# Schneider Downs > Big Thinking. Personal Focus. > Admin Email: bevancho@schneiderdowns.com ## Posts ### Dan Frazier Joins Schneider Downs as Chief Growth Officer PITTSBURGH, PA – Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, announces that Dan Frazier has joined the firm in the newly-created position of Chief Growth Officer. Mr. Frazier joins Schneider Downs from Pittsburgh-based Century Support Services, where he served as Chief Executive Officer and member of its Board of Directors since 2017. In this new position, he will oversee all firm growth initiatives and resources, working directly with firm leadership to prioritize strategic growth initiatives and investments. “Dan brings an extremely strong arsenal of experience in strategy and growth, which will be a tremendous asset to Schneider Downs as we continue to advance toward our Firm’s vision,” said Chris McElroy, Co-Chief Executive Officer at Schneider Downs. “Dan’s proven leadership and insights will support the introduction of new concepts as we continue our growth journey. Dan also fits our corporate culture, and we look forward to his contributions to our leadership team.” Mr. Frazier is a graduate of Duquesne University and lives in Cranberry Township with his wife and children. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Schneider Downs Hires Dan Frazier as First Chief Growth Officer ### Chris McElroy Joins UPMC Children’s Hospital Foundation Board of Trustees ### Melody Van Dusen Joins Schneider Downs as Tax Shareholder COLUMBUS, OH. – Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, announces that Melody Van Dusen has joined the firm as a tax shareholder. Ms. Van Dusen joins Schneider Downs from a national firm, where she held a leadership role in a client serving capacity. Included among her areas of focus are Accounting Standards Codification 740 and assisting Emerging Companies in all stages of development. Her presence further enhances Schneider Downs’ ability to provide highest-level tax advisory and guidance to its roster of clients. “I’m very pleased to welcome Melody to Schneider Downs. She’s an extremely experienced tax advisor who is also deeply committed to building relationships both with her co-workers and her clients,” said Justin Steele, practice leader for Schneider Downs Tax Advisors. “We couldn’t be more pleased to have the opportunity to add to our tax leadership team while also continuing to build on the momentum and growth we are experiencing in our Columbus office.” About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Ross Alessandro Discusses the R&D Tax Credit with the Allegheny County Bar Association ### Madeline Adamczyk Named 2025 Greater Pittsburgh ATHENA Young Professional Award Recipient PITTSBURGH, PA – Schneider Downs is proud to announce that Madeline Adamczyk, Senior Marketing Strategist, has been named the winner of the 2025 Greater Pittsburgh ATHENA Young Professional Award. Adamczyk was honored on September 5 at the annual ATHENA Awards Program of Greater Pittsburgh, hosted by the Pittsburgh Technology Council. “I’m so honored to be part of the ATHENA community. The ATHENA Young Professional Award is a powerful motivator for me to further engage in mentorship and community initiatives,” said Madeline Adamczyk. “Particularly in support of young women who are more reserved or introverted, both in academic settings and the workplace.” Presented annually, the Greater Pittsburgh ATHENA and ATHENA Young Professional Awards celebrate women who demonstrate excellence in their profession, contribute meaningfully to their communities, and uplift other women and girls through mentorship and support. “Maddie’s passion for her work, her community, and the people around her is truly inspiring,” said Daniel Hooven, Director of Marketing Strategy at Schneider Downs. “We’re incredibly proud to see her recognized with the ATHENA Young Professional Award, and we can’t wait to watch her build on this achievement in even more meaningful ways.” Learn more about the ATHENA Award program, winners and finalists here. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Schneider Downs Remembers John Null, Who Found Great Joy Advising Clients and Shaping Future Leaders ### Schneider Downs and Schneider Downs Wealth Management Honored in Columbus CEO Magazine’s 2025 “Best of Business” Awards COLUMBUS, OH – Schneider Downs is proud to announce its recognition as a two-award recipient in the 2025 “Best of Business” Awards, presented by Columbus CEO Magazine. These prestigious honors, determined by the magazine’s annual Readers poll, will be awarded at a gala event on October 8, 2025. Schneider Downs will be named “Best of Business – Accounting (Large Firm)” for the second consecutive year. The firm secured more votes than any other accounting firm in the category of organizations with more than 20 certified public accountants (CPAs), highlighting the continued trust and support of clients and readers across the region. Additionally, Schneider Downs Wealth Management Advisors will be honored with the “Best of Business – Wealth Management” award. This marks the first time the practice has achieved this distinction. “Awards and recognition are nice, but we’re particularly proud that this accolade stems from voters residing in the Columbus business community,” stated David Brinkman, partner and Senior Wealth Manager, Schneider Downs Advisors. “Ours is a business based on trust and confidence, so it’s rewarding to receive this feedback from the readers of Columbus CEO.” Now in its 18th year, the “Best of Business” Awards by Columbus CEO Magazine offer readers the opportunity to recognize outstanding businesses and service providers throughout the Columbus area. The 2025 poll included categories such as accounting and law firms, contractors, education, insurance, technology companies, and favorite restaurants. Honorees from this year’s “Best of Business” Awards will be celebrated at the Columbus CEO gala in October. For more information about Schneider Downs and its award-winning services, please visit our website. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  ### Schneider Downs Digital Named 2025 Solver AI Technology Partner of the Year Pittsburgh, PA – Schneider Downs Digital (SD Digital) is proud to announce that it has been named the 2025 Solver AI Technology Partner of the Year, a new award category championed by Nils Rasmussen, CEO of Solver, and Mike Applegate, CTO of Solver. The AI Technology Partner of the Year award recognizes a partner that has demonstrated its technology knowledge of AI and applied it to Solver scenarios to provide value to our mutual clients while also contributing their AI knowledge back to the greater Solver community. “We are honored to receive this award from Solver; a valued partner whose collaboration continues to inspire innovation and excellence. At SD Digital, our commitment to delivering transformative AI solutions is driven by a passionate and talented team whose dedication made this recognition possible,”  said Patrick Armknecht, Shareholder at SD Digital. “This award is a testament to the strength of our partnership and the impact we can achieve together.” This recognition reflects SD Digital’s ongoing commitment and fresh ideas in this disruptive and opportunity laden area of AI. “We are honored to recognize SD Digital with this award, which reflects their dedication and commitment to innovation. Their partnership with Solver continues to drive meaningful impact for organizations on their AI financial transformation journey,” said Mark Bennett, Sr. Partner Development Manager of Solver. “As we work toward eliminating ad hoc reporting in finance and achieving the full democratization of financial insights to improve bottom-line results, our clients have told us their biggest challenge is unifying their data,” said John Huckle, Chief Digital Innovator at SD Digital. “Our partnership with Solver helps companies speed up their AI journey, often in just weeks, and delivers immediate impact through real-time financial decisions across the enterprise.” The award was presented in August at the annual Solver ASCEND 2025 conference in Huntington Beach, California, where industry leaders gathered to share best practices, explore innovations, and celebrate outstanding partner achievements. Schneider Downs Digital plays a vital role in extending the reach and impact of Solver’s extended financial planning and analysis (xFP&A) solution by guiding organizations through the evaluation process and helping them implement, integrate, and customize Solver to meet their needs. About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and user experience. Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com. About Solver Solver is an extended financial planning and analysis solution (xFP&A) with an AI-driven strategy that increases access to actionable insights beyond the finance department to accelerate intelligent decisions. Patented QuickStart integration technology provides immediate access to a collection of tailorable templates, allowing finance and management users to optimize their planning, reporting, consolidation, and analysis processes. Users can get up and running quickly, leveraging familiar Excel-based functionality to create any report and planning model. Solver transforms organizational data into a strategic advantage for data-driven success. Visit www.solverglobal.com to learn more. ### Schneider Downs Digital Wins 2025 Solver Partner Award for AI Technology Partner of the Year ### Schneider Downs Climbs to #55 in IPA Top 100 Accounting Firms Ranking ### Madeline Adamczyk Named Finalist for the 2025 Pittsburgh ATHENA Young Professional Award PITTSBURGH, PA – Madeline Adamczyk, Senior Marketing Strategist at Schneider Downs, has been named a finalist for the 2025 Greater Pittsburgh ATHENA Young Professional Award. Madeline will be recognized at the 2025 ATHENA Awards Program of Greater Pittsburgh on September 5th, where she will be honored as one of three finalists for the ATHENA Young Professional Award. Presented annually, the Greater Pittsburgh ATHENA and ATHENA Young Professional Awards celebrate women who demonstrate excellence in their profession, contribute meaningfully to their communities, and uplift other women and girls through mentorship and support. “Maddie is an exceptional professional, community member, and person. Her commitment to empowering, educating, and elevating women reflects everything the ATHENA Award stands for,” said Daniel Hooven, Director of Marketing Strategy. “I’m thrilled to see her recognized among such an inspiring group of finalists.” Madeline is a University of Pittsburgh graduate who holds a Professional Certified Marketer credential from the American Marketing Association and was selected for the Content Marketing Institute’s Mentorship Program. She has held multiple leadership roles in the BNY Pittsburgh Toastmasters Club since 2021, including Club President, and will serve as Vice President of Membership in 2025. Learn more about the ATHENA Young Professional Award and the ATHENA Awards Program of Greater Pittsburgh here. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Nick Lombardo to Transition to Business Advisory Services Leader COLUMBUS, OH – Effective July 1, 2025, Nick D. Lombardo, Shareholder, is transitioning into the role of leader for Schneider Downs’ Business Advisory practice within the Firm’s Consulting Practice. He will coordinate this transition with Schneider Downs Consulting Practice Unit Leader Adam Goode, who previously served as leader of the Business Advisory practice. The Firm’s rapidly growing Business Advisory practice provides a broad spectrum of strategic and specialty services, including transaction advisory, fraud and forensic accounting, litigation support, business valuation, and managed. Practice growth in Fiscal Year 2025 exceeded ten percent and is projecting continued growth for FY26. Nick previously served as the group leader for the firm’s Accounting Advisory Services (AAS) team, part of the Audit and Assurance practice unit. AAS continues to be one of Schneider Downs’ most exciting emerging specialty services within the firm, helping clients manage the accounting complexities and implications associated with increasing regulatory oversight and financial reporting challenges. As Nick joins the Business Advisory practice, the firm’s Accounting Advisory Services team will be integrated into the overall Consulting palette of services. Eight other professionals from AAS will join the group with him. “I’m thrilled to welcome the Accounting Advisory team into the Consulting practice. There are tremendous synergistic opportunities to align and deliver advisory services to the market,” explained Adam Goode, practice unit leader, Schneider Downs Consulting. “I’m equally excited to add Nick to the Consulting practice’s leadership team. Nick’s experience solving client problems in unique and creative ways makes him the ideal person to grow this practice into the future.” About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Schneider Downs Announces New Members to Ownership Group PITTSBURGH, PA – Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce the addition of new shareholders to its ownership group. The firm also announces the addition of one new partner to its affiliate, Schneider Downs Wealth Management Advisors, LP.  “A firm’s foundation is built around its internal talent, and for nearly 70 years we’ve been proud to continue to grow our ownership group through the promotions of our highly talented professionals,” says Christopher S. McElroy, Co-CEO of Schneider Downs. “Schneider Downs continues to have aggressive growth goals moving into the future, and these new leaders will play an important part in this sustained success.”  The new promotions reach across several areas of the firm’s service offerings, including the firm’s tax, audit and consulting practices, as well as the growing wealth management practice.  Included among those promoted to Shareholder at Schneider Downs are:  Maggie Havelka, JD, MBA joined Schneider Downs in 2013 and focuses on estate, succession planning and individual taxation for business owners, executives and high net-worth individuals. She received her B.A. from the University of Findlay, and her M.B.A. and J.D. from West Virginia University. She is a member of the American and Pennsylvania Bar Associations. Patrick Hickman, CPA, joined the firm in 2023 following a decade in public accounting with other firms. His areas of tax expertise include partnerships, including allocations, tax planning and structuring. His experience spans a variety of industries and includes private equity. He graduated with a B.S.B.A in Accounting from West Virginia University, and is a member of the American and Pennsylvania Institutes of Certified Public Accountants. Logan Kowcheck, CPA joined Schneider Downs in 2011 in the firm’s audit practice group. He has experience serving clients in a variety of industries including energy and natural resources, real estate, manufacturing and retail. Logan leads the Firm’s Energy and Natural Resources Services Industry Group. He graduated with a B.A. in Accounting from Bethany College and holds a Master of Professional Accountancy from West Virginia University. He is very active in the community and serves as the President of the Council of Petroleum Accountants Societies and is a Board member of The American Association of Drilling Engineers. Mike Marasco, MBA, joined the Schneider Downs Business Advisory Group in 2020 following 20 years of experience in business administration, finance, and accounting. Prior to joining the firm, he held various Chief Financial Officer positions, providing him with well-rounded expertise. Mike provides his administrative, planning, analytic and accounting expertise to clients looking for a strategic partner, or those looking to outsource any or all of their accounting and finance functions. He holds a B.S. and M.B.A. from Duquesne University. Janelle Merlo, CPA, CFP® joined Schneider Downs in 2023, bringing 20 years of public accounting experience, providing a wide variety of tax and consulting services to a broad range of clients. Janelle has extensive experience working with closely held businesses and their owners in the construction and manufacturing industries. Additionally, she is a certified financial planner and has experience helping clients as a business advisor, applying tax technical and other knowledge to consult on a variety of areas. She holds a B.S. in Accounting from the University of Pittsburgh and is a member of the American and Pennsylvania Institutes of Certified Public Accountants and the Construction Financial Management Association. In addition to the above-mentioned shareholders, Schneider Downs also announced the addition of a new partner to its affiliate, Schneider Downs Wealth Management.  Greg Daily, AIF® joined the firm in 2021, following over 20 years in the finance industry providing personal and institutional financial services. He helps individuals, families and organizations in achieving their financial goals through developing, overseeing and ultimately maintaining their wealth and investment management strategies. Gregg is also an active participant in our Investment Committee, assisting with the ongoing maintenance and monitoring of the SDWMA Investment Platform, in addition to seeking out new investment strategies. Gregg received his Applied Science degree from Western School of Health and Business.   About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA.  ### Mike Voinovich Joins Schneider Downs as Audit Shareholder COLUMBUS, OH – Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, announces that Mike Voinovich, CPA, has joined the firm as an audit shareholder in its Columbus office. He officially joined the firm on May 12, 2025. Mr. Voinovich joins Schneider Downs from a Columbus-based national retailer, where he served as Chief Financial Officer since 2021. He also has more than 25 years of public accounting experience, served at CPA firms within the Columbus area. His executive leadership experience, coupled with his extensive experience in public accounting, further enhances Schneider Downs’ ability to provide highest-level consulting and guidance to its roster of clients. “Adding Mike to our shareholder group provides us with yet another strong leader and mentor for our entire team, as well as an experienced auditor who can provide shrewd financial insights to our clients in most any industry,” stated Staci Brogan, practice leader of the firm’s Accounting, Assurance and Advisory Services Department. “Mike is a well-respected leader in the Columbus community, and we are proud that he will also now represent our firm.” About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Schneider Downs Co-CEO Chris McElroy featured on iHeart's CEOs You Should Know Columbus ### Joe Vandermark Joins Schneider Downs as IT Risk Advisory Shareholder COLUMBUS, OH – Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, announces Joe Vandermark, CISA, CIPP/IT, has joined the firm as IT Risk Advisory Shareholder in its Columbus office. He will officially join the firm on January 27, 2025. Mr. Vandermark joins Schneider Downs from the Columbus office of a national firm, where he served as Risk Consulting Leader. He will bring more than 25 years of experience guiding clients through the design and implementation of business transformation initiatives in a broad spectrum of areas, including cybersecurity, emerging technologies, internal audit & controls, business process improvement and third-party risk advisory. In addition to delivering on this expertise at Schneider Downs, he will also serve in the role of Consulting Services Columbus Market Growth Leader for Consulting Services at the firm. “We are pleased to welcome Joe’s experience and leadership to our firm, and especially enthused to introduce his talents to our clients and prospects,” said Chris McElroy, Co-CEO, Schneider Downs. “We have enjoyed very significant momentum in Columbus in recent years, and adding Joe’s strengths as an insightful consultant and recognized leader in the region’s business community is a tremendous asset for us.” About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Steven Barber Cited on Dealer Portal Failure in NPR's EV Tax Credit Investigation ### Jessica Miller and Jim Yard Receive the 2025 Pennsylvania Bankers Association Champion for Women Award ### Schneider Downs Achieves C3PAO Authorization to Conduct CMMC Certifications PITTSBURGH, PA – Schneider Downs has successfully completed the Certified Third-Party Assessor Organization (C3PAO) authorization process. Schneider Downs is one of first 54 nationwide and three Pennsylvania-based CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense's (DoD) program. The CMMC is a major DoD program built to protect the defense industrial base from increasingly frequent and complex cyber-attacks. It particularly aims to enhance the protection of controlled unclassified information and comply with NIST SP 800-171 DOD assessment requirements. "This milestone reinforces our commitment to providing comprehensive compliance assessment services for organizations working with the DoD," said Eric M. Wright, Shareholder at Schneider Downs. "As an authorized C3PAO, we can now assist clients navigate the complexities of CMMC  compliance." As an authorized C3PAO, Schneider Downs is uniquely positioned to help organizations either prepare for or provide CMMC certification. Learn more about our CMMC Services or contact the Schneider Downs CMMC team at contactsd@schneiderdowns.com. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. The firm also offers Internal Audit; Technology Consulting; Software Solutions, Personal Financial Services, Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the nation with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Schneider Downs Co-CEO's included in the Business Times’ Power 100 list ### Tom Springer discusses the pivotal role of baseline and readiness assessments in business transactions with the Catalyst Connection. ### Tom Springer discusses the pros and cons of selling a business in "Beyond the Horizon – Developing an Exit Strategy and Understanding Alternatives" in the Catalyst Connection. ### Tom Springer and Stuart Lawson discuss the intricacies of preparing a business for sale or acquisition with the BlackLetter Podcast. ### James Rumph discusses the need for agility in fraud risk management, including strategies and emerging risks, with the Ohio Society of CPAs. ### Schneider Downs Announces Sponsorship Agreement with Pro Golfer Neal Shipley PITTSBURGH — Schneider Downs, one of the nation’s largest public accounting and consulting firms, announced today that it has signed a sponsorship agreement with professional golfer Neal Shipley. Shipley, 23, turned professional in the summer of 2024 following a notable collegiate amateur career. He was the low amateur at both the 2024 Masters Tournament and the 2024 U.S. Open, becoming only the 9th golfer in PGA TOUR history to achieve this distinction in both tournaments in a single year. Shipley qualified for these events by finishing as the runner-up at the 2023 U.S. Amateur Championship. He played college golf at James Madison University before transferring to The Ohio State University. Originally from Pittsburgh, Shipley is currently a member of the PGA TOUR Americas and has received sponsor exemptions to compete in multiple PGA TOUR events. “We are excited to have Neal Shipley represent our brand as he embarks on his professional golfing career,” said Chris M. McElroy, Co-CEO of Schneider Downs. “Neal has strong connections to Pittsburgh, where our headquarters are located, as well as to The Ohio State University, aligning well with our expanding office in Columbus, Ohio. His poise and performance on the golf course make him an ideal ambassador for our firm.” Under the agreement, Shipley will feature the Schneider Downs logo on the right side of his golf shirts through the 2026 season. He will also make personal appearances on behalf of Schneider Downs in both Pittsburgh and Columbus. The firm, headquartered in Pittsburgh and with a significant office in Columbus, finds the partnership particularly fitting given Shipley’s ties to both cities. “As I start my career as a professional golfer, partnering with a brand familiar to me from both my hometown and college town is truly special,” Shipley said. “This is an exciting time for me, and I look forward to representing Schneider Downs and engaging with their team and clients.”   About Schneider Downs Schneider Downs is a regional accounting and business consulting firm offering tax, audit, and business advisory services to public and private companies as well as nonprofit organizations. Headquartered in Pittsburgh, Pennsylvania, with additional offices in Columbus, Ohio, and Metropolitan Washington, Schneider Downs serves clients across Pennsylvania, Ohio, West Virginia, New York, Maryland, and globally. ### Alex Papson discusses how employers and employees can navigate the SECURE Act 2.0 on the Building PA Podcast ### Eric Surma and Tim Martin named as part of the 20 People to Know in Accounting by the Pittsburgh Business Times ### Schneider Downs named on Inside Public Accounting “Best of the Best” list of accounting firms ### Pittsburgh Business Times Features Schneider Downs' Internship Program ### Darin Schindler Joins the 2024 Men Wear Pink Campaign Pittsburgh, PA – Darin Schindler is representing Schneider Downs in the 2024 Men Wear Pink Campaign. According to Darin, the decision to join the campaign is because of the personal effect breast cancer has had on his family. Fourteen years ago, Darin’s wife Regina was diagnosed with Stage 3 breast cancer.  Thankfully, Regina is a cancer survivor. Darin and his family credit the network of researchers, physicians, hospitals and support systems that exist to treat this disease for saving Regina’s life. Funds raised from the Men Wear Pink Campaign help the American Cancer Society save lives from breast cancer by funding innovative breast cancer research; providing education and guidance to help people reduce their risk; and offering comprehensive patient support to those who need it most so that no one faces breast cancer alone. Darin will be guest bartending at Velum Fermentation Brewery in Pittsburgh, PA, on September 26th between 5 and 9 pm. He is also hosting a Tee Off Against Cancer fundraising event at Topgolf in Bridgeville, PA, on October 16th at 6 pm. For more information on the campaign or to support his mission, please visit Darin’s Men Wear Pink campaign page. About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Downs Construction Practice Recognized by Constructive Executive Schneider Downs & Co. announces it has been recognized by Construction Executive’s “The Top 50 Construction Accounting Firms ™,” which was announced in the August 2024 issue of the publication. The firm reported more than 135 construction clients with interests across 27 states. Schneider Downs’ construction practice involves 18 partners and more than 70 CPAs who serve the firm’s clients across its offices in Pittsburgh, PA; Columbus; OH; and Washington D.C. Collectively, the practice was recognized as number 27 on the list of top 50 construction accounting firms. “Our firm has a long and storied history serving clients within the construction and building sector since 1956,” stated Ted Pettko, audit shareholder and chair of the firm’s construction practice. “Construction is an industry unlike any other. While bigger doesn’t always mean better, being recognized on this list for several years in a row does demonstrate our ongoing commitment to provide top-tier accounting guidance while also serving as industry specialists who understand the unique needs of our clients.” Now in its 22nd year of publication, Construction Executive is the leading trade magazine for the business of construction. In its July/August 2024 issue, CE published a comprehensive ranking of The Top 50 Construction Accounting Firms™. To determine the ranking, CE surveyed hundreds of U.S. accounting firms with a construction practice. Data collected included: 1) 2023 revenues from construction practice; 2) number of CPAs in construction practice; 3) percentage of firm’s total revenue derived from construction practice; 4) number of construction clients in 2023; 5) number of office locations with a construction accounting practice; 6) number of employees with CCIFP certification; and 7) year construction accounting practice established. The ranking was determined by an algorithm that weighted these factors in descending order of importance.   About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and consulting services to public and private companies, not-for-profit organizations and global companies. The firm also offers risk advisory, wealth management, personal financial services and retirement plan solutions. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington, Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Schneider Downs listed in the top 100 of Inside Public Accounting's largest U.S. CPA Firms ### James Rumph Joins Firm's Consulting Management Team COLUMBUS, OH—Schneider Downs & Co. announces that James Rumph has joined the firm’s consulting practice as a Director, helping lead its growing Business Advisory segment. Mr. Rumph has over 20 years of diverse experience in forensic fraud investigation, business valuation, damages analysis, accounting, audit, and risk management within various organizations. Prior to joining Schneider Downs, he was a corporate officer leading fraud risk governance, risk assessment, monitoring, and other consulting activities at a Fortune 100 insurance and financial services company. Mr. Rumph has also previously served in various forensic accounting and investigation roles within the insurance and public accounting industries, as well as for the Federal Bureau of Investigation (FBI). In addition, Mr. Rumph has served as President of the Central Ohio Chapter of the Association of Certified Fraud Examiners (ACFE), President of the Central Ohio and Des Moines ACFE Chapters, as co-chair of the Coalition Against Insurance Fraud’s Fraud Risk Management Task Force, and chair of the ACFE Chapter Leaders Committee. At Schneider Downs, Mr. Rumph will help lead and expand the firm’s Business Advisory Services within the Columbus, OH market, which consists of Forensic & Litigation Services, Transaction Advisory Services, Valuation Services, and Outsourced Accounting Services. Mr. Rumph’s core focus will be within the firm’s Forensic & Litigation Services practice where he will help clients assess and remediate fraud risk as well as help investigate suspicions or allegations of fraud. In addition, Mr. Rumph will help clients and their attorneys with discovery and expert testimony around claims for lost profits, intellectual property disputes, breach of contract, insurance claims, construction claims, and valuation of closely held businesses. “James has a really impressive background and is a national thought-leader within the forensics space,” said Adam Goode, Business Advisory leader at Schneider Downs. “We’re thrilled to have him on the team and know his experience will be a tremendous asset to our practice and our clients.” Mr. Rumph received his bachelor’s in accounting and business administration from Graceland University, as well as his master’s in accounting with a concentration in forensics, from the Florida Atlantic University. He is also a certified public accountant (CPA), certified fraud examiner (CFE), certified anti-money laundering specialist (CAMS), and certified internal auditor (CIA). About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Schneider Downs Launches SD Capital Aimed to Take M&A Advisory to the Next Level ### Schneider Downs Announces Schneider Downs Capital Value Advisors for the Middle Market July 10, 2024 — Schneider Downs & Co. introduces a new subsidiary: Schneider Downs Capital, LLC (SD Capital), a focused team of value advisors specializing in middle market transactions. The new entity, SD Capital, will guide owners in maximizing business value from early-stage planning through final transaction. It merges middle-market M&A investment banking services from Schneider Downs Corporate Finance, LP with strategic value advisory services aimed at enhancing pre-transaction value, evaluating downstream sale options, and implementing a top-tier transaction process. The powerful combination of top-tier transaction M&A execution capabilities and a proven team of value creation advisors provides business owners multiple pathways for downstream sale and monetization. The team brings deep industry expertise and transaction experience in information technology, government contracting and defense, energy and utility services, manufacturing and industrial services and consumer-related businesses. “Through our daily interactions with middle-market companies across all industries, we’ve recognized the need for both assistance in selling companies and the creation and enhancement of value earlier in the process. SD Capital has a talented roster of experienced advisors who can provide strategic and practical guidance to help clients navigate the entire process in a manner aligned with their personal and professional goals,” explained Chris McElroy, Co-CEO, Schneider Downs. SD Capital will be led by Managing Partners Peter J. Lieberman and Thomas L. Springer. Mr. Lieberman joined Schneider Downs in 2006 and has served as CEO of Schneider Downs Corporate Finance since 2018 where he led both Schneider Downs’ M&A investment banking and real estate investment businesses. Over a 27-year investment banking career, Mr. Lieberman has been a trusted advisor to a broad group of owners and executives executing strategic transactions and investments. Mr. Springer, a former Springer Lawson & Associates co-founder, joined Schneider Downs by strategic acquisition in May 2023. He has over 20 years of experience in strategic planning, advising, and maximizing enterprise value for middle-market clients, and specializes in technology and government contracting and is skilled as an operator preparing for liquidity events and ownership transfers. Imran Mohiuddin and Stuart Lawson will join SD Capital as Managing Directors, with additional employees based in our Metropolitan Washington, Columbus and Pittsburgh offices. Combining over 100 years of collective experience executing more than 100+ transactions, SD Capital’s team provides a full suite of services to assist mid-market companies as they explore opportunities for either growth or sale. This includes a best-in-class process and various sell-side options, such as control sales, recapitalizations, buy-outs, carve-outs, and ESOPs. Additionally, SD Capital offers the distinct advantage of leveraging the comprehensive service offerings of Schneider Downs, a premier independent consulting firm in the nation, which include estate, wealth management, tax, audit and consulting expertise. Schneider Downs Corporate Finance, LP will continue to operate Schneider Downs Real Estate Capital Markets, which arranges equity investments in commercial real estate development and acquisition transactions. Mr. Lieberman will continue to serve as CEO of Schneider Downs Corporate Finance. About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and consulting services to public and private companies, not-for-profit organizations and global companies. The firm also offers risk advisory, wealth management, personal financial services and retirement plan solutions. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington, Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. ### Schneider Downs Shareholder Susan M. Kirsch Spotlighted in Pittsburgh Magazine For Her Successful Career ### CMO Sean Smith Discusses the Evolving Digital Marketing Landscape on the Association for Accounting Marketing’s Amplify! Podcast ### Stephanie Haugh discusses strategies to recruit top talent with Pittsburgh Business Times. ### SD Digital Senior Manager Chris Kosty, CPA, CIDA shares his digital wisdom with the CFMA. ### David Brinkman Featured On Columbus Business First Wealth Management Table Of Experts ### CARLEY TASLOV SHARES HER INSIGHTS WITH ABC NEWS 7 ON THE IMPACT OF THE BALTIMORE KEY BRIDGE COLLAPSE ON CONSUMERS ### SCHNEIDER DOWNS WINS CLEARLYRATED’S 2024 BEST OF ACCOUNTING DIAMOND AWARD FOR SERVICE EXCELLENCE ### SCHNEIDER DOWNS WEALTH MANAGEMENT ADVISORS, LP NAMED A 2024 TOP DEFINED CONTRIBUTION ADVISOR TEAM BY THE NATIONAL ASSOCIATION OF PLAN ADVISORS We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the Nation’s Top DC Advisor Teams in 2024 by the National Association of Plan Advisors (NAPA) for the fourth consecutive year. The NAPA Top DC Advisor Firm list highlights the nation’s leading retirement plan advisor firms. Unlike other lists, this focuses on teams having at least $100 million in defined contribution (DC) plan assets under advisement and is based on self-reported assets under advisement as of December 31, 2023. The National Association of Plan Advisors was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. NAPA is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org. NAPA members like SDWMA are having a huge impact every single day, not just on the quality of retirement plan advice, but also in building a more financially secure retirement for millions of Americans. It is a great honor for SDWMA to be listed in this regard by NAPA. To our clients, friends, and colleagues, thank you for your continued trust and confidence in SDWMA. If you know someone that we could be of service to, please do not hesitate to share this email or our contact information. Please Note: NAPA updated the title and naming convention this year to reflect the year in which the list is released even though it is still based on data as of 2023. Hence, a list titled “NAPA Top DC Advisor Teams – 2023” is not published. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### MATT HARTMAN SHARES HIS INSIGHTS ON US CLIMATE DISCLOSURE PROGRAMS ### SCHNEIDER DOWNS UNVEILS SD DIGITAL Reimagining Technology and Data Services February 7, 2024 - Schneider Downs & Co. introduces SD Digital, an evolution of their Technology and Data Service practice designed to match modern solutions with modern problems, to unlock clients’ business potential. In response to the changing technology market, SD Digital, led by Schneider Downs shareholders John J. Huckle and Patrick B. Armknecht, delivers holistic, business enabling and human-centered digital solutions for essential back-office functions, including finance, operations, supply chain and human capital, across organizations of all sizes and industries. Taking a user-first approach to digital solutions, the practice will aim to help each client determine what “digital” means to them. "As digital technologies continue to emerge at an unprecedented pace, trying to make sense of how to leverage technology to drive strategy can be overwhelming. SD Digital works with market-leading platforms to help our customers solve their business problems” said Patrick B. Armknecht, Shareholder. “Our approach is designed to provide timely value to our clients while consistently managing risks to ensure successful project outcomes." https://www.youtube.com/watch?v=yRHB2BBf8gk With the transition to SD Digital, Schneider Downs continues to offer a cutting-edge suite of business-focused, technology-enabled and AI-powered digital solutions which include: Data Analytics Digital Modernization Intelligent Automation Microsoft Dynamic ERP Solutions Custom Development In addition, SD Digital will continue to offer proprietary software including SD inSITE and simpLEASE accounting. “With digital spend at an all-time high and meaningful success in digital initiatives remaining frustratingly illusive, we know that our clients deserve a different and better approach to leveraging digital systems and thought patterns,” said John J. Huckle, Chief Digital Innovator. “The opportunity to unlock progress and meaningfully pivot/point their businesses towards success is why we exist. Given our proven experience of providing digital solutions to customers in their back offices, SD Digital is uniquely positioned to help simplify, educate and improve.” SD Digital will combine the firm’s business and industry expertise with its 20 years of technology consulting experience to create tailored solutions for each unique client need. In a market demanding digital partnership, SD Digital will help organizations discover the art of the possible with innovative and agile end-to-end digital solutions—leading organizations through every step of their modernization journey, while accounting for industry, regulatory and financial considerations. About Schneider Downs & Co., Inc. Schneider Downs is a regional accounting and business consulting firm providing tax, audit and business advisory services to public and private companies and nonprofit organizations. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington, Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### ROGER SPEARS DISCUSSES CYBERSECURITY TIPS FOR THE NEW YEAR ### BLUE JACKETS ANNOUNCE SCHNEIDER DOWNS AS NEW CORPORATE PARTNER ### Schneider Downs has joined the Women in Manufacturing Association Schneider Downs is pleased to announce its membership with the Women in Manufacturing Association (WiM), a global trade association dedicated to supporting women in the manufacturing sector. Schneider Downs joins a community of more than 24,000 individual members representing over 2,800 manufacturing companies. This membership will provide Schneider Downs with access to valuable resources, networking opportunities and educational programs aimed at supporting women in manufacturing careers. "We’re ready to hit the ground running with WiM,” said Jeanne Barrett, Audit Shareholder and leader of the firm’s dedicated manufacturing group, "We’ve been excited to see more women represented in our manufacturing client base, and our participation in WiM will both support their careers and provide opportunities for women in our firm to build relationships in this space.” “WiM is a collective community working passionately to ensure that women are well-represented in the manufacturing space,” says WiM President and Founder Allison Grealis. “Our goal is to provide the tools, resources and connections to help women to reach their full potential in their roles in manufacturing while advocating for investments in female workers’ resources and support.” As part of its ongoing diversity and inclusion efforts, Schneider Downs is committed to fostering an inclusive workplace culture. By joining WiM, Schneider Downs aims to help foster such a culture within the manufacturing sector and promote the growth and advancement of women in manufacturing positions. About Schneider Downs Industry Groups Schneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com. ### ROGER SPEARS DISCUSSES HOME NETWORK SECURITY WITH CYBER DEFENSE MAGAZINE ### CO-CEOS STEVEN THOMPSON AND CHRIS MCELROY RECOGNIZED ON THE 2024 PBT POWER 100 LIST ### BRETT CUBELLIS INTERVIEWED BY INSIDE CLIMATE NEWS MAGAZINE ON EV CREDITS ### MATT HARTMAN DISCUSSES THE GREENHOUSE GASES: CLIMATE-RELATED FINANCIAL RISK ACT WITH PRIME GLOBAL ### Rogers Spears Speaks with Property Casualty 360 on Cybersecurity Check-ups ### John Brady Joins Firm as an Accounting Advisory Manager PITTSBURGH, PA—Schneider Downs & Co. announces that John Brady has joined the firm as an Accounting Advisory Manager. Mr. Brady has 25 years of diverse accounting and finance experience, serving in both public accounting and private industry settings. Throughout his career, he has served clients over a broad range of sizes and a wide variety of industries, including manufacturing, start-up, healthcare, retail, automotive and financial services. At Schneider Downs, Mr. Brady is responsible for the planning, coordination, management and overall delivery of services with his clients and is also instrumental in coaching, mentoring and evaluating fellow client service professionals.“John fits right in with the Accounting Advisory team,” said Nick Lombardo, Audit Shareholder. “His years of experience have already been an excellent resource for our clients, and he has been an outstanding mentor and asset to our group.” Mr. Brady received his Bachelor of Science in Business Administration, with a concentration in Accounting, from West Virginia University.About Schneider Downs & Co., Inc.Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington, Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Chris McElroy Featured on Columbus Business Times Executive Insights ### Schneider Downs Continues Growth Kathleen Lynch Joins Firm as Director of Business Development PITTSBURGH, PA—Schneider Downs & Co. announces that Kathleen Lynch has joined the firm as Director of Business Development. Ms. Lynch brings more than 25 years of business development and marketing experience to Schneider Downs. She previously served in various business development, client service and operational roles for Am Law 100 and 200 law firms. At Schneider Downs, Ms. Lynch is responsible for developing, implementing and driving business development initiatives out of the firm’s Pittsburgh office. “Kathleen is coming to us at the right time for our firm,” said Chris McElroy, Co-CEO of Schneider Downs. “We’ve maintained a steady pace of organic growth to this point, and her expertise growing professional service firms like ours is exactly what we need to continue propelling us forward.” Ms. Lynch received her Bachelor of Arts from State University of New York at Oswego. About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### SDWMA Leadership Announcement Derek J. Eichelberger to serve as Chief Executive Officer for $2.3 Billion AUM PracticePITTSBURGH – Schneider Downs Wealth Management Advisors (SDWMA), a Registered Investment Advisory (RIA) firm celebrating its 20th anniversary this year, announced that Derek J. Eichelberger, CFA, CFP®, AIFA®, MBA will assume the role of Chief Executive Officer (CEO) effective October 1. Mr. Eichelberger joined SDWMA in 2015 and has most recently served as Managing Partner of the wealth management firm.  He is also a shareholder at Schneider Downs & Co., Inc.Mr. Eichelberger has more than 25 years of experience in the financial services industry, and he has a lengthy history of advising high net worth individuals, foundations, endowments and retirement plans. He is a valued mentor to advisors and staff on the team, and he also serves on the Operating Committee for Schneider Downs & Co., the parent company of the wealth management practice.Mr. Eichelberger will transition into the role, replacing current CEO Nancy L. Skeans, CPA, CFP® MBA. Ms. Skeans, also celebrating her 20th anniversary at SDWMA, will remain in a leadership role with the practice, focusing primarily on serving existing clients, as well as mentoring SDWMA’s growing team of wealth advisors. She also will remain as the practice’s Chief Compliance Officer (CCO).With 26 full-time team members across two offices, Pittsburgh and Columbus, SDWMA is currently managing over $2.3 billion in assets. The firm provides personal investment management, financial planning and qualified retirement services for individuals and companies across the country. In the June 2023 issue of Accounting Today, SDWMA was ranked 21st of 150 “Top Firms by Assets Under Management.” These top 150 firms are wealth advisory firms associated with a CPA firm and are ranked by AUM as of 12/31/2022.“Leadership transitions are a natural component of successful companies,” explained Skeans. “Our team has grown considerably over the last several years, adding three new Wealth Management partners and many talented employees.  Under Derek’s leadership, and with a strong team in place, I know that we are well-positioned to continue our high client service standards and our sustained pattern of growth.” “Nancy is a wonderful friend and confidant, and has been for many years,” said Mr. Eichelberger. “She was absolutely the catalyst in my joining Schneider Downs Wealth Management Advisors, so it’s a special honor to become CEO in succession to her accomplishments. Our playbook is clear – we’ll continue with the same vision, management and service principles that we’ve held for 20 years.” Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Ross Alessandro discusses IRS moratorium ERC claims delays with Pittsburgh Business Times ### Megan Whitlock Joins Schneider Downs as Tax Shareholder Megan Whitlock Joins Schneider Downs as Tax Shareholder PITTSBURGH, PA; COLUMBUS, OH. – Schneider Downs announces that Megan Whitlock, CPA, has joined its Tax shareholder group to expand the firm’s growing Tax practice with a focus on partnership taxation. Megan is based out of Dallas, Texas and will lead the focus of the firm's tax practice across all of its offices in Columbus, Pittsburgh and Metropolitan Washington. In this position, Megan will focus on client needs specific to the tax implications of complex partnership transactions. Megan has extensive experience working with both private equity sponsors and private equity owned companies. She also has experience advising on the tax implications of complex real estate and oil and gas transactions, but her client leadership has spanned various industries and transaction sizes throughout her career. Prior to joining the firm, she worked in the national tax office of a Big Four firm and most recently was the National Tax Director for a national firm. “We are pleased to welcome Megan to our shareholder group," said Justin Steele, Tax Practice Leader. "As an experienced technical tax advisor, we are excited to add her dynamic leadership to our vibrant and rapidly growing Tax Practice." Megan is a certified public accountant and holds a Master in Professional Accounting and Bachelor of Business Administration from the University of Texas at Austin, McCombs School of Business. About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Timothy Martin Selected to Attend AICPA’s 2023 Leadership Academy Timothy Martin from Schneider Downs Selected to Attend AICPA’s 2023 Leadership AcademyTimothy O. Martin, CPA was one of only 36 CPAs honored by the American Institute of CPAs (AICPA) as a member of the Leadership Academy’s 15th graduating class.Timothy was selected based on his exceptional leadership skills and professional experience for the four-day Leadership Academy program, which will be held December 11th – 14th. Timothy is a 2017 graduate of Geneva College with a Bachelor of Science in both Accounting and Business Management. He has been a Certified Public Accountant since February 2019 and received the 2020 PICPA Young Leader award. Having more than 6 years of public accounting assurance experience, Timothy is currently a Manager in Assurance and Advisory Services at Schneider Downs. Timothy provides assurance and accounting advisory services to his clients and is also responsible for a portion of the firm’s education curriculum, including developing, organizing and instructing audit staff. The AICPA Leadership Academy was designed to strengthen and expand the leadership skills of promising young professionals while they network with a peer group of talented and motivated CPAs.  The Leadership Academy features career development workshops and sessions with some of the accounting profession’s most prominent influencers. Participants were selected from public accounting firms of all sizes, business and industry, government, and consulting firms.  The 2023 Leadership Academy attendees were recommended by their employers, state CPA societies, and/or volunteer organizations. Candidates submitted resumes and a statement explaining how participating in the Leadership Academy would impact them personally and professionally.  More than 480 CPAs have participated in the AICPA Leadership Academy, many of whom have taken on leadership positions in their firms, businesses, and volunteer organizations. For more information about the AICPA Leadership Academy, visit AICPA.org/Leadership.About Schneider Downs & Co., Inc.Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Co-CEO Steven Thompson discusses the evolution of accounting firms with the Pittsburgh Business Times. ### Tim Amoroso joins the Firm’s Tax Practice PITTSBURGH, PA—Schneider Downs & Co. announces that Tim Amoroso has joined the firm a manager in the Tax Department. Mr. Amoroso has more than 6 years of public accounting experience, which includes time spent at a national public accounting firm. His primary focus is in the construction industry and closely held organizations. Tim has extensive knowledge of tax accounting methods, tax planning, and state tax returns.“We’re excited to have Tim on board,” said Justin Steele, Chair of Schneider Downs’ tax practice. “His expertise in the construction industry will further expand our capacity to serve tax clients in one of our key verticals.”Mr. Amoroso received his Bachelor of Science from the University of Pittsburgh.About Schneider Downs & Co., Inc.Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Schneider Downs and Tim Wolfgang Featured on the Drata Blog ### Kevin Frischkorn Joins the 2023 Men Wear Pink Campaign Pittsburgh, PA – Kevin Frischkorn is representing Schneider Downs in the 2023 Men Wear Pink Campaign.According to Kevin, the decision to join the campaign is because of the personal effect breast cancer has had on his family. Kevin lost his grandmother to breast cancer shortly before he was born, and his mother battled breast cancer when he was a teenager and has been cancer-free for 20 years. More recently, his mother-in-law had breast cancer.“I participate to honor them.”Funds raised from the Men Wear Pink Campaign help the American Cancer Society save lives from breast cancer by funding innovative breast cancer research; providing education and guidance to help people reduce their risk; and offering comprehensive patient support to those who need it most so that no one faces breast cancer alone.Kevin will be guest bartending at Velum Fermentation Brewery of Pittsburgh, PA, and hosting a fundraising event at Topgolf in Bridgeville, PA. Stay tuned for event details and tickets.For more information on the campaign or to support his mission, please visit Kevin’s Men Wear Pink campaign page.About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Downs Announces Expansion of Management Team Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is pleased to announce the following additions to our management team.Patrick Hickmann, CPA, Tax Senior ManagerMr. Hickmann has over 10 years of experience in public accounting, which includes time spent at a Big Four public accounting firm where he served as the lead partnership technical expert for his office. He specializes in partnerships, including allocations, tax planning and structuring. He also has significant experience working with family offices, S corporations and individuals. His experience spans a variety of industries and includes private equity, manufacturing, casinos and real estate.  Mr. Hickmann received his B.S.B.A. in Accounting from West Virginia University  Maureen Barry, CPA, Tax Senior Manager  Ms. Barry has over 20 years of experience serving clients. Her clients are closely held, privately owned businesses in various industries, including retail, professional services, healthcare, real estate and start-ups. Ms. Barry enjoys understanding the whole client service plan, from the strategic business plan of the owners through their exit. Her expertise lies in being able to provide guidance on tax planning, accounting and accounting systems.  Ms. Barry received her B.S.B.A. in Accounting from Robert Morris University. Teagan Osborne, CPA, Audit ManagerMs. Osborne has more than 4 years of public accounting assurance experience, having previously worked in the public sector at another firm. She has had extensive experience serving a variety of clients in the construction and real estate industries.Ms. Osborne received her Bachelor of Science in Accounting, with a minor in Finance from Geneva College. “Schneider Downs remains committed to fueling our growth by hiring talented professionals with experience relevant to our clients’ needs,” said Chris McElroy, co-CEO at Schneider Downs. “Ms. Osborne, Ms. Barry and Mr. Hickmann are all valued additions to our team.”About Schneider DownsSchneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Metropolitan Washington., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world. ### Stephen Bish Discusses New White House Cybersecurity Initiatives With NextGov.com ### Schneider Downs Receives Breakout Partner of the Year Award From Solver ### Kevin Frischkorn to be Ambassador for Men Wear Pink ### Schneider Downs' latest promotions boost its ownership group to record high ### Schneider Downs Announces Seven Additions to Ownership Group “We’ve had another monumental year at Schneider Downs,” said Steven Thompson, Co-CEO. “Each of these talented individuals has demonstrated exceptional commitment to our clients and the Schneider Downs community, and we’re thrilled that they’re continuing to grow with the firm. We’re proud to have added 10 shareholders in the past year, which wouldn’t have been possible without the tremendous rate of growth we’ve achieved and maintained over the past few years. The future continues to be bright for us, and we’re excited to continue providing opportunities for professional development in the future.” The new promotions touch the firm’s offices in both Pittsburgh and Columbus, and they reach across several areas of the firm’s service offerings, including the firm’s Tax, Audit and Consulting practices, as well as the Merger and Acquisitions/Transaction Advisory practice.  Included among those promoted to Shareholder at Schneider Downs are: Ryan R. Deatrick joined the firm in 2009. He provides accounting and assurance services to both public and privately held companies, primarily those within the construction and manufacturing sectors. He also has extensive experience serving the employee benefit plans of his clients. Ryan is a member of the firm’s Construction Industry Group and serves as the firm’s subject matter expert related to Topic 606 Revenue Recognition for companies within that sector. Additionally, he frequently presents during internal firm training seminars and writes articles for the firm’s website. Ryan received both his Bachelor’s and Master’s degrees from West Virginia University.  Woodrow M. Morris has over 10 years of public accounting experience in various areas of tax compliance and consulting. He is experienced in working with the management of closely held businesses in implementing tax-planning strategies, as well as providing private equity and capital groups with tax forecast, advisory and compliance-related services. He also assists clients in identifying and applying for a variety of federal, state and local tax incentive programs. Over his career, Woodrow has managed tax engagements for privately held clients in industries such as construction, real estate, manufacturing and professional services. He received both his Bachelor’s and Master’s degrees from Robert Morris University. Brett T. Cubellis has more than 10 years of experience providing tax advisory services to privately-held corporations, partnerships, LLCs and individual clients, advising on various issues involving federal, international and state and local tax matters. Brett’s primary focus is on tax planning, research and compliance issues for corporate and pass-through entities as well as individuals. Brett has extensive experience working with companies operating in industry sectors ranging from automotive/motorcycle, retail, transportation and logistics, real estate, construction and service companies. He also has experience with transfers and acquisitions of interests in partnerships and closely-held corporations, as well as clients with tax exposure from foreign-owned investments. Brett is a graduate of Youngstown State University. James A. Sayre has more than 15 years of experience consulting and advising public and privately held clients in the areas of income and franchise taxation. James is one of the firm’s leading experts in accounting for income tax, including accounting for mergers and acquisitions, in accordance with ASC 740. He has served clients in various industries, including healthcare, retail, manufacturing, technology and professional services. He provides services to the firm’s clients that include the coordination and review of corporate, partnership and individual tax returns, including implementation of tax planning strategies. James is a graduate of Youngstown State University. William M. Deller Jr. has over 10 years of experience providing high-quality consulting, advisory and auditing services to clients across various industries, particularly in healthcare, technology, financial services, higher education, professional services and energy. William leads the Third-Party Risk Management (TPRM) practice at Schneider Downs in program design, execution, and innovative and strategic solutions. In addition, he directs and leads client engagement teams within the firm’s full suite of Cybersecurity Governance, Risk and Compliance services. His specialties include SOC reporting, HIPAA, HITRUST, ISO 27001, GLBA, NIST 800 Series, CIS Cloud Security Controls, organizational policy development and IT general control testing. William is a graduate of Duquesne University. Brian W. Matthews joined Schneider Downs in January 2007 and has more than 15 years of public accounting experience. Brian has extensive experience providing consulting services including buy side and sell side diligence and financial modeling. Prior to joining the Business Advisory Group, Brian provided audit and assurance services to a variety of industries, including construction, manufacturing, transportation and radio broadcasting, in addition to clients in the not-for-profit sector and with publicly traded and private equity owned entities. He received both his Bachelor’s and Master’s degrees from Robert Morris University.  About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Metropolitan Washington.  About Schneider Downs Wealth Management Advisors, LP Schneider Downs Wealth Management, LP (“SD Wealth Management” or “SDWMA”) is an SEC Registered Investment Advisor specializing in Investment Management and Financial Planning Services for Individual Investors; Investment Management and Investment Committee Services for Institutions and Non-Profits; and Corporate Solutions and ERISA Fiduciary Services. Registration with the SEC does not imply any level of skill or training. ### Chris McElroy Discusses Vision 2030 With The Boomer Consulting Briefing Podcast ### Schneider Downs Expands Strategic and Transaction Advisory Services with the Addition of Five Management Consulting Specialists PITTSBURGH, PA-- Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, has added a team of five strategic and transaction advisory consultants to the firm’s Consulting and Business Advisory practice. The group joins Schneider Downs from Springer Lawson & Associates (SLA), a boutique consulting firm specializing in managing, transforming and optimizing enterprise value for middle-market clients. SLA co-founders Tom Springer and Stuart Lawson will be among those joining Schneider Downs. The two firms have previously worked together on joint projects in recent years, which helped identify the opportunity to explore synergies. SLA will sunset operations as part of the movement to Schneider Downs. “It’s a rare opportunity to add such a collective strength of business expertise and experience at one time,” said Chris McElroy, Co-CEO of Schneider Downs. “Tom, Stuart and their team have excellent in-depth experience in helping their clients operate more efficiently and profitably, and in ensuring that businesses maximize their value in sell-side transactions. That fits in perfectly in conjunction with our rapidly growing Business Advisory and Corporate Finance practices. We know from our previous projects together that this is an excellent cultural fit, as well as an important expansion of our strategic and transaction advisory service offerings.”   Included among those joining Schneider Downs will be: Tom Springer, Shareholder Stuart Lawson, Director Christine Marshall, Senior Manager Rebecca Talley, Senior II Timothy “Wayne” Pigott, Senior II Through their work with SLA, this integrated team is highly experienced in creating and selling business entities, managing mergers and acquisitions, as well as restructuring and managing workforces. These experiences both augment and expand the consulting services offered by Schneider Downs’ Consulting practice. The team will join the firm on May 1, 2023. In addition, the SLA team’s roots in Northern Virginia provide Schneider Downs with additional resources to serve existing clients in that region, while also helping the firm expand the offerings in its Washington D.C. office. “We continue to see growth opportunities in the DC/Northern Virginia market. Tom, Stu and his team have robust contacts and experience in that area, which will help us accelerate our growth plans for the market,” McElroy explained. “This is another step forward in our ongoing Vision 2030 strategic plan.” Schneider Downs’ Consulting practice offers a broad spectrum of specialties across Financial Advisory, Technology Advisory and Risk Management services. As businesses today face increasingly sophisticated challenges, the need for experienced management consultants has never been more pronounced. The incoming team from Springer Lawson will add both scope and depth to the firm’s existing Business Advisory and Corporate Finance consulting practices. About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Down's growth featured in PBT ### Christopher T. Kosty, CPA, CIDA on Technology, Perspective and Change with PICPA ### Matt Hartman Discusses Key Stakeholders in the ESG Puzzle with Prime Global ### Michael Fox Joins Firm as Business Advisory Director Schneider Downs Expands Management Team PITTSBURGH, PA-- Schneider Downs & Co. announces that Michael Fox has joined the firm’s Business Advisory Practice as a Director. Mr. Fox has over 30 years of experience in financial and accounting operations within both public and private equity-sponsored businesses. He began his career at a Big 4 firm, before moving into CFO and Controller roles in various industries, ranging from Professional Service to Technology to Distribution and Logistics. Mr. Fox’s experience advising organizations of all kinds on both the “buy” and “sell” side of transactions, coupled with his detailed understanding of the issues important to private equity-sponsored companies, make him a valuable asset to Schneider Downs’ diverse client portfolio. “We are so pleased to welcome Mike to the team,” said Adam Goode, Chair of Schneider Downs’ Business Advisory Practice. “His deep background of experience will be a tremendous resource to our practice, providing clients with a valuable new perspective.” Mr. Fox received his Bachelor of Science in Accounting from Indiana University of Pennsylvania. About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world.   ### Matthew Legg Joins Schneider Downs as International Tax Practice Shareholder Addition further strengthens the Firm’s global tax presence PITTSBURGH, PA-- Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce that Matthew Legg, CPA, has been named tax shareholder to lead the firm’s growing International Tax practice. Mr. Legg will be based in the firm’s Pittsburgh, PA office, while leading the firm’s International tax practice across the firm’s offices in Pittsburgh, Columbus and Washington D.C. In this position, Mr. Legg will focus on client needs specific to international tax issues, including foreign and domestic tax considerations associated with the global business operations of firm clients. Mr. Legg brings extensive experience in all aspects of international tax strategies, including cross-border structuring and tax due diligence, foreign expansion assistance, foreign tax credit planning and international tax compliance projects. Prior to joining Schneider Downs, he served as the Managing Director of International Tax for a global firm. “We are quite pleased to add Matt Legg to our shareholder group,” said Chris McElroy, Co-CEO at Schneider Downs. “This area of our tax practice continues to grow rapidly, and our clients come to us with increasingly complex and sophisticated international tax needs. Matt’s expertise, as well as his personality and leadership skills, are a perfect match to meet those needs.” Mr. Legg is a certified public accountant (CPA) who received his Bachelor of Science, Accounting, from St. Vincent College. About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world.   ### Kallie Winkler Recognized at the Upcoming PTC’s CIO of the Year Award Dinner Congratulations, Kallie Winkler Congratulations to Kallie Winkler, Client Systems Manager at Schneider Downs, for being named a finalist for the Pittsburgh Technology Council’s Rising Star Award. Kallie will be recognized at the upcoming PTC’s CIO of the Year Award dinner on April 12. Kallie joined Schneider Downs as a Help Desk Technician in 2016 and has served as an outstanding resource, working her way through the department and becoming an essential part of overseeing many of the different technologies Schneider Downs professionals use each day. We are quite proud of Kallie’s recognition as a Rising Star in the Technology Industry. Best of luck to Kallie and all of the Rising Star Award finalists. Learn more about the Rising Star Award and the CIO of the Year program hosted by the Pittsburgh Technology Council. About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world.   ### Matt Hartman Joins Schneider Downs as Senior ESG and Sustainability Manager Schneider Downs Expands Management Team PITTSBURGH, PA—Schneider Downs & Co. announces that Matthew Hartman has joined the firm’s Risk Advisory Practice as Senior Environmental, Social and Governance (ESG) and Sustainability Manager. Mr. Hartman has 10 years of experience, in both Pennsylvania and Ohio. He brings an array of experience in corporate sustainability and reporting, development of ESG programs and ESG data sourcing and governance. Matt has previously delivered initiatives in line with the Task Force on Climate-Related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI), and the Sustainable Finance Disclosure Regulation (SFDR), amongst others. Mr. Hartman will aid Schneider Downs’ clients in designing, enhancing, implementing and evaluating organizations’ ESG practices. “ESG is a top business priority for organizations, along with pending guidance from the SEC, organizations across all industries will need strategic advisory services to accomplish their objectives and adapt to on-going changing regulations. Mr. Hartman will be a key addition to our growing ESG practice,” said James B. Yard, Chair of Schneider Downs’ Consulting Practice. “His experience deepens our abilities to advise our clients on ESG strategy, ESG implementation, and assurance. We are excited to have this expertise right here in our core markets, providing us the ability to serve our region’s companies with a full suite of ESG services focused on managing risk and adopting industry-leading practices to fully realize the benefits of ESG. Many of our clients and friends in the community continue to see pressure on ESG issues from customers, employees and investors.” Mr. Hartman received his Bachelor of Science in Economics from the Pennsylvania State University. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization prepare for the proposed disclosure requirements and additional ESG-related risks by developing an ESG strategy that aligns with your overall corporate strategy. For more information on our ESG solutions, please visit our dedicated ESG solutions landing page. About Schneider Downs & Co., Inc. Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit, and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Headquartered in Pittsburgh, Pennsylvania, with offices in Columbus, Ohio and Washington D.C., Schneider Downs serves clients in Pennsylvania, Ohio, West Virginia, New York, Maryland and around the world.   ### Nancy Skeans’ groundbreaking career profiled in Pittsburgh Post-Gazette. ### Senior Manager of Cybersecurity Consulting Services Roger Spears comments on recent Hyundai and Kia lawsuits with the Automotive News ### Mark Balistrieri sits down with Kristen Powers of WTAE Action News 4 in the segment titled Breaking Down Sales Tax in Pennsylvania. ### Co-CEOs Steven Thompson and Chris McElroy selected to 2023 PBT Power 100 List ### Carl Scharf talks about EV Tax Credits with Automotive News ### New United Way of Southwestern Pennsylvania Board Chair Raymond Buehler Jr. The board of directors of United Way of Southwestern Pennsylvania elected Raymond W. Buehler, Jr. as the incoming Chair in a news release courtesy of the United Way of Southwestern PA.“It’s very exciting to see Ray in the Board Chair seat and to welcome Stacy into the role of Vice Chair,” said Bobbi Watt Geer, President and CEO, United Way of Southwestern Pennsylvania. “We’re very fortunate to have such committed leaders with a long history of supporting United Way. Each in their own way, they have contributed greatly to carrying out our mission, guiding our organization and supporting the community through many transitions. It’s fitting that the next chapter begins with them.”More than a decade ago, Buehler’s journey with United Way began at Schneider Downs through his colleagues, whose encouragement inspired his advocacy for the cause. Buehler became a Tocqueville Society member in 2004 and served as co-chair in 2020. Buehler joined the Board of Directors in 2011 and has served four terms since then. And, he chaired the annual campaign in 2014. Buehler’s passion for giving back to the community began as soon as he entered the workforce in 1975 at Schneider Downs, where he became a shareholder just six years later, President/CEO four years after that, and ascended to the role of Chairman in 2014. As he excelled in his professional career and was named one of the Top 100 Most Influential Practitioners by CPA Magazine, Buehler became an integral part of United Way’s leadership, which has helped him gain a unique perspective that combines his understanding of finances and meeting the community’s needs. As Board Chair, Buehler will serve as the organization’s Chief Volunteer Officer. “I have always felt that United Way is the heartbeat of this city,” said Buehler. “I am excited to continue my  involvement in helping it thrive and succeed in its mission. United Way’s leadership has always struck me in a very personal way, and I am proud to find myself a part of it. I know the need is enormous, but resources are constrained. So I ask myself, ‘Where can you get your most effective use of dollars?’ I believe the answer is United Way.”Read the entirety of the article Pittsburgh Business Times article United Way of SW PA announces new board leadership.About United Way United Way of Southwestern Pennsylvania, serving Allegheny, Armstrong, Butler, Fayette and Westmoreland counties, convenes and mobilizes the caring power of individuals, the business community and organizations to help local people meet basic needs, move toward financial stability and build for success in school and life. Together with dedicated donors and caring volunteers, United Way creates long-lasting change for the betterment of our community. ### Dave Mitros discusses real estate tax issues with Totum Realty Advisors ### Schneider Downs and Penguins partner on 2000s Theme Night at December 1 Game vs. Vegas ### Fraud is ramping up ### Carl Kriebel Shares How To Protect Yourself From Online Shopping Scams With WTAE-TV ABC ### Digital Transformation: How Boards Can Help Forge the Path Forward ### Fed continues assault on inflation with another .75 point rate hike ### What is Greenwashing and What Are the Associated Risks? ### Schneider Downs Announces Expansion of Management Team We are pleased to announce the additions of Roger Spears, Cybersecurity Project Manager and Michael Divens, CFA, SDWMA Research and Due Diligence Manager to our management team. “Schneider Downs continues to grow and expand through hiring experienced and talented personnel,” said Steven Thompson, co-managing shareholder of Schneider Downs. “We are excited to see Mr. Divens and Mr. Spears grow within our firm and provide our clients with quality service.” Roger Spears, Cybersecurity Project Manager Mr. Spears has over 18 years of experience within the IT and Cybersecurity disciplines. He has spent his career leading dynamic teams on both small- and enterprise-level projects. He has previously served as Chief Technology Officer, Cyber Security Training Coordinator and in other related positions for employers in the higher education sector and, most recently, for the U.S. Navy. He will serve a broad array of Schneider Downs’ cybersecurity clients in similar capacities. Mr. Spears received his Bachelor of Science in Technology from Bowling Green State University and his Masters of Science in Information Assurance and Security from Capella University. Michael Divens, CFA, SDWMA Research and Due Diligence ManagerMr. Divens is an investment professional with over six years of experience analyzing all aspects of companies for investment decisions, as well as in constructing investment portfolios for clients. He has previously served in Chief Investment Officer, Chief Operations Officer and Investment Analyst roles for large firms as well as in Project/Process Engineer positions in multiple industries.Mr. Divens attended Carnegie Mellon University, where he received his Bachelor of Science in Chemical Engineering. He then received his Executive Masters of Business Administration from the University of Pittsburgh.  ### Schneider Downs’ manufacturing survey quoted in Akron Beacon Journal article ### The Value of Expanding Consulting Services Through Accounting Advisory ### analyzing the reduction in Pennsylvania’s Corporate CNI Tax ### What experts are saying: How is the economy doing in Dayton? ### Conflicting signs: What key economic indicators tell us about inflation’s impact ### Steve Barber Discusses EV Tax Credits with Bloomberg Law ### Schneider Downs Featured in INSIDE Public Accounting’s 2022 Best of the Best Accounting Firms List "Welcome to the 9-figures club, Schneider Downs.Schneider Downs & Co. LLC, based in downtown Pittsburgh, was No. 54 with revenue of $103.36 million, a new record and more than 9.7% above its prior high of $94.18 million when it ranked 56th on IPA’s 2021 list. Prior to 2021, Schneider Downs was the sole local to make the ranking since 2013.Steven Thompson, who is Schneider Downs’ co-CEO, along with Christopher McElroy, said it’s especially gratifying to move up in the IPA rankings because it’s difficult to do so without an acquisition. 'Our growth continues to be fueled organically, through the introduction of new services,' Thompson said. 'This past year saw a steady increase in demand for many of our consulting services, including risk advisory, transaction advisory, managed accounting services and technology. We also saw growth across our core practice areas: tax, audit, consulting and wealth management services. We believe this is a validation of our market strategy, which is to offer a broad spectrum of services that our clients need — all serviced by experienced professionals. As our clients’ needs change, we’re adding services to meet those needs. We’re grateful that our clients choose Schneider Downs for those services.'" Click here to read the full Pittsburgh Business Times article. About INSIDE Public AccountingIPA is a leader in practice management resources for the public accounting profession that include: a monthly practice management newsletter, annual national practice management benchmarking reports, and training. IPA has helped firms across North America grow and thrive since 1985. For more information, to schedule an interview, or to inquire about presentations at meetings or retreats, please contact IPA at (317) 733-1920 or info@plattgroupllc.com.  About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Stephen Worth Discusses Recent Cuts in the Pennsylvania Corporate Tax Rate ### Schneider Downs Announces Six New Members to Ownership Group Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce the addition of five new shareholders, as well as one new partner, to its affiliate, Schneider Downs Wealth Management Advisors, LP “We are thrilled to add these new members to our leadership team. At Schneider Downs, we are committed to the professional development of our people, so it is especially rewarding when we can draw from existing talent to expand our ownership group,” says Christopher S. McElroy, Co-CEO of Schneider Downs. “We have watched these talented individuals grow throughout their years with us, and we are confident that each of them will advance the future of our firm and community in their new roles. What is particularly exciting is that these leaders join 7 new shareholders and partners from last year–as well as the recent additions of 3 lateral shareholder hires–to bring our new leader total to 15 in just the past two years. Growth creates opportunities.” The new promotions reach across several areas of the firm’s service offerings, including the firm’s tax, audit and consulting practices, as well as the growing wealth management practice.  Included among those promoted to Shareholder at Schneider Downs are:  David J. Mitros joined the firm in 2019. He has 14 years of experience working with national and regional firms, providing tax services to a variety of manufacturing, construction and real estate clients. David has a focus on privately-held organizations, working with management, owners and other stakeholders to identify and achieve tax-related objectives. With Schneider Downs, he has frequently been a valuable resource, assisting the firm’s clients in significant M&A activity by leading transaction structuring negotiations. He is a graduate of Miami University and a member of both the American Institutes of Certified Public Accountants and the Ohio Society of Public Accountants.  Patricia R. Giudici joined the firm in 2016, following 12 years working for a regional and national firm. She has experience serving a diverse group of privately owned companies within the technology, distribution and logistics, manufacturing, real-estate and employee benefit plan industries, including significant experience working with start-up, private equity and venture capital-backed companies. She is a graduate of Clarion University and is a member of the American and Pennsylvania Institutes of Certified Public Accountants. Patricia leads the firm’s Employee Benefit Plan Group. She is also a board member of Bethlehem Haven, an advisory council member for Standing Firm, a member of the planning committee for the St. Jude Gala, and a member of the Women’s Executive Board for the Pittsburgh Chapter of ACG.  Carley R. Taslov began her career at Schneider Downs in 2009 after graduation from Washington & Jefferson College. She specializes in helping clients identify, assess and manage risks through internal audit and risk management services. She delivers additional value to organizations in a variety of ways, including business process optimization and digital transformation. Carley's expertise spans multiple industries and her contributions to the firm have come from within the Risk Advisory Services and External Audit departments. She is a member of the Pennsylvania Institute of Certified Public Accounts (PICPA) and the Institute of Internal Auditors (IIA), as well as a board member for Lending Hearts, a Pittsburgh-based not-for-profit.  Eric M. Fair joined Schneider Downs in 2011 and has 11 years of experience leading teams and clients collaboratively through IT governance, risk & compliance initiatives, including but not limited to IT internal audit co-sourcing and outsourcing, SSAE 18, business continuity, disaster recovery, data privacy and cybersecurity consulting. Eric holds an M.S. in Internet Information Systems from Robert Morris University, a B.S. in Information Systems Management from Robert Morris University and an M.S. in Accounting from Liberty University. He currently serves on a local advisory board and as a co-chair to a local chapter dedicated to the industry. He has previously served on a local non-profit board and continues to participate in the mentorship program for his alma mater. Eric is one of only 95 active Certified Business Continuity Lead Auditors (CBCLA) globally and is also a Certified Information Systems Auditor (CISA).  Derek J. Eichelberger has been with Schneider Downs Wealth Management Advisors, LP (SDWMA) since 2015 and serves as the practice’s Managing Partner. He advises high-net-worth individuals, foundations, endowments and retirement plans. He is a graduate of Penn State University and received a Master of Business Administration from the University of Pittsburgh. Schneider Downs Wealth Management Advisors, LP (SDWMA) also announced the promotion of a team member to the role of partner:  Michael J. Bucci has been with Schneider Downs for 12 years and currently leads the Investment Advisory practice for the SD Retirement Solutions division of Schneider Downs Wealth Management Advisors. He is a graduate of East Carolina University and a Certified Investment Management Analyst® About Schneider Downs Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C.  About Schneider Downs Wealth Management Advisors, LP Schneider Downs Wealth Management, LP (“SD Wealth Management” or “SDWMA”) is an SEC Registered Investment Advisor specializing in the Investment Management and Financial Planning Services for Individual Investors; Investment Management and Investment Committee Services for Institutions and Non-Profits; and Corporate Solutions and ERISA Fiduciary Services. Registration with the SEC does not imply any level of skill or training.     ### David Murphy discusses the importance of disaster recovery plans ### Schneider Downs discusses cyber attack vulnerabilities and what colleges can do to mitigate them ### David Murphy highlighted on Post Gazette ### WAND - Ransomware, pandemic brought down Lincoln College ### David Murphy discusses challenges with 36-hour cyber reporting rule ### The key to digital transformation is strategy, not tech ### CSO Online – What Is Your Biggest Insider Threat? ### Cybersecurity Dive – Banks Face ‘Tight Deadline’ Under New Cyber Notification Rule ### Remain on Alert for Russian Financial Cyberattacks ### Schneider Downs Wealth Management Advisors, LP Named a 2021 Top Defined Contribution Advisor Team by the National Association of Plan Advisors Pittsburgh, PA -- Schneider Downs Wealth Management Advisors, LP was named one of the top Defined Contribution (DC) Teams in 2021 by the National Association of Plan Advisors (NAPA) for the second consecutive year.The NAPA Top DC Advisor Team list, which highlights the nation’s leading retirement plan advisor firms with at least $100 million in DC assets under advisement, is based on self-reported assets under advisement as of December 31, 2021.It’s an honor to be recognized by the National Association of Plan Advisors as one of the nation’s Top Defined Contribution Advisor Teams for the second consecutive year,” said Alex Papson, Manager of Fiduciary Solutions with Schneider Downs Wealth Management Advisors, LP. “We take great pride in the breadth and depth of our expertise as a specialized retirement plan service provider and truly enjoy waking up every day to serve our clients and communities in that capacity.”The National Association of Plan Advisors was created by and for retirement plan advisors. However, membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. It is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Registration with the SEC does not imply any level of skill or training. ### David Murphy Shares His Thoughts on the impact of Potential Russian Cyber Attacks to U.S. Businesses ### David Murphy Discusses Cyber Insurance and Preparing For Potential Russian Cyberattacks ### Carl Kriebel Discusses the Importance of Closing Communication Gaps to Strengthen Cybersecurity ### David Murphy provides insight on the U.S. Cyber Command and Ukraine/Russia conflict ### Jeffrey Smercani Joins the 2022 Real Men Wear Pink Campaign Pittsburgh, PA – Jeffrey Smercani is representing Schneider Downs in the 2022 Real Men Wear Pink Campaign.The Real Men Wear Pink campaign raises breast cancer awareness and money to support the American Cancer Society’s mission to save more lives than ever before from breast cancer. According to Jeffrey, the decision to join the campaign was based on his personal experience.“Breast cancer affects everyone - it doesn't matter if you're a man or a woman. That's why I'm stepping up to fight breast cancer with all I have.”Funds raised help the American Cancer Society save lives from breast cancer by funding innovative breast cancer research; providing education and guidance to help people reduce their risk; and offering comprehensive patient support to those who need it most so that no one faces breast cancer alone.Schneider Downs and Mindful Brewing Company of Pittsburgh, PA will be hosting a happy hour fundraising event later this year. Stay tuned for event details and tickets.For more information on the campaign or to support his mission, please visit Jeffrey’s Real Men Wear Pink campaign page at https://secure.acsevents.org/site/STR/RMWP/RMWPCY22NER?px=57711276&pg=personal&fr_id=102923.About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Downs adds Ron Wollett, JD as Tax Shareholder in Columbus Office COLUMBUS, OH—Schneider Downs, a top-60 public accounting and business advisory firm in the United States, is proud to announce Ron Wollett has joined the firm’s shareholder group.Mr. Wollett has over 28 years of experience in both public accounting and private industry. He has served clients of all sizes, ranging from large SEC registrants to small family-owned businesses. Mr. Wollett’s vast industry expertise includes working with manufacturing, distribution, utilities, construction, retail, aircraft ownership and chartering and real estate companies, as well as family offices. He has a strong history of leading multifunctional teams that include multistate and international tax professionals to provide high-level and insightful services to clients.“We’re thrilled about the addition of Ron to our shareholder group,” explained Chris McElroy, Co-CEO. “His expertise in leading teams with varying tax specialties will be an amazing addition to our growing team in Columbus, as well as our Pittsburgh and Washington, D.C. offices.”Mr. Wollett attended The Ohio State University where he received his B.S.B.A. in Accounting, followed by his J.D. He is a member of the American Institute of Certified Public Accountants, Ohio’s Society of CPAs, The Columbus Bar Association and The Advisory Council for the Mentoring Center of Central Ohio.About Schneider Downs:Schneider Downs is a Top 60 accounting firm providing tax, audit and business advisory services to public, private and nonprofit companies.  The firm offers 80 services from five business units: Assurance and Tax Advisors; Business Advisors; Technology Advisors; Wealth Management Advisors; and Corporate Finance Advisors. With offices in Pittsburgh and Columbus, Schneider Downs serves clients in Pennsylvania, Ohio, Washington D.C., West Virginia, New York, Maryland and beyond.  ### Schneider Downs Announces Additions to Management PITTSBURGH, PA-- Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce the addition of six new management leaders to the firm.“We are thrilled that Schneider Downs has added to our management team,” stated Steven D. Thompson, Co-CEO of Schneider Downs. “These new leaders will play an integral part in the ongoing growth of our firm.”  Ashley Bucek, Tax Senior ManagerMs. Bucek has over ten years of experience in public accounting, a family office and a national bank. She attended Robert Morris University and received her BS in Financial Mathematics and BSBA in Accounting. She went on to receive her Master of Science in Taxation from the University, as well as her MBA in Business from Clarion University of Pennsylvania.  Emily Monda, Audit ManagerMs. Monda has over 7 years of professional accounting experience and previously worked in the assurance department of a Big Four accounting firm, in addition to her work in the accounting department of a billion-dollar computer software company. She received her BSBA in Accounting from Duquesne University and her Master of Professional Accountancy from West Virginia University.  Laura DelFratte, Tax DirectorMs. DelFratte has more than 15 years of experience in advising high-net worth individuals and business owners in tax related matters. She joined Schneider Downs as an intern in 2006 and then became a tax staff accountant in 2008. She pursued other work as an attorney for a local law firm and a tax director for a Big Four accounting firm. She graduated with a Bachelor of Science degree in Accounting from Pennsylvania State University and continued her education by earning an MBA from the University of Pittsburgh Katz School of Business and her J.D. from at the University of Pittsburgh School of Law.  Gregg Daily, SDWMA PFP Senior ManagerMr. Daily has been in the investment services industry since 2000, providing personal and institutional financial planning for clients. He develops, oversees and maintains wealth and investment management strategies to help individuals, families and organizations achieve their financial goals.  Justin Mudryk, Audit ManagerMr. Mudryk has over eight years of experience. He previously joined Schneider Downs in 2008 as an audit staff. Most recently he worked for an accounting and advisory firm based out of Indianapolis, Indiana. He attended Duquesne University where he studied Finance and Accounting.About Schneider Downs & Co., Inc.Schneider Downs is a regional accounting and business consulting firm providing tax, audit, and business advisory services to public and private companies and nonprofit organizations.  The firm offers more than 80 services from five business units: Assurance and Tax Advisors; Business Advisors; Technology Advisors; Wealth Management Advisors; and Corporate Finance Advisors. With offices in Pittsburgh, Columbus, and the District of Columbia, the firm serves clients with local, national, and global interests. ### simpLEASE Accounting Achieves SOC 1 Type 2 Examination Confirming Accounting and Financial Controls Security Lease accounting software provider, Schneider Downs, has announced the successful completion of the Service Organization Control (SOC) 1 Type 2 audit for simpLEASE Accounting. The third-party audit validates the completeness and accuracy of simpLEASE’s accounting and financial controls.Moore Colson, a third-party independent CPA Moore based in Atlanta, GA, provided the independent service auditors’ report on Schneider Downs’s description of its lease accounting software system, simpLEASE, for processing user entities’  transactions throughout the period  October  1, 2020 to September  30, 2021 and the suitability of the design and operating effectiveness of the controls to achieve the related control objectives stated in the description.Jason M. Reljac, Manager of simpLEASE Accounting Services at Schneider Downs commented, “Substantial effort has been made to make sure that simpLEASE provides clients with appropriate and highly accurate results. The clean SOC report confirms that our effort was well placed and provides our clients with an independent endorsement.” Developed by Schneider Downs, one of the nation’s 60 largest public accounting firms, simpLEASE helps organizations adapt to the new lease accounting standards introduced by the Financial Accounting Standards Board  (ASC 842). simpLEASE uses a wizard-based system to guide the user through the process and provides easy-to-understand guidance to analyze each individual lease.By answering a series of prompts about each contract, the program informs the user how the lease should be reported, reducing the time spent on the categorization process. Long-term, simpLEASE helps manage the on-going accounting of a leased asset including the creation of all of the necessary accounting entries on a monthly basis. Whether managing one lease or a thousand, simpLEASE makes lease accounting under ASC 842 simple and painless. Visit simpLEASE for more information.About Schneider DownsSchneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and McLean, VA. ### Carl Kriebel Joins Schneider Downs to Lead Cybersecurity Practice ### Schneider Downs Introduces Digital Transformation Solution Offerings Enhanced services develop strategic transformative solutions for organizations of all sizesOctober 13, 2021 – Schneider Downs’ Consulting practice announces that it has expanded its existing array of technology and data services with the introduction of Digital Transformation. Digital Transformation leverages Schneider Downs’ technological capabilities and experience to help clients identify and maximize opportunities to use digital technologies, innovation and processes to achieve maximum organizational efficiency.   The Schneider Downs’ Digital Transformation solutions focus on three foundational components of transformation: People, process and technology. All Digital Transformation solutions are developed and implemented with a specific focus on one or all of these components and a commitment to improvement through self-evaluation, innovation and technology.  People are the human capital that define, create, manage and use data Process represents the rules that leverage data to run the business Technology represents the business applications used by organizations to support the integration of people and process “We believe that today’s organizations have access to more information and technology than ever before and understand the challenge of matching technological solutions with unique business needs,” explained Patrick Armknecht, Shareholder. “At its core, our Digital Transformation solutions evaluate all facets of your current state and reimagines how future business technologies can work more efficiently.” In expanding the firm’s Technology and Data Services with Digital Transformation, Schneider Downs Consulting continues to build process and technology enhancements that are scalable for organizations of all sizes and industries. Collectively, these tools improve data reliability, productivity and timely reporting and analysis. The expanded group integrates a variety of services to support these processes, including: Reporting, Planning, & Analytics Automation and Workflow Data Management & Integration Artificial Intelligence/Machine Learning Infrastructure and Cloud Compliance & Security “These are services and concepts that Schneider Downs has offered to our clients for years,” said James B. Yard, practice leader of Schneider Downs Consulting. “We’re excited about formalizing the integration of our Technology and Data services to help organizations evolve their business processes and operations through Digital Transformation.” For more information on Schneider Downs Consulting’s Digital Transformation solutions, visit /digital-transformation or contact Patrick Armknehct at parmkencht@schneiderdowns.com.About Schneider Downs ConsultingThe Schneider Downs Consulting team features experienced professionals across a diverse array of specialties, carefully selected to address the most pressing needs of businesses across all industries. Our team of consultants will guide you through solutions to the problems on your radar, and help you identify those that are not. About Schneider Downs & Co., Inc.Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm also offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Stephen Bish Discusses the sharp rise in cyber insurance premiums ### Schneider Downs Introduces New Cybersecurity Awareness Month Resources The Schneider Downs cybersecurity practice is introducing several new cybersecurity awareness resources for the 18th annual Cybersecurity Awareness Month.Cybersecurity Awareness Month takes place annually every October and is a joint effort between the National Cyber Security Alliance (NCSA) and the Cybersecurity & Infrastructure Security Agency (CISA). The initiative was introduced in 2003 to help ensure Americans have the resources to keep themselves secure online at work and home. The theme for this year is a continuation of 2020’s “Do Your Part. #BeCyberSmart” narrative. In support of the Federal initiative, the Schneider Downs cybersecurity practice is introducing several new resources over the course of October to help educate and protect clients and communities from cyber threats. “Cybersecurity Awareness Month is when the spotlight is on cybersecurity, but we know first-hand that threat actors are attacking targets of all sizes every month, week, day, hour and minute,” said Eric Wright, Shareholder. “Educating end users is a critical first step in any organization’s cybersecurity posture and we hope our resources can help everyone to some degree.”The new Cybersecurity Awareness Month open-access resources are available at /ncsam and include:Video Series: Top Cybersecurity Questions of 2021In our ten-part video series, the Schneider Downs cybersecurity team answers the most commonly asked questions they have encountered on the frontlines over the past calendar year. The first five videos cover topics including cybersecurity insurance premiums, phishing, password blacklisting, penetration testing and Purple Team assessments. The full series is accessible at https://vimeo.com/showcase/8866271 with additional videos releasing throughout the second half of the month.Webinar: The Benefits of a Purple Team Assessment | November 10, 2021 @ 10AM ET (1 Hour)This one-hour webinar hosted by members of the Schneider Downs cybersecurity team will explore several aspects of a Purple Team assessment, including what exactly a Purple Team Assessment is, how the exercise works and the tangible benefits of the process. Attendees will qualify for 1 CPE and a replay will be available to all registrants following the live event.Registration is open until 11/9. Register here. These new resources - and others - are available year-round on the Schneider Downs cybersecurity resource center. Resources include infographics, quick-reference charts, original articles, multimedia, whitepapers and webinar replays. Interested parties can also subscribe to the Schneider Downs “Focus on Cybersecurity” bi-weekly newsletter.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and robust digital forensics and incident response team. For more information, visit /cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Schneider Downs Ranked 27th in Construction Executive’s 2021 Top 50 Construction Accounting Firms Pittsburgh, PA -- Schneider Downs was ranked 27th in Construction Executive’s Top 50 Construction Accounting Firms rankings of the top accounting firms within the construction industry.For the 2021 Top 50 Construction Accounting Firms, Construction Executive reached out to U.S. accounting firms with formal construction practices to learn how they are advising their clients throughout the uncertain economic times with a focus on supply chain stability, labor shortages and cash flow management.“Schneider Downs has a long and storied history working with construction companies from throughout our region, and that work has been a tremendous part of our success for more than 65 years,” said Ted M. Pettko, audit shareholder and leader of the firm’s construction practice. “The construction sector is quite unique and has many different needs and requirements. The diversity of our specialists allows us to meet all of those needs, and I think that helps explain how our practice has continued to grow and thrive.”To qualify for the list and rankings, firms were asked to complete a survey with data including: 2020 revenues from construction practice Number of CPA's in construction practice Number of construction clients in 2020 Number of office locations with a construction accounting practice Number of employees with CCIFP certification Percentage of firm’s total revenues from construction practice Year construction accounting practice established. The ranking was determined by an algorithm that weighted these factors in descending order of importance.Learn more at www.constructionexec.com/pages/2021-top-50-construction-accounting-firms.About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C.About Schneider Downs Construction ServicesSchneider Downs understands that the relationship with your CPA firm rests on a strong foundation and we strive to build this footing with big thinking and personal focus for our construction clients.  As a top 60 CPA firm in the U.S., we have more than 350 professionals with a wide background of experience in the region, specifically in Pittsburgh and Columbus.  Schneider Downs offers several dedicated services for the construction industry including audit and assurance services, tax services and business advisory services. Learn more at /construction. ### Alexander Papson Joins the 2021 Real Men Wear Pink Campaign Pittsburgh, PA -- Alexander Papson, Manager of Fiduciary Solutions with Schneider Downs Wealth Management Advisors, LP, is representing Schneider Downs in the 2021 Real Men Wear Pink Campaign.The Real Men Wear Pink campaign raises breast cancer awareness and money to support the American Cancer Society’s mission to save more lives than ever before from breast cancer. According to Alexander, the decision to join the campaign was based on his personal experience.“Participating in the Real Men Wear Pink campaign is my way of honoring my family’s suffering, sacrifices and tenacity while also taking a cathartic jab at cancer with the research that the campaign will fund.”Funds raised help the American Cancer Society save lives from breast cancer by funding innovative breast cancer research; providing education and guidance to help people reduce their risk; and offering comprehensive patient support to those who need it most so that no one faces breast cancer alone.Schneider Downs and Mindful Brewing Company of Pittsburgh, PA will be hosting a happy hour fundraising event on Wednesday, September 29. For event details and tickets please visit the fundraising event page.For more information on the campaign or to support his mission, please visit Alexander’s Real Men Wear Pink campaign page at http://main.acsevents.org/goto/alexanderpapson.About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Downs Featured in INSIDE Public Accounting’s 2021 Best of the Best Accounting Firms List Carmel, Ind. (August 20, 2021) − Schneider Downs, one of the 60 largest public accounting firms in the United States, was one of the firms named among the “Best of the Best” in the 2021 list.Continuing a tradition that stretches back more than 25 years, INSIDE Public Accounting (IPA) has unveiled its list of the Best of the Best public accounting firms in the nation for 2021. Ranked on more than 50 metrics, these top performers within the profession produce superior results while planning for long-term sustainability and growth, offering both clients and staff alike a successful future.The 2021 IPA Best of the Best – chosen from more than 520 firms that were eligible for this prestigious accolade by participating in IPA’s 31st Annual Survey and Analysis of Firms – are scattered across the U.S. and Canada and come in all sizes, ranging from 11 employees to nearly 3,000.“Given the challenges, obstacles and uncertainties of 2020, being named an IPA Best of the Best firm is an especially notable achievement,” says Michael Platt, principal of the Platt Group and publisher of the accounting trade publication, INSIDE Public Accounting. “Combined with the overarching impacts of the COVID-19 pandemic were societal stressors (heightened racial justice awareness and a divisive presidential election), employee stressors (home schooling, remote work and burnout), business stressors (remote onboarding, productivity, engagement and firm culture) and client stressors (shutdowns, cash flow, uncertainty and existential threats for many). Firms that were able to overcome these landmines while turning in stellar performance are to be celebrated.”According to Steven D. Thompson, Co-CEO of Schneider Downs, appearing on this list represents a further validation of the firm’s continuing efforts to operate in a manner that benefits the firm, its clients and its community.“It’s always gratifying to be recognized by a highly respected third-party for doing business the right way,” Thompson explained. “The past two years have been fraught with business challenges, and the best we can do each day is make the best decisions that we can. We’re proud to be among such strong and talented firms as the others that comprise the Best of the Best list. It’s really a tribute to our entire team for their efforts to work together as one firm.”About INSIDE Public AccountingIPA is a leader in practice management resources for the public accounting profession that include: a monthly practice management newsletter, annual national practice management benchmarking reports, and training. IPA has helped firms across North America grow and thrive since 1985. For more information, to schedule an interview, or to inquire about presentations at meetings or retreats, please contact IPA at (317) 733-1920 or info@plattgroupllc.com.  About Schneider DownsSchneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C. ### Schneider Downs Certified as a Qualified Security Assessor (QSA) Pittsburgh, PA -- Schneider Downs announces its certification by the Payment Card Industry (PCI) Security Standards Council as a Qualified Security Assessor (QSA) Company, which grants authorization to provide audit services for merchants and service providers to comply with credit card security standards. The Payment Card Industry Data Security Standard (PCI DSS) was established as an information security standard for organizations that handle branded credit cards. Merchants of any size that accept cards are required to be compliant with the PCI Security Council security standards. All merchants must complete an annual Self-Assessment Questionnaire (SAQ) and Level 1 merchants, as defined by the PCI Security Standard Council, must obtain an annual Report on Compliance (RoC) from a QSA Company. As a QSA Company, Schneider Downs is now approved to complete both RoCs for merchants and service providers that require them, as well as attest to the completeness and accuracy of SAQs performed by any merchant that does not require a formal RoC. The firm has historically provided a variety of services to assist with PCI DSS compliance, ranging from scoping of the cardholder data environment to delivering penetration and segmentation testing. “We are excited to bring the firm’s extensive experience in IT audit and PCI DSS together into this new service offering. Serving as a QSA allows us to help merchants of all sizes stay on the right side of compliance requirements, which ultimately protects consumers. With a continually evolving compliance landscape (a new revision of PCI DSS is anticipated in 2022), it is crucial for companies of all sizes to find a partner that can address all of their needs,” stated Eric Wright, Shareholder. “The QSA designation better positions us to serve our clients and reduce their compliance overhead.” The PCI Security Standards Council defines a QSA Company as an independent security organization that has been qualified by the PCI Security Standards Council to validate an entity’s adherence to PCI DSS. QSA Employees are individuals who are employed by a QSA Company and have satisfied and continue to satisfy all QSA Requirements. Schneider Downs is now certified at the company level and has several designated QSA employees who can assist with your PCI audit. Schneider Downs continues to offer a variety of additional services pertaining to PCI DSS compliance, including: Cardholder data environment (CDE) scoping and reduction PCI DSS gap assessment/readiness Penetration testing Segmentation testing For more information please visit /cybersecurity/payment-card-industry-data-security-standard-compliance Schneider Downs PCI DSS Contacts Eric Wright CPA, CITP – ewright@schniederdowns.com Sean Thomas CISA, CISSP, CISM – sthomas@schneiderdowns.com Timothy Wolfgang CISA, CISSP, CCSFP – twolfgang@schneiderdowns.com About Schneider Downs & Co., Inc. Schneider Downs’ IT Risk Advisory professionals help organizations gain valuable insights into their processes and technologies. Our dedicated IT Risk Advisory professionals have experience working with a wide variety of industries and companies of all sizes. We will partner with you to provide comprehensive IT risk advisory reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies. Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C.   ### Steve Thompson Discusses Firm Growth ### Schneider Downs Supersizes Holiday Weekend ### Schneider Downs Announces Seven New Members to Ownership Group PITTSBURGH, PA-- Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce the addition of five new shareholders, as well as two new partners to its affiliate, Schneider Downs Wealth Management Advisors, LP. This matches the largest single-year addition to the leadership team in the firm’s 65-year history.“On the heels of the great challenges presented by the COVID-19 pandemic, we are very proud that Schneider Downs is in a position to significantly add to our ownership group this year. This speaks to the extremely talented roster of talent we have within our firm, as well as the great potential we see for our firm’s future,” stated Steven D. Thompson, Co-CEO of Schneider Downs. “These new leaders will play an integral part in the ongoing growth of all facets of our organization.”The new promotions reach across several areas of the firm’s service offerings, including the firm’s tax, audit and consulting practices, as well as the growing wealth management practice.Included among those promoted to Shareholder at Schneider Downs are:Adam J. Goode (Pittsburgh, PA) joined Schneider Downs in 2007, following seven years of work within the private sector. He leads the firm’s Accounting Advisory Services Group along with Nick Lombardo (see below). Adam is a graduate of Robert Morris University. He is a member of the American and Pennsylvania Institutes of Certified Public Accountants and was a recipient of the 2015 PICPA Young Leader Award.Tony P. Ielase (Columbus, OH) joined the firm in 2019 as Director of Risk Advisory Services. He holds a BSBA in Accounting from Clarion University and is a Certified Information Systems Auditor (CISA).Nicholas D. Lombardo (Columbus) joined Schneider Downs in 2004. He leads the firm’s Accounting Advisory Services Group along with Adam Goode (see above). Nick is a graduate of Capital University and a member of the American and Ohio Institutes of Certified Public Accountants.Sarah R. Piot (Pittsburgh) joined the firm in 2002 and specializes in providing tax services to tax-exempt organizations (including institutions of higher education). She is a graduate of Robert Morris University and a member of the American and Pennsylvania Institutes of Certified Public Accountants.Matthew C. Werner (Pittsburgh) joined the firm in 2019 as a tax senior manager and serves clients in the public, private and emerging-growth global organizations sectors. He is a graduate of Duquesne University and a member of the American and Pennsylvania Institutes of Certified Public Accountants.The following professionals were named Partner to Schneider Downs Wealth Management Advisors, LP (SDWMA):David C. Brinkman, CFA, CPA, CFP®, CPFA (Columbus) has been an Investment Relationship Manager with SDWMA since 2016.  David is a Chartered Financial Analyst®, a Certified Public Accountant, a Certified Financial PlannerTM Practitioner and a Certified Plan Fiduciary Advisor. David is a graduate of The Ohio State University and is a member of the CFA Society of Columbus and the American Institute of Certified Public Accountants.Jason R. Staley, CFA, CAIA® (Pittsburgh) joined SDWMA in 2016 as Director of Research and Due Diligence. Jason is a graduate of Mercyhurst University and is both a Chartered Financial Analyst® and Chartered Alternative Investment Analyst and is a member of many investment-related organizations.About Schneider Downs:Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and Washington D.C.About Schneider Downs Wealth Management Advisors, LPSchneider Downs Wealth Management, LP (“SD Wealth Management” or “SDWMA”) is an SEC Registered Investment Advisor specializing in the Investment Management and Financial Planning Services for Individual Investors; Investment Management and Investment Committee Services for Institutions and Non-Profits; and Corporate Solutions and ERISA Fiduciary Services. Registration with the SEC does not imply any level of skill or training.  ### Jack Wolford Named Pittsburgh Tech Council CIO of the Year ### Stephen Worth Joins Schneider Downs as State and Local Tax Shareholder PITTSBURGH, PA-- Schneider Downs, one of the 60 largest certified public accounting and business advisory firms in the United States, is proud to announce that Stephen Worth, CPA, JD,  has been named tax shareholder to lead the firm’s growing State and Local Tax (SALT) practice. Mr. Worth will be based in the firm’s Columbus, OH office, while leading the firm’s SALT practice across the firm’s offices in Columbus, Pittsburgh and Washington D.C. In this position, Mr. Worth will focus on client needs specific to state and local tax issues, including state corporate income/franchise tax, sales and use tax, property tax and incentives/credits. Mr. Worth brings extensive experience in all aspects of state income taxation, including compliance technical support and review, SEC financial reporting requirements for income tax disclosures and analysis of client filings for refund opportunities.  Prior to joining Schneider Downs, he led the Northeast Ohio Indirect/SALT practice for a national firm. “Stephen is an excellent addition to our shareholder team, both as an experienced technical advisor and a dynamic leader,” said Chris McElroy, Co-CEO at Schneider Downs. “In today’s constantly changing environment, our clients need and deserve sophisticated experience navigating the many challenges associated with state and local taxation issues. Stephen will fill that need and lead our SALT practice into the future.” Mr. Worth is both a certified public accountant (CPA) and a licensed attorney. He received his Bachelor of Business Administration, Accounting and Finance from the University of Cincinnati, and his Juris Doctorate from the University of Cincinnati College of Law. About Schneider Downs: Schneider Downs is a top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business consulting services to public and private companies, not-for-profit organizations and global companies.  The firm offers Risk Advisory; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services.  Schneider Downs is the 13th-largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA , Columbus, OH and Washington D.C. ### Jack Wolford Shortlisted for the Pittsburgh Tech Council CIO of the Year Award ### Schneider Downs Wealth Management Advisors, LP Named in Accounting Today’s 2021 Wealth Magnet Ratings Schneider Downs Wealth Management Advisors, LP was ranked as #27 in  Accounting Today’s 2021 “Wealth Magnet” rankings of the top 150 wealth management firms within a CPA firm.Read More (https://www.accountingtoday.com/list/the-2021-billion-dollar-wealth-magnets) Award Disclosure The 2021 Wealth Magnets Ranking of the Top 150 Firms by AUM is published by Accounting Today, an independent company unaffiliated with Schneider Downs Wealth Management Advisors, LP (“SDWMA”). The ranking is exclusively by assets under management and is based on submissions by over 150 firms. AUM reported is comprised of assets under management as well as under administration. The dates used by firms submitting data varies. Data provided by Audit Analytics, an online intelligence service that delivers audit, regulator and disclosure analysis to the accounting community. Information from these sources is deemed to be reliable, but accuracy cannot be guaranteed. SDWMA did not pay to be included in this ranking. Working with a ranked advisor should be evaluated properly and has no correlation to investment results. Working with a highly-ranked advisor does not ensure that a client or prospective client will experience a higher level of performance or results. Third-party rankings are no guarantee of future investment success or performance. This ranking is conducted by a third-party provider and not meant to serve as an endorsement for SDWMA. Rankings should not be considered an endorsement of the wealth manager by any client nor are they representative of any one client’s evaluation. Provided for informational purposes only.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.  ### David Murphy Previews Cyburgh 2021 on Tech Vibe Radio ### Troy Fine Discusses How Cybersecurity Requirements Can Provide New Opportunities for CPAs ### Steven Thompson's Thoughts on Covid-19 Mitigation Measures Lift ### Mary Richter and Dan Phillips provide insight into President Biden’s Global Tax Reforms in the International Accounting Bulletin. ### Accounting firm Schneider Downs & Co. Inc. announces consolidated services practice ### Introducing Schneider Downs Consulting New structure consolidates more than 80 existing services into an integrated practiceMarch 3, 2021 – Today, Schneider Downs announced the reorganization of more than 80 unique services into a consolidated practice, Schneider Downs Consulting. This practice will operate in conjunction with Schneider Downs’ traditional accounting and tax services, one of the 60 largest practices in the United States. The reorganization reflects the increasing impact of business consulting services to the firm’s continued growth. The services provided by Schneider Downs Consulting are not new to the firm, but rather existing and emerging services that have been reorganized into logical groupings to provide greater clarity of the firm’s broad scope of available services. “Schneider Downs has a 65-year history of adding services and capabilities to help meet the ever-emerging needs of our clients,” explained Steven D. Thompson, Co-CEO of Schneider Downs. “As these services continued to proliferate and expand, it became apparent that they should be organized in such a manner that streamlines the process for prospective clients to discover them.” Under the Schneider Downs Consulting platform, more than 80 services are organized into three categories: Risk Advisory – including services such as IT Risk Advisory, Enterprise Risk Management, SOC Compliance and Third-Party Risk Management Technology Advisory – including services such as Cybersecurity, Business Process Automation (BPA), Data Analytics and Software Solutions Financial Advisory – including services such as Accounting Advisory, Transaction Advisory, Business Consulting and Investment Banking “Many of these services are not traditional to accounting and tax firms, yet they are absolutely essential for businesses operating in today’s rapidly changing world,” explained Chris S. McElroy, Co-CEO of Schneider Downs. “We have offered these services for years, yet people are still sometimes surprised to learn what we can do.  We believe the Schneider Downs Consulting structure will make it easier to communicate the full spectrum of services that we can provide to our clients.”All services can be discovered on the Schneider Downs Consulting website.About Schneider Downs & Co., Inc.Schneider Downs is a regional accounting and business consulting firm providing tax, audit and business advisory services to public and private companies and nonprofit organizations.  With offices in Pittsburgh, Columbus and the District of Columbia, the firm serves clients with local, national and global interests.  ### Snags are surfacing in $284B PPP round Schneider Downs Michael Hart provides insight into issues with the $284B PPP funding round in the Business Times article, "Here's where snags are surfacing in $284B PPP round". ### Schneider Downs Achieves CMMC Third-Party Assessor Certification Schneider Downs & Co., Inc. has successfully completed the Certified Third-Party Assessor Organization (C3PAO) accreditation process and applied for the CMMC ML-3 assessment performed by the Defense Contract Management Agency’s (DCMA) Defense Industrial Base Cybersecurity Assessment Center (DIBCAC). Pending a successful CMMC ML-3 assessment, Schneider Downs will be authorized to provide certification assessments for the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) program.  “This represents another step in our commitment to provide comprehensive compliance assessment services to organizations dealing with the Department of Defense,” explained Eric M. Wright, shareholder at Schneider Downs. “Schneider Downs is already certified as a Registered Provider Organization to provide preliminary CMMC advisory assessments. Completing the C3PAO certification furthers our ability to assist clients as they navigate the challenges of confirming data security when working with the Department of Defense.”Schneider Downs currently provides CMMC readiness and consulting services. The team includes a Certified CMMC Provisional Assessor, and several other members currently in process of applying for CMMC Certified Assessor status who plan on completing training in Q2 of 2021.About CMMCThe CMMC is a unified standard for implementing cybersecurity across the defense industrial base (DIB), which includes hundreds of thousands of contractors across the nation. The DOD created the CMMC compliance standard to improve the security of the supply chain of the DIB. New legislation requires third-party assessments of contractors’ compliance with the standardized practices and procedures – making it essential to involve an assessor with CMMC certification.  Contractors that receive Federal Contract Information (FCI) and/or Controlled Unclassified Information (CUI) will not be able to do business with the DOD without complying with CMMC requirements.The CMMC framework adds a certification element to verify the implementation of processes and practices associated with the achievement of a cybersecurity model.  CMMC is designed to provide increased assurance to the DOD that a DIB contractor can adequately protect FIC and CUI at a level commensurate with the risk, accounting for information flow down to its subcontractors in a multi-tier supply chain.For more information on how Schneider Downs can help with CMMC, please visit /cmmc or contact us.About Schneider Downs & Co., Inc.Schneider Downs’ dedicated IT Risk Advisory practice works with organizations across the country to help them gain valuable insights into their processes and technologies. Schneider Downs partners with clients to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies.Schneider Downs is a regional accounting and business consulting firm providing tax, audit and business advisory services to public and private companies and nonprofit organizations. The firm offers more than 80 services from five business units: Assurance and Tax Advisors; Business Advisors; Technology Advisors; Wealth Management Advisors; and Corporate Finance Advisors. With offices in Pittsburgh, Columbus and the District of Columbia, the firm serves clients with local, national and global interests.  ### Schneider Downs Wins ClearlyRated’s 2021 Best of Accounting Diamond Award for Service Excellence SCHNEIDER DOWNS WINS CLEARLYRATED’S  2021 BEST OF ACCOUNTING DIAMOND AWARD FOR SERVICE EXCELLENCE Diamond Award winners have won the Best of Accounting Award for at least 5 years in a row, consistently earning industry-leading satisfaction scores from their clients.PITTSBURGH, PA –  February 2021 – Schneider Downs, a leading accounting firm announced today that they have won the Best of Accounting Diamond Award for providing superior service to their clients for at least five consecutive years. ClearlyRated's Best of Accounting® Award winners have proven to be industry leaders in service quality based entirely on ratings provided by their clients. Best of Accounting winners are twice as likely to be satisfied than those who work with non-winning firms. Just 22% of the 2021 Best of Accounting winners earned the Diamond Award distinction. Schneider Downs received satisfaction scores of 9 or 10 out of 10 from 88% of their clients, significantly higher than the industry’s average of 43% in 2020.“Schneider Downs works hard to make client service a top priority and we are proud and honored to be recognized for our efforts in this way.” Schneider Downs’ co-managing CEO, Steve Thompson said. “We’re thrilled that we have received this honor now for the fifth year in a row and look forward to continuing to provide best-in-class client service for many years to come.”“After one of the most turbulent years in modern history, winners of the 2021 Best of Accounting award have proven their commitment to go above and beyond in support of their clients," said ClearlyRated's CEO and Founder, Eric Gregg. "These service leaders have demonstrated their capacity to be agile, to be precise, and to prioritize the client experience above all else. It is my honor to celebrate and showcase the 2021 Best of Accounting winners alongside feedback from their actual clients on ClearlyRated.com!”About Schneider DownsSchneider Downs is a regional accounting and business consulting firm providing tax, audit and business advisory services to public and private companies and nonprofit organizations.  The firm offers more than 80 services from five business units: Assurance and Tax Advisors; Business Advisors; Technology Advisors; Wealth Management Advisors; and Corporate Finance Advisors. With offices in Pittsburgh, Columbus and the District of Columbia, the firm serves clients with local, national and global interests.About ClearlyRatedRooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build online reputation, and differentiate on service quality. Learn more at https://www.clearlyrated.com/solutions/.About Best of Accounting™  ClearlyRated's Best of Accounting® Award recognizes accounting firms that have demonstrated exceptional service quality based exclusively on ratings provided by their clients. The award program provides statistically valid and objective service quality benchmarks for the accounting industry, revealing which firms deliver the highest quality of service to their clients. Winners are featured on ClearlyRated.com—an online business directory that helps buyers of professional services find service leaders and vet prospective firms with the help of validated client ratings and testimonials.   ### simpLEASE Accounting Achieves SOC 1 Type 2 Examination Confirming Accounting and Financial Controls Security Lease accounting software provider, Schneider Downs, has announced the successful completion of the Service Organization Control (SOC) 1 Type 2 audit for simpLEASE Accounting.The third-party audit validates the completeness and accuracy of simpLEASE’s accounting and financial controls. Moore Colson, a third-party independent CPA based in Atlanta, GA, provided the independent service auditors’ report on Schneider Downs’s description of its lease accounting software system, simpLEASE, for processing user  entities’  transactions  throughout  the  period  October  1,  2019 to September  30,  2020  and  the  suitability of the design and operating effectiveness of the controls to achieve the related control  objectives  stated  in  the  description.Jason M. Reljac, Manager of simpLEASE Accounting Services at Schneider Downs noted, “We are confident in what we have built with simpLEASE in regards to control and accuracy around lease accounting, and having the SOC report completed further validates our efforts and our commitment to our clients.” simpLEASE was developed by Schneider Downs, one of the nation’s 60 largest public accounting firms, to help organizations adapt to the new lease accounting standards introduced by the Financial Accounting Standards Board  (ASC 842). simpLEASE uses a wizard-based system to guide the user through the process and provides easy-to-understand guidance to analyze each individual lease. By answering a series of prompts about each contract, the program informs the user how the lease should be reported, reducing the time spent on the categorization process. Long-term, simpLEASE helps manage the on-going accounting of a leased asset including the creation of all of the necessary accounting entries on a monthly basis. Whether managing one lease or a thousand, simpLEASE makes lease accounting under ASC 842 simple and painless. For more information on simpLEASE visit www.simpleaseaccounting.com.About Schneider DownsSchneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and McLean, VA.  ### SaaS startups need to prioritize SOC 2 ### Brian Matthews outlines changes to PPP with the Pittsburgh Business Times ### Schneider Downs Named PTC Tech 50 Cybersecurity Innovator of the Year Schneider Downs was named the 2020 Pittsburgh Tech Council’s Cybersecurity Innovator of the Year. The Pittsburgh Technology Council’s Tech 50 Awards honor technology innovation in the greater Pittsburgh region. “This is an enormous recognition from the Tech Council, especially given the very stiff competition from other providers in the region,” said Daniel Desko, leader of Schneider Downs' cybersecurity practice. “This is an award earned by the entire firm – and by our clients who have trusted us with the very sensitive nature of assisting with their data security and cybersecurity needs. We’re genuinely motivated by working with our clients to provide proactive and innovative solutions to help make them better…it’s gratifying to be honored for that approach.” For a full list of category finalists and winners please visit the PTC Tech 50 event recap page. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit our website or contact the team at cybersecurity@schneiderdowns.com. If you suspect your organization is experiencing a network incident, our Incident Response Team is available around–the-clock at 1-800-993-8937. ## Pages ### CMMC Compliance Services - Warren, MI CMMC Compliance Services - Warren, (MI) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Warren (MI), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Warren, MISchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Warren, MINot ready for the CMMC Certification yet? Has your Warren and Michigan business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Warren, MIWarren hosts major Army and defense R&D operations alongside a dense cluster of manufacturers and integrators. Aligning with CMMC requirements helps local companies safeguard design, testing, and logistics information critical to national defense. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. Excerpt: Are you ready for the upcoming CMMC certification requirements? As an authorized C3PAO, Schneider Downs is uniquely positioned to guide your organization through the complexities of CMMC compliance. With over 25 years of experience, our team of experts can help you prepare for your assessment, conduct gap analyses, and ensure your security frameworks align with the necessary standards. Don’t risk disqualification from vital DoD contracts—contact us today to learn how we can assist you in achieving CMMC certification and safeguarding your business in the defense industrial base. Your path to compliance starts here! ### CMMC Compliance Services - Hartford, CT CMMC Compliance Services - Hartford, (CT) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Hartford (CT) and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Hartford, CTSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Hartford, CTNot ready for the CMMC Certification yet? Has your Hartford and Connecticut business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Hartford, CTHartford anchors Connecticut’s insurance, aerospace, and advanced manufacturing sectors, making it a key hub for organizations handling sensitive federal and defense-related data. Local contractors and suppliers face increasing CMMC expectations to protect that information across complex supply chains. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Chicago, IL CMMC Compliance Services - Chicago, (IL) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Chicago (IL), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Chicago, ILSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Chicago, ILNot ready for the CMMC Certification yet? Has your Chicago and Illinois business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Chicago, ILChicago’s diverse economy includes technology, engineering, and manufacturing firms that frequently support federal and defense contracts. Strengthening CMMC compliance enables these organizations to secure sensitive data and remain viable partners across complex government projects. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. Excerpt: Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either: Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit or Prepare the organization for CMMC certification. ### CMMC Compliance Services - Detroit, MI CMMC Compliance Services - Detroit, (MI) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Detroit (MI), and nationwide. The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB). Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Detroit, MI Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either: Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit or Prepare the organization for CMMC certification. The CMMC independence requirements prevent us from serving in both capacities. Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Detroit, MI Not ready for the CMMC Certification yet? Has your Detroit and Michigan business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including: Develop and align critical documentation with one another Conduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failed Consult with management regarding an overall CMMC implementation strategy Conduct mock audits Assist management with their required annual self-assessment Assist management with the interpretation of CMMC requirements Work with management to address failed controls included within your Plan of Action & Milestones (POA&Ms) CMMC Readiness Assessment Phases Our comprehensive CMMC readiness assessment encompasses four distinct phases. Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness. Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations. Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations. Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken. About Schneider Downs As a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process. Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification Guide Download our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQs To help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide. What are the latest updates on CMMC 2.0?As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC?Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences?For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract?Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171?The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant?Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. CMMC Compliance Services in Detroit, MI Detroit remains a cornerstone of U.S. automotive and defense manufacturing, with many firms contributing to tactical vehicle and mobility programs. CMMC compliance allows these organizations to protect sensitive technical data and remain trusted partners to the DoD. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met.   ### CMMC Compliance Services - Harrisburg, PA CMMC Compliance Services - Harrisburg (PA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Harrisburg (PA), and nationwide. The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB). Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Harrisburg, PA Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either: Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit or Prepare the organization for CMMC certification. The CMMC independence requirements prevent us from serving in both capacities. Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Harrisburg, PA Not ready for the CMMC Certification yet? Has your Harrisburg and Pennsylvania business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including: Develop and align critical documentation with one another Conduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failed Consult with management regarding an overall CMMC implementation strategy Conduct mock audits Assist management with their required annual self-assessment Assist management with the interpretation of CMMC requirements Work with management to address failed controls included within your Plan of Action & Milestones (POA&Ms) CMMC Readiness Assessment Phases Our comprehensive CMMC readiness assessment encompasses four distinct phases. Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness. Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations. Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations. Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken. About Schneider Downs As a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process. Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification Guide Download our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQs To help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide. What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. CMMC Compliance Services in Harrisburg, PA Harrisburg’s mix of state government, logistics, and industrial companies creates a strong ecosystem for organizations working with federal and defense partners. Meeting CMMC standards allows these entities to better secure critical data and maintain contract eligibility. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met.   ### CMMC Compliance Services - Philadelphia (PA) CMMC Compliance Services - Philadelphia (PA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Philadelphia (PA), and nationwide. The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB). Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Philadelphia, PA Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either: Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit or Prepare the organization for CMMC certification. The CMMC independence requirements prevent us from serving in both capacities. Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Philadelphia, PA Not ready for the CMMC Certification yet? Has your Philadelphia and Pennsylvania business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including: Develop and align critical documentation with one another Conduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failed Consult with management regarding an overall CMMC implementation strategy Conduct mock audits Assist management with their required annual self-assessment Assist management with the interpretation of CMMC requirements Work with management to address failed controls included within your Plan of Action & Milestones (POA&Ms) CMMC Readiness Assessment Phases Our comprehensive CMMC readiness assessment encompasses four distinct phases. Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness. Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations. Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations. Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken. About Schneider Downs As a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process. Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification Guide Download our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQs To help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide. What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. CMMC Compliance Services in Philadelphia, PA Philadelphia is a major hub for engineering, technology, and professional services firms that frequently collaborate with federal agencies and defense contractors. CMMC compliance helps these organizations protect controlled unclassified information and qualify for high-value opportunities. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met.   ### CMMC Compliance Services - Pittsburgh (PA) CMMC Compliance Services - Pittsburgh (PA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Pittsburgh (PA), and nationwide. The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB). Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Pittsburgh, PA Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either: Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit or Prepare the organization for CMMC certification. The CMMC independence requirements prevent us from serving in both capacities. Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Pittsburgh, PA Not ready for the CMMC Certification yet? Has your Pittsburgh and Pennsylvania business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including: Develop and align critical documentation with one another Conduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failed Consult with management regarding an overall CMMC implementation strategy Conduct mock audits Assist management with their required annual self-assessment Assist management with the interpretation of CMMC requirements Work with management to address failed controls included within your Plan of Action & Milestones (POA&Ms) CMMC Readiness Assessment Phases Our comprehensive CMMC readiness assessment encompasses four distinct phases. Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness. Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations. Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations. Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken. About Schneider Downs As a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process. Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification Guide Download our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQs To help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide. What are the latest updates on CMMC 2.0?As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC?Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences?For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract?Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171?The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant?Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes: Internal IT networks that handle CUI. Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud). End-user devices (laptops, desktops, mobile devices) that access CUI. Email and collaboration tools (if used for CUI communication). Subcontractors handling CUI must also meet the appropriate CMMC level. Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as: DFARS 252.204-7012 (Cybersecurity Requirements) DFARS 252.204-7019 (SPR System Submission) DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk) DFARS 252.204-7021 (CMMC Certification Requirements) If DFARS 252.204-7021 is included, the contract will specify the required CMMC level. There is also the way to determine by the type of information that you will be handling with this contract: If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required. If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required. If your company works with high-value CUI for critical national security → CMMC Level 3 is required. The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. CMMC Compliance Services in Pittsburgh, PA Pittsburgh’s advanced manufacturing, cyber, and research communities are tightly integrated with defense and federal innovation initiatives. A strong CMMC program helps local organizations secure sensitive information while unlocking new DoD and government opportunities. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met.   ### Everything You Need to Know About HITRUST The Complete Guide to HITRUST: Framework, Certification, and Compliance HITRUST unifies regulatory and industry requirements for managing information risk and protecting sensitive data.What is HITRUST? HITRUST ensures your organization meets the highest standards for protecting sensitive information. The CSF now harmonizes and maps over 50 authoritative sources, including HIPAA, ISO 27001, PCI DSS, NIST 800 series, GDPR, etc. Based on 3 core principles, HITRUST was created to ensure the following: Improve Data Security Reduce Liability Enhance Customer Trust  Page Index HITRUST is More Than a Compliance CheckboxHITRUST is a risk management framework, but it’s also an organization. The HITRUST Alliance is a private entity that created the Common Security Framework (CSF), a certifiable framework that integrates and harmonizes various standards and regulations. The Alliance also developed supporting certifications (e1, i1, r2, etc.) and the MyCSF® assessment platform, a tool designed to streamline evaluations and reporting. At its core, HITRUST is an information protection standards organization and certifying body. Their mission is to champion programs that safeguard sensitive information and manage information risk for organizations across all industries throughout the third-party supply chain. While the HITRUST CSF is industry-agnostic, it has become the gold standard for healthcare organizations seeking to demonstrate a serious commitment to security, privacy, and compliance.  What Is HITRUST Certification?HITRUST certification serves both as a recognized outcome and a powerful tool for demonstrating trust in an organization’s security and privacy practices. It provides third-party assurance to customers and stakeholders that appropriate safeguards are in place. To achieve this certification, HITRUST offers three core types of assessments, each tailored to an organization’s size, risk profile, and assurance needs. All three assessment types are built on the HITRUST CSF, which integrates and harmonizes requirements from over 100 authoritative sources. These include HIPAA, NIST, COBIT, ISO 27001, SOC 2, and GDPR, combined into a single, scalable control framework. This allows organizations to address multiple compliance obligations through one comprehensive assessment.  e1 Assessment (Essential 1-Year) and Certification for Foundational CybersecurityProvides entry-level assurance focused on the most critical cybersecurity controls and demonstrates that essential cybersecurity hygiene is in place 44 controls testing “implementation” scoring only i1 Assessment (Implemented 1-Year) and Certification for Leading Security Practices (2 Years With Rapid Recertification in Year 2)Provides a moderate level of assurance that addresses cybersecurity leading practices and a broader range of active cyber threats than the e1 assessment 182 controls testing “implementation” scoring only r2 Assessment (Risk-Based 2-Year) and Certification for Expanded Practices (With an Interim Assessment in Year 2) Provides a high level of assurance that focuses on a comprehensive risk-based specification of controls with an expanded approach to risk management and compliance evaluation ~375 controls, on average, testing “policy, procedure, and implementation” scoring There are also new AI Security and Risk Management assessments and certifications, as well as the ability to add-on frameworks to the r2 certification and tailor it to your organization’s needs.  Understanding and Evaluating HITRUST Certification Types e1 Assessment (Essential 1-Year) The e1 assessment is the simplest of the three assessments. With 44 control requirements, the e1 assessment lets organizations quickly and efficiently receive a HITRUST certification. The e1 assessment confirms whether the control requirement statements have been implemented. The control requirements for the e1 demonstrate that your organization has reasonably achieved essential cybersecurity hygiene. For the e1 assessment, both readiness and validated assessment options are possible. Many organizations think of the readiness assessment as a stepping-stone for the validated assessment. While there is no certification granted for the readiness assessment, we still generate a report that helps organizations identify and remediate gaps before performing a validated assessment. Upon completion of a validated assessment, a HITRUST certification is received. Given the smaller scope of the e1 assessment, there is limited flexibility for the assessed entity. This is most evident when considering the fact that the certification only lasts 1 year. The assessed entity must also select the most current version of the e1 assessment that is available. Further, the assessed entity does not have the option to tailor the control requirements to cover privacy, information protection regulations (e.g., Health Insurance Portability and Accountability Act (HIPAA), General Data Protection Regulation (GDPR), Payment Card Industry Data Security Standard (PCI DSS), or the National Institute of Standards and Technology (NIST) Cybersecurity Framework). The e1 assessment lets your organization carve out service providers from testing. Pros of the HITRUST e1 Assessment SummaryOnly 44 control requirements, allowing for a quick and efficient certification process Readiness and validated assessment options possible HITRUST certification granted through the validated assessment Third party service providers can be carved out Cons of the HITRUST e1 Assessment SummaryCertification lasts for 1 year Limited flexibility in tailoring control requirements Shows only essential cybersecurity practices are in place The maturity level tested only shows whether the control requirements have been implemented i1 Assessment (Implemented 1-Year) The i1 assessment is an expansion of the e1 assessment. Covering 182 requirements, the i1 assessment includes the same 44 e1 control requirements, plus another 138. The i1 assessment provides a moderate level of assurance that your organization has implemented leading cybersecurity practices against a broader range of cyber threats when compared to the e1 assessment. Again, both readiness and validated assessment options are possible for the i1 assessment. The i1 assessment offers some further flexibility than the e1 but share many of the same limitations. Like the e1, service providers can be carved out, and control requirements cannot be tailored to cover privacy, information protection regulations, or the NIST Cybersecurity Framework. Further, the certification for the validated assessment only lasts for 1 year. Where the i1 offers greater flexibility is in the rapid recertification process. After your organization obtains the i1 certification, for the following year, you can be evaluated based on a selection of i1 requirement statements instead of being tested against all requirement statements again. This reduces the amount of testing required to complete the assessment. The rapid recertification results in the same i1 assessment reports and i1 certification that is valid for one year. To use the rapid recertification process, there must not have been any significant changes to your organization’s control environment since the last i1 assessment. HITRUST defines a significant change as any of the following: Acquisitions, divestures, mergers, or other changes in control of an Assessed Entity where controls over in-scope systems are no longer being operated by the Assessed Entity who originally obtained the certified reportChanges in a “Factor” question response within the validated assessmentChanges in responsibility for performance or oversight of the in-scope control activities (outsourcing, insourcing, or change in service providers)Changing an in-scope system to use a different back-end systemDecommissioning a data center and moving all assets to a different data centerMoving an in-scope facility to a different physical locationMoving an on-premises data center to a public cloud environmentMoving away from an outsourced IT model by standing up an internal IT functionNew functionality in an in-scope platform enabling it to be accessed from a public locationReplacing any of the in-scope platforms that were included in the previous i1 reportPros of the HITRUST i1 Assessment Summary More expansive than the e1 assessment Readiness and validated assessment options possible HITRUST certification granted through the validated assessment Third party service providers can be carved out Rapid Certification process is available after your organization obtains the i1 certification Cons of the HITRUST i1 Assessment Summary More extensive than the e1 assessment Certification lasts for 1 year Limited flexibility in tailoring control requirements Must use the most current version of the assessment at the time of creation The maturity level tested only shows whether the control requirements have been implemented r2 Assessment (Risk-Based 2-Year) The r2 assessment is the most comprehensive of the three assessment types and offers the most flexibility. The r2 assessment encompasses the same control requirements as the e1 and i1 assessments, while also incorporating additional controls based on data volumes handled by your organization, applicable regulatory compliance, and other risk factors relevant to your organization. Further, not only does the r2 assessment test the control requirement implementation status, but it also tests whether a policy or standard is in place for the control and whether the process supports the policy. There are 2 additional maturity levels that can be added as part of a r2 Assessment. The first is “measured,” which looks at whether the control requirement is being tracked and tested by management to ensure the control is operating. The second is “managed,” which looks to see whether necessary corrective actions are being performed on the measured results. The r2 assessment provides a high level of assurance on the design and implementation of the leading cybersecurity practices and additional risk-based controls. As a part of the further flexibility offered by the r2 assessment, the control requirements for the assessment can be tailored to cover privacy and information protection regulations. Upon receiving the r2 certification of a validated assessment, HITRUST will also issue your organization a certification over the NIST Cybersecurity Framework. Where flexibility is limited for an r2 assessment is that third party service providers cannot be carved out of testing. Like the e1 and i1 assessments, the r2 offers both a readiness and validated assessment option type. It is not required for your organization to select the most current version of the r2 assessment at the time of assessment creation. Due to the r2 being the most extensive assessment, the certification for the validated assessment lasts for 2 years, but an interim assessment is required after 1 year. The interim assessment takes 1 randomly selected requirement statement from each domain to be fully retested and rescored to ensure that certification requirements are maintained. The interim assessment also reviews any corrective action plans that were identified during the initial testing to ensure that issues were either remediated or that satisfactory progress has occurred. Pros of the HITRUST r2 Assessment Summary Provides the highest level of assurance when compared to the other assessment types Certification lasts for 2 years Interim testing reduces the amount of testing needed for year 2 HITRUST issued certification is provided over the NIST Cyber Security Framework Readiness and validated assessment options possible HITRUST certification granted through the validated assessment The r2 assessment offers 5 levels of maturity to test in policy, process, implementation, measured, and managed (measured and managed are optional) Assessment can be tailored to include privacy and information protection regulations Cons of the HITRUST r2 Assessment Summary Most extensive testing Third party service providers cannot be carved out  HITRUST Assessment Types Pros and Cons Summary Is a HITRUST Certification Economically Worth It?The HITRUST Alliance’s Enterprise Strategy Group conducted a comprehensive analysis to calculate ROI, leveraging proprietary financial models, industry-standard methodologies, and customer-reported data. The analysis applied conservative assumptions to assess the total cost of achieving HITRUST certification, including direct certification expenses and avoided costs. It also quantified a range of potential benefits, such as improved operational efficiency, reduced risk from fewer security breaches, enhanced regulatory compliance, minimized downtime, and incremental revenue opportunities driven by HITRUST certification. By capturing both cost savings and strategic value, the model attempts to provide a holistic view of HITRUST’s overall economic impact. Based on this approach, the Enterprise Strategy Group estimated a staggering 464% ROI for organizations that adopt the HITRUST certification framework. Does HITRUST Certification Reduce Cyber Insurance Costs?Claim:  HITRUST certification allows for avoided costs tied to discounted cyber insurance premiums, including not only lower annual insurance costs but also improved coverage quality and administrative efficiency. Conclusion: Partially True. While exact savings may vary, a growing number of insurance providers, including direct partners of the HITRUST Alliance, are offering reduced premiums for organizations reaching certification in HITRUST r2 validated assessments. However, these discounts are not universally applied, and organizations should not assume automatic reductions. Actual savings will depend on the insurer, broker, industry risk posture, and scope of coverage. Can HITRUST Deliver Operational Efficiency Savings?Claim:  Organizations with HITRUST certifications reported that HITRUST’s structured and comprehensive approach enabled them to reuse documentation across frameworks, minimizing duplication and reducing the effort required for additional assessments. Conclusion: Partially True. The unique combination and consideration of multiple frameworks does make documentation associated with HITRUST certification easier to leverage efforts across other frameworks. This rings especially true for organizations utilizing GRC automation tools such as Vanta or Drata. However, while HITRUST’s framework alignment can streamline evidence reuse, many customers and regulators still require organizations to maintain additional attestations or certifications such as SOC 2, PCI DSS, or ISO 27001. As a result, HITRUST certification alone does not necessarily eliminate the need for parallel compliance efforts, meaning efficiency gains are often incremental rather than absolute. Can HITRUST Certification Reduce the Likelihood of Cyber Incidents?Claim:  Customers with HITRUST certifications reported reduced breach-related costs, minimized regulatory penalties, and avoided downtime. Conclusion: True.* These claims are true for any organization with an elevated security posture, not just those with a HITRUST certification. Previous HITRUST reports have indicated that less than 1% of HITRUST-certified organizations have fallen victim to a cyber event. However, the degree of risk reduction depends heavily on the level of certification pursued, ranging from the baseline e1 (44 requirements), to the more moderate i1 (182 requirements), up to the rigorous r2 assessment (average of ~289 requirements). Each tier reflects a different depth of control maturity and assurance, and while higher-level certifications can provide stronger evidence of security and compliance, they also demand greater investment in time, cost, and operational discipline. Organizations should therefore view HITRUST as one component of a broader risk management strategy rather than a blanket guarantee of protection. Can HITRUST Certification Lead to Incremental Revenue Gains?Claim:  HITRUST certification led to indirect revenue gains, including faster sales cycles due to pre-validated security posture, competitive differentiation in regulated industries, and the ability to command premium pricing in certain contracts. Conclusion: Plausible. This claim is the hardest to quantify; however, the logic is sound. HITRUST certification is an indication of a mature environment and that security is baked into the ethos of the organization. This will often lead to services or products being more marketable and will in-turn increase revenue. It’s kind of like a professional sports team upgrading its training facility. The facility doesn’t win games, but it shows commitment to excellence and attracts top recruits, which ultimately improves performance on the field. Overall Conclusion on Economic Value of Trust: True (Results May Vary)Overall, the benefits outlined within the report are true for all organizations with an elevated security posture. In turn, achieving HITRUST certification does indicate a mature environment and that the organization is security minded. Even if ROI isn’t 464% as the report indicates, it would be hard to deny some of the value provided by the certification as outlined within the report. Preparing for HITRUST and Picking the Right Certification TypeEmbarking on the journey toward HITRUST certification is a crucial step for any organization handling sensitive data, particularly within the healthcare sector. Achieving this benchmark demonstrates a commitment to robust information security and compliance. Build a HITRUST-Ready Program Without the BurnoutTip 1: Use What you Already Have in Place A control overhaul might seem par for the course with each new control framework. With HITRUST, no need to reinvent the wheel, leverage the work your team already does. You likely already have controls in place, just not in HITRUST language. SOC 2? ISO 27001? PCI DSS? Start by leveraging HITRUST’s authoritative source mappings and validate them to your exact controls.Focus on policy maturity, control execution, and audit-ready documentation. Go directly to the source of the certification – the requirement statement’s evaluative elements and their illustrative procedures. These are the answers to the test that you’ll ultimately take as part of the validated assessment (certification). Tip 2: Utilize Automation Automation and repeatability are your best playing mates. Let them help you. Use Governance, Risk, and Compliance (GRC) platforms, ticketing systems, and cloud-native tools to reduce manual effort. Automate alerts, evidence collection, and log reviews where possible. Ensure your external assessor firm is involved in this approach, too. A good firm will be able to relay the discounts that you realize through the efficiencies that you implement. I.e., good automation can lead to reduced assessor fees. Build a documentation repository early. It saves hours if not days later on. Tip 3: Assign Leaders for Each Step Well defined and clearly communicated responsibilities help spread the load and prevent any scrambles to gather evidence or meet deadlines. Designate a project manager or compliance lead. Align specific controls to domain experts (IT, HR, Legal, DevOps).Avoid the burnout that comes from one person trying to “own” it all.Tip 4: Build Your Program One Step at a Time New frameworks can seem daunting – it’s important to remember that every course can be tackled with the right approach. Don’t boil the ocean. Start with foundational domains (Access Control, Change Management, Risk Management, etc.).Use a phased roadmap (90-day increments) with clear progress tracking.Communicate wins early and often to keep stakeholders engaged.Tip 5: Bring in a Pro for the Tough Parts Everyone’s program is different. Know when to consult your third-party or even have a expert build certain steps and processes for you. Internal teams often don’t have bandwidth or HITRUST expertise, and that’s OK! Co-sourcing with a trusted advisor allows your team to stay focused on operations.Advisors bring structure, tools, templates, and proven experience.Play the Long Game Think of HITRUST as your goal; it takes stamina, coordination, and strategy. But with the right processes, your team can navigate it confidently without letting morale or leadership’s patience burn out.  Budgeting for HITRUST: What It Really Costs and How to Optimize What Are Standard HITRUST Contractor Fees?Engaging a HITRUST-certified external assessor firm is an essential component of the certification process. In fact, it’s ultimately required to obtain a certification and validated assessment report. In our professional opinion, it should be the first course of action for an organization considering HITRUST.Your external assessor should be your partner throughout your HITRUST journey, guiding you through the building remodel and beyond. They have the answers to the test that you ultimately have to take and will give you the answers to prepare for that test!External Assessors are a professional service/consulting arrangement, so fees are based on the time and effort they expend. Fees can vary based on the assessment type, organizational size, and complexity of the systems in review.e1 (Entry-level): Readiness Assessment ($15,000–$25,000), Certification and Validated Assessment ($25,000–$45,000)i1 (Intermediate): Readiness Assessment ($20,000–$30,000), Certification and Validated Assessment ($40,000–$80,000)r2 (Comprehensive): Readiness Assessment ($25,000–$45,000+), Certification and Validated Assessment ($60,000–$150,000+)These figures are starting points; actual costs may be higher depending on complexity and scope.Pro Tip: Firms that are transparent about their fees should be able to help you realize discounts as you integrate automation into your control environment and mature your evidence collection and testing processes.Zoning FeesAccess to the MyCSF platform is required for managing the certification process and submitting the validated assessment to HITRUST for QA validation and reporting. You will ultimately need to purchase both a professional subscription (annual) as well as a validated report agreement credit to access the platform.Professional Subscription: $15,000–$30,000+, depending on the number of licenses and any add-on features you includeValidated Assessment Credit: $4,000–$8,000+ (per submission)The subscription level should align with your organization's needs and the assessment type pursued.Please note: Pricing estimates are for illustrative purposes only and subject to change. Official fees must be obtained directly from HITRUST.Internal Resource AllocationInternal costs include staff time for preparation, remediation, and coordination:Readiness Assessment and Remediation Efforts: Variable, based on identified gapsOngoing Maintenance: Continuous investment to uphold standardsUsing a 100-person healthcare technology organization as an example, the internal effort required is a critical factor in achieving a successful certification outcome. On average, first-time certifications demand approximately the following internal FTE or contracted vendor hours:e1: 150–300 hoursi1: 250–500 hoursr2: 300–600+ hoursAssuming the certification scope remains consistent, the internal effort typically decreases in year two and beyond as efficiencies are realized.Key Strategies to Optimize HITRUST Certification CostsWith the help of an experienced contractor, savings can be found and, as always, planning is key!1. Phased Readiness ApproachImplementing a phased approach allows organizations to tackle the certification process in manageable segments:Phase 1: Conduct a readiness assessment to identify gapsPhase 2: Address remediation efforts systematicallyPhase 3: Undergo the validated assessmentThis structured method can lead to more efficient resource utilization and cost savings.2. Leverage Automation ToolsWork with your contractor to reduce manual control testing and develop custom automated control techniques. Additionally, consider utilizing compliance automation platforms, which can streamline evidence collection, control mapping, and reducing manual efforts and associated costs.3. Align Scope with Business NeedsClearly defining the scope of the assessment to include only necessary systems and processes can prevent unnecessary expenditures and focus efforts where they are most impactful.Securing Leadership and Financial Buy-InProject costs add up fast, and it’s important to prepare stakeholders upfront.1. Present a Clear Business CaseArticulate the value of HITRUST certification in terms of risk mitigation, market competitiveness, and regulatory compliance to garner executive support.2. Develop a Detailed Budget and TimelineProviding a comprehensive plan with projected costs and timelines can build confidence among stakeholders and facilitate resource allocation.3. Highlight Long-Term BenefitsEmphasize how certification can lead to long-term savings by reducing the likelihood of data breaches and associated penalties.Building Better with PartnershipProjects can be unpredictable, costly, and time-intensive. When working on new projects, that is even more so the case and, for that reason, it’s important to have a partner who has been there before. A partner that is open, honest, and upfront with everything will best prepare your project to proceed.7 Key Steps to Building a Successful HITRUST ProgramCertification requires a rigorous, evidence-based process that requires planning, cross-functional coordination, and genuine readiness. Certification isn’t simply given. It’s earned. The journey through HITRUST certification is demanding, sometimes exhausting, often consuming, but it is also clarifying. It forces organizations to surface what was once hidden, to harden what was once fragile, to coordinate what was once fragmented. And when the final report is issued, those who have endured know they’ve done more than check the box, they’ve survived a campaign and earned a seal that speaks of both credibility and grit. Step 1: Procure an Experienced TranslatorHITRUST has its own language and if you don’t speak it, you’re traveling abroad without a reliable translator. You wouldn’t want to be stuck in a foreign country without a card showing your hotel address in different languages, and you wouldn’t want to get caught roaming the vast lands of the HITRUST CSF without a HITRUST Authorized External Assessor. After all, they’re the one who ultimately submits validated assessments to HITRUST for quality review. That means they know the answers to the test that you will have to pass to obtain certification. Engaging an external assessor firm early on in your journey will save you and your team days of wandering unfamiliar areas for a semblance of familiarity. Step 2: Define Scope and ObjectivesWhat systems, data, and services are in scope? While this is a seemingly simple first question, it is everything. In fact, for experienced external assessors, it’s only the first instance in which this question will be asked. It continues to be revisited time and time again throughout your HITRUST journey to ensure you’re doing the right amount of assurance – not too little nor too much. Is certification motivation driven by prospective or current customer demands, market positioning and enablement, or internal maturity factors? What level of assurance do you need? Minimal, moderate, or high? Choose your assessment type (e1, i1, r2, etc.) – check out our more detailed breakdown of the assessment types here. Know that many organizations treat the e1, i1, r2 certifications like a maturity ladder. It benefits your organization to do so, as with each step in the ladder you will experience more. More controls, more attributes, more associated fees – with the same rigor. So, start small if you can and get good at the basics like anything else. If you end up choosing the r2 path, you will be subject to a more elaborate  scoping process where a handful of additional scoping factors (Organizational, Technical, Regulatory, etc.) are necessary to tailor your assessment. Phase Time Length: This phase is generally completed in a matter of weeks but does require some technical validation of your infrastructure and systems. Step 3: Readiness AssessmentBefore a validated assessment (certification), most organizations complete a readiness phase to: Perform a gap analysis against HITRUST CSF controls and identify missing policies, procedures, and technical proof. This is where you’ll work through the questions on the test to explain how you’ll answer it come validated assessment time. It’s a full walkthrough of your game plan, packed with a playbook on how to handle inevitable audibles in the thick of auditor testing. Prioritize remediation tasks by effort and risk. Controls are required to be “implemented” for 60-90 days, depending on the type of control, prior to initiating a validated assessment period. That is what HITRUST refers to as the “Incubation Period.” Therefore, it’s important to prioritize gap remediation to ensure your roadmap can be accomplished as efficiently as possible. Assessors should also be able to identify required gaps vs optional enhancements. The enhancement are things that are nice to have in the future, but not necessary to achieve compliance and certification now. Phase Time Length: This phase generally takes anywhere from 1 to 3 months, depending on the complexities of your infrastructure and systems. Remediate and AlignThis is where the heavy lifting happens. You’re now armed with the honey-do list of gaps to close, along with a prioritized roadmap. This phase is about executing the plan and checking back with your audit partner to ensure you did it the right way. In this phase, you will: Update or develop formal documentation – policies, procedures, standards, etc. Templates go a long way and good audit partner firms will have a library to get you started. Implement technical safeguards (MFA, logging & monitoring, encryption, etc.). This is a wide-ranging task, based on the number and type(s) of gaps previously identified. It could be as simple as enabling a dormant configuration to be as extensive as implementing a new SDLC process and supporting systems. Assign control owners, prepare evidence for each control, and align with your external assessor firm on its completeness and accuracy. Consider this an extension of the gap assessment that was previously completed to further validate that your newly remediated gaps are indeed remediated in the manner they’ll be tested. Develop testing efficiencies to allow for automated evidence collection and evaluation. Consider how you can integrate compliance and security operations in a continuous, systematic way, moving beyond point-in-time assessments to a model of continuous monitoring and risk mitigation. Good external assessor firms will be able to realize these efficiencies and relay discounts based on their own reduced audit efforts. Step 4: 90-Day Incubation PeriodOnce all of your readiness gaps have been closed and “implemented” (Congrats!) you get a free 90-day vacation. Well, sort of… HITRUST requires a 90-day “incubation period” for controls to be implemented (or 60 days for policies/procedures), before you can officially start your 90-examination period. In practice, you can begin that 90-day incubation clock as soon as the last gap is closed. During this period of peace, it’s the perfect opportunity to book that HITRUST QA reservation. Once your assessment is scoped and loaded into MyCSF, you’ll be able to reserve a date on the HITRUST QA Team’s calendar, much like that of an online dinner reservation (the kind of one that takes your credit card preauthorization). This is a key step to ensure you meet your timeline as the HITRUST QA Team’s availability fluctuates based on demand. You don’t want to overpromise your delivery date if the QA team can’t meet your needs. Additionally, the assessed entity can begin to work with the external assessor to preload MyCSF. While most of the controls will require time-stamped evidence from within your 90-day examination period, there’s still plenty your teams can do ahead of time to make the examination period run more smoothly.  This includes tasks like: Answering all pre-assessment questions, organization information, assessment options, assessment scope, scoping factorDrafting all requirement statements and completing the validated report agreement Validating your internal documentation paths to ensure smooth and possibly automated evidence collection Step 5: The Validated Assessment – The Battle of the CSFThe fog thickens, and the march turns into an open battle. This is the validated assessment, the clash of intent versus reality. Here, the External Assessor performs fieldwork and tests whether your claims survive contact with scrutiny. Performing Validation: The assessor validates pre-assessment scores, links required documents, executes the test plan, and completes the QA checklist. Time sheets, audit trails, and the representation letter become weapons and shields. This is where most of the hours are spent. Performing validation is the most grueling part of the campaign: assessors spend days and weeks combing through evidence, re-scoring pre-assessment judgments, and linking every screenshot, configuration, and attestation to the framework. The test plan drives hundreds of small exchanges, including requests for logs, clarification emails, system demos, and each one consumes time from both the assessment team and internal staff. Assessment Results Review: Once the bulk of validation is complete, the work shifts to the assessment results review. The entity and assessor sit shoulder-to-shoulder to acknowledge findings, accepting victories and recording wounds. Inputting Corrective Action Plans (CAPS) & Signing Rep Letter: CAPS are carved into the record, a pledge that gaps will not be left unguarded. The management representation letter is signed like a commander’s oath. Reviewing CAPs: The assessor validates these commitments, ensuring every promise is backed by real action. This is no longer theory on paper. It is proof standing under fire. The validated assessment reveals not just the state of your controls, but the strength of your coordination under pressure. Step 6: HITRUST Quality Assurance Review – Trial by FireWith the assessment complete, the campaign now passes to final judgment. Your file advances to HITRUST, where a tribunal dissects *a sample of* every word, every score, every justification. This is the trial by fire, a distant but unyielding review where survival depends on precision. Performing Check-In: HITRUST performs automated quality assurance (QA) checks, scanning for inconsistencies in documents and evidence. Addressing Check-In Tasks: If issues arise, new tasks are hurled back like flaming arrows, the entity and assessor must respond timely. Reviewing Pending Check-In Tasks: HITRUST evaluates the fixes. If gaps remain, the engagement loops again until resolution. Only when the defenses hold does the assessment move forward: Pending QA: The assessment sits in waiting, queued for its reserved QA block. Performing QA: The QA Analyst begins the full, impartial review of ratings, citations, and evidence under the microscope. This includes a review of a sample of control requirements in a live screen-sharing session with the External Assessor team. In this live session, the control references are randomly selected immediately before the call and the External Assessor team shares their screen and walks the HITRUST QA Analyst through each evaluative element and the associated evidence for each sampled control requirement. Escalated QA: If numerous and/or severe concerns are identified during QA, the Escalated QA phase will be triggered. This warrants an additional, internal review conducted by the HITRUST quality team and is more intensive than the standard QA process. Common reasons for Escalated QA include significant scoring inaccuracies, insufficient evidence to prove implementation, lack of rigor or testing inaccuracies, or extensive gaps. Addressing QA Tasks: More tasks may follow; remediation and clarification continue under fire. Only when every task is closed does the review advance. But the gauntlet is not finished. Reports must be drafted, revised, and approved: HITRUST prepares and executives review the draft deliverables; the entity approves or requests revisions. Additional drafts, revisions, and reporting tasks cycle through until every open question is resolved. This trial by fire is slow, relentless, and impartial. It demands not just accuracy, but endurance. The patience to close loop after loop until applicable weaknesses are fully understood. Step 7: Certification and Beyond – the Standard of TrustFinally, the verdict: certification is granted… or… not. Regardless, a validated assessment report is published, with it’s certifying decision one way or the other. On the one hand, The Standard of Trust earned. On the other, Trust may cease to exist for now. But the journey does not end here, it changes form. Certification is not a trophy to display; it is a banner raised over your organization, a signal to the market that you have endured and can be trusted. Validity: 1 year for e1 and i1 and two for the r2. Interim reviews and recertifications loom on the horizon. Continuous Vigilance: New controls, new threats, new regulations will arise. Certification is not the end of war but the beginning of stewardship. Sustained Discipline: Prepare for each cycle as if it were your first; remediate continuously; embed resilience into the daily rhythm of operations. Those who treat certification as a finish line often falter; those who treat it as a campaign standard to uphold lead their industries forward with credibility and strength. Certification is a call to remain vigilant, to adapt as threats evolve, and to prove, again and again, that trust is not a point in time, but a posture of resilience. 3 Common Myths About HITRUSTHITRUST Is Just HIPAA With Extra StepsThat’s like saying private health insurance is just Medicare with extra steps. HIPAA is a law. HITRUST is both an organization and a certifiable framework that maps to HIPAA but goes far beyond it. The HITRUST CSF integrates requirements from numerous standards and regulations, offering a comprehensive approach to risk management. Only Large Enterprise Companies Need HITRUSTNews flash: large enterprises do not assess third-party risk based solely on your revenue or employee count. If you process electronic protected health information (ePHI) on their behalf, they care about your security posture regardless of your size. Fortunately, HITRUST offers assessment types like e1 and i1 that are designed specifically for small and mid-sized businesses. HITRUST Is Just a Compliance CheckboxThis phrase alone will be sure to set off some Governance, Risk management, and Compliance (GRC) professionals. Organizations that treat compliance as a box to check often struggle or fall short. HITRUST is about maturity, not minimalism. It focuses on building a resilient security and privacy program that can evolve with threats and regulations. Why You Might Wait for HITRUSTLet’s be honest. HITRUST is not a one-size-fits-all solution. But if you operate in healthcare or a related field, especially if you handle (e)PHI, it might be exactly the trust signal your organization needs. You should consider HITRUST if: Your clients or prospects are asking for it.Many large healthcare organizations and insurers require or strongly prefer HITRUST certification. You are juggling multiple audits.HITRUST can streamline compliance by aligning with frameworks such as HIPAA, SOC 2, PCI, NIST, and ISO. You are scaling your business.Expanding into new markets or launching new services? HITRUST shows that you take security and privacy seriously. You want to stand out.In a crowded and regulated market, HITRUST can serve as a strong differentiator. You Might Wait for HITRUST IfYou are a small operation without immediate compliance needs. Your clients are not requesting HITRUST, and your current framework is sufficient. If you are considering HITRUST, start by evaluating your organization’s needs and the expectations of your clients. Engage stakeholders across departments to understand the scope and impact. HITRUST certification is a long-term investment. It requires coordination, a clear understanding of your risk environment, and ongoing commitment across internal and external teams. Approach it as a journey and trust the process. How Can Schneider Downs Help?  As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at contactsd@schneiderdowns.com. HITRUST ResourcesEvaluating HITRUST Certifications: e1, i1 and r2Compare HITRUST Assessment TypesThe HITRUST Journey: 7 Steps to Expect Before You CertifiyDemystifying HITRUST: A Practical Path to Clarity and CertificationContact Us Form  Contact Our HITRUST Team Excerpt: Unlock the secrets to robust information security with HITRUST certification! This comprehensive framework not only harmonizes over 50 regulatory standards but also enhances your organization’s data protection, reduces liability, and builds customer trust. Whether you're a small business or a large enterprise, understanding the nuances of HITRUST assessments—e1, i1, and r2—can transform your approach to compliance. Dive into our complete guide to discover how to prepare effectively, optimize costs, and navigate the certification process with confidence. Don’t just check a box; elevate your security posture and stand out in a crowded market! ### SD Digital LumenFI LumenFI From Data to Decisions in Seconds with our AI-Powered Digital Finance Companion Every CFO knows the pain of traditional reporting: endless emails, disparate spreadsheets, slow cycles, and overloaded teams that delay decisions. In today’s fast-moving environment, leaders cannot afford to wait weeks for answers while opportunities and risks unfold in real time. The challenge is not only speed but also confidence. Too often, traditional reporting leaves leaders questioning whether they have the full story, forcing them to react after the fact instead of leading with foresight.LumenFI helps organizations see the best path forward with their financial data, illuminating insights that accelerate smarter decisions. Built on the Microsoft stack many organizations already use, it empowers CFOs to engage with their data in plain language and unlock insights in seconds. By eliminating ad hoc reporting and embedding intelligence into familiar tools, it ensures that financial data is clear, governed, and actionable across the organization.LumenFI transforms finance from a reporting function into a strategic driver of growth, equipping leaders to anticipate opportunities, mitigate risks, and deliver measurable bottom line impact with clarity and confidence. Your Finance Team, Reimagined with AI With LumenFI, access to financial insights moves at the speed of business. Think of it as your AI-empowered finance team, always available, continuously learning, and integrated through Microsoft Teams to deliver insights when you need them. Together, they cover the core areas of finance with focused expertise:Accounts ReceivableOversees collections and monitors customer payment trendsAccounts PayableManages obligations and improves payment efficiencyOrchestrationActs as the executive of your AI team, ensuring governance, accuracy, and alignment across all responsesRevenueProvides topline insights and supports forecasting accuracyAlways on and accurate, LumenFi transforms data into foresight, giving leaders the confidence to shape strategy, drive performance, and deliver measurable impact.The Benefits of AI-Powered Financial ReportingBeyond financial functions, our AI-powered finance solution delivers real-time, governed insights that make financial data clear, actionable, and secure, all within the Microsoft platform where your business already works.Collaboration in Microsoft Teams and 365 Copilot for faster alignment across the businessFlexible outputs in Excel, email, Teams, or board-ready visualsImmediate answers with natural language queriesReduced workload by eliminating backlogs of ad hoc requestsStreamlined setup that strengthens your data foundationWith these capabilities, finance leaders gain immediate, actionable insights that drive clarity, speed, and confidence in every decision.Ready to Meet LumenFI? Contact UsAbout SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     SD Digital Resources SD Digital Solutions Overview LumenFI Overview Resource Center Our Thoughts On Blog OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? 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One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? 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There are many new features that make the platform easier… Read More > ### Smith-Goshen Royalty Class Action Website UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO | CASE NO. 2:21-cv-3999 Main Menu Contact UsImportant DocumentsSettlement AgreementOrder Granting Preliminary ApprovalSettlement NoticeMotion for Attorneys’ Fees, Litigation Expenses, & Service AwardsJoint Declaration of Class Counsel in Support of Motion for Attorneys’ Fees, Litigation Costs, & Service Awards Welcome to the officialSmith-Goshen Royalty Class Action website WHAT IS THIS CLASS ACTION ABOUT?Plaintiffs raised issues related to the calculation of royalty payments made by Defendants, deductions of Post-Production Costs by Defendants, and the stratigraphic depths granted to Defendants. A Settlement has been proposed between Class Counsel and the Defendants and preliminarily approved by the Court pursuant to which settlement payments will be made to members of the proposed Settlement Class.Please read the Notice.PLEASE READ THIS NOTICE CAREFULLY. It impacts your rights and provides you with information regarding a class action lawsuit over royalty payments on oil and gas mineral leases in Ohio against Rice Drilling D, LLC, EQT Production Company, EQT Energy, LLC, and EQT Corporation (collectively, the “Defendants”). Your legal rights are affected whether or not you take action.The Settlement will pay money to those who receive this Notice and are Class Members, as well as fees and expenses for the Class Counsel and an incentive award to Dorothy Bowman, Maple Ridge Farm, LLC, and OK Ridge Farm, LLC for acting as the Class Representative as approved by the Court.YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENTDo NothingIf you do nothing, received the Settlement Notice in the mail, and are identified by the Claim Administrator as a Class Member, you will receive a Claim Form and Benefit Notice automatically if the Court approves the Settlement, which is scheduled for hearing on January 22, 2026, at 1:30 p.m. at the United States District Court for the Southern District of Ohio located at 85 Marconi Boulevard, Columbus, OH 43215. To get paid, Class Members must sign the Claim Form and Benefit Notice and release their right to sue the Defendants for the same legal claims as in this case.Provide Additional InformationComplete the Class Membership Form you receive in the mail, included as Exhibit 1 on the Settlement Notice attached to this page, or submit electronically below. By doing so, you will be assisting the Settlement Administrator with determining whether you are a Class Member. The Class Membership Form is optional, and is not required to be a Class Member or receive payment if you are identified as a Class Member by the Settlement Administrator.Object/CommentWrite to us as the Settlement Administrator, including the information requested within the Settlement Notice you receive in the mail or attached to this page, if have an objection and request the Court not to approve the Settlement.Go to the HearingAsk to speak in Court about the fairness of the Settlement. Deadlines Contained in the Settlement Notice YOU MAY: DUE DATE: Submit a Class Membership Form Postmarked by: November 21, 2025 Exclude Yourself From The Settlement Postmarked by: November 21, 2025 Object To The Settlement Postmarked by: November 21, 2025 Request To Appear At The Fairness Hearing Postmarked by: November 21, 2025 Return Your Signed Ratification Postmarked by: 90 days after checks are mailed Settlement Administrator James H. Rumph, CPASchneider Downs & Co., Inc.65 E. State Street, Suite 2000Columbus, OH 43215settlementadmin@schneiderdowns.com(412) 697-5030 ### In Memoriam: John Null It is with profound sadness that the Schneider Downs family shares the news of the passing of our beloved colleague, friend, advisor, and mentor, John Null, who left us on Friday, September 5th.John's kindness, wisdom, and unwavering dedication made an indelible impact on everyone who had the privilege of knowing him—colleagues, clients, and professional contacts alike. He was a cherished presence, extending his warmth and generosity beyond the boundaries of his work.John had a special gift for nurturing relationships, transforming professional connections into lasting friendships. Every meeting with him began with a smile, and his constant optimism was a source of light and upliftment for those around him. He will be missed.During this time of grief, we extend our deepest condolences to John’s family, friends, and loved ones. Our thoughts are with them as they navigate through this difficult period. ### Stirring Growth Columbus Manufacturing Stirring Growth:Conversations, Cocktails & Columbus Manufacturing Date: October 7, 2025Time: 4:00 pm – 7:00 pm Location: The Junto – 77 Belle St, Columbus, OH 43215Join us for an exclusive Manufacturing Event that promises to be both informative and entertaining.The manufacturing industry is a cornerstone of the Columbus, Ohio, economy, driving growth and innovation across the region. This sector not only provides a significant number of jobs but also contributes to the economic stability and development of our community. With a robust pipeline of industrial projects, Columbus is poised to continue its legacy of excellence in manufacturing. This event is a show of appreciation for your continued efforts to keep our region at the forefront of manufacturing.   Additionally, we are honored to have the Interim President of One Columbus, Matt McCollister, who will be speaking about the following key topics:The presence of industrial projects in our project pipelineThe impact the industrial sector has had on our regional economyKey items we are monitoring that could positively or negatively impact future industrial growthThis event will also feature a special session where you'll learn how to manufacture the perfect cocktail or mocktail. Our professional mixologist will guide you through the art of crafting delicious and visually stunning drinks. Whether you're a cocktail enthusiast or prefer non-alcoholic options, this session has something for everyone.   Please RSVP by September 30, 2025. ### Dinner with the Doctors Please RSVP for our Dinner with the Doctors Event Below! When: October 21st, 2025, 6:00-8:00pm ET Location: The Conference Center at Nationwide Children’s Hospital, Allen Auditorium, 520 Butterfly Gardens Columbus, OH 43215 Details: You and a guest are cordially invited to an exclusive evening with Dr. Maryam Fouladi, a world-renowned leader in pediatric neuro-oncology and a driving force behind groundbreaking clinical trials and global collaborations in childhood cancer research. Join us for a private dinner where you'll have the rare opportunity to: Connect personally with Dr. Fouladi, Co-Executive Director of the Pediatric Neuro-Oncology Program at Nationwide Children’s Hospital. Gain insider insight into the future of pediatric cancer care and the transformative work happening at Nationwide Children’s. Explore meaningful ways to support one of our community’s most vital institutions. This intimate gathering is designed to foster conversation, connection, and a shared commitment to advancing care for children and families in need. Host: Schneider Downs Contact (Registering/Technical Issues): Lindsay Sherrill   Columbus Dinner with the Doctors Event Name(Required) First Last Company/Organization(Required)Job Title(Required)Email(Required) Are you planning on bringing a guest?(Required) Yes No Guest Name(Required) First Last Do you have any dietary restrictions?(Required) Yes No Dietary RestrictionsCAPTCHA Submit   ### Women's Golf Outing Schneider Downs Women's Golf Outing Join the Schneider Downs Consulting team for a day of golf!Ready your swing for an 18-hole scramble, hosted by the Schneider Downs consulting team!Registration starts at 9:00 AM, and golf will begin at 9:30 AM.Contact Carley Taslov with any questions.Please RSVP by September 5, 2025. Please RSVP by September 5, 2025. "*" indicates required fields First Name*Last Name*Company*Email* CAPTCHAEmailThis field is for validation purposes and should be left unchanged. Submit ### Active Directory Security Assessment Active Directory Security Assessment Strengthen Active Directory Security and Compliance Against Cyber Threats In today's digital landscape, cyber threats are increasingly targeting the core infrastructure of organizations, making the security of your Active Directory (AD) environment more critical than ever.Schneider Downs’ Active Directory Security Assessment service provides a thorough evaluation of your AD setup, identifying vulnerabilities, misconfigurations, and potential attack vectors.Our comprehensive assessment helps organizations pinpoint risks, address security gaps, and enhance their overall security posture. By taking proactive measures, you can reduce exposure to cyberattacks, safeguard sensitive data, and ensure compliance with industry standards and best practices.Trust Schneider Downs to strengthen your Active Directory security and help maintain business continuity in the face of evolving cyber threats.What to Expect from Active Directory Security AssessmentsAlignment with compliance requirements, reducing legal and operational risks.Detailed analysis of AD configurations to identify vulnerabilities and misconfigurations.Enhanced confidence in your organization’s ability to protect critical systems and data.Tailored recommendations to fortify your AD environment against modern threats. Core Assessment Components Account and Credential SecurityCredential ExposurePrivileged Account Risks.Stale and Inactive AccountsWeak Password PoliciesObject and System HygieneObsolete ObjectsReplication Topology IssuesSchema MisconfigurationsUnpatched SystemsDomain Trust and Relationship IntegrityDomain Controller ExposureInsecure Trust ConfigurationsKerberos Trust VulnerabilitiesLegacy Protocol RisksPolicy and Configuration AssuranceAudit and Logging GapsEncryption and Protocol SecurityGroup Policy WeaknessesSecurity Descriptor Risks How Active Directory Security Assessments WorkAdvanced Mapping of Attack Vectors: Identify critical risks such as privilege escalation and lateral movement within your AD environment.Clear, Prioritized Report: Receive a detailed report outlining findings, risks, and remediation strategies to strengthen security.Collaborative Assessment: Work with your IT team to understand your AD environment’s size, complexity, and role, ensuring a tailored approach.Compliance Checks: Ensure your AD environment meets industry standards like NIST, CIS, or HIPAA, keeping you audit-ready.Comprehensive Review: Examine group policies, user permissions, and trust relationships to identify exploitable weaknesses in your AD setup.Ongoing Security Insights: Gain best practices for maintaining AD security with ongoing monitoring and configuration updates.Post-Assessment Meetings: Discuss findings, answer technical questions, and receive support for implementing recommended changes.Why Schneider Downs?Commitment to Success: We are dedicated to your success and believe that protecting individuals’ information is essential for the greater good.Deep Expertise in Active Directory Security: Our team’s extensive experience in secure AD configurations spans various industries and includes formal federal government service.Informed Remediation Strategy: We leverage insights from Digital Forensics and Incident Response (DFIR) investigations to guide your team on where to focus time and resources.Ready to get started? Contact the Schneider Downs cybersecurity team at cybersecurity@schneiderdowns.com.Experiencing or suspect a cloud security incident?Contact the Schneider Downs Incident Response Team at 1-800-993-8937.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Continuous Cybersecurity Framework Assessments Continuous Cybersecurity Framework Assessments Build Cyber Resilience Through Continuous Security Framework Assessments Just as a coach drives performance improvement, a cybersecurity auditor challenges your organization to move beyond risk and toward lasting resilience.In today’s constantly evolving threat environment, one-time security assessments no longer provide sufficient protection. Organizations need continuous oversight to defend against advanced cyber threats and ensure long-term compliance.The Schneider Downs Continuous Framework Assessment delivers an ongoing evaluation of your security posture using industry-recognized standards, including NIST CSF 2.0 and CIS Critical Security Controls v8.1. This year-round service helps organizations maintain a proactive security stance, demonstrate sustained compliance, and confidently respond to emerging risks. Our service provides real-time insights and actionable steps for continuous improvement into your organization’s security maturity and compliance status. Through continuous monitoring and analysis, we help identify control gaps, prioritize remediation, and validate the effectiveness of your security controls over time.Aligned With Your Business Goals and Risk ProfileWhether you’re aiming to meet regulatory requirements or strengthen your cybersecurity posture, our approach aligns technical controls with your unique business objectives and risk tolerance. We provide actionable insights that support strategic decisions to align your business goals and risk profile.What to Expect from Continuous Framework AssessmentsAutomated monitoring and validation of key security controls between assessmentsComprehensive baseline and periodic assessments against NIST CSF 2.0 or CIS Critical Security Controls v8.1Enhanced confidence in your organization's ability to withstand evolving threatsPrioritized remediation guidance with clear implementation roadmapsQuarterly progress reports with executive dashboards and technical details Core Continuous Framework Assessment Components Continuous ImprovementControl Gap Remediation TrackingFramework Evolution AdaptationProcess Maturity AdvancementSecurity Metrics and KPI DashboardsTechnical Control ImplementationData Protection ControlsDetection and Monitoring CapabilitiesIdentity and Access ManagementInfrastructure Security ArchitectureGovernance and Risk ManagementFramework Selection and CustomizationLeadership Reporting and OversightRisk Assessment and TreatmentSecurity Policy AdherenceOperational Program EffectivenessIncident Response ReadinessSecurity Awareness Program MaturityThird-Party Risk ValidationVulnerability Management Lifecycle What to Expect from Continuous Framework AssessmentsBaseline Security Assessment: We begin with a comprehensive evaluation against your chosen framework to establish a security maturity baseline and identify key areas for improvement.Continuous Control Monitoring: Our team monitors critical controls using automated tools and manual validation to maintain consistent compliance between formal assessments.Risk Exposure and ROI Measurement: We use advanced metrics and industry benchmarks to quantify risk exposure and show the value of your cybersecurity investments over time.Quarterly Security Reports: Each quarter, you receive detailed reports with executive summaries, technical findings, and a living roadmap that evolves with your security program.Ongoing Threat and Remediation Reviews: Scheduled sessions throughout the year help evaluate threat trends, track remediation progress, and adjust priorities as needed.Compliance Validation: Our assessments include continuous validation against relevant regulations like HIPAA, PCI-DSS, and GLBA to support ongoing compliance.Actionable Security Guidance: Beyond identifying gaps, we deliver practical guidance on implementation, resource allocation, and process improvements to strengthen your defenses.Why Schneider Downs?Our assessment methodology is built on years of experience implementing and evaluating security frameworks across diverse industries and organizational sizes.Our team provides clear, plain-language guidance that bridges the gap between technical requirements and business operations.We leverage insights from our Digital Forensics and Incident Response investigations to align your security controls with real-world attack patterns and emerging threats.We maintain independence while acting as trusted partners, ensuring objective assessments while working collaboratively toward your security goals.Experiencing or Suspect a Cloud Security Incident?Contact the Schneider Downs Incident Response Team at 1-800-993-8937About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### vCISO vCISO Executive Strategy and Expertise for Risk Management and Business Resilience In today’s digital landscape, where cyber threats grow more advanced and regulatory requirements constantly shift, organizations need more than just technical controls, they need a trusted cybersecurity partner.We provide strategic cybersecurity guidance with executive-level expertise to help organizations manage risk and drive long-term value. Our consulting integrates risk assessments, policy development, security architecture, and framework alignment to strengthen cyber posture. We support both executive and operational levels to ensure compliance, build resilience, and foster a security-first culture. Over time, we help improve cybersecurity maturity model assessments (e.g., CMMI for cybersecurity), training, processThe goal is to turn cybersecurity from a technical challenge into a strategic business asset, ensuring alignment with your broader organizational objectives.The Value of Experienced Cybersecurity Professionals and ExecutivesA strong security posture capable of handling evolving modern threats.Closer alignment with industry standards and regulations, which reduces legal and financial risks.Enhancement of organizational preparedness through security-focused training both for experienced technical professionals and your everyday enterprise user.Objectivity in advisory roles, avoiding conflicts of interest.How We WorkCybersecurity Onboarding: We begin with interviews and a detailed review of your current cybersecurity program to set realistic goals and build a roadmap for long-term maturity.Strategic Advisory & Planning: Our team develops a prioritized project plan based on the specific risks your organization aims to mitigate.Cybersecurity Framework Advancement: We guide your team through recognized cybersecurity frameworks to improve security posture and support business enablement.Bi-Weekly Strategy Meetings: Regular sessions cover current threats, project prioritization, and both technical and non-technical questions to keep initiatives on track.Active Directory Security Review: We perform a comprehensive technical assessment of Active Directory, identifying misconfigurations that often serve as entry points for attackers.Annual Tabletop Exercise (TTX): We facilitate a yearly TTX to test your Incident Response Plan (IRP), helping fulfill cyber insurance and framework requirements while improving real-world readiness.Policy Evaluation & Development: We assess your existing cybersecurity policies and assist with drafting or revising documents to meet compliance and operational needs.Ongoing Threat Intelligence Sharing: Stay ahead of emerging threats with curated Cyber Threat Intelligence (CTI) updates tailored to your industry and risk profile.Why Schneider Downs? Our holistic approach addresses every aspect of cybersecurity governance, from strategic planning to operational oversight, to help you build lasting resilience.Our team brings deep cybersecurity strategy expertise across diverse industries and formal federal government service.We tailor cybersecurity transformation efforts to fit your organization’s unique needs, capabilities, and team size.Experiencing or Suspect a Network Incident?Contact the Schneider Downs Incident Response Team at 1-800-993-8937About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Threat Hunting Threat Hunting Proactive Human-Led Threat Detection That Maximizes Existing Security Investments Just as a skilled hunter reads the forest for subtle signs of prey, a cyber threat hunter analyzes quiet signals across your network to detect and stop malicious activity before it escalates.In today’s fast-evolving threat landscape, sophisticated attackers can remain hidden for months, gathering data and preparing for high-impact attacks. Traditional security tools alone often fail to detect these stealthy intrusions in time.The Schneider Downs Threat Hunting service delivers proactive, human-led investigations that uncover advanced threats often missed by automated systems. By applying hypothesis-driven techniques and combining your existing security infrastructure with our proprietary detection capabilities, we identify malicious activity before it impacts your business. Whether you're responding to suspicious behavior or conducting routine threat hunts to strengthen your cybersecurity posture, our service is tailored to meet your specific needs.Benefits of Threat Hunting Services for ClientSignificantly reduced dwell time for adversaries through early threat detectionEnhanced utilization of existing security investments (EDR, SIEM, etc.)Detailed insights into adversarial tactics operating in your environmentActionable remediation recommendations to strengthen defenses  Our Threat Hunting Process Endpoint and Network AnalysisFileless malware detectionLiving-off-the-land technique identificationLateral movement patternsPersistence mechanism discoveryData and Asset ProtectionData exfiltration attemptsSensitive asset targetingCommand and control activitiesDestructive action preparationIdentity and Access MonitoringCredential theft detectionPrivilege escalation identificationAuthentication anomaliesAccess abuse patternsAdvanced Threat IntelligenceEmerging threat incorporationIndustry-specific targeting patternsKnown adversary technique matchingCustom threat hypothesis development  What to Expect from Threat HuntingAdversary-Focused Hunting: Our threat hunters operate under the assumption that advanced threats may already exist in your network, using intelligence-driven hypotheses tailored to your industry and risk profile.Behavior-Based Threat Detection: Instead of relying solely on known indicators of compromise (IOCs), we focus on identifying suspicious behavior patterns that signal potential threats, regardless of the tools used.Collaboration and Knowledge Transfer: Our experts work directly with your internal security team, strengthening your organization's detection capabilities through ongoing collaboration and knowledge sharing.Comprehensive Threat Hunt Reporting: Every engagement concludes with a detailed report that includes findings, evidence of malicious activity (if discovered), and clear, prioritized remediation recommendations.Evolving Detection Framework: Each threat hunt builds on previous insights, continuously refining a detection strategy tailored to your unique environment and evolving threats.Flexible Threat Hunting Options: Choose between targeted, one-time threat hunts to investigate specific concerns or schedule quarterly hunts to maintain a strong, proactive cybersecurity posture.Maximize Existing Security Investments: We leverage your current security tools—such as EDR, SIEM, and other technologies—and enhance them with our proprietary threat detection capabilities to close critical gaps. Why Schneider Downs?Combining expert analysis with advanced tools, we deliver broad threat coverage with efficient resource use.Our threat hunting team blends offensive and defensive expertise to understand attacker behavior and uncover hidden threats.Unlike alert-driven services, our team proactively hunts for threats that security tools often miss.We leverage experience from hundreds of incident responses to anticipate and outmaneuver advanced threats. Experiencing or Suspect a Cloud Security Incident?Contact the Schneider Downs Incident Response Team at 1-800-993-8937 About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Cookie Policy COOKIE POLICYLast updated July 25, 2025This Cookie Policy explains how Schneider Downs ("Company," "we," "us," and "our") uses cookies and similar technologies to recognize you when you visit our website at https://schneiderdowns.com ("Website"). It explains what these technologies are and why we use them, as well as your rights to control our use of them.In some cases we may use cookies to collect personal information, or that becomes personal information if we combine it with other information.What are cookies?Cookies are small data files that are placed on your computer or mobile device when you visit a website. Cookies are widely used by website owners in order to make their websites work, or to work more efficiently, as well as to provide reporting information.Cookies set by the website owner (in this case, Schneider Downs ) are called "first-party cookies." Cookies set by parties other than the website owner are called "third-party cookies." Third-party cookies enable third-party features or functionality to be provided on or through the website (e.g., advertising, interactive content, and analytics). The parties that set these third-party cookies can recognize your computer both when it visits the website in question and also when it visits certain other websites.Why do we use cookies?We use first- and third-party cookies for several reasons. Some cookies are required for technical reasons in order for our Website to operate, and we refer to these as "essential" or "strictly necessary" cookies. Other cookies also enable us to track and target the interests of our users to enhance the experience on our Online Properties. Third parties serve cookies through our Website for advertising, analytics, and other purposes. This is described in more detail below.How can I control cookies?You have the right to decide whether to accept or reject cookies. You can exercise your cookie rights by setting your preferences in the Cookie Consent Manager. The Cookie Consent Manager allows you to select which categories of cookies you accept or reject. 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You can also control Flash Cookies by going to the Global Storage Settings Panel and following the instructions (which may include instructions that explain, for example, how to delete existing Flash Cookies (referred to "information" on the Macromedia site), how to prevent Flash LSOs from being placed on your computer without your being asked, and (for Flash Player 8 and later) how to block Flash Cookies that are not being delivered by the operator of the page you are on at the time).Please note that setting the Flash Player to restrict or limit acceptance of Flash Cookies may reduce or impede the functionality of some Flash applications, including, potentially, Flash applications used in connection with our services or online content.Do you serve targeted advertising?Third parties may serve cookies on your computer or mobile device to serve advertising through our Website. These companies may use information about your visits to this and other websites in order to provide relevant advertisements about goods and services that you may be interested in. They may also employ technology that is used to measure the effectiveness of advertisements. They can accomplish this by using cookies or web beacons to collect information about your visits to this and other sites in order to provide relevant advertisements about goods and services of potential interest to you. The information collected through this process does not enable us or them to identify your name, contact details, or other details that directly identify you unless you choose to provide these.How often will you update this Cookie Policy?We may update this Cookie Policy from time to time in order to reflect, for example, changes to the cookies we use or for other operational, legal, or regulatory reasons. Please therefore revisit this Cookie Policy regularly to stay informed about our use of cookies and related technologies.The date at the top of this Cookie Policy indicates when it was last updated.Where can I get further information?If you have any questions about our use of cookies or other technologies, please email us at bevancho@schneiderdowns.com or by post to:Schneider Downs One PPG Place, Suite 1700Pittsburgh, PA 15222United StatesPhone: (+1)412261364420 Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Comprehensive Overview of Sales Tax Compliance Overview of Sales & Use Tax Key Topics Sales Tax BasicsImportance of NexusSignificance of the Wayfair RulingSales Tax ExemptionsIndustry Sales & Use Tax ConsiderationsSales Tax AuditsSales Tax Frequently Asked Questions (FAQs) Contact Us Sales Tax BasicsWhat is sales tax?Sales tax is usually imposed by states on the sale of tangible personal property and certain services. Typically calculated as a percentage of the purchase price, this tax is collected by the retailer at the point of sale and then remitted to the government on either a monthly, quarterly, or annual basis.With the rise of ecommerce, remote work, and economic sales thresholds, sales tax compliance is now more complex than it ever has been, subjecting companies to new filing obligations as they do business across a multitude of state and local jurisdictions.What is Tangible Personal Property?Tangible Personal Property (TPP) refers to physical items that have a tangible form and can be seen, touched, and moved. Unlike real property, which includes land and buildings, TPP encompasses portable objects that are not permanently attached to any real estate. Examples include furniture, vehicles, equipment, electronics, jewelry, and artwork. These items are often subject to sales tax at the point of purchase or delivery. Unlike intangible property, such as stocks or patents, TPP is defined by its physical presence and portability. Its classification is crucial when determining if a certain purchase is subject to sales tax or if the purchaser will be able to utilize an exemption certificate for the purchase.Sales Tax on ServicesHistorically, only tangible personal property was subject to state sales and use tax, however, states continue to expand their potential sales tax base by levying sales tax on certain enumerated services. Unlike the sale of TPP - which is subject to sales tax unless expressly exempt by the state, services must be specifically enumerated by legislature to be subject to sales and use taxes .Services concerning software and cloud-based solutions have been a recent target of many states subjected those services to sales and use tax. The remote nature of software licenses adds another layer of complexity to sales and use tax compliance.Importance of NexusNexus refers to the connection between a business and a state or jurisdiction that establishes the obligation to comply with tax laws, including collecting and remitting sales tax. A nexus determination is primarily controlled by the U.S. Constitution, in which the Due Process Clause requires a definite link or minimal connection between a state and the entity it wants to tax, and the Commerce Clause requires substantial presence. What constitutes whether a taxpayer has a “substantial presence” has been interpreted by state legislatures, state supreme courts, and even the United States Supreme Court.Nexus can be established in a number of ways, below is a breakdown of the different types o nexus for sales tax purposes:Physical Presence NexusThis occurs when a business establishes a tangible connection to a state or jurisdiction through its physical activities or assets. Historically, this was the primary standard for determining whether a business was required to collect and remit taxes in each state, as established by the U.S. Supreme Court in Quill Corp. v. North Dakota (1992).A business is deemed to have a physical presence nexus if it has a direct, physical footprint in the state. Examples include operating a physical storefront, office, or warehouse; having employees, contractors, or sales representatives working in the state; or maintaining inventory or using a fulfillment center located within the state. Other activities, such as participating in trade shows or conducting regular in-person business activities in the state, or having a remote employee, can also create a nexus.Economic NexusThis is a legal standard that establishes a business's obligation to collect and remit taxes in a state based on the extent of its economic activity, regardless of whether the business has a physical presence in that state. This concept became prominent after the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair, Inc., which allowed states to require tax compliance based on economic activity alone.The Rise of Bright-line ThresholdsThe use of bright-line thresholds has been adopted by virtually every state and local jurisdiction that levies a sales tax since the decision in Wayfair.Under the use of bright-line thresholds, a business will have economic nexus with a state if generates more than $100,000 in annual sales or completes 200 or more transactions with customers in the state. (However, many states are repealing the 200-transaction count and determining nexus solely based on the $100k threshold alone)Generally, states who levy and collect a sales tax utilize the $100k threshold established in Wayfair, absent some outliers such as CA and NY.Significance of the Wayfair RulingDue to the large number of state and local taxing jurisdictions in the United States with various rates, rules and regulations, the Court first established the physical presence test in National Bellas Hess v. Illinois, 1967 and upheld this standard 25 years later in Quill Corp. v. North Dakota, 1992.Due to a rapidly growing retail market on the internet and declining sales tax revenue, South Dakota’s state legislature, in defiance of the physical presence standard established in Quill, passed a economic nexus standards standard which set bright-line thresholds of $100,000 in sales or 200 transactions to state residents which if exceeded gave businesses a sales tax collection and remittance obligation with the state.Ultimately, the economic nexus standard enacted by South Dakota was challenged claiming the economic nexus standard was unconstitutional. While the South Dakota Supreme Court declared the law unconstitutional based on the Quill decision, the U.S. Supreme Court granted certiorari on appeal and agreed to hear the case where they ruled the economic nexus thresholds as being constitutional.In the opinion drafted by Justice Kennedy, it appeared that the South Dakota law’s safeguards against discrimination and undue burdens on interstate commerce were persuasive.  The respective safeguards include:·        A safe harbor for small sellers who do not meet that annual economic threshold of $100,000 in sales or 200 transactions;·        No application of the law retroactively; and·        Sales tax simplification features that come with membership in the streamlined sales tax agreement, such as a single state-level tax administration, uniform definition of products and services, simplified tax rate structures and other uniform rules.  The state also provides sellers access to sales tax administration software paid by the state.  Sellers using this software are immune from audit liability.State Sales Tax Regulations – Post WayfairMany states have updated sales tax collection regulations post-Wayfair. Below is a summary of the changes made in certain states immediately after the Supreme Court ruling was issued.State of California California enacted new legislation increasing the sales threshold from $100,000 to $500,000 and eliminating the 200 individual transaction thresholds.  This change is retroactive to April 1, 2019 and extends to marketplace facilitators effective October 1, 2019.State of New Mexico New Mexico enacted new economic nexus standards for remote sellers and marketplace providers of at least $100,000 in sales.  All receipts from doing business in New Mexico are subject to gross receipts tax, including sales, leases and licenses of tangible personal property, and sales of licenses and services or licenses for the use of real property that are sourced to New Mexico.  Marketplace sellers, may deduct receipts from transactions facilitated by a marketplace provider.  To take the deduction the marketplace seller must get documentation from the marketplace provider showing that the marketplace provider is registered with the Taxation and Revenue Department and has remitted or will remit taxes for those transactions.  Marketplace sellers choosing to exercise the deduction should issue reliable information to marketplace providers.  If not, the Department may determine that the marketplace provider is not liable for the tax on the marketplace seller’s transactions.  The marketplace provider’s taxability depends upon the information provided by the marketplace seller.  This legislation is effective, July 1, 2019. Source: Tax FoundationState of HawaiiHawaii enacted legislation extending their economic nexus standards to marketplace facilitators.  The legislation applies to sales of intangible property and services as well as tangible personal property.  The legislation’s definition of “marketplace facilitator” is any person who sells or assist in the sale of tangible personal property, intangible property, or services on behalf of another seller by: 1) providing a forum, whether physical or electronic, in which sellers list or advertise tangible personal and intangible property, or services on the behalf or another; and 2) collets payment from the purchaser either directly or indirectly through an agreement with a third party.  This legislation is effective January 1, 2020.State of IndianaIndiana’s Department of Revenue released a ruling regarding an out-of–state bake goods manufacturer reaffirming that once an economic nexus threshold is reached (when a retail merchant’s gross revenue exceeds $100,000; or 200 or more separate transactions in the state), the remote seller is required by law to register and file zero returns, even if all of their retail sales are exempt.  Revenue Ruling No. 2018-06 ST, Indiana Department of Revenue, January 7, 2019, released March 2019.State of ArkansasArkansas’ House of Representatives have passed economic nexus standards for remote sellers and marketplace facilitators that made sales into the state during the previous or current calendar year that exceeds either $100,000 or 200 individual transactions.  Should the bill be enacted, it would become effective July 1, 2019.State of GeorgiaGeorgia’s Senate passed an economic nexus bill (H. B. 276) that reduces the economic nexus sales threshold from $250,000 to $100,000 and eliminates the 200 transaction threshold.  The Senate amended the Bill to make a marketplace facilitator a dealer on sales it facilitates that are sourced to Georgia, unless the marketplace seller, or a retailer or dealer, pay the sales taxes.  Other amendments bar Georgia class action lawsuits against marketplace facilitators regarding the over collection of sales tax and moves the effective date of the changes from July 1, 2019 to January 1, 2020.State of IdahoIdaho enacted legislation for remote sellers and marketplace facilitators who lack a physical presence in the state to register and collect Idaho state level sales tax once they reach an economic nexus threshold of $100,000 in sales within the state.  The state will provide liability relief for marketplace facilitators who collect the incorrect amount of tax by reason of the retailer or retailer’s authorized agent providing misinformation.  Customers are barred from filing class action lawsuits against marketplace facilitators to recover refunds for over collected taxes.  This law becomes effective on June 1, 2019.State of West VirginiaWest Virginia expanded their economic nexus standards of $100,000 in gross revenue or 200 or more separate transactions to marketplace facilitators and referrers.  Marketplace facilitators are people who contract with one or more sellers to facilitate, for consideration, the sale of the seller’s product through a physical or electronic marketplace operated by that person, regardless of whether the consideration is deducted as fees from the transaction.  A referrer is a person who contracts or otherwise agrees with the seller to list or advertise for sale one or more items in any medium, including a website or catalog.  They receive a commission, fee or other consideration from the seller for the listing or advertisement.  The referrer also connects the purchaser to the seller electronically or through other means to complete the sale but does not collect receipts from the purchaser for the transaction.  Businesses that provide internet advertising services and do not provide the marketplace seller’s shipping terms or advertise whether a marketplace facilitator charges sales tax are not considered referrers.  This standard becomes effective on July 1, 2019.Sales Tax ExemptionsKnowing which products or services that are not subject to or are exempt from sales tax is crucial for accurate reporting where exemptions can vary greatly across different industries.  Common exempt activities include providing certain services, manufacturing, processing, research and development, pollution control, sales of items to be resold, sales to exempt organizations, and a host of other activities   Additionally, states vary widely in the items they elect to impose sales tax on.  For instance, software as a service (SaaS) is taxable in only about half of the states that impose a sales tax.Since sales tax rates often vary between location and type of product or service sold, many organizations prefer to work with qualified specialists, such as Schneider Downs, to determine and manage their sales tax exemption certificate needs.Understanding the specific criteria and documentation required for these exemptions is crucial for businesses to ensure compliance and optimize their tax liability.Use of Exemption CertificatesExemption certificates are essential documents that businesses utilize to claim sales tax exemptions on eligible purchases. Proper completion and retention of these certificates are crucial for compliance. Sales tax exemptions and exemption certificates vary state by state, therefore due diligence must be done in order to stay compliant with sales tax obligations concerning exempt sales and purchases.The following are the most common types of sales tax exemptions:ResaleGoods purchased with the intent of resale are exempt from sales tax, eliminating the burden of tax on items procured for the purpose of resale to customers. Sales tax will then be collected on the purchase by the ultimate customer.Directly Used or Consumed in ManufacturingProducts directly used or consumed in the manufacturing process qualify for sales tax exemption. This includes raw materials and components that integrate into the final product.Concept of “Direct Use”The "direct use" concept mandates that goods must be used immediately in the production process without intermediate steps, ensuring that materials contribute directly in the manufacturing process or consumed in making the finished product.Non-ProfitNon-profit organizations benefit from sales tax exemptions on purchases relevant to their charitable, educational, or religious missions, aiding in operational cost reduction and resource allocation.Government PurchaserGovernment entities are afforded sales tax exemptions on purchases made for public use, covering items utilized in government facilities, vehicles, and services.AgricultureAgricultural products and supplies that are directly employed in farming operations are exempt from sales tax. This encompasses seeds, fertilizers, and equipment necessary for crop and livestock production.ConstructionSpecific construction-related purchases, especially those used in public works or qualifying projects, may also be exempt from sales tax.Industry Sales and Use Tax ConsiderationsOften sales and use tax includes specific considerations based on the industry where the goods were sold. To add to the complexity, often states offer additional considerations to specific industries outside of the general market. Be sure to check for additional considerations within your specific state for additional incentives concerning your industry. Examples of industries with specific sales tax exemptions are packaging, transportation, public utility, R&D, and quality control, to name a few.https://vimeo.com/696683282Manufacturing Sales & Use Tax Pennsylvania Manufacturing Sales and Use Tax ConsiderationsPennsylvania offers significant sales tax exemptions for manufacturing companies, but navigating these exemptions can be complex. To maximize these benefits, manufacturers must carefully consider the specific requirements and maintain detailed records to substantiate exempt purchases.Predominant Use: Equipment must be used more than 50% of the time in the manufacturing process to qualify for the exemption. This means that equipment used for both manufacturing and non-manufacturing purposes may not be fully exempt.Recordkeeping: Maintain detailed records to demonstrate the exempt use of purchases. This includes invoices, purchase orders, maintenance records, and any other documentation that supports the exempt nature of the purchase.Out-of-State Purchases: Even if sales tax is not collected at the time of purchase, use tax may be due on out-of-state purchases used in Pennsylvania. This means that manufacturers must be aware of their use tax obligations, even for purchases made outside the state.Ohio Manufacturing Sales and Use Tax ConsiderationsOhio has specific sales and use tax rules for manufacturing companies that can significantly impact their tax liability.Tangible Personal Property: Ohio exempts tangible personal property that becomes a part of the manufactured product from sales and use tax. This includes raw materials, components, and parts used in the manufacturing process.Machinery and Equipment: Machinery, equipment, and other tangible personal property used in the manufacturing process are generally exempt, even if they are used for cleaning, repairing, or maintaining manufacturing equipment. This is often broader than many other state’s manufacturing exemptions.Use Tax on Non-Manufacturing PurchasesNon-Manufacturing Items: While manufacturing equipment and supplies are exempt, a manufacturer is responsible for paying use tax on tangible personal property that is not used primarily in the manufacturing process. This includes office supplies, furniture, and vehicles.Taxable Services: Manufacturers must also pay use tax on certain taxable services used in their operations, such as repair and installation services for non-manufacturing equipment, if those are taxable services in the respective state.Packaging Sales and Use Tax Sales and use tax considerations for packaging can vary depending on the specific jurisdiction and the type of packaging involved.Exemptions for Packaging Materials:Non-returnable containers: In many jurisdictions, sales of non-returnable containers (like boxes, bags, or envelopes) are exempt from sales tax when sold to businesses that will use them to package their own products for resale.Packaging materials used for shipping: Materials like bubble wrap, packing peanuts, or shipping tape are often exempt from sales tax when purchased by businesses for shipping their products.Food and beverage packaging: In many states, packaging materials used for food and beverages, such as carryout containers, cups, and bags, are exempt from sales tax.Construction Sales and Use Tax Sales and use tax considerations for construction companies can be complex and vary depending on the specific state and local jurisdictions where they operate. Adding even more complexity, the type of construction contract often dictates the sales tax treatment of the corresponding invoices. For instance, a time and materials construction contract will often be subject to sales tax on the materials only if the construction services are exempt from tax. On the other hand, a lump sum construction contract will not be subject to sales tax since the contractor pays sales tax on their materials and factors that it into their corresponding construction bid.Sales Tax on Construction Services:Generally Non-Taxable: In most states, construction services themselves are not subject to sales tax. This includes labor, installation, and other services provided by contractors.Exemptions for Certain Services: Some states may have specific exemptions for certain types of construction services, such as those related to residential construction or low-income housing.Sales Tax on Construction Materials:Taxable at Purchase: Construction materials, such as lumber, drywall, plumbing fixtures, and electrical components, are typically subject to sales tax at the time of purchase.Exemptions for Certain Materials: Some states may offer exemptions for certain types of construction materials, particularly those that become affixed to real property.Use Tax on Construction Materials:Use Tax Liability: If a construction company purchases construction materials from out-of-state suppliers or makes purchases without paying sales tax, they may be liable for use tax.Exemptions for Certain Materials: Use tax exemptions may apply to the same types of materials that are exempt from sales tax.Other Construction Considerations:Equipment and Machinery: The taxability of equipment and machinery used in construction can vary depending on the specific item and its intended use.Software Sales and Use TaxThe ever-evolving landscape of sales and use tax can be particularly intricate for software companies. To ensure compliance, it's crucial to understand the key factors that may impact your business:Taxability of Software: A State-by-State CircumstanceTangible Media: Software delivered on physical media (CDs, DVDs) is generally classified as tangible personal property and is subject to sales tax.Digital Products: The taxability of digital products, including software downloads, varies significantly by state. Some states exempt them, while others may treat them as tangible personal property or a taxable service. Essentially, certain states determine taxability based on the method of delivery, i.e. electronic download vs. tangible disc. While other states look to the essence of what is being purchased and determine that canned software is taxable regardless of the method of delivery.Customized Software: Customized software is usually always exempt from tax regardless of delivery method.Software-as-a-Service (SaaS): SaaS models often present unique tax challenges. While some states consider SaaS as a taxable service, others may exempt it. It's essential to consult specific state laws to determine the correct tax treatment. Additionally, the location of where the licenses to the SaaS product are being used allows taxpayers to apportion their liability to states with either lower sales tax rates or states that have no sales tax at all.Software Use Tax LiabilityRemote Purchases: If your company purchases software for use in a state where you don't have nexus, you may be liable for use tax. This tax is typically the responsibility of the purchaser, but sellers may be required to collect it in certain circumstances.Additional Software Tax ConsiderationsRemote Workforce: The presence of remote workers can create nexus in certain states, impacting your sales and use tax obligations.Subscription-Based Models: The tax treatment of subscription-based software can be complex and varies by state. It's important to understand the specific rules for recurring revenue models.Retail Sales and Use TaxRetail companies Sales and Use Tax regulations vary significantly by state and locality. Understanding your locations core considerations is important.Product Taxability: Different types of products may be subject to different tax rates or exemptions. For example, groceries, prescription drugs, and certain clothing items may be exempt in some states.Sales Tax Holidays: Many states offer sales tax holidays on specific items or during certain periods. Staying informed about these exemptions can help you avoid errors and potential penalties.Remote Sales: If you sell products to customers in other states, you may need to register for sales tax in those states and collect the appropriate amount of tax depending on the amount of sales volume.Consumer Use Tax: This tax is imposed on consumers who purchase taxable goods from out-of-state sellers and use them within a state that has a sales tax.Seller's Use Tax: This tax is imposed on businesses that purchase taxable goods for use in their business but fail to pay sales tax on the purchase.Drop Shipping: If you use a drop shipping model, you may have sales tax obligations in multiple states, depending on where your suppliers and customers are located.Marketplace Facilitator Laws: These laws require online marketplaces to collect and remit sales tax on behalf of third-party sellers.Local Sales Tax: Many localities impose their own sales taxes, which can add to the complexity of tax calculations.https://youtu.be/HbpotdcPVMc?si=XH8f1voRpz5r-4hvMarketplace Facilitator LawsMarketplace facilitator laws impose an obligation on the platform that facilitates the sale (the marketplace facilitator) to collect and remit sales tax on behalf of the marketplace seller. These laws are significant because they shift the obligation to collect and remit sales tax from the seller to the marketplace platform.Sales Tax AuditsSales tax audit complexity is compounded by states becoming more aggressive and strategic in auditing taxpayers to recover tax dollars and fill budget gaps. As a result, businesses must understand their sales tax exposure, mitigate risk and past exposure, and establish processes and systems to ensure ongoing compliance.Sales Tax Audit TrendsRecent sales tax audit trends show an increased focus on remote sellers and the use of technology. States are actively targeting online retailers and businesses with remote employees to ensure they are properly collecting and remitting sales tax. Additionally, tax authorities are leveraging advanced data analytics tools to identify potential non-compliance issues, such as discrepancies in sales records or product classification errors. To mitigate audit risks, businesses should maintain accurate records, stay informed about changing tax laws, and consider using tax automation software to streamline compliance processes.Sales Tax Audit StrategiesSales tax audit strategies have become increasingly sophisticated, leveraging advanced data analytics and technology. State tax authorities are utilizing data mining techniques to identify potential non-compliance issues, such as discrepancies in sales records, product classification errors, or inconsistencies in tax rates. Additionally, there is a growing emphasis on remote seller audits, particularly targeting businesses that may not have a physical presence in a state but are required to collect and remit sales tax due to economic nexus.Sales Tax Audit Review for RefundsState tax authorities are scrutinizing refund claims more closely, particularly for businesses with complex operations or those claiming significant refunds. This increased scrutiny often involves detailed reviews of supporting documentation, such as purchase orders, invoices, and tax exemption certificates. To mitigate risks and maximize refund opportunities, businesses should maintain meticulous records, stay informed about changing tax laws, and consider consulting with tax professionals to ensure accurate and timely filing of refund claims.Sellers are still responsible for collecting and remitting sales made outside of a marketplace platform, including on an ecommerce site, at a trade show, or from a physical location.Frequently Asked QuestionsAs a business owner, understanding state and local tax laws is crucial to ensure compliance and minimize your tax liability. Here are some key questions to consider: What types of state and local taxes are applicable to my business? Generally, businesses are subject to state and local income tax, sales tax, property tax, and potentially other taxes like excise taxes or franchise taxes. How are these state and local taxes calculated and collected? The method of calculating state and local tax liabilities depends on the type of state and local tax (i.e. income, sales & use, property) and varies across the thousands of tax jurisdictions within the United States. Navigating the ever-changing state and local tax landscape requires deep expertise. Are there any tax incentives or credits available to my business? Available state and local tax credits and incentives vary by state, industry, and the type of activity being incentivized.  Commonly, tax credits and incentives are available for capital investment, hiring or retention of employees, employee training, relocation or new facility development, manufacturing of emerging technologies, and a host of other activities. Securing state and local tax incentives and credits requires familiarity with compliance obligations required by a state or local tax administrator to be awarded the tax credit or incentive. Am I required to collect and remit sales tax? Your business’s location, the nature of your products or services, and the specific rules of your state and locality all need to be evaluated whether your business has “nexus,” the taxable presence necessary for a state to impose their sales tax and require a business to collect and remit the tax.   Nexus and the resulting tax obligation can arise from having a physical presence in the state (i.e. employees or property) or even having an economic presence in the state by exceeding a particular sales revenue threshold – generally $100,000 What items are exempt from sales tax? Knowing which products or services are not subject to or are exempt from sales tax is crucial for accurate reporting and exemptions vary across industries.  Common non-taxable or exempt activities include providing certain services, manufacturing, processing, research and development, pollution control, sales of items to be resold, sales to exempt organization, and a host of other activities   Additionally, states very widely in the items they elect to impose the sales tax on.  For instance, software as a service (SaaS) is taxable in only about half of the states that impose a sales tax. How do I determine the correct sales tax rate for each transaction? Sales tax rates can vary based on location and the type of product or service. Keeping up to date on state and local sales tax rates is necessary to achieve accurate sales tax compliance.. Am I required to file income tax in a state?  Evaluating if your business is required to file an income tax return in a state starts with determining whether your business has nexus in the state sufficient for the state to tax your income.  Generally, state income tax nexus is derived through physical presence in a state, such as the presence of assets or employees, including those employees working remotely in the state. How is my business income taxed at the state and local level? The method of taxation varies based on how the business is structured from a legal entity perspective and where the business is located.  State income taxation can vary widely based on whether your business is a corporation or pass-through entity.  Additionally, states may tax different varieties of income differently, such as the taxation of goods vs. services, and impose varying taxing methodologies, adding further variations to the taxes your business may be subject to. What are the tax implications of operating in multiple jurisdictions? State income tax methodologies vary amongst the various states, with differences in the treatment of key components to the tax calculation, such as the tax base, apportionment of income, conformity to federal tax provisions, tax rates, and a host of other factors.  A multistate business faces the complicated task of navigating the myriad of state tax regimes. How is property tax assessed for my business property? Business property is generally taxed according to whether it is real property or business personal property. Real property tax and business personal property tax generally have different rates and nuances in how the tax is calculated. Exemptions are also generally different between the two taxes. Are there any tax exemptions or abatements available for business property? Some jurisdictions offer tax exemptions for property tax. Some common exemptions include property used in manufacturing, property used by a small business, research and development, pollution control, and agriculture. What payroll taxes are applicable to my employees? Payroll taxes include federal and state income tax withholding , Social Security tax, Medicare tax, and other employment-related taxes depending on your state and locality, such as state unemployment insurance. Remote and hybrid employees bring their own distinct challenges, such as the proper jurisdiction to withhold. How do I calculate and withhold these taxes from employee paychecks? Understanding the payroll tax calculation rules is crucial for compliance as each state and locality’s withholding rules differ greatly. Accurate payroll tax compliance is important since failure to collect and remit the proper payroll taxes may result in hefty penalties and interest and could even lead to the businesses’ owner with personal liability for the tax not being withheld and remitted. Generally, businesses are subject to state and local income tax, sales tax, property tax, and potentially other taxes like excise taxes or franchise taxes.The method of calculating state and local tax liabilities depends on the type of state and local tax (i.e. income, sales & use, property) and varies across the thousands of tax jurisdictions within the United States. Navigating the ever-changing state and local tax landscape requires deep expertise.Available state and local tax credits and incentives vary by state, industry, and the type of activity being incentivized.  Commonly, tax credits and incentives are available for capital investment, hiring or retention of employees, employee training, relocation or new facility development, manufacturing of emerging technologies, and a host of other activities. Securing state and local tax incentives and credits requires familiarity with compliance obligations required by a state or local tax administrator to be awarded the tax credit or incentive.Your business's location, the nature of your products or services, and the specific rules of your state and locality all need to be evaluated whether your business has “nexus,” the taxable presence necessary for a state to impose their sales tax and require a business to collect and remit the tax.   Nexus and the resulting tax obligation can arise from having a physical presence in the state (i.e. employees or property) or even having an economic presence in the state by exceeding a particular sales revenue threshold – generally $100,000Knowing which products or services are not subject to or are exempt from sales tax is crucial for accurate reporting and exemptions vary across industries.  Common non-taxable or exempt activities include providing certain services, manufacturing, processing, research and development, pollution control, sales of items to be resold, sales to exempt organization, and a host of other activities   Additionally, states very widely in the items they elect to impose the sales tax on.  For instance, software as a service (SaaS) is taxable in only about half of the states that impose a sales tax.Sales tax rates can vary based on location and the type of product or service. Keeping up to date on state and local sales tax rates is necessary to achieve accurate sales tax compliance.. Evaluating if your business is required to file an income tax return in a state starts with determining whether your business has nexus in the state sufficient for the state to tax your income.  Generally, state income tax nexus is derived through physical presence in a state, such as the presence of assets or employees, including those employees working remotely in the state.The method of taxation varies based on how the business is structured from a legal entity perspective and where the business is located.  State income taxation can vary widely based on whether your business is a corporation or pass-through entity.  Additionally, states may tax different varieties of income differently, such as the taxation of goods vs. services, and impose varying taxing methodologies, adding further variations to the taxes your business may be subject to.State income tax methodologies vary amongst the various states, with differences in the treatment of key components to the tax calculation, such as the tax base, apportionment of income, conformity to federal tax provisions, tax rates, and a host of other factors.  A multistate business faces the complicated task of navigating the myriad of state tax regimes.Business property is generally taxed according to whether it is real property or business personal property. Real property tax and business personal property tax generally have different rates and nuances in how the tax is calculated. Exemptions are also generally different between the two taxes.Some jurisdictions offer tax exemptions for property tax. Some common exemptions include property used in manufacturing, property used by a small business, research and development, pollution control, and agriculture.Payroll taxes include federal and state income tax withholding , Social Security tax, Medicare tax, and other employment-related taxes depending on your state and locality, such as state unemployment insurance. Remote and hybrid employees bring their own distinct challenges, such as the proper jurisdiction to withhold.Understanding the payroll tax calculation rules is crucial for compliance as each state and locality’s withholding rules differ greatly. Accurate payroll tax compliance is important since failure to collect and remit the proper payroll taxes may result in hefty penalties and interest and could even lead to the businesses’ owner with personal liability for the tax not being withheld and remitted. Excerpt: Discover the comprehensive range of services offered by Schneider Downs, a leading independent CPA firm. From audit and assurance to tax compliance and consulting, our expert team is dedicated to helping businesses navigate the complexities of financial management. Explore our specialized services in risk advisory, digital consulting, and wealth management tailored to meet the unique needs of public and private companies, not-for-profit organizations, and individuals. Stay informed with our insights and resources designed to empower your financial decisions. Join us on a journey to optimize your financial strategies and achieve your goals with confidence. ### One Big Beautiful Bill One Big Beautiful Bill Resource Center Expert insights to help you navigate the complexities of the One Big Beautiful Bill (OBBB). Contact us today Bill Overview Get a comprehensive snapshot of the One Big Beautiful Bill (OBBB) — its official enactment on July 4, 2025, how it extends or modifies key provisions of the TCJA and beyond, and why it’s considered one of the largest tax‑policy overhauls in recent years. The One Big Beautiful Bill: Highlights for Individual, Estate, and Gift Taxes July 10, 2025 Explore key individual, estate, and gift tax changes from the One Big Beautiful Bill and how they may impact your financial planning. Read More → The One Big Beautiful Bill: Highlights for Businesses and Tax-Exempt Organizations July 10, 2025 Explore key tax changes in the One Big Beautiful Bill that impact businesses and tax-exempt organizations, from deductions to compliance updates Read More → The One Big Beautiful Bill: State Tax Impact and Noteworthy Past Proposals Provisions That Were Not Included July 11, 2025 See how the One Big Beautiful Bill affects state taxes—and what high-profile tax proposals didn’t make it into the final legislation. Read More → Back to Categories Article Categories Main Menu Individual taxEstate and giftBusiness taxTax-exempt organizationsInternational taxIncentives and creditsState and Local ImplicationsIndustry-Specific Videos Janelle Merlo OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations September 22, 2025 Watch Now Mark A. DiPietrantonio OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations September 22, 2025 Watch Now Daniel P. Phillips OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations September 9, 2025 Watch Now Events R&D Tax Credits for Construction: Turning Legislative Change Into Opportunity When: October 22, 2025 @ 11:00 AM EST | Register Now Join the Schneider Downs R&D Tax Credit Team for a webinar on how recent ... View Event From Complexity to Clarity: Understanding the One Big Beautiful Bill (OBBB) When: Wednesday, August 20, 2025, 09:00 AM ET Join us for an informative and engaging webinar where we’ll break down the key elements of the ... View Event From Complexity to Clarity:Understanding the One Big Beautiful Bill (OBBB) Watch Webinar Download Slides VIDEOS | EVENTS | WEBINARS All Articles Explore our complete library of articles covering the OBBB across individual, business, estate, energy, green incentives, international, and state tax implications—your all‑in‑one source for updated tax insights. OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations September 22, 2025 Read More → OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations September 22, 2025 Read More → OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations September 9, 2025 Read More → OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations September 9, 2025 Read More → 7 Provisions of the OBBB That Provide a More Certain and Tax Efficient Environment for M&A Activity September 3, 2025 Read More → 1 2 3 … 6 Next » Individual Tax Understand how OBBB permanently extends the 20% Qualified Business Income deduction, enhances §529 education planning (including doubling K–12 tuition withdrawal limits), and adds new personal deductions for tips and overtime pay. The One Big Beautiful Bill: Key Green Energy Tax Credits Set to Expire July 29, 2025 Read More → Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay July 22, 2025 Read More → Employer Reporting Obligations for Employee Tax-Free Tips and Overtime Compensation July 16, 2025 Read More → 1 2 Next » Estate and Gift Learn how OBBB affects estate and gift planning, including changes to §529 plan usage and higher thresholds for qualifying withdrawals—features especially relevant for intergenerational wealth strategies. The One Big Beautiful Bill: Highlights for Individual, Estate, and Gift Taxes July 10, 2025 Read More → Business Tax Dive into the major tax changes impacting businesses: the permanent shift to EBITDA‑based §163(j) interest deduction, extended 100% bonus depreciation, heightened §179 expensing limits, and updated information‑reporting thresholds. OBBB Section 174 Expensing – Further Guidance with a Tight Timeline for Small Businesses August 29, 2025 Read More → Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay July 22, 2025 Read More → The “One Big Beautiful Bill” Makes Two Changes to the Income Tax Reporting of Residential Construction Contracts July 17, 2025 Read More → 1 2 3 4 Next » Tax-Exempt Organizations See how the OBBB modifies excise tax rules for tax‑exempt entities—expanding definitions of “covered employees” and adjusting endowment tax rates for large colleges and universities The One Big Beautiful Bill: Highlights for Businesses and Tax-Exempt Organizations July 10, 2025 Read More → Tax Exempt Organizations and “The One, Big, Beautiful Bill” Provisions With Potential Impact May 16, 2025 Read More → International Tax Understand global businesses’ exposure to OBBB provisions, from interest deduction changes to credit impacts and compliance shifts—especially for companies with cross‑border structures The One Big Beautiful Bill: International Tax Implications July 16, 2025 Read More → Incentives and Credits Discover which clean energy and green tax credits are expiring or being phased out—such as EV credits, home energy improvements, and commercial refueling property incentives—so you can act ahead of deadlines. The One Big Beautiful Bill: Key Green Energy Tax Credits Set to Expire July 29, 2025 Read More → Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay July 22, 2025 Read More → How does the One Big Beautiful Bill (OBBB) Impact the Energy and Natural Resources Industry? July 16, 2025 Read More → 1 2 Next » State and Local Implications Explore how OBBB’s federal tax changes may ripple into state conformity rules and SALT workaround regimes—as well as which proposals didn’t make it into the final bill. The One Big Beautiful Bill: State Tax Impact and Noteworthy Past Proposals Provisions That Were Not Included July 11, 2025 Read More → Major Tax Code Changes Under the One Big Beautiful Bill July 7, 2025 Read More → Industry-Specific Industry‑specific insights show how sectors like energy, manufacturing, construction, and real estate are impacted by the OBBB—from bonus depreciation in natural resources to advanced manufacturing tax credits for coal and changes to construction‑related clean energy incentives. The OBBB and Its Impact on the Real Estate Industry July 28, 2025 Read More → Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay July 22, 2025 Read More → The “One Big Beautiful Bill” Makes Two Changes to the Income Tax Reporting of Residential Construction Contracts July 17, 2025 Read More → 1 2 3 Next » ### Construction SME FAQs Construction SME FAQs Welcome to our comprehensive guide for Small and Medium-sized Enterprises (SMEs) in the construction industry. This resource addresses critical questions and provides insights into key financial and operational areas that impact your business. From navigating the complexities of joint ventures and financial consolidation to understanding indirect job costs, tax implications, and the benefits of captive insurance, we aim to equip you with the knowledge needed to make informed decisions and foster sustainable growth. Each section is designed to offer clear, concise answers to common challenges faced by construction SMEs. We'd love to hear from you if you have a question for our Construction team and don’t see it listed. Send us a question at contactsd@schneiderdowns.com. Joint Ventures FAQs What accounting consolidation method is appropriate to capture and report joint venture activity? Accurate financial reporting is crucial for transparency and compliance. Construction companies often may have a decision to make in terms of assessing how a joint venture activity is reflected within its financial reporting. These methods include cost, equity method, full consolidation, proportional consolidation, or partial consolidation. How are responsibilities and risks shared between joint venture partners? A well-structured joint venture agreement should explicitly define the allocation of responsibilities. This should cover aspects such as majority voting rights, profit and loss distribution, the designation of the managing partner, and mechanisms for dispute resolution. The significance of formulating a comprehensive agreement that addresses these factors cannot be overstated at the beginning of the joint venture. Clarifying these responsibilities prior to the commencement of the project will prevent potential issues in the future. What are some key factors that should be evaluated prior to entering into a joint venture? Prior to signing a joint venture agreement, a contractor should be evaluating the following: Operational strategic alignment – How will the joint venture align with our strategic goals and operational capabilities? What is the financial health of the potential joint venture partner? Have you reviewed their financial statements and credit history? How will the joint venture impact our balance sheet and cash flow? Performance metrics – What key performance indicators (KPIs) will be used to measure the success of the joint venture? How will financial reporting and transparency be maintained? Exit Strategy – What is the exit strategy for the joint venture? How will assets and liabilities be handled upon dissolution? Are there provisions for resolving disputes or disagreements? Accurate financial reporting is crucial for transparency and compliance. Construction companies often may have a decision to make in terms of assessing how a joint venture activity is reflected within its financial reporting. These methods include cost, equity method, full consolidation, proportional consolidation, or partial consolidation. A well-structured joint venture agreement should explicitly define the allocation of responsibilities. This should cover aspects such as majority voting rights, profit and loss distribution, the designation of the managing partner, and mechanisms for dispute resolution. The significance of formulating a comprehensive agreement that addresses these factors cannot be overstated at the beginning of the joint venture. Clarifying these responsibilities prior to the commencement of the project will prevent potential issues in the future. Prior to signing a joint venture agreement, a contractor should be evaluating the following: Operational strategic alignment - How will the joint venture align with our strategic goals and operational capabilities? What is the financial health of the potential joint venture partner? Have you reviewed their financial statements and credit history? How will the joint venture impact our balance sheet and cash flow? Performance metrics - What key performance indicators (KPIs) will be used to measure the success of the joint venture? How will financial reporting and transparency be maintained? Exit Strategy - What is the exit strategy for the joint venture? How will assets and liabilities be handled upon dissolution? Are there provisions for resolving disputes or disagreements? Consolidation FAQs What is the difference between consolidation and combination in financial statements? Consolidation and combination are methods used to present the financial statements of a construction company and its subsidiaries or affiliated entities. Consolidation involves merging the financial information of a parent company and its subsidiaries into a single set of statements, eliminating intercompany transactions and balances. Combination, on the other hand, involves aggregating the financial information of entities under common control but does not eliminate intercompany transactions. This method is less common in construction companies and may be used for joint ventures or partnerships. When should a construction company consolidate its financial statements? A construction company should consolidate its financial statements when it has control over other entities. Control is typically defined as owning more than 50% of the voting shares, being able to influence financial and operational policies, or having the power to appoint or remove the majority of the board of directors. Consolidation is necessary to provide a complete and accurate picture of the company’s financial position, performance, and cash flows, ensuring transparency for stakeholders. What are the key considerations in consolidating financial statements for a construction company? When consolidating financial statements, a construction company must consider the following key factors: Elimination of Intercompany Transactions: All transactions between the parent company and its subsidiaries, such as loans, sales, and expenses, must be eliminated to avoid double counting. Accounting Policies: The parent company and its subsidiaries must use consistent accounting policies to ensure comparability and accuracy in the consolidated statements. Minority Interests: The interests of minority shareholders in subsidiaries should be appropriately accounted for and presented in the consolidated financial statements. Goodwill and Impairment Testing: Goodwill arising from acquisitions must be recognized and tested for impairment regularly to reflect its fair value. Currency Translation: If the parent company or subsidiaries operate in different currencies, appropriate translation methods must be applied to consolidate the financial statements. Consolidation and combination are methods used to present the financial statements of a construction company and its subsidiaries or affiliated entities. Consolidation involves merging the financial information of a parent company and its subsidiaries into a single set of statements, eliminating intercompany transactions and balances. Combination, on the other hand, involves aggregating the financial information of entities under common control but does not eliminate intercompany transactions. This method is less common in construction companies and may be used for joint ventures or partnerships. A construction company should consolidate its financial statements when it has control over other entities. Control is typically defined as owning more than 50% of the voting shares, being able to influence financial and operational policies, or having the power to appoint or remove the majority of the board of directors. Consolidation is necessary to provide a complete and accurate picture of the company’s financial position, performance, and cash flows, ensuring transparency for stakeholders. When consolidating financial statements, a construction company must consider the following key factors: Elimination of Intercompany Transactions: All transactions between the parent company and its subsidiaries, such as loans, sales, and expenses, must be eliminated to avoid double counting. Accounting Policies: The parent company and its subsidiaries must use consistent accounting policies to ensure comparability and accuracy in the consolidated statements. Minority Interests: The interests of minority shareholders in subsidiaries should be appropriately accounted for and presented in the consolidated financial statements. Goodwill and Impairment Testing: Goodwill arising from acquisitions must be recognized and tested for impairment regularly to reflect its fair value. Currency Translation: If the parent company or subsidiaries operate in different currencies, appropriate translation methods must be applied to consolidate the financial statements. Indirect Job Costs FAQs What constitutes an indirect cost? Essentially, costs that are not easily identified with a specific project. Confusion often occurs in determining whether indirect costs relate to specific contracts or to the general operating expense of the contractor. Common indirect costs include: rent, utilities, depreciation, insurance, repairs and maintenance, and other costs related to construction facilities, as well as equipment. In addition, compensation, fringe benefits, workers’ compensation insurance, and payroll taxes for indirect labor (such as project managers and supervisors), are also indirect costs. How do you appropriately allocate the indirect costs? All indirect costs related to the construction process should be identified and included in an overhead pool or pools to be allocated to the construction costs of individual contracts. Determining overhead pools and allocation of those costs generally depend on the type of work and amount of costs incurred. Guidelines to be considered in determining the components of the overhead pools include: If the indirect cost was incurred solely to benefit the construction activity, all of that cost should be included in the overhead pool. If the indirect cost does not relate to the construction activity, none of it should be considered in the overhead pool. If a portion of the cost relates directly to the construction activity, consider only that portion in the overhead allocation. What methods of allocating overhead are GAAP compliant and can I change the allocation? GAAP allows a variety of methods for allocating overhead costs among construction contractors, including allocations based on direct labor hours, direct labor costs, or combinations of direct labor and material costs. A key point is that the contractor makes sure that the method used is systematic, rational, and consistent year after year. However, indirect costs and estimating processes change over time, therefore contractors should periodically consider the appropriateness of the allocation method used and revise the process as necessary to maintain accuracy. What are the repercussions if contractors fail to properly allocate indirect costs? Contracts run the risk of not recouping expenses or submitting inaccurate bids, which could lead to cost overruns and lost profits. Underestimating indirect costs during bidding often results in contract losses, while overestimating may prevent the contractor from obtaining the job in a competitive environment. Essentially, costs that are not easily identified with a specific project. Confusion often occurs in determining whether indirect costs relate to specific contracts or to the general operating expense of the contractor. Common indirect costs include: rent, utilities, depreciation, insurance, repairs and maintenance, and other costs related to construction facilities, as well as equipment. In addition, compensation, fringe benefits, workers’ compensation insurance, and payroll taxes for indirect labor (such as project managers and supervisors), are also indirect costs. All indirect costs related to the construction process should be identified and included in an overhead pool or pools to be allocated to the construction costs of individual contracts. Determining overhead pools and allocation of those costs generally depend on the type of work and amount of costs incurred. Guidelines to be considered in determining the components of the overhead pools include: If the indirect cost was incurred solely to benefit the construction activity, all of that cost should be included in the overhead pool. If the indirect cost does not relate to the construction activity, none of it should be considered in the overhead pool. If a portion of the cost relates directly to the construction activity, consider only that portion in the overhead allocation. GAAP allows a variety of methods for allocating overhead costs among construction contractors, including allocations based on direct labor hours, direct labor costs, or combinations of direct labor and material costs. A key point is that the contractor makes sure that the method used is systematic, rational, and consistent year after year. However, indirect costs and estimating processes change over time, therefore contractors should periodically consider the appropriateness of the allocation method used and revise the process as necessary to maintain accuracy. Contracts run the risk of not recouping expenses or submitting inaccurate bids, which could lead to cost overruns and lost profits. Underestimating indirect costs during bidding often results in contract losses, while overestimating may prevent the contractor from obtaining the job in a competitive environment. Taxes/Lookback FAQs What is the small contractor exception? The small contractor exemption allows contractors with average annual gross receipts of $30 million or less to use the completed contract method or other permissible methods, potentially deferring revenue recognition for tax purposes. How does percentage of completion method work? Taxable income is recognized based on the percentage of the contract completed during the tax year. This is determined by comparing costs allocated to the contract and incurred before the end of the tax year with the estimated total contract costs. How does the look-back method work? The look-back method is used to correct over- or under-reported income from long-term contracts. After the contract is completed, the contractor must compare the actual income and expenses to the estimated amounts reported in previous years and adjust their tax returns accordingly. The small contractor exemption allows contractors with average annual gross receipts of $30 million or less to use the completed contract method or other permissible methods, potentially deferring revenue recognition for tax purposes. Taxable income is recognized based on the percentage of the contract completed during the tax year. This is determined by comparing costs allocated to the contract and incurred before the end of the tax year with the estimated total contract costs. The look-back method is used to correct over- or under-reported income from long-term contracts. After the contract is completed, the contractor must compare the actual income and expenses to the estimated amounts reported in previous years and adjust their tax returns accordingly. Captive Insurance FAQs What are the benefits of forming/participating within a captive insurance arrangement? Customization of coverage – Captive insurance allows companies the ability to customize their insurance policies to create more comprehensive and relevant coverage to address their unique operational risks. Cost savings and potential earnings – Traditional insurance companies charge premiums based on industry-wide risks, which can lead to higher premiums. Captive insurance allows companies to retain more of their unused premiums, especially if they have strong risk management practices. Additionally, those premiums funded are invested until the funds are needed to pay claims or other expenses. The investments can generate additional income used to cover future claims or future premiums. Access to reinsurance market – Captives can negotiate directly with the reinsurance market avoiding commissions charged by commercial carriers Potential tax benefits – Captives can also offer potential tax benefits depending on how the captive is structured and the jurisdiction in which it is domiciled. Premiums paid to a captive may be tax-deductible as a business expense reducing the overall tax burden for the parent company. A captive insurance company formed under internal revenue code section 831(b) with net premiums that do not exceed $2,650,000 for a taxable year can elect to be taxed on its investment income only. Risk management – Companies may be incentivized to invest in safety programs, employee training and other loss prevention initiatives in an effort to reduce claim activity, ultimately fostering a safer work environment. What responsibility will my company have in operating a captive? Captives are subject to strict regulatory oversight, which can vary depending on the jurisdiction in which the captive is domiciled. They must comply with local insurance laws, maintain solvency requirements and submit quarterly/annual financial reports to regulators. The day-to-day administration of the captive will be handled by third party captive managers and consultants, but the Company will still bear ultimate oversight responsibilities including participation in the captive’s board of directors. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. What forms of collateral are accepted for participation within a group captive? Each member is required to post collateral for the purpose of funding and capitalizing the captive as well as collateralizing the policy issuing/fronting carrier. Members may post letters of credit or cash collateral with cash collateral providing an opportunity to earn investment income. Customization of coverage - Captive insurance allows companies the ability to customize their insurance policies to create more comprehensive and relevant coverage to address their unique operational risks. Cost savings and potential earnings - Traditional insurance companies charge premiums based on industry-wide risks, which can lead to higher premiums. Captive insurance allows companies to retain more of their unused premiums, especially if they have strong risk management practices. Additionally, those premiums funded are invested until the funds are needed to pay claims or other expenses. The investments can generate additional income used to cover future claims or future premiums. Access to reinsurance market – Captives can negotiate directly with the reinsurance market avoiding commissions charged by commercial carriers Potential tax benefits - Captives can also offer potential tax benefits depending on how the captive is structured and the jurisdiction in which it is domiciled. Premiums paid to a captive may be tax-deductible as a business expense reducing the overall tax burden for the parent company. A captive insurance company formed under internal revenue code section 831(b) with net premiums that do not exceed $2,650,000 for a taxable year can elect to be taxed on its investment income only. Risk management - Companies may be incentivized to invest in safety programs, employee training and other loss prevention initiatives in an effort to reduce claim activity, ultimately fostering a safer work environment. Captives are subject to strict regulatory oversight, which can vary depending on the jurisdiction in which the captive is domiciled. They must comply with local insurance laws, maintain solvency requirements and submit quarterly/annual financial reports to regulators. The day-to-day administration of the captive will be handled by third party captive managers and consultants, but the Company will still bear ultimate oversight responsibilities including participation in the captive’s board of directors. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. Each member is required to post collateral for the purpose of funding and capitalizing the captive as well as collateralizing the policy issuing/fronting carrier. Members may post letters of credit or cash collateral with cash collateral providing an opportunity to earn investment income. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. 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Whether your journey started in the C-suite, Accounting, FP&A or Operations, we ensure all stakeholders benefit from your investment.Our enterprise-wide solutions transform data into intelligent insights, enhancing strategy, optimizing operations and providing a complete view of performance and opportunities that impact your bottom line.Power BI Business AnalyticsGain a holistic view of your organizational data to drive ongoing success with SD Digital. Our team transforms fragmented business data sets into integrated insights that drive the creation of enterprise-level KPIs, directly contributing to an organization’s success. These KPIs include customer satisfaction (CSAT), profitability, sales pipeline, customer service and operations management.Power BI Compliance AnalyticsNavigate compliance with confidence. 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By aligning and mobilizing critical financial data analytics from accounts receivable, accounts payable and FP&A, SD Digital provides a holistic view of revenue and sales data, expense data, profit figures, asset information, liabilities, equity data, cash flow statements, investment data, budgets and forecasts, tax records, credit information, market data, bank statements and financial ratios.Power BI Supplemental ServicesTalent AccelerationLooking to build out a future-ready data team? SD Digital provides the framework and expertise to help organizations establish and manage their data analytics teams to meet evolving business demands with confidence. SupportOur Microsoft-certified Power BI experts can provide additional training and post go-live support when needed, ensuring the ongoing success of implementation. SD Digital also offers managed services to organizations that desire worry-free proactive support for their investment in Power BI.Ready to Start Your Digital Journey? 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CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Cleveland, OHSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Cleveland OHNot ready for the CMMC Certification yet? Has your Cleveland and Ohio business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Cleveland (OH)Cleveland serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Cleveland’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Scottsdale (AZ) CMMC Compliance Services - Scottsdale (AZ) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Scottsdale (AZ), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Scottsdale, AZSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Scottsdale, AZNot ready for the CMMC Certification yet? Has your Scottsdale and Arizona business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Scottsdale, AZScottsdale serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Scottsdale’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Cincinnati (OH) CMMC Compliance Services - Cincinnati (OH) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Cincinnati (OH), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Cincinnati, OHSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Cincinnati OHNot ready for the CMMC Certification yet? Has your Cincinnati and Ohio business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Cincinnati (OH)Cincinnati serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Cincinnati’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Columbus (OH) CMMC Compliance Services - Columbus (OH) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Columbus (OH), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Columbus, OHSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Columbus, OHNot ready for the CMMC Certification yet? Has your Columbus and Ohio business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Columbus (OH)Columbus serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Columbus’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Baltimore (MD) CMMC Compliance Services - Baltimore (MD) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Baltimore (MD), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Baltimore (MD)Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Baltimore (MD)Not ready for the CMMC Certification yet? Has your Baltimore and Maryland  business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Baltimore (MD)Baltimore serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Baltimore’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Boston (MA) CMMC Compliance Services - Boston (MA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Boston (MA), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Boston (MA)Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Boston (MA)Not ready for the CMMC Certification yet? Has your Boston business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Boston (MA)Boston serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Boston’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Plymouth (MA) CMMC Compliance Services - Plymouth (MA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Plymouth (MA), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Plymouth (MA)Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Plymouth (MA)Not ready for the CMMC Certification yet? Has your Plymouth business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Plymouth (MA)Plymouth serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Plymouth’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Jacksonville (FL) CMMC Compliance Services - Jacksonville (FL) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Jacksonville (FL), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Jacksonville (FL)Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Jacksonville (FL)Not ready for the CMMC Certification yet? Has your Jacksonville and Florida business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Jacksonville (FL)Jacksonville serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Jacksonville’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Tucson (AZ) CMMC Compliance Services -Tucson (AZ) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Tucson (AZ), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Tucson, AZSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Tucson, AZNot ready for the CMMC Certification yet? Has your Tucson and Arizona business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Tucson, AZTucson serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Tucson’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Phoenix (AZ) CMMC Compliance Services - Phoenix (AZ) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Phoenix (AZ), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Phoenix, AZSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Phoenix, AZNot ready for the CMMC Certification yet? Has your Phoenix and Arizona business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Phoenix, AZPhoenix serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Phoenix’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Tacoma (WA) CMMC Compliance Services - Tacoma (WA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Tacoma (WA), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Tacoma, WASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Tacoma, WANot ready for the CMMC Certification yet? Has your Tacoma and Washington business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Tacoma, WATacoma serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Tacoma’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Seattle (WA) CMMC Compliance Services - Seattle (WA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Seattle (WA), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Seattle, WASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Seattle, WANot ready for the CMMC Certification yet? Has your Seattle and Washington business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Seattle, WASeattle serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Seattle’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Tampa (FL) CMMC Compliance Services - Tampa (FL) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Tampa (FL), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Tampa, FLSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Tampa, FLNot ready for the CMMC Certification yet? Has your Tampa and Florida business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Tampa, FLTampa serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Tampa’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Miami (FL) CMMC Compliance Services - Miami (FL) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Miami (FL), and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Miami, FLSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Miami, FLNot ready for the CMMC Certification yet? Has your Miami and Florida business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Miami, FLMiami serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Miami’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - San Francisco CA CMMC Compliance Services - San Francisco (CA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in San Francisco, CA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in San Francisco, CASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – San Francisco, CANot ready for the CMMC Certification yet? Has your San Francisco and California business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in San Francisco, CASan Francisco serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances San Francisco’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - San Diego CA CMMC Compliance Services - San Diego (CA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in San Diego, CA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in San Diego, CASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – San Diego, CANot ready for the CMMC Certification yet? Has your San Diego and California business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in San Diego, CASan Diego serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances San Diego’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Los Angeles CA CMMC Compliance Services - Los Angeles (CA) As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Los Angeles, CA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Los Angeles, CASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Los Angeles, CANot ready for the CMMC Certification yet? Has your Los Angeles and California business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Los Angeles, CALos Angeles serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Los Angeles’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Alexandria (VA) CMMC Compliance Services - Alexandria, Virginia As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Alexandria, VA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Alexandria, VASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Alexandria, VANot ready for the CMMC Certification yet? Has your Alexandria and Virginia business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Alexandria, VAAlexandria serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Alexandria’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Norfolk (VA) CMMC Compliance Services - Norfolk, Virginia As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Norfolk, VA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Norfolk, VASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Norfolk, VANot ready for the CMMC Certification yet? Has your Norfolk and Virginia business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Norfolk, VANorfolk serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Norfolk’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Richmond (VA) CMMC Compliance Services - Richmond, Virginia As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Richmond, VA, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Richmond, VASchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Richmond, VANot ready for the CMMC Certification yet? Has your Richmond and Virginia business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Richmond, VARichmond serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Richmond’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Dallas (TX) CMMC Compliance Services - Dallas, Texas As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Dallas, TX, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Dallas, TXSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Dallas, TXNot ready for the CMMC Certification yet? Has your business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Dallas, TXDallas, TX serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Houston’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Compliance Services - Houston(TX) CMMC Compliance Services - Houston, Texas As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Houston, TX, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Houston, TXSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Houston, TXNot ready for the CMMC Certification yet? Has your Houston and Texas business aligned your System Security Plan (SSP) with your Shared Responsibility Matrix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Houston, TXHouston, TX serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Houston’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### SD Focus on Women [Content is password protected] ### CMMC Compliance Services - Austin, TX CMMC Compliance Services - Austin, Texas As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause in Austin, TX, and nationwide.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC Certification in Austin, TXSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment Consulting – Austin, TXNot ready for the CMMC Certification yet? Have you aligned your System Security Plan (SSP) with your Shared Responsibility Matix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment.CMMC Compliance Services in Austin, TXAustin, TX serves as a key hub for defense innovation and research. The presence of DoD organizations and defense-related companies further enhances Austin’s role as a strategic center for innovation. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### Not-for-Profit Industry FAQs Not-for-Profit FAQs The Not-for-Profit practice at Schneider Downs takes great pride in helping our clients answer the questions that matter most to their organizations. We’ve learned that often there are other organizations with very similar queries. We'd love to hear from you if you have a question for our not-for-profit team and don’t see it listed. Send us a question at contactsd@schneiderdowns.com. General NFP FAQs What are the key differences between not-for-profit (NFP) and for-profit entities? NFPs have no owners and therefore do not distribute profit​ Differing revenue streams​ NFP entities receive contributions, grants and/or membership dues​ For-profit entities sell goods or services​ NFP return (Form 990) is a public document​ NFP entities are generally exempt from income taxes (if approved by IRS)​ NFP may need to comply with solicitation rules in various states and other jurisdictions where they raise funds. What are the key differences between not-for-profit (NFP) and for-profit financial statements? Statement of financial position (NFP) v. balance sheet​ (for-profit) Net assets (NFP) vs. stockholder’s equity​ (for-profit) Statement of activities (NFP) vs. statement of operations​ (for-profit) NFPs have a statement of functional expenses​ Present expenses by program and general and administrative rather than by natural category (salaries, rent, etc.)​ What are net assets with donor restrictions? Net assets with donor restrictions are net assets subject to donor-imposed restrictions and are generally legally binding. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates those resources be maintained in perpetuity. Gifts of long-lived assets and gifts of cash restricted for the acquisition of long-lived assets are recognized as revenue when the assets are placed in service. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed when the stipulated purpose for which the resource was restricted has been fulfilled, or both. As a reminder, only donors can create or relieve these types of restrictions. Any restrictions that are created by the organization (board or management) are not subject to the same legal requirements and restrictions and can be changed. NFPs have no owners and therefore do not distribute profit​ Differing revenue streams​ NFP entities receive contributions, grants and/or membership dues​ For-profit entities sell goods or services​ NFP return (Form 990) is a public document​ NFP entities are generally exempt from income taxes (if approved by IRS)​ NFP may need to comply with solicitation rules in various states and other jurisdictions where they raise funds. Statement of financial position (NFP) v. balance sheet​ (for-profit) Net assets (NFP) vs. stockholder’s equity​ (for-profit) Statement of activities (NFP) vs. statement of operations​ (for-profit) NFPs have a statement of functional expenses​ Present expenses by program and general and administrative rather than by natural category (salaries, rent, etc.)​ Net assets with donor restrictions are net assets subject to donor-imposed restrictions and are generally legally binding. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates those resources be maintained in perpetuity. Gifts of long-lived assets and gifts of cash restricted for the acquisition of long-lived assets are recognized as revenue when the assets are placed in service. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed when the stipulated purpose for which the resource was restricted has been fulfilled, or both. As a reminder, only donors can create or relieve these types of restrictions. Any restrictions that are created by the organization (board or management) are not subject to the same legal requirements and restrictions and can be changed. Higher Education FAQs Why does my institution of higher education have so many compliance requirements? The answer is that it is largely driven by all the significant and varying forms of grants that higher education institutions receive from federal, state and other grantors. Each specific grant, such as those related to financial aid, will require the institution to adhere to the underlying guidelines promulgated by the awarding agency. Compliance challenges can be significant, but the overall amount that institutions receive from these awards is typically very significant, both qualitatively and quantitatively, to the institution. Typically, compliance requirements change on an annual basis and the Office of Management and Budget (OMB) publishes an updated compliance supplement annually that includes the most recent compliance requirements. Does my institution of higher education have contract liabilities under Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers? The answer depends on your fiscal year and the timing of any programs you run where you received amounts from the ‘customer’ before fiscal year-end, but the overall performance obligation has not been satisfied yet as the program runs to completion after the fiscal year ends. This situation can be common at many institutions that offer summer or other programs that don’t align with the institution’s fiscal year-end date. The answer is that it is largely driven by all the significant and varying forms of grants that higher education institutions receive from federal, state and other grantors. Each specific grant, such as those related to financial aid, will require the institution to adhere to the underlying guidelines promulgated by the awarding agency. Compliance challenges can be significant, but the overall amount that institutions receive from these awards is typically very significant, both qualitatively and quantitatively, to the institution. Typically, compliance requirements change on an annual basis and the Office of Management and Budget (OMB) publishes an updated compliance supplement annually that includes the most recent compliance requirements. The answer depends on your fiscal year and the timing of any programs you run where you received amounts from the ‘customer’ before fiscal year-end, but the overall performance obligation has not been satisfied yet as the program runs to completion after the fiscal year ends. This situation can be common at many institutions that offer summer or other programs that don’t align with the institution’s fiscal year-end date. Single Audit FAQs What triggers a Federal Single Audit? Currently, any organization that expends more than $750,000 of federal financial assistance is subject to a single audit. In April 2024, this threshold was increased to $1,000,000 for fiscal years beginning on or after October 1, 2024. Organizations with fiscal years ending June 30, 2024 and 2025 are still subject to a single audit if they have more than $750,000 of federal financial assistance but will see relief in the single audits for fiscal years ending June 30, 2026, and beyond if they expend less than $1,000,000. Calendar year organizations will see relief for years ending December 31, 2025. For more information on recent changes, visit our article at Single Audits and the 2024 Uniform Grant Guidance. Do I have any special filing requirements if I received more than Single Audit threshold? If you exceed the thresholds above and you have an audit completed, you are required to file your audit with the Federal Audit Clearinghouse (“FAC”) within 9 months of your fiscal year-end. You will need to complete the Data Collection Form (DCF) which includes information about your organization as well as information about the results of your audit. As part of this filing, the full text of your financial statements will be publicly available on the FAC site. In addition, Institutions of Higher Education need to complete an annual filing via the U.S. Department of Education’s Ez-Audit system. Currently, any organization that expends more than $750,000 of federal financial assistance is subject to a single audit. In April 2024, this threshold was increased to $1,000,000 for fiscal years beginning on or after October 1, 2024. Organizations with fiscal years ending June 30, 2024 and 2025 are still subject to a single audit if they have more than $750,000 of federal financial assistance but will see relief in the single audits for fiscal years ending June 30, 2026, and beyond if they expend less than $1,000,000. Calendar year organizations will see relief for years ending December 31, 2025. For more information on recent changes, visit our article at Single Audits and the 2024 Uniform Grant Guidance. If you exceed the thresholds above and you have an audit completed, you are required to file your audit with the Federal Audit Clearinghouse (“FAC”) within 9 months of your fiscal year-end. You will need to complete the Data Collection Form (DCF) which includes information about your organization as well as information about the results of your audit. As part of this filing, the full text of your financial statements will be publicly available on the FAC site. In addition, Institutions of Higher Education need to complete an annual filing via the U.S. Department of Education’s Ez-Audit system. Accounting Treatment FAQs Are government grants considered a contribution or an exchange transaction? An exchange transaction is defined as a reciprocal transfer whereby each party receives and sacrifices something of approximately equal value. Government grants most often benefit the general public and are therefore considered contributions. Contributions should be accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 958. For more information visit our article on accounting for Exchange versus Contribution transactions and the associated impact of the Current Expected Credit Loss (CECL) standard. How do I account for donated space under Accounting Standards Codification (“ASC”) 842? ASC 842 defines a lease as: a contract, or part of a contract, that conveys the right of control and the use of identified property, plant, and equipment (an identified asset) for a period of time in exchange for consideration. Because no consideration is exchanged for the use of the space, donated space does not meet the definition of a lease under ASC 842.  Donated space should continue to be accounted for under Accounting Standards Update (“ASU”) 2020-07. An exchange transaction is defined as a reciprocal transfer whereby each party receives and sacrifices something of approximately equal value. Government grants most often benefit the general public and are therefore considered contributions. Contributions should be accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 958. For more information visit our article on accounting for Exchange versus Contribution transactions and the associated impact of the Current Expected Credit Loss (CECL) standard. ASC 842 defines a lease as: a contract, or part of a contract, that conveys the right of control and the use of identified property, plant, and equipment (an identified asset) for a period of time in exchange for consideration. Because no consideration is exchanged for the use of the space, donated space does not meet the definition of a lease under ASC 842.  Donated space should continue to be accounted for under Accounting Standards Update (“ASU”) 2020-07. Tax Related FAQs Do I have to file a Form 990 series return if my organization’s exemption is still pending with the Internal Revenue Service (“IRS”)? Yes. Newly formed non-profit organizations that don’t have their IRS Exemption Determination Letter yet are still required to file an appropriate Form 990 series return. Are tax-exempt organizations required to pay tax on investment income? Generally, investment income such as interest, dividends, royalties and capital gains are excluded from taxable income under Section 512 (b) of the Internal Revenue Code. However, there are certain scenarios when investment income is considered Unrelated Business Income (“UBI”) and is subject to the corporate income tax. For example, income from debt-financed property and income from controlled entities may be considered UBI. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. What are the filing thresholds for Forms 990-N, 990-EZ, 990? Form 990-N, e-Postcard – Annual gross receipts are normally $50,000 or less. Gross receipts are the total amounts the organization received from all sources during the accounting period (expenses are not deducted) Gross receipts are normally $50,000 or less if the organization: In existence 1 year or less: Received $75,000 or less during its first tax year In existence 1-3 years: Averaged $60,000 or less in gross receipts in each of the first two periods. In existence over 3 years: Averaged $50,000 or less in gross receipts for the immediately preceding 3 years (starting with current tax year Form 990-EZ, Short Form Return of Organization Exempt from Income Tax – Annual gross receipts less than $200,000 and total assets at year-end of less than $500,000. Gross receipts are calculated the same as for 990-N Form 990, Return of Organization Exempt from Income Tax – Annual gross receipts greater than or equal to $200,000 or total assets at year-end greater than or equal to $500,000. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. What are the public disclosure requirements for Form 990, Return of Organization Exempt from Income Tax, and where can I find an organization’s return? Exempt organizations must make their annual information return (Forms 990, 990-EZ or 990-N) available for three years. Schedule B, which lists the individual names, addresses and the amount of the contributions from your donors that exceed a threshold, is not subject to public disclosure requirements for public charities. However, private foundations must disclose Schedule B. A copy of the information return does not have to be provided if the form is publicly available online, but the form must be available for in-person inspection. Below are some common websites that provide public disclosure copies of tax-exempt organization returns: IRS Tax Exempt Organization Search  Guidestar ProPublica Nonprofit Explorer  What is a donor-advised fund (“DAF”)? A donor-advised fund (DAF) is a fund or account that is separately identified by reference to contributions of a donor or donors, that is owned and controlled by a sponsoring organization; and with respect to which a donor (or any person appointed or designated by the donor, i.e. a “donor advisor”) has, or reasonably expects to have, advisory privileges with respect to the distribution or investment of amounts held in the fund or account by reason of the donor’s status as a donor. When a taxpayer contributes cash, securities, or other assets to a donor-advised fund, they are generally eligible to take an immediate tax deduction. What is a donor acknowledgement letter and what is required to be included in the letter? A donor acknowledgment letter is a formal letter sent by a charitable organization to a donor to acknowledge and thank them for their contribution. This letter expresses the organization’s appreciation for the donor’s generosity, helping to build a positive relationship and encouraging future donations.  In addition, the letter provides support for the donor’s tax documentation. For donations of $250 or more, the IRS requires a written acknowledgment for the donor to claim a tax deduction. This acknowledgment must include the name of the organization, the amount of any cash contribution, a description (but not the value) of any non-cash contributions, and a statement regarding whether any goods or services were provided in exchange for the donation. For more information visit our article Reminders on Completing Donor Acknowledgement Letters. Yes. Newly formed non-profit organizations that don’t have their IRS Exemption Determination Letter yet are still required to file an appropriate Form 990 series return. Generally, investment income such as interest, dividends, royalties and capital gains are excluded from taxable income under Section 512 (b) of the Internal Revenue Code. However, there are certain scenarios when investment income is considered Unrelated Business Income (“UBI”) and is subject to the corporate income tax. For example, income from debt-financed property and income from controlled entities may be considered UBI. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. Form 990-N, e-Postcard - Annual gross receipts are normally $50,000 or less. Gross receipts are the total amounts the organization received from all sources during the accounting period (expenses are not deducted) Gross receipts are normally $50,000 or less if the organization: In existence 1 year or less: Received $75,000 or less during its first tax year In existence 1-3 years: Averaged $60,000 or less in gross receipts in each of the first two periods. In existence over 3 years: Averaged $50,000 or less in gross receipts for the immediately preceding 3 years (starting with current tax year Form 990-EZ, Short Form Return of Organization Exempt from Income Tax – Annual gross receipts less than $200,000 and total assets at year-end of less than $500,000. Gross receipts are calculated the same as for 990-N Form 990, Return of Organization Exempt from Income Tax – Annual gross receipts greater than or equal to $200,000 or total assets at year-end greater than or equal to $500,000. In addition, certain private foundations are required to pay tax on their net investment income annually as reported on their Form 990-PF, Return of Private Foundation, filed with the Internal Revenue Service. Exempt organizations must make their annual information return (Forms 990, 990-EZ or 990-N) available for three years. Schedule B, which lists the individual names, addresses and the amount of the contributions from your donors that exceed a threshold, is not subject to public disclosure requirements for public charities. However, private foundations must disclose Schedule B. A copy of the information return does not have to be provided if the form is publicly available online, but the form must be available for in-person inspection. Below are some common websites that provide public disclosure copies of tax-exempt organization returns: IRS Tax Exempt Organization Search  Guidestar ProPublica Nonprofit Explorer  A donor-advised fund (DAF) is a fund or account that is separately identified by reference to contributions of a donor or donors, that is owned and controlled by a sponsoring organization; and with respect to which a donor (or any person appointed or designated by the donor, i.e. a "donor advisor") has, or reasonably expects to have, advisory privileges with respect to the distribution or investment of amounts held in the fund or account by reason of the donor’s status as a donor. When a taxpayer contributes cash, securities, or other assets to a donor-advised fund, they are generally eligible to take an immediate tax deduction. A donor acknowledgment letter is a formal letter sent by a charitable organization to a donor to acknowledge and thank them for their contribution. This letter expresses the organization's appreciation for the donor's generosity, helping to build a positive relationship and encouraging future donations.  In addition, the letter provides support for the donor’s tax documentation. For donations of $250 or more, the IRS requires a written acknowledgment for the donor to claim a tax deduction. This acknowledgment must include the name of the organization, the amount of any cash contribution, a description (but not the value) of any non-cash contributions, and a statement regarding whether any goods or services were provided in exchange for the donation. For more information visit our article Reminders on Completing Donor Acknowledgement Letters. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. OUR THOUGHTS ON Senator Wyden's Memo: Potential Revenue-Generating Changes and Their Implications Senator Ron Wyden’s (D-OR) memo from House Budget Committee Republicans outlines options that the committee is considering in order to… Read More > Understanding Donated Space Under Accounting Standards Codification 842 Accounting for leases has undergone significant changes with the introduction of Accounting Standard Codification (ASC) 842. Under ASC 842, right-of-use… Read More > IRS Releases six annual revenue procedures for 2025 The IRS has released six annual revenue procedures for 2025 in Internal Revenue Bulletin 2025-1. This article will focus on… Read More > Uniform Guidance: De Minimis Rate Increase for Indirect Costs October 1, 2024 marked the effective date for exciting changes to the Office of Management and Budget (OMB) Guidance for… Read More > Reminders on Completing Donor Acknowledgment Letters As 2024 comes to a close, it’s important that tax-exempt organizations provide acknowledgment letters to donors for charitable contributions that… Read More > Back to the Basis: Form 990, Part VII Reporting By law, tax-exempt organizations are required to report directors, trustees, officers, key and highest-compensated employees, and certain individuals who formerly… Read More > Time Extended for Tax-Exempt Organizations to Claim Direct Payment of Certain Energy Credits Internal Revenue Code Section 6417 allows certain tax-exempt entities to make an elective payment election for tax credits, treating the… Read More > ### Accounting Optimization Assessments Future-proof your accounting function with Accounting Optimization Assessments. PRIMARY CONTACT: Carley TaslovThe accounting function is the heartbeat of thriving organizations. If designed appropriately, accounting functions play an instrumental role in helping organizations both execute strategy and maintain sustainable growth. Outdated accounting functions can impact the bottom line through financial mismanagement, compliance issues, missed opportunities and operational inefficiencies. It is essential to ensure your accounting function is performing effectively.Accounting Optimization Assessments (AOA) are a crucial first step toward developing a best-in-class accounting function. These assessments help organizations identify fundamental issues in processes, policies, people and technology through a comprehensive and objective evaluation.Is your accounting function struggling to keep pace with demands? Our Accounting Optimization Assessments help organizations evaluate and discover actionable steps to strengthen their accounting functions. Our assessments provide a roadmap to increased operational efficiency and empower accountants to allocate resources strategically while maximizing benefits in alignment with organizational priorities and goals.Accounting Optimization Assessments Assist Organizations in Navigating Common Events and ChallengesAccelerated growth outpacing current accounting capabilitiesAcquisitions or divestituresDelays in month-end closeKey changes in management or significant employee turnoverRecent fraud or accounting errorsSignificant use of Excel to manipulate data for reportingSuccession planning for long-tenured employeesUntimely or inaccurate operational or financial information needed to make informed business decisions Benefits of Accounting Optimization Assessments Our solutions help accounting functions identify the high-level steps needed to optimize and align processes, technology and human capital resources. We help clients adopt an experience-driven, outcome-focused strategy enriched with business expertise across numerous industries.Data Accessibility and Reliability — Improve data visibility and ensure completeness and accuracy of financial reporting data.Employee Engagement — Alleviate unnecessary or redundant tasks, allowing employees to focus on higher-value-added activities.Increased Revenue — Gain better visibility into your processes, people and technology to identify new growth opportunities and take action on patterns and trends that would have otherwise remained hidden.Improved Reporting and Analytics — Improve timeliness and availability of financial and accounting reporting and analytics to better support business insights and decision-making.Reduced Cost —Save time and money by pinpointing cost-saving opportunities across your resources, including staff restructuring.Reduced Fraud Risk — Identify potential fraud prevention measures.Streamlined and Standardized Processes — Reduce process inefficiencies and create additional efficiencies through policies, standard operating procedures, financial reporting and internal controls.Objective, Third-Party Perspective — Eliminate internal biases in the decision-making process and rely on external expertise to provide an objective and holistic action plan to set you up for success.Ready to Get Started?Contact us and let us know how we can help.Interested in a more in-depth Business Optimization Assessment? Our Business Process Optimization services result in comprehensive assessments of an organization’s key business processes to ensure an in-depth action plan for transforming core operational, finance and information technology processes.About Schneider Downs Risk AdvisoryOur team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Our Thoughts On Accounting for Success – The Importance of Accounting Optimization Assessments in 2025 A big part of reaching business goals comes down to your accounting function. Is it designed to support your growth… Read More > SDWMA Investment Corner: Impacts of a Potential Tariff Trade War On February 1, 2025, the White House announced new tariffs on imports on its three top trading partners, Canada, Mexico… Read More > 2025 Tax Legislation – A Long and Winding Road to “One Big Beautiful Bill”?” Now that President Trump is in the White House, and a new and differently configured Congress is back in session,… Read More > Senator Wyden's Memo: Potential Revenue-Generating Changes and Their Implications Senator Ron Wyden’s (D-OR) memo from House Budget Committee Republicans outlines options that the committee is considering in order to… Read More > What to Do with Excess Money in a 529 Plan Section 529 plans were created in 1996 to help American families manage the cost of education. These accounts allow for… Read More > Senator Wyden's Memo: Potential Revenue-Generating Changes and Their Implications In recent weeks, Senator Ron Wyden (D-OR) published a memo from House Budget Committee Republicans on his social media accounts.… Read More > ### IT Risk Advisory IT Risk Advisory Deliver sound risk management practices, internal control systems and compliance frameworks. Meet our team Broad capabilities, unmatched expertise Schneider Downs’ IT Risk Advisory professionals help organizations gain valuable insights into their processes and technologies. A well-planned, properly structured information technology (IT) audit program is essential to evaluate risk management practices, internal control systems, and compliance with regulations and corporate policies. Business Continuity & Disaster Recovery Disaster Recovery/Business Continuity Planning and Table Top Exercises Deliver sound risk management… Cybersecurity Maturity Model Certification Services (CMMC) Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider… Data Privacy Services Data Privacy Services Deliver sound risk management practices, internal control systems and… FFIEC IT Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The… GDPR Compliance Deliver sound risk management practices, internal control systems and compliance frameworks. The… HIPAA Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The… HITRUST HITRUST Information Technology Audit Deliver sound risk management practices, internal control systems and compliance frameworks. With… InfoSec Policy Templates Deliver sound risk management practices, internal control systems and compliance frameworks. The… IRS Publication 1075 Deliver sound risk management practices, internal control systems and compliance frameworks. To… ISO 27001 Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. ISO… IT General Controls Audit Deliver sound risk management practices, internal control systems and compliance frameworks. IT… IT Risk Assessment Services Deliver sound risk management practices, internal control systems and compliance frameworks. Prior… Network Device Security Configuration Assessment Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. It… NIST The National Institute of Standards and Technology (NIST) The National Institute of… Payment Card Industry Security Standard Compliance PCI DSS Compliance Payment Card Industry Data Security Standard Deliver sound risk… SAP Audits and Controls SAP Audits and Controls PRIMARY CONTACT: Eric M. Wright CPA, CITP Schneider… Sarbanes-Oxley Solutions Sarbanes-Oxley Solutions Deliver sound risk management practices, internal control systems and compliance… SOC Practice Overview SOC Practice Overview Deliver sound risk management practices, internal control systems and… Third-Party Risk Management Third-Party Risk Management Deliver sound risk management practices, internal control systems and… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections Our dedicated IT Risk Advisory professionals have experience working with various industries and companies of all sizes. We will partner with you to provide comprehensive IT audits and compliance reviews to ensure your organization has effective and efficient technology controls that better align the technology function with its business and risk strategies. Our IT Risk Advisory practice ensures your organization will be risk-focused with sound IT controls, timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. https://youtu.be/-H1DrQiFJZ4 Learn How We Can help you meet your goals Ask A Question Submit an RFP OUR THOUGHTS ON User Access Reviews: 16 Tips to Meet Auditor Expectations How can you understand and meet auditor expectations on complete user access reviews? While access reviews can range in complexity,… Read More > Top Five Emerging Risks for Assurance Leaders in 2025: What You Need to Know Learn about the top five emerging risks enterprise assurance leaders may face in 2025 based on Gartner’s most recent Quarterly… Read More > Top 3 Emerging Privacy Trends for 2025 As we progress through 2025, data privacy laws are surging in number and scale. Approximately 70% of nations have enacted… Read More > 5 Practical Tips for Data Privacy in 2025 It’s Data Privacy Week 2025, and in today’s digital age, maintaining data privacy is more critical than ever. As recognized… Read More > Postcard from 2024 ISACA PGH What were the hot topics at the 11th Annual Pittsburgh Information Security Awareness Day? The ISACA Pittsburgh chapter held their… Read More > ### Cybersecurity Consulting Cybersecurity Consulting Identify Vulnerabilities. Mitigate Risks. Schneider Downs can help your organization to be better prepared. Meet Our Team Broad capabilities, unmatched expertise The sophistication and frequency of cyber-attacks is on the rise. Recent breach reports have outlined the fact that attacks are exploiting security weaknesses faster and easier than ever before and most organizations are not adequately equipped to defend themselves. Active Directory Security Assessment Active Directory Security Assessment Strengthen Active Directory Security and Compliance Against Cyber… Cloud Security Configuration Assessment Cloud Security Configuration Assessment Identify Misconfigurations and Compliance Gaps to Strengthen Cloud… Continuous Cybersecurity Framework Assessments Continuous Cybersecurity Framework Assessments Build Cyber Resilience Through Continuous Security Framework Assessments… Digital Forensics & Incident Response Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. In… External Footprint Analysis Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Schneider… Firewall Configuration Review Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Schneider… Incident Response Plan Development, Testing, & Training Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Data… Intrusion Prevention / Detection Review Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. It… IT Risk Advisory IT Risk Advisory Deliver sound risk management practices, internal control systems and… Penetration Testing Network Penetration Testing Understand Your Cybersecurity Gaps and Strengthen Resilience Our network… Purple Team Assessments Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Do… Social Engineering Simulate Real-World Attacks to Identify Weaknesses and Raise User Awareness Social Engineering… Threat Hunting Threat Hunting Proactive Human-Led Threat Detection That Maximizes Existing Security Investments Just… vCISO vCiso Executive Strategy and Expertise for Risk Management and Business Resilience In… Web Application Penetration Testing Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Web… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections Schneider Downs can help your organization to be better prepared. We offer a comprehensive set of information technology (IT) security services, including network penetration assessments, network vulnerability assessments, web application security testing, IT security maturity assessments and more. Schneider Downs’ team of network security specialists, application configuration specialists, implementation consultants and certified information system auditors can assist your organization with an objective assessment, identifying crucial information and key security risks, and assisting with the implementation of industry best-practice security standards to mitigate these risks. https://www.youtube.com/watch?v=0TnyjO_OnhI&t=2s Learn How We Can help you meet your goals Ask A Question We Are hiring! Build an exceptional career with diverse, talented people who are among the most respected in their fields. View jobs Learn How We Can help you meet your goals Ask A Question Submit an RFP ### Quality of Earnings Analysis - Miami (FL) Quality of Earnings Reports - Miami (FL) When it comes to buying or selling a Miami or Florida  business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Miami QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Miami and across Florida.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Miami (FL) Miami's business community is a dynamic mix of international trade, tourism, real estate, finance, and a burgeoning tech sector. As a gateway to Latin America, Miami has long been a hub for international commerce, with the Port of Miami and Miami International Airport supporting robust import-export activities. This strategic location has also fostered a diverse economy with a strong focus on finance, as global banks and investment firms leverage Miami’s unique access to international markets. Tourism is a cornerstone of the local economy, with Miami’s beaches, cultural events, and year-round warm climate drawing millions of visitors annually. This sector supports a wide range of businesses, from hospitality and dining to luxury retail and entertainment. Real estate and construction are also integral to Miami’s growth, driven by high demand for residential and commercial properties and attracting investment from both domestic and international buyers. Recently, Miami has emerged as a growing tech hub, appealing to startups and tech companies with its favorable tax policies and increasing venture capital presence. Initiatives like Miami Tech Week and the eMerge Americas conference have solidified the city’s reputation as a hotspot for tech innovation and entrepreneurship. Miami’s multicultural population, strong infrastructure, and pro-business climate make it attractive to a broad range of industries, while its entrepreneurial spirit and global connections continue to drive economic expansion and diversification. ### Quality of Earnings Analysis - Cheyenne (WY) Quality of Earnings Reports -Cheyenne (WY) When it comes to buying or selling a Cheyenne or Wyoming business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Little Rock QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Cheyenne and across Wyoming.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit About Cheyenne (WY) Wyoming's business community is rooted in natural resources, agriculture, tourism, and a growing focus on technology and renewable energy. The state has long been known for its energy sector, with coal, oil, and natural gas production forming a significant part of its economy. While traditional energy continues to play a major role, Wyoming is increasingly diversifying into renewable sources, especially wind energy, taking advantage of its vast open spaces and favorable conditions. The agricultural industry is also fundamental to Wyoming’s economy, with cattle ranching and farming contributing heavily to local communities and supporting ancillary businesses in machinery, feed, and distribution.Tourism is another critical industry, driven by the state’s iconic natural attractions such as Yellowstone National Park, Grand Teton National Park, and Devil’s Tower. These destinations bring in millions of visitors annually, boosting sectors like hospitality, retail, and outdoor recreation. Small businesses that cater to tourists, such as outfitters, lodging providers, and local artisans, thrive in this environment, adding unique local charm to Wyoming’s economy. Wyoming’s business climate is notably favorable for entrepreneurs and companies seeking low tax burdens, as the state has no corporate or individual income tax ### Quality of Earnings Analysis - Little Rock (AR) Quality of Earnings Reports -Little Rock (AR) When it comes to buying or selling a Little Rock or Arkansas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Little Rock QoE Team Schneider Downs provides Quality of Earnings reports to companies in Little Rock and across Arkansas.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/Question How would you like us to contact you?* Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit About Little Rock (AR) The business community in Little Rock, Arkansas, is marked by a mix of industries that support both local and regional economic growth. Known as a hub for healthcare, finance, and government services, Little Rock hosts several hospitals, clinics, and health institutions, including the University of Arkansas for Medical Sciences, which is a major healthcare provider and research facility in the state. Financial services also play a central role, with several banks and insurance companies contributing significantly to the local economy. Additionally, Little Rock benefits from a range of government offices and agencies due to its status as the state capital, which creates substantial opportunities in public sector contracting and consulting. Retail, education, and logistics are also important sectors, with retail being supported by a diverse customer base and logistics driven by Little Rock’s strategic position along the Arkansas River and major highways, making it a transit and distribution center for the region. ### Quality of Earnings Analysis - St. Louis (MO) Quality of Earnings Reports - St. Louis (MO) When it comes to buying or selling a St. Louis or Missouri business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our St. Louis QoE Team Schneider Downs provides Quality of Earnings reports to companies in St. Louis and across Missouri.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/Question How would you like us to contact you?* Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit About St. Louis (MO) St. Louis has a dynamic business community shaped by a mix of long-standing industries and an increasingly innovative startup scene. The city is home to a diverse range of industries, with healthcare, finance, manufacturing, and transportation logistics forming the backbone of its economy. Major corporations such as Boeing, Centene, and Emerson have deep roots in St. Louis, contributing to its status as a hub for aerospace, healthcare services, and engineering. The healthcare sector is particularly robust, anchored by major institutions like BJC HealthCare and Washington University School of Medicine, which not only provide extensive employment but also drive advancements in medical research and biotechnology. The financial sector is also well-represented, with several banks and financial service companies headquartered or holding a significant presence in St. Louis, fostering a stable economic foundation. The city has embraced a supportive environment for startups, especially in tech and biotech, thanks to organizations like Arch Grants and the Cortex Innovation Community, which provide resources, funding, and networking opportunities for entrepreneurs. This innovation district, along with numerous co-working spaces and incubators, has helped attract a younger, tech-savvy workforce and has driven new investments into the city. ### Quality of Earnings Analysis - Buffalo (NY) Quality of Earnings Reports - BUffalo (NY) When it comes to buying or selling a Buffalo or New York business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Buffalo QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Buffalo and across New York.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Buffalo (NY) Buffalo’s business community has seen a significant revitalization over recent years, blending its industrial heritage with modern innovation and development. Once heavily reliant on manufacturing and the steel industry, Buffalo has diversified its economy, now focusing on sectors such as healthcare, financial services, and renewable energy. The healthcare industry, anchored by the Buffalo Niagara Medical Campus, has become a cornerstone of the local economy, providing numerous jobs and supporting biomedical research initiatives. This campus also acts as a hub for healthcare innovation, attracting partnerships with research institutions and spurring economic activity. ### Quality of Earnings Analysis - Salt Lake (UT) Quality of Earnings Reports - Salt Lake (UT) When it comes to buying or selling a Salt Lake City or Utah business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Salt Lake City QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Salt Lake and across Utah.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Salt Lake City (UT) Salt Lake City's business community is thriving, bolstered by a blend of established corporations, emerging startups, and a strategic location in the Mountain West. The city’s economy is notably diverse, with key sectors including technology, healthcare, financial services, and outdoor recreation. The “Silicon Slopes” tech corridor, encompassing Salt Lake City and neighboring areas, has become a significant tech hub, attracting substantial investments and innovation, particularly in software, cloud computing, and fintech.Additionally, the healthcare industry is robust, with Intermountain Healthcare serving as a major player and anchor institution in the region. Financial services have also grown, as evidenced by the presence of large financial firms and a burgeoning fintech scene. ### Quality of Earnings Analysis - Wilmington (DE) Quality of Earnings Reports - Wilmington (DE) When it comes to buying or selling a Wilmington or Delaware business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Wilmington QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Wilmington and across Delaware.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Wilmington (DE) Wilmington, Delaware, thrives as a prominent financial hub, particularly known for its influence in the banking and credit card industries. Major corporations, including many Fortune 500 financial services firms, have established operations in Wilmington due to favorable state tax laws and regulatory conditions. Beyond finance, Wilmington has also embraced a growing technology and innovation sector, supported by state-led initiatives that attract tech startups and foster a culture of innovation. The city’s strategic location, close to Philadelphia, Baltimore, and New York, also benefits its diverse economy. Wilmington’s small businesses, legal firms, and healthcare facilities play crucial roles in the community, further driving its economic resilience. The Port of Wilmington, one of the busiest on the East Coast, adds another dimension to the local economy, supporting logistics, manufacturing, and international trade. This multi-faceted approach makes Wilmington an attractive city for a range of industries ### Audit Services Case Studies Audit Case Studies Risk Assessment Compliance Internal Controls Financial Reporting Data Analytics Fraud Detection Regulatory Requirements Quality Control Operational Efficiency Performance Improvement Sustainability Reporting Explore Audit Services Case Studies Learn how our audit services have helped businesses manage risk, ensure compliance, enhance operational efficiency and more. 30 Years and Counting: Transitioning Leadership, Evolving Business Structure, Stewarding Expansion Starting Early: Delivering a Timely Audit with a Proactive Approach Powering Progress: Energy Expertise Fuels Seamless Partnership and Long-Term Growth Big Thinking and Personal Focus: A Decade of Excellence with a Complex, Multi-Faceted Entity From Providers to Partners: Continuously Tailored Solutions for Record-Breaking Closing Timelines From Acquisition to Audit: Guiding a SaaS Company Through a Seamless Start Compliance Crisis to Clean Slate: Preparing a 401K Plan for Clean Audit Ready for Anything: Long-standing Bonds Enable Swift Responses in Dynamic Climate Raising the Bar: Value-Added Services Supercharge Success About Schneider Downs Audit and Assurance ServicesSchneider Downs provides a variety of specialized services to assist our clients with all their audit and assurance needs. We apply the experience of more than 60 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans.Learn more about our Audit and Assurance Services or contact the team at contactsd@schneiderdowns.com. ### Quality of Earnings Analysis - Stamford (CT) Quality of Earnings Reports - Stamford (CT) When it comes to buying or selling a Stamford or Connecticut business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Wichita QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Stamford and across Connecticut.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Stamford (CT) Stamford, Connecticut, is a thriving business hub known for its concentration of corporate headquarters, financial services, and a growing technology sector. Its proximity to New York City makes it a strategic location for businesses looking to benefit from metropolitan access while enjoying a more cost-effective setting. Stamford has attracted several Fortune 500 companies, particularly in finance, insurance, and consumer goods, with firms like Charter Communications, Synchrony Financial, and WWE maintaining headquarters in the city.Financial services are a cornerstone of the Stamford economy, with hedge funds, investment firms, and insurance companies contributing to its reputation as a financial center. Real estate and development are also significant, as Stamford continues to experience a surge in residential and commercial construction, transforming the downtown area into a bustling, modern district. ### Quality of Earnings Analysis - New Orleans Quality of Earnings Reports - New Orleans (LA) When it comes to buying or selling a New Orleans or Louisiana business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Wichita QoE TeamSchneider Downs provides Quality of Earnings reports to companies in New Orleans and across Louisiana.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About New Orleans (LA) New Orleans boasts a diverse and resilient business community, deeply rooted in its cultural heritage while evolving to embrace modern industries. Tourism and hospitality remain central to the economy, driven by the city’s unique culture, festivals such as Mardi Gras, and attractions like the French Quarter. Hotels, restaurants, and event spaces generate significant revenue and employment, contributing to the city’s global appeal.Beyond tourism, New Orleans has a strong energy sector, with a focus on oil and gas production as well as emerging renewable energy initiatives. The Port of New Orleans is a critical economic engine, supporting trade, shipping, and logistics along the Mississippi River and connecting the region to global markets. ### Quality of Earnings Analysis - Wichita (KS) Quality of Earnings Reports - Wichita (KS) When it comes to buying or selling a Wichita or Kansas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Wichita QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Wichita and across Kansas.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Wichita (KS) Wichita, Kansas, is a vital economic center known for its leadership in aerospace manufacturing, earning it the title "Air Capital of the World." Major aerospace companies such as Textron Aviation, Spirit AeroSystems, and Bombardier maintain significant operations in the area, driving innovation and employment. This industry forms the backbone of the local economy, with a well-developed supply chain and a highly skilled workforce supporting aircraft production, maintenance, and engineering.In addition to aerospace, Wichita has a strong presence in advanced manufacturing and industrial production, with companies involved in machinery, transportation equipment, and chemicals. The healthcare sector also plays a key role, with major providers like Ascension Via Christi and Wesley Medical Center offering critical services and employment opportunities. ### Quality of Earnings Analysis - Richmond (VA) Quality of Earnings Reports - Richmond (VA) When it comes to buying or selling a Richmond or Virginia business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Richmond QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Richmond and across Virginia.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Richmond (VA) Richmond, Virginia, boasts a dynamic and diverse business community with a strong blend of industries, reflecting both its historical roots and modern economic development. As the state capital, government and public administration remain key sectors, with numerous state agencies and federal offices contributing to the local economy. Additionally, the city's central location along the Eastern Seaboard makes it a vital hub for logistics and distribution.The finance and insurance industries are central to Richmond’s economy, with the presence of major institutions such as Capital One Financial, Genworth Financial, and the Federal Reserve Bank of Richmond. These companies foster a business-friendly environment and attract talent from across the region. ### Quality of Earnings Analysis - Dallas (TX) Quality of Earnings Reports - Dallas (TX) When it comes to buying or selling a Dallas or Texas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Dallas QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Dallas and across Texas.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Dallas (TX) Dallas is a powerhouse business hub with a highly diversified economy, known for its strength in finance, technology, healthcare, logistics, and real estate. The city benefits from its strategic location within the Dallas-Fort Worth (DFW) metroplex, which offers easy access to national and international markets. Dallas serves as the headquarters for several Fortune 500 companies, including AT&T, Southwest Airlines, and Texas Instruments, solidifying its reputation as a center for corporate activity and innovation.The finance and banking sectors are particularly prominent, with Dallas being home to major institutions such as Comerica Bank and the Federal Reserve Bank of Dallas. The technology sector is thriving as well, driven by companies involved in telecommunications, software development, and data management, thanks to the city's growing tech infrastructure and talent pipeline. ### Quality of Earnings Analysis - Tulsa (OK) Quality of Earnings Reports - Tulsa (OK) When it comes to buying or selling a Tulsa or Oklahoma business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Tulsa QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Tulsa and across Oklahoma.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Tulsa (OK) The Tulsa business community is a vibrant and evolving hub that leverages its rich history in energy and manufacturing while embracing growth in sectors such as technology, healthcare, and aerospace. Historically known as the “Oil Capital of the World,” the energy industry still plays a significant role, with several oil and gas companies and service providers maintaining operations in the region. However, Tulsa has successfully diversified its economy over recent decades, reducing reliance on oil by nurturing new industries.Aerospace and aviation have emerged as vital contributors to the local economy, with Tulsa International Airport serving as both a regional hub and a center for maintenance and engineering operations. American Airlines' Maintenance and Engineering Base, one of the largest in the world, is located here, further strengthening the city’s position in the aerospace sector. ### Opt Out Of All Communications Opt out of all communications ### Audit Case Study - Multi-Location, Multi-generational, recently transitioned construction client How it Started Relationship Building Through Schneider Downs’ high-profile work within the construction industry throughout our region, our Firm enjoyed a friendly relationship with a closely-held, multi-location, multi-entity, multi-generational construction company, even though they weren’t a client (yet). Our two organizations shared many common relationships, including insurers, bankers, and peers from the industry. This familiarity led to the opportunity to take our relationship further. Born Ready Constructing Solutions The organization soon realized that its current provider was facing capacity challenges, which were becoming apparent in the service they received. Recognizing that Schneider Downs had both experience and a sizable construction accounting team, the company approached our firm to discuss a possible relationship. What began as an invitation to assist with their current need soon evolved into deeper discussions about more proactive and complex business solutions that the company had previously not explored. From our initial meeting about the audit and tax work, our teams began identifying areas of interest. We noticed they were accounting for their extensive leasing activities manually, and were without a formalized process or plan. When we offered to set them up with our simpLEASE software, they endorsed the idea immediately. Along the way, Schneider Downs introduced several additional service ideas that could present new opportunities to the client – soon we were engaged to do their corporate audit, 401k audit, extensive tax work, including individual taxes for the owners and lease accounting, as well as assist with valuation projects. Because the client was so interested in new ideas, they were especially receptive to the “best practices” conversations led by our construction experts. Collectively, our services helped them not only address current needs but also identify opportunities to prepare for the future. How it's Going Tackling Delays with Expert Guidance Quality relationships are worth the wait….and the effort. Schneider Downs built a dedicated team of construction experts to tackle these assignments collectively, and, after an excellent first year, that same team will return in its entirety. In that first year, because our teams worked together so closely, we quickly identified that a restructuring initiative had exacerbated some delays in preparing financial statements for audit. So, to assist their overextended finance department, the Schneider Downs team took that responsibility off their hands. Problem solved. It’s what good partners do. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### Audit Case Study - Nationally-renowned Geotechnical Engineering and Construction Firm How it Started Estimating the Best FitTwenty-five years ago, one of our current clients faced a dilemma. As the local arm of one of the largest construction contractors in the world, they had extremely tight audit deadlines from their group auditors. Because they needed a firm with both the capacity and deep industry expertise to meet those deadlines, they believed their options were limited to working with a Big 4 firm. However, they found that the traditional “Big Four” approach wasn’t ideal for their unique needs, and they searched for a better value proposition. If they were to invest in professional services, they wanted partners who would know their organization like the back of their hands. In light of its extensive experience in the construction industry, Schneider Downs was identified as the ideal for this assignment. No Surprises A Blueprint for SuccessIt was immediately apparent that to meet the type of deadlines set out by the group auditor, there could be no room for error or a learning curve. This wasn’t a “learn-as-you-go” procedure—we had to come in with the expertise to get the job done. Fortuitously, our robust construction practice was equipped to handle everything that came up. Whether it be accounting for claims, variable considerations, multi-year projects, or joint ventures, our experience prepared us to achieve a successful, timely audit. Each year, we sat down with the client, took stock of what was going on in their business, and laid out exactly what we needed to do to meet the deadline that year. We helped them get their arms around a daunting process by walking back each year’s audit map, calendar and close process. We committed to codeveloping the plan that worked best for them. Simply put, we plan the work and work the plan. How it's Going A Well-Oiled Machine We’ve been together for 25 years, weathering multiple ownership transitions, changes in group auditors and countless complex business activities. At the core of the relationship is a mutual appreciation and commitment to the project at hand – on-time delivery. The audit process has become a well-oiled machine thanks to our robust partnership. At times, the challenges may seem daunting – we recently met a seemingly impossible 12-day close deadline – but the rapport generated by a quarter of a century together makes it run. The net result is that our client trusts us through it all. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Audit Case Study - Compliance Crisis to Clean Slate: Preparing a 401K plan for Clean Audit How it Started Quick Thinking on a Late NoticeWhen a Controller was notified late by her third-party administrator that her company’s 401k plan required an audit that year, she knew she needed a firm that could do quality work on a compressed timeline. Luckily, because she had worked with Schneider Downs on several employee benefit plan audits at her previous company, she knew we were the ones to call. Our robust ERISA practice was more than capable of handling the quick turnaround she needed. We were ready to hustle when it became time to do their audit. Out of Left Field Navigating Risks with Corrective ActionAs soon as we started reviewing the plan document, we noticed a major problem with the plan administration: the auto-enrollment procedures listed on the plan were not being performed. An error of this magnitude was a huge risk to the client since it could bring significant costs. Navigating the potential legal and financial ramifications required a practiced hand. After identifying the problem, we quickly had our in-house retirement experts step in to help the client identify and execute corrective actions. Our team helped them understand their options, calculate lost earnings, draft responses to notices as they came up and ensure compliance with DOL guidance. Because they had undergone some corporate mergers previously, we assisted their legal team with pinpointing their precise legal liability within the acquisition documents. We served as an ongoing resource for them, providing continuing counsel throughout the entire process of right-sizing their plan and correcting the problems. How it's Going An Ongoing Role in Unraveling SolutionsWith our guidance, the client identified and executed the appropriate corrective actions for the issues, and today they have a clean plan and a smooth audit. Years later, the Controller reached out to us again: this time on behalf of a sister company having trouble with their retirement plan. Overwhelmed by calls from employees complaining about employee contributions, loan repayment and timely remittance, they didn’t know where to start. Remembering how valuable our in-house retirement expertise had been in getting her own organization’s plans back on track, the client told their sister company that she had the perfect solution. Once again, we’ve rolled up our sleeves. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Audit Case Study - From Acquisition to Audit: Guiding a SaaS Company Through a Seamless Start How it Started Sorting Out The ComplexitiesA private equity firm acquired the Ohio-based SaaS startup and they knew it was time to prepare for an audit. As a young company that had never been audited, they needed not just an auditor, but a partner to ensure they were ready for the challenges of preparing to be audited. Finding a regional firm that provides both those services can be a challenge but, fortunately, since the company’s Controller was already familiar with Schneider Downs, she skipped a few steps in what could have been an arduous search. She set up a meeting with our Accounting Advisory and audit practices to talk about the audit and audit readiness process. We also explained how we could help sort out the complexities associated with revenue recognition and other accounting challenges we consistently see in the SaaS space. With a game plan in place, we were ready to begin our partnership. Laying the Groundwork Our Accounting Advisory team stepped in first. Since the client had limited internal resources, our first task was to help them structure their audit readiness process. We made sure everything was in order, providing guidance on the acquisition opening balance sheet, helping them understand customer contracts from a revenue recognition perspective, aiding with purchase price allocation and ensuring that their technology costs were capitalized properly. Our job was educational as well as technical. We were on the ground with them, helping management draft memos and making ourselves available to answer any questions they had. And, because our Accounting Advisory team was constantly consulting with our audit team, we were able to avoid the headaches and pitfalls of communicating with an external auditor. Before the audit even began, we knew there would be no surprises. How it's Going From Preparation to CollaborationNow that the client’s books and records are in good order, the audit team is ready to take over. And, as we gear up for their audit, our tax team has appeared on the scene as well. After collaborating with us on the audit readiness process, the CFO realized we had the expertise to help them with their tax compliance, and he asked us to expand our relationship. It’s just one of the advantages of working with a partner with capabilities in so many areas. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Audit Case Study - From Providers to Partners: Continuously Tailored Solutions for Record-Breaking Closing Timelines How it Started Discovering a Distinctive PartnershipAfter years of working with national accounting firms, (a standard move for a global organization of their size), one of our current clients wanted to find a different approach. They didn’t just want an auditor anymore—they wanted a business partner to guide them through every step of the reporting and readiness process. A business partner who would develop a personalized and practical procedure to ensure a successful audit. Though they wanted more personal attention than the Big 4 could offer, it was also important that their provider still had the resources to understand and simplify the complex accounting requirements of international operations. That’s where we came in. A Practical Approach Creating Efficiencies through the IntricaciesFrom the beginning, we committed to co-developing a procedure that worked for the client. We know from experience that the first question international organizations have when it comes to an audit is how to cohesively and painlessly organize the disparate reporting requirements of each location. With that in mind, we sat down with them and discussed the best methods to approach each of their international sites, one by one. Rather than insisting on a reperformance of financial statements reported under IFRS accounting standards, we rolled the work already completed at several of their locations into our audit process. And, based on our experience with other companies, we provided advice on best practices at each location that would ultimately create efficiencies in our overall audit process. Throughout our relationship, we’ve viewed this client as our partner. We’ve guided them through the intricacies of new accounting pronouncements, lease arrangements, complex transactions and revenue recognition. Whenever a complex issue has come up, they’ve relied on us to provide guidance and support; they know we both have the resources to handle these issues and that, as our partners, they have access to all of them. How it's Going Setting Ambitions for SuccessOur client is ambitious. After ten years with us, they’ve seen how much an audit process can improve with careful attention. Over the years, we’ve shortened the time between their year-end and audit close to an impressive 60 days. And we’re not done yet. Their new goal for the coming years is a 45-day close. They know we’ll help them get there the way we’ve always done. Our feedback remains consistent each year with insights on ways to improve. We continue to partner with them through transactional and accounting matters to outline the most efficient and effective ways to reach their goals. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Audit Case Study - Family-owned, nationally recognized professional services company How it Started Beyond Big 4 Territory with Expansion PlansIt was 2012, and it was our client's first foray out of Big 4 territory so they weren’t sure what to expect when we performed our first audit for their family-owned professional services company. A smooth transition led them to be ensured we would perform at the high level to which they were accustomed. Service level was important to them, with considerable pride in their excellent reputation and established brand. We knew they had ambitious growth goals and needed a partner with the capacity and expertise to grow their business. We were to be that partner. A Proud Partnership Assessing Needs and Growing TogetherAs the client grew comfortable they started transitioning work from other firms. What began as a corporate audit grew to include additional ancillary audits and other agreed-upon procedures. As the client noticed they received the same high level of service, responsiveness and timeliness from us, our relationship continued to grow. Since we began working together, the client has nearly doubled in size. And we have grown with them, expanding our service offerings with their growing needs. We have worked together on cybersecurity assessments, due diligence on acquisitions, tax work, compensation studies and family office matters. When the financial reporting and controls of acquired entities didn’t meet our client’s standards, we stepped in to bring them up to speed. As partners, we protect their brand by ensuring consistency across locations and disaggregated accounting functions. How it's Going A Decade of Closeness and ExcellenceAfter more than 10 years, we have become fully integrated into the client’s operations. Each time a major business decision looms, they consult with us on the implications from an accounting, tax and general organizational perspective. We assume the audit work for each acquisition they gain, and they know we will help to maintain a reputation they can take pride in. We, in turn, are incredibly proud to call them our clients and friends. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Cybersecurity Awareness Month 2024 Cybersecurity Awareness Month 2024 We're dedicated to helping you stay secure in the digital world with this year's curated Cybersecurity Awareness Month content. Elevate your digital awareness with our new series Two Truths and a Lie About Cybersecurity where we delve into common cybersecurity topics to help separate facts from fiction—test your knowledge below to see how many you get correct! Then register early for our 2025 webinar where we'll open our files from the frontlines of penetration testing. Enjoy the month and stay safe out there!   Two Truths and a Lie about Cybersecurity   Playlist 3 Videos Two Truths and a Lie about Cyber Insurance 0:16 Two Truths and a Lie about Purple Teaming 0:16 Two Truths and a Lie about Cybersecurity Goverance 0:16 Play Video From the Frontlines of Penetration Testing   Navigating the Path to Compromise: Common Findings from Penetration Testing Start 2025 with Schneider Downs Cybersecurity as they open their files to share critical insights, top vulnerabilities and user behavior patterns identified through their real-life penetration testing experiences from the frontline. Date: Thursday, January 23, 2025 Time: 1:00-2:00 PM ET Location: ON24 Webinar Register Webinar About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Our Thoughts On Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue… Read More > 3 Key Insights from GetApp’s 2024 C-Suite Cybersecurity Report 72% of U.S. senior executives have been targeted at least once by a cyberattack in the last 18 months according… Read More > 2.9 Billion Reasons to Be Concerned – The Latest on the National Public Data Breach The National Public Data (NPD) breach is emerging as 2024’s defining cybersecurity incident, but what sets this breach apart? After… Read More > Data For Sale – The Latest on the City of Columbus, Ohio Ransomware Attack The recent ransomware attack on Columbus, OH now has an alleged perpetrator. International ransomware gang Rhysida claimed responsibility for the… Read More > How Much Does a Data Breach Cost in 2024? Just like everything else, the cost of a data breach continues to get more and more expensive. In fact, the… Read More > View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Manufacturing FAQ About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. Manufacturing Industry Resources Schneider Downs Manufacturing Industry Articles Schneider Downs Manufacturers’ Economic Surveys Schneider Downs Remote Learning Center About Schneider Downs Industry Groups Schneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com. OUR THOUGHTS ON Worker Safety for Manufacturing Groups Due to the breadth of products coming to us from manufacturing companies, the industry faces wide range of safety issues.… Read More > Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio The semiconductor industry is the backbone of modern technology, powering everything from smartphones to cars to advanced medical equipment. Recognizing… Read More > Survey on Career Advancement and Women in the Manufacturing Sector In February 2024, The Women In Manufacturing Association and Xometry collectively released the 4th Annual Survey on Career Advancement and… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the manufacturing industry in 2023?In support of Cybersecurity Awareness Month, we… Read More > How To Identify Supply Chain Vulnerabilities How can companies identify supply chain vulnerabilities to be better prepared for the future?Supply chains have been hit hard by… Read More > Changes to R&D Expense Rules Affecting Manufacturers The Tax Cuts and Jobs Act of 2017 (TCJA) included a deferred “gift” to manufacturers and other taxpayers in the… Read More > United States Deals with Baby Formula Shortage Over the past few weeks, as you’ve been running errands or completing your grocery shopping, you may have noticed some… Read More > An Introduction to Industry 4.0 The fourth industrial revolution is upon us. Better known as Industry 4.0, the digitization of manufacturing, which focuses on interconnectivity,… Read More > Inflation Tracking and Cost Pass-through Analysis With inflation increasing at 40-year record highs, nearly every business is impacted with higher input costs. Along with supply chain challenges… Read More > Reshoring to Combat Global Supply Chain Disruptions While Covid-related restrictions have been largely lifted and the world is returning to a new normal, the impact of the… Read More > Superfund Excise Taxes Are Back Under the Infrastructure Investment and Jobs Act Effective July 1, 2022 The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. The latest reiteration of… Read More > EV’s are Changing the World, but Who will be Left Behind? As manufacturers transition production from internal combustion engines to electric vehicles, are they being short-sighted about supplying vehicles to many… Read More > Key Takeaways from the September ISM Manufacturing Report In early October, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that provides… Read More > Persistent Challenges Facing Manufacturing With the majority of the U.S. and the world now attempting to get back to some semblance of normalcy, we… Read More > Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q1 2021 On April 1, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines… Read More > Behind the Numbers in ISM’s Q4 Report on Business On January 5, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines… Read More > 2020 Schneider Downs Manufacturers’ Economic Survey Results Released Each year, Schneider Downs collects insights from leaders in the manufacturing industry through our annual Manufacturers’ Economic Survey. This year, our… Read More > Manufacturing - State of the Industry While 2020 has been challenging, the manufacturing industry continued to perform well in the third quarter of 2020. According to an… Read More > Reshoring and Manufacturers Reshoring is the practice of bringing manufacturing jobs and services back to the United States—jobs that had been previously lost… Read More > ### Audit Case Study Energy Expertise How it Started A Search for Value and Expert Guidance23 years ago, one of our current energy clients struggled to find a good high-quality audit and tax service provider that truly understood its industry. Though they had tried several different audit and tax providers over the years, they couldn’t find a firm with the industry expertise necessary to support their growing business effectively. When they were finally introduced to Schneider Downs, our experience with the nuances of energy-specific accounting and tax standards differentiated us from the previous firms. We were in it for the long haul when they engaged us all those years ago. Growing Together Preservering through Steady GrowthThough the client started as a relatively small operation, they were able to experience the tremendous growth they believed was possible. And we have been with them every step of the way, growing and adapting as their inventory expanded and their operations became increasingly complex. We’ve had the expertise and capacity to handle every industry-specific need over the years, from implementing new ARO accounting standards and depletion accounting to various tax-related services. Satisfied their needs were being met, the client settled into a steady audit and tax relationship with us for nearly a quarter of a century. As success continued and trust grew, that relationship expanded to provide solutions to other areas of operations as well. Over time, our technology services team was pulled in to implement and upgrade their ERP system, and today, Schneider Downs also consults on the client’s ERISA plans and trust and estate matters. How it's Going Full Steam Ahead - Unearthing New Goals Fueled by their incredible growth, the client sought to diversify their operations by acquiring several companies in different industries and geographies. After each acquisition, we have been their first phone call for the audit and tax work. Over the long course of extended trust, the relationship continues to grow and evolve, as Schneider Downs remains the “first call” when new solutions are needed. Reflecting over many years, the shared values and goals of both client and firm remain apparent – our client knows and values the high-touch approach we bring to the table; it mirrors the hands-on philosophy they’ve maintained with their customers throughout its period of extended growth. In the end, we were a perfect fit. Contact an Audit & Tax Advisor Today ### Audit Case Study Transitioning Leadership How it Started Anchoring the Past while Charting a New VisionAfter years of running a business and almost a decade working with Schneider Downs, the owner of one of our clients was ready to plan for a leadership transition. Since we had been established business partners for years, the owner trusted us to handle the transition as much as he trusted his son to manage the business. And a successful succession was just the beginning. His legacy was impressive: his son stood to inherit a profitable professional service company boasting clients among the Fortune 1000. We began working with his son to explore a new organizational structure. The business had outgrown the one-person entrepreneur model that had served it so well, and a new model would better position the company for growth. Working together, we created a more formalized corporate structure, creating additional companies and an expansion-focused management team. Our client was poised for exponential growth. Through It All Delivering Tailored Solutions for the Long HaulAs the client expanded, so did our service offerings. We weren’t just there to steward them through a transition, we were in it for the long haul of their developing needs. After years of performing their audit and tax work, our knowledge of the business and its culture was unmatched. We were committed to providing the experts they needed for every obstacle and opportunity they would encounter.When we began our Credits and Incentives practice, we immediately knew which credits were most appropriate and realistic. And, when they first needed a SOC 2 report, we had the experts in-house to perform it for them. When they brought on a new CFO to help facilitate their growth, he leaned on us to provide the resources to support their operations and execute his vision. With each new acquisition, we helped with valuations and profitability calculations. Further, when they began to expand their borders internationally, we connected them to our Prime Global partners to help structure their foreign offices. Through our partnership, the client knew they had access not only to our experts but to all our connections as well. How it's Going A Lasting Partnership Founded on TrustOur relationship has continued for almost 30 years. Beyond the traditional client/firm relationship, we remain good partners and good friends. There is no “business as usual,” in our approach: we continue to be committed to evaluating how we can serve them better each year. Recently, these efforts have culminated in a forensic accounting engagement for which we were their first and only phone call. They’re our first phone call as well: they have become as much our advocate as we are theirs—they’re always ready to provide a reference and have played prominent roles in our internal programming. Needless to say, we’re looking forward to the next 30 years. Contact an Audit & Tax Advisor Today ### Audit Case Study - Operational Efficiency How it Started Lack of Preparation & Excessive PaperworkIn 2021, Schneider Downs was contacted by a company that had missed its most recent ERISA filing date by several months, creating significant frustration with their current provider. Although Schneider Downs was not local to their area, the client reached out to us at the recommendation of their actuary. When he asked us to propose their ERISA audits, the prospect made it clear: his top priority was filing timely this year. We were determined to deliver. Charting a New Course On Board with Early Planning and Scheduling​After our initial meeting, we knew this audit required an especially proactive approach. Generally, due to the extensive third-party coordination and client onboarding tasks that come with a first-year ERISA audit, making granular predictions about specific timing can be tricky. However, to ensure the client felt confident they would file on time, we carefully outlined and committed to a detailed timeline of our audit plan in April. Staying Vigilant with Internal ReviewsTo ensure we delivered on the promised timeline, we conducted biweekly calls with the client in June, even though fieldwork didn’t start until August. When we did begin fieldwork, which we conducted remotely, we upped the cadence of our calls and communicated regularly with the client through issuance—which occurred with time to spare. How it's Going Enhanced Financial Accuracy, Strengthened Internal Controls & Operational EfficiencySince successfully completing their ERISA audits, we’ve developed a strong partnership with the client. As they continue to grow, we are here to provide complimentary and general advisory services.  Today, because we’ve demonstrated their priorities are our priorities, we’re the first to know whenever a change occurs within their organization. They know we’ll always pick up their call. Contact an Audit & Tax Advisor Today About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### Forensics and Litigation Services Forensics and Litigation Services Navigate the complex litigation landscape with confidence. Meet our team Broad capabilities, unmatched expertise The Schneider Downs Business Advisors consists of seasoned forensic accountants and litigation support consultants with significant experience across all industries. Our seasoned team of forensics and litigation professionals provide organizations the expertise, analysis and technology required to mitigate, address and settle investigations of all sizes. Business Interruption and Damanges Services Business Interruption and Damages Quantify Losses, Support Claims, and Navigate Recovery with… Fiduciary and Trustee Professional Services Fiduciary and Trustee Professional Services Providing Assistance to Help Fiduciaries Meet Their… Forensic & Investigative Accounting Forensic and Investigative Accounting Uncover Financial Misconduct, Resolve Disputes, and Strengthen Controls… Fraud Risk Assessment Fraud Risk Assessment Identify Vulnerabilities, Prioritize Risks, and Strengthen Your Anti-Fraud Strategy… Fraud Risk Assessments Fraud Risk Assessments Fraud Risk Diagnostic Evaluation Fraud Risk Diagnostics and Mitigation Services Evaluate Your Organization’s Fraud Defenses and… Fraud Risk Management Fraud Risk Management Proactively Identify, Assess, and Address Fraud Risks to Safeguard… Litigation Support Services Litigation Support Services Delivering credible analysis, expert testimony, and strategic insight for… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections About Business Advisory Services In a business world of rapid change, organizations are challenged more than ever before to remain current, informed and insightful. The Schneider Downs Business Advisory practice helps organizations make more informed accounting, financial, legal and business decisions across every facet of their operations, from the ground floor to the C-suite. View our additional Forensics and Litigation services and capabilities Learn More Contact us Do You See Ghosts (Students)? Over the past few months, there has been a rise in concern about ghost students. Ghost students are individuals who… Read More > Employee Fraud in Construction: Understanding and Mitigating Risks Former office assistant Kami Elois Power was indicted in January with allegations of embezzling over $1.4 million between 2019 and… Read More > Tracing Commingled Assets: Separating Red and Green Beans “Bean counter” is a colloquial term sometimes used to describe an accountant focused on minor details. When it comes to… Read More > 6 Essential Safeguards to Prevent AML Violations in Your Organization What can organizations learn from the recent TD Bank anti-money laundering (AML) program settlement? TD Bank recently appointed Guidepost Solutions… Read More > How Scammers Are Using AI to Enhance Family Emergency Scams – What You Need to Know Family emergency scams are on the rise and evolving thanks to AI. Who makes phone calls nowadays anyway? Scammers, that’s… Read More > ### Audit Case Study Prototype 1 How it Started Lack of Preparation & Excessive PaperworkIn 2021, Schneider Downs was contacted by a company that had missed its most recent ERISA filing date by several months, creating significant frustration with their current provider. Although Schneider Downs was not local to their area, the client reached out to us at the recommendation of their actuary. When he asked us to propose on their ERISA audits, the prospect was very clear: his top priority was filing timely this year. We were determined to deliver. Every Step of the Way Early Planning and Scheduling​After our initial meeting, it was clear that this audit required an especially proactive approach. In general, due to the extensive third-party coordination and client onboarding tasks that come with a first-year ERISA audit, it’s tricky to make granular predictions about specific timing. However, to make sure the client felt comfortable that this year would be different than the last, we carefully outlined and committed to a detailed timeline of our audit plan in April. Internal Reviews & Clear Communication​To ensure we delivered on the promised timeline, we conducted biweekly calls with the client in June, even though fieldwork didn’t start until August. When we did begin fieldwork, which we conducted remotely, we upped the cadence of our calls and communicated regularly with the client through issuance—which occurred with time to spare. How it's Going Enhanced Financial Accuracy, Strengthened Internal Controls & Operational EfficiencySince successfully completing their ERISA audits, we’ve developed a strong partnership with the client and continue to provide several complimentary services and general advisory services as they grow.  Today, because we’ve demonstrated that their priorities are our priorities, we’re the first to know whenever a change occurs within their organization. They know we’ll always pick up their call. Contact an Audit & Tax Advisor Today ### SDinSite Features and Benefits Does your organization struggle with time and effort reporting?Many organizations are required to track employees’ time for various reasons—whether it be to process payroll, allocate costs to projects or grants or facilitate the billing process.In some cases, the collection of this information adds time and frustration to your staff’s workday. Outdated or lost spreadsheets, incorrect options selected by staff and the inability to self-report make time collection painful for all involved. Add in the rekeying or complicated and error-prone transformations in Excel to move data to other systems and you end up with a disjointed and inaccurate process.SD inSITE by SD Digital is an employee time-tracking software using a secure, web-based application to streamline reporting time and effort. By reducing administrative burdens and improving data accuracy, SD inSITE helps you achieve greater productivity and financial control.SD inSITE is a secure, online time reporting system designed to collect information from users, providing modules for time, expenses, purchase requisitions, invoice approvals and other company-related information.Key Features and Benefits:If your organization struggles with time and effort reporting, SD inSITE can streamline the process, present appropriate options to your staff using terms they understand and provide insight into effort for staff, supervisors, budget managers, accounting departments and management.Ease of Use - Employees can report their time from any Internet-connected computer by using a form tailored to your organization’s needs, with terminology your organization understands. Time can be captured based on start/stop times or by users simply entering elapsed time by day to the level of detail necessary. To help eliminate mistakes from information overload and reduce inconsistencies, options can be presented to users based on their job, department or group they are a part of. Using the optional submit process in SD inSITE, employees can both electronically attest to the time entered and notify their supervisor when it’s ready for review.Integrated Time Off Management - SD inSITE can also help modernize organizations that have a time off request and approval process. SD inSITE’s Time Request module provides users up-to-date balances for available types of leave and allows for electronic time off requests. This process can also facilitate future requests, making sure enough time will be accrued before the request is approved. This process includes out-of-office time requests like jury duty and bereavement and helps track FMLA use and overtime requests.Streamlined Approval and Reporting - All time requests can notify supervisors to review and approve online, allowing visibility into balances and outstanding and approved requests by other users. Approved time requests can be automatically added to an employee’s timesheet and cross referenced at the end of a pay period.Data Transformation and Integration - Once the review process has been completed, time can be sent to third party systems as needed. SD inSITE can transform data to meet business needs while maintaining original data entry details. Transformations can be as simple as summarizing data by employee and pay code or as complicated as allocating time off across attributes entered during the time collection process. Once transformed, time can be sent through formatted files or by using available APIs.At any point during the entry/review/approval process, time can be reported on by individual users, departments, groups of users or filtered based on a variety of options depending on what details are collected.Managing time can involve more than just entry and approval.Budget Management - SD inSITE also has a budget module that allows organizations to set budgets for users as related to the data being captured during time entry. Consider the following scenario: your organization tracks time by person, by day, by project and activity. (Keep in mind, SD inSITE uses your organization’s terms—that’s an important part of the SD inSITE implementation and training). Your funding is all based on the project, and the activity tracks what is being done for the selected project. The list of projects is ever-changing and funding sources are becoming more stringent on the use of their dollars. With that in mind, budgets can be set up in SD inSITE by project, by person to limit access to the project for purpose of time entry and to limit how much time can be entered for a period by person. This allows for more detailed control of what each person enters and how much time is utilized by project overall.Enhanced Project Tracking - As users enter time, they can see their time balance as compared to their available budget for a given project. Project managers can view time across the project regardless of who entered the time, providing visibility throughout the budget period as opposed to points in time throughout the year. This visibility allows project managers to better track their projects, making sure they are on track in terms of effort spent and required objectives being met.Combining user-friendly time entry, electronic approval routing, powerful data transformations and simple to use budget tools, SD inSITE enables your organization to spend less effort managing time and more time working on things that keep the business running.PRIMARY CONTACT: Patrick B. Armknecht CPA, CITP Further ResourcesView a DemoSD inSITE OverviewView an SD inSITE Stay Informed Overview ### Schneider Downs Capital Contact Us How Can SD Capital Help? Value Advisors for the Middle Market ### QoE Reports - Lexington (KY) Quality of Earnings Reports - Lexington (KY) When it comes to buying or selling a Lexington or Kentucky business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Lexington (KY) 40507 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Lexington QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Lexington and across Kentucky.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Lexington (KY) Lexington, Kentucky's business community thrives as a blend of tradition and innovation in the heart of the Bluegrass region. Known for its historic horse industry and agricultural heritage, Lexington has evolved to include diverse sectors such as healthcare, technology, education, and professional services. The city's strategic location, surrounded by fertile farmland and anchored by the University of Kentucky, fosters an environment ripe for business growth and entrepreneurship.Networking and collaboration are fundamental to Lexington's business fabric, facilitated by organizations like Commerce Lexington and local industry associations. These entities provide platforms for professionals to connect, share knowledge, and forge partnerships that drive economic development. Moreover, Lexington's business community is committed to fostering a sense of civic pride and community engagement. Many businesses actively support local initiatives, from educational programs to environmental sustainability efforts, contributing to the city's vibrant and inclusive culture. This dedication underscores Lexington's position as a dynamic business hub where innovation meets tradition, creating opportunities for prosperity and progress.       ### QoE Reports - Detroit (MI) Quality of Earnings Reports - Detroit (MI) When it comes to buying or selling a Detroit or Michigan business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earning Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Detroit (MI) 48201 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Detroit QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Detroit and across Michigan.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit About Detroit (MI) Detroit's business community embodies a spirit of resilience and innovation, deeply intertwined with the city's rich industrial history and cultural legacy. Once known as the automotive capital of the world, Detroit has diversified its economic base to include sectors such as technology, healthcare, finance, and manufacturing. The city's strategic location, skilled workforce, and entrepreneurial spirit continue to attract businesses looking to thrive in a dynamic urban environment.Networking and collaboration are fundamental to Detroit's business landscape, supported by organizations like the Detroit Regional Chamber and local business associations. These entities foster connections among entrepreneurs, startups, and established corporations, promoting knowledge-sharing and strategic partnerships. Moreover, Detroit's business community is actively engaged in initiatives aimed at revitalizing neighborhoods, promoting economic equity, and supporting local talent development. This commitment to community and economic growth underscores Detroit's transformation into a modern, inclusive business hub that honors its past while embracing a promising future. ### QoE Reports - Newark (NJ) Quality of Earnings Reports - Newark (NJ) When it comes to buying or selling a Newark or New Jersey business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Newark (NJ) 07105 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Newark QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Newark and across New Jersey.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Newark (NJ) Newark, New Jersey's business community is a dynamic and integral part of the city's identity and economic landscape. Located just west of New York City, Newark has historically been a hub for transportation and commerce, with industries ranging from finance and healthcare to education and technology. The city's strategic location and robust infrastructure continue to attract businesses of all sizes, contributing to its economic resilience and growth.Networking and collaboration are key drivers within Newark's business ecosystem. Local organizations, such as the Newark Regional Business Partnership and the New Jersey Institute of Technology Enterprise Development Center, play vital roles in fostering connections and supporting entrepreneurial endeavors. These initiatives not only promote innovation but also strengthen the bonds between businesses and the community. Additionally, Newark's business community is committed to social responsibility and community engagement. Many companies actively participate in initiatives aimed at improving education, supporting local nonprofits, and promoting sustainable practices, reflecting their dedication to contributing positively to Newark's overall development and well-being. ### QoE Reports - Charleston (WV) Quality of Earnings - Charleston (WV) When it comes to buying or selling a Charleston or West Virginia business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earning Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Charleston (WV) - 25301 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Charleston QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Las Vegas and across Nevada. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Charleston (WV) Charleston, West Virginia's business community thrives amidst a backdrop of scenic beauty and a rich cultural heritage. Situated along the banks of the Kanawha River, Charleston serves as the state's capital and a hub of commerce and industry. Historically rooted in sectors like energy, manufacturing, and healthcare, the city's economy has diversified to include technology, tourism, and professional services. This diversity fosters a dynamic environment where businesses of all sizes can innovate and grow.Networking and collaboration are integral to Charleston's business fabric, facilitated by local chambers of commerce, industry associations, and business incubators. These organizations provide platforms for professionals to connect, exchange ideas, and forge strategic partnerships. Moreover, Charleston's business community is committed to fostering a sense of civic pride and social responsibility. Many businesses actively participate in community initiatives, supporting local charities, and contributing to the city's cultural and economic vitality. This dedication to both economic growth and community well-being underscores Charleston's resilience and position as a vibrant business center in West Virginia.       ### QoE Reports - Jackson (MS) Quality of Earnings Reports - Jackson (MS) When it comes to buying or selling a Jackson or Mississippi business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Jackson QoE Team Schneider Downs provides Quality of Earnings reports to companies in Jackson and across Mississippi. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit About Jackson (MS) Jackson, Mississippi's business community embodies resilience and adaptability amidst a backdrop of rich cultural heritage and Southern hospitality. From its historic downtown to burgeoning commercial districts, such as Fondren and Flowood, a diverse range of industries thrives. Agriculture and manufacturing have historically been significant, complemented now by a growing presence in healthcare, education, and technology sectors. This blend of traditional strengths and emerging opportunities creates a fertile ground for entrepreneurship and economic growth. Networking and collaboration are fundamental to Jackson's business landscape, fostering connections and innovation. Local organizations and chambers of commerce play a pivotal role in bringing together professionals from various sectors, facilitating knowledge-sharing and strategic partnerships. Additionally, businesses in Jackson are committed to community engagement and social responsibility, actively contributing to initiatives that enhance quality of life and support local causes. This shared commitment to the city's development underscores Jackson's vibrant business community, shaping its future as a resilient and inclusive economic hub in the South. ### QoE Reports - New Orleans (LA) Quality of Earnings Reports - New Orleans (LA) When it comes to buying or selling a New Orleans or Louisana business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our New Orleans QoE Team Schneider Downs provides Quality of Earnings reports to companies in New Orleans and across Louisiana. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit About New Orleans (LA) The business community in New Orleans is as vibrant and eclectic as the city itself, renowned for its rich cultural heritage and entrepreneurial spirit. From its historic French Quarter to emerging districts like the Warehouse District and Central Business District, a diverse array of industries thrives. Hospitality and tourism remain cornerstone sectors, bolstered by a growing presence in technology, healthcare, and creative industries. This blend of tradition and innovation creates a dynamic environment where businesses of all sizes flourish. Networking and collaboration are integral to the fabric of the New Orleans business community. Local entrepreneurs benefit from a supportive network that fosters creativity and encourages partnerships. Events such as industry conferences, networking mixers, and cultural festivals serve as catalysts for forging connections and sharing insights. Moreover, businesses in New Orleans prioritize community engagement, participating actively in initiatives that support local causes, promote cultural preservation, and drive economic development. This commitment to social responsibility underscores the community's resilience and contributes to its enduring charm and appeal as a business destination.    ### QoE Reports - Little Rock (AR) Quality of Earnings Reports - Little Rock (AR) When it comes to buying or selling a Little Rock or Arkansas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Little Rock (AR) - 72201 Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Little Rock QoE Team Schneider Downs provides Quality of Earnings reports to companies in Little Rock and across Arkansas.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit About Little Rock (AR) The business community in Little Rock, Arkansas, stands as a testament to the city's entrepreneurial spirit and economic resilience. Anchored by a diverse array of industries including healthcare, technology, retail, and hospitality, local businesses play a pivotal role in driving both employment and economic growth. From small startups to established corporations, entrepreneurs find a supportive environment that fosters innovation and creativity. Networking events and business associations provide invaluable opportunities for professionals to connect, collaborate, and share insights, further enhancing the community's cohesive fabric. Beyond economic contributions, businesses in Little Rock actively engage in civic initiatives and social responsibility efforts. Many companies prioritize giving back to the community through charitable donations, volunteer programs, and partnerships with local nonprofits. This commitment to corporate citizenship strengthens the bond between businesses and residents, fostering a sense of shared responsibility for the city's well-being. As Little Rock continues to evolve, its business community remains integral to shaping its future trajectory, ensuring sustainable development and a high quality of life for all who call it home.    ### QoE Reports - Providence (RI) Quality of Earnings Reports - Providence (RI) When it comes to buying or selling a Providence or Rhode Island business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Providence RI 02902 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Providence QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Providence and across Rhode Island.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Providence (RI) The business community in Providence, Rhode Island, reflects a city that blends historic charm with modern innovation. Known as the "Creative Capital," Providence has evolved from its industrial roots into a diverse economy driven by sectors such as education, healthcare, technology, and creative industries.The city's economy is bolstered by institutions like Brown University and the Rhode Island School of Design (RISD), which not only contribute to education but also fuel research, development, and entrepreneurial endeavors. These institutions serve as anchors for knowledge-based industries and attract talent from around the world. ### QoE Reports - Los Angeles (CA) Quality of Earnings Reports - Los Angeles (CA) When it comes to buying or selling a Los Angeles or California Business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Los Angeles (CA) 90002 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Los Angeles QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Los Angeles and across California. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Los Angeles (CA) The business community in Los Angeles, California, is diverse and driven by entertainment, technology, international trade, and tourism. As a global hub for film and media, it is home to major studios and production companies, while Silicon Beach fosters innovation with numerous tech startups. The Port of Los Angeles, one of the world’s busiest, anchors international trade and logistics. Additionally, the city benefits from a thriving tourism industry, boosted by its cultural attractions and hospitality sector, along with a robust creative economy supported by fashion and design. ### QoE Reports - Columbus (OH) Quality of Earnings - Columbus (OH) When it comes to buying or selling a Columbus or Ohio business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earning Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Columbus (OH) 43215 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Columbus QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Columbus and across Ohio. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit About Columbus (OH) The business community in Columbus, Ohio, is characterized by a blend of innovation, collaboration, and a strong sense of community. Nestled in the heart of Ohio, Columbus has emerged as a dynamic hub for business and entrepreneurship, propelled by a diverse range of industries including finance, insurance, healthcare, retail, and technology.Home to major corporations such as Nationwide Insurance, L Brands, and Cardinal Health, Columbus boasts a robust corporate presence that drives economic growth and job creation. These companies not only contribute significantly to the local economy but also actively engage in community initiatives and philanthropy, enhancing the quality of life for residents. ### QoE Reports - New York City (NY) Quality of Earnings - New York (NY) When it comes to buying or selling a New York City or New York Business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our New York City QoE Team Schneider Downs provides Quality of Earnings reports to companies in New York City and across New York. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About New York City (NY) The business community of New York City is a vibrant tapestry woven from countless threads of industry and ambition. It spans finance, technology, media, fashion, and beyond, reflecting the city's role as a global nexus of innovation and entrepreneurship. Here, towering skyscrapers house the headquarters of multinational corporations alongside the offices of startups fueled by ambition and innovation. Amid the hustle and bustle of Manhattan's streets, business deals are brokered over coffee in bustling cafes and in boardrooms high above the city skyline. The city's economy pulses with the energy of competition and collaboration, as businesses vie for market share in a city that never sleeps. ### Schneider Downs Capital Team Schneider Downs Capital Team Value Advisors for the Middle Market Meet Our Team Peter Lieberman Managing Partner Learn More > Tom Springer Managing Partner Learn More > Stuart P. Lawson Managing Director - CPA, CEPA, CM&AA Learn More > Imran Mohiuddin Managing Director Learn More > Walter Gilligan Senior Director - MBA Learn More > Alyssa Fudala Director Learn More > Erika Keough Director - MBA, SHRM-SCP Learn More > Christine Marshall Director - CEPA Learn More > Wayne Pigott Director - CMAA Learn More > Matthew Kotkiewicz Associate Learn More > Rebecka Talley Senior Associate - CEPA, CM&AA Learn More > Thomas Merante Analyst Learn More > ### SD Capital Transactions Mergers & Acquisitions Schneider Downs Capital Transactions Mergers & Acquisitions All Mergers & Acquisitions Consumer/HealthcareEnergy & Utility ServicesManufacturing & Industrial Services Advised Donegal Construction Corp. and Delta Contracting, Inc. on their sale to SurfaceCycle, a portfolio company of Warren Equity Partners Advised Armstrong Nutrition Management, LLC on its sale to DiningRD, a portfolio company of Evolution Capital Partners Advised CWM Environmental, LLC (CWM) on its sale to Metiri Group, Inc. Advised Producers Supply Company, Inc. on its sale to BPS Supply Group, a portfolio company of Trive Capital Advised Sam Levin, Inc. on its sale to Art Van Furniture, an affiliate of Thomas H. Lee Partners, L.P. UV Technologies, a division of Calgon Carbon Corporation, has been acquired by De Nora Holdings US, Inc. The assets of Kanata Blanket Company and Neet Feet have been acquired by an undisclosed buyer Advised Westmoreland Advanced Materials, Inc. on its sale of certain assets to Allied Mineral Products, LLC Advised Klein’s Restoration Services on its sale to Yak Access, LLC, an affiliate of Platinum Equity Advised Keystone Consultants, Inc. on its sale to Contract Land Staff, LLC, an affiliate of Oaktree Capital Management, L.P. Advised Well Service Group, Inc. and Utility Access Solutions, Inc. on their sales to Newpark Resources Inc. Advised Weavertown Transport Leasing, Inc. and Weaver Town Oil Services, Inc., operating as Weavertown Environmental Group, on their sale to Univar USA Inc. Advised Conveyor Services Corporation, Classic Conveyor Components Corporation and Affiliates on its sale to Fenner, PLC Advised Troy D. Dolan on his equity investment in Diamond Technical Services, Inc. Advised S/D Engineers, Inc. on its sale to Siemens Power Generation, Inc. Advised L.R. Kimball & Associates, Inc. on its sale to CDI Corp. Advised DMLogic, LLC on its sale of a majority ownership interest to Körber AG Advised NILCO Corporation on its acquisition by Platinum Equity Advised TIGG Corporation on its sale to The Spencer Turbine Company, a portfolio company of Alliance Holdings, Inc. Advised Powerohm Resistors, Inc. on its sale to Hubbell Industrial Controls, Inc., a business unit of Hubbell Incorporated Advised Snap-tite, Inc. on its sale to Parker Hannifin Corporation Advised Union Spring & Manufacturing Corp. on the sale of its Pontotoc Spring division to MW Industries, Inc., a portfolio company of Genstar Capital Advised Print Tech of Western Pennsylvania on its sale of assets to Center Capital, LLC Advised Heartland Petroleum, LLC on its recapitalization by Warren Distribution Advised Snap-tite Hose, Inc., a business unit of Snap-tite, Inc., on its sale to All-American Hose, LLC Advised Marion Steel on its sale to Nucor Advised James Austin Company on its sale to KIK Custom Products, an affiliate of Centerbridge Partners, L.P. Advised Choice Respiratory Care, Inc. on its sale to a national respiratory care provider Advised Eat’n Park Hospitality Group on the sale of its Cura Hospitality division to TrustHouse Services Group Advised AAA Allied Group on its acquisition of Bob Sumerel Tire Co. Inc.’s retail business Advised ABARTA, Inc. on its acquisition of Kahiki Foods, Inc. Advised West Mifflin Imaging Associates, LP on its sale to Jefferson Regional Medical Center OUR THOUGHTS ON Dealing with the CDK Cyberattack Fallout Before June 18, 2024, no one would have imagined that cyber criminals could compromise an industry leader like CDK and… Read More > New TEOS Improvements Webpage On June 21, 2024, the IRS announced enhancements to public access of Form 990 series data on the new Tax… Read More > The Value of Control Self-Assessments “Risk comes from not knowing what you are doing.”– Warren Buffet A risk management framework is an ongoing process of… Read More > Investment Corner with Jason & Sean: Strength in EM… Is it Sustainable? Emerging Markets (EM) sometimes can feel like the forgotten middle child within the greater equity asset class as performance over… Read More > Changes to the Student Financial Assistance Cluster in the 2024 Compliance Supplement With the release of the 2024 Compliance Supplement from the Office of Management and Budget (Supplement), there are changes to… Read More > ### WebApp Questionnaire Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. CONTACT US About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources   Resource Library Our Thoughts On View our additional IT Risk Advisory services and capabilities Learn More Contact us ### QoE Reports - Milwaukee (WI) Quality of Earnings Reports - Milwaukee (WI) When it comes to buying or selling a Milwaukee or Wisconsin business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Milwaukee (WI) 53202 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Milwaukee QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Milwaukee and across Wisconsin. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Milwaukee (WI) Milwaukee, Wisconsin, boasts a diverse and resilient business community shaped by its industrial heritage, strategic location, and entrepreneurial spirit. The city's economy encompasses various sectors, including manufacturing, healthcare, technology, education, and brewing.Manufacturing has long been a cornerstone of Milwaukee's economy, with the city's history deeply rooted in industries such as machinery, tools, and metal fabrication. While the manufacturing landscape has evolved over the years, Milwaukee remains home to a wide array of manufacturing companies, ranging from large corporations to small and medium-sized enterprises. The manufacturing sector continues to be a vital contributor to the local economy, providing employment opportunities and driving innovation.Healthcare is another key sector in Milwaukee, with world-class medical institutions like the Medical College of Wisconsin and Froedtert Hospital serving as anchors for the city's healthcare industry. These institutions, along with numerous hospitals, clinics, and research centers, contribute to Milwaukee's reputation as a hub for medical innovation and excellence. ### QoE Reports - Houston (TX) Quality of Earnings Reports - Houston (TX) When it comes to buying or selling a Houston or Texas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earning Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Houston TX 77018 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Houston QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Houston and across Texas. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Houston (TX) Houston, Texas, boasts a robust and diverse business community, characterized by its strategic location, strong energy sector, thriving healthcare industry, and growing technology and aerospace sectors.As the fourth-largest city in the United States, Houston serves as a major economic hub, particularly in the energy sector. The city is often referred to as the "Energy Capital of the World" due to its prominent role in the oil and gas industry. Houston is home to numerous energy companies, including multinational corporations, independent producers, and service providers, contributing significantly to the city's economy and employment opportunities.In addition to energy, Houston has a thriving healthcare industry, with the Texas Medical Center (TMC) serving as the largest medical complex in the world. TMC is home to renowned hospitals, research institutions, and healthcare organizations, attracting patients, medical professionals, and investment to the region. Houston's healthcare sector encompasses a wide range of specialties, including cancer treatment, cardiovascular care, and medical research. ### QoE Reports - St. Louis (MO) Quality of Earnings Reports - St. Louis (MO) When it comes to buying or selling a St. Louis or Missouri business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our St. Louis QoE TeamSchneider Downs provides Quality of Earnings reports to companies in St. Louis and across Missouri. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About St. Louis (MO) St. Louis, Missouri, boasts a diverse and dynamic business community that reflects its rich history and strategic location in the heart of the United States. The city is home to a variety of industries, including healthcare, manufacturing, biotechnology, finance, and logistics.Healthcare is a prominent sector in St. Louis, with renowned institutions such as Barnes-Jewish Hospital, St. Louis Children's Hospital, and Washington University School of Medicine anchoring the region's medical landscape. These institutions drive innovation, research, and medical care, attracting patients, professionals, and investment to the area.Manufacturing has historically been a cornerstone of St. Louis's economy, with the city's location along the Mississippi River facilitating trade and transportation. While the manufacturing sector has evolved over the years, St. Louis remains home to a diverse range of manufacturing companies, including those specializing in aerospace, automotive, chemicals, and consumer goods. ### QoE Reports - Wichita (KS) Quality of Earnings Reports - Wichita (KS) When it comes to buying or selling a Wichita or Kansas business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Wichita QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Wichita and across Kansas. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Wichita (KS) Wichita, Kansas, is home to a diverse and resilient business community that spans various industries, with aviation, manufacturing, healthcare, and agriculture playing prominent roles in the local economy. Historically known as the "Air Capital of the World," Wichita has a strong aviation industry presence, with major aerospace companies like Spirit AeroSystems and Textron Aviation headquartered in the city. This legacy has fostered a robust ecosystem of aviation-related businesses, including suppliers, manufacturers, and maintenance facilities, contributing significantly to Wichita's economy and employment landscape.Manufacturing is another cornerstone of Wichita's business community, encompassing a range of sectors such as machinery, equipment, and advanced manufacturing. The city's central location, skilled workforce, and favorable business climate have attracted manufacturing companies seeking operational efficiency and access to key markets.In addition to aviation and manufacturing, healthcare is a vital sector in Wichita, with several hospitals, medical centers, and healthcare providers serving the region. Wichita is home to the University of Kansas School of Medicine-Wichita and the Kansas Heart Hospital, among others, contributing to the city's reputation as a healthcare hub in the state. ### QoE Reports - Tampa (FL) Quality of Earnings Reports - Tampa (FL) When it comes to buying or selling a Tampa or Florida business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Tampa QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Tampa and across Florida. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Tampa (FL) Tampa, Florida, hosts a diverse and thriving business community characterized by several key sectors driving economic growth and innovation. One of the primary pillars of Tampa's economy is its robust healthcare industry. With world-renowned medical institutions such as Tampa General Hospital and Moffitt Cancer Center, the region has become a hub for healthcare services, research, and innovation. This sector not only provides quality healthcare to residents but also attracts medical professionals and researchers from around the globe.Tampa's proximity to major shipping routes and its strategic location on the Gulf Coast have contributed to the development of a flourishing logistics and distribution sector. The Port of Tampa Bay, one of the largest seaports in Florida, facilitates the movement of goods and cargo, supporting industries such as manufacturing, warehousing, and transportation. This strategic advantage has made Tampa an attractive destination for businesses looking to establish distribution centers and logistics operations.Furthermore, Tampa's financial services industry continues to grow, with an increasing number of banks, investment firms, and insurance companies establishing a presence in the region. The city's strong financial infrastructure, coupled with its growing population and business-friendly environment, has positioned Tampa as a key player in the financial services sector within the state of Florida. ### QoE Reports - Orlando (FL) Quality of Earnings Reports - Orlando (FL) When it comes to buying or selling a Orlando or Florida business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Orlando FL 32801 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Orlando QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Orlando and across Florida. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Orlando (FL) Orlando, Florida, boasts a vibrant and diverse business community, fueled by a combination of tourism, technology, healthcare, and entertainment industries. Known worldwide for its theme parks and attractions, including Walt Disney World Resort, Universal Orlando Resort, and SeaWorld Orlando, tourism is a major economic driver for the region. The hospitality sector, comprising hotels, restaurants, and entertainment venues, thrives on the millions of visitors who flock to the area each year, contributing significantly to the local economy and providing employment opportunities.In addition to tourism, Orlando has emerged as a hub for technology and innovation. With a growing number of tech companies and startups establishing a presence in the area, Orlando's tech sector is on the rise. The presence of institutions like the University of Central Florida, one of the largest universities in the country, contributes to a pool of skilled talent and fosters collaboration between academia and industry.Healthcare is another thriving sector in Orlando, with world-class medical facilities and research institutions driving innovation and economic growth. The Lake Nona Medical City, a 650-acre health and life sciences park, is a prime example of Orlando's commitment to advancing healthcare through research, education, and clinical care. ### QoE Reports - Pittsburgh (PA) Quality of Earnings Reports - Pittsburgh (PA) When it comes to buying or selling a Pittsburgh or Pennsylvania business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Pittsburgh QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Pittsburgh and across Pennsylvania. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit About Pittsburgh (PA) The Pittsburgh business community is characterized by a rich tapestry of industries and a spirit of innovation that has propelled the city into a dynamic economic hub. Historically known for its steel production, Pittsburgh has undergone a remarkable transformation, diversifying its economy and embracing sectors such as technology, healthcare, education, and finance.The city's emergence as a leader in technology and robotics has earned it the nickname "Roboburgh." Home to renowned universities such as Carnegie Mellon University and the University of Pittsburgh, Pittsburgh benefits from a highly skilled workforce and a culture of collaboration between academia and industry. This synergy has fostered the growth of numerous tech startups, as well as the establishment of research and development centers by major corporations.Moreover, Pittsburgh boasts a thriving healthcare sector, anchored by world-class medical institutions like UPMC (University of Pittsburgh Medical Center). The city's healthcare industry not only provides essential services to residents but also serves as a driver of innovation and a magnet for healthcare-related businesses and investment. ### QoE Reports - Seattle (WA) Quality of Earnings Reports - Seattle (WA) When it comes to buying or selling a Seattle or Washington business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Seattle QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Seattle and across Washington. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Seattle (WA) Seattle, Washington, is renowned for its dynamic and diverse business community, characterized by innovation, entrepreneurship, and a strong presence of established corporations. As the home to tech giants like Amazon, Microsoft, and Boeing, Seattle has long been associated with innovation and technology.The city's thriving tech industry has attracted talent from around the world, fostering a culture of creativity and collaboration. Startups and tech companies continue to emerge, drawn by the city's robust infrastructure, access to capital, and vibrant startup ecosystem. This has led to the development of technology clusters in areas like South Lake Union and Pioneer Square, further fueling innovation and economic growth.Beyond technology, Seattle is also home to a thriving retail sector, with companies like Starbucks, Nordstrom, and Costco headquartered in the region. The city's bustling retail scene, anchored by iconic brands and innovative startups, contributes significantly to its economy and cultural identity. ### QoE Reports - Charleston (SC) Quality of Earnings - Charleston (SC) When it comes to buying or selling a Charleston or South Carolina business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Charleston (SC) - 29401 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Charleston QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Charleston and across South Carolina. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit About Charleston (SC) Charleston, South Carolina, boasts a vibrant and diverse business community characterized by a blend of traditional industries and emerging sectors. As one of the oldest cities in the United States, Charleston has a rich history that is reflected in its economic landscape. The city's economy has traditionally been driven by sectors such as tourism, manufacturing, shipping, and defense, all of which continue to play significant roles in the local business community.The tourism industry is a major contributor to Charleston's economy, attracting millions of visitors each year to its historic sites, beautiful beaches, and renowned culinary scene. The hospitality sector, including hotels, restaurants, and entertainment venues, thrives on this influx of tourists, providing employment opportunities and driving economic growth.In addition to tourism, manufacturing has long been a cornerstone of Charleston's economy. The region is home to a diverse range of manufacturing companies, producing everything from automobiles and aerospace components to textiles and consumer goods. The Port of Charleston, one of the busiest ports on the East Coast, facilitates the import and export of goods, further supporting the manufacturing sector and contributing to the city's economic vitality. ### QoE Reports - Las Vegas (NV) Quality of Earnings Reports - Las Vegas (NV) When it comes to buying or selling a Las Vegas or Nevada business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Las Vegas NV 89101 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Las Vegas QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Las Vegas and across Nevada. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Las Vegas (NV) Las Vegas boasts a vibrant and diverse business community, driven largely by its tourism, hospitality, entertainment, and gaming industries. With its reputation as the "Entertainment Capital of the World," the city attracts millions of visitors each year, creating opportunities for businesses in sectors ranging from hotels and resorts to restaurants, nightlife, and event management.Moreover, the city's convention industry is robust, hosting numerous trade shows, conferences, and exhibitions throughout the year, which further stimulates economic activity and fosters networking opportunities for businesses. Additionally, Las Vegas is emerging as a hub for technology startups and innovation, with companies drawn to the city's favorable business environment, including tax incentives and a growing talent pool.The business landscape is also supported by a range of professional services, including legal, financial, and consulting firms, which cater to the diverse needs of businesses operating in the region. Furthermore, the city's strategic location in the southwestern United States positions it as a gateway for trade and commerce, particularly with markets in the Asia-Pacific region. ### Value Advisory [Content is password protected] ### Schneider Downs Capital Value Advisors for the Middle Market A premier, full-service, value growth and investment banking practice serving middle market companies. PRIMARY CONTACTS: Peter J. Lieberman, Tom SpringerForged from the combined experience of former owners and operators, seasoned investment bankers and senior executives, the SD Capital team provides a unique perspective on value creation and company sales. We are trusted advisors who assist business owners in creating and maximizing business value through strategic evaluation and execution of multiple pathways for downstream sales and monetization.With decades of collective experience and 100+ transactions, we are uniquely positioned to help owners navigate the complex journey of selling their company. We understand this is a life-changing event and are committed to providing guidance tailored to your goals.Value AdvisoryWe have extensive experience collaborating with companies as strategic and operating partners to develop and execute inorganic growth by identifying and addressing business challenges to unlock significant value before initiating a sale process. Leveraging top-tier investment banking capabilities, we implement powerful strategies to enhance value pre-transaction.Investment BankingFor owners who are ready to pursue a transaction immediately, we offer a comprehensive range of investment banking resources and expertise. This includes a best-in-class process and various sell-side options, such as control sales, recapitalizations, buy-outs, carve-outs, and ESOPs.If you want to discuss what’s next for your company, please get in touch with us at contact@sdcapital.com. The Value Advisory ProcessUsing our three-phase approach, our clients routinely create maximum value and achieve exit multiples well beyond industry norms. Baseline Readiness Assessment Our baseline readiness assessment is performed through the lens of a buyer, identifying those areas most likely to result in discounting and a reduction of purchase price in a transaction. It also consists of identifying upside opportunities for value enhancement, such as repositioning a product or service offering as a recurring versus project-based revenue stream.Utilizing workshops, interviews, and data analysis, we identify opportunities for enhancing company value. Our team comprises subject matter experts across multiple disciplines including estate and wealth management, tax , etc., to comprehensively assess all potential impacts on a potential future event. Value Advisory Each of the value gaps or value creation opportunities identified as part of the Phase I assessment process are ranked based on impact, timing, and cost (level of effort). A targeted plan to address each gap and value creation activity is identified as are key performance indicators to track and monitor progress. Significant progress can be made in a little as 6 months, but the time frame to create measurable improvement is often 12 – 18 months. Value Realization In the value realization phase, we capitalize on the improvements identified and addressed in phases I and II, harnessing SD Capital’s collective investment banking expertise to guide business owners through a monetization or liquidity event. The intimate knowledge of our client’s business gained during the first two phases provides unparalleled insight to successfully represent and position the Company to achieve its owner’s desired outcome. Our baseline readiness assessment is performed through the lens of a buyer, identifying those areas most likely to result in discounting and a reduction of purchase price in a transaction. It also consists of identifying upside opportunities for value enhancement, such as repositioning a product or service offering as a recurring versus project-based revenue stream.Utilizing workshops, interviews, and data analysis, we identify opportunities for enhancing company value. Our team comprises subject matter experts across multiple disciplines including estate and wealth management, tax , etc., to comprehensively assess all potential impacts on a potential future event.Each of the value gaps or value creation opportunities identified as part of the Phase I assessment process are ranked based on impact, timing, and cost (level of effort). A targeted plan to address each gap and value creation activity is identified as are key performance indicators to track and monitor progress. Significant progress can be made in a little as 6 months, but the time frame to create measurable improvement is often 12 – 18 months.In the value realization phase, we capitalize on the improvements identified and addressed in phases I and II, harnessing SD Capital's collective investment banking expertise to guide business owners through a monetization or liquidity event. The intimate knowledge of our client’s business gained during the first two phases provides unparalleled insight to successfully represent and position the Company to achieve its owner’s desired outcome. Investment Banking We provide comprehensive sale advisory services, ensuring sellers achieve maximum value through an approach that efficiently connects them with a diverse pool of domestic and global buyers or investors, maximizes focus on business operations and minimizes deal-related distractions.While price is crucial for sellers, the form of consideration, deal structure, and buyer compatibility are equally important factors in securing the right deal. We place special emphasis on a detailed analysis of the potential buyer/investor pool, which may allow for a more targeted and abbreviated auction process, if appropriate, but also identifies a comprehensive set to maximize reach and options for a seller. We play a pivotal role in driving the process toward an optimal outcome by offering the following services: Leadership and management of the transaction process. Primary contact and interaction with buyers and investors. Real-time market intelligence and comprehensive valuation guidance. Facilitation of buyer and investor due diligence. Identification of a comprehensive pool of potential buyers and/or investors. Strategic advisory to develop a unique sale proposition, positioning the client for future growth. Structuring and negotiation of transaction terms. Sales, Divestitures, Leveraged Buyouts and Recapitalizations We play a critical leadership role in sales process, providing comprehensive sale advisory services that generate maximum value for sellers. We combine a deep understanding of our clients’ businesses and industries with a rigorous and disciplined process to execute efficiently and allow our clients to stay focused on running their businesses. We are experts in navigating the unique needs of mid-market companies, recognizing that a sale for many owners is not just a financial transaction, but a life event that impacts management, employees and family.While price is crucial, the form of consideration, deal structure, and buyer compatibility are equally important factors in securing the right deal. We place special emphasis on a detailed analysis of the potential buyer/investor pool, which may allow for a more targeted and abbreviated auction process, if appropriate, but also identifies a comprehensive set to maximize reach and options for a seller. Acquisition Advisory Our team has extensive experience and success assisting clients in their pursuit of specific acquisition targets and in tailoring acquisition programs. We partner with you to develop criteria, identify and contact candidates, coordinate diligence and structure deal terms. We play a critical leadership role in sales process, providing comprehensive sale advisory services that generate maximum value for sellers. We combine a deep understanding of our clients’ businesses and industries with a rigorous and disciplined process to execute efficiently and allow our clients to stay focused on running their businesses. We are experts in navigating the unique needs of mid-market companies, recognizing that a sale for many owners is not just a financial transaction, but a life event that impacts management, employees and family.While price is crucial, the form of consideration, deal structure, and buyer compatibility are equally important factors in securing the right deal. We place special emphasis on a detailed analysis of the potential buyer/investor pool, which may allow for a more targeted and abbreviated auction process, if appropriate, but also identifies a comprehensive set to maximize reach and options for a seller.Our team has extensive experience and success assisting clients in their pursuit of specific acquisition targets and in tailoring acquisition programs. We partner with you to develop criteria, identify and contact candidates, coordinate diligence and structure deal terms.Who We AreOwner-operators with successful exits.Consultants and Executives to the private equity community.Corporate C-suite, M&A and growth roles in acquisitive Fortune 100 companies.Experts in commercial, GovCon and international business models.Value creation experts that achieve upside exit multiples.Investment banking professionals with expertise in a range of complex assignments.Leaders across the full M&A continuum as buyers and sellers with 100’s of transactions.Specialists in debt restructuring, turn-around, and special situations.Why SD Capital?Transaction and Hands-On Operating ExpertiseBenefit from our firsthand experience as former owners who have built and sold companies and as transaction professionals who have dedicated our careers to advising owners of firms in transition.Executive Insights and Industry ExpertiseTap into executive insights from our tenure as former C-Suite executives in Private Equity Portfolio Companies and transactions advisors across countless industries.Integrated Practice with a Deep Specialty KnowledgeAccess a deep talent pool of tax, wealth management, accounting, due diligence and valuation professionals through our relationship with Schneider Downs.Best-in-Class Transaction ExecutionWith extensive experience in mid-market M&A and corporate finance, our team prioritizes seamless communication, relentless effort, and technical expertise to ensure optimal outcomes for our clients and closely held businesses.Industry Experience Energy & Utility Services Manufacturing & Industrial Services GovCon & Defense Consumer & Healthcare IT & Technology Retail & Wholesale Distribution SD Capital Resources SD Capital Overview Thought Leadership Whitepapers About Schneider DownsSchneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and McLean, VA.Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### QoE Reports - Portland (OR) Quality of Earnings Reports - Portland (OR) When it comes to buying or selling a Portland or Oregon business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Portland QoE Team Schneider Downs provides Quality of Earnings reports to companies in Portland and across Oregon. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About Portland (OR) The Portland, Oregon business community is characterized by its emphasis on sustainability, innovation, and a strong sense of localism. Known for its green initiatives and eco-friendly practices, Portland has positioned itself as a leader in sustainable business, with many companies prioritizing environmental stewardship. The city's economy is diverse, with significant contributions from technology, manufacturing, and the creative industries. Tech companies, including Intel and various startups, form a crucial part of the economic landscape, benefiting from the region's skilled workforce and collaborative environment. Portland's business culture is also marked by a commitment to local and independent enterprises. This is evident in the thriving food and beverage industry, where local breweries, coffee roasters, and farm-to-table restaurants flourish. The city's strong support for small businesses and artisans fosters a unique and vibrant marketplace that attracts both residents and tourists. ### QoE Reports - Minneapolis (MN) Quality of Earnings Report - Minneapolis (MN) When it comes to buying or selling a Minneapolis or Minnesota business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Minneapolis (MN) 55402 Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Minneapolis QoE Team Schneider Downs provides Quality of Earnings reports to companies in Minneapolis and across Minnesota. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit About Minneapolis (MN) The Minneapolis business community has evolved into a diverse and dynamic ecosystem, reflecting the city's rich history and progressive outlook. Minneapolis, known for its innovative spirit, is home to a blend of established corporations and burgeoning startups. Major sectors such as finance, healthcare, technology, and manufacturing play a pivotal role in the local economy, with companies like Target, Best Buy, and General Mills headquartered in the area. The city's commitment to sustainability and social responsibility has fostered a culture of corporate citizenship, with businesses often leading initiatives in environmental stewardship and community engagement. The entrepreneurial scene in Minneapolis is vibrant, supported by a robust network of incubators, accelerators, and co-working spaces. This environment nurtures innovation and attracts a diverse talent pool, further enhancing the city's reputation as a hub for creativity and business growth. Educational institutions like the University of Minnesota contribute significantly by providing a steady stream of skilled graduates and engaging in research collaborations with local industries. ### QoE Reports - Indianapolis (IN) Quality of Earnings Reports - Indianapolis (IN) When it comes to buying or selling an Indianapolis or Indiana business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earning Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Indianapolis (IN) 46202 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Indianapolis QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Indianapolis and across Indiana. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Indianapolis (IN) The Indianapolis business community is a thriving and diverse economic hub that has experienced significant growth and development. Known for its strategic location in the heart of the Midwest, Indianapolis serves as a central nexus for various industries including manufacturing, healthcare, logistics, technology, and sports. The city's robust infrastructure, combined with a business-friendly environment, makes it an attractive destination for companies and entrepreneurs.Manufacturing is a cornerstone of Indianapolis's economy, with a strong presence of automotive, aerospace, and pharmaceutical companies. This sector benefits from the city's extensive transportation network, which facilitates efficient distribution and logistics operations. Healthcare is another major driver of the local economy, with world-class hospitals, research institutions, and biotech firms contributing to Indianapolis's reputation as a healthcare leader. ### QoE Reports - Des Moines (IA) Quality of Earnings Reports - Des Moines (IA) When it comes to buying or selling a Des Moines or Iowa business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earning Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Des Moines QoE Team Schneider Downs provides Quality of Earnings reports to companies in Des Moines and across Iowa. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About Des Moines (IA) The Des Moines business community is a vibrant and steadily growing hub that plays a crucial role in the economic vitality of the Midwest. Known for its welcoming atmosphere and supportive business environment, Des Moines has become a center for a variety of industries, including finance, insurance, healthcare, and agribusiness. The city’s strategic location, combined with a strong educational infrastructure and high quality of life, attracts businesses and professionals alike. The finance and insurance sectors are particularly prominent in Des Moines, with the city being home to numerous major insurance companies and financial institutions. This strong financial presence has earned Des Moines a reputation as a significant player in the insurance industry on both a national and international level. Healthcare is another key component of the local economy, with top-tier hospitals, research institutions, and healthcare providers contributing to both economic growth and community well-being. ### QoE Reports - Richmond (VA) Quality of Earnings Reports - Richmond (VA) When it comes to buying or selling a Richmond or Virginia business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Richmond (VA) 23220 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Richmond QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Richmond and across Virginia. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Richmond (VA) The Richmond business community is a dynamic and integral part of the region's economic landscape, characterized by a rich history and a growing diversity of industries. Known for its strategic location and vibrant culture, Richmond has attracted businesses ranging from finance and law to healthcare and manufacturing. The city’s historic charm, combined with modern amenities, creates a favorable environment for both established companies and new ventures.Richmond’s finance sector is particularly influential, with numerous banks, investment firms, and insurance companies headquartered in the area. This financial hub is complemented by a strong legal sector, with many prominent law firms and government agencies providing stability and growth opportunities.The healthcare industry is another pillar of Richmond’s economy, featuring leading hospitals, research institutions, and healthcare providers that offer high-quality services and drive economic development. Additionally, Richmond’s manufacturing sector remains robust, with a variety of companies producing goods ranging from chemicals to consumer products. ### QoE Reports - Denver (CO) Quality of Earnings Reports - Denver (CO) When it comes to buying or selling a Denver or Colorado business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earning Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Denver (CO) 80202 Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Denver QoE Team Schneider Downs provides Quality of Earnings reports to companies in Denver and across Colorado. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit About Denver (CO) The Denver business community is a dynamic and rapidly evolving landscape, marked by a robust and diverse economy. Known for its entrepreneurial energy, Denver has become a magnet for various industries including technology, aerospace, energy, healthcare, and finance. The city's strategic location in the Rocky Mountain region, combined with a high quality of life and a supportive business environment, has attracted a wide range of businesses and professionals. The technology sector in Denver is thriving, with numerous tech startups and established companies choosing to set up operations in the area. This growth is bolstered by a strong talent pool, thanks to the presence of prestigious universities and a culture that fosters innovation and collaboration. Additionally, Denver is a significant player in the aerospace industry, home to major aerospace companies and research institutions that contribute to both the local economy and national defense. ### QoE Reports - Phoenix (AZ) Quality of Earnings Reports - Phoenix (AZ) When it comes to buying or selling a Phoenix or Atlanta business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Phoenix AZ 85004 Sell-Side Due Diligence: Maximize Your Exit StrategyWhen it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include:Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Phoenix QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Phoenix and across Arizona. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Phoenix (AZ) The Phoenix business community is a vibrant and dynamic ecosystem that has seen significant growth and transformation over the past few decades. Known for its entrepreneurial spirit, Phoenix has become a hub for various industries including technology, healthcare, real estate, and manufacturing. The city's strategic location, favorable business climate, and robust infrastructure have attracted a diverse array of businesses, from startups to established corporations.The tech sector in Phoenix is particularly noteworthy, with an increasing number of tech companies and startups establishing their presence in the area. This growth is supported by the availability of a skilled workforce, thanks to the presence of major universities and colleges in the region. The healthcare industry is also a major player, with several leading healthcare providers and research institutions contributing to the local economy and providing high-quality services to the community. ### SOC 2 REPORTS– NEW YORK CITY (NY) SOC 2 REPORTS– NEW YORK CITY (NY) New York City and New York business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. New York SOC Expertise Schneider Downs provides SOC examinations in New York and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – New York City (NY) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our New York SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in New York City and across New York. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### Microsoft Dynamics Legacy Users Microsoft Dynamics Legacy Users Implement, Integrate, and Optimize Dynamics 365 Business Central. Dynamics NAV, GP and SL are now Dynamics 365 Business Central. With the confirmed end of lifecycle and extended support dates for Microsoft Dynamics NAV, GP, and SL, it's time for organizations to plan their migration to Dynamics 365 Business Central.Migrating from a seemingly functional ERP system may seem daunting, but Microsoft is no longer investing in these older platforms, so why should you?Without the latest updates, AI, or automation capabilities, the security and value of these platforms diminishes, directly impacting your data, people and revenue – the very resources ERP platforms are meant to conserve.How Can SD Digital Help?As a Microsoft partner, our team has the technical, business, and industry expertise required to help you assess, integrate and transition to Dynamics Business Central 365.Whether you are just getting started, need implementation assistance or prefer fully outsourced managed services, the SD Digital team de-risks the complexity and reduces the cost of migrations.Discover the benefits of switching to Microsoft Dynamics 365 Business Central.Contact Mike P. Scalamogna or book a time on his calendar. From initial advice to complex migrations, he’s here to help!The Value of Migrating to Dynamics 365 Business CentralUpgrading to Dynamics 365 Business Central yields many benefits. A recent Forrester study shared the cost savings and business impact of migrating, which included:$44K savings in third-party reporting spend over 3 years< 1-year payback10% operations productivity increase162% ROI over 3 years8% average in improved flow of operationsAvoidance of one full-time equivalent and one part-time equivalent finance and operations hiresWhy Choose SD Digital as Your Dynamics 365 Business Central Partner?Business Expertise – As a part of a robust professional services firm, our team has access to a diverse bench of professionals who offers a broad spectrum of expertise—including cybersecurity, internal audit, data analytics, audit and assurance, and tax services—to enhance your implementation.Commitment to Success – We emphasize long-term client success, ensuring thorough documentation and clear instructions for your team's independent operation post-engagement.Dynamic Knowledge – For more than 15 years, SD Digital has been a trusted partner for organizations of all sizes in all industries for Microsoft Dynamics GP, NAV, SL and Business Central.Peace of Mind – With a comprehensive managed services option, your organization has the peace of mind knowing your migration is in expert hands from start to finish.Trusted Digital Partner – Choosing us as your partner means you get a trusted team focused on keeping your digital capabilities up to date and running smoothly, ensuring you can focus on growth while we handle the technological details.Related ResourcesSD Digital Dynamics 365 Business Central SolutionsSD Digital Dynamics 365 Business Central ResourcesSD Digital Dynamics 365 MS Business Central OverviewSD Digital Dynamics Migration OverviewWhat is Microsoft Dynamics 365 Business Central?Microsoft Dynamics 365 Business Central is an all-in-one enterprise resource planning (ERP) business management solution that helps your business connect financials, sales, service, and operations to streamline business processes, improve customer interactions and make better decisions.About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.* Perpetual Licensing is currently available for Dynamics 365 Business Central on-premises; however licensing will be shifting to subscription in October 2025. At this point, new Business Central customers will purchase the subscription licenses. Existing Perpetual customers may still purchase additional perpetual licenses. Ready to Get Started? Schedule a Demo OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### SOC 1 Certification - Providence (RI) SOC 1 CERTIFICATION – PROVIDENCE, RI Providence and Rhode Island business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Providence SOC ExpertiseSchneider Downs provides SOC examinations in Rhode Island and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 1 Examinations – ProvidenceSchneider Downs is recognized as a premier provider of SOC services including:SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination.SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. take a free assessment quiz About Providence (RI)Providence is the capital and largest city of the state of Rhode Island, located in the northeastern region of the United States. It is known for its historic architecture, vibrant arts and culture scene, and delicious food.Some of the most popular attractions in Providence include:WaterFire: This unique event features a series of bonfires lit on the city's rivers, accompanied by music and performances.Rhode Island School of Design Museum: This museum features a large collection of art and design from around the world, including works by famous artists like Monet and Degas.Roger Williams Park: This large park features a zoo, botanical gardens, and several museums, as well as a lake for boating and fishing.Benefit Street: This historic street features some of the oldest and most well-preserved homes in the city, including several from the 18th century.Federal Hill: This neighborhood is known for its Italian restaurants and shops, making it a popular destination for foodies.Providence is also home to a variety of festivals and events throughout the year, including the Rhode Island International Film Festival, the Providence Waterfront Festival, and the Providence Restaurant Weeks.National ReachSchneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 1 Reports ### R&D Tax Credit New Mexico R&D Tax Credit - New Mexico Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Albuquerque, Las Cruces, Rio Rancho and across New Mexico. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. New Mexico R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in New Mexico, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Albuquerque, Las Cruces, Rio Rancho and across New Mexico for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, and many more. Contact Our New Mexico R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Albuquerque, Las Cruces, Rio Rancho and across New Mexico. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About New Mexico There’s a welcome mat in New Mexico. The doors are open to businesses, tourists and residents who want to make their home in the fifth-largest state in the country. New Mexico is known for its elaborate incentive system for businesses that settle in the state. New Mexico is currently the nation’s second-largest producer of crude oil and ninth-largest producer of natural gas, and the industry is only growing. Federal jobs are plentiful in New Mexico, many of which relate to the military. Much of the state’s plentiful federal land is dedicated to public use, with national forests, monuments and heritage sites drawing visitors in droves. New Mexico’s economy also draws from a diverse range of other sectors, including ranching, agriculture, scientific and technological research and textiles. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit New Jersey R&D Tax Credit - New Jersey Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Newark, Jersey City and across New Jersey. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. New Jersey R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in New Jersey, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Newark, Jersey City and across New Jersey for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, Washington DC, and many more. Contact Our New Jersey R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Newark, Jersey City and across New Jersey. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About New Jersey Everyone wants to call New Jersey home. The most densely populated state in the United States is prime real estate—with its per capita GDP consistently ranking as one of the country’s highest. Sandwiched between Philadelphia and New York City, the Garden State is a prime spot for the well-educated labor pool of two major cities. But while it is a global leader in fields such as life sciences, biotechnology and pharmaceuticals, New Jersey’s economy draws its strength from a variety of sectors, including the financial industry, telecommunications, food processing, publishing and retail. New Jersey’s location makes it a natural magnet for shipping and tourism as well. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Wyoming R&D Tax Credit - Wyoming Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Cheyenne and across Wyoming. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Wyoming R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Wyoming, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in St. Louis and across Missouri for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our Wyoming R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Cheynne and across Wyoming. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit West Virginia R&D Tax Credit - West Virginia Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Charleston and across West Virginia. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. West Virginia R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in West Virginia, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Charleston and across West Virginia for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our West Virginia R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Charleston and across West Virginia. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Washington R&D Tax Credit - Washington Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Seattle and across Washington. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Washington R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Washington, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Seattle and across Washington for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our Washington R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Seattle and across Washington. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Tennessee R&D Tax Credit - Tennessee Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Nashville and across Tennessee. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Tennessee R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Tennessee, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Nashville and across Tennessee for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our Tennessee R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Nashville and across Tennessee. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Oregon R&D Tax Credit - Oregon Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Portland and across Oregon. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Oregon R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Oregon, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Portland and across Oregon for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our Oregon R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Portland and across Oregon. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Oklahoma R&D Tax Credit - Oklahoma Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Tulsa and across Oklahoma. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Oklahoma R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Oklahoma, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Tulsa, Oklahoma City and across Oklahoma for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. Contact Our Oklahoma R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Oklahoma City, Tulsa,  and across Oklahoma. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### Online CPE coming soon Online CPE coming soon!We apologize for the inconvenience as we adjust to ensure a smooth and enjoyable process for all of our Schneider Downs family. ### R&D Tax Credit Delaware R&D Tax Credit - Delaware  Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Wilmington, Dover and across Delaware. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Delaware R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Delaware, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Wilmington, Dover and across Delaware for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Delaware R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Wilmington, Dover and across Delaware. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About DelawareDelaware may be small, but its business is big. The second-smallest state in the country is home to over half of all U.S. publicly-traded companies and 63% of the Fortune 500—attracted by Delaware’s friendly corporate tax law. Residents have their pick of jobs in several sectors. Giants like Perdue Farms provide farming jobs for the state, whose agricultural exports consist mainly in poultry, soybeans, corn and dairy. There is no shortage of jobs in the financial sector either, with Bank of America, JPMorgan Chase and others on the scene. Healthcare, retail, technology and pharmaceutical giants also provide jobs for Delaware’s residents.  https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCompanyThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Connecticut R&D Tax Credit - Connecticut  Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Bridgeport, Stamford and across Connecticut. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Connecticut R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Connecticut, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Bridgeport, Stamford and across Connecticut for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Connecticut R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Bridgeport, Stamford and across Connecticut. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About ConnecticutConnecticut is worth the investment. The southernmost state in New England has the highest per capita income, as well as one of the most highly educated populations, in the country. Indeed, “investment” is what many have in mind when they think of the state, which hosts several of the largest hedge funds in the world. Connecticut has long been known for its relation to the financial services, insurance and real estate industries, which collectively make up the largest portion of its sizable GDP. But professional services, manufacturing, entertainment and retail also contribute significantly to the state’s economy. Even so, the highest number of Connecticut’s jobs can be found in the education, healthcare and social services industries. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Arkansas R&D Tax Credit - Arkansas Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Little Rock, Fayetteville and across Arkansas. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Arkansas R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Arkansas, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Little Rock, Fayetteville and across Arkansas for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Arkansas R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Little Rock, Fayetteville and across Arkansas. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About ArkansasArkansas has diversified. Once a state with a heavy reliance on agriculture, Arkansas has evolved its economy to draw from many other sectors. Of course, with one of the nation’s highest values of agricultural products sold, the agricultural sector still contributes significantly to Arkansas’ economy, and the country can always rely on it for mainstays such as rice, turkeys, cotton and catfish. Arkansas is also home to the headquarters of retail giant Walmart, as well as four Fortune 500 companies. Tourism is another significant part of the state’s economy, with nature-lovers flocking to “The Natural State,” to enjoy its 52 state parks and famous scenery. https://youtu.be/qOLu9PNvpFINational ReachSchneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### SOC 1 Certification - Detroit (MI) SOC 1 CERTIFICATION – DETROIT (MI) Detroit and Michigan business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Detroit SOC Expertise Schneider Downs provides SOC examinations in Michigan and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 1 Examinations – Detroit Schneider Downs is recognized as a premier provider of SOC services including: SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination. SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. take a free assessment quiz About Detroit (MI) Detroit is known for its contributions to the automotive industry, as well as its music and art scenes. Some popular attractions in Detroit include: The Henry Ford Museum of American Innovation, which is a museum that features exhibits on American innovation and history, including artifacts from the automotive industry. The Detroit Institute of Arts, which is a museum that features a vast collection of art from around the world, including works by Vincent van Gogh and Diego Rivera. The Motown Museum, which is a museum that showcases the history of Motown Records and its influence on American music. The Detroit Riverwalk, which is a scenic pedestrian walkway along the Detroit River that offers views of the city skyline. The Belle Isle Park, which is a public park that features a conservatory, aquarium, and zoo, as well as sports facilities and a beach. Contact Our Detroit SOC 1 Examination Team Schneider Downs provides SOC 1 examinations and readiness assessments to companies in Detroit and across Michigan from our Pittsburgh location. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 1 Reports ### R&D Tax Credit California R&D Tax Credit - California Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Los Angeles, San Diego and across California. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.California R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in California, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax Credits Both federal and state tax credits exist to reward companies in Los Angeles, San Diego and across California for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, Texas, New Jersey, Washington DC and many more.Contact Our Texas R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Los Angeles, San Diego and across California. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About CaliforniaCalifornia is the most populated state in the United States. It is home to over 39 million people. Los Angeles is the most populated city in the state, home to 3.9 million people. The state is known all over the world for many reasons, some of those being the Golden Gate Bridge, Disneyland, Hollywood, culture and the entertainment industry. California has an incredibly diverse geography because in the west is the Pacific Coast, the Sierra Nevada mountains in the east and the Mojave Desert in the southeast. In more recent years, there has been an increase in droughts and wildfires in the state because of climate change and over-extraction. These issues are having a great impact on California’s business industry and agriculture. https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Wisconsin R&D Tax Credit - Wisconsin Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Milwaukee, Madison, Green Bay and across Wisconsin. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Wisconsin R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Wisconsin, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - Wisconsin Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits R&D Tax Incentives Both federal and state tax credits exist to reward companies in Milwaukee, Madison, Green Bay and across Wisconsin for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Wisconsin R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Milwaukee, Madison, Green Bay and across Wisconsin. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Wisconsin Wisconsin is well known around the country for many things such as tourism, agriculture, manufacturing, consumer goods, film and energy. It is the 25th largest state and is home to well over 5 million people. The headquarters of the Miller Brewing Company is located in Milwaukee, Wisconsin. In 2021 the company generated $10.28 billion in revenue, a 6.5% increase from the previous year. Milwaukee is known as the beer capital of the world because its first production of it started there in the 1850s.  The production of beer started in Wisconsin and has been commonly nicknamed “America’s Dairyland” since 1940 because it is one of the leading dairy producers in the USA. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Texas R&D Tax Credit - Texas Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Houston, Dallas, Austin and across Texas. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Texas R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Texas, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Houston, Dallas, Austin and across Texas for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, New Jersey, Washington DC and many more.Contact Our Texas R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Houston, Dallas, Austin and across Texas. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About TexasTexas is the second largest state in the United States because of both its population and area. It has 11 major league sports teams, with the Houston Texans and Dallas Cowboys being the most well-known. Texas is also well known for the rodeo. The first rodeo in Texas was in Pecos in 1883. Years later, in 1997, the governor at the time declared the official sport to be Rodeo. Several industries are contributing to the growth of GDP in Texas. Some of those are business services, education, health, hospitality, manufacturing and energy.  “Don’t Mess with Texas” is a slogan known all over specifically to try and reduce littering in the state. It was not intended to be known worldwide when it was created. Statistically, 18–35-year-old males litter the most so the slogan was supposed to appeal to that demographic and keep them from littering.  https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit South Carolina R&D Tax Credit - South Carolina Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Charleston, Columbia, Greenville and across South Carolina. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.South Carolina R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in South Carolina, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - South CarolinaAssisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsR&D Tax IncentivesBoth federal and state tax credits exist to reward companies in Charleston, Columbia, Greenville and across South Carolina for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our South Carolina R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Charleston, Columbia, Greenville and across South Carolina. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About South CarolinaSouth Carolina attracts a lot of tourism because of its beautiful beaches, golf courses and historic buildings. There's a total of 12 beaches all along the coast of the state. South Carolina was ranked in 4th place for having the best golf courses in the nation. There is a total of 164 courses that are fan favorites all over. Several large universities are located there, such as Clemson University, University of South Carolina, Winthrop University and Coastal Carolina University. Clemson University is ranked 5th out of 25 universities for best college football.https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Michigan R&D Tax Credit - Michigan Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Detriot, Grand Rapids and across Michigan. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Michigan R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Michigan, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - Michigan Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits R&D Tax Incentives Both federal and state tax credits exist to reward companies in Detroit, Grand Rapids and across Michigan for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Michigan R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Detroit, Grand Rapids and across Michigan. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Michigan There’s something for everyone in Michigan. From cars to tech to tourism, the state boasts an incredibly diverse economy. Even so, the automotive industry is a powerhouse in Michigan. The auto industry bankrolls many of the state’s high-tech jobs, and it attracts a huge amount of research and development activity. In fact, Michigan’s R&D makes up a higher percentage of its overall GDP than any other state in the country. Michigan’s public universities receive over $1.5 billion in R&D grants annually. Its universities are also attractive to several businesses, churning out a highly skilled workforce and the nation’s third highest number of engineering graduates. Even so, 50% of Michigan is covered by forest, making hunting and tourism very popular among nature enthusiasts. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### SOC 1 Certification - Cleveland (OH) SOC 1 CERTIFICATION – CLEVELAND, OH Cleveland and Ohio business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Cleveland SOC Expertise Schneider Downs provides SOC examinations in Ohio and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 1 Examinations – Cleveland Schneider Downs is recognized as a premier provider of SOC services including: SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination. SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. take a free assessment quiz About Cleveland (OH) Cleveland is a city located in the northeastern part of the state of Ohio, in the Great Lakes region of the United States. It is known for its rich history, vibrant arts scene, and world-class museums. Some of the most popular attractions in Cleveland include: Rock and Roll Hall of Fame: This museum honors the history and legends of rock and roll, with exhibits featuring artifacts, interactive experiences, and memorabilia from some of the biggest names in music. Cleveland Museum of Art: This museum features a collection of over 61,000 works of art from around the world, including paintings, sculptures, and decorative arts. West Side Market: This historic indoor market features a variety of vendors selling fresh produce, meats, cheeses, and baked goods, making it a popular destination for foodies. Cleveland Metroparks Zoo: This zoo is home to a variety of animals from around the world, including elephants, tigers, and gorillas, and features a variety of exhibits and activities for visitors of all ages. Cleveland Orchestra: This world-renowned orchestra is one of the best in the world, and performs throughout the year at Severance Hall and other venues around the city. Cleveland is also known for its delicious food, with a variety of restaurants offering classic Cleveland specialties like pierogies, corned beef sandwiches, and kielbasa. The city is home to a variety of festivals and events throughout the year, including the Cleveland International Film Festival, the Cleveland National Air Show, and the Cleveland Museum of Art's Solstice Party. Contact Our Cleveland SOC 1 Examination Team Schneider Downs provides SOC 1 examinations and readiness assessments to companies in Cleveland and across Ohio from our Pittsburgh location. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 1 Reports ### R&D Tax Credit Georgia R&D Tax Credit - Georgia Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Atlanta, Columbus, Augusta and across Georgia. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Georgia R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Georga, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax Credits Both federal and state tax credits exist to reward companies in Atlanta, Columbus, Augusta and across Georgia. for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Texas R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Atlanta, Columbus, Augusta and across Georgia. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About GeorgiaGeorgia is known for its southern hospitality and its peaches. The Peach State has around 9 million acres of land dedicated to farming. Annually, the economy makes around $69.4 billion from agriculture. Several blockbuster movies and television shows, such as The Hunger Games series, Ant-Man, The Walking Dead and Stranger Things, were filmed there. There has been a significant increase in tourism over the last 20 years, growing from 100,000 to 6.5 million. This is not only because of the attraction from the entertainment industry but also from tourist attractions like World of Coke, Georgia Aquarium, Zoo Atlanta, beaches, Stone Mountain and much more. https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthX/TwitterThis field is for validation purposes and should be left unchanged. Submit ### QoE Reports - Billings (MT) Quality of Earnings Reports - Billings (MT) When it comes to buying or selling a Billings or Montana business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions, and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Billings (MT) 59101 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Billings QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Billings and across Montana. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Billings (MT) The business community in Billings, Montana, thrives as a diverse economic hub for the region, driven by sectors like healthcare, energy, agriculture, and tourism. As Montana's largest city, Billings plays a pivotal role in commerce for the surrounding rural areas, making it a regional center for financial services, retail, and trade. Healthcare anchors much of the economic activity, with institutions such as Billings Clinic and St. Vincent Healthcare providing employment and driving development in life sciences. Energy and natural resources are also crucial, with oil refining, mining, and renewable energy projects contributing to economic stability. ### QoE Reports - Boise (ID) QoE Reports - Boise (ID) When it comes to buying or selling a Boise or Idaho business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a QoE Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Boise ID 83702 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Boise QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Boise and across Idaho. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Boise (ID) Boise, Idaho, boasts a thriving and dynamic business community that contributes significantly to the city's economic vitality and overall quality of life. Nestled in the picturesque Treasure Valley region, Boise has experienced steady growth and transformation in recent years, attracting businesses from various sectors.One of the pillars of Boise's business community is technology and innovation. The city has emerged as a notable tech hub in the Pacific Northwest, earning it the moniker "the Boise Tech Scene." Tech companies, startups, and entrepreneurs have flocked to the area, drawn by a combination of factors such as a lower cost of living compared to tech-centric cities like San Francisco and Seattle, access to outdoor recreational opportunities, and a strong sense of community. Boise's downtown area, in particular, has become a hotspot for tech companies, fostering collaboration and innovation.Boise is also home to a diverse range of industries, including agriculture, manufacturing, and healthcare. The city's proximity to fertile farmland and its well-established agricultural sector contribute to a robust food production and processing industry. Additionally, manufacturing companies in Boise produce a wide array of products, from semiconductor components to outdoor gear. ### R&D Tax Credit Florida R&D Tax Credit - Florida Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Jacksonville, Miami and across Florida. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Florida R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Florida, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:assisting your staff in identifying the qualifying R&D activitiesgathering and documenting the related costsdetailing the state tax benefits that may be availablepreparing any required tax filings, including how to file Form 6765providing support with federal or state auditsFederal R&D Tax Credits Both federal and state tax credits exist to reward companies in Jacksonville, Miami and across Florida for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, California, Texas, New Jersey, Washington DC and many more.Contact Our Florida R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Jacksonville, Miami and across Florida. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About FloridaThe sunshine state is a vacation hot spot for a lot of the USA. Florida is known for its beach resorts, warm climate, clear ocean, amusement parks and more. Its main attractions are Walt Disney World, Kennedy Space Center and Miami Beach. In the United States, Florida has the fourth largest economy, with a gross state product of $1.2 trillion. Healthcare research, biomedical and life sciences, tourism and commercial space travel are some that have boosted Florida’s economy.  https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthX/TwitterThis field is for validation purposes and should be left unchanged. Submit ### QoE Reports - Boston (MA) Quality of Earnings Reports - Boston (MA) When it comes to buying or selling a Boston or Massachusetts business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Boston (MA) 02108 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Boston QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Boston and across Massachusetts.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Boston (MA) The Boston business community is a dynamic and influential force in the city's economic landscape. With deep historical roots dating back to the colonial era, Boston has evolved into a thriving center for various industries and innovation.Today, Boston's economy encompasses a wide array of sectors, including finance, healthcare, technology, education, and biotechnology. This diversity reflects the city's ability to adapt and embrace change while remaining a hub of economic activity.Innovation is a driving force within the Boston business community, with local entrepreneurs, startups, and established companies contributing to advancements in various fields. Collaboration is a core value, as businesses, universities, research institutions, and government agencies work in partnership to address challenges, stimulate growth, and foster innovation. ### QoE Reports - Bangor (ME) Quality of Earnings Reports - Bangor (ME) When it comes to buying or selling an Bangor or Maine business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a Quality of Earnings Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Bangor (ME) - 04401 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Bangor QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Bangor and across Maine.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit About Bangor (ME) The Bangor business community is a resilient and essential part of the city's economic landscape. Anchored in a history shaped by the timber, shipping, and healthcare industries, Bangor's business sector has evolved to embrace a diverse range of enterprises.Today, Bangor's economy comprises various sectors, including healthcare, education, tourism, and technology. This diversity showcases the city's capacity to adapt and thrive amidst changing economic landscapes.Innovation is a driving force within the Bangor business community, with local entrepreneurs and established companies contributing to advancements in their respective fields. Collaboration is a core value, as businesses, educational institutions, and community organizations work in tandem to address challenges and stimulate growth. ### QoE Reports - Birmingham (AL) Quality of Earnings Reports - Birmingham (AL) When it comes to buying or selling a Birmingham or Alabama business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QoE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Birmingham (AL) - 59101 Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Birmingham QoE Team Schneider Downs provides Quality of Earnings reports to companies in Birmingham and across Alabama.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit About Birmingham (AL) The Birmingham business community embodies a rich historical legacy intertwined with a commitment to innovation and collaboration. Rooted in its industrial past, the city has evolved into a diverse economic hub spanning various sectors. Entrepreneurs thrive in an ecosystem that fosters creativity and risk-taking. Birmingham's businesses prioritize collaboration, actively engaging in networking events and forums to forge partnerships and drive mutual growth. This community is a testament to the city's resilience and adaptability in a constantly changing global economy, exemplifying the spirit of innovation and camaraderie. ### QoE Reports - Baltimore (MD) QoE Reports - Baltimore (MD) When it comes to buying or selling a Baltimore or Maryland business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence.What is a QoE Report?A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential.Buy-Side Due Diligence: Unleash the True Value of Your InvestmentsFinancial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisionsHistorical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance.Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment.Map of Baltimore MD - 21215 Sell-Side Due Diligence: Maximize Your Exit StrategyFinancial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business.Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale.Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale.Contact our Baltimore QoE TeamSchneider Downs provides Quality of Earnings reports to companies in Baltimore and across Maryland.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly.National ReachSchneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit About Baltimore (MD) The business community in Baltimore, Maryland, is fueled by a mix of healthcare, education, finance, and maritime industries. Major institutions like Johns Hopkins University and Health System play a pivotal role in the local economy, alongside a strong financial presence with companies such as T. Rowe Price. The city's historic port supports shipping and logistics, while a growing tech and startup scene benefits from local incubators and research institutions. Baltimore’s economic growth is further bolstered by its proximity to Washington, D.C., fostering collaboration between public and private sectors. ### QoE Reports - Buffalo (NY) Quality of Earnings - Buffalo (NY) When it comes to buying or selling an Buffalo or New York business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Buffalo NY 14201 Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Buffalo QoE Team Schneider Downs provides Quality of Earnings reports to companies in Buffalo and across New York.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of  Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit About Buffalo (NY) The business community in Buffalo, NY, is characterized by a collaborative and proactive approach to fostering economic growth and innovation. Central to this effort are the City of Buffalo's initiatives and partnerships aimed at improving the business environment and encouraging entrepreneurship. The Mayor's Office of Strategic Planning plays a critical role in coordinating development efforts and implementing community planning initiatives to enhance both the built and natural environments of the city​. The University at Buffalo (UB) contributes significantly through its business and economic development programs. UB's School of Management offers a variety of programs that link local businesses with university resources, fostering entrepreneurship and providing mentorship and networking opportunities for business owners and leaders. Notable among these is the Blackstone LaunchPad, which supports UB students, staff, and alumni in developing entrepreneurial skills​. ### QoE Reports - Charlotte (NC) Quality of Earnings Reports - Charlotte (NC) When it comes to buying or selling a Charlotte or North Carolina business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earning Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Charlotte (NC) 28202 Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Charlotte QoE Team Schneider Downs provides Quality of Earnings reports to companies in Charlotte and across North Carolina.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About Charlotte (NC) The business community in Charlotte, North Carolina, stands as a dynamic and influential force, driven by its status as a major financial hub and a center for diverse industries. Known as the second-largest banking city in the United States, Charlotte is home to major financial institutions like Bank of America and Truist, creating a robust environment for financial services, insurance, and fintech innovation. Beyond banking, the city has cultivated a thriving energy sector, with Duke Energy headquartered there, further reinforcing its role in the energy industry. Manufacturing, logistics, and transportation also play key roles, supported by Charlotte’s strategic location and access to a well-connected transportation network, including the Charlotte Douglas International Airport. ### QoE Reports - Atlanta (GA) Quality of Earnings Report - Atlanta (GA) When it comes to buying or selling an Atlanta or Georgia business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Map of Atlanta (GA) - 30303 Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Atlanta QoE Team Schneider Downs provides Quality of Earnings reports to companies in Atlanta and across Georgia. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About Atlanta (GA) The business community in Atlanta, Georgia, is dynamic and diverse. The city serves as a major economic hub in the Southeastern United States, hosting a wide range of industries such as finance, technology, healthcare, logistics, and media. Atlanta is home to a significant number of Fortune 500 companies, particularly in the finance and telecommunications sectors. The city's Hartsfield-Jackson Atlanta International Airport is one of the world's busiest airports, making it a crucial transportation and logistics hub. ### QoE Reports - Chicago (IL) Quality of Earnings Reports - Chicago (IL) When it comes to buying or selling a Chicago or Illinois business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earning Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Schneider Downs specializes in buy-side due diligence, helping buyers uncover the true value of their investments. Our buy-side due diligence services include: Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions. Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy When it's time to sell your business, Schneider Downs can help you maximize your exit strategy with our comprehensive sell-side due diligence services. Our sell-side due diligence services include: Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Chicago QoE Team Schneider Downs provides Quality of Earnings reports to companies in Chicago and across Illinois. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). ASK US Contact Our Experienced Team of Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit About Chicago (IL) The business community in Chicago, Illinois, is diverse and robust, with a well-established reputation as a global financial and economic hub. The city is home to major financial institutions, including the Chicago Board of Trade and the Chicago Mercantile Exchange, making it a leader in financial markets, trading, and investment services. Chicago's economy benefits from its strategic location as a transportation center, with O’Hare International Airport and extensive rail networks facilitating national and international commerce. Manufacturing also plays a significant role, with industries ranging from food processing to aerospace contributing to the city’s industrial output. ### R&D Tax Credit Kansas R&D Tax Credit - Kansas Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Wichita and across Kansas. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Kansas R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Kansas, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings.We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Wichita and across Kansas for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Kansas R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Wichita and across Kansas. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About KansasThe Kansas business community is a dynamic and thriving ecosystem that plays a vital role in the state's economy. Known for its central location, skilled workforce, and diverse industries, Kansas offers a favorable environment for businesses to flourish. Agriculture is one of the key sectors driving the Kansas economy. The state is known as the "breadbasket of America" due to its vast agricultural resources and production. Kansas is a leading producer of wheat, corn, sorghum, soybeans, and beef. The agricultural industry is supported by modern farming techniques, advanced research institutions, and a robust network of agribusinesses, contributing significantly to the state's economy. Kansas also has a strong presence in the aviation and aerospace industry. Wichita, the largest city in Kansas, is often referred to as the "Air Capital of the World" due to its long-standing history and expertise in aircraft manufacturing. Major aircraft manufacturers and suppliers have operations in Kansas, creating job opportunities and driving innovation in the aerospace sector.https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Colorado R&D Tax Credit - Colorado Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Denver, Colorado Springs and across Colorado. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Colorado R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Colorado, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings.We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Denver, Colorado Springs and across Colorado for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Colorado R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Denver, Colorado Springs,  and across Colorado. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About ColoradoThe Colorado business community is a dynamic and thriving ecosystem that embodies the spirit of entrepreneurship, innovation, and sustainability. Known for its breathtaking natural landscapes and progressive mindset, Colorado has become a magnet for businesses across various industries. One of the key strengths of Colorado's business community is its entrepreneurial spirit. The state has a rich history of fostering startups and small businesses, with a supportive environment that encourages risk-taking and innovation. Colorado consistently ranks high in national entrepreneurship and startup rankings, attracting ambitious individuals and organizations looking to turn their ideas into successful ventures.https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Illinois R&D Tax Credit - Illinois Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Chicago, Aurora and across Illinois. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Illinois R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Illinois, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Chicago, Aurora and across Illinois for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Illinois R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Chicago, Aurora and across Illinois. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About IllinoisHome to the famous city of Chicago, Illinois is the sixth most populous state in the country with over 12 million people. The state is known all over the world because of its culture, music and history. Many large companies, such as Walgreens, State Farm Insurance, Caterpillar and Allstate, all bring money and people into the state. Every year, the city of Chicago hosts a St Patrick’s day parade that is talked about all over. The parade has attracted over 50,000 people in pre-pandemic years. Chicago is also home to one of the tallest buildings in America, Willis Tower. Today Illinois is a major tourist destination in the Eastern United States.  https://youtu.be/qOLu9PNvpFINational ReachSchneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthLinkedInThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Alabama R&D Tax Credit - Alabama Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Birmingham and across Alabama. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Alabama R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Alabama, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Birmingham and across Alabama for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Alabama R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Birmingham,  and across Alabama. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Alabama The Alabama business community is vibrant and diverse, encompassing a wide range of industries and sectors. Alabama has a strong economy that is supported by various factors such as its favorable business climate, robust infrastructure, and skilled workforce. One of the key sectors driving Alabama's economy is manufacturing. The state has a long history of manufacturing excellence, particularly in industries such as automotive manufacturing, aerospace, chemicals, and steel production. Major companies like Mercedes-Benz, Honda, and Hyundai have established manufacturing plants in Alabama, creating job opportunities and contributing to the state's economic growth. In addition to manufacturing, Alabama also has a significant presence in sectors like healthcare, biotechnology, information technology, and logistics. The state is home to renowned healthcare institutions and research facilities, fostering innovation and attracting investment in the healthcare and biotech fields. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Minnesota R&D Tax Credit - Minnesota Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Minneapolis, St. Paul and across Minnesota. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Minnesota R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Minnesota, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Minneapolis, St. Paul and across Minnesota for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Minnesota R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Minneapolis, St. Paul and across Minnesota. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Minnesota It’s the best of all worlds in Minnesota. The state has room for industries of all kinds, with a mixture of dense forests, sprawling prairies and thriving metros. Most Minnesota’s residents live in the “Twin Cities” of Saint Paul and Minneapolis and are employed in a vast array of sectors, from finance to services to healthcare, enjoying one of the highest per capita income rates in the country. The state’s prairies are home to an impressive agricultural economy. And with approximately a third of Minnesota blanketed by forests, logging, forest product and paper manufacturing all continue to contribute to the state’s sizable GDP. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Virginia R&D Tax Credit - Virginia Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Arlington, Richmond and across Virginia. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Virginia R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Virginia, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - Virginia We can also facilitate your company’s accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits R&D Tax Incentive Both federal and state tax credits exist to reward companies in Arlington, Richmond and across Virginia for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Virginia R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Richmond, Arlington and across Virginia. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Virginia Virginia is a state worth paying attention to. The state’s GDP ranks 13-highest in the nation, while its poverty rate is 12th-lowest.  Virginia’s economy draws from several diverse sources—from government to tech to farming. The state also has the nation’s third highest concentration of technology workers. This is no small wonder, since Virginia’s average internet download speeds are the second highest in the country. But even though Virginia is the highest data center market nationwide and its top export is the computer chip, it’s not just tech that drives Virginia forward. The largest industry in Virginia is still its agriculture, and it’s also the country’s third-largest producer of seafood. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Ohio R&D Tax Credit - Ohio Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Columbus, Cincinnati, Cleveland and across Ohio. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Ohio R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Ohio, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit - Ohio We can also facilitate your company’s accounting and application for the R&D Tax Credit by assisting your staff in: identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits R&D Tax Incentive Both federal and state tax credits exist to reward companies in Columbus, Cincinnati, Cleveland and across Ohio for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC, and many more. Contact Our Ohio R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Columbus, Cincinnati, Cleveland and across Ohio. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Ohio Ohio is one of the states that has the biggest cities. Ohio State University is in Columbus and is famous for its college football team. Cleveland is home to the Browns professional football team. Ohio also has several tourist attractions such as the Cincinnati Zoo, Pro Football Hall of Fame, Cedar Point, Rock & Roll Hall of Fame, Hocking Hills and Columbus Zoo. Several big companies have their headquarters in Ohio, such as Procter & Gamble, Nationwide Insurance, Progressive Insurance, Goodyear Tire & Rubber, Kroger, L Brands, Sherwin-Williams and Big Lots. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Massachusetts R&D Tax Credit - Massachusetts Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Boston, Worcester and across Massachusetts. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Massachusetts R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Massachusetts, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Boston, Worcester and across Massachusetts for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Massachusetts R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Boston, Worcester and across Massachusetts. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Massachusetts It’s a forward march in Massachusetts. The 2016 Bloomberg rated “most innovative state in the country,” lives up to its title in more ways than one. The state’s economy has reinvented itself several times over—from a primarily agricultural state to an industrial powerhouse to a global leader in tech, finance and education. These sectors keep the most populous state in New England strong, with the average personal income the third highest in the nation. Massachusetts is home to some of the most highly esteemed academic institutions, and Cambridge boasts “the most innovative square mile on the planet,” which has hosted countless quality entrepreneurial projects since 2010. The state is also spearheading the charge towards sustainability, ranking as the most energy efficient state in the U.S. in both 2015 and 2016. https://youtu.be/qOLu9PNvpFI Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Maryland R&D Tax Credit - Maryland Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Baltimore, Annapolis and across Maryland. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Maryland R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Maryland, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings.We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Baltimore, Annapolis and across Maryland for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Maryland R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in  Baltimore, Annapolis and across Maryland. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About MarylandMaryland is thriving by any measure. Though the state uses a metric of well-being, the “Genuine Progress Indicator,” in lieu of its GDP to measure its development, its GDP is strong and per capita income is one of the highest—and poverty the lowest—in the country. Maryland’s economic and population growth began largely after the Industrial Revolution, and it is now one of the nation’s most densely populated states and boasts an incredibly diverse economy. Its proximity to the D.C. metro area provides the state with a host of government jobs. But Maryland’s residents are also frequently employed in the aerospace industry, research institutions, biotechnology companies and some of the most sophisticated computer centers in the country.https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Pennsylvania R&D Tax Credit - Pennsylvania Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Philadelphia, Pittsburgh, and across Pennsylvania. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Pennsylvania R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Pennsylvania, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit - Pennsylvania We can also facilitate your company’s accounting and application for the R&D Tax Credit by assisting your staff in: identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits R&D Tax Incentives Both federal and state tax credits exist to reward companies in Philadelphia, Pittsburgh and across Pennsylvania for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Pennsylvania R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Philadelphia, Pittsburgh and across Pennsylvania. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Pennsylvania Pennsylvania is bigger than you think. In fact, if it were its own country, it would have the 22nd-largest economy in the world. Most of its residents are concentrated in the Philadelphia and Greater Pittsburgh metro areas. The cities are home to jobs aplenty—in sectors such as healthcare, higher education, finance and insurance. Despite the popularity and success of Pennsylvania’s cities, however, most of the state is rural, and it actually ranks 19th in overall agricultural production. The agricultural industry has a large impact on Pennsylvania residents, with employment provided in farming, food manufacturing and food product export. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit South Dakota R&D Tax Credit - South Dakota Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Sioux Falls and across South Dakota. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. South Dakota R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in South Dakota, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Sioux Falls and across South Dakota for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our South Dakota R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Sioux Falls and across South Dakota. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About South Dakota South Dakota's business landscape blends tradition with innovation. Agriculture, is the foundation, corn, soybeans and cattle ranching thrive on the fertile plains. Modern techniques and sustainability ensure future harvests. Tourism complements this strength, with Mount Rushmore and the Black Hills drawing visitors and bolstering local economies through events like the Sturgis Motorcycle Rally. Manufacturing is also on the rise, with food processing, machinery and electronics production capitalizing on the state's central location and infrastructure, creating a diversified and promising economic landscape. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit North Carolina R&D Tax Credit - North Carolina Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Charlotte and across North Carolina. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. North Carolina R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in North Carolina, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Charlotte and across North Carolina for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our North Carolina R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Charlotte and across North Carolina. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About North Carolina North Carolina's business landscape thrives on collaboration and innovation. Boasting a skilled workforce, a strategic East Coast location and a favorable business environment with tax breaks and development programs, the state attracts companies of all sizes across diverse industries. Well-developed transportation infrastructure connects businesses to national and international markets, solidifying North Carolina as a dynamic hub for economic growth. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit New York R&D Tax Credit - New York Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in New York City and across New York. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. New York R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in New York, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in New York City and across New York for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our New York R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in New York City  and across New York. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About New York New York's business scene pulsates with energy and ambition. A global magnet, it's known as the financial capital, where Wall Street's towering institutions like the NYSE orchestrate high-stakes deals. Yet, the Big Apple offers more than finance – it's a diverse ecosystem. Tech titans like Google and Facebook thrive in Silicon Alley, while media, fashion, entertainment and real estate all flourish, solidifying New York's position as a powerhouse of innovation and ambition across industries. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit New Hampshire R&D Tax Credit - New Hampshire Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Manchester, Nashua and across New Hampshire. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. New Hampshire R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in New Hampshire, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Manchester, Nashua and across New Hampshire for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our New Hampshire R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Manchester, Nashua and across New Hampshire. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About New Hampshire Whether geographically or otherwise, New Hampshire is at the top. It consistently ranks as one of the top ten states in healthcare, governance, fiscal stability and socioeconomic opportunity. The roughly 1.3 million residents of the state enjoy one of the highest median household incomes and some of the lowest poverty, unemployment and crime rates in the country. And to top it off, New Hampshire has one of the nation’s smallest tax burdens. Fueling the state’s success is its booming economy, which diversified in the 20th century. New Hampshire’s economy is bolstered by real estate, financial and professional services, healthcare, tourism and government services. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Vermont R&D Tax Credit - Vermont Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Burlington, Essex and across Vermont. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Vermont R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Vermont, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - Vermont We can also facilitate your company’s accounting and application for the R&D Tax Credit by assisting your staff in: identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Burlington, Essex and across Vermont for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, and many more. Contact Our Vermont R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Burlington, Essex and across Vermont. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Vermont Vermont is a top commodity. Visitors to the second least-populous state in the country more than compensate for its relatively small number of permanent residents. Indeed, tourism is one of the state’s strongest industries. Guests have long been fascinated with Vermont—its mountains attracting skiers in the winter and its scenic resources attracting hikers and inspiration-seeking artists in the warmer months. Many of Vermont’s industries are geared towards specialty items that exude the state's unique culture. Visitors enjoy hockey sticks, furniture and paper created from Vermont timber and by Vermont manufacturers. And the agricultural sector pumps out classic Vermont staples such as milk and maple syrup. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Nevada R&D Tax Credit - Nevada Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Las Vegas and across Nevada. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Nevada R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Nevada, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Las Vegas and across Nevada for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Nevada R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Las Vegas and across Nevada. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Nevada Nevada's business landscape shimmers with both dazzling tourist destinations like Las Vegas and bold ventures in innovation. This dynamic ecosystem, fueled by a favorable business climate, attracts companies across sectors. Tourism reigns supreme, with hotels, casinos and entertainment venues drawing millions and bolstering the state's coffers. But Nevada isn't a one-trick pony – it's a tech hub too, with Las Vegas luring startups and established companies with tax breaks, grants and prestigious events like CES, proving Nevada's business scene is as vibrant as its neon lights. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Nebraska R&D Tax Credit - Nebraska Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Lincoln, Omaha and across Nebraska. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Nebraska R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Nebraska, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Lincoln, Omaha, and across Nebraska for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Nebraska R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Lincoln, Omaha and across Nebraska. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Nebraska Nebraska's business community thrives on a dynamic ecosystem fueled by agriculture and manufacturing. Known for its strong work ethic and central location, Nebraska boasts fertile soil and is a leading producer of corn, soybeans, and livestock. Innovative farming techniques, research institutions and a robust agribusiness network support this vital sector. Manufacturing flourishes as well, with major companies drawn to the skilled workforce and Nebraska's role as a distribution hub. From agriculture's backbone to cutting-edge manufacturing, Nebraska's business landscape fosters a diverse and thriving economy. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Montana R&D Tax Credit - Montana Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Billings and across Montana. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Montana R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Montana in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Billings, Helena and across Montana for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Montana R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Billings, Helena,  and across Montana. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Montana Montana's business community thrives on a spirit of independence, mirroring the state's natural beauty and rugged landscapes. "Big Sky Country" attracts entrepreneurs and outdoor enthusiasts alike, with agriculture playing a key role. Family-owned farms and ranches leverage the vast fertile land for wheat, barley, beef and dairy production. Tourism is another pillar, with stunning mountains, pristine lakes, and abundant wildlife drawing visitors who fuel businesses in lodging, recreation, and hospitality. From agriculture to adventure, Montana's business landscape offers a unique experience. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Louisiana R&D Tax Credit - Louisiana Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in New Orleans, Baton Rouge, Shreveport and across Louisiana. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Louisiana R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Louisiana, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in New Orleans, Baton Rouge, Shreveport and across Louisiana for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Louisiana R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in New Orleans, Baton Rouge, Shreveport and across Louisiana. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Louisiana Louisiana is most famous for its Mardi Gras celebration in New Orleans. It is also well known for jazz, bayous Creole cuisine and jambalaya. New Orleans is a major tourist attraction all over the world. People go to experience the nightlife, participate in the celebrations, visit the famous Bourbon Street, enjoy Creole cuisine and more. Louisiana is the largest crawfish producer in the USA. Annually, the crawfish portion of the seafood industry impacts the economy by $120 million. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Utah R&D Tax Credit - Utah Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Salt Lake City, West Valley City, Provo and across Utah. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Utah R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Utah, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company’s accounting and application for the R&D Tax Credit by assisting your staff in: identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits R&D Tax Incentives Both federal and state tax credits exist to reward companies in Salt Lake City, West Valley City, Provo and across Utah for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, and many more. Contact Our Utah R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Salt Lake City, West Valley City, Provo and across Utah. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Utah Utah isn’t slowing down. Since 2010, it’s had faster population growth than any other state—a trend that shows no sign of stopping. The state ranks among the best in terms of healthcare, education and infrastructure, and it boasts one of the lowest rates of income inequality in the country. Indeed, Utah’s diverse economy offers ample opportunities for employment in the transportation, information technology, research, government service, mining and tourism industries. And Utah is known for attracting business—it consistently ranks as one of the states that is friendliest to small business, and it famously attracts high-paying, high tech jobs. Utah’s five national parks also attract scores of tourists to the area. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth NameThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Missouri R&D Tax Credit - Missouri Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in St. Louis and across Missouri. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Missouri R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Missouri, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings.We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in St. Louis and across Missouri for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Missouri R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in St. Louis and across Missouri. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About MissouriMissouri's business climate is thriving, with a low corporate tax rate and a focus on workforce development attracting new ventures. This strong business foundation contributes to the state's healthy GDP, which reached $304 billion in 2023 and is experiencing steady growth. This economic strength makes Missouri an attractive location for businesses to set up shop and contribute to the state's ongoing prosperity.https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Kentucky R&D Tax Credit - Kentucky Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Lexington, Louisville and across Kentucky. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Kentucky R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Kentucky, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings.We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Lexington, Louisville, and across Kentucky for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Kentucky R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Lexington, Louisville,  and across Kentucky. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About KentuckyThe Kentucky business community is a dynamic and diverse landscape that plays a significant role in the state's economy. From its rich heritage with auto giants like Toyota and Ford, to its thriving agriculture and food processing sectors known for bourbon and poultry production. Kentucky offers a favorable business climate, strategic location and skilled workforce, making it an attractive destination for businesses across various industries.https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthURLThis field is for validation purposes and should be left unchanged. Submit ### R&D Tax Credit Alaska R&D Tax Credit - Alaska Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Anchorage, Fairbanks and across Alaska. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Alaska R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Alaska, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. R&D Tax Credit Services - Alaska Assisting your staff in identifying the qualifying R&D activities Gathering and documenting the related costs Detailing the state tax benefits that may be available Preparing any required tax filings, including how to file Form 6765 Providing support with federal or state audits R&D Tax Incentives Both federal and state tax credits exist to reward companies in Anchorage, Fairbanks and across Alaska for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more. Contact Our Alaska R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Anchorage, Fairbanks and across Alaska. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Alaska There’s no shortage of space in Alaska. No other U.S. state comes close to its size—its total area is more than the combined areas of Texas, Montana and California. With 80% of the state’s revenues coming from energy exports, Alaskan residents are likely employed in the natural resource extraction, shipping or transportation industries. Residents may also be employed by the federal government, military bases or within a growing tourism and service industry. With more than half of the state dominated by public land, parks and forests, tourists frequently visit to take advantage of Alaska’s most abundant resource: its space. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### SOC 2 REPORTS– PORTLAND (OR) SOC 2 REPORTS - PORTLAND (OR) Portland business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Portland SOC ExpertiseSchneider Downs provides SOC examinations in Oregon and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Portland (OR)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 REPORTS– NEW YORK CITY (NY) SOC 2 REPORTS– NEW YORK CITY (NY) New York City and New York business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. New York SOC ExpertiseSchneider Downs provides SOC examinations in New York and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – New York City (NY)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our New York SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in New York City and across New York. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – MIAMI (FL) SOC 2 CERTIFICATION – MIAMI (FL) Miami and Florida business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Miami SOC ExpertiseSchneider Downs provides SOC examinations in Florida and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Miami (FL)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our Miami SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in Miami and across Florida. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 REPORTS - PHILADELPHIA (PA) SOC 2 CERTIFICATION – PHILADELPHIA (PA) Philadelphia business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Philadelphia SOC ExpertiseSchneider Downs provides SOC examinations in Pennslyvania and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Philadelphia (PA)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).  ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### R&D Tax Credit Idaho R&D Tax Credit - Idaho Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Boise City, Meridian and across Idaho. Our team of tax professionals specializes in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit.Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment.Idaho R&D Tax Credit ExpertiseAt Schneider Downs, one of our specialties is aiding our clients, including those in Idaho, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by:Assisting your staff in identifying the qualifying R&D activitiesGathering and documenting the related costsDetailing the state tax benefits that may be availablePreparing any required tax filings, including how to file Form 6765Providing support with federal or state auditsFederal R&D Tax CreditsBoth federal and state tax credits exist to reward companies in Boise City, Meridian and across Idaho for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your federal and state credit eligibility to maximize your savings.National ReachSchneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, Washington DC and many more.Contact Our Idaho R&D Tax Credit ExpertsSchneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Boise City, Meridian and across Idaho. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you.About IdahoIt’s full steam ahead in Idaho. The state’s industrial economy is growing, and high-tech products are spearheading the charge. Over 25% of the 14th largest state’s GDP comes from the technology and science sector, which account for a majority of its exports. Other industries, such as manufacturing, food processing, forestry and agriculture have significant roles to play as well. The state boasts an agricultural sector responsible for providing about a third of the country’s potatoes. And of course, tourism is also an important industry for Idaho, whose natural beauty earned it the official title of the “Gem State.” https://youtu.be/qOLu9PNvpFINational Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit ### SOC 2 CERTIFICATION – MILWAUKEE GREEN BAY (WI) SOC 2 CERTIFICATION – MILWAUKEE GREEN BAY (WI) Milwaukee and Green Bay business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Milwaukee SOC ExpertiseSchneider Downs provides SOC examinations in Wisconsin and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Milwaukee Green Bay (WI)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our Milwaukee SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Milwaukee, Green Bay, and across Wisconsin. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).  ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit About the Milwaukee Business Community The Milwaukee business community is a diverse and dynamic network contributing significantly to the city's economy. Milwaukee has strong sectors in manufacturing, healthcare, finance, and technology, supported by its strategic location, skilled workforce, and favorable business environment. The city's rich cultural heritage and quality of life make it an attractive destination for businesses and entrepreneurs.The Metropolitan Milwaukee Association of Commerce (MMAC) supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Milwaukee Economic Development Corporation (MEDC) focuses on attracting new businesses and investments to the Milwaukee area, highlighting the city's advantages as a business hub.Milwaukee's technology and startup ecosystem is growing, with organizations like Startup Milwaukee providing support, resources, and events for tech companies and entrepreneurs. The Milwaukee Tech Hub Coalition offers mentorship, funding, and a collaborative environment for startups and innovators. ### SOC 2 CERTIFICATION – Wichita Kansas City (KS) SOC 2 CERTIFICATION – WICHITA KANSAS CITY (KS) Wichita and Kansas City business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Wichita SOC ExpertiseSchneider Downs provides SOC examinations in Kansas and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Wichita Kansas City(KS)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About Kansas City (KS)Kansas City, Kansas is known for its vibrant arts and culture scene, with several theaters, museums, and galleries located in the city. The Kansas City Kansas Community College Performing Arts Center hosts a variety of cultural events throughout the year, including concerts, theater productions, and dance performances. The city is also home to several major sports teams, including the Kansas City T-Bones baseball team and the Sporting Kansas City soccer team, which plays at the state-of-the-art Children's Mercy Park stadium.Contact Our Wichita SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Wichita, Kansas City and across Kansas. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### R&D Tax Credit Rhode Island R&D Tax Credit - Rhode Island Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Providence, Warwick and across Rhode Island. Our team of tax professionals specialize in helping companies achieve tax savings, and we have extensive experience determining organizational activities that qualify for the R&D Tax Credit. Faced with international competition, organizations must continually invest in developing new and innovative products to expand and maintain their customer base. The R&D Tax Credit is a powerful opportunity for savings and offers an advantage to companies that incur considerable research and development expenses to remain competitive in an increasingly global market. At Schneider Downs, we’re experts at helping our clients evaluate their eligibility for the R&D Tax Credit, to make the most of their investment. Rhode Island R&D Tax Credit Expertise At Schneider Downs, one of our specialties is aiding our clients, including those in Rhode Island, in exploring ways to claim the R&D Tax Credit. We have significant experience conducting R&D studies for a variety of industries, including manufacturing, construction, transportation and logistics, engineering, software development, and chemical products. We can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential savings. We can also facilitate your company's accounting and application for the R&D Tax Credit by: assisting your staff in identifying the qualifying R&D activities gathering and documenting the related costs detailing the state tax benefits that may be available preparing any required tax filings, including how to file Form 6765 providing support with federal or state audits Federal R&D Tax Credits Both federal and state tax credits exist to reward companies in Providence, Warwick and across Rhode Island for investing in Research and Development. Federal R&D Tax Credits can net as much as 10% of actual expenditures. Additionally, new tax rules (post-2006) might make it easier for your company to claim Federal R&D tax credits. At Schneider Downs, we will evaluate your eligibility for both federal and state credits, to maximize your savings. National Reach Schneider Downs’ tax professionals provide R&D Tax Credit services to companies located across the United States including those in Pennsylvania, Ohio, Virginia, Michigan, Wisconsin, Illinois, South Carolina, Georgia, Florida, California, Texas, New Jersey, and many more. Contact Our Rhode Island R&D Tax Credit Experts Schneider Downs is a Top 60 CPA firm that specializes in serving the tax needs of businesses in Providence, Warwick and across Rhode Island. If you have questions or would like additional information on how we can help you with the R&D Tax Credit, please complete the form to the right and a team member will promptly follow up with you. About Rhode Island Rhode Island is the smallest state in the United States. The total population of the state is only 1.1 million people. It is located near New York, Connecticut and Massachusetts. It is a great location to get to the big cities nearby. Because of its location, the traditional accent of Rhode Island sounds like a combination of a New York accent and a Boston accent.  The largest industries in the state are health services, agriculture, tourism and manufacturing. https://youtu.be/qOLu9PNvpFI National Reach Schneider Downs provides R&D tax consulting to companies in Arizona (AZ), Arkansas (AR), California (CA), Colorado (CO), Delaware (DE), Florida (FL), Georgia (GA), Illinois (IL), Indiana (IN),  Kentucky (KY), Maryland (MD), Michigan (MI), Minnesota (MN), Nevada (NV),  New Mexico (NM), New Jersey (NJ), North Carolina (NC),   Ohio (OH),  Oregon (OR), Pennsylvania (PA), Tennessee (TN), Washington (WA), Wisconsin (WI), Texas (TX), and Utah (UT). Whitepaper - 5 Things You May Not Know About the R&D Tax Credit. Download Now ASK US Contact Our Experienced Team of R&D Tax Credit Professionals. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### SD Contact Us We want to hear from you. ### SOC 2 CERTIFICATION – OMAHA LINCOLN (NE) SOC 2 CERTIFICATION – OMAHA LINCOLN (NE) Omaha and Lincoln business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Omaha SOC ExpertiseSchneider Downs provides SOC examinations in Nebraska and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Omaha (NE)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About the Omaha Business Community The Omaha business community is a robust and diverse network that significantly contributes to the city's economy. Omaha has strong sectors in finance, insurance, healthcare, and agriculture, supported by its strategic location, skilled workforce, and favorable business environment. The city's high quality of life and central location make it an attractive destination for businesses and entrepreneurs.The Greater Omaha Chamber supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Omaha Economic Development Corporation (OEDC) focuses on attracting new businesses and investments to the Omaha area, highlighting the city's advantages as a business hub.Omaha's technology and startup ecosystem is growing, with organizations like The Startup Collaborative providing support, resources, and events for tech companies and entrepreneurs. The Omaha Small Business Network (OSBN) offers resources, mentorship, and a collaborative environment for startups and innovators.Contact Our Lincoln SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Omaha, Lincoln, and across Nebraska If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – CHARLOTTE RALEIGH (NC) SOC 2 CERTIFICATION – CHARLOTTE RALEIGH (NC) Charlotte and Raleigh business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Charlotte SOC Expertise Schneider Downs provides SOC examinations in North Carolina and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – Charlotte (NC) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our Raleigh SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in Charlotte, Raleigh, and across North Carolina. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit About the Charlotte Business Community The Charlotte business community is a rapidly growing and diverse network, significantly contributing to the city's economic vitality. Charlotte is known as a major financial hub, being the second-largest banking center in the United States, home to the headquarters of Bank of America and the east coast operations of Wells Fargo. The city's strategic location, pro-business environment, and talented workforce attract a wide range of industries, including energy, healthcare, and manufacturing. The Charlotte Regional Business Alliance plays a key role in supporting and promoting local businesses. It provides resources, advocacy, and networking opportunities to help businesses thrive. The alliance also works to attract new investments and foster economic growth in the region. Charlotte's innovation and startup scene is vibrant, with organizations like Packard Place and RevTech Labs offering coworking spaces, accelerator programs, and resources for entrepreneurs. These organizations support early-stage companies by providing mentorship, funding, and networking opportunities. ### SOC 2 CERTIFICATION –CLEVELAND CINCINNATI (OH) SOC 2 CERTIFICATION –CLEVELAND CINCINNATI (OH) Cleveland and  Cincinnati business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Cleveland SOC Expertise Schneider Downs provides SOC examinations in Ohio and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – Cincinnati (OH) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About Cincinnati (OH) Cincinnati is situated on the banks of the Ohio River and is home to several major attractions, including the Cincinnati Zoo and Botanical Garden, the National Underground Railroad Freedom Center, and the Cincinnati Art Museum. The city is also known for its historic architecture, including the Cincinnati Music Hall and the Roebling Suspension Bridge. The economy is driven by several industries, including healthcare, finance, and manufacturing. The city is home to several major corporations, including Procter & Gamble, Fifth Third Bank, and Kroger. Cincinnati is also a hub for transportation and logistics, with the Cincinnati/Northern Kentucky International Airport and several major highways located nearby. Contact Our Cleveland SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in Cleveland, Cincinnati and across Ohio. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – PROVO (UT) SOC 2 CERTIFICATION – PROVO (UT) Provo and Utah business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Provo SOC ExpertiseSchneider Downs provides SOC examinations in Utah and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Provo (UT)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About Provo (UT)Provo is situated in Utah Valley, between the Wasatch Range to the east and the Utah Lake to the west. The city is known for its scenic beauty and outdoor recreational opportunities, including hiking, skiing, and fishing. Provo Canyon, located just east of the city, is a popular destination for outdoor enthusiasts, with several hiking trails and scenic drives. The city has a strong economy, with several major employers in the area, including Brigham Young University, Utah Valley University, and the Utah Valley Hospital. Provo is also home to several technology companies, including Qualtrics, Vivint, and Ancestry.com.Contact Our Provo SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Provo and across Utah. If you are interested in learning how we can assist your organization, complete the form to the right, and a team member will follow up promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).  ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – CHARLESTON (SC) SOC 2 CERTIFICATION –CHARLESTON (SC) Charleston and South Carolina business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Charleston SOC ExpertiseSchneider Downs provides SOC examinations in Charleston, across South Carolina, and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Charleston (SC)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About Charleston (SC)Charleston's historic district is one of the best-preserved in the country, with beautiful antebellum homes, churches, and public buildings. The city is home to several historic landmarks, including Fort Sumter, where the first shots of the Civil War were fired, and the Nathaniel Russell House, a beautifully restored neoclassical mansion. The city's coastal location and warm climate make it a popular destination for outdoor activities, including boating, fishing, and beachcombing. The city is surrounded by several beautiful beaches, including Folly Beach and Sullivan's Island, which are popular among locals and visitors alike.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit About the Charleston Business Community The Charleston SC business community is a vibrant and diverse network that plays a crucial role in the city's economy. Charleston's economy is driven by industries such as tourism, technology, healthcare, manufacturing, and logistics. The city's historic charm, strategic port location, and quality of life make it an attractive place for businesses and entrepreneurs.The Charleston Metro Chamber of Commerce supports local businesses through advocacy, resources, and networking opportunities. The chamber works to foster economic growth and improve the business climate in the region. Charleston Regional Development Alliance (CRDA) focuses on attracting new businesses and investments to the Charleston area, promoting it as a prime location for business operations.Charleston's technology and startup ecosystem is growing, with organizations like Digital Corridor offering coworking spaces, mentorship, and resources for tech companies and entrepreneurs. The Harbor Entrepreneur Center provides accelerator programs, events, and resources to support startups and early-stage businesses. ### SOC 2 CERTIFICATION – LAS VEGAS (NV) SOC 2 CERTIFICATION – LAS VEGAS (NV) Las Vegas and Nevada business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Las Vegas SOC ExpertiseSchneider Downs provides SOC examinations in Nevada and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Las Vegas (NV)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About Las Vegas (NV)Las Vegas is often referred to as the "Entertainment Capital of the World," thanks to its many casinos, world-class restaurants, and entertainment venues. The city's famous Las Vegas Strip is lined with iconic resorts, including the Bellagio, Caesars Palace, and the MGM Grand. In addition to its entertainment industry, Las Vegas is also known for its stunning natural beauty. The city is surrounded by several breathtaking natural attractions, including Red Rock Canyon, Lake Mead, and the Hoover Dam.Contact Our Las Vegas SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Las Vegas and across Nevada. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – BOISE (ID) SOC 2 CERTIFICATION – BOISE (ID) Boise and Idaho business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Boise SOC ExpertiseSchneider Downs provides SOC examinations in Idaho and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Boise (ID)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz Contact Our Boise SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Boise and across Idaho If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* EmailThis field is for validation purposes and should be left unchanged. Submit About the Boise Business Community The Boise ID business community is a dynamic and rapidly growing network contributing significantly to the city's economic development. Boise is known for its strong technology sector, robust agricultural industry, and vibrant outdoor recreation economy. The city's high quality of life, skilled workforce, and business-friendly environment make it an attractive location for companies and entrepreneurs.The Boise Metro Chamber pivotally supports local businesses by providing resources, advocacy, and networking opportunities. The chamber promotes economic growth and ensures a favorable business climate in the region. Boise Valley Economic Partnership (BVEP) focuses on attracting new businesses and investments to the Boise area, highlighting its advantages as a business destination.Boise's startup scene is flourishing, with organizations like Trailhead Boise offering coworking spaces, mentorship, and resources for entrepreneurs and early-stage companies. Boise State University’s Venture College provides programs and support to help students and community members launch and grow their businesses. ### SOC 2 CERTIFICATION – DENVER COLORADO SPRINGS (CO) SOC 2 CERTIFICATION – DENVER COLORADO SPRINGS (CO) Denver and Colorado Springs business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Denver SOC ExpertiseSchneider Downs provides SOC examinations in Colorado and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Denver Colorado Springs (CO)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About the Denver Business Community The Denver business community is a vibrant and diverse network contributing significantly to the city's economy. Denver is known for its strong industries in technology, aerospace, healthcare, and energy. The city's strategic location, high quality of life, and skilled workforce make it an attractive destination for businesses and entrepreneurs.The Denver Metro Chamber of Commerce supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Metro Denver Economic Development Corporation (Metro Denver EDC) focuses on attracting new businesses and investments to the Denver area, highlighting the city's advantages as a business hub.Denver's technology and startup ecosystem is thriving, with organizations like Built In Colorado providing support, resources, and events for tech companies and entrepreneurs. The Commons on Champa offers coworking spaces, mentorship, and a collaborative environment for startups and innovators.Contact Our Denver SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Denver, Colorado Springs, and across Colorado. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields NameThis field is for validation purposes and should be left unchanged.First Name*Last Name*TitleCompany/OrganizationEmail* Phone Number*Question?* Submit SOC 2 Reports ### SOC 2 CERTIFICATION – NEW ORLEANS (LA) SOC 2 CERTIFICATION – NEW ORLEANS (LA) New Orleans and Louisiana business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. New Orleans SOC ExpertiseSchneider Downs provides SOC examinations in Louisiana and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – New Orleans (LA)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About the New Orleans Business CommunityThe New Orleans business community is a vibrant and diverse network that plays a significant role in the city's economy. New Orleans has strong sectors in tourism, healthcare, education, and energy, supported by its strategic port location, skilled workforce, and rich cultural heritage. The city's unique atmosphere and quality of life make it an attractive destination for businesses and entrepreneurs.The New Orleans Chamber of Commerce supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Greater New Orleans, Inc. (GNO, Inc.) focuses on attracting new businesses and investments to the New Orleans area, highlighting the city's advantages as a business hub.New Orleans's technology and startup ecosystem is growing, with organizations like Propeller providing support, resources, and events for tech companies and entrepreneurs. The Idea Village offers mentorship, funding, and a collaborative environment for startups and innovators.Contact Our New Orleans SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in New Orleans and across Louisiana.  If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – HOUSTON (TX) SOC 2 CERTIFICATION – HOUSTON (TX) Houston and Texas business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Houston SOC ExpertiseSchneider Downs provides SOC examinations in Texas and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Houston (TX)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About the Houston Business Community The Houston business community is a diverse and influential network that plays a crucial role in the city's economy. Houston is renowned for its energy sector, being home to many major oil and gas companies. Additionally, the city has strong industries in healthcare, aerospace, manufacturing, and technology. Its strategic location, large port, and skilled workforce make it an attractive hub for businesses and entrepreneurs.The Greater Houston Partnership supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Houston Economic Development Council (HEDC) focuses on attracting new businesses and investments to the Houston area, highlighting the city's advantages as a business destination.Houston's technology and startup ecosystem is growing, with organizations like Houston Exponential providing support, resources, and events for tech companies and entrepreneurs. The Ion Houston offers coworking spaces, mentorship, and a collaborative environment for startups and innovators.Contact Our Houston SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Houston and across Texas. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* EmailThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – INDIANAPOLIS (IN) SOC 2 CERTIFICATION – INDIANAPOLIS (IN) Indianapolis and Indiana business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Indianapolis SOC ExpertiseSchneider Downs provides SOC examinations in Indiana and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Indianapolis (IN)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz About the Indianapolis Business CommunityThe Indianapolis business community is a vibrant and diverse network contributing significantly to the city's economic development. Indianapolis has strong industries in life sciences, manufacturing, technology, and logistics, supported by its central location, skilled workforce, and favorable business environment. The city's infrastructure and quality of life make it an attractive destination for businesses and entrepreneurs.The Indy Chamber supports local businesses through advocacy, resources, and networking opportunities, aiming to promote economic growth and improve the business climate in the region. The Indy Partnership focuses on attracting new businesses and investments to the Indianapolis area, highlighting the city's advantages as a business hub.Indianapolis has a growing technology and startup ecosystem, with organizations like TechPoint providing support, resources, and events for tech companies and entrepreneurs. The Speakeasy offers coworking spaces and a collaborative environment for startups and innovators.Contact Our Indianapolis SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Indianapolis and across Indiana. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – BOSTON (MA) SOC 2 CERTIFICATION – BOSTON (MA) Boston and Massachusetts business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Boston SOC Expertise Schneider Downs provides SOC examinations in Massachusetts and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.   https://vimeo.com/696683679 SOC 2 Examinations – Boston (MA) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? Contact Our Boston SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in Boston and across Massachusetts. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – ATLANTA (GA) SOC 2 CERTIFICATION – ATLANTA (GA) Atlanta and Georgia business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Atlanta SOC ExpertiseSchneider Downs provides SOC examinations in Georgia and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Atlanta (GA)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT?National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).  take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit About the Atlanta Business Community The Atlanta business community is a dynamic and diverse ecosystem, playing a crucial role in the city's economy and culture. Atlanta is home to a range of industries, including finance, technology, logistics, and film. It serves as the headquarters for several major corporations, such as The Coca-Cola Company, Delta Air Lines, and Home Depot. The city's strategic location, robust infrastructure, and skilled workforce make it an attractive hub for businesses.Organizations like the Metro Atlanta Chamber work to support local businesses and attract new investments. The chamber offers resources, networking opportunities, and advocacy to foster a favorable business environment. Meanwhile, the Technology Association of Georgia (TAG) connects and promotes the state's technology community through events, educational programs, and policy initiatives. ### SOC 2 REPORTS - LOS ANGELES (CA) SOC 2 CERTIFICATION – LOS ANGELES (CA) Los Angeles and California business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Los Angeles SOC Expertise Schneider Downs provides SOC examinations in Los Angeles and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – Los Angeles (CA) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? About Los Angeles (CA) Los Angeles is home to several major attractions, including Hollywood and the famous Sunset Strip, Universal Studios Hollywood, the Getty Center, and the Griffith Observatory. The city is also home to several iconic landmarks, including the Hollywood Sign, the Santa Monica Pier, and the Staples Center. The entertainment industry is a major part of the Los Angeles economy, with the city serving as the center of the film, television, and music industries. Major studios like Warner Bros., Paramount Pictures, and Universal Studios are located in the LA area, along with many smaller production companies. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* EmailThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 REPORTS - BALTIMORE (MD) SOC 2 CERTIFICATION – BALTIMORE (MD) Baltimore and Maryland business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Baltimore SOC Expertise Schneider Downs provides SOC examinations in Maryland and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – Baltimore (MD) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? About Baltimore (MD) Baltimore is situated on the Chesapeake Bay and is home to several major attractions, including the Inner Harbor, the National Aquarium, and Fort McHenry, which played a crucial role in the War of 1812 and inspired the writing of the US national anthem. The city is also known for its historic architecture, including the Bromo Seltzer Tower and the Baltimore Basilica, the oldest Catholic cathedral in the United States. The economy is driven by several industries, including healthcare, education, and government. The city is home to several major institutions, including Johns Hopkins Hospital and the Johns Hopkins University. The Port of Baltimore is also an important economic driver, serving as a major transportation hub for the region. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* EmailThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports ### SOC 2 CERTIFICATION – CHICAGO (IL) SOC 2 CERTIFICATION – CHICAGO (IL) Chicago and Illinois business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Chicago SOC Expertise Schneider Downs provides SOC examinations in Illinois and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 2 Examinations – Chicago IL SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? Contact Our Chicago SOC 2 Examination Team Schneider Downs provides SOC 2 examinations and readiness assessments to companies in Chicago and across Illinois. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit About the Chicago Business Community The Chicago business community is a thriving and diverse network of industries and enterprises, contributing significantly to the city's economy. Chicago is a central hub for finance, manufacturing, transportation, and technology, and it hosts the headquarters of several Fortune 500 companies, including Boeing, McDonald's, and United Airlines. The city's central location, extensive transportation infrastructure, and skilled workforce make it an attractive business destination. The Chicago Chamber of Commerce plays a pivotal role in supporting local businesses by offering resources, advocacy, and networking opportunities. The chamber's initiatives aim to foster economic growth and ensure a favorable business climate in the region. The Chicago Innovation organization highlights and supports the city's innovation ecosystem through events, awards, and programs that connect entrepreneurs, startups, and established companies. Chicago's technology and startup scene is vibrant, with organizations like 1871 Chicago and MATTER providing incubator and accelerator services. These organizations offer mentorship, funding, and resources to help early-stage companies grow and succeed. Additionally, the World Business Chicago initiative focuses on driving inclusive economic growth and job creation by attracting investments and supporting local businesses. ### SOC 2 CERTIFICATION – RICHMOND (VA) SOC 2 CERTIFICATION – RICHMOND (VA) Richmond and Virginia business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Richmond SOC ExpertiseSchneider Downs provides SOC examinations in Virginia and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Richmond (VA)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. About the Richmond Business CommunityThe Richmond business community is a diverse and dynamic network that significantly contributes to the city's economy. Richmond has strong sectors in finance, healthcare, logistics, and manufacturing, supported by its strategic location, skilled workforce, and business-friendly environment. The city's rich history and quality of life make it an attractive destination for businesses and entrepreneurs.The ChamberRVA supports local businesses through advocacy, resources, and networking opportunities, promoting economic growth and improving the business climate in the region. The Greater Richmond Partnership focuses on attracting new businesses and investments to the Richmond area, highlighting the city's advantages as a business hub.Richmond's technology and startup ecosystem is growing, with organizations like Startup Virginia providing support, resources, and events for tech companies and entrepreneurs. The Lighthouse Labs offers mentorship, funding, and a collaborative environment for startups and innovators.Contact Our Richmond SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Richmond and across Virginia. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit SOC 2 Reports - Virginia ### SOC 2 CERTIFICATION – BRIDGEPORT (CT) SOC 2 CERTIFICATION – BRIDGEPORT (CT) Bridgeport and Connecticut business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Bridgeport SOC ExpertiseSchneider Downs provides SOC examinations in Connecticut and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 2 Examinations – Bridgeport (CT)SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II.SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. About Bridgeport (CT)Bridgeport is situated on the coast of Long Island Sound and is located about 60 miles northeast of New York City. It was originally a busy seaport and manufacturing center, but over time its economy has shifted towards services and healthcare. Today, Bridgeport is home to a number of hospitals and healthcare providers, as well as several institutions of higher education, including the University of Bridgeport and Housatonic Community College.While Bridgeport has struggled with crime and poverty in the past, the city has undergone a revitalization in recent years, with new residential and commercial developments, as well as investments in transportation infrastructure. Popular attractions in Bridgeport include the Beardsley Zoo, the Barnum Museum, and the Webster Bank Arena, which hosts concerts and sporting events.Contact Our Bridgeport SOC 2 Examination TeamSchneider Downs provides SOC 2 examinations and readiness assessments to companies in Bridgeport and across Connecticut. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE).DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit Washington DC Economic Profile ### SOC 2 CERTIFICATION- SEATTLE (WA) SOC 2 CERTIFICATION – SEATTLE (WA) Seattle and Washington business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) (e.g., social security numbers, medical records) of customers.  Ensuring the company has robust internal controls and cybersecurity policies and practices in place to protect against a breach is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 2 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Seattle SOC Expertise Schneider Downs provides SOC examinations in Washington and nationwide to dozens of companies in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. SOC 2 Examinations – Seattle (WA) SOC 2 Examinations - These examinations concentrate on the Trust Services Categories and Criteria for security, availability, processing integrity, confidentiality and/or privacy. SOC 2 requirements allow organizations to decide which categories to include in the scope of the examination. This flexibility means SOC 2 reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories they choose to include in the examination. Like SOC 1 examinations, there are two types of SOC 2 reports: Type I and Type II. SOC 2 Plus -These examinations include one to all five of the Trust Services Categories and Criteria, plus additional criteria for frameworks such as HITRUST, PCI, ISO 27001, NIST or other established control frameworks. About Seattle (WA) Seattle is a major center for technology and innovation, with several major tech companies based in the area, including Amazon, Microsoft, and Boeing. The city's thriving tech industry has helped to fuel its economic growth and has made it a hub for entrepreneurs and startups. It is also known for its coffee culture, with the original Starbucks store located in the historic Pike Place Market. The city is home to several other popular coffee shops and roasters, and coffee plays an important role in the daily life and culture of the city. Seattle is located on the Puget Sound, a deep-water harbor that is home to several major shipping ports. The city's location has helped to make it a major center for international trade and commerce, with strong ties to Asia and other parts of the world. Contact Our Seattle SOC 2 Examination Team Schneider Downs provides SOC 2examinations and readiness assessments to companies in Seattle and across Washington. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Indianapolis (IN), Las Vegas (NV), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Philadelphia (PA), Phoenix (AZ), Providence (RI), Richmond (VA), Seattle (WA), Washington (D.C.) and Wilmington (DE). TAKE A FREE ASSESSMENT QUIZ ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit SOC 2 Examinations ### International Tax CPAs Honolulu (HI) INTERNATIONAL TAX ACCOUNTANTS – MILWAUKEE GREEN BAY (WI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Milwaukee, Green Bay and across Wisconsin. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Wisconsin International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Milwaukee (WI) The business community in Milwaukee, Wisconsin, is a dynamic and resilient ecosystem deeply rooted in the city's industrial heritage and Midwestern values. Nestled on the shores of Lake Michigan, Milwaukee serves as a regional economic powerhouse, boasting a diverse range of industries and a strong entrepreneurial spirit. At its core, the Milwaukee business community is characterized by a strong manufacturing legacy, with companies ranging from heavy machinery to consumer goods. However, in recent years, Milwaukee has diversified its economy, with emerging sectors such as technology, healthcare, and financial services gaining prominence. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Wisconsin International Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Milwaukee, Green Bay, and across Wisconsin. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Wisconsin Exports, Export Categories, and Top Export Partners ### International Business Tax Seattle (WA) INTERNATIONAL BUSINESS TAX ACCOUNTANTS –SEATTLE (WA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Seattle and across Washington. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Seattle International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters About Seattle (WA) Seattle is located between the Puget Sound and Lake Washington, which provide ample opportunities for outdoor activities such as boating, fishing, and hiking. The city is also home to several iconic landmarks, including the Space Needle and Pike Place Market, as well as several museums, including the Museum of Pop Culture and the Seattle Art Museum. Seattle's economy is based on several industries, including technology, aerospace, and shipping. The city is home to several major tech companies, including Amazon and Microsoft, as well as several major aerospace companies, including Boeing. The city's port is also a significant economic driver, with several shipping companies headquartered in the area. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Seattle International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Seattle and across Washington. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="4"].gform-theme,[data-parent-form="30_4"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit Tennessee Exports, Export Categories, and Top Export Partners ### Schneider Downs Digital Team The SD Digital Team Expertise with Heart. For more than 20 years, organizations across all industries have trusted Schneider Downs to find the right pieces for their digital puzzle. Originally Schneider Downs Technology and Data Services, SD Digital is focused on solving the unsolvable and delivering digital solutions built to unlock efficacy, efficiency and scale for a wide range of organizations, business processes and industries.  SD Digital continues to be a trusted innovation partner with our proven track record of producing impactful solutions built on our commitment to technology innovation and a digital mindset. With a pioneering spirit, user-centric perspective and agile approach, our team of digital innovators de-risk, develop and deliver digital forward solutions that solve complex business problems, achieve tangible results and most importantly, provide a delightful client experience.  Our Leadership Patrick Armknecht and John Huckle are our fearless digital leaders. Together, they lead the SD Digital, a group of forward-thinking professionals with an appetite for innovation and a knack for success.  Patrick Armknecht CPA, CITP Learn More > John Huckle Learn More > Tina Kirsch Rhonda McIntyre Robert Morgan Jason Reljac Bob Whalen Interested in Joining the Team? Contact Us Our Digital Values Guided by our set of client-focused values, our team of digital innovators help organizations unpack what digital means to them by challenging the status quo with the art of the possible. Eye on the Prize We understand the complexity and speed of business today, which is why we approach each digital journey with an unrelenting focus on successful outcomes for our clients. Progress over Perfection We deliver an iterative roadmap that celebrates milestones, learns from roadblocks and prioritizes continuous progress toward client objectives. Courage to be Candid Change can be challenging, which is why we promise to respectfully challenge the status quo, present our authentic thoughts and facilitate tough conversations, all in the pursuit of the possible. Real-world Experience With a robust firm of 500+ professionals, we have the business expertise and digital mindset to provide end-to-end solutions that account for industry, regulatory and financial considerations. Hardwired Empathy We approach each engagement through the eyes of the business leaders and stakeholders to design, strategize, develop and implement solutions built with the mind of our clients. Sustainable Speed With our unique combination of digital expertise and business experience, we can mobilize and deliver impactful solutions at the speed of business. Our Digital Solutions Data Analytics and Power BIPredictive and prescriptive solutions that transform siloed, unworkable data into actionable business insights.Digital ModernizationLet us educate and align your teams on how, tangibly and immediately, digital can drive efficiency, scale, savings – all with a keen focus on accelerated speed to outcomes.Intelligent AutomationEvaluate, adopt and implement intelligent automation to reduce risk, increase productivity and eliminate mundane manual tasks.Microsoft DynamicsMicrosoft Dynamics ERP Solutions Implement and evolve ERP solutions to meet the complex business demands of today and tomorrow.simpLEASE Accounting SoftwareMeet the ASC 842 lease accounting standard with confidence using our award-winning software built for accountants, by accountants.SD Insite Workforce Management SoftwareProvide a secure central data repository that interfaces with your accounting software, payroll software, or a third-party payroll processor. Ready to Start Your Digital Journey? Contact Us Industry Focus We are proud to help organizations across all industries discover the power of digital and understand that while the power of digital is agnostic, the need for digital varies based on industry. With a deep bench of industry professionals, SD Digital has the team and roadmap for digital journeys across different industries, including: HealthcareFinancial ServicesHigher EducationManufacturingNot-for-ProfitConstructionTransportation and LogisticsRetail and B2C About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated Schneider Downs Digital page or contact the team directly at contactsd@schneiderdowns.com.     What our clients think OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > ### Solver Extended Financial Planning & Analysis Solver Extended Financial Planning and Analysis Accelerate better business decisions with Solver's Extended Financial Planning and Analysis (xFP&A). As financial planning and analysis (FP&A) professionals, we understand that clear data analysis and insights are crucial for making impactful business decisions. Incomplete and inconsistent data can hinder progress, efficiency, and financial goals by affecting an organization’s ability to make informed decisions, allocate resources effectively, and navigate the right path forward.Which is why Solver has introduced Solver xFP&A, an extended financial planning and analysis solution. This cloud-based solution consolidates business and financial data into a unified source, transforming traditional FP&A into a comprehensive, scalable performance management system. Solver xFP&A increases access to actionable insights beyond the finance department to accelerate better decisions and time to value. As part of Schneider Downs and an award-winning Solver partner, SD Digital offers the technical, business and financial expertise needed to maximize your Solver xFP&A investment.Ready to Get Started? Contact the SD Digital Team and let us know how we can helpWhy SD Digital?Digitally Immersed, Business EnabledWith access to a robust firm of 550+ professionals, SD Digital provides to business and digital knowledge to translate digital innovation to business results.Financial Planning & Analysis ExpertiseSD Digital has a proven track record of integrating financial planning and analysis solutions to improve business outcomes and client expectations.Specialized Industry KnowledgeWhile the potential of Solver xFP&A is universally applicable, its necessity can vary significantly by sector. Which is why our team offers specialized solutions for industries, including: manufacturing, retail, construction, not-for-profit and professional services.Premier Solver PartnerAs an award-winning Solver partner, SD Digital brings a recognized track record of helping organizations de-risk, scale, implement and optimize their Solver xFP&A investment.About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Software Solutions Software Solutions Innovative Solutions. Bottom Line Results. Our list of software products can be effectively implemented across a variety of industries; in organizations large and small.We provide software solutions for accounting, fixed assets, distribution, manufacturing, e-commerce, nonprofits, automated workforce management, Human Resources, Payroll, and more. Over the past 20 years, we have implemented software solutions in over 200 organizations in Ohio and Western Pennsylvania.The software solutions offered by SD Digital include:Microsoft Dynamics ERP SolutionsBusiness management solution that connects departments to streamline processes.SD inSITEWorkforce Automation and Management SolutionssimpLEASE Accounting SoftwareLease accounting software created by accountants for accountantsSolver Extended Financial Planning and AnalysisAccelerate better business decisions with Solver’s Extended Financial Planning and Analysis (xFP&A). About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Custom Development Custom Development Innovative Solutions. Bottom Line Results. Organizations spend countless hours and dollars selecting software solutions; however, all too often, they discover that software is only as effective as the team behind it.If your software is anything but a solution, SD Digital can help. With our deep bench of technical expertise and business experience, our team continues to help organizations across all industries translate software specs to business-critical processes that drive impactful business outcomes. SD Digital specializes in custom development for Microsoft Dynamics and Automation Anywhere but can also deliver transformative results for other third-party and proprietary software solutions. Ready to Start Your Digital Journey? Contact UsAbout SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     What our clients think Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Digital Modernization Digital Modernization Reimagine How You Compete in the Digital World In today’s ever-evolving business landscape, digital modernization isn’t just an option; it’s a necessity. But with the vast range of technology solutions available, where do you start?At SD Digital, we not only grasp the concept of digital modernization, but we also comprehend the needs of the organizations that require it the most. Many businesses face challenges in navigating the market, identifying the right solutions, and optimizing their existing technology investments. That's where we step in.Our team empowers organizations with transformative solutions to increase working capital, capture more revenue, reduce costs, and scale efficiently during periods of growth. We help finance teams modernize with impact by driving business model innovation and delivering real, actionable change—not just reports and slide decks. Digital Modernization Solutions Micro-TransformationsImplement targeted process improvements to drive incremental yet impactful changes across the business.ERP ModernizationAlign ERP systems with strategic objectives through process visioning, technology enablement and automation to support transformative growth.Digital Strategy Assessment Conduct a comprehensive evaluation of digital capabilities, tools, processes and strategies to identify gaps and opportunities, resulting in a prioritized roadmap for change.AI/ML StrategyEmpower organizations to harness AI and machine learning to drive innovation, enhance decision-making and gain a competitive edge.Human-Centered DesignLeverage user-focused problem-solving techniques to identify needs, align stakeholders, prioritize challenges and develop high-impact solutions.The Impact of Digital ModernizationDigital modernization can drive meaningful change at every level of an organization, with the greatest impact on people, processes and technology. While challenges may vary, the signs of needing transformation—and the benefits of doing it right—are often the same. Here’s what success looks like with the right approach. From Insight to ModernizationGuided by AGILE methodology, SD Digital follows a streamlined process to uncover opportunities, redefine possibilities and implement impactful solutions.Research Through workshops and analysis, we assess business operations, technical frameworks and areas for efficiency, identifying the best methods to drive transformation.Ideation We pinpoint gaps, reimagine the current state, and build a prioritized backlog of capabilities, aligning on a Minimum Viable Product (MVP).Remediation & Transition We provide strategic recommendations, establish priorities and deliver a roadmap for future-state implementation.Our approach ensures clarity, efficiency and a seamless transition toward digital modernization.Ready to Start Your Digital Journey? Contact UsRelated ResourcesDigital Transformation FAQ GuideDigital Modernization Service Overview About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### SD Digital Solutions SD Digital What We Do Contact Us SD Digital delivers modern solutions for modern problems through the power of digital.Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey.We partner with you to unblock the promise that digital has for unlocking better business outcomes. Through being agile, user-centric, business savvy, and digital experts, our solutions are delivered with an unwavering commitment to practicality, speed to market, and a delightful user experience. With a pioneering spirit and client-first mindset, SD Digital works with you to de-risk, demystify and deliver outcome-focused, iterative solutions that translate technology into transformative change. SD DIGITAL CORE SOLUTIONSOur scalable, customizable and iterative business solutions empower organizations to discover the best version of themselves.Digital Modernization  Let us educate and align your teams on how, tangibly and immediately, digital can drive efficiency, scale and savings.Intelligent AutomationEvaluate, adopt and implement intelligent automation to reduce risk, increase productivity and maximize employee resources.Data AnalyticsPredictive and prescriptive solutions that transform siloed, unworkable data into actionable business insights. SD Digital LumenFiCombines advanced AI and digital finance expertise to illuminate critical insights within your organization’s financial data.Custom DevelopmentSolve complex business problems of all shapes and sizes that are unique to your industry, company and needs.Microsoft Dynamics ERP SolutionsImplement and evolve ERP solutions to meet the complex business demands of today and tomorrow. simpLEASE Accounting SoftwareMeet the ASC 842 lease accounting standard with confidence using our award-winning software built for accountants, by accountants. SD Insite Workforce Management SoftwareSD inSITE is a web-based application that provides employees, and other individuals associated with your organization, a central data repository for information sharing. Solver Extended Financial Planning and Analysis (xFP&A)Accelerate better business decisions beyond the finance department with Solver xFP&A. Ready to start your digital journey? Contact Us INDUSTRY FOCUSWe are proud to help organizations across all industries discover the power of digital and understand that while the power of digital is agnostic, the need for digital varies based on industry. With a deep bench of industry professionals, SD Digital has the team and roadmap for digital journeys across different industries, including:HealthcareFinancial ServicesHigher EducationManufacturingNot-for-ProfitConstructionTransportation and LogisticsRetail and B2CWHAT WE BELIEVE INGuided by our set of client-focused values, our team of digital innovators help organizations unpack what digital means to them by challenging the status quo with the art of the possible.Courage to be CandidChange can be challenging, which is why we promise to respectfully challenge the status quo, present our authentic thoughts and facilitate tough conversations, all in the pursuit of the possible.Eye on the PrizeWe understand the complexity and speed of business today, which is why we approach each digital journey with an unrelenting focus on successful outcomes for our clients.Hardwired EmpathyWe approach each engagement through the eyes of the business leaders and stakeholders to design, strategize, develop and implement solutions built with the mind of our clients.Progress over PerfectionWe deliver an iterative roadmap that celebrates milestones, learns from roadblocks and prioritizes continuous progress toward client objectives.Real-world ExperienceWith a robust firm of 500+ professionals, we have the business expertise and digital mindset to provide end-to-end solutions that account for industry, regulatory and financial considerations.Sustainable SpeedWith our unique combination of digital expertise and business experience, we can mobilize and deliver impactful solutions at the speed of business.About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. Learn more about the SD Digital Story Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### SOC 1 CERTIFICATION – NEW YORK CITY (NY) SOC 1 CERTIFICATION – NEW YORK CITY (NY) New York and New York City business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. New York SOC ExpertiseSchneider Downs provides SOC examinations in New York City and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679SOC 1 Examinations – DenverSchneider Downs is recognized as a premier provider of SOC services including:SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination.SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. About New York City (NY)With a population of over 8.3 million people, it is a global hub for finance, culture, media, and entertainment. Some popular attractions in New York City include:The Statue of Liberty, which is a world-famous landmark and symbol of freedom and democracy.Times Square, which is a bustling commercial and entertainment district that is known for its bright lights and billboards.The Empire State Building, which is a skyscraper that offers stunning views of the city from its observation deck.The Metropolitan Museum of Art, which is one of the largest and most comprehensive art museums in the world, with over 2 million works of art from around the globe.Central Park, which is a vast urban park that offers a variety of recreational activities, including jogging, picnicking, and ice-skating.New York City has a humid subtropical climate, with hot, humid summers and cold winters. The average high temperature in the summer is around 84°F (29°C), while the average high temperature in the winter is around 39°F (4°C). The city receives an average of 49 inches of precipitation per year, with most of it falling as rain in the summer months.Contact Our New York City SOC 1 Examination TeamSchneider Downs provides SOC 1 examinations and readiness assessments to companies in New York City and across New York. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.).DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit New York Economic Profile ### SOC 1 CERTIFICATION – DENVER (CO) SOC 1 CERTIFICATION – DENVER (CO) Denver and Colorado business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Denver SOC ExpertiseSchneider Downs provides SOC examinations in Colorado and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 1 Examinations – DenverSchneider Downs is recognized as a premier provider of SOC services including:SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination.SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. About Denver (CO)Denver is known for its stunning natural surroundings, thriving cultural scene, and outdoor recreational opportunities. Some popular attractions in Denver include:The Denver Art Museum, which is a world-class art museum that features a collection of over 70,000 works of art from around the world.The Denver Botanic Gardens, which is a 24-acre garden that features a variety of plants and flowers, as well as art installations and seasonal events.The Red Rocks Park and Amphitheatre, which is a stunning natural amphitheater that hosts concerts, events, and fitness classes.The Denver Zoo, which is home to over 3,500 animals from around the world, including many endangered species.The Colorado State Capitol, which is a historic building that offers tours and stunning views of the city from its observation deck.Denver has a semi-arid climate, with four distinct seasons. The average high temperature in the summer is around 88°F (31°C), while the average high temperature in the winter is around 45°F (7°C). The city receives an average of 57 inches of snow per year, mostly in the winter months, and an average of 15 inches of precipitation per year.Contact Our Denver SOC 1 Examination TeamSchneider Downs provides SOC 1 examinations and readiness assessments to companies in Denver and across Colorado. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.).DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit Colorado Economic Profile ### SOC 1 CERTIFICATION – CHICAGO (IL) SOC 1 CERTIFICATION – CHICAGO (IL) Chicago and Illinois business owners need to ensure sensitive data is protected, especially as it relates to financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Chicago SOC ExpertiseSchneider Downs provides SOC examinations in Illinois and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables.https://vimeo.com/696683679SOC 1 Examinations – Chicago ILSchneider Downs is recognized as a premier provider of SOC services including:SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination.SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. About Chicago (IL)Chicago is a city with a population of over 2.7 million, it is the third most populous city in the country, after New York City and Los Angeles. Chicago is known for its rich history, diverse culture, and beautiful architecture. Some popular attractions in Chicago include:The Willis Tower (formerly known as the Sears Tower), which is a 110-story skyscraper that was once the tallest building in the world.Millennium Park, which is a 24.5-acre park that is home to the famous Cloud Gate sculpture, as well as many other public art installations, gardens, and fountains.Navy Pier, which is a 3,300-foot-long pier that is home to many restaurants, shops, and attractions, including the Centennial Wheel, an iconic Ferris wheel that offers stunning views of the city.The Art Institute of Chicago, which is one of the oldest and largest art museums in the United States, with a collection that includes works by Monet, Van Gogh, and Picasso.Wrigley Field, which is a historic baseball stadium that is home to the Chicago Cubs.Contact Our Chicago SOC 1 Examination TeamSchneider Downs provides SOC 1 examinations and readiness assessments to companies in Chicago and across Illinois. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly.National ReachSchneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.).DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit Illinois Economic Data ### SOC 1 CERTIFICATION – AUSTIN (TX) SOC 1 CERTIFICATION – AUSTIN (TX) Austin and Texas business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Austin SOC Expertise Schneider Downs provides SOC examinations in Texas and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 1 Examinations – Austin Schneider Downs is recognized as a premier provider of SOC services including: SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination. SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. About Austin (TX) Austin is known for its thriving music, food, and arts scenes, as well as its beautiful natural surroundings. Some popular attractions in Austin include: The Texas State Capitol, which is a historic building that houses the offices of the Governor, Lieutenant Governor, and Texas Legislature. The Barton Springs Pool, which is a popular outdoor swimming pool fed by natural springs. The Lady Bird Johnson Wildflower Center, which is a botanical garden that showcases the native plants of Texas. The Blanton Museum of Art, which is a world-class art museum that features a collection of over 18,000 works of art from around the world. The Congress Avenue Bridge, which is home to the largest urban bat colony in North America and offers nightly bat-watching tours. Contact Our Austin SOC 1 Examination Team Schneider Downs provides SOC 1 examinations and readiness assessments to companies in Austin and across Texas from our Pittsburgh location. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.). DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* PhoneThis field is for validation purposes and should be left unchanged. Submit Texas Economic Data ### SOC 1 CERTIFICATION – WASHINGTON DC SOC 1 CERTIFICATION – WASHINGTON DC Washington DC business owners need to ensure sensitive data is protected, especially as it relates to the financial information of customers.  Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to processing transactions and internal controls over financial reporting. Government regulations, such as Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404) stress the need for effective internal controls. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a System and Organization Controls (SOC) report before doing business with a company. This examination (often referred to as a “SOC 1 audit”) verifies that the controls, processes, and procedures have been tested and indicates whether controls are effective. Washington DC SOC Expertise Schneider Downs provides SOC examinations in Washington DC and nationwide to 150 companies annually in a variety of industries. Typically, we work with organizations that use or store sensitive financial and other data that cybercriminals may want. Some examples of the clients we serve include Software-as-a-Service (SaaS) companies, data centers, IT-managed service providers, mortgage and loan servicing companies, medical claims processors, payroll companies, and inventory management and logistics providers. Our diverse range of experience permits us to understand the company more easily, its risk profile, areas of exposure, and important testing variables. https://vimeo.com/696683679 SOC 1 Examinations – Washington DC Schneider Downs is recognized as a premier provider of SOC services including: SOC Readiness Assessments - These assessments assess an organization’s preparedness for a successful SOC 1 examination. SOC 1 Examinations - These examinations focus on an organization’s business processes and IT controls, particularly those that are likely to be relevant to an audit of customers’ financial statements. There are two types of SOC 1 reports: Type 1 reports evaluate the design of an organization’s controls. Type 2 reports test whether an organization’s controls are properly designed and implemented. About Washington DC The City of Washington DC is the world’s destination. Home of all three branches of the federal government, international organizations, and some of the nation’s largest companies, the city naturally draws people from across the globe. The federal government is responsible for attracting organizations such as law firms, professional associations, and nonprofits, as well as nearly 200 international organizations and embassies. 25% of the city’s employees also work for federal governmental agencies. However, the federal government isn’t fully responsible for the enormous spike in the city’s daytime population during the workweek. The city’s diversified economy is growing, especially in industries such as finance, education, research, and public policy. In fact, according to the 2021 Global Financial Centre’s Index, the city’s financial district scored fourth most competitive in the country and 14th most competitive in the world. National Reach Schneider Downs provides SOC 1 reports and certifications to companies located across the United States including those in Austin (TX), Boise (ID), Boston (MA), Charleston (SC), Chicago (IL), Denver (CO), New York (NY),  Seattle (WA), Washington DC, Baltimore (MD), and Phoenix (AZ). Contact Our Washington DC SOC 1 Examination Team Schneider Downs provides SOC 1 examinations and readiness assessments to companies in Washington DC. If you are interested in learning how we can assist your organization, complete the form to the right and a team member will follow up with you promptly. National Reach Schneider Downs provides SOC 1 consulting services to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Billings (MT), Boise (ID), Boston (MA), Burlington (VT), Charleston (WV), Chicago (IL), Cleveland (OH), Denver (CO), Des Moines (IA), Detroit (MI), Hartford (CT), Lexington (KY), Los Angeles (CA), Memphis (TN), Milwaukee (WI), Montgomery (AL), Newark (NJ), New York City (NY), St. Paul (MN), Orlando (FL), Portland (OR), Richmond (VA), Seattle (WA), St. Louis (MO), Tucson (AZ), Wilmington (DE) and Washington (D.C.). DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? take a free assessment quiz ASK US Contact Our Experienced Team of SOC Professionals. "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit Washington DC Economic Data ### 2021 Manufacturers' Economic Survey 2021 Manufacturers' Economic Survey Please complete this form to download the survey results. "*" indicates required fields First Name* Last Name* Company Name* Email Address* EmailThis field is for validation purposes and should be left unchanged. Submit * required ### Intelligent Automation Intelligent Automation Automate and Enhance Business Processes With Intelligent Automation Automation can generate exceptional results, but adopting intelligent automation is how organizations can sharpen their competitive edge. This digital solution can unlock previously unattainable levels of efficiency and performance and prepare your organization for the future.Intelligent automation involves the integration of robotic process automation, artificial intelligence, and business process management to automate tasks and streamline processes using human-centric interfaces. The SD Digital team can help your organization evaluate, adopt and implement intelligent automation and find a better way forward with a more sophisticated and adaptable automation solution. Our team has the in-depth knowledge, business acumen, and deep experience necessary to translate business automation technology into strategic solutions to help your organization unlock the power of digital.Ready to Get Started? Contact the SD Digital Team and let us know how we can help.Intelligent Automation in ActionOne of the key advantages intelligent automation offers is the ability to impact controls and business units regardless of industry or vertical. Below are a few examples of how intelligent automation can help organizations streamline and automate key processes and roles.AccountingAccounts Receivable ProcessingAudit ControlExpense ManagementFinanceStatement ReconciliationP&L PreparationRegulatory ComplianceHuman ResourcesOnboardingEmployment VerificationRecord KeepingCustomer ServiceOnboardingRelationship ManagementUser Profile UpdatesMarketing and SalesLead NurturingInvoice ManagementCRM UpdatesOperationsInventory ManagementRefund ProcessingProcurement RecordsBenefits of Intelligent AutomationBy implementing this cost-effective and scalable solution, organizations can increase operational efficiency, increase productivity and maximize employee performance by tackling high-volume tasks critical to business operations with a virtual and intelligent workforce.24x7x365Increase productivity with technology that operates continuously without sick days, vacations, or staffing turnover.  Cost SavingsBoost productivity without adding headcount.Employee EngagementUse intelligent automation for mundane tasks, allowing staff to focus on higher-value and strategic work.Reduced RiskEliminate human error and establish robust audit trails for compliance and regulatory requirements.  ScalableBuild a flexible and scalable virtual workforce that adapts to your organization’s evolving needs and growth. SpeedAccelerate task completion time and increase processing capacity without requiring extra resources.TransparencyGain instant access to detailed performance reports and business insights for continuous improvement.Intelligent Automation Success StoriesLearn how SD Digital has made impactful change for clients across several industries with the power of intelligent automation.  Automotive Client - Sales Inventory ManagementLogistics Client - Vendor Invoice ProcessingNot-for-Profit Client - Monitoring Legal CompliancePayroll Provider Client - Internal AuditingProfessional Services Client - Cash Conversion Cycle Retail Client - Sales and Use Tax SaaS Provider Client - Bill Rates Adjustment Transportation Client - Road Toll ReconciliationWealth Management Client - Fee ProcessingRelated ResourcesIntelligent Automation OverviewAbout SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com.     OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? 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One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Penetration Testing Questionnaire Penetration Testing Questionnaire Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Thank you for your interest in our Penetration Testing service. To get started, please fill out the form below to the best of your ability. If you have any questions regarding the questionnaire or our services please contact the cybersecurity team at cybersecurity@schneiderdowns.com. Do your needs go beyond penetration testing? Explore our full suite of cybersecurity services and capabilities at www.schneiderdowns.com/cybersecurity/additional-services. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Social Engineering Assessments Simulate Real-World Attacks to Identify Weaknesses and Raise User Awareness Social Engineering Assessments help organizations strengthen their cyber resilience by simulating real-world cyberattacks. These tests reveal weaknesses in your security posture and raise user awareness to better defend against threats. Social engineering attacks manipulate end users into compromising security by revealing sensitive information, bypassing security protocols, or granting unauthorized access. Often exploiting emotions such as urgency or trust, these attacks impersonate familiar contacts, creating a false sense of security. How Social Engineering Assessments Strengthen Your Security Social Engineering Assessments simulate real-world threats like phishing, vishing (voice phishing), and physical security breaches to assess your organization’s vulnerability to human error. These assessments help you identify areas for improvement and raise awareness about potential risks. Common forms include phishing, vishing (voice phishing), and physical security breaches. Phishing remains the most common form of attack, with threat actors using it to deliver malware, steal credentials, compromise sensitive data, and carry out attacks like ransomware. Victims often click on malicious links, open infected attachments, or provide login credentials to attackers posing as trusted contacts. Schneider Downs offers hyper-specific phishing simulations to address the ever-present threat of phishing. Vishing has grown in effectiveness as generative AI and automation tools have become more accessible, making it an increasingly significant threat. Schneider Downs offers robust vishing simulations to address this rising risk. Physical Security Testing is essential for identifying insider threats and ensuring that physical access controls are secure. Schneider Downs' experts assess these controls to enhance overall security. Customizable Social Engineering Assessments Schneider Downs collaborates with clients to design customized social engineering assessments that simulate real-world attacks in a controlled environment. We work closely with your team to understand your organization's cybersecurity culture, risks, and goals. Based on our findings, we configure our tools to create, execute, and track simulated attacks in real-time. The assessment may include: Phishing or vishing for credential harvesting Phishing or vishing for malware execution Phishing or vishing for MFA bypass Physical testing for restricted area access Our team monitors user behavior throughout the assessment, tracking actions like whether phishing emails are ignored, reported, opened, or whether malicious links or attachments are clicked. At the end of the engagement, we provide detailed analysis, highlighting high-risk behaviors and offering recommendations for additional training. Identities remain anonymous in the report, but users with risky behaviors are flagged for management’s attention. For subscription service customers, we offer ongoing data analytics to track employee behavior baselines and improvement over time. What to Expect from Social Engineering Assessments? Behavioral Data Tracking: Gather deep data to establish baseline user behaviors and track progress over time. Custom Campaigns: Tailor phishing exercises to fit your organization's specific needs and industry. Continuous Support: Benefit from ongoing assistance from our experienced cybersecurity analysts. Expert Analysis: Receive detailed insights and expert recommendations based on simulated phishing campaign results. Flexible Subscription Models: Choose from annual, quarterly, monthly, or on-demand assessments based on your needs. Real-Time Teachable Moments: Address any organizational security missteps immediately during the assessment for effective learning opportunities. Diverse Phishing Techniques: Simulate various phishing tactics, including malicious attachments, links, and other attack methods. Trusted Cybersecurity Partnership: Educate your organization and end users with ongoing support and guidance. Ready to get started? Contact the Schneider Downs cybersecurity team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security and vulnerability assessments, as well as a robust digital forensics and incident response team. Learn more at www.schneiderdowns.com/cybersecurity. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Ransomware Security Service Ransomware Security Service Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. PRIMARY CONTACT: Carl N. Kriebel CISSP Despite growing awareness, the number of incidents involving phishing and ransomware continues to rise, with endless stories of breaches costing organizations of all sizes millions of dollars and immeasurable reputation damage. Attacks are not slowing down, which is why the Schneider Downs Cybersecurity Team offers a cybersecurity solution for ransomware prevention that begins with a comprehensive assessment of your organization’s cyber-hygiene. Our process implements preventive and monitoring software to ensure you’re prepared for the complex cybersecurity threats of today and tomorrow.  Our Approach to Ransomware Security Assess – Penetration Testing Schneider Downs takes a holistic approach to penetration testing to help your organization build resilience to cyberattacks and prioritize vulnerability remediation efforts. Our services are designed to assess your organization’s security by mimicking real-world cyberattacks using advanced skills, tools and techniques, then delivering comprehensive reports that provide detailed findings and actionable data to improve your security stature and readiness. Learn more about our penetration testing service. Prevent – Mimecast® Exploiting the human element through phishing is one of the most common means of compromise for today’s attackers. Ransomware is often initially delivered through phishing emails. Even with best intentions, legacy anti-spam solutions often have limitations and are typically not effective when it comes to targeted or opportunistic phishing attacks, which is why supplementing your cybersecurity defenses with a next-generation targeted email protection program like Mimecast is paramount. Learn more about our Mimecast® solutions. Detect – Carbon Black® Cyber attackers are innovating faster than traditional defenses can keep up. Carbon Black uses advanced predictive models to analyze complete endpoint data and uncover malicious behavior to stop all types of attacks before they compromise your system. There is no better solution to help stop malware, ransomware and non-malware attacks. Carbon Black prevents attacks automatically, online and offline, and is adept at blocking emerging, never-before-seen attacks that other solutions may miss. Learn more about Carbon Black® solutions. Download our Ransomware Security Service Overview for more information. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Vulnerability Assessment Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. PRIMARY CONTACT: Carl N. Kriebel CISSP It is critical to assess the risks within your organization's IT infrastructure. Despite an organization's best efforts, IT systems are often released with bugs and installed with misconfigurations, or the underlying technology is changing so rapidly that it's hard for system administrators to keep pace. Schneider Downs understands that the process for installing security updates can be confusing and time-consuming, and that, in reality, security updates can sometimes be overlooked. The goal of the Vulnerability Assessment is to provide our clients with a comprehensive view of potential security flaws in their environment by looking for misconfigurations, unpatched services, open ports, and other architectural mistakes. The results of this assessment will be a detailed report of vulnerabilities uncovered during the assessment, ranked by criticality, along with an agreed-upon remediation plan with detailed steps to assist in remediating noted vulnerabilities that create a security risk. Detailed Approach to a Vulnerability Assessment We begin by identifying the scope of the assessment through mapping the client's IP address ranges. This approach will help identify the active devices on the organization's network. From here, a port scan will be performed on each of the active devices identified. This will determine which services are running on each active device and the associated ports. From the device discovery, we will scan each IP address with our automated security assessment tools to identify misconfigurations, vacant patches, and service vulnerabilities that may exist within the host. We will then analyze the results to eliminate any false positives that may have been identified and determine the actual threat and risk to the organization. Our Vulnerability Assessment works in conjunction with our automated tools and the application of our industry experience. We determine the impact of potential security exposures and the risk they may or may not pose depending on your organization's overall security posture and risk appetite. Regardless of your organization's size, Schneider Downs will work with you to determine the most effective approach when determining the scope of the assessment. Our team will work closely with you to analyze the results and take a collaborative approach in issue identification and building action plans to remediate identified vulnerabilities. We also consider any other security components and mitigating factors to determine the overall risk to the security posture of the organization's IT infrastructure. We believe that it is essential to take this holistic strategic view during a vulnerability assessment to accurately identify the risk to the organization. The results of our assessment will be a detailed report of vulnerabilities uncovered during the assessment, ranked by criticality, along with an agreed-upon remediation plan with detailed steps to assist in remediating the noted vulnerabilities. Our Process Identify the scope/IP address range Port scan performed on each active device/IP Automated security assessment performed on each active device/IP Assess vulnerabilities considering mitgrating factors Eliminate false positives Produce detailed report About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Purple Team Assessments Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Do you ever worry about your organization’s ability to detect and/or prevent a threat actor? Would you like to know how your team and toolsets react to a battery of offensive tests that range from the most basic tactics to the latest and greatest advanced persistent threat techniques? Have you ever discovered a new attack technique and wondered, "How many more are there?" or "Which ones should I be worried about?" Are you curious about testing a particular exploit or lateral movement activity in your network, but aren’t sure where to start?If you answered “yes” to any of those questions, perhaps a Purple Team exercise is exactly what you need. A Schneider Downs Purple Team exercise brings together our red teamers and blue teamers, onsite, to work alongside your team to learn how to prevent and detect specific offensive techniques from the MITRE ATTACK framework and other hacker tools, techniques and procedures.As part of a Purple Team exercise, our goal is to provide the hacker toolsets and mentality of our red team experts along with the incident responder and defensive thinking of our blue team experts in a way that encourages, engages and sparks knowledge transfer.AcclimationTo maximize the effectiveness of a Purple Team exercise, our team must first gain a strong understanding of your environment. During this process, we'll become familiar with your current alerting/detection capabilities, as well as your network architecture and various other pertinent details. We believe the more we understand about your environment, the more valuable the exercise will be.Threat MappingBy leveraging every category of the MITRE ATT&CK framework, we'll work collaboratively with you to map a custom set of tactics and techniques that are risk-based, industry-appropriate and meaningful to your organization. This selection process is highly flexible and can steer the exercise toward a specific theme of offensive techniques or it can ensure a well-balanced exercise for a stronger baseline. Ultimately, the scope and variety of the exercise is entirely up to you. Additionally, we will cross-reference your threat intel against the framework's data to identify which threat actors youâre most likely facing in the wild, and then use our understanding of their typical behavior to further shape your organization's custom threat map. This enables us to anticipate additional attack vectors of concern and provide an authentic attack scenario within the collaborative process.ExecutionOnce threat mapping is complete, the offensive experts of our red team will execute each of the techniques in a transparent environment. This process encourages an "over-the-shoulder" element, in which your security can observe, learn and even get hands-on assisting in the execution of a variety of typical hacker activities like enumeration, exploitation, lateral movement, post-exploitation and exfiltration, et al. Throughout this process, our red team will serve as an expert resource to transfer valuable knowledge regarding modern offensive strategies, and offer insights into the mind of a hacker.Impact AnalysisThe success or failure of each technique is closely monitored to ensure complete understanding of its impact within the environment. The best-case scenario is for controls to prevent the execution or deny the intended result, in which case we may attempt several other methods of execution. If a technique is successful, we analyze the results to determine its full impact and identify additional mitigating factors. With the understanding that it's not always possible to prevent every technique, impact analysis for successful techniques allows for appropriate prioritization and accurate decision-making.DetectionAs our red teamers execute offensive techniques, our blue teamers are alongside your team simultaneously monitoring your logs and systems. If a technique is successful, we'll help your team leverage current capabilities to prevent/detect each technique. If current capabilities are insufficient, we'll help your team develop a plan for new capabilities. Throughout this process, our blue team will serve as an expert resource to transfer valuable knowledge regarding modern defensive strategies and offer insights into their real-world threat actor encounters.ReportingAfter the exercise, your team will receive a full report that will include a detailed threat map of each technique's execution status and analysis from both our red and blue teams, as well as a detailed guide for the implementation of any defensive items that were not fully addressed during the exercise.View our Purple Team Assessment service overview for more information or download our whitepaper, Benefits of a Purple Team Assessment, to learn more about the impact the assessment can have for your organization.About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Web Application Penetration Testing Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Web application penetration testing is one of the most critical components of any information security program. Web attacks are becoming more targeted, more prevalent and much more sophisticated.Our testing services provide an in-depth assessment of your web application to discover vulnerabilities caused by programming errors, configuration weaknesses or faulty assumptions about user behavior. Our approach combines manual testing and inspection with automated scanning toolsets to identify vulnerabilities.Ready to get started? Contact us or complete our online web application penetration testing questionnaire and a member of our team will reach out.Our web application penetration testing approach is based on the OWASP Testing Project for Web Application Penetration Testing and covers the following subcategories: shield bullet copyCreated with Sketch. Information Gathering shield bullet copyCreated with Sketch. Configuration and Deployment shield bullet copyCreated with Sketch. Management Testing shield bullet copyCreated with Sketch. Identity Management Testing shield bullet copyCreated with Sketch. Authentication Testing shield bullet copyCreated with Sketch. Authorization Testing shield bullet copyCreated with Sketch. Session Management Testing shield bullet copyCreated with Sketch. Input Validation Testing shield bullet copyCreated with Sketch. Error Handling shield bullet copyCreated with Sketch. Cryptography shield bullet copyCreated with Sketch. Business Logic Testing shield bullet copyCreated with Sketch. Client-Side Testing Our experienced analysts will work directly with your team to validate and explain all findings as they're uncovered. The deliverable you receive will outline all misconfigurations uncovered during our testing. Our reports are laid out in an easy-to-read format that summarizes the issue, shows a proof of concept, and provides a detailed recommendation to resolve the issue. Our findings are scored using the DREAD model, which takes into account the following attributes: shield bullet copyCreated with Sketch. Damage potential shield bullet copyCreated with Sketch. Reproducibility shield bullet copyCreated with Sketch. Exploitability shield bullet copyCreated with Sketch. Affected users shield bullet copyCreated with Sketch. Discoverability About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Why Schneider Downs Private Client Services? The Schneider Downs Private Client Services practice was developed to attend to the specific and individualized needs of high-net-worth individuals. From robust and complex solutions to efficient and convenient solutions our team delivers the peace of mind that comes from working with experienced and talented professionals who can meet any challenge.No two clients have the same priorities or goals. Our private client services are tailored to meet your unique needs, with the ultimate goal of providing you with security, stability and the knowledge that your goals are being addressed backed by one of the largest public accounting firms in the nation.Let us know what makes you unique, and we'll show you the Schneider Downs difference.Explore the Private Client Service Offerings. Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: A comprehensive suite of services from a single integrated team. ### Wealth Management At Schneider Downs Wealth Management, we have options available to assist you with your specific needs, including: Investment Management - Financial Planning Schneider Downs Retirement Solutions Learn More Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: Through Schneider Downs Wealth Management Advisors, we listen to you and customize a solution aimed to meet your needs and goals. ### Tax and Personal Financial Services With one of the largest regional tax practices in the country, we offer a broad range of expertise to assist in every facet of tax compliance and planning. Tax Compliance We favor a hands-on, personal approach with constant client communication. We take the time to understand you, your family and your business so that we can help you plan to achieve your goals. Our services are customizable: We specialize in individualized tax preparation and planning to meet the unique needs of you, your family, and your business. Our expertise allows us to identify unique opportunities and leverage your wealth in new ways. We incorporate state-of-the-art technology such as TaxCaddy™ to streamline the transfer of tax return information from the client, brokerage firms, etc. Some of the returns we prepare include: Individual Fiduciary (Trust) Gift Estate Death Tax Split-Interest Foreign Partnership Family Limited Partnership S-Corporations, C-Corporations   Personal Financial Planning Our services are tailored to our clients' needs, and we are able to work alongside your existing in-house tax departments to offer not only traditional tax services, but also specific expertise for unique issues. Services such as cash management, budgeting, retirement planning, social security, and cash flow planning can prove to be burdensome amid your many responsibilities. Allow our team of experienced professionals to provide these services with diligence and expertise. We can provide you with the peace of mind of knowing that these critical areas are managed and in good hands. Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: A comprehensive suite of services from a single integrated team. ### Service Offerings Tax and Personal Financial Services Learn More Estate, Trust and Succession Planning Learn More Private Family Office Learn More Philanthropy Learn More Wealth Management Learn More Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: A comprehensive suite of services from a single integrated team. ### Private Family Office Accounting and Related AnalysisWe provide a host of accounting functions for you, your family, and your related entities. With a strategic focus on your personal financial statements, we deliver:Budgeting and financial projections to identify opportunitiesA clear and concise picture of your overall financial position and net worth to better manage assetsEfficient and effective tax preparationTreasury Management and Bill-Pay ServicesDeveloping a comprehensive treasury management plan is essential to ensure adaptability and flexibility and to preserve wealth for each generation. We work with you to develop a holistic tax-efficient plan for your family and individual members/entities to address:Cash flow needsRetirement and social security planningProjections using comprehensive financial statementsAsset Management ServicesA triage of services to manage your assets and provide you with peace of mind.Asset protectionReview of cybersecurity, life, property and casualty insuranceEstate and financial tax planning regarding transfers and/or valuations of assets, portfolios and or entitiesPeripheral services, including data/document management to safely and efficiently store and manage your documents, so you don't have toLifestyle Management and Family EducationPersonal Concierge Services that allow the family member to pursue their passions without the burden of managing their wealthPeace of mind through credible advisors that facilitate and streamline your lifestyleServices include but are not limited to:Household administrative servicesCalendar coordination and managementExpanded bill-pay servicesTravel arrangementEvent coordinationElder care coordinationInsurance and long-term care reviewSeasonal asset managementMultiple home administration and other services Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: Offering comprehensive executive and administrative services to accommodate your lifestyle and provide peace of mind. ### Philanthropy Many individuals desire to manage their wealth in a way that not only benefits loved ones, but also advances their philanthropic goals. Our not-for-profit professionals offer expertise to realize these goals, whether through the creation of a private foundation, utilization of donor-advised funds, or yearly tax planning to give charitably and maximize tax savings and fiscal sustainability.We work with both new and established charitable organizations, and are able to leverage unique connections and capabilities to best capture your vision.Our experienced team will help you coordinate the plan that most effectively suits your needs.Structured charitable givingAt Schneider Downs, we can incorporate your family's ideology to create and execute your philanthropic goals.Legacy planningAt Schneider Downs, we can establish your private foundation, and leverage community funds to support charitable causes that are of significant importance to you and your family.Through estate planning and other generational transfers, Schneider Downs can provide the greatest tax opportunities available for you and your family. Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: Creating and structuring charitable giving according to your individual passion. ### Meet Our Private Client Services Team SHAREHOLDERS Gregory L. Allison CPA/PFS, JD, CFP® Shareholder Lear More > Darin G. Schindler CPA Shareholder Lear More > Sarah Piot CPA Shareholder Lear More > CHIEF OPERATING OFFICER / DIRECTORS Carol G. Murray CPA, JD Chief Operating Officer Lear More > Melanie M. LaSota CPA, JD Director Lear More > SENIOR MANAGERS Ashley N. Bucek EA, MST, MBA Senior Manager Lear More > Catherine A. Martz CPA, MST Senior Manager Lear More > Maggie Gompers-Havelka JD, MBA Senior Manager Lear More > Vicki Mayowski CPA Senior Manager Lear More > MANAGERS Del E. Wilmot Jr. EA Manager Lear More > Kari T. Owens JD Manager Lear More > Michael W. Darpino JD, LLM, MBA Manager Lear More > PHYLLIS M. TEDESCO CPA Manager Lear More > Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### What’s the Fuss About TaxCaddy? By Share with a colleague Download PDF We are approaching our individual tax clients about the opportunity to use a new, secure software product called “TaxCaddy” to streamline your tax-prep process. TaxCaddy is a cutting-edge software solution that we are offering to our 1040 clients to gather and share their tax documents with us. It is our hope that this product significantly cuts down the time and effort our individual clients expend each year, and that it will make tax time much less taxing!The old way of gathering personal documents was time-consuming and cumbersome:Wait for envelopes to arrive in the mail with important tax documentsGather all of the documents, (be careful not to misplace any) and get them to your CPA either by mail or in personBe sure to tell your CPA about changes that happened to you over the past year, most likely by completing the huge paper “organizer”Oh, no! A corrected document arrived in the mail – now you've got to get it to your CPA and hope that it doesn’t get “lost in the paper shuffle”The CPA has returned all of your documents; now how should they be stored?TaxCaddy has the answer to streamline the process and get individual tax information to your CPA all year round with no stamps, envelopes or trips to the Post Office. Plus, it makes document storage electronic, so no more huge files of paper!When you sign up for this free service, you’ll enjoy the following:The account will belong to you; it’s not a Schneider Downs portal – So, even if you leave Schneider Downs, your account goes with you.All documents uploaded will remain in digital form, so you don’t have to store paper copies.You can link bank and brokerage accounts, which will enable your year-end tax statements (Forms 1099) to be retrieved automatically without your having to upload them.Documents that you scan can be “dragged & dropped” into your account.Utilizing the mobile app, you can snap and transmit photos of documents, so you don’t need to scan everything.Your account is available year-round, so a charitable receipt that you get in June doesn’t have to be located in February when you are gathering your tax documents.You’ll see a real-time document request list, so you know which documents you still need to provide to your CPA.You’ll have the ability to digitally sign documents, such as your engagement letter and electronic filing authorization forms, making such communications instantaneous.Security! TaxCaddy employs best-in-class encryption and threat management and mitigation practices, including regular security penetration testing.We believe that all of our individual clients will love using TaxCaddy. In order to get started, please send an email to:TaxCaddy@schneiderdowns.comYou’ll receive an invitation with further instructions which will enable you to establish your TaxCaddy account. At that point, you can share access with a spouse, family member, or trusted professional.If you’d like to discuss the TaxCaddy technology further, please contact your Schneider Downs professional tax team member. Share ### OUR THOUGHTS ON ARCHIVE Our Thoughts On Sort by Most Recent Most Viewed Categories Authors Advanced Search 401(k) Plans CARES Act Coronavirus Estate Planning Government Internal Revenue Service Private Client Services Tax Tax Impact TCJA Wealth Management B | H | J | L | O | P | W Author Search ENTER Danielle Jacobs David C. Brinkman Donna Wolfson Kari Tallarico Owens Maggie Havelka Matt Biggs Melanie M. LaSota Schneider Downs Professional Estate Planning, Private Client Services Danielle Jacobs | 06.15.2023 Are Your Digital Assets Lost Forever? If you are not careful with your estate plan, your digital assets may be stuck… Read More Estate Planning, Government, Private Client Services Melanie M. LaSota | 11.23.2021 Estates and Trusts Tax Update - November 2021 The Schneider Downs team of estate planning professionals provide an estates and trusts tax update… Read More 401(k) Plans, Private Client Services, Wealth Management Donna Wolfson | 11.03.2020 2021 Retirement Plan Limitations On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will… Read More Private Client Services, Tax Schneider Downs Professional | 10.22.2020 2020 Election from a Tax Perspective With the presidential election about two weeks away, we wanted to highlight President Trump and… Read More Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates Estate Planning, Private Client Services, Tax Schneider Downs Professional | 10.15.2020 IRS Issues Final Regulations for Non-Grantor Trust Deductions The IRS has issued final regulations on the deductions available to estates and non-grantor trusts.Under… Read More Private Client Services, Wealth Management David C. Brinkman | 09.17.2020 Financial Boot Camp Series: Maximizing Gifting and Charitable Impacts By David Brinkman, CFA, CPA, CFP®, CPFAWhen working with individuals and families that are on… Read More Coronavirus, Private Client Services, Tax, Tax Impact Schneider Downs Professional | 09.03.2020 IRS Extends 2020 Rollover Period and Other Deadlines for Retirement Account RMDs In March, the CARES Act provided taxpayers opportunity to skip this year’s (2020) required minimum… Read More Internal Revenue Service, Private Client Services, Tax, Tax Impact Maggie Havelka | 08.17.2020 IRS Audit Campaign: Examinations to begin on Hundreds of High-Wealth Individuals The Internal Revenue Service (IRS) announced in June a renewed focus on auditing high net-worth… Read More Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates Private Client Services, Tax, TCJA Schneider Downs Professional | 07.28.2020 Use It or Lose It…Maybe: Gift Planning Considerations in an Unpredictable Election Year In a year rife with a global pandemic, intense social justice movements, tempestuous markets and… Read More Private Client Services, Wealth Management David C. Brinkman | 07.21.2020 Financial Boot Camp Series: Is Your Estate in Proper Order? Estate planning is the process of identifying one’s assets and providing clear instruction for who… Read More 1 2 Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### More than a Slogan By Share with a colleague Download PDF Schneider Downs’ mission statement reads "Working together every day to make our firm, clients and communities better." We at Schneider Downs believe that this motto is much more than just a string of words. In addition to the stellar services our firm provides to our clients, our colleagues are involved in various activities and events to make an important contribution to our world.These include external events such as participating in:The Race to Anyplace (benefits the Leukemia & Lymphoma Society)JDRF Gala (Finding a cure for diabetes)United Way Free Tax Preparation (for low-income citizens)Lending Hearts Gala (support for young adults/children with cancer)JA Bowl-a-thon (benefits Junior Achievement)Red Door Project (support of local homeless shelter)Pelotonia (benefits James Cancer Hospital)Rebuilding Together Pittsburgh (support for home repairs for low-income citizens)Treasures for Children (Salvation Army Christmas gift drive)Real Men Wear Pink (benefits American Cancer Society)Polar Bear Plunge (benefits Special Olympics)Internal activities at Schneider Downs this past year included:Creation of sleeping mats for the homeless (utilizing plastic bag “plarn”)Dodgeball tournament (to benefit United Way)Countless fundraiser 50 / 50 raffles and Happy Hours for a variety of causesPacking and delivering lunches for a nearby homeless shelterIn fact, our employees have made contributions of time/talent/treasure in more than 20 Schneider Downs approved events during the previous year. These are in addition to the personal contributions our employees make outside of work – to their places of worship, community and school sports, alma maters and boards on which they serve.Here at Schneider Downs, we believe in our communities and know that our efforts can bring about a positive influence. So, it is indeed more than a slogan – it’s part of who we are! Share Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### IN THE SPOTLIGHT ARCHIVE Our Thoughts On Sort by Most Recent Most Viewed Categories Authors Advanced Search 401(k) Plans CARES Act Coronavirus Estate Planning Government Internal Revenue Service Private Client Services Tax Tax Impact TCJA Wealth Management B | H | J | L | O | P | W Author Search ENTER Danielle Jacobs David C. Brinkman Donna Wolfson Kari Tallarico Owens Maggie Havelka Matt Biggs Melanie M. LaSota Schneider Downs Professional Estate Planning, Private Client Services Danielle Jacobs | 06.15.2023 Are Your Digital Assets Lost Forever? If you are not careful with your estate plan, your digital assets may be stuck… Read More Estate Planning, Government, Private Client Services Melanie M. LaSota | 11.23.2021 Estates and Trusts Tax Update - November 2021 The Schneider Downs team of estate planning professionals provide an estates and trusts tax update… Read More 401(k) Plans, Private Client Services, Wealth Management Donna Wolfson | 11.03.2020 2021 Retirement Plan Limitations On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will… Read More Private Client Services, Tax Schneider Downs Professional | 10.22.2020 2020 Election from a Tax Perspective With the presidential election about two weeks away, we wanted to highlight President Trump and… Read More Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates Estate Planning, Private Client Services, Tax Schneider Downs Professional | 10.15.2020 IRS Issues Final Regulations for Non-Grantor Trust Deductions The IRS has issued final regulations on the deductions available to estates and non-grantor trusts.Under… Read More Private Client Services, Wealth Management David C. Brinkman | 09.17.2020 Financial Boot Camp Series: Maximizing Gifting and Charitable Impacts By David Brinkman, CFA, CPA, CFP®, CPFAWhen working with individuals and families that are on… Read More Coronavirus, Private Client Services, Tax, Tax Impact Schneider Downs Professional | 09.03.2020 IRS Extends 2020 Rollover Period and Other Deadlines for Retirement Account RMDs In March, the CARES Act provided taxpayers opportunity to skip this year’s (2020) required minimum… Read More Internal Revenue Service, Private Client Services, Tax, Tax Impact Maggie Havelka | 08.17.2020 IRS Audit Campaign: Examinations to begin on Hundreds of High-Wealth Individuals The Internal Revenue Service (IRS) announced in June a renewed focus on auditing high net-worth… Read More Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates Private Client Services, Tax, TCJA Schneider Downs Professional | 07.28.2020 Use It or Lose It…Maybe: Gift Planning Considerations in an Unpredictable Election Year In a year rife with a global pandemic, intense social justice movements, tempestuous markets and… Read More Private Client Services, Wealth Management David C. Brinkman | 07.21.2020 Financial Boot Camp Series: Is Your Estate in Proper Order? Estate planning is the process of identifying one’s assets and providing clear instruction for who… Read More 1 2 Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Estate Planning in a Changed World By Share with a colleague Download PDF The year 2020 has been a difficult time for all of us. As our economy reopens and we begin our slow journey back to normal life, we wanted to reach out to let you know that the current environment provides a number of estate planning opportunities that may not last forever.First, if you are considering gifts to your loved ones, either outright or in trust, now is a good time to act. By using what is known as your “gift tax annual exclusion,” you can gift up to $15,000 each year to as many people as you want without reporting the gifts or paying gift tax. If you are married and choose to split gifts with your spouse, that amount increases to $30,000. In addition to this annual exclusion, you may now gift up to $11.58 million ($23.16 million for couples) during your lifetime free of tax. Gifting is a great idea in the current environment because depressed asset values allow you to pass assets to your loved ones at a significant discount. When the market rebounds, and the gifted assets rise in value, none of this appreciation will be included in your taxable estate.Second, now is an ideal time to consider the benefits of a grantor retained annuity trust, known in the estate planning world as a “GRAT.” A GRAT is a mechanism whereby a taxpayer transfers undervalued or highly appreciating assets to an irrevocable trust while retaining the right to receive annuity payments for a predetermined period of time. When the GRAT term ends, the trust assets, and any appreciation in value of the assets over and above the annuity’s interest rate, are passed to the beneficiaries free of gift taxes. GRATs established in down markets are generally sensible because the hurdle growth rate required to be surpassed in order to successfully transfer appreciation is much lower than in times of higher interest rates. The more that asset prices rebound during the GRAT term, the more tax-free appreciation will be passed to your loved ones.Today’s environment also lends itself to the possibility of refinancing existing intra-family loans at lower rates. It may also be possible to use “swap powers” in irrevocable trusts to exchange low-basis assets owned by the trusts for high-basis assets owned individually. This will maximize the step-up in basis allowed at death and thus minimize the capital gains taxes paid by your beneficiaries when they later sell the assets. Additionally, new rules on charitable contributions make this year a great time to give to your favorite charity. If taking advantage of these opportunities is of interest to you, we encourage you act before this window of opportunity closes. These techniques will become less attractive as the market rebounds. In addition, the political climate may shift as a result of the upcoming election, and several of the planning tools described in this article have been on the legislative chopping block for quite some time. Please feel free to reach out to us to discuss which planning opportunities may work best for you and your family.Lear more about the Schneider Downs Private Client Services practice. Share ### Insights OUR THOUGHTS ON 2020 Election from a Tax Perspective With the presidential election about two weeks away, we wanted to highlight President Trump and Democratic presidential candidate Joe Biden’s… Read More > Estate Planning as a Tool for Your Business Succession Plan The year 2020 has been mired with uncertainty and unprecedented strife for many.As we reflect on the past six months… Read More > The Role of Data Analytics in Real Estate Data has always been collected, analyzed, and used by real estate professionals and investors to make informed decisions on purchasing… Read More > Internal Controls for Not-For-Profits The Institute of Management Accountants (IMA) Research Foundation studied the nature of internal controls in not-for-profit organizations and how those… Read More > The Redesigned IRS Form W-4 – What You Need to Know The old familiar IRS Form W-4 has a new look this year, thanks to a redesign by the IRS. The… Read More > New Optional Standard Mileage Rates for 2020 The IRS recently released the optional standard mileage rates for 2020, as follows: 57.5 cents for every mile of business… Read More > Estimated Tax Payment and Voucher Address Change as of July 1, 2020 Taxpayers should be aware that the IRS will be closing its Cincinnati and Hartford mailing addresses on July 1. This… Read More > View Archives IN THE SPOTLIGHT View Archives Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: Explore Schneider Downs news and resources. ### Estate, Trust and Succession Planning Estate planning is an ongoing and complex process that requires expertise and coordination. Schneider Downs is uniquely positioned with a diverse team of credentialed professionals, including CPAs, CFPs, LLMs, MBAs, JDs, and non-practicing attorneys who are committed to comprehensive service. From business entity succession planning to estate administration, Schneider Downs professionals can synthesize the most complex financial situations to develop an effective, customized, tax-efficient estate and succession plan. Services We Provide and Coordinate Include: Estate and Succession Planning Analyze Current Estate Planning Documents Calculate Death Taxes and Liquidity Gifting Design and Consultation Trust Design and Consultation Insurance Planning Family Tuition and Medical Plan Design Entity Succession Planning Compliance (Trust Returns, Gift Returns, Estate and Inheritance Tax Returns) Estate Administration Process Federal and State Death Tax Returns Estate and Fiduciary Income Tax Returns Estate and Trust Accountings Assist in gathering assets and determining distributions Death Tax Return Challenges Our team of estate planning professionals have a history of success in representing clients before the taxing authorities in the event of a death tax return challenge. Curious about the origin of the estate tax? Learn more in our History of the Estate Tax Infographic. Schneider Downs & Co., Inc. is not a law firm and does not provide legal services. In furtherance of the estate planning services provided, it may be necessary to retain legal counsel. Tax and legacy planning services are offered through Schneider Downs & Co., Inc. Investment and asset management services are provided through Schneider Downs Wealth Management Advisors, LP. Each service may require you to sign a separate engagement agreement that will outline the services to be provided and the respective fees. Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: Preserving wealth within and between generations. ### Contact Us We want to hear from you. "*" indicates required fields Name* Company/Organization* Email* Phone NumberComment/Question How would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Want to stay informed? Let us do the heavy lifting. SIGN UP HERE Excerpt: We welcome the opportunity to meet with you. ### SD Digital SD Digital Meet Our Team Innovative Solutions. Bottom Line Results. SD Digital's mission is to help businesses discover the power of digital through strategic, efficient and attainable solutions. With a pioneering spirit and client-first mindset, we strive to de-risk, demystify and deliver outcome-focused, iterative solutions that translate technology into transformative change. Custom Development Custom Development Innovative Solutions. Bottom Line Results. Organizations spend countless hours and… Data Analytics and Power BI Data Analytics and Power BI Solutions Innovative Solutions. Bottom Line Results. Struggling… Digital Modernization Digital Modernization Reimagine How You Compete in the Digital World In today’s… Intelligent Automation Intelligent Automation Automate and Enhance Business Processes With Intelligent Automation Automation can… Microsoft Dynamics ERP Microsoft Dynamics ERP Solutions Implement, Integrate, and Optimize Dynamics 365 Business Central.… Power BI Enterprise Solutions Power BI Enterprise Solutions Unlock the Full Potential of Power BI Across… SD Digital LumenFI SD Digital LumenFi From Data to Decisions in Seconds with our AI-Powered… SD inSITE SD inSITE by SD Digital is an employee time-tracking software using a… simpLEASE Accounting simpLEASE Accounting Lease Accounting Software Built by Accountants for Accountants Navigating the… Solver Extended Financial Planning & Analysis Solver Extended Financial Planning and Analysis Accelerate better business decisions with Solver's… Problems We Solve Impactful change starts with identifiable problems. Business is Growing. Operations Can’t Keep Up.   One of the most common problems for businesses is scaling existing systems and processes to keep pace with future growth and goals. Our experienced team delivers the digital infrastructure, automation and centralized business intelligence to mobilize and deliver impactful solutions at the speed of your business.Our Solution: Digital Modernization  Manual Processes. Manual Problems.  A regular challenge our team encounters is an organization that relies on too many manual processes that ultimately put a strain on human capital. Our team helps clients evaluate, adopt and implement RPA and AI technology that digitize manual mundane tasks and allow talent to focus on higher-value activities.Our Solution: Intelligent Automation  Data Rich. Information Poor. Up to your neck in unusable, inaccurate or siloed data sets? Unfortunately, this is a common hurdle for organizations of all sizes. Our data analytics team delivers descriptive, predictive and prescriptive solutions that help transform your unworkable data into accessible and actionable business insights.Our Solution: Data Analytics  Robust Business. Outdated ERP. ERP software systems are the digital lifeblood of an organization. As a licensed Microsoft Dynamics partner, our team can help you identify, configure and implement the best ERP solution for your core business processes and customer experiences.Our Solution: Microsoft Dynamics ERP Solutions Big Thinking. Personal Software. Our team offers several cloud and IT solutions for accounting, fixed assets, distribution, automated workforce management, human resources and payroll needs, including our award winning simpLEASE lease accounting and SD inSITE workforce management tool.Our Solution: Software Solutions Custom Needs. Custom Solutions.  Our team understands every organization is built differently. Luckily, so are we. SD Digital specializes in custom development for Microsoft Dynamics and Automation Anywhere but can also deliver transformative results for other third-party and proprietary software solutions.Our Solution: Custom Development One of the most common problems for businesses is scaling existing systems and processes to keep pace with future growth and goals. Our experienced team delivers the digital infrastructure, automation and centralized business intelligence to mobilize and deliver impactful solutions at the speed of your business.Our Solution: Digital Modernization A regular challenge our team encounters is an organization that relies on too many manual processes that ultimately put a strain on human capital. Our team helps clients evaluate, adopt and implement RPA and AI technology that digitize manual mundane tasks and allow talent to focus on higher-value activities.Our Solution: Intelligent Automation Up to your neck in unusable, inaccurate or siloed data sets? Unfortunately, this is a common hurdle for organizations of all sizes. Our data analytics team delivers descriptive, predictive and prescriptive solutions that help transform your unworkable data into accessible and actionable business insights.Our Solution: Data Analytics ERP software systems are the digital lifeblood of an organization. As a licensed Microsoft Dynamics partner, our team can help you identify, configure and implement the best ERP solution for your core business processes and customer experiences.Our Solution: Microsoft Dynamics ERP SolutionsOur team offers several cloud and IT solutions for accounting, fixed assets, distribution, automated workforce management, human resources and payroll needs, including our award winning simpLEASE lease accounting and SD inSITE workforce management tool.Our Solution: Software SolutionsOur team understands every organization is built differently. Luckily, so are we. SD Digital specializes in custom development for Microsoft Dynamics and Automation Anywhere but can also deliver transformative results for other third-party and proprietary software solutions.Our Solution: Custom Development Ready to Start Your Digital Journey? Contact Us Investing in digital is not just a requirement for relevance but a race against market obsolescence. There is a bleak future facing organizations that view the status quo as their final state, from financial impacts and attrition to a decline in market share. Surprisingly, 84% of companies consider their digital journey a failure, despite IT spending nearly $1.4 trillion worldwide.In our experience, a lack of digital success stems from a lack of digital literacy required to effectively implement change. https://youtu.be/yRHB2BBf8gk Our Digital Values Our digital innovators are guided by a set of client-focused values to help organizations discover their digital potential by redefining boundaries through innovative possibilities. Eye on the Prize We understand the complexity and speed of business today, which is why we approach each digital journey with an unrelenting focus on successful outcomes for our clients. Progress over Perfection We deliver an iterative roadmap that celebrates milestones, learns from roadblocks and prioritizes continuous progress toward client objectives. Courage to be Candid Change can be challenging, which is why we promise to respectfully challenge the status quo, present our authentic thoughts and facilitate tough conversations, all in the pursuit of the possible. Real-world Experience With a robust firm of 500+ professionals, we have the business expertise and digital mindset to provide end-to-end solutions that account for industry, regulatory and financial considerations. Hardwired Empathy We approach each engagement through the eyes of the business leaders and stakeholders to design, strategize, develop and implement solutions built with the mind of our clients. Sustainable Speed With our unique combination of digital expertise and business experience, we can mobilize and deliver impactful solutions at the speed of business. Learn More About SD Digital OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Recovery & Remediation Recovery & Remediation Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. PRIMARY CONTACT: Carl N. Kriebel CISSP Recovery and remediation is also a major component of the Schneider Downs Incident Response process. Our team has the experience to help you recover from major disruptions to your IT systems. Form and identify the remediation team Determine the timing and extent of remediation activities needed Develop and implement remediation posturing actionauring the incident (password resets, two-factor deployments, etc.) Develop and implement eradication action plan Develop strategic recommendations for safe recovery Document and report on lessons learned Learn more about our Incident Response Process INCIDENT RESPONSE RECOVERY AND REMEDIATION About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Penetration Testing Network Penetration Testing Understand Your Cybersecurity Gaps and Strengthen Resilience Our network penetration testing services are designed to assess your organization’s security by simulating real-world cyberattacks, such as phishing and ransomware, using the same tools and techniques employed by threat actors. This testing helps you gain a comprehensive understanding of your cybersecurity strengths, weaknesses, and priorities.As an impartial third party, we identify critical vulnerabilities across both internal and external networks. Our tests also evaluate whether these vulnerabilities are exploitable, providing a clear picture of the actual risks they pose to your IT security posture.Getting Started with Network Penetration TestingIf you're new to network penetration testing, simply complete our penetration questionnaire, and a member of our team will reach out to assist you in the next steps. What to Expect from Network Penetration Testing Services Access top-tier cybersecurity experts to protect your systems.Boost end-user security awareness to reduce threats.Confirm critical security controls are effective in real time.Empower your IT team with hands-on security training.Get continuous support and education to stay ahead.Receive a customized action plan to enhance security.Strengthen defenses against cyberattacks with immediate improvements. How Network Penetration Testing Works The Schneider Downs cybersecurity team offers comprehensive, tailored network penetration testing to strengthen your security posture. We stay ahead of evolving cyber threats, uncovering current vulnerabilities and predicting future risks. Our scenario-based testing provides actionable insights that help you make informed security decisions. Our approach includes:Continuous Threat Alignment: We adapt our testing methods to stay ahead of evolving threats.Strategic Insights: Gain long-term strategic insights to improve your overall security posture.Tactical Recommendations: We provide actionable, tactical recommendations to immediately address vulnerabilities.Why Choose Schneider Downs?Accurate Risk DiagnosisOur detailed reports provide clear, actionable insights into your actual risks, helping you prioritize remediation efforts.Comprehensive Risk AssessmentWe identify both known and unknown risks, offering continuous partnership and support beyond the initial testing engagement.Hacker MentalityWe simulate attacks with the mindset of a real-world cybercriminal, ensuring our tactics closely mirror actual threats.Proven ExpertiseOur team combines deep technical expertise with real-world experience across various industries.Tailored SolutionsEvery engagement is customized to reflect your organization’s unique risks, resources, and industry needs.Ready to get started? Contact the Schneider Downs cybersecurity team at cybersecurity@schneiderdowns.com or download our service overview for more information. Additional Penetration Testing Solutions In addition to network penetration testing, our team also offers:API Security TestingCloud Security TestingPhysical Penetration TestingWeb Application Testing (WAPT)Wireless Network Testing About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including network penetration testing, intrusion prevention/detection review, ransomware security and vulnerability assessments, as well as a robust digital forensics and incident response team. Learn more at www.schneiderdowns.com/cybersecurity.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Data Privacy Services: Privacy Regulations and Compliance Deliver sound risk management practices, internal control systems and compliance frameworks. With the ever-evolving data privacy landscape and a growing number of state and international privacy laws, it can be very cumbersome to identify which of these apply to your organization and furthermore how your organization must comply. Dependent on your organization’s business model, industry and many other factors, you will likely need to comply with at least one and potentially more of the data privacy regulations listed below, which is not an exhaustive list. We have helped organizations across industries, both domestically and globally, to both prepare for and achieve compliance with these data privacy regulations:The General Data Protection Regulation (GDPR)The GDPR is the toughest privacy and security law in the world. Though it was drafted and passed by the European Union (EU), it imposes obligations onto organizations anywhere, so long as they target or collect data related to people in the EU. The regulation was put into effect on May 25, 2018 to protect and empower all EU citizens with respect to data privacy, reshaping the way organizations across the globe approach data privacy. The GDPR can levy harsh fines against those who violate its privacy and security standards, with penalties equivalent to the greater of  €20m or 4% of total revenue.California Privacy Rights Act (CPRA)In November 2020, over 9.3 million Californians voted to approve the CPRA of 2020 with the passage of Proposition 24. The CPRA is the strongest consumer privacy law ever enacted in the United States and achieves broad general parity with the most comprehensive laws in other jurisdictions including the GDPR.CPRA builds on existing California law passed in 2018 (the California Consumer Privacy Act (CCPA)) and applies to personal information collected after January 1, 2022 which will be enforced January 1, 2023. CPRA builds upon CCPA, in a number of ways:Sensitive data: New definition, limits on use and sharingNew enforcement agency: California Privacy Protection AgencyExpanded breach liabilityRequired audits and risk assessments for high-risk processingRestrictions on automated decision-making and profilingConsumer data correctionStrengthened opt-in rights for children’s dataNecessity-based limitations for data retentionNew obligations for service providersCalifornia Consumer Privacy Act (CCPA)The CCPA gives consumers more control over the personal information that businesses collect about them. This law secures new privacy rights for California consumers, includingThe right to know about the personal information a business collects, how it is used and shared;The right-to-delete personal information collected;The right-to-opt-out of the sale of their personal information; andThe right-to-non-discrimination for exercising their CCPA rights.The Health Insurance Portability and Accountability Act of 1996 (HIPAA)HIPAA was developed to protect the privacy and security of certain health information. To fulfill this requirement, the U.S. Department of Health & Human Services (HHS) published the HIPAA Privacy and Security Rules. The Privacy Rule establishes national standards for the protection of certain health information.The Security Rule establishes a national set of security standards for protecting certain health information that is held or transferred in electronic form. The Security Rule operationalized the protections contained in the Privacy Rule by addressing the technical and non-technical safeguards that organizations called “covered entities” must put in place to secure individuals “electronically protected health information” (e-PHI).The Privacy Rule is to protect the privacy of individuals’ health information while allowing covered entities to adopt new technologies to improve the quality and efficiency of patient care. Given that the health care marketplace is diverse, the Security Rule is designed to be flexible and scalable so a covered entity can implement policies, procedures, and technologies that are appropriate for the entity’s particular size, organizational structure, and risks to consumers’ e-PHI. Within HHS, the Office for Civil Rights (OCR) has responsibility for enforcing the Privacy and Security Rules with voluntary compliance activities and civil money penalties.Gramm-Leach-Bliley Act (GLBA)The GLBA is a Federal law, known as the Financial Modernization Act of 1999, which applies to financial institutions, including higher-education institutions. The intent of GLBA is to protect the security, confidentiality and integrity of customer information, where customer information is any record containing non-public personal information…about a customer of a financial institution, whether in paper, electronic, or other forms that are handled or maintained by or on behalf of the institution.Additional Schneider Downs Data Privacy ServicesBusiness Process and Data FlowA critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn MoreData Privacy Control AssessmentRegardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn MoreData Protection Impact Assessment A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn MoreNIST Privacy Framework ComplianceThe NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture.  Learn MoreAbout Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Learn more about Schneider Downs Data Privacy Services or contact us for more information. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Employers' Guide to the New ACA Reporting Requirements Employers' Guide to the New ACA Reporting Requirements "*" indicates required fields Please fill out the following form in order to download the whitepaper.Name Email address* Company Phone numberEmailThis field is for validation purposes and should be left unchanged. Submit Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Eight Common Schemes Eight Common Schemes Thank you for your interest.  You may download a copy of "Eight Commonly Identified Fraud Schemes." If you have any questions about the content or would like more information, please contact us.  ### Emerging Technology FAQs Emerging Technology FAQs Schneider Downs takes great pride in answering relevant questions surrounding startup and mature emerging technology companies.Startup Companies  |  Mature Companies   Startup Companies ARE THERE ANY TAX BENEFITS FOR AN EARLY-STAGE STARTUP COMPANY? Yes. If your company engages in research in development activities, which many technology-focused startups do, you may qualify for a research and development (R&D) tax credit.Related Articles:Five Tax Considerations for Start-up CompaniesSection 174 Expensing Restored Under OBBB—A Win for R&D-Driven Businesses CAN MY COMPANY BENEFIT FROM AN R&D CREDIT IF IT IS LOSING MONEY? Yes. Early-stage companies, which generate less than $5M in gross receipts, may qualify to use their R&D tax credit to offset payroll taxes irrespective of their profit or loss.Related Article:Emerging Technology Companies and the R&D Tax Credit WHAT ACCOUNTING SERVICES CAN WE OUTSOURCE? Your company can outsource accounting services including but not limited to:Outsourced CFO and controller servicesFull source of accounting functions which can include bookkeeping, month end close assistance and reporting and moreBudget analysis and projectionsValuation services Related Article:Value of Outsourced Accounting Services DO I NEED TO HAVE A VALUATION DONE IF I HAVE A RECENT EQUITY RAISE? A best practice is to have a valuation done when equity is issued to employees and when there is a large capital raise.Related Article:Valuation Article About Schneider Downs Technology AdvisorsOur consultants combine practical business experience with up-to-date technical options to implement cost-effective solutions for our clients. Our association with industry-leading technology companies provides our clients with the latest industry-specific, low-risk and proven solutions. Through vendor certification programs, advanced education and industry conferences, our consultants are trained and certified on the latest products and services. Our consultants bring a variety of experiences, technical knowledge and industry certifications to our clients, providing an ongoing and effective partnership.Learn more at www.schneiderdowns.com/adapt or contact us to get started today. SHOULD WE IMPLEMENT A CERTAIN TYPE OF SOFTWARE? There are a lot of systems that emerging technology clients use. One software that should be implemented is an equity management system to house all equity agreements, maintain vesting schedules and calculate compensation expense.Related Article:5 Essential Software Considerations for Startups Yes. If your company engages in research in development activities, which many technology-focused startups do, you may qualify for a research and development (R&D) tax credit.Related Articles:Five Tax Considerations for Start-up CompaniesSection 174 Expensing Restored Under OBBB—A Win for R&D-Driven BusinessesYes. Early-stage companies, which generate less than $5M in gross receipts, may qualify to use their R&D tax credit to offset payroll taxes irrespective of their profit or loss.Related Article:Emerging Technology Companies and the R&D Tax CreditYour company can outsource accounting services including but not limited to:Outsourced CFO and controller servicesFull source of accounting functions which can include bookkeeping, month end close assistance and reporting and moreBudget analysis and projectionsValuation services Related Article:Value of Outsourced Accounting ServicesA best practice is to have a valuation done when equity is issued to employees and when there is a large capital raise.Related Article:Valuation ArticleAbout Schneider Downs Technology AdvisorsOur consultants combine practical business experience with up-to-date technical options to implement cost-effective solutions for our clients. Our association with industry-leading technology companies provides our clients with the latest industry-specific, low-risk and proven solutions. Through vendor certification programs, advanced education and industry conferences, our consultants are trained and certified on the latest products and services. Our consultants bring a variety of experiences, technical knowledge and industry certifications to our clients, providing an ongoing and effective partnership.Learn more at www.schneiderdowns.com/adapt or contact us to get started today.There are a lot of systems that emerging technology clients use. One software that should be implemented is an equity management system to house all equity agreements, maintain vesting schedules and calculate compensation expense.Related Article:5 Essential Software Considerations for Startups Mature Companies IS MY BEST OPTION FOR AN EXIT AN INITIAL PUBLIC OFFERING (IPO)? We get this question a lot from early-stage companies or we hear from owners that their plan is to exit via IPO. The reality is that very few early-stage companies go through an IPO as their initial exit. In a lot of cases, a more compelling exit presents itself prior to the opportunity to do an IPO. However, if you are considering an IPO there are a lot of complex, costly and time consuming, regulatory, reporting and legal requirements that must be considered prior to going this route.Related Article:IPO Article WHAT ARE THE MOST COMMON ISSUES ENCOUNTERED WHEN A SOFTWARE COMPANY IS GOING THROUGH BUY SIDE OR SALE SIDE DUE DILIGENCE? The most common issues seen in the due diligence process relate to data security, IP ownership, regulatory compliance and contract obligations with customers.Related Articles:Common Issues Encountered During Buy-Side Due Diligence in Software CompaniesKey Strategies for Navigating Sell-Side Due Diligence in Software Companies WHAT ACCOUNTING ADVISORY SERVICES DO WE OFFER? Schneider Downs’ Accounting Advisory group can assist an organization with any accounting issues, such as:Equity accounting for stock options, stock warrants, stock appreciation rights, profit interests, debt vs equity considerations, or convertible debtRevenue recognition under ASC 606Capitalized software cost accountingLease accounting under ASC 842Valuation of intangible assetsRelated Article:Accounting Advisory Services Article WHAT IS THE DIFFERENCE BETWEEN A COMPILATION, REVIEW, AND AUDIT? Schneider Downs offers three types of assurance services: compilations, reviews, and audits.A compilation involves organizing client data into a financial statement format but does not offer any sort of assurance.A review involves limited assurance that the financial statements are free from material misstatements and involves inquiry and analysis. An audit is the highest level of assurance service we provide. In an audit engagement, we obtain evidence through testing and inquiry to provide reasonable assurance that the financial statements are free from material misstatement.Related Article:Compilation, Review, and Audit Article DO I HAVE STATE AND LOCAL TAX OBLIGATIONS IN MULTIPLE STATES? State tax nexus can established by having remote employees in a state, having physical traditional offices in multiple states, or by exceeding a state’s economic nexus threshold which is generally an amount of sales to customers in a particular state.  Remote employees can create payroll tax obligations as well as income or sales tax filing obligations; while economic nexus is generally used for sales tax or income tax obligations.Related Article:State Tax Considerations in a Remote Environment ARE MY TECHNOLOGY SERVICES SUBJECT TO SALES TAX OR GROSS RECEIPTS TAXES IN STATES OTHER THAN MY HOME STATE? States have varying rules of what is considered tax in the technology industry that are dependent on the types of services being offered.Related Article:Digital Products and Services Tax Unclear We get this question a lot from early-stage companies or we hear from owners that their plan is to exit via IPO. The reality is that very few early-stage companies go through an IPO as their initial exit. In a lot of cases, a more compelling exit presents itself prior to the opportunity to do an IPO. However, if you are considering an IPO there are a lot of complex, costly and time consuming, regulatory, reporting and legal requirements that must be considered prior to going this route.Related Article:IPO ArticleThe most common issues seen in the due diligence process relate to data security, IP ownership, regulatory compliance and contract obligations with customers.Related Articles:Common Issues Encountered During Buy-Side Due Diligence in Software CompaniesKey Strategies for Navigating Sell-Side Due Diligence in Software CompaniesSchneider Downs’ Accounting Advisory group can assist an organization with any accounting issues, such as:Equity accounting for stock options, stock warrants, stock appreciation rights, profit interests, debt vs equity considerations, or convertible debtRevenue recognition under ASC 606Capitalized software cost accountingLease accounting under ASC 842Valuation of intangible assetsRelated Article:Accounting Advisory Services ArticleSchneider Downs offers three types of assurance services: compilations, reviews, and audits.A compilation involves organizing client data into a financial statement format but does not offer any sort of assurance.A review involves limited assurance that the financial statements are free from material misstatements and involves inquiry and analysis. An audit is the highest level of assurance service we provide. In an audit engagement, we obtain evidence through testing and inquiry to provide reasonable assurance that the financial statements are free from material misstatement.Related Article:Compilation, Review, and Audit ArticleState tax nexus can established by having remote employees in a state, having physical traditional offices in multiple states, or by exceeding a state’s economic nexus threshold which is generally an amount of sales to customers in a particular state.  Remote employees can create payroll tax obligations as well as income or sales tax filing obligations; while economic nexus is generally used for sales tax or income tax obligations.Related Article:State Tax Considerations in a Remote EnvironmentStates have varying rules of what is considered tax in the technology industry that are dependent on the types of services being offered.Related Article:Digital Products and Services Tax Unclear SOC WHAT IS A SOC REPORT AND WHY IS IT IMPORTANT FOR GROWING COMPANIES? Your clients and prospects want assurance that their data and transactions are handled with integrity. A System and Organization Controls (SOC) report provides the transparency and trust needed to demonstrate your commitment to strong controls and processes.  In a SOC report, auditors trained in IT controls evaluate your systems and process by inspecting evidence and documentation to verify controls are in place.  The auditors produce a formal report that can be shared with clients, prospects, regulators and other interested parties about their procedures and results of testing.Related Articles:Getting Started with SOC 2 ReportsSOC 2 – What is ACTUALLY Required? HOW CAN A SOC 2 HELP A STARTUP? Startups are often trying to sell services to larger organizations.  These types of organizations often have implemented third party risk management (TPRM) programs that require them to perform monitoring of their own vendors, particularly if the vendor receives what the organization considers sensitive data.  As part of the sales cycle an organization may ask you to provide a SOC report to demonstrate you have appropriate process to protect their data.  A SOC report completed by an independent third-party provides your customers and prospects assurance you are doing the right things.  It also provides your company assurance that there are no gaps in the internal controls tested by the auditor.Related Articles:Getting Started with SOC 2 ReportsSOC 2 – What is ACTUALLY Required?SOC 2 Type 1 Before Type 2What Should You Consider When Determining a SOC Report Testing Period?Five Questions to Assist with Identifying SOC Report Scope HOW DO I REVIEW A SOC REPORT PROVIDED BY A VENDOR? If you use a cloud hosting provider like AWS, Azure or GCP or other vendors to support key operations you will need to complete due diligence activities over the vendor to make sure they are maintain an appropriate internal control environment to protect your data and ensure continuity of services.  Typically a SOC report is used to facilitate this process.  SOC reports have a certain format that can ease the review process but requires some background.  If your company has your own SOC report, your auditors will ask for evidence of your review.Related Article:How to Review a Vendor’s SOC Report? Your clients and prospects want assurance that their data and transactions are handled with integrity. A System and Organization Controls (SOC) report provides the transparency and trust needed to demonstrate your commitment to strong controls and processes.  In a SOC report, auditors trained in IT controls evaluate your systems and process by inspecting evidence and documentation to verify controls are in place.  The auditors produce a formal report that can be shared with clients, prospects, regulators and other interested parties about their procedures and results of testing.Related Articles:Getting Started with SOC 2 ReportsSOC 2 – What is ACTUALLY Required?Startups are often trying to sell services to larger organizations.  These types of organizations often have implemented third party risk management (TPRM) programs that require them to perform monitoring of their own vendors, particularly if the vendor receives what the organization considers sensitive data.  As part of the sales cycle an organization may ask you to provide a SOC report to demonstrate you have appropriate process to protect their data.  A SOC report completed by an independent third-party provides your customers and prospects assurance you are doing the right things.  It also provides your company assurance that there are no gaps in the internal controls tested by the auditor.Related Articles:Getting Started with SOC 2 ReportsSOC 2 – What is ACTUALLY Required?SOC 2 Type 1 Before Type 2What Should You Consider When Determining a SOC Report Testing Period?Five Questions to Assist with Identifying SOC Report ScopeIf you use a cloud hosting provider like AWS, Azure or GCP or other vendors to support key operations you will need to complete due diligence activities over the vendor to make sure they are maintain an appropriate internal control environment to protect your data and ensure continuity of services.  Typically a SOC report is used to facilitate this process.  SOC reports have a certain format that can ease the review process but requires some background.  If your company has your own SOC report, your auditors will ask for evidence of your review.Related Article:How to Review a Vendor's SOC Report?Don't See Your Question?Ask Our Experts. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page. ### Exit and Succession Planning Scenarios Exit and Succession Planning Scenarios Exit and succession planning is one of the most important strategies you will need to implement throughout the life of your business, and whether you are ready to start today or in 10 years, it’s never too early to begin the discussions.The Schneider Downs Exit and Succession Planning team understand that every engagement is unique with each client having specific goals, objectives and needs based on their individual circumstances. Below are sample client profiles illustrating the different scenarios that can benefit from exit and succession planning services.  Meet David A Successful Business Founder and Owner Ready to Retire Are there equity arrangements available to bring associates into the ownership fold?" Meet Darren A Serial Entrepreneur Looking for His Next Adventure How can I learn more about the due diligence process to ensure my company’s value is represented accurately?" Meet ABC Technologies A Successful Start-Up Technology Company Confronting Business Challenges and Needs  How can we grow the business without losing control or sight of our mission?" Meet The Hawthornes A Successful Family Business CEO Ready to Transition to the Next Generation Are my children capable to run the business? Do they even want to?" Meet Lisa A Female Business Owner of a Construction Company Who can lead the company when I leave? Is there family or a current leader that can carry it forward, or is a direct sale better?" Meet NP Consulting A Professional Services Firm Interested in Becoming an ESOP Does an ESOP make sense compared to individuals separately owning shares?" Meet Sasha A Successful Female Business Owner Growing Her Business How can I find and attract the right talent to help my company grow and increase in value?" Meet The Lins A Family-Owned Business Coming to an End What if we can’t find a buyer?"Whether you are unsure of your next steps, are looking at a buyer, private equity or public offering or thinking of transitioning to family, key management, gifting to individuals or trusts, or considering an ESOP, Schneider Downs will listen, understand, create, manage and fully execute your exit and succession plan.If you would like to speak to a member of the Schneider Downs Exit and Succession Planning team, please contact us directly at contactsd@schneiderdowns.com. Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners.To learn more, visit our dedicated Exit and Succession Planning page.  ### A Successful Female Business Owner Growing Her Business MEET SASHA How can I find and attract the right talent to help my company grow and increase in value?" Recommended Services Business Valuation Cash Flow Planning / Financial Modeling Evaluation of Key Business Drivers and Process Review Long Term Charitable Planning Retirement Planning Tax Credits and Incentives Consulting How can I find and attract the right talent to help my company grow and increase in value?" A Successful Female Business Owner Growing Her Business Sasha is a millennial minority business owner with a future full of plans. Her most recent venture has grown into a successful business and, as soon as she’s not too busy running it, she’s looking to start another one. Sasha is very purpose-driven—her ultimate goal is to have a positive impact on her community. However, she’s no idealist. Before she makes her next move, she wants to make sure she has a plan for growing through the multiple life stages, building transferable value in her business and staying ahead of her competitors. Key Business and Operational Questions How can I have my business processes reviewed to manage risk effectively?How can I maximize minority owner designations to make the business more competitive and financially sound?What makes my business valuable in the eyes of investors and potential buyers?What opportunities exist within the business that I am not aware of? Key Financial Considerations and Questions Am I taking full advantage of federal and state tax credits and incentives?Can I offer a retirement or non-qualified compensation plan to help attract talent?How much is my company worth?Is my current financial model sustainable?Will growing the business help or hurt my personal retirement goals? Recommended Services Business Valuation Cash Flow Planning / Financial Modeling Evaluation of Key Business Drivers and Process Review Long Term Charitable Planning Retirement Planning Tax Credits and Incentives Consulting Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question NameThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Successful Start-Up Technology Company Confronting Business Challenges MEET ABC TECHNOLOGIES How can we grow the business without losing control or sight of our mission?" Recommended Services Business Valuation Employee Compensation and Equity Awards Managed Accounting Services / Fractional CFO Services Pre-diligence Review / Business Process Review Tax and Business Structure Analysis How can we grow the business without losing control or sight of our mission?" A Successful Start-Up Technology Company Confronting Business Challenges and Needs ABC Technologies is the brainchild of a group of enterprising software engineers who put their heads together to create what has become a rapidly growing startup. The company has made it through two rounds of private equity investment already, and its success is largely a result of the innovative ideas, enthusiastic energy and long hours invested by the founders.However, while these engineers are pioneers in the technology space, the business space (accounting, compliance, management, taxes) is unknown territory for them. As this is the first business any of them have owned, they’re looking for guidance on how to run it.Additionally, as ABC Technologies continues its rapid pace of growth, it’s becoming necessary to consider next steps. The owners know they want to stay involved, but do they want to aim for expansion, acquisition or more funding? Key Business and Operational Questions How can we grow the business without losing control or sight of our mission?How do we maintain or grow our position in the market?What leadership positions/executive functions does our business need to succeed? What pace do we want to grow at? Are we growing too fast right now or not fast enough? Will a business advisor understand the value of our company? Key Financial Considerations and Questions Do we have the best legal structure for a potential sale or a partial sale to private equity?Do we need additional funding? If so, how do we start another round of funding?How can we get liquidity into our current venture without significant dilution of our current ownership?What is the best retirement plan or non-qualified deferred comp plan that we can offer to potential employees to attract and retain talent? Recommended Services Business Valuation Employee Compensation and Equity Awards Managed Accounting Services / Fractional CFO Services Pre-diligence Review / Business Process Review Tax and Business Structure Analysis Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question NameThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### A Female Business Owner of a Construction Company Looking for Exit Options MEET LISA Who can lead the company when I leave? Is there family or a current leader that can carry it forward, or is a direct sale better?" Recommended Services Business Valuation Evaluation of Key Business Drivers and Improvement Plan Management Team Evaluation / Leadership Transition Outsource CFO Services Personal Cash Flow Analysis Retirement Planning Who can lead the company when I leave? Is there family or a current leader that can carry it forward, or is a direct sale better?" A Female Business Owner of a Construction Company Looking for Exit Options Lisa’s construction company is part of the family, having been with them for two generations. And the company is in a good spot—it’s currently thriving and, as a certified woman-owned business, it has a preferential position when it comes to bidding on work.Additionally, Lisa herself is recognized as a regional leader and is well-respected among her peers in the construction community. With over 10 years before retirement, she is showing no signs of slowing down.But since this company is so important to her, she’s already starting to think about next steps for both her business and her family. She realizes the importance of continuing to add value to her company as it evolves. Key Business and Operational Questions Who can lead the company when I leave? Is there family or a current leader that can carry it forward, or is a direct sale better?What kind of seller do I want, would I sell to a competitor or national buyer?Can the next owner retain the certified women owned business designation?How do I value my business contacts and referral sources? How can I start diversifying my management and executive roster now to setup for long-term success? Key Financial Considerations and Questions Do I have enough to retire and how will selling my business increase my portfolio/worth?How can I increase the value of the company over the next 3, 5 and 10 years?How do I know what my company is worth today and ten years from now?How do I position my company to be attractive to buyers, and how will I know if the offer is fair?What would it look like if I sold the majority and kept some equity? Is this an option? Recommended Services Business Valuation Evaluation of Key Business Drivers and Improvement Plan Management Team Evaluation / Leadership Transition Outsource CFO Services Personal Cash Flow Analysis Retirement Planning Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question PhoneThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Family-Owned Business Coming to an End MEET THE LINS What if we can’t find a buyer?" Recommended Services Investment Banking / Business Brokerage Deal Structure Multi-generational Estate Planning Wealth Management Tax Consulting Business Valuation What if we can’t find a buyer?" A Family-Owned Business Coming to an End The Lins have owned their family services business for generations. This close-knit family takes pride in their family name, as well as in the legacy of their company. However, the next generation of Lins isn’t going to take over the company, and retirement age is quickly approaching the current generation. The Lins are now faced with the reality of preparing for non-family transition options. As much as their business feels like part of the family, they are considering selling to a private buyer to ensure the continued future of their family and their legacy. Key Business and Operational Questions What is the timeline and considerations for the current generation to exit?Will our family name be part of the sale if we sell to private buyers?Will customers still want to buy from us if we sell or transition to other family members? What do we need to do to effectively plan for our estate and ensure our children are taken care of? Key Financial Considerations and Questions How do we know if we have a fair offer?If we can’t find a buyer, do we explore the possibility of simply closing? If so, how do we maximize the value?What are my options for receiving sale proceeds?What do I do with the proceeds after the sale?What tax needs will I have if the company sells? Recommended Services Investment Banking / Business Brokerage Deal Structure Multi-generational Estate Planning Wealth Management Tax Consulting Business Valuation Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question CommentsThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### A Successful Family Business CEO Ready to Transition to the Next Generation THE HAWTHORNES Are my children capable to run the business? Do they even want to?" Recommended Services Business Valuation Compensation Studies Family / Leadership Transition Personal Wealth Gap Analysis Succession Advisory Transactional Tax Planning Are my children capable to run the business? Do they even want to?" A Successful Family Business CEO Ready to Transition to the Next Generation John Hawthornes is the CEO of a successful family business, at which his children serve on the board and in key executive roles. Now that his children are grown and he is growing closer to retirement, John is considering who should take charge after he retires. Though they haven’t brought it up with him yet, his children are thinking along the same lines, and each of them envisions a different future for the company. John is proud of his children, and he is leaning towards passing the torch to them. However, he also wants what’s best for the company, and would therefore like to explore all his options, including selling outright or naming a non-family member as CEO, before he makes his final decision. Key Business and Operational Questions Are my children capable to run the business? Do they even want to?What if I want to name a non-family member as my replacement? Where and when do I start the process?How do I value my business contacts and referral sources? Who will take over? What will the other roles be for the children not named CEO? Key Financial Considerations and Questions How do I maximize the company value and get my wealth out of the transition?How is compensation evaluated for the successor?How will the transition decision/announcement impact the company value?What are the tax/legal implications/requirements?Will my kids be comfortable with the company valuation and my retirement package/benefits? Recommended Services Business Valuation Compensation Studies Family / Leadership Transition Personal Wealth Gap Analysis Succession Advisory Transactional Tax Planning Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question PhoneThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Serial Entrepreneur Looking for His Next Adventure MEET DARREN How can I learn more about the due diligence process to ensure my company’s value is represented accurately?" Recommended Services Business Valuation Deal Structure Investment Banking / Business Brokerage Seller Due Diligence Value Growth / Acceleration Wealth Management How can I learn more about the due diligence process to ensure my company’s value is represented accurately?" A Serial Entrepreneur Looking for His Next Adventure Darren is a private equity partner in his mid-to-late 30’s. As a serial entrepreneur, his early career has been a nonstop succession of building and exiting successful companies, primarily in the technology space. While Darren has no plans to halt this momentum, he wants to be more strategic in the future. He’s focused on growing his existing business in the near-term, and he wants this next exit to leave nothing on the table. He’s exited businesses countless times before, but he’s unsure if he truly maximized his value. Key Business and Operational Questions What do I need to do to prepare for this exit?What is my next venture, how can I use my current one to get me there?What is the process to attract the best potential buyers?What specialized tax structures are available to me to help with equity if I decide to stay partially invested in the company? Key Financial Considerations and Questions How much is my company worth?Is my current financial model sustainable?How will I manage my personal wealth?What does my sell model look like?How does a sale impact my portfolio and worth? Recommended Services Business Valuation Deal Structure Investment Banking / Business Brokerage Seller Due Diligence Value Growth / Acceleration Wealth Management Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question NameThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### A Successful Business Founder and Owner Ready to Retire MEET DAVID Are there equity arrangements available to bring associates into the ownership fold?" Recommended Services Business Valuation Employee Equity Award Evaluation of Exit Options Process Improvement / Business Value Driver Optimization Tax Minimization and Wealth Management Are there equity arrangements available to bring associates into the ownership fold?" A Successful Business Founder and Owner Ready to Retire When David was in his early 30s, he started his own company. Now that he’s been at the helm of a thriving organization for several years, David is very proud of what he has built. However, as he nears retirement age, he’s beginning to wonder how his company will continue to thrive with someone else in charge. While he values his associates, there’s no one internally that he feels would be quite right for the job, and his children are busy pursuing their own dreams. Therefore, David is looking for the right buyer—one that will treat the clients he’s spent years building relationships with as well as he does. Key Business and Operational Questions Are there equity arrangements available to bring associates into the ownership fold? Do I want to have a role after selling? If so, what does that look like?How can I ensure my employees are taken care of when I leave?How do I bring on partners without losing control as I transition out?What is my legacy? Key Financial Considerations and Questions Do I have a fair offer?What are the personal and business tax implications of selling?What do I need to do to prepare for the sale and how long does the process take?What is my company worth and how do I maximize the value of the market?When is the best time to sell? Recommended Services Business Valuation Employee Equity Award Evaluation of Exit Options Process Improvement / Business Value Driver Optimization Tax Minimization and Wealth Management Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question EmailThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Microsoft Office 365 Security Assessment It is critical for organizations to have network intrusion detection (IDS) and prevention (IPS) devices functioning properly in order to alert and respond to potential network security events. Many organizations spends hundreds of thousands of dollars on network security recording and alerting devices, but do not have the capabilities or resources to properly configure and analyze the alerts from these devices; thus, this data becomes more of an organizational liability than an asset.In helping our clients review their IDS/IPS systems, we assist with the testing, tuning, and monitoring processes. We work with a variety of products and recommend solutions that best meet our clients’ needs. Interview Management to scope the analysisReview and scan MS Exchange policies and configurations for vulnerabilitiesReview and validate findings and refine configuration to re-scan as necessary; write reportReport, review, and knowledge transfer View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Intrusion Prevention / Detection Review Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. It is critical for organizations to have network intrusion detection (IDS) and prevention (IPS) devices functioning properly in order to alert and respond to potential network security events. Many organizations spends hundreds of thousands of dollars on network security recording and alerting devices, but do not have the capabilities or resources to properly configure and analyze the alerts from these devices; thus, this data becomes more of an organizational liability than an asset.In helping our clients review their IDS/IPS systems, we assist with the testing, tuning, and monitoring processes. We work with a variety of products and recommend solutions that best meet our clients’ needs.Our ProcessInterview Management and scope the IDS/IPS services desiredReview existing network IDS/IPS systems and configurationWrite report of recommendations and/or findings to meet Management’s requirementsReport, review, and knowledge transfer of findings About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Information Security Program Maturity Assessments Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. The Schneider Downs maturity assessment evaluates your security program against industry best practices. Our maturity assessments take a holistic approach to gauging an enterprises security program, utilizing industry best practices and frameworks. A maturity assessment will provide management with the information necessary to understand the risks and maturity of its information security program.Our ProcessInterview management and security management and gather security data, policies, and proceduresConduct network reviews and scans as well as review logsReview findings with security and management to reach consensusIssue information security maturity report About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Indicator of Compromise Assessment Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Our indicator of compromise assessment utilizes our extensive experience within cybersecurity to identify potential malicious compromise signatures that may already exist within your network and systems. This allows us to give you key insights into your environment to assess whether your organization may have already been the victim of a cyberattack.Our team employs a comprehensive approach to cybersecurity and proactive incident response services that are part of our overall strategy to secure our clients’ networks and key systems. Below are some of the checks that are provided with an indicator of compromise (IOC) assessment:Antivirus log analysisNetwork device log analysisWeb filter log analysisWindows event log analysis from key servers or endpointsForensic artifacts review of critical Windows systemsCloud log analysis (e.g., Azure, AWS, or O365)Intrusion Detection System (IDS)/Intrusion Prevention System (IPS) log analysisSecurity Information and Event Management (SIEM) log analysisEmail security appliance or software log analysisNetwork device firmware integrity checksAccess point (AP) log analysisSensitive application/web security log analysisWhile the primary goal of the assessment is to determine if there is already a compromise of critical systems, Schneider Downs will also provide a security architecture review and recommend improvements to improve the multiple layers of security protecting your organization. This includes reviewing the following items, leveraging our extensive client experiences:Web filtersAntivirus productsSIEM productsIDS/IPS (integrated firewalls or standalone devices)Data Loss Prevention (DLP) SoftwareEmail Security ProductsCybersecurity User EducationNetwork ArchitectureDMZ ArchitecturePatch ManagementWindows Event Logging AnalysisOur ProcessInterview to scope the analysisConduct public domain searches, custom IP and domain scans, DNS scans, metadata scans, and web bug attacksReview and validate findings and refine configuration to re-scan as necessary; write reportReport, review, and knowledge transfer About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Incident Response Plan Development, Testing, & Training Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Data confidentiality or system availability incidents are inevitable. Be it criminal intrusion after personally identifiable information, a state sponsored intrusions after your client database or other intellectual property, or the extortion of your data with the use of ransomware or DDoS attacks.Our security professionals have years of experience planning, testing and responding to real world Cyber incidents. An up-to-date, manageable incident response plan is vital to a timely and effective response to a potential major data incident. These plans and their proper execution can preserve an organization’s reputation and prevent the loss of millions of dollars.In helping our clients design, update, and test their incident response plan, we believe the best plans go beyond your normal IT personnel and include multiple disciplines of corporate management including Legal, Marketing, Compliance, Public Relations, and Operations.Our ProcessReview plans, policies, procedures and interview key personnelBuild a playbook to accommodate all scenarios and management verticalsReview playbook with key personnel and refineExercise, familiarize, and test playbook with simulated securityAbout Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### The Value of Robotic Process Automation As the business landscape becomes more competitive, companies continue to look for ways to improve performance and efficiency. Along with people and processes, using and adopting technology is a critical component to improving performance. Download “The Value of Robotic Process Automation” to learn about:How robotic process automation software works and types of botsThe business benefits of robotic process automation and machine processingRobotic process automation use cases and capabilitiesDetermining the cost and ROI associated with robotic process automationLearn more at RPA or contact us at contactsd@schneiderdowns.com. DOWNLOAD THE CONTENT "*" indicates required fields Name* Company Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?*How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### Resource Download Thank you.  Please Enjoy Your Content. 10 Vulnerabilities Hackers Love to Exploit  Media coverage of data breaches often focus on the impact, but that’s only half the story. Get inside the mind of a hacker and learn about the common underlying circumstances leading to breaches and best practices you can take to protect yourself and your organization from being a target. Learn more about our cybersecurity team and services at Cybersecurity. ### Cyber 10 Vulnerabilities How Secure is Your Remote Workforce? Evaluating and strengthening your cybersecurity posture has never been more important as it is now. The COVID-19 pandemic has resulted in an increased shift to remote workforces and in turn, increased vulnerabilities and threats placing your organization at risk. Get inside the mind of a hacker in our popular whitepaper “10 Vulnerabilities Hackers Love to Exploit” to learn about underlying circumstances leading to breaches and best practices to prevent becoming a statistic. About Schneider DownsThe Schneider Downs cybersecurity team provides robust services dedicated to keeping organizations secure including penetration testing, phishing and ransomware prevention services, incident response planning, digital forensics, and purple team assessments. In addition our Incident Response Team is available around the clock at 1-800-993-8937 if your organization suspects or is experiencing a network incident. For more information contact the team at cybersecurity@schneiderdowns.com or visit Cybersecurity.Helpful LinksSchneider Downs Penetration Testing OverviewSchneider Downs Digital Forensics & Incident Response OverviewSchneider Downs Cybersecurity Resource LibrarySchneider Downs Cybersecurity Blog DOWNLOAD THE CONTENT Fill out the form for your complimentary copy of 10 Vulnerabilities Hackers Love to Exploit. "*" indicates required fields First Name* Last Name* Company/Organization* Email* NameThis field is for validation purposes and should be left unchanged. Submit ### Forensic Analysis Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. From a forensics standpoint, our trained experts will use the most advanced technology and analysis methods. Ensure the incident or malware is contained and unable to breach additional systems Execute detailed analysis on production systems for malware or threat actor persistence Perform detailed forensic analysis of suspected compromised hosts Review all event logs and provide a detailed report on current auditing procedures Assess all network traffic and perform detailed threat analysis for potential malware command and control communications Review all Intrusion Detection Systems (IDS) or Intrusion Prevention System (IPS) alerts for malicious activity Perform static and dynamic malware analysis on discovered payloads executed on victim machines Provide a detailed list of recommended remediation procedures and long-term cybersecurity enhancements Our malicious file analysis often leads to the identification of indicators of compromise (IOCs), such as IP addresses or domains communicating with the malware, Microsoft registry key modifications, identification of child or sub-processes that have been launched, code injections, and file names or other attributes of not just the malicious payloads, but the related affected files as well. With this information, we can help you track down other instances of the attack on other systems or put preventative measures in place to block them from happening going forward. Learn more about our Incident Response Process INCIDENT RESPONSE RECOVERY AND REMEDIATION About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Firewall Configuration Review Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Schneider Downs firewall configuration review evaluates the rules from your firewalls to determine whether security risks exist in the configuration, whether the firewall software is up-to-date and if high risk services containing known vulnerabilities are allowed through the firewall. This review can be utilized for compliance verification and validation of perimeter security posture. We use a rating system and mitigation advice to prioritize and address your issues. We produce a detailed report showing how the device has been configured. We also report on any device vulnerabilities that are in the public domain that a hacker could target.Our ProcessInterview FW administrators; review FW policies and desired protectionScan and test FW settings, rules, procedures, and network net flowReview firewall findings and refine configuration as necessaryValidate and report firewall configuration and net flow About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### External Footprint Analysis Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Schneider Downs consultants will use commonly available open source tools, scanners and databases which can be acquired by any attacker to obtain a blueprint of the client and its Internet profile.Our team's approach external foot printing without any significant prior knowledge about the client’s network. We gather domain names, IP network ranges, and other information about hosts, such as operating systems and applications. This service may discover new hosts or applications on the network that the client management is not aware of, such as vendor, employee, or partner-added systems.Our ProcessInterview to scope the analysisConduct public domain searches, custom IP and domain scans, DNS scans, metadata scans, and web bug attacksReview and validate findings and refine configuration to re-scan as necessary; write reportReport, review, and knowledge transfer About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources Resource Library Our Thoughts On View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Enterprise Information Security Program Review & Consultation Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. In today's IT environment risk and threats to your company can come from anywhere, internal (disgruntled employees, vendors, contractors), or external (organized crime, competitors, protesters, nation states). It is crucial that you identify your digital assets (PCI, PII, PHI, Banking, Marketing, Customer, Payroll, AP, AR, W2, Test, Back Ups, Paper, etc.), the threats to those assets, and the controls you have protecting the confidentiality, availability and integrity of those assets. Schneider Downs offers this type of security review and consultation to help protect your data.With this review, Schneider Downs seasoned professionals can also assist in defining strategies and developing policies and procedures customized for your business environment. We can build or assist with creating programs for security awareness and information security compliance. In addition, we can share our experiences as to which products or vendor security services may best meet your needs.Our ProcessInterview network administrators and third-party vendors and conduct network search for sensitive or critical data and systemsConduct network security reviews and scans, review security policies, procedures, and logsReview findings with security and management to reach consensusIssue report with as needed threats, risks, gaps, recommendations, strategies, policies, or procedures About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources Resource Library Our Thoughts On View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Digital Forensics & Incident Response Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. In today's state of cybersecurity, breaches are often not a matter of if, but when. Approximately one in four companies will experience a data breach within 24 months. This could be the result of a number of different threats, such as malware campaigns, foreign state-sponsored threat actors, cybercriminals looking to turn a quick profit, or even insider threat.IBM's Cost of Data Breach Study indicates that having access to an outsourced incident response team typically accelerates the timeframe that events can be contained, which can be a significant factor in reducing the overall cost of a breach. Don't wait until it's too late. Schneider Downs digital forensics and incident response experts can be engaged ahead of a breach through a retainer contract or during emergency situations as needed. Our team of digital forensics and incident response experts have experience helping clients respond to a multitude of threat vectors and attack types. Schneider Downs will work with you to determine the exact factors that led to the breach, assist you in recovery, and develop lessons learned to better mitigate these types of events down the road. This process allows for restoration of faith that your systems will be hardened against future attacks and preserve business relationships and public trust.Experiencing or suspect a network incident?Contact the Schneider Downs Incident Response Team at 1-800-993-8937Download our Digital Forensics & Incident Response service overview for more information.Incident Response ProcessWe have a defined process for assisting clients through response to a computer security incident.1. Collect Initial FactsOur team will gather initial facts and circumstances surrounding the computer incident(s) reported. We will collect information about the incident, such as: date and time; systems affected, what these systems support, and how it was reported; and what suspicious behaviors were detected. If malware is detected, we will capture information regarding the type of malware, a listing of systems where it was identified, and other related information about how the malware operates.2. Scoping the IncidentBased on the initial facts, we will attempt to identify the scope of the incident. We will examine data and gather and review preliminary evidence to help guide further course of action.3. Data CollectionOur analysis will incorporate the use of data from various information sources, collected to preserve volatile evidence from key systems that can be analyzed later in the process.Our method will collect data from two general categories:Data that describes the current running state of the affected systems, such as network connections and running processes.A snapshot of important data that can help us identify what may have happened in the past (e.g. file listings, system logs, operating system data, etc.). This may include capturing read-only, full-disk images of affected systems and log files.4. Data AnalysisBased on information captured in the previous phase, we will execute a plan to review available data for indicators of compromise and any other related activity that will allow us to render an opinion on the activities that have occurred on those systems. We will rely on the completeness and accuracy of the data provided by the client to perform this step.5. ReportBased on the analysis performed, we will build a report for the client that identifies the following:Facts ObservedData CollectedData Analysis ResultsListing of Limitations (if any)Summary of FindingsLessons Learned Learn more about our Incident Response Process RECOVERY AND REMEDIATION FORENSIC ANALYSIS About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Cybersecurity Maturity Model Certification Services (CMMC) Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider Downs is an authorized C3PAO qualified to assess and certify CMMC certification for organizations conducting business with the Department of Defense's (DoD) program.What is CMMC?To enhance the protection of Federal Contract Information (FCI) and Controlled Unclassified Information (CUI) within the supply chain, the U.S. Department of Defense (DoD) has worked with DoD stakeholders, university-affiliated research centers, federally funded centers and industry at large to develop version 2.0 of the CMMC, a process that measures the ability of organizations within the defense industrial base (DIB) sector to protect FCI and CUI.CMMC 2.0 will add a certification element to verify implementation of cybersecurity requirements and DoD contractors storing CUI will need to be certified by a CMMC Third Party Assessment Organization (C3PAO).CMMC is designed to provide the DoD assurance that a DIB contractor can adequately protect CUI at a level commensurate with the risk and account for flow down to subcontractors in a multitier supply chain. CMMC requirements will begin being phased into RFIs and RFPs in early 2025 and will eventually be mandatory for all.Ready to Get Started? Contact our team and let us know how we can help.Download our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization.CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract.Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. The CMMC Model FrameworkThe CMMC model framework categorizes cybersecurity best practices at the highest level by domains.Each domain is further segmented by a set of capabilities and achievements to ensure that cybersecurity objectives are met within each domain. Companies will further validate compliance with the required capabilities by demonstrating adherence to practices and processes that have been mapped across three maturity levels (explained below). Within this context, practices will measure the technical activities required to achieve compliance with a given capability requirement, while processes will measure the maturity of a organizations cybersecurity processes. CMMC Model 2.0 LevelsThe CMMC model has three defined levels, each with a set of supporting practices and processes, from Level 1 that addresses basic cyber hygiene to advanced and expert Levels 2 and 3. To meet a specific CMMC level, an organization must meet the practices and processes within that level and below. Levels are described as follows:CMMC Level 1 -The “foundational” level of CMMC compliance requires all contractors that have FCI in their contracts to implement a set of 17 basic cybersecurity practices that are required by the Federal Acquisition Regulation (FAR) 52.204-21. Organizations that fall under level one may perform an annual self-assessment of the FAR 52.204-21 controls and report there score to the Department of Defense.CMMC Level 2 -The “advanced” level of CMMC that requires contractors that handle CUI to implement the National Institute of Standards and Technology (NIST) 800-171 framework which includes 110 practices from 14 CMMC domains. If a contractor handles sensitive CUI, the Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.204-7012 requires the contractor to be level 2 certified by having a CMMC Third Party Assessment Organization (C3PAO) perform an independent assessment to validate that the contractor has fully implemented the NIST 800-171 framework.CMMC Level 3 -The “expert” level of CMMC maturity that is required for contractors that work with critical DoD infrastructure. Organizations seeking level 3 certification will be required to comply with the NIST 800-172 framework. Level 3 contractors are also required to be accessed by the DoD directly as opposed to an independent C3PAO. Organizations will need to become certified for level 2 practices by a C3PAO prior to being assessed by the DoD for level 3. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC DomainsThe CMMC 2.0 model is cumulative and consists of 6 Level 1 domains and 8 additional domains for Level 2. Level 1domains originated from Federal Acquisition Regulation (FAR) 52.204.-21 and Level 2 originated from NIST SP 800-171. The domains are as follows:Level 1:Access Control (AC)Identification and Authentication (IA)Media Protection (MP)Physical Protection (PE)System and Communication (SC)System and Information Integrity (SI)Level 2 (Also contains all Level 1 Practices):Awareness and Training (AT)Audit and Accountability (AU)Configuration Management (CM)Incident Response (IR)Maintenance (MA)Personnel Security (PS)Risk Assessment (RA)Security Assessment (CA) CMMC Timeline and CostThe final CMMC rule was published and put into effect on December 16, 2024.For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. Given that, we expect future RFIs and RFPs will allow prime contractors subcontractors to work the cost of compliance into their bids. CMMC AssessmentsSchneider Downs is currently one of the first 54 Authorized Certified Third-Party Assessor Organization (C3PAO) by the Defense Contract Management Agency’s (DCMA) Defense Industrial Base Cybersecurity Assessment Center (DIBCAC). Schneider Downs is authorized to provide certification assessments for the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) program. How Can Schneider Downs Help?Schneider Downs is one of the first 55 authorized C3PAOs in the nation. We can help your organization become CMMC certified by conducting an official CMMC assessment for your organization. Schneider Downs has several CMMC Certified Professionals (CCP) and CMMC Certified Assessors (CCA) who are trained in using the CMMC Assessment Process (CAP). Schneider Downs is also able to help with a readiness consulting engagements to identify gaps within your controls and help remediate those gaps prior to your CMMC assessment. Organizations Seeking Certification (OSCs) should note that a single firm cannot perform both consulting and assessment service for a single client per the CyberAB standards.About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.To learn more, visit our dedicated IT Risk Advisory page. Cybersecurity Maturity ModelCertification (CMMC) Schneider Downs is one of the first 55 Authorized C3PAOs and can handle your CMMC Certificaton. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Cyber Speaker Series Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. Cyber Insurance 2022 and Beyond REQUEST A SESSION Many have questions about the recent changes to cyber insurance policies, processes, and potential future changes. Join the Schneider Downs cybersecurity team, as they provide an update on the cyber insurance market by breaking down the numbers and sharing frontline insights from countless strategic discussions with business and technology leaders attempting to navigate the shifting landscape of modern cybersecurity.   Created with Sketch. A high-level understanding of the modern cybersecurity threat landscape Created with Sketch. Relevant background information and insights regarding the recent changes to the cyber insurance market Created with Sketch. Best-practices and strategic takeaways to prepare for potential future changes $1,000,000 Global Ransomware Lockdown: Chronicles of a Rapid Responder REQUEST A SESSION Ransomware is one of the most devastating cyber-attack methods that exists today, and these attacks are seemingly getting more difficult to prevent and recover from. Does your organization have a plan for when the lights go out, data and systems become unavailable, the phones stop working, or the manufacturing floor comes to a crashing halt? Join the Schneider Downs cybersecurity team, as they share a real-world experience of a massive ransomware attack that shut down a global business operation for many weeks. Our team will provide a stunning first-hand account of the realities of a well-coordinated and crafted ransomware attack from an international threat actor that has eluded law enforcement for many years. Created with Sketch. An inside look at ransomware attacks by analyzing the tactics, techniques and methods used by the threat actors Created with Sketch. An overview of the controls that could have prevented or detected the malicious actions Created with Sketch. Accounts of lessons learned by those experiencing a modern cyber incident Accounts of lessons learned by those experiencing a modern cyber incident REQUEST A SESSION Join the Schneider Downs cybersecurity team as they share insights from countless strategic discussions with business and technology leaders attempting to navigate the shifting landscape of modern cybersecurity. Many organizations still lack a comprehensive understanding of cybersecurity risks and with so many technical variables and threats, their cybersecurity strategy could find itself relying on thought processes that are outdated or based on false assumptions. From a penetration tester’s perspective; these strategic mistakes are often the root cause of significant compromises. During this presentation, we will discuss several critical misconceptions and overlooked risks that may be lurking within your organization’s cybersecurity strategy and then review practical approaches to help reach an effective cybersecurity posture. Created with Sketch. A high-level understanding of the modern cybersecurity threat landscape Created with Sketch. A breakdown of common strategic shortcomings that can negatively impact an organization’s overall security posture Created with Sketch. Best-practices and strategic takeaways to avoid falling victim to these strategic mistakes Best-practices and strategic takeaways to avoid falling victim to these strategic mistakes REQUEST A SESSION Press coverage of data breaches often focuses on the impact, but that’s only half the story. What if you could get a behind-the-scenes look at the underlying circumstances that resulted in these breaches? Our team of cybersecurity experts dedicate significant time and resources into maintaining a detailed understanding of advanced threat actor’s current capabilities and methodologies. We leverage this knowledge to help organizations of all sizes and industries to improve their ability to prevent and respond to cyber threat actors. Over the years, we’ve participated in countless penetration tests and incident response efforts. While every engagement has a unique set of circumstances, this presentation reviews the 10 most commonly exploited vulnerabilities in today’s cybersecurity landscape. Created with Sketch. A high-level understanding of the modern cybersecurity threat landscape Created with Sketch. An overview of the most effective tactics, techniques and procedures used by threat actors and pentesters alike to compromise organizations today Created with Sketch. Best-practices and strategic takeaways to help prevent, detect and respond effectively Effective Strategies for Board Communications on Cybersecurity REQUEST A SESSION Executives and board members alike are all keenly concerned about cyber-risks. Boards typically lack specific cyber-expertise but they've all seemingly read the same whitepaper on what questions to ask your CISO and/or Cybersecurity team. So why does it feel like a challenge to address their concerns and what is causing the communication gap? In this session, we will explore how to answer common tough questions such as "Are we secure?" or "Have we been hacked?" and others. Attendees will walk away with proven methods and strategic ideas that will better prepare them for future discussions with board member and c-suite executive conversations. Created with Sketch. A high-level understanding of the modern cybersecurity threat landscape Created with Sketch. A breakdown of common strategic shortcomings that can negatively impact an organization’s overall security posture Created with Sketch. Strategic takeaways and tangible steps to help improve board communication Our team of experienced cybersecurity professionals offer a diverse range of speaking engagements covering topics from general cybersecurity best practices to industry specific needs. Sessions are available on-site and virtually. REQUEST A SESSION About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources Resource Library Our Thoughts On View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Information Technology Audit and Compliance Services A well-planned, properly structured information technology (IT) audit program is essential to evaluate risk management practices, internal control systems, and compliance with regulations and corporate policies. Our IT audit and compliance practice helps ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. We recognize that this is often difficult to perform internally as organizations must plan, manage and monitor rapidly changing technologies to enable it to deliver and support new products, services, and delivery channels to remain competitive in their marketplace. However, this rate of change, and the resulting increased reliance on technology, makes the inclusion of IT audit coverage essential to an effective organization.Schneider Downs’ IT audit and compliance professionals help organizations gain valuable insights into their processes and technologies. Our dedicated IT audit and compliance professionals have experience working with a wide variety of industries and companies of all sizes. We will  partner with you to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies. Download the IT Audit and Compliance Services OverviewIT Audit and Compliance Services Include the Following:Business Continuity and Disaster Recovery PlanningCybersecurity Maturity Model Certification (CMMC)FFIEC IT Compliance AssessmentGDPR ComplianceHIPAA Compliance AssessmentHITRUSTInformation Technology AuditIRS Publication 1075ISO27001 Compliance AssessmentIT General Controls AuditNIST Compliance AssessmentPayment Card Industry Data Security Standard ComplianceRisk Assessment ServicesSarbanes-Oxley Compliance Audits ### Client Satisfaction Survey Thank you for trusting Schneider Downs with your cybersecurity and IT needs. We value your feedback and invite you to take our brief client satisfaction survey. If you have any questions regarding our survey please contact the cybersecurity team at cybersecurity@schneiderdowns.com. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Case Studies Case Studies Explore recent case studies that illustrate Schneider Downs' efforts to help clients identify risk, mitigate exposure to cyber-attacks, and recover systems, ultimately resulting in cost savings and more secure environments. Case Studies Case Study: Company Impacted by Six-Figure Ransomware Attack Case Studies Employees’ Passwords Compromise Cybersecurity Defenses Case Studies Global Manufacturer Operations Halted By Ransomware Attack ### Interested in Becoming an ESOP MEET NP CONSULTING Does an ESOP make sense compared to individuals separately owning shares?" Recommended Services Business Valuation Cash Flow Analysis for Seller and Buyer Employee Education and Planning ESOP Evaluation / Retirement Benefits Analysis Estate Planning Wealth Management Does an ESOP make sense compared to individuals separately owning shares?" A Professional Services Firm Interested in Becoming an ESOP NP Consulting is a tight-knit, team-oriented professional services firm that’s about to go through some changes. Though the company has a wide range of owners and potential owners, the two primary players are getting ready for retirement. Before they go, they want to ensure a bright future for their team and company by transferring ownership of NP Consulting to their employees—who they consider to be family. As part of their overarching succession plan, they are also exploring options to buy out some of the majority owners. Key Business and Operational Questions How can we continue to grow and stay independent?How does an ESOP actually work?Is an ESOP my best option compared to private equity or an employee private buy-out?What is the timeline and impact of a gradual exit strategy?  Key Financial Considerations and Questions Does becoming an ESOP mean I get less money when I sell?How do I determine the price of stock/ownership?How do I get my money out of the transfer transaction?Is ownership investment worth it financially?What happens if the business fails, am I financially impacted? Recommended Services Business Valuation Cash Flow Analysis for Seller and Buyer Employee Education and Planning ESOP Evaluation / Retirement Benefits Analysis Estate Planning Wealth Management Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question NameThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Higher Ed Executive Compensation Higher Ed Executive Compensation We welcome you to download our free whitepaper, Compensation 101: Avoiding Intermediate Sanctions in Higher Education. Please complete the form below and you will be instantly routed to access the document. "*" indicates required fields First Name* Last Name* Email Address* Company Phone numberPhoneThis field is for validation purposes and should be left unchanged. Submit * required Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Thanks For Downloading Our Content! ( Top Ten Data Privacy Trends for 2021 ) Thanks For Downloading Our Content! We appreciate your interest and hope you find your copy of Top Ten Data Privacy Trends for 2021 useful.For more information on Schneider Downs Data Privacy Services, please visit www.schneiderdowns.com/data-privacy-services.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Top Ten Data Privacy Trends for 2021 Top Ten Data Privacy Trends for 2021 Data continues to be one of the most valuable and targeted resources for organizations of all sizes across all industries.With the continued state of remote workforces and increased scrutiny on consumer data rights, our team shares what they believe are the top ten data privacy trends to watch for in 2021. Download our Top Ten Data Privacy Trends for 2021 whitepaper to learn more.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.Download the Content.Please Fill out the form for your complimentary copy of Top Ten Data Privacy Trends for 2021. "*" indicates required fields First Name* Last Name* Email Address* Company Phone numberPhoneThis field is for validation purposes and should be left unchanged. Submit ### Thanks For Downloading Our Content! (Benefits of a Purple Team Assessment) Thanks For Downloading Our Content! We appreciate your interest and hope you find your copy of Benefits of a Purple Team Assessment useful.For more information on our Purple Team Assessments, please visit www.schneiderdowns.com/cybersecurity/services/purple-team-assessment.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Cloud Security Configuration Assessment Cloud Security Configuration Assessment Identify Misconfigurations and Compliance Gaps to Strengthen Cloud Security As businesses increasingly rely on cloud environments, securing these platforms is more critical than ever. Schneider Downs’ Cloud Security Configuration Assessment service offers a comprehensive evaluation of your cloud infrastructure across major platforms, including Microsoft 365, Google Workspace, Azure, Google Cloud Platform (GCP), and Amazon Web Services (AWS). We identify misconfigurations, permission gaps, and compliance issues to help you strengthen your cloud security, minimize vulnerabilities, and ensure regulatory compliance before breaches occur. Our Cloud Security Configuration Assessment provides clear insights into the security health of your cloud environment. We systematically identify weaknesses that could be exploited by cybercriminals, offering actionable recommendations to remediate risks. Whether you aim to enhance existing defenses or verify compliance with industry standards, our assessment aligns technical solutions with your business needs. What to Expect from Cloud Security Configuration Assessments Detailed analysis to identify security gaps and misconfigurations. Platform-specific recommendations to strengthen cloud infrastructure. Alignment with compliance frameworks to reduce risks. Increased confidence in securing critical cloud workloads and data. Core Assessment Components Identity and Access Management Excessive Permissions and Privilege Sprawl Multi-factor Authentication Coverage Role-Based Access Control Implementation Service Account Security Data Protection and Governance Storage Configuration Security Encryption Implementation Gaps Data Classification Practices Retention and Backup Controls Infrastructure Security Network Security Group Configurations Virtual Network Design Weaknesses Public Endpoint Exposure Container and Serverless Security Compliance and Logging Audit Configuration Adequacy Security Monitoring Coverage Compliance Policy Alignment Incident Response Preparedness How Cloud Security Assessments Work Tailored Assessment: We collaborate with your cloud admins to understand your environment and customize the security assessment to meet your needs. Comprehensive Review: We examine cloud configurations, including IAM policies and resource permissions, to identify security gaps and potential vulnerabilities. Risk Mapping: Using specialized tools, we identify attack vectors such as privilege escalation and data exfiltration, highlighting critical risks. Prioritized Report: We provide a detailed, prioritized report with findings, risks, and actionable remediation strategies to improve cloud security. Executive & Technical Briefings: After the assessment, we offer briefings to explain findings, address questions, and guide the implementation of security improvements. Compliance Alignment: We ensure your cloud environments meet compliance standards like NIST, CIS, and CSA, helping you stay regulatory-ready. Ongoing Security Support: Beyond the assessment, we offer best practices for continuous monitoring and configuration management to maintain robust security. Why Schneider Downs? Commitment to Security Success: We’re committed to your organization’s security, viewing it as key to protecting sensitive data and critical infrastructure in a connected world. Expertise in Cloud Security: Our team has specialized expertise in secure cloud configurations across platforms, gained through enterprise implementations and cloud security incident responses. Prioritized Remediation: We leverage insights from investigating cloud-based breaches to prioritize remediation efforts for maximum security impact. Proactive Threat Intelligence: Our consultants stay ahead of evolving threats, ensuring recommendations reflect best practices and Cyber Threat Intelligence (CTI). Ready to get started? Contact the Schneider Downs cybersecurity team at cybersecurity@schneiderdowns.com. Experiencing or suspect a cloud security incident? Contact the Schneider Downs Incident Response Team at 1-800-993-8937. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Benefits of a Purple Team Assessment Benefits of a Purple Team Assessment Our Schneider Downs Purple Team exercise brings together our onsite red and blue teams to work alongside your team to prevent and detect specific offensive techniques from the MITRE ATT&CK Framework and other hacker tools, techniques and procedures.As part of a Purple Team exercise, our goal is to provide the hacker mentality and toolsets our red team experts possess along with the incident responder and defensive thinking of our blue team experts in a way that encourages, engages and sparks knowledge transfer. Download our Benefits of a Purple Team Assessment whitepaper to learn more about purple team assessments, including how they’re devised and measured and the key benefits.  Additional information is provided at www.schneiderdowns.com/cybersecurity/services/purple-team-assessment.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.Download the Content.Please Fill out the form for your complimentary copy of Benefits of a Purple Team Assessment. "*" indicates required fields First Name* Last Name* Title* Company/Organization* Email* Phone NumberEmailThis field is for validation purposes and should be left unchanged. Download ### Revenue Recognition Update 2016 Revenue Recognition Update 2016 We welcome you to download our free brochure on the updates to the revenue recognition standard. Please complete the form below and you will be instantly routed to access the document. "*" indicates required fields First Name* Last Name* Email Address* Company Phone numberEmailThis field is for validation purposes and should be left unchanged. Submit * required Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Revenue Recognition 2014 Revenue Recognition 2014 You may download a copy of "Addressing the New Revenue Recognition Standard."  Please note that there have been recent updates to these standards.  Click here to reference the updated version.  Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Schneider Downs Intern Yearbook 2015 Schneider Downs Intern Yearbook 2015 Are you thinking about a career in accounting? Do you want to know what life is like for a tax specialist at a regional CPA firm? Did you know that we have an internship program for Marketing majors?Schneider Downs is recruiting interns for audit, tax, internal audit and marketing. We recruit top talent to join our team for the winter (January start) or the summer (June start). Learn about our intership program from our interns - click on the photos below.If you're interested in an internship, please contact Mike Collins for Pittsburgh opportunities or Natalie Donovan for Columbus opportunities. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Schneider Downs Intern Yearbook Archive Schneider Downs Intern Yearbook Archive 2013 Intern Yearbook2014 Intern Yearbook2015 Intern Yearbook2016 Intern Yearbook Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Schneider Downs Intern Yearbook 2016 Schneider Downs Intern Yearbook 2016 Are you thinking about a career in accounting? Do you want to know what life is like for a tax specialist at a regional CPA firm? Did you know that we have an internship program for Marketing majors?Schneider Downs is recruiting interns for audit, tax, internal audit and marketing. We recruit top talent to join our team for the winter (January start) or the summer (June start). Learn about our intership program from our interns - click on the photos below.If you're interested in an internship, please contact Mike Collins for opportunities. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Schneider Downs Intern Yearbook 2014 Schneider Downs Intern Yearbook 2014 Are you thinking about a career in accounting? Do you want to know what life is like for a tax specialist at a regional CPA firm? Did you know that we have an internship program for Marketing majors?Schneider Downs is recruiting interns for audit, tax, internal audit and marketing. We recruit top talent to join our team for the winter (January start) or the summer (June start). Learn about our intership program from our interns - click on the photos below.If you're interested in an internship, please contact Mike Collins for Pittsburgh opportunities or Natalie Donovan for Columbus opportunities. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Schneider Downs Intern Yearbook 2013 Schneider Downs Intern Yearbook 2013 Are you thinking about a career in accounting? Do you want to know what life is like for a tax specialist at a regional CPA firm? Did you know that we have an internship program for Marketing majors?Schneider Downs is recruiting interns for audit, tax, internal audit and marketing. We recruit top talent to join our team for the winter (January start) or the summer (June start). Learn about our intership program from our interns - click on the photos below.If you're interested in an internship, please contact Mike Collins for Pittsburgh opportunities or Natalie Donovan for Columbus opportunities. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Health Care Reform and Your Business Health Care Reform and Your Business President Obama signed the Patient Protection and Affordable Care Act (“the Act”) into law on March 23, 2010. Separately, on March 25, 2010, the Senate and House passed the Health Care and Education Reconciliation Act of 2010 (“the Reconciliation Act”) amending many provisions of the Act. The Reconciliation Act was signed into law by President Obama on March 30, 2010.Collectively, this represents a seismic change in the manner in which Americans perceive–and experience– health care. Over the course of the coming months, Schneider Downs will continue to monitor news and events surrounding this evolving issue, and we will evaluate the impact of these policy decisions on businesses and organizations.If you would like to receive automatic updates as we continue to post our insights, please subscribe to our free e-newsletter.Links to Health Care Reform Information:Health Care - U.S. Government Web site dedicated to Health Care ReformOffice of the Clerk - Find out how your Representative voted for Health Care ReformUnited States Senate - Find out how your Senator voted for Health Care ReformLegislative information from the Library of Congress - Read the Patient Protection and Affordable Care ActWebinar:Schneider Downs hosted a webinar for Automotive dealers. Watch the Health Care Reform webinar. Note that the webinar also contains an investment market update. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### SOC Case Study - Health Management Solutions Provider SOC 2 + HITRUST SOC Case Study - Health Management Solutions Provider SOC 2 + HITRUST Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completed a Service Organization Control (SOC 2) report +HITRUST for health management solutions provider.What was the need or problem that you had before you started using Schneider Downs’ services?Our organization was seeking guidance in obtaining a SOC2+HITRUST report to provide to a large healthcare provider. It became a mandated requirement to continue doing business with this entity.Why did you choose to partner with Schneider Downs?Schneider Downs came highly recommended. They also have a very strong presence in the city of Pittsburgh where we are located, and their reputation for quality precedes them.What was it like to work with Schneider Downs?From the start, Schneider Downs was an extremely thorough, knowledgeable, and valuable partner. Obtaining a SOC 2+HITRUST report can be a daunting endeavor. It’s important that you feel comfortable and secure in honestly discussing your organizations needs and goals. Schneider Downs performed an initial risk assessment and provided guidance in planning a realistic timeline for obtaining our report. In this process you don’t want to feel you are just given a rulebook and meeting deadlines. You want a partner that understands your specific needs as your path to obtaining your report will be unique to your organization.What is an example of how Schneider Downs went "the extra mile" to serve you?There were many times when we had questions and needed clarification on audit evidence and controls. This pertained not only to ourselves individually but also in regards to business partners and associates. As we form new business partnerships and obtain new clients, we find ourselves reaching back out to Schneider Downs for their up-to-date knowledge and steadfast expertise. They will remain a valuable asset long after you obtain your SOC 2+ HITRUST report.How has Schneider Downs and the SOC 2+ HITRUST Report benefited your company?Our report was required to continue to do business with a very large healthcare provider. Therefore, obtaining the report fulfilled an immediate need. Not long after obtaining our report, we had the opportunity to partner with another large healthcare provider. One of the very first things they asked was, "Do you have a SOC2+HITRUST report"? Being able to provide our prospects with a SOC2+HITRUST report and demonstrating that our security controls are operating effectively has provided us opportunities that we may not have had otherwise.In addition, going through the audit process forced us to take a hard look at our current control environment. We now have a much stronger control environment and can convey to current and future customers that their data will be appropriately protected.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Quality of Earnings Analysis - San Jose (CA) Quality of Earnings Reports - San Jose (CA) When it comes to buying or selling a San Jose or California business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions, and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our San Jose QoE Team Schneider Downs provides Quality of Earnings reports to companies in San Jose and across California. If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you? Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth PhoneThis field is for validation purposes and should be left unchanged. Submit About San Jose (CA) The San Jose business community is a vibrant and dynamic ecosystem that thrives in the heart of Silicon Valley, often regarded as the global epicenter of technology and innovation. Located in the northern part of California's Santa Clara County, San Jose is the largest city in the region and serves as a bustling hub for entrepreneurs, tech companies, and startups. The city's business landscape is heavily influenced by the tech giants that call Silicon Valley home, including companies like Apple, Google, Facebook, and Cisco Systems. These industry leaders have not only shaped the global technology landscape but have also contributed significantly to the local economy, providing job opportunities and driving innovation in various fields such as software development, artificial intelligence, and hardware manufacturing. San Jose's business community extends well beyond the big tech companies. The city is a hotbed of entrepreneurial activity, with numerous startups and incubators focusing on cutting-edge technologies and disruptive ideas. The availability of venture capital funding and a culture that values innovation have made it an ideal place for aspiring entrepreneurs to turn their visions into reality. ### Dynamics GP Consultant - Pittsburgh, PA Microsoft Partner Dynamics GP Consultant - Pittsburgh, PA Let’s be clear: Dynamics GP is not going away, but the reasons to keep using GP are becoming less and less compelling.As experienced Microsoft Dynamics GP consultants, Schneider Downs understands the value organizations have placed on their investment in Microsoft Dynamics GP. We recognize that many businesses are struggling to find the right way to incorporate Microsoft Dynamics GP into their cloud strategy and are questioning whether Dynamics GP has reached end of life. The Schneider Downs Technology Advisors can help address these concerns, and more importantly, guide you through the complex migration to Dynamics 365 Business Central.3 Key Reasons to Migrate to Dynamics 365 Business Central 1. Increased ROI and cost-effectiveness as Dynamic GP Costs continue to increase.Businesses using Business Central saw a 162% ROI over three years. A variety of cost savings using Business Central include:Avoidance of one full-time equivalent and one part-time equivalent finance/operations hires.44k elimination of 3rd party reporting spend over 3 years.Avoidance of more than 40k in costs pertaining to the previous solution (server hosting, server support & maintenance, IT support).Automatic annual updates in Business Central cut down on costs.Source: TEI_of_Microsoft_Business Central_FINAL.pdf (schneiderdowns.com)Meanwhile, Microsoft has significantly reduced its investment in the Dynamics GP and SL platforms while increasing annual enhancement fees two years in a row. Effective October 1, 2023, your enhancement fees will increase by 1%. Infrastructure fees and the salaries of IT resources are going up, meaning the cost of hosting GP is going up.  If you plan to keep GP, you will need to plan to make a significant investment in security.2. Your ERP should be built into your tech stack; your tech stack shouldn’t be built around your ERP.Microsoft continues to invest in the interoperability of the Dynamics 365 Business Central app with other platforms."By adopting Business Central, you can leverage the power of a comprehensive cloud-based ERP solution that adapts to your unique business needs, ensuring your ERP is an integrated part of your tech stack, not a limiting factor." Recently, Microsoft announced read-only access for Office 365 users with no additional licensing required.In contrast, the technology behind Dynamics GP remains the same while many of the things around GP are evolving. While each update is tested for compatibility, that does not mean the features you are using will not go away or become “buggy”.  Recently, a few notable things have happened to negatively interfere with business: Modern Authentication rollout required many updates not to lose email, and some features (like the web client) still broke, VBA Customizations now require a workaround to use, AV software has been known to interfere with stability, and Office updates have broken functionality.3. Take advantage of cloud technology for scalability, flexibility, and security.79% of businesses like yours are either planning or in the process of migrating to the cloud. The level of self-service reporting available in Microsoft Business Central is staggering compared to Dynamics GP. Nearly every page within the system can be exported into Excel or pulled into a Power BI Report.In their 2021 annual report, Microsoft committed to investing over $20 billion in security over a 5-year period. The platform is compliant with multiple data protection standards and regulatory requirements, meaning much of the liability associated with maintaining compliance is shifted to Microsoft. These benefits include:99.9% uptime guarantee.The concept of a “stuck batch” does not exist in Microsoft Business Central.Point in time restore for up to 28 days.Designed with disaster recovery in mind.Automatic updates.Behind-the-scenes resource scaling.Anytime/anywhere access from nearly any device.Ready to take the next step but not sure which direction to follow? Let us help you review your options. Use the form above to schedule a readiness call with a Schneider Downs Technology Advisor today. CONTACT US TODAY "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Benefits of migrating Dynamics GP to Dynamics 365 Business Central: 162% ROI79% of businesses are planning to implement cloud ERP200k median loss from fraud of small to medium sized businesses About Schneider DownsTechnology and Data ServicesSchneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. ### Fraud Risk Diagnostic Evaluation Fraud Risk Diagnostics and Mitigation Services Evaluate Your Organization’s Fraud Defenses and Uncover Gaps Before They Become Costly Mistakes Fraud can be catastrophic in both financial and reputational terms, and therefore, requires executive commitment to address related risks so that an organization is adequately protected.Schneider Downs Business Advisors can provide you with the necessary expertise to evaluate your company's current fraud mitigation plan and infrastructure, support your efforts to perform a fraud risk assessment or assist with the development of a robust fraud mitigation plan.Unfortunately, many companies find out about their weaknesses only after they have been exploited by a fraudster. Even smaller frauds are a drain on an organization's financial resources.In today's environment, no organization wants to throw away even a small percentage of revenues (3% to 5%) in fraud losses. Given recent headlines, fraud is at least on the radar of most organizational leaders. Executives typically wonder whether fraud can occur within their organization, beholden to their trust that their accountants have things in order, but lacking the expertise or resources to truly assess the status of their organization's fraud mitigation program (if it exists).Schneider Downs Business Advisors can assist executive leadership by performing an organizational Fraud Risk Diagnostic Evaluation, the first step in assessing an organization's fraud readiness.The minimal investment made for a Fraud Risk Diagnostic Evaluation can be offset by triggering necessary improvements or by simply serving as validation of the current state of the fraud mitigation program. Fraud Mitigation ProgramOur quick and efficient approach consists of an analysis of the following areas an organization's fraud mitigation program:Governance & CommunicationManagement Ownership of ResponsibilityIdentification of Key Fraud RisksFraud Risk Tolerance and ManagementEnvironment Level ControlsProcess Level ControlsProactive Fraud Detection and InvestigationIn evaluating these areas, we highlight weaknesses in an organization's fraud mitigation program, so that the organization can make necessary modifications, including the possible performance of a fraud risk assessment. About Schneider Downs Business AdvisoryThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today’s rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. View our additional Fraud services and capabilities Learn More Contact us ### Schneider Downs Forensic Accounting Services Schneider Downs Forensic Accounting Services Schneider Downs Business Advisors' Certified Fraud Examiners perform forensic examinations to determine where the loopholes are and identify who is taking advantage of them.Our advisors investigate allegations of fraud, white-collar crime, embezzlement and financial crimes, and we quantify the potential losses incurred, and design and implement internal accounting and management controls for loss prevention and risk management.If you suspect fraud at your business, please call us today at 412-261-3644.*Statistics from www.acfe.com, Report to the Nations on Occupational Fraud and AbuseAwareness is powerful tool to detect and prevent fraud. Subscribe to our free newsletter E-mail EmailThis field is for validation purposes and should be left unchanged. Sign up * required Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Request Additional Information Request Additional Information "*" indicates required fields Name* Email* Phone NumberHow would you like us to contact you?* Email Phone Comments/QuestionsNameThis field is for validation purposes and should be left unchanged. Submit * requiredThank you.  We will be in contact with you shortly. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### HITRUST CSF Reporting HITRUST Deliver sound risk management practices, internal control systems and compliance frameworks. SOC 2 + HITRUST CSF Report What it is: A mapping between the HITRUST CSF requirements and AICPA's Trust Services Categories and Criteria has been developed and made available to enable service organizations to provide information to users of their system about whether controls relevant to security, availability and confidentiality are suitably designed and operating effectively to meet the applicable trust services criteria (TSC) and HITRUST CSF requirements. This enables the service organization to communicate information about the processes and procedures it uses to meet the HITRUST CSF, in addition to the applicable TSC. This increases transparency and provides information for decision making. Benefits: SOC 2 engagements are performed under the professional standards of the AICPA It is substantially less expensive than obtaining a validated report and certification from HITRUST It is often the preferred method of compliance reporting from organizations that perform third-party risk assurance activities Each organization's risk appetite is unique to them, so they decide to determine what level of third-party assurance is necessary. If you're not sure whether your customers accept the SOC 2 + HITRUST CSF Report, ask your customers whether it will be sufficient to give them appropriate assurance of your controls. HITRUST CSF Validated Report and Certification This option is used when a service organization wants to provide its stakeholders with a HITRUST CSF certification report but does not choose to provide them with a SOC 2 report. This engagement is performed by an approved HITRUST CSF assessor based on the HITRUST CSF requirements. The engagement consists of an assessment that is submitted to HITRUST for evaluation. If the service organization controls meet the HITRUST CSF requirements based on a determination by HITRUST, the result is the issuance of a certification report by HITRUST. Benefits: Validation is performed against all 135 control references Assessment requirements are assessed based on the 5 PRISMA-based maturity levels (Non-Compliant, Somewhat Compliant, Partially Compliant, Mostly Compliant, Fully Compliant) You receive a validated certification report, based on the assessor and HITRUST's evaluation and determination. SOC 2 + HITRUST CSF + CSF Certification What it is: This reporting option is used when a service organization wants to obtain both a SOC 2 + HITRUST CSF report in addition to a HITRUST CSF certification. Attribute SOC 2 HITRUST Certification SOC 2 + HITRUST SOC 2 + HITRUST CSF + CSF Certfication Framework AICPA TSC Tes A/C/P TSC and HITRUST CFS+ Certification This reporting option is used when a service organization wants to obtain both a SOC 2 + HITRUST CSF report in addition to a HITRUST CSF certification. Please contact us if you are considering this reporting option. Requires HITRUST scoping factors NO CSF Assesor Yes Independent third party examiner CPA Firm HITRUST Alliance CPA Firm with valid licensure Governing body for the report AICPA HITRUST Alliance AICPA Who prepares the report? CPA FIRM No Yes Incorporate SOC 2 Trust Services Criteria (TSC) Yes No Yes Allows Type 1 (point in time) explanation option Yes Yes Yes Requires a risk rating to be established for controls Yes No, but CorrectiveAction Plans are issued Yes Reporting control gaps (exceptions) Yes (Type 2) Yes (Type 2) Yes (Type 2) Allow for Corrective Action Plans No No Yes Requires a full scope examinations each year Yes Yes Yes List of attestation 1 year 2 years, plus an interim review within 1 year 1 year About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact us Our Thoughts On Cybersecurity Awareness Month is Over...Now What? As October comes to an end, so does Cybersecurity Awareness Month. However, that doesn’t mean our focus on security awareness… Read More > Two Truths and a Lie about Cybersecurity: Purple Teaming Let’s play a game! Two truths and a lie about Purple Teaming. In support of Cybersecurity Awareness Month, we are… Read More > Two Truths and a Lie about Cybersecurity: Cyber Governance Let’s play a game! Two truths and a lie about Cybersecurity Governance.In support of Cybersecurity Awareness Month, we are examining… Read More > Two Truths and a Lie about Cybersecurity: Cyber Insurance Let’s play a game! Two truths and a lie about Cyber Insurance.In support of Cybersecurity Awareness Month, we are examining… Read More > Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue… Read More > ### Federal Tax Federal Tax Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### MIP End-of-Year Tips MIP End-of-Year Tips The Schneider Downs Technology Advisors team has assembled several documents to help with your year-end planning and processing.  These items only occur once a year so we thought it would be helpful to bring them together for you.2009 1099 Guide This document provides information and the steps to follow for preparing and creating your vendor 1099s.  This document explains using the Sage Aatrix® service to handle all processing and filing. 2009 W-2 Guide This document provides information and the steps to follow for preparing and creating your employee W-2s. 2009 End-of-Year Thoughts End-of-year is a good time to review your system and clear out unneeded information.  This document reviews important system maintenance procedures you should perform. MIP User Group Power Point Presentation  In case you missed the Schneider Downs user group conference earlier this year, this document contains the slides on all topics covered. If you have questions on any of these topics, please call the Schneider Downs Help Desk at 866-999-SDCO.  Interested in making Schneider Downs your reseller?  Contact Patrick Armknecht at 412-697-5386 or Teresa Grady at 614-586-7268.Have a great New Year! Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Family Office Services Family Office Services Schneider Downs understands that the relationship with your CPA firm rests on a strong foundation and we strive to build this footing with big thinking and personal focus for our Family Office clients.  As a top 60 CPA firm in the U.S., we have more than 350 professionals with a wide background of experience in the region, specifically in Pittsburgh and Columbus.  Our people are our greatest assets – they have enabled us to grow by being responsive and assisting our clients with practical solutions.  Our family office services practice was developed Schneider Downs to recognize that our clients’ needs are both complex and unique. Our ability to integrate the essential services of business accounting and consulting, tax consulting and compliance, estate planning, treasury management, and wealth management practice units enables us to deliver a coordinated approach to your financial needs.Clients We Serve In Family OfficeOur clients include existing or developing Family Offices who require a full outsourcing or co-sourcing of services in the areas indicated below.What Differentiates Schneider Downs Family Office Services?Family obtains a trusted advisorDevelopment of personalized long term wealth management, tax planning, and estate planning strategiesTimely deliverable turnaround time by ensuring the work is properly leverage to the firm’s subject matter expertsScalable delivery model for small and large multi generational families onboardingEffective utilization of technologies for wealth management and document retention (Marketplace Development of a specialized service in the Pittsburgh and Columbus markets)Services We Offer To Family OfficesBusiness Accounting and ConsultingTreasury ManagementTax Consulting and ComplianceEstate PlanningWealth ManagementContact UsAt Schneider Downs, it's our business to provide you with an accurate blueprint and the tools you need to build a sturdy financial structure, aimed at future growth.  For more information on how Schneider Downs can assist your family office, please contact us. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### What is HITRUST? HITRUST HITRUST unifies regulatory and industry requirements for managing information risk and protecting sensitive data. HITRUST ensures that your organization meets the highest standards for protecting sensitive information. As an Authorized HITRUST External Assessor Firm, Schneider Downs has a proven track record with HITRUST protocols and solutions, offering reliable guidance and support throughout your entire certification process. The HITRUST Common Security Framework (CSF) provides a prescriptive set of requirements to assess and score the efficacy of organizational systems. It streamlines the myriad of accepted frameworks, regulations and standards into one holistic framework. The framework also allows for enhanced customization by various scoping factors including organization type, size, transaction volume, location, systems, and applicable regulations. HITRUST was developed in collaboration with leading healthcare and information security industry organizations. The CSF now harmonizes and maps over 50 authoritative sources, including HIPAA, ISO 27001, PCI-DSS, NIST 800 series, GDPR, etc. Improve Data Security Reduce Liability Enhance Customer Trust Your Roadmap to HITRUST Certification Schneider Downs' Approach to HTIRUST Validated Assessments/Certification (e1, i1, r2). Fact: HITRUST-certified organizations have reported breaches as low as .59%, based on The HITRUST 2025 Trust Report. Which Certification Type is Right for Your Organization? e1, i1, or r2 Certifications SOC 2 + HITRUST Attestation Why Us? Your Trusted HITRUST Experts Schneider Downs is a HITRUST Authorized External Assessor Firm specializing in healthcare organizations. Our unique approach prioritizes personalized guidance, expert insights and ongoing support – even after certification!              What You’ll Achieve with Our Partnership: A comprehensive understanding of the HITRUST CSF control requirements and any design/operating gaps Prioritized recommendations of gaps (both required and optional) A defined roadmap for implementation HITRUST validated assessment testing, reporting, and CAP/GAP consulting assistance A HITRUST e1, i1, or r2 Validated Assessment Report and Certification Ready to take the next step? Speak with our HITRUST experts today to learn how we can help your organization. Contact us About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. OTHER USEFUL LINKS SOC 2 + Examinations | HIPAA | IT TPRM | ### Register to Attend a Webinar Register to Attend a Webinar "*" indicates required fields Name* Company/Organization Email* PhonePlease sign me up to attend the webinar.* May 27 @ 2:00 p.m. I cannot attend, but please contact me with more information. NameThis field is for validation purposes and should be left unchanged. Submit * requiredThank you for registering.  We will contact you with details. Register to receive our weekly newsletter with our most recent columns and insights. Subscribe for Updates ### Product Literature Product Literature "*" indicates required fields Name* Email Address CommentsThis field is for validation purposes and should be left unchanged. Submit * requiredDownload the SD inSITE Expense Entry feature sheet ### SD inSITE Employee Expense Entry Module SD inSITE Employee Expense Entry Module How much does it cost your organization to reimburse employee expenses? Consider the time it takes to fill out a spreadsheet or paper expense form, have it approved, reviewed by accounting, entered into accounts payable (or payroll), filing documents and receipts?There is a better way!SD INSITE EMPLOYEE EXPENSE ENTRYWeb-based, electronic formAccurate reimbursement for mileage; based upon your rulesAttach scanned receipt copies - truly paperless!Automated workflow for supervisor and accounting approvalBusiness rules to make sure expenses conform to policiesAutomated interface to accounts payable or payroll - no re-keying or error checkingSD INSITE EMPLOYEE EXPENSE ENTRYSave time for employees and accountingEliminate paperElectronic file of both expense forms and receiptsUse the inSITE expense reporting software to take the hassle out of expense reimbursement Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Value Builder Newsletter Subscribe to Our Value Builder Newsletter Whether you want to sell your business now or decades into the future, our content provides insight into strategies that will help you navigate through your company’s lifecycle. Subscribe to our weekly newsletter for exclusive case study podcasts that highlight real stories from business owners, monthly articles aimed at educating owners on building the value of their business as well as quarterly live, interactive sessions with thought leaders and more. Interested in receiving exclusive exit planning content? 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Subscribe ### Executive Compensation and Benefit Planning Executive Compensation and Benefit Planning ### Schneider Downs and the Energy Industry Schneider Downs and the Energy Industry Schneider Downs has extensive experience in the Energy Industry:Provides specialized financial services and advice to clients in a broad variety of energy and natural resource categoriesAlternative fuels and energyOil and gasMiningMetalsTimberDelivers industry-specific updates and commentaries through our Energy BlogActively involved in various industry-related associations, such as:Ohio and Pennsylvania Independent Oil & Gas Association (IOGA)Independent Petroleum Association of America (IPAA)Other industry forums and conferencesDo you want to learn how Schneider Downs’ Energy Industry Group can help your business?Contact our Energy Group leaders today: Jeffrey A. Wlahofsky and Jay R. MeglichThis advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.Subscribe to our free Energy industry newsletter.Sign up here: "*" indicates required fields Name* Company Name* Email Address* CommentsThis field is for validation purposes and should be left unchanged. Submit * required ### Employee Login Employee Login PittsburghColumbus ### Sign up for Paperless Billing Sign up for Paperless Billing "*" indicates required fields Client Name* Client Number (can be found on upper right of invoice) E-bill Contact Name(s)* First E-bill Contact Email Address* Second E-bill Contact Email Address (if applicable) (both contacts will receive the same bill) E-bill Contact PhoneNameThis field is for validation purposes and should be left unchanged. Submit * required ### COVID-19 RESOURCE [Content is password protected] ### Honors & Awards Content Coming Soon... ### Schneider Downs and the Automotive Industry Schneider Downs and the Automotive Industry Schneider Downs has extensive experience in the Automotive Industry:Provided services to automobile dealers for more than 40 yearsHosts quarterly, free webinars on topics relevant to auto dealershipsOur professionals annual attend industry-specific conferences and seminars such as:National Auto Dealer Association (NADA)American Institute of Certified Public Accountants (AICPA) National Auto Dealership ConferenceDo you want to learn how Schneider Downs can help your auto dealership?Contact our Automotive Industry Group leaders today: Paul M. Matvey, Kathy D. Petrucci and Joseph J. Patrick, Jr.This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.Subscribe to our free Automotive industry newsletter.Sign up here:* required "*" indicates required fields Name* Company Name* Email Address* PhoneThis field is for validation purposes and should be left unchanged. Submit * required ### Tax Code Offers a Possible Cash Infusion for Real Estate Developers Tax Code Offers a Possible Cash Infusion for Real Estate Developers The Tax Code Offers a Possible Cash Infusion for Real Estate DevelopersThank you for downloading the article. ### Proposed Regulation Would Clarify Exceptions to $1 Million Deduction Limit Under IRC Section 162(m) Proposed Regulation Would Clarify Exceptions to $1 Million Deduction Limit Under IRC Section 162(m) Proposed Regulation Would Clarify Exceptions to $1 Million Deduction Limit Under IRC Section 162(m) Thank you for downloading the article. If you have any questions, please contact Ron Kramer. ### New Rules for Tax Return Disclosure of Information With Respect To Foreign Financial Assets Will Take Effect for 2011 Returns New Rules for Tax Return Disclosure of Information With Respect To Foreign Financial Assets Will Take Effect for 2011 Returns New Rules for Tax Return Disclosure of Information With Respect to Foreign Financial Assets Will Take Effect for 2011 Returns Thank you for downloading the article. If you have any questions, please contact Ron Kramer. ### IFRS Updates IFRS Updates PRIMARY CONTACTS: Joseph A. Bruce IASB Completes Off-Balance-Sheet Activities and Joint Arrangements Accounting Improvements. The IASB has announced the completion of its review of accounting treatment for off-balance-sheet activities. The IASB believes that this process broadly brings IFRSs and U.S. GAAP into alignment, and concludes an important element of the IASB’s comprehensive response to the financial crisis. The IASB’s review resulted in the issuance of the following new and (or) amended standards: IFRS 10 Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements (as amended in 2008) and SIC 12 Consolidation - Special Purpose Entities. IFRS 11 Joint Arrangements is intended to provide for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. IFRS 12 Disclosure of Interests in Other Entities is a new standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles, and other off-balance-sheet vehicles. IAS 27 Separate Financial Statements (as amended in 2011) contains accounting and disclosure requirements for investments in subsidiaries, joint ventures, and associates when an entity prepares separate financial statements. The standard requires an entity preparing separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. In completing IFRS 10, the IASB removed from IAS 27 all requirements relating to consolidated financial statements. IAS 28 Investments in Associates and Joint Ventures (as amended in 2011) prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The new and amended standards are effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. If early application is applied, an entity should disclose that fact and apply IFRS 10, IFRS 11, IFRS 12, IAS 27 (as amended in 2011), and IAS 28 (as amended in 2011) at the same time. An entity can, however, provide the information required by IFRS 12 early without complying with all of the requirements of IFRS 12 or applying IFRS 10, IFRS 11, IAS 27 (as amended in 2011), and IAS 28 (as amended in 2011) early. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Preparing Your Business for More Invasive Employment Tax Audits Under the Employment Tax National Research Project Preparing Your Business for More Invasive Employment Tax Audits Under the Employment Tax National Research Project Preparing Your Business for More Invasive Employment Tax Audits Under the Employment Tax National Research ProjectIf you have any questions about the article, please contact Marty DiGiovine, JD . ### Imran Mohiuddin Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### What are the risks to your business? Schneider Downs' Internal Audit and Risk Advisory Services professionals partner with our clients to develop risk-based internal audit plans that support the goals of their companies. Our team of business advisors includes a range of skills and experience, including internal audit, IT specialists and subject matter professionals.The Schneider Downs Risk Assessment Methodology takes into account the most likely and most potenially damaging risks, identifies controls in place and pinpoints control gaps.Contact us for our references, who would be happy to tell you about their positive experiences with our team.We welcome the opportunity to work with you to help minimize your risk and achieve your goals. ### Internal Audit and Risk Advisory Services for the Education Sector PRIMARY CONTACT: James B. Yard CPA, CIA, CISA (Pittsburgh) The role of internal audit is evolving due to economic conditions, ever-changing regulations, increased technology risk and globalization. This dynamic environment creates a new opportunity for internal audit to demonstrate its value, but also makes it difficult for many institutions to staff an internal audit function and/or maintain all of the necessary skills required to meet the challenges of the higher education sector. Schneider Downs is positioned to provide internal audit support, from staff augmentation to full outsourcing. We work closely with internal audit functions, management and Audit Committees to achieve the scope of coverage institutions require. In a co-sourcing arrangement, we partner with your professionals to fill problematic gaps in your internal audit function’s subject-matter skill sets or geographic needs in order to mitigate exposure to crucial areas requiring attention beyond your reach. Schneider Downs provides a suite of advisory and consulting internal audit and risk advisory services that address specific concerns of organizations, including: Internal Audit Sourcing IT Audit Sourcing Enterprise Risk Management and Compliance Services  Business Process Optimization Cybersecurity  Quality Assurance Review In addition to Internal Audit and Risk Advisory services, the Schneider Downs teams offers a number of services to education  institutions in the Pittsburgh and Columbus region, and across the United States, including: Audit and Assurance Services Auxiliary and Investment Activities Business Advisory Services Staffing Services State and Local Tax Matters Tax Compliance Services Technology Services and Compliance Wealth Management Advisors Browse the full service list on our education sector services webpage. About Schneider Downs Our Higher Education Industry Group operates with a service-focused philosophy: You talk, we listen.  It is this philosophy that has fueled our practice’s growth to nearly 40 clients over the past decade.  Higher education is a strategic priority for Schneider Downs. Our delivery of a comprehensive blend of integrated services ensures that our professionals can meet your institution’s operational and compliance needs.  By staying abreast the latest trends, developments and challenges within the education sector, our professionals offer timely and practical solutions to our clients. For questions or more information on Schneider Downs can help your institution, please contact James B. Yard. ### Resource Download (CMMC REFERENCE GUIDE) EACUBO 2011 Pittsburgh Workshop For your convenience, following are the presentations for the EACUBO 2011 Pittsburgh Workshop.  The documents will all print three slides per page.  If you would prefer the slides in a different format, please contact us.ERISA Fiduciary Responsibilities for 403(b) Plans: Keys to Implementation (Part 1)ERISA Fiduciary Responsibilities for 403(b) Plans: Keys to Implementation (Part 2)403(b) Participant and Plan Management for Successful Outcomes in Difficult TimesPost-Issuance Bond ComplianceFraud within NonprofitsIT Tools and Techniques to Assist in Fraud Prevention and DetectionTax and Legislative UpdateFASB Update ### Digital Transformation Consulting Schneider Downs Digital Transformation Solutions The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. https://vimeo.com/649227587 Our solutions are built to identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. Through our cross-functional team of risk and technology professionals, we provide insights and assistance in improving the foundational business processes of an organization and identify and implement technology to further automate and support those processes.  Some of our areas of technology specialization include: Reporting, Planning, & Analytics Automation and Workflow Data Management & Integration Artificial Intelligence/Machine Learning Infrastructure and Cloud Compliance & Security Benefits of Digital Transformation Data Accessibility and Reliability – Improve visibility to data and increase comfort over the completeness and accuracy of data utilized in financial reporting. Enhanced Use of Existing Software – Identify features and functionality of existing business applications that are unutilized or underutilized to maximize existing investments and strengthen processes. Improved Customer Relations – Provide better visibility into the customer experience and make more informed decisions related to buying habits, delivery of products and services, and support. Improved Reporting and Analytics - Improve timeliness and availability of financial and operational reporting and analytics to better support business insights that drive management decisions. Reduced Risk – Eliminate existing control gaps in processes while improving audit trails for compliance and regulatory requirements. Reduced Cost – Save time and money by freeing employees from non-value added tasks and by replacing patch-worked technology with robust multi-purpose solutions. Streamlined and Standardized Processes - Reduce inefficiencies in existing processes and create additional efficiencies through automation, standard operating procedures and training. Digital Transformation Resources Schneider Downs Digital Transformation in Finance and Accounting Schneider Downs Digital Transformation FAQ Guide Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap Schneider Downs Digital Transformation Solutions Overview Schneider Downs Digital Transformation Articles About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information contact the team at contactsd@schneiderdowns.com or visit our dedicated Technology and Data Services page. Contact The Team PDF Version CONTACT US "*" indicates required fields Name Company Email Phone NumberComment/Question How would you like us to contact you?* Email? Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth CommentsThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### SD inSITE Time Entry Product Overview SD inSITE Time Entry Product Overview ### SD inSITE Employee Performance Product Overview SD inSITE Employee Performance Product Overview ### A Regional Firm with International Reach. Our SD Global professionals advise clients on issues related to expanding and operating within international markets. And with more than 120 clients conducting business internationally, our team has the experience to help most any company meet the challenges of global commerce. We respond quickly to client inquires and provide practical business recommendations.Our global delivery model incorporates PrimeGlobal, the third largest association of independent accounting firms in the world.  PrimeGlobal’s independent member firms house a combined total of 2,200 partners, 17,000 employees, and 800 offices in 90 countries around the globe.If your company operates internationally or you are thinking about expanding into new markets, contact us today. We can turn you in the right direction. ### International Tax Accountants Baltimore Annapolis (MD) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – BALTIMORE ANNAPOLIS (MD) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Baltimore, Annapolis and across Maryland. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Baltimore International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Baltimore (MD) Nestled along the picturesque shores of the Chesapeake Bay, the business community of Baltimore, Maryland, exudes a rich blend of history, innovation, and maritime heritage. As one of the oldest cities in the United States, Baltimore serves as a vital economic hub on the East Coast, with a diverse range of industries driving its economy. At its core, Baltimore's business landscape is anchored by sectors such as healthcare, biotechnology, maritime commerce, logistics, and education. The city is home to world-renowned medical institutions, research centers, and biotech companies, making it a leader in the healthcare and life sciences industries. Additionally, Baltimore's historic Inner Harbor serves as a bustling center for maritime commerce and tourism, attracting visitors from around the world. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Baltimore International Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Baltimore, Annapolis and across Maryland. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Maryland Exports, Export Categories, and Top Export Partners ### MIP Product Overview MIP Product Overview ### International Tax Accountants - Boise (ID) INTERNATIONAL BUSINESS TAX CPAS – BOISE (ID) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Boise and across Idaho. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Boise International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Boise (ID) Nestled in the scenic heart of Idaho, the business community of Boise exudes a blend of innovation, collaboration, and Western charm. Anchored by the majestic Boise River and surrounded by the rugged beauty of the Rocky Mountains, Boise offers a unique setting that fosters entrepreneurship and economic growth. At its core, Boise's business landscape is shaped by a diverse array of industries, ranging from technology and agriculture to outdoor recreation and healthcare. The city serves as a burgeoning tech hub, attracting startups and established companies alike with its supportive ecosystem and skilled workforce. Boise's thriving technology sector is complemented by a robust agricultural industry, which benefits from the region's fertile soil and favorable climate. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Boise International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Boise and across Idaho. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Idaho Export Data ### International Tax CPAs Boston Cambridge MA INTERNATIONAL BUSINESS TAX ACCOUNTANTS – BOSTON CAMBRIDGE (MA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in  Boston, Cambridge and across Massachusetts. We focus our services for high net worth business owners and those with significant cross-border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Massachusetts International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Boston (MA) The business community in Boston, Massachusetts, is a dynamic and diverse ecosystem that reflects the city's rich history, innovation, and academic prowess. As one of the oldest cities in the United States, Boston has a legacy of entrepreneurship and commerce that continues to thrive in the modern era. At its core, the Boston business community is deeply influenced by the presence of renowned universities and research institutions, including Harvard, MIT, and numerous others. This concentration of academic excellence fosters a culture of innovation and attracts top talent from around the world, driving breakthroughs in technology, biotechnology, healthcare, and finance. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Boston International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Boston, Cambridge, and across  Massachusetts. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Boston Exports, Export Categories, and Top Export Categories Source: Trade.gov ### International Tax Accountants Stamford Bridgeport INTERNATIONAL BUSINESS TAX ACCOUNTANTS – STAMFORD BRIDGEPORT (CT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Stamford, Bridgeport and across Connecticut. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Connecticut International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Stamford (CT) Nestled along the scenic shores of Long Island Sound, the business community of Stamford, Connecticut, embodies a dynamic blend of corporate headquarters, financial institutions, and entrepreneurial ventures. As a bustling economic hub in Fairfield County, Stamford serves as a vibrant center for commerce, innovation, and opportunity. At its core, Stamford's business landscape is anchored by sectors such as finance, insurance, technology, healthcare, and professional services. The city is home to numerous Fortune 500 companies and major corporations, particularly in the financial and insurance industries, making it a significant player in the global economy. Additionally, Stamford's strategic location between New York City and Connecticut's Gold Coast has attracted a diverse array of businesses, from startups and small businesses to multinational corporations. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Connecticut International Business Tax Accountants Schneider Downs is a Top 60 CPA firm specializing in serving the international business accounting and tax needs of businesses in Stamford, Bridgeport, and Connecticut. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Connecticut Exports, Export Categories, and Top Export Categories Source: Trade.gov ### SD inSITE Time Entry Demo SD inSITE Time Entry Demo ### International Business Tax Accountants Burlington (VT) INTERNATIONAL BUSINESS TAX CPAS – BURLINGTON (VT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Burlington and across Vermont (VT). We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Burlington International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Burlington (VT) The business community in Burlington, Vermont, is characterized by its resilience, diversity, and commitment to sustainability. Nestled in the heart of the picturesque Green Mountains, Burlington boasts a thriving economy driven by a mix of industries ranging from technology and healthcare to agriculture and tourism. At its core, Burlington's business landscape is defined by its vibrant entrepreneurial spirit. The city has a strong support system for startups and small businesses, with incubators, accelerators, and co-working spaces fostering innovation and collaboration. This environment has nurtured a burgeoning tech scene, attracting talented professionals and investment capital to the area. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Burlington International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Burlington and across Vermont. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Vermont Economic Data ### SD inSITE Document Portal Product Overview SD inSITE Document Portal Product Overview ### International Tax Accountants - Calgary (AB) U.S. INTERNATIONAL BUSINESS TAX CPAS – CALGARY (AB) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Calgary and across Alberta. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Calgary International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). About Calgary (AB) Nestled in the foothills of the Canadian Rockies, Calgary's business community embodies a unique blend of resilience, innovation, and resourcefulness, mirroring the spirit of the rugged landscape that surrounds it. As the largest city in Alberta, Calgary serves as a bustling economic center, deeply rooted in the province's rich history of energy production and resource development. At its core, Calgary's business landscape is defined by its strong ties to the energy sector, particularly oil and gas. The city's downtown skyline is punctuated by the headquarters of major energy companies, showcasing Calgary's pivotal role in the global energy industry. However, in recent years, Calgary has diversified its economy to reduce its reliance on fossil fuels, embracing emerging sectors such as technology, finance, and healthcare. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Calgary International Business Tax Accountants Schneider Downs is a U.S. based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Calgary and across Alberta. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Calgary Top Exports ### Abra Demo Abra Demo ### International Business Tax Accountants - Charleston (SC) INTERNATIONAL BUSINESS TAX CPAS – CHARLESTON (SC) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Charleston and across South Carolina. We focus our services on high-net-worth business owners and those with significant cross-border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Charleston International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Charleston (SC) Nestled along the picturesque coastline of South Carolina, the Charleston business community exudes a unique blend of Southern charm, historical significance, and economic vibrancy. Rooted in a rich tapestry of culture and tradition, this community thrives on a diverse array of industries that reflect both its heritage and forward-thinking ethos. At its heart, Charleston is renowned for its hospitality and tourism sector, drawing millions of visitors each year to explore its cobblestone streets, antebellum architecture, and culinary delights. The city's thriving restaurant scene, coupled with its vibrant arts and cultural offerings, creates a magnet for both tourists and locals alike, driving economic growth and job creation. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Charleston International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Charleston and across South Carolina. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit South Carolina Export Data ### Overview Overview ### International Tax Accountants Chicago Naperville IL NTERNATIONAL BUSINESS TAX ACCOUNTANTS – CHICAGO NAPERVILLE (IL) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in  Chicago, Naperville and across Illinois. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Illinois International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Chicago (IL) Nestled along the shores of Lake Michigan, the business community of Chicago, Illinois, stands as a dynamic testament to innovation, diversity, and economic vitality. As the third-largest city in the United States, Chicago serves as a bustling economic center, with a rich tapestry of industries driving its robust economy. At its core, Chicago's business landscape is anchored by sectors such as finance, technology, manufacturing, healthcare, and transportation. The city is home to the Chicago Mercantile Exchange, one of the world's largest futures and options exchanges, and boasts a thriving financial sector with major banks and investment firms headquartered in the downtown area. Additionally, Chicago's legacy as a manufacturing powerhouse continues to shape its economy, with companies in industries ranging from automotive to food processing calling the city home. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Chicago International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Chicago, Naperville, and across Illinois. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Chicago Exports, Export Categories, and Top Export Categories ### International Tax Accountants Denver (CO) INTERNATIONAL BUSINESS TAX CPAS – DENVER (CO) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Denver and across Colorado. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Denver International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Denver (CO) Nestled against the backdrop of the majestic Rocky Mountains, the business community of Denver, Colorado, embodies a dynamic blend of innovation, entrepreneurship, and outdoor lifestyle. As the capital city of Colorado, Denver serves as a vibrant economic hub with a diverse range of industries driving its thriving economy. At its core, Denver's business landscape is anchored by sectors such as technology, aerospace, energy, healthcare, and tourism. The city has emerged as a burgeoning technology hub, attracting startups and established companies alike with its skilled workforce, supportive ecosystem, and high quality of life. Additionally, Denver's proximity to major research institutions and federal laboratories has fostered innovation in industries such as aerospace and energy. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Denver International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Denver and across Colorado. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Denver Exports, Export Categories, and Top Export Categories ### International Tax Accountants - Des Moines (IA) INTERNATIONAL TAX CPAS – DES MOINES (IA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Des Moines and across Iowa. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Des Moines International Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Des Moines (IA) Nestled in the heartland of America, the business community of Des Moines, Iowa, reflects a blend of tradition, innovation, and community spirit. Situated amidst the rolling plains of the Midwest, Des Moines serves as a thriving economic center, anchored by diverse industries ranging from finance and insurance to agriculture and technology. At its core, Des Moines boasts a strong financial and insurance sector, with several major companies calling the city home. The downtown skyline is dotted with the headquarters of renowned insurance giants, showcasing Des Moines' stature as an insurance hub. Additionally, the city's robust agricultural industry contributes significantly to its economy, with many agribusinesses and food processing companies thriving in the region. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Des Moines International Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Des Moines and across Iowa. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Iowa Economic Data ### International Tax Accountants Detroit Dearborn (MI) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – DETROIT DEARBORN MICHIGAN Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Detroit, Dearborn and across Michigan. We focus our services on high-net-worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Michigan International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Detroit (MI) Nestled along the banks of the Detroit River, the business community of Detroit, Michigan, embodies a tale of resilience, reinvention, and revitalization. As a city with a storied past in automotive manufacturing, Detroit has weathered economic challenges and undergone transformation to emerge as a diverse hub of industry and innovation. At its core, Detroit's business landscape is anchored by a range of industries beyond automotive, including manufacturing, technology, healthcare, and finance. While the automotive industry remains significant, the city has diversified its economic base to attract investment and spur growth in emerging sectors. Detroit's downtown area has experienced a resurgence, with a burgeoning entrepreneurial ecosystem, revitalized infrastructure, and a growing number of tech startups and innovation hubs. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Michigan International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Detroit, Dearborn and across Michigan. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Michigan Economic Profile ### Data Protection Impact Assessment Data Privacy Services: Data Protection Impact Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. To assess the level of risk, you must consider both the likelihood and the severity of any impact on data subjects.When is a DPIA required?Whenever processing is likely to result in high-risk to the rights and freedoms of individuals. Required at least in the following cases, under GDPR:A systematic and extensive evaluation of the personal aspects of an individual, including profiling;Processing of sensitive data on a large scale;Systematic monitoring of public areas on a large scaleIt is also good practice to perform a DPIA as a baseline or for any major initiative which requires the processing of personal data.Your DPIA must:Describe the nature, scope, context and purposes of the processing;Assess necessity, proportionality and compliance measures;Identify and assess risks to and impact on data subjects; andIdentify any additional measures to mitigate those risks.Additional Schneider Downs Data Privacy ServicesBusiness Process and Data FlowA critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn MoreData Privacy Control AssessmentRegardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn MoreNIST Privacy Framework ComplianceThe NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture. Privacy Regulations and CompliancePrepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn MoreAbout Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Learn more about our Data Privacy Services or contact us for more information. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Data Privacy Services Data Privacy Services Deliver sound risk management practices, internal control systems and compliance frameworks. Data is one of the most valued and targeted assets across all industries and organizations, which is why it is critical to know how to effectively manage and protect it. With the technology and regulatory landscape constantly changing, the methods organizations take to protect the privacy of data should also constantly evolve.An effective data privacy program can be a business differentiator within your market and industry. By being transparent with your data practices, answering customer concerns upfront, along with the ability to show that employees with access to customer data are regularly trained, will collectively help gain and retain customer trust to differentiate your business amongst competitors and in-turn speed up the sales cycle.Schneider Downs Data Privacy ServicesBusiness Process and Data FlowA critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn MoreData Privacy Control AssessmentRegardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn MoreData Protection Impact Assessment A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn MoreNIST Privacy Framework ComplianceThe NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture. Privacy Regulations and CompliancePrepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn MoreWhy Do You Need a Data Privacy Program?The following are key reasons to develop your organization’s Data Privacy Program:Be a good corporate citizenCompetitive differentiatorContinually monitor, maintain and improve the privacy programContinue to meet regulatory compliance obligationsEnhance the organization’s reputation/brandEntry into new marketsFacilitate privacy awareness of employees, customers, partners and service providersIncrease value/quality of dataMeet client/consumer expectationsPromote consumer trust and confidenceReduce risk to and respond effectively to privacy breachesSchneider Downs Data Privacy ResourcesSchneider Downs Service Overview – Data Privacy ServicesSchneider Downs Whitepaper – Top Ten Privacy Trends for 2021Schneider Downs Infographic – Top Ten Privacy Trends for 2021Schneider Downs ‘Our Thoughts On’ Articles – IT Risk AdvisorySchneider Downs ‘Our Thoughts On’ Articles – CybersecurityAbout Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Ready to Get Started?For more information on how we can help your data privacy needs please contact us. View our additional IT Risk Advisory services and capabilities Learn More Contact us Our Thoughts On Cybersecurity Awareness Month is Over...Now What? As October comes to an end, so does Cybersecurity Awareness Month. However, that doesn’t mean our focus on security awareness… Read More > Two Truths and a Lie about Cybersecurity: Purple Teaming Let’s play a game! Two truths and a lie about Purple Teaming. In support of Cybersecurity Awareness Month, we are… Read More > Two Truths and a Lie about Cybersecurity: Cyber Governance Let’s play a game! Two truths and a lie about Cybersecurity Governance.In support of Cybersecurity Awareness Month, we are examining… Read More > Two Truths and a Lie about Cybersecurity: Cyber Insurance Let’s play a game! Two truths and a lie about Cyber Insurance.In support of Cybersecurity Awareness Month, we are examining… Read More > Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue… Read More > ### Data Privacy Control Assessment Data Privacy Services: Data Privacy Control Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. Is your Data Privacy program effective? Regardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. The evolving technology landscape is placing more pressure on organizations to not only understand but effectively manage data security and privacy, which is the top technology challenge organizations face today.However, it is critical to understand the difference between data privacy and security. Security strives to safeguard data, whereas privacy strives to safeguard a person’s identity. Therefore, these are not one and the same and rather you need both to be effective in helping protect your organization and its most critical data assets. While good cybersecurity is important, it doesn’t address all privacy risks.Our audit approach not only takes into account the IT landscape for the lifecycle of personal data, but also the business landscape to ensure the IT and business strategies align from the collection, transmission, storage, disposal and overall protection of this personal data throughout its lifecycle.  We also ensure we understand the industry and regulatory compliance requirements of the organization within our approach, as we know there is not a one-size-fits-all solution to data privacy.Additional Schneider Downs Data Privacy ServicesBusiness Process and Data FlowA critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn MoreData Protection Impact Assessment A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn MoreNIST Privacy Framework ComplianceThe NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture.  Privacy Regulations and CompliancePrepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn MoreAbout Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Learn more about our Data Privacy Services or contact us for more information. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC Case Study - Data Center/Secure Application Host SOC Case Study - Data Center/Secure Application Host Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completed a Service Organization Control (SOC) report for a leading provider of scalable and secure application hosting, virtualization and data center solutions.The client services businesses across the United States, while maintaining technical certifications and partner relationships with Microsoft, VMWare, EMC, Citrix Systems, Cisco and Liebert. A senior engineer shared his thoughts on working with Schneider Downs on the SOC Report.Why did you want a Service Organization Control (SOC) Report?We manage a vast number of clients and their data. We felt that we needed to have controls in place so our customers know that we are providing the services we say we are, and following the procedures we have in place. Some of our customers fall under Sarbanes-Oxley (SOX), and having a Type II SOC report over our managed data center services also helped with their SOX compliance.Why did you choose to partner with Schneider Downs for your SOC report?Schneider Downs was highly recommended by a local CPA we know and, after meeting with them, we couldn’t agree more.How long have you worked with Schneider Downs?We have worked with Schneider Downs since 2009.Can you describe your experience working with Schneider Downs?The firm has been great to work with. The staff is very knowledgeable and helpful. They are always a phone call or email away, and their response time is great.How has your SOC report process been beneficial?We have been able to provide the report to our customers and put their minds at ease that their data is being protected. The SOC report process also has helped us internally identify risks that have now been mitigated by the procedures we put in place. This protects us…and our customers.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. ### International Tax Accountants - Edmonton (AB) U.S. INTERNATIONAL BUSINESS TAX CPAS – EDMONTON (AB) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Edmonton and across Alberta. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Edmonton International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services, including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). About Edmonton (AB) Nestled in the heart of Alberta, Canada, the business community of Edmonton exudes a unique blend of resilience, innovation, and diversity. Surrounded by the natural beauty of the Canadian Rockies and the expansive prairies, Edmonton serves as a vibrant economic center, deeply rooted in the province's rich history of resource development and entrepreneurship. At its core, Edmonton's business landscape is shaped by its strong ties to the energy sector, particularly oil and gas. The city is home to numerous energy companies and engineering firms, reflecting its pivotal role in Alberta's energy industry. However, Edmonton has also diversified its economy in recent years, embracing emerging sectors such as technology, healthcare, and education. Contact Our Edmonton International Business Tax Accountants Schneider Downs is a U.S. based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Edmonton and across Alberta. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Alberta Economic Profile ### International Tax Accountants Hartford Middletown CT INTERNATIONAL BUSINESS TAX ACCOUNTANTS – HARTFORD MIDDLETOWN (CT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in  Hartford, Middletown and across Connecticut. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Connecticut International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Hartford (CT) Nestled along the banks of the Connecticut River, the business community of Hartford, Connecticut, embodies a rich blend of history, innovation, and resilience. As the capital city of the state, Hartford serves as a vibrant economic hub with a diverse array of industries driving its economy. At its core, Hartford's business landscape is anchored by sectors such as insurance, finance, healthcare, manufacturing, and education. The city has long been recognized as the Insurance Capital of the World, home to many major insurance companies and institutions. Additionally, Hartford boasts a strong presence in the financial sector, with banks, investment firms, and financial services companies contributing to its economic vitality. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Hartford International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Hartford, Middletown, and across Connecticut. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Hartford Exports, Export Categories, and Top Export Categories Source: Trade.gov ### International Tax Accountants - Indianapolis (IN) INTERNATIONAL BUSINESS TAX CPAS – INDIANAPOLIS (IN) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Indianapolis and across Indiana. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Indianapolis International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Indianapolis (IN) Nestled in the heart of the Midwest, the business community of Indianapolis, Indiana, embodies a unique blend of tradition, innovation, and collaboration. Surrounded by the rolling plains of the Hoosier State, Indianapolis serves as a bustling economic hub, fueled by diverse industries ranging from manufacturing and logistics to technology and life sciences. At its core, Indianapolis boasts a strong manufacturing heritage, with a legacy that dates back to the city's founding. The automotive and aerospace sectors play a prominent role in the local economy, with several major companies operating production facilities in the region. Additionally, Indianapolis has emerged as a center for innovation and entrepreneurship, with a growing number of startups and tech companies choosing to call the city home. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Indianapolis International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Indianapolis and across Indiana. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Indiana Economic Export Data ### International Tax Accountants - Lexington (KY) INTERNATIONAL BUSINESS TAX CPAS – LEXINGTON (KY) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Lexington and across Kentucky. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure that appropriate compliance and tax planning steps are taken. Lexington International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters About Lexington (KY) Nestled in the picturesque Bluegrass region of Kentucky, the business community of Lexington epitomizes a harmonious blend of tradition, innovation, and community pride. Surrounded by the rolling hills and lush pastures that define the area, Lexington serves as a vibrant economic center deeply rooted in the state's rich history of agriculture, equestrianism, and bourbon distilling. At its core, Lexington's business landscape is shaped by its strong ties to the equine industry, earning it the nickname "Horse Capital of the World." The city's renowned horse farms, breeding operations, and equine-related businesses contribute significantly to its economy and cultural identity. Moreover, Lexington boasts a thriving healthcare sector, anchored by world-class medical facilities and research institutions. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Lexington International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Lexington and across Kentucky. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Kentucky Export Data ### International Business Tax Accountants - Lincoln Omaha (NE) INTERNATIONAL BUSINESS TAX CPAS – LINCOLN OMAHA (NE) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Lincoln, Omaha, and across Nebraska. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Omaha International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Omaha (NE) Nestled in the heart of the Midwest, Omaha, Nebraska's business community epitomizes resilience, innovation, and a strong sense of community. Rooted in its pioneer spirit and entrepreneurial ethos, Omaha boasts a diverse economic landscape shaped by a blend of traditional industries and emerging sectors. At its core, Omaha's business community is anchored by stalwart industries such as agriculture, manufacturing, and finance. The city's strategic location at the crossroads of major transportation routes has historically made it a hub for distribution and logistics, with companies leveraging its proximity to railroads and interstate highways for efficient movement of goods. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Lincoln International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Omaha, Lincoln, and across Nebraska. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Nebraska Export Data ### International Tax Accountants - Manchester (NH) INTERNATIONAL BUSINESS TAX CPAS – MANCHESTER (NH) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Manchester and across New Hampshire. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Manchester International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Manchester (NH) Nestled along the banks of the Merrimack River, the business community of Manchester, New Hampshire, embodies a blend of industriousness, innovation, and New England charm. As the largest city in the Granite State, Manchester serves as a bustling economic hub, rooted in a diverse array of industries ranging from manufacturing and healthcare to technology and education. At its core, Manchester's business landscape reflects its rich industrial heritage, with a legacy dating back to the city's prominence in the textile mills of the 19th century. While manufacturing remains a significant part of the local economy, Manchester has diversified in recent decades, leveraging its strategic location and skilled workforce to attract companies in emerging sectors such as aerospace, biotechnology, and finance. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Manchester International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Manchester and across New Hampshire. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit New Hampshire Export Data ### International Tax CPAs Milwaukee Green Bay (WI) INTERNATIONAL TAX ACCOUNTANTS – MILWAUKEE GREEN BAY (WI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Milwaukee, Green Bay and across Wisconsin. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Wisconsin International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Milwaukee (WI) The business community in Milwaukee, Wisconsin, is a dynamic and resilient ecosystem deeply rooted in the city's industrial heritage and Midwestern values. Nestled on the shores of Lake Michigan, Milwaukee serves as a regional economic powerhouse, boasting a diverse range of industries and a strong entrepreneurial spirit. At its core, the Milwaukee business community is characterized by a strong manufacturing legacy, with companies ranging from heavy machinery to consumer goods. However, in recent years, Milwaukee has diversified its economy, with emerging sectors such as technology, healthcare, and financial services gaining prominence. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Wisconsin International Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Milwaukee, Green Bay, and across Wisconsin. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: 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url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Wisconsin Exports, Export Categories, and Top Export Partners ### International Tax CPA Minneapolis St Paul (MN) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – MINNEAPOLIS ST. PAUL (MN) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Minneapolis, St. Paul and across Minnesota. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Minnesota International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Minneapolis (MN) The business community in Minneapolis, Minnesota is a dynamic and thriving ecosystem that reflects the city's rich history, diverse population, and innovative spirit. Situated in the heart of the Midwest, Minneapolis serves as a regional economic powerhouse, boasting a wide range of industries and sectors. At its core, the Minneapolis business community is characterized by a strong spirit of entrepreneurship and innovation. The city is home to a vibrant startup scene, with numerous incubators, accelerators, and co-working spaces nurturing the growth of new ventures across various industries. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Minnesota International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Minneapolis, St. Paul, and across Minnesota. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Minnesota Economic Profile ### International Tax Accountants - Montreal (QC) U.S. INTERNATIONAL BUSINESS TAX CPAS – MONTREAL (QC) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Montreal and across Quebec. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Montreal International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Montreal (QC) Nestled along the majestic Saint Lawrence River, the business community of Montreal, Quebec, is a vibrant tapestry woven with a rich history, cultural diversity, and entrepreneurial spirit. As the largest city in the province, Montreal serves as a dynamic economic hub, attracting businesses from a wide range of industries and fostering innovation and collaboration. At its core, Montreal's business landscape is shaped by its strong ties to sectors such as aerospace, technology, finance, and tourism. The city is home to a thriving aerospace industry, with major companies like Bombardier Aerospace and Pratt & Whitney Canada driving innovation and contributing significantly to the local economy. Additionally, Montreal has emerged as a leading technology hub in North America, with a burgeoning startup ecosystem and a strong presence of multinational tech giants. Contact Our Montreal International Business Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Montreal and across Quebec. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Quebec Economic Profile ### International Tax Accountants - Newark (NJ) INTERNATIONAL BUSINESS TAX CPAS – NEWARK (NJ) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Newark and across New Jersey. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Newark International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters About Newark (NJ) Nestled along the Passaic River, the business community of Newark, New Jersey, represents a dynamic blend of resilience, revitalization, and opportunity. As one of the oldest cities in the United States, Newark boasts a rich history deeply intertwined with its economic evolution. At its core, Newark's business landscape is anchored by its strategic location as a transportation hub. With proximity to major airports, seaports, and highways, the city serves as a vital gateway for commerce in the Northeast region. This accessibility has attracted businesses from a diverse range of industries, including finance, healthcare, education, and technology. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Newark International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Newark and across New Jersey. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit New Jersey Export Data ### International Tax Accountants - Ottawa (ON) U.S. INTERNATIONAL TAX CPAS – OTTAWA (ON) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves international companies in Ottawa and across Ontario. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Ottawa International Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Ottawa (ON) Nestled along the scenic banks of the Ottawa River, the business community of Ottawa, Canada, embodies a dynamic blend of innovation, collaboration, and government influence. As the nation's capital, Ottawa serves as a bustling economic center, characterized by a diverse array of industries and a unique blend of cultural heritage. At its core, Ottawa's business landscape is shaped by its strong ties to government and technology sectors. The city is home to numerous federal government agencies, departments, and embassies, driving demand for professional services, consulting, and legal expertise. Additionally, Ottawa has emerged as a thriving technology hub, with a vibrant ecosystem of startups, research institutions, and multinational tech companies specializing in areas such as telecommunications, software development, and cybersecurity. Contact Our Ottawa International Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Ottawa and across Ontario. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Ontario Economic Profile ### International Tax Accountants - Portland (OR) INTERNATIONAL BUSINESS TAX CPAS – PORTLAND (OR) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Portland and across Oregon. We focus our services on high-net-worth business owners and those with significant cross-border activities. Our experienced team of international tax accountants and consultants is ready to address your global business needs. The international tax landscape is continually changing and presents new challenges domestically and abroad. This reality means that international businesses and investors must stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is essential to carefully assess international business activities to ensure that appropriate compliance and tax planning steps are taken. Portland International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services, including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters About Portland (OR) Nestled between the rugged beauty of the Pacific Northwest and the serene waters of the Willamette River, the business community of Portland, Oregon, embodies a unique blend of creativity, sustainability, and entrepreneurial spirit. Known for its vibrant culture, lush green spaces, and progressive values, Portland's business landscape reflects the city's commitment to innovation and environmental stewardship. At its core, Portland's business community thrives on a diverse array of industries, ranging from technology and manufacturing to food and beverage. The city's reputation as a hub for creativity and innovation has attracted a thriving startup ecosystem, with entrepreneurs drawn to its supportive network of incubators, co-working spaces, and venture capital firms. Additionally, Portland's focus on sustainability is evident in its thriving green economy, with businesses prioritizing eco-friendly practices, renewable energy, and sustainable development. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Portland International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Portland and across Oregon. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Oregon Economic Profile ### International Tax Accountants - Regina (SK) U.S. INTERNATIONAL BUSINESS TAX CPAS – REGINA (SK) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Regina and across Saskatchewan. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Regina International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada, including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Regina (SK) Nestled on the vast plains of Saskatchewan, the business community of Regina embodies a blend of resilience, resourcefulness, and community spirit. As the capital city of the province, Regina serves as a vital economic center, characterized by its diverse industries and strong sense of local pride. At its core, Regina's business landscape is anchored by sectors such as agriculture, mining, energy, and manufacturing. The city's strategic location in the heart of Canada's agricultural belt has made it a hub for agribusiness and food processing companies. Additionally, Regina benefits from its proximity to natural resources such as potash, oil, and natural gas, which drive economic activity in the region. Contact Our Regina International Business Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Regina and across Saskatchewan. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Saskatchewan Economic Profile ### International Tax CPAs Seattle Bellevue (WA) INTERNATIONAL TAX ACCOUNTANTS – SEATTLE BELLEVUE (WA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Seattle, Bellevue, and across Washington. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Seattle International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Seattle (WA) The business community in Seattle, Washington, reflects the city's reputation as a global hub for innovation, entrepreneurship, and progressive values. Nestled between the Puget Sound and the Cascade Mountains, Seattle's economic landscape is characterized by a diverse array of industries, from technology and aerospace to healthcare and retail. At its core, the Seattle business community thrives on innovation, driven by the presence of tech giants like Amazon, Microsoft, and numerous startups. This culture of innovation is further bolstered by the city's renowned research institutions and vibrant venture capital scene, which attract top talent and investment from around the world. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Seattle International Tax CPAs Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Seattle, Bellevue, and across Washington.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: 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url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Washington Exports, Export Categories, and Top Export Categories ### International Business Tax Memphis TN INTERNATIONAL BUSINESS TAX ACCOUNTANTS – MEMPHIS NASHVILLE (TN) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Memphis, Nashville and Tennessee. We focus our services on high-net-worth business owners and those with significant cross-border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Memphis (TN) International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Memphis (TN) The Memphis business community epitomizes resilience and innovation amidst a backdrop of historical significance and modern challenges. Rooted in the city's rich cultural heritage and strategic geographical location along the Mississippi River, this community boasts a diverse array of enterprises spanning various sectors. At its core, the Memphis business landscape reflects a blend of traditional industries such as logistics and transportation, healthcare, and manufacturing, alongside emerging sectors like technology and entrepreneurship. The city's status as a transportation hub, facilitated by its robust infrastructure and the presence of major shipping companies like FedEx, has propelled its prominence in the global supply chain. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Tennessee International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Memphis, Nashville and Tennessee.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Tennessee Exports, Export Categories, and Top Export Partners ### International Tax Accountants - Toronto (ON) U.S. INTERNATIONAL BUSINESS TAX CPAS – TORONTO (ON) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Toronto and across Ontario. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Toronto International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Toronto (ON) Nestled along the shores of Lake Ontario, the business community of Toronto, Ontario, represents a dynamic tapestry of diversity, innovation, and economic vitality. As Canada's largest city and financial capital, Toronto serves as a bustling hub for commerce, culture, and opportunity. At its core, Toronto's business landscape is anchored by a diverse array of industries, including finance, technology, healthcare, manufacturing, and media. The city is home to Canada's largest stock exchange and headquarters of major banks, investment firms, and financial institutions, cementing its status as a global financial center. Additionally, Toronto boasts a thriving technology sector, with a burgeoning ecosystem of startups, incubators, and research institutions driving innovation and entrepreneurship. Contact Our Toronto International Business Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Toronto and across Ontario. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Ontario Economic Profile ### Schneider Downs and the Construction Industry Schneider Downs and the Construction Industry Schneider Downs has extensive experience in the Construction Industry:Provide services to 10 of the largest Tri-state construction contractors. Provides services to 7 of the largest Tri-state specialty contractors.Provides more than 40,000 hours of services annually to industry group clients.Performs 20-30 engineering-based cost segregation studies on an annual basis.Actively involved in various industry-related associations, such as:Association for General Contractors (AGC)Builders Exchange of Central Ohio (BX)Construction Financial Management Association (CFMA)Constructors Association of Western Pennsylvania (CAWP)Master Builders Association of Western Pennsylvania (MBA)National Association of Industrial & Office Properties (NAIOP)Ohio Contractors Association (OCA) Do you want to learn how Schneider Downs can help your construction company?Contact our Construction Industry Group Leaders today:  Gennaro J. DiBelloThis advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.Subscribe to our free Construction Industry newsletter.Sign up here:* required "*" indicates required fields CommentsThis field is for validation purposes and should be left unchanged.Name*Company Name*Email Address* Submit * required ### International Tax Accountants - Vancouver (BC) U.S. INTERNATIONAL BUSINESS TAX CPAS – VANCOUVER (BC) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Vancouver and across British Columbia. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Vancouver International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services, including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). About Vancouver (BC) Nestled between the rugged Coast Mountains and the Pacific Ocean, the business community of Vancouver, British Columbia, embodies a unique blend of natural beauty, innovation, and cultural diversity. As one of Canada's largest metropolitan areas, Vancouver serves as a vibrant economic center with a diverse range of industries and opportunities. At its core, Vancouver's business landscape is anchored by sectors such as technology, natural resources, tourism, and international trade. The city's strategic location on the West Coast of Canada makes it a gateway to the Asia-Pacific region, facilitating trade and investment with countries around the world. Additionally, Vancouver's burgeoning technology sector has gained international recognition, with startups and established companies alike drawn to the city's supportive ecosystem and skilled workforce. Contact Our Vancouver International Business Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Vancouver and across British Columbia. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 0.292893C3.48043 0.105357 3.73478 0 4 0ZM0.292893 9.29289C0.683417 8.90237 1.31658 8.90237 1.70711 9.29289L4 11.5858L6.29289 9.29289C6.68342 8.90237 7.31658 8.90237 7.70711 9.29289C8.09763 9.68342 8.09763 10.3166 7.70711 10.7071L4.70711 13.7071C4.31658 14.0976 3.68342 14.0976 3.29289 13.7071L0.292893 10.7071C-0.0976311 10.3166 -0.0976311 9.68342 0.292893 9.29289Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-select: url("data:image/svg+xml,%3Csvg width='10' height='6' viewBox='0 0 10 6' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M0.292893 0.292893C0.683417 -0.097631 1.31658 -0.097631 1.70711 0.292893L5 3.58579L8.29289 0.292893C8.68342 -0.0976311 9.31658 -0.0976311 9.70711 0.292893C10.0976 0.683417 10.0976 1.31658 9.70711 1.70711L5.70711 5.70711C5.31658 6.09763 4.68342 6.09763 4.29289 5.70711L0.292893 1.70711C-0.0976311 1.31658 -0.0976311 0.683418 0.292893 0.292893Z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit British Columbia Trade Details ### International Tax Accountants Providence Warwick (RI) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – PROVIDENCE WARWICK (RI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Providence, Warwick and across Rhode Island. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Rhode Island International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Providence (RI) Nestled along the scenic Narragansett Bay, the business community of Providence, Rhode Island, exudes a rich tapestry of history, creativity, and entrepreneurial spirit. As the capital city of Rhode Island, Providence serves as a dynamic economic center with a diverse range of industries driving its economy. At its core, Providence's business landscape is anchored by sectors such as education, healthcare, manufacturing, technology, and tourism. The city is home to renowned institutions like Brown University and the Rhode Island School of Design (RISD), which foster innovation and talent in fields such as research, design, and the arts. Additionally, Providence boasts a thriving healthcare sector, with world-class hospitals and medical research facilities contributing to the city's economic vitality. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Rhode Island International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Providence, Warwick, and across Rhode Island. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Rhode Island Exports, Export Categories, and Top Export Categories Source: Trade.gov ### International Tax Accountants - Windsor (ON) U.S. INTERNATIONAL BUSINESS TAX CPAS – WINDSOR (ON) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Windsor and across Ontario. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Windsor International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters National Reach Schneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB). Who is Schneider Downs? We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Windsor (ON) Nestled along the scenic shores of the Detroit River, the business community of Windsor, Ontario, exudes a blend of resilience, innovation, and cross-border collaboration. Situated directly across from Detroit, Michigan, Windsor serves as a vital economic link between Canada and the United States, facilitating trade, manufacturing, and investment opportunities. At its core, Windsor's business landscape is anchored by industries such as automotive manufacturing, advanced manufacturing, logistics, and agribusiness. With its proximity to the automotive hub of Detroit, Windsor has established itself as a key player in the global automotive supply chain, home to major automotive assembly plants and supplier facilities. Additionally, the city's strategic location along major transportation routes, including highways, railways, and the Windsor-Detroit International Border Crossing, enhances its role as a transportation and logistics hub. Contact Our Windsor International Business Tax Accountants Schneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Windsor and across Ontario. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-color-in-ctrl: #fff;--gf-color-in-ctrl-rgb: 255, 255, 255;--gf-color-in-ctrl-contrast: #112337;--gf-color-in-ctrl-contrast-rgb: 17, 35, 55;--gf-color-in-ctrl-darker: #F5F5F5;--gf-color-in-ctrl-lighter: #FFFFFF;--gf-color-in-ctrl-primary: #204ce5;--gf-color-in-ctrl-primary-rgb: 32, 76, 229;--gf-color-in-ctrl-primary-contrast: #fff;--gf-color-in-ctrl-primary-contrast-rgb: 255, 255, 255;--gf-color-in-ctrl-primary-darker: #001AB3;--gf-color-in-ctrl-primary-lighter: #527EFF;--gf-color-in-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-in-ctrl-light-rgb: 17, 35, 55;--gf-color-in-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-in-ctrl-light-lighter: #F5F5F5;--gf-color-in-ctrl-dark: #585e6a;--gf-color-in-ctrl-dark-rgb: 88, 94, 106;--gf-color-in-ctrl-dark-darker: #112337;--gf-color-in-ctrl-dark-lighter: rgba(17, 35, 55, 0.65);--gf-radius: 3px;--gf-font-size-secondary: 14px;--gf-font-size-tertiary: 13px;--gf-icon-ctrl-number: url("data:image/svg+xml,%3Csvg width='8' height='14' viewBox='0 0 8 14' fill='none' xmlns='http://www.w3.org/2000/svg'%3E%3Cpath fill-rule='evenodd' clip-rule='evenodd' d='M4 0C4.26522 5.96046e-08 4.51957 0.105357 4.70711 0.292893L7.70711 3.29289C8.09763 3.68342 8.09763 4.31658 7.70711 4.70711C7.31658 5.09763 6.68342 5.09763 6.29289 4.70711L4 2.41421L1.70711 4.70711C1.31658 5.09763 0.683417 5.09763 0.292893 4.70711C-0.0976311 4.31658 -0.097631 3.68342 0.292893 3.29289L3.29289 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0.65)'/%3E%3C/svg%3E");--gf-icon-ctrl-search: url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Ontario Economic Profile ### Cloud Strategy What is a cloud strategy? PRIMARY CONTACT: Patrick B. Armknecht CPA, CITPA cloud strategy is the means by which you migrate on premise solutions to cloud (internet based) solutions. Cloud computing can include software, servers, storage, databases, etc.Fluff – Specific to questionApplicable Service Offerings CLOUD MIGRATION HAVE A QUESTION? "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* CommentsThis field is for validation purposes and should be left unchanged. Submit OUR THOUGHTS ON Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal… Read More > Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity… Read More > Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the… Read More > ### U.S. INTERNATIONAL BUSINESS TAX CPAS – WINNIPEG (MB) U.S. INTERNATIONAL BUSINESS TAX CPAS – WINNIPEG (MB) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients international companies in Winnipeg and across Manitoba. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Winnipeg International Business Tax ServicesInitial structuring, capitalization, and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 U.S.-based CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. National ReachSchneider Downs provides U.S. international tax consulting services to businesses located across Canada including Montreal (QC), Calgary (AB), Toronto (ON), Regina (SK), Ottawa (ON), Vancouver (BC), and Winnipeg (MB).Map of Winnipeg, MB About Winnipeg (MB)Winnipeg is known for its cultural diversity, arts and music scene, and its natural beauty. The city is home to several museums and art galleries, including the Winnipeg Art Gallery and the Canadian Museum for Human Rights, which is the first museum in the world dedicated to the subject.The city is also known for its festivals and events, such as the Winnipeg Folk Festival, the Winnipeg Fringe Theatre Festival, and the Festival du Voyageur, a winter festival celebrating the city's French-Canadian heritage.Contact Our Winnipeg International Business Tax AccountantsSchneider Downs is a U.S.-based Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Winnipeg and across Manitoba. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit Manitoba Economic Profile ### International Tax CPA Anchorage Juneau AK INTERNATIONAL BUSINESS TAX CPAS – ANCHORAGE JUNEAU (AK) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Anchorage and Juneau. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Anchorage International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico, and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Anchorage (AK) Anchorage is known for its famous landmarks, including the Alaska Native Heritage Center, which celebrates the state's Native cultures and history. The city is also home to several museums, including the Anchorage Museum at Rasmuson Center and the Alaska Aviation Museum. Anchorage's economy is based on several industries, including oil and gas, tourism, and government. The city serves as a hub for transportation, with an international airport and several major highways connecting it to the rest of the state and the Lower 48 states. Anchorage is also home to several government offices, including the Alaska State Capitol and the offices of several state agencies. The city's tourism industry is also significant, with visitors coming to explore the city's natural beauty and outdoor recreation opportunities. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Alaska International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Anchorage, Juneau and across Alaska.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_30[data-form-index="2"].gform-theme,[data-parent-form="30_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: 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url("data:image/svg+xml,%3Csvg version='1.1' xmlns='http://www.w3.org/2000/svg' width='640' height='640'%3E%3Cpath d='M256 128c-70.692 0-128 57.308-128 128 0 70.691 57.308 128 128 128 70.691 0 128-57.309 128-128 0-70.692-57.309-128-128-128zM64 256c0-106.039 85.961-192 192-192s192 85.961 192 192c0 41.466-13.146 79.863-35.498 111.248l154.125 154.125c12.496 12.496 12.496 32.758 0 45.254s-32.758 12.496-45.254 0L367.248 412.502C335.862 434.854 297.467 448 256 448c-106.039 0-192-85.962-192-192z' fill='rgba(17, 35, 55, 0.65)'/%3E%3C/svg%3E");--gf-label-space-y-secondary: var(--gf-label-space-y-md-secondary);--gf-ctrl-border-color: #686e77;--gf-ctrl-size: var(--gf-ctrl-size-md);--gf-ctrl-label-color-primary: #112337;--gf-ctrl-label-color-secondary: #112337;--gf-ctrl-choice-size: var(--gf-ctrl-choice-size-md);--gf-ctrl-checkbox-check-size: var(--gf-ctrl-checkbox-check-size-md);--gf-ctrl-radio-check-size: var(--gf-ctrl-radio-check-size-md);--gf-ctrl-btn-font-size: var(--gf-ctrl-btn-font-size-md);--gf-ctrl-btn-padding-x: var(--gf-ctrl-btn-padding-x-md);--gf-ctrl-btn-size: var(--gf-ctrl-btn-size-md);--gf-ctrl-btn-border-color-secondary: #686e77;--gf-ctrl-file-btn-bg-color-hover: #EBEBEB;--gf-field-pg-steps-number-color: rgba(17, 35, 55, 0.8);} "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/Question How would you like us to contact you?Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Alaska International Trade Data ### International Tax CPA Detroit MI INTERNATIONAL BUSINESS TAX CPAS – DETROIT (MI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Detroit and across Michigan. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Detroit International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs and for-profit and not-for-profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico, and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Detroit (MI)Nestled along the shores of the Detroit River, the business community of Detroit, Michigan, embodies a tale of resilience, reinvention, and economic revival. Once known primarily for its automotive industry, Detroit has diversified its economy and emerged as a dynamic hub of innovation across various sectors.At its core, Detroit's business landscape is anchored by industries such as automotive manufacturing, technology, healthcare, finance, and professional services. While the automotive sector remains a significant driver of the local economy, the city has embraced new industries, including advanced manufacturing, mobility technologies, and renewable energy. Additionally, Detroit's downtown area has experienced a revitalization, with a burgeoning entrepreneurial ecosystem, revitalized infrastructure, and a growing number of startups and innovation hubs.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Michigan International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Detroit and across Michigan.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPA Honolulu Hawaii INTERNATIONAL BUSINESS TAX CPAS – HONOLULU KONA (HI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Honolulu and Kona. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Honolulu International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico, and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Honolulu (HI)The business community in Honolulu, Hawaii is a vibrant and diverse landscape that reflects the unique cultural and economic dynamics of the region. Situated in the heart of the Pacific Ocean, Honolulu serves as a major hub for commerce, tourism, and innovation in Hawaii and the broader Pacific Rim.At its core, the business community in Honolulu is deeply influenced by the spirit of aloha, which emphasizes respect, hospitality, and collaboration. This ethos permeates through various sectors, fostering a supportive and interconnected network of businesses, entrepreneurs, and professionals.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Hawaii International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Honolulu, Kona and across Hawaii  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPA - Los Angeles CA INTERNATIONAL BUSINESS TAX CPAS – LOS ANGELES (CA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Los Angeles and across California. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Los Angeles International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. What Our Clients Say...About Los Angeles (CA)Nestled amidst the vibrant sprawl of Southern California, the business community of Los Angeles embodies a kaleidoscope of innovation, diversity, and cultural richness. As the second-largest city in the United States and a global hub of commerce, Los Angeles serves as a dynamic epicenter for a wide array of industries, from entertainment and technology to fashion, finance, and healthcare.At its core, Los Angeles is synonymous with the entertainment industry, boasting the world-renowned Hollywood district and major film studios that shape global pop culture. However, the city's economic landscape extends far beyond entertainment, with thriving sectors such as technology, aerospace, manufacturing, logistics, and tourism contributing to its economic vitality. Los Angeles is also home to a robust startup ecosystem, attracting entrepreneurs and venture capital to fuel innovation and growth.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Los Angeles International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Los Angeles and across California. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPA - Phoenix AZ INTERNATIONAL BUSINESS TAX CPAS – PHOENIX (AZ) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Phoenix and across Arizona. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Phoenix International Business Tax ServicesInitial structuring, capitalization, and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross-border tax issuesMexico/U.S. cross-border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic, international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs, for-profit and not-for-profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Phoenix (AZ)The business community in Phoenix, Arizona, epitomizes the dynamic spirit of the American Southwest, blending innovation, diversity, and resilience against the backdrop of a thriving desert metropolis. Situated in the Sonoran Desert, Phoenix has emerged as a hub for a wide array of industries, ranging from technology and aerospace to healthcare and tourism.One of the defining features of Phoenix's business landscape is its rapid growth and expansion. As one of the fastest-growing cities in the United States, Phoenix attracts businesses and entrepreneurs seeking new opportunities and a favorable business climate. The city's strategic location, well-developed infrastructure, and pro-business policies make it an attractive destination for companies looking to establish a presence in the Southwest.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Phoenix International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Phoenix and across Arizona. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US Subscribe to the SD Global Navigator, our free quarterly e-newsletter.Sign up here: "*" indicates required fields Name*Company Name*Email Address* EmailThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPA Portland Bangor (ME) INTERNATIONAL BUSINESS TAX CPAS – PORTLAND BANGOR (ME) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Portland and Bangor. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Portland International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs and for-profit and not-for-profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico, and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Portland (ME)The business community in Portland, Maine is a dynamic and close-knit ecosystem that reflects the city's unique blend of historic charm and modern innovation. Nestled along the picturesque shores of Casco Bay, Portland serves as the economic hub of Maine, attracting businesses from diverse industries and sectors.At its heart, the Portland business community is defined by a spirit of collaboration and creativity. Local entrepreneurs and small businesses thrive alongside established companies, fostering a supportive environment for growth and innovation. The city's vibrant arts and culture scene, coupled with its strong culinary reputation, adds to its allure, attracting both tourists and investors alike.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Maine International  Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Portland, Bangor, and across Maine.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPA Santa Fe Albuquerque (NM) INTERNATIONAL BUSINESS TAX CPAS – SANTA FE ALBUQUERQUE (NM) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Santa Fe and Albuquerque. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Albuquerque International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit, and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico, and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Santa Fe (NM)The business community in Santa Fe, New Mexico, reflects the city's unique blend of history, culture, and creativity. Situated in the high desert of northern New Mexico, Santa Fe is renowned for its vibrant arts scene, adobe architecture, and rich Native American and Hispanic heritage.At the heart of Santa Fe's business community is a spirit of entrepreneurship and innovation, which is deeply intertwined with the city's cultural identity. Local artisans, galleries, and independent retailers contribute to the city's reputation as a hub for the arts and crafts, attracting visitors from around the world.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our New Mexico International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Santa Fe and across New Mexico.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPA - Seattle (WA) INTERNATIONAL BUSINESS TAX CPAS – SEATTLE (WA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Seattle and across Washington. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Seattle International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax matters Who is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Seattle (WA)Nestled along the shores of the majestic Puget Sound, the business community of Seattle, Washington, is a vibrant tapestry of innovation, entrepreneurship, and economic dynamism. As the largest city in the Pacific Northwest and a global tech hub, Seattle serves as a beacon of innovation across a diverse range of industries.At its core, Seattle's business landscape is anchored by the technology sector, with giants like Amazon, Microsoft, and numerous startups shaping the city's economy. The city's thriving tech scene has fostered a culture of innovation and entrepreneurship, attracting talent and investment from around the world. Additionally, Seattle boasts a strong presence in other industries, including aerospace, healthcare, biotechnology, retail, and maritime trade.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Seattle International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Seattle and across Washington. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs Anchorage Juneau (AK) INTERNATIONAL BUSINESS TAX CPAS – ANCHORAGE JUNEAU (AK) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Anchorage, Juneau, and across Alaska. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Anchorage International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Anchorage (AK) The business community in Anchorage, Alaska, is a resilient and diverse network that thrives amidst the unique challenges and opportunities presented by the state's rugged terrain and extreme climate. Anchorage serves as the economic hub of Alaska, providing a wide range of goods and services to both residents and visitors alike. At its core, the Anchorage business community is characterized by a spirit of independence and entrepreneurship, reflecting the pioneering ethos of the region's early settlers. From small family-owned businesses to large corporations, there is a strong sense of community and collaboration that permeates throughout the city. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Alaska International Business Tax CPAs Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Anchorage, Juneau, and across Alaska.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. 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Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Alaska Economic Data ### Client Login Client Login Schneider Downs Client Portal TaxCaddy Login SafeSend Returns Login QuickFee Client Portal Wealth Management Logins Charles Schwab 401(K) PLAN LOGIN Elite Money Portal Orion Client Portal Fidelity Investments ### International Tax CPAs Billings Missoula (MT) INTERNATIONAL BUSINESS TAX CPAS – BILLINGS MISSOULA (MT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Billings, Missoula, and across Montana. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Billings International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Billings (MT)The business community in Billings, Montana, embodies the spirit of the American West, characterized by resilience, entrepreneurship, and a strong sense of community. As the largest city in Montana, Billings serves as a vital economic hub for the region, attracting businesses from various industries and sectors.At its heart, the Billings business community is deeply rooted in the region's natural resources, including agriculture, energy, and mining. These industries have long been pillars of the local economy, providing employment opportunities and driving economic growth.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Montana International Business Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Billings, Missoula, and across Montana.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs Fargo Bismarck (ND) INTERNATIONAL TAX CPAS – FARGO BISMARCK (ND) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in  Fargo, Bismarck, and across North Dakota. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Fargo International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Fargo (ND)The business community in Fargo, North Dakota, epitomizes resilience, collaboration, and innovation against the backdrop of the Midwest's vast plains. Despite being a relatively small city, Fargo boasts a thriving economy supported by a diverse range of industries.At its core, Fargo's business landscape is characterized by a strong entrepreneurial spirit and a supportive environment for startups and small businesses. The city's close-knit community fosters collaboration and networking opportunities, enabling entrepreneurs to thrive and innovate.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Fargo International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Fargo, Bismarck, and across North Dakota. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs Las Vegas (NV) INTERNATIONAL TAX CPAS – LAS VEGAS (NV) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Las Vegas and across Nevada. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Las Vegas International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Las Vegas (NV)The business community in Las Vegas, Nevada, pulsates with energy and diversity, mirroring the city's reputation as the entertainment capital of the world. Beyond the glitz and glamour of the famed Strip, Las Vegas boasts a thriving economy fueled by a variety of industries and enterprises.Central to the Las Vegas business community is the hospitality and tourism sector, which forms the backbone of the city's economy. With world-class resorts, casinos, and entertainment venues, Las Vegas attracts millions of visitors annually, generating revenue and employment opportunities for businesses across the spectrum.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Las Vegas International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Las Vegas and across Nevada. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs Honolulu (HI) INTERNATIONAL TAX CPAS – HONOLULU (HI) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Honolulu and across Hawaii. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Honolulu International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Honolulu (HI)The business community in Honolulu, Hawaii, is a vibrant tapestry woven with the threads of island culture, global commerce, and natural beauty. Situated as the capital and economic center of Hawaii, Honolulu's business landscape is unique, blending the traditional with the modern.At its heart, the Honolulu business community is infused with the spirit of aloha, fostering relationships built on respect, collaboration, and hospitality. This cultural ethos permeates through various sectors, creating a supportive environment for businesses of all sizes.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Honolulu International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Honolulu and across Hawaii.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs New Orleans (LA) INTERNATIONAL TAX CPAS – NEW ORLEANS (LA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in New Orleans and across Louisiana. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.New Orleans International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About New Orleans (LA)The business community in New Orleans, Louisiana, is a vibrant tapestry interwoven with the city's rich cultural heritage, entrepreneurial spirit, and unique economic landscape. Situated along the banks of the Mississippi River, New Orleans is renowned for its historic architecture, diverse cuisine, and lively music scene, all of which contribute to the city's distinctive business environment.At the heart of the New Orleans business community is a deep-rooted sense of resilience, shaped by the city's history of overcoming adversity, including natural disasters such as Hurricane Katrina. Despite these challenges, New Orleans has emerged as a thriving hub for various industries, including tourism, hospitality, entertainment, and maritime commerce.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our New Orleans International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in New Orleans and across Louisiana.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit ### International Tax CPAs Salt Lake City (UT) INTERNATIONAL TAX CPAS – SALT LAKE CITY (UT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Salt Lake City, and across Utah. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Salt Lake City International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Salt Lake City (UT)The business community in Salt Lake City, Utah, embodies a unique blend of entrepreneurial vigor, economic diversity, and cultural heritage set against the backdrop of the stunning Wasatch Mountains. Situated in the heart of the Intermountain West, Salt Lake City serves as a hub for commerce, technology, and outdoor recreation.At its core, the Salt Lake City business community is characterized by a spirit of innovation and collaboration, nurtured by a supportive ecosystem that includes universities, research institutions, and a burgeoning startup scene. The city's business landscape is diverse, encompassing industries such as technology, finance, healthcare, outdoor recreation, and manufacturing.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Salt Lake City International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Salt Lake City and across Utah.  If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name*Last Name*Company*Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit ### Julie Ann M. Boles Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### CPE Month Webinar Series CPE Month Webinar Series: Tax When: December 1, 2022 9:00AM - December 1, 2022 12:00PMWe are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with me at lsherrill@schneiderdowns.com.Tax Update3 CPE HoursTopics Covered to Include*:Federal Tax Update/IRS StatusCredits and IncentivesState Tax Update and OpportunitiesEstate Tax/Exit Planning*Topics subject to change. About Schneider Downs Tax AdvisorsWith one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives.Visit our Tax Services page to learn more. ### Thank You for Contacting Schneider Downs (permissions) Thank You for Contacting Schneider Downs Thank you for contacting Schneider Downs about posting information from our website. We will respond to your request within 24 hours. If you have any questions, please contact the permissions coordinator at 412-697-5321 or ssmith@schneiderdowns.com. ### Key Indicators Your Organization Can Benefit From Digital Transformation Digital Transformation can impact every part of an organization, with the primary focus being on transforming your human capital, processes and technology. But, how do you know which areas to focus on, and where do you even start? We invite you to download our whitepaper to learn some of the top indicators that your organization can benefit from a digital transformation.  For more information, contact the team at contactsd@schneiderdowns.com or visit Digital Transformation.  Download the Content. Please fill out the form for your complimentary copy of Key Indicators Your Organization Can Benefit From Digital Transformation whitepaper. "*" indicates required fields First Name* Last Name* Title* Company/Organization* Email* Phone NumberEmailThis field is for validation purposes and should be left unchanged. Download Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Introducing....TaxCaddy Tax simplification has arrived. Schneider Downs is proud to introduce TaxCaddy, a safe, secure software solution that will reduce the amount of time you spend collecting your annual tax data. TaxCaddy leverages the capabilities of today’s technology to make it easier for you to send us the materials needed to complete your annual Form 1040.Whether you use a PC, Mac, tablet, or mobile phone, TaxCaddy has the capability to retrieve your Form 1099s, Form 1098s and W-2s directly from the payor, bank, and your employer, and send them electronically to your Schneider Downs tax engagement team.  Documents that you choose not to link can be scanned and uploaded or, perhaps even more convenient, photographed when they arrive in the mail using the TaxCaddy mobile application.  No more paper, stamps or envelopes!In addition to easily capturing and securely storing tax documents, your TaxCaddy account maintains a complete inventory of your tax data, including a record of all the information that has been reported on your past returns.  Simple questions regarding changes in your tax position can be answered with the click of a button.  Simplifying the tax data gathering process is an innovation that provides convenience for our clients, while allowing our professionals to focus on tax planning strategies.We realize you may have questions about this new program and  invite you to contact your Schneider Downs representative or William DeMarchi, TaxCaddy IT Support, with questions about getting started. https://www.youtube.com/embed/RWoYh-gqhEU ### YubiKey With more and more data breaches being reported every day, it is important to form strong security habits when online. One of the strongest steps you can take is enabling two-factor authentication. This type of authentication requires you first to provide your password, then another proof of identification. The second form of identification has many methods you are able to use, but the strongest method to ensure security is using a physical hardware key, such as a YubiKey. No additional software is necessary and the YubiKey only takes minutes to set up, and can help protect you from an attacker taking over your account.To learn more about your Yubikey and how to set it up for some of the most common online applications, please visit https://www.yubico.com/setup/#security-key. As a helpful guide, we have laid out Yubikey setup instructions for some of the most common applications below. Always remember to have a backup to the security key (SMS One Time Password, Backup Security Codes, Google Authenticator, etc.) in case you misplace your security key, these options vary per website.To learn more about our cybersecurity services and how we may assist you, please visit our website at Cybersecurity.GoogleNavigate to the 2-Step Verification section of your Google AccountSelect Get Started  and register a phone number for Google’s SMS 2FASelect Add Security KeySelect NextInsert the YubikeyTap the gold disk on your YubiKeyIn the top left, you’ll be asked if Google can see the make and model of your security key. Select AllowDuoLog into a Duo enabled application and select Add a New Device located on the left of the Duo portalSelect U2F Token for your authentication device Select ContinueInsert the YubiKey into your computerTap the gold disk on the YubiKeyFacebookNavigate to your Security and Login SettingsScroll down to Use two-factor authentication and select EditGo to Security Keys and select Add KeyInsert the YubiKey into your computerTap the gold disk on the YubiKeyTwitterNavigate to your profile icon, then select  Settings and PrivacyUnder Security, select Review Your Login Verification MethodsNext to Security Key, select Set Up Insert the YubiKey into your computerTap the gold disk on the YubiKeyDropboxNavigate to the Settings tab in your Dropbox AccountEnter the Security TabTurn the Two-step verification tab onSelect Add next to Security KeysInsert the YubiKey into your computerTap the gold disk on the YubiKeyIn the top left hand of your browser select Allow  ### Quality of Earnings Analysis - Memphis (TN) Quality of Earnings Reports - Memphis (TN) When it comes to buying or selling a Memphis or Tennessee business, ensuring the integrity of financial and non-financial information is crucial. At Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. What is a Quality of Earnings Report? A Quality of Earnings (QoE) report is a financial analysis that assesses the sustainability and reliability of a company's earnings. It is typically conducted during the due diligence process, often in the context of mergers and acquisitions (M&A), but it can also be used for internal purposes by companies and their stakeholders. The primary objective of a Quality of Earnings report is to provide a deeper understanding of a company's financial performance and the factors that may impact its future earnings potential. Buy-Side Due Diligence: Unleash the True Value of Your Investments Financial Statement Analysis: We conduct a detailed review of financial statements, evaluating the quality of earnings, identifying potential risks, and assessing the sustainability of earnings. This analysis provides you with a clear understanding of the target company's financial health, helping you make informed investment decisions Historical Data Analysis: Our team performs a thorough review of historical financial data, identifying trends, patterns, and anomalies that may impact future earnings. This analysis helps uncover any potential risks or opportunities that may affect your investment decision, ensuring you have a comprehensive understanding of the target company's financial performance. Quality of Earnings Analysis: We assess the quality of earnings adjustments, including non-recurring items, non-operating income, and off-balance-sheet items, to ensure that earnings are reliable and sustainable. This analysis helps you make informed decisions based on accurate financial information, minimizing risks in your investment. Sell-Side Due Diligence: Maximize Your Exit Strategy Financial Performance Analysis: We conduct a detailed analysis of your financial performance, identifying potential risks and opportunities, and providing recommendations to enhance the quality of earnings. This analysis helps you position your business in the best possible light to potential buyers, maximizing the value of your business. Financial Statement Restatement Assistance: Our team can assist you in restating financial statements to ensure they are accurate and in compliance with accounting standards. This can enhance buyer confidence and streamline the due diligence process, ensuring a smooth and successful sale. Proactive Risk Identification: We identify potential risks that may impact the sale process and work with you to proactively address them, minimizing the likelihood of surprises during the due diligence process. Our proactive approach helps you mitigate risks and maximize the value of your business, ensuring a successful sale. Contact our Memphis QoE Team Schneider Downs provides Quality of Earnings reports to companies in Memphis and across Tennessee.  If you are interested in learning how we can assist you in your deal process, complete the form above and a team member will follow up with you promptly. National Reach Schneider Downs also provides QoE reports to companies in: Atlanta (GA), Baltimore (MD), Birmingham (AL), Boston (MA), Charleston (SC), Charlotte (NC), Chicago (IL), Denver (CO), Des Moines (IA), Houston (TX), Indianapolis (IN), Las Vegas (NV), Memphis (TN), Milwaukee (WI), Minneapolis (MN), Orlando (FL), Phoenix (AZ), Pittsburgh (PA), Portland (OR), Richmond (VA), San Diego (CA), Seattle (WA), St. Louis (MO), Tampa (FL) and Wichita (KS). GET MORE INFORMATION "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About Memphis (TN) The business community in Memphis, Tennessee, is anchored by logistics, healthcare, and manufacturing. Home to FedEx’s global headquarters, the city is a major logistics hub with a strong transportation infrastructure. Healthcare plays a vital role, with institutions like St. Jude Children’s Research Hospital and Methodist Le Bonheur Healthcare driving economic growth. Memphis also has a strong manufacturing presence, particularly in the automotive and food processing industries. Its location along the Mississippi River enhances trade, while the city's rich cultural heritage supports tourism and hospitality. ### Request a Quote "*" indicates required fields First Name* Last Name* Email* PhoneService departments of interest* Audit and Assurance Tax Consulting Private Client Services Wealth Management Additional detailContact preference* Email Phone EmailThis field is for validation purposes and should be left unchanged. Submit ### Automation and Data Analytics Process Team FAQs ADAPT FAQs The Schneider Downs Automation and Data Analytics Process Team (ADAPT) offers a lineup of descriptive, predictive and prescriptive data analytic services to help transform your unworkable data into actionable business insights. Below are some of the common questions our team comes across and some helpful tips when deciding if data analytics services is right for your organization. What industries and business functions are best suited for ADAPT? As an agnostic technology solution, data analytics provides numerous business advantages across the board. Recent engagements include: Installation and configuration of data warehouse, analytics and visualization tools into existing business processes Automation of business processes using data analytic procedures Implementation of custom dashboard reporting to assist in data management and communication Ad hoc data analytic projects using state of the art data analysis software and procedures Data readiness and best practice consulting Contract risk assessment and multi-faceted analytics package designed to manage risk Analytics to measure profitability and productivity of routes, drivers, day of the week and other time trends Fraud monitoring and detection procedures Litigation support Due diligence for M&A activity Can ADAPT provide quick and easy access to my data? Our team provides data warehousing solutions to help you access your data with ease and to remedy inefficient systems or disaggregated systems that do not talk to each other. Security based permissions provide the appropriate employees with secure access to data at their fingertips. Can ADAPT implement data analysis into everyday accounting or operational processes? Our team can identify opportunities to integrate data analysis into your day-to-day, monthly, quarterly or annual closing and reporting processes to provide you with more business insights to help run your business. Can ADAPT improve efficiency with day-to-day manual business processes? Our team can design and implement a tailored solution to automate and streamline manual reporting, planning and data analysis processes to allow the highest and best use of each employee’s time. Can ADAPT provide solutions for reports or data-sets that have outgrown the capabilities of standard office applications? Our team will use state-of-the-art data analytics and big-data solutions to develop a scalable model that can grow with your business. ADAPT DATA DISCOVERY FAQs CAN ADAPT IDENTIFY SOURCES OF ANOMALIES AND UNEXPECTED RESULTS? Our team can analyze your business to identify the root cause of abnormalities in your results.  By implementing these solutions at your company, we can create an environment for continuous monitoring, evaluating and notification of any anomalies or unexpected results in the future. CAN ADAPT EVALUATE THE IMPACT OF CERTAIN KEY PERFORMANCE INDICATORS (KPI’S) ON OUR RESULTS? Our team will examine KPI’s used by you and your team to determine their relevancy to your actual performance.  Focusing on factors with a perceived, but not actual, impact on end-results can lead to inappropriate business decisions and refocus your oversight on business intelligence that matters. CAN ADAPT HELP TO IDENTIFY NEW RELEVANT KPI’S FOR MONITORING OUR BUSINESS? Our team will consult with key stakeholders and decision makers to discuss, design and develop solutions to track and monitor new KPI’s relevant to the end-results of your company. CAN ADAPT PROVIDE ME WITH THE FOUNDATION TO EXECUTE AND GROW OUR DATA INITIATIVES? Our team will partner with you to evaluate your company’s data readiness, aid in consultation and execution of a data strategy, and we will help deploy solutions to carry you through all phases of your data journey. Our team can analyze your business to identify the root cause of abnormalities in your results.  By implementing these solutions at your company, we can create an environment for continuous monitoring, evaluating and notification of any anomalies or unexpected results in the future. Our team will examine KPI's used by you and your team to determine their relevancy to your actual performance.  Focusing on factors with a perceived, but not actual, impact on end-results can lead to inappropriate business decisions and refocus your oversight on business intelligence that matters. Our team will consult with key stakeholders and decision makers to discuss, design and develop solutions to track and monitor new KPI’s relevant to the end-results of your company. Our team will partner with you to evaluate your company’s data readiness, aid in consultation and execution of a data strategy, and we will help deploy solutions to carry you through all phases of your data journey. ADAPT DATA VISUALIZATION FAQS CAN ADAPT SUPPLEMENT OUR EXISTING REPORTING PACKAGES? Our team can provide you with customized dashboards for continuous monitoring of financial transactions, operational processes and business results. CAN ADAPT COMMUNICATE FINANCIAL PERFORMANCE AND METRICS TO LARGE AUDIENCES? Our team can explain business insights to your organization in visually appealing and easy to understand graphics and reports. CAN ADAPT PROVIDE A COMPREHENSIVE WELLNESS CHECK OF MY CURRENT STATE? Our team can provide comparative financial reporting so you can see how you stack up against past performance, target performance and performance of peers in your industry. Our team can provide you with customized dashboards for continuous monitoring of financial transactions, operational processes and business results. Our team can explain business insights to your organization in visually appealing and easy to understand graphics and reports. Our team can provide comparative financial reporting so you can see how you stack up against past performance, target performance and performance of peers in your industry. ADAPT GENERAL FAQS CAN ADAPT’S SOLUTIONS INTEGRATE WITH MY EXISTING SOFTWARE? Our team uses industry-leading software that integrates directly into your systems to allow for automatic data aggregation, report running and dashboard refresh. Our technology consultants have experience integrating with multiple ERP systems and other software solutions. CAN ADAPT UTILIZE MY EXISTING BUSINESS INTELLIGENCE TOOLS? Our team is partnered with Microsoft and Solver to deliver high-quality service, support and ongoing updates.  Our team is trained and certified in a variety of data analytic tools including Caseware IDEA, Microsoft Power BI, Solver Cloud, Alteryx and Tableau. CAN ADAPT ANSWER THE QUESTIONS MY COMPANY HAS REGARDING DATA? Our team is comprised of individuals with a variety of experience and qualifications, including Certified Data Analysts, Certified Public Accountants, Certified Business Analysts, Solver Certified Consultants, Microsoft Power BI Certified Consultants, Power BI Black Belts and skilled employees with technology and industry experience. About Schneider Downs Technology Advisors Our consultants combine practical business experience with up-to-date technical options to implement cost-effective solutions for our clients. Our association with industry-leading technology companies provides our clients with the latest industry-specific, low-risk and proven solutions. Through vendor certification programs, advanced education and industry conferences, our consultants are trained and certified on the latest products and services. Our consultants bring a variety of experiences, technical knowledge and industry certifications to our clients, providing an ongoing and effective partnership. Learn more at www.schneiderdowns.com/adapt or contact us to get started today. Our team uses industry-leading software that integrates directly into your systems to allow for automatic data aggregation, report running and dashboard refresh. Our technology consultants have experience integrating with multiple ERP systems and other software solutions. Our team is partnered with Microsoft and Solver to deliver high-quality service, support and ongoing updates.  Our team is trained and certified in a variety of data analytic tools including Caseware IDEA, Microsoft Power BI, Solver Cloud, Alteryx and Tableau. Our team is comprised of individuals with a variety of experience and qualifications, including Certified Data Analysts, Certified Public Accountants, Certified Business Analysts, Solver Certified Consultants, Microsoft Power BI Certified Consultants, Power BI Black Belts and skilled employees with technology and industry experience. About Schneider Downs Technology Advisors Our consultants combine practical business experience with up-to-date technical options to implement cost-effective solutions for our clients. Our association with industry-leading technology companies provides our clients with the latest industry-specific, low-risk and proven solutions. Through vendor certification programs, advanced education and industry conferences, our consultants are trained and certified on the latest products and services. Our consultants bring a variety of experiences, technical knowledge and industry certifications to our clients, providing an ongoing and effective partnership. Learn more at www.schneiderdowns.com/adapt or contact us to get started today. CONTACT ASK US What would you like to know? "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Schneider Downs Solutions Center Schneider Downs Solutions Center Solutions to Problems You Didn’t Know You Had Contact Us Today Remote Learning from Schneider Downs Browse our list of free webinars to find your next great idea! Learn More Big Thinking for Today's Challenges Visit our case history library for real-life examples of how our Big Thinking can help solve Big Problems Learn More Schneider Downs Events Connect with Schneider Downs virtually and in-person at one of our upcoming events. Learn More OUR SERVICES SINCE 1956, SCHNEIDER DOWNS HAS BEEN PROVIDING ACCOUNTING, TAX AND BUSINESS ADVISORY SERVICES THROUGH INNOVATIVE THOUGHT LEADERS WHO DELIVER THEIR EXPERTISE TO MEET THE INDIVIDUAL NEEDS OF EACH CLIENT. audit-assurance-servicesCreated with Sketch. AUDIT AND ASSURANCE SERVICES We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans. tax-servicesCreated with Sketch. TAX SERVICES Schneider Downs provides a variety of specialized services to assist our clients with all of their tax compliance and planning needs. technologyCreated with Sketch. CONSULTING SERVICES The Schneider Downs Consulting team features experienced professionals across a diverse array of specialties, carefully selected to address the most pressing needs of businesses across all industries. staffingCreated with Sketch. PRIVATE CLIENT SERVICES The Schneider Downs Private Client Services practice was developed to attend to the specific and individualized needs of high-net-worth individuals. wealth-iconCreated with Sketch. WEALTH MANAGEMENT SERVICES Schneider Downs Wealth Management has been providing investment and retirement services since 2000. YOU MAY ALSO BE INTERESTED IN SOC REPORTING Schneider Downs provides System and Organization Controls (SOC) examinations nationally to over 100 clients annually in a variety of industries. CYBERSECURITY We offer a comprehensive set of IT security services, including penetration assessments, vulnerability assessments, web application security testing, IT security maturity assessments and more. IT RISK ADVISORY We ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. OUR THOUGHTS ON Browse our library of articles featuring the latest commentary and analysis on a broad range of topics written by our professionals. ABOUT SCHNEIDER DOWNS Big Thinking. Personal Focus. This is what has made us who we are today, and it will guide our actions in the future. What our clients think ### Lease Accounting 2016 We welcome you to download our free whitepaper, Understanding the Lease Accounting Changes. Please complete the form below and you will be instantly routed to access the document. "*" indicates required fields First Name* Last Name* Email address* Company Phone numberCommentsThis field is for validation purposes and should be left unchanged. Submit ### Thank you for contacting Schneider Downs (We want to hear from you thank you) Thank you for contacting Schneider Downs Your message is very important to us, and you will be contacted by a member of the Schneider Downs team shortly if a response is needed. If you need immediate assistance, please call one of our offices: Pittsburgh, 412-261-3644 or Columbus, 614-621-4060. ### SD Cares Donation SD Cares Donations: Use Boxes Below Checking Transfer funds directly from your bank with no additional fees. 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(“SDC”) client portal is offered to you conditioned on your acceptance of the terms, conditions and notices contained in this Client Portal Agreement, as may be updated from time to time by SDC. By using the portal you agree to these terms and conditions. If you are not a SDC client or authorized employee of a SDC client, then any use by you of the portal is prohibited.Description of ServiceThe portal provides SDC clients and their authorized employees with access to information displayed on the portal for inquiries and deliveries of documents and communications for their account only. The information, documents and communications on the portal are provided as a convenient resource to clients and may be used for informational purposes only.User Password and SecurityUsing the portal and its related services requires the use of a password and a user name. The confidentiality of your password and account is your responsibility. You must take appropriate security measures to maintain the confidentiality of your password and username and to prevent disclosure to any unauthorized persons. Any activities that occur under your account are your responsibility and not the responsibility or liability of SDC. You agree to notify SDC immediately of any unauthorized use of your account or any other breach of security by contacting us at icshelpdesk@schneiderdowns.com or (412) 261-3644. It is prohibited to use anyone else’s account without the express permission of that account holder.Accuracy of Content and Liability DisclaimerSDC will strive to use reasonable efforts to include accurate and updated information on the portal. HOWEVER, YOU UNDERSTAND AND AGREE THAT SDC IS UNDER NO OBLIGATION TO DO SO AND NEITHER SDC NOR ITS SUPPLIERS MAKE ANY REPRESENTATION OR WARRANTY ABOUT THE SUSTAINABILITY, RELIABILITY, AVAILABILITY, TIMELINESS, AND ACCURACY OF THE INFORMATION SOFTWARE, DOCUMENTS AND COMMUNICATIONS CONTAINED ON THE PORTAL FOR ANY PURPOSE. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH INFORMATION, SOFTWARE, DOCUMENTS AND COMMUNICATIONS ARE PROVIDED “AS IS” WITHOUT WARRANTY OR CONDITION OF ANY KIND. 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IF YOU ARE DISSATISFIED WITH ANY PORTION OF THE PORTAL, INFORMATION, DOCUMENTS OR COMMUNICATIONS ON THE PORTAL, OR WITH ANY OF THESE TERMS AND CONDITIONS OF USE, YOUR SOLE AND EXCLUSIVE REMEDY IS TO CEASE USING THE PORTAL AND THE INFORMATION, DOCUMENTS OR COMMUNICATIONS YOU OBTAINED FROM THE PORTAL. YOU MUST CONTACT SDC at (412) 261-3644 TO CANCEL YOUR PASSWORD AND USERNAME.Icons, Logos and Other Proprietary MaterialThe trademarks, logos, and service marks (collectively the “Trademarks”) displayed on the SDC portal are registered and common law trademarks of SDC. Nothing contained on the portal should be construed as granting, by implication, or otherwise, any license or right to use any of the Trademarks displayed on the portal without the written permission of SDC. Your use of any of the Trademarks displayed on the portal or displayed on any content on the portal is strictly prohibited.Changes to Terms and Conditions of UseSDC may at any time modify the terms, conditions and notices under which the portal is offered by updating this posting. You are bound to any such modifications if you continue to use the SDC portal. SDC may terminate the portal in its sole discretion.Confidentiality, Information Protection, and Protection of DataNotwithstanding any existing legal or contractual obligations regarding confidentiality between you and SDC, you undertake to treat all knowledge relating to business secrets, which come into your possession, as confidential. You shall assure that any protected data, which comes into your possession through the use of the portal, is not transmitted to any unauthorized person. In partial consideration of the opportunity to access the resources of the portal concerning your account, you agree to maintain the strict confidentiality of access of the portal and its data (including password and username) to you and your authorized employees and to indemnify and hold harmless SDC and its officers, partners, agents, and employees and their heirs, successors and assigns from and against any and all claims, actions, demands, losses, damages, judgments, costs and expenses, including without limitation, reasonable attorneys’ fees and liabilities of every kind which may arise from your or your employees’ use of the portal or because of violation of these terms and conditions of use.No Unlawful or Prohibited UseYou are prohibited from using the portal to damage, disable, or overburden SDC’s servers or network or impair the portal or interfere with any other party’s use of the portal. Hacking, password mining or any other means to gain unauthorized access to the portal, portal accounts, computers or network is prohibited. Posting or transmitting any unlawful, threatening, libelous, defamatory, obscene, scandalous, inflammatory, pornographic, or profane material or any material that could constitute or encourage conduct that would be considered a criminal offense, give rise to civil liability, or otherwise violate any law is also prohibited. SDC will fully cooperate with any law enforcement authorities or court order requesting or directing SDC to disclose the identity of anyone posting any such information and materials.IRS CIRCULAR 230 DISCLOSURETo ensure compliance with requirements imposed on June 20, 2005 by the United States Treasury, SDC informs you that any tax advice contained in communication (including any attachments) using the portals was not intended or written to be used, and cannot be used, for the purpose of 1) avoiding tax-related penalties or 2) promoting, marketing or recommending to another party any tax related matters addressed in this communication. ### Marcellus and Utica Shales New Marcellus and Utica Shales Services PRIMARY CONTACT: Ted Pettko CPA  The Marcellus Shale and Utica Shale gas formations in Pennsylvania, Ohio and surrounding states establishes a significant amount of recoverable gas in this region. These shales have dramatically impacted many industries well beyond just the oil and gas industry. With a substantial client base already in the oil and gas industry, as well as serving supporting organizations to the sector, we are fully aware of the impact of this development at many areas. In addition to traditional accounting and tax compliance services, a sample of services Schneider Downs has provided to our clients include: Purchase price allocation and accounting Sale versus lease of mineral rights tax evaluation Drilling program prospectus assistance Entity evaluation for drilling programs Wealth management and investment advisory functions Post closing settlement audits Accounting software implementation Finance and accounting consulting and process improvement Technology assistance with royalty and partner statements and payments State registration for business activity in various states Federal along with state and local (SALT) audit representation Income tax planning and projections Our teams of seasoned professionals work together collectively to assist our clients meet their financial goals. We pride ourselves on providing the highest technical advice with a practical approach. About the Schneider Downs Energy & Resources Industry Group The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. Learn more at Energy. ### Experienced Professionals. Solid Methodology. Client Satisfaction. Experienced Professionals. Solid Methodology. Client Satisfaction. When you need valuation services, you can count on Schneider Downs Business Advisors to determine the fair market value of your business.We have a dedicated team of business advisors who identify the most critical factors in determining the value of a business, property or intangible asset. Our team includes highly-experienced certified financial analysts who understand that each company is unique and tailor their analyses accordingly.Our expertise adds up when you want to know the true value of your company. Contact us for a no-obligation discussion with our professionals. ### Matthew W. Kotkiewicz Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### Business Process and Data Flow Data Privacy Services: Business Process and Data Flow Deliver sound risk management practices, internal control systems and compliance frameworks. A critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Successful business process and data flow diagrams are achieved by conducting meetings with business unit representatives, as well as representatives from information technology (IT). These meetings allow for both business unit and IT representatives to develop a baseline understanding of what data is collected and how it is used, processed, shared, stored and retained within and outside of the organization.The following components should surface throughout this exercise, to then determine how to protect and effectively control personal data:Who collects, uses and maintains personal data relating to individuals, customers and employees?What types of personal data are collected and what is the purpose of collection?Where the data is physically stored?To whom is the data transferred/shared?When and how is the data collected?How long is it retained and how is it deleted?Additional Schneider Downs Data Privacy ServicesData Privacy Control AssessmentRegardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn MoreData Protection Impact Assessment A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn MoreNIST Privacy Framework ComplianceThe NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture.  Learn MorePrivacy Regulations and CompliancePrepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn MoreAbout Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Learn more at www.schneiderdowns.com/data-privacy-services or contact us for more information. View our additional IT Risk Advisory services and capabilities Learn More Contact us Our Thoughts On Cybersecurity Awareness Month is Over...Now What? As October comes to an end, so does Cybersecurity Awareness Month. However, that doesn’t mean our focus on security awareness… Read More > Two Truths and a Lie about Cybersecurity: Purple Teaming Let’s play a game! Two truths and a lie about Purple Teaming. In support of Cybersecurity Awareness Month, we are… Read More > Two Truths and a Lie about Cybersecurity: Cyber Governance Let’s play a game! Two truths and a lie about Cybersecurity Governance.In support of Cybersecurity Awareness Month, we are examining… Read More > Two Truths and a Lie about Cybersecurity: Cyber Insurance Let’s play a game! Two truths and a lie about Cyber Insurance.In support of Cybersecurity Awareness Month, we are examining… Read More > Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue… Read More > ### Business Advisory Services for the Energy and Resources Industry Business Advisory Services for the Energy and Resources Industry Schneider Downs professionals can assist your company with:Entity evaluation for drilling programsBusiness continuity planningPreparation and analysis of claimsInvestigation of fraud and unusual financial transactionsEvaluation of lost profits and economic damagesKey man retention and incentives - Non-qualified Deferred CompensationStock Appreciation Rights (SAR)Phantom stock programsIncentive compensation plansDue diligence relating to acquisitions and divestituresFor a list of the services that Schneider Downs can provide to companies in the Pittsburgh and Columbus regions, and across the United States, please visit our energy and resources services webpage. ### Business Advisory Services for Construction Companies Business Advisory Services for Construction Companies The Schneider Downs Business Advisors consists of seasoned forensic accountants and litigation support consultants with significant experience serving the Construction industry.  Services include:Business continuity planningPreparation and analysis of claimsInvestigation of fraud and unusual financial transactionsEvaluation of lost profits and economic damagesKey man retention and incentives - Non-qualified Deferred CompensationStock Appreciation Rights (SAR)Phantom stock programsIncentive compensation plansFor a list of the services that Schneider Downs can provide to construction companies in the Pittsburgh and Columbus regions, and across the United States, please visit our construction services webpage. ### Schneider Downs State and Local Tax Services Schneider Downs State and Local Tax Services With state budget deficits mounting, state auditors are under increasing pressure to identify new revenues. You may be at risk for a state tax audit if your company conducts business in numerous states or you have already received notices from other states about your activities there.Our dedicated State and Local (SALT) team has more than 100 combined years of experience, including working with many companies doing business in multiple states. Our extensive knowledge of issues related to sales and use tax, and state and local tax, is available to help guide you through the audit process.If you have received an audit notice, contact Schneider Downs. We can help.To stay current with changes to state and local tax legistion, subscribe to our free newsletter. E-mail NameThis field is for validation purposes and should be left unchanged. Sign up ### Thank you for contacting Schneider Downs Thank you for contacting Schneider Downs Thank you for contacting Schneider Downs. Your questions and feedback are important to us and we’ll be in touch shortly. ### Thank You Thank You Thank you for submitting your information. ### Michael P Hart ### Thank You Thank You Thank you for your interest in this event.  You should receive an email confirming your registration. If you do not receive a confirmation, please contact Lindsay Sherrill in Columbus or Alicia Furlan in Pittsburgh.  ### Microsoft Videos See Microsoft Dynamics 365 in action.  View the how-to videos in our library.Creating a New Customer ### Schneider Downs 2013 Manufacturers Economic Survey Results PDF Schneider Downs 2013 Manufacturers Economic Survey Results Thank you for your interest in Schneider Downs' 2013 Manufacturers Economic Survey.Download: Schneider Downs 2013 Manufacturers Economic Survey Results Please contact us if you have any questions about the survey. ### Download the Schneider Downs Manufacturer's Economic Survey Results Download the Schneider Downs Manufacturer's Economic Survey Results Please complete this form to download the survey results. "*" indicates required fields First Name* Last Name* Company Name* Email Address* CommentsThis field is for validation purposes and should be left unchanged. Submit * required ### Schneider Downs 2012 Manufacturers Economic Survey Results PDF Schneider Downs 2012 Manufacturers Economic Survey Results Thank you for your interest in the Schneider Downs 2012 Manufacturers Economic Survey.Download: Schneider Downs 2012 Manufacturer’s Economic Survey Results Please contact us if you have any questions about the survey. ### Microsoft Dynamics GP FAQ PRIMARY CONTACT: Patrick B. Armknecht CPA,CITP, Mike P. Scalamogna What are some of the frequently asked questions about Microsoft Dynamics GP? As Microsoft continues to shift its investment away from this popular tool, we recognize that many businesses are struggling to find the right way to incorporate Microsoft Dynamics GP into their cloud strategy and are questioning if it’s time to reevaluate the software altogether. The Schneider Downs Technology Advisors continue to help our customers understand their options and have compiled a listing of some of the most frequently asked questions regarding  Microsoft Dynamics GP. WHAT ARE MY OPTIONS WITH MICROSOFT DYNAMICS GP? Microsoft Dynamics GP customers have three primary options as the support-end date approaches. WHAT IF I MIGRATE TO A HOSTED DYNAMICS GP DEPLOYMENT? This option may be attractive to smaller companies who do not have the IT resources to maintain an on-premises server or larger companies who want to shift their IT resources efforts’ elsewhere; however, this path typically incurs higher costs in both the short term and long term. OR WHAT IF I DECIDE TO MIGRATE TO A SAAS BASED ERP? Many organizations are choosing this route as it eliminates costs associated with maintaining servers and the risk associated with having on-premises data. It also allows finance teams anywhere-access to their data and is backed by at least a 99% uptime SLA and massive annual investments in security (over $1 Billion annually in Microsoft’s case). WHAT IF I DECIDE TO TAKE NO ACTION? The final and most dangerous option is to simply do nothing. Doing nothing will leave your system vulnerable to risks without updates and patches from Microsoft. WHAT HAPPENS IF I CONTINUE USING MICROSOFT DYNAMICS GP? Microsoft has ended mainstream support for Dynamics GP and has introduced a new support lifecycle called the Modern Lifecycle Policy. In short, this means Microsoft will release bug fixes, new features, tax updates and regulatory updates on a periodic basis going forward. Photo Source: Microsoft This option requires an annual upgrade, at least one server, and IT resources to support and manage the server. Your business is responsible for ensuring the data is secure and the applications are available. WHAT ARE THE BENEFITS OF MIGRATING TO A CLOUD ERP? Microsoft is investing heavily in its cloud platform across the board, as are many other vendors. Some of the major benefits include: > 99% uptime SLAs Billions of dollars invested annually in security Your IT resources can focus their efforts elsewhere Upgrades happen behind the scenes and are included in your monthly subscription price Regular updates for localized compliance, governance, and security elements Integrations with low code/no code development platforms Better support for hybrid and remote work From an accountant or end user perspective, the most important benefit of a cloud accounting system is that major enhancements are released multiple times per year (twice per year for Microsoft). HOW DO DYNAMICS GP AND DYNAMICS BUSINESS CENTRAL FEATURES COMPARE? There are several new features available on Dynamics Business Central compared to Dynamics GP, some of the key updates and new capabilities are listed below: If you would like to discuss which option is best suited for your organization and situation, please contact Mike P. Scalamogna directly or schedule a time on his calendar. WHY CHOOSE SCHNEIDER DOWNS AS YOUR IMPLEMENTATION PARTNER? Business Expertise – As a multi-faceted professional services firm, our team has access to a diverse bench of professionals with expertise in a wide range of solutions to augment your implementation, including cybersecurity, internal audit, data analytics, audit and assurance, tax and more. Client Success – With a focus on the long-term success of our clients, our team prioritizes the importance of  thorough documentation and clear instructions to ensure your team can operate independently post-engagement. Experienced Professionals – Our implementation professionals are well-versed in technology and industry-specific concerns, allowing our consultants to hit the ground running and provide true guidance from day one. Microsoft Knowledge – The implementation team has evolved with Microsoft’s offerings, allowing us to gain a thorough understanding of how legacy platforms worked and the steps needed to move clients to the appropriate Microsoft solutions. Microsoft Dynamics GP customers have three primary options as the support-end date approaches. This option may be attractive to smaller companies who do not have the IT resources to maintain an on-premises server or larger companies who want to shift their IT resources efforts’ elsewhere; however, this path typically incurs higher costs in both the short term and long term. Many organizations are choosing this route as it eliminates costs associated with maintaining servers and the risk associated with having on-premises data. It also allows finance teams anywhere-access to their data and is backed by at least a 99% uptime SLA and massive annual investments in security (over $1 Billion annually in Microsoft’s case). The final and most dangerous option is to simply do nothing. Doing nothing will leave your system vulnerable to risks without updates and patches from Microsoft. Microsoft has ended mainstream support for Dynamics GP and has introduced a new support lifecycle called the Modern Lifecycle Policy. In short, this means Microsoft will release bug fixes, new features, tax updates and regulatory updates on a periodic basis going forward. Photo Source: Microsoft This option requires an annual upgrade, at least one server, and IT resources to support and manage the server. Your business is responsible for ensuring the data is secure and the applications are available. Microsoft is investing heavily in its cloud platform across the board, as are many other vendors. Some of the major benefits include: > 99% uptime SLAs Billions of dollars invested annually in security Your IT resources can focus their efforts elsewhere Upgrades happen behind the scenes and are included in your monthly subscription price Regular updates for localized compliance, governance, and security elements Integrations with low code/no code development platforms Better support for hybrid and remote work From an accountant or end user perspective, the most important benefit of a cloud accounting system is that major enhancements are released multiple times per year (twice per year for Microsoft). There are several new features available on Dynamics Business Central compared to Dynamics GP, some of the key updates and new capabilities are listed below: If you would like to discuss which option is best suited for your organization and situation, please contact Mike P. Scalamogna directly or schedule a time on his calendar. Business Expertise – As a multi-faceted professional services firm, our team has access to a diverse bench of professionals with expertise in a wide range of solutions to augment your implementation, including cybersecurity, internal audit, data analytics, audit and assurance, tax and more. Client Success – With a focus on the long-term success of our clients, our team prioritizes the importance of  thorough documentation and clear instructions to ensure your team can operate independently post-engagement. Experienced Professionals – Our implementation professionals are well-versed in technology and industry-specific concerns, allowing our consultants to hit the ground running and provide true guidance from day one. Microsoft Knowledge – The implementation team has evolved with Microsoft’s offerings, allowing us to gain a thorough understanding of how legacy platforms worked and the steps needed to move clients to the appropriate Microsoft solutions. READY TO GET STARTED? SCHEDULE A DEMO Related Resources Microsoft Dynamics 365 Business Central - Software Overview Forrester Report – Total Economic Impact™ of Business Central Related Services Microsoft Dynamics 365 Business Central Microsoft Dynamics GP Microsoft Dynamics NAV About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information contact the team at contactsd@schneiderdowns.com or visit our dedicated Technology and Data Services page. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Mining and Aggregates Mining and Aggregates Services PRIMARY CONTACT: Ted Pettko CPA The Schneider Downs Energy & Resources Services industry group provides specialized services to clients operating in the mining and aggregate industries.We provide audit, tax and consulting services, as well as assist your company with mergers and acquisitions, equipment financing, productivity analyses, lease vs. buy decisions for major asset additions, structuring of transactions to gain the most favorable tax treatment allowable and a review of your internal accounting policies and procedures. Some of the services and capabilities that Schneider Downs provides to clients in the mining and aggregates industry are as follows:Review of the entity selection (e.g. proprietorship, joint venture, partnership or incorporation), based on the specifics of the situation and the business objectives, to determine the best possible organizational structure for your business.Guidance on operating agreements, lease contracts and partnership agreements to determine the best method of investment (limited vs. general partner) and the related tax considerations.Review of potential investments not only from a tax standpoint, but also from an economic standpoint to determine if the investment is feasible.Analyze development and exploration costs to determine if all income tax elections are timely and properly made and ensure that all development and exploration costs are properly handled, based on the taxpayer’s individual tax situation.Evaluation of the percentage depletion computations for income tax compliance and identification of planning opportunities to enhance current deductions.Assistance in tracking development costs by mineral property to ensure total tax basis has been captured.Assistance in determining the effect that proposed transactions will have on the taxpayer from both a tax and a financial statement perspective.Benchmarking comparisons of similar businesses to determine if an entity is operating in an efficient and effective manner and earning an appropriate return on its investment.Analysis of operations to ensure compliance and to identify all tax savings opportunities at the state level (e.g. assist with P.U.C. licenses for hauling operation; assist with the purchase of state tax credits at a discounted percentage of value.Purchase price accounting assistance.Assistance in connection with the evaluation of purchase or sale of mineral interests, including tax planning related to the transaction structuring, purchase price allocation and related cash flow.Guidance on FASB Accounting Standards Codification Topic 410, "Asset Retirement and Environmental Obligations," as it relates to reclamation reserve liability calculations.Evaluation of the company’s tax preference items to minimize the federal alternative minimum tax impact and development of strategies to utilize minimum tax credit carry forwards.Evaluation and planning relative to state tax credit opportunities and filing positions. Resources Mining and Aggregate Overview About the Schneider Downs Energy & Resources Industry GroupThe Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. Learn more at Energy & Resources Services. ### MIP Spring Cleaning Please complete the following form so that we may update our records. Thank you in advance! "*" indicates required fields Full name* Organization Job title Email PhoneOrganization address Is there anyone new to your organization who would benefit from communication related to MIP? (please provide name, title and email)Is there anyone from your team who has left your organization and should be removed from our database? Please provide the name(s) to remove.If you have previously unsubscribed from communication, may we add you back to our list? (Please note, if you choose yes, we will need to send you an email for you to accept before adding you back) Yes No PhoneThis field is for validation purposes and should be left unchanged. Submit ### MIP Fund Accounting Gain more time to focus on your causeEnsure Mission Productivity with MIP Fund Accounting®MIP Fund Accounting® is a configurable fund accounting solution that allows you to report and track information that is most important to you, your board and your supporters. To help you deliver on your mission, our solutions can change and grow with you through your most difficult of fund accounting, human capital management and payroll decisions alike.MIP Fund Accounting® can help you:Scale - MIP Fund Accounting® can change and grow with you through your most difficult fund accounting, human capital management, and payroll challenges.Choose - Our software can be hosted in the cloud for maximum data security and anywhere access, or on premise, based on your specific needs.Decide - Comprehensive, accessible data empowers you to make better financial decisions and execute financial management with greater precision.Know - Track, analyze, and report on the data that is most important to your board, your organization, and you.MIP's modular structure makes it a precise fit for the budget and programs you have today, with room for expansion and growth in the future. When your accounting and performance needs change, you have the opportunity to add modules to the system when you actually need them. Learn more about the MIP Fund Accounting® product.CLOUD SOLUTIONSUsing rudimentary tools to achieve complex nonprofit and government accounting functionality can open the door to costly errors. You need a true fund accounting™ system like MIP® Cloud, which was purpose built by and for nonprofit and government financial professionals just like you.With MIP® Cloud You Get:Rich History- MIP® Cloud brings MIP Fund Accounting® revered for more than 30 years as the gold standard in true fund accounting, to the cloud.Peace of Mind - With advanced audit reporting, fraud deterrence and alerting, and built-in FASB and GASB, you’ll breeze through audits and effortlessly meet stringent reporting requirements.Worry-Free, Cloud-Based Technology - Maintenance, backups, and iron-clad security are baked in.Flex and Scale – MIP® Cloud can flex and grow alongside your organization, regardless of complexity and needs.Anytime Access - The system is a fully-integrated, fully-inclusive cloud suite that provides anytime/anywhere access to important data and reports.To learn more about this product and how it can help your business, please contact Patrick Armknecht at 412-697-5386. ### Motor Fuel Tax Contact: Timothy Adams ### Capital Raising Capital Raising PRIMARY CONTACTS: Peter J. LiebermanSenior Debt, Subordinated/Mezzanine Debt and EquityThe capital "dance floor" includes an infinite number of options beyond bank loans. With extensive corporate finance experience and global finance contacts, we assist in identifying lenders and capital partners well beyond the reach of our clients. We help owners and executives seeking to fuel growth, fund acquisitions, or recapitalize the business to facilitate a liquidity event for shareholders.The Schneider Downs Corporate Finance team can:Provide real-time market intelligence and comprehensive valuation guidanceDevelop a list of potential lenders, deal sponsors or investorsSecure senior or junior debt placementsSecure minority and majority equity placements on a selective basisAssist in creating offering memorandaManage the transaction process and interaction with lenders and investorsWork with clients legal counsel in preparation of purchase offersFacilitate lender and investor due diligenceContact a member of our Corporate Finance team today for a confidential conversation.About Schneider Downs Corporate FinanceSchneider Downs Corporate Finance is a leading, full-service investment banking, corporate finance and strategic advisory firm serving the needs of mid-market and small companies. With close to 100 combined years of financial transaction and executive management experience across a broad spectrum of industries and client situations, our focus is to provide premier advisory services in the areas of company sales and divestitures, acquisitions, fund-raising and strategic advisory. Learn more about our additional services at www.schneiderdowns.com/investment-banking.Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC.Schneider Downs Corporate Finance, LP Customer Relationship Summary (Form CRS). Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Business Valuation Services Business Valuation Services The valuation of any business or asset is a complex task that includes, among other things, detailed financial analyses, a deep understanding of the subject company and the industry/economic environment in which it operates, and the application of multiple valuation techniques. The necessary insight required to prepare a reasoned and supportable valuation analysis is the product of both significant real-world experience and a theoretical understanding of key business valuation concepts.The professionals that make up Schneider Downs’ business valuation management team have an average of 20 years of experience in providing business valuation and other advisory services.  This depth of experience is further enhanced by the fact that each individual has also earned industry-recognized certifications in the area of business valuation, including as Certified Valuation Analysts (CVAs) from the National Association of Certified Valuators and Analysts, and as Accredited in Business Valuation (ABV) from the American Institute of Certified Public Accountants.Schneider Downs’ real-world experience and professional expertise allows us to provide our clients with service excellence in a broad range of valuation services, including:BankruptcyBuy/Sell AgreementsEstate and Gift TaxFair-Value Reporting Requirements (ASC 820)Purchase Price Allocation (ASC 805)Goodwill and Intangible Asset Impairment (ASC 350 and 360)Incentive Compensation Expense (ASC 718)Mergers, Acquisitions, and DivestituresS Corporation ElectionsShareholder DisputesTransfer PricingOur skilled team of professionals delivers an ideal balance of industry knowledge with the deep-rooted experience necessary to address the specific nuances that make every business transaction unique.About Schneider Downs Transaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of business transactions of all types, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning. Our team consists of interdisciplinary dedicated professionals who provide support across all aspects of transactions.Learn more about our Transaction Advisory Services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Move to the Cloud How do I prepare to move to the cloud? PRIMARY CONTACT: Patrick B. Armknecht CPA, CITP (Pittsburgh)Before moving to the cloud, there are several questions that a business needs to answer:1. Why do you want to migrate to the cloud?First and foremost, it is important to clearly understand how/why migrating to the cloud supports the strategic objectives/initiatives of your business.2. Which type of cloud computing is right for your business?Public cloud – Services and infrastructure are shared by consumers and the infrastructure resides on the cloud service provider’s platform.  Services are sold on demand.Private cloud – Infrastructure is not shared but rather, exclusive to your company.Hybrid cloud – Combination of public and private clouds.3. Who are the stakeholders of cloud computing?It is important to understand who will be consuming the cloud services.  Far too often, cloud decisions are made based upon the needs a subset of stakeholders as opposed to all stakeholders.  Common examples include understanding the impact to stakeholders outside of your organization (customers, vendors, etc.).4. What are the anticipated costs of moving to the cloud?Businesses that have run their business applications on premise for a number of years generally have a good idea of the cost of maintaining these applications.  Whether it be maintenance, upgrades, patching or new software/hardware, the costs become fairly predictable.  The same predictability can be achieved in the cloud although the cost factors may be different.  Storage, processing are costs that may have been fixed in an on premise environment. Other costs that need to be considered for cloud migration are migration and downtime costs.5. How will you govern your cloud deployment?Although the policies and standards used to govern a cloud deployment are still the responsibility of your organization, executing these policies and standards will most likely require assistance from your cloud providers.  Understanding and documenting your role and that of your cloud providers is critical for governing a cloud deployment.6. Does the service level agreement (SLA) align with my business needs?A Service Level Agreement (SLA) identifies the responsibilities, minimum level of service (e.g. response times) and the remedies for failing to meet the minimum level of service between a cloud service provider and the client.  Prior to entering into any cloud agreement, it is imperative to understand the cloud solution provider’s commitment to availability, response times and reliability to ensure it aligns with the needs of your stakeholders.Applicable Service Offerings CLOUD MIGRATION HAVE A QUESTION? "*" indicates required fields First Name* Last Name* Title Company/Organization Email* Phone Number*Question?* NameThis field is for validation purposes and should be left unchanged. Submit ### Organization Technology- SD inSITE Board Portal Organization Technology- SD inSITE Board Portal How much time do you spend getting information to your Board?If you are like most organizations, you use a variety of means: email, postal mail, phone.The inSITE Board Portal provides a secure and cost-effective tool to organize and distribute documents to Board members and senior management.SD inSITE Board Portal:Improves communicationSingle location for all documents, including financial reports from prior periodsCalendars and notices to remind Board members of upcoming meetings and eventsMakes your staff more efficient by reducing their work loadVery effective in orienting new Board members to the various committees and current issuesTrack which documents are accessed.The Board Portal is organized in folders which correspond to your needs.  You define the security and Board members only see the documents to which they have access.The Board Portal is secure.Role-based access to foldersDocuments can be lockedSecond password requiredNo printingNo distribution ### Navigating Digital Transformation Navigating the Digital Transformation Roadmap Digital Transformation involves evaluating the purpose, efficiency and effectiveness of processes, reimagining how processes should work and identifying and leveraging technology to execute upon the reimagined process.Download our whitepaper, Navigating the Digital Transformation Roadmap, to learn how organizations can benefit from digital transformation, best practices for project framework, our transformation methodology and how to measure success. About Schneider Downs Digital Transformation Solutions The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. Our solutions identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. Through our cross-functional team of risk and technology professionals, we provide insights and assistance in improving the foundational business processes of an organization, and identify and implement technology to further automate and support critical business processes. For more information contact the team at contactsd@schneiderdowns.com or visit Digital Transformation. Download the Content. Please Fill out the form for your complimentary copy of Navigating the Digital Transformation Roadmap. "*" indicates required fields First Name* Last Name* Title* Company/Organization* Email* Phone NumberNameThis field is for validation purposes and should be left unchanged. Download ### Thank you. Please Enjoy Your Content Whitepaper: Navigating the Digital Transformation Roadmap For more information contact the team at contactsd@schneiderdowns.com or visit Digital Transformation. ### Services for the Energy and Resources Industry Services for the Energy and Resources Industry Schneider Downs professionals can assist your company with:Provide guidance to clients through process of restructuring their current debt and related terms and covenantsBenchmarking comparisons of similar businesses to determine if an entity is operating in an efficient and effective manner and earning an appropriate return on its investmentPurchase price allocation and accountingPost-closing settlement auditsFinance and accounting consulting and process improvementComparison of the full cost versus the successful efforts methods of accounting and the effect of each on the financial statement of the entityRevenue distribution policies and proceduresAssistance with:Cash flow analysis used in valuation matters associated with future production from wells.Asset retirement obligations associated with wells.Depreciation, depletion and amortization accountingInterpretation of reserve reportsFor a list of the services that Schneider Downs can provide to companies in the Pittsburgh and Columbus regions, and across the United States, please visit our energy and resources services webpage. ### Audit Assurance Education Sector Audit Assurance Education Sector Schneider Downs professionals focus on the business of our clients and the environments in which they operate.  Our audit procedures are tailored for each institution and are developed only after obtaining a detailed understanding of the accounting systems, administrative procedures and internal controls.  This understanding enables us to effectively identify and respond to business and financial statement risks affecting the development and execution of a customized audit plan. Audit and assurance services for the education sector include:Financial statement audits, reviews, compilations and other attest servicesOMB Circular A-133 audits (student financial aid, research and development and other major programs)ERISA plan audits including 401(k), 401(a) and 403(b) auditsNew accounting standards assistanceAudit preparation servicesManagement reporting needs, considerations and presentationsGeneral business consultingNCAA agreed-upon proceduresState grant audits/compliance audits (RACP, DCED)Internal controls assessmentsAccounting policy reviewReview of financial reports and tax compliance matters related to endowments and investment portfoliosProgram profitability and viability studiesBond offering services (taxable and tax-exempt)For a list of the services that Schneider Downs can provide to educational institutions in the Pittsburgh and Columbus regions, and across the United States, please visit our education sector services webpage. ### Content Subscribe Subscribe Thank you for opting-in to Schneider Downs’ knowledge network.By joining our network, you will receive the latest commentary and analysis on a broad range of topics, be invited to free CPE opportunities and be kept abreast on the latest happenings in business today. "*" indicates required fields Please take a moment to choose the content you want to receive:* Not-for-Profit related content Our Thoughts On weekly newsletter with our most recent columns and insights Opt-me in to all Schneider Downs content Name* Company* Job Title* Email* Phone Number*EmailThis field is for validation purposes and should be left unchanged. Submit ### Audit and Assurance Services for Construction Companies Audit and Assurance Services for Construction Companies Audit and assurance services that Schneider Downs provides to construction companies include:Prequalification reportsJoint venture accounting and reportingRevenue recognitionAccounting for claims and unapproved change ordersReporting in accordance with IFRS and IASNew accounting standards assistanceIndirect cost allocation methodologyTreasury management involving liquidity and working capitalCashflow forecast analysis and durationAccounts receivable managementSoftware optimization and utilizationsManagement reporting needs, consideration and presentationRisk management evaluationFor a list of the services that Schneider Downs can provide to construction companies in the Pittsburgh and Columbus regions, and across the United States, please visit our construction services webpage. ### NIST Privacy Framework Compliance Data Privacy Services: NIST Privacy Framework Compliance Deliver sound risk management practices, internal control systems and compliance frameworks. The NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. The NIST Privacy Framework is often used in tandem with the NIST Cybersecurity Framework to strengthen the overall privacy and security posture of the organization’s digital environment. An organization’s adoption of the NIST Privacy Framework will prove its privacy leadership through the following:Building customer’s trust by supporting ethical decision-making while minimizing adverse consequences for individual’s privacy and society as a whole;Fulfilling current compliance obligations and future-proofing products and services to meet these obligations;Facilitating communications about privacy practices with individuals, business partners, assessors, and regulators.We have the experience to help organizations comply with the NIST Privacy framework through the following methods:Readiness Gap AssessmentWe will perform a walkthrough of the current control environment to see how it aligns with NIST’s 5 Functions, 18 Categories, and 100 Subcategories to determine where there may be control gaps within the organization. From here, we will provide value-add recommendations on how to remediate those gaps, to implement controls to ultimately meet the requirements of the NIST Privacy Framework.Effectiveness TestingWe will evaluate the organization’s control environment against the framework’s 5 Functions, 18 Categories, and 100 Subcategories to determine the maturity of the organization, based upon the NIST Implementation Tiers, as further detailed below.NIST Implementation TiersThe NIST Implementation Tiers provide a point of reference on how an organization has sufficient processes and resources in place to manage the privacy risk, as defined by the framework. The Tiers reflect an organization’s progression and can help an organization gauge its placement in a range from:Tier 1 (Partial)Tier 2 (Risk Informed)Tier 3 (Repeatable)Tier 4 (Adaptive)Additional Schneider Downs Data Privacy ServicesBusiness Process and Data FlowA critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn MoreData Privacy Control AssessmentRegardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn MoreData Protection Impact Assessment A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn MorePrivacy by DesignOur approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture. Learn MorePrivacy Regulations and CompliancePrepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn More.About Schneider Downs Data Privacy ServicesAt Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance.Learn more about our IT Risk Advisory Practice or contact us for more information. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Affordable Care Act Reporting Affordable Care Act Reporting This page contains information on the reporting requirements for the Affordable Care Act Forms 1094 and 1095.  We also encourage you to contact us if you would like more information, or feel a detailed conversation would be beneficial.Employer's Guide to the ACA Reporting Standards whitepaperDownload the presentation from the webinar: Affordable Care Act Reporting – Forms 1094 & 1095View the recorded ACA Reporting webinar belowhttps://vimeo.com/154084258 ### Oil and Gas New Oil and Gas Services PRIMARY CONTACT: Ted Pettko CPAThe Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas industry.Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. We have assisted our clients with solutions for their business, such as operational matters, mergers and acquisitions and liability concerns. From joint interest billing processing and review of operator overhead charges, to tax planning we provide our clients the solutions needed to be successful.Our Energy and Resources Industry Group is specifically focused on your industry, and our advisors are experienced in your operating environment. We like to say that we make it our business to know your business, and that is why we regularly schedule multi-disciplinary meetings to monitor industry trends.We are also active members of the Ohio and Pennsylvania Independent Oil and Gas Association (IOGA) and the Independent Petroleum Association of America (IPAA). We attend both local and national continuing professional education sessions dedicated to oil and gas account and tax matters.Some of the services and capabilities that Schneider Downs provides to clients in the oil and gas industry are as follows:Audit and AssuranceComparison of the full cost versus the successful efforts methods of accounting and the effect of each on the financial statement of the entity.Assistance with:cash flow analysis used in valuation matters associated with future production from wells.asset retirement obligations associated with wells.depreciation, depletion and amortization accountinginterpretation of reserve reportsrevenue distribution policies and procedures.benchmarking comparisons of similar businesses to determine if an entity is operating in an efficient and effective manner and earning an appropriate return on its investment.Tax AdvisoryReview of the entity structure to ensure the best possible organizational structure for your businessGuidance on partnership agreements, drilling contracts and operating agreements to determine the best method of investment.Ensure drilling cost elections are properly made and that all intangible drilling costs are properly handled.Review and determination the effect that proposed transactions will have on the taxpayer.Analysis of operations to ensure compliance and to identify all tax saving opportunities at the state level.Evaluation of the company’s tax preference items to minimize the federal alternative minimum tax impact Resources Oil and Gas Overview About the Schneider Downs Energy & Resources Industry GroupThe Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. Learn more at Energy & Resources Services. ### Other Industries Content Coming Soon... ### Thanks For Downloading Our Content! (10 Vulnerabilities Hackers Love to Exploit ) Thanks For Downloading Our Content! We appreciate your interest and hope you find your copy of 10 Vulnerabilities Hackers Love to Exploit useful.For more information on Schneider Downs Cybersecurity, please visit www.schneiderdowns.com/cybersecurity.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity ### 10 Vulnerabilities Hackers Love to Exploit 10 Vulnerabilities Hackers Love to Exploit Media coverage of data breaches often focuses on the impact, but that’s only half the story. Get inside the mind of a hacker and learn about common and underlying circumstances leading to breaches. Download our 10 Vulnerabilities Hackers Love to Exploit whitepaper to learn more, including best practices for mitigating risks presented by hackers. If you like this whitepaper, you’ll love the companion whitepaper, 10 Things Companies Wish They Did Before a Breach. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Download the Content. Please Fill out the form for your complimentary copy of 10 Things Companies Wish They Did Before a Breach. First Name Last Name Organization Title Email PhonePhoneThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Cynthia J. Hoffman ### Other Services Provided to Construction Companies Other Services Provided to Construction Companies Schneider Downs provides additional value-added services to energy and resources companies, including but not limited to:401(k) PlansDesigned for owners and key executivesPersonal adviceOpen architectureSchneider Downs Corporate Finance, LPSchneider Downs Technology AdvisorsSchneider Downs Wealth Management AdvisorsFor a list of the services that Schneider Downs can provide to companies in the Pittsburgh and Columbus regions, and across the United States, please visit our construction services webpage. ### Other Services Provided for the Energy and Resources Industry Other Services Provided for the Energy and Resources Industry Schneider Downs provides additional value-added services to energy and resources companies, including but not limited to:401(k) PlansDesigned for owners and key executivesPersonal adviceOpen architectureSchneider Downs Technology AdvisorsSchneider Downs Wealth Management AdvisorsSchneider Downs Corporate Finance, LPSchneider Downs Meridian, LPSchneider Downs StaffingFor a list of the services that Schneider Downs can provide to companies in the Pittsburgh and Columbus regions, and across the United States, please visit our energy and resources services webpage. ### 10 Things Companies Wish They Did Before a Breach 10 Things Companies Wish They Did Before a Breach Data breaches continue to impact organizations across all industries and sizes without any signs of slowing down. The Schneider Downs cybersecurity team has participated in countless breach response efforts and while each situation is unique, there are common mistakes and trends we continue to see. In an effort to help organizations like yours, we asked our team of cybersecurity experts to share the top ten preventive measures overlooked prior to a breach.Download our 10 Things Companies Wish They Did Before a Breach to learn more.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.Download the Content.Please Fill out the form for your complimentary copy of 10 Things Companies Wish They Did Before a Breach. First Name Last Name Organization Title Email PhoneNameThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Navigating Internal Financial Statements to Tax Returns Navigating Internal Financial Statements to Tax Returns ### The content you selected is not currently available We apologize The content you selected is not currently available. Please visit the Our Thoughts On home page for other insightful articles. ### Download the SOC Report Presentation Download the SOC Report Presentation To download a copy of the presentation, please complete the following form. "*" indicates required fields Name* Company* Email* EmailThis field is for validation purposes and should be left unchanged. Submit * required ### OTO Archive Thank you for your interest in Schneider Downs Our Thoughts On This Article Has Been ArchivedSchneider downs takes pride in providing a surplus of relevant thought provoking articles to our clients and friends. To be consistent with providing the most current content, articles older than five years are archived. Schneider Downs would be happy to provide these articles upon request. Please contact us with your article request by completing the form below or emailing, contactsd@schneiderdowns.comWe invite you to learn more about Schneider Downs, subscribe to one of our newsletters. ### International Tax Accountants – Alexandria Newport News (VA) International Tax Accountants – Alexandria Newport News (VA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Alexandria, Newport News and across Virginia. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Virginia International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.About Alexandria (VA)Nestled along the scenic banks of the Potomac River, the business community of Alexandria, Virginia, embodies a unique blend of historical charm, innovation, and economic vitality. As a historic city steeped in colonial heritage, Alexandria serves as a dynamic economic center within the Washington, D.C. metropolitan area.At its core, Alexandria's business landscape is anchored by a diverse array of industries, including government contracting, technology, healthcare, hospitality, and professional services. The city's close proximity to the nation's capital has made it a strategic location for government contractors and consulting firms, driving economic growth and job creation.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Virginia International Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Alexandria, Newport News, and across Virginia. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAEmailThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax Accountants – Miami Orlando (FL) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – MIAMI ORLANDO (FL) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Miami, Orlando and across Florida. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Miami International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Miami (FL) Nestled along the vibrant shores of South Florida, Miami's business community exudes a dynamic blend of diversity, innovation, and entrepreneurial spirit. Rooted in its rich cultural heritage and strategic location as a gateway to Latin America and the Caribbean, the city's economic landscape reflects a tapestry of industries spanning finance, tourism, technology, and international trade.At its core, Miami is renowned for its role as a global financial center, with a concentration of banking institutions, investment firms, and wealth management services. The city's strategic position as a hub for international trade and commerce, coupled with its favorable tax climate, has made it a magnet for investment from around the world.National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Miami International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Miami, Orlando and across Florida. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHACommentsThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – St. Louis (MO) International Business Tax CPAs – St. Louis (MO) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in St. Louis and across Missouri. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Saint Louis International Business Tax ServicesInitial structuring, capitalization, and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.About St. Louis (MO)The business community of St. Louis, Missouri, reflects a rich blend of tradition, innovation, and resilience, set against the backdrop of the iconic Gateway Arch and the winding Mississippi River. Established as a major port city in the 19th century, St. Louis has evolved into a diverse economic hub with a strong focus on healthcare, biotechnology, manufacturing, and financial services.At its core, St. Louis is renowned for its robust healthcare sector, anchored by world-class medical institutions such as Washington University School of Medicine and Barnes-Jewish Hospital. These institutions drive groundbreaking research, attract top talent, and contribute significantly to the city's economy. Additionally, the city's biotechnology industry continues to thrive, with numerous startups and established companies innovating in areas such as pharmaceuticals, medical devices, and life sciences.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our St. Louis International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in St. Louis and across Missouri. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – Philadelphia (PA) International Business Tax CPAs – Philadelphia (PA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Philadelphia and across Pennslyvania. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Philadelphia International Business Tax ServicesInitial structuring, capitalization, and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.About Philadelphia (PA)The business community of Philadelphia, Pennsylvania, embodies a rich tapestry of history, resilience, and innovation. Situated along the banks of the Delaware River, Philadelphia boasts a legacy of commerce dating back to its founding days, serving as a vital hub for trade and industry in the United States.At its core, Philadelphia's business landscape is characterized by its diverse array of industries, ranging from healthcare and education to manufacturing and technology. The city is home to a thriving healthcare sector, with world-renowned hospitals and research institutions driving innovation and medical breakthroughs. Additionally, Philadelphia has emerged as a burgeoning center for technology and entrepreneurship, with a growing number of startups and tech companies choosing to call the city home.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Philadelphia International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Philadelphia and across Pennsylvania. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAEmailThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax Accountants – Cleveland Columbus (OH) International Business Tax Accountants – Cleveland Columbus (OH) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Cleveland, Columbus, and across Ohio. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Ohio International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.  About Columbus (OH) Nestled in the heart of Ohio, Columbus boasts a thriving business community that combines a spirit of innovation with a commitment to collaboration and growth. Rooted in a diverse array of industries, the city's economic landscape reflects both its rich history and forward-thinking ethos.At its core, Columbus is renowned for its diverse economy, with key sectors including finance, healthcare, retail, logistics, and technology. The city's strategic location and robust infrastructure have made it a hub for distribution and logistics, with major companies leveraging its proximity to interstate highways and rail networks for efficient transportation of goods. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Cleveland/Columbus Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Cleveland, Columbus, and across Ohio. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – New York City (NY) INTERNATIONAL BUSINESS TAX CPAS – NEW YORK CITY (NY) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in New York City and across New York. We focus our services on high-net-worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. New York International Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. What Our Clients Say... About New York (NY) The business community of New York City stands as a global epitome of dynamism, innovation, and unparalleled economic diversity. Nestled amidst the iconic skyline and bustling streets, New York's entrepreneurial spirit is palpable, pulsating through the veins of its various industries. At its core, New York City is synonymous with finance and commerce, boasting the world-renowned Wall Street and a multitude of financial institutions that drive global markets. The city's iconic Stock Exchange is a symbol of its pivotal role in shaping the global economy. Moreover, New York's business landscape extends far beyond finance, encompassing sectors such as technology, media, fashion, healthcare, and real estate. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our New York International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in New York City and across New York. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. 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Submit New York Export Data ### International Business Tax CPAs – Los Angeles (CA) INTERNATIONAL BUSINESS TAX CPAS – LOS ANGELES (CA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Los Angeles and across California. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Los Angeles International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.What Our Clients Say...About Los Angeles (CA)The business community of Los Angeles, California, paints a vibrant and eclectic picture of entrepreneurship, creativity, and cultural diversity. Nestled between the Pacific Ocean and the sprawling metropolis, Los Angeles serves as a global hub for entertainment, technology, fashion, and innovation.At its core, the city's business landscape is driven by its thriving entertainment industry, which includes film, television, music, and gaming. Hollywood, with its iconic studios and production companies, serves as the beating heart of this industry, attracting talent and investment from around the world. Beyond entertainment, Los Angeles is also home to a burgeoning tech scene, with Silicon Beach emerging as a hotspot for startups and tech giants alike.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Los Angeles International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Los Angeles and across California. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHANameThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – Houston (TX) INTERNATIONAL BUSINESS TAX CPAS – HOUSTON (TX) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Houston and across Texas.  We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Houston International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.About Houston (TX)The business community in Houston, Texas, epitomizes the essence of the Lone Star State's entrepreneurial spirit and economic prowess. Situated in the heart of the Gulf Coast region, Houston stands as a dynamic metropolis renowned for its diverse industries, innovative enterprises, and unwavering resilience.Houston's business landscape is as vast and varied as the Texas sky, encompassing sectors such as energy, healthcare, aerospace, manufacturing, and technology. With its roots deeply entrenched in the oil and gas industry, Houston has evolved into a global energy capital, home to numerous multinational corporations, as well as a thriving ecosystem of startups and innovators pioneering renewable energy solutions.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Houston International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Houston and across Texas. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAEmailThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax Accountants – Dallas Fort Worth (TX) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – DALLAS FORT WORTH (TX) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Dallas, Fort Worth and across Texas. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Dallas International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Dallas (TX) Nestled in the heart of North Texas, Dallas boasts a vibrant and dynamic business community characterized by a unique blend of tradition, innovation, and entrepreneurial spirit. Rooted in its storied history as a center for trade and commerce, the city's economic landscape reflects a diverse array of industries and a relentless pursuit of growth and prosperity.At its core, Dallas is renowned for its robust economy, with key sectors including finance, healthcare, technology, manufacturing, and energy. The city's strategic location and transportation infrastructure, including the Dallas/Fort Worth International Airport, have made it a global hub for logistics and distribution, facilitating the movement of goods and services across the nation and beyond. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Dallas International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Dallas, Fort Worth, and across Texas. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAPhoneThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – Chicago (IL) INTERNATIONAL BUSINESS TAX CPAS – CHICAGO (IL) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Chicago and across Illinois. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Chicago International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.What Our Clients Say...About Chicago (IL)The business community of Chicago, Illinois, represents a dynamic fusion of tradition and innovation, anchored by a legacy of commerce that stretches back to the city's founding. Nestled along the shores of Lake Michigan, Chicago boasts a diverse and robust economy spanning a multitude of sectors, from finance and manufacturing to technology and transportation.At its core, Chicago's business landscape is characterized by its resilience and adaptability. Despite facing challenges such as economic downturns and shifting industries, the city has consistently demonstrated a remarkable ability to reinvent itself and thrive. This resilience is fueled by a spirit of innovation and entrepreneurship that permeates the city, driving forward-thinking initiatives and fostering a culture of collaboration and growth.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Chicago International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Chicago and across Illinois. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHAEmailThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax Accountants – Boston Cambridge (MA) INTERNATIONAL BUSINESS TAX ACCOUNTANTS – BOSTON CAMBRIDGE (MA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in  Boston, Cambridge and across  Massachusetts. We focus our services for high net worth business owners and those with significant cross-border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Massachusetts International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.About Boston (MA)Nestled along the scenic shores of Massachusetts, Boston's business community resonates with a rich tapestry of innovation, academia, and historical significance. Rooted in its storied past as a hub of American independence and intellectual prowess, the city's economic landscape reflects a dynamic blend of traditional industries and cutting-edge sectors.At its core, Boston stands as a beacon of education and research, home to prestigious universities and leading academic institutions. Harvard, MIT, and other world-renowned schools not only drive innovation and intellectual capital but also serve as catalysts for entrepreneurship and technology transfer, fostering a vibrant ecosystem of startups and spin-offs.National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Boston International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Boston, Cambridge, and across  Massachusetts. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name*Company/Organization*Email* Phone NumberComment/QuestionHow would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCAPTCHACommentsThis field is for validation purposes and should be left unchanged. Submit ### International Business Tax CPAs – Atlanta (GA) INTERNATIONAL BUSINESS TAX CPAS – ATLANTA (GA) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Atlanta and across Georgia. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Atlanta International Business Tax Services Initial structuring, capitalization, and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Atlanta (GA) The business community in Atlanta, Georgia, is a dynamic tapestry woven with innovation, diversity, and Southern hospitality. Nestled in the heart of the Southeast, Atlanta serves as a bustling economic center, attracting businesses from a myriad of industries including technology, finance, healthcare, and entertainment. A key driver of Atlanta's business success is its status as a major transportation hub. With the world's busiest airport, Hartsfield-Jackson Atlanta International Airport, and a robust network of highways and railways, the city serves as a gateway for commerce both domestically and internationally. This strategic advantage has helped cultivate a thriving corporate landscape, with many Fortune 500 companies choosing Atlanta as their headquarters. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Atlanta International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Atlanta and across Georgia. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. *** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_8[data-form-index="2"].gform-theme,[data-parent-form="8_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: 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Submit Georgia International Economic Profile ### INTERNATIONAL BUSINESS TAX ACCOUNTANTS – WASHINGTON, DC INTERNATIONAL BUSINESS TAX ACCOUNTANTS – WASHINGTON, DC Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Washington DC. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken. Washington DC International Business Tax Services Initial structuring, capitalization and entity selection for U.S. and foreign operation Transfer pricing studies Canada/U.S. cross border tax issues Mexico/U.S. cross border tax issues Direct and indirect foreign tax credit opportunities IC-DISC - Utilizing domestic international sales corporations Earnings repatriation planning Reorganizations involving foreign corporations and foreign-owned U.S. corporations Transactional analysis and support services including due diligence U.S. tax compliance and planning for inbound businesses and their employees Expatriate/ inpatriate tax matters Who is Schneider Downs? We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Washington DC Nestled along the banks of the Potomac River, Washington, D.C.'s business community radiates a unique blend of political influence, cultural significance, and economic vitality. Rooted in its role as the nation's capital, the city's economic landscape reflects a diverse array of industries and institutions that shape not only national policy but also global commerce. At its core, Washington, D.C. is renowned for its role as the epicenter of government and politics, with a concentration of federal agencies, diplomatic missions, and advocacy organizations. The presence of these institutions not only drives demand for professional services such as law, consulting, and lobbying but also fosters a robust ecosystem of research, think tanks, and policy analysis. National Reach We also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA). Contact Our Washington DC International Business Tax Accountants Schneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Washington DC and across the U.S. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. #gform_wrapper_8[data-form-index="2"].gform-theme,[data-parent-form="8_2"]{--gf-color-primary: #204ce5;--gf-color-primary-rgb: 32, 76, 229;--gf-color-primary-contrast: #fff;--gf-color-primary-contrast-rgb: 255, 255, 255;--gf-color-primary-darker: #001AB3;--gf-color-primary-lighter: #527EFF;--gf-color-secondary: #fff;--gf-color-secondary-rgb: 255, 255, 255;--gf-color-secondary-contrast: #112337;--gf-color-secondary-contrast-rgb: 17, 35, 55;--gf-color-secondary-darker: #F5F5F5;--gf-color-secondary-lighter: #FFFFFF;--gf-color-out-ctrl-light: rgba(17, 35, 55, 0.1);--gf-color-out-ctrl-light-rgb: 17, 35, 55;--gf-color-out-ctrl-light-darker: rgba(104, 110, 119, 0.35);--gf-color-out-ctrl-light-lighter: #F5F5F5;--gf-color-out-ctrl-dark: #585e6a;--gf-color-out-ctrl-dark-rgb: 88, 94, 106;--gf-color-out-ctrl-dark-darker: #112337;--gf-color-out-ctrl-dark-lighter: rgba(17, 35, 55, 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Submit Washington DC Exports, Export Categories, and Top Export Partners Source – International Tax Administration ### Sell-Side Financial Due Diligence Sell-Side Financial Due Diligence It has been said that “Luck favors the prepared.” It has also been said that “Luck is where opportunity meets preparation.” What if that’s true? In the Business Advisory group here at Schneider Downs, our experience supports these claims. We have found that companies in the market to sell who have subjected themselves to rigorous sell-side financial due diligence have had better success in closing deals than companies that have not.Delays and discrepancies can quickly escalate a buyer’s anxiety, opening the door for negotiations to become contentious and possibly even fall apart altogether.  Allowing our team to come in and perform a quality of earnings analysis along with other procedures as a part of the sell-side financial due diligence process, will help prepare you to navigate the landscape of the negotiation process while increasing your credibility and the buyer’s confidence in you; two factors that only benefit you.Key advantages of investing in sell-side financial due diligence include, but are not limited to, the following:Accurate Valuation of the CompanyA seller needs to project an accurate picture of the company’s financial results, including pro forma adjustments supported by data and/or documents that can be verified by the buyer. By undertaking sell-side financial due diligence, our team will work to discover potential unidentified earnings adjustments that can increase the company’s valuation, resulting in more money in the seller’s pocket.Reduce Concerns of the BuyerWhen the reliability of financial information and/or data provided by the seller is in question, buyers can quickly lose confidence and interest. This often increases the buyer’s concerns around the viability of the business and decreases the buyer’s perceived value of your company.  Sell-side financial due diligence will provide the opportunity to assure that your data and financial information are both accurate and consistent, eliminating errors and possible fears.Minimize SurprisesSell-side financial due diligence will not necessarily identify every single potential problem or question involved in a deal, but it should address the most significant issues so that a deal does not dissolve because of unforeseen but preventable issues.  It is better to identify and address these concerns through sell-side financial due diligence than to allow for both the seller and buyer to be surprised when concerns arise with only days left in the exclusivity period.If you are considering selling your company, we highly recommend performing sell-side financial due diligence prior to marketing your company.  We understand that, for the seller, successfully exiting a business is just as important, if not more important, than starting and growing it.  It’s the trophy at the end of the championship season.  We can help prepare you for success and your desired outcome.Schneider Downs has extensive experience in providing buy-side and sell-side due diligence services.About Schneider Downs Transaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of business transactions of all types, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning. Our team consists of interdisciplinary dedicated professionals who provide support across all aspects of transactions.Learn more about our Transaction Advisory Services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Buy-Side Financial Due Diligence Buy-Side Financial Due Diligence Assessing and evaluating the opportunity to acquire a new business needs to be completed with swiftness, precision and discretion. Our professionals in the Business Advisory group at Schneider Downs are highly skilled to help you accomplish exactly that. Our team has decades of experience and has been involved in hundreds of successful transactions.While our experience has revealed that no target is perfect, we will work alongside you to help examine the key value drivers of the target and how they align with your strategic vision. Our inquiries and analysis are designed to aid you in making an informed decision, and equip you with the knowledge to engage in effective negotiations; resulting ultimately in a fair purchase price for the value obtained.Benefits of investing in buy-side financial due diligence with us include, but are not limited to, the following:Accurate Valuation of the Target CompanyBy analyzing the target’s historical financial results, including the quality of earnings, and how they link with its future projections, provides important insight into the viability of the company going forward. As a part of our process, we look to identify potential unidentified earnings adjustments, which could result in a more precise valuation, and thus a more accurate price for the assets obtained. The analysis also includes a careful review of the target’s assets and liabilities, on and off its balance sheet.Confidence and ClarityThe transactional process demands a healthy level of skepticism, but it also requires a clear head. We have found that the acquisition process tends to elicit a full spectrum of emotions for potential buyers. Our experience in the due diligence practice has trained us to remain focused and appropriately respond to information learned throughout the engagement, which allows us to obtain the answers to the buyer’s most important questions, bringing clarity to the opportunity and drowning out unnecessary noise.Smooth ProcessThe amount of data and information that is requested during the due diligence period is substantial, and often significant time is needed just to manage these requests. We have the resources in place to simply, easily and securely allow for the exchange of information to take place in a timely and accountable manner from beginning to end.If you are looking to acquire a company, engaging in buy-side financial due diligence is a prudent and necessary step to take in the evaluation process. Warren Buffett put it well, “Price is what you pay. Value is what you get.” We are here to help assure the value you acquire is a rewarding multiple of the price you pay.Schneider Downs has extensive experience in providing buy-side and sell-side due diligence services.  Please contact Joel M. Rosenthal or Marc P. Brdar if you would like to get more information.About Schneider Downs Transaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of business transactions of all types, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning. Our team consists of interdisciplinary dedicated professionals who provide support across all aspects of transactions.Learn more about our Transaction Advisory Services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Exit and Succession Planning Exit and Succession Planning PRIMARY CONTACTS: David C. Brinkman CFA, CPA, CFP Schneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners.Exit and succession planning is one of the most important strategies you will need to implement throughout the life of your business, and whether you are ready to start today or in 10 years, it’s never too early to begin the discussions.  Schneider Downs is uniquely qualified to provide you with ideas, options and innovative solutions to meet whatever objectives you have in mind.We will help you address common obstacles to exit planning, explain why exit planning is important and a good business strategy, help to assess owner and business readiness, identify deal killers and apply the value acceleration methodology ™, along with identifying the solutions that best fit your objectives as well as understand the underlying tax, cash flow, estate, business and family considerations. We will help you address common obstacles to exit planning, explain why exit planning is important and a good business strategy, help to assess owner and business readiness, and identify deal killers.We utilize The Value Builder System to provide a Value Builder PREScore that provides you with a good understanding of what role your team will play in securing a satisfying exit. The assessment provides the 4 Key Drivers of an exit without regret. You can get your score at the link below.The Value Builder SystemOur Exit and Succession Planning Advisors are comprised of advisory professionals from five practice units—assurance and tax advisors, business advisory, technology advisors, corporate finance and wealth management—to deliver seamless, fully integrated exit and succession solutions.Download our Exit and Succession Planning service overview to learn more or contact us today to get started.Our experts include:Certified Exit Planning Advisors (CEPA)CPAsAttorneysAccredited Investment Fiduciary ProfessionalsCFAsCIMAsSo whether you are unsure of your next steps, are looking at a buyer, private equity or public offering or thinking of transitioning to family, key management, gifting to individuals or trusts, or considering an ESOP, Schneider Downs will listen, understand, create, manage and fully execute your exit and succession plan. Subscribe to Our Value Builder Newsletter Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Contact Tax We want to hear from you. "*" indicates required fields First Name* Last Name* Company/Organization* Email* Phone NumberComment/Question How would you like us to contact you? * Email Phone How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit ### Tax Services for the Education Sector Tax Services for the Education Sector Our Higher Education Tax Services Group is nationally recognized for its technical expertise and extensive experience in tax and business matters that affect academic institutions.  Our professionals are quick to assess the tax implications associated with your activities and bring practical solutions to your institution.  Our team is well-versed in areas of taxation specific to colleges and universities, and assists clients with the following tax services:Compliance Matters For The Education SectorForm 990 and 990-T preparation and reviewAnalysis of uncertain income tax positionsUnrelated business incomeJoint ventures and partnership reportingSupporting organizationsSubstantiation of charitable contributionsState and local tax exemption and complianceCharitable solicitation registrationForeign investment reportingNon-resident alien reportingFederal tax auditsFBAR filing analysisInternational tax issues association with study abroad programsCompensation and benefits design reviewGovernance/policy Tax Matters For The Education SectorConflict-of-interest policy and managementFringe benefits and compensation mattersBoard educationIntermediate sanctionsAuxiliary And Investment Activities For The Education SectorUnrelated business income activitiesAlternative investment complianceJoint venturesShared service agreementsFor-profit subsidiariesCorporate restructuringTransaction analysisState And Local Tax Services For The Education SectorSchneider Downs has a dedicated State and Local Tax (SALT) practice, which has been assisting clients with complex tax issues for more than 50 years. Our SALT professionals remain steadfast in our commitment to consistently monitor, evaluate and update our higher education clients regarding state and local tax changes and developments. The expertise and dedication of our SALT group allows our clients to optimize their tax situations and assure compliance with evolving laws and regulations. Our comprehensive array of SALT services include:Sales and use tax compliance reviewSales and use tax refund reviewUncertain income tax position complianceRealty exemption challengesLegislative assistanceFor a list of the services that Schneider Downs can provide to educational institutions in the Pittsburgh and Columbus regions, and across the United States, please visit our education sector services webpage. ### Business Advisory Business Advisory Contact Us Today In a business world or rapidly changing economic conditions and legislation, organizations are challenged more than ever before to remain current, informed and insightful.Our team of dedicated advisors are experienced across a wide scope of specialties, allowing us to help our clients make more informed business decisions across every facet of their operations.Download our Business Advisory practice overview for more information. BUSINESS ADVISORY SOLUTIONS Accounting Advisory Services Accounting Advisory Services Focus on protecting and enhancing the value of your… Business Restructuring Schneider Downs Business Restructuring Experienced and practical guidance through the complex issues… Business Valuation Services Business Valuation Services The valuation of any business or asset is a… Forensics and Litigation Services Forensics and Litigation Services Navigate the complex litigation landscape with confidence. Meet… Managed Accounting Services Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or… Transaction Advisory Services Trusted guidance to create value at every stage of business transactions. Contact… meet the team ADDITIONAL SERVICES FINANCIAL AND CASH FLOW MODELING COMPENSATION STUDIES MANAGEMENT ADVISORY PROFITABILITY AND OPERATIONS MANAGEMENT SERVICES Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Enjoy more of what COUNTS at Schneider Downs. Enjoy more of what COUNTS at Schneider Downs. At Schneider Downs, we prioritize your growth and development within a caring culture and work together toward collaborative impact. We are committed to your personal and professional development, offering coaching and mentoring tailored to each individual. 1 Culture of Care At Schneider Downs, our culture is our identity. And it’s our culture of care that makes us unique. Even as we grow, we work hard to retain this culture to continuously promote a positive, supportive work environment through our core values: Care, Integrity, Flexibility, Respect, and Drive. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs, as well as activities created to foster camaraderie and support.  2 Flexibility Flexibility is at the core of our culture, giving you the autonomy and empowerment to thrive. Schneider Downs has embraced the hybrid work model, so you will have flexibility working from home, as well as the office. We understand the importance of balancing the needs of our clients and the development of our people with flexibility, and we believe flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication, and a commitment to excellence. 3 Growth & Development Schneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop. Our firm’s history of growth and continual introduction of new services provide broad opportunities for career variety and advancement. Our leaning environment, with hands-on work from day one, will allow you to learn and grow quickly. We offer a mentorship program to help guide and support new team members in their transition to Schneider Downs. 4 Collaborative Impact Schneider Downs is a well-recognized, established, and collaborative firm in which you can impact many clients by providing value and solutions to our clients with whom you’ll build rewarding and lasting relationships. You’re not just a number here. You’ll gain national firm experience, with a regional touch, and will have the opportunity to work on wide-ranging client sizes, industries, and project complexities. 5 Total Rewards Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better. We offer a comprehensive total rewards package to all full-time and eligible part-time employees, many of which are available on the first day of employment. We regularly monitor our benefits to ensure that it is best in class and the current offerings include, but are not limited to: competitive compensation; insurance, including health, dental, and vision, that begin on day one; 20+ days of paid time off and 13 paid holidays; Flex Fridays and office closures for summer and winter breaks; parental leave, family care leave, and volunteer time; 401(k) plans and profit sharing; CPA exam bonus, education assistance program, and pet insurance. 6 Community Consistent with our Mission Statement of Working Together Every Day to Make Our Firm, Clients and Communities Better, Schneider Downs is committed to giving back to our communities and providing our employees with opportunities to do so. We do this, in part, through a team of dedicated Schneider Downs personnel who comprise our “SD Cares” Committee, whose mission is to be a resource to all employees to learn about volunteer opportunities in our communities. The firm also provides PTO for approved volunteering activities. 7 Diversity, Equity & Inclusion At Schneider Downs, we believe that diversity, equity, and inclusion contribute to a better company, better client services and a better world. We want everyone to feel they can be themselves by sharing the wide range of perspectives they represent, thereby fostering an environment where differences are truly valued and celebrated. We are committed to our culture of care with a welcoming environment, programs and initiatives that are designed to foster a community and celebrate differences.  1 Culture of Care At Schneider Downs, our culture is our identity. And it’s our culture of care that makes us unique. Even as we grow, we work hard to retain this culture to continuously promote a positive, supportive work environment through our core values: Care, Integrity, Flexibility, Respect, and Drive. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs, as well as activities created to foster camaraderie and support.  2 Flexibility Flexibility is at the core of our culture, giving you the autonomy and empowerment to thrive. Schneider Downs has embraced the hybrid work model, so you will have flexibility working from home, as well as the office. We understand the importance of balancing the needs of our clients and the development of our people with flexibility, and we believe flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication, and a commitment to excellence. 3 Growth & Development Schneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop. Our firm’s history of growth and continual introduction of new services provide broad opportunities for career variety and advancement. Our leaning environment, with hands-on work from day one, will allow you to learn and grow quickly. We offer a mentorship program to help guide and support new team members in their transition to Schneider Downs. 4 Collaborative Impact Schneider Downs is a well-recognized, established, and collaborative firm in which you can impact many clients by providing value and solutions to our clients with whom you’ll build rewarding and lasting relationships. You’re not just a number here. You’ll gain national firm experience, with a regional touch, and will have the opportunity to work on wide-ranging client sizes, industries, and project complexities. 5 Total Rewards Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better. We offer a comprehensive total rewards package to all full-time and eligible part-time employees, many of which are available on the first day of employment. We regularly monitor our benefits to ensure that it is best in class and the current offerings include, but are not limited to: competitive compensation; insurance, including health, dental, and vision, that begin on day one; 20+ days of paid time off and 13 paid holidays; Flex Fridays and office closures for summer and winter breaks; parental leave, family care leave, and volunteer time; 401(k) plans and profit sharing; CPA exam bonus, education assistance program, and pet insurance. 6 Community Consistent with our Mission Statement of Working Together Every Day to Make Our Firm, Clients and Communities Better, Schneider Downs is committed to giving back to our communities and providing our employees with opportunities to do so. We do this, in part, through a team of dedicated Schneider Downs personnel who comprise our "SD Cares" Committee, whose mission is to be a resource to all employees to learn about volunteer opportunities in our communities. The firm also provides PTO for approved volunteering activities. 7 Diversity, Equity & Inclusion At Schneider Downs, we believe that diversity, equity, and inclusion contribute to a better company, better client services and a better world. We want everyone to feel they can be themselves by sharing the wide range of perspectives they represent, thereby fostering an environment where differences are truly valued and celebrated. We are committed to our culture of care with a welcoming environment, programs and initiatives that are designed to foster a community and celebrate differences.  total rewards Best-in-class benefits are anything but basic -“ experience the extras that make work infinitely more rewarding. read more Work-Life Balance  Embrace professional challenges and enjoy a full personal life with a culture that facilitates work-life balance. read more For more information about Schneider Downs Careers, please visit schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us today. Have a question? Ask us! Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. ### Sarbanes-Oxley Solutions Sarbanes-Oxley Solutions Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider Downs delivers a comprehensive suite of Sarbanes-Oxley (SOX) solutions tailored to your company’s specific needs. Whether you need a one-time assessment of controls or ongoing support, we adapt to your requirements and deliver tailored SOX services specific to your organization. Our teams have extensive experience collaborating with companies to ensure an effective SOX program. SOX Controls Optimization Our SOX program takes a focused approach to optimizing your SOX program, including strategy, structure, and controls. For a successful SOX program, all components must work in harmony and progress together. We assess the scope, risks, testing strategies, and documentation—such as key controls, testing results, risk mapping, flowcharts, and walkthroughs—to ensure they operate at peak effectiveness and efficiency. By evaluating these factors, we help enhance the overall performance of your SOX controls and program. SOX Readiness Services Schneider Downs helps companies implement and support their SOX programs, emphasizing scoping, documentation, and key controls. Whether you're pre-IPO or an SRC moving to an accelerated filer, we’ll guide you in developing the right strategy, structure, processes, and technology, ensuring effective design and operation while meeting independence requirements. SOX Services for Public Companies Our team of experienced professionals help support existing SOX programs. We provide an entire suite of SOX services, including scoping, walkthroughs to assess control design, detailed testing to assess control effectiveness, issue tracking and remediation, and coordination with necessary stakeholders, Our team consists of business process and IT professionals to provide comprehensive SOX solutions. SOX Services for Smaller Reporting Companies (SRC) Schneider Downs assists SRCs not subject to the SOX 404(b) auditor attestation requirement in achieving SOX compliance that aligns with management, and where necessary, external auditor, expectations. Our experienced team collaborates with companies to design and execute a cost-effective approach for management’s attestation of effective internal controls over financial reporting. Our SOX Approach and Methodology Our proven SOX methodology follows a disciplined approach aligned with industry-leading practices, ensuring consistent execution and high-quality results for both business processes and IT. Our methodology focuses on continuous improvement through training, awareness, thought leadership, and regular communication to keep stakeholders informed. Aligned with SEC and PCAOB standards, as well as the COSO framework, it enhances the efficiency and effectiveness of Sarbanes-Oxley programs. This ensures organizations can identify significant risks of material misstatement and implement the necessary processes and controls to mitigate those risks. How Can Schneider Downs Help? Schneider Downs’ IT, financial, and operational audit professionals stay updated on SOX guidance and legislation, bringing extensive Sarbanes-Oxley experience across diverse domestic and international industries. We are proficient in various processes, applications, platforms, and databases, including HR, Accounts Payable, Accounts Receivable, Inventory, SAP, Oracle ERP, and JDE. Ready to get started? Contact the team directly. SOX Resources SOX Service Overview SOX Resource Center About Schneider Downs Risk Advisory The Schneider Downs Risk Advisory team collaborates closely with your organization to identify and effectively mitigate risks. Our objective is not only to address risks associated with potential losses but also to implement solutions that add value and ensure minimal disruption to your business. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study Our Thoughts On Strong IT General Controls, Smarter Technology: How Smaller Reporting Companies Can Innovate with Confidence Why are strong IT General Controls (ITGCs) essential for smaller reporting companies (SRCs) embracing automation and AI? For smaller reporting… Read More > 5 Ways Smaller Reporting Companies Can Gain Flexibility with SOX Smaller Reporting Companies (SRCs) can improve SOX compliance by using a risk-based approach to prioritize control testing and allocate resources… Read More > Benefits of Internal Audit Involvement in SAP S/4HANA and SAP RISE Implementations What are the benefits of internal audit involvement in SAP S/4HANA and SAP RISE implementations? As more companies embark on… Read More > McBreach: Vendor’s Use of '123456' Exposes 64 Million McDonald’s Job Applicants Would you like your personal data exposed because of a weak password? That’s the one question McDonald’s hiring website forgot… Read More > Changing the Game - What the NCAA's New NIL Revenue Framework Means On June 6th, 2025, the NCAA’s landmark House v. NCAA settlement was officially approved, transforming the way student-athletes can earn… Read More > ### SOC Case Study - Secure Communications Software Start-up SOC Case Study - Secure Communications Software Start-up Primary Contact: Eric M. Wright CPA, CITPWhat can you tell us about your company/history of your company?We are a secure communications software startup coming to a more mature level, 60 or so employees, globally, at almost five years since founding.Why did you want a Service Organization Control Report?As a company in the security space, we felt it was important to pursue a third-party attestation of the work we were doing to ensure the security of our products and customers. Rather than vague statements about using or leveraging varying frameworks, and promises of security, an independent third-party examination of our security controls and effectiveness would go a lot farther. Specifically, we chose a SOC 2 report, as we had several FinTech deals in the pipeline, and the SOC 2 report resonates particularly well in that space, as well as being well accepted in general.Why is the SOC 2 Type 2 report valuable from your customers’ perspective?As an independent third party, the auditors review our controls and posture. Not just a binary certificate, like some other standards, the SOC 2 report allows potential stakeholders, like customer or investors, to review, or have reviewed, the report, to ensure the control set is what they would expect for the product/company/service. Why did you choose to partner with Schneider Downs for your SOC report?As a smaller business, at the front of the technology curve for our industry, we were really looking for a smaller firm we felt would have closer relationships. The larger firms we spoke to had a mentality we were afraid wouldn’t mesh well with us. As a highly innovative product and service, we are very used to having to explain ourselves, and wanted to be certain someone would listen. Having met one of the audit leaders at Schneider Downs professionally, I was certain this would bethe case, and it was.Can you describe your experience with Schneider Downs?I was very pleased with our experience. This was our initial report, and initial third-party examination. While we had prepared hard, there was some trepidation. The auditors, and the audit leadership made the process very smooth. As we encountered issues with evidencing certain controls, we were able to discuss the issues, and find a course of action to provide the documentation needed to prove the control effectiveness. In a modern Agile system, this is not always the easiest thing to do, but we were able to find creative solutions, together, to meet the goals of providing the report, while upholding the standards of the same.How has your SOC report process been beneficial?By the time we received our final report, we had three customers waiting for it as part of their Due Diligence of us. Since then, we have used it numerous times to shorten conversations regarding security practices. That is, as third party surveys or Due Diligence has come up, we have simply provided the SOC 2 report for review. There are occasional questions that are beyond the scope of the report, but it is certainly easier than responding manually to every request. The fact that is not just our statement, but the word of seasoned SOC report practitioners, simply reduces the friction in the sales cycle, especially for the space we are in.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC. ### SOC Case Study - Pharmacy Provider SOC Case Study - Pharmacy Provider Primary Contact: Eric M. Wright CPA, CITPWhy did you choose to partner with Schneider Downs for your SOC Report?Out of 5 or 6 firms interviewed for our SOC 2 engagement, Schneider Downs was the only firm to inform us that the AICPA was soon updating to the ‘2017 Trust Services Criteria’ and that we would likely benefit more from meeting these new criteria prior to beginning a SOC 2 audit.That very first phone call provided us with more helpful information than had been gathered from all of the other firms combined.    Right from the beginning it was obvious Schneider Downs was genuinely interested in ensuring we got the best value out of our SOC 2 audit experience. What was it like to work with Schneider Downs?This was our first SOC 2 audit so we had many, many questions along the way!  The team answered every one of our questions quickly, completely and with earnestness.  We never felt uneasy asking a question.  The team at Schneider Downs worked cohesively as well.  We never had to repeat ourselves because the whole team was always up to date on our progress and could jump right in without a hiccup.  And, the team was very well-versed in Information Technology.  They were able to bridge any communication gaps between technical language and compliance language to ensure both sides understood one another. What is an example of how Schneider Downs went “the extra mile” to serve you?Schneider Downs went above and beyond our expectations many times throughout our SOC 2 gap analysis and audit.  The team took the initiative to fully understand our complex business structure,  explained every step of the SOC 2 engagement with patience, maintained responsive communication with us, and even helped us with a few off-topic compliance related questions! What value did the SOC 2 Report provide to your organization?Now that we have a SOC 2 Report we are able to offer clients tangible reassurance of our commitment to protecting their data.  Clients can hold a copy of the report in their hands and rest assured knowing an independent third-party has tested and reported on the effectiveness of our controls.  Because of that, our SOC 2 Report places us at an advantage over the competition right from day one of the proposal process.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC. ### SOC Case Study - Information Technology Services SOC 2 Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completed a Service Organization (SOC) Type 2 report for a leading SaaS provider that empowers retailers and manufacturers to drive new product success by introducing the right new products at the right price.The client offers a cloud-based software solution that gives retailers and manufacturers insight into expected product performance and optimal entry price points for new items that have no sales history, all within 48-72 hours.  Retailers and brands use the solution to develop, select, and price more winning products.The client uses a scalable platform that enables thousands of consumers to evaluate hundreds of new products through online games that are presented via social media, websites, emails, and on mobile devices.  The predictive analytic solution filters and weighs consumer input, ensuring that clients are listening to the right consumers.  The results have been 3%-9% gains in sales and margin dollars for all customers. The Chief Technology Officer shared her thoughts with Schneider Downs on the SOC 2 Type 2 report:Why is the SOC 2 Type 2 report valuable from you customers’ perspective?Because we are a SaaS solution, it is important for our customers to know we have sufficient controls in place to ensure that we are managing the information they provide us in a secure and business-appropriate manner.  The SOC 2 principles and criteria provide a standard framework for us to demonstrate evidence of our controls without our customers have to conduct their own due diligence audit on our systems.How has the SOC 2 report process added to the Security and Processing Integrity of your SaaS offering?It mobilized our company to this about the best practices for managing inputs into our solution, monitoring consumer engagement activities, and producing customer results from our systems, and to develop Policies and Procedures that encourage those best practices and mitigate risk.  The Policies and Procedures related to Security and Processing Integrity we have developed have also simplified new hire training, as it was easier to develop training materials and track compliance.Can you describe your experience with Schneider Downs?Schneider Downs was professional and knowledgeable and worked with us from a point of view wanting us to succeed.  They worked hard to understand our business and worked with us to develop controls that made sense for our company.  The challenged us when necessary and they helped us ultimately build a framework that made us better as a company.  I look forward to working with them again on the next testing phase.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC. ### SOC Case Study - Information Technology Services Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completed a Service Organization (SOC) report for a leading provider of remote database administration, operating system and Oracle EBS support services. The client provides around-the-clock support for all major database products, including Oracle, SQL Server, DB2, MYSQL and Oracle EBS and also provides operating system support for all major variations of the UNIX and LINUX operating systems.  The Director of Customer Value and Service Delivery shared his thoughts with Schneider Downs on the SOC report:Why did you want a Service Organization Control Report?Database administrators, by the very nature of their profession, are the protectors of an organization’s critical database assets.  When a mission-critical application becomes unavailable, it can threaten the survivability of a business.  The financial impact of downtime is not the only issue that companies face when critical applications are offline.  Loss of customer goodwill, bad press and legal penalties can all damage a company’s reputation.  As a result, the quality of our work must be without question.  One of the first questions prospective customers ask is if we have a SOC report.  The SOC report provides potential and existing customers with the peace of mind knowing that our support activities have been reviewed by an independent organization that specializes in measuring service quality.  It is extremely beneficial to attracting new customers and keeping existing customers happy.Why did you choose to partner with Schneider Downs for your SOC report?We wanted a company that had extensive experience in providing SOC auditing and reporting experience.  In addition, we were looking for an organization that possessed an excellent reputation for these types of services.  The reputation of the firm providing the SOC audits is extremely important to the credibility of the report.  Having a firm like Schneider Downs work with us on our SOC report provided our organization with the level of credibility that we wanted.Can you describe your experience with Schneider Downs?Schneider Downs’ engagement team was extremely knowledgeable about the entire process. Our organization spent many hours reviewing SOC information before we selected Schneider Downs. What I found out during Schneider Downs’ first visit was how much we truly didn’t know about the SOC process. The engagement team took the time to educate us from the top down. They worked with us to identify what operational activities were truly important to the quality of service we provide to our customers.They also provided advice on the processes and reports that would be required to measure the quality of these services. Security is of the utmost importance to our organization. Schneider Downs knew that coming in, and worked with us to create a set of measures to evaluate not only service delivery quality but service delivery security.Schneider Downs clearly stated all deadlines and timeframes in both verbal and written communications. They described all of the stages that were involved in the audit process. My organization clearly understood where Schneider Downs was in the analysis, evaluation and reporting stages.The SOC-1 report exactly met our needs. Schneider Downs did an excellent job during the initial stages of the engagement to educate us about what operations were important to be audited, why they were important and how to effectively measure them.  Schneider Downs then reviewed our measurement processes to ensure accuracy. They quickly “learned our business,” which was very beneficial to the process. We have had numerous customers’ auditing departments review our SOC-1 report with no questions asked.How has your SOC report process been beneficial?The SOC report process has been extremely beneficial to our organization. Although we knew we provided high-quality service to our customers, creating additional measurements allowed us to further increase the quality of our support processes.  Every prospective customer asks us if we have a SOC report. The SOC1 process has been the most beneficial project we have undertaken. Every service delivery organization should have a third party perform an in-depth review of its support processes.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC. ### SOC Case Study - HR Outsourcing Provider SOC 1 Case Study Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completed a Service Organization Controls (SOC 1) report for an HR outsourcing company.Why did you want a Service Organization Control (SOC) report?Our company provides HR Outsourcing Services in the areas of HR Administration, Benefits, Payroll, Workers Compensation and Technology Infrastructure in a bundled solution. The SOC 1 provided to our customers evidences if the proper controls and processes are in place to ensure that their financial information, including client and employee setup, employee maintenance, payroll processing and auditing, financial and tax administration, are properly performed. The SOC 1 also provides them with assurance that their data is secure.Why did you choose to partner with Schneider Downs for your SOC report?We chose Schneider Downs as a partner to perform the SOC 1 Type 2 report because of their reputation and their prior working experience with our company. They have been an integral part by auditing our financials, Section 125 plans, Retirement Savings Plan, and other areas. They have provided excellent service since day one.How long have you worked with Schneider Downs?We have been working with Schneider Downs for various services mentioned previously since 2007.Can you describe your experience with Schneider Downs?We have found Schneider Downs to be an excellent partner. They are very knowledgeable and supportive in meeting all of our needs. They are very organized and attuned to meeting their deliverables on time. They are very accommodating to our schedules and work very hard to make adjustments as needed.How has the SOC report process been beneficial to your organization?Our SOC report process has been beneficial for our company in communicating to our customers that we strive to provide the highest level of service that we can possibly provide. It has given our clients assurance that we maintain the highest control standards with regards to the services we provide. It has also given our clients’ auditors comfort that we are maintaining an effective control environment.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC. ### SOC Case Study - Healthcare Management/Third Party Administrator Case Study SOC Case Study - Healthcare Management/Third Party Administrator Case Study Primary Contact: Eric M. Wright CPA, CITPSchneider Downs completes Service Organization Control (SOC) reports for a national healthcare management and technology company devoted to improving outcomes for professional providers and the patience they serve.The company provides solutions for physician groups, healthcare systems, provider networks and EMS organizations, enabling them to reach maximum potential with respect to operational, financial and clinical outcomes.  Headquartered in Pittsburgh, PA, the company has offices located throughout the United States. The Director of Internal Audit shared her thoughts on working with Schneider Downs.Why did you want a Service Organization Control (SOC) Report?By having a SOC report performed, we are able to provide additional assurance to our customers of our efficient medical billing services, and also validate internally our processes and controls.Why did you choose to partner with Schneider Downs for your SOC Report?Schneider Downs performs our external financial statement audit and tax preparation. We have been pleased with the firm’s level of knowledge and our relationship with Schneider Downs, and felt the firm would continue to provide great service in this area.How long have you worked with Schneider Downs?I personally have worked with Schneider Downs since I joined our team in July 2008.  Our company has worked with Schneider Downs since the firm engaged to perform the 2006 financial statement audit.Can you describe your experience with Schneider Downs?The SOC report experience with Schneider Downs has been great.  The engagement team communicates effectively, reports have been timely, and they have ensured that all applicable parties are informed appropriately.How has your SOC report process been beneficial?By going through the readiness phase, it has allowed me to become intimately involved in our operations.  I got a good look “behind the scenes” and learned a great deal about our operations that I never would have otherwise.Also, another line of business within our company recently won a large bid for a client who requires a SOC report.  Through our previous experience, we are prepared to move forward more quickly.Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainsAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. ### SOC Case Study - Data Center/Secure Application Host SOC Case Study - Data Center/Secure Application Host Primary Contact: Eric M. Wright CPA, CITP Schneider Downs completed a Service Organization Control (SOC) report for a leading provider of scalable and secure application hosting, virtualization and data center solutions. The client services businesses across the United States, while maintaining technical certifications and partner relationships with Microsoft, VMWare, EMC, Citrix Systems, Cisco and Liebert. A senior engineer shared his thoughts on working with Schneider Downs on the SOC Report. Why did you want a Service Organization Control (SOC) Report? We manage a vast number of clients and their data. We felt that we needed to have controls in place so our customers know that we are providing the services we say we are, and following the procedures we have in place. Some of our customers fall under Sarbanes-Oxley (SOX), and having a Type II SOC report over our managed data center services also helped with their SOX compliance. Why did you choose to partner with Schneider Downs for your SOC report? Schneider Downs was highly recommended by a local CPA we know and, after meeting with them, we couldn’t agree more. How long have you worked with Schneider Downs? We have worked with Schneider Downs since 2009. Can you describe your experience working with Schneider Downs? The firm has been great to work with. The staff is very knowledgeable and helpful. They are always a phone call or email away, and their response time is great. How has your SOC report process been beneficial? We have been able to provide the report to our customers and put their minds at ease that their data is being protected. The SOC report process also has helped us internally identify risks that have now been mitigated by the procedures we put in place. This protects us…and our customers. Schneider Downs SOC Services SOC 1 Examinations SOC 2 Examinations SOC 3 Examinations SOC for Cybersecurity SOC for Supply Chains About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. ### SOC Report Quiz SOC Report Quiz Does your organization need a system and organization controls (SOC) report? SOC examinations provide management with assurance regarding the effectiveness of an organization's internal controls, while also providing insights for opportunities to improve internal controls and risk mitigation activities. Obtaining a SOC report has become increasingly relevant for organizations of all sizes, as the report demonstrates that effective internal controls and related safeguards have been implemented. Does your organization need a SOC Report? Take our brief quiz to help answer the question. 2Do the financial statement auditors of your organization's customers (user entities) request System and Organization Controls (SOC) reports for your organization and/or request to perform audit procedures on your organization's activities for the services provided to customers? Yes No Don't Know 3Do contracts with your organization's customers or prospective customers require you to provide a System and Organization Controls (SOC) report or have a right to audit clause? Yes No Don't Know 4Do you receive requests from your customers or prospective customers to provide System and Organization Controls (SOC) reports? Yes No Don't Know 5Does your organization use or provide applications that are software-as-a-service (SaaS) or platform-as-a-service (PaaS)? Yes No Don't Know 6Does your organization store, process or transmit confidential information or sensitive data (e.g., personally identifiable information (PII), personal health information (PHI), proprietary customer information, credit cards) on behalf of customers? Yes No Don't Know 7Does your organization need assurance regarding information security and/or compliance requirements (e.g., HIPAA, HITRUST, PCI, FISMA, ISO 27001, etc.) or is your organization operating in a regulated environment? Yes No Don't Know 8Does management of your organization want to obtain assurance regarding the internal controls at your organization relative to security, availability, confidentiality, processing integrity and/or privacy? Yes No Don't Know CommentsThis field is for validation purposes and should be left unchanged. Submit ### IFRS Resource Center PRIMARY CONTACTS: Joseph A. Bruce, Todd J. LucasU.S. companies may be required to convert their financial reporting from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS). As it currently stands, approximately 120 countries permit or require reporting in accordance with IFRS. This convergence of standards will affect public companies as well as non-public companies.If and when IFRS becomes the global accounting standard, the only remaining questions for U.S. companies are “when?” and “how?” The SEC answered the “when” with its release of a proposed roadmap, which includes a timeline for adopting IFRS, beginning in 2014 for public companies.  With no definitive timeline for IFRS implementation for privately-held companies, the International Accounting Standards Board (IASB) issues IFRS for small- and medium-sized entities (SMEs), a condensed version of full IFRS that should be easier to adapt and implement, in July 2009.As for the “how,” that is a more difficult question to answer. IFRS will not only affect your company’s finance and accounting departments, but also will affect processes, internal controls and information technology systems. With many companies already mired in the daily grind of financial accounting and reporting under a set of often complex standards, learning, adapting, implementing, and understanding these international standards will be a challenge.  There is a reasonable, cost-effective solution to convergence service providers with Schneider Downs.Our experienced personnel can assist with project management and planning, needs and GAP analysis, information systems reviews, as well as training and understanding of IFRS and its impact on you.Read recent IFRS updates.LinksInternational Accounting Standards Board (IASB) IFRSFinancial Accounting Standards BoardAICPA IFRS ResourcesU.S. Securities and Exchange CommissionInternational Federation of AccountantsAICPA IFRS ResourcesAdditional ResourcesPrimeGlobalConference to Review the Effects of IFRS Adoption in Global Capital MarketsWorld GAAP and IFRS ComparisonSEC Work PlanSEC Work Plan Progress Report - 10/29/10SEC Work Plan - 5/26/11 Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Schneider Downs Careers ### Profitability and Operations Management Services Profitability and Operations Management Services PRIMARY CONTACTS:  Adam J. Goode, CPAMaximizing the value of a business is an integrated effort that involves nearly everyone within an organization. Without clear visibility, policies and analytical tools, there is a good chance your organization could be leaving money on the table. Profitability management is a journey, with each organization’s unique challenges requiring custom solutions based on industry best practices.Our ServicesSchneider Downs’ Profitability and Operations Management team provide services to pinpoint untapped opportunities. Through partnering with executives, management and staff, our services support and improve Strategic Pricing and the Sales, Inventory and Operations Processes (SIOP) to optimize bottom-line results.Profitability and Operations Management ResourcesProfitability and Operations Management Service Overview Success Story – Inventory Profit OpportunitySuccess Story – Operations Profit OpportunitySuccess Story – Strategic Pricing Profit OpportunityAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Full Accounting Services Full Accounting Solution Schneider Downs Full Accounting Solution ensures timely recording of your transactions, efficient execution of month-end and accurate financial reporting.A sound accounting function is an essential component of managing a profitable business. Whether you need to implement a full accounting solution or receive as-needed support for your existing team, Schneider Downs helps you achieve your goals.Benefits of outsourcing the management of your accounting function include:Accounting Efficiency and AccuracyAbility for Leadership to focus on growing their businessCost ControlElimination of Management and Turnover IssuesImplementation of Best PracticesOur experienced team utilizes innovative technology to enhance your solution, including implementation of artificial intelligence to automate your bookkeeping. The artificial intelligence platform combines machine learning with the oversight of skilled accountants, allowing timely and accurate:In addition, Schneider Downs professionals routinely provide clients with recommendations based on our analysis.Automated BookkeepingBook period-end adjusting entriesClass and Department tracking and reportingDaily or weekly categorization of bank and credit card transactionsEmployee expense reimbursement management through ExpensifyPayroll Journal EntriesWeekly Accounts Payable Processing through Bill.comMonth-End Close Assistance – Ensure 5- or 10-day month-end closeBank and Credit Card ReconciliationsIncome Statement and Balance Sheet review for unusual balances or discrepanciesMonth-end checklist managementRevenue ReconciliationReview of period-end adjusting entriesMonth-End ReportingDepartment or Class ReportingKPI analysisStandard reporting, including Balance Sheet, Income Statement and Cash Flow Statement by the 10th or 15th day of the month  Ready to Get Started?Contact the team at contactsd@schneiderdowns.com or download the Schneider Downs Managed Accounting Services brochure for more information.ResourcesManaged Accounting Services OverviewRelated ServicesCFO Services Controller Services About Schneider Downs Managed Accounting ServicesSchneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. Learn more at www.schneiderdowns.com/managed-accounting-services. ### Controller Services Controller Services Many accounting functions struggle to produce the timely, accurate reporting, analysis and planning tools leadership teams need to drive good business decisions.A controller is a critical component of ongoing success of profitable organizations who are responsible for providing accurate and timely reporting. Profitable businesses excel in these areas, allowing leaders to grow their business with confidence.If your team needs additional support to produce the tools you need, consider Schneider Downs Controller Services as your solution.With Schneider Downs, you can supplement your existing team with scalable solutions which commonly include:Month-end closeAccount reconciliationsBank reconciliationsMonthly financial reportingMonthly KPI reportingBudget to actual analysisAudit supportTax supportAccounting policy and procedures analysisAccounting and finance department oversightReady to Get Started?Contact the team at contactsd@schneiderdowns.com or download the Schneider Downs Managed Accounting Services brochure for more information.ResourcesManaged Accounting Services OverviewRelated ServicesCFO ServicesFull Accounting ServicesAbout Schneider Downs Managed Accounting ServicesSchneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals.Learn more at www.schneiderdowns.com/managed-accounting-services. ### CFO Services CFO Services With Schneider Downs, you can outsource your CFO function to our team of CFOs, CPAs and experienced accounting professionals to help guide your business toward a path to success. If you need a CFO but prefer the expertise at a cost that meets your budget, or you’ve recently lost your full time CFO, consider Schneider Downs CFO Services. Schneider Downs CFO Services provide the strategic financial leadership needed to grow your business with scalable solutions which commonly include: Accounting and finance department oversight Budgeting and forecasting Cash management Financial growth strategy Financial modeling Fundraising support Investor and bank relations Profitability analysis Strategic planning “What if” scenario planning Our team of experienced professionals provide the strategic financial leadership and can deliver customized services responsive to your organization’s specific needs often at a fraction of the cost of hiring a full-time CFO. Ready to Get Started? Contact the team at contactsd@schneiderdowns.com or download the Schneider Downs Managed Accounting Services brochure for more information. Resources Managed Accounting Services Overview Related Services Controller Services Full Accounting Solution About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. Learn more at www.schneiderdowns.com/managed-accounting-services. ### Managed Accounting Services Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs.Focused on providing accounting leadership and support services to businesses that either have limited resources, staffing challenges or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services bring the right talent and expertise to you.Whether you need to implement a full accounting solution or are searching for supplemental support to your existing team, Schneider Downs Managed Accounting Services can help you achieve your goals. Key services include:CFO ServicesA CFO plays a vital role in the ongoing success of profitable organizations. The ideal CFO has a wide range of experience and skills, as well as the ability to communicate with Business Owners, CEO’s or the Board of Directors. As a result, hiring a fully qualified, full-time CFO can be cost prohibitive to growing businesses. If you need a CFO but prefer the expertise at a cost that meets your budget, or if you’ve recently lost your full time CFO, consider Schneider Downs CFO Services. Learn more about Schneider Downs CFO Services.Controller ServicesMany accounting functions struggle to produce the timely, accurate reporting, analysis and planning tools leadership teams need to drive good business decisions. Profitable businesses excel in these areas, allowing leaders to grow their business with confidence. If your team needs an outsourced controller function or support, consider Schneider Downs Controller Services as your solution. Learn more about Schneider Downs Controller Services.Full Accounting SolutionSome companies choose to outsource their entire accounting and finance functions.  In addition to CFO Services and Controller Services, Schneider Downs offers a solution for full outsourcing of the accounting and finance functions, including daily transactional accounting, accounts payable and bill pay activities, and accounts receivable and invoicing activities. Learn more about Schneider Downs Full Accounting Solution.Ready to Get Started?Contact the team at contactsd@schneiderdowns.com or Managed Accounting Services Overview for more information.ResourcesManaged Accounting Services OverviewAbout Schneider Downs Business AdvisoryIn a business world of rapidly changing economic conditions and legislation, organizations are challenged more than ever before to remain current, informed and insightful. Our team of dedicated consultants has experience across a broad scope of specialties, allowing us to help our clients make more informed business decisions across every facet of their operations.Learn more at our dedicated Business Advisory page. ### Litigation Support Services Litigation Support Services Delivering credible analysis, expert testimony, and strategic insight for complex legal matters Schneider Downs litigation support specialists maintain a variety of advanced professional and analytical skills, and professional certifications.If you are an attorney representing claims for lost profits, intellectual property disputes, breach of contract, insurance claims, construction claims, and valuations of closely held businesses, Schneider Downs litigation support specialists have the professional credentials and experience you need to assist you with your caseload. Our team has earned a reputation for rapid response, thorough preparation for court, and poise, presence and credibility as expert witnesses.Schneider Downs litigation support specialists maintain a variety of advanced professional and analytical skills, and professional certifications including Certified in Financial Forensics (CFFs) and accredited Certified Fraud Examiners (CFEs).Our team members have diversified financial and business experience, as well as familiarity with the legal process, which enables them to effectively identify key issues on each case. Added to this is the solid reputation and expertise of one of the nation’s largest independent accounting firms, assured by the highest ethical standards and credentials held by its shareholders and professionals.Litigation Support in ActionAnalysis of damage claims, including those for lost profits, business interruption and acceleration and delay claimsAssistance with discovery, including the review and preparation of document requests, attendance at depositions and preparation of interrogatoriesBusiness valuation and forensic accounting as related to shareholder disputesDevelopment of claim theory and related damage issuesExpert testimonyPreparation of financial models and assistance with settlement negotiationsPresentation of financial data and related information to triers of factOur professionals are experienced in analyzing and presenting complex financial issues in a clear and usable format in a variety of forums. These forums have included courts, arbitration, mediation and regulatory bodies.Commitment to InnovationIn today's fast-paced environment, we mitigate the risk of underutilized or misunderstood data by partnering with our SD Digital Team data analytics team. By integrating decades of industry expertise with cutting-edge tools, we swiftly deliver actionable insights through data management, discovery, visualization, and advanced analytics, transforming decision-making, uncovering client value and identifying opportunities including:Aggregating and combing data from disassociated legacy systems to discover new insights and assist in quantifying supportable damage claimsDeveloping procedures backed by statistical methods that are credible and will support expert testimonyProviding well-documented and detailed analyses that are repeatable and can be followed at each step of the process, from the source document to the conclusionAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. View our additional Forensics and Litigation services and capabilities Learn More Contact us ### Fraud Risk Management Fraud Risk Management Proactively Identify, Assess, and Address Fraud Risks to Safeguard Your Organization’s Future Fraud can be catastrophic in both financial and reputational terms, and therefore, requires executive commitment to address related risks so that an organization is adequately protected. A strong fraud risk management program will help prepare for, protect and enable your organization to develop a response plan in the event fraud risk elevates to unacceptable levels. Schneider Downs can provide you with the necessary expertise to evaluate your company’s current fraud mitigation plan and infrastructure, support your efforts to perform a fraud risk assessment or assist with the development of a robust fraud mitigation plan. Fraud Risk Assessment  Schneider Downs can help your organization identify and manage the risks of fraud by performing a Fraud Risk Assessment. During the process we work closely with management and create a tailored fraud risk assessment to identify fraud risks and controls and implement corrective actions. Learn More Fraud Risk Diagnostics and Mitigation Services Schneider Downs can assist you in evaluating your organization’s fraud readiness with a Fraud Frisk Diagnostic Evaluation and designing a customizable fraud mitigation program that addresses and alleviates fraud concerns with an actionable analysis of current and future state of risk prevention. Learn More About Business Advisory Services The Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today’s rapidly evolving business environment. Learn more about our Business Advisory services or contact us  for more information.  View our additional Fraud services and capabilities Learn More Contact us ### Forensic & Investigative Accounting Forensic and Investigative Accounting Uncover Financial Misconduct, Resolve Disputes, and Strengthen Controls Through Expert Forensic Analysis Forensic accounting is a specialty practice area that applies accounting concepts along with data analysis and auditing techniques, in the investigation of financial transactions, processes and reporting.Forensic accounting engagements often involve actual or anticipated disputes and the investigation of accounting and financial issues. Investigations include suspicions or allegations of fraud, asset misappropriation, waste, mismanagement or misuse of funds, or white-collar crime. Our clients are companies, boards of directors, creditors, investors and other parties that are potentially impacted by the transactions or issues involved.Schneider Downs' forensic accounting professionals include Certified Fraud Examiners (CFEs) and those who are Certified in Financial Forensics (CFFs) - individuals who are experienced at analyzing, interpreting and presenting complex financial issues in a clear and usable format. Forums have included courts, arbitration panels, investigative agencies, law enforcement, and regulatory bodies.Examples of the forensic accounting investigations in which we have participated include:Fraud and asset misappropriation schemes involving bookkeepers, controllers, managers and executivesUse of construction loan proceeds by developersAllegations of fraud, waste and fair dealings in the operation of a businessAnalysis of Ponzi schemesPublic corruption and misuse of fundsMisuse of funds by a fiduciaryReconstruction of sources and uses of restricted funds and grantsExamination of related-party transactions as a part of bankruptcyInternal investigations or disputesAnalysis of investor fund usageInvestigations of the financial condition of businesses on behalf of lenders and investorsBy understanding our clients' objectives and circumstances, our specialists are able to quantify the impact and potential losses incurred, and design and implement internal accounting and management controls for loss prevention and risk management.Forensic and Investigative Accounting ResourcesForensic Accounting Service Overview Foresnic Accounting Case StudiesTypes of Fraud Investigated and Examples of Forensic Accounting Matters ConductedForensic Accounting Services Investigation Process About Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. View our additional Forensics and Litigation services and capabilities Learn More Contact us ### Financial and Cash Flow Modeling Financial and Cash Flow Modeling PRIMARY CONTACTS: Adam J. Goode CPAHow will the decisions you make today impact your business in the future? An essential component to managing and leading a profitable business is the ability to accurately forecast and project cash flow.Whether computing simple projections or building robust financial modeling tools, the Schneider Downs Business Advisory team has performed and developed numerous types of financial analyses and models for use in a wide range of applications and industries. These tools help our clients make informed decisions regarding capital expenditures, buying or selling a business or simply to better prepare for the future. Our team has the ability to customize and execute each project based on the clients specific needs and requirements. Examples include:Cash Flow ModelingFinancial Model ReviewProfitabilityBudget AnalysisCost-benefit AnalysisBilling AnalysisAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Fiduciary and Trustee Professional Services Fiduciary and Trustee Professional Services Providing Assistance to Help Fiduciaries Meet Their Legal Requirements Our experienced team of advisors provides a comprehensive scope of accounting services for conservatorships, guardianships, estates and trusts. We have experience with a variety of Trusteeships including Super Funds and receiverships.While each specific assignment is unique by design and purpose, our approach is consistent - identify the specific requirements for each client and provide thorough and efficient assistance to ensure the fiduciary requirements are being met in regard to appropriate accounting procedures. Whether this requires basic accounting paperwork, comprehensive financial analysis or assistance with litigation or court proceedings, the professionals at Schneider Downs Business Advisors will work closely with you and your attorney to ensure that your estate, foundation or trust is being properly managed.In some cases, those requirements may include:Detailed documentation of every transactionSpecialized reporting requirementsAsset reconciliationsIncome/Cash verificationPreparation of required tax filingsDistributions made in accordance with applicable fiduciary documentsProper execution of transactionsAs a fiduciary, we respect the fundamental obligations of fiduciary duty:The duty of management;The duty of loyalty or preference;The duty to account; andThe duty to discloseAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. View our additional Forensics and Litigation services and capabilities Learn More Contact us ### Compensation Studies Compensation Studies PRIMARY CONTACTS: Adam J. Goode CPAThe Business Advisory team at Schneider Downs partners with management, boards and compensation committees to provide market compensation data to aid in an organization's compensation setting process. A well-developed compensation plan attracts talent, improves retention and encourages employee engagement.We have served both for-profit and not-for-profit clients in a variety of industries and can perform a compensation analysis for a particular position or for an organization's entire workforce.A compensation study involves benchmarking an entity's selected job positions to what similar entities are paying for similar positions. Factors such as geographic area, industry and company size are considered.We can also provide an analysis of the mix of executive pay, which entails a breakdown between base compensation, short-term incentive compensation, long-term incentive compensation and other compensation.Not-for-Profit OrganizationsNot-for-profit organizations are subject to additional regulations that for-profit organizations are not. If the compensation of certain individuals is deemed unreasonable by the IRS, intermediate sanctions might be imposed on the recipient, as well as those persons who approved it.However, the IRS also provides a safe harbor to not-for-profit organizations: the rebuttable presumption of reasonableness. We can provide compensation data specific to the requirements of the rebuttable presumption.We can also provide training at your compensation committee meetings in order to ensure that all board members have the knowledge to create a rebuttable presumption that a transaction is not an excess benefit transaction.Ancillary ServicesSchneider Downs Wealth Management Advisors provides other executive compensation and non-qualified deferred compensation planning services to our clients.About Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Debt Placement Debt Placement We navigate the capital markets world for our clients.Companies turn to Schneider Downs Business Restructuring for effective solutions to complex financial problems. We offer over 25 years of success in helping our clients fund their business needs. Our knowledge of the financial markets and our long-term relationships with a variety of funding sources help our clients meet their objectives with a very competitive cost structure.We maintain active resources for financing:Working CapitalAcquisition FinancingTerm Debt and Equipment FinancingCash Flow FinancingMezzanine and other forms of Quasi-Equity FinancingOur approach for raising capital is designed to successfully steer our clients through the complex financing process, toward the most advantageous outcome. It includes:Establishing realistic objectivesIdentifying financial alternativesPreparing a financing memorandumMarketing to appropriate sources of capitalCreating a competitive environment among the various capital sourcesNegotiating the transaction to achieve the most beneficial termsClosing the dealAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Insolvency Services Insolvency Services We enhance value in insolvency situations by bringing management expertise, broad experience, and superior communication.The Schneider Downs Business Restructuring team provides expert advice and guidance to our clients before, during and post-bankruptcy. Our professionals have served in the capacity of court-appointed Trustee, Liquidation Trustee, Examiner, and Chief Responsible Party in bankruptcy proceedings. Our team also has extensive experience as a court-appointed receiver on both the Federal and state level. We possess an intimate knowledge of the legal processes involved in these proceedings and understand the complexity of dealing with a multitude of stakeholders.Insolvency Experience and StepsUnderstanding the financial and legal alternatives when insolventAssistance in securing DIP financingExpertly communicating with stakeholders, such as lenders, trade creditors, and employeesEfficiently managing cash flowRecognizing and dealing with preference and avoidancePreparing and implementing reorganization plansOverseeing proof of claim processMaximizing recovery through effective organizational restructuring and/or liquidation of assetsAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Turnaround/Restructuring Business Restructuring and Turnaround Services We specialize in mapping the course for financially distressed companies and guiding their way to profitability.Financial troubles are often invisible until the company has a serious cash-flow deficit and/or has violated loan covenants. Schneider Downs Business Restructuring and Turnaround Services applies its depth of management and financial experience in workout situations and determine what actions need to be taken. This assistance can be critical in keeping the troubled company's focus on serving its customers, while resolving its internal problems.A turnaround situation demands immediate attention to problems arising from the client's customers, lenders, trade creditors, employees or competitors. The utmost confidentiality must be maintained to protect the market image of the company throughout this time. From experience, our team understands the effort required to help a company through the crisis. Our depth of management enables us to address many problem areas simultaneously.Stages in Corporate Restructuring and Turnaround ServicesAnalyzing and altering operations to be more cost-efficientDeveloping a restructuring plan that meets the long-term goals of owners and management, while also satisfying the short-term needs of creditor groups. This stage requires an in-depth analysis of asset utilization, current cash flow demands, and future cash flow needs for funding day-to-day operations, as well as capital expendituresNegotiating with various creditor groups to gain support for the continued operation of the companyReconfiguring the debt of the company to minimize cash required for servicing the debt, and redirecting cash flow to company operations during the reorganization phaseIf necessary, replacing existing creditors with debt from financial institutions that specialize in financing for distressed companiesAssisting management in meeting goals defined in the plan and agreed to by all concerned parties. This stage often involves the sale of divisions, subsidiaries or other assets to improve the liquidity of the companyAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Performance Improvement Performance Improvement Maximizing a company's return on investment comes from driving the organization to achieve its goals through the analysis, development and execution of comprehensive operating and strategic plans.Schneider Downs Business Restructuring professionals have a wealth of senior-level corporate experience in both large corporations and middle-market companies. They can help your organization sort through and prioritize its goals, whether they focus on operational improvement, maximization of cash flow, or growth, either internal or through acquisitions. They bring extensive knowledge of strategic planning tools and the required processes to ensure successful execution of a strategic plan.How We HelpOperational managementStrategic planningProcess optimizationCash flow enhancement including inventory and accounts receivable managementSupplier selection and cost containment strategiesFinancial managementOur ApproachAn initial assessment of the company's current situationA determination of the company's owner's or senior management's operational and financial goalsDefinition of the gaps between the current situation and the target goalsDevelopment of a roadmap including, schedule and resources, for the company to achieve the targetThe realignment of individual, departmental, and functional focus to match corporate goalsEstablish a system of metrics and milestones that measure progress toward the goals.Interested in a More High-Level Assessment of Your Accounting Function?Our Accounting Optimization Assessment services help your organization evaluate and discover actionable steps to strengthen your accounting function, increasing operational efficiency and maximizing benefits in alignment with organizational priorities and goals.About Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Business Restructuring Schneider Downs Business Restructuring Experienced and practical guidance through the complex issues facing today’s businesses Contact Us The Schneider Downs Business Restructuring team provides clients with award-winning consulting services in the areas of management consulting, corporate restructuring and debt financing. Additionally, our experience includes having acted in the capacity of Court-appointed Receiver, Examiner and Trustee.Our clients range from closely-held businesses to large publicly-traded corporations across the country, but typically are middle-market businesses with sales between $10 million and $500 million. They encompass a wide range of industries including manufacturing, transportation, distribution, and service.The foundation of Schneider Downs Business Restructuring's success is constant attention to detail, a focused approach to solving the problems of our clients, a commitment to results, and the ability to pull from our depth of knowledge. Over the years, our professionals have gained an enviable reputation for our thoroughness, financial expertise, negotiating skills, presentation expertise, and the ability to quickly assess and address the obstacles impeding our client's success.The Schneider Downs Business Restructuring team focuses on four key services to maximize value for its clients' stakeholders. BUSINESS RESTRUCTURING SERVICE OFFERINGS BUSINESS RESTRUCTURING AND TURNAROUND SERVICES Financial troubles are often invisible until the company has a serious cash-flow deficit and/or has violated loan covenants DEBT PLACEMENT Companies turn to Schneider Downs Business Restructuring for effective solutions to complex financial problems INSOLVENCY SERVICES Schneider Downs Business Restructuring provides expert advice and guidance to our clients before, during and post-bankruptcy PERFORMANCE IMPROVEMENT Schneider Downs Business Restructuring professionals have a wealth of senior-level corporate experience in both large corporations and middle-market companies CONTACT US We want to hear from you Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Business Interruption and Damanges Services Business Interruption and Damages Quantify Losses, Support Claims, and Navigate Recovery with Confidence Business interruption claims typically involve a loss of income, and/or extra expenses incurred by a business. Business interruption claims relate to a period of time when a business cannot operate due to a disruption of the normal operations of a business. Businesses can obtain business interruption insurance to cover the financial impacts from these events. Business interruption claims can result from storms, fires, floods, hurricanes, tornadoes and maybe even COVID-19. The Schneider Downs Business Advisory group handles all business interruption and insurance claim matters and can work with policyholders, counsel, accountants and insurance brokers and adjustors in many different ways, including: Assisting in determination of period of loss or restoration Assisting in preparing or evaluating financial projections Preparing detailed business interruption claims and lost profit calculations Calculating extra expenses, including construction, overtime, costs related to temporary locations Identifying costs related to COVID-19 (e.g. cleaning, protective equipment, etc.) Preparing package of all relevant documents and analyses supporting claims Evaluating insured’s claim or expert report Assisting in presenting a claim to insurance carriers Evaluating alternative analyses of losses prepared by insurance carriers If claims proceed to litigation, we can also assist with discovery, depositions and settlement proceedings, presentation of financial data and provide expert testimony. For more information on our services, download our Business Interruption Service Overview. About Business Advisory Services The Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment. Learn more about our Business Advisory services or contact us for more information. View our additional Forensics and Litigation services and capabilities Learn More Contact us ### Meet Our Team Meet Our TeamSchneider Downs' seasoned team of dedicated business advisors are experienced across a wide scope of specialties, allowing us to help our clients make more informed business decisions across every facet of their operations. SHAREHOLDERS Adam Goode CPA Learn More > Nick Lombardo CPA Learn More > Brian Matthews CPA, CITP Learn More > Michael Marasco Learn More > BUSINESS ADVISORY SERVICES Brian Webster CPA/ABV/CFF, CFE, CMA, CVA James Rumph CPA, CFE, CAMS, CIA Michael Fox Steve Thimons CVA, CFE Phil Farabaugh CPA John Jennings CPA Brad Miller CPA ### Technical Accounting Advisory Services Accounting Project Management From Complex Transactions to Global Audits—Your Partner for Accounting Excellence. The Schneider Downs Technical Accounting Advisory Services team provides customized consulting and advisory solutions to meet accounting-specific compliance and regulatory needs.With backgrounds in audit, valuation, tax and other disciplines, our diverse team of professionals routinely assists publicly traded and privately held companies with their most complex accounting issues.Our team of subject matter experts works with clients ranging from small businesses to multi-national Fortune 500 clients. We can address a broad spectrum of technical accounting needs, including accounting standard implementation, complex transactional accounting matters, GAAP/IFRS conversions, SEC reporting, debt and equity financing, as well as regulatory and compliance requirements. We also offer on-call resources for technical accounting and financial reporting support.Accounting for Complex TransactionsMany complex transactions require professional consultation. Our experts can assist you with any complicated transactions you encounter. We have subject matter expertise in  the following areas:Business Combinations (ASC 805)Complex Debt or Equity ArrangementsConsolidations/VIE AccountingDerivative and Hedging TransactionsFair Value MeasurementImpairmentsLease Accounting (ASC 842)Other Complex Transactions and AccountingRevenue Recognition (ASC 605 and ASC 606)Technical Accounting and Financial ReportingThe corporate and regulatory environment is constantly evolving, which can cause significant challenges for organizations of all sizes and industries. While our clients often maintain adequate resource levels to address standard, recurring accounting needs, they often do not have the expertise or capacity to efficiently manage more complex accounting manners . This is where the Schneider Downs Technical Accounting Advisory Services team can provide immediate value.Our team of technical accounting professionals is dedicated to staying current with the latest accounting changes and pronouncements. Using an interactive and high-touch consultative approach, our team provides the on-call technical and financial reporting capabilities your organization needs to stay within GAAP, IFRS and SEC requirements.  Key services include, but are not limited to:Accounting Policies and ProceduresBankruptcy and LiquidationConsolidationDebt and Equity TransactionsDerivatives and HedgingFinancial Reporting for Public and Private CompaniesFinancial Statement Conversion (GAAP/IFRS, Cash Basis to GAAP, etc.)Foreign CurrencyImpairmentInventory CostingPosition PapersResearchRestatementsShare-Based CompensationSoftware CapitalizationVariable Interest Entities (VIE)Implementation of New Accounting StandardsThe Schneider Downs Technical Accounting Advisory Services team routinely monitors new accounting standard developments and pronouncements. Our team knows first-hand the challenges of implementing these standards and the stress  this adds on an organization’s resources, specifically time and people. By the time new accounting standards are issued, our team is fully prepared to help our clients understand and implement the required regulatory measures. Key services include:Adoption of New StandardsCustomized Project Plans for Client AssessmentPosition Papers or Accounting Policy RevisionsEducation on New Regulatory StandardsReporting and Disclosure Preparation and/or AssistanceOur team can help you draft a complete set of financial statements in accordance with U.S. GAAP, IFRS or other statutory requirements. We can assist on a monthly, quarterly or annual basis.For more information on our Technical Accounting Advisory Services, please contact us at contactsd@schneidedowns.com.Technical Accounting ResourcesSchneider Downs Accounting Advisory Services OverviewSchnieder Downs Technical Accounting OverviewSchneider Downs IFRS Resource CenterSchneider Downs IFRS UpdatesRelated ServicesAccounting Advisory ServicesAccounting Project ManagementManaged Lease AccountingAbout Schneider Downs Accounting Advisory ServicesThrough our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective.Learn more at www.schneiderdowns.com/accounting-advisory-services. View our additional Business Advisory services and capabilities Learn More Contact us ### Managed Lease Accounting Services Managed Lease Accounting Services Closing Resource Gaps with Proven Accounting Expertise and Strategic Leadership. The Schneider Downs Managed Lease Accounting team can help organizations meet the ASC 842 and IFRS 16 lease accounting standards reporting requirements.Lease accounting standards and reporting requirements can have a significant impact on not only your financial statements but also your internal processes for managing and reporting leases on a monthly basis.The Schneider Downs Managed Lease Accounting service provides an end-to-end lease accounting solution that blends people, process and technology to reduce the time and complexity of meeting lease accounting standards and deadlines. Our comprehensive lease accounting reporting package can include:Accounting assessment and treatment by lease expertsAmortization schedulesAudit trailsCustom ReportingLease listingMonthly/quarterly journal entriesReporting for all annual financial statement disclosure requirementsOur scalable, full-service approach works with organizations of all sizes and industries to ensure they meet lease accounting challenges from the initial adoption of the standards to the ongoing reporting requirements.Download the Schneider Downs Managed Lease Accounting Service Overview.Why Schneider Downs?The Schneider Downs Managed Lease Accounting team has the expertise to understand lease accounting standards and the software built for compliance.Accounting expertise – Rely on accounting professionals to understand the complex reporting and compliance requirements of ASC 842 and IFRS 16.Budgeting – Have a fixed cost for lease accounting reporting for budgeting and planningIncreased efficiency – Allocate your internal resources to other needs beyond lease accounting reportingTechnology – Know that we use our proprietary simpLEASE lease accounting software to provide accurate analysis for all lease computationsReduce Risk – Shift the responsibility of interpreting complex lease accounting requirements and meeting deadlines off of your teamStaffing – Avoid human capital related issues such as staff shortages or lack of expertiseOur experienced accounting advisory professionals work hand in hand with your organization to understand your unique challenges and partner with our technology advisors to find the best solution to ensure your lease accounting standard compliance and reporting requirements are met within scope and by deadline.For more information please contact the team at contactsd@schneiderdowns.com.What is ASC 842?ASC 842 is a lease accounting standard published by the Financial Accounting Standards Board that requires the tracking and disclosure of all lease assets. ASC 842 replaced the previous ASC 840 standard with both public and private companies required to adopt the standard.What is IFRS 16?IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, with earlier application permitted (as long as IFRS 15 is also applied). The objective of IFRS 16 is to report information that (a) faithfully represents lease transactions and (b) provides a basis for users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. To meet that objective, a lessee should recognize assets and liabilities arising from a lease. Source: IFRS.orgWhat is simpLEASE?Built by accountants for accountants, simpLEASE makes the FASB’s Accounting Standards Certification (ASC 842) simple. Designed to solve leasing accounting challenges for organizations of all sizes, simpLEASE is a scalable web-based solution that streamlines the lease accounting process, and provides fast and accurate results regardless of whether you have two or two thousand leases. Learn more about simpLEASE.Related ServicesAccounting Advisory ServicesAccounting Project ManagementTechnical Accounting AdvisoryAbout Schneider Downs Accounting Advisory ServicesThrough our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective.Learn more about our Accounting Advisory Services. View our additional Business Advisory services and capabilities Learn More Contact us ### Accounting Project Management Accounting Project Management Expert Accounting Leadership to Bridge Gaps, Drive Results, and Deliver Solutions. The Schneider Downs Accounting Project Management team provides the accounting experience, technical expertise and leadership acumen to supplement accounting and finance teams.Companies often find themselves in positions where they may not have the intellectual capital or critical resources necessary to undertake, let alone achieve, their required accounting objectives or outcomes. Whether the gap is due to fast growth, labor shortages or poor economic conditions, our team of accounting professionals can help.With a focus on delivering innovative solutions customized to our clients’ needs, our Accounting Project Management team leverages our business expertise, project management skills, outcome-oriented and pragmatic approach to provide value-added accounting solutions.Accounting for Complex Business Transactions SolutionsWe have the experience and technology to support clients in integrating and accounting for complex business transactions that require considerable effort, specialized skills and industry knowledge, such as:Accounting and ReportingAccounting and Reporting Assistance to Public CompaniesAccounting for Complex Equity StructuresBusiness Combination AccountingCarve-outsDivestituresNew Equity Transactions such as Capital Raises and Equity-based Compensation PlansPro-forma Financial Statement Preparation Audit Coordination and Readiness SolutionsAudits can be daunting, especially as organizations grow in size and location. Whether geographic growth is domestic or international, your organization may benefit from our audit coordination and readiness services.We have the expertise and technical skills to help meet global compliance requirements, including the need for statutory audits, application consistency and corporate accounting policy adherence, as well as the overall ability to meet the statutory deadlines required by each domicile.We handle the following:Determining Audit Requirements throughout a Company’s Global FootprintCreating an Inventory of Audit Compliance Needs in Each JurisdictionRe-evaluating Compliance Requirements based on Previous Events and TransactionsAssisting in Selecting a Provider in Each JurisdictionReviewing Financial Statements for Accounting Matters Inconsistent with Accounting Policies and Conventions Adopted for U.S. GAAPInternational Audit Assistance and Management across Different CountriesManaging Group Audit Projects toward Audit Completion and Coordination of Audit RequestsEstablishing Local Country Resources for Country Regulatory and Statutory Expertise Additionally, our team offers solutions that can guide your organization through the various stages of an audit, including:Accounting Process Narrative ReviewBalance Sheet Account ReconciliationsClient Interview and Preparation for Audits and ReviewsDesign & Implementation Review of ControlsFinancial Statement Footnote Disclosure PreparationShort-Term Staff AugmentationWhether due to unforeseen circumstances such as retirement or resignation, resource challenges, deadlines or rapid growth, organizations often find themselves in a position that requires staff augmentation. Our team of accounting professionals offers scalable, short-term staffing options at all levels, from the C-suite and more:Interim Executive Management Support/ControllersManager and Senior Accounting SupportTransition Support for Executive Management/CFOsSpecialized Accounting SolutionsWe understand that every organization is unique, facing different challenges, concerns, resources and pain points. Whether you require expertise to fill skill gaps, need assistance to meet deadlines or simply need specialized and technical knowledge to solve a business challenge, our team can help. Accounting Solutions we offer:Back Office Assessments/Shared Services OpportunitiesCustom Accounting ProjectsCash Flow Optimization through Programs to Accelerate Cash Receipts or Slow Vendor PaymentsEnvironmental, Social and Governance (ESG) ReportingFinancial Statement Preparation & ReportingLease Accounting Software Selection, Implementation & Support Transaction-Related Accounting Solutions Transaction-related accounting and financial reporting considerations are influenced bymany factors, including differing accounting standards, purchase price allocation, technical accounting matters, adjustments and the availability of professionals capable of providing direction. We can advise on:Accounting Records “Clean Up” Before you Go to Market to Ensure a Smooth Transaction ProcessCommon Transaction-Related Accounting Issues, including:Accounting for Goodwill and Other Intangible AssetsTransaction CostsStock Options and Other Incentive-Based AwardsOther Unique Accounting NeedsOpening Balance Sheet Accounting Under FASB ASC 805, Business Combinations, Ensuring Opening Balance Sheets are U.S. GAAP CompliantPreparation of Final Closeout Financial Statements for the Selling Company to Meet Any Internal or External RequirementsStandardization of New Accounting Policies and Practices Within Your Company Following a Merger or AcquisitionTransaction-Related Accounting ConsultationFor more information on our Accounting Project Management services, please contact us at contactsd@schneidedowns.com.Related ResourcesSchneider Downs Accounting Advisory Services OverviewSchneider Downs Accounting Project Management OverviewRelated ServicesAccounting Advisory ServicesTechnical Accounting AdvisoryManaged Lease AccountingReady to Get Started?Contact the team at contactsd@schneiderdowns.com.About Schneider Downs Accounting Advisory ServicesThrough our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective.Learn more about our dedicated Accounting Advisory Services landing page. View our additional Business Advisory services and capabilities Learn More Contact us ### Digital Transformation ### Data Analytics (ADAPT) ### Business Process Optimization Business Process Optimization PRIMARY CONTACTS:  James B. Yard CPA, CIA, CISAThe people, processes and technology within organizations and practices are constantly being challenged to increase efficiency and maximize limited resources.The Schneider Downs Business Process Optimization (BPO) services are designed to assess the efficiency and effectiveness of an organization’s core business processes to ensure best practice opportunities are realized, risks are mitigated and a strong foundation exists for controls. Our team of process improvement specialists are adept in understanding and assessing complex workflows, internal risks and controls, systems functionality and automation opportunities.Our team of risk advisory professionals assist our clients in optimizing and transforming their core operational, finance and information technology processes. Combining deep industry expertise with repositories of process insights, we act as a strategic advisor to implement changes to the organization structure to achieve cost reductions and efficiencies, while also providing recommendations to better managing risk and strengthen control activities.Some of the most common triggering events that lead to companies investing in a strategic evaluation of their business processes include:Key changes in management;Control environment failures or changes;Staffing or cost reduction initiatives;Recent fraud or misstatement;Significant control deficiency, material weakness or concerning management letter comments;Untimely or inaccurate operational or financial information to make informed business decisions;Implementation of a new system or systems; andAcquisitions or divestituresWhat does our BPO process look like?Results include an organizational assessment and dashboard of current state against better practice opportunities, as well as a summary of work performed, global risk overviews, and recommendations to achieve increased efficiency, process improvement and internal control environment enhancements.Ready to get started?Contact us to learn more about Schneider Downs Business Process Optimization services.Interested in a More High-Level Assessment of Your Accounting Function?Our Accounting Optimization Assessment services help your organization evaluate and discover actionable steps to strengthen your accounting function, increasing operational efficiency and maximizing benefits in alignment with organizational priorities and goals.About Schneider Downs Risk AdvisoryOur team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service offerings at Risk Advisory Services or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON 2025 Tax Legislation – A Long and Winding Road to “One Big Beautiful Bill”?” Now that President Trump is in the White House, and a new and differently configured Congress is back in session,… Read More > Senator Wyden's Memo: Potential Revenue-Generating Changes and Their Implications Senator Ron Wyden’s (D-OR) memo from House Budget Committee Republicans outlines options that the committee is considering in order to… Read More > What to Do with Excess Money in a 529 Plan Section 529 plans were created in 1996 to help American families manage the cost of education. 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These issues can significantly impact the… Read More > Corporate Transparency Act Beneficial Ownership Reporting Update: The More Things Change, the More They Stay the Same On January 2, we wrote about the on-again, off-again decisions being made regarding the filing of beneficial ownership information (BOI)… Read More > Navigating Check Fraud: Who Bears the Liability? This article provides a general overview of liability considerations for various types of check fraud, but it is not intended… Read More > 4 Changes to Pennsylvania's Tax Appeal Process Act 123 of 2024, which will become effective January 27, includes several significant changes designed to make the appeals process… Read More > Investment Corner with Jason & Sean: Were the Magnificent 7 Really So Magnificent in 2024? Despite the down December, the S&P 500 ended 2024 with a 25% return for the year, delivering investors strong back-to-back… Read More > Ohio HB 315 Impacts Sourcing of Ohio CAT Receipts for Auto Dealers On January 2, 2025, Ohio Governor Mike DeWine signed into law House Bill 315 (HB 315), providing Ohio Commercial Activity… Read More > Top 3 Emerging Privacy Trends for 2025 As we progress through 2025, data privacy laws are surging in number and scale. Approximately 70% of nations have enacted… Read More > 5 Practical Tips for Data Privacy in 2025 It’s Data Privacy Week 2025, and in today’s digital age, maintaining data privacy is more critical than ever. As recognized… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > How Artificial Intelligence Is Reshaping Cybersecurity on Campuses What are key takeaways from The Chronicle of Higher Education’s virtual forum on Artificial Intelligence’s Impact on College Cybersecurity? The… Read More > Stolen Money Wired Overseas? Here’s How You Might Still Recover It. $20 billion! According to the FBI’s Internet Crime Complaint Center (IC3), between October 2013 and December 2023, more than 158,000… Read More > ### Process Improvement Consulting Process Improvement Consulting Contact Us Today PRIMARY CONTACTS: James B. Yard CPA, CIAOur Process Improvement Consulting services are designed to assess and maximize the efficiency of your organizations’s business processes and technology management.Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks.  Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. PROCESS IMPROVEMENT CONSULTING SERVICES BUSINESS PROCESS OPTIMIZATION DATA ANALYTICS AND POWER BI ACCOUNTING OPTIMIZATION ASSESSMENTS Explore our full Risk Advisory Service offerings.Ready to Get Started?Contact the team at contactsd@schneiderdowns.com.  Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### IT Risk Advisory ### Data Privacy and Security ### Cybersecurity ### Business Continuity & Disaster Recovery Disaster Recovery/Business Continuity Planning and Table Top Exercises Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider Downs Risk Advisory professionals understand that business continuity provides a framework for building organizational resilience and the capability for an effective response through managing processes to identify the following potential risks, threats, and vulnerabilities that could affect continued operations: Advances in technology Cyber threat considerations Utilizing insurance as a risk transfer tool Strategies for manufacturing Supply chain processing Risk management concepts Legal and regulatory concerns We are committed to the continued understanding of risks that have the potential to impact business operations. Specifically, what sets us apart is our commitment to continuing professional education and the fact that the management of our Risk Advisory Practice has obtained the Certified Business Continuity Lead Auditor (CBCLA) certification, which is one of only 64 certified professionals globally. Our Business Continuity Program Approach Created and maintained by Disaster Recovery Institute International, The Professional Practices for Business Continuity Management is a body of knowledge designed to assist in the development, implementation, and maintenance of business continuity programs. These professional practices, along with the NFPA 1600 Standard on Disaster/Emergency Management and Business Continuity/Continuity of Operations Programs and our industry experience will serve as a baseline to assess the existing Plan in helping to identify gaps and deficiencies while providing recommendations as necessary. Our approach and core areas of focus for the assessment will include but not be limited to the following: Assess Management's Buy-In and Ongoing Support of the Plan Assess the Risk Assessment Approach and Frequency Assess the Business Impact Analysis (BIA) Assess the Business Continuity Strategies based on the Risk Assessment and BIA Assess the Incident Response Plan and its Effectiveness Assess the Plan and the Implementation Procedures Assess the Awareness and Training Programs Assess Ongoing Testing and Maintenance of the Plan Assess Crisis Communication Procedures Assess Coordination Efforts and Procedures with External Agencies We will perform our assessment with the assistance of management to ensure resources and information remain readily available. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Information Technology Advisory Information Technology Advisory Contact Us Today PRIMARY CONTACTS: Eric M. Wright CPA, CITP Our Information Technology Advisory services help ensure your organization is risk-focused, promotes sound IT controls and ensure timely resolution of audit deficiencies. Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks.  Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. INFORMATION TECHNOLOGY ADVISORY SERVICES Created with Sketch. CYBERSECURITY Created with Sketch. DATA PRIVACY AND SECURITY Created with Sketch. DISASTER RECOVERY/BUSINESS CONTINUITY PLANNING AND TABLE TOP EXERCISES Created with Sketch. IT GENERAL CONTROLS AUDIT Created with Sketch. IT COMPLIANCE FRAMEWORK CONSULTING (I.E. GDPR, HIPAA, PCI, NIST, ISO, ETC.) Created with Sketch. IT RISK ADVISORY Created with Sketch. SYSTEMS IMPLEMENTATION ASSURANCE   Explore our full Risk Advisory Service offerings at www.schneiderdowns.com/risk-advisory-services or download our Risk Advisory Services brocure for more information. Ready to Get Started? Contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Training, Education, and Awareness TPRM Training Education and Awareness Deliver sound risk management practices, internal control systems and compliance frameworks. Don’t know where to start when it comes to evaluating your vendors?Have the Schneider Downs Third-Party Risk Management team present to you and your executive team what exactly TPRM should mean to your organization, the significance a mature program can provide in protecting your organization’s data, and how to employ best practices. Additionally, we perform specific training topics by request if there are certain areas that your team or management needs.  Topics we have presented in the past include:How to Mitigate Your TPRM ExposureBest and Trending Practices in Performing Onsite and Virtual AssessmentsManaging Cloud Vendor RisksSecrets Revealed: How SOC Auditors Review a SOC ReportBefore you decide to start your own TPRM program or outsource processes, let us guide you as to how to get started and what might work best for your business like we have for various leadership groups and clients.Additional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity ServicesTPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Officer as a Service Schneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.Learn more about our Third-Party Risk Management services or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### TPRM Officer-as-a-Service TPRM Officer as a Service Deliver sound risk management practices, internal control systems and compliance frameworks. Every successful Third-Party Risk Management program needs strategic governance in place to uphold and improve the program’s initiatives.Many organizations don’t have the resources or bandwidth to hire a full-time TPRM department or even to appoint a TPRM committee. Many organizations don’t even know who should be responsible for TPRM matters.As experts in the field of TPRM, we understand the various roles and needs associated with TPRM programs. We develop custom packages that demonstrate your control environment and assurance to your customer base.We offer a wide range of TPRM services:Building a customer-facing compliance packageProducing copy relating to compliance for your websiteAnswering customer inquiries related to third party requirements:Mapping any of your existing standards-based assessments to third party requirementsMapping your policy set to third-party requirementsManagement and facilitation of virtual and/or onsite third-party assessmentsDiscussion, evaluation, and counsel through third-party requirement remediation efforts (related to identified third-party audit findings)Assistance with the implementation of solutions related to identified third-party audit findingsAdditional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity ServicesTPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Training, Education, and Awareness Schneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.Learn more about our Third-Party Risk Management services or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Program Support Services TPRM Program Support Services Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider Downs has extensive experience building and optimizing the third party risk programs for a variety of clients.We have managed entire Third-Party Risk Management programs across all different maturity levels and various points of the TPRM lifecycle. We have experience working with procurement, compliance, technical, and financial teams along with business functional areas that own third-party relationships. Thus, our team can adapt to your program’s needs.This ongoing support complements our core assessment services, and when combined, our support encourages a new level of TPRM assurance. The following are examples of ways we provide ongoing program support in addition to our traditional external assessment services:Assessment project management, scheduling, and coordinationTracking assessment metrics and reporting to management/TPRM stakeholdersAssessment evidence retrievalDevelopment and maintenance of process documentationTPRM policy and procedures optimizationSolutions engineering and software selectionContinuation of TPRM program maturityAssist in introducing TPRM to additional business unitsInternal risk assessmentsPenetration testing service implementationAdditional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity ServicesTPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Officer-as-a-ServiceTPRM Training, Education, and Awareness Schneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.Learn more about our Third-Party Risk Management services or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Program Implementation and Development TPRM Program Implementation and Development Deliver sound risk management practices, internal control systems and compliance frameworks. Based on your capabilities assessment results, Schneider Downs also can develop a comprehensive implementation project plan with targeted goals and benchmarking.This helps to operationalize a Third-Party Risk Management program to achieve the targeted levels of maturity and build the capabilities an organization envisions. Organizations may know where they want their TPRM program to be in the years to come, but without a fine-tuned road map to guide the process, it can become an insurmountable task.TPRM Program implementation can include the following:Define/document governance/reporting process and roles/responsibilitiesEnhance/develop policies, standards, proceduresDefine/document TPRM lifecycle processDefine/document risk rating scoring and IRQDefine/document skillset requirementsDefine/document internal/external communication/sharing protocolDevelop enterprise-specific TPRM toolkit and define/document measurement/analysis processDefine/document monitoring/review programIf your business doesn’t have a TPRM program yet, Schneider Downs can work with you to develop a program that is right for your organization. We can help you build a strong foundation and guide you through each component of our model.Additional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity ServicesTPRM External Assessor ServicesTPRM Program Support ServicesTPRM Officer-as-a-ServiceTPRM Training, Education, and AwarenessSchneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.For more information visit www.schneiderdowns.com/tprm or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### External Assessor TPRM External Assessor Services Deliver sound risk management practices, internal control systems and compliance frameworks. As the Third-Party Risk Management industry grows, the need for qualified assessor resources compounds.Many TPRM practices preach industry best practices without having the boots on the ground to consistently execute these practices and adequately evaluate third parties. However, at Schneider Downs, our strength is in our people. Our assessors maintain a trifecta of technical expertise, business knowledge, and a keen sense of risk to perform assessments successfully. Our trained assessors are readily available to inject themselves into any organization’s TPRM program and assist in performing all levels of assessments and executing your TPRM program.Schneider Downs’ External Assessor model is not a one-size-fits-all approach.We can provide External Assessor services in a multitude of ways to seamlessly fit into an organization’s TPRM program including:Virtual assessmentsOn-site assessmentsPhysical and environmental reviewsSpecialty assessments (e.g.: web application technical review, penetration testing, etc.)Specific subject matter expertise: IT, Cybersecurity, Financial, Operational, Compliance, Business Resiliency, etc.Pre-contract third-party evaluations (before acquisition or onboarding a third party)Here’s a suggested path for a TPRM assessment lifecycle :Additional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Officer-as-a-ServiceTPRM Training, Education, and AwarenessSchneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.Get more information on our Third-Party Risk Management services or contact us to get started today. ### Capabilities and Maturity Assessment TPRM Capabilities and Maturity Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. A capability is anything an organization does well that drives meaningful business results. Capabilities drive up resilience and drive down risk.Third-Party Risk ManagementWe perform capabilities and maturity assessments to understand how an organization’s Third-Party Risk Management program stacks up next to comparable organizations against leading practices as well as help to identify bottlenecks and target areas of improvement. The assessment process evaluates an organization’s level of maturity for critical components of a TPRM program and quantitatively scores that level of maturity. Ultimately, this assessment helps organizations develop and/or mature a centralized governance model and provides the tools to maintain it and continuously improve it. The following are examples of areas to benchmark and assess maturity:Program governancePolicies, standards and proceduresContract managementVendor risk identification and analysisSkills and expertiseCommunication and information sharingTools, measurement and analysisMonitoring and reviewingAdditional TPRM ServicesTPRM Ad-Hoc Review ServicesTPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Officer-as-a-ServiceTPRM Training, Education, and AwarenessSchneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.For more information visit www.schneiderdowns.com/tprm or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Ad-Hoc Review TPRM Ad Hoc Review Services Deliver sound risk management practices, internal control systems and compliance frameworks. Our Third-Party Risk Management external assessment services model is flexible so that we can serve a variety of client needs.If your organization already has a third-party assessment process, our team can perform ad-hoc reviews of standards-based frameworks. After all, audit and assurance are part of the core skills that our IT audit team was built on.Schneider Downs standards-based assessments include:SOC (System and Organization Control) Report ReviewsOne of the best indicators that you can trust a third party with your data is if they have a SOC report completed on an annual basis by a reputable audit firm. However, reviewing SOC reports is a vital part of TPRM processes. This is where our knowledge as a premier provider of SOC reports complements our ability to review third-party SOC reports and behalf of organizations.We’re not here to make it more complicated. Download the AICPA SOC Report Review Template.Standard Information Gathering (SIG Questionnaire)Schneider Downs is a registered firm with the Shared Assessment program through the Santa Fe Group, the leader in TPRM best practices, education, and guidance.  We leverage tools such as the SIG and SIG Lite to provide assessment services.ComplianceHIPAA, HITRUST, NIST, ISO, PCI, FFIEC, CIS CSC, and many more.Additional TPRM ServicesTPRM Capabilities and Maturity ServicesTPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Officer-as-a-ServiceTPRM Training, Education, and AwarenessSchneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:AICPA SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program. We understand that outsourcing business functions to third parties is essential in today’s business environment.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third party providers is vital for any business.For more information visit www.schneiderdowns.com/tprm or contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Third-Party Risk Management Third-Party Risk Management Deliver sound risk management practices, internal control systems and compliance frameworks. Outsourcing business functions to third parties is essential in today’s business environment.While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats presented by outsourcing.  Understanding how to identify and manage the risks presented by third-party providers is vital for any business.  The Schneider Downs Risk Advisory Services team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program.Learn more about Schneider Downs' third-party risk management service offerings, capabilities and experience in our service overview.What is Third-Party Risk Management?Third-party Risk Management (TPRM) is a process of identifying and managing the risks created when hiring a third party to provide goods and services.Its’ primary focus is usually on data protection/privacy and IT security controls, but its scope depends entirely on the nature of the services provided by the third party. Therefore, it may include operational concerns such as business resiliency, financial integrity, and regulatory compliance.The Need for Third-Party Risk ManagementThe practice of outsourcing services to specialized organizations continues to grow exponentially. Shortages of qualified individuals continue to drive this trend, and statistics show that this shortage will continue throughout most industries for years to come. Outsourcing has proven to reduce and control cost more effectively, improve company focus, and gain access to world-class specialized resources.Third party relationships are increasingly being viewed as strategic business partners. Third parties are expected to maintain the same level of control throughout the environments where they store or process sensitive or confidential data elements.Third party relationships are popular and consistent targets for cyber-attacks. The cost of cybercrime is expected to continue to rise each year by trillions of dollars, primarily driven by data breach fines and lost business. Third-parties that process highly confidential data elements have the potential to be the root cause of a data breach, yet both the third party and their customers can experience significant downstream effects.It is no secret that monitoring and regularly evaluating third parties is undoubtedly a good business practice and can help uncover and mitigate key risks. In addition to being a best business practice, regulators and lawmakers around the world are recognizing the impact that third parties have on their business partners operations and the responsibility they have as stewards of sensitive data. Because of this, there is increased regulatory pressure across a multitude of industries to ensure that third parties are appropriately evaluated for key risks.Consideration of these factors adds up to one consistent sentiment: A strong TPRM program is essential to ensure strong business operations. Learn more information about our Third-Party Risk Management services or contact us to get started.Schneider Downs TPRM ServicesThe Schneider Downs Risk Advisory Services team can help your organization with third-party risk management with our robust service offeringsTPRM Ad-Hoc Review ServicesTPRM Capabilities and Maturity Assessment TPRM External Assessor ServicesTPRM Program Implementation and DevelopmentTPRM Program Support ServicesTPRM Officer-as-a-ServiceTPRM Training, Education, and AwarenessSchneider Downs TPRM ResourcesBuilt by our tenured team of security, risk and compliance practitioners. We have leveraged decades of diverse subject-matter expertise and experience to be able to provide the following resources and tools:SOC Report Review TemplateSchneider Downs TPRM Service OverviewSchneider Downs TPRM Policy TemplateSchneider Downs Compliance and Third-Party Risk Management GuideSchneider Downs ‘Our Thoughts On’ ArticlesHow Can Schneider Downs Help?Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information or to get started contact us.About Schneider Downs Risk AdvisoryOur team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### ESG FAQs Environmental, Social and Governance Disclosure FAQs PRIMARY CONTACT: James B. Yard CPA, CIA, CISA, Adam J. Goode, CPA In light of an increased focus on environmental, social and governance (ESG) disclosures for public companies, the Schneider Downs Environmental, Social and Governance consulting team has compiled a list of commonly asked questions and answers to help organizations better prepare for the U.S Securities and Exchange Commission’s (SEC) proposed Greenhouse Gas reporting requirements. WHAT IS ENVIRONMENTAL, SOCIAL AND GOVERNANCE? ESG stands for “Environmental,” “Social” and “Governance,” and represents a stakeholder-centric approach to reporting, outside of just the financial results. Demand for ESG reporting has been seeing increasing demand from consumers, employees, investors and now regulatory authorities. WHY IS ESG IMPORTANT? ESG provides additional insight into an organization's impact on the world broken into three categories: Environmental, Social and Governance. Elements of each can include: Environmental - climate change, carbon emissions, water and air pollution Social - working conditions, equal opportunities, human rights, community relations Governance - corporate structure, ethics, hiring practices, compensation structure Given how quickly ESG is gaining significance, organizations should start to build their ESG strategy as part of their core corporate strategy. WHEN DOES THE PUBLIC COMMENT PERIOD EXPIRE? The public has until May 20, 2022, to provide comment on the proposed Greenhouse Gas reporting requirements. The SEC has stated that they want to incorporate feedback into the required metrics and financial reporting. WHAT ARE THE KEY DEADLINES ASSOCIATED WITH THE PROPOSED ESG DISCLOSURE REQUIREMENTS? The proposed SEC timeline envisions rules being finalized by December 2022 with Scope 1 and 2 emission metrics for 2023 to be included in 2024 filings for large, accelerated filers. Scope 3 emissions would then be phased in the following year. Accelerated filers and non-accelerated filers would have one additional year for each deadline. Smaller reporting companies would have two additional years. The requirements will also be mandatory by foreign private issuers. DOES THE ESG DISCLOSURE REQUIREMENTS APPLY TO PRIVATE COMPANIES? No. However, there is significant movement towards private companies voluntarily disclosing ESG from customers, employees and other organizations within their value chain. WILL ESG DISCLOSURE REQUIREMENTS APPLY TO INTERNATIONAL COUNTRIES? The SEC’s regulation will extend to any company listed on a U.S. Exchange, including foreign issuers. In addition, the European Union (E.U.) has proposed its own revised set of required disclosures covering ESG reporting titled the Corporate Sustainability Reporting Directive. The scope of organizations under this proposal extends well beyond those proposed by the SEC’s greenhouse gas requirements for public companies. This could have a significant impact to organizations with operations in E.U. member countries. WHAT IS CORPORATE SUSTAINABILITY REPORTING DIRECTIVE The Corporate Sustainability Reporting Directive (CSRD) is the E.U.’s proposal to establish mandatory disclosure requirements to drive ESG initiatives as organizations must report targets and progress towards achieving their goals. This aligns with Europe’s goal of achieving climate-neutrality by 2050. WHAT IS THE THRESHOLD FOR REPORTING UNDER CSRD? This will have an impact on E.U. subsidiaries of U.S. companies. The current proposal would cover most companies publicly traded on E.U. exchanges as well as all large private E.U. companies. However, the “large” threshold is lower than might be expected; defined as meeting two of the following thresholds: Total assets over €20m for two consecutive years end Revenue (net turnover) over €40m for two consecutive fiscal years Average employees exceeding 250 for two consecutive fiscal year WHAT ARE THE FRAMEWORKS UNDER ESG? Currently, there are a number of competing frameworks including: Value Reporting Foundation Global Reporting Initiatives (GRI) Task Force on Climate Related Financial Disclosures (TCFD) Climate Disclosures Standards Board (CDSB) International Sustainability Standards Board (ISSB) However, the industry is seeing significant revisions to these frameworks and convergence is expected. Organizations looking to adopt ESG should start with the regulations under the SEC’s proposal or the E.U.’s CSRD proposal. ISSB is being developed by the International Financial Reporting Standards (IFRS) Foundation in conjunction with the E.U. and is receiving most of the current focus. ENVIRONMENTAL, SOCIAL AND GOVERNANCE RESOURCES Schneider Downs ‘Our Thoughts On’ ESG Articles SEC Response to Clime and ESG Risks and Opportunities SEC Fact Sheet – Enhancement and Standardization of Climate-Related Disclosures ABOUT SCHNEIDER DOWNS ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSULTING With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization prepare for the proposed disclosure requirements and additional ESG-related risks by developing an ESG strategy that aligns with your overall corporate strategy. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. 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Phone? How did you find us? How did you find us? Google Yahoo Bing Referral Source Other Schneider Downs Professional Direct Mail Word of Mouth EmailThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Environmental, Social and Governance Consulting ESG Consulting PRIMARY CONTACT: Tony Ielase CISA Is your organization prepared to meet ESG-related regulatory, reporting and financial demands? Environmental, social and governance (ESG) involves setting, managing and reporting on an organization’s governance mechanisms, environmental and social impacts and related policies. Given how quickly ESG is growing in the public and private space, organizations must prioritize building the appropriate ESG-focused infrastructure, capabilities and controls as part of their core corporate strategy. With our industry experience and extensive knowledge of the ESG risk advisory landscape, our team can develop the appropriate strategies, frameworks, governance, policies and reporting tools to meet the complex requirements of today and tomorrow. ESG Strategy and Program Development  Our ESG Strategy and Program Development solutions help organizations assess ESG readiness, develop the appropriate ESG framework and strategy, operationalize processes and controls, meet reporting requirements and establish program governance for long-term success. Key solutions include: ESG Framework GAP Assessment ESG GRC Technology Implementation ESG Implementation Support ESG Program Roadmap ESG Materiality Assessment ESG Stakeholder Alignment Our team takes a pragmatic approach to ESG strategy and program development that follows four primary phases. This allows us to develop the appropriate strategy, reporting and governance structure unique to our clients’ goals, stakeholders and industry. Additional ESG Solutions In addition to ESG Strategy and Program Development, our cross-functional team can help companies meet the regulatory, audit and tax challenges associated with ESG. ESG Assurance With our skilled bench of audit professionals, Schneider Downs is uniquely positioned to provide independent assurance services for organizations with ESG disclosures related to financials and other key metrics. Our team provides audit, review and compilation services for ESG reporting based on the level of assurance required. ESG Assurance Services ESG Limited Assurance Reporting ESG Readiness Assessment ESG Reasonable Assurance Reporting ESG California Climate Disclosure Laws Our ESG Consulting team can help organizations impacted by the Climate Corporate Data Accountability Act (CA SB 253) and Greenhouse Gases: Climate-Related Financial Risk (CA SB 261) laws. Identify material climate-related financial risks. Create an accompanying report in line with TCFD recommendations. Develop a process to inventory and calculate GHGs. Provide limited assurance on GHGs calculations. ESG Governance, Risk and Compliance Our ESG and risk professionals work together to help clients understand and mitigate the complex risks associated with ESG, including operational, compliance and reputational concerns. Key services include: ESG Data Validation ESG Program Assessment ESG Regulatory Compliance Assessment ESG Risk and Control Assessment ESG Testing and Monitoring ESG Tax Advisory Our experienced tax professionals work with our ESG team to help clients understand the impact of ESG on tax strategy, preparation and planning. Key services focus on ESG tax requirements, incentives and reporting, including: ESG and Tax Strategy Alignment ESG Incentives and Credits ESG Program Development ESG Regulatory Compliance The SEC released a proposed timeline for phase-in periods and accommodations for the proposed disclosures outlined below. ESG Resources Schneider Downs ESG Consulting Overview Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees Schneider Downs ESG Whitepaper – ESG and the Transportation & Logistics Industry Schneider Downs ESG FAQ ESG California Climate Disclosure Laws Resources Schneider Downs Fact Sheet - CA SB 253: Climate Corporate Data Accountability Act Schneider Downs Fact Sheet - CA SB 261: Greenhouse Gases: Climate-Related Financial Risk Act Related Links Schneider Downs ESG Assurance Services Schneider Downs ‘Our Thoughts On’ ESG Articles Ready to get started? Contact us to learn more about Schneider Downs ESG Consulting solutions. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings at Risk Advisory Service Page or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Investment Corner with Jason & Sean: U.S. Small Cap Equities “History never repeats itself, but it often rhymes.” – Mark Twain The internet is going to change the world. It… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Master Your Credit Card Strategy: A Guide to Maximizing Rewards and Boosting Your Credit Score Credit card debt has soared to new heights, totaling over $1.125 trillion at the close of 2023, the highest balance… Read More > Enhancing Focus on Risk Management and Consumer Protection Over the past year, regulatory agencies, financial services management teams and board members have had to increase their focus on… Read More > Controlling Wire Fraud in the Financial Industry Wire fraud is one of the most common cyberattacks afflicting companies of all shape and sizes, particularly financial institutions. When… Read More > The Top Risks Internal Audit Leaders Need to Know for 2024 What are the top risks internal audit leaders need to know about in 2024? In their Focus on the Future report,… Read More > SOC 2 Terminology: Vendor vs Subservice Organization vs Subcontractor vs Third Party vs Nth Party What's the difference between vendors, subservice organizations, subcontractors, third parties and nth parties in SOC 2 reports? We’re very talented… Read More > Preparing for Financial Responsibility Rule Changes Effective July 1, 2024, the U.S. Department of Education will mandate additional disclosures for higher education institutions in order to… Read More > Did Poor Change Management Contribute to the AT&T Wireless and McDonald’s Outages? In the past few months, both AT&T Wireless and McDonald’s experienced system outages that affected customer service. On February 22,… Read More > Cracking the Value Creation Code: Key Considerations for the Value Creation Process This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a… Read More > Managing University Costs: Strategies for Examining and Identifying Savings Opportunities How can universities control rising operational costs? The cost to run a college is amplified by a multitude of factors,… Read More > Subservice Organizations: Their Role and Impact on Your SOC Report In today’s interconnected business landscape, understanding the role of subservice organizations in SOC (System and Organization Controls) reports is paramount.… Read More > Allegheny County Marriage License Data Leak May Affect Recent Newlyweds A website glitch may have exposed thousands of couples who filed for marriage licenses in Allegheny County. Guest list? Check. Wedding… Read More > Cracking the Value Creation Code: Implementing the Value Creation Process This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a… Read More > PCI DSS v4.0 is Here…Are You Ready? What do organizations need to know about PCI DSS v4.0? We published our summary of the key changes in Payment… Read More > Cracking the Value Creation Code: Laying the Foundation This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a… Read More > Summary of President Biden’s 2025 Revenue Proposals Released in Treasury’s Greenbook The U.S. Treasury Department released President Biden’s administration’s fiscal year 2025 revenue proposals on March 11, 2024. The annual “Greenbook”… Read More > The Impact of the Baltimore Key Bridge Disaster on Supply Chain How will the Baltimore Key Bridge collapse impact national and regional supply chain? Tuesday's tragic bridge collapse at the Francis… Read More > The Importance of Certified Business Valuation Professionals The recent United States Tax Court opinion in the case of Estate of Scott M. Hoenshied v. Commissioner of Internal… Read More > IRS Tax-Exempt and Governmental Entity New Compliance Programs Every year, the Tax-Exempt and Government Entities division (TEGE) of the Internal Revenue Service (IRS) issues a letter stating its… Read More > ### Fraud Risk Assessment Fraud Risk Assessment Identify Vulnerabilities, Prioritize Risks, and Strengthen Your Anti-Fraud Strategy A strong fraud risk management program will help prepare for, protect and enable your organization to develop a response plan in the event fraud risk elevates to unacceptable levels.Schneider Downs can help your organization identify and manage the risks of fraud by performing a Fraud Risk Assessment. During the process we work closely with management and create a tailored fraud risk assessment to meet the needs of your organization.The following key areas are assessed during an assessment: Overall fraud governance including Board and Senior Management oversiteFraud roles and responsibilitiesFraud risk management policies and proceduresComprehensive fraud training and awarenessFraud risk assessment, including inherent and residual risk factorsFraud assessment rating criteria in order to appropriately prioritize key fraud risksAnti-fraud control activitiesFraud monitoring and testing activities over the first, second and third lines of defenseOverall program monitoring activities to ensure that fraud risk activities are continuously assessed and mitigatedReady to get started?Contact us to learn more about our Fraud Risk Management services.About Schneider Downs Risk AdvisoryOur team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. View our additional Fraud services and capabilities Learn More Contact us ### Enterprise Risk Management Enterprise Risk Management (ERM) PRIMARY CONTACTS: James B. Yard CPA, CIA , Tony P. Ielase, CISA In today's volatile business environment, risk landscapes are changing more rapidly and with a greater impact than ever before. Effective Enterprise Risk Management (ERM) is a critical enabler for strategy execution and an important competitive advantage for all organizations in the business landscape. It creates greater confidence in decision-making and achieving operational and strategic objectives while effectively enabling risks and opportunities to be actively managed.  The value is in the discipline surrounding key events to realize opportunities, minimize disruptions, manage adverse events and limit financial ramifications. For more information download our Enterprise Risk Management Brochure. How Can Schneider Downs Help? Our team of risk advisory professionals assist our clients in developing, optimizing and transforming their risk management processes.  Combining deep industry expertise with repositories of leading practice tools and accelerators, we act as a strategic advisor to implement changes to your ERM program to achieve value and minimize surprises. Our ERM service offerings include: ERM Program Assessment – Review current ERM framework and program against leading practices to identify tangible actions to enhance ERM activities, improve program acceptance and integrate ERM management with underlying business processes. ERM Program Development – Provide guidance on appropriate governance, processes and infrastructure to support the target risk management culture and objectives. Enterprise Risk Assessment – Execute activities to identify, analyze, prioritize, manage, monitor and report top risks. Download our Key Questions to Consider When Conducting an Enterprise Risk Assessment to get started. Risk Action Plans, Monitoring and Reporting – Develop and implement tools, templates and content to monitor and report risks and risk measures, risk management strategies and plans, and risk management program activities. Risk Analytics – Develop and implement Key Risk Indicators (KRI’s) to better understand individual risks, risk inter-relationships, aggregate risk exposure and risk appetite and tolerance. Risk Management Sourcing – Outsource or co-sourced risk management program activities, including risk assessments, monitoring and reporting, and analytics. Benefits of ERM More effective strategic and operational planning Planned risk-taking and the proactive management of risks Greater confidence in decision making and achieving operational and strategic objectives  Greater stakeholder confidence Enhanced organizational resilience Dealing effectively with disruptions and losses, minimizing financial impact Avoid surprises through forward planning Regulatory compliance and director protection Identifying and managing risk entity-wide Increasing positive outcomes and advantage while reducing negative surprises Reducing performance variability Improving resource deployment ERM Key Questions When Conducting an Enterprise Risk Assessment Are We Taking the Right Risks? How are the risks we take related to our strategic objectives? Do we know the significant risks we are taking? Do the risks we take give us a competitive advantage? How are the risks we take related to activities that create value? Are We Taking the Right Amount of Risk? Are we getting an adequate return that is consistent with our overall level of risk? Does our organizational culture promote or discourage risk-taking? Have we defined our risk appetite and aligned with the Board? Is our actual risk-taking consistent with our risk appetite? Are We Adequately Managing Our Risk? Is our risk management process aligned with our strategic decision-making process and existing performance measures? Is our risk management process coordinated and consistent across the entire enterprise? Does everyone use the same definition of risk? Do we have gaps and/or overlaps in our risk coverage? Ready to get started? Contact us to learn more about Schneider Downs Enterprise Risk Management services. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Risk Management and Compliance Services Risk Management and Compliance Services Contact Us Today PRIMARY CONTACTS:Eric M. Wright CPA, CITP, James B. Yard CPA, CIAOur Risk Management and Compliance services ensure your organization is effectively mitigating risk and successfully meeting regulatory and compliance obligations.Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks.  Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. RISK MANAGEMENT AND COMPLIANCE SERVICES COMPLIANCE ADVISORY ENTERPRISE RISK MANAGEMENT FRAUD RISK ASSESSMENT MERGER AND ACQUISITION RISK EVALUATION SOC COMPLIANCE, AUDITS AND READINESS SOX READINESS, OPTIMIZATION AND PROGRAM SOURCING Meet our team of experienced professionals dedicated to your success. THIRD-PARTY RISK MANAGEMENT Read the latest insight on key topics in the M&A and Transaction Advisory space. Explore our full Risk Advisory Service offerings at Risk Advisory Services or download our Risk Advisory Services Brocure for more information.Ready to Get Started? Contact the team at contactsd@schneiderdowns.com.  Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Business Process Automation Business Process Optimization PRIMARY CONTACTS: James B. Yard CPA, CIA, CISAThe people, processes and technology within organizations and practices are constantly being challenged to increase efficiency and maximize limited resources.The Schneider Downs Business Process Optimization (BPO) services are designed to assess the efficiency and effectiveness of an organization’s core business processes to ensure best practice opportunities are realized, risks are mitigated and a strong foundation exists for controls. Our team of process improvement specialists are adept in understanding and assessing complex workflows, internal risks and controls, systems functionality and automation opportunities.Our team of risk advisory professionals assist our clients in optimizing and transforming their core operational, finance and information technology processes. Combining deep industry expertise with repositories of process insights, we act as a strategic advisor to implement changes to the organization structure to achieve cost reductions and efficiencies, while also providing recommendations to better managing risk and strengthen control activities.Some of the most common triggering events that lead to companies investing in a strategic evaluation of their business processes include:Key changes in management;Control environment failures or changes;Staffing or cost reduction initiatives;Recent fraud or misstatement;Significant control deficiency, material weakness or concerning management letter comments;Untimely or inaccurate operational or financial information to make informed business decisions;Implementation of a new system or systems; andAcquisitions or divestituresWhat does our BPO process look like?Results include an organizational assessment and dashboard of current state against better practice opportunities, as well as a summary of work performed, global risk overviews, and recommendations to achieve increased efficiency, process improvement and internal control environment enhancements.Ready to get started?Contact us to learn more about Schneider Downs Business Process Optimization services.About Schneider Downs Risk AdvisoryOur team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service offerings at Risk Advisory Services or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Internal Audit Sourcing Internal Audit Sourcing PRIMARY CONTACTS: James B. Yard CPA, CIA, CISA, Tony P. Ielase CISA Our internal audit service model provides solutions to allow for a highly-effective internal audit function to serve your institution in a complex risk environment. We can provide a cost-effective solution to staff an internal audit function and provide the various necessary skills required to meet the challenges facing internal audit and the business.  We are suited to assist organizations with providing effective internal audit solutions in the following ways: Ability to address geographic dispersion through our affiliation with Prime Global Experience and knowledge to assess complex business environments using a risk-based approach to derive maximum value Experienced information technology resources to assess complex information systems Access to an experienced team of internal audit and IT audit resources Depth of knowledge Access to industry and subject matter expertise Knowledge of regulatory demands Ability to benchmark against industry best practices Use of automated tools and technology to improve audit efficiency Schneider Downs is positioned to provide internal audit support, from staff augmentation to full outsourcing. We work closely with internal audit functions, management, and Audit Committees to achieve the scope of coverage organizations require. In a co-sourcing arrangement, we partner with your professionals to fill problematic gaps in your internal audit function, in order to mitigate exposure to crucial areas requiring attention beyond your reach. Ready to get started? Contact us to learn more about our Internal Audit Sourcing services. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### Internal Audit Quality Assurance Reviews Quality Assurance Review (QAR) PRIMARY CONTACTS: James B. Yard CPA, CIA, CISA (Pittsburgh), Tony P. Ielase CISA (Columbus) Whether electing a full external assessment or a self-assessment with independent external validation, a Quality Assurance Review (QAR) allows audit committees and chief audit executives to evaluate the activities of their internal audit (IA) function and determine whether policies, procedures and practices of the function adhere to The Institute of Internal Auditors’ (The IIA) Core Principles, International Standards for the Professional Practice of Internal Auditing (Standards) and the Code of Ethics. Our experienced professionals leverage our Internal Audit Strategic Framework to assess your internal audit function’s activities against leading practices of other internal audit functions we have observed, and provide insights and recommendations to elevate the performance and value of the function to stakeholders. Schneider Downs’s Internal Audit Strategic Framework Our QAR professionals are required to meet the qualification requirements as defined in Standard 1312 - qualified, independent reviewer or review team from outside the organization. The Standard defines qualified individuals as persons with the technical proficiency, business experience and educational background appropriate for the audit activities to be reviewed. For this reason, QARs are conducted by the management of our practice. In addition, many of our QAR professionals also have experience in industry within internal audit functions and have also served as a Chief Audit Executive (CAE) so they know the challenges of leading an IA function and thus will provide practical, non-theoretical recommendations where appropriate. Quality Assurance Review Process What does our QAR process look like? DATA COLLECTION Conduct interviews of key stakeholders (i.e., audit committee, executive management, IA team members) Develop questionnaire for other stakeholders Collect key documents that will support the QAR (i.e., risk assessment, IA charter, working papers, IA reports, Quality Assurance results, IA resumes, etc.) ANALYSIS Assess documentation against the IIA Standards Review sample of executed audits to ensure compliance with existing IA policies and IIA Standards Leverage our SD Internal Audit Strategic Framework to assess areas for improvement Summarize and analyze interview/questionnaire results and develop positive themes and potential areas for improvement REPORTING Report on conformance with the IIA Standards (Generally Conforms, Partially Conforms, Does Not Conform) Identify IA’s areas of strength Identify areas for improvement based on stakeholder feedback and our experience with leading practice recommendations Results include an overall assessment with conformance  against the IIA Standards, as well as a high level roadmap for the most impactful opportunities for improvement, and detailed assessment against our SD Internal Audit Strategic Framework – highlighting both strengths and value add recommendations. Ready to get started? Contact us to learn more about Schneider Downs Quality Assurance Review (QAR) services. QAR is just one of the many risk-based advisory services offered by Schneider Downs, explore our additional services on our Risk Advisory Services homepage. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261). The climate-focused… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > ### Data Analytics for Internal Audit Data Analytics for Internal Audit PRIMARY CONTACTS: James B. Yard CPA, CIA, CISA, Tony P. Ielase, CISA Internal Audit organizations are focusing on how to use data to improve their role in evaluating and monitoring key risks and business activities. In fact, most have this as one of their key strategic priorities for their function in the future. Evaluating data and building an analytics process can be a heavy undertaking requiring training, tools and expertise. Many organizations are in the early stages of integrating data analytics and continuous monitoring into their audit and business processes. As business processes transform and become more automated, internal audit needs to adapt on how to evaluate the process and mitigate the risk. This can be an opportunity to not only incorporate analytics but transform the entire department. Internal Audit is in a unique position when it comes to data analytics and continuous monitoring, they can be used to improve audits but also become a resource for innovation and decision making for the organization. Whether you have started your journey or you don’t know where to start, we are here to help and be a partner. Ready to get started? Contact us to learn more about our Data Analytics for Internal Audit service. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks.  Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings at Risk Advisory Services or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261). The climate-focused… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > Think Before You Click: Fake Browser Updates are Back in Style Why are malware-laced fake browser updates having a moment in 2023?The adage “what’s old is new again,” is certainly true in the cyber… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > ### Internal Audit Solutions Internal Audit Solutions Contact Us Today PRIMARY CONTACTS: James B. Yard CPA, CIA, CISA Our Internal Audit solutions allow for a highly effective internal audit function to serve your organization in a complex risk environment. Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks.  Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. INTERNAL AUDIT SOLUTIONS audit-assurance-servicesCreated with Sketch.DATA ANALYTICS FOR INTERNAL AUDIT audit-assurance-servicesCreated with Sketch.INTERNAL AUDIT BENCHMARKING AND METRICS audit-assurance-servicesCreated with Sketch.INTERNAL AUDIT QUALITY ASSURANCE REVIEWS audit-assurance-servicesCreated with Sketch.INTERNAL AUDIT SOURCING AND OUTSOURCING audit-assurance-servicesCreated with Sketch.QUALITY ASSURANCE AND IMPROVEMENT PLANS audit-assurance-servicesCreated with Sketch.STRATEGIC INTERNAL AUDIT FUNCTIONAL ASSESSMENT AND TRANSFORMATION Explore our full Risk Advisory Service offerings at Risk Advisory Services or download our Risk Advisory Services Brocure for more information.Ready to Get Started? Contact the team at contactsd@schneiderdowns.com.  Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### SAP Audits and Controls SAP Audits and Controls PRIMARY CONTACT: Eric M. Wright CPA, CITP Schneider Downs has the SAP ECC, SAP S/4HANA, and SAP GRC expertise to assist organizations to identify their SAP key controls and to partner with organizations in their on-going control and audit compliance requirements. Organizations use our services in every part of their SAP maturity journey, including guiding companies with controls requirements during the implementation process, post-implementation and segregation of duties reviews, annual audits and SAP health checks and testing. Our professionals are well versed in the entire SAP environment and multiple SAP versions. Our services include extracting data from SAP tables for data analysis, ITGC testing including SAP security and SAP transport management, SAP application controls within the IMG, auditing supporting operating systems, SAP GRC solutions, and SAP ancillary/bolt-on applications. We serve clients that range from mid-size to large as well as international companies. For more information please contact us. SAP services that we offer include: Outsourcing and co-sourcing of SAP audits Assist in documenting As-Is and To-Be processes for data transformation projects (e.g, SAP S/4HANA, SAP ECC, acquisitions) Assist in completing key project deliverables (e.g., process, controls, etc) Reviewing key deliverables of SAP projects (e.g., evaluating the project plan, participation in periodic status meetings with the project team, reviewing key controls and security, and other key deliverables, etc) Assist in documenting SAP business and IT (ITGC and application) controls Assess Security and Controls Strategy Develop audit programs and testing instructions for the Security/Controls/Internal Audit Teams Conduct SAP audit training Evaluate SAP security roles Evaluate the design and testing effectiveness of SAP key controls within a controls framework Conduct SAP post-implementation review, ITGC, automated control, and business process audits Evaluate the Segregation of Duties (SOD) Rule Set, sensitive transactions, emergency request process, and the SAP transport change process Assist in customizing the SOD Rule Set and sensitive transactions Schneider Downs SAP Resources SAP Audits and Controls Service Overview SAP Services Overview For each service, Schneider Downs uses a top-down, risk based approach that fits the organization size, culture, and requirements.  We will work collaboratively with management on the scope and testing approach.  Our approach includes periodically communicating status, issues, and providing a report with recommendations to strengthen the SAP controls environment. Let our trained SAP professionals navigate the complexities of SAP to provide the assurance you need. OUR THOUGHTS ON Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal… Read More > Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity… Read More > Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the… Read More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Payment Card Industry Security Standard Compliance PCI DSS Compliance Payment Card Industry Data Security Standard Deliver sound risk management practices, internal control systems and compliance frameworks. Successfully obtaining and maintaining Payment Card Industry Data Security Standard (PCI DSS) compliance can sometimes be a monumental effort between several business processes across a variety of business units, encompassing both manual and automated procedures that involve an array of systems and personnel throughout the organization. Download our PCI DSS Service Overview As a certified Qualified Security Assessor (QSA), Schneider Downs is equipped to assist clients with their PCI compliance journey from the initial scoping and/or reduction of their cardholder data environment (CDE), gap/readiness assessments, and formal examinations resulting in a completed Self-Assessment Questionnaire (SAQ) or Report on Compliance (ROC) and accompanying Attestation of Compliance (AOC). In addition, the Schneider Downs Cybersecurity team provides several services pertinent to PCI DSS compliance, including penetration testing and segmentation testing. Based on published guidance and experience, the Schneider Downs team developed a five-phase approach to achieving an effective PCI compliance program with each phase following a clear, concise framework designed to deliver value to our clients. Phase I - Awareness and Project Support Develop the awareness of PCI compliance requirements and the related consequences of non-compliance at the senior management level. Phase II - Inventory and Dataflow Inventory and document the flow of credit card information throughout the organization’s various processes, including data origination, data in motion, data at rest and data in use. During the credit card information lifecycle assessment, we will utilize the following attributes associated with the flow of credit card data: Data origination: The methods for initiation of credit card transactions throughout the organization including identifying the electronic and manual methods used to accept credit card information. Data in Motion: Map the flow of the credit card information throughout the organization either in paper or electronic form to identify an inventory of all technology components that are instrumental in the transportation, processing and routing of the credit card information. Data at Rest: Identify throughout the organization where credit card information is stored and the format (paper, electronic) of the data. Data in Use: Develop a list of personnel that can access or utilize the credit card information. Phase III - Design and Scoping Begin to formulate our strategic IT architecture and process design recommendations that will limit the areas of the network that fall within the scope of the PCI compliance effort. Phase IV - Reporting and Remediation Roadmap Prepare an executive-level report detailing the results of our analysis designed to provide a realistic understanding of the current state of your control environment and the risk associated with each of the identified weaknesses or gaps. Phase V - Sustainment and Governance Provide recommendations that would enhance your compliance governance structure and embed controls in your ongoing processes that will address key security and control activities into operational processes, helping make PCI a core organizational competency. Our approach can be tailored to meet the existing needs of, and the current task being undertaken by your organization. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact Us Our Thoughts On Cybersecurity Awareness Month is Over...Now What? As October comes to an end, so does Cybersecurity Awareness Month. However, that doesn’t mean our focus on security awareness… Read More > Two Truths and a Lie about Cybersecurity: Purple Teaming Let’s play a game! Two truths and a lie about Purple Teaming. In support of Cybersecurity Awareness Month, we are… Read More > Two Truths and a Lie about Cybersecurity: Cyber Governance Let’s play a game! Two truths and a lie about Cybersecurity Governance.In support of Cybersecurity Awareness Month, we are examining… Read More > Two Truths and a Lie about Cybersecurity: Cyber Insurance Let’s play a game! Two truths and a lie about Cyber Insurance.In support of Cybersecurity Awareness Month, we are examining… Read More > Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue… Read More > ### NIST The National Institute of Standards and Technology (NIST) The National Institute of Standards and Technology (NIST) is a non-regulatory federal agency within the U.S. Department of Commerce. NIST's mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. NIST promotes their mission by developing special publications that are devoted to specific information security topic. At Schneider Downs we have experience advising our clients using NIST guidance and frameworks such as: NIST Cybersecurity Framework Created through voluntary collaboration between industry and government, the Framework consists of standards, guidelines, and practices to promote the protection of critical infrastructure. The prioritized, flexible, repeatable, and cost-effective approach of the Framework helps owners and operators of critical infrastructure to manage cybersecurity-related risk. NIST 800-53 This publication provides a set of procedures for conducting assessments of security controls and privacy controls employed within federal information systems and organizations.. NIST 800-61 This publication assists organizations in establishing computer security incident response capabilities and handling incidents efficiently and effectively. NIST 800-30 This document provides guidance for carrying out each of the three steps in the risk assessment process (i.e., prepare for the assessment, conduct the assessment, and maintain the assessment) and how risk assessments and other organizational risk management processes complement and inform each other. NIST 800-171 This publication provides federal agencies with recommended requirements for protecting the confidentiality of Controlled Unclassified Information (CUI): (i) when the CUI is resident in nonfederal information systems and organizations; (ii) when the information systems where the CUI resides are not used or operated by contractors of federal agencies or other organizations on behalf of those agencies; and (iii) where there are no specific safeguarding requirements for protecting the confidentiality of CUI prescribed by the authorizing law, regulation, or government wide policy for the CUI category or subcategory listed in the CUI Registry. NIST 800-82 This document provides guidance on how to secure Industrial Control Systems (ICS), including Supervisory Control and Data Acquisition (SCADA) systems, Distributed Control Systems (DCS), and other control system configurations such as Programmable Logic Controllers (PLC), while addressing their unique performance, reliability, and safety requirements. Schneider Downs NIST Assessment Approach We begin our assessment by working closely with you to understand your business processes in order to understand the NIST special publication that best pertains to your organization . We will work with and interview key individuals within the business and information technology services responsible for compliance with the NIST special publication. We will evaluate your compliance with all control requirements through review of documentation supporting the operating effectiveness of controls. When our evaluation is complete, we will provide your organization with a detailed compliance assessment report outlining corrective action plans with a detailed roadmap for achieving NIST compliance. Identify NIST special publication that pertains to your organization Understand policies, processes, and controls Evaluate controls and determine if gaps exist Produce detailed report with remediation steps View our additional IT Risk Advisory services and capabilities Learn More Contact Us ### IT Risk Assessment Services Deliver sound risk management practices, internal control systems and compliance frameworks. Prior to simply performing an audit, it is critical to first identify and categorize risk. A properly performed risk assessment is a critical component in understanding the complexities and requirements of the risk assessment process, prior to identifying and testing controls to mitigate the related risks. Risk assessments should be comprised of an information gathering process to identify threats and vulnerabilities the organization is facing, determining the probability and impact of those threats, identifying existing mitigating controls, designing audit procedures test the effectiveness of those mitigating controls. Throughout this process, a combination of collaborative discussion and reviews will occur with the business functions and supporting services being audited. What makes Schneider Downs stand out among our competitors is our ability to consider and understand the multiple layers of technology that help support business functions, while developing a personal focus to your business and the people supporting it. We believe in collaborating with multiple layers of your organization, staff, management, and C-level executives to ensure that risks are appropriately identified. Schneider Downs can assist your organization in identifying IT risks by performing a thorough and detailed risk assessment that will ensure that your organization has implemented the appropriate safeguards to protect the most valuable IT assets within your organization. Our Detailed Approach to IT Risk Assessment We begin our assessment by working closely with you to understand your business functions and take an inventory of the technologies used to support those functions. We will work with and interview key individuals within the business and information technology services to understand information policies, procedures, and practices through the following: Hold information-gathering sessions. Identify threats and vulnerabilities. Determine the probability and likelihood of threats occurring. Evaluate the effectiveness of controls. Determine overall residual risk. Our ultimate goal is to assess your organization’s risk appetite for your business functions and supporting technologies by identifying gaps and providing detailed recommendations to effectively close those gaps to mitigate potential risks to the business. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### IT General Controls Audit Deliver sound risk management practices, internal control systems and compliance frameworks. IT general controls (ITGC) are the basic controls that can be applied to IT systems such as applications, operating systems, databases, and supporting IT infrastructure. The objectives of ITGCs are to ensure the integrity of the data and processes that the systems support. The most common ITGCs are as follows: Logical access controls over applications, data and supporting infrastructure Program change management controls Backup and recovery controls Computer operation controls Data center physical security controls System development life cycle controls Detailed Approach to IT General Controls We assist organizations in designing ITGC frameworks and providing operating effectiveness assurance through co-sourcing and outsourcing of ITGC audits. Schneider Downs dedicated IT audit professionals have experience working with a wide variety of industries of all sizes. We partner with you to provide a comprehensive ITGC coverage to manage and mitigate ITGC risks within your IT environment. Our ITGC services will be tailored to the organizations risk appetite and compliance requirements. With a large number of skilled and seasoned IT Auditors on-staff, we are able to tailor IT audit plans and deliver results that are designed to mitigate the most critical risks to your organization. Our staff also delivers the utmost integrity, objectivity, confidentiality, and independence required by the auditing standards. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact Us ### ISO 27001 Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. ISO 27001 Certification Process The certification process is divided into two stages: The "Stage 1 Audit" and the "Stage 2 Audit". The "Stage 1 Audit" consists of a documentation review. During Stage 1, the ISO 27001 assessor reviews policies and procedures to ensure that appropriate policies and procedures are in place to meet the requirements of the ISMS. The "Stage 2 Audit" consists of the ISO 27001 auditor performing tests of effectiveness to ensure that controls have been implemented to meet the requirements of the ISMS. Additional ISO 27001 Certification Requirements In addition to the Stage 1 and Stage 2 audits, the following must be performed to become ISO 27001 certified: A periodic and independent internal audit of the ISMS against the requirements of the ISO 27001 standard. Many organizations have trouble meeting the internal audit requirement do to the following reasons: They do not have personnel that are truly independent. Those responsible for conducting the internal audit should not be auditing functions over which they have operational control or ownership. To combat these issues, organizations are outsourcing the internal audit requirement to CPA firms, such as Schneider Downs, that possess the appropriate knowledge of internal audit and ISO 27001. Our ISO 27001 Internal Audit Approach We begin our assessment by working closely with you to understand your business processes in order to understand your ISO 27001 compliance scope. We will work with and interview key individuals within the business and information technology services responsible for implementing the ISO 270001 controls to understand information security policies, procedures, and practices. We will evaluate your compliance with all control requirements through review of documentation supporting the operating effectiveness of controls. When our evaluation is complete, we will provide your organization with a detailed ISO 27001 compliance assessment report outlining corrective action plans with a detailed roadmap for achieving ISO 27001 compliance. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### IRS Publication 1075 Deliver sound risk management practices, internal control systems and compliance frameworks. To foster a tax system based on voluntary compliance, the public must maintain a high degree of confidence that the personal and financial information maintained by the Internal Revenue Service (IRS) is protected against unauthorized use, inspection, or disclosure. IRS Publication 1075 provides guidance to ensure the policies, practices, controls, and safeguards employed by recipient agencies, agents, or contractors adequately protect the confidentiality of Federal Tax Information (FTI). FTI is defined by the IRS as any return or return information received from the IRS or secondary source (e.g. Social Security Association). Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies and Entities provide very detailed audit requirements. Publication 1075 documents the managerial, operational, and technical security controls that must be implemented as a condition of receipt of FTI. IRS has mapped the IRS Publication 1075 control requirements to the National Institute of Standards and Technology (NIST) control requirements (NIST SP 800-53). IRS Publication 1075 has the following key Sections: Section 1.0, Introduction Section 2.0, Federal Tax Information and Reviews Section 3.0, Record Keeping Requirement Section 4.0, Secure Storage Section 5.0, Restricting Access Section 6.0, Other Safeguards Section 7.0, Reporting Requirements Section 8.0, Disposing of FTI Section 9.0, Computer System Security Schneider Downs specializes in the implementation and ongoing support of IRS Publication 1075 programs that align with this IRS publication. We apply a risk-based, top-down approach that drives both efficiency and effectiveness into the programs. Detailed Approach to IRS Publication 1075 Schneider Downs’ dedicated IT, financial and operational audit professionals have experience working with a wide variety of industries of all sizes. We partner with you to assist your company in complying with the IRS Publication 1075 requirements. Our IRS Publication 1075 Process Assistance in implementing and maintaining a comprehensive IRS 1075 program. Assistance in implementing the proper policies and soldiers. Inventory existing in key FTI controls and systems and identify missing controls. Performance design and testing of effectiveness, independent testing for key FTI internal controls. Communications of recommendations to strengthen IRS 1075 controls. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### InfoSec Policy Templates Deliver sound risk management practices, internal control systems and compliance frameworks. The following is a library of free information security policy templates that map to the HITRUST Common Security Framework, which in turn maps to a multitude of security frameworks (NIST, ISO, Cobit, HIPAA, PCI, SOC, etc.). The policy templates were developed by our team of information security, compliance, and risk experts to provide our clients and constituents with a base of governance documentation. Each policy is designed with fill-in-the-blank text and should be customized to accurately represent the controls operating within your organization. To report any issues or enhancements related to these free templates, please contact us at cybersecurity@schneiderdowns.com. Policy TemplatesPolicy IntroductionData Classification PolicyPolicy Management PolicyRisk Management PolicyRoles PolicyData Management PolicySystems Access PolicyAuditing PolicyConfiguration Management PolicyFacility Access PolicyIncident Response PolicyBreach Notification PolicyDisaster Recovery PolicyRemovable Media PolicySystems Development Lifecycle PolicyVulnerability Scanning PolicyData Integrity PolicyData Retention PolicyThird Party PolicyEmployee and Teleworking PoliciesAsset Inventory and Device Management PolicyAbout Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.  To learn more, visit our dedicated IT Risk Advisory page.  ### Information Technology Audit Deliver sound risk management practices, internal control systems and compliance frameworks. With highly publicized incidences of data loss and increasing security risks, many organizations struggle to develop and maintain a strong information technology (IT) control environment to mitigate IT risks. Employing qualified IT professionals has also become more difficult due to the high cost of training, limited availability of qualified resources and escalating compensation requirements. The role of IT audit has never been more important. In order to effectively manage the IT risk universe, your IT audit function needs to be skilled, trained and up-to-date with the ever-evolving IT field. In addition, your IT audit function should be well versed on a large variety of IT compliance issues, new and evolving regulations and IT best practices that provide value to your organization. Schneider Downs can assist your organization by providing skilled IT audit professionals to meet your IT audit and risk needs. We can work with you to augment your current IT audit staff, or we can operate as a fully outsourced IT audit function. Either way, we will ensure that we provide IT audits that address the most critical risks to your organization. Detailed Approach to Information Technology Audits Schneider Downs' dedicated IT audit professionals have experience working with a wide variety of industries of all sizes. We will partner with you to provide comprehensive IT audits to manage and mitigate IT risks within your enterprise IT environment. We provide a wide range of services that can be tailored to an organization's risk appetite and compliance requirements. With a large number of skilled and seasoned IT Auditors on staff, we can tailor IT audit plans and deliver results that are designed to mitigate the most critical risks to your organization. Our staff also delivers the utmost integrity, objectivity, confidentiality, and independence required by the auditing standards. Our IT Audit Process Interview network administrators and third-party vendors and conduct network searches for sensitive or critical data and systems. Conduct network security reviews and scans, and review security policies, procedures and logs. Review findings with security and management to reach a consensus. Issue a report with as-needed threats, risks, gaps, recommendations, strategies, policies, or procedures. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### HITRUST ### HIPAA Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The Health Insurance Portability and Accountability Act (HIPAA) was passed by Congress in 1996 with the aim of requiring the protection and confidential handling of protected health information (PHI), both in paper and electronic forms (ePHI).The subsequent passing of the Health Information Technology for Economic and Clinical Health (HITECH) Act, which was enacted as part of the American Recovery and Reinvestment Act of 2009, modified the U.S. Department of Health and Human Service (HHS) Secretary's authority to impose civil money penalties for HIPAA violations. These HITECH Act revisions have significantly increased enforcement actions and the penalty amounts HHS may impose for violations of the HIPAA rules. These HIPAA rules are required for companies that store, process, or handle ePHI either as a covered entity or business associate.Schneider Downs can assist your organization in meeting these rules by performing an independent HIPAA / HITECH gap analysis that will ensure that your organization has implemented the appropriate safeguards to protect the sensitive PHI and ePHI within your organization.Detailed Approach of HIPAA ComplianceWe begin our assessment by gaining and understanding of your business processes and taking an inventory of areas where PHI / ePHI are used or stored. We will work with and interview key individuals within the business and information technology services areas of your organization to understand information security policies, procedures, and practices. We will examine administrative, physical and technical safeguards that your organization has implemented to protect PHI / ePHI.What makes the Schneider Downs process so effective is that our HIPAA compliance assessment is aligned with the HHS audit protocol. Using our deep understanding of the HHS' HIPAA Audit Protocol we perform a detailed review of policies and procedures adopted and employed by covered entities or business associates to meet the standards and implementation specifications of the Privacy, Security, and Breach Notification Rules.Our ultimate goal is to assess your organization's compliance with the HIPAA rules, identify gaps and provide you with detailed recommendations to effectively close those gaps and ultimately protect ePHI / PHI. We will by provide your organization with a HIPAA compliance assessment report outlining all gaps along with a detailed roadmap to achieve ultimate compliance.Our HIPAA compliance Assessment ProcessIdentify use and storage of PHI/ePHIUnderstand policies, process and controlsEvaluate controls and determine if gaps existProduce detailed report with remediation stepsAbout Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.  To learn more, visit our dedicated IT Risk Advisory page.  View our additional IT Risk Advisory services and capabilities Learn More Contact us ### GDPR Compliance Deliver sound risk management practices, internal control systems and compliance frameworks. The European Union’s (EU) General Data Protection Regulation (GDPR) went into effect on May 25, 2018. The regulation is specific to the protection of natural persons with regard to the processing of personal data and on the free movement of such data. The regulation applies to any organization doing business in the EU or that processes personal data originating in the EU, be it data of residents or visitors. The GDPR has made profound changes to the understanding of privacy, data protection and personal data in the EU and has wide-ranging effects on anyone processing personal data of data subjects of the EU. A data subject is defined as a person whose personal data is being captured and processed. If your organization captures just one record of an EU data subject, this regulation applies to you. GDPR also changes the way that these laws are enforced and brings potential penalties that are significant in nature. Penalties for failing to comply with the articles of GDPR may subject the organization to fines up to €20m or 4% of the organization’s total global revenue, whichever is greater. How We Can Help Schneider Downs provides multiple solutions to help our clients achieve and maintain compliance with GDPR: Comprehensive compliance and gap assessment Data Protection Impact Assessment (DPIA) and Privacy Impact Assessment project management Data discovery and data classification programs Data Protection Officer as a service offering—a Schneider Downs expert can assume this required role for your organization. Guidance and implementation of erasure, or “right to be forgotten” programs Guidance and implementation of security measures, including anonymization and pseudonymization of personal data Developing and executing training and awareness programs Guidance and implementation of vendor management best practices for ensuring controls over data in the supply chain Policy and procedure development to bring current practices into compliance Schneider Downs Approach to GDPR Compliance 1. Awareness You should make sure that decision-makers and key people in your organization are aware that regulations are changing. They need to appreciate the impact that these changes are likely to have on your organization. In addition, line-level and larger scale training may be necessary for certain personnel within your organization who handle personal data on a regular basis. 2. Document the Personal Information You Hold You should document what personal data you hold, where it came from, what you do with it and who you share it with. We use data flow diagrams and business process maps for each of these processes. 3. Communicating Privacy Information You should review your current privacy policies, procedures, contracts and notices and put a plan in place for making any necessary changes to meet the GDPR deadline. 4. Individuals’ Rights: Right to Be Forgotten, Transfer Data or Correct Data, etc. You should check your procedures to ensure that they cover all the rights individuals have, including how you would delete any obsolete data (e.g., right to be forgotten), transfer data upon request or correct any incorrect information. 5. Data Subject Access Requests for Data / Information on Data Handling You should update your procedures and plan how you will handle data extraction requests to meet the 30-day requirement. Data subjects have the right to obtain confirmation from the controller as to whether or not personal data concerning him or her is being processed and, where that is the case, access to the personal data. They also have the right to inquire about the nature of further processing and treatment of their data while it was in the controller’s possession. 6. Inventory Your Data Identify all the data subjects for which you process or store sensitive data and determine whether GDPR applies to their country. Document the supervisory authority for each member country and identify the data controller for each process. You need to also determine who the lead supervisory authority will be based on your overall activities. 7. Lawful Basis for Processing Personal Data You should review your current practices and contracts and identify the lawful basis for your processing activity under the GDPR, document it, and update your privacy notice to explain it. 8. Consent You should review how you seek, record and manage consent and whether you need to make any changes. Refresh existing consent processes now if they do not meet the GDPR standard. 9. Data Breaches / Incident Response Plan You should make sure you have an incident response plan in place to detect, report and investigate a personal data breach. The plan needs to be documented and tested. 10. Security of Processing You should ensure that certain technical safeguards are in place to ensure that risk to personal data is effectively mitigated. Your plan should include techniques such as the pseudonymization and encryption of personal data. Effective controls to not only ensure the ongoing security, but also the confidentiality and availability of personal data must also be in place. 11. Data Protection by Design and Data Protection Impact Assessments You should familiarize yourself now with the code of practice on Data Protection Impact Assessments as well as the latest guidance from the Article 29 Working Party, and decide how, when or if you need to implement these in your organization. 12. Data Protection Officers You should designate someone to take responsibility for data protection compliance and assess where this role will sit within your organization’s structure and governance model. You need to determine whether you are required to formally designate a Data Protection Officer. If so, this position must report to the highest levels of management. If your organization is late to comply with GDPR, please visit the “Our Thoughts On” blog to read more about our recommendations on how to become compliant. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### FFIEC IT Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The Federal Financial Institutions Examination Council (FFIEC) is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB), and to make recommendations to promote uniformity in the supervision of financial institutions. These agencies prescribe regulations and best practices for financial institutions. Schneider Downs is well-versed and experienced in all the various guidance that the FFIEC has released and can assist your organization in achieving FFIEC compliance within your organization. Topical areas include: Audit Business Continuity Planning Development and Acquisition E-Banking Information Security Management Operations Outsourcing Technology Services Retail Payment Systems Supervision of Technology Service Providers Wholesale Payment Systems Detailed Approach to FFIEC Compliance We begin our assessment by working closely with you to understand the current state of your organization in relation to the audit topic. We review previous audit results, examiner comments/ratings and interview management. We then review policies and procedures in relation to the examination guidance from the FFIEC. From there we will dig deeper into the actual business practices and controls related to the audit topic at hand. After this analysis we provide a detailed report outlining considerations such as current gaps and detailed recommendations to close those gaps. What makes the Schneider Downs process so effective is that our FFIEC compliance assessments are aligned with the FFIEC examiner audit protocol. Through our deep understanding of FFIEC audit protocol we can perform a detailed review of your information technology operations. Our ultimate goal is to assess your organization's compliance with the FFIEC guidelines, identify gaps and provide you with detailed recommendations to effectively close those gaps and ultimately protect customer information. Our FFIEC Compliance Process Identify current state Understand policies, process and controls Evaluate controls and determine if gaps exist Produce detailed report with remediation steps About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Network Device Security Configuration Assessment Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. It is critical to assess risks prevalent within an organization’s core network infrastructure. As technology constantly evolves, core network appliances and other devices are frequently shipped and installed with "out-of-box" settings that lack the hardening required for maximum security.Schneider Downs has the expertise to identify and assess the risks of single and cumulative vulnerabilities that exist across a wide range of devices, from firewalls to switches and routers. Our Network Device Security and Configuration Assessment is a comprehensive analysis of potential vulnerabilities and misconfigurations on a device.We perform automated and manual assessments and take a collaborative approach to establishing an action plan to remediate all identified vulnerabilities. We also consider any other security components and mitigating factors in determining the overall risk to the security posture of the organization's internal network appliances.Detailed Approach to a Network Device Security and Configuration AssessmentDEVELOP TECHNICAL UNDERSTANDINGSchneider Downs begins by developing an understanding of our client's network infrastructure through reviewing the network topology, meeting with key technical personnel and understanding any other points of access that may not be indicated within the organization's technical documentation.DETERMINE HIGH RISK DEVICES: From here, we collaborate with the client to determine which high risk devices to incorporate into our assessment.AUTOMATED IDENTIFICATION OF VULNERABILITIES FOR HIGH-RISK DEVICES: We then take an automated approach to identify all vulnerabilities or misconfigurations for each device.ASSESS VULNERABILITIES CONSIDERING MITIGATING FACTORS: We utilize our deep experience to collaborate with our clients and assess the findings to determine their actual threat and risk exposure to the organization. In doing so, we take care to consider other mitigating factors—such as superseding rule sets, access levels, isolation within the network and other security devices—that will impact risk.PROVIDE DETAILED VULNERABILITY REPORT:We will provide a comprehensive vulnerability report with the following data points for each vulnerability or misconfiguration uncovered during the assessment: findings, rating, impact, ease of exploit, recommendations and ease of fix.CLIENT DISCUSSION:We meet with the client to discuss our fully vetted findings to ensure that the risks posed for each vulnerability or misconfiguration, along with our recommendations for remediation, are fully understood.About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources Resource Library Our Thoughts On ### Data Privacy Services PRIMARY CONTACTS: Eric M. Wright CPA, CITP Eric M. Fair CISA, CDPSE, CBCLA Data is one of the most valued and targeted assets across all industries and organizations, which is why it is critical to know how to effectively manage and protect it. With the technology and regulatory landscape constantly changing, the methods organizations take to protect the privacy of data should also constantly evolve. An effective data privacy program can be a business differentiator within your market and industry. By being transparent with your data practices, answering customer concerns upfront, along with the ability to show that employees with access to customer data are regularly trained, will collectively help gain and retain customer trust to differentiate your business amongst competitors and in-turn speed up the sales cycle. Schneider Downs Data Privacy Services Business Process and Data Flow A critical component to understanding how an organization’s data (oftentimes consumer data) travels throughout its lifecycle is to develop business processes and data flow diagrams. Learn More Data Privacy Control Assessment Regardless of whether your data privacy program was recently established or tenured, it’s important to assess its ongoing effectiveness in today’s ever-evolving technological world. Learn More Data Protection Impact Assessment  A Data Protection Impact Assessment (DPIA) is a process to help identify and minimize data protection risks to an organization. Learn More NIST Privacy Framework Compliance The NIST Privacy Framework is intended to be leveraged as a foundation to help organizations identify and manage privacy risk to build innovative products and services while protecting individuals’ privacy. Learn More Privacy by Design Our approach to Privacy by Design ensures that privacy and security controls are aligned with an organization’s tolerance for risk, its compliance with regulations, and its commitment to building a sustainable privacy-minded culture.  Learn More Privacy Regulations and Compliance Prepare your organization for compliance with data privacy regulations including GDPR, CPRA, CCPA, New York SHIELD Act, GLBA and HIPAA. Learn More Why Do You Need a Data Privacy Program? The following are key reasons to develop your organization’s Data Privacy Program: Be a good corporate citizen Competitive differentiator Continually monitor, maintain and improve the privacy program Continue to meet regulatory compliance obligations Enhance the organization’s reputation/brand Entry into new markets Facilitate privacy awareness of employees, customers, partners and service providers Increase value/quality of data Meet client/consumer expectations Promote consumer trust and confidence Reduce risk to and respond effectively to privacy breaches Schneider Downs Data Privacy Resources Schneider Downs Service Overview – Data Privacy Services Schneider Downs Whitepaper – Top Ten Privacy Trends for 2021 Schneider Downs Infographic – Top Ten Privacy Trends for 2021 Schneider Downs ‘Our Thoughts On’ Articles – IT Risk Advisory Schneider Downs ‘Our Thoughts On’ Articles – Cybersecurity About Schneider Downs Data Privacy Services At Schneider Downs, our IT Risk Advisory Practice has a team of professionals who specialize in data privacy. Our team not only understands the evolving data privacy regulations but also the technologies that allow for opportunities to enable controls in the effort of reducing and protecting the data footprint and ongoing risks of non-compliance. Ready to Get Started? For more information on how we can help your data privacy needs please contact us. ### Digital Transformation FAQs Digital Transformation Frequently Asked Questions PRIMARY CONTACT: Patrick B. Armknecht CPA, CITPDigital Transformation is one of the fastest-growing terms across all organizations and industries. The Schneider Downs Digital Transformation group has prepared a listing of Frequently Asked Questions to help interested parties better understand what Digital Transformation is, how the process works, tangible benefits of the solution and more.What is Digital Transformation?Schneider Downs defines Digital Transformation as the use of technological innovations and business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes.  We believe Digital Transformation involves evaluating the purpose, efficiency and effectiveness of processes, reimagining how processes should work and identifying and leveraging technology to execute upon the reimagined process.Why is Digital Transformation important?More than ever before, businesses today are in need of timely, accurate, and meaningful data.  Shortcomings in existing processes and technologies result in issues such as data integrity, timeliness, and completeness of the information that business operations need to make informed business decisions. Combined with the increasingly digital world and dependency on data, the importance of Digital Transformation will continue to grow.What are the benefits and obstacles of Digital Transformation?Some of the key benefits of digital transformation include:Adapt to Change – Better respond to market disruptions and customer needs with increased organizational flexibility.Data Accessibility and Reliability – Improve visibility to data and increase comfort over the completeness and accuracy of data utilized in financial reporting.Employee Engagement – Alleviate unnecessary or redundant tasks from employees, allowing time for them to focus on higher-value-added tasks.Enhanced Use of Existing Software – Identify features and functionality of existing business applications that are unutilized or underutilized to maximize existing investments and strengthen processes.Improved Customer Relations – Provide better visibility into the customer experience and make more informed decisions related to buying habits, delivery of products and services, and support.Improved Reporting and Analytics – Improve timeliness and availability of financial and operational reporting and analytics to better support business insights that drive management decisions.Increased Revenue – Achieve better visibility into current processes and identify new opportunities for growth by recognizing and taking action on patterns and trends that otherwise would not have been visible or readily apparent.Reduced Cost – Save time and money by freeing up employees from non-value added tasks and by replacing patch-worked technology with robust multi-purpose solutions.Reduced Risk – Eliminate existing control gaps in processes while improving audit trails for compliance and regulatory requirements.Streamlined and Standardized Processes – Reduce inefficiencies in existing processes and create additional efficiencies through automation, standard operating procedures and training.How Can Digital Transformation Help My Business?Digital Transformation can help your business maintain a competitive advantage by embracing the rapid changes in the technology world. The companies that will be the most responsive to customer needs, the most able to adapt to changing market demands, are those that have the processes and technology in place to adapt to those needs and changes quickly and effectively.Thinking of it differently, what is the impact of not transforming? Can your organization scale and increase market share with its current technologies and processes, or will it need to undergo significant changes to keep up and prepare for the future?How can I justify the cost of Digital Transformation?Digital Transformation can be a large investment in time, money, and other resources, and budgeting for it can often be a non-starter.  There are investments needed to be made in new technologies and to enhance existing technologies, employees who will need training on new procedures and technologies, and sometimes entire new departments will need to be created, just to name a few.  These constraints can be overcome by demonstrating the value of digital transformation.  Developing an ROI can help prove the use case for digital transformation. In addition, taking on what may be considered a “quick win” of your overall digital transformation plan to prove the value can also build momentum and success for the entire effort.What are the key starting steps to Digital Transformation?Digital Transformation requires a culture that supports innovation and we understand getting started can seem daunting. Organizations should begin by laying out a communication plan that outlines the organization's goals, objectives for Digital Transformation, and states the plan that will facilitate and support this important organizational change.  The plan should also convey why it is important, what that change looks like and means to the organization and individuals involved, and that leadership is committed and invested in promoting and supporting the Digital Transformation initiative.How do I deal with internal resistance to Digital Transformation?Employees and even leadership will to some degree resist change.  This will especially be true if planning efforts are not established up front.  This is why having a change management plan is an important tool to have in place at the onset of any Digital Transformation initiative.  In our experience, a valid strategy within a change management plan is starting with a pilot area ripe for change. demonstrating early wins can be a catalyst for acceptance to change.   If you see internal resistance as a barrier to successful digital transformation, it may be beneficial to start with a pilot area in order to demonstrate value and wins to the organization.  This helps build the internal momentum needed to branch out to other areas of the business.What types of technologies are used in Digital Transformation?Digital Transformation can use a wide range of technologies with several different purposes.  These technologies are designed to be scalable, enable improved data reliability, increase productivity, provide timely reporting and data analysis, and support organizational improvement by further automating and supporting business processes.  Some examples of these technologies include:Artificial Intelligence/Machine LearningAutomation and WorkflowCompliance & SecurityData Management & IntegrationInfrastructure and CloudReporting, Planning, and Data AnalyticsWill Digital Transformation and technology replace my employees?No, the intention of Digital Transformation is to enable people across all functional areas to perform value-added tasks.  While technology may be able to replace redundant tasks, it is not meant to replace people. We believe technology is supplemental and supports what people will do for an organization because technology cannot replace a human’s ability to think creatively, critically, strategically, and collaboratively.What types of process changes should I expect through Digital Transformation?Processes across multiple business areas will benefit from optimized workstreams that utilize technology and workflow automation.  Examples of such changes include reduced manual steps, elimination of duplicate efforts, enhanced use of existing software capabilities, and better enforcement of controls and standard operating procedures.  Some of the business areas that benefit the most from digital transformation include:Financial Close, Reporting, Planning & AnalysisFixed AssetsHire to RetireInventory Planning & ManagementMarket to Order to CashPayrollProcure to PayTreasury ManagementWhat industries does Digital Transformation impact?Digital Transformation is affecting all industries, but how and to what degree it affects them differs from industry to industry. Here are some key factors that have bearing on that impact:The industry’s dependency on technology and the pace of those technological enhancements,What specific types of technology the industry uses to facilitate business processes, andThe magnitude of stakeholder dependency on technology, such as for customers, suppliers, and employees.What are some indicators that it is the right time to start Digital Transformation?The right time to start depends on a number of factors, but in general, the sooner the better.  Factors such as your organizational readiness, industry, market, finances, long-term strategy, compliance and government regulations may all come into play. Here are some common triggering events:Accelerated growth outpacing current finance and accounting abilities;Acquisitions or divestitures;Implementation of a new system or systems;Inefficiencies;Significant employee turnover;Multiple locations lacking standardization or alignment of best practices;Staffing or cost reduction initiatives;Untimely or inaccurate operational or financial information to make informed business decisions; andDesire to scale and be an industry leader.How long does Digital Transformation take?Every digital transformation project is unique and will require a plan specific to an organization’s goals and objectives.  That said, you should expect the effort to take time – many months and often longer.  In fact, in many ways digital transformation is more of an evolutionary process, rather than an individual project with a set start and end date.  There are often multiple projects within an overall digital transformation project that need to occur to achieve the overall objectives.  In addition, technology will always evolve, so organizations must evolve with it. This may require future digital transformation efforts to maintain that competitive edge achieved by your organization’s initial efforts. That said, you should think of the early stages of digital transformation as the most important because they establish the foundation on which your organization will achieve long-term success.How can I help my organization succeed with Digital Transformation?To be successful, an organization should be prepared to dedicate internal resources and seek external expertise.  Internally, leaders within IT, finance and accounting, operations, HR, and other areas should expect to manage teams that will participate in these efforts.  Leaders should also be prepared to culturally support the change that comes with digital transformation.  At the same time, seeking expertise from those that specialize in Digital Transformation, who can bring best practices and experience to your organization, and perform many of the tasks necessary that cannot be done by your resources due to availability or inability, will also be a key to successful digital transformation.Who are the stakeholders for Digital Transformation?Stakeholders are classified as either internal or external to the organization. Internally, stakeholders come from each of the areas that have some role or impact as a result of digital transformation. Examples include finance and accounting, IT, human resources, leadership teams, committees, and ownership. Externally, stakeholders include your customers, suppliers, shareholders, creditors, government and other outside relationships that will be impacted by this effort.How do we dedicate time to Digital Transformation while still managing our day-to-day responsibilities?When it comes to implementing digital transformation, the management team must strike the right balance with current business operations and other company initiatives.  That balance is different for each business, however, it begins by designing an approach to implementing digital transformation that prioritizes company resources (human, technological, and financial) around the expected organizational impact of digital transformation, while keeping a workable balance between existing responsibilities and other company initiatives.Is Your Organization Ready for Digital Transformation?Take our brief Digital Transformation Readiness Quiz to find out!How Can Schneider Downs Help?The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. Our solutions are built to identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis.For more information contact the team at contactsd@schneiderdowns.com or visit our Digital Transformation page at Digital Transformation.Digital Transformation ResourcesSchneider Downs Digital Transformation ArticlesSchneider Downs Digital Transformation FAQ GuideSchneider Downs Digital Transformation in Finance and AccountingSchneider Downs Digital Transformation Solutions OverviewSchneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital TransformationSchneider Downs Whitepaper: Navigating the Digital Transformation RoadmapAbout Schneider Downs Technology and Data ServicesSchneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an on-going mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. VIEW PDF VERSION PDF Version CONTACT US "*" indicates required fields NameCompanyEmail Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthCommentsThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Digital Transformation in Finance & Accounting Digital Transformation in Finance and Accounting PRIMARY CONTACTS: Patrick B. Armknecht CPA, CITPOur digital transformation solutions are applicable to all industries and business process areas, however, the areas of finance and accounting are a natural place to begin the digital transformation journey. These areas tend to own and manage much of the critical data used to make business decisions.Because of this, they are often expected to provide senior leadership, management, and other decision-makers across business units with real-time, accurate information used to drive those business decisions.All too often though, the finance and accounting functions are forced to compete with the demands of other business units also looking to fund and leverage data-driven technologies for their own set of problems.As a result, it becomes critical for finance and accounting professionals to become advocates for change, convey the value of finance and accounting digital transformation, and explain how that benefits other business units and process areas.  Without doing so, they risk falling behind on the digital transformation journey while other business units and even industry competitors get well underway.Many data-driven technologies can be strategically implemented to benefit both finance and accounting and other business units and functional areas as part of an organization’s digital transformation initiative. Here are just a few examples:Digital Transformation benefits both finance and accountingLeveraging data management solutions to integrate systems and consolidate data removes siloed information, improves the flow of data, increases data quality, reduces costs, and promotes standardization.  This benefits everyone, having the effect of improved cross-business unit communication, collaboration, data access, sharing and analysis.Robotic process automation (RPA) has cross-business unit benefits as well.  Through its ability to eliminate repetitive and time-consuming tasks, reduce human error, and work 24/7, RPA technologies, or “bots”, can free up personnel across all functional areas to perform value-added tasks that require a human to think creatively, critically, strategically, and collaboratively.Corporate Performance Management (CPM) solutions for comprehensive reporting, planning, and analytics can take advantage of the improved data management and automated processes by providing any business unit and process area with the data that matters to them.These are just a few examples of how once data-driven technologies like those listed above are implemented, finance and accounting professionals and other business units can collaborate to achieve common goals and objectives.  Furthermore, having these technologies supporting optimized business processes allows finance and accounting teams to act as a value-added resource to the business and ensures that these functions are able to properly scale and support the goals and strategy of an organization as they grow. Some of the end-to-end business process areas, and industries, and technologies we specialize in include:Business Processes:Financial CloseFinancial ReportingFinancial Planning & AnalysisTreasury ManagementMarket to OrderHire to RetireOrder to CashProcure to PayForecast to DeliveryPlan to InventoryFixed AssetsPayrollTechnologies:Reporting, Planning, & AnalyticsAutomation and WorkflowData Management & IntegrationArtificial Intelligence/Machine LearningInfrastructure and CloudCompliance & SecurityIs Your Organization Ready for Digital Transformation?Take our brief Digital Transformation Readiness Quiz to find out!Digital Transformation ResourcesSchneider Downs Digital Transformation ArticlesSchneider Downs Digital Transformation FAQ GuideSchneider Downs Digital Transformation in Finance and AccountingSchneider Downs Digital Transformation Solutions OverviewSchneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital TransformationSchneider Downs Whitepaper: Navigating the Digital Transformation RoadmapAbout Schneider Downs Digital Transformation SolutionsOur solutions identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. Through our cross-functional team of risk and technology professionals, we provide insights and assistance in improving the foundational business processes of an organization, and identify and implement technology to further automate and support critical business processes.For more information contact the team at contactsd@schneiderdowns.com or visit our Digital Transformation page at www.schneiderdowns.com/digital-transformation.  Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Contact We want to hear from you. "*" indicates required fields First Name* Last Name* Company/Organization* Email* Phone NumberComment/Question How would you like us to contact you? * Email Phone How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit ### Resources Cybersecurity Resources Take advantage of our resources, including case studies, news and expert thought leadership, to stay apprised of current cybersecurity trends. To view the entire Our Thoughts On cybersecurity blog catalog visit our archive. Category All Case Studies Quick References White Papers Videos Service Overviews Our Thoughts On Events Events Webinar: How to Secure Student Records and Comply with GLBA Quick References Article - Security Info Watch - Lincoln College Closure a Testament to the Threat Posed by Ransomware David Murphy discusses the importance of having a good disaster recovery plan and the investment in vulnerability management tools in an article with Security Info Watch regarding Lincoln College closure. Quick References Article – Financial Planning –Remain on Alert for Russian Financial Cyber Attacks David Murphy provides insight to Financial Planning about the importance of basic cybersecurity practices. Quick References Article - DOE Significantly Expands Definition of Third-Party Servicer in New Guidance to Higher Education Institutions Learn more about the Department of Education recently expanding the definition of Third-Party Servicer in relation to the Title IV of the Higher Education Act of 1965. Videos Big Thinking, Personal Focus: Cybersecurity Learn how big thinking and personal focus drive client success. Service Overviews IT Risk Advisory Overview Quick References Guide - CMMC Frequently Asked Questions Learn more about frequently asked questions from authorized resources and professionals regarding cybersecurity Maturity Model Certification (CMMC) engagements. Events Webinar: How to Recover from a Cyberattack, presented by the Chronicle of Higher Education White Papers Securing a Remote Workforce Learn about best practices to secure a remote workforce including critical infrastructure considerations, cyber incident preparation and themed attack mitigation. Quick References Guide - CMMC Preparation Checklist Be better prepared with your Cybersecurity Maturity Model Certification (CMMC) engagement using our preparation checklist. Service Overviews Purple Team Assessment Overview Quick References Article - Tech Republic - Security alert: Use these most popular passwords at your peril Cybersecurity Shareholder Carl Kriebel discusses how to strengthen password security with Tech Republic. White Papers Staying Secure From Home Learn about the best practices organizations and individuals can take to mitigate risks in an increasingly remote world. Quick References Guide - Key Changes in PCI DSS V4.0 Learn about key changes in the Payment Card Industry Data Security Standard v4.0. Quick References Article – Pittsburgh Business Times Cyber-Breached Panel Quick References Article - Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Learn about the most important considerations to make when working with third-party IT auditors for IT security. Quick References Guide - 7 Best Practices to Keep Your Home Network Safe Learn how to layer and maintain defensive security measures to protect your assets from digital intruders. Quick References Infographic - Types of Personal Data Learn about the different types of personal data targeted by cybercriminals. Quick References Article – Cybersecurity Dive – Banks Face 'Tight Deadline' Under New Cyber Notification Rule David Murphy discusses the FDIC’s Computer-Security Incident Notification Final Rule with Cybersecurity Dive. Events Webinar: Managing Cloud Vendor Risks Service Overviews Penetration Testing Overview Quick References Infographic – Top Ten Data Privacy Trends of 2021 Learn why data continues to be one of the most valued and targeted resources held by organizations and what are our suggestions are to protecting it. Quick References Guide - 10 Must Ask Cybersecurity and Information Security Questions Quick References Infographic – The Most Common Passwords of 2022 View the top ten most commonly used passwords of 2022. Quick References Article – Directors & Boards – Boards and Management Must Work Together to Strengthen Cybersecurity Schneider Downs' Carl Kriebel discusses the importance of management and boards closing communication gaps to strengthen cybersecurity. Quick References Article – WAND – Ransomware, Pandemic Brought Down Lincoln College Events Webinar: Cyber Insurance: 2022 and Beyond Our Thoughts On A First of Its Kind: The $25 Million Deepfake Scam Learn how scammers used a deepfake attack to steal more than $25 million from a multinational firm. White Papers 10 Things Companies Wish They Did Before a Breach Learn about ten key preventive measures companies have overlooked prior to a breach. Case Studies Global Manufacturer Operations Halted By Ransomware Attack Quick References Article – Pittsburgh Business Times – Remote Workforce Security Tips Quick References Article - The IT Nerd - Cyber Thieves Can Wreak Holiday Havoc: How to Avoid these Scams Cybersecurity Shareholder Carl Kriebel discusses three of the most common scams targeting online holiday shoppers this year with The IT Nerd. Quick References Article – CSO Online – What is Your Biggest Insider Threat? David Murphy shares his insights with CSO Online on some of the most problematic insider threats and minimizing their risk. Quick References Guide – Understanding the Security and Privacy Concerns of TikTok Learn what data TikTok users share, with whom that information is being shared and why the platform is considered by many as a security risk. White Papers Top Ten Data Privacy Trends for 2021 Learn what the Top Ten Data Privacy Trends of 2021 are and what you should be doing to prepare. Case Studies Case Study: Company Impacted by Six-Figure Ransomware Attack Quick References Article - How Third Party Risk Management Caters to Your Organization Learn more about what your third-party risk management team does every day to keep your organization safe. Quick References InfoSec Policy Templates Quick References Guide - COVID-19 Fraud Risks Videos Chronicles of a Penetration Tester Lead Cybersecurity Strategist Stephen Bish shares his adventures as a penetration tester. Events Webinar: 10 Vulnerabilities Hackers Love to Exploit White Papers 10 Most Common Physical Cybersecurity Threats Learn about some of the top physical cybersecurity threats facing organizations and best practices for mitigating physical security risks. Quick References Infographic – 10 Steps Contractors Can Take to Reduce Cyber Attacks Learn ten key steps contractors can take to strengthen their cybersecurity defenses. Our Thoughts On Fortifying Retail Security: Essential Cybersecurity Tools and Software Explore essential cybersecurity tools and software that are indispensable for securing the retail industry Quick References Guide – Compliance and Third Party Risk Management Quick References Article - Pittsburgh Post Gazette - Ask Me About... How the Shutdown of a Small College Brings Home the Danger of Ransomware David Murphy speaks with the Pittsburgh Post-Gazette regarding the recent ransomware attack that shut down Lincoln College. Videos Top Cybersecurity Questions of 2021 Join the Schneider Downs Cybersecurity team as they answer some of the most common questions they have faced in the field from 2021. Quick References Infographic - Top Disguises Used to Breach the Office Service Overviews Third Party Risk Management Services Overview Service Overviews CMMC Service Overview Our Thoughts On Tis the Season: Unwrapping the Top Holiday Scams of 2023 Learn about some of the top online scams circulating this holiday season. White Papers Top Ten Cybersecurity Strategy Mistakes of 2021 Learn about the top cybersecurity strategy mistakes organizations our team has witnessed first-hand and best practices to avoid these common pitfalls. Service Overviews Cybersecurity Services Overview Service Overviews Ransomware Security Overview Service Overviews PCI DSS Service Overview Our Thoughts On Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Explore some of the key takeaways from the 2023 ISACA Pittsburgh Information Security Awareness Day conference. Videos Cybersecurity Tips from Home Series Quick References Article – CNN – US Warns Businesses to Prepare for Russian Cyberattacks. Here's How They Can Do That Schneider Downs' David Murphy discusses cyber insurance and potential Russian cyberattacks. Our Thoughts On Defend Your Dollars and Data: How to Avoid IRS Impersonation Scams Learn more about how to identify and avoid IRS impersonation scams this tax season. Quick References Guide - Automotive Dealerships and the FTC Safeguards Rule Learn about the new compliance requirements outlined by the updated Federal Trade Commission Safeguards Rule for automotive dealerships. Events Webinar: Inside Web Application Penetration Testing Case Studies Employees’ Passwords Compromise Cybersecurity Defenses Videos Why IT compliance strengthens and protects your business Manager of Risk Advisory Services, Timothy Wolfgang, joins the PGH Networks to discuss why IT compliance strengthens and protects your business. Quick References Article – Schneider Downs Named PTC Tech 50 Cybersecurity Innovator of the Year Quick References Article - The Top Ten Most Common SOC 2 Exceptions Learn about the most common SOC 2 exceptions the Schneider Downs team have encountered. White Papers Benefits of a Purple Team Assessment Learn more about the benefits of extending your basic penetration testing using Purple Team assessments to help you improve the organization’s alerting and detection posture. Quick References Article – HowStuffWorks – Have You Been Zoom Bombed? Our Thoughts On 10 Cybersecurity New Year's Resolutions for 2024 Strengthen your cybersecurity defenses in 2024 with these ten tips from the Schneider Downs cybersecurity team. Videos Top Cybersecurity Questions of 2022 The Schneider Downs Cybersecurity team shares some of the top questions they have faced from clients in 2022. Quick References Article – WAND – Ransomware, Pandemic Brought Down Lincoln College Sean Thomas discusses the role a ransomware attack played in the permanent closure of Lincoln College. Quick References Infographic – Avoiding COVID-19 Scams Quick References Article – VentureBeat – Why the U.S. Can Engage Russia on Cyber Over Ukraine Schneider Downs' David Murphy provides insight on how the issues in Ukraine create implications in US/Russian relations. Quick References Article - Proposed Interagency Guidance on Third-Party Risk Management Learn about the new jointly proposed guidance on Third Party Risk Management from the OCC, FDIC and Board of Governors of the Federal Reserve System. Quick References Article – Pittsburgh Business Times – Carl Kriebel Joins Schneider Downs Carl Kriebel joined Schneider Downs & Co. Inc. as a shareholder and is based at its downtown headquarters. Our Thoughts On Squish the Quish – Stop and Think Before You Access a QR Code Learn more about QR code phishing attacks and how to protect yourself from this rising threat. White Papers Maximizing the Value of Penetration Testing Learn about penetration testing including our methodologies, and best practices to help your organization maximize the value of this assessment tool. Quick References Article – S&P Global – Small Banks Could Face Challenges With 36-Hour Cyber Reporting Rule David Murphy discusses why smaller banks may struggle with the FDIC 26-hour cyber reporting rule. Service Overviews Digital Forensics & Incident Response Overview Quick References Article - Government Technology - Cyber Analyst Q&A: Security Lessons from Lincoln College David Murphy discusses cyber attack vulnerabilities and what colleges can do to mitigate them. Our Thoughts On Ensuring Network Security in the Retail Industry: A Crucial Imperative Learn more about the need for robust network security in the retail industry and discover effective strategies for enhancing it. Quick References Article - Shared Assessment SIG Questionnaire – What’s New for 2023? Learn about some of the key changes to the Shared Assessments 2023 Standardized Information Gathering (SIG) Questionnaire. Quick References Article – Search Security – Cyber Insurance Premiums Skyrocket Schneider Downs' Stephen Bish discusses Cyber insurance premiums with TechTarget, as costs skyrocket due to attacks surge. White Papers 10 Vulnerabilities Hackers Love to Exploit Get inside the mind of a hacker to learn about underlying circumstances leading to breaches and best practices to mitigate these risks. Quick References Guide – Qualifying for Cyber Insurance in 2022 Learn about key requirements and considerations to qualify for cyber insurance. Our Thoughts On Comcast Xfinity Breach Impacts Nearly 36 Million Customers Learn more about the Comcast Xfinity breach that exposed login credentials of 35.8 million customers. Quick References Article - WTAE-TV ABC 4 - How to protect yourself from online shopping scams Cybersecurity Shareholder Carl Kriebel sits down with WTAE-ABC Pittsburgh to discuss some of the most popular scams targeting holiday shoppers and how to avoid them. Events Webinar: Benefits of a Purple Team Assessment White Papers Cybersecurity Maturity Model Certification (CMMC) Guide Learn about CMMC, including a deep-dive into the certificate framework, the certification process, potential costs and best practices for preparing your organization.   ### Cybersecurity Meet Our Team Meet Our TeamSchneider Downs' seasoned team of network security and application configuration specialists, implementation consultants and certified information system auditors bring a breadth and depth of expertise in helping organizations to defend themselves in a sophisticated climate of cyber-attacks. Carl Kriebel CISSP Shareholder Learn More > Eric Wright CPA, CITP Shareholder Learn More > Eric Fair CISA, CDPSE, CBCLA Shareholder Learn More > William Deller Shareholder Learn More > Joe Vandermark Shareholder CYBERSECURITY CONSULTING Clay A. Penrose Cybersecurity Technical Services David B. Murphy Cybersecurity Technical Services Haley Waring Cybersecurity Technical Services Roger Spears Cybersecurity Technical Services Stephen Bish Cybersecurity Technical Services Taylor McCullough Cybersecurity Technical Services Tyler Yoder Cybersecurity Technical Services IT RISK ADVISORY SERVICES Anna Young IT Risk Advisory Services Andrew H. Jackson IT Risk Advisory Services Ben Stock IT Risk Advisory Services Breanna Hentosz IT Risk Advisory Services Chloe (Vaught) Burnfin IT Risk Advisory Services Christian Claus IT Risk Advisory Services Colby Porterfield IT Risk Advisory Services Danny White IT Risk Advisory Services David J. Snyder IT Risk Advisory Services Donald Eckrod III IT Risk Advisory Services Frank E. Dezort III IT Risk Advisory Services Han Jumashov IT Risk Advisory Services Jacob D. Katz IT Risk Advisory Services James Preamble IT Risk Advisory Services Jessica A. Chin IT Risk Advisory Services Karl Bixler IT Risk Advisory Services Lizzie Sklodowski IT Risk Advisory Services Mark Riley, CISA IT Risk Advisory Services Michael Sinkevich IT Risk Advisory Services Mike Lorditch IT Risk Advisory Services Nathan Shepler IT Risk Advisory Services Nicholas Deluca IT Risk Advisory Services Patrick M. Kelly IT Risk Advisory Services Sean P. Fogarty IT Risk Advisory Services Timothy M. Wolfgang IT Risk Advisory Services Trudie Kozar IT Risk Advisory Services ### Sophos Sophos Intercept X delivers maximum end-to-end endpoint protection solutions to safeguard organizations of all sizes. Sophos Intercept X delivers unmatched protection against unknown malware, exploits and ransomware by combining cutting-edge technologies like deep learning and endpoint detection and response. End-to-End Endpoint Protection Rather than simply relying on one primary security procedure, Sophos Intercept X employs a comprehensive defense-in-depth approach to endpoint protection and combines leading foundational and modern techniques. Intercept X integrates the industry’s top-rated malware detection and exploit protection with built-in endpoint detection and response (EDR). Harness the power of a deep-learning neural network The artificial intelligence built into the Intercept X deep-learning neural network, an advanced form of machine learning that detects both known and unknown malware without relying on signatures, drives threat prevention to new levels. Deep learning makes Intercept X smarter, more scalable and higher-performing than endpoint security solutions that use traditional machine learning or signature-based detection alone. Exploit Prevention Intercept X denies attackers by blocking the exploits and techniques used to distribute malware, steal credentials and escape detection. This allows Sophos to ward off evasive hackers and zero-day attacks in your network. START WITH THE STRONGEST PROTECTION: Consolidate protection and EDR into a single solution ADD EXPERTISE, NOT HEADCOUNT: Built-in machine learning and threat intelligence from SophosLabs GUIDED INCIDENT RESPONSE: Understand your security posture and respond with a simple click With Intercept X Advanced with EDR, you can now understand the scope and impact of security incidents, detect attacks that may have gone unnoticed, analyze files to determine if they are a threat, and confidently report on your organization’s security posture at any given moment. Malware Cleanup While most virus cleaners simply remove offending malware files, Sophos Clean provides forensic-level remediation by eradicating malicious code, as well as eliminating nasty registry key changes created by malware. Synchronized Security Synchronized Security simplifies and unifies defenses with real-time intelligence sharing between your endpoints and firewall. You get better protection against advanced threats and spend less time responding to incidents. Automatically isolate infected computers Instantly clean up malware 100% visibility of all apps on your network Schneider Downs can help with your implementation of Sophos. CONTACT US About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Redlure A customizable and scalable phishing assessment platform built by red teamers for red teamers. Redlure is an open-source phishing platform from Schneider Downs designed to be a feature-rich solution for red teamers and penetration testers. The application uses a distributed model that grants one interface access to multiple campaigns running on different servers and domains simultaneously. It provides a robust campaign creation platform with custom email templates, linked landing pages and payload integration to emulate real-world scenarios. If you are interested in Redlure, please contact us for more information. Please note this is currently in Alpha testing. Schneider Downs Redlure Demo https://vimeo.com/444310257/fd5a0e7b5b How Redlure Works Features and Benefits Encryption Redlure encrypts sensitive information stored in its database, like SMTP passwords and user-submitted form data. Scalability Add as many Redlure workers as your organization or team needs. Central Interface Manage multiple phishing servers, generate LetsEncrypt certificates and switch domains from a single interface. Chain Landing Pages Link pages to emulate user login experiences for common sites, including email access and cloud or company portals. Payload Phishing Easily integrate payloads with campaigns to track downloads. Sortable Workspace Organize campaigns, templates and results by client or engagement. Sample Campaign Ready to get started? Contact our team for more information. ### Mimecast Mimecast cyber resilience provides email cloud services for security, archiving, and continuity. Protect your email system without compromise. Cybersecurity researchers attribute 9 out of every 10 security breaches to some form of human error. More than three quarters of those errors are traced back to phishing. Each crime stemming from one of these breaches is the product of an uneven playing field between attackers who launch increasingly sophisticated phishing campaigns and employees who lack the proper software solutions to help them make safe decisions. Mimecast Email Security and Awareness Training solutions take that advantage away from cyber criminals. Email Security Mimecast is a cloud-based secure email gateway. It gives organizations t the advantages of shared analytics to identify evolving threats and the simplicity of a single management console, while using a multi-tenant infrastructure to maintain segregation of organizational data. The platform offers four key functions as part of its Targeted Threat Protection component: URL Protect rewrites links found in inbound email and performs real-time scanning every time an employee attempts to navigate to the linked website. Attachment Protect performs a multi-stage scan of incoming attachments, looking at signatures, static analysis, and sandbox behavior. Impersonation Protect analyzes received email to identify potential business email compromise and impersonation attacks, which imitate trusted senders. Internal Email Protect limits the spread of email-based attacks by extending Mimecast’s analytics to internal and outbound email. In addition to Targeted Threat Protection, Mimecast offers Data Leak Protection & Content Control to reduce the likelihood of loss of intellectual property, customer data, or other sensitive information through email. Expanded email security features include Mailbox Continuity, Sync & Recover, Large File Send, and Secure Messaging, which can be added to any Mimecast subscription. Awareness Training Behind even the best security defenses are employees who need to understand how to make decisions that keep the organization safe. Computer-based awareness training has traditionally been boring, limited in scope, or cost-prohibitive for small and medium-sized businesses. Mimecast Awareness Training uses short, engaging lessons laced with humor to keep employees abreast of real techniques used by attackers. The platform reinforces positive security behaviors and helps identify employees most in need of direct follow-up. Schneider Downs can help with your implementation of Mimecast or answer your questions about Mimecast technical features and employee awareness training. Schneider Downs can help with your implementation of mimecast. CONTACT US About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Guardicore The Guardicore Centra Security Platform is the simplest and most effective way to visualize and secure your datacenter, cloud or hybrid cloud infrastructure. The Guardicore Centra Security Platform makes visualizing and securing on-premises and cloud workloads fast and simple. It creates human-readable views of your complete infrastructure from the datacenter to the cloud, with fast and intuitive workflows for segmentation policy creation. The platform helps you: REDUCE COMPLEXITY: The infrastructure-agnostic approach works consistently across any environment, platform or operating system. REDUCE RISK: Granular segmentation policies prevent lateral movement within your datacenter and cloud environments. INNOVATE FASTER: Integrating security into DevOps and IT automation workflows without creating obstacles or requiring application changes. Guardicore Centra Features and Benefits VISIBILITY: Automatically discovers applications and flows, including process-to-process communications, and creates contextual maps that make understanding activity and creating policies simple. APPLICATION DEPENDENCY MAPPING: Correlates network- and process-level activity and shows you how applications communicate with and depend on other IT resources. SEGMENTATION POLICIES: Easily creates granular segmentation policies that work seamlessly across any platform, operating system or environment. THREAT DETECTION & RESPONSE: Combines policy-based detection, reputation analysis and dynamic deception techniques to quickly detect threats and provide actionable intelligence. FILE INTEGRITY MONITORING: Baselines your sensitive files using cryptographic checksums and detects changes that indicate possible tampering or misconfiguration. Schneider Downs can help with your implementation of Guardicore. CONTACT US About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Carbon Black Carbon Black and the CB Predictive Security Cloud are transforming endpoint security, supporting a number of services that deliver next generation endpoint protection and operations with big data and analytics. Carbon Black CB Defense Antivirus (AV) has been accepted as part of any strong cybersecurity regimen since the early days of endpoint computing. But if your organization has taken a set it and forget it's approach to AV, you could be at much greater risk for malware infection than you know. The industry-leading CB Defense from Carbon Black replaces legacy AV solutions with its next-generation antivirus (NGAV) and endpoint detection and response (EDR) functionalities. Next-Generation Antivirus (NGAV) Traditional AV protection relies on unique file signatures, essentially just comparing each executable, attachment and web download to a list of known malware. Attackers have found that they can easily sidestep this type of solution by obfuscating their malicious code or by deploying fileless malware via Windows PowerShell or VBScript embedded in Office documents. These approaches either result in a new signature that the antivirus protection does not recognize as malicious or avoid antivirus scanning entirely by hiding in the endpoint runtime memory, or RAM. CB Defense scans not only the files and executables on an endpoint, but also monitors for suspicious activity such as commands and scripts commonly used to launch an attack. By leveraging the CB Predictive Security Cloud, CB Defense can detect not only the same known attacks as traditional AV, but also unknown attacks that bypass signature-based filters. Endpoint Detection and Response (EDR) Visibility into the events occurring on endpoint devices has historically been achieved via a combination of desktop-based agents and network-level monitoring. This approach can leave unseen gaps in coverage that allow attackers to penetrate an internal network undetected. Further, network-based monitoring tools offer no insight into or control over endpoints residing outside of the organizational network, such as [list common endpoints here]. These vulnerable endpoints are a growing blind spot for companies with a mobile workforce. CB Defense offers unprecedented insight into activity occurring on endpoint devices. Managed from a single, cloud-based console, CB Defense requires no on-premises infrastructure and gathers event data from endpoints even outside of the traditional local area network (LAN). With the ability to see and respond to suspicious activity wherever it happens, security and IT operations teams can remediate potential security issues more quickly than ever before. Schneider Downs can help with your implementation of Carbon Black CB Defense. CONTACT US About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Cybersecurity Resources   Resource Library Our Thoughts On View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Products Products Schneider Downs' seasoned professionals can work with your team to ensure the cybersecurity products you have in place reflect the needs of your organization. We can also make expert recommendations about products and vendor security services. Carbon Black and the CB Predictive Security Cloud are transforming endpoint security, supporting a number of services that deliver next generation endpoint protection and operations with big data and analytics. Guardicore provides cloud workload protection preventing the spread of breaches inside data center and cloud environments. Mimecast cyber resilience provides email cloud services for security, archiving, and continuity. Protect your email system without compromise. Redlure is an open-source phishing platform from Schneider Downs designed to be a feature-rich solution for red teamers and penetration testers. Sophos Intercept X delivers maximum end-to-end endpoint protection solutions to safeguard organizations of all sizes. View our additional Cybersecurity services and capabilities Learn More Contact us ### IT Risk Advisory IT Risk Advisory Evaluate risk management practices, internal control systems, and compliance with regulations and corporate policies. Contact Us Today Disaster Recovery/Business Continuity Planning and Table Top Exercises Learn More > Cybersecurity Maturity Model Certification Learn More > Data Privacy Services Learn More > FFIEC IT Compliance Assessment Learn More > GDPR Compliance Learn More > HIPAA Compliance Assessment Learn More > HITRUST Learn More > Information Technology Audit Learn More > InfoSec Policy Templates Learn More > IRS Publication 1075 Learn More > ISO 27001 Compliance Assessment Learn More > IT General Controls Audit Learn More > Network Device Security Configuration Assessment Learn More > IT Risk Assessment Services Learn More > Payment Card Industry (PCI) Data Security Standard Compliance(DSS) Learn More > The National Institute of Standards and Technology (NIST) Learn More > SAP Audits and Controls Learn More > SOC Practice Overview Learn More > Third-Party Risk Management Learn More > Sarbanes-Oxley Compliance Audits Learn More > Primary Contact: Eric M. Wright CPA, CITP A well-planned, properly structured information technology (IT) audit program is essential to evaluate risk management practices, internal control systems, and compliance with regulations and corporate policies. Our IT Risk Advisory practice helps ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. We recognize that this is often difficult to perform internally as organizations must plan, manage and monitor rapidly changing technologies to enable it to deliver and support new products, services, and delivery channels to remain competitive in their marketplace. However, this rate of change, and the resulting increased reliance on technology, makes the inclusion of IT audit coverage essential to an effective organization. Schneider Downs’ IT Risk Advisory professionals help organizations gain valuable insights into their processes and technologies. Our dedicated IT Risk Advisory professionals have experience working with a wide variety of industries and companies of all sizes. We will partner with you to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies. IT Risk Advisory Services Overview View our additional IT Risk Advisory services and capabilities LEARN MORE CONTACT US ### Additional Cybersecurity Services Cybersecurity Services Contact Us Today Amazon Web Services Security Assessment Learn More Cyber Speaker Series Learn More Digital Forensics & Incident Response Learn More Enterprise Information Security Program Review & Consultation Learn More External Footprint Analysis Learn More Firewall Configuration Review Learn More Forensic Analysis Learn More Incident Response Plan Development, Testing, & Training Learn More Indicator of Compromise Assessment Learn More Information Security Program Maturity Assessments Learn More Intrusion Prevention / Detection Review Learn More Network Device Security Configuration Assessment Learn More Penetration Testing Learn More Phishing Simulation Exercises Learn More Purple Team Assessments Learn More Ransomware Security Service Learn More Recovery & Remediation Learn More Vulnerability Assessment Learn More Web Application Penetration Testing Learn More PRIMARY CONTACT: Carl N. Kriebel CISSPThreats to your IT environment can come from virtually anywhere at any time. Anticipating risk means thinking like those who would benefit from your vulnerability and protecting you with a comprehensive approach to cybersecurity.Cybersecurity Services Overview View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Ask a Question Ask a Question "*" indicates required fields First Name* Last Name* Company/Organization* Email* Phone NumberComment/Question CommentsThis field is for validation purposes and should be left unchanged. Submit ### Schneider Downs Subscriptions Schneider Downs Subscriptions Receive Expert Insights from Schneider Downs. Manage subscription preferences Follow Us and Join the Conversation Facebook X-twitter Linkedin Youtube ### Schneider Downs Wealth Management Advisors Announces Plans for Leadership Transition Schneider Downs Wealth Management Advisors Announces Plans for Leadership TransitionDerek J. Eichelberger to serve as Chief Executive Officer for $2.3 Billion AUM PracticePITTSBURGH – Schneider Downs Wealth Management Advisors (SDWMA), a Registered Investment Advisory (RIA) firm celebrating its 20th anniversary this year, announced that Derek J. Eichelberger, CFA, CFP®, AIFA®, MBA will assume the role of Chief Executive Officer (CEO) effective October 1. Mr. Eichelberger joined SDWMA in 2015 and has most recently served as Managing Partner of the wealth management firm.  He is also a shareholder at Schneider Downs & Co., Inc.Mr. Eichelberger has more than 25 years of experience in the financial services industry, and he has a lengthy history of advising high net worth individuals, foundations, endowments and retirement plans. He is a valued mentor to advisors and staff on the team, and he also serves on the Operating Committee for Schneider Downs & Co., the parent company of the wealth management practice.Mr. Eichelberger will transition into the role, replacing current CEO Nancy L. Skeans, CPA, CFP® MBA. Ms. Skeans, also celebrating her 20th anniversary at SDWMA, will remain in a leadership role with the practice, focusing primarily on serving existing clients, as well as mentoring SDWMA’s growing team of wealth advisors. She also will remain as the practice’s Chief Compliance Officer (CCO).With 26 full-time team members across two offices, Pittsburgh and Columbus, SDWMA is currently managing over $2.3 billion in assets. The firm provides personal investment management, financial planning and qualified retirement services for individuals and companies across the country. In the June 2023 issue of Accounting Today, SDWMA was ranked 21st of 150 “Top Firms by Assets Under Management.” These top 150 firms are wealth advisory firms associated with a CPA firm and are ranked by AUM as of 12/31/2022.“Leadership transitions are a natural component of successful companies,” explained Skeans. “Our team has grown considerably over the last several years, adding three new Wealth Management partners and many talented employees.  Under Derek’s leadership, and with a strong team in place, I know that we are well-positioned to continue our high client service standards and our sustained pattern of growth.” “Nancy is a wonderful friend and confidant, and has been for many years,” said Mr. Eichelberger. “She was absolutely the catalyst in my joining Schneider Downs Wealth Management Advisors, so it’s a special honor to become CEO in succession to her accomplishments. Our playbook is clear – we’ll continue with the same vision, management and service principles that we’ve held for 20 years.” Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### simpLEASE Contact simpLEASE Accounting Lease Accounting Software Built by Accountants for AccountantssimpLEASE FAQsCapabilities Contact Us Interested about simpLEASE or scheduling a demo? Lets talk "*" indicates required fields First Name* Last Name* Company/Organization* Email* Phone NumberComment/Question How would you like us to contact you? * Email Phone How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthNameThis field is for validation purposes and should be left unchanged. Submit About simpLEASENearly every company or organization utilizes lease contracts as part of its day-to-day operations. (ASC) 842 will dramatically alter how companies identify leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process.simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations.  Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. ... Read Case Study Solved By Trevor Warren Schneider Downs shareholder since 2001 Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. ... Read Case Study OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261).The climate-focused legislation… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > Think Before You Click: Fake Browser Updates are Back in Style Why are malware-laced fake browser updates having a moment in 2023?The adage “what’s old is new again,” is certainly true in the cyber… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible2. Ask Us ### simpLEASE Accounting FAQ simpLEASE Accounting FAQ Lease Accounting Software Built by Accountants for Accountants Nearly every company or organization utilizes lease contracts as part of its day-to-day operations. (ASC) 842 will dramatically alter how companies identify leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process.simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations.  Lease Accounting FAQs Why was simpLEASE created? On February 25, 2016, the Financial Accounting Standards Board (FASB) finalized the standards update related to accounting for leases, ASU 2016-02. The primary goal of ASU 2016-02 is to improve transparency surrounding financial reporting and leased assets. As with most changes to rules like these, there are a number of details that need attention or else issues could arise. Each company is different. Every lease is unique. It became apparent that there was a need for a resource that could simplify the process of identifying how each lease should be classified under the new guidance. Similarly, it also became apparent that this tool should be built on the knowledge of accountants. By integrating the insights of Schneider Downs’ accounting experts with the programming experience of its Technology Advisors team, simpLEASE delivers an easy-to-use software tool to address the challenges presented by the new lease accounting standard. How does simpLEASE work? simpLEASE is a web-based application that uses a series of easy-to-navigate wizards to assist in classifying leases and analyze how they should be accounted for under the new standard. The program provides intuitive prompts to guide the user through the process, whether reviewing 10 leases or 100. The program is built upon SD inSITE, a web-based application developed by Schneider Downs that’s compatible with most any accounting system. Do all leases go on the balance sheet under the new lease accounting standard? With the implementation of the new lease accounting standards, substantially all leases will now go on the balance sheet. This includes both operating and finance (previously referred to as capital) leases. There are, however, certain leases that will be scoped out or may be exempt. Some of these exclusions are leases for inventory, assets under construction, intangible assets or biological assets. There is also an accounting policy election to exclude those leases that have a term of fewer than 12 months and no purchase options, or a renewal period that is reasonably certain to be exercised. Does the new lease accounting standard require me to change how I account for existing leases? Yes, the new lease accounting standards will significantly change how existing leases are accounted for today. There is no grandfathering of previous leases. Upon implementation of the new standards, all leasing arrangements will have to be accounted for under the new guidance. Under the new guidance, what is an operating lease? Under the new lease accounting guidance, from the perspective of a lessee, an operating lease will be anyone that does not meet the definition of a finance lease (see definition of finance lease below). Under the new guidance, what is a finance lease? Under the new lease accounting guidance, from the perspective of a lessee, a finance lease (previously referred to as a capital lease) is one that meets one or more of the criteria below:The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.The lease term is for the major part of the remaining economic life of the underlying asset.The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When does my company need to implement the new lease accounting guidance?  Public business entities are required to adopt ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e. calendar year 2019), and non-public business entities the following year (i.e. calendar year 2020).  However, the amendments are required to be presented retrospectively to all periods presented in a company’s financial statements, so a company presenting two years of financial information will need to implement the new rules under ASU 2016-02 the year prior to the effective date. I am a small business owner (privately held company) that leases office equipment. Do I need to be concerned with changes in lease accounting? Yes, the scope of ASU 2016-02 does not provide an accounting alternative for privately held companies. I generally only lease equipment for less than 12 months. Does the new lease accounting guidance impact me in any way? A lessee is permitted to adopt an accounting policy by asset class to not recognize lease assets and lease liabilities for leases with terms of 12 months or less, including any renewal periods that are reasonably certain to be exercised.  Leases with initial terms of less than 12 months and have renewal periods that are reasonably certain to be exercised, are required to be accounted for under ASU 2016-02. My company leases land for the exploration of natural resources (e.g. oil and natural gas). Are we impacted by the new lease accounting standard? Certain leases are excluded from the scope of ASU 2016-02, including those initiated to explore for or use minerals, oil, natural gas and similar non-regenerative resources.  These types of leases will continue to be accounted for under Topic 930 Extractive Activities-Mining and 932 Extractive Activities-Oil and Gas.  Leases of intangible assets, biological assets and assets under construction are also excluded from the scope of ASU 2016-02. Does the new lease accounting standard impact real estate leases? Yes.  There is very little that is scoped out of the new lease accounting standards. Leases involving property/buildings, property improvements and real estate are all covered under the new standards. Will the lease accounting changes impact my bottom line? We anticipate very little, if any, impact on the bottom line / net income as a result of the accounting changes. However, we do anticipate there could be additional costs associated with preparing for the implementation by organizations that have significant leases. Those costs could include, but not be limited to additional internal staffing / resources and lease accounting software, as well as outside consultants to assist with the implementation. Will the lease accounting changes impact my taxes? We don’t anticipate an effect on net taxes. Is my data safe in simpLEASE Accounting (simpLEASE)? Yes, all your data is encrypted from the moment it’s entered into the system (this includes uploaded documents). Can work be distributed among users using simpLEASE? Yes, simpLEASE has a built-in workflow that allows users to enter lease data, which is then reviewed and approved before it is sent to your accounting system.  Multiple users can be entering and reviewing leases simultaneously. Can simpLEASE interface with my current accounting system? Yes, simpLEASE can provide data in a wide array of formats for easy import into most accounting systems.  simpLEASE can also capture data electronically from your accounting system that can be used for validation and exporting. Can simpLEASE help me track my leases in any way? In addition to storing active lease specifications based on the new accounting standards, simpLEASE can track a wide variety of details about each lease.  With an unlimited number of user-defined fields, you can track each lease and associated relevant data.  Payments, estimated taxes and due dates can be tracked for each lease.  Can I store lease agreements and other documents associated with the lease in the system? Yes, simpLEASE allows for an unlimited number of uploaded documents for each lease.  The system has a definable data retention period that can automatically purge data as per your document retention policy. Can I use simpLEASE to ensure there are internal controls over lease accounting? Yes, simpLEASE can help you ensure that your leases are accounted for in accordance with the guidance. Where is my data housed in simpLEASE, and is there a SOC report available? Data is housed at a third-party service organization’s data center, which does have a SOC report covering controls.  Additionally, there is a SOC report covering the simpLEASE application. On February 25, 2016, the Financial Accounting Standards Board (FASB) finalized the standards update related to accounting for leases, ASU 2016-02. The primary goal of ASU 2016-02 is to improve transparency surrounding financial reporting and leased assets. As with most changes to rules like these, there are a number of details that need attention or else issues could arise. Each company is different. Every lease is unique. It became apparent that there was a need for a resource that could simplify the process of identifying how each lease should be classified under the new guidance. Similarly, it also became apparent that this tool should be built on the knowledge of accountants. By integrating the insights of Schneider Downs’ accounting experts with the programming experience of its Technology Advisors team, simpLEASE delivers an easy-to-use software tool to address the challenges presented by the new lease accounting standard.simpLEASE is a web-based application that uses a series of easy-to-navigate wizards to assist in classifying leases and analyze how they should be accounted for under the new standard. The program provides intuitive prompts to guide the user through the process, whether reviewing 10 leases or 100. The program is built upon SD inSITE, a web-based application developed by Schneider Downs that’s compatible with most any accounting system.With the implementation of the new lease accounting standards, substantially all leases will now go on the balance sheet. This includes both operating and finance (previously referred to as capital) leases. There are, however, certain leases that will be scoped out or may be exempt. Some of these exclusions are leases for inventory, assets under construction, intangible assets or biological assets. There is also an accounting policy election to exclude those leases that have a term of fewer than 12 months and no purchase options, or a renewal period that is reasonably certain to be exercised.Yes, the new lease accounting standards will significantly change how existing leases are accounted for today. There is no grandfathering of previous leases. Upon implementation of the new standards, all leasing arrangements will have to be accounted for under the new guidance.Under the new lease accounting guidance, from the perspective of a lessee, an operating lease will be anyone that does not meet the definition of a finance lease (see definition of finance lease below).Under the new lease accounting guidance, from the perspective of a lessee, a finance lease (previously referred to as a capital lease) is one that meets one or more of the criteria below:The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.The lease term is for the major part of the remaining economic life of the underlying asset.The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.Public business entities are required to adopt ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e. calendar year 2019), and non-public business entities the following year (i.e. calendar year 2020).  However, the amendments are required to be presented retrospectively to all periods presented in a company’s financial statements, so a company presenting two years of financial information will need to implement the new rules under ASU 2016-02 the year prior to the effective date.Yes, the scope of ASU 2016-02 does not provide an accounting alternative for privately held companies.A lessee is permitted to adopt an accounting policy by asset class to not recognize lease assets and lease liabilities for leases with terms of 12 months or less, including any renewal periods that are reasonably certain to be exercised.  Leases with initial terms of less than 12 months and have renewal periods that are reasonably certain to be exercised, are required to be accounted for under ASU 2016-02.Certain leases are excluded from the scope of ASU 2016-02, including those initiated to explore for or use minerals, oil, natural gas and similar non-regenerative resources.  These types of leases will continue to be accounted for under Topic 930 Extractive Activities-Mining and 932 Extractive Activities-Oil and Gas.  Leases of intangible assets, biological assets and assets under construction are also excluded from the scope of ASU 2016-02.Yes.  There is very little that is scoped out of the new lease accounting standards. Leases involving property/buildings, property improvements and real estate are all covered under the new standards.We anticipate very little, if any, impact on the bottom line / net income as a result of the accounting changes. However, we do anticipate there could be additional costs associated with preparing for the implementation by organizations that have significant leases. Those costs could include, but not be limited to additional internal staffing / resources and lease accounting software, as well as outside consultants to assist with the implementation.We don’t anticipate an effect on net taxes.Yes, all your data is encrypted from the moment it’s entered into the system (this includes uploaded documents).Yes, simpLEASE has a built-in workflow that allows users to enter lease data, which is then reviewed and approved before it is sent to your accounting system.  Multiple users can be entering and reviewing leases simultaneously.Yes, simpLEASE can provide data in a wide array of formats for easy import into most accounting systems.  simpLEASE can also capture data electronically from your accounting system that can be used for validation and exporting.In addition to storing active lease specifications based on the new accounting standards, simpLEASE can track a wide variety of details about each lease.  With an unlimited number of user-defined fields, you can track each lease and associated relevant data.  Payments, estimated taxes and due dates can be tracked for each lease. Yes, simpLEASE allows for an unlimited number of uploaded documents for each lease.  The system has a definable data retention period that can automatically purge data as per your document retention policy.Yes, simpLEASE can help you ensure that your leases are accounted for in accordance with the guidance.Data is housed at a third-party service organization’s data center, which does have a SOC report covering controls.  Additionally, there is a SOC report covering the simpLEASE application. simpLEASE ResourcessimpLEASE HomepagesimpLEASE Software OverviewsimpLEASE Security Overview OUR THOUGHTS ON Understanding Donated Space Under Accounting Standards Codification 842 Accounting for leases has undergone significant changes with the introduction of Accounting Standard Codification (ASC) 842. Under ASC 842, right-of-use… Read More > Understanding Leases In Technology Arrangements There are many complex transaction rules impacting technology companies, including Topic 842: Lease Accounting, which could have a significant impact… Read More > Six Common Lease Accounting Adoption Mistakes... and How to Avoid Them What are some of the most common mistakes organizations make when adopting the ASC 842 lease accounting standard? Over the… Read More > Lease Accounting – Top Industry Considerations and Challenges of 2023 What are the top industry challenges organizations face when meeting the ASC 842 lease accounting deadline? Upon the initial release… Read More > Changes to Accounting for Leases Under Common Control On February 15, the Financial Accounting Standards Board (FASB) voted to issue an amendment to accounting rules for leases between… Read More > Lease Accounting in the Deal You’ve heard it before, “Every deal is different,” and that’s no different when it comes to companies reporting their lease… Read More > Adoption Requirements for ASC Topic 842, Where Are Your Embedded Leases Hiding? As the deadline for private and not-for-profit entities to adopt the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)… Read More > FASB ASC Topic 842 Leases – Contract Modifications After all the diligent work to assemble your “day-one” accounting for leases under the new lease accounting standard (Topic 842),… Read More > ASC 842, Leases – ASU 2021-09 Provides Additional Guidance on Use of Risk-Free Rate and Required Disclosures for Non-Public Entities As the deadline to implement the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842 quickly approaches for… Read More > Lease Accounting Guidelines for the Trucking Industry Schneider Downs, in partnership with the Ohio Trucking Association, is pleased to announce the release of the second installment in… Read More > It's The Final Countdown: ASC-842 Join the Schneider Downs simpLEASE team for our "Lease Accounting: The Final Countdown to ASC 842" webinar on August 19th… Read More > ASC 842, Leases – Proposed Discount Rate Updates for Non-Public Entities The advent of ASC 842 on leases brought with it considerable changes to the way companies accounted for leases. On… Read More > Warping Through ASC Topic 842: Practical Expedients Available to Lessees Whenever practical expedients are mentioned in casual conversation, my mind typically runs straight to Super Mario Brothers. Not the Goombas… Read More > IFRS 16, Leases - Lessee Perspective Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Principles (U.S. GAAP) should… Read More > Impact of Variable Lease Payments Under ASC 842 In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-02, Leases (Topic 842). This standard… Read More > Managing Leases Under ASC 842 with Excel – Does It Make Sense for Your Organization? You have gone to some CPE and read up on how ASC 842 impacts your organization, now it’s time to… Read More > Fraud Considerations for Lessees and Lessors The main driver behind the FASB’s issuance of the new lease standard (Topic 842) is to increase transparency within organizations… Read More > Top 5 Implementation Lessons Learned Under ASC 842 The deadline for private companies to implement the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842 is… Read More > Key Changes for Lessors Under FASB ASC Topic 842 In June 2020, the FASB issued ASU 2020-05 and delayed, for a second time, ASU 2016-02, Leases Topic 842 for… Read More > How will ASC Topic 842 Lease Accounting impact your organization’s operations? Over the last few years, we’ve discussed the impact of ASC Topic 842 Lease Accounting on financial statements.  Discounted lease… Read More > ### simpLEASE Accounting simpLEASE Accounting Lease Accounting Software Built by Accountants for Accountants Navigating the complexities of ASC 842 doesn’t have to be overwhelming. simpLEASE is a scalable, web-based solution designed to simplify lease accounting for organizations of any size. Whether you're managing two leases or two thousand, simpLEASE streamlines the process and delivers fast, accurate, and compliant results with less manual effort and greater efficiency. How simpLEASE WorksDeveloped on a step-by-step, wizard-driven interface, simpLEASE guides users through the entire lease accounting process. By responding to a series of intuitive prompts about each lease agreement, users receive clear, actionable guidance tailored to the specific reporting requirements of ASC 842. simpLEASE Capabilities Automates lease data entry by capturing and processing key terms from lease agreements. Classifies leases accurately as either finance (capital) or operating leases based on ASC 842 criteria.Fully compliant with ASU 2016-02, producing schedules for both finance and operating leases. Supports efficient lease portfolio management, including new and existing lease agreements. Integrates with accounting and fixed asset systems to automate journal entries and streamline the creation of right-of-use (ROU) assets. Supports comprehensive multicurrency reporting by automatically converting and consolidating financial data across different currencies, ensuring accuracy in financial statements Calculates present and future values of lease assets and liabilities and generates required amortization schedules. Generates essential reports, including lease listing, amortization schedules, disclosure, liability roll-forward balance reports and future payments.Guides users through intuitive wizards, making complex lease accounting decisions easier.Provides transition support for migrating legacy leases into the new standard.Manages ongoing lease activity, including term changes, renewals, and termination.Includes unlimited UDF’s giving the users the flexibility to create and customize as many fields as they need to capture specific data relevant to their lease management processes. Automates lease data entry by capturing and processing key terms from lease agreements. Classifies leases accurately as either finance (capital) or operating leases based on ASC 842 criteria.Fully compliant with ASU 2016-02, producing schedules for both finance and operating leases. Supports efficient lease portfolio management, including new and existing lease agreements. Integrates with accounting and fixed asset systems to automate journal entries and streamline the creation of right-of-use (ROU) assets. Supports comprehensive multicurrency reporting by automatically converting and consolidating financial data across different currencies, ensuring accuracy in financial statements Calculates present and future values of lease assets and liabilities and generates required amortization schedules. Generates essential reports, including lease listing, amortization schedules, disclosure, liability roll-forward balance reports and future payments.Guides users through intuitive wizards, making complex lease accounting decisions easier.Provides transition support for migrating legacy leases into the new standard.Manages ongoing lease activity, including term changes, renewals, and termination.Includes unlimited UDF’s giving the users the flexibility to create and customize as many fields as they need to capture specific data relevant to their lease management processes.https://vimeo.com/519223042 Features and Benefits: Web-Based Access -Available 24/7 from any location, no IT setup or installation required.Centralized Lease Tracking - Securely stores all lease data and related documents in one place.Intelligent Workflow - Built-in review process ensures data accuracy before financial impact, with a complete audit trail.Informative Alerts - Automated notifications for approvals and key lease milestones help keep you on schedule.Comprehensive Reporting - Generates month and year-end reports that comply with ASC 842 standards, which are easily exportable to Excel.Real-Time Dashboard - Offers a user-friendly dashboard with high-level insights at a glance.Multi-Company Support - Manage multiple entities with a flexible setup for asset classes, ground leases, and securities.Flexible Pricing Model - Price is determined by the number of leases and entities, with unlimited users and comprehensive support included. Interested about simpLEASE or scheduling a demo? Let's talk! simpLEASE ResourcessimpLEASE FAQsimpLEASE Software OverviewsimpLEASE Security Overview5 Common Lease Accounting Mistakes and How to Avoid ThemReal-World Lease Account Errors (And How to Avoid Them) Video SeriesAbout simpLEASENearly every company or organization relies on lease contracts as part of its daily operations. ASC 842 has significantly changed how companies report leases on their annual financial statements.  simpLEASE is a software program designed to provide easy-to-understand guidance for recording each individual lease. Developed in collaboration with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms, simpLEASE benefits from years of expertise in tracking and anticipating changes to lease accounting standards. Schneider Downs has worked extensively to understand the specifics and intricacies of these standards. As a result, simpLEASE is not only user-friendly but also serves as an insightful and intuitive tool for accurate lease computations.  Ready to Get Started? CONTACT US FOR MORE INFORMATION OUR THOUGHTS ON Understanding Donated Space Under Accounting Standards Codification 842 Accounting for leases has undergone significant changes with the introduction of Accounting Standard Codification (ASC) 842. Under ASC 842, right-of-use… Read More > Understanding Leases In Technology Arrangements There are many complex transaction rules impacting technology companies, including Topic 842: Lease Accounting, which could have a significant impact… Read More > Six Common Lease Accounting Adoption Mistakes... and How to Avoid Them What are some of the most common mistakes organizations make when adopting the ASC 842 lease accounting standard? Over the… Read More > Lease Accounting – Top Industry Considerations and Challenges of 2023 What are the top industry challenges organizations face when meeting the ASC 842 lease accounting deadline? Upon the initial release… Read More > Changes to Accounting for Leases Under Common Control On February 15, the Financial Accounting Standards Board (FASB) voted to issue an amendment to accounting rules for leases between… Read More > Lease Accounting in the Deal You’ve heard it before, “Every deal is different,” and that’s no different when it comes to companies reporting their lease… Read More > Adoption Requirements for ASC Topic 842, Where Are Your Embedded Leases Hiding? As the deadline for private and not-for-profit entities to adopt the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)… Read More > FASB ASC Topic 842 Leases – Contract Modifications After all the diligent work to assemble your “day-one” accounting for leases under the new lease accounting standard (Topic 842),… Read More > ASC 842, Leases – ASU 2021-09 Provides Additional Guidance on Use of Risk-Free Rate and Required Disclosures for Non-Public Entities As the deadline to implement the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842 quickly approaches for… Read More > Lease Accounting Guidelines for the Trucking Industry Schneider Downs, in partnership with the Ohio Trucking Association, is pleased to announce the release of the second installment in… Read More > ### Performance Evaluation Grid (PEG) Performance Evaluation Grid (PEG) How do your employees’ self-assessments compare to management’s view?The Performance Evaluation Grid (PEG) is a proprietary, web-based program developed by Schneider Downs built as a part of SD inSITE. PEG was developed after we saw a need to build upon our current shareholder/manager evaluation process.Easy-to-Use, Easy-to-UnderstandPEG was designed to provide an easy-to-use, and time-efficient, manner of processing what can be a very detailed process. By standardizing the leadership traits being evaluated, all individuals receive an “apples-to-apples” analysis of their performance.All evaluations are conducted online on a secure server, and can be completed by all participants at their convenience. The interface is user-friendly and can quickly be utilized without significant training or instruction. The approach is very similar to taking an online survey or questionnaire.Evaluation OptionsPerformance Evaluation Grid (PEG), Schneider DownsFor more information, please contact Jason Reljac at 412-697-5483. ### SD inSITE Modules SD inSITE Modules Employee Time Collection Overview IS COLLECTING EMPLOYEE TIME SHEETS MORE OF A HASSLE THAN IT SHOULD BE? SD inSITE offers a variety of different methods of payroll time sheet reporting that allows you to provide your staff with the simplest and most effective method of time collection possible. Options as simple as collecting just the date and number of hours to collecting comprehensive project based details inSITE has a time collection screen that best suites your organizational needs (and your users’ abilities). The right time entry interface for your employees makes all the difference in the world, but it is not the only consideration. Providing an easy to use interface helps eliminate the age old adage of “Garbage In = Garbage Out”. Centralized administration of work codes and projects ensure that your staff has access to only what they need; no more, no less. Eliminating confusion increases the accuracy of time entry, which means less time required to verify the data before it goes to your payroll or accounting system. Using inSITE for project based time collection also allows for the automatic distribution of labor hours across various projects eliminating the need for time consuming time allocation procedures. VIEW PRODUCT OVERVIEW | VIEW A DEMO Employee Expenses Overview ARE EMPLOYEE EXPENSES COSTING YOU TOO MUCH TIME? As with time entry, employee expense entry can be more difficult than it needs to be for your staff, supervisors and accounting personnel. With a multitude of codes to remember, changing mileage rates and late or missing receipts, getting employee expenses recorded and approved can be a nightmare. SD inSITE is based upon the premise to keep all steps in the process simple. We build upon of the idea of easy to use employee inputs, smooth interfaces and centralized management to provide a simple, yet effective, expense entry and approval process that your staff will embrace. SD inSITE can use either electronic or paper receipts to match the needs of your organization. Employee mileage reimbursements for mileage are based on the date an expense was incurred (not when it was entered submitted). SD inSITE also allows for the use of the same set of project codes used in time entry to make expense entries in SD inSITE. This allows for the consistent allocation of expenses across the appropriate cost codes. VIEW PRODUCT OVERVIEW | VIEW A DEMO Document Portal Overview IS IT DIFFICULT FOR YOUR ORGANIZATION TO SHARE IMPORTANT AND SENSITIVE DOCUMENTS? While the Internet provides a new level of connectivity it also opens the doors to a host of new security concerns. One of those concerns is the distribution of sensitive documents. While E-Mail gets things to the right people quickly it also opens up the door for loss of control. SD inSITE can provide you with a new level of security when it comes to the distribution of documents across the Internet. The Document Portal in SD inSITE allows for the secure distribution of sensitive and important documents. The document portal allows for the distribution of documents to specific users or groups of users and includes functionality for tracking document usage and making sure documents are not available before or after you require them to be. You can reduce the time it takes to distribute information and improve the level of security surrounding sensitive documents. VIEW PRODUCT OVERVIEW | VIEW A DEMO inSITE Performace Review Overview ARE EMPLOYEE EVALUATIONS A MOUNTAIN OF PAPERWORK? Employee evaluations are important; and you should treat them as such. Traditional evaluation systems create mountains of paper that get manually distributed to the organization. The review and approval process can be cumbersome and time consuming. SD inSITE helps reorganize and re-optimize the evaluation process by leveraging both the workflow created for time and expense approval and the easy to use SD inSITE interface. SD inSITE offers personal and supervisor evaluations, peer evaluations and project-based evaluations that allow for internal and external responses. All evaluation information is kept in SD inSITE where it can be reviewed at a later time or simply kept on file for historical purposes. VIEW PRODUCT OVERVIEW | VIEW A DEMO Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261). The climate-focused… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > ### SD inSITE SD inSITE by SD Digital is an employee time-tracking software using a secure, web-based application to streamline reporting time and effort. By reducing administrative burdens and improving data accuracy, SD inSITE helps you achieve greater productivity and financial control. Built-in utilities allow for direct export of your critical data at any time to interface with your accounting software, payroll software, or a third-party payroll processor.Key Features & Benefits:If your organization struggles with time and effort reporting, SD inSITE can streamline the process, present appropriate options to your staff using terms they understand and provide insight into effort for staff, supervisors, budget managers, accounting departments and management.Staying InformedSD inSITE Stay Informed is comprised of SafeTrack and PolicyTrack, which can be used together, or independently of each other, to keep your employees well informed of policies and mitigate health risks in order to keep your organization, clients and vendors safe.SafeTrack allows organizations to collect, track and securely store health and contact tracing data from employees on a daily basis. PolicyTrack enables organizations to ensure employee policies are reviewed, signed and tracked in an automated and paperless manner. Download the SD inSITE Stay Informed overview to learn more.Time EntrySD inSITE gives supervisors and administrators a clear view into the amount of time being worked in a given pay period, allowing them to guard against excessive overtime charges. The daily time entry feature offers managers the ability to forecast anticipated overtime based on hours worked to date and has a built-in overtime feature, which allows employees to request time in advance to prevent any surprises. You can also track government lobbying activities to assist in keeping track of registration requirements every quarter. View a demo to learn more.Expense EntryIndividuals can submit work-related expenses with attachments from emails and scanned images from their phones. SD inSITE allows these expenses to be approved online from anywhere and can be exported to payroll, accounts payable and billing systems to eliminate double entry of data.Pay Stubs and Time OffSD inSITE provides a secure system for employees to access pay stub information from any computer and allows users to view current time off balances anytime, in real time. In addition employees are able to request time off from anywhere, and supervisors can approve via email once requests are complete.Document PortalThe portal allows users to view documents and organization-wide calendars, as well as disseminate required forms or questionnaires which can help streamline onboarding and training processes. SD inSITE assures documents are securely stored and transmitted with encrypted connections and shifting to digital document management helps to eliminate postage, shipping and printing costs.IRequestSD inSITE simplifies the purchase-request process by defining the process upfront. The moment a request is made the approver is notified, and the requestor is notified as approvals are being made in real time. Our software consolidates associated documentation, packing slips, invoices, quotes and backup, are stored under the associated request, and can be accessed by the requestor, approver(s) and administrators at any time during, and after, the approval process. In addition SD inSITE can track when items on a request have been purchased, received (and delivered if necessary) by requestors and reported on by approvers and administrators.Pre-existing interfaces have been developed for ADP, Sage 100 ERP, Abila Fund Accounting (formerly Sage Fund Accounting), Sage HRMS, Sage Business Works Gold, Paychex and Ceridian.Combining user-friendly time entry, electronic approval routing, powerful data transformations and simple to use budget tools, SD inSITE enables your organization to spend less effort managing time and more time working on things that keep the business running. OUR THOUGHTS ON Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible2. Ask Us ### Sage Fixed Assets Sage Fixed Assets Sage Fixed Assets software gives total control over fixed assets throughout their entire lifecycle. Based upon an easy-to-learn, intuitive user interface, Sage FAS Fixed Assets is the most comprehensive fixed asset management solution for asset depreciation, inventory tracking, and custom reporting. Sage Fixed Assets Asset Accounting Fixed Assets Asset Accounting software is fixed asset depreciation software that integrates with multiple accounting applications. Fixed Assets has the most comprehensive depreciation calculation engine in the industry, containing over 300,000 IRS tax rules and GAAP supported depreciation methods. Fixed Assets allows for up to seven books, all visible on one screen: Internal, Tax, ACE, AMT, State, and two user-defined custom books. Sage Fixed Assets Asset Inventory Fixed Assets Asset Inventory gives you automated fixed asset inventory tracking and reconciliation capabilities. Allows for the use of bar code technology, including Windows Mobile devices. Enables companies to conduct multiple inventories concurrently at various sites and reconcile data at one central location. Sage Fixed Assets Construction-in-Progress (CIP) Accounting Fixed Assets CIP Accounting lets you assemble multi-component equipment, upgrade machinery, renovate buildings, or accumulate separate invoices prior to placing a fixed asset into service. Manages both capitalized and expensed assets for convenient project tracking. Tracks all of the project details including status, contacts, notes, and all of the financial details. Additionally, you can monitor both the physical and financial completion status of the project. Upon project completion, the application will instantly create the asset in the Asset Accounting application. Sage Fixed Assets Gov and Sage Fixed Assets Nonprofit: Same functionality as Fixed AssetsAsset Accounting with reporting features for government and school organizations to help them comply with GASB 34/35 requirements. Request Additional Information To learn more about this product and how it can help your business, please contact Patrick Armknecht at 412-697-5386. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### Microsoft Product Resources Microsoft Product Resources SD Digital has compiled the following resources and links relevant to Microsoft technology products offered by Schneider Downs.Schneider Downs ResourcesMicrosoft Dynamics GP FAQWhitepaper – Benefits of Migrating to the CloudSchneider Downs Technology ArticlesThird-Party ResourcesMicrosoft Dynamics 365 Business Central OverviewMicrosoft Business Central Infographic for NonprofitsForrester Report – Total Economic Impact™ of Business CentralRelated Microsoft SolutionsMicrosoft Dynamics 365 Business CentralMicrosoft Dynamics NAVMicrosoft Dynamics GP Ready to Get Started? Schedule a Demo About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com. Ready to Get Started? Schedule a Demo Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first… Read More > Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working… Read More > The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your… Read More > ### Microsoft Dynamics ERP Microsoft Dynamics ERP Solutions Implement, Integrate, and Optimize Dynamics 365 Business Central. Microsoft Dynamics 365 Business Central is a business-critical ERP platform that integrates key business functions including finance, operations, sales, and customer service into a single solution.Relying on an outdated ERP system exposes organizations to critical risks and operational challenges, such as security gaps, limited access, compliance troubles, and subpar user experiences. Operationally, outdated or absent ERP platforms result in financial recordkeeping challenges when closing books, managing general ledgers, and making journal adjustments – all of which result in excessive internal resources being used where technology should be doing the work.If you are experiencing these issues with your existing ERP, are operating on a legacy Microsoft platform or simply need to know how to get started, SD Digital can help. Since 2009, our business acumen, digital expertise and client-focused mindset have created impactful opportunities to help organizations of all sizes and industries identify, implement, integrate, and optimize Dynamics 365 Business Central (formerly NAV).Discover the benefits of switching to Microsoft Dynamics 365 Business Central.Contact Mike P. Scalamogna or book a time on his calendar. From initial advice to complex migrations, he’s here to help!Dynamics 365 Business Central SolutionsWhether you are starting to look at ERP options, migrating, implementing or searching for outsourced solutions, SD Digital can help with our slate of Dynamics 365 Business Central solutions.Valuation AssessmentsOur valuation assessments deliver a thorough evaluation of your readiness and needs, along with a business case, software requirements, and implementation plan, empowering you to make informed decisions.Blueprint ServicesOur blueprint services provide a detailed implementation guide and actionable roadmap, enabling leadership to swiftly assess the necessity, feasibility, resources, and timeline of your implementation.Implementation ServicesDeploying Dynamics 365 Business Central successfully requires more than just selecting software—it needs a dedicated partner like SD Digital with the expertise and strategic vision to understand your unique needs and ensure long-term success.Migration ServicesWith legacy software support waning, transitioning to Dynamics 365 Business Central is crucial to avoid issues like performance, usability, security, and functionality problems.Managed ServiceSD Digital provides fully outsourced services for essential functions such as IT security, system testing, daily maintenance, and reporting. While we offer outsourced managed services, our talent remains entirely US-based, consisting solely of SD Digital employees.Rescue ProgramIs Dynamics 365 Business Central falling short of your expectations? Frustrated with delayed support, costly fixes, or unmet feature requests? SD Digital can help realign your course and maximize your ERP investment.Why Choose SD Digital as Your ERP Partner?Business ExpertiseAs a part of a robust professional services firm, our team has access to a diverse bench of professionals who offers a broad spectrum of expertise—including cybersecurity, internal audit, data analytics, audit and assurance, and tax services—to enhance your implementation.Commitment to SuccessWe emphasize long-term client success, ensuring thorough documentation and clear instructions for your team's independent operation post-engagement.Dynamic KnowledgeFor more than 15 years, SD Digital has been a trusted partner for organizations of all sizes in all industries for Microsoft Dynamics GP, NAV, SL and Business Central.Trusted Digital PartnerChoosing us as your partner means you get a trusted team focused on keeping your digital capabilities up to date and running smoothly, ensuring you can focus on growth while we handle the technological details.What is Microsoft Dynamics 365 Business Central?Microsoft Dynamics 365 Business Central is an all-in-one enterprise resource planning (ERP) business management solution that helps your business connect financials, sales, service, and operations to streamline business processes, improve customer interactions and make better decisions.About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com. Want to learn more about Microsoft Dynamics 365? Schedule a Demo OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Data Analytics and Power BI Data Analytics and Power BI Solutions Innovative Solutions. Bottom Line Results. Struggling with disconnected systems, unreliable data and time-consuming manual processes? SD Digital delivers data analytics solutions that centralize your data, eliminate inefficiencies and replace manual work with automation—giving you clean, real-time insights you can trust. With AI-powered dashboards and automated alerts, you no longer have to dig through spreadsheets or wait for updates. We put the right data at your fingertips, so you can make faster, smarter decisions with confidence. At SD Digital, we don’t just compile data—we empower your teams. By breaking down silos and driving collaboration, we ensure decision-makers across Accounting, FP&A, Operations and IT have the insights they need, exactly when they need them. Say goodbye to wasted hours on manual tasks and hello to a streamlined, data-driven future. Solutions for Every Stage of Your Data Analytics and Power BI Journey No matter where you are in your data analytics journey, SD Digital helps you unlock the full potential of your Power BI investment. Whether you’re defining stakeholder needs or scaling Power BI across your organization, SD Digital is committed to delivering a successful implementation, driving enterprise-wide adoption and fostering a data-driven culture that empowers your business. Assessing Data Analytics Business Value Assessment Ensure your Power BI investment delivers the right ROI. SD Digital helps you build a solid business case with clear implementation principles, aligning Power BI with your strategic goals for maximum impact. Power BI Blueprint Our iterative, human-centered approach to Power BI uncovers the analytics that drives real business impact. SD Digital helps you boost profitability, streamline supply chains, enhance quality and maximize business success. Starting Your Data Analytics Journey Quick Start Implementation Rapidly identify the business areas and systems that can benefit most from Power BI, deploying analytics that enhance and support your critical processes—delivering immediate value. Full Life Cycle Implementation For a seamless Power BI deployment, SD Digital offers an enterprise-wide tailored plan to solve the right challenges. Using a proven Agile approach, we assess, design and implement a strategic roadmap for smooth migration and long-term success. Evolving Your Data Analytics Journey Implementation Rescue  Struggling to maximize your analytics investment? SD Digital rapidly assesses your Power BI deployment, resolves key issues for quick wins and realigns it with business goals—restoring momentum and unlocking long-term value. Enterprise-Wide Adoption Expand Power BI across your organization with SD Digital. We empower decision-makers across departments with actionable insights to drive smarter, data-driven decisions at every level. SD Digital transforms data into strategic intelligence, optimizing operations and providing a comprehensive view of performance and opportunities. Learn more about our Power BI enterprise solutions.Ready to Start Your Digital Journey? Contact UsCommon Roadblocks to Power BI ImplementationSD Digital removes roadblocks to ensure a seamless, strategic Power BI implementation that delivers real results. If any of the following challenges sound familiar, we’re here to help.Incomplete, Disconnected and Unreliable Data – Incomplete, disconnected, or low-quality data is unreliable. A data warehouse organizes unstructured data, simplifies Power BI modeling for accuracy and efficiency, and automates data collection from previously inaccessible sources.Insufficient Power BI Expertise – Successful deployment requires skills in data integration, modeling, transformation, DAX coding and visualization—along with strong analytical and problem-solving abilities. Many organizations lack the in-house expertise needed to maximize Power BI’s potential.Unclear Stakeholder Needs – Without clearly defined objectives from key stakeholders, Power BI deployments can miss the mark. Engaging stakeholders early ensures alignment with business goals and user expectations.IT Concerns and Roadblocks – Security, integration complexities, user training, infrastructure, licensing costs and governance challenges often stall Power BI projects. Addressing these concerns upfront is crucial for success.Low Adoption and Engagement – Even after deployment, Power BI usage may be minimal due to misalignment with business needs, poor training, unintuitive visuals or lack of leadership support. Ensuring proper onboarding and ongoing engagement is key to driving user value.Industry Experience Financial Services Manufacturing Real Estate Healthcare Construction Transportation & Logistics  About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page or contact the team directly at contact@sddigital.com. OUR THOUGHTS ON Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services.… Read More > Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes… Read More > Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO… Read More > Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to… Read More > PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital… Read More > Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services… Read More > Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides.… Read More > Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas.… Read More > What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content… Read More > Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction… Read More > Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely… Read More > Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier… Read More > ### Locations ### Retirement Solutions ### PrimeGlobal PrimeGlobalAccounting, Tax and Business Advisory Services Around the WorldAs your business looks beyond its current market areas and expands past the U.S. borders, it is important to work with a business partner who understands the many nuances of operating in a global marketplace.Through our active membership in PrimeGlobal, Schneider Downs can serve all your global business needs. We offer complete access to a worldwide network of local and regional firms that provide quality accounting, tax and consulting expertise throughout the United States and abroad.PrimeGlobal is one of the largest associations of independent public accounting firms in the world - with more than 380 independent member firms that operate almost 850 offices in 89 countries. Most importantly, all PrimeGlobal member firms must adhere to the highest quality procedures to ensure you receive only the best business advice, given in a personalized way.PrimeGlobal’s website ### Big Thinking Personal Focus Around the World Big Thinking Personal Focus Around the World ### Experienced Professionals Where your EXPERIENCEcounts. Schneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop. For over 65 years, Schneider Downs has provided audit, tax, consulting, and wealth management services through our team of innovative thought leaders committed to our approach of providing Big Thinking with a Personal Focus. Our client roster includes a diverse blend of well-established national and regional businesses both publicly and privately owned – as well as not-for-profits and exciting start-ups. Regardless of industry of corporate profile, our clients receive the highest level of responsiveness, proactivity, and personal attention to their individual needs. We call that commitment the SD Standard and it’s what makes us different. At Schneider Downs, you’ll gain national firm experience, with a regional touch. You’re not just a number here. You’ll have the opportunity to work on wide-ranging client sizes, industries, and project complexities. You will be able to provide value and solutions to our clients with whom you’ll build rewarding and lasting relationships.Our firm’s history of growth and continual introduction of new services provide broad opportunities for career variety and advancement. We also offer a mentorship program to help guide and support new team members as they start their journey with Schneider Downs. All of our leaders deeply care about and prioritize our team members’ professional development and future growth. Ready to learn more? See All Job Openings FEATURED JOB OPENINGS 2026 Tax Winter Intern Tax Pittsburgh PA Schneider Downs is seeking motivated students who are interested in expanding their knowledge in the public accounting environment to participate in our 2026 internship program.… Learn More > 2026 Risk Advisory Summer Intern Risk Advisory Services Columbus OH Our growing Risk Advisory Services practice, a specialty area within our Consulting Services group, provides outsourcing, co-sourcing and Sarbanes-Oxley assistance to clients in various industries,… Learn More > 2026 Risk Advisory Summer Intern Risk Advisory Services Pittsburgh PA Our growing Risk Advisory Services practice, a specialty area within our Consulting Services group, provides outsourcing, co-sourcing and Sarbanes-Oxley assistance to clients in various industries,… Learn More > 2026 IT Risk Advisory Summer Intern IT Risk Advisory Services Columbus OH Our growing IT Risk Advisory Services practice, a specialty area within our Consulting Services group, is seeking motivated students who are interested in expanding their knowledge… Learn More > 2026 IT Risk Advisory Summer Intern IT Risk Advisory Services Pittsburgh PA Our growing IT Risk Advisory Services practice, a specialty area within our Consulting Services group, is seeking motivated students who are interested in expanding their knowledge… Learn More > See all openings Not ready to apply but want to stay connected, learn more about Schneider Downs, and future career opportunities that interest you? Join our Talent Community.  Join our Talent Community We value your time. Please enter your information to get the conversation started and Schneider Downs HR will reach out to you. For more information about Schneider Downs Careers, please visit schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us today. ### Explorers Program Your world is moving fast. Just a short time ago you graduated from high school and in just a few years you will start a professional career. Let us help you navigate this challenging and wondrous journey. By participating in the one-day Schneider Downs Explorers Program, you and other high-performing freshmen and sophomores will learn about the immense opportunities and rewards within a professional services firm, interact with our professionals, including current interns, and network with colleagues from other universities. In addition, our recruiting professionals will provide valuable insights and advice to assist in your preparation for future internship and full-time interviews and the overall recruiting/hiring process. We are always looking for high-achieving students pursuing accounting and/or technology-related degrees with strong academic performance (3.0 GPA or higher) for our internships in the following areas:We also have shared firm, office and departmental activities to keep you connected, make you feel a part of the team and encourage the development of lasting friendships. Some of our team’s favorite events include:AuditTaxRisk Advisory (IT Risk Advisory, Enterprise Risk Management, SOC Compliance and Third-Party Risk Management)Technology Advisory (Cybersecurity, Business Process Automation (BPA), Data Analytics and Software Solutions) Apply For Program Who’s eligible to participate? Freshman and sophomore standing in a full-time academic program, pursuing a Bachelor’s or master’s degree in accounting or in technology-related fields.Strong academic performance; preferred overall GPA of 3.3 (3.0 minimum) total rewards Best-in-class benefits are anything but basic -“ experience the extras that make work infinitely more rewarding. read more Work-Life Balance  Embrace professional challenges and enjoy a full personal life with a culture that facilitates work-life balance. read more ### All Openings ### Emerging Talent Where your EDUCATION counts. Build an exceptional career with diverse, talented people who are among the most respected in their fields. At Schneider Downs, we prioritize your growth and development within a caring culture and work together toward collaborative impact. We are committed to your personal and professional development, offering coaching and mentoring tailored to each individual. Bring your entrepreneurial spirit to a firm that values new ideas and innovation, allowing you to learn and grow quickly. You’ll engage in impactful work that allows you to make a difference for the firm, our clients and the community. Personal focus is key here, fostering an inclusive environment where differences are truly valued, and everyone works together to solve problems and achieve success. We offer flexibility to our team members – not just as where and how they work, but also manageable hours throughout the year. We provide our team members with autonomy and empowerment in their roles by encouraging them to pursue new ideas and ways to innovate or improve processes. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs throughout their career, as well as activities created to foster camaraderie and support. Ready to learn more? See All Job Openings FEATURED JOB OPENINGS   2026 Tax Summer Intern Tax Columbus OH Schneider Downs is seeking motivated students who are interested in expanding their knowledge in the public accounting environment to participate in our 2026 internship program.… Learn More > 2026 Tax Summer Intern Tax Pittsburgh PA Schneider Downs is seeking motivated students who are interested in expanding their knowledge in the public accounting environment to participate in our 2026 internship program.… Learn More > 2026 Audit Summer Intern Audit Columbus OH Schneider Downs is seeking motivated students who are interested in expanding their knowledge in the public accounting environment to participate in our 2026 internship program.… Learn More > 2026 Audit Summer Intern Audit Pittsburgh PA Schneider Downs is seeking motivated students who are interested in expanding their knowledge in the public accounting environment to participate in our 2026 internship program.… Learn More > See all openings Learn more about Schneider Downs Careers. Questions? Contact us today. SKYLA SOMMERKAMP Risk Advisory Services Intern "It is very clear that Schneider Downs values community and inclusiveness between its employees. The efforts the company has made to make the virtual environment feel like being at the office is something I have never experienced before." Read more BRITANI LINGAFELT Cybersecurity Intern "My experiences over the past several weeks serve as a reminder not to be intimidated by what I do not know and to be open-minded about possibilities for the future. I could not have predicted all the ways I would grow and benefit from this internship, and I am so glad that I spent this summer as an intern on Schneider Downs’ Cybersecurity Team." Read more ### Flexibility Work-Life Flexibility Work-life flexibility is not just a slogan at Schneider Downs, it’s a focus.Schneider Downs offers a unique culture where employees can pursue professional excellence while enjoying a full personal life. Although we have grown to be one of the nation's largest public accounting firms, we remain committed to supporting the important things in your life.Your quality of life is important to us, which is why we offer limited out-of-town travel and flexible work arrangements. We are committed to planning advanced work schedules so you can effectively plan your life's events and will work closely with you to ensure that your life remains in balance.Schneider Downs is dedicated to our people and focused on delivering exceptional client service. We value strong relationships, across clients, teams, the firm, and our communities, and appreciate that where we work is not anchored to one place and is focused more on outcomes.As the world shifts its thinking about work, we are embracing newly expanded options for our employees, including hybrid and remote work. We understand the importance of balancing the needs of our clients and the development of our people with employee flexibility, and we believe that flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication and a commitment to excellence.We also have shared firm, office and departmental activities to keep you connected, make you feel a part of the team and encourage the development of lasting friendships. Some of our team’s favorite events include:After work receptions and happy hoursCommunity involvement opportunitiesHoliday dinners and celebrations New hire team-building activitiesSummer picnics and social eventsFor more information about Schneider Downs Careers, please visit www.schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us at contactsd@schneiderdowns.com. total rewards Best-in-class benefits are anything but basic -“ experience the extras that make work infinitely more rewarding. read more ### Growth & Development Grow, develop and learn. The journey is yours.Learning is an ongoing process. Ours is a culture of continual development. We place a high premium on working with you to ensure that your ongoing education is tailored to meet your professional development needs.We’ll work with you to match your skills and interests so that you can choose your direction with confidence, from selecting an industry focus to working in a department that interests you most. We offer a course catalog that allows you to chart the course of your education throughout your time with Schneider Downs.We encourage everyone from staff member to shareholder to stay connected to new ideas, insights, best practices, and of course, learning. Career Path We will work with you to align your interests and skills with career opportunities as you advance within the firm. You'll be matched with an advisor who will provide one-on-one career guidance and coaching as you chart the course of your professional development and career. Options abound, from selecting to work in specific industries, to pursuing inter-departmental transfers, we are here to help guide you through those decisions. Leadership We will provide you with many of the tools to help you achieve a leadership role as an independent professional who thinks, evaluates, decides and then takes responsibility for those decisions. Your development and success, however, will also depend on your attitude, desire and commitment. Your success will ultimately come from your ability to collaborate with others, perform work of the highest quality and provide unsurpassed service to our clients. Training Learning is an ongoing and never ending endeavor. Ours is a culture of continual self-development and exploration. We place a premium on working with you to meet your unique professional development needs and interests. We offer learning pathways that allow you to chart the course of your education throughout your time with Schneider Downs. total rewards Best-in-class benefits are anything but basic -“ experience the extras that make work infinitely more rewarding. read more Work-Life Balance  Embrace professional challenges and enjoy a full personal life with a culture that facilitates work-life balance. read more Diversity and Inclusion Embrace our differences and celebrate what we can accomplish together Learn More Why Work At Schneider Downs? Explore Schneider Downs. You'll like what you see. Learn More For more information about Schneider Downs Careers, please visit schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us today. ### Total Rewards Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better.Schneider Downs offers a comprehensive total rewards package to all full-time and eligible part-time employees, many of which are available on the first day of employment. We regularly monitor our benefits to ensure that it is best in class and the current offerings include:401(k) plan with firm profit sharingAFLAC productsCorporate discounts CPA and other approved license assistance and bonusesDentalDisability and life/AD&D"Dress for your day" dress codeEducation assistanceEmployee bonusesEmployment referral bonusesFlexible spending account (medical and dependent care)Flexible work arrangementsGym membership reimbursementsMedicalPet insurance Paid holidaysPaid parental leavePaid personal daysPaid time offTransportation fringe benefit planVariable compensation programsVision Voluntary group term-life insuranceFor more information about Schneider Downs Careers, please visit schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us at contactsd@schneiderdowns.com. WORK-LIFE BALANCE  Embrace professional challenges and enjoy a full personal life with a culture that facilitates work-life balance. read more ### Diversity, Equity & Inclusion Embrace our differences and celebrate what we can accomplish together.Consistent with our Mission Statement of Working Together Every Day to Make Our Firm, Clients and Communities Better, Schneider Downs is committed to giving back to our communities and providing our employees with opportunities to do so. We do this, in part, through a team of dedicated Schneider Downs personnel who comprise our "SD Cares" Committee, whose mission is to be a resource to all employees to learn about volunteer opportunities in our communities. The firm also provides PTO for approved volunteering activities.We are committed to a workplace which is free from discrimination, harassment and bullying. We recognize the importance of having individuals with diverse backgrounds and distinctive perspectives, as they contribute to our firm by challenging assumptions and practices. We acknowledge our commitment to a culture where each employee is respected and valued as a key contributor to our firm's success. total rewards Best-in-class benefits are anything but basic -“ experience the extras that make work infinitely more rewarding. read more Work-Life Balance  Embrace professional challenges and enjoy a full personal life with a culture that facilitates work-life balance. read more For more information about Schneider Downs Careers, please visit schneiderdowns.com/careers or you can browse our current job openings. Questions? Contact us today. ### Copyright and Permissions Schneider Downs Copyright & Permissions All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission. Any reproduction, retransmission, republication or other use of any or part of any document found on this site is expressly prohibited without said prior consent.Your request for permission to use or repost Schneider Downs’ text, photos, graphics or audio can be obtained by filling out and submitting the form below. Once you have completed this form, you can submit your request by clicking the button below. Schneider Downs' Permissions Coordinator will respond to your request within 24 hours. If you have any questions, please contact the permissions coordinator. "*" indicates required fields Name* Company* Email Address* Website* I agree to the following requirements.* The material will be used solely for informational purposes. The material will not be used for commercial purposes. Any copy of this information will include notice of "Copyright Schneider Downs," along with a link to www.schneiderdowns.com. * I am requesting permission to reproduce information found on the Schneider Downs website. Please specify the exact content you are interested in by page from schneiderdowns.com, and where (website, newspaper, broadcast, etc.) you will post the content.*NameThis field is for validation purposes and should be left unchanged. Submit * required ### Disclaimers Disclaimers This Web site describes certain services of Schneider Downs & Co., Inc. that may be available depending upon the client's particular needs. The specific terms of an engagement letter will govern in determining the services actually to be rendered by Schneider Downs to a particular clientIf you have any questions about this disclaimer, the practices of this site, or your dealings with this website, you can contact info@schneiderdowns.com. ### Diversity Diversity StatementSchneider Downs & Co., Inc. is committed to ensuring diversity in our firm by actively recruiting, hiring, developing, and promoting a diverse group of employees based on individual merit and performance. We seek to create an inclusive environment in which each person is valued as a key component of our culture and a critical factor in our ability to provide quality service to our clients. ### News 2024 Archive 2024 2023 2022 2021 2020 July 10, 2024 Women & Business Profile: Susan M. Kirsch Read More > July 10, 2024 Schneider Downs Announces Schneider Downs Capital Value Advisors for the Middle Market July 10, 2024 — Schneider Downs & Co. introduces a new subsidiary: Schneider Downs… Read More > June 6, 2024 CMO Sean Smith Discusses the Evolving Digital Marketing Landscape on the Association for Accounting Marketing’s Amplify! Podcast Read More > May 16, 2024 Stephanie Haugh discusses strategies to recruit top talent with Pittsburgh Business Times. Read More > April 25, 2024 SD Digital Senior Manager Chris Kosty, CPA, CIDA shares his digital wisdom with the CFMA. Read More > March 29, 2024 David Brinkman Featured On Columbus Business First Wealth Management Table Of Experts Read More > March 29, 2024 CARLEY TASLOV SHARES HER INSIGHTS WITH ABC NEWS 7 ON THE IMPACT OF THE BALTIMORE KEY BRIDGE COLLAPSE ON CONSUMERS Read More > March 27, 2024 SCHNEIDER DOWNS WINS CLEARLYRATED’S 2024 BEST OF ACCOUNTING DIAMOND AWARD FOR SERVICE EXCELLENCE Read More > March 20, 2024 SCHNEIDER DOWNS WEALTH MANAGEMENT ADVISORS, LP NAMED A 2024 TOP DEFINED CONTRIBUTION ADVISOR TEAM BY THE NATIONAL ASSOCIATION OF PLAN ADVISORS We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the… Read More > March 8, 2024 MATT HARTMAN SHARES HIS INSIGHTS ON US CLIMATE DISCLOSURE PROGRAMS Read More > February 7, 2024 SCHNEIDER DOWNS UNVEILS SD DIGITAL Reimagining Technology and Data Services February 7, 2024 - Schneider Downs & Co. introduces SD Digital, an evolution of their… Read More > February 1, 2024 ROGER SPEARS DISCUSSES CYBERSECURITY TIPS FOR THE NEW YEAR Read More > January 22, 2024 BLUE JACKETS ANNOUNCE SCHNEIDER DOWNS AS NEW CORPORATE PARTNER Read More > January 18, 2024 Schneider Downs has joined the Women in Manufacturing Association Schneider Downs is pleased to announce its membership with the Women in Manufacturing Association (WiM), a global trade association dedicated… Read More > January 11, 2024 ROGER SPEARS DISCUSSES HOME NETWORK SECURITY WITH CYBER DEFENSE MAGAZINE Read More > January 11, 2024 CO-CEOS STEVEN THOMPSON AND CHRIS MCELROY RECOGNIZED ON THE 2024 PBT POWER 100 LIST Read More > January 4, 2024 BRETT CUBELLIS INTERVIEWED BY INSIDE CLIMATE NEWS MAGAZINE ON EV CREDITS Read More > 2023 2022 2021 2020 Read More > ### Peer Review Peer Review ReportSeptember 25, 2022To the Partners of Schneider Downs & Co., Inc.and the National Peer Review CommitteeWe have reviewed the system of quality control for the accounting and auditing practice of Schneider Downs and Co., Inc., applicable to engagements not subject to PCAOB permanent inspection, in effect for the year ended May 31, 2022. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants (Standards).Read the entire Schneider Downs Peer Review Report. ### Mission and Corporate Values Mission and ValuesSchneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop, and our clients receive the highest levels of care, attention and expertise. Our culture has remained consistent for more than 50 years, and we have no doubt it will continue to be a defining characteristic of our firm. We believe the continuity of our culture is due to the unified approach each and every one of us take to living up to the Schneider Downs Mission Statement and Core Values. CORE VALUES Care and Respect We are committed to treating everyone with care, inclusion and respect through honest conversations, thoughtful decision-making and genuine empathy. Integrity We build trust-based relationships by doing the right thing for each other, our clients and our communities. Be Great We strive for excellence and continuously seek opportunities to provide exceptional service and expertise to our clients. Adaptive We embrace change, adapt to evolving needs and remain flexible to solve problems for our employees, clients and community. We Not Me We prioritize the collective good of the firm, making selfless, team-centric and collaborative decisions. Our MissionBe great for our people, clients and communitiesOur NicheWe listen, understand and care ### History History Schneider Downs was established in 1956 by James T. Schneider and Paul Downs. Their leadership and vision set the stage for the future growth and success of the firm. In 1985, Schneider and Downs retired, and Raymond W. Buehler, Jr. and Kenneth A. Rowles assumed leadership. They moved the firm’s 50 professionals from Downtown Pittsburgh to 1133 Penn Avenue, a historic building located on the edge of Pittsburgh’s fabled Strip District. Then, in 2013, the Pittsburgh office moved to One PPG Place to accommodate the firm’s growth. With a growing number of Midwestern clients, Schneider Downs opened an additional office in Columbus, Ohio, in 1989. By the mid-1990s, the Columbus office had grown from just 1 to nearly 50 employees—and today it boasts a staff of more than 80 professionals. Buehler and Rowles shared the founders’ vision of providing quality and attentive client service together with insightful and innovative solutions. After Ken Rowles retired in 2003, Ray Buehler served as President and CEO until 2014, when he transitioned to Chairman and returned to the co-management philosophy, naming Timothy Hammer and Steven Thompson Co-Managing Shareholders. When Tim Hammer retired in 2020, Chris McElroy joined Thompson as the second Co-Managing Shareholder. In early 2020, a new office was opened in McLean, VA to serve clients in Washington DC and the surrounding areas. While the new office does not have dedicated staff, it provides the facilities and resources necessary for the firm to best serve existing clients in that area and demonstrates a commitment to expanding operations as part of our 2030 strategic plan. The firm has historically continued to develop our people, add talent and invest in technology to offer new services and solutions to meet the evolving needs of our clients. As part of our mission, we remain committed to continually introducing new services and practices based on ever-changing client needs and market conditions. We first added business advisory and internal audit services in the early 1990s, and today, we have a full array of consulting services, from technology and data tools and methodologies to risk and financial advisory. We will continue to introduce new capabilities as client needs arise. Within the Pittsburgh and Columbus offices, we have more than 500 personnel, including 50+ shareholders and partners, serving private and publicly traded companies and professional service firms, as well as not-for-profit and government entities. Schneider Downs is one of the 60 largest public accounting firms in the United States. Schneider Downs is also registered with the Public Company Accounting Oversight Board (PCAOB), enabling us to audit the financial statements of public companies, and with the Canadian Public Accountability Board (CPAB). ### Submit a Request for Proposal (RFP) Submit a Request for Proposal We invite you to submit your RFP and welcome the opportunity to work with you. You can either fill out the below form and submit your RFP via our website or submit to the below mailing address. Submit an RFP by online form: By Mail PittsburghATTN:MARKETINGSchneider DownsOne PPG Place, Suite1700 Pittsburgh, PA 15222 ColumbusATTN:MARKETINGSchneider Downs65 E.State Street, Suite 2000 Columbus, OH 43215 ### Management Management Team Our shareholders have directed corporations, owned small businesses and managed nonprofits. They know your business. Our shareholders and partners are dedicated to the growth, stability and mission of Schneider Downs.We know that these kinds of people are key to creating a quality organization, so we make sure our employees are involved and challenged in their work. Their continued dedication to Schneider Downs lets us remain fully committed to you. Schneider Downs All (55) Audit (19) Consulting (13) Tax (23) GEORGE E. ADAMS CPA Tax Shareholder ROSS S. ALESSANDRO III CPA Tax Shareholder GREGORY L. ALLISON JD, CPA/PFS, CFP® Tax Shareholder DONALD B. APPLEGARTH CPA Audit Shareholder PATRICK B. ARMKNECHT CPA, CITP Consulting Shareholder STEVEN A. BARBER CPA, MST Tax Shareholder JEANNE M. BARRETT CPA Audit Shareholder STACI L. BROGAN CPA Audit Shareholder JOSEPH A. BRUCE CPA Audit Shareholder BRETT T. CUBELLIS CPA Tax Shareholder RYAN R. DEATRICK CPA, CCIFP Audit Shareholder EUGENE M. DEFRANK CPA Audit Shareholder WILLIAM M. DELLER JR., CISA, CTPRP, CTPRA, CCSFP Consulting Shareholder GENNARO J. DIBELLO CPA Tax Shareholder MARK A. DIPIETRANTONIO CPA, CCIFP Tax Shareholder ERIC M. FAIR CISA, CDPSE, CBCLA Consulting Shareholder EDWARD R. FRIEL CPA Audit Shareholder PATRICIA R. GIUDICI CPA Audit Shareholder ADAM J. GOODE CPA Consulting Shareholder KIMBERLY P. GRIFFITH CPA Audit Shareholder JOHN J. HUCKLE Consulting Shareholder TONY P. IELASE CISA Consulting Shareholder KIMBERLY L. JAMES CPA Audit Shareholder PATRICK F. KERNS CPA Audit Shareholder SUSAN M. KIRSCH CPA, JD Tax Shareholder CARL N. KRIEBEL CISSP Consulting Shareholder MATTHEW S. LEGG CPA Tax Shareholder NICHOLAS D. LOMBARDO CPA Audit Shareholder BRIAN W. MATTHEWS CPA, CM&AA Consulting Shareholder CHRISTOPHER S. MCELROY CPA Tax Shareholder JAY R. MEGLICH CPA Audit Shareholder DAVID J. MITROS CPA Tax Shareholder DOUGLAS J. MORALLY CPA Audit Shareholder WOODROW M. MORRIS CPA Tax Shareholder JOHN R. NULL CPA Audit Shareholder EVAN C. OGRODNIK CPA Tax Shareholder THEODORE M. PETTKO CPA Audit Shareholder DANIEL P. PHILLIPS CPA Tax Shareholder SARAH R. PIOT CPA Tax Shareholder THOMAS D. PRATT CPA, ABV, CFF, CVA Consulting Shareholder JAMES A. SAYRE CPA Tax Shareholder CARL D. SCHARF CPA Tax Shareholder DARIN G. SCHINDLER CPA Tax Shareholder TOM SPRINGER Consulting Shareholder JUSTIN C. STEELE ESQ Tax Shareholder CARLEY R TASLOV CPA Consulting Shareholder STEVEN D. THOMPSON CPA Audit Shareholder TREVOR P. WARREN CPA Audit Shareholder LAUREN E. WEDDELL CPA Audit Shareholder MATTHEW C. WERNER CPA Tax Shareholder MEGAN J. WHITLOCK CPA Tax Shareholder RON S. WOLLETT JD Tax Shareholder STEPHEN R. WORTH CPA, JD Tax Shareholder ERIC M. WRIGHT CPA, CITP Consulting Shareholder JAMES B. YARD CPA CIA CISA Consulting Shareholder Wealth Management DAVID C. BRINKMAN CFA, CPA, CFP® Shareholder MICHAEL J. BUCCI CIMA® Shareholder DEREK J. EICHELBERGER CFA, CFP®, AIFA® Shareholder JASON M. LUMPKIN QKA®, AIF® Shareholder NANCY L. SKEANS CPA, CFP®, MBA Shareholder JASON R. STALEY CFA, CAIA® Shareholder SD Capital PETER J. LIEBERMAN Consulting Shareholder OF Special Counsel RAYMOND W. BUEHLER JR. CPA Shareholder PAUL M. MATVEY CPA Shareholder JEFFREY A. WLAHOFSKY CPA Shareholder Learn How We Can help you meet your goals Ask A Question Submit an RFP ### Case Studies Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. .elementor-383 .elementor-element.elementor-element-6b89d71c{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--margin-block-start:2rem;--margin-block-end:2rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}.elementor-383 .elementor-element.elementor-element-660f104b{--display:flex;--gap:0px 0px;--background-transition:0.3s;}.elementor-383 .elementor-element.elementor-element-2ed9004f .elementor-heading-title{color:var( --e-global-color-secondary );}.elementor-383 .elementor-element.elementor-element-2ed9004f > .elementor-widget-container{margin:0rem 0rem 2rem 0rem;}.elementor-383 .elementor-element.elementor-element-2967fb09{line-height:1;}.elementor-383 .elementor-element.elementor-element-910b672{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}.elementor-383 .elementor-element.elementor-element-3a627172{--display:flex;--background-transition:0.3s;--padding-block-start:0px;--padding-block-end:0px;--padding-inline-start:0px;--padding-inline-end:0px;}@media(max-width:1170px){.elementor-383 .elementor-element.elementor-element-6b89d71c{--margin-block-start:3.125rem;--margin-block-end:3.125rem;--margin-inline-start:0rem;--margin-inline-end:0rem;}}@media(min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:59%;}}@media(max-width:1170px) and (min-width:568px){.elementor-383 .elementor-element.elementor-element-660f104b{--width:75%;}} Here are just a few examples of how our Big Thinking and Personal Focus have helped our clients. Contact us to start the conversation about your business. Categories  All Advisory Audit Cybersecurity RAS Retirement Tax Technology Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Organization Severely Impacted By Covid-19. Big Thinking: Identify And Claim Over $1.1m In Refundable Credits. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Accurately Gauging Employee Credit Card Usage. Big Thinking: Revised Policies To Safeguard Client Funds. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Time Consuming Billing Process. Big Thinking: Utilize Robotic Process Automation To Reduce Manual Input Time By 75%. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Large Tax Burden In The Succession Plans Of A Family Business. Big Thinking: Creating A Grantor Trust To Save $1.5 Million. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Incorrect Accounting Methods Big Thinking: Seven Figure Tax Savings. Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he’s been with Schneider Downs since 1987. During a routine review of one of our client’s operations, Gennaro’s team identified something that wasn’t very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro’s expertise and eye for detail was critical in helping this client fix a problem they didn’t even realize that they had. “We’re good at identifying opportunities or exposures that aren’t on our clients’ radars,” Gennaro said. “It’s not necessarily what we were originally retained to do, but while we’re executing our engagements, we’re always looking for new ways to help our clients and minimize their tax burden.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Cybersecurity Defenses Compromised By Employees' Passwords Big Thinking: Significant Updates To The Cybersecurity Environment. Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client’s unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. “We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Complex Business Evaluation Case. Big Thinking: Dispute Settlement And Control Of The Business. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Not-for-profit Client Out Of 401(k) Compliance. Big Thinking: Allowing More Contributions By Highly Paid Employees. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Liquidity Issues For A Local Company. Big Thinking: New Ways To Predict And Control Cash Flows. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: The Tax Implications Of Overseas Valuations. Big Thinking: $1 Million In Tax Savings. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Shareholder DON APPLEGARTH has more than 26 years of public accounting experience and is the practice leader of the Schneider Downs Accounting, Assurance and Advisory Services department. He has experience serving companies in a variety of industries, including but not limited to manufacturing, retail, construction, real estate, transportation and logistics, and natural resources. Don’s team had an ongoing audit engagement with a large manufacturing company that ran two subsidiaries as if they were separate companies. This resulted in disparate accounting, human resources and IT functions. In addition to providing traditional audit and tax services, Don tapped the expertise of Schneider Downs’ Technology Services, Risk Advisory Services, and Human Resource experts to present a comprehensive back office consolidation plan. “We conducted a comprehensive back office assessment of technology, processes, and a skills assessment of existing client personnel,” Applegarth said. “Leveraging strong relationships with the owner and key decision makers, the client trusted our multi-disciplinary team to come up with an effective back office implementation that ended up saving the company more than $600,000 annually. The client knew there would be savings, but they were extremely pleased with the amount of savings, new synergies, and tangible benefits to the Company’s operations going forward.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: Inefficiency In Data Extraction And File Conversion. Big Thinking: Use Proprietary Software To Do What Once Took Days In Just Hours. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted’s team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. “Our efforts on behalf of our client enhanced their timeliness and efficiency,” Pettko said. “Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it’s a win-win.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Family-owned Business Needing Tax Advice. Big Thinking: $1.4 Million In Eligible Deductions. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Limited Employee Benefit Plan. Big Thinking: Increased Contributions And Employee Retention. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: New Rules For Business Deductions. Big Thinking: New Tax Planning Strategies To Save $300,000. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: A Global Company Needing Better Internal Controls. Big Thinking: A Network Of Professionals To Implement Best Practices. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services. One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global – one of the largest associations of independent public accounting firms in the world – and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris’ team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs’ shareholder-led service model positioned the team to have a sophisticated understanding of the client’s objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. “We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. .elementor-2184 .elementor-element.elementor-element-774d02e8{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--background-transition:0.3s;--padding-block-start:5.625rem;--padding-block-end:5.625rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}.elementor-2184 .elementor-element.elementor-element-774d02e8:not(.elementor-motion-effects-element-type-background), .elementor-2184 .elementor-element.elementor-element-774d02e8 > .elementor-motion-effects-container > .elementor-motion-effects-layer{background-image:url("https://schneiderdowns.com/wp-content/uploads/2023/12/bg-question.png");background-position:center center;background-repeat:no-repeat;background-size:cover;}.elementor-2184 .elementor-element.elementor-element-774d02e8, .elementor-2184 .elementor-element.elementor-element-774d02e8::before{--border-transition:0.3s;}.elementor-2184 .elementor-element.elementor-element-593af2b3{--display:flex;--flex-direction:column;--container-widget-width:calc( ( 1 - var( --container-widget-flex-grow ) ) * 100% );--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--align-items:center;--gap:0.75rem 0.75rem;--background-transition:0.3s;--padding-block-start:0rem;--padding-block-end:0rem;--padding-inline-start:0rem;--padding-inline-end:0rem;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 .sd-icon{font-size:5.1rem;color:#FFFFFF;}.elementor-2184 .elementor-element.elementor-element-29e5bbd1 > .elementor-widget-container{margin:0rem 0rem 0.5rem 0rem;}.elementor-2184 .elementor-element.elementor-element-224098a{text-align:center;}.elementor-2184 .elementor-element.elementor-element-224098a .elementor-heading-title{color:#FFFFFF;font-weight:200;}.elementor-2184 .elementor-element.elementor-element-420612f7{text-align:center;}.elementor-2184 .elementor-element.elementor-element-420612f7 .elementor-heading-title{color:#FFFFFF;font-size:1.06rem;}.elementor-2184 .elementor-element.elementor-element-4ccff9d6 > .elementor-widget-container{margin:3rem 0rem 0rem 0rem;}@media(max-width:1170px){.elementor-2184 .elementor-element.elementor-element-774d02e8{--padding-block-start:3.125rem;--padding-block-end:3.125rem;--padding-inline-start:1rem;--padding-inline-end:1rem;}}@media(min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:41%;}}@media(max-width:1170px) and (min-width:568px){.elementor-2184 .elementor-element.elementor-element-593af2b3{--width:100%;}} Have a question? Ask us! We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible. Ask Us Read More >Read Less < Do you need help readying your company for a sale? Email me directly here. ### SD Standard The relationship between Schneider Downs and our clients is based on trust. We know our clients have a choice of service providers, and we’re proud that they have selected our firm. The SD Standard is our commitment to honor that trust. Schneider Downs pledges to each and every client that our baseline standard for meeting their needs will be to provide best-in-class service. This is called the SD Standard, and it represents our commitment to providing Big Thinking with a Personal Focus. ### Audio Schneider Downs Audio Clips Business AdvisorsJoel RosenthalWhat should you look at if you are considering buying a company?What is Forensic Accounting?What are some common Fraud Schemes?What are some common Fraud Indicators?How can Financial Modeling help a business?What are the reasons to get a valuation of a company?What methods are typically used to conduct a valuation of a company?What are some key areas that are considered when doing a valuation of a company?Schneider Downs Corporate Finance, LPSchneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC.Peter LiebermanHow does a buyer determine how much my business is worth?What is a seller note?Schneider Downs Technology AdvisorsPatrick ArmknechtWhat are the signs that my software is not meeting my company’s needs?What should I look for when selecting a technology vendor to handle a software implementation?What are the keys to a successful software implementation?Schneider Downs Wealth Management AdvisorsNancy SkeansWhat is my best option for funding my child’s college education?How much should I have in an emergency cash fund?Should the surging budget deficit create concerns about inflation?Should I pay off my mortgage before retirement?Should I borrow against my retirement savings to pay for my child’s college education?What is a reasonable return expectation for the stock market? Schneider Downs Tax AdvisorsTimothy AdamsIs my business filing returns for all tax types due?Is my business taking advantage of state tax credits, incentives and grants that may be available?Is there a way to mitigate or limit taxes owed due to non-filing?Is my organization holding any unclaimed property?What is Fin 48 for Private Companies?What do state budget deficits mean for your company?What are tax amnesty programs? ### Media Center Media Center Schneider Downs is pleased to accommodate media requests for interviews or background information. Media inquiries can be directed to Alicia Furlan. For inquiries regarding specific topics, the following professionals are available for interviews and speaking engagements: Schneider Downs & Co. Steven Thompson and Christopher McElroy Tax Advisory Services Justin Steele State and Local Tax (SALT) Stephen Worth Assurance Advisory Services Staci Brogan (Pittsburgh) Trevor Warren (Columbus) Risk Advisory/SOX James B. Yard Wealth Management Derek Eichelberger Retirement Planning/ Employee Benefit Services Jason M. Lumpkin Technology Advisory Services Eric Wright Investment Banking Peter J. Lieberman Business Advisory Services Adam Goode For more information on our industry group contacts, visit our Industries section. Audio Archive > ### Build Back Better Update Center TAX REFORM 2022 – BUILD BACK BETTER TECHNICAL ARTICLES SUGGEST A TOPIC Tax Reform 2021 - Build Back Better: Status Update as of December 22, 2021 It appears that the Build Back Better legislation is, at best, being put on hold until after January 1, 2022… Read More > Tax Reform 2021 - Build Back Better: Status Update as of December 9, 2021 Not much has changed since the last post to our tax blog. The Build Back Better bill is still parked… Read More > Tax Reform 2021 - Build Back Better: Status Update as of November 15, 2021 On Monday, November 15, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA).  This bill is separate… Read More > Tax Reform 2021 - Build Back Better: President Biden`s Updated Framework as of October 28, 2021 As we noted in our recent letter on October 25, The Tax Evolution Continues article, President Biden and democratic leaders in… Read More > Tax Reform 2021 - Build Back Better: The Tax Evolution Continues, October 25, 2021 Update As we enter the last week of October, the movement on proposed tax legislation appears to be shifting faster than… Read More > Introduction to Tax Reform 2021 – The Proposed “Build Back Betterâ€_x009d_ Legislation For the better part of two years, U.S. taxpayers have been hearing about more changes to federal tax law (over… Read More > Sort by Most Recent Most Viewed Categories Authors Advanced Search 401(k) Plans American Jobs Plan American Rescue Plan Act Audit Automobile Benefits Business Advisory Business Process Optimization Business Valuation CARES Act Construction Consulting Coronavirus Corporate Finance Cybersecurity Data Analytics Digital & Technology Due Diligence Emerging Technology Energy & Resources ERISA Estate Planning Exit and Succession Planning Fraud Government Healthcare Higher Education Human Resources Internal Revenue Service International International Tax Loans Manufacturing Mergers and Acquisitions Not-for-Profit Paycheck Protection Program (PPP) Private Client Services Private Equity Professional Services Public Companies R&D Tax Credit Real Estate Restaurants Retail Risk Advisory/Internal Audit Schneider Downs SD Medallion Services SECURE Act 2 Services for Private Equity Firms Small Business (SBA) State and Local Tax Tax Tax Impact Tax Policy Tax Reform TCJA Transportation & Logistics Wealth Management Women in Business A | B | C | D | F | G | H | J | K | L | M | N | O | P | R | S | T | U | V | W | Z Author Search ENTER Allen W Wassel Allen Wassel Alyssa Brunatti Amy Lehner Audrey Hendarsah Austin Nace Brandon Deal Brett Cubellis Brian Webster Brianna Lundy Brittany Becker Carl D. 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Darpino Nathan Johnstonbaugh Nneoma Njubigbo Phyllis Tedesco Raimee Gordon Richard Pirollo Robert Mele Robin S. Murphy Ryan Bianco Ryan DeDominicis Ryan R. Deatrick Ryan T. Broze Sarah Hoagland Sarah R Piot Schneider Downs Professional Sean Griffin Shad Fagerland Stephen D. Thimons Stephen R. Worth Steven A. Barber Susan Paulauskas Taylor Mahan Theodore M. Pettko Tom Pratt Trevor P. Warren Tyler Brose Woodrow Morris Xiaoyan Li Zachary Zeigler Tax, Transportation & Logistics Chad Kort | 09.26.2024 New Per Diem Rates Announced for the Transportation Industry – Can Your Company Use This as Another Driver Retention Tool? The IRS recently released Notice 2024-68, which increased the special per diem rates for 2024… Read More Tax Robin S. Murphy | 08.27.2024 Is Lobbying by Tax-Exempt Organizations Permissible? The United States is in the midst of an election season, which brings discussions, debates… Read More Tax, Tax Policy Schneider Downs Professional | 08.19.2024 2025 U.S. Open Presents Opportunity for Oakmont Residents Turn your home into a lucrative rental during PGA tournaments with the Augusta Rule. Discover… Read More R&D Tax Credit, Tax Mayera Iqbal | 08.19.2024 IRS Relaxes Documentation Requirements for Claiming R&D Tax Credits on Amended Returns Since January 10, 2022, the IRS has required that taxpayers provide supplementary information beyond the… Read More Tax Jennifer C Doering | 08.19.2024 Connelly v. United States In May, I wrote about a case before the U.S. Supreme Court with potential estate… Read More Construction, Tax Janelle Merlo | 08.19.2024 The Interaction between Section 174 Capitalization Requirements and Section 460 Long-Term Contracts Under the Percentage-of-Completion Method Before 2022, taxpayers who incurred research and experimental (Section 174) costs could fully deduct them… Read More Tax McKenna Pope | 08.14.2024 IRS Makes Free Tax Filing Program Permanent The Internal Revenue Service recently announced it would be expanding its free tax filing program,… Read More Tax, Tax Reform James Sayre, Cache Heidel | 08.12.2024 Pennsylvania NOL Limitation Changes On July 11th, the Pennsylvania General Assembly passed and Governor Shapiro signed the 2024-25 fiscal… Read More Energy & Resources, Tax Ryheem Dove | 08.06.2024 Total Impact Fees Collected – Another Large Decline The Pennsylvania Public Utility Commission announced that the annual distribution from impact fees collected for… Read More Energy & Resources, Tax Colton Lutz | 08.05.2024 The Impact of PA Senate Bill 654 on the Oil & Gas Industry in Pennsylvania On July 11, 2024, Pennsylvania Governor Josh Shapiro approved PA Senate Bill 654 as part… Read More 1 2 3 4 5 … 67 RESOURCESHR 5376 Rules Committee Release: Committee on AgricultureBuild Back Better Proposed Reconciliation BillJoint Committee On Taxation's Greenbook - 5.10.2021Joint Committee Taxation Report on Build Back BetterAICPA Comment Letter on Proposed Tax Legislation – 10.1.2021H.R. 5376 Build Back Better ActHELPFUL LINKSThe White House Build Back Better AgendaTax Foundation’s Build Back Better Act: Details and Analysis of the $3.5 Trillion Budget Reconciliation BillHouse Budget Committee Build Back Better ResourcesBrookings’ What is Reconciliation in Congress?USAGov – How Laws are Made ### Webinar: BI360 -The Complete Business Intelligence Suite When: January 16, 2014 10:00AMSchneider Downs & Co. invites you to attend this informative webinar!BI360 provides a complete Excel and web-based Reporting, Budgeting, Dashboard and Collaboration solution with a preconfigured Data Warehouse that integrates to all of your data sources for complete insight!  Because BI360 comes with out-of-the-box integration it takes only a fraction of the time to implement compared to other Business Intelligence solutions.  Join us for a free webcast where attendees will see how to:Easily design reports with the modern BI360 Excel interfaceEmpower decision makers to 'run' their own reports and drill down for analysisDrive efficiencies with collaborative budgeting and reporting that enable dialogue and analysisCreate at-a-glance dashboards with no technical expertiseConsolidate many data source into one system, the BI360 Data Warehouse, for integrated reporting and analysisJoin us and learn how you can help your organization increase productivity, insight and informed decisions and decrease manual keying and inaccuracies by making the move to BI360, the next-generation, integrated business intelligence solution.Thursday, January 16, 201410:00 AM - 11:30 AM ESTRegister Today!If the above link does not work, please copy and paste the following URL into your browser. https://www3.gotomeeting.com/register/231242118 ### Events Schneider Downs Events Upcoming Past Events No upcoming events SOC 2 Compliance: Key Steps to Success in 2024 Webinar January 25, 2024 2023 CPE Month Webinar Series December 5, 2023 Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules November 15, 2023 Tee Off Against Cancer – 2023 Men Wear Pink Fundraiser October 18, 2023 Guest Bartending – 2023 Men Wear Pink Fundraiser September 19, 2023 ESG Data and Greenwashing: Key Considerations for Retailers September 14, 2023 View More Events ### Video Library Video Library Resource Type All Resources Types Our Thoughts On Events Quick References Remote Learning Videos Categories All Categories 11-K Extensions 401(k) Plans Affordable Care Act (ACA) American Jobs Plan American Rescue Plan Act Audit Audit GAAP Audit/Tax Automobile Benefits Business Advisors Business Process Optimization Business Restructuring Business Valuation CARES Act CECL Compensation Studies Construction Consulting Continuity Coronavirus Corporate Finance CPE Eligible Webinars Cyber Cyber Security Cybersecurity Data Analytics Digital & Technology Digital Transformation Due Diligence Emerging Technology Energy & Resources ERISA ESG Estate Planning Estate Tax Exit and Succession Planning Financial Services Fraud Fraud/Investigative & Forensic Accounting Global Government Health Care Higher Ed Higher Education Human Resources IFRS Impairment Industry Specific Internal Revenue Service International Internship IT Risk Advisory Large Companies Lease Accounting Leases Litigation Support Loans Manufacturing Marketing Mergers and Acquisitions Modern Workplace N NFP Cash Flow Not-for-Profit OMB Release Paycheck Protection Program (PPP) Personal Finance Presentations & Webinars Private Client Services Private Equity Professional Services Public Companies Publicly Held Company Real Estate Restaurants Retail Retirement Plan Participant Education Retirement Solutions Risk Advisory/Internal Audit Sarbanes-Oxley Schneider Down Services and Solutions Schneider Downs Schneider Downs Wealth Management Advisors Videos SD Medallion Services SECURE Act SECURE Act 2 Services for Private Equity Firms Small Business (SBA) SOC SOC 2 State and Local Tax Stimulus Package Tax Tax Impact Tax Policy Tax Reform TCJA Technology and Data Solutions Third Party Risk Management Top Cybersecurity Questions of 2021 Top Cybersecurity Questions of 2022 Transaction Advisory Services Transportation & Logistics Wealth Management Webinars Women in Business Working at Schneider Downs Search Displaying 57 results Which cyber maturity framework is right for us? Videos Which cyber maturity framework is right for us? Top Cybersecurity Questions of 2022 Big Thinking Personal Focus Videos Big Thinking Personal Focus Working at Schneider Downs Digital Transformation Solutions Videos Digital Transformation Solutions Technology and Data Solutions What is business email compromise and why is it so lucrative for threat actors? Videos What is business email compromise and why is it so lucrative for threat actors? Top Cybersecurity Questions of 2022 Schneider Downs Wealth Management Advisors Careers Videos Schneider Downs Wealth Management Advisors Careers Working at Schneider Downs Estate Planning Videos Estate Planning Schneider Down Services and Solutions Tax Credits & Incentives Videos Tax Credits & Incentives Schneider Down Services and Solutions What exactly is a Purple Team Assessment and how does it work? Videos What exactly is a Purple Team Assessment and how does it work? Top Cybersecurity Questions of 2022 Pre-tax vs Roth Contributions Videos Pre-tax vs Roth Contributions Retirement Plan Participant Education 1 2 3 4 5 … 7 Stay In-The-Know Sign up for our email newsletter to receive all the latest news and views right in your inbox. E-mail CommentsThis field is for validation purposes and should be left unchanged. Sign up ### Remote Learning Remote Learning from Schneider Downs Schneider Downs takes great pride in providing useful presentations and webinars to help organizations learn more about strategic tools and opportunities. Browse our list of free webinars to find your next great idea. Resource Type All Resources Types Our Thoughts On Events Quick References Remote Learning Videos Categories All Categories 11-K Extensions 401(k) Plans Affordable Care Act (ACA) American Jobs Plan American Rescue Plan Act Audit Audit GAAP Audit/Tax Automobile Benefits Business Advisors Business Process Optimization Business Restructuring Business Valuation CARES Act Case Studies CECL Compensation Studies Construction Consulting Continuity Coronavirus Corporate Finance CPE Eligible Webinars Cyber Cyber Security Cybersecurity Data Analytics Digital & Technology Digital Transformation Due Diligence Emerging Technology Energy & Resources ERISA ESG Estate Planning Estate Tax Events Exit and Succession Planning Financial Services Fraud Fraud/Investigative & Forensic Accounting Global Government Health Care Higher Ed Higher Education Human Resources IFRS Impairment Industry Specific Internal Revenue Service International Internship IT Risk Advisory Large Companies Lease Accounting Leases Litigation Support Loans Manufacturing Marketing Mergers and Acquisitions Modern Workplace N NFP Cash Flow Not-for-Profit OMB Release Our Thoughts On Paycheck Protection Program (PPP) Personal Finance Presentations & Webinars Private Client Services Private Equity Professional Services Public Companies Publicly Held Company Quick References Real Estate Restaurants Retail Retirement Plan Participant Education Retirement Solutions Risk Advisory/Internal Audit Sarbanes-Oxley Schneider Down Services and Solutions Schneider Downs Schneider Downs Wealth Management Advisors Videos SD Medallion Services SECURE Act SECURE Act 2 Service Overviews Services for Private Equity Firms Small Business (SBA) SOC SOC 2 State and Local Tax Stimulus Package Tax Tax Impact Tax Policy Tax Reform TCJA Technology and Data Solutions Third Party Risk Management Top Cybersecurity Questions of 2021 Top Cybersecurity Questions of 2022 Transaction Advisory Services Transportation & Logistics Videos Wealth Management Webinars White Papers Women in Business Working at Schneider Downs Authors All authors Abigail Sickafuse Abigail Turnbull Adam Costa Adam J. Goode Alexa Xenakis Alexander Papson Alexandra Vander Molen Alicia Furlan Alissa M. Garcia Allen W Wassel Allen Wassel Allie Thompson Alyssa Brunatti Alyssa Fudala Amy Lehner Andrea Pfaadt Andrew Jackson Andrew Trettel Andrew Wherley Andrew Widmer Angela Danielle Morris Anthony J. Margiotta Anthony Milan Asher Passalinqua Athena Walton Audrey Hendarsah Austin Nace Bailey Williams Ben Stock Benjamin Tjoelker Bernie Rafferty Bill Deller Bob Whalen Brandon Deal Brandon Embreus Brendan Leech Brett Cubellis Brian W. Matthews Brian Webster Brianna Lundy Bridget Pike Brittany Becker Brooke Florian Cameron Latham Carl D. Scharf Carl Kriebel Carley Taslov Carol Murray Carrie Urey Catherine Martz Chad Kort Charlotte Garraway Chelsea Jackson Chelsea Sarnowski Chloe Vaught Christian Johnson Christian Wheeler Christopher Cerda Christopher Kosty Christopher L Watson Christopher Veitch Clay A. Penrose Colten Oakley Colton Boring Connor Bigelow Corynn Moore Courtney Moriarty Dan OToole Dan R. Nesbit Dan Riske Daniel Hooven Daniel Napierkowski Daniel P. Phillips Daniel Struth Danielle Jacobs Danielle Miceli Danielle Strobel Danny White Dave Snyder David C. Brinkman David James David Murphy Debra Ann Ries Debra Stockdale Del Wilmot Dennis R. Mowrey Derek Eichelberger Derek J Godwin Derek Pugliese Domenic Eannace Donald B. Applegarth Donald Eckrod III Donna Wolfson Doug J. Morally Ed Kremmel Edward R. Friel Elena Faurie Elizabeth Beck Elizabeth Rhodes Emily Monda Emmalee Nerantzis Eric M. Fair Eric M. Wright Erin Haase Erin M. Puko-Wilking Eugene M. DeFrank Evan C Ogrodnik Frank A. Wisehart Frank E Dezort Gabriel Zisk Garrett LaBrosse Gary Muggli Gennaro J. DiBello George E. Adams Gina Trulick Greg McGuire Gregory L. Allison Haddae Allen Han Jumashov Hannah Windhorst Harley Stuebgen Hayley Planitzer Heather A. Haemer Henry J. Szymanski Holly L Russo Isaac McKinley Isabella Meese Jack Steve Jack Stewart Jacob Dixon Jacob Katz Jake Busshaus Jake Gentile James Moyer James Sayre Jared Kurz Jason Cetra Jason M Lumpkin Jason M Reljac Jason Staley Jay R. Meglich Jeanne M. Barrett Jenna M Zelenski Jenna Risacher Jennifer C Doering Jennifer Zatchey Jeremy Matelan Jessica Chin Jessica L. Miller Jessica Murtha Jessica Wenger Jessica Wingertsahn Jim Gilboy Joe Bruce Joe Tritschler Joel M. Rosenthal John Sullivan John Waybright Jonathan Grim Jonathan Rice Jordan Schofield Jordan Toohey Joseph Carna Joseph DeAugustino Josh Gailey Joshua McFall Joshua Zimmerly Josie Mills Justin Mudryk Justin Premich Justin Steele Justin Wolford Kaitlin Pack Kari Tallarico Owens Karl Bixler Karlye N. Rowles Katherine Kwan Kayla Huston Kelci Winters Kelly Murphy Kevin Atkins Kevin Begley Kevin M. Davis Kimberly Griffith Kimberly L James Kimberlyann Davis Kira Waugaman Kirk Mitchell Kristen Sorice Kristyn Stang Kyle R Zeller Lara E Fuller Laria Moore Lauren E. Weddell Lindzee Nicholson Logan Kowcheck M. Michele Milheim Mackenzie J. Peterman Madeline Adamczyk Maggie Havelka Maggie Welsh Mailiis Simovart Marc P. Brdar Marcy King Maria D. Stromple Maria Stuvek Mark A. DiPietrantonio Mark Riley Marko Zivanov Mary D. Richter Matt Biggs Matt Hartman Matt McNeal Matthew Cavanagh Matthew Nace Matthew R. Kraemer Matthew Rozanski Megan Krull Megan Muller Melanie M. LaSota Melissa Gallo Michael Divens Michael Hart Michael Maloney Michael P. Scalamogna Michael Rocco Michael Valek Michael Vizzini Michael W. Darpino Michael Withrow Mike Bucci Mike Winsko Miles Gibson Morgan Crawford N Nancy L. Skeans Nathan Johnstonbaugh Nathaniel Novacco Nick Lagnese Nick Lombardo Nick Seiler Nickolas DeLisio Nicolas Leone Nicole Miller Nneoma Njubigbo Noelle Harrold Patricia M. Warrick Patrick B. Armknecht Patrick Kelly Patrick Kerns Patti Giudici Peter Frauen Peter J. Lieberman Phyllis Tedesco Rachel Turnbull Raimee Gordon Raymeir Williams Rebecca Hoffman Rebecca Yan Reilly Oliverio Richard Pirollo Robert L. Morgan Robert Mele Robin S. Murphy Roger Spears Ron Wollett Ross Alessandro Ryan Bianco Ryan DeDominicis Ryan R. Deatrick Ryan T. Broze Samuel J. Becherer Sarah Hoagland Sarah R Piot Sarah Schauble Sarah Walker Sarah Zwiener Schneider Downs Professional Scott Walton Sean Fogarty Sean Griffin Sean McCann Sean P. Smith Sean Thomas Seth Robertson Shad Fagerland Shan Zhou Shane M. Gastecki Staci L. Brogan Stephen Bish Stephen D. Thimons Stephen R. Worth Steven A. Barber Steven D. Thompson Stu P. Lawson Susan M. Kirsch Susan Paulauskas Tarun D. Reddy Taylor Anderson Taylor Mahan Theodore M. Pettko Thomas Yoder Tim Martin Timothy M. Wolfgang Tom Pratt Tom Springer Trevor P. Warren Trudie E. Kozar Tyler Brose Varun Devulapalli Woodrow Morris Xiaoyan Li Zach Cicchini Zachary Zeigler Search Displaying 67 results Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules Remote Learning Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules CPE Eligible Webinars, Industry Specific ESG Data and Greenwashing: Key Considerations for Retailers Remote Learning ESG Data and Greenwashing: Key Considerations for Retailers CPE Eligible Webinars, Industry Specific Inside a Ransomware Attack: Chronicles of a Rapid Responder Remote Learning Inside a Ransomware Attack: Chronicles of a Rapid Responder CPE Eligible Webinars, Industry Specific 2023 Not-for-Profit Symposium Remote Learning 2023 Not-for-Profit Symposium CPE Eligible Webinars, Industry Specific Tools and Strategies for Financially Distressed Institutions of Higher Education Remote Learning Tools and Strategies for Financially Distressed Institutions of Higher Education CPE Eligible Webinars, Industry Specific Third Party Servicers and Higher Education Institutions - How to Navigate the New DOE Guidance Remote Learning Third Party Servicers and Higher Education Institutions - How to Navigate the New DOE Guidance CPE Eligible Webinars, Industry Specific Timely Tax Topics for Retail and Restaurant Businesses Remote Learning Timely Tax Topics for Retail and Restaurant Businesses Audit/Tax, CPE Eligible Webinars 2023 Employee Benefits Forum Remote Learning 2023 Employee Benefits Forum CPE Eligible Webinars, Industry Specific 2022 CPE Month Webinar Series: Consulting Update Remote Learning 2022 CPE Month Webinar Series: Consulting Update CPE Eligible Webinars, Wealth Management 1 2 3 4 5 … 8 ### Transportation & Logistics Transportation and Logistics Services At Schneider Downs, we go the extra mile and are in it for the long haul when it comes to serving clients in the transportation and trucking industry.The Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. For more than 30 years, we have worked with multiple large clients in the top 100 and continue to provide innovative solutions to help our clients reach their strategic goals.We meet on a regular basis to review and analyze issues central to this industry and understand the issues facing you today. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.Transportation & Logistics Industry ServicesAt Schneider Downs, we provide extensive and comprehensive solutions to our transportation and logistics industry clients including:BUSINESS ADVISORYServices include compensation studies, profitability and operations management, business restructuring, litigation support, captive insurance, fuel hedging and driver retention strategies. Learn moreCYBERSECURITYServices include penetration testing, vulnerability assessments, ransomware security, phishing simulations, and digital forensics and incident response. Learn moreEXIT PLANNING AND SUCCESSIONServices include exit planning and succession strategy consulting, family business transitions, owner and business readiness assessments, deal killers, ESOP and gifting to individuals or trusts. Learn moreRISK ADVISORYServices include SOC reporting, third-party risk management, internal audit sourcing and co-sourcing, risk assessments, business process optimization and IT risk advisory. Learn moreTAX ADVISORY SERVICESServices include tax planning and compliance, income tax accounting (ASC 740), State and local tax (SALT), cost segregation, and credits and incentives (Federal, state, R&D, etc.). Learn moreSD DIGITALServices include ERP lifecycle solutions, intelligent automation, data analytics and lease accounting software. Learn moreTRANSACTION ADVISORYServices include business valuation, due diligence and quality of earnings (buy-side/sell-side), and investment banking. Learn more.Additional Transportation & Logistics ServicesAudit and AssuranceData PrivacyEmployee Stock Ownership Plan (ESOP)Estate and Succession PlanningExcise & Motor Fuels TaxPCI DSS ComplianceR&D Tax Credit for Transportation & LogisticsRetirement SolutionssimpLEASE Accounting SoftwareState and Local TaxThird-Party Risk ManagementTransportation & Logistics AffiliationsWe are active members of industry-related associations including the American Trucking Association, National Accounting and Finance Council, Pennsylvania Motor Truck Association, Pittsburgh Traffic Club, Ohio Trucking Association, Columbus Region Logistics Council and the Council of Supply Chain Management Professionals (Columbus Chapter).   Transporation & Logistics Industry Resources Schneider Downs Transportation & Logistics Articles Transportation & Logistics Resource CenterTransportation & Logistics Industry LinksAmerican Trucking Association’s National Accounting and Finance CouncilOhio Trucking AssociationPennsylvania Motor Truck AssociationTransport Topics Online About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > ### Retail & Business-to-Consumer Retail and Business-to-Consumer Services Retailers must have access to a business partner that understands the nuances and complexities of the industry and the dynamic of the Retail & Business-to-Consumer environment in which they operate. Competition in the market can be fierce, and we are here to help.We have experience working with several regional, national and international organizations, and we possess the knowledge and capability to provide value to any entity within the industry. At Schneider Downs, we strive to maximize the potential of our clients’ operations, while growing revenue and reducing costs.As one of the largest firms in the tri-state region, we know the value of personal focus and are a PCI Certified Quality Security Assessor. We began serving retail clients in 1956, and today, our practice has more than 20 individuals with retail experience serving more than 50 B2C clients across all of our practice disciplines.Each day, we are interacting with retailers in the region, and we are proud to say that our client list includes a broad spectrum of companies that have a consumer orientation and focus.Retail & Business-to-Consumer Sectors We ServeWe understand the unique challenges Retailers & Business-to-Consumer entities face and have experience serving clothing retailers, convenience stores, department stores, discount stores, entertainment companies, restaurants, furniture distributors, the hospitality industry, jewelry stores, wholesalers and specialty stores.Retail & Business-to-Consumer Industry Services:At Schneider Downs, we provide extensive and comprehensive services to our Retail & Business-to-Consumer services clients including:Accounting AdvisoryAudit and AssuranceBusiness AdvisoryCost SegregationCybersecurityInternational TaxPCI DSS ComplianceSD CapitalSD Digital State and Local Tax (SALT)simpLEASE Lease Accounting SoftwareTax Credits and IncentivesThird-Party Risk ManagementWealth Management  Retail & Business-to-Consumer Industry Resources Retail and Business-to-Consumer Overview Schneider Downs Retail Articles Schneider Downs Remote Learning CenterAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Real Estate Tax, Accounting and Advisory Expertise for Real Estate ProfessionalsThe real estate industry demands specialized expertise in its technical, financial, and operational aspects. Schneider Downs is a trusted advisor, delivering specialized tax, accounting, and advisory services to help clients manage the risks and opportunities associated with income taxes, property taxes, green incentives, depreciation, and gains upon sale, while ensuring compliance with critical deadlines and optimizing cash flow.As strategic business advisors, we provide comprehensive consulting and investment expertise to help clients tackle complex challenges, raise capital, structure deals and identify new opportunities. Whether it’s optimizing operations, securing financing, or facilitating mergers and acquisitions, our team works closely with clients to drive growth and maximize value.Our unique blend of tax, consulting, and investment expertise enables us to deliver comprehensive solutions throughout the real estate lifecycle, which is why national owners, developers and investors trust Schneider Downs.Real Estate Tax AdvisoryWe help real estate clients maximize ROI and deal performance starting with pre-development or pre-acquisition tax advisory and planning to maximize tax benefits and improve future cash flow.Our approach focuses on structuring transactions to leverage tax credits, incentives, and deferral strategies, including like-kind exchanges, green building initiatives and opportunity zone investments, ensuring clients optimize their tax position while enhancing investment returns.Real Estate Tax Credits and IncentivesWe help real estate clients assess federal, state, and local tax credits and incentives, including those from the Inflation Reduction Act, historic preservation, and clean energy programs, to maximize funding and bridge any gaps.Real Estate Attest ServicesSchneider Downs provides tailored attest services to help real estate companies ensure financial accuracy and regulatory compliance, such as financial institution covenants or your investor agreements. Our audits, reviews, employee benefit plan audits and agreed-upon procedures support transparent reporting, boost investor confidence, and align with industry standards. We perform attest work in accordance with U.S. GAAP, Income Tax Basis or other bases of accounting based upon your unique needs. With deep expertise in real estate accounting and risk advisory, we deliver reliable insights to enhance strategic decision-making. We are the firm of choice for financial statement assurance and providing customized, independent solutions.Real Estate Value Advisory and Investment BankingThrough our partnership with SD Capital, our team delivers comprehensive value advisory, investment banking, and M&A services, maintaining a keen pulse on real estate market trends, deals, and insights.Real Estate Business Consulting and Business SolutionsSchneider Downs offers a wide range of consulting solutions tailored to every stage of the real estate life cycle. We help companies maximize investments and drive bottom-line impact through back-office assessments, digital modernization, and process optimization.Accounting Advisory ServicesBack Office OptimizationDebt Restructuring ReportingDigital ModernizationExchange AdvisoryManaged Accounting ServicesProcess Control AuditsSell-side Financial Due DiligenceTransaction AdvisoryValuation ServicesFrom enhancing efficiency and profitability to providing strategic and financial guidance for transactions, our team delivers the specialized expertise real estate clients demand and deserve.SD DigitalSD Digital's mission is to help businesses discover the power of digital through strategic, efficient and attainable solutions. With a pioneering spirit and client-first mindset, we strive to de-risk, demystify and deliver outcome-focused, iterative solutions that translate technology into transformative change.Data Analytics and Power BIPower BI Enterprise SolutionsDigital ModernizationSD inSiteIntelligent AutomationSimpLEASE AccountingMicrosoft Dynamics ERPSolver Extended Financial Planning & Analysis Ready to Get Started? Contact Us Schneider Downs is a Proud Member of the NAIOP Why Schneider Downs? With our big thinking and personal focus, we provide dedicated real estate advisory services, offering expert guidance and investment insight that clients deserve at every stage of the real estate lifecycle.A Partner at Every StageFrom acquisition to disposition, Schneider Downs offers trusted guidance to help you navigate and succeed in every phase of your real estate journey.Access to the Schneider Downs NetworkWith a strong professional network and specialized teams in capital markets, digital solutions, and advisory, we provide the resources to adapt and thrive in a dynamic real estate market.Proven ExperienceWith decades of hands-on experience, we solve complex challenges and deliver results that drive real estate investment success.Reliable ComplianceWe help clients meet critical tax deadlines and stay informed and compliant with ever-changing regulations.Specialized ExpertiseWe bring deep knowledge of real estate’s financial, operational, and technical complexities across sectors like commercial, industrial, residential, multifamily, student housing, hospitality, and land development.Value-Driven StrategiesOur team maximizes returns through strategic ownership structures, debt optimization profit analysis, and transaction planning.* Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC.Real Estate Resources Schneider Downs Real Estate Articles Schneider Downs Real Estate Industry Overview Schneider Downs Remote Learning CenterAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.  * Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Innovation Transformation: The Ongoing Journey Toward Audit Process Improvement The latest in an ongoing series on the Schneider Downs Audit Practice’s commitment to innovation transformation. As our firm approaches… Read More > OMB Releases 2025 Compliance Supplement The U.S. Office of Management and Budget (OMB) has officially released the 2025 Compliance Supplement. This is after a draft… Read More > 3 Questions Emerging Technology Companies Need to Ask About SOC Reports In today’s competitive and data-driven business environment, trust is a currency that emerging technology companies cannot afford to overlook. As… Read More > Top Month-End Closing Tips for Dealership Accounting Teams One of the most critical processes for dealership accounting teams is month-end closing. A smooth close requires structure, discipline and… Read More > Investment Corner: Are We In A Bubble? – The Bubble Triangle One of the dominant themes in capital markets over the past few years has been the rise of artificial intelligence… Read More > ### Professional Services Professional Service Solutions Schneider Downs truly understands the needs of your business because we live it every day as a professional service firm. Our success as a firm has been driven by our ability leverage expert knowledge of current best practices, processes and technology across all aspects of our business. We offer your business that same advantage.Key business decisions should not be made in a vacuum. Our “whole client” approach allows us to provide advisory services that incorporate not only your current business needs, but also your ultimate personal and financial goals. We understand the complexity of business decisions and how they impact not only your immediate bottom line, but also future tax implications, employee retention and eventually, exit opportunities. Our team of multidisciplinary experts can help you make efficient, informed decisions that serve all of your goals.In today’s environment, competition can be intense, requiring your strategic focus on your clients and their needs. Let us provide business solutions to allow you to do what you do best.Professional Services Organizations We ServeWe advise a range of professional service organizations, including, but not limited to, advertising and marketing, architecture, consulting, engineering, law firms and technology services.Professional Services SolutionsAt Schneider Downs, we provide extensive and comprehensive services to our professional services clients including:BUSINESS CONSULTING Services include reviewing potential acquisitions and sales from both a tax and economic standpoint to determine if a transaction is feasible, succession planning, litigation support, industry benchmarking and forensic accounting. Learn moreRETIREMENT PLAN SOLUTIONS Services include the design and implementation equity incentive plans including phantom equity strategies, qualified retirement plan design, fiduciary guidance, investment advisory and participant education. Learn moreRISK ADVISORY Services include internal audit sourcing, quality assurance review, IT risk advisory, risk assessment, process and control optimization and fraud risk assessments. Learn moreSTATE AND LOCAL TAX (SALT) Services include sales and use tax compliance review/reverse audits, nexus studies including voluntary disclosure, unclaimed property reporting and legislative assistance. Learn moreAdditional Solutions for Professional ServicesAccounting AdvisoryAudit and AssuranceCybersecurityExit and Succession PlanningPrivate Client ServicesSD DigitalTax AdvisoryTransaction Advisory Private Equity Firm Resources Schneider Downs Private Equity Articles Schneider Downs Remote Learning CenterAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Private Equity Firm Services Private Equity Firm Services Schneider Downs provides all of the traditional audit and tax services needed by private equity firms and their portfolio companies as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions.At Schneider Downs, our consultants help private equity firms maximize returns and build value from acquisition through exit. We also assist firms with compliance and accounting and tax regulations germane to your business structure and evolving needs.Private equity firms face many issues from regulations and oversight to ever-changing market conditions that have a significant impact on investment opportunities and returns. With increasing pressures to increase value, private equity firms need experienced business advisors to work with throughout the lifecycle of the fund and portfolio company investments.Creation of the actual fund, including structure, is just the beginning. Schneider Downs regularly assists our private equity firm clients with buy-side due diligence, including the assessment of quality of earnings, working capital and earnout calculations and tax due diligence.Further, our tax professionals help quantify the tax risks and benefits associated with stock versus asset acquisitions and assist sellers in evaluating the after-tax proceeds associated with different transaction structures.Private Equity Firms We ServeOur professionals serving private equity firms include certified public accountants, certified merger and acquisition advisors and certified valuation analysts.Private Equity Firm ServicesTAX ADVISORYServices include tax compliance and consulting, managed tax services, state and local taxes (SALT) and tax transaction advisory. Learn moreACCOUNTING ADVISORY SERVICESServices include outsourced CFO services, technical accounting advisory, accounting for complex transactions and transactional accounting services. Learn moreTRANSACTION ADVISORY SERVICESServices include business valuation, data analytics for financial transactions, due diligence and quality of earnings, exit planning and succession advisory and investment banking. Learn moreSD DIGITALServices include ERP lifecycle solutions, intelligent automation, data analytics and lease accounting software. Learn moreAdditional Private Equity Firm ServicesAudit and AssuranceBusiness ConsultingCybersecurityFinancial AdvisoryExecutive Compensation PlansRetirement Solutions ConsultingInvestment BankingIT Risk AdvisoryRisk AdvisoryTransfer Pricing Studies Private Equity Firm Resources Schneider Downs Private Equity Articles Schneider Downs Newsletters Schneider Downs Remote Learning CenterAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON The Delay with the 2025 OMB Compliance Supplement As we move deeper into fall, many recipients of federal funding find themselves navigating a familiar yet frustrating challenge: the… Read More > The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook… Read More > September 2025 Market Recap U.S. equity markets seemed to have forgotten about the historical context that September has brought for investors. Historically, September has… Read More > 2025-2026 Priority Guidance Plan: IRS & Treasury Key Updates The 2025-2026 Priority Guidance Plan (“Plan”), released on September 30, lists projects that the Department of the Treasury and the… Read More > 5 Things Companies Wish They Did Before a Breach What are some practical and proactive steps organizations can take to improve their security posture? In support of Cybersecurity Awareness Month,… Read More > ### Not-For-Profit Resources Primary Contacts: Kim James CPA, Staci Brogan CPA, Sarah Piot CPA The Schneider Downs Not-for-Profit industry group has compiled the following resources and links that may provide useful tools and information for your organization. Not-for-Profit IRS Resources IRS Governance Check Sheet IRS Governance Guide Sheet Not-for-Profit Industry Resources Board Source Charity Navigator Charity Watch Chronicle of Higher Education Chronicle of Philanthropy Council on Foundations Guidestar Independent Sector IRS Exempt Organizations National Association of College and University Business Officers (NACUBO) National Association of State Charity Officials Ohio Association of Nonprofit Organizations Pennsylvania Association of Nonprofit Organizations Not-for-Profit Accounting Resources American Institute of Certified Public Accountants (AICPA) Financial Accounting Standards Board (FASB) Government Auditing Standards Internal Revenue Service (IRS) Not-for-Profit Software Solutions MIP Fund Accounting Sage Fixed Assets SD inSITE simpLEASE Lease Accounting Software About the Schneider Downs Not-for-Profit Industry Group Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. Through integrated service delivery, Schneider Downs understands that not-for-profit organizations, as stewards of charitable assets, are accountable to numerous constituencies: boards of directors or trustees, donors, grantors, regulatory authorities and the public. Learn more at www.schneiderdowns.com/not-for-profit. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Not-for-Profit Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day.Through integrated service delivery, Schneider Downs understands that not-for-profit organizations, as stewards of charitable assets, are accountable to numerous constituencies: boards of directors or trustees, donors, grantors, regulatory authorities and the public.Gathering the information required to make informed decisions is only the start of the service we provide. What sets our Not-for-Profit Practice apart is a commitment to making sure our clients know how to put this information to use. Through assurance, tax, advisory and technology consulting services (including not-for-profit fund accounting software), we provide valuable insight to not-for-profit organizations of all sizes and their boards. We understand the challenges of not-for-profit funding and business environments, and we are committed to helping each unique organization achieve its mission.Not-for-Profit Sectors We ServeWe advise a range of not-for-profit organizations, including, but not limited to:Arts and Cultural InstitutionsHigher Education InstitutionsCommunity and Private FoundationsHuman and Social Service OrganizationsReligious and Community OrganizationsAssociations and Membership OrganizationsNot-for-Profit Industry ServicesAt Schneider Downs, we provide extensive and comprehensive solutions to our Not-for-Profit clients.AUDIT AND ASSURANCEServices include OMB Uniform Guidance Audit (student financial aid, research and development, USDA loans and other major programs), 403(b) and 401(a) plan audits and compliance assistance, NCAA agreed-upon procedures, compliance audits (RACP, DCED), review of financial reports and tax compliance matters related to endowments and investment portfolios, program profitability studies and bond offering services (taxable and tax-exempt). Learn moreTAX ADVISORYTax Compliance – Services include Forms 990, 990-PF and 990-T preparation and review, federal and state tax exemption requests and compliance, charitable solicitation registration, federal tax audits, FBAR filing analysis, and analysis of alternative investments for foreign information reporting.Tax Governance and Policy – Services include conflict-of-interest policy and annual disclosure requirement analysis, fringe benefit and compensation analysis and review, board education and intermediate sanctions.Auxiliary and Investment Activities – Services include analysis of unrelated business income activities, alternative investment compliance, joint ventures, shared services and affiliate relationships.SD DIGITALServices include software implementation and support focused on not-for-profit solutions (experience with Banner, Datatel, Jenzabar, Oracle, J.D. Edwards, Lawson, Ellucian, Great Plains and more), disaster recovery and business continuity planning, cybersecurity assessments (penetration testing, vulnerability scanning, social engineering, infrastructure assessments and firewall vulnerability assessments) and more. We also provide software solutions for not-for-profit organizations, including MIP® Fund Accounting. Learn moreAdditional Not-for-Profit ServicesAccounting AdvisoryBusiness AdvisoryCybersecurityERISA Plan Audits and ReviewsIT Risk AdvisoryPCI DSSRetirement SolutionsRisk AdvisorySOC ReportingThird-Party Risk ManagementNot-for-Profit Services Industry Resources  Not-for-Profit FAQs Schneider Downs Not-for-Profit Resource Library Schneider Downs Remote Learning Center Private Foundation OverviewAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.  For more information on additional industries we serve, please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Postcard from the AICPA NFP Industry Conference The 2025 AICPA & CIMA Not-for-Profit (NFP) Industry Conference took place during June 2025. This annual event brought together finance… Read More > Audit and Financial Reporting Considerations Associated with Federal Funding Freezes On January 27, the Office of Management and Budget ordered a pause on the disbursement of certain federal grants, transactions… Read More > Funding Challenges in the Not-for-Profit Industry Funding in the not-for-profit sector is a persistent challenge that affects the ability of an organization to fulfill its mission.… Read More > Tax Exempt Organizations and "The One, Big, Beautiful Bill" Provisions With Potential Impact On Tuesday, May 12, the House Ways and Means Committee released a draft of the Title XI budget reconciliation bill… Read More > U.S. Department of Education Reminds Colleges and Universities of Their Obligations to Help Struggling Borrowers On May 5, 2025, the U.S. Department of Education (DOE) issued a “Dear Colleague Letter (DCL)” to institutions of higher… Read More > ### Manufacturing Schneider Downs understands the manufacturing industry at a regional, national and international perspective. From the issues you face at the production level up to your management goals and strategies, our expertise allows us to provide big thinking to operational and technical solutions.Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development (R&D) tax credits, provides manufacturers the expertise needed to run their businesses more effectively.Manufacturing Companies We ServeWe have diverse experience in providing customized assurance, tax and consulting services to a wide range of manufacturing entities from smaller, family-owned businesses to large, multiple-facility, publicly traded, multinational companies.Manufacturing ServicesAt Schneider Downs, we provide extensive and comprehensive services to our manufacturing clients including:Audit and AssuranceServices include financial statement audits, reviews and compilations, ERISA plan audits and reviews. Learn moreTax AdvisoryServices include domestic and international tax compliance, state income and franchise tax, transfer pricing studies, research and development tax credits and IC-DISC planning. Learn moreSD DigitalServices include software consulting, digital transformation, consultation and implementation, ERP, data security and privacy, electronic time entry and online expense reporting. Learn moreRisk Advisory ServicesServices include business process optimization, data analytics, enterprise risk management, SOX compliance and IT risk advisory. Learn moreBusiness Advisory ServicesServices include accounting advisory, transaction advisory and business consulting. Learn moreAdditional Manufacturing Services Cost Segregation ServicesCybersecurityDigital TransformationInternational ServicesExit Planning and Succession AdvisoryInternational TaxManagement Advisory ServicesProfitability and Operations Management ServicesResearch and Development Tax CreditsState and Local Tax (SALT) R&D Tax Credits for ManufacturersGet an overview of R&D Tax Credit opportunities for manufacturers, highlighting specific qualifying activities that illustrate how routine manufacturing activities can qualify for substantial tax credits, helping businesses offset costs and drive innovation. Download the list Manufacturing FAQ How can I determine if my manufacturing company is eligible for the R&D Tax Credit based on IRS guidelines? If your manufacturing company is developing new or improved products and/or production processes, then it is likely eligible for the R&D Tax Credit. Even companies that are not developing their products, such as original equipment manufacturers (OEMs), but are developing or improving manufacturing processes for their customers may qualify for the R&D credit. An experienced Schneider Downs R&D tax credit professional can help you identify eligible activities and expenses. What strategies can manufacturing companies employ to maximize their R&D Tax Credit benefits? Although there is no specific documentation requirement to claim the R&D credit, companies that are knowledgeable about what types of activities qualify are better positioned to maximize their credit. Some companies utilize time-tracking or job-costing systems, or they track R&D-eligible expenses in dedicated general ledger accounts. When Schneider Downs works with a taxpayer, the first step is understanding their business and identifying qualified activities and expenses. With this knowledge, we can also offer recommendations and suggestions on how to track eligible costs moving forward to improve efficiency, ensure that all activities and expenses are captured, and maximize your R&D Tax Credit. Can R&D Tax Credit consulting firms provide customized solutions tailored to the specific needs of manufacturing companies? Yes, but not all firms do! At Schneider Downs, we tailor our approach to each client and industry. With an extensive knowledge of your industry, we develop a customized strategy to calculate and maximize the R&D credit with an eye towards efficiency and accuracy.Additionally, we prepare documentation to substantiate the claim that is tailored to the client and outlines the specific methodology used for their credit calculation. Be careful–many firms out there prepare R&D Tax Credit claims, but are not public accounting firms, and that comes with risk. With Schneider Downs, your company will receive the “Big Thinking. Personal Focus.” that will enable it to maximize its R&D Tax Credit! If your manufacturing company is developing new or improved products and/or production processes, then it is likely eligible for the R&D Tax Credit. Even companies that are not developing their products, such as original equipment manufacturers (OEMs), but are developing or improving manufacturing processes for their customers may qualify for the R&D credit. An experienced Schneider Downs R&D tax credit professional can help you identify eligible activities and expenses.Although there is no specific documentation requirement to claim the R&D credit, companies that are knowledgeable about what types of activities qualify are better positioned to maximize their credit. Some companies utilize time-tracking or job-costing systems, or they track R&D-eligible expenses in dedicated general ledger accounts. When Schneider Downs works with a taxpayer, the first step is understanding their business and identifying qualified activities and expenses. With this knowledge, we can also offer recommendations and suggestions on how to track eligible costs moving forward to improve efficiency, ensure that all activities and expenses are captured, and maximize your R&D Tax Credit.Yes, but not all firms do! At Schneider Downs, we tailor our approach to each client and industry. With an extensive knowledge of your industry, we develop a customized strategy to calculate and maximize the R&D credit with an eye towards efficiency and accuracy.Additionally, we prepare documentation to substantiate the claim that is tailored to the client and outlines the specific methodology used for their credit calculation. Be careful–many firms out there prepare R&D Tax Credit claims, but are not public accounting firms, and that comes with risk. With Schneider Downs, your company will receive the “Big Thinking. Personal Focus.” that will enable it to maximize its R&D Tax Credit!Read more Manufacturing FAQ Manufacturing Industry Resources Schneider Downs Manufacturing Industry Articles Schneider Downs Remote Learning Center Manufacturing Associations and AffiliationsWe regularly participate in industry forums and conferences and are active members in the Women in Manufacturing Association (WiM), Ohio Manufacturers’ Association (OMA), Japan-American Society of Central Ohio (JASCO) and the Pennsylvania Institute of CPAs.About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates… Read More > Accounting for Tariffs As global trade policies continue to fluctuate, many entities are reviewing how tariffs should be accounted for within their organizations.… Read More > The One Big Beautiful Bill: A New Era for Manufacturing Tax Policy How will the One Big Beautiful Bill (OBBB) impact the manufacturing industry? The recently enacted OBBB represents a significant shift… Read More > Navigating Tariffs with Onshoring: Tax Benefits for U.S. Manufacturers With most industries, navigating the impact of tariffs continues to be an important topic in the manufacturing industry. This article… Read More > Benefits of Inflation Reduction Act Tax Credits for the Manufacturing Industry The Inflation Reduction Act (IRA), signed into law August 16, 2022, introduced a series of tax credits that can significantly… Read More > Accounting for Abnormal Production Periods How can inventory costing assessments help manufacturers manage production levels? Manufacturers continued to encounter challenges over the past year in… Read More > Global Manufacturers Turn To IFRS As organizations continue to grow and become more complex, those with locations across the globe have increasingly considered adopting the… Read More > From Concept to Creation – The Impact of R&D Tax Credits for Manufacturing Companies Manufacturers must overcome many challenges to remain competitive in an increasingly global market. From understanding and implementing sophisticated automated technologies… Read More > Worker Safety for Manufacturing Groups Due to the breadth of products coming to us from manufacturing companies, the industry faces wide range of safety issues.… Read More > Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio The semiconductor industry is the backbone of modern technology, powering everything from smartphones to cars to advanced medical equipment. Recognizing… Read More > Survey on Career Advancement and Women in the Manufacturing Sector In February 2024, The Women In Manufacturing Association and Xometry collectively released the 4th Annual Survey on Career Advancement and… Read More > Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive… Read More > Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the manufacturing industry in 2023?In support of Cybersecurity Awareness Month, we… Read More > How To Identify Supply Chain Vulnerabilities How can companies identify supply chain vulnerabilities to be better prepared for the future?Supply chains have been hit hard by… Read More > Changes to R&D Expense Rules Affecting Manufacturers The Tax Cuts and Jobs Act of 2017 (TCJA) included a deferred “gift” to manufacturers and other taxpayers in the… Read More > United States Deals with Baby Formula Shortage Over the past few weeks, as you’ve been running errands or completing your grocery shopping, you may have noticed some… Read More > Inflation Tracking and Cost Pass-through Analysis With inflation increasing at 40-year record highs, nearly every business is impacted with higher input costs. Along with supply chain challenges… Read More > An Introduction to Industry 4.0 The fourth industrial revolution is upon us. Better known as Industry 4.0, the digitization of manufacturing, which focuses on interconnectivity,… Read More > Reshoring to Combat Global Supply Chain Disruptions While Covid-related restrictions have been largely lifted and the world is returning to a new normal, the impact of the… Read More > Superfund Excise Taxes Are Back Under the Infrastructure Investment and Jobs Act Effective July 1, 2022 The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. The latest reiteration of… Read More > ### International Resources International Industry Resources PRIMARY CONTACTS: Staci L. Brogan CPA The Schneider Downs International industry group has compiled the following resources and links for international organizations. International Accounting Resources Financial Accounting Standards Board International Financial Reporting Standards (IFRS) Japanese Institute of CPAs German Commercial Code (HGB) UK and Republic of Ireland Financial Reporting Council U.S. Tax and Treasury Resources Income Tax Treaties US Customs/Duty Tax US IRS US Social Security US Treasury Reporting Rate of Exchange Foreign Tax and Treasury Authorities Resources Australian Tax Canada Revenue Agency China Tax India Tax Germany Tax Japanese Ministry of Finance United Kingdom Inland Revenue Additional International Resources European Union Website Foreign Exchange Rates Organisation for Economic Cooperation and Development (OECD) U.S. Department of State - Country Pages World Time Zones About the Schneider Downs International Industry Group The Schneider Downs International industry group is a dedicated team of experienced professionals specializing in serving international companies. We work with clients on all issues related to expanding into international markets and understanding the various accounting, tax and business rules and regulations of each jurisdiction. Learn more at www.schneiderdowns.com/international-services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON OMB Releases 2024 Uniform Guidance On April 4, 2024, the Office of Management and Budget (OMB) released the 2024 Uniform Grant Guidance (2024 guidance). The… Read More > Federal Trade Commission Votes to Ban Noncompete Agreements On April 23, 2024, the Federal Trade Commission (“FTC”) issued a groundbreaking rule (the “Rule”) banning noncompete clauses in employment… Read More > The Impact of Accounting Advisory in 2024: Supplemental Talent for Accounting and Finance Needs How can accounting advisory services address talent and expertise needs? Accounting advisory services play a pivotal role in alleviating accounting… Read More > Schneider Downs Construction Industry Group Annual Summit 2024 On May 6, 2024, the Schneider Downs Construction Industry Group convened for our highly anticipated annual full-day summit. Over 20… Read More > Is Your Company Prepared for the Methane Emissions Charge? The Environmental Protection Agency (EPA) has published a rule to assess and collect billions of dollars in methane “waste emissions… Read More > The Impact of the U.S. Department of Education’s Final Title IX Regulations What do higher education institutions need to know about Title IX? As of April 19th, 2024, The U.S. Department of… Read More > Postcard from Cyburgh 2024 According to an impressive lineup at the Pittsburgh Technology Council’s Cyburgh 2024, communication is key to a successful cyber posture.… Read More > Maximizing Returns: Leveraging R&D Tax Credits in the Energy and Natural Resources Sector The energy and natural resources sector faces an ever-changing landscape of financial pressures, including volatile commodity pricing, regulatory uncertainty, and… Read More > Notice anything different? Visit our new and enhanced website. Previous Next If you’ve visited the Schneider Downs websites (Schneiderdowns.com and sdwealthmanagement.com) recently, you’ve likely noticed some differences. We recently… Read More > The Impact of Accounting Advisory in 2024: Process Optimization for Business Needs How can accounting advisory services transform your business processes? Accounting advisory services play a pivotal role in optimizing business processes… Read More > A Challenge to a Common Estate Planning Tool Reaches the Supreme Court A case with estate planning implications is currently before the U.S. Supreme Court after split decisions at the circuit court… Read More > Maintaining a Disciplined Investment Approach When it comes to investments, it's easy to want to dive right in, but often that mentality can lead you… Read More > The Impact of Accounting Advisory in 2024: Technical Expertise for Complex Needs How can accounting advisory services elevate your financial reporting and compliance efforts? Accounting advisory services play a pivotal role in… Read More > The Biden Administration's Latest Student Debt Relief Program How does the latest proposed student loan debt forgiveness program from the Biden-Harris Administration work? Last Tuesday, the Biden Administration… Read More > Lost in Translation: Ippei Mizuhara Accused of Wire Fraud in Excess of $16M It appears that the most popular baseball player in the world is the victim in a story of deception and… Read More > Investment Corner with Jason & Sean: U.S. Small Cap Equities “History never repeats itself, but it often rhymes.” – Mark Twain The internet is going to change the world. It… Read More > Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new… Read More > 8 Key Considerations When Reviewing User Access What are important considerations when reviewing user access? Organizations not performing regular user access reviews can expose themselves to a… Read More > Master Your Credit Card Strategy: A Guide to Maximizing Rewards and Boosting Your Credit Score Credit card debt has soared to new heights, totaling over $1.125 trillion at the close of 2023, the highest balance… Read More > Enhancing Focus on Risk Management and Consumer Protection Over the past year, regulatory agencies, financial services management teams and board members have had to increase their focus on… Read More > ### Services for Private Equity Firms Services for Private Equity Firms Private equity firms face a number of issues, from increased oversight by stakeholders (lenders, limited partners (LPs), roll-over partners, etc.) to an ever-increasing competitive market with investment opportunities that have to be successful.Just as private equity firms are familiar with the pressures to show returns, Schneider Downs is in helping firms throughout the lifecycle of your fund and portfolio investments. Our diverse team of experienced professionals can help private equity firms at every stage and deliver the trusted guidance to build value from investment by the LPs to that first platform acquisition to exit.Assurance ServicesPrivate equity firms, their funds and portfolio companies face unique audit and accounting challenges based on their structure and typical organizational requirements. Schneider Downs can help firms address these issues, including:Accounting for business combinations, including accounting related to opening balance sheetsAccounting for complex equity structures and debt arrangements, including convertible debt issuancesAccounting for share-based compensation arrangementsAssistance with developing and adhering to revenue recognition policies in compliance with US GAAPEvaluation of impairment of intangible assetsIdentification of internal control issues and discerning and applying industry best practiceTax ServicesTax planning and structuring is essential for private equity firms, and Schneider Downs has the experience and in-depth knowledge to assist private equity firms with tax planning and structuring needs, including:Analysis of uncertain tax positions and potential exposureAssessment of intangibles and amortization, representations, warranties and indemnificationsConfirmation of tax entityConsulting on deal structure (asset, stock or hybrid) and applicable tax implicationsEvaluation of state and local income tax compliance, state sales and use tax exposure and tax attributes (NOLs, credits, etc.)Payroll tax reporting and advisoryPost-transaction tax ServicesSD DigitalSD Digital is dedicated to helping private equity firms’ de-risk and maximize their digital investments, with key services including:ERP System ImplementationSoftware and Technology assessmentsIntelligent AutomationConsulting ServicesThe Schneider Downs Consulting team has the cross-functional business expertise to help private equity firms mitigate risks and maximize value, with key services including:Accounting AdvisoryCompliance Assessments (PCI, HIPAA, etc.)Cybersecurity and IT Risk AdvisoryDue Diligence (Buy-side and Sell-side, Financial and tax)Executive CompensationFraud Risk AssessmentsIT Controls ReviewManaged Accounting ServicesPost-Merger IntegrationValuation Services (of identified intangible assets)Ready to Get Started?For more information on our services, contact the team at contactsd@schneiderdowns.com.ResourcesServices for Private Equity OverviewAbout Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations in making informed decisions across accounting, financial, legal, and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment.Learn more about our Business Advisory services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### International International Services The Schneider Downs International industry group is a dedicated team of experienced professionals specializing in serving international companies.Many growing companies face the challenges of prospering in the global marketplace. At Schneider Downs, our clients are both domestic and international. We work with clients on all issues related to expanding into and operating within international markets and understanding the various accounting, tax and business rules and regulations of each jurisdiction.Schneider Downs provides a full range of services to entities following U.S. GAAP, IFRS, and other accounting standards. We work with U.S. companies with operations in other countries as well as U.S. components with headquarters outside the United States.Schneider Downs helps clients take full advantage of all their international opportunities and can reach you and your business, no matter where you're located around the globe.International Industry Services:At Schneider Downs, we provide extensive and comprehensive services to our international clients including:Audit and AssuranceBusiness AdvisoryCybersecurityInternational TaxIT Risk AdvisoryRisk AdvisorySD CapitalSD DigitalAccounting AdvisoryThird-Party Risk Management International Services Industry Resources Schneider Downs International Resource Library Schneider Downs International Services Articles Schneider Downs Remote Learning Center Countries Served About Schneider Downs Industry GroupsThe Schneider Downs International industry group is a dedicated team of experienced professionals specializing in serving international companies. We work with clients on all issues related to expanding into and operating within international markets and understanding each jurisdiction's various accounting, tax and business rules and regulations.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON IFRS Changes in 2025 The International Financial Reporting Standards (IFRS) continue to evolve to provide greater transparency and comparability of the financial statements between… Read More > Accounting for Tariffs As global trade policies continue to fluctuate, many entities are reviewing how tariffs should be accounted for within their organizations.… Read More > Overview of Accounting for German Entities in the U.S. What are the financial reporting options for German-owned entities looking to establish a subsidiary in the United States (U.S.)? Unlike… Read More > A Collaborative Approach to Internal Audit How has the approach to internal audit changed in recent years? Historically, internal audit is focused on identifying discrepancies and… Read More > Key Risk and Compliance Concerns for Companies Amid Emerging Trade Tariffs What risk and compliance issues can trade tariffs create? Trade tariffs are a known focal point of the new administration.… Read More > Political Risk: An Internal Auditor Perspective How can internal auditors navigate political risks to protect organizational resilience and compliance? In today’s fast-changing global landscape, political risks… Read More > Accounting for Abnormal Production Periods How can inventory costing assessments help manufacturers manage production levels? Manufacturers continued to encounter challenges over the past year in… Read More > Global Manufacturers Turn To IFRS As organizations continue to grow and become more complex, those with locations across the globe have increasingly considered adopting the… Read More > Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional In a highly anticipated ruling, the U.S. Supreme Court has ruled in Moore v. United States that the Section 965… Read More > Disclosure Relief for Certain IFRS Subsidiaries The International Accounting Standards Board (IASB) has issued International Financial Reporting Standard (IFRS) 19 Subsidiaries without Public Accountability: Disclosures, which… Read More > Significant Reporting Changes for All IFRS Entities The International Accounting Standards Board (IASB) has issued International Financial Reporting Standard (IFRS) 18, Presentation and Disclosure in Financial Statements,… Read More > Pillar Two is Here; Is Your Company Ready? The BEPS Pillar Two tax framework is the culmination of a yearslong initiative undertaken by the OECD and over 135… Read More > E.U. Environmental, Social, and Governance Proposals under CSRD and their Impact on U.S. Companies The European Union (E.U.) has proposed its own set of required disclosures covering Environmental, Social, and Governance (ESG) reporting. The… Read More > Most Schedule K-2 and K-3 Reporting Can Now Be Postponed Until 2022 Tax Return Filing The IRS just announced that it is providing transition relief from Schedule K-2 and K-3 reporting for certain domestic partnerships… Read More > E-filing of New Pass-Through Schedules K-2 and K-3 Starts in March The IRS has announced it will be rolling out the ability to electronically file the new Schedules K-2 and K-3… Read More > Build Back Better Tax Legislation Update – International Tax Changes This article summarizes the proposed changes regarding international tax provisions of the Tax Cuts and Jobs Act (TCJA). The Build… Read More > Proposed Tax Changes to GILTI In August, the Senate Finance Committee released draft legislation that would overhaul the international provisions of the Tax Cuts and… Read More > IRS Announces New Update Regarding Streamlined Filing Compliance Procedures and Section 965 What is Section 965 Tax?In 2017, Congress passed the most significant tax legislation since 1986 – the Tax Cuts and… Read More > Looking for Clarity from the IRS Regarding Foreign Activities? Be Careful What You Wish For! If you own a foreign entity or joint venture, you’re likely familiar with the associated IRS reporting requirements (if not,… Read More > Potential Changes to Certain International Provisions of the Tax Code proposed by the Biden Administration In May, the U.S. Department of Treasury released General Explanations of the [Biden] Administration’s Fiscal Year 2022 Revenue Proposals, which… Read More > ### Higher Education Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities.As one of the largest premier regional accounting and advisory firms serving public and private K-12, colleges and universities, our integrated service delivery ensures that our professionals can offer timely and practical solutions to help institutions meet their operational and compliance needs.Our professionals know that financial and operational challenges are among the top concerns for higher education institutions. They face demands from all levels, while possibly dealing with reduced funding, pressures from the community and Board of Trustees and the challenge of remaining accountable to all parties. By staying abreast of the latest trends, developments and challenges within the education sector, we offer timely and practical solutions to our clients.We work with a variety of unique educational institutions in the sector, including public colleges and universities, liberal arts schools and faith-based entities, and we always take the time to understand the history, mission, people and stakeholders of each institution we serve.Higher Education ServicesAUDIT AND ASSURANCEServices include OMB Uniform Guidance Audit (student financial aid, research and development, USDA loans and other major programs), 403(b) and 401(a) plan audits and compliance assistance, NCAA agreed-upon procedures, compliance audits (RACP, DCED), review of financial reports and tax compliance matters related to endowments and investment portfolios, program profitability studies and bond offering services (taxable and tax-exempt). Learn moreTAX ADVISORY Tax Compliance – Services include Form 990 and 990-T preparation and review, State and local tax exemption and compliance, charitable solicitation registration, Federal tax audits, FBAR filing analysis, international tax issues association with study abroad programs and compensation and benefits design review.Tax Governance and Policy – Services include conflict-of-interest policy and management, fringe benefits and compensation matters, board education and intermediate sanctions.Auxiliary and Investment Activities – Services include unrelated business income activities, alternative investment compliance, joint ventures, transaction analysis and for-profit subsidiaries. SD DIGITALServices include software implementation and support focused on higher education solutions (experience with Banner, Datatel, Jenzabar, Oracle, J.D. Edwards, Lawson, Ellucian, Great Plains and more), disaster recovery and business continuity planning, cybersecurity assessments (penetration testing, vulnerability scanning, social engineering, infrastructure assessments and firewall vulnerability assessments) and more. Learn moreAdditional Higher Education ServicesBusiness AdvisoryConsulting ServicesCybersecurityIT Risk AdvisoryRetirement SolutionsRisk AdvisoryStaffingState and Local Tax (SALT)Third-Party Risk ManagementWealth Management Higher Education Industry Resources Schneider Downs Higher Education Services Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Strong IT General Controls, Smarter Technology: How Smaller Reporting Companies Can Innovate with Confidence Why are strong IT General Controls (ITGCs) essential for smaller reporting companies (SRCs) embracing automation and AI? For Small Reporting… Read More > Accounting for Tariffs As global trade policies continue to fluctuate, many entities are reviewing how tariffs should be accounted for within their organizations.… Read More > Surge in PennDOT and E-ZPass Phishing Scams Targets Pennsylvania Drivers Scammers are targeting Pennsylvanians with fake messages posing as PennDOT, the Turnpike Commission, and E-ZPass. Here’s how to protect yourself.… Read More > You Can’t Pay by Check. Executive Order 14247 “Modernizing Payments To and From America’s Bank Account” and its Impact on Federal Tax Payments and Refunds Earlier this year, President Trump signed Executive Order 14247, Modernizing Payments to and from America’s Bank Account. The order mandates… Read More > 5 Ways Smaller Reporting Companies Can Gain Flexibility with SOX Small Reporting Companies (SRCs) can improve SOX compliance by using a risk-based approach to prioritize control testing and allocate resources… Read More > Western Pennsylvania’s Energy Future Western Pennsylvania is once again at the epicenter of America’s energy sector transformation. With vast natural gas reserves and a… Read More > Do You See Ghosts (Students)? Over the past few months, there has been a rise in concern about ghost students. Ghost students are individuals who… Read More > The One Big Beautiful Bill: Key Green Energy Tax Credits Set to Expire There are key provisions in the One Big Beautiful Bill (OBBB) that have implications on investing in green energy related… Read More > There are key provisions in the One Big Beautiful Bill (OBBB) that have implications on investing in green energy related… Read More > Benefits of Internal Audit Involvement in SAP S/4HANA and SAP RISE Implementations What are the benefits of internal audit involvement in SAP S/4HANA and SAP RISE implementations? As more companies embark on… Read More > The OBBB and Its Impact on the Real Estate Industry What are key tax changes in the One Big Beautiful Bill (OBBB) that may impact the Real Estate and Development… Read More > McBreach: Vendor’s Use of '123456' Exposes 64 Million McDonald’s Job Applicants Would you like your personal data exposed because of a weak password? That’s the one question McDonald’s hiring website forgot… Read More > The HITRUST Journey: The First Four Steps to Expect Before You Certify HITRUST isn’t just a compliance checkbox. It is proof that your organization meets a high standard of security and risk… Read More > Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, providing significant tax reform and… Read More > Cybersecurity Alert: Critical Zero-day Vulnerability (CVE-2025-53770) in Microsoft SharePoint Server A critical zero-day security vulnerability affecting on-premises Microsoft SharePoint servers was recently discovered and reported by multiple sources this past… Read More > Investment Corner: Dollar Pains, Global Gains - The FX Factor in 2025 Market Performance The falling U.S. dollar continues to be the most important driver of multi-asset investing in 2025. The first half of… Read More > The “One Big Beautiful Bill” Makes Two Changes to the Income Tax Reporting of Residential Construction Contracts How will the One Big Beautiful Bill (OBBB) impact Residential Construction Contracts? The OBBB made two significant and favorable changes… Read More > How does the One Big Beautiful Bill (OBBB) Impact the Energy and Natural Resources Industry? The recently passed One Big Beautiful Bill (OBBB) introduced sweeping income tax changes that will significantly affect businesses in the… Read More > One Big Beautiful Bill Expands Section 45X Tax Credit to U.S. Metallurgical Coal Producers As part of the sweeping tax changes introduced in the One Big Beautiful Bill (OBBB), metallurgical coal has now been… Read More > Employer Reporting Obligations for Employee Tax-Free Tips and Overtime Compensation The One Big Beautiful Bill introduces new deductions for certain workers, but with them come additional reporting requirements for employers.… Read More > ### Healthcare Healthcare Services The Schneider Downs Healthcare industry group provides assurance, tax, advisory and technology consulting services to large and small health care organizations and their boards.Healthcare organizations balance the need to operate efficiently and effectively while delivering on the promise of quality care. At the same time, they are challenged to keep up with governmental payers and regulations, as well as the changing technological environment.The Schneider Downs Healthcare industry group serves clients in the dynamic and continually evolving healthcare market segment. Our experienced professionals have a comprehensive understanding of issues facing healthcare organizations today. We understand that healthcare organizations, as service providers building relationships with patients, are accountable to numerous constituencies: boards of directors or trustees, donors, grantors, regulatory authorities and the communities they serve.We understand the complexity of the healthcare business environment and are committed to assisting each unique organization in responding to their needs and challenges.Healthcare Organizations We ServeAt Schneider Downs, we provide extensive and comprehensive services to our healthcare clients.AUDIT AND ASSURANCEServices include audits, reviews and compilations including A-133, agreed-upon procedures and internal audit co-sourcing/outsourcing solutions. Learn moreCYBERSECURITYServices include penetration testing, ransomware security services, digital forensics and incident response, compliance and web application penetration testing. Learn moreIT RISK ADVISORYServices include HIPAA compliance assessments, data privacy, PCI DSS compliance, business continuity and disaster recovery planning, SOX audits, SOC reporting and third-party risk management.  Learn moreEMPLOYEE PLAN BENEFITSServices include 403(b) and 401(k) plan management, plan audits, open architecture investment platform, employee education programs and deferred compensation plans, including 457(b) and 457(f) design. We also provide audit and assurance services for employee benefit plans including 403(b) and 401(k) plans. Learn moreTAX ADVISORYServices include 501(r) compliance, not-for-profit taxes, analysis of affiliate boards for Form 990 business and family relationship reporting, identifying reportable transactions with interested persons and analysis of compensation reporting for Form 990 purposes to determine appropriate reporting of compensation among members of an affiliate group. Learn moreAdditional Healthcare ServicesAccounting AdvisoryBusiness AdvisoryBusiness RestructuringExecutive CompensationFinancial AdvisoryRisk AdvisoryStaffingTechnology AdvisoryTax Compliance and ConsultingTax Credits and Incentives Healthcare Industry Resources Schneider Downs Healthcare Services Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook… Read More > Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s… Read More > September Investment Corner – The Impact of Fed Rate Cuts On September 17th, Federal Reserve Chairman Jerome Powell announced a 0.25% cut to the federal funds rate, lowering the target… Read More > The TPRM Concentration Risk Playbook: 3 Key Types of Concentration Risk In third-party risk management (TPRM), organizations must address three key types of concentration risk: vendor, geographic and service. Ever struggle… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The Economic Value of HITRUST Certification Does a HITRUST certification offer actual economic benefits beyond just meeting regulatory requirements? In a landscape where compliance investments must… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates… Read More > FASB Introduces Policy Election and Practical Expedient Alternatives Related to Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to address the challenges faced when applying the… Read More > The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards… Read More > FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect transportation and logistics organizations.Understanding these… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect not-for-profit and higher education organizations.… Read More > The HITRUST Journey: The Last Three Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification.… Read More > August 2025 Market Recap The continuation of the market rally in August was driven by strong earnings from tech companies, especially those involved with… Read More > ### Government Government Services Schneider Downs established the Government industry group to address the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities.Over many years, our expertise in this area has continued to grow, enabling Schneider Downs to emerge as a single course for accounting and consulting needs dedicated to government entities. Our professionals have direct experience working within the sector, which allows us to bring unique and practical insight to our practice and clients.Schneider Downs is an active participant in numerous groups and associations focused on the government sector, including the AICPA Government Audit Quality Center.Government Sectors We ServeWe advise a range of government entities including, but not limited to, boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages.Government Industry ServicesAt Schneider Downs, we provide extensive and comprehensive services to our government clients including:Business AdvisoryCybersecurityData AnalyticsForensic and Investigative AccountingIT Risk AdvisoryUniform Guidance Testing and Reporting Retirement SolutionsRisk AdvisorySD DigitalTax AdvisoryWealth Management Government Industry Resources Schneider Downs Government Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook… Read More > Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s… Read More > September Investment Corner – The Impact of Fed Rate Cuts On September 17th, Federal Reserve Chairman Jerome Powell announced a 0.25% cut to the federal funds rate, lowering the target… Read More > The TPRM Concentration Risk Playbook: 3 Key Types of Concentration Risk In third-party risk management (TPRM), organizations must address three key types of concentration risk: vendor, geographic and service. Ever struggle… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The Economic Value of HITRUST Certification Does a HITRUST certification offer actual economic benefits beyond just meeting regulatory requirements? In a landscape where compliance investments must… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates… Read More > FASB Introduces Policy Election and Practical Expedient Alternatives Related to Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to address the challenges faced when applying the… Read More > The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards… Read More > FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect transportation and logistics organizations.Understanding these… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect not-for-profit and higher education organizations.… Read More > The HITRUST Journey: The Last Three Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification.… Read More > August 2025 Market Recap The continuation of the market rally in August was driven by strong earnings from tech companies, especially those involved with… Read More > ### Financial Financial Services Schneider Downs’ Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit.Financial institutions operate in a heavily regulated environment that is experiencing unprecedented regulatory change and technological obstacles. As one of the largest consulting practices in the region, Schneider Downs is well-equipped to help institutions navigate these changes.Our team is an industry leader in strategic risk management, technology risk and organizational improvement that can supplement existing internal audit, risk, consulting and IT teams or act as a full-service solution provider for our financial industry clients.We offer both functional and industry expertise in critical areas of technology risk and leading frameworks, and all team members have significant roles in supporting our financial services clients. Many have worked within the industry prior to joining the firm.This collective experience results in uniquely diverse and deep expertise delivered on each engagement from several subject-matter experts in the internal audit, risk, compliance, data analytics, digital transformation and cybersecurity space. We strive not only to ensure the objectives of our clients are met, but also to identify efficiency and best practice opportunities in all engagements.Financial Services Industry SolutionsAt Schneider Downs, we provide extensive and comprehensive solutions to our financial services industry clients.CYBERSECURITY Solutions include penetration testing, vulnerability assessments, digital forensics and incident response, infrastructure assessments and ransomware security services. Learn moreIT RISK ADVISORYSolutions include data privacy and security, disaster recovery/business continuity, systems implementation assurance and FFIEC IT audit and general controls evaluations.INTERNAL AUDITSolutions include audit sourcing and outsourcing, strategic functional assessment and transformation, benchmarking and metrics, robotic process controls automation, quality assurance reviews (QARs) and quality assurance and improvement planning (QAIP).IT COMPLIANCE FRAMEWORKSolutions include GLBA, GDPR, HIPAA compliance assessment, CMMC, PCI, National Institute of Standards and Technology (NIST), ISO 27001 and more. Learn MoreRISK ADVISORYSolutions include System and Organization Controls (SOC) reports (readiness, SOC 1, SOC 2 and more) and Sarbanes-Oxley (SOX) readiness and SOC 1 and 2 assessments. Learn MoreRISK MANAGEMENTSolutions include enterprise risk management assessments, third-party risk management, merger and acquisition risk evaluation and fraud risk assessment. Learn moreFinancial Services Helpful LinksFederal Deposit Insurance Corporation (FDIC)Federal Financial Institutions Examination Council (FFIEC)Federal Reserve BankOffice of the Comptroller of the Currency (OCC) Financial Services Industry Resources Schneider Downs Financial Services Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook… Read More > Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s… Read More > September Investment Corner – The Impact of Fed Rate Cuts On September 17th, Federal Reserve Chairman Jerome Powell announced a 0.25% cut to the federal funds rate, lowering the target… Read More > The TPRM Concentration Risk Playbook: 3 Key Types of Concentration Risk In third-party risk management (TPRM), organizations must address three key types of concentration risk: vendor, geographic and service. Ever struggle… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The Economic Value of HITRUST Certification Does a HITRUST certification offer actual economic benefits beyond just meeting regulatory requirements? In a landscape where compliance investments must… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates… Read More > FASB Introduces Policy Election and Practical Expedient Alternatives Related to Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to address the challenges faced when applying the… Read More > The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards… Read More > FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect transportation and logistics organizations.Understanding these… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect not-for-profit and higher education organizations.… Read More > The HITRUST Journey: The Last Three Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification.… Read More > August 2025 Market Recap The continuation of the market rally in August was driven by strong earnings from tech companies, especially those involved with… Read More > ### Energy & Resources Energy and Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.We began serving energy and natural resources clients in 1980 and have experience working with organizations of all sizes and with all types of energy and resource producers and related service providers within the industry. Today, our practice has more than 20 individuals with experience in this industry. We understand the unique challenges this industry faces and have experience serving clients in the forest products industry, mining and aggregates and oil and gas sectors. Our client list includes over 40 clients, including family-owned entities, entities with public/private equity and venture capital investors - as well as those that are local, regional and global. We possess the knowledge and capabilities to provide value to any entity within the industry. Our industry group meets regularly to monitor industry trends and to discuss their impact on our clients. We can then provide timely solutions and advice. Energy & Resources Sectors We ServeOur industry group works with key sectors including forest products, mining and aggregates, oil and gas, and Marcellus Shale and Utica Shale. These sectors have various unique opportunities, such as tax credit and planning opportunities; review of entity structure; review of partnership/operating agreements; depreciation, depletion and amortization accounting and accounting for asset retirement obligations, among many unique and specialized services.Energy & Resources ServicesFOREST PRODUCTSWe can assist your company with mergers and acquisitions, equipment financing, productivity analyses, lease vs. buy decisions for major asset additions, structuring of transactions to gain the most favorable tax treatment allowable and a review of your internal accounting policies and procedures. MARCELLUS AND UTICA SHALESThe Marcellus Shale and Utica Shale gas formations in Pennsylvania, Ohio and surrounding states establishes a significant amount of recoverable gas in this region. These shales have dramatically impacted many industries well beyond just the oil and gas industry. Learn MoreMINING AND AGGREGATES We provide specialized services to mining and aggregate industries including lease vs. buy decisions for major asset additions, structuring of transactions to gain the most favorable tax treatment allowable and a review of your internal accounting policies and procedures. Learn MoreOIL AND GASWe provide specialized services to oil and gas industries including operational matters, mergers and acquisitions and liability concerns. From joint interest billing processing and review of operator overhead charges to tax planning, we provide our clients the solutions needed to be successful. Learn MoreAdditional Energy & Resources ServicesAccounting AdvisoryAudit and AssuranceBusiness AdvisoryCybersecurityInternational TaxSD CapitalSD DigitalState and Local Tax (SALT)simpLEASE Lease Accounting SoftwareTax Credits and IncentivesThird-Party Risk ManagementWealth ManagementEnergy & Resources Associations and AffiliationsWe are active members of the Ohio and Pennsylvania Independent Oil and Gas Association (OOGA/PIOGA), the Independent Petroleum Association of America (IPAA), Marcellus Shale Coalition and Pennsylvania Aggregates and Concrete Association (PACA) and regularly participate in industry forums and conferences. Energy & Resources Industry Resources Schneider Downs Energy and Resource Resources Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON What to Do After the ERISA Deadline: Setting Up for Success Next Year The Employee Retirement Income Security Act (ERISA) deadline may have passed, but for plan sponsors and fiduciaries, the work is… Read More > 5 Holiday Season Scams to Watch for in 2025 (And How to Avoid Them) Article Summary: 5 Holiday Season Scams to Watch for in 2025 This article outlines five emerging holiday scams, from AI-powered… Read More > Penalty Relief for Employer Reporting of Qualified Overtime and Tips Article Summary: IRS Penalty Relief for 2025 Tip/Overtime Reporting The IRS issued Notice 2025-62, designating 2025 as a transition year… Read More > 5 Accounting Priorities for Dealerships as We Close 2025 The 2025 AICPA Dealership Conference highlighted meaningful shifts in how dealerships are structuring and supporting their accounting functions. With staffing… Read More > Innovation Transformation: Unleashing a New Audit Experience We are actively redefining audit excellence through continuous investment in next-generation technologies and team empowerment. As the leader of our… Read More > Fighting Fraud with AI: Turning the Tide In recent years, generative AI has made for enabling high-profile deepfakes and impersonation scams. Schneider Downs is proud to be… Read More > AI and the Future of Fraud Risk Management Artificial Intelligence is reshaping the fraud landscape at an unprecedented pace. For organizational leaders, staying informed is not optional—it’s imperative.… Read More > The Dark Side of Generative AI in 2025: Voice Cloning With the capabilities of generative AI tools becoming so widely available, it is increasingly difficult to distinguish between what’s real… Read More > 5 Operational Priorities for Dealerships as We Close 2025 Operational conversations at the 2025 AICPA Dealership Conference focused on helping dealerships strengthen efficiency, protect profitability and keep employees engaged… Read More > Reopening the Government Doesn’t End the Risk: What Internal Audit Should Do Next Today is November 12, 2025, and the longest government shutdown is U.S. history is one step away from coming to… Read More > October 2025 Market Recap The S&P 500 has now posted six consecutive monthly gains, while the NASDAQ has extended its winning streak to seven.… Read More > When Physical Theft Becomes a Cyber Story: Lessons from the Louvre When I first saw headlines about a daytime robbery of 100 million dollars’ worth of French Crown Jewels from the… Read More > Managing the Challenges of M&A During and After the Federal Government Shutdown Government contractors have faced significant uncertainty in 2025. Despite initial hopes of an invigorated Federal Government contracting environment that would… Read More > 5 Red Flags That Could Be Hurting Your Dealership’s Financial Health Strong financial controls are critical to protecting a dealership’s profitability and long-term growth. Many dealerships operate with lean accounting teams… Read More > 4 Ways Managed Accounting Helps Your Business Succeed Managed accounting, also referred to as outsourced accounting, helps businesses save money, gain expert financial guidance, and scale with confidence.… Read More > JLR Cyber Breach: Business Interruption Insurance Coverage Jaguar Land Rover (JLR) detected a devastating cyberattack on August 31st that took technology systems offline, resulting in halted manufacturing… Read More > Cybersecurity Awareness Month is Over… Now What? As another Cybersecurity Awareness Month comes to a close, many companies are packing up their posters, taking down reminders, and… Read More > Why Strategy Matters: Unlocking Organizational Value Through a Strategic Internal Audit Function A well-developed strategy can transform the internal audit function from a compliance checkpoint into a trusted advisor that drives organizational… Read More > Business Risk by the Numbers: What Leaders Should Be Watching in 2026 Explore the key business risks shaping 2026, from talent and workforce challenges to cybersecurity, fraud, AI, and ownership transitions. Numbers… Read More > Coal vs. Natural Gas: Market Prices and Future Outlook As of late 2025, the energy market reveals a stark divergence between coal and natural gas in both pricing and… Read More > ### Emerging Technology Emerging Technology Services Trusted Advisory for the Complex Emerging Technology Industry At Schneider Downs, we understand the ever-changing landscape of the emerging technology industry. Our clients range from innovative start-ups to established leaders in fintech, SaaS, hardware-as-a-service and healthcare technology as well as many other tech-driven businesses.Schneider Downs offers strategic guidance and financial expertise to support your tech company’s growth from the challenges of complex funding structures of early-stage companies to the unique revenue streams of mature companies.Emerging Technology Core SolutionsAt Schneider Downs, we provide extensive and comprehensive solutions to guide your growing business through every phase of your journey: Audit and Assurance Accounting Advisory ServicesFinancial Statement Audits, Reviews and CompilationsPublic Companies AssuranceAll Audit and Assurance Services Business Advisory Accounting Optimization AssessmentsBack-office AssessmentsBusiness Process AssessmentsDue DiligenceManaged Accounting ServicesOutsource CFO ServicesValuationAll Business Advisory Services IT Risk Advisory and Compliance All IT Risk Advisory and Compliance ServicesCybersecurityIT Compliance FrameworksIT Risk AssessmentsPCI DSS CompliancePenetration TestingSOX Solutions Accounting Advisory ServicesFinancial Statement Audits, Reviews and CompilationsPublic Companies AssuranceAll Audit and Assurance ServicesAccounting Optimization AssessmentsBack-office AssessmentsBusiness Process AssessmentsDue DiligenceManaged Accounting ServicesOutsource CFO ServicesValuationAll Business Advisory ServicesAll IT Risk Advisory and Compliance ServicesCybersecurityIT Compliance FrameworksIT Risk AssessmentsPCI DSS CompliancePenetration TestingSOX Solutions Tax Advisory Compliance and ConsultingCredits and IncentivesManaged Tax ServicesResearch and Development Tax Credit StudiesState and Local Tax AdvisoryAll Tax Advisory Services Digital Innovation Data Analytics & Power BIDigital ModernizationIntelligent AutomationMicrosoft ERP SolutionsAll Digital Innovation Services Investment Banking Baseline Readiness AssessmentsSales, Divestitures, Leveraged Buyouts and RecapitalizationsValue Advisory and RealizationAcquisition AdvisoryAll Investment Banking Services Compliance and ConsultingCredits and IncentivesManaged Tax ServicesResearch and Development Tax Credit StudiesState and Local Tax AdvisoryAll Tax Advisory ServicesData Analytics & Power BIDigital ModernizationIntelligent AutomationMicrosoft ERP SolutionsAll Digital Innovation ServicesBaseline Readiness AssessmentsSales, Divestitures, Leveraged Buyouts and RecapitalizationsValue Advisory and RealizationAcquisition AdvisoryAll Investment Banking Services R&D Tax Credit for Software and TechnologyGet an overview of R&D Tax Credit opportunities for the software and technology industry, highlighting specific qualifying activities that illustrate how routine activities can qualify for substantial tax credits, helping businesses offset costs and drive innovation. Download the list Why Schneider Downs?Schneider Downs understands that every industry has its own unique challenges, and we’re committed to providing the insight, innovation and experience necessary to navigate them. As a trusted business partner, we are dedicated to helping your emerging technology companies and leadership achieve their goals through tailored solutions and expert guidance.Industry ExpertiseSeasoned professionals with extensive experience working with emerging technology companies across various industries.Comprehensive SupportOne-stop provider with skilled advisors offering customized operations and technical solutions.Practical SolutionsPractical, hands-on approach to delivering tailored services, solutions and strategies.Tax Credit ExpertiseSpecialized R&D experts to help maximize tax benefits and growth while supporting innovation.Emerging Technology Resources Our Thoughts On Blog Emerging Technology FAQs Emerging Technology Service Overview Resource CenterAbout Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com. OUR THOUGHTS ON 5 Essential Software Considerations for Start-Up Companies in 2025 An often-overlooked yet crucial concern for start-ups is ensuring that they have the right software and, if not, deciding on… Read More > Internal Control Considerations for Startup Companies Learn why internal controls are one of the most important, yet often overlooked, business considerations in the startup world. Startups… Read More > Common Issues Encountered During Buy-Side Due Diligence in Software Companies When conducting buy-side due diligence for a software company, several common issues often arise. These issues can significantly impact the… Read More > Value of Outsourced Accounting Services Start-ups facing the challenges of limited resources and the need to focus on core business objectives can significantly benefit from… Read More > Key Strategies for Navigating Sell-Side Due Diligence in Software Companies Sell-side due diligence is a critical process for software companies looking to attract potential buyers or investors. When going through… Read More > Equity vs. Debt Financing Considerations When looking at the potential options of equity versus debt financing, companies should assess the impact on the financial statements… Read More > The Pittsburgh Technology Council Tech 50 Awards I had the privilege of attending my first Tech 50 Awards banquet on Thursday, November 14, which celebrated the most… Read More > Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to… Read More > Startup Company Valuations – A Cornucopia of Challenges and Some Factors to Consider Valuing a startup company can create a cornucopia of challenges. Unlike valuations for an established business, a valuation analyst does… Read More > Accounting Considerations for Healthcare Startups Explore the unique accounting challenges faced by healthcare startups. From funding to compliance, learn how accounting impacts the success of… Read More > Are EVs Just A Fad? If you were alive in the late 1990s, you either wanted, or knew a kid who wanted, a Furby. For… Read More > Pay to Play In the world of venture capital and startup financing, "pay-to-play" provisions have become increasingly popular. These provisions are designed to… Read More > Cap Table Basics for Startup Companies When is the last time you checked on your capitalization table? A startup company’s cap table typically is constantly evolving.… Read More > Compilation, Review or Audit? What Early-Stage Companies Should Know Does my emerging technology company need a compilation, a review or an audit?This is a question that often comes up… Read More > Top Accounting Advisory Needs for Emerging Technology Companies For both true start-ups and mature emerging technology companies, we have seen that there are numerous accounting advisory projects with… Read More > Best Practices After an Equity Raise for Start-up Companies Fundraising is an essential function for any start-up company. And, after undertaking a fundraising event, companies must decide whether to… Read More > Five Tax Considerations for Start-up Companies When it comes to taxes, startup companies often underestimate the significance of tax planning, compliance and the implementation of effective tax… Read More > Pros and Cons of IPO for Early-stage Companies Founders of most early-stage companies need capital. Most initially seek capital from private investors and venture capital firms, which ultimately… Read More > Understanding Leases In Technology Arrangements There are many complex transaction rules impacting technology companies, including Topic 842: Lease Accounting, which could have a significant impact… Read More > New Advances in AI and AI Chatbots May Leave Users Concerned About Data Collection and Privacy The recent release of Snapchat’s new Internal Friend, MyAI, proves just how advanced artificial intelligence (AI) and chatbots have gotten… Read More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. Read Case Study ### Construction Construction Services Our Construction industry group is committed to bringing big thinking and personal focus to help our clients solve the growing list of complex business and accounting problems facing the construction industry.Led by a diverse group of shareholders and managers, our team continues to provide strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.In Pittsburgh, we serve 8 of the Pittsburgh Business Times’ largest 25 contractors in the region. Our Columbus office serves both a Columbus Business First Top-25 architectural firm and a heavy-highway contractor awarded three of Columbus Business First’s Top-25 largest public construction projects.Our group of professionals spends more than 50,000 hours per year serving construction clients; attends annual national, local and internal construction specific continuing education and meets monthly to discuss trends within the construction industry.Construction Sectors We ServeOur clients include all sizes and types of construction firms, ranging from general contractors to heavy-highway to a host of specialty contractors. We also serve family-owned entities and private equity firms with venture capital investors or local, regional and global public ownership.Construction Industry ServicesAUDIT AND ASSURANCEServices include prequalification reports, joint venture accounting/reporting, IFRS and IAS reporting, accounts receivable management, cashflow forecasting and treasury management involving liquidity and working capital. Learn moreBUSINESS ADVISORYServices include business interruption, data analytics, financial and cash flow modeling, fraud mitigation and business transactions. Learn moreEMPLOYEE STOCK OWNERSHIP PLAN (ESOP)Services include tax benefit advisory, feasibility analysis and consulting, administration support, and plan design, documentation and implementation. Learn moreEXECUTIVE COMPENSATIONServices include phantom equity arrangements, stock appreciation rights (SAR), incentive compensation plans, non-qualified plans and restricted stock plans. Learn moreSD CAPITALServices include acquisition advisory, capital raising, company sales and divestitures, private equity firm advisory and specialized services for companies with ESOPs. Learn moreTAX ADVISORYServices include voluntary disclosure agreements, cost capitalization deferral techniques, estate planning for business owners, research and development credits and keyman retention and incentives. Learn moreR&D Tax Credits for Construction IndustrySchneider Downs informs clients about R&D Tax Credits that may be available to them, including credits for electrical and plumbing contractors, among others. Review the R&D Tax Credits listed below and contact Schneider Downs to find out if your organization qualifies. R&D Tax Credit for Construction ArchitectureR&D Tax Credit for ConstructionR&D Tax Credit for Electrical ContractorsR&D Tax Credit for EngineeringR&D Tax Credit for Mechanical ContractorsR&D Tax Credit for Plumbing ContractorsAdditional Construction ServicesOur Construction industry group offers a wide range of specialized services including:Cost SegregationCybersecurityDigital TransformationForensic and Investigative AccountingInternational TaxIT Risk AdvisorySD DigitalsimpLEASE Accounting SoftwareState and Local Tax (SALT)Wealth ManagementConstruction Associations and AffiliationsWe are members of the Construction Financial Management Association (CFMA), Constructors Association of Western Pennsylvania (CAWP), Master Builders Association of Western Pennsylvania (MBA), National Association of Industrial and Office Properties (NAIOP), Associated General Contractors of Ohio (AGC), Builders Exchange of Central Ohio (BX) and Ohio Contractors Association (OCA). Construction Industry Resources Schneider Downs Construction SME FAQs Schneider Downs Resource Center Construction Industry Services Overview 2023 Construction Pillars to Success About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates… Read More > Tariffs and Construction: 3 Key Challenges Facing the Industry Today Tariffs are having a direct impact on the construction industry by driving up material costs, complicating project budgets and disrupting… Read More > The “One Big Beautiful Bill” Makes Two Changes to the Income Tax Reporting of Residential Construction Contracts How will the One Big Beautiful Bill (OBBB) impact Residential Construction Contracts? The OBBB made two significant and favorable changes… Read More > Five Significant Tax Implications of the "One Big Beautiful Bill" on the Construction Industry How will the One Big Beautiful Bill (OBBB) impact the construction industry? The OBBB introduced significant income tax-related changes affecting… Read More > FASB Implements Improvement for Joint Venture Formations (ASU 2023-05) According to the Ankura Joint Venture Index, global joint ventures and partnerships in 2024 experienced varied activity. "New deal volumes… Read More > The One Big Beautiful Bill Impact on Construction Industry As of early June, Congress has worked through several iterations of The One Big Beautiful Bill. Here are a few… Read More > No Relief on the Way for Contractor’s Presentation of Retainage Unless you’re new to the accounting industry, chances are you’ve heard phrases like “606” or “Rev Rec” a lot in… Read More > Employee Fraud in Construction: Understanding and Mitigating Risks Former office assistant Kami Elois Power was indicted in January with allegations of embezzling over $1.4 million between 2019 and… Read More > Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of… Read More > Navigating the Construction Industry: Top Challenges and Innovations for Owners, CEOs, CFOs and Business Advisors As a Shareholder at Schneider Downs, I have had the privilege of working closely with various stakeholders in the construction… Read More > Postcard from the Ohio Construction Conference On Wednesday, March 12, I had the pleasure of attending the Ohio Construction Conference, presented by the Builders Exchange of… Read More > Three Significant Tax Issues Impacting the Construction Industry in 2025 Tax professionals followed the 2024 elections especially close, since from a tax perspective the results are expected to significantly impact… Read More > Contract Bid Preparation – Importance of Actual Costs from Previous Projects During Estimation The process of securing and executing a successful and profitable contract starts in the preconstruction phase by preparing a bid… Read More > Postcard from the Inaugural Women in Construction/Real Estate Networking Dinner Earlier this fall, the women from Schneider Downs’ Construction and Real Estate Industry Groups were pleased to host a networking… Read More > The Most Important Financial Metrics Contractors Should Track to Ensure Profitability Key Indicators for Managing Financial Health For contractors, keeping a vigilant eye on financial metrics is crucial to maintain and… Read More > Advanced Strategies for Year-End Book Preparation in Construction As the fiscal year concludes, construction companies must undertake the meticulous task of preparing year-end books and records. This process… Read More > Recapping the Navigating Strategic Growth in Construction Roundtable On Thursday, September 5th, 2024, the Tower Club in Tyson’s Corner, VA, hosted a highly anticipated SD Capital event, bringing… Read More > The Interaction between Section 174 Capitalization Requirements and Section 460 Long-Term Contracts Under the Percentage-of-Completion Method Before 2022, taxpayers who incurred research and experimental (Section 174) costs could fully deduct them in the year incurred. The… Read More > Opportunities in the Construction Industry for AI and Predictive Data Analytics “Artificial Intelligence is not a substitute for human intelligence; it is a tool to amplify human creativity and ingenuity.” -Fei-Fei… Read More > Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the… Read More > ### Dealerships Dealerships Schneider Downs has a long history of advising vehicle dealers across the country on accounting, tax and other business advisory matters.Over the course of our 65+ year history, we have had the opportunity to consult in nearly every segment of the dealership business – maximizing cash flows, cost containment, inventory control, reinsurance, financing, or capitalization and more. We understand the critical relationship between the front-end and back-end of your business, and we have earned the trust of our clients through responsive and proactive service. Schneider Downs serves dealers of all sizes from single-point locations to mega-dealerships. Our personalized business approach emphasizes active listening, proactive insights, exceptional guidance and practical solutions to drive results. Our Dealership Services industry group is composed of audit, tax and management consulting professionals who are specifically trained and experienced in matters such as those facing your company. We serve automotive, motorcycle, truck, RV, boat dealerships and more. Our Dealership Industry Group members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting dealerships.  Automotive Heavy Equipment Boats Motorcycles RVs Power Sports Trucking Specialized Dealership SolutionsAt Schneider Downs, we provide extensive and comprehensive solutions to both individual dealers and dealer advertising associations. Individual Dealer ServicesOur Dealership industry group offers a wide range of specialized services geared to the individual dealer, including:Accounting Advisory ServicesAudit and Assurance ServicesBusiness ValuationsBuy/Sell Planning and Due Diligence AnalysisCompensation StudiesCost Segregation Analysis for Real Estate AcquisitionsEmployee Benefit Plan ServicesEstate PlanningExit Planning and Succession AdvisoryFinancial and Cash Flow ModelingForensic and Investigative AccountingLIFO Consulting and ComplianceLitigation Support ServicesSD DigitalTax Planning and Compliance ServicesDealer Advertising Association ServicesOur Dealership Services industry group also provides accounting, tax and business advisory services to Dealer Advertising Associations, which manage funds used by regional dealership groups to advertise vehicles within their designated marketing areas. Schneider Downs’ services to our Dealer Advertising Association clients include the following: Assistance with annual financial and/or compliance audits, as performed by independent certified public accountants in accordance with the requirements of the manufacturer (if applicable)Assistance with incorporation issues, drafting of by-laws and other organizational mattersAttendance and presentation of financial information at periodic Board of Directors’ meetingsDaily Bookkeeping Distribution of financial statements to authorized recipientsFinancial Statements and SchedulesIncome Tax Returns Monthly Bank Statement ReconciliationPreparation and independent tabulation of ballots with respect to elections and other important voting matters of the associationPreparation of federal Forms 1099 Tax advisory matters and assistance with the resolution of Internal Revenue Service inquiriesDealership Associations and AffiliationsTo stay abreast of current trends and challenges facing dealers, our dealership specialists continuously participate in industry-specific conferences and seminars such as the National Auto Dealer Association (NADA) Convention and the American Institute of Certified Public Accountants (AICPA) National Auto Dealership Conference. Dealership Industry Resources Schneider Downs Automotive Services Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   OUR THOUGHTS ON R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will… Read More > AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook… Read More > Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s… Read More > September Investment Corner – The Impact of Fed Rate Cuts On September 17th, Federal Reserve Chairman Jerome Powell announced a 0.25% cut to the federal funds rate, lowering the target… Read More > The TPRM Concentration Risk Playbook: 3 Key Types of Concentration Risk In third-party risk management (TPRM), organizations must address three key types of concentration risk: vendor, geographic and service. Ever struggle… Read More > The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration… Read More > The Economic Value of HITRUST Certification Does a HITRUST certification offer actual economic benefits beyond just meeting regulatory requirements? In a landscape where compliance investments must… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates… Read More > FASB Introduces Policy Election and Practical Expedient Alternatives Related to Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to address the challenges faced when applying the… Read More > The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards… Read More > FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect transportation and logistics organizations.Understanding these… Read More > OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect not-for-profit and higher education organizations.… Read More > The HITRUST Journey: The Last Three Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification.… Read More > August 2025 Market Recap The continuation of the market rally in August was driven by strong earnings from tech companies, especially those involved with… Read More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Read Case Study Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study ### Service Disruption Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Privacy Policy Schneider Downs (as defined below) complies with the EU-U.S. Data Privacy Framework (EU U.S. DPF), the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. Data Privacy Framework (Swiss-U.S. DPF) as set forth by the U.S. Department of Commerce. Schneider Downs has certified to the U.S. Department of Commerce that it adheres to the EU-U.S. Data Privacy Framework Principles (EU-U.S. DPF Principles) with regard to the processing of personal data received from the European Union in reliance on the EU-U.S. DPF and from the United Kingdom (and Gibraltar) in reliance on the UK Extension to the EU-U.S. DPF. Schneider Downs has certified to the U.S. Department of Commerce that it adheres to the Swiss-U.S. Data Privacy Framework Principles (Swiss-U.S. DPF Principles) with regard to the processing of personal data received from Switzerland in reliance on the Swiss-U.S. DPF. If there is any conflict between the terms in this privacy policy and the EU-U.S. DPF Principles and/or the Swiss-U.S. DPF Principles, the Principles shall govern. To learn more about the Data Privacy Framework (DPF) program and to view our certification, please visit dataprivacyframework.gov/. Introduction Schneider Downs & Co., Inc. and its entities (collectively “Schneider Downs,” “we,” “us,” or “our”) take your privacy seriously. We believe it is important for you to understand when, how, and why we collect personal information as you utilize our products and services, use our website, contact us, or interact with us in any manner.This Privacy Policy outlines the scope of our relationship with you and your personal information, and details your rights to control how we use your data. Schneider Downs is committed to compliance with data protection and privacy laws and protecting the privacy of its users, and we endeavor to always be good stewards of your data.This Privacy Policy applies to the collection and use of personal information by Schneider Downs & Co., Inc., Schneider Downs Wealth Management, Schneider Downs Capital, and Schneider Downs Digital. Information we collect Schneider Downs collects certain personal information about our clients, potential clients, and partners. The type of information we collect is based on how you interact with us, including by retaining our services or using our website. Our legal bases for processing your personal information include our legitimate interests in running and promoting our business, the performance of a contract, legal or regulatory obligations, or client consent.We collect information about our users in the following ways:1. Information you give usIn order for you to access certain services and/or products, we may require you to provide us with information that personally identifies you (“Personal Information”). Personal Information may include: (i) Contact Data (such as your name, mailing and e-mail addresses); (ii) Financial Data (such as your account or credit card number); (iii) Demographic Data (such as your zip code, age and income); and (iv) Location Data (such as IP address or geological data).2. Information we collect about youAs is typical of most websites, certain information is automatically collected about the way you use our website. This information helps us improve the quality, usability, and performance of the services we offer to you through aggregate information that does not reveal your specific identity and cannot reasonably be used to identify any particular individual user. Common information we collect may include: IP address, device identifier, browser type, operating system, information about your use of the website, and data regarding network-connected hardware. The information collected is obtained by user input and in the form of “cookies” (a small file containing the address of the website and codes that your browser sends back to the website each time you visit a page to provide the user a more personalized experience.)Our website uses a "metapixel"  to collect anonymous data that helps us understand how visitors interact with our site. This information allows us to improve our website's functionality, content, and user experience.The metapixel collects non-personally identifiable information, such as:IP address (anonymized): Your IP address is immediately anonymized upon collection, meaning it cannot be traced back to you.Browser type and version: To understand browser compatibility.Operating system: To understand device compatibility.Referring URL: The website you came from to reach our site.Pages viewed and actions taken: To understand popular content and user flow.Time and date of visit: For analytical purposes.The anonymized data collected through the metapixel is for internal use only and is not shared with third parties for marketing or advertising purposes.This site also uses Google Analytics in connection with our website to gather data such as age, gender and interests to provide advertising targeted to suit your interests and preferences. Google Analytics collects anonymous information that is not used to identify a particular user. This information helps us better understand how visitors use our website and detect and defend against fraud and other security risks.3. Information we receive from other sourcesWe also may obtain information about you from other sources, including third-party services in order to enhance our ability to provide relevant services and offers to you. Such collection may occur on certain parts of the website that are powered and facilitated by third parties such as the Schneider Downs Client Portal (powered by Suralink), Make A Payment Portal (powered by Pineapple Payments), the Career Portal and Talent Accusation Portal (powered by Cornerstone), Wealth Management Orion Client Portal (powered by Orion Advisor Tech), Wealth Management Charles Schwab Portal (powered by Charles Schwab), Wealth Management 401(k) Plan Portal (powered by SD Retirement Solutions), Wealth Management Elite Money Portal (powered by eMoney Advisor, LLC) and the Wealth Management Fidelity Investments Portal (powered by Fidelity Investments). We will treat such data in accordance with this Privacy Policy. We are not responsible or liable for the accuracy of the information provided by third parties or for third-party policies or practices. Use of the information we collect We collect your data to help us manage our relationship with you, including responding to your requests or queries, meeting our obligations under any contracts we have entered into with you, billing and invoicing, seeking feedback on the services we have provided to you, or providing you with information about other services we offer that are similar to those that you have already engaged or inquired about. We also collect your data for security-related processing (e.g., automated scanning of incoming and outgoing e-mails for viruses), to provide customer support, including to manage your use of services and send customer updates and administrative communications, such as changes to our terms, conditions, and policies. We may also use your data to investigate and prevent fraudulent activities, unauthorized access to our services, and other illegal activities. We may collect your data for any other purposes for which we will notify any impacted clients.We also use your personal information to market to you, including sending you promotional materials or communications regarding services by us, or to send you information which we think may be of interest to you, but only in accordance with your marketing preferences. You will always be able to opt-out of such communications at any time by visiting our Email Preference Center (https://schneiderdowns.com/opt-out/).We collect your personal information to comply with our legal and regulatory obligations, including in relation to financial crime laws and regulations and establishing, exercising and defending legal claims. Disclosure of the information we collect We will share and disclose information about you in the following limited circumstances:We will share your personal information with the following Schneider Downs entities for purposes consistent with this Privacy Policy: Schneider Downs & Co., Inc., Schneider Downs Wealth Management, Schneider Downs Capital, and Schneider Downs Digital.We will also share your information with consultants, professional advisers (such as accountants, lawyers and auditors), and certain vendors and service providers to process your personal information on our behalf. These companies are not permitted to use your information for their own purposes and may only handle your data at our express direction. We use these companies to provide products, services, communication, marketing offers, and customer services, among other tasks. We assess the technical and organizational security measures of all third-party service providers Schneider Downs engages to ensure the protection of your personal information.We will also share your data with third-party business partners who sponsor events and other offerings with us. We share personal information with these co-sponsors when you sign up for events or offerings to allow our partners to send you marketing communications and information that may be of interest to you, as permitted under applicable law.We will share your personal information where we have a duty to disclose or share your personal information in order to comply with any legal obligation, or in order to enforce any contract or other agreements; or to protect the rights, property, or safety of Schneider Downs, our clients, or others. Under certain circumstances, we may be required to disclose your personal information if we are under a legal or regulatory obligation to do so including to meet security or law enforcement requirements. Security of information We employ various physical, electronic and managerial measures, including education and training of our personnel, which are designed to reasonably and appropriately protect personal data from loss, misuse or unauthorized access, disclosure, alteration or destruction. These measures include limiting access and using industry best practice controls such as firewalls and encryption for personal data. Personal data collected or displayed through a website is protected in transit by standard encryption processes, but we cannot guarantee the security of information on, or transmitted via, the internet.We retain personal information about you for the period necessary to fulfill the purposes outlined in this Privacy Policy or until you notify us to remove you from our database, unless a longer or shorter retention period is required or permitted by applicable law, rule, or regulation. Data Privacy Framework Statement Schneider Downs complies with the EU-U.S. Data Privacy Framework (“EU U.S. DPF”), the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. Data Privacy Framework (“Swiss-U.S. DPF”) as set forth by the U.S. Department of Commerce. Schneider Downs has certified to the U.S. Department of Commerce that it adheres to the EU-U.S. Data Privacy Framework Principles (“EU-U.S. DPF Principles”) with regard to the processing of personal data received from the European Economic Area (“EEA”) in reliance on the EU-U.S. DPF and from the United Kingdom (and Gibraltar) in reliance on the UK Extension to the EU-U.S. DPF. Schneider Downs has certified to the U.S. Department of Commerce that it adheres to the Swiss-U.S. Data Privacy Framework Principles (“Swiss-U.S. DPF Principles”) with regard to the processing of personal data received from Switzerland in reliance on the Swiss-U.S. DPF. If there is any conflict between the terms in this Privacy Policy and the EU-U.S. DPF Principles and/or the Swiss-U.S. DPF Principles, the Principles shall govern. To learn more about the Data Privacy Framework (“DPF”) program and to view our certification, please visit dataprivacyframework.gov/. You can also verify our self-certification to the DPF and check the information we have provided by viewing our details on the DPF list.The Federal Trade Commission has jurisdiction over Schneider Downs’ compliance with the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF.We may transfer personal information to our third-party agents and service providers who perform functions on our behalf as described herein. Where required by the DPF, we enter into written agreements with those third-party agents and service providers requiring them to provide the same level of protection the DPF requires and limiting their use of the data to the specified services provided on our behalf. We take reasonable and appropriate steps to ensure that third-party agents and service providers process personal information in accordance with our DPF obligations and to stop and remediate any unauthorized processing. Under certain circumstances, we may remain liable for the acts of our third-party agents or service providers who perform services on our behalf for their handling of personal information that we transfer to them.In some cases, we may transfer personal information to unaffiliated third-party data controllers. These third parties do not act as agents or service providers and are not performing functions on our behalf. We may transfer your personal information to third-party data controllers for the purposes of sending you marketing communications and information that may be of interest to you, as permitted under applicable law. We will only provide your personal information to third-party data controllers where you have not opted-out of such disclosures, or in the case of sensitive personal information, where you have opted-in if the DPF requires consent. We enter into written contracts with any unaffiliated third-party data controllers requiring them to provide the same level of protection for personal information the DPF requires. We also limit their use of your personal information so that it is consistent with any consent you have provided and with the notices you have received. If we transfer your personal information to one of our affiliated entities within our corporate group, we will take steps to ensure that your personal information is protected with the same level of protection the DPF requires.Under certain circumstances, we may be required to disclose your personal information in response to valid requests by public authorities, including to meet national security or law enforcement requirements. We will only do so in accordance with the DPF Principles.Under the DPF, you have rights in relation to your personal data. These include:Information on the types of personal data collected.Information on the purposes of collection and use.Information on the type or identity of third parties to which your personal data is disclosed.Choices for limiting use and disclosure of your personal data.Access to your personal data.Notification of the organization's liability if it transfers your personal data.Notification of the requirement to disclose your personal data in response to lawful requests by public authorities.Reasonable and appropriate security for your personal data.A response to your complaint within 45 days.Cost-free independent dispute resolution to address your data protection concerns.The ability to invoke binding arbitration to address any complaint that the organization has violated its obligations under the DPF Principles to you and that has not been resolved by other means.You may have the right to access the personal data that we hold about you and to request that we correct, amend, or delete it if it is inaccurate or processed in violation of the DPF. These access rights may not apply in some cases, including where providing access is unreasonably burdensome or expensive under the circumstances or where it would violate the rights of someone other than the individual requesting access. If you would like to request access to, correction, amendment, or deletion of your personal data, you can submit a written request to the contact information provided below. We may request specific information from you to confirm your identity. In some circumstances, we may charge a reasonable fee for access to your information.In compliance with the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF, Schneider Downs commits to resolve DPF Principles-related complaints about our collection and use of your personal information. EEA, UK, and Swiss individuals with inquires or complaints regarding our handling of personal data received in reliance on the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF should first contact Schneider Downs at: Privacy Office, Schneider Downs & Co., Inc., One PPG Place, Suite 1700, Pittsburgh, PA 15222, privacy@schneiderdowns.com,. 1-877-444-7326In compliance with the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF, Schneider Downs commits to refer unresolved complaints concerning our handling of personal data received in reliance on the EU U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss U.S. DPF to JAMS, an alternative dispute resolution provider based in the United States. If you do not receive timely acknowledgment of your DPF Principles-related complaint from us, or if we have not addressed your DPF Principles-related complaint to your satisfaction, please visit JAMS EU U.S. Data Privacy Framework Resolution for more information or to file a complaint. The services of JAMS are provided at no cost to you.In compliance with the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF, Schneider Downs commits to cooperate and comply respectively with the advice of the panel established by EU data protection authorities (“DPAs”), the UK Information Commissioner’s Office (“ICO”) and the Gibraltar Regulatory Authority (“GRA”), and the Swiss Federal Data Protection and Information Commissioner (“FDPIC”) with regard to unresolved complaints concerning our handling of human resources data received in reliance on the EU-U.S. DPF, the UK Extension to the EU-U.S. DPF, and the Swiss-U.S. DPF in the context of the employment relationship.You may have the option to select binding arbitration for the resolution of your complaint under certain circumstances, provided you have taken the following steps: (1) raised your complaint directly with Schneider Downs and provided us the opportunity to resolve the issue; (2) made use of the independent dispute resolution mechanism identified above; and (3) raised the issue through the relevant data protection authority and allowed the US Department of Commerce an opportunity to resolve the complaint at no cost to you. For more information on binding arbitration, see https://www.dataprivacyframework.gov/framework-article/D–Binding-Nature-of-Decisions. Information for California residents If you are a resident of the State of California, you have additional rights regarding your personal information under the California Consumer Privacy Act (“CCPA”) as amended by the California Privacy Rights Act (“CPRA”), specifically:To request that we disclose to you the categories and specific pieces of personal information we have collected about you, the categories of the sources of our information, how we use the information, the categories of any personal information disclosed or sold to third parties, and the categories of third parties to whom such information was disclosed or sold;To request that we delete any personal information we have about you or correct inaccurate personal information;To request disclosure of information collected, shared, or sold;To request to opt-out of the sharing of personal information; andThe right not to be discriminated against because you exercise any of these rights, including by denying services, providing a different level or quality of services, or charging different prices by virtue of exercising these rights.To exercise any of your rights under the CPRA please email us at privacy@schneiderdowns.com or contact us at 1-877-444-7326.1. Collection of Personal InformationThe table below identifies, generally, the categories of personal information (as defined by the CPRA) that we have collected about California residents in the past twelve (12) months. Please note that not all examples listed in the table below are collected from every consumer, and we may not collect all items listed as examples in a particular category. Personal Identifiers A real name, alias, postal address, unique personal identifier, online identifier, Internet Protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers. Personal Information Categories A name, signature, Social Security Number, physical characteristics or description, address, telephone number, passport number, driver’s license or state identification card number, insurance policy number, education, employment, employment history, bank account number, credit card number, debit card number, or any other financial information, medical information, or health insurance information. Protected Classifications Age (40 years or older), race, color, ancestry, national origin, citizenship or immigration status, religion or creed, marital status, medical condition, physical or mental disability, sex (including gender, gender identity, gender expression, pregnancy or childbirth and related medical conditions), sexual orientation, veteran or military status, genetic information (including familial genetic information). Commercial Information Records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies. Internet or Similar Activity Browsing history, search history, and information regarding a consumer’s interaction with an internet website application, or advertisement. Sensory data Audio, electronic, visual, thermal, olfactory, or similar information Professional & Employment Current or past job title. A real name, alias, postal address, unique personal identifier, online identifier, Internet Protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers.A name, signature, Social Security Number, physical characteristics or description, address, telephone number, passport number, driver’s license or state identification card number, insurance policy number, education, employment, employment history, bank account number, credit card number, debit card number, or any other financial information, medical information, or health insurance information.Age (40 years or older), race, color, ancestry, national origin, citizenship or immigration status, religion or creed, marital status, medical condition, physical or mental disability, sex (including gender, gender identity, gender expression, pregnancy or childbirth and related medical conditions), sexual orientation, veteran or military status, genetic information (including familial genetic information).Records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies.Browsing history, search history, and information regarding a consumer’s interaction with an internet website application, or advertisement.Audio, electronic, visual, thermal, olfactory, or similar informationCurrent or past job title.2. Disclosure of Personal InformationThe table below identifies, generally, the categories of personal information (as defined by the CPRA) that we have disclosed about California residents in the past twelve (12) months. Please note that not all examples listed in the table below are disclosed, and we may not disclose all items listed as examples in a particular category. Personal Identifiers A real name, alias, postal address, unique personal identifier, online identifier, Internet Protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers. Personal Information Categories A name, signature, Social Security Number, physical characteristics or description, address, telephone number, passport number, driver’s license or state identification card number, insurance policy number, education, employment, employment history, bank account number, credit card number, debit card number, or any other financial information, medical information, or health insurance information. Protected Classifications Age (40 years or older), race, color, ancestry, national origin, citizenship or immigration status, religion or creed, marital status, medical condition, physical or mental disability, sex (including gender, gender identity, gender expression, pregnancy or childbirth and related medical conditions), sexual orientation, veteran or military status, genetic information (including familial genetic information). Internet or Similar Activity Browsing history, search history, and information regarding a consumer’s interaction with an internet website application, or advertisement. A real name, alias, postal address, unique personal identifier, online identifier, Internet Protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers.A name, signature, Social Security Number, physical characteristics or description, address, telephone number, passport number, driver’s license or state identification card number, insurance policy number, education, employment, employment history, bank account number, credit card number, debit card number, or any other financial information, medical information, or health insurance information.Age (40 years or older), race, color, ancestry, national origin, citizenship or immigration status, religion or creed, marital status, medical condition, physical or mental disability, sex (including gender, gender identity, gender expression, pregnancy or childbirth and related medical conditions), sexual orientation, veteran or military status, genetic information (including familial genetic information).Browsing history, search history, and information regarding a consumer’s interaction with an internet website application, or advertisement.3. Sale of Personal InformationSchneider Downs does not sell your personal information to anyone under any circumstances and has not sold any personal information in the past 12 months. Other information Information relating to present or former Schneider Downs personnel is subject to our Confidential Data Policy, which is available to current Schneider Downs personnel on the Schneider Downs intranet site and to former Schneider Downs personnel upon request.Information obtained from, or relating to, clients or former clients is further subject to the terms of any privacy notice to the client, any engagement letter or other similar letters or agreements with the client, and applicable laws and professional standards. Contact information If you have any questions about this Policy or would like to request access to your personal data, please contact us at Privacy Office, Schneider Downs & Co., Inc., One PPG Place, Suite 1700, Pittsburgh, PA 15222, privacy@schneiderdowns.com, [1-877-444-7326. Changes to this Policy We reserve the right to amend this Privacy Policy. Effective date: 01/01/2025Last modified: 01/14/2025 Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Private Client Services Big Thinking. Personal Focus. Why Schneider Downs Private Client Services? Tax and Personal Financial Services Learn More Estate, Trust and Succession Planning Learn More Private Family Office Learn More Philanthropy Learn More Wealth Management Learn More Legendary client service for high-net-worth individuals Meet Our Team Get to know our professionals who can lend you their expertise. Learn More INSIGHTS Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > Happier With An Advisor Can working with a financial advisor lead to greater happiness? A recent industry survey strongly suggests that yes, individuals and… Read More > Marginal Well Credit Back to Zero for 2023 Tax Year Just months after declaring the total phase-out of the 2022 Marginal Well Credit, the IRS has released Notice 2023-58, announcing… Read More > The Pros and Cons of I-Bonds Although I-Bonds are a good way to generate tax-free yield in today’s economy, they are subject to penalties if surrendered… Read More > “Constructing” Your Estate to Meet Your Needs As an owner of a construction company, at some point you will need to determine what the next steps are… Read More > Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration The U.S. Department of the Treasury has issued long-awaited guidance on how customers can elect to transfer New Clean Vehicle… Read More > Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Consulting Contact Us We want to hear from you. ### Meet the Team Meet Our Team Schneider Downs Consulting Services provides organizations with actionable ideas for achievable solutions. Our arsenal of consulting services is tailored to best fit our clients' needs today and tomorrow. SHAREHOLDERS Patrick Armknecht CPA, CITP Learn More > William Deller Learn More > Eric Fair CISA, CDPSE, CBCLA Learn More > Adam Goode CPA Learn More > John Huckle Learn More > Tony Ielase CISA Learn More > Carl Kriebel CISSP Learn More > Peter Lieberman Learn More > Nicholas Lombardo CPA Learn More > Michael Marasco Brian Matthews Learn More > Carley Taslov CPA Learn More > Eric Wright CPA, CITP Learn More > James Yard CPA, CIA, CISA Learn More > DIRECTORS Phil Farabaugh Michael Fox Heather Haemer John Jennings Brad Miller Jessica Miller Imran Mohiuddin Tyler Reeder James Rumph Holly Russo Steven Thimons Brian Webster ### View All Consulting Services All Consulting Services and Solutions Experienced and practical guidance through the complex issues facing today’s businesses. Schneider Downs Consulting provides a wide range of services and solutions to address critical business needs and challenges for organizations of all sizes and industries. Get the solutions you need through big thinking and personal focus for your organization to thrive.Business Advisory ServicesThe Schneider Downs Business Advisory team empowers organizations to make informed decisions across accounting, financial, legal and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today’s rapidly evolving business environment.Accounting Advisory ServicesBusiness RestructuringForensics and Litigation ServicesManaged Accounting ServicesServices for Private Equity FirmsTransaction Advisory ServicesValuation ServicesRisk Advisory ServicesThe Schneider Downs Risk Advisory team collaborates closely with your organization to identify and effectively mitigate risks. Our objective is not only to address risks associated with potential losses but also to implement solutions that add value and ensure minimal disruption to your business.CybersecurityActive Directory AssessmentCloud Security Configuration AssessmentContinuous Cybersecurity Framework AssessmentsDigital Forensics & Incident ResponseExternal Footprint AnalysisFirewall Configuration ReviewIncident Response Plan Development, Testing and TrainingIntrusion Prevention/Detection ReviewIT Risk AdvisoryPenetration TestingPurple Team AssessmentsSocial Engineering AssessmentsThreat HuntingvCISOWeb Application Penetration TestingInternal Audit SolutionsData Analytics for Internal AuditInternal Audit Benchmarking and MetricsInternal Audit Quality Assurance ReviewsInternal Audit Sourcing and OutsourcingQuality Assurance and Improvement PlansStrategic Internal Audit Functional Assessment and TransformationRisk Management and Compliance ServicesCompliance AdvisoryEnterprise Risk ManagementFraud Risk AssessmentMerger and Acquisition Risk EvaluationResponsible AISOC Compliance, Assessments and ReadinessSOX Readiness, Optimization and Program SourcingThird-Party Risk ManagementInformation Technology AdvisoryCMMC Certification and AssessmentsBusiness Continuity & Disaster RecoveryData Governance and ProtectionData Privacy and SecurityDisaster Recovery/Business Continuity Planning and Tabletop ExercisesIT Audit and Genera Controls EvaluationsIT Compliance Framework Consulting (i.e. GDPR, HIPAA, PCI, NIST, ISO, etc.)Systems Implementation AssuranceIT Risk AdvisoryCybersecurity Maturity Model Certification (CMMC)FFIEC IT Compliance AssessmentGDPR ComplianceHIPAA Compliance AssessmentHITRUSTInformation Technology AuditIRS Publication 1075ISO 27001 Compliance AssessmentIT Risk Assessment ServicesNational Institute of Standards and Technology (NIST)Network Device Security Configuration AssessmentPayment Card Industry Data Security Standard ComplianceSAP Audits and ControlsProcess Improvement Consulting Accounting Optimization AssessmentsBusiness Process OptimizationProcess Best Practice and Benchmarking ServicesTransaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of various business transactions, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning.Due Diligence and Quality of EarningsBusiness Restructuring and Turnaround ServicesBusiness Valuation ServicesSD DigitalThe SD Digital practice has the forward-thinking mindset, business acumen and technical expertise to translate technology into transformative change.Custom Development Data Analytics and POWER BIDigital ModernizationIntelligent AutomationMicrosoft Dynamics ERP SolutionsPower BI Enterprise SolutionsSD inSITEsimpLEASE Accounting Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study Our Thoughts On AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the… Read More > Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s… Read More > The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards… Read More > FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’… Read More > Strong IT General Controls, Smarter Technology: How Smaller Reporting Companies Can Innovate with Confidence Why are strong IT General Controls (ITGCs) essential for smaller reporting companies (SRCs) embracing automation and AI? For smaller reporting… Read More > ### Transaction Advisory Services Trusted guidance to create value at every stage of business transactions. Contact Us Today The Schneider Downs Transaction Advisory Team provides the strategy, guidance and services organizations need to create value through all stages of a transaction, including due diligence and quality of earnings, mergers and acquisitions, exit and succession planning, capital raising and corporate finance.With a focus on middle-market organizations, our team has the collective business, industry and technical expertise necessary to help clients understand their options and achieve successful outcomes, whether the goal is buy-side, sell-side or post-merger integration.Our team of experienced consultants work side-by-side with clients to assess, maximize, transform and optimize enterprise value, and most importantly, ensure their best interests are properly represented at every stage of the deal process.Download our Transaction Advisory practice overview for more information. TRANSACTION ADVISORY SERVICES audit-assurance-servicesCreated with Sketch.Due Diligence & Quality of Earnings The way a company structures the finances and operations for a transaction can often have a dramatic effect on the success audit-assurance-servicesCreated with Sketch.Business Restructuring and Turnaround Services We specialize in mapping the course for financially distressed companies and guiding their way to profitability. audit-assurance-servicesCreated with Sketch.Business Valuation Services The necessary insight required to prepare a reasoned and supportable valuation analysis is the product of both significant real-world experience. About Schneider Downs Transaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of business transactions of all types, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning. Our team consists of interdisciplinary dedicated professionals who provide support across all aspects of transactions.Learn more about our Transaction Advisory Services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Risk Advisory Services Schneider Downs provides a variety of specialized solutions to help organizations identify and mitigate risks. Contact Us Today Internal Audit Solutions Learn More > Risk Management and Compliance Services Learn More > Information Technology Advisory Learn More > Process Improvement Consulting Learn More > Cybersecurity Learn More Our Thoughts On Learn More > A company's future depends on its ability to identify and manage risk. Risk is ever-present and always evolving in today’s world and effective risk management is essential to every business.https://player.vimeo.com/video/696683043?h=ab8f4e1e1eOur team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Download the Schneider Downs Risk Advisory Brochure Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### About Schneider Downs Consulting Experienced and practical guidance through the complex issues facing today’s businesses Contact Schneider Downs Consulting About Schneider Downs ConsultingThe challenges facing businesses today are quite different and more sophisticated than at any other time in history, and the pace of change will only get faster.Volatile economic conditions, rapidly evolving cyber threats, complex regulatory requirements, and data overload and constantly changing technology platforms make it challenging to make sound business decisions, or to create reliable business plans for the future.The Schneider Downs Consulting team features experienced professionals across a diverse array of specialties, carefully selected to address the most pressing needs of businesses across all industries. Our team of consultants will guide you through solutions to the problems on your radar, and help you identify those that aren’t. We look forward to helping your organization meet the complex business challenges of today and tomorrow.Download the Schneider Downs Consulting Brochure ### Consulting Services Schneider Downs Consulting Services Carefully curated range of services and solutions for organizations of all sizes Contact us today Broad capabilities, unmatched expertise Schneider Downs Consulting delivers a comprehensive suite of services and solutions tailored to meet the critical business needs and challenges of organizations across all sizes and industries. Our team combines strategic insight with personalized attention to solve your current problems and proactively identify future ones. Business Advisory Business Advisory Contact Us Today In a business world or rapidly changing… Cybersecurity Consulting Cybersecurity Consulting Identify Vulnerabilities. Mitigate Risks. Schneider Downs can help your organization… IT Risk Advisory IT Risk Advisory Managed Accounting Services Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or… Risk Advisory Services Schneider Downs provides a variety of specialized solutions to help organizations identify… SOC Services SOC Services Delivering SOC Reports With IT, Internal Audit, And External Audit… Transaction Advisory Services Trusted guidance to create value at every stage of business transactions. Contact… View All Consulting Services All Consulting Services Experienced and practical guidance through the complex issues facing… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections The Schneider Downs Consulting team possesses a wealth of professional and industry knowledge. Our deep bench of professionals includes certified specialists in financial and transaction advisory, cybersecurity, data privacy, compliance frameworks, risk management and investigative accounting.To support our mission of providing best-in-class service, our culture is dedicated to continuous learning and training, with many of our team members earning credentials and certifications, Download Our Consulting Service Overview ### Tax All Services All Tax Services Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us SCHNEIDER DOWNS TAX SERVICES Schneider Downs’ team of tax services advisors address many of our client’s needs whether they relate to traditional tax preparation and planning services or more specialized services such as state and local or international tax issues. Download our Tax Services Overview to learn more or access the services below for quick reference. Tax Compliance and Consulting Business Tax Individual Tax Not-For-Profit Tax Gift, Trust and Estate Services Managed Tax Services Outsourcing/On-Call Assistance Income Tax Provisions - ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Abandoned/Unclaimed Property Excise & Motor Fuels Tax Employment Tax Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales and Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investment in U.S Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transactional Analysis and Support Services Transfer Pricing and Review of Cross-border Transactions Tax Credit and Incentives Research and Development Credits Cost Segregation Services Benefit Analysis Request PA Educational Improvement Tax Credits (EITC) Qualified Opportunity Zones (QOZ) State Credits and Incentives Tax Accounting Methods & Elections Tax Transaction Advisory Due Diligence Exit Planning and Succession Advisory Sales and Purchase Analysis/Structuring and Restructuring Transaction Cost Analysis Tax Services by Industry Automotive Construction Real Estate Manufacturing Higher Education Energy & Resource Not-For-Profit Transportation & Logistics We welcome the opportunity to serve you. Contact us to start the conversation.  Contact Us! About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Transaction Cost Analysis Primary Contacts: Evan C. Ogrodnik CPA, Michael Bowman Maximize Hidden Deductions Related to Transaction Costs Mergers, acquisitions and divestitures are major financial transactions that involve numerous and significant costs and expenses along the way. These fees and expenses can have a major after-tax impact on the final cost of a transaction. Performing a Transaction Cost Analysis (a TCA) can generate significant tax savings opportunities by identifying certain costs and expenses that may be deductible currently, or over time. In addition, a TCA helps manage the tax risks associated with the transaction and the allocation of transaction costs by applying and documenting the necessary due diligence in determining the proper tax treatment of transaction costs. Tax rules generally require capitalization of transaction related expenses, unless certain specific criteria are met to allow current deduction or amortization of these expenses over a prescribed period. Since the effective date of Accounting Standards Codification Topic 805 (ASC 805), Business Combinations, there has been a divergence between the treatment of transaction costs for (U.S. GAAP) financial accounting purposes and for income tax purposes. ASC 805 requires all transaction costs to be expensed as incurred. For tax purposes, however, transaction costs might be appropriately expensed as incurred, capitalized as a separate intangible asset, included in the basis of shares acquired, included in the basis of other assets, or included in tax-deductible goodwill. Thus, the key tax question becomes, how does a taxpayer minimize the U.S. GAAP impact on net income and maximize tax deductions from transaction costs to alleviate this difference between "book" and "tax" accounting treatment for such costs? A TCA distinguishes the deductibility and capitalization of costs associated with transactions for income tax purposes. As well as providing documentation for tax return deductions, IRS audit documentation and FIN 48 support relating to these deductions, with proper analysis, certain fees may qualify for an immediate deduction often resulting in significant cash savings. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Due Diligence Due Diligence & Quality of Earnings The way a company structures the finances and operations for a transaction can often have a dramatic effect on the success of a proposed business deal. The purpose of conducting a due diligence review is to minimize any unexpected developments that could occur with the proposed transaction and to maximize transaction value.At Schneider Downs, our seasoned professionals have the knowledge and experience necessary to assist buyers, sellers, investors, private equity firms and lenders in organizing and completing both buy-side and sell-side due diligence reviews. The time and investment devoted to conducting a due diligence review often prevents surprises, purchase price disputes and litigation matters. At Schneider Downs, we are here to support your efforts according to your specific needs and provide you with a timely and accurate assessment of your proposed transaction.Quality of EarningsThe goal of a quality of earnings engagement is to present a clear picture to the buyer of a target company’s financial condition. Our senior business analysts will focus not only on the balance sheet and income statements as presented by the target, but also the underlying quality of those statements. A quality of earnings analysis may be conducted by taking a quantitative and qualitative approach to evaluating the amounts presented to acquire a thorough understanding of EBITDA, working capital and potential adjustments.Buy-Side Financial Due DiligenceAssessing and evaluating the opportunity to acquire a new business needs to be completed with swiftness, precision and discretion. Our professionals in the Business Advisory group at Schneider Downs are highly skilled to help you accomplish exactly that. Our team has decades of experience and has been involved in hundreds of successful transactions. Learn MoreSell-Side Financial Due DiligenceIt has been said that “Luck favors the prepared.” It has also been said that “Luck is where opportunity meets preparation.” What if that’s true? In the Business Advisory group here at Schneider Downs, our experience supports these claims. We have found that companies in the market to sell who have subjected themselves to rigorous sell-side financial due diligence have had better success in closing deals than companies that have not. Learn MoreAbout Schneider Downs Transaction AdvisoryThe Schneider Downs Transaction Advisory team helps companies maximize the success of business transactions of all types, including mergers, acquisitions, capital raising, minority interest investments, management buy-outs, sale preparation, due diligence, valuations and succession planning. Our team consists of interdisciplinary dedicated professionals who provide support across all aspects of transactions.Learn more about our Transaction Advisory Services or contact us for more information. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Tax Transaction Advisory Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us Today PRIMARY CONTACT: Evan C. Ogrodnik CPA Recognizing that every transaction is unique, Schneider Downs ensures that a team of highly skilled and responsive professionals with applicable industry and tax technical specializations are assigned to the project. Our team also works with other disciplines within the firm such as valuation experts, technology and technical accounting personnel to provide holistic support for acquisitions and divestitures. We work with public and private companies, PE firms and individuals on large and small transactions. OUR TAX TRANSACTION ADVISORY SERVICES Created with Sketch. DUE DILIGENCE Created with Sketch. EXIT PLANNING AND SUCCESSION ADVISORY Created with Sketch. TRANSACTION COST ANALYSIS Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### PA Educational Improvement Tax Credits (EITC) Pennsylvania has two types of tax credits related to education. Schnieder Downs help our clients participate in these worthwhile programs, allowing both businesses and individuals to achieve both Pennsylvania tax savings along with supporting educational improvement and scholarships. We can assist you in applying for these credits and determining available tax savings. The program is administered through the PA Department of Community and Economic Development and includes: Educational Improvement Tax Credit (EITC) Supports scholarship organizations and educational improvement organizations. These are nonprofits that support innovative programs in public schools. Opportunity Scholarship Tax Credit (OSTC) Contributions to approved IRC 501(c) organizations/private schools that provide scholarships to eligible students living within the boundary of the lowest achieving 15% of elementary and secondary schools as determined by the Department of Education. These incentives can result in deductible contributions (subject to federal rules) and state credits while assisting with your philanthropic goals. Additional Tax Credits and Incentive Services Research and Development Credits Cost Segregation Services State Credits and Incentives About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Cost Segregation Cost Segregation Services PRIMARY CONTACT: David J. Mitros CPA Your company’s real estate holdings constitute a huge capital investment. With Schneider Downs’ engineering-based cost segregation studies, you can maximize your real property’s financial return by generating significant cash flow savings. Our cost segregation analysis generates cash tax savings by carving out shorter-lived assets (qualifying for 5-, 7- or 15-year write-off periods) that are normally imbedded in a building’s construction or acquisition costs (generally depreciated over 39 years). Our consultants will “mine out” these buried tax savings from: New buildings presently under construction. Existing buildings undergoing renovation, remodeling, restoration or expansion. Purchases of existing properties. Office/facility leasehold improvements and “fit-outs.” Post-1986 real estate construction, building acquisition or improvements where no cost segregation study was performed (even though the statute of limitations previously closed on the property construction/acquisition year). Enjoy the windfall for real property constructed or purchased in a prior tax year or for proprety constructed or purchased in the current tax year. You now have a valuable opportunity, courtesy of the IRS, if you constructed or purchased real estate in a prior year but did not have a cost segregation study performed. An IRS procedure now allows you to deduct depreciation amounts that you are legally entitled to, but did not claim (e.g., due to erroneous property classification as a 39-year depreciable building) entirely in the tax year in which you complete a study. Our cost segregation consultants possess the engineering expertise and the necessary tax compliance skills to permit you to accelerate tax depreciation deductions, reduce taxes and increase your cash flow through our cost segregation studies. Which industries does Schneider Downs Cost Segregation Services benefit? Automobile Dealerships Commercial Rental Property Corporate Office Buildings Distribution Centers Food Processing Plants Hotels and Motels Manufacturing Facilities Mixed-Use Property Multi-Family Residential Property Restaurant Facilities Shopping Malls Strip Mall Center Shops Additional Tax Credits and Incentive Services Research and Development Credits PA Educational Improvement Tax Credits (EITC) State Credits and Incentives About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Research & Development Research and Development Tax Credits PRIMARY CONTACT: Ross S. Alessandro III CPA Both federal and state tax credits exist to reward companies for investing in Research and Development (R&D). The federal credit can net as much as 10% of credit year expenditures, and many states, including Ohio and Pennsylvania, also offer a credit for research. Additionally, new tax rules might make it easier for your company to claim and utilize a Federal R&D tax credit (even if your company is a pre-revenue start-up). Our professionals have significant experience in conducting R&D studies for a variety of industries, including, but not limited to, manufacturing, emerging technology, transportation & logistics, and construction. Let us help you to make the most of your investment. https://player.vimeo.com/video/696685553?h=addec09ef2&badge=0&autopause=0&player_id=0&app_id=58479 Key Tax Opportunities At Schneider Downs, we can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential credits. We can facilitate your company's accounting and application for this credit by: Determining qualified research activities and expenditures Creating the documentation needed to substantiate the credit Detailing the state tax benefits that may be available Preparing any required tax filings Providing support with federal or state audits Our professionals have significant experience in conducting R&D studies for a variety of industries, including manufacturing, software development, metal production and chemical products. Let us help you to make the most of your investment. R&D Tax Credit Industry Overviews Construction Construction Architecture Electrical Contractors Engineering Manufacturers Mechanical Engineers Plumbing Contractors Software and Technology Transportation & Logistics Qualified Research - The Four Part Test Overview Additional Tax Credits and Incentive Services Cost Segregation Services PA Educational Improvement Tax Credits (EITC) State Credits and Incentives About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Navigating Tariffs with Onshoring: Tax Benefits for U.S. Manufacturers With most industries, navigating the impact of tariffs continues to be an important topic in the manufacturing industry. This article… Read More > Bipartisan House Bill Could Retroactively Reinstate Immediate Expensing of R&D Costs Learn more about the reintroduction of the American Innovation and R&D Competitiveness Act. On March 10, 2025, Reps. John B.… Read More > Postcard from the AI Horizons Pittsburgh Event On Monday, October 14, I had the pleasure of attending the inaugural AI Horizons Pittsburgh event. As I walked the… Read More > From Concept to Creation – The Impact of R&D Tax Credits for Manufacturing Companies Manufacturers must overcome many challenges to remain competitive in an increasingly global market. From understanding and implementing sophisticated automated technologies… Read More > IRS Relaxes Documentation Requirements for Claiming R&D Tax Credits on Amended Returns Since January 10, 2022, the IRS has required that taxpayers provide supplementary information beyond the usual requirements of the Form… Read More > 2024 Changes to Federal Form 6765 On Friday, June 21, 2024, the U.S. Internal Revenue Service (IRS) released a revised draft of Form 6765, the form… Read More > Maximizing Returns: Leveraging R&D Tax Credits in the Energy and Natural Resources Sector The energy and natural resources sector faces an ever-changing landscape of financial pressures, including volatile commodity pricing, regulatory uncertainty, and… Read More > Building Innovation: Navigating the Terrain of R&D Tax Credits for Real Estate Developers Although it might not be obvious, the R&D tax credit can benefit taxpayers in a wide variety of industries including… Read More > Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal… Read More > Five Tax Considerations for Start-up Companies When it comes to taxes, startup companies often underestimate the significance of tax planning, compliance and the implementation of effective tax… Read More > IRS Issues Draft Instructions to Claim the R&D Tax Credit on Amended Returns On October 15, 2021, the IRS issued Chief Counsel memorandum FAA20214101F, which introduced new procedures for taxpayers claiming R&D Tax… Read More > Research and Development Tax Capitalization Rules: Are You Ready? As part of the Tax Cuts and Jobs Act, a significant change in the tax law occurred for research and… Read More > Emerging Technology Companies and the R&D Tax Credit In today’s world, emerging technology companies are facing a barrage of challenges, including, finding funding, navigating supply chain issues, defending… Read More > ### Tax Credits and Incentives Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us Today PRIMARY CONTACT: Ross S. Alessandro III CPA Our tax professionals are fully committed to assisting you in identifying and securing the tax credits and incentives available to you and your business. Staying current in tax credits and economic development incentives is a daunting, if not an insurmountable task. This is seen in studies that have shown that at least 50% of tax credits and incentives are not claimed each year. Our experienced professionals have been extremely successful in representing clients of all sizes and across numerous industries in matters such as those described above. The insight, innovation, and experience of Schneider Downs' tax professionals can assist you in navigating the labyrinth of tax credit and economic development incentives. TAX CREDITS AND INCENTIVE SERVICES Created with Sketch. RESEARCH AND DEVELOPMENT CREDITS Created with Sketch. COST SEGREGATION SERVICES Created with Sketch. COST SEGREGATION BENEFIT ANALYSIS REQUEST FORM Created with Sketch. PA EDUCATIONAL IMPROVEMENT TAX CREDITS (EITC) Created with Sketch. STATE CREDITS AND INCENTIVES Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Transfer Pricing and Review of Cross-border Transactions PRIMARY CONTACTS:  Matthew S. Legg CPA As with many other countries, U.S. tax rules strive to ensure that taxpayers with common ownership are using “arm’s length” pricing when buying and selling products, services, and intangibles to one another. Essentially, “arm’s length” pricing means ensuring that related entities are paying their related counterparts the same prices for goods and services as they would be paying an unrelated third party. Each intercompany transaction must be separately accounted for in a company’s transfer pricing policy, which as required by the U.S. Tax Code, must be maintained as contemporaneous documentation. We present practical, customized solutions to our clients’ unique transfer pricing needs. These services include: Audit support Functional analysis Analysis of comparable companies Transfer pricing studies and annual updates Documentation of comparable companies and assessments, in line with IRS and OECD requirements Transfer pricing planning We also work with specialists to include transfer pricing analysis for local countries, in conjunction with U.S. reporting. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### International Withholding Tax PRIMARY CONTACTS:  Matthew S. Legg CPA Schneider Downs can help you manage your international withholding tax liabilities and help you obtain refunds, where applicable. As a consequence of doing business directly and indirectly around the world, companies often pay taxes in foreign jurisdiction.  Many times, these are directly withheld by the payor and may be able to be reduced by treaty application. In addition, you may be required to withhold taxes if you are operating overseas. We often assist our clients with evaluating and mitigating foreign withholding requirements for various employment and business income taxes. Through Prime Global, we work directly with our colleagues around the world to ensure compliance and minimize your withholding tax. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### International Tax Reporting and Planning PRIMARY CONTACTS:  Matthew S. Legg CPA Transactional analysis and support services including due diligence. Base Erosion and Anti-Abuse Tax (BEAT) BEAT is an additional tax on certain corporations that make specific types of payments to foreign related parties. The determination as to whether a corporation has made a payment that would be subject to such tax is made by looking at a company’s base erosion percentage and gross receipts. If a taxpayer falls within the requirement to pay BEAT, then a complex calculation, as indicated by the Service, is done each year with the corporation’s tax return. There are certain industries that might be more impacted by BEAT than others. Importers and those in the energy sector seem to be uniquely susceptible to BEAT, and should be cautious when making payments to their foreign related entities without carefully considering the tax impact. If you are concerned about BEAT and want to know how Schneider Downs can help, reach out to the Schneider Downs international tax team. These tax professionals can: Aid in making the determination of whether BEAT applies to you, Engage in tax planning to model the best options for your unique business need, and Ensure compliance with all relevant reporting requirements as issued by the Service. GILTI, Subpart F, Repatriation Prior to the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, U.S. owners of foreign businesses were able to defer U.S. taxation on certain income earned outside of the U.S. until such income is repatriated to the United States (via payment of a dividend from the foreign entity to the U.S. owner). When Congress passed the TCJA, it allowed U.S. shareholders a new benefit, but added some new burdens, all aimed to incentivize those doing business abroad to bring profits and investments back to the United States. Per the TCJA,U.S. corporate shareholders that repatriate income via dividend are now afforded a deduction in the amount of the dividend, effectively allowing U.S. shareholders to bring profits held offshore back to the United States tax-free. Additionally, taxpayers that are leaving profits abroad in their foreign companies, are now subject to stricter subpart F rules, as well as a newer tax on GILTI, or global intangible low-taxed income. The rules for calculation of subpart F income and GILTI, respectively, are both complex and time-consuming. It takes significant modeling on the planning side and detailed analysis on the compliance side to determine the best course of action for a taxpayer. Schneider Downs’ talented Global Tax team has experience in both of these areas, and is ready to help you determine your individual needs. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Inbound and Outbound Entity Structuring PRIMARY CONTACTS:  Matthew S. Legg CPA Schneider Downs can help you manage your worldwide tax exposure to achieve the most effective global tax structure. Our team of tax professionals work closely with you and your team to develop the optimal tax solutions that align with your business strategy. We regularly work with clients with both day-to-day and specialty services including: Assistance with complex foreign transactions Assistance with ensuring compliance with U.S. and international taxlaws Avoidance of double taxation, including utilizing income taxtreaties Controlled foreign corporationsplanning International mergers, acquisitions and due diligence International gift and estate tax planning, including estate tax treatyanalysis Voluntary Disclosure Programs Schneider Downs can assist you and your company with: Minimizing the impact of GILTI and Subpart F and BEAT Repatriation Planning Managing Withholding Taxes Taking Advantage of Export Benefits About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Foreign Direct Investments in the U.S. Foreign Direct Investments in the U.S. PRIMARY CONTACTS:  Matthew S. Legg CPA The U.S. is a large potential market for many foreign companies. From manufacturing to software industries, we can help manage your U.S. reporting requirements and help maximize your investment. From starting an entity, through growth stage to exit, we understand the decentralized U.S. tax system and how it interacts with foreign jurisdiction rules and global tax policy. Starting your business in the U.S. correctly is crucial. There are many details which must be considered thoroughly to make your U.S. expansion a success. The decisions made in the planning phase will affect the business direction in the future. We handle the complexities of the U.S. tax system so you can focus on your business. As your business grows, our skilled team will assist in managing business and tax opportunities to maximize your company’s growth opportunities. Initial structuring and business commencement U.S. tax reporting for sales, income, franchise and withholding taxes Transfer Pricing Tax aspects of employees in the U.S. Coordination with your local country tax rules About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### FATCA and Nonresident Withholding FATCA and Nonresident Withholding PRIMARY CONTACTS:  Matthew S. Legg CPA NRA Withholding Payments to all foreign persons, including nonresident alien individuals, foreign entities and governments, may be subject to NRA withholding. Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%, unless a reduced rate, including exemption, applies. FATCA(Foreign Account Tax Compliance Act) FATCA isset of rules designed to assistthe IRS in collecting taxes owed by foreign persons that receive payments from U.S. businesses. It impacts nearly all non-U.S. entities that receive most types of U.S. source income. Failure to comply with FATCA withholding regulations can result in increased tax liability, penalties and fines for non-compliance. Under FATCA, your foreign payees are likely to be subject to the 30% withholding tax. Withholdable payments commonly include U.S. source dividends, rents, interest, royalties, salaries, wages, annuities or other fixed, determinable, annual or periodic income; gross proceeds from the sale or disposition of U.S. property that could produce interest or dividends; or interest paid by a foreign branch of a U.S. bank. Schneider Downs’ professionals can assist in: A process to capture, track and maintain the data and documents required for FATCA reporting. Filing of Form 1042 and related Form 1042-S. Determining the classification of each of your foreign payees (NFFEs,FFIs, etc.). Assistancecollecting, validating and managing Forms W-8as part of your FATCA compliance process. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Export Incentives PRIMARY CONTACTS:  Matthew S. Legg CPA Foreign Derived Intangible Income (FDII) Onetax incentive that existsforthose in theexportbusiness isthereductionin tax rate onFDII, or Foreign Derived Intangible Income. FDII is income that is generated on the export of intangible assets, such as patents or trademarks. The Internal Revenue Service allows for income generated on the sale of these assets, subject to several complex limitations, to be taxed atthe13.125% as opposed to the 21% corporate tax rate.The rules regarding when and what qualifies for the FDII rate reduction are complex and seemingly always evolving.Schneider Downs’ tax professionals canprovideaidtobusinesses inmaking thedetermination as to whetherthey can benefit from a rate reduction on certain sales,help strategically plan new business ventures to take advantage of this significant rate reduction, and file the necessary forms and disclosures with the Internal Revenue Service annually. Interest Charge Domestic International Sales Corporation (IC-DISC) IC-DISC offers significant income tax savings for exporters. Permanent tax savings are available to producers and distributors of U.S. made products used abroad. Rely on your Schneider Downs’ internal tax professionals in exploring this great tax incentive. We can determine if your operating entity and business model is a good fit for this tax-advantaged vehicle. Amnesty Programs Non-willful delinquency in connection with disclosing your foreign assets happens all the time. These violations can lead to a variety of penalties and other serious consequences. Violation penalties vary. Typically, they start at $10,000 and could be even higher. A willful failure to file an FBAR or other form, for example, can cost you the greater amount of $100,000 or 50% of the foreign account balance. There are several existing IRS programs which can aid in fixing your non-compliance, and we can assist you in finding a tailored solution that makes sense for your situation. It is in your best interest to seek solutions proactively and disclose your foreign assets to the IRS. The IRS will not grant amnesty unless you make a first contact. It’s important to emphasize that the timing is crucial, because the above IRS amnesty programs are currently available; however, the IRS could cancel them at any time. There are several existing amnesty programs: Delinquent FBAR Submission Procedures   These procedures generally apply when the taxpayer did not fail to report any income and does not owe any tax, but non-willfully failed to file an FBAR or failed to include an account on a previously filed FBAR. Taxpayers can go back and file the delinquent FBARs, and typically, the IRS will not impose a penalty for failure to file the FBARs. We can help you in assessing whether you qualify for this program. Delinquent International Information Returns Submission Taxpayers who have identified the need to file delinquent international information returns who are not under a civil examination or a criminal investigation by the IRS and have not already been contacted by the IRS about the delinquent information returns should file the delinquent information returns through normal filing procedures. Normally, if you provide a reasonable cause for the delay in your submission and don’t have any unpaid tax liability and the IRS will waive any penalties associated with late filing. Sometimes, this type of tax amnesty is the best way to go. However, a thorough planning and analysis of all relevant facts is the key. Streamlined Programs: Domestic and Foreign Did you miss reporting of your foreign accounts, investment, and income? The IRS has two great programs for non-willful delinquently filing taxpayers to become compliant: the domestic streamlined program and foreign streamlined program. The domestic streamlined program requires: non-willfulness, not being under IRS audit, and filed returns for several recent years. The potential 5% penalty could apply; however, this 5% penalty should be balanced against potentially large penalties associated with continuous noncompliance. For the foreign streamlined program, the main requirements are: non-residency and non-willfulness in failure to disclose foreign assets.  Streamlined foreign procedures don’t carry the 5% penalty, and prior filing of tax returns is not required. Being non-willful is a crucial piece in the streamlined programs. Determination of whether one’s conduct was non-willful can be highly technical, so it’s best to work with a qualified international tax professional. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Expatriate Tax Expatriate Taxation PRIMARY CONTACTS:  Matthew S. Legg CPA The international relocation of executives and key employees happens frequently in today’s business world. The immigration laws and tax implications of such relocation generate a lot of complexity, both for the company and the employees. How can Schneider Downs help? Our team of tax professionals can provide support from both the employer and employee perspective. For individuals moving into or out of the U.S., we can assist with: Country Tax Briefing-Employer Checklist We will provide the company with a general overview of the local country tax structure, including permanent establishment thresholds, treaty applicability, payroll tax considerations, and other pertinent items. We will also provide a commentary regarding local country taxation of benefits, options, etc. Tax Considerations-Employee Checklist   We will provide a checklist with general expatriate tax information (i.e., what are the U.S. tax consequences of working overseas) and your specific country tax information, such as the local country taxability of employer-provided items and general tax structure. Expatriate Tax Briefing (Pre-departure)   We will arrange the pre-departure meeting with individuals to review the local country and U.S. tax considerations related to their assignments. We will help to minimize their global tax burden and avoid negative surprises in the relocated country. U.S. Federal and State Returns    We will provide U.S. tax compliance services to eligible employees. Local Country Tax Returns   We will coordinate with local country service providers to ensure employees’ compliance with host country filing requirements. Country Tax Briefing-Employer Checklist   We will provide the company with a general overview of the local country tax structure, including permanent establishment thresholds, treaty applicability, payroll tax considerations, and other pertinent items. We will also provide a commentary regarding local country taxation of benefits, options, etc. Form W-2 Gross-up Calculations   We can work with your payroll department to calculate current-year Forms W-2 including amounts for grossed-up benefits, thereby minimizing the need for amended returns. Hypothetical Tax and Equalization Calculations  These calculations will assist the company in maintaining expatriates’ tax neutral positions. We will work with you and the employees to calculate hypothetical tax (so that the appropriate amount can be collected from the employees) and we will “true up” that calculation after the U.S. returns are filed. We will work with you to establish acceptance and sign-off procedures, in accordance with the Internal Revenue Code and other regulations. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Tax Advisory Services – International Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us Today PRIMARY CONTACTS:  Matthew S. Legg CPA Schneider Downs Tax Advisory Services are specialized services delivered by knowledgeable experts to minimize our clients’ tax liabilities and fully capitalize on incentives and credits available based on the clients’ business activity. Our tax professionals strive to find opportunities for our clients to utilize these services to create value for our clients. As tax legislation rapidly changes, our tax team continues to update these specialty service offerings to maximize the benefit for our clients. Our International Tax Advisory services can serve your global tax planning and compliance needs. We focus on both “outbound” and “inbound” international tax planning and tax matters associated with foreign transactions. We emphasize practical planning strategies to reduce your worldwide income tax burden. We work with a wide variety of clients, industries and countries, providing you with the benefit of our broad range of experiences. Our active participation in Prime Global, an award-winning association of worldwide public accounting and consulting firms, provides access to specialists in more than 90 countries, ensuring that your tax needs are met in the U.S. and throughout the world. OUR INTERNATIONAL SERVICES EXPATRIATE TAX EXPORT INCENTIVES FATCA AND NONRESIDENT WITHHOLDING FOREIGN DIRECT INVESTMENT IN U.S INBOUND AND OUTBOUND ENTITY STRUCTURING INTERNATIONAL TAX REPORTING AND PLANNING INTERNATIONAL WITHHOLDING TAX TRANSFER PRICING AND REVIEW OF CROSS-BORDER TRANSACTIONS Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### State Credits and Incentives PRIMARY CONTACT: Stephen R. Worth CPA, JD Our State and Local Tax professionals are fully committed to assisting you in identifying and securing the tax credits and incentives available to you and your business. https://player.vimeo.com/video/696685553?h=addec09ef2 Staying current in state tax credits and economic development incentives is a daunting, if not an insurmountable task. This is seen in studies that have shown that at least 50% of tax credits and incentives are not claimed each year. Our experienced professionals have been extremely successful in representing clients of all sizes and across numerous industries in matters such as those described above. The insight, innovation, and experience of Schneider Downs' State and Local Tax professionals can assist you in navigating the labyrinth of state tax credit and economic development incentives. Our state and local tax team provides a full range of services to assist companies to maximize the benefit of their business operations, including: Income/franchise tax credits Tax exemptions for state and local taxes including income/franchise, sales and use taxes, payroll taxes, and real and personal property taxes. Site Selection Services Workforce Studies Incentive Negotiation Incentive Compliance Statutory income tax credit refund reviews Work Opportunity Tax Credit Services Additional Tax Credits and Incentive Services Research and Development Credits Cost Segregation Services PA Educational Improvement Tax Credits (EITC) About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Sales and Use Tax Compliance Advice and Services PRIMARY CONTACTS: Stephen R. Worth CPA, JDAt Schneider Downs, we recognize the complexities of sales and use tax issues faced by companies today as they do business across a multitude of state and local jurisdictions.With our insight and nearly 100 combined years of dedicated state and local tax experience, Schneider Downs’ SALT professionals are fully committed to helping clients comply with the complex and ever-changing sales and use tax laws and regulations.Assistance with Increased Sales/Use Tax Compliance Burdens – Including WayfairThe Supreme Court’s decision in South Dakota v. Wayfair has dramatically changed sales and use tax filing obligations for businesses. Consequently, many companies will be required to file returns in state and local jurisdictions where they did not previously.Unsure if your business has been impacted by the Wayfair decision? Schneider Downs can assist you in identifying each state and locality where your business has a sales tax filing obligation. If a review identifies additional obligations, our team of experienced professionals can assist your business with registration, online tax account setup and, ultimately, the filing of returns.Customized Sales and Use Tax Filing ProcessSchneider Downs has developed a sales and use tax compliance process that focuses on the specific needs of each of our clients. Your team will initiate the preparation of returns based on those identified on your sales and use tax compliance calendar, as well as the transactional data you provide to us. After your returns are completed, applicable payments are either made on your behalf or drafted online for you to initiate. After filing, completed returns and supporting documentation are placed into our convenient and secure online client portal for access, as needed.Fulfill Sales and Use Tax Compliance Outsourcing NeedsSales tax compliance is an endless cycle for most companies, creating days and even weeks of ongoing work. Our SALT team will ensure that your sales tax returns and associated payments are made accurately and timely, allowing you to focus ultimately on the operation and growth of your business.About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Sales/Use Tax Sales and Use Tax PRIMARY CONTACTS: Stephen R. Worth CPA, JD Sales and use tax rules are more complex than ever, presenting known and unknown risks to businesses of all sizes. The complexity is compounded by states becoming more aggressive and strategic in auditing taxpayers to recover tax dollars and fill budget gaps. As a result, businesses must understand their sales tax exposure, mitigate risk and past exposure, and establish processes and systems to ensure ongoing compliance. We provide our clients with proactive, practical advice on sales and use tax filings and processes, taxability of products and services, and other related issues.  In addition to providing sound tax technical advice, our state and local tax (SALT) team can add value to your tax function through the following sales & use tax consulting services: Audit Defense and Controversy Compliance Process Reviews Data Automation Support Direct Pay Agreements Due Diligence Exposure Reviews Participatory/Managed Audits Refund Reviews/Reverse Audits Research and Matrices Transactional Planning Voluntary Disclosures and Amnesty Programs Additionally, our SALT team is well-positioned to alleviate the strain on your resources and unnecessary stress associated with the sales & use tax compliance function through the following services: Correspondence and Notice Management Exemption Certificate Management Jurisdictional Rate Change Updates Multistate Registrations Multistate Return Filing About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Property Tax PRIMARY CONTACTS: Stephen R. Worth CPA, JD Real and personal property taxes are one of the most substantial sources of local government revenue and can be one of the largest tax expenditures for companies. This leaves companies with properties in multiple jurisdictions with the burden of managing a myriad of differing methodologies, regulations, and deadlines, while also monitoring the equitable administration of property value assessments.  This complexity is further compounded by the uniqueness of property taxes - unlike other taxes, property tax assessments are based on the estimated value of the property, leaving them subject to varying valuation opinions. Our state and local tax (SALT) professionals can assist in a wide range of services to assist all components of your property tax function, from return filing to assisting to ensure the proper valuation and taxation of your property holdings. Our comprehensive property tax services include: Assessment monitoring, review and appeals Audit defense and appeal Data acquisition and analysis Management reporting Strategic planning Reviews for proper asset classification, obsolescence, utility, and application of exemptions Tax payment Tax reporting Voluntary Disclosure Agreements About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Multistate Income, Franchise and Gross Receipts Tax PRIMARY CONTACTS: Stephen R. Worth CPA, JD Nearly every state has some form or a combination of an income, franchise or privilege tax. Accordingly, companies that operate in multiple states face an increasingly difficult burden to comply with states' complex and ever-changing laws and regulations. Our team of State and Local Tax professionals is committed to assisting you in complying with these state tax laws and regulations and achieving your state tax goals. Some of the ways we can assist and add value to your organization include: Nexus Studies - Review of your company's state and local tax filing obligations. Due Diligence Reviews - Analysis of the potential state and local tax impact of proposed corporate changes, including buy-sell agreements. Voluntary Disclosure Agreements - Negotiations and advance filing agreements with state tax departments to satisfy income/franchise tax liabilities, along with reduced or abated penalty/interest. State and Local Tax Planning - Management of your company's state tax liability through industry and client-specific state and local tax planning strategies. Review of Business Structure - Review of your company's current operational and organizational structure to ensure optimal structure. Audit Representation - Assistance from the pre-audit conference through the appeals process to help minimize income/franchise tax assessments. Amended State Tax Returns (RAR Adjustments) - Assistance with amended state income and franchise tax returns after the completion of an IRS audit. Our experienced professionals have been extremely successful in representing clients of all sizes and across numerous industries in matters such as those described above. The insight, innovation and experience of Schneider Downs' State and Local Tax professionals can assist you in navigating the labyrinth of income/franchise tax laws. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Excise & Motor Fuels Excise and Motor Fuels Tax PRIMARY CONTACTS: Stephen R. Worth CPA, JD Federal and state excise taxes are levied on a wide variety of items – such as heavy vehicles, cable and communication equipment, tires, airline tickets, motor fuel, alcohol, tobacco, and a whole host of other items. Companies often do not have the resources to comply with the reporting and compliance requirements on these taxes or the expertise to identify refunds that can be recovered. Our state and local tax professionals can perform a detailed review of your company’s in-house excise tax function to identify refund opportunities, mitigate risk, and advise on your internal processes.  These services include: Cash refund recovery opportunities Audit defense assistance Compliance assistance Risk mitigation Process review and technology automation About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Abandoned/Unclaimed Property PRIMARY CONTACTS: Stephen R. Worth CPA, JD Schneider Downs' State and Local Tax professionals can help you traverse the complex state abandoned or unclaimed property laws and procedures to limit or eliminate potential liabilities. While abandoned or unclaimed property is not a tax, it has become a significant source of revenue for many states. The information age has also allowed state governments to more effectively locate companies that have never filed an unclaimed property report. State inquiries can lead to an audit and an audit can quickly evolve into a costly matter for your business. Generally, all states have some type of unclaimed property laws that declare money, property or other assets to be abandoned after a period of inactivity, usually three to five years. Should the company fail to locate the property owner within this time period, the company is required to turn the property over to a particular state's abandoned property department. A few common forms of abandoned property consist of, but are not limited to: Outstanding checks to vendors. Product and service refunds; and Uncashed payroll checks; Unused gift cards or certificates; Non-compliance with state abandoned or unclaimed property laws can be costly when considering that state assessments can cover a significant number of years and penalty and interest additions. Abandoned or unclaimed property audits can reveal significant and material liabilities that may impact reporting in accordance with Sarbanes-Oxley Section 404. Our State and Local Tax professionals have the knowledge and experience to assist companies with the following services: Audit Defense and Controversy Compliance Policies and Procedures Manuals Research and Matrices Transaction Due Diligence About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Tax Advisory Services – State and Local Taxes (SALT) Specialized services to help clients meet all of their tax compliance and planning needs. PRIMARY CONTACT: Stephen R. Worth CPA, JD For most companies and organizations, state and local taxes represent the majority of the overall tax burden. With the growing complexity of these state and local taxes, many companies may not even realize they have incurred liabilities, leading to unforeseen tax exposure, interest, and penalty payments. This complexity only continues to grow with the ever-changing and evolving state and local tax legislation. As state and local governments continue to align their tax systems with their fiscal challenges, businesses must stay focused on the changing landscape of their state and local tax obligations.  Doing so is integral to ensure your business operations are aligned with the state and local tax systems in a tax-efficient manner – both in the long and short term. Our state and local tax professionals are poised to advise you on all state and local tax issues, including tax technical, processes, controversy, and multi-jurisdictional complexities, as well as assist you in minimizing state and local taxes and driving tax efficiencies. https://vimeo.com/696683282 Struggling to manage the complex regulations and data compliance of SALT? Set yourself on the right path with tailored solutions to reduce future tax liability and minimize audit risk. Contact us today to schedule a state and local tax risk assessment. SALT TAX ADVISORY SERVICES Created with Sketch. ABANDONED/UNCLAIMED PROPERTY Created with Sketch. EXCISE AND MOTOR FUELS TAX Created with Sketch. MULTISTATE INCOME, FRANCHISE AND GROSS RECEIPTS TAX Created with Sketch. PROPERTY TAX Created with Sketch. SALES AND USE TAX Created with Sketch. SALES AND USE TAX COMPLIANCE ADVICE AND SERVICES Created with Sketch. STATE CREDITS AND INCENTIVES Our active participation in Prime Global, an award-winning association of worldwide public accounting and consulting firms, provides access to specialists in more than 90 countries, ensuring that your tax needs are met in the U.S. and throughout the world. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Income Tax Provisions - ASC 740 and IFRS PRIMARY CONTACT: James Sayre One of the leading causes of financial restatements continues to be the reporting of deferred taxes and valuation allowances. These matters are further complicated by the continuous development of tax legislation across all jurisdictions. Additionally, accelerated reporting deadlines along with increased scrutiny placed on proper disclosures create further challenges to comply with all reporting requirements. It is clear that accounting for income tax grows more complex each year. While a significant component of a company’s financial statements, many do not have the necessary internal resources to prepare their income tax provision calculations. Schneiders Downs provides solutions to your company’s needs to ensure appropriate reporting in accordance with ASC 740 (formerly FAS 109). We offer specialists that are dedicated in the area of accounting for income tax and work closely with your accounting department to ensure proper reporting under U.S. Generally Accepted Accounting Principles (GAAP) and/or International Financial Reporting Standards (IFRS). Our tax accounting specialists provide the following services: Annual and interim tax provision support Public and private company reporting support Valuation allowance assessment Accounting for uncertain tax positions (formerly FIN 48) Footnote disclosure assistance Audit support Purchase accounting related to business combinations Tax accounting training SOX internal control design, implementation and improvement assistance S. GAAP/IFRS conversion support Click here for our thoughts on changes taking place in the market. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Outsourcing/On-Call Assistance Tax Outsourcing / On Call Assistance PRIMARY CONTACTS: Justin C. Steele ESQ Matthew C. Werner CPA In today's complex business and tax environment, most companies cannot maintain the requisite level of in-house tax expertise necessary to ensure compliance in all tax disciplines and jurisdictions. Tax co-sourcing provides a strategic opportunity for companies to house those areas of the tax function that are most strategic, while outsourcing those tasks that are prohibitively resource-intensive or too expensive to complete in-house. It is all about getting the most from limited resources.  Small to large, companies have turned to co-sourcing to handle traditional Federal, state and foreign tax return preparation and tax provision calculations as well as more complex projects such as SOX tax control reviews, income tax reserve (ASC 740-10 fka. FIN 48)implementation, state and local tax consulting and audit assistance, tax provision audit support, and transactional analysis.   Let Schneider Downs help your Company leverage its current tax resources in an efficient, cost-effective manner. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Managed Tax Services Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us Today PRIMARY CONTACTS: Justin C. Steele JD, Matthew Werner CPA In today’s complex business and tax environment, most companies cannot maintain the requisite level of in-house tax expertise necessary to ensure compliance in all tax disciplines and jurisdictions. Managed Tax Services provides a strategic opportunity for companies to house those areas of the tax function that are most strategic, while outsourcing those tasks that are prohibitively resource-intensive or too expensive to complete in-house. It’s all about getting the most from limited resources and leveraging your tax resources. We work with our clients to create a tailored, customer-specific plan to address current needs with the flexibility to adapt to new situations. We provide the following services MANAGED TAX SERVICES Created with Sketch. OUTSOURCING/ON-CALL ASSISTANCE Created with Sketch. INCOME TAX PROVISIONS - ASC 740 AND IFRS   Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Gift, Trust and Estate Services Estate, Trust and Succession Planning Preserving wealth within and between generations. Estate planning is an ongoing and complex process that requires expertise and coordination. Schneider Downs is uniquely positioned with a diverse team of credentialed professionals, including CPAs, CFPs, LLMs, MBAs, JDs, and non-practicing attorneys who are committed to comprehensive service. From business entity succession planning to estate administration, Schneider Downs professionals can synthesize the most complex financial situations to develop an effective, customized, tax-efficient estate and succession plan. Services We Provide and Coordinate Include: Estate and Succession Planning Analyze Current Estate Planning Documents Calculate Death Taxes and Liquidity Gifting Design and Consultation Trust Design and Consultation Insurance Planning Family Tuition and Medical Plan Design Entity Succession Planning Compliance (Trust Returns, Gift Returns, Estate and Inheritance Tax Returns) Estate Administration Process Federal and State Death Tax Returns Estate and Fiduciary Income Tax Returns Estate and Trust Accountings Assist in gathering assets and determining distributions Death Tax Return Challenges Our team of estate planning professionals have a history of success in representing clients before the taxing authorities in the event of a death tax return challenge. Curious about the origin of the estate tax? Learn more in our History of the Estate Tax Infographic. Schneider Downs & Co., Inc. is not a law firm and does not provide legal services. In furtherance of the estate planning services provided, it may be necessary to retain legal counsel. Tax and legacy planning services are offered through Schneider Downs & Co., Inc. Investment and asset management services are provided through Schneider Downs Wealth Management Advisors, LP. Each service may require you to sign a separate engagement agreement that will outline the services to be provided and the respective fees. Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Not-for-profit Tax Not-For-Profit Tax PRIMARY CONTACT: Sarah Piot CPA Schneider Downs' experience with the not-for-profit sector allows us to bring insight to organizations and to better understand the unique challenges and opportunities that not-for-profits face. Our mission is working together every day to make our firm, clients, and communities better. We recognize the importance and value of the services that not-for-profit organizations provide to our communities and are committed to serving our clients to their highest levels of satisfaction. Our Not-for-Profit Tax Services Group is recognized for its technical expertise and comprehensive experience in tax and business matters that affect not-for-profit organizations. From the very beginning of an organization’s existence, we are able to assist in obtaining tax-exempt status with the Internal Revenue Service including education on the process and a collaborative preparation of the exemption request. The required annual filings, including Form 990 and Form 990-PF, are complex documents which are open to public disclosure. A critical component of our process when working with not-for-profit organizations includes viewing the annual filing document as an integral part of your public relations plan and ensuring the operations and accomplishments are highlighted. In addition to the services mentioned above, the following is a sample list of services that we regularly assist not-for-profit organizations with: Unrelated business income analysis both at the federal and state level Foreign information filing requirement analysis Board and management education Analysis and preparation of foreign equivalency determinations Annual conflict of interest questionnaire assistance Consultation regarding employment taxes Reasonable compensation analysis Executive Compensation review Gift planning strategies State charitable solicitation registration State payroll tax registration Assistance with Payroll Protection Program Employee Retention Credit Claims Shuttered Venue Operators Grant application assistance Conflict of Interest best practices Internal Revenue Service Audit Representation Application for Federal Exempt Status About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Individual Tax Individual Tax Primary Contact: Justin C. Steele ESQ  Schneider Downs Tax Advisors focus on providing value to our individual tax clients with a tailored approach to meet their unique tax needs and goals. The Schneider Downs team consists of experienced tax professionals who have your best interest at heart and provides you with a personalized customer experience through a variety of services, including: Tax Compliance Schneider Downs tax advisors ensure that our clients’ can address individual federal, state and local tax needs in an accurate and timely manner during the tax preparation process and throughout the entire year. Proactive Tax Planning Our tax professionals provide proactive ideas, develop strategies to minimize your individual tax burdens and provide timely updates to avoid surprises. Tax Projections We strive to ensure our clients are aware of their projected tax liabilities, understand the significant factors that affect their taxes, and provide information in advance of personal and business decisions to evaluate the tax effect and provide opportunities for tax savings. Audit Support Schneider Downs tax advisors have experience assisting and supporting clients through federal, state and local tax authority audits and ensure our clients are fairly represented in their individual tax needs. Why Schneider Downs Individual Tax Advisors? Schneider Downs processes and technology utilized for tax information collection provide a simple and easy experience for our clients, while ensuring that data is managed in a secure manner. We have designed a service model built on a commitment to continuous communication with clients with frequent dialogue and scheduled meetings throughout the year to understand individual goals and needs. Our team of professionals have your best interest at heart. If you need an advisor to provide you a fresh tax perspective, please contact a member of the tax team at contactsd@schneiderdowns.com. About Schneider Downs Tax Advisors  The tax environment is constantly changing, and effective tax planning allows clients to take advantage of significant economic opportunities and achieve substantial tax savings. With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits. Learn more about our additional tax services and capabilities at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Business Tax Business Tax Primary Contact: Justin C. Steele ESQ  Schneider Downs Tax Advisors focus on the business of our clients and the environments in which they operate. Our approach is tailored to your operations and is developed after obtaining an in-depth understanding of your organization. Our professionals have a breadth of experience providing industry-leading service to businesses of all types including both publicly and privately held companies. Business Tax Compliance Services Our integrated service delivery model ensures that our clients’ federal, state and local tax needs are addressed in a timely manner during the course of the tax preparation process and throughout the entire year. We work to minimize liabilities and maximize cash flow while ensuring compliance with federal and state laws. We keep you informed of tax law changes and related issues that might affect your business, and we coordinate with international advisors to provide global solutions. Schneider Downs’ commitment to identifying opportunities with a personal focus on your business allows us to identify and implement tax-saving strategies for you. Our tax professionals understand complex tax issues and we work to bring value to your business. As a part of our services, we meet with our clients regularly to learn what is important to you, and to understand your goals and industry trends. We know that understanding your business allows us to develop proactive tax planning strategies. About Schneider Downs Tax Advisors  With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Tax Compliance and Consulting Tax Compliance and Consulting Specialized services to help clients meet all of their tax compliance and planning needs. Contact Us Today PRIMARY CONTACT: Justin C. Steele ESQ  Schneider Downs Tax Advisors strive to create value for our clients. Our approach is based on developing an in-depth relationship with our clients to bring creative ideas and solutions tailored to the unique aspects of our clients’ goals, challenges, and opportunities. Our integrated service delivery model ensures that our clients’ tax needs are addressed in a timely manner. TAX COMPLIANCE AND CONSULTING SERVICES Created with Sketch. BUSINESS TAX Created with Sketch. INDIVIDUAL TAX Created with Sketch. NOT-FOR-PROFIT TAX Created with Sketch. GIFT, TRUST AND ESTATE SERVICES Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Tax About Us About Schneider Downs Tax Services Providing specialized services to help clients meet all of their tax compliance and planning needs. Contact Us The tax environment is constantly changing, and effective tax planning allows clients to take advantage of significant economic opportunities and achieve substantial tax savings. With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits Schneider Downs’ tax advisors have experience and expertise in a wide range of industries including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensures the delivery of technical tax strategies which can be implemented as practical business initiatives. Download our Tax Services Overview ### Tax Services Tax Services Schneider Downs provides a variety of specialized services to assist our clients with all of their tax compliance and planning needs. Contact Us Today Tax Compliance and Consulting Ensure compliance while providing tax planning to reduce tax liabilities and manage cash flow related to tax obligations Learn More > Managed Tax Services Supplemental solutions for your internal compliance and reporting functions Learn More > SALT Tax Advisory Services to achieve optimal results relating to SALT, credits and incentives, and accounting methods and elections Learn More > International Tax Advisory Specialty consulting services for international taxation to achieve your global tax planning and compliance needs Learn More > Tax Credits and Incentives Identify and secure the tax credits and incentives available to you and your business Learn More > Tax Transaction Advisory Learn More > Our Thoughts On Articles and insights written by our professionals on tax topics most important to you Learn More > About Us Learn more about the Schneider Downs Tax Advisory team and capabilities Learn More > Contact Us We want to hear from you. Learn More > Learn how we’ve Solved Big Problems For our clients View more Big Problem: High Tax Burden For Family-owned Franchisor. Big Thinking: Comprehensive Planning For A 15% Tax Reduction. Read Case Study Big Problem: Pandemic-fueled Tax Liabilities For Dealerships Big Thinking: Change Accounting Methods To Achieve $600,000 In Deferred Tax Savings. Read Case Study ### Accounting Advisory Services Accounting Advisory Services Focus on protecting and enhancing the value of your business. Contact Us Today Broad capabilities, unmatched expertise The Schneider Downs Accounting Advisory team helps clients manage the accounting complexities and implications associated with increasing regulatory oversight and compliance challenges organizations face in the ever-evolving business landscape. See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections With a focus on protecting and enhancing the value of your business, the Schneider Downs Accounting Advisory team is committed to guiding clients through their unique challenges and providing pragmatic solutions that solve complicated issues and capitalize on unique opportunities.Regardless of the complexity of the issues facing your organization, the Schneider Downs team has the collective knowledge and industry experience to provide the best practices, relevant research and key insights to overcome current business challenges and position your company for future success.Whether you need support with technical accounting services, U.S. GAAP, IFRS, IPO readiness, post-acquisition integration, back-office assessment, shared services, cash flow optimization or staff augmentation for specialized projects, the Schneider Downs Accounting Advisory team has the collective expertise and experience you can trust. Accounting Project Management Accounting Project Management The Schneider Downs Accounting Project Management team provides the… Managed Lease Accounting Services Managed Lease Accounting Services The Schneider Downs Managed Lease Accounting team can… Technical Accounting Advisory Services Technical Accounting Advisory The Schneider Downs Technical Accounting Advisory Services team provides… Industry ExpertiseThe Schneider Downs Accounting Advisory team understands the importance of industry considerations when working with our clients. Our team has the specialized expertise to support the unique challenges facing private and publicly traded organizations across a wide range of industries, including:AutomotiveConstructionEmerging TechnologyHealthcareHigher EducationManufacturingNot-for-ProfitPrivate EquityProfessional ServicesReal EstateRetailTransportation & LogisticsWith our diverse experience across industries and organizations of all sizes, our team understands the business nuances, regulatory requirements and compliance concerns important to our clients.Commitment to InnovationIn addition to industry and accounting advisory expertise, our team is committed to developing technology-driven solutions that address foundational accounting needs, process optimization, automated reporting capabilities and increased productivity – all of which help drive business solutions while maximizing existing resources and reducing costs. View our additional Business Advisory services and capabilities Learn More Contact us ### International Assurance Services International Assurance Services PRIMARY CONTACTS: Staci L. Brogan CPASchneider Downs knows that business opportunities frequently cross national borders. While the global marketplace offers unique challenges, we’re here to help your business with domestic and foreign needs.We have a deep understanding of the challenges international organizations face and have the experience to provide excellent assurance services under both U.S. Generally Accepted Audit Standards (U.S. GAAS) and the International Standards on Auditing (ISA). We serve a large number of clients with international needs throughout the world. We perform assurance services as the parent auditor for international organizations as well as the assurance provider for component entities of foreign companies. We perform assurance services in accordance with U.S. GAAP, International Financial Reporting Standards (IFRS), and other foreign accounting standards.When Schneider Downs is selected as a component auditor of a U.S. subsidiary with a foreign parent, we will work with the group auditor and group management to determine the most cost-effective approach to meet the needs domestically as well as those of the Group.For technical content, hot topics and trends impacting International Organizations, subscribe to our complementary Our Thoughts On weekly newsletter at Subscribe.Contact UsSchneider Downs provides excellent service to our international clients with a personal focus on their individualized needs.  For more information on how Schneider Downs can assist your international organization, please contact Staci Brogan.About Schneider Downs Audit and Assurance ServicesSchneider Downs provides a variety of specialized services to assist our clients with all of their audit and assurance needs. We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans. Learn more about our Audit and Assurance Services. OUR INTERNATIONAL SERVICES audit-assurance-servicesCreated with Sketch. ACCOUNTING AND ASSURANCE We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held tax-servicesCreated with Sketch. TAX SERVICES The tax environment is constantly changing, and effective business and tax planning allows clients to take advantage of significant economic opportunities technologyCreated with Sketch. TECHNOLOGY SERVICES Schneider Downs Technology Advisors is committed to providing value added technology services and solutions to our clients business advisoryCreated with Sketch. BUSINESS CONSULTING SERVICES Schneider Downs Business Advisors leverages our experience and industry expertise to maximize value and minimize risk information-technologyCreated with Sketch. IT RISK ADVISORY SERVICES In today’s global economy, risks – both operational and technology - span multiple countries and continents Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Public Companies Assurance Services Public Company Assurance Services PRIMARY CONTACTS:Doug J. Morally CPASchneider Downs provides audit, assurance and consulting services to publicly traded businesses in a wide range of industries.As the largest independent financial and business advisory firm in our region, with 60+ years of experience and a proven global service model, Schneider Downs offers a cost-effective alternative to using a national service provider.Schneider Downs is the independent auditor of record for operating companies in various industries and has experience with IPOs, IPO readiness, secondary offerings and underwriting diligence.  We work proactively with management and the audit committee to develop an audit plan that effectively manages a registrant's risk in an increasingly complex regulatory environment, delivering on our promise of "Big Thinking, Personal Focus."Global Service Delivery ModelSchneider Downs’ global service delivery model incorporates PrimeGlobal, an association of independent accounting firms selected as best in class for quality of practice, professional standing, local reputation, diverse technical capabilities and geographic location.Our position within the association is strengthened by our role as a founding member of PrimeGlobal and our continuous involvement on the board of directors. We work with PrimeGlobal firms across the globe to coordinate our clients’ international service needs.Additional Public Company ServicesIn addition to SEC audits, Schneider Downs provides several extensive and comprehensive solutions for public companies including:Employee Benefit Plan AuditsSarbanes-Oxley ComplianceIPO and SPACs Deal Readiness AdvisoryFor a full overview of our services and capabilities, please download our Public Company brochure.Public Company Associations and AffiliationsSchneider Downs is an active participant in numerous groups and associations focused on public companies, including:Prime GlobalPublic Companies Accounting Oversight Board (PCAOB)  The Center for Audit Quality (CAQ)Public Company Industry ResourcesSchneider Downs Public Company ArticlesSchneider Downs Public Company BrochureAbout Schneider Downs Audit and Assurance ServicesSchneider Downs provides a variety of specialized services to assist our clients with all their audit and assurance needs. We apply the experience of more than 60 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans.Learn more about our Audit and Assurance Services or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### SOC Case Studies Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider Downs has extensive experience conducting all forms of System and Organization Controls (SOC) Reports for clients in numerous niche industries.Schneider Downs SOC Report Case Studies:Data Center/Secure Application Host SOC ReportHealth Management Solutions Provider SOC 2 + HITRUSTHealthcare Management/Third Party AdministratorHR Outsourcing Provider SOC 1Information Technology Services SOC ReportInformation Technology Services SOC 2Pharmacy Provider SOC 2Software as a Service (SaaS) Company SOC 2 Type 2Schneider Downs SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainSOC ResourcesSchneider Downs SOC Report BrochureSchneider Downs SOC Reports OverviewTake Our free SOC Assessment QuizSchneider Downs SOC FAQsSchneider Downs SOC Case StudiesSchneider Downs SOC ‘Our Thoughts On’ ArticlesAICPA's SOC Report CenterAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started and learn more about our practice at SOC.DOES YOUR ORGANIZATION NEED A SYSTEM ANDORGANIZATION CONTROLS (SOC) REPORT?TAKE A FREE ASSESSMENT QUIZ View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC Report FAQs SOC Frequently Asked Questions As one of the region’s largest providers of high-quality SOC reports, we have compiled a library of responses to the questions we are asked nearly every day. We’re happy to share our insights, questions include: WHAT ARE SOC REPORTS?System and Organization Controls (SOC) reports, formerly Service Organization Control reports, are examinations provided by CPAs in connection with system-level controls of a service organization or entity-level controls at other organizations. These engagements are performed in accordance with Statement on Standards for Attestation Engagements (SSAE) No. 18, which is a professional standard promulgated by the American Institute of Certified Public Accountants (AICPA). WHO NEEDS A SOC REPORT?A SOC report is often requested by organizations (user entities) that receive significant services from a service organization and the user entities’ auditors (user auditors). WHAT ARE THE TYPES OF SOC REPORTS? SOC 1, SOC 2 – SOC for Service Organizations: Trust Services SOC 2® HITRUST SOC 2® CSA STAR Attestation SOC 3 – SOC for Service Organizations: Trust Services Criteria for General Use Report SOC for Cybersecurity SOC for Supply Chain WHAT ARE THE BENEFITS OF OBTAINING A SOC 2 REPORT?Obtaining a SOC 2 report differentiates the service organization from its peers by demonstrating the establishment of effectively designed internal corporate governance and oversight and allows customers, stakeholders – or both – to gain confidence and place trust in the service organization’s system. HOW DOES A SERVICE ORGANIZATION PREPARE FOR A SOC REPORT?Prior to undergoing a SOC examination, an organization should engage a CPA firm to perform a SOC Readiness Assessment. SOC Readiness Assessments are designed to assist organizations in assessing their preparedness for a SOC examination. System and Organization Controls (SOC) reports, formerly Service Organization Control reports, are examinations provided by CPAs in connection with system-level controls of a service organization or entity-level controls at other organizations. These engagements are performed in accordance with Statement on Standards for Attestation Engagements (SSAE) No. 18, which is a professional standard promulgated by the American Institute of Certified Public Accountants (AICPA). A SOC report is often requested by organizations (user entities) that receive significant services from a service organization and the user entities’ auditors (user auditors). SOC 1, SOC 2 - SOC for Service Organizations: Trust Services SOC 2® HITRUST SOC 2® CSA STAR Attestation SOC 3 - SOC for Service Organizations: Trust Services Criteria for General Use Report SOC for Cybersecurity SOC for Supply Chain Obtaining a SOC 2 report differentiates the service organization from its peers by demonstrating the establishment of effectively designed internal corporate governance and oversight and allows customers, stakeholders – or both – to gain confidence and place trust in the service organization’s system. Prior to undergoing a SOC examination, an organization should engage a CPA firm to perform a SOC Readiness Assessment. SOC Readiness Assessments are designed to assist organizations in assessing their preparedness for a SOC examination. About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at SOC . DOES YOUR ORGANIZATION NEED A SYSTEM AND ORGANIZATION CONTROLS (SOC) REPORT? TAKE A FREE ASSESSMENT QUIZ Download The Content For the full FAQ document please take a moment to tell us a little bit about you, and we’ll provide instant access to all of our responses. First Name Last Name Organization Title Email PhoneEmailThis field is for validation purposes and should be left unchanged. Submit ### SOC for Vendor Supply Chains SOC for Supply Chain Deliver sound risk management practices, internal control systems and compliance frameworks. What is a SOC for Supply Chain Report?SOC for Supply Chain reports helps organizations communicate certain information about the supply chain risks and management efforts to assess and implement an effective system of controls that mitigate those risks. These reports provide management with a competitive advantage when competing for work with user entities, such as manufacturers or distributors, by demonstrating to users the organization’s commitment to keeping data secure and meeting performance metrics.A SOC for Supply Chain report covers the types of goods produced or distributed, product performance specifications and system components like infrastructure, software and people. It also includes details on significant inputs like raw materials and distribution channels and aligns them with the criteria of a SOC 2 report.Who Can Benefit from a SOC for Supply Chain Report?Emerging Technology CompaniesA SOC for Supply Chain report provides a comprehensive assessment of your supply chain's security posture, helping to identify and mitigate potential risks. Additionally, it enhances trust with your partners and customers by demonstrating a commitment to maintaining high security standards.Distribution/Warehouse CompaniesA SOC for Supply Chain report enhances customer confidence by demonstrating your company's commitment to security, ensuring that you have processes in place to manage customer inventory adequately and ensure products get where they need to go.Manufacturing CompaniesA SOC for Supply Chain report demonstrates a commitment to managing risks posed by suppliers in the manufacturing process and controls are implemented to ensure the security and integrity of final products.Ready to Get Started Contact us for more information on our SOC solutions and capabilities.Key Benefits of a SOC for Supply Chain Report include:Providing end users information about compliance with performance specification, commitments and requirements. For example, a software developer states all third-party libraries included in a new release are formally authorized and up to date, a SOC for Supply Chain report would determine if such a control is operating effectively.Reduce third party inquiries and assessment regarding supply chain risk management practices and controls.Competitive advantage for organizations that obtain a SOC for Supply Chain report. Potential customers may view your services or product more favorably if they have been independently assessed.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Big Thinking. Personal Focus.Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC for Cybersecurity SOC for Cybersecurity Delivering SOC Reports With IT, Internal Audit, And External Audit Expertise A SOC for Cybersecurity examination from an independent CPA firm culminates in a report that describes the effectiveness of your cybersecurity risk management program. The report can be presented to your organization’s board of directors, analysts and investors, business partners, industry regulators and customers to demonstrate that there are effective cybersecurity controls in place to detect, respond to, mitigate and recover from organizational breaches and other security events.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Ready to Get Started Contact us for more information on our SOC solutions and capabilities.Who Can Benefit from a SOC for Cybersecurity Report?Analysts and InvestorsThey may need to understand the cybersecurity risks that could threaten the achievement of your organization’s operational, reporting and compliance (legal and regulatory) objectives and, consequently, harm your organization’s value and stock price.Board of Director Members They may require information about the cybersecurity risks an organization faces and the current cybersecurity risk management program to fulfill their oversight responsibilities. They may also want information from independent third-party assessors to help them evaluate management’s effectiveness in managing cybersecurity risks.Business PartnersThey may require information about your organization’s cybersecurity risk management program as part of their overall risk assessment. This information is intended to help business partners determine matters such as whether there is a need for multiple suppliers for a good or service and the extent to which they choose to extend credit to your organization.Customers and Industry Regulators They may benefit from information about an organization’s cybersecurity risk management program to support their monitoring and oversight roles. Key Differences between SOC 2 and SOC for Cybersecurity SOC 2Audience - Typically requested by customers and stakeholders concerned with data security and privacy in outsourced services.Scope - Primarily for service organizations that need to report to users on security, availability, confidentiality, privacy or processing integrity commitments.Description Criteria - Includes information on an in-scope Service Commitments, Infrastructure, Software, Data, People, Processes and Procedures, and relevant aspects of the Control EnvironmentControls - Uses the AICPA's Trust Services Criteria (TSC) for assessments. The TSC includes security, availability, confidentiality, privacy and/or processing integrity.Timing - SOC 2 timing is up to the organization, but is typically an annual activity.SOC for CybersecurityAudience - Intended for a broader range of stakeholders, including boards of directors, investors and business partners, seeking assurance on an organization's cybersecurity posture.Scope - Can be applied to any organization even those that do not need to perform SOC 2.Description Criteria - Includes information on an entity’s cybersecurity risk management program. Elements that could be included are cybersecurity risk management objectives, critical assets and data, cybersecurity risk management governance, assessments and internal controls.Controls - Organization can choose the framework they wish to measure against.  This could be the SOC 2 TSC or another framework such as NIST Cyber Security Framework or ISO 27001 Information Security Management System.Timing - SOC for Cybersecurity timing is up to the organization, but is typically an annual activity.Big Thinking. Personal Focus.Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC 3 SOC 3 Examinations Delivering SOC Reports With IT, Internal Audit, And External Audit Expertise A SOC 3 report must be done in conjunction with a SOC 2 Type 2 report.  SOC 3 covers the same five categories as SOC 2 but does not require or need the knowledge necessary to effectively use the details contained in a SOC 2 report.The main reason a SOC 3 report is obtained is that the report can be posted on a public website or quickly provided to prospective customers, eliminating the need for a Non-Disclosure Agreement and reducing due diligence timelines for closing sales.Insights for Specific Risk AreasWe also provide other specialized reports, such as SOC for Cybersecurity and SOC for Supply Chain, to address the risk areas most important to you and your organization.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Ready to Get Started Contact us for more information on our SOC solutions and capabilities.Big Thinking. Personal Focus.Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC for CybersecuritySOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC 2 SOC 2 Examinations Delivering SOC Reports With IT, Internal Audit, And External Audit Expertise A SOC 2 examination is a report on controls at a service organization relevant to security, availability, processing integrity, confidentiality and/or privacy.  SOC 2 reports are intended to meet the needs of a broad range of users needing detailed information and assurance about an organization’s controls to securely manage and use customer data during business operations.With the Security category as the foundation for a SOC 2 report, you can optionally choose four additional categories: Availability, Confidentiality, Privacy and Processing Integrity. These additional categories allow you to tailor your SOC 2 report to the services you provide while still adhering to a universal criterion. Including these categories may offer additional assurance to your customers.Once your organization selects the categories in scope, you can design controls to meet the criteria for each applicable category. This is your opportunity to specify the actions your organization performs. The controls you design help the reader understand how your organization meets the criteria for the chosen SOC 2 categories. These controls typically demonstrate processes for organizational oversight, vendor management, internal governance, logical and physical access and logical security.After choosing the categories and designing the controls, your organization will decide between a SOC 2 Type 1 or SOC 2 Type 2 examination. See below for additional details on the differences between these reports.Once you complete your SOC 2 audit, you can distribute the report to specified parties of your choosing. However, the use of these reports is restricted to specified parties and cannot be posted publicly. To address this, the AICPA has designed SOC 3 reports for public distribution. A SOC 3 report is performed in tandem with your SOC 2 report, requiring no additional work for your organization, as all inputs are obtained during the SOC 2 audit fieldwork.Examples of Service Organizations that Benefit from SOC 2 Engagements:Application Hosting ServicesColocation and Managed ServicesClaims Processing and Healthcare Benefit AdministrationDatabase AdministrationData Centers or Data Processing Service BureausEnterprise Data Management SolutionsInfrastructure as a Service (IaaS) SolutionsInvestment Management Services / Retirement Plan AdministrationManaged Service ProvidersMortgage, Title, Closing and Appraisal ServicesPlatform as a Service (PaaS) SolutionsSoftware as a Service (SaaS) SolutionsThird-Party AdministratorsWeb or Cloud Hosting ServicesReady to Get Started? Contact us for more information on our SOC solutions and capabilities.What’s Inside a SOC 2 Report?There are a few important terms to understand when reading a SOC 2 report. Independent Service Auditor refers to the auditor that your organization works with. Service Organization refers to the organization – you! Service/Platform refers to the service you provide your customers.A SOC 2 report contains the following sections:Section 1: Independent Service Auditors ReportSection 2: Management’s AssertionSection 3: Management’s Description of the Organization/Service/Platform (i.e., System Description)Section 4: Information Provided by the Service Auditor (i.e., controls)Section 5: Other Information Provided by Management (optional)What Type of SOC 2 Engagement is Right for You?SOC 2 Readiness Assessment – Plan for a successful SOC 2 examination. Readiness Assessments are non-attest consulting engagements aimed at designing controls, identifying control gaps, and advising corrective actions before a SOC examination. We collaborate with clients to align relevant trust service categories and criteria, addressing risks important to user organizations.SOC 2 Type 1 –  As the Independent Service Auditor, we evaluate 1) the fairness of the presentation of the Service Organization’s system description in accordance with the description criteria and 2) the suitability of the design of the controls to provide reasonable assurance that the Service Organization’s service commitments and system requirements would be achieved based on the trust services criteria relevant to the applicable trust services categories as of a specified date. The SOC 2 Type 1 may benefit organizations that have never completed an examination, since it assesses the design of controls at a specified date.SOC 2 Type 2 – As the Independent Service Auditor, we evaluate 1) the fairness of the presentation of the service organization’s system description in accordance with the description criteria, 2) the suitability of the design, and 3) operating effectiveness of the controls to provide reasonable assurance that the Service Organization’s service commitments and system requirements would be achieved based on the trust services criteria relevant to the applicable trust services categories over a specified period. The SOC 2 Type 2 examination is recommended for organizations that have had a readiness assessment or completed a Type 1 examination, as it evaluates both control design and operating effectiveness over time. The period of time a SOC 2 Type 2 report covers is typically 12 months but periods as short as 3 months can be used for a first-time report or to meet service commitments.SOC 2+ –  SOC 2 reports are produced under the AICPA’s AT-C Section 105 and AT-C Section 205 standards for attestation engagements. These standards provide a framework for evaluating and reporting on controls at the Service Organization. Additional frameworks can be added and evaluated in the same way we use these standards as a framework for evaluating controls against the applicable SOC 2 categories. Here are a few examples of SOC 2 + reports:SOC 2 + CSA STARSOC 2 + HIPAASOC 2 + HITRUSTSOC 2 + ISO 27001SOC 2 + NIST 800-171SOC 2 + NIST 800-853SOC 2 + PCIIt’s important to note that a SOC 2 + report does not provide any certification. For example, in the case of a SOC 2 + ISO 27001 report, the objective of the Independent Service Auditor is to state whether there was reasonable assurance to determine the Service Organization’s controls met the requirements within ISO 27001, as opposed to providing a certification for ISO 27001. Please browse our SOC report FAQs for more information on the different types of reports available to you.Insights for Specific Risk AreasWe also provide SOC 3 examinations and other specialized reports, such as SOC for Cybersecurity and SOC for Supply Chain, to address the risk areas most important to you and your organization.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Big Thinking. Personal Focus.“Schneider Downs takes a refreshingly pragmatic approach to SOC2 and other compliance initiatives.” Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC for CybersecuritySOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started.Schneider Downs National ReachSchneider Downs provides SOC 2 reports to companies in: Atlanta (GA), Austin (TX), Baltimore (MD), Boise (ID), Boston (MA), Burlington (VT), Charleston (SC), Charlotte (NC), Chicago (IL), Cincinnati (OH), Denver (CO), Detroit (MI), Houston (TX), Indianapolis (IN), Las Vegas (NV), Lexington (KY), Little Rock (AR), Los Angeles (CA), Memphis (TN), Miami (FL), Milwaukee (WI), Minneapolis (MN), New Orleans (LA), New York City (NY), Omaha (NE), Philadelphia (PA), Phoenix (AZ), Pittsburgh (PA), Providence (RI), Portland (OR), Richmond (VA), St. Louis (MO), Santa Fe (NM), Seattle (WA), Washington (D.C.) and Wilmington (DE).DOES YOUR ORGANIZATION NEED A SYSTEM ANDORGANIZATION CONTROLS (SOC) REPORT?TAKE A FREE ASSESSMENT QUIZ View our additional IT Risk Advisory services and capabilities Learn More Contact us ### SOC 1 SOC 1 Examinations Delivering SOC Reports With IT, Internal Audit, And External Audit Expertise SOC 1 examinations evaluate your organization’s operational processes and IT controls. The reports are specifically designed to meet the needs of entities that use service organizations and their external auditors as they evaluate the effect of the controls at the service organization on user entities’ financial statements. Use of these reports is restricted to the management team of the service organization, user entities and user auditors.Examples of Service Organizations that Benefit from SOC 1 Engagements:Application Service ProvidersBack Office ServicesClaims Processing and Healthcare Benefits AdministrationCollection ServicesData Centers or Data Processing Service BureausExpense Management and Bill ProcessingFacilities Maintenance and Vendor ManagementInventory Management/Logistics/Reverse Logistics ServicesInvestment Management Services / Retirement Plan AdministrationMortgage, Title, Closing and Appraisal ServicesPayroll Processing ServicesThird-Party AdministratorsWeb or Cloud Hosting ServicesWhat Type of SOC 1 Engagement is Right for You?Readiness Assessment – Readiness Assessments are non-attest consulting engagements designed to identify control gaps and advise the service organization of necessary corrective actions in preparation for a successful SOC examination. We work closely with service organizations to ensure mutual agreement on the control objectives and risks significant to user organizations.SOC 1 Type 1 – Evaluate the fairness of the presentation of the service organization’s system description and the suitability of the design of the controls in meeting the related control objectives as of a specific date. SOC 1 Type 1 may benefit organizations that have never completed an examination, since it assesses the design of controls at a specified date.SOC 1 Type 2 – Evaluate the fairness of the presentation of the service organization’s system description and the suitability of the design and operating effectiveness of the controls in meeting the related control objectives over a specified period. The SOC 1 Type 2 examination is recommended for those who have completed a readiness assessment or a Type 1 examination, as it evaluates both the design and operating effectiveness of controls over time.Insights for Specific Risk AreasWe also provide SOC 3 examinations and other specialized reports, such as SOC for Cybersecurity and SOC for Supply Chain, to address the risk areas most important to you and your organization.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Ready to Get Started Contact us for more information on our SOC solutions and capabilities.Big Thinking. Personal Focus.Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC for CybersecuritySOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Subservice Organizations: Their Role and Impact on Your SOC Report In today’s interconnected business landscape, understanding the role of subservice organizations in SOC (System and Organization Controls) reports is paramount.… Read More > 20 Pre-Contract Questions To Ask Your Next SOC 2 Audit Firm What information do you need to know before your SOC 2 audit?When it comes time for a SOC 2 report,… Read More > What Should a Service Organization Consider When Determining Its SOC Report Testing Period? The American Institute of Certified Public Accountants does not mandate a minimum testing and reporting period for System and Organization… Read More > What is blockchain? How can I secure my blockchain environment? What is Blockchain:Blockchain definitions vary by source, but at its essence, blockchain is a continually expanding list of digital records… Read More > The Benefits of a Compliance Automation Platform An organization without established security and governance is as good as a straw home; a wolf is bound to blow… Read More > Which SOC Report Is Right for You? Selecting the appropriate System and Organization Controls (SOC) report requires knowledge of the types of reports available. The American Institute… Read More > What Evidence Is Requested During SOC 2 Audits? One of the most common questions our team fields is what kind of evidence is requested for SOC 2 audits?… Read More > What is a SOC 3 Report? One of the most common questions we hear field is, what is a SOC 3 report and do we need… Read More > How To Scope a SOC 2 Audit One of the most common questions we hear from clients and colleagues is how do you scope a SOC 2… Read More > Do I Need a SOC 2 Type 1 Before a SOC 2 Type 2? Should I engage a CPA firm to perform a SOC 2 Type 1 audit before jumping straight into a SOC… Read More > Why Do CPA Firms Perform SOC 2 Audits? One question our team hears from non-industry contacts and friends is why do CPA firms perform SOC 2 audits?The technical reasons… Read More > Fact or Fiction: SOC 2 There is a lot of misleading information about SOC 2 audits out in the wild. Hopefully, this article clears up… Read More > Getting Started with SOC 2 Reports Need some help getting started with SOC 2 Reports and don’t know where to begin?Before you get stuck in a… Read More > SOC 2 – The Importance of Leadership Buy-In In our experience, there is one key factor that almost always leads to a successful SOC 2 audit— leadership buy-in. So… Read More > What’s the Difference Between SOC 1 and SOC 2 Reports? What are the differences and similarities between SOC 1 and SOC 2 reports? SOC 1 Reports SOC 1 reports focus… Read More > Benefits of a System and Organization Controls (SOC) Report With the increasing utilization of third-party service providers, the need for trust and transparency between service organizations and their customers… Read More > How Internal Audit Can Assist with SOC Reviews at Higher Education Institutions With the rise of cloud computing and software-as-a-service (SaaS) playing a key role within higher education institutions, outsourcing certain functions… Read More > What is a SOC for Cybersecurity report and who needs one? Organizations that undergo a SOC for Cybersecurity examination will obtain a report on the effectiveness of their cybersecurity risk management… Read More > What is a SOC Report and Who Needs One? What are SOC reports?System and Organization Controls (SOC) reports, formerly Service Organization Control reports, are examinations provided by CPAs in… Read More > How to Review a Vendor’s SOC Report When Microsoft reported a 12% increase in revenue in their latest quarterly earnings report, the company attributed much of that… Read More > ### SOC Services SOC Services Delivering SOC Reports With IT, Internal Audit, And External Audit Expertise Your clients and prospects want assurance that their data and transactions are handled with integrity. A System and Organization Controls (SOC) report provides the transparency and trust needed to demonstrate your commitment to strong controls and processes.https://vimeo.com/696683679Schneider Downs is a trusted provider of SOC examinations with proven experience and demonstrated expertise. Annually, we deliver more than 200 reports to a global client base spanning numerous industries.What Type of SOC Report is Right for You?We can work with you to determine which report will evaluate the controls you want to measure. We offer the following types of SOC reports:SOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsInsights for Specific Risk AreasWe also provide SOC 3 examinations and other specialized reports, such as SOC for Cybersecurity and SOC for Supply Chain, to address the risk areas most important to you and your organization.Not sure if your organization needs a SOC examination? Download our SOC service overview or take our SOC assessment quiz to find out.Ready to Get Started Contact us for more information on our SOC solutions and capabilities.What Our Clients Are Saying: “I’ve never been a fan of compliance for its own sake—checkbox exercises don’t equal real security. Schneider Downs brings a mindset and methodology that avoids the performative and focuses on meaningful outcomes.” “Schneider Downs takes a refreshingly pragmatic approach to SOC2 and other compliance initiatives.” Big Thinking. Personal Focus.Recognized for our deep SOC experience and established service model, we are leaders in the field and sought-after speakers on SOC reporting requirements both regionally and nationally. Key benefits of working with Schneider Downs include:Client-first approach to drive maximum value for you and your customersCollaborative working style to ensure knowledge transfer between our clients and teamIncorporation of Schneider Downs’ professionals based on the subject matter expertise required for each engagementIT leaders experienced in system controls (e.g., SOX, NIST, CMMC, COBIT, PCI DSS v4.0, CSA Star, HIPAA, HITRUST, and ISO 27001)Leaders with global project management expertiseRegistered as a firm with the AICPA and subject to peer review requirementsMember of the AICPA Enhanced Oversight Committee for SOC reportsWell-versed in reporting on controls at service organizationsSOC ServicesSOC Practice OverviewSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for Supply ChainSOC for CybersecuritySOC ResourcesVisit our SOC Resource Library for helpful thought leadership, including case studies and FAQs.About Schneider Downs SOC ServicesSchneider Downs employs a distinctive approach to SOC reports by blending the expertise of IT, internal audit, and external audit professionals. Our integration of diverse knowledge and project management skills ensures we meet and exceed our clients’ expectations. To ensure our SOC reports meet your needs, we employ a rigorous Quality Control system and have peer reviews completed by external assessors on a regular basis. To explore how we can support your organization, please contact us to get started. View our additional IT Risk Advisory services and capabilities Learn More Contact us ### ERISA Frequently Asked Questions Employee Benefit Plan Audit - ERISA Requirement Frequently Asked Questions PRIMARY CONTACT: Patricia Giudici, CPA Employee benefit plan audits are required for a majority of plans that are covered by the Employee Retirement Income Security Act of 1974 (ERISA). With increased scrutiny on employee benefit plan audits, the Schneider Downs ERISA group has prepared a listing of Frequently Asked Questions to help parties better understand the requirements and types of benefit plan audits, including the required filings, characteristics to look for in an audit firm, and advice on preparation for an audit. What is ERISA? The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of employees so that funds placed in retirement plans during their working lives will be available when they retire. ERISA is a federal law that establishes certain standards for retirement plans in the private industry.  For example, ERISA specifies (1) minimum standards for employee eligibility, vesting and funding, (2) fiduciary responsibilities and standards, (3) reporting and disclosure requirements, and (4) enforcement responsibilities.  Additionally, certain parts of ERISA are coordinated with applicable tax-related provisions of the Internal Revenue Code. What types of benefit plans are subject to ERISA? In general, ERISA applies to the following types of benefit plans: Pension plans sponsored by non-governmental organizations.  Pension plans include both defined benefit and defined contribution plans.  Examples of defined contributions plans include, but are not limited to, profit-sharing plans, 401(k) plans, employee stock ownership plans (ESOPs), and 403(b) plan arrangements. Welfare benefit plans (insured or otherwise), providing health insurance, group life insurance, long-term disability income, severance pay, vacation benefits, training programs, daycare centers, scholarship funds, and prepaid legal services Health Reimbursements Accounts (HRAs) Flexible Spending Accounts (FSAs) What type of retirement plan should I provide to my employees? The type of plan that an organization provides depends on a number of factors, including the size of the organization, the employer’s commitment to providing benefits, the organization’s goals and objectives, the costs of maintaining the plan, etc. Employers should work closely with knowledgeable retirement plan advisors to identify the specific retirement plan program that is appropriate for their organization and employees. What reporting and disclosure requirements are associated with a plan subject to ERISA? There are a number of different federal reporting and employee disclosure requirements associated with maintaining a benefit plan that is subject to ERISA.  While many of these requirements are consistent across all types of ERISA plans (Form 5500 reporting, for example), others depend upon a plan’s specific provisions and features. To assist plan sponsors with identifying their reporting and disclosure responsibilities, the Department of Labor has published a Reporting and Disclosure Guide for Employee Benefit Plans, which can be found at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdf How much can be contributed to a retirement plan? Qualified plan contributions are subject to various limitations under the Internal Revenue Code.  These limitations are updated annually by the IRS.  The following chart provides a comprehensive listing of the current contribution limits: What are the current various IRS limitations on benefits and compensation? IRS Limits 2021 2022 Compensation limit $290,000 $305,000 401(k) deferral limit $19,500 $20,500 401(k) catch-up limit $6,500 $6,500 Defined contribution individual limit* $58,000 $61,000 IRA contribution limit (49 and under) $6,000 $6,000 IRA contribution limit (50 and above) $7,000 $7,000 *Excludes catch-up limits Who is a fiduciary and what are the general responsibilities of a fiduciary? A fiduciary is any individual who has discretionary control or authority over plan management or assets, or responsibility for plan administration or provides investment advice (or has the authority to) for compensation. Fiduciaries include, but are not limited to, plan trustees, plan administrators and members of the plan’s investment committee. Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them; carrying out their duties prudently; following the plan documents (unless inconsistent with ERISA); diversifying plan investments; and paying only reasonable plan expenses. The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA and requires expertise in a variety of areas, such as investments. While many fiduciaries will hire professionals to assist with carrying out these responsibilities, it is important to note that he/she will retain a fiduciary responsibility to monitor the chosen service providers. Who is required to file a form 5500? Form 5500 must be completed by the sponsor of any plan subject to ERISA. When is the deadline for completing the audit of an employee benefit plan and filing Form 5500? The Form 5500 (and accompanying audit report, if required) is due seven months after the last day of the plan year (July 31 for calendar year-end plans), and can be extended for an additional 2½ months, to October 15 for calendar year-end plans. Are there employee benefit plans that are not subject to Title I of the Employee Retirement Income Security Act (ERISA) and therefore don't have an annual reporting obligation? Yes. Governmental plans and church plans are exempt from Title I of ERISA as well as certain types of 403(b) plans that qualify under the safe harbor rules. You should consult with ERISA counsel if you believe your plan may be exempt from the reporting obligations of Title I. Failure to comply with these regulations could result in significant penalties being assessed to your plan. When is an audit of an employee benefit plan required? Generally, employee benefit plans with 100 or more participants (includes eligible, but not participating as well as separated employees with account balances) are considered to be “large” plans and are required to have an audit performed on an annual basis. Plans with fewer than 100 participants (“small” plans) generally do not require an audit to be performed. Are there any exceptions to these general rules? Yes, an exception to these general rules does exist. The "80-120 rule" as it is called may permit plans with more than 100 participants to be treated as a “small” plan. In instances where a plan existed in the previous year, was treated as a small plan for that year and has no more than 120 participants (as of the beginning of the plan year), it may continue to file as a small plan, and no audit will be required. There is no limit to the number of years this rule may be applied. This means a plan may have up to 120 participants for many years without having an audit requirement. However, if a new plan (no previous Form 5500 filing) has 100 or more participants (as of the beginning of the plan year), it must file as a “large” plan, and therefore, would require an audit. What are the audit requirements for a welfare benefit plan? Medical, dental, short- and long-term disability and other types of welfare benefit plans only require an audit if funded. Often, benefits from these plans are paid out of the general assets of the employer/plan sponsor, or through insurance rather than a trust. If the plan uses a trust, it will be considered a funded plan, and an audit will be required if there are 100 or more participants. What are the audit requirements for short plan years? If the plan year is seven months or less, the audit for the short plan year may be deferred until the following plan year. The plan audit for the short plan year still needs to be performed; however, the audit report is filed with the following year's Form 5500. Filing of the short plan year's Form 5500 is not deferred. If the election to defer the audit is elected and the plan participant count falls under 100 for the subsequent plan year, the plan must still meet the large plan filing requirements in that subsequent year. What is an ERISA Section 103(a)(3)(c) audit? An ERISA Section 103(a)(3)(C) audit permits the plan administrator the option of not having investment information (at the plan level only) tested during the audit. In order to permit a limited scope audit, the investment information must be certified by the trustee or custodian as ‘complete and accurate.’ Certifications of completeness or accuracy, but not both, do not qualify for ERISA Section 103(a)(3)(C) audit. Additionally, the certification cannot be from a broker/dealer. The certification must be from a qualified institution. Under Department of Labor (DOL) regulations a qualified institution is one that is regulated and subject to periodic examination by a state of Federal agency such as a bank, trust company, or similar institution including an insurance company. The ERISA Section 103(a)(3)(C) audit exception does not apply to any other audit areas (i.e., participant data, contributions, distributions, etc.) only to investments. Do all plans qualify to have a limited scope audit? No. 11-k audits (audits of a public company’s employee benefit plan that contains plan sponsor stock), master trust arrangements with certification only at the master level, church and governmental plans and assets held outside of a trust are not eligible for ERISA Section 103(a)(3)(C) audit audits. Additionally, plans whereby the assets are not held by a qualified institution do not qualify for an ERISA Section 103(a)(3)(c) audit. What types of items do plan auditors ask for? The area of most focus in a plan audit should be on participant-related transactions and activity. This includes payroll information, deferral percentages, demographic information, distribution paperwork, claims paid (for health & welfare plans), and, most importantly, the plan document provisions. Without the plan document, an audit should not be started. Just as important as participant data is the plan’s investments. As noted above, the level of audit procedures for investments varies in an ERISA Section 103(a)(3)(C) audit or full scope audit. However, no matter what the scope, a plan’s financial statements must contain all disclosures required by the financial report framework (generally accepted accounting principles). What are the five most common tips for a successful employee benefit plan audit? Prepare and be proactive: Ensure that the timing of the audit is agreed upon with the audit team and ensure the audit team has provided the client assistance listing in advance of fieldwork. Suggest alternatives: If there are difficulties in fulfilling an audit request, talk to your audit team. There may be alternative reports your auditor can use to accomplish the required test. Communicate: Request regular status meetings with your audit team to discuss open items, testing exceptions, and more. Set Realistic timelines: The timeline should be agreed upon by both the plan sponsor and the audit team in advance. If the plan is going through an audit for the first time, make sure to build additional time into the schedule. Ask Questions: Audit teams welcome the opportunity to answer questions. The audit process should be an interactive process. What is the American Institute of CPAs Employee Benefit Plan Audit Quality Center (EBPAQC)? The EBPAQC is a voluntary membership organization for firms performing ERISA employee benefit plan audits and was established to promote the quality of employee benefit plan audits.  The EBPAQC provides members with timely communication of regulatory updates, best practices guidance, technical updates and member to member discussion forums to discuss these matters. What are the membership requirements of the American Institute of CPAs EBPAQC? Membership requirements include designating an audit partner to have firm-wide responsibility for the quality of the firm’s ERISA employee benefit plan audit practice; establishing a program to ensure that all ERISA employee benefit audit plan audit engagement personnel possess current knowledge, appropriate for their level of involvement in the engagement; establishing annual internal inspection procedures that include a review of the firms ERISA employee benefit plan audit practice; establishing policies and procedures specific to the firm's ERISA employee benefit plan audit practice to comply with the applicable professional standards and EBPAQC member requirements. Why should I look for an audit firm that is a member of the EBPAQC? Studies by the DOL of employee benefit plan audits show a much smaller deficiency rate in firms that belong to the EBPAQC than those that do not.  Given the fiduciary responsibility of the plan sponsor to have a quality audit performed, this becomes a very significant factor to consider. What is an ERISA Fidelity Bond? An ERISA fidelity bond is a required type of insurance that protects the plan against losses caused by fraud or dishonesty.  It is different from fiduciary liability insurance (which is not required but encouraged), which insures fiduciaries against losses caused by breaches of fiduciary responsibilities. Audit and Assurance Services for Employee Benefit Plans Resources Schneider Downs ERISA Services  Schneider Downs ERISA 'Our Thoughts On' Articles Schneider Downs Employee Benefit Plan Services About Schneider Downs ERISA The Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that include both regulatory and accounting updates, and more.  For more information, visit our dedicated Audit and Assurance Services for Employee Benefit Plans page or contact us at contactsd@schneiderdowns.com. VIEW PDF VERSION PDF Version CONTACT US "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthPhoneThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Employee Benefit Plan Resources Employee Benefit Plan Resources PRIMARY CONTACT: Patricia Giudici, CPAThe Schneider Downs Employee Benefit Plan team has compiled the following resources and links that may provide useful tools and information for your organization. Employee Plan Benefits Third Party LinksAICPA Employee Benefit Plan Audit Quality CenterAICPA's Limited Scope Certification Review Documentation ToolCybersecurity Considerations for Benefit PlansDelinquent Filer Voluntary Compliance Program Penalty (DFVCP) CalculatorDepartment of LaborDepartment of Labor Reporting and Disclosure Guide for Employee Benefit PlansEmployee Benefits Security Administration ERISA Advisory Council ReportsEmployer Resource Site (Established by the Department of Labor)Frequently Asked Questions about the Delinquent Filer Voluntary Compliance Program (DFVCP)Internal Revenue Service - Retirement PlansIRS 401(k) Plan Fix-it GuideIRS Employee Plans Compliance Resolution System (EPCRS) OverviewPension Benefit Guaranty CorporationPrudent Practices for Investment FiduciariesRetirement Plans - Questions to Expect From Your Plan AuditorEBPAQC Plan AdvisoriesEffective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions Employee Benefit Plans - Financial Statement Audits Internal Controls in Financial Reporting and Safeguarding Plan AssetsPartial Employee Benefit Plan Terminations The Importance of Hiring a Quality Auditor to Perform Your Employee Benefit Plan Audit  Understanding Auditor Communications Valuing and Reporting Plan Investments Schneider Downs Employee Benefit Plans ResourcesSchneider Downs FAQ - Employee Benefit Plan Audit RequirementSchneider Downs ERISA Employee Benefit Plan Services BrochureSchneider Downs ERISA 'Our Thoughts On' ArticlesAbout Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services, but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that includes both regulatory and accounting updates, and more.  For more information, visit www.schneiderdowns.com/audit-assurance-services-employee-benefit-plans or contact us at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Employee Benefit Plan Services Employee Benefit Plan Services PRIMARY CONTACT: Patricia Giudici, CPA The Schnieder Downs Audit and Assurance Services for Employee Benefit Plans Services group performs: Audit Services 401(k), 403(b), and profit sharing plans, including 11-K Employee Stock Ownership Plans (ESOPs) Defined benefit and cash balance plans Health and welfare plans Consulting, Fiduciary, and Administrative Solutions* Plan governance assessment, implementation and maintenance Fiduciary and participant education Investment menu analysis, including target date fund suitability Fee benchmarking, including requests for proposals (RFPs) Customized plan design analysis and implementation Open architecture retirement plan platform Individual Retirement Account (IRAs) solutions Third-party administrative services, including: Compliance and nondiscrimination testing Form 5500 preparation Recordkeeping for daily-valued individual account plans Plan document preparation Distribution processing Participant reporting and notification Plan corrections under EPCRS (IRS), DFVCP (EBSA), and VFCP (DOL) Assistance with IRS and DOL examinations Employee stock ownership plan (ESOP) consulting and administration, including feasibility analysis, repurchase obligation, and 409(p) testing (where applicable) Nonqualified plan design and implementation Audit and Assurance Services for Employee Benefit Plans Resources Schneider Downs Audit and Assurance Services for Employee Benefit Plans Schneider Downs FAQ - Employee Benefit Plan Audit Requirement Schneider Downs ERISA Employee Benefit Plan Services Brochure Schneider Downs ERISA 'Our Thoughts On' Articles Employee Benefit Plan Resources About Schneider Downs ERISA The Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services, but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that includes both regulatory and accounting updates, and more.  For more information, visit Audit and Assurance Services for Employee Benefit Plans or contact us at contactsd@schneiderdowns.com. *Consulting and Fiduciary Services are provided by SDAdvantage Retirement Solutions, LP (SDARS) and Schneider Downs Wealth Management Advisors, LP (SDWMA). SDARS performs third-party administrative services for retirement plans.  These services typically include design and plan documentation, compliance testing and reporting, recordkeeping, contribution processing, and distribution services. SDWMA is a Registered Investment Advisor providing investment management services to plan sponsors, including discretionary and non-discretionary investment advice regarding a plan’s investment options, the ongoing monitoring of those options and participant education. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Audit and Assurance Services for Employee Benefit Plans Audit and Assurance Services for Employee Benefit Plans Confident compliance for your benefit plans.PRIMARY CONTACT:Patricia Giudici, CPAWe apply the experience of more than 60 years in practice to the audit and assurance needs of employee benefit plans.Our diverse Employee Benefit Plan practice dictates that we perform audits in accordance with generally accepted auditing standards for compliance with the Department of Labor's (DOL) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act (ERISA) for:Defined contribution plans, including 401(k) and 403(b) plans, profit sharing plans and 11-K filingsDefined benefit plans, including pension plans and cash balance plansHealth and welfare plansEmployee stock ownership plansWe have been a member of the American Institute for Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center (EBPAQC) since its inception. As a member of the EBPAQC, we are required to have a designated ERISA partner, quality control process, annual internal inspections of employee benefit plans and a public peer review report. Additionally, we have a firm-wide employee benefit plan training program, providing specialized training to all professional staff within the firm to stay current on ERISA, DOL, and Internal Revenue Service rules and regulations.We are committed to superior quality and responsive and efficient service. Our expertise in serving employee benefit plans enables us to provide timely, well-researched answers to your most important questions and to accurately address your needs with a solid foundation of knowledge that only experience can provide. We focus on understanding the technical aspects of the plans, and we combine this focus with the judgement and extensive experience of our professionals in auditing employee benefit plans.We are members of the Center for Public Company Audit Firms and the Private Companies Practice Section of the AICPA's Division of Firms, which requires mandatory continuing education for all members of the professional staff and a triennial peer review of a firm's quality control system in its practice of public accounting.We are registered with the Public Company Accounting Oversight Board, committing the firm to the highest standards of the profession and enabling us to deliver audit services to SEC registrants.Audit and Assurance Services for Employee Benefit Plans ResourcesSchneider Downs Employee Benefit Plan ServicesSchneider Downs FAQ - Employee Benefit Plan Audit RequirementSchneider Downs ERISA Employee Benefit Plan Services BrochureSchneider Downs ERISA 'Our Thoughts On' ArticlesEmployee Benefit Plan ResourcesAbout Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services, but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that includes both regulatory and accounting updates, and more.  For more information, please contact us at contactsd@schneiderdowns.com.About Schneider Downs Audit and Assurance ServicesSchneider Downs provides a variety of specialized services to assist our clients with all of their audit and assurance needs. We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans. Learn more about our Audit and Assurance Services at Audit Assurance Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study Excerpt: Gain confidence in plan compliance, accuracy, and trust. ### Audit and Assurance Services Audit and Assurance Services Schneider Downs provides a variety of specialized services to assist our clients with all of their audit and assurance needs. Contact Us Today Audit and Assurance Services for Employee Benefit Plans We apply the experience of more than 60 years in practice to the audit and assurance needs of employee benefit plans. Learn More > SOC Practice Overview Schneider Downs provides System and Organization Controls (SOC) examinations nationally to over 100 clients annually in a variety of industries. Learn More > Public Companies Schneider Downs provides audit, assurance and consulting services to publicly traded businesses in a wide range of industries. Learn More > International Assurance Services While the global marketplace offers unique challenges, we’re here to help your business with domestic and foreign needs. Learn More > Accounting Advisory Services Schneider Downs Consulting offers a variety of technical accounting advisory services, as well as outsourced accounting and finance advisory services. Learn More > Our Thoughts On Articles and insights written by our professionals on audit topics most important to you Learn More > Audit Case Studies Learn how our audit services have helped businesses manage risk, ensure compliance, enhance operational efficiency and more. Click Here We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans.Our clients confirm that it is our service philosophy that sets us apart from other public accounting firms:Proactive communication, responsiveness and accessibilityRisk-based audit approachExtensive executive involvementExceptional value through a practical approachExpertise resident in our officesAll firm resources available for each engagementOur engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.Schneider Downs is registered with the Public Company Accounting Oversight Board and is a member of the AICPA’s Center for Public Company Audit Firms, the Private Companies Practice Section, the Governmental Audit Quality Center and the AICPA's Employee Benefit Plan Audit Quality Center.Our firm's professional standards and compliance with the rules of our profession have been assured by those bodies who are responsible for regulating our industry. Such bodies have conducted evaluations of our practice and system of quality control to ensure our firm’s adherence to the highest standards of the profession. We have earned unmodified reports in all of our peer reviews. The PCAOB issued a report.We are the firm of choice for financial statement audit and providing customized, independent solutions. ### Site Map Site Map Services Audit and Assurance Services ESG Assurance Services Audit and Assurance Services for Employee Benefit Plans Services Resources Frequently Asked Questions SOC Practice Overview SOC Reports SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Public Companies Assurance Services International Assurance Services Accounting Advisory Services Tax Services Tax About Us Tax Compliance and Consulting Business Tax Individual Tax Not-for-profit Tax Gift, Trust and Estate Services Managed Tax Services Outsourcing/On-Call Assistance Income Tax Provisions – ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Abandoned/Unclaimed Property Excise & Motor Fuels Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales/Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investments in the U.S. Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transfer Pricing and Review of Cross-border Transactions Tax Credits and Incentives Research & Development Cost Segregation PA Educational Improvement Tax Credits (EITC) State Credits and Incentives Tax Transaction Advisory Due Diligence Transaction Cost Analysis Tax All Services Consulting Services About Us Services Technology and Data Services Risk Advisory Services M&A and Transaction Advisory Services Financial Advisory Services Meet the Team Contact Us Private Client Services Main Navigation Why Schneider Downs Private Client Services? Service Offerings Meet Our Private Client Services Team Insights Contact Us Footer Navigation Privacy Policy Service Disruption Disclaimer Wealth Management Ultra High Net Worth Investors High Net Worth Investors Voyage Program Financial Planning Institutions and Non-Profits Retirement Solutions Advisory Services Consulting ESOP Services Recordkeeping Third-Party Administration Services Executive Compensation Retirement Plan Fiduciary Risk Assessment Industries Automotive Construction Emerging Technology Energy & Resources Financial Government Healthcare Higher Education International International Resources Manufacturing Resources Not-for-Profit Resources Private Equity Firm Services Professional Services Real Estate Retail & Business-to-Consumer Transportation & Logistics Resources Resources Our Thoughts On Our Thoughts On 2008-2014 Remote Learning Video Library Events Events Events Archive Build Back Better Update Center Tax Reform 2021 – Letters COVID-19 Resource Center Media Center Audio About Us SD Standard Case Studies Management Submit a Request for Proposal (RFP) History Mission and Corporate Values Peer Review News Diversity Locations Pittsburgh, PA Columbus, OH Metropolitan Washington PrimeGlobal Big Thinking Personal Focus Around the World Careers Schneider Downs Careers Experienced Professionals Students & Entry-Level Careers Explorers Program All Openings Enjoy More of What Counts Flexibility Growth & Development Total Rewards Diversity, Equity & Inclusion Privacy Policy Legal Information Copyright and Permissions Disclaimers Site Map ### Legal Information Legal Information Please click on the links below for legal information. Copyright & Permissions Disclaimers ### Careers Schneider Downs Careers Start building a career with people motivated to help you succeed and enjoy more of what counts Experienced Professionals LEARN MORE Emerging Talent LEARN MORE MORE OF WHAT COUNTS. As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your own success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. As a member of the Schneider Downs team, you will be joining one of the 60 largest, independent Certified Public Accounting (CPA) and professional services firm providing audit, tax, consulting, and wealth management services to clients in the United States and around the world.  We take pride in our expertise and vast array of services that support clients across diverse industries, giving you the platform to leverage your personal talent and experiences on a variety of interesting and challenging projects. Join our team at Schneider Downs where flexibility, growth, impactful work, and a collaborative mindset await you. Ready to learn more? See All Job Openings FEATURED JOB OPENINGS Audit Senior Audit Columbus OH As an Audit Senior, you will be a vital part of our Audit and Assurance Practice where you will have the opportunity to play a key… Learn More > Tax Manager – Core Tax Pittsburgh PA As a Tax Manager – Core, you will provide tax consulting and compliance services, as well as oversee all aspects of the tax planning, preparation and… Learn More > Business Advisory Manager – Transactions Advisory Services Remote As a Business Advisory Manager – Transactions, you will be part of a team that is committed to assisting clients with critical business decisions by applying… Learn More > Audit Manager Audit Columbus OH As an Audit Manager, you will provide best in class audit, consulting and compliance services, as well as oversee day-to-day operations of engagements. In this role, you… Learn More > Financial Solutions Architect SD Digital Remote Our growing SD Digital practice is committed to providing value-added technology services and solutions to our clients. Our Digital Modernization practice empowers organizations with transformative… Learn More > See all openings WORK-LIFE BALANCE Achieve the work-life balance you deserve read more total rewards Compensation and benefits encompass opportunities, incentives and extras that simply make your professional life better. read more PROFESSIONAL DEVELOPMENT Grow, develop and learn with our total support. read more Diversity and Inclusion Embrace our differences and celebrate what we can accomplish together Learn More Why Work At Schneider Downs? Explore Schneider Downs. You'll like what you see. Learn More ### About Us Big Thinking. Personal focus. We’re proud of our client roster of well-established regional businesses, not-for-profits and exciting start-ups. But we are even more proud that we’ve never lost focus on what is really important: the personal connections we make with every client. Big Thinking. Personal Focus. This is what has made us who we are today, and it will guide our actions in the future. Since 1956, Schneider Downs & Co., Inc. has been providing accounting, tax, consulting and business advisory services through innovative thought leaders who deliver their expertise to meet the individual needs of each client. At Schneider Downs, we're proud that we've built a client list of powerful Fortune 500 companies, well-established regional businesses, not-for-profits and exciting start-ups. But we are even prouder that we have never lost focus on what is really important: the personal connections we make with every one of our clients. We provide them national and international-level expertise, while volunteering in the neighborhoods they live in. We know what matters to their businesses, and we care deeply about what happens in their lives. Big Thinking. Personal Focus. This is what has made us who we are today, and this is what will guide our purpose and actions in the future. Schneider Downs works with large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities, service firms and professional associations. We help our clients reach their goals through insight, innovation and experience. Our ultimate goal is to serve our clients to their highest levels of satisfaction. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with the commitment to the service that they deserve. That's the Schneider Downs difference. Insight is information filtered through experience. Schneider Downs' interdisciplinary teams understand the complex issues businesses face. Using the latest technology and in-depth resources, we help you make the most of your opportunities. Innovation occurs when creative ideas are tempered by study and vision. Clients trust Schneider Downs to stay abreast of new business and accounting regulations. We work with our clients to manage the effects of changing economic conditions. We aggressively seek a range of integrated, innovative solutions to each business situation. Experience results from applying lessons learned to new solutions. Our senior executives have directed corporations, owned small businesses and managed nonprofits. They can understand your business and offer flexible paths to success. ### Resources Resource Center CDK Global Hack – What We Know So Far Our Thoughts On CDK Global Hack – What We Know So Far Automobile, Cybersecurity In what is becoming a concerning Federal holiday tradition, a large-scale cyberattack has halted an entire industry. Hackers took one of the largest nationwide automotive… Daniel Hooven 06.24.2024 Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio Our Thoughts On Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio Manufacturing The semiconductor industry is the backbone of modern technology, powering everything from smartphones to cars to advanced medical equipment. Recognizing its strategic importance, the U.S.… Christopher Catalano 06.20.2024 Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional Our Thoughts On Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional International Tax, Tax In a highly anticipated ruling, the U.S. Supreme Court has ruled in Moore v. United States that the Section 965 Mandatory Repatriation Tax (“MRT”) imposed… Matthew Legg 06.20.2024 Ozempic and Wegovy Phishing Scams Up Nearly 200% in 2024 Our Thoughts On Ozempic and Wegovy Phishing Scams Up Nearly 200% in 2024 Cybersecurity Learn about the sharp rise in Ozempic and Wegovy-themed phishing scams in 2024. Semaglutide-based weight loss drugs such as Ozempic and Wegovy have become increasingly… Daniel Hooven 06.18.2024 Are EVs Just A Fad? Our Thoughts On Are EVs Just A Fad? Automobile, Emerging Technology If you were alive in the late 1990s, you either wanted, or knew a kid who wanted, a Furby. For those unfamiliar, the Furby was… Brandon Embreus 06.18.2024 Resource Type All Resources TypesOur Thoughts OnEventsQuick ReferencesRemote LearningVideos Categories All Categories 11-K Extensions401(k) PlansAccounting AdvisoryAffordable Care Act (ACA)American Jobs PlanAmerican Rescue Plan ActAuditAudit GAAPAudit/TaxAutomobileBenefitsBusiness AdvisorsBusiness Process OptimizationBusiness RestructuringBusiness ValuationCARES ActCase StudiesCECLCompensation StudiesConstructionConsultingContinuityCoronavirusCorporate FinanceCPE Eligible WebinarsCyberCybersecurityData AnalyticsDigital & TechnologyDigital TransformationDue DiligenceEmerging TechnologyEnergy & ResourcesERISAESGEstate PlanningEstate TaxEventsExit and Succession PlanningFinancial ServicesFraudFraud/Investigative & Forensic AccountingGlobalGovernmentHealth CareHigher EducationHuman ResourcesIFRSImpairmentIndustry SpecificInternal Revenue ServiceInternationalInternational TaxInternshipIT Risk AdvisoryLarge CompaniesLease AccountingLeasesLitigation SupportLoansManufacturingMarketingMergers and AcquisitionsModern WorkplaceNFP Cash FlowNot-for-ProfitOMB ReleaseOur Thoughts OnPaycheck Protection Program (PPP)Personal FinancePresentations & WebinarsPrivate Client ServicesPrivate EquityProfessional ServicesPublic CompaniesPublicly Held CompanyQuick ReferencesR&D Tax CreditReal EstateRestaurantsRetailRetirement Plan Participant EducationRetirement SolutionsRisk Advisory/Internal AuditSarbanes-OxleySchneider Down Services and SolutionsSchneider DownsSchneider Downs Wealth Management Advisors VideosSD DigitalSD Medallion ServicesSECURE ActSECURE Act 2Service OverviewsServices for Private Equity FirmsSmall Business (SBA)SOCSOC 2State and Local TaxStimulus PackageTaxTax ImpactTax PolicyTax ReformTCJATechnology and Data SolutionsThird Party Risk ManagementTop Cybersecurity Questions of 2021Top Cybersecurity Questions of 2022Transaction Advisory ServicesTransportation & LogisticsVideosWealth ManagementWebinarsWhite PapersWomen in BusinessWorking at Schneider Downs Authors All authors Abigail SickafuseAbigail TurnbullAdam CostaAdam J. GoodeAlexa XenakisAlexander PapsonAlexandra Vander MolenAlicia FurlanAlissa M. GarciaAllen W WasselAllen WasselAllie ThompsonAlyssa BrunattiAlyssa FudalaAmy LehnerAndrea PfaadtAndrew JacksonAndrew TrettelAndrew WherleyAndrew WidmerAngela Danielle MorrisAnna YoungAnthony J. MargiottaAnthony MilanAsher PassalinquaAthena WaltonAudrey HendarsahAustin NaceBailey WilliamsBen StockBenjamin TjoelkerBernie RaffertyBill DellerBo WeaverBob WhalenBrandon DealBrandon EmbreusBrendan LeechBrett CubellisBrian W. MatthewsBrian WebsterBrianna LundyBridget PikeBrittany BeckerBrooke FlorianCameron LathamCarl D. ScharfCarl KriebelCarley TaslovCarol MurrayCarrie UreyCatherine MartzChad KortCharlotte GarrawayChelsea JacksonChelsea SarnowskiChloe VaughtChristian JohnsonChristian WheelerChristopher CatalanoChristopher CerdaChristopher KostyChristopher L WatsonChristopher VeitchClay A. PenroseColin SweeneyColten OakleyColton BoringConnor BigelowConor ManningCorynn MooreCourtney MoriartyDan R. NesbitDan RiskeDaniel HoovenDaniel NapierkowskiDaniel P. PhillipsDaniel StruthDanielle JacobsDanielle MiceliDanielle StrobelDanny WhiteDave SnyderDavid C. BrinkmanDavid JamesDavid MurphyDebra Ann RiesDebra StockdaleDel WilmotDennis R. MowreyDerek EichelbergerDerek J GodwinDerek PuglieseDomenic EannaceDonald B. ApplegarthDonald Eckrod IIIDonna WolfsonDoug J. MorallyEd KremmelEdward R. FrielElena FaurieElizabeth BeckElizabeth RhodesEmily MondaEmmalee NerantzisEric M. FairEric M. WrightErin HaaseErin M. Puko-WilkingErin WoodEugene M. DeFrankEvan C OgrodnikFrank A. WisehartFrank E DezortGabriel ZiskGarrett LaBrosseGary MuggliGennaro J. DiBelloGeorge E. AdamsGina TrulickGreg McGuireGregory L. AllisonGretchen MurphyHaddae AllenHan JumashovHannah WindhorstHarley StuebgenHayley PlanitzerHeather A. HaemerHenry J. SzymanskiHolly L RussoIsaac McKinleyIsabella MeeseJack SteveJack StewartJacob DixonJacob KatzJake BusshausJake GentileJames MoyerJames SayreJared KurzJared SofrankoJason CetraJason M LumpkinJason M ReljacJason StaleyJay R. MeglichJeanne M. BarrettJenna M ZelenskiJenna RisacherJennifer C DoeringJennifer ZatcheyJeremy MatelanJessica ChinJessica EllicottJessica L. MillerJessica MurthaJessica WengerJessica WingertsahnJim GilboyJoe BruceJoe TritschlerJoel M. RosenthalJohn SullivanJohn WaybrightJonathan GrimJonathan RiceJordan SchofieldJordan TooheyJoseph CarnaJoseph DeAugustinoJosh GaileyJoshua McFallJoshua ZimmerlyJosie MillsJustin MudrykJustin PremichJustin SteeleJustin WolfordKaitlin PackKari Tallarico OwensKarl BixlerKarlye N. RowlesKatherine KwanKayla HustonKelci WintersKelly MurphyKevin AtkinsKevin BegleyKevin M. DavisKiersten RoushKimberly GriffithKimberly L JamesKimberlyann DavisKira WaugamanKirk MitchellKristen SoriceKristyn StangKyle R ZellerLara E FullerLaria MooreLauren E. WeddellLindzee NicholsonLogan KowcheckM. Michele MilheimMackenzie J. PetermanMaggie HavelkaMaggie WelshMailiis SimovartMarc P. BrdarMarcy KingMaria D. StrompleMaria StuvekMark A. DiPietrantonioMark BalistrieriMark RileyMarko ZivanovMary D. RichterMatt BiggsMatt HartmanMatt McNealMatthew CavanaghMatthew LeggMatthew NaceMatthew R. KraemerMatthew RozanskiMegan KrullMegan MullerMelanie M. LaSotaMelissa GalloMichael DivensMichael HartMichael MaloneyMichael P. ScalamognaMichael RoccoMichael SinkevichMichael ValekMichael VizziniMichael W. DarpinoMichael WithrowMike BucciMike WinskoMiles GibsonMorgan CrawfordNancy L. SkeansNathan JohnstonbaughNathan SheplerNathaniel NovaccoNicholas DeLucaNick LagneseNick LombardoNick SeilerNickolas DeLisioNicolas LeoneNicole MillerNneoma NjubigboNoelle HarroldPatricia M. WarrickPatrick B. ArmknechtPatrick KellyPatrick KernsPatti GiudiciPeter FrauenPeter J. LiebermanPhyllis TedescoRachel TurnbullRaimee GordonRaymeir WilliamsRebecca HoffmanRebecca YanReilly OliverioRichard PirolloRobert L. MorganRobert MeleRobin S. MurphyRoger SpearsRon WollettRoss AlessandroRyan BiancoRyan DeDominicisRyan R. DeatrickRyan T. BrozeSamuel J. BechererSarah HoaglandSarah R PiotSarah SchaubleSarah WalkerSarah ZwienerSchneider Downs ProfessionalScott WaltonSean FogartySean GriffinSean McCannSean P. SmithSean ThomasSeth RobertsonShad FagerlandShan ZhouShane M. GasteckiStaci L. BroganStephanie HaughStephen BishStephen D. ThimonsStephen R. WorthSteven A. BarberSteven D. ThompsonStu P. LawsonSusan M. KirschSusan PaulauskasTarun D. ReddyTaylor AndersonTaylor MahanTheodore M. PettkoThomas YoderTim MartinTimothy M. WolfgangTom PrattTom SpringerTony IelaseTrevor P. WarrenTrudie E. KozarTyler BroseTyler CavenVarun DevulapalliWoodrow MorrisXiaoyan LiZach CicchiniZachary MotylZachary Zeigler Search Displaying 2,561 results CDK Global Hack – What We Know So Far Our Thoughts On CDK Global Hack – What We Know So Far Automobile, Cybersecurity Daniel Hooven 06.24.2024 Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio Our Thoughts On Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio Manufacturing Christopher Catalano 06.20.2024 Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional Our Thoughts On Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional International Tax, Tax Matthew Legg 06.20.2024 Ozempic and Wegovy Phishing Scams Up Nearly 200% in 2024 Our Thoughts On Ozempic and Wegovy Phishing Scams Up Nearly 200% in 2024 Cybersecurity Daniel Hooven 06.18.2024 Are EVs Just A Fad? Our Thoughts On Are EVs Just A Fad? Automobile, Emerging Technology Brandon Embreus 06.18.2024 Streamlining Audits Year-Round: Transitioning from Ad-Hoc to Proactive Processes Events July 16, 2024 2:00PM Streamlining Audits Year-Round: Transitioning from Ad-Hoc to Proactive Processes The FASB Proposes Rule on Accounting for Environmental Credits Our Thoughts On The FASB Proposes Rule on Accounting for Environmental Credits Energy & Resources Logan Kowcheck 06.13.2024 Disclosure Relief for Certain IFRS Subsidiaries Our Thoughts On Disclosure Relief for Certain IFRS Subsidiaries IFRS, International Michael Maloney 06.13.2024 Significant Reporting Changes for All IFRS Entities Our Thoughts On Significant Reporting Changes for All IFRS Entities IFRS, International Michael Maloney 06.13.2024 1 2 3 4 5 … 285 Stay In-The-Know Sign up for our email newsletter to receive all the latest news and views right in your inbox. E-mail NameThis field is for validation purposes and should be left unchanged. Sign up Schneider Downs Events View our upcoming and past events! Upcoming Past Events Streamlining Audits Year-Round: Transitioning from Ad-Hoc to Proactive Processes Webinar July 16, 2024 12th Annual Fraud and Corruption Awareness Seminar Rivers Casino May 20, 2024 2024 Employee Benefits Forum Webinar May 2, 2024 SOC 2 Compliance: Key Steps to Success in 2024 Webinar January 25, 2024 2023 CPE Month Webinar Series December 5, 2023 Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules November 15, 2023 Tee Off Against Cancer – 2023 Men Wear Pink Fundraiser October 18, 2023 View More Events Media Center Schneider Downs is pleased to accommodate media requests for interviews or background information. Media inquiries can be directed to Sean Smith.For inquiries regarding specific topics, the following professionals are available for interviews and speaking engagements: Schneider Downs & Co. Steven Thompson and Christopher McElroy Tax Advisory Services Justin Steele State and Local Tax (SALT) Stephen Worth Assurance Advisory Services Staci Brogan (Pittsburgh)Trevor Warren (Columbus) Risk Advisory/SOX James B. Yard Wealth Management Derek Eichelberger Retirement Planning/ Employee Benefit Services Jason M. Lumpkin Technology Advisory Services Eric Wright Investment Banking Peter J. Lieberman Business Advisory Services Adam GoodeFor more information on our industry group contacts, visit our Industries section. Audio Archive > ### Industries Our Industries Schneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. INDUSTRIES WE SERVE ### Services Our Services Schneider Downs provides more than 80 distinct services to clients of nearly any background: large and small businesses, both publicly and privately held companies, as well as nonprofit organizations, government entities, service firms and professional associations. We help our clients reach their goals through insight, innovation and experience. Contact Us Today Audit and Assurance Services Specialized services to assist clients with all of their audit and assurance needs. Learn More Consulting Services Schneider Downs Consultants leverage experience with industry expertise to maximize your value and minimize risk. Learn More Private Client Services Legendary client service for high-net-worth individuals. Learn More Real Estate Capital Markets We arrange equity investments in commercial real estate, primarily multifamily housing and related sub-classes. Learn More Retirement Solutions Specialized services in retirement plan design, fiduciary guidance, investment advisory, employee education and administrative. Learn More Schneider Downs Capital SD Capital provides a unique perspective on value creation and company sales. Learn More SD Digital Helping businesses discover the power of digital through strategic, efficient and attainable solutions Learn More Tax Services Effective business and tax planning allows you to take advantage of significant economic opportunities. Learn More Wealth Management Together, we craft a personal plan that acts as your financial roadmap and are with you every step of the way. Learn More Learn how we’ve Solved Big Problems For our clients View more Big Problem: Big Thinking: Read Case Study Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. Read Case Study ### Make A Payment Make a Payment   Electronic Funds Transfer Transfer funds directly from your bank with no additional fees. Learn More Credit Card A 3% convenience fee will be applied to all credit card transactions. Debit cards are not accepted. Learn More Payment Plan QuickFee offers an easy, no-hassle way for you to spread the cost of your invoice(s) over three to twelve monthly payments.* Learn More How Quickfee Payment Plans Help: Smooths your cash flow. Keeps working capital in your business for other purposes. Access an additional line of credit without a formal application process. No additional security is required. No early payout fees. If you would like to pay off your payment plan early, any remaining interest is rebated. Obtain the additional services you need to grow your business. * $2,000 minimum ** If you have received audit and attest services, you may not use the 12-month QuickFee Payment Plan option to pay existing invoices. Please contact our office for shorter terms or questions. Please contact SDCoAR@schneiderdowns.com with questions. ### CP Click here to go to Schneider Downs' Suralink If you are a client of Schneider Downs Wealth Management Advisors or Schneider Downs Retirement Solutions, please visit our login page. Go ### Home Big Thinking. Personal Focus. Since 1956, we’ve provided accounting, tax, consulting and business advisory services through innovative thought leaders who deliver their expertise to meet the individual needs of each client. About Us Broad capabilities, unmatched expertise We help our clients reach their goals through insight, innovation and experience. View all Services > Audit and Assurance Services Audit and Assurance Services Schneider Downs provides a variety of specialized services… Consulting Services Schneider Downs Consulting Services Carefully curated range of services and solutions for… Private Client Services Big Thinking. Personal Focus. Why Schneider Downs Private Client Services? Tax and… Retirement Solutions Retirement Solutions Schneider Downs Capital Value Advisors for the Middle Market A premier, full-service, value growth and… SD Digital SD Digital Meet Our Team Innovative Solutions. Bottom Line Results. SD Digital's… Tax Services Tax Services Schneider Downs provides a variety of specialized services to assist… Wealth Management At Schneider Downs Wealth Management, we have options available to assist you… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections How we deliver results View case studies Big Problem: Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Big Thinking: Perform Multi-jurisdictional Tax Exposure Analysis To Ensure Compliance When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products... Read Case Study Solved by Trevor Warren Schneider Downs shareholder View our insights and Resources View Resources The One Big Beautiful Bill: Highlights for Individual, Estate, and Gift Taxes Our Thoughts On The One Big Beautiful Bill: Highlights for Individual, Estate, and Gift Taxes One Big Beautiful Bill Act, Tax What changes in the One Big Beautiful Bill (OBBB) could impact individual taxpayers and estate and gift taxes? H.R. 1, formally titled “An Act to… Kirk Mitchell, Daniel P. Phillips 07.10.2025 Optimizing High Net Worth Tax Planning Events June 26, 2025 11:00AM Optimizing High Net Worth Tax Planning Wealth Management, Webinars HITRUST Isn't Just Another Compliance Checkbox. So What is It? Our Thoughts On HITRUST Isn't Just Another Compliance Checkbox. So What is It? Cybersecurity, Healthcare, HITRUST, IT Risk Advisory The CFO's Guide to Tariff Uncertainty in 2025: 5 Things CFOs Should Be Doing Now Our Thoughts On The CFO's Guide to Tariff Uncertainty in 2025: 5 Things CFOs Should Be Doing Now Consulting, Managed Accounting We Are hiring! Build an exceptional career with diverse, talented people who are among the most respected in their fields. View jobs Learn How We Can help you meet your goals Ask A Question Submit an RFP ## Landing Pages ### Elementor Landing Page #60638 Cybersecurity Maturity ModelCertification (CMMC) Services Schneider Downs is a Candidate C3PAO and is qualified to assess and certify organizations that conduct business with the DoD. ## My Templates ### Data Analytics and Power BI Resources Grey Box Data Analytics and Power BI Resources SD Digital Solutions Overview Power BI Enterprise Solutions Overview Resource Center ### Power BI Enterprise Solutions Resources Grey Box Power BI Enterprise Solutions Resources SD Digital Solutions Overview Power BI Enterprise Solutions Overview Resource Center ### OB3 Resource Popup Modal Videos Events From Complexity to Clarity:Understanding the One Big Beautiful Bill (OBBB) Watch Webinar Download Slides ### OTO Newsletter Subscription Container #2 Our Thoughts OnWeekly NewsletterReceive weekly insights, expert analysis, and valuable industry tips to help you stay ahead in your field. ### OTO Newsletter Subscription Container ### Grey Box Template - STANDARD LINKS Accounting Advisory Resources Resource Center Our Thoughts On Blog ### OBBB Resource Center 2 OBBB Resource Center ### Fraud Resources Grey Box Fraud Resources Resource Center Our Thoughts On Blog ### Forensics and Litigation Resources Grey Box Forensics and Litigation Resources Resource Center Our Thoughts On Blog ### H5 Subheader - Services Page Deliver sound risk management practices, internal control systems and compliance frameworks. ### Elementor Loop Item #64611 ### Elementor Loop Item #64606 Sort by Most Recent Most Viewed Categories Authors Advanced Search 401(k) Plans Accounting Advisory Affordable Care Act (ACA) American Jobs Plan Audit Audit Case Study Benefits Big Beautiful Bill Business Advisory Business Continuity Business Process Optimization Business Valuation CARES Act Case Studies Compensation Studies Construction Consulting CPE Eligible Webinars Cybersecurity Data Analytics Dealerships Due Diligence Emerging Technology Employee Retention Credit Energy & Resources ERISA ESG Estate Planning Events Exit and Succession Planning Financial Services Fraud Fraud/Investigative & Forensic Accounting Global Government Healthcare Higher Education Human Resources IFRS Industry Specific Internal Revenue Service International International Tax Internship IT Risk Advisory Lease Accounting Litigation Support Managed Accounting Manufacturing Marketing Mergers and Acquisitions Not-for-Profit Our Thoughts On Personal Finance Presentations & Webinars Private Client Services Private Equity Professional Services Public Companies Quick References R&D Tax Credit Real Estate Retail Retirement Plan Participant Education Retirement Solutions Risk Advisory/Internal Audit Sarbanes-Oxley SD Capital SD Digital SECURE Act SECURE Act 2 Service Overviews Small Business (SBA) SOC SOC 2 State and Local Tax Tax Tax Impact Tax Reform TCJA Third Party Risk Management Transaction Advisory Services Transportation & Logistics Videos Wealth Management Webinars White Papers Women in Business Working at Schneider Downs | A | B | C | D | E | F | G | H | J | K | L | M | N | O | P | R | S | T | U | V | W | X | Y | Z Author Search ENTER Abigail Sickafuse Abigail Turnbull Adam Costa Adam J. Goode Alexa Xenakis Alexander Papson Alexandra Vander Molen Alicia Furlan Alissa M. Garcia Allen W Wassel Allen Wassel Allie Thompson Alyssa Brunatti Alyssa Fudala Amy Lehner Andrea Pfaadt Andrew Jackson Andrew Trettel Andrew Wherley Andrew Widmer Angela Danielle Morris Anthony J. Margiotta Anthony Milan Asher Passalinqua Athena Walton Audrey Hendarsah Austin Nace Bailey Williams Ben Stock Benjamin Tjoelker Bernie Rafferty Bill Deller Bob Whalen Brandon Deal Brandon Embreus Brendan Leech Brett Cubellis Brian W. Matthews Brian Webster Brianna Lundy Bridget Pike Brittany Becker Brooke Florian Cameron Latham Carl D. Scharf Carl Kriebel Carley Taslov Carol Murray Carrie Urey Catherine Martz Chad Kort Charlotte Garraway Chelsea Jackson Chelsea Sarnowski Chloe Vaught Christian Johnson Christian Wheeler Christopher Cerda Christopher Kosty Christopher L Watson Christopher Veitch Clay A. Penrose Colten Oakley Colton Boring Connor Bigelow Corynn Moore Courtney Moriarty Dan OToole Dan R. Nesbit Dan Riske Daniel Napierkowski Daniel P. Phillips Daniel Struth Danielle Jacobs Danielle Miceli Danielle Strobel Danny White Dave Snyder David C. Brinkman David James David Murphy Debra Ann Ries Debra Stockdale Del Wilmot Dennis R. Mowrey Derek Eichelberger Derek J Godwin Derek Pugliese Domenic Eannace Donald B. Applegarth Donald Eckrod III Donna Wolfson Doug J. Morally Ed Kremmel Edward R. Friel Elena Faurie Elizabeth Beck Elizabeth Rhodes Emily Monda Emmalee Nerantzis Eric M. Fair Eric M. Wright Erin Haase Erin M. Puko-Wilking Eugene M. DeFrank Evan C Ogrodnik Frank A. Wisehart Frank E Dezort Gabriel Zisk Garrett LaBrosse Gary Muggli Gennaro J. DiBello George E. Adams Gina Trulick Greg McGuire Gregory L. Allison Haddae Allen Han Jumashov Hannah Kubas Harley Stuebgen Hayley Planitzer Heather A. Haemer Henry J. Szymanski Holly L Russo Isaac McKinley Isabella Meese Jack Steve Jack Stewart Jacob Dixon Jacob Katz Jake Busshaus Jake Gentile James Moyer James Sayre Jared Kurz Jason Cetra Jason M Lumpkin Jason M Reljac Jason Staley Jay R. Meglich Jeanne M. Barrett Jenna M Zelenski Jenna Risacher Jennifer C Doering Jennifer Zatchey Jeremy Matelan Jessica Chin Jessica L. Miller Jessica Murtha Jessica Wenger Jessica Wingertsahn Jim Gilboy Joe Bruce Joe Tritschler Joel M. Rosenthal John Sullivan John Waybright Jonathan Grim Jonathan Rice Jordan Schofield Jordan Toohey Joseph Carna Joseph DeAugustino Josh Gailey Joshua McFall Joshua Zimmerly Josie Mills Justin Mudryk Justin Premich Justin Steele Justin Wolford Kaitlin Pack Kari Tallarico Owens Karl Bixler Karlye N. Rowles Katherine Kwan Kayla Huston Kelci Winters Kelly Murphy Kevin Atkins Kevin Begley Kevin M. 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Kozar Tyler Brose Varun Devulapalli Woodrow Morris Xiaoyan Li Zach Cicchini Zachary Zeigler Big Beautiful Bill, Tax James Moyer | 07.07.2025 Major Tax Code Changes Under the "Big Beautiful Bill" (BBB) A sweeping update to the U.S. tax code was signed into law late last week… Read More Big Beautiful Bill, Tax, Tax Impact Kirk Mitchell | 07.03.2025 One Big Beautiful Bill Status Update: Senate Passes Bill – It’s Now Back to House An amended version of the One Big Beautiful Bill passed the Senate on Tuesday by… Read More SD Digital Patrick B. Armknecht | 06.25.2025 Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting… Read More IT Risk Advisory Patrick Kelly | 06.24.2025 Teeing Up Success: Build a HITRUST-Ready Program Without the Burnout Learn why HITRUST readiness doesn’t have to cost you a full round of resources. Fresh… Read More Dealerships Colten Oakley | 06.23.2025 Auto Manufacturers Investing Heavily in American Production Facing high foreign production costs because of recent tariffs, many auto manufacturers have committed to… Read More Big Beautiful Bill, Tax, Tax Impact Kirk Mitchell | 06.20.2025 Senate Republicans Release Substitute Version of One Big Beautiful Bill Passed by the House On June 16, the Senate Finance Committee released its version of the One Big Beautiful… Read More Big Beautiful Bill, Tax, Tax Impact Elena Faurie | 06.18.2025 Senate Finance Draft: Key Changes to One Big Beautiful Bill Impacting Tax-Exempt Organizations On June 17, the Senate Finance Committee released its draft of the One Big Beautiful… Read More Construction Ed Kremmel | 06.17.2025 FASB Implements Improvement for Joint Venture Formations (ASU 2023-05) According to the Ankura Joint Venture Index, global joint ventures and partnerships in 2024 experienced… Read More Big Beautiful Bill, Construction Matthew Cavanagh | 06.16.2025 The One Big Beautiful Bill Impact on Construction Industry As of early June, Congress has worked through several iterations of The One Big Beautiful… Read More Cybersecurity, Healthcare, IT Risk Advisory Bill Deller | 06.16.2025 What HITRUST Isn't: 3 Common Myths Our previous article provided a comprehensive overview of HITRUST, including what it is, how the… Read More 1 2 3 4 5 … 239 ### Header 2 SC June " data-hide-for="large"> Loading... Services Audit and Assurance Services Overview Accounting Advisory Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources ERISA Frequently Asked Questions International Assurance Services Public Companies Assurance Services SOC Services Overview SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Consulting Services Overview Business Advisory Overview Transaction Advisory Services Forensics and Litigation Overview Business Interruption Services Fiduciary and Trustee Professional Services Forensic & Investigative Accounting Fraud Risk Assessment Fraud Mitigation Services Fraud Diagnostics Litigation Support Services Valuation Services Managed Accounting Services Overview Controller Services CFO Services Full Accounting Services Business Restructuring Overview Turnaround/Restructuring Debt Placement Insolvency Services Performance Improvement Services for Private Equity Firms Meet Our Team Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Accounting Optimization Assessments Business Process Optimization Data Analytics (ADAPT) Cybersecurity IT Risk Advisory All Services Private Client Services Overview Why Schneider Downs Private Client Services? 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Services Audit and Assurance Services Overview Accounting Advisory Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources ERISA Frequently Asked Questions International Assurance Services Public Companies Assurance Services SOC Services Overview SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Consulting Services Overview Business Advisory Overview Transaction Advisory Services Forensics and Litigation Overview Business Interruption Services Fiduciary and Trustee Professional Services Forensic & Investigative Accounting Fraud Risk Assessment Fraud Mitigation Services Fraud Diagnostics Litigation Support Services Valuation Services Managed Accounting Services Overview Controller Services CFO Services Full Accounting Services Business Restructuring Overview Turnaround/Restructuring Debt Placement Insolvency Services Performance Improvement Services for Private Equity Firms Meet Our Team Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Accounting Optimization Assessments Business Process Optimization Data Analytics (ADAPT) Cybersecurity IT Risk Advisory All Services Private Client Services Overview Why Schneider Downs Private Client Services? Service Offerings Overview Tax and Personal Financial Services Estate, Trust and Succession Planning Private Family Office Philanthropy Wealth Management Meet Our Private Client Services Team Insights Contact Us Retirement Solutions Overview Advisory Services Consulting ESOP Services Recordkeeping Third-Party Administration Services Executive Compensation Retirement Plan Fiduciary Risk Assessment Schneider Downs Capital SD Digital Solutions SD Digital Solutions Home Intelligent Automation Data Analytics and Power BI Digital Modernization Software Solutions Software Solutions Home Microsoft Dynamics ERP Microsoft Dynamics Legacy Users simpLEASE Accounting SD inSITE Solver Extended Financial Planning & Analysis Custom Development Meet The Team Tax Services Overview Tax About Us Tax Compliance and Consulting Business Tax Individual Tax Not-for-profit Tax Gift, Trust and Estate Services Managed Tax Services Overview Outsourcing/On-Call Assistance Income Tax Provisions – ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Overview Abandoned/Unclaimed Property Excise & Motor Fuels Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales/Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Overview Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investments in the U.S. Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transfer Pricing and Review of Cross-border Transactions Tax Credits and Incentives Overview Research & Development Cost Segregation PA Educational Improvement Tax Credits (EITC) State Credits and Incentives Tax Transaction Advisory Overview Due Diligence Transaction Cost Analysis Tax All Services Wealth Management Overview Ultra High Net Worth Investors High Net Worth Investors Voyage Program Financial Planning Institutions and Non-Profits View all services Industries Overview Automotive Construction Emerging Technology Energy & Resources Financial Government Healthcare Higher Education International Manufacturing Not-for-Profit Private Equity Firm Services Professional Services Real Estate Retail & Business-to-Consumer Transportation & Logistics Resources Resource Center Our Thoughts On Blog Events Subscribe About Us Overview Big Thinking Personal Focus Around the World Case Studies Diversity History Management Mission and Corporate Values News Peer Review PrimeGlobal SD Standard Submit a Request for Proposal (RFP) Locations Pittsburgh, PA Columbus, OH Metropolitan Washington Careers Client Portal Make a Payment Close Open Search Submit Contact us ### Landing Page Service Blocks Broad capabilities, unmatched expertise Schneider Downs’ IT Risk Advisory professionals help organizations gain valuable insights into their processes and technologies. A well-planned, properly structured information technology (IT) audit program is essential to evaluate risk management practices, internal control systems, and compliance with regulations and corporate policies. Business Continuity & Disaster Recovery Disaster Recovery/Business Continuity Planning and Table Top Exercises Deliver sound risk management… Cybersecurity Maturity Model Certification Services (CMMC) Deliver sound risk management practices, internal control systems and compliance frameworks. Schneider… Data Privacy Services Data Privacy Services Deliver sound risk management practices, internal control systems and… FFIEC IT Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The… GDPR Compliance Deliver sound risk management practices, internal control systems and compliance frameworks. The… HIPAA Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. The… HITRUST HITRUST Information Technology Audit Deliver sound risk management practices, internal control systems and compliance frameworks. With… InfoSec Policy Templates Deliver sound risk management practices, internal control systems and compliance frameworks. The… IRS Publication 1075 Deliver sound risk management practices, internal control systems and compliance frameworks. To… ISO 27001 Compliance Assessment Deliver sound risk management practices, internal control systems and compliance frameworks. ISO… IT General Controls Audit Deliver sound risk management practices, internal control systems and compliance frameworks. IT… IT Risk Assessment Services Deliver sound risk management practices, internal control systems and compliance frameworks. Prior… Network Device Security Configuration Assessment Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. It… NIST The National Institute of Standards and Technology (NIST) The National Institute of… Payment Card Industry Security Standard Compliance PCI DSS Compliance Payment Card Industry Data Security Standard Deliver sound risk… SAP Audits and Controls SAP Audits and Controls PRIMARY CONTACT: Eric M. Wright CPA, CITP Schneider… Sarbanes-Oxley Solutions Sarbanes-Oxley Solutions Deliver sound risk management practices, internal control systems and compliance… SOC Practice Overview SOC Practice Overview Deliver sound risk management practices, internal control systems and… Third-Party Risk Management Third-Party Risk Management Deliver sound risk management practices, internal control systems and… See Schneider Downs ratings and testimonials on ClearlyRated. Our focus is on making personal connections ### SOCDifferencesChart Key Differences between SOC 2 and SOC for Cybersecurity SOC 2Audience - Typically requested by customers and stakeholders concerned with data security and privacy in outsourced services.Scope - Primarily for service organizations that need to report to users on security, availability, confidentiality, privacy or processing integrity commitments.Description Criteria - Includes information on an in-scope Service Commitments, Infrastructure, Software, Data, People, Processes and Procedures, and relevant aspects of the Control EnvironmentControls - Uses the AICPA's Trust Services Criteria (TSC) for assessments. The TSC includes security, availability, confidentiality, privacy and/or processing integrity.SOC for CybersecurityAudience - Intended for a broader range of stakeholders, including boards of directors, investors and business partners, seeking assurance on an organization's cybersecurity posture.Scope - Can be applied to any organization even those that do not need to perform SOC 2.Description Criteria - Includes information on an entity’s cybersecurity risk management program. Elements that could be included are cybersecurity risk management objectives, critical assets and data, cybersecurity risk management governance, assessments and internal controls.Controls - Organization can choose the framework they wish to measure against.  This could be the SOC 2 TSC or another framework such as NIST Cyber Security Framework or ISO 27001 Information Security Management System. ### SDinSite Resources SD inSite Resources View a Demo SD inSite Overview ### SimpLEASE Resources simpLEASE Resources simpLEASE Homepage simpLEASE FAQ simpLEASE Software Overview simpLEASE Security Overview Resource Center Our Thoughts On Blog ### SD Digital Resources Grey Box 2 SD Digital Resources SD Digital Solutions Overview Digital Modernization Overview Resource Center Our Thoughts On Blog ### Data Analytics Resources Grey Box Data Analytics Resources Resource Center Our Thoughts On Blog ### SD Digital Resources Template Box SD Digital Resources SD Digital Solutions Overview Resource Center Our Thoughts On Blog ### CMMC Landing Page Cybersecurity Maturity Model Certification (CMMC) Services Schneider Downs is an Authorized C3PAO qualified to assess and certify organizations conducting business with the DoD.The CMMC was ruled final on December 16, 2024, for organizations within the defense industrial base (DIB) sector.Per DFARS 7021/CMMC, all organizations must start the new certification process to maintain and win contracts. Act now to ensure certification is complete before the 2026 deadline! A CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of 54 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Gain Competitive Advantage Our deep understanding of the CMMC assessment details, backed by our authorization as a CMMC certification provider, offers a unique position to guide your organization effectively through the readiness assessment. Get Specialized Industry Expertise Leveraging our expertise across 16+ industries, we deliver customized solutions to conquer your CMMC challenges, ensuring your industry-specific needs are met and driving your success. CMMC CertificationStarting in 2025, all companies that conduct business with the DoD and suppliers across the DIB will need to acquire some level of Cybersecurity Maturity Model Certification (CMMC). This means that every prime contractor and subcontractor of the DoD will have to be audited and certified under the CMMC framework. This will affect more than 450,000 organizations, including entities in the U.S and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. The government plans to work closely with companies and incorporate feedback as it starts the certification process and awards contracts with the new requirements.CMMC Readiness Assessment ConsultingNot ready for the CMMC Certification yet? Identify and address critical gaps in your CMMC compliance with our comprehensive assessment. Partner with us for CMMC readiness and gain significant advantages. Our deep understanding of CMMC assessments, combined with our authorization as a CMMC certification provider and audit authority, uniquely positions us to guide your organization effectively through the readiness assessment.CMMC Assessment PhasesOur comprehensive CMMC assessment encompasses four distinct phases. Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness. Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations. Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations. Finally, Phase 4 centers on the closure of the identified Plan of Action & Milestones (POA&Ms) and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQS What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of 54 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. Cybersecurity Maturity ModelCertification (CMMC) Only 54 firms are authorized to provide CMMC Certification. Schneider Downs is an Authorized C3PAO and can handle your CMMC Certificaton. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### CMMC Banner Form 1 Cybersecurity Maturity ModelCertification (CMMC) Services Schneider Downs is a Candidate C3PAO and is qualified to assess and certify organizations that conduct business with the DoD. ### CMMC Top Banner with Form Cybersecurity Maturity ModelCertification (CMMC) Services Schneider Downs is a Candidate C3PAO and is qualified to assess and certify organizations that conduct business with the DoD. ### Ad Landing Page Template 1 Outsourced Accounting Services Empowering our clients with financial knowledge is the cornerstone of their success. We hear from many clients who’ve been running their business while struggling with financial overwhelm. Many small business owners come to us after realizing that hiring a full-time, in-house accountant isn’t the most cost-effective or strategic solution. After months of drowning in spreadsheets and tax deadlines, our clients finally seek the support they need to regain control of their finances.Uncover the true value of your investments and financial decisions by seeing beyond the numbers. Confidential and Professional Trustworthy and secure handling of your financial data. Expertise at a cost that meets your budget. A Unique Relationship We value family and teamwork and treat your business as our own. Built on trust for over 30 years. Goal-Oriented Discussions Focus on your business goals with timely reporting and analysis to make better business decisions. Outsourced Accounting Solutions Outsourced Accounting Outsourced/Fractional CFO Outsourced/Fractional Controller Our scalable and customizable outsourced accounting services allow you to focus on growing your business. Add a strategic financial partner to help grow and scale your business. Our CFOs will help you build and execute a strategic plan and vision, maximizing profitability. Add a seasoned controller to deliver you the timely, accurate financial information you need to run your business. Our controllers will manage your process, existing accounting staff, and internal control environment and deliver a best-in-class month-end financial package. Our scalable and customizable outsourced accounting services allow you to focus on growing your business.Add a strategic financial partner to help grow and scale your business. Our CFOs will help you build and execute a strategic plan and vision, maximizing profitability.Add a seasoned controller to deliver you the timely, accurate financial information you need to run your business. Our controllers will manage your process, existing accounting staff, and internal control environment and deliver a best-in-class month-end financial package. Experience your finances in action. Contact us today to receive your complimentary Financial Report. The Visual Financial Report uses your data to customize forecasts, modify projections, and see the impact on cash flow and results. Make informed business decisions with ease with data at your fingertips.  Contact our Managed Accounting TeamWe offer a free consultation to review your financial report and to discuss our Outsourced Accounting Services.We look forward to hearing from you! Common Accounting Problems We Solve Our business struggles to improve cash flow management while maintaining a healthy financial position. Our experienced professionals provide strategic financial leadership and customized solutions to help you optimize cash flow. By immersing ourselves in your operations, we gain a deep understanding of your business and identify opportunities to improve financial performance. We have difficulty keeping up with changing tax laws and regulations. Leveraging our extensive expertise and deep understanding of current tax regulations, Schneider Downs Tax Advisors helps clients navigate the complex tax landscape. Our personalized approach ensures that clients meet their tax obligations while maximizing tax advantages. Our team spends a significant amount of time on manual accounting tasks, creating a diversion of resources from core business activities. Whether you are looking to support existing staff or a fully outsourced management solution, our team tailors services to your current needs and structure to provide the best strategy and resources for your situation allowing you to focus on what matters the most. Our team has an inability to handle complex accounting tasks (e.g., international taxation, mergers & acquisitions). Benefit from our network of 500+ Tax, Audit and Consulting professionals. We can handle your most intricate accounting challenges, enabling your team to concentrate on strategic initiatives.  We have limited in-house accounting knowledge or expertise. All projects are managed by a team of senior consultants with broad experience in accounting, finance and administration—across a multitude of industries and corporate structures. Leverage Schneider Downs’ breadth and depth of expertise across countless industries and disciplines. We can’t seem to quickly scale services to meet increasing demands without the need for immediate hiring. Schneider Downs Managed Accounting Services brings the right talent and expertise to you. Our proven processes with sound fundamentals and leading technology allows us to quickly scale with our partners demand. Our experienced professionals provide strategic financial leadership and customized solutions to help you optimize cash flow. By immersing ourselves in your operations, we gain a deep understanding of your business and identify opportunities to improve financial performance.Leveraging our extensive expertise and deep understanding of current tax regulations, Schneider Downs Tax Advisors helps clients navigate the complex tax landscape. Our personalized approach ensures that clients meet their tax obligations while maximizing tax advantages.Whether you are looking to support existing staff or a fully outsourced management solution, our team tailors services to your current needs and structure to provide the best strategy and resources for your situation allowing you to focus on what matters the most.Benefit from our network of 500+ Tax, Audit and Consulting professionals. We can handle your most intricate accounting challenges, enabling your team to concentrate on strategic initiatives. All projects are managed by a team of senior consultants with broad experience in accounting, finance and administration—across a multitude of industries and corporate structures. Leverage Schneider Downs’ breadth and depth of expertise across countless industries and disciplines.Schneider Downs Managed Accounting Services brings the right talent and expertise to you. Our proven processes with sound fundamentals and leading technology allows us to quickly scale with our partners demand. FAQ Why should I outsource my accounting? Outsourcing accounting offers numerous advantages, including reduced overhead costs, access to specialized expertise, streamlined processes, improved accuracy, and the ability to focus on core business competencies. What kind of accounting tasks can be outsourced? Outsourcing can streamline various accounting functions, such as recording financial transactions, processing payroll, preparing tax returns, generating financial statements, and managing accounts receivable and payable. How do I choose an outsourced accounting provider? When selecting an outsourced accounting provider, prioritize experience in your industry, a comprehensive service offering, advanced technology utilization, strong communication, and robust security measures to safeguard your financial data. How do I ensure a smooth transition to outsourced accounting? To ensure a seamless transition to outsourced accounting, clearly communicate your expectations to the provider, transfer all necessary financial data, train your staff on the new workflow, maintain regular communication, and monitor the provider’s performance to guarantee they meet your standards. Outsourcing accounting offers numerous advantages, including reduced overhead costs, access to specialized expertise, streamlined processes, improved accuracy, and the ability to focus on core business competencies.Outsourcing can streamline various accounting functions, such as recording financial transactions, processing payroll, preparing tax returns, generating financial statements, and managing accounts receivable and payable.When selecting an outsourced accounting provider, prioritize experience in your industry, a comprehensive service offering, advanced technology utilization, strong communication, and robust security measures to safeguard your financial data.To ensure a seamless transition to outsourced accounting, clearly communicate your expectations to the provider, transfer all necessary financial data, train your staff on the new workflow, maintain regular communication, and monitor the provider's performance to guarantee they meet your standards. An Industry Leader See Schneider Downs ratings and testimonials on ClearlyRated. Our Certifications About Schneider Downs Managed Accounting ServicesSchneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals.  ### Breached Global Widget ### Breached Widget Breached? Get Help Now ### Audit Case Studies Landing Page Block Explore our Audit Services Case Studies Learn how our clients founded their visions, increased efficiency, reduced costs and more in our case studies library. 30 Years and Counting: Transitioning Leadership, Evolving Business Structure, Stewarding ExpansionClient: American International Forwarding Starting Early: Delivering a Timely Audit with a Proactive ApproachClient: American Commerical Barge Line Powering Progress: Energy Expertise Fuels Seamless Partnership and Long-Term GrowthClient: Rosebud Mining Company Big Thinking and Personal Focus: A Decade of Excellence with a Complex, Multi-Faceted EntityClient: Family-owned, nationally recognized Real Estate company From Providers to Partners: Continuously Tailored Solutions for Record-Breaking Closing TimelinesClient: Multi-Location, Global, Long-term client From Acquisition to Audit: Guiding a SaaS Company Through a Seamless StartClient: SaaS Start Up in Emerging Technologies Compliance Crisis to Clean Slate: Preparing a 401K Plan for Clean AuditClient: Technology company focused on residential and commercial parking domestically and internationally Ready for Anything: Long-standing Bonds Enable Swift Responses in Dynamic ClimateClient: Nationally-renowned geotechnical engineering and construction firm Raising the Bar: Value-Added Services Supercharge SuccessClient: Multi-location, Multi-generational, recently transitioned construction client ### Audit Case Study Header 9 CASE STUDY - Audit Services Raising the Bar: Value-Added Services Supercharge Success Client: Multi-location, Multi-generational, Recently Transitioned Construction Client Services: Audit, Tax, Lease, Valuation, 401k Audit, Individual Tax Work, and Succession Planning ### Elementor Loop Item #57625 ### Audit Case Study Header 8 CASE STUDY - Audit Services Ready for Anything: Long-standing Bonds Enable Swift Responses in Dynamic Climate Client: Nationally-Renowned Geotechnical Engineering and Construction Firm ### Audit Case Study Header 7 CASE STUDY - Audit Services Compliance Crisis to Clean Slate: Preparing a 401K Plan for Clean Audit Client: Technology company with Domestic and International OperationsService: 401K Consulting ### Audit Case Studies Header 6 CASE STUDY - Audit Services From Acquisition to Audit: Guiding a SaaS Company Through a Seamless Start Client: SaaS Start Up in Emerging Technologies ### IT Ras Resources Grey Box IT Risk Advisory Resources Resource Center Our Thoughts On Blog ### Audit Case Studies Header 5 CASE STUDY - Audit Services From Providers to Partners: Continuously Tailored Solutions for Record-Breaking Closing Timelines Client: Multi-Location, Global, Long-term Client ### Audit Case Study Header 2 Landing Page 30 Years and Counting: Transitioning Leadership, Evolving Business Structure, Stewarding Expansion Client: American International Forwarding Services: Business Consulting, SOC 2 Report, Forensic Accounting Read more ### Audit Case Studies 1 Landing Page Block Starting Early: Delivering a Timely Audit with a Proactive Approach Client: American Commercial Barge LineServices: ERISA Audit Read more ### Audit Case Study Header 4 CASE STUDY - Audit Services Big Thinking and Personal Focus: A Decade of Excellence with a Complex, Multi-Faceted Entity Client: Family-owned, Nationally Recognized Professional Services Company ### Single Case Studies Learn More ### SOC Resources Grey Box 2 SOC Resources Resource Center Our Thoughts On Blog ### New Goals CTA Box Learn How We Can help you meet your goals Ask A Question Submit an RFP ### New Goals CTA Box Learn How We Can help you meet your goals Ask A Question Submit an RFP ### TPRM Resources Grey Box 1 TPRM Resources Resource Center Our Thoughts On Blog ### Cyber IT Risk Learn More CTA View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Grey Box Subheader Template - IT Ras Deliver sound risk management practices, internal control systems and compliance frameworks. ### Grey Box Subhead Cybersecurity Identify vulnerabilities, mitigate risks and be better prepared against cyber threats. ### Manufacturing FAQ with Sidebar Tax Credits and IncentivesR&D Tax Credit Eligibility and MaximizationHow can I determine if my manufacturing company is eligible for the R&D Tax Credit based on IRS guidelines?If your manufacturing company is developing new or improved products and/or production processes, then it is likely eligible for the R&D Tax Credit. Even companies that are not developing their products, such as original equipment manufacturers (OEMs), but are developing or improving manufacturing processes for their customers may qualify for the R&D credit. An experienced Schneider Downs R&D tax credit professional can help you identify eligible activities and expenses.What strategies can manufacturing companies employ to maximize their R&D Tax Credit benefits?Although there is no specific documentation requirement to claim the R&D credit, companies that are knowledgeable about what types of activities qualify are better positioned to maximize their credit. Some companies utilize time-tracking or job-costing systems, or they track R&D-eligible expenses in dedicated general ledger accounts. When Schneider Downs works with a taxpayer, the first step is understanding their business and identifying qualified activities and expenses. With this knowledge, we can also offer recommendations and suggestions on how to track eligible costs moving forward to improve efficiency, ensure that all activities and expenses are captured, and maximize your R&D Tax Credit.Can R&D Tax Credit consulting firms provide customized solutions tailored to the specific needs of manufacturing companies?Yes, but not all firms do! At Schneider Downs, we tailor our approach to each client and industry. With an extensive knowledge of your industry, we develop a customized strategy to calculate and maximize the R&D credit with an eye towards efficiency and accuracy. Additionally, we prepare documentation to substantiate the claim that is tailored to the client and outlines the specific methodology used for their credit calculation. Be careful–many firms out there prepare R&D Tax Credit claims, but are not public accounting firms, and that comes with risk. With Schneider Downs, your company will receive the “Big Thinking. Personal Focus.” that will enable it to maximize its R&D Tax Credit!State Tax Credits and Incentives for Manufacturing CompaniesHow do I determine if my manufacturing business qualifies for state tax credits, and what are the application procedures?There are specific tax credit programs offered by various states, depending on which state your business operates. Each state has its criteria, which can include factors such as the type of manufacturing activities, job creation or retention, investment in equipment or property and other economic impacts. A consultation with one of our tax professionals can help you review your eligibility criteria and understand the specific application procedures, including the relevant agency forms and instructions, pre-application stages and due diligence during the application review process.What state tax incentives are available specifically for manufacturers and how can my company benefit?States offer a variety of tax incentives for manufacturers. Some of these incentives include: withholding tax rebates to new labor-intensive manufacturers, investment tax credits that can offset corporate tax liabilities and encourage investment in equipment, facilities, and technology, property tax abatements, and sales and use tax exemptions for manufacturing equipment, raw materials and other eligible items.Are there any state tax breaks or incentives for manufacturers who implement environmentally friendly practices or energy-efficient technologies?Several states encourage manufacturers to adopt environmentally friendly practices. Some states offer tax incentives specifically targeting energy efficiency, while others offer renewable energy tax credits. Our tax professionals can help you to determine which incentives may be available in your state.Accounting and Auditing ServicesTailored Services for International Manufacturing CompaniesWhat steps does your firm take to tailor accounting and auditing services to meet international manufacturing companies' specific needs and challenges?Your services will be tailored to your entity's unique needs and situation. While we have substantial experience with international manufacturers, we understand that every business is unique and will take the time to truly understand the needs of your organization and the ultimate users of your financial statements.Specialized Expertise in International Accounting ChallengesWhat specialized expertise does your team possess in navigating the accounting challenges associated with international manufacturing, including cross-border transactions?Schneider Downs maintains a deep understanding of international organizations' challenges and has experience providing assurance, tax, and advisory services to these organizations. We work with numerous international clients throughout the world. We have experience as the service provider at both the group level and as the service provider for U.S. component entities of foreign companies. We perform assurance services under U.S. GAAP and International Financial Reporting Standards (IFRS). Schneider Downs also has experience providing tax services, including transfer pricing, for international entities and understands the complexities of filing in multiple jurisdictions. We also have experience providing advisory services to entities including accounting method conversions and valuations under both U.S. GAAP and IFRS. International Tax ConsiderationsKey Tax Issues for International Manufacturing CompaniesAs a company manufacturing and distributing products internationally, what are some of the key tax issues to consider to ensure compliance and optimize tax strategy?Key areas to consider include Transfer Pricing, Permanent Establishment (PE), Value Added Tax (VAT) and Goods and Services Tax (GST), customs duties and tariffs, tax treaties, withholding taxes, Controlled Foreign Corporation (CFC) Rules, foreign tax credits, tax compliance and local tax incentives and subsidies. Navigating these complex tax issues requires a coordinated approach involving tax planning, compliance and risk management to optimize your tax position and ensure compliance.Inventory Reporting and ValuationCompliance Standards and GAAP RulesWhat are the compliance standards and GAAP rules that manufacturing organizations should follow for accurate inventory reporting and valuation?Cost of inventory can be determined using several methods such as first-in, first-out (FIFO), average cost, or last-in, first-out (LIFO). Regardless of the cost method selected, the cost captured and applied to inventory should include both direct expenditures as well as indirect charges that are incurred to bring an item to its current condition. This should include acquisition, labor, production and other overhead charges. These overhead charges should be allocated to individual items based on the normal capacity of the production facility. Normal capacity is an assumption that requires estimation by management based on a review of facts and circumstances. Costs outside that normal capacity range should be recognized as a current period charge rather than capitalized into inventory. Total inventory cost should also be reviewed to ensure that it is not higher than the net realizable value upon the ultimate sale of the inventory.Technology SolutionsTechnology Implementation for ManufacturersWhat technology solutions are right for my company?Each company is unique, and the solutions available would depend on the people, processes and technology that are already in place. Implementing technology is a valuable tool that can transform your business but ensuring that the right-fit technology is implemented with the right processes in place is essential to successful transformation. SD Digital helps organizations evaluate the purpose, efficiency and effectiveness of existing processes and technology to develop strategic, transformative solutions. Please reach out to a member of the SD Digital Team and let them help you transform your business. Explore the Digital Transformation FAQ.What are common Intelligent Automation (IA) solutions implemented for manufacturers?IA involves the integration of robotic process automation, artificial intelligence and business process management to automate tasks and streamline processes using human-centric interfaces. While an IA solution will be unique to your company, here are some common areas where automation has been implemented within the manufacturing industry: supply chain management, order fulfillment, inventory management, and back-office processes. Automation can significantly contribute to the operational excellence of a company by providing cost savings, employee engagement, reduced risk, scalability and speed. Learn more about Intelligent Automation.How can Schneider Downs assist with technology implementation?SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. We work with you to understand your business and identify roadblocks to efficiency and scalability. Our team is made up of the following core solutions:Data AnalyticsDigital ModernizationIntelligent AutomationMicrosoft Dynamic ERP SolutionsCustom DevelopmentBy identifying the right-fit technology for your company, you can expect benefits such as:Streamlined and automated processes that reduce costs and mitigate risks.Improved reporting and analytics to help make better-informed business decisions.Enhanced data accessibility, reliability, and governance.Enabled future digital growthImpactful user experience drives buy-in and efficiency. 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Submit ### Audit Case Study Header 3 CASE STUDY - Audit Services Powering Progress: Energy Expertise Fuels Seamless Partnership and Long-Term Growth Client: USA Mining, Processing and Transportation OrganizationSchneider Downs Service: Audit/Tax ### Audit Case Study Header 2 CASE STUDY - Audit Services 30 Years and Counting: Transitioning Leadership, Evolving Business Structure, Stewarding Expansion Client: Supplier of Freight Forwarding ### Audit Case Study Header 1 CASE STUDY - Audit Services Starting Early: Delivering a Timely Audit with a Proactive Approach Client: Global Marine Shipping & TransportationSchneider Downs Service: ERISA Audit ### Audit Case Study Page Template " data-hide-for="large"> Loading... Services Audit and Assurance Services Overview Accounting Advisory Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources ERISA Frequently Asked Questions International Assurance Services Public Companies Assurance Services SOC Practice Overview Overview SOC Reports SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Consulting Services Overview Business Advisory Overview Meet Our Team Business Interruption Services Business Restructuring Overview Performance Improvement Turnaround/Restructuring Insolvency Services Debt Placement Compensation Studies Data Analytics for Business Advisory Fiduciary and Trustee Professional Services Financial and Cash Flow Modeling Forensic & Investigative Accounting Fraud Mitigation Services Litigation Support Services Management Advisory Services Profitability and Operations Management Services Services for Private Equity Firms SD Digital Solutions SD Digital Solutions Home Intelligent Automation Data Analytics Digital Modernization Software Solutions Software Solutions Home Microsoft Dynamics ERP Microsoft Dynamics Legacy Users simpLEASE Accounting SD inSITE Solver Corporate Performance Software Custom Development Our Story Meet The Team Transaction Advisory Services Overview Due Diligence & Quality of Earnings Business Restructuring and Turnaround Services Business Valuation Services Data Analytics for Financial Transaction Advisory Management Advisory Services Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment SOC Compliance, Assessments and Readiness Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Business Process Optimization Data Analytics (ADAPT) Cybersecurity IT Risk Advisory Private Client Services Overview Why Schneider Downs Private Client Services? Service Offerings Overview Tax and Personal Financial Services Estate, Trust and Succession Planning Private Family Office Philanthropy Wealth Management Meet Our Private Client Services Team Insights Contact Us Retirement Solutions Overview Advisory Services Consulting ESOP Services Recordkeeping Third-Party Administration Services Executive Compensation Retirement Plan Fiduciary Risk Assessment Schneider Downs Capital Tax Services Overview Tax About Us Tax Compliance and Consulting Business Tax Individual Tax Not-for-profit Tax Gift, Trust and Estate Services Managed Tax Services Overview Outsourcing/On-Call Assistance Income Tax Provisions – ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Overview Abandoned/Unclaimed Property Excise & Motor Fuels Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales/Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Overview Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investments in the U.S. Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transfer Pricing and Review of Cross-border Transactions Tax Credits and Incentives Overview Research & Development Cost Segregation Overview Benefit Analysis Request PA Educational Improvement Tax Credits (EITC) State Credits and Incentives Tax Transaction Advisory Overview Due Diligence Transaction Cost Analysis Tax All Services Wealth Management Overview Ultra High Net Worth Investors High Net Worth Investors Voyage Program Financial Planning Institutions and Non-Profits View all services Industries Overview Automotive Construction Emerging Technology Energy & Resources Financial Government Healthcare Higher Education International Manufacturing Not-for-Profit Private Equity Firm Services Professional Services Real Estate Retail & Business-to-Consumer Transportation & Logistics Resources Resource Center Our Thoughts On Events About Us Overview Big Thinking Personal Focus Around the World Case Studies Diversity History Management Mission and Corporate Values News Peer Review PrimeGlobal SD Standard Submit a Request for Proposal (RFP) Locations Pittsburgh, PA Columbus, OH Metropolitan Washington Careers Audit Services - CASE STUDY Starting Early: Delivering a Timely Audit with a Proactive Approach Client: American Commercial Barge LineSchneider Downs Service: ERISA Audit How it Started Lack of Preparation & Excessive Paperwork In 2021, Schneider Downs was contacted by a company that had missed its most recent ERISA filing date by several months, creating significant frustration with their current provider. Although Schneider Downs was not local to their area, at the recommendation of their actuary, the client reached out to us. When he asked us to propose on their ERISA audits, the prospect was very clear: his top priority was filing timely this year.We were determined to deliver. Every Step of the Way Early Planning and Scheduling After our initial meeting, it was clear that this audit required an especially proactive approach. In general, due to the extensive third-party coordination and client onboarding tasks that come with a first-year ERISA audit, it’s tricky to make granular predictions about specific timing. However, to make sure the client felt comfortable that this year would be different than the last, we carefully outlined and committed to a detailed timeline of our audit plan in April. Internal Reviews & Clear Communication To ensure we delivered on the timeline we promised, we began conducting biweekly calls with the client in June, even though fieldwork didn’t start until August. When we did begin fieldwork, which we conducted remotely, we upped the cadence of our calls and communicated regularly with the client through issuance—which occurred with time to spare. How it's Going Enhanced Financial Accuracy, Strengthened Internal Controls & Operational Efficiency Since successfully completing their ERISA audits, we’ve developed a strong partnership with the client and continue to provide several complimentary services and general advisory services as they grow. Today, because we’ve demonstrated that their priorities are our priorities, we’re the first to know whenever a change occurs within their organization.They know we’ll always pick up their call. Schneider Downs did an amazing job. Speaker Name Schedule an Audit Assessment Today ### Audit Case Studies Template Explore Audit Services Case Studies Learn how our clients effectively managed risk, ensured compliance, enhanced operational efficiency, and more. 30 Years and Counting: Transitioning Leadership, Evolving Business Structure, Stewarding ExpansionClient: Supplier of Freight Forwarding Starting Early: Delivering a Timely Audit with a Proactive ApproachClient: Global Marine Shipping & Transportation Powering Progress: Energy Expertise Fuels Seamless Partnership and Long-Term GrowthClient: USA Mining, Processing and Transportation Organization Compliance Crisis to Clean Slate: Preparing a 401K Plan for Clean AuditClient: Technology Company with Domestic and International Operations Ready for Anything: Long-standing Bonds Enable Swift Responses in Dynamic ClimateClient: Nationally-renowned Geotechnical Engineering and Construction Firm Raising the Bar: Value-Added Services Supercharge SuccessClient: Multi-location, Multi-generational, Recently Transitioned Construction Client Big Thinking and Personal Focus: A Decade of Excellence with a Complex, Multi-Faceted EntityClient: Family-owned, Nationally Recognized Professional Services Company From Providers to Partners: Continuously Tailored Solutions for Record-Breaking Closing TimelinesClient: Multi-Location, Global, Long-term Client From Acquisition to Audit: Guiding a SaaS Company Through a Seamless StartClient: SaaS Start Up in Emerging Technologies ### Elementor Loop Item #53382 ### SD Capital header " data-hide-for="large"> Loading... Services Meet Our Team Transactions Client Portal Group 3Created with Sketch. Make a Payment Close Open Search Submit Contact us " data-hide-for="large"> Loading... Services Meet Our Team Transactions Client Portal Group 3Created with Sketch. Make a Payment Close Open Search Submit Contact us ### Marissa SDC Template Schneider Downs Capital Value advisors for the middle market. SD Capital is a premier, full-service, value growth and transaction advisory practice serving middle market companies. At SD Capital, we work with owners to help them create and leverage maximum business values by evaluating and executing one of multiple pathways for downstream sales and monetization.We use our experience executing all types of transactions to focus our advice on identifying and executing the best possible solution to accomplish our clients’ goals.As former owners and operators, we offer a unique perspective on the complex journey of building value and selling companies. Our team’s expertise spans multiple sell side options, including majority or minority recapitalization, management and partner buy-outs, carve-outs, ESOPs and dividend recapitalizations. We also have considerable experience working with companies as strategic and operating partners to develop and execute inorganic growth strategies.With decades of collective experience and 100+ transactions, we are uniquely positioned to help owners navigate the complex journey of selling their company. We understand that this is a life-changing event and are committed to providing guidance tailored to your goals.PRIMARY CONTACTS: Tom Springer, Peter J. Lieberman Schedule a Consultation The SD Capital Journey We use the following three-phase approach to achieve maximum value upon exit, which allows our clients to routinely achieve exit multiples surpassing industry norms.  Phase I: Baseline Readiness Assessment We perform our baseline readiness assessment through the lens of a buyer, identifying the best ways to discount or reduce the purchase price in a sale. We also identify upside opportunities for value enhancement, such as repositioning a product or service as recurring, rather than project-based, revenue.Through a series of workshops and interviews, combined with data analysis, we provide a roadmap of prioritized actions to enhance company value. We often involve other members of integrated teams (estate/wealth management, tax, etc.) during the assessment process to ensure we identify all potential impacts on the sale process. Phase II: Value Creation During the value creation phase, we collaborate with our clients to address the roadmap we created during the baseline assessment. We often work side by side with our clients as a limited operating partner in this phase, and we track performance by creating monitoring feedback loop of key performance indicators. Phase III: Value Realization In the value realization phase, our team of experienced transaction advisory professionals leverages the work of phases I and II to take business owners through a streamlined sale process. Our detailed analysis of the potential buyer pool often helps create upside value by providing a more targeted and abbreviated auction process. We perform our baseline readiness assessment through the lens of a buyer, identifying the best ways to discount or reduce the purchase price in a sale. We also identify upside opportunities for value enhancement, such as repositioning a product or service as recurring, rather than project-based, revenue.Through a series of workshops and interviews, combined with data analysis, we provide a roadmap of prioritized actions to enhance company value. We often involve other members of integrated teams (estate/wealth management, tax, etc.) during the assessment process to ensure we identify all potential impacts on the sale process.During the value creation phase, we collaborate with our clients to address the roadmap we created during the baseline assessment. We often work side by side with our clients as a limited operating partner in this phase, and we track performance by creating monitoring feedback loop of key performance indicators.In the value realization phase, our team of experienced transaction advisory professionals leverages the work of phases I and II to take business owners through a streamlined sale process. Our detailed analysis of the potential buyer pool often helps create upside value by providing a more targeted and abbreviated auction process. Who We Are Consultants and Executives to the private equity community.Corporate C-suite, M&A and growth roles in acquisitive Fortune 100 companies.Deep commercial, government contracting and international business model expertise.Leadership across the full M&A continuum as buyers and sellers with 100’s of transactions.Owner operators with successful exits.Proficiency in debt restructuring, turn-around, and special situations. Industry Experience Why SD Capital? Entrepreneurial Expertise Executive Insights Industry Expertise Transaction Structuring Integrated Practice Benefit from our firsthand experience as former owners who have built and sold companies. We have a profound respect for and understanding of the challenges, opportunities and concerns you face. Tap into executive insights from our tenure as former C-Suite executives in Private Equity Portfolio Companies. We specialize in driving your company’s performance to its peak, maximizing value upon exit. Benefit from our broad base of experience across multiple industries both as C-Suite members and transaction advisors. Rely on our expertise in structuring multiple transactions including credit facilities for leveraged buyouts, add-on acquisitions and growth capital to enhance your financial strategies for success. Access a deep talent pool of tax, wealth management, accounting, due diligence and valuation professionals through our relationship with Schneider Downs & Co., Inc. Benefit from our firsthand experience as former owners who have built and sold companies. We have a profound respect for and understanding of the challenges, opportunities and concerns you face.Tap into executive insights from our tenure as former C-Suite executives in Private Equity Portfolio Companies. We specialize in driving your company's performance to its peak, maximizing value upon exit.Benefit from our broad base of experience across multiple industries both as C-Suite members and transaction advisors.Rely on our expertise in structuring multiple transactions including credit facilities for leveraged buyouts, add-on acquisitions and growth capital to enhance your financial strategies for success.Access a deep talent pool of tax, wealth management, accounting, due diligence and valuation professionals through our relationship with Schneider Downs & Co., Inc.For more information, please contact the team at contactsd@sdcapital.com.SD Capital is a subsidiary of Schneider Downs & Co., Inc. Contact our team of professionals today. Have a question or comment or need advice? Email us today. About Schneider DownsSchneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH and McLean, VA.Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPCSchneider Downs Corporate Finance, LP Customer Relationship Summary (Form CRS). ### Elementor Loop Item #50137 Phase I: Baseline Readiness AssessmentWe perform our baseline readiness assessment through the lens of a buyer, identifying the best ways to discount or reduce the purchase price in a sale. We also identify upside opportunities for value enhancement, such as repositioning a product or service as recurring, rather than project-based, revenue.Through a series of workshops and interviews, combined with data analysis, we provide a roadmap of prioritized actions to enhance company value. We often involve other members of integrated teams (estate/wealth management, tax, etc.) during the assessment process to ensure we identify all potential impacts on the sale process. ### Management Team Management Team Our shareholders have directed corporations, owned small businesses and managed nonprofits. They know your business. Our shareholders and partners are dedicated to the growth, stability and mission of Schneider Downs.We know that these kinds of people are key to creating a quality organization, so we make sure our employees are involved and challenged in their work. Their continued dedication to Schneider Downs lets us remain fully committed to you. Corporate Finance All (1) Consulting (1) PETER J. LIEBERMAN Consulting Shareholder Consulting No team members found. Tax No team members found. No team members found. Learn How We Can help you meet your goals Ask A Question Submit an RFP ### Persona Archive Exit and Succession Planning Scenarios Exit and succession planning is one of the most important strategies you will need to implement throughout the life of your business, and whether you are ready to start today or in 10 years, it’s never too early to begin the discussions.The Schneider Downs Exit and Succession Planning team understand that every engagement is unique with each client having specific goals, objectives and needs based on their individual circumstances. Below are sample client profiles illustrating the different scenarios that can benefit from exit and succession planning services.  Meet David A Successful Business Founder and Owner Ready to Retire Are there equity arrangements available to bring associates into the ownership fold?" Meet Darren A Serial Entrepreneur Looking for His Next Adventure How can I learn more about the due diligence process to ensure my company’s value is represented accurately?" Meet ABC Technologies A Successful Start-Up Technology Company Confronting Business Challenges and Needs  How can we grow the business without losing control or sight of our mission?" Meet The Hawthornes A Successful Family Business CEO Ready to Transition to the Next Generation Are my children capable to run the business? Do they even want to?" Meet Lisa A Female Business Owner of a Construction Company Who can lead the company when I leave? Is there family or a current leader that can carry it forward, or is a direct sale better?" Meet NP Consulting A Professional Services Firm Interested in Becoming an ESOP Does an ESOP make sense compared to individuals separately owning shares?" Meet Sasha A Successful Female Business Owner Growing Her Business How can I find and attract the right talent to help my company grow and increase in value?" Meet The Lins A Family-Owned Business Coming to an End What if we can’t find a buyer?"Whether you are unsure of your next steps, are looking at a buyer, private equity or public offering or thinking of transitioning to family, key management, gifting to individuals or trusts, or considering an ESOP, Schneider Downs will listen, understand, create, manage and fully execute your exit and succession plan.If you would like to speak to a member of the Schneider Downs Exit and Succession Planning team, please contact us directly at contactsd@schneiderdowns.com. Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners.To learn more, visit our dedicated Exit and Succession Planning page.  ### Persona Template MEET DAVID Are there equity arrangements available to bring associates into the ownership fold?" Recommended Services Business Valuation Employee Equity Award Evaluation of Exit Options Process Improvement / Business Value Driver Optimization Tax Minimization and Wealth Management Are there equity arrangements available to bring associates into the ownership fold?" A Successful Business Founder and Owner Ready to Retire When David was in his early 30s, he started his own company. Now that he’s been at the helm of a thriving organization for several years, David is very proud of what he has built. However, as he nears retirement age, he’s beginning to wonder how his company will continue to thrive with someone else in charge. While he values his associates, there’s no one internally that he feels would be quite right for the job, and his children are busy pursuing their own dreams. Therefore, David is looking for the right buyer—one that will treat the clients he’s spent years building relationships with as well as he does. Key Business and Operational Questions Are there equity arrangements available to bring associates into the ownership fold? Do I want to have a role after selling? If so, what does that look like?How can I ensure my employees are taken care of when I leave?How do I bring on partners without losing control as I transition out?What is my legacy? Key Financial Considerations and Questions Do I have a fair offer?What are the personal and business tax implications of selling?What do I need to do to prepare for the sale and how long does the process take?What is my company worth and how do I maximize the value of the market?When is the best time to sell? Recommended Services Business Valuation Employee Equity Award Evaluation of Exit Options Process Improvement / Business Value Driver Optimization Tax Minimization and Wealth Management Does this story sound familiar? If so, the Schneider Downs Exit and Succession Planning team can help. For more information, please contact us at contactsd@schneiderdowns.com.Please note, our services are best suited for targeted businesses with revenue or value in excess of $5M. Ask our Exit and Succession Planning Professionals Please fill out the form and one of our professionals will contact you. "*" indicates required fields First Name* Last Name* Email* Question PhoneThis field is for validation purposes and should be left unchanged. Ask Us About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. To learn more, visit our dedicated Exit and Succession Planning page.The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products are intended or should be inferred.  ### Elementor Header #45478 " data-hide-for="large"> Loading... 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Services Audit and Assurance Services Overview ESG Assurance Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources Frequently Asked Questions Public Companies Assurance Services International Assurance Services Accounting Advisory Services Consulting Services Overview Cybersecurity Overview Additional Services Products Overview Carbon Black Guardicore Mimecast Redlure Sophos Meet Our Team Resources Contact Financial Advisory Services Overview Accounting Advisory Services Overview Accounting Project Management Managed Lease Accounting Services Technical Accounting Advisory Services Business Consulting Services Overview Meet Our Team Business Interruption Services Business Restructuring Overview Performance Improvement Turnaround/Restructuring Insolvency Services Debt Placement Compensation Studies Data Analytics for Business Consulting Fiduciary and Trustee Professional Services Financial and Cash Flow Modeling Forensic & Investigative Accounting Fraud Mitigation Services Litigation Support Services Management Advisory Services Profitability and Operations Management Services Other Business Advisory Services Investment Banking IT Risk Advisory Overview Data Privacy Services Network Device Security Configuration Assessment FFIEC IT Compliance Assessment GDPR Compliance HIPAA Compliance Assessment HITRUST Information Technology Audit InfoSec Policy Templates IRS Publication 1075 ISO 27001 Compliance Assessment IT General Controls Audit IT Risk Assessment Services NIST Payment Card Industry Security Standard Compliance SOC Practice Overview SAP Audits and Controls M&A and Transaction Advisory Services Overview Baseline and Readiness Assessments Growth, Strategy and Transaction Advisory Services Post-Transaction Advisory Services All M&A and Transaction Advisory Services Meet The Team Managed Accounting Services Overview CFO Services Controller Services Full Accounting Services Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Robotic Process Automation for Internal Audit Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment Merger and Acquisition Risk Evaluation SOC Compliance, Assessments and Readiness Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Business Process Optimization Data Analytics (ADAPT) Digital Transformation SOC Practice Overview Overview SOC Reports SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Technology and Data Services Overview Business Process Automation Cloud and IT Solutions Overview BI360 Business Intelligence Solutions Overview BI360 Videos and Demos Microsoft Dynamics 365 Business Central Microsoft Dynamics GP Microsoft Dynamics NAV Microsoft Product Resources Sage Fixed Assets SD inSITE Overview SD inSITE Modules Performance Evaluation Grid (PEG) simpLEASE Accounting Overview simpLEASE FAQs simpLEASE Capabilities Contact simpLEASE Data Analytics Digital Transformation Overview Digital Transformation in Finance & Accounting Digital Transformation Readiness Assessment Digital Transformation FAQs Private Client Services Overview Why Schneider Downs Private Client Services? Service Offerings Overview Tax and Personal Financial Services Estate, Trust and Succession Planning Private Family Office Philanthropy Wealth Management Meet Our Private Client Services Team Insights Contact Us Retirement Solutions Overview Advisory Services Consulting ESOP Services Recordkeeping Third-Party Administration Services Executive Compensation Retirement Plan Fiduciary Risk Assessment Tax Services Overview Tax About Us Tax Compliance and Consulting Business Tax Individual Tax Not-for-profit Tax Gift, Trust and Estate Services Managed Tax Services Overview Outsourcing/On-Call Assistance Income Tax Provisions – ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Overview Abandoned/Unclaimed Property Excise & Motor Fuels Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales/Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Overview Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investments in the U.S. Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transfer Pricing and Review of Cross-border Transactions Tax Credits and Incentives Overview Research & Development Cost Segregation Overview Benefit Analysis Request PA Educational Improvement Tax Credits (EITC) State Credits and Incentives Tax Transaction Advisory Overview Due Diligence Transaction Cost Analysis Tax All Services Wealth Management Overview Ultra High Net Worth Investors High Net Worth Investors Voyage Program Financial Planning Institutions and Non-Profits View all services Industries Overview Automotive Construction Emerging Technology Energy & Resources Financial Government Healthcare Higher Education International Manufacturing Not-for-Profit Private Equity Firm Services Professional Services Real Estate Retail & Business-to-Consumer Transportation & Logistics Resources Resource Center Our Thoughts On Events About Us Overview Big Thinking Personal Focus Around the World Case Studies Diversity History Management Mission and Corporate Values News Peer Review PrimeGlobal SD Standard Submit a Request for Proposal (RFP) Locations Pittsburgh, PA Columbus, OH Metropolitan Washington Careers Client Portal Group 3Created with Sketch. 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Services Audit and Assurance Services Overview ESG Assurance Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources Frequently Asked Questions Public Companies Assurance Services International Assurance Services Accounting Advisory Services Consulting Services Overview Cybersecurity Overview Additional Services Products Overview Carbon Black Guardicore Mimecast Redlure Sophos Meet Our Team Resources Contact Financial Advisory Services Overview Accounting Advisory Services Overview Accounting Project Management Managed Lease Accounting Services Technical Accounting Advisory Services Business Consulting Services Overview Meet Our Team Business Interruption Services Business Restructuring Overview Performance Improvement Turnaround/Restructuring Insolvency Services Debt Placement Compensation Studies Data Analytics for Business Consulting Fiduciary and Trustee Professional Services Financial and Cash Flow Modeling Forensic & Investigative Accounting Fraud Mitigation Services Litigation Support Services Management Advisory Services Profitability and Operations Management Services Other Business Advisory Services Investment Banking IT Risk Advisory Overview Data Privacy Services Network Device Security Configuration Assessment FFIEC IT Compliance Assessment GDPR Compliance HIPAA Compliance Assessment HITRUST Information Technology Audit InfoSec Policy Templates IRS Publication 1075 ISO 27001 Compliance Assessment IT General Controls Audit IT Risk Assessment Services NIST Payment Card Industry Security Standard Compliance SOC Practice Overview SAP Audits and Controls M&A and Transaction Advisory Services Overview Baseline and Readiness Assessments Growth, Strategy and Transaction Advisory Services Post-Transaction Advisory Services All M&A and Transaction Advisory Services Meet The Team Managed Accounting Services Overview CFO Services Controller Services Full Accounting Services Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Robotic Process Automation for Internal Audit Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment Merger and Acquisition Risk Evaluation SOC Compliance, Assessments and Readiness Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Business Process Optimization Data Analytics (ADAPT) Digital Transformation SOC Practice Overview Overview SOC Reports SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Technology and Data Services Overview Business Process Automation Cloud and IT Solutions Overview BI360 Business Intelligence Solutions Overview BI360 Videos and Demos Microsoft Dynamics 365 Business Central Microsoft Dynamics GP Microsoft Dynamics NAV Microsoft Product Resources Sage Fixed Assets SD inSITE Overview SD inSITE Modules Performance Evaluation Grid (PEG) simpLEASE Accounting Overview simpLEASE FAQs simpLEASE Capabilities Contact simpLEASE Data Analytics Digital Transformation Overview Digital Transformation in Finance & Accounting Digital Transformation Readiness Assessment Digital Transformation FAQs Private Client Services Overview Why Schneider Downs Private Client Services? 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E-mail NameThis field is for validation purposes and should be left unchanged. Sign up Schneider Downs Events Lorem ipsum dolor sit amet consectetur. In cras tortor urna in vel consectetur arcu. Mauris. Upcoming Past Events Test February 29, 2024 Test February 27, 2024 SOC 2 Compliance: Key Steps to Success in 2024 Webinar January 25, 2024 2023 CPE Month Webinar Series December 5, 2023 Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules November 15, 2023 Tee Off Against Cancer – 2023 Men Wear Pink Fundraiser October 18, 2023 Guest Bartending – 2023 Men Wear Pink Fundraiser September 19, 2023 View More Events Media Center Schneider Downs is pleased to accommodate media requests for interviews or background information. Media inquiries can be directed to Alicia Furlan.For inquiries regarding specific topics, the following professionals are available for interviews and speaking engagements:Schneider Downs & Co.Steven Thompson and Christopher McElroyTax Advisory ServicesJustin SteeleState and Local Tax (SALT)Stephen WorthAssurance Advisory ServicesStaci Brogan (Pittsburgh)Trevor Warren (Columbus)Risk Advisory/SOXJames B. Yard Wealth Management Derek EichelbergerRetirement Planning/ Employee Benefit ServicesJason M. Lumpkin Technology Advisory ServicesEric Wright Investment BankingPeter J. LiebermanBusiness Advisory ServicesAdam GoodeFor more information on our industry group contacts, visit our Industries section. Audio Archive > ### CTA How we can help Learn How We Can help you meet your goals Ask A Question Submit an RFP ### Search Result Search Results ### Quiz Section SOC Report Quiz Does your organization need a system and organization controls (SOC) report? SOC examinations provide management with assurance regarding the effectiveness of an organization's internal controls, while also providing insights for opportunities to improve internal controls and risk mitigation activities.Obtaining a SOC report has become increasingly relevant for organizations of all sizes, as the report demonstrates that effective internal controls and related safeguards have been implemented.Does your organization need a SOC Report? Take our brief quiz to help answer the question. 1Does your organization outsource or provide outsourced services for critical business functions or processes (e.g., payroll, collections, inventory management and logistics, claims processing, investment management, processing transactions, storing data) or information technology operations (e.g., managed service provider (MSP), infrastructure-as-a-service (IaaS) or data center)? Yes No Don't Know 2Do the financial statement auditors of your organization's customers (user entities) request System and Organization Controls (SOC) reports for your organization and/or request to perform audit procedures on your organization's activities for the services provided to customers? Yes No Don't Know 3Do contracts with your organization's customers or prospective customers require you to provide a System and Organization Controls (SOC) report or have a right to audit clause? Yes No Don't Know 4Do you receive requests from your customers or prospective customers to provide System and Organization Controls (SOC) reports? Yes No Don't Know 5Does your organization use or provide applications that are software-as-a-service (SaaS) or platform-as-a-service (PaaS)? Yes No Don't Know 6Does your organization store, process or transmit confidential information or sensitive data (e.g., personally identifiable information (PII), personal health information (PHI), proprietary customer information, credit cards) on behalf of customers? Yes No Don't Know 7Does your organization need assurance regarding information security and/or compliance requirements (e.g., HIPAA, HITRUST, PCI, FISMA, ISO 27001, etc.) or is your organization operating in a regulated environment? Yes No Don't Know 8Does management of your organization want to obtain assurance regarding the internal controls at your organization relative to security, availability, confidentiality, processing integrity and/or privacy? Yes No Don't Know EmailThis field is for validation purposes and should be left unchanged. Submit Contact Us PITTSBURGH One PPG Place, Suite 1700 Pittsburgh, PA 15222 contactsd@schneiderdowns.com p:412.261.3644 f:412.261.4876 COLUMBUS 65 East State Street, Suite 2000 Columbus, OH 43215 contactsd@schneiderdowns.com p:614.621.4060 f:614.621.4062 METROPOLITAN WASHINGTON 1660 International Drive McLean, VA 22102 contactsd@schneiderdowns.com p:571.380.9003 Follow Us Facebook-square Twitter Linkedin-in Youtube Rss CLIENT PORTAL Subscribe For Updates E-mail EmailThis field is for validation purposes and should be left unchanged. Submit ### CTA Simplease contact Ready to Get Started? CONTACT US FOR MORE INFORMATION ### CTA Schedule a Demo Ready to Get Started? Schedule a Demo ### CTA two buttons View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Hero (image on bg) M&A and Transaction Advisory Services Trusted guidance to create value at every stage of business transactions. Contact Us Today ### Hero Section (only title) TPRM Ad Hoc Review Services ### Universal Template ### Hero white shape Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better. ### Case Studies Two columns (most common items) Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Meet the Team Meet Our TeamThe Schneider Downs M&A and Transaction Advisory Services Team consist of experienced professionals from our Transaction Advisory and Corporate Finance Practices who are dedicated to working side-by-side with clients to understand their options, define achievable goals, optimize enterprise value, and most importantly, ensure that their best interests are properly represented at every stage of the transaction. SHAREHOLDERS Adam Goode CPA Learn More > Peter Lieberman Learn More > Tom Springer Learn More > DIRECTORS AND MANAGEMENT Alyssa M. Fudala Learn More > Imran Mohiuddin Learn More > Julia Ann M. Boles Learn More > Marc Brdar CPA, CFF, CIA Michael Fox Michael Hart Learn More > Stuart Lawson Tyler M. Reeder Learn More > Ready to Get Started?For more information on how the Schneider Downs M&A and Transaction Advisory Team can help you maximize the value of your business, contact us at contactsd@schneiderdowns.com.Related ServicesBaseline and Readiness AssessmentsInvestment Banking Growth, Strategy and Transaction Advisory Services Post-Transaction Advisory ServicesAbout Schneider Downs M&A and Transaction Advisory ServicesThe Schneider Downs Transaction Advisory Services and Corporate Finance Teams provide the strategy, guidance and services organizations need to create value through all stages of a transaction, including due diligence and quality of earnings, mergers and acquisitions, exit and succession planning, capital raising and corporate financeVisit our dedicated M&A and Transaction Advisory Services page or contact the team directly at contactsd@schneiderdowns.com. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. Contact Us PITTSBURGH One PPG Place, Suite 1700 Pittsburgh, PA 15222 contactsd@schneiderdowns.com p:412.261.3644 f:412.261.4876 COLUMBUS 65 East State Street, Suite 2000 Columbus, OH 43215 contactsd@schneiderdowns.com p:614.621.4060 f:614.621.4062 METROPOLITAN WASHINGTON 1660 International Drive McLean, VA 22102 contactsd@schneiderdowns.com p:571.380.9003 Follow Us Facebook-square Twitter Linkedin-in Youtube Rss CLIENT PORTAL Subscribe For Updates E-mail NameThis field is for validation purposes and should be left unchanged. Submit ### Page with full height sidebar How Secure is Your Remote Workforce? Evaluating and strengthening your cybersecurity posture has never been more important as it is now. The COVID-19 pandemic has resulted in an increased shift to remote workforces and in turn, increased vulnerabilities and threats placing your organization at risk. Get inside the mind of a hacker in our popular whitepaper “10 Vulnerabilities Hackers Love to Exploit” to learn about underlying circumstances leading to breaches and best practices to prevent becoming a statistic. About Schneider DownsThe Schneider Downs cybersecurity team provides robust services dedicated to keeping organizations secure including penetration testing, phishing and ransomware prevention services, incident response planning, digital forensics, and purple team assessments. In addition our Incident Response Team is available around the clock at 1-800-993-8937 if your organization suspects or is experiencing a network incident. For more information contact the team at cybersecurity@schneiderdowns.com or visit Cybersecurity.Helpful LinksSchneider Downs Penetration Testing OverviewSchneider Downs Digital Forensics & Incident Response OverviewSchneider Downs Cybersecurity Resource LibrarySchneider Downs Cybersecurity Blog DOWNLOAD THE CONTENT Fill out the form for your complimentary copy of 10 Vulnerabilities Hackers Love to Exploit. "*" indicates required fields First Name* Last Name* Company/Organization* Email* PhoneThis field is for validation purposes and should be left unchanged. Submit ### Cybersecurity Resources (extended) Cybersecurity Resources Resource Library Our Thoughts On Blog ### Blue Box Effective Strategies for Board Communications on Cybersecurity REQUEST A SESSION Executives and board members alike are all keenly concerned about cyber-risks. Boards typically lack specific cyber-expertise but they've all seemingly read the same whitepaper on what questions to ask your CISO and/or Cybersecurity team. So why does it feel like a challenge to address their concerns and what is causing the communication gap?In this session, we will explore how to answer common tough questions such as "Are we secure?" or "Have we been hacked?" and others. Attendees will walk away with proven methods and strategic ideas that will better prepare them for future discussions with board member and c-suite executive conversations. icon-check-orangeCreated with Sketch. A high-level understanding of the modern cybersecurity threat landscape icon-check-orangeCreated with Sketch. A breakdown of common strategic shortcomings that can negatively impact an organization’s overall security posture icon-check-orangeCreated with Sketch. Strategic takeaways and tangible steps to help improve board communication ### Page Cybersecurity Services Make a Payment Start building a career with people motivated to help you succeed and enjoy more of what counts Contact Us Today Electronic Funds Transfer Transfer funds directly from your bank with no additional fees. Learn More Credit Card A 3% convenience fee will be applied to all credit card transactions. Debit cards are not accepted. Learn More Payment Plan QuickFee offers an easy, no-hassle way for you to spread the cost of your invoice(s) over three to twelve monthly payments.* Learn More PRIMARY CONTACT: Carl N. Kriebel CISSPThreats to your IT environment can come from virtually anywhere at any time. Anticipating risk means thinking like those who would benefit from your vulnerability and protecting you with a comprehensive approach to cybersecurity.Cybersecurity Services Overview View our additional IT Risk Advisory services and capabilities Learn More Contact us ### Cybersecurity Resources Cybersecurity Resources Case Studies Learn More > Our Thoughts On Learn More ### Single Cybersecurity What is HITRUST?The HITRUST Common Security Framework (HITRUST CSF) is a certifiable framework that provides organizations with a comprehensive, flexible, and efficient approach to regulatory compliance and risk management. The HITRUST Alliance is a not-for-profit organization, founded in 2007, born out of the belief that information protection should be a core pillar of, rather than an obstacle to, the broad adoption of health information systems and exchanges. HITRUST also leads many efforts in awareness, education, and advocacy related to information protection. In addition, HITRUST's framework has since been developed to be non-industry specific.The HITRUST CSF consists of 14 Control Categories (see below), 19 Domains, 49 Control Objectives, 156 Control References, and 3 Implementation Levels. The HITRUST CSF was built on the primary principles of ISO 27001/27002 and has evolved to align with a wide range of regulations, standards, and business requirements. These include HIPAA, PCI-DSS, NIST 800-53, NIST Cybersecurity Framework, COBIT, GDPR, and more.HITRUST CSF Control CategoriesInformation Security Management ProgramAccess ControlHuman Resources SecurityRisk ManagementSecurity PolicyOrganization of Information SecurityComplianceAsset ManagementPhysical and Environmental SecurityCommunications and Operations ManagementInformation Systems Acquisition, Development and MaintenanceInformation Security Incident ManagementBusiness Continuity ManagementPrivacy PracticesWhy HITRUST?You have a customer requiring HITRUST complianceYou're looking to improve your overall security posture through a recognized, reputable and certifiable frameworkYou're looking to establish governance over your risk management and information security programsYou're looking to differentiate your organization through adoption of an efficient, flexible and scalable standardHarmonizes and maps existing controls and requirements from standards, regulations, business, and third-party requirements, including:HIPAA, NIST 800-53, PCI-DSS, ISO 27001/2, COBIT, GDPR, etc.Scales controls based on the size, type, and complexity of your organizationIs non-industry specificThe HITRUST CSF Assurance Program enables trust in information protection through an efficient and manageable approachThe comprehensiveness of the requirement statements for the assessed entity is based on multiple levels within the HITRUST CSF as determined by defined risk factors LEARN MORE ABOUT HITRUST CSF REPORTING OTHER USEFUL LINKS SOC 2 + Examinations | HIPAA | IT TPRM | View our additional IT Risk Advisory services and capabilities Learn More Contact Us ### Single Private Client Services without hero By Share with a colleague Download PDF Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo. Share ### Page International Tax CPAs INTERNATIONAL TAX CPAS – SALT LAKE CITY (UT) Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) firm that serves clients in Salt Lake City, and across Utah. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Salt Lake City International Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms.  National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Salt Lake City International Tax CPAsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Salt Lake City and across Utah.  to the right and a team member will promptly follow up with you.*** Our international tax services provide optimal value to international businesses & executives.  ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields First Name* Last Name* Company* Email* Phone NumberComment/QuestionHow would you like us to contact you? Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Salt Lake City Exports by Sector ### Text content with background An internship with Schneider Downs is an excellent way to discover what we are all about. You will work directly with other members of client engagement teams on various assignments involving audit, tax and accounting issues. This hands-on learning environment provides a terrific introduction to the profession and our firm.In addition, you'll have opportunities to participate in community service activities and firm networking/social events.The Yearbook entries below provide insight into what some of our former interns think about their experiences. In most cases, we utilize our internship program to recruit for full-time employees. In fact, over 90% of our former interns received full-time offers.Connect with us to begin the process! ### Single Staff with one Tab CONTACT professional bio ### Contact us with map Contact Us PITTSBURGH One PPG Place, Suite 1700 Pittsburgh, PA 15222 contactsd@schneiderdowns.com p:412.261.3644 f:412.261.4876 COLUMBUS 65 East State Street, Suite 2000 Columbus, OH 43215 contactsd@schneiderdowns.com p:614.621.4060 f:614.621.4062 METROPOLITAN WASHINGTON 1660 International Drive McLean, VA 22102 contactsd@schneiderdowns.com p:571.380.9003 Follow Us Facebook-square Twitter Linkedin-in Youtube Rss CLIENT PORTAL Subscribe For Updates E-mail PhoneThis field is for validation purposes and should be left unchanged. Submit ### Staff simple single page ### Single Staff ### M&A and Transaction Advisory Services M&A and Transaction Advisory Services Trusted guidance to create value at every stage of business transactions. Contact Us Today PRIMARY CONTACTS:Adam J. Goode, CPAPeter J. LiebermanTom SpringerThe Schneider Downs M&A and Transaction Advisory Team provides the strategy, guidance and services organizations need to create value through all stages of a transaction, including due diligence and quality of earnings, mergers and acquisitions, exit and succession planning, capital raising and corporate finance.With a focus on middle-market organizations, our team has the collective business, industry and technical expertise necessary to help clients understand their options and achieve successful outcomes, whether the goal is buy-side, sell-side or post-merger integration. Our team of experienced consultants from our Transaction Advisory and Corporate Finance Practices work side-by-side with clients to assess, maximize, transform and optimize enterprise value, and most importantly, ensure their best interests are properly represented at every stage of the deal process.  Download the Schneider Downs M&A and Transaction Advisory Brochure M&A AND TRANSACTION ADVISORY SERVICES M&A AND TRANSACTION ADVISORY SERVICES Understand the best options for your business’s next step. GROWTH, STRATEGY AND TRANSACTION ADVISORY Strategic, operational and financial solutions for your transaction. INVESTMENT BANKING Seamlessly execute your transaction with our corporate finance professionals. POST-TRANSACTION ADVISORY Address the unique business needs and concerns after your transaction is complete. ALL M&A AND TRANSACTION ADVISORY SERVICES View all of our M&A and Transaction Advisory services and solutions. MEET THE TEAM Meet our team of experienced professionals dedicated to your success. OUR THOUGHTS ON Read the latest insight on key topics in the M&A and Transaction Advisory space. Ready to Get Started?For more information on how the Schneider Downs M&A and Transaction Advisory Team can help you maximize the value of your business, contact us at contactsd@schneiderdowns.com. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### simpLEASE Page simpLEASE Accounting Lease Accounting Software Built by Accountants for Accountants Contact Us simpLEASE FAQsCapabilities Contact Us simpLEASE makes the FASB’s Accounting Standards Certification (ASC 842) simple. Designed to solve leasing accounting challenges for organizations of all sizes, simpLEASE is a scalable web-based solution that streamlines the lease accounting process, and provides fast and accurate results regardless of whether you have two or two thousand leases.  How simpLEASE WorkssimpLEASE uses a wizard-based system to walk users through each step of the lease accounting process by providing easy-to-understand guidance to analyze each individual lease. By answering a series of prompts about each contract, simpLEASE produces guidance on the reporting requirements and guidelines for each lease.https://vimeo.com/519223042Features and Benefits:Web-Based - simpLEASE is available 24x7 from any location with no IT resources required.Lease Tracking - Provides a centralized and secure location to house lease data and documents.Intelligent Workflow - Transparent workflow provides review of data before impacting financials and a clear audit trail.Informative Alerts - Receive notifications for approval process and lease-related dates.Comprehensive Reporting - Month end reports that meet 842 requirements and are exportable to Excel.Real-Time Dashboard - Quick access to high-level data in an accessible and intuitive dashboard.Multi-Company Access - Shared or separate options for asset class setup, ground lease structure and securities.Scalable Pricing - Pricing is based on leases and entities, with unlimited users and support included. Learn more about simpLEASE Meeting the ASC 842 lease accounting standard is still an uphill battle for many organizations - regardless of industry - and time is running out. If any of the challenges sound familiar, we are ready to provide you our lease accounting software expertise and experience.Please fill out the form and a member of our team will contact you. "*" indicates required fields First Name* Last Name Email* I am interested in:*I am interested in:simpLEASE PricingsimpLEASE DemoGeneral InformationCommentsThis field is for validation purposes and should be left unchanged. Get more information. What is FASB ASC 842?ASC 842 is a lease accounting standard published by the Financial Accounting Standards Board (FASB) that requires the tracking and disclosure of all lease assets. ASC 842 replaced the previous ASC 840 standard with both public and private companies required to adopt the standard. The effective date for the new lease accounting standard for public organizations went into effect for fiscal years starting after December 15, 2018.The effective date for the new lease accounting standard for private entities and non-profit organizations went into effect for fiscal years starting after December 15, 2021. Nearly every company or organization utilizes lease contracts as part of its day-to-day operations. ASC 842 will dramatically alter how companies identify leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process.simpLEASE ResourcessimpLEASE Software OverviewsimpLEASE Security OverviewUnderstanding the Lease Accounting Whitepaper"Our Thoughts On" Lease Accounting Articles  About simpLEASENearly every company or organization utilizes lease contracts as part of its day-to-day operations. (ASC) 842 will dramatically alter how companies identify leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process.simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations.  READY TO GET STARTED? CONTACT US FOR MORE INFORMATION OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261).The climate-focused legislation… Read More > Tis the Season: Unwrapping the Top Holiday Scams of 2023 What are the top holiday scams in 2023?Along with turkey, football and crazy relatives, Thanksgiving also marks the start of… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > Think Before You Click: Fake Browser Updates are Back in Style Why are malware-laced fake browser updates having a moment in 2023?The adage “what’s old is new again,” is certainly true in the cyber… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > Cybersecurity Awareness Month Celebrates 20 Years October is right around the corner and that means another Cybersecurity Awareness Month is here.Since 2004, the United States and Congress… Read More > How LinkedIn and a Phone Call Led to the Massive MGM Ransomware Attack How did the ransomware attack on MGM Resorts start?“I know more about casino security than any man alive, I invented it,… Read More > Climate Corporate Data Act – What to Know About California SB 253 What are the implications and impact of the CA SB 253 – Climate Corporate Data Accountability Act?On September 12, the California… Read More > 20 Pre-Contract Questions To Ask Your Next SOC 2 Audit Firm What information do you need to know before your SOC 2 audit?When it comes time for a SOC 2 report,… Read More > Five Tax Considerations for Start-up Companies When it comes to taxes, startup companies often underestimate the significance of tax planning, compliance and the implementation of effective tax… Read More > School Yourself on Common Student Loan Cyber Scams What are some of the most common student loan cyber scams to watch out for?With the student loan pause ending… Read More > Six Common Lease Accounting Adoption Mistakes... and How to Avoid Them What are some of the most common mistakes organizations make when adopting the ASC 842 lease accounting standard?Over the past… Read More > SDWMA Thoughts on Silicon Valley Bank By now I am sure a good number, if not all of you, have heard about the rapid fall of… Read More > Digital Transformation and The Construction Industry: Digital Workflows This article is part of series focused on the benefits, challenges and impact of digital transformation on the construction industry… Read More > SECURE 2.0 Act of 2022: Key Highlights The SECURE 2.0 Act of 2022 (SECURE 2.0) was signed into law by President Biden on Dec. 29, 2022, as part… Read More > Resolve to Prevent or Detect Financial Statement Fraud in the New Year As we approach the end of the calendar year for all organizations, and fiscal year for many, it’s a great… Read More > Buyer Beware: Five Common Holiday Scams of 2022 The holiday season means overeating, overspending, and if you’re not careful… oversharing financial information with cyber criminals.With the holiday season right… Read More > International Fraud Awareness Week 2022 Schneider Downs is once again proud to support the Association of Certified Fraud Examiners (ACFE) as it celebrates International Fraud… Read More > IRS Gave the Gift of Higher Estate and Gift Tax Limits for 2023 You know what they say: it is always better to give than to receive. Coincidentally, there is no better time to… Read More > October is Cybersecurity Awareness Month! October is right around the corner and that means Cybersecurity Awareness Month is back to help raise awareness on the… Read More > ATA Wins Decision Blocking Rhode Island Truck-Only Tolling Plan Breaking News - On September 21, 2022, the United States District Court for Rhode Island ruled that the State of… Read More > Everything You Need to Know about the New Electric Vehicle Tax Credit President Biden’s August 16th signing of the Inflation Reduction Act (IRA), a $739 billion tax, climate, healthcare, and energy law,… Read More > President Biden Announces Student Debt Relief Plan President Joe Biden introduced the Student Debt Relief plan on Wednesday, August 24, 2022. The White House states that the plan… Read More > UPDATE: Inflation Reduction Act – Final Senate Version Eliminates the Change in Carried Interest Rules As observed in our recent blog on the Inflation Reduction Act (or IRA), the vote of Senator Kyrsten Sinema (D-Arizona) was… Read More > Inflation Reduction Act – Tax Provisions Included in Proposed Legislation Late in July, Senator Joe Manchin (D-WV) announced that he had reached an agreement with Senate Majority Leader Chuck Schumer… Read More > United States Deals with Baby Formula Shortage Over the past few weeks, as you’ve been running errands or completing your grocery shopping, you may have noticed some… Read More > ### No Hero Section Page SD inSITE Modules Employee Time Collection OverviewIS COLLECTING EMPLOYEE TIME SHEETS MORE OF A HASSLE THAN IT SHOULD BE?SD inSITE offers a variety of different methods of payroll time sheet reporting that allows you to provide your staff with the simplest and most effective method of time collection possible. Options as simple as collecting just the date and number of hours to collecting comprehensive project based details inSITE has a time collection screen that best suites your organizational needs (and your users’ abilities).The right time entry interface for your employees makes all the difference in the world, but it is not the only consideration. Providing an easy to use interface helps eliminate the age old adage of “Garbage In = Garbage Out”.Centralized administration of work codes and projects ensure that your staff has access to only what they need; no more, no less. Eliminating confusion increases the accuracy of time entry, which means less time required to verify the data before it goes to your payroll or accounting system.Using inSITE for project based time collection also allows for the automatic distribution of labor hours across various projects eliminating the need for time consuming time allocation procedures.VIEW PRODUCT OVERVIEW | VIEW A DEMO Employee Expenses OverviewARE EMPLOYEE EXPENSES COSTING YOU TOO MUCH TIME?As with time entry, employee expense entry can be more difficult than it needs to be for your staff, supervisors and accounting personnel. With a multitude of codes to remember, changing mileage rates and late or missing receipts, getting employee expenses recorded and approved can be a nightmare. SD inSITE is based upon the premise to keep all steps in the process simple. We build upon of the idea of easy to use employee inputs, smooth interfaces and centralized management to provide a simple, yet effective, expense entry and approval process that your staff will embrace.SD inSITE can use either electronic or paper receipts to match the needs of your organization. Employee mileage reimbursements for mileage are based on the date an expense was incurred (not when it was entered submitted).SD inSITE also allows for the use of the same set of project codes used in time entry to make expense entries in SD inSITE. This allows for the consistent allocation of expenses across the appropriate cost codes.VIEW PRODUCT OVERVIEW | VIEW A DEMO Document Portal OverviewIS IT DIFFICULT FOR YOUR ORGANIZATION TO SHARE IMPORTANT AND SENSITIVE DOCUMENTS?While the Internet provides a new level of connectivity it also opens the doors to a host of new security concerns. One of those concerns is the distribution of sensitive documents.While E-Mail gets things to the right people quickly it also opens up the door for loss of control. SD inSITE can provide you with a new level of security when it comes to the distribution of documents across the Internet.The Document Portal in SD inSITE allows for the secure distribution of sensitive and important documents. The document portal allows for the distribution of documents to specific users or groups of users and includes functionality for tracking document usage and making sure documents are not available before or after you require them to be.You can reduce the time it takes to distribute information and improve the level of security surrounding sensitive documents.VIEW PRODUCT OVERVIEW | VIEW A DEMO inSITE Performace Review OverviewARE EMPLOYEE EVALUATIONS A MOUNTAIN OF PAPERWORK?Employee evaluations are important; and you should treat them as such.Traditional evaluation systems create mountains of paper that get manually distributed to the organization. The review and approval process can be cumbersome and time consuming.SD inSITE helps reorganize and re-optimize the evaluation process by leveraging both the workflow created for time and expense approval and the easy to use SD inSITE interface. SD inSITE offers personal and supervisor evaluations, peer evaluations and project-based evaluations that allow for internal and external responses.All evaluation information is kept in SD inSITE where it can be reviewed at a later time or simply kept on file for historical purposes.VIEW PRODUCT OVERVIEW | VIEW A DEMO Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261).The climate-focused legislation… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023.The COLA increases will become… Read More > The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the… Read More > ### Schedule a Demo (Orange CTA) Ready to Get Started? 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E-mail NameThis field is for validation purposes and should be left unchanged. Sign up ### Business Process Page Business Process Optimization PRIMARY CONTACTS: James B. Yard CPA, CIA, CISA The people, processes and technology within organizations and practices are constantly being challenged to increase efficiency and maximize limited resources.The Schneider Downs Business Process Optimization (BPO) services are designed to assess the efficiency and effectiveness of an organization’s core business processes to ensure best practice opportunities are realized, risks are mitigated and a strong foundation exists for controls. Our team of process improvement specialists are adept in understanding and assessing complex workflows, internal risks and controls, systems functionality and automation opportunities.Our team of risk advisory professionals assist our clients in optimizing and transforming their core operational, finance and information technology processes. Combining deep industry expertise with repositories of process insights, we act as a strategic advisor to implement changes to the organization structure to achieve cost reductions and efficiencies, while also providing recommendations to better managing risk and strengthen control activities.Some of the most common triggering events that lead to companies investing in a strategic evaluation of their business processes include:Key changes in management;Control environment failures or changes;Staffing or cost reduction initiatives;Recent fraud or misstatement;Significant control deficiency, material weakness or concerning management letter comments;Untimely or inaccurate operational or financial information to make informed business decisions;Implementation of a new system or systems; andAcquisitions or divestituresWhat does our BPO process look like?Results include an organizational assessment and dashboard of current state against better practice opportunities, as well as a summary of work performed, global risk overviews, and recommendations to achieve increased efficiency, process improvement and internal control environment enhancements.Ready to get started?Contact us to learn more about Schneider Downs Business Process Optimization services.About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service offerings at Risk Advisory Services or contact the team at contactsd@schneiderdowns.com. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study OUR THOUGHTS ON Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal… Read More > Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity… Read More > Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the… Read More > Happier With An Advisor Can working with a financial advisor lead to greater happiness? A recent industry survey strongly suggests that yes, individuals and… Read More > Marginal Well Credit Back to Zero for 2023 Tax Year Just months after declaring the total phase-out of the 2022 Marginal Well Credit, the IRS has released Notice 2023-58, announcing… Read More > The Pros and Cons of I-Bonds Although I-Bonds are a good way to generate tax-free yield in today’s economy, they are subject to penalties if surrendered… Read More > Understanding CA SB 253: The Climate Corporate Data Accountability Act On October 7th, California Governor Gavin Newsome signed the Climate Corporate Data Accountability Act (CA SB 253).The climate-focused legislation will… Read More > Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261).The climate-focused legislation… Read More > Tis the Season: Unwrapping the Top Holiday Scams of 2023 What are the top holiday scams in 2023?Along with turkey, football and crazy relatives, Thanksgiving also marks the start of… Read More > Squish the Quish – Stop and Think Before You Access a QR Code What are quishing attacks and why are they growing in popularity? Back in May, I attended Cyburgh, an annual conference… Read More > “Constructing” Your Estate to Meet Your Needs As an owner of a construction company, at some point you will need to determine what the next steps are… Read More > ESG in the Construction Industry: Electrification The construction industry plays a critical role in the delivery of key initiatives in the Environmental, Social and Governance (“ESG”)… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > Frauds of the Rich and the Famous: The Star-studded Saga of Jennifer Shah Jennifer Shah rose to fame through her appearances on the TV reality show "The Real Housewives of Salt Lake City."… Read More > Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys “Life is a dream for the wise, a game for the fool, a comedy for the rich, a tragedy for… Read More > Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival Who’s excited for Fyre Festival II? What’s the Fyre Festival you ask? If you missed the original Fyre Festival, here’s… Read More > Deal Me In: Close and Settle-up As a transaction advisor, one of the most difficult concepts to explain to an owner/seller is the close and settle-up… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > ### International Tax Pages INTERNATIONAL BUSINESS TAX ACCOUNTANTS – WASHINGTON, DC Schneider Downs is a Pittsburgh (PA) based Certified Public Accounting (CPA) Firm that serves clients in Washington DC. We focus our services for high net worth business owners and those with significant cross border activities. Our experienced team of international tax accountants and consultants is ready to address your international business needs. The international tax landscape is continually changing and presents new challenges, both domestically and abroad. This reality means that international businesses and investors need to stay updated with the various filing rules and requirements. To intensify the matter, there are often substantial penalties for those who fail to comply or are found to have been willfully neglectful. As a result, it is important to carefully assess international business activities to ensure the appropriate compliance and tax planning steps are taken.Washington DC International Business Tax ServicesInitial structuring, capitalization and entity selection for U.S. and foreign operationTransfer pricing studiesCanada/U.S. cross border tax issuesMexico/U.S. cross border tax issuesDirect and indirect foreign tax credit opportunitiesIC-DISC - Utilizing domestic international sales corporationsEarnings repatriation planningReorganizations involving foreign corporations and foreign-owned U.S. corporationsTransactional analysis and support services including due diligenceU.S. tax compliance and planning for inbound businesses and their employeesExpatriate/ inpatriate tax mattersWho is Schneider Downs?We are a Top 60 CPA and consulting firm serving the accounting, audit and tax needs of entrepreneurs, for-profit and not-for profit organizations. We work with thousands of clients located in the U.S., Canada, Mexico and across the globe.  Our firm has been consistently ranked a Top 60 CPA firm in the U.S. with offices in Washington D.C., Pittsburgh (PA), and Columbus (OH). We are a member of Prime Global and the international professional association of over 300 independent accounting and consulting firms. About Washington DCThe City of Washington DC is the world’s destination. Home of all three branches of the federal government, international organizations, and some of the nation’s largest companies, the city naturally draws people from across the globe. The federal government is responsible for attracting organizations such as law firms, professional associations, and nonprofits, as well as nearly 200 international organizations and embassies. 25% of the city’s employees also work for federal governmental agencies. However, the federal government isn’t fully responsible for the enormous spike in the city’s daytime population during the workweek. The city’s diversified economy is growing, especially in industries such as finance, education, research, and public policy. In fact, according to the 2021 Global Financial Centre’s Index, the city’s financial district scored fourth most competitive in the country and 14th most competitive in the world. National ReachWe also offer international tax and consulting services to businesses in Atlanta (GA), Boston (MA), Chicago (IL), Dallas (TX), Houston (TX), Los Angeles (CA), New York City (NY), Washington DC, Cleveland (OH), Philadelphia (PA), St. Louis (MO),  Miami (FL), and Richmond (VA).Contact Our Washington DC International Business Tax AccountantsSchneider Downs is a Top 60 CPA firm that specializes in serving the international accounting and tax needs of businesses in Washington DC and across the U.S. If you have questions or would like additional information on how we can help you, please complete the form to the right and a team member will promptly follow up with you. ASK US In order to best serve our clients, at the current time, we are focusing on businesses with recurring needs. "*" indicates required fields Name* Company/Organization* Email* Phone NumberComment/Question How would you like us to contact you?* Email Phone How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Washington DC Exports, Export Categories, and Top Export Partners Source – International Tax Administration ### Page Sidebar Right Employee Benefit Plan Audit Requirement Frequently Asked Questions PRIMARY CONTACT: Patricia Giudici, CPAEmployee benefit plan audits are required for a majority of plans that are covered by the Employee Retirement Income Security Act of 1974 (ERISA). With increased scrutiny on employee benefit plan audits, the Schneider Downs ERISA group has prepared a listing of Frequently Asked Questions to help parties better understand the requirements and types of benefit plan audits, including the required filings, characteristics to look for in an audit firm, and advice on preparation for an audit. What is ERISA?The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of employees so that funds placed in retirement plans during their working lives will be available when they retire.ERISA is a federal law that establishes certain standards for retirement plans in the private industry.  For example, ERISA specifies (1) minimum standards for employee eligibility, vesting and funding, (2) fiduciary responsibilities and standards, (3) reporting and disclosure requirements, and (4) enforcement responsibilities.  Additionally, certain parts of ERISA are coordinated with applicable tax-related provisions of the Internal Revenue Code.What types of benefit plans are subject to ERISA?In general, ERISA applies to the following types of benefit plans:Pension plans sponsored by non-governmental organizations.  Pension plans include both defined benefit and defined contribution plans.  Examples of defined contributions plans include, but are not limited to, profit-sharing plans, 401(k) plans, employee stock ownership plans (ESOPs), and 403(b) plan arrangements.Welfare benefit plans (insured or otherwise), providing health insurance, group life insurance, long-term disability income, severance pay, vacation benefits, training programs, daycare centers, scholarship funds, and prepaid legal servicesHealth Reimbursements Accounts (HRAs)Flexible Spending Accounts (FSAs)What type of retirement plan should I provide to my employees?The type of plan that an organization provides depends on a number of factors, including the size of the organization, the employer’s commitment to providing benefits, the organization’s goals and objectives, the costs of maintaining the plan, etc.Employers should work closely with knowledgeable retirement plan advisors to identify the specific retirement plan program that is appropriate for their organization and employees.What reporting and disclosure requirements are associated with a plan subject to ERISA?There are a number of different federal reporting and employee disclosure requirements associated with maintaining a benefit plan that is subject to ERISA.  While many of these requirements are consistent across all types of ERISA plans (Form 5500 reporting, for example), others depend upon a plan’s specific provisions and features.To assist plan sponsors with identifying their reporting and disclosure responsibilities, the Department of Labor has published a Reporting and Disclosure Guide for Employee Benefit Plans, which can be found at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdfHow much can be contributed to a retirement plan?Qualified plan contributions are subject to various limitations under the Internal Revenue Code.  These limitations are updated annually by the IRS.  The following chart provides a comprehensive listing of the current contribution limits:What are the current various IRS limitations on benefits and compensation?IRS Limits20212022Compensation limit$290,000$305,000401(k) deferral limit$19,500$20,500401(k) catch-up limit$6,500$6,500Defined contribution individual limit* $58,000$61,000IRA contribution limit (49 and under)$6,000$6,000IRA contribution limit (50 and above)$7,000$7,000*Excludes catch-up limitsWho is a fiduciary and what are the general responsibilities of a fiduciary?A fiduciary is any individual who has discretionary control or authority over plan management or assets, or responsibility for plan administration or provides investment advice (or has the authority to) for compensation. Fiduciaries include, but are not limited to, plan trustees, plan administrators and members of the plan’s investment committee.Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them; carrying out their duties prudently; following the plan documents (unless inconsistent with ERISA); diversifying plan investments; and paying only reasonable plan expenses.The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA and requires expertise in a variety of areas, such as investments. While many fiduciaries will hire professionals to assist with carrying out these responsibilities, it is important to note that he/she will retain a fiduciary responsibility to monitor the chosen service providers.Who is required to file a form 5500?Form 5500 must be completed by the sponsor of any plan subject to ERISA.  When is the deadline for completing the audit of an employee benefit plan and filing Form 5500?The Form 5500 (and accompanying audit report, if required) is due seven months after the last day of the plan year (July 31 for calendar year-end plans), and can be extended for an additional 2½ months, to October 15 for calendar year-end plans.Are there employee benefit plans that are not subject to Title I of the Employee Retirement Income Security Act (ERISA) and therefore don't have an annual reporting obligation?Yes. Governmental plans and church plans are exempt from Title I of ERISA as well as certain types of 403(b) plans that qualify under the safe harbor rules. You should consult with ERISA counsel if you believe your plan may be exempt from the reporting obligations of Title I. Failure to comply with these regulations could result in significant penalties being assessed to your plan.When is an audit of an employee benefit plan required?Generally, employee benefit plans with 100 or more participants (includes eligible, but not participating as well as separated employees with account balances) are considered to be “large” plans and are required to have an audit performed on an annual basis. Plans with fewer than 100 participants (“small” plans) generally do not require an audit to be performed.Are there any exceptions to these general rules?Yes, an exception to these general rules does exist. The "80-120 rule" as it is called may permit plans with more than 100 participants to be treated as a “small” plan. In instances where a plan existed in the previous year, was treated as a small plan for that year and has no more than 120 participants (as of the beginning of the plan year), it may continue to file as a small plan, and no audit will be required. There is no limit to the number of years this rule may be applied. This means a plan may have up to 120 participants for many years without having an audit requirement.However, if a new plan (no previous Form 5500 filing) has 100 or more participants (as of the beginning of the plan year), it must file as a “large” plan, and therefore, would require an audit.What are the audit requirements for a welfare benefit plan?Medical, dental, short- and long-term disability and other types of welfare benefit plans only require an audit if funded. Often, benefits from these plans are paid out of the general assets of the employer/plan sponsor, or through insurance rather than a trust.If the plan uses a trust, it will be considered a funded plan, and an audit will be required if there are 100 or more participants.What are the audit requirements for short plan years?If the plan year is seven months or less, the audit for the short plan year may be deferred until the following plan year. The plan audit for the short plan year still needs to be performed; however, the audit report is filed with the following year's Form 5500. Filing of the short plan year's Form 5500 is not deferred.If the election to defer the audit is elected and the plan participant count falls under 100 for the subsequent plan year, the plan must still meet the large plan filing requirements in that subsequent year.What is an ERISA Section 103(a)(3)(c) audit?An ERISA Section 103(a)(3)(C) audit permits the plan administrator the option of not having investment information (at the plan level only) tested during the audit. In order to permit a limited scope audit, the investment information must be certified by the trustee or custodian as ‘complete and accurate.’ Certifications of completeness or accuracy, but not both, do not qualify for ERISA Section 103(a)(3)(C) audit. Additionally, the certification cannot be from a broker/dealer. The certification must be from a qualified institution. Under Department of Labor (DOL) regulations a qualified institution is one that is regulated and subject to periodic examination by a state of Federal agency such as a bank, trust company, or similar institution including an insurance company. The ERISA Section 103(a)(3)(C) audit exception does not apply to any other audit areas (i.e., participant data, contributions, distributions, etc.) only to investments.Do all plans qualify to have a limited scope audit?No. 11-k audits (audits of a public company’s employee benefit plan that contains plan sponsor stock), master trust arrangements with certification only at the master level, church and governmental plans and assets held outside of a trust are not eligible for ERISA Section 103(a)(3)(C) audit audits. Additionally, plans whereby the assets are not held by a qualified institution do not qualify for an ERISA Section 103(a)(3)(c) audit. What types of items do plan auditors ask for?The area of most focus in a plan audit should be on participant-related transactions and activity. This includes payroll information, deferral percentages, demographic information, distribution paperwork, claims paid (for health & welfare plans), and, most importantly, the plan document provisions. Without the plan document, an audit should not be started.Just as important as participant data is the plan’s investments. As noted above, the level of audit procedures for investments varies in an ERISA Section 103(a)(3)(C) audit or full scope audit. However, no matter what the scope, a plan’s financial statements must contain all disclosures required by the financial report framework (generally accepted accounting principles).What are the five most common tips for a successful employee benefit plan audit?Prepare and be proactive: Ensure that the timing of the audit is agreed upon with the audit team and ensure the audit team has provided the client assistance listing in advance of fieldwork. Suggest alternatives: If there are difficulties in fulfilling an audit request, talk to your audit team. There may be alternative reports your auditor can use to accomplish the required test. Communicate: Request regular status meetings with your audit team to discuss open items, testing exceptions, and more. Set Realistic timelines: The timeline should be agreed upon by both the plan sponsor and the audit team in advance. If the plan is going through an audit for the first time, make sure to build additional time into the schedule. Ask Questions: Audit teams welcome the opportunity to answer questions. The audit process should be an interactive process. What is the American Institute of CPAs Employee Benefit Plan Audit Quality Center (EBPAQC)?The EBPAQC is a voluntary membership organization for firms performing ERISA employee benefit plan audits and was established to promote the quality of employee benefit plan audits.  The EBPAQC provides members with timely communication of regulatory updates, best practices guidance, technical updates and member to member discussion forums to discuss these matters.What are the membership requirements of the American Institute of CPAs EBPAQC?Membership requirements include designating an audit partner to have firm-wide responsibility for the quality of the firm’s ERISA employee benefit plan audit practice; establishing a program to ensure that all ERISA employee benefit audit plan audit engagement personnel possess current knowledge, appropriate for their level of involvement in the engagement; establishing annual internal inspection procedures that include a review of the firms ERISA employee benefit plan audit practice; establishing policies and procedures specific to the firm's ERISA employee benefit plan audit practice to comply with the applicable professional standards and EBPAQC member requirements.   Why should I look for an audit firm that is a member of the EBPAQC?Studies by the DOL of employee benefit plan audits show a much smaller deficiency rate in firms that belong to the EBPAQC than those that do not.  Given the fiduciary responsibility of the plan sponsor to have a quality audit performed, this becomes a very significant factor to consider.What is an ERISA Fidelity Bond?An ERISA fidelity bond is a required type of insurance that protects the plan against losses caused by fraud or dishonesty.  It is different from fiduciary liability insurance (which is not required but encouraged), which insures fiduciaries against losses caused by breaches of fiduciary responsibilities.Audit and Assurance Services for Employee Benefit Plans ResourcesSchneider Downs ERISA Services Schneider Downs ERISA 'Our Thoughts On' ArticlesSchneider Downs Employee Benefit Plan ServicesAbout Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that include both regulatory and accounting updates, and more.  For more information, visit our dedicated Audit and Assurance Services for Employee Benefit Plans page or contact us at contactsd@schneiderdowns.com. 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During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. 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Submit ### Single Industry PRIMARY CONTACTS: Steven A. Barber CPA, MST, Carl D. Scharf CPA Schneider Downs has a long history of advising automobile dealers across the country on accounting, tax and other business advisory matters.Over the course of our 65+ year history, we have had the opportunity to consult in nearly every segment of the dealership business – maximizing cash flows, cost containment, inventory control, reinsurance, financing, or capitalization and more. We understand the critical relationship between the front-end and back-end of your business, and we have earned the trust of our clients through responsive and proactive service. Schneider Downs serves dealers of all sizes from single-point locations to mega-dealerships. Our personalized business approach emphasizes active listening, proactive insights, exceptional guidance and practical solutions to drive results. Our Automotive Services industry group is composed of audit, tax and management consulting professionals who are specifically trained and experienced in matters such as those facing your company. Our Automotive Industry Group members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. Specialized Automotive Industry SolutionsAt Schneider Downs, we provide extensive and comprehensive solutions to both individual dealers and dealer advertising associations. Individual Dealer ServicesOur Automotive industry group offers a wide range of specialized services geared to the individual dealer, including:Accounting Advisory ServicesAudit and Assurance ServicesBusiness ValuationsBuy/Sell Planning and Due Diligence AnalysisCompensation StudiesCost Segregation Analysis for Real Estate AcquisitionsEmployee Benefit Plan ServicesEstate PlanningExit Planning and Succession AdvisoryFinancial and Cash Flow ModelingForensic and Investigative AccountingLIFO Consulting and ComplianceLitigation Support ServicesRetirement SolutionsTax Planning and Compliance ServicesTechnology and Data ServicesDealer Advertising Association ServicesOur Automotive Services industry group also provides accounting, tax and business advisory services to Dealer Advertising Associations, which manage funds used by regional dealership groups to advertise vehicles within their designated marketing areas. Schneider Downs’ services to our Dealer Advertising Association clients include the following: Assistance with annual financial and/or compliance audits, as performed by independent certified public accountants in accordance with the requirements of the manufacturer (if applicable)Assistance with incorporation issues, drafting of by-laws and other organizational mattersAttendance and presentation of financial information at periodic Board of Directors’ meetingsDaily Bookkeeping Distribution of financial statements to authorized recipientsFinancial Statements and SchedulesIncome Tax Returns Monthly Bank Statement ReconciliationPreparation and independent tabulation of ballots with respect to elections and other important voting matters of the associationPreparation of federal Forms 1099 Tax advisory matters and assistance with the resolution of Internal Revenue Service inquiries Automotive Associations and AffiliationsTo stay abreast of current trends and challenges facing dealers, our automotive specialists continuously participate in industry-specific conferences and seminars such as the National Auto Dealer Association (NADA) Convention and the American Institute of Certified Public Accountants (AICPA) National Auto Dealership Conference. Automotive Industry Resources Schneider Downs Automotive Services Articles Schneider Downs Remote Learning Center About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Industries or contact us at contactsd@schneiderdowns.com.   OUR THOUGHTS ON Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity… Read More > Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the… Read More > Happier With An Advisor Can working with a financial advisor lead to greater happiness? A recent industry survey strongly suggests that yes, individuals and… Read More > Marginal Well Credit Back to Zero for 2023 Tax Year Just months after declaring the total phase-out of the 2022 Marginal Well Credit, the IRS has released Notice 2023-58, announcing… Read More > The Pros and Cons of I-Bonds Although I-Bonds are a good way to generate tax-free yield in today’s economy, they are subject to penalties if surrendered… Read More > Understanding CA SB 253: The Climate Corporate Data Accountability Act On October 7th, California Governor Gavin Newsome signed the Climate Corporate Data Accountability Act (CA SB 253).The climate-focused legislation will… Read More > Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261).The climate-focused legislation… Read More > Tis the Season: Unwrapping the Top Holiday Scams of 2023 What are the top holiday scams in 2023?Along with turkey, football and crazy relatives, Thanksgiving also marks the start of… Read More > Squish the Quish – Stop and Think Before You Access a QR Code What are quishing attacks and why are they growing in popularity?Back in May, I attended Cyburgh, an annual conference held… Read More > "Constructing" Your Estate to Meet Your Needs As an owner of a construction company, at some point you will need to determine what the next steps are… Read More > ESG in the Construction Industry: Electrification The construction industry plays a critical role in the delivery of key initiatives in the Environmental, Social and Governance (“ESG”)… Read More > President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks… Read More > Frauds of the Rich and the Famous: The Star-studded Saga of Jennifer Shah Jennifer Shah rose to fame through her appearances on the TV reality show "The Real Housewives of Salt Lake City."… Read More > Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys “Life is a dream for the wise, a game for the fool, a comedy for the rich, a tragedy for… Read More > Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival Who’s excited for Fyre Festival II? What’s the Fyre Festival you ask? If you missed the original Fyre Festival, here’s… Read More > Deal Me In: Close and Settle-up As a transaction advisor, one of the most difficult concepts to explain to an owner/seller is the close and settle-up… Read More > Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration The U.S. Department of the Treasury has issued long-awaited guidance on how customers can elect to transfer New Clean Vehicle… Read More > CASE STUDIES Big Problem: PANDEMIC-FUELED TAX LIABILITIES FOR DEALERSHIPS Big Thinking: CHANGE ACCOUNTING METHODS TO ACHIEVE $600,000 IN DEFERRED TAX SAVINGS. Read More Big Problem: COMPANY IMPACTED BY RANSOMWARE. Big Thinking: RESTORE SYSTEM ON-SITE AND AVOID SIX-FIGURE RANSOM. 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Werner CPAIn today's complex business and tax environment, most companies cannot maintain the requisite level of in-house tax expertise necessary to ensure compliance in all tax disciplines and jurisdictions.Tax co-sourcing provides a strategic opportunity for companies to house those areas of the tax function that are most strategic, while outsourcing those tasks that are prohibitively resource-intensive or too expensive to complete in-house.It is all about getting the most from limited resources.  Small to large, companies have turned to co-sourcing to handle traditional Federal, state and foreign tax return preparation and tax provision calculations as well as more complex projects such as SOX tax control reviews, income tax reserve (ASC 740-10 fka. FIN 48)implementation, state and local tax consulting and audit assistance, tax provision audit support, and transactional analysis.   Let Schneider Downs help your Company leverage its current tax resources in an efficient, cost-effective manner. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Single News ### Our Thoughts on single two columns Read More ### Our Thoughts Single Share with a colleague Download PDF Share You’ve heard our thoughts… We’d like to hear yours The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. 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Sign Me Up ### Featured Job Section FEATURED JOB OPENINGS Third-Party Employee Benefits Administrator SDARS Pittsburgh PA The Retirement Solutions division of Schneider Downs specializes in providing comprehensive retirement planning services, including plan governance consulting, retirement plan design and implementation, recordkeeping, third-party… Learn More > Accounting Advisory Senior Audit Pittsburgh PA Schneider Downs Accounting Advisory Services practice offers a variety of technical accounting advisory services, as well as outsourced accounting and finance advisory services, for every… Learn More > Director, Digital Transformation Information Systems Pittsburgh PA The Director, Digital Transformation at Schneider Downs is a new role that has created to advance the firm’s digital capabilities. We are seeking a dynamic… Learn More > Real Estate Investment Associate SDCF Pittsburgh PA Schneider Downs Corporate Finance (SDCF), an affiliate of Schneider Downs & Co., which operates and manages a real estate investment platform that focuses on acquiring… Learn More > Business Advisory Director – Litigation Support, Forensics & Valuation Advisory Services Columbus OH Schneider Downs is searching for a dynamic Business Advisory market practice leader to join our growing Consulting practice. This individual will bring their diverse experience… Learn More > See all openings ### Simple Slider 1 Culture of Care At Schneider Downs, our culture is our identity. And it’s our culture of care that makes us unique. Even as we grow, we work hard to retain this culture to continuously promote a positive, supportive work environment through our core values: Care, Integrity, Flexibility, Respect, and Drive. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs, as well as activities created to foster camaraderie and support.  2 Flexibility Flexibility is at the core of our culture, giving you the autonomy and empowerment to thrive. Schneider Downs has embraced the hybrid work model, so you will have flexibility working from home, as well as the office. We understand the importance of balancing the needs of our clients and the development of our people with flexibility, and we believe flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication, and a commitment to excellence. 3 Growth & Development Schneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop. Our firm’s history of growth and continual introduction of new services provide broad opportunities for career variety and advancement. Our leaning environment, with hands-on work from day one, will allow you to learn and grow quickly. We offer a mentorship program to help guide and support new team members in their transition to Schneider Downs. 4 Collaborative Impact Schneider Downs is a well-recognized, established, and collaborative firm in which you can impact many clients by providing value and solutions to our clients with whom you’ll build rewarding and lasting relationships. You’re not just a number here. You’ll gain national firm experience, with a regional touch, and will have the opportunity to work on wide-ranging client sizes, industries, and project complexities. 5 Total Rewards Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better. We offer a comprehensive total rewards package to all full-time and eligible part-time employees, many of which are available on the first day of employment. We regularly monitor our benefits to ensure that it is best in class and the current offerings include, but are not limited to: competitive compensation; insurance, including health, dental, and vision, that begin on day one; 20+ days of paid time off and 13 paid holidays; Flex Fridays and office closures for summer and winter breaks; parental leave, family care leave, and volunteer time; 401(k) plans and profit sharing; CPA exam bonus, education assistance program, and pet insurance. 6 Community Consistent with our Mission Statement of Working Together Every Day to Make Our Firm, Clients and Communities Better, Schneider Downs is committed to giving back to our communities and providing our employees with opportunities to do so. We do this, in part, through a team of dedicated Schneider Downs personnel who comprise our “SD Cares” Committee, whose mission is to be a resource to all employees to learn about volunteer opportunities in our communities. The firm also provides PTO for approved volunteering activities. 7 Diversity, Equity & Inclusion At Schneider Downs, we believe that diversity, equity, and inclusion contribute to a better company, better client services and a better world. We want everyone to feel they can be themselves by sharing the wide range of perspectives they represent, thereby fostering an environment where differences are truly valued and celebrated. We are committed to our culture of care with a welcoming environment, programs and initiatives that are designed to foster a community and celebrate differences.  1 Culture of Care At Schneider Downs, our culture is our identity. And it’s our culture of care that makes us unique. Even as we grow, we work hard to retain this culture to continuously promote a positive, supportive work environment through our core values: Care, Integrity, Flexibility, Respect, and Drive. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs, as well as activities created to foster camaraderie and support.  2 Flexibility Flexibility is at the core of our culture, giving you the autonomy and empowerment to thrive. Schneider Downs has embraced the hybrid work model, so you will have flexibility working from home, as well as the office. We understand the importance of balancing the needs of our clients and the development of our people with flexibility, and we believe flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication, and a commitment to excellence. 3 Growth & Development Schneider Downs is proud that we have created a unique culture through which our professionals can thrive and develop. Our firm’s history of growth and continual introduction of new services provide broad opportunities for career variety and advancement. Our leaning environment, with hands-on work from day one, will allow you to learn and grow quickly. We offer a mentorship program to help guide and support new team members in their transition to Schneider Downs. 4 Collaborative Impact Schneider Downs is a well-recognized, established, and collaborative firm in which you can impact many clients by providing value and solutions to our clients with whom you’ll build rewarding and lasting relationships. You’re not just a number here. You’ll gain national firm experience, with a regional touch, and will have the opportunity to work on wide-ranging client sizes, industries, and project complexities. 5 Total Rewards Schneider Downs’ total rewards package provides comprehensive benefits and programs to make your professional life better. We offer a comprehensive total rewards package to all full-time and eligible part-time employees, many of which are available on the first day of employment. We regularly monitor our benefits to ensure that it is best in class and the current offerings include, but are not limited to: competitive compensation; insurance, including health, dental, and vision, that begin on day one; 20+ days of paid time off and 13 paid holidays; Flex Fridays and office closures for summer and winter breaks; parental leave, family care leave, and volunteer time; 401(k) plans and profit sharing; CPA exam bonus, education assistance program, and pet insurance. 6 Community Consistent with our Mission Statement of Working Together Every Day to Make Our Firm, Clients and Communities Better, Schneider Downs is committed to giving back to our communities and providing our employees with opportunities to do so. We do this, in part, through a team of dedicated Schneider Downs personnel who comprise our "SD Cares" Committee, whose mission is to be a resource to all employees to learn about volunteer opportunities in our communities. The firm also provides PTO for approved volunteering activities. 7 Diversity, Equity & Inclusion At Schneider Downs, we believe that diversity, equity, and inclusion contribute to a better company, better client services and a better world. We want everyone to feel they can be themselves by sharing the wide range of perspectives they represent, thereby fostering an environment where differences are truly valued and celebrated. We are committed to our culture of care with a welcoming environment, programs and initiatives that are designed to foster a community and celebrate differences.  ### Single Private Client Services Want to stay informed? Let us do the heavy lifting. SIGN UP HERE ### Gray Section With A Lot of Info Schneider Downs offers a unique culture where employees can pursue professional excellence while enjoying a full personal life. Although we have grown to be one of the nation's largest public accounting firms, we remain committed to supporting the important things in your life.Your quality of life is important to us, which is why we offer limited out-of-town travel and flexible work arrangements. We are committed to planning advanced work schedules so you can effectively plan your life's events and will work closely with you to ensure that your life remains in balance.Schneider Downs is dedicated to our people and focused on delivering exceptional client service. We value strong relationships, across clients, teams, the firm, and our communities, and appreciate that where we work is not anchored to one place and is focused more on outcomes.As the world shifts its thinking about work, we are embracing newly expanded options for our employees, including hybrid and remote work. We understand the importance of balancing the needs of our clients and the development of our people with employee flexibility, and we believe that flexibility must be a joint commitment between the firm and its employees rooted in trust, strong communication and a commitment to excellence.We also have shared firm, office and departmental activities to keep you connected, make you feel a part of the team and encourage the development of lasting friendships. Some of our team’s favorite events include:After work receptions and happy hoursCommunity involvement opportunitiesHoliday dinners and celebrations New hire team-building activitiesSummer picnics and social eventsFor more information about Schneider Downs Careers, please visit www.schneiderdowns.com/careers or you can browse our current job openings.Questions? Contact us at contactsd@schneiderdowns.com. ### Services Grid Item audit-assurance-servicesCreated with Sketch. ACCOUNTING AND ASSURANCE We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held ### Services Grid OUR INTERNATIONAL SERVICES audit-assurance-servicesCreated with Sketch.ACCOUNTING AND ASSURANCEWe apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held tax-servicesCreated with Sketch.TAX SERVICESThe tax environment is constantly changing, and effective business and tax planning allows clients to take advantage of significant economic opportunities technologyCreated with Sketch.TECHNOLOGY SERVICESSchneider Downs Technology Advisors is committed to providing value added technology services and solutions to our clients business advisoryCreated with Sketch.BUSINESS CONSULTING SERVICESSchneider Downs Business Advisors leverages our experience and industry expertise to maximize value and minimize risk information-technologyCreated with Sketch.IT RISK ADVISORY SERVICESIn today’s global economy, risks – both operational and technology – span multiple countries and continents ### Text Block with Index 2 Culture of Care At Schneider Downs, our culture is our identity. And it’s our culture of care that makes us unique. Even as we grow, we work hard to retain this culture to continuously promote a positive, supportive work environment through our core values: Care, Integrity, Flexibility, Respect, and Drive. We make our team members feel welcomed and at home, beginning with a robust onboarding program and continuing through formal mentoring and development programs, as well as activities created to foster camaraderie and support.  ### Contact us without Logo Contact Us PITTSBURGH One PPG Place, Suite 1700 Pittsburgh, PA 15222 contactsd@schneiderdowns.com p:412.261.3644 f:412.261.4876 COLUMBUS 65 East State Street, Suite 2000 Columbus, OH 43215 contactsd@schneiderdowns.com p:614.621.4060 f:614.621.4062 METROPOLITAN WASHINGTON 1660 International Drive McLean, VA 22102 contactsd@schneiderdowns.com p:571.380.9003 Follow Us Facebook-square Twitter Linkedin-in Youtube Rss CLIENT PORTAL Subscribe For Updates E-mail PhoneThis field is for validation purposes and should be left unchanged. Submit ### Sidebar Right gray Employee Benefit Plan Audit Requirement Frequently Asked Questions PRIMARY CONTACT: Patricia Giudici, CPAEmployee benefit plan audits are required for a majority of plans that are covered by the Employee Retirement Income Security Act of 1974 (ERISA). With increased scrutiny on employee benefit plan audits, the Schneider Downs ERISA group has prepared a listing of Frequently Asked Questions to help parties better understand the requirements and types of benefit plan audits, including the required filings, characteristics to look for in an audit firm, and advice on preparation for an audit. What is ERISA?The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of employees so that funds placed in retirement plans during their working lives will be available when they retire.ERISA is a federal law that establishes certain standards for retirement plans in the private industry.  For example, ERISA specifies (1) minimum standards for employee eligibility, vesting and funding, (2) fiduciary responsibilities and standards, (3) reporting and disclosure requirements, and (4) enforcement responsibilities.  Additionally, certain parts of ERISA are coordinated with applicable tax-related provisions of the Internal Revenue Code.What types of benefit plans are subject to ERISA?In general, ERISA applies to the following types of benefit plans:Pension plans sponsored by non-governmental organizations.  Pension plans include both defined benefit and defined contribution plans.  Examples of defined contributions plans include, but are not limited to, profit-sharing plans, 401(k) plans, employee stock ownership plans (ESOPs), and 403(b) plan arrangements.Welfare benefit plans (insured or otherwise), providing health insurance, group life insurance, long-term disability income, severance pay, vacation benefits, training programs, daycare centers, scholarship funds, and prepaid legal servicesHealth Reimbursements Accounts (HRAs)Flexible Spending Accounts (FSAs)What type of retirement plan should I provide to my employees?The type of plan that an organization provides depends on a number of factors, including the size of the organization, the employer’s commitment to providing benefits, the organization’s goals and objectives, the costs of maintaining the plan, etc.Employers should work closely with knowledgeable retirement plan advisors to identify the specific retirement plan program that is appropriate for their organization and employees.What reporting and disclosure requirements are associated with a plan subject to ERISA?There are a number of different federal reporting and employee disclosure requirements associated with maintaining a benefit plan that is subject to ERISA.  While many of these requirements are consistent across all types of ERISA plans (Form 5500 reporting, for example), others depend upon a plan’s specific provisions and features.To assist plan sponsors with identifying their reporting and disclosure responsibilities, the Department of Labor has published a Reporting and Disclosure Guide for Employee Benefit Plans, which can be found at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdfHow much can be contributed to a retirement plan?Qualified plan contributions are subject to various limitations under the Internal Revenue Code.  These limitations are updated annually by the IRS.  The following chart provides a comprehensive listing of the current contribution limits:What are the current various IRS limitations on benefits and compensation?IRS Limits20212022Compensation limit$290,000$305,000401(k) deferral limit$19,500$20,500401(k) catch-up limit$6,500$6,500Defined contribution individual limit* $58,000$61,000IRA contribution limit (49 and under)$6,000$6,000IRA contribution limit (50 and above)$7,000$7,000*Excludes catch-up limitsWho is a fiduciary and what are the general responsibilities of a fiduciary?A fiduciary is any individual who has discretionary control or authority over plan management or assets, or responsibility for plan administration or provides investment advice (or has the authority to) for compensation. Fiduciaries include, but are not limited to, plan trustees, plan administrators and members of the plan’s investment committee.Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them; carrying out their duties prudently; following the plan documents (unless inconsistent with ERISA); diversifying plan investments; and paying only reasonable plan expenses.The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA and requires expertise in a variety of areas, such as investments. While many fiduciaries will hire professionals to assist with carrying out these responsibilities, it is important to note that he/she will retain a fiduciary responsibility to monitor the chosen service providers.Who is required to file a form 5500?Form 5500 must be completed by the sponsor of any plan subject to ERISA.  When is the deadline for completing the audit of an employee benefit plan and filing Form 5500?The Form 5500 (and accompanying audit report, if required) is due seven months after the last day of the plan year (July 31 for calendar year-end plans), and can be extended for an additional 2½ months, to October 15 for calendar year-end plans.Are there employee benefit plans that are not subject to Title I of the Employee Retirement Income Security Act (ERISA) and therefore don't have an annual reporting obligation?Yes. Governmental plans and church plans are exempt from Title I of ERISA as well as certain types of 403(b) plans that qualify under the safe harbor rules. You should consult with ERISA counsel if you believe your plan may be exempt from the reporting obligations of Title I. Failure to comply with these regulations could result in significant penalties being assessed to your plan.When is an audit of an employee benefit plan required?Generally, employee benefit plans with 100 or more participants (includes eligible, but not participating as well as separated employees with account balances) are considered to be “large” plans and are required to have an audit performed on an annual basis. Plans with fewer than 100 participants (“small” plans) generally do not require an audit to be performed.Are there any exceptions to these general rules?Yes, an exception to these general rules does exist. The "80-120 rule" as it is called may permit plans with more than 100 participants to be treated as a “small” plan. In instances where a plan existed in the previous year, was treated as a small plan for that year and has no more than 120 participants (as of the beginning of the plan year), it may continue to file as a small plan, and no audit will be required. There is no limit to the number of years this rule may be applied. This means a plan may have up to 120 participants for many years without having an audit requirement.However, if a new plan (no previous Form 5500 filing) has 100 or more participants (as of the beginning of the plan year), it must file as a “large” plan, and therefore, would require an audit.What are the audit requirements for a welfare benefit plan?Medical, dental, short- and long-term disability and other types of welfare benefit plans only require an audit if funded. Often, benefits from these plans are paid out of the general assets of the employer/plan sponsor, or through insurance rather than a trust.If the plan uses a trust, it will be considered a funded plan, and an audit will be required if there are 100 or more participants.What are the audit requirements for short plan years?If the plan year is seven months or less, the audit for the short plan year may be deferred until the following plan year. The plan audit for the short plan year still needs to be performed; however, the audit report is filed with the following year's Form 5500. Filing of the short plan year's Form 5500 is not deferred.If the election to defer the audit is elected and the plan participant count falls under 100 for the subsequent plan year, the plan must still meet the large plan filing requirements in that subsequent year.What is an ERISA Section 103(a)(3)(c) audit?An ERISA Section 103(a)(3)(C) audit permits the plan administrator the option of not having investment information (at the plan level only) tested during the audit. In order to permit a limited scope audit, the investment information must be certified by the trustee or custodian as ‘complete and accurate.’ Certifications of completeness or accuracy, but not both, do not qualify for ERISA Section 103(a)(3)(C) audit. Additionally, the certification cannot be from a broker/dealer. The certification must be from a qualified institution. Under Department of Labor (DOL) regulations a qualified institution is one that is regulated and subject to periodic examination by a state of Federal agency such as a bank, trust company, or similar institution including an insurance company. The ERISA Section 103(a)(3)(C) audit exception does not apply to any other audit areas (i.e., participant data, contributions, distributions, etc.) only to investments.Do all plans qualify to have a limited scope audit?No. 11-k audits (audits of a public company’s employee benefit plan that contains plan sponsor stock), master trust arrangements with certification only at the master level, church and governmental plans and assets held outside of a trust are not eligible for ERISA Section 103(a)(3)(C) audit audits. Additionally, plans whereby the assets are not held by a qualified institution do not qualify for an ERISA Section 103(a)(3)(c) audit. What types of items do plan auditors ask for?The area of most focus in a plan audit should be on participant-related transactions and activity. This includes payroll information, deferral percentages, demographic information, distribution paperwork, claims paid (for health & welfare plans), and, most importantly, the plan document provisions. Without the plan document, an audit should not be started.Just as important as participant data is the plan’s investments. As noted above, the level of audit procedures for investments varies in an ERISA Section 103(a)(3)(C) audit or full scope audit. However, no matter what the scope, a plan’s financial statements must contain all disclosures required by the financial report framework (generally accepted accounting principles).What are the five most common tips for a successful employee benefit plan audit?Prepare and be proactive: Ensure that the timing of the audit is agreed upon with the audit team and ensure the audit team has provided the client assistance listing in advance of fieldwork. Suggest alternatives: If there are difficulties in fulfilling an audit request, talk to your audit team. There may be alternative reports your auditor can use to accomplish the required test. Communicate: Request regular status meetings with your audit team to discuss open items, testing exceptions, and more. Set Realistic timelines: The timeline should be agreed upon by both the plan sponsor and the audit team in advance. If the plan is going through an audit for the first time, make sure to build additional time into the schedule. Ask Questions: Audit teams welcome the opportunity to answer questions. The audit process should be an interactive process. What is the American Institute of CPAs Employee Benefit Plan Audit Quality Center (EBPAQC)?The EBPAQC is a voluntary membership organization for firms performing ERISA employee benefit plan audits and was established to promote the quality of employee benefit plan audits.  The EBPAQC provides members with timely communication of regulatory updates, best practices guidance, technical updates and member to member discussion forums to discuss these matters.What are the membership requirements of the American Institute of CPAs EBPAQC?Membership requirements include designating an audit partner to have firm-wide responsibility for the quality of the firm’s ERISA employee benefit plan audit practice; establishing a program to ensure that all ERISA employee benefit audit plan audit engagement personnel possess current knowledge, appropriate for their level of involvement in the engagement; establishing annual internal inspection procedures that include a review of the firms ERISA employee benefit plan audit practice; establishing policies and procedures specific to the firm's ERISA employee benefit plan audit practice to comply with the applicable professional standards and EBPAQC member requirements.   Why should I look for an audit firm that is a member of the EBPAQC?Studies by the DOL of employee benefit plan audits show a much smaller deficiency rate in firms that belong to the EBPAQC than those that do not.  Given the fiduciary responsibility of the plan sponsor to have a quality audit performed, this becomes a very significant factor to consider.What is an ERISA Fidelity Bond?An ERISA fidelity bond is a required type of insurance that protects the plan against losses caused by fraud or dishonesty.  It is different from fiduciary liability insurance (which is not required but encouraged), which insures fiduciaries against losses caused by breaches of fiduciary responsibilities.Audit and Assurance Services for Employee Benefit Plans ResourcesSchneider Downs ERISA Services Schneider Downs ERISA 'Our Thoughts On' ArticlesSchneider Downs Employee Benefit Plan ServicesAbout Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that include both regulatory and accounting updates, and more.  For more information, visit our dedicated Audit and Assurance Services for Employee Benefit Plans page or contact us at contactsd@schneiderdowns.com. VIEW PDF VERSION PDF Version CONTACT US "*" indicates required fields Name Company Email Phone NumberComment/QuestionHow would you like us to contact you?* Email? Phone? How did you find us?How did you find us?GoogleYahooBingReferral SourceOtherSchneider Downs ProfessionalDirect MailWord of MouthEmailThis field is for validation purposes and should be left unchanged. Submit Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### SOC Single SOC Reports Overview PRIMARY CONTACT: Eric M. Wright CPA, CITPSystem and Organization Controls (SOC) reports (formerly SSAE 16, SAS 70 report) are examinations provided by CPAs in connection with system-level controls of a service organization or entity-level controls at other organizations.Business owners need to ensure sensitive data is protected, especially as it relates to financial and personally identifiable information (PII) and protected health information (PHI) of customers. Organizations also continue to face pressure from regulators and customers to demonstrate that adequate controls are in place with respect to the processing of transactions and internal controls over financial reporting. Government regulations, including Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404), Gramm-Leach-Bliley Act (GLBA) and Health Insurance Portability and Accountability Act (HIPAA) stress the need for effective internal controls. System and Organization Controls (SOC) examinations provide management with assurance regarding the effectiveness of an organization’s internal controls, while also providing insights for opportunities to improve internal controls and risk mitigation activities.  Further, standard contracts typically require organizations to attest to the effectiveness of their internal controls. Obtaining a SOC report has become increasingly relevant for organizations of all sizes, as the resulting report can be provided to customers and prospective customers to demonstrate that effective internal controls and related safeguards have been implemented. Ensuring the company has robust internal controls and policies and practices in place is essential. In fact, many may expect to see a SOC report before doing business with a company. This examination (often referred to as a “SOC audit”) verifies that the controls, processes and procedures have been tested and indicates whether controls are effective. Some organizations may desire a SOC 1 examination, while others will obtain more value from a SOC 2 or SOC 3 report. Whatever the desired level of assurance, it’s important to work with an experienced provider to drive the process.Schneider Downs provides SOC examinations nationally to over 100 clients annually in a variety of industries. Our dedicated group of professionals spend the majority of their time providing services related to the evaluation, optimization and testing of internal controls and control environments in support of SOC reports, internal audit co-sourcing or outsourcing, Sarbanes-Oxley Section 404, and several other RAS practice offerings.Learn more about our practice at SOC.SOC ServicesSOC 1 ExaminationsSOC 2 ExaminationsSOC 3 ExaminationsSOC for CybersecuritySOC for Supply ChainSOC ResourcesSchneider Downs SOC Report BrochureSchneider Downs SOC Reports OverviewTake Our free SOC Assessment QuizSchneider Downs SOC FAQsSchneider Downs SOC Case StudiesSchneider Downs SOC ‘Our Thoughts On’ ArticlesAICPA's SOC Report CenterAbout Schneider Downs SOC ServicesSchneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started and learn more about our practice at SOC. DOES YOUR ORGANIZATION NEED A SYSTEM ANDORGANIZATION CONTROLS (SOC) REPORT?TAKE A FREE ASSESSMENT QUIZ Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Divider Extended ### Our Thoughts dark carousel Our Thoughts On Research and Development Tax Credits - Are You Claiming Yours? Our Thoughts On Research and Development Tax Credits - Are You Claiming Yours? BY Derek J Godwin 12.21.2023 Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Our Thoughts On Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Cybersecurity, IT Risk Advisory BY Alicia Furlan 12.07.2023 Achieve Financial Freedom with the Help of Basic Financial Ratios Our Thoughts On Achieve Financial Freedom with the Help of Basic Financial Ratios 401(k) Plans, Wealth Management BY Schneider Downs Professional 12.07.2023 Holiday Spending and Budgeting Our Thoughts On Holiday Spending and Budgeting Wealth Management BY Courtney Moriarty 12.07.2023 ESMA produces Final Report on SFDR RTS Our Thoughts On ESMA produces Final Report on SFDR RTS ESG BY Matt Hartman 12.06.2023 ### Dark Carousel ### Our Thoughts Black & Orange Our Thoughts On ### Service Single Audit and Assurance Services for Employee Benefit Plans PRIMARY CONTACT:Patricia Giudici, CPAWe apply the experience of more than 60 years in practice to the audit and assurance needs of employee benefit plans.Our diverse Employee Benefit Plan practice dictates that we perform audits in accordance with generally accepted auditing standards for compliance with the Department of Labor's (DOL) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act (ERISA) for:Defined contribution plans, including 401(k) and 403(b) plans, profit sharing plans and 11-K filingsDefined benefit plans, including pension plans and cash balance plansHealth and welfare plansEmployee stock ownership plansWe have been a member of the American Institute for Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center (EBPAQC) since its inception. As a member of the EBPAQC, we are required to have a designated ERISA partner, quality control process, annual internal inspections of employee benefit plans and a public peer review report. Additionally, we have a firm-wide employee benefit plan training program, providing specialized training to all professional staff within the firm to stay current on ERISA, DOL, and Internal Revenue Service rules and regulations.We are committed to superior quality and responsive and efficient service. Our expertise in serving employee benefit plans enables us to provide timely, well-researched answers to your most important questions and to accurately address your needs with a solid foundation of knowledge that only experience can provide. We focus on understanding the technical aspects of the plans, and we combine this focus with the judgement and extensive experience of our professionals in auditing employee benefit plans.We are members of the Center for Public Company Audit Firms and the Private Companies Practice Section of the AICPA's Division of Firms, which requires mandatory continuing education for all members of the professional staff and a triennial peer review of a firm's quality control system in its practice of public accounting.We are registered with the Public Company Accounting Oversight Board, committing the firm to the highest standards of the profession and enabling us to deliver audit services to SEC registrants.Audit and Assurance Services for Employee Benefit Plans ResourcesSchneider Downs Employee Benefit Plan ServicesSchneider Downs FAQ - Employee Benefit Plan Audit RequirementSchneider Downs ERISA Employee Benefit Plan Services BrochureSchneider Downs ERISA 'Our Thoughts On' ArticlesEmployee Benefit Plan ResourcesAbout Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services, but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that includes both regulatory and accounting updates, and more.  For more information, please contact us at contactsd@schneiderdowns.com.About Schneider Downs Audit and Assurance ServicesSchneider Downs provides a variety of specialized services to assist our clients with all of their audit and assurance needs. We apply the experience of more than 50 years in practice to the audit and assurance needs of public and privately held businesses across a wide range of industries, not-for-profit organizations and employee benefit plans. Learn more about our Audit and Assurance Services at Audit Assurance Services. Learn how we’ve Solved Big Problems For our clients View more Big Problem: Company Impacted By Ransomware. Big Thinking: Restore System On-site And Avoid Six-figure Ransom. Read Case Study Big Problem: Inefficient Tax Credit Realization. Big Thinking: Identified A $900,000 Tax Credit, Nearly Twice As Much As Prior Years. Read Case Study ### Hero with heading only Audit and Assurance Services for Employee Benefit Plans ### Case Studies Two columns Learn how we’ve Solved Big Problems For our clients View more Big Problem: Redundant Back Office Functions. Big Thinking: Back Office Consolidation Project Saves $600,000 Annually. Read Case Study Big Problem: New Accounting Methods For Significant Refunds. Big Thinking: Seven Figure Tax Savings. Read Case Study ### Our Thoughts On slider OUR THOUGHTS ON Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal… Read More > Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity… Read More > Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to… Read More > Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up… Read More > ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the… Read More > ### Feature Boxes Item Description Learn More Item Description Learn More Item Description Learn More ### Hero with content in the middle Our Services Schneider Downs provides more than 80 distinct services to clients of nearly any background: large and small businesses, both publicly and privately held companies, as well as nonprofit organizations, government entities, service firms and professional associations. 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Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and consulting services to public and private companies, not-for-profit organizations and global companies. We also offer risk advisory, transaction advisory, digital consulting, wealth management, retirement plan solutions and investment banking services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), metropolitan Washington (DC) and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH, and McLean, VA.© 2024 Schneider Downs & Co., Inc. Maryland license number 35239. ### Main header Make A Payment Client Portal " data-hide-for="large"> Loading... 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Services Audit and Assurance Services Overview Accounting Advisory Services Audit and Assurance Services for Employee Benefit Plans Overview Services Employee Benefit Plan Resources ERISA Frequently Asked Questions International Assurance Services Public Companies Assurance Services SOC Services Overview SOC 1 SOC 2 SOC 3 SOC for Cybersecurity SOC for Vendor Supply Chains SOC Report FAQs Case Studies Consulting Services Overview Business Advisory Overview Transaction Advisory Services Forensics and Litigation Overview Business Interruption Services Fiduciary and Trustee Professional Services Forensic & Investigative Accounting Fraud Risk Assessment Fraud Mitigation Services Fraud Diagnostics Litigation Support Services Valuation Services Managed Accounting Services Overview Controller Services CFO Services Full Accounting Services Business Restructuring Overview Turnaround/Restructuring Debt Placement Insolvency Services Performance Improvement Services for Private Equity Firms Meet Our Team Risk Advisory Services Overview Internal Audit Solutions Overview Data Analytics for Internal Audit Internal Audit Quality Assurance Reviews Internal Audit Sourcing Risk Management and Compliance Services Overview Enterprise Risk Management Fraud Risk Assessment Environmental, Social and Governance Consulting Overview ESG FAQs SOX Readiness, Optimization and Program Sourcing Third-Party Risk Management Overview Ad-Hoc Review Capabilities and Maturity Assessment External Assessor Program Implementation and Development Program Support Services TPRM Officer-as-a-Service Training, Education, and Awareness Information Technology Advisory Overview Business Continuity & Disaster Recovery Cybersecurity Data Privacy and Security IT General Controls Audit IT Risk Advisory Process Improvement Consulting Overview Accounting Optimization Assessments Business Process Optimization Data Analytics (ADAPT) Cybersecurity IT Risk Advisory All Services Private Client Services Overview Why Schneider Downs Private Client Services? Service Offerings Overview Tax and Personal Financial Services Estate, Trust and Succession Planning Private Family Office Philanthropy Wealth Management Meet Our Private Client Services Team Insights Contact Us Retirement Solutions Overview Advisory Services Consulting ESOP Services Recordkeeping Third-Party Administration Services Executive Compensation Retirement Plan Fiduciary Risk Assessment Schneider Downs Capital SD Digital Solutions SD Digital Solutions Home Intelligent Automation Data Analytics and Power BI Digital Modernization Software Solutions Software Solutions Home Microsoft Dynamics ERP Microsoft Dynamics Legacy Users simpLEASE Accounting SD inSITE Solver Extended Financial Planning & Analysis Custom Development Meet The Team Tax Services Overview Tax About Us Tax Compliance and Consulting Business Tax Individual Tax Not-for-profit Tax Gift, Trust and Estate Services Managed Tax Services Overview Outsourcing/On-Call Assistance Income Tax Provisions – ASC 740 and IFRS Tax Advisory Services – State and Local Taxes (SALT) Overview Abandoned/Unclaimed Property Excise & Motor Fuels Multistate Income, Franchise and Gross Receipts Tax Property Tax Sales/Use Tax Sales and Use Tax Compliance Advice and Services State Credits and Incentives Tax Advisory Services – International Overview Expatriate Tax Export Incentives FATCA and Nonresident Withholding Foreign Direct Investments in the U.S. Inbound and Outbound Entity Structuring International Tax Reporting and Planning International Withholding Tax Transfer Pricing and Review of Cross-border Transactions Tax Credits and Incentives Overview Research & Development Cost Segregation PA Educational Improvement Tax Credits (EITC) State Credits and Incentives Tax Transaction Advisory Overview Due Diligence Transaction Cost Analysis Tax All Services Wealth Management Overview Ultra High Net Worth Investors High Net Worth Investors Voyage Program Financial Planning Institutions and Non-Profits View all services Industries Overview Automotive Construction Emerging Technology Energy & Resources Financial Government Healthcare Higher Education International Manufacturing Not-for-Profit Private Equity Firm Services Professional Services Real Estate Retail & Business-to-Consumer Transportation & Logistics Resources Resource Center Our Thoughts On Blog Events Subscribe About Us Overview Big Thinking Personal Focus Around the World Case Studies Diversity History Management Mission and Corporate Values News Peer Review PrimeGlobal SD Standard Submit a Request for Proposal (RFP) Locations Pittsburgh, PA Columbus, OH Metropolitan Washington Careers Client Portal Group 3Created with Sketch. Make a Payment Close Open Search Submit Contact us ### Default Kit ## Locations ### Metropolitan Washington Metropolitan Washington As a CPA firm in Washington DC, Schneider Downs is proud that we’ve built a client list of powerful Fortune 500 companies, well-established regional businesses, not-for-profits and exciting start-ups. But we are even prouder that we have never lost focus on what is really important: the personal connections we make with every one of our clients. We provide them national and international-level expertise, while volunteering in the neighborhoods they live in. We know what matters to their businesses, and we care deeply about what happens in their lives. Big Thinking. Personal Focus. This is what has made us who we are today, and this is what will guide our purpose and actions in the future. The City of Washington DC is the world’s destination. Home of all three branches of the federal government, international organizations and some of the nation’s largest companies, the city naturally draws people from across the globe. The federal government is responsible for attracting organizations such as law firms, professional associations and nonprofits, as well as nearly 200 international organizations and embassies. 25% of the city’s employees also work for federal governmental agencies. However, the federal government isn’t fully responsible for the enormous spike in the city’s daytime population during the workweek. The city’s diversified economy is growing, especially in industries such as finance, education, research and public policy. In fact, according to the 2021 Global Financial Centre’s Index, the city’s financial district scored fourth most competitive in the country and 14th most competitive in the world. Tourism is, of course, one of the strongest industries in a city that houses some of the country’s most impressive historical monuments. As the world’s destination, it’s no surprise that Washington DC is one of the most visited cities in the United States. Washington DC CPA Firm - Services International Tax Services SOC 1 Certification SOC 2 Certification ### Columbus, OH Columbus As a CPA firm in Columbus, OH, Schneider Downs is proud that we’ve built a client list of powerful Fortune 500 companies, well-established regional businesses, not-for-profits and exciting start-ups. But we are even prouder that we have never lost focus on what is really important: the personal connections we make with every one of our clients. We provide them national and international-level expertise, while volunteering in the neighborhoods they live in. We know what matters to their businesses, and we care deeply about what happens in their lives. Big Thinking. Personal Focus. This is what has made us who we are today, and this is what will guide our purpose and actions in the future. There’s something for everyone in the City of Columbus. As the most populous city in the state, Columbus is home to a diversity of activities and opportunities. The over 900,000 residents of Ohio’s state capital could be university students, sports enthusiasts, avid foodies or adventure-seekers, drawn to the city because of its strong sports scene, its local breweries and pubs or even by one of the largest state festivals in the nation. As diverse as Columbus’ cultural scene is its economy, which is based in a wide range of industries, including education, banking, defense, insurance, aviation, logistics, steel, apparel, medical research, health care, hospitality, technology, retail and more. The world’s largest private research and development foundation is housed in the city’s metro area, which is also home to the headquarters of five Fortune 500 companies. The city’s wealth of opportunities and options create a monumental amount of freedom and flexibility for any resident or visitor looking to settle down or explore. ### Pittsburgh, PA Pittsburgh As a CPA firm in Pittsburgh, PA, Schneider Downs is proud that we’ve built a client list of powerful Fortune 500 companies, well-established regional businesses, not-for-profits and exciting start-ups. But we are even prouder that we have never lost focus on what is really important: the personal connections we make with every one of our clients. We provide them national and international-level expertise, while volunteering in the neighborhoods they live in. We know what matters to their businesses, and we care deeply about what happens in their lives. Big Thinking. Personal Focus. This is what has made us who we are today, and this is what will guide our purpose and actions in the future. The City of Pittsburgh is known for its tough, unrelenting spirit. Considered a paradigm of managing industrial transition in the mid-20th century, “the Steel City,” remade itself from a powerhouse of industry to a hub of healthcare, education and tech. The second-most populous city in Pennsylvania, Pittsburgh provides a multitude of opportunities for its over 300,000 residents. The city boasts prominent museums, multiple research centers and a thriving cultural district, and it has defended its place in the top three “most livable cities” for several years. Besides appreciating overall livability, however, Pittsburgh residents can also enjoy living alongside large medical providers, more than 29 colleges and universities, 1600 technology firms, seven Fortune 500 companies and several top U.S. law firms, which all mark Pittsburgh as a top destination for job growth and employment. Despite a changed economic base, the city’s industrial heritage runs deep, and many of these modern businesses find their homes in renovated factories. This marriage of the old and the new is distinctly “Pittsburgh,” where the same grit and determination that marked its industrial past have ultimately fueled its transformation and continued growth. ## Our Thoughts On ### Raising the Bar: FDICIA Thresholds Redefined The FDIC’s newly approved amendments to 12 CFR Part 363 will significantly reshape internal control and audit requirements for financial institutions as key asset thresholds rise on January 1, 2026. On November 25, 2025, the Federal Deposit Insurance Corporation (FDIC) approved amendments to 12 CFR Part 363, which implements Section 112 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Effective January 1, 2026, the asset-size threshold for internal control and audit requirements will increase from $1 billion to $5 billion. This change revises key regulatory thresholds that govern audit and reporting obligations for financial institutions. Under the new rules, if an insured depository institution does not meet the updated thresholds on January 1, 2026, it will not need to comply with the Part 363 requirements in place on December 31, 2025. What Are the Final FDICIA Rule Updates? Independent External Financial Statement Audit: Financial institutions with assets exceeding $1 billion are required to complete this process. Previously, the threshold applied to institutions with assets greater than $500 million. Independent External Testing of FDICIA Controls: Financial institutions with assets exceeding $5 billion are required to complete this process. Previously, the threshold applied to institutions with assets greater than $1 billion. Management Attestation of Effectiveness of FDICIA Controls: Financial institutions with assets exceeding $1 billion are required to complete this process. Previously, the threshold applied to institutions with assets greater than $500 million. The updates outlined above were implemented to ease the compliance burdens associated with FDICIA testing. These changes are intended to benefit small and mid-sized financial institutions, as reporting requirements can be costly and burdensome for community banks, and small rural banks often face challenges meeting audit committee composition requirements. How Should Institutions Act? Based on the new thresholds, management can focus more on what is most important when reviewing the scope of internal controls. However, institutions with over $1 billion in current or projected assets must still attest to the effectiveness of internal controls under the new rule. While there is greater flexibility associated with internally managing the timing and scope of controls, maintaining strong internal controls remains essential to ensure the safety and soundness of each financial institution. The Importance of Continued Internal Control Testing Risk Is Present Regardless Of Size: Internal control testing serves as a critical safeguard for financial institutions, helping to identify potential fraud, errors, and operational deficiencies. Institutions with asset sizes between $1 billion and $5 billion are required to formally attest to the effectiveness of their internal controls. This attestation must be supported by a reasonable basis, which is established through ongoing internal monitoring, documentation, and evaluation of control processes. Governance Expectations Remain: Regulatory agencies such as the FDIC, OCC, and Federal Reserve continue to emphasize the importance of strong governance and sound risk management practices. Deficiencies in internal controls can result in supervisory findings, enforcement actions, and significant reputational harm. Stakeholders, including shareholders, customers, and counterparties, depend on accurate and reliable financial reporting to maintain confidence in the institution. Ongoing testing and monitoring of controls demonstrates organizational discipline, reinforces transparency, and signals a commitment to regulatory compliance and stakeholder trust Preparation For Continued Growth: As financial institutions expand, the continued execution of control testing and the implementation of strong governance frameworks are essential to ensuring sustainable success. Effective internal controls not only mitigate costly errors but enhance audit readiness and streamline operational processes. Investments in robust internal controls and governance structures should be regarded not as sunk costs, but as strategic assets, strengthening institutional resilience, reinforcing regulatory confidence, and enabling long-term agility in an evolving financial landscape. How Can Schneider Down Help? While regulatory relief might reduce the burden of mandatory internal control testing, our role is to ensure your organization continues to operate with discipline, transparency, and resilience. At Schneider Downs, we deliver strategic advisory solutions that enable institutions to evaluate their internal control frameworks, optimize compliance practices, and align governance structures with sustainable long-term growth. For more information, contact our risk advisory team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. ### November 2025 Market Recap A late-session rally on the final trading day of the month lifted the S&P 500 to a modest 0.2% gain in November, marking its seventh straight monthly increase and continuing its long trend of positive Novembers for the past 15 years. The only negative November since 2011 was in 2021. Early in the month, equity markets were pressured by a record-long government shutdown, increased concerns of an AI-driven bubble, and stretched valuations in mega-cap technology stocks. However, sentiment shifted dramatically in the final week as expectations for a December rate cut strengthened, fueling the market’s recovery. U.S. Small Caps, as measured by the Russell 2000 index, outperformed their larger cap counterparts as these more interest rate-sensitive companies reacted positively to the sentiment of a December rate cut. “Reversal” defined November’s performance: leaders over the prior 12 months lagged, while many former underperformers moved to the top of the leaderboard. Technology and Consumer Discretionary, two of the best-performing sectors over the past year, were among the worst in November. Meanwhile, Materials and Health Care, previously lagging, ranked among the month’s sector leaders. The one sector that defied reversal was Communication Services. It was the only sector to deliver strong returns in both periods, driven by Alphabet’s (Google) sharp rally following the launch of its Gemini 3 AI model. Similarly, growth has outperformed value for the year, yet value beat growth last month. In fact, the Russell 1000 Value index led the Russell 1000 Growth index by 4.5% in November, the 6th widest monthly value outperformance in 23 years. International equities took the month to breathe, generating a flat return for November, keeping year-to-date returns just under 30% for 2025. Emerging Markets on the other hand took a step back after a strong 2025, losing -2.25% for November and bringing their 2025 return to 28.6%. Despite trading flat to slightly positive since the end of June, the U.S. Dollar is still one of the most significant cross-asset return drivers for 2025. Being the main driver of international equity returns in the first half of the year, it has taken a back seat in the second half of 2025. International equities continue to remain attractive relative to other asset classes as valuations remain more grounded, dividend yields are still attractive on a relative basis, and the U.S. Dollar continues to remain a potential future tailwind. As deglobalization continues to be a megatrend in 2025 and looking forward, international ex-U.S. companies continue to be beneficiaries of the reshoring being done to sharpen up supply chains. November was a month of stability and strength for the bond market as the 10-year U.S. Treasury yield traded within a tight range (high of 4.16%, low of 3.99%), ultimately closing at 4.02% - a slight decrease from 4.10% at the end of October. The Bloomberg U.S. Aggregate Bond Index returned 0.6% in November. Year-to-date, the index is up almost 7.5%, positioning it for its strongest annual gain since 2019, when it achieved a 10.8% return. With only 1 month left to go in 2025, bonds are poised to finish out the year as a strong allocation for diversified portfolios. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Innovation Transformation: The Ongoing Journey Toward Audit Process Improvement The latest in an ongoing series on the Schneider Downs Audit Practice’s commitment to innovation transformation. As our firm approaches its 70th anniversary as a leading public accounting firm, Schneider Downs has a long history of commitment to continuously improve business processes to help our clients – and our firm – be better. Standing still means falling behind, and we’re proud of our long-standing dedication to always seeing new and better ways to get things done. As Senior Manager of Transformation and Innovation at Schneider Downs, I have a front-row seat to see this commitment first hand. It’s been exciting to be part of the ongoing process of using innovative technology to improve our audit procedures. Our Latest Innovations My involvement with audit innovation began in 2021, when I became Manager of Innovation and Transformation. At that time, Schneider Downs committed resources to advancing audit technology, and I was tasked with leading the dynamic audit solution (DAS) project—a major initiative to introduce advanced data analytics and new software into our practice. To launch the initiative, we brought together a Task Team from the audit team, taking care to include a variety of professional levels, as well as different perspectives in the process. Collectively, we evaluated options for our next audit technology and methodology. Over the course of Summer 2024, we evaluated four vendors, using demos and a detailed scorecard process to guide our decision. This process gave us a broad perspective for moving forward. Today, we’ve entered into full deployment of the Caseware suite of products into our client service model. Navigating Change and Gathering Feedback Change management has been one of the biggest challenges. Transitioning from established methods to new workflows required feedback from the audit department—questions about how the new software fits with our processes, and - sometimes - resistance to change. The blessings of a continual commitment to change is that trying new things becomes normal, and thus less intimidating. Training has been crucial. We recently trained new hires, and I was impressed by their questions and enthusiasm for the new software. Often, the best feedback and feature requests come from staff at this level, and we make sure to share those with the software developers. As our newest hires continue their professional development, these new processes will become the baseline upon which we continue to add new innovations. Surprises and Client Impact Of course, change isn’t just new to our professionals, but to our clients as well. The client reaction was surprising and enlightening. We expected clients to notice changes in deliverables or question new formats, but most didn’t realize we’d switched software. Some teams reported that, unless we told clients about the change, they wouldn’t have known—showing how smooth the transition was. Instead, the difference is in final product and service delivery. (We’ll share more client perspectives in an upcoming article in our Innovation Transformation series.) Evolving into a Subject Matter Expert I’ve enjoyed my personal journey as a member of the leadership team for this transformation. My nearly five years in client service prepared me for this role. I became the firm’s internal software expert, spending over two years as product owner on the DAS project with AICPA and CaseWare. This gave me firsthand experience with the software’s evolution, from early releases to the improved version we use today. My position is dedicated solely to this transformation, and I feel empowered to serve Schneider Downs as an agent of cahnge. I focus on ensuring our audit innovation succeeds, serving as the main contact for technical questions, implementation challenges, and communication with development teams. Looking to the Future Audit innovation is an ongoing journey. By automating the upfront work, we’re focused on using data analytics not just for historical analysis, but also to provide forward-looking insights for clients. Our staff is engaged and can ask more in-depth, industry-specific questions, which benefits their development, strengthens client relationships, and improves our final product. We’re spending more time on what matters most and adding value, which is why our clients selected Schneider Downs in the first place. We’re always searching for new tools to help us achieve this, and I’m excited about the possibilities ahead. I’ll be sure to keep you updated. Discover how our innovative approach can transform your audit experience—reach out to our team to learn more. ### OMB Releases 2025 Compliance Supplement The U.S. Office of Management and Budget (OMB) has officially released the 2025 Compliance Supplement. This is after a draft was released in the fall to facilitate planning of these audits but prohibited final issuance until the final supplement was released. This annual publication is a critical resource for auditors and entities that receive federal funds. It provides detailed guidance for conducting Single Audits and ensuring compliance with federal regulations. The 2025 OMB Compliance Supplement is effective for Single Audits of fiscal years beginning after June 30, 2024. This means if your organization’s fiscal year started on July 1, 2024, or later, auditors will use the 2025 Supplement for compliance testing. The 2025 OMB Compliance Supplement was released much later than usual, arriving in late November, instead of its typical release date in spring or early summer. This delay was largely due to the extensive updates required to incorporate the revised Uniform Guidance, which became effective on October 1, 2024. OMB also needed additional time to integrate new programs and compliance requirements following significant federal funding changes and to ensure consistency across multiple agencies. Even with the delayed release of the 2025 Compliance Supplement, the Uniform Guidance outlines strict reporting requirements for Single Audits. Audit reports must be submitted to the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. OMB has stated that extensions for submitting Single Audit reports are not automatic and must be formally requested. Organizations that need additional time should submit their request to their cognizant or oversight agency for audit, rather than to OMB. You can find a contact listing for the various cognizant agency contacts here. The request should clearly state the reason for the delay and specify the length of the extension being sought. Agencies have discretion to approve or deny these requests, and approval is generally based on whether the circumstances are valid and do not compromise federal oversight. OMB encourages agencies to consider granting extensions in extraordinary situations, such as significant changes in federal requirements or events beyond the entity’s control. Even when an extension is approved, entities are expected to complete their audits as quickly as possible. What's New in 2025? The 2025 Compliance Supplement introduces several significant changes that are designed to streamline compliance and strengthen accountability. First, the 2025 Compliance Supplement now includes a dual compliance framework. There are two separate compliance sections: Part 3.1 applies to awards under the Uniform Guidance issued before October 2024, and Part 3.2 applies to awards under the revised Uniform Guidance that became effective on October 1, 2024. Auditees must determine which section applies based on the award date, which adds complexity but ensures alignment with updated regulations. Second, the Single Audit threshold has increased from $750,000 to $1,000,000 for federal expenditures of awards issued after October 1, 2024. This change is intended to reduce the audit burden for smaller entities. Organizations with fiscal years ending on or after September 30, 2025, will be the first to take advantage of the higher audit threshold. Third, compliance requirements have been expanded. Updates include stricter procurement standards, enhanced subrecipient monitoring and new reporting elements that align with federal systems. Fourth, the supplement places greater emphasis on internal controls. Entities must now demonstrate that internal controls are not only properly designed but also operating effectively across areas such as cash management, eligibility determinations and performance metrics. This trend on increased focus on internal control has been occurring for the past few releases. Fifth, there are program-specific changes. New programs have been added, including the Summer EBT for Children program from the USDA, the Title IV-E Prevention Program from HHS, and the Greenhouse Gas Reduction Fund from the EPA. COVID-19 programs have largely been phased out. There have been updates to major clusters such as Student Financial Assistance, Medicaid and Housing programs. Finally, the supplement introduces a terminology shift. The term “non-federal entity” has been replaced with “recipient” and “subrecipient,” which reflects clearer accountability across funding chains. As always, it is important for organizations that receive federal funding to be familiar with all of these changes to ensure that you are remaining compliant with all of the applicable laws and regulations. How Can I Access the 2025 OMB Compliance Supplement? The full document, which spans more than 2,200 pages, is available on the OMB website. You can also find a summary of the significant changes in Part 8 – Appendices beginning on 8-V-1 to help you quickly digest changes to any programs your organization participates in. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### 3 Questions Emerging Technology Companies Need to Ask About SOC Reports In today’s competitive and data-driven business environment, trust is a currency that emerging technology companies cannot afford to overlook. As organizations increasingly rely on third-party vendors and cloud-based services, demonstrating a commitment to data integrity and operational transparency becomes essential. A System and Organization Controls (SOC) report offers a powerful way to build that trust by providing independent validation of your internal controls and processes. Whether you're a startup aiming to win enterprise clients or a scaling company navigating regulatory landscapes, understanding the value of a SOC report is key to unlocking growth and credibility. What is a SOC report? Your clients and prospects want assurance that their data and transactions are handled with integrity. A SOC report provides the transparency and trust needed to demonstrate your commitment to strong controls and processes. In a SOC report, auditors trained in IT, financial and operational controls evaluate your systems and process by inspecting evidence and documentation to verify controls are in place. The auditors produce a formal report that can be shared with clients, prospects, regulators and other interested parties about their procedures and results of testing. How Can a SOC 2 Help a Startup? Startups are often trying to sell services to larger organizations. These types of organizations often have Third Party Risk Management (TPRM) programs that work alongside their procurement functions and require them to perform due diligence of their own vendors, particularly if the vendor can access what the organization considers sensitive data. As part of the sales cycle an organization may ask you to provide a SOC report to demonstrate you have appropriate processes to protect their data. A SOC report completed by an independent third-party provides your customers and prospects assurance that you are doing the right things. It also provides your company with assurance that there are no gaps in the internal controls tested by the auditor. How Do I Review a SOC Report Provided by a Vendor? If you use a cloud hosting provider like AWS, Azure or GCP or other vendors to support key operations you will need to complete due diligence activities over the vendor to make sure they maintain an appropriate internal control environment to protect your data and ensure continuity of services. Typically, a SOC report is used to facilitate this process. SOC reports have a certain format that can ease the review process but require some background. If your company has your own SOC report, your auditors will ask for evidence of your review. View our SOC Review Report Template About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Top Month-End Closing Tips for Dealership Accounting Teams One of the most critical processes for dealership accounting teams is month-end closing. A smooth close requires structure, discipline and proactive communication across departments. By implementing clear cutoffs, assigning responsibilities and maintaining rigorous review standards, dealerships can avoid costly errors and ensure that financial statements reflect true performance. Below are 9 practical steps to streamline your month-end close and build confidence in your reporting. Establish Hard Cutoffs To ensure a smooth month-end close, establish a hard cutoff for vehicle deals and have sales management review and approve all deals before sending them to accounting. Instruct parts and service teams to close as many R.O.’s and parts slips as possible, review open RO lists and voided document reports and provide  the WIP report. Finally, confirm that all payables, parts statements, third-party transactions and credit card activity have been  posted accurately to maintain clean financial records. Review Schedules and Reconciliations Assign responsibilities for each reconciliation and schedule review to specific team members and establish a timeline to keep the process on track. All schedules should be submitted to the controller for final review promptly after the deal posting cutoff (second day of the month in a perfect world), and bank and credit card accounts must be fully reconciled monthly by someone that has no cash handling responsibilities. Accrue Payroll and Bonuses Payroll should be accrued to coincide with the month end date and bonus calculations should be verified by an independent employee to prevent costly errors. Typically, department managers handle bonus calculations while accounting verifies them (or vice versa). It’s important that both employees involved in bonus calculations have access to the underlying pay plans.  The reviewer isn’t simply testing the mathematical calculations.  Before processing payroll, submit the payroll ledger to the dealer or designated representative for approval. Calculate Statistical Amounts Accuracy in statistical reporting is often overlooked during the closing process, and errors can discredit your work and distort manufacturer calculations. Simple mistakes—such as reporting 760 employees instead of 76, listing negative used vehicle inventory counts or erroneously marking all receivables as current may not impact the bottom line, but can create serious concerns for dealers and financial partners (banks, accountants, etc.). Develop Preliminary Financials and Reports The controller should  prepare (or review – depending on your office structure) preliminary financial statements  and confirm that department totals align with  expectations.  Be prepared to compare accounting results to  desk logs and parts and service management reports. Review variances with departmental managers, perform trend analysis to catch missing expenditures check the balance sheet for obvious misstatements like debit balances in credit balance accounts. Finally, assess income statement profitability for reasonableness and identify any mapping issues that could distort reporting accuracy. Prepare for Questions Most dealers are fairly predictable when it comes to their financial statement review process, so anticipating their questions is key to being prepared. If you’ve already reviewed departmental results with managers, you’ll have a clear understanding of significant events that occurred during the month and how they impact the financial statements. This proactive approach ensures confidence and accuracy during dealer reviews. Review Final Financial Statements with Dealer Controllers should not shy away from discussing financials with the dealer, as a well-managed accounting process helps minimize issues and builds trust. Use insights from departmental reviews to provide clear answers and deliver an analysis of key metrics, whether based on predetermined KPIs or significant dealership events. Submit Financial Statements Before submitting, take a final review of the financial statements to ensure accuracy and completeness. Work through any manufacturer-imposed verification process, clearing all errors, and save submission verifications for your records. Archive Month-End Reports Initiate month-end archiving as soon as possible after submitting financial statements to maintain organized records. Evaluate the documents scheduled for archiving to ensure completeness, and consider adding any relevant files. Finally, check archive reports for errors to confirm accuracy. Closing the books doesn’t have to be chaotic if sound office procedures are enforced throughout the month. These best practices not only minimize errors but also strengthen trust with dealers and stakeholders. Start implementing these strategies today to set the foundation for accurate, timely and insightful financial reporting. How Can Schneider Downs Help? If you would like support strengthening your accounting operations or considering outsourced options, our team is ready to help. We have team members with CFO and Controller backgrounds in the dealership space, giving us a practical understanding of the daily demands your team faces. To discuss these resources or learn how we can support your dealership, please contact us at contactsd@schneiderdowns.com. About Schneider Downs Dealership Services Schneider Downs’ Dealership practice helps single-point stores and multi-location groups strengthen operations, improve profitability, and plan for long-term growth. Our cross-functional team delivers audit and assurance, tax and accounting, risk advisory and cybersecurity, digital innovation (automation, analytics, custom DMS reporting), transaction advisory, forensic accounting, reinsurance advisory, exit and succession planning, and wealth management—led by responsive senior professionals who know the dealership business. We actively contribute across NADA, AICPA dealership forums, and state associations, bringing timely insights and practical guidance to every engagement. To learn more, visit our dedicated Dealerships page. ### Investment Corner: Are We In A Bubble? – The Bubble Triangle One of the dominant themes in capital markets over the past few years has been the rise of artificial intelligence and the companies benefiting from this transformative technology. As these firms continue to outperform major indices, questions about lofty valuations, the sustainability of rapid growth, and whether we are witnessing the formation of an AI bubble have become central to market discussions. Strong earnings from leading technology companies challenge the bubble narrative, yet history reminds us that bubbles are rarely recognized until after they burst. This debate brings me back to last fall, when our team at Schneider Downs Wealth Management studied financial bubbles through the lens of William Quinn and John D. Turner’s book, Boom and Bust – A Global History of Financial Bubbles. Their framework likens bubbles to fires: just as fire requires oxygen, fuel, and heat, bubbles require three elements—marketability, money/credit, and speculation. Marketability refers to how easily an asset can be bought and sold. Money/Credit is often fueled by low interest rates and loose credit conditions. Speculation occurs when investors purchase assets primarily to sell them later at a profit, with little regard for intrinsic value. While bubbles frequently end in banking or economic crises, they can also generate positive outcomes. They can accelerate innovation, encourage entrepreneurship, and channel capital into projects that might otherwise have struggled to secure funding. Many transformative technologies—from railways and bicycles to automobiles, fiber optics, and the internet—were propelled forward during bubble periods. Since 1990, major bubbles have emerged roughly every six years, including the dot-com bubble, the housing bubble, and the crypto boom. Globalization of capital and deregulation of banking have fueled this cycle, extending credit and increasing debt to unprecedented levels. Deregulation has also made trading cheaper and easier, enhancing the marketability of financial assets and amplifying speculative activity. Historically, bubbles are often sparked by technological breakthroughs or government policy shifts—patterns that resonate with today’s AI-driven environment. Whether today’s surge in AI represents the next great bubble or a lasting technological revolution remains uncertain. What is clear is that the bubble triangle—marketability, money/credit, and speculation—offers a powerful lens for evaluating the risks and opportunities shaping our financial future. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### What to Do After the ERISA Deadline: Setting Up for Success Next Year The Employee Retirement Income Security Act (ERISA) deadline may have passed, but for plan sponsors and fiduciaries, the work is far from over. The period immediately following the deadline is a critical time to reflect, correct, and prepare. Here’s how companies can use this window to strengthen their regulatory compliance and ensure a smoother process next year. 1. Conduct a Post-Filing Review After submitting Form 5500 and other required disclosures, plan sponsors should perform a retrospective review of the plan year. This includes: Verifying that all required notices (e.g., Summary Annual Reports, fee disclosures) were issued on time. Ensuring that participant communications were clear and documented. Reviewing any audit findings or internal inspection results for improvement opportunities. 2. Address Operational Errors Promptly If any compliance issues were discovered—such as missed contributions, incorrect participant data, or outdated plan documents—plan administrators should act quickly. The IRS’s Voluntary Correction Program (VCP) offers a structured way to correct significant failures, such as missing contributions or not properly enrolling an employee into the plan. Consulting an ERISA attorney or third-party administrator (TPA) is highly recommended to navigate these corrections. 3. Update Documentation and Plan Amendments Plan administrators should ensure that all plan amendments, Summary Plan Descriptions (SPDs), and Summaries of Material Modifications (SMMs) are current and accurately reflect the plan’s operations. Any changes made during the year must be documented and disclosed within the required timeframes. 4. Evaluate Internal Controls Internal control narratives for key plan processes should be regularly reviewed by plan administration to ensure they are up to date and accurately reflect the controls in place. In addition, plan management should identify areas for improvement. If applicable, Management Letter Comments (MLCs) and reportable findings should be reviewed and discussed with the audit team upon the conclusion of the audit. MLCs and reportable findings can vary in severity; however, the auditors can communicate any they believe will lead to process improvements for the plan. Each TPA will have a SOC report prepared annually identifying key controls for each process of the plan. Plan management should identify which controls are applicable to them, then review the associated Complementary User Entity Controls (CUECs) associated with each. CUECs are controls that must be performed by the plan in order for the key control of the TPA to operate effectively. 5. Plan Ahead for Next Year To avoid the 10/15 stress, rush and late-filing penalties, plan management should be in communication with their audit teams throughout the year, keeping them up to date on major plan changes that will affect the scope of the audit. Common key events include plan mergers, changes in TPAs, newly eligible employee groups and other significant changes. Allowing the auditors to get ahead of these changes will lead to a smoother audit. While meeting the ERISA deadline is a significant milestone, true success comes from what happens next. By conducting thorough post-filing reviews, promptly addressing any operational errors, keeping documentation up to date, and strengthening internal controls, plan sponsors and fiduciaries can turn compliance into an ongoing process of improvement. Proactive planning and open communication with audit teams throughout the year will not only reduce stress and risk but also set the stage for a smoother, more efficient filing season next year. For more information on how you can prepare for your next ERISA deadline, contact a member of the Schneider Downs Employee Benefit Plan team. ### 5 Holiday Season Scams to Watch for in 2025 (And How to Avoid Them) Article Summary: 5 Holiday Season Scams to Watch for in 2025 This article outlines five emerging holiday scams, from AI-powered phishing to fake government rebates, and provides practical steps to help individuals shop safely and protect sensitive data this season. AI-Driven Social Engineering: Criminals are using generative AI and deepfakes to craft convincing brand communications and impersonate family members in urgent “emergency” money requests. Delivery, QR and Rebate Cons: Fake shipping alerts, tampered QR codes and non-existent “tariff rebate” offers attempt to capture personal, financial and login information during peak shopping. Verify Before You Click or Pay: Individuals should avoid links in unsolicited messages, confirm requests through trusted channels, use official retailer and government sites, and share awareness to help others stay safe. With Black Friday, Cyber Monday and peak holiday shopping season approaching, cybercriminals are preparing too. Every year brings a new wave of scams designed to steal personal data, payment information and login credentials from unsuspecting shoppers. Before you start hunting for deals, it helps to understand the top threats circulating this season, including phishing emails, fake delivery alerts, QR-based scams and false government payout claims. Below are five scams to watch for this holiday season and practical ways to avoid them. AI-Powered Phishing Attacks Phishing makes the holiday scam list every year because it still works. This season, the risk is even greater. Scammers are now using AI to create realistic emails, text messages and social posts that look like they came directly from trusted brands. Since 2023, there has been a 1,265% increase in phishing attacks linked to generative AI, which means inboxes are  flooded with convincing scams during peak shopping season. AI tools can now copy brand language, mimic logos and personalize messages, making fake holiday deals feel more real than ever. With so many “limited-time offers,” it is easy to click without thinking. Watch for low-quality logos, odd wording, typos and suspicious sender addresses like “contact@walMartz.com.” If a deal looks questionable, do not click the link. Go directly to the retailer’s website or app to confirm the offer. You can also check store flyers or mailers you already received…yes, some of us still read those. If the deal is real, you will find it elsewhere. Deepfake Family Impersonation Scams Deepfakes are becoming a dangerous holiday scam tactic. These scams work because people are busy, emotional and more willing to help a loved one without thinking twice. A deepfake is a synthetic audio or video clip created with AI to mimic someone’s voice or face. While they are often used for harmless social media filters, scammers now use them to sound like a relative who needs urgent money for a “holiday emergency.” As wild as this may sound, deepfake fraud in North America has grown more than 1,700% since 2022, and their sophistication has increased significantly as well making them harder to spot. If you receive a sudden call or message from a relative asking for money, gift cards or personal information, do not respond right away. Contact them directly through a separate number or message you already know is real. Always confirm the request with another family member. As crazy as it is, a familiar voice or face is no longer proof of identity, so treat any urgent request as suspicious until you verify it. Fake Delivery and Shipping Notifications Online shopping increases dramatically during the holidays, and scammers use this to their advantage. Fake delivery alerts, both in email and text messages, pretend to offer tracking updates and then ask you to click a link or submit personal information. In 2024, consumers lost more than $470 million to text scams, and fake delivery messages were the most common. These alerts succeed because we are expecting packages and want instant updates. On phones, warning signs are easier to miss. Fake messages often come from random numbers and include shortened links that hide the destination website. Do not click or call from the message itself. Instead, check your original order confirmation for tracking information. Visit the retailer’s website manually to track your package and call the customer service number listed on the retailer’s site, not the one in the message. QR Scams: A Growing Threat in Stores and Restaurants QR codes made a major comeback during COVID, and criminals took notice. Quishing scams use QR codes to redirect people to fake websites, download malware or steal login and financial information. During the holidays, shoppers are even more likely to scan them for coupons, menus, store apps or quick checkout options. Most QR codes are harmless, but scammers can swap real ones with fake versions on flyers, parking meters, restaurant tables, posters and checkout counters. If a code looks tampered with, has a sticker over it, or appears on a random flyer you found on the floor, think twice before scanning. Let common sense beat curiosity. Scanning an unknown QR code today is like plugging in a mystery USB you found on the ground. You know better, so skip it. If you want to redeem a coupon or download an app, search for it directly in the Apple App Store or Google Play Store. That extra step can be the difference between getting a deal and getting scammed. “Tariff Rebate” Scam Claims Scammers love rumors about government payments, especially when people are hoping for extra holiday cash. Recently, false claims of a “tariff rebate” have spread online even though no official program or eligibility details exist. Do not let the promise of a little extra money make you suspend belief. Until the government confirms it, treat it like any other too-good-to-be-true offer. Any message about a tariff rebate right now is a scam. Fraudsters are sending calls, emails and texts asking you to “verify your identity” to get a refund. Do not share personal or financial information. Until the federal government publishes official details on irs.gov or home.treasury.gov, assume all tariff rebate messages are fake. Report them and delete them immediately. Keep Each Other Safe This Season The best way to stay ahead of scammers is to look out for each other. If this article helps you, please share it with friends, family and your network so they can shop smarter and stay a little more secure this season. A little awareness goes a long way and helps everyone enjoy a safer, stress-free holiday, or at least as stress-free as the holidays can be.  About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. ### Penalty Relief for Employer Reporting of Qualified Overtime and Tips Article Summary: IRS Penalty Relief for 2025 Tip/Overtime Reporting The IRS issued Notice 2025-62, designating 2025 as a transition year for new reporting requirements for Qualified Tips (§224) and Qualified Overtime (§225) deductions. No Penalties in 2025: Employers are exempt from penalties for failing to separately report qualified tips, occupation, or overtime compensation on tax forms for the 2025 tax year. Forms Unchanged: Forms W-2 and 1099 will not be updated for 2025. Inform Employees: The IRS encourages employers to use alternative methods (like Box 14 or an online portal) to provide this deduction information to employees. The new federal qualified overtime deduction (§225) and qualified tip deduction (§224) – adopted midyear by the passage of the One Big Beautiful Bill but effective for overtime and tips received beginning January 1, 2025 – has created reporting challenges for both taxpayers and tax practitioners. The IRS recognizes that, in some instances, payors and employers may lack the necessary accounting information infrastructure (data, systems, and/or procedures) to fully and accurately comply with these added information reporting requirements. Given (1) that the mid-year law change is a significant contributor to this lack of preparedness and (2) the fact that the IRS had announced in August that Forms W-2 and 1099 for taxable year 2025 will not be updated to reflect these OBBBA-related changes, the IRS concluded that enforcement during this initial year would be difficult. Notice 2025-62 The IRS recently issued Notice 2025-62 addressing potential failures related to implementing the new reporting requirements. The relief targets penalties imposed under §6721 for failure to file correct information returns and under §6722 for failure to furnish correct payee statements. It is extremely important to understand that is not blanket relief covering all requirements for inclusion of information on certain information returns; the penalty relief granted is strictly limited to the narrow subject of failing to separately report tips, occupation or overtime compensation to the extent that the person otherwise files and furnishes a complete and correct return or statement for amounts paid during 2025 only. In summary, the Notice provides that the IRS will not impose penalties for 2025 under either section in the following circumstances: Relief Related to Qualified Tips and Occupations: The penalties will not be imposed if an employer fails to provide the separate accounting of reasonably designated cash tips or the occupation for which the tips are earned (see proposed regulations for over 70 separate eligible occupations of tipped workers) on any of the returns or statements required to be filed. Relief Related to Qualified Overtime Compensation: The penalties will not be imposed if an employer fails to separately provide the total amount of qualified overtime compensation as defined in §225 on any of the returns or statements required to be filed. The IRS has determined that taxable year 2025 will be regarded as a transition period for the enforcement and administration of the new information reporting requirements. Employers should be taking steps now to be able to accumulate and provide this information for 2026 and later tax years. Even with the penalty relief, the IRS is still encouraging employers to provide overtime and tip information to employees to allow them to determine if they are eligible to claim the deductions. The IRS suggests providing the information through an online portal, in an additional written statement, or in Box 14 of the employee’s Form W-2. Risk of Reporting an Incorrect Amount Employers may want to exercise caution, as some tax experts are concerned about the risk of reporting an incorrect amount on the W-2 for 2025 and possibly exposing employers to litigation risk under existing tax law, even with the penalty relief for non-reporting. Specifically for example, §7434 allows employees to bring civil action for “fraudulent” filing of an information return, with potential damages of $5,000 or more per employee. While this risk may be small from a practical perspective, employers may want to simply rely on the penalty relief for 2025 and report nothing on the W-2 itself but to be prepared, in the interest of good employee relations, to provide certain information to employees allowing them to separately conclude whether they are entitled to, and the amount of, any deduction. Finally, this relief applies for IRS tax reporting purposes only; employers may still be required to comply with separate Department of Labor (DOL) regulations. How Can Schneider Downs Help? For more information on the impact of the OBBB, please visit www.schneiderdowns.com/obbb or contact us at contactsd@schneiderdowns.com About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### 5 Accounting Priorities for Dealerships as We Close 2025 The 2025 AICPA Dealership Conference highlighted meaningful shifts in how dealerships are structuring and supporting their accounting functions. With staffing shortages continuing and financial processes growing more complex, many stores are rethinking how work gets allocated, how information flows and how technology supports accuracy and speed. Dealers are prioritizing more consistent execution, better visibility into daily activity and tools that help teams stay efficient during periods of change. Below are four of the top accounting takeaways from the conference. Hybrid Accounting Models More dealerships are moving to a hybrid structure with on-site office managers supported by centralized processing for AR, AP, deal posting and banking. This approach helps improve accuracy, consistency and staffing flexibility. Technology to Increase Efficiency Dealerships are adopting AI, automation and digital exception reporting to help offset talent shortages, streamline routine work and allow teams to focus on higher-value tasks. Playbooks for Core Accounting Functions Retirements and turnover continue to pressure staffing. Dealers are creating documented playbooks for key processes to speed onboarding, support cross-training and standardize execution. Daily “Jump Start” Manager Meetings Many stores are using 10-minute daily meetings to increase visibility into department issues and receivables. The meeting is mandatory for all managers, and the controller distributes updated receivable schedules every day. The general manager directs the depth of the discussion and the specific issues to be addressed. This promotes accountability, faster escalation and better cash awareness. How Can Schneider Downs Help? If your dealership is refining its accounting structure or planning year-end improvements, our team can help you assess your current processes and identify practical opportunities to increase accuracy, efficiency and control. Contact our team at contactsd@schneiderdowns.com. ### Innovation Transformation: Unleashing a New Audit Experience We are actively redefining audit excellence through continuous investment in next-generation technologies and team empowerment. As the leader of our audit practice, I’m energized to see our team’s collective enthusiasm for driving the future of audit through the implementation of enhanced methodologies, including the implementation of the CaseWare Dynamic Audit Solution and innovation throughout the practice.  Through data, automation and AI, we are driving smarter decision-making by empowered teams. While DAS is just one of our initiatives, it’s part of a broader journey of continuous transformation, driven by the boundless potential of innovation. Why We Are Doing This Our tech-enabled audit platform doesn’t just streamline processes—it unlocks deeper, real-time insights that empower our teams to serve clients with smarter, faster business decisions.  Our focus on progressive technologies is driven by the expectations of our clients and our team to deliver on our promise of exceptional client service.  Today’s digital-native professionals thrive in tech-forward environments, and the timing is right to empower them with innovative tools. How Our Clients Benefit From a client standpoint, the impact of our investment in technology is profound. With innovation, we are driving deeper insight into our assurance processes.  Our professionals come ready to serve and help our clients solve complex problems.  When we understand our clients' businesses and needs better, we can provide stronger audit and advisory services. A key part of this transformation is our shift to a cloud-based practice via the Caseware platform. This multi-year rollout is streamlining data integration and improving efficiency across our audit practice. While the transition requires upfront effort, our team at every level is energized by the long-term impact: delivering better results, faster. Embracing Change I’m proud to work at a firm that has embraced change since it opened its doors in 1956. Schneider Downs thrives with a culture that recognizes the potential of technology to  provide a best-in-class client experience while also providing a roadmap for our professionals to excel. Our transformation relies on inclusive change management by engaging team members at every level in decision-making and adoption. This team-centered approach is a huge part of our success. As we continue to implement these new tools, we are committed to ensuring that our team has the necessary skills to use the latest technology and sophisticated processes. Our entire practice is engaged in collaborative work that will transform our future. The Bottom Line The success of our technological advancements will be measured by client satisfaction and team fulfillment. Team members love coming to work at Schneider Downs and serving clients with these new, exciting tools. From a client perspective, we can deliver on our clients' deadlines and expectations more meaningfully. It’s simple: Schneider Downs is committed to leading the way in audit practice through the adoption of new technologies. This commitment is driven by the needs of our clients and our people, and it is transforming the way we do business. Discover how our innovative approach can transform your audit experience—reach out to our team to learn more.   Questions about how you might benefit from these now technologies? Ask your Schneider Downs team or contact me directly at sbrogan@schneiderdowns.com. ### Fighting Fraud with AI: Turning the Tide In recent years, generative AI has made for enabling high-profile deepfakes and impersonation scams. Schneider Downs is proud to be an official supporting organization of International Fraud Awareness Week. To mark the 25th anniversary of International Fraud Awareness Week, we are releasing a series of content on how AI is reshaping the landscape of fraud detection and prevention.  This article focuses on how to fight fraud with AI-powered tools. Generative AI is providing bad actors with a powerful tool to refine and scale their efforts to compromise victim companies, individuals and governments for financial gain. Social engineering, business email compromise, forged documents and synthetic identity schemes are now even more compelling thanks to AI.  But despite the onslaught of AI-fueled attacks, organizations are using the same emerging technologies to turn the tide. Fraud fighters are using AI tools to augment traditional internal controls to respond smarter and faster to fraud schemes and even prevent them from occurring in the first place. The Rise of AI-Powered Defense AI is no longer just a buzzword; it’s an integral part of a robust program of anti-fraud controls. From financial institutions to internal audit departments, organizations are deploying AI to detect anomalies, flag suspicious behavior and prevent fraud before it happens. According to Business Insider, MasterCard is using AI to improve its automated fraud alerts to cardholders. MasterCard asserts AI has helped it refine its risk calculations and reduce false positives. Perhaps you’ve noticed a change in how your bank or credit card provider alerts you about suspicious transactions over the past few years. AI systems like these analyze vast amounts of data in real time, like transaction patterns, device fingerprints and behavioral signals to identify subtle indicators of fraud that human analysts might miss. Unlike traditional rule-based systems, AI models continuously learn and adapt, improving accuracy and reducing false positives. Real-World Applications Behavioral Analysis: AI models track user behavior across platforms to detect deviations that may signal fraud. For example, a sudden change in login location or spending habits can trigger an alert. Transaction and Accounting Entry Monitoring: As mentioned, MasterCard and other financial institutions are using AI to refine their approach to monitoring customer and cardholder transactions for suspicious activity, protecting them in the process. Likewise, this same approach can be applied to internal accounting records to automatically flag accounting entries that may exhibit suspicious attributes (e.g., round numbers, journal entries posted outside business hours, unusual combinations of accounts). Document and Identity Verification: AI tools now scrutinize IDs, credentials and transaction support for signs of manipulation and AI generation. As deepfake documents become more convincing, AI helps verify authenticity by analyzing shadows, textures and metadata. No Replacement for Internal Controls Despite its potential, AI is not and will never be a silver bullet. It’s another item in the toolbelt of fraud fighters. However, it’s no substitute for a robust system of internal controls. “Old school” controls like multiple approvals for large transactions, confirmation of vendor changes via secondary channels, ethics and fraud hotlines, and a strong ‘tone at the top’ will still make the difference between preventing fraud and falling victim to it. How Can Schneider Downs Help? At Schneider Downs, we have years of experience helping organizations respond to potential fraud and developing anti-fraud programs to catch fraud before it happens. If you have questions or concerns, contact a member of our team at contactsd@schneiderdowns.com. This article is part of a series highlighting how AI is reshaping the landscape of fraud detection and prevention. Additional articles include: The Dark Side of Generative AI in 2025: AI Voice Cloning AI and the Future of Fraud Risk Management About International Fraud Awareness Week Since 2000, the Association of Certified Fraud Examiners has recognized the third week in November as International Fraud Awareness Week. With a focus on awareness, education and fostering a culture of integrity, International Fraud Awareness Week recognizes the importance of taking action in the fight against fraud. Learn more at FraudWeek.com. About Schneider Downs Business Advisory Our experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), a Master Analyst in Financial Forensics (MAFF), a Certified Forensic Interviewer (CFI), and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. ### AI and the Future of Fraud Risk Management Artificial Intelligence is reshaping the fraud landscape at an unprecedented pace. For organizational leaders, staying informed is not optional—it’s imperative. Schneider Downs is proud to be an official supporting organization of International Fraud Awareness Week. To mark the 25th anniversary of International Fraud Awareness Week, we are releasing a series of content on how AI is reshaping the landscape of fraud detection and prevention.  This article focuses on AI and future predictions for fraud risk management. Understanding the Risks of AI and Building Resilience The dual nature of AI, as both a tool for fraudsters and a powerful ally in fraud prevention, demands a proactive and strategic response. Understanding how fraudsters exploit AI, through deepfakes, voice cloning, fraudulent document and image creation, and sophisticated phishing schemes, is the first step in building resilience. Equally important is recognizing how AI-enabled technologies can strengthen fraud risk management programs, offering predictive insights, anomaly detection, real-time monitoring capabilities, and efficiency gains. Exploring the Human Element of AI There are and will continue to be many threats that aren’t reliant on the use of AI, and an organization’s use of AI technology alone will never be enough. Human awareness, critical thinking, and ethical judgment remain irreplaceable. AI should augment, not replace, these core capabilities. Organizations must foster a culture of vigilance and empower teams to question, verify, and act decisively. About the Cost of AI… While many AI tools are available today, cost concerns often hinder adoption, especially within organizations that might not face as much fraud risk as financial institutions. As implementation costs and false positive rates decline, the value proposition of AI in fraud risk management will become increasingly compelling. Forward-thinking organizations must prepare now to capitalize on these advancements. Organizations with mature fraud risk assessments are uniquely positioned to quantify expected benefits and make informed decisions. Those organizations with mature fraud risk assessments that embrace agile frameworks and adaptive practices will be best equipped to evolve alongside AI. How Can Schneider Downs Help? Schneider Downs’s Business Advisory Services team provides proactive fraud risk management consulting tailored to an organization’s industry, size, and risks, and ranging from fraud risk assessments and program maturity assessments to governance, internal control, investigation, and program monitoring consulting. If you’re interested in learning about how we can assess or help to mature your organization’s fraud risk management program, contact a member of our team at contactsd@schneiderdowns.com. This article is part of a series highlighting how AI is reshaping the landscape of fraud detection and prevention. Additional articles include: The Dark Side of Generative AI in 2025: AI Voice Cloning Fighting Fraud with AI: Turning the Tide About International Fraud Awareness Week Since 2000, the Association of Certified Fraud Examiners has recognized the third week in November as International Fraud Awareness Week. With a focus on awareness, education and fostering a culture of integrity, International Fraud Awareness Week recognizes the importance of taking action in the fight against fraud. Learn more at FraudWeek.com. About Schneider Downs Business Advisory Our experienced team of business advisors includes Certified Fraud Examiners (CFE), a Master Analyst in Financial Forensics (MAFF), a Certified Forensic Interviewer (CFI), and Certified Mergers and Acquisition Advisors (CM&AA). We leverage our industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. ### The Dark Side of Generative AI in 2025: Voice Cloning With the capabilities of generative AI tools becoming so widely available, it is increasingly difficult to distinguish between what’s real and fake. Schneider Downs is proud to be an official supporting organization of International Fraud Awareness Week. To mark the 25th anniversary of International Fraud Awareness Week, we are releasing a series of content on how AI is reshaping the landscape of fraud detection and prevention.  This article focuses on AI voice cloning. This past summer, an imposter sent deceptive AI-generated voicemail messages to foreign and U.S. officials, leveraging U.S. Secretary of State Marco Rubio’s voice. This sparked national security concerns. Simultaneously, the publicity helped spread awareness of the threats that generative AI can pose. With generative AI capabilities growing exponentially, and AI tools becoming increasingly prevalent in everyday life, it is getting much harder to distinguish between what’s real and fake. Imagine receiving a call from what sounds exactly like a family member or colleague in distress, only to discover it was an AI-generated voice leading you into a financial scam. Think it could never happen to you? Our latest video might change your mind. Put your instincts to the test as you try to tell the difference between a real voice and an AI-generated one, featuring both authentic and synthetic audio clips from our co-CEO, Chris McElroy. The Real-Life Impact of AI Voice Cloning The implications for fraud are profound and far-reaching, extending far beyond the use of cloned voices. Generative AI has expanded the pool of threat actors by lowering the bar for technological expertise and increasing the scale of attacks through rapid content creation capabilities. Fraudsters are exploiting large language models (LLMs) to craft highly convincing and personalized phishing emails and text messages, designed to deceive recipients into revealing sensitive information, clicking malicious links or sending funds. Beyond phishing, these AI tools can even be used to generate documentation, images and even video calls. These materials can then be used to support fraudulent expense reimbursement requests and vendor invoices, and create malware and viruses. Tips to Reduce the Risk of AI-Enabled Fraud Be cautious of unsolicited messages that create urgency or emotional pressure. Consider leveraging corporate credit cards for employee expenses. Educate employees and family members about the risks of AI-generated scams. Leverage multi-factor authentication to protect accounts. Maintain and implement transaction approval workflows. Verify the identity of callers or message senders through secondary channels. How Can Schneider Downs Help? At Schneider Downs, we have years of experience helping organizations respond to potential fraud and developing anti-fraud programs to catch fraud before it happens. If you have questions or concerns, contact a member of our team at contactsd@schneiderdowns.com. This article is part of a series highlighting how AI is reshaping the landscape of fraud detection and prevention. Additional articles include: AI and the Future of Fraud Risk Management Fighting Fraud with AI: Turning the Tide About International Fraud Awareness Week Since 2000, the Association of Certified Fraud Examiners has recognized the third week in November as International Fraud Awareness Week. With a focus on awareness, education and fostering a culture of integrity, International Fraud Awareness Week recognizes the importance of taking action in the fight against fraud. Learn more at FraudWeek.com. About Schneider Downs Business Advisory Our experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), a Master Analyst in Financial Forensics (MAFF), a Certified Forensic Interviewer (CFI), and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. ### 5 Operational Priorities for Dealerships as We Close 2025 Operational conversations at the 2025 AICPA Dealership Conference focused on helping dealerships strengthen efficiency, protect profitability and keep employees engaged in a changing market. Leaders discussed how shifting tax dynamics may influence used-vehicle demand, how F&I and reinsurance strategies are evolving and how reconditioning practices are becoming more disciplined to support sales velocity. Dealers also emphasized the importance of clearer communication, better coordination across service workflows and stronger risk management. At the same time, growing attention is being placed on cybersecurity and employee compensation transparency as stores work to improve both resilience and retention. Below are key operational themes and considerations that stood out from this year’s conference. Tax Legislation Impact Withholding tables were not revised for recent tax legislation (OBBB) and economists are forecasting larger tax refunds and increased demand for used vehicles. F&I and Reinsurance Optimization As profits return to pre-Covid levels, F&I products and reinsurance arrangements are increasingly important profit centers. Savy dealers are not only optimizing deferral opportunities but also focusing on investment management within their reinsurance program. Three-Day Reconditioning Deadline With increasing pressure on used vehicle sales, many dealers are implementing three-day deadlines for reconditioning and providing technicians with incentives to work overtime to ensure that inventory moves through the shop promptly without delaying customer pay or warranty work. Video Multi-Point Inspections Dealers are providing technicians with the tools to capture video of concerns identified during their multi-point inspections. The technician then sends this video directly to the customer, not the service advisor. Dealers are incentivizing technicians for these up sales. Reconditioning Profit Sharing Dealers have long recognized the profit potential of older, higher mileage vehicles but have often been squeezed out of this market by the cost of getting these cars through the service department, even at internal rates. To deal with this problem, some dealers are reconditioning these vehicles at actual cost (parts and technician wages). Then when the vehicle is sold, the profit (after all commissions) is shared with the service departments. The sharing percentages discussed were 35% for service and 25% for parts. How Can Schneider Downs Help? If your dealership is reviewing its operational priorities or planning year-end improvements, our team can help you assess your current processes and identify practical opportunities to increase accuracy, efficiency and control. Contact our team at contactsd@schneiderdowns.com. About Schneider Downs Dealership Services Schneider Downs’ Dealership practice helps single-point stores and multi-location groups strengthen operations, improve profitability, and plan for long-term growth. Our cross-functional team delivers audit and assurance, tax and accounting, risk advisory and cybersecurity, digital innovation (automation, analytics, custom DMS reporting), transaction advisory, forensic accounting, reinsurance advisory, exit and succession planning, and wealth management—led by responsive senior professionals who know the dealership business. We actively contribute across NADA, AICPA dealership forums, and state associations, bringing timely insights and practical guidance to every engagement. To learn more, visit our dedicated Dealerships page or contact contactsd@schneiderdowns.com ### Reopening the Government Doesn’t End the Risk: What Internal Audit Should Do Next Today is November 12, 2025, and the longest government shutdown is U.S. history is one step away from coming to an end. The Senate has approved a plan to reopen federal operations, and the House is expected to vote immediately. If approved, the measure would fund most government activities through January 30. While the shutdown may be nearing its end, it underscores how quickly federal disruptions can introduce operational, financial, and compliance challenges, particularly for organizations with public sector exposure or federal dependencies. In these environments, internal audit functions play a vital role in assessing risks, maintaining continuity, and supporting informed decision-making. Below are several areas internal audit teams should evaluate as organizations transition out of the shutdown and prepare for continued uncertainty: 1. Disruption of Federal Funding and Cash Flow Shutdowns = freezing payments and delaying reimbursements for federally funded programs and contracts. This creates funding risks for organizations reliant on government funding, grants, or contracts. Internal audit should: Assess exposure to delayed federal payments. Review contingency plans for maintaining operations during funding gaps. Validate compliance with contractual obligations. 2. Compliance and Regulatory Delays Federal agencies often suspend routine oversight, permitting, and reporting during shutdowns. This can lead to: Missed deadlines for regulatory filings. Increased risk of non-compliance with grant or award conditions. Auditors and compliance functions should confirm that critical compliance activities are prioritized and documented, even if agency responses are delayed. 3. Cybersecurity and Data Integrity Reduced staffing at agencies like the IRS and other federal bodies can weaken oversight and increase vulnerability to fraud or cyber threats. Internal audit should: Reassess cybersecurity controls and monitoring processes. Ensure continuity of data protection measures during periods of limited federal engagement. 4. Strategic and Operational Resilience Shutdowns highlight the need for defined risk management processes. Internal audit should: Evaluate business continuity plans for prolonged disruptions. Recommend scenario planning for future shutdowns, including stress testing liquidity and workforce impacts. Assess potential revenue impacts to the organization. Government shutdowns are more than political events. They can quickly cascade into operational, financial, and compliance risks for businesses. Internal audit functions must be proactive to ensure that organizations remain resilient, compliant, and prepared for uncertainty. If you have any questions or concerns about your organization’s risk exposure, contact our team at contactsd@schneiderdowns.com. ### October 2025 Market Recap The S&P 500 has now posted six consecutive monthly gains, while the NASDAQ has extended its winning streak to seven. Both indices have recorded 36 all-time closing highs year-to-date. NASDAQ recorded strong gains in October, supported by robust earnings from major technology companies and surging interest in artificial intelligence. In the final week of the month, Nvidia became the first company to reach a $5 trillion market capitalization, while Apple and Microsoft each surpassed the $4 trillion mark. Alphabet, Amazon, Meta and Tesla also posted solid quarterly results, contributing to a 4.7% monthly gain in the tech-heavy NASDAQ. Amazon led market gains on the last trading day of the month, rallying 9.6% to a record high on stronger-than expected AI-related revenue growth and expanded data-center investment plans. The “Magnificent Seven” stocks, which now comprise roughly 38% of the S&P 500’s market weight, were the primary drivers of October’s 2.3% S&P500 gain. Just five stocks (Alphabet, Nvidia, Apple, Amazon, and Broadcom) generated more than 100% of the monthly return with nearly 60% of S&P 500 constituents declining in October. The equal-weight S&P 500 ended lower for the month, trailing by 3.2%. Overall, market sentiment remained risk-on in October, fueled by expectations of a Federal Reserve rate cut and optimism around a potential U.S.-China trade agreement. International equities (MSCI ACWI Ex-US Index) also had a strong month, returning over 3.6% for September, bringing the year-to-date returns to almost 30% for 2025. Emerging Markets (MSCI Emerging Markets) also had another impressive month, returning over 3.9% for the month of September, bringing their 2025 return almost to 32%. As the global earnings growth driver is becoming increasingly reliant on technology companies, these companies are found more so in the U.S. and Emerging Markets. Other than earnings growth, the U.S. Dollar continues to be one of the biggest drivers in cross-asset performance (still down over -8% for the year), boosting international equity returns. Another element to consider on the U.S. dollar, it has been down amidst a global risk-on sentiment surge. While not apparent yet, we will be watching to see if the U.S. dollar will receive a risk-off bid if markets eventually do go through some volatility. The Federal Reserve implemented its second consecutive rate cut on October 29th, lowering the target range for the federal funds rate to 3.75%–4.00%. At the longer end of the yield curve, the 10-year Treasury yield ranged between 4.18% early in the month and 3.97% mid-month - its first close below 4% since April 2025. The 10-year yield ended in October at 4.11%, down from 4.16% at the end of September. The Bloomberg Aggregate Bond Index gained 0.6% for the month and 6.8% for 2025. When looking at the relationship between starting yields and subsequent returns in core fixed income, starting yields tell investors a great deal about what their return could be if they hold the bond to maturity. Almost 90% of the variability in total return can be explained by the starting yield alone. Even though the reset higher in yields has created a challenging environment for bonds over the last few years, it has greatly improved the total return potential for returns going forward. Investors with longer investing horizons should consider the higher-than-average yields that bonds generally offer as the Federal Reserve has started to cut rates again.   Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### When Physical Theft Becomes a Cyber Story: Lessons from the Louvre When I first saw headlines about a daytime robbery of 100 million dollars’ worth of French Crown Jewels from the Louvre, I imagined a Hollywood heist straight out of Ocean’s Eleven. The reality was far less glamorous. Reports say the thieves parked a truck during a Sunday morning, used a truck-mounted basket lift to reach the Galerie D’Apollon, forced open a window with a blow torch and a small chainsaw, used an angle grinder to break through the glass cases, took nine jewels, and sped off on  mopeds… all within approximately seven minutes. Police have four suspects in custody, but none of the stolen pieces have been recovered . Bold? Yes. High-tech? Not really. Why Cybersecurity Stole the Spotlight So why is everyone talking about cybersecurity when this was clearly a physical robbery? One of my favorite lines from Ocean’s Eleven is, “Don’t use seven words when four will do.” The Louvre took that minimalist mindset too literally. A 2014 report showed the password for the Louvre’s surveillance system was “LOUVRE,” and a key platform used the password “THALES,” the name of the vendor. At least they used all caps, right? Then, in 2017, an audit found some office networks still running Windows 2003, which could not receive antivirus updates. There is no public confirmation that these issues were ever corrected. None of that played a role in the heist. The thieves didn’t exploit weak passwords or hack in through outdated systems. But once investigators started digging, these past cybersecurity failures resurfaced and immediately became part of the story. Media attention shifted from lift trucks and angle grinders to something more embarrassing: the museum’s long-ignored security basics. Even though the crime was a smash-and-grab, the Louvre’s history of neglecting fundamental protections turned outdated IT practices into a reputational liability. Why Physical Security Still Matters Cybersecurity protection is only part of a strong security posture. Physical security remains essential. Regular penetration testing, facility assessments, audits and site reviews help identify weak entry points and operational gaps. The thieves were brazen, but they were not careless. They struck during a period when gallery traffic was low and security presence was thin. They approached from outside, used equipment to bypass monitored corridors and took advantage of predictable guard patterns. The strategy highlights how timing, reconnaissance and physical access techniques can allow attackers to evade even well-designed controls. These measures may not stop every fast, coordinated theft, but they reinforce that security must protect both the physical environment and the digital estate. Strong programs take a layered approach across people, process and technology to improve resilience and reduce exposure. Protecting Reputation Through Cyber Maturity Cybersecurity is more than preventing breaches. It signals whether an organization can be trusted. Even though those weak passwords likely had nothing to do with the robbery, neglected issues have a way of resurfacing at the worst time. Now the Louvre may be remembered as much for its password hygiene as for its stolen jewels. And if nothing else, I know I will think twice before connecting to public Wi-Fi when I visit the Louvre this holiday season. If you want to learn from real breach stories and the preventative steps that could have changed the outcome, join our annual Before the Breach – A Strategic Guide to Cyber Breach Preparation webinar in January. Our cybersecurity team breaks down real incidents and practical actions every organization can take.  About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. ### Managing the Challenges of M&A During and After the Federal Government Shutdown Government contractors have faced significant uncertainty in 2025. Despite initial hopes of an invigorated Federal Government contracting environment that would spur investment, the impact of DOGE and now the October 1, 2025, Federal Government shutdown has created significant challenges for GovCon M&A. Deal Flow and Market Dynamics However, despite the obstacles, deal flow is still relatively strong. Buyers, particularly mid-size strategics, are viewing the current environment as a discount window to take advantage of an uncertain market and acquire in advance of downstream sale. Sellers, especially those approaching retirement age, remain in the market, and timing is still optimum for small business sellers and buyers to take advantage of the Safe Harbor provisions of the SBA’s new recertification rule. How the Shutdown Complicates Deal Terms With that said, the Federal Government shutdown has created challenges when crafting deal terms. How then are buyers and sellers dealing with the shutdown? What are potential landmines that need to be considered? This article addresses some key areas that should be addressed in negotiating a deal that is impacted by the shutdown. Valuation Considerations for GovCon M&A Valuations are often tied to the achievement of an Adjusted EBTIDA target for an historical or forecasted period of time. Preliminary valuations are frequently subject to adjustment should rolling trailing twelve month adjusted EBITDA fall below the initial valuation threshold. The Federal Government shutdown will result in 4th quarter 2025 numbers falling below pre shut down expectations for contractors whose funding is adversely affected or where work is delayed when government oversight or administration is required for work to proceed on funded contracts. How are buyers and sellers dealing with this? We are seeing deals where the parties agree to look through the shutdown – that is, there is no impact to valuation so long as revenue and adjusted EBITDA levels return to pre-shutdown levels. In evaluating the viability of this potential workaround, multiple factors come into play including understanding what period of time is required to return to pre-shutdown levels, especially when a Company’s workforce may be adversely affected for those employees or 1099s who may seek alternative employment in non-impacted industry sectors. In some instances, upfront consideration is being moved downstream to an earnout or other contingent payment based on resuming pre-shut down revenue and adjusted EBITDA levels. Slippage in pipeline awards can also complicate projected performance targets. Working Capital Impacts Impacts to working can be significant due to payment delays and an increase in unbilled or potentially unrecoverable costs. Payment delays, for instance, can result in a highly inflated receivable balance that will favor the buyer if not effectively normalized in establishing the working capital peg or target. Likewise, receivable levels can decrease on certain contracts which are impacted due to work stoppages and delays – these must also be addressed. Shutdown-Related Cost Treatment Incremental costs associated with the shutdown, especially those related to employee retention, should be tracked, monitored and ideally treated as an adjustment to EBITDA. At-Risk Work and Recoverability A contactor may continue work on a contract where stoppage is impractical or to maintain good relations with the government customer. Where funding or payment is not assured at the time of shutdown, such costs can accumulate as unbilled receivables and recoverability will need to be a focal point during diligence. Sellers should carefully evaluate the impact of cost recovery. Third-Party Funding Considerations Deals where third-party lending is key for a buyer, risk is being ameliorated through the use of seller financing, thus lessening the strain on senior lenders. Also pivotal is finding a lender that is knowledgeable of the government contracting industry. Now is not the best time to obtain funding from lenders that do not have experience in the space. Earnouts and Deferred Payments There has been a proliferation of the use of earnouts and deferred payments in the purchase of Federal Government contractors in 2025 primarily as a result of the uncertainty of DOGE, streaming of the procurement process, termination of contracts, award delays, etc. The Federal Government shutdown will further impact earnout dynamics, especially for payments based on 2026 or near term performance. Just a few considerations are: Reduction in workforce – Contractors that experienced a decrease in workforce due to voluntary terminations during the shutdown must often replace those employees/consultants to achieve pre-shutdown revenue and profit levels. Delays in finding and onboarding employees may be key to returning to pre-shutdown levels – this can be exacerbated where the new employees must be approved/cleared by the customer. This can impact both revenue and profitability during the earnout period. Burning hot – while burning hot on contracts post shutdown may help achieve or exceed target revenue levels, margins may be adversely affected. Careful consideration of the consequences of burning hot will often vary by contract or contract type and may require contract officer approval. Performance based milestones – earnouts that are milestone based or tied to a specific non-financial goal or objective (e.g., contract renewal) may be adversely affected by the shutdown. Timing delays should be considered upfront where practical. Earnout provisions will require careful negotiation to arrive at an equitable resolution. The government shutdown has added increased complexity to an M&A environment that was already fraught with challenges. Having an experienced and cohesive deal team will help address such challenges as will negotiations that benefit from considering the other party’s perspective in arriving at deal terms that are fair to both parties. If you have any questions, please contact the SD Capital team at contact@sdcapital.com or visit www.sdcapital.com. To download a print version of this article, please click here. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### 5 Red Flags That Could Be Hurting Your Dealership’s Financial Health Strong financial controls are critical to protecting a dealership’s profitability and long-term growth. Many dealerships operate with lean accounting teams and limited oversight, which can allow small issues to grow into larger financial challenges over time. In working with clients across the industry, we often see early indicators that signal when stronger risk controls are needed. Below are five common red flags that can help dealership owners identify potential vulnerabilities before they become costly problems. Financial Results Not Aligning With Department Performance When the accounting profit and loss statement shows results that do not align with sales, service, or parts performance expectations, it may be a sign of misclassified entries or inconsistent reporting between departments. Lack of Segregation of Duties in Cash Handling A single employee performing multiple steps in cash handling creates a high risk of error or fraud. For example, an individual who records deposits and manages accounts receivable or writes checks and manages vendor arrangements could conceal misappropriations without proper review or oversight. Sloppy Accounting Schedules Incomplete or outdated schedules for any account, but especially receivables, cash clearing and bank activity can make it difficult to verify balances and identify errors. This can also slow down the monthly close and frustrate auditors or leadership who rely on timely reports. Unexpected 13th Month Adjustments Unexpected adjustments at year-end that significantly change profitability, such as large write-offs of uncollectable amounts or unrecorded expenses, can suggest that financial activity wasn’t properly captured or reviewed during the year. Unreconciled Bank Accounts Bank reconciliations are such a fundamental accounting function that unreconciled accounts are often the sign of much larger problems. These problems may be as innocent as inadequate training or as malicious as outright theft. Don’t let bank accounts go unreconciled and be sure to fully investigate any delays. As each month passes, it becomes more difficult to identify intentional and unintentional differences. How Can Schneider Downs Help? If these red flags sound familiar, we can help you close the gaps and restore clarity, control, and confidence across your operations. Reach out to our Dealership Industry Group at contactsd@schneiderdowns.com  to start the conversation. Related Resources Risk Advisory Services for Dealerships Dealership Solutions Brochure About Schneider Downs Dealership Services Schneider Downs’ Dealership practice helps single-point stores and multi-location groups strengthen operations, improve profitability, and plan for long-term growth. Our cross-functional team delivers audit and assurance, tax and accounting, risk advisory and cybersecurity, digital innovation (automation, analytics, custom DMS reporting), transaction advisory, forensic accounting, reinsurance advisory, exit and succession planning, and wealth management—led by responsive senior professionals who know the dealership business. We actively contribute across NADA, AICPA dealership forums, and state associations, bringing timely insights and practical guidance to every engagement. To learn more, visit our dedicated Dealerships page or contact contactsd@schneiderdowns.com ### 4 Ways Managed Accounting Helps Your Business Succeed Managed accounting, also referred to as outsourced accounting, helps businesses save money, gain expert financial guidance, and scale with confidence. Managed accounting is becoming a go-to solution for businesses that want more than just basic bookkeeping services. By working with a team of experienced professionals, companies gain access to expert financial guidance, scalable support, and the latest technology without the challenge of building everything in-house. The result is smarter decision-making and greater efficiency. Here are four of the most important benefits businesses see when they choose managed accounting services. Cost Savings That Boost Your Bottom Line – Gain the capabilities of a full in-house accounting team without the weight of payroll, benefits, or overhead. A fixed monthly fee means predictable costs and more capital to reinvest in growth. Smarter Decisions with Expert Financial Insight – Your team gets direct access to industry and subject-matter experts who provide real-time tax strategies and modernization guidance. These insights empower leadership to make faster, more informed decisions that drive measurable business results. Scalability That Matches Your Growth – As your business evolves, your accounting support evolves with it. Resources scale to match your changing needs, ensuring you’re never over- or under-resourced. This flexibility lets your team stay focused on strategy, not administrative gaps. Modern Technology That Powers Efficiency – With a secure, cloud-based accounting platform, your team works faster and smarter. Automated processes replace manual tasks, improving accuracy, increasing efficiency, and freeing up valuable time to focus on growth. Together, these benefits make managed accounting a cost-effective and future-focused solution for growing businesses. By combining financial expertise, flexible support, and modern technology, you gain the resources to make smarter decisions and keep your business moving forward with confidence. If you think your organization may benefit from Managed Accounting Services, or if you’d simply like to learn more, reach out to our team at contactsd@schneiderdowns.com. How Can Schneider Downs Help? The Schneider Downs Managed Accounting team delivers flexible finance, accounting, and tax solutions designed around your business. From monthly reporting and virtual CFO support to strategic  tax planning, we scale with your needs. Our process is collaborative and seamless as we work with you to define priorities and guide you through an onboarding experience that sets the foundation for long-term success. Learn more at https://schneiderdowns.com/managed-accounting. ### JLR Cyber Breach: Business Interruption Insurance Coverage Jaguar Land Rover (JLR) detected a devastating cyberattack on August 31st that took technology systems offline, resulting in halted manufacturing across factories and negatively impacted dealer service and repair operations for over a month. Some of the diagnostic tools used by dealers are JLR-controlled and unavailable. The attack was so severe that the UK government intervened with a £1.5 billion loan guarantee to stabilize the supply chain, while Tata Motors, JLR’s parent company, secured an additional £2 billion emergency credit line. The Cyber Monitoring Centre has estimated this event caused a financial impact of at least $2.6 billion in the United Kingdom alone. With JLR’s interconnected digital infrastructure offline, downstream dealers were impacted. Service departments faced slower service and related customer dissatisfaction, leading to lost revenue and negatively impacting dealers’ bottom lines. The Case for Cyber Business Interruption Insurance For auto dealers, especially those tied to large OEMs like JLR which rely on digital infrastructure and just-in-time manufacturing, this incident underscores the critical importance of cyber business interruption insurance. According to Reuters, JLR had been negotiating an insurance policy providing business income loss protection related to cyber events but had not finalized that deal. As a result, JLR has been left to recover without an insurer to step in. Although JLR didn’t have active coverage, some JLR dealers have cyber insurance coverage extending to impacts from cyber breaches at service providers. These policies will help the dealers recover lost business income. Many of these policies also provide coverage for forensic accounting consulting services to assist the insured with their claim. How Can We help? Properly calculating lost business income for auto dealers requires a detailed understanding of dealer operations and their nuanced revenue streams and financial statements. Schneider Downs has a long history of advising vehicle dealers across the country on accounting, tax and other business advisory matters, including specialized expertise in analyzing and consulting on loss of business income for auto dealers related to business interruptions. Dealer management system service provider CDK experienced a cyber breach that made its system unavailable for a couple of weeks during the summer of 2024. Schneider Downs provided forensic accounting consulting services to several of our impacted auto dealer clients. We reviewed the dealers’ initial lost business income calculations, which had been calculated by a forensic accountant hired by their insurance carrier. Each calculation contained oversights that would have significantly negatively impacted the coverage amounts paid to our clients. After our review and feedback, our clients’ revised calculations increased by approximately 10% to 42%. With our help, our clients received the additional money rightly owed to help with their recovery. If your dealership was impacted by JLR’s cyber breach and have loss of business income coverage for interruptions caused by service provider breaches, we are here to help make sure you receive what you are due. If you need help navigating your loss of business income claim, including reviewing your insurance carrier’s hired forensic accountant’s loss of business income calculation, please contact our forensic accounting director James Rumph at jrumph@schneiderdowns.com or (614) 586-7012. About Schneider Downs Business Advisory Our experienced team of business advisors includes Certified Public Accountants (CPA), Certified Valuation Analysts (CVA), a Master Analyst in Financial Forensics (MAFF), and Certified Mergers and Acquisition Advisors (CM&AA). We leverage our industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. ### Cybersecurity Awareness Month is Over… Now What? As another Cybersecurity Awareness Month comes to a close, many companies are packing up their posters, taking down reminders, and moving on to the next initiative. But while awareness campaigns wind down, threat actors don’t. They don’t take holidays. They don’t wait until next October. This is exactly why building lasting security habits matters. Good cyber hygiene is not a once-a-year theme. It’s an everyday commitment. Throughout the month, our cybersecurity team explored the evolving threat landscape and shared practical strategies to help organizations strengthen their defenses. From governing emerging technologies to preventing breaches and rethinking authentication, these conversations focused on one goal: turning awareness into action. Here’s a look back at the topics we explored this month that matter well beyond October: AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant 5 Things Companies Wish They Did Before a Breach Did You Use a Password to Login Today? You’re Set Up for Failure! We always value Cybersecurity Awareness Month, but what matters most is working with our community and clients year-round to help build stronger defenses and smarter security habits. Remember, October is a reminder, not a finish line. Stay Ready Before the Breach Happens To keep security top of mind, we’re hosting a cybersecurity webinar, Before the Breach – A Strategic Guide to Cyber Breach Preparation, on January 13, 2026. This session will highlight real incidents, and the practical steps companies wish they had taken before an attack. These proven practices help organizations shift from reactive to proactive security. Registration is open now, and we hope you can join us. Year-Round Security Resources Our cybersecurity team is continuously adding new resources designed to help protect both organizations and individuals. These can be accessed anytime through our Cybersecurity Resource Center, and you can stay up to date by subscribing to our bi-weekly cybersecurity newsletter, Focus on Cybersecurity, which shares the latest threats, trends, and industry best practices. How Can Schneider Downs Help? If you have any questions or would like to talk about your organization’s security resilience and cybersecurity practices, our team is here to help. Contact us at cybersecurity@schneiderdowns.com, and we’ll be glad to discuss your security program and how to strengthen it.  About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. ### Why Strategy Matters: Unlocking Organizational Value Through a Strategic Internal Audit Function A well-developed strategy can transform the internal audit function from a compliance checkpoint into a trusted advisor that drives organizational success. In today’s dynamic business environment, internal audit functions are increasing their roles to not only assess controls but to deliver strategic value.  According to the Institute of Internal Auditors (IIA), strategic planning is not just a best practice; it’s a requirement under Principle 9 of the Global Internal Audit Standards. The Benefits of a Strong Internal Audit Strategy A strong strategy enables the internal audit function to: Align with the organization’s mission, goals, and evolving risks Anticipate future challenges and proactively address them Allocate resources efficiently to areas of highest impact Elevate the function’s relevance and influence across the enterprise Foster continuous improvement and innovation Demonstrate measurable contributions to organizational performance A well-thought-out strategy is the key to adding value. Building a Value-Driven Strategy The IIA has published a Global Practice Guide entitled Developing the Internal Audit Strategy, which details a six-step process for creating an internal audit strategy designed to deliver value. Vision: Establish the future vision of the internal audit function. This sets the tone for how the function will work to meet stakeholder expectations, articulate priorities, and promote continuous improvement. Strategic Scan: This step is all about understanding the internal audit function and identifying factors that may impact how it operates.  This includes assessing internal and external environments to identify trends, risks, and opportunities. Analysis: Using the results of the strategic scan, compare the current state with the desired future state. This can be accomplished through various techniques, including SWOT analysis, gap analysis, or scenario analysis, which reveal where the function can improve and where it can add the most value. Strategic Objectives and Initiatives: Set clear goals and actionable steps that move the function toward its vision. These initiatives should be aligned with enterprise risk and performance priorities. Communication: Share the strategy with stakeholders to build buy-in and reinforce the function’s role as a strategic partner. Review and Revise: Monitor progress and adapt the strategy as needed. This ensures the internal audit function remains agile and continues to deliver value over time. A strong internal audit strategy provides a vital foundation that helps shape the organization’s direction and drive its success. It empowers the function to go beyond assurance and become a driver of organizational resilience, performance, and trust. By investing in strategic planning, internal audit leaders position their teams to deliver insights that matter, create lasting influence, and drive continuous value. How Can Schneider Downs Help? Schneider Downs can help your organization transform internal audit from a compliance checkpoint into a strategic partner by building future-focused strategies, identifying opportunities for greater impact, and equipping your team to deliver insights that drive performance, resilience, and trust. For more information, contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Business Risk by the Numbers: What Leaders Should Be Watching in 2026 Explore the key business risks shaping 2026, from talent and workforce challenges to cybersecurity, fraud, AI, and ownership transitions. Numbers don’t lie. They tell the story long before the impact shows up in a board meeting or a balance sheet. The numbers we’re seeing right now reveal where  pressure is building across core operational, business, and financial areas. There are five key risk areas every leader should be paying attention to right now.  They begin with the people who keep the business running, extend into technology and fraud, and grow more complex with data, AI, and ownership transitions. These trends are already shaping the 2026 business landscape and understanding them early is the first step to staying ahead. Talent and Workforce Risk The talent gap is widening across finance and accounting: 75% of CPAs are expected to retire within the next 15 years 80% of companies say they can’t recruit or retain the finance talent they need 84% of CFOs report shortages in accounting talent, followed by FP&A (49%) and accounts receivable/payable (42%) Losing experienced talent means losing knowledge that can’t be replaced overnight. It drives up hiring costs, strains teams, and increases the risk of costly mistakes. A smart strategy plans for both visible and hidden gaps. The right outsourced support can ease pressure, keep operations steady, and create room to grow. Cybersecurity and Third-party Vendor Risk Technology drives growth, but it also exposes companies to bigger and faster-moving threats: Cybercrime is projected to cost the world $10.5 trillion in 2025, making it the third-largest economy in the world Ransomware attacks are up 37% year-over-year and appear in 44% of breaches Third-party vendor breaches doubled to 30% in 2025 90% of companies lack the maturity to defend against modern, AI-driven attacks Cyber incidents can trigger major financial losses and legal exposure. They disrupt operations, damage reputation, and bring costly regulatory challenges. Recovery and insurance expenses continue to climb, and many organizations are not prepared. Prioritizing cybersecurity as both a budget line item and an organizational priority with proper assessments and remediation plans is key to staying ahead of the risk. Fraud and Financial Crime Risk Fraud isn’t a theoretical issue. It’s already hitting businesses hard: Organizations lose an estimated 5% of their annual revenue to fraud 77% of executives say risks are harder to detect and manage, and 72% admit their risk management capabilities haven’t kept pace 71% of executives expect financial crime risk to increase in 2025 Even modest levels of fraud can lead to significant financial losses over time. It attracts regulatory attention, weakens stakeholder trust, and increases the need for stronger controls and audits. Investing in proactive monitoring and fraud prevention strategies helps organizations protect both their finances and their reputation. AI Governance and Operational Risk AI is advancing faster than most companies are prepared for: 92% of organizations plan to increase AI investments over the next three years, but don’t have clear roadmaps or governance structures to manage that growth 48% of leaders say their organizations lack the high-quality data needed to operationalize AI effectively Investing in AI without a clear strategy leads to wasted resources and fragmented systems. Weak governance creates compliance and security gaps, and poor data limits the value AI can deliver. Organizations that build a strong data foundation and clear governance plans are better positioned to turn AI into real business value while reducing risk. Ownership Transition and Valuation Risk Succession planning is one of the most overlooked business risks: 43% of small business owners plan to sell their companies in the next few years A well-prepared business can command 20 to 30% higher valuation than one without a plan Unplanned exits can diminish enterprise value and disrupt culture, operations, and strategy. Without a clear transition plan, leaders risk leaving money on the table and weakening the organization’s future. Proactive exit planning, supported by value advisory and investment banking expertise, can help maximize valuation and protect a business through change. The risks shaping 2026 are real, and the numbers make that clear. Acting early is what separates reacting from leading. With the right strategy and support, businesses can manage these challenges before they grow. If these challenges sound familiar or you'd like to discuss your goals for the year ahead, please reach out to your Schneider Downs contact or our team at contactsd@schneiderdowns.com. ### Coal vs. Natural Gas: Market Prices and Future Outlook As of late 2025, the energy market reveals a stark divergence between coal and natural gas in both pricing and trajectory. Coal prices have remained relatively stable, buoyed by global demand—particularly in Asia, where countries like India and China continue to build new coal-fired plants. Despite environmental concerns, coal consumption remains resilient, with emissions from coal still contributing significantly to global totals. Natural gas, on the other hand, has experienced a notable rebound. The U.S. benchmark Henry Hub spot price averaged around $3.60/MMBtu in the second half of 2025, up from $2.19/MMBtu in 2024. This surge is attributed to colder-than-average temperatures, increased residential heating demand, and a sharp rise in liquefied natural gas (LNG) exports. Forecasts suggest prices will climb further to $4.20–$4.80/MMBtu in 2026, driven by tightening supply-demand balances and new export projects. Looking ahead, coal faces mounting pressure from regulatory and environmental shifts, especially in Western markets. However, its affordability and reliability continue to make it attractive in developing economies. Natural gas, while cleaner, is increasingly influenced by global market dynamics. U.S. production growth is slowing due to capital discipline and regulatory hurdles, while LNG exports are expected to expand by over 20% by 2026. In summary, coal remains a steady energy source with regional growth pockets, while natural gas is poised for price volatility and global integration. ### Understanding §200.507: Program-Specific Audits Under Uniform Guidance Program-specific audits are a specialized form of compliance review conducted when an entity expends Federal awards under a single program and is not required to undergo a full single audit. Section 200.507 of the Uniform Guidance outlines the framework for conducting these audits, including the use of audit guides, auditor responsibilities, and reporting requirements. See below for a summary of the framework. Availability of Program-Specific Audit Guides: When a program-specific audit guide is available, auditors must adhere to both the guide and Generally Accepted Government Auditing Standards (GAGAS). These guides provide detailed instructions on: Internal Control Evaluation Compliance requirements Suggested audit procedures Reporting formats A current list of these guides can be found in Appendix VI of the Uniform Guidance Compliance. When No Audit Guide Is Available: If no program-specific audit guide exists, the audit must follow the same standards as a major program audit within a single audit framework. Responsibilities are divided between the auditee and the auditor: Auditee Responsibilities include: Financial statements for the Federal program A Schedule of Expenditures of Federal Awards (SEFA) Notes on significant accounting policies A Summary Schedule of Prior Audit Findings (§200.511(b)) A Corrective Action Plan (§200.511(c)) Auditor Responsibilities include: Audit the financial statements in accordance with GAGAS. Assess and test internal controls (§200.514(c)). Evaluate compliance with applicable laws and award terms (§200.514(d)). Follow up on audit findings and assess the accuracy of the auditee’s summary (§200.511). Report current-year audit findings (§200.516). Reporting Format: Auditor reports may be combined or separate, but must include: An opinion (or disclaimer) on the fairness of the financial statements A report on internal controls, including scope and results A compliance report with an opinion (or disclaimer) A Schedule of Findings and Questioned Costs consistent with §200.515(d) Submission Requirements Audits must be submitted: Within 30 calendar days of receiving the auditor’s report, or No later than nine months after the end of the audit period—whichever is earlier. If the due date falls on a weekend or Federal holiday, submission is due the next business day. Submission Process With a guide: Submit the data collection form (§200.512(b)) and required reporting to the Federal Audit Clearinghouse (FAC). Without a guide: Submit the data collection form, financial statements, summary schedule of findings, corrective action plan, and auditor’s reports to the FAC. Auditees must ensure that the reporting package excludes protected personally identifiable information (PII) and, unless restricted by law, make it publicly available. Please reach out to Schneider Downs if you have any questions about program audits – we are happy to assist! About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### October Investment Corner - What is a Government Shutdown? Every year, Congress must pass, and the President must sign, budget legislation for the next fiscal year, consisting of 12 appropriations bills, one for each Appropriations subcommittee (Agriculture, Commerce, Defense, etc.). The U.S. government has been partially shut down for 17 days, as of the writing of this article, due to Congress’s failure to pass any of the 12 appropriations bills required for FY 2026. Without these bills or a continuing resolution, non-essential federal functions halt, while essential services and mandatory programs continue. Since Congress introduced the modern budget process in 1976, there have been 20 “funding gaps,” including the 2018-2019 shutdown and the one in January 2018, when funds were not appropriated for at least one day. Since 1981, ten funding gaps of three days or fewer have occurred, mostly over a weekend when government operations were only minimally affected. There have now been four “true” shutdowns where operations were affected for more than one business day. The first two happened in the winter of 1995-1996, when President Bill Clinton and the Republican Congress were unable to agree on spending levels, causing the government to shut down twice, for a total of 26 days. The third was in 2013, when a House and Senate standoff over funding for the Affordable Care Act (ACA) resulted in a 16-day shutdown. The fourth shutdown in December 2018 and January 2019 – technically only a partial shutdown because five of the 12 appropriations had previously been enacted – centered on a dispute over border wall funding and was the longest-lasting shutdown at 35 days. Shutdowns are costly. Federal agencies incur expenses preparing contingency plans, lose revenue from fees, and face contractor premiums to account for the uncertainty of not being paid. The Congressional Budget Office (CBO) estimated that the 2018-2019 shutdown reduced Gross Domestic Product (GDP) by a total of $11 billion, including $3 billion that will never be recovered. Private businesses also suffer from delays in permits, loans, and certifications. A 2019 Senate report found that the three government shutdowns in 2013, 2018, and 2019 wasted nearly $4 billion of taxpayer dollars. Government shutdowns and U.S. defaults may often be confused, but they’re not the same. Unlike shutdowns, a government default—triggered by breaching the debt ceiling—would jeopardize all federal payments, including debt interest and mandatory spending. While shutdowns are disruptive, defaults pose far greater economic risks. For more information on the debt ceiling and what the impacts from a government default could look like please see: Our June Investment Corner Article Coffee with Alissa – The Debt Ceiling Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### 3 Signs It’s Time to Consider Managed Accounting What are key signs your organization should explore outsourced accounting? Many businesses today are navigating challenges that go beyond daily accounting tasks. Retirements among experienced staff, difficulty hiring new talent, and rising salary costs make it harder than ever to build a stable in-house team. At the same time, managing cash flow and setting aside time for long-term planning often take a back seat to immediate demands. Managed accounting services can help close these gaps by giving companies access to seasoned professionals, from accountants to virtual CFOs, who bring the expertise and structure needed to move the business forward. Below are three common challenges we help companies overcome. 1. Talent Acquisition and Attrition Can’t find the right people? Budgetary constraints for new hires? Trusted leader about to retire? Our managed accounting model provides an accounting team, including a virtual CFO, at your fingertips without the excess costs associated with in-house hires. 2. Cash Flow Constraints Our team, led by a virtual CFO, can drive working capital management and cash flows analysis and basic cash flow modeling. 3. Current Strategic Planning Process Limitations We often hear, “We are growing at a rapid pace and as a result, we do not have enough time to develop KPIs or to forecast our annual results and prepare a three-year strategic plan.”  Leave to it us to step in and implement a forecasting and strategic planning process, whether it be for a one, three, or five-year period. If these challenges sound familiar, managed accounting can step in to fill the gaps. With expert guidance and flexible support, your business can stay focused on growth instead of remaining stagnant. If you think your organization may benefit from Managed Accounting Services, or if you’d simply like to learn more, reach out to our team at contactsd@schneiderdowns.com. How Can Schneider Downs Help? The Schneider Downs Managed Accounting team delivers flexible finance, accounting, and tax solutions designed around your business. From monthly reporting and virtual CFO support to strategic  tax planning, we scale with your needs. Our process is collaborative and seamless as we work with you to define priorities and guide you through an onboarding experience that sets the foundation for long-term success. Learn more at https://schneiderdowns.com/managed-accounting. ### Endearing Yourself to Clients—No Drama Required: The Power of the R&D Tax Credit Reprinted with permission from the Allegheny County Bar Association's Lawyers Journal. In the fictional worlds of television and cinema, attorneys have endeared themselves to their clients in many, often comical ways. Saul Goodman did it for years with his creative legal schemes on “Better Call Saul.”  Vinny Gambini did it when he got his wrongfully accused clients acquitted of murder charges in “My Cousin Vinny.” And while it might be entertaining to assist your clients as these aforementioned characters helped theirs, I would like to share with you a less dramatic, but more conventional way to endear yourself to your clients – the Research & Development (R&D) Tax Credit. In the ever-evolving landscape of U.S. tax law, few provisions have generated as much attention in recent years as the R&D Tax Credit under IRC Section 41 and the deduction for research and experimental (R&E) expenditures under IRC Section 174. These incentives have long served as pillars of federal tax policy aimed at fostering domestic innovation. However, legislative shifts – most notably the Tax Cuts and Jobs Act of 2017 (TCJA) and the recent One Big Beautiful Bill Act (OBBBA) – have dramatically altered the terrain. This article offers an overview of the R&D Tax Credit, including the criteria for qualification. It also examines recent developments that may affect your clients, such as: The reinstatement of immediate expensing under Section 174, New opportunities and challenges introduced by the OBBBA, and Changes to documentation requirements under Section 41. Credit for Increasing Research Activities Found in Section 41 of the Internal Revenue Code and formally called the “Credit for Increasing Research Activities,” the R&D Tax Credit was introduced in 1981 as part of the Economic Recovery Tax Act  (ERTA) and was sponsored by Rep. Jack Kemp (a former Pittsburgh Steeler) and Sen. William Roth (yes, the Roth IRA guy) as an incentive to encourage domestic R&D.  Initially set to expire in 1985, the credit was extended 16 times over the next three decades and became permanent in 2015 with the enactment of the Protecting Americans from Tax Hikes Act (PATH). The R&D Tax Credit is industry agnostic and provides a dollar-for-dollar reduction in federal tax liability for qualified research activities (QRAs).  QRAs give rise to qualified research expenditures (QREs) which are needed to calculate the credit.  QREs typically include expenses related to wages paid to employees who directly perform, supervise, and/or support QRAs, payments made to third parties who perform QRAs on the taxpayer’s behalf, and/or supplies used or consumed in the research process. The credit is calculated based on the increase in QREs over a base amount, with a regular credit rate of 20% and an alternative simplified credit rate of 14%. Each year, a taxpayer may evaluate which calculation method is best for them based on a number of factors including, but not limited to, the availability of base period data / documentation, the trend of their QREs, and the credit resulting from each method.  And while the credit is not refundable, unused credits may be carried forward up to 20 years and/or carried back one year. So how does one know when the work their client is performing could possibly qualify for the credit? Qualifying Criteria To qualify, activities must pass a Four-Part Test: Permitted Purpose – Improve functionality, performance, reliability, or quality of a business component. Technological in Nature – Based on principles of science or engineering. Elimination of Uncertainty – Must address uncertainty in capability, method, or design. Process of Experimentation – Involves evaluating alternatives through modeling, simulation, prototyping, or trial and error. The Four-Part Test is an “and” test, meaning that all four parts must be satisfied for QRAs to occur.  Essentially, if a taxpayer performs work that seeks to create a new or improved business component (e.g., a product, process, software, technique, formula, or invention) in terms of function, performance, reliability, and/or quality, the taxpayer  will likely satisfy the “permitted purpose” test.  If the work being performed by the taxpayer fundamentally relies upon principles of the hard sciences, the taxpayer will likely satisfy the “technical in nature" test.  If, through the course of their research, the taxpayer must seek to resolve technical uncertainty related to capability, method, and/or design, the taxpayer will likely satisfy the “elimination of uncertainty” test.  And finally, if the taxpayer undertakes a systematic evaluation of alternatives (e.g. prototyping, modeling, simulations, and/or trial-and-error testing) to eliminate technical uncertainty, the taxpayer will likely satisfy the “process of experimentation” test. Simple questions that you can ask your clients to determine whether they may be performing QRAs include the following: Have you recently developed any new or improved products? Have you recently developed any new or improved processes / undertaken any LEAN initiatives? Have you applied for or have you been granted any patents? Impact of the OBBBA / Rev. Proc. 2025-28 If you have clients who have historically claimed the R&D Tax Credit, they have recently received some relief in the OBBBA.  In July 2025, the OBBBA introduced IRC Section 174A, “Domestic research or experimental expenditures,” which restored taxpayers’ ability to immediately expense domestic research and experimentation expenditures (this had been taken away in 2022 as a result of the Tax Cuts and Jobs Act).  Foreign research and experimental expenditures still must be capitalized and amortized over 15 years. Other provisions of the OBBBA that help taxpayers and make claiming the R&D Tax Credit easier include the following: Immediate Expensing Returns: Beginning for tax years beginning after December 31, 2024, domestic R&E costs are fully deductible in the year incurred—no special election needed. Retroactive Relief for Small Businesses: Companies with average gross receipts of $31 million or less over the past three years can: Amend 2022–2024 returns (must be done within one year of the bill’s enactment), or Take a catch-up deduction in 2025 or split it between 2025 and 2026. Accelerated Deductions for Larger Businesses: Companies above the small business threshold cannot amend prior returns, but they can accelerate remaining amortization from 2022-24 over one or two years starting in 2025. Like any piece of tax legislation, the OBBBA left practitioners with questions that required further clarification.  This guidance was provided in the form of Rev. Proc. 2025-28 and outlines the procedures for making certain elections under the OBBBA for domestic R&E expenditures. Claiming the Credit / Form 6765 Revisions To claim the credit, taxpayers must file Form 6765 with their original timely filed tax return (including extensions).  If amending a return, there is additional documentation required.  Qualified Small Businesses (defined as having less than $5 million in gross receipts for the current year and no gross receipts more than five years prior to the current tax year)can complete Section D of Form 6765 to make the payroll tax election and then complete Form 8974 to apply the credit against payroll taxes.  This is a great way for start-up companies to utilize their credits before they have income tax to offset. In parallel with legislative changes, the IRS has revised Form 6765, the primary vehicle for claiming the R&D credit. The new form includes: Section E which seeks additional information, including but not limited to the number of business components and officer’s wages included as QREs. Section G (mandatory completion of this section required after tax year 2024) requires detailed breakdowns of QREs by business component, the business component type and the information sought to be discovered. Taxpayers with QREs ≤ $1.5 million and gross receipts ≤ $50 million are exempt from completing Section G. These changes reflect the IRS’s heightened scrutiny and underscore the need for robust documentation. Attorneys should advise clients to maintain contemporaneous records and consider implementing R&D tracking systems / methods. While one may never match the dramatic flair of Saul Goodman or the courtroom bravado of Vinny Gambini, attorneys have a real opportunity to endear themselves to clients by helping them navigate the complexities of the R&D Tax Credit. By staying informed about legislative changes like the OBBBA and the evolving requirements for documentation and compliance, one can deliver tangible value that goes far beyond entertainment. In a landscape where innovation is rewarded, guiding clients to maximize these incentives is not just good practice – it’s good business. So, the next time your client asks how you can help, remember: sometimes the best way to be their hero is through a well-timed tax credit. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Budgeting for HITRUST: What It Really Costs and How to Optimize What is the recommended approach to budgeting for HITRUST certification, and what strategies can be employed to optimize the related costs? Imagine you’re planning to renovate an old historic building. At a high level, it seems straightforward, just update the façade, modernize the interior, and ensure everything is up to code. You budget based on visible needs. However, as demo day begins, unforeseen challenges emerge with structural surprises including outdated wiring requiring complete overhauls; new code regulations that necessitate unanticipated modifications; specialty consultations to address specific issues; and extended timelines due to the complexity of the work, increasing labor expenses. Similarly, pursuing HITRUST certification often reveals complexities beyond the initial scope. What starts as a plan to meet the compliance requirements evolves into a full overhaul of your organization’s security and privacy program and the systems that are used to support it. Previously, we broke down the economic value of obtaining a HITRUST certification. Here, we break down the fees associated with the preparation, remediation, assessment, reporting, and optimization of the continuous certification process, so that you don’t have to deal with unexpected issues right before moving day. What Are Standard HITRUST Contractor Fees? Engaging a HITRUST-certified external assessor firm is an essential component of the certification process. In fact, it’s ultimately required to obtain a certification and validated assessment report. In our professional opinion, it should be the first course of action for an organization considering HITRUST. Your external assessor should be your partner throughout your HITRUST journey, guiding you through the building remodel and beyond. They have the answers to the test that you ultimately have to take and will give you the answers to prepare for that test! External Assessors are a professional service/consulting arrangement, so fees are based on the time and effort they expend. Fees can vary based on the assessment type, organizational size, and complexity of the systems in review. e1 (Entry-level): Readiness Assessment ($15,000–$25,000), Certification and Validated Assessment ($25,000–$45,000) i1 (Intermediate): Readiness Assessment ($20,000–$30,000), Certification and Validated Assessment ($40,000–$80,000) r2 (Comprehensive): Readiness Assessment ($25,000–$45,000+), Certification and Validated Assessment ($60,000–$150,000+) These figures are starting points; actual costs may be higher depending on complexity and scope. Pro Tip: Firms that are transparent about their fees should be able to help you realize discounts as you integrate automation into your control environment and mature your evidence collection and testing processes. Zoning Fees Access to the MyCSF platform is required for managing the certification process and submitting the validated assessment to HITRUST for QA validation and reporting. You will ultimately need to purchase both a professional subscription (annual) as well as a validated report agreement credit to access the platform. Professional Subscription: $15,000–$30,000+, depending on the number of licenses and any add-on features you include Validated Assessment Credit: $4,000–$8,000+ (per submission) The subscription level should align with your organization's needs and the assessment type pursued. Please note: Pricing estimates are for illustrative purposes only and subject to change. Official fees must be obtained directly from HITRUST. Internal Resource Allocation Internal costs include staff time for preparation, remediation, and coordination: Readiness Assessment and Remediation Efforts: Variable, based on identified gaps Ongoing Maintenance: Continuous investment to uphold standards Using a 100-person healthcare technology organization as an example, the internal effort required is a critical factor in achieving a successful certification outcome. On average, first-time certifications demand approximately the following internal FTE or contracted vendor hours: e1: 150–300 hours i1: 250–500 hours r2: 300–600+ hours Assuming the certification scope remains consistent, the internal effort typically decreases in year two and beyond as efficiencies are realized. Key Strategies to Optimize HITRUST Certification Costs With the help of an experienced contractor, savings can be found and, as always, planning is key! 1. Phased Readiness Approach Implementing a phased approach allows organizations to tackle the certification process in manageable segments: Phase 1: Conduct a readiness assessment to identify gaps Phase 2: Address remediation efforts systematically Phase 3: Undergo the validated assessment This structured method can lead to more efficient resource utilization and cost savings. 2. Leverage Automation Tools Work with your contractor to reduce manual control testing and develop custom automated control techniques. Additionally, consider utilizing compliance automation platforms, which can streamline evidence collection, control mapping, and reducing manual efforts and associated costs. 3. Align Scope with Business Needs Clearly defining the scope of the assessment to include only necessary systems and processes can prevent unnecessary expenditures and focus efforts where they are most impactful. Securing Leadership and Financial Buy-In Project costs add up fast, and it’s important to prepare stakeholders upfront. 1. Present a Clear Business Case Articulate the value of HITRUST certification in terms of risk mitigation, market competitiveness, and regulatory compliance to garner executive support. 2. Develop a Detailed Budget and Timeline Providing a comprehensive plan with projected costs and timelines can build confidence among stakeholders and facilitate resource allocation. 3. Highlight Long-Term Benefits Emphasize how certification can lead to long-term savings by reducing the likelihood of data breaches and associated penalties. Building Better with Partnership Projects can be unpredictable, costly, and time-intensive. When working on new projects, that is even more so the case and, for that reason, it’s important to have a partner who has been there before. A partner that is open, honest, and upfront with everything will best prepare your project to proceed. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at: contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Did You Use a Password to Login Today? You’re Set Up for Failure! A 5-minute reality check for executive leadership on modern authentication threats. In support of Cybersecurity Awareness Month, we are spotlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. The focus of this article is on combating modern authentication threats. What you have been taught about authentication is wrong. It’s time to be clear about our limitations as humans: we are bad at making passwords and we haven’t learned our lesson after years of compromises on our most sensitive programs and infrastructure. You have probably heard the following guidance from your IT and Cybersecurity allies working in your organization throughout the years: Don’t share your password with anybody Don’t store your password in a file on your desktop Don’t write down your password Make sure it can’t be easily guessed (avoid using team names, birthdays, derogatory words) Use a long password Use a passphrase and not a password That guidance is now obsolete, because passwords themselves are being replaced by passwordless solutions that are more secure and save users valuable time during the authentication process. Why Your Current MFA Method Is Fighting Yesterday's War To complicate the problem even further, the legacy Multi-Factor Authentication (MFA) methods that were designed to ensure you are who you say you are, have fallen victim to modern attacker methods that exploit weaknesses in the process. SMS Coders: SMS Codes can be intercepted through SIM swapping, but more commonly, they're just captured and replayed by attacker-in-the-middle tools faster than you can blink. Authentication Apps: Authenticator app codes suffer the same fate. Once that six-digit number is entered on the attacker-in-the-middle fake site, it's immediately used on the real site before it expires. Push Notifications: Push notifications are perhaps the most insidious because they've trained users to approve requests without thinking. When you get the same Microsoft Authenticator prompt you've seen hundreds of times before, your brain doesn't register that you didn’t trigger the request. The common thread isn't just that these methods can be intercepted, it's that they're designed around the assumption that the user is talking directly to the legitimate service. Simply put, when an attacker inserts themselves into that conversation, the entire security model collapses. The Anwer to Your Problems: Phishing-Resistant Passwordless Authentication Here's where the story gets better. The technology to solve this problem already exists, and you're probably already paying for it without realizing its full potential. The beauty of phishing resistant authentication solutions is that they don't require users to make better security decisions. They make man-in-the-middle attacks technically impossible with current technology, regardless of how convincing the phishing attempt might be. Windows Hello for Business: This turns your employees' faces, fingerprints, or PINs into cryptographic keys that are cryptographically infeasible to intercept or replay. When an attacker tries their man-in-the-middle attack against someone using Windows Hello, the authentication simply fails because the cryptographic response is tied to the legitimate domain and can't be redirected. Microsoft Authenticator Passwordless: This works similarly. Instead of generating a code that can be captured, it creates a unique cryptographic signature for each login attempt that only works for the specific service being accessed. An attacker can create the most convincing fake Microsoft login page in the world, but the passwordless authentication will recognize it as fake and refuse to work. Hardware Security Keys: Hardware keys, like YubiKeys, provide the same improved protection mechanisms, though they require additional hardware investment and can be more complex to manage at scale. The Authorities Are No Longer Subtle About This This isn't just vendor marketing talk. Microsoft, Google, and CISA have all moved beyond recommending phishing-resistant authentication. They're now explicitly stating that traditional MFA is insufficient for modern threats. Microsoft's own security team published data showing that their employees using security keys had zero successful phishing attacks over an 18-month period. Zero. Not "fewer attacks" or "reduced impact,” but complete elimination of successful credential-based attacks. Google reported similar results across their workforce, noting that phishing-resistant authentication didn't just reduce attacks, it made entire categories of attacks impossible. CISA has been the most direct. Their recent memoranda don't dance around the issue: they explicitly state that SMS, voice calls, and push notifications "do not provide adequate security against sophisticated attacks" and mandate phishing-resistant methods for federal agencies. When the agency responsible for protecting critical infrastructure says your security method isn't good enough, it's time to listen. Getting Started Without Disrupting Operations The path forward doesn't require ripping out your existing infrastructure. Modern identity platforms support multiple authentication methods simultaneously, allowing you to migrate gradually while maintaining business continuity. So where can you start? Start with your highest-risk users including executives, IT administrators, and any users with access to financial systems or sensitive data. These users are most likely to be targeted by threat actors and can often cause the most damage if compromised. Leverage What you Already own: If you're using Microsoft 365 and Windows devices, Windows Hello for Business can be deployed without additional licensing costs. For organizations with mixed environments, Microsoft Authenticator Passwordless provides similar protection across platforms. Plan for User Adoption: While these methods are often easier to use than traditional MFA, change management remains crucial. Users need to understand not just how to use the new system, but why it matters. Three Questions Your Technology Leaders Should Be Able to Answer The next time you meet with IT leadership, ask them: What percentage of our security incidents started with compromised credentials? Are we using the most secure form of authentication for the applications we use every day? Which users in our organization are most likely to be targeted by sophisticated phishing campaigns? These questions will lead your IT leadership to the most secure path–a path without passwords. The Window Is Closing Here's the reality that keeps cybersecurity professionals awake at night: attacker-in-the-middle toolkits are becoming more sophisticated and more accessible every month. What required advanced technical skills two years ago can now be purchased as a service for a few hundred dollars. The organizations that recognize this shift and act proactively will maintain their competitive advantage and avoid becoming cautionary tales. Those that wait for a successful attack to drive change will find themselves implementing these solutions under pressure, often while simultaneously dealing with breach response, regulatory scrutiny, and customer trust issues. Your current MFA was a significant step forward when you implemented it. Phishing-resistant authentication represents the same magnitude of improvement over traditional MFA, that MFA represented over passwords alone. The difference is that this time, we know what we're defending against, and we have solutions that work. Technology exists today in products you likely already own. The business case is clear. The regulatory pressure is building. The only question left is whether you'll make this transition on your timeline or someone else's. This article is part of a series highlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. Additional articles include: AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant 5 Things Companies Wish They Did Before a Breach How Can Schneider Downs Help? If you have any questions about assessing and strengthening your organization’s cybersecurity program, contact our team at cybersecurity@schneiderdowns.com. About Cybersecurity Awareness Month Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices. Related Resources CISA Cybersecurity Awareness Month Resource Center CISA Cybersecurity Awareness Month 2025 Toolkit Schneider Downs Cybersecurity Resource Library About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The Delay with the 2025 OMB Compliance Supplement As we move deeper into fall, many recipients of federal funding find themselves navigating a familiar yet frustrating challenge: the delayed release of the 2025 Office of Management and Budget (OMB) Compliance Supplement. Traditionally issued in late spring, this critical document provides the framework for conducting Single Audits under Uniform Guidance. As of early October, however, the final version remains unreleased, leaving auditors and auditees in a holding pattern. What’s Causing the Delay? According to communications from the AICPA’s Governmental Audit Quality Center (GAQC), the delay stems from an administrative backlog at the OMB. While a draft version of the Supplement was made available to the GAQC in August, it has not yet received final clearance from OMB leadership. The GAQC has emphasized that this draft is for planning purposes only and cannot be used to issue final audit reports for fiscal years ending June 30, 2025. Why This Matters The Compliance Supplement is more than just a technical guide, it’s the playbook auditors rely on to test federal program compliance. Without it, auditors are prohibited from finalizing Single Audits, which has ripple effects for clients relying on timely audit reports for grantor deadlines, board reporting and continued funding. For example, HUD multifamily projects may require an owner-certified submission by September 30, followed by an audited submission once the Supplement is released. Similarly, state agencies like the New Mexico Office of the State Auditor have issued due date extensions for entities requiring a Federal Single Audit. Similar to what happened during the COVID-19 pandemic, when the compliance supplement was delayed and required some later revisions, we anticipate there will be an extension on the deadline, though this has not yet been formally communicated. What We’re Doing at Schneider Downs Our team has been proactive in using the draft Supplement to begin planning 2025 engagements. We’re also closely monitoring updates from the GAQC and the OMB. As noted in GAQC Alert #488, auditors should not issue June 30, 2025, year-end Single Audits until the final Supplement is released. Looking Ahead The good news? The OMB has indicated that no significant changes are expected between the draft and final versions. But until the final Supplement is published, issuing Single Audit reports risks noncompliance and potential repercussions from federal agencies. We encourage our clients and colleagues to remain flexible and informed. While we await final clearance, consider separating financial statement audits from Single Audits where necessary to comply with lending and other requirements, and communicate early with funders about potential delays. If you have questions or need help preparing for your audit in light of the delay, please reach out to your Schneider Downs engagement team. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our Audit and Assurance page ### The TPRM Concentration Risk Playbook: DORA’s Approach to Exit Strategy and Termination What is DORA’s approach and process to exit strategy and termination? In earlier parts of The TPRM Concentration Risk Playbook series, we covered the three main types of concentration risk and how Digital Operational Resilience Act (DORA) addresses them through due diligence, stronger ICT contracting, and ongoing monitoring. In our final article, we focus on how DORA addresses concentration risk during the exit strategy and termination process, ensuring organizations can move away from over-reliance on a single ICT or cloud provider without compromising operational resilience. Although DORA is a very important regulation that includes new requirements for managing concentration risk, another unique framework exists in the area of financial organization governance known as Basel. The Basel Framework is a set of international banking regulations that must be followed by banks that are members of the Basel Committee on Banking Supervision (BCBS). The BCBS is the primary global standard setter for the prudential regulation of banks. Member jurisdictions have agreed to fully implement these standards and apply them to internationally active banks in their regions. This alignment ensures that banks adhere to necessary regulatory adjustments and transitional arrangements, maintaining the stability and integrity of the global financial system. Although the Basel Framework is not targeted at third-party risk specifically, all of the requirements below incorporate elements related to identifying concentration risk areas: Pillar 2 (Supervisory Review and Evaluation Process - SREP) Bank Responsibilities –  Banks are expected to identify, measure, monitor, and manage all material risks, including concentration risk, under their internal capital adequacy assessment process (ICAAP). Supervisory Review –  Under Pillar 2, supervisors review and evaluate a bank's ICAAP to ensure it appropriately assesses concentration risk and maintains adequate capital to cover it. Concentration Risk in Pillar 2 –  This includes evaluating the potential impact of credit exposures to single counterparties or groups of connected counterparties, geographical locations, industry sectors, specific products, or service providers, according to the Bank for International Settlements.  Understanding the Large Exposures Framework and Its Role in Managing Concentration Risk The Large Exposures Framework complements Pillar 1 by limiting a bank's exposures to single or connected counterparties. A large exposure is defined as the sum of all exposures to a single counterparty (or connected group) that is 10% or more of a bank's Tier 1 capital. Generally, exposures to a single counterparty are limited to 25% of Tier 1 capital, with a tighter 15% limit for exposures between global systemically important banks (G-SIBs). This framework applies to various exposures in both the banking and trading books. For interconnected counterparties that could cause cascading failures, the limit applies to the combined exposures of the group. In conclusion, concentration risk is no longer a theoretical concern. It is a rapidly evolving and increasingly critical component of Third-Party Risk Management (TPRM). As organizations become more reliant on external vendors for essential services, the potential for operational, compliance, reputational, and cybersecurity disruptions due to over-reliance on a single provider, region, or service type becomes more pronounced. Preparing Your TPRM Program for the Future of Concentration Risk Looking ahead, we can expect continued development of regulatory frameworks such as DORA and Basel, along with new tools, controls, and best practices designed to help organizations identify, assess, and mitigate concentration risk more effectively. As this area matures, proactive engagement, diversified vendor strategies, and robust oversight mechanisms will be key to building a resilient and future-ready TPRM program. If you are overseeing your own TPRM program, the list of questions below can help you begin identifying concentration risk: How many specific vendors does our company leverage for data center / cloud hosting? Have we confirmed the service locations / area of operations for all of our vendors? Are these information / locations tracked? How many different solutions are used across the organization for meetings, calls, instant messages? Do we have a centralized support team, or is support assistance decentralized? How many different vendors do we use for staffing? Which of our vendors support multiple business units or functions across the organization? How many vendors within our population provide a service/product that is considered a sole provider with no backup options? Are Concentration Risk questions or factors included in our IRQ / Due Diligence process? Have we considered determining quantifiable characteristics for concentration risk by service type, business unit, or risk tier? This article is part of The TPRM Concentration Risk Playbook blog series, which explores how organizations can identify, assess, and mitigate concentration risk in third-party risk management programs. How Can Schneider Downs Help? Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/tprm. ### September 2025 Market Recap U.S. equity markets seemed to have forgotten about the historical context that September has brought for investors. Historically, September has been the only month in which the S&P 500 index posts a negative average return. This September stood out for both its performance and stability. The S&P 500 index gained 3.7%, its strongest September return since 2009. Daily volatility was remarkably subdued, with no single trading day seeing a move greater than 1% in either direction – an occurrence seen only twice before since 1990 (September 1995 and September 2018). Notably, the 2018 instance preceded both a sharp market downturn and a government shutdown. The most recent U.S. government shutdown began just after midnight on October 1, 2025, following Congress’s failure to pass a funding bill. The previous shutdown lasted from December 22, 2018 to January 25, 2019. Interestingly, during that period, the S&P 500 index advanced 10.3%, but had declined 17.1% in the lead-up from October 1st through December 21st. Despite the uncertainty surrounding the current shutdown, the market posted an 8.1% gain in the third quarter. With the S&P 500 Index up 14.8% year-to-date, following annual returns of 25.0% and 25.3% in the past two years—it remains to be seen whether this rally can persist. September marked the fifth consecutive monthly gain for the S&P 500. Key contributors included investor optimism following the Federal Reserve’s 25 basis point rate cut and expectations for two additional cuts before year-end. A surge in artificial intelligence-related stocks also boosted mega-cap technology companies, fueling market strength. The prospect of lower interest rates also buoyed small-cap stocks. The Russell 2000 index rose 3.1% in September and 12.4% during Q3. The 4.3% performance spread between the Russell 2000 and S&P 500 indices in Q3 2025 is the largest in favor of small-cap stocks since the first quarter of 2021. International equities (MSCI ACWI Ex-US) also had a strong month, returning over 3.6% for September, bringing the year-to-date returns to over 26% for 2025. Emerging Markets (MSCI Emerging Markets) had a very impressive month, returning almost 6.5% for the month of September and up over 26% for the year. Chinese equities (MSCI China Index) continue to push EM to new highs for the year returning almost 10% for the month of September, and over 40% for 2025. In asset allocation, every dog has its day. Given the surge in September to all-time highs, at this pace, international equities could get into of the best years ever by year end. Over the last nearly 40 years, this would already be a top 5 annual return with 3 of the other top 4 being early cycle recoveries out of bear markets or corrections. As stocks continued to advance in September, bonds also participated in strength of performance. The 10-year Treasury yield remained rangebound. After finishing August at 4.23%, the 10-year Treasury yield finished the month of September at 4.16%. Meanwhile, the Bloomberg U.S. Aggregate Bond Index gained 1.1% for the month and is up over 6.0% year-to-date. Municipal bonds also had a relatively strong performance for the asset class, outperforming their taxable counterparts. Despite yields falling for the month, income levels are still attractive for both taxable and tax-exempt fixed income. Given the starting yield of 4.44% on the U.S. Aggregate Bond index, the 10 yr. Treasury yield would need to rise over 5.00% over a 12-month basis to see a negative total return (holding bond spreads constant). Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### 2025-2026 Priority Guidance Plan: IRS & Treasury Key Updates The 2025-2026 Priority Guidance Plan (“Plan”), released on September 30, lists projects that the Department of the Treasury and the Internal Revenue Service plan to focus on. The projects, after input from interested parties, are those that have been determined to be the most important to taxpayers and tax administration. The Plan lists priorities for the period beginning July 1, 2025, through June 30, 2026 and focuses on five main areas including: Implementation of the One Big Beautiful Bill Act; Deregulation and burden reduction; Guidance addressing Tribal tax issues; Digital assets; and The SECURE 2.0 Act. New Projects Targeting Tax-Exempt Organizations Among the new projects, one will focus on the statutory restriction in Internal Revenue Code Section 501(c)(3) that prohibits tax-exempt organizations from participating in or intervening in political campaigns—a rule commonly referred to as the Johnson Amendment. The second new initiative will examine how the fundamental public policy against racial discrimination, including recent legal developments, affects the eligibility of private schools to qualify for tax-exempt status under Internal Revenue Code Section 501(c)(3). Additional Provisions Affecting Tax-Exempt Organizations In addition to the new projects, a few of the provisions affecting tax-exempt organizations are listed below. A copy of the 2025-2026 Priority Guidance Plan can be accessed by clicking here. Final regulations under §4966 regarding donor advised funds, including excise taxes on sponsoring organizations and fund management. Proposed regulations were published on November 14, 2023. Guidance under §4960 regarding excess compensation paid by applicable tax-exempt organizations, including the expanded definition of “covered employee.” Regulations under §4945 regarding expenditure responsibility requirements. Guidance under §25F on the income tax credit for contributions of individuals to scholarship-granting organizations. Regulations under §4968 regarding excise tax based on investment income of certain private colleges and universities. Regulations under §6104 regarding the place for public inspection of materials relating to tax-exempt organizations, pensions and other plans. Guidance concerning the reporting of charitable contributions of trusts under §6034. If you would like further information on any of these areas, please contact Schneider Downs for any questions. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### 5 Things Companies Wish They Did Before a Breach What are some practical and proactive steps organizations can take to improve their security posture? In support of Cybersecurity Awareness Month, we are spotlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. The focus of this article is on breach preparedness. In the aftermath of a cybersecurity breach, organizations identify critical gaps that could have dramatically reduced their impact, recovery time, and overall costs. This article shares decades of response team experience and post-incident analysis, highlighting 5 of the top preparations companies wish they’d implemented before a breach. These aren't exotic technologies, they're proven practices that transform organizations from reactive to proactive security postures. These preparations represent the difference between a manageable incident and potential business-threatening catastrophes. 1. Incident Response Plan (IRP) A written incident response plan provides step-by-step procedures, decision trees, and resource inventories that enable coordinated response rapidly without wasting critical time resolving conflicting approaches under pressure. Key components include contact information, a decision matrix, incident classification, procedures and templates. An effective IRP should include input from all relevant stakeholders and be specific enough to guide action, yet flexible enough for unique circumstances 2. Tabletop Exercises An untested IRP may be unhelpful when needed most. Regular testing reveals gaps, builds team competence, and transforms procedures into practiced capabilities. Effective testing progresses scenario complexity over time to gradually build team capabilities and confidence. Tests should include practical aspects of scenarios such as password changes or network isolation steps. Post-exercise reviews identify lessons learned and drive plan improvements. 3. Cyber Insurance Cyber insurance has evolved from a convenience to an essential risk management tool. Beyond financial protection, modern cyber insurance policies provide access to specialized incident response resources, legal expertise, and recovery services that many organizations cannot maintain in-house. Organizations should carefully assess coverage limits, exclusions, and requirements. Many policies mandate specific security controls and preparedness measures, creating positive reinforcement for good cybersecurity practices. Regular policy reviews ensure coverage keeps pace with organizational growth and evolving threat landscapes. Misrepresented controls in cyber insurance application/renewal forms can result in denied claims. 4. Logging, Alerting and Detection Logs provide the digital forensic foundation for incident investigation informing response efforts. Without proper logging, organizations operate blindly during critical moments. Settings should be adjusted from defaults to increase log details and volume to include network traffic, system logs, security logs and user activity. Active monitoring transforms data into actionable intelligence for early threat detection and rapid response. Success requires tuned detection rules, balanced alert thresholds, and trained personnel to reduce blind spots and minimize false positives. 5. Pentesting Penetration testing simulates sophisticated attacks to provide actionable intelligence that enables risk-based prioritization over theoretical severity scores. Organizations should go beyond compliance and perform preventative assessments to identify exploitable vulnerabilities, exceptions and attack paths for prioritized remediation. Regular testing establishes security maturity baselines, demonstrates ROI to executives, and transforms cybersecurity from cost center to competitive advantage while strengthening insurance and compliance positions. By revealing vulnerabilities before attackers find them, validating controls under realistic conditions, and building response capabilities, strategic penetration testing helps organizations thrive despite cyber threats. From Regret to Resilience The question is not whether an organization will face a cyber incident, but whether they will be prepared when it happens. These 5 preparations are the collective wisdom of organizations that have experienced cyber incidents and emerged stronger. Their regrets have become our roadmap to thrive in an increasingly digital world where cybersecurity resilience has become a defining characteristic of successful enterprises. The best time to implement these controls was yesterday. The second-best time is today. This article is part of a series highlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. Additional articles include: AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Did You Use a Password to Login Today? You're Set Up for Failure! How Can Schneider Downs Help? For more information about implementing these cybersecurity preparations in your organization, or to access additional resources and tools, please contact our cybersecurity consulting team at cybersecurity@schneiderdowns.com. About Cybersecurity Awareness Month Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices. Related Resources CISA Cybersecurity Awareness Month Resource Center CISA Cybersecurity Awareness Month 2025 Toolkit Schneider Downs Cybersecurity Resource Library About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The TPRM Concentration Risk Playbook: 5 Ways DORA Targets Concentration Risk Digital Operational Resilience Act (DORA), strengthens third-party risk management by targeting five key ways to identify, assess, and reduce concentration risk. In our previous article, we explored the three core types of concentration risk Third Party Risk Management (TPRM) programs must manage: vendor, geographic, and service. Building on that, let’s look at how DORA, the EU regulation for financial entities, pushes firms to identify, assess, and reduce each of those risks. Who Does DORA Apply To? DORA applies to EU financial entities (and certain ICT providers that support them). It requires a register of critical third parties, limits over-reliance on a small number of providers, and elevates expectations for contracts, monitoring, and exit. Definitions ICT = Information and Communications Technology—the systems and services (often third-party) that underpin your digital operations. CTPP = Critical ICT Third-Party Provider—an ICT vendor designated by European Supervisory Authorities (ESAs) for direct oversight due to systemic importance. 1) Enhanced Due Diligence & Risk Assessment DORA raises the bar on what “good” due diligence looks like. Evaluate criticality of the ICT service and the single-point-of-failure risk (including fourth-/nth-party chains). Consider replaceability and realistic alternatives. Factor in third-country and subcontracting exposures into the risk rating. Align findings with your digital resilience strategy (not just a one-off checkbox). What to update: Due Diligence Questionnaire (DDQ) content, risk-tiering logic, and inherent risk models to explicitly score concentration, substitutability, and chain risk. 2) Stronger ICT Contract Requirements DORA expects contracts with ICT providers to be explicit and enforceable. Clear service scope, security obligations, and performance targets. Incident reporting timelines and defined Recovery Time Objective/Recovery Point Objective (RTO/RPO). Audit, testing, and access rights (including pen testing where proportionate). Data location/processing terms and portability assurances. Termination & exit clauses that work in practice (e.g., material breach, chronic under-performance). Why this matters for concentration: When you’re heavily reliant on a single provider, operable termination and exit rights are the safety valve that lets you move without chaos. 3) Ongoing Monitoring & Vendor Diversification DORA leans into a multi-vendor mindset where feasible. Monitor performance, incidents, resilience metrics, and subcontractors—not just once a year. Identify concentrations (by provider, region, service) and set thresholds that trigger remediation or diversification. Use portfolio-level dashboards to show where risk clusters are forming. What to add: Portfolio heatmaps, trigger thresholds (e.g., “no single vendor >40% of X”), and remediation playbooks. 4) Oversight Framework for Critical ICT Third-Party Providers (CTPPs) DORA creates a regulatory oversight lane for ICT providers designated as “critical” by the European Supervisory Authorities (ESAs). ESAs can designate providers critical based on systemic impact and substitutability. CTPPs face direct oversight, inspections, resilience testing, and corrective actions. Lead Overseers can issue recommendations; non-compliance can lead to penalties and force financial entities to suspend or exit services. Practical takeaway: Monitor which of your vendors are or may become CTPPs—their status signals heightened scrutiny and elevated expectations for your program. 5) Exit Strategy & Termination Testing DORA treats exit as a designed capability, not an afterthought. Maintain tested exit plans (data portability, transition support, knowledge transfer). Validate time-to-cutover, licensing contingencies, and access during wind-down. Test exits periodically—beyond normal BCP/DR—to prove you can detach from a concentration in practice. What to test: Cloud/provider failover drills, escrow/portability of data and configs, role-based access during transition, and communications plans. Putting It Into Practice (checklist) Register: Maintain an up-to-date critical third-party register with concentration indicators. Score: Add concentration, substitutability, and chain risk to inherent/overall risk scoring. Contract: Standardize DORA-ready clauses (audit, RTO/RPO, reporting, data location, termination/exit). Monitor: Build portfolio heatmaps with thresholds that trigger diversification or remediation. Exit: Test your exit and cutover scenarios—treat them like fire drills. The Bottom Line DORA doesn’t just ask you to document concentration risk—it expects you to design around it. If you operationalize these five areas, you’ll reduce single-point-of-failure exposure, improve negotiating leverage, and be ready when regulators (or your board) ask the only question that matters: “If this provider fails, can we carry on?” This article is part of The TPRM Concentration Risk Playbook blog series, which explores how organizations can identify, assess, and mitigate concentration risk in third-party risk management programs. How Can Schneider Downs Help? Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/tprm. ### R&D Tax Credit Update: IRS Keeps Section G Optional for 2025 and Extends Feedback Window In a welcome move for businesses and tax practitioners, the IRS announced in IR-2025-99 (Oct. 1, 2025) that it will extend the comment period for the draft instructions to Form 6765, used to claim the Credit for Increasing Research Activities (R&D Tax Credit). Perhaps most welcome for taxpayers, the IRS confirmed that Section G of Form 6765 will remain optional for all filers for tax year 2025 – a relief for many navigating the evolving compliance landscape. More Time to Weigh In After releasing draft instructions in late 2024, the IRS received significant feedback from stakeholders requesting additional time to evaluate the changes. In response, the agency has extended the comment period through March 31, 2026. Tax professionals and taxpayers are encouraged to submit feedback to lbi.rt.team@irs.gov with the subject line “Instructions for Form 6765.” Final instructions are expected in January 2026, ahead of the 2025 filing season. Section G: Optional for Now, Mandatory Later Section G, which introduces new reporting requirements, will be optional for all filers in tax year 2025 (processing year 2026). However, starting in tax year 2026 (processing year 2027), Section G will become mandatory, with limited exceptions for: Qualified Small Businesses (QSBs) under Section 41(h)(3) claiming a reduced payroll tax credit. Taxpayers with qualified research expenditures (QREs) ≤ $1.5 million and gross receipts ≤ $50 million, determined at the control group level, filing an original return. This phased approach gives businesses time to prepare for the expanded reporting requirements while continuing to claim the credit without immediate changes. Refund Claim Transition Period Extended The IRS also extended the transition period for research credit refund claims through January 10, 2027. Taxpayers now have 45 days to perfect a claim before the IRS makes a final determination. For claims postmarked after June 18, 2024, the IRS requires: Identification of all business components related to the R&D tax credit. Description of research activities for each component. Disclosure of total QREs related to wages, supplies, and contract research. Form 6765 may be used to meet these substantiation requirements. Final Thoughts The IRS’s decision to keep Section G optional for 2025 offers a much-needed reprieve for businesses still adjusting to the evolving R&D credit landscape. With more time to provide feedback and prepare for future compliance, taxpayers and advisors should take advantage of this window to engage with the IRS and ensure readiness for 2026 and beyond. How Can Schneider Downs Help? Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at contactsd@schneiderdowns.com. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### AI Governance in 2025: 3 Key Strategies to Protect Your Business and Stay Compliant Why is AI governance so important for organizational security and compliance? In support of Cybersecurity Awareness Month, we are spotlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. The focus of this article is on AI governance. Organizations everywhere are rushing to implement some form of AI.  Some are integrating AI into their service offerings.  Others are allowing employees to use monthly subscription models, such as Claude and ChatGPT. A few are simply enabling employees to utilize built-in AI capabilities, like Microsoft’s CoPilot or Google’s Gemini. Regardless of the approach your organization is taking to integrate AI into its business processes, there are established standards and frameworks you can utilize to help you address governance concerns. One of the most comprehensive AI governance playbooks to date is the AI Risk Management Framework (AI RMF), released by the National Institute of Standards and Technology (NIST). The NIST AI RMF lists four core functions of Govern, Map, Measure, and Manage.  Govern addresses the policies and practices around AI in an organization.  Map relates to the context mapping of the purpose, expectations, operations, and use of AI in an organization.  Measure relates to the measurement of AI risks.  Manage addresses the analysis of risk versus reward, aiming to answer the question, “Are the risks worth the reward with this AI deployment?” In alignment with the NIST AI RMF, the Schneider Downs Cybersecurity team suggests three key AI Governance strategies that can be used to protect your business and stay compliant: Data classification and AI usage policies AI-specific access controls and monitoring AI incident response plan 1. Data Classification and AI Usage Policies Organizations should have a data classification policy that defines the different types of data used in their day-to-day business processes.  Examples of classification types include public (website content), internal (policies and training materials), confidential (employee records and financial reports), and restricted (proprietary business materials, protected health information, and payment card information). Your organization’s data classification and AI usage policies should specifically mention the use of data with AI.  Beyond the expected “prohibited from use with AI” policy, your organization should also create “allowed to use” AI tool lists with specific use cases.  Consider creating different approval levels for data sensitivity and AI tool type.  AI technology is constantly evolving, so be sure to perform regular reviews of any AI policy.  Data classification and AI usage policies align this strategy with the NIST AI RMF Map (level 2) function. 2. AI-Specific Access Controls and Monitoring Access controls and monitoring should include the specific types of AI that are allowable.  Perhaps the organization only wants employees to use corporate-managed AI accounts versus personal subscription accounts.  AI tool usage can be monitored via logs and endpoint detection.  Be sure to create alerts for unauthorized AI tool access or anomalous data transfer patterns (specific to your business expectations/baselines).  Your organization should also schedule regular AI usage audits and include who has access and why they have access.  Continuous monitoring of AI risk levels, documented allow lists, and managing account types align this strategy with the NIST AI RMF Govern (level 4), Measure, and Manage functions. 3. AI Incident Response Plan (AI-IRP) At a minimum, AI should be included in your response plan.  It’s crucial to be prepared for the moments following a breach that might include AI.  The AI-IRP should include response steps for data leaks through AI prompts, model poisoning attempts (insider threat or otherwise), and prompt injections (phishing or other types).  Make sure your cybersecurity team members are properly trained for AI tool forensics and AI log analysis.  Also, they should be familiar with AI vendor security incident cooperation capabilities and policies.  Finally, create communication templates for notifying clients, stakeholders, and vendors of AI-related security incidents.  Managing AI risks and regularly documenting and managing response and recovery techniques aligns this strategy with the NIST AI RMF Manage (levels 3 and 4) function. This article is part of a series highlighting the critical areas where organizations must elevate their cybersecurity strategies for 2025 and beyond. Additional articles include: 5 Things Companies Wish They Did Before a Breach Did You Use a Password to Login Today? You're Set Up for Failure! About Cybersecurity Awareness Month Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices. Related Resources CISA Cybersecurity Awareness Month Resource Center CISA Cybersecurity Awareness Month 2025 Toolkit Schneider Downs Cybersecurity Resource Library About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Liquidation Basis of Accounting in Pension Plan Termination Organizations are increasingly opting to terminate defined benefit (pension) plans in favor of more cost-effective alternatives, such as defined contribution plans. While terminating a pension plan may be strategically advantageous, the process is complex and often spans several years, requiring adherence to numerous regulatory and financial requirements. One critical aspect is the transition to the liquidation basis of accounting for the plan’s financial statements. When does the liquidation basis of accounting begin? Use of the liquidation basis is required once liquidation is imminent. In the case of plan termination, liquidation is imminent once an authorized party has approved the termination. For example, if the plan termination is approved in 2025, the liquidation basis does not begin until 2025. For 2024, the plan would still use an ongoing basis of accounting. What does the liquidation basis of accounting entail? Any administrative costs incurred to close out the plan will need to be accrued in the financial statements even if the costs are not paid until the subsequent year. This can include the costs due to an insurance company if dealing with an annuity buyout, the actuarial fee associated with determining the actuarial benefit obligation, the fee to the auditor for conducting the final audit, etc. Additionally, if the employer plans to make any contributions to ensure that the plan has sufficient funds for termination, the plan will need to record those contributions as a receivable, if not made before the plan’s current year-end. Interest income expected to be earned in liquidation should also be accrued when reporting under the liquidation basis. Note that this is not an all-inclusive list; it represents some of the common adjustments that will be needed. What if there are changes to initial estimates for accruals? If the company becomes aware of additional expenses that were not accrued, or changes in interest income expected to be earned, or if there are other unanticipated events that have occurred as a result of the plan termination, then the changes in the estimates would be made upon notification. For example, if there is an estimate for expenses at 12/31/24 (under liquidation) and there are additional costs that were not captured in the 12/31/24 financial statements, then the additional amount would be expensed in 2025. Key Considerations for a Successful Transition Given the extended timeline and potential complexity of pension plan termination, entities should proactively prepare for the transition to liquidation accounting as soon as liquidation becomes imminent. Plan management should engage both their plan auditor and ERISA counsel upon determination of termination. Maintaining accurate records and securing monthly trust statements will facilitate a smoother process and ensure compliance when preparing final financial statements.   The employee benefit plan team at Schneider Downs can assist with the accounting and auditing aspects of the plan termination. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our Audit and Assurance page ### Ohio Bill 96 Compliance Countdown: What You Need to Know Before the Deadline What is Ohio Bill 96, and what are the key deadlines, requirements, and action steps needed for compliance? Recently, there’s been significant discussion regarding Ohio Bill 96 and the new cybersecurity requirements outlined in Section 9.64.  The bill was signed by Governor DeWine on June 30th, 2025, and goes into effect on September 30th, 2025. Ohio Bill 96: Compliance Deadlines The compliance deadline for counties and cities is January 1st, 2026. School districts are required to comply by July 1st, 2026. The reporting and ransomware payment requirements outlined in Ohio Bill 96 will be effective beginning September 30th, 2025. Ohio Bill 96: Cybersecurity Incident and Ransomware Reporting Requirements The new cybersecurity incident and ransomware incident reporting requirements involve the legislative authority, the executive director of the division of homeland security within the department of public safety, and the auditor of the state. The legislative authority of a political subdivision must alert the executive director of the division of homeland security within the department of public safety as soon as possible and no later than seven days after the incident is discovered.  The legislative authority must also notify the auditor of the state as soon as possible, but no later than thirty days after the discovery of the incident. Ohio Bill 96: Ransomware Payment Requirements The new requirements state that the political subdivision is prohibited from paying or complying with ransom demands without first receiving approval.  The approval process requires the legislative authority of a political subdivision to formally approve the ransom demand within a resolution or ordinance.  The resolution or ordinance must specifically state the reasons for complying with the ransom demands and how that compliance is the best course of action for the political subdivision. Ohio Bill 96: Cybersecurity Program Requirements Entities covered by Ohio Bill 96 are required to implement  a cybersecurity program that aligns with best practices established by bodies like the National Institute of Standards and Technology (NIST) and the Center for Internet Security (CIS).  The goal is to  create a cybersecurity program that protects the “…data, information technology, and information technology resources to ensure availability, confidentiality, and integrity.”  Specific call-outs for the cybersecurity program include risk and impact identification, threat detection mechanisms, incident response plans, post-incident security measures, and employee cybersecurity training. The final portion of the new cybersecurity requirements states that cybersecurity programs, reporting of and any files associated with a cybersecurity incident or ransomware incident are not considered public records.  This could prevent threat actors from obtaining such records and developing additional attack plans. What’s the Bottom Line for Ohio Bill 96 Compliance? Entities are now required to move from a “nice to have” to a “required to have” cybersecurity posture.  Ransomware demands can no longer be met without a vote in most instances.  There are now fast reporting requirements, which will hopefully contribute to faster remediations and recoveries.   These requirements are forged by real-world incidents that occurred within the state (Cleveland, Columbus, Union County, and others). How Can Schneider Downs Help? We highly recommend that you read Ohio Bill 96 for yourself and reach out with any questions.  We are happy to speak to anyone who might have cybersecurity questions related to Ohio Bill 96. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### September Investment Corner – The Impact of Fed Rate Cuts On September 17th, Federal Reserve Chairman Jerome Powell announced a 0.25% cut to the federal funds rate, lowering the target range to 4.00%–4.25%. Powell cited rising risks to the job market and signs of labor market softness as key drivers behind the decision. The Federal Reserve operates under a dual mandate: to promote maximum employment and maintain stable prices. In addressing this mandate, Powell acknowledged that there is “no risk-free path” to balancing inflation and employment, emphasizing that both persistently high inflation and a weakening labor market pose significant risks. While financial markets anticipate additional rate cuts later in 2025, Powell cautioned that further adjustments are not guaranteed and will depend on evolving economic conditions, with the Fed remaining data-dependent. The Federal Open Market Committee (FOMC), which sets the federal funds target range, convenes eight times annually, with the next meeting scheduled for the final week of October. How do Federal Reserve rate cuts impact our daily lives? While decisions made by the Fed directly influence stock and bond markets both domestically and internationally, they also have indirect effects that are felt more locally. Although the federal funds rate isn’t one that typical consumers pay, many borrowing and savings rates are linked to it. Those with variable-rate loans or credit cards may see interest rates decline in the near term, though not necessarily right away. Fixed-rate loan holders won’t experience immediate changes to their current debt, but future market conditions may present refinancing opportunities. It’s important to note that not all loans respond equally. For instance, auto loans tend to react more quickly than mortgages, largely because they are shorter in duration. Mortgage rates, on the other hand, are more closely tied to movements in the 10-year Treasury yield, which is not directly controlled by the Fed. Finally, savings rates will be affected by the Federal Reserve’s latest action. Yields on short-term savings vehicles, such as money market funds, certificates of deposit (CDs), and Treasury Bills (T-Bills), are closely tied to the federal funds rate and will likely decline quickly in response to the recent rate cut. Ultimately, the Fed’s rate cut is more than a headline, it’s a shift that touches everything from loan payments to savings returns. As economic conditions evolve, so will the choices available to consumers navigating this changing financial environment Source/Inspiration: Federal Reserve cuts interest rates: Here’s what that means for you Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### The TPRM Concentration Risk Playbook: 3 Key Types of Concentration Risk In third-party risk management (TPRM), organizations must address three key types of concentration risk: vendor, geographic and service. Ever struggle to concentrate on mundane tasks after a long day sifting through 100+ emails? Now scale that to the daily oversight of a vendor portfolio of 1,000+. Overwhelming? Absolutely. TPRM practitioners know it’s a non-stop game of cat and mouse, but managing concentration risk can slow down this so-called game and allow your program to hone-in on what matters most. TPRM protects operations, data, and reputation whenever you rely on outside vendors. Concentration risk crops up when too much dependence accumulates around a single provider, location, or service line. This turns routine incidents into enterprise problems. As organizations lean harder on cloud, software, and specialized services, concentration risk now touches operational, compliance, reputational, and cybersecurity exposure across organizations of all sizes. The Three Faces of Concentration Risk and Real-World Examples 1) Vendor Concentration – Over-reliance on one provider increases single-point-of-failure risk. One cloud for everything (AWS or Azure or GCP). One law firm for all jurisdictions. One supplier for a critical component (e.g., lithium for EV batteries). 2) Geographic Concentration – Vendors and operations clustered in one region magnify exposure to natural disasters, conflict, or political shifts. All customer support in the Philippines (typhoons, unrest). Data centers concentrated in a single corridor (e.g., Northern Virginia; flood/fire risk elsewhere). IT services centralized in one geopolitical hotspot. 3) Service Concentration – Multiple critical functions sourced from the same provider create “blast radius” risk. One vendor for both payroll and benefits. A single partner managing cybersecurity, compliance, and privacy. One logistics firm for warehousing, shipping, and returns. How to Quickly Spot It Fast Heatmap your vendors by criticality × data sensitivity × substitutability. Stack-rank exposure: % of spend, % of transactions, or % of critical processes tied to one vendor/region/service. Map fourth parties (where practical) to see hidden clusters. How to Reduce It… Without Inflating Costs Segment and diversify: a primary + secondary model for crown-jewel services. Contract for resilience: exit rights, data portability, RTO/RPO targets, tested failover. Architect for portability: multi-AZ/region designs; avoid hard platform lock-in; standardize interfaces. Stagger dependencies: separate hosting from security monitoring, payroll from benefits, warehousing from shipping. Run scenarios: “If Vendor X is down for 72 hours, what breaks? What’s plan B?” Measure & report: set thresholds (e.g., “no single vendor >40% of critical process X”) and track exceptions. The Payoff Treating concentration risk as a design constraint, not an afterthought, yields a vendor ecosystem that’s diverse, flexible, and audit ready. It won’t eliminate incidents, but it keeps local problems from becoming enterprise crises, and it gives you leverage at the negotiating table. How Can Schneider Downs Help? Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/tprm.   ### The Economic Value of HITRUST Certification Does a HITRUST certification offer actual economic benefits beyond just meeting regulatory requirements? In a landscape where compliance investments must withstand scrutiny from all angles, decision-makers demand clarity around the tangible value of security certifications and often ask themselves, does achieving HITRUST certification simply check a box for regulators—or does it deliver measurable economic advantages worth the considerable effort? To answer these questions, we reviewed the findings of the HITRUST Alliance’s recent study to assess how the promise of ROI aligns with the realities facing organizations navigating a complex risk environment. About the Economic Value of Trust Study The HITRUST Alliance’s Enterprise Strategy Group conducted a comprehensive analysis to calculate ROI, leveraging proprietary financial models, industry-standard methodologies, and customer-reported data. The analysis applied conservative assumptions to assess the total cost of achieving HITRUST certification, including direct certification expenses and avoided costs. It also quantified a range of potential benefits, such as improved operational efficiency, reduced risk from fewer security breaches, enhanced regulatory compliance, minimized downtime, and incremental revenue opportunities driven by HITRUST certification. By capturing both cost savings and strategic value, the model attempts to provide a holistic view of HITRUST’s overall economic impact. Based on this approach, the Enterprise Strategy Group estimated a staggering 464% ROI for organizations that adopt the HITRUST certification framework. Below is our summary of the key aspects of the study including perspective on the study claims and realities of HITRUST certification. Does HITRUST Certification Reduce Cyber Insurance Costs? Claim: HITRUST certification allows for avoided costs tied to discounted cyber insurance premiums, including not only lower annual insurance costs but also improved coverage quality and administrative efficiency. Conclusion: Partially True While exact savings may vary, a growing number of insurance providers, including direct partners of the HITRUST Alliance, are offering reduced premiums for organizations reaching certification in HITRUST r2 validated assessments. However, these discounts are not universally applied, and organizations should not assume automatic reductions. Actual savings will depend on the insurer, broker, industry risk posture, and scope of coverage. Can HITRUST Deliver Operational Efficiency Savings? Claim: Organizations with HITRUST certifications reported that HITRUST’s structured and comprehensive approach enabled them to reuse documentation across frameworks, minimizing duplication and reducing the effort required for additional assessments. Conclusion: Partially True The unique combination and consideration of multiple frameworks does make documentation associated with HITRUST certification easier to leverage efforts across other frameworks. This rings especially true for organizations utilizing GRC automation tools such as Vanta or Drata. However, while HITRUST’s framework alignment can streamline evidence reuse, many customers and regulators still require organizations to maintain additional attestations or certifications such as SOC 2, PCI DSS, or ISO 27001. As a result, HITRUST certification alone does not necessarily eliminate the need for parallel compliance efforts, meaning efficiency gains are often incremental rather than absolute. Can HITRUST Certification Reduce the Likelihood of Cyber Incidents? Claim: Customers with HITRUST certifications reported reduced breach-related costs, minimized regulatory penalties, and avoided downtime. Conclusion: True* These claims are true for any organization with an elevated security posture, not just those with a HITRUST certification. Previous HITRUST reports have indicated that less than 1% of HITRUST-certified organizations have fallen victim to a cyber event. However, the degree of risk reduction depends heavily on the level of certification pursued, ranging from the baseline e1 (44 requirements), to the more moderate i1 (182 requirements), up to the rigorous r2 assessment (average of ~289 requirements). Each tier reflects a different depth of control maturity and assurance, and while higher-level certifications can provide stronger evidence of security and compliance, they also demand greater investment in time, cost, and operational discipline. Organizations should therefore view HITRUST as one component of a broader risk management strategy rather than a blanket guarantee of protection. Can HITRUST Certification Lead to Incremental Revenue Gains? Claim: HITRUST certification led to indirect revenue gains, including faster sales cycles due to pre-validated security posture, competitive differentiation in regulated industries, and the ability to command premium pricing in certain contracts. Conclusion: Plausible This claim is the hardest to quantify; however, the logic is sound. HITRUST certification is an indication of a mature environment and that security is baked into the ethos of the organization. This will often lead to services or products being more marketable and will in-turn increase revenue. It’s kind of like a professional sports team upgrading its training facility. The facility doesn’t win games, but it shows commitment to excellence and attracts top recruits, which ultimately improves performance on the field. Overall Conclusion on Economic Value of Trust: True  (Results May Vary) Overall, the benefits outlined within the report are true for all organizations with an elevated security posture. In turn, achieving HITRUST certification does indicate a mature environment and that the organization is security minded. Even if ROI isn’t 464% as the report indicates, it would be hard to deny some of the value provided by the certification as outlined within the report. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at: contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Manufacturing Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect manufacturing organizations. Understanding these updates is critical to ensure compliance while also positioning your organization for long-term success. To help you better understand the potential impact of the OBBB, we’ve created a short video tailored specifically for manufacturing leaders. In this video, you’ll learn: How bonus depreciation and Section 179 expensing have been expanded What the change from EBIT to EBITDA under Section 163J means, and how it increases allowable interest deductions The new provision for Qualified Production Property (QPP) and how it enables full and immediate expensing of new manufacturing facilities The changes made to Section 174 R&D cost deductions, and how manufacturers can now expense domestic research costs immediately How manufacturers can prepare now by reviewing capital expenditures, updating tax planning models, reassessing financing strategies and revisiting R&D budgets For more resources related to the OBBB, please visit our dedicated OBBB Resource Center. How Can Schneider Downs Help? We hope this overview has helped clarify how the OBBB may affect your organization. At Schneider Downs, our manufacturing industry team brings deep expertise and practical insight to help you navigate complex legislative changes. For additional resources, please visit our resource page, where you’ll find webinars, articles, and tools tailored to the manufacturing sector. If you have questions about this legislation or would like to discuss how it may impact your organization, I would be glad to connect. We believe the best solutions come from meaningful conversations, so feel free to reach out to me directly at your convenience. ### OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Construction Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect construction organizations. Understanding these updates is critical to ensure compliance while also positioning your organization for long-term success. To help you better understand the potential impact of the OBBB, we’ve created a short video tailored specifically for construction leaders. In this video, you’ll learn: What the 199A deduction is and why its permanent extension benefits contractors How bonus depreciation has been restored to 100% and what the increased Section 179 limit means for businesses investing in new assets R&D cost deduction changes and how businesses can now deduct previously amortized expenses or amend past returns for quicker refunds New reporting rules, including what overtime reporting on W-2s enables for employee deductions and how the raised 1099 threshold reduces paperwork for contractors What accounting method flexibility now exists for residential contractors and why the elimination of the 179D deduction affects future energy-efficient building projects For more resources related to the OBBB, please visit our dedicated OBBB Resource Center. How Can Schneider Downs Help? We hope this overview has helped clarify how the OBBB may affect your organization. At Schneider Downs, our construction industry team brings deep expertise and practical insight to help you navigate complex legislative changes. For additional resources, please visit our resource page, where you’ll find webinars, articles, and tools tailored to the construction sector. If you have questions about this legislation or would like to discuss how it may impact your organization, I would be glad to connect. We believe the best solutions come from meaningful conversations, so feel free to reach out to me directly at your convenience. ### FASB Introduces Policy Election and Practical Expedient Alternatives Related to Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to address the challenges faced when applying the guidance in Topic 326, Financial Instruments—Credit Losses. Specifically, the ASU applies to current accounts receivable and current contract assets arising from transactions under Topic 606, Revenue from Contracts with Customers.   The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. Entities that elect the practical expedient and accounting policy election after the effective date will not need to perform a preferability assessment, as is typically required by ASC 2510-45-2, to determine if the accounting method is preferable to the existing policies and elections chosen by the entity.  Background: Stakeholders were concerned that identifying, analyzing, and documenting macroeconomic data required by Topic 326, such as unemployment rates and property values, can be costly and complex when estimating expected credit losses for these balances. They noted that this effort generally does not have a material effect on the estimate of expected credit losses for short-term assets. Additionally, stakeholders observed that estimating expected credit losses for current accounts receivable and contract assets collected before the financial statements are issued can require significant effort and documentation, potentially resulting in recording expected credit losses for amounts that have been subsequently collected. Stakeholders suggested that considering collection activity after the balance sheet date would provide more useful information to investors and reduce complexity for preparers.  ASU Overview: To address this stakeholder feedback, the amendments introduce a practical expedient for all entities and an accounting policy election for non-public business entities related to applying Subtopic 326-20 to current accounts receivable and contract assets arising from transactions under Topic 606.  The amendments affect the estimation of expected credit losses on current accounts receivable and contract assets arising from transactions under Topic 606, including those acquired in transactions under Topic 805, Business Combinations. The practical expedient may be applied by all entities, while the accounting policy election may be applied by entities other than public business entities.  The main provisions of the amendment include the following:  Practical Expedient: All entities may elect a practical expedient which assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts for estimating expected credit losses.  Accounting Policy Election: Entities other than public business entities that elect the practical expedient may make an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses.  These amendments differ from current Generally Accepted Accounting Principles (GAAP) by allowing entities to consider collection activity after the balance sheet date and by providing a practical expedient for developing forecasts. The practical expedient permits all reporting entities to assume no change in balance sheet date market, industry and other applicable conditions in building forecasts used to estimate these current assets. This adaptation is expected to provide decision-useful information to investors while reducing the time and effort needed to analyze and estimate credit losses for current accounts receivable and contract assets.  How Can Schneider Downs Help? If you or your organization has a need for assistance in interpreting or applying the above Accounting Standards Update, please reach out to Nick D. Lombardo, CPA or any other member of the Schneider Downs’ Accounting Advisory Services team.  ### The Two Types of Valuation Engagements What are the differences between valuation and calculation engagements? The American Institute of Certified Public Accountants’ (“AICPA”) Statements on Standards of Valuation Services (“SSVS”) identifies two types of engagements to estimate value: Valuation engagement – A valuation analyst performs a valuation engagement when (1) the engagement calls for the valuation analyst to estimate the value of a subject interest and (2) the valuation analyst estimates the value (as outlined in SSVS) and is free to apply the valuation approaches and methods he or she deems appropriate in the circumstances. The valuation analyst expresses the results of the valuation as a conclusion of value; the conclusion may be either a single amount or a range. Calculation engagement - A valuation analyst performs a calculation engagement when (1) the valuation analyst and the client agree on the valuation approaches and methods the valuation analyst will use and the extent of procedures the valuation analyst will perform in the process of calculating the value of a subject interest (these procedures will be more  limited than those of a valuation engagement) and (2) the valuation analyst calculates the  value in compliance with the agreement. The valuation analyst expresses the results of these procedures as a calculated value, which is expressed as a range or as a single amount. A calculation engagement does not include all of the procedures required for a valuation engagement. A valuation analyst may also perform more limited services under a consulting engagement, which is governed by the AICPA’s Statement on Standards for Consulting Services (“SSCS”). This type of engagement does not express an opinion or estimate of value. The nature and scope of work are determined solely by the agreement between the analyst and the client. Generally, the work is performed only for the use and benefit of the client. The two main organizations that often require valuation services, the Internal Revenue Service (in the case of estate and gift tax valuations) and the Securities and Exchange Commission (in the case of fair value valuations for public company financial reporting), generally prefer that a full valuation be performed when determining the value of an entity. In addition, an attorney might require a full valuation when preparing an analysis for a litigation matter. A consulting or calculation engagement is normally appropriate when it is not likely that the value will be reviewed by an outside party (e.g., the IRS or SEC) or be subject to litigation.  Examples of when a consulting or calculation engagement might be appropriate include: Helping clients understand the value of their company, to determine whether an offer to purchase their company is reasonable; Helping clients calculate a value for a potential acquisition target, in order to make a successful purchase offer; or Helping clients understand the value of their company for various corporate planning purposes (and the value will not be shared with outside parties). A consulting or calculation engagement can be time-saving alternatives to a full valuation; however, deciding which option is appropriate depends on the individual situation and should be discussed with your attorney and/or valuation analyst before you make a decision. Schneider Downs has significant experience providing business valuation services for a wide range of purposes. For more information, please contact Nick Lombardo (nlombardo@schneiderdowns.com) or Steve Thimons (sthimons@sdcpa.com) of our Business Advisory Group. About Schneider Downs Business Advisory Our experienced team of business advisors consisting of Certified Fraud Examiners, Certified in Valuation Analysts and Certified Mergers and Acquisition Advisors leverages its industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business events. To learn more, visit our dedicated Business Advisory page. ### FBI Issues Warning on Phantom Hacker Scam Targeting Senior Citizens Phantom hacker scams are on the rise, combining fake tech support calls, banking scams, and government impersonation to target victims’ life savings. Since 2024, the three-phased phantom hacker scam has cost Americans nearly $1 billion, and according to a recent FBI alert, it is making the rounds again. At its core, phantom hacking is a sophisticated impersonation scam. Threat actors use a phased approach to gain trust, access to devices, and ultimately money. Sadly, many victims lose their entire life savings, with senior citizens being frequent targets. How Does Phantom Hacker Scams Work? The phantom hacker scam, which was recently dramatized as a central scheme in the movie The Beekeeper, is often exaggerated on screen but in reality, still involves coordinated networks of scammers working together. Image Source: IC3.gov Unlike traditional scams, phantom hacker scams are layered and highly strategic. They focus on building trust and gaining access through a three-phase attack in which scammers impersonate technical support, financial institutions, and government officials. The goal is to convince victims that their money is at risk and needs to be protected, leading to significant financial loss through the three phases described below. Phase 1 – Technical Support Imposter The first phase often begins with a fake technical support representative posing as someone from an anti-virus or security company. Their goal is to trick the victim into downloading what appears to be a virus scanner but is actually malware that grants remote access. One common tactic is to display a pop-up warning that a computer is infected and provide a phone number for help. Calling that number connects the victim to the scammer, who pressures them to install the malicious software. Once access is gained, the scammer pretends to run a scan, claims a virus has been detected, and instructs the victim to open their financial accounts so they can “check” for issues. In reality, the scammer is looking for the largest balances to target. After identifying the most valuable account, they insist it has been compromised and warn that a representative from the financial institution will follow up. Sometimes the scammer even offers to connect the victim directly, setting the stage for the second phase. Phase  2 – Financial Institution Imposter Next, a different scammer poses as a representative from the victim’s bank or financial institution. They confirm that the account has been hacked and pressure the victim to move their money into a “safe” account through a wire transfer, cash withdrawal, or cryptocurrency transaction, often overseas. They also instruct the victim not to share details of the situation with anyone else, claiming it is for security purposes. In reality, this tactic prevents the victim from reaching out to a trusted source who could recognize the scam and intervene. Phase 3 – US Government Imposter In some cases, particularly if the targeted account is federal or government-related, the scam escalates further. A scammer posing as a U.S. government official contacts the victim to reinforce the illusion of legitimacy. This final step is designed to build additional trust, discourage the victim from seeking outside advice, and push them to complete the transfer of funds into a third-party account controlled by the scammers. How to Identify and Avoid Phantom Hackers Many people are familiar with deleting and reporting obvious phishing emails that impersonate legitimate organizations. Phantom hacker scams, however, are harder to spot because they add a human voice to the deception. This personal interaction creates a false sense of trust, and the methodical three-step approach is what makes phantom hacking a billion-dollar scam. To reduce your risk, it is important to avoid unsolicited communication from unknown individuals. The FBI also recommends the following steps to protect yourself: Do not click on unsolicited pop-ups, links sent via text messages, or attachments in emails. Do not call the phone number provided in a pop-up, text, or email. Do not download software at the request of someone you do not know. Do not allow an unknown individual to have remote control of your computer. Remember that the U.S. Government will never ask you to send money via wire transfer to foreign accounts, cryptocurrency, or gift cards. If you believe you or someone you know is being targeted by a phantom hacker scam, report the activity to your local FBI field office or submit a complaint through the FBI’s Internet Crime Complaint Center (IC3) at www.ic3.gov. How Can Schneider Downs Help? Phantom hacker scams demonstrate the importance of having a security program that protects both systems and employees. Even one compromised work computer can put an entire organization at risk of financial loss and data exposure. Schneider Downs helps businesses strengthen defenses through employee awareness, testing against phishing and social engineering, and safeguarding company devices. By making employees an active part of cybersecurity, organizations can better defend against evolving threats like phantom hacking. For more information, contact us at cybersecurity@schneiderdowns.com. ### OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Transportation & Logistics Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect transportation and logistics organizations. Understanding these updates is critical to ensure compliance while also positioning your organization for long-term success. To help you better understand the potential impact of the OBBB, we’ve created a short video tailored specifically for transportation and logistics leaders. https://youtu.be/eyQXVPZZcck In this video, you’ll learn: What bonus depreciation changes mean for asset-intensive businesses, including its taxpayer-friendly return The implications of interest expense limitations, especially for highly leveraged and asset-heavy companies Updates to R&D cost treatment, including the return to first-year expensing for qualified domestic costs How changes to credits and incentives from the Inflation Reduction Act may directly or indirectly affect your business Why mid-year tax projections and strategic planning are critical to maximizing tax benefits and minimizing liabilities For more resources related to the OBBB, please visit our dedicated OBBB Resource Center. How Can Schneider Downs Help? We hope this overview has helped clarify how the OBBB may affect your organization. At Schneider Downs, our transportation and logistics industry team brings deep expertise and practical insight to help you navigate complex legislative changes. For additional resources, please visit our resource page, where you’ll find webinars, articles, and tools tailored to the transportation and logistics sectors. If you have questions about this legislation or would like to discuss how it may impact your organization, I would be glad to connect. We believe the best solutions come from meaningful conversations, so feel free to reach out to me directly at your convenience. ### OBBB Video Series: Understanding the One Big Beautiful Bill Act – Impacts on Not-for-Profit and Higher Education Organizations The recently passed One Big Beautiful Bill Act (OBBB) introduces significant changes that will affect not-for-profit and higher education organizations. Understanding these updates is critical to ensure compliance while also positioning your organization for long-term success. To help you better understand the potential impact of the OBBB, we’ve created a short video tailored specifically for not-for-profit and higher education leaders. In this video, you’ll learn: Which proposed tax provisions affecting not-for-profits were removed before the bill became law. How the endowment excise tax has been modified, including new thresholds and a tiered rate structure of up to 8%. What expanded reporting requirements higher education institutions now face. How the excess compensation excise tax has been broadened to cover more employees earning over $1 million. Other indirect changes that may affect the sector, such as new rules for charitable contributions, Form 1099 reporting, and clean energy credits. For more resources related to the OBBB, please visit our dedicated OBBB Resource Center. If you have questions about this legislation or would like to discuss how it may impact your organization, I would be glad to connect. We believe the best solutions come from meaningful conversations, so feel free to reach out to me directly at your convenience. How Can Schneider Downs Help? We hope this overview has helped clarify how the OBBB may affect your organization. At Schneider Downs, our not-for-profit industry team brings deep expertise and practical insight to help you navigate complex legislative changes. For additional resources, please visit our resource page, where you’ll find webinars, articles, and tools tailored to the higher education and not-for-profit sectors. ### The HITRUST Journey: The Last Three Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification. Check out the first article in the series here. Into the Fog You come out of incubation and the air is different. For months, your organization existed in relative calmness, with policies documented and acknowledged, configurations set and slept, and systems humming along in the background. But now, the silence breaks and ahead lies a gauntlet of auditors and what seems like endless document requests. What felt like routine governance suddenly reveals itself as a time-constrained campaign, and every decision, every document, and every test will determine whether you emerge with the standard of trust, or retreat with scars to repair. This is the reality of the HITRUST certification journey; not a checklist to be idly marked, but a complex journey fought in phases. Strategy matters. Allies matter. Preparation matters. And survival, compliance, certification, and trust belong only to those who are willing to navigate through the fog with discipline and resolve. The journey through HITRUST certification is demanding, sometimes exhausting, often consuming, but it is also clarifying. It forces organizations to surface what was once hidden, to harden what was once fragile, to coordinate what was once fragmented. And when the final report is issued, those who have endured know they’ve done more than check the box, they’ve survived a campaign and earned a seal that speaks of both credibility and grit. Step 5: The Validated Assessment – The Battle of the CSF The fog thickens, and the march turns into an open battle. This is the validated assessment, the clash of intent versus reality. Here, the External Assessor performs fieldwork and tests whether your claims survive contact with scrutiny. Performing Validation: The assessor validates pre-assessment scores, links required documents, executes the test plan, and completes the QA checklist. Time sheets, audit trails, and the representation letter become weapons and shields. This is where most of the hours are spent. Performing validation is the most grueling part of the campaign: assessors spend days and weeks combing through evidence, re-scoring pre-assessment judgments, and linking every screenshot, configuration, and attestation to the framework. The test plan drives hundreds of small exchanges, including requests for logs, clarification emails, system demos, and each one consumes time from both the assessment team and internal staff. Assessment Results Review: Once the bulk of validation is complete, the work shifts to the assessment results review. The entity and assessor sit shoulder-to-shoulder to acknowledge findings, accepting victories and recording wounds. Inputting Corrective Action Plans (CAPS) & Signing Rep Letter: CAPS are carved into the record, a pledge that gaps will not be left unguarded. The management representation letter is signed like a commander’s oath. Reviewing CAPs: The assessor validates these commitments, ensuring every promise is backed by real action. This is no longer theory on paper. It is proof standing under fire. The validated assessment reveals not just the state of your controls, but the strength of your coordination under pressure. Step 6: HITRUST Quality Assurance Review – Trial by Fire With the assessment complete, the campaign now passes to final judgment. Your file advances to HITRUST, where a tribunal dissects *a sample of* every word, every score, every justification. This is the trial by fire, a distant but unyielding review where survival depends on precision. Performing Check-In: HITRUST performs automated quality assurance (QA) checks, scanning for inconsistencies in documents and evidence. Addressing Check-In Tasks: If issues arise, new tasks are hurled back like flaming arrows, the entity and assessor must respond timely. Reviewing Pending Check-In Tasks: HITRUST evaluates the fixes. If gaps remain, the engagement loops again until resolution. Only when the defenses hold does the assessment move forward: Pending QA: The assessment sits in waiting, queued for its reserved QA block. Performing QA: The QA Analyst begins the full, impartial review of ratings, citations, and evidence under the microscope. This includes a review of a sample of control requirements in a live screen-sharing session with the External Assessor team. In this live session, the control references are randomly selected immediately before the call and the External Assessor team shares their screen and walks the HITRUST QA Analyst through each evaluative element and the associated evidence for each sampled control requirement. Escalated QA: If numerous and/or severe concerns are identified during QA, the Escalated QA phase will be triggered. This warrants an additional, internal review conducted by the HITRUST quality team and is more intensive than the standard QA process. Common reasons for Escalated QA include significant scoring inaccuracies, insufficient evidence to prove implementation, lack of rigor or testing inaccuracies, or extensive gaps. Addressing QA Tasks: More tasks may follow; remediation and clarification continue under fire. Only when every task is closed does the review advance. But the gauntlet is not finished. Reports must be drafted, revised, and approved: HITRUST prepares and executives review the draft deliverables; the entity approves or requests revisions. Additional drafts, revisions, and reporting tasks cycle through until every open question is resolved. This trial by fire is slow, relentless, and impartial. It demands not just accuracy, but endurance. The patience to close loop after loop until applicable weaknesses are fully understood. Step 7: Certification & Beyond – The Standard of Trust Finally, the verdict: certification is granted… or… not. Regardless, a validated assessment report is published, with it’s certifying decision one way or the other. On the one hand, The Standard of Trust earned. On the other, Trust may cease to exist for now. But the journey does not end here, it changes form. Certification is not a trophy to display; it is a banner raised over your organization, a signal to the market that you have endured and can be trusted. Validity: 1 year for e1 and i1 and two for the r2. Interim reviews and recertifications loom on the horizon. Continuous Vigilance: New controls, new threats, new regulations will arise. Certification is not the end of war but the beginning of stewardship. Sustained Discipline: Prepare for each cycle as if it were your first; remediate continuously; embed resilience into the daily rhythm of operations. Those who treat certification as a finish line often falter; those who treat it as a campaign standard to uphold lead their industries forward with credibility and strength. Certification is a call to remain vigilant, to adapt as threats evolve, and to prove, again and again, that trust is not a point in time, but a posture of resilience. Final Thoughts – Epilogue: From the Fog to Watchtower The fog lifts, the battlefield quiets, and what remains is not simply survival but transformation. Your organization has marched through the gauntlet, faced judgment, and emerged stronger. Certification is the seal, but the true victory is clarity: knowing your defenses, your gaps, your strengths, and your discipline. From here, you take your place on the watchtower, bearing the Standard of Trust, not as a survivor of one campaign, but as a leader ready for the next. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at contactsd@schneiderdowns.com. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### August 2025 Market Recap The continuation of the market rally in August was driven by strong earnings from tech companies, especially those involved with AI, and growing investor optimism about upcoming interest rate cuts by the Federal Reserve. From its low point on April 8th, the S&P 500 index has advanced 29.7% over the 99 days from April 9th through August 29th. Concentration risk remains a concern within the U.S. equity space as the top 10 companies in the S&P500 account for nearly 40% of the index’s market capitalization. In August, four of these—Apple, Alphabet, Tesla, and Berkshire Hathaway—were responsible for 81% of the S&P 500's total return. While the rally initially began in a narrow fashion, it slightly broadened in August with small-cap and mid-cap stocks outperforming large-cap stocks. U.S. Large Cap equities finished the month up 2.1%, U.S. Mid-Caps up 2.5%, and U.S. Small Cap equities finished August up 7.1%, outperforming impressively. Large-cap stocks still maintain a big lead over their smaller-cap peers for the trailing 12 months ending August. After trailing their large-cap peers for the last few years, small-cap stocks may finally look more appealing to investors due to more attractive valuations and the anticipation of future interest rate cuts. International equities (MSCI ACWI Ex-US) also had a strong month, returning over 3.5% for August, bringing the year-to-date returns to over 22% for 2025. Emerging Markets (MSCI Emerging Markets) continued their relative performance and were up over 1.5% for the month of July and up almost 19% for the year. International equities, as a whole, posted positive returns for the month mainly due to a weakening in the U.S. dollar. U.S. Dollar depreciation remains one of the biggest tailwinds for international equities for 2025. As stocks continued to advance in August, bonds also participated in strength of performance.  The 10-year Treasury yield remained rangebound. After rising from 4.23% at the end of Q2 to 4.36% in July, it edged back down to finish August at 4.23%. Meanwhile, the Bloomberg U.S. Aggregate Bond Index gained 1.2% for the month and is up 5.0% year-to-date. Municipal bonds also had a relatively strong performance for the asset classes, although more moderate when compared to their taxable counterparts. That being said, income levels are attractive for both taxable and tax-exempt fixed income. Given the starting yield of 4.44% on the U.S. Aggregate Bond index, the 10 yr. Treasury yield would need to rise over 5.00% over a 12-month basis to see a negative total return (holding bond spreads constant). From a macro standpoint, the month began with heightened growth concerns following a weaker-than-expected July nonfarm payrolls report and significant downward revisions to May and June’s figures. This triggered a spike in Fed rate-cut expectations, reinforced by increasingly dovish Fed commentary. Trade developments also drew attention: after the August 1 deadline, Trump reinstated reciprocal tariffs on several countries, while a separate 90-day delay on China tariffs was agreed upon. Focus remained on bilateral deals still lacking key details. Tariffs dominated the Q2 earnings season, with many companies citing cost pressures. However, retail firms’ mitigation strategies were well received, as were signs of continued consumer spending despite evidence of consumers trading down to lower-cost options. Overall, Q2 earnings metrics were resilient. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### 7 Provisions of the OBBB That Provide a More Certain and Tax Efficient Environment for M&A Activity The One Big Beautiful Bill (OBBB) has many tax provisions that will be impactful to business owners in the next few years. Most significantly the bill extends, permanently, many provisions introduced by the 2017 Tax Cuts and Jobs Act that are favorable to business owners. Here are seven of the top provisions included in the bill that set up for a favorable environment for the next few years for business owners to consider significant acquisition or sale transactions. 1. Individual Income Tax Rates Permanent extension of the Tax Cuts and Jobs Act income tax rates that were set to expire at the end of 2025. The top marginal tax rate remains at 37% instead of increasing to 39.6% providing 2.6% savings for those that may find themselves in the top bracket in a year of sale on any ordinary income. 2. Capital Gains Rates There are no provisions in the bill addressing the capital gains rates, however by omission it provides certainty that there will not be a change in this rate until a potential future tax bill, which is unlikely in the next few years. The top rate remains 20% for long-term gains. Most sale transactions will give rise to significant long-term capital gain income which is taxed at this beneficial tax rate. 3. 100% Bonus Depreciation Restores bonus depreciation back to 100% expensing and makes it permanent. Certain eligible property acquired through normal capex spend or through the acquisition of a trade or business is again eligible for a deduction of 100% of the cost in the year acquired and placed in service. 4. 163(j) Interest Deductibility Limitation Reverts back to the pre 2022 formula to determine the deductibility of interest expense on an annual basis equal to Tax EBITDA multiplied by 30% for tax year 2025 and thereafter. This allows for improved tax efficiency on transactions where debt is utilized to fund acquisition as compared to the limitation required for tax years 2022-2024. 5. Qualified Business Income Deduction Permanent extension of this deduction was introduced in the Tax Cuts and Jobs Act which was set to expire as of 12/31/25. Ordinary income arising from sales could effectively be taxed at 29.6% instead of 37% assuming a full deduction is available, and the owner is in the highest tax bracket. 6. State and Local Tax Deduction Limitation Increased and Preserved Work Around The Federal deduction increased from 10,000 to 40,000 (subject to phase out for high income earners) and preserved the deductibility of state income tax paid by pass-through entities without limitation in states with an available election. If a pass-through entity tax election is made in the year of sale and the sale is structured as an asset sale for tax purposes the selling business can deduct all state taxes paid as a business expense and pass the deduction through to owners without limitation rather than an individual Federal itemized deduction limited to $10,000 or $40,000. 7. Opportunity Zones (OZ) Extended The OZ program was made permanent, and gains realized in a sale transaction could be deferred by rolling into an OZ investment with the original Tax Cuts and Jobs Act basis step up programs enhanced for new investments in OZ property if held for the required time period. How Can Schneider Downs Help? For more information on the impact of the OBBB, please visit www.schneiderdowns.com/obbb or contact us at contactsd@schneiderdowns.com About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Tariffs and Construction: 3 Key Challenges Facing the Industry Today Tariffs are having a direct impact on the construction industry by driving up material costs, complicating project budgets and disrupting supply chains. They are changing how projects get built, priced and delivered. As companies face rising costs, tighter financial planning and reconfigured supply chains, many are being forced to rethink the way they operate. Here are three ways tariffs are currently reshaping the construction industry . 1. Material Costs and Procurement Volatility Tariffs on imported materials have driven up costs and injected a considerable amount of uncertainty into procurement planning. Companies are now facing longer lead times and have needed to shift their sourcing strategies to adapt to these changes. 2. Budgeting and Financial Forecasting The uncertainty of tariff policies has made it increasingly challenging to project multi-year financial forecasts. As a result, many companies are now building in larger variances, revisiting contract terms and adjusting cash flow models to better navigate the unpredictable landscape. 3. Supply Chain Reconfiguration In an effort to reduce exposure to tariff-affected areas, companies are reevaluating their sourcing strategies. This includes increasing supplier diversification and restructuring contracts to pass tariff costs downstream. As we learn more about how the current tariffs will impact the construction industry, strategic innovation and adaptability are crucial for preparing for the future. How Can Schneider Downs Help? If you have questions about navigating tariff uncertainty in the construction industry, our team is here to help. Contact us at contactsd@schneiderdowns.com. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### OBBB Section 174 Expensing – Further Guidance with a Tight Timeline for Small Businesses In July 2025, the One Big Beautiful Bill Act (OBBB) delivered overdue relief to Taxpayers investing in domestic research and experimentation (R&E). If you are not caught up on these changes check out our article Section 174 Expensing Restored Under OBBB”. OBBB also left Taxpayers and practitioners with many questions regarding the practical implementation of the new legislation.   IRS Issues Rev. Proc. 2025-28 Cue the newly released Revenue Proc 2025-28, which outlines procedures for making certain elections under the OBBB for domestic research or experimental expenditures. Rev. Proc. 2025-28 provides the necessary guidance, elections and statements that large taxpayers will need to implement on their 2025 returns to resume full expensing. Most critically, we received guidance regarding steps small taxpayers must take to retroactively expense R&E.   Small taxpayers are on a tight timeline to file the necessary amendments with accompanying elections if they want to retroactively claim relief from domestic Section 174 amortization and depreciation. From the initial OBBB legislation, we were aware that Taxpayers making the small business election under the OBBB only had until July 6, 2026, to file amended returns with the necessary elections. However, the new guidance clarifies that some Taxpayers have an even shorter window for filing Tax Year 2022 amendments. OBBB did not modify or provide an exception to the statutory period of limitations on filing a claim for the credit or refund for the purposes of elections under OBBB. If a Taxpayer filed their 2022 tax return in the spring of 2023, that Taxpayer’s deadline to amend the 2022 Tax Return for a small business treatment for Section 174 would likely fall before the July 6, 2026, deadline. For example, if a calendar year-end C-Corporation timely filed their 2022 Tax Return by April 15, 2023, then their statute for amending the 2022 tax return will run on April 15, 2026.   This puts pressure on Taxpayers and their advisors to examine the most advantageous application of the options available to small businesses under OBBB. An eligible taxpayer making an election under OBBB generally must file an amended return for each taxable year affected by such elections, so small business Taxpayers are required to apply the election across all relevant tax years, rather than selectively applying it to just one.     Final Thoughts The OBBB’s revisions to Section 174 provide long overdue relief to Taxpayers with domestic R&E spend. Small businesses taxpayers must act quickly to determine the best pathway to take advantage of this relief. All Taxpayers and practitioners should pay close attention to Rev. Proc. 2025-28 to ensure the necessary elections and statements are included in Taxpayers’ returns.   How Can Schneider Downs Help? Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### August Investment Corner – Crypto Week in Review The middle of July marked a pivotal moment for crypto regulation in the U.S. Three major bills debated in Congress, each aiming to define the future of digital currencies and blockchain technologies, were passed leading to elevated interest in Bitcoin and the future of cryptocurrencies as a whole. The legislation covers consumer protections, stablecoin oversight, and market structure reforms, with bipartisan support emerging around a clearer regulatory framework for the industry. GENIUS Act The first legislation passed was the GENIUS Act (Guiding and Establishing National Innovation for United States Stablecoins) which establishes the first federal framework for stablecoins. A stablecoin is a cryptocurrency whose value is pegged to that of a currency or commodity such as the U.S. dollar. In this case, the regulation requires full dollar backing for all stablecoins, setting standards for issuers, including audit requirements and redemption rights. The passing of the GENIUS act opens the door for mass adoption of stablecoins in retail payments and could significantly increase demand for U.S. Treasury bills as stablecoin reserves grow. CLARITY Act The second legislation passed was the CLARITY Act, which defines the regulatory jurisdiction over digital assets. The act establishes criteria for whether a token falls under SEC or CFTC oversight using decentralization and functionality as guiding principles. The legislation ultimately designates crypto as a commodity, not a security, so the CFTC would regulate this rather than the SEC. The passing of the CLARITY act provides long-awaited legal certainty for crypto developers and investors. Anti-CBDC Act Finally, the third piece of legislation surrounding the cryptocurrency market was the Anti-CBDC Act which blocks the Federal Reserve from issuing a retail Central Bank Digital Currency (CBDC). Citing concerns over privacy, surveillance, and government overreach; the act prohibits the Fed from launching a digital dollar for consumer use. The impact of this bill reinforces the U.S. commitment to private-sector innovation in digital payments. These three landmark bills reshape the regulatory landscape for digital assets in the U.S. These developments signal a new era of legal clarity, institutional adoption, and market stability. The legislation is expected to catalyze capital flows into crypto markets, particularly stablecoins, tokenized assets, and regulated exchanges. If you have questions, our team would love to hear from you. Visit https://sdwealthmanagement.com/contact-us/ to start the conversation. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### IFRS Changes in 2025 The International Financial Reporting Standards (IFRS) continue to evolve to provide greater transparency and comparability of the financial statements between reporting entities based on input from financial statement users and the business community to the International Accounting Standards Board (IASB). This article covers most significant changes impacting international businesses following IFRS this year. Standard effective in 2025: Foreign Currency - The IASB provided additional flexibility to organizations operating in foreign countries where currencies cannot easily be exchanged. Under International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates, entities are now permitted to estimate a spot rate for currency translation in situations where there is no exchangeability. A lack of exchangeability may occur when governments restrict capital transfers inside and out of their nation or in markets with unofficial parallel currency markets. When companies choose to estimate a spot rate due to a lack of exchangeability, they must disclose the rate used, how they estimated this rate, the impact of not having an exchangeable rate at this subsidiary, and operating risks of business in an environment without exchangeable currencies. Recent standard that could have a significant impact in 2025: Classification of Liabilities - Effective in 2024, the amendments to IAS 1, Presentation of Financial Statements, could have a significant impact this year as many organizations face economic headwinds.  Under IAS 1, liabilities are classified as non-current if the entity has substantive rights to defer settlement for 12 months or longer at the end of the reporting period. The new amendment specifies that management’s intentions and expectations for rights under a liability no longer impact the liabilities classification as current or long-term. The right to defer liability settlement only exists if the entity complies with relevant conditions at the reporting date. This includes the passing of covenants or obtaining a waiver for failed covenants by the reporting date. Entities that fail their covenants at or before the reporting date, but do not obtain a waiver until after the reporting date, must classify the entire liability as current. On the other hand, only covenants before or on the measurement date are relevant to the long-term or short-term classification. Liabilities that breach their covenants subsequent to the reporting date, but were in compliance at the reporting date, should be classified as non-current if the right to defer the settlement extended for at least twelve months. Entities who anticipate challenges with covenants near the end of their reporting period should discuss this situation with their banks ahead of time to obtain a waiver before the measurement date. On the Horizon: IFRS 18, Presentation and Disclosure in Financial Statements, will impact every IFRS reporting entity as it replaces IAS 1, Presentation of Financial Statements. Many of the current principles will remain along with the same accounting recognition of transactions but could change where and how these are reported. IFRS 18 is effective January 1, 2027 and is applied retrospectively with early adoption permitted. IFRS 19, Subsidiaries without Public Accountability: Disclosures: Disclosures, provides disclosure relief for subsidiary entities whose statements are not subject to public accountability, but have a parent organization that prepares consolidated financial statements for public use. Schneider Downs provides a full range of services to international organizations including assurance, tax, and advisory services. For more information concerning global business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### IRS Releases New Technical Guides on Tax-Exempt Organization Compliance In June, the IRS Tax Exempt and Government Entities (TE/GE) Division published three new technical guides aimed at enhancing compliance among tax-exempt organizations. These resources offer clear guidance to help organizations fulfill obligations, avoid frequent errors, and ensure operations align with IRS standards. The summary below provides an overview of each guide and its key insights. TG 3-8: Inurement and Private Benefit, Taxes on Excess Benefit Transactions, and Enhanced IRS Examination Techniques The Tax Exempt and Government Entities (TE/GE) division released Technical Guide TG 3-8, which addresses issues related to inurement, private benefit, excess benefit transactions, and IRS examination techniques.  A summary of key concepts is below. Inurement and Private Benefits Explained: Both inurement and private benefit can jeopardize an organization’s tax-exempt status. Inurement occurs when a tax-exempt organization’s net earnings improperly benefit an insider.  Examples of this are unreasonable compensation or payment of excessive rents. Private benefit occurs when there is a benefit to individuals outside of the organization.  While inurement is strictly prohibited, private benefit may be permitted if the benefit is incidental, both qualitatively and qualitatively, and stems from furthering the organization’s tax-exempt purpose. . Private benefit can result from grants, awards, scholarships, or research that creates benefits for a particular business interest. Taxes Excess Benefit Transactions: Section 4958 imposes an excise tax on disqualified persons and organization managers who engage in excess benefit transactions.  An excess benefit transaction occurs when a disqualified person or organization manager receives a benefit exceeding fair value.  The initial tax is 25% of the excess benefit on each transaction.  If the excess benefit transaction is not corrected within the taxable period, an additional 200% tax on the excess benefit is imposed.  An additional 10% tax. limited to $20,000 per transaction,  is imposed on any organization manager who knowingly participated in the excess benefit transaction. IRS Examination Techniques TG 3-8 outlines IRS methods for identifying violations.  Some of these methods include reviewing Forms 1023 and 990, analyzing compensation, contracts, and fundraising agreements, and assessing insider status. TG 3-27: Foundation Classification TG 3-27 provides detailed guidance on miscellaneous public charity foundation classifications that are rarely encountered during the exemption application and examination processes.  The guide defines classification rules for organizations receiving tax-exempt status under IRC Sections 509(a)(1) and 170(b)(1)(A)(iv),(v), (ix) which includes organizations for the benefit of state and municipal colleges and universities, governmental units, and agricultural research organizations.  The guide also addresses organizations that test for public safety classified under Section 509(a)(4). This guide provides step-by-step instructions for completing Form 1023, Application for Recognition of Exemption under Section 501(c)(3), and Form 8940, Request for Miscellaneous Determination. TG 70: Charitable Trusts TG 70 provides guidance on the classification, requirements, and tax obligations of non-exempt charitable trusts (NECTs)and split-interest trusts.  Both NECTs and split-interest trusts are subject to certain excise taxes under Chapters 41 and 42 pursuant to Section 4947. For any questions regarding the previously discussed Technical Guides, please contact Schneider Downs. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Strong IT General Controls, Smarter Technology: How Smaller Reporting Companies Can Innovate with Confidence Why are strong IT General Controls (ITGCs) essential for smaller reporting companies (SRCs) embracing automation and AI? For smaller reporting companies (SRCs), maintaining secure, reliable, and efficient IT systems is essential, particularly given their limited personnel and infrastructure. ITGCs, including access controls, change management, and data backup and recovery, provide a foundational framework to protect systems and data across the entire IT environment. These controls are especially valuable for SRCs, where well-targeted efforts can improve resilience and compliance without requiring significant cost or overhead. ITGCs as a Safeguard for Automation and AI in SRCs As SRCs increasingly adopt automation and emerging technologies such as artificial intelligence to streamline operations, the role of ITGCs has grown significantly in managing associated risks. Historically seen as a lower risk area within an Internal Controls over Financial Reporting (ICFR) audit, ITGCs now represent a critical safeguard, particularly where SRCs rely on automated processes like system generated reports and transaction processing. With fewer personnel to manually oversee systems, SRCs benefit from strong ITGCs that ensure these technologies function securely, accurately, and as intended, preventing unauthorized changes and mitigating failures. When automation does falter, ITGCs such as batch job monitoring provide a vital safety net, helping SRCs maintain operational integrity with limited resources. Securing Information Produced by the Entity (IPE) System reports and datasets used for financial reviews and audits are collectively referred to as IPE must be trustworthy. SRCs can gain immense value from ITGCs that properly control access, prevent unauthorized modifications, and ensure system stability. This allows management and auditors to rely on the data shown in key reports without requiring extensive manual validation, boosting confidence in the organization’s IT governance and ultimately, their financial records. Three ITGC Principles for SRCs Embracing Automation and AI As SRCs continue their journey toward automation and AI-driven efficiency, it’s vital they remain proactive in fortifying their internal controls with ITGCs being the key foundation that supports innovation, keeping these three principles top-of-mind: Automation Demands Accountability – Emerging technologies can streamline processes but without robust ITGCs, SRCs risk unintended consequences from system errors or unauthorized changes. AI Amplifies Control Complexity – The intelligence behind automation introduces new layers of risk making governance and oversight more critical than ever. Lean Teams Require Lean Safeguards – With limited personnel, SRCs must lean on well-implemented ITGCs to maintain integrity across automation systems. How Can Schneider Downs Help? Schneider Downs assists SRCs not subject to the SOX 404(b) auditor attestation requirement in achieving SOX compliance that aligns with management, and where necessary, external auditor, expectations. Our experienced team collaborates with companies to design and execute a cost-effective approach for management’s attestation of effective internal controls over financial reporting. For more information contact our team at contactsd@schneiderdowns.com. ### July 2025 Market Recap The S&P 500 index continued its strong advance in July, hitting a record closing high in almost half (10 of 22) of the trading days. From its lowest point on April 8th, the S&P 500 index has advanced 27.7% through the end of July. Following an extremely volatile first five months of the year, daily stock returns have become more muted in the past two months. From January through May, the S&P 500 index moved by 1% or more in 36 of 102 days. However, in the past two months, the S&P 500 index moved by 1% or more in only 3 of 42 days. While equity indices advanced in July, not all stocks followed suit. In fact, 45% of all S&P 500 and 44% of all Russell 1000 were down in July. The market’s return was concentrated in July with 62% of all Russell 1000 stocks underperforming the market index and the S&P 500 monthly return coming solely from six stocks (Nvidia, Microsoft, Amazon, Alphabet, Meta and Apple). Given the resurgence of six of the Magnificent Seven stocks in July, the strength of large-cap growth stocks and the suffering of small-cap stocks are evident both year-to-date and for the most recent 12 months. International equities took a breather in the month of July from the red-hot performance they returned for the first half of the year. The MSCI AC World ex U.S. (International Developed Equities) were down -0.26% for the month of July, but still up over 18% for the year. Emerging Markets continued their strong relative performance and were up 1.83% for the month of July and up over 17% for the year. Non-U.S. earnings continue to be the biggest headwind for international equities, and the weaker U.S. dollar has been the biggest tailwind aiding international returns. As stocks continued to advance in July, bonds took a bit of a breather. While the 10-Year Treasury yield traded in a fairly narrow range during the month; it rose from 4.23% at the end of June to 4.36% at the end of July. For the month, the Bloomberg Aggregate Bond index was down almost -0.3%. While the U.S. Aggregate bond index has seen yields fall from 4.91% to start the year to 4.36% as of the end of July, the Municipal bond index has seen yields rise from 3.74% to 4.02%. The largest driver has been bond supply as the Federal government has stepped back state support; in turn, states have gone to the municipal bond market for funding in the first half of the year. The tax equivalent yield is now north of 6% for investors given the absolute yield of 4%. Attractive tax-free income at these levels may not be receiving much attention in the current risk-on market environment, but it could be an attractive option for those investors focused on risk management. From a macro perspective, the Fed held rates steady at the 4.25% to 4.50% level again at the July meeting. Going into the Fed meeting, the thought was there is no need for rate cuts. The Q2 GDP blew out to the upside at 3%, and initial jobless claims posted another exceptionally low 218k. The jobs report at the end of the month brought the downside risks often cited by the Fed back into the light quickly. While the jobs report came in below estimates, the revisions were the big surprise. Revisions downward for May and June were larger than normal. The May report was revised down by 125k to 19k jobs and the change for June was revised down by 133k to 14k jobs. With these revisions, employment in May and June combined is 258k lower than previously reported. It is hard to say the labor market is solid if the job growth has been anemic. Before the jobs report, the bond market only priced in one cut for the rest of 2025 and the consensus was getting closer to no cuts. Now, the bond market is pricing in three cuts with one at the September, October, and December meetings. If you have questions about capital markets, please don’t hesitate to reach out to your SDWMA advisor. If you aren’t currently working with us, you can reach out via our website at https://sdwealthmanagement.com/contact-us/. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill o ### Accounting for Tariffs As global trade policies continue to fluctuate, many entities are reviewing how tariffs should be accounted for within their organizations. Tariffs are amounts owed on goods crossing international borders, generally levied on imports but can occasionally also be placed on certain export products.   Under Generally Accepted Accounting Principles in the United States (U.S. GAAP), inventory on hand should include any tariff expense in the capitalized cost. This follows the same treatment as other costs incurred to acquire an item. As a result, tariff costs incurred should be considered when performing an assessment under the lower of cost or net realizable value (LCNRV) methodology.  Similarly, amounts incurred to pay tariffs should be included in both revenue on products sold and in the cost of goods sold. Tariff costs and revenue should be recorded at gross amounts and not netted together. This accounting methodology should be followed regardless of whether any additional revenue collected as a result of tariffs is shown on invoices to customers or is included within the product fee line. The rationale for this treatment is that U.S. GAAP wants revenue recognition to be consistent and comparable across companies and industries, whether or not companies elect to break these out for their customers. While U.S. GAAP does provide a practical expedient to net taxes collected from customers on behalf of a government, tariffs are excluded from this consideration as the company is not collecting the tariff itself.   Tariffs incurred to obtain long-term assets such as property, plant, and equipment should also be capitalized into the cost to place the asset into service. The capitalized tariff cost should then be considered when assessing future cash flows for any potential asset impairment.   Companies may face new complexities as they navigate through tariff uncertainty. Manufacturers and retailers with large inventory balances, along with capital-intensive businesses, should take time now to assess their accounting policies as changes in global trade policies could make the accounting for tariffs more significant.  Entities following the International Financial Reporting Standards (IFRS) should follow a similar accounting treatment, as the accounting standards under revenue recognition and inventory valuation under U.S. GAAP and IFRS are now largely converged.   Schneider Downs provides a full range of services to manufacturing, retail, and international organizations including assurance, tax, and advisory services. For more information concerning global business matters and their impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.  ### Surge in PennDOT and E-ZPass Phishing Scams Targets Pennsylvania Drivers Scammers are targeting Pennsylvanians with fake messages posing as PennDOT, the Turnpike Commission, and E-ZPass. Here’s how to protect yourself. What’s old is new again. A fresh wave of scams are circulating across Pennsylvania, targeting residents with smishing and phishing attacks impersonating trusted state transportation agencies. Scammers are impersonating these agencies and pressuring people to pay supposed overdue tolls or fines. While these types of scams tend to resurface every so often, the recent increase in both frequency and sophistication has prompted action from state officials. The Senate Transportation Committee Chairs Judy Ward and Marty Flynn, along with House Transportation Committee Chairs Ed Neilson and Kerry Benninghoff, have issued an official warning to Pennsylvania residents. “These messages look official, but they’re nothing more than scams designed to steal your personal and financial information,” said Senator Flynn. “PennDOT does not collect tolls, and legitimate agencies will never ask for payment through unsolicited texts or emails.” As with most scams, it is the same old song and dance, just given a fresh coat of paint. Messages from unknown senders that contain links and create a sense of urgency are a major red flag. If the message mentions late toll payments, license suspension, or time-sensitive fines, it is likely a scam and should be reported and deleted immediately. To help protect yourself, keep the following tips in mind: Be cautious of unsolicited texts or emails that contain links, especially if they reference tolls, fines, or account issues Never send payment or financial information unless you have confirmed the request is legitimate Double-check agency names and details. For example, there is no such thing as the Pennsylvania Toll Agency, and PennDOT does not collect toll payments Log in directly through official websites or apps rather than clicking on links in a message If something feels off, trust your instincts and investigate before responding If you believe you clicked on a malicious link, secure your accounts immediately, monitor for unusual activity, and contact your financial institution to dispute any suspicious charges Watch out for senders that appear to be law firms or regulatory agencies. Scammers often use names that sound official to pressure you into acting quickly If you receive a communication and want to validate the legitimacy, you can contact the Pennsylvania Turnpike Commission’s Customer Service Center at (877) 736-6727, Monday through Friday from 8 am to 6 pm. You are also encouraged to report scam attempts to the Federal Trade Commission at reportfraud.ftc.gov or to the FBI’s Internet Crime Complaint Center at www.ic3.gov.   About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### You Can’t Pay by Check. Executive Order 14247 “Modernizing Payments to and From America’s Bank Account” and Its Impact on Federal Tax Payments and Refunds Earlier this year, President Trump signed Executive Order 14247, Modernizing Payments to and from America’s Bank Account. The order mandates the phase-out of paper check disbursements and receipts and is applicable to all federal agencies including the IRS. This order affects the way taxpayers will pay their taxes and receive refunds. Why the Change? The order cites substantial increases in mail theft since the COVID-19 pandemic along with reports that Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable or altered than are electronic funds transfers (ETF).  The order also touts operational efficiency as a reason for the push to digitize all payments—along with reducing the cost of maintaining the specialized technology required to digitize paper records, which was estimated to cost the taxpayer over $657 million in fiscal year 2024. Key Dates The order provides that all payments made to the federal government, including taxes, fines, fees, and loans, must be made electronically by September 30, 2025 (where permissible under existing law). Below are the key dates leading up to implementation on September 30, 2025. March 25, 2025: Executive Order 14247 signed. June 23, 2025: Implementation plans from heads of federal agencies were to be submitted. September 21, 2025: Deadline for the Treasury Secretary to submit a full implementation report detailing the progress. September 30, 2025: Scheduled phase-out of paper check payments. After this date, most payments to and from the IRS must be submitted electronically. October 15, 2025: Recommended deadline for taxpayers to be fully prepared for electronic payments, particularly those individuals that filed extensions of their individual income tax returns (Form 1040) that might have an overpayment or underpayment. On May 30, 2025, Treasury published in the Federal Register a request for information soliciting public comments by June 30, 2025. During the comment period, Treasury received close to 250 comments with the AICPA comments specifically requesting that the IRS and Treasury Department delay the deadline.  At this time there is no guarantee that the requirement will be delayed prior to September 30, 2025, so taxpayers need to be ready to comply. Who Needs To Act? While businesses are accustomed to paying tax obligations electronically due to various payment mandates in prior years, the order now applies to individuals. Section 3 of the order specifically lists Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds with limited exceptions described in Section 4. Federal agencies shall take appropriate action to eliminate the need for Treasury’s physical lockbox services and expedite requirements to receive payment of federal receipts, including fees, fines, loans, and taxes, through electronic means. The IRS currently offers numerous electronic payment options on its site. These include: On-line account. IRS Direct Pay - online transfers directly from a checking or savings account at no cost to taxpayer. Debit card, credit card, or digital wallet. (Note: this could be an expensive way to pay taxes as the credit card service charge is owed by the taxpayer. A 2% fee on $500,000 estimated tax payment would be $10,000.) Electronic Funds Withdrawal (EFW) – an integrated e-file/e-pay option offered when filing federal taxes electronically using tax preparation software through a tax professional or the IRS at IRS.gov/Payments. Electronic Federal Tax Payment Systems (EFTPS) - Allows payment of taxes online or by phone directly from a checking or savings account. There is no fee for this service. A taxpayer must enroll either online or by having an enrollment form mailed. Pay by Phone. Exceptions to the Executive Order: Section 4 of the executive order provides certain exceptions to the payment and collection mandate in limited circumstances including: Individuals who do not have access to banking services or electronic payment systems. Certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208. National security-related or law enforcement-related activities where non-EFT transactions are necessary or desirable. Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance. Individuals or entities qualifying for an exception under this section or other applicable law shall be provided with alternative payment options. Next Steps As part of the order – and to ease the transition process – the Treasury Department will launch a comprehensive nationwide campaign to educate payment recipients on the transition and provide guidance for setting up electronic payment options. Unfortunately, no official guidance to date has been issued addressing the executive order. The IRS 2025 Form 1040-ES estimated tax instructions and the 2024 Form 1040 instructions do include electronic payment options, which might be applicable to the new requirements. Taxpayers should take time to familiarize themselves with all the current electronic payment options prior to the September 30, 2025, deadline to determine what method works best for them. Taxpayers and their advisors will need time to adjust to the new requirements. Schneider Downs will issue further guidance as additional information becomes available from Treasury and the IRS. Subscribe here to stay on top of this evolving issue and get real-time insights from Schneider Downs’ tax experts. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### 5 Ways Smaller Reporting Companies Can Gain Flexibility with SOX Smaller Reporting Companies (SRCs) can improve SOX compliance by using a risk-based approach to prioritize control testing and allocate resources effectively. As companies continue to evaluate their SOX compliance strategies, it's important to recognize that SRCs may take a more tailored, risk-based approach to their annual SOX testing, rather than defaulting to blanket testing of every key control listed in the risk and controls narrative. Here are five key considerations to help Smaller Reporting Companies prioritize SOX control testing effectively and strategically: Regulatory Flexibility: SRCs are not required to obtain auditor attestation on internal control over financial reporting (ICFR) under Section 404(b) of the Sarbanes-Oxley Act. This allows for greater latitude in determining the scope and depth of control testing. Resource Optimization: Given typically limited audit budgets and lean staffing, SRCs can focus their testing efforts on controls that are most closely tied to higher-risk financial statement line items and processes. Risk-Based Prioritization: Annual testing should be aligned with a dynamic risk assessment. Controls linked to material financial line items, known process vulnerabilities, significant system changes, or fraud risks should be prioritized, while lower-risk areas may be rotated or tested less frequently. Testing Rotation Strategy: Controls identified as “key” within the narrative may not all warrant annual testing. If some controls show a strong historical operating effectiveness and present a lower risk, SRCs may choose to scope them out for Internal Audit SOX testing and rely on other forms of management testing. Documentation & Justification: It's critical to clearly document the rationale for control selection and rotation, supported by risk assessment findings. This establishes audit defensibility and aligns with best practices, even in the absence of an ICFR attestation. SRCs have the ability to shape their SOX testing framework around their evolving risks. By focusing resources on the most impactful areas, companies can ensure robust compliance while maintaining cost efficiency and operational focus. How Can Schneider Downs Help? Schneider Downs assists SRCs not subject to the SOX 404(b) auditor attestation requirement in achieving SOX compliance that aligns with management, and where necessary, external auditor, expectations. Our experienced team collaborates with companies to design and execute a cost-effective approach for management’s attestation of effective internal controls over financial reporting. For more information contact our team at contactsd@schneiderdowns.com. ### Western Pennsylvania’s Energy Future Western Pennsylvania is once again at the epicenter of America’s energy sector transformation. With vast natural gas reserves and a legacy of industrial innovation, the region is poised to power not just homes and businesses—but the next generation of artificial intelligence and digital infrastructure. Recent announcements, including a $20 billion investment by Amazon in data centers and plans for the largest gas-powered power plant in the U.S. just outside Pittsburgh, underscore the area’s strategic importance. This surge in energy demand is driven by the exponential growth of AI and cloud computing. Over the next seven years, U.S. electricity consumption is projected to rise by 25%, a tenfold increase over the previous seven years. Western Pennsylvania’s ability to meet this demand hinges on its ability to modernize infrastructure and streamline regulatory processes. As highlighted at the recent Pennsylvania Energy and Innovation Summit at Carnegie Mellon University, the region’s success will depend on aligning policy, investment, and innovation. But this is not just about energy abundance—it’s about resilience and sustainability. Local utilities and developers are increasingly focused on building systems that are not only powerful but also adaptable to climate and cyber risks. As Pittsburgh Magazine recently noted, innovation in Western PA is “not theoretical—it’s operational,” with real-world projects already underway to enhance grid reliability and reduce emissions. In my view, the convergence of energy, technology, and policy in Western Pennsylvania offers a blueprint for national progress. By embracing its role as both an energy sector powerhouse and a digital launchpad, the region can help secure a more prosperous and sustainable future for the country. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Do You See Ghosts (Students)? Over the past few months, there has been a rise in concern about ghost students. Ghost students are individuals who enroll in an institution without the intention of completing any coursework, seeking a degree, or obtaining any certification, but solely to fraudulently obtain financial aid. According to a recent press release from the U.S. Department of Education (ED) it stated that, “a recent comprehensive analysis uncovered nearly $90 million disbursed to ineligible recipients.” This is another headache for the higher education sector, which has had challenges over the past few years with maintaining a robust and healthy enrollment. While many institutions have been reporting increases in both applications and enrollment over the past two years, it is important to dig into those upticks to ensure that you are not being ghosted. Institutions can focus on the following to detect potential issues: Look for unexplained surges in applications, FAFSA applications or course enrollments that do not match your institution's efforts to grow enrollment; Examine website traffic data for surges from overseas or outside your normal recruiting areas; Identify classes that are quickly and completely filled within minutes (or less) once enrollment opens; Look into students enrolling in online-only or similar options who do the minimum to stay enrolled (e.g., basic online forum posts that do not align with the content or requirements.) Although ED has recently made changes to the FAFSA process to better identify individuals seeking to perpetuate fraud, it is important to remain vigilant. This issue, coupled with proposed legislation on cost sharing of student loan defaults, could cause a significant issue for institutions’ budgets in the future if that proposed legislation is enacted, and if these types of frauds exist or persist at an institution. Although institutions have been targeted across the country, recent articles from Fortune and EdTech have highlighted the heightened vulnerability for community and technical colleges due to their enrollment models. Many of these institutions typically do not require an application fee and are typically admitting any and all eligible students, which makes it easier for fraudsters to perpetrate these schemes. Although the focus is on preventing fraud, ghost students can disrupt your existing student population, making it difficult for them to complete coursework due to unavailable classes, causing other issues with student satisfaction and degree completion/graduation rates. This is another reason to remain vigilant as risks within the higher education sector continue to evolve. A robust cybersecurity program, appropriate training for your financial aid professionals and engaging with the academic team will be important in both preventing and detecting these types of issues. The advisors at Schneider Downs can assist you in identifying and making recommendations on vulnerabilities to ensure that your institution isn’t ghosted. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### The One Big Beautiful Bill: Key Green Energy Tax Credits Set to Expire There are key provisions in the One Big Beautiful Bill (OBBB) that have implications on investing in green energy related projects and assets. H.R. 1, formally titled “An Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14,” commonly referred to as the One Big Beautiful Bill, spans more than 1,100 pages and introduces sweeping changes across the tax landscape. Our previous articles took a closer look at how the One Big Beautiful Bill affects businesses and tax-exempt organizations in one piece, individual taxpayers along with estate and gift taxes in another, on state tax changes and what was left out of the final version of the bill in a third, followed by implications for businesses with international exposure. In this article, we highlight some of the green energy credits being terminated.   The Impact on Green Energy Credits Many green energy credits are being eliminated by OBBB, some sooner than others.  Individuals and businesses who were planning on utilizing these credits may need to take action soon before the deadlines.  The following credits have been terminated: Previously Owned Clean Vehicle Credit – Terminates for vehicles acquired after 9/30/2025. Clean Vehicle Credit – Terminates for vehicles acquired after 9/30/2025. Qualified Commercial Clean Vehicles Credit – Terminates for vehicles acquired after 9/30/2025. Alternative Fuel Vehicle Refueling Property Credit – Terminates for property placed in service after 6/30/2026. Energy-Efficient Home Improvement Credit – Terminates for property placed in service after 12/31/2025. Residential Clean Energy Credit – Terminates for expenditures made after 12/31/2025. New Energy-Efficient Home Credit – Terminates for any qualified new energy-efficient home acquired after 6/30/2026.   It’s important to appreciate the distinction in the terminology used in the termination provisions (“acquired” versus “placed in service” for example). Note that there are other green energy changes brought by OBBB that are of limited applicability to our clients and are not addressed here. If you have questions about how the OBBB may affect you or your organization, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center.   About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Benefits of Internal Audit Involvement in SAP S/4HANA and SAP RISE Implementations What are the benefits of internal audit involvement in SAP S/4HANA and SAP RISE implementations? As more companies embark on their transformation to SAP S/4HANA and SAP RISE, a key contributor many see are Internal Audit (IA) controls support resources within the project. This role can be in the form of a part-time or full-time member, depending on the project size. And while it may initially be believed that including IA will slow down the process, the benefits usually greatly outweigh any negatives. Projects should demand skilled SAP audit resources that will add value. When dedicated teams and steering committees evaluate the cost of including IA on their SAP projects, they should consider the following key benefits:   Independent Risk Assessment Communicates clear, independent project progress to the board and upper management Helps protect the investment of the SAP S4/HANA and SAP RISE projects Helps to enhance documentation quality and organization; e.g., the project might be on increased alert to ensure documentation is in order if there’s a chance IA may be reviewing Assists with communication surrounding the external audit Our recommended approach is to follow projects throughout their lifecycle. This allows for better communication and education of auditor expectations, limits “surprises” and minimizes exceptions after the SAP go-live. Post implementation reviews still provide value, but preventing risks and issues prior to an audit is in the best interest of the project and the company implementing SAP.   Compliance Ensures Sarbanes-Oxley (SOX) application controls are included in the testing plan Tests existing application controls within the User Acceptance Testing (UAT) phase Ensures that SOX IT general controls (ITGC) and business process controls frameworks are updated Ensures the SAP SOC 1 report is evaluated and documented   System Development (SDLC) Practices Ensures sound SDLC project practices are being followed, including but not limited to: The company’s SDLC policy requirements Project plan Design documentation Strategy documentation Test plans and results Security Data reconciliations   User Acceptance Testing Validates that production security roles are being used in the UAT phase Ensures that the UAT scope includes all key areas Ensure that proper business resources are involved with UAT testing Ensure that high-risk issues were closed prior to go-live and/or the proper mitigating controls are documented and operational Validates that UAT is completed and failed tests are remediated and retested Validates that there is a centralized issue log, and high-risk issues are fixed and retested prior to production go-live Go-live is formally approved   Data Reconciliation A data reconciliation strategy is in place that documents which data objects will be reconciled between the legacy application(s) and SAP S/4HANA/SAP RISE; this is a must to validate the completeness and accuracy of data being transferred to the new SAP environment Data reconciliations were completed within a reasonable time after go-live; typically, data reconciliations should be completed one month after go-live; any data differences should be explained and supported, and the overall reconciliations are formally approved Communicates expectations and provides an independent assessment of the data reconciliations and the Information Produced by the Entity (IPE) parameters requirements for data reconciliations; IPE parameters are required to understand when the reports were generated, what applications the reports come from and how the reports were generated to validate the completeness and accuracy of the data   Security SAP GRC ruleset was updated SAP roles changes were approved Obsolete transactions were removed from SAP custom roles and from the SAP GRC ruleset   Continuous Improvement Improve project control practices New functionality to be considered in a future project New application controls are being considered for SOX testing If you have any questions about internal audit involvement in SAP S/4HANA and SAP RISE Implementations, contact our team at contactsd@schneiderdowns.com.   About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### The OBBB and Its Impact on the Real Estate Industry What are key tax changes in the One Big Beautiful Bill (OBBB) that may impact the Real Estate and Development industry? Congress has officially passed legislation making several adjustments to existing tax policy, bringing with it a number of major benefits for the real estate industry, including: Qualified Business Income Deduction: The OBBB keeps the 20% deduction and makes it permanent, while easing phase-out thresholds and adding a new baseline $400 deduction for those with modest qualifying income. The new phase-out thresholds increased from $100,000 to $150,000 for MFJ and $50,000 to $75,000 for single filers. State and Local Tax (SALT) Deduction: The OBBB raises the cap to $40,000 for individuals and removes the cap entirely for pass-through entities, offering broader relief than the current $10,000 limit for individuals. Bonus Depreciation: The OBBB permanently restored to 100% for qualifying property placed in service after January 19, 2025, and an extension of manufacturing property receives similar treatment of 100% bonus if operational before 2031. Effectively, for 2025, before this change, a company with $500,000 of bonus eligible 5-year assets placed in service, would be able to deduct $260,000 as first-year depreciation ($200,000 of bonus and $60,000 on first year MACRS). Under the new law, on assets placed in service after January 19, 2025, the company would be able to take bonus on the full amount of $500,000, an additional $240,000 of depreciation deductions in 2025. Noteworthy as of the January 19, 2025 date, the understanding of a “written binding contract” is critical for determining applicable bonus depreciation percentage. Written Binding Contract: For property acquired in this manner, the acquisition date is the later of: Contract Date Date enforceable under state law Date all cancellation periods end Date all contingency clauses are satisfied   Section 179 expense limits: The OBBB increased the maximum deduction to $2.5 million, with a higher phase-out threshold of $4.0 million, further supporting small and mid-sized businesses in acquiring and upgrading assets. Business Interest Deduction – Section 163(j): The OBBB reverts the business interest deduction calculation, which had been changed to EBIT in tax years 2022-2024, to an EBITDA basis, permanently.  In capital-intensive businesses, the ability to add-back depreciation and amortization in the calculation is a huge benefit in reducing the large interest limitations some businesses may have previously had.  This change is especially advantageous for real estate and infrastructure projects that rely heavily on debt financing, as it allows for greater deductibility of interest expenses and improves project feasibility and return on investment.  However, for those who have made the Real Property Trade or Business election in years past, that is an irrevocable election, and so this change will not be impactful to those companies. Qualified Opportunity Zones: The OBBB revitalizes the Opportunity Zones (OZ) program by restructuring it to allow for rolling, 10-year designations starting in 2027, replacing the fixed-term approach. The OBBB continues the OZ designation process and enhances the eligibility requirements. These changes aim to provide more flexibility and predictability for investors, while ensuring that designated zones meet updated criteria for economic need. The enhancements are expected to attract sustained investment in underserved communities, driving long-term development and revitalization efforts. The OBBB provisions also maintain investor benefits with some modification. Deferral of Realized Gains – For investments made after December 31, 2026, the capital gain originally deferred as an eligible investment into a Qualified Opportunity Fund (QOF) must be included in income in the taxable year that is earlier of: 1) the date the QOF interest was sold or exchanged or 2) the date five years after the investment was made in the QOF. Realized gains invested prior to December 31, 2026 must still be recognized by December 31, 2026. Basis Adjustment - A taxpayer who holds their QOF investment, originally invested after December 31, 2026, for five years will be eligible for a 10% basis step-up, applied when the taxpayer is required to recognize the original deferred gain into income. This adjustment will be 30% for designated “Rural” zones. Gain Exclusion - A taxpayer can elect to have the fair market value (FMV) of their QOF interest equal to the basis on the date that the investment is sold or exchanged if sold before 30 years after the investment date. If sold after the 30-year mark, it would be the FMV of the investment as of the 30-year holding period date. Excess Business Loss Deduction: The OBBB made the Excess Business Loss (EBL) limitation permanent, while maintaining the current treatment of carryforward losses, allowing these to be treated as NOLs used in the following years of income, subject to traditional NOL rules, ensuring that businesses experiencing temporary downturns can still benefit from tax relief in future profitable years, enhancing financial stability. New Markets Tax Credit (NMTC): The OBBB permanently extends the NMTC, which was set to expire on Dec. 31, 2025. This benefit can continue to be considered in planning for financing and capital needs of future projects in eligible areas. Low-income housing tax credit (LIHTC): The OBBB permanently increases the allocation of low-income housing tax credits to states by 12% and lowers the threshold for bond-financing to 25% starting in 2026. Section 179D Energy-Efficient Commercial Buildings Deduction: The OBBB terminates the deduction for qualified property that begins construction after June 30, 2026. Section 45L Credit for Building Energy-Efficient Homes: The OBBB terminates the credit for homes either sold or leased after June 30, 2026. This termination will impact the economics of renewable energy projects and may require developers to reevaluate their financial metrics and models. Section 48E Wind and Solar Projects: The OBBB terminates the credit for Solar and Wind projects placed in service after December 31, 2027.  However, if construction begins by July 4, 2026, the project does not need to be placed in service before December 31, 2027.   This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. For more information on the impact of the OBBB on your company, please contact us at contactsd@schneiderdowns.com. ### McBreach: Vendor’s Use of '123456' Exposes 64 Million McDonald’s Job Applicants Would you like your personal data exposed because of a weak password? That’s the one question McDonald’s hiring website forgot to ask job applicants. According to NordPass, 123456 is the most common password of 2025 so far. It was also reportedly the password of choice for Paradox.ai, the vendor behind McHire, McDonald’s automated hiring and screening platform. Security researchers discovered a serious vulnerability in Paradox.ai’s system that allowed nearly all chat records with its AI assistant Olivia, including names, email addresses, and phone numbers, to be accessed using the default administrator email and a weak password, "123456." Fortunately, the issue was not found by malicious hackers, and Paradox.ai responded quickly by fixing the vulnerability within an hour of being alerted. All parties now believe that while the data was exposed, it was not accessed by bad actors. Paradox.ai has published a detailed statement, timeline, and launched a bug bounty program to encourage ethical disclosures in the future. So, if researchers found it and the issue was fixed quickly, why does this still matter?   Reputational Damage In many breaches, the vulnerability comes from a third-party vendor, but it is the brand that takes the reputational hit. A headline about a McDonald’s data breach draws more attention than the vendor’s name and often leads to public confusion. Casual readers may assume the breach affected customers or app users, and before long, the narrative shifts blame to McDonald’s. And while readers should look deeper, that does not always happen. In this case, McDonald’s quickly clarified that the issue originated with Paradox.ai and called the third-party vulnerability unacceptable to get ahead of any misunderstanding.   The Importance of Third-Party Risk Management Vendors are essential for most businesses, but each one adds third-party risk. Even if your organization has a strong security program, your vendors may not. Their risks become your own. It only takes one weak link to bring down the structure, like pulling a single card from the bottom of a house of cards. That is why a strong third-party risk management program is critical to protecting your operations, data, clients, and brand. If you have questions about assessing your current approach or starting a third-party risk management program, contact our third-party risk management team or learn more at www.schneiderdowns.com/tprm.   Credential Security Is Everyone’s Responsibility We often hear about complex cyber-attacks like ransomware, deepfakes, and spear phishing. But basic security flaws like weak passwords still put organizations at risk. There is no excuse for using a password like 123456. And no, 123456789 is not better. Use a password manager and make credential security a core part of your information security program. Ask your vendors about their password policies and access controls and set clear security requirements from the first sales call. The more you understand their security posture, the better you can decide if they are the right fit for your organization.   Commit to Layered Protection and Password Security Beyond strong passwords, implementing multi-factor authentication, regularly clearing browser and temporary files, and avoiding storage of credentials in easily accessible locations can strengthen your credential security. It may sound basic, but simple habits still matter. It might feel outdated to remind people not to write passwords on sticky notes in 2025, but since this article is about someone using 123456 to protect administrator access on a hiring platform, I am fairly certain someone out there still has passwords written down. And no, hiding them under the desk does not make them any more secure. If you have any questions about your cybersecurity program, vendor requirements or third-party risk, contact our team at cybersecurity@schneiderdowns.com.   About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The HITRUST Journey: The First Four Steps to Expect Before You Certify This article is part of a series detailing the seven key steps to anticipate on the path to HITRUST certification. Check out the second article in the series here. HITRUST isn’t just a compliance checkbox. It is proof that your organization meets a high standard of security and risk management. Certification requires a rigorous, evidence-based process that requires planning, cross-functional coordination, and genuine readiness. Certification isn’t simply given. It’s earned. Here are the first four of seven key steps in your journey to certification. Step 1: Procure an Experienced Translator HITRUST has its own language and if you don’t speak it, you’re traveling abroad without a reliable translator. You wouldn’t want to be stuck in a foreign country without a card showing your hotel address in different languages, and you wouldn’t want to get caught roaming the vast lands of the HITRUST CSF without a HITRUST Authorized External Assessor. After all, they’re the one who ultimately submits validated assessments to HITRUST for quality review. That means they know the answers to the test that you will have to pass to obtain certification. Engaging an external assessor firm early on in your journey will save you and your team days of wandering unfamiliar areas for a semblance of familiarity. Step 2: Define Scope and Objectives What systems, data, and services are in scope? While this is a seemingly simple first question, it is everything. In fact, for experienced external assessors, it’s only the first instance in which this question will be asked. It continues to be revisited time and time again throughout your HITRUST journey to ensure you’re doing the right amount of assurance – not too little nor too much. Is certification motivation driven by prospective or current customer demands, market positioning and enablement, or internal maturity factors? What level of assurance do you need? Minimal, moderate, or high? Choose your assessment type (e1, i1, r2, etc.) – check out our more detailed breakdown of the assessment types here. Know that many organizations treat the e1, i1, r2 certifications like a maturity ladder. It benefits your organization to do so, as with each step in the ladder you will experience more. More controls, more attributes, more associated fees – with the same rigor. So, start small if you can and get good at the basics like anything else. If you end up choosing the r2 path, you will be subject to a more elaborate  scoping process where a handful of additional scoping factors (Organizational, Technical, Regulatory, etc.) are necessary to tailor your assessment. How long does this phase take? This phase is generally completed in a matter of weeks but does require some technical validation of your infrastructure and systems. Step 3: Readiness Assessment Before a validated assessment (certification), most organizations complete a readiness phase to: Perform a gap analysis against HITRUST CSF controls and identify missing policies, procedures, and technical proof. This is where you’ll work through the questions on the test to explain how you’ll answer it come validated assessment time. It’s a full walkthrough of your game plan, packed with a playbook on how to handle inevitable audibles in the thick of auditor testing. Prioritize remediation tasks by effort and risk. Controls are required to be “implemented” for 60-90 days, depending on the type of control, prior to initiating a validated assessment period. That is what HITRUST refers to as the “Incubation Period.” Therefore, it’s important to prioritize gap remediation to ensure your roadmap can be accomplished as efficiently as possible. Assessors should also be able to identify required gaps vs optional enhancements. The enhancement are things that are nice to have in the future, but not necessary to achieve compliance and certification now. How long does this phase take? This phase generally takes anywhere from 1 to 3 months, depending on the complexities of your infrastructure and systems. Remediate and Align This is where the heavy lifting happens. You’re now armed with the honey-do list of gaps to close, along with a prioritized roadmap. This phase is about executing the plan and checking back with your audit partner to ensure you did it the right way. In this phase, you will: Update or develop formal documentation – policies, procedures, standards, etc. Templates go a long way and good audit partner firms will have a library to get you started. Implement technical safeguards (MFA, logging & monitoring, encryption, etc.). This is a wide-ranging task, based on the number and type(s) of gaps previously identified. It could be as simple as enabling a dormant configuration to be as extensive as implementing a new SDLC process and supporting systems. Assign control owners, prepare evidence for each control, and align with your external assessor firm on its completeness and accuracy. Consider this an extension of the gap assessment that was previously completed to further validate that your newly remediated gaps are indeed remediated in the manner they’ll be tested. Develop testing efficiencies to allow for automated evidence collection and evaluation. Consider how you can integrate compliance and security operations in a continuous, systematic way, moving beyond point-in-time assessments to a model of continuous monitoring and risk mitigation. Good external assessor firms will be able to realize these efficiencies and relay discounts based on their own reduced audit efforts. Step 4: 90-day Incubation Period Once all of your readiness gaps have been closed and “implemented” (Congrats!) you get a free 90-day vacation. Well, sort of… HITRUST requires a 90-day “incubation period” for controls to be implemented (or 60 days for policies/procedures), before you can officially start your 90-examination period. In practice, you can begin that 90-day incubation clock as soon as the last gap is closed. During this period of peace, it’s the perfect opportunity to book that HITRUST QA reservation. Once your assessment is scoped and loaded into MyCSF, you’ll be able to reserve a date on the HITRUST QA Team’s calendar, much like that of an online dinner reservation (the kind of one that takes your credit card preauthorization). This is a key step to ensure you meet your timeline as the HITRUST QA Team’s availability fluctuates based on demand. You don’t want to overpromise your delivery date if the QA team can’t meet your needs. Additionally, the assessed entity can begin to work with the external assessor to preload MyCSF. While most of the controls will require time-stamped evidence from within your 90-day examination period, there’s still plenty your teams can do ahead of time to make the examination period run more smoothly.  This includes tasks like: Answering all pre-assessment questions, organization information, assessment options, assessment scope, scoping factor. Drafting all requirement statements and completing the validated report agreement Validating your internal documentation paths to ensure smooth and possibly automated evidence collection Our next article will share the final 3 steps to expect before you certify, including the 90-day examination period, quality assurance and certification, as well as a roadmap summarizing the full 7-phase lifecycle. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Related Articles HITRUST Isn’t Just Another Compliance Checkbox. So What is It? What HITRUST Isn’t: 3 Common Myths Teeing Up Success: Build a HITRUST-Ready Program Without the Burnout ### Major Provisions in the “One Big Beautiful Bill Act” Impacting the Trucking Industry, Including Driver Overtime Pay The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, providing significant tax reform and updates to current tax law that should significantly benefit the U.S. trucking industry.Many of the provisions that were scheduled to expire at the end of 2025 have now been made permanent. With provisions aimed at boosting capital investment, easing financing burdens, and assisting families in passing on their businesses through an increased estate tax exemption, the OBBB provides multiple avenues for taxpayer-friendly planning opportunities for trucking firms while also leaving a major question mark related to driver overtime pay.No Tax on Overtime Pay?OBBB provides the ability for employees to deduct up to $12,500 of overtime pay yearly through December 31, 2028.  Taxpayers earning less than $150,000 ($300,000 filing joint) a year are eligible for the deduction.  If a taxpayer’s income threshold exceeds the proscribed amounts, the deduction will begin to phase out.Unfortunately, this provision may not in fact provide relief to many truck drivers due to the Motor Carrier Exemption of the 1938 Fair Labor Standards Act, which exempts drivers from the overtime pay rules. However, Schneider Downs and our partners are analyzing the potential impacts of this provision, since we know that drivers will want to understand the personal impact of this provision, and if over-road drivers are not eligible, employers will likely want to provide an explanation to their employees.We also understand that many transportation companies are concerned about the possibility of drivers exploring opportunities at other organizations that are eligible to pay drivers for overtime.  We will continue to monitor the situation related to overtime pay and provide additional insight as the dust settles. Section 199A: Boost for S Corps and PartnershipsOBBB makes the Qualified Business Income (QBI) deduction under Section 199A permanent at the 20% deduction rate. This provision will add certainty to tax planning for independent owner-operators and owners structured as pass-through entities, effectively permanently reducing  their Federal tax rate and improving after-tax income. Bonus Depreciation: 100% Write-Offs ExtendedA major win for the trucking industry is the permanent restoration of 100% bonus depreciation for qualified property, including trucks and trailers. This provision will allow businesses to immediately deduct the full cost of new equipment and other assets purchased after January 19, 2025, which could encourage investment in cleaner, more-efficient vehicles and reduce upfront capital costs. Section 174: R&D Deductibility RestoredOBBB reinstates the immediate deductibility of research and development (R&D) expenses incurred under Section 174 permanently for expenses incurred after December 31, 2024. To be fully deductible, the expenses must be incurred in the United States. Expenses incurred outside of the United States must still be amortized over 15 years. For trucking companies investing in logistics technology, route optimization software or alternative fuel systems, this change restores the full benefit of R&D spending.  Careful consideration should be taken in determining the best option for receiving the tax benefit related to any unamortized Section 174 costs, since the bill provides options depending on the size of your business. Section 163(j): Interest Deduction ReliefThe definition of adjusted taxable income under Section 163(j) permanently reverts to an EBITDA-based calculation (earnings before interest, taxes, depreciation and amortization) for tax years beginning after December 31, 2024. This change increases the amount of deductible business interest, benefiting capital-intensive trucking firms that rely on financing for fleet expansion or infrastructure development. Estate and Gift Tax Exemption: Planning for the FutureOBBB also permanently raises the estate and gift tax exemption to $15,000,000 for a single individual and up to $30,000,000 for joint filers. This will allow family-owned trucking businesses to transfer more wealth without triggering federal estate taxes.  This supports generational continuity and succession planning, a critical issue for many mid-sized trucking firms. Form 1099 Reporting ThresholdOBBB increases the threshold for information reporting requiring Form 1099 for certain payments to people engaged in a trade or business and payments for renumeration for services to $2,000 in a calendar year. This is up from $600 and will be indexed for inflation in the future for calendar years after 2026. ConclusionWith these provisions, OBBB delivers targeted relief and long-term incentives for the trucking industry. OBBB resolves the sunsetting of many of provisions of the 2017 Tax Cuts and Jobs Act and should provide the trucking industry with the opportunity for growth and innovation into the future. The actual impact of “No Tax on Overtime Pay” is still not determined, but we will pass along additional information when it becomes available. Reach out to any members of our Schneider Downs Transportation Team with any questions! This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center.For more information on the impact of the OBBB on your company, please contact us at contactsd@schneiderdowns.com. ### Cybersecurity Alert: Critical Zero-day Vulnerability (CVE-2025-53770) in Microsoft SharePoint Server A critical zero-day security vulnerability affecting on-premises Microsoft SharePoint servers was recently discovered and reported by multiple sources this past weekend. This vulnerability is actively being exploited in the wild with no complete patch available for most SharePoint versions prior to the exploitation efforts attempted by multiple threat actors. The information below summarized the vulnerability and Indicators of Compromise (IOC) to search for if you believe you or your organization are affected. If you think your organization is impacted by CVE-2025-53770, please contact our team at cybersecurity@schneiderdowns.com.   CVE-2025-53770 Summary A critical zero-day vulnerability (CVE-2025-53770) in Microsoft SharePoint Server is being actively exploited by threat actors worldwide. At least 75 servers have been confirmed compromised -- including U.S. federal, state and local agencies -- with an additional 9,000 exposed SharePoint instances globally at risk. The vulnerability allows attackers to gain complete control of SharePoint servers without any authentication or user interaction. Immediate Action Required: If you are running on-premises SharePoint servers, especially those accessible from the internet, you must consider implementing emergency mitigations immediately.   CVE-2025-53770 – What Happened? Attackers are exploiting a previously unknown vulnerability in SharePoint servers. This is known as a "zero day" attack because it targeted a previously unknown vulnerability. The attack allows complete takeover of SharePoint servers without requiring any login credentials. Government agencies, businesses, and institutions across the globe, including U.S. federal and state agencies, universities, energy companies, and an Asian telecom provider have been compromised.   CVE-2025-53770 – Assessing Risk and Impact You are at risk if: You run SharePoint Server 2016, 2019, or Subscription Edition on your own servers (on-premises) Your SharePoint servers are accessible from the internet You have not yet implemented Microsoft's emergency mitigations You are NOT affected if: You use SharePoint Online as part of Microsoft 365 (cloud-based SharePoint) Your SharePoint servers are completely isolated from the internet   CVE-2025-53770 – Immediate Actions to Take Assume compromise if your SharePoint servers are internet-facing Enable Microsoft's recommended security features (AMSI and Defender) If you cannot enable these protections, disconnect SharePoint from the internet immediately Begin incident response procedures to check for compromise Prepare to rotate all system secrets and credentials   CVE-2025-53770 – Technical Details CVE: CVE-2025-53770 (and related CVE-2025-53771) CVSS Score: 9.8 (Critical) Attack Vector: Network Authentication: None required User Interaction: None required Impact: Complete system compromise The vulnerability involves deserialization of untrusted data in on-premises Microsoft SharePoint Server, allowing an unauthorized attacker to execute code over a network. CVE-2025-53770 provides more robust protections than CVE-2025-49704 (patched in July), while CVE-2025-53771 provides more robust protections than CVE-2025-49706.   CVE-2025-53770 – Attack Methodology The attack, dubbed "ToolShell," works through a simple process: Attacker sends a crafted POST request to /_layouts/15/ToolPane.aspx with a spoofed HTTP Referer header. This bypasses authentication and allows file upload without credentials. Attackers upload a file named "spinstall0.aspx," which is used to steal the Microsoft SharePoint server's MachineKey configuration, including the ValidationKey and DecryptionKey. With these keys, attackers can forge valid requests and maintain permanent access.   CVE-2025-53770 – Indicators of Compromise File Indicators Primary malicious file: Filename: spinstall0.aspx Location: C:\PROGRA~1\COMMON~1\MICROS~1\WEBSER~1\16\TEMPLATE\LAYOUTS\spinstall0.aspx SHA256: 92bb4ddb98eeaf11fc15bb32e71d0a63256a0ed826a03ba293ce3a8bf057a514   Network Indicators Known attacker IP addresses: 107.191.58.76 104.238.159.149 96.9.125.147 HTTP Request Pattern: POST requests to: /_layouts/15/ToolPane.aspx?DisplayMode=Edit&a=/ToolPane.aspx HTTP Referer: /_layouts/SignOut.aspx User-Agent: Mozilla/5.0 (Windows NT 10.0; Win64; x64; rv:120.0) Gecko/20100101 Firefox/120.0 Additional File Hashes (from related attacks): 4a02a72aedc3356d8cb38f01f0e0b9f26ddc5ccb7c0f04a561337cf24aa84030 b39c14becb62aeb55df7fd55c814afbb0d659687d947d917512fe67973100b70 fa3a74a6c015c801f5341c02be2cbdfb301c6ed60633d49fc0bc723617741af7   Download Security Updates: SharePoint Server 2019: KB5002754 SharePoint Subscription Edition: KB5002768 SharePoint Server 2016: No patch available yet - check Microsoft's advisory for updates   References: Microsoft Security Response Center: https://msrc.microsoft.com/blog/2025/07/customer-guidance-for-sharepoint-vulnerability-cve-2025-53770/ CVE-2025-53770 Details: https://msrc.microsoft.com/update-guide/vulnerability/CVE-2025-53770 CVE-2025-53771 Details: https://msrc.microsoft.com/update-guide/vulnerability/CVE-2025-53771 CISA Advisory: https://www.cisa.gov/news-events/alerts/2025/07/20/microsoft-releases-guidance-exploitation-sharepoint-vulnerability-cve-2025-53770 ### Investment Corner: Dollar Pains, Global Gains - The FX Factor in 2025 Market Performance The falling U.S. dollar continues to be the most important driver of multi-asset investing in 2025. The first half of 2025 saw the U.S. Dollar Index (DXY) fall over 10%, experiencing one of the worst first-half performances in the past 50 years (see chart below).  Although a falling dollar may sound ominous, it has helped lift risk assets more broadly.  International Equities (represented by the MSCI ACWI ex US) returned +19% for the first half of 2025 - one of the strongest 6-month returns in recent memory. Almost half of this return was generated from a falling U.S. Dollar1. Given the current economic outlook for the U.S. of slower growth, rising federal debt, and continuous trade deficits, this should put downward pressure on the exchange rate, further supporting international equities. Source: Bloomberg, FactSet, J.P. Morgan Asset Management; (Left) ICE; (Top right) BEA; (Bottom right) BIS. Currencies in the DXY Index are: British pound, Canadian dollar, euro, Japanese yen, Swedish krona and Swiss franc. *Interest rate differential is the difference between the 10-year U.S. Treasury yield and a basket of the 10-year yields of each major trading partner (Australia, Canada, eurozone, Japan, Sweden, Switzerland and UK). Weights in the basket are calculated using the 10-year average of total government bonds outstanding in each region. Guide to the Markets – U.S. Data are as of June 30, 2025. As we look ahead to the second half of the year, the biggest question is: can the U.S. dollar continue falling at this pace? Experience teaches us that long-term investors shouldn’t attempt short-term trades. Those who sold equities in April missed the subsequent 25% rally in the S&P 500 from the bottom. The same principle applies to currencies—despite the downward trend in the U.S. dollar so far this year, that trend could easily reverse.   Source: FactSet. To receive our market updates, please visit www.sdwealthmanagement.com and subscribe to our emails. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Sources: Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. 15-years ann. is a rolling 15-year period ending with the previous month-end. All return values are MSCI Gross Index data, except the U.S., which is the S&P 500. *Multiple expansion is based on the forward P/E ratio, and EPS growth outlook is based on NTMA earnings estimates. Chart is for illustrative purposes only. Past performance is not indicative of future results. Guide to the Markets – U.S. Data are as of June 30, 2025. ### The “One Big Beautiful Bill” Makes Two Changes to the Income Tax Reporting of Residential Construction Contracts How will the One Big Beautiful Bill (OBBB) impact Residential Construction Contracts? The OBBB made two significant and favorable changes to the income tax rules related to residential construction contracts entered into in tax years beginning after July 4, 2025. First Income Tax Reporting Change The OBBB expands the exception to the percentage-of-completion method of accounting to include residential construction contracts. For tax purposes. Residential construction contracts are defined differently from home construction contracts; the primary difference is the number of dwelling units in the building. (In general, home contracts contain four or fewer units, and residential contracts contain more than four dwelling units.) The Internal Revenue Code has always provided favorable tax treatment to home construction contracts. One of the most favorable benefits was that the requirement to use the percentage-of-completion method of accounting does not apply to home construction contracts. A home construction contract is defined as any construction contracts where 80% or more of the total estimated contract costs, as of the close of the tax year in which the contract was entered into, are reasonably expected to be attributable to the building, construction, reconstruction or rehabilitation of (1) dwelling units contained in buildings containing four or fewer dwelling units (with each townhouse or rowhouse treated as a separate building), and (2) improvements to real property directly related to such dwelling units and located on the site of such dwelling units. Residential construction contracts are contracts, other than home construction contracts, for which 80% or more of the total estimated costs under the contract are reasonably expected to be attributable to the building, construction, reconstruction or rehabilitation of, or improvements to, real estate directly related to and located on the site of dwelling units.  A dwelling unit, for purposes of this exception, is a house or apartment used to provide living accommodations in a building or structure, but does not include a hotel, motel, inn or other establishment where more than one-half of the units are used on a transient basis. Second Income Tax Reporting Change The second material change that the OBBB made to residential construction contracts is that an alternative minimum tax (AMT) adjustment is no longer required for any residential construction contracts entered into in a tax year after July 4, 2025. The elimination of the AMT adjustment further aligns the tax treatment of residential and home construction contacts because home construction contracts have long benefited from the fact that an AMT adjustment was not required on home construction contracts. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. For more information on the impact of the OBBB on your company, please contact us at contactsd@schneiderdowns.com. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### How does the One Big Beautiful Bill (OBBB) Impact the Energy and Natural Resources Industry? The recently passed One Big Beautiful Bill (OBBB) introduced sweeping income tax changes that will significantly affect businesses in the energy and natural resources sector, especially those involved in natural gas and coal production, development, and transportation. Below are seven of the OBBB’s most important income tax implications for the energy and natural resources sector: Depreciation Changes The OBBB permanently extends 100% bonus depreciation (previously scheduled to drop to 40% in 2025) for qualifying property placed in service after January 19, 2025. This applies to assets commonly used in the natural gas and coal sectors, such as drilling equipment, vehicles, pipelines, tangible drilling costs, and other property with a recovery period of 20 years or less. In addition, the Section 179 expensing limit increases to $2.5 million, and the investment limitation increases to $4 million starting in 2025, with future inflation adjustments. These changes provide significant opportunities to accelerate deductions on equipment and infrastructure investments. Section 163(j) Interest Deduction Changes The OBBB permanently reverts the §163(j) limitation from EBIT back to EBITDA for tax years beginning after December 31, 2024. Adjusted taxable income can be computed without a reduction for depreciation, amortization, or depletion, thereby allowing a larger amount of interest that can be deducted. This change increases allowable interest deductions and particularly benefits capital-intensive development companies. Qualified Business Income Deduction The OBBB makes permanent the 20% deduction of ordinary business income from qualified pass-through entities. For privately held natural gas producers, coal operators, and related service providers structured as partnerships, LLCs, or S corporations, this deduction effectively lowers the top individual effective tax rate from 37% to 29.6%. This deduction, previously set to expire at the end of 2025, is now permanent and provides welcome certainty for owners and investors. Expensing of Qualified Research and Experimental Expenses (QREs) Beginning in 2022, domestic QREs had to be capitalized and amortized over six years, reducing the immediate tax benefit of investing in new exploration technologies, environmental compliance strategies, and process improvements. Under the OBBB, for tax years beginning after December 31, 2024, domestic R&D costs will once again be fully deductible in the year incurred. Companies can also deduct the remaining unamortized QREs capitalized from 2022–2024 in 2025 or elect to split the deduction across 2025 and 2026. Small taxpayers (with average gross receipts of $31 million or less over the prior three years) may amend 2022–2024 tax returns to claim these deductions retroactively. Section 45X Advanced Manufacturing Credit Expanded to Metallurgical Coal The OBBB expands the Section 45X Advanced Manufacturing production tax credit to include metallurgical coal mined in the United States, recognizing it as a critical mineral. This credit, equal to 2.5% of eligible production costs, is available for tax years 2026 through 2029. Importantly, the credit applies whether the metallurgical coal is sold domestically or internationally, as long as it is mined within the U.S., offering significant tax benefits to producers serving both domestic steelmakers and global markets. Modification of Clean Energy Tax Credits The OBBB significantly reshapes many of the clean energy tax credits originally enacted under the Inflation Reduction Act of 2022. While some credits were immediately repealed with the bill’s passage, others saw their phaseouts accelerated to earlier tax years. The changes impact a wide range of incentives — from consumer-focused credits, such as those for energy-efficient home improvements and electric vehicles, to producer- and developer-level credits that support the generation and development of renewable energy projects. SALT Work-Arounds Retained The OBBB retains the popular workaround allowing pass-through entities to fully deduct state and local income taxes paid on behalf of their owners. This remains especially valuable to operators and service businesses in high-tax states. For individual taxpayers, the SALT deduction cap increases to $40,000 (from $10,000) but phases out for married taxpayers with AGI over $500,000, making the entity-level workaround a critical planning tool. If you have questions about how the OBBB may affect you or your business, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### One Big Beautiful Bill Expands Section 45X Tax Credit to U.S. Metallurgical Coal Producers As part of the sweeping tax changes introduced in the One Big Beautiful Bill (OBBB), metallurgical coal has now been added to the list of critical minerals eligible for the Section 45X advanced manufacturing production tax credit. This development represents a significant new opportunity for U.S.-based coal producers, particularly those supplying domestic and international steel and metals markets. Key details of the new credit: What’s eligible: The credit applies to metallurgical coal mined within the United States. Credit amount: The credit is calculated as 2.5% of eligible production costs. Availability: Taxpayers may claim the credit for tax years 2026 through 2029. Sales requirement: The mined metallurgical coal can be sold either domestically or internationally — offering flexibility for producers serving global steel and metals customers. Additionally, the coal must be sold to an unrelated party. This addition highlights the strategic importance of metallurgical coal in U.S. industrial supply chains and reflects a broader federal policy shift to strengthen domestic production of critical minerals and materials essential to manufacturing and infrastructure. For U.S. coal producers, the Section 45X credit could improve after-tax project economics, support reinvestment in mining operations, and help offset rising regulatory and operational costs. What this means for your business: Producers should begin reviewing their cost accounting systems to accurately identify and track eligible production costs starting in 2026. Companies considering new mining projects or expansions should factor this credit into financial modeling and capital planning. Taxpayers should evaluate how the credit interacts with other deductions or credits they may claim to optimize their overall tax position.   For questions about the Section 45X credit or its potential impact on your business, please contact us at contactsd@schneiderdowns.com This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Employer Reporting Obligations for Employee Tax-Free Tips and Overtime Compensation The One Big Beautiful Bill introduces new deductions for certain workers, but with them come additional reporting requirements for employers. As many U.S. taxpayers know, the One Big Beautiful Bill (OBBB or the Act) signed into law on July 4, 2025, created two new temporary deductions for certain employees receiving “qualified tips” and “qualified overtime compensation.” (see our previous article for more details).  However, the information necessary to allow employees to calculate these deductions will require employers to report additional information on Form W-2 and Form 1099 beginning for the 2025 tax year (forms prepared in January 2026). Two sections of the Act, 70201 and 70202, impose reporting requirements on businesses making payments to employees, or to non-employees as the case may be, of qualified tips or qualified overtime. The language in these sections of the OBBB amends the Internal Revenue Code in a number of places related to business payments to payees. In both instances, however, individuals are only allowed deductions for those items that are received during the taxable year and that are included on statements furnished to the individual by the payer. If the item is not reported by the payer, no deduction will be available to the recipient of the qualifying compensation. Concerning the tip deduction, qualified tips are defined to include only those (i) “received by an individual in an occupation which customarily and regularly received tips on or before December 31, 2024, as provided by the Secretary.”  Tips must be voluntarily paid by the payor to an individual not working for a business defined as a specified service trade or business (accountants, attorneys, consultants, medical professionals, etc.). Further, the IRS is authorized to establish other requirements. Essentially, the rules are in place to benefit employees who typically receive tips and prevent recharacterization of income for those in the past who were not tipped (such as your author). Concerning the payment of “qualified overtime compensation,” this term is defined to mean “compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 (FLSA) that is in excess of the regular rate (as used in such section) at which such individual is employed.”  Overtime not meeting this definitional requirement is not qualified overtime compensation defined under the new provisions. Businesses should consider consulting with their employment/labor legal advisors to conclude whether overtime that the business pays meets this requirement under the FSLA. Additionally, for the 2025 tax year, both Act provisions provide transitional rules allowing employers to approximate amounts of both tips and overtime compensation by a separate accounting using any reasonable method as specified by the IRS. Future guidance from the IRS is necessary. Currently, only the statutory language as provided in the OBBB is currently available, leaving employers craving additional guidance to be able to comply. On July 14, the IRS issued a fact sheet noting the following for payers of qualified tips and qualified overtime: No Tax on Tips: The IRS must publish a list of occupations that “customarily and regularly” receive tips on or before December 31, 2024. The IRS will also provide transition relief for employers and payors subject to the new reporting requirements. No Tax on Overtime: The IRS indicates that employers and other payers will be required to file information returns with the IRS (or Social Security Administration) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year and that transition relief will be provided for employers and other payers subject to the new reporting requirements. Businesses may need to update their accounting, payroll, and accounts payable systems to be able to appropriately track and identify payments that meet the definitions of “qualified tips” and “qualified overtime compensation.”  These changes often take time to implement, so businesses should be considering their options now. If you have questions about how the OBBB may affect you or your organization, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### The One Big Beautiful Bill: International Tax Implications There are key provisions in the One Big Beautiful Bill (OBBB) that have international tax implications. H.R. 1, formally titled “An Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14,” commonly referred to as the One Big Beautiful Bill, spans more than 1,100 pages and introduces sweeping changes across the tax landscape. Our previous articles took a closer look at how the One Big Beautiful Bill affects businesses and tax-exempt organizations, individual taxpayers along with estate and gift taxes, and state tax changes and what was left out of the final version of the bill. In this article, we focus on OBBB’s impact on taxpayers doing business globally. The Impact of the OBBB on U.S. International Tax Regime The Bill makes modifications to the existing U.S. international tax regime in a number of key areas, including: Global Intangible Low-Taxed Income (GILTI): Replaces the term “Global Intangible Low-Taxed Income” (GILTI) with “Net CFC Tested Income (NCTI)” throughout the tax code. The deduction for NCTI (formerly GILTI) under Section 250 is reduced from 50% to 40%. Eliminates the net deemed tangible income return (NDTIR), which had allowed for a 10% return on qualified business asset investment (QBAI) to be excluded from tested income for GILTI purposes.  Foreign-Derived Intangible Income (FDII): Replaces the term “Foreign-Derived Intangible Income” (FDII) with “Foreign-Derived Deduction Eligible Income” (FDDEI). The deduction for FDDEI (formerly FDII) under Section 250 is reduced from 37.5% to 33.34%. Excludes gains from the sale or disposition of intangible property and other depreciable property from the calculation of deduction eligible income (DEI). Eliminates reduction for 10% return on QBAI from the calculation of FDDEI. Extension and Modification of Base Erosion Minimum Tax Amount (BEAT) Increases rate from 10% to 10.5%. Base erosion percentage threshold will remain at 3%. Permanently excludes certain tax credits from reducing regular tax liability when calculating BEAT tax liability. Permanent Extension of CFC Look-Through Rules: Makes permanent the existing look-through exclusion from Subpart F income provided under Section 954(c)(6), which was scheduled to expire. This rule excludes from foreign personal holding company income (and potential inclusion under Subpart F rules) certain payments of dividends, interest, rents and royalties received by a CFC from a related CFC where the payments are not reducing Subpart F income of the CFC making the payments. Restoration of Section 958(b)(4) Limitations on Downward Attribution: Restores application of Section 958(b)(4), which had been repealed under the Tax Cut and Jobs Act in 2017, and limits downward attribution of ownership of shares in foreign corporations owned by non-U.S. persons to U.S. persons when determining U.S. shareholder and CFC status. This previous repeal had resulted in an overly broad application of the downward attribution rules to cause foreign corporations to be viewed as CFCs even in cases where there was no actual majority control by U.S. shareholders. Introduces Section 951B to provide for downward attribution of ownership in a more targeted way, focusing on “foreign-controlled U.S. shareholders” and “foreign-controlled foreign corporations” and thus preserving applicability of Subpart F and GILTI inclusion rules and compliance reporting to structures within the scope of these provisions. Repeal of Election for One-Month Deferral of Tax Years of Specified Foreign Corporations (SFCs) One-month deferral election under Section 898(c)(2) is repealed. Prescribes transition rule for SFCs to adjust to a conforming year-end for tax years beginning after November 30, 2025. Modification to CFC Pro Rata Share Inclusion Rules Modifies existing pro rata share rules to require U.S. shareholders to include their share of Subpart F income if the U.S. shareholders own stock on any day during the CFC tax year as opposed to just those who hold shares on the last day of the CFC tax year. Modifications Related to Foreign Tax Credit Limitation Precludes allocation and apportionment of interest expense or research and experimentation expenditures to NCTI (formerly GILTI) basket income for purposes of the foreign tax credit limitation. Aside from Section 250 deduction and taxes on NCTI inclusions, only deductions directly allocable to NCTI income will be allocated against NCTI basket income for purposes of the foreign tax credit limitation. Modifies deemed paid credit allowed under Section 960 for foreign taxes applicable to tested income by increasing the allowable percentage from 80% to 90%. Disallows a foreign tax credit for 10% of any foreign income taxes paid or accrued on distributions of previously taxed NCTI of a CFC. Applies to taxes on such distributions made after June 28, 2025. Changes sourcing rule applicable to sales of inventory produced in the U.S. and sold outside the U.S. through foreign branches to limit foreign source treatment for foreign tax credit purposes. If you have questions about how the OBBB may affect you or your organization, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### The One Big Beautiful Bill: A New Era for Manufacturing Tax Policy How will the One Big Beautiful Bill (OBBB) impact the manufacturing industry? The recently enacted OBBB represents a significant shift in U.S. tax policy, particularly for the manufacturing sector. The bill includes provisions designed to stimulate domestic investment, foster innovation and promote industrial growth. These provisions offer a suite of tax incentives that could reshape how manufacturers plan capital expenditures and R&D strategies. Some of the noteworthy provisions related to the manufacturing industry are as follows: Full and immediate expensing for certain production facilities involved in manufacturing This provision is one of the most impactful provisions for manufacturers in the tax bill. It allows businesses to deduct 100% of the cost of newly constructed qualified production property (QPP) in the year it is placed in service. QPP is nonresidential real property used by the taxpayer as an integral part of a qualified production activity. The deduction is available for new facilities that are involved in substantial transformation of a product such as manufacturing, refining, extraction and chemical production. It excludes areas used for offices, administrative spaces and parking structures. The property must be new, U.S.-based, and not previously placed in service. It applies to property placed in service between July 4, 2025, and before January 1, 2031 (construction of the property must begin after January 19, 2025, and before January 1, 2029). A 10-year recapture rule applies if the property’s use changes to serve a new purpose. Under the prior law, buildings of this nature were required to be depreciated over a 39-year period. An exception can be applied to used property acquired by a taxpayer after January 19, 2025, and before January 1, 2029, in which the special depreciation allowance is permitted under certain conditions. This provision is expected to accelerate capital investment in domestic production, factory construction and modernization by reducing the initial cost for new factories. Bonus Depreciation and Section 179 Expensing The OBBB also permanently reinstates 100% bonus depreciation for qualified property acquired and placed into service after January 19, 2025. This allows manufacturers to immediately expense machinery, tools and other tangible assets. Accordingly, the bill raises the §179 expensing limit to $2.5 million (phased out after $4 million), indexed for inflation after 2025. This is especially beneficial for small and mid-sized manufacturers investing in equipment and facility upgrades. Research and Experimental Cost Deduction The bill repeals the Tax Cuts and Jobs Acts’ amortization requirement for domestic R&D costs, restoring immediate expensing under §174 starting in 2025. Further, it provides retroactive relief for small companies with annual revenues less than $31 million to amend their tax returns and deduct these expenses for tax years 2022-2024. Alternatively, a taxpayer may elect a deduction for previously capitalized expenses in 2025 or over two years in 2025 and 2026. Larger companies are limited to electing one of the catch-up provisions for unamortized capitalized costs. Section 163(j) Interest Deduction Relief OBBB permanently reverts the §163(j) limitation from EBIT back to EBITDA for tax years beginning after December 31, 2024. Adjusted taxable income can be calculated without a reduction for depreciation, amortization or depletion, thereby allowing an increase in allowable interest deductions and particularly benefiting capital-intensive manufacturers. The OBBB marks a transformative shift in U.S. manufacturing tax policy. By aligning tax incentives with realities of modern industrial investment—through full expensing, enhanced R&D treatment and expanded interest deductibility—OBBB empowers manufacturers to scale operations, embrace innovation and strengthen domestic production. As the sector adapts to this new landscape, proactive and strategic planning will be essential to fully leverage these provisions and drive sustained long-term growth. If you have questions about how the OBBB may affect you or your business, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Five Significant Tax Implications of the "One Big Beautiful Bill" on the Construction Industry How will the One Big Beautiful Bill (OBBB) impact the construction industry? The OBBB introduced significant income tax-related changes affecting the construction industry. Five of the most significant income tax implications of this landmark bill are highlighted below: Qualified Business Income Deduction The OBBB makes permanent the 20% deduction of ordinary business income from qualified pass-through entities.  This deduction essentially reduces the top individual effective rate from 37% to 29.6% and was set to expire at the end of the 2025 calendar year. Expensing of Qualified Research and Experimental Expenses (QREs) Beginning in 2022, domestic QREs were required to be capitalized and amortized over six tax periods, with the first and last year deduction equaling only 10% of the total amount of expense incurred during the year. For tax years beginning after December 31, 2024, domestic R&D costs are fully deductible in the year incurred, and taxpayers can deduct the unamortized QREs (that were capitalized in 2022-2024) in 2025 or split the deduction between 2025 and 2026. Small taxpayers (companies with average gross receipts of $31 million or less over the past three years) also have the ability to amend their tax returns for 2022 through 2024 to claim these deductions. Depreciation Changes One hundred percent bonus depreciation (previously 40% in 2025) was made permanent for qualifying property acquired after January 19, 2025.  In general, qualifying property is MACRS property with a recovery period of 20 years or less, computer software or Qualified Improvement Property. In addition, the dollar limitation for Code Section 179 depreciation expense is increased to $2.5 million and the investment limitation is increased to $4 million for tax years beginning after 2024.  These amounts will be adjusted for inflation for years beginning after 2025. Clean Energy Incentives Terminated The bill eliminates many green construction tax incentives, including 179D and 45L.  The 179D tax deduction is not available for properties that begin construction after June 30, 2026, and the 45L tax credit is not available for all dwelling units that are closed or initially leased after June 30, 2026. SALT Work-Arounds Retained The OBBB retains the full deductibility of state income taxes paid by pass-through entities on behalf of their owners.  This workaround remains an important tax planning strategy given that the SALT deduction (for individual income taxpayers) was only increased to $40,000 (from $10,000) and phases out for married individual income taxpayers with adjusted grossed income in excess of $500,000. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. For more information on the impact of the OBBB on your company, please contact us at contactsd@schneiderdowns.com. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### Postcard from the AICPA NFP Industry Conference The 2025 AICPA & CIMA Not-for-Profit (NFP) Industry Conference took place during June 2025. This annual event brought together finance and accounting professionals from the NFP sector to explore industry news, regulatory updates, financial reporting, cybersecurity, AI integration, and leadership. Key accounting topics included Financial Accounting Standards Board (FASB) and Uniform Guidance changes, Form 990 compliance, internal controls, budgeting, and grant accounting, equipping NFP professionals with tools to enhance transparency, sustainability, and mission-driven financial management. One of the main highlights of the conference was the discussion of the impact of emerging technologies on the accounting profession. Speakers emphasized the importance of staying updated with technological advancements such as artificial intelligence and data analytics. These technologies are transforming the way accountants work, making processes more efficient and accurate. Attendees were encouraged to embrace these changes and leverage technology to enhance their services and programs. Another significant topic was the evolving regulatory landscape. The conference addressed recent changes in accounting standards and regulations, highlighting the need for professionals to stay informed and compliant. Experts provided guidance on navigating these changes and ensuring that their practices align with the latest requirements. This session was particularly beneficial for those involved in financial reporting. The conference also featured sessions on risk management and cybersecurity. With the increasing prevalence of cyber threats, it is crucial for accounting professionals to understand the risks and implement robust security measures. Speakers shared best practices for protecting sensitive financial data and mitigating potential risks. This information is vital for maintaining the trust and confidence of the NFP donor and grantor base. In addition to these topics, the conference included discussions on leadership and professional development. Attendees were encouraged to invest in personal growth and develop essential skills such as communication, critical thinking, and adaptability. These skills are crucial for navigating the dynamic and ever-changing accounting landscape. Overall, the AICPA conference was a comprehensive and informative event that addressed the most pressing issues facing the NPF industry today. Please join Schneider Downs’ NFP industry leaders and subject matter experts on August 19 for our webinar that dives deeper into these topics impacting the NFP sector. ### The One Big Beautiful Bill: State Tax Impact and Noteworthy Past Proposals Provisions That Were Not Included What are some key state tax implications of the One Big Beautiful Bill (OBBB), and what are some noteworthy past proposals that were not included in this legislation? H.R. 1, formally titled “An Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill, spans more than 1,100 pages and introduces sweeping changes across the tax landscape. One previous article took a closer look at how the OBBB affects businesses and tax-exempt organizations, while another explored the effects on individual taxpayers along with estate and gift taxes. In this piece, we focus on the implications on state taxes and past proposals that were not included in the final version of the bill. What the OBBB Means for State Taxes The passage of any significant federal income tax legislation often impacts the amount of state income taxes incurred by individuals. This is because state income tax regimes are often directly tied to (or conform with) federal tax law. Many states (but not Pennsylvania) use federal adjusted gross income or alternatively taxable income as their starting point by incorporating the Internal Revenue Code (IRC) in whole or in part into their state law either through: Static conformity – a state conforms to the IRC as of a specific date, or Rolling conformity – wherein a state law automatically conforms to the IRC States may further complicate matters by “decoupling” from federal rules in certain areas, like depreciation, by adopting slower depreciation methods or opting out of federal bonus depreciation rules, for example, while adopting most other federal provisions. Another item for consideration are the various state pass-through entity tax (PTET) workaround regimes developed in response to the TCJA’s $10,000 SALT limitation. Some states included sunset provisions into their laws that would terminate the workaround when the TCJA was set to expire. Careful attention to each state’s specific laws is required. Taxpayers need to be mindful of these potential federal and state differences when estimating state income tax consequences of the new legislation. What Didn’t Make the Final Cut of the OBBB? A number of ideas that were floated by various members of Congress didn’t make it into the OBBB, but it doesn’t mean they won’t be considered in the future. Items not included in the bill include: Corporate Tax Rates – A change in corporate tax rates (increase or decrease) was not included in the OBBB. Wealth or Billionaire Taxes – Though floated in prior years, there is no provision within the OBBB imposing a tax on wealth. Higher Income Tax Rate – Though discussed, there are no provisions imposing a higher income tax rate (such as a return to a 39.6% rate) on high income individuals. Net Investment Income Tax – Increases in the tax rate of the net investment income tax have previously been proposed but were not included in the OBBB. Carried Interest – Treating carried interest as ordinary income was not included. Step-Up in Basis – Ending the step-up in basis on inherited wealth was not included in the OBBB. Like-Kind Exchanges – repeal of like-kind exchange treatment on real estate transaction have been proposed in the past but are not included in the OBBB. Corporate SALT Deduction – A limitation on the corporate SALT deduction was not included. Work Opportunity Credit – An extension of the Work Opportunity Credit (set to expire 12/31/2025) was not included. Social Security Taxation – An exclusion of Social Security benefits from income tax was not included. If you have questions about how the OBBB may affect you or your organization, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  Excerpt: See how the One Big Beautiful Bill affects state taxes—and what high-profile tax proposals didn’t make it into the final legislation. ### The One Big Beautiful Bill: Highlights for Businesses and Tax-Exempt Organizations What changes in the One Big Beautiful Bill (OBBB) could impact businesses and tax-exempt organizations? H.R. 1, formally titled “An Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill, spans more than 1,100 pages and introduces sweeping changes across the tax landscape. Our previous article covered how the OBBB affects individual taxpayers and estate and gift taxes. In this article, we explore the key changes that could impact businesses and tax-exempt organizations. The Impact of the OBBB on Businesses The business-related tax provisions contained in the OBBB appear to be designed to encourage business in America and stimulate the economy by restoring and adding tax- favorable (although not all provisions are favorable) business provisions, including: Business Interest Deduction: The OBBB permanently reinstates the “taxable EBITDA” limitation for tax years beginning after December 31, 2024. Accordingly, for the purpose of calculating the business interest limitation for these years, adjusted taxable income is computed without a reduction for depreciation, amortization or depletion, thereby increasing the amount of interest expense that can be deducted. The OBBB also modifies the definition of “motor vehicle” for purposes of the floorplan financing interest and floorplan financing indebtedness definitions to include any trailer or camper that is designed to provide temporary living quarters for recreational, camping or seasonal use and is designed to be towed by or affixed to a motor vehicle. Finally, the OBBB provides rules for coordinating the business interest limitation rules with rules on the capitalization of interest. The new rules don’t change other numerous and complex compliance business interest limitation rules already in place, including the definition of interest and its different impact on partnerships and partners compared to S corporations and their shareholders. Special Depreciation Allowance for Qualified Production Property: The OBBB aims to encourage growth in domestic manufacturing by creating a new tax incentive that allows for the immediate deduction for investment in both new and refurbished manufacturing facilities (i.e., buildings) by adding new subsection (§168(n)), and by creating an immediate deduction for a new class of property called “qualified production property” for property acquired and placed in service after January 19, 2025 and before January 1, 2031. Bonus Depreciation: The OBBB permanently reinstates a 100% additional first-year depreciation deduction under §168(k) for qualified property (new or used property with a recovery period of 20 years or less) acquired and placed in service after January 19, 2025. There are still other options available to elect out of 100% bonus depreciation. Section 179 Business Expensing of Capital Acquisitions: The OBBB increases the maximum expense deduction to $2,500,000 while increasing the phaseout threshold to $4,000,000 (both indexed for inflation) beginning in tax years after December 31, 2024. Research and Experimental Cost Deduction: The OBBB permanently provides for the immediate deduction of domestic (but not foreign) R&E costs in the year incurred for tax years beginning after December 31, 2024. Capitalization and amortization are no longer required, but can be elected. Further, it provides retroactive relief for smaller companies with average gross receipts of $31 million or less over the past three years to either amend returns for tax years 2022 through 2024 or take a catch-up deduction in either one year in 2025 or over two years in 2025 and 2026. Larger companies are limited to either of the catch-up provisions, but not the amended return option for remaining unamortized capitalized costs. The 15-year amortization rule remains in place for foreign R&E; these costs are still excluded from the Section 41 research credit. Qualified Opportunity Zones: The OBBB revitalizes the QOZ program by creating a permanent set of provisions and benefits that are separate from those originally established by the TCJA. The Act calls for the designation of additional qualified opportunity zones under a modified definition of a low income community. It also creates a second type of QOZ known as a “rural area” QOF, provides differing gain exclusion periods based on holding periods of qualifying investments, and increases compliance reporting requirements. Qualified Business Income Deduction: The OBBB makes permanent a 20% deduction against “adjusted taxable income” (though the original House OBBB wanted to increase the deduction to 23%, a number that was not acceptable to the Senate and was removed prior to passage). You’ll recall that the deduction is available to individuals regardless of whether they itemize their deductions. The OBBB makes a few additional but nominal enhancements, including providing for a new minimum $400 deduction for those with at least $1,000 of qualified business income, and expands the deduction limit by increasing phaseout amounts. It makes no changes to the treatment of income to professional service business owners of “specified service trade or businesses.” Excess Business Loss Deduction: The excess business loss provisions for noncorporate taxpayers are made permanent, including treating the loss disallowed and carried forward to future years as a net operating loss. C Corporation Floor on Charitable Contributions: The OBBB creates a floor equal to 1% of taxable income on corporate charitable donations exceeding 1% of taxable income for donations in taxable years beginning after December 31, 2025. Total charitable donations are still limited to a maximum 10% of taxable income (before the floor). Carryforwards are available. Section 179D Energy Efficient Commercial Buildings Deduction: The OBBB terminates the deduction for qualified property that begins construction after June 30, 2026. Exception To Percentage-Of-Completion Method Of Accounting For Certain Residential Construction Contracts: The OBBB made two significant changes to rules related to residential construction contracts entered into in tax years beginning after July 4, 2025. First, it expands the exception to the percentage-of-completion method of accounting to include residential construction contracts. For tax purposes. residential construction contracts are defined differently than home construction contracts, the primary difference being the number of dwelling units in the building. In general, home contracts contain four or fewer units while residential contracts contain more than four dwelling units. The second material change that the OBBB made to residential construction contracts is that an alternative minimum tax (AMT) adjustment is no longer required for any residential construction contracts entered into in a tax year after July 4, 2025 (Code Section 56(a)(3). The elimination of the AMT adjustment further aligns the tax treatment of residential and home construction contacts because home construction contracts have long benefited from the fact that an AMT adjustment was not required on home construction contracts. Administrative Accounting for Tips and Overtime Earned by Employees: The OBBB includes provisions for employers that require additional compliance reporting obligations to both employees and the IRS to allow for the proper claiming and verification of deductions. Form 1099 Information Reporting: The OBBB increases the information return (Form 1099) threshold for certain payments to individuals engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year (up from $600). The threshold amount will be indexed annually for inflation in calendar years after 2026; the provision is effective for payments made after December 31, 2025. The Impact of the OBBB on Tax-Exempt Organizations The final version of the OBBB includes only a few changes that directly impact tax-exempt organizations. Several provisions that raised concerns following the release of the House’s initial draft in May were ultimately excluded from the final version of the legislation. The excluded provisions include an increase in the rate of tax on net investment income of certain private foundations, an increase in unrelated business taxable income (UBTI) by the amount of certain fringe benefit expenses for which deduction is disallowed, and name and logo royalties being treated as UBTI There are also a number of provisions that indirectly impact tax-exempt organizations. These are discussed elsewhere. but include changes in the treatment of charitable contributions by individuals and corporations and a change in the reporting threshold for information reporting forms with respect to compensatory payments to certain payees. Tax on Excess Compensation Within Tax-Exempt Organizations: The OBBB expands the application of an excise tax on the excess compensation of tax-exempt organizations. It changes the definition of a “covered employee” to mean any employee (including any former employee employed after 2016) of an applicable tax-exempt organization, not just the five highest-compensated in each year after 2016. This amendment works to increase the excise tax by effectively erasing the limitation on the number of employees that can be considered new “covered employees” each year. Modification of Excise Tax on Investment Income of Certain Private Colleges and Universities: The OBBB amends the law by adding a tiered tax rate structure based on the student-adjusted endowment as follows: Student-adjusted endowment Excise tax rate More than $500,000 and not more than $750,000 1.4% (current rate) More than $750,000 and not more than $2,000,000 4% More than $2,000,000 8% The new law also increases the number of tuition-paying students to be considered an applicable educational institution to 3,000 from the current 500. Additionally, under the new law, the net investment income subject to the excise tax will include student loan interest income and royalty income from federally funded research. Schools that are subject to this excise tax will be required to report the number of tuition-paying students and the number of total students on their Form 990, Return of Organization Exempt from Income Tax. If you have questions about how the OBBB may affect you or your organization, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  Excerpt: Explore key tax changes in the One Big Beautiful Bill that impact businesses and tax-exempt organizations, from deductions to compliance updates ### The One Big Beautiful Bill: Highlights for Individual, Estate, and Gift Taxes What changes in the One Big Beautiful Bill (OBBB) could impact individual taxpayers and estate and gift taxes? H.R. 1, formally titled “An Act to provide for reconciliation pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill, spans more than 1,100 pages and introduces sweeping changes across the tax landscape. The OBBB tax implications are focused on several key goals, including: The extension or permanency of 2017’s Tax Cuts and Jobs Act (TCJA) provisions; A reduction in Inflation Reduction Act (IRA) green energy credits; Encouraging business in America and stimulating the economy by restoring and adding tax-favorable business provisions; and Putting America first by enacting permanent reform to international provisions of the federal tax code. The OBBB impacts federal taxation – and various taxpayers – in a number of areas. We’ve summarized the key provisions we believe are most relevant or have the most interest to our clients. This article will focus on the individual and estate and gift-related provisions of the OBBB, with future articles focusing on: Businesses and Tax-Exempt Organizations State Tax and Proposal Exclusions International Tax Green and Other Credits The Impact of the OBBB on Individual Taxpayers Generally, the OBBB achieved its goal of extending many of the TCJA provisions, along with adding additional rules regarding specific items like taxation of tips and overtime pay. The OBBB does change law impacting individual taxpayers as highlighted below: Tax Rates and Brackets: The OBBB makes permanent the existing seven tax brackets created by the TCJA (10%, 12%, 22%, 24%, 32%, 35%, 37%); it does not create a higher tax rate for wealthy individuals that was being floated at one time. Brackets will continue to increase for inflation. Standard Deduction: The OBBB makes permanent – and slightly increases – the standard deduction that was nearly doubled by the TCJA. The deduction will be increased based on inflation. The larger standard deduction essentially includes the reduction in income formerly provided by personal exemptions and a smaller standard deduction under pre-TCJA tax law. Personal Exemptions: Many taxpayers may remember reductions to adjusted gross income (AGI) for personal exemptions. This item would have returned with the expiration of the TCJA but is now permanently eliminated by the OBBB. Deduction for Seniors: The OBBB provides for a temporary $6,000 senior deduction (or exemption) for tax years 2025 through 2028 for individuals who are age 65 or older, with the benefit phasing out when modified AGI exceeds $75,000 for singles and $150,000 for married filing jointly taxpayers. The deduction is allowed to senior taxpayers who either claim the standard deduction or itemize deductions. It is not indexed for inflation. This provision is likely a compromise provision to the President’s goal of making Social Security benefits not taxable. Itemized Deduction Benefit Limited: Beginning in 2026, a new provision places an overall limit on the tax benefit of miscellaneous itemized deductions (including SALT deductions, charitable contributions, and mortgage and investment interest) for the highest income earners at essentially 35%. This impacts the highest bracket taxpayers only (the 37% bracket is reached at roughly $626,000 of taxable income for single taxpayers and $752,000 for married filing jointly taxpayers using 2025 brackets). The provision specifically excludes a reduction for the qualified business income deduction. Miscellaneous Itemized Deductions Not Allowed: The OBBB permanently denies the TCJA’s non-deductibility of almost all miscellaneous itemized deductions like tax preparation fees, investment fees and professional fees incurred with IRS audits and assessments. Only educator expenses are allowed as a miscellaneous itemized deduction. State and Local Tax (SALT) Deduction Limitation: For tax years beginning in 2025, the OBBB retroactively increases the cap on SALT deductions to $40,000 (excluding a small 1% increase annually) for tax years through 2029, after which it is scheduled to return to $10,000. The deduction would also be subject to a phaseout for modified AGI greater than $500,000 in 2025 and similar 1% increases thereafter. It would not be reduced below $10,000. More importantly for business passthrough business owners, there would be no SALT limitation for passthrough entities. Charitable Deduction For Non-Itemizers: Beginning in 2026, non-itemizing individuals can deduct up to $1,000 (or $2,000 for married couples filing jointly). This provision is permanent. Charitable Deduction Floor Established: The OBBB establishes a floor for the deduction of charitable contributions for taxpayers who itemize. Beginning in 2026, charitable contributions will only be deductible to the extent they exceed 0.5% of AGI. A limited carryforward provision is provided for the disallowed portion; the excess may be carried forward if the taxpayer has other charitable carryforwards from the year. Cash Contributions Allowed Up to 60% of AGI: The Senate also added a provision to the OBBB that makes the 60% AGI limitation for cash contributions to public charities permanent. Home Mortgage Interest Deduction: The OBBB makes permanent the TCJA limitations on the deductibility of home mortgage interest at $750,000 of mortgage indebtedness (otherwise set to increase to $1,000,000 if the TCJA provisions expired). Home equity indebtedness is not separately deductible unless it qualifies as “acquisition indebtedness.” Automobile Loan Interest Deduction: The OBBB establishes a new temporary deduction (also allowed to non-itemizers) for tax years 2025 through 2028 for “qualified passenger vehicle loan interest” on debt incurred after December 31, 2024, for the purchase of a personal use automobile secured by the debt. The automobile must be a new vehicle (car, minivan, SUV, pickup truck or motorcycle under 14,000 pounds) and final assembled in the U.S. There is a limit on the amount of interest deductible ($10,000) and limits on deductibility when modified AGI exceeds $100,000 ($200,000 in the case of a joint return). Deduction for Tips Earned: This provision temporarily creates a limited above-the-line deduction for “qualified tips” received by an individual in an occupation (Treasury will publish a list within 90 days of enactment) that “customarily and regularly” receives tips during tax years 2025 through 2028. A qualified tip is one that must be paid voluntarily, is not subject to negotiation and is determined by the payor. The deduction is allowed for both employees receiving a W-2 and independent contractors receiving a 1099-K, 1099-NEC or reported by the taxpayer on Form 4317. The deduction is limited to $25,000 and begins to phase out when the taxpayer’s modified AGI exceeds $150,000 ($300,000 for married filing jointly). Deduction for Overtime Pay: This provision temporarily creates a limited above-the-line deduction for “qualified overtime compensation” received by an individual during tax years 2025 through 2028. Qualified overtime compensation means overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed. The deduction is limited to $12,500 ($25,000 in the case of a joint return) and begins to phase out when the taxpayer’s modified AGI exceeds $150,000 ($300,000 for married filing jointly). Exclusion from Income of Gain on Section 1202 Qualified Small Business Stock: Taxpayers investing in certain small “C” corporations can achieve significant capital gain income exclusions of up to 100% of gains (or even over $500 million in gains in an extreme example) when selling stock that qualifies as Section 1202 Qualified Small Business Stock (QSBS). The OBBB makes substantial modifications and improvements to existing law, adjusting the QSBS exclusion to provide tiers (50% for stock held for three years; 75% for four years; 100% for five) for newly acquired stock while also increasing the eligibility for exclusion by raising the limit on the corporation’s gross assets at the time of stock issuance from $50 million to $75 million. Because Section 1202 has existed since 1993 and the rules have evolved over the years, it’s critical to understand your specific facts before the amount of gain eligible for exclusion can be determined. Personal Casualty Losses: This provision permanently limits the itemized deduction for personal casualty losses resulting from federally declared disasters. When a loss is attributable to a disaster declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the loss is deductible only to the extent of the sum of the individual’s personal casualty gains plus the amount by which aggregate net disaster-related losses exceed 10% of the individual taxpayer’s AGI as an itemized deduction. In any taxable year beginning after December 31, 2017, all other personal casualty losses – such as a fire that totally destroys a personal residence not caused by a federally declared disaster – are deductible only to the extent that the losses do not exceed the individual’s personal casualty gains. NOTE: Qualified disaster losses are a special subset of a personal federally declared disaster loss and are not a miscellaneous itemized deduction subject to the above rule. Child Tax Credit: Provides for a permanent increase in the child tax credit to $2,200 (indexed for inflation) for eligible taxpayers for tax years beginning in 2025. The OBBB also makes permanent the income phaseout threshold amounts of $400,000 for taxpayers filing jointly and $200,000 for all other taxpayers. Adoption Credit: Formerly nonrefundable, the OBBB makes $5,000 of the total credit refundable ($17,280 for 2025 as adjusted for inflation). It did not change the income levels when the credit begins to phase out (at income levels roughly between $259,000 and $299,000 for 2025). Qualified Elementary and Secondary Scholarship Tax Credit: The OBBB creates a tax credit not to exceed $1,700 (reduced by any state credit allowed) available to U.S. citizens or U.S. resident individuals equal to “qualified contributions” made to a “scholarship granting organization.” Various additional requirements and restrictions apply. The effective date is for tax years beginning after December 31, 2026. Student Loan Debt Discharge: The OBBB makes permanent the exclusion from gross income the discharge of student loan debts due to death or disability. Alternative Minimum Tax: The OBBB preserves the TCJA’s AMT exemption amounts but increases the phaseout rate to 50% (versus 25% under current law), accelerating the claw-back for upper income taxpayers. Additional Miscellaneous Items: The OBBB permanently terminates other provisions, including the deduction for moving expenses and the determination of the amount of wagering losses allowed as a deduction. The Impact of the OBBB on Estate and Gift-Related Provisions Estate and Gift Tax Exemption: The OBBB makes permanent and increases the unified estate and gift tax exemption to an inflation-indexed $15 million for taxable years beginning after December 31, 2025. The generation-skipping transfer tax exemption is also permanently increased to an inflation-indexed $15 million. Education Savings Accounts (provides enhanced gifting opportunities): The use of §529 Accounts offers the ability to save for future primary, secondary and college education expenses in a tax-efficient manner by providing for tax-free growth on principal contributed and allowing for tax-free withdrawals when used for qualified education expense. The funding of §529 plans can also offer valuable gift and estate planning benefits for parents and grandparents, though these rules are outside the scope of this guide.While many current rules surrounding 529 Accounts remain the same, the OBBB enhances educational planning by expanding the definition of “qualified higher education expenses” to include additional expenses eligible for K-12 usage (but excluding from the definition expenses incurred in homeschooling), such as curriculum and curricular materials, books or other instructional materials, online educational materials, certain tutoring expenses, educational therapies and fees for standardized testing, college admission examinations and advanced placement tests. These elementary and secondary school expenses are considered qualified higher education expenses for all purposes of §529. The OBBB also doubles the amount of allowed withdrawals for elementary and secondary school tuition and expenses from $10,000 annually per beneficiary to $20,000. If you have questions about how the OBBB may affect you or your family, please reach out to us at contactsd@schneiderdowns.com. This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  Excerpt: Explore key individual, estate, and gift tax changes from the One Big Beautiful Bill and how they may impact your financial planning. ### June 2025 - Market Recap The S&P 500 index continues to produce new records – this time the fastest recovery following a 15% or greater decline since the mid 1950’s. What makes this 55-day (the fastest ever) recovery from a 15% or greater decline even more surprising is that the stock market was able to shrug off the U.S. bombing of Iran, the continued global trade wars, and the typical blasé month of May. In fact, the S&P 500 index just generated its highest May through June return (up 11.7%) since the 20.9% return to the S&P 500 index during May through June 1938. Markets have rebounded from the April lows and have gone all in on risk. While we are back to all-time highs from a price perspective, we are also back to very expensive levels from a valuation perspective. The forward P/E on the S&P 500 is on the brink of hitting 22x, not that far from all-time high valuations reached in 1999-2000 of 24x. Amidst all the geopolitical uncertainty, slowing economic growth, and still relatively restrictive Fed, equities brushed all that off to be priced in of the highest valuations in 30 years. Large cap stocks fared better than mid- and small-cap stocks in June and during the second quarter. In June, the S&P 500 was up 5.1%, the S&P 400 (mid-cap) was up 3.6% and the S&P 600 (small cap) was up 4%. For the quarter, the S&P 500 was up almost 11% while the S&P 400 was up 6.7% and the S&P 600 was up 4.9 %. Despite all three size indices generating a positive return for the second quarter, only large cap and mid-cap indices are ahead year-to-date, while small cap stocks are still in negative territory (the Russell 2000 is down 1.8% and the S&P 600 is down 4.5%). International equities continued their relatively strong performance to end the first half of 2025 as one of the best returning asset classes across the board. The MSCI AC World ex-US (international developed equities) were up 3.45% for the month of June and 18.3% for the first half of 2025. Emerging markets were up over 6% for the month of June and 15% for the first half of 2025. The U.S. dollar fell to new cycle lows leading to over a -10% decline for the first half of 2025, one of the worst starts to a year for the U.S. dollar since the 1970s. This has helped lift risk assets more broadly and continues to be the most important driver of multi-asset investing in 2025. As we set up for the second half of 2025, one of the biggest questions around is can the USD keep falling at this pace for the rest of the year? As stock indices advanced in June, so did bonds as yields declined. The 10-year Treasury yield dropped from 4.42% at the close of May to 4.23% at the end of June – leading to a 1.5% monthly return for the Bloomberg Aggregate Bond index. For the quarter, the Bloomberg Aggregate Bond index was up 1.2%. Riskier areas of the bond market (high yield) benefited from the falling rate environment as well as tightening credit spreads as less risk was priced into the market. High quality bonds continue to offer compelling income and the potential for further price returns if the economy slows down more. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### IRS Announces 2025 Marginal Well Tax Credit; Highest Credit Ever at $0.79 Per MCF On June 30, the IRS released the figures needed to calculate the Marginal Well Tax Credit (MWC) for tax year 2025. Using a natural gas reference price of $1.64 per mcf and an inflation adjustment factor of 1.5821, the result is a credit of $0.79 per eligible mcf of production, the highest amount in the credit’s history. The MWC was enacted to help domestic producers keep low-production (or “marginal”) wells in service, especially when natural gas prices are low. Marginal wells, which often operate on thin profit margins, are an important part of U.S. energy supply and local economies. The credit serves as an incentive to maintain production rather than shut in wells when prices dip. Historically, the credit amount has varied each year based on the IRS-determined reference price and inflation adjustments. In recent years, the credit was $0.77 for 2024, and $0 in both 2022 and 2023, when higher natural gas prices meant the credit phased out entirely. The new 2025 credit of $0.79 per mcf marks a record high, providing extra support to operators during a period of relatively low gas prices. For operators of qualified marginal wells, the 2025 credit could provide meaningful tax relief and help offset operating costs. As always, it’s important to review eligibility requirements carefully and consult with a tax advisor to ensure proper calculation and use of the credit. If you think you could benefit from the credit or would like to discuss the 2025 MWC, please contact a Schneider Downs tax advisor. ### Section 174 Expensing Restored Under OBBB—A Win for R&D-Driven Businesses How will the One Big Beautiful Bill Act (OBBB) impact R&D-driven businesses? The newly enacted OBBB delivers long-awaited relief for businesses investing in domestic research and development (R&D). One of the most impactful changes? The repeal of the Tax Cuts and Jobs Act’s (TCJA) requirement to amortize Section 174 R&D expenses over five years. Starting with tax years beginning after December 31, 2024, companies can once again fully deduct domestic R&D costs in the year they’re incurred. What’s Changed? Since 2022, businesses were required to capitalize and amortize domestic R&D expenses over five years. This policy created cash flow challenges and discouraged innovation. The OBBB reverses that, restoring immediate expensing for domestic R&D and realigning tax treatment with the fast-paced nature of innovation. Key Highlights for Taxpayers Immediate Expensing Returns: Beginning for tax years beginning after December 31, 2024, domestic R&D costs are fully deductible in the year incurred—no special election needed. Retroactive Relief for Small Businesses: Companies with average gross receipts of $31 million or less over the past three years can: Amend 2022–2024 returns (must be done within one year of the bill’s enactment), or Take a catch-up deduction in 2025 or split it between 2025 and 2026. Accelerated Deductions for Larger Businesses: Companies above the small business threshold can’t amend prior returns, but they can accelerate remaining amortization from 2022–2024 over one or two years starting in 2025. Foreign R&D Still Amortized: The 15-year amortization rule remains for foreign R&D, and these costs are still excluded from the Section 41 research credit. Strategic Considerations Small businesses should weigh the pros and cons of amending prior returns versus taking the catch-up deduction. Amending could improve cash flow and financial reporting, but it comes with administrative overhead. The catch-up deduction may be simpler and more efficient for businesses with steady cash flow or limited resources to handle amended filings. Final Thoughts The OBBB’s revisions to Section 174 signal a meaningful shift in tax policy—one that reaffirms the value of domestic innovation and supports the businesses driving it. For companies in software, biotech, advanced manufacturing, and other R&D-heavy sectors, this is a moment to act. Review your past filings, assess your options, and position your business to take full advantage of the restored expensing rules. How Can Schneider Downs Help? Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at contactsd@schneiderdowns.com. ### Major Tax Code Changes Under the One Big Beautiful Bill A sweeping update to the U.S. tax code was signed into law late last week under the One Big Beautiful Bill (OBBB). This legislation introduces a wide range of changes that will affect nearly every American taxpayer—from extending the 2017 tax cuts to introducing new deductions for car loan interest. In this article, we’ll break down what we feel are the most impactful provisions. Extension of the 2017 Tax Cuts The tax reforms introduced in 2017 were originally set to expire at the end of 2025. However, under the OBBB, these provisions are now permanent—with one major addition: a temporary expansion of the State and Local Tax (SALT) deduction. SALT Deduction Increase: The SALT deduction cap will rise from $10,000 to $40,000 starting in 2025. This increase will phase out after four years, reverting to the $10,000 cap in 2029. The new cap will also increase by 1% annually during its effective period. Other permanent provisions include: Reduced tax rates across most income brackets, with adjusted thresholds. Elimination of personal exemptions and a near doubling of the standard deduction. Child Tax Credit increased from $1,000 to $2,000, and further raised to $2,200 per child (indexed for inflation after 2025). Elimination of many itemized deductions (e.g., unreimbursed employee expenses, tax prep fees). Federal estate tax exemption remains at $13.99 million per individual. Mortgage interest deduction preserved for up to $750,000 of new acquisition debt. Medical expenses exceeding 7.5% of AGI remain deductible. Repeal of the Pease limitation on itemized deductions remains in effect. New Deduction for Car Loan Interest Taxpayers can now deduct up to $10,000 in interest on car loans annually, provided the vehicle is assembled in the U.S. This deduction phases out for individuals earning between $100,000–$150,000 and joint filers earning between $200,000–$250,000. The car must be new, you must be the original owner, and it must be for personal use. Senior Tax Deduction While Social Security income remains partially taxable, the OBBB introduces a new $6,000 deduction for taxpayers over age 65. This deduction phases out starting at $75,000 for individuals and $150,000 for joint filers and is set to expire in 2029. Green Energy Rollbacks The $7,500 electric vehicle tax credit, passed in September 2025, has been repealed under the OBBB. Reduced Taxes on Tips The first $25,000 in tips will be tax-deductible for eligible workers (e.g., servers, beauticians), subject to income limits of $150,000 (individual) and $300,000 (joint). Reduced Taxes on Overtime Up to $12,500 in overtime pay will also be tax-deductible under the same income thresholds. New Savings Accounts for Children The OBBB establishes a new savings account program for children born between 2025 and 2028: Each eligible child receives a new account with a $1,000 government-funded seed deposit. Parents can contribute up to $5,000 annually. Accounts are invested in a U.S. stock market index and function similarly to IRAs. Withdrawals are allowed starting at age 18, with penalties for early withdrawals (pre-59½) unless used for qualifying expenses. Final Thoughts The Big Beautiful Bill introduces significant changes to the tax landscape. At Schneider Downs Wealth Management Advisors, we’re here to help you navigate these updates and make taxes less complicated. Please reach out to your trusted advisor with any questions. To make sure you are receiving our written and video content surrounding the OBBB and other hot topics, make sure to follow us on LinkedIn, Facebook, YouTube, and subscribe to our emails! https://taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes https://www.cbsnews.com/news/whats-in-trump-big-beautiful-bill-senate-version/ https://millancpa.com/insights/one-big-beautiful-bill-act-official-tax-policy-key-provisions Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### One Big Beautiful Bill Status Update: Senate Passes Bill – It’s Now Back to House An amended version of the One Big Beautiful Bill passed the Senate on Tuesday by a vote of 51-50 (needing Vice President J.D. Vance as a tiebreaker); the bill now bounces back to the House for another vote in that chamber. The House started its procedural processes yesterday (Wednesday). The Republican leadership goal is to have a bill ready for signature by July 4th. It is not clear if that goal line can still be crossed by the self-imposed targeted date as there may be a greater number of House Republicans sounding off against various changes made by the Senate to the House version sent to the Senate May 22. The Party can afford to lose only three members in a close vote (assuming all Democrats will continue to vote no) and still get the bill passed. Any change to the bill, regardless of how minor, would require it to be returned to the Senate for another vote. In our post of June 20, 2025, we noted some of the fundamental differences in tax provisions between the version that passed the House and the initial version the Senate was tweaking. Changes to that initial Senate version of the bill released were necessary to obtain the votes to get a bill passed. Some of those changes include a larger SALT deduction more closely aligned with the House version and changes to the phase-outs of various energy credits. We will continue to monitor the progress of the bill and will be providing a detailed analysis after a final bill is signed into law by President Trump. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services This article summarizes our recent webinar, Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services. You can watch the full replay here. Jan Kubiska, Senior Director of IT and Security at Presley Ridge and Robert Morgan, Senior Manager at SD Digital reflected on how Solver and Power BI helped Pressley Ridge, a leading nonprofit serving over 8,000 clients annually across seven states, streamline operations and improve decision-making with integrated, real-time reporting tools. The Challenge: Siloed Data and Manual Processes Like many nonprofits, Pressley Ridge faced challenges managing data across multiple systems. This lack of integration created delays and limited visibility. Before implementing the new solution, Pressley Ridge encountered several common organizational challenges: Disjointed Systems: Key data was stored across three main platforms: Microsoft Dynamics (ERP), myEvolv (EHR), and UKG Pro (HRIS). These systems were not integrated, making cross-functional reporting difficult. Manual Reporting: Staff used Excel to manually extract, clean, and merge data. This process consumed valuable time and introduced the risk of errors. Outdated Insights: Reports were generated monthly or quarterly. By the time they reached decision-makers, the data was often no longer timely. Inefficient Use of Staff: Highly skilled employees were tied up with repetitive data tasks rather than strategic analysis. The Solution: Automated Integration and Real-Time Reporting To address these issues, SD Digital implemented an integrated solution using Solver Cloud for data warehousing and Power BI for data visualization. Centralized and Automated Data Management: Solver Cloud was used to integrate data from the ERP, EHR, and HRIS systems into a centralized warehouse. This data hub now serves as a single source of truth. Manual processes were replaced by automated workflows using SQL Server Integration Services and Solver’s built-in connectors, providing daily and even on-demand data refreshes. Role-Based Access to Financial Reports in Solver: Data access was customized for financial reports in Solver based on user roles. For example, program directors receive financial reports specific to their programs, while state-level leaders see broader roll-ups. This user-specific reporting approach ensures that staff only see the data that is relevant to their responsibilities. Interactive Dashboards with Power BI: While Solver provided a foundation for standardized, Excel-style financial reports, Power BI added dynamic, visual dashboards for operational insights. From client counts to trend analysis, these dashboards made data more accessible and actionable across all levels of the organization. Real Results: Efficiency, Insight, and Impact Faster Reporting and Analysis: What previously took weeks now happens automatically. Reports on client census, staff turnover, and financial performance are generated in real time. For example, the weekly census report, once compiled manually by dozens of staff members, is now available instantly through Power BI. Ability to Get Answers Quickly Through the Use of Dashboards: Dedicated departmental dashboards provide quick answers to operational questions such as, “How many clients are we serving in a program this quarter?” This allows operational leaders to make decisions using the most current information available. Enhanced Risk Monitoring: By integrating a suicide risk screener and other clinical data, Pressley Ridge built dashboards to proactively identify high-risk cases. Heat maps and trend visuals helped leadership target areas requiring intervention. Streamlined HR Analytics: Previously manual turnover reports and candidate tracking are now automated and visualized. HR teams and program leaders can analyze hiring trends, applicant demographics, and reasons for candidate rejection in one place. Lessons Learned from the Implementation Jan Kubiska and Robert Morgan emphasized several key takeaways that contributed to the success of this initiative: Leadership Support is Essential: Pressley Ridge’s leadership team played a pivotal role in driving the transformation. Jan Kubiska served as a liaison between technical experts and organizational leaders, ensuring alignment and clear communication. Data Quality Comes First: Before building reports, the team prioritized cleaning and structuring data. Starting with accurate and consistent data prevented delays and rework later. Start with High-Impact Wins: The project focused initially on reports with the most strategic value. This approach demonstrated results quickly, helping build internal support and enthusiasm for the tools. Consistency Enhances Adoption: Reports and dashboards were designed with a standardized layout and color scheme. This consistent look and feel helped users navigate the tools more easily, regardless of their technical background. Training Drives Engagement: Pressley Ridge invested in user training sessions to show staff not only how to use the tools, but why they mattered. This helped foster adoption and confidence among users at all levels. By integrating Solver Cloud and Power BI, Pressley Ridge transitioned from outdated, manual reporting systems to a powerful, real-time analytics platform. This shift improved operational efficiency, enhanced data accuracy, and enabled better, faster decision-making across the organization. Whether you work in healthcare, education, or nonprofit services, Pressley Ridge’s experience offers a strong example of how data modernization can create measurable impact when paired with the right tools and strategies. For more information please contact the SD Digital team at contact@sddigital.com or view the webinar replay. ### Teeing Up Success: Build a HITRUST-Ready Program Without the Burnout Learn why HITRUST readiness doesn’t have to cost you a full round of resources. Fresh off the U.S. Open at Oakmont, it’s the perfect time to tee up your next HITRUST move. In our last article, we debunked some of the biggest myths keeping teams in the HITRUST sand trap. Now, it’s time to chart your course. Many teams underestimate the terrain ahead on their HITRUST readiness course, until they’re buried in the rough with policy updates, access logs, and endless evidence reviews. But with the right strategy, you can stay on the fairway and keep your momentum all the way to certification. Tip 1: Use Every Shot Already in Your Bag A control overhaul might seem par for the course with each new control framework. With HITRUST, no need to reinvent the wheel, leverage the work your team already does. You likely already have controls in place, just not in HITRUST language. SOC 2? ISO 27001? PCI? Start by leveraging HITRUST’s authoritative source mappings and validate them to your exact controls Focus on policy maturity, control execution, and audit-ready documentation Go directly to the source of the certification – the requirement statement’s evaluative elements and their illustrative procedures. These are the answers to the test that you’ll ultimately take as part of the validated assessment (certification). Tip 2: Automation – the Best Playing Partners Automation and repeatability are your best playing mates. Let them help you. Use Governance, Risk, and Compliance (GRC) platforms, ticketing systems, and cloud-native tools to reduce manual effort. Automate alerts, evidence collection, and log reviews where possible. Ensure your external assessor firm is involved in this approach, too. A good firm will be able to relay the discounts that you realize through the efficiencies that you implement. I.e., good automation can lead to reduced assessor fees. Build a documentation repository early. It saves hours if not days later on. Tip 3: Assign Captains for Each Hole We’ve all been there – a last-minute scramble and we’re not talking golf. Well defined and clearly communicated responsibilities help spread the load and prevent any scrambles to gather evidence or meet deadlines. Designate a project manager or compliance lead Align specific controls to domain experts (IT, HR, Legal, DevOps) Avoid the burnout that comes from one person trying to “own” it all Tip 4: Build Your Game One Hole at a Time New frameworks can seem daunting – it’s important to remember that every course can be tackled with the right approach. Don’t boil the ocean. Start with foundational domains (Access Control, Change Management, Risk Management, etc.) Use a phased roadmap (90-day increments) with clear progress tracking Communicate wins early and often to keep stakeholders engaged Tip 5: Bring in a Pro for the Tough Shots Everyone’s game is different. Know when to consult your caddie or even have a pro take certain shots for you. Internal teams often don’t have bandwidth or HITRUST expertise, and that’s OK! Co-sourcing with a trusted advisor allows your team to stay focused on operations Advisors bring structure, tools, templates, and proven experience Play the Long Game Think of HITRUST as your championship round; it takes stamina, coordination, and strategy. But with the right swing mechanics, your team can navigate it confidently without letting morale or leadership’s patience bunker out. Ready to lower your HITRUST handicap? Explore our HITRUST co-sourcing model to see how we support clients like you. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at: contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Related Articles HITRUST Isn't Just Another Compliance Checkbox. So What is It? What HITRUST Isn't: 3 Common Myths ### Auto Manufacturers Investing Heavily in American Production Facing high foreign production costs because of recent tariffs, many auto manufacturers have committed to long-term domestic production investments. Key decision makers at GM, Stellantis, Hyundai and Toyota are hoping to avoid absorbing long-term losses from tariffs or drastically raising prices with large investments in U.S. manufacturing, even if it means suffering through higher costs in the short term. These investments represent the industry’s strategy to invest in American production in response to a shifting economic and political landscape. Can the quality and affordability of American-made vehicles compete in the global marketplace? Will auto manufacturers be able to maintain profits long term, despite higher startup and labor costs? The answers to these questions will determine if greater investment in U.S. production will pay off for manufacturers. If the answer to both questions is yes, manufacturers that have greater domestic production will benefit. If the answer to both questions is no, those that maintain foreign facilities will benefit. There will be a bit of a transition from shifting labor, plants, suppliers and equipment from foreign production to the U.S. During this period, consumers may experience certain vehicle shortages, fewer color choices, fewer trim options and longer wait times for custom orders. The pre-owned vehicle market may also experience a price increase if the costs of newly manufactured vehicles begin to soar. 2025 Timeline of American Production Announcements January – Stellantis pledges a $5 billion investment in its U.S. facilities, including hiring 1,500 employees and manufacturing a new midsize pickup in Illinois, building plans for the next Dodge Durango in Michigan and manufacturing the GMET4 EVO engine in Indiana. March – Hyundai announces a $21 billion investment from 2025 to 2028, with goals to produce 1.2 million units in the U.S. annually, strengthen its American supply chain/infrastructure and expand future American industries, a commitment that’s projected to generate more than 100,000 direct and indirect job opportunities by 2028. April – Toyota commits to investing $88 million in its West Virginia facility that will focus on assembling hybrid transaxles. June – General Motors plans to invest $4 billion in domestic manufacturing, with goals to increase American production of electric vehicles, V-8 engines and gas vehicles. GM estimates that this investment will enable them to produce two million more vehicles annually. Large portions of GM’s plans will involve plants in Tennessee, Michigan and Kansas. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. ### Senate Republicans Release Substitute Version of One Big Beautiful Bill Passed by the House On June 16, the Senate Finance Committee released its version of the One Big Beautiful Bill. In many ways, the proposed text mirrors the bill that was passed by the House in May (highlighted in this previous article), but there are key differences that need to be reconciled in the weeks to come between that bill and any bill ultimately approved by the Senate. A key focus Republicans are pushing for with this legislation is to prevent the automatic tax increases on individuals that would go into effect in 2026 following the sunsetting of provisions contained within the Tax Cuts and Jobs Act of 2017. Both the House and Senate versions generally accomplish this goal by extending existing provisions, including the reduction in tax rates and brackets and the increased standard deduction. The House version generally provides for temporary extensions of these provisions while the Senate version calls for making provisions permanent. Fundamental differences between the two bills include, but are not limited to: Qualified business income deduction: The current 20% deduction, set to expire at the end of 2025, is made permanent (rather than temporarily extended as in the House version). The Senate version does not include the increase in the deduction to 23% as approved by the House. Certain key business tax incentives: Certain business tax deductions important to business leaders and Republicans include the restoration of 100% bonus depreciation, the expensing of U.S.-based research, and a business interest expense limitation using EBITDA rather than EBIT to calculate the limit on the deduction, particularly given the high interest rate environment. These provisions would be permanently restored under the Senate version, compared to a general five-year temporary restoration approved by the House. SALT Deduction: Though many expect this provision to be even further modified, the Senate bill would permanently extend the current SALT $10,000 limitation at the individual level rather than increase the deduction to $40,000. as called for under the House bill (subject to similar income phaseout limitations), while modifying the availability to use the passthrough entity tax workaround currently in place in several states. Senior Standard Deduction: The substitute amendment increases the new proposed standard deduction for seniors to $6,000, up from the $4,000 included in the House bill. Taxation of Tip and Overtime Compensation: The proposed Senate version would cut back on the amount of tip and overtime compensation earned by certain individuals that would be deducted from income by providing ceilings on the tips deduction at $25,000, and at $12,500 ($25,000 joint) on the overtime deduction with another ceiling on the amount of income before the deduction begins to phase out. Child Tax Credit: While both bills enhance the child tax credit, the Senate proposal increases the amount of the credit to $2,200, while the House version increases the credit to $2,500 with similar income phaseouts. Health Savings Accounts: The House bill would significantly expand health savings accounts (HSAs); the Senate bill does not provide any provisions for HSAs. Green Tax Credits: While both the House and Senate desire to reduce or eliminate many of these credits, a main difference between the versions is timing. The Senate generally calls for a slower phaseout, while the House calls for an immediate end to certain credits. Tax-Exempt Organization Changes: See a separate OTO for changes impacting tax exempt organizations. Other distinctions between the House and Senate versions are differences in the debt ceiling increase needed to fund government and the level of spending and work requirements related to Medicaid. The bill may be ready for consideration by the Senate next week, but it is still subject to additional Senate discussions and negotiations. The Republican Congressional goal of having a final bill ready to be signed by July 4 is possible, but the timing seems optimistic considering the differences between the two versions. Plus, any bill approved by the Senate needs to be voted on again by the House, and both House and Senate are scheduled to recess at the end of next week. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Senate Finance Draft: Key Changes to One Big Beautiful Bill Impacting Tax-Exempt Organizations On June 17, the Senate Finance Committee released its draft of the One Big Beautiful Bill. Overall, many provisions overlap with the House bill but there were significant differences with those affecting tax-exempt organizations. We had posted a May 16 article covering the bill’s impact on nonprofit organizations; the following sections have been removed from the House version: Section 112025: Name and logo royalties treated as unrelated business taxable income Section 112026: Exclusion of research income limited to publicly available research Section 112024: Unrelated business taxable income increased by amount of certain fringe benefit expenses for which deduction is allowed Section 112022: Increase of tax rate on net investment income of certain private foundations Section 112209: Suspension of exemption for material support for terrorist organizations The following sections remained in the Senate version but were modified: Section 112021: Modification of excise tax on investment income of certain private colleges and universities. This provision follows the original House proposal with a change to the tiered structure. The Senate version modifies the thresholds and rates as follows: Student-adjusted Endowment Tax Rate $500,000-$750,000 1.40% $750,000 - $2,000,000 4% Over $2,000,000 8% The Senate version removed the tier between $750,000 and $2,000,000 and reduced the top rate from 21% to 8%. Section 110112: Reinstatement of partial deduction for charitable contributions of individuals who do not elect to itemize. This provision allows for deduction of $150 ($300 married filing jointly) for those who do not itemize. The Senate draft (Section 70424) reinstates the nonitemizer deduction permanently and raises it to $1,000 ($2,000 for married filing jointly). This provision would be effective beginning in tax year 2026. A couple of the exempt organization sector provisions that remained unchanged as of the June 17 draft were as follows: Section 112020: Expanding application of tax on excess compensation within tax-exempt organizations. This provision specifically revises the definition of a “covered employee” to mean any employee (including any former employee) of an applicable tax-exempt organization who received remuneration in excess of $1 million. Section 112027: One-percent floor on deduction of charitable contributions made by corporations. In addition to the above changes, the Senate noted additional provisions, as follows: Section 70425: A 0.5-percent floor on deductions of charitable contributions made by individuals who elect to itemize. Section 70411: Tax credit for contributions of individuals to scholarship-granting organizations. This provision creates a new income tax credit for charitable contributions made to tax–exempt organizations that provide scholarships to elementary and secondary school students. The credit may not exceed the greater of 10% of the taxpayer’s AGI or $5,000. An individual is allowed the credit only to the extent the Secretary of the Treasury allocates the credit to the individual. Students receiving scholarships will have to meet certain criteria. We continue to follow the development of the proposed tax bill and will publish updates as they become available. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### FASB Implements Improvement for Joint Venture Formations (ASU 2023-05) According to the Ankura Joint Venture Index, global joint ventures and partnerships in 2024 experienced varied activity. "New deal volumes got off to a slow start, soared to great heights, then declined, yet ended the year 14% higher than 2023. Within this dynamic environment, three key themes emerged. Joint venture and partnership deal activity is increasing in some industries while decreasing in others. Deal structures and terms are becoming more innovative. The outlook for deals remains positive for 2025." In alignment with the rise in global joint venture activity, the FASB released ASU 2023-05, effective for joint ventures formed on or after January 1, 2025. ASU 2023-05 states that an entity qualifying as a joint venture or corporate joint venture, as defined in the FASB Accounting Standards Codification (ASC) master glossary, must recognize a new basis of accounting for contributed net assets as of the formation date. The guidance indicates that joint ventures must initially measure their assets and liabilities at fair value on the formation date. Previously, there was no specified guidance regarding the initial measurement of assets and liabilities, allowing a joint venture to record contributions either at the contributing parties' carrying value or at fair value. Additional Key Considerations within ASU 2023-05: Business combination guidance within ASC 805 should be utilized to assess fair value. Assets and liabilities should be measured on the formation date, defined by ASU 2023-05 as “the date on which the entity initially meets the definition of a joint venture.” It is important to ensure that the joint venture uses the correct formation date, since it might not align with the date on which assets were contributed. Excess of fair value over net assets contributed would be recognized as goodwill. Conversely, if the net assets exceed the fair value, it would result in negative goodwill as an adjustment to equity. At the formation date, the joint venture’s measurement of its net assets should equal the fair value of 100% of its equity. Ensure that applicable disclosures are included in the financial statements, such as: Description of the joint venture’s purpose Fair value of the joint venture at the formation date Amounts recognized by the joint venture for each major class of assets and liabilities Qualitative description of factors contributing to any recognized goodwill Exceptions to the Guidance: Formations of entities determined to be not-for-profit entities Combinations between entities and businesses under common control Entities in the construction or extractive industries that may be proportionately consolidated by any of their investor venturers according to paragraph 810-10-45-14. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### The One Big Beautiful Bill Impact on Construction Industry As of early June, Congress has worked through several iterations of The One Big Beautiful Bill. Here are a few common provisions across each iteration and how they could potentially help construction companies while requiring those companies to change very little – if anything – about their current operations. Bonus Depreciation Going back to his campaign trail, President Trump has supported restoring 100% bonus depreciation for eligible assets placed in service in 2025. Under current law, certain assets are eligible for an immediate 40% deduction in 2025 (phased down to 20% in 2026 and zero bonus in 2027 and thereafter) with the remaining cost being subject to the traditional MACRS depreciation deductions over the life of the asset. A construction company with $1,000,000 of eligible five-year assets placed in service in 2025 under the current rules would be able to deduct $520,000 ($1,000,000*40% bonus + $1,000,000*60% basis after bonus *20% first year MACRS deduction percentage) and could see an additional $480,000 of tax depreciation deductions in 2025 under the proposed 100% bonus provision. Qualified Research and Experimental Expenses (QREs) Under current tax law, domestic QREs are required to be capitalized and amortized over six tax periods, with the first- and last-year deduction equaling only 10% of the total amount of expense incurred during the year. These are costs associated with traditional R&D, both internally and externally, as well as with process or design improvements in other areas. The current iteration of The One Big Beautiful Bill would allow taxpayers to postpone the current capitalization requirement until tax years ending after December 31, 2029 for domestic R&D expenditures. This would result in the ability to deduct 100% of 2025 domestic QREs currently required to be capitalized. A taxpayer could also choose to elect to continue to capitalize and amortize these costs should they desire. A transition rule would require taxpayers to adopt the changes to domestic research or experimental expenditures as an automatic accounting method change on a cutoff basis for taxable years beginning after December 31, 2024. Qualified Business Income (Section 199A) Deduction The Tax Cuts and Jobs Act (TCJA) established a temporary 20% deduction of ordinary business income from qualified pass-through entities, which included the construction industry, to reduce the top individual effective tax rate from 37% to 29.6%. This temporary deduction is set to expire at the end of the 2025 calendar year. The One Big Beautiful Bill would modify the expiring the expiring 20% deduction with a permanent 23% deduction that would bring the top individual effective tax rate down to 28.49%, saving a pass-through construction company owner roughly $11,000 in federal income taxes on $1,000,000 of taxable income. This modification does not go into effect until 2026. Business Interest Deduction Limitation (Section 163j) The Tax Cuts and Jobs Act also established a permanent calculation that limits the amount of business interest expense that can be deducted by certain larger construction companies. The original calculation limited deductible interest expense to 30% of a business’s Adjusted Taxable Income (ATI), which was similar tax EBITDA. Also included in the initial limitation was an expiration on the ability to add back tax depreciation and amortization to calculate ATI. The current iteration of The One Big Beautiful Bill would temporarily re-allow taxpayers to add back tax depreciation and amortization to its ATI calculation. Without this favorable change to the ATI formula, the increased deductions received from 100% bonus depreciation are moderately offset with a 30% reduction in deductible interest expense. The final iteration of The One Big Beautiful Bill remains open for discussion and adjustment, but it is looking increasingly likely that in 2025, tax relief is on the way for U.S. construction companies. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### What HITRUST Isn't: 3 Common Myths Our previous article provided a comprehensive overview of HITRUST, including what it is, how the process works, and how it compares to other frameworks. Despite this, we still hear frequent misconceptions about HITRUST. Here are the three most common myths and the facts that set the record straight. HITRUST is Just HIPAA with Extra Steps That’s like saying private health insurance is just Medicare with extra steps. HIPAA is a law. HITRUST is both an organization and a certifiable framework that maps to HIPAA but goes far beyond it. The HITRUST CSF integrates requirements from numerous standards and regulations, offering a comprehensive approach to risk management. Only Large Enterprise Companies Need HITRUST News flash: large enterprises do not assess third-party risk based solely on your revenue or employee count. If you process electronic protected health information (ePHI) on their behalf, they care about your security posture regardless of your size. Fortunately, HITRUST offers assessment types like e1 and i1 that are designed specifically for small and mid-sized businesses. HITRUST is Just a Compliance Checkbox This phrase alone will be sure to set off some Governance, Risk management, and Compliance (GRC) professionals. Organizations that treat compliance as a box to check often struggle or fall short. HITRUST is about maturity, not minimalism. It focuses on building a resilient security and privacy program that can evolve with threats and regulations. So, Do You Really Need HITRUST? Let’s be honest. HITRUST is not a one-size-fits-all solution. But if you operate in healthcare or a related field, especially if you handle (e)PHI, it might be exactly the trust signal your organization needs. You should consider HITRUST if: Your clients or prospects are asking for it. Many large healthcare organizations and insurers require or strongly prefer HITRUST certification. You are juggling multiple audits. HITRUST can streamline compliance by aligning with frameworks such as HIPAA, SOC 2, PCI, NIST, and ISO. You are scaling your business. Expanding into new markets or launching new services? HITRUST shows that you take security and privacy seriously. You want to stand out. In a crowded and regulated market, HITRUST can serve as a strong differentiator. You might wait if: You are a small operation without immediate compliance needs. Your clients are not requesting HITRUST, and your current framework is sufficient. If you are considering HITRUST, start by evaluating your organization’s needs and the expectations of your clients. Engage stakeholders across departments to understand the scope and impact. HITRUST certification is a long-term investment. It requires coordination, a clear understanding of your risk environment, and ongoing commitment across internal and external teams. Approach it as a journey and trust the process. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at: contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Related Articles HITRUST Isn't Just Another Compliance Checkbox. So What is It? Teeing UP Success: Build a HITRUST-Ready Program Without the Burnout ### Safe Travels: 5 Tips to Protect Your Data While Traveling Getting ready for summer vacation season? These quick tips will help keep your data and devices safe while you travel. Summer is here, and many of us are booking flights and packing our bags for a well-earned break. While it’s the perfect time to relax and recharge, it’s important not to let your guard down when it comes to cybersecurity. A few simple steps can help keep your information secure while you enjoy your trip. Disable Auto Connect and Network Discovery Auto-connect makes it easier to join familiar networks and devices at home, but it can expose you to risks while traveling. If you've previously connected to hotel or airport Wi-Fi (which we don’t recommend), your device might reconnect automatically. This is especially true with hotel chains, where your device may recognize the brand, not just the location. Bluetooth works the same way. You’ve probably seen pop-up connection requests at the gym or on a plane. Leaving auto-connect enabled can make your device an easy target. Turn off Wi-Fi auto-connect, delete any saved networks and devices you don't fully trust, and disable Bluetooth auto-discovery to prevent both device discovery and being discoverable. Watch Out for All the Ishings Phishing, smishing, vishing, and quishing are always threats, but travel increases your exposure. With AI-powered scams on the rise, attackers may know you're away and target you with fake travel alerts, airline updates, hotel offers or deals that seem too good to be true. If you're unsure about a message, contact the company directly using a verified phone number or check through a trusted app to confirm its legitimacy. While communication-based attacks are easy to spot (unsolicited, urgent, bad grammar and contain suspicious links), quishing can be harder to detect in the wild. Quishing uses QR codes to deliver malicious content and is harder to detect, especially since QR codes are common for menus and payments. Some scammers even place fake QR code stickers over real ones in public places. Always verify QR codes with staff before scanning. Avoid random codes in public. When in doubt, take a photo and inspect the URL before clicking. If something seems off, it most likely is. Leave Work at Home Remote work has its benefits, but vacation is a time to disconnect – literally and figuratively. Taking your work laptop may seem helpful for staying ahead of the email avalanche, but it introduces unnecessary risk to you and your employer. If you must travel with work devices, consult your IT department to ensure compliance with security policies which may include specific VPN usage or travel-specific or limited-access device. If your company doesn’t yet have formal policies or procedures in place, our team would be happy to assist in developing them. Freeze Your Credit Cards and/or Credit Freezing your credit restricts access to your credit report, making it harder for identity thieves to open new accounts in your name. It’s a quick step you can take through any of the three major credit bureaus. Freezing your actual credit cards can also help with many banks letting you temporarily disable cards through their apps or websites. Freezing a card lasts as long as you want it to and simply restricts the card from being used anywhere. Best Practice: Only take the cards you need and leave the rest in a secure location, such as a home safe or safety deposit box. Notify your card providers if you’re traveling internationally to avoid blocked transactions due to fraud alerts. Don’t Overlook Physical Safety Protecting your data isn't just about online threats. Physical theft can be just as damaging as a cyberattack, especially when you're away from home. Use theft-resistant bags, keep your devices in sight or on your person, and never leave them unattended in public spaces. Consider using a privacy screen to guard against shoulder surfing. If you're using navigation apps, step into a store or enclosed area to avoid signaling that you're lost or unfamiliar with the area. Add an extra layer of digital security on your physical devices with Bluetooth trackers like Tile or Apple AirTag and enable "Find My Device" apps and websites, but watch out for malicious imposters. Make sure multi-factor authentication is enabled, your lock screen password is strong, and auto-lock is turned on. These steps make it significantly harder for anyone to access your device if it’s lost or stolen. Vacation is all about relaxing and making great memories, but that doesn’t mean forgetting about security. With a few smart moves, you can soak up the sun and the sights while keeping your devices and data safe. A little prep now means a lot more peace of mind later. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Changing the Game - What the NCAA's New NIL Revenue Framework Means On June 6th, 2025, the NCAA’s landmark House v. NCAA settlement was officially approved, transforming the way student-athletes can earn money through their Name, Image, and Likeness (NIL) rights in college sports. This significant development marks a shift in collegiate athletics as a federal judge granted final approval of the settlement, introducing a new compensation framework. The decision has been closely followed by universities, athletes, and sports fans alike. With this approval, universities can now directly pay student athletes for playing college sports.  These changes are set to take effect on July 1, 2025. As a result of the settlement, new terms governing the relationship between the NCAA and its student-athletes will include: $2.8 billion will be paid as damages to former D1 student athletes who played prior to NIL, and lost earning opportunities. Roster limits will be implemented for each sport, replacing the sport-by-sport scholarship limit that had been in place. Athletes can be “grandfathered” on to the roster if there are student athletes who lost their roster spot due to the new limits. Salary cap for participating D1 schools of $20.5 million for the upcoming academic year. This cap will increase over time. Following this ruling, several changes will be implemented in college sports, including: Due to the roster limits, there is little potential for walk-on athletes. NIL Collectives, once a big player in the NIL space due to broker NIL agreements may be dissolved or integrated into school-led programs. NIL is not being replaced by this settlement; however, student athletes no longer have to look outside the university to be paid. Power Conferences (PAC-12, Big 10, ACC, SEC, and Big 12) have created a College Sports Commission, CSC, to enforce the salary cap, a new vetting process for NIL deals, and roster limits for teams. The salary cap does not contain a breakout of how the money should be applied to sports, but most of the $20.5 million is expected to go to the high-profile sports such as football and men’s basketball, which could draw Title IX scrutiny and lead to additional legal challenges. Some observers suggest that under these new rules, student-athletes might choose to remain in college sports longer, as they could potentially earn comparable or greater compensation than they would by turning professional immediately. Risk Management for Universities As Universities build out process and procedures to comply with this new agreement, some risks that should be taken into consideration are: Delayed Distribution of Revenue to Student-Athletes Institutions should implement robust procedures to ensure timely and accurate disbursement of revenue share payments to student-athletes. Inadequate Monitoring of Salary Cap and Roster Limits Universities must establish effective monitoring mechanisms to track sport-specific roster counts and ensure compliance with salary cap thresholds as outlined in the agreement. Insufficient Internal Controls Over Distribution Processes Internal control frameworks should be updated to incorporate oversight of student-athlete revenue share payments, ensuring transparency, accountability, and audit readiness. Lack of Stakeholder Education on New Requirements Comprehensive training and communication strategies should be deployed to educate all relevant stakeholders—including athletics staff, compliance officers, and finance personnel—on the implications of noncompliance and the operational impact of the new requirements. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Investment Corner: What Does a Debt Rating Downgrade Mean for the U.S.? Credit rating agencies, such as Fitch, Moody’s, and Standard & Poor’s, provide ratings of the creditworthiness of debt issuances (from sovereign nations, municipalities, and corporations) as a tool for investors. These ratings generally range from a high of AAA to D, with ratings below BBB- often considered “non-investment grade” or “junk”. On May 16th, Moody’s cut the U.S. credit rating from AAA, the highest rating that represents minimum credit risk, to AA1, which is the notch below, but still represents high-grade credit worthiness. The rating scale, running from a high of AAA to a low of C, comprises 21 notches. It is divided into two sections, investment grade and speculative grade. As one moves down the rating scale, default risk rises. Moody’s cited widening budget deficits, deteriorating debt affordability, and concerns about the commitment of elected officials to alter the trajectory for rising U.S. debt. “This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the rating agency said in a statement. They continued, “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.” The historic default rate for AAA-rated debt issuers is negligible, across all horizons. Even though the U.S. has been downgraded from the highest rating, the chances of a default on outstanding U.S. debt are relatively low. The implications of a credit downgrade may see yields increase (not materially as a lot of this has already been priced in) for longer-term U.S. Treasuries which could put pressure on equity valuations. While the long end of the curve is increasingly influenced by fiscal dynamics, expectations for Fed policy will continue to drive the front end of the Treasury curve. Overall, the downgrade underscores deepening concerns about the fiscal discipline of the U.S. and brings forth the question of “How much longer can this fiscal irresponsibility continue?” Source: Ratings.Moodys.com/ratings-news/443154 Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### May 2025 Market Recap Historically, the month of May has not been the strongest for the equity market. Many investors may have heard the adage “sell in May and go away”. But, if an investor sold on May 1, 2025, they would be disappointed to have missed the best May (up 6.29%) for the S&P 500 index in 35 years. The market has fluctuated along with the Trump Administration's trade policies this year. Stocks fell in February, March, and April as tariffs were threatened and added, and then rose in May as some levies were reduced and trade agreements were reached. The market’s advance in May was fairly widespread with small-cap equities (Russell 2000) up 5.3% and mid-cap equities (Russell Midcap) up 5.7%. Despite being up strongly in May, only large-cap and mid-cap indices are ahead year-to-date (the S&P 500 and the Russell Midcap are both up 1.1%), while small-cap stocks are still in negative territory (the Russell 2000 is down 6.9%). During the first quarter, investors gravitated towards more defensive companies. However, there was a rotation evident among U.S. equities that started in April. The shift away from defensive sentiment persisted in May with higher growth stocks leading the way. While growth beat value across all capitalization indices in May, the market was very concentrated with seven companies (six of the “Magnificent Seven” and Broadcom) contributing 79% of the S&P 500 index monthly return. International equities continued their relatively strong performance from the first 4 months of the year through the end of May. The equity leaders of Europe and China have the commonality of central banks that keep providing easing measures. The Eurozone has been seeing more meaningful disinflation and that is why the ECB has been more willing to cut interest rates. The biggest driver for non-U.S. investors is the currency, the EUR is up nearly 9% vs. the USD this year. As stock indices advanced in May, so did bond yields. U.S. treasuries were sharply weaker across the curve, with the policy-sensitive 2-year yield up over 30 bp, and the 10- and 30-year yields up around 25 bp. The 10-year Treasury yield rose from 4.18% at the close of April to 4.40% at the end of May – leading to a 0.7% decline during the month for the Bloomberg Aggregate Bond index. Bond investors were concerned about elevated inflation expectations, foreign buyer boycotts, the recent Moody’s downgrade and the potential for more debt and deficit spending. Despite its monthly decline, the Bloomberg Aggregate Bond index is still up 2.5% year-to-date. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Audit and Financial Reporting Considerations Associated with Federal Funding Freezes On January 27, the Office of Management and Budget ordered a pause on the disbursement of certain federal grants, transactions and loan funds, effective the following day, a decision that has sparked ongoing legal challenges and court actions, and creating significant uncertainty for the not-for-profit (NFP) sector and any organization reliant on federal contracts. Beyond assessing the operational impact on these organizations, it’s crucial to consider the implications for financial statement reporting and how this uncertainty is communicated to financial statement users. Fortunately, the AICPA’s National A&A Resource Center’s Center for Plain English Accounting issued a report on March 19 discussing the implications of federal funding freezes for NFPs and other entities. Here’s a summary of the key considerations for the upcoming audits; the full text of the report can be found here. Accounting and Auditing Considerations Federal funding received by an organization is recorded based on the terms of the agreement and whether it falls under ASC 958 Contribution guidance or ASC 606 Revenue Recognition guidance. With potential changes in these agreements (modification, termination or pure uncertainty), organizations should reassess how the amounts were accounted for and whether these circumstances alter the accounting for these funds. If funds are recorded under ASC 958 Contribution guidance, organizations should reevaluate their federal grant agreements to determine if there is a new interpretation of whether a barrier exists that might render the grant conditional. While the funding freeze itself does not create a barrier, new insights into how the agreement is regarded might indicate a previously unidentified barrier. In general, if the probability of collectability is determined to be less than what is currently recorded, this reduction in receivable (or creation of a reserve) should be recorded in the period when the organization's expectation changes. Under ASC 606 Revenue Recognition guidance, organizations should consider these actions as a change in the transaction price, a potential adjustment to the allowance for credit losses, and potentially a contract modification if both parties have signed a change in the contract. Financial reporting considerations The financial statements of an NFP organization not only present the results of the prior year's activities but also narrate the organization's story, detailing how it operates and its ability to continue operating in the future. FASB ASC 275, Risks and Uncertainties, mandates that entities disclose risks and uncertainties that could significantly affect the amounts reported in the financial statements in the near term. These disclosures must address the nature of the entity's operations, the use of estimates and significant concentrations. The impact of funding freezes could affect footnote disclosures related to going concern, subsequent events and liquidity and availability of resources. It's crucial to critically evaluate these footnote disclosures and the impact of federal funding freezes. Providing users of the financial statements with comprehensive information about these events enables them to adequately assess the associated risks. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### HITRUST Isn't Just Another Compliance Checkbox. So What is It? It’s a bird! It’s a plane! It’s... HITRUST! But what exactly is HITRUST? Well, that is a complicated question. HITRUST is a risk management framework, but it’s also an organization. The HITRUST Alliance is a private entity that created the Common Security Framework (CSF), a certifiable framework that integrates and harmonizes various standards and regulations. The Alliance also developed supporting certifications (e1, i1, r2, etc.) and the MyCSF® assessment platform, a tool designed to streamline evaluations and reporting. The HITRUST Alliance governs and supports the full ecosystem of its assurance programs. In short, it holds both the gavel and the sword when it comes to HITRUST programming. At its core, HITRUST is an information protection standards organization and certifying body. Their mission is to champion programs that safeguard sensitive information and manage information risk for organizations across all industries throughout the third-party supply chain. While the HITRUST CSF is industry-agnostic, it has become the gold standard for healthcare organizations seeking to demonstrate a serious commitment to security, privacy, and compliance. Still, with existing frameworks like HIPAA, SOC 2, NIST, PCI, and ISO already in use, many organizations understandably ask: Is HITRUST really necessary? What is HITRUST Certification? HITRUST certification serves both as a recognized outcome and a powerful tool for demonstrating trust in an organization’s security and privacy practices. It provides third-party assurance to customers and stakeholders that appropriate safeguards are in place. To achieve this certification, HITRUST offers three core types of assessments, each tailored to an organization’s size, risk profile, and assurance needs. All three assessment types are built on the HITRUST CSF, which integrates and harmonizes requirements from over 100 authoritative sources. These include HIPAA, NIST, COBIT, ISO 27001, SOC 2, and GDPR, combined into a single, scalable control framework. This allows organizations to address multiple compliance obligations through one comprehensive assessment. Here is a brief overview of the three progressive assessment and certification types: Essentials, 1-Year (e1) assessment and certification for foundational cybersecurity Provides entry-level assurance focused on the most critical cybersecurity controls and demonstrates that essential cybersecurity hygiene is in place 44 controls testing “implementation” scoring only Implemented, 1-Year (i1) assessment and certification for leading security practices (2 years with rapid recertification in year 2) Provides a moderate level of assurance that addresses cybersecurity leading practices and a broader range of active cyber threats than the e1 assessment 182 controls testing “implementation” scoring only Risk-based, 2-Year (r2) assessment and certification for expanded practices (with an interim assessment in year 2) Provides a high level of assurance that focuses on a comprehensive risk-based specification of controls with an expanded approach to risk management and compliance evaluation ~375 controls, on average, testing “policy, procedure, and implementation” scoring There are also new AI Security and Risk Management assessments and certifications, as well as the ability to add-on frameworks to the r2 certification and tailor it to your organization’s needs. Our recent article provides a more detailed breakdown and comparison of each certification type. How Does the HITRUST Process Work? Understanding your customers' assurance needs is essential when selecting the appropriate HITRUST certification type. Regardless of which option you choose, the certification process is rigorous, standardized, and closely governed. Every certification is reviewed and approved by the HITRUST Alliance. This level of oversight is critical. Without it, the certification would lose its credibility. This governance is often lacking in other standards-based frameworks. The structure and thoroughness of the HITRUST process are intentional, ensuring that the trust conveyed through certification is both consistent and meaningful. The outcome of the certification is a validated assessment report and a certification badge, which can be used on your website, in documentation, or even in marketing materials. These are issued by the HITRUST Alliance through the MyCSF platform, in partnership with your certified External Assessor. How HITRUST Compares to Other Frameworks   Bottom line: HITRUST doesn’t replace these, it consolidates and aligns them. Now that we understand what HITRUST is, our next article debunks three common myths about what it isn't. How Can Schneider Downs Help? As an Authorized HITRUST External Assessor Firm, Schneider Downs has a strong track record with HITRUST protocols, providing trusted guidance and support throughout the certification process. For more information, contact our HITRUST team at: contactsd@schneiderdowns.com. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Related Articles: What HITRUST Isn't: 3 Common Myths Teeing Up Success: Build a HITRUST-Ready Program Without the Burnout ### Visa Freeze at Harvard Sparks National Concern Over International Student Policies Over the past week, the State Department ordered a pause in U.S. embassy interviews related to the issuance of new student visas in an effort to enhance social media screenings of applicants. This move by the State Department comes on the heels of the Department of Homeland Security’s recent press release that halted Harvard University’s ability to enroll foreign students, and stated existing students must transfer or lose their legal status. The story has captured the attention of a number of higher education administrators as the implications of the situation could have ripple effects across many colleges, universities and international students. As of May 29, the measure has been temporarily blocked by a court order. While ultimate resolution may not be known until the courts decide, there may be a lasting impact as international students are a large part of the Higher Education landscape within the United States. According to the website statisticsanddata.org, there were well over a million international students matriculating in the U.S. during the 2023/2024 academic year. This record high represents a 7% increase over the previous academic year and a more than 100% surge since 1999/2000 (with trends slightly curtailed during the pandemic). The upward trajectory is expected to increase even more in the future. Given an average tuition cost of $36,000 per student across the U.S., the international contingent represents about $36 billion in annual gross tuition revenue that may be at risk. Given the consideration that many international students receive a lower discount rate associated with their tuition, it’s apparent that this impact would be significant. The current headlines should prompt schools of all sizes to stay up to date on these developing stories, as they consider the impact to budgets for both international student attendance and federal grant money. While the outcome appears uncertain, U.S. colleges and universities could be impacted in a major way. As part of the responding to this uncertainty, colleges and universities should evaluate their ability to budget and forecast and how this may impact their budget for next fiscal year. Due to some of these uncertainties, institutions are evaluating many different budgeting strategies including multiple budget scenarios or preparing and passing budgets for each quarter. Schneider Downs just recently held a webinar, Navigating Times of Uncertainty for NFPs and Higher Ed, talking about responding to uncertainty which you can access as part of our on-demand learning. As events continue to unfold, check our website for further updates on this and other topics impacting Higher Education. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Hello Summer: Take a Break, Not a Breach Just as sunscreen protects your skin from harmful UV rays, strong cybersecurity practices protect your data from cyber threats. Cyber threats don’t take a summer break. Whether you plan to soak up as much summer sun as possible or prefer to head indoors to bask in the A/C, here are three tips for staying secure this summer ’25: 1. Step up your Password Game One easy win for the summer is to take inventory of your passwords. If you’re using similar passwords across accounts, reusing words or just swapping letters for symbols or adding predictable numbers, it’s time to rethink your approach. Hackers know that many people use the same or similar passwords across the board, and once they get access to one account, they’ll try the same and similar passwords across other accounts. Creating a unique password for each account makes you a harder target. But, remembering all your passwords is hard, so investing in a password manager is also a great option. Want more password tips? Check out this article on World Password Day. Whether it’s a national holiday or a regular weekday, these password tips are key for keeping yourself more secure. 2. Use AI More Securely By this point, your company should’ve had you sign an Acceptable Use Policy regarding AI. But even with the best intentions, the reality is that many employees sign their company’s policy and don’t revisit it for months. It’s easy to forget what is and isn’t allowed when using a company-approved AI platform, so it’s best practice to review the Acceptable Use Policy monthly. And it’s not just about remembering not to put confidential or proprietary information into an AI platform. It’s about gaining an understanding of where your data is going and how it might be used. Even for personal use, on platforms such as Gemini and ChatGPT, conducting high-level research can help you understand how your data is used and stored. For example, if you use DeepSeek, your data might be stored in servers in China. 3. Educate Yourself on Evolving Cyber Threats Staying up-to-date on cyber trends is easier said than done. New cyber tactics are deployed on the daily, and with AI’s ever-growing capabilities, hackers can be more deceiving at a greater velocity than ever before. The emergence of AI-based attacks allows for advancements to virtually every attack method, from crafting more deceptive phishing emails to creating video and voice deepfakes. There is even new “shape-shifting” malware, powered by AI, which adapts its features to evade detection by traditional security tools. The bottom line is that increased customization and precision of AI-enabled attacks will continue to be a constant threat. While these attacks are growing more advanced, they often rely on the same red flags such as suspicious requests, malicious links and a false sense of urgency. So, brushing up on key cyber trends and attack methods can help you stay current and stop cyber-attacks before they happen. And while there are many ways to digest cyber news on the go, we recommend the Schneider Downs cybersecurity biweekly newsletter, Focus on Cybersecurity, where we share relevant cyber news stories and information. Whether you're setting your out-of-office reply or locking up for a week-long getaway, don't let your guard down. Cyber threats don't take vacations, even if you do. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Major Provisions in the “One, Big, Beautiful Tax Bill” Impacting the Trucking Industry The 2025 “One, Big, Beautiful Tax Bill,” recently approved by the House Budget Committee, brings a wave of tax reforms and extensions that could significantly benefit the U.S. trucking industry. With provisions aimed at boosting capital investment, easing financing burdens and assisting families in passing on their businesses through an increased estate tax exemption, the bill should provide a positive tax environment for the future for trucking firms. Section 199A: Boost for S Corps and Partnerships The bill increases the Qualified Business Income (QBI) deduction under Section 199A from 20% to 23% and makes it permanent. This change is especially impactful for independent owner-operators and owners structured as pass-through entities, effectively lowering their tax burden and improving after-tax income. Bonus Depreciation: 100% Write-Offs Extended A major win for the trucking industry is the restoration of 100% bonus depreciation for qualified property, including trucks and trailers. This provision, extended through 2029, allows businesses to immediately deduct the full cost of new equipment, encouraging investment in cleaner, more-efficient vehicles and reducing upfront capital costs. Section 174: R&D Deductibility Restored The bill reinstates the immediate deductibility of research and development (R&D) expenses under Section 174 for tax years 2025 through 2029. For trucking companies investing in logistics technology, route optimization software, or alternative fuel systems, this change restores the full benefit of R&D spending. Section 163(j): Interest Deduction Relief The definition of adjusted taxable income under Section 163(j) reverts to an EBITDA-based calculation (earnings before interest, taxes, depreciation and amortization) for 2025–2028. This change increases the amount of deductible business interest, benefiting capital-intensive trucking firms that rely on financing for fleet expansion or infrastructure development. Estate and Gift Tax Exemption: Planning for the Future The bill also raises the estate and gift tax exemption to $15,000,000, allowing family-owned trucking businesses to transfer more wealth without triggering federal estate taxes.  This supports generational continuity and succession planning, a critical issue for many mid-sized trucking firms. Conclusion With these provisions, the “Big, Beautiful Tax Bill” delivers targeted relief and long-term incentives for the trucking industry. This bill resolves the sunsetting of many of provisions of the 2017 tax law and should provide the trucking industry with the opportunity for growth and innovation into the future. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page. ### House Of Representatives Passes One Big Beautiful Bill – Now On To The Senate The House of Representatives narrowly passed (215-214) the tax and spending reconciliation package (the One Big Beautiful Bill) earlier this morning. It will now move onto the Senate (which will likely not take up the Bill until June 2 at the earliest after returning from recess.) It is expected that the bill will face tough negotiations between Republican Senators in its current form. Early press reports indicate that the amendments to the original proposal include an acceleration of Medicaid work requirements, an earlier ending to many energy credits, funding to reimburse states for border security, a modest increase in the SALT deduction (although it continues to contain income limitations), removal of the provision treating name and logo royalties as unrelated business taxable income, and modifications to the provisions regarding excise tax on excess compensation and the net investment income of certain private foundations from the original proposal that came out of the House Ways and Means Committee. For more information on the tax provisions of the bill, please see our article from May 15, 2025. Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Penetration Testing and AI in 2025: Exploring Capabilities, Limitations, and Best Practices Artificial Intelligence (AI) is rapidly transforming many industries, and cybersecurity is no exception.With new AI tools and integrations emerging constantly, it’s important to understand how AI is currently being applied in Penetration Testing (PenTesting), including its capabilities, limitations, and best practices.PenTesting and AI: The CapabilitiesWithout going into great technical depth, AI is trained to recognize and react to patterns. AI can work 24/7 without taking any breaks. AI can analyze small and large data sets, including massive code repositories and large security event logs, looking for non-standard entries. All these capabilities make AI skillful at continuously scanning assets such as networks, applications, and systems for known vulnerabilities (pattern matching). For PenTesting, AI is proficient at performing tasks such as port scanning, vulnerability scanning, and limited exploitation techniques. These exploitation techniques take advantage of known vulnerabilities and misconfigurations.PenTesting and AI: The LimitationsIt is important to recognize that AI has limitations when performing PenTests. Yes, AI is trained, but it cannot perform tasks of reasoning (yet). Therefore, when AI encounters a situation that requires an understanding of business logic, it can struggle. Currently, AI is unable to implement the type of problem-solving logic and/or intuition that humans possess. If there are no known patterns for AI to learn from, it cannot connect several exploits into a path to compromise to progress a PenTest. AI is unable to adapt to situations that occur with social engineering techniques such as vishing. It goes without saying, AI is unable to perform physical testing in a PenTest engagement.As far as the PenTesting scope, AI can follow the basics, such as IP lists. However, AI struggles with making the appropriate decisions related to other testing boundaries. Exceeding scope boundaries can lead to business operation interruptions, loss of data, and ultimately, reputation loss. AI can lack an understanding of business goals and risk appetite, which human testers use to guide their decision-making processes. PenTesting and AI in 2025: Exploring Capabilities, Limitations, and Best PracticesLearn about the evolving landscape of PenTesting and AI, with key insights on the strengths, the drawbacks, and best practices for enhanced cybersecurity. Download the Whitepaper When to Use AI for PenTestingThere are ideal environments for using AI in PenTesting. Those include environments that require continuous monitoring, large-scale environments, and/or environments that experience frequent changes. It can be impractical to have human testers perform continuous monitoring. AI has no problem working with large-scale environments that are made up of similar systems. This type of testing would be very time-consuming for a human tester. Also, when environments experience frequent changes, it can be cost-prohibitive to have human testers perform PenTesting at high frequency intervals.When to Use Human PenTestersHuman PenTesters can be experienced with complex systems that contain unique architectures. They are also adept at testing custom applications. Human PenTesters can chain several exploitation techniques in sequence in order to build a complex path to compromise. In addition, human testers can adapt to social engineering engagements like vishing, where conversations can take unpredictable paths.During PenTest engagements, clients might request that the tester provide a transfer of knowledge to help build awareness and knowledge within the client staff. These are moments where the tester meets with the client, reviews their notes on screen, and describes in detail how a specific technique works within the client’s environment. This session can also include an “over-the-shoulder” moment where the tester shares their screen and executes the attack in real time while answering any questions the client team presents.Best Practices for PenTesting and AIIn the right circumstances, AI and human testers can be used in a tiered approach. AI can be used for scanning networks, code bases, applications, and systems to develop a list of potential vulnerabilities. This information can then be provided to the human tester to review, confirm true/false positives, and exploit any vulnerability that would lead to a path to compromise. The human tester can also perform any complex exploitations, business impact analyses, and knowledge transfer sessions.How Can Schneider Downs Help?Our Network PenTesting services are designed to assess your organization’s security by simulating real-world cyberattacks, such as phishing and ransomware, using the same tools and techniques employed by threat actors. As an impartial third party, we identify critical vulnerabilities across both internal and external networks. Our tests also evaluate whether these vulnerabilities are exploitable, providing a clear picture of the actual risks they pose to your IT security posture.If you’re new to Network PenTesting, simply complete our penetration questionnaire, and a member of our team will reach out to assist you in the next steps.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Navigating Tariffs with Onshoring: Tax Benefits for U.S. Manufacturers With most industries, navigating the impact of tariffs continues to be an important topic in the manufacturing industry. This article delves into some of the impacts of those tariffs and some tax implications on the Sec. 41 Research and Development (R&D) Tax Credit and Sec. 174 research and experimental (R&E) cost capitalization. Tariffs can contribute to higher input costs for end products, which may lead to increased prices for end users if companies choose to maintain their profit margins. As a tariff is a tax on importing goods, US companies can avoid paying tariffs by removing the need to import by investing in domestic production. That said, certain tax provisions may help offset some of the additional costs associated with tariffs As tax law currently stands, companies are required to capitalize their R&E costs and amortize them over five years for onshore research and 15 years for offshore research. If US companies move their manufacturing production onshore and begin realizing these R&E costs, they will be able to utilize tax deductions quicker, which will reduce their income tax liability. Further tax benefits from onshoring labor are outlined in the Sec. 41 R&D Tax Credit. As offshore research is not able to be capitalized into the R&D Tax Credit, companies that decide to move production and research onshore will be able to capitalize more costs into their credit, and as a result, recognize a larger tax benefit. U.S. tariffs continue to have broad implications for the manufacturing sector. As these tariffs remain in effect, rising costs are prompting companies to explore strategies to lessen the impact. Potential avenues for relief may be found in Section 41 R&D Tax Credits and Section 174 Research & Experimentation (R&E) capitalization. How Can Schneider Downs Help? To learn more about available tax benefits and credits for manufacturers, please contact our R&D Tax team at contactsd@schneiderdowns.com or download our R&D Tax Credit for Manufacturers fact sheet. About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. ### Funding Challenges in the Not-for-Profit Industry Funding in the not-for-profit sector is a persistent challenge that affects the ability of an organization to fulfill its mission. One of the primary issues is the dependency on government funding, which can be unpredictable and subject to political changes. Recent federal funding freezes and cuts have left many not-for-profit organizations (NFPs) in a state of uncertainty, forcing them to reconsider their budgets and operations, instability that can lead to reduced services, staff layoffs and even the closure of essential programs communities rely on. Another significant issue is the competition for limited resources. NFPs often target the same grants and donations, which can create a highly competitive environment. This rivalry can be particularly fierce among smaller organizations that lack the resources to effectively market themselves or apply for large federal, state or local grants. As a result, many NFPs struggle to secure the funding they need to operate, leading to financial instability and an inability to plan for long-term projects. Restricted funding is another challenge. Many grants and donations come with specific stipulations on how the money can be used, limiting the flexibility of organizations to address their most pressing needs. This can be particularly problematic in times of crisis when NFPs need to quickly adapt their services to meet changing needs. The lack of unrestricted funding means that NFPs often have to juggle multiple funding sources and comply with various requirements, which can be both time-consuming and costly. The economic impact of funding issues on not-for-profit organizations is substantial. NFPs are a significant part of the economy, employing millions and contributing significantly to the nation’s GDP. When funding is cut or becomes uncertain, it not only affects the services provided but creates a ripple effect on the economy. Job losses in the not-for-profit sector can lead to increased unemployment and reduced economic activity in local communities. Plus, NFPs often purchase goods and services from local businesses, so their financial struggles can impact the broader economy. The need for sustainable funding models is crucial for the future of the not-for-profit sector. Many experts advocate for a shift toward more stable, long-term funding sources that can provide consistent support. This includes exploring new revenue streams, like social enterprises or partnerships with private companies and advocating for policy changes that support the financial stability of nonprofits. By developing more sustainable funding strategies, NFPs can better navigate financial uncertainties and continue to provide crucial services to their communities. Schneider Downs will continue to monitor the evolving considerations around the funding challenges face by not-for-profit sector. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### Investment Corner: How Do Tariff Impacts Flow Through the Economy So far this year, capital markets have reacted strongly to news about potential trade wars and tariff policies. In April, the S&P 500 experienced one of the worst three-day periods on record following President Trump’s “Liberation Day,” when his new tariff policies were announced to the world. The proposed policies came as a shock to capital markets, which responded accordingly. Similarly, in May, the initial steps of a trade deal between the United States and China were announced, reducing the effective tariff rate for both countries. When markets opened the following Monday, equity markets reacted positively. While equity markets tend to respond almost immediately to tariff-related news, the real implications of these policies take much longer for the economy to absorb. A similar trend was observed in 2022 when the Federal Reserve began raising interest rates. The stock market reacted to the news by falling double digits over the course of the year. Even though interest rates increased by only 0.25% in some instances, markets responded immediately, and investors adjusted their portfolios based on perceived implications. At Schneider Downs Wealth Management Advisors, we believe that the longer-term impact of tariffs on the real economy will resemble that of rising interest rates in 2022 — it will take time. Although the effects on economic growth, inflation, and other factors may differ this time, we will have to wait and see how everything unfolds. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Workforce Reduction of the IRS Tax-Exempt and Government Entities Division The Trump administration's tenure has been marked by several executive orders aimed at reducing the size of the federal government’s workforce. On May 2, 2025, the Treasury Inspector General for Tax Administration (TIGTA) released a report on IRS workforce reductions as of March 2025. In February 2025, the IRS had approximately 103,000 employees. By March, more than 11,000 IRS employees either received termination notices during their probationary employment period or were approved for the Deferred Resignation Program (DRP), which allowed federal employees to resign but retain their pay and benefits through September 20, 2025. The loss of employees represented an 11% reduction in the agency’s workforce. The separations disproportionately impacted employees in certain positions. Approximately 31% of revenue agents separated, while only 5% of information technology management separated. Similarly, the separations impacted certain business units more than others. The Tax-Exempt and Government Entities (TE/GE) Division has seen the largest percentage reduction in workforce among all of the IRS business units. Prior to the reduction efforts, TE/GE had a staff of 2,239. As of March, there had been 694 departures, which represents a decrease of 31% of the workforce. As the report only covers reductions through March, it does not include the effects of three additional voluntary separation programs that were reported in April. The primary additional program is the Treasury Deferred Resignation Program (TDRP), which will largely mirror the benefits offered by the first DRP. The TIGTA reports that more than 23,000 IRS employees have applied for the TDRP. As of the end of April, more than 13,000 of those applications had been approved. Once the additional voluntary separation programs are complete, the percentage decrease in TE/GE agents will rise. If you have any questions on the potential impact of the Tax-Exempt/Government Entities workforce reduction, please contact Sarah Piot or Erin Wood. About Schneider Downs Government Services The Schneider Downs Government industry group addresses the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities. We advise a range of government entities, including—but not limited to—boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages. To learn more, visit our Government Industry Group page. ### Tax Exempt Organizations and "The One, Big, Beautiful Bill" Provisions With Potential Impact On Tuesday, May 12, the House Ways and Means Committee released a draft of the Title XI budget reconciliation bill and a summary. The draft includes several provisions that would impact tax-exempt organizations, including private foundations and institutions of higher education. Among the most notable provisions are the following: Provisions impacting unrelated business taxable income (UBTI): Section 112025: The draft bill proposes that royalty income from any sale or licensing by a tax-exempt organization of its name or logo will be treated as UBTI. Section 112026: This provision amends Internal Revenue Code (IRC) Section 512 to increase UBTI by including the income generated from non-public research by an organization whose tax-exempt purpose is to provide publicly available research. Section 112024: This provision would reinstate the Section 512(a)(7) “parking tax” which increased UBTI by including the amount paid or incurred for any qualified transportation fringe benefits. Provisions regarding excess compensation: Section 112020: This provision expands the application of tax on excess compensation within tax-exempt organizations. The provision specifically revises the definition of a “covered employee” to mean any employee (including any former employee) of an applicable tax-exempt organization who received remuneration in excess of $1 million. Provisions impacting higher education institutions: Section 112021: Currently, IRC Section 4968 imposes an excise tax on applicable educational institutions at a flat rate of 1.4% of the net investment income. The draft amends the current excise tax by adding a tiered system based on student-adjusted endowment as follows. The first tier is a 4% rate for institutions with student-adjusted endowments of at least $500,000 and less than $750,000. The second tier is a 7% rate for institutions with student-adjusted endowments of at least $750,000 and less than $1,250,000. The third tier is a 14% rate for institutions with student-adjusted endowments of at least $1,250,000 and less than $2,000,000. The fourth tier is a 21% rate for institutions with student-adjusted endowments of $2,000,000 or more. For purposes of calculating an institution’s student-adjusted endowment, the section excludes students who do not meet the requirements under Section 484(a)(5) of the Higher Education Act of 1965 which states that a student “must be a citizen or national of the United States, a permanent resident of the United States”. The draft bill also includes student loan interest income and certain royalty income for the purposes of calculating a school’s net investment income. Provisions impacting private foundations: Section 112022: Currently, private foundations are taxed on their net investment income at the rate of 1.39%. This section revises the tax rate based on a foundation’s total assets. The first tier is a 1.39% rate for foundations with total assets of less than $50,000,000. The second tier is a 2.78% rate for foundations with total assets of at least $50,000,000 and less than $250,000,000. The third tier is a 5% rate for foundations with total assets of at least $250,000,000 and less than $5,000,000,000. The fourth tier is a 10% rate for foundations with total assets of $5,000,000,000 or more. Provisions impacting charitable giving: Section 112028: This provision establishes a 1% floor on deductions of charitable contributions made by corporations. In the case of a corporation with charitable contributions exceeding the 10% limit, the provision allows taxpayers to add the amount disallowed under the 1% floor to the amount carried over to the subsequent year. Section 110112: This section would allow individuals who do not itemize deductions on their personal returns to still take a deduction for charitable contributions of $150 ($300 for married filing jointly). The contributions cannot be made to Donor Advised Funds or supporting organizations. This section would only be applicable for tax years 2025 to 2028. The Schneider Downs Not-for-Profit tax team is following the development of the proposed tax bill and will publish updates as they become available.   Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### "The One, Big, Beautiful Bill" (At Least As Currently Drafted) On May 12, the House Committee on Ways and Means released a version of “The One, Big, Beautiful Bill,” the merits of which will be debated in the House of Representatives beginning this week, with a goal to ultimately lead to the enactment of legislation. The provisions of the bill generally extend the Tax Cuts and Jobs Act (TCJA) legislation passed in 2017, increase the federal debt limit and adds additional provisions favored by President Trump. It’s part of an overall proposed legislative package, comes in at 389 pages and contains over 115 separate tax provisions impacting individuals and businesses. While there are still many pages of legislative text to digest, below are some highlights of a few of the provisions. Additional details and insight will be provided in future posts. Selected Proposals Impacting Individuals Provide for the temporary or permanent extension (or termination) of many TCJA provisions, including the extension of existing tax brackets (no millionaire tax bracket proposed). The extension prevents tax increases on most individual taxpayers, as opposed to the result of those provisions expiring at the end of 2025 and reverting to pre-2018 tax law. Provide for temporary separate deductions from income for “qualified tip income” and “qualified overtime compensation” for the years 2025 through 2028, with specific limitations and thresholds included. Permanently enhance the Section 199A qualified business income deduction by increasing the deduction percentage from 20% to 23% for tax years beginning after December 31, 2025, and reduces the impact of the phaseout of the deduction on specified service trades or businesses. Provide for a temporary enhanced deduction of $4,000 per eligible filer for senior citizens over age 65 with adjusted modified income under $75,000 (for single taxpayers) and $150,000 (for those married filing jointly) for tax years 2025 through 2028. The senior deduction would be available to both itemizers and non-itemizers. Permanently extend the increased estate and gift tax exemption and increases the exemption to $15 million for single filers ($30 million for couples), indexed for inflation. Reinstate a partial deduction for charitable contributions by individuals who do not itemize deductions. Provide for a second round of qualified opportunity zone investing. The provision is billed as adjusting, improving and expanding the previous policy and would allow investment from January 1, 2027, through December 31, 2033. Selected Proposals Impacting Business Allow 100% bonus depreciation on the cost of “qualified equipment” acquired after January 20, 2025, and before December 31, 2030 (up from 40% for 2025, 20% for 2026 and 0% in 2027 and follows, under existing law). Allow taxpayers to immediately deduct 100 percent of the cost of certain “qualified production property,” including new factories, certain improvements to existing factories and certain other structures. Increase the maximum amount a taxpayer may expense under IRC section 179 to $2.5 million for items placed in service after January 1, 2024 (up from $1,250,000 under current law), reduced by the amount by which the cost of qualifying property exceeds $4 million (up from $3,130,000). Modify the calculation of “adjusted taxable income” and reduce the limitation on the deductibility of business interest expense for taxable years beginning after December 31, 2024, and before January 1, 2030. Under the proposal, a business would add back deductions for depreciation, amortization and depletion. As a result, “adjusted taxable income” would correspond with the financial accounting concept of earnings before interest, taxes, depreciation and amortization (EBITDA), as opposed to being limited to earnings before interest and taxes (EBIT). Allow the immediate deduction for domestic research and development expenses incurred after December 31, 2024, and before January 1, 2030. Increase the ability to use the cash receipts method of accounting. Other Provisions The bill rescinds a number of the renewable energy incentives enacted in the 2022 Inflation Reduction Act that passed under the Biden administration using the same procedures Republicans employed in 2017 to pass the TCJA and are now using to move the current proposal through Congress. It also contains provisions intended to remove benefits for illegal immigrants, to prevent fraud, waste and abuse, and increase the debt limit that continues to allow the federal government to operate, which could be reached as early as August 2025. Closing Thoughts While generally accepted that a tax bill will be enacted – though House passage of the current version is by no means certain – it does provide a foundation that the final package will likely be built upon and provides details that up to now were only talking points. Republicans hold a slim 220-213 majority in the House and would need to remain united before the proposed legislation is passed and moved onto the Senate, where it will also likely be further debated. Note that various state Republican House Representatives, including those in New York and California, have threatened to oppose the legislation unless the state and local tax itemized deduction limitation is increased even further than the $20,000 increase under the current proposal. Plus, fiscal hawks within the Republican Party may be uncomfortable that the proposal does not include sufficient spending cuts and will continue to increase the deficit over the 10-year window used for budget reconciliation. Like most tax-related legislative proposals, there will be likely be winners, losers and those who break even. What you can do is make your viewpoints known to your representatives and continue to monitor the legislation’s process. As we’ve noted with other proposed legislation, it’s too soon to rely upon the proposed tax changes in making decisions, but you may want to begin modeling potential impacts upon your business.   Please note: This article was written before the final version of the bill became law, so some information may no longer be current. Resources "The One, Big, Beautiful Bill" House Ways and Means Committee Summary Joint Committee on Taxation JCS-21-25 Report on the Budget Reconciliation Legislative Recommendations Related to Tax About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### The CFOs Guide to Tariff Uncertainty in 2025: The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) Many companies still treat tariff-related risks as isolated, operational issues rather than integrating them into their broader enterprise risk management (ERM) framework. This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. For CFOs looking to build resilience into their organizations, this is a missed opportunity. Tariff uncertainty isn’t just a trade or logistics issue. It’s a strategic risk that has impacts across the broader enterprise, impacting cost structures, pricing strategy, customer relationships, compliance obligations, and even capital allocation decisions. ERM is designed to help companies identify, assess, manage, and monitor the full spectrum of risks that could affect business performance. But, too often, the framework lags behind the pace of real-world events.  Tariff risk is often underappreciated in formal risk registers. It tends to get lumped in within procurement or supply chain departments, with minimal strategic oversight. But, as we are now seeing, the consequences of inaction, or late reaction, can be severe.  Given this landscape, treating tariff uncertainty as a minor operational inconvenience is no longer tenable. Here are three key areas where CFOs can drive meaningful ERM updates: Risk Identification Must Include Trade Dependencies Most organizations have a decent handle on supplier concentration or geographic exposure, but fewer have a holistic view of their tariff exposure. What percentage of our COGS is exposed to tariff-affected imports? Do we rely on any suppliers located in regions with rising trade tensions? What are the tariff classifications of our key inputs, and are there alternative codes available?  The goal is to map trade exposure across the enterprise and identify vulnerabilities that might not be obvious on the surface. Scenario Planning Should Include Tariff Shock Events Scenario planning is an essential part of ERM, but it often focuses on economic downturns, cyber breaches, or natural disasters. It’s time to add trade shocks to the mix.  Run stress tests for sudden 25% tariffs on core inputs. Consider the impact of losing access to key suppliers due to retaliatory tariffs or sanctions. What would you do if a primary distribution market suddenly imposed duties on your products? These scenarios might not be high-probability, but they are high-impact—and they are happening more frequently. Governance Structures Must Involve Cross-Functional Teams Tariff risk is inherently cross-functional.  It touches finance, legal, procurement, operations, and strategy. ERM governance must reflect this complexity. Consider creating a standing trade risk task force, or incorporating trade experts into your ERM committee. CFOs should ensure that financial modeling, legal compliance, and supply chain adjustments are aligned and reviewed collectively, not in isolation. Incorporating tariff uncertainty into ERM isn’t just about risk avoidance. It’s a chance to create strategic agility. Companies that understand their exposure and build responsive systems will not only avoid downside losses but also capitalize on upside opportunities. As CFOs take on a more strategic role in guiding enterprise resilience, tariff risk should be part of the regular risk dialogue with boards, audit committees, and operating teams. Now is the time to make sure that your ERM framework reflects that reality. If you’d like to learn how Schneider Downs’ CFO Services team can assist in navigating tariff-related uncertainties, please contact us. Other related articles in our series: 5 Things CFOs Should Be Doing Now Why CFOs Must Build Scenario Plans and Be Ready to Pivot Why CFOs Should Lead the Charge on Supply Chain Risk Assessments Why CFOs Need Agile Pricing Models The CFOs Role in Agile Forecasting and Margin Protection About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### May 30 Reporting Deadline Looming for U.S. Persons With Interests in Foreign Entities Every five years, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) requires U.S. persons to file the BE-10 Benchmark Survey of U.S. Direct Investment Abroad. This filing applies to U.S. corporations, private funds, trusts, estates and individuals who directly or indirectly own or control at least 10% of the voting stock in an incorporated foreign business, or an equivalent interest in an unincorporated foreign business enterprise at the end of their 2024 fiscal year. Certain ownership of foreign real estate may also trigger a filing requirement (excluding real estate held for personal use). The survey is conducted to secure current economic data on the operations of U.S. parent companies and their foreign affiliates. A response is required from all U.S. persons subject to the reporting requirements of the BE-10 survey, whether they are contacted by BEA or not. The survey will require the filer to report information such as sales and employment data, financial and operating data, export and import business, along with investments and transactions between the filer and its foreign affiliates. Filing Requirements Each U.S. person required to submit a BE-10 survey must complete the Form BE-10A and one or more of the below forms. Whether a U.S. person’s foreign affiliate is majority-owned or not and, the amount of the foreign affiliate’s assets, sales or net income of such foreign affiliate will determine which supplemental form to the BE-10A will be required. Form BE-10B: For each majority-owned foreign affiliate whose assets, sales or net income exceeds $80 million. Form BE-10C: For each majority-owned foreign affiliate whose assets, sales or net income exceeds $25 million but for which none of the foregoing items exceeds $80 million. Form BE-10D: For each foreign affiliate whose assets, sales and net income do not exceed $25 million. Filing Deadline Fewer than 50 Forms: May 30, 2025 50 Forms or more: June 30, 2025 Filers may request an extension to file Form BE-10. The extension request must be filed electronically through the BEA website. Extensions are determined on a case-by-case basis and are not automatically granted. The filer must provide substantive reasons for the need of additional time to file.  The BEA will provide a written response to the extension request. Failure to File Penalties Failure to file may result in civil penalties of between $5,911 and $59,114, with willful violations carrying criminal penalties of up to $10,000 and/or imprisonment of up to one year. Please contact any member of Schneider Downs’ tax practice with questions related to the filing requirement, and we can help you navigate your specific circumstances. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Overview of Accounting for German Entities in the U.S. What are the financial reporting options for German-owned entities looking to establish a subsidiary in the United States (U.S.)? Unlike many other countries, the U.S. does not have a statutory reporting requirement for privately owned organizations. While U.S. Generally Accepted Accounting Principles (GAAP) is the most common accounting methodology for commercial entities in the country, it is not required. Similarly, the Internal Revenue Service (IRS), the Federal taxing authority in the U.S., does not mandate a book accounting methodology. Regardless of which book accounting methodology is elected, entities are converted from their book accounting methodology to the income tax basis of accounting as part of the tax provision and return process. This provides flexibility for foreign-owned companies to choose the accounting methodology that best meets their needs. Many German-owned subsidiaries in the U.S. will make the choice between U.S. GAAP or German GAAP. U.S. GAAP and German GAAP both provide a high level of reporting with financial and regulatory transparency. The two have similarities, but also significant differences. Both standards reflect their cultural, financial, and regulatory environments. The high quality of both standards is tailored to the needs of their large economies, which together account for 30% of the global Gross Domestic Product, according to the World Bank. Accounting Standards Compared: U.S. GAAP vs German GAAP German GAAP is grounded in the Handelsgesetzbuch (HGB) commercial code framework regulated by the German Federal Ministry of Justice. The German Accounting Standards Board (GASB) then develops standards for non-listed entities within this framework and incorporates select global best practices. The framework has more focus on the needs of creditors and regulatory authorities with an emphasis on conservatism and the prudence principle. U.S. GAAP is a rules-based approach, shaped by the nature of the American economy. The framework is driven by the Financial Accounting Standards Board (FASB), an independent, private-sector, non-profit organization that establishes financial accounting and reporting standards for public, private, and not-for-profit organizations. U.S. GAAP is generally more investor-focused on transparency and comparability of the financial statements between reporting entities. The differences are further complicated as U.S. GAAP has undergone substantial convergence projects with International Financial Reporting Standards (IFRS) in the past decade, including Revenue Recognition, Leases, Current Expected Credit Losses and Inventory Measurement. These areas, along with the measurement of long-term assets, contingent liabilities, hedge accounting, and pension accounting, may have a major impact on your organization, depending on the accounting methodology selected. U.S. GAAP and German GAAP: Which Is Right for Your Business? When making an accounting methodology election, Organizations should consider the ultimate financial reporting needs when making an accounting methodology election, including those of management, investors and third parties. The U.S. does not require a particular chart of accounts. Given this flexibility, many organizations will choose a chart of accounts that corresponds to the parent entity, regardless of the methodology selected. Foreign entities that follow IFRS at their parent organization would generally elect to follow IFRS at each subsidiary. The IFRS elections made at the parent level should be followed by each subsidiary, as permitted by their local jurisdictions. IFRS provides more flexibility with accounting elections than German GAAP but can often be more complex. Our Resource Page contains a number of articles on IFRS accounting and current matters. How Can Schneider Downs Help? Schneider Downs provides a full range of services to organizations following U.S. and German GAAP including assurance, tax, and advisory services. For more information concerning international business matters and their impact to your organization, please contact us or learn more at www.schneiderdowns.com/international-services. About Schneider Downs International Services The Schneider Downs International Services industry group is a dedicated team of professionals specializing in serving international companies. Schneider Downs helps clients take full advantage of all their international opportunities and can reach you and your business, no matter where you're located around the globe.   To learn more, visit our International Services Industry Group page.   ### U.S. Department of Education Reminds Colleges and Universities of Their Obligations to Help Struggling Borrowers On May 5, 2025, the U.S. Department of Education (DOE) issued a “Dear Colleague Letter (DCL)” to institutions of higher education reminding them of their shared responsibility under Title IV of the Higher Education Act of 1965 to support student loan borrowers. The DOE issued guidance on the same day it resumed involuntary collections on student loans, which had been paused since the beginning of the COVID-19 pandemic. According to the DOE, only 38% of Direct Loan and Department-held Federal Family Education Loan Program borrowers are in repayment and current on their student loans. The DOE estimates that 25% of the entire portfolio is either in default or a late stage of delinquency. Given these challenges, the DOE is taking immediate steps to engage student borrowers and support the repayment of their federal student loans, including: Resumption of collections on defaulted federal student loans through the Treasury Offset Program and Administrative Wage Garnishment. An outreach campaign to remind borrowers of their repayment obligations and provide resources to assist them in selecting the best repayment plan. Launch of an enhanced income-driven repayment plan process to simplify enrollment and eliminate the need for many borrowers to manually recertify their income each year. The DOE noted the integrity of the loan programs has always been a shared responsibility among student borrowers, the DOE and participating institutions. Although borrowers have the primary responsibility for repaying their student loans, institutions play a key role in the DOE’s ongoing efforts to improve loan repayment outcomes. The DOE outlines the role of the institutions as: Institutions are responsible for providing clear and accurate information about repayment through entrance and exit counseling. Institutions must disclose annual tuition fees and net prices to students and their families. Institutions are required to keep their cohort default rates low to maintain eligibility for federal student assistance. The letter also urges all institutions of higher education that receive federal funding assistance to reach out to all former students to remind them of their obligation to repay any federal student loan that is not in deferment or forbearance, and that they do so before June 30, 2025. The DOE also notes that it maintains data on the repayment status of federal student loan borrowers and provides information in the College Scorecard about the status of each institution’s borrowers after they enter repayment. The DOE plans to use the data to calculate rates of nonrepayment by institution and will publish the information on the Federal Aid Data Center later this month. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### The CFO’s Guide to Tariff Uncertainty in 2025: The CFO’s Role in Agile Forecasting and Margin Protection As international relations shift and trade policies evolve, the resulting changes in tariff structures can wreak havoc on a company’s supply chain costs, pricing strategy, and, perhaps most critically, profit margins. This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. In today’s volatile global trade environment, tariffs have become an increasingly unpredictable variable in corporate financial planning. For CFOs, staying ahead of these changes isn’t just about risk management; it’s about enabling agility and preserving enterprise value in the face of rapid change. Tariff uncertainty stems not only from actual changes in rates but also from the unpredictability of when, why, and how they might occur. For example, political shifts, retaliatory trade actions, or sector-specific trade enforcement can introduce abrupt and sweeping changes. Even the threat of new tariffs can cause price swings in raw materials, inventory stockpiling, or disruptions in vendor contracts. What makes tariffs particularly dangerous from a financial standpoint is their ability to erode margins without warning. Unlike labor or operating costs, which are relatively easier to control or forecast, tariff-related costs are externally imposed and can escalate quickly. A product that had a comfortable gross margin last quarter might suddenly become unprofitable if its key input is subject to a 25% tariff. Traditional, annual, or even quarterly, forecasts might be too slow to capture the fast-moving nature of tariff changes. If your financial models are built once and reviewed sporadically, you’re likely flying blind when it comes to responding to trade policy disruptions. CFOs can respond by transforming their approach to budgeting and forecasting in the following ways: Scenario Modeling with Tariff Sensitivities Every budget and forecast should include a sensitivity analysis of key trade assumptions. This doesn’t mean trying to forecast the next tariff announcement, it means structuring “what-if” scenarios for various degrees of cost inflation based on plausible tariff changes. By quantifying the financial impact under multiple scenarios, finance leaders can help their executive teams make informed strategic decisions, including whether to raise prices, shift sourcing, or delay investments. Real-Time Data Feeds and Assumption Triggers CFOs should work with supply chain and procurement teams to establish live or frequently updated inputs into their forecasting models. Inputs include 1) commodity price feeds, 2) currency exchange rates, 3) trade policy alerts, and 4) lead-time or availability data from suppliers. When these indicators breach certain thresholds (e.g., a key material increases by 5%), it should trigger an automatic review or update of forecasts and budgets. Rolling Forecasts for Margin Protection The more frequently you update your financial outlook, the better positioned you are to act decisively. Many leading finance functions have moved from static annual budgets to rolling forecasts updated monthly or quarterly. In a tariff-sensitive environment, this allows for faster response to external shocks. Rolling forecasts also support “in-flight” strategy adjustments. If a tariff scenario starts to materialize, finance can preemptively adjust pricing guidance, reallocate budgets, or pull-forward sourcing decisions. It’s a shift from reactive firefighting to proactive margin management. Tariffs are more than a policy issue, they’re a bottom-line threat. But with the right tools, processes, and mindset, CFOs can transform tariff uncertainty from a blind spot into a strategic advantage. By making forecasting more agile, assumptions more responsive, and communication more transparent, finance leaders can help their companies navigate global turbulence with resilience and protect profit margins. If you’d like to learn how Schneider Downs’ CFO Services team can assist in navigating tariff-related uncertainties, please contact us. Other related articles in our series: 5 Things CFOs Should Be Doing Now Why CFOs Must Build Scenario Plans and Be Ready to Pivot Why CFOs Should Lead the Charge on Supply Chain Risk Assessments Why CFOs Need Agile Pricing Models The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### No Relief on the Way for Contractor’s Presentation of Retainage Unless you’re new to the accounting industry, chances are you’ve heard phrases like “606” or “Rev Rec” a lot in recent years as references to the FASB’s major overhaul of accounting guidance for revenue recognition.The much ballyhooed standard was issued in 2014, after many years of development, and finally became effective in 2018 for public companies and 2019 for private companies. Thankfully, with a few exceptions, the adoption of the new rules did not significantly alter the legacy accounting for most contractors, but one particular aspect of 606 has caused a fair amount of confusion in the last handful of years.One of the stated objectives of the FASB’s Revenue Recognition project was to improve “comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets.” In other words, the FASB intended to make it easier for users of the financial statements to compare companies.Ironically, those rules created significant diversity in practice related to a common item in the construction industry – retainage. “Retainage” or “retention” receivables represent amounts the customer can contractually withhold from the consideration billed until certain project milestones are met or the project is completed. The retention portion of each invoice is typically paid at a later date than the remainder of the invoice that is typically considered trade receivable. Prior to the adoption of the new rules, most contractors presented retainage as a component of accounts receivable on the balance sheet, but the adoption of the new rules caused some contractors to consider retainage to fall under the newly created “contract asset.”Understanding Contract Assets, Liabilities, and Receivables Under ASC 606A contract asset is defined as an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (e.g., the entity’s future performance). Conversely, a contract liability is defined as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer.Under current guidance, a receivable is defined as being a right to consideration that is not conditional upon anything other than the passage of time (i.e. “unconditional”). If a balance is subject to conditions other than passage of time, such as future performance or achievement of stated milestones, that balance should be reflected as a contract asset instead of a receivable (i.e. “conditional”).The Challenges of Conditional Retainage and the PCC's ResponseThe complication with conditional retainage is that each contract can only have one contract asset or liability balance, and almost all contracts already have a contract asset or liability in the form of an underbilling or overbilling. As a result, contracts with conditional retainage that are underbilled show a cumulative contract asset balance equal to the sum of the two, while contracts with conditional retainage that are underbilled show a net liability or asset. Various example scenarios are depicted in the example calculations below:  Contract #1Contract #2Contract #3Revenue Recognized $1,000,000$1,000,000$1,000,000Amount Billed $950,000$1,050,000$1,200,000Underbilling / (Overbilling) $50,000($50,000)($200,000)Conditional Retainage $95,000$105,000$120,000Contract Asset / (Liability) $145,000$55,000($80,000)Conclusions on whether retainage is unconditional or conditional have varied from company to company. As a result, many users of financial statements have been left confused and struggling to find the legacy balances they considered to be meaningful. In September 2023, the topic was raised to the FASB’s Private Company Council (PCC) and it was officially added to the PCC’s docket in 2024. The PCC explored the issue and evaluated a number of presentation alternatives, notably alternatives that would have eliminated the netting effect of conditional retainage and overbillings.After outreach and deliberation, the PCC ultimately decided that this issue did not warrant standard setting and that much of the diversity is the result of misunderstanding of, or disagreement with, the current rules. Further, the PCC believes existing disclosure templates, like the AICPA’s example financial statements for contractors, would provide financial statements users with the desired information. As a result, the PCC instructed the FASB to release an educational paper and removed this topic from its agenda in March 2025, thus dashing the hopes of those who wanted to see the presentation revert back to the pre-606 version and those hoping for presentation alternative to show contract assets and liabilities gross versus net.Disclosure Requirements Surrounding Contract Assets and LiabilitiesThe FASB’s educational paper, released in April, focused primarily on current disclosure requirements surrounding contract assets and liabilities, and provided two example templates meant to satisfy feedback from users, particularly sureties.The first example displays parenthetical disclosure of conditional retainage within contract assets and contract liabilities on the balance sheet. This aligns with the AICPA’s example financial statements and allows users to calculate underbillings and overbillings by removing the effects of the conditional retainage amounts included in the parenthetical disclosure.The second example displays disaggregated disclosure of conditional retainage with contract assets and contract liabilities on the balance sheet. In this example, the composition of contract asset and liability balances are broken out directly in the balance sheet.The FASB is asking companies to revisit the existing guidance and rethink financial statement presentation. With the recent overhaul of the revenue recognition rules and the intent to eliminate industry-specific guidance, it’s not surprising the construction industry wasn’t provided with a carveout. For now, companies will need to make sure they’re evaluating the appropriate accounting for conditional retainage and working with users of their financial statements to ensure they’re providing meaningful transparency that adheres to the disclosure requirements.About Schneider Downs Audit and Assurance ServicesSchneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.To learn more, visit our dedicated Audit and Assurance page. ### The CFO’s Guide to Tariff Uncertainty in 2025: Why CFOs Need Agile Pricing Models As global trade policy becomes increasingly unpredictable, tariffs have reemerged as a volatile and disruptive factor in supply chain and cost management. For CFOs, tariff unpredictability poses a real challenge: how to maintain profitability and competitiveness when cost structures can shift with a single headline or Presidential executive order. This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. Tariffs often strike quickly, without warning, and disproportionately impact specific sectors, raw materials, or countries of origin. For example, a tariff might suddenly increase the landed cost of a key input by 10% or more. If pricing remains unchanged, that increase flows directly to the bottom line. For companies operating on thin margins, even a small swing in input cost can be the difference between profit and loss. However, passing-on costs to customers isn't always a viable option. Market dynamics, customer loyalty, and competitive pricing pressures can all constrain a company’s ability to raise prices. In some industries, such as consumer goods, electronics, or automotive, price sensitivity is acute, and competitors might absorb the cost to maintain market share. This is where an agile pricing strategy becomes essential. Agile pricing is not just about speed; it’s about adaptability. It refers to the ability to adjust pricing in real time, or near real time, based on changes in input costs, supply chain conditions, competitor behavior, and customer demand. It combines financial modeling, data analytics, and decision-making agility to ensure that the company can respond to shocks without overreacting. Three reasons why agile pricing should be on every CFO’s radar: Tariffs Can Be Short-Term or Long-Term and You Need to Prepare for Both Tariffs may be political tools, temporary bargaining chips, or long-term structural changes to trade policy. Whether tariffs last six months or six years, companies need to avoid pricing models that assume permanence or transience without a clear rationale. An agile approach allows for provisional pricing changes that can be scaled back if tariffs are lifted or deepened if they persist. Not All Costs Can Be Passed Through The ability to raise prices is market-dependent. For commodity products or industries with high substitution risk, attempting to push cost increases to the customer could result in lost business. Agile pricing models allow you to identify when price increases are feasible, and when alternative margin-protection strategies (e.g., product reformulation, supplier renegotiation, or SKU optimization) are more appropriate. Your Competitors Are Watching and Responding In some industries, price transparency is high. Customers can easily compare prices across vendors. If you raise prices in response to tariffs and competitors don’t, you risk losing volume. An agile strategy allows you to monitor market signals and adjust quickly if your position becomes uncompetitive. Transparent communication, internally and externally, is also critical. Sales teams need to have talking points and rationale to explain price changes to customers. Internally, teams need to understand that pricing is now a strategic lever, not just a sales tool. Customers are more likely to accept price increases if they’re communicated early, transparently, and framed within the context of a larger economic reality (e.g., supply chain disruptions, rising tariffs, input shortages). CFOs should work with marketing and sales to support that messaging. Ultimately, pricing agility is about building resilience. In a world where economic policy can change overnight, static pricing strategies put your margins at risk. CFOs must lead the effort to embed flexible, data-informed, and market-aware pricing capabilities across their organizations. If you’d like to learn how Schneider Downs’ CFO Services team can assist in navigating tariff-related uncertainties, please contact us. Other related articles in our series: 5 Things CFOs Should Be Doing Now Why CFOs Must Build Scenario Plans and Be Ready to Pivot Why CFOs Should Lead the Charge on Supply Chain Risk Assessments The CFOs Role in Agile Forecasting and Margin Protection The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### April 2025 – Market Recap If you had invested in the S&P 500 on March 30th, 2025, then slept for a month and woke up on May 1st, only to hear that the index had closed the month down 0.7%, you might have thought to yourself, 'Oh, I didn’t miss much, did I?' When taking a longer-term view, the daily swings that seem to happen can be less daunting. As we have previously written many times, extreme daily returns tend to be clustered and occur around the same time. This new extreme return regime is no different as the S&P 500 index posted an annual return in a single day, gaining 9.5% on April 9th, representing the 3rd best day for the market in over 67 years. The Global Trade Wars and “Liberation Day” sparked the latest extreme return regime, which has added 1 of the best and 2 of the worst days to the list. The previous extreme return regimes included Black Monday, the Dot-Com Bubble, the Global Financial Crisis, and COVID-19. As a reminder, the very best days in the market have a tendency to be right after the very worst days. We could break the month of April into two segments – the S&P 500 index declined 11.2% through April 8th and proceeded to generate an 11.8% return for the remainder to the month. While the overall monthly return of -0.7% for the S&P 500 seems relatively ho-hum, the path throughout the month was far from it! The event that splits the month occurred on April 9th when President Donald Trump announced a 90-day pause on the reciprocal tariffs he placed earlier in the month. Given their more domestic focus, mid-cap and small cap stocks fared worse in April while international and emerging markets performed positively. The Russell 2000 index (small cap equities) was down 2.3% and the Russell Midcap (mid-cap equities) was down 1.0% in April, while the MSCI EAFE Index (international developed equities) was up 4.7% and the MSCI Emerging Markets (emerging markets equities) index was up 1.3%. The U.S. economy showed signs of contraction with first quarter GDP decreasing by 0.3%. In addition to concerns about economic growth, investor sentiment deteriorated due to the uncertainty and volatility created by aggressive tariff policies. In comparison, international markets benefited from relatively stable economic conditions, stimulus announcements, interest rate policy cuts, and generally more positive investor sentiment. Just as stocks were gyrating in April, so were bond yields. The 10-year Treasury yield closed March at 4.25% but was down to 3.99% on April 4th, only to experience its biggest weekly increase since 2001 – closing at 4.49% on April 11th. As the stock market rebound started on April 9th, the bond market rebound started just a few days later as the 10-year Treasury yield fell to 4.18% by month-end, helping the Bloomberg Aggregate Bond index to be up 0.4% in April. Despite the volatility in interest rates, fixed income continues to play its role well in portfolios as the ballast of the portfolio. An area of provide relief from the volatility storm that equities can bring. We remain constructive on fixed income and believe that it will continue to remain a crucial part of portfolios moving forward. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Delve into economic trends affecting the S&P 500 and learn how daily market swings fit into larger market movements. ### What We Learned: 4 Key Insights from Cyburgh 2025 The Pittsburgh Technology Council recently hosted its annual Cyburgh, PA Initiative, an event that brings together cybersecurity leaders, professionals, and executives to explore Pittsburgh’s expanding role in the cybersecurity space. As regular attendees, we always look forward to this event. It’s a great opportunity to hear directly from cybersecurity experts, from boardrooms to front-line practitioners, about the latest trends and challenges shaping the field today. Here are a few key takeaways from the day: 1. Tabletop Exercises are Surging, But Leaving Ransomware Behind One of the encouraging takeaways from the day was the growing number of organizations conducting tabletop exercises (TTXs). These exercises help assess, test, and validate emergency response plans, policies, and procedures, providing a clearer picture of an organization's security maturity. However, a noticeable trend has emerged: while TTXs are on the rise, ransomware scenarios are showing up less frequently. Why leave out one of the most well-known cyber threats? According to several speakers, it’s because many organizations believe they already know enough about ransomware to deprioritize it. But knowing is only half the battle. Ransomware remains a major threat and should still have a seat at the table. Make sure to include it in your annual TTXs. 2. Smarter Tech, Smarter Threats: How Cybercriminals are Using AI to Phish You Hackers are all too familiar with modern email systems. Add this familiarity with their growing list of AI knowledge, and you get a recipe for hard-to-detect phishing campaigns. Although the common telltale signs you’ve received a phishing email still apply, such as bad grammar and a tone of urgency, AI enables threat actors to slide under the radar and sound more humanlike with better grammar. AI also helps bad actors shift away from directing users to click on malicious links. Instead, their messaging can direct you to act outside of your email inbox and disclose information in different and potentially more detrimental ways. Overall, the velocity of AI-enabled attacks is increasing, and malicious intent is getting harder to detect now that AI is on the scene, so we must monitor our inboxes with a keener eye. 3. Collaboration and Communication Power Cyber Resiliency In today’s cyber landscape, it’s not a question of if your organization will be targeted – but when. A strong cyber resiliency strategy must be in place before something goes wrong. And a strong cyber resiliency strategy isn’t built overnight. Active collaboration and communication between cybersecurity and business leaders help foster a strong resiliency strategy by answering the hard-hitting questions, such as, What are our most critical services? What does the business need to keep the lights on in the face of a disruption? From a technical standpoint, how can our incident response planning best align with business goals and priorities? When cybersecurity maintains an ongoing and collaborative partnership with the business, they can work together to identify upstream and downstream dependencies in the supply chain, take part in scenario planning and help reinforce a strong cyber culture and resiliency best practices. 4. Data-driven Perspectives on Passwords and Privacy With Cyburgh coinciding with World Password Day, it was fitting to include a session on password security, and it delivered some eye-opening, data-driven insights. The presentation tackled the age-old question: why are passwords so easy to crack? While familiar issues like shoulder surfing and data breaches were discussed, the session emphasized a simple truth: people are predictable. For example, “monkey” remains a top password choice not because it’s secure, but because people like monkeys and tend to include things they like in their passwords. The presentation also challenged the idea that something "unique to you" is automatically secure. Think your dog’s name, Captain, makes a strong password? Chances are that thousands of others are using the same one. The session went on to question some common beliefs around password practices. Passphrases and required password changes aren’t as effective as many assume, since people often reuse words, add predictable numbers, or substitute letters with symbols. Even keystroke patterns may not be as strong as they seem. For example, “thelastkiss” is 900 times more secure than “1qaz2wsx3edc”, just take a look at how you would type the latter password on your keyboard. The key takeaway was clear: Predictable human behavior remains one of the biggest vulnerabilities, so use a password manager and vary your credentials. Events like these are why we are so proud to be members of and support the Pittsburgh Technology Council – thank you to all of the staff who made the event possible. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The CFO’s Guide to Tariff Uncertainty in 2025: Why CFOs Should Lead the Charge on Supply Chain Risk Assessments Tariff policy has been front and center in the news in 2025—and U.S. businesses are contending with near daily changes: trade wars, punitive tariffs on specific goods, retaliatory tariffs from major trading partners, and a variety of country-specific measures. This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. Each change has brought a new wave of uncertainty to businesses, altering cost structures, delaying shipments, and, in some cases, forcing sudden shifts in sourcing strategies. The financial impact is substantial. Tariffs can increase landed costs by 10–25% or more, erode margins, and trigger cascading effects across pricing, working capital, and contractual obligations. When CFOs can’t predict what goods will be affected or how long duties will remain in place, it undermines budgeting, forecasting, and strategic planning. This is why now, more than ever, companies must understand where they are vulnerable. A supply chain risk assessment, led by finance, and executed cross-functionally, is an essential step in building resilience. A supply chain risk assessment identifies potential threats to the flow of goods and materials that could disrupt operations or negatively impact financial performance. The goal of the assessment is to understand not only where risks exist but also how severe they are and what actions can be taken to mitigate them. This type of assessment allows CFOs and supply chain leaders to transition from reactive damage control to strategic, data-driven decision-making. Here’s a high-level roadmap to executing a supply chain risk assessment focused on tariff uncertainty: Process Actions Map the Supply Chain Identify Tier 1 and Tier 2 suppliers, catalog the origin of imported materials, highlight dependencies on countries/regions Assess Tariff Exposure Cross-reference product categories with tariffs, evaluate financial impact, model cost implications Evaluate Supplier Risk Rate suppliers by tariff volatility. Assess each vendor’s financial health, flexibility, ability to relocate/adapt Review Contracts and Pricing Terms Determine which contracts allow cost pass-throughs, review terms related to lead times, penalties, exclusivity Prioritize and Mitigate Risk Identify high-risk components/partners, explore risk-mitigation strategies, integrate tariff risk into ERM framework Implement Monitoring Tools Establish a process for monitoring trade policy developments, use digital dashboards to track changes Once risks are identified, CFOs can work with cross-functional teams to implement meaningful changes. CFOs should own the supply chain risk conversation, lead a disciplined assessment of the company’s exposure, work cross-functionally to develop mitigation strategies, and treat the effort not just as a defensive maneuver, but as a competitive differentiator. In an unpredictable world, companies that understand and manage their supply chain risks will be best positioned to adapt, respond, and thrive. If you’d like to learn how Schneider Downs’ CFO Services team can assist in navigating tariff-related uncertainties, please contact us. Other related articles in our series: 5 Things CFOs Should Be Doing Now Why CFOs Must Build Scenario Plans and Be Ready to Pivot Why CFOs Need Agile Pricing Models The CFOs Role in Agile Forecasting and Margin Protection The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### IRS Releases Chief Counsel Advice on IRC Section 4960 On April 11, the IRS released Chief Counsel Advice (CCA) on Internal Revenue Code Section 4960 (see CCA 202515014) clarifying that the definition of remuneration does not include an employee’s elective Section 403(b) deferrals or contributions to Section 125 cafeteria plans. Section 4960 imposes a 21% excise tax on remuneration paid in excess of $1,000,000 to employees of applicable tax-exempt organizations that meet certain criteria. Remuneration is defined as wages under Section 3401(a) with certain exceptions. Under Section 3401(a), wages include amounts paid by an employer for services performed by an employee, including the cash value of any benefits paid in a medium other than cash. Generally, employers are required to deduct and withhold tax on these wages under Section 3402. While contributions to a Section 403(b) plan and salary reduction payments to a Section 125 cafeteria plan are not explicitly excluded from Section 3401(a) wages, IRS guidance provides that these benefits are excluded from income tax withholding under Section 3402 to the extent they are excludible from gross income. Section 403(b) contributions are excluded from an employee’s gross income and therefore not subject to income tax withholding to the extent annuity premiums and vested annual additions do not exceed the annual contribution limits ($23,500 in 2025, with catch-up contributions allowed for some individuals). Amounts in excess of those limits would be includible in an employee’s gross income and subject to income tax withholding. Section 125 cafeteria plan contributions are excludable from gross income and income tax withholding if the funds are used to purchase qualified health insurance benefits. In the CCA, the IRS held that the exclusion from income tax withholding under Sections 3401 and 3402 should be treated as extending to the Section 4960 definition of renumeration. Therefore, for purposes of calculating the excise tax due under Section 4960, remuneration should not be treated as including Section 403(b) elective deferral payments or salary reduction amounts under a Section 125 cafeteria plan to purchase qualified health insurance benefits and other health benefits to the extent each of these benefits are excluded from gross income and wages subject to income tax withholding. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and consulting services to public and private companies, not-for-profit organizations and global companies. We also offer risk advisory, transaction advisory, digital consulting, wealth management, retirement plan solutions and investment banking services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), metropolitan Washington (DC) and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH, and McLean, VA. ### World Password Day: Simple Tips to Strengthen Password Practices Today is World Password Day, which makes it the perfect day to talk about improving our password habits. Not to be confused with National Change Your Password Day, which is celebrated on February 1st, World Password Day is observed on the first Thursday of every May. But in the world of cybersecurity, every day is really a good day to emphasize the importance of strong password practices. And yes, despite all the security awareness training, passwords continue to be an issue. In fact, the worst passwords of 2024 still include the usual suspects, such as: 123456, 12345678, and you guessed it, 123456789, along with password and 11111. With that in mind, here are a few simple ways you can celebrate World Password Day while strengthening your password security and protecting your data. Strengthen Your Password Security with Variety Avoid using the same username and password for multiple accounts. If you use the same credentials across multiple sites, a single password leak could serve as a master key to all of your accounts. This is why having unique passwords for each account and changing them periodically are essential to improving your security. Enable Multi-Factor Authentication (MFA) MFA is already a standard practice for many of us working virtually. However, be sure to enable it on your personal accounts as well. While it can sometimes be inconvenient to provide a second layer of authentication, it is an important and simple step in securing your accounts. Avoid Storing Passwords in Easy-to-Access Places Lists help keep us organized but avoid using them for storing passwords. Whether on your phone or sticky notes, passwords saved in easy-to-access places like a desktop file or a notepad may seem convenient, but they offer quick access to anyone who finds them. Clear Temporary Internet Files Regularly Many browsers offer the option to save usernames and passwords for convenience, but this convenience can be a security risk. Be sure to clear your cookies and cache regularly to ensure you are not unintentionally saving credentials you want to keep private. Use a Password Manager for Better Security Password managers provide a secure and convenient way to manage your credentials. Many of them not only store passwords but have the option for password generators and even store sensitive information. However, remember that password managers carry some risk. If they are ever breached, all of your data could be compromised. Choose a trusted solution and always use strong master passwords along with two-factor authentication for extra protection Whether it’s National Change Your Password Day, World Password Day, Cybersecurity Awareness Month, or simply a regular Monday, every day is a good day to commit to better password security and habits to protect your personal data. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The CFO's Guide to Tariff Uncertainty in 2025: Why CFOs Must Build Scenario Plans and Be Ready to Pivot In today’s volatile trade environment, few issues have introduced as much unpredictability into business planning as tariffs. For CFOs, this unpredictability is more than an operational issue, it’s a material risk to margins, supply chains, and long-term growth strategies. This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. As the stewards of financial strategy, CFOs must move beyond reactive cost management and embrace scenario planning as a foundational element of tariff risk preparedness. This approach not only helps companies to quantify potential exposures. It also creates an actionable roadmap for pivoting when policy shifts occur. Tariff uncertainty can erode profitability with little warning. In many cases, companies feel the impact only after the duties are imposed and the cost hits the bottom line. By then, the damage is done. Scenario planning enables CFOs to get ahead of damage by creating multiple “what if” paths that assess the impact of various tariff regimes. For example, what if a 25% tariff is imposed on raw materials from China? What if trade negotiations stall, extending current tariffs for another 18 months? What if tariff policy reverses course entirely? Each of these questions deserves a modeled scenario that considers revenue, cost, working capital, and supply chain outcomes. Scenario planning doesn’t mean predicting the future, it means preparing for a range of plausible outcomes, so you're not caught off guard. To be effective, your scenario planning process should be rooted in financial modeling, cross-functional collaboration, and real-time data inputs. Here are key components to incorporate: Supply Chain Mapping and Vulnerability Assessment: Identify which suppliers and components are exposed to tariff risk. Understanding the full traceability of your supply chain is essential to modeling realistic scenarios. Cost Impact Analysis: Determine the direct and indirect costs of various tariff levels. This includes landed cost calculations, margin pressure, and changes in product pricing strategy. Demand Sensitivity Modeling: Explore how price changes resulting from tariffs might affect customer behavior and volume. Will customers absorb price increases, or will demand fall off a cliff? Inventory and Working Capital Implications: Some companies respond to tariff threats by stockpiling inventory. Although stockpiling inventory can offer short-term protection, it also ties up capital and increases storage costs. Alternative Sourcing Scenarios: Evaluate the feasibility, cost, and lead times of sourcing from alternative countries. Consider the investment required to qualify new vendors or shift production. Tax and Compliance Considerations: Changing jurisdictions and trade routes has downstream tax and regulatory implications. Involve your tax advisors early in the planning process. P&L and Balance Sheet Forecasting Under Each Scenario: Quantify the full financial implications of each scenario, on gross margins, cash flow, EBITDA, and key financial ratios. Scenario planning has little value if it remains theoretical. CFOs should make sure that each modeled scenario includes not just impact projections, but also specific triggers and execution plans. When will you pull the trigger on shifting production? At what margin pressure do you revise your pricing strategy? How quickly can you renegotiate vendor terms?  Work to establish a “playbook” for each scenario. Tariff uncertainty demands more than reactive tactics. It requires a strategic, forward-looking approach built on scenario planning, real-time intelligence, and a readiness to pivot. CFOs are uniquely positioned to lead this effort, not only by modeling financial impact but by embedding resilience and agility into the company’s operating model. Now is the time to build the scenarios, monitor the trends, and be ready to act. How Can Schneider Downs Help? We know firsthand that a CFO’s job is never easy. Managing a company’s financial strategy, cash flow, and risk is challenging even in stable times. If you’d like to learn how Schneider Downs’ CFO Services team can support your organization, please contact us. Other related articles in our series: 5 Things CFOs Should Be Doing Now Why CFOs Should Lead the Charge on Supply Chain Risk Assessments Why CFOs Need Agile Pricing Models The CFOs Role in Agile Forecasting and Margin Protection The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### 2025 Federal Tax Legislation Status Update: A Complex Path Through Reconciliation On Saturday, April 5, the Senate adopted a fiscal framework (mostly along party lines) for its vision of the 2025 tax and spending bill by a vote of 51-48. However, the Senate version did not agree with the House version passed in late February, which then required a second vote by the House.This version was narrowly approved by House Republicans (216-214, mostly along party lines, but with not all Republicans voting yes) on Thursday, April 10, ending a stalemate between the two chambers. However, there is still much challenging work ahead before federal tax legislation is drafted, let alone passed by Congress and signed into law by President Trump.Republicans (in this instance, since they control both House and Senate) are using a fast-track process that allows them to avoid the Senate’s 60-vote filibuster threshold necessary to pass a bill on simple-majority votes (both parties have used this process). To get the legislation to the President’s desk, Republicans in the House and Senate needed to pass identical versions of a budget resolution to get access to a process known as “reconciliation.” Reconciliation is a two-stage process, starting with reconciliation instructions being included in a budget resolution directing the appropriate committees to develop legislation achieving the desired budgetary outcomes; this stage was completed Thursday with the House’s approval.Now that both chambers have agreed on the framework, next comes writing a draft bill that attempts to encompass an agenda that not all Republicans may be on board with yet. The proposed legislation (usually incorporated into an omnibus bill) will be considered under expedited procedures, as the reconciliation process allows Senate Republicans to avoid a filibuster by Senate Democrats (the process works the same way when Democrats are in control).There is no guarantee that the House and Senate will agree on an ultimate bill, though it is generally believed an agreement will be reached, as there is too much political risk in allowing tax increases across the entire taxpayer spectrum. The timing of this agreement is unknown; however, House Budget Committee Chairman Jodey Arrington (R-Texas) has stated that Congress is planning to deliver a reconciliation bill to President Trump by Memorial Day. It may take continued cajoling from President Trump for Republicans to reach a final agreement. Some House conservatives appear hesitant to support the Senate’s minimal spending cuts and higher debt limit. Republicans currently have a 220-213 House majority (there are two open seats previously held by Democrats) and a 53-47 Senate majority (including two independents) edge, meaning they can lose only three votes in each chamber (assuming all Democrats are opposed) to come to a joint agreement on a bill.House Republicans agreed to vote affirmatively after assurances that spending differences will be reconciled during negotiations on the bill. A summary of the differences between the initial Senate and House versions is summarized as follows (values are in trillions): House                 SenateSpending Cuts              $1.5-$2.0$0.40Tax Cuts                          $4.0-$5.0          $5.3 ($3.8 for TCJA extension + $1.5 for new tax cuts) Debt Limit Increase$4.00$5.00Political posturing and negotiating are still ahead among Republicans to move the entire process forward. Using the reconciliation process means that a bill’s provisions cannot increase federal deficits outside of a 10-year window (one major reason that TCJA provisions are set to expire at the end of 2025).Note that the Senate budget called for using a different method of measuring the cost of extending the TCJA than was used in the past; this new method — estimated to cost $3.8 - $4 trillion (or more depending upon who is measuring and why) — results in $0 for official scoring purposes.Under a current law baseline, the Congressional Budget Office (CBO) estimates spending and revenue trends “based on laws enacted through the applicable date.” This is the baseline that CBO is required to use when presenting budget projections to Congress or when estimating the cost of new legislation. Current law is set to expire, so using this method would result in higher revenue, which would be reduced (a cost) if legislation is passed extending the tax cuts).Under a current policy baseline, the CBO estimates spending and revenue trends from the assumption that certain laws are extended—even if the letter of the law says they expire on a certain date. Under TCJA, if current law is considered to be extended, the cost of the legislation will be less.The baseline is a set of budgetary and economic projections against which Congress measures the impact of new legislation. The Congressional Budget Office (CBO) sets the standard baseline annually. The CBO is a congressionally established, nonpartisan agency that serves lawmakers and staff of both parties. The baseline is a forecast rather than a crystal ball; their projections and estimates are not always correct. This measurement issue also needs to be resolved.NOTE: Tariff revenue may only count in reconciliation if it is legislated. Since Congress has not legislated the current tariff increases – and does not appear that it will – any revenue that the U.S. may see from increased tariffs may not help Republicans. The decision to measure the cost of proposed legislation using a “current policy” baseline methodology (rather than a “current law” baseline) generally needs the approval of the Senate parliamentarian before the legislation goes for a final vote. However, it is not clear at this time whether this approval is still required or even whether all Republicans would agree to move forward without this approval. Something more to watch out for in the coming weeks.Now that the House and Senate have essentially agreed on the general framework of the spending and revenue impact of the proposed legislation, writing of tax legislation can begin. Both the House Ways and Means Committee and the Senate Finance Committee will be drafting their versions of the bill, which will need to be reconciled and finalized into one final piece of legislation.There Are Over 30 Expiring TCJA Provisions Affecting Numerous Areas of Tax LawIncreased tax rates at all levels, including lower tax bracket levels at lower tiers (not considering inflation).Reinstatement of personal exemptions.Elimination of higher standard deduction.Reinstatement of miscellaneous itemized deductions.Increased mortgage interest deduction: home equity interest deduction will be allowed.Reinstatement of SALT deduction (some states’ PTET provisions will automatically expire).Charitable contributions AGI limit decreases from 60% to 50%.Elimination of 199A qualified business income deduction.Elimination of §461 excess business loss deduction (not until after 12/31/2028).Bonus depreciation will be eliminated.Casualty losses will not be limited to federally declared disasters but will be subject to AGI limitations.Reduced child tax credits (unless tax law changes provide for increases).AMT provisions will revert, potentially exposing more taxpayers to AMT.Decrease in estate and gift tax exemption.In addition to extending much of the expiring TCJA provisions, we briefly discussed in the last OTO on tax legislation that President Trump campaigned on certain positions that would also reduce taxes in some areas.Campaign Tax Reduction PositionsReducing taxes on tips.Reducing taxes on social security benefits.Reducing taxes on overtime payments.However, there could be some new increases for certain taxpayers, as a number of proposals are being floated to help pay for the cost of the legislation. The Trump administration appears to be considering some tax increases to offset the costs.Measures Under ConsiderationIntroducing a new income tax bracket for those earning $1 million or more.Creating a SALT deduction limitation for C corporations.Repealing the carried interest break used by the hedge fund and private equity industries (a provision that has been considered in the past).Repealing the tax-free treatment of interest earned on state and local municipal bonds.Repealing Inflation Reduction Act green energy subsidies.Additionally, it is possible we could see additional tweaks to existing law such as, for example, the permanent inclusion of the §461 excess business loss deduction. However, without an extension of the TCJA provisions passed in 2017, the overall impact on taxpayers if the TCJA were to expire would likely be an increase in taxes paid by most taxpayers.A big question remaining is when can a bill be expected. Some believe legislation could be passed as early as sometime this summer. Alternatively, the process could drag on into autumn or even early winter. Many tax policy experts believe at this time that legislation will most likely be completed sometime in the second half of 2025, though, as noted above, House Budget Committee Chairman Jodey Arrington (R-Texas) has stated that Congress is planning to deliver a reconciliation bill to President Trump by Memorial Day.The Senate and House return April 28 from a two-week recess. Their top priority is likely the development of the spending and tax bills. It is hoped that we will soon see some of the details that will impact federal taxes over the next three to five years.So, what should you do now to prepare for the 2026 tax law? It is much too early to talk about specific provisions; no one knows with any degree of certainty what the final legislation will look like or what its impact will be on specific individuals. Stay alert to what is happening in Washington, contact your representatives and express your views. Finally, stay in contact with your Schneider Downs tax advisors as we continue to monitor progress and consider the ramifications.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### State and Local Taxes on EV Charging Stations As the demand for alternative fuels like electricity for EV charging stations rises, states are evolving their tax policies, presenting auto dealerships with new challenges in tax compliance and financial planning. Historically, a number of states have deemed the sale of electricity as subject to state and local sales tax, while subjecting purchases of gasoline and other traditional fuels that power on-road vehicles to separate fuel taxes. As alternative fuels such as clean natural gas (“CNG”) and liquified natural gas (“LNG”) - which have not traditionally been subject to sales tax - have grown in demand, states have expanded taxes to those fuels to reduce any potential revenue loss resulting from the move away from traditional fuel sources. Against that backdrop, states are adjusting their tax regimes to address electricity dispensed through electric vehicle (“EV”) charging stations. The response has been a mixture of subjecting the electricity to sales tax versus defining the usage under alternative fuels tax rules. Example State EV Taxing Regimes Of the states that have defined electricity from an EV charging station as an alternative fuel, Iowa, Kentucky, Oklahoma and Pennsylvania have also implemented rules that hold the operator of the EV charging station as the responsible party to remit the tax. Some states, such as Pennsylvania, have taken the additional step of requiring the tax to be remitted even if the operator of the charging station does not charge for the electricity. These regulations may further require the operator to register under the alternative fuels tax rules and create an additional tax filing in that jurisdiction. Some states that apply existing sales tax rates to the electricity from EV charging station,  such as Arkansas and Indiana, will treat the operator of the EV charging station as selling electricity to the person charging the EV. As such, the operator will have to calculate the tax on the electricity dispensed through the charging station and remit the tax to the taxing jurisdiction. Implications Taxes on electricity distributed from EV charging stations potentially create a new tax burden on auto dealerships, including the potential to be subject to taxes not traditionally applicable, such as state fuel taxes. Because states vary in their approach to taxing electricity distributed from EV charging stations, auto dealerships are further challenged with the task of determining how to comply with taxes across multiple jurisdictions. Additionally, to the extent a tax is required, auto dealerships must determine if and how the tax will be charged to customers using the EV charging stations. Further, auto dealerships must take special precautions to understand who is responsible for remitting the sales or fuels excise taxes, especially in states where the operator of the EV charging station collects the tax. While some states require the operator to remit the tax as the facilitator of the transaction, other states allow the auto dealership to remit the tax. In the latter circumstance, auto dealers must be careful to coordinate with the operator regarding how the taxes will be remitted. Finally, if the electricity distributed from the EV charging station is subject to tax, the initial purchase of electricity from the provider may be exempt from tax pursuant to a resale exemption. If this is the case, auto dealers face the difficult task of establishing the percentage of electricity that is exempt from their overall electric utility purchases. The Schneider Downs State and Local Tax Group can assist car dealership clients in navigating the requirements in each state. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. ### April Investment Corner: Long-Term Allocators vs. Short-Term Traders The beginning of April’s erratic market moves was disorienting. On April 8th, the S&P 500 closed out its worst four-day stretch since the pandemic, falling over 12% after the administration announced tariffs that exceeded market expectations. About a week later, news that these tariffs would be suspended for most countries fueled a 9.5% market rally, the largest one-day gain since 2008. What went under the radar during this time was that Monday, April 7th was an extremely volatile trading day in between the madness. The major indexes began the day sharply lower. The S&P fell as much as 4.7%, while the Nasdaq was down as much as 5.2%. Stocks surged (as high as +7%) after an originally thought to be fake headline circulated online that suggested President Donald Trump was considering a 90-day delay for tariffs, aside from China. Equity markets ended the day in the red on what was one of the most volatile trading days of the year so far. Source: Bloomberg, FactSet, Standard & Poor's, J.P. Morgan Asset Management. The 60/40 portfolio is 60% invested in the S&P 500 Total Return Index and 40% invested in the Bloomberg U.S. Aggregate Total Return Index. Cash represented by the Bloomberg 1-3 Month Treasury Index. It can be tempting to try and trade when the market is moving this quickly, possibly thinking you can make a quick buck. Or perhaps you’re concerned about the ongoing volatility in capital markets and feel that going to cash right now may prevent further downside in your portfolio. However, this tends to be a losing strategy. History shows that, despite these periods of stress, the diversified portfolio dependably outperforms cash, with the likelihood of outperformance rising with the investment horizon. Investors should remain prudent and stick to the long-term plan. Investors should avoid letting short-term emotions about their portfolios drive long-term investment decisions that can have a material impact in the years to come. Well put together financial plans take into account both good and bad years for markets. If you have questions about how the recent capital market performance has impacted your portfolio or your long-term financial plan, please reach out to your advisor. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### President Trump Signs Executive Order Listing Coal as a Critical Mineral In a move to bolster American energy dominance, President Trump signed an Executive Order (EO 14241) on April 8, 2025. EO 14241 aims to accelerate the permitting process, open additional federal lands to mineral extraction and development and prioritize coal leasing on federal lands. This would remove an Obama-era coal moratorium on leasing of federal lands. In addition, EO 14241 requires any government agencies that sought to transition the United States away from coal production or otherwise create obstacles to using coal as a generation resource, including for the generation of electricity, to reverse that position. This requirement also includes halting the ongoing closure of coal-fired power plants, which might make the Unites States more vulnerable to electricity grid outages. The Department of Interior announced a separate initiative to disburse $13 million in grants to North Dakota, Tennessee, and Texas to support the reclamation of abandoned mine sites. EO 14241 mandates coordination among various governmental agencies, including the Departments of Defense, Energy, Agriculture, Interior, to list and fast-track mineral production projects. EO 14241 also aims to facilitate capital provision for these projects through loans and coordination of private equity funding options. President Trump directed the National Energy Dominance Council, chaired by the Secretary of the Interior Doug Burgum, to assess whether metallurgical coal used in steel production meets the definition of a “critical material” under the same Act. Department of Energy Secretary Chris Wright recommends designating metallurgical coal used in steelmaking as a “critical material” in the upcoming 2025 Critical Materials Assessment. This designation is intended to ensure that the U.S. maintains a stable supply of metallurgical coal in the decades to come. This reflects the DOE’s view that metallurgical coal plays a vital role in both the national security and economic stability of the United States. These designations reflect the Trump Administration’s support for the coal industry and the position coal has in economic and national security interests for energy production and manufacturing. However, it remains to be seen whether the recent closures of many coal-fired power plants can be reversed and if coal can continue to play a vital role as one of the baseline fuel sources in electricity production. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Strategic Capital: Making the Most of Minority Investment As value growth and M&A advisors, we frequently see situations where a minority investor can add immediate value to an existing business. Although potentially dilutive to current ownership, a minority investor often provides the growth capital, industry knowledge, contacts, and management experience necessary to position a company for maximum value upon exit. However, bringing on a minority investor is not without risk.  Alignment of vision is key, as is understanding the ground rules for decision-making post-investment. The following topics are key in evaluating whether a minority investor is right for your business. Strategic Plan: Defining the Purpose of Capital Infusion/Minority Recapitalization At the heart of any successful minority investment lies a clear and compelling strategic or business plan outlining the purpose and utilization of the funds sought. This plan serves as a roadmap, guiding prospective minority investors through the company's vision, goals/objectives, and growth trajectory while articulating how the funds will be deployed to drive value creation. Whether it is expanding into new markets, scaling operations, investing in research and development, or pursuing strategic acquisitions, the plan should delineate the company's overarching strategy and the role that capital plays in achieving these objectives. The plan should be supported by financial projections that define the amount of funds being sought, the timing of infusion, and whether additional monies will be needed for the business. Investors must also understand how and over what time horizon their investment will be realized. Thus, what is the plan for repayment (exit or buyout)? The nature of the capital to be raised can significantly impact the business, affecting everything from day-to-day management/control of decision making, distributions, exit timing, etc.  Minority investment, most often provided by private equity, can take multiple forms – direct equity investment, or often, a preferred instrument. Such investors typically seek to compel a downstream sale (drag-along rights) and often desire a degree of control via board participation and positive/negative control provisions. Holding periods for private equity investors will often be in the 3–5-year range. Downside protection in the form of a sale preference is typically required. Participating in preferred stock or straight equity investment with downside protection is an example of a vehicle. High-net-worth individuals may also be an option; however, relative sophistication will vary, as will the creation of upside value via the relationships brought to the table. While beyond the scope of this article, it is important to note that the form of organization (S Corp, etc.) will potentially impact the form of equity investment (investors may seek a change in the company’s organizational structure). Further, for some regulated industries such as government contractors, companies must be cognizant of how the equity investor could negatively impact status as a small business, etc., due to the SBA affiliation rules. Build Relationships in Advance For middle-market businesses, proactive preparation means taking strategic steps well in advance of needing capital. Firstly, developing relationships with potential investors early on fosters trust and familiarity, making the eventual fundraising process smoother and more likely to yield favorable outcomes. Building relationships in advance involves actively engaging with potential investors, industry peers, and advisors before the need for capital arises. This proactive approach goes beyond mere networking; it entails fostering genuine connections.  These pre-existing relationships can lay the groundwork for a successful outcome. Maintain Meticulous Financials and Investor Grade Artifacts As part of the process, investors will perform due diligence on the company in advance of investment.  Preparing and maintaining a data room of key artifacts is vital to ensuring a smooth pathway to close. Standard data room material includes organizational documents, employee information, customer information, and financial data. Presenting a comprehensive and transparent financial picture to potential investors entails ensuring financial statements adhere to Generally Accepted Accounting Principles (GAAP) and possibly also gaining additional assurances, such as audits or quality of earnings reports. GAAP-compliant financial statements provide a standardized framework for recording and reporting financial transactions, ensuring consistency, comparability, and accuracy. Responsiveness: Being Easy to Work With In the fast-paced world of growth capital, responsiveness is key to fostering positive relationships with potential investors.  Being easy to work with entails promptly addressing requests for information and providing thorough answers to questions. Whether it is providing financial statements, market research, or due diligence materials, companies should strive to deliver requested information in a timely manner, respecting investors' time and urgency. This proactive approach expedites the due diligence process and instills confidence in investors, signaling the company's readiness and reliability. By prioritizing timeliness, thoroughness, and collaboration in their interactions with investors, companies can enhance their reputation, streamline the capital-raising process, and ultimately lay the foundation for productive and mutually beneficial partnerships. Building a Strong Deal Team Building a strong deal team for a transaction is vital and is no different than if the Company were seeking a sale of the entire business. Having a strong deal/M&A attorney, knowledgeable tax advisor, and deal advisor (Investment Bank) is critical to success. In those situations where the investor is permitting the owners to take some “chips off the table,” a wealth advisor should be part of the team. Understanding the underlying economics, control provisions, and downstream expectations of any investor is paramount to not ceding control of the business to others. Further, running a process on top of one’s day job can be daunting for an owner or member of the C-Suite. Having an experienced advisor quarterback the process, will pay for itself many times over. Raising capital through minority investment is often needed to fund growth and build value in a business. The nature of the investment can significantly impact how a company is run and managed post-investment. This article highlighted some of the considerations and guidelines that should be considered prior to beginning a process and to help ensure a successful outcome. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### The Masters Golf Tournament and Tax-Free Rental Income With the Masters golf tournament taking place in Augusta, GA this weekend and the U.S. Open coming to Oakmont later this year, there is a relatively unknown income tax benefit that homeowners in these areas can enjoy if they should rent their homes out during these events. The Masters Rule Also known as the “Masters Rule,” Internal Revenue Code Section (IRC) Section 280(A)(g) generally provides that if a dwelling unit is used during a taxable year by the taxpayer as a residence, and such dwelling unit is actually rented for fewer than 15 days during the taxable year, then – no deductions are allowed related to the rental expenses incurred, and the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer. Rule Requirements The above rule allows you to pocket the rental income received, and it is exempt from federal income tax, so long as the property qualifies as your residence, and it is rented for fewer than 15 days during the year. If you should satisfy the straightforward statutory requirements, the exclusion will apply regardless of the amount of rental income that you collect and receive. Of course, there are many other factors that need to be taken into consideration before you enter into such an arrangement, including, but not limited to, the payment of commissions and other costs, drafting appropriate legal agreements, finding alternative living arrangements, and state and local tax implications. This rule can become beneficial to many homeowners living near venues where major events will be taking place over the coming years on a regular basis. While short-term rental arrangements may be common in areas where professional golf tournaments are frequently held, the rule could apply to other potential situations where interested parties are in need of property to rent for a short period of time. Of course, you should seek the advice of a tax professional before you engage in such an arrangement. Please contact your Schneider Downs representative or any member of our team to discuss the implications of how this rule may impact you if you are approached to rent your home for a period of fewer than 15 days. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Postcard from the 2025 Pittsburgh IIA and ACFE Presentation Competition On April 3rd, 2025, the Pittsburgh chapters of the Institute of Internal Auditors (IIA) and Association of Certified Fraud Examiners (ACFE) hosted their annual Presentation Competition. College students from local universities presented on a wide variety of fraud and internal audit-focused topics. Students were given approximately two months to prepare their presentations and present to a panel of four judges, comprising the following industry professionals: Arvah Rana, Cordia Energy; Brittany Nimal, Herbein & Co.; Connor Bigelow, Schneider Downs & Co.; and Kortney Lampel, Northwest Bank. This year, four teams, each consisting of four to five students, registered from the following schools: Duquesne University, Point Park University, and Robert Morris University. Two teams from Duquesne University presented on fraud risk assessment and changes in IIA Standards. The fraud risk assessment presentation covered the purpose, importance, process, how internal audit can assist in the assessment process, and how fraud risk assessments can be static or dynamic in nature. The presentation on changes in IIA Standards compared the 2017 standards to the new 2024 standards, noting key changes and impacts. Point Park University’s team prepared a presentation on the impact of corporate culture on fraud, including internal audit’s influence on corporate culture. The team from Robert Morris University presented on data analytics and AI’s impact on the internal audit and fraud fields. They discussed ways to innovate in the industry and how AI and data analytics tools can empower internal auditors and fraud examiners. All of the students who participated in the competition put in substantial thought and hard work, especially with the event taking place during the end of the semester. In addition to the efforts made by our participants, the event could not have been a success without the judges who volunteered their time and professional insight. A special thanks to the aforementioned individuals and everybody who helped plan the event. The winning team of this year’s presentation competition was the team from Robert Morris University. The second and third place teams were the Point Park team and the Duquesne University team that presented on fraud risk assessment, respectively. Congratulations to all the teams for their impressive presentations and thank you to everyone who contributed to making this year’s competition such a fun and rewarding event. About Schneider Downs Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and consulting services to public and private companies, not-for-profit organizations and global companies. We also offer risk advisory, transaction advisory, digital consulting, wealth management, retirement plan solutions and investment banking services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), metropolitan Washington (DC) and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH, and McLean, VA. ### Navigating Single Audit Requirements for Federal Funding A Single Audit is a comprehensive audit of an organization’s financial statements and its expenditures of Federal awards. This type of audit is mandated by the Single Audit Act of 1984 and its amendments in 1996, which established a standardized audit process for organizations that receive and expend Federal funds to administer various grant programs and initiatives. What is a Single Audit? A Single Audit includes two key components: Audit of Financial Statements: This involves examining the organization’s financial statements to ensure that they are fairly presented in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS). Audit of Compliance: This involves assessing the organization’s compliance with Federal program requirements. The audit report includes an opinion on whether the organization complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of the major programs selected for the audit.  The auditor accomplishes this through evaluation of the internal controls and testing the specific compliance requirements under Federal regulations. The Single Audit requires the preparation and presentation of the Schedule of Expenditures of Federal Awards (SEFA) to accompany the financial statements.  The SEFA contains a list of all Federal awards expended during the fiscal year.  It is important to note that the SEFA is created based on expenditures of Federal awards, not by the grant revenue received during the fiscal year. Federal awarding officials use Single Audits to administer and oversee Federal awards. These audits provide valuable information about the internal control structure, compliance, and financial operations of the organizations that have received Federal funds. The Single Audit and the information it provides helps to ensure accountability and ensures that Federal funds are used appropriately and in compliance with regulations.  Further, the Single Audit reduces the need for multiple Federal award audits and combines those requirements into the Single Audit. Organizations are required to submit the Single Audit reporting package, including the data collection form, within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the organization’s fiscal year. When is a Single Audit required? Currently, a Single Audit is required for any organization that expends $750,000 or more in Federal awards during the organization’s fiscal year. This threshold was increased to $1,000,000 for fiscal years beginning on or after October 1, 2024. Many organizations with fiscal years ending September 30, 2025, will be the first to experience the increased threshold for the Single Audit. The SEFA will be evaluated for completeness and accuracy to verify if the organization expended the required amount of Federal funds to trigger the Single Audit. The SEFA and audit must cover the entire operations of the organization or must include all departments, agencies, and other organizational units that expended or otherwise administered Federal awards during the audit period. Did you find this information helpful? For more frequently asked questions for the not-for-profit industry, visit the Not-for-Profit resources center. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### The Potential Impact of Proposed New Well Setback Distances On April 8, the Pennsylvania Department of Environmental Protection will recommend to the Environmental Quality Board (EQB) that it accepts a petition to study drastic increases in setback distances (also known as no-drill zones) for shale gas wells. This recommendation comes in response to two environmental organizations, the Clean Air Council and the Environmental Integrity Project, expressing concerns about potential risks of air emissions and water contamination for individuals living near unconventional oil and gas wells. In light of these concerns, they have recommended that the Environmental Quality Board evaluate the possibility of increasing the minimum setback distance. Proposed increases to setback distances may present challenges for the industry. The setback distances established by Act 13 of 2012 are considered among the most extensive compared to those in other major natural gas producing states. Appalachian oil and gas producers believe there are ongoing misunderstandings about the shale gas industry in the region and emphasize that, when conducted responsibly, natural gas development does not pose health risks If the petition were to result in a new rule, which could take considerable time, it could significantly limit new shale gas development in Pennsylvania. While this outcome may align with the goals of environmental advocates, it could also have substantial impacts on the state’s oil and gas industry, including potential effects on employment. If you have any questions on this petition or any other questions related to the energy and resources industry, please contact us at contactsd@schneiderdowns.com. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### March 2025 - Market Recap This past week has been extremely volatile, and capital markets have reacted strongly. Let’s recap what has happened. On April 2nd, the Trump administration released its new tariff rates on countries across the world. Instead of being focused on a few specific countries, a broad 10% tariff was spread across the board as a starting point (with some exceptions). Reciprocal tariffs have also been placed on countries that the administration claims have a higher tariff rate on the U.S. The resulting tariff announcements have brought the average tariff rate on U.S. imports to levels we have not seen since the 1930’s. Capital markets have reacted so strongly because this is a worse outcome than anyone expected. While the main concern coming into this week was at what level do U.S. tariff rates end? Markets are now reflecting concern that the new, higher than expected, tariff rates will cause other countries to deploy countermeasures resulting in an all-out trade war. Unfortunately, uncertainty has just changed form from policy alone to whether or not a soft landing can be orchestrated in the midst of a tariff-induced slowdown. In March, the S&P 500 was down 5.6%, its worst monthly performance since December 2022. Just as the largest technology stocks led the market on its way up in 2023 and 2024, they also led the market down in March 2025. Despite achieving three all-time closing highs during the first quarter of 2025, the S&P 500 posted a cumulative -4.3% return for the period, marking only the second time this index dropped during the previous 10 quarters. The only other quarter the market closed down was the third quarter of 2023. The S&P 500 was not the only index suffering its worst quarter in three years. The NASDAQ was down 10.3% during the first quarter, its worst since the second quarter of 2022. Market sentiment, particularly focused on many of the “Magnificent Seven” stocks, continued to sour during the last week of March when Alibaba’s Chairman, Joe Tsai, warned about a bubble in AI data center buildout. Chipmaker Nvidia’s stock price has fallen 28% from a January peak while Microsoft, Amazon, Alphabet, and Meta have all fallen 20% or more from their own record highs. In fact, if it were not for these seven stocks, the S&P 500 index would have been up 0.6% during the first quarter instead of being down -4.3%. While domestic large-cap stocks were down during the first quarter, domestic small-cap stocks fared even worse. The Russell 2000 index was down 6.8% in March and 9.5% during the first quarter. There has been a shift over the past twelve months in the market away from more volatile stocks towards defensive stocks, evident when looking at the best performing sector in the S&P 500; utilities (+23.9%). For the third consecutive month, value beat growth across all market capitalizations. The biggest advantage of value over growth was among large-cap stocks. While growthier stocks were the leaders in January in an up market, defensive stocks were the leaders as the market contracted in both February and March. There has also been a shift in performance when comparing domestic to international equities. While the S&P 500 index was down 4.3% during the first quarter, the MSCI ACWI ex US Index was up 5.4%. For the 12-month period ending March, the MSCI Emerging Markets Index is beating the S&P 500 index (8.6% vs. 8.3%). International equities have served as a strong equity diversifier for portfolios in the first quarter as U.S. equity markets have sold off. While the Bloomberg Aggregate Bond index was flat in March, it was up 2.8% during the first quarter, providing ballast for balanced portfolios holding stocks and bonds. The 10-year Treasury yield closed the first quarter at 4.25%, in line with its 4.23% close at the end of February. There was less movement in the 10-year Treasury yield in March compared to the first two months of the year as its lowest close was 4.18% on March 3rd and its highest close was 4.37% on March 27th. As concerns shifted from potential recession to higher-than-expected inflation data, yields moved between the low and high points to close the month around the midpoint of its trading range. As interest rates have been relatively rangebound, the coupon from fixed income is providing its expected role of contributing to total return. With the yield on the Bloomberg U.S. Aggregate currently around 4.5%, forward expected returns look attractive for fixed income as an asset class as the starting yield for fixed income has historically explained a large portion of the next 5-year returns. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Unlocking the Promise of Digital Modernization in Real Estate How is digital modernization impacting the real estate industry? Digital modernization is the strategic integration of digital technologies to transform existing traditional and non-digital business processes, services and infrastructure. Digital modernization addresses several challenges that have long plagued the real estate industry, including lack of visibility into current and historical bidding/job costing, inability to understand margins, reliance on outdated legacy systems, human capital constraints, lack of standardization, and disconnect between field and office. Lack of Visibility in the Real Estate Industry One of the primary challenges in real estate is the lack of visibility into current and historical bidding and job costing, which makes it difficult for companies to understand margins and impacts on business, such as revenue and profit forecasting. Many companies also rely on outdated legacy systems that lack integration, leading to scalability concerns and manual work. Human capital constraints further exacerbate these issues, as manual work often leads to inefficiencies and scalability concerns. The lack of standardization across departments or divisions and the disconnect between field and office also affect the transfer of data and overall communication. Financial Process Challenges In addition to the above challenges, the real estate industry faces challenges in financial processes across four categories: Cash Management, Accounts Payable (AP), Accounts Receivable (AR) and Financial Planning and Analysis (FP&A). These challenges include inaccurate tracking, delayed payments, data inaccuracies and difficulties in accessing data for decision-making. Utilizing existing functionality, integrating core systems, implementing an xFPA solution, reimagining and streamlining processes and automating workflows can help overcome these challenges and improve overall financial efficiency. What Questions Should Real Estate Professionals Be Asking Themselves? About the people… Where do you have instances of institutional knowledge that present risk? Have your employees complained about the difficulty of existing system functionality or the lack of systems that increase their daily workload? About the process… Are your finance and general operating functions generally accurate and efficient? Do you consistently meet deadlines and leverage financial data in key organizational/strategic decisions? About the technology… Are systems in your tech stack reliable? Do systems in your tech stack offer you a competitive advantage? Where are you not using tech to minimize the mundane, eliminate manual processes and drive informed decision-making? The Impact of Digital Solutions Data analytics, Enterprise Resource Planning (ERP) systems and intelligent automation are a few solutions to combat these challenges. Data analytics have been demonstrated to improve job margins and planning across projects, as well as to increase revenue, optimize spend and maximize capital, all of which can aid in making more informed decisions. ERP systems reduce technology stack while improving capabilities. Intelligent automation can streamline processes, condense manual work, reduce human costs and expand employee capacity. How Can Schneider Downs Help? Leveraging our extensive expertise in finance and accounting, digital solutions and the real estate industry, our team empowers real estate companies to enhance their project and business outcomes by utilizing technology to provide greater insights, automate processes and enable them  to concentrate more on their core business activities. Questions? Contact the SD digital team at contact@sddigital.com. About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development.   To learn more, visit our Real Estate Industry Group page.   ### Your ERISA Audit Is Around the Corner - Are You Ready? Much like going to the dentist, preparing for your ERISA audit may not be the most exciting to-do on your summer schedule! However, just as regular dental checkups are necessary for your health, being ready for your ERISA audit will ensure the health of your plan and employees. Company 401(k) and 403(b) plans with 100 or more participant account balances are required to undergo an Employee Retirement Income Security Act (ERISA) audit by a CPA firm. Meeting this requirement can be resource-intensive; however, preparing for the upcoming audit now offers benefits, including preventing last-minute issues, reducing errors and easing the audit process itself. Organizing Plan Documentation and Financial Records Companies should organize all plan documentation, ensuring participant data (contributions, distributions, loans) is accurate and aligns with payroll and third-party administrator (TPA) statements. Perform regular reconciliations to verify all transactions are accurately recorded. Verify that contributions comply with IRS limits. Early review of these records prevents last-minute issues. Implementing/Documenting Internal Controls and Processes Effective internal controls are crucial for minimizing errors and mitigating the risk of fraud. Companies should employ detailed narratives around key cycles to define roles and responsibilities. These controls should be centered around or include: Timely deposit of contributions, determined by what is administratively feasible; Segregation of duties to help prevent fraud; Regular reconciliations of employer/employee contributions from TPA information to payroll records; Clear approval processes for distributions or loans to minimize errors; and SOC Reports: Review the Complimentary User Entity Controls (CUECs). Included in the recordkeeper’s SOC report is a list of control objectives the plan sponsor is responsible for, along with specific instructions on how to achieve them. The plan sponsor should review and ensure they are fulfilling the outlined steps. While this is not a comprehensive list, these controls will provide checks and balances to ensure the plan is operating effectively. Communicating with Third-Party Administrators and Auditors Effective communication with TPAs and auditors is crucial. Reach out to TPAs to ensure participants’ data will be ready, and work with auditors to provide required documentation. Reach out to TPAs to confirm that all necessary data, such as participant records and financial reports, is on track and will be provided on time. Often, TPAs can work directly with your auditor for these reports, reducing the workload on your end. Contact your TPA to see how they can help facilitate the delivery of necessary audit information. Work closely with auditors to understand what documentation is required, such as plan financials, participant data and compliance reports. This ensures the audit process is efficient, and that issues are addressed promptly. Communicating with all parties prior to your audit can ease your team’s burden, as many of the required documentation items can be provided before the audit begins. Staying Updated on Regulatory Changes Recent legislative changes, particularly the SECURE Act 2.0, have introduced significant updates to 401(k) and 403(b) plans. Key changes effective or relevant for 2025 include: Automatic Enrollment: ERISA Plans established after December 29, 2022, are typically required to include auto-enrollment features within the plan. Required Minimum Distributions (RMD) Age Adjustments: With the goal of giving participants more time to grow their savings, RMD age increased to 73 in 2023 and will rise to 75 in 2033. Companies should continually monitor regulatory changes and update their plans to comply with these changes. Conclusion Preparing for your ERISA audit requires a proactive approach. Focusing on organizing your records, implementing/documenting controls, early communication, and staying up to date on regulations throughout the year will pay off (much like flossing!). For more information on how to prepare for your ERISA audit, contact a member of the Schneider Downs ERISA group. About Schneider Downs Wealth Management Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. ### Who Owns Your DNA Now? 23andMe's Bankruptcy Raises Privacy Concerns What does 23andMe’s bankruptcy and potential sale mean for your genetic data? 23andMe was once a leading genetic testing company, offering personalized reports on ancestry, traits and genetic predispositions to diseases. Users simply created an account, provided a saliva sample and awaited their analysis and report. The service quickly gained popularity, with countless stories of users discovering long-lost relatives, adopted children reconnecting with biological parents and law enforcement even using it in the high profile Golden State Killer case in 2018. Despite accumulating an estimated 15 million users and reaching a $6 billion valuation after going public, 23andMe has now filed for Chapter 11 bankruptcy. The company has been authorized to seek a buyer, including one for all of its assets—most notably, its vast genetic database. In a press release regarding the bankruptcy, 23andMe stated that its data storage and protection policies remain unchanged and assured users that any potential buyer must comply with applicable privacy laws. “We are committed to continuing to safeguard customer data and being transparent about the management of user data going forward, and data privacy will be an important consideration in any potential transaction.” How to Delete Your 23andMe Data Despite the press release, many users are skeptical and have opted to delete their data from the website—which caused the website to temporarily crash due to volume shortly after the bankruptcy and sale announcement. For those concerned about their privacy, follow these steps to request the deletion of your 23andMe data: Log in to your account and go to “Settings”. Scroll to the bottom of the page, select “23andMe Data”, then click “View” to download a copy of your genetic information. Choose “Delete Data” and confirm by selecting “Permanently Delete Data.” In “Settings,” you can also request the destruction of your genetic material. Navigate to the “Research and Product Consents” section and revoke permission for your genetic data to be used in research projects. (This applies only to future research.) Like many online services, 23andMe makes data deletion more complex than expected and may require additional verification before processing your request. To complete the process, you must follow the instructions in their confirmation email. If you run into any issues, the company suggests reaching out to customercare@23andme.com for support. It is important to note that the full ability to delete your data may not be as straightforward based on their terms of service, which states: “Your sample is processed in an irreversible manner and cannot be returned to you. Any information derived from your sample remains subject to rights we retain as set forth in these Terms.” Adding another layer of complexity, your state of residence may impact your data privacy, as consumer protection laws vary by state and may not uniformly apply to 23andMe. What’s Next for 23andMe Users? As a 23andMe user myself, I weighed the risks of sharing my genetic information in exchange for analysis, reports and access to their database. For me, the benefits, particularly as an adoptee searching for biological relatives, far outweighed the risks. However, the thought of what might happen if the company were sold never crossed my mind. The reality is that, despite all the speculation about the future of genetic data in the event of a sale, no one truly knows what will happen until it unfolds. This uncertainty serves as a stark reminder to carefully read the terms and conditions before signing up for any online service that asks for personal data. While 23andMe continues to offer vague assurances, the truth is that the level of data privacy will ultimately depend on who acquires the company and what their intentions are moving forward. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Asking Questions But Not Getting Clear Answers; New ERC FAQs Leave Taxpayers Wondering What to Do On March 20, the IRS updated its Frequently asked questions about the Employee Retention Credit (ERC) page in an effort to answer taxpayer questions in the midst of income tax return filings. At the onset of the COVID-19 pandemic, Congress enacted the ERC to support struggling businesses and exempt organizations impacted by government-imposed restrictions by providing a tax credit intended to keep employees on the payroll. While many utilized this lifeline to keep their businesses afloat, the future consequences that the credit would have on their income tax returns was far from taxpayers’ minds. Generally, a taxpayer can’t deduct an expense as an ordinary and necessary business expense if they have a right or reasonable expectation of reimbursement at the time they paid or incurred the expense. According to Notice 2021-20, taxpayers eligible for the ERC have a right or reasonable expectation of reimbursement for qualified wage expense in the amount of the ERC, meaning that the amount of a taxpayer’s ERC reduces the amount they’re able to report as wage expense on the income tax return for the tax year in which the qualified wages were pair or incurred. How Taxpayers Are Being Affected As more claims have entered the processing pipeline, two groups of taxpayers have risen to the surface with growing concerns about what this means for them ahead of the filing deadline. Those who have claimed the ERC but did not reduce their wage expenses as the ERC was paid in a subsequent year; and Those who have already reduced their wage expense by the amount of ERC they expected, but part of the claim was disallowed. The IRS advises that if a taxpayer finds themselves in either of the above groups, the simplest solution is to follow the instructions below (also found in the Income Tax and ERC section of the FAQ page). Those who have claimed the ERC but did not reduce their wage expenses as the ERC was paid in a subsequent year Taxpayers are no longer required to file an amended return to address the overstated wage expense; instead, they can include the overstated wage expense amount as gross income on the income tax return for the tax year when the credit was received. If the taxpayer capitalized wages or did not otherwise experience a reduction in tax liability for the overstated wage expense, they may need to make other adjustments such as a reduction in basis for capitalized wages Those who have already reduced their wage expense by the amount of ERC they expected, but part of the claim was disallowed If the ERC was disallowed and the taxpayer had reduced the wage expense on its income tax return for the year the ERC was claimed, they may increase their wage expense on the income tax return by the same amount it was reduced when the claim was made. If a taxpayer is choosing to contest the disallowance and/or is actively arguing against the disallowance, they are unable to make this adjustment For taxpayers not contesting the disallowance, this process gives relief to those who previously reduced wage expenses in tax years for which the assessment period has expired and the taxpayer did not file a protective refund claim Alternatively, if the assessment period has not expired, taxpayers may file an amended return, AAR or protective claim for refund to deduct wage expense for the year in which the ERC was claimed. What if My Claim Has Not Been Processed? Taxpayers with open claims do not need to take action at this point and should await further notification from the IRS regarding processing. The IRS cautioned taxpayers who filed ERC claims that the process will take time, highlighting that processing speeds will not return to the levels that occurred in 2023, but should increase from those in 2024. The IRS has also cautioned taxpayers that calling its toll-free lines will not necessarily be fruitful, as additional information regarding claims is generally not available as processing work continues. Inconsistencies Unveiled While this guidance is aimed at clearing up questions many taxpayers may have, the “solution” has only raised concerns since it contradicts earlier guidance released by the IRS. Previously, taxpayers were told they had to amend the tax return for the year in which the credit was being claimed; now they’re being told to make the reduction of wage expense in the year which the credit is received. The FAQ page provides a disclaimer that the information provided is only for general guidance and that notices, forms and instructions are the authority for technical guidance. Although the latest batch of FAQ answers provide a much-needed solution to many taxpayers, the direct contradiction to the previously released notices leaves questions surrounding the best source for guidance on this topic. As further guidance is issued, the Schneider Downs Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions, please reach out to your SD contact(s) or Matthew Werner at mwerner@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Employee Fraud in Construction: Understanding and Mitigating Risks Former office assistant Kami Elois Power was indicted in January with allegations of embezzling over $1.4 million between 2019 and 2023 from the family-owned construction company for which she had worked. Power had previously served time in prison around the turn of the century related to a prior embezzlement of more than $700,000. Within the new indictment, the U.S. Department of Justice has alleged that: Over $700,000 in fraudulent transfers were disguised as part of a billing scheme involving supposed payments to vendors the company worked with, using fake profiles created in the names of real companies and fictitious companies with names that used some version of Power’s initials: “KEP Inc. Sale” and “KPI.” Additional fraudulent transfers were masked as payroll and expense reimbursement payments. Unauthorized personal purchases were made using the company’s credit card; and balances due on Power’s personal credit cards were paid down with company funds. Stolen money was used to buy property, luxury cars, ATVs, and a horse. According to the Association of Certified Fraud Examiners’ (ACFE) most recent biennial study, Occupational Fraud 2024: A Report to the Nations, the construction industry ranked fourth in per case median occupational fraud losses among the more than 20 industries included in the study, with a per case median loss of $250,000. Occupational fraud includes fraud committed by employees against the organization that employs them. Only mining, wholesale trade, and manufacturing had higher median per case losses. Fraud committed by employees, no matter the industry, can take many forms, such as asset misappropriation, corruption, and fraudulent reporting. However, the complexity and high value of construction projects often make them particularly vulnerable to fraudulent activities. The financial impacts can harm an organization’s ability to thrive and operate profitably. Asset Misappropriation Employee fraud cases often encompass multiple types of asset misappropriation. The ACFE reported that the most common asset misappropriation occupational fraud schemes within the construction industry cases in their 2024 study were: Billing schemes, such as an employee submitting invoices for payment for goods not received or services not rendered, as is alleged in Power’s case above, or with inflated amounts (38% of cases) Noncash schemes, where an employee steals or misuses noncash assets, such as equipment or construction materials (25% of cases) Expense reimbursement schemes, such as submitting for reimbursement of expenses not actually incurred, expenses that are not work-related (e.g., worker’s compensation medical expenses from a personal injury incurred while moonlighting over the weekend), or expenses submitted multiple times (25% of cases) Payroll schemes, where an employee makes false claims for compensation, such as claiming to have worked more than actual hours worked, entering unapproved pay rate increases, or making payroll payments to individuals who haven’t worked for the company (23% of cases) Cash skimming, such as an employee personally taking cash from a customer for work completed through their employer or stealing an incoming check intended for their employer (23% of cases) Corruption Corruption is another broad area of employee fraud within the construction industry. Corruption can include schemes like bribery (e.g., bid rigging and payments to inspectors or government officials to overlook violations or expedite approvals) and conflicts of interest. Fraudulent Reporting Fraudulent reporting occurs when an employee intentionally fabricates or omits material information within reporting (e.g., within financial statements to help meet loan covenants or misrepresenting how loan proceeds were used to match a prior agreement). Fraud Prevention and Detection Employee fraud risk at construction companies differ depending on a variety of factors, such as its size and types of projects. However, no construction organization is immune to fraud, and all have finite resources to prevent and detect fraud. The following four activities are examples of components that a construction organization can leverage to help manage fraud risk: Background checks: For the cases analyzed within the ACFE’s 2024 study, 43% were reported to not have had background checks, including criminal checks, completed on the employee who committed fraud. Although background checks won’t identify all prior fraudulent activity a person has committed, it is a good opportunity to identify former convictions. As for Power’s case above, a pre-employment background check could have identified her prior embezzlement. That awareness could have influenced the decision to place Power in a position of trust over company funds. If the company still decided to place Power in this position, leadership may have found it prudent to enhance internal controls knowing Power’s history. Fraud risk assessments: These assessments can help an organization proactively identify vulnerabilities and prioritize fraud prevention and detection efforts across employee and third-party fraud risks. The ACFE reported in its 2024 study that those organizations detected occupational fraud eight months sooner and experienced 47% lower median per case losses. Data monitoring: Those organizations in the ACFE’s study that proactively monitored data discovered occupational frauds 50% sooner and incurred 50% lower median per case losses. Insights gained from fraud risk assessments can help prioritize proactive data monitoring efforts to maximize an organization’s return on investment for fraud prevention and detection. Hotlines: Even with data monitoring, employees and external sources (e.g., customers, vendors, and competitors) play a critical role in helping an organization prevent and detect fraud. The ACFE’s study found that the organizations with hotlines had detected fraud 12 months sooner and experienced 50% lower median fraud losses. Employee fraud poses a significant threat to construction organizations, with the potential to cause substantial financial losses. By understanding the various forms of occupational fraud — asset misappropriation, corruption, and fraudulent reporting — construction organizations can more effectively mitigate these risks. Of course, construction companies face fraud risks not just from their own employees, but also in their dealings with customers, sub-contractors, suppliers, and vendors. Implementing proactive measures such as background checks, fraud risk assessments, data monitoring, and fraud hotlines can significantly reduce the likelihood and impact of fraud. If you have any questions or concerns regarding fraud, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### National Association of College and University Business Officers Share Priorities for Congress On January 31, 2025 the National Association of College and University Business Officers (NACUBO) released an official letter to the majority and minority leaders of Congress outlining what it believes should be the higher education priorities of the 119th Congress. NACUBO, founded in 1962, is a nonprofit professional organization representing chief administration and financial officers at more than 1,700 colleges and universities across the United States. NACUBO’s mission is to advance the economic vitality, business practices, and support of higher education institutions in pursuit of their missions. According to NACUBO’s letter, the organization wants to emphasize the following policy priorities: Protect Tax-Exempt Status Ensure College Affordability by Investing in Students and Families Revisit the 2017 Tax Cuts and Jobs Act Per Senator Ron Wyden’s memo (D-OR) in January 2025, there are several proposed revisions to tax policy surrounding higher education that are under consideration.  According to the memo, possible items for reform include the inclusion of scholarships in taxable income, repeal of the Lifetime Learning Credit and the American Opportunity Tax Credit, and repeal of the student loan interest deduction. In their letter, NACUBO  shares concerns on certain provisions of the tax code that may affect higher education organizations, such as expanding the excise tax on endowments, eliminating tax-exempt bonds, or curtailing charitable contributions. On February 18, 2025, NACUBO also released a summary designed to provide an overview of the numerous tax issues currently under consideration by Congress. The organization highlighted the following areas of tax policy under consideration: Both education tax credits – the American Opportunity Tax Credit and Lifetime Learning Credit Student loan interest deduction Employer-Provided Tuition Assistance Nontaxability of qualified scholarships Charitable giving Tax-exempt bond financing Excise tax on net investment income NACUBO’s letter and summary to both Congress and the public at large detail the proposed tax changes that could impact higher education institutions. These tax changes, if enacted, could create far-reaching and transformative implications to the higher education sector. The summary provided above is based on the content of NACUBO’s letter and does not reflect the views or opinions of Schneider Downs. The information is presented in a nonpartisan manner to ensure an objective understanding of the topic. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Building the Future: Top 3 Digital Tools Reshaping the Construction Industry How is digital technology enhancing efficiency, improving accuracy, and enabling smarter decision-making in the construction industry?While the primary objective of construction management is straightforward — delivering projects on time, within budget, and to the owner’s satisfaction — the processes and technologies involved can be complex and demanding.Through our experience working with leading construction firms, we've identified three essential tools that every company should have in its arsenal: Accounts Payable (AP) automation software, mobile field solutions and data analytics. Let’s explore how these technologies can be game changers for construction companies.AP Automation: Streamlining Financial ProcessesAP automation is essential for modern construction companies, helping streamline financial operations and allowing teams to better manage spending for a stronger bottom-line impact. Manual invoice and payment processing is often time-consuming, error-prone and costly. Here are some key components and benefits of AP automation:Touchless Invoicing2- or 3-way matching, invoice processing and payments are among the most time-consuming tasks in the AP process. When these tasks are handled manually, the goal should be to implement AP automation to achieve touchless invoicing—where invoices are processed without manual intervention. This is made possible through intelligent invoice processing and matching, which automatically captures, validates, and approves invoices, eliminating the need for manual data entry and approval.For example, project managers generate a digital purchase order (PO) and send it directly to the vendor through the vendor portal. The vendor issues an invoice and routes it back to the company via the portal, where the AP system automatically matches it to the PO and, if applicable, the receipt. Approved invoices are processed for payment automatically, based on the vendor's pre-input payment information.Once the payment is processed within the customized workflow, relevant data is seamlessly integrated into systems such as construction management software for tracking against the schedule of values and the ERP for transaction recording. By allowing the system to handle the bulk of processing, AP staff can be redeployed to more strategic, value-added tasks rather than simply pushing invoices through the system.Reduction in Research and ResolutionAutomation not only reduces the risk of human error in invoice matching, data entry, and payment processing but also streamlines the process of retrieving project information. AP requires information related to spending for tasks such as invoice verification, contract compliance, or expense allocation. Automating the flow of this data from procurement to pay enables AP to make sure that invoices are charged to the correct project, spend is aligned to contract terms and milestone payments and expenses are allocated to the appropriate cost codes within a project. These examples ensure that payment is applied accurately so downstream reporting, i.e. WIP, is reliable and can be run in real time.Improved Cash Flow ManagementWith automated workflows, companies can accelerate approval processes, optimize payment schedules, and gain greater visibility into cash flow. AI and ML analyze historical project data to forecast future expenses, enabling project managers to anticipate budget overruns and allocate resources more effectively. Additionally, automation helps identify recurring payments tied to contracts or blanket POs, enhancing cash flow analysis and financial planning. Building the Future: Top 3 Digital Tools Reshaping the Construction IndustryLearn how digital technology enhancing efficiency, improving accuracy and enabling smarter decision-making in the construction industry Download the Whitepaper Mobile Field Solutions: Enabling Real-time CommunicationIn the construction industry, timely communication and data access are crucial for project success. Delays in time sheets, expense reports, or resource tracking often leads to payroll errors, delayed reimbursements, and inaccurate job costing. Similarly, delayed inventory updates on material usage and equipment tracking can result in cost-tracking issues or project delays due to poorly timed maintenance.These challenges can also create communication breakdowns, information silos, and slower responses to change orders or discrepancies. Outdated systems and manual processes often worsen these issues, leading to unexpected costs. Mobile field solutions address these problems by equipping on-site teams with tools to stay connected and productive. Key benefits include:Access to InformationWorkers can access project plans, documents, and schedules on their mobile devices, reducing delays and ensuring everyone is on the same page.Enhanced Data CollectionField teams can capture and input data directly from the job site in a standardized format, improving the digitization of essential information for office processing. This seamless data flow from operations to finance reduces reliance on manual entry and paperwork, resulting in faster, more accurate invoicing, cost realization, and better cash flow forecasts. It also allows for concurrent reporting, enabling a more proactive approach to project status and cost overruns, and ensuring timely processing of change orders to prevent unapproved work by crews. From an operational perspective, this can provide insights into supply volumes, aiding supply chain management and mitigating costs caused by delays in receiving supplies.Real-Time CommunicationMobile solutions enable instant communication between construction site teams and the office, streamlining decision-making around cost estimation, materials and equipment management, and stakeholder expectations. This connectivity ensures that project managers, site supervisors, and office staff can collaborate seamlessly, addressing challenges and making informed decisions quickly to keep projects on track.Improved EstimationEstimation stands as one of the most crucial steps in a project's lifecycle. Ensuring the job is accurately scoped and priced from the outset is vital, yet also one of the most challenging tasks. Instant data entry and digitization provides direct benefit to the estimation process by allowing project managers to update cost and timeline elements of upcoming projects based on real-time field data. It can also assist from a resource management perspective to help track resource usage and availability in real-time, allowing for more precise allocation and estimation of required resources.Data Analytics: Driving Informed Decision-MakingData analytics is revolutionizing the way companies operate, making your business more efficient, cost-effective, and competitive. Neglecting data analytics as a foundational requirement can leave construction companies blind to critical insights, resulting in inefficient resource allocation, project delays, missed opportunities for cost savings / optimization, etc. Some of the examples of data analytics success from our experience include:Project Performance MonitoringBy analyzing real-time data, companies can track KPIs to monitor progress, spot bottlenecks, and adjust timelines proactively. This helps keep projects on schedule and within budget while offering insights into jobs in the estimation phase. Predictive analytics uses historical data to improve estimates and identify cost-saving opportunities. Unlike basic reporting, which flags issues, data analytics digs deeper to reveal root causes—whether related to project managers, suppliers, customers, or project complexity. This level of insight, difficult to achieve with manual calculations alone, empowers construction companies to address problems more effectively.Cost Estimation and ControlLeveraging historical data allows for more accurate cost estimations and better financial planning. By identifying cost trends and anomalies early, companies can proactively prevent budget overruns.Resource OptimizationData analytics enhances resource allocation by optimizing labor schedules and managing materials more effectively, reducing waste and boosting productivity, that, as mentioned earlier, has a direct impact to the estimation process.Adopting advanced technologies does more than automate back-office tasks; it transforms finance and accounting into a dynamic support system. By providing continuous insights, it empowers project teams to work with greater clarity and confidence. Integrating AI and ML further enhances efficiency, reduces costs, and drives better outcomes. In an industry with tight margins and strict deadlines, this innovation is essential.How Can SD Digital Help?Leveraging our extensive expertise in finance, digital solutions, and the construction industry, our team empowers construction clients to enhance their project and business outcomes by utilizing technology to provide greater insights, automate processes, and enable clients to concentrate more on their core business activities. Have questions? Contact us at contact@sddigital.com.About SD DigitalSD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience.Learn more on our dedicated SD Digital page. ### Navigating the Construction Industry: Top Challenges and Innovations for Owners, CEOs, CFOs and Business Advisors As a Shareholder at Schneider Downs, I have had the privilege of working closely with various stakeholders in the construction industry, including owners, CEOs, CFOs and other key players. Through our conversations, several critical points have emerged that are shaping the future of construction. This article delves into these points, providing insights and strategies for navigating some of the construction industry's top challenges and innovations. The Lack of Quality Skilled Labor One of the most pressing issues in the construction industry is the shortage of quality skilled labor. While there are skilled workers across various trades, the question remains: are there enough good ones to ensure that projects run smoothly, maintain high quality and generate profit? Companies are increasingly investing in their people through robust training and development programs in an effort to assemble a team that meets their needs and ensures the successful completion of projects. The Impact of Tariffs Tariffs have a significant impact on the construction industry, particularly concerning the three most used construction products: steel, wood and cement. Tariffs can increase material costs, disrupt supply chains, and extend project timelines. For instance, when tariffs are imposed on steel and aluminum, the prices of these essential materials rise, affecting the cost of raw materials and finished products. This increase leads to higher expenses for construction companies, which can result in increased project budgets and higher costs for clients. Government Funding and Regulations Governmental funding plays a crucial role in the construction industry, especially for organizations funded by federal agencies for construction and capital expenditure. Public sector funding supports infrastructure projects, including highways, public safety facilities and waste management. Recent legislation, such as the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act, has increased spending in the construction industry. However, with increased government funding comes increased regulation, which companies must navigate to maximize their benefits. CMMC Certification for Department of Defense (DoD) Vendors DoD vendors must be Cybersecurity Maturity Model Certification (CMMC) certified to ensure the protection of sensitive data. CMMC is a unified standard for implementing cybersecurity across the defense industrial base.. This certification process measures a company's ability to protect sensitive data and is essential for continuing to do business with the DoD. Schneider Downs is a C3PAO which allows us to both certify and prepare organizations for CMMC. The Move Towards Prefabrication and Automation Prefabrication and automation are becoming increasingly prevalent in the construction industry as companies seek innovative solutions to address the lack of skilled labor, improve quality and enhance profits. Prefabrication involves assembling components of a structure in a factory before transporting them to the construction site for installation. This method can expedite the construction process, reduce labor requirements and minimize waste. Automation, including the use of robotics, further optimizes manufacturing, transportation, and assembly processes, leading to increased efficiency and cost savings. The construction industry faces several challenges, including the shortage of skilled labor, the impact of tariffs, and the need for governmental funding and regulation compliance. However, the industry has always been responsive to the changing dynamics it faces.  Schneider Downs is committed to providing the expertise and support needed to help companies thrive in this dynamic environment. If you have any questions, please contact our Construction industry group. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### What's New at Schneider Downs Consulting? One of the best parts of working at Schneider Downs is seeing our consulting practice help clients of all sizes and industries tackle unique business challenges. To support our clients, we continually introduce new ideas, solutions, and resources. While many stay informed through the Our Thoughts On newsletter and firm LinkedIn page, we understand that the flow of information can sometimes feel overwhelming. That's why we’ve put together a concise update highlighting the latest news and resources from the Schneider Downs consulting practice over the past month. 5 Actions CFOs Should Take Amid 2025 Tariff Uncertainty I never expected "tariff" to outshine AI as 2025’s buzzword—but here we are. While much remains speculative, CFOs can take key steps now to stay ahead. Consulting Shareholder Adam Goode shares insights on how CFOs can prepare for potential tariffs by staying forward-thinking, adaptable and ready to manage financial risks in an unpredictable trade landscape. Read his full article here. Top 3 Digital Tools Reshaping the Construction Industry in 2025 The SD Digital team continues to help construction clients leverage digital technologies to enhance operational efficiency, streamline back-office automation, and support data-driven decision-making. In our latest whitepaper, we share insights on how construction companies are modernizing their business and operations through AP automation, mobile field solutions and advanced data analytics. Download the whitepaper here. 5 Essential Software Considerations for Start-up Companies in 2025 Choosing the right tech stack is crucial for startups, and software selection plays a key role. But how do you ensure the best fit for your organization? While the ideal software varies, startups should consider business needs, security and compliance and user experience. Senior Audit Manager Justin Mudryk explores these factors and more in his latest article. Read the full article here. Joe Vandermark Joins Schneider Downs Our firm continues to grow in the Columbus market with the addition of Joe Vandermark, who will serve as an IT Risk Advisory Shareholder, and will lead key growth initiatives in the Columbus, OH market as our Consulting Services Growth Leader. Joe brings more than 25 years of experience driving business transformation in cybersecurity, emerging technologies, audit, process improvement and risk advisory. Learn more about Joe here. Keep Up With Schneider Downs News and Resources We believe that delivering relevant thought leadership and resources is essential to our mission: “Working together every day to make our firm, clients and communities better”. We invite you to explore, share our latest insights with your network and stay informed by subscribing to the Our Thoughts On newsletter. ### Bipartisan House Bill Could Retroactively Reinstate Immediate Expensing of R&D Costs Learn more about the reintroduction of the American Innovation and R&D Competitiveness Act. On March 10, 2025, Reps. John B. Larson (D-CT), Ron Estes (R-KS), Suzan DelBene (D-WA), and Rudy Yakym (R-IN) have reintroduced the American Innovation and R&D Competitiveness Act (the bill), with support from 64 original cosponsors. The bill has received substantial bipartisan support and would permanently allow for the immediate expensing of research and development costs retroactively to 2022, when the provision from the Tax Cuts and Jobs Act of 2017 expired. Since 1954, the U.S. tax code has provided businesses the option to deduct research and development expenses in the same year in which they were incurred or to amortize them over a period of up to 60 months. However, the Tax Cuts and Jobs Act of 2017 substantially amended Section 174, requiring taxpayers to amortize all research and experimental expenses over a five-year period for domestic costs and over 15 years for foreign costs for tax years beginning after December 31, 2021. Highlights from the bill include the elimination of Section 174 amortization and the retroactive restoration of provisions allowing taxpayers to fully deduct R&D costs when incurred. The bill would exclude any expenditures related to the acquisition or improvement of land, property improvements, or exploration expenses related to minerals, oil, and gas. Although bipartisan support for the bill is certainly a reason for optimism, only time will tell if a limited-scope tax bill can make it through Congress or if it will have to wait to be included as a part of larger tax reform. If you have questions regarding the impact of the American Innovation and R&D Competitiveness Act, please contact a member of the Schneider Downs Credits and Incentives Team at contactsd@schneiderdowns.com. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### The Institute of Internal Auditors' New Performance Measurement Tool In March 2025, the Institute of Internal Auditors (IIA) released new guidelines for conforming with Standard 12.2 Performance Measurement. These guidelines are designed to help internal audit functions develop a robust methodology for performance measurement, ensuring alignment with the board’s expectations, the Standards, the internal audit charter and the internal audit function’s strategy. Purpose of Performance Measurement The primary goal of performance measurement is to ensure that the internal audit function is aligned with the board’s expectations, the Global Internal Audit Standards (Standards), the internal audit charter and the internal audit function’s strategy. This alignment is crucial for the effectiveness and efficiency of the internal audit function. Design Process The design process for performance measurement involves several key components: Outcome Areas: These are high-level categories that are further subdivided into performance categories. Examples include the extent of coverage of organizational or business unit conclusions, stakeholder expectations, financial and operational efficiency, human resource needs and learning and development. Performance Categories: These are bundles of multiple related performance measures. Performance Measures: These can be either quantitative or qualitative and correspond to criteria that are monitored over time. Effective performance measures can be characterized by the acronym SMART: Specific, Measurable, Achievable, Relevant and Timely. Implementation During the implementation phase, it is essential to ensure that performance measures reflect stakeholders’ input and align with organizational objectives. Communication between the Chief Audit Executive, the board, and senior management is crucial for determining responsibilities and ensuring successful implementation. Reporting and Continuous Improvement Per Standard 8.3, the Chief Audit Executive must communicate the results of the quality assurance and improvement program, including reporting on the internal audit function’s conformance with the Standards. Dashboards and weighted scorecards can be useful tools for communicating performance measures and ensuring continuous improvement. Performance Measure Examples Here are some examples of performance measures that can be used by your internal audit department: Coverage of High-risk Auditable Units: Ensuring the audit plan covers targeted risks. Stakeholder Satisfaction: Surveys measuring satisfaction with engagement objectives and timeliness. Financial and Operational Efficiency: Evaluating progress against the audit plan and staff utilization. Human Resource Needs: Quality assurance reviews confirming adequate competencies. Learning and Development: Tracking completion of development plans and training hours. Considerations and Challenges While performance measurement is essential, it is important to avoid relying too heavily on certain measures, as this can lead to potential drawbacks such as time-limited applicability, low recommendation implementation rates, and disagreement with management. A balanced approach allows for meaningful recommendations and continuous improvement. The IIA’s Performance Measurement Tool provides a comprehensive framework for internal audit functions to align with organizational objectives, ensuring continuous improvement and effective stakeholder communication. By adopting these guidelines, internal audit functions can enhance their performance and contribute to the overall success of their organizations. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Tracing Commingled Assets: Separating Red and Green Beans “Bean counter” is a colloquial term sometimes used to describe an accountant focused on minor details. When it comes to forensic accountants tracing commingled assets, maybe we should be called “red and green bean counters.” Here, the red beans represent tainted or illegally obtained assets, while the green beans represent untainted or “clean” assets obtained through lawful means. Tainted assets can include the proceeds from a wide variety of criminal activities, such as selling an asset pledged as collateral without the lender’s consent, a fraudulent investment offering or insurance claim, a Ponzi scheme, or an embezzlement from an employer. The differentiation between tainted and untainted assets can become important when it comes to situations like criminal or civil asset forfeiture and determining assets available for creditors related to a bankruptcy. This differentiation can become complicated when assets are commingled and not specifically identifiable. As pointed out in William Stoddard’s widely cited 2002 Nevada Law Journal article Tracing Principles in Revised Article 9 § 9-315(B)(2): A Matter of Careless Drafting, or an Invitation to Creative Lawyering: “The goal of ‘tracing’ is not to trace anything at all in many cases, but rather serves as an equitable substitute for the impossibility of specific identification.” In U.S. v. Henshaw, the Tenth Circuit of U.S. Court of Appeals indicated that the district court properly turned to equitable tracing principles and stated, “There are several alternative methods, none of which is optimal for all commingling cases; courts exercise case-specific judgment to select the method best suited to achieve a fair and equitable result on the facts before them.” Four widely accepted methods of tracing commingled assets include (1) first in, first out (FIFO); (2) last in, first out (LIFO); (3) lowest intermediate balance rule (LIBR); and (4) pro rata distribution. Most accountants are familiar with FIFO and LIFO from inventory pricing methods, but LIBR and pro rata distribution methods are also available. To show these methods in action, I’ve created examples below leveraging red and green beans to represent tainted and untainted commingled assets. The red beans represent tainted or illegally obtained assets, and the green beans represent untainted or “clean” assets obtained through lawful means. Each of these examples follows the same fact pattern, adding a total of 38 beans in equal proportions and removing 26 beans, but each method ends with different results for the number of red and green beans removed and remaining. First in, First Out (FIFO) The FIFO method assumes assets removed are traceable to the earliest assets added into a commingled account. The oldest assets are removed before newer assets. The first assets added are the first removed. For the below FIFO example, you will see the first addition of beans being 10 green beans. Since those are the first beans added, the first beans removed are all green beans. It is not until those first 10 green beans are all removed on January 6 that all of the red beans added on January 2 and some added on the 14th are removed. Last in, First Out (LIFO) The LIFO method assumes that assets removed are traceable to the most recent assets added into a commingled account. The newest assets are removed before more stale assets. The most recent assets added are the first removed. For the below LIFO example, you will see the last addition of beans before the first removal being 10 red beans. Since those were the most recent beans added, the first six beans removed are all red beans. Then at the end, all 10 of the green beans added on January 1 and two of the red beans added on January 2 are still remaining. Lowest Intermediate Balance Rule (LIBR) The LIBR method assumes the owner of commingled clean and unlawfully obtained assets will preserve the unlawfully obtained assets for the benefit of the victim. Therefore, the tainted assets are only considered to be used when the balance of the untainted assets is reduced to zero. For the below LIBR example, you will see there are 10 green beans available when the first six beans are removed, which makes those six beans green. It is not until all green beans are removed that red beans begin to be pulled. Pro Rata Distribution The Pro Rata Distribution method assumes that the proportionate allocation of commingled tainted and untainted assets determines how much of assets removed is proportionally allocated to tainted and/or untainted assets. For this Pro Rata Distribution example, you will see there are an equal number of red and green beans when the first removal of six beans occurs, making those six beans half red and half green. Then, the removal of 20 beans on January 6 occurred when the proportion of red and green beans were equal again, so the beans were equally removed between red and green again. Comparison Across Models The timing and extent of tainted and untainted assets added and removed drive which method results in higher concentrations of tainted or untainted assets as having been removed and that remain across these four tracing methods. The LIBR method will typically result in the least amount of tainted assets having been removed and the highest amount of tainted assets remaining, though. The green and red beans specific fact pattern leveraged for the above examples resulted in the least remaining and most removed red beans under the LIFO method and the most remaining and least removed red beans under the LIBR method. The summary results are shown in the below chart: As shown, the results can vary significantly across methods. Case-specific facts and circumstances should influence the decision of which method is most appropriate to achieve a fair and equitable results. If you have a need for a “red and green bean counter” to trace commingled tainted and untainted assets or a related expert witness, contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in Pittsburgh. About Schneider Downs Business Advisory Our experienced team of business advisors consisting of Certified Fraud Examiners, Certified in Valuation Analysts and Certified Mergers and Acquisition Advisors leverages its industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business events. To learn more, visit our dedicated Business Advisory page. ### User Access Reviews: 16 Tips to Meet Auditor Expectations How can you understand and meet auditor expectations on complete user access reviews? While access reviews can range in complexity, the goal is the same, determine if current users have appropriate access rights. Users could be overlooked within termination processes or simply no longer require access due to changes in organizational responsibilities. A simple user access review could take less than an hour to complete, while complex reviews that involve many reviewers can take several months to complete. Over the years, auditors have become more critical on the requirements to satisfy a passable user access review for Sarbanes-Oxley compliance, audits and assessments. So, how can you set yourself up for success with user access review auditors? Define your scope. It is good hygiene to complete user access reviews on your computer environment, especially production-critical and sensitive applications and technology, including applications, tools, databases and operating systems.  You should first start with the highest-risk items. Assign ownership. Access should be reviewed by appropriate personal with the right competence and authority. It is good practice to assign both IT and business owners to share responsibility.  Ensure the owners take the review seriously and do not just “rubber stamp” access. Understand the control frequency and deadlines. User access reviews usually range from quarterly, semiannual to annual. Quarterly review reports should be generated within the quarter of the review and preferably be completed in the same quarter.  Most auditors will allow 15 days after the quarter to complete them.  Auditors will be stricter at year-end, though.  Semiannual reviews should be completed six months apart in the second and fourth quarters.  Annual access reviews should be completed in the fourth quarter.  The final review with security changes made should be completed within the period of review. Determine the scope of the access review. Reviews need to start with active users and their role assignments. Auditors also expect that reviews include whether the security privileges are appropriate within the roles and the assessment of segregation of duties. Applications should consider using a segregation-of-duties (SOD) matrix, document the steps of the review and document role descriptions to aid owners in completing access reviews. Use technology solutions. For complex environments, consider GRC solutions to automate the access review and to automate the segregation-of-duties analysis. Joining employee titles also can make for more effective and efficient access reviews Utilize a template. To ensure reviews follow a consistent process and that no steps are missed, the review should use a template to document the steps followed, a summary of the review and an overall sign-off. Use Information Produced/Provided by the Entity (IPE) Parameters. Parameters/IPE should be retained to validate the completeness and accuracy of the security report(s) used in the access review.  Pre- and post-parameters should be included.  Key questions that the review support should be able to answer are: How Many – The transaction volume should be included with the parameters, which should be able to tie to the security report number of transactions. Who – Who generated the report? When – IPE parameters should include the date and time stamp and the date range of the report. Where – What was the source of the report? How – Was the source a canned report or a custom report? What – What was the scope of the report (e.g., all users, select group of users)? Retain original security reports. The original reports should be retained and a working version copied to perform the review. Auditors need to have the ability to evaluate completeness and accuracy of the security reports with the IPE. Review at the right level of precision. Access should be checked at the individual access level. The reviewer should not just sign off on a cover page template. Ensure proper segregation of duties. Users are not permitted to review their own access. Secondary reviewers will most likely be required to ensure segregation of duties when an individual performing the review also has access to a system. Ensure completeness of the review. All access should be reviewed. Read-only or low-risk roles could be scoped out; however, this scope change should be well documented.  However, read-only or low risk roles may not pose a direct risk to financial data, there is a data privacy concern associated with this type of access. Note security changes. The review should signify if the access is appropriate or not. If not appropriate, the review should define the reason why access is not appropriate (e.g., termination, transfer, no longer requires access, unauthorized user, etc.).  This original review and results should be included in the review support.  Requests to modify access should follow the company’s access provisioning process. Conduct a lookback exercise. For the inappropriate access, the review should include an impact analysis if the access was used inappropriately using last login dates, historic transactions, logs or other mitigating controls. Validate security changes. After the security changes have been made, changes need to be confirmed if access was removed. The easiest way is to regenerate the access report and validate that the access has been removed.  Then, retain this second report with the review with the original security report. Perform a final sign-off. The application owner(s) or designee should perform a final sign-off. A secondary sign-off will help ensure proper segregation of duties. Save the User Access Review. Save user reviews in a central repository where access review materials will be obtained for future reference. How Can Schneider Downs Help? For more information on user access reviews, contact a member of Schneider Downs’ IT Risk Advisory Services department. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Turning Threats to Stone: CISA and FBI Issue Alert on Surging Medusa Ransomware Attacks Beware the Ides of March… or in this case, suspicious emails if you’re one of the 1.8 billion Gmail accounts at risk from the Medusa ransomware accounts. The Medusa ransomware gang has been active since 2021 but recently gained attention due to a 42% increase in activity year-over-year in 2024. This surge has been accompanied by a series of successful attacks impacting over 300 organizations across critical infrastructure sectors, including healthcare, manufacturing, education, legal, and technology. Like most ransomware attacks, Medusa targets organizations primarily through phishing campaigns or exploiting unpatched software vulnerabilities. Once a system is compromised, victims face a double extortion scheme. This means attackers demand a ransom — in this case, reportedly ranging from $100 to $1 million — to restore access to encrypted data and prevent the sale or leaking of sensitive information unless an additional payment is made. Mitigating the Medusa Ransomware Threat CISA has posted immediate steps organizations can take to mitigate cyber threats related to the Medusa ransomware attacks: Mitigate known vulnerabilities by ensuring operating systems, software, and firmware are patched and up to date within a risk-informed span of time. Segment networks to restrict lateral movement from initially infected devices and other devices in the same organization. Filter network traffic by preventing unknown or untrusted origins from accessing remote services on internal systems. In addition, CISA offered a comprehensive list of mitigation recommendations designed to reduce the likelihood and impact of Medusa and similar ransomware attacks, including: Ensure all backup data is encrypted, immutable (i.e., cannot be altered or deleted), and covers the entire organization’s data infrastructure. Implement a recovery plan to maintain and retain multiple copies of sensitive or proprietary data and servers in a physically separate, segmented, and secure location. Maintain offline backups of data, and regularly maintain backup and restoration. Require all accounts with password logins (e.g., service accounts, admin accounts, and domain admin accounts) to comply with NIST’s standards. Require multifactor authentication for all services to the extent possible, particularly for webmail, virtual private networks, and accounts that access critical systems. For more information on identifying, mitigating, and protecting against the Medusa ransomware attack, please visit the CISA Medusa Ransomware advisory page. How Can Schneider Downs Help? If you have specific concerns about the Medusa ransomware attack or want to discuss how to keep your organization prepared against cyber threats, contact our Cybersecurity Consulting team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Postcard from the Ohio Construction Conference On Wednesday, March 12, I had the pleasure of attending the Ohio Construction Conference, presented by the Builders Exchange of Central Ohio. The conference brought together commercial construction professionals and leadership from across the country and included local, regional, and national experts who shared their insights on industry trends and topics. One of the standout sessions for me was "XY&Z: The Keys to Intergenerational Management," presented by Dr. Rapp. In this session, Dr. Rapp identified the different generational groups and their unique characteristics. He provided valuable insights into how these demographics think and work, emphasizing the importance of understanding these differences to work more effectively with others. This session resonated deeply with my leadership philosophy: to get the best out of your team, you must adjust to their mentality and motivation. Forcing them to conform to your style is an outdated and ineffective approach to management. Great leaders know when to take charge, when to remain silent and when to find a balance based on the team's dynamics and the environment. This approach aligns with my belief that leadership is not about imposing one's will but about adapting to the needs of the team to create a collaborative environment that achieves organizational goals. The conference also featured discussions on various construction industry trends, including advancements in technology, sustainability practices and regulatory changes. These sessions provided a comprehensive overview of the current state of the construction industry and offered practical strategies for navigating its challenges. The Ohio Construction Conference was a valuable experience that highlighted the importance of adaptability and understanding in leadership. It showed me that successful leadership means being aware of the different perspectives and motivations within a team. I’m eager to apply what I learned and keep improving as a leader. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### 5 Essential Software Considerations for Start-Up Companies in 2025 An often-overlooked yet crucial concern for start-ups is ensuring that they have the right software and, if not, deciding on the appropriate software to implement. Start-up companies face numerous challenges in today's competitive environment, including business growth, securing additional debt or equity financing, and attracting and retaining top talent to elevate the business. This article delves into key considerations for determining whether to adopt a particular type of software for a start-up. Business Needs The first step for companies is to understand their unique needs and goals. This involves conducting an analysis of the current technology environment and identifying specific pain points where software could add value and enhance efficiency. During this initial stage, companies should adopt a "dream big" mentality. It is important to consider not only the software that addresses immediate needs but also the solutions that will support future business growth. Integration Next, it is crucial to evaluate how the new software would integrate with existing software and hardware infrastructure. Implementing a new type of software can cause disruption to the business. Ensuring that you have a well-thought-out plan and identifying any roadblocks early on in the process can help minimize downtime. User Experience and Functional Capabilities When selecting new software, companies should prioritize the user experience and ensure that the software has the capabilities required to run the business effectively. Software should simplify operations rather than complicate them. Finding a solution with an easy-to-use interface that requires minimal training for employees is ideal. Involving cross-functional teams in the software selection process can help to ensure that the software meets the needs of all relevant parties within the organization. Security and Compliance It's also important to consider the security and compliance aspects of the software, as well as the vendor's reputation. Does the software company provide a SOC report for review? What are the vendor's processes for updating and patching the software packages to protect company data? These factors are critical to maintaining the integrity and security of data and business operations. Cost Considerations Lastly, no evaluation would be complete without considering the cost of implementing new software. Companies should take into account not only the upfront costs but also the recurring expenses related to implementation, training, and ongoing maintenance. The cost of implementing new software can vary considerably depending on the product and its pricing structure. Some software might be subscription-based, adding another layer of cost consideration. Overall, implementing software in a start-up company requires careful planning and consideration of various factors. By prioritizing business needs, seamless integration, usability, security, and cost, start-ups can optimize their software investments and propel their business growth. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.   To learn more, visit our Emerging Technology page.   ### A Collaborative Approach to Internal Audit How has the approach to internal audit changed in recent years? Historically, internal audit is focused on identifying discrepancies and enforcing compliance. Today, internal auditors are adopting a collaborative mindset to build trust with their clients and drive positive organizational change. So, what does a collaborative approach to internal audit look like, and how can you build one? Four Key Elements For a Collaborative Approach to Internal Audit 1. Building Better Relationships A collaborative approach helps internal auditors build credibility and trust with management. Effective communication and collaboration can lead to better alignment with organizational goals and more valuable audits. 2. Building Trust Establishing trust with management encourages openness and transparency. When auditors are seen as collaborators, management is more likely to share information and implement audit recommendations. 3. Driving Change Constructive communication of audit findings increases the likelihood of management applying recommendations. Internal auditors can help optimize processes, recommend best practices, and provide ongoing support. 4. Balancing Independence and Collaboration Internal auditors must maintain their independence while being active members of the organization. Reporting directly to the audit committee, defining collaboration limits, and performing routine independence reviews help maintain objectivity. A collaborative mindset is essential for internal auditors to support the organization’s long-term success and navigate complex issues effectively. If you have any questions about how internal audit can help your organization, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### The CFO's Guide to Tariff Uncertainty in 2025: 5 Things CFOs Should Be Doing Now How can Chief Financial Officers (CFO) prepare for tariffs in 2025? This article is part of a series examining the key challenges and best practices that today’s CFOs face as they navigate tariff uncertainty in 2025. Download the full guide, “The CFO’s Guide to Tariff Uncertainty in 2025”, here. A CFO’s job is never easy.  Managing a company’s financial strategy, cash flow, and risk are difficult tasks even in stable times.  As we move into 2025, CFOs are faced with a new, challenging landscape characterized by increasing uncertainty around tariffs. The unpredictable trade policy adds layers of complexity to the CFO role, making it crucial for financial leaders to be forward-thinking, adaptable, and prepared to manage multiple financial risks. Companies must be ready to take both preventative and reactive measures swiftly, in response to tariff-related risks. Agility will be key in mitigating the financial impact, and CFOs need to be more strategic than ever. We know that many companies plan to pass on the cost of new or higher tariffs to their customers in an attempt to maintain targeted margins. Downstream businesses that rely on raw materials and other goods from these companies will, in-turn, be directly impacted by tariffs. Here are the five things I’m advising CFOs to do now: Reassess Enterprise Risk Management (ERM): CFOs should consider updating their enterprise risk management framework to account for tariff-related risks. Current risks might not have been identified as significant risks the last time the analysis was done. Given the current climate, identifying areas of exposure and integrating these into broader risk assessments will allow companies to stay ahead of potential disruptions. Conduct a Supply Chain Risk Assessment: A thorough assessment of supply chain risks is essential. It’s crucial for CFOs to evaluate their supply chain dependencies and understand where disruptions could occur. CFOs should evaluate potential vulnerabilities and develop alternative sourcing plans where necessary to minimize dependency on high-tariff regions. Companies need to pinpoint their tariff exposure as early as possible. Understanding which goods or services are most likely to be affected and being prepared with a rapid response strategy can give businesses an edge in mitigating risks. Develop an Agile Pricing Strategy in Response to Uncertainty: CFOs should assess their pricing strategies carefully to ensure competitiveness while managing rising costs. This involves building flexible pricing models that account for potential cost increases, conducting scenario analyses to prepare for different tariff outcomes, and closely monitoring competitor pricing strategies to stay competitive. Dynamic pricing tools can help automate real-time adjustments, and transparent communication with customers about price changes can assist in preserving trust and long-term relationships. Ultimately, agility in pricing will enable companies to swiftly respond to fluctuating tariffs, ensuring financial resilience and strategic positioning in the market. Monitor Forecasts and Budgets for Increased Uncertainty: CFOs should continuously monitor forecasts and budgets to account for the heightened uncertainty surrounding tariffs. A sensitivity analysis can help assess how various tariff changes would impact costs, revenues, and overall profitability. CFOs should also ensure that their budgets are flexible enough to accommodate unexpected cost increases or supply chain disruptions and consider establishing contingency reserves within the budget to manage unforeseen expenses. By building in flexibility and constantly re-evaluating projections, companies can better prepare for and swiftly adapt to tariff fluctuations, ensuring financial stability amidst uncertainty. Build Scenario Plans: Scenario planning is a crucial tool for CFOs to navigate tariff uncertainty, enabling businesses to prepare for a range of possible outcomes. By modeling different tariff scenarios, CFOs can assess how each situation would impact costs, supply chains, and profitability. This approach helps companies to identify their vulnerabilities and opportunities, allowing them to develop contingency plans for various tariff levels. Once scenarios are developed, companies can create actionable strategies, such as adjusting pricing, diversifying suppliers, or reallocating resources. By anticipating multiple possibilities, businesses can remain agile and better equipped to protect margins and market position. At this point, no one can predict with certainty which goods will be impacted by tariffs and to what extent. This unpredictability adds complexity to the CFO role, as companies must prepare for a variety of possible outcomes and downstream effects. CFOs should remain proactive and agile, ensuring that their businesses can respond to any new tariffs or trade policy changes swiftly and strategically. If you’d like to learn more about how Schneider Downs’ CFO Services team can assist in navigating these uncertainties, please contact us. Other related articles in our series: Why CFOs Must Build Scenario Plans and Be Ready to Pivot Why CFOs Should Lead the Charge on Supply Chain Risk Assessments Why CFOs Need Agile Pricing Models The CFOs Role in Agile Forecasting and Margin Protection The Case for Integrating Tariff Risk into Enterprise Risk Management (ERM) About Schneider Downs Managed Accounting Services Schneider Downs Managed Accounting Services provide as-needed, part-time or full-time support for your accounting and finance needs. Focused on providing accounting leadership and support services to businesses that either have limited resources or wish to supplement their existing resources with additional technical expertise, Schneider Downs Managed Accounting Services can help you achieve your goals. For more information visit our Schneider Downs Managed Accounting Services page. ### Navigating Leadership Change: The Role of Internal Audit in Succession Planning Why is succession planning crucial for strong leadership and how can internal auditors help? Succession planning is a critical business strategy focused on maintaining effective leadership by identifying potential future leaders in advance. This proactive approach ensures key roles can be filled seamlessly when a current leader steps down. Having a designated successor, an employee with the necessary knowledge, skills, and abilities, helps safeguard business continuity. Preparing for Leadership Departure: Key Questions to Ask To ensure a smooth transition when key team members leave, companies must plan early and strategically. Management should consider asking the following questions: How can the company preparer for inevitable executive turnover? How will the company want to move forward in order to protect the company’s culture? How should the organization guarantee the knowledge held by the predecessor is not lost? How can we align this change with our business strategies? The short answer to all of these questions is to have a well-defined succession plan in place. Define Key Leadership Roles for a Smooth Transition Leadership responsibilities, daily activities, regular processes for each key role should be defined and documented in order to maintain the continuity of the organization and the preservation of knowledge held by the predecessor, at a very minimum to have an effective succession plan. A mentorship program could also be helpful, one where the predecessor and their replacement have a chance to walk through daily activities, act as proxy, or work on special projects that would be involved in the role could also be helpful in order to make the process smoother when the real transition occurs. Ensuring there is transparency into the plan can also help alleviate some of the worries held by those that surround the key executives and those who would be directly involved in the transition process. Develop a Strong Leadership Onboarding Program Having a strong onboarding program is another key step to have in place prior to the succession of a key executive. The onboarding program should cover company goals, core values, strategies, visions for the future, and culture, and responsibilities of the previous role holder. If the successor is not aware or inline with these items, then it is important for the company to be aware of that and take necessary steps to either select someone more appropriate or educate the chosen successor. It’s also essential to identify potential internal candidates who could step into these roles, either temporarily or permanently, and assess their readiness. Create Dedicated Roles for Succession Planning It can also be helpful to have a set role that is responsible for succession planning. This role would include tasks such as defining an emergency succession plan, determining potential interim leaders, establishing a regular review of critical operational materials and the succession plan itself to ensure it is still aligned with available personnel and company goals and strategies. Regularly Review and Update Succession Planning One thing that could be easy for management to overlook in developing a strong succession plan is the regular review of the current plan and making updates as necessary. Items such as trainings, specific appropriate personnel, responsibilities, strategic goals, and even the greater general business environment could change resulting in changes to responsibilities and roles. If a succession plan is outdated, the company would suffer the consequences with a potentially less than smooth transition. It is recommended that the succession plan is reviewed at least once year. How Can Internal Auditors Help With Leadership Succession Planning? Internal auditors can also help establish processes and materials to organize these functions. Auditors can ensure the plan is robust and effective for the company specifically, not just as a general outline. They should verify that the plan aligns with current company strategy while supporting long term goals. Internal auditors can provide unique insights and expert opinions into the risks and effectiveness of current in place processes. Additionally, specialists state that human resources, the existing key executive, and any potential successors should be involved in creating the succession plan. Involving senior management or board members might also be a logical choice if the position in question is sufficiently important to the operations of the business. Regardless of who the company deems it necessary to involve in succession planning, the primary process should be to establish the succession plan, communicate the succession plan to all parties as needed, and then complete any preliminary steps in order to prepare for the transition, whether these are tasks that can be completed ahead of time or when the executive is ready to step down. If you have any questions on how internal audit can help with succession planning, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### February 2025 - Market Recap There were several headwinds for domestic equities in February. On the economic front, while inflation decelerated slightly, consumer spending pulled back and consumer confidence fell to an eight-month low, raising investor concerns. Ongoing geopolitical issues, including trade tensions and tariffs, also added to market uncertainty and increased volatility. Sparked by the news of a new AI model from China (DeepSeek) at the end of January, stocks in sectors that enjoyed significant gains in 2024 riding the artificial intelligence theme experienced sharp declines in February. The question being asked “Is all of this money being spent on AI overdone?” The pattern of returns relative to market capitalization was not linear in February. Even within the S&P 500 index, an asymmetry in returns across market capitalization deciles in February was evident with the very smallest stocks posting the most negative average return among the 250 smallest stocks, while the largest 50 stocks had the most negative average return among the 250 largest stocks. In other words, the 50 largest stocks and the 800 smallest stocks within the Russell 1000 index underperformed while stocks with a market capitalization in the middle of the pack performed the best. Value beat growth across all market capitalizations in February; by 3.3% for the S&P 500, by 4.0% for the Russell 1000, and by 2.9% for the Russell 2000. This was the second consecutive month of value beating growth. While dynamic, growthier stocks were the leaders in January in an up market, defensive stocks were the leaders as the market contracted in February. From a sector perspective, consumer staples (up 5.7%), real estate (up 4.2%), and utilities (up 1.7%) were among the leading S&P 500 sectors for the month, consistent with defensive, less volatile stocks outperforming in a down market. International equities continued their outperformance from January through the end of February with international developed equities returning 1.4% and emerging market equities returning 1.21% for the month. International equities differ from their U.S. counterparts as international equities are much more value-orientated when compared to the U.S. As value continues to outperform growth year-to-date (YTD), international stands to benefit from the rotation that has been at play this year. European stocks are outperforming the S&P 500 YTD. Mega cap technology-related stocks (that have struggled to start the year) and European financials are off to a great start. Despite the recent outperformance, international equities continue to trade at a discount to their U.S. peers. Non-U.S. equities are benefiting from central banks cutting rates and economic data that is holding on so far. The Bank of England cut interest rates this year and some of their committee wanted a bigger cut. Overall, it sent dovish ripple effects across markets resulting in another bounce higher in broader European equities. International equities remain one of the best performing asset classes year-to-date. As domestic equities fell in February, bonds performed well. The 10-year Treasury bond yield on January 31st was 4.57% and rose at the beginning of the month to close at 4.63% on February 12th. From that point, the 10-year yield fell over 40 basis points as the bond market began to fully price in two quarter-point interest rate cuts by the Federal Reserve for 2025, reflecting expectations of a weaker economic outlook. Risk-adjusted total return scenarios for fixed income continue to look attractive as yields today continue to pay higher than what we have seen over the last 5 to 10 years. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### How the Temporary Federal Aid Pause May Impact Higher Education What can a temporary pause on federal financial assistance mean for higher education? In late January, the Trump Administration ordered a temporary pause on all federal financial assistance, which included funding to higher education institutions via grants and loans. The freeze was not intended to affect Pell Grants, student loans and Federal Work-Study. Here are some highlights of what has happened since the freeze was initiated. The National Institutes of Health and the National Science Foundation have canceled meetings to review grants, causing significant uncertainty and disruption in daily operations at higher education institutions. This raises concerns about the stability of federal funding in the long term. The Office of Management and Budget has directed all federal agencies to pause the grants and loans they oversee. The funding freeze has sparked two legal battles. The first, in Rhode Island, saw 22 state attorneys general suing to block the freeze on funds allocated to their states. This lawsuit was successful, and the freeze was prevented for those funds. The second case, in DC, involved the National Council of Nonprofits and other plaintiffs arguing that the freeze violated the Appropriations Clause and the Administrative Procedure Act. The judge ruled in favor of the plaintiffs, allowing the disbursements to resume. On February 25, a federal court judge ordered a preliminary injunction to block a further funding freeze. The injunction is in place indefinitely while the case plays out. From the federal funding freeze, there are a few outcomes that could occur for higher education institutions. Some of these include: Shifting funding to an industry-sponsored process. Institutions can diversify their funding sources by having industry-sponsored funding for research or programming as a way to keep funding flowing into their institutions. However, institutions should be careful of accepting industry-sponsored funding as it may lead to unintended consequences that could affect the academic integrity of the institution. Requiring institutions to do the same amount with less, possibly driving up tuition for students. Removing programs the institutions can no longer support. With a lack of funding, institutions may be faced with the hard decision to no longer support programs—academic or social—within their university to maintain their overall budget. Enacting a hiring freeze and budget cuts. Institutions may also be forced to implement a hiring freeze or instill budgeting cuts to maintain the level or service to their students. Higher education institutions can take several steps to reduce the potential impact of decreased federal funding such as: Assess the institution’s exposure to the freeze by understanding how it may affect the institution’s ability to fund programs. Communicate with contacts within the federal agencies to understand the standing of institution-specific grants. Advocate for policy changes by working with other higher education institutions to lobby for change at the federal level. Collect funding by accelerating the obligation and/or disbursement process where feasible. Participate in webinars or town halls to stay up to date on the most current information. Continue to focus on current student retention and success. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### 6 Essential Safeguards to Prevent AML Violations in Your Organization What can organizations learn from the recent TD Bank anti-money laundering (AML) program settlement? TD Bank recently appointed Guidepost Solutions as the compliance monitor for its anti-money laundering program as part of its $3 billion settlement with the US government. The settlement included a record $1.3 billion in penalties to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and $1.8 billion to the Department of Justice (DOJ). This penalty is one of the largest in history for AML violations and highlights significant shortcomings in the bank's AML safeguards. The appointment of Guidepost Solutions is part of a multi-year program to address these issues and strengthen TD Bank's controls. The monitor will oversee TD's operations in the U.S., track progress on risk and controls, and report to regulators. This move comes after TD Bank admitted to facilitating over $650 million in transactions for money laundering activities. The bank has also seen significant leadership changes, with the departure of its CEO and global AML officer, as well as layoffs of several executives. This case underscores the importance of robust AML programs and the severe consequences of failing to detect and prevent money laundering activities. Essential Safeguards to Prevent AML Violations in Your Organization Risk Assessment: Regularly assess the institution's risk exposure to money laundering and terrorist financing. This involves identifying and evaluating potential risks based on the institution's products, services, customers, and geographic locations. Internal Policies, Procedures, and Controls: Develop and implement comprehensive policies and procedures tailored to the institution's risk profile. These should include guidelines for customer due diligence, transaction monitoring, and reporting suspicious activities. Transaction Monitoring and Reporting: Use advanced monitoring systems to detect unusual or suspicious transactions and help ensure timely reporting of suspicious activities to the relevant authorities. For example, TD Bank’s President and CEO Leo Salom shared in their Q1 earnings call that TD Bank will be implementing machine learning tools that will analyze customer data to more effectively and rapidly detect potential activity of interest later this year. Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD): Implement robust CDD procedures to verify the identity of customers and assess their risk levels. For higher-risk customers, apply EDD measures to gather additional information and monitor their activities more closely Independent Testing and Auditing: Conduct regular independent audits of the AML program to evaluate its effectiveness and compliance with regulatory requirements. This helps identify any weaknesses and areas for improvement. Employee Training: Provide ongoing training for employees at all levels to ensure they understand AML regulations, the institution's policies, and their specific roles in preventing money laundering. How Can Schneider Downs Help? If you or your organization has need assistance in developing an AML/CFT program, contact our team at contactsd@schneiderdowns.com. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. ### Ready, Set, “Catch-Up!” – Unpacking Proposed Regs. Regarding Catch-Up Contributions Under SECURE 2.0 On January 10, 2025, the U.S. Department of the Treasury and the Internal Revenue Service released proposed regulations to clarify and implement provisions from the SECURE 2.0 Act of 2022 concerning catch-up contributions in retirement plans. While the proposed regulations provide much needed guidance on numerous issues affecting employer sponsored retirement plans, it also highlights the complexity involved in implementing these changes. For more insights and practical considerations regarding these proposed regulations, click HERE to register for Schneider Downs’ Employee Benefits Forum on April 1, 2025, at 9:00 AM ET. Background The SECURE 2.0 Act, enacted in late 2022, aimed to enhance retirement savings by updating various retirement plan rules. Among these, catch-up contributions were significantly revised. The proposed regulations address implementation challenges and provide guidance for plan sponsors and participants. Catch-up contributions allow individuals aged 50 and older to contribute additional elective deferrals to employer-sponsored retirement savings plans, such as 401(k), 403(b) and governmental 457(b) plans, above standard IRS limits. Plans are not required to offer catch-up contributions, but if they do, they must generally be available to all eligible participants at the same dollar amount. The proposed regulations primarily focus on Section 603 of SECURE 2.0, which requires that catch-up contributions for higher-income plan participants be designated as Roth contributions (the "mandatory Roth catch-up" provision). In addition, the proposed regulations address Section 109 of SECURE 2.0, which permits eligible catch-up participants aged 60 through 63 to make "super catch-ups," thereby increasing their catch-up contribution limits for the calendar year (the "increased catch-up" provision). Mandatory Roth Catch-Ups (Section 603) Section 603 of SECURE 2.0 introduced a mandatory Roth catch-up contribution requirement for higher-income retirement plan participants. This new provision is scheduled to take effect for taxable years beginning after December 31, 2025, and requires that catch-up contributions made by participants earning more than $145,000 in prior-year FICA wages be made on a Roth basis. The Roth catch-up wage threshold will be adjusted for inflation in subsequent years. Utilization of Deemed Roth Catch-Up Contribution Elections: As previewed in Notice 2023-62, the proposed amendments would enable a 401(k) or 403(b) plan to allow participants subject to the mandatory Roth catch-up requirement to irrevocably designate any catch-up contributions as Roth contributions. A plan offering this deemed election must give participants an opportunity to choose an alternative election. Availability of Roth Catch-Up Contributions: According to the proposed regulations, if a plan permits any participant subject to the mandatory Roth catch-up contribution provision to make Roth catch-up contributions, then all catch-up-eligible participants must also be allowed to make Roth catch-up contributions regardless of the applicability of Section 603. Identification of “Employer Sponsoring the Plan”: The proposed regulation clarifies that the “employer sponsoring the plan” refers to the participant’s common law employer. When multiple employers participate in a plan, wages from each employer are not aggregated for determining the mandatory Roth catch-up application. Plans Without a Qualified Roth Contribution Program: If a plan lacks a qualified Roth contribution program, participants subject to the mandatory Roth catch-up provision cannot make catch-up contributions under that plan. Methods for Correcting Failures: The proposed regulations outline methods for correcting failures to comply with the Roth catch-up requirements, but a plan must use the same correction method for all effected participant and may be required to have related policies and procedures in place. Acceptable correction methods include: (i) Form W-2 correction method, (ii) In-Plan Roth Rollover correction method, and (iii) taxable distribution of the contribute intended to be a pre-tax contribution. Timing for Correcting Failures: The correction deadline depends on the specific contribution limit exceeded. Super Catch-Up Contributions for Ages 60-63 (Section 109) Section 109 of SECURE 2.0 amends Code Section 414(v) to increase the catch-up limit for participants attaining ages 60 through 63 during the taxable year. The proposed regulations provide limited substantive guidance on the increased catch-up limit provision, ensuring compliance with the universal availability requirement and confirming the optional nature of the increased limit. Contribution Limit: The super catch-up limit is defined as the greater of $10,000 or 150% of the regular age 50 catch-up contribution limit, adjusted for cost-of-living. For 2025, the regular age 50 catch-up limit is $7,500, so 150% is $11,250. For SIMPLE plans, the regular age 50 catch-up limit is $3,500, making the super catch-up limit $5,250, also adjusted for cost-of-living. Applicability: This applies to 401(k), 403(b), governmental 457(b), SARSEP, SIMPLE IRA and SIMPLE 401(k) plans. Effective Date: Taxable years beginning after December 31, 2024. The proposed regulations apply after a date six months from the publication of the final rule, with early election permitted after December 31, 2024. This change is particularly beneficial for late-career savers, offering a significant boost to retirement funds, but plan sponsors must update systems to accommodate the higher limits. Impact on Stakeholders These regulations have significant implications for plan sponsors, administrators and participants: Plan Sponsors: Must update plan documents, systems and processes to accommodate super catch-up limits and Roth mandates, particularly as it relates to identifying high earners under the Roth requirement. Participants: Higher-income participants (over $145,000 FICA wages for 2025) face a shift to Roth catch-up contributions, potentially affecting tax strategies, while ages 60-63 benefit from higher contribution limits. Administrative Complexity: The Roth catch-up mandate introduces challenges in tracking FICA wages and ensuring compliance, with correction methods providing some relief but requiring diligent oversight. About Schneider Downs Wealth Management Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. ### Corporate Transparency Act Update: Treasury Announces Significant Curtailment in Enforcement The U.S. Treasury released guidance regarding significant curtailment in enforcement on the Corporate Transparency Act (CTA) on March 2. The New CTA Updates Include the Following: The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The notice further reported that Treasury will “be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” Accordingly, most reporting entities will be spared from filing reports for the foreseeable future. Please note, though, that the CTA remains in federal law until Congress passes and enacts a bill that repeals it. By not repealing the law itself, Congress could allow the current administration (however unlikely) or a future administration the ability to reconsider the administrative rule and revive the filing requirement somewhere down the road. Regarding the prospect for legislation, U.S. Senator Tommy Tuberville (R-Ala.) has introduced the Repealing Big Brother Overreach Act, a bill designed to overturn CTA, with Congressman Warren Davidson (R-Ohio) likewise introducing companion legislation in the U.S. House of Representatives. Neither bill has progressed past the introductory phase of the legislative process. While this is generally good news, apparently there will be some businesses that will need to file reports once rules are updated yet again, so many companies still need to continue to monitor developments in this area. As a reminder, any reporting requirements under FinCEN are not tax filings under the Internal Revenue Code. Accordingly, we continue to encourage you to consult with your legal counsel for additional information and filing requirements regarding beneficial owner reporting obligations. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### The Challenges Facing Higher Education—Navigating Change It is hard to believe that we have already entered March 2025, the third month of the year. While time has certainly gone fast, in these two short months, we have seen numerous executive orders (EO) issued by President Trump—one in particular pertinent to the higher education industry. On January 27, 2025, the president issued an EO focusing on freezing certain federal funding. While this EO was quickly halted due to a temporary restraining order (TRO) filed by a coalition of organizations, uncertainty remains as to the ultimate outcome and related impacts. As a result, on February 10, 2025, the court ordered that the administration accomplish the following immediately and throughout the TRO: Restore frozen funding End any federal funding pause Take every step necessary to effectuate the TRO, including clearing any administrative, operational or technical hurdles to implementation Comply with the TRO’s terms Restore withheld funds, including those appropriated in the Inflation Reduction Act and Infrastructure Improvement and Jobs Act Resume funding for institutes and agencies, including the National Institute for Health The Dear Colleague Letter As an additional layer of change facing higher education institutions, a Dear Colleague Letter (DCL) was issued by the United States Department of Education’s (Department) Office for Civil Rights. On February 14, 2025, the Department issued a DCL reiterating existing legal requirements under Title VI of the Civil Rights Act of 1964. The focus of the letter explains that the Department will no longer tolerate what it deems to be overt and covert racial discrimination as all students are entitled to a school environment free from discrimination. In the DCL’s closing remarks, it is clear that the Department is focusing on this issue, noting all education institutions are advised to: Ensure that their policies and actions comply with existing civil rights law Cease all efforts to circumvent prohibitions on the use of race by relying on proxies or other indirect means to accomplish such ends Cease all reliance on third-party contractors, clearinghouses or aggregators that are being used by institutions in an effort to circumvent prohibited uses of race What Should Higher Education Institutions Do Now? In regard to this specific DCL, the National Association of College and University Business Officers (NACUBO) released an update on the new federal guidance on race-based policies. Near the end of this update, NACUBO provided a list of ‘what institutions should do now,’ which is summarized below: Engage legal and compliance teams Conduct an institutional policy audit Communicate changes to leadership and stakeholders Monitor legislative and federal developments In my opinion, the 4th point listed by NACUBO has to be one of the most notable in the current environment, monitoring change. If you aren’t actively monitoring all that is happening, it may be a challenge to adequately address the needs of the institution by choosing the best path to respond to what is coming. From January 1, 2025, to today, we’ve been on a winding path made up of a few bumps and potholes brought on by change forced upon the industry. All signs point to the path ahead being just as dynamic. Continue to monitor legislative and federal developments (the change coming) and check our website for details on further changes. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. ### Congress Votes to Repeal Methane Fee Legislation Last week, both the House and Senate voted to repeal the Waste Emissions Charge (WEC) that was originally passed as part of the 2022 Inflation Reduction Act. The legislation directed the EPA to set a fee based on a formula calculation for methane emissions for facilities emitting more than 25,000 tons of carbon dioxide equivalent per year. The fee started at $900 per metric ton in 2024 and was to increase to $1,200 in 2025 and $1,500 in 2026. In addition to the fee structure, last November, the EPA finalized WEC methane emission and reporting rules, noting that requirements applied only to petroleum and natural gas facilities and not other methane-producing industries. The definition of a facility, for the purpose of these requirements, included production, storage, gathering, transmission and compression facilities and related equipment. The timing of these regulations last fall subjected them to the Congressional Review Act, which allows Congress to pass a resolution to undo rules ratified in the final few months of a president’s term. If the resolution passes and the new president signs it, the rule is terminated and agencies cannot issue similar rules without congressional approval. The reversal of these particular requirements and related fees is a win for the oil and gas industry, and president is expected to sign the repeal of the law in the coming days. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Taking a Strategic Approach to Ongoing Supply Chain Risks What are steps organizations can take to mitigate supply chain risks? In today's dynamic business environment, managing supply chain risks is more critical than ever. A strategic approach to these risks can ensure business continuity and maintain a competitive edge. Here are some key steps to consider: Risk Identification and Assessment – The first step in managing supply chain risks is identifying and assessing potential disruptions, such as geopolitical uncertainties, climate change, and other macroeconomic factors. For example, global conflicts can escalate supply chain constraints and inflation, increasing material and labor costs. Collaboration and Communication – Fostering cross-functional collaboration and communication within your organization is crucial. Engaging with stakeholders and leveraging data-driven tools can help identify, assess, and monitor risks in real-time. Proactive Risk Management – Emphasizing proactive risk management by leveraging data-driven tools and engaging with stakeholders to identify, assess, and monitor risks in real-time is crucial. This means anticipating risks and managing them before they become critical issues. Effective risk management relies on transparency and open communication across the supply chain, from sourcing to delivery. Resilience and Flexibility – Building resilience and flexibility into your supply chain is vital. This includes making strategic investments in resilience, such as diversifying suppliers, increasing inventory buffers, and developing contingency plans for potential disruptions. Strategic Investments – Investing strategically in resilience, such as by diversifying suppliers and increasing inventory buffers, helps mitigate risks and respond to disruptions effectively. Sustainability – Aligning your supply chain strategy with sustainability goals is another important aspect. This involves considering environmental, social, and governance (ESG) factors in your risk management approach. Understanding Risks – Recognizing that risks are present throughout a product's lifecycle, from sourcing raw materials to delivering the final product, is key. If left unchecked, these risks can disrupt operations, impacting profitability and reputation. By following these steps, you can develop a strategic approach to managing ongoing risks in your supply chain, ensuring business continuity and maintaining a competitive advantage. How Does Internal Audit Add Value in Supply Chain Risk Management? Internal audit can assist companies in being strategic with their approaches to supply chain by: Meeting Supply Chain Owners and Management – Performing walkthroughs and developing process narratives of the supply chain helps a company gain a deeper understanding of its operations and the potential impact of changes. Sharing these narratives with management provides a clearer view of the business, enabling informed decision-making and necessary adjustments. Detailed Supply Chain Testing – Performing testing over the supply chain process can allow companies to validate where their perceived weaknesses or strengths lie. Testing can provide a clear road map of where a company may want to focus their efforts to strengthen their supply chain processes. Reporting and Communication – Detailed audit reports over the supply chain to the audit committee, board of directors and management will help convey to those in a decision-making role the specific supply chain risks for the company, and communicated to them in an independent, clear, concise manner. If you  have any questions about supply chain risk management or how internal audit can help, contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### International Women’s Day 2025: Accelerate Action and Confidence International Women’s Day, observed annually on March 8th, is a global celebration of women’s social, economic, cultural and political achievements. Recognized in 1911, International Women's Day (IWD) received participation from over a million people in Austria, Denmark, Germany and Switzerland. This landmark event demanded women's rights to work, vote, receive education and hold public office. Today, International Women's Day serves as a call to action for us all to accelerate gender equality and address ongoing challenges faced by women worldwide. Every year, a specific theme is adopted to highlight issues of importance and encourage collective action and individual commitment towards a gender-equal world. The theme for 2025 is Accelerate Action. How We Celebrate At Schneider Downs, we kick off our International Women’s Day celebration with a coffee toast, donuts and a brief presentation from members of our P.O.W.E.R. (Programming and Outreach for Women Employees on the Rise) Committee and firm leadership. This year, we are asking employees to take a photo with our International Women’s Day backdrop and answer these questions, "How do you define confidence? Who in your life demonstrates confidence?" Additionally, we’ve asked employees to share something they’ve accomplished that they are proud of, which they can post on LinkedIn and our intranet. As a firm, we are committed to hiring, retaining, developing and inspiring women to reach their highest potential. The P.O.W.E.R. Committee holds various events throughout the year, including celebrating International Women’s Day and engaging in conversation on an annual theme. The theme selected by the Committee for 2025 is confidence and builds off our 2024 theme of authenticity. Embracing your true self and demonstrating your core values through actions go hand in hand with having confidence in yourself and navigating and demonstrating those beliefs in a world with many outside influences. We’ve had open and honest conversations around these difficult topics that we believe help accelerate action. Accelerate Action International Women’s Day is not just a celebration, but a platform for all of us to advocate for change—challenging norms and striving for a more inclusive and equitable world. I encourage you to think about how you can accelerate action in both your personal and professional lives by positively impacting just one individual. And, in closing, I’m sharing a quote often attributed to Michelle Obama: “Here’s to strong women. May we know them. May we be them. May we raise them.” About Schneider Downs Women’s Initiatives At Schneider Downs, we are proud to champion two key women’s initiatives: SD Focus on Women and the P.O.W.E.R. (Programming and Outreach for Women Employees on the Rise) Committee. SD Focus on Women is dedicated to creating an environment that empowers and supports women to excel in their careers. We recognize the importance of fostering a workplace where women can thrive and reach their highest potential. The P.O.W.E.R. Committee is a dynamic group of employees from all levels and departments, including both internal and client-facing roles. Formed in 2022, the P.O.W.E.R committee develops impactful programming and outreach opportunities for our women employees. ### Back to the Basics Series: Pennsylvania Forms BCO-10 & BCO-23 The Pennsylvania Charitable Organization Registration Statement, Form BCO-10, is an annual filing that must be completed by organizations soliciting charitable contributions from Pennsylvania residents unless the organization is exempt or excluded from the filing requirement. A list of types of excluded and exempt organizations can be found here. The BCO-10 must be signed by two different officers of the organization, one of whom is the chief fiscal officer or the equivalent. The form also requires several different attachments to be submitted with the charitable organization registration. A completed and signed copy of the Form 990, 990-EZ, 990-PF, or 990-N and all applicable schedules for the immediately preceding fiscal year. Please note that if an organization files Form 990-N, 990-EZ, or 990-PF instead of Form 990, a Pennsylvania public disclosure Form BCO-23 must also be filed. The applicable required financial statements for the immediately preceding fiscal year. Initial registrants are required to include a copy of the organization’s IRS exemption letter and organizing documents. Registration fee and any late filing fees All of this, along with the completed Form BCO-10, must be mailed to the Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations. The applicable required registration fee is dependent on the gross annual contributions of an organization: $25,000 or less, requires a $15 registration fee $25,001 to less than $100,000, requires a $100 registration fee $100,000 to less than $500,000, requires a $150 registration fee $500,000 or more, requires a $250 registration fee The Form BCO-10 financial statement requirement is also dependent on the gross annual contributions of an organization: Less than $100,000: The organization must submit internally prepared, compiled, reviewed, or audited financial statements. $100,000 to less than $250,000: The organization must submit compiled, reviewed, or audited financial statements. $250,000 to less than $750,000: The organization must submit reviewed or audited financial statements. $750,000 or more: The organization must submit audited financial statements. As mentioned above, Form BCO-23 is required to be filed when an organization does not file a full Form 990 return, but instead files a Form 990-N, 990-EZ, or 990-PF. The Pennsylvania public disclosure form, Form BCO-23, reports an organization’s income, expenses, and net assets. There is also a salary and expense statement for the organization’s officers and five highest-paid employees. For any questions on the Pennsylvania Form BCO-10 or Form BCO-23, please contact Schneider Downs. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### Our Thoughts on the IIA's Cybersecurity Topical Requirement The Institute of Internal Auditors (IIA) has taken a significant step forward with the release of the Cybersecurity Topical Requirement on February 5, 2025. This new requirement is effective immediately and is a crucial addition to the IIA’s International Professional Practices Framework® (IPPF®), addressing one of the most pressing risks faced by organizations globally. Addressing Pervasive Risks Cybersecurity remains a top concern for organizations worldwide, consistently ranking as a critical risk in various reports, including The IIA’s Risk in Focus 2025. The Cybersecurity Topical Requirement (Topical Requirement) provides a structured approach for internal audit functions to assess cybersecurity governance, risk management and control processes. This is essential for ensuring that organizations are well-prepared to handle recurring cyber threats. Key Elements of the Requirement The requirement emphasizes several key areas: Clear Roles and Responsibilities: Establishing defined roles within the organization to manage cybersecurity strategic objectives. Robust Risk Management: Implementing an up-to-date risk management approach to address ongoing cyber risks. Effective Internal Controls: Ensuring that management has established a strong internal control environment. These elements are designed to provide a consistent baseline for internal auditors, helping them to evaluate cybersecurity risks effectively. Flexibility and Guidance One of the standout features of the Topical Requirements is the flexibility they offer. Internal audit functions can tailor their audit plans to the unique needs and risk profiles of their organizations. This flexibility ensures that while the requirements provide clear guidance, they do not mandate a one-size-fits-all approach. Instead, they equip practitioners with the resources needed to address priority risks in a consistent manner. Implementation Steps Implementing the IIA's Cybersecurity Topical Requirement involves several key steps to ensure effective integration into an organization's internal audit processes: Understand the Requirement Review the User Guide: Start by thoroughly reviewing the Cybersecurity Topical Requirement User Guide provided by the IIA. This guide offers detailed insights into the requirement, including practical application examples and mapping to globally recognized frameworks like NIST and COBIT. Assess Current Capabilities Evaluate Skill Sets: Assess the current skill sets of your internal audit team to determine if additional training or resources are needed. This may involve identifying gaps in cybersecurity knowledge and arranging for relevant training programs. Engage Qualified Resources: If necessary, consider engaging third-party experts to supplement your internal audit team’s capabilities. Develop a Tailored Audit Plan Customize Audit Plans: Tailor your audit plans to address the unique needs and risk profiles of your organization. Ensure that the plans incorporate the key elements of the Cybersecurity Topical Requirement, such as clear roles and responsibilities, robust risk management, and effective internal controls. Engage Stakeholders Involve Senior Management and the Board: Engage senior management and the board in discussions about cybersecurity governance. Their involvement is crucial for establishing a strong cybersecurity culture and ensuring alignment with strategic objectives. Document and Review Document Conformance: Maintain thorough documentation of how your organization conforms to the Cybersecurity Topical Requirement. This includes records of audit plans, findings, and corrective actions. Prepare for Quality Reviews: Be prepared for both internal and external quality reviews by ensuring that all documentation is up-to-date and accurately reflects your cybersecurity audit processes. Continuous Improvement Learn from Best Practices: Leverage lessons learned from other organizations that have implemented the requirement. Participate in roundtables and forums to share experiences and gain insights. Stay Updated: Keep abreast of any updates or additional guidance provided by the IIA to ensure your practices remain current and effective. Internal audit functions are required to comply with the IIA's cybersecurity-related requirements when cybersecurity risks are material to the organization and have a significant impact on the achievement of the organization’s objectives.  To put it simply, the need for compliance is tied to when cybersecurity becomes a critical factor in managing the organization’s overall risk and control environment. By following these steps, organizations can effectively implement the IIA's Cybersecurity Topical Requirement and enhance their cybersecurity audit processes.  Although the Cybersecurity Topical Requirement is not mandatory for all internal audit functions to be considered in compliance with the IIA standards, it is highly recommended. Looking Ahead The Topical Requirement is just the beginning. The IIA plans to release additional Topical Requirements throughout the year, focusing on other critical areas such as third-party risk, business culture, business resilience, and anti-corruption and bribery. These upcoming requirements will further enhance the ability of internal auditors to address a wide range of pervasive risks. The release of the Topical Requirement marks a significant milestone for the IIA and the internal audit profession. By providing a structured and flexible approach to assessing cybersecurity risks, the IIA is helping organizations strengthen their defenses against one of the most critical threats they face today. If you have any questions about the Topical Requirement, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Key Risk and Compliance Concerns for Companies Amid Emerging Trade Tariffs What risk and compliance issues can trade tariffs create? Trade tariffs are a known focal point of the new administration. Tariffs are taxes that a country imposes on certain imported goods, increasing their costs for domestic buyers, making it harder for foreign companies to compete within a country’s economy. In response to U.S. tariffs on trading partners, many affected countries have imposed reciprocal tariffs—tariffs on imports from a country that has levied tariffs on their goods. These measures impact U.S. companies operating in affected markets, whether through sourcing materials or selling products. Many U.S.-based companies, unfamiliar with tariffs and their associated risks or compliance challenges, now face the complexities of navigating these trade policies. Key Risk and Compliance Issues Related to Trade Tariffs? Complex customs procedures – Companies who source products from outside the US should be familiar with custom procedures, however, with the additional tariffs imposed, these procedures could have changed; additional steps may have been added, additional payments may need to be completed before the product can be released. Higher cost of doing business – The imposed tariffs could make sourcing goods or doing business outside of the United States more expensive for companies. Failure to account for this additional cost will affect the company’s profit. Noncompliance with the tariff – Noncompliance with the tariff could be costly for a company and could attract unwanted attention from regulators and/or the federal government. Tariff classification – Tariffs apply to specific classifications of goods, and misclassification can disrupt sourcing or lead to unexpected cost increases. Companies should assess whether their products or supplies are subject to these tariffs to mitigate potential risks. Supply chain disruptions – Companies may choose to adjust their supply chain to reduce the higher cost associated with a tariff, however, an adjustment in their supply chain can be costly and take time to implement. How Can Companies Reduce Risk and Ensure Compliance? Understand the tariff and how it effects their company – Companies should understand which tariffs can/will impact their business, where in the supply chain they will impact, and how the tariff will impact their business. Establish compliance procedures for all applicable tariffs – Once a company understands the basics of the tariff, developing internal controls/procedures to address the tariff can help reduce the risk of noncompliance to the tariff and help maintain efficiencies within their shipping/receiving process. Leverage trade associations – Engaging with the experts can help a company develop their plan for tariff compliance and how the tariff will impact their company. Monitor for regulatory changes – If the early months of 2025 are any indication, the tariff landscape can change rapidly. Implementing a monitoring process to track current and potential tariffs will help companies stay ahead of changes and allow more time to plan for compliance. Implementing internal controls and procedures for tariffs can significantly mitigate the risk of non-compliance and potential tariff impacts. This proactive approach can greatly benefit a company, enhancing its position in the global market. If you have any questions about the risk and compliance issues related to trade tariffs or any other industry factors, contact our team at contactsd@schneidedowns.com. About Schneider Downs Risk Advisory  Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.  Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com  ### Political Risk: An Internal Auditor Perspective How can internal auditors navigate political risks to protect organizational resilience and compliance? In today’s fast-changing global landscape, political risks are a major concern for organizations across all industries. Geopolitical tensions, regulatory changes, cybersecurity threats, and economic shifts can all disrupt business operations and strategic decision-making. For internal auditors, managing these risks is crucial to maintaining organizational resilience and compliance. By staying informed and proactive, auditors can help navigate complex challenges, offering valuable insights and recommendations to protect their organizations from potential disruptions. What Are Geopolitical Risks? Geopolitical risks refer to the potential for political, economic, and social instability or conflict that can impact countries, regions, or the global community. Many CEOs view these risks as a major threat to business operations. According to Verisk Maplecroft’s Political Risk Index, 99 countries have experienced a significant rise in risk over the past three years. In 2024, leadership changes in many of these nations have further reshaped the global political landscape, influencing business risks. As a result, geopolitical risk is increasingly a priority for audit leaders, with 30% of global CAEs ranking it among their top five concerns. These risks include: Heightened geopolitical competition and social unrest can significantly disrupt business operations and supply chains. These disruptions can arise from political instability, protests, and conflicts that affect the flow of goods and services. Geopolitical tensions can lead to increased cyberattacks targeting critical infrastructure, financial systems, and corporate networks. These cyber threats can compromise sensitive data, disrupt operations, and cause financial losses. Political decisions and changes in government policies can result in abrupt regulatory changes. These changes can impact industries differently, creating compliance challenges and operational disruptions. Companies must stay vigilant and adapt to new regulations to maintain compliance. Conflicts such as the Russia-Ukraine war and tensions in the South China Sea can fuel regional instability and impact global energy and food security. These conflicts can lead to higher prices and increased inflation rates. Additionally, various nations have increased their spending on nuclear weapons, allowing them to expand their arsenals, which further escalates geopolitical risks. Economic policies and trade conflicts between countries, such as the U.S.-China trade war, can disrupt global trade patterns and affect economic growth. Monetary policies, including interest rates, public spending, and invested infrastructure, directly influence the risks and opportunities of economic growth and stability. Internal Audits Role and Opportunity In today's interconnected world, geopolitical risks pose significant challenges to business operations and supply chains. Internal audit’s role regarding these risks is to identify, assess, and monitor potential impacts of political instability, regulatory changes, and international conflicts on a company's operations, finances, and compliance. Some of the best practices for internal auditors include: Evaluating geopolitical risks requires analyzing factors like political instability, sanctions, currency fluctuations, trade barriers, and regional conflicts. For example, instability may disrupt supply chains, sanctions can restrict resources, and currency shifts impact trade costs. Scenario planning helps anticipate and mitigate these risks. Regularly monitoring geopolitical developments involves tracking global events, regulatory changes, and emerging risks through news, government reports, and industry publications. This ensures compliance and timely risk management adjustments. A robust reporting system facilitates prompt communication to management for proactive decision-making. Geopolitical risks often intersect with economic and cyber risks. Internal audit teams should account for these connections to create more comprehensive risk assessments and mitigation strategies. The only thing that is certain, is that the geopolitical landscape is here to stay and will continue to evolve. These shifts create opportunities for agile companies that can adapt to the changing political landscape. Success requires recognizing, navigating, and capitalizing on these changes. For internal auditors, the evolving geopolitical landscape presents significant potential. By understanding geopolitical dynamics and incorporating them into audit plans, they enhance risk mitigation and identify growth opportunities, becoming key enablers of geopolitical risk adaptation and strategic growth. About Schneider Downs IT Risk Advisory  Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.   To learn more, visit our dedicated IT Risk Advisory page.  ### Investment Corner with Jason & Sean: The Impact of Government Stimulus on Capital Markets Reflecting on the last 2 years, many can argue that we have not needed diversification across portfolios. After all, when US Large Cap equities give back-to-back 25% return years, it can be difficult to see the value in all the other aspects that make up a well-diversified portfolio. Although equities often contribute most of the return in a portfolio (not always the case), they also appear to contribute to most of the risk and volatility as well. A well-diversified portfolio will capture strong returns of the best assets classes in a given year but will also spread the risk out so that the portfolio as a whole will not be as volatile. Source: Bloomberg, Apollo Chief Economist If we think back to 2022, when the Federal Reserve was raising interest rates, equities as a whole were selling off providing a lot of downside volatility to portfolios. U.S. Large Cap Growth stocks ended 2022 down over -30% for the year. Other areas of the portfolio provided much-needed diversification. U.S. Large Cap Value stocks suffered much less, down a little more than -7%.  Bonds and International Equities outperformed U.S. Large Cap Growth that year and allocations outside of the traditional 60/40 stocks and bonds portfolio, such as real assets, provided strong relative returns with muted volatility (some real asset exposures were even positive for the year, outperforming U.S. Large Cap Growth Equities by as much as 30%!). We are no longer in 2022, and the benefits of diversification can feel like a thing of the past. The best performing asset classes change most years and although U.S. Large Cap Growth has been in the spotlight, we must not look solely into that asset class for future growth in our portfolios.  We continue to invest in other asset classes because we believe in diversification in our client portfolios. Year-to-date (as of 2/20/2025), International Developed Equities, U.S. Mid-Caps, and Value as a style are some of the strongest performers. Fixed Income continues to pay out higher coupons with yields sitting at levels higher than we have experienced over the last 5 years. All asset classes are not perfectly uncorrelated with each other, but when combined into a well-diversified portfolio, your experience should be much smoother. When the S&P 500 is having a strong year, you may be tempted to ask your advisor why your portfolio is not performing in line. Remember that diversified portfolios are set up in a way to get you where you want to go in the long-term but without the rollercoaster of a ride that equities can provide by themselves. If you would like to learn more about how diversification is pivotal to long-term success, please contact us at sdwealthmanagement@schneiderdowns.com. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Buyers and Sellers: Don't Forget About EV Tax Credits If you’re a customer who purchased an electronic vehicle in 2024, Form 8936, Clean Vehicle Credit, needs to be filed with your return for you to claim your EV tax credit. Hopefully, the dealership took all the necessary steps to enable this. Tax season always comes with surprises. The good surprises are refunds larger than we anticipated; the bad ones are smaller refunds or not getting the tax credit you expected. During the season, we all gather the necessary information to file. Do you have everything you need? We’ve already received several questions from taxpayers this season regarding having the correct information. Our concern is that some electric vehicle (EV) credits might be disallowed if the dealership failed to do its part. Per the IRS, the dealership needs to report all the necessary information for eligible EVs they sell through the IRS Energy Credits Online within three days of the transaction. We’ve suggested to our dealers to make this part of the finance and insurance step of selling the vehicle. Dealers, Don’t Lose a Customer Over an EV Credit This should be old news, but dealerships need to register to enable credits for clean vehicle buyers. Yes, dealerships initiate the process. Don’t lose a customer simply because you didn’t register to participate. It’s easy to take care of and there are many advantages to registering online. This includes applying the payment toward the vehicle at the time of sale, a better process than the cash-for-clunkers program from 2009. If your dealership is not registered, we recommend doing so as soon as possible. There is still time to submit late sales reports, though the IRS will require an explanation for the late filing. Be sure to read up on clean vehicle credit seller or dealership requirements. If you haven’t done so already, register your dealership accordingly. Please reach out to Steve Barber or any Schneider Downs advisor for more information. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. ### Corporate Transparency Act Beneficial Ownership Reporting Update: Part 3 of The More Things Change, The More They Stay The Same Just when you thought you had a handle on Beneficial Ownership Information (BOI) reporting, the rules have changed again: reporting is now mandatory, with a deadline of March 21, 2025 On January 2, we wrote about the on-again, off-again decisions being made regarding the filing of beneficial ownership information (BOI) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). We followed that up on January 30 with an article that a further delay in reporting was again in place. Well, time for another update. There is yet another about turn in filing requirements. In short, on February 18, the U.S. District Court for the Eastern District of Texas essentially reversed its earlier decision with the result being that BOI reporting is again now mandatory. For most reporting companies, the new deadline to file an initial, updated, or corrected BOI report is March 21, 2025. Because Treasury recognizes that reporting companies may need the additional time needed to comply with BOI reporting obligations, FinCEN is generally extending the deadline for 30 days from February 19 to March 21 for most companies – unless of course there are even further delays resulting from judicial decisions, regulatory actions or enacted legislation that could yet again reverse the current mandatory reporting requirements. We note the potential for additional changes for a couple of reasons: FinCEN itself states that, “… in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines.” FinCEN intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses. The House of Representatives voted 408-0 on February 10 in favor of pushing the CTA’s reporting deadline to January 1, 2026 under H.R. 736 – Protect Small Business from Excessive Paperwork Act of 2025. The measure is now pending in the Senate. There are still a number of cases throughout the country challenging the constitutionality of the Corporate Transparency Act. Reporting companies impacted by certain hurricanes may have extended reporting deadlines past March 21. For example, if a company’s current BOI reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline. Additional information is available at the FinCEN website. FinCEN also reminds reporting companies that they can report their BOI directly, free of charge, using the agency’s e-filing system. Recommendations for Reporting Companies If your company has not already taken steps to gather the necessary information required to be reported, it should do so immediately and be prepared to file by March 21. In the wake of these constant changes, some reporting companies may decide to just simply file their reports to get this behind them, regardless of whether there are any future delays. Finally, reporting companies that filed an initial report in 2024 but have changes in beneficial owners may have to file an updated report by the new deadline. For those that decide to further delay filing, they should continue to monitor the proceedings, just as we will. As a reminder, any reporting requirements under FinCEN are not tax filings under the Internal Revenue Code. We encourage you to consult with your legal counsel for additional information and filing requirements regarding beneficial owner reporting obligations. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Top Five Emerging Risks for Assurance Leaders in 2025: What You Need to Know Learn about the top five emerging risks enterprise assurance leaders may face in 2025 based on Gartner’s most recent Quarterly Emerging Risk Report. Emerging risks are dynamic, evolving over time as they transition from emerging to established risks within the landscape. Typically, the emerging risk landscape shifts from year to year or quarter to quarter, with the top five risks constantly vying for the top position. Gartner’s Quarterly Emerging Risk Report for 2024 revealed an intriguing trend: none of the top five emerging risks identified in Q1 2024 remained in the top five by Q4 2024. While some topics showed consistency in concept or evolution in risk areas, the shift over the year is noteworthy. Let's delve into the top five emerging risks as of Q4 2024 and how they emerged: IT Vendor Criticality Defined as the risk of overreliance or unknown reliance on third- or nth-party IT vendors, which leads to operational IT risks like outages or data loss. This risk started 2024 outside the top five but climbed to the top spot by Q4 2024 due to market consolidation and increased vendor concentration. AI-Enhanced Malicious Code This risk involves the increased threat of high-impact cyber events from the use of AI for malicious code generation. This risk appears to be an evolution of AI-enhanced malicious attacks, which topped the list in Q1. Advances in AI and AI tools continues to pose a serious threat as bad actors evaluate viability of their code generating capabilities. Unsettled Regulatory and Legal Environment This risk stems from increasing compliance complexity or costs due to regulatory changes following court decisions and elections. While not on the list in Q1, this is a result of a globally consequential election, which ranked as high as 4th on the emerging risks list in 2024. Many industries are waiting with bated breath for the sweeping changes to be announced or enacted in regard to regulatory requirements under the new administration. Postelection Volatility Defined as the risk of rapid changes due to new governments (e.g. US) and policies, this risk is also a result of the globally consequential election. International reactions to new policies continue to create near-term uncertainty. Soft Ransomware Targets This risk involves systems vulnerable to ransomware due to underinvestment or technical debt, leading to prolonged business disruptions. It emerged in Q4 2024 as organizations struggled with allocating appropriate resources across their array of systems, typically on basis of criticality, leaving some systems exposed. Understanding these emerging risks is crucial for effective risk management and strategic planning. How do you see these risks impacting your organization? Let us know at contactsd@schneiderdowns.com. About the Gartner Quarterly Emerging Risk Report The Gartner Quarterly Emerging Risk Report provides assurance leaders with a benchmarked view of 20 emerging risks and analyzes the connections between risk events, their causes and consequences. The report simplifies risk assessment and reporting, making complex scenarios easier to present to executive leaders and risk committees. About Schneider Downs Risk Advisory Services Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. ### How Scammers Are Using AI to Enhance Family Emergency Scams – What You Need to Know Family emergency scams are on the rise and evolving thanks to AI. Who makes phone calls nowadays anyway? Scammers, that’s who. And maybe your older relatives. All jokes aside – family emergency scams are on the rise. And it might not be enough only to educate yourself on these types of scams since they tend to target seniors – meaning you may have to step in and prepare your loved ones, including grandma or grandpa, to identify and avoid these scams. What are Family Emergency Scams? Family emergency scams are facilitated through phone calls using AI voice cloning technology. AI voice cloning software enables scammers to artificially duplicate your loved ones’ voices, sometimes with uncanny accuracy, and create convincing messages that they need help or are in trouble. According to research conducted by online protection service McAfee, even a three-second audio clip posted on social media is enough for scammers with basic AI skills to create an 85% voice match. The longer the audio clip, the more convincing AI voice cloning technology can be, thus, increasing the likelihood of duping victims into sending money. Proceed with Caution – How Family Scams Work The more you put on social media, the more scammers have on you. Scammers love it when you announce on Instagram that you bought a new puppy, purchased a car for your child or grandson or are going on an international family trip. Scammers can use AI voice cloning technology to create audio that sounds exactly like your loved one and deliver a convincing verbal message with it. One that’s rooted in facts you’ve shared online and directly with your loved ones. Nevertheless, even the most private people can be family emergency scam victims if their information is hacked, so remember to take steps to prevent yourself from being hacked. Granddaughter, is that you? How to Spot and Stop Family Emergency Scams Here are a few of the red flags you’ll want to listen for when answering a phone call from a so-called relative: They’re calling from a number you don’t recognize. They have a strong sense of urgency around their request for money and/or assistance, suggesting that something horrible will happen if you don’t help them. They ask for a nontraditional payment form, including a gift card, cryptocurrency or wire transfer. They ask for sensitive information, including your credit card number, bank account information or Social Security number. They tell you not to tell anyone else, including family members, about their predicament. Once you notice one or two red flags, verify if this is a family emergency or a scam. Hang up and call your loved one at the phone number you regularly use to contact them. If they answer and aren’t in trouble, you’ll know it’s a scam. If they don’t answer, try the number of a family member or friend who might have recently been with the person or know of their whereabouts. If you successfully spot a scam, report it to the FTC. And if you want to be proactive about it, it’s helpful to establish a safe word to get ahead of these scams before they happen. Share the word with your innermost circle and tell them to ask for it the next time they’re on the phone with someone they suspect might be a scammer. If the caller can’t provide the safe word, you’ll know their request for help isn’t legitimate. At the end of the day, education is your and your loved ones’ first line of defense, so stay informed of the latest scams, including romance scams, and familiarize yourself with the steps to protect yourself and them from falling victim. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Micro-Captive Final Regulations – Good News for Auto Dealerships On January 14, 2025, the IRS and Treasury Department issued final regulations on micro-captive transactions. These rules clarify the requirement for dealerships and their F&I captive reinsurance companies to file Form 8886 with their tax returns. The good news, under these final regulations, if the captive reinsurance company is insuring or reinsuring at least 95% third-party risk (i.e., risks of customers unrelated to the dealership), no Form 8886 will be required to be filed. This has been an area of uncertainty since 2016, when Notice 2016-66 was issued requiring Form 8886 to be filed for all micro-captive reinsurance companies. Form 8886 is used to notify the IRS of participation in a transaction of interest that has the potential for tax avoidance or tax evasion. Notice 2016-66 was intended to target abusive micro-captive insurance companies insuring their own related-party risks. The automotive industry has always felt that its F&I reinsurance of third-party customer risk was not intended to be pulled into Notice 2016-66, but the 2016 notice did not provide a definitive exception for these companies. The final regulations issued last month provide for a long-awaited and welcomed “Seller’s Captive” exception, which states that the F&I captive reinsurance transactions will not be deemed either a “Listed Transaction” of “Transaction of Interest” if all of the following conditions are met: The reinsurance company is owned by the same individuals (or related individuals) who own the dealership selling the service contracts, warranties, etc. The reinsurance company issues or reinsures some or all of the contracts purchased by unrelated customers in connection with the products or services being sold by the dealership. 100% of the business of the reinsurance company is issuing or reinsuring contracts in connection with products or services being sold by the dealership; AND At least 95% of the reinsurance company’s business for the taxable year is issuing or reinsuring contracts purchased by customers unrelated to the dealership or reinsurance company owners. (This allows for F&I products to be sold to family members who may purchase vehicles in a given year.) We believe most dealership F&I reinsurance participation structures will meet this “Seller’s Captive” exception and thus fall outside the reporting requirements relative to abusive micro-captive transactions. However, you should consult with your tax advisor to ensure you meet the exception based on your specific facts and circumstances. If your captive is insuring any underlying business risk of your dealership itself, this exception may not apply and you will need to review additional facts to make the Form 8886 filing determination. For more information or if you need assistance understanding these complex regulations, please contact Brett Cubellis or any of our SD Auto Advisors. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. ### What's New at Schneider Downs? Start 2025 off with new resources from our digital, CMMC, SOX and not-for-profit teams. One of the best things about working at Schneider Downs is the countless ways our firm helps clients of all sizes and industries solve unique business problems. This also means we continually introduce new ideas, solutions and resources to support our clients. While many stay informed through the Our Thoughts On newsletter and firm LinkedIn page, we understand that the flow of information can sometimes feel overwhelming. So, we’ve put together a consolidated update featuring the latest news and resources from the Schneider Downs team. Schneider Downs is an Authorized CMMC C3PAO Schneider Downs officially completed the CMMC Third-Party Assessor Organization (C3PAO) authorization process, which means our firm is one of the first 60 firms in the country qualified to assess and provide CMMC certification for organizations conducting business with the Department of Defense’s (DoD) program. For more information on our CMMC solutions, contact us at contactsd@schneiderdowns.com. Enhanced Guidance for Not-for-Profit Organizations Not-for-profit organizations navigate a complex landscape of tax, audit, compliance, and regulatory requirements. Our not-for-profit industry group frequently fields client questions on topics such as federal single audit triggers, accounting for donated space under ASC 842, and filing thresholds for Forms 990-N, 990-EZ, and 990. Over the past year, we’ve helped many organizations address these challenges. To share our insights, we recently published a not-for-profit FAQ covering a wide range of key topics and common questions, available here. CFOs Continue Prioritizing Digital Investments in 2025 Over the past year, our SD Digital team has worked with organizations to enhance the value of their digital investments. While CFOs recognize the benefits—improved reporting, risk management, efficiency and decision-making—they often need support to translate these investments into measurable impact. Our Chief Digital Innovator, John Huckle, recently shared his thoughts on this, including key steps CFOs can take to start the new year off on the right digital path in his whitepaper, Top 5 Digital Priorities for CFOs in 2025. Smaller Reporting Companies Continue to Search for SOX Guidance Our SOX team continues to see an increase in smaller reporting companies searching for SOX guidance. SRCs are public companies  with either a public float of less than $250 million or less than $100 million in annual revenues and either no public float or a public float of less than $700 million. Our recent article outlines some of the best ways SRCs can approach SOX compliance, including ways to maximize limited resources, the importance of external auditors and how to leverage technology for monitoring and testing internal controls. Keep Up With Schneider Downs News and Resources We believe that delivering relevant thought leadership and resources is essential to our mission: "Working together every day to make our firm, clients and communities better”. We invite you to explore, share our latest insights with your network and stay informed by subscribing to the Our Thoughts On newsletter. ### Impact of Declining Dealership Profits on Tax Obligations Will lower profits result in reduced tax liabilities for the automotive dealership industry? The answer is not straightforward. The automotive dealership industry is experiencing a challenging period, with profits declining in recent years. Declining Profits and Rising Costs The 2024 financial results for dealerships reveal a concerning trend. Overall profits have decreased, driven by several key factors: Increased Personnel Expenses: Dealerships are facing higher costs related to employee salaries, benefits and other personnel-related expenses. This increase in overhead can significantly impact the bottom line. Reduced Gross Profits on Vehicles: The gross profit margins on vehicle sales have declined. This reduction can be attributed to various factors, including increased competition, changes in consumer preferences and economic conditions. Higher Inventory Costs: The cost of maintaining inventory has risen, particularly due to increased floorplan interest expenses. Floorplan financing, which allows dealerships to borrow money to purchase inventory, has become more expensive, adding to the financial strain. Decreased Sales Volume: The volume of vehicles sold has dropped, further contributing to the decline in overall profits. Taxable Income vs. Financial Statement Income Several items can cause discrepancies between taxable income and financial statement income: LIFO (Last-In, First-Out) Accounting: The use of LIFO accounting can lead to deflation and income pickup. In periods of rising prices, LIFO can reduce taxable income by valuing inventory at older, lower costs. However, in deflationary periods, it can result in higher taxable income. Interest Expense Limitation: Section 163(j) limits the amount of deductible other business interest expense to 30% of adjusted taxable income. In a period of higher interest rates, dealerships may face restrictions on the amount of non-floorplan interest expense they can deduct, impacting their overall tax liability. Floorplan Interest Deductibility: Floorplan interest expenses are fully deductible for auto dealers. However, dealerships may not be able to utilize bonus depreciation if total floorplan interest expense exceeds the sum of 30% of adjusted taxable income (ATI) and business interest income earned. Strategic Considerations for Dealerships Given the complex interplay between financial performance and tax obligations, dealerships must adopt strategic approaches to manage their tax liabilities effectively. Here are some key considerations: Tax Planning: Proactive tax planning is essential to navigate the challenges posed by declining profits and rising costs. Dealerships should work closely with tax professionals to identify opportunities for tax savings and ensure compliance with evolving tax regulations. Cost Management: Controlling personnel expenses and inventory costs can help mitigate the impact of declining profits. Implementing efficient cost management practices can improve the overall financial health of the dealership. Revenue Diversification: Exploring new revenue streams, such as service and parts sales, can help offset the decline in vehicle sales. Diversifying revenue sources can provide a more stable financial foundation. Financial Analysis: Regular financial analysis and performance monitoring are crucial. Dealerships should track key financial metrics and adjust their strategies based on changing market conditions. Conclusion By understanding the factors influencing taxable income and adopting proactive measures, dealerships can navigate this difficult period and position themselves for future success. For more information related to this topic, please contact a member of Schneider Downs’ Automotive industry group tax practice. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.   To learn more, visit our Automotive Industry Group page.   ### Internal Control Considerations for Startup Companies Learn why internal controls are one of the most important, yet often overlooked, business considerations in the startup world. Startups have many things to consider as they begin: headcount, location (or lack thereof), business strategy, cash flow and more. One area that can often be an afterthought is internal controls for financial statements. However, internal controls should be a key consideration as startups develop their company. Why Are Internal Controls Important for Startups? Incorporating internal controls into the daily functions of a startup can provide numerous benefits, such as: Accuracy and Reliability – Internal controls over financials increase the accuracy and reliability of reporting, giving both readers and preparers confidence. This, in turn, can boost stakeholder confidence in the company, potentially bringing in more cash flow and improving the company's financial well-being. Compliance and Regulatory Requirements – Internal controls create guidelines for employees that help the company meet compliance requirements. By aligning internal controls with applicable laws and regulations, the company can ensure compliance. Efficiency – Internal controls establish guidelines for processes and procedures, showing employees what to do and what not to do. These guidelines help employees complete their jobs more efficiently, saving the company time and money, and allowing them to focus on their true mission and goals. Reducing Risk – Establishing internal controls reduces the risk of error, fraud and mismanagement of assets. Investor Confidence – Incorporating internal controls can provide a higher level of confidence for investors, which can lead to additional funding. The Importance of Internal Controls in the Finance Function Here are some internal controls that a startup should consider implementing into their financial processes: Access Controls: Limiting access to employees who need it to perform their job functions can reduce the financial reporting risk of a startup. This includes both physical and digital access. Accounting Software: Incorporating quality accounting software into a company's financial controls increases the reliability of the data stored within the software and the accuracy of the financials it generates. Authorization Procedures: Establishing clear authorization for financial procedures reduces the risk of inappropriate recording and management of financial information. Regular review of these procedures is also necessary. Documentation and Recordkeeping and Reconciliations: Documenting the financial processes and procedures for a company allows a startup to thoroughly explain how their controls are put into practice. Then, maintaining this documentation will allow for an easier audit/review process. Examples of documentation a company should maintain are evidence of review of financial reporting, reconciliations and account receivable and payable support. Reconciliations are especially important to ensure accounts are regularly reconciled, discrepancies are identified, and that financial information is trustworthy. Monitoring: Reviewing and analyzing financial procedures, and adjusting them as necessary, keeps processes current and accurate. This can also help identify additional risks that may have emerged in the past year. As a best practice, this process is typically completed on an annual basis. Segregation of Duties: It's best practice to limit an employee's ability to perform functions that cross over three main areas of a financial process: authorization, recording and custody. Establishing internal controls that prevent this overlap helps maintain a strong, reliable and accurate financial environment. If you have any questions about how internal controls can benefit your startup, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Understanding and Mitigating Fraud Risk Amid Employee Layoffs How can organizations prepare for and reduce the increased risk of fraud during employee layoffs? Layoffs are sometimes necessary for an organization to remain competitive, even during times of positive economic outlook. Still, they’re not free of collateral damage when it comes to the risk of fraud. Three broad factors that impact fraud risk are opportunity, financial pressure, and rationalization—any of which can significantly impact an organization amid employee layoffs. The Opportunity Factor Increased opportunity can embolden employees and others – like customers – to engage in fraudulent activities, since individuals may perceive a lower likelihood of being caught. For example: Reduced staff may weaken internal controls and compromise duty segregation, making fraud easier to commit and harder to detect. Heavier workloads on remaining employees can lead to shortcuts, unintentionally creating fraud risks. A service provider’s layoffs may impact its control performance for business partners, increasing fraud risk for partners and their customers. The Financial Pressure Factor Unemployment benefits provide short-term income to workers who lose their jobs through no fault of their own, but laid off employees are typically only eligible to receive weekly benefits which are capped to replace at most around 50 percent of their previous earnings. The increased financial pressure can push employees and others to engage in fraudulent activities which may include: Employees being laid off face the possibility of prolonged unemployment and may resort to fraud as a financial safety net. Even if employees aren’t impacted by layoffs at their organization, layoffs elsewhere can create financial pressure, indirectly raising fraud risk. For example, financial pressure from widespread layoffs may lead to heightened fraud risk at an insurance carrier with more individuals intentionally misrepresenting information on applications to obtain lower-cost coverage fraudulently. The Rationalization Factor Perceived justification for actions known to be wrong can also contribute to employees and others choosing to engage in fraudulent activities. Employees impacted by layoffs that feel betrayed by their employer and its leadership may justify fraud as retaliation for perceived injustice. Remaining employees, burdened with extra work without higher pay may rationalize stealing as compensation. Although not directly impacted, third parties may exploit perceived unfair treatment of employees to justify fraud against the organization. How Can Organizations Mitigate Layoff-Related Fraud Risk? Fraud risk is just one factor in a layoff strategy, and organizations often take steps to mitigate the increased risk. Providing financial resources can reduce employees' temptation to commit fraud and make it harder to justify stealing from a supportive employer. Similarly, increasing both actual and perceived detection, restricting access to sensitive information, and reinforcing expectations can help deter employees from attempting fraud. Here are more specific examples of how an organization can effectively manage fraud risk amid employee layoffs: Notice Periods: The federal Worker Adjustment and Retraining Notification Act requires most employers to give 60 days’ notice in cases of mass layoff. Even when not required by law, some organizations still provide a notice period before layoffs, allowing affected employees time to prepare and seek new jobs, reducing the stress of potential unemployment. Immediate Terminations: Immediate terminations may be necessary for layoffs of employees with access to sensitive information or systems at risk of compromise. Even if the employer temporarily continues to pay them, immediate termination can help mitigate security risks. Increased Monitoring and Controlling Activity: Instead of immediate termination, organizations may opt for closer monitoring and restricted access. They can limit employees’ access to sensitive systems while allowing them to complete other tasks. Enhanced monitoring of emails and physical file activity can also help mitigate risks before layoffs take effect. Confidential Information Protection Obligation Reminders: Even if already part of an employment agreement, an employer can reduce the risk of unauthorized disclosure of protected information – like intellectual property, customer lists, and trade secrets – by providing reminders to affected employees. Employee Assistance Programs (EAPs): EAPs often provide employees with financial counseling and assist those impacted by layoffs in finding a new job, which can help them effectively manage personal financial stress. Severance Pay: Some employers may decide to provide severance pay for laid-off employees, which cannot only reduce financial pressure but also deter an employee’s ability to rationalize when it comes to stealing from the company. How Can Schneider Downs Help? If your organization needs assistance with fraud risk management strategy, assessing your risk to help prioritize efforts, evaluating the maturity and/or effectiveness of your risk management practices, developing awareness content or procedures or finding a litigation expert witness related to fraud, contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in Pittsburgh. If you need assistance with cybersecurity consulting, contact Carl Kriebel. About Schneider Downs Business Advisory Our experienced team of business advisors consisting of Certified Fraud Examiners, Certified in Valuation Analysts and Certified Mergers and Acquisition Advisors leverages its industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business events. To learn more, visit our dedicated Business Advisory page. ### New Form 7217 Partner’s Report of Property Distributed by a Partnership The Internal Revenue Service (IRS) released the final version of Form 7217, Partner’s Report of Property Distributed by a Partnership, along with the applicable instructions. The initial draft of the instructions was released on September 3, 2024, and the initial draft of the form was released on August 28, 2024. Tracking of a partner’s basis in its partnership interest (“outside basis”) is required for each partner and is used to compute gain or loss on the disposition of the partner’s interest in the partnership and the deductibility of losses. The introduction of Form 7217 provides a uniform method of reporting property distributions from partnerships to their partners and facilitates the proper computation of any gain or loss that may be attributable to such property distributions. Partnerships that distribute property subject to reporting are required to provide partners’ relevant information on Box 19c of Schedule K-1 (Form 1065). If this information is not provided and the partner received property subject to the new reporting requirements, the partner needs to contact the partnership to obtain the relevant information to complete Form 7217. Below is an overview of the new form, including information on who must file and when. Who Must File For tax years beginning in 2024 or later, any partner receiving property subject to Internal Revenue Code (IRC) § 732 from a partnership in both a liquidating and non-liquidating transaction must prepare Form 7217. A separate Form 7217 is required to be filed for each date Section 732 properties are distributed, even if the distribution is part of the same transaction. Exceptions to Filing Form 7217 is not required in the following instances: Distributions consisting only of money or marketable securities treated as money under IRC §731(c); Distributions for services under IRC §707(a)(1) when the partner is not acting in the capacity as a partner; Transfers that are treated as disguised sales under IRC §707(a)(2)(B); or Constructive receipt of distributed property (e.g., relief of liabilities). There must be an actual receipt of property. How and When the Form is Filed Form 7217 is due and filed with a partner’s annual tax return, including extensions, in the year the property subject to Section 732 is received. For example, individuals filing Form 1040 who received a distribution from a partnership subject to the new reporting requirements should include Form 7217 with their timely filed Form 1040, including extensions. Information Required to Be Included The partner must provide detailed information, including: Description of property distributed, including property code if applicable; The partnership’s basis in the distributed property immediately before the distribution; Whether the property is subject to §§732(d), 732(f), 734(b), 743(b); Fair market value of each property distributed; Partner’s basis in the distributed property after the application of §732; Cash received as part of the total distribution; and Adjusted basis of the partner’s interest in the partnership immediately before the distribution. Please contact any member of Schneider Downs’ tax practice with questions related to the new filing requirement, and we can help you navigate your specific circumstances. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Accounting for Success – The Importance of Accounting Optimization Assessments in 2025 A big part of reaching business goals comes down to your accounting function. Is it designed to support your growth plans, or are inefficiencies holding your business back? The start of a new year is all about setting goals and striving for a better version of ourselves. Businesses are no different—it's a time to reflect on priorities and focus on achieving key objectives, like revenue growth and operational efficiency. This is where accounting optimization assessments come in. These evaluations give organizations a clear view of their current operations, helping to identify gaps, streamline processes and align key functions—like accounting—with broader business goals. By taking a closer look at your accounting function, you can position your organization for success and ensure you're ready to meet the challenges of the year ahead. Here are some key questions organizations should ask when assessing their accounting function. Can Your Accounting Function Keep Pace With Business Processes and Goals? Businesses are often hyper-focused on operations and growth, which makes sense—it’s how a company generates revenue. However, it’s not uncommon for accounting functions to lag behind, failing to mature and evolve at the same pace. This imbalance can lead to an environment where teams are working harder not smarter, and lead to organizations increasing headcount while continuing to rely on outdated, manual processes. This approach often increases inefficiencies and payroll costs rather than addressing the root causes of the problem – which is why organizations should be asking themselves these two questions in the new year: Has our revenue grown year-over-year and, if so, how has our accounting function grown or innovated to remain at a maturity level commensurate with the business? Have we acquired other businesses and, if so, how have we adjusted our accounting function for proper support? Do You Have Small Teams Reliant on Tribal Knowledge? Having employees who have stayed with you for decades is something to be incredibly proud of, as it speaks positively to your organization’s culture. However, long tenures on small teams create the following concerns: Segregation of Duties Issues Single Points of Failure Succession Planning Gaps Understanding your team’s composition is critical for addressing both short-term and long-term needs. In the short-term, ensuring clear ownership of processes and controls can help mitigate fraud risks associated with segregation of duties issues. Longer-term considerations include succession planning and single points of failure. A good start to assessing your human capital risk is by answering these two questions: Do we have key individuals nearing retirement and what is our succession plan for them? Is there one individual in accounting who has the ability and/or responsibility to perform several key tasks? Do these responsibilities increase fraud risk within the organization? If your answer is yes to either of those, it may be time to develop specific hiring and training needs. This will reduce the risk of single points of failure and allow for proactive succession planning, ensuring a smoother transition when key employees leave or retire. Is Your Accounting Function Data Rich, But Information Poor? In many accounting functions, disaggregated or underutilized systems can create significant challenges. Data often resides outside of key systems, in formats like Excel, which can lead to inefficiencies and errors. When speaking with clients, we usually lead with two simple questions to understand their existing tech stack: Are your processes manual and paper-based or technology-enabled? If technology-enabled, does the technology meet your needs, and if not, is this a user problem or technology shortfall? By embracing the right technologies, businesses can improve visibility, streamline processes, enhance data accuracy and enable true reporting and insights to make key business decisions that drive growth. Accounting optimization assessments are a powerful tool that helps organizations discover who they are compared to who they want to be from an operational perspective. When utilized correctly, they help map a better path forward toward organizational improvement, sustainable growth and achievable financial goals. If you are interested in learning more about how an accounting optimization assessment can help your organization achieve its growth goals, please visit our dedicated Accounting Optimization Assessments page or contact me at ctaslov@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### SDWMA Investment Corner: Impacts of a Potential Tariff Trade War On February 1, 2025, the White House announced new tariffs on imports on its three top trading partners, Canada, Mexico and China. Within almost 72 hours, the tariffs on Mexico and Canada were postponed by 30 days. This early trade policy enacted by the new administration is a sign of the potential volatile times to come as the policy landscape is in continuous flux. Retaliation and Potential Escalation The tariffs were implemented under the International Emergency Economic Powers Act (IEEPA), which grants the president authority to impose tariffs in a response to a national emergency for 120 days, after which they can be extended. The White House cited the “extraordinary threat posed by illegal aliens and drugs” as the requisite national emergency1. The initial tariffs that were planned to be implemented were a 25% tariff on Mexican imports, 25% tariff on Canadian imports, and an additional 10% tariff on already current Chinese tariffs. The respective countries responded almost immediately with retaliation of their own. Canada was the first country to respond with specific retaliatory plans, quickly announcing a 25% tariff on imports from the U.S. to be introduced in two waves. Both Mexico and China have indicated that retaliatory measures would be forthcoming, though neither have released details. The U.S. has said any retaliation could lead to additional tariffs. Source: Tax Foundation, United States International Trade Commission, U.S. Department of Commerce, J.P. Morgan Asset Management. Imports for consumption: goods brought into a country for direct use or sale in the domestic market. *Estimate is by the Tax Foundation as of October 2024 and assumes a 20% universal tariff as well as a 60% tariff on Chinese imports. May not be updated as of the latest announcements regarding tariffs and U.S. trade policy and is subject to change. Forecasts are based on current data and assumptions about future economic conditions. Actual results may differ materially due to changes in economic, market and other conditions. Guide to the Markets – U.S. Data are as of February 5, 2025. Impact on Consumers and the Economy The current effective tariff rate on all U.S. imports remains historically low at around 2%. If across-the-board tariffs are implemented, the effective U.S. tariff rate would rise considerably. Given the broad-based application of tariffs without an exclusion process, the tariff cost to consumers will likely be a multiple of what it was previously. Estimates suggest an at least $2,000-$3000/household annual cost if global tariffs were implemented, along with 60% tariffs on China2. At the end of the day, tariffs create stagflation, meaning that they lead to higher inflation and less growth. Given that over 75% of Mexican/Canadian exports are bound to the U.S. and a larger share of their GDP is driven by trade, a persistent escalation in trade without resolution presents significant challenges to both U.S. trade partners. Keep in mind that China, Canada, and Mexico, in aggregate, accounted for more than 40% of U.S. imports during the first 11 months of 2024. Any potential trade war with our closest trading partners will likely have a negative impact on the U.S. economy (not just other economies). In summary, we believe tariffs of the proposed magnitude on the country’s largest trading partners are likely to raise U.S. consumer prices, lower U.S. GDP growth, and increase uncertainty in capital markets. While President Trump likes tariffs and think they work, we believe they are more of a negotiating tool than proposed permanent trade policy. In the evolving landscape of global trade, the dynamics between the United States and its key trading partners are undergoing significant shifts. While the past does not always predict the future, we expect sudden bouts of volatility followed by recovery (similar to Monday) with high asset dispersion to be an ongoing feature for markets in 2025. If you have questions, please reach out to our Schneider Downs Wealth Management Advisors team. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Sources: 1. Trade War 2.0 2. J.P. Morgan Equity Strategy & Quantitative Research, Tax Policy Center, Center for American Progress Action Fund, Peterson Institute for International Economics, Budget Lab, Tax Foundation 3. Trump Tariffs: The Economic Impact of the Trump Trade War ### 2025 Tax Legislation – A Long and Winding Road to “One Big Beautiful Bill”?” Now that President Trump is in the White House, and a new and differently configured Congress is back in session, our attention can turn to the political posturing and negotiating from Republicans, Democrats, and Independents on any number of pressing federal policy issues (budget and spending, border security, immigration, international relations, defense, energy reform, tariffs, Social Security, etc.). One such issue on many taxpayer’s minds is the expiration of many of the Tax Cuts and Jobs Act provisions enacted the last time Republicans controlled the Administration and both chambers of Congress from January 20, 2017, to January 3, 2019. These provisions, if allowed to expire, would result in increased taxes to most individuals. However, if these provisions are fully extended, it could create a significant increase to the current deficit. The odds are good that a tax bill will be enacted before December 31, 2025. However, the journey to arrive at that legislative destination may not be short – and there will likely be many twists, turns, and detours along the road. If what happened in 2017 with the Tax Cuts and Jobs Act is any indication, we may not see a final signed bill until much later in 2025. So – fasten your seatbelts and be prepared for many starts and stops along the way; this journey will be like traveling a long distance with children and listening to “Are we there yet?” during the entire trip. Only now, it will be: What will be in the final legislation? and, When will it be passed? What are some of the obstacles that may be encountered Determining the tax provisions to include and exclude from the legislation. Determining the cost of the legislation. The impact on the deficit could range between a $3 - $7 trillion reduction in revenue over ten years. Determining how the legislation will be paid for and who may end paying for the tax cuts (there are often winners and losers in any tax legislation changes). The reconciliation process requirements necessary to pass legislation favored by only one party. Reconciling conflicting priorities among Republicans. The Wall Street Journal is reporting that frustrations among Republicans are already being observed. The slim margin Republicans enjoy in both chambers could be an obstacle. The tax items most often mentioned, and which seem likely to be included in legislation Keeping the lower income tax rate and brackets of the Tax Cuts and Jobs Act. Keeping the Section 199A business income tax deduction. Maintaining or increasing the level of child tax credits. Keeping the larger standard deductions. Keeping existing gift and estate tax regime. Note that not all expiring 2025 provisions will increase taxes. Some items, such as limits on mortgage interest deductions and limitation on excess businesses losses provide a tax benefit to some upon expiration. In addition to the items mentioned above, diverse types of taxpayers and industry groups desire other changes; even President Trump advocated for certain changes during the run-up to the election. These include: Required capitalization (and amortization over at least five years) of all research and development expenses. Easing of Section 163(j) interest expense limitations by allowing depreciation and amortization expenses in the calculation of adjusted taxable income. Extension of bonus depreciation provisions. A reduction in the corporate income tax rate. Tax-free treatment of tip income and overtime pay. Tax-free treatment of Social Security benefits. Allowing tax deductions for the cannabis industry. Rollbacks of energy credits. Expansion of the state and local tax deduction limitation. A big question is how tax reduction items will be paid for. That answer is currently unclear. A House Budget Committee 51-page list of potential policy options has become public. This list contains a couple hundred items, with brief descriptions, that either reduce or increase spending/deficits. These represent many of the items that have been talked about but not necessarily included in any bills. Some of these items will create controversy (elimination of the home mortgage interest deduction for example) and will not make it near final legislation. Taxpayers should be prepared to hear numerous proposals, and multiple iterations of draft bills before a final bill is drafted and voted on. Many individual items will be supported by Republicans and panned by Democrats (and vice versa). We all should be used to this drill by now. But - taxpayers can do at least two things. First, continue to pay attention to proposals and educate themselves on options and impact, so that appropriate actions can be taken when a new bill is enacted. Second – reach out to your Congressional representatives and let them know how you feel about the proposals. Schneider Downs will continue to monitor 2025 federal (and state) legislative proposals and will be providing further updates, analysis, and action items regarding these issues as we move through 2025.   Please note: This article was written before the final version of the bill became law, so some information may no longer be current. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Senator Wyden's Memo: Potential Revenue-Generating Changes and Their Implications Senator Ron Wyden’s (D-OR) memo from House Budget Committee Republicans outlines options that the committee is considering in order to generate revenue. The changes under consideration could affect higher education institutions, healthcare organizations, individuals, and businesses. What Is In Senator Wyden’s Memo? The memo is 50 pages long and includes multiple options for many matters. For example, the State and Local Tax (SALT) deduction cap, which is expiring at the end of 2025 as part of the Tax Cuts and Jobs Act of 2017 (TCJA), has options such as the complete elimination of the deduction for both individuals and businesses, permanent extension of the cap, doubling the amount for married filing jointly returns, increasing the cap, and eliminating the deduction just for businesses. These options vary wildly, and it is not clear which, if any, path will be favored. How Does This Affect Higher Education? The endowment tax of 1.4% included in the TCJA affected institutions enrolling at least 500 students and exceeding $500,000 in endowment assets per student. In 2022, this tax was paid by 58 institutions. The memo proposes increasing the tax to 14%. H.R. 8913, Protecting American Students Act, adjusts the criteria for which students are counted when determining whether a private college or university is subject to an excise tax on its net investment income. Foreign students would not be included when determining if an institution meets the endowment threshold for the excise tax. This bill is meant to incentivize universities that receive U.S. federal tax benefits to either enroll more American students or spend more of their endowment funds on those students to avoid additional tax. H.R. 8914, University Accountability Act, would enact penalties for colleges and universities that violate students’ rights under Title VI of the Civil Rights Act. The penalties are intended to encourage educational institutions to comply with civil rights laws and create a more equitable environment for all students. There are concerns, according to the memo, that the bill might lead to unintended consequences, such as discouraging institutions from taking proactive measures to address civil rights issues for fear of financial repercussions. What Else is Included? The memo also includes a legislative option to eliminate nonprofit status for hospitals. It specifically states that more than half of all income generated by 501(c)(3) organizations is generated by nonprofit hospitals and healthcare firms. This option would tax hospitals as ordinary for-profit businesses. Another proposed change is to eliminate charitable contribution deductions to health organizations specifically. The memo includes a repeal of tax credits included in the Inflation Reduction Act related to clean vehicles, clean energy, efficient building and home energy, biofuel, and more. Among some of the other proposed changes, mostly aimed at the removal of various credits, are the elimination of the American Opportunity Credit, Lifetime Learning Credit, and Child and Dependent Care Credit. However, the memo does not endorse realizing increased revenue by increasing the federal tax on for-profit corporations. There are a couple of options included in the memo addressing the corporate tax rate, which is currently flat at 21%. One option proposes a reduction to 20%, and the other option lists a reduction to 15%. The future of these proposals remains uncertain, but their implications could be far-reaching and transformative. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### What to Do with Excess Money in a 529 Plan Section 529 plans were created in 1996 to help American families manage the cost of education. These accounts allow for tax-deferred growth and tax-free withdrawals for qualified education expenses. Starting in 2024, Section 529 account owners have a new option for managing excess funds in their accounts. Thanks to the Secure Act 2.0, which was passed in 2022, account owners can now transfer up to $7,000 per year to the beneficiary’s Roth IRA account. This is a great way to use leftover funds without being taxed on the earnings, especially if the beneficiary has completed their education. However, there are a few important considerations to keep in mind: Lifetime Limit: The total amount that can be transferred is capped at $35,000. This means you can make annual transfers of $7,000 for up to five years. Earned Income Requirement: The beneficiary must have earned income in the amount of the transfer. For example, if the beneficiary’s earned income in 2024 is $5,200, then the maximum contribution to their Roth IRA is $5,200. Direct Transfer: The transfer must be made directly from the Section 529 plan to the Roth IRA account. The account owner cannot receive the funds and then make the contribution themself via check. It has to be a direct trustee-to-trustee transfer. Account Age: The Section 529 account must have been open for more than 15 years. Therefore, accounts opened in 2008 or earlier are eligible for these transfers. 5-year rule: No fund contributions to a Section 529 plan from the past five years and earnings on those contributions may be rolled over to a Roth IRA. Coordination with Other IRA Contributions: If the beneficiary has already made contributions to a traditional or Roth IRA for the year, those contributions take precedence over the amount transferred from the Section 529 account. Therefore, it's important to coordinate with the beneficiary to ensure that they have not already funded their IRA for the tax year. By following these guidelines, you can make the most of the excess funds in a Section 529 plan and provide the beneficiary a head start on their retirement savings. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Three Significant Tax Issues Impacting the Construction Industry in 2025 Tax professionals followed the 2024 elections especially close, since from a tax perspective the results are expected to significantly impact the fate of the portions of the Tax Cuts and Jobs Act (TCJA) scheduled to expire on December 31, 2025. With President Trump’s victory and now a slim Republican majority in both the House and Senate, it’s anticipated that portions of the TCJA may be extended. Here’s a summary: Qualified Business Income Deduction (Section 199A Deduction) For businesses that operate as pass-through entities (generally S corporations and partnerships), the most significant item scheduled to expire is the Section 199A Deduction, which reduces the highest effective tax rate on qualified business income from 37% to 29.6% (a 20% deduction). Research and Experimentation Expense Capitalization Requirement (Section 174) Prior to the TCJA, businesses were able to deduct certain research and experimentation (R&E) expenses under Section 174. Beginning in 2022, the TCJA required taxpayers to capitalize and amortize those expenses over five years, a requirement that substantially increased the taxable income for many taxpayers claiming R&E credits. It’s uncertain if the new administration will move to modify or delay the Section 174 capitalization requirement, but there’s been recent bipartisan support to delay. In fact, the Tax Relief for American Families and Workers Act of 2024 (TRAFWA) would have allowed taxpayers to immediately deduct domestic R&E expenses through 2025. TRAFWA easily passed in the House but stalled in the Senate. Taxpayers will have to monitor future legislation for any changes to this requirement. Energy-Efficient Commercial Building Deduction (179D Deduction) Section 179D provides a tax deduction for owners and designers of energy-efficient commercial buildings. The deduction is calculated based on the square footage of the building and the extent of energy-efficient improvements made to the lighting, HVAC and building envelope systems. Under Section 179D, taxpayers achieving the required energy savings can qualify for deductions of up to $1.16 per square foot. If certain prevailing wage and apprenticeship requirements are met, the deduction could go as high as $5.81 per square foot. Section 179D also allows architects, engineers and design-build contractors to be allocated deductions from non-taxpaying entities, including federal and state governments, local municipalities, universities, K-12 schools and nonprofit organizations. These are just a few issues contractors should consider when developing their tax planning strategy. Legislation is certain to change as President Trump’s administration moves forward, and the extent of those potential changes is beyond the scope of this article. The tax professionals at Schneider Downs are ready to help your company navigate these changes and ensure you’re taking advantage of any available tax savings strategies. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### AI's Rising Role in Romance Scams With Valentine’s Day approaching, it’s a good time to remind everyone about the growing concern of romance scams, which are becoming harder to spot due to advancements like AI. Albert Einstein famously said, "You can't blame gravity for falling in love." However, the growing surge in romance scams suggests you might want to blame something else: scammers—and the ever-advancing capabilities of AI. What are Romance Scams? Romance scams are a form of social engineering in which scammers create fake identities, often on dating or social media platforms, to build trust and affection with individuals seeking companionship. Once a connection is made, scammers frequently express love, propose marriage or suggest in-person meetings—all to manipulate victims into sending money. Scammers typically spend months or years cultivating deep relationships with their victims, so when they ask for money—whether for a plane ticket or an emergency surgery—they often seem genuine and leave victims vulnerable to exploitation. One high-profile case last year involved a scammer posing as professional wrestler Alexa Bliss, who stole nearly $1 million over two years from an elderly man, including his granddaughter’s college fund. Tragically, even after his son attempted to move the remaining funds into a new account, the elderly man sued him so he could continue "helping" the imposter he believed was Alexa Bliss. You're the AI of My Eyes Romance scams, like the Alexa Bliss one, are often easy to spot due to common red flags, such as only being able to communicate through text or voice calls. However, the rise of AI deepfakes makes detecting these scams increasingly difficult. A recent example of this involves a woman who had nearly $900,000 stolen by a scammer impersonating Brad Pitt. The scam began with someone posing as the actor on Instagram, slowly building a relationship with the victim through a year and a half of love bombing, poems and constant affirmation. Eventually, the scammer made a financial request, backing it up with AI-generated images of Brad Pitt in a hospital bed. They fabricated a story claiming that the actor needed funds for treatment of kidney cancer since  his divorce from Angelina Jolie froze his bank accounts. Moved by the emotional manipulation and the convincing AI imagery, the victim—believing that the actor’s life was at risk—sent her entire life’s savings to help. While it may seem unbelievable that someone would fall for such a scheme, AI technology blurs the line between what’s real and what’s fake for these victims, allowing scammers to generate convincing fake images and videos that can deceive even the most skeptical individuals. Though these examples may involve high-profile individuals like a WWE wrestler or Brad Pitt, romance scams are far more common than you might think. In fact, the Federal Trade Commission reports that nearly 70,000 people were victims of romance scams in 2022, with older adults losing nearly $240 million. And if you’re still not  convinced of how real AI-generated videos can appear, just ask the company who lost $25 million to one. Fraudulent Love at First Sight: How to Spot and Stop Romance Scams The combination of advancing AI technologies, dating apps and social media creates the perfect storm for romance scams. To stay safe this Valentine’s Day and throughout the year, watch for these red flags: Their photos look too perfect or seem like stock images/models. They quickly want to move conversations to a different texting app. They always have excuses for why they can’t meet in person (emergencies, work, etc.). They overwhelm you with compliments, attention and words of affirmation. They ask for money or financial details (this is the biggest red flag). If you suspect you or someone you know is being scammed, the Department of Homeland Security recommends: Stop communicating with the scammer immediately. Report the scam to the website or app where it occurred. File a complaint with the Federal Trade Commission. Notify local law enforcement. Regularly check financial account statements for unusual activity. Replace any compromised bank accounts or credit cards. You can also find support through the AARP’s fraud helpline, 877-908-3360. This is a free resource available to anyone, regardless of age or AARP membership. Who knows, maybe you will even reach one of our fraud experts James Rumph – who is a volunteer fraud specialist for AARP’s fraud helpline. Above all, don’t blame yourself. Romance scams are designed to manipulate emotions and can affect anyone, regardless of age, education or background. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### 5 Key SOX Considerations for Smaller Reporting Companies in 2025 How can smaller reporting companies (SRCs) set themselves up for success for SOX compliance? While the Sarbanes-Oxley Act (SOX) of 2002 applies to all publicly traded companies, small reporting companies (SRCs) face different SOX requirements than what is expected for an accelerated filer. SRCs are defined as companies that either have a public float of less than $250 million or have less than $100 million in annual revenues and either no public float or a public float of less than $700 million. SRCs are only required to comply with Section 404(a) of the Sarbanes-Oxley Act, which pertains to management’s assessment of internal controls over financial reporting (ICFR). In contrast, accelerated filers must comply with both Section 404(a) and Section 404(b), which includes the auditor’s assessment of ICFR. This distinction creates unique opportunities and challenges for SRCs when approaching SOX compliance. Here are five key considerations for SRCs to ensure compliance and leverage SOX as a strategic advantage. Resource Allocation By their definition, SRCs are smaller in nature, which means they typically operate with more limited resources compared to larger corporations. Ensuring SOX compliance requires careful resource allocation. Outsourcing or co-sourcing functions to outside auditors or consultants can be cost-effective, providing internal teams with specialized expertise, sharing resource constraints, and managing peak workloads. Partnering with third-party service providers is a strategic approach to enhance the internal audit function. Internal Controls Effective internal controls are crucial for SOX compliance. Companies need to design, implement, and maintain robust systems to ensure accurate financial reporting. This includes regular risk assessments, identifying potential weaknesses, and implementing controls to mitigate these risks. Additionally, companies must carefully consider whether to reduce or accept risks in areas where the cost of mitigation may not be justified. Regularly reviewing and updating internal controls to address new risks and changes in the business environment is essential for maintaining compliance. External Auditors Collaboration Effective collaboration with external auditors is crucial. Internal audit teams should establish open lines of communication with external auditors to align on compliance objectives, expectations, and reliance strategies. Sharing documentation, control testing results, and risk assessments, as well as coordinating walkthroughs, can streamline the audit process and reduce redundancy. Leveraging Technology for Compliance Technology can significantly enhance SOX compliance efforts. Internal audit teams should leverage automated tools for monitoring and testing internal controls. Digital tools offer real-time insights, streamline documentation, and facilitate more efficient testing processes. Additionally, data analytics can help identify anomalies and trends that may indicate potential control weaknesses or areas requiring further investigation. Training and Awareness Employee training and awareness are crucial for successful SOX compliance. SRCs should invest in ongoing training programs to educate staff about SOX requirements, internal controls, and their roles in maintaining compliance. Fostering a culture of accountability and integrity within the organization ensures that employees understand the importance of accurate financial reporting and the potential consequences of non-compliance. How Can Schneider Downs Help? Schneider Downs assists SRCs not subject to the SOX 404(b) auditor attestation requirement in achieving SOX compliance that aligns with management, and where necessary, external auditor, expectations. Our experienced team collaborates with companies to design and execute a cost-effective approach for management’s attestation of effective internal controls over financial reporting. For more information contact our team at contactsd@schneiderdowns.com. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.   To learn more, visit our dedicated IT Risk Advisory page.  ### Benefits of Inflation Reduction Act Tax Credits for the Manufacturing Industry The Inflation Reduction Act (IRA), signed into law August 16, 2022, introduced a series of tax credits that can significantly benefit taxpayers in the manufacturing industry. Central to these incentives is the provision for investment in green energy and advanced manufacturing technologies. Companies can receive substantial credits for adopting renewable energy solutions, including solar and wind power, thereby reducing their operational carbon footprint. The IRA also offers credits for energy-efficient upgrades to industrial equipment and facilities, facilitating the transition to more sustainable manufacturing practices. These credits not only help offset the initial cost of implementing such technologies but also promote long-term savings through reduced energy consumption and operational expenses. Specific IRA credits relevant to the manufacturing industry include the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). The PTC offers a per-kilowatt-hour tax credit for electricity generated by renewable energy sources like wind, solar and geothermal. The credit can significantly lower the cost of producing clean energy, making it an attractive option for manufacturers. The ITC, on the other hand, provides a tax credit for a percentage of the cost of installing renewable energy systems, such as solar panels, on manufacturing facilities. The IRA also includes incentives for the development of advanced manufacturing projects through the Advanced Manufacturing Tax Credit (AMTC), which supports investments in semiconductor technologies and semiconductor manufacturing equipment. These credits collectively enable manufacturers to adopt sustainable practices, innovate in green technology and maintain competitiveness in a rapidly evolving industry. About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. ### The State of Car Dealerships Going into 2025 As we step into 2025, the automotive industry is undergoing significant transformations. Car dealerships, in particular, are at the forefront of these changes, adapting to new technologies, evolving consumer preferences, and shifting market dynamics. Here’s a look at the key trends shaping the state of car dealerships in 2025. Digital Transformation: Dealerships are investing in digital marketing, online sales platforms, and virtual showrooms to meet the demands of tech-savvy customers. Electric Vehicles (EVs): With the rise of EVs, dealerships are expanding their EV inventory, installing charging stations, and educating sales teams about EV technology and incentives. Subscription and Car-Sharing Models: More consumers are exploring alternatives to traditional car ownership, such as subscription services and car-sharing programs. Sustainability Initiatives: Dealerships are prioritizing sustainability by incorporating energy-efficient facilities, recycling programs, and promoting sustainable practices. Market Dynamics: U.S. auto sales are expected to accelerate in 2025, with inventories rising and consumer demand rebounding. Advanced Technology: Technologies like augmented reality (AR), virtual reality (VR), and artificial intelligence (AI) are enhancing dealership sales and service experiences. As we move forward, car dealerships must embrace these trends and adapt to the changing landscape to thrive in 2025 and beyond. The future of the automotive industry is bright, with opportunities for innovation and growth on the horizon. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.   To learn more, visit our Automotive Industry Group page.   ### Common Issues Encountered During Buy-Side Due Diligence in Software Companies When conducting buy-side due diligence for a software company, several common issues often arise. These issues can significantly impact the valuation and future performance of the target company. Buy-Side Due Diligence points to consider: Assessment of Recurring Revenue and Customer Base Many software companies have recurring revenue contracts for the software to be used over a contract period. One of the primary aspects of due diligence is the assessment of recurring revenue and the customer base. This goes beyond merely reviewing the most recent income statement. It involves a thorough analysis of the quality of earnings, which includes understanding the sustainability and predictability of revenue streams. An important step in the due diligence process is the need to scrutinize the customer contracts, renewal rates, and the overall satisfaction of the customer base. This helps in identifying any potential risks related to customer churn and can identify revenue concentrations. During this process, it is also crucial to assess the company's cash flow management practices and the efficiency of its customer collections process. Understanding the timing of collections and how much of a target company’s projected future revenue is already collected will greatly impact the value of the target. If most of the future recurring revenue contract value has been collected already, the balance sheet will show a large deferred revenue liability that would be acquired by the buyer in the acquisition. Therefore, understanding the cash flow dynamics and customer collections is essential for making informed investment decisions. Cybersecurity and IT Due Diligence In today's digital age, cybersecurity and IT due diligence are critical components of the due diligence process. It is essential to have tech experts review the security measures around the software and applications to ensure they were built with best practices and are free from vulnerabilities. This includes evaluating the company's data protection policies, encryption standards, and access controls. Moreover, it is crucial to review for indicators of previous breaches or the potential for future breaches. This can involve examining the company's incident response plans, past security incidents, and the overall security posture. Ensuring the proper cybersecurity measures are in place throughout the target can mitigate the risk of acquiring unforeseen liabilities and allow for a smooth integration of the target into the established business. Projections/Forecast Reasonableness Another critical aspect of due diligence is assessing the reasonableness of the target company's projections and forecasts. Management needs to get comfort with the assumptions and methodologies used in the financial projections. This involves analyzing the historical performance, market trends, and competitive landscape. It is essential to engage with the seller’s management team to understand the basis for the growth assumptions and whether they are realistic and achievable if acquired. Additionally, stress-testing the projections under different scenarios can provide insights into the potential risks and opportunities. Buyers should also create their own projections with their plan for how they will integrate the target company within their business to ensure it is in line with their own forecasts. This would include focusing on the cash needs to operate and integrate the target company and understanding when to expect the company to be cash flow positive. In conclusion, buy-side due diligence for a software company involves a comprehensive assessment of various factors. By thoroughly evaluating the revenue and customer base, conducting rigorous cybersecurity and IT due diligence, scrutinizing the reasonableness of projections and forecasts, and understanding the cash flow expectations, investors can make informed decisions and mitigate potential risks. This holistic approach ensures a better understanding of the target company's value and future prospects. At Schneider Downs, our professionals on our Transaction Advisory Services team can assist buyers of software companies by performing a quality of earnings and financial due diligence assessments. This process assesses both financial and non-financial risks such as cybersecurity, operational and tax risks. Schneider Downs has a proven track record of assisting buyers, sellers, investors, private equity firms, and lenders in evaluating the financial integrity of businesses involved in M&A transactions. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.   To learn more, visit our Emerging Technology page.   ### Corporate Transparency Act Beneficial Ownership Reporting Update: The More Things Change, the More They Stay the Same On January 2, we wrote about the on-again, off-again decisions being made regarding the filing of beneficial ownership information (BOI) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). In that article, we noted that on December 30, 2024, the Justice Department asked the U.S. Supreme Court to weigh in on lower court injunctions against enforcement by the government on beneficial ownership reporting filings. Supreme Court Ruling and Existing Injunction Well, on January 23, the Supreme Court granted the government’s motion and lifted a nationwide injunction issued by a district court in Texas Top Cop Shop, Inc. v. Garland, a move that in and of itself would have allowed enforcement of the law requiring filings to move forward. Under the law, many preexisting 1/1/2024 businesses were required to provide ownership information with FinCEN by December 31, 2024 (later extended to January 13, 2025). However, a separate nationwide injunction against enforcement of Corporate Transparency Act (CTA) filing remains in place. Samantha Smith and Robert Means v. U.S. Department of the Treasury is based on different facts and arguments from the one just ruled on by the Supreme Court, so despite the Court’s ruling in Texas Top Cop Shop, reporting companies still are not currently required to file beneficial ownership information with FinCEN. FinCEN's Response This result was confirmed by FinCEN on January 24 when it announced that, “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force.” Penalties for Non-Compliance (If Enforcement Resumes) Note that willful violations of the law, if enforcement is allowed to go forward, can be substantial, punishable by civil and criminal fines and penalties of $591 a day, up to $10,000, and two years in prison with similarly serious penalties for unauthorized disclosure. Uncertainty and Future of the CTA The recent judicial decisions leave reporting companies uncertain about their response. FinCEN notes that reporting companies may continue to voluntarily submit beneficial ownership information reports. Supporters of the CTA cite national security needs and the Trump administration’s position on enforcement is not yet known, though Sen. Tommy Tuberville (R-Ala.) and Rep. Warren Davidson (R-Ohio) introduced companion bills in their respective chambers (S. 100/H.R. 425) on January 15 to repeal the CTA. Recommendations for Reporting Companies In the wake of the above, reporting companies may just want to stay their course until the waters calm and final guidance is provided, but they should continue to monitor the proceedings. A final decision could result in the need for filings with possibly only a short extension period. If companies have not already taken steps to gather the necessary information required to be reported, they may want to reconsider so they could act quickly if the law is upheld. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Navigating Check Fraud: Who Bears the Liability? This article provides a general overview of liability considerations for various types of check fraud, but it is not intended as legal advice. A central Ohio man – who had been the quartermaster responsible for safeguarding funds for a not-for-profit Veterans of Foreign Wars (VFW) post in Columbus – was sentenced earlier this month to five years of probation and ordered to repay the more than $35,000 of charitable funds stolen from the VFW post as part of a “check fraud” scheme. Check fraud is an age-old problem, especially for closely held businesses and not-for-profit organizations. The above case involved fraudulent check issuances as part of an embezzlement from a VFW post. You probably have seen news related to other businesses and organizations over the years. Check fraud has been on the rise and has been in the news a lot these days, recently related to mail theft and related altered checks and forged endorsements. If not, maybe you have seen the 2002 film “Catch Me If You Can,” where Leonardo DiCaprio portrayed Frank Abagnale Jr. as fictionally having cashed thousands of counterfeit checks at various businesses and financial Institutions totaling millions of dollars in the 1960s. The underlying type of check fraud, the promptness of discovery, and several other factors all have implications on who ends up bearing the liability. The laws and rules that govern check fraud liability are a bit of a maze and include subjectivity, but primary liability is the party who committed the check fraud, and secondary liability is generally that of the party who was in the best position to prevent the loss. You should consult an attorney with the specific facts and circumstances if you are unsure of liability and trying to decide how to proceed. First, to set the stage for terms, here are types of check fraud and check handling parties: Five Main Types of Check Fraud Altered check: When details on the front of a check are fraudulently altered after the check was written or printed (e.g., changing the amount or the payee’s name). Forged endorsement: When someone other than the listed payee fraudulently endorses the back of a check. Forged maker signature: When the issuing signature on the front of a check is forged/signed without authorization. Counterfeit check: When a check is fraudulently created leveraging someone’s financial institution routing and account number but was not issued by the account owner. Fraudulent issuance (aka embezzlement): When an authorized signer writes a check to divert funds for personal gain or other unauthorized purposes (e.g., the above VFW case). Five Typical Check Handling Parties, Who Each Have Distinct Roles In the Handling of Checks The account holder (aka the financial institution customer or drawer): The party who owns the financial institution account from which a check is drawn. The authorized signer: A party who has been authorized to sign checks for a financial institution account. The payee (aka the presenter): The party to whom a check is made payable (e.g., the company a check was given to in payment for services). The depository financial institution (aka the bank of first deposit or the payee’s bank): The financial institution that receives the check for deposit for the payee. The paying financial institution (aka the drawee bank, the drawer’s bank, or the payor bank) is the financial institution from which the check is drawn. So, Who Bears the Liability? The person who altered, forged or created the check has primary liability. However, when funds can’t be recovered there, the account holder, the depository financial institution and/or the paying financial institution bear the liability burden. Below are the parties who typically bear the liability for the five types of check fraud outlined above: Altered Check: The Depository Financial Institution Under UCC § 3-416, the depository financial institution warrants that a check has not been altered. Here, the depository financial institution is in the position to identify an altered check from its direct interaction with the presenter. These losses are typically discovered and reported quickly enough to meet the account holders’ deadlines imposed by UCC § 4-406 though. Forged Endorsement: The Depository Institution Under UCC § 4-207, the depository financial institution warrants to the paying financial institution that all signatures on a check – including any endorsements – are authentic and authorized. Here, the depository financial institution is in the position to identify a forged presenter endorsement from its direct interaction with the presenter. This endorsement warranty is generally good for three years from the deposit date. This period is shortened or lengthened by state law in some states, though, such as being shortened to one year. Even though the warranty period is longer, once an account holder discovers a forgery suspicion, they only have 30 days to notify the depository financial institution to avoid the risk of the depository financial institution’s liability being decreased to the extent that the loss was increased by the delay. Forged Maker Signature: The Paying Financial Institution Under both UCC § 4-207 and when Clearing House Rule 9 applies, the depository financial institution warrants to the paying financial institution that the purported drawer’s signature is not forged or otherwise unauthorized; however, most losses related to forged maker signatures are not discovered and reported quickly enough for the paying financial institution to make a return before the deadline imposed by UCC § 4-301, the midnight on the following business day. These losses are typically discovered and reported quickly enough to meet the account holder’s deadlines imposed by UCC § 4-406 though. Counterfeit Check: The Paying Financial Institution Under UCC § 4-207, the depository financial institution warrants that all signatures on a check are authentic and authorized. When Clearing House Rule 9 applies, the depository financial institution warrants to the paying financial institution that a check is not counterfeit. However, the majority of losses related to counterfeit checks are not discovered and reported quickly enough for the paying financial institution to make a return before the deadline imposed by UCC § 4-301, midnight on the following business day. These losses are typically discovered and reported quickly enough to meet the account holder’s deadlines imposed by UCC § 4-406 though. Fraudulent Issuance: The Account Holder Plain and simple for this one. Authorized drawer signatures on checks bind the account holder. Of course, there are exceptions to these generalizations. For example, if an account holder leaves their checkbook or check stock in a place where it is very likely to get stolen, they may have liability due to the account holder needing to apply “ordinary care” as outlined within UCC § 3-406. Also, a financial institution may – to retain an account holder and protect reputation among other reasons – assume liability beyond that it is legally obligated. How Can You Be Proactive? Even better than trying to navigate liability from check fraud is taking steps to proactively prevent losses from occurring in the first place. Below are several ways you can help protect yourself and your organization from check fraud: You and Your Organization Avoid mailing checks when possible. Individuals and organizations should typically seek to make payment through alternative methods, avoiding the need to mail a check. Organizations can encourage vendors to transition to electronic payment methods, such as ACH. Electronic payment methods also inherently come with risk, but internal controls like account owner validation leveraging third-party data sources and verifying deposit account changes through trusted sources and methods can be implemented to significantly reduce those risks, as well. If a check needs to be mailed, consider dropping the mail off at the mail provider’s physical location (e.g., within the post office). If a check needs to be mailed, consider the costs and benefits of paying extra to require the recipient’s signature for delivery. Leverage high-security check stock: Although there is still risk in the creation of new checks to alter check details like payee and amount, leveraging high-security check stock reduces check fraud risk. Features like watermarks, microprinting, holograms and chemical sensitivity make checks more difficult to successfully alter. Your Organization Leverage positive pay: While generally not available for personal financial accounts, positive pay has been around for decades but has stood the test of time. This process helps organizations verify the checks they issue against those presented for payment, flagging identified discrepancies as exceptions for the drawer’s review. Although not bulletproof or without cost of its own, positive pay is a best practice to help protect organizations against altered and counterfeit checks. In fact, an organization not leveraging features made available by its financial institution like payee positive pay could be considered negligence for not applying “ordinary care” under UCC § 3-406 contributing to a check payee alteration. Segregate duties among employees: Fraudulent check issuance is typically harder for organizations to protect against, but segregating duties such as check writing and cleared check review and reconciliation can help deter and sooner detect fraudulent issuances. Segregation of duties can be difficult for not-for-profits like the VFW post referenced above that leverage volunteers and closely held businesses that don’t have many employees, but there should always be some level of oversight of check writing. Know Your Customer (KYC): For those who work at a financial institution, insufficient new account opening identity verification can cause your organization to become a target for people who steal and fraudulently alter or endorse checks. KYC processes can help your financial institution avoid unnecessary check fraud losses. Contact Schneider Downs: If your organization needs assistance in implementing a fraud risk management strategy, assessing the maturity and/or effectiveness of your fraud risk management practices, assessing your fraud risk to help prioritize efforts, developing awareness content or procedures, or finding a litigation expert witness related to fraud, contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in our Pittsburgh office. About Schneider Downs Business Advisory Our experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business events. To learn more, visit our dedicated Business Advisory page. ### 4 Changes to Pennsylvania's Tax Appeal Process Act 123 of 2024, which will become effective January 27, includes several significant changes designed to make the appeals process easier for the taxpayer to present his or her case and settle the dispute with the Pennsylvania Department of Revenue more efficiently. As anyone who has had to work through the process of disputing a tax assessment in Pennsylvania can attest, filing an appeal in the state can feel like traversing a maze with many pitfalls. Here are four key changes for you to know about. 1. Deadline to File an Appeal The timeline to file an appeal of an assessment with the Board of Appeals for Personal Income Tax, Employer Withholding Tax and Pass-Through entities has been extended to 90 days from the date of the assessment (note all other taxes remain at the 60-day timeline). In addition, the Act allows for a 30-day extension of the deadline for good cause, which also applies to appeals of the same tax assessments from the Board of Appeals to the second appeal level at the Board of Finance and Revenue. This change should allow taxpayers enough time to discuss the assessment with their tax provider and properly determine how best to address any disagreement with the Department of Revenue. Plus, allowing both the Board of Appeal and the Board of Finance and Revenue to grant an additional 30 days for good cause allows taxpayers who may have otherwise been excluded from the appeals process a chance to present their case. 2. Mailing Options Act 134 allows the Board of Appeals to use the postmarked date as the filed date for mailings sent through means other than the U.S. Postal Service, including mailing services that are defined by the U.S. Treasury Department as acceptable services, like FedEx and UPS. This change provides taxpayers another option to file an appeal to the Board of Appeals within the prescribed timeline. 3. Board of Finance and Revenue Mediated Settlement The Act also adds a new option for taxpayers to negotiate a settlement agreement to close the dispute at the Board of Finance and Revenue level. Any of the parties to the appeal, including the Board of Finance and Revenue itself, can request a settlement conference with a settlement officer, whose role will be to conduct an informal conference with the taxpayer and the Department to try and facilitate an agreement. If the settlement is agreed to, the appeal will not be required to proceed to the formal Board of Finance and Revenue hearing and the appeal will be closed. This new process provides taxpayers with the ability to negotiate an agreed-upon amount to close tax disputes related to both assessment and refunds. The addition of the settlement officer to the negotiation provides an independent third party to assist with reaching an agreement with the Department of Revenue, which can be advantageous for cases where the taxpayer and the Department may have been having discussions for a protracted period, as can occur with field audit review and cases with a large amount of information under review. This added option gives taxpayers the ability to reach a resolution before the need to file an appeal at the Pennsylvania Commonwealth Court level. As with any settlement agreement, the taxpayer will be asked to forego any further appeal of the issue, so he or she should consult with a tax advisor and/or counsel before final agreement. 4. Department of Revenue Closing Agreements The Department of Revenue is now authorized to enter into a closing agreement with a taxpayer related to a specific tax matter. The agreement will be in writing and will be final and conclusive. As of the date of this article, the Department of Revenue has not released details as to what will constitute a closing agreement or when and how a taxpayer can negotiate the agreement. Since the matter will be final and conclusive, we recommend consulting a tax advisor and/or counsel before entering into the agreement. Our Thoughts On While these changes will not completely eliminate the need to proceed with administrative appeal hearings and court filings, they’re a positive step to working with the Department of Revenue, Board of Appeals and Board of Finance and Revenue in a more timely and potentially cost-effective manner. Schneider Downs State and Local Tax group stands ready to assist you with appeal of Pennsylvania and other states tax notices and assessments. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Investment Corner with Jason & Sean: Were the Magnificent 7 Really So Magnificent in 2024? Despite the down December, the S&P 500 ended 2024 with a 25% return for the year, delivering investors strong back-to-back annual returns in 2023 and 2024 – the first time in a quarter-century that the S&P 500 generated 25%+ returns in consecutive years (over a 57% total return in the last 2 years!). Of course, none of this would have been possible without the help of the illustrious “Magnificent 7” stocks (NVIDIA, Amazon, Tesla, Apple, Meta, Microsoft, and Alphabet/Google). But, from a return standpoint, were the Magnificent 7 really the best in breed? With all of the narrative within the financial news world that the Magnificent 7 are the best and brightest of the S&P 500, it may be difficult to hear that they, as a group, were not the best performers in 2024 from a price-return perspective. Only NVIDIA was in the top 10 S&P 500 performers for 2024, and it was not even the top name. Microsoft actually underperformed the S&P 500 for the year. Within the NASDAQ, none of the Mag 7 were in the top 10. Groups of stocks like the Mag 7 and other mega-cap names do represent an outsized contribution to the overall return of the S&P 500. However, this is not necessarily due to their returns being the best. The bloated weight in their contribution is partly due to the size of the companies. The S&P 500 is a market-cap-weighted index, meaning that the larger the company, the larger the contribution. Yes, companies have to grow in order to get quite big, but once they get to the top of the mountain, their contribution is reinforced. Source: Charles Schwab Asset Management There is an old saying about market breadth, “that the market is strongest when the soldiers, and not just the generals, are at the front line.” For 2024, only 19% of the stocks within the S&P 500 outperformed the index, but this improved over the last 4 months of the year with 40% of the stocks in the index having outperformed in the final 4 months. As market breadth continues to expand and the other 493 stocks in the index catch up to the Mag 7, U.S. large cap equities as a whole should be in a much healthier spot. Eventually, extreme style and/or size return differentials in the equity markets have reversed over time. While it is not clear if the mega-cap stock influence in the market will continue in 2025, it does seem reasonable to expect the average stock to begin outperforming the index at some point in 2025 or 2026. If you have questions, please do not hesitate to contact our SD Wealth Management team at sdwealthmanagement@schneiderdowns.com Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Source: Article: It Was A Very Good Year ### Ohio HB 315 Impacts Sourcing of Ohio CAT Receipts for Auto Dealers On January 2, 2025, Ohio Governor Mike DeWine signed into law House Bill 315 (HB 315), providing Ohio Commercial Activity Tax (CAT) relief to automobile dealers with respect to recent Ohio Board of Tax Appeals (BTA) decisions. Ohio HB 315 Background In October of 2024, the BTA issued an opinion (Case No. 2022-422, Ohio Bd. Of Tax App. (10/23/24)), vacating an Ohio CAT) assessment and holding that because vehicle sales transactions occurred outside of Ohio, the gross receipts from these sales were not sitused to Ohio and were not subject to Ohio’s CAT, even though the purchaser subsequently brought the automobile into Ohio. Specifically, Straub Nissan, LLC (Straub), a Wheeling West Virginia auto dealership, was not required to include in its Ohio CAT gross receipts its sales to Ohio residents who transported the vehicle to Ohio. While not expressly mentioned in the BTA’s opinion, the logical result of this opinion would require Ohio auto dealers to include sales to out-of-state customers in their Ohio CAT receipts, potentially leading to substantial increases in a dealership’s Ohio CAT liability. The Ohio Department of Taxation (Department) may provide additional clarification on this point closer to HB 315’s effective date. What is HB 315 HB 315 clarifies the sourcing of motor vehicles that are intended to be transported out of state. Specifically, gross receipts from the sale or lease of a motor vehicle are to be sitused to Ohio only if the motor vehicle is issued a certificate of title evidencing the owner or lessee’s address is in the state. In other words, the sale of a motor vehicle from an out-of-state dealership to an Ohio resident who will title the vehicle in Ohio under an Ohio address, similar to the facts in the Straub case, will be included in Ohio CAT gross receipts. Sales from Ohio dealerships to out-of-state customers who will title the vehicle under an address outside of Ohio will not be included in Ohio gross receipts for CAT purposes. Our Thoughts On HB 315 HB 315 provides resolution to the Straub decisions and welcome relief to Ohio auto dealers making sales to out-of-state customers, as these sales are likely not included in Ohio CAT gross receipts. However, HB 315 does not provide specific guidance on the sourcing of receipts for dealers making sales from out-of-state dealerships to Ohio residents who will title the vehicle in Ohio, though it is likely these receipts would be sourced to Ohio for CAT purposes. Out-of-state dealerships should continue to monitor guidance from the Department with respect to these sales. In light HB 315, automobile dealerships should analyze their out-of-state sales to determine if they properly reflect the updated legislation with respect to CAT receipts situsing. The Schneider Downs State and Local Tax (SALT) practice is equipped to help you evaluate the impact of these revenue situsing changes on your Ohio CAT filings. Please direct inquiries to Stephen Worth, Schneider Downs State & Local Tax Practice Leader at sworth@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Top 3 Emerging Privacy Trends for 2025 As we progress through 2025, data privacy laws are surging in number and scale. Approximately 70% of nations have enacted national data privacy legislation, covering nearly 80% of the world’s population. In the United States, the absence of a federal privacy law has led to an abundance of state-level regulations, with over 20 states implementing their own privacy laws. Along with this surge in data privacy laws, key trends are shaping the landscape. In honor of Data Privacy Week 2025, learn key data privacy trends and understand high-level strategies for addressing them. Trend #1: Integration of AI in Data Privacy AI-driven tools have the capability to not only enable organizations to increase efficiency and output but to also enhance data protection by identifying and mitigating privacy risks in real-time. Nevertheless, the rapid adoption of AI technologies has increased the need for governance, security and privacy measures. As such, the introduction of specific regulations, such as the EU’s AI Act and Colorado’s AI Act, have come to fruition to address associated AI privacy concerns. Trend #2: Consumer-Centric Privacy Approaches Consumers are demanding greater control over their personal data, leading businesses to implement more transparent and user-friendly privacy practices. This shift includes providing clear privacy policies, easy-to-use consent management tools, and options for users to access, modify or delete their data, thereby building trust while aligning their compliance initiatives with privacy regulations. Trend #3: Data Localization and Sovereignty Countries are increasingly enacting laws that require data generated within their borders to be stored and processed locally. This trend aims to enhance data security and protect national interests but presents challenges for multinational organizations in terms of compliance and operational efficiency. Now that you’re informed of key high-level, emerging data privacy trends, let’s explore your options to stay ahead, ensuring you're prepared to navigate the evolving landscape effectively. To address some of the emerging data privacy trends in 2025, organizations can adopt a proactive and strategic approach by focusing on the following actions: 1. Integration Privacy with AI and Cybersecurity AI Risk Management: Build internal AI governance policies to ensure ethical and privacy-compliant AI usage. Privacy-by-Design in AI: Ensure AI tools are designed with built-in privacy controls, such as anonymization. Collaborate Across Functions: Foster collaboration between privacy, AI and cybersecurity teams to address overlapping risks. 2. Foster Consumer Trust Through Transparency Clear Communication: Draft concise, easy-to-understand privacy notices and terms. User-Centric Privacy Features: Provide intuitive mechanisms for users to control their data, including consent management, opt-out options and data deletion requests. Proactive Engagement: Communicate how data is used in a way that builds trust and showcases responsible data practices. 3. Address Data Localization Challenges Cloud-Based Solutions: Partner with cloud providers that comply with local data storage regulations while enabling global operations. Local Expertise: Work with regional experts or hire compliance professionals familiar with local privacy laws. Data Sovereignty Strategy: Develop a strategy for managing data flows across borders, including encryption and secure data transfer protocols. 4. Leverage Privacy Technology Automation and AI for Privacy: Adopt AI-driven tools for monitoring privacy risks, automating compliance workflows and detecting data breaches. Privacy Impact Assessments (PIAs): Regularly conduct PIAs for new operational or technology initiatives to evaluate potential privacy and compliance risks. Data Discovery and Classification: Use tools to identify and classify sensitive data across the organization for better governance. 5. Build an Organizational Privacy Culture Leadership Commitment: Ensure leadership visibly supports privacy initiatives as a core business value. Employee Training: Regularly educate employees about privacy policies, regulatory changes and the importance of data security. Ethical Data Practices: Foster an internal culture that prioritizes responsible data usage and consumer trust. 6. Stay Agile and Proactive Regular Audits: Conduct frequent privacy audits to identify gaps and areas of improvement. Participate in Industry Alliances: Engage in forums or industry groups focused on privacy to stay ahead of emerging trends. Prepare for Future Regulations: Invest in adaptable systems and processes that can easily incorporate new compliance requirements. By aligning these strategies with overall business objectives, organizations can address privacy trends effectively and gain a competitive edge by demonstrating leadership in responsible data practices. Have a data privacy question or concern? Contact us to help you assess and enhance your privacy and security posture through a tailored assessment specific to your needs. About Data Privacy Week As recognized by the National Cybersecurity Alliance (NCA), Data Privacy Week is an international effort to empower individuals and organizations to respect privacy, safeguard data and enable trust. Check out the resources on the Data Privacy Week website to learn ways to more effectively manage your personal information and understand, from an organizational perspective, why it is important to respect user data. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Excerpt: Unlock the key data privacy trends of 2025 and stay ahead of the curve and ensure your organization's data is secure. ### 5 Practical Tips for Data Privacy in 2025 It’s Data Privacy Week 2025, and in today’s digital age, maintaining data privacy is more critical than ever. As recognized by the National Cybersecurity Alliance (NCA), Data Privacy Week is intended to empower and raise awareness for individuals and businesses to respect data privacy, safeguard data and enable trust over data usage. At Schneider Downs, we are committed to guiding you through ongoing data privacy challenges. Here are five practical tips for organizations to consider in their efforts to protect critical data and ultimately minimize the risk of data breaches: 1. Implement AI & Data Governance AI and data governance are critical in building a comprehensive data privacy and protection strategy, as organizations increasingly rely on AI tools and large datasets. AI Governance: As organizations embrace the use of AI, they must implement controls to ensure AI systems are designed, deployed and monitored responsibly. This includes avoiding bias, ensuring data privacy in AI training, and complying with appropriate use guidelines. Strong governance frameworks help to minimize risks associated with AI systems and protect sensitive data from unintended misuse. Data Governance: Develop governance policies and procedures to ensure data is appropriately collected, stored, structured, processed and shared securely and in compliance with regulations (i.e., GDPR, CCPA). This includes creating a data inventory, assigning data stewards and monitoring data flows. 2. Encrypt Sensitive Data Apply end-to-end encryption for sensitive data both in transit and at rest. This ensures that even if data is intercepted or stolen, it remains unusable to unauthorized parties. 3. Regularly Update Software & Patch Vulnerabilities Conduct vulnerability assessments and penetration tests periodically to ensure all systems, applications, software and hardware are up to date to minimize the risk of security vulnerabilities. 4. Train Employees on Data Privacy & Security Best Practices Create a culture of accountability by emphasizing the importance of safeguarding sensitive information. For this to be effective, an organization must provide ongoing education about phishing, password hygiene and handling sensitive information, as employees are often the first line of defense against data breaches. 5. Establish & Exercise an Incident Response Plan Develop and exercise a clear and actionable incident response plan that allows you to detect, respond and recover to a security incident to effectively mitigate the impact of a breach. It remains critical that those designated understand the steps for notifying affected parties, reporting to regulators and implementing recovery measures. Can your organization do a better job of measuring its security and privacy posture? Hopefully, these five tips help you start thinking about how your organization can better proactively manage risks, improve resilience and minimize the impact of potential breaches. Have a data privacy question or concern? Contact us to help you assess and enhance your privacy and security posture through a tailored assessment specific to your needs. About Data Privacy Week As recognized by the National Cybersecurity Alliance (NCA), Data Privacy Week is an international effort to empower individuals and organizations to respect privacy, safeguard data and enable trust. Check out the resources on the Data Privacy Week website to learn ways to more effectively manage your personal information and understand, from an organizational perspective, why it is important to respect user data. About IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Top 5 Digital Priorities for CFOs in 2025 As we set resolutions, close out the previous year, finalize budgets, and kick off new transformational initiatives, the modern-day CFO naturally prioritizes tasks in January. Some priorities remain constant for finance leaders: maximizing working capital, staying financially nimble to fund strategic growth, managing risk, ensuring compliance, optimizing the bottom line, and leveraging financial data to diagnose past and future issues. Instead of adding another item to the agenda, I suggest reframing the only panacea across all these priorities: Digital. When applied with business-first, human-centered, and incremental methods, Digital offers a competitive edge within the office of the CFO. CFOs who embrace AI/ML technologies realize significant business benefits, such as improved financial reporting, proactive risk management, enhanced operational efficiency, and better decision-making. Learn how to de-risk, simplify, and accelerate your digital efforts to drive bottom-line impact in 2025 with SD Digital’s best practices: 1. Find a SAFE Starting Point for AI/ML in the Finance Organization We are now officially out of the hype cycle for AI/ML and into the acceleration cycle. Nearly every modern digital platform is embedding either generative, predictive, or both AI/ML capabilities into their tools. This is great news for finance professionals, as we can now leverage the power of AI/ML without implementing yet another set of technologies. I suggest using 2025 to do something—anything—with AI/ML. Of course, like with any investment, a solid strategy around usage is essential, but in the meantime, I recommend you... Clean Up Your Data - Running AI on ill-defined, poor-quality, or incomplete data sets is like using a navigation system with outdated maps. However, fixing this doesn't require Gerardus Mercator-level cartography skills. Start in 2025 to: Define and align core data elements such as customer demographics, product catalogs, chart of accounts, and vendor demographics to ensure they have the same level of fidelity and definition across all your systems, whether integrated or not. Take the core data of your organization and consolidate the most critical 20% into a single data store. Continue to populate this throughout the year. Embrace being a digital packrat (storage is cheap) and don't worry about exactly how you'll use the data—you will use it eventually, I promise. Up Your Data Mastery - Remember when the concept of having process owners, experts, or SMEs was novel? Without delving into that debate, let's agree that data mastery is the digital equivalent of process mastery. Promote everyone in your finance organization to become a data champion. Get really good at collecting data, putting it to use, and relying on it to make decisions, both large and small, in complex scenarios instead of relying on untested hypotheses. Amazing things can happen when you, as a leader, ask your teams to show you the data. Assess What You Have - As mentioned above, you could probably throw a rock at your tech stack and be guaranteed to hit a platform with built-in AI/ML capabilities. Using internal data, load up Large Language Models and Large Data Models, and set your users free to explore what they can do. Some key wins we have seen this year include: Using PowerBI correlation analysis to do multi-variable predictions that learn over time Using PowerBI prompting to auto-create dashboards Using CoPilot in Business Central to ask questions like “what are my most profitable products”, “who are my best customers” Using PowerBI to do root cause analysis in FP&A misses and establish correlations in move forward restated financials 2. Raise Your Team’s Digital Quotient In today’s digital world, understanding key digital concepts like System of Record and System of Truth is just as important as understanding GAAP. A digitally aware Finance professional is uniquely positioned to add value to their team and enterprise by advocating for digital concepts. These concepts naturally lead to solutions that promote nimbleness, enhance user experience, and foster connectedness, unlike the large, monolithic systems of the past. I ask that you challenge your team to do even one of the three below things: Know the Players in the Market – A prime example is AP automation technology. In recent years, there has been a proliferation of AP tools that assist with the PO side, invoice ingestion, matching, and offer end-to-end solutions. Some tools focus on touchless rates, others help reduce category spend through vendor consolidation, and some aim to get your teams out of Excel (more on that later). With so many options, challenge your team to spend time getting to know the leaders and up-and-comers, along with their relative strengths. Some other exciting emerging categories to explore include Audit analytics, FP&A and Financial Service Management workflow tools. Work in an Agile Fashion – I know that Agile can quickly turn into a religious debate in an organization.  So, let’s set the record straight (as a self-identified Agile anti-purist) any flavor of Agile is better than no flavors.  Get your organization comfortable with the fact that when a digital effort is planned, not everything can be known and not every estimate/task is going to be accurate.  So, adopt the parts of Agile that promote: Small and incremental releases of improvements Performing a small Research phase at the beginning of a project to derisk that the end solution will work to solve the right problem and can be technically de-risked Fail fast and small Fund the outcome, not the project – so calling audibles is encouraged 3. Future Proof Your Organization As transactional level jobs become more automated; finally freeing your team up to focus on the strategic, and not the mundane is finally a tangible opportunity.  But how many of us as leaders have a plan for what is next for those loyal and dedicated team members?  It is more than fair to say that Digital will be the central nervous system of our Modern Finance Organizations – and not pushing paper.  Which makes it absolutely critical that your teams focus on learning disciplines like: Data Science Agile and SCRUM Human Centered Design problem solving methods 4. Don’t Make Coming to Work a Digital Downgrade Give your finance team consumer-grade technology and experiences similar to what they use personally. Imagine if Amazon added 12 steps between finding an item and finalizing the purchase, requiring you to copy text from another window multiple times, spend 5 minutes hand-keying and re-keying information, navigate through 7 different screens, and use workarounds because parts of the site are broken. Would you use Amazon again? This can be the experience of our finance teams when closing a period, developing annual/quarterly budgets, or processing AP. So why do we tolerate it at work if we wouldn't after work? We owe it to our teams to be better, which means... Getting them out of Excel Shifting focus on driving better financial results by getting them out of the minutiae required by manually keying/re-keying data between systems Integrate systems to give them data at their fingertips – and not to copy/paste rows or columns into new pivot tables Connect, using workflow, across finance silos (this is where most tools create bad experiences) 5. Say Goodbye to Large, Monolithic Tools and Projects Granted, this might be a bit of a stretch to accomplish in one year, mainly because it involves a cultural shift towards accepting some controlled risk of rework to achieve progress. As Finance professionals, the idea of progress over perfection can cause panic, but the alternative is never affecting change because we can't get our systems perfect. I believe that proactive discussions about the right time to invest in new tools are crucial for progressive organizations. These new tools should be implemented for a small part of the business initially, in a matter of weeks, not months or years. One thing I've learned over my career is that no matter how many brilliant minds are in a conference room conceptualizing how a technology should work, production usage is ALWAYS the best teacher. Gone are the days of huge ERP implementations that do everything for our companies. Modern tools and architectures focus on systems that handle core functions, different tools that differentiate, and separate tools that help you innovate. The ability to integrate and share data between systems means you can (and should) choose more point solutions that best meet your needs. This approach not only provides more bespoke features for your finance processes but also reduces risk when those micro systems need to be replaced or go offline. So, what does this mean? Here is what I recommend as a stretch goal for you in 2025: Spend more time on integrating and building bridges between great experiences for your team; extract the data layer as a separate asset Prioritize nimbleness – it is likely that your company could look significantly different by 2026; new markets, new customers, new products, M&A... so replacing a wholesale system over the course of 24 months is no longer an option. Don’t focus on managing systems (functionality), focus on governing data – that is the real asset Make 2025 the year you focus on the Panacea of Priorities – your Digital Finance agenda. Don’t try to do it all but do at least one thing. Move from thinking to action so that you and your teams can learn from smaller projects that might fail and generate learnings or succeed and generate learnings – quickly and over time. And know that you are not alone. If you need help putting any or all of this into a discrete set of measurable goals for you or your team, please reach out to me directly at jhuckle@sddigital.com or contact the SD Digital team at contact@sddigital.com. As Finance and Digital professionals, we are here to help bring clarity and confidence and would be honored to help shape your 2025 digital agenda. About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### How Artificial Intelligence Is Reshaping Cybersecurity on Campuses What are key takeaways from The Chronicle of Higher Education’s virtual forum on Artificial Intelligence’s Impact on College Cybersecurity? The Chronicle of Higher Education recently held a virtual forum with industry leaders and campus officials to discuss the unique challenges and opportunities that universities and colleges face when it comes to artificial intelligence (AI). Here are some of the highlights coming out of the session. AI Usage is Growing… and So are the Cybersecurity Risks The use and awareness of AI surged in 2024, making discussions about its threats and benefits more crucial than ever. AI is now ubiquitous, including on college campuses. Colleges and universities are prime targets for hackers due to the valuable data they hold, such as research and student personal information. According to the Verizon 2024 Data Breach Investigations Report, the education sector is among the top three most breached industries, with about 16% of incidents originating from higher education. Several factors contribute to this vulnerability: limited resources for additional security measures, open networks for user collaboration, and unmanaged student personal devices accessing the network. Additionally, the diverse demographic groups needing access—students, parents, faculty, staff, and alumni—pose a significant challenge in keeping hackers at bay. Cybersecurity and Third-party Risk Management Moving to the cloud has significantly impacted cybersecurity for colleges and universities. While panelists agree that cloud migration enhances infrastructure resiliency, the responsibility for cybersecurity and data protection still lies with the institutions themselves, not just third-party cloud vendors. When considering outsourcing key cybersecurity functions, panelists recommend starting with an internal analysis based on the type and classification of data, and the potential impact of a breach. It's also crucial to ensure that the third-party cybersecurity vendor is a good fit for the specific institution. Common methods to ensure this fit include surveys and security reviews. The Importance of Cybersecurity Awareness and Training Cybersecurity awareness and training has become more important and more challenging with the increase in use of AI. One panelist stated that some organizations believe that having separate AI training is the appropriate response. Specific AI threats to cybersecurity within the higher education industry include how quickly AI can learn how to write a believable email or create genuine looking images. Regulating AI and Compliance Needs The constantly shifting technical and financial compliance regulatory environments, driven by new AI developments, present challenges for universities and colleges. It's often impractical to have separate compliance officers for every team, making training and education on these matters increasingly vital. On a positive note, AI also plays a crucial role in defending against cybersecurity threats. It helps management organize and respond to alerts that are more relevant to the user's specific situation, reducing the need to sift through a flood of information. This targeted approach ensures users know where to focus their attention, enabling timely responses to potential threats. The Importance of AI Education The panelists also discussed the potential benefits in growing the computer-science and psychology programs to ensure students have at least a high-level understanding of the impacts of AI and cybersecurity. The panelists all agreed that there is going to be an increased demand for AI related jobs, which means a growing need for AI education. Regardless of your opinions on the use of AI and how it affects cybersecurity, it has become more important than ever for key for members of all industries to be aware of how it is affecting their job roles, regulatory environment, and to obtain necessary trainings on these topics. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Stolen Money Wired Overseas? Here’s How You Might Still Recover It. $20 billion! According to the FBI’s Internet Crime Complaint Center (IC3), between October 2013 and December 2023, more than 158,000 business email compromise (BEC) incidents were reported that involved U.S. victims and over $20 billion in losses. If you stacked freshly minted $1 bills, the stack would reach over 1,300 miles high. The actual losses are undoubtedly higher, as many BEC attacks go unreported to IC3. BEC, also known as email account compromise (EAC), typically involves social engineering and a malicious digital link to capture someone’s email login credentials, allowing unauthorized access – especially when multifactor authentication is not utilized. This email access is then typically leveraged to (1) gain unauthorized access to financial accounts through online password resets to take over the accounts and attempt to steal funds or (2) send and receive emails impersonating the email account owner to attempt to redirect funds owed to the email account owner or their company for products or services provided, or divert funds that are due to one of their clients. Expeditious response is critical. In general, the more time that has passed since the funds were sent prior to reporting the fraud to the sending financial institution (e.g., bank or credit union), the slimmer the chances of recovering the funds. It is also advisable to report the fraud to the financial institution where the funds were sent as soon as possible, too, to decrease the likelihood the funds can continue to move in the event the funds have not already moved elsewhere. These funds often make it out of the U.S. This is generally where victims of these BEC-enabled fraud stop, and the funds are never recovered. Here’s How You Might Still Recover the Funds The Rapid Response Program (RRP) and the Financial Fraud Kill Chain (FFKC) it leverages are critical to recovery efforts when funds stolen through cyber-enabled fraud are wired internationally. It has been almost a decade since the creation of the RRP, but most people I bring this important program up to still are not familiar with it – including business professionals responsible for attempting to recover fraudulently stolen funds. Hence, this is why I am writing this article. Through the RRP, the Financial Crimes Enforcement Network (FinCEN) helps victims and their financial institutions through the Financial Fraud Kill Chain (FFKC) recover stolen funds wired internationally as the result of certain cyber-enabled financial crime schemes, such as BECs and financial account takeovers. The RRP is a partnership between FinCEN; U.S. law enforcement (including the FBI, the Secret Service, Homeland Security Investigations (HSI), and the Postal Inspection Service (USPIS)); and foreign partner agencies that, like FinCEN, are the financial intelligence units (FIUs) of their respective jurisdictions. As part of the FFKC, FinCEN leverages its authority to share financial intelligence rapidly with counterpart FIUs and encourages foreign authorities to interdict the transactions, freeze funds, and stop and recall payments using their authorities under their own respective legal and regulatory frameworks. In February 2022, FinCEN reported the RRP had been used to confront cyber threats involving approximately 70 foreign jurisdictions to date, and had the capacity to reach more than 160 foreign jurisdictions through FIU-to-FIU channels. Through these collaborative efforts, FinCEN reported having successfully assisted in the recovery of over $1.1 billion for U.S. victims since the program’s inception in 2015. A victim of a cyber-enabled crime, or the victim’s financial institution, must report the fraud to law enforcement to initiate the FFKC; and the FFKC is more likely to be triggered if the international wire was in an amount of at least $50,000. To request assistance from federal law enforcement to initiate the FFKC, a victim or the victim’s financial institution may start the process by filing a report with federal law enforcement. In particular, the event can be reported through the FBI’s Internet Crime Complaint Center (IC3) or the nearest FBI or USSS field office. Federal law enforcement may then request FinCEN’s assistance to share financial intelligence with foreign FIUs in an attempt to recover the crime proceeds. While FinCEN does not ensure the recovery of internationally wired stolen funds, the RRP has had greater success in recovering funds when international wire transfers of fraudulently stolen funds are reported to law enforcement within 72 hours of the transaction. In March 2022, in a statement before the House Judiciary Committee, the FBI’s Cyber Division Assistant Director Bryan Vorndran shined a light on the FFKC’s success. Vorndran reported that during its fiscal year 2021 the FBI’s Recovery Asset Team (RAT) leveraged the FFKC 1,726 times with a 74 percent success rate and successfully froze more than $328 million that could then be returned to individual and business victims of cyber fraud. Even if cyber-enabled fraud does not meet the above criteria, reporting the fraud to the FBI through IC3 may still enable the event to be tied to other events and investigations and attempts to recover funds and/or hold the responsible parties accountable. What Can Be Done to Be Proactive? Steps can be taken to help ensure funds aren’t sent out in the first place, as well. For example, take steps to ensure sustained awareness of cyber-enabled fraud and its indicators among those who may encounter it (e.g., those with vendor billing relationships) and have processes in place to validate the legitimacy of where funds are sent (e.g., telephone calls to a vendor’s billing contact to confirm the change of bank account information or leveraging third-party data through a vendor to help validate bank account ownership). Leveraging multifactor authentication for email and financial accounts can reduce fraud risk related to account takeovers. This risk reduction includes adopting available more secure multifactor options (e.g., an authenticator application on a mobile phone and SMS text one-time passcodes are generally more secure than email one-time passcodes). Organizations can also document financial institution and law enforcement reporting steps within procedures to help ensure sustainable and timely response when fraud is discovered and increase funds recovery likelihood. If your organization needs assistance in implementing a fraud risk management strategy, assessing the maturity and/or effectiveness of your fraud risk management practices, assessing your fraud risk to help prioritize efforts, or developing awareness content or procedures, contact our related Business Advisory leaders: James Rumph in our Columbus office or Tom Pratt and Brian Webster in our Pittsburgh office. If your organization needs cybersecurity risk mitigation or remediation consulting, contact our Cybersecurity leader Carl Kriebel. About Schneider Downs Business Advisory Our experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business events. To learn more, visit our dedicated Business Advisory page. ### New Year, New Processing Speeds? Frustrations and Hardships Rise as Uncertainty Regarding ERC Claims Extends into 2025 On January 8, 2025, National Taxpayer Advocate Erin M. Collins released her 2024 Annual Report to Congress, finding overall improvement in the IRS taxpayer service but also highlighting persistent challenges, particularly delays in processing Employee Retention Credit (ERC) claims. At the onset of the COVID-19 pandemic, Congress enacted the Employee Retention Credit (“ERC”) to support struggling businesses and exempt organizations impacted by government-imposed restrictions by providing a tax credit intended to keep employees on the payroll. Instead, for many taxpayers, ERC has become a source of confusion and hardship due to lengthy delays, inefficient processing times, limited guidance and communication, unclear notices, and non-standard examination processes. The IRS’s understaffing and missteps have prolonged businesses’ hardships leaving many without the funds they need to stay afloat, pay employees, or plan for the future. The IRS implemented a processing moratorium in September 2023 citing rampant fraud in ERC claims and detailing the necessity to pause processing to determine better ways to detect fraud. Prior to the moratorium, the IRS had processed approximately 3.6 million ERC claims. Since the implementation of the moratorium, the number of claims processed has dropped juristically and came to a near standstill for almost 12 months. On October 10, 2024, the IRS announced that it had 400,000 claims processed or “ready-to-process” that taxpayers had filed prior to January 31, 2024. Of those 400,000 claims, 28,000 claims were disallowed and 50,000 were valid claims the IRS had previously announced it was processing. As of October 26, 2024, about 1.2 million claims remained unprocessed, and it is unclear as to when taxpayers can expect the IRS to act on their claims. Many of these claims have been pending for more than a year – resulting in financial hardship for businesses. Figure 1, below, illustrates the fluctuation in processing by the IRS of ERC claims over the past several years. Figure 1. Fluctuation of Processed ERC Claims On December 13, 2024 at the ABA Tax Section’s Criminal Tax Fraud and Tax Controversy Conference in Las Vegas, IRS Commissioner Danny Werfel announced that the IRS had plans to process around 500,000 ERC claims by the end of 2024, since the IRS has “a better sense of where the ineligible claims are going to be.” Werfel also announced that another 500,000 – 600,000 claims were “teed up” for approval in 2025; however, details and timing of the refunds are still to be determined. Furthermore, Werfel acknowledged that in Summer 2024, the IRS relied on algorithms to deny 20,000 ERC claims which inaccurately disallowed 10%-20% of valid claims. Since then, the IRS has tweaked its algorithms based on practitioner feedback, but given that the IRS is relying on algorithmic processing, it is likely to use broad eligibility criteria that may still reject valid claims during 2025. Next Steps for Taxpayers Taxpayers with claims do not need to take action at this point and should await further notification from the IRS. The IRS cautioned taxpayers who filed ERC claims that the process will take time – highlighting that processing speeds will not return to levels that occurred in 2023, but that speeds should increase from those in 2024. Additionally, the IRS has cautioned taxpayers that calling the IRS toll-free lines will not be fruitful because additional information regarding claims is generally not available as processing work continues. IRS Reminder As the agency continues intensifying audits and criminal investigation work in this area, the IRS continues to urge employers with pending ERC claims to consider a separate Withdraw Program that allows then to remove a pending ERC with no interest or penalty. Claims that are withdrawn will be treated as if they were never filed and the IRS will not impose penalties or interest. The complete release from National Taxpayer Advocate Erin M. Collins can be found at: National Taxpayer Advocate Annual Report to Congress 2024 (taxpayeradvocate.irs.gov) As further guidance is issued, our Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions, please reach out to your Schneider Downs contact(s) or Matthew Werner at mwerner@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.    ### Accounting for Abnormal Production Periods How can inventory costing assessments help manufacturers manage production levels? Manufacturers continued to encounter challenges over the past year in a number of areas including the continuing gap of skilled labor, supply chain disruptions, changes in customer demand, and continuing inflation. As a result of this environment, manufacturers are constantly struggling with forecasting and managing production level fluctuations. Variable Production Overhead and Normal Capacity While variable production overhead is generally allocated based on the units produced, fixed overhead costs are allocated based on the normal capacity expectations of the production facilities. Normal capacity is a range of outcomes expected to be achieved over a number of periods under normal circumstances.  Normal capacity ranges can be unique to certain business or industries. Common issues that lead to abnormal production periods include significant changes to demand, labor or material shortages, and unplanned production downtime. Accounting for Production Levels and Inventory Valuation Issues Production outside this normal range could lead to inventory valuation issues. When production levels are abnormally high the fixed overhead allocated to each item should be reduced to better reflect to amount of expense actually applied to each unit and that the inventory population in total is not measured above actual costs incurred. However, when production levels are abnormally low, the amount of fixed overhead applied should not be increased to each unit manufactured. Expensing the remaining fixed overhead costs and not allocating additional fixed overhead keeps inventory within an appropriate lower of cost or net realizable value. Both U.S. GAAP and the International Financial Reporting Standards are aligned in this accounting. This treatment also aligns with the conservative principle of accounting under both standards. In addition, abnormal costs relating to freight, handing and wasted materials should be included in current period costs rather than being deferred by being capitalized into inventory. The Benefits of Inventory Costing Assessments Having accurate inventory costing provides decision-makers with the appropriate information to manage operations. Inventory correctly capitalized at the end of the period also recognizes issues when they occur and sets up appropriate margins on future sales. This assessment is particularly important at the end of the year and other reporting period ends. Looking for more information or assistance with assessing inventory costing? Schneider Downs provides accounting advisory services as well as assurance, and a full range of tax services for Manufacturers. For more information on our manufacturing services, please visit our industry page Schneider Downs Manufacturing or email us at contactSD@schneiderdowns.com. About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively.   To learn more, visit our Manufacturing Industry Group page.   ### New IRS Form 15620 Standardizes Section 83(b) Election Reporting In October 2024, the Internal Revenue Service (IRS) released instructions and fillable versions of new Form 15620. This form is used to report Section 83(b) Elections and is designed to make filing consistent across taxpayers. Taxpayers and tax preparers may file the new form electronically or by mail. The form standardizes the model letter set forth in Rev. Proc. 2012-29 and follows the rules established in Reg. §1.83-2(e). When a substantially nonvested property is transferred to a person as a result of services performed, that person may elect under Internal Revenue Code (IRC) § 83(b) to include in their current gross income the excess of the property’s FMV at the time of the transfer over the amount paid for the property at the time of transfer. The election is made at the time of transfer rather than waiting to include the amount when the property later becomes substantially vested. It is crucial to note that unlike other elections such as an IRC §754 election, there is no extension of time to file a §83(b) election. The election must be filed within 30 days of the transfer of the property. It is important that taxpayers and those transferring substantially nonvested property to be aware of the new form and clarify who in the transfer process will be responsible for the filing. Please contact any member of our Schneider Downs tax practice with questions and how we can help you navigate the new filing requirement. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Reserve Estimation On average, reserves represent greater than 60% of a producer’s total assets on the balance sheet. Reserve estimation is a complex, imprecise process requiring a synthesis of diverse data about the geologic environment, reservoir rock structure and other characteristics and engineering analysis. Due to the material balance and highly sensitive estimation process, reserves are generally a high-risk area for financial statement users and auditors. Below we’ll take a closer look at the reserve process and the information necessary to create as accurate of a reserve report as possible. General Estimation Methods There are four common approaches to estimating reserves: Analogy employs experience and judgment to estimate reserves based on observations of similar situations (i.e. nearby producing wells) and consideration of hypothetical performance. It’s used most when data is unreliable and/or insufficient to warrant the use of other estimating methods. Analogy alone is considered to have a low degree of accuracy relative to other methods, but any reserve estimation method employs some degree of analogy in application. Volumetrics calculates the hydrocarbons in place, and an estimate of those recoverable, by using a combination of measured physical data and estimates for certain unmeasurable data. Factors like rock and fluid properties are combined with estimates of the reservoir volume derived from seismic and/or drilling information to determine quantities that can be economically recovered. The volumetric method is most commonly used in newly developed and/or non-pressure depleting reservoirs. Overall, it has a low degree of accuracy, though good rock quality, well control and uncomplicated reservoirs can improve precision. Performance Curves. For many properties, oil and gas production rates and reservoir pressures decline in patterns or curves that can be extrapolated to estimate future production. Historical production is plotted on a logarithmic graph scale to identify trends; engineers end the curve extrapolation and future production when the production rate declines to the property’s economic limit. This limit occurs when production is too low to provide monthly cash inflow from production sales in excess of monthly cash outflow for operating costs. Performance curves are considered to provide more precise estimates than volumetric or analogy approaches. Most commonly used after production is established, accuracy generally improves as historical data accumulates. The analysis of decline curves requires special attention when 1) wells are not producing at capacity; 2) the number of producing wells is changing; 3) operating practices change; or 4) completion zones are not consistent over time. Material Balance Analysis involves complex calculations based on analysis of the relationship of production and pressure on well performance. It recognizes that reservoir pressure declines as more fluid is removed. Accuracy of this method is directly related to the quantity and quality of relevant data. Obtaining the data necessary to justify such a detailed study is relatively expensive. Information Needed for Reserve Estimation In addition to the geologic and engineering data referred to above, other information is needed for calculating the estimated reserves: Records of Production. Historical records of daily or monthly production that should be provided for both operated and non-operated properties. Engineers use such records to establish a production decline curve for determining the remaining recoverable reserves. Records of Ownership. For ownership interests, the entity’s net share of reserves is the only one reported. These interests come from the lease records department and must agree with the interests being used for revenue and joint interest billing. Ownership interest can change over time based on agreements among the owners. Records to Determine Current Pricing and Operating Costs. For proved reserves that are, by definition, based on current economic and operating conditions, engineers use current prices and operating costs to determine the economic limit. Lease operating costs are usually available from lease operating statements but require analysis to identify recurring costs, repairs and maintenance. Expected Future Capital Expenditures Records of Gas Imbalances As you gather information to provide to the engineer, make sure you also share it with your auditor. This will prevent future reserve report revisions and save money and time if they identify any material exceptions in testing of the inputs. If you need any assistance in gathering information for your reserve estimations, reach out to a member of the Schneider Downs Natural Resources Industry Group. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Understanding Donated Space Under Accounting Standards Codification 842 Accounting for leases has undergone significant changes with the introduction of Accounting Standard Codification (ASC) 842. Under ASC 842, right-of-use assets and lease liabilities are recognized on the statement of financial position or balance sheet to provide for increased transparency and comparability. However, when it comes to donated space, ASC 842 presents unique considerations. Under ASC 842, a lease is defined as a contract that conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration. Donated space refers to the use of property provided to an organization without any exchange of consideration. Therefore, donated space does not meet the definition of a lease under ASC 842. Instead, donated space should be accounted for as a contribution in accordance with ASC 958. Accounting Standards Update (ASU) 2020-07 provides guidance on the presentation and disclosure of contributed nonfinancial assets, including donated space. ASU 2020-07 requires organizations to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. Additionally, organizations must disclose the following information about contributed nonfinancial assets: A description of the contributed nonfinancial assets. The valuation techniques and inputs used to arrive at a fair value measure. The principal market or most advantageous market used to arrive at a fair value measure. Any donor-imposed restrictions associated with the use of the contributed nonfinancial assets. An organization must also consider the impact of below-market lease agreements.   In these cases, an organization must account for lease payments made in accordance with ASC 842.  It must also account for the difference between lease payments and the fair market value of the use of the leased asset, recording it as a contribution in accordance with ASC 958.   That contribution should be recorded at the fair value (less any actual lease payments made) in the period in which the contribution is received, and the related expense recorded in the period the leased asset is used. Organizations with donated space or below-market leases should consider the impact for these types of leases in accordance with ASC 842, ASC 958 and ASU 2020-07. By doing so, organizations can ensure accurate and transparent financial reporting of contributed nonfinancial assets. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.   To learn more, visit our dedicated Audit and Assurance page.  Don’t forget, Schneider Downs offers simpLEASE, a software program that assists with the accounting requirements set forth by ASC 842. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. Visit simpLEASE to learn more.    ### Why Buyer Value Creation Matters for Sellers In our previous article, we delved into the fundamentals of buyer value creation. This time, we shift our focus to its impact on sellers. Despite the efforts of both parties, buyers and sellers may not agree on value – a seller may have a more optimistic perception of value that does not align with the buyer's risk-adjusted perspective. This value gap is either successfully negotiated and bridged or can result in an unsuccessful transaction. To bridge value gaps, transaction advisors work with the buyer and seller to adjust the purchase price and nature of the transaction by using any one or a combination of the following: Earn-out – A portion of the purchase price is contingent upon the target's financial performance after the acquisition. Earn-outs typically last for up to two years. They are often linked to future revenue or EBITDA, which is usually based on the financial forecast provided by the seller during the sale process. Additionally, qualitative earn-outs are possible where payments are tied to specific outcomes, such as technology development or product launches. Retained Interest – The seller retains a portion of their equity, typically between 10% and 20%, allowing them to benefit from the value created through the buyer's activities aimed at increasing that value. The seller can realize this retained value either through a downstream sale or, depending on the buyer's intended holding period, by having the buyer repurchase the equity at market value based on a pre-determined trigger (such as the holding period) at a future date. Minority Investment – As an alternative to a majority purchase, a buyer could seek to position for a minority investment in the target. While this may not meet the seller's objectives, it may allow the buyer to see/realize upside value over time and position for a downstream purchase of the business. Buyers often lock in an option and value for full acquisition of the company at the time of initial investment. In summary, creating value for buyers is vital to the sales process. It justifies the transaction and helps determine the amount and structure of the purchase price. In most transactions, buyers and sellers have different perceptions of value. Therefore, minimizing and bridging these value gaps is essential for a successful outcome. As value and growth advisors on the sell side, we aim to create value for the seller while minimizing the potential value gap. A well-structured, multi-step sell-side process can help identify and address this gap before the letter of intent is issued. Closing the value gap is crucial for both parties to achieve a successful transaction. This article is part of a comprehensive series exploring buyer value creation. You can find another article here and download the complete guide here. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### IRS Releases six annual revenue procedures for 2025 The IRS has released six annual revenue procedures for 2025 in Internal Revenue Bulletin 2025-1. This article will focus on the portions of the revenue procedures that affect tax-exempt organizations. Included in this bulletin are the following revenue procedures: Rev. Proc. 2025-1 – Contains revised procedures for letter rulings, information letters and determination letters issued by the IRS. Rev. Proc. 2025-2 – Explains when and how technical advice is conveyed in technical advice memoranda (TAMs). Rev. Proc. 2025-3 – Provides a revised list of areas in which the IRS will not issue letter rulings or determination letters (domestic). Rev. Proc. 2025-4 – Relates to the types of advice the IRS will provide to taxpayers on issues relating to Tax-Exempt and Government Entities, Employee Plans and the procedures that apply to requests for determination letters. Rev. Proc. 2025-5 – Describes procedures for issuing determination letters on tax exempt status of Exempt Organizations. Rev. Proc. 2025-7 – Provides a revised list of areas in which rulings will not be issued (international). Tax exempt organizations will be most impacted by the following Revenue Procedures: Rev. Proc. 2025-1 User fees for Private Letter Rulings (PLRs) and Technical Advice Memoranda (TAMs) will increase for requests submitted after February 1, 2025, as follows: Letter ruling request for relief: $14,500 Private letter ruling requests: $43,700 Reduced user fee involving a personal, exempt organization, governmental entity, or business tax issue if the request involves a tax issue with gross income of less than $400,000: $3,450 Reduced user fee involving a personal, exempt organization, governmental entity, or business tax issue if the request involves a tax issue with gross income between $400,000 and $10 million: $9,775 Substantially identical letter ruling requests: $4,370 Rev. Proc. 2025-5 The following types of organizations are now ineligible to use Form 1023-EZ, Streamlined Application for Recognition of Exemption, per Rev. Proc. 2025-5, Sec. 6.05(2): Organizations previously denied recognition of exemption. Organizations previously determined to be ineligible to use Form 1023-EZ. Organizations involved in activities with federally prohibited controlled substances, regardless of the legality under state law. Organizations involved in the exchange, creation, or distribution of digital assets. Rev. Proc. 2025-5, Sec. 6.05(2)(w) was updated to state that private foundations applying for reinstatement after automatic revocation and requesting to change to a public charity foundation classification are ineligible to use Form 1023-EZ. Prior years’ procedures provided that any automatically revoked organization was ineligible to use Form 1023-EZ if it sought to change its foundation type. Rev. Proc. Sec. 3.01(1) clarifies that an organization previously recognized under Internal Revenue Code (IRC) Section 501(c)(3) will remain classified as an applicable tax-exempt entity subject to the rules of excess benefit transactions (IRC Section 4958) for five years after losing its exemption under IRC Section 501(c)(3), except if it is a private foundation or a governmental unit or affiliate. For any questions relating to these Revenue Procedures, please contact Sarah Piot at spiot@schneiderdowns.com or Erin Wood at ewood@schneiderdowns.com. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### New Pennsylvania Department of State Filing Requirement - Annual Report Filing Beginning January 2025 On November 3, 2022, Pennsylvania Governor Tom Wolf signed Act 122 of 2022 into law. Among the changes made by Act 122 was an annual reporting requirement with the Pennsylvania Department of State (PADOS) for most domestic and foreign filing associations (including nonprofit organizations). The new Annual Report filing requirement began January 1, 2025. Additionally, Act 122 repealed the long-time decennial report requirement. Associations required to file an Annual Report include: Domestic business corporations Domestic nonprofit corporations Domestic limited liability (general) partnerships Domestic electing partnerships that are not limited partnerships Domestic limited partnerships (including limited liability limited partnerships) Domestic limited liability companies Domestic professional associations Domestic business trusts All registered foreign associations General partnerships that are not limited liability partnerships are among filing types not required to file. While financial information is not required to be reported, the following information is required to be included on the Annual Report. This information will be publicly available through the PADOS public website: Business name. Jurisdiction of formation. Registered office address. Name of at least one governor (director, general partner, LLC manager or LLC member with material management responsibility, etc., depending on type of association). Names and titles of the principal officers, if any. Address of the principal office. Entity number issued by the Pennsylvania Department of State. The deadline for filing the annual report is based on the type of association: Corporations (business and nonprofit) domestic and foreign – January 1 – June 30 Limited liability companies domestic and foreign – January 1 – September 30 All other associations (limited partnerships, limited liability partnerships, business trusts, professional associations) domestic and foreign – January 1 – December 31 There is a nominal fee of $7 for business corporations, limited liability companies (LLCs), limited partnerships (LPs) and limited liability general partnerships (LLPs). There is no fee for nonprofit corporations and any LPs or LLCs with a not-for-profit purpose. The information reported must be current as of the date the report is delivered to PADOS; information should not be for the prior calendar year. Failure to file the Annual Report will subject the association to administrative dissolution, termination or cancellation and loss of the protection of its name, leaving the name available for use by other entities. However, since the new reporting requirement is a significant change for Pennsylvania, Act 122 requires that the PADOS provide associations with a transition period before imposing any dissolution, termination or cancellation for failure to file Annual Reports. The transition period will last until Annual Reports are due in 2027. Although not specifically stated, it is possible that a nonprofit corporation that is administratively dissolved could have its tax-exempt status under Internal Revenue Code Section 501(c)(3) revoked as well. PADOS will mail a notice to the registered office address of each association required to make an Annual Report at least two months prior to the respective deadline reminding it of the need to make an Annual Report. It is important that affected associations keep all information on file with the PADOS up-to-date, particularly their registered office address, to ensure that they receive notice of how and when to make Annual Reports.   However, failure by the PADOS to deliver notice to any party, or failure by any party to receive notice, of an Annual Report filing requirement does not relieve the association of the obligation to make the filing. The Annual Report will be able to be filed electronically online or by paper. Additional information, resources (Infographic and Annual Report Help Guide) and FAQs are available at the PADOS website. Note that this annual compliance obligation is not tax related and does not relieve organizations from tax filing obligations.  Additional questions should be directed to your legal counsel. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Value of Outsourced Accounting Services Start-ups facing the challenges of limited resources and the need to focus on core business objectives can significantly benefit from outsourcing their accounting functions. By leveraging the expertise of seasoned professionals, accessing cutting-edge technology, and gaining cost-effectiveness, start-ups can streamline their financial operations, improve decision-making, and build trust with investors, ultimately contributing to their overall success. Cost Efficiency Outsourcing accounting services can be more cost-effective than hiring a full-time, in-house accounting team. This is particularly beneficial for start-ups that need to manage their budgets carefully. Access to Expertise Start-ups can leverage the expertise of seasoned accounting professionals without the overhead costs associated with full-time employees. This includes access to specialized knowledge in areas such as tax accounting, financial reporting, and compliance. Scalability As start-ups grow, their accounting needs become more complex. Outsourced accounting services can scale with the business, providing the necessary support at each stage of growth. Focus on Core Business By outsourcing accounting tasks, start-ups can focus on their core business activities, such as product development and customer acquisition, rather than getting bogged down in financial management. Building Trust with Investors Working with a reputable outsourced accounting firm can help start-ups build trust with investors by demonstrating a commitment to accurate and transparent financial management. Access to Cutting-Edge Technology Outsourced accounting firms often use advanced accounting software and analytics tools, which can provide start-ups with valuable insights into their financial performance. Enhanced Financial Decision-Making Accurate and timely financial data from outsourced accounting services can help start-ups make informed decisions, optimize cash flow, and identify potential risks. By partnering with reputable accounting firms, startups can gain access to valuable expertise, streamline their processes, and make informed decisions that drive growth and success. In today's competitive landscape, outsourcing accounting functions can be a crucial step for startups to thrive and achieve their long-term goals. About Emerging Technology Services At Schneider Downs, we have in-depth experience helping emerging technology companies navigate unique capital structures and other challenges that don’t confront more mature businesses. We understand the nuances and complexities of your business, and we are here to help. For more information visit our dedicated Emerging Technology Services page. ### Understanding and Measuring Buyer Value Creation This article is part of a comprehensive series exploring buyer value creation. You can find another article here and download the complete guide here. As value and transaction advisors, we collaborate with business owners to enhance their company's overall value before a transaction occurs. Our approach involves a multi-month process that includes implementing significant changes, professionalizing the management team, and clearly defining the company's strategy. Additionally, we improve back-office operations to ensure accurate and timely financial reporting while providing insights into operational performance. Ultimately, our value advisory efforts aim to help achieve the highest possible purchase price during the sale process. It's important to note that value creation is not solely the seller's responsibility; buyers also evaluate target companies based on the future value they can generate and realize downstream. When buyers consider purchasing a company, they develop a deal thesis—a clear rationale outlining why the acquisition is strategically and financially justified. A primary objective for the buyer is to achieve a return that justifies their capital investment. For the investors involved, this means realizing a financial return through the eventual sale of the acquired business, downstream monetization of the acquiring company, or the upside generated from a longer-term hold of the acquired business. In any case, a buyer must envision the potential benefits of the transaction. A well-positioned seller can assist the buyer in shaping this vision or deal thesis, which improves the likelihood of success pre- and post-transaction. What is Value Creation, and How is it Measured? Value creation refers to the process of developing both tangible and intangible assets within a business. It can be quantified in real dollars, which helps to determine the company's worth. The most commonly used metric for assessing value is Enterprise Value (EV). Enterprise value represents the total value of a company. For privately held companies, EV is typically a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA) or revenue based on the sales figures of similar companies within the same market segment. A private company's value is further established during the sale process, frequently through an auction. Engaging in value-creation activities can increase EBITDA, leading to higher market multiples. Value creation occurs between sellers and buyers when the seller provides a clear strategy. By positioning the company as a platform or identifying operational opportunities, the seller can help shape a compelling deal thesis. However, time and funding constraints may limit the implementation of these opportunities before going to market. Suggestions like entering a complementary market or productizing a service may take time but can lead to significant revenue growth. The selling company's Confidential Information Memorandum (CIM) outlines these potential opportunities to help buyers identify value prospects. Buyers can review the strategies presented to evaluate how they fit into their deal thesis. Buyers will most likely map value to the following (partial list): Synergies – cost rationalization post-sale helps create financial synergies – this may involve eliminating duplicate departments or functions such as accounting or human resources. Synergies may also result from vertical integration or the acquisition of underutilized assets. Synergies effectively buy down the cost of the target - for instance, reducing the cost of acquisition from a 5x to 4x multiple. Cost rationalization can help drive improved financing terms and result in an accretive rather than dilutive transaction on day one. Expansion and Diversification – Buyers frequently aim to enter new markets or increase their existing market share. To achieve these objectives, they often pursue inorganic growth strategies. For example, acquiring a ready-made entry into a new market can be quicker, less costly, and less risky than expanding organically. Additionally, expansion and diversification can help reduce concentration risk, meet market demand, or enhance profit margins. Buyers experiencing slow organic growth look for inorganic options to boost revenue growth. Competitive Advantage and Margin Growth – Buyers may seek to acquire a strong brand, new or advanced technology, specialized skills, or teams or to minimize competition by buying a competitor. Acquiring a competitor can also result in gaining new customers and expanding its footprint (geographic, demographics, etc.), acquiring valuable intellectual property or technology, and expanding into new markets. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### 3 Cybersecurity New Year's Resolutions for a Safer 2025 New Year, New Me—or at least a more secure me this year! Throughout my career, I’ve had the opportunity to work closely with cybersecurity professionals, and I’ve always taken pride in knowing enough to help keep myself and my friends a little more secure than the average bear. However, that doesn’t mean I don’t fall into the same bad habits here and there that can lead to larger security issues – which is why every new year, I take a moment to think about some steps to safeguard my personal devices and information. For 2025, here are my New Year’s resolutions to stay more secure. Secure Mobile Payment Services Mobile payment services offer a secure way to store credit cards, tickets and even hotel keys in the palm of your hand. Over the past year, I have become increasingly reliant on my mobile wallet for everyday and travel expenses,  which means I have a centralized collection of financial and personal information directly on my phone. Knowing that I will be upgrading to a new phone this year, my first resolution is to ensure I have multi-factor authentication turned on for mobile transactions (biometric or passkey) and to do a full factory reset on any old devices with payment information stored. Use a Strong Password Manager Password managers provide a secure and convenient way to store all your passwords in one centralized location, helping reduce password reuse. Many password managers also come with additional security features, such as VPNs, antivirus protection and passkeys. I’ve been using a password manager for years, and each year, I recommend it to my friends and family as a great way to start the new year off right (they even make excellent holiday gifts!). They’re affordable, especially when considering the level of risk reduction they offer. However, it's important to note that while web-based password managers may seem convenient, they might not provide the same level of security as more established password management providers. Freeze Credit Cards The holiday shopping season often means many consumers are using credit cards or signing up for new accounts. While credit cards are generally more secure than debit cards, they still carry risks if the information falls into the wrong hands. That’s why, after the holiday season, I make it a point to review the statements for any credit cards I don't use regularly and, more importantly, freeze them. Freezing a credit card is a quick, convenient and free way to protect it from unauthorized use, and it can easily be turned off and on via an app or by calling customer service. So, take a few minutes to freeze any cards you don’t use regularly. Just be cautious of unsolicited communications asking for information related to unfreezing or freezing accounts—these are often scams. As we enter 2025, let’s make it a goal to prioritize our data and security. Whether you’re making small adjustments or implementing new habits like securing mobile payments, using a password manager and freezing unused credit cards, every step counts toward keeping your personal information safe. Here’s to a more secure year ahead! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Key Strategies for Navigating Sell-Side Due Diligence in Software Companies Sell-side due diligence is a critical process for software companies looking to attract potential buyers or investors. When going through sell-side due diligence, companies are subject to a thorough examination of their financials, operations, controls, legal matters and many other key areas to gather information, provide transparency and build trust.  While due diligence is crucial for a successful transaction, it can often unveil some common issues that software companies must address. 1. Financial Discrepancies One of the most frequent issues encountered during sell-side due diligence is financial discrepancies. These can include inconsistencies in revenue recognition, discrepancies in expense reporting or outdated financial records. Software companies must ensure that their financial statements are accurate, up to date and compliant with relevant accounting standards. This may require a thorough internal review and the assistance of the experienced professionals at Schneider Downs. 2. Intellectual Property Concerns Intellectual property (IP) and intangible assets can make up a significant portion of the balance sheet for software companies, and potential buyers will scrutinize IP ownership, licensing agreements, contracts and any potential infringements during due diligence. Common issues include unclear ownership of code, open-source software usage without proper licensing and potential patent infringements. Companies must conduct a comprehensive IP review to address these concerns and ensure that all IP assets are adequately protected and accounted for. 3. Customer and Contractual Obligations The relationship between software companies and their customers is often governed by complex contracts. During due diligence, potential buyers will examine these contracts to assess the company's obligations, renewal rates and any potential liabilities. Common issues include vague contract terms, unfulfilled service-level agreements and disputes with key customers. Companies should review and attempt to standardize their contracts to ensure clarity and compliance with customer expectations. 4. Data Privacy and Security Data privacy and security are essential for software companies, especially given the constantly changing regulatory landscape. Potential buyers will assess the company's data protection practices, compliance with applicable regulations and the strength of its cybersecurity measures. Common issues include outdated security protocols, insufficient data encryption and lack of compliance with privacy laws. Companies should invest in modern security technologies and conduct regular cybersecurity reviews to mitigate these risks. 5. Operational Inefficiencies Operational inefficiencies can significantly impact the valuation of a software company. During due diligence, buyers will evaluate the company's internal processes, development methodologies and overall operational efficiency. Common issues include reliance on outdated technology, lack of automation and inefficient project management practices. Companies should streamline their operations, adopt agile structures and invest in automation tools to enhance efficiency. 6. Legal and Regulatory Compliance Compliance with legal and regulatory requirements is essential for software companies to avoid potential liabilities. Due diligence will uncover any compliance issues with industry-specific regulations, employment laws and corporate governance standards. Common issues include unregistered business activities, noncompliance with labor laws and inadequate corporate governance practices. Companies must be aware of relevant regulations, stay ahead of any regulatory changes and ensure full compliance to avoid legal complications. Sell-side due diligence can be a demanding process, but addressing these common issues proactively can significantly enhance a software company's attractiveness to potential buyers. By ensuring financial accuracy, protecting intellectual property, fulfilling contractual obligations, safeguarding data privacy, improving operational efficiency and maintaining legal compliance, companies can navigate due diligence successfully and be prepared for a successful transaction.  Being well-prepared for sell-side due diligence not only facilitates a smoother transaction process, but also lays the foundation for long-term success and growth. Addressing potential issues early on and maintaining a robust and transparent operational structure will make a software company more appealing to prospective buyers and investors, and ensure that the company is positioned to succeed. For more information about Schneider Downs’ due diligence services, contact a member of our Transaction Advisory team. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.   To learn more, visit our Emerging Technology page.   ### IRS Announces Standard Mileage Rates for 2025 The Internal Revenue Service has rolled out its standard mileage rates for 2025. Beginning January 1, standard rates for the use of a car, van, pickup or panel truck will be: 70 cents per mile driven for business use (up three cents from 2024) 21 cents per mile driven for medical purposes (the same as in 2024) 21 cents per mile driven for moving purposes for qualified active-duty Armed Forces members (the same as in 2024) 14 cents per mile driven in service of charitable organizations (fixed by Congress) The official rates and additional information can be found in Notice 2025-5. Standard rates apply to gasoline and diesel-powered vehicles as well as fully electric and hybrid automobiles. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Disaster Relief Tax Bill Signed into Law On Dec. 12, 2024, President Biden signed the Federal Disaster Tax Relief Act of 2023 (H.R. 5863) into law (NOTE: “2023” is not a typo). This legislation, passed by Congress on December 6, provides favorable tax provisions for disaster victims, including the elimination of the requirement that personal casualty losses must exceed 10% of adjusted gross income (AGI). While Congress typically passes a bill to cover major disasters at the scale of Hurricane Ida (2021) and Hurricanes Ian (2022) and Helene and Milton (2024), there have been delays in passing legislation since 2021— even though there appeared to be bipartisan support for such legislation. The legislation allows taxpayers to file amended returns or seek refunds for losses that were previously nondeductible. Taxpayers suffering losses from federally declared disasters between 2021 and 2023 may be able to amend returns; and taxpayers suffering losses in 2024 may be able to deduct those losses on their 2024 tax returns. The bill provides relief in three general areas: Disaster Loss Relief - Provides disaster relief by extending certain provisions of the Taxpayer Certainty and Disaster Relief Act of 2020 for losses occurring after December 27, 2020. Waives the 10% of adjusted gross income limitation. Sets casualty loss floor to $500, allowing a deduction for losses exceeding that amount. Allows individuals to add the casualty loss deduction to their standard deduction (itemization of deductions is not required to claim the loss). Wildfire Relief - Provides that gross income excludes “any amount received by an individual as a “qualified wildfire relief payment.” Any amount received by or on behalf of an individual as compensation for losses, expenses, or damages—including compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have otherwise paid such wages), personal injury, death, or emotional distress—incurred as a result of a qualified wildfire disaster but only to the extent that the losses, expenses or damages compensated by such payment are not compensated by insurance or otherwise. A qualified wildfire disaster is any federally declared wildfire disaster declared after December 31, 2014 as a result of any forest or range fire. Applies to qualified wildfire relief payments received by the individual during taxable years beginning after December 31, 2019, and before January 1, 2026. Extends statute of limitations for claiming a credit or refund to 1 year after date of enactment East Palestine Train Derailment Relief – provides that East Palestine train derailment relief payments are treated as qualified disaster relief payments under IRC §1239; this allows for the exclusion from gross income of compensation-related payments received after February 2, 2023 received from: a Federal, State, or local government agency; Norfolk Southern Railway, or Any subsidiary, insurer, or agent of Norfolk Southern Railway or any related person. The eligible payments include any amount received by or on behalf of an individual as compensation for (i) loss, damages, expenses, loss in real property value, (ii) closing costs with respect to real property (including realtor commissions), or (iii) inconvenience (including access to real property). Disaster Tax Relief Declaration Steps Determine if a disaster qualifies. Identification of disaster declarations can be found here https://www.fema.gov/disaster/declarations. Taxpayers, and their advisors, can perform various search inquires by state, type of disaster, year, or combinations. For example, tropical storm Debby in 2024 and remnants of Hurricane Ida in 2021 impacted certain Pennsylvania residents and qualify as federally declared disasters; and other tornados occurring in Ohio in March 2024 also qualify. Determine if an amended return is warranted. Please do not hesitate to reach out to your Schneider Downs tax advisor with questions or for more information. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Corporate Transparency Act Beneficial Owner Reporting Update: Off-again, On-again, Off-again. Starting in early December and accelerating over the week between Christmas, the start of Hannukah, and New Years Day, the courts have kept everyone disoriented about the filing requirements for reporting beneficial owners information to the U.S. Treasury Department’s Financial Crimes Enforcement Network by the December 31, 2024 deadline. In short, the reporting deadline has again been postponed. Below is a brief summary of recent December actions: In early December, a preliminary injunction was issued by the U.S. District Court for the Eastern District of Texas, stopping the requirement to submit a BOI report. On December 23, the 5th Circuit U.S. Court of Appeals overturned the December 3 ruling. So, for a few days, FinCEN was requiring reporting, but with an extended deadline of January 13 to give companies a little more time to comply (presumably due to confusion brought by the differing court actions and decisions). However, on December 26, a different panel of the 5th Circuit vacated the December 23 order. In other words, the preliminary injunction is back in place and BOI reports are not currently required. FinCEN confirms this conclusion on its website, noting: Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN (emphasis added) https://www.fincen.gov/boi However, in response, on December 30, the Department of Justice filed an emergency request with the U.S. Supreme Court to reverse once again the injunction against enforcement of the BOI reporting requirements. No decision has been announced yet; but stay tuned. The current reporting rule could change (apparently) at any time, but it is not expected to result in a deadline any earlier than the January 13, 2025 deadline FINCen instituted on December 23 that existed for only a few days. Additionally, please note that Schneider Downs has also received information that some businesses are receiving fake BOI notices sent by fraud artists. The FINCen website has more information about these attempts and how to spot them. Companies need to stay vigilant against criminals looking to take advantage of confusing and changing reporting requirements, and strongly safeguard sensitive financial, business, and personal reporting information. Additionally, please note that Schneider Downs has also received information that some businesses are receiving fake BOI notices sent by fraud artists. The FINCen website https://www.fincen.gov/boi has more information about these attempts and how to spot them. Companies need to stay vigilant against criminals looking to take advantage of confusing and changing reporting requirements, and strongly safeguard sensitive financial, business, and personal reporting information. As a reminder, any reporting requirements under FINCen are not tax filings under the Internal Revenue Code. We encourage you to consult with your legal counsel for additional information and filing requirements regarding beneficial owner reporting obligations. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Uniform Guidance: De Minimis Rate Increase for Indirect Costs October 1, 2024 marked the effective date for exciting changes to the Office of Management and Budget (OMB) Guidance for Grants and Agreements, which is now referred to as the OMB Guidance for Federal Financial Assistance. The OMB revised several parts of the overall guidance, but this article focuses on Part 200 - Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, otherwise referred to as the Uniform Guidance, and, more specifically, changes to Section 200.414 - Indirect costs. OMB Guidance for Federal Financial Assistance Background and Timeline The OMB periodically reviews the Uniform Guidance, which was first established in 2013 to assist programs in delivering more positive outcomes while reducing administrative burden and fraud, waste and abuse risk. In February 2023, the OMB announced it was initiating the process of reviewing the Uniform Guidance for potential revisions, which was then followed by issuance of a Notification of Proposed Guidance in the Federal Registrar in October. Public comments to the proposed guidance brought forth additional revisions in the notification of final guidance issued on April 22, 2024. One objective among the OMB’s final revisions was the concept of reducing agency and recipient burden. Several changes evidenced the OMB’s attempt to achieve this objective, including the increase in the guaranteed de minimis rate for indirect costs from 10 percent to 15 percent of modified total direct costs. De Minimis Rate Increase and Impact The OMB explained that the change would allow for a more reasonable and realistic recovery of indirect costs, particularly for new or inexperienced organizations that may not have the capacity to undergo a formal rate negotiation but still deserve to be fully compensated for their overhead costs. It’s important to note that recipients still have discretion in applying a lower than 15 percent, but federal agencies may not compel those recipients to use a lower rate. Application for Affected Recipients The Council on Federal Financial Assistance (COFFA) contextualized the application of the indirect cost changes in its August 15, 2024 publication FY 2024 Revisions to 2 CFR: Federal Agency Implementation: “Indirect Costs Negotiated Indirect Cost Rate Agreements (NICRA) negotiated prior to October 1, 2024 must continue to be honored by both federal agencies and recipients, however cognizant agencies for indirect costs may – but are not required to – renegotiate existing NICRAs (i.e., issue revised or amended agreements) to reflect the new MTDC base. OMB encourages cognizant agencies for indirect costs to accommodate requests to renegotiate existing NICRAs that are in effect beyond October 1, 2025.” With respect to de minimis rates, COFFA summarized the recipient application as follows: New Awards: Recipients may elect to use the new 15 percent de minimis indirect cost rate for any award executed on or after October 1, 2024. All federal agencies must honor the new de minimis rate after this date unless a different rate is required by law (such as federal statute or regulation) or otherwise allowed by 2 CFR part 200. Recipients submitting applications to federal agencies before October 1, 2024 for programs with an anticipated award date that occurs on or after October 1, 2024 may use the 15 percent de minimis rate in calculating the budget in that application even if the Notice of Funding Opportunity does not yet indicate that the 2024 Revisions will apply. Existing Awards: Federal agencies may allow a recipient to apply the 15 percent de minimis rate to an existing award if the agency determines that there are sufficient funds to support the 15 percent de minimis rate. In these instances, the recipient must charge the 15 percent de minimis rate only to costs incurred after the effective date of the amendment to implement the 15 percent de minimis rate. Recipients may not retroactively apply the de minimis rate to costs incurred prior to the effective date of the amendment. Conclusion The increase in de minimis rate presents opportunity for recipients to review and renegotiate existing awards and provides more cushion on newly awarded federal funds going forward with respect to indirect costs.  Impacted nonprofit organizations that are agile and proactive can experience tremendous cost recovery improvements and enhance their financial stability while also advancing program impact and mission. Navigating compliance changes can be cumbersome, but leaders need to continue to contemplate how their organizations are affected and act accordingly in order to experience the true benefit. Resources Federal Register :: Guidance for Federal Financial Assistance OMB Uniform Guidance | National Council of Nonprofits FY-2024-Revisions-to-2-CFR-Supplementary-Information-for-Federal-Agency-Implementation.pdf About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.     ### Reminders on Completing Donor Acknowledgment Letters As 2024 comes to a close, it’s important that tax-exempt organizations provide acknowledgment letters to donors for charitable contributions that meet IRS requirements. Such letters are a vital part of donor relations, not only because they’re required for donors to substantiate their charitable contribution deduction on personal income tax returns, but because prompt acknowledgment helps reassure those donors that their contribution was received and appreciated. The IRS provides specific recordkeeping and substantiation rules that are critical for organizations to understand when providing acknowledgment letters. When a tax-exempt organization receives a cash donation of $250 or more, the acknowledgment must include the name of the tax-exempt organization, the amount received, the date of receipt and a statement that no goods or services were provided in return for the contribution. When an organization receives a cash donation of $75 or more and goods or services are provided in return, the acknowledgment letter must include the value of goods and services provided in return, as well as the name of the organization, the amount received and the date of receipt. When a nonprofit receives a noncash donation of $250 or more, the acknowledgment letter to the donor must include the name of the organization, date of receipt and description of the property received, but not the value of the noncash item(s), plus a statement that there were no goods or services received in return (or the value of goods and services provided). It’s the responsibility of the donor to determine the value of noncash donations given to qualified charities. The acknowledgment should be contemporaneous and written and must be received by the donor on or before the earlier of: the date on which the donor files his or her individual federal income tax return for the year of the contribution or the due date (including extensions) of such return. Charities typically send written acknowledgments to donors no later than January 31 of the following year. If there are multiple gifts from a single donor in one year, the organization can aggregate them into one letter. It’s also important to note that some states have requirements that must also be included in the letter or the written request for the contribution. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### Investment Corner with Sean & Jason: The Santa Claus Rally Every December, children and adults alike are excited to see what may have been left under the Christmas tree by jolly old Saint Nick. But Santa is not the only one who has a tendency to leave (mostly) happy surprises at the end of the year. For many years, investors have examined a market anomaly where the stock market tends to go up in the final few days of the calendar year. Coined by Yale Hirsch, this phenomenon has become known as the “Santa Claus Rally.” Typically happening over a seven-day period, historically this stock market abnormality has generated higher stock prices almost 80% of the time since 1950. Interestingly during this period, last year (December 25th, 2024 to January 2nd, 2025), the S&P 500 did not generate a positive return for investors. Over the last 20 years, the Santa Claus rally has generated fewer positive returns when compared to the 20th century. There are many theories that may explain this frequently occurring rally. Some investors may tax-loss harvest during this time, while others may just feel more optimistic about the future during the holiday season. Those who receive end-of-year bonuses may put that money into the market once all the holiday shopping has finished. There is no clear-cut reason why the Santa Claus Rally sometimes occurs and sometimes doesn’t. With a couple of days of January included in the Santa Claus Rally, this rally may lead into what is known as the “January Effect.” Although history has shown this to occur more times than not, remember that this still a random outcome. Market performance is reliant upon many factors; almost never just one. It is almost impossible to accurately time the market and we remind investors that staying invested can lead to strong results over long time periods. “Long-term traders should view holiday-season price action for what it is: a toss-up amid low market liquidity that has little predictive power for the future.” If you have questions about your investment portfolio, please contact us. Source: Santa Claus Rally: What It Is and Means for Investors Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  ### Multifamily Investment Showing Potential for 2025 Rebound While much has been made of the negative headlines surrounding commercial real estate over the past two years, multifamily investments are poised to rebound in 2025 and beyond. After weathering an influx of new properties across the country and a difficult financing environment, apartments are now filling at a record pace as supply and demand come back into balance. Post-Pandemic Challenges Prior to COVID-19, multifamily lending was investor-friendly and widely available. Elevated transaction volumes in 2019 were driving values higher than ever, and stable rent growth created an environment for developers to increase production. The first quarter of 2020 saw a record number of apartment units start construction, then the pandemic hit and changed the real estate landscape across the country. As supply chain issues delayed projects and office exposure threatened banks’ real estate lending capabilities, financing became more difficult. In 2022, the Federal Reserve started raising interest rates to combat inflation, and real estate transaction volumes began to drop. Properties that did sell transacted at markedly lower values. In March of 2023, Signature Bank, which had allocated around $33.6 billion (45%) of its loans to commercial real estate, collapsed days after Silicon Valley Bank, igniting widespread concerns around loosening real estate underwriting standards. Amid heightened scrutiny, banks greatly cut back their lending, and traditional debt became a smaller proportionate share of capital in real estate transactions. This was particularly prevalent among the local and regional banks that had become a cornerstone of the commercial real estate debt market. Combined with rising rates, 2023 saw the most restrictive lending environment since the Great Recession. Meanwhile, new apartments were being completed at the greatest pace in 40 years. From Q2 2023 to Q3 2024, 1.2 million units were delivered across the U.S., with the highest delivery numbers concentrated in the southeast and mountain west, where population growth was spurred by expanded remote work policies and business-friendly government. While demand remained strong, rent growth turned negative and transactions stalled, compounding financial issues for property owners nationwide. This left a number of operators unable to cover debt burdens that had sharply risen in prior quarters in conjunction with the Federal Reserve’s aggressive rate hikes. With the market in flux amid widespread uncertainty, transaction volumes had dropped to their lowest level in 10 years by Q1 2024. The Current Market Today, positive shifts in fundamental drivers of the multifamily investment space are leading to a brighter outlook. With supply and demand coming back into balance, debt markets loosening and transaction volumes rebounding, the reversals of multiple key negative trends observed over the past few years serve to bolster activity and pricing moving forward. Positive Supply and Demand Trends According to CoStar, apartment occupancy rates stabilized for the first time since 2021 last quarter, a key indicator that demand is catching up to supply. Absorption, the number of newly completed units rented, has been steadily increasing since 2022. This has closed the supply and demand gap significantly, a trend that may continue as CoStar estimates that new apartment deliveries peaked in Q3 2024. The narrowing difference between trailing 12-month absorption (demand) and trailing 12-month deliveries (supply) is illustrated below. Source: CoStar Group Perhaps more importantly, the pipeline of new multifamily projects is drying out. Q3 2024 construction starts reached their lowest level in over a decade, following six consecutive quarters of decreasing activity. CoStar estimates that 341K units will deliver in 2025, compared to 671K expected this year, followed by 270K and 269K in 2026 and 2027 respectively. While high mortgage rates and a shortage of for-sale housing have kept some potential buyers in apartments for longer periods, there has also been an ongoing preference shift toward the flexibility and maintenance-free lifestyle of renting. According to a 2024 survey by property management software provider Entrata, 41% of renters say that their “American Dream” no longer has anything to do with homeownership, and 20% expect to be lifelong renters, a number that has increased by 33% since the 2021 survey. This demand is further bolstered by the increasing premium of buying versus renting for households across the country, which reached $1,030 per month as of mid-2023 according to John Burns Consulting. The downturn in supply, combined with robust demand and shifting renter preferences, creates an environment for property owners to begin raising rents again in 2025. Financing Availability and Transaction Volumes Increasing Other factors are trending in a positive direction as well. Debt for multifamily has become more accessible. The National Multifamily Housing Council’s Q3 Survey of Apartment Conditions indicated a Debt Financing Index at its highest level since Q2 of 2019, indicating that lenders are more willing to originate loans and take on a greater proportionate share of capital in a given property. The Federal Reserve has cut rates as well, indicating that interest costs will continue to become more affordable as rates on commercial real estate loans move in response. Sales volume is also ticking upwards, and values are improving. Many major markets in the south and west that were particularly impacted by oversupply are recovering. Tampa, Charlotte, Denver, Nashville and Las Vegas are among the many metro areas that have seen year-over-year apartment sales volume grow in 2024. This trend is on track to continue, as CoStar reports 116K units currently listed for sale in the U.S., a 433% increase from last November. Transactions are generating more liquidity in the market, which helps to establish fair values, creating stability in the near term and contributing to value growth in the coming years. 2025 and Beyond Moving forward, negative trend reversals and positive political and regulatory tailwinds are on track to bolster the multifamily real estate market by increasing transaction activity and values. As supply and demand rebalance, further rent growth may be achieved in markets that have seen zero to negative rent growth over the past couple years. This increase to bottom-line revenue, coupled with broader availability of more attractive financing options and terms, can expand transaction activity and drive exit values across the asset class. Additionally, the results of the recent presidential election are likely to extend favorable real estate programs like Qualified Opportunity Zone investing and capital gains tax treatments, leading to more capital moving toward the sector as other asset classes continue to reach all-time highs and offer lower risk-adjusted returns relative to multifamily real estate. It’s unlikely that lending availability and interest rates will return to pre-pandemic levels, but stability in the debt market will help to form a “new normal” in financing expectations. While banks still provide the majority of commercial real estate financing, a larger proportion of loans now come from private capital providers, a fundamental shift from pre-pandemic norms that is altering the makeup of the market while bolstering the availability of funding for multifamily investments. This is evidenced by a recent report by CBRE noting that banks share of non-agency loan closing in Q3 2024 was down 38% from their share a year earlier. Instead, CBRE observes alternative lenders – including life companies, debt funds and mortgage REITs – seizing heightened CRE lending market shares. In turn, these trends can lead to higher transaction volumes and mitigate some of the variability in projecting investment returns. While we’re coming out of a challenging environment for multifamily real estate investing, we at Schneider Downs believe the future is bright, and we’re committed to providing the best available opportunities for investors to capitalize on this rebound. We will continue to monitor the national landscape and provide investment opportunities across the U.S., with a focus on active asset management and strengthening our long-standing industry partnerships. About Schneider Downs Corporate Finance Schneider Downs Corporate Finance (SDCF) is a FINRA-registered broker dealer dedicated to providing clients with profitable real estate investment opportunities. Since 2014, SDCF has placed over $237 million of equity in investments across the U.S. and has built deep relationships with a variety of respected multifamily developers and operators. To learn about investing with Schneider Downs, or for more information, contact sdcf@schneiderdowns.com. ### Equity vs. Debt Financing Considerations When looking at the potential options of equity versus debt financing, companies should assess the impact on the financial statements under both options. Equity financing involves raising capital by issuing shares or units, thus diluting ownership but avoiding immediate repayment obligations like a traditional debt instrument. There may be repurchase features, especially if it is considered mandatorily redeemable; however, the obligation is structured differently. Typically, with equity financing, a cash payment to the holder will not occur until a sale of the Company. In contrast, debt financing will require cash payments of both the principal and interest to meet debt service obligations. The choice between the two options requires considerable thought and different accounting implications exist for both. Equity and debt financing are not always as simple as one may think. Multiple instruments have characteristics of both equity and debt financing, which include but are not limited to preferred stock, including mandatorily redeemable stock, warrants, profits interests (depending on the characteristics outlined in the agreements), SAFE notes and more. In deciding between equity and debt financing, companies should consider not only the regulatory environment and investor expectations but also the accounting implications of each. When instruments have both equity and debt characteristics, the accounting can be quite complicated. Most times, guidance is considered to determine if there are embedded conversion options that must be valued, if remeasurement needs to be performed at fair value each period, whether the financial instruments meet the definition of a derivative, and more. By understanding the implications of each type of financing, companies can optimize their capital structure, enhance financial stability and foster long-term success. Analyzing these types of features can be quite complex, and Schneider Down’s Emerging Technology Group is here to assist you. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.   To learn more, visit our Emerging Technology page.   ### Back to the Basis: Form 990, Part VII Reporting By law, tax-exempt organizations are required to report directors, trustees, officers, key and highest-compensated employees, and certain individuals who formerly held these positions on Form 990, Part VII, Section A. Directors and Trustees A director or trustee is a member of the organization’s governing body. Only those with voting rights should be reported in Part VII. Members of advisory boards that don’t exercise any governance authority over the organization aren’t considered directors or trustees for Form 990. A director or trustee who served at any time during the organization’s tax year is deemed a current director or trustee and should be reported, regardless of whether compensation was received. Officers An officer is a person elected or appointed to manage the organization’s daily operations. Officers named on Form 990 are determined by reference to the organization’s bylaws, but at a minimum must include those required by applicable state law. Common officer titles include president, vice president, secretary and treasurer. For the purpose of Form 990, the organization’s top management and top financial official are also treated as officers, regardless of title. Officers are reported regardless of whether they received compensation. Any individual who served as an officer at any time during the tax year should be reported. Key Employee A person is considered a current key employee when all three of the following criteria are met: The individual receives reportable compensation of over $150,000 from the organization and related organizations during the calendar year that ends with or within the tax year. The individual has significant responsibilities within the organization – similar to those of an officer, director or trustee – or they have control over a major portion of the organization’s activities or manage a significant part of its resources. The individual is one of the top 20 employees who receives over $150,000 in compensation from the organization and all related organizations and has the appropriate level of responsibility. If there are more than 20 individuals who meet the first two criteria, only the 20 with the highest compensation need to be reported. Highest Compensated Employees The five highest compensated employees are those who receive over $100,000 in reportable compensation from the organization and related organizations who are not already reported as current officers, directors, trustees or key employees. Former “Former” officers, directors, trustees and key employees should be reported if both of the following conditions apply: The filing organization reported or should have reported the individual as an officer, director, trustee or key employee on Form 990 within the past five years. The individual received reportable compensation from the organization and related organizations in excess of: $100,000 paid to former officers and key employees $10,000 paid to former directors and trustees for services rendered in their former capacity “Former” highest compensated employees should only be reported if the following four criteria are met: The individual wasn’t an employee of the organization at any time during the calendar year ending with or within the organization’s tax year The individual was reported as a highest compensated employee on Form 990 within the past five years The individual’s reportable compensation exceeded $100,000 for the calendar year that ended with or within the organization’s tax year The amount of the individual’s reportable compensation for the year would place him or her among the organization’s current five highest compensated employees if the individual were an employee during the calendar year ending with or within the organization’s tax year Compensation reported in Part VII includes any direct compensation from the organization, as well as any payments made by organizations related to the filing entity. Compensation is reported for the calendar year that ends with or within the tax year. Each individual listed in Part VII must also list the number of hours per week that they dedicated to fulfilling the duties of their position for the organization and/or any related organizations. For questions on Form 990, Part VII please reach out to a member of the Schneider Downs Not-for-Profit group. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page.   ### House Passes CDL Bill Following earlier passage by the Senate, on December 9, the U.S. House of Representatives passed the Strengthening the Commercial Driver’s License Information System Act, or S3475, which stipulates that commercial drivers can only obtain one concurrent commercial driver’s license (CDL). S3475 will help ensure safety on our roads by requiring that commercial drivers are screened with a single valid license and their complete record. Prior to the bill, if a commercial driver lost his or her license for safety reasons in one state, they would be able to apply for a CDL in a different state. Previously, the American Association of Motor Vehicle Administrators (AAMVA) had collected the state fees to operate the system, but that changed in 2022 after the Federal Motor Carrier Safety Administration determined that AAMVA could not legally receive the fees. S3475 reinstates the agency’s authority to receive them. The bill is now headed to the president for final approval. Our Transportation & Logistics industry group will provide updates. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page. ### Smart Giving: How to Safely Donate This Holiday Season and Avoid Scams With Giving Tuesday recently behind us and the holiday season in full swing, it’s that time of year when we reflect on how we can leave the world a little better off as we head into the new year. But your money spent on leaving the world better off might get into the wrong hands if you’re not careful.  Unfortunately, the season of giving means the season of stealing for scammers who use fake charities to solicit donations, which reached $22.5 million in 2023 alone. Here are some best practices to ensure you donate securely and safely to legitimate organizations this holiday season: Avoid unsolicited donation requests – including phone calls, social media DMs, emails and texts. Chances are they are fraudulent. Use trusted websites. Charity Navigator, CharityWatch and Better Business Bureau’s Wise Giving Alliance monitor are helpful resources for vetting and verifying charities. Review the charity’s website directly. The website should include information about their programs, oversight and funding structures. While you’re at it, research members of the leadership team on LinkedIn to confirm their background aligns with their charity's purpose, for a more informed donation decision. Pay attention to the payment method required. If you have to pay through a third-party application, with cryptocurrency or via wire transfer, it’s probably not legitimate. If possible, you should pay with a credit card directly on the charity’s website. Keep a record of your donations so that if the charity ends up being fraudulent, you can review your credit card statement and use it as evidence to dispute the charge. Don’t overshare. If the charity is asking for information beyond your first and last name and email address, red flags should be raised in your mind. Your Social Security number, date of birth and bank account number should never be required to make a charitable donation. This season of giving will always be uplifting, regardless of the charity scams out there, but it never hurts to take a few extra safety precautions before making your donations. If you fall victim to a charity scam this season, you can report it to the FBI Internet Crime Complaint Center. Stay safe out there, friends! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Year-End Individual Tax Planning for 2024 With only a few weeks remaining in the calendar year (how can this be?!), it’s still not too late to do some last-minute tax planning. There are several ways to reduce your 2024 taxable income; here are a few ideas: Health Savings Account (HSA) Contributions If you’re enrolled in a high-deductible health insurance plan and have an HSA, don’t forget to fund it by year-end. For 2024, you can deduct up to $4,150 for individual coverage and $8,300 for the family. Funding your HSA is a deduction from gross income, reducing your taxable income dollar-for-dollar. Any distributions taken from the HSA for medical expenses are not taxable to you. 401(k) Contributions If you receive a year-end bonus and have not yet fully funded your work 401(k), consider allocating all or part of the bonus to your plan so you can maximize your deduction. Employees can contribute up to $23,000 to their company 401(k) plan for tax year 2024. For those 50 or over, you get an additional catch-up contribution allowance of $7,500, for a maximum 401(k) contribution of $30,500. Designating dollars to an employer 401(k) plan – and not to a Roth IRA – allows these contributions to be considered pretax, which means you don’t have to pay tax on the bonus/wages contributed. Tax Loss Harvesting If you have stocks that have not been performing well, consider selling the underperformers. You can deduct up to $3,000 in capital losses annually and any loss over this amount carries forward. Also, these losses can offset capital gains and capital gain distributions you may receive for 2024. Traditional to Roth IRA Conversion If you’re in a lower income tax bracket this year and have a traditional IRA account, consider converting it to a Roth account. The amount you transfer will be subject to ordinary income tax, but once converted to a Roth IRA, you’ll no longer have to take required minimum distributions (RMDs) when you turn 73. The earnings grow tax-free, and once you begin taking distributions, they, too, are not subject to tax. Qualified Charitable Distributions through an IRA If you must take an RMD from your retirement account, don’t forget that you can take all or part of it as a qualified charitable distribution. Anyone age 70 1/2 or older can designate up to $105,000 of their RMD to go directly to any 501(c)(3) organization, which will decrease your overall taxable income. Bunching Charitable Donations through use of a Donor Advised Fund (DAF) If you’d like to contribute to an organization that’s important to you but don’t contribute enough to itemize, consider setting up a donor-advised fund (DAF) and “bunching” a few years’ worth of donations to push you into the itemized deduction status. Any money contributed in 2024 to a DAF will be deductible in tax year 2024 and the funds can be granted to the charitable organization of your choice based on your desired timeline. College Savings Account Contributions Don’t forget about deductions to a 529 plan for your children or grandchildren. Ohio taxpayers can deduct up to $4,000 annually for each beneficiary. If you give more than $4,000, the excess carries forward indefinitely. Pennsylvania taxpayers can deduct up to $18,000 in contributions per beneficiary per year ($36,000 if married filing jointly, assuming each spouse had income of at least $18,000) from their Pennsylvania taxable income. So there’s still time to reduce your 2024 taxable income. Chat with your Schneider Downs tax advisor and financial advisor to consider whether any of these tax savings strategies will work for you. Happy holidays! About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Contract Bid Preparation – Importance of Actual Costs from Previous Projects During Estimation The process of securing and executing a successful and profitable contract starts in the preconstruction phase by preparing a bid that accurately reflects the estimated costs to complete the project. Understand Costs Underestimating costs to complete on a project can not only yield significant financial ramifications, including reduced profit margins for a company and excess cash outflows, but it can also provide a strain on the availability of resources, as additional hours are likely to be expended. Conversely, overestimating costs to complete may result in a bid that’s too high and won’t be awarded to the contractor. Evaluate Past Contracts Rarely are any two contracts the same. However, drawing on prior experiences can be a useful practice in preparing your bid. Analyzing previous projects will help contractors better understand where they’ve had success in meeting or going below their estimated costs, or on the other hand, where they’ve overrun their estimated costs. Were the overruns on a previous contract an execution problem, or were the estimates unrealistic? Were there unforeseen obstacles on the project that caused the cost overruns? Evaluation of multiple similar-scope contracts could reveal whether there are recurring patterns, which will enable contractors to improve their estimation process and more accurately prepare a bid that meets desired profitability, while not bidding themselves out of the project. Understand Risks Additionally, this evaluation process may help contractors identify where the risk in the contract lies. Understanding the risk in a contract allows contractors to have some foresight and develop proactive strategies to help mitigate the risk. This is also important from a budgetary standpoint to determine where any contingency built into the estimate is likely to be utilized. Consider Previous Experience Another important factor to consider is the customer/owner relationship. Having previous experience working with the customer will provide a contractor context as to what the working relationship looks like, particularly with respect to the change order process. The execution of a contract includes significant variability, as there are a lot of moving parts and changes throughout its life. The actual costs incurred will almost never line up with original estimates, but that doesn’t minimize the importance of developing a detailed and reasonably accurate estimate. Drawing on outcomes and experiences from previous contracts can be a cornerstone in effectively developing estimates on future contracts. To learn how Schneider Downs can help your construction company, contact a member of our Construction Industry Group. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### Postcard from the Inaugural Women in Construction/Real Estate Networking Dinner Earlier this fall, the women from Schneider Downs’ Construction and Real Estate Industry Groups were pleased to host a networking dinner attended by clients and friends of the firm.The purpose for the event was simple – gather together professional women in these industries to collaborate, and exchange ideas and experiences, while broadening our personal networks.As you can imagine, we had a lot to talk about. Topics varied greatly, from industry trends to shared experiences as working women in fields that often are dominated by men. Along the way, we had a delicious meal at Balvanera which was fantastic start to finish.A common observation from our guests was that it’s important to bring like-minded professional women together and build meaningful connections. We were delighted with the response and look forward to continuing to build on what we started that night.Of course, we’re always looking to expand our group (and network) and we invite you to contact us if you’d like to attend a future event.About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.  About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development. To learn more, visit our Real Estate Industry Group page.   ### EPA Finalizes New Ruling to Reduce Methane Emissions The Environmental Protection Agency (EPA) recently finalized its ruling aimed at reducing methane emissions within the oil and gas industry. The Waste Emissions Charge (WEC) seeks to incentivize reductions in air pollution that arise from oil and natural gas production by imposing a charge on applicable oil and gas facilities that emit greater than 25,000 metric tons of carbon dioxide equivalent (CO2e) each year. An applicable facility, under the Clean Air Act (CAA) Section 136(d), is defined as a facility with the following industry segments: Onshore or offshore petroleum and natural gas production Onshore natural gas processing Onshore petroleum and natural gas gathering and boosting Onshore gas transmission compression Onshore natural gas transmission pipeline Underground natural gas storage Liquefied natural gas (LNG) import and export equipment and LNG storage The WEC is required to apply to emissions occurring in 2024 at $900 per metric ton of methane, increasing to $1,200 per metric ton in 2025, and increasing further to $1,500 per metric ton in 2026 and the years after. The ruling, laid out in Section 60013 of the Inflation Reduction Act of 2022 (IRA), provides EPA with the authority to assess, collect and enforce all regulatory compliance and penalties associated with the WEC. Any related penalties incurred by companies will be due by September 2, 2025, for the 2024 reporting period. EPA is also working to finalize three exemptions laid out by Congress with the goal of lowering a facility’s WEC or allowing the facility to be entirely exempt from the charge: Unreasonable Delay: Applies to methane emissions that were caused by an unreasonable delay in environmental permitting or transmission infrastructure necessary for the removal of volume to mitigate methane emissions Plugged Wells: Applies to methane emissions from wells that have been permanently closed off from further production Regulatory Compliance: Applies to facilities that are subject to and in compliance with emissions requirements laid out in Section 60013 of the IRA EPA has plans to finalize an approach that would allow the netting of emissions across facilities under common ownership or control. This would mean that emissions from facilities that are below the emissions threshold can be used to reduce those from other facilities held under common ownership or control that might be exceeding the threshold. EPA estimates that the WEC alone will result in cumulative emissions reductions of 1.2 million metric tons of methane through 2035, producing roughly $2 billion in cumulative climate benefits. This ruling not only aims to curb the volume of harmful air pollutants but also ensures that the oil and gas industry remains competitive in overseas markets that require a minimum level of emissions standards. Improved emissions standards and the adoption of innovative technologies will assist companies in capturing more of their product to be sold in the market while reducing the long-term impact of methane emissions on our environment. As we look to the future, companies should be proactive in assessing their emissions reduction capabilities and take steps to avoid the potential impact of WEC penalties. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Commercial Real Estate and Projected Debt Maturities Debt maturity in commercial real estate (CRE) continues to be a hot-button topic as we approach the close of 2024. Some projections indicate that $1.5 trillion in CRE debt is due by the end of next year. Why we're here: CRE's current debt position stems from various macroeconomic conditions, most notably the low cost of borrowing before the COVID-19 pandemic that resulted in a significant accumulation of debt as CRE companies capitalized on the low cost of capital. As interest rates began to climb post-pandemic, the concept of taking on new borrowing and refinancing existing burdens has become more complicated and less cost-effective. The interest rate environment is just one of the many factors that have contributed to the current debt bubble facing industry at large. Additionally, lending standards have tightened and banks continue to evaluate their loan portfolios in the name of risk management. Where we're headed: Although predicting the future can be a fool’s errand, there are some indicators to look toward as CRE companies position themselves in the coming months. In September, the Federal Open Market Committee (FOMC) announced the lowering of interest rates by 50 basis points, marking the first reduction in four years. Federal Reserve Chairman Jerome Powell emphasized that inflation has eased from 7% to 2.2% as of August, which is much closer to the FOMC’s target of 2%. The FOMC are scheduled to meet again December 17-18 and many experts believe additional rate cuts will be announced coming out of the meetings. This would be a welcome sign for the CRE industry as discussions with their lending partners continue into 2025 and beyond. Proactiveness and agility will become imperative for CRE companies to successfully navigate the next few years and position their portfolios for continued success. If distressed debt is heading toward foreclosure, CREs would be wise to include their legal counsel and CPAs in discussing options and transaction structuring, whether that’s planning for a forced recognition of tax gain through foreclosure activity or negotiating recapitalizations to improve a property’s loan-to-value position. To help mitigate cash flow challenges, tax strategies to consider include: Cost segregations studies 179D certifications Fixed asset depreciation methods reviews and partial asset disposal elections Property tax appeals About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development.   To learn more, visit our Real Estate Industry Group page.   ### Investment Corner with Sean & Jason: Time in the Market, Not Timing the Market Investors flocked to money market funds leading up to and on election day. During the week of November 6th (election week), investors purchased a massive $127 billion worth of global money market funds which was the largest weekly purchase of money market funds since the beginning of the year1. As investors stashed cash into the safe haven asset that is a money market fund (remember money market funds do not fluctuate in price but pay monthly interest), they hoped to protect themselves from any upcoming volatility. Assuming those investors did not sell these new money market positions and reinvest into the market, they would have missed out on one of the best weeks of the year in capital markets (at least for equities). U.S. Large Caps returned almost 5%, while their U.S. Small Cap counterparts returned over 8% for the week! Source: FactSet; Data is from December 29, 2023 - November 8, 2024. We never know exactly what markets are going to give us on any one specific day, week, or month. In October, the People’s Bank of China (PBOC) announced one of the largest stimulus packages since the COVID pandemic. Within three weeks of the stimulus announcement, the Chinese stock market had returned over 39 percent. Keep in mind, Chinese equity markets had returned a measly 0.5% for the year leading up to that announcement, going from one of the most forsaken public equity markets to one of the most loved in a matter of weeks. Unless you have inside information on the future (looking to Marty McFly here), staying invested in the market is vital to long-term success for investor portfolios. Whether it’s election results, Fed announcements, or earnings results of your favorite company, volatility is a part of investing. Only time can tell whether or not that volatility is to the upside or downside. We encourage investors that may have concerns about market conditions to talk to their financial advisor to help them through these tumultuous times. If you or someone you know would like to learn more about capital markets and how they may impact your portfolio, please contact us at sdwealthmanagement@schneiderdowns.com. Article Source1: Global money market funds saw large inflows on election caution | Reuters Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  ### Tax Benefits of Private Real Estate Investments This article was co-authored by Megan Whitlock, Schneider Downs, and James McKinney, President, McKinney Properties. Private real estate investments have long been favored among investors due to their potential for generating stable cash flow, inflation protection, and capital appreciation. Beyond these benefits, real estate investments offer significant tax advantages, which can enhance overall investor returns. This paper explores the tax efficiency and benefits of investing in private real estate, focusing on the impacts of depreciation, tax deferral, and long-term capital gains, with an overview of the differences for passive versus active investors. For the sake of simplicity, this article solely focuses on federal taxation consequences. Depending on the state where you reside and the state where the property is located, there may be similarities and differences between benefits at the state level and federal level. Key Considerations Real Estate (RE) Investments may provide greater tax efficiency than other, more traditional forms of investment. Due to the tax shelter provided by depreciation, RE Investments have the ability to generate positive cash flow without taxable income in the early years of ownership. For an investor in the highest individual marginal tax rate, a (taxable) bond investment would have to generate a pre-tax yield of 9.52% to produce the same after-tax yield as a RE Investment with a pre-tax yield of 6.00%. For active investors and passive investors with outside passive income, the ability to use losses from a RE Investment to offset taxable income from other activities maximizes the depreciation deduction by further reducing the investor's taxable income that year. Depreciation: An Overview Depreciation is the recognition of the physical wear and tear, or depletion, of real property over time, and it is an important tax benefit for real estate investors. Investors are permitted to deduct the cost of this physical depreciation on their property over a specified period, thereby reducing taxable income. The Internal Revenue Service (IRS) permits depreciation of residential real properties over 27.5 years and commercial real properties over 39 years under Internal Revenue Code (IRC) Section 1250. This non-cash deduction can significantly lower an investor's annual tax liability. The impact of depreciation can vary depending on whether the investor is classified as passive or active. Accelerated & Bonus Depreciation The IRS also recognizes that specific components of a building, such as appliances, light fixtures, and cabinetry, have a shorter useful life than the structure of the building itself. These components are permitted to be depreciated over shorter useful lives of five years, seven years, or fifteen years, resulting in 'accelerated' depreciation under IRC Section 1245. Additionally, the Tax Cuts and Jobs Act of 2017 allows new owners of property placed in service in 2024 to depreciate 60% of the components of their building with a useful life of less than 20 years in the first year of ownership using bonus depreciation. Accelerated and bonus depreciation each significantly reduces taxable income in the early years of ownership and can generate significant (tax) losses that may be used to offset other income for those investors that can use the losses. Passive vs. Active Investor: Key Differences The distinction between passive and active investors is crucial in understanding the applicability and extent of tax benefits. Active investors who materially participate in the management of their properties or meet the IRS criteria of a 'real estate professional,' may utilize depreciation deductions and apply losses to offset other business income. Passive Investors, typically involved in real estate through limited partnerships, REITs, or syndications, enjoy many of the same benefits but may face stricter limitations on the use of their losses. Rules for Passive Investors Passive losses from real estate investments can only be used to offset passive income. Investors with passive losses from a RE Investment but without outside passive income that year will have their losses suspended. Investors don't lose the ability to claim these losses but instead must wait to utilize their benefits in a future year. In subsequent years, these 'trapped' losses may be used to offset passive income from the current RE Investment when it eventually produces taxable income or to reduce their gain when the investment is sold. Suspended passive losses can also be applied to offset passive income from an investor's other passive activities, including other real estate investments. Investors with enough passive income to use the entire loss each year, maximize the benefit of the depreciation deduction. The Mechanics of Depreciation – Straight-Line Method Depreciation is calculated based on the property's adjusted basis, which includes the purchase price plus any capital improvements minus the land value (which is assumed not to depreciate). For instance, if an investor buys a residential property on January 1st for $20,000,000, with $4,000,000 allocated to land, the depreciable basis would be $16,000,000. Spread over 27.5 years using the Straight-Line (SL) Method results in an annual depreciation deduction of approximately $581,818, reducing taxable income by a corresponding amount. If this residential property generated an annual operating cash flow of $500,000 before depreciation, and there was no additional capital improvement made that year or mortgage amortization, then the depreciation deduction would result in an $81,818 tax loss. Passive investors with no outside passive income would have received the $500,000 in cash flow and owe no tax but have the $81,818 loss suspended for use in future years. Passive Investors with outside passive income could use all or part of the loss to offset their passive income. Active investors are generally permitted to use the loss against other personal income. Distributions Versus Taxable Income There is often a misunderstanding between distributions (cash received) and taxable income. Part of the tax efficiency of private real estate is derived from this distinction. In the early years of owning a stabilized, leveraged RE Investment, it is typical for both active and passive investors to receive cash distributions but owe no tax. This is due to the 'tax shelter' provided by the depreciation deduction. Depreciation reduces the asset's tax basis and the owner's taxable income, often resulting in losses through the first five to seven years of ownership. The tradeoff is an increase in gain at the time of sale, generally referred to as depreciation recapture, but the investor receives two key benefits from the depreciation deduction. First, depreciation recapture taxes are deferred until the sale of the property. Second, when the taxes are eventually due, if ever, the investor benefits from paying those taxes at the lower federal recapture rate of 25% on Section 1250 recapture for real property versus their ordinary income rate of as high as 37%. Long-Term Capital Gains Tax Rates Investments in real estate held for more than a year benefit from favorable long-term capital gains tax rates. Unlike short-term gains taxed at ordinary income rates, long-term capital gains are taxed at reduced rates: 0%, 15%, or 20%, depending on the investor's taxable income. This lower tax rate significantly enhances the after-tax returns of real estate investments held for the long term. Impact of Long-Term Capital Gains on Returns The difference in tax rates between short-term and long-term capital gains can be substantial. For example, an investor in the highest tax bracket would pay 37% on short-term gains compared to 20% on long-term gains. By holding properties for the long term, investors can benefit from a nearly 50% reduction in the tax rate, substantially increasing net returns. After-Tax Comparison of Real Estate Versus Bonds (Fixed Income) Bonds and real estate have a different risk/return profile. As the chart below shows, since 2000, the average annual yield produced by real estate has been roughly 250bp (2.50%) higher than the average yield on bonds globally. Putting aside this difference, bonds are often compared to real estate investments for their ability to produce yield (i.e., cash flow). However, real estate investments offer distinct tax advantages compared to bonds due to the benefits of the depreciation deduction and capital gains treatment. As mentioned above, the losses created by depreciation can offset all of the cash flow of a real estate investment for an extended period of time. As a result, after-tax yields equal pre-tax yields during this period. When sold, assuming a holding period of at least one year, the appreciation of the RE Investment is taxed as a long-term capital gain rather than as ordinary income. Conversely, the cash flow from bond investments is considered interest income payments, which are generally taxed as ordinary income at the investor's marginal tax rate rather than as capital gains. While bonds provide a steady income stream, the annual after-tax yield is significantly reduced by the payment of income taxes, making it much less tax-efficient than a RE Investment. In Year 1 of a RE Investment, an investor at the highest marginal rate would earn a 60% higher after-tax yield than on a bond investment earning the same 6.00%. Looked at another way, for a bond investment to produce the same after-tax yield as a RE Investment, the bond investment would have to offer a significantly higher pre-tax yield. For an investor at the highest marginal tax rate of 37%, a bond investment would have to provide a pre-tax yield roughly 58% higher than a RE Investment to produce the equivalent after-tax yield. Assuming straight-line depreciation, a 10-year holding period, and a 3% average annual appreciation, the blended annual tax rate for a RE Investment would be approximately 22.5%, with nearly all of this tax due at the time of sale rather than annually. This compares to an average annual tax rate of 37% for a bond investor at the highest marginal tax rate. Not only are the total taxes paid 40% less overall, but the deferral of the taxes until the end of the holding period creates a massive advantage in the time value of the tax payments, resulting in a much higher internal rate of return (IRR) for the investor. In addition, investors able to use the passive losses during the holding period, rather than having them suspended, would receive an even greater tax benefit. Combining Tax Benefits for Optimal Tax Efficiency When combined, depreciation, tax deferral, and long-term capital gains rates create a powerful framework for tax-efficient investing in real estate. Depreciation reduces annual taxable income, tax deferral postpones tax payments and maximizes reinvestment capital, and favorable capital gains rates reduce the overall tax burden on profits from property sales. Other Tax Advantages While not the subject of this article, real estate provides the opportunity to defer taxes in the future through a 1031 Exchange named after Section 1031 of the Internal Revenue Code. This provision allows investors to defer capital gains taxes by reinvesting the proceeds from the sale of real property into another real property of like-kind. Active and passive investors can benefit from 1031 exchanges, though active investors may have more control over the timing and management of the transactions. While the deferral of taxes through a 1031 Exchange can be a significant benefit to investors, the performance of the subsequent investment ultimately determines the deferral's overall value. Conclusion Private real estate investment offers numerous tax advantages that can enhance overall returns and enable the investor to retain a majority of the cash flow that is distributed. Depreciation provides a valuable annual deduction, tax deferral preserves capital for reinvestment, and favorable long-term capital gains rates reduce the tax burden on profits. By leveraging these benefits, both active and passive Investors can achieve significant tax efficiency, making real estate a compelling investment choice. However, navigating the complexities and requirements of these tax provisions is essential to realize their full potential. Active investors, with greater involvement, may maximize these benefits more effectively, while passive investors should rely on skilled management and professional advice to optimize their returns. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### The Pittsburgh Technology Council Tech 50 Awards I had the privilege of attending my first Tech 50 Awards banquet on Thursday, November 14, which celebrated the most innovative and impactful technology companies in the Pittsburgh region. Schneider Downs was a proud sponsor of this annual event, which was organized by the Pittsburgh Technology Council, and brought together industry leaders, entrepreneurs and tech enthusiasts to recognize outstanding achievements in various categories, including AI, robotics and software development. The evening kicked off with a networking session, where attendees had the opportunity to connect with peers and discuss the latest trends in technology. The atmosphere was vibrant, with many expressing excitement about the future of Pittsburgh’s tech scene. The awards ceremony itself was a highlight, featuring inspiring speeches from industry leaders and heartfelt acceptance speeches from the winners, while the audience enjoyed a nice dinner. On social media, attendees shared their experiences and highlights from the event. Many praised the organization and the opportunity to meet like-minded professionals. One attendee tweeted, “Incredible night at #Tech50! So proud to be part of such a dynamic tech community.” Another shared a photo of the award they received, captioning it, “Honored to be recognized at #Tech50. This award is for the entire team!” The event also featured a post-event happy hour, where I had the opportunity to meet some of the evening’s award recipients. I was very impressed with the diverse group of companies and backgrounds of the people in attendance. Being from our Columbus market, a market that also boasts a robust startup and technology scene, it was great to see what a presence technology has in Pittsburgh. Overall, the Tech 50 Awards was a resounding success, highlighting the vibrant tech ecosystem in Pittsburgh and fostering a sense of community among its members. The positive feedback on social media reflects the event’s impact and the excitement surrounding the region’s technological advancements. As one honoree aptly put it, “Pittsburgh’s tech future is bright, and #Tech50 is a testament to that!” About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Black Friday Scams to Watch Out For in 2024 With Thanksgiving approaching, the holiday shopping season is upon us. From Black Friday to Cyber Monday, and every other "one day only” sale in between, consumers are gearing up to shop online, with an estimated spending of nearly $10 billion. Unfortunately, this also means scammers will be out in full force, trying to take advantage of the online shopping frenzy to steal personal and financial data. Even the most cautious consumers can fall for deals that seem too good to be true. Here are some of the top Black Friday shopping scams to be aware of this year. Brand Impersonation Scams One of the most common methods scammers use against online shoppers is brand impersonation. This cyber-attack involves using well-known brand names to trick shoppers into entering their financial and personal information on malicious websites. Scammers achieve this through communications offering early sale access, discounts or holiday shopping incentives. They also use advertisements on social media and create fake social media business pages that lead to malicious websites and links. Fraudulent Shipping Notifications Another scam that picks up steam around the holidays is fraudulent shipping notifications. The holiday shopping season is an especially vulnerable time for many, as we are likely doing more online shopping, shipping and receiving than usual. Fraudulent shipping scams, whether received by text, email or phone calls, impersonate legitimate shipping services like USPS, UPS and FedEx. They contain malicious links disguised as tracking numbers or website links. Gift Card Scams Gift cards are one of the most popular and practical gifts, which is why gift card-related scams see a significant increase during the holiday season. Primarily via phishing and smishing, scammers send emails impersonating e-gift cards that lead to malicious links or websites. Contrary to popular belief, physical gift cards aren’t always a safer option. In fact, scammers in Santa Clara have found ways to tamper with and return gift cards to physical stores, leaving consumers empty-handed when trying to redeem funds. How To Spot and Avoid Black Friday Scams Scams often share common warning signs, regardless of the time of year. Here are some tips to help you identify and avoid them: Unsolicited and Urgent Messages: Be wary of unsolicited communications with urgent calls to action, such as delayed shipping or flash sales. If you receive such a message, it's best to ignore it. If you think it might be legitimate, verify by visiting the retailer's website or contacting customer service directly, but avoid clicking any links in the message. Visual Warning Signs: Watch out for advertisements or communications with stretched or distorted images, such as brand logos or grammatical errors. Legitimate companies are usually very careful with their marketing materials, especially during the holidays. If something seems off, delete, ignore or report it. This also applies to physical gift cards; if you notice ripped packaging, damaged edges or discolored barcodes, report them to store management as they may have been tampered with. Odd Payment Methods: When shopping online, use a major credit card, as they often have built-in fraud protection and are easier to deal with than debit cards. While some vendors may offer payment methods like PayPal, Venmo or CashApp, if they don't accept credit cards, it's best to avoid them. Remember, there will always be great deals after Thanksgiving, but stay vigilant, both online and in-store. Scammers are just as excited about holiday shopping as you are. About Schneider Downs Cybersecurity We help your organization be prepared. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including Penetration Testing, Intrusion Prevention/Detection Review, Ransomware Security, Vulnerability Assessments, and a robust Digital Forensics and Incident Response Team. Learn more at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to the Nations), which asserted that organizations across the globe lose 5% of revenue to fraud annually.The biennial update has consistently reported the 5% estimate for decades, based on real cases involving organizations of all sizes from diverse industries. The Report to the Nations helps leaders and organizations benchmark their anti-fraud prevention, detection and response efforts.Occupational fraud is loosely defined as fraud committed by an individual against their employer leveraging their position of trust. While emerging technology entities are not discussed specifically within the report, we can consider the overarching themes and findings consistent across all organizations to guide our efforts to combat fraud in the sector.Emerging technology companies are synonymous with being agile, responsive to feedback and comfortable leveraging the newest tools and technology to achieve operational goals and growth. Those same attributes are valuable when designing controls to prevent, detect and respond to fraud, but some limitations found in emerging technology companies – such as small teams, constrained expenses and a lack of robust financial systems and controls – may create opportunities for fraud.While not surprising, it’s important to note that a key finding of the Report to the Nations is that anti-fraud controls are associated with lower fraud losses and quicker fraud detection. The report also finds that more than half of occupational fraud is due to a lack of internal controls or an override of existing controls. Despite the challenges of implementing anti-fraud controls in emerging technology companies, the report findings show many benefits to working through them.The fraud threat landscape can change quickly for any business. The ability of an organization to identify weaknesses and put controls in place to mitigate risk is vital to a properly functioning finance group. In the early stages of its lifecycle, an emerging technology company may lack the human capital to staff an accounting or finance department in a way that allows them to segregate duties. Relying on individuals outside the group is one way to combat that shortcoming. The Report to the Nations states that 21% of cases with a median loss of $141,000 were reported by organizations with 100 employees or less. While the percentage of cases was the lowest, based on segments grouped by number of employees, the median loss was higher than all but the largest group of 10,000 or more employees, which indicates that despite the smaller size of the organizations, there’s a real risk of loss related to fraud for smaller organizations.As the business grows and back-office staff is hired, controls that were in place and effective may become outdated. Personnel changes may cause segregated duties to overlap or misalign given the roles within the group. Logins and passwords used to access systems designated for a particular person may be shared, allowing for them to be exploited. Background checks focused on design, engineering or product credentials may ignore questionable financial acumen or trustworthiness.Emerging technology companies, however, may benefit from their interest in technology and ability to leverage new tools. More established organizations may be reluctant to employ the latest technology because it’s not scaled to enterprise levels needed by a larger group, but they may be nimble and willing to customize to meet the needs of a strategic customer.The threats related to fraud for emerging technology companies are unique to the industry and to the specific factors in place at the organization, but a thoughtful approach guided by the data available in the Report to the Nations is an excellent way to combat threats.At Schneider Downs, we have years of experience helping organizations respond to potential fraud and developing anti-fraud programs to catch fraud before it happens. If you have questions or concerns, please contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in our Pittsburgh office.About Schneider Downs Business AdvisoryOur experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Our Thoughts On 2024 Fraud Week Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact… Read More > Fraud Risk Assessments: Essential Health Checkups for Your Business Proactive fraud risk assessments tailored to an organization’s needs can help prioritize its limited resources to match its risk appetite… Read More > Fraud Week 2024: A Deeper Look at the ACFE's 2024 Report to the Nations Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > Unlocking Fraud Prevention: 6 Key Insights from the ACFE’s 2024 Report to the Nations The Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations) examined… Read More > Excerpt: Protect your emerging tech company from fraud risk using best practices and insights from a comprehensive report on occupational fraud prevention. ### Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact on your organization.In the Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations), on average, a given organization will lose approximately 5% of its revenue to fraud. According to the ACFE, the longer a fraud scheme goes undetected, the greater the loss. A typical fraud scheme lasts about 12 months, but schemes that persist for years can lead to median losses of $875,000 (see Figure 7 below). Why Does Fraud Go Undetected?Understanding what allows fraud to persist is key to catching it sooner. A few factors that contribute to the longevity of fraud schemes include:1. Insufficient Internal ControlsAccording to the Report to the Nations, in about 32% of cases, weak controls allowed fraud to go undetected, and in 19%, existing controls were bypassed. When essential controls do not exist or are not enforced, fraudsters can act without raising suspicion.Relying on passive discovery alone can save money but is risky. While some passive methods like tip lines can be effective, fraud discovered through an unsolicited confession, by accident, or uncovered by law enforcement tends to last longer and result in higher fraud losses. Proactive measures, such as internal audits and data monitoring, can help reduce both duration and losses (see Figure 15 below). 2. CollusionCollusion adds complexity to schemes and helps perpetrators evade detection. When people collude across departments, they can bypass controls that would typically block their attempted schemes, or at least, raise red flags. These schemes are also more costly since they can involve sophisticated cover-ups.3. High-Level PerpetratorsExecutives or senior employees are behind some of the highest-loss fraud incidents due to their access and authority, with median losses of $459,000. Higher-ups are better positioned to override controls, making it harder for others to detect and report their schemes. In organizations with poor leadership, executives and senior employees can use their authority to convince others that the rules don’t apply to them or bully subordinates into looking the other way.Reducing Fraud Duration and LossOrganizations can reduce the length and cost of fraud with a few proactive strategies:1. Implement Internal ControlsReinforcing internal controls, especially in sensitive areas of the organization, is essential. Regular supervisor review, enforced segregation of duties, and access limits may go a long way towards detecting fraud or can prevent it from happening in the first place. Weak or bypassed controls are at the root of over half of the fraud cases in the Report to the Nations.2. Offer a Tip LineTips account for 43% of fraud discoveries, highlighting the importance of whistleblowing channels (see Figure 13 below). Offering anonymous tip lines and encouraging employees, vendors, customers and the public to report suspicious behavior improves early detection. 3. Ensure a Strong “Tone-at-the-Top”Training employees to spot red flags and reinforcing ethical conduct are strong fraud deterrents. Organizations investing in fraud awareness training detect fraud more quickly and experience lower fraud losses (see Figure 28 below). A strong culture makes it harder for potential fraudsters to rationalize their behavior and empowers key participants in the internal control structure to push back on undue pressure to ignore control violations. Are you confident in your organization’s ability to detect fraud before it gets out of control? Think about internal controls in your organization. Fraud that goes undetected costs more the longer it lasts. By reinforcing internal controls, encouraging reporting, and maintaining a culture of vigilance, organizations can reduce fraud duration and minimize losses. For more insights from this year’s Report to the Nations, visit legacy.acfe.com/report-to-the-nations/2024/.About Schneider Downs Business AdvisoryOur experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Our Thoughts On 2024 Fraud Week Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to… Read More > Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact… Read More > Fraud Risk Assessments: Essential Health Checkups for Your Business Proactive fraud risk assessments tailored to an organization’s needs can help prioritize its limited resources to match its risk appetite… Read More > Fraud Week 2024: A Deeper Look at the ACFE's 2024 Report to the Nations Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > Unlocking Fraud Prevention: 6 Key Insights from the ACFE’s 2024 Report to the Nations The Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations) examined… Read More > Excerpt: Protect your organization from occupational fraud and its devastating financial impact by learning how to detect and prevent fraud schemes early. ### Fraud Risk Assessments: Essential Health Checkups for Your Business Proactive fraud risk assessments tailored to an organization’s needs can help prioritize its limited resources to match its risk appetite and contribute to a significant return on investment.Just as there is no single antidote for maintaining good health, there is no single antidote for keeping fraud out of an organization. Both require strategies, vigilance and ongoing efforts to be effective. Fraud risk assessments are essential to effective fraud risk management strategies, just like health checkups are necessary for effective health management. Health checkups monitor the state of known health conditions, and similarly, fraud risk assessments monitor the state of known fraud vulnerabilities. Health checkups help identify diseases before they progress, and fraud risk assessments can identify fraud vulnerabilities before significant exploitations occur. Health checkups recommend lifestyle changes and other preventative measures as forms of preventative care; fraud risk assessments recommend adjustments to the internal control environment that could be prioritized.The Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2024: A Report to the Nations reported that, of the occupational fraud cases included in its most recent study, those at organizations that had proactively conducted fraud risk assessments detected fraud 44% sooner and experienced 47% lower median losses. Although this study does not specify how much less frequently fraud occurs within organizations that proactively conduct fraud risk assessments, these assessments can also help inform actions that mitigate the risks and prevent some fraud from occurring in the first place. This ACFE study drew insights from almost 2,000 occupational fraud cases investigated by CFEs between 2022 and 2023, where someone’s occupation was leveraged for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.Not all fraud risk assessments are created equal though, nor should they be. A mature fraud risk assessment within an organization can look significantly different than a mature fraud risk assessment within another organization. The scope should vary based on a wide variety of factors, such as the organization’s industry, size and risk appetite.While there is no single solution to fraud prevention, implementing tailored fraud risk assessments is a crucial step in protecting any organization.By proactively monitoring and addressing fraud vulnerabilities, organizations can not only prevent more fraud but also detect fraud more quickly and reduce the financial impact. Moreover, fostering a culture of integrity and accountability through proactive fraud risk management can enhance overall organizational resilience. Just as regular health checkups are vital for maintaining good health, regular fraud risk assessments are essential for maintaining the financial health and integrity of an organization.If your organization needs assistance with building out and/or conducting tailored fraud risk assessments, assessing the maturity and effectiveness of your fraud risk management practices, or even more targeted fraud consulting, contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in our Pittsburgh office.About Schneider Downs Business AdvisoryOur experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Our Thoughts On 2024 Fraud Week Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to… Read More > Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact… Read More > Fraud Week 2024: A Deeper Look at the ACFE's 2024 Report to the Nations Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > Unlocking Fraud Prevention: 6 Key Insights from the ACFE’s 2024 Report to the Nations The Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations) examined… Read More > Excerpt: Discover how fraud risk assessments can help organizations prioritize resources and prevent significant exploitations. ### Fraud Week 2024: A Deeper Look at the ACFE's 2024 Report to the Nations Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud Awareness Week.We have a long and established role in the fraud investigation and awareness field. We have performed numerous investigations over the years, and we sponsor the annual Fraud and Corruption Awareness Seminar each year. Our Business Advisory group includes several Certified Fraud Examiners (CFE) as well as board members and leadership personnel for the Greater Pittsburgh and Central Ohio (Columbus) Chapters of the ACFE.This past year, we were fortunate to have John Warren, Chief Executive Officer of the ACFE and co-author of the ACFE’s Occupational Fraud 2024: A Report to the Nations (Report to the Nations), join us for our 12th annual ACFE Fraud and Corruption Awareness Seminar. One of the most powerful quotes he shared in the foreword of the Report to the Nations was:“These crimes are a threat to every type of organization in all industries in every region throughout the world. The fact that occupational fraud remains so common and so costly is a stark reminder that the work we do as CFEs is vitally important. We are the ones tasked with preventing, detecting, and investigating these crimes that cause so much harm to so many people and organizations.”In recognition of Fraud Week, a few of the CFEs in our group have written Our Thoughts On articles highlighting some of the important topics addressed in the Report to the Nations, which is the largest global study on occupational fraud.While Fraud Week may only be featured once a year, the professionals in our Business Advisory group work year-round with our clients to detect, assess and prevent fraud. Check out our Schneider Downs Business Advisory LinkedIn page throughout the week for additional information from the ACFE. If you have any questions or concerns about fraud in your organization, please contact our team.About Schneider Downs Business AdvisoryOur experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Our Thoughts On 2024 Fraud Week Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to… Read More > Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact… Read More > Fraud Risk Assessments: Essential Health Checkups for Your Business Proactive fraud risk assessments tailored to an organization’s needs can help prioritize its limited resources to match its risk appetite… Read More > Unlocking Fraud Prevention: 6 Key Insights from the ACFE’s 2024 Report to the Nations The Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations) examined… Read More > Excerpt: Schneider Downs proudly supports International Fraud Awareness Week 2024. ### Unlocking Fraud Prevention: 6 Key Insights from the ACFE’s 2024 Report to the Nations The Association of Certified Fraud Examiners' (ACFE) Occupational Fraud 2024: A Report to the Nations (Report to the Nations) examined over 1,900 real cases of occupational fraud that caused total losses of more than $3.1 billion. Insights shared in the Report to the Nations can aid anti-fraud specialists, organizational leaders and other stakeholders in enhancing their strategies for preventing, detecting and responding to fraud using the following methods:Enhance fraud risk assessments, by using heat maps from the Report to the Nations to understand the frequency and impact of occupational fraud. These maps present which fraud schemes are the greatest risk to your organization, by industry and by department.Evaluate your anti-fraud program, by comparing its elements with those of other organizations presented in the Report to the Nations, including which anti-fraud controls are most common and which are utilized by small organizations.Enhance fraud prevention and detection efforts, by using the Report to the Nations to identify how fraud incidents are most commonly and quickly detected, and which controls are most effective in preventing and detecting fraud.Promote the value of prevention to management, by highlighting the risk occupational fraud poses to your organization and illustrating the return on investment from anti-fraud measures. The Report to the Nations can support this effort by presenting the cost of fraud to organizations, how anti-fraud controls affect fraud losses and the importance of providing fraud awareness training.Determine the high-risk departments with more frequent or more costly fraud incidents. Recognize common behavioral red flags to pinpoint high-risk individuals.Educate management and your anti-fraud team about occupational fraud and ways to effectively combat it by sharing key findings from the Report to the Nations.If you’d like to review the key findings in the Report to the Nations or your organization needs assistance with fraud detection, fraud risk assessment or fraud prevention efforts, please contact our team.About Schneider Downs Business AdvisoryOur experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Our Thoughts On 2024 Fraud Week Fraud Risk Management for Emerging Technology Companies Earlier this year, the Association of Certified Fraud Examiners published Occupational Fraud 2024: A Report to the Nations (Report to… Read More > Spotting and Stopping Long-Lasting Fraud: Highlights from the ACFE's 2024 Report to the Nations Occupational fraud can be devastating to the financial health of organizations. Catching fraud early is essential for minimizing its impact… Read More > Fraud Risk Assessments: Essential Health Checkups for Your Business Proactive fraud risk assessments tailored to an organization’s needs can help prioritize its limited resources to match its risk appetite… Read More > Fraud Week 2024: A Deeper Look at the ACFE's 2024 Report to the Nations Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud… Read More > Excerpt: Enhance your strategies for preventing and detecting occupational fraud using insights from the ACFE's 2024 Report to the Nations. ### The Most Important Financial Metrics Contractors Should Track to Ensure Profitability Key Indicators for Managing Financial Health For contractors, keeping a vigilant eye on financial metrics is crucial to maintain and improve profitability. These metrics provide insights into project performance, resource allocation and overall financial health. Below are the essential financial metrics that contractors should meticulously track. Backlog Definition: Backlog is the open pipeline for a contractor. The backlog indicates the amount of future revenue that is set to be generated from the contracts the contractor currently has in place. Importance: A higher backlog balance indicates a healthy pipeline for future revenue. Contractors can look at several metrics relating to backlog to assess their financial health, one of which would be number of months in backlog (current backlog/annual revenue): This figure will give contractors a glance into where they are sitting with current work. For example, a good goal would be to maintain six months’ worth of revenue in backlog at a given time. Additionally, if the backlog number is significantly higher, it may be a sign work is delayed, and the contractor is potentially overextended. Working Capital Definition: Working capital is the difference between a company's current assets and its current liabilities. Importance: Construction projects often require substantial upfront costs relating to labor and materials. Sufficient working capital is needed to cover these expenses while awaiting payment from clients. Gross profit margin Definition: Gross profit margin is the percentage of revenue that exceeds the cost of goods sold (COGS). It reflects the efficiency of a contractor in managing project costs and generating revenue. Importance: A higher gross profit margin indicates better control over direct costs and higher profitability. Tracking this metric helps contractors identify cost-saving opportunities and price their services appropriately. Looking at this metric on a job level aids contractors in identifying certain projects that are negatively impacting the overall gross profit margin of the company, which can help target project management concerns. Overhead Ratio Definition: The overhead ratio measures the proportion of indirect costs to direct costs or revenue. Importance: A lower overhead ratio indicates efficient management of indirect costs. Contractors should aim to minimize overhead expenses to maximize profitability. Bid-Hit Ratio Definition: The bid-hit ratio compares the number of successful bids to the total number of bids submitted. Importance: This metric helps contractors assess the effectiveness of their bidding strategies. A higher bid-hit ratio indicates better alignment with market demands and client expectations. Conclusion Tracking these financial metrics is essential for contractors to maintain profitability and achieve sustainable growth. By regularly monitoring and analyzing these key indicators, contractors can make informed decisions, optimize their operations, and enhance their financial performance. Effective financial management is the cornerstone of a successful contracting business, ensuring that projects are not only completed on time and within budget but also contribute positively to the company's bottom line. For more information on how financial metrics can help your contracting business, contact a member of the Schneider Downs Construction Industry Group. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. ### 2025 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2025 Cost-of-Living Adjustments (COLA) in Notice 2024-80 on November 1, 2024. The COLA increases will become effective on January 1, 2025, and impact many aspects and types of retirement plans as well as Individual Retirement Accounts (IRAs). Retirement Plan Highlights The elective deferral limits for 401(k), 403(b) and most 457 plans increased to $23,500 for 2025 compared to $23,000 in 2024. The catch-up contribution limit for 401(k), 403(b) and most 457 plan participants who are age 50 or older remains $7,500 for 2025. Therefore, plan participants who are 50 and older can contribute up to $31,000 starting in 2025. The SECURE 2.0 Act’s provision regarding enhanced catch-up contributions will become effective in 2025 as well. Individuals who attain age 60, 61, 62, or 63 in the 2025 calendar year are eligible for an enhanced catch-up contribution of $11,250. The annual contribution limit for 401(k) plans and 403(b) plans, which includes both employee deferrals and employer contributions (e.g., match and/or profit-sharing contributions), increased to $70,000 in 2025, compared to $69,000 in 2024. Note that neither catch-up contribution types are included in the annual contribution limit of $70,000, so a participant who is eligible for traditional catch-up contributions could have their 401(k) or 403(b) plan funded with up to $77,500 (or $81,250, if eligible for enhanced catch-up contributions) in 2025, assuming the plan is designed to accomplish as much and otherwise passed IRS required annual nondiscrimination tests. Individual Retirement Account (IRA) Highlights The limits for annual contributions to an IRA and catch-up contributions remain unchanged at $7,000 and $1,000, respectively, for 2025. Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the adjusted gross income (AGI) phase-out ranges in 2025 for traditional IRA contribution purposes: For single taxpayers covered by a workplace retirement plan, the phase-out range is $79,000 to $89,000, up from $77,000 to $87,000 in 2024. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $126,000 to $146,000, up from $123,000 to $143,000 in 2024. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $236,000 and $246,000, up from $230,000 and $240,000 in 2024. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000 in 2024. For married couples filing jointly, the income phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000. The income limit for the Saver's Credit (also known as the Retirement Savings Contributions Credit) for low-to-moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of household, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250. The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,500, up from $16,000 in 2024. Additional changes made under SECURE 2.0 are as follows: The limitation on premiums paid with respect to a qualifying longevity annuity contract to $200,000 in 2024. For 2025, this limitation increases to $210,000. Added an adjustment to the deductible limit on charitable distributions. For 2025, this limitation is increased to $108,000, up from $105,000 in 2024. A deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity is $54,00 in 2025, up from $53,000 in 2024. The prior year annual compensation limitation under section 45E(f)(2)(C) for employees excluded from the calculation of the additional small employer pension plan startup cost credit for certain employer contributions is $105,000. For these and other retirement-related cost-of-living adjustments for 2024, please click here, or visit www.sdretirementsolutions.com. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### On The Horizon – Post Election Tax Legislation With recent Republican victories in the U.S. presidential and senate races, significant tax legislation changes can be expected over the next 12 to 14 months, most notably with regard to the Tax Cuts and Jobs Act of 2017 (TCJA) since many aspects of the bill were not permanent provisions and are set to expire as of December 31, 2025. Although Republicans will control both the Senate and the House of Representatives, tax policy changes will require 60 votes in the Senate or will need to use the reconciliation process to pass, similar to the TCJA. Throughout his campaign, President-Elect Donald Trump discussed a wide variety of tax policies and proposals, including: Making TCJA permanent – As mentioned above, without 60 votes in the Senate, Congress would need to use the reconciliation process to enact legislative tax changes. The process would allow a tax bill to pass with 51 votes to avoid a filibuster but would impose limitations on increased spending or decreased revenues as a result. Individual tax rates – Currently set to expire at the end of 2025 and return to pre-TCJA levels, reestablishing the maximum tax bracket at 39.6%, an increase from the current 37%. Qualified Business Income (Section 199A) deduction - Currently allows eligible self-employed individuals and pass-through entities (S corporations and partnerships) a tax deduction equal to 20% of qualified business income. It also levels the playing field between self-employed and pass-through entities versus C corporations. This deduction is set to expire with the TCJA as of December 31, 2025. State and Local Tax cap (“SALT Cap”) – Also set to expire at the end of next year, this limits the deduction of state and local taxes to $10,000 for married couples filing jointly. This limitation is likely to be brought up as a part of tax legislation as some argue it disproportionately affects taxpayers in high-tax states. Taxation of tips and overtime income – It’s unclear how this proposal would specifically be enacted and whether this income would be exempt from employment taxes as well as income taxes. There would also likely be a significant impact on tax revenues and the overall deficit that would need to be offset. Tariffs – While tariffs are not an income tax policy matter, business owners should be aware of the proposed baseline tariffs on imports in the range of 10-20% and the proposed 60% tariff on imports from China. Estate tax – Without the extension of the TCJA, exemptions would revert to pre-2018 levels, adjusted for inflation (estimated at approximately $6.8-$7.5 million). The current gift limitation set to expire after December 31, 2025 is $13.99 million per individual. Corporate taxation – Permanently lowered to 21% through the TCJA, it’s been proposed to reduce this to 15% for companies that produce in the U.S. Other provisions that may be addressed include bonus depreciation, expensing of research and development costs (Section 174) and the child tax credit. Legislation could be passed fairly quickly in 2025, so it’s important for businesses, individuals and estates to consider the changes on the horizon and to work with their tax advisors to plan accordingly. Our Schneider Downs tax practice is ready to assist with strategic tax planning and cash flow analysis. Contact a member of the team to learn how we can help your organization. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### IRS Announces 2024 Marginal Well Credit For the first year since 2021, the Marginal Well Credit (MWC) will be available for the tax year 2024 to taxpayers to provide valuable tax-saving opportunities for natural gas producers who hold an operating interest in qualified marginal wells. A marginal well is defined as a domestic well with marginal production of crude oil or natural gas under the percentage depletion rules: that is, a well producing 15 barrels of oil equivalent per day or 90 mcf or less per day. While there is no limit on the number of qualified wells that may be used to determine the credit, the MWC is subject to several important requirements and limitations: Operating Interest Requirement: Taxpayers must hold an operating interest in a marginal well to qualify for the credit. Credit Amount Based on Reference Price: The credit amount is determined based on the average wellhead price of domestic natural gas from the prior year (referred to as the reference price). Qualified Production Limitation: The credit can only be claimed for qualified production on the first 1,095 barrels of oil equivalents (6,570 mcf) for each well during the tax year. Short-Year Limitation: There are limitations on production in a short tax year. The MWC is included in the general business credit, meaning it cannot offset tax liabilities generated by the alternative minimum tax (AMT). In accordance with IRS guidance in Notice 2024-52 (IRB 2024-27), the same methodology continues to be used to calculate the credit for the 2024 tax year, resulting in a $0.77 tax credit per qualified mcf of production. This could provide taxpayers as much as $5,058.90 in tax savings per each qualified well they own. The marginal well credit, per mcf, for the five most recent tax years is as follows: Tax Year Credit Allowed 2020 - 0.66 2021 - 0.67 2022 - 0.00 2023 - 0.00 2024 - 0.77 Notably, the MWC includes oil production under the definition of qualified marginal wells; however, this aspect is subject to a separate limitation that is not detailed in this article. Due to high oil prices in recent years, the credit related to oil production has been phased out for all tax years. If you think you could benefit from the credit or would like to discuss the 2024 Marginal Well Credit, please contact a Schneider Downs tax advisor. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### PA Computer Services Guidance Recently the Pennsylvania Department of Revenue (DOR) published written guidance on the taxability of services related to software and digital goods. The new guidance follows recent DOR audit assessments and policies applied against both vendors and purchasers of these services, and addresses the department’s position on applying sales and use tax to the purchase of software licenses and consulting services utilized for purposes like the implementation, modification, configuration and support of taxable software and digital goods, as well as additional applications like website development, informational retrieval services and data sales. Through the guidance, the DOR interprets the current statutory definitions of purchase price and the altering/repair of tangible personal property to apply to services that are performed in conjunction with the purchase of canned software, as well as those that may be performed separate from the sales of such technology. The interpretation discusses an analysis of whether the services are akin to the alteration, repair and maintenance of canned software based on past precedent and current statutory definition that the definition of tangible personal property includes canned software. History The taxability of computer services has changed throughout the years. Services were first defined as taxable in 1991 until repeal of that legislation in 1997 resulted in an exemption. In January 2000, the DOR issued Regulation Section 60.19 stating that if these computer services were separately identified from the sales and installation charges of canned software, they were to remain exempt from tax. In 2016, the legislature enacted Act 84, which expanded the definition of tangible personal property to include software regardless of method of delivery. Other than stating that separately invoiced helpdesk or call center support is not included in the definition of tangible personal property, Act 84 did not add computer services to the list of taxable services, therefore the criteria for taxability established in Regulation Section 60.19 remain valid regulations to determine the taxability of computer services. Current Guidance Per the recent guidance, the following computer services are considered taxable when performed in conjunction with the sale of, or performed to, canned software: configuration, modification, consulting to assist with identifying the software users needs, enhancement, modification, installation and project management. Additionally, information retrieval services, data sales, training and support services may be taxable depending on the nature of the services. While the DOR guidance does provide statutory and case law authority in its analysis, it’s important to note that the guidance itself was not issued as a bulletin, notice or regulation and therefore does not set any legal precedent on its own. Additionally, while the DOR has stated it will treat this guidance as a clarification of past and existing law, it is inconsistent with both Regulation Section 60.19 and past audit assessments where these services were not assessed. Our Thoughts On Purchasers of computer services should be aware that the DOR’s assessments with respect to these services have been upheld at the administrative appeal levels and a number of these assessments are pending resolution at Pennsylvania Commonwealth Court. Before paying state sales and use tax, companies should analyze their taxability pursuant to the historic taxability framework and this recent guidance. In the meantime, our State and Local Tax team is poised to assist you with this analysis. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Ohio BTA Decision Impacts Sourcing of Out-of-State CAT Receipts In a recent Board of Tax Appeals case (Case No. 2022-422, Ohio Bd. Of Tax App. (10/23/24)), the Ohio Board of Tax Appeals (“BTA”) vacated an Ohio Commercial Activity Tax (“CAT”) assessment, holding that because vehicle sales transactions occurred outside of Ohio, the gross receipts from these sales were not sitused to Ohio and were not subject to Ohio’s CAT, even though the purchaser subsequently brought the automobile into Ohio. Background and Decision From its Wheeling, West Virginia dealership, Straub Nissan, LLC (“Straub”) sold vehicles to Ohio resident customers who took possession of the vehicles in West Virginia and subsequently took them back to Ohio.  Straub sourced the gross receipts from these transactions to West Virginia, arguing both that this is where the goods were received and all transportation was completed, and because the receipts were already subject to West Virginia income tax, subjecting the receipts to CAT would result in double taxation. The Tax Commissioner argued the sales should be sitused to Ohio because Straub knew that is where they were ultimately destined. Finding the sales to Ohio residents were not subject to the CAT, the BTA noted that each transaction was entirely consummated in West Virginia, as the Ohio customers drove to West Virginia to receive their vehicles, and it was in West Virginia that they made the first possessory use of the vehicles.  The BTA concluded that the Ohio Department of Taxation had misapplied the “transportation clause” of Ohio Rev. Code section 5751.033(E), as there was no transportation of the vehicles into Ohio by common carrier Our Thoughts On The Straub decision reverses a long-standing Ohio Department of Taxation position, clarifying that out-of-state automobile dealers that sell automobiles to Ohio resident customers who receive the vehicle out of state and ultimately take the vehicle to Ohio are not to be included in Ohio CAT gross receipts.  It is important to note the BTA’s decision relied heavily on the fact the vehicles were transported by the customer to Ohio.  It is likely that vehicles delivered to Ohio via the dealer or common carrier would still be sitused to Ohio. Conversely, Ohio dealers selling to out-of-state customers should be aware that these receipts should likely be included as Ohio CAT receipts to the extent the customer takes possession of the vehicle in Ohio (i.e., the vehicle is not delivered out of state by the dealer or common carrier). In light of this decision, automobile dealerships should analyze their out-of-state sales to determine if they properly reflect these changes to CAT receipts situsing. The Schneider Downs State and Local Tax (SALT) practice is equipped to help you evaluate the impact of these revenue situsing changes on your Ohio CAT filings. Please direct inquiries to Stephen Worth, Schneider Downs State & Local Tax Practice Leader at sworth@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.    ### Highlights from the NACUBO Tax Forum This year’s NACUBO Tax Forum was held in Las Vegas on October 20-22. The annual meeting brings together tax professionals and university representatives from around the country to engage in discussions on subjects that are currently impacting the higher education tax community. Sessions were designed to offer the latest information on issues and best practices in higher ed tax compliance and administration. This year, several key topics were in focus, including the potential impact of the election on tax policy, issues related to NIL (name, image and likeness), fringe benefit and compensation matters, and common sources of unrelated business taxable income (UBTI). Many of the sessions over the three-day forum were dedicated to the potential impact of the upcoming elections and the recent bills that have been introduced in Congress that would affect higher education institutions. Summaries of those bills can be found in our earlier articles here and here. While the outcome of the election and its ultimate impact on tax policy is uncertain, speakers at NACUBO fully expect a large tax bill to be drafted and introduced shortly after the election, regardless of which candidate is elected. A new bill will be necessary to address the provisions within the Tax Cuts and Jobs Act that are set to expire at the end of 2025. NIL is one of the most hot-buttoned topics in the higher education space today. The forum held a session on the history and current rules regarding NIL collectives, organizations that operate independent from colleges and universities but have a large impact on recruiting and retaining student athletes. These groups raise money from a wide variety of individuals and facilitate NIL opportunities for students. In 2023, 81% of the $1.17 billion in NIL opportunities came from collectives. Historically these organizations have been organized as tax-exempt entities, but recently the IRS has found that they serve more a private benefit and not a public interest. In 2024, collectives seeking exemption were denied, and there is now a review of collectives previously granted tax-exempt status. Fringe benefits and compensation issues are also important topics in the higher ed space. Sessions were held to discuss the taxability and reporting of non-qualified scholarships for students and travel reimbursement for faculty. The implications of Section 512(a)(6), which provides for the separate computation of taxable income for each trade or business, continues to be a much discussed topic within the higher ed community. Sessions were held to discuss the differences in calculating UBTI before and after Section 512(a)(6) came into effect. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Postcard from 2024 ISACA PGH What were the hot topics at the 11th Annual Pittsburgh Information Security Awareness Day? The ISACA Pittsburgh chapter held their annual Pittsburgh Information Security Day this past Monday, and as always, the day was filled with great insights and conversations surrounding the latest information systems and security world. While there is no way to recap all of the great content and discussions in a single article, here are some of the key takeaways and highlights from our perspective. There's No Gray Area in Fraud: Synthetic Identities, Mortgage Fraud and True Crime The ISACA Pittsburgh chapter delivered an exceptional keynote presentation featuring Matthew Cox, a former mortgage fraudster, con man and true crime author. Cox's gripping journey began as a local mortgage broker who falsified documents with whiteout, ultimately bilking an estimated $55 million from America's largest banks. This led to a three-year cross-country manhunt by the U.S. Marshals, FBI and Secret Service. In his keynote, Cox discussed how his fraud tactics escalated as he learned to create synthetic identities and commit mortgage fraud. One of his most intriguing stories involved exploiting a loophole that allowed him to obtain Social Security numbers for fictitious individuals—often named after characters from "Reservoir Dogs"—using falsified birth certificates and immunization records, as long as the “baby” was under 10 months old. Cox shared several memorable anecdotes, including: Close Calls: He described near-captures, often paying back defrauded amounts, knowing that victims wouldn't recover their money if they contacted the FBI. A Narrow Escape: He recounted walking past his own wanted photo in a police station after being brought in under suspicion of fraud. With a fake driver’s license listing him as 5'10", despite being 5'6", he cleverly joked his way out, promising not to leave town before heading to Nashville. Mortgage Fraud: Cox detailed purchasing an estimated 109 houses with $11.5 million in fraudulent funds, inadvertently driving up the local housing market to one of Florida’s top-growing zip codes. Organized Deception: When finally apprehended, Cox had 27 driver's licenses across seven states and 22 passports. When asked by an audience member if he ever confused his identities, he explained that he had a folder for each persona, and even the FBI noted his remarkable organization. Cox's fascinating insights into the psychology of fraud and his experiences as a real-life criminal made for a great way to kick off the day. Aspiring to Allyship: Commit to Active Listening ISACA’s OneInTech hosted a thought-provoking panel discussion to explore actionable strategies for becoming an effective ally in our workplaces and communities. Five women leaders in their respective tech spaces took the stage to reveal what allyship means to them and how everyone can use it to drive meaningful change. All the panelists stressed that effective allyship starts with active listening. When we are ready to learn, grow and listen to our colleagues from different backgrounds and experiences, we can aspire to allyship. However, it’s a fluid process. Approaching allyship with a growth mindset and surrounding ourselves with mentors and other positive influences can help us on our journeys and remind us that there’s always something new to learn. And allyship isn’t just about listening. It’s about acting when the time is right. Whether it’s speaking out against injustice or taking the time to accommodate a colleague with an invisible disability, such as ADHD and anxiety, it’s important to be available if someone needs direct assistance or a listening ear. If we are open to new ideas, actively listen and self-reflect on our actions, we can be well on our way to becoming effective allies. They're Watching You: The Research Behind Employee Surveillance Hopefully today, most of us realize that our activity on our work laptops is monitored. And while the IT department does this to find anomalous behaviors, we begin to see them as the “productivity police.” All types of questions come with standard monitoring practices that we haven’t solved yet, such as “Do remote employees need extra monitoring? Should monitoring data help decide who gets fired or promoted?” Matthew Butkovic from Carnegie Mellon University unpacked data from the Pew Research Center regarding employee sentiment of monitoring activities as well as his own research, and he found that when employees are well-informed of the “what” and “why” behind their employers’ monitoring activities, they are more likely to accept it. But that’s not comprehensive. An explanation must be coupled with positive deterrence-related practices, which includes measures to make people feel connected at work, receive organizational support and possess levels of high job engagement. When these components are embedded into an organization, employees are more likely to “self-police” and accept organizational monitoring practices. Employers must strike a balance between driving engagement, offering intrinsic motivations and increasing the effectiveness of the organization’s insider threat risk program. Data, Danger... and More Danger: Third-Party Risk and Data Centers The presentation on data centers and third-party risk management left a lasting impression on many attendees. It highlighted the vast scale of data centers in our interconnected world, which account for an estimated 2-3% of global energy consumption. Given their significance, these facilities are heavily regulated and often targeted by malicious actors. The discussion covered existing audit and security measures for data control centers, including contract reviews, third-party risk assessments, questionnaires and on-site audits. Particularly striking was the revelation of how easily threat actors can exploit vulnerabilities—such as hacking temperature controls to compromise the delicate environments that data centers rely on. Real-world examples underscored the potential consequences of such attacks, including the 2010 incident at the Iranian nuclear facility, the 2015 Ukraine power grid disruption and the 2021 Colonial Pipeline attack, one of the most significant assaults on American infrastructure. Overall, the session served as a crucial reminder of the need for robust security measures in our data-driven world. Thank you to all of the ISACA Pittsburgh chapter board members and volunteers for another fantastic year. We look forward to next year! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. ### Cybersecurity Awareness Month is Over...Now What? As October comes to an end, so does Cybersecurity Awareness Month. However, that doesn’t mean our focus on security awareness and education should end. With cyberattacks growing in scale, complexity, and volume, practicing good cyber hygiene and adopting a security-first mindset in our daily personal and professional lives has never been more important. Over the past month, the Schneider Downs Cybersecurity team has shared their expertise on several key topics, including cybersecurity insurance, purple teaming, and cybersecurity governance, through our video series, Cybersecurity: Two Truths and a Lie. Cybersecurity: Two Truths and a Lie Video Series 3 Videos Cybersecurity Insurance 1:51 Purple Teaming 2:45 Cybersecurity Governance 4:16 This series helps filter through common misconceptions about important cybersecurity topics and provides valuable resources for everyone, from the boardroom to the floor, on various ways to mitigate cybersecurity threats.To help organizations and end users become better informed and prepared against these threats, we invite you to explore our additional educational resources below.Webinar: Navigating the Path to Compromise: Common Findings from Penetration TestingStart the new year off with the Schneider Downs Cybersecurity team on January 23, 2025, as they share critical insights from their real-life penetration testing experiences. Discover key vulnerabilities, user behavior patterns, and practical strategies to enhance your organization's security, including multi-factor authentication and purple team assessments. Attendees will qualify for 1 CPE credit.Register HereOur Thoughts On: CybersecurityStay informed with our cybersecurity blog, where we cover emerging threats, trends, and best practices to help you navigate the complex cybersecurity landscape. Whether you’re looking for practical tips or updates on vulnerabilities, our blog is your essential resource for enhancing your organization’s security and fostering a safer digital environment.Explore the ArticlesNewsletter: Focus on CybersecurityWhether you are a cybersecurity professional or simply interested in the field, our bi-weekly “Focus on Cybersecurity” newsletter provides a convenient roundup of relevant news and current events, along with original articles and insights from our team.SubscribeIf you have any questions about specific cybersecurity topics or would like to discuss how to better educate and protect your organization, please contact the team directly at cybersecurity@schneiderdowns.com.About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices.Related ResourcesCISA Cybersecurity Awareness Month Resource CenterCISA Cybersecurity Awareness Month 2024 ToolkitSchneider Downs Cybersecurity Resource LibraryAbout Schneider Downs CybersecurityWe help your organization be prepared. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including Penetration Testing, Intrusion Prevention/Detection Review, Ransomware Security, Vulnerability Assessments, and a robust Digital Forensics and Incident Response Team.Learn more at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. Excerpt: As Cybersecurity Awareness Month comes to a close, continue practicing good cyber hygiene and learn more about cybersecurity topics from our experts. ### Choosing the Right Accounting Firm for Transportation & Logistics Companies: Essential Considerations The transportation and logistics industry is defined by constant movement – goods must reach their destinations on time, and seamless operations are critical. To meet this goal, specialized financial expertise is needed to navigate industry-specific challenges, maintain compliance and optimize profitability. When it’s time to select a new accounting firm, choosing the right partner is essential. Here are several factors transportation and logistics companies should consider to ensure their new accounting firm aligns with their needs and truly is their trusted business advisor. Industry-Specific Experience Industry-specific knowledge and experience is non-negotiable. Companies can’t afford for their CPA firm to be learning on the job. Complex accounting and tax issues like ASC 606 revenue recognition, insurance captive/self-funded specifics, including accruals and contingencies, state filings and apportionment, and fuel credits, among many others, necessitate an accounting team with proven experience in your industry. Companies within the industry must stay compliant with a whole host of federal, state, and local regulations. A firm familiar with the intricacies of transportation operations can help you navigate cost recovery, improve cash flow management, reduce tax burdens and mitigate risks associated with noncompliance, which can lead to costly penalties or legal issues. Reputation and Trustworthiness; What Do Others Say What’s the reputation of the accounting firm? Can they be trusted as your business advisor? Companies often ask for three to five client references, which is typical. Speaking with past and current clients in the industry provides firsthand insight into the firm’s reputation and trustworthiness – including its responsiveness, industry expertise and service quality – helping companies better understand what to expect in their partnership. Time and again when we ask our longstanding best clients what keeps them a Schneider Downs client, they resoundingly say “trust” in our partnering with them as a business advisor. Understanding the Breadth and Depth of Services the Firm Provides Ideally, you’ll want a lasting relationship with your new firm, so it’s important to understand the range of services they offer, since your business needs will likely evolve over time. In addition to tax compliance and returns, as well as the audit or review requirement for the bank, there will be state and local tax matters that arise or new terminal purchases that are best analyzed with a cost segregation study performed. Or perhaps you need some accounting advisory assistance with regard to your ever-expanding lease portfolio. A firm that’s invested in its advisory services is akin to an insurance policy for the company. For example, if you’re a client of Schneider Downs (in any particular service), you then have access to all of the firm’s experts across our range of services. Look for a firm that can support long-term strategic planning, including financial modeling, merger and acquisition assistance and succession planning. A proactive accounting partner will help you anticipate future trends, prepare for expansion and achieve sustained growth. Evaluate the Firm’s Pricing and Value They Offer Once you’ve assessed a firm’s capabilities and they meet all your criteria, don’t automatically choose the lower-priced option if another firm is slightly more expensive. Quality should take precedence over cost! A higher fee may be worth it if the firm provides additional expertise and specialized services, offering long-term benefits through knowledgeable advisors who fully support your business. For example, consider whether a firm that can help streamline your financial processes also offers efficient and effective service delivery, which in turn frees up your CFO and others to focus on growing the business. Or consider how a firm’s expertise in tax planning (not just return preparation) can reduce your tax liability, which would more than justify the additional expense. By considering these key factors, you can select an accounting firm that not only meets your current needs but also supports your company’s growth and resilience in the competitive transportation and logistics landscape. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page or email Tim Martin. ### Global Manufacturers Turn To IFRS As organizations continue to grow and become more complex, those with locations across the globe have increasingly considered adopting the International Financial Reporting Standards (IFRS). IFRS continues to gain traction and has become a standard accepted across the world with formal commitments from 160 countries and jurisdictions. Here are some of the top reasons why IFRS has become so popular for manufacturers: Reporting Consistency - IFRS provides global organizations with a single set of accounting standards making management of foreign locations easier and aligning financial reporting with global best practices. Smoother Consolidation Process - All entities under a consolidated group must follow the same application of the IFRS accounting policies. This eliminates a large pain point for many entities as the policies become consistent throughout the globe. The risk of errors in the reporting process is also reduced as all accounting team members are following and are familiar with the same standards. Cost Savings – With one single set of statements, entities can save time and money by avoiding the preparation of multiple sets of financial statements under various local standards. Consistent Inventory Costing – With all entities following the same application of accounting standards, costing methods for inventory become uniform throughout the organization. IFRS also provides more flexibility than many local Generally Accepted Accounting Policies (GAAP), including U.S. GAAP, as it permits the recovery of inventory write-downs if circumstances change. Improved Management Process – Consistent standards across an organization provides more timely information for the group management to track trends and adjust on an ongoing basis. Management can also shift resources more effectively as all team members follow the same accounting standards. Access to Capital – Manufacturers can find it difficult to access capital with financial statements prepared under certain local GAAP standards. The adoption of IFRS can make it easier for manufacturers to access capital as these standards provide a high level of reporting. Investor Relationships – The more transparent and comparable financial information provided by the IFRS standards allows entities better communication with investors and helps build confidence in the organization. Improved Comparability – IFRS statements are utilized across the globe. Statements prepared under this standard are easy to compare to other organizations and industries. Improved Internal Controls – IFRS allows manufacturers to apply consist, high-quality control processes which enhances visibility of activity throughout the organization and can reduce the risk of fraud. This implementation can significantly improve the overall risk management process. Support for Long-term Growth – The IFRS standards provide high quality accounting policies and statements that can be applied consistently over time to support long-term growth and sustainability of the organization. Think an IFRS conversion could be a solution for your organization? We can help! Schneider Downs provides assurance, tax, and advisory services for international organizations under IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. About Schneider Downs International Services The Schneider Downs International Services industry group is a dedicated team of professionals specializing in serving international companies. Schneider Downs helps clients take full advantage of all their international opportunities and can reach you and your business, no matter where you're located around the globe.   To learn more, visit our International Services Industry Group page.   ### Time Extended for Tax-Exempt Organizations to Claim Direct Payment of Certain Energy Credits Internal Revenue Code Section 6417 allows certain tax-exempt entities to make an elective payment election for tax credits, treating the amount of the credit as a payment against federal income taxes. This provision enables those entities to receive tax credits as direct cash payments instead of nonrefundable tax credits. Entities must file Form 990-T, Exempt Organization Business Income Tax Return, to make the elective payment election. The IRS recently issued revenue procedure 2024-39 which provides certain tax-exempt organizations an automatic six-month extension to file Form 990-T to make an elective payment election. The extension applies to entities that missed the timely filing of Form 8868, the Application for Extension of Time to File an Exempt Organization Return, for purposes of making an elective payment election. This extension applies to taxable years ending between December 31, 2023, and November 30, 2024. If for any reason an entity receives a notice (CP131) that their elective payment election is considered to be ineffective due to late filing, the entity can seek assistance by contacting the IRS. Additionally, the procedure temporarily waives the requirement to file Form 990-T electronically, allowing applicable entities to submit a paper-filed Form 990-T instead. This relief is aimed at helping entities that were unfamiliar with the filing process or faced issues with electronic filing. The Treasury Department and the IRS recognize that many entities intended to timely and accurately make an elective payment election on Form 990-T electronically and were not able to accomplish it. This is because there are numerous organizations that are unfamiliar with the filing process and that might have encountered issues with electronic filing. Although paper-filed Forms 990-T are allowed at this time, the IRS still strongly urges organizations to utilize electronic filing, when possible, for efficient processing. If an entity is filing on paper, the form must be sent to the IRS with a specific notation at the top indicating that it is filed under revenue procedure 2024-39. Revenue Procedure 2024-39 was put in place in order to help applicable entities better manage the challenges associated with the filing requirements related to Form 990-T and the elective payment election. This procedure guarantees that entities can benefit from the elective payment election without facing penalties for late submissions. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Investment Corner with Jason & Sean: The Impact of Government Stimulus on Capital Markets Typically, economic stimulus is intentional action by the government to encourage private sector economic activity. Economic stimulus within the United States may come in the form of monetary policy carried out by the Federal Reserve via lowering interest rates or quantitative easing. Congress can sometimes also provide a jump-start to the economy via fiscal policy, with lawmakers directing tax policies and government spending toward areas that they believe will boost the economy. In March 2020, at the height of the COVID-19 pandemic, the U.S. government unveiled a bazooka of an economic stimulus package to help get America through the rest of the pandemic. Stimulus was provided through many measures; the Federal Reserve lowered interest rates to near 0 while at the same time providing much needed liquidity for capital markets through its asset purchase program (Quantitative Easing (QE)). The Fed also created specific lines of credit and programs to finance loans in order to keep debt markets open.  Trillions of dollars of fiscal stimulus were provided by the U.S. government via the CARES Act and Consolidated Appropriations Act, among others. The capital markets response? The SP500 returned over 18% for the year 2020, a year impacted by a once in a lifetime pandemic and where U.S. unemployment hit almost 15%. The SP500  finished the year up almost 63% off the March lows. Recently, after a rather uninspiring 2024, the government of China decided that in order to get their economy into gear, it could use a little help from the public sector via an economic stimulus blitz. China's central bank unveiled its biggest stimulus package since the pandemic in order to pull the economy back towards the government's growth target. The People’s Bank of China (PBOC) announced it was cutting interest rates, reducing reserve requirements, and giving the property market direct support, among other things. Just three weeks after the People’s Bank of China announced new rounds of stimulus to jumpstart their economy, the Chinese stock market has returned over 37 percent (as of October 7th, 2024). MSCI China +37.45% Total Return 9/16/2024 – 10/7/2024 Source: FactSet There will be an academic argument for years to come on whether the economic stimulus that was flushed into capital markets in 2020 was excessive or not. The question can be asked whether or not throwing money at the world’s problems is a truly effective way to solve them, but one thing that cannot be questioned is whether or not government stimulus has an impact on economies and, more specifically, capital markets. One question does surface from this discussion: what happens when money can’t solve the problem? About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.    Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Key Insights From the IAF’s 2025 Risk in Focus: North America Report Annually, the Internal Audit Foundation (IAF) provides the Risk in Focus report, which contains insights on risk and trends for internal auditors and their stakeholders. The IAF surveyed Chief Audit Executives (CAE) and heads of internal audit from March 21, 2024, through May 20, 2024, to identify current and trending risks. A total of 3,544 responses were received globally, including 418 in North America. The results from the global survey reveal the top three risk areas are cybersecurity, business continuity and human capital. Similarly, the survey in North America notes cybersecurity, human capital and digital disruption (including AI) as the top three risk areas. A common theme between the two surveys is the sentiment that digital disruption and climate change are emerging within the next three years. Figure 1. Results from the Risk in Focus North America survey conducted from March 21, 2024, through May 20, 2024. Risk Drivers of Emerging Risks The IAF breaks down risk drivers into two categories: direct and indirect. Direct risk drivers have a strong impact on companies, while indirect risk drivers take longer to influence risk but have the potential to have a strong impact. The report identifies the three largest direct risk drivers as regulations, financial impact and business opportunity. These drivers are often prioritized in internal audit scope and have more immediate results. For example, the introduction of a new regulation that affects a company will be prioritized in an audit plan, as there are consequences for noncompliance. The top indirect risk drivers identified are politics, public opinion and social impact. Presidential elections often lead to some uncertainty regarding new or changing regulations. While factors like these will not have an immediate effect on a company, they should still be considered in the long-term strategy. Both types of risk drivers affect a company’s approach to digital disruption and climate change. Digital Disruption While digital disruption currently stands as the third highest risk in North America, seventy percent of North American CAEs project that it will continue to be a top risk in the next three years, second only to cybersecurity. Radical changes to technology have become apparent in the past few years with the development of AI, which comes with huge risks for companies. Despite companies understanding digital transformation controls, generative AI has not yet had the same sufficient consideration regarding governance and controls. The management of AI should be considered alongside policies and procedures as AI continues to evolve in the workspace. AI is interconnected with several risks, including cybersecurity, fraud and human capital. Cybersecurity hackers can now leverage AI for malicious schemes and attacks, like spreading malicious software across networks or devices to compromise systems more efficiently. Similarly, AI can enhance fraud schemes. An instance in Hong Kong involved fraudsters utilizing deepfake technology to pose as a company’s CFO, leading to a finance employee being conned into paying $25 million to the fraudster. Staffing, training and recruitment are concerns relating to human capital. Continuing to educate internal auditors in AI governance and controls will be key to filling gaps in staffing. Image Source: https://www.theiia.org/globalassets/site/foundation/latest-research-and-products/risk-in-focus/2025/north-america-risk-in-focus-2025-hot-topics.pdf Climate Change While climate change has been a hot topic within the industry, it only ranks fourteenth in this year’s top risks. Twenty-seven percent of North American CAEs or heads of internal audit expect climate change to be a top five risk in the next three years, although leaders note that climate risk will remain low until regulations apply to their organizations. On the Federal level, the U.S. Security and Exchange Commission (SEC) began the implementation of climate disclosures for certain publicly traded companies, although has since halted due to pending litigation. Additionally, California has passed legislation relating to climate reporting, which will be effective in 2026. Although these laws are not yet fully implemented, there is a reputational risk of greenwashing, the practice of a company misleading consumers by falsely presenting their products, policies or activities as environmentally friendly, and the preparation for when the regulation will be fully implemented. How Does This Affect the Internal Audit Plan? The CAEs noted that while the top risks were identified, these do not necessarily dictate the audit plan for the year. For example, despite human capital being identified as a top three risk, it ranks ninth as an audit priority. The top five audit priorities across all industries include cybersecurity, governance/corporate reporting, regulatory change, business continuity and financial liquidity. Some overall risks include external factors, like geopolitical uncertainty, that internal audit may not be able to take direct action to mitigate but may be incorporated in other areas of the audit plan. For example, geopolitical uncertainty could be included in regulatory change, business continuity and supply chain. To effectively address identified risks and ensure a comprehensive audit plan, consider the following: Develop a short-term and long-term risk assessment to identify both current risks and expected future risks. Stay current on new or upcoming regulations that affect your business and any changes to regulations. Become educated on opportunities for innovative technology, like AI, but stay cognizant of the risks that come with it. Further, continue to educate employees about the risks of using such technology, including an understanding of acceptable use and ethics. Implement continuous monitoring over any emerging risk areas to keep the audit plan dynamic and responsive. Communicate with key stakeholders like management and other relevant departments for additional insights on emerging risks in your industry. The insights from the IAF’s Risk in Focus report highlight the ever-evolving landscape of risks that internal auditors must navigate. With cybersecurity, human capital and digital disruption at the forefront, and emerging concerns like climate change gaining traction, it is imperative for audit plans to be both comprehensive and adaptable. By staying informed about new regulations, leveraging technology responsibly and maintaining open communication with stakeholders, internal auditors can effectively address both current and future risks. This proactive approach not only enhances the audit process but also strengthens the organization’s resilience in an ever-changing environment. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Postcard from the AI Horizons Pittsburgh Event On Monday, October 14, I had the pleasure of attending the inaugural AI Horizons Pittsburgh event. As I walked the halls of this sold-out, high-energy event, I encountered AI thought-leaders from the business community, academia, and even a robotic dog (which, with the permission of its “handler” I petted)! The event began with a keynote panel discussion featuring Pennsylvania Governor Josh Shapiro, Google’s Global Head of Knowledge & Information Products, Government Affairs & Public Policy, Cris Turner, Lovelace AI CEO Dr. Andrew Moore, and Carnegie Mellon University’s President Farnam Jahanian.  The discussion was moderated by Laurie Segall, Founder of Mostly Human Media and a former CNN Senior Tech Correspondent.  This discussion did a great job of setting the tone for the event, which from my perspective was essentially that Pittsburgh is uniquely positioned to play a major role in the AI innovation and technology space. The first breakout session that I attended -- “Empowering Pittsburgh: AI, Energy, and National Leadership in the Global Economy” -- included a panel that discussed Pittsburgh’s potential to lead the next industrial revolution through the development of AI factories and power suppliers. The second breakout session that I attended -- “Empowering a Sustainable Future: AI’s Role in Aiding the Energy Revolution” -- included a panel that expanded up my first breakout sessions discussion in terms of how AI is being used now and could be used in the future to connect renewable energy sources to the grid and optimize the operating capabilities of AI factories and data centers. The final keynote panel discussion of the event discussed AI’s role today and in the future related to public safety. Takeaways from an R&D Tax Credit Professional My primary observation from the perspective of a client service professional who enjoys helping organizations who perform research and development that makes our world a better place to obtain R&D tax credits is that there are hundreds of technology companies here in Pittsburgh and probably tens of thousands of technology companies around the country who are developing and / or using AI in ways that would likely qualify for an R&D Tax Credit. And the Schneider Downs R&D Tax Credit team is poised to help. At Schneider Downs, we can help to review your current R&D Tax Credit calculation or conduct an R&D Tax Credit Study to determine the amount of any potential credits. We can facilitate your company’s accounting and application for the R&D Tax credit by: Determining qualified research activities and expenditures Creating the documentation needed to substantiate the credit Detailing the state tax benefits that may be available Preparing any required tax filings Providing support with federal or state audits Our professionals have significant experience in conducting R&D studies for a variety of industries, including manufacturing, software development, metal production and chemical products. Let us help you to make the most of your investment. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Outsourced Accounting: Addressing the Financial Leadership Gaps of Today’s Non-Profits How has the war on talent impacted financial leadership in not-for-profit organizations and what can you do about it? Outsourced Accounting and Not-for-Profit Financial Leadership Being the CFO of a not-for-profit in many ways is more difficult today than ever before. Most not-for-profit accounting departments are under tremendous budget pressure and struggle to implement available technology fully. On top of it all, it has become difficult to find and retain qualified accounting talent to support the effort. CFOs often spend so much time getting the books closed that they do not have time to focus on planning and strategy. Does your organization lack the resources to close monthly accounting in a timely manner? Do you struggle with the separation of duties or lack of access to FP&A and advanced reporting tools? What if you could find solutions to all those challenges for less than the cost of a full-time employee (FTE)? Many CFOs are turning to outsourced options such as our Outsourced Accounting Services. Outsourcing can provide access to a deep bench of accounting professionals, technology to streamline processes and tools to facilitate forecasting and modeling. Outsourcing month-end close, first level review or preparation of professional timely reporting can free up a CFO to focus their time on higher value initiatives. Outsourced Accounting and Not-for-Profit Talent Gaps The shortage of accounting professionals has been developing within the last decade or so. Fewer college graduates are choosing accounting as a profession than in the past, while more senior accounting professionals are choosing earlier retirements than ever before. The low supply and high demand have created a vacuum for talent, higher salaries and looming questions about how not-for-profit organizations can compete for the next generation of accounting professionals. Attracting, training and retaining qualified financial professionals is more difficult now than ever, when most not-for-profits were at a financial disadvantage before the war on talent. Even professionals who value mission first find it harder to reduce the large salaries available in other industries. In today’s marketplace, many organizations face high turnover, a lack of qualified candidates and strained budgets that cannot grow fast enough to cover increased wages. Companies that are blessed with long-tenured professionals face serious challenges with succession planning. With all these challenges, many not-for-profit organizations are moving toward managed accounting solutions as they provide organizations access to premium talent, business continuity, cost savings and effective risk mitigation. It eliminates the need to find, train and retain talent, reduces overhead costs and gives you access to proven processes and technologies. How Can Schneider Downs Help? Schneider Downs Managed Accounting provides growing organizations access to highly qualified CFOs, Controllers and Accounting Professionals at a reasonable cost to provide strategic solutions and timely and accurate financial reporting, as well as fully outsourced solutions, including transactional accounting, accounts payable, accounts receivable and invoicing. Through our extensive experience with the not-for-profit industry, our financial professionals understand that every organization is unique. We begin with a comprehensive assessment to identify your goals, processes, technology usage and pain points. Based on this, we provide tailored recommendations to enhance your accounting efficiency, whether by supporting your existing team or offering a fully outsourced solution. Partnering with Schneider Downs grants you access to technology solutions that optimize your accounting functions. We evaluate your current tools to maximize their potential and recommend new software as needed. Our approach ensures you receive polished reports and effective forecasting for accurate cash management and budget analysis. For more information on our Managed Accounting Services, contact us at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/managed-accounting. About Schneider Downs Business Advisory The Schneider Downs Business Advisory team empowers organizations to make informed decisions across accounting, financial, legal and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment. ### Accounting Simplified: The Advantages of Outsourced Accounting What is outsourced accounting and how can outsourcing your accounting be a competitive advantage? Outsourced Accounting Services offers customized outsourced accounting solutions to organizations with limited resources, staffing challenges or those who wish to supplement their existing team with additional expertise and technology. Outsourced Accounting and Resource Gaps Outsourcing your accounting function can provide cost-effective efficiencies and access to talent that are difficult for small businesses to attain in today’s marketplace. There are many compelling reasons to outsource your accounting, including cost, a deep pool of accounting professionals, quicker optimization of technology and processes, and time savings so you can focus on achieving company goals rather than managing accounting personnel. All of which leads to timely, accurate value-added reporting and analysis. When you hire, train and manage an in-house accounting team, you still deal with paid time off, leaves of absence, turnover and performance issues. Furthermore, outsourcing can save significant costs when you compare our fees to the cost of wages, benefits and employer taxes. Outsourced Accounting and Financial Leadership Gaps Finding and retaining qualified financial leaders is more challenging now than ever before. Having accurate and timely financial reporting, data and analysis is vital to successful companies. Managing an organization without those tools is stressful, frustrating and potentially harmful to the future of your business. Outsourcing your accounting function is a viable, cost-effective alternative, allowing you to focus on other organizational objectives while simultaneously mitigating those risks. How Can Schneider Downs Help? Schneider Downs Managed Accounting provides growing organizations access to highly qualified CFOs, Controllers and Accounting Professionals at a reasonable cost to provide strategic solutions and timely and accurate financial reporting, as well as fully outsourced solutions including transactional accounting, accounts payable, accounts receivable and invoicing. With Schneider Downs Managed Accounting Services, you will have two to three dedicated resources who will gain an in-depth understanding of your organization. This approach minimizes the risk associated with reliance on a single individual for information and processes. Our financial professionals understand that every business is unique. We begin with a comprehensive assessment to identify your goals, processes, technology usage and pain points. Based on this, we provide tailored recommendations to enhance your accounting efficiency, whether by supporting your existing team or offering a fully outsourced solution. Following the assessment, we implement new processes and tools, train your team and focus on delivering high-quality monthly financials and strategic support, including core reports, key performance indicators, budget variance analysis and cash forecasting. Partnering with Schneider Downs grants you access to technology solutions that optimize your accounting functions. We evaluate your current tools to maximize their potential and recommend new software as needed. Our approach ensures you receive polished reports and effective forecasting for accurate cash management and budget analysis. For more information on our Managed Accounting Services, contact us at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/managed-accounting. About Schneider Downs Business Advisory The Schneider Downs Business Advisory team empowers organizations to make informed decisions across accounting, financial, legal and operational areas. From the ground floor to the C-suite, we provide strategic guidance to help clients succeed in today's rapidly evolving business environment. To learn more, visit our dedicated Business Advisory page. Excerpt: Discover the benefits of outsourced accounting services and how they can give your business a competitive edge. ### The Evolving Landscape of the United States Automotive Industry: A Decade of Change Over the past decade, the automotive industry in the U.S. has undergone significant transformation, driven by fluctuations in car prices, interest rates, and, to a great extent, consumer behavior. These factors have collectively influenced the average age of vehicles on the road, the growth of the automotive repair market and the overall dynamic of new and used car sales. Rising Car Prices and Their Impact The average price of a new car in the U.S. has increased substantially over the past 10 years. In 2014, the average transaction cost for a new vehicle was approximately $32,000. Fast forward to 2024, and this figure has risen to just under $48,000. The sharp increase has made it challenging for consumers to afford new vehicles, leading many to hold onto their existing cars for longer periods. Those rising costs have also contributed to the increasing average age of vehicles on the road, which was 11.4 years in 2014 and has climbed to 12.6 years in 2024, an increase of 10.5%. Inflationary pressures have also played a role, as the cost of raw materials, labor and other inputs has risen over the years. Higher Interest Rates and Their Role Higher interest rates have also played a crucial role in extending the lifespan of vehicles on the road. In 2022, the average rate for a new car loan was approximately 4.75%. Today, the rate has risen to around 6.8%. Higher interest rates increase the overall cost of financing a new car, making it less attractive for consumers to purchase new vehicles. As a result, many have opted to maintain and repair their current cars instead. Decline in New Car Production The past five years have also seen a decline in new car production, exacerbated by supply chain disruptions and shortages of critical components like semiconductors. The decline has led to lower inventories and higher prices, further contributing to the trend of consumers holding onto their vehicles for longer periods. Comparing the Growth Rates: New Car Sales, Used Car Sales, and Service The Compound Annual Growth Rate (CAGR) for select sectors within the automotive industry highlights the varying growth dynamics: New Car Sales: The global automotive market is expected to grow at a CAGR of approximately 3.7% from 2020 to 2030. Used Car Sales: The global used car market is projected to grow at a CAGR of approximately 6.3% from 2024 to 2031. Service: The global automotive repair and maintenance service market is anticipated to grow at a CAGR of approximately 10.2% from 2024 to 2032. Though estimates vary by source, this is a much faster growth rate than either new or used car sales growth estimates. This comparison reveals that the service sector is experiencing the fastest growth, driven by the increasing need for maintenance and repairs as vehicles age. The Opportunity in the Automotive Service Market The aging vehicle fleet presents a significant opportunity for the automotive industry, particularly in the service sector. As cars stay on the road longer, the demand for repair and maintenance services continues to rise. This growth is fueled by the increasing age of vehicles, which leads to more frequent servicing and repairs due to wear and tear. In conclusion, the combination of rising prices, higher interest rates and the aging vehicle fleet has reshaped the American automotive industry. While new and used car sales continue to grow, the service sector stands out as the most promising area, offering substantial opportunities for businesses to capitalize on the increasing need for vehicle maintenance and repairs. As consumers hold onto their cars longer, the automotive repair market is poised for continued growth, making it a vital component of the industry's future. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiency in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.   To learn more, visit our Automotive Industry Group page.   ### Two Truths and a Lie About Cybersecurity: Purple Teaming Let’s play a game! Two truths and a lie about Purple Teaming.In support of Cybersecurity Awareness Month, we are examining factual and fictional statements about common cybersecurity topics. The focus of this article is on Purple Teaming.Can you guess which of the three statements below is a lie and which two are true?Purple Teaming allows clients to understand their true blocking, alerting and detection capabilities.Purple Teaming is possible even when you outsource a portion of your monitoring to a third party.Purple Teaming requires the team to be onsite so that the activities can be observed firsthand.Watch the full video below as David Murphy, Senior Manager of Cybersecurity Consulting Services, reveals which statements are factual and which are not. He also sheds light on important considerations regarding Purple Teaming.https://youtu.be/BdErNvfIk7MFor more information on Purple Teaming, please contact us or visit our Purple Team Assessments webpage.This article is part of a series highlighting factual and fictional statements about common cybersecurity topics. Additional articles include:Two Truths and a Lie About Cybersecurity: Cyber InsuranceTwo Truths and a Lie About Cybersecurity: Cyber GovernanceCybersecurity Awareness Month is Over...Now What?About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices.Related ResourcesCISA Cybersecurity Awareness Month Resource CenterCISA Cybersecurity Awareness Month 2024 ToolkitSchneider Downs Cybersecurity Resource CenterAbout Schneider Downs CybersecurityWe help your organization be prepared. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including Penetration Testing, Intrusion Prevention/Detection Review, Ransomware Security, Vulnerability Assessments, and a robust Digital Forensics and Incident Response Team.Learn more at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. Excerpt: Our Cybersecurity team reveals two truths and one lie about Purple Teaming and shares expert tips on staying safe in the digital world. ### The IRS Accelerates Payment of Employee Retention Credit Claims Worth $10 Billion For taxpayers that have been waiting in limbo for ERC funds, Thursday’s press release from the IRS signals that resolution is finally on the horizon for about 400,000 of the at least 1.4 million claims still outstanding. Of the 400,000 claims, the Service has indicated that the vast majority are being processed for approval, representing approximately $10 billion of eligible claims. The exact catalyst for the increased movement in processing of claims is unclear; it could be related to increased congressional pressure, the influx of taxpayers filing lawsuits, or the ever-increasing interest liability the delay in processing continues to create. As IRS Commissioner Danny Werfel states, “The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve ever had.” Processing and mailing of the checks related to the 400,000 claims will be seen by taxpayers immediately, with more to come over the weeks and months ahead. Thursday’s press release also included information on a new consolidated claim process for third-party payers and continued to publicize the reopening of the Voluntary Disclosure Program (VDP). Last month, the IRS opened a consolidated claim process to allow for easier resolution of claims filed through third-party payers like professional employer organizations. Taxpayers who utilized a third-party payer to report and pay federal employment taxes during 2020 and 2021 needed to utilize the same third-party payer group to file an ERC claim. Issues have since arisen with how to revise these filings if a single organization within the payer group wants to rescind or alter their ERC filing. The consolidated claim process lets a third-party payer withdraw the original claim and file a corrected claim for only select clients within a payer group while maintaining the claims of other clients within the same group. The VDP has reopened for a second time, through November 22, 2024. The program allows businesses that have already received ERC payments but now believe that they are not eligible to resolve incorrect claims without penalties or interest. Businesses can correct improper claims at a 15% discount and avoid any future audits, penalties or interest. The claims withdrawal processes also remain open for businesses whose ERC claims have yet to be paid. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Not-for-Profits: Navigating CECL (ASC 326) In June 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2016-13, Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, commonly referred to as “CECL.” The new standard was effective for fiscal years beginning on or after December 15, 2022. Since the standard has gone into effect, there have been cries of confusion coming from the not-for-profit world. The new standard goes beyond previous credit loss estimates (frequently referred to as bad debt or uncollectible account reserves), which typically only considers the age of receivables and historical loss information. This aging method is still allowable under CECL; however, FASB now requires the separation of receivables by type and consideration of historical loss information in conjunction with current economic conditions and reasonable and supportable forecasts of future economic conditions that affect the collectability of these receivables. This forward-looking element adds complexity to the reserve calculation and may appear daunting to non-economists. So, what’s the good news for not-for-profits? Largely, not-for-profit entities have two main categories of receivables, depending on the nature of their operations: promises to give and trade accounts receivable. Not-for-profits can breathe a sigh of relief knowing that promises to give are scoped out of CECL. Promises to give include all transactions that are considered nonexchange transactions and, therefore, are not required to be accounted for under ASU 2014-09 Revenue from Contracts with Customers (Topic 606). This includes conditional and unconditional contributions with and without donor restrictions. Grants are also included in this scope-out, so long as the grant is considered a nonreciprocal transaction. The main determination of a nonreciprocal transaction is the donor does not receive anything of commensurate value in return for providing the resources. FASB ASC 958-605-15-5A provides further guidance on how not-for-profits can determine if a grant constitutes an exchange transaction. According to this section of the codification, commensurate value does not include benefits received by the general public or execution of the grantor’s mission in fulfilling the grant requirements. ASC 958 also provides an informational flow chart, shown below, to assist not-for-profit entities in determining if a transaction is a contribution or a contract to be accounted for using ASC 606. As for the consideration of current and future economic conditions when estimating credit losses, not-for-profit entities are not expected to incorporate complex economical calculations into their determinations. Historical information is a good starting point for reserve calculations with adjustments being made to reflect current and future economic conditions affecting collectability. These conditions should be relevant and can be qualitative in nature. Some examples of possible relevant qualitative information given by FASB include changes in unemployment rates, property values, and commodity values. Entities should only consider conditions relevant to the nature of their activities and those affecting the counterparties of their exchange transactions. FASB’s Contribution Flowchart: About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.   To learn more, visit our dedicated Audit and Assurance page.  ### Exempt Organization Projects - IRS 2024-25 Priority Guidance Plan Following recommendations from interested parties as to which tax issues should be addressed through revenue rulings, procedures, notices and other administrative guidance, the Internal Revenue Service released its 2024-25 Priority Guidance Plan on October 4. This year’s Plan contains 231 guidance projects. While many of the projects carry over year-to-year, the 2024-25 Plan adds a new project illustrating the application of regulations under Section 501(r), which apply to hospital organizations described in Section 501(c)(3). The IRS’ commitment to guiding 501(r) aligns with the Tax-Exempt/Government Entity Group’s list of priorities and the agency’s overall strategic operating plan. (See our earlier article here.) One exempt organization project was removed from the 2024-25 Plan related to final regulations for Section 509(a)(3) supporting organizations, which were published in October 2023. The 2024-25 Priority Guidance Plan includes 10 projects under the “Exempt Organizations” heading: Guidance revising Rev. Proc. 80-27 regarding group exemption letters. Notice 2020-36 was published on May 18, 2020. Guidance illustrating the application of regulations under Section 501(r). Regulations under Section 512 regarding the allocation of expenses in computing unrelated business taxable income and addressing how changes made to Section 172 net operating losses by Section 2303(b) of the CARES Act apply for purposes of Section 512(a)(6). Guidance addressing the SECURE 2.0 Act changes relating to Section 529. Guidance under Section 4941 regarding a private foundation's investment in a partnership in which disqualified persons are also partners. Final regulations under Section 4966 regarding donor-advised funds, including excise taxes on sponsoring organizations and fund management. Proposed regulations were published on November 14, 2023. Regulations under Section 4967 regarding prohibited benefits, including excise taxes on donors, donor advisors, related persons and fund management. Regulations under Section 4958 regarding donor-advised funds and supporting organizations. Guidance regarding the public-support computation with respect to distributions from donor-advised funds. Final regulations designating an appropriate high-level Treasury official under Section 7611. Proposed regulations were published on August 5, 2009. Under the “General Tax Issues” heading, the IRS lists three projects of note for tax-exempt entities: Guidance under Section 170 regarding charitable contributions. Guidance under Section 170 regarding conservation easements, including façade easements. Guidance under Section 7701 providing criteria for treating an entity as an integral part of a state or local government, and guidance on federally and tribally chartered Tribal entities. The IRS also has six projects this year under the heading “Tax-Exempt Bonds”: Guidance under Section 142, as amended by the Infrastructure Investment and Jobs Act. Revenue procedure providing guidance on the use of average area purchase prices and median income figures for purposes of Section 143. Regulations under Sections 148 and 150 on refunding bonds. Revenue procedure on the recovery of rebate under Section 148. Regulations under Section 149 to update requirements for certain tax-exempt bond information returns. Final regulations on bond reissuance under Section 150. Proposed regulations were published on December 31, 2018. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Two Truths and a Lie About Cybersecurity: Cyber Governance Let’s play a game! Two truths and a lie about Cybersecurity Governance.In support of Cybersecurity Awareness Month, we are examining factual and fictional statements about common cybersecurity topics. The focus of this article is on Cybersecurity Governance.Can you guess which of the three statements below is a lie and which two are true?The Board of Directors’ awareness of organizational cybersecurity risks and maturity levels is essential to ensuring proper direction and decision-making.Cybersecurity typically operates as a second line of defense function for an organization.Organizational cyber risk tolerance levels are best determined by the chief Information security officer of the organization.Watch the full video below as Carl Kriebel, Shareholder of Cybersecurity Consulting Services, reveals which statements are factual and which are not. He also sheds light on important considerations regarding Cybersecurity Governance.https://youtu.be/IXiRA0NAlt4?feature=sharedThis article is part of a series highlighting factual and fictional statements about common cybersecurity topics. Additional articles include:Two Truths and a Lie About Cybersecurity: Cyber InsuranceTwo Truths and a Lie About Cybersecurity: Purple TeamingCybersecurity Awareness Month is Over...Now What?About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices.Related ResourcesCISA Cybersecurity Awareness Month Resource CenterCISA Cybersecurity Awareness Month 2024 ToolkitSchneider Downs Cybersecurity Resource LibraryAbout Schneider Downs CybersecurityWe help your organization be prepared. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including Penetration Testing, Intrusion Prevention/Detection Review, Ransomware Security, Vulnerability Assessments, and a robust Digital Forensics and Incident Response Team.Learn more at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. Excerpt: Our Cybersecurity team reveals two truths and one lie about Cyber Governance and shares expert tips on staying safe in the digital world. ### FinCEN’s New Rule for Investment Advisors about AML/CFT Regulations Finalization On August 28, FinCEN (Financial Crimes Enforcement Network) released a final ruling which is extending anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements to investment advisors. This rule will apply to many registered investment advisors (RIAs), registered with the Securities and Exchange Commission (SEC), and exempt reporting advisors (ERAs). This shift aims to enhance the integrity of the financial system by extending the scope of what is considered a financial institution under the Bank Secrecy Act (BSA) regulations. The final ruling requires companies to develop and maintain AML/CFT compliance through a compliance program, including filing Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) and implementing due diligence measures for correspondent and private banking accounts. The final rule is scheduled to go into effect January 1, 2026. FinCEN has finalized its definition of an “investment advisor” after proposing to amend its previous definition earlier this year. The new definition excludes specific RIAs registered with the SEC that are mid-sized advisors, pension advisors, RIAs that do not report any AUM (assets under management) on SEC Form ADV, and multi-state advisors. FinCEN notes that these RIAs pose a lower risk than bigger ones with over $110 million AUM. FinCEN has also indicated that state-registered advisors are not required to comply with this rule due to being considered low-risk for money laundering. Although these state-registered advisors are not required to comply at this time, FinCEN cautioned that they will continue to monitor activity moving forward. Before this rule, there were no U.S. federal or state regulations requiring IAs or RIAs to maintain AML/CFT programs. FinCEN noted that having obligations in place for banks, broker-dealers, and other financial institutions can help in detecting financial crime. As financial crimes evolve, regulatory bodies are recognizing the need for more robust regulations to combat these issues. By including investment advisers within the scope, FinCEN is reinforcing its commitment to creating a more secure financial environment. With the new ruling, there are minimum requirements that need to be set into place. RIAs and ERAs (exempt reporting advisors) are mandated to implement risk-based written AML/CFT programs which include the development of internal policies, procedures, and controls: ongoing employee training programs, a designated compliance officer, and independent audit programs to test the effectiveness. Additionally, advisors will be obligated to conduct customer due diligence (CDD) to better understand their clients and the nature of their transactions. This move not only places focus on investment performance but also the potential risks associated with client activities. The new AML/CFT program must be approved by the IA’s board of directors or trustees. If there is no board, the program will need to be approved by the general partner, sole proprietor, or other persons like the board of directors. RIAs and ERAs can serve a critical role in the fight against financial crime and its impacts. If you or your organization has need assistance in developing an AML/CFT program, please reach out to James Rumph jrumph@schneiderdowns.com or Brian Webster bwebster@schniderdowns.com for more information on what we can do to help. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. ### 2024 Tri-state Legislative and Regulatory Update Here’s a look at the legislative update for the tri-state area through September 2024 Pennsylvania Pennsylvania’s legislative session opened on January 2 and is set to adjourn on November 30. SB590 proposes to double the bonding requirements currently in place for unconventional wells. The amount due is based on well length and number of wells, and each tier has a cap. This bill would also require the Environmental Quality Board to adjust the amounts annually based on the Consumer Price Index for All Urban Consumers in Pennsylvania, New Jersey, Delaware and Maryland. SB831, meanwhile, sets the parameters required of carbon dioxide injection and storage facilities. There are a number of requirements applicable to both surface owners and subsurface owners. It also establishes a fee to be paid to the state per ton of carbon dioxide injected for storage. Fifty years after the completion of the project, the state will issue a certificate of project completion and assume responsibility for the injected carbon dioxide. The bill was approved by Governor Shapiro on July 17. West Virginia West Virginia’s legislative session opened on January 10 and ended March 9. SB873 was passed and rendered effective June 7. The periodic installment on oil and gas severance tax that is greater than $1,000,000 is due and payable in monthly installments on or before the last day of the month following the month in which the tax accrued. The bill eliminates the June 30 installment due by June 15, now making the payment due June 30. Ohio Ohio had no legislative updates. This update is based on legislative and regulatory information available at the time of publication and is not intended as legal, tax or accounting advice. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.   To learn more, visit our dedicated Audit and Assurance page.  ### What Should Contractors Consider When Choosing a New Accounting Firm? Choosing an accounting firm is an important decision. Assessing the factors below is a good start to making an informed decision that is tailored to your business and your business goals. An accounting firm should be your partner and provide value to your business and its success. Seek a Firm With Extensive Experience in the Construction Industry Industry-specific knowledge is invaluable. The firm of the Contractor’s choice will understand the unique challenges and regulatory requirements of the industry. Research Firms in the Surrounding Area Contractors can keep track of the Construction Executive that shows the top 50 Construction Accounting Firms. This is a highly reputable publication that Contractors can rely on for valuable information. Contractors can also request references directly from the firm they are interested in to speak to past and present clients. This will give the Contractor a clear understanding of what to expect from the firm when it comes to responsiveness, expertise, and quality of service. Understanding the Range of Services the Firm Provides Ideally, you want to have a longstanding relationship with this new firm of choice, therefore you want to understand the services they provide because your business is not always going to stay the same. A contractor is going to face obstacles and new challenges with regulatory requirements, tax or bookkeeping issues. Another important topic that has been coming up the past year is the Sales and Use Tax and how it affects contractors. Firms that have a specific team that specializes in Sales and Use Tax would be very beneficial if this applies to you. Inquire about the firms use of accounting software and technological tools – this can help you with real-time problems and make real-time decisions. Most importantly, ensure the firm can provide services that are specific to your needs. Every client is different and having this option will get the most bang for your buck. Shop Around – Evaluate the Firm’s Pricing and Value They Can Provide Remember – cheaper is not always better! You get what you pay for. After you hit the 3 steps above, and a firm checks all of the boxes but is slightly more expensive than another firm, do not always go with the cheaper option. Quality over quantity! A higher fee can be justified if the firm offers more expertise and specialized services. This will help your business in the long run to have valuable experts and advisors that have your back always. If you have a firm that can better your financial processes and reduce your tax liability compared to another firm, can this justify the higher expense? The savings you get may outweigh the additional cost of the firm. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.   To learn more, visit our dedicated Audit and Assurance page.  ### Two Truths and a Lie About Cybersecurity: Cyber Insurance Let’s play a game! Two truths and a lie about Cyber Insurance.In support of Cybersecurity Awareness Month, we are examining factual and fictional statements about common cybersecurity topics. The focus of this article is on Cyber Insurance.Can you guess which of the three statements below is a lie and which two are true?Cyber Insurance provides access to preferred vendors for pre- and post-incident services.Cyber Insurance costs and requirements change yearly.Cyber Insurance covers all financial losses resulting from a cyber incident.Watch the full video below as Stephen Bish, Manager of Cybersecurity Consulting Services, reveals which statements are factual and which are not. He also sheds light on important considerations regarding Cyber Insurance.https://youtu.be/KYM9Li6acOYThis article is part of a series highlighting factual and fictional statements about common cybersecurity topics. Additional articles include:Two Truths and a Lie About Cybersecurity: Cyber GovernanceTwo Truths and a Lie About Cybersecurity: Purple TeamingCybersecurity Awareness Month is Over...Now What?About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. With a focus on securing our world, Cybersecurity Awareness Month recognizes the importance of taking daily action to reduce risks when online and connected to devices.Related ResourcesCISA Cybersecurity Awareness Month Resource CenterCISA Cybersecurity Awareness Month 2024 ToolkitSchneider Downs Cybersecurity Resource LibraryAbout Schneider Downs CybersecurityWe help your organization be prepared. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including Penetration Testing, Intrusion Prevention/Detection Review, Ransomware Security, Vulnerability Assessments, and a robust Digital Forensics and Incident Response Team.Learn more at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. Excerpt: Our Cybersecurity team reveals two truths and one lie about Cyber Insurance and shares expert tips on staying safe in the digital world. ### Deepfake Scams – A Growing Threat Deepfake-driven fraud remains a top concern for CISOs and security professionals, as the frequency and complexity of these scams continue to escalate. The Team 8 2024 CISO Survey Report, presented at their annual CISO Summit, identified deepfake-enhanced fraud as the second highest perceived threat, with 56% of respondents expressing concerns over voice or video fraud. Similarly, another survey found that over half of businesses in the U.S. and UK have been targeted by financial scams using deepfake technology, with a concerning success rate of 43%. This survey reported an even higher level of concern, with 85% of respondents labeling deepfake-driven fraud as an "existential threat" to organizational financial security. What are Deepfake Scams and How Do They Work? A deepfake is media—typically video or audio—of a real person that has been digitally manipulated, often using generative AI, to misrepresent them. In the business context, deepfakes can be employed to impersonate executives or clients, aiming to defraud companies through social engineering tactics. Perhaps the most notable case involved a Hong Kong finance worker who was deceived into transferring $25 million to a fraudster impersonating the company's CFO during a conference call. A similar incident happened in China, where a financial employee was tricked into transferring more than $260,000 to a fraudster who impersonated her boss on a video call. As generative AI technology becomes more accessible and advanced, deepfake scams are on the rise, highlighting the need for enhanced security training. Traditionally, organizations have focused training on the dangers of phishing through emails, texts, and phone calls—threats that can often be easier to identify. However, with the growing remote workforce, video calls have become a primary communication method, making it essential to educate employees about the risks of deepfake technology in this context. How to Spot and Avoid Deepfake Scams But what happens when you receive an incoming video call from an AI-version of somebody you trust or know at work? Here are some best practices and tips to recognize a potential deepfake. Ask Questions and Think About Requests If you receive an incoming video call from your CFO asking you to wire money immediately, it's wise to pause and ask some questions. First, consider whether this is a typical request from your CFO, or if such requests usually come from a manager. Second, if you ask company-specific questions and they can’t answer or sound rehearsed, it could indicate a deepfake. Third, you could always say you're on mute and wait for a reaction—just kidding... sort of! Look for Visual or Audio Glitches While video conferencing quality has improved with the rise of remote work, it’s still not perfect. Deepfakes may exhibit noticeable video and audio glitches since generative AI, while advanced, is not flawless. If you receive unusual instructions or requests, pay close attention to any visual or audio distortions that could suggest you’re speaking to an AI imposter. Watch Out for Phishing Red Flags While deepfake scams can be sophisticated, they often exhibit the typical signs of phishing attacks. If the video or audio call is unsolicited, demands urgent action, or simply doesn’t sound like the person they claim to be, it’s likely a deepfake. In such cases, end the call and report it to your IT department. While these tips may not guarantee complete protection against deepfake scams, being aware of their existence is half the battle. If you receive an audio or video call that resembles someone you know but feels off, trust your instincts. Consider verifying their identity through another method, such as an in-person meeting or by calling them back on a verified line or video platform. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn about the rising concern of deepfake-driven fraud and how to defend against it. ### New Per Diem Rates Announced for the Transportation Industry – Can Your Company Use This as Another Driver Retention Tool? The IRS recently released Notice 2024-68, which increased the special per diem rates for 2024 – 2025 for the transportation industry. The rate for meals and incidental expenses has been increased to $80 from $69 for travel in the continental United States. For travel outside of the continental United States, the rate has increased to $86 from $74. The new rates will be effective on October 1, 2024. If your trucking company has a per diem program in place, you need to update your calculations to meet the October 1, 2024, effective date. If your trucking company has not adopted a per diem program for your company drivers, then now may be a great time to determine if this expense reimbursement program could help with driver retention and recruitment. A per diem payment is a reimbursement, as defined in the Internal Revenue Code and Regulations, that covers meals and incidental expenses of drivers when they’re away from home. The transportation company takes a deduction for the per diem paid, and the only record-keeping consists of logging the number of days away from home. Drivers collect the reimbursement for the expenses, which are not included in their taxable compensation. Independent drivers will be able to use the new per diem rates to deduct their meals and incidental expenses while away from home on their tax returns. In this tight driver labor market, having per diems treated as nontaxable income could be a great recruiting and retention tool. If you would like to learn more about how your trucking company could benefit from a per diem program, please reach out to your Schneider Downs contact(s) or Chad Kort. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page. Excerpt: Stay updated on the latest IRS per diem rates for the transportation industry. ### Investment Corner with Jason & Sean: Mortgage Rate Implications Given a Fed Cut With the Federal Reserve (Fed) starting its interest rate-cutting cycle, the question many homebuyers face is “How will this affect my mortgage rate?” While the Fed does not explicitly set the federal funds rate, the Federal Open Markets Committee, a subset of the members of the Federal Reserve, sets the federal fund rate. The federal funds rate is the interest rate banks pay to borrow money from each other overnight. When the Fed wants the rate to go up, they sell government bonds and buy government bonds when it wants the rate to go down. The Federal Reserve has kept the federal funds rate in a range of 5.25% to 5.5% since July 2023. To combat inflation, the Federal Reserve took interest rates from 0% during COVID to the current level. With the recent 50-basis point reduction in the target federal funds rate, the new target fed funds rate is 4.75% to 5%. Before the Federal Reserve raised interest rates in 2022, this rate hadn’t gone higher than 2.25% since 2008. While the level of interest rates has hovered near zero for much of the last decade, it rose above 19% in the early 1980s under Paul Volcker as the Fed tried to get runaway inflation under control. As the chart below illustrates, while interest rates are high when compared to recent times, historically they are still relatively in line (or lower) when put into historical context. The typical effect of an interest rate cut is that variable-rate mortgages, including home equity lines of credit (HELOCs) and adjustable-rate mortgages (ARMs), will see rates decline. Those variable rates are tied to what is known as the prime rate, the interest rate banks charge their most creditworthy customers, which is directly influenced by the fed funds rate. While not always the case, in most cases, the fixed rate mortgage rate would likely move down as well.  The chart below shows the relationship between the federal funds rate, the prime rate, the 30-year mortgage, and a conventional 5/1 mortgage ARM (adjustable-rate mortgage). While prevailing sentiment may be for long-term mortgage rates to come down as the Federal Reserve starts their rate cutting cycle, this is not a guarantee. Mortgage rates can and will respond to many economic signals besides the federal funds rate. While the Federal reserve can have a heavy influence on where mortgage rates result, there are also many other factors to consider such as inflation, the health of the economy, investor appetite for mortgage bonds, and personal credit history, to name a few. If you would like to learn more about where current mortgage rates sit, please reach out to a local mortgage broker or banker to receive up to date estimates. Source: How The Fed Affects Mortgage Rates – Forbes Advisor Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Advanced Strategies for Year-End Book Preparation in Construction As the fiscal year concludes, construction companies must undertake the meticulous task of preparing year-end books and records. This process is not merely a compliance exercise but a strategic opportunity to refine financial accuracy and project insights. A critical component is the Work in Progress (WIP) schedule. This document is more than a mere ledger; it is a dynamic tool that reflects the financial pulse of ongoing projects. Ensuring precision in the WIP schedule is paramount, as it influences both financial statements and tax obligations. Experienced professionals understand that discrepancies here can cascade into significant financial misstatements. Addressing claims and job losses is another sophisticated task. Outstanding claims must be scrutinized and resolved with a keen eye on their impact on project profitability and cash flow. Recording job losses accurately is essential for a realistic assessment of project performance and future planning. Under and over billings require a nuanced approach. These variances, where billed amounts diverge from actual work completed, must be reconciled meticulously. This reconciliation is not just about balancing books but about providing a true reflection of project status and financial health. Conditional retainage, often a significant figure in construction accounting, must be accounted for with precision. This involves not just recording the amounts withheld but understanding their implications on cash flow and project completion timelines. Uninstalled inventory, including materials and supplies yet to be utilized, should be carefully reviewed. Proper accounting for uninstalled inventory ensures an accurate depiction of company assets and liabilities, which is crucial for both internal assessments and external reporting. In conclusion, preparing year-end books and records for a construction company is a complex, multi-faceted process. By focusing on the WIP schedule, claims, job losses, under and over billings, conditional retainage, and uninstalled inventory, experienced professionals can ensure financial records are not only accurate but also insightful, paving the way for strategic decision-making in the new fiscal year. About Schneider Downs Construction Services  Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### Pop Dreams and Ponzi Schemes Lou Pearlman, renowned for launching iconic boy bands like NSYNC and the Backstreet Boys, is equally infamous for orchestrating one of the longest-running Ponzi schemes in U.S. history. His story was recently highlighted in the Netflix documentary series, Dirty Pop: The Boy Band Scam. Pearlman’s eye for talent was undeniable. He formed the Backstreet Boys in 1993 and NSYNC in 1995, both of which became global sensations under his record label, Trans Continental Records. These groups dominated the charts and turned Pearlman into a music industry titan. His success with these bands allowed him to manage other groups like O-Town, LFO and Natural. Despite his musical success, Pearlman’s business was built on a lie. He used the fame of his boy bands to lure investors into a Ponzi scheme, promising high returns with no risk by joining the Trans Continental Airlines’ Employee Investment Savings Account. He falsified documents showing that investor accounts would be insured by the FDIC as well as by Lloyds of London and AIG. Pearlman’s persuasive personality and ability to create an illusion of success helped him to maintain his influence. He lived lavishly, often flying his bands on private jets and dining with world leaders, all funded by stolen money. However, things began to crumble when Pearlman’s band Natural broke up in 2004. He started traveling the world with a former member of the band under the guise of pitching TV projects to investors, when in reality, he was attempting to evade investigators. In early 2007, an Orange County Circuit Judge appointed a receiver to assume control of Pearlman’s Trans Continental Airlines Inc., the sponsor of the savings program, along with its affiliates, Trans Continental Airlines Travel Service, Inc. and Trans Continental Enterprises, LLC. Pearlman and his various companies were then forced into involuntary bankruptcy. After being spotted by tourists, Pearlman was arrested in Bali, Indonesia on June 14, 2007, and indicted by a federal grand jury on June 27, 2007. It is estimated that investors sustained losses of $300 million as a result of Pearlman’s scheme. In 2008, he pled guilty to money laundering, conspiracy and making false statements during bankruptcy proceedings. He was sentenced to 25 years in federal prison, the maximum sentence for his crimes. In 2016, at the age of 62, Pearlman died from a heart attack while still behind bars at the Miami Florida Federal Correctional Institution. Lou Pearlman’s story is a rollercoaster ride of fame, fortune and fraud. From reaching multimillionaire status to facing bankruptcy and prison time, his journey is as dramatic as any boy band ballad. Our dedicated professionals bring extensive expertise in investigating actual fraud cases, addressing allegations of suspected fraud and assessing risks associated with potential fraud. Although our most “unusual” projects haven’t featured any boy bands, we have worked on engagements involving many industries and situations, including Ponzi schemes. If you need assistance with assessing fraud risk, fraud prevention strategy or investigating fraud suspicions, contact James Rumph in our Columbus office or Tom Pratt and Brian Webster in our Pittsburgh office. About Schneider Downs Business Advisory In a business world of rapid change, organizations are challenged more than ever before to remain current, informed and insightful. The Schneider Downs Business Advisory practice helps organizations make more informed accounting, financial, legal and business decisions across every facet of their operations, from the ground floor to the C-suite. Excerpt: Learn how the mastermind behind NSYNC and the Backstreet Boys built a fraudulent empire. ### HITRUST Certification: Pros and Cons of Each Assessment Type What are the pros and cons of each HITRUST Certification? When it comes to properly navigating the post-HITRUST version 11 certification types, understanding the pros and cons of each assessment type enables your organization to select the assessment that best fits your needs. Let us take a closer look at the e1, i1, and r2 assessments. Download our HITRUST Assessment Types Pros and Cons Whitepaper e1 Assessment (Essential 1-Year) The e1 assessment is the simplest of the three assessments. With 44 control requirements, the e1 assessment lets organizations quickly and efficiently receive a HITRUST certification. The e1 assessment confirms whether the control requirement statements have been implemented. The control requirements for the e1 demonstrate that your organization has reasonably achieved essential cybersecurity hygiene. For the e1 assessment, both readiness and validated assessment options are possible. Many organizations think of the readiness assessment as a stepping-stone for the validated assessment. While there is no certification granted for the readiness assessment, we still generate a report that helps organizations identify and remediate gaps before performing a validated assessment. Upon completion of a validated assessment, a HITRUST certification is received. Given the smaller scope of the e1 assessment, there is limited flexibility for the assessed entity. This is most evident when considering the fact that the certification only lasts 1 year. The assessed entity must also select the most current version of the e1 assessment that is available. Further, the assessed entity does not have the option to tailor the control requirements to cover privacy, information protection regulations (e.g., Health Insurance Portability and Accountability Act (HIPAA), General Data Protection Regulation (GDPR), Payment Card Industry Data Security Standard (PCI DSS)), or the National Institute of Standards and Technology (NIST) Cybersecurity Framework). The e1 assessment lets your organization carve out service providers from testing. Pros and Cons of the HITRUST e1 Assessment Summary Pros: Only 44 control requirements, allowing for a quick and efficient certification process Readiness and validated assessment options possible HITRUST certification granted through the validated assessment Third party service providers can be carved out Cons: Certification lasts for 1 year Limited flexibility in tailoring control requirements Shows only essential cybersecurity practices are in place The maturity level tested only shows whether the control requirements have been implemented i1 Assessment (Implemented 1-Year) The i1 assessment is an expansion of the e1 assessment. Covering 182 requirements, the i1 assessment includes the same 44 e1 control requirements, plus another 138. The i1 assessment provides a moderate level of assurance that your organization has implemented leading cybersecurity practices against a broader range of cyber threats when compared to the e1 assessment. Again, both readiness and validated assessment options are possible for the i1 assessment. The i1 assessment offers some further flexibility than the e1 but share many of the same limitations. Like the e1, service providers can be carved out, and control requirements cannot be tailored to cover privacy, information protection regulations, or the NIST Cybersecurity Framework. Further, the certification for the validated assessment only lasts for 1 year. Where the i1 offers greater flexibility is in the rapid recertification process. After your organization obtains the i1 certification, for the following year, you can be evaluated based on a selection of i1 requirement statements instead of being tested against all requirement statements again. This reduces the amount of testing required to complete the assessment. The rapid recertification results in the same i1 assessment reports and i1 certification that is valid for one year. To use the rapid recertification process, there must not have been any significant changes to your organization’s control environment since the last i1 assessment. HITRUST defines a significant change as any of the following: Moving an on-premises data center to a public cloud environment Moving an in-scope facility to a different physical location Decommissioning a data center and moving all assets to a different data center Replacing any of the in-scope platforms that were included in the previous i1 report Changing an in-scope system to use a different back-end system Moving away from an outsourced IT model by standing up an internal IT function Changes in responsibility for performance or oversight of the in-scope control activities (outsourcing, insourcing, or change in service providers) New functionality in an in-scope platform enabling it to be accessed from a public location Acquisitions, divestures, mergers, or other changes in control of an Assessed Entity where controls over in-scope systems are no longer being operated bt the Assessed Entity who originally obtained the certified report Changes in a “Factor” question response within the validated assessment. Pros and Cons of the HITRUST i1 Assessment Summary Pros: More expansive than the e1 assessment Readiness and validated assessment options possible HITRUST certification granted through the validated assessment Third party service providers can be carved out Rapid Certification process is available after your organization obtains the i1 certification Cons: More extensive than the e1 assessment Certification lasts for 1 year Limited flexibility in tailoring control requirements Must use the most current version of the assessment at the time of creation The maturity level tested only shows whether the control requirements have been implemented r2 Assessment (Risk-based 2-year) The r2 assessment is the most comprehensive of the three assessment types and offers the most flexibility. The r2 assessment encompasses the same control requirements as the e1 and i1 assessments, while also incorporating additional controls based on data volumes handled by your organization, applicable regulatory compliance, and other risk factors relevant to your organization. Further, not only does the r2 assessment test the control requirement implementation status, but it also tests whether a policy or standard is in place for the control and whether the process supports the policy. There are 2 additional maturity levels that can be added as part of a r2 Assessment. The first is “measured,” which looks at whether the control requirement is being tracked and tested by management to ensure the control is operating. The second is “managed,” which looks to see whether necessary corrective actions are being performed on the measured results. The r2 assessment provides a high level of assurance on the design and implementation of the leading cybersecurity practices and additional risk-based controls. As a part of the further flexibility offered by the r2 assessment, the control requirements for the assessment can be tailored to cover privacy and information protection regulations. Upon receiving the r2 certification of a validated assessment, HITRUST will also issue your organization a certification over the NIST Cybersecurity Framework. Where flexibility is limited for an r2 assessment is that third party service providers cannot be carved out of testing. Like the e1 and i1 assessments, the r2 offers both a readiness and validated assessment option type. It is not required for your organization to select the most current version of the r2 assessment at the time of assessment creation. Due to the r2 being the most extensive assessment, the certification for the validated assessment lasts for 2 years, but an interim assessment is required after 1 year. The interim assessment takes 1 randomly selected requirement statement from each domain to be fully retested and rescored to ensure that certification requirements are maintained. The interim assessment also reviews any corrective action plans that were identified during the initial testing to ensure that issues were either remediated or that satisfactory progress has occurred. Pros and Cons of the HITRUST r2 Assessment Summary Pros: Provides the highest level of assurance when compared to the other assessment types Certification lasts for 2 years Interim testing reduces the amount of testing needed for year 2 HITRUST issued certification is provided over the NIST Cyber Security Framework Readiness and validated assessment options possible HITRUST certification granted through the validated assessment The r2 assessment offers 5 levels of maturity to test in policy, process, implementation, measured, and managed (measured and managed are optional) Assessment can be tailored to include privacy and information protection regulations Cons: Most extensive testing Third party service providers cannot be carved out HITRUST Assessment Types Pros and Cons Summary Download our HITRUST Assessment Comparison Chart If your organization is considering obtaining a HITRUST certification, Schneider Downs can assist you at any point through the process. We can help further discussions to determine which assessment is best for your organization, guide you through a readiness to gain the confidence in obtaining a certification, as well as perform the validated assessment itself for your organization. To learn more, visit our HITRUST services page. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.   To learn more, visit our dedicated IT Risk Advisory page contact the team at contactsd@schneiderdowns.com. Excerpt: Discover the pros and cons of HITRUST certifications with overviews of e1, i1, and r2 assessments to find the best fit for your organization. ### FinCEN's Proposal to Strengthen and Modernize Institutions’ AML/CFT Programs The Bank Secrecy Act (BSA) establishes program, recordkeeping and reporting requirements to ensure that banks have controls in place to deter and detect financial-related crimes, including money laundering and terrorist financing. In June 2024, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed a ruling to strengthen anti-money laundering (AML), counter the financing of terrorism (CFT) programs at financial institutions and to clarify minimum standards for the programs. Previously, FinCEN has encouraged a risk-based approach to AML/CFT programs. The proposed ruling would require a mandatory risk assessment process to be established and properly maintained. What are the Key Objectives of the Proposal? FinCEN’s proposal introduces a more robust risk-based approach to AML/CFT, which will require financial institutions to complete formal risk assessments to identify and mitigate threats specific to their institution. It aims to enhance transparency and reporting by imposing more stringent requirements for reporting suspicious activities and maintaining comprehensive transaction records. As technology continues to rapidly advance, the proposal encourages innovation and the use of advanced technology, such as Artificial Intelligence (AI), to detect and prevent illicit activities. In addition to increasing U.S. standards, the proposal seeks to better align to AML/CFT standards to global standards, such as those set by the Financial Action Task Force (FATF). FinCEN is also committed to working with financial institutions in the implementation and maintenance of effective AML/CFT programs, encouraging the collaboration of financial institutions, financial regulators, law enforcement and other stakeholders. What Does This Mean for Financial Institutions? Financial institutions would be required to establish, implement and maintain a risk-based AML/CFT program with various components, such as the mandatory risk assessment process. This risk assessment would incorporate the reports filed with FinCEN, ensuring BSA filings are being considered. While many financial institutions have a risk assessment process already in place for AML/CFT programs, the proposed rule outlines the requirements of the mandatory risk assessment process: Integration of AML/CFT Priorities: The risk assessment is geared towards identifying AML/CFT threats and prioritizing them for the institution. The risk assessment should be tailored to the financial institution’s size and complexity to ensure its effectiveness. Documentation and Reporting: Risk assessments must be documented, including any mitigation measures for identified risks. Ongoing Monitoring: The risk assessment is meant to be flexible and adapt to any changes in risk. Regular monitoring and updating of the risk assessment on a regular basis will ensure that any new or continuous risks are considered. Training Requirements: Institutions must provide regular training to staff that covers AML/CFT regulations and the risk assessment process. How Will This Help Your Institution? The proposed ruling aims to strengthen and modernize AML and CFT by taking a risk-based approach to promote continued effectiveness and flexibility. The goal is to make AML and CFT programs more responsive to various risks, reinforcing BSA and tackling financial-related national security threats. The ability to tailor the risk assessment to the financial institution would enable the institution to focus on higher-risk customers and business activities, effectively enhancing security procedures. What Can You do to Prepare for the Potential Implementation? Conduct a gap analysis to identify any areas related to your AML/CFT program that need improvement to meet the new requirements. If there is not one already in place, develop a formal risk assessment process based on your institution’s size, complexity and needs. Once developed, consider reviewing and revising relevant policies and procedures to ensure alignment. Implement regular trainings related to AML and CFT to ensure that employees are knowledgeable and updated. Research technology solutions such as automated risk assessment tools to streamline compliance processes. Stay informed about the proposal’s implementation. Rulings often take months to be finalized, so ensure to check FinCEN’s website for periodic updates. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. Excerpt: Understand the implications of FinCEN's AML proposal, which aims to strengthen financial institutions' ability to deter, detect and mitigate money laundering and terrorist financing. ### From Concept to Creation – The Impact of R&D Tax Credits for Manufacturing Companies Manufacturers must overcome many challenges to remain competitive in an increasingly global market. From understanding and implementing sophisticated automated technologies to finding skilled workers to accurately managing inventory and tackling supply chain disruptions, manufacturing companies must embrace innovative solutions, strategic approaches and financial tools to overcome these challenges, maintain cash flow and increase profits. One such tool that many in the manufacturing industry may overlook is the Research and Development (R&D) Tax Credit. Based on the name of the credit, some in the manufacturing industry might mistakenly believe that it is not a viable option for their business. However, this powerful incentive has been successfully deployed by some of the largest manufacturing companies in the U.S. and across Pennsylvania. What is the R&D Tax Credit? The federal R&D tax credit, also known as the Research and Experimentation (R&E) tax credit, was first introduced in 1981 as a two-year incentive to encourage U.S. companies to increase their investment in R&D. Although initially intended as a temporary measure, the credit was repeatedly extended with bipartisan support until it was made permanent in 2015 with the passing of the Protecting Americans from Tax Hikes Act. Historically, the R&D Tax Credit could not reduce a corporation’s tax liability below the alternative minimum tax (AMT), limiting its use for many manufacturing companies. However, the 2017 Tax Cuts and Jobs Act raised the AMT exemption, enabling these businesses to avoid the AMT and fully utilize the R&D Tax Credit to offset their regular income tax liability. How Does it Apply to Manufacturing Companies? Given the dynamic nature of the manufacturing industry, innovation is essential for businesses to compete and succeed. Many standard industry initiatives may qualify for the R&D Tax Credit, including the following examples: Design and Development of a New Product – Development of a new product, including conceptual design, material selection, prototype development and testing. Design and Development of an Improved Product – Improving an existing product, for instance, by incorporating a new type of material that reduces weight and improves efficiency and performance while maintaining safety standards. Design and Development of a New Manufacturing Process – Design, development, and testing of new processing and handling techniques for a newly designed product to ensure that quality, safety and efficiency standards are met while reducing the number of manufacturing steps. Design and Development of an Improved Manufacturing Process – Implementing a new automated assembly line that uses robotic arms to increase production speed and precision, resulting in higher efficiency and quality. Development of New or Improved Processes to Meet New Government Requirements or Achieve ISO Certifications – For example, development of a new waste management process to comply with stricter environmental regulations including, but not limited to, advanced filtration systems to reduce emissions and achieve ISO 14001 certifications. Designing, Prototyping, and Developing New Technology and/or Manufacturing Equipment – Creating a prototype for a new three-dimensional printing machine that can produce complex parts with high precision resulting in early detection of design problems, functionality testing and increased production efficiency. Programming and Integration of PLCs (Programmable Logic Controllers) – Integrating PLCs into an assembly line to improve production speeds, reduce production errors and allow for real-time monitoring and adjustments. Design and Development of New or Improved Software Applications – Developing a custom software application for inventory management that integrates with existing enterprise resource planning systems to automate order processing and enhance operational efficiency. These examples illustrate the diverse range of activities within the manufacturing industry that may qualify for the R&D Tax Credit. Expenses related to employee time, supplies or third-party contractors necessary to conduct research and development may be eligible R&D expenditures. As manufacturers expand, grow and innovate, claiming R&D tax credits is an important way to ensure that companies have the dollars they need to invest in a successful tomorrow. If your company is conducting activities similar to the examples listed, contact a member of the Schneider Downs Credits and Incentives Team to discuss how the R&D Tax Credit can potentially reduce your company’s tax liability. About Schneider Downs Manufacturing Services The Schneider Downs Manufacturing industry group provides specialized financial advice and services to our clients in the automotive, industrial, aerospace and defense, high tech and electronics and engineering sectors throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Manufacturing Industry Group page. Excerpt: Discover the hidden potential of R&D Tax Credits for manufacturing. Increase your profits and stay ahead of the competition. ### Chase Bank – When a Viral Trend is Simply Check Fraud Discover how the latest TikTok trend led users to commit a form of check fraud known as check kiting. TikTok trends usually fall under the category of senseless, but the latest viral trend is anything but innocent. In fact, it’s a form of check fraud called check kiting. Last week, videos surfaced showing people taking advantage of a “glitch” in Chase Bank’s system. The glitch allowed Chase Bank members to write a check for more money than they had available, deposit the check via ATM, and then withdraw the funds in cash. While many people who took advantage of this glitch filmed themselves dancing with money they essentially stole with bad checks, they didn’t stop to think they had just filmed themselves committing check fraud against a financial institution – which can be charged as a felony offense. What is Check Kiting? From a legal perspective, those who wrote bad checks against their Chase accounts committed a form of check fraud called check kiting. Check kiting occurs when someone knowingly writes a check for more than they have and deposits it, knowing they have a few days to take advantage of the “funds” due to the time it takes for the check to clear. Sound familiar? How is Chase Addressing the TikTok Check Fraud? Chase was quick to address the viral trend and set the record straight on the reality of people’s actions. “We are aware of this incident, and it has been addressed,” a Chase spokesperson said. “Regardless of what you see online, depositing a fraudulent check and withdrawing the funds from your account is fraud, plain and simple.” At this point, there is no confirmation from Chase on the scope, but they swiftly froze thousands of accounts and have started to reconcile balances. Many customers shared surprised reactions of negative balances on TikTok… shocker, you wrote a bad check and now your account is in overdraft, right? Additionally, Chase has shared information with law enforcement, which was easy enough since it was their own customers who committed fraud, with many filming themselves in the act – and in many instances bragging about it or making it “rain” at the ATMs… which also have surveillance cameras. Not the brightest moment for many. What if you Participated in the Chase Bank TikTok Scam? If you were caught on camera knowingly writing a bad check, it may be hard to do anything but claim ignorance if Chase opts to pursue action beyond simply reconciling bank accounts to reflect the negative balances. However, as always in potential legal situations, the most advisable route is to contact a legal professional. Beyond potential fines and incarceration, those found guilty of check fraud may also face life-changing financial consequences, including the inability to open credit cards, checking accounts, or apply for loans. If you did participate, your best bet may be to simply return the money to get your account back to normal. While this is not legal advice, common sense suggests you may want to avoid asking for a refund on any overdraft fees… no matter what the next TikTok video tells you to do. About Business Advisory Services In a business world of rapid change, organizations are challenged more than ever before to remain current, informed and insightful. The Schneider Downs Business Advisory practice helps organizations make more informed accounting, financial, legal and business decisions across every facet of their operations, from the ground floor to the C-suite. Excerpt: Uncover the latest viral trend on TikTok: check kiting. Learn how people took advantage of a glitch in a bank's system to commit check fraud. ### Recapping the Navigating Strategic Growth in Construction Roundtable On Thursday, September 5th, 2024, the Tower Club in Tyson’s Corner, VA, hosted a highly anticipated SD Capital event, bringing together a diverse group of professionals from the real estate and construction industries. Tom Springer, SD Capital Managing Partner, facilitated the event, and notable speakers included me, Ted Pettko, a leading expert construction advisor; Doug Wheeler, a seasoned risk management professional; and Philip Croessmann, an experienced construction lawyer. The attendees, whose roles ranged from real estate developers to general and specialty contractors, gathered to discuss pressing topics in the industry. Technology Integration The event started with a focus on integrating technology in construction. The speakers highlighted how technological advancements revolutionize construction, provide competitive advantages, improve efficiency and reduce costs. They emphasized the importance of staying updated with the latest technological trends to remain competitive in the market and having a technology strategy is required. Risk Management Risk management, particularly in the subcontractor space, was another critical topic of discussion. The speakers shared insights on identifying and mitigating risks associated with subcontractors. They discussed strategies for ensuring subcontractors meet quality standards and deadlines, minimizing potential project delays and cost overruns. Roundtable participants shared the importance of thorough vetting processes, and maintaining strong communication channels with subcontractors was underscored. Tax Credits and Incentives The event also delved into the realm of tax incentives and credits available to the construction industry. The speakers provided valuable information on how companies can leverage these incentives to reduce their tax liabilities and increase profitability. They discussed various credits, including those for energy-efficient buildings and renewable energy projects. Research and development credits were noted to be largely valuable in construction, but frequently overlooked. Attendees were encouraged to explore these opportunities to maximize their financial benefits. Conclusion Overall, the SD Capital event at the Tower Club was a resounding success, providing attendees with valuable insights and practical strategies to navigate the complexities of the construction industry. The engaging discussions and networking opportunities left participants feeling informed and inspired to implement the knowledge gained in their respective fields. The event underscored the importance of continuous learning and adaptation in an ever-evolving industry, Schneider Downs’ commitment to developing relationships and providing Big Thinking and Personal Focus. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. Excerpt: Discover the latest insights on strategic growth in the construction industry from industry experts. ### 3 Key Insights from GetApp’s 2024 C-Suite Cybersecurity Report 72% of U.S. senior executives have been targeted at least once by a cyberattack in the last 18 months according to GetApp’s latest C-Suite Cybersecurity Report. The higher you climb the corporate ladder, the higher the chance you’ll be the target of a cyberattack. At least, that was the conclusion drawn from GetApp’s 2024 C-Suite Cybersecurity survey results, which included insights from nearly 3,000 cybersecurity professionals across 11 different countries. Cybercriminals know that the money, data and control they seek can be found more quickly at the top of organizations, so it’s more crucial than ever to offer robust cybersecurity training to C-Suite executives. But does that always happen? Even if the answer is no, your organization can get on the right track by taking the time to review these 3 key insights from the report. When Cybersecurity Training Goes Down, Cyberattack Vulnerability Goes Up Unfortunately, but not surprisingly, there’s a correlation between a lack of cybersecurity training and increased vulnerability to cyberattacks, especially at the senior executive level. When cybersecurity training is prioritized for leadership personnel, the likelihood of them falling victim to a cyberattack decreases. And while this group of individuals is particularly busy, training shouldn’t be an afterthought. In fact, 86% of GetApp’s survey respondents agree that senior executives need more frequent and specialized training than other employees. And most do. 69% of U.S. senior executives received additional cybersecurity training compared to other staff members. However, 37% of senior executives globally are not being provided with more advanced training, putting them and their organizations at an increased risk. The Cybersecurity Training Target is Constantly Moving Even if your organization does offer specialized training for your senior leadership team, the tactics and attack methods used by threat actors are getting increasingly sophisticated. While malware and phishing attacks are the primary ones to watch out for, the danger posed by newer threats is growing. The risk of AI-generated deepfakes and individualized social engineering attacks such as “whaling” – a highly nuanced attack on high-value targets such as C-level executives – are growing in complexity and scale. Now more than ever, cybersecurity training should be prioritized and updated consistently to increase awareness and bring in new insights so senior leadership can have the knowledge they need to stay up-to-date on the evolving attack methods that may be used against them. It’s not a matter of if, but when it will happen to them. Preparation is Key for Handling Cybersecurity Risks While staying on top of cyber threats is important, knowing everything is impossible, even for the most seasoned and cautious professionals. Nevertheless, there are key steps your organization can take to make sure your cybersecurity program effectively prepares those at the top to make the right decisions when presented with threats. Focus training on the current threat landscape: It's crucial for C-Suite executives to receive training on the tactics that could be used against them, so they can recognize what a targeted attack might look like aimed at someone in a more senior role. Safeguard image and personal data: The higher up a person is in the organization, the more information there is about them online. Training on the ramifications of this is important because C-Suite executives need to be aware of what they should and shouldn’t share online – and how public data can be weaponized against them. They should know to enable MFA, where possible, and not reuse passwords for multiple accounts, whether work or personal. Stress the risk factors: High-value transactions are carried out by higher-ups and while they should be empowered to make those decisions, they should also be trained on the risks those types of transactions yield. This might include procedures to recognize whether a video call is a deepfake or not, or how to scan transactional documents for signs of fraud. Emphasize appropriate usage of organizational information: Organizational information should be kept separate from personal information. While those lines are blurred in today’s world because we use our phones for everything we do, it’s important to train executives on how to recognize secure Wi-Fi networks when traveling for business or pleasure and to be able to identify insecure apps or malware. Your organization can only do so much to protect your proprietary data but stressing the importance of cybersecurity at all levels and taking the time to continually refine your approach to improve cyber hygiene, including how cybersecurity topics are trained, give your organization better odds at staying secure… As every cybersecurity professional knows, you’re only as strong as your weakest link; don’t let it be your people! Stay safe out there! Disclaimer: It is important to note that the data referenced is from IT and cybersecurity professionals in 11 countries who chose to disclose incidents and cybersecurity training information as part of GetApp’s 2024 Executive Cybersecurity survey. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Excerpt: Discover the latest insights on C-Suite cybersecurity. Learn how senior executives can protect their organizations from cyberattacks. ### Investment Corner with Jason & Sean: Carry Trades – A Levered Bet There is an oft-used phrase from an old proverb that says, “you can’t have your cake and eat it too.” I thought of that proverb in early August when a small, but significant, subset of investors that had a “carry trade” (more on that below) learned that you can’t remain in possession of your cake while eating it. Another way of understanding the proverb is what parents have told their kids for generations: don’t be greedy and take more than what you need or is reasonable. Leverage, or the use of borrowed money to increase the potential return of an investment, is a double-edged sword. A levered investment can amplify returns to the upside, but it also comes with inherent risks; namely your losses are amplified on the downside (typically the downside is more painful than the upside). For a very long time, investors that implemented the “carry trade” were having their cake AND eating it too. The proverb, so it seemed, had met its proverbial match as investors borrowed money cheaply and poured the proceeds into a broad array of investments that kept going up in value… Until an action by the central bank of Japan caused capital markets to go into disarray, leaving those investors who thought they could have the best of both worlds wishing they had heeded the advice of their parents from long ago: don’t be greedy or unreasonable. We set out to explain the mechanics of what caused the volatility in capital markets in early August in the words below without boring you with the minutiae (however, if you have you children or grandchildren at home, we can almost guarantee that this will put them to sleep!). At the beginning of August, markets around the world were impacted by what appeared to be a rather large leverage trade that is known as a “carry trade.” In this case, what investors were doing was borrowing in Japanese Yen (Japanese currency), which has experienced a very low interest rate environment, and then investing in everything from Japanese stocks, U.S. Government debt securities, and even the S&P 500 and other U.S. mega-cap tech companies. In order for this trade to be successful, investors would want their U.S. investments to perform well and the yen to stay weak. When the Bank of Japan increased interest rates by a mere 0.25%, the Japanese yen strengthened, and the returns of these levered trades reacted quite negatively. As the trades unwound and investors covered their losses, capital markets were impacted heavily to the downside. Japanese markets were down as much as 6% on Friday (8/2/24) and another 12% on the following Monday (8/5/24); its biggest one-day decline since the Black Monday crash in October of 1987. The yen carry trade was one of the biggest carry trades that we have seen in over 30 years - one giant $20 trillion-dollar levered trade. These trades are very hard to time and when there is volatility in the markets, they can end up as sour investments (or bets if you are speculating). The use of leverage can feel like free money until it isn’t. When trades go bad, the use of leverage can make them much worse. Just as investors/speculators may have benefitted from leverage when AMC’s stock ran up like a SpaceX rocket, the other side of that trade was significantly impacted to the downside as well. There are two sides to every trade, and adding leverage into the mix amplifies the risk, as well as the return. SDWMA would like to remind investors to be prudent when making investment decisions and to take into account all the risks an investment may have prior to putting an investment strategy in place. If you are interested in having a more in-depth conversation about your investment portfolio, please contact us at sdwealthmanagement@schneiderdowns.com. Article/Source: There’s no place like home | J.P. Morgan Private Bank U.S. (jpmorgan.com) About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn more about how to make the best investment decisions and what risks to take into account before investing. ### Is Lobbying by Tax-Exempt Organizations Permissible? The United States is in the midst of an election season, which brings discussions, debates and decisions. Internal Revenue Code (“IRC”) Section 501(c)(3) organizations, which include charities and religious organizations, are subject to strict rules regarding their participation in political activities. Violation of these rules can result in the loss of tax-exempt status and the imposition of taxes. In this article, we will explore both prohibited and permitted activities. It is a common misconception that tax-exempt organizations may not conduct any lobbying activities. Not only is it legal for tax-exempt organizations to conduct lobbying activities, but Congress has recognized that lobbying efforts by tax-exempt organizations represent an appropriate and important activity. Lobbying and advocacy are related but distinct activities that are commonly confused with one another. One important thing to keep in mind is that lobbying is a type of advocacy, but advocacy activities are not always lobbying. Lobbying is a specific type of advocacy that involves direct communication with policymakers to influence specific legislation or regulations. Lobbying activities can include contacting a legislative member, legislative staff, or government employee to attempt to influence them to propose, support, or oppose specific legislation, and/or trying to persuade the public to share your views on a particular legislative proposal. There are two main types of lobbying: Direct lobbying is communicating with legislators or government officials to influence legislation; and, Grassroots lobbying is mobilizing the public to contact legislators or government officials about specific legislation. Advocacy is focused on education about a specific cause or issue to influence public opinion and policy and encompasses a wide range of activities aimed at creating awareness and driving change. These activities can include public education, grassroots organizing, and nonpartisan voter engagement. To maintain IRC Section 501(c)(3) tax-exempt status, organizations must avoid all political campaign activities and must keep lobbying within permissible limits. Although there is an absolute prohibition on IRC 501(c)(3) organizations participating or intervening in any political campaign on behalf of or in opposition to candidates for public office, IRC Section 501(c)(3) organizations can engage in lobbying activity if carefully conceived and managed. If you have any questions about your organization’s lobbying activities, please reach out to Robin Murphy or Sarah Piot. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the strict rules that charities and religious organizations must follow regarding their participation in political activities. ### Startup Company Valuations – A Cornucopia of Challenges and Some Factors to Consider Valuing a startup company can create a cornucopia of challenges. Unlike valuations for an established business, a valuation analyst does not have the benefit of analyzing historical performance. Often, a startup company has not yet generated positive cash flow or even revenue. Specific approaches to valuing a startup company are beyond the scope of this article; however, here are some factors to consider when you are at the starting point of understanding what your startup might be worth: Forecasts – Future cash flow expectations are the most critical value driver for any business. While historical cash flow generation provides the best starting point for understanding future cash flow potential, this luxury is largely nonexistent for startup companies. This makes forecast modeling even more critical for understanding the value of a startup. The story supporting the forecasts should reflect thorough research (SWOT, market, industry, competition, etc.) and as much quantitative data as possible, to convince potential investors of its accuracy. Given the uncertainty of a startup’s future, it is beneficial to prepare multiple forecast scenarios based on potential outcomes. Each potential outcome could then be attributed an estimated probability of occurrence. Risk/Expected Return – What level of return are the company’s target investors expecting? What will compensate them for the risk associated with an investment in the startup company? Ranges of expected return can vary depending on the type of investment being sought (angel, venture capital, private equity, mezzanine). The range can be wide (~20-100% or more!), so it is important to know where your company stands, and what level of return your potential investors are seeking. The higher the return expected by your investors, the lower the company valuation, and vice versa. R&D/Capital Investment – As indicated, estimating forecasts and rates of return for a startup can be very subjective. One starting point to understand a startup’s value with less subjectivity is to analyze the cost of investments already made in the business. Answering some of the questions below can help to establish a basis for what the startup company might be worth. How much money was spent on fixed assets? How much time have engineers/scientists/marketing put into their research and what is their market rate of compensation? It is important to be mindful that sunk costs don’t add value. For example, did some engineering time lead to a dead end that required significant rework? Is some equipment no longer useful for the current needs of the business? In addition, considering that future cash flow growth potential could be significant for a startup, historical costs may only provide a floor value for the business. Capital Raises – The best indicator of fair market value for a business is an actual ownership transaction. Granted, there are some things to consider before using the transaction to estimate current value: Transaction Date – When did the transaction take place? Is it still relevant on the valuation date? An acceptable timeline can be a moving target, depending on the activity of the business. If the business is beating, or missing, growth targets, or the business has fundamentally changed since the transaction date, the transaction price will be less likely to provide a relevant indication of value. Parties Involved – Who is involved in the transaction? If the transaction was between existing owners, it might not provide a relevant indication of value since many other factors could be considered in the purchase consideration. When an outside third party is involved, it increases the likelihood of the transaction price reflecting fair market value. Security Type – What type of security was issued? The startup company may already have many different types of securities outstanding (e.g., different share classes, warrants, options, etc.) with various owners. It is important to be mindful of the rights attributed to the security issued in the identified transaction and how those rights impact value and fit into the overall capitalization table for the business. Pricing models (e.g., Black-Scholes, Monte Carlo simulation) can be used to extrapolate the value of the transacted security to the implied value of the entire company. The factors outlined above are important to consider when beginning the valuation exercise for a startup company. Schneider Downs has significant experience providing business valuation services for a wide range of purposes. For more information, please contact Adam Goode (412.697.5411) or Steve Thimons (412.697.5281) of our Business Advisory Group. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. Excerpt: Learn more about some of the important factors to consider when you are at the starting point of starting a startup company. ### 2.9 Billion Reasons to Be Concerned – The Latest on the National Public Data Breach The National Public Data (NPD) breach is emerging as 2024’s defining cybersecurity incident, but what sets this breach apart? After weeks of speculation and a federal class action lawsuit, consumer data broker NPD confirmed their version of the data breach in a brief statement. They outlined their remediation efforts, provided a vague promise of doing better in the future, and put the onus of the breach on consumers by suggesting they contact one of the major credit agencies for further action, without offering to cover the cost. What Makes the NPD Data Breach Unique? Aside from the staggering 2.9 billion record count, the NPD data breach puts a spotlight on the controversial world of data brokers. Data brokers buy, aggregate, disclose and sell personal data with little oversight or regulation. Firms like NPD essentially “scrub” public and non-public sources to compile personal information, so affected consumers have no idea about the breach nor consent for their data to be collected. Even if you have done your best to stay offline, this breach proves your data is still out there somewhere. The lack of consent for data collection is one of the focal points of the federal lawsuit, coupled with accusations that NPD knowingly did not secure their data. These are the reasons why this data breach is garnering so much attention beyond the reported 2.9 billion record count. How Bad is the NPD Data Breach? Bad. But how bad depends on who you ask. Initial reports, including the cybercriminal group USDoD’s $3.5 million 4TB data trove posting on the dark web, indicate nearly 2.9 billion personal information records were compromised. This number is also represented in the class action lawsuit. To put this into perspective, the entire global population is 8.2 billion, so if this number is accurate, nearly 35% of the world may be affected. At this point, NPD claims that the incident affected 1.3 million people in the United States but does not mention any international victims. Historically, initially disclosed numbers tend to increase over time as more details are confirmed or may be purposely staggered to mitigate reputational damage. Regardless of what the final number becomes, this is already considered one of the worst breaches in history. What Data Was Exposed in the NPD Breach? The NPD data breach included full names, email addresses, phone numbers, Social Security numbers and mailing addresses—the full gamut of PII that threat actors rely on for identity theft, fraud and other malicious activities. What makes the NPD breach even worse are the allegations that the data also includes family member information, both living and deceased, going back 30 years. While this may sound like something out of a science fiction movie, the emergence of AI and deepfake social engineering attacks has some security experts concerned about the inclusion of family member data. There is a very real possibility of threat actors using this data to impersonate loved ones for financial gain. Sound far-fetched? Just ask the finance worker who sent $25 million to hackers after they used deepfake technology to impersonate his CFO. What Should NPD Breach Victims Do? NPD has stated they will be notifying individuals impacted by the breach, but at the time of this article, no official outreach is underway. Aside from the go-to data breach checklist of checking financial statements, monitoring credit and freezing credit, you can visit Norton’s data broker resource center to learn more about how your data is collected and used by these brokers. The NPD breach and legal battle will undoubtedly be one of the largest cybersecurity stories of the year, if not ever, given the scale and controversial nature of the entire incident. How this will impact data brokers in general will be another interesting fallout. While a recent bipartisan bill took aim at data brokers, it only restricted the sale of American data to foreign adversaries but did not address the collection methods or domestic distribution. A quick search of “data broker privacy” shows a long history of privacy and security concerns associated with the wild west of unregulated data collection for profit—which may finally be coming to an end at the expense of exposing personal data of over 3 billion people. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about the severity of the NPD breach, why it is unique, what data was exposed and what victims can do. ### Leveraging Intelligent Automation – Lessons from the CDK Global Cyberattack A couple of months ago, CDK Global was victim to a cyberattack, prompting them to halt most of their services for 14 days while mitigating the risk. SD Digital’s Intelligent Automation Team closely monitored the outage due to our automotive dealership clients, for whom we implemented new vehicle inventory management solutions. Impact on Business Processes The outage resulted in a significant backlog of information that needed entry into their Dealer Management System (DMS), including inventory management and financial reporting. Focusing on new vehicle invoices, a vehicle does not appear in the dealer's website inventory until the invoice is entered in the DMS. Until the backlog of invoices was processed, the car inventory was inaccurate. Such discrepancies can negatively impact sales, especially for customers who rely on website inventory while seeking specific vehicles. Similar scenarios of degraded processes with downstream operational impacts were evident across other business areas. Once the CDK service was restored, operations weren’t immediately back to business as usual. It was discovered that some third-party integrations with CDK were halted during the outage. For example, Honda stopped providing dealerships with baseline information based on VIN. This created additional manual inputs for several dealerships. The Benefits of Automation By having automated solutions in place, our clients were positioned to quickly eliminate their backlogs. As soon as notification was received that CDK’s services were online, the automation was invoked to begin processing records that had been queued throughout the outage. Even with the process changes from the broken integrations, the backlog was quickly eliminated, leaving only a handful of exceptions to be manually reconciled. Although under unfortunate circumstances, this instance highlighted some of the core benefits of automation: Automation should be leveraged to remove process bottlenecks and avoid downstream impacts. By uploading new invoices into the DMS, the sales process is unblocked, creating the opportunity for improved revenue generation and more efficient cash flow. Automation is a valuable tool for responsibly scaling. By implementing automation, organizations can handle irregular volumes over time, without impacting resource allocation. Whether there are invoices for a single day or multiple weeks of backlog, automation can handle the workload without needing to scale resources up or down. Automation can be tailored to your current or future business needs. Processes and applications are bound to change over time, so having an automation platform that is robust enough to adapt quickly is an invaluable resource to any organization. Digital workforces operate 24/7/365. Given that notice of CDK’s service restoration was received in the afternoon of July 2nd, resource scheduling could have been difficult with the end of standard working hours quickly approaching and an upcoming holiday. Deploying automation resolved this scenario and ensured employees could enjoy their evening and holiday plans. Lessons Learned The cyberattack on CDK Global and the subsequent outage highlights the impact automation can have on business operations. This incident serves as a powerful reminder that intelligent automation is not only a tool for optimizing daily operations but also an essential component of an effective recovery strategy. By leveraging automation, businesses can ensure continuity, scalability, and resilience in the face of unforeseen challenges. No matter where you are on your journey with automation, SD Digital is here to help you. When we talk to our customers, they tell us that they appreciate our thorough and business-focused approach to identifying the right problems to solve before solving them. Contact us today to accelerate AND derisk your automation journey with a FREE process discovery workshop. About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated Schneider Downs Digital page or contact the team directly at contactsd@schneiderdowns.com. Excerpt: Learn about the impact the CDK Global cyberattack had on automotive dealerships and the benefits automation played in recovery efforts. ### 2025 U.S. Open Presents Opportunity for Oakmont Residents Turn your home into a lucrative rental during PGA tournaments with the Augusta Rule. Discover the financial advantages today! Imagine a lush green golf course right next to your house – a serene backdrop for both business meetings and leisure. But there’s a catch: the constant stream of visitors during major PGA tournaments causing traffic nightmares and otherwise disrupting your quiet neighborhood for a week in the middle of June. However, there is an opportunity to get up and down for par with a tax-free financial gain. Enter the “Augusta Rule.” IRS Code Section 280A(g) allows you, as an Oakmont resident, to rent your personal residence for up to 14 days annually without reporting the rental revenue as income on your personal tax return. How it works: you can rent your home, whether it’s your primary residence or a vacation home (as long as it is only used as a personal residence) for up to 14 days in a calendar year. Although there is no limit on how much you can charge to rent your home, the rental rate needs to be in line with the rest of the market in that location and for those dates. Any expenses incurred as part of this arrangement would not be able to be reported as a deduction; however, you will still be able to report your Schedule A mortgage interest and property tax deductions, as usual. Several online listing sites already show many properties available for rent during the 2025 U.S. Open in Oakmont. Homeowners near the golf course can rent to both golf fans and businesses looking for accommodations for the week, either as lodging or as a hospitality headquarters for entertaining customers. So, take advantage of this “breakfast ball” of a tax break and go on vacation for a week fully paid for by your tax-free rental income or pay your mortgage bill for the entire year. The 2025 U.S. Open at Oakmont is June 12-15, 2025. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### IRS Moves Forward with Employee Retention Credit Claims: Accelerated Payment Processing and Increased Scrutiny on Improper Claims On Thursday, August 8, 2024, the Internal Revenue Service (“IRS”) announced it has revised its moratorium on Employee Retention Credit (“ERC”) claims and will begin processing claims filed between September 14, 2023 and January 31, 2024. Furthermore, the IRS announced enhanced measures to help small businesses while preventing fraud and improper payments in the ERC program. These measures include accelerating payments for legitimate claims, intensifying audits, and initiating criminal and promoter investigations to mitigate fraudulent activity. Accelerated Payments and Increased Scrutiny The IRS recently announced that it has identified 50,000 valid ERC claims filed before September 14, 2023, which will be expedited for payment processing. These claims, considered low-risk, are expected to receive an initial batch of payments in September 2024, with additional payments following in the subsequent weeks. The IRS has worked to digitize and analyze the large volume of claims submitted by categorizing claims that show signs of inaccuracy into a high-risk group, while claims with minimal concern for accuracy are considered low-risk. In a June 20, 2024, news release (IR-2024-169), the IRS reported that 10% to 20% of ERC claims are considered low-risk, 60% to 70% are of unacceptable risk, and 10% to 20% are high-risk. As the IRS resumes processing new claims filed between September 14, 2023 and January 31, 2024, focus will be on processing low-risk claims, with the oldest of the low-risk claims prioritized first. At the same time, the IRS is taking strong measures to prevent fraud and improper payments. Recently, the IRS sent out 28,000 disallowance letters to high-risk businesses, potentially preventing up to $5 billion in improper payments, while numerous audits are underway. Additionally, the IRS has initiated 460 criminal investigations, with potentially fraudulent claims amounting to nearly $7 billion, and is conducting promoter investigations to gather information about suspected tax promoters and preparers who are improperly promoting the ability to claim a credit. Ongoing Compliance Efforts Maintaining close contact with the tax professional community, the IRS will continue to monitor the situation to adjust its processes and filters for determining invalid claims. While the first significant wave of disallowances in 2024 undergoes evaluation, early indications suggest that errors in the process are relatively isolated and that more than 90% of disallowance notices were validly issued. Moreover, the IRS is also addressing the concerns of businesses that may have received denial letters. The agency emphasizes that taxpayers have the right to appeal denied claims and is working to ensure that all relevant taxpayers are informed about the appeals process. As more claims are processed, the IRS will continue to accelerate payments for valid claims, intensify scrutiny on suspicious claims, and carry on compliance efforts such as the ERC Claim Withdrawal Program to further reduce the risk of improper payments. As ERC processing continues, the Schneider Downs Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions or have received a claim denial letter or notice of audit, please reach out to your Schneider Downs contact(s) or Matthew Werner for guidance. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. Excerpt: Learn more about the IRS announcement of its revised its moratorium on ERC claims and will begin processing claims filed between September 14, 2023 and January 31, 2024. ### IRS Relaxes Documentation Requirements for Claiming R&D Tax Credits on Amended Returns Since January 10, 2022, the IRS has required that taxpayers provide supplementary information beyond the usual requirements of the Form 6765 to claim the R&D Tax Credit on an amended tax return. Initially mandated by Chief Counsel Memorandum 20214101F, this directive included five specific items related to the amended year: Identification of all business components related to the Section 41 research credit claim For each business component: Identification of all research activities performed Identification of all individuals who performed each research activity Identification of all the information each individual sought to discover Totals for qualified employee wage expenses, qualified supply expenses and qualified contract research expenses On June 18, 2024, the IRS updated its guidelines, eliminating the need for the names of the individuals who performed each research activity and the information each individual sought to discover with respect to each business component. Taxpayers are still obligated, however, to identify each business component, outline the research activities conducted and report total expenses for the claim year. This update applies to research credit refund claims postmarked on or after June 18, 2024. The IRS clarified that despite the relaxed guidelines, the names of the individuals who conducted the research activities and the information they sought to discover may still be requested if a tax return claiming the research credit is selected for audit. Thorough documentation remains essential for taxpayers to claim the R&D Tax Credit for both original and amended tax returns. Collaborating with your tax team will ensure your amended claims are submitted with a substantiation package that meet current IRS requirements. For inquiries regarding eligibility for the R&D Tax Credit or Schneider Downs’ approach to R&D claims, please contact us. We will continue to monitor developments concerning Sections 41 and 174 and provide regular updates. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### IRS Releases Updates to FAQs Concerning Commercial Clean Vehicle Credits The Internal Revenue Service recently released updates to frequently asked questions related to commercial clean vehicle credits. The revisions supersede earlier FAQs posted on April 16. The full release can be found in Fact Sheet 2024-26, but here are a few highlights based on inquiries we’ve received from dealers: If an individual leases an EV from a dealership, can they claim the clean vehicle credit? No; leased vehicles are not eligible. Only EV owners are eligible for a new, previously owned or commercial clean vehicle credit. The lessor (the leasing business receiving compensation for use of the EV) is the owner of the vehicle, not the lessee. Since leased vehicles are not eligible for the credit, a time-of-sale report doesn’t need to be completed through the IRS Energy Credits Online. A change is needed to a time-of-sale report already submitted; what does a dealer do? The initial time-of-sale report should be voided within the 48-hour void window. Once that occurs, a second time-of-sale report can be submitted. Clarification has not yet been provided related to reports outside the 48 hours. Per the FAQs, the IRS plans to provide additional information in the coming months. We suggest keeping a record of any reports that need to be changed until that info is made available. What if the new clean vehicle sale is cancelled or the vehicle is returned shortly after purchase? If a sale is cancelled before the taxpayer takes possession of the EV, the buyer is not eligible to claim a credit and the vehicle would be eligible for a credit when sold to another taxpayer. As for a return within 30 days of possession, the taxpayer may not claim a credit and the vehicle would not be eligible for a credit when sold to a subsequent taxpayer. Likewise, in the case of a resale within 30 days of possession, the taxpayer cannot claim a credit. Since the vehicle was already placed in service, it would not be eligible for a credit when sold to a subsequent buyer. What if a previously owned clean vehicle sale is cancelled or returned/resold shortly after purchase? Similar to the above clarification, if a sale is cancelled before the taxpayer takes possession of the EV, the buyer is not eligible to claim a credit. The vehicle may be eligible for a credit when sold to another taxpayer. For a return within 30 days of possession, the vehicle generally would not be eligible for a credit when sold to a subsequent taxpayer, and the “new” taxpayer cannot claim a credit. The vehicle history report may help determine eligibility. For resale within 30 days of possession, the taxpayer cannot claim a credit. Since the vehicle was already placed in service, it would not be eligible for a credit when sold to a subsequent buyer. As any dealer knows, each sale is unique and can pose unique questions. Additionally, the upcoming election could potentially bring policy changes related to these credits. In the meantime, our automotive advisors will continue to monitor and provide any updates from the IRS. If you have specific questions or need assistance, please contact us. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.   To learn more, visit our Automotive Industry Group page.   ### Connelly v. United States In May, I wrote about a case before the U.S. Supreme Court with potential estate tax planning implications. The case, Connelly v. United States, was recently decided unanimously in favor of the IRS. See below for a summary description of the case and the Supreme Court’s ruling: Background: Michael and Thomas Connelly were sole shareholders in Crown C Supply, Inc. A stock purchase agreement was in place that obligated the company to purchase a stockholder’s shares upon death. The company had maintained a life insurance policy on each of the brothers to fund a redemption of shares. In October 2013, Michael Connelly died. The company received $3.8 million in insurance proceeds. The company also recorded a $3 million liability based on the company’s obligation to purchase the shares, largely offsetting the asset on the books. IRS Dispute: The IRS audited the estate’s tax return. During the audit, Thomas Connelly’s valuation expert concluded that the fair market value of the equity of the company was $3.86 million, which included a $3 million liability for the redemption obligation. The IRS’s expert determined a fair market value for the company’s equity of $6.86 million, differing from the taxpayer’s expert in that the IRS did not include a liability for the redemption obligation, effectively increasing the company’s value by the amount of the insurance proceeds received. As a result, the estate was assessed additional taxes of $889,914. The estate paid and sued for a refund, arguing that the insurance proceeds should not be included to the extent that the proceeds were used to redeem Michael Connelly’s shares. Supreme Court Ruling: The Supreme Court held that a company’s contractual obligation to purchase shares does not reduce the value of the company for federal estate tax purposes. The Court reasoned that the redemption obligation does not affect any shareholder’s economic interest and thus does not offset the value of the insurance proceeds. Implications: The decision clarifies that life insurance proceeds received by the company from the death of a shareholder must be included in the company’s value when determining estate taxes. This ruling impacts how closely held entities plan for succession and structure agreements. As a result, business owners should review any buy-sell agreements and life insurance policies that are in place and consult with legal or tax experts to consider any tax ramifications, in light of the Connelly decision. In some cases, a cross-purchase agreement may be beneficial. (In a cross-purchase agreement, life insurance is held at the individual or trust level, not at the company level, in which case, insurance proceeds will not be included in the company’s value and will not be subject to the estate tax, such as it was in this case.) Additionally, seeking estate planning and business valuation services may allow you to prepare for a tax-efficient wealth transfer and to plan for any future tax liabilities in advance. Taking proactive steps is essential for smart estate planning and smooth business succession. About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. Excerpt: Learn more about the Connelly v. United States case that was recently decided unanimously in favor of the IRS. ### The Interaction between Section 174 Capitalization Requirements and Section 460 Long-Term Contracts Under the Percentage-of-Completion Method Before 2022, taxpayers who incurred research and experimental (Section 174) costs could fully deduct them in the year incurred. The Tax Cuts and Jobs Act of 2017 required these costs to be capitalized and amortized over five years for domestic research and 15 years for foreign research for tax years beginning after December 31, 2021. The new requirement caused a misalignment between the cash outlay for research and experimental expenses and the tax benefit derived from incurring those costs. Specifically, for instance, taxpayers using the percentage-of-completion method for long-term contracts recognize income based on the progress of the contract. Historically, research and development costs were included in the calculation of the completion factor (both numerator and denominator) to determine the percentage of completion each year. As a result of the interaction between the two code sections, the percentage of completion calculated by these taxpayers was based on costs that were not deducted during the year, thereby overstating the percentage-of-completion ratio. On September 8, 2023, the IRS released Notice 2023-63 providing administrative guidance on how to treat R&D costs in relation to long-term contracts. The guidance allows taxpayers to use amortization deductions related to Section 174 costs as allocable contract costs rather than the full amount of capitalized research and experimental costs when calculating the percentage-of-completion ratio. For affected taxpayers, this corrects the misalignment between the costs not permitted to be deducted and the costs included in the numerator of their percentage-of-completion calculation. In some cases, the result of this adjustment can yield a more favorable result than the unfavorable Section 174 effect on taxable income. Implications There are other considerations to evaluate when implementing these changes, such as determining the taxable year to implement the changes and making the required adjustments if a long-term contract ends during a shorter timeframe than the five-year amortization period. The IRS issued Revenue Procedure 2024-23 to address some of the uncertainty surrounding these issues, incorporating specific examples of costs permitted to be included in the numerator and denominator, as well as alternative methods and whether these changes can be made on a cutoff basis. The recent IRS guidance provides an opportunity for taxpayers to review their current percentage-of-completion methodology and identify changes that are available based on Section 174 capitalization requirements. Many taxpayers will be required to file a change of accounting method adopting the automatic change available. For a deeper discussion of how this issue might affect your business, contact a member of the SD Construction Industry Group team or Janelle Merlo at jmerlo@schneiderdowns.com. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page.   ### SD Internship The weeks leading up to the start of my internship with Schneider Downs were some of the most stressful I’d had in recent memory. I was overwhelmed with the fear of how bad this summer could go and what that would mean for me at this point in my career. Do I know enough? Would I be able to complete the work? Would I be accepted by my peers? Would I have to work under condescending superiors? My image of what a corporate internship would be, pushed me to the darkest corners of my mind. The moment I sat that first day, listened to introductions from various figures in the company and got a chance to converse with others who had been with the company, my concern for the summer began to dwindle quickly. After this experience, followed by a week of thorough training and reinforcement, the concern that had haunted me for weeks on end was nonexistent. Fast forward 12 fast weeks and I sit here with confidence in not only my knowledge of tax but in what the future of my career holds. The connections and relationships I’ve built are some that feel eternal. The knowledge I’ve gained on many different industries and entities has been invaluable at this point in my career. I was able to get a snapshot of the entire return process from work paper preparation to return preparation and sending work through layers of checks. I leave the internship confident in my ability to understand and work through this tax return process. Looking back, I am more than happy with my decision to work with Schneider Downs and with the experience I’ve had. I’m grateful for the time I’ve spent with the company and to those who have sat with me to ensure that I understood the work I was doing, was comfortable, and that I was making progress in my ability. Schneider Downs feels like a place I would love to start my career. Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Learn more about how to overcome the nerves of starting a new internship from one of our 2024 Summer Interns. ### How My Internship at Schneider Downs Transformed My Career Perspective The journey that has led to my current career path has not been easy, but I am grateful for the challenges that have gotten me to where I am. Having started college as a biology major, I could have never predicted that just a few years later I would be wrapping up an internship in the accounting field. After taking over a year's worth of science courses, I knew that route was not the right one for me. I felt more drawn to the few business classes that I was exposed to, so I did a complete 180-degree turn, knowing the risks in my decision. Switching to a business major relatively late in my college career there was the potential risk of not being able to graduate on time. Based on the general impression that I had about an office job, I was also terrified that I would end up stuck in a cubicle all day doing monotonous work and barely interacting with my co-workers. While I greatly enjoyed my business classes at school, my worries about the work atmosphere in the real world created doubt in my mind if I had made the right choice. I can now confidently say that my summer internship experience at Schneider Downs has completely changed my outlook for the better. From the open work environment to the kindness that my co-workers have shown towards me, I know that this is the type of place that I want to be a part of. Even during the interview process, I had the immediate sense that everyone was incredibly welcoming and encouraging, which became even more evident upon starting my internship. At the beginning, it was intimidating to be assigned work that I was completely unfamiliar with, but the support from my managers and the staff on my team, Risk Advisory Services, gave me the confidence to ask questions when necessary and to not be afraid of failure. In times of stress, I am constantly reassured through the positive work atmosphere that it's impossible to learn everything in one day, one week, or even one month. It takes time to develop necessary skills, and I feel that from the start of my internship until now I have made an immense amount of progress in developing my knowledge and appreciation for this work. Everyone at Schneider Downs has been more than willing to spend the extra few minutes to answer any of the questions that I may have or help me understand why we do the work that we do. It's one thing to just learn how to execute the work that has been assigned, but it is another to see the whole picture. By going the extra mile, my mentors have given me a much better and deeper understanding of the work that is done on our team. I have been given amazing opportunities this summer at Schneider Downs, such as being able to visit client sites, volunteer and attend team/intern events. Despite my initial fears of an 'office job,' Schneider Downs has completely changed by prospective. Working here, I have never felt as if I'm confined to a desk, and I'm constantly faced with different challenges each day, which keeps the job exciting. I couldn’t be more thrilled and appreciative of my internship experience at Schneider Downs, and I'm excited to see what the future holds! Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Take a deep dive into the journey of one of our 2024 Summer Interns and see what it’s like to be part of our team. ### One Solution to the Truck Driver Shortage: More Women Drivers With a well-documented shortage of truck drivers in the United States, one solution might be to encourage more women to consider a career as a truck driver. The Kickoff There just are not enough women in the industry at this time. While it’s difficult to pinpoint an exact percentage due to different research methods, the Bureau of Labor Statistics reported that the number of women in the trucking industry declined from 8.1% of the workforce in 2022 to 6.9% in 2023. The American Transportation Research Institute (ATRI) found that women trucker drivers are safer drivers than their male counterparts. ATRI also reported that women had “fewer crashes, convictions, and violations” than male truck drivers based on 2022 Predicting Truck Crash Involvement Research. It would benefit the industry as a whole to attract more female drivers. In 2020, ATRI began research to determine what deterred women from the industry and what could be done about it. The Research ATRI gathered qualitative data by sending out a survey to both men and women. Next, they created a focus group of 11 women from many companies to gain personal, real-life advice and insight into the trucking world women face. At the end of the survey and focus group interviews, ATRI compiled the information into six challenges and proposed some potential solutions. Six Challenges Negative Industry Image and Perception Unable to Complete Truck Driver Training Unsatisfactory Motor Carrier Company Culture Inability to Acclimate to OTR Driver Lifestyle Limited Parking and Restroom Facility Access Excessive Gender Harassment and Discrimination Solutions Not every solution is going to work for every woman. However, ATRI was able to compile a list of solutions that may encourage more women to pursue a career in trucking. Marketing One potential solution is to market specifically to women. Emphasizing competitive pay, childcare opportunities during training, and the independent lifestyle that the industry provides, could all prove attractive to women. Safety Safety was also a concern to some female respondents. ATRI suggests advertising the ability to bring a dog, both as a companion and added protection. Other solutions could be organizing routes so that stops are early in the day and that parking is available close to restrooms and food. Health To mitigate the challenges of being on the road, encouraging health maintenance may be beneficial. Education regarding sleep hygiene, mental health and other physical health practices could result in healthier, happier employees. Community While ATRI had many other suggestions in its report, it was clear that the respondents felt the need for community. The report suggests devising strategies to create time for truck drivers to connect with loved ones, whether by devising reasonable travel times or encouraging digital communication while away from home. Community within the workforce can be encouraged by creating mentorship programs and women-specific groups where women can feel connected and understood. Perhaps with intentional efforts, women-specific initiatives and research like ATRI’s, more women will see the trucking industry as a possible career. If you are interested in this topic, please review ATRI’s “ Identifying and Mitigating the Challenges Faced By Women Truck Drivers” released in June 2024. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page. ### Living Up to SD’s Mission Statement – An Intern’s Brief Reflection Walking into the looming glass castle, I wasn’t sure what to expect from my first internship. Looking up at the pointed towers that adorned the PPG building, my thoughts focused on making sure I wasn’t late for my first full day of work. Before this, all the summer 2024 interns engaged in a week and a half of orientation, where I learned about the company and the minutiae of tax return software and databases. So, I was more than ready to start my first real day on the job. Flash forward to one week later, I got my first assignment. It was supposed to be a quick 30-minute task, but it took me what felt like forever. I spent the first bit fumbling around trying to figure it out on my own since I was nervous about bothering the full-time staff members. They had plenty of work to do and I didn’t want to add mine on top of it. Finally, I worked up enough courage to ask for help. An analyst was able to quickly guide me through the software and show me what numbers we were looking for as well as helpful tips to keep in mind when double-checking my work. I quickly learned that Schneider Downs is a firm that fosters a team environment. Professionals at every level regularly seek advice and work together on a variety of different issues. In putting collaboration at the forefront, I built meaningful connections, fostering my coworker relationships in which we, as a colleague of mine said, “lean on each other.” As the summer wraps up, I am going to miss the Thursday cookie days I shared with the other interns, the puzzles of trial balances and tax return software, and the growth and betterment that comes from working together with everyone at Schneider Downs. Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Inside the world of tax internships: from orientation to real assignments. Learn about the challenges and triumphs of the internship journey. ### IRS Makes Free Tax Filing Program Permanent The Internal Revenue Service recently announced it would be expanding its free tax filing program, Direct File, for 2025, making it accessible in all 50 states. Launched in time for the 2024 filing season and available to people with simple returns in 12 states, Direct File provides step-by-step guidance to taxpayers filing federal returns. It does not prepare state taxes. There is no income threshold to use Direct File, unlike the Free File program that allows only those taxpayers who earn $79,000 or less to use it. Direct File’s 2024 pilot cost almost $32 million and will be supported by approximately $75 million in budget for fiscal year 2025, though the actual cost will depend on how many people use it. Over time, the IRS plans to increase the number of eligible taxpayers so it can support the most common tax situations. Direct File is just one of a number of new initiatives underway at the IRS after the agency received funds totaling $80 billion via the Inflation Reduction Act. With the new funding, which is spread over a decade, the IRS has improved phone service, is planning to digitize all paper-filed tax returns and has made improvements to its “Where’s My Refund?” service, wherein taxpayers can get real-time information about the status of their returns. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Pennsylvania NOL Limitation Changes On July 11th, the Pennsylvania General Assembly passed and Governor Shapiro signed the 2024-25 fiscal year budget. As part of this budget, changes were made to the Pennsylvania net operating loss (NOL) deduction. Facts: Currently, Pennsylvania limits the utilization of NOL carryforwards for corporate taxpayers to 40% of taxable income. The new budget provides relief and increases this limitation by an additional 10% per year starting with tax years beginning after December 31, 2025 (see table below) through tax years beginning after December 31, 2028, when the limitation reaches 80%. However, the increases in the limitation apply to only those losses that are incurred after December 31, 2024. For losses that are generated before January 1, 2025, the 40% limitation will still apply, but the overall net loss deduction in a given year going forward can be increased by 10% of taxable income if the corporate taxpayer generates losses after December 31, 2024. The net loss deduction is determined as follows: For net losses incurred in taxable years beginning prior to 1/1/2025, deduct 40% of taxable income For net losses incurred in taxable years after 12/31/2024 deduct: The applicable percentage rate for each year (see table below) - the actual percentage of taxable income deducted under item 1. multiplied by taxable income In other words, NOLs generated prior to January 1, 2025 can only offset up to the first 40% of taxable income. Any losses generated thereafter, are subject to the limitation set for that particular year. Refer to the table and examples below.   If loss generated in tax years beginning…. And losses are utilized in tax years beginning…. Then the net loss deduction is limited to…. Step 1 Prior to January 1, 2025 After December 31, 2024 and thereafter 40% of taxable income Step 2 (phase 1) After December 31, 2024 and before January 1, 2026 Prior to January 1, 2026 40% of taxable income, after accounting for NOLs utilized in Step 1 Step 2 (phase 2) After December 31, 2024 and thereafter After December 31, 2025 and prior to January 1, 2027 50% of taxable income, after accounting for NOLs utilized in Step 1 Step 2 (phase 3) After December 31, 2024 and thereafter After December 31, 2026 and prior to January 1, 2028 60% of taxable income, after accounting for NOLs utilized Step 1 Step 2 (phase 4) After December 31, 2024 and thereafter After December 31, 2027 and prior to January 1, 2029 70% of taxable income, after accounting for NOLs utilized Step 1 Step 2 (phase 5) After December 31, 2024 and thereafter After December 31, 2028 and thereafter 80% of taxable income, after accounting for NOLs utilized Step 1 Example #1 Company XYZ, with a calendar-year end of December 31, has generated the following income and losses over the next several years: Generation Tax Year Activity 12/31/2022 (200,000) 12/31/2023 (200,000) 12/31/2024 500,000 12/31/2025 (75,000) 12/31/2026 (50,000) 12/31/2027 325,000 For the tax year ending December 31, 2024, only $200,000 of NOLs will be used to offset taxable income ($500,000 x 40%) For the tax year ending December 31, 2027, a total of $195,000 of NOLs will be used to offset taxable income ($325,000 x 60%). Only $130,000 of the pre-2025 NOLs will be used to offset taxable income ($325,000 x 40%). The remaining $65,000 of NOLs will come from the NOLs generated in years after December 31, 2024. See table below: Example 1 - Answer Generation   Utilization Tax Year Activity   12/31/2025 12/31/2027 NOLs Remaining 12/31/2022             (200,000)            200,000                    -                           - 12/31/2023             (200,000)           130,000                  (70,000) 12/31/2024               500,000          (200,000) 12/31/2025               (75,000)             65,000                  (10,000) 12/31/2026               (50,000)                  (50,000) 12/31/2027               325,000         (195,000) Example #2 Company XYZ, with a calendar-year end of December 31, has generated the following income and losses over the next several years: Generation Tax Year Activity 12/31/2022          (200,000) 12/31/2023          (200,000) 12/31/2024           500,000 12/31/2025            (75,000) 12/31/2026            (60,000) 12/31/2027          (100,000) 12/31/2028           475,000 The answer for the tax year ending December 31, 2024 is the same as the above. For the tax year ending December 31, 2028, a total of $332,500 of NOLs will be used to offset taxable income ($475,000 x 70%). Only $190,000 of the pre-2025 NOLs will be used to offset taxable income ($475,000 x 40%). The remaining $142,500 of NOLs will come from the NOLs generated in years after December 31, 2024. See table below: Example 2 - Answer Generation   Utilization Tax Year Activity   12/31/2025 12/31/2028 NOLs Remaining 12/31/2022           (200,000)           200,000                      - 12/31/2023           (200,000)            190,000             (10,000) 12/31/2024             500,000          (200,000) 12/31/2025             (75,000)              75,000                      - 12/31/2026             (60,000)              60,000                      - 12/31/2027           (100,000)                7,500             (92,500) 12/31/2028             475,000           (332,500) Implications This legislative change will only affect tax years beginning after December 31, 2024, considering that any losses generated before then will continue to be limited to 40% of taxable income. It is imperative that corporate taxpayers track the generation and utilization of the NOLs given these changes in the limitations. For those corporate taxpayers with valuation allowances, it is important to consider the change in how NOLs within the state of Pennsylvania will be utilized over the next several years and whether a valuation allowance should be released as a result of the increase in limitation. Moreover, this should be considered within a taxpayer's scheduling of the reversal of deferred tax items as a source of income. For additional information on other changes that accompanied this bill, please refer to our article here. Resource Links: SB 654 About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### IT Risk Advisory Internship When I met the Schneider Downs recruiters at my college career fair in my Sophomore Year, I immediately felt like it was easy to chat with the professionals at the table. The recruiters introduced me to the variety of departments and positions that Schneider Downs is composed of and steered me towards applying for the IT Risk Advisory Intern position. I remember after the fair, researching “IT Risk Advisory” to see what that term even meant, and what kind of work I would likely be doing. A lot of different sources popped up, each with a variety of different answers. Safe to say Google wasn’t very helpful to me for learning about this field but all my coworkers at the firm certainly have been! Going into the field of IT Risk Advisory I didn’t know what to expect, but I immediately felt warmly welcomed into the department. This really helped ease my transition from school life to the new and unfamiliar corporate environment. I slowly got introduced to new assignments and projects as the summer progressed and tried to learn as much as possible from these different responsibilities. I felt like everyone in the department had a lot of trust in my abilities and was willing to answer any questions I had no matter how big or small. Along the way, I was given good advice from a variety of sources in the department. Whether that was advice on how to approach control testing, methods for interacting with clients or general helpful career tips. Everyone imparted important knowledge that has helped further my development as a professional. All of the development culminated with work for one of my clients. When we just had wrapped up a meeting, I got a Teams message from some of the staff asking me to lead the next meeting. I was surprised, and a little bit nervous but took the challenge head on. I prepared extensively before the meeting and went through the session smoothly. I am very grateful for my fellow team members’ belief in me. This achievement would not have been possible without the help from everyone involved in IT Risk Advisory. Overall, I have grown immensely this summer as a professional and I am so thankful to Schneider Downs for providing this opportunity to me. I am excited to finish my senior year and then enter the professional world! Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Discover what it's like to experience a Schneider Down IT Risk Advisory internship through the eyes of one of our interns. ### Schneider Downs Internship I have seen Schneider Downs’ motto “Big Thinking. Personal Focus.” lived out during each day of my internship. Going into this internship, I had absolutely no idea what to expect. This was my first experience taking my knowledge from my coursework and applying it to work in the “real world.” From day one, I felt the empowerment and support from all of the Schneider Downs employees and knew that my internship experiences this summer would be like no other. Now, about two weeks out from my scheduled end-date, I can confidently say that this was an incredible opportunity. Working with the Wealth Management Team as an Investment Analyst Intern, I have gone beyond the textbook meanings of finance and gained so much experience in that “real world” work life. Not only, did I get to work directly with investment material, but I was able to gain an understanding of the financial planners’ and operations team’s day-to-day as well. We had the opportunity to sit in on both investment meetings and planning meetings while still working on skill development with projects of our own. I gained experience in investment allocation, public speaking, wealth management software, understanding fiduciary responsibilities, the importance of networking and more. I am looking forward to taking what I have learned at Schneider Downs this summer and applying it to my future! Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Gain insights about the Schneider Downs internship experience within our Wealth Management practice. ### Top 5 Overlooked Factors in Measuring ROI of Intelligent Automation Programs When calculating Return-On-Investment (“ROI”) for an intelligent automation program, many organizations fail to accurately measure the value the technology provides. The most common mistake is to solely limit the program’s value to the cost savings generated from a reduction in human capital costs. In most cases, this measure justifies the continued investment in automation but fails to effectively measure the efficiencies created by adopting automation. When assessing the true value of automation, it is important to consider the impacts it might have throughout an organization. In addition to the reduction in human capital costs, here are five items we recommend you consider when assessing the value of an intelligent automation program: 1. Revenue Automation is frequently integrated with revenue-generating activities to boost lead generation, customer engagement, and sales and marketing campaign effectiveness. A digital workforce can analyze vast amounts of data to identify high-quality leads and personalize marketing efforts, leading to higher conversion rates and improved customer retention. By streamlining routine tasks and providing precise insights, automation enables a more efficient, targeted, and impactful sales and marketing strategy, driving revenue growth. 2. Profitability Beyond direct cost savings, automation enhances profitability by enabling responsible scaling and sustainable growth. Organizations constantly strive to optimize profitability by maximizing resource utilization before expanding their workforce. By deploying a digital workforce, they can exponentially increase capacity through efficient processing and around-the-clock availability. Additionally, during growth cycles, a key risk is maintaining quality control as new team members face learning curves that can lead to errors and increased costs. Automation mitigates this risk by ensuring consistent, error-free operations. 3. Employees Automation can profoundly impact employees by transforming their roles and the nature of their work. By automating repetitive, mundane tasks, it frees employees to focus on higher-value activities that require creativity, critical thinking, and emotional intelligence. This shift can lead to greater job satisfaction as employees engage in more meaningful and impactful work. Creating a fulfilling career encourages longer tenures, which in turn benefits the organization by fostering deep institutional knowledge, enhancing team cohesion, and reducing the costs and disruptions associated with high turnover. When turnover does occur, automation reduces the risk of process inefficiencies and business stoppage. While this may be difficult to quantify, the cost avoidance from digitizing and automating processes is real and should be incorporated into your ROI. 4. Brand Automation can impact branding by enhancing consistency, responsiveness, and personalization in customer interactions. Intelligent Automation Bots ensure that branding messages are uniform across all channels, reinforcing brand identity and recognition. They also enable faster and more accurate responses to customer inquiries and feedback, improving overall customer satisfaction and brand reputation. Furthermore, automation can deliver highly personalized experiences, making customers feel valued and understood. This level of customization can strengthen customer loyalty and positive word-of-mouth, elevating the brand's image to help distinguish it in the marketplace. 5. Decision Making Automation empowers decision-making by providing near real-time data across the entire organization. Rather than devoting time to extract and transform data, automated data pipelines redirect the focus to analyzing data, which enables informed and thoughtful decisions. By having current data readily available, organizations can break the dangerous cycle of retroactive lookbacks and begin to proactively adjust to current business conditions. Conclusion Accurately assessing the ROI of an automation program requires a holistic view of its impacts beyond mere cost savings. By analyzing the positive impact intelligent automation has on revenue, profitability, employees, branding, and decision making, your organization can get closer to fully realizing the benefits of intelligent automation, fostering a culture of continuous improvement, and driving sustainable growth. No matter where you are on your journey with automation, SD Digital is here to help you. When we talk to our customers, they tell us that they appreciate our thorough and business-focused approach to identifying the right problems to solve before solving them. Contact us today to accelerate AND derisk your automation journey with a FREE process discovery workshop. About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated Schneider Downs Digital page or contact the team directly at contactsd@schneiderdowns.com. Excerpt: Maximize the ROI of your intelligent automation program with these key considerations. ### Sobering Reality: The High Cost of Cryptocurrency Investment Fraud The American public reported almost $4 billion in losses due to cryptocurrency investment fraud in 2023, marking a staggering 53% increase from the previous year, according to the FBI’s 2023 Internet Crime Report. Among the victims was Shan Hanes, the former CEO of the now-collapsed Heartland Tri-State Bank (HTSB). While it’s not initially clear why HTSB closed, the impact of over $47 million Hanes embezzled – which he used to invest in cryptocurrency – significantly impaired HTSB’s capital and liquidity and led to the bank becoming insolvent. Initially investing in cryptocurrency with personal funds, Hanes wanted to finance more and resorted to embezzling over $47 million from his bank, leading to HTSB’s collapse and significant losses for its investors. Not only did the executive embezzle from HTSB, but he also absconded $40,000 from a local church and $10,000 from a local investment club. Although he didn’t know at the time, Hanes was being scammed. He was, in fact, investing in a “pig butchering” cryptocurrency investment fraud. As coined by the initial criminals who first carried out the scheme, pig butchering consists of a series of methodical scams, the first phase of which is to build a victim’s trust and a desire for more over an extended time – metaphorically fattening the pig (e.g., sending fraudulent investment statements depicting significant returns from initial investments, or even allowing for some withdrawals to serve as “evidence” of legitimacy and value). The scheme then persists with the victim continuing to send funds – with pressure for more, as the “butchering” phase – with the criminals metaphorically bleeding out every penny they can. Hanes not only embezzled from HTSB, the church, and the investment club to further his personal cryptocurrency investments, he then lost the funds he embezzled through the “pig butchering” scam. The ex-CEO pled guilty to one count of Embezzlement by Bank Officer (18 U.S. Code § 656) earlier this year and is now facing a looming prison sentence. He’s scheduled to be sentenced later this week and faces a maximum of 30 years in prison. A February 2024 report issued by the Consumer Financial Protection Bureau Office of Inspector General pointed out both significant internal control breakdowns (e.g., bank employees not following established wire approval procedures) and the influence of the CEO as a dominant management official as having created the opportunity for the series of wire transfers that impaired HTSB’s capital and liquidity. This case underscores both the domino effect of investment fraud through the economy and the fundamental importance of internal controls. As Hanes heads to sentencing, his experience serves as a reminder of the importance of vigilance and education as they relate to investment fraud. Financial pressure is a significant contributor to fraud risk, and that pressure can stem from personal investment scams. If you or someone you know has invested in an investment scam, the AARP Fraud Watch Network Helpline (877-908-3360) is a great free resource available, regardless of AARP membership. The helpline is staffed with trained anti-fraud and victim specialists, including noble volunteers, who provide judgment-free guidance. If your organization suspects someone has stolen funds or other resources, an investigation by your own team – or in tandem with outside forensic accountants – can ensure suspicions and related evidence are sufficiently examined and help inform and prioritize remediation activities. If you need assistance with assessing fraud risk, fraud prevention strategy or investigating fraud suspicions, contact James Rumph in our Columbus office or Tom Pratt or Brian Webster in our Pittsburgh office. About Schneider Downs Business Advisory Our experienced team of business advisors consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs) leverages their industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. Excerpt: Learn more about the $4 billion is losses reported by the American public due to cryptocurrency investment fraud in 2023. ### Total Impact Fees Collected – Another Large Decline The Pennsylvania Public Utility Commission announced that the annual distribution from impact fees collected for 2023 would be $179.6 million. That’s an approximate $100 million and 36% decrease from the previous-year distribution of $278.9 million. It’s the lowest distribution since 2020 and the third lowest since the imposition of the impact fee in 2011. The change is mostly attributed to a significant decrease in the commodity price of natural gas. The amount each producer pays in impact fees is determined primarily by a multi-year fee schedule that is based on the average annual price of natural gas. A decrease in the average price of natural gas from $6.64/MMBtu in 2022 to $2.74/MMBtu in 2023 was the principal cause of the decrease in fees collected. This change in price led to producers paying 25-40% lower than they would have in the previous year. Drops in prices led to a decrease in not only fees, but also the development of new wells. These factors, along with the number of aging wells that pay less in impact fees, contributed to the massive decline seen in 2023. The proceeds of the impact fees are distributed to the counties/municipalities where the gas wells are located, the state-maintained Marcellus Legacy Fund, and other state agencies. For 2023, $95.7 million will be distributed to local municipalities, $63.8 million to the Marcellus Legacy Fund, $10.5 million to state agencies, and $9.7 million to conservation districts/commissions. Pennsylvania lawmakers have debated for years about levying a severance tax on natural gas producers. While the impact fee is imposed on each unconventional natural gas well drilled, a severance tax would assess natural gas producers on the resources they extract. The Pennsylvania state budget for the 2024-2025 fiscal year was passed on July 11, 2024 without the severance tax, but the debate will likely continue. Sources Pennsylvania natural gas impact fee collection drops from 2022 as prices, drilling fall - Pittsburgh Business Times Act 13 Public Utility Commission IFO - Releases IFO - File Download About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the Pennsylvania Public Utility Commission announcement that the annual distribution from impact fees collected for 2023 would be $179.6 million ### Data For Sale – The Latest on the City of Columbus, Ohio Ransomware Attack The recent ransomware attack on Columbus, OH now has an alleged perpetrator. International ransomware gang Rhysida claimed responsibility for the large-scale cyber attack on Columbus, OH, and is auctioning off the stolen data on the dark web. City officials have not confirmed the claim as they are focusing on remediation efforts with law enforcement and strengthening their IT infrastructure against future incidents. Rhysida is reportedly asking for nearly $2 million for the 6.5TB data trove, which includes city-wide databases, employee logins and passwords, city video camera access and a full dump of servers with city emergency services applications. There’s no indication that Columbus, OH plans to pay the ransom, especially with law enforcement involved. Early reports suggest minimal damage, as the city’s Department of Technology quickly disconnected systems to prevent data encryption. City officials announced they are providing free credit monitoring to Columbus and Franklin County Municipal Court Clerk employees and judges and have asked city employees to use different passwords for their accounts. In addition to claiming responsibility for the Columbus, OH attack, Rhysida is also selling data from recent breaches, including LawDepot and the Queens County Public Administrator, and claimed responsibility for the $3.4 million ransomware attack on Chicago-based Lurie Children’s Hospital last March. What Caused the City of Columbus, OH Ransomware Attack? Officials confirmed that the cyberattack was caused by a malicious zip file from a compromised website, commonly known as a “drive-by download” attack. In this method, users are tricked into downloading malware, which then sends data to the human hackers to scope and qualify large targets to initiate the real attack, which usually ends with double extortion—demanding a ransom payment to decrypt the data and threatening to publish it if not paid. Government and Municipal Ransomware Attacks are Growing in Cost and Scale The ransomware attack on Columbus is another reminder of the target local governments and municipalities have on their backs. Recent reports show that malware attacks on state and local governments increased 148% between 2022 and 2023, including a 51% increase in government ransomware attacks. Although this attack was via a malicious download, phishing remains the top choice for hackers, with reports revealing a shocking 360% increase in phishing attempts on government offices over the past year. Interestingly enough, another report showed that local government leaders have been reporting fewer ransomware attacks, decreasing from 69% in 2023 to just 34% so far in 2024. However, since the percentage decrease is based on self-reporting, it may not be a completely accurate reflection of ransomware attack trends. If you think you're affected by this attack or notice suspicious IT activity, contact city officials at abuse@columbus.gov. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. ### The Impact of PA Senate Bill 654 on the Oil & Gas Industry in Pennsylvania On July 11, 2024, Pennsylvania Governor Josh Shapiro approved PA Senate Bill 654 as part of the 2024-2025 state budget. The bill, among other changes, allows producers, mineral owners and royalty owners a deduction for percentage depletion for mines, oil and gas wells and other natural deposits. The bill also increases the Coal Refuse Energy and Reclamation Tax Credit available to taxpayers. Prior to the bill’s passing, Pennsylvania did not conform to the federal percentage depletion rules. However, as of the effective date of the bill, the state now conforms to “the provisions of sections 611, 612, 613, 613A, 614, 616, and 617 of the Internal Revenue Code of 1986.” This will allow taxpayers in the oil and gas industry to “claim a deduction for percentage depletion of a mine, oil and gas well and other natural deposit.” The percentage depletion rates vary based on the type of natural resource being extracted. The relevant rates are as follows: Resource Percentage Depl. Rate Oil and Natural Gas 15% Coal 10% Limestone 14% Gravel 5% Prior to this bill’s passage, Pennsylvania permitted taxpayers to only claim a deduction for cost depletion. This posed a challenge to mineral and royalty owners because it required an analysis of the rate at which their resource was being exhausted and application of that rate to their remaining basis in the property. The calculation for percentage depletion is based on revenue and will be easier for taxpayers to determine. In addition to the decision to conform to federal regulations for percentage depletion, Senate Bill 654 also contains legislation to double the rate of the Coal Refuse and Energy Reclamation Tax Credit. The credit is now calculated as “$8 multiplied by the tons of qualified coal refuse used to generate electricity at an eligible facility.” The increase in this tax credit will incentivize taxpayers to utilize alternative sources in electric power generation. These two changes to Pennsylvania’s tax code will have a positive impact on Pennsylvania miners, natural gas producers, royalty owners and power generators. Visit this page to read Senate Bill 654 in its entirety. Schneider Downs will continue to monitor for additional information from the state about these changes. For further information on this bill, please contact a member of our Energy & Natural Resources team. About Schneider Downs Energy & Resources Services  The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Opportunities in the Construction Industry for AI and Predictive Data Analytics “Artificial Intelligence is not a substitute for human intelligence; it is a tool to amplify human creativity and ingenuity.” -Fei-Fei Li, Co-Director of the Stanford Institute for Human-Centered Artificial Intelligence and IT Professor at the Stanford Graduate School of Business. Today’s news is flooded with the topic of artificial intelligence and where this technological advancement is headed into the ever-evolving future.  Since the emergence of AI into mainstream media with the release of ChatGPT in November 2022, the technology has seen exponential growth with no slowdown in capabilities in sight. Nearly two years later, industries within the global economy have started to integrate the technology into everyday operations. The construction industry is no exception.  Once thought of as an industry that lagged willingness to adopt and embrace new technology and processes, the construction industry now has a rare opportunity to change that narrative. Below are a sample of AI and predictive data analytic opportunities currently being utilized within the construction industry: Cost Estimation – AI and predictive analytics can be utilized to summarize historical data across an organization’s portfolio of projects.  When a new project is bid and won, AI and predictive analytic software has the capability to aid in summarizing and analyzing the costs on similar scale projects that the company has completed in the past.  It can also provide historical insight into the costs of contract-related materials and market pricing of labor rates.  Additional inputs, such as inflation, regulatory and vendor data, can be embedded into certain AI-related software and be leveraged when estimating current and future job costs.  With the help of leveraging the organization’s historical project data, key decision makers can be better informed on projects, which can lead to favorable performance. Project Management / Risk Management – Current AI and predictive data analytic models can be trained to look at a new project and assess the project’s schedule.  Based on the historical portfolio of similar projects, how long does this type of project take to complete?  What are some of the areas where the Company has historically experienced runover or other challenges in the past? What has been the historical order and completion of various phases of projects? These are all questions that AI and predictive data analytics have looked to assist within the area of project management. In addition to assisting in the scheduling aspect of project management, the technology can be utilized to summarize underlying components of the legal contract and identify key provisions when comparing the contract to the Company’s historical contracts.  For example, if a project team is looking to identify if a liquidated damage clause exists within the contract, AI software has the ability to flag each instance and summarize the details of the contract to assist the project management team with interpreting the key provisions. Maintenance / Safety - AI can help project teams predict when elements of a contract or organizational structure might need to be serviced based on usage and historical data of similar projects.  Additionally, overall safety on a project may be improved through implementation of AI software language translation features.  AI software, including ChatGPT 4.0, has the ability to translate from one language to another in real time.  The ability for all team members to communicate regardless of their primary language enables increased communication on job sites, which results in increased safety. These are just a few of the many examples of how AI and predictive analytics are currently being utilized on projects. As noted above, AI and predictive analytics are not intended to replace human intelligence. Rather, this technology will aid the industry and help to propel construction into the future. For additional inquiries into how AI and predictive analytics can help your organization, please contact us at contactsd@schneiderdowns.com Sources: AI in Construction CFMA Industry Conference Presentation (Pittsburgh) - Sumana Rao – May 23, 2024 https://www.constructiondive.com/news/the-ways-contractors-are-using-ai-on-jobsites-now/718690/ About Schneider Downs Construction Services   Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus.  To learn more, visit our Construction Industry Group page. ### Not Just Taxes When people asked me what my plans for the summer were, I excitedly told them I was going to be doing a Tax Internship at Schneider Downs. They would then look at me with almost pity in their eyes and say something along the lines of well I guess someone has to do it. It was disheartening to constantly be told I was choosing a miserable work life. When I got to SD my life was quite the opposite. The people I met and the experiences we have shared made the summer incredible. I have had lots of training and worked on many client’s taxes but while doing it I worked on the best engagement teams. I learned about so many new things and got to experience it with the other interns. We would laugh and celebrate our successes and share the frustration of something not balancing. We leaned on each other for help and always shared the new “tricks” we learned. All jobs need people working them to make the world go-'round, and I am blessed to have had a tax internship with SD this summer. Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Explore the valuable insights and unique experiences shared by one of our summer 2024 tax interns. ### How Much Does a Data Breach Cost in 2024? Just like everything else, the cost of a data breach continues to get more and more expensive. In fact, the average cost of a data breach is nearly $5 million dollars according to IBM’s Cost of a Data breach report. The $4.88 million figure is an alarming 10% increase from the prior year-- and the largest annual jump since the COVID pandemic. The report is based on a joint study with the Poneman Institute which includes more than 600 organizations that reported a data breach. Included this year were 17 industries in more than 16 countries and regions with compromised individual records ranging from 2,000 to 113,000, as well as interviews with executives and security professionals. How is the Average Cost of a Data Breach Calculated? The average data breach cost of $4.88 million is based on the overall cost to detect the breach, the cost to notify victims, post-breach response efforts and lost business. Out of the four activities, lost business and post-breach activities accounted for nearly $2.8 million of the average, which is the highest combined amount since 2018 and may be attributed to 70% of breached organizations reporting significant or very significant disruptions. What Makes a Data Breach so Expensive? The rising cost of data breaches is not just due to volume. Ancillary expenses beyond the breach such as hiring forensic experts, reputational damage, staffing/contracting support hotlines, and free credit reporting can significantly increase the total cost. Not to mention the looming threat of regulatory fines, which are only growing in size. It is important to note that the report is dependent on self-reporting and does not take ransomware payments into account–so while the report has the average cost of a data breach at $4.88 million, the reality is that the number may be exponentially higher. The Winner’s Circle… Healthcare, Industrial, Phishing and the United States To no one’s surprise, the healthcare industry has the distinction of having the highest average cost of a data breach. The average cost of a data breach for the healthcare industry in 2024 is $9.77 million, which is a bit lower than the 2023 average cost of $10.93 million. The industrial sector, including manufacturing, engineering and chemical process companies, experienced the largest increase in breach costs, with an average increase of nearly $830,000 per breach over the past year. This sector is highly regulated and susceptible to operational downside costs, and that is most likely the reason behind the large increase per breach. When it comes to cost per breach by country and region, the United States takes the gold for the 14th year in a row with an average breach cost of $9.36 million. And finally, the report found that the majority of breaches were traced back to phishing attacks or compromised credentials–both with costs of around $4 to $5 million per breach. The Impact of Law Enforcement on Ransomware One interesting finding from the report is the fact that involving law enforcement led to an average of $1 million in cost savings and reduced incident identification and containment time by 16 days (the average data breach takes 200 days based on the report). Even more encouraging, two thirds of those who involved law enforcement did not pay any ransom at all. So if you are experiencing a ransomware attack, we recommend referencing the FBI’s ransomware resource page for law enforcement resources and contact information. If you have any questions about the potential impact of a data breach or how to be better prepared, please contact our team at cybersecurity@schneiderdowns.com. You can download the full IBM Cost of a Data Breach report here. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about the alarming increase in the cost of data breaches over the past year according to IBM's report. ### Postcard From the National Accounting and Finance Council Conference in Cleveland, Ohio – Part Two This is the second article in our series covering important information from the National Accounting and Finance Council’s Annual Conference. Of particular interest to our group was a discussion around future tax legislation presented by David Bauer, Vice President of State and Tax Policy at ATA. It is widely believed that 2025 will be a very active year for tax legislation, and Mr. Bauer covered several potential scenarios. The Tax Cuts and Jobs Act of 2017 (TCJA) was a major piece of tax legislation. The corporate tax provisions were permanent changes to the tax code from the TCJA, but most of the individual provisions will ultimately sunset on January 1, 2026, or have already begun to phase out. Accordingly, we believe that 2025 will be an active year for tax legislation. Regardless of who ultimately wins The White House in November, both parties will have tax legislation high on their priority list. Below is a listing of tax legislation that will be impacting taxpayers currently or in 2026: Expiration of the 20% Qualified Business Income Deduction (“QBI”) in 2026 from the TCJA. Addback and amortization of research and experimental costs over 5 years for tax purposes (Section 174) Bonus depreciation phases out Individual tax rates and brackets will revert to the 2017 amounts (max rate is 39.6%) Itemized deductions will be restored Standard deduction amount reverts to reduced 2017 amounts Individual Alternative Minimum Tax expands Estate tax exemption reverts to 2017 amounts, adjusted for inflation Mr. Bauer discussed how the outcome of any future tax legislation will be determined by which political party controls the Presidency and Congress. If one party wins the presidency and wins both houses of Congress, their priorities will take precedent. What might that look like? If Republicans control the government, the priorities might include: Make permanent or extend TCJA provisions including: o 20% Qualified Business Income Deduction o Increase the estate tax exemption o Lower individual tax rates Repeal portions of the Inflation Reduction Act Scale back IRS enforcement funding Raise taxes on elite higher education Corporate tax rate reduction from the current 21% If the Democrats control the government, the priorities might include: Increased Child Tax Credit Remove $10,000 SALT at the individual taxpayer level Increase corporate tax rate from 21% to 28% or somewhere in between Expand Inflation Reduction Act Energy Credits Allow TCJA top tax brackets to expire so that top rate would return to 39.6% How would a divided government impact the possibility of tax legislation in 2025? It would certainly make the deal much harder to negotiate before the expiration of the TCJA provisions on January 1, 2026. However, there will be incentives for both sides to come together outside of an election year. Tax legislation in a divided government could look something like this: The deal will be negotiated late into 2025 TCJA middle class tax cuts will likely be extended Efforts will be made to promote domestic research, manufacturing, and capital expenditures Reduce incentives for foreign investment in the U.S., especially from China We may see a short-term extension of the TCJA, similar to the two-year extension of the Bush era tax cuts in 2010. One subject that is not mentioned in these discussions is the topic of fiscal deficits. As the total U.S. Government debt continues to increase and become a larger share of GDP, this subject will have to come to the forefront. In summary, it is believed that major changes will be coming to the tax code by January 1, 2026, either because of new legislation or because the provisions of the TCJA will be allowed to expire. Schneider Downs will monitor the progress and report on the tax legislative developments as they occur over the next 18 months. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.   To learn more, visit our Transportation & Logistics Industry Group page.   ### Postcard From the National Accounting and Finance Council Conference in Cleveland, Ohio – Part One Our Schneider Downs Transportation & Logistics Industry Group members attended the 2024 National Accounting and Finance Council Conference (NAFC ) of the American Trucking Associations (ATA). The three-day conference covered many current topics related to the trucking industry including taxation, finance, risk management, technology management and ESG. This article is the first in a series that will recap what we believe to be vital information for our industry from the conference. The first session was the annual report from Rebecca Brewster, President and Chief Operating Officer of the American Trucking Research Institute. She covered the 2024 New Research Priorities which included: Mining Driver Demographic Data to Identify New Pathways to Trucking Careers. Impact of Nuclear Verdicts Comprehending the Scope of Cargo Theft in the U.S. Calculating the Cost of Truck Traffic Bottlenecks Federal Excise Tax (FET) Cost-Benefit Analysis Another main portion of the presentation recapped the 2023 Top 10 Trucking Industry Issues, including :  Economy – Issues such as inflation, interest rates, diesel prices and freight demand were top economic concerns of the survey respondents. Truck Parking – This issue has been included in the survey for the past several years. There has been a 65% increase in funding for truck parking projects under the US DOT’s High Priority Grants Awards, but there is still significant work to do. Fuel Prices – This was the number one concern in the prior year. Fuel prices have climbed to be an even higher percentage of total operating costs in recent years. Driver Shortage – The driver shortage has dropped in ranking over the past few years. This might be a direct result of the softer freight market. Driver Compensation – Due to recent compensation increases and the soft freight demand, this issue dropped in importance to the survey respondents as compared to the prior year. Lawsuit Abuse Reform – Also known as tort reform, this issue has been an industry focus for many years. The related increase to insurance rates for all carriers regardless of safety records or crash history impacts all trucking companies. Driver Distraction – This issue mainly concerns the distraction of the automobile drivers sharing the road with truck drivers. This was the top concern of law enforcement personnel who completed the survey. A push for harsher penalties and more aggressive enforcement of distracted driver laws for all road users is a priority. Driver Retention – This has moved down the list in the past few years along with the driver compensation issue. Again, it could be a result of the softer freight market. Detention / Delay at Customer Facility – This could be another result of the softer freight market, but it has been a longstanding issue and will continue to require the attention of shippers and haulers. Zero-Emission Vehicles – This is the first year that Zero-Emission Vehicles has appeared on the list. Since several states are aggressively pushing these standards, it is anticipated that it will remain a concern. Issues such as the high cost of the equipment and the lack of charging infrastructure are some of the hottest topics in the industry. The session also covered a recently released report about renewable diesel as an alternative pathway to decarbonization, which generated significant discussion within the attendees, since the renewable diesel path seems more reasonable from an infrastructure, and capital expenditure perspective, and ultimately lesser impact on the overall environment. As a side note, the IRS recently released guidance on the Clean Fuel Production Credit that goes into effect on January 1, 2025. This credit is expected to drive down the price per gallon of renewable diesel and increase its availability to purchase throughout the country. Finally, Ms. Brewster shared the next research report: Challenges and Opportunities for Improving Accessibility for Women Truck Drivers. Schneider Downs’ Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends, and can work with you to seek innovative ways to reach your strategic goals. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.   To learn more, visit our Transportation & Logistics Industry Group page.   ### PA Realty Transfer Tax On July 3, 2024, the Pennsylvania Commonwealth Court issued an opinion in the case 430 Stump Road LLP v. Commonwealth. The Court concluded that transfers of interests in real estate companies should be treated the same as transfers of real estate for purposes of real estate transfer tax exemptions. The Court’s decision directly impacts Pennsylvania trusts and their beneficiaries if those trusts own interests in real estate and real estate companies. Realty Transfer Tax Transfers of real property and interest in real estate companies are generally subject to real estate transfer tax in Pennsylvania. Transfer tax consists of a state and local component, often 2% of the purchase price or fair market value paid to the state and locality (1% each). Individuals, trusts, and other entities are subject to the transfer tax unless the transfer is specifically excluded. The Pennsylvania Tax Code provides a list of transactions that are not subject to real estate transfer tax. Examples include certain transfers among family members, transfers to government or non-profit organizations, and specific transfers to shareholders or partners. The Pennsylvania Department of Revenue (Department) has enacted regulations explaining application of the realty transfer tax exemptions to common transactions. Stump Case The Stump case involves the transfer of an interest in a real estate company to the beneficiary of a trust. Prior to his death, Allen Kanter established the Allen Kanter Revocable Trust. The primary asset of the trust was a 98% ownership of Stump LLP, which owned real estate in Montgomeryville, PA. Stump LLP is considered a real estate company for purposes of the realty transfer tax. Upon Mr. Kanter’s death, the trust’s 98% interest in Stump LLP transferred to a marital trust he had established for the benefit of his wife. The Department assessed Stump LLP for failure to pay real estate transfer tax on the transfer of the ownership interest. The Department argued that the transfer of ownership interest was subject to transfer tax since it was a transfer of an entity ownership percentage, and not a transfer of real property. The Pennsylvania Board of Appeals and Board of Finance and Revenue both upheld the assessment, siding with the Department’s interpretation of the realty transfer tax exemptions. Upon review, the Commonwealth Court determined that the Tax Code does not distinguish between transfers of real property and transfers of interests in real estate companies for the purposes of realty transfer tax exemptions. Additionally, the Court determined that the Department’s regulations excluding transfers by trusts of real estate company ownership interests from qualifying for the exemption were improper. The Court sided with Stump in determining that the transfer of ownership interest should have qualified for one of the listed realty transfer tax exemptions and that the Department had improperly assessed transfer tax on the transfer. Impact of the Decision The Court’s decision formally expands the amount and type of transactions that are not subject to realty transfer tax in Pennsylvania. Specifically, the Court confirmed that transfers of ownership interests in real estate companies held by trusts are not subject to transfer tax if they meet the remaining requirements of the Tax Code. The Stump decision will inform planning decisions by individuals looking to protect interests in both real property and ownership interests in entities that own real property assets. Planning Opportunities The Petitioner in the Stump case relied on the exemption in the statute that states that a transfer for no or nominal actual consideration from a trustee of a living trust to a beneficiary after the death of the settlor is not subject to the transfer tax. The decision provides for taxpayers the opportunity to plan for the transfer of real estate from a living trust to be made free of the tax. Clients should discuss the potential for the tax savings with their SD account team. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the Pennsylvania Commonwealth Court's opinion opinion in the case 430 Stump Road LLP v. Commonwealth. ### Succession Planning As the baby boomer generation continues to retire at a rate of 10,000 people per day, a pressing concern for many soon to be retirees is succession planning for their businesses. Succession planning is the process of preparing for the change of ownership and leadership within a company. Effective succession planning is crucial because it not only facilitates a smooth transition of power and responsibility but also mitigates risks, preserves business value, maintains stakeholder confidence and secures the future of the business for the generations to come. Key Considerations: Identifying Successors – Determining who can and will take over leadership. This can be family members or key employees depending on their qualifications and commitment to the business. Communication and Transparency - Communicate the succession plan openly with stakeholders, including family members, employees, and business partners. Transparency helps mitigate uncertainty and ensures everyone understands their roles and responsibilities. Timeline and Execution - Establish a timeline for the succession process and execute the plan systematically. Consider phased transitions or trial periods to ensure a smooth handover of responsibilities. Valuation of the Business - Determine the value of the business through a professional valuation to facilitate fair negotiations and financial planning for the succession process. Tax Implications - Understand the tax consequences of transferring ownership, including estate taxes, gift taxes, and capital gains taxes. Implement tax-efficient strategies to minimize potential tax liabilities. In summary, business succession planning isn't just about planning for the future; it's about ensuring that your company can keep running smoothly no matter what changes come its way. Whether you are ready to transact, want to assess your value or simply want to know your options, Schneider Downs can help. Feel free to contact us at contactsd@schneiderdowns.com for more information on our exit and succession planning, value advisory and investment banking practices. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about how succession planning is essential for smooth transitions and preserving business value as 10,000 baby boomers retire daily. ### Our Thoughts on the 2024-25 Pennsylvania Budget On July 11, the Pennsylvania General Assembly passed – and Governor Shapiro signed – the state’s fiscal year 2025 budget. The financial plan boosts spending by 6.2% to $47.6 billion, with increases in education, economic development and infrastructure, among other areas. The budget includes a tax code bill with several tax changes. Notably missing, however, was a bill to create a pass-through entity tax or legislative intervention to cure the current disparity in treatment for owners of S corporations and partnerships claiming the resident credit from other states where pass-through entity tax elections were made. The budget does include several provisions that may be beneficial to both businesses and individuals looking to minimize their state taxes, including: Pennsylvania Personal Income Tax The state will now conform to Internal Revenue Code (IRC) to allow for the cost and percentage depletion of mines, oil and gas wells and other natural gas deposits. Other changes include a $2,500 deduction for student loan debt interest, as well as conformity to IRC for rollovers from 529 accounts. Corporate Net Income Tax Changes to the net operating loss carryover will take effect for tax years beginning on January 1, 2025. For the 2025 tax year, the carryover will be limited to 40% of taxable income, but that percentage will increase 10% per year until it reaches 80%. Note, however, that as the deduction percentage increases, the calculation of will not be a flat percentage increase. Per the statute, the percentage of the tax year will be retained for that unused NOL. For example, the NOL from tax years beginning on January 1, 2025, will remain 40% until the 2025 NOL is depleted. For tax years that began on or after January 1, 2023, an affiliate entity that is subject to corporate net income tax is eligible for deduction of the intangible/interest expenses or cost that is required to be added back by the taxpayer. The election must be made on the original return and the taxpayer required to add back the intangibles/interest is not entitled to a credit. Sales and Use Tax Services purchased by a restaurant for cleaning or maintaining a storage trap for grease waste are now exempt from tax. Tax Credits Two credit programs were created for employers who provided matching contributions to their employees for 529 and child care accounts. Both credits begin for tax years starting January 1, 2025. The 529 contribution credit is capped at $500 per employee and is limited to 25% of the aggregate amount of the matching contributions. The credit also ends for tax years ending before January 1, 2030. The child care contribution credit is capped at $500 per employee and is limited to 30% of the aggregate amount of the matching contributions. The amount of funds available in other credit programs – including the Neighborhood Assistance Program, the Coal Refuse Energy and Reclamation Tax Credit and the Rural Jobs and Investment Tax Credit – have also been adjusted/increased. Businesses and individuals should incorporate these tax code changes into their current tax planning to properly take advantage of any benefits available. Schneider Downs’ State and Local Tax and Core Services Tax groups are available to assist with that planning. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the Pennsylvania fiscal year 2025 budget, which increases on education, economic development, and infrastructure. ### Two Summers, Two Internships I had only taken an introductory accounting course when I applied for my first internship at Schneider Downs. This intimidated me as I entered the internship; however, knowing that Schneider Downs still offered me the position instilled confidence in me. I began my experience with Schneider Downs as an audit intern in the summer of 2023. My audit internship opened my eyes to the world of public accounting and was nothing short of an amazing first internship. I gained experience in ERISAs, financial statement audits, preparing memos, and meeting with clients. Every engagement team I was on throughout the summer gave me the opportunity to learn things independently, while still allowing me to ask plenty of questions when I was unsure or needed help. Any uncertainty I had prior to the internship went away with each engagement and employee I encountered. While I loved audit work, I wanted exposure to the tax industry. Schneider Downs allowed me to do this, as I returned in May 2024 for a tax internship. So far, it has been an amazing experience. I’ve prepared S Corporation, partnership and individual income tax returns, as well as one amended return. Beyond returns, I’ve worked on various tasks dealing with Schedule K1s, fixed assets, qualified business income reporting, and more. There are so many opportunities to get hands-on experiences at Schneider Downs, but they also make sure to incorporate fun events too. During my audit internship, we went to Five Iron, a Pirates game and volunteered at the Pittsburgh Food Bank. This summer, we volunteered at Humane Animal Rescue and will be having a cookout at Highland Park. Both internships had a Lunch with Leaders series, as well as different workshops on personal finance and career development. I’m so grateful that Schneider Downs gave me two opportunities to see different sides of the public accounting industry. Every project I have worked on enhanced my knowledge considerably. On top of that, every person and team I have worked with has been a crucial part of my learning and enhanced my overall experience. I could not ask for a better introduction to the public accounting industry! Start Your Career with Schneider Downs As a trusted advisor in the professional services industry, you know what matters most to clients: Big Thinking with a Personal Focus. You also know what matters most to your success, including: career growth, work-life flexibility, leadership that cares about your ability to succeed, the opportunity to give and receive one-on-one coaching and mentoring, as well as learning opportunities that inspire professional development. Build an exceptional career with diverse, talented people who are among the most respected in their fields. Join our team at Schneider Downs where flexibility, growth, impactful work and a collaborative mindset await you. Visit our careers page to learn more today. Excerpt: Discover the exciting journey of spending two summers at Schneider Downs—first as an audit intern and then as a tax intern—through the eyes of someone who's lived it. ### Join Us in Celebrating Those Who Blow the Whistle Next Tuesday is National Whistleblower Day in the United States, a special day to recognize individuals who play a critical role in exposing fraud and corruption. Their courage and commitment to integrity helps protect resources, upholds the law and promotes ethical business environments. The day also commemorates our nation’s first whistleblower law, which was unanimously signed during the height of the American Revolution on July 30, 1778. Every year since 2013, the U.S. Senate has unanimously recognized that date as National Whistleblower Day. Despite advancements in detection techniques and technology, awareness is still highly critical in combating fraud. This is especially true with occupational fraud, which the Association of Certified Fraud Examiners (ACFE) defines as, “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.” The ACFE’s Occupational Fraud 2024: A Report to the Nations points to whistleblowers as being the most common source of occupational fraud discoveries. The study notes employees as being the source of over half of all whistleblower fraud referrals, also known as tips, but the statistics also shine a light on the importance of helping spread fraud awareness with outside parties like customers and vendors. In fact, fraud suspicion referrals from outside parties were reported as having made up nearly a third of whistleblower fraud suspicion referrals. Over time, the communication channels in which whistleblower occupational fraud referrals are received have evolved as well. In years past, the telephone was the most common channel; now, however, the ACFE’s study also points to email and web-based forms having surpassed the telephone for fraud detection referral frequencies. These statistics highlight the importance of making a variety of fraud detection reporting channels, like dedicated hotlines, email addresses and/or web-based forms, available to not only employees but also customers and vendors. For people to feel confident about coming forward with suspicions, organizations should value and empower whistleblowers with a strong tone from the top, fostering a culture of protection from retaliation, providing means for anonymous referrals and providing a community of support. An investigation by an organization’s own team, or in tandem with outside forensic accountants, can ensure fraud suspicions and related evidence are sufficiently examined and help inform and prioritize remediation activities. If your organization needs assistance with assessing fraud risk, fraud prevention strategy or investigating fraud suspicions, contact James Rumph in our Columbus office or Tom Pratt or Brian Webster in our Pittsburgh office. About Schneider Downs Business Advisory Our experienced team of business advisors consisting of Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs) leverages their industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page. ### Are You Ready for an Artificial Al Michaels? If you’re like me, you’re not so patiently waiting for the Summer Olympic Games to begin. Anticipation is high, as elite athletes prepare for the world stage and fans are ready to watch their hard work unfold over more than two weeks of action-packed games. It was recently announced that NBC plans to use Gen AI – generative artificial intelligence – to recreate Al Michaels’ voice for daily Olympic recaps on Peacock, the network’s streaming service. This will provide opportunity for a high level of customization, as Peacock estimates that nearly seven million variants of the recap could be produced for subscribers. It’s also an opportunity for NBC to showcase its innovation and creativity while maximizing efficiency and level of service. While this is a huge advancement in the use of Gen AI, it doesn’t come without substantial risk. Not unique to NBC, some key points that should be considered when exploring uses of Gen AI include: Governance and monitoring: how employee usage of Gen AI is guided and monitored to foster use that is ethical and aligned with the organization’s values Data privacy/security: accessing and handling data in compliance with relevant laws/regulations and without data breaches or misuse Reliability and accuracy: reviewing content output for accuracy and reliability; how trust in Gen AI is earned and AI Hallucination is avoided Reputation: how content remains authentic to the organization’s brand and avoids harmful, inappropriate or offensive content While associated risks evolve nearly as rapidly as uses of Gen AI, the good news is that there are steps that can be taken now to mitigate those risks. Some essential steps include: Establishing a framework and clear guidelines on responsible practice and ethical use of Gen AI Equipping employees with a controlled AI tool Educating employees on how to use and how not to use Gen AI Regularly monitoring and auditing AI systems and output to verify they are operating as intended Creating crisis monitoring plans to respond quickly and effectively to any issues that arise Being transparent with stakeholders (both internal and external) in uses of Gen AI Continuously learning and improving With equal parts interest and uncertainty, I await the outcome of NBC’s choice to use Gen AI, and with unequivocal excitement, I await the opening ceremony to kickoff the 2024 Paris games. Are you interested in continuing the conversation of AI and risk? Contact our Risk Advisory Services team. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. ### House Ways and Means Committee Approves the Protecting American Students Act and the University Accountability Act The House Committee on Ways and Means recently approved two bills that would impact colleges and universities, if enacted.  Both bills are direct responses to the recent political unrest on college campuses. Protecting American Students Act (H.R.8913) If H.R.8913 passes, it would amend Section 4968 to reduce the endowment tax threshold.  The endowment tax was established as part of the 2017 Tax Cuts and Jobs Act.  Currently, the endowment tax is a 1.4% excise tax on the net investment income of certain private colleges or university endowments.  The following institutions are subject to this tax: The institution has at least 500 “tuition-paying” students, and The endowment is valued at least $500,000 per “full-time” student. The bill would amend the endowment tax formula to exclude students who are not eligible for federal financial assistance under the Higher Education Act.  To qualify for financial assistance, students must be citizens, nationals or permanent residents of the United States or must be able to provide evidence from the Immigration and Naturalization Service that they are in the U.S. for other than a temporary purpose with the intention of becoming a U.S. citizen.  Students who are in the U.S. temporarily or are on a student visa will not be included in the formula. The bill would also require schools to report on Form 990 the number of students taken into account before and after applying the proposed exclusion, thereby reporting the number of international students at the school. According to the one-page summary by Congressman Drew Ferguson (R-GA), the bill will incentivize universities to either enroll more American students or spend more of their endowments on Americans to avoid being subject to the Endowment Tax.  It is estimated that 10-12 additional institutions will be subject to the endowment tax if there are no changes to the makeup of the student population. University Accountability Act (H.R.8914) H.R.8914 would add a new Code Section to impose a penalty on all colleges and universities that violate Title VI of the Civil Rights Act of 1964.  This act prohibits discrimination on the basis of race, color or national origin.  The penalty would be the greater of $100,000 or 5% of the aggregate administrative compensation reported on Form 990, Part VII.  In addition, institutions with 501(c)(3) status would be subject to an automatic review of its status after three violations. Six higher education associations have written to lawmakers in opposition to the legislation. In the joint letter, the associations urged the Committee to not only withdraw H.R. 8913 and H.R. 8914, but also to repeal the endowment tax entirely. If you have any questions about the potential impact of this legislation on your organization, please reach out to Hailey Adams or Erin Wood. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page. ### Investment Corner with Jason & Sean: The True Feeling of Inflation June inflation numbers were released recently and good news! Prices didn’t just slow down in rising, but they fell month over month! Across the board, prices have increased by about 3% since this time a year ago. But if that’s the case, why does it feel that my grocery prices have almost doubled over the past few years? It certainly feels that I am paying more for less in my most recent trips to the grocery store. According to the Federal Reserve Bank of St. Louis, grocery prices have risen only 1% over the past year. But when looking at data from 2021, food prices on average have increased almost 22% since January 20211. Despite that, gone are the days when someone could walk into a grocery store and buy a dozen eggs for $1.50 or a gallon of milk for under $3. Now, eggs can be somewhere between $3 - $5 (or more for higher-quality ones). Nearly every food group costs more than it did a year ago. But what we consumers can feel as inflationary can come across as “shrinkflation” while typical inflation usually means paying more for the same product or service. Shrinkflation is the practice of reducing the size of a product while maintaining the same price and is another strategy engaged by companies in order to maintain profit margins in the face of rising costs (note that SP500 profit margins have doubled on average since 20002). Recently retailers such as Walmart and Pepsi have been accused of this practice. Walmart recently cut the number of sheets in its Great Value paper towel rolls from 168 to 120 but did not reduce the price. “In a report on shrinkflation, Sen. Bob Casey of Pennsylvania, called out Gatorade for swapping out a 32-ounce bottle for a 28-ounce version and keeping the same price.”3 In a Pew Research Center survey from May, 62% of U.S. adults said inflation was “a very big problem in the country today,” a higher percentage than any other issues they were asked about4. While financial media outlets may focus on the overall CPI number coming down, or the core CPI number (which does not include food and energy an area on which I feel I spend a significant amount of my disposable income), Americans are still feeling the heat from rising costs on some of the most essential items. Inflation may be cooling, but consumers’ outrage over higher prices is still running hot. Sources: Food and Beverages | FRED | St. Louis Fed (stlouisfed.org) Guide to the Markets | J.P. Morgan Asset Management (jpmorgan.com) Article: Inflation: Walmart, Chipotle criticized over prices (cnbc.com) Americans' Views of Economy Slip, Inflation Still Seen as Major Problem | Pew Research Center Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  ### National Rent Control – Biden Proposal Are rents too high? Among tenants, the consensus seems to be a resounding yes. According to an index compiled by housing marketplace Zillow, rents for certain types of properties have risen by 32% over the last four years. Additionally, six of the nation’s largest publicly traded apartment companies are under pending litigation due to the alleged use of proprietary algorithms to raise rents on tenants. Does this spike inspire cause for action? According to President Biden, it does. On July 16, Mr. Biden announced a proposal that calls on Congress to pass legislation giving landlords a harsh choice: cap rent increases at 5% or risk losing federal tax breaks. The current plan states that beginning this year and through 2026, corporate landlords with over 50 units in their portfolio would only be able to take advantage of the accelerated depreciation available to owners of rental housing if they keep annual rent increases to no more than 5% each year, a move that could affect more than 20 million units across the country. These recent updates are by no means close to law, but Schnieder Downs’ real estate industry group is keeping a close watch. As the proposal continues to evolve, we can assist, ensuring up-to-date information and constant communication on legislation updates. For more information on the proposal and additional detail surrounding the Biden-Harris Housing Plan, see FACT SHEET: President Biden Announces Major New Actions to Lower Housing Costs by Limiting Rent Increases and Building More Homes | The White House. About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development.   To learn more, visit our Real Estate Industry Group page. ### 2024 Changes to Federal Form 6765 On Friday, June 21, 2024, the U.S. Internal Revenue Service (IRS) released a revised draft of Form 6765, the form used by taxpayers to claim the I.R.C. § 41 Credit for Increasing Research Activities, more commonly referred to as the R&D Tax Credit. The revised draft updates several of the proposed changes to Form 6765 that were introduced by the IRS in September 2023. These changes aim to alleviate some of the preparation burden on small businesses while still providing taxpayers with a consistent and predefined format for reporting, as well as improving the information received for tax administration. Background On September 15, 2023, the IRS released a preview of the proposed changes to Form 6765 that will take effect beginning with Tax Year 2024. The initial draft introduced Section F, “Business Component Information,” requiring detailed quantitative and qualitative data for each business component included in the research credit claim. The IRS sought feedback from interested stakeholders on the proposed changes and whether the new Business Component Information section should be optional for certain taxpayers. New Proposed Changes to Form 6765 The new draft form released on June 21, 2024 removes several requirements from the previous version and introduces a new threshold to protect small businesses from extensive reporting. Most of these changes pertain to business component information reporting, which has since been updated from Section F to Section G. Key proposed changes include: A reduction in the number of business components that must be reported on Section G. Taxpayers should now include information for each business component in descending order by the amount of total qualified research expenditures (QREs) per business component, up to a maximum of 50 business components or 80% of total QREs, whichever is lesser of the two. Additionally, special instructions will be given to taxpayers following the ASC 730 directive for determining QREs, which will allow taxpayers to report ASC 730 QREs as a single line item in Section G. A decrease in the amount of business component information required in Section G. Specifically, the requirement to specify whether a business component was new or improved, its use (i.e., sale, lease or license), and a summary describing the information sought to be discovered (for original returns only) has been eliminated. Additionally, the options for selecting the type of business component have been reduced, and the instructions will provide clearer definitions for officers, controlled group reporting and business component descriptive names. Offering the reporting of business component information in Section G to be optional for: Qualified small businesses electing the payroll offset under IRC 41(h)(1) & (2), or Taxpayers claiming a research credit on an originally filed return who have total QREs equal to or less than $1.5 million, determined at a controlled group level, and equal to or less than $50 million of gross receipts, as described under Section 448(c)(3) (without regard to subparagraph (A) thereof). The Section G requirement will be optional for all taxpayers for Tax Year 2024 to allow taxpayers sufficient time to adjust substantiation methods and transition to the new Section G format. The proposed requirements will go into effect for Tax Year 2025 (processing year 2026). What happens now? While the recent updates to the draft Form 6765 provide relief for some taxpayers, the new form includes substantial changes that may pose challenges for others. Taxpayers should review documentation practices and the new draft form to ensure the appropriate level of detail is being collected and maintained to satisfy the updated requirements. The final form and instructions are expected to be released at a later date. Schneider Downs’ Credits and Incentives team has extensive experience helping taxpayers maximize their R&D Credits while navigating everchanging tax rules and regulations. As the R&D Credit requirements continue to evolve, Schneider Downs can assist taxpayers with tax support and services, ensuring proper documentation and compliance with the latest guidance from the IRS. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page.  ### Unveiling the Next Phase: IRS Announces New ERC Processing Initiatives On June 20, 2024, the IRS issued a long-awaited news release (IR-2024-169) that announced the next phase of ERC processing. Since imposing a moratorium last September on processing ERC refund claims, the IRS has been working to identify and prevent potential errors and fraud, with its efforts so far involving the use of technology and advanced data analytics. Moratorium Review Process Since the moratorium started on September 14, 2023, the IRS has conducted a detailed review of more than one million ERC claims representing more than $86 billion and has identified significant discrepancies. These discrepancies led the agency to begin to categorize claims into three groups based on risk level. Level 1 – High Level of Risk 10% – 20% of claims fall into this group Claims within this group will be denied – because they are those that clearly fall outside the guidelines established by Congress, resulting in immediate ineligibility. Level 2 – Medium / Unacceptable Level of Risk 60% – 70% of claims fall into this group Claims within this group will require additional analysis to ensure compliance. Level 3 – Low Level of Risk 10% – 20% of claims fall into this group Claims within this group appear to be legitimate and will be processed with heightened scrutiny to protect against improper payments. The agency anticipates some of the first payments in this group to be release later this summer; however, these will go out at a dramatically slower pace than payments went out during the pandemic period. Begging for More Time The U.S. House of Representatives passed the Tax Relief for American Families and Workers Act of 2024 on January 31, 2024, (the "Act"). Under the Act as currently written, new ERC claims are prohibited after January 31, 2024. Since January 31 has already passed, the Act could be revised to include a new deadline, which would likely be sometime before calendar-year end. The IRS continues to advocate for Congress to pass legislation that would not only end additional ERC claims but also extend the statute of limitations on assessment of these claims. Legislation proposed at the beginning of 2024 included a six-year period for IRS review from the date of the refund check, as opposed to the standard three years from the date of the claim. This additional time would benefit the IRS, since the agency currently has thousands of claims to review with a very short time left to do it. The statute of limitations on assessment for 2020 periods expired in April 2024; and the period for 2021 claims will expire in April 2025. Next Steps Taxpayers with claims do not need to take action at this point and should await further notification from the IRS. The IRS cautioned taxpayers who filed ERC claims that the process will take time – highlighting that processing speeds will not return to levels that occurred in 2023 and that calling IRS toll-free lines will not be fruitful, since additional information is generally not available as processing work continues. IRS Reminder As the agency continues intensifying audits and criminal investigation work in this area, the IRS continues to urge employers with pending ERC claims to consider a separate Withdraw Program that allows then to remove a pending ERC with no interest or penalty. Claims that are withdrawn will be treated as if they were never filed, and the IRS will not impose penalties or interest. The IRS will maintain a moratorium on processing new ERC claims submitted after September 14, 2023. This decision is intended to prevent further improper claims and allow the agency to consult with Congress on potential legislative actions regarding the future of the ERC program. The agency is also considering reopening its Voluntary Disclosure Program, which previously expired on March 22, 2024, in order to help taxpayers rectify improperly processed claims, although the terms may be less favorable than the initial offering. The complete release from the IRS surrounding this new phase of ERC processing can be found at: IRS enters next stage of ERC Retention Credit work; review indicates vast majority show risk of being improper. As further guidance is issued, Schneider Downs Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions, please reach out to your Schneider Downs contact(s) or Matthew Werner. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the upcoming stage of the updated ERC processing and the classification of claim categories according to risk levels. ### Taxpayers Taking their ERC Grievances to the Courts “How much longer are we going to have to wait?” A question being posed with increasing resonance as over 1.3 million Employee Retention Credit (“ERC”) claims sit stagnant with the IRS. Fueled by frustration, some taxpayers are no longer willing to wait it out. Taxpayers are employing numerous avenues to try to gain traction with the IRS, including lobbying their Congressional representative, appealing to Taxpayer Advocacy Services (although of late, they have been resistant to accepting ERC-related issues), and taking the IRS to court. The courts have seen a big increase in ERC-related cases being filed. These cases grapple with different issues and rely upon varying arguments based on the specifics of each taxpayer, but the overarching theme in many cases is disputing the continued inaction by the IRS. The crux of many of these suits rely upon the “six-month” language in IRC §6532. Generally, the period of limitation on suits for the recovery of internal revenue tax, penalty, or other sum shall not begin until at least six months from the filing date, if a taxpayer has not received a notice disallowing the refund during that time. However, the six-month requirement in IRC §6532 has not yet played out in the context of a moratorium, which raises questions of its applicability for taxpayers in the ERC moratorium context. Additionally, some cases have been filed questioning the applicability of Notice 2021-20. Arguments have utilized application of the Administrative Procedure Act (“APA”) as the basis for asking the Court to deny the applicability of Notice 2021-20. This argument has been made in filings by Southern California Emergency Medicine and more recently by Stenson Tamaddon LLC, both in the 9th Circuit. The crux of this argument relies upon the fact that for a rule to be enforceable, as opposed to only offering guidance, agencies must apply APA administrative policies for proposing and establishing regulations. APA provides guidance for the formal notice and comment period that is employed when creating final regulations. When the IRS issued Notice 2021-20, in January 2021, the Notice did not go through the traditional APA process, since there was no proposed guidance before the final publication. If the Courts find that Notice 2021-20 is not enforceable, it can still be utilized as guidance internally by the IRS. All of these suits are in early days, with suits likely not to see the courtroom until 2025 at the earliest. These cases ultimately seek to increase the overall pressure on the IRS to recognize that the lengthy moratorium is harming eligible U.S. businesses. The question remains of how long the IRS can continue with the moratorium under this increased scrutiny. In recent webinars and industry conferences, answers of “early summer” and “soon” have been informally provided as the timeline for when the moratorium might end, but with claim time stretching 18+ months, this provides little reassurance for taxpayers. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Discover more about when the 1.3 million Employee Retention Credit claims currently held by the IRS will proceed to resolution in court. ### The Sweeping Impact of the Supreme Court’s Chevron Reversal On June 28, 2024, the U.S. Supreme Court made a significant ruling in Loper Bright Enterprises v. Raimondo, overturning the longstanding Chevron decision. For the past 40 years, Chevron deference had directed courts to defer to administrative agencies’ interpretations of ambiguous statutes. Here’s what you need to know: Chevron Doctrine Explained The 1984 Chevron case established a two-step approach for interpreting federal statutes implemented by agencies. Courts first determine if Congress directly addressed the statutory question. If not, they defer to the agency’s permissible interpretation. Chevron has been cited extensively in both Supreme Court and lower court cases. The Recent Reversal The Court’s decision in Loper Bright Enterprises rejects Chevron deference. Going forward, new cases involving statutory interpretation won’t rely on Chevron. Existing settled judgments based on Chevron are unaffected. Impact on Oil and Gas Companies: In Western Pennsylvania, where the oil and gas industry thrives, this ruling has implications. Companies may face greater scrutiny as courts no longer automatically defer to agency interpretations. Legal challenges related to environmental regulations, permits, and compliance may change. What Lies Ahead Courts will now play a more active role in interpreting statutes and agencies’ decisions will face heightened scrutiny. Oil and gas companies should seek legal advice to navigate this new landscape. The demise of Chevron deference marks a sea of changes in statutory interpretation, affecting not only environmental law but also industries like oil and gas. Companies operating in Western Pennsylvania must adapt to this shift and stay informed about evolving legal standards. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Pittsburgh Challenges Tax-Exempt Status of 104 Properties On January 24, 2023, Pittsburgh Mayor Ed Gainey signed an executive order directing the city’s law and finance departments to conduct a full review of all properties owned by tax-exempt organizations in an effort to determine whether Pittsburgh’s purely public charities were meeting the requirements of their tax-exempt status. Purely public charities, as defined, must advance a charitable purpose; donate a substantial portion of their services; benefit a class of people that are legitimate subjects of charity; relieve the government of some of its burden; and operate without seeking profit. More than one-third of all properties in Pittsburgh claim tax-exempt status. The city estimates that in 2021 alone it lost approximately $34.5 million in potential property tax revenue from tax exemptions. During the first round of reviews following Mr. Gainey’s order, Pittsburgh challenged the status of 27 properties and won 12 of those challenges, resulting in about $100,000 in new tax revenue. The city is now challenging the 2024 tax-exempt status of 104 properties as part of its ongoing review. Sixty-one of those properties are owned by UPMC. If all the properties Pittsburgh is challenging this year were to lose their tax-exempt status and begin making tax payments, the city would collect around $6.5 million in annual revenue. Once Pittsburgh submits its challenges to the county property assessment office, organizations have an opportunity to appeal. The properties the city is challenging this year include parcels that are owned by private corporations or entities that have lost their nonprofit status; parcels that don’t belong to purely public charities; and properties that are owned by nonprofits but are not being used for a charitable purpose. These parcels include vacant buildings, parking lots and empty lots with no immediate plans for development. Pittsburgh has now reviewed over 60% of the city’s 940 tax-exempt properties, with hopes to finish the first full review of all properties by the end of 2025. After the initial round, Pittsburgh will continue to review tax-exempt properties on a regular basis. City officials say these challenges are only one part of a larger effort to augment Pittsburgh’s revenues. Major nonprofit entities, including UPMC, have stated their willingness to participate in payment-in-lieu of tax agreements, or PILOT agreements. City officials have been amenable to the idea; Mr. Gainey said those conversations are ongoing. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the executive order that is directing Pittsburgh's law and finance departments to review properties owned by tax-exempt organizations to ensure compliance with criteria for purely public charities. ### Introducing SD Capital We are thrilled to announce the launch of Schneider Downs Capital LLC (SD Capital). SD Capital is a robust new Value Advisory practice forged from the combination of Schneider Downs Corporate Finance’s (SDCF) M&A investment banking practice and Schneider Downs’s Growth, Strategy and Transaction Advisory Services practice, established in 2023 with the strategic acquisition of Springer Lawson & Associates. Together, the two practices create an integrated team dedicated to helping business owners build and monetize the value of their firms. We have a proven expertise in identifying and helping owners capitalize on areas that will make their businesses more attractive to buyers and investors, and then effectively executing the transactions to put value in the owner’s pocket. Moreover, we share combined DNA, which includes the big thinking and personal focus that Schneider Downs has brought to clients since 1956. We’re a group of accomplished professionals who have devoted their careers to helping middle-market business owners realize the full potential value in their firms. We’re all dealmakers, plain and simple. Combining efforts, we are able to deliver exponentially more powerful capabilities, broader industry expertise and deeper resources than ever before. The practice will be led by your authors, Managing Partners and Schneider Downs Shareholders Tom Springer and Pete Lieberman, along with Managing Directors Imran Mohiuddin and Stu Lawson. Our Capabilities We will always be delighted to work with clients who are ready for an immediate deal. But for those who see an opportunity to build an even more valuable business, we deliver a three-phase process to assess readiness and then create and realize additional enterprise value. When complete, our clients approach potential buyers and investors with bigger bottom lines, fewer due diligence issues and often at higher multiples. Truly a win-win for everybody involved. Industry Expertise SD Capital brings deep subject matter expertise and transaction experience across a number of verticals, which include Energy & Utility Services, Manufacturing & Industrial Services, Health Care & Consumer industries, Government Contracting, Defense and IT. Resources Together, our team has a national footprint across our Pittsburgh headquarters and metropolitan Washington location, as well as remote members throughout the country. Combined with Schneider Downs’ tax, audit, consulting and wealth management practices, we have a diverse bench of expertise across all facets of business. Engagements will continue to be led by senior personnel, focused on delivering subject matter expertise, constant communication and, ultimately, results. If you’ve worked with SDCF’s team of M&A professionals, the familiar faces and personalized approach aren’t going anywhere, and SDCF’s real estate practice remains in place as well. We invite you to follow our SD Capital LinkedIn page, where the SD Capital team plans to share more with you in coming weeks, including expert views on operational tips for building value, transaction best-practices and market commentary. As always, if you have any questions or think we can help, please feel free to contact us. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. Excerpt: We are proud to announce the launch of our new value advisory practice, SD Capital. ### A Breakdown of the Key Sections of a SOC 2 Report System and Organization Controls (SOC) reports play a significant role in providing insights into the controls and processes implemented by service organizations. SOC 2 reports provide their readers with information about the controls in place at the service organization to achieve the applicable trust services criteria (Security, Availability, Processing Integrity, Confidentiality and/or Privacy) and provide users with information about the suitability of the design and operating effectiveness of controls (only in a SOC 2 Type 2 report). Among the essential components of a SOC 2 report, five key sections are typically included. The following is a quick rundown of how these reports can help an organization promote a secure and dependable digital landscape and provide reasonable assurance that the service organization’s service commitments and system requirements were achieved based on the applicable trust services criteria. Section 1 – Independent Service Auditor’s Report Section 1 is the auditor’s opinion on the service organization’s controls and whether they have been operating as designed (Type 1) and/or operating effectively (Type 2). Additionally, this section provides a brief synopsis of the system(s) in scope, the examination period or as-of date, and applicable trust service criteria. See our Understanding SOC Report Opinions article for additional details. Section 2 – Management Assertion Section 2 is management’s assertion, which is the statement made by the service organization’s management regarding the design and/or operating effectiveness of the controls in place to achieve its service commitments and system requirements based on the applicable trust service criteria. In simple terms, this is the service organization’s statement that its controls have been operating as designed as of a specified date and/or operating effectively throughout the specified period. Management’s assertion is prepared using the service organization’s letterhead (required), signed by the appropriate member(s) of management (optional but recommended), dated the same date as the service auditor’s opinion and included in the final report. Section 3 – System Description Section 3 is an in-depth management-written description of the system in scope for the SOC 2 report. This is typically the longest section of the SOC 2 report, as it may have graphics, such as reporting structures, network diagrams, etc. Additionally, the system description covers an in-depth dialogue about the organization’s background, services provided, processes, controls and personnel. The system description is required to include the criteria for a description of a service organization’s system set forth in DC 200, 2018 Description Criteria for a Description of a Service Organization’s System in a SOC 2® Report (With Revised Implementation Guidance—2022) in AICPA, Description Criteria. Required criteria include: The types of services provided; The principal service commitments and system requirements; The components of the system used to provide the services, including: Infrastructure Software People Procedures Data Boundaries of the system; For identified system incidents that (a) were the result of controls that were not suitably designed or operating effectively or (b) otherwise resulted in a significant failure in the achievement of one or more of those service commitments and system requirements, as of the date of the description (for a Type 1) or during the period of time covered by the description (for a Type 2), as applicable, the following information: Nature of each incident Timing surrounding the incident Extent (or effect) of the incident and its disposition; The applicable trust services criteria and the related controls designed to provide reasonable assurance that the service organization’s service commitments and system requirements were achieved; If service organization management assumed, in the design of the service organization’s system, that certain controls would be implemented by user entities, and those controls are necessary, in combination with controls at the service organization, to provide reasonable assurance that the service organization’s service commitments and system requirements would be achieved, those complementary user entity controls (CUECs); If the service organization uses a subservice organization and the controls at the subservice organization are necessary, in combination with controls at the service organization, to provide reasonable assurance that the service organization’s service commitments and system requirements are achieved, the following: When service organization management elects to use the inclusive method: The nature of the service provided by the subservice organization; The controls at the subservice organization that are necessary, in combination with controls at the service organization to provide reasonable assurance that the service organization’s service commitments and system requirements are achieved; Relevant aspects of the subservice organization’s infrastructure, software, people, procedures and data; The portions of the system that are attributable to the subservice organization; When service organization management decides to use the carve-out method: The nature of the service provided by the subservice organization; Each of the applicable trust services criteria that are intended to be met by controls at the subservice organization; The types of controls that service organization management assumed, in the design of the service organization’s system, would be implemented by the subservice organization that are necessary, in combination with controls at the service organization, to provide reasonable assurance that the service organization’s service commitments and system requirements are achieved (commonly referred to as complementary subservice organization controls (or CSOCs); Any specific criterion of the applicable trust services criteria that is not relevant to the system and the reasons it is not relevant; In a description that covers a period of time (Type 2 examination), the relevant details of significant changes to the service organization’s system and controls during that period that are relevant to the service organization’s service commitments and system requirements; The system description also includes details of the service organization’s relevant aspects of the control environment, risk assessment process, information and communication systems, and monitoring of controls. Section 4 – Description of Criteria and Related Controls Section 4 includes the following: The Controls Specified by the Service Organization and Tests of Operating Effectiveness section includes a table with the following columns based on the type of report (SOC 2 Type 1 or SOC 2 Type 2) SOC 2 Type 1 Control Number Description of the Service Organization’s Controls Applicable Trust Services Criteria SOC 2 Type 2 Control Number Description of the Service Organization’s Controls Test of Effectiveness Test Result Applicable Trust Services Criteria Schneider Downs also includes in its reports a section that includes the Trust Services Criteria and mapping to controls specified by the service organization, which provides a breakdown of the control activity mappings for the Trust Services Criteria included in the report. This subsection includes a table with the following columns: Criteria Criteria Description Control Activity Mappings Section 5 – Other Information Provided by the Organization In a SOC 2 report, the Other Information Provided by the Service Organization section commonly includes additional details or context that the organization can include to strengthen the understanding of the system and the controls being evaluated. Within this section, the organization has the opportunity to provide a management response to any exceptions noted that gives readers insight into why an exception occurred, and what steps were taken to ensure that the issue has been remediated. This section can also include any additional information that management of the service organization wants to or is required to include (e.g., additional services provided that are not within the scope of the examination or subsequent events that occurred subsequent to the as of date (Type 1) or report period end (Type 2) but before the report date/date the report is issued. This section is not audited, the auditor disclaims an opinion on such information, and this section is not included in all SOC 2 reports. If your organization is in need of a SOC report, please contact a member of Schneider Downs’ SOC Services team. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. Excerpt: Get a comprehensive breakdown of a SOC 2 report and discover how it helps organizations achieve a secure digital environment. ### Accounting Considerations for Healthcare Startups Explore the unique accounting challenges faced by healthcare startups. From funding to compliance, learn how accounting impacts the success of these innovative companies. Big tech companies have been contributing to healthcare for more than six decades. Since the COVID-19 pandemic, there has been a tremendous amount of growth in healthcare startups. These startups introduce technologically advanced products and services into the industry and have been instrumental in filling healthcare gaps that were present even before the pandemic. The industry is estimated to reach over $550 billion by the end of 2027, according to the National Institute of Health. Besides securing funding and resources and navigating unique compliance considerations in a heavily regulated industry, healthcare startups face a variety of complex accounting considerations. Capitalized Software Software is often a healthcare startup’s largest and most important investment. Startups rely on the development of proprietary software to serve their customers. Accounting Standards Codification 985-20 provides authoritative guidance on software solutions that are often referred to as “external-use software,” while ASC 350-40 provides authoritative guidance on “internal-use software.” Therefore, in order to assess how to account for the costs, the startup must first determine whether there is a substantive plan to market their software externally, or if such a plan will be created during the development period. Internal-Use Software Costs identified as internal-use have both of the following characteristics: The software is acquired, internally developed or modified solely to meet internal needs. During development or modification, no substantive plan exists or is being developed to market the software externally. The timeline for developing internal-use software is divided into three stages: preliminary, application development and postimplementation. It is crucial for a startup to be able to identify these stages to determine whether or not incurred costs are capitalizable. External-Use Software Instead of developing a solution that will provide a service to its customers, a startup may wish to market or sell its software solution. These solutions are commonly referred to as external-use software and are often in the form of a perpetual or subscription license or a software-as-a-service (SaaS) solution. In a SaaS the customer accesses the solution—normally through an online portal—and does not take possession. The costs of developing the SaaS solution, including the formation of ideas, design and testing are all considered internal-use costs. For software that is to be marketed or sold, ASC 985-20 identifies technological feasibility as the moment in which costs incurred may be capitalized. Technological feasibility is established when all planning, designing, testing and coding activities necessary to establish that the product can be produced to meet its design specifications have been completed. Technological feasibility typically occurs much later in the development life cycle of external-use software than it does for internal-use software and therefore generally results in a smaller amount of costs eligible for capitalization. Revenue Recognition Another critical accounting consideration that must be addressed is revenue recognition. Healthcare startups often have various revenue streams, including, but not limited to, SaaS, licensing and processing and billing medical claims. Proper revenue recognition is necessary for accurate financial reporting and compliance with regulatory requirements. Healthcare startups should familiarize themselves with the guidance under ASC 606 and apply it consistently. Startups should implement a comprehensive revenue recognition policy that is clearly documented, regularly updated, reviewed and followed. Healthcare startups often have complex contracts with multiple performance obligations and variable consideration. Step 2 of the 5-step revenue recognition model: “Identify the performance obligations in a contract,” is one of the most critical steps since it establishes revenue recognition and strongly aids in determining whether the entity is a principal or agent. This step can be difficult due to healthcare startups often having bundled goods/services within their contracts, particularly in software contracts. Variable consideration is often found in contracts in the form of discounts, rebates, refunds, credits, price concessions, incentives, usage-based fees in SaaS arrangements, and performance bonuses or penalties. Variable consideration must be estimated upfront and can be done using one of two methods: expected value or most likely amount. Management’s best estimate is not an acceptable method to estimate variable consideration. Contracts may also include certain nonrefundable up-front fees that are paid in conjunction with the execution of the contract, such as set-up fees for SaaS contracts or hosting arrangements. Capitalization of software and revenue recognition are just two significant areas where accounting can be unique and complex for healthcare startups. Consultation with professionals is highly recommended to ensure compliance with accounting standards and to ensure all unique accounting considerations have been addressed. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Dealing with the CDK Cyberattack Fallout Before June 18, 2024, no one would have imagined that cyber criminals could compromise an industry leader like CDK and bring more than 15,000 auto dealers to their knees. By now, those impacted have felt the pain of manual recordkeeping and patched together their own systems to keep the doors open. Unfortunately, that pain is just the beginning. Once CDK is back online, dealers will need to process the manual records into the DMS, reconcile the results, and take additional precautions to protect consumer data. While there’s not a one-size-fits-all solution, the following suggestions can be implemented now to navigate the roadblocks ahead: 13 suggestions to navigate the CDK Cyberattack Fallout 1. Protect your cash flow Encourage your accounting department to work closely with F&I every day to ensure that contracts-in-transit and vehicle receivables are collected promptly and floorplan and lien payoffs are made in a timely manner. Continue to work with your service manager to ensure that credit policies are closely monitored. Protect the dealership’s check stock and review online banking every day. Ensure that signature processes are enforced and examine every check through your online banking site. Examine your online banking for any other unusual outflows. Ensure that operating departments generate a summary of payments received and require that these summaries be provided to the accounting office for reconciliation to the manual records (repair orders, parts slips, vehicle sales orders) every day. Verify that the cash and checks reported on the summaries agree to deposits and maintain copies of these summaries for reconciliation to credit card merchant statements. 2. Require that your operational employees double-check their work, including the proper calculation of sales taxes and registration fees. 3. Assign responsibility for collecting and protecting manual records (repair orders, vehicle sales orders, registration paperwork, customer receipts, etc.). Everyone needs to understand the importance of maintaining manual records during this outage but one person from each department should be ultimately responsible to make sure that records are generated and preserved. This will likely be a department manager, but not necessarily. Identify your best people and make sure that they know their responsibilities. 4. Test the manual records collected to date. Call a meeting with key personnel from each department and your controller/office manager to identify what records are being generated and ensure that sufficient information is available to permit the eventual entry and reconciliation of operational data. If there appear to be any holes, address them immediately. 5. Pay close attention to internal repair orders and after-sales items due to the customer. You may want the sales and service departments to manually track these items to ensure that accurate gross profit amounts are used during vehicle sales and for commission and bonus calculations. 6. Determine a plan for data entry once the system is online. Will each service advisor or F&I manager be responsible for entering his or her transactions? Will you have an administrative person enter everything? Will there be any type of bonus or other incentive tied to prompt, accurate entry? 7. Contact your factory representative to determine if there are any alternative procedures for CDK-supported functions. 8. Be extra vigilant against fraud. Unfortunately, dealerships are often targets of internal theft and this system outage could be very enticing to an unscrupulous employee. If something doesn’t feel right, investigate it immediately. 9. Also be vigilant about outside parties posing as CDK in the wake of the current events. External bad actors will also be looking to capitalize on this opportunity. 10. Review your cybersecurity insurance policy and notify your insurance provider of the incident. Many policies have third-party liability and/or business interruption coverage. 11. Ensure that your customer data has not been breached. Depending on the strength of your internal IT function, this determination could require the help of a qualified incident response organization. If you find that information has been breached, seek legal counsel regarding action required. 12. Remind the accounting office that there are many daily tasks that still need to be performed while CDK is unavailable. They should use their knowledge of the normal reconciliation processes to identify and address future problems now. 13. Once CDK is online and your data is entered, insist that your accounting department perform a detailed analysis of all the accounting schedules and reconcile every balance sheet account. Consider using advanced data analytics to help identify errors and speed up the ultimate reconciliation of your accounting records. As this situation unfolds, more concerns will likely come to the forefront. Set your expectations for recovery and reconciliation. The fallout from this outage could take months to be fully identified and resolved, and Schneider Downs is ready to help you get your dealership back on track. For more information and assistance, please contact Brett Cubellis, or any of our SD Automotive Advisors. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. ### New TEOS Improvements Webpage On June 21, 2024, the IRS announced enhancements to public access of Form 990 series data on the new Tax Exempt Organization Search (TEOS) Improvements page. The IRS’s TEOS Modernization Team made these enhancements to improve the usability of TEOS datasets. Form 990 series data has been updated to provide better transparency of tax-exempt organizations to the general public as well as to the tax-exempt community. The new site features the following resources: Public disclosure datasets and updates Dataset guides Data dictionaries/indices Annotated forms Schemas Frequently asked questions (FAQs) The public disclosure datasets and updates page contains a comprehensive list of datasets and relevant updates, including the TEOS tool, bulk data downloads, the Exempt Organization Business Master File extract, political organization disclosures, and Form 5500 information. The dataset guides outline the type of data available, usage, format, and updated schedules to help users understand and utilize the data effectively. Data dictionaries and indices are tools that identify column headers and data elements in each data set to provide clarity on the content and structure of the data. There is a data dictionary for both TEOS and the Form 990-N, and indices for the Forms 990, 990-EZ, 990-PF, and 990-T, as well as each associated Form 990 schedule. The annotated forms are PDF copies of the Forms 990, 990-EZ, 990-PF, and 990-T, as well as the supplemental Form 990 schedules that shows the relationship between the tax form field name and dataset. The schemas improvement provides users with redacted schemas for the Forms 990-N, 990-T, and 990 that are tailored for non-software developers. The new schemas simplify the understanding of the raw XML data files. The files downloaded from the site come as XSD files. Currently, all annotated forms and schemas are for the 2022 tax year. The FAQs address common inquiries and concerns around public disclosure, datasets, and related topics. Since the Form 990 series returns must be made available to the public, they are an important tool for disclosure and transparency to various parties. Interested parties can include federal and state regulators as well as organization stakeholders such as donors, beneficiaries, and the general public. Resources on the new TEOS Improvements website aim to improve accessibility and facilitate the public’s use of Form 990 series data, in addition to enhancing transparency and understanding within the tax-exempt community. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Discover the improvements made to public access of Form 990 series data, designed to enhance transparency and usability. ### The Value of Control Self-Assessments “Risk comes from not knowing what you are doing.”– Warren Buffet A risk management framework is an ongoing process of recognizing, evaluating, and managing risks in an organization. A control self-assessment is a crucial part of a risk management framework. Used wisely, it can be a powerful tool for profiling the company’s risk environment and existing processes. The key benefit of the assessment process is uncovering hidden risks, which can inform decisions and contribute to achieving a company’s strategic goals. Typically, a control self-assessment involves a questionnaire completed by staff within the assessed business unit(s). Self-assessments present opportunities for process owners to offer open and honest feedback, which can uncover unknown risks and potential blind spots of the leadership team. Self-assessment tools are particularly useful in organizations with active acquisition strategies, multiple locations/branches, and decentralized processes. Tools and Execution Tailored Questions: Questionnaires can be customized based on risk level. Depending on the desired response, questions can be set up as yes/no, multiple-choice, open-ended, or requiring documented support. This streamlines the review and reporting process. Technology and Reporting: Efficient and automated technology tools, such as Microsoft Forms, can consistently track user responses until 100% completion is achieved. These survey tools enable data reporting and visualization, helping to picture holistic results that inform decision-making. Identifying Trends and Heightened Risks: If self-assessments are completed periodically, responses can be baselined to identify trends in shifting risks, including new and heightened risks. Accountability and Policy Reinforcement Compliance with Regulations and Policies: Answers may reveal potential compliance issues with regulations or policy standards that can be preemptively addressed. Accountability: The self-assessment can include a formal acknowledgment that users have read and understand policies, emphasizing critical points. Onboarding: Self-assessments can assist in onboarding new employees, reinforcing training and key policy items. Utilizing Results Risk Awareness and Identification: Employees can readily identify risks they encounter in their day-to-day duties, which might not be known to management. This can also reduce the risk of fraud by flagging unusual responses. Monitoring Key Risk Indicators (KRI): Answers can be evaluated against key risk indicators and compared to the company’s risk appetite to ensure alignment. Best Practices and Comparative Analysis: A self-assessment allows employees to share best practices that can be evaluated and applied to other locations or business units. Responses can also be compared to identify similarities and differences; and where consistency might be beneficial. Feedback on Processes: Employees can submit (potentially anonymous) feedback on key processes, gaps, and issues resulting from processes outside of their ownership. It allows employees to provide input on whether key policies might need to be refreshed. Business Objective Awareness: Self-assessments often align with critical business objectives, providing additional support for these initiatives. Internal Audit Supplement: The assessments complement periodic location/branch audits and support an annual risk-based internal audit plan. Responses help to ensure that testing procedures address the highest-risk items and identify the need for one-time process audits. Reach out to the Schneider Downs Risk Advisory team to learn about our tools and templates for risk assessment and other processes, or to see how a control self-assessment can benefit your organization. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.   To learn more, visit our dedicated IT Risk Advisory page.  ### Investment Corner with Jason & Sean: Strength in EM… Is it Sustainable? Emerging Markets (EM) sometimes can feel like the forgotten middle child within the greater equity asset class as performance over the last decade has been lackluster from a relative perspective. Over the last decade, EM equities have underperformed International Developed equities along with their U.S. Large, Mid, and Small Cap counterparts. When we think about the next decade, Emerging Markets could provide growth opportunities over a longer time period. Currently, behind U.S. Large Caps, Emerging Market equities are the second-best performing equity asset class year-to-date. Emerging Market (EM) index returns have rebounded in recent months, mostly due to positive technology exposure within Taiwan and a slight re-rating higher of multiples in China. EM equities include the stock of companies from many countries including Mexico, Brazil, India, China and others.  With over a third of the equity market found outside of the U.S., excluding exposure to countries with rising demographics and fast-growing companies may prove to be a disadvantage to portfolios. There have been different regimes over the decades where asset classes have had a wide dispersion of performance. What we see in the current and upcoming regime within Emerging Market equities is an asset class of cheaper equity valuations, cheaper currencies, and a combination of cyclical and structural investment themes that could potentially help boost long-term returns. When thinking about allocating capital for years to come, SDWMA believes a globally diversified portfolio is the key to long-term success despite short-term volatility. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Changes to the Student Financial Assistance Cluster in the 2024 Compliance Supplement With the release of the 2024 Compliance Supplement from the Office of Management and Budget (Supplement), there are changes to the Student Financial Assistance (SFA) Cluster that may impact institutions of higher education. Though not a complete list, the following are some of the key changes from the 2023 supplement to the 2024 supplement for the SFA cluster. Matrix of Compliance Requirements The supplement lists the 12 compliance requirements for audits and which requirements relate to the SFA cluster. In the 2024 supplement, the requirement of activities allowed or unallowed is only relevant to Health and Human Services (HHS) programs within the SFA cluster and not Department of Education (ED) programs. This may result in changes to audit procedures for Institutions that only have ED programs, but the requirement remains unchanged for HHS programs such as 93.364 Nursing Student Loans (NSL) and 93.342 Health Professions Student Loans (HPSL). If your institution has HHS programs 93.364 and 93.342 noted above, the 2024 supplement increased loan limits by 4.277% per year until 2030. The current limit of NSL loans to a student for an academic year may not exceed $5,460, except that for each of the final two academic years of the program, the total must not exceed $8,588, and total NSL loans may not exceed $26,928. These limits will increase by 4.277% until 2030. Institutional Eligibility The 2024 supplement has reorganized requirements relating to institutional eligibility and states an institution is not eligible under 34 CFR 600.7(a)(1) if in the latest complete award year: More than 50% of the institution’s courses were correspondence courses; 50% or more of enrolled students were enrolled in correspondence courses; More than 25% of enrolled students were incarcerated; or More than 50% of enrolled students had neither a high school diploma nor the recognized equivalent and the institution does not provide a four-year or two-year program that awards a bachelor’s or associate degree. A course offered through correspondence is a course in which the institution provides instructional materials, by mail or electronic transmission, including examinations on the materials, to students who are separated from the instructors. Interaction between instructors and students in a correspondence course is limited, is not regular and substantive, and is primarily initiated by the student. Institutions are not required to report this information to the ED, but must maintain documentation of their compliance with the requirements. The regulations require an annual attestation on compliance with these institutional eligibility requirements. The ED’s regulations describe the auditor’s substantiation of these calculations, and reporting thereon, as an attestation performed in accordance with the American Institute of Certified Public Accountant’s Statement on Standards for Attestation Engagements. However, the ED does accept coverage of these calculations through an institution’s annual Title IV compliance audit or single audit submission. If you are part of an institution that offers correspondence courses, consult the 2024 compliance supplement, and with your auditor, for more details on the above calculations. Special Tests and Provisions As part of the Special Tests and Provisions regarding disbursements to students, a new requirement recommends auditors test to determine whether the institution’s policies and procedures provide for determining a student’s eligibility at the time of disbursement. This may be a new question from auditors that will need verification, and institutions should review their documented policies to ensure eligibility is being determined before making disbursements. These are just some of the changes that may have a more noticeable impact on your single audits that fall under the regulations of the 2024 compliance supplement. We will continue to assess and track the developments related to the Student Financial Assistance Cluster. Reach out to a Schneider Downs Audit and Assurance team member if you have questions. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Learn more about the 2024 Compliance Supplement and what the impact will mean for the Student Financial Assistance Cluster. ### Worker Safety for Manufacturing Groups Due to the breadth of products coming to us from manufacturing companies, the industry faces wide range of safety issues. The primary worker safety issues facing most manufacturing companies include hearing protection, eye hazards, chemical exposure, mechanical hazards, and fire hazards. However, many accidents can be prevented by education, caution, and safety procedures. The Occupational Safety & Health Administration has set most of the worker safety requirements for manufacturing companies, such as required training and safety posters in work areas. The trainings inform employees of how to keep the workplace safe and posters remind employees about the safety procedures in place to keep themselves and coworkers safe during their shifts. When the safety procedures are followed everyone should remain safe, but accidents can always happen. Safety procedures can look different depending on the manufacturing company but some of the OSHA requirements include: Hearing protection based on decibels of the noise. For noise greater than 115 decibels workers must wear hearing protection after 15 minutes of exposure. For noise is below 85 decibels, workers must wear hearing protection after 8 hours of exposure. Safety goggles with side eye shields to protect dust, metal, and chemical fumes. Gloves, eye goggles, and dust masks to protect from chemical exposures. In these cases, OSHA also strongly recommends that workers wear long-sleeved shirts and pants. Accessible First-aid equipment and eye wash stations Precautionary machine guards to prevent cuts, punctures, and severed limbs from operating machinery. Accessible and visible fire extinguishers and fire exits. Regular employee training is used to remind and refresh employees on remaining safe and to update employees on changes to protocol. There are many services that can provide worker safety education and OSHA also provides education on keeping the workplace safe. Schneider Downs provides Manufacturers with assurance, tax, and advisory services. For more information, please the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. Excerpt: Learn more about the critical worker safety issues that commonly confront manufacturing companies, and explore the OSHA requirements. ### Postcard from Automation Anywhere 2024 I had the pleasure of representing SD Digital’s Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas. It was a busy week connecting with current and former colleagues, fellow partners and representatives of Automation Anywhere. The agenda was packed with client success stories, transformative use-cases and, of course, some authentic Texas cuisine. Here some important insights I garnered from the event. Virtual Agents The next wave of Artificial Intelligence (“AI”) has already arrived in the form of Virtual Agents. Virtual Agents use natural language processing (NLP) to query against datasets and see through the resolution of the request. An analogy that resonated with me compared Artificial Intelligence to a doctor’s visit. If your doctor only diagnosed your issue, it would fall short of meeting expectations, as you want your doctor to not only diagnose but prescribe a remedy to your symptoms. The same is true for Artificial Intelligence: identifying and/or summarizing a problem isn’t enough. The real value is in taking actions to resolve the problem. Virtual Agents provide industry expertise, allowing organizations to transform their operations to fit their specific business needs. Human-In-The-Loop This is not a new concept and certainly not limited to AI use-cases. For years, automation programs have strived to improve the collaboration between humans and bots; for example, in the handling of exceptions and reprocessing of tasks and or records. The need for such collaboration has been amplified in recent years, as AI autonomously operating throughout an organization presents a level of risk that makes some decision-makers uncomfortable. As adoption of AI becomes necessary for business to remain competitive, guardrails will need to be in place to instill confidence during the early stages of implementation. Eventually, these guardrails will be able to be walked back, but 100% straight-through processing (e.g. 100% success rate) will always be an impractical goal. Automation Anywhere’s introduction of forms has enabled developers to create custom user-interfaces that can be embedded in the applications that employees are already using to perform their job. Automation as a Platform One indicator that an organization needs automation is if the applications supporting the business operate in siloes. Traditional automation aimed to break these siloes and integrate applications across an organization. However, over the past several years, the number of companies offering AI-based products and application specific AI is exponentially on the rise. It's becoming more prevalent to have AI built into an organization’s CRM, ERP and other SaaS applications. This ultimately recreates siloes, this time in the form of AI. There is a direct correlation between the volume and integrity of data and the quality of AI outputs, highlighting the need for an automation platform. Importance of an Intelligent Automation Partner When speaking with customers, it was apparent that many teams were stretched too thin to handle all the responsibilities of maintaining a successful automation program. To achieve optimal outcomes, resources should be allocated to support, enhancements, new development and strategic initiatives. Bound by a finite number of resources, organizations typically neglect one (or more) of these areas, highlighting why a partner is more important now than ever. A good partner should not only meet you where you are in your automation journey but be able to bridge resource gaps in any of these areas. By doing so, the partner enables customers to experience success while preserving the ability to choose if/when they invest in human capital for a self-sustaining program. Please do not hesitate to reach out to me at areo@schneiderdowns.com to discuss any of these topics in more detail or for a more technical explanation. About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. Excerpt: Learn more about the Intelligent Automation Team at Automation Anywhere’s Imagine 2024 Conference in Austin, Texas. ### Be Prepared with an Estate Plan It can be difficult to start the estate planning process as it involves thinking about negative outcomes of life such as death, disability or incapacitation. It’s incredibly important to have these documents lined up early in life. Doing so can help preserve assets, reduce unnecessary taxes or expenses, protect your privacy, and help ensure that your assets are passed on to the right people should something happen to you. What are the common estate documents you should have in place? Powers of Attorney – these are documents that you use during your lifetime in which you name an agent to act on your behalf in the event you are unable to advocate for yourself. There are two kinds that we typically suggest: financial and healthcare. A Financial Power of Attorney is someone who can act on your behalf for all legal matters (i.e. paying your bills, filing tax returns, or entering contracts), while a Healthcare Power of Attorney can make decisions in regard to your medical care while you are incapacitated. With a Healthcare Power of Attorney, you generally also prepare a living will. Living Will – this is a document that outlines exactly what kind of healthcare decisions you want your agent to make in the event you can't advocate for yourself. Having your wishes clearly written helps alleviate the chances of family conflict or controversy and takes some of the pressure off of your loved ones in times of high stress. Powers of Attorney are effective when you're alive, but when you pass, your will is going to let the world know how you want your assets to be distributed. A term that commonly comes up in estate planning is probate, what is probate? Probate can vary drastically from state to state but in general, it is a court-supervised process that assets have to go through to be passed on to beneficiaries and includes three primary steps: 1. File Will with the Court – the executor that you have identified will be responsible for this step and must go to the courthouse to present your will to the court. 2. Provide Notice – your executor must then provide notice to all interested parties and to the general public that assets are being transferred. 3. Account for all Assets – this process in itself is not complicated but can open your assets up to all sorts of unnecessary risks such as will contest or creditor claims. It’s also critical to know that going through probate is a very public process. If you don't want your personal financial statements to be public knowledge, then you really want to avoid probate. What can I do to avoid probate? A well thought out and documented estate plan can eliminate the need for probate. Probate only applies to assets held in your sole name, so any jointly held asset will skip probate entirely and pass directly to your surviving joint owner. Similarly, if you designate a beneficiary for life insurance policies, brokerage accounts (transfer on death), bank accounts (payable on death) and retirement accounts, those assets are not subject to probate and will go directly to your appointed beneficiary. At the same time, you do want to make sure that enough assets will be available to the executor to pay any outstanding debts, taxes, and end of life expenses. In addition, trusts can sometimes be a good solution to avoiding probate. What are some of the most commonly used trusts? Revocable Trust – This type of trust allows you to avoid probate while retaining control of your assets. Although you don't technically own the assets you put in your trust for probate purposes, you can name yourself as a trustee and still retain control. The downside with this type of trust is that these assets are still included in your taxable estate so it does not offer incentives for estate tax savings or creditor protection. Irrevocable Trust – This type of trust offers more asset protection but requires you to relinquish control of your assets. When you create an irrevocable trust, you select the terms of the trust and designate a trustee but after that you have no say in what happens to those assets. The upside of this option is that by effectively removing assets from your control, you are able to isolate said assets from any kind of litigation. If all you're trying to do is avoid probate, a revocable trust can be a great tool but if you want to take advantage of asset protection benefits, then an irrevocable trust might provide the strategy you are looking for. If you are interested in a trust, you should consult a legal professional for their advice on which strategy best suits your situation. How often should you revisit your estate plan documents? Your estate plan should evolve throughout your life. Anytime you have a major life event, such as the death of a loved one, a marriage, a birth of a child, you really do need to revisit your plan. Barring any significant life event, we suggest sitting down with your estate planning attorney every three to five years. What are some common estate planning mistakes to avoid? The most common estate planning mistake we see is not really with the estate plan itself, but with the communication of the plan. You don't really create an estate plan for yourself. You're doing it for your family in order to alleviate stress during times of high emotion. Most legal documents will effectively name the people to carry out your plan, but it's wise to have that conversation with your family ahead of time to avoid any conflict when you're not around to explain the decisions that you made. It's equally important to communicate your estate plan with your financial advisor. Your advisor should be in partnership with your estate attorney to ensure all parties are aware of your plans. If interested in connecting with one of our advisors to start the process of creating an estate plan, please contact us at sdwealthmanagement@schneiderdowns.com. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: What are the common estate documents you should have in place? What can I do to avoid probate? What are some of the most commonly used trusts? ### CDK Global Hack – What We Know So Far Hackers took CDK Global, one of the largest nationwide automotive dealer management software providers, for a joyride last week. In what is becoming an all too common occurrence, a large-scale cyberattack was carried out on a Federal Holiday - this time putting the brakes on the automotive industry on Juneteenth. CDK Global, who provides business critical software to nearly 15,000 dealerships (including all of General Motors’ retail locations) were forced offline on June 19th to investigate a massive cyberattack. CDK Global provides a vast number of business-critical solutions for dealerships’ front and back office, fixed operations and infrastructure. With CDK Global offline, auto dealerships across the country were forced to shut down operations for the day, including new sales, inventory management and service centers. Some dealerships tried to weather the storm with pen and paper: choosing to handwrite contracts, estimate creditworthiness on the spot and endure communication gaps created by inaccessible customer databases. The hack is also impacting consumers, as service centers and new car deliveries are being delayed. CDK Global originally announced that some of their core dealership and retail systems were restored later in the day, but, after they experienced an additional cyber incident, they opted to completely shut down their systems until further notice. While the situation is similar in target and scope to the PLAY ransomware group attack on the 2024 Arnold Clark dealerships, the two don’t seem connected with early reports indicating the BlackSuit ransomware gang is behind the hack - and that CDK Global is expected to pay tens of millions in ransom to get back online. From the consumer side, there are no immediate reports or concerns regarding a data breach, but that doesn’t mean details won’t emerge as the situation unfolds – especially with the amount of financial, personal and business data CDK Global’s systems manage. For those impacted by the CDK Global hack, there are crucial questions and factors to consider once systems are restored which include: watching for scammers posing as CDK, reconciling service work done offline, and verifying staff time entry. The cyberattack on CDK Global is yet another reminder of how vulnerable businesses can be in the increasingly connected world – as well as of the importance of a strong cybersecurity and third-party risk management program. Like many other large-scale cyberattacks, hackers targeted a third-party software provider to disrupt a vast network of connected users, with many unprepared for the outage. Perhaps the key takeaway at the moment is that these types of attacks are nothing new but are increasing in frequency and scope in each instance. It will be interesting to see how the story unfolds and if the true cause of the hack is disclosed, but for now remember that having a robust third-party risk management and cybersecurity program, including a formalized incident response plan, are key steps you can take to be better prepared. If your organization is impacted by the CDK Global hack, we can help. Contact a member of our Cybersecurity team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about the cyberattack on CDK Global that shut down auto dealerships across the U.S. ### Downstream Effects of the CHIPS Act on Local Manufacturing in New Albany, Ohio The semiconductor industry is the backbone of modern technology, powering everything from smartphones to cars to advanced medical equipment. Recognizing its strategic importance, the U.S. government enacted the CHIPS and Science Act to bolster domestic semiconductor manufacturing and reduce dependence on foreign suppliers. This legislation aims to revitalize the U.S. semiconductor industry by providing $52B in subsidies and tax incentives for companies that invest in domestic semiconductor research, development and manufacturing. Intel's New Ohio Chip Factory for Completion in Late 2026 and Production 2027 Intel's decision to invest $20B into a cutting-edge semiconductor manufacturing facility in New Albany, announced in early 2022, highlights the potential of the CHIPS Act to revitalize American manufacturing and reduce reliance on foreign suppliers. The Intel factory's downstream effects extend far beyond its physical footprint. It not only creates 3,000 high-tech manufacturing jobs and 7,000 construction jobs, but also stimulates Ohio’s supply chain ecosystem. Currently, Intel collaborates with more than 350 suppliers from 47 Ohio counties for the facility, but additional partnerships will be crucial once production begins in 2027. Big Blue-chip names like Amazon, Facebook and Google have already established a presence in the “Silicon Heartland” by constructing data centers. The presence of a major semiconductor manufacturer like Intel in Ohio will not only attract businesses and suppliers to the region, diversifying and strengthening the state's economy; it will also establish the area as a hub for innovation and technological advancement. By serving as a center for research and collaboration, the Intel facility will attract talent and foster the development of new technologies, further driving economic growth and competitiveness in the long term. The largest investment in Ohio’s history emphasizes Ohio's growing importance in the sector and its potential to become a major player in semiconductor manufacturing. As Ohio experiences economic growth, it's crucial for local organizations to navigate the changing landscape effectively. Schneider Downs offers tailored assurance, tax and advisory services to support growth and success in Columbus and beyond. To learn more, visit the Schneider Downs blog or email contactSD@schneiderdowns.com. About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. References: Biden-Harris Administration Announces Preliminary Terms with Intel to Support Investment in U.S. Semiconductor Technology Leadership and Create Tens of Thousands of Jobs Intel to Build Ohio Semiconductor Manufacturing Facility Ohio to Lead Semiconductor Supply Chain Consortium Proposal | Governor Mike DeWine Excerpt: Learn more about the downstream effects of the CHIPS Act for local manufacturing in Ohio due to the Intel Factory. ### Moore vs. U.S. Update – Supreme Court Rules that Section 965 Mandatory Repatriation Tax is Constitutional In a highly anticipated ruling, the U.S. Supreme Court has ruled in Moore v. United States that the Section 965 Mandatory Repatriation Tax (“MRT”) imposed under the 2017 Tax Cuts and Jobs Act (“TCJA”) on certain U.S. shareholders of controlled foreign corporations on the accumulated, undistributed earnings and profits of such corporations is permissible under the 16th amendment of the Constitution, which grants Congress the authority to tax “incomes, from whatever source derived”. The case was being watched closely by taxpayers and tax practitioners, because if the U.S. Supreme Court had ruled that such a tax on “unrealized income” is unconstitutional, it could have called into question the constitutionality of a number of other tax provisions, such as the anti-deferral rules under Subpart F and GILTI, taxation of certain pass-through entities such as S-corporations and partnerships, and other provisions where income earned indirectly through an entity is included in taxable income of its owners whether actually distributed or not. The ruling also appears to shut the door on taxpayers who were hopeful that potential refund claims of Section 965 MRT may be possible if the Section 965 MRT was found to be unconstitutional. For additional information, see our previous article on the case. About Schneider Downs International Tax Services Schneider Downs Tax Advisory Services are specialized services delivered by knowledge experts to minimize our clients’ tax liabilities and fully capitalize on incentives and credits available based on the clients’ business activity. To learn more, visit our dedicated International Tax Services page. Excerpt: Learn more about the highly anticipated Supreme Court ruling of Moore vs. U.S. that Section 965 Mandatory Repatriation Tax is Constitutional. ### Ozempic and Wegovy Phishing Scams Up Nearly 200% in 2024 Learn about the sharp rise in Ozempic and Wegovy-themed phishing scams in 2024. Semaglutide-based weight loss drugs such as Ozempic and Wegovy have become increasingly popular over the past year. While these drugs are developed for adults with type 2 diabetes, pop culture icons and Hollywood stars have progressively used these drugs for vanity purposes in place of traditional weight loss methods. The increased mainstream illusion of these drugs as a health supplement versus a prescription drug has created such a shortage that those who legitimately need the drug can’t afford or access it, with prices being as high as $1,000 per month. As with any product with high demand and restricted supply, scammers are out in full force looking to take advantage of consumers. In fact, a recent report shows Ozempic and Wegovy-themed phishing scams are up 183% in 2024 compared to last year. These scams spanned nearly 450 high-risk websites and more than 176,000 phishing attempts over a four-month period, in addition to postings on social media and online marketplaces. How to Identify Weight Loss Phishing Scams Beyond a fresh coat of paint, the scams are nothing new in structure or design and are built to install malware and steal personally identifiable information (PII) or funds. Some of the most common red flags for these scams include: No Prescription Required – The most glaring warning sign is any website or email that claims to provide Ozempic, Wegovy or any other prescription drug without an actual prescription. If the seller does not require any paperwork, it should be the only red flag needed. Cheap Prices – Even with insurance, these drugs are not cheap, so if you see an ad or email with Ozempic for $100, ignore it. Not only will you most likely not receive anything, but if you do receive something, you’ll have no idea what it actually is. Traceless Payment Methods – Sellers who don’t take credit or debit cards as payment are most likely scammers, as they tend to stick to digital platforms like Zelle, Bitcoin, CashApp and Venmo. Especially with expensive prescription drugs of any kind, offers that are too good to be true are just that… and dangerous from a health perspective. If you are considering one of these weight loss drugs, or any sort of prescription drug for that matter, the best starting point is an actual health professional - not unverified websites or unsolicited emails. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn about the sharp rise in Ozempic and Wegovy-themed phishing scams in 2024 and how you can protect yourself. ### Are EVs Just A Fad? If you were alive in the late 1990s, you either wanted, or knew a kid who wanted, a Furby. For those unfamiliar, the Furby was a robotic owl-like toy introduced during the 1998 holiday season. Originally retailing for around $35, prices soon skyrocketed to triple digits as children around the world begged their parents for one of these creepy little creatures. The Furby ultimately went on to sell more than 40 million units in its initial three-year run. But then, just as quickly as it began, the fad ended. Merriam-Webster defines fad as “a practice or interest followed for a time with exaggerated zeal.” There have been many fads over the years: pet rocks, waterbeds, the macarena, to name a few. They all shared the same surge of excitement and popularity. And they all shared the same inherent lack of any real substance. Back in 2007, many people probably thought the first iPhone was a fad. Seventeen years later, that device has gone on to revolutionize our lives. The key difference between the iPhone and any of the aforementioned fads is that the iPhone possessed inherent innovation. It completely changed the way humans procured and disseminated data, and it just so happened to do so in an aesthetically pleasing package. A skeptical thinker has to question whether the current electric vehicle (EV) craze is just the latest in a long line of fads. As simply a tool for transportation, the EV does not provide any advantages over existing internal combustion engine (ICE) vehicles. EV and ICE vehicles will both get a passenger from point A to point B in the same manner. EV fans are quick to point out that EVs are better for the environment because they don’t burn fossil fuels. But they’re powered by electricity, which is generated from fossil-fuel powered electrical plants. And given the intense power needs of EVs, they require a lot more of that electricity than is currently being produced, requiring the burning of even more fossil fuels. So that argument is speculative at best. EV proponents will also point out that EVs will save you money at the pump, since you don’t need to buy gasoline. According to many studies, the cost of electricity to “fuel” an EV is likely less expensive than the cost of gas to fuel an ICE vehicle. But according to a recent article from Edmunds, the average price of an EV is approximately $17,000 more than a comparable ICE vehicle. So, the money you save in power will easily be erased by the higher purchase/finance costs. Then there’s the ethical issue. EVs are powered by batteries made from materials like lithium and cobalt. These materials are mined from places like the Democratic Republic of Congo, long known for its inhumane treatment of workers. I encourage readers to reference the February 2023 NPR article How ‘modern-day slavery’ in the Congo powers the rechargeable battery economy. At best, EV fans can point to the myriad of advanced technologies appearing on many new EVs as incentive enough to purchase. Self-driving via Tesla’s Autopilot is a perfect example, but it’s not a technology distinct to EVs. A number of automotive manufacturers are already offering this technology on ICE vehicles, and the number is rapidly growing. There are also a number of areas in which EVs are clearly inferior to ICE vehicles. These include, but are not limited, to: Lack of availability of charging stations Charging times Higher initial costs (as previously mentioned) Limited driving range Expensive battery replacement costs Questionable environmental effect of disposed EVs, due to the omnipresent battery materials One would be remiss to not consider the “alternative” alternative fuel technologies that are either available in the market or currently being developed. At the time of this writing, biodiesel, hydrogen and hybrid electric all seem like much more viable long-term solutions to fossil fuels. Recent news from the automotive industry would suggest that the proverbial writing is already on the wall. EV sales dropped significantly in Q1 2024 to just 268,909 units. GM announced June 11 that it was scaling back its target EV production from 300,000 vehicles to 250,000. Ford recently asked its dealers to pause EV investments due to impending changes to its EV certification program. This comes after the automaker posted a $1.3 billion (approximately $100,000 per vehicle) loss in Q1 2024 in its Model E (EV) business. Mercedes Benz, meanwhile, which once touted that they would sell only electric cars by 2030, is now backtracking to say they will continue to manufacture cars with electrified internal combustion engines well into the next decade. Many other auto manufacturers are following suit. Only time will tell whether EVs stand the test of time. Perhaps they possess more innovation than this author gives them credit. Perhaps the federal government will continue to mandate an inferior technology for political reasons that this author does not understand. Or, maybe in five years, EVs will be the butt of dad jokes. On the bright side, original mint condition Furbies now sell for over $1,000 on eBay. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. Excerpt: Learn more about the pros and cons of electric vehicles and if they are just going to be another fad over time. ### The FASB Proposes Rule on Accounting for Environmental Credits On June 12, 2024, the Financial Accounting Standards Board (FASB) voted 7-0 to move forward on an exposure draft that will propose both public and privately held companies apply one model to account for various environmental credits. Currently, there are no environmental accounting rules that companies must follow, which has led to inconsistent accounting and disclosure practices. One of the FASB’s priorities this year is to provide investors with consistent and comparable information.  The proposal will cover environmental credits, carbon offsets and cap-and-trade programs, including credits generated from renewable sources. The proposal would require companies to follow the following framework when accounting for most environmental credits: Companies would be required to recognize an environmental credit revenue or expense when the credit likely will be used to settle an obligation or sold. Credits would be required to be valued at cost on the balance sheet and evaluated for impairment. Companies will be required to include additional disclosures, including significant holdings; compliance obligations and information supporting revenue and expenses recorded on the income statement. The FASB plans to issue a formal proposal by the end of 2024. About Schneider Downs Energy & Resources Services  The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Disclosure Relief for Certain IFRS Subsidiaries The International Accounting Standards Board (IASB) has issued International Financial Reporting Standard (IFRS) 19 Subsidiaries without Public Accountability: Disclosures, which reduces the required disclosures for certain subsidiaries. Subsidiaries are eligible for this election if their financial statements are not subject to public accountability but have a parent organization that prepares consolidated financial statements for public use under IFRS. Public accountability includes entities whose debt or equity instruments are traded in a public market, are in the process of having these instruments being traded publicly, or if the entity holds assets in a fiduciary capacity as one of its primary businesses. Under IFRS 19, subsidiaries still must follow the same IFRS accounting standards as adopted by their consolidating group, but they could see a benefit from complying with a reduced version of the disclosure requirements. IFRS 19 provides disclosure relief for 32 specified standards. IFRS 8 Operating Segments, IFRS 17 Insurance Contracts and IAS 33 Earnings Per Share must still be fully disclosed. Entities who apply IAS 26 Accounting and Reporting by Requirement Benefit Plans, would meet the public accountability threshold and therefore are not eligible for the IFRS 19 election. Similar to the full IFRS standards, entities following IFRS 19 would not need to disclose information that is not material. IFRS 19 is effective January 1, 2027 and is applied retrospectively with certain exceptions. Early adoption is permitted. Entities should also monitor for local reporting requirements. Entities that adopt IFRS 19 in one reporting period may revoke this election in a later period. Upon removing this election, comparative disclosure information would be required. Schneider Downs provides assurance, tax, and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. About Schneider Downs International Services The Schneider Downs International Services industry group is a dedicated team of professionals specializing in serving international companies. Schneider Downs helps clients take full advantage of all their international opportunities and can reach you and your business, no matter where you're located around the globe.   To learn more, visit our International Services Industry Group page.   ### Significant Reporting Changes for All IFRS Entities The International Accounting Standards Board (IASB) has issued International Financial Reporting Standard (IFRS) 18, Presentation and Disclosure in Financial Statements, which is designed to improve the comparability and transparency across IFRS reports. While this standard will replace International Accounting Standard 1, Presentation of Financial Statements, many of the current principles will remain. The standard will not impact the accounting recognition of transactions but could change where and how these are reported. The primary changes under IFRS 18 focus on the structure of the statement of profit and loss, disclosures of management-defined performance measures and enhancing the IFRS principles of aggregation and disaggregation. Statement of Profit or Loss: The new standard provides more structure in reporting on the statement of profit and loss. Items in the statement must now be classified into the following five categories: operating, investing, financing, income taxes and discontinued operations. Income taxes and discontinued operations are largely unchanged. The others are as follows: Operating category – Activity from an entity’s primary business. Investing category – Activity from equity investments (associates and joint ventures), income or loss from other investments and interest income from cash and cash equivalents. Financing category – Activity on liabilities and the impact of interest rate fluctuations on liabilities such as pension discount rates. IFRS 18 also requires certain totals and subtotals – operating profit or loss, profit or loss before financing, profit or loss before income taxes, income taxes and profit or loss. Entities whose primary activity is investing or providing financing to customers will have additional disclosure requirements. Disclosures: IFRS 18 provides specific disclosure requirements for Management-defined performance measures or non-GAAP measures. These should be disclosed within one note to the financial statements and provide a reconciliation to the most similar IFRS defined subtotal on the statement of profit or loss. These non-GAAP measures must be based on financial performance measures and cannot be totals or subtotals specified under IFRS. Entities can present expenses within the operating category by either nature, function or a combination of both. Certain new disclosures would be required for any operating expenses presented by function. Aggregation: The standard provides additional guidance on grouping similar items based on shared characteristics and should be applied across the financial statements. There would be additional disclosure for items on the financial statements grouped together as “other.” In addition, IFRS 18 eliminates cash flow presentation options by requiring dividends and interest paid to be classified as financing activities and dividends and interest received as investing activities. Also, goodwill will now be a required line on the balance sheet, if applicable. IFRS 18 is effective January 1, 2027 and is applied retrospectively. Early adoption is permitted. All IFRS entities will be impacted. While there are several years before the standard is effective, successful adoption will depend on preparation beforehand. Organizations should begin the process of assessing how this standard impacts their financial statements, communicate the impact and expectations with financial statement users and monitor local reporting changes between then and now. Schneider Downs provides assurance, tax and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### EPA’s Small Entity Compliance Guide - Standards of Performance for New, Reconstructed and Modified Sources and Emissions Back in December 2023, The U.S. Environmental Protection Agency (EPA) announced a final rule aimed to reduce methane and other harmful air pollutants. That rule became effective May 7, 2024, and targeted methane “waste emissions charges (WEC)” from the oil and gas sector. The rule implements Section 60113 of the Inflation Reduction Act of 2022 (IRA), which gives the EPA the power to act as tax assessor, collector and enforcer. For a summary recap of the new rules relating to the methane emissions charge, see Our Thoughts On the WEC charge. Since then, the EPA has shown a continued focus on methane emission regulations, and moving forward to March 8, 2024, established a new rule on “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review.” These new rules became effective on May 7, 2024, alongside the new rules that included the methane emissions charge. Most recently, on May 20, 2024, the EPA published a small entity compliance guide for the new emission standards that were part of the March 8, 2024 rules. The purpose of the guide, while non-authoritative, was created to assist small entities in complying with the new rules for certain impacted facilities (or points of emissions). The impacted facilities mentioned within the guide are included within Table 1-1 of the referenced guide linked below. A summary of these impacted facilities (or points of emission sources) includes: Well completions (including two separate subcategories based upon type) Well liquids unloading New wells with associated gas (including three subcategories based upon construction dates) Wells with associated gas reconstructed or modified after December 6, 2022 Wet seal centrifugal compressors Dry seal centrifugal compressors Reciprocating compressors Process controllers Pumps Fugitive emissions from well sites and compressor stations Equipment leaks at natural gas processing plants Sweetening units Storage vessels The guide goes on to outline steps for determining facility status, compliance timelines, testing and monitoring protocols, reporting obligations and recordkeeping/retention protocols. As mentioned within the guide, certain requirements such as reporting and recordkeeping will likely be relevant for most, if not all, of the impacted facilities described above. If you own or operate more than one affected facility, you may submit one report for multiple affected facilities, provided the report contains all of its required information. Have you read through the compliance guide to assess how these new rules could impact your operations? There are specific requirements for compliance for each of the above-mentioned points of emissions. If you need further assistance in the evaluation of these new requirements, please see the final rule and small entity compliance guide linked below or contact one of us on the Schneider Downs Oil and Natural Gas team, if we can help. Small Entity Compliance Guide Final Rule - Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### OMB Releases the 2024 Compliance Supplement As many organizations discuss audit planning with their auditors for fiscal years ending June 30, 2024, the Office of Management and Budget has released the 2024 Compliance Supplement (Supplement) effective for fiscal years beginning after June 30, 2023. As stated in Part 1 of the Supplement, “The Supplement is a document that identifies existing compliance requirements that the federal government expects to be considered as part of an audit required by the 1996 Amendments to the Single Audit Act.” Currently, any organization that expends more than $750,000 of federal financial assistance is subject to a single audit. In April 2024, this threshold was increased to $1,000,000 for fiscal years beginning on or after October 1, 2024. Organizations with fiscal years ending June 30, 2024 and 2025 are still subject to a single audit if they have more than $750,000 of federal financial assistance but will see relief in the single audits for fiscal years ending June 30, 2026 and beyond if they expend less than $1,000,000. Calendar year organizations will see relief for years ending December 31, 2025. Organizations and auditors annually await the release of the Supplement to review for major changes. This year’s version includes a number of modifications, ranging from newly added or the removal of programs, compliance requirements subject to audit changing and changes within the “higher risk” designation. Part 2 of the Supplement contains the matrix of compliance requirements. This chart shows the new programs added or deleted in the 2024 version. Part 2 also lists the Assistance Listing Numbers of programs and which compliance requirements are subject to audit. Federal agencies select the compliance requirements subject to audit that must be tested by auditors for direct and material items related to the program(s) under audit. For 2024, the Supplement removed the following programs from higher risk designation: 21.026 - Homeowner Assistance Fund 21.029 - Capital Projects Fund 84.425 - Education Stabilization Fund 93.498 - Provider Relief Fund 96.001/96.006 - Disability Insurance/Supplemental Security Income Cluster Many federal programs established during the COVID-19 pandemic were designated as higher risk. The Infrastructure Investment and Jobs Act also created additional programs, with some also labeled as higher risk. Programs with higher risk designations in the 2024 version include the following: 15.252 - Abandoned Mine Land Grants 21.023 - Emergency Rental Assistance 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.778/93.777/93.775 - Medicaid Cluster One more reminder: the Federal Audit Clearinghouse has completed the transition from Census Bureau to General Services Administration. There are no current waivers, so organizations must complete their single audit submissions on time, which is the sooner of nine months after year-end or 30 calendar days after the organization receives the auditor’s report. The date the auditors signed the report is considered the date received. Schneider Downs will continue to provide updates regarding federal funding as new information is discovered. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.   To learn more, visit our dedicated Audit and Assurance page.  ### A Front Row Seat to the Ticketmaster Data Breach Learn more about Live Nation’s Ticketmaster data breach that impacts millions of customers. Last Thursday, I woke up to my 7 AM alarm as usual. My iPhone screen lit up as I reached for it, and my sleepy eyes immediately focused on an alert I’d never seen before concerning a list of my passwords exposed in recent data leaks. Among the long list was Ticketmaster. And I’m not alone. 560 million Ticketmaster customers are in this with me! The Department of Home Affairs recently confirmed that Ticketmaster was the target of a cyber incident, affecting the data of 560 million customers worldwide. ShinyHunters, a notorious hacker group, claimed responsibility for the attack and is allegedly selling the confiscated data for $750,000. Why is the data worth so much? Well, because it includes Ticketmaster customers’ fingerprint data. What is Fingerprint Data and Why is it So Valuable? Fingerprint data is personally identifiable information, such as phone numbers, names, addresses, credit card numbers, and other sensitive details. Threat actors on the dark web look for this type of personal information so they have the data points they need to open fictitious accounts in someone else’s name with someone else’s money. From purchasing a vehicle to opening a line of credit, fingerprint data is the key threat actors need to open the door to fraud. And while fraud isn’t a new concept and large-scale data breaches like this are happening more frequently, it’s still easy to get frustrated. And I find myself asking, “No matter how many times I change my password, is my data ever really safe?” Even though I still grapple with this question, I know a few best practices to help myself (and you!) feel safer when participating in regular activities, such as buying concert tickets. 3 Top Tips to Protect Your Private Information Knowledge is Power: Regularly review the security alerts you receive via your Apple and Android devices and monitor your credit reports for signs of fraud and irregular activity. Flag suspicious activity appropriately. You can also enable multi-factor authentication for increased account protection. Think Before You Click: Once your information is exposed in a data leak, the risk of identity fraud and phishing attacks is higher. Stay vigilant on all digital communication platforms, especially when clicking on links in emails and while surfing the web. Sharing is Caring: Help your elders and others around you who are less technologically savvy set up strong passwords. And by the way, it is still important to regularly change your passwords, especially if you use the same one across multiple accounts. While your password might not be the source of compromise, if exposed, threat actors can use it to try to break into your other accounts that use the same password. Stay safe out there! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about the recent Ticketmaster data breach that impacted millions of customers and how to keep your private information safe. ### Pay to Play In the world of venture capital and startup financing, "pay-to-play" provisions have become increasingly popular. These provisions are designed to protect companies during challenging times, but they also come with their own set of advantages and disadvantages. Below we will explore both sides. Pros Financial Stability for Companies Pay-to-play provisions can ensure that companies receive necessary funding even when market conditions are unfavorable. If new investors are unwilling or unable to contribute funds, existing investors are obligated to step in. This helps maintain financial stability during downturns. Resetting Valuations In a pay-to-play financing, existing preferred stockholders may face a "cram down." Their preferred shares are converted to common stock at a 1:1 ratio, effectively wiping out their preferred status. The company then raises a new round of financing at a lower valuation, often referred to as a "down round." This reset allows the company to adjust its valuation based on current market realities. Cons Strained Investor Relationships Pay-to-play provisions can strain relationships between investors. When one party is unwilling or unable to contribute additional funds, tensions may arise. Investors may feel pressured to invest more than they initially intended, leading to potential conflicts. Exclusion from subsequent rounds due to financial limitations can impact investor returns and overall company growth. Power Dynamics and Unfair Advantages In down rounds, larger investors often have an advantage. They can negotiate better terms and maintain their ownership percentage. Smaller investors may find themselves at a disadvantage, potentially diluting their ownership stake disproportionately. Pay-to-play financings serve as a safety net for companies during economic downturns, but they also introduce complexities and potential conflicts. Striking a balance between financial stability and investor relations remains crucial for successful implementation. Remember that each situation is unique, and the decision to adopt pay-to-play provisions should be carefully considered based on the company's specific circumstances. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. Excerpt: Learn more about the advantages and disadvantages of "pay-to-play" provisions and why they have become more popular. ### What You Missed at DynamicsCon We traveled to Denver earlier this month to attend DynamicsCon. The week was jam-packed with educational sessions, listening to stories from end users and other partners, and learning about the ever-evolving marketplace. It’s impossible to summarize everything (there were over 250 sessions and over 1,500 people there) we saw. Suffice to say it was an amazing experience and we are so grateful to the city of Denver and the team at DUG for putting on this awesome event. We met people from many different industries and functional areas, but most of the individuals we met were either in Finance or IT. We also noticed that many of the people there were users of more than just one app. The most common combination was Business Central or Finance and Supply Chain Management with Customer Engagement or Power Platform. The most popular industry represented at the conference was manufacturing and distribution, which is no surprise given investment that both Microsoft and the partner ecosystem is making in both industries. Here’s what you missed: Cloud Migrations We are going to be talking about cloud migrations for the foreseeable future. There are plenty of people who were using GP or NAV and planning a migration to Business Central or F&SCM. Like Summit, this was one of the most popular topics. At Summit, we encountered many GP users planning a migration to Business Central. At DynamicsCon, we spoke with an equal number of companies using NAV and GP. The process for planning a migration from GP to Business Central is very different from the process of planning a migration from NAV to Business Central. Regardless, there are several ways to de-risk a migration from legacy to modern ERP. Use a business value assessment to unpack the value and identify the most important outcomes. Optimize processes and build a blueprint ahead of the implementation. Use a proof of concept to build confidence in a mission critical process. One of our favorite sessions on this topic was hosted by an end user who was in the process of migrating from GP to Business Central. She told us her story and then we had an interactive discussion about data migration and some of the tools & strategies available. Looking towards optimization The number of companies live on Business Central (and the rest of the Dynamics 365 platform for that matter) is growing every day. There was more talk about how to optimize after going live at DynamicsCon than there was last year at Community Summit. One of our favorite sessions on this topic was led by another Business Central partner and an end user that was focused on the concept of an “ERP Health Check”.  This session was from the perspective of an IT leader and we learned about several ways to proactively ensure your ERP is driving business outcomes. There was a lively audience discussion at the end where we drilled into best practices or prioritizing tasks in a health check. The big takeaway from this session (which we wholeheartedly agree with) is that ERP is a living, breathing part of your organization. There is not “set it and forget it” option. ERP drives business outcomes. Without proper care and feeding, ERP can become a blocker to outcomes. AI, AI, AI AI should be top of mind for every business. The Dynamics and Power Platform ecosystem is fully embracing AI to help customers unlock hidden potential and move faster. The keynote energized everyone – and for good reason. During the keynote, we got a peak at Copilot for Finance. This tool connects to your financial data and adds automation to some of the common activities finance teams spend time on. Balance sheet reconciliations Trend analysis Pulling information together for customer communications (e.g., collections) The transition to cloud unfolded at a reasonable pace. The transition to AI is moving at lightspeed. IDC research predicts 40% of net new apps in the marketplace will incorporate AI by 2026. About Schneider Downs Digital Unlock your true business potential and evolve your digital footprint with SD Digital. In a business world where competition and consumer demands are multiplying, investing in digital is not just a requirement for relevance but a race against market obsolescence. From financial impacts and attrition to a decline in market share, there’s a bleak future facing organizations that view the status quo as their final state. To learn more, visit our dedicated SD Digital page. ### Four Bills Approved by the House Ways and Means Committee Affecting Tax-Exempt Organizations On May 15, 2024, the House Committee on Ways and Means approved four bills that could impact tax-exempt organizations if enacted. In his opening statement, Chairman Jason Smith (R-MO) cited antisemitic activities occurring on college campuses, the nexus between tax-exempt organizations and terrorism, and the undue influence of foreign money in U.S. elections as motivations for the bills. A summary of each of the four bills can be found below. Foreign Grant Reporting Act (H.R. 8290) The Foreign Grant Reporting Act, if enacted, would require Section 501(c) organizations to report information regarding any grant or other assistance provided by the organization to a foreign entity. This information would need to be reported on the organization’s annual return and would include the name and address of the foreign entity receiving the support, as well as the aggregate amount of the support. Indirect, as well as direct, contributions would need to be reported. This bill would serve to broaden the current Form 990, Schedule F reporting requirements for grants to foreign entities and bring the requirements more in line with the reporting that is already required for the grants tax-exempt organizations provide to domestic entities. Critics of the bill have expressed concerns that the additional disclosure requirements could create risk for grant recipients in sensitive, or life-threatening, situations. Additionally, critics feel the definition of “indirect contributions” is very broad, and therefore may have a high reporting burden. American Donor Privacy and Foreign Funding Transparency Act (H.R. 8293) If enacted, the American Donor Privacy and Foreign Funding Transparency Act would require tax-exempt organizations to report on their annual Form 990 information regarding contributions received from foreign sources, including the aggregate amount of foreign-sourced contributions received, grouped by source country. Under the bill, this information would be required to be made available for public inspection. Some organizations have expressed concerns that the requirement to verify the nationality of donors may be burdensome, and it may result in losing the trust of the donors and the communities they serve. However, Chairman Smith noted that this “will help shine a light on the influx of foreign funding into tax-exempt organizations,” which could potentially be used to influence U.S. elections. No Foreign Election Interference Act (H.R. 8314) The No Foreign Election Interference Act could have serious consequences for any tax-exempt organization that continues to violate the prohibitions that it would put into place if enacted. Under this bill, any tax-exempt organization that makes a disqualified political committee contribution will be required to pay a penalty equal to twice the amount of the contribution. A “disqualified political committee contribution” is defined as any contribution made by a tax-exempt organization to a political committee if the tax-exempt organization received, during the previous eight-year period, any contribution or gift from a foreign national. Tax-exempt organizations will lose their tax-exempt status after three disqualified political committee contributions are made. End Zuckerbucks Act (H.R. 8291) The End Zuckerbucks Act, named after Mark Zuckerburg, who donated hundreds of millions of dollars to charitable organizations that funded state and local election organizations, amends Section 501(c)(3) to prohibit tax-exempt organizations from funding the administration of elections (except the donation of space to serve as a polling place). If you have any questions about the potential impact of this legislation on your organization, please reach out to Sarah Piot or Erin Wood. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. Excerpt: Learn more about the four bills approved by the House Committee on Ways and Means and how it could impact tax-exempt organizations if enacted. ### IRS Begins to Notify Impacted Taxpayers of Breach of Data Related to US vs. Littlejohn This past April, the Internal Revenue Service (IRS) started to send out Letter 6613-A’s to notify taxpayers that an IRS contractor has been charged with the unauthorized inspection or disclosure of their tax return information. These notifications are in reference to case US vs. Charles Edward Littlejohn, an IRS contractor. The letter states that Littlejohn was charged with unauthorized inspection or disclosure of tax return or return information between 2018 and 2020. The letters include a copy of IRC 7431 and a copy of the General Allegations of the case against Littlejohn. The allegations against Littlejohn assert that he distributed taxpayer information associated with “Public Official A,” along with thousands of the nation’s wealthiest people, to two separate “news organizations.” Based on our observation of these letters, the tax returns impacted have been associated closely with real estate development and investment. If you or one of your business entities receive Letter 6613, you may be asking yourself: what exactly is IRC Section 7431 and what, if any, action should I or am I required to take? IRC Section 7431 allows for civil damages if an officer or employee of the United States and/or a person who is not an employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer, in violation of any provision of section 6103, which prohibits the release of tax information by an IRS employee. The consequences for violating these code sections can result in the violators paying the greater of $1000 for each act for which they are found liable or the sum of the actual damages sustained by the persons whose information was breached, including punitive damages and costs of actions. In the case of willful violations of the disclosure rules, a plaintiff may seek punitive damages, along with costs of the action and reasonable attorney’s fees. If you are responsible for filing tax returns that may include investor-identifying data, such as Forms K-1, you may wonder if there are any required notifications for you to send to your investors. There are no notifications required by the IRS code or regulations; however, in your duty, as the manager of the partnership or an officer of the corporation, you may be required by your operating or shareholder agreement to notify your partners or shareholders. Even if it’s not required to notify your investors, it may be best practice to provide them notice of the potential breach of sensitive information. Taxpayers affected by the breach have two years from the date of discovery by the plaintiff to take action. It has yet to be seen whether taxpayers will take legal action in this case and what type of renumeration they may achieve. If you have received these letters from the IRS, you should provide copies to your CPA and legal counsel to determine a plan for any potential legal action to take on behalf of yourself or your partners. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about Letter 6613-A’s to notify taxpayers that an IRS contractor has been charged with unauthorized inspection or disclosure. ### Welcoming Our 2024 Summer Intern Class! We’re pleased to announce that between Monday, May 13, and Monday, May 20, we welcomed over 55 interns to the firm! As outlined in this Pittsburgh Business Times article (subscription may be required to view), we have worked hard to bolster our presence on campuses in Pittsburgh and Columbus and have taken a consultative approach when talking with students. This ensures that we understand what experiences our interns are looking to gain from their time at the firm, and prepare interns for entry-level staff roles while simultaneously aligning with their expectations and desires. Whether they’re spending the summer working in our audit, tax, consulting or wealth management practices, we can’t wait to watch them develop as they apply their classroom knowledge and deepen their skills. Plus, we have planned plenty of fun activities within and beyond our office walls, so they can get a healthy balance of relationship-building and networking opportunities along with their day-to-day work responsibilities. If you're interested in joining us next year, explore our early career opportunities here: Where your future counts (schneiderdowns.com).   Excerpt: Check out our incoming group of 2024 Summer Interns, consisting of 55 individuals ready to start their journey with us. ### Adopting a Digital Mindset Copyright Disclaimer: This article is a repost and not an original work. All rights to the content belong to the original author and/or publication. We are sharing it here for informational purposes only. The original publication can be found here. While changing market conditions, human capital retention issues, and financial constraints are challenging for contractors, they also provide opportunities for competitive advantages if handled effectively. Companies that continue to innovate and adapt to changing environments position themselves for long-term sustainability, success, and growth. Contractors can distinguish themselves in this way through the enhanced use of technology. This article discusses the importance of aligning people, processes, and technology to achieve successful digital initiatives. PREPARING FOR DIGITAL TRANSFORMATION A common misconception is that technology can — and will — fix any business process issues. The reality is that technology, when implemented over poor or broken processes, can exacerbate these issues. Technology should be used to enhance optimized processes, as opposed to implementing technology that requires a process to conform to it. By first going through the exercise of aligning people, processes, and technology to explicitly stated business objectives, companies can expect better results from their technology implementations, avoid common pitfalls, and have a greater probability in realizing the full benefits of their digital initiatives. Furthermore, these steps aid in user acceptance and confidence, while developing a culture of change and new perspectives. The necessary foundational steps to put you on the right path include thinking critically about the problem you are trying to solve, how technology plays a role in that solution, and the value to be derived from solving that problem to facilitate successful change and cultivate a culture of innovation. DIGITAL STRATEGY The technology landscape is vast and can be quite overwhelming. There are a significant number of solutions available, with new ones constantly hitting the market that are more impressive than the last. The sheer volume of software alone makes it difficult to identify and select the right technology solution for your company. If there is no business case supporting these digital initiatives, then they will fail before they even start. Companies that ask about a technology solution’s features and functions before reflecting internally on the business purpose and corresponding impact on people and processes are setting themselves up for a costly, inefficient, and overall painful implementation from the start. Have you ever left a software demo thinking that the tool was going to change your company forever, only to realize that it doesn’t do what you thought it would once implemented? Have you ever been part of an implementation that stretches months past the deadline and gets shelved before it goes live? Or, have you purchased new software that gets rolled out with grand pomp and circumstance, only for it to go unused past the training class? Largely, these failures are not solely the fault of the technology itself and, in fact, may not be the fault of the software at all. A frequently missed step by most companies, and a costly omission, is the lack of clarity surrounding the purpose and intended impact of the solution being evaluated. Companies don’t always need the best piece of technology available in the market — they need the correct piece of technology to help achieve their particular goal or objective. Understanding, defining, and aligning these needs are the starting point to developing a foundational digital strategy. A digital strategy refers to a company’s plan for leveraging digital technologies in order to achieve specific strategic goals and objectives. Critically thinking through those strategic goals and objectives should come first and is key in having a clear and focused digital strategy. Simply stated, the first question that companies need to be considering is “Why are we planning to innovate?” While the answer may not be straightforward for everyone, the purpose behind most digital strategies can typically be categorized into one of the following four strategic goals: New Business Technology can help with growth by enabling new business lines or revenue streams to develop and flourish. Simply put, technology can allow companies to do something new. Consider the data captured during a job’s life cycle. Companies using tools such as data warehousing, data analytics, and artificial intelligence (AI) can mine this data to extract insights that will not only help them with their own internal operations, but may also be used to provide insights on construction trends, cost projections, and project performance metrics that could be sold within the marketplace, thus creating a new source of revenue. Internal Stakeholder Impact Improving the employee experience enhances satisfaction, aids retention, and creates opportunities. People want to have a positive experience during their workday, feel empowered, and know they have the right tools to do their job as efficiently and effectively as possible. Technology can help by removing the most manual, tedious, and time consuming tasks from your company’s processes through automation. But the quantitative impact is getting the actual time back each day to focus on other value-added tasks, thus expanding your workforce’s capacity. External Stakeholder Impact Think about all the interactions your company has with project owners, GCs, subcontractors, banks, bonding companies, lawyers, vendors, accountants, auditors, compliance officers, etc. It’s likely that any inefficiency or business problem that is painful for your company internally has an equal or greater negative impact on an external party. Technology provides the ability to proactively share clear, concise, and timely information with external partners due to the implementation of workflow tools, giving you a newfound visibility into your processes and access to your data. Scalability Technology can help to reduce costs, both in the interim and at scale, essentially allowing companies the opportunity to do more with less. While top-line growth is important, it’s the enhanced profitability that makes the prospect of growth exciting and sustainable. Tools such as resource planning and scheduling software to optimize resource allocation, labor management, and equipment usage can help ensure that projects are executed timely while reducing downtime and affording the opportunity to take on more projects without straining resources.\ Additionally, enhanced reporting and automated financial management may allow contractors to improve their jobs per project manager metric, allowing them to take on additional projects without having a corresponding increase to headcount. As mentioned previously, the pace of change in the current business environment is rapid and keeping up requires companies to be adaptable. A company’s digital strategy is not immune to these forces; it’s okay to pivot, rework, and redefine your digital strategy over time. After all, it’s meant to be a guiding principle, not a self-imposed regulation. DIGITAL INITIATIVES The tangible steps that must be taken to execute your digital strategy are referred to as digital initiatives and, collectively, make up the plan to achieve the stated goals and objectives. For example, if the digital strategy were synonymous with a marathon, then the digital initiatives would represent each mile marker getting you to the finish line. Technology is at the forefront of any digital strategy, representing the actual tools that enable companies to carry out the tasks needed to achieve the goals and objectives. At multiple points along your digital journey, technological implementations will occur. While there are technologies across all cost ranges and complexities from which the construction industry can benefit, it’s less important to hear about what these technologies do in general and more about how they address a specific need. The best way to keep this point at the forefront is to think about technologies in classes or categories, rather than by particularly named solutions. For common technology classes you may encounter, see the “Technology Classes” sidebar. While it’s important to understand the functionality that different classes of technology provide, it’s equally important to consider that there are digital initiatives that require no new software or technology investments at all. People, processes, and technologies all play an equal role in helping to carry out the digital strategy. Digital initiatives that focus on people and process are hypercritical and create an environment ready for innovation and technology. They ensure that the business processes in place are structured for leveraging technology to execute jobs efficiently and effectively. A few examples include: Realigning roles and responsibilities to create a more efficient workflow with less touches or transfers Evaluating the business purpose and need for each step within a particular process to trim off any excess, outdated steps Reimagining how a particular process should work in order to better leverage a piece of technology Often, it’s the people- or process centric initiatives that require a bit more creativity or shifting perspective to think through change. Have you ever asked someone (or been asked yourself) about why a task is performed a certain way, only to hear that “it’s the way it’s always been done”? This is a great indicator of an opportunity for improvement. Where innovation runs rampant within a company is getting employees to proactively ask about the why behind processes and feel empowered and supported in bringing thoughts, ideas, or even solutions forward. This particularly speaks to the importance of creating a culture of innovation and adopting a digital mindset. Technology Classes Aside from enterprise solutions, the following are common technology classes encountered in the industry today: Data Analytics & Business Intelligence Data analytics and business intelligence tools allow companies to leverage data to make data-driven business decisions with confidence and clarity. These insights can have a profound impact in a variety of areas of any business and can be foundational in driving strategic planning. At this point, all companies within the construction industry should have an analytics strategy either in the works or already in place. Robotic Process Automation & Intelligent Automation Robotic process automation (RPA), or “bots,” use software to automate repetitive, rules-based tasks. Once developed, a bot simulates how a human interacts with a computer to perform tasks. They have 24/7/365 capacity, can improve efficiency and effectiveness of tasks, mitigate risks associated with human error, and allow human capital resources to focus on value-added tasks. Bots can also leverage artificial intelligence (AI) to handle difficult tasks. The combination of AI and RPA is often referred to as intelligent automation. Data Warehousing A data warehouse is a class of technology that involves collecting, storing, integrating, and managing data from a variety of disparate systems in one centralized location. Often, a data warehouse is a recommended foundational component to any successful analytics or business intelligence endeavor. Data warehouses help enhance decision-making, improve the capabilities and efficiency of reporting, and promote having consistent data policies throughout an organization (i.e., governance, integrity, and security). An oversimplified and common example is if you are constantly going into multiple systems, exporting data from said systems, and manually pulling together a custom report in a side spreadsheet, then a data warehouse may be useful for you to support and automate those efforts. Integration & Workflow Tools While technically separate categories, these tools are often used together and are designed to connect different applications, systems, and processes within a company to streamline operations, improve efficiency, and enhance collaboration. Integration tools enable the flow of information and actions between various components throughout a business process. Common workflow tools include business process management systems, task and project management tools, approval and review workflows, and document and content management workflows. Accounts payable automation is a hot topic with this class of tools supporting those efforts. Artificial Intelligence & Machine Learning These technologies leverage algorithms to perform complex tasks that require logic typically associated with human intelligence. While you may hear about them often, these solutions are only starting to become more mainstream. It’s of utmost importance to note that if you have goals to leverage AI and machine learning in the future, then start working on your data integrity, storage, and governance immediately. These tools require high-quality data to produce reliable results (the ultimate case study in “garbage in, garbage out”). A CULTURAL COMMITMENT TO INNOVATION Adopting a digital mindset means to embrace attitudes, beliefs, and behaviors that prioritize leveraging digital technologies. It speaks to the necessary commitment to innovation and transformation required to gain competitive advantages, operate more efficiently and profitably, and develop a culture of forward-thinking problem solvers, rather than data-movers and button-pushers. It promotes agile thinking supported by research, ideation, and experimentation, with steps to arrive at impactful solutions quickly while problem-solving, collaborating, and embracing change along the way. Executing a digital strategy effectively requires buy-in and collaboration at all levels. The commitment to these digital efforts within any company calls for that tone to be set at the top. Executive leadership is responsible for creating the cultural commitment to ensure innovation is a core value that shapes how companies think, work, and interact. This leadership helps encourage, support, and reward the individuals responsible for carrying out the digital initiatives. Additionally, the individual process owners are most intimately familiar with the day-to-day operations and directly feel the pains of any inefficiencies or technology gaps. This positions them uniquely on the front lines for identifying improvement opportunities. Accordingly, it is critical that those team members feel empowered to proactively raise their hands without the fear of scrutiny and ask, “I wonder if we could do this a different way?” CONCLUSION Processes within the construction industry have largely looked and felt the same way for a long time. Change may be hard, but stagnation is fatal. Fostering an environment where change is celebrated may seem like a monumental task. By embracing these concepts and developing a forward-thinking and innovative environment, the challenges associated with change will be quickly replaced by the excitement and encouragement about the opportunities this change creates. Companies need to realize that the greatest returns on investment on their digital strategies are those that make a cultural commitment to innovation and digital transformation. About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. Excerpt: Learn more about the importance of aligning people, processes and technology to achieve successful digital initiatives. ### Expanded Related-Party Footnote Disclosures for Higher Education On October 31, 2023, the Department of Education published final regulations that impact financial responsibility, administrative capability, certification procedures, and “ability to benefit” programs for institutions of higher education that participate in Title IV of the Higher Education Act. These new rules are designed to protect students and taxpayers by strengthening the Department of Education’s oversight and monitoring of colleges and universities. The final regulations include new disclosure requirements for related-party transactions within the institution’s audited financial statements. The new disclosure requirements extend beyond the requirements of Accounting Standards Codification (ASC) 850, Related Party Disclosures, and require the related party's name, location, and description, along with the amount and nature of any transactions between the related parties and the institution. Transactions cannot be aggregated and must be disclosed individually, regardless of the amount, and there is currently no threshold for amounts to be considered de minimis or insignificant. Per the original ruling and fact sheet released by the Department of Education, these new regulations go into effect on July 1, 2024; however, it had been unclear which financial statement periods the new requirements would apply to. On May 17, 2023, the Department of Education published a series of Frequently Asked Questions that begin to address some common issues. They clarified that the requirements for the new related-party disclosures apply to any financial statements submitted to the Department of Education on or after July 1, 2024, regardless of when the institution’s fiscal year begins or ends. This means that the expanded related-party disclosures will need to be included within an institution’s fiscal year 2023-2024 financial statements. In order to prepare for these new requirements, institutions should review conflict-of-interest policies, begin gathering the data that will be needed to create this new disclosure, and make sure that the necessary parties at your institution are aware of the new rules.  In addition, institutions should develop a strategy for communicating these changes to key stakeholders and informing them that some of their activity may be included in the new reporting. Reach out to the higher education advisory team at Schneider Downs for guidance as your institution prepares to navigate these new requirements. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.   To learn more, visit our Higher Education Industry Group page.   ### Investment Corner with Jason & Sean: Securitized Fixed Income Securitized bonds are an area of the investment universe that many investors are not familiar with. The lack of familiarity is understandable. They don’t have issuers that are easy identifiable (e.g. Microsoft or Johnson and Johnson), and are not issued by a government (e.g. United States Treasury Bill, United Kingdom Gilts, German Bunds, etc.) or a state/local municipality (e.g. City of Pittsburgh or State or Pennsylvania). What They Are and How They Work Taking a step back, securitized bonds fall under the fixed income asset classification of the investment cosmos; we emphasize cosmos1 here because there is wide space between a U.S. Treasury Bill and a Non-Agency Residential Mortgage-Backed Security (more on that later). Securitized bonds are comparable to a traditional bond in that one party is lending to another, but they differ in many ways. Among them those differences are: The way interest payments are made What is backing the creditworthiness of the bond The duration (interest rate sensitivity If I have kept you engaged this far, you might be asking… well what is a securitized bond? In a nutshell, a securitized bond is the product of taking many individual financial assets (e.g. individual mortgage loans) and putting them together (in investment parlance, it is called pooling) to create a “bond” that pays investors one interest payment. The source of the payment isn’t from one entity (e.g. United States or Microsoft), but many (e.g. the mortgage payments of me and the rest of my SDMWA colleagues). The process of pooling financial assets is primarily done because it is easier to trade (think find an investor). For example, it would be hard to find someone interested in buying my mortgage loan, but if you packaged my loan with a series of other mortgage loans that mirrored mine across a litany of characteristics2, that would be attractive to buyers. Securitization most often occurs with loans and other assets that generate receivables such as different types of consumer or commercial debt. The most popular securitized products are mortgage-backed securities, who were pioneered by Lewis Ranieri, a prominent Bear Stearns trader.3 How They Can Add Value Now that we have given you the broad outlines of what a securitized bond is, I want to talk about how it can add value to a portfolio/fixed income allocation. The securitized asset space is vast in size; it is over $2.5 trillion larger than the corporate credit market. However, despite being such a big market, many securitized bonds are not included in the popular fixed income indices like the U.S. Bloomberg (nee Barclays) Aggregate Index. The lack of inclusion in broad indexes, in our opinion, creates the opportunity to add diversification and higher income/return streams into fixed-income portfolios. Despite having unique features such as credit enhancements, income streams that are floating rate in nature, and structures that allow an investor to select the type of risk (and by extension, the type of yield) they want to take, securitized bonds often receive credit ratings that understate their credit quality. The lack of ability to properly rate these bonds can be attributed to the vastness of the investable universe, the complexity of the cash flows, and the structure of the securitized bond; all of these reasons contribute to securitized bonds offering attractive yields for investors with mostly less interest rate sensitivity to a comparably-rated corporate or municipal bond. Securitized bonds have complexity to them; we don’t want to pretend that they don’t, nor do we think that we can explain them in less than 750 words. However, our investment team believes they have the ability to offer diversification, increased yield, and differentiated return streams when compared to more traditional fixed-income allocations. They don’t have the panache of stocks like Nvidia or Microsoft, the name recognition of U.S. treasuries, or the ubiquity on Twitter that GameStop or AMC enjoy. Instead, securitized bonds operate off to the side, visible to almost anyone willing to look their way, but unable to generate the attention we feel they deserve. For more information on how we use securitized bonds as a part of our fixed income allocation, please contact me or another member of the SDWMA team. We would welcome the opportunity to have a conversation. 1 Cosmos are really, really, really big. 2 Mortgage loan characteristics would be: down payment size, W2 income of the borrower, location of the house, strength of the local schools, etc. 3 https://www.investopedia.com/terms/l/lewis_ranieri.asp#:~:text=Lewis%20Ranieri%20is%20considered%20by,the%20mortgage%2Dbacked%20securities%20market About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision-making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn more about the intricate nature of securitized bonds. Explore their complexity, grasp their mechanics and discover how they can potentially enhance value. ### IRS Announces Relief for Taxpayers Affected by Ohio Tornadoes On May 16, 2024, the Internal Revenue Service (“IRS”) announced tax relief for individuals and businesses that were affected by the Ohio tornadoes that began on March 14, 2024. Affected taxpayers now have until September 3, 2024 to make tax payments and file federal individual and business tax returns. Who is eligible for the relief? The relief currently applies to individuals and businesses in the following counties: Auglaize Crawford Darke Delaware Hancock Licking Logan Mercer Miami Richland Union The Federal Emergency Management Agency (“FEMA”) may subsequently add additional counties to the list. An up-to-date listing of all eligible locations can be found on the Tax relief in disaster situations page of the IRS website. The IRS will automatically provide the relief to individuals and businesses if the address on record is within the disaster area. There is no need to contact the IRS to be eligible for the relief. What are the types of relief available? The tax relief delays tax filing and payment deadlines that occur during the postponement period between March 14, 2024 and September 3, 2024. As a result, affected individuals and businesses will have until September 3, 2024 to file returns and pay any taxes that were originally due during the postponement period. The IRS gives the following examples of the types of returns and payments that can be postponed until September 3, 2024; however, this is not an exhaustive list of all returns and payments to which the relief applies: Individual income tax returns and payments normally due on April 15, 2024. 2023 contributions to IRAs and health savings accounts for eligible taxpayers. Quarterly estimated income tax payments normally due on April 15 and June 17, 2024. Quarterly payroll and excise tax returns normally due on April 30, 2024 and July 31, 2024. Calendar-year partnership and S corporation returns normally due on March 15, 2024. Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2024. Calendar-year tax-exempt organization returns normally due on May 15, 2024. Additionally, penalties for failing to make payroll and excise tax deposits due on or after March 14, 2024 and before March 29, 2024 will be abated if the deposits were made by March 29, 2024. Details on other types of returns, payments and actions that qualify for relief during the postponement period can be found on the Disaster assistance and emergency relief for individuals and businesses page of the IRS website. The IRS may also provide additional disaster relief in the future. Are there any other considerations? Some taxpayers who live outside of the disaster area may also qualify for relief if they have records located in the affected area that are necessary to meet a deadline during the postponement period. Individuals who need a filing extension beyond the postponement period can get it by filing a paper Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS. This will extend the individual income tax return until October 15, 2024; however, payments will still be due on September 3, 2024. How can Schneider Downs help? The team at Schneider Downs can help clients determine if they qualify for relief, and which payments and tax returns can be delayed during the postponement period. We can also help if late payment or late filing penalties are erroneously assessed. Additionally, affected taxpayers within the disaster area who suffered uninsured or unreimbursed disaster-related losses, received qualified disaster relief payments, or participate in a retirement plan or individual retirement arrangement (“IRA”) should discuss the appropriate tax treatment of these items with their Schneider Downs contact(s). About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the tax relief released by the IRS for individuals and businesses that were affected by the recent Ohio tornados. ### OMB Releases 2024 Uniform Guidance On April 4, 2024, the Office of Management and Budget (OMB) released the 2024 Uniform Grant Guidance (2024 guidance). The revisions outlined in the 2024 guidance are effective on or after October 1, 2024, however agencies may elect to apply the 2024 revisions prior to October 1, 2024, but are not required to do so. The 2024 guidance includes numerous updates which should be reviewed in detail by each organization receiving Federal assistance. However, this summary is meant to highlight a few updates that we feel are most applicable and relevant to the administration of Uniform Grant Guidance. The Uniform Grant Guidance increases the single audit threshold from $750,000 to $1,000,000. Perhaps the most notable change in the 2024 guidance, this change could impact an organizations’ requirement to submit a Single Audit. Since 2013, the threshold for a Single Audit was $750,000 where it remained until this year, in which the threshold was updated to $1,000,000. If your organization was close to the threshold of $750,000 in years past, the need for a Single Audit should be reevaluated if Federal grant assistance remained under $1,000,000. This could provide cost savings for organizations, which was cited as one of the goals of these 2024 updates. The amount of fixed amount subawards was also increased from $250,000 to $500,000 for the amount of subawards a recipient may provide with prior written approval from the Federal agency. Check the 2024 OMB Compliance Supplement when it is released but this change is most likely not to take effect for audits of periods beginning on or after October 1, 2024. Equipment and Unused Supplies limit increases from $5,000 to $10,000. The value of equipment or unused supplies that an organization can either retain, sell or otherwise dispose of at the end of a grant award period has increased up to $10,000. The De Minimus indirect cost rate has increased from 10% to 15%. In an effort to recognize the recipient cost of doing business, there were changes to the maximum rate that recipients of Federal funds may use for indirect costs. The amount of subawards that a recipient may apply to their indirect rate also doubled, increasing from $25,000 to $50,000. Simplify language and program requirements. The 2024 guidance “make it clear that agencies should make their grant announcements as clear and concise as possible by limiting the length and complexity of the grant announcement by only including necessary information. Agencies should use plain language that is accessible to eligible applicants with a special focus on reaching underserved communities.” Many of the revisions outlined in the current year are designed to provide clearer, and more precise guidance to both agencies and organizations. And many of the limit changes previously mentioned are specifically aimed towards burden reduction for the organizations and agencies that adhere to Uniform Grant Guidance. The OMB’s announcement of the release of the 2024 Uniform Grant Guidance, as well as other resources such as a redline document showing the 2024 revisions, an accompanying implementation memorandum, as well as reference guides are listed on the CFO website. We will continue to assess and track the developments related to the 2024 guidance. About Schneider Downs Government Services The Schneider Downs Government industry group addresses the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities. We advise a range of government entities, including—but not limited to—boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages. To learn more, visit our Government Industry Group page. Excerpt: Learn more about the recently released 2024 Uniform Grant Guidance (2024 guidance) from the Office of Management and Budget (OMB). ### Federal Trade Commission Votes to Ban Noncompete Agreements On April 23, 2024, the Federal Trade Commission (“FTC”) issued a groundbreaking rule (the “Rule”) banning noncompete clauses in employment contracts. The FTC has stated that this action is intended to empower American workers by providing them the freedom to explore new career opportunities, launch new businesses and foster innovation. A noncompete agreement is a contractual provision between a worker and an employer that restricts the worker from seeking or accepting employment with a competitor or starting a competing business after termination of the worker’s employment. Under current law, noncompetes are governed by state law, and the legal landscape varies widely among the states. While some states broadly prohibit noncompete agreements, other states generally allow and enforce them, with varying standards, conditions and exceptions. The Rule would preempt all inconsistent state laws and create a federal standard for noncompete agreements. Under the Rule, employers would be prohibited from creating new noncompete agreements and would be required to rescind existing agreements. Employers who have entered noncompete agreements with workers will be further required to provide them with “clear and conspicuous” notice by the effective date that the existing noncompete agreement will not be, and cannot legally be, enforced against them. While the Rule takes a broad approach, it does provide for several exemptions. First, it allows existing noncompete agreements with senior executives to remain in place, though no new such agreements may be implemented after the effective date. “Senior executives” for this purpose are defined as workers in policy-making positions who earn over $151,164 annually. In addition, the Rule would not apply to noncompete agreements between businesses, to agreements that restrict activity solely outside of the United States, or to agreements involving certain tax-exempt organizations that do not carry on business for profit. The Rule will also preserve the validity of other types of restrictive employment agreements, such as confidentiality agreements and nonsolicitation agreements. However, if these agreements contain provisions that overly restrict a worker from seeking or accepting work, effectively functioning as a noncompete agreement, they will also be prohibited under the Rule. The FTC envisions a transformative impact on the American economy through implementation of the Rule. Projections indicate that the Rule will facilitate the creation of 8,500 new businesses each year and boost workers’ earnings by an average of $524 per year. The Rule is further projected to lower health care costs by up to $194 billion over the ensuing decade. Furthermore, the removal of employment restrictions is expected to spur a surge in innovation, resulting in an increase of 17,000 to 29,000 additional patents each year for the next decade. Employers should proactively commence preparations, as the Rule will become effective 120 days following its publication in the Federal Register. However, significant legal challenges to the Rule are widely expected, which could delay or even prevent its implementation. Employers are well-advised to review their existing noncompete agreements with experienced legal counsel to develop strategies for addressing this changing regulatory landscape. About Schneider Downs Government Services The Schneider Downs Government industry group addresses the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities. We advise a range of government entities, including—but not limited to—boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages. To learn more, visit our Government Industry Group page. Excerpt: Learn more about the groundbreaking rule the FTC issued (the “Rule”) banning noncompete clauses in employment contracts. ### The Impact of Accounting Advisory in 2024: Supplemental Talent for Accounting and Finance Needs How can accounting advisory services address talent and expertise needs? Accounting advisory services play a pivotal role in alleviating accounting and finance-related talent constraints facing organizations of all sizes and industries. Our Accounting Advisory team continues to provide organizations with the personnel they need to prepare for audits and meet reporting deadlines but also to uncover new opportunities and ways to mitigate risks in talent pipelines. To highlight the impact of our accounting advisory services, we asked our team to share success stories where our supplemental talent significantly benefited our clients. Backfilling Multiple Back Office and Accounting Roles Near year-end, one of our clients experienced turnover in multiple positions within the back office and accounting departments. This resulted in multiple instances of inaccurate financial information: trial balances were not in balance, supporting documents did not agree with trial balances, accounts were not fully reconciled, roll forward schedules were out of date and a significant new accounting standard had not been implemented. After we stepped in to perform a pre-audit readiness analysis, assisted with material adjustments in several areas and helped implement the new accounting standard, our client, despite a sparse back-office, received an unmodified opinion on the financial statements to the satisfaction of all stakeholders. Assisting the Controller of a Billion Dollar Company After the Assistant Controller of a $1.7 billion publicly held client unexpectedly resigned, the Controller was deeply concerned about both getting ready for an audit and meeting the fast-approaching SEC external reporting deadline. We came on board to help the Controller reconcile year-end balance sheet accounts, meet reporting deadlines and prepare for an audit; and the Company filed their 10-K in advance of their SEC deadline. While we were there, we also helped them write the MD&A section of their annual report. Positioning New Leadership for Success The owner of one of our clients installed his son within the organization’s Audit Committee and Board of Directors. Noting that the fresh college graduate had limited knowledge of how the business operates, we suggested to the owner that we have a separate meeting with his son to get him up to speed. After we provided a history and explanation of the company’s strategies over time, as well as a crash course on how to read and interpret financial statements, the owner’s son was better prepared to effectively serve as a committee and board member. Managing Organizational Growing Pains One of our private equity-owned clients enjoyed a little too much success executing their growth-by-acquisition strategy, expanding their operational footprint faster than their financial team could keep pace. When the CFO came to us with concerns about their upcoming financial statement audit, we quickly implemented a targeted plan: developing purchase accounting allocation analyses, reviewing new debt agreements, adopting the new lease accounting standard and evaluating potential costs for capitalization versus expense. The growing organization was able to provide all necessary information to the auditors of the financial statements on time and without significant adjustments. How Can Schneider Downs Help? Do any of these scenarios sound familiar? For more information on how our Accounting Advisory services can help your organization with complex regulatory and accounting needs, please contact Nick Lombardo CPA. Related Articles The Impact of Accounting Advisory in 2024 – Technical Expertise for Complex Needs The Impact of Accounting Advisory in 2024 – Process Optimization for Business Needs Related Resources Schneider Downs Accounting Advisory Services Overview Schneider Downs Accounting Project Management Overview Schneider Downs Managed Lease Accounting Overview About Schneider Downs Accounting Advisory Services Through our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective. Learn more about our dedicated Accounting Advisory Services landing page. Excerpt: Learn how supplementing expertise and accounting talent can benefit your organization. ### Schneider Downs Construction Industry Group Annual Summit 2024 On May 6, 2024, the Schneider Downs Construction Industry Group convened for our highly anticipated annual full-day summit. Over 20 members of senior leadership attended an event designed to address critical industry challenges, foster collaboration and gather valuable external perspectives. Objectives of the Summit Issue Identification: The summit provided a platform to identify the pressing issues faced by construction industry clients, so that we can better tailor our solutions and services to the sector. Collaboration and Innovation: Through collaborative discussions, we shared ideas about how to enhance the firm’s capabilities and find innovative ways to address client needs. External Insights: An external panel of clients and industry experts participated in the summit. Their insights shed light on broader industry trends, challenges and opportunities. Additionally, they evaluated Schneider Downs’ brand reputation in the market. Year in Review The summit included a comprehensive review of the past year’s accomplishments. Key highlights from Schneider Downs’ work with construction clients included: Digital Transformation: Among the various topics discussed, digital transformation emerged as the most impactful. For context, digital transformation involves leveraging technology, processes and people to effectively solve complex challenges. Schneider Downs’ dedicated digital transformation team has been instrumental in helping construction companies navigate this critical shift. Succession challenges: As the baby boomer generation prepares to transition out of business ownership, succession planning becomes a critical focus. At Schneider Downs, we recognize the significance of this moment and offer valuable insights and services to assist owners during this pivotal phase. The anticipated transfer of wealth from retiring baby boomers to the next generation presents both opportunities and complexities. Our role is to guide owners through this process, ensure a smooth transition and preserve their financial legacy. Tom Springer, a seasoned professional with extensive experience in succession planning, leads our team. His expertise, combined with Schneider Downs’ commitment to excellence, ensures that owners receive personalized, results-driven solutions. As the business landscape evolves, Schneider Downs remains dedicated to supporting owners through every stage of succession. Our collaborative approach and unwavering commitment to value creation set us apart as trusted advisors in the realm of business ownership transitions. Insights from Industry Experts and Clients The external panel shared valuable insights on industry trends, challenges and opportunities in the market. Challenges in Construction: Our panel highlighted challenges such as labor shortages, supply chain disruptions and regulatory changes—all of which will continue to inform our strategic planning. Brand and Reputation: The panel also assessed Schneider Downs’ brand reputation. Their positive feedback affirmed the firm’s commitment to excellence. Commitment to Excellence Schneider Downs’ investment in hosting this annual summit underscores our sincere dedication to being the premier business advisor for the construction industry. As the sector evolves, we remain committed to elevating our services and impact within the industry. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. Excerpt: Learn more about the key takeaways from the Schneider Downs Construction Industry Group Annual Summit 2024. ### Is Your Company Prepared for the Methane Emissions Charge? The Environmental Protection Agency (EPA) has published a rule to assess and collect billions of dollars in methane “waste emissions charges (WEC)” from the oil and gas sector. The rule implements section 60113 of the Inflation Reduction Act of 2022 (IRA) which gives the EPA the power to act as tax assessor, collector and enforcer. The WEC is imposed on methane emissions at facilities that emit more than 25,000 metric tons of carbon dioxide equivalent (CO2e), as reported in Subpart W of the EPA’s Greenhouse Gas Reporting Program in the 1.) Onshore and offshore production sector; 2.) The onshore natural gas gathering and boosting, processing, transmission and storage sector; and 3.) The liquified natural gas (LNG) storage export and import sector. The final rule of Subpart W is set to be released in August 2024 with methodology changes for calculations and new emissions sources being added to the regulation. The IRA WEC increases 66% by 2026: $900/metric ton of methane in 2024 (equates to $36/metric ton of CO2) $1,200/metric ton of methane in 2025 $1,500/metric ton of methane in 2026+ Companies need to evaluate key criteria when implementing the WEC: Determining what a facility is under the IRA. What is the prescribed calculation to determine how much it will cost? How are you monitoring methane emissions on a facility or asset level? The regulatory push is towards continuous/real-time empirical measurement. How will you differentiate emissions reported at a basin level versus facilities versus individual assets? If emissions are reported at a basin or facility level, how do you allocate? Can you use volumes as an allocation basis? Are you billing monthly through your joint-interest-billing account or when paid? If you are a non-operator, how will you determine the amount to charge monthly if the operator is charging on an annual basis? How will the related-party aggregation rules impact your calculations? Could your transportation or storage partner share in the cost if there are capacity constraints that require flaring? How could this charge impact valuations in mergers and acquisitions? The IRA has other key changes that will impact rules that have not been updated since the 1950s. Below is a list of other changes based on the IRA:                   The IRA is expected to have significant impacts on the monitoring and remitting of information related to methane emissions that are already in effect for 2024. You should begin assessing how the IRA will impact your company and implement necessary changes to comply with the new rules. In addition, continue monitoring the changes that are expected to be released during 2024. If you have questions as you are evaluating the impact the IRA has on your company, reach out to a Schneider Downs expert. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. Excerpt: Learn more about the methane emissions charge and how your company should best prepare for the cost increases. ### The Impact of the U.S. Department of Education’s Final Title IX Regulations What do higher education institutions need to know about Title IX? As of April 19th, 2024, The U.S. Department of Education (the Department) issued its new Title IX rule, which protects LGBTQI+ students, employees, pregnant students and employees using the civil rights law that prevents gender discrimination in education programs. The new law defines sex-based harassment, among other things, as harassment that stems from gender identity, sexual orientation, pregnancy and related conditions or sex stereotypes. The new Title IX regulations will also: Permit informal dispute resolution procedures in schools, apart from situations in which students file complaints against staff members Safeguard staff members and students who are recuperating from pregnancy termination or who have medical conditions connected to it Bring back the single-investigator approach, which permits a single person to act as the Title IX investigator and the case decision-maker Give universities additional flexibility to modify Title IX regulations in accordance with their student body sizes, ages and organizational setups The regulations follow several lengthy delays in the Title IX rule's finalization, which concerned civil rights advocates who claimed that the rights of LGBTQI+ students were in jeopardy. Advocates of the proposal put pressure on the Department to complete the regulations before the start of the following academic year. Additionally, they issued a warning about potential difficulties the Department would encounter with the Congressional Review Act, which gives Congress the power to reverse some federal agency acts within 60 days of Congressional workdays. In September 2021, almost a year before the proposed rule was made public, a group of 20 states filed a lawsuit against the Department, attempting to reverse the agency's determination that Title IX protections apply to gay and transgender individuals. Fifteen state attorney generals pressed the department to abandon its plans to amend the 2020 regulation in April 2022, right before the proposal was unveiled, threatening legal action in the process. The proposed rule for 2022 was criticized by those who claimed it misconstrued Title IX and drastically changed the federal law enforcement duties of educational institutions. Now that the final rule was published in the Federal Register in April, educational institutions have until August 1st to put it into effect. Along with the rule, the Department is anticipated to make available a resource for creating Title IX grievance procedures and policies that adhere to the updated regulations. “These are designed to help schools speedily come into compliance,” said Catherine Lhamon, Assistant Secretary of Education for Civil Rights of the United States. Lhamon stated that the agency is available to offer technical assistance and that the guidelines do not impose any additional requirements. The Biden administration is still reviewing the department's second final Title IX rule, which addresses transgender students' participation in Athletics. The final Title IX rule is expected to be published later in Fall 2024. The final regulations aim to give schools the information they need to fulfill their Title IX requirements while restoring and strengthening essential student protections. They also allow for appropriate discretion and flexibility to accommodate differences in school size, student population and administrative structures. How Can Schneider Downs Help? Schneider Downs can help review an institution’s policy around title IX to help keep them in compliance with the new regulations. Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is not only to understand the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. ### Postcard from Cyburgh 2024 According to an impressive lineup at the Pittsburgh Technology Council’s Cyburgh 2024, communication is key to a successful cyber posture. That’s music to my ears. As a member of the Schneider Downs Marketing team, communication is my bread and butter. Based on the conversations at Cyburgh 2024, this is something I share with the cybersecurity community. Communication Within Organizations Cyburgh 2024 kicked off with a discussion of the “State of Cyber in 2024,” which focused on several key trends, including the impact of new regulations, shifts in hiring practices and predictions for the future. But the most interesting part of the presentation to my communication-biased ears was that the “key to success” in today’s cyber landscape was “context, communication and connection.” Organizational context can make or break a security program. As for how to best provide context within your organization… other presenters had thoughts. Leadership: Getting a security program off the ground requires buy-in from leadership. Of course, it’s difficult to demonstrate the precise ROI of “what might have happened if we didn’t have this program,” but there are several strategies that CISOs might use to get in the door. For example, one presenter suggested painting cyber as a business enabler. Maybe increased security makes you more competitive than your vulnerable competitors, maybe you can do business with more people or maybe you could create valuable efficiencies within the organization. Or, for the more technical leadership audiences, it could be helpful to explain the value of consolidating vendors to create a SASE tech architecture as a cost reduction opportunity. Across departments: While IT or cyber departments set the policy, incident response will touch groups all over your organization. A presentation on cyber resilience suggested running combined exercises: implementing incident response, business continuity and disaster recovery exercises in parallel rather than in sequence. Each of these exercises require different teams, and having each of them understand their role in the bigger picture will make all the difference in the event of an incident. Another cyber leader echoed this sentiment: taking us through an example of a tabletop exercise designed to engage departments across your organization. In addition, it’s incredibly important to conduct frequent tech trainings. Making sure you have someone on hand who knows how to work your tech stack is crucial—especially when legacy or proprietary technology is in play. Training: As we heard time and time again yesterday, your security program is only as strong as your organization’s weakest link: your people. Every presenter underscored the necessity of a robust training program—with some twists in 2024. For example, some presenters predicted that new technologies would allow for more personalized learning experiences and that training programs would expand to include security of the cloud, IoT and AI tools, as adoption of these tools accelerates. Communication Outside Organizations Communication doesn’t stop outside the four walls (virtual or physical) of your organization. Whether it’s through vendor relationships or positions on the supply chain, the cybersecurity world is incredibly interconnected. This interconnection is only increasing as more on-premise solutions are moved into the cloud. Collaboration with outside parties continues to be critical in 2024. Vendors: As firm as your own security program might be, you are, in many cases, at the mercy of the security of your vendors. In a panel discussion, panelists emphasized the importance of upfront conversations with your vendors: both about what you need from them and about how you can help them stay secure. And one speaker encouraged the use of a clear “pre-nup” with vendors to ensure all parties are clear on their liability in the event of an incident. Regulators: Regulation was, of course, a hot topic at the conference. In an era of heightened personal liability for CISOs, it’s more important than ever to not only have an effective plan in place, but also be able to demonstrate that you have an effective plan in place. Multiple presenters urged CISOs to rigorously document their attempts at promoting security. When it comes to communicating with regulators, a paper trail is everything. Interestingly, communication among regulators was also a topic at issue. In the “Strengthening Critical Infrastructure through Cybersecurity Safeguards” panel, the speakers outlined how tricky it is to navigate a plethora of (often conflicting) regulations and standards that change by state, industry and regulating body. According to the panel, better communication among regulators could go a long way. Cyber Insurance: The extensive questionnaires required by cyber insurance carriers are the stuff of legend by now. But communicating with your carrier doesn’t end when you check the box. The presenters had several creative ways to leverage your relationship with your insurance carrier. In a panel on operating a security program on a limited budget, industry leaders advised leaning into the demands of several carriers to use their services in the event of an incident and that carriers were incredibly helpful in explaining exactly which controls make sense: both for your organization and for reluctant boards. Communication in Attacks The importance of communication in 2024 isn’t lost on threat actors either, which is why social engineering attacks may be on the rise again. This is in part because of the power of AI technology. The keynote explored how the AI revolution has changed the social engineering game. Attackers can now deploy features like personalization at scale, conversation bots, deep fakes, enhanced targeting capabilities and adaptive phishing. I’ve barely scratched the surface of everything covered at Cyburgh 2024. For example, the keynote address on AI included several mind-blowing demonstrations of how to both harness and outwit various artificial intelligence technologies. And did you know that, if the money in cyber crime were expressed as GDP, cyber criminals would be the third richest country in the world? As sobering as the above statistic might be, I still came out of Cyburgh 2024 energized and excited to have learned more about how communication lies at the heart of the complex and ever-changing world of cybersecurity. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.  Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.  To learn more, visit our dedicated Cybersecurity page.  ### Maximizing Returns: Leveraging R&D Tax Credits in the Energy and Natural Resources Sector The energy and natural resources sector faces an ever-changing landscape of financial pressures, including volatile commodity pricing, regulatory uncertainty, and investment in clean energy and environmental, social and governance (ESG) innovation. In the current environment, businesses should utilize every strategy available to maintain cash flow and increase profits. One such strategy is the Research and Development (R&D) Tax Credit. The R&D Tax Credit was first enacted in 1981 to incentivize innovation and the retention of top talent in the U.S. Although it was initially intended to be a temporary measure, it was re-enacted for decades with bipartisan support until it was finally made permanent in 2015 with the passing of the Protecting Americans from Tax Hikes Act. However, corporations within the energy sector were historically limited from fully utilizing this benefit, since the R&D Tax Credit cannot reduce a corporation’s tax liability below the alternative minimum tax (AMT). That all changed in 2017 with the passing of the Tax Cuts and Jobs Act which raised the AMT exemption. As a result, many mining, oil and gas, and other energy companies were no longer required to pay the AMT, thereby opening the door for such businesses to utilize the R&D Tax Credit to offset their regular income tax liability. Given the dynamic nature of the energy industry, innovation is all but a requirement for businesses to compete and be successful. In fact, many standard industry initiatives may qualify for the R&D Tax Credit: Extraction and Production Techniques: Development of innovative methods for extracting resources more efficiently, such as advanced drilling techniques, hydraulic fracturing technologies, or improved mining processes. Refining and Processing: Research and development efforts focused on enhancing refining processes to increase yield, purity, or energy efficiency, such as catalytic cracking, distillation optimization, or biofuel production techniques. Alternative Energy Sources: Innovation in renewable energy technologies, including solar, wind, hydroelectric, geothermal, and biomass, to improve performance and enhance environmental sustainability. Energy Storage Solutions: Development of advanced energy storage technologies such as batteries, fuel cells, or pumped hydro storage systems to address intermittency issues and enable greater integration of renewable energy sources into the grid. Environmental Compliance and Sustainability: Research activities aimed at reducing environmental impact and ensuring compliance with regulations, including emissions reduction technologies, waste management solutions, and water conservation measures. Carbon Capture and Sequestration (CCS): Innovation in CCS technologies to capture and store carbon dioxide emissions from industrial processes or power generation, mitigating greenhouse gas emissions and addressing climate change concerns. Smart Grid and Energy Management Systems: Development of intelligent grid systems, energy-efficient appliances, and demand-response technologies to optimize energy distribution, consumption, and conservation. Advanced Materials and Components: Research into novel materials and components for energy-related applications, such as high-performance alloys for turbines, lightweight materials for vehicle efficiency, or corrosion-resistant coatings for pipelines. Biotechnology and Bioenergy: Biotechnological research for the production of biofuels, bio-based chemicals, and biodegradable materials from renewable biomass sources, including algae, agricultural residues, and municipal waste. These examples illustrate the diverse range of activities within the energy and natural resources industry that may qualify for the R&D Tax Credit. Expenses related to employee time, supplies, or third-party contractors necessary to conduct research and development may be eligible R&D expenditures.  If your company is conducting activities similar to the examples listed, contact a member of the Schneider Downs Credits and Incentives Team to discuss how the R&D Tax Credit can potentially reduce your company’s tax liability. About Schneider Downs Energy & Resources Services  The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.   To learn more, visit our Energy and Resources Industry Group page.  ### Notice anything different? Visit our new and enhanced website. Previous Next If you’ve visited the Schneider Downs websites (Schneiderdowns.com and sdwealthmanagement.com) recently, you’ve likely noticed some differences. We recently launched an enhanced and updated version of our websites, with the principle focus of making it easier than ever for visitors to find the information most relevant to them. Each month, more than 20,000 visitors come to our websites to explore various forms of content, ranging from articles and whitepapers to shareholder bios to accessing the all-important client portal. (You can even get directions to our offices in the About Us section.) Regardless of why visitors come to our websites, it’s paramount that we provide the easiest possible route to that deliverable…and that our visitors learn more about Schneider Downs in the process. We’re proud to deliver thousands of unique web pages, including videos and original articles written by professionals from every service we offer. Streamlining the search for content was the focal point of our recent facelift. Included among the many updates are: A simplified navigation system to make it easy to move from page to page An intuitive site-wide search feature for categorized search results An integrated resource section combining all articles, whitepapers, videos and webinars into one section, making it easy to find content on any topic from a single menu Context-driven organization, delivering content suggestions on each department based on the relevancy of the department you are searching within the navigation We even reorganized our Management page, streamlining the process of looking up members of our firm’s leadership Most importantly, our new web platform serves as the foundation for future improvement, providing our firm with a platform to introduce new features and functions in the future. From a technology standpoint, we’ve reframed the site to become more friendly for online searches, helping audiences find our content more readily. A fundamental principle of our business model is to provide our clients and friends with information and solutions that they will find most relevant to help them make better decisions. We hope you’ll take time to visit (or, re-visit) SchneiderDowns.com and Sdwealthmanagment.com to get familiar with the many resources our sites have to offer. And, should you have any ideas for additional content on our site, please drop us a line at contactsd@schneiderdowns.com As always, you can register to receive weekly updates from Schneider Downs in the form of the Our Thoughts On newsletter, which is delivered electronically every Thursday. If you haven’t subscribed yet, subscribe here. Excerpt: Learn more about the enhanced and updated version of our Schneider Downs web sites, with the principle focus of making it easier than ever for visitors to find the information most relevant to them. ### The Impact of Accounting Advisory in 2024: Process Optimization for Business Needs How can accounting advisory services transform your business processes? Accounting advisory services play a pivotal role in optimizing business processes for organizations of all sizes and industries. Our Accounting Advisory team continues to provide organizations with the business acumen they need to not only optimize existing processes but also uncover new opportunities and ways to mitigate risks for future business process optimization efforts. To highlight the impact of our accounting advisory services, we asked our team to share success stories where our business process optimization significantly benefited our clients. Establishing GAAP Compliance Ahead of Company Sale When our client was preparing to sell part of the business to a private equity group, they realized their accounting system had not been updated for all transactions and were not GAAP compliant. To help the company demonstrate the level of financial acumen required by and familiar to the buyer, we advised them on multiple errors and omissions within their processes and accounting system. We also assisted with applying accounting pronouncements to bring their financial statements into compliance with U.S. GAAP. We presented the financial information to the PE group in the manner to which they were accustomed, and the company sold at a premium. Eliminating Unnecessary Software Costs Due to a lack of communication between IT and Accounting, our client was losing money paying for a software program they no longer utilized. When our team discovered this expense in the general ledger, we compiled a full list of software programs the company was paying for, then met with the IT department to determine the nature of each individual expense. Mediating between the two departments, we put together a comprehensive list of software programs with subscription start and end dates, billing frequency details and other essential information our client can now continuously monitor and update. We also established a regular communication protocol to ensure that all future software programs would be reported and tracked. Leveraging Real-Time Data for Improved Decision-Making When the owner of a large client was struggling to get real-time actionable business intelligence from dated operational reporting, we pulled in our Data Analytics team to help implement a Digital Transformation strategy. After meeting with the owner to determine the KPIs to be monitored, the team dove into the company’s existing processes to see how data was currently being used and mitigate risks to data integrity. The team then created a data warehouse and a daily dashboard with real-time financial and operational data, as well as key performance indicators that the owner uses to take action where necessary. Today, the owner uses the daily dashboard to make informed business decisions on a timely basis. Enhancing Retention with a Targeted Compensation Plan The war for talent during and after COVID had one of our clients worried about retaining the experienced management team they had built over several years. Though the company the company had a short-term (annual) and post-retirement incentive plan, they had no incentive plan that addressed intermediate term leading into their retirement. To help the client remain competitive in a cutthroat market, we performed a compensation study. Aligning responsibilities with benchmarking data, we recommended an actionable, phased approach to initially increase salaries where needed for certain individuals, followed by developing an intermediate incentive plan to help retain key members of the team. Since the client has begun implementing the plan, the Executive Team has remained intact. How Can Schneider Downs Help? Do any of these scenarios sound familiar? For more information on how our Accounting Advisory services can help your organization with complex regulatory and accounting needs, please contact Nick Lombardo CPA. Related Articles The Impact of Accounting Advisory in 2024 – Technical Expertise for Complex Needs The Impact of Accounting Advisory in 2024 – Supplemental Talent for Accounting and Finance Needs Related Resources Schneider Downs Accounting Advisory Services Overview Schneider Downs Accounting Project Management Overview Schneider Downs Managed Lease Accounting Overview About Schneider Downs Accounting Advisory Services Through our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective. Learn more about our dedicated Accounting Advisory Services landing page. Excerpt: Learn how accounting advisory services can transform business processes. ### A Challenge to a Common Estate Planning Tool Reaches the Supreme Court A case with estate planning implications is currently before the U.S. Supreme Court after split decisions at the circuit court level. The case, Connelly v. United States, will address the treatment of corporate-owned life insurance (COLI), a common way for small businesses to fund the redemption of stock from a deceased stockholder. However, this tool may be in jeopardy depending on the outcome. In the case, two brothers owned a roofing and siding company called Crown C Supply, Inc., with Thomas Connelly holding 22.82% ownership and brother Michael the remaining 77.18%. Michael died in October 2013. As stipulated in a stock purchase agreement, Crown C Supply, Inc. was obligated to purchase the deceased stockholder’s shares. The company and Michael’s estate agreed on a purchase price of $3 million (implying a total equity value of approximately $3.86 million). The company had maintained a life insurance policy on Michael and received approximately $3.5 million in proceeds upon his death. The money was used to pay Michael’s estate in the share redemption, with the excess $0.5 million in proceeds added to the company's value as a nonoperating asset. An estate tax return was filed, valuing Michael’s shares at the agreed-upon purchase price. The IRS subsequently audited the estate and determined that the $3.0 million life insurance proceeds used for stock redemption should be added to the value of the company, resulting in a total equity value (for 100% ownership) of $6.89 million. As a result, the IRS issued a Notice of Deficiency, assessing over $1 million in additional estate taxes. The estate argued that by increasing the value of the company by the value of the insurance proceeds, the IRS effectively ignored the corresponding liability since the company was obligated to redeem the deceased stockholder’s shares and the insurance money was received into the company, then directly paid out to the estate. The estate also argued that increasing the company value by the $3 million insurance proceeds results in double taxation, first through the estate tax, then later as a capital gains tax due to the increase in the value of Thomas’s shares. The IRS argued that there isn’t an actual liability incurred in this case that reduces the net worth of the company or the value of shares to be redeemed; in other words, the $3.5 million will not be repaid like a loan owed to a creditor would be and even though the money did go out of the company, it gained another asset in its place—the shares it redeemed from the deceased stockholder.  As a result, the total “pie” is $6.89 million, and the value attributable to the estate would be the deceased stockholder’s ownership percentage times the value of this larger pie. The Supreme Court justices questioned both sides’ arguments extensively in an attempt to understand the issues at hand.  However, the justices did not tip their hand(s) on how they expect to eventually rule on the matter creating some temporary uncertainty for taxpayers who currently have COLI. Regardless of the ultimate ruling, COLI can be a useful tool for estate and succession planning. It provides funding to ensure the continuity of the business and provides the cash flow to do so without the company potentially having to liquidate assets needed for the company’s continued operations. However, if the Supreme Court rules that the insurance proceeds increase the value of the company, the attractiveness of COLI as an estate planning tool will likely be significantly impacted. Stay tuned for updates in this case, as well as information on any ramifications for COLI and estate and succession planning. About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. ### Maintaining a Disciplined Investment Approach When it comes to investments, it's easy to want to dive right in, but often that mentality can lead you to trouble. A  well-constructed financial plan could provide a roadmap for staying disciplined, especially when emotions run high. One of the most important factors in achieving a disciplined investment approach is focusing on your goals and objectives before making any decisions. Portfolio construction and asset allocation won't mean anything if you don't know what you're working toward. Marrying your investment plan with an overall holistic financial plan is the key to seeing the big picture. There are obviously behavioral aspects that go into creating a more disciplined approach, but having a solid financial plan will allow you to stay the course through times of high emotion. After you establish your foundational goals, the next step in building your portfolio comes from understanding how much risk you are comfortable taking in your portfolio. Typically, when we think of risk in a portfolio, we automatically think of financial risk – how much money do I have and how much can I comfortably allocate towards investments? – but there is also an emotional risk component. It has been well documented that the pain associated with loss overwhelms any joy and excitement that you may get from stock appreciation or doing well. Ask yourself, how much can I tolerate a drop in my portfolio when the markets take a downturn? What amount of loss would make me want to change my investment approach? The worst time to figure out that you are not comfortable with your risk tolerance is right before the market bottoms when you have the potential for a big rally in financial assets. The idea is to work with an advisor to create a portfolio that you can hold strong with through the best of times as well as the worst of times. Research shows that if you stick with your investment plan and stay invested, the better you’re chances of coming out of times of market volatility in a good position. The benefit of working with an advisor is that we have tools at our disposal that allow us to run scenario testing. We have the ability to see how your current allocation would stack up in past instances of financial stress such as the 2009 market crash or the start of COVID shutdown in 2020. Being able to see how your portfolio would have reacted during those events gives insight into the amount of risk you are actually comfortable with. Markets are not static so your investment journey won’t be either. We have different needs and goals when we're in our 30s, 40s, and 50s than we do when we're in our 60s, 70s, and 80s. It is crucial to keep a consistent dialogue and to set a cadence of regular meetings, whether quarterly or semi-annually, with your advisor. It may feel unnecessary to meet regularly when moves aren’t being made, but those less incendiary meetings are great for sitting down, going through your portfolio, and covering your bases – Do you know what you currently own? Do you know why you own it? How do your investments fit into your overall goals and objectives? Our team is committed to providing expert guidance and support to help you achieve your financial goals with confidence and clarity. If you are interested in connecting with one of our advisors, please contact us at sdwealthmanagement@schneiderdowns.com. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn how a financial advisor can help you understand your risk tolerance, and provide scenario-testing tools to gauge your comfort level. ### The Impact of Accounting Advisory in 2024: Technical Expertise for Complex Needs How can accounting advisory services elevate your financial reporting and compliance efforts? Accounting advisory services play a pivotal role in navigating the regulatory landscape facing organizations of all sizes and industries. Our Accounting Advisory team continues to provide organizations with the technical expertise they need to not only meet deadlines and regulatory requirements but also to uncover new opportunities and ways to mitigate risks in financial reporting. To highlight the impact of our accounting advisory services, we asked our team to share success stories where our technical expertise significantly benefited our clients. Uncovering $700,000 in Unused Refundable Allowances While assisting a multi-location client with the adoption of new lease accounting standards, we identified that they lacked critical knowledge of their lease agreements across their portfolio. In the process of reviewing their leases to comply with the new standards, we uncovered over $700,000 in unclaimed refundable tenant improvement allowances. Upon our recommendation, the client approached the landlords involved and successfully negotiated for economic benefits allowed under the leases, leading to significant property improvements. As a result, the landlords funded several property improvements that will help the client more effectively serve their customers. Correcting Revenue Recognition Under ASC Topic 606 When a client raised concerns about revenue recognition under ASC Topic 606, we analyzed the issue, focusing on when a performance obligation is satisfied and its impact on revenue timing. We evaluated the client's situation, applied relevant guidance, and delivered a roadmap for correct revenue recognition and understanding performance obligations in future transactions. Identifying Material Errors to Increase Deal Value When our client acquired a construction company practicing percentage of completion (POC) accounting, they faced challenges reconciling the initial balance sheet. Our involvement in reconciling each active project revealed significant misstatements in the POC calculations at the time of acquisition. We drafted a position paper detailing these inaccuracies and their economic impact on the transaction, enabling the client to seek legal advice for potential actions against the seller. Embracing Automation to Improve Financial Modeling For an investment opportunity where our client aimed to finance and construct a plant for a third party, the CFO asked us to assess a complex financial model forecasting the project's Return on Investment (ROI). The original Excel model was prone to errors due to its requirement for repeated manual data entries. We developed a dynamic spreadsheet to streamline updates to assumptions, significantly reducing the risk of errors. This tool allowed the CFO to structure the deal effectively to meet the desired ROI goals, and they continue to use it to this day when evaluating similar deals. How Can Schneider Downs Help? Do any of these scenarios sound familiar? For more information on how our Accounting Advisory services can help your organization with complex regulatory and accounting needs, please contact Nick Lombardo CPA. Related Articles The Impact of Accounting Advisory in 2024 – Supplemental Talent for Accounting and Finance Needs The Impact of Accounting Advisory in 2024 – Process Optimization for Business Needs Related Resources Schneider Downs Accounting Advisory Services Overview Schneider Downs Accounting Project Management Overview Schneider Downs Managed Lease Accounting Overview About Schneider Downs Accounting Advisory Services Through our Accounting Advisory Services, Schneider Downs offers various technical accounting advisory services in addition to outsourced accounting and financial advisory services for every type of organization, from small businesses with limited resources to large publicly and privately held entities that require a unique perspective. Learn more about our dedicated Accounting Advisory Services landing page. Excerpt: Learn how accounting advisory services can elevate your financial reporting and compliance efforts. ### The Biden Administration's Latest Student Debt Relief Program How does the latest proposed student loan debt forgiveness program from the Biden-Harris Administration work? Last Tuesday, the Biden Administration and the US Department of Education released a first set of draft rules aimed at providing student debt relief for the following categories: Borrowers that owe more than their initial balance due to rising or “runaway” interest rates Borrowers that have been making payments for over two decades Borrowers that would be eligible for student loan forgiveness under other agency programs but haven’t enrolled in those programs Borrowers that have attended colleges that didn’t provide them with sufficient financial value If implemented, the Biden-Harris Administration expects that an estimated 30 million borrowers will be impacted by this new debt relief proposal. Here is what you need to know for each category: For Borrowers with Runaway Interest The Department is proposing automatic relief of up to $20,000 of the amount that currently exceeds what the borrower originally owed when they first began repaying their student loans. This relief amount is applicable to any student loan  held by the Department of Education, such as parent loans, consolidated loans, loans in default, etc. Borrowers within this category may also be able to obtain a second type of relief if they are enrolled in any Income-Driven Repayment (IDR) plan and have an income of $120,000 (single) or $240,000 (married filing taxes jointly) or less annually. This second relief ruling would permit the U.S. Secretary of Education to forgive the full amount that exceeds what the borrower originally owed at the beginning of their repayment. For Borrowers Making Payments Over Two Decades The Department is proposing forgiveness for undergraduate debt only if the borrower has begun repayment at least 20 years ago, beginning on or before July 1, 2005. Graduate debt borrowers only eligible for forgiveness if they have begun their repayment at least 25 years ago, beginning on or before July 1, 2000. For Borrowers Eligible for, But Not Enrolled in Other Student Loan Forgiveness Programs The Department would authorize forgiveness to these borrowers if they are eligible for relief programs such as any IDR plan or the Saving on A Valuable Education (SAVE) plan but have not successfully applied to those plans due to paperwork requirements, bad advice or other obstacles. The Department also proposes relief for borrowers that are eligible for forgiveness through the closed school discharge opportunities but have not successfully applied for this type of forgiveness. For Borrowers that Attended Colleges with Low Financial Value Programs The Department is proposing assistance to those who retained debt from an institution that lost access to Federal aid due to high student loan default rates, producing graduates that have a high percentage of debt compared to their income, graduates that do not earn a higher income than a high school graduate or an institution that was subject to a final agency action to terminate aid for providing insufficient financial value. The Department also is proposing relief to borrowers whose colleges faced the above issues but closed before any action was taken by an outside agency and if the borrowers had high levels of debt compared to their income or are not earning more than a high school graduate. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Learn more about the Biden-Harris Administration's latest plan to provide student debt relief to more than 30 million borrowers. ### Lost in Translation: Ippei Mizuhara Accused of Wire Fraud in Excess of $16M It appears that the most popular baseball player in the world is the victim in a story of deception and betrayal. Shohei Ohtani, a Japanese native and pitcher/designated hitter for the Los Angeles Dodgers, allegedly had $16M stolen from him over the course of the last few years by his once trusted confidant and translator, Ippei Mizuhara, according to a criminal complaint filed jointly by the Internal Revenue Service’s criminal division, the Department of Homeland Security and the U.S. Attorney’s Office for the Central District of California. The story is as complex as it is sad and according to U.S. Attorney Martin Estrada, “Mr. Mizuhara stole this money largely to finance his voracious appetite for illegal sports betting.” Sports betting has grown significantly in recent years as many states have legalized the activity, however; California is not one of those states. Mizuhara was making sports bets on football, soccer and other sports (not baseball) through an illegal bookmaker, Matthew Bowyer.  Unlike the popular online sports betting sites where you are not permitted to make a bet for an amount in excess of your account balance, illegal bookmakers may allow you to bet on “credit” and choose amounts to settle on when winnings or losses reach a certain threshold.  Mizuhara was not a successful gambler and accrued large debts while betting with Bowyer. What Makes the Ippei Mizuhara Case Unique? The case is quite unique in the sense that Ohtani speaks little English and relied on Mizuhara to help him set up an account at a bank branch in Arizona in 2018. Ohtani received direct deposit of his salary from his former team, the Los Angeles Angels, into this account.  Although Ohtani relied heavily on Mizuhara to help him navigate most aspects of life in the United States, Ohtani never granted Mizuhara access to his bank account. In late 2021, as Mizuhara began losing large sums of money betting with Bowyer, Mizuhara allegedly changed the phone number and email address associated with Ohtani’s account to his own information. In February 2022, Mizuhara called Ohtani’s bank and falsely identified himself as Ohtani. Mizuhara, claiming to be Ohtani, stated he needed to wire funds to Bowyer for a car loan. Mizuhara’s first request was unsuccessful, but he did call the bank back and eventually gained access to Ohtani’s account by answering Ohtani’s security questions correctly. Because Mizuhara assigned the phone number associated with the account as his own, he was able to confirm large wire amounts on the phone with bank employees. Over the course of 2021 – 2024, more than $16M was wired from Ohtani’s account to Bowyer’s account without Ohtani’s knowledge, the criminal complaint alleges. Mizuhara also allegedly denied account access to Ohtani’s financial advisors and accountants, claiming that Ohtani was the one who desired their access be limited. Typically, banks institute multi-factor authentication requirements when performing wire transfers. These authentication procedures were allegedly in place on Ohtani’s account, but because the account phone number and email address were linked to Mizuhara’s information, Mizuhara allegedly confirmed wire transfers and operated without detection by Ohtani until March 2024. The alleged Mizuhara wire fraud case highlights the desperate measures that individuals may resort to when gripped by addiction. Mizuhara’s alleged betrayal of trust of Ohtani is poignant as the two became each other’s closest friends in the world and Mizuhara was someone whom Ohtani relied on to be his ears and voice in the United States. From a banking perspective, banks may have controls in place to prevent wire fraud and also to understand the risks associated with customer activity. However, it is difficult for even the most well-developed control environments to counteract the alleged deception displayed by Ippei Mizuhara. If you want to read more about controls that can be put into place to help to detect and prevent wire fraud, click here. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Learn more the $16M scandal surrounding MLB pitcher Shohei Ohtani's former interpreter Ippei Mizuhara. ### Investment Corner with Jason & Sean: U.S. Small Cap Equities “History never repeats itself, but it often rhymes.” – Mark Twain The internet is going to change the world. It was a statement made 100s of times a day in the late 1990s, both to describe the incredible innovation within the “World Wide Web1” and the incredible valuations and market capitalization ascribed to companies that were at the forefront of the internet boom. Throughout the late 90’s, the “internet” theme became a runaway train of sorts, with internet companies like a then little-known internet bookstore called Amazon, the infamous Pets.com and the supercharged internet search engine Yahoo! rocketing into the stratosphere. While Amazon has gone on to incredible success (and market capitalization!), Pets.com went bankrupt in under a year, and Yahoo! is a mere afterthought2 failing to live up to its initial promise. One could be forgiven if your memory comes up empty on positive/constructive/overweight commentary around small-cap stocks in the late 90s, as there weren’t many to find. Small-cap stocks did not have the cache of internet stocks and even when internet stocks IPO’d as small-cap stocks, as Amazon did in 1997 ($300 million market cap), they did not stay there for very long. These high-flying internet stocks would reach their nadir in late 1999/early 2000 and then proceed to run smack into the harsh reality of recession, exogenous geopolitical events, and earnings that could not justify the lofty valuations. For the decade that started on January 1st, 2000, and ended on December 31st, 2009, the S&P 500 had an annualized return of -0.95%3 and a cumulative negative return of -9.10%. Over the same time period the Russell 2000, the index that makes up the smallest 2000 stocks in the U.S., had an annualized return of +3.51% and positive cumulative return of +41.26%4. Fast forward almost 25 years and capital markets and investors find themselves in a familiar space. All investors are talking about is “artificial intelligence” and the “Magnificent 7” mega-cap technology stocks that makeup almost 30% of the S&P 500 market capitalization. Some things are different from the internet age, namely, these technology companies have much stronger revenue numbers and use cases, the internet has evolved, the cell phone morphed into the iPhone/Android (a personal computer held in your hand), among others. However, the valuations ascribed to these technology companies have now come into question, with Tesla off over 30% this year and supercharged semiconductor company, Nvidia, off 20% from its March highs. This week promises to be a big week for markets and technology companies, as higher for longer interest rates will collide with lofty valuations; earnings and more importantly the trajectory of earnings growth will determine whether these technology companies keep pressing forward or if a new regime will take hold. Investors would be wise to remember Mark Twain’s words and look toward U.S. Small Caps, which are under-loved, under-owned, and potentially set up for another surprising move higher at the moment the market has seemingly forgotten about them. 1 For those readers under the age of 30, that is what the www. stands for in your internet browser. 2 Currently owned by private equity giant Apollo with a smaller minority investor in Verizon. 3 Source: Morningstar Direct. Dividends are reinvested using total return calculations. 4 Source: Morningstar Direct. Dividends are reinvested using total return calculations. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision-making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. The material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn more about the comprehensive history of technology and how it has directly shaped the realm of investing. ### Dynamics 365 Business Central 2024 Release Wave 1: Top 5 Features The much-anticipated Dynamics 365 Business Central 2024 Release Wave 1 is finally here, bringing with it a host of new features. In recent releases of Business Central Microsoft has evolved the platform's AI capabilities and added features targeted to larger organizations. While many consider Business Central an “SMB” platform, it’s important to note that Microsoft’s definition of “SMB” includes some companies with revenues approaching $1BN and employee headcount of over 1,000. If you’re pressed for time, here are my top five picks: Enhanced Integration with Dataverse: The basic integration between Business Central and Dataverse has been expanded. Now, you can add additional fields and tables that your company might need, such as syncing customer ship-to addresses. Microsoft has also revamped the Virtual Tables feature in BC and created a UI for setting up virtual tables within Business Central. Previously the setup process was not very intuitive. The difference between Virtual Tables and using the Dataverse Integration is that Virtual Tables are a “view” of data and don’t consume any storage, whereas using the Dataverse integration actually moves data between the two systems. This enhancement reduces the need for developer interaction, thereby cutting costs and deployment time. Having an integration designed and supported by Microsoft also de-risks support cases. Electronic 1099 Filing: A long-awaited feature for US-based Microsoft end users. This feature not only enables electronic filing via the IRIS system but also provides a mechanism to correct vendor setup errors after transactions have already been posted. It’s expected to be fully operational by the end of 2024. This enhancement takes the guesswork out of a 1x per year process that nearly always results in unanticipated costs. Using this feature requires very little training and will have immediately noticeable cost reduction benefits. Field Services Integration: Previously, integrating data between Field Services and Business Central required custom integration and sometimes middleware. However, it does require some setup and adds overhead to your invoicing routine because invoices are created using the project module. We recommend considering this one of the options for integrating D365 Field Service with Business Central and not THE option. Now, it’s simpler to build a business case for using both apps, potentially reducing costs and streamlining integrations. This feature also has the potential to transform the way you do business. The D365 Field Service app is an extremely popular and feature rich platform that drives technician productivity and customer satisfaction. Mobile App & Barcode Scanning: This low-cost add-on could be a boon for businesses with shop floor employees looking for basic Warehouse Management System (WMS) functionality. The SaaS mobile app now supports several popular 1D and 2D barcodes and worksheet pages, making it a game-changer, especially for those tracking serial or lot numbers. This enhancement reduces the risk of data entry errors and is fully extensible by developers so it can be customized to your end users unique needs and workflows. This feature also has some transformational qualities in that implementing it will likely solve for issues with pick accuracy, put away accuracy and receiving efficiency (among others). Better Employee Experiences with Copilot: I could write an entire book on the massive investment Microsoft is making in AI (it is billions of dollars). This release of Business Central has several AI-related additions, all of which help end users do their jobs more efficiently and effectively. Here are a few of the ones that most impactful for end users. Ask Copilot for help with fields – The Learn More link in tooltips is replaced by an Ask Copilot link that triggers the copilot chat pane to open and asks a question on behalf of the end user. Previously, an end user may have had to skim several parts of the documentation or consult a colleague. Create sales lines with copilot – Users can now engage Copilot with structured data or natural language to input lines on sales documents (quote, order, invoice). In other words, you can copy/paste an email or purchase order from a customer into a Copilot prompt. This is a totally new way of entering sales transactions and is a huge time – saver for end users who would have otherwise had to “hunt and peck” for data. Create Power Automate flows with copilot – this takes the guesswork out of what can sometimes turn into a complicated and time-consuming endeavor. While there are still some inputs required, this saves a ton of time and can accelerate the process for setting up new flows. Each of these new AI features give your team a better employee experience. While these features certainly aren’t a silver bullet, they serve as a proactive way to save your internal (or external) support teams from fielding “how do I…” questions and boost your end users’ confidence. This latest release continues Microsoft’s trend of investing in AI for Business Central and pushing the platform further upmarket. If you have any questions about these new features, please contact us here. About Schneider Downs Digital Unlock your true business potential and evolve your digital footprint with SD Digital. In a business world where competition and consumer demands are multiplying, investing in digital is not just a requirement for relevance but a race against market obsolescence. From financial impacts and attrition to a decline in market share, there's a bleak future facing organizations that view the status quo as their final state. To learn more, visit our dedicated SD Digital page. Excerpt: Learn more about the top five new artificial intelligence features of wave one of the 2024 release of Dynamics 365 Business Central. ### 8 Key Considerations When Reviewing User Access What are important considerations when reviewing user access? Organizations not performing regular user access reviews can expose themselves to a multitude of risks, from data breaches to compliance deficiencies. However, before they can start performing reviews, companies must first develop an access review policy to define the process. The access review policy should consider items such as maintenance of asset owners, frequency of reviews, roles and access levels, exceptions to the policy, etc. Key Considerations When Reviewing User Access Roles/Permissions: When reviewing user access, it is essential to consider the role and/or permissions that the users may have as well as who has the ability to grant or revoke user access within the system. The goal here is to implement least privilege principles, so that users are granted only the roles/permissions necessary to fulfill the duties of their job, while not compromising or impeding the operations of the business. Additionally, because  many employees transfer roles, the level of access they require may change. Inactive Accounts: Inactive stale accounts without a UAR process may stay in the system indefinitely. Consider reviewing the last logon date for the user accounts and remove accounts with no activity within a predetermined period (refer to your organization’s Access Review Policy). Additionally, disabled accounts that have been inactive should be considered for removal as well. Access to Sensitive Data: Data sensitivity is important to consider when reviewing access. Applications/users with access to sensitive data may need to be reviewed on a more frequent basis. Ask yourself these questions: Does my organization receive, transmit and/or process any sensitive data? Where does this data reside? (Which applications/servers/workstations, etc.) Look-Back Procedures: When you determine that a user has improper access; either since the review or longer, a look-back procedure process is essential. This procedure involves looking back at the actions of the user in question over the period in which the user had inappropriate access and determining if unauthorized changes have been made. Consider Third-Party Access/System Accounts/Service Accounts: It is key to determine if your company can reduce third party access to organizational applications or environments by removing this access or implementing compensating controls. The access may be for third parties that you no longer have contracts or agreements with. Additionally, when reviewing system accounts and service accounts, consider where the passwords are stored. If they are stored in a password vault, consider reviewing who has access to the account in the vault. Make the Review Auditable: User access reviews are typically a key control in most IT related audits; therefore, it is crucial to make sure the user access reviews are auditable. The review should be documented so that an auditor could reperform the review. When exporting user listings, include completeness and accuracy (a screenshot of how the list was generated), create tickets documenting that the review occurred, what changes were necessary, a reference to the tickets with those changes, the lookback procedures, approvals, a user listing for review, a user listing post review (to confirm the changes were made), etc. Additionally, consider creating a template within which business owners can document the reviews. Such templates may contain: An initial user access listing (evidence of how the listing was generated) Results of the review Segregation of duties assessment Reviewers’ sign-off with date Documentation to show that changes were made (ticket evidence) Updated user listing to show access was updated (evidence of how the listing was generated) Risk assessment for any inappropriate access that was detected (look-back procedures) Privileged Access/Administrative Users: Users with privileged access to systems pose a higher risk than regular users do, making these reviews more critical. Consider reviewing privileged access accounts on a more frequent basis. Reviewer Independence: When reviewing access to a system, the reviewer should not be reviewing and approving their own access. A secondary independent reviewer should review the initial reviewer’s access to the application/database, ensuring appropriate access of the initial reviewer. We recommend performing user access reviews on a regular basis (quarterly, semi-annually, annually, etc.). When selecting a review frequency, consider any compliance standards, laws, regulations, etc. that may be applicable to your organization, as well as the risk associated with the application/data in-scope for review. Additionally, if your organization has the resources, there are tools and software to promote efficiency in the review process. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Learn about key considerations when reviewing user access. ### Master Your Credit Card Strategy: A Guide to Maximizing Rewards and Boosting Your Credit Score Credit card debt has soared to new heights, totaling over $1.125 trillion at the close of 2023, the highest balance since the New York Fed began tracking in 1999. In today's society, credit cards are ubiquitous and play a significant role in our financial transactions. To assist you in managing your credit cards more effectively and harnessing their potential benefits to the fullest, we've curated a list of frequently asked questions. How do you choose the right credit card? There are several different reasons you may be looking to add a new credit card to your wallet. You may be starting out trying to build credit as a younger person, in which case maybe a student credit card, which is unsecured and easy to qualify for, would be ideal. Alternatively, if you're in the process of rebuilding your credit after a setback like bankruptcy, a secured credit card could be a suitable option. Others may seek a card for emergency use during lean financial periods. For those with good credit standing, the allure of cashback rewards is often a major draw, offering returns on everyday purchases. With a plethora of options available, thorough research is crucial to finding the right card for your circumstances. Each credit card differs in terms of benefits, fees, and eligibility criteria, making it essential to understand the terms before committing. Utilizing resources like NerdWallet can provide valuable insights into the cards available, tailored to your current credit score. How can you determine which cashback card suits your lifestyle best? Begin by analyzing your spending habits over the past 3-6 months. This assessment will provide insight into where the majority of your expenses lie. Once you have a clear picture of your financial patterns, you can identify which spending categories offer the most potential for cashback rewards. Among the array of cashback card options, one of the more common choices is a card that racks up travel points. This kind of card would be ideal for frequent travelers, hotel patrons, and users of ride-sharing services like Uber or Lyft. Alternatively, entertainment cards are available as well and cater to those who dine out frequently or enjoy attending shows such as concerts or movies. The third category we see a lot focuses on rewards for everyday essentials such as groceries, gas, and utility payments. When conducting your research, pay close attention to promotional offers, including any associated annual fees or sign-on bonuses. While high-end cards often feature enticing sign-up bonuses, they may also come with substantial fees that could outweigh the benefits in the long run. It's crucial to calculate whether the cashback percentage justifies any fees and consider whether paying an annual fee remains viable beyond the initial year of card ownership. Remember, sign-up bonuses are one-time incentives, so evaluate the card's long-term value proposition beyond the initial perks. What is a balance transfer, and how can you make the most of promotional offers? A balance transfer is exactly what it sounds like, a transfer of a credit card balance to another card. Often this type of card is beneficial in lowering your APR and reducing your overall interest payments – a bit like refinancing your debt. Every credit card company is different, but several offer promotional rates as low as 0% APR for a set amount of time, some up to 21 months. What’s the catch? Why wouldn’t everyone take advantage of no interest? To leverage a balance transfer effectively, you need to follow some essential guidelines. First of all, be conscientious of upfront transfer fees that range anywhere from 3% to 5% of the balance transferred. Secondly, devise a plan to pay off the balance within the promotional period. Failing to pay off the balance before the end of the promotional period could result in higher interest charges than your original card. If you struggle to meet credit card deadlines, a balance transfer might not be the best option for you. Many offers include clauses stipulating that a missed payment—even by a day—could nullify the promotional APR, triggering a switch to a higher rate. In this scenario, not only do you lose the benefit of the transfer, but you also incur the initial transfer fee on your balance. Remember to make your monthly minimum payments and avoid making additional purchases on this credit card while paying down your balance. While promotional offers provide a low APR for a limited period, any new charges may accrue interest immediately. Every credit card comes with a "grace period," mandated by law to be at least 21 days. This period spans from when your billing cycle concludes to the due date. During this grace period, you won't incur interest on purchases made in the previous billing cycle, but any carried-over balance, including a transfer, could subject new purchases to interest charges. What impact does my credit score have on applying for credit cards and how can I improve my score? Your credit score plays a pivotal role in your credit card application process. A higher score not only boosts your approval chances but also widens the array of available options. Fortunately, in today's digital age, accessing your credit score is easier than ever, with platforms like Credit Karma offering free, hassle-free checks that don't impact your score. These tools also provide tailored insights and actionable tips to elevate your score, but in a general sense, 6 main factors contribute to your credit score: Credit Card Use – HIGH Impact Credit utilization is a simple equation: the amount of credit you're currently using divided by your total available credit. The lower this ratio, the healthier your credit score. One effective strategy to reduce your credit utilization is to maximize your available credit. When completing credit applications, consider including all sources of income. For students, this might encompass grants, scholarships, or parental allowances. Similarly, married individuals can leverage their partner's income to bolster their combined creditworthiness. By expanding your pool of available credit, you can lower your utilization ratio and strengthen your financial standing. Payment History – HIGH Impact The more consistently you pay your credit card bills on time and in full, the stronger your score in this category will be. As is life, sometimes there are instances in which payments can’t always be made on time. Just know that missing that payment, even by a day, could have consequences. A missed payment within a 30-day window typically carries a relatively minor impact on your credit score. However, if you allow a payment to lapse between 60 to 90 days, the repercussions could be more significant and you may find yourself disqualified from applying for specific loans in the future. Derogatory Marks – HIGH Impact If you surpass the 90-day mark without making a payment on your credit cards, your account will likely be sent to collections. Failure to take corrective measures at this stage results in receiving a derogatory mark on your credit report, which can significantly harm your credit score. It's crucial to address missed payments promptly to mitigate the long-term consequences and preserve your financial health. Credit Age – MEDIUM Impact When it comes to credit age, early entry into the credit world is advantageous. Unfortunately, this is a factor that can't be altered retroactively, as it's determined by the age of your oldest credit card account. However, if you're in a favorable credit position, you have the opportunity to pave the way for future generations' financial success. By adding them as authorized users on your credit accounts, you can positively impact their credit scores without having to grant them direct access to the card itself. As long as you continue to make responsible credit decisions while they're linked to the account, their credit scores stand to benefit significantly when they eventually venture into the realm of credit cards themselves. Total Accounts – LOW Impact Similar to the importance of diversifying your investment portfolio, maintaining diversity in your credit accounts is key. By incorporating various types of credit accounts, such as credit cards or loans, into your financial profile, you enhance your credit mix, which in turn positively influences your credit score. This diversity showcases your ability to manage different types of credit responsibly, thereby bolstering your creditworthiness in the eyes of lenders. Hard Inquiries – LOW Impact Hard inquiries are triggered when you apply for credit, this can include everything from opening a credit card to buying a new car or home. Accumulating too many of these inquiries can hurt your score, which is why we recommend minimizing the amount of hard inquires on your account before applying for any large loans such as a mortgage. The good news is that hard inquiries only exert a temporary influence on your credit score and their impact is relatively minor compared to other factors. Every person’s financial situation is different, meaning their credit card needs vary. Consulting with a seasoned advisor who can craft a personalized and comprehensive financial plan tailored to your specific needs can be instrumental in identifying the ideal credit card solutions for you. Our team is committed to providing expert guidance and support to help you achieve your financial goals with confidence and clarity. If you are interested in connecting with one of our advisors, please contact us at sdwealthmanagement@schneiderdowns.com. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: In today's society, credit cards are ubiquitous and play a significant role in our financial transactions. To assist you in managing your credit cards more effectively and harnessing their potential benefits to the fullest, we've curated a list of frequently asked questions.  ### Enhancing Focus on Risk Management and Consumer Protection Over the past year, regulatory agencies, financial services management teams and board members have had to increase their focus on effective risk management practices.  That focus will continue to grow and evolve and must include an emphasis on consumer protection. Financial services management teams are not only expected to ensure compliance with regulatory requirements but also to improve internal risk management practices to help identify and remediate weaknesses in a timely manner. They must reassess the state of their operations surrounding governance, risk management policies and procedures, systems in place, and internal controls and frameworks. Strategies to help enhance risk management practices include: Establish dedicated risk committees and organize training sessions on risk management Review current policies and mitigation strategies and provide education about consumer rights, compliance requirements and fraud prevention Conduct comprehensive scenario analyses to identify potential risks Assess the impact of economic downturns, cybersecurity breaches and regulatory changes Perform stress testing to evaluate resilience and identify vulnerabilities Test loan portfolios against sudden market shocks or rising interest rates Utilize data analytics to monitor metrics in real time Track operational risk incidents, credit risk exposures and liquidity ratios Strategies to help enhance consumer protection include: Ensure that financial products and services align with consumer needs Provide clear disclosures, conduct suitability assessments and incorporate changes based on market dynamics Establish transparency in pricing and rates Empower consumers with clear information, simplify product documentation and terms, and disclose charges and penalties upfront Proactively identify consumer risks Prioritize supervision based on risk exposure, monitor compliance with consumer protection regulations and conduct targeted reviews/audits Ensure effective oversight with consumer protection in mind Establish robust governance frameworks and Key Performance Indicators (KPIs), involve compliance and legal in product/service development, and monitor consumer complaints and feedback Risk management and consumer protection are critical pillars for maintaining trust, stability and growth.  Financial services institutions must proactively address these areas to safeguard their reputation, comply with regulations and ensure positive customer experiences. About Schneider Downs Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated Risk Advisory and IT Risk Advisory page. ### Controlling Wire Fraud in the Financial Industry Wire fraud is one of the most common cyberattacks afflicting companies of all shape and sizes, particularly financial institutions. When talking about the matter, it’s important to note that since banks make extensive use of electronic communication that can allow individuals to interpret fraudulent actors as legitimate entities and cause funds or sensitive information to be transferred into the wrong hands, it’s critical the financial organization implement techniques to ensure they have the proper controls in place. Authentication Procedures A bank can perform vendor verification, specifically callbacks on predetermined numbers, to authenticate wire requests. A phone call to a customer’s number that’s on file is one proactive method. But individuals who try to initiate fraud can easily take over customers’ emails and phone numbers, so bank employees must complete due diligence and verify that any phone number associated with a customer is accurate. Multifactor Authentication (MFA) is a method of identity verification that requires three components to be successful, typically a password, a phone number and the customer’s face or fingerprint. This method adds an important additional layer of security for both the bank and its customers. With passwords, emails and phone numbers becoming increasingly easy to hack, adding an extra step to the login process can make it more difficult for unauthorized users to access their target. MFAs are versatile, too; they can add the extra step when customers login to a mobile device, database network or physical location. When enabling an MFA, the customer is prompted to enter a username, password and a second factor. Most banks offer password-less authentication. The second factor could be a code that’s sent to the customer’s phone via text or through an app like Google Authenticator, which generates a one-time code that’s only valid for a few seconds, making it largely impossible for an actor to hack an account since they can’t ascertain the correct code in time. Implementing facial recognition is an additional method that can block a potential hacker. Monitoring Systems Banks can deploy advanced monitoring systems to detect suspicious activity and unusual transaction patterns in real time. This allows them to intervene promptly and mitigate any associated potential risks or losses. Monitoring/tracking systems ensure that payments are made to the right place every time and will detect any unusual activity or potential fraud. Employee Training No matter how robust a bank’s fraud tools, employees are the most important component in making sure they work correctly. Human error accounts for most data breaches and initiation of fraud, so it’s vital that all employees are well-trained with comprehensive programs that can educate bank staff on fraud and the red flags associated with wire fraud schemes. Proper training can emphasize the importance of following security protocols and the repercussions if not followed. Customer Education Customers can also be a key factor in the fight against wire fraud. Ensuring that the institution provides ongoing updates about potential threats and risks are essential for a bank’s risk management process. Customers should be educated on security measures like MFA, for instance. Also, informing customers of who to contact or what to look out for when it pertains to fraud can help mitigate associated risks. Regulatory Changes Fostering practices that keep employees and management up-to-date on banking regulations, the latest emerging threats and the best protection against wire fraud is paramount. Banks with a designated compliance team can proactively monitor and interpret relevant regulatory changes  and review updates generated by the Financial Crimes Enforcement Network and the Federal Financial Institutions Examination Council. Keeping up-to-date on these components can help the bank determine if any updates are needed for policies and procedures to better prepare for potential fraudsters, including those in the areas of: Risk Assessment – A wire fraud risk assessment that includes factors like customer profiles, transaction activity, locations and emerging threats can be put into place to identify, assess and mitigate risks. Customer Due Diligence Questionnaires (CDD) – Implementing due diligence questionnaires for customers who exhibit high risk and unusual activity is a great way to mitigate potential wire fraud risks. CDD procedures allow a bank to verify a customer initiating a wire transfer and assess the legitimacy of the transaction. The bank can perform periodic reviews of the questionnaires to ensure accuracy and patterns that take place. Information Sharing and Collaboration – Collaborative relationships between financial institutions and industry peers is a great way to better protect customers. Sharing best practices or regulatory guidelines to avoid emerging threats is an effective way to mitigate risk associated with all fraud, especially wire fraud. Implementing these elements into a financial institution’s policies and procedures can help advance and enhance its ability to detect, prevent and respond to wire fraud. It’s important to ensure the interest of customers while also maintaining compliance with banking regulations and standards. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com Excerpt: When talking about the matter, it’s important to note that since banks make extensive use of electronic communication that can allow individuals to interpret fraudulent actors as legitimate entities and cause funds or sensitive information to be transferred into the wrong hands, it’s critical the financial organization implement techniques to ensure they have the proper controls in place. ### The Top Risks Internal Audit Leaders Need to Know for 2024 What are the top risks internal audit leaders need to know about in 2024? In their Focus on the Future report, Audit Board has conducted several surveys and presented data reporting the top risks Internal Audit leaders should keep top of mind. With new and changing risks presenting themselves, internal audit practices need to be responsive and transformative. The traditional perspective on internal audit transformation frequently relies on introducing new procedures checklists, and instruments (like AI, analytics and continuous monitoring) to improve capabilities. The  report shared the highest risks for organizations to incorporate into their part of their 2024 internal audit plans, which include: Cybersecurity:  Continuing from 2023, cybersecurity has been identified by internal audit teams as the greatest risk for 2024. According to the 2023 vs 2024 top risk survey performed by Audit Board, 81% of internal audit leaders rated cybersecurity as a "very high" or "higher than average" risk in 2024, compared to 83% in 2023. One reason cyber remains a top risk is that the U.S. Securities and Exchange Commission (SEC) unveiled a new cybersecurity rule in September that mandates the evaluation and disclosure of significant incidents within four business days. Additionally, a number of states have followed California's lead and implemented new data privacy laws modeled after the General Data Protection Regulation (GDPR) of the European Union. Changing Economic Conditions: The second top risk in 2024 is changing economic conditions. Examples of these changing conditions include the highest inflation rate in nearly 40 years in 2022, the global pandemic and unrest in the Middle East. Ability to Attract and Retain Talent:  Retaining and attracting talent is the third highest risk, according to the “Focus on the Future” report. This has been a steady issue since Covid began. Regulatory and Legislative Changes: Regulatory and Legislative changes are the fourth highest risk according to the “Focus on the Future” report. Environmental, social and governance (ESG) regulatory and standard-setting activity is increasing globally, in addition to the new cyber and data protection regulations. Potential legislation governing social media and artificial intelligence are also on the rise. As a result of the recent upsurge of new laws and regulations, businesses are experiencing increased uncertainty as they learn more about the regulations' meanings, applications and potential long-term effects. Additional Top Risks: The other top risks identified for 2024 include disruption from digitalization and/or new business models, third-party management and IT aspects not covered by other risk areas noted. Digital risk and the requirement for efficient integrated risk management throughout the organization will continue to be more and more pressing. Misalignment of Internal Audit Plan to Key Risks: Internal audit teams should continue to adapt to the changing risk environment. The survey on key risks for 2024 and planned audit coverage for each risk illustrate significant exposure gaps, as some top risks were not identified as top priorities in the audit plan. If ignored, the risk exposure gap can have impactful effects on a company. Specifically, the areas identified where the risk ranking significantly exceeds audit coverage in 2024 are: Changing economic conditions: this is expected to receive little coverage from IA’s: ranking 10th in planned coverage. Firms should look to be more aware of these conditions as they stand as the second greatest risk in 2024. Attracting and retaining talent: this is the third greatest risk for IAs in 2024, yet it is ranks 12th in planned coverage. Internal audit needs to consider the critical risk areas affecting the business in order to comprehend the risk exposure gap and align resources and skillsets appropriately. IA leaders should continue to strategize and create plans surrounding the significant risks the business will face in 2024 to ensure appropriate alignment of the internal audit function. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com Excerpt: The traditional perspective on internal audit transformation frequently relies on introducing new procedures checklists, and instruments (like AI, analytics and continuous monitoring) to improve capabilities. ### SOC 2 Terminology: Vendor vs Subservice Organization vs Subcontractor vs Third Party vs Nth Party What's the difference between vendors, subservice organizations, subcontractors, third parties and nth parties in SOC 2 reports? We’re very talented in business at having half a dozen different ways to say close to the same thing, yet when using them in context, you can completely change the meaning of each term. Well, words matter! A lot of specific terminology is used throughout SOC reports. We often refer to vendors, subservice organizations, subcontractors, third parties and nth parties, but what do each of those terms represent? Unless defined differently through internal policy, these are the widely accepted definitions and how to use them: Vendor: A vendor is an organization that provides a company with goods or services. With a vendor, however, its controls are not necessary for a service organization to meet its service commitments or system requirements, when completing a SOC 1 or SOC 2 audit. Subservice Organization: If a vendor’s controls are necessary for a service organization to meet its service commitments or system requirements when completing SOC 1 or SOC 2 audits, then that vendor is ‘upgraded’ to a subservice organization. The increased reliance on the vendor's controls is what classifies it as a subservice organization rather than a vendor. Subcontractor: A subcontractor is an external individual with a specialized skillset to help perform tasks or projects (in this case, for a service organization) on a contract basis. A subcontractor is hired by a contractor, who is responsible for communication to the service organization. A subcontractor would report any issues or concerns to the contractor and, in turn, would report those issues or concerns to the client. Third Party: A third party is similar to a vendor, but broader. It includes any external entity directly or indirectly involved in business. Thus, third parties can include vendors, customers, partners, regulators, consultants, etc. Unlike vendors, third parties may not always be directly involved in the exchange of good or services. Nth Party: An nth party is any party beyond the immediate third party, such as a fourth party, fifth party, sixth party, etc. This is when a third party utilizes other entities to assist with the services that the third party provides to its clients. Different controls can be tested within a SOC report to verify that a company is performing the necessary monitoring procedures over vendors, subservice, subcontractor, third party or nth party. How Can Schneider Downs Help? Before embarking on the journey toward SOC 2 compliance, it's crucial to classify third parties and understand the key differences between them. Please visit our SOC 2 webpage for more information on how Schneider Downs can assist with SOC 2 compliance. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### Preparing for Financial Responsibility Rule Changes Effective July 1, 2024, the U.S. Department of Education will mandate additional disclosures for higher education institutions in order to determine financial responsibility, specifically regarding transactions with related parties. The definition of related parties mirrors the definitions in FASB 850 – Related-Party Disclosures, so this includes not only the members of the board of your institution, but also members of management and can include other entities established by donors and others. Under the current rule, the Department of Education notes that this disclosure should include any related-party transactions, so there is not a de minimis threshold. What should you start to do now to prepare for this change? Review and strengthen your conflict-of-interest policy. If you had established any types of thresholds that transactions were de minimis before, those will need to be removed. Evaluate who within the institution is completing the conflict-of-interest disclosures and determine if this population of individuals needs to be revisited. Train those who are processing transactions on who is deemed to be a related party and develop a list of known related parties and ensure that list is regularly updated. Evaluate your ability to capture transactions with related parties with your existing system. Do you need to develop additional reports to access the additional data you are seeking to capture? Evaluate the level of detail you are capturing when establishing new vendors and determine if changes are needed to identify potential related parties. Evaluate the different sources of your revenues and cash receipts (tuition, contributions, etc.) and evaluate if there is a way to identify related parties within those transactions. Perform some basic analytics comparing the amounts, volume of transactions and number of related parties year over year, looking for trends that require further investigation or follow-up. Ensure the information that you are disclosing in the financial statements matches the Form 990 disclosures in Schedule R and other schedules. Ensure that significant transactions captured in other key documents (i.e., board minutes, key contracts, donation agreements, etc.) are flagged to be analyzed and verify they are included in the detailed reports. Designate someone as responsible for capturing this information and designate someone to review who will challenge any assumptions, discrepancies and who has the knowledge of what they would expect to see captured based upon their knowledge of the relationships around the institution. Lastly, maintain a master record and include the narrative of how you determined the completeness of the information you captured. As you prepare to evaluate these transactions, we are here to help in navigating these rules and ensuring your initiation can comply with these new requirements. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Learn more about the U.S. Department of Education disclosures for higher education institutions that will become effective July 1, 2024. ### Did Poor Change Management Contribute to the AT&T Wireless and McDonald’s Outages? In the past few months, both AT&T Wireless and McDonald’s experienced system outages that affected customer service. On February 22, AT&T encountered widescale network outages throughout its U.S. service areas. Other providers that use AT&T cell towers were also affected, including Cricket Wireless, Consumer Cellular and Straight Talk Wireless. Customers reported issues making calls and sending text messages. Then, on March 15, McDonald’s reported global outages to its point-of-sale system, with employees noting an inability to accept orders, open cash registers or process payments. The outage caused many restaurants to close. Both companies stated that the outages were due to a software update and configuration change to their respective systems, and not caused by bad external actors in a cyberattack, despite media reports. In other words, the software update encountered complications. McDonald’s attributed the change to a third-party service provider. If the outages were caused by poor change management practices, both AT&T and McDonald’s should evaluate their procedures. Even if they have strong processes in place, it’s important to recognize that change management needs to be followed consistently and throughout all types of changes. Even seemingly straightforward or small changes could have significant consequences. Best Practices to Limit Software Change Issues Effective change management is crucial to minimizing the significant potential negative impact changes could have when pushed to production. The following list identifies some key recommendations for any organization looking to improve its change management process: An Emergency Change Process - This should be in place for those changes that require fast or immediate implementation into production. This allows organizations to expedite the approval and implementation of urgent changes while still following the organizational change management process, ensuring that changes are documented and tracked throughout. Building in Adequate Network Redundancy  - Ensures that if a change does go wrong and affects the overall network, network redundancy will automatically take over, minimizing downtime and maintaining service availability. Change Testing - All changes should undergo review within a separate test environment prior to migration into production. Types of tests include quality assurance, user acceptance, regression, security (code reviews, dynamic/static scans, fuzz testing) and configuration, which ensure the change meets quality standards and performs as intended. It helps the team identify any bugs, errors or unexpected outcomes before they impact the users or system, as well as any security risks. Testing should also follow segregation of duties and be performed by an independent resource. Deploying Changes on a Predefined Schedule - These allows organizations to implement changes during low-traffic periods, which can minimize service disruptions for users or customers. It can also reduce the risk of errors or failures by allowing for ample planning and testing. In addition, companies should keep up with critical updates and patches based on the vendor’s recommended schedule. Implementing a Change Advisory Board - A board consisting of various leaders throughout the organization who can assist in making informed decisions about proposed changes by considering the risks and impact of the change. Implementing a Change Management Policy - Policies provide guidance during software changes, outline the requirements of the change process and ensure adherence to all necessary steps. Implementing a Ticket System - Systems like Jira, ServiceNow, Cherwell, etc., can provide a centralized location to track all change requests from initiation to resolution while maintaining documentation of the change, including description, testing, approvals and prioritization. Keeping Servers Updated - Ensure servers have not reached their end of life. Unsupported servers pose a significant security risk due to their no longer receiving important security updates/patches. Reliability and performance are also compromised with out-of-date/unsupported software. Limiting Administrator Access/Assigning Unique and Separate Accounts - This allows organizations to reduce the risk of unauthorized changes. Unique accounts enable easier tracking and auditing of changes that occur. Maintaining Segregation of Duties - This is a crucial control in the change management process, meaning that the user(s) who developed the change(s) should not have access to migrate those changes to the production environment. A change log should be reviewed monthly if segregation of duties conflicts exist. Monitoring Third-party/Offshore Locations - If third parties or service providers are involved with implementing changes or providing support for systems, it’s important to monitor their performance and compliance to the change management process to ensure risks are mitigating with outsourcing and that changes are implemented effectively and securely. Obtaining Final Approvals - Changes should have final approval by management prior to being deployed into a production environment. This ensures that the change has undergone review and validation, thus reducing the risk of a company deploying untested or harmful changes into production. Obtaining Initial Approvals - All proposed changes should have proper management approval to ensure they align with strategic objectives and operational needs. Set and Monitor Change Management KPIs - This ensures that organizations will assess the effectiveness and efficiency of the change management process, help identify improvements areas and optimization opportunities. Strong Password Controls for Administrator Access - Utilize a password vault for administrator generic accounts to help manage passwords and reduce the risk of weaker password control for administrators. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is not only to understand the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: If the outages were caused by poor change management practices, both AT&T and McDonald’s should evaluate their procedures. Even if they have strong processes in place, it’s important to recognize that change management needs to be followed consistently and throughout all types of changes. Even seemingly straightforward or small changes could have significant consequences. ### Cracking the Value Creation Code: Key Considerations for the Value Creation Process This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a foundational business strategy. You can download the complete guide here. Just like preparing a home for sale, certain improvements can be accomplished in a shorter rather than longer time frame. With more time and investment, more impactful changes can be made to drive value and return on investment. The Impact of Timing on Value Creation But what if a business wants to sell now? Or sell in 6 months? Would they have time for value creation to be impactful? There is indeed an interplay between timing and value creation. Certain value creation activities, such as entering a new market or fully productizing a revenue stream, are harder to accomplish in a compressed time frame. And, while market timing is impossible to gauge, some owners want to pursue a monetization event sooner rather than later. What does the value enhancement process look like in those circumstances? Even on compressed timelines, value creation is beneficial. The activities in this process would concentrate most on items which can result in limiting the amount of potential buyer discount. Examples of this may include the elimination of unprofitable revenue streams, key employee identification and lockups, receipt of all assignments for IP, preparation of assumption-based annual budget and forecast, etc. In addition, there is still value in longer-term value creation activities that owners will not have the time to implement before the sale. Organizations can incorporate these activities into the Confidential Information Memorandum (“CIM”), providing the buyer with a roadmap for how additional targeted investment can translate to tangible increased value over time. This can help the buyer develop a strong deal thesis and an upside scenario, which often translates to an increased purchase price. Industry Specific Considerations While certain value drivers cut across industries (solid management team, good and impactful data, recurring revenue streams, strong repeatable processes, etc.), others are industry specific. For instance, value creation in the federal government contracting space may include emphasizing prime versus subcontractor work, full and open versus set-aside work, establishing a competitive indirect cost rate structure, creating a dedicated business development and proposal team, and building a strong backlog and pipeline. Understanding industry-specific value creation activities is critical and should be incorporated into the assessment process DIY vs. Third-Party While some companies may attempt the value creation process on their own, the effort is typically fraught with pitfalls. Because the key to value creation is being able to impartially evaluate the business through the lens of a buyer, leveraging subject matter experts and others who have seen multiple businesses, are familiar with the sale process, and have a clear understanding of best practices for a particular industry helps set the table for success. Further, the time commitment can be significant. Working on value creation while still driving the business can be difficult. Lastly, the value creation process can result in some hard decisions, including restructuring or eliminating certain positions. While owners may recognize the need to make those tough decisions, they still may find third-party validation and ownership of such actions desirable. Consulting costs incurred during the assessment and value creation process are add-backs to EBITDA in the calculation of Enterprise Value. Thus, the cost associated with the value creation exercise has no negative impact on Enterprise Value. In summary, it’s critical to examine these key considerations as part of the overall value creation process.  Value creation serves as a solid foundation to achieve a vision, create, and enhance growth opportunities and drive improved decision-making and financial results. It results in a better run and more valuable business, helping maximize dollars realized upon exit. Related Articles Cracking the Value Creation Code: Laying the Foundation Cracking the Value Creation Code: Implementing the Value Creation Process About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. Excerpt: Just like preparing a home for sale, certain improvements can be accomplished in a shorter rather than longer time frame. With more time and investment, more impactful changes can be made to drive value and return on investment. ### Managing University Costs: Strategies for Examining and Identifying Savings Opportunities How can universities control rising operational costs? The cost to run a college is amplified by a multitude of factors, including inflation, decreased state funding, and tuition discount rates. In fiscal year 2022, institutional costs increased 5.2 percent from the prior year. As the cost to run a college increases every year, enrollment challenges are becoming a threat to higher education. Overall college enrollment has been steadily declining over the last decade and has decreased by 9.89 percent from 2010 to 2023. Furthermore, the rate of enrollment among new high school students into colleges and universities has declined by 7.3 percent year over year. With the rising costs and decreased enrollment, how can higher educational institutions tap into opportunities to save on costs? A strategy to right-size the institution is key in addressing rising cost challenges. Colleges and universities can investigate administrative through several cost saving methods, including: Review current administrative processes. Look for opportunities for automation that can simplify processes and remove duplicate efforts. This may include reviewing current software and weighing options for a change in software that is more tailored for the university or analyzing manual processes that could be more efficient. Evaluate current staffing for the possibility of merging departments or units as well as the needs to fill any vacancies can aid in saving costs. Consider outsourcing services. Universities can analyze the costs of outsourcing services like food services, IT operations, building maintenance, student health centers, and recreational centers. Additionally, universities and colleges can look to thoughtfully cut costs in academics by: Optimize office and classroom space. As in-person work has shifted to a hybrid or remote environment in some cases, there is a reduced need for office and classroom space. These spaces may be reallocated to other departments or for other uses to best utilize the rooms. Look for opportunities to utilizing facilities in diverse ways. Tracking the utilization of various spaces on campus can optimize its use and has the potential to discover using the spaces in a new way. For example, there may be opportunities to rent facilities to other organizations or departments. Perform a review of academic programs and departments with considerations for costs and enrollment. Consider key performance indicators that may reveal potential reorganizations that prove to be more efficient. While considering optimizing resources for academic programs and departments, it is important to take a look at the breakdown of the fields in which students are earning their degrees and focusing resources in those fields. 52.1 percent of all bachelor’s degrees earned in 2021 are in five fields: business (18.2 percent), health professionals and related studies (12.9 percent), social sciences and history (7.7 percent), biological and biomedical sciences (6.3 percent), and psychology (6.1 percent). Reviewing the concentrations of university’s academic programs can guide the university to the proper cost cutting strategies. How Can Schneider Downs Help? The collective expertise and real-world experience of the Schneider Downs Consulting practice can help higher education institutions better assess, plan and control operational costs and savings, as well as mitigating large-scale cyber, compliance and IT risks that can cause unforeseen financial damages. If you have any questions, please contact our Higher Education Industry group directly at contactsd@schneiderdowns.com. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: The cost to run a college is amplified by a multitude of factors, including inflation, decreased state funding, and tuition discount rates. In fiscal year 2022, institutional costs increased 5.2 percent from the prior year. ### Subservice Organizations: Their Role and Impact on Your SOC Report In today’s interconnected business landscape, understanding the role of subservice organizations in SOC (System and Organization Controls) reports is paramount. Subservice organizations are third-party entities utilized by service organizations to perform key functions, necessitating scrutiny to ensure comprehensive risk management and regulatory compliance. Through a detailed examination of subservice organizations’ roles, responsibilities, and impact on SOC reporting, organizations can enhance their ability to effectively manage risk and uphold the integrity of their assurance processes. This article delves into the significance of subservice organizations within SOC reports, exploring how to identify a subservice organization, and what that means for your SOC report. What is a Subservice Organization? The 2022 AICPA SOC 2 Guide defines a subservice organization as a "vendor used by a service organization that performs controls that are necessary, in combination with controls at the service organization, to provide reasonable assurance that the service organization’s service commitments and system requirements were achieved". To elaborate on the AICPA’s definition of a subservice organization, a vendor is a subservice organization if the following are true: You need the vendor’s controls to achieve service commitments and meet system requirements for SOC 1 objectives or SOC 2 criteria. It is necessary to describe the vendor’s services for customers to understand your core system and how it relates to applicable Trust Services criteria. A contract is in place with the vendor that stipulates the vendor’s obligations to execute certain controls to address risks related to their service. When adding a subservice organization to your report, all of the subservice organization’s complementary controls (CSOCs) and each user entity’s complementary user entity controls (CUECs), must be evaluated to be in alignment with the operating effectiveness of the service organization controls. One of the most typical scenarios seen for adding a subservice organization is for cloud-based hosting services. Amazon Web Services (AWS), Azure, and the Google Cloud Platform (GCP) are typical service providers for this specific type of service. One of the CSOCs for a subservice organization like AWS, Azure, or GCP for providing cloud-based hosting services would be providing physical and environmental security over the production servers being used. Choosing the Inclusive or Carve-Out Method for Reporting When a service organization chooses to add a subservice organization to their SOC report, they can choose to use either the inclusive or carve-out method to present the subservice organization. When using the inclusive method, the auditor will audit the subservice organization for the controls that the service organization relies on them for. When choosing this method, it’s important to consider whether the subservice organization is willing to allow the auditor to test the controls within their environment. When the carve-out method is used, the auditor does not audit the subservice organization for the controls that the service organization relies on them for. When choosing this method, it’s important to consider if the subservice organization receives a SOC report or another certification that will allow you to monitor their control environment. Monitoring Your Subservice Organization When choosing to rely on the controls that a subservice organization is performing, it is important to consistently review the control reports (e.g., SOC reports) as they are made available. When reviewing the subservice organization’s SOC reports, check to see if the subservice organization received a clean opinion or any exceptions on controls that could have an impact to the service you are providing to your clients. If the subservice organization does not have a SOC report, it’s important to find an alternate approach to monitor the controls that are being relied on. This could mean requesting vendor questionnaires or even setting up recurring meetings with the subservice organization for monitoring. Preparing for Your Next SOC Audit It is important to note that whether you use the inclusive or carve-out reporting method, you must disclose any use of services provided by a subservice organization in your audit report. For your next SOC audit, do you need to decide whether to have an inclusive or carve-out report to represent your subservice organization? After considering the positives and negatives of both methods, you can now make an informed decision on what is best for you and your customers. If you need help determining subservice organizations, have questions on audit reporting methods, or any other SOC questions, feel free to contact our team directly at contactsd@schneiderdowns.com. Related Resources Schneider Downs SOC Report Brochure Schneider Downs SOC FAQs About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com Excerpt: Through a detailed examination of subservice organizations’ roles, responsibilities, and impact on SOC reporting, organizations can enhance their ability to effectively manage risk and uphold the integrity of their assurance processes. ### Allegheny County Marriage License Data Leak May Affect Recent Newlyweds A website glitch may have exposed thousands of couples who filed for marriage licenses in Allegheny County. Guest list? Check. Wedding venue? Check. Dinner menu? Check. There are a lot of important dates to add to your calendar and items to add to your checklist when wedding planning. And while most of it is fun and exciting, some involve contractual obligations, one of which is applying for a marriage license. Depending on your jurisdiction, applying too late or too early can affect the timing of your license acceptance. But one item you shouldn’t need to worry about is whether your personal information is protected while filling out a marriage license application. Recently, a security flaw was exposed in the Allegheny County Department of Court Records’ website. If you looked up a married couple’s public marriage on the website and then went to start your own application, you could “auto-fill” that married couple’s information into your new marriage license application. While the glitch has since been resolved and an independent investigation is underway to determine the true scope of the incident, the exposed data still poses a concern for many newlywed couples in Allegheny County. A requirement of the marriage license application includes providing your Social Security number. When a threat actor discovers this, they can open credit cards, loans and mortgages in your name. While identity theft is always a concern, there are proactive measures residents in Allegheny County and beyond can take to make sure their personal information is protected and, if exposed, the risks mitigated. If you’re worried your information could have been exposed in this data leak, or others, you can take the following actions: Freeze your credit Check your credit reports regularly for suspicious activity Subscribe to alerts with each of the main credit bureaus (Experian, Equifax and Transunion) File a police report if you notice suspicious activity For more information on how to protect yourself against identity theft, check out our Identity Theft series. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Excerpt: There are a lot of important dates to add to your calendar and items to add to your checklist when wedding planning. And while most of it is fun and exciting, some involve contractual obligations, one of which is applying for a marriage license. Depending on your jurisdiction, applying too late or too early can affect the timing of your license acceptance. ### Cracking the Value Creation Code: Implementing the Value Creation Process This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a foundational business strategy. You can download the complete guide here. The value creation process consists of two distinct steps: (1) assessing the current state of the business and (2) remediating identified gaps while implementing value creation activities. Assessment The value creation process requires critical thinking and analysis across the organization. An organization begins the process through the lens of a buyer and identifies areas most likely to result in discounting and a reduction of the purchase price in a sale transaction. It also identifies upside opportunities for value enhancement, such as repositioning a product or service offering as a recurring versus project-based revenue stream. The assessment process is not just a series of “canned” questions, but workshops and one-on-one interviews coupled with data review and analysis across all key functions of the company. It includes a review of operations as well as support functions, such as marketing/sales, human resources/talent management and accounting/finance. Areas analyzed may include the following: Business Development/sales structure and go-to-market strategy. Customer concentrations Customer contract composition – status of key contracts and special preferences Decision-making processes (governance structure) Employee agreements, compensation, benefits, and incentives Financial reporting – GAAP v. non-GAAP basis statements Intellectual property and perfection of ownership interests IT/ERP environment and other key systems (CRM, project management, etc.) Key business processes (policies and procedures) Management team composition and structure Market size and positioning Operating cost structure - fixed and variable costs Organizational structure Revenue streams – nature and composition, recurring versus non-recurring, gross margin by product/service line, etc. Strategic planning/budgeting process Working capital maximization The analysis of each area helps organizations identify a series of value gaps and value creation opportunities. Gap Remediation and Implementation of Value Creation Activities Next, organizations rank each of the value gaps or value creation opportunities identified as part of the assessment process based on impact, timing, and cost (level of effort). They then formulate a targeted plan to address each gap and value creation activity and decide on key performance indicators to track and monitor progress. In most value creation exercises, businesses give the highest priority to low effort, high impact items. They rank mid-term and longer-term items based on relative return and establish a plan to move the effort forward. Although organizations can make significant progress in as few as 6 months, the ideal time frame to create measurable improvement often takes 12 – 18 months. Working with one federal government contractor, we moved from a single to double-digit multiple of EBITDA prior to the sale process. Our work for this contractor included the following value enhancements: Establishing an achievable strategy and execution framework with goals/objectives that could be driven downward, throughout the organization. Eliminating an unprofitable product line (and treating related costs as an adjustment to EBITDA) Reconfiguring the management team to reposition individuals based on their relative strengths. Filling a back-office resource need that would better position the company as a platform company. Building out a formal business development process and implementing a CRM/pipeline. Reviewing compensation and incentives and establishing incentives that align with the strategic direction of the company. In the value creation stage, it is also critical to establish a formal feedback loop for the key performance indicators that were identified to monitor progress. This provides a means for measuring success and allows for mid-course corrections, as necessary. Related Articles Cracking the Value Creation Code: Laying the Foundation Cracking the Value Creation Code: Key Considerations for the Value Creation Process About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. Excerpt: Learn more about the two distinct steps of value creation, business assessment and remediating identified gaps. ### PCI DSS v4.0 is Here…Are You Ready? What do organizations need to know about PCI DSS v4.0? We published our summary of the key changes in Payment Card Industry Data Security Standard (PCI DSS) v4.0 two years ago. Now, as entities prepare for their first assessments under the new standard, we want to share some key lessons we’ve learned while helping our clients prepare to meet the new and changed requirements. What is PCI DSS? The PCI DSS is a globally recognized framework that sets technical and operational standards for safeguarding account data. On March 31, 2022, the PCI Security Standards Council (PCI SSC) released version 4.0 of the PCI DSS, with a three-year transition period for replacing the previous version (3.2.1). This update was intended to address emerging threats, adapt to evolving technologies and introduce innovative ways to combat new risks. What are the Key Objectives of PCI DSS v4.0? Continuing to Meet Industry Needs: The new version aims to meet the evolving security requirements of the payment industry. It recognizes that security is an ongoing process and adapts accordingly. Promoting Security as a Continuous Process: PCI DSS v4.0 emphasizes that security is not a one-time event but a continuous effort. Organizations must remain vigilant and adapt to changing threats. Enhancing Flexibility: The standard provides flexibility for organizations by introducing additional methods to achieve their security goals. It acknowledges that different approaches can effectively maintain payment. Improving Payment Validation Methods and Procedures: PCI DSS v4.0 enhances validation methods, ensuring that organizations can effectively assess and validate their compliance. What is the Transition Period and Timeline for PCI DSS v4.0? Transition Period: From March 2022 to March 31, 2024, organizations could operate under both PCI DSS v3.2.1 and v4.0. This allowed time for organizations to familiarize themselves  with the changes, update reporting templates and implement necessary adjustments. Retirement of v3.2.1: As of March 31, 2024, PCI DSS v3.2.1 has been retired, and v4.0 will be the sole active version. Make sure your assessor has completed the mandatory v4.0 training before starting your next assessment. What are the Key Changes to PCI DSS v4.0? Over the upcoming month, our team will share insights on some of the more detailed requirement updates and changes to PCI DSS for v4.0, which include: Requirement 1 - Install and Maintain Network Security Controls: The terminology related to firewalls has been revised to encompass a broader range of network security controls. This change supports various technologies used to achieve security objectives traditionally associated with firewalls. Requirement 2 - Apply Secure Configurations to All System Components: There have been several updates designed to clarify the scope and intent of the requirements around securing asset configurations within the cardholder data environment (CDE). Requirement 3 - Protect Stored Account Data: New restrictions have been placed around the storage of sensitive authentication data (SAD), and additional cryptographic controls must be implemented to protect cardholder data (CHD). Requirement 4 - Protect Cardholder Data with Strong Cryptography During Transmission Over Open, Public Networks: Trusted keys and certificates must now be formally inventoried. Requirement 5 - Protect All Systems and Networks from Malicious Software: Malware scanning now must cover removable media, and all entities must deploy anti-phishing controls. Requirement 6 - Develop and Maintain Secure Systems and Software: Custom software and client-side scripts used on payment pages must be inventoried, and additional technical controls need to be implemented to protect web-based payment pages. Requirement 7 - Restrict Access to System Components and Cardholder Data by Business Need to Know: User access reviews must be performed at least every six months for all user accounts within the CDE. Requirement 8 - Identify Users and Authenticate Access to System Components: PCI DSS now mandates the implementation of MFA for all access into the cardholder data environment and finally increases minimum password length to 12 characters. Requirement 9 - Restrict Physical Access to Cardholder Data: Only minor changes were made to the restrictions on physical access, both related to additional documentation. Requirement 10 - Log and Monitor All Access to System Components and Cardholder Data: Emphasis is now placed on the use of automation to detect security events, including any failure of all critical security components. Requirement 11 - Test Security of Systems and Networks Regularly: Vulnerability remediation plans must address all severity ratings (not just those considered “high-risk”), and authenticated mode is required for internal vulnerability scans. Requirement 12 - Support Information Security with Organizational Policies and Programs: While additional requirements for documenting responsibilities have been added to Requirements 1-11, the need to perform a full risk assessment (using NIST, OCTAVE, etc.) has been replaced by the Targeted Risk Analysis. Understanding the Customized Approach in PCI DSS v4.0: Different from the concept of “Compensating Controls” (which still exist), the Customized Approach is only available to entities undergoing an assessment resulting in a Report on Compliance (ROC). Understanding Targeted Risk Analysis in PCI DSS v4.0: While the Targeted Risk Analysis generally simplifies the risk assessment process, all entities should understand the necessary considerations, especially if incorporating their PCI risk assessment into a broader risk management strategy. New Requirements for Service Providers: Third-party service providers must satisfy additional requirements intended to protect their customers’ PCI environments. Understanding these obligations is equally important to TPSPs and merchants relying on their services. Be sure to check back to our PCI DSS Solutions page as we make additional guidance and resources available. How Can Schneider Downs Help? As a certified Qualified Security Assessor (QSA), Schneider Downs is equipped to assist clients with their PCI compliance requirements by providing scalable, efficient solutions for meeting the rigorous demands of PCI compliance. If you have any questions regarding PCI DSS v4.0 feel free to contact the Schneider Downs team at contactsd@schneiderdowns.com or visit our PCI DSS solutions website. Related Resources PCI DSS Resource Center PCI PSS DSS v4.0 Fact Sheet About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is not only to understand the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Learn more about the key changes, requirements and timeline for PCI DSS v4.0 that replaced the previous version (3.2.1). ### Cracking the Value Creation Code: Laying the Foundation This article is part of a comprehensive series exploring value creation in anticipation of a downstream transaction and as a foundational business strategy. You can download the complete guide here. As growth and sell-side advisors, we work closely with business owners to help increase the value of their organization and guide them through the sale process. Business owners are often initially skeptical of how impactful the value creation process can be. However, doubters turn to believers as they witness tangible evidence of improved performance and find themselves optimally positioned for a downstream monetization event. What is Value Creation and Why Does it Matter? Simply stated, value creation is the process of building both tangible and intangible value into the business. It can be measured in real dollars – that is, what is my business worth? The most widely used measure of value is Enterprise Value (“EV”). EV is the value of the entire company – the amount of consideration that a third party would pay to buy the company. EV includes not only the equity value of the company, but its term debt and cash reserves as well. It is calculated as follows: EV = Equity Value + Debt – Cash In an M&A transaction, the buyer is most often purchasing the equity value of the Company. Rather than assuming the debt and cash on the balance sheet, the deal is structured so that the debt and cash remain with the seller who has the responsibility for satisfying the debt upon close of the transaction. This is referred to as a cash-free-debt-free transaction. Formulaically, it can be expressed as follows: EV – Debt + Cash = Equity Value Now that we have started to lay the foundation, there is one more formula to discuss: the EBITDA multiple. Multiples of EBITDA (earnings before interest, taxes, depreciation, and amortization) are derived across industry or market segments to approximate the EV of similar companies within that segment. The basic formula for EV using a multiple of EBITDA is: EV = EBITDA x Market Multiple This is the key equation underlying value creation. Market multiples are quoted as a range of value – for example, the range of value for companies in the IT services space may be 7 to 10 times EBITDA. So, an IT services company with an EBITDA of $2 million could have an EV range of $14 million (7 multiple) to $20 million (10 multiple). The goal behind value creation is to improve a company’s relative position along the range of value. For instance, in the example above, the IT services company would aim to move the multiple from a 7 to an 8 or 9.  As improvements drive the multiple upward, invariably EBITDA (or profitability) is also positively impacted. Thus, value creation can positively impact both factors that drive Enterprise Value and create the basis for an exponential increase in value over time. Adopting a Value Creation Mindset Value creation is not a one-time exercise, but an ongoing business mindset or strategy. It is complimentary to the mission, as a well-run company can provide increased value or upside to all stakeholders, including customers, employees, and the business owners themselves. Improved performance and profitability, for example, can drive more opportunities for employees to advance as the company grows over time. And customers are positively impacted when companies realize efficiencies in delivery or invest more dollars in R&D. The value creation mindset is fundamentally a paradigm shift that entails focusing more acutely on those specific activities that add value to the organization and baking that mindset into the company’s tactical and strategic orientation. Many middle market companies lack a clearly defined strategy. While owners may have a vision of the future, they lack the ability to clearly define the steps and process to achieve that vision. Frequently, when owners have multiple initiatives in process, none of them seem aligned to a clearly defined strategy. With so many projects in play, very little—besides excess cost and frustration—gets accomplished. Establishing a firm strategic direction with an execution framework based on value creation can help define which projects to pursue and prioritize. Defining and pursuing the top 2-3 initiatives at any given time will help create focus within the organization, drive measurable progress and value and allow the company to celebrate success as it goes. Whether an owner is seeking monetization or wants to develop a solid lifestyle business, adopting a value creation mindset can provide benefits, including creating a solid foundation to achieve a vision, create and enhance growth opportunities and drive improved decision-making and financial results. Related Articles Cracking the Value Creation Code: Implementing the Value Creation Process Cracking the Value Creation Code: Key Considerations for the Value Creation Process About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. Excerpt: Business owners are often initially skeptical of how impactful the value creation process can be. However, doubters turn to believers as they witness tangible evidence of improved performance and find themselves optimally positioned for a downstream monetization event. ### Summary of President Biden’s 2025 Revenue Proposals Released in Treasury’s Greenbook The U.S. Treasury Department released President Biden’s administration’s fiscal year 2025 revenue proposals on March 11, 2024. The annual “Greenbook” (available here https://home.treasury.gov/system/files/131/General-Explanations-FY2025.pdf ) explains revenue proposals contained in the fiscal year 2025 budget recommendation. Although there are noteworthy changes in this year’s proposal compared to last year’s proposal, many of the items should be familiar to taxpayers—since they’ve been proposed in prior years in similar fashion (see last year’s article here https://www.schneiderdowns.com/our-thoughts-on/biden-administration-releases-proposed-fiscal-20232024-budget)  It’s also likely we’ll continue to see a number of these proposals included in some format in future (2-4 years) budget proposals if the Presidency remains in control of the Democratic Party after the 2024 November election. These proposals might be incorporated into the 2024 Democratic party platform, but how many end up in enacted legislation is pure conjecture. Note that the Greenbook proposals are priorities of Democrats; Republicans have yet to be heard from in any detail. Some of these proposals will be competing with proposals to either let expire or extend certain tax provisions enacted as part of 2017’s Tax Cuts and Jobs Act and set to expire at the end of 2025. With it being an election year, the chasm between Republican and Democratic parties on many issues, including taxes, appears to be quite wide; and coupled with the current split control in the House versus the Senate, the likelihood of major changes to existing federal tax law seems unlikely at this time. However, it is important to stay abreast of proposals because these often become the foundation of future legislation. The current Greenbook proposes the following changes (many of which would impact states’ income taxes, which piggyback federal tax law): Raise the corporate income tax rate from 21% to 28%. Increase the corporate book income alternative minimum tax from 15% to 21%. Increase excise on stock repurchase from 1% to 4% Deny a compensation deduction exceeding $1 million for all “C” corporations (including privately held corporations). Increase the highest individual marginal tax bracket rate from 37% to 39.6% while also reducing the floor on which that income is taxed (from $731,200 to $450,000 for couples married filing jointly for example). Increase the additional tax on net investment income from 3.8% to 5% for taxpayers with income exceeding $400,000. Increase the capital gain and qualified dividend income tax rates to the highest marginal tax rate for individuals with adjusted gross income exceeding $1,000,000 (meaning capital gains could be taxed at a rate as high as 44.6%) Tax carried interests as ordinary income for those making more than $400,000. Repeal like-kind exchange treatment for real estate for gains exceeding $500,000 (or $1,000,000 for married individuals filing a joint return). Treat all depreciation recapture on sale of Section 1250 property (real property) as ordinary income for individuals with adjusted gross income of $400,000 or more ($200,000 for married individuals filing separate returns) Permanently extend the excess business loss limitation past its current expiration date of December 31, 2028, while simultaneously limiting the use of excess disallowed losses to only business income (as opposed to treating the loss limitation as a net operating loss in the following year available to offset other types of income). Tax transfers of appreciated property by gift or death as a realization event. Impose a 25% minimum tax on total income (including unrealized capital gains) on taxpayers with wealth exceeding $100 million. Expand the child tax credit. Restore the expanded earned income tax credit for workers without qualifying children. Permanently exclude cancellation of student debt from income. Provides tax credits up to $10,000 for both first-time home buyers and home sellers with credit phased-out between $100,000 and $200,000 of modified adjusted gross income. The Greenbook also proposes other changes including the elimination of tax incentives on fossil fuels and would also align the U.S. Global Intangible Low-taxed Income (GILTI) minimum tax with the income inclusion rules under the OECD Pillar Two model rules. As we have noted in the past, it is important to remember that the above items are only proposals; many of these items have been floated in the past but sank before making it into any final tax legislation. It is much too early to act on any of these proposals, but it is important to remain informed about any legislative bills arising from the Greenbook proposals and the possible implications on your tax situation. If you have any questions, please do not hesitate to reach out to your Schneider Downs tax consultant. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about President Biden’s 2025 Revenue Proposals Released in Treasury’s Greenbook and the following changes. ### The Impact of the Baltimore Key Bridge Disaster on Supply Chain How will the Baltimore Key Bridge collapse impact national and regional supply chain? Tuesday's tragic bridge collapse at the Francis Scott Key Bridge over the Port of Baltimore has triggered a scramble among companies to adapt their supply chains due to the port's closure. With our headquarters in Pittsburgh, we recognize the vital role waterways and bridges play in the economy, facilitating the transportation of goods across and out of the country every single day. The collapse of this critical bridge has widespread implications at both local and national levels, leading company leaders to assess supply chain risks and seek strategies for mitigation, asking: "What are the supply chain risks to my company, and how can we minimize them?" What Effects Will the Key Bridge Disaster Impact Businesses and Customers? As one of the largest ports in the nation, the port of Baltimore is a critical supply chain point for the auto, construction, machinery and coal industries. To put the importance into perspective, the port handled 52.3 million tons of foreign cargo worth an estimated $81 billion in 2023 and produced more than 15,000 jobs. Many of those crucial industries have roots within the Pittsburgh, Philadelphia and Columbus regions, causing an impact to those region’s companies and ports. Companies can be affected on the inbound or outbound side of their supply chain.  If the inbound side is impacted, a delay in receiving supplies could equate to a delay in manufacturing. If a delay is caused, manufacturing schedules will need to be adjusted to adapt to the shift in resources, and as a result the company can have a negative financial impact. If the outbound side is impacted, the company may see a delay in customer’s receiving their goods, causing a potential negative impact on their professional reputation. The delay could also affect shipping and receiving metrics and delivery standards for the company. How Can Companies Mitigate Supply Chain and Logistics Risk? There are a number of different ways that a company can mitigate their supply chain and logistical risk, including: Applying dynamic transport modes such as automated freight management or automated shipping processes. Conducting evaluations of the supply chain frequently.  By completing these evaluations, which can be done using data collected manually or through the use of AI, the company can learn the viable pain points and vulnerabilities within the supply chain and determine where efficiencies can be gained. Developing a disaster recovery plan for their supply chain(s) Having visibility into suppliers’ suppliers by having the ability to track and receive notification of shipping orders.  This can be conducted by using RFID sensors within shipping packaging. Using standardized freight documentation, giving the company the ability to use different modes of transportation or different ports of entry. Utilizing vendor diversification through either multisourcing or nearshoring (using suppliers and distributors close to your operations or close to the critical points in your supply chain) Utilizing the PPRR Risk Management model, a population global supply chain risk management strategy. Prevention – precautionary measures to reduce supply chain risk Preparedness – develop and test the disaster recovery plans for those applicable supply chain risks Response – successful implementation of the disaster recovery plans Recovery – working to repair and restore all affected areas timely and in order of critical prioritization (this would be determined within the Preparedness and Response steps) How Can Schneider Downs Help? Schneider Downs can help organizations of all sizes and industries evaluate the company’s risks, assist with improvement of the supply chain risk management for your company, consult on the adequacy of your disaster recovery plan, and assess if supply chain and logistics are an area of elevated concern given the changing infrastructure of today. If you have any questions about supply chain risk, please contact our team directly at contactsd@schneiderdowns.com. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. For more information visit our Risk Advisory Services page. Excerpt: Learn more about the regional and national supply chain implications of the Baltimore Key Bridge collapse. ### The Importance of Certified Business Valuation Professionals The recent United States Tax Court opinion in the case of Estate of Scott M. Hoenshied v. Commissioner of Internal Revenue sheds light on the significance of a professional certification when conducting business valuations, especially in the context of litigation. The case involved a charitable contribution of shares in a closely held corporation where the appraiser lacked certification from a professional organization and made several errors in the preparation of the valuation. According to the Tax Court, a qualified appraiser must hold an appraisal designation from a recognized professional appraiser organization, regularly perform appraisals for compensation and meet other requirements prescribed in the regulations. In this case, the appraiser failed to meet these criteria and made numerous errors in the valuation report, leading to a disallowance of the significant tax deduction. Key Takeaways: Certification: The case highlights the importance of appraiser certification from recognized professional organizations like the National Association of Certified Valuators and Analysts (NACVA) or the American Institute of Certified Public Accountants (AICPA). Certification serves as a mark of credibility and competence in the eyes of the court and enhances the acceptance of appraisals in litigation. Education: Appraisers should complete ongoing education and training in the appraisal field to stay on top of industry trends and best practices. Continuing education not only reinforces an appraiser's expertise but also instills confidence in the court and opposing counsel regarding the validity of their work. Compliance: Appraisers must adhere to prescribed standards and guidelines in conducting valuations and preparing appraisal reports. Failure to comply with regulatory requirements and include essential information in the appraisal report can undermine its credibility and acceptance. Schneider Downs is committed to upholding professional standards and delivering high-quality valuation services. We are proud that our team is composed of certified individuals recognized by reputable professional appraiser organizations like NACVA and the AICPA. Our certified appraisers undergo rigorous training, maintain active participation in continuing education programs and adhere to industry best practices to ensure the quality and integrity of our valuation services. For more information about our business valuation and other advisory services, contact Steve Thimons at 412.697.5281 or sthimons@sdcpa.com, or Adam Goode at 412.697.5411 or agoode@sdcpa.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the United States Tax Court opinion in the case of Estate of Scott M. Hoenshied v. Commissioner of Internal Revenue. ### IRS Tax-Exempt and Governmental Entity New Compliance Programs Every year, the Tax-Exempt and Government Entities division (TEGE) of the Internal Revenue Service (IRS) issues a letter stating its priorities as part of the IRS’s 2023-2031 Strategic Operating Plan. Along with the annual letter, the IRS posts new compliance program initiatives as they are launched.  For fiscal year 2024, the TEGE Compliance Governance Board has issued new compliance programs for tax-exempt hospitals as well as tax-exempt collectives using name, image, and likeness (NIL) agreements with student-athletes.  TEGE will also be continuing compliance with Section 4960 excise tax. The IRS is focusing on verifying whether tax-exempt hospitals are in compliance with IRC Section 501(c)(3), including the community benefit standard as well as IRC Section 501(r).  Brought about by the Patient Protection and Affordable Care Act, Section 501(r) requires tax-exempt hospital organizations to establish financial assistance and emergency medical care policies; limit the amounts charged to individuals eligible for assistance under the hospital’s financial assistance program (FAP); and make reasonable efforts to determine an individual’s eligibility under the hospital’s FAP before engaging in extraordinary collection actions.  The strategy that the IRS will employ for verification is examinations. In the wake of the Supreme Court’s NCAA v. Alston 2021 ruling, the NCAA implemented a name, image, and likeness (NIL) policy which permits student-athletes to earn compensation for the use of their name, image, and likeness.  Tax-exempt organizations that identify as supporting athletes using NIL for compensation must disclose their activities in their application for exemption.  They must show that those activities are in full compliance with existing legal requirements under 501(a). The strategy that the IRS will employ for verification is examinations. Included in the Tax Cuts and Jobs Act, Section 4960 imposes a 21% excise tax on tax-exempt organizations that pay over $1 million in compensation to any “covered employee.”  A covered employee is defined as “one of the five highest compensated employees of the organization for the taxable year” or “was a covered employee of the organization (or any predecessor) for any preceding taxable year beginning after December 31, 2016.”  The IRS’s ongoing review of filing data shows that there is a high volume of exempt organizations that were required to report the excise tax on Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, but failed to do so.  The IRS’s strategies to be employed to ensure that Section 4960 is being followed are compliance checks and examinations of Form 4720. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at our dedicated Tax Services page. Excerpt: Learn more about new compliance programs for tax-exempt hospitals as well as tax-exempt collectives using name, image, and likeness (NIL) agreements with student-athletes - TEGE. ### IPE 101 – Assessing Management IPE Controls and Report Risks This article is part of a comprehensive series exploring IPE. You can download the complete whitepaper here. What are the key steps to assessing management IPE controls and report risks? In our first two articles in the IPE series, we defined IPE and the difference between key reports and populations. The final piece of the puzzle is to understand testing methodologies for gaining comfort over completeness and accuracy of key reports to manage the risk associated with the data. Understanding and Assessing Management's IPE Controls Before the auditor designs any independent testing procedures to validate a key report, the auditor should obtain an understanding of the design and effectiveness of management’s IPE controls. This consideration includes four critical steps: Assess management’s IPE controls for the completeness of the data utilized in the operation of the control Assess management’s IPE controls for the accuracy of the data utilized in the operation of the control Develop testing attributes over the design and operating effectiveness of the IPE controls performed by management Evaluate whether the IT General Controls over systems utilized in the production of IPE have been tested and the results of that testing. If controls over IT General Controls are ineffective, additional considerations must be performed by the auditor. For example, the auditor may need to perform independent substantive testing procedures for completeness and accuracy. Managing Key Report Risk Once the auditor has assessed management’s control, the auditor still may be required to perform additional testing procedures which should be coordinated with the external audit team to ensure the procedure are sufficient. The first step in determining additional procedures must first be to determine the type of key report used in the control. Standard Reports: For standard reports, the report can be relied upon as complete and accurate without the need for additional testing procedures as management has never modified the data as long as the last change date is obtained and confirmed to be a standard report. Third Party Reports: The SOC report should be obtained and reviewed for all in-scope third parties. While the report comes from a third party source system in which management cannot directly edit the data of the report, management should still perform procedures to inspect the input parameters and ensure the parameters match the intended purpose of the control. Custom / Ad Hoc Reports: Each external audit firm has their own guidance on what procedures are required to gain sufficient comfort, but typical testing procedures to confirm the completeness and accuracy of a custom/ad-hoc report include: Performance of the Control – Most key reports used by management are utilized through a review control where management is inherently validating the completeness and accuracy of the data as a control objective and so the auditor can point to management’s review if it is designed effectively to verify the report details (accuracy) and report totals (completeness). Additional Samples – The auditor will select samples from the report to trace back to source transactions (accuracy) and then select source transactions to trace into the report (completeness). This method can be very time consuming and should be looked at as a last resort to gain comfort. SQL Inspection – Some scripts are able to be documented in detail as to how the data is being extracted but SQLs can also become complex very quickly and so this method is less frequently relied upon. If management or the auditor is reviewing the script, keep in mind the most important sections are typically the SELECT, FROM and WHERE statements within the script. The SELECT section should directly tie to the column headers, the FROM section identifies the database tables that houses the data, and the WHERE statement is how the data can be filtered to only be included in the report if it fits a certain criterion. Sample Transaction – Depending on the situation, the auditor can work with management to process a transaction and observe how it then appears on the report. This is especially helpful when dealing with exception reports that only populate data when certain actions occur. This method is oftentimes performed through management’s TEST environment and then the additional step of verifying PROD is a mirror of TEST is completed to show how the testing is applicable to the PROD environment. Understand Compensating Controls – Typically this method is not enough to gain completeness and accuracy comfort by itself, but when used in conjunction with other testing procedures, it can provide comfort over the data. This technique involves understanding the entire control universe and which controls provide comfort over the source transaction that your report is populating. The testing methods do not have to be used individually either. Depending on the key report, performance of the control may be used to gain comfort over the completeness of the report, but a sample transaction could be used for the accuracy of the report. Regardless of which type is used, the auditor should always obtain input parameters or SQL screenshots to verify how the report was generated along with obtaining a screenshot to verify the report’s last change date and who last edited the report. Ultimately, the amount of testing required is at the discretion of the audit team performing the procedures, which is why it is so important to coordinate the testing approach with the external audit team. Related Articles IPE 101 – Defining and Understanding Information Produced by Entity IPE 101 – Differentiating Populations and Key Reports About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Learn more about testing methodologies and key report risks to consider with IPE in SOX testing. ### Employee Retention Credit: IRS’s Voluntary Disclosure Program Expiring With the recent moratorium on processing new Employee Retention Credit (ERC) claims through at least the end of 2023, questions regarding the validity of claims that were previously filed began to rise. In an effort to ease taxpayers’ worries and combat suspect ERC claims, the Internal Revenue Service (IRS) launched a new Voluntary Disclosure Program on December 21, 2023. The program is aimed at helping businesses that may have been victims of erroneous ERC claims pay back the money they received. Who can apply? Any employer that already received the ERC for a tax period can apply if it meets the following criteria: The employer is not currently under a criminal investigation, nor has it been notified of an intended criminal investigation; The employer is not under an employment tax examination by the IRS for the tax period(s) for which it is applying to the Voluntary Disclosure Program; The employer has not previously received notice and demand from the IRS for repayment of part of all of the ERC; and The IRS has not received information from a third party alerting it to the employer’s noncompliance, nor has the IRS acquired information directly related to the noncompliance from an enforcement action. Additionally, to qualify for this program, employers must provide the IRS with the names, addresses and telephone numbers of any advisor or tax preparer who advised or assisted them with their claim. How to apply? To apply, interested employers must use the IRS Document Upload Tool | Internal Revenue Service to first file Form 15434 (About Form 15434, Application for Employee Retention Credit (ERC) Voluntary Disclosure Program | Internal Revenue Service (irs.gov), Application for Employee Retention Credit Voluntary Disclosure Program by March 22, 2024. Those employers whose applications are accepted by the IRS must then repay 80% of the claim they received. Through the Voluntary Disclosure Program, employers are able to keep 20% of the claim they received in addition to any interest the IRS paid on the employer’s ERC claim.  The IRS noted that it selected the 80% repayment due to many ERC promotors charging a percentage fee that was collected in advance of receiving the claim payment. Employers that are unable to repay the full 80% of the credit received may request an installment agreement with the IRS. Installment agreements are considered on a case-by-case basis, pending submission and review of Form 433-B (OIC) (Rev. 4-2023) Collection Information Statement for Businesses and are subject to all penalties and interest that may apply. The IRS encourages employers to consider obtaining a loan from a financial institution, as it may be more financially feasible than entering into an installment agreement. IRS Reminder As the agency continues intensifying audits and criminal investigation work in this area, the IRS continues to urge employers with pending ERC claims to consider a separate withdrawal program that allows them to remove a pending ERC claim with no interest or penalty. Claims that are withdrawn will be treated as if they were never filed. The complete release from the IRS surrounding the Voluntary Disclosure Program can be found at Announcement 2024-3: Employee Retention Credit Voluntary Disclosure Program (irs.gov) As further guidance is issued, our Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions, please reach out to your Schneider Downs contact(s) or Matthew Werner at mwerner@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the Voluntary Disclosure Program aimed at helping businesses that may have been victims of erroneous ERC claims. ### Pillar Two is Here; Is Your Company Ready? The BEPS Pillar Two tax framework is the culmination of a yearslong initiative undertaken by the OECD and over 135 countries around the world to reform international tax rules applicable to multinational companies to help combat base erosion and profit-shifting strategies (BEPS) employed by large multinationals in their efforts to minimize effective tax rates on global profits. To achieve this objective, Pillar Two introduced a new tax framework referred to as Global Anti-Base Erosion – or “GloBE” – a set of rules designed to ensure that multinational groups with over EUR 750 million in consolidated financial statement revenue are subjected to at least a 15% minimum tax rate on their global income in each jurisdiction the group operates. To ensure this minimum level is met, GloBE rules rely on a series of novel effective tax rate (“ETR”) calculations and, when applicable, require a top-up tax to be applied to income earned in low-tax jurisdictions where such income is not otherwise subject to an ETR of at least 15%. The top-up tax may be assessed by the low-taxed entity itself, if that jurisdiction has implemented a Qualified Domestic Minimum Top-up Tax (QDMTT); at the ultimate parent entity (UPE) level, if the UPE jurisdiction has implemented an Income inclusion Rule (IIR); or by other entities in the group, in jurisdictions that have implemented an Under-Taxed Profits Rule UTPR) if neither a QDMTT nor an IIR otherwise applies. GloBE rules require additional data gathering and preparation of new and complex book income-based ETR calculations by entity and jurisdiction to ultimately determine the nature and amount of any top-up taxes applicable to group income in low-tax jurisdictions. These rules also require detailed and complex GloBE-based tax and information return reporting for in-scope multinational groups and their constituent entities. Pillar Two Tax Current Status To implement this new global tax framework, participating countries are in the process of adopting, or have adopted already, local country tax legislation that incorporates the Pillar Two/GloBE principles and reporting requirements into their local country tax regimes. To date, significant progress has been made and many countries have implemented or are close to implementing these rules with effective dates for years beginning on or after January 1, 2024. Consequently, publicly traded U.S. and non-U.S. multinationals will likely begin dealing with the impact of these rules in connection with their first quarter 2024 income tax provision reporting. While the U.S. has yet to implement Pillar Two legislation and appears unlikely to do so in the short-term, U.S. multinationals with constituent entities in jurisdictions that have implemented Pillar Two legislation will need to assess potential implications for income tax provision reporting and ultimately local country GloBE tax and information return reporting for the 2024 tax year. GloBE Information Return reporting is extensive and is comprised of 28 pages and up to 480 data points for each jurisdiction. Non-U.S. multinationals with U.S. subsidiaries will also need to consider these rules as they assess the potential for Pillar Two top-up taxes in their UPE or constituent entity jurisdictions that have implemented Pillar Two rules. Even if no top-up tax liability applies, companies need to be prepared to provide satisfactory documentation supporting this conclusion to their external auditors in connection with their financial statement audit. Recommended Action Steps for Pillar Two Implementation Companies that have not developed processes and procedures to comply with Pillar Two financial accounting and tax reporting requirements are falling behind schedule and should consider taking steps to ensure they’re ready for these additional reporting requirements, including: Review your company’s legal entity structure to identify UPE and constituent entities (including permanent establishments) and relevant jurisdictions; Assess and monitor the status of Pillar Two legislation and applicable top-up taxes in jurisdictions relevant to group structure; Assess the applicability and document eligibility for available safe harbor rules (e.g., transitional country-by-country safe harbor); Assess the availability of necessary financial data on any entity by entity and/or jurisdictional level to be able to perform required GloBE calculations and identify data gaps for resolution; Prepare and organize workbooks with GloBE data to better allow the ability to perform GloBE ETR calculations; Develop or outsource a calculation model for the preparation of GloBE calculations; Evaluate and choose potential elections for the purpose of GloBE ETR calculations; Prepare GloBE ETR calculations by entity/jurisdiction; Assess potential Pillar Two financial statement disclosures; and Develop plans and procedures for preparation of GloBE-based local country tax return reporting and GloBE Information Return reporting. Implementation of Pillar Two is a complex process requiring cooperation and coordination among various internal and/or external team members. The time is now if your organization has yet to develop a gameplan to address these new requirements. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at our dedicated Tax services page. Excerpt: Explore the BEPS Pillar Two tax framework, which includes the Global Anti-Base Erosion (GloBE) tax that aims to ensure multinational companies with over €750 million in revenue pay. ### SDWMA Named as one of the Nation’s Top DC Advisor Teams in 2024 by NAPA We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the Nation’s Top DC Advisor Teams in 2024 by the National Association of Plan Advisors (NAPA) for the fourth consecutive year. The NAPA Top DC Advisor Firm list highlights the nation’s leading retirement plan advisor firms. Unlike other lists, this focuses on teams having at least $100 million in defined contribution (DC) plan assets under advisement and is based on self-reported assets under advisement as of December 31, 2023. The National Association of Plan Advisors was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. NAPA is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org. NAPA members like SDWMA are having a huge impact every single day, not just on the quality of retirement plan advice, but also in building a more financially secure retirement for millions of Americans. It is a great honor for SDWMA to be listed in this regard by NAPA. To our clients, friends, and colleagues, thank you for your continued trust and confidence in SDWMA. If you know someone that we could be of service to, please do not hesitate to share this email or our contact information. Please Note: NAPA updated the title and naming convention this year to reflect the year in which the list is released even though it is still based on data as of 2023. Hence, a list titled “NAPA Top DC Advisor Teams – 2023” is not published. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn more about Schneider Downs Wealth Management Advisors, LP being named as one of the Nation’s Top DC Advisor Teams in 2024 by National Association of Plan Advisors. ### Pell Grant Program Facing Shortfall How can potential funding shortfalls of the Pell Grant program impact undergraduate students? The Pell Grant, specifically aimed to assist low-income undergraduate college students paying for their education, is facing potential shortfall in the budget. The Committee for a Responsible Federal Budget estimates the program could decrease up to $95 billion over the next decade. The committee states the only way to decrease this shortfall is to increase federal spending, award smaller amounts to individuals, or create tighter eligibility rules. Current eligibility rules are based on the following: participating academic undergraduate program, the student must have a high school diploma, must be a permanent resident or citizen of the US, must not be in default on any federal student loans, and no history of being incarcerated for a sexual offense. The amount of the grant is based on the expected family contribution and cost of attendance. Additionally, the amount increased the couple of years, partially due to the Covid-19 pandemic and to account for inflation. The maximum aid per student for the 2021-2022 academic year was $6,495, then for the 2022-2023 academic year increased to $6,895, and in the 2023-2024 academic year increased again to $7,395. Even in the best-case scenario, according to the Committee for a Responsible Federal Budget, the shortfall in the Pell Grant fund could be up to $35 million over the next decade. In the best-case scenario given changes to the federal aid formula, enrollment increases, and given an increased award, as a current policy before Congress outlines, the Pell Grant will grow to $29 billion this year alone. While the Pell Grant has money remaining in the federal spending reserves, due to these factors mentioned above, it could spend that money much quicker than originally anticipated. In order to close this gap between where the budget currently is and what is needed to decrease this shortfall, it is anticipated that a 25% spending reduction or a 36% increase within the fund would be required. About $29.8 billion was available for students in Pell Grant funding in 2023– 2024. Without the Pell Grant, students might have to find extra funding or take more loans, adding to the already high average student loan debt. Unlike loans, the Pell Grant typically doesn't need repayment, offering significant relief. However, boosting Pell Grant funding could necessitate cuts to other federal aids or higher taxes. Despite these challenges, universities view the Pell Grant as crucial for enhancing education and creating a more inclusive learning atmosphere. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Learn how a shortfall in federal funding for the pell grant program may impact undergraduate students and student loan debt. ### Investment Corner with Jason & Sean: The Last Mile of the Inflation Race May Be the Hardest In June of 2022, the U.S. recorded a year-over-year inflation reading of 9.1%, an inflation level not yet experienced in the 21st century. A year later, the annual inflation rate had dropped all the way down to 3.0%. As the Fed continues its mission to bring down inflation while maintaining full employment, many investors out there may believe that the fight is almost over. As we approach the 2% inflation goal, many economists and investors believe the Fed should start to cut rates at the risk of being overly restrictive, dragging the U.S. economy into a recession. Federal Reserve Chairman Jerome Powell has repeatedly stated that the Fed is cognizant of the risk of being overly restrictive, but is also being proactive to prevent a restimulation of inflation that an early cut in rates could bring. For the last 6 months, as each month’s inflation data is released, the anticipated date for the first rate cut by the Fed gets pushed out even further. The last percent or two decrease in inflation may take longer to achieve, so the investment team at Schneider Downs Wealth Management believes that investors should be prepared for a higher interest rate for longer environment. Similar to losing those last few pounds in a weight loss journey, bringing U.S. inflation down from 3% to 2% may be more difficult than bringing it down from 9% to 3%. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training Excerpt: Learn more how the Fed is being proactive to prevent a restimulation of inflation that an early cut in rates could bring. ### Higher Ed - Additional Oversight and Monitoring on the Horizon In October 2023, the Biden-Harris Administration released final rules that are aimed to strengthen oversight and monitoring of colleges and universities, and to strengthen consumer protection for student borrowers. The changes of the Department of Education’s (Department) final regulation are centered around four areas: Financial Responsibility Key changes to financial responsibility standards include: Amendments to conditions that require an institution to post financial protection if certain events occur. These mandatory triggers are external events and circumstances that might not yet be reflected within the institution’s financial statements or composite score. A few examples follow: High cohort default rates or failing the 90/10 revenue requirement An institution taking steps to manipulate its composite score, such as by reporting a contribution before year-end and then taking a distribution after the fiscal year has ended Declaration of financial exigency Amendments to conditions that might require an institution to post financial protection if certain events occur. These discretionary triggers are external events and circumstances that might not yet be reflected within the institution’s financial statements or composite score. A few examples follow: Adverse actions by an accreditor, states or federal agencies. Significant fluctuations in federal student aid volume. Closing programs or locations that enroll significant shares of students. Institutions will now have 21 days to report triggering events and, as part of the reporting, will be able to show that mandatory triggering events have been resolved. Administrative Capability Administrative capability rule changes will strengthen how the Department administers the requirement that institutions must demonstrate that they are capable of administering Title IV programs. Changes include that: Institutions must provide adequate financial aid counseling and communications to students, including information on costs of attendance and financial aid available to them. Institutions must provide geographically accessible clinical or externship options that are required to complete the credential or licensure in a recognized occupation within 45 days of the completion of other required coursework. Institutions must provide adequate career services to eligible students who receive Title IV and HEA assistance. Certification Procedures Certification procedure changes are included within the update and are aimed to assist the Department’s ability to monitor institutions that exhibit concerning signs and mitigate the risks in those situations. These changes include, among other items, the following: Institutions will be prevented from withholding transcripts for credits paid with Title IV aid. Institutions will be prohibited from maintaining policies and procedures that encourage or condition institutional aid or student benefits in a manner that induces the student to limit the amount of federal student aid that the student receives. (Exceptions for certain scholarships from the institutions do exist.) The number of hours in a program must be limited to the greater of the required minimum number of clock hours, credit hours, or equivalent required for training in the recognized occupation for which the program prepares the student. Ability to Benefit The ability to benefit from amendments will impact the eligibility requirements for individuals who do not have a high school diploma or a recognized equivalent. These changes include, among other items, the following: Codifying a definition of eligible career pathway program. Clarifying the differences between Title IV and HEA aid eligibility of non-high school graduates who are enrolled in eligible programs, pre and post July 1, 2012. Amends monitoring requirements to provide an institution that has failed to achieve the 85% success rate up to three years to achieve compliance. Next Steps Although the above presents a high-level overview of several key changes, there are further changes and amendments brought about by this final regulation that will be effective on July 1, 2024. Evaluating how these changes impact your institution will be critical to ensuring continued compliance in the continuously changing world of higher education. The final regulation published by the Department is available to the general public, but additional resources are published by the Department, such as this fact sheet that summarizes the final rule. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Biden-Harris Administration to enhance oversight and monitoring of colleges and universities, as well as to strengthen consumer protection for student borrowers. ### Financial Planning for Blended Families 40 percent of families in the U. S. are blended with at least one partner having a child from a previous relationship. Every situation's different, and there is up to 67 different possible stepfamily combinations. Ron Deal, author of the “The Smart Stepfamily” series, draws comparisons to blended families and common kitchen appliances. Often times many of us jump into these new family dynamics with a lot of gusto and good intentions but end up throwing everyone into a blender. A blender chops up its ingredients, trying to mix everything together very quickly, and in the process, each ingredient ends up losing its distinct flavoring. On the other hand, if we treat this new endeavor more like a slow-cooker crockpot meal, all of the individual ingredients have time to warm up and soften, ultimately maintaining their individuality while creating a beautifully merged recipe. Combing families and bringing children in the mix is obviously challenging, but it is just as important to be aware of the trials you may face when it comes to working alongside your new spouse. The divorce rate for second marriages is significantly higher than first marriages. It is imperative for success to set realistic expectations early on, arguably before you get married, and continuously work to keep your line of communication open. There are certainly enough struggles and tensions when it comes to blending families, but money does not have to be one of them. Financial conversations can seem awkward or tough to initiate, but are incredibly important. As humans, we have this innate desire to be heard and understood, so getting and staying on the same page with each other, understanding what's important to each other, and setting standards and boundaries together for your home is crucial. When sitting down with your new spouse to discuss finances, where should we start? Get a feel of where you both are financially – Are you saving for retirement? Do you have life insurance? What kind of debt do either of you have? Take some time to look at your budgets as a whole and don’t be afraid to ask the deeper questions. If handled right, even the most seemingly uncomfortable topics might surprise you how easy they end up being to talk through once you get them out in the open.  What are some of the topics we should cover when creating our financial plan? Does the new spouse plan to file for guardianship of any stepchildren? Do the children get added to the new spouse’s beneficiary designations? Do you want to have more children down the line? Does your current residence allow for more family members? In the event of a home sale, who has ownership? Do you have an estate plan in place in the event that you both pass? How old are your children? Do you need to designate a guardian? How do you want to setup inheritance? Does it make sense to setup a trust? Are you familiar with local rules and regulations when it comes to alimony, child support and/or FAFSA requirements? What does your current cashflow look like (i.e., what does your spending vs. saving ratio look like)? Do you have an investment portfolio? If so, what are you investing in? Asking these questions allows you and your spouse to begin to draw out a financial roadmap toward reaching your goals together. Once you are able to assess where you are both coming from, you can set some ground rules to eliminate future discord when it comes to decision-making. Sometimes it can be helpful to set aside separate individual funds for each of you to spend however you would like, almost like an allowance of sorts. This option gives you both the freedom to make smaller purchases guilt free without feeling like you need to ask your spouse for permission, with the intention of saving larger purchasing decisions to be made together. In the end, every stepfamily has very different situations, needs, and goals. Consulting an advisor who believes in comprehensive planning could be the key to solving your financial puzzle. Having an advisor can help bring clarity, set realistic expectations, and nudge you to ask the truly important questions. If interested in connecting with one of our advisors, please contact us at sdwealthmanagement@schneiderdowns.com. Recommended Reading Material The Smart Stepfamily Guide to Financial Planning The Smart Stepfamily: Seven Steps to a Healthy Family About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Excerpt: Learn more about some of the most important topics to cover when creating a financial plan. ### IPE 101 – Differentiating Populations and Key Reports This article is part of a comprehensive series exploring IPE. You can download the complete whitepaper here. What are the two primary categories of information produced by entity (IPE)? IPE can be broken into two main categories: Populations and Key Reports. Both represent data obtained from management but the requirements to document how the auditor obtained comfort over the data will vary. IPE Populations Populations are system-generated reports provided to auditors to select a sample of transactions to verify management’s control procedures. Only the auditor must attest to the completeness and accuracy of the population. For example, when testing a control over the approval of purchase orders, auditors will test to verify that orders were appropriately approved in accordance with company policies. They must first obtain the listing of all purchase orders (i.e., the population) and confirm that this population accurately reflects all purchase orders during the defined period. This is typically done by verifying the source system is in scope for IT General Controls testing, obtaining the relevant input parameters/query used to create the population and tying row counts from the system screenshot to the report output. Another method to gain comfort over the data is to inspect the SQL/query used to create the population to understand how the data was generated. IPE Key Reports If system-generated data is utilized by management to perform a control, then it is considered a key report. There are four types of key reports: Standard Report – The report comes from an in-scope system but has not changed since implementation by the vendor (i.e., out of the box).. Third-party Report – The report comes from a third-party application & covered by a SOC report. Custom Report – The report comes from an in-scope system but has been edited through the change management process. Ad Hoc Report – The report comes from an in-scope system but is generated through a SQL or data query Key reports require both management and the auditor to ensure the data is complete and accurate. From management’s standpoint, their obligation is to ensure they are understanding what they are generating by retaining and inspecting the input parameters. The other main component for management is verifying the report was built following the company’s change management process. When any key report is created or changed, it should go through user acceptance testing, which allows management to confirm the report is pulling the intended data completely and accurately for its anticipated use in the control. Beyond the change management process, management should be designing their control review procedures to ensure they are checking the completeness and accuracy of each report they generate. As most management key reports are used in review controls, a common procedure for obtaining comfort over the completeness is tying the report out to the general ledger. For comfort over the accuracy of the report, management should be reviewing the details of the report and making sure they tie to source transactions. Management should also understand what controls create the transactions that populate their report to gain further comfort over the completeness and accuracy of the report. We will discuss the auditor’s approach for obtaining comfort over the completeness and accuracy of key reports in the next OTO IPE Article. Related Articles IPE 101 – Defining and Understanding Information Produced by Entity IPE 101 – Assessing Management IPE Controls and Report Risks About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Better understand what IPE Populations and Key Reports are in SOX testing? ### Administration’s 2025 Revenue Proposals – Potential Changes for Private Foundations On March 11, 2024, the U.S. Department of the Treasury released the “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” which is a 256-page explanation of the Biden Administration’s fiscal year 2025 budget. The Green Book contains the administration’s policy priorities and recommendations to Congress for spending and taxation. Within the many recommendations, there are two changes proposed specific to private foundations: Limit use of donor-advised funds to avoid a private foundation payout requirement; and, Exclude payments to disqualified persons from counting toward private foundation payout requirement. Private nonoperating foundations are generally required to annually distribute at least 5% of the total fair market value of their non-charitable use assets from the preceding year. A foundation that fails to meet this minimum distribution requirement is subject to a 30% excise tax on the undistributed amount. Typically, qualifying distributions include amounts paid to accomplish religious, charitable, scientific or educational purposes, as well as reasonable and necessary administrative expenses paid by the foundation to further its charitable purposes. Private foundations are, generally, allowed to pay compensation and reimburse expenses for personal services to a disqualified person that are reasonable and necessary to carry out the foundation’s exempt purpose. These payments are currently included in the consideration of the minimum distribution requirement. A distribution by a private foundation to a donor-advised fund (“DAF”) is generally considered a qualifying distribution. Currently, there is no requirement that amounts held in a DAF be distributed within a set period of time. The Green Book proposes that a distribution by a private foundation to a DAF is not a qualifying distribution unless (a) the DAF funds are expended as qualifying distributions, excluding a distribution to another DAF, by the end of the following year and (b) the private foundation maintains adequate records or other evidence showing that the DAF has made a qualifying distribution within the required time frame. The second Green Book proposal affecting private foundations provides that paying compensation or reimbursing expenses by a private foundation to a disqualified person (other than a foundation manager of such private foundation who is not a member of the family of any substantial contributor) is not a qualifying distribution that satisfies the payout requirement. Both of these proposals would be effective after the date of the law's enactment. About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. Excerpt: Learn more about the "General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals" released by the U.S. Department of the Treasury. ### Building Innovation: Navigating the Terrain of R&D Tax Credits for Real Estate Developers Although it might not be obvious, the R&D tax credit can benefit taxpayers in a wide variety of industries including the real estate industry. The name of the credit suggests that it is reserved for taxpayers that are developing new, cutting-edge technologies. However, many business activities related to real estate development may qualify for the R&D tax credit: Evaluating a property and its location to determine whether it is a suitable site to construct a commercial, residential or mixed-use building Developing the design for a new building or the renovation of an existing building, including building facades and floor plans, to achieve functional requirements and/or meet historic preservation requirements Designing a park or greenspace Evaluating different building materials to improve designs or meet project requirements for energy efficiency, sustainability or adherence to building regulations Design and development to achieve Leadership in Energy and Environmental Design (LEED) or energy efficient requirements Real estate developers may also have R&D qualifying activities related to software development. For example, a residential developer may invest in a custom software solution or application to allow potential tenants to take a virtual tour, view the various units and layouts available, or submit a lease application. Once a tenant signs a lease, they might use custom software to pay their rent, reserve amenities, or unlock their apartment. Similarly, home builders may create a software platform for customers to shop for and purchase a new home or to select custom design options, including paint colors, flooring, fixtures or layouts, and then even view a virtual rendering of their custom design. Many of the business activities and expenses associated with the design of a new or renovated building and the development of related software solutions are eligible for the R&D credit. If these examples sound applicable to your business, contact a member of the Schneider Downs Credits and Incentives Team to discuss how the R&D Tax Credit can potentially reduce your company’s tax liability. About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development. To learn more, visit our Real Estate Industry Group page. ### Auto Industry Value and Economic Indicators The automotive industry typically performs well when consumer confidence is high and when interest rates are low. I decided to test this idea over the past two years because during this time, we’ve experienced a significant rise in interest rates. To do so, I tracked the total market capitalization for the top five auto manufacturers as a proxy for automotive industry performance, and the Federal Funds rate, which broadly impacts interest rates, for the time period between January 1, 2022 and January 1, 2024. As predicted, based on this limited data, it appears that auto industry value has declined as interest rates have risen. The chart below shows that this correlation does not seem to continue as interest rates become more stable in 2023. This seems to indicate that investors might react to large changes in interest rates, but that more modest increases, coupled with signs from the Fed that interest rate hikes are starting to slow, might not impact auto manufacturers’ stock prices as heavily. It is important to note, though, that the total market cap for auto manufacturers begins to recover in 2023, but not to 2022 levels—as interest rates remain at historically high levels throughout 2023. There appears to be some correlation between auto industry value and U.S. consumer sentiment (measured by the U.S. Index of Consumer Sentiment) over the past two years, but only in the first half of 2022 as shown in the chart below: However, the Consumer Sentiment Index has averaged 85 between 1952 and 2024. Therefore, consumer confidence was below average over the past two years while the auto manufacturer market cap was generally deflated. In this context, the data still seems to support the correlation between auto industry performance and consumer confidence. Since consumers are more directly impacted by auto dealers, as opposed to auto manufacturers, it is relevant to track the market cap for dealers as well. As shown below, the market cap for auto dealers (measured by the top six public auto dealers) has generally fluctuated in line with car manufacturers over the last two years. The limited data presented in the charts above appears to support the idea that the values of auto dealers and manufacturers are impacted by changes in interest rates (negative correlation) and consumer confidence (positive correlation). However, it is important to note that many other macro- and micro-economic factors impact these metrics. In addition, a change in one metric could take time to impact another metric; there is likely a lag in the correlations over time. Therefore, while it is interesting to observe these potential correlations over the last two years, they should not be viewed as a rule to estimate future changes. Schneider Downs has significant experience in preparing business valuations of car dealerships and a range of private businesses for various purposes including gift/estate taxes, buy/sell purposes and financial reporting. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) for more information about Schneider Downs’ business valuation services. Data Sources: Macrotrends Companies Market Cap Yahoo Finance  FRED, Federal Reserve Economic Data YCharts About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. Excerpt: Learn more about the two-year-long test to confirm if the auto industry actually performs well when consumer confidence is high and interest rates are low - Schneider Downs Automotive ### $1 Billion a Day: Unpacking the Financial Aftershock of the Change Healthcare Cyber-Attack The fallout of the recent cyber-attack on UnitedHealth’s Change Healthcare is only getting worse, with the attack costing service providers nearly $1 billion a day, according to recent reports. Change Healthcare is one of the largest vendor claim processing networks in the world, managing 1 of every 3 U.S. patient records and processing nearly 15 billion transactions per year. This means the attack impacted not only the data of exposed patients, but also their ability to access medical care and prescriptions. The attack also systemically shut down insurance, billing, payments and prescriptions for network providers, essentially shutting down their revenue pipeline and cash flow, forcing healthcare providers to explore every possible financial avenue to keep their doors open. Due to its massive scale, many consider the attack on Change Healthcare to be one of the most devastating and disruptive cyber-attacks on the healthcare industry to date. How Severe is the Financial Impact of the Change Healthcare Cyber-Attack? Although it’s been a few weeks since the initial report of the attack, the disruption to providers' financials is still at emergency levels. Because of an inability to process insurance claims or payments, many network providers must borrow money simply to make payroll or rent. Brad Larsen, a psychologist and founder of Portland Mental Health & Wellness in Oregon, said the outage has caused a three-week gap in cash flow, forcing the practice to borrow nearly $300,000 to meet monthly payroll. The idea that healthcare organizations and providers are nearly out of cash within a few weeks may seem absurd to patients who endure ever-increasing costs of care. However, this attack has shown how fragile the healthcare revenue cycle can be. The financial impact has reached such levels that the federal government is now involved, announcing an emergency funding program (CHOPD) for providers and issuing a poignant letter to UnitedHealth group with strong recommendations for how to support impacted parties. UnitedHealthcare did announced a temporary funding assistance program for providers on their Information on the Change Healthcare Cyber Response page as well. The Human Impact of the Change Healthcare Cyber-Attack Besides the financial impact to healthcare providers, the attack is more importantly creating concerns for the health and wellbeing patients. Aside from potentially exposing personal and private data (which has not been confirmed as of this article), for many, this attack has added more red tape to an already convoluted insurance process. Despite providers offering workarounds for network members to access medical services and prescriptions through alternative clearing houses, both providers and patients are still reporting issues obtaining necessary medical care due to the complications from the attack. In one instance, a parent in Utah reported nearly running out medication to manage her teenage daughter’s rare genetic syndrome. After spending hours on the phone with both her pharmacy and insurance, she was able to get the medication last minute – and if they hadn’t sorted out the insurance issues, she would have been stuck with a $1,000 bill. Change Healthcare System Cyber Attack Restoration Timeline According to their website, Change Healthcare is still working aggressively to restore their systems and has provided a timeline estimating system functionality and availability. The timeline is copied below: Pharmacy services: Electronic prescribing is now fully functional, with claim submission and payment transmission also available as of today. We have taken action to make sure patients can access their medicines in the meantime, including Optum Rx pharmacies sending members their medications based on the date needed. Payments platform: Electronic payment functionality will be available for connection beginning March 15. Medical claims: We expect to begin testing and reestablish connectivity to our claims network and software on March 18, restoring service through that week. But even if they meet the mid-March timeline, network providers still face an uphill challenge catching up from the outage. Experts believe that once systems are back online, it could take months to sort out patient eligibility and claims, and providers may potentially need to hire additional staff to handle the extra administrative burden. Ransomware and the Healthcare Industry While details on the attack are still minimal, the notorious BlackCat/ALPHV has claimed responsibility for this attack, and there are reports of a $22 million ransom , paid on March 1st in connection to the attack. And with lawsuits already piling up and providers announcing their departure from UnitedHealth’s Change Healthcare network, the reality is that this systemic attack will not be an isolated incident. In fact, ransomware attacks on the healthcare industry are lucrative business for threat actors due to the trove of financial and patient data, the scope of disruption, the human factor and the fact that the industry as a whole lacks strong cybersecurity protection. That’s why it’s no surprise that ransomware attacks in the healthcare sector nearly doubled in 2023 from 2021. What Can Healthcare Organizations Learn from the Change Healthcare Attack? The Change Healthcare attack should act as a wake-up call for healthcare organizations about the importance of investing in strong cybersecurity measures, the fragility of the healthcare industry framework and the importance of third-party risk management. More specifically, attacks like this one highlight the importance of business contingency plans, Active Directory’s role in network protection, payment portal access management, contingency planning and finding the right cybersecurity partner for your organization. If you have any questions related to the Change Healthcare attack or concerns about your organization’s cybersecurity posture, please reach out to our team at cybersecurity@schneiderdowns.com. Related Links United Health – Information on the Change Healthcare Cyber Response Fact Sheet – CHOPD Accelerated Payments to Part A Providers and Advance Payments to Part B Suppliers About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### IPE 101 – Defining and Understanding Information Produced by Entity This article is part of a comprehensive series exploring IPE. You can download the complete whitepaper here. What is information produced by entity? Sarbanes Oxley (SOX) is no stranger to the ebbs and flows of accounting trends. Every year, the Public Company Accounting Oversight Board (PCAOB) reviews a sample of audits for compliance. One of the constant themes is that firms are struggling with identifying and documenting the completeness and accuracy of IPE or Information Produced by the Entity. To help you avoid this challenge, let’s define IPE, including its main categories and essential testing methodologies. So, what is IPE? The PCAOB defines IPE as all the information, whether obtained from audit procedures or other sources, that is used by the auditor in arriving at the conclusions on which the auditor’s opinion is based. Audit evidence consists of both information that supports and corroborates management’s assertions regarding the financial statements or internal control over financial reporting and information that contradicts such assertions. When conducting an audit in accordance with Internal Controls over Financial Reporting (ICFR), auditors typically break IPE into two groups: Key Reports and Populations. Key reports are classified as any data used by management in the performance of a control whereas populations are data obtained by auditors to select a sample of transactions to verify management’s process. Regardless of which type of IPE is present, the auditor has an obligation to document the procedures performed to gain comfort over the completeness and accuracy of the data which is discussed in the Differentiating Populations and Key Reports article. What Does Completeness and Accuracy Mean? When evaluating the completeness and accuracy of IPE, the PCAOB states that when using information produced by the company as audit evidence, the auditor should evaluate whether the information is sufficient and appropriate for purposes of the audit by performing procedures to test the accuracy and completeness of the information, or test the controls over the accuracy and completeness of that information; and evaluate whether the information is sufficiently precise and detailed for purposes of the audit. Simply put, when evaluating the IPE used in a control, the auditor must document the methods and rational for how they obtained comfort over the accuracy (individual line items) and completeness (report totals). When determining the audit procedures required to validate the completeness and accuracy of the data, each audit firm will have their own guidance depicting the required procedures, but it will also vary based upon the IPE report type. It is important to align testing plans with your external audit partner as you develop your IPE approach. Related Articles IPE 101 – Differentiating Populations and Key Reports IPE 101 – Assessing Management IPE Controls and Report Risks About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings or contact the team at contactsd@schneiderdowns.com ### SEC Adopts Final Climate Disclosure Rules Key insights on the the Enhancement and Standardization of Climate-Related Disclosures: Final Rules. On Wednesday, March 6th, the SEC voted 3-2 along party lines to adopt the climate-related disclosure rules that were originally proposed back in 2022. The final rules will require public registrants to disclose material climate-related financial risks, Scope 1 and 2 GHG emissions if deemed material, and the financial statement impacts of severe weather events, amongst other items. What's Included in the Adopted Climate-related Disclosure Rules? Material Climate-related Financial Risks - Companies will need to disclose risks that are material and reasonably likely to have impacts on the company’s strategy, operational results, or financial disclosures. If companies have undertaken mitigation measures related to these risks, they will need to disclose material expenditures and material impacts on financial estimates and assumptions resulting from those mitigation efforts. Furthermore, companies will need to describe their overall process for identifying, assessing, and managing material climate-related financial risks and the degree to which this process is embedded in the company’s overall risk management efforts. Scope 1 and 2 GHG Emissions - Large accelerated filers and accelerated filers will need to disclose material Scope 1 and 2 emissions. Additionally, these companies subject to disclosure will need to have limited assurance performed initially, with reasonable assurance thereafter for large accelerated filers. Financial Statement Impacts of Severe Weather Events - Companies will need to disclose expenditures, charges, and losses incurred as a result of severe weather events and other natural conditions subject to a 1% threshold and de minimis considerations. Additionally, companies will need to disclose capitalized costs, expenditures, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if those instruments are materially used to meet net zero goals. What is the Timeline for the Adopted Climate-related Disclosure Rules? Material Climate-related Financial Risks - Fiscal year 2026 for large accelerated filers, 2027 for accelerated filers, 2028 for EGCs, SRCs, and NAFs. Scope 1 and 2 GHG Emissions - Fiscal year 2026 for large accelerated filers, 2027 for accelerated filers. Limited assurance in fiscal year 2029 for large accelerated filers and 2031 for accelerated filers. Reasonable assurance in fiscal year 2033 for large accelerated filers. Financial Statement Impacts of Severe Weather Events - Fiscal year 2025 for large accelerated filers, fiscal year 2026 for accelerated filers, fiscal year 2027 for EGCs, SRCs, and NAFs. What Proposed Legislation was Not Included in the Final Climate-related Disclosure Rules? Many items were modified or removed completely from the final climate-related disclosure rules with the most substantial items changed or removed including: Scope 3 GHG emissions Mandated board expertise for oversight of climate-related risks, opportunities, and ambitions Scope 1 and 2 emissions disclosure for EGCs, SRCs, and NAFs. Removal of references to negative impacts of a company’s value chain related to material climate-related financial risks. No requirements around specific disclosure of physical risks associated with high or extremely high water stress. What Frameworks are Referenced in the final Climate-related Disclosure Rules? The material climate-related financial risks are largely aligned to the TCFD. The greenhouse gas emissions part is aligned to the GHG Protocol. What Should Companies Focus on Right Now? Performing a gap analysis of the finalized ruling relative to what was initially proposed back in 2022 and understanding the implications of any changes on data collection processes, internal climate-related governance, and disclosure strategy. Related Links Schneider Downs ESG Consulting Schneider Downs ‘Our Thoughts On’ ESG Articles SEC Fact Sheet: The Enhancement and Standardization of Climate-Related Disclosures: Final Rules About the Author Tony Ielase leads the firm’s Risk Advisory Services (RAS) practice for the Columbus market and has over 25 years of experience providing risk advisory and compliance services to a diversified number of retail, manufacturing, higher education, healthcare, technology, utilities and financial services clients. His areas of expertise include internal audit strategic planning, internal audit co-sourcing, enterprise risk management, compliance assessments, fraud risk assessments, business process improvement and SOX program implementation and optimization, among others. Tony can be reached at tilease@schneiderdowns.com About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service offerings at www.schneiderdowns.com/risk-advisory-services or contact the team at contactsd@schneiderdowns.com. ### Proposed American Families and Workers Act of 2024 Legislation – Status Update The Tax Relief for American Families and Workers Act (the Act) has been in the hands of the Senate since the House passed its version of the bill on February 1, 2024. Check out our other articles on an overview of the bill and passage by the House Proposed Bipartisan Tax Plan Released – Overview of the Tax Relief for American Families and Workers Act of 2024 and Our Thoughts On. A two-week Senate recess in February and preoccupation with the need for spending legislation and other national and international issues are reasons for the lack of progress. Given those priorities, and with requests by some Senators for the bill to go through a committee markup, the Senate has yet to act. Some Republican Senators are weighing whether some of the provisions included in the $78 billion tax package currently stuck in the chamber are in the best interest of the country. Currently, the Senate’s top Republican tax writer says he does not think supporters of a $79 billion tax package have enough Republican backers to bring it to a floor debate or vote. The Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) has said there are dozens of ideas for adds or subtractions to the package from Senate Republicans, including traditional tax extenders, technical corrections to the SECURE 2.0 Act of 2022 retirement legislation, and nixing the tax package’s only budget offset — an early end to employee retention credit claims. Senator Crapo is among Senate Republicans voicing concern regarding the bill’s prior-year income lookback provision for determining the child tax credit. It takes 60 votes in the Senate for legislation to bypass a filibuster and make it to the floor. Assuming all 48 Democratic Senators along with three independents who usually caucus with them support the bill, nine Republican votes would be needed to begin debate on the bill. While several Republicans have indicated support for the bill, other Republicans are still not on board. Given the above - no action is the action taken by the Senate on the tax bill at this time.  Note that the House passed a $460 billion spending package earlier this week that would keep key federal agencies operating through the remainder of the budget year. The Senate is expected to take up the spending bill legislation before a midnight Friday deadline. The effort necessary to get the spending bill completed would seem to take Senate attention away from any discussion of the tax bill (and the spending bill does not contain the tax proposals). Even if the Senate passes a tax bill but it contains different provisions than those contained in the House version of the bill (for which it seems some Republican Senators are advocating), then the bill will need to go back to the House for another vote. In conclusion, then, passage of the Act is far from certain, and the uncertainty is causing disquiet with both taxpayers who may benefit from some of its retroactive provisions and tax preparers facing a March 15 deadline for completion of business tax returns (and not even addressing the impact on state tax law of the federal changes). Even if something were to pass this week, it might be too late to incorporate those changes into returns due March 15. This leaves taxpayers and tax preparers in difficult situations. To file now or to extend? With regrets to Shakespeare, that is the question. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Corporate Transparency Act Held Unconstitutional – Higher Courts Will Likely Have an Opinion Following a suit brought by the National Small Business Association (and small business owner Isaac Winkles) against the US Treasury Department, Judge Liles C. Burk, of the United States District Court, Northern District of Alabama, ruled on Friday March 1, 2024, that the Corporate Transparency Act (CTA) requiring companies to report extensive stakeholder ownership information to the government is unconstitutional. The court opined that the CTA’s requirements “cannot be justified as an exercise of Congress’ enumerate powers” because it “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals. In general, companies that have a reporting obligation under the law (see our article on How the Corporate Transparency Act Will Impact Small Business ) are required to provide certain information on both the company, beneficial owners, and the entity applicant including names, addresses and identification numbers. Reporting entities formed before December 31, 2023, have until December 31, 2024, while entities formed in 2024 have an earlier filing date. FinCEN, the agency overseeing the administration of the reporting requirements, estimates that over 32 million entities will be required to report during 2024 and five million entities will need to report thereafter. What does this ruling mean for most small business entities?  What does this ruling mean for most small business entities falling with the CTA’s reporting requirements currently? Well, FinCEN for its part announced that it will not currently enforce the CTA against the plaintiffs. For all others, however, planning to comply with the CTA’s provisions may be the prudent approach, although there remains time to comply for those entities formed before 2024. While the decision is likely to be appealed to the Eleventh Circuit Appeals Court and then possibly even to the Supreme Court, that process could take months to resolve, and penalties for non-compliance can be steep. Note that the CTA is not a tax-related reporting required under the Internal Revenue Code; businesses with questions are encouraged to discuss the matter with their legal counsel. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Survey on Career Advancement and Women in the Manufacturing Sector In February 2024, The Women In Manufacturing Association and Xometry collectively released the 4th Annual Survey on Career Advancement and Women in the Manufacturing Sector. As the leader of the firm’s SD Focus on Women group and as a member of the Schneider Downs Manufacturing Industry Group, a number of findings and trends hit home with me.  I have spent the last 20 years in my public accounting career serving clients in the manufacturing space and have borne witness to the progress that has been made in this area, but I am by no means content with where we are today or the pace of change. The survey, which was completed by approximately 1,000 respondents during the course of January 2023, covered individuals across the United States who were predominantly female (approximately 83%), employed by businesses spanning less than $1 million to more than $1 billion in revenue, and with anywhere from 1 to 15,000 employees. Some key insights from the survey were the following: Approximately 90% of women believe that diversity improves business outcomes 71% of women enter the manufacturing industry unintentionally, compared to 56% of men 83% of respondents report labor shortages, especially at entry-level positions 81% of women surveyed recommend a career in manufacturing At 23%, the percentage of female business leaders has not moved significantly since 2021 Approximately 30% of employees in manufacturing are women So, what can companies do with those statistics?  The first step is continuing to invest in how they recruit women to the business, looking to engage with women earlier and more often in school and then secondly, looking for ways to engage and retain those women once they join the company.  Are women getting opportunities for career development, mentorship and coaching, access to leaders, and networking?  Are their co-workers making them feel included in the workplace?  Is your company offering benefits that appeal to younger women?  Dedicating time, energy and cost towards this focus will help build the future pipeline of women in the manufacturing industry—to help address the widely known labor shortages and ultimately help improve business outcomes. Download the full report About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively. To learn more, visit our Manufacturing Industry Group page. ### HMDA: Common 2022 Violations and How Community Banks Can Address Them The Federal Reserve recently provided its top consumer violations in 2022 for State Member Banks, with HMDA violations topping the table with 239 (59.4%). As HMDA data is relied upon in fair lending examinations, community banks need to ensure the number of violations decreases. Common HMDA violations included improperly reporting the loan purpose, improper reporting of the income the institutions relied on for the credit decision, and improper reporting of the scoring model used by the credit reporting agency. Given the high count of violations in 2022, a community bank’s HMDA process should be one that is reviewed and refined. Here are some ways your financial institution can refine their HMDA process: Standardize the HMDA Process The implementation of detailed policies and procedures can help standardize certain processes such as application date and action taken date, credit score, as well as points/fees. Community banks should conduct an annual review of the common violations provided by the Federal Reserve with the purposes of identifying any weaknesses within their HMDA process. Updates to the bank’s HMDA policies and procedures based on these weaknesses will help lower repeat offenses going into future filings. Training Ensuring that employees involved in the HMDA process are well-trained and knowledgeable about HMDA requirements and regulations is crucial to lowering the number of offenses. Conducting trainings when regulatory changes or procedural weaknesses are identified is also an important aspect of implementing a successful training program. Community banks should note the common violations referenced by the Federal Reserve and curate new trainings to bolster the employee’s understanding of the HMDA process. Internal Controls Establishing internal controls to monitor HMDA data collection can ensure that the data being collected is accurate and complies with HMDA guidelines. Additionally, community banks can implement controls related to self-identified weaknesses or those published by the Federal Reserve. These internal controls can help ensure that any changes made based on these weaknesses are being properly applied to the bank’s HMDA procedures. A combination of the three efficiencies above can ensure that your financial institution takes the necessary steps to lower HMDA violations for the 2023 filing. Reviewing your bank’s policies and procedures in line with the common 2022 HMDA violations will help identify weaknesses with what is currently in place. Establishing training based on these weaknesses will help refine the knowledge and expertise of employees involved in the HMDA process. Finally, the implementation of internal controls will ensure that changes made to your bank’s HMDA process are applied properly. By doing these steps, community banks can do their part in reducing the number of HMDA violations in 2023. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. ### 2024 Energy and Natural Resources Legislative and Regulatory Update Here’s a look at 2024’s legislative updates for the tri-state area: Pennsylvania had no legislative updates. West Virginia’s legislative session opened on January 10 and is scheduled to end March 9. HB4283 and SB326 were introduced on January 10. The purpose of the bills is to create the West Virginia Black Lung Program and grant entitlement for pain and suffering for occupational pneumoconiosis.  New taxes would be imposed on every person severing, extracting, reducing to possession, and producing for sale, profit or commercial use, coal, natural gas or oil. Additionally, there would be new taxes on the generation of electricity by wind or solar devices equal to 1/10 of the existing tax. The revenue generated by these taxes will be deposited into the “State Black Lung Fund,” which was created in the general revenue account to be used exclusively to offset the cost of the Black Lung Program. HB4662 requires all lessees of West Virginia real estate who make natural resource royalty payments to withhold West Virginia personal income tax on royalty payments to lessors who do not reside in the state. Withholding is optional for lessors who receive less than $1,000 annually.  Natural resources royalty payments include, but are not limited to, rents, delay rentals, royalty interests, working interests, lease bonus payments and overriding royalty interests. The Tax Commissioner will provide a schedule for lessees to file reports and submit the withholding to the Commission. The Tax Commissioner will also prescribe the method for providing annual withholding statements to lessors as well as annual reporting to the Commission by the lessee who reconciles the filings and payments made throughout the course of the year. If passed, this bill will be effective for all taxable years after December 31, 2024. HB4292 and SB235 provide for a penalty of three times the market value of extracted minerals for which payment is due plus reasonable attorney’s fees and costs for payment not made within six months after the due date on conventional vertical oil, natural gas and natural gas liquids, wells only. HB4411 amends Article 6 §22-6-2 by adding a section to require the Office of Oil and Gas to adopt rules no later than July 1, 2025 to standardize leases, deeds or contracts relating to oil and gas. Any rules adopted will only be applicable to documents dated after July 1, 2025. HB5048 proposes to update §22-6-2 of the Code of West Virginia to remove the cap on the number of wells on which an oversight fee is due. The oversight fee is tiered based on average production. SB532 requires new financial assurances for new and producing wells. For new wells, an operator will not be issued a permit unless the operator furnishes for each individual well either: Plugging money set aside in agreement with the State Treasurer’s Office to escrow funds with the State Treasurer’s Office as required in §22-10A-7 for this code or A bond payable to the State of West Virginia conditioned on full compliance with the plugging and reclamation of wells required by this code in an amount determined by the Chief of the Office of Oil and Gas for a well with similar characteristics. The Department of Environmental Protection has rule-making authority to determine this amount. Ohio had no legislative updates. This update is based on legislative and regulatory information available at the time of publication and is not intended as legal, tax or accounting advice. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. ### Community Reinvestment Act Strengthening: What it means for community banks On October 24, 2023, the three agencies responsible for the CRA; the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency, issued a final rulemaking to revise the Community Reinvestment Act to strengthen and modernize the legislation. As this final rule applies to all banks subject to the CRA, community banks must be prepared for the rule to take effect on April 1, 2024, in addition to staggered compliance dates of January 1, 2026, and January 1, 2027. Let us delve into each of the major changes, and review their impact on community banks. Application of new performance tests Final rule includes the implementation of four (4) new performances tests to evaluate the CRA performance of banks: the Retail Lending Test, Retail Services and Products Test, Community Development Financing Test, and Community Development Services Test. The final rule breaks down the application of these tests into three (3) different bank sizes, large (assets of $2 billion or more), intermediate (assets of $600 million or more but less than $2 billion), and small (assets less than $600 million). Community banks can prepare for these new performance tests by reviewing their record of serving low- and moderate-income members of their community, specifically through the origination and purchase of home mortgage loans, multifamily loans, small business loans, small farm loans, and availability of the bank’s retail services and products. An analysis of these areas can provide community banks with an idea of where their strength and weaknesses are with regard to serving LMI members of their community. Clarification of community development activities The agencies have expanded the definition of community development to include the following categories: Affordable housing Economic development Community supportive services Place-based activities, which includes the following: Revitalization or stabilization activities Essential community facilities Essential community infrastructure Recovery activities that promote the recovery of a designated disaster area Disaster preparedness and weather resiliency activities Qualifying activities in Native Land Areas Activities with minority depository institutions (MDIs), women’s depository institutions (WDIs), low-income credit unions (LICUs), and community development financial institutions (CDFIs). Financial literacy When having their CRA performance evaluated, community banks may receive community development consideration for engaging in the categories listed above. This expanded definition, paired with the agencies’ support of confirming community development activities provides community banks with a more detailed objective with respect to supporting their community. Feedback from the community Transparency and public engagement are essential pillars of the Community Reinvestment Act. Without feedback from the community they are serving, banks will never truly grasp the impact of their CRA related actions. The agencies are encouraging the community to provide them with comments regarding their credit needs and their bank’s CRA performance. Even though the purpose of a community bank is to serve the community they are based in, this added emphasis on public feedback from the agencies should encourage these banks to address the needs of their customers, especially those of the LMI demographic. By appropriately listening and addressing the comments of their community, community banks can prepare themselves for a successful CRA examination. The final rule of the Community Reinvestment Act impacts community banks through enhanced testing of their CRA performance, improved definition of what constitutes community development activities, and the encouragement of feedback from the bank’s community. These aspects of the final rule should encourage community banks to evaluate their current CRA position and make the appropriate changes for the upcoming compliance dates. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. ### Reporting Responsibilities Under Federal Grants for Orphaned Well Plugging and Reclamation Orphaned wells are non-producing gas wells for which no legal responsible party can be found, or where the owner or operator leaves the financial responsibility to plug and remediate the well to local, state or federal agencies. Recipients, subrecipients and subcontractors receiving federal grants under the Infrastructure Investment and Jobs Act to clean up orphaned wells have important reporting responsibilities or risk having to repay the grants. Pennsylvania is among the states with the highest number of documented abandoned wells in the country. So far, about 27,000 have been identified, but researchers estimate there could be as many as 760,000 in the state. Total projected funding for the state is $412 million. States must submit quarterly financial and performance reports to the U.S. Department of the Interior (DOI): The Federal Financial Report Form 425 is used for reporting the financial status of awards. The Federal Technical Performance Report is used to report the progress toward performance objectives, a comparison of actual accomplishments to performance goals and an explanation of why any milestones were not met. An annual Personal Property Report is required if funds are used to acquire equipment. States must also submit final financial and performance reports to the DOI within 120 days of the performance end date. In addition to periodic reporting, states must report problems that will affect the ability to meet the objective of the award, including a statement of the action taken or contemplated and any assistance needed. Data for the above reports can be tracked via the Ground Water Protection Council’s Risk-Based Data Management System, including data such as well location information; pre- and post-plugging methane emission measurement; actual total cost per well of plugging and surface reclamation and other pertinent data. State recipients, subrecipients, subcontractors and others will need to track and coordinate reportable information and should carefully consider how data will be collected prior to signing contracts. Feel free to contact your Schneider Downs consultant for help with any orphaned well funding or reporting matters or with any plugging and abandonment and asset retirement obligation accounting and related strategies. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. ### SEC ESG Updates: February 2024 The SEC has been active in February in the environmental, social and governance (ESG) space. The long-awaited Issuer Proposal finally has its date set to be voted on, and the SEC has provided more context into what it’s looking for in public-facing disclosures. Additionally, one of the SEC’s directors has provided his insights into the current state of the ESG disclosure landscape, best practices for companies, and a recap of recent enforcement actions. What are the Key ESG Updates for February 2024? SEC Issuer Proposal - The SEC has filed a Sunshine Act Notice indicating that a vote will take place on the proposed legislation on Wednesday, March 6th at 9:45 AM EST. No additional details about modifications to the rule were included, but the rumor mill indicates that Scope 3 will be removed entirely, and Scope 1 and 2 will require disclosure under the auspices of materiality. This accomplishes a few things- first, it allows the legislation to proceed under a timeframe that the current administration can implement prior to the possible end of its tenure. Second, the scaled-back ambition makes it more likely that the ruling will survive legal battles. Finally, the legislation creates a steppingstone for companies to be assured that their disclosures on Scope 1 & 2 in addition to ESG items in their financial statements have a framework to rely on. SEC Enforcement Actions - In a February 23rd speech to the Ohio State Law Journal, Director Gurbir S. Grewal gave his thoughts on best practices for companies in the ESG disclosures space in addition to recapping enforcement actions that were brought about in 2023 against companies. What Best Practices did Director Grewal Outline for Companies’ ESG Disclosures? The Director outlined the need for companies to do the following: Practice proactive compliance Self-reporting potential violations to the SEC Evaluate public-facing statements for exaggerations or misleading content Ensure there is not purposeful omission of negative disclosures Review ESG investment strategies for end-to-end integration of the guiding ESG principles What Were the Significant ESG Enforcement Actions in 2023? Vale – the company was fined $55.9 million related to a dam collapse that occurred in 2019, resulting in the deaths of 270 people. Within SEC filings and ESG disclosures, Vale insisted that the dam was safe while downplaying the potential risks related to the dam’s stability. McDonalds – the company’s CEO was fired in 2019 ‘without cause’ for an inappropriate personal relationship. The company failed to disclose that it had exercised discretion in determining his firing ‘without cause’, which allowed him to retain stock-related compensation worth about $40 million. Deutsche Bank – the Firm indicated publicly that ESG considerations were integrated into its investments. Upon SEC review, it was found that employees responsible for integration of those factors were not following through in its investment processes. The Firm paid a $19 million fine as a result. What Should Companies Do Right Now? Determine which public-facing disclosures you have the in-house knowledge to verify, and which will require third party qualitative and quantitative expertise. Identify an SME and a control person internally for each data point and material ESG topic. Perform a gap assessment of your current practices relative to regulatory expectations and leading ESG frameworks. Substantiate your data collection and data governance processes in areas where you’re disclosing facts and figures in your ESG report or in general financial statements. Review your governance structure and associated process of compiling, approving, and publishing your ESG disclosures. Related Links Schneider Downs ESG Assurance Services Schneider Downs ‘Our Thoughts On’ ESG Articles Related Resources Schneider Downs ESG Consulting Overview Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG FAQ About the Author Tony Ielase leads the firm’s Risk Advisory Services (RAS) practice for the Columbus market and has over 25 years of experience providing risk advisory and compliance services to a diversified number of retail, manufacturing, higher education, healthcare, technology, utilities and financial services clients. His areas of expertise include internal audit strategic planning, internal audit co-sourcing, enterprise risk management, compliance assessments, fraud risk assessments, business process improvement and SOX program implementation and optimization, among others. Tony can be reached at tilease@schneiderdowns.com About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the ESG landscape, the Schneider Downs team can help your organization prepare for the proposed disclosure requirements and additional ESG-related risks and opportunities. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### Get the Low Down Before You Download: Exploring Temu App’s Security Risks Should you be concerned about your privacy while using the Temu app? If you were one of the 123.4 million people watching Super Bowl XVIII this year, you probably recall seeing one of Temu’s “shop like a billionaire” commercials. Temu paid for three spots during the game and two post-game ads, with the in-game advertisement costing a reported $21 million. As a Chinese-owned e-commerce discount store, Temu is competing with the already popular discount store, Shein, which has captured the approval of many American teenagers and their parents because of cost savings. Although not always high-quality, the premise of Shein and Temu is that you can snag trendy pieces without breaking the bank. But cheapness comes at a price. Shein has dealt with several accounts of forced labor accusations. Temu has also been accused of similar actions, but recently, they’ve come under fire for a different type of concern. A cybersecurity concern, that is. Temu is now the target of several class action lawsuits, one of them claiming that once the Temu app is downloaded, it has access to nearly everything on a user’s phone. This lawsuit alleges that Temu uses malware and spyware to collect user data beyond what’s necessary for an online shopping app. Another lawsuit claims that Temu is careless with user data, failing to enable safe usage and storage of customers’ sensitive data. At this time, Temu denies all allegations. And while at this point, the lawsuits are pending, and allegations are just that – allegations – it’s important to understand how to identify and mitigate privacy concerns related to any app you download. Before you download an app from the app store on your phone, do you check the app privacy details? It’s always a best practice to review the app privacy details in the app description before downloading it. Every time you download an app, you’ll inevitably have to create an account, thereby handing over your name, email, and potentially phone number, but you’ll want to make sure the apps limit it at that, or at least, don’t go far beyond it. Here’s how to check app privacy details before installing apps on your iPhone and Android devices. It’s also important to audit all the apps already downloaded on your phone. Whether you’re an Apple or Android user, you can easily review and change access to information in your mobile apps. Learn more by visiting one of the following websites: Review iPhone instructions for managing information access in apps Review Android instructions for managing information access in apps Recently, I realized my Google app had access to my entire contact list. I immediately went into the settings on my iPhone, chose the Contacts option, and then toggled off the Contacts sync with my Google account. So, if you learn anything from this article, remember this – be proactive about your app security settings before it’s too late and you realize your information is in the wrong hands. About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter,?Focus on Cybersecurity, at?www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### Six-Figure Ransomware Attack Hits Washington County, PA On January 19, 2024, a cyber-attack was identified by Washington County officials which eventually became a full-blown ransomware attack by January 24. The attack created major problems for the county’s network and computer systems and resulted in a ransomware payment of nearly $350,000. The county’s information technology department worked with federal investigators and third-party cyber experts to combat the attack and prevent the malware from spreading to other systems while trying to understand the logistics surrounding various aspects of the breach. On February 5, digital forensic consultant Sylint confirmed to the county officials that threat actors had obtained “large amounts of data” from the county’s network that could be “injurious to the county and its residents” if it were to be released on the dark web. The deadline to pay the ransom was set for 3:30 pm on February 6. On February 6, county officials held an emergency meeting to vote on paying the ransom. In a 2-1 vote by the commissioners, a payment of up to $400,000 was authorized, to be paid through cryptocurrency firm DigitalMint. A payment of $346,687 was sent to the threat actor(s) in exchange for the “digital encryption key” that was to unlock the county’s system with an understanding that none of the private information would be shared on the dark web. Best Practices to Mitigate Cyber-attacks Cyber criminals are continuously working on ways to exploit both public and private organizational information technology systems for monetary gain. Accordingly, businesses and government organizations are working to identify appropriate investments in protective, detective and responsive capabilities to mitigate the risk of a breach. The following list identifies important recommendations for any organization looking to improve their cyber hygiene: Conduct annual audits such as penetration tests and security audits, utilizing leading cyber frameworks such as NIST, CIS, ISO, etc. Overall, organizations should prioritize protective, detective and response/recovery controls such as those identified through leading cyber frameworks (NIST, CIS, ISO). Examples include: Disaster Recovery Plan – Formalize systems and exercises to ensure that systems can be recovered to their recovery objective states; and test system recovery capability regularly based on system criticality. Establish Remediation Thresholds – Formal thresholds facilitate vulnerability fixes within risk-tolerable timeframes. Use Geo-Blocking – The process of limiting user access to the internet based on a user’s physical location. Immutable and Offsite Backups – Encrypt backups and store them remotely. IT General Controls – Implement controls such as limiting administrators, disallowing account sharing, implementing strong password settings, limiting access to programs and data, and limiting change management and development procedures to the appropriate personnel. Incident Response Plan – Formalize roles, responsibilities and response processes/playbooks to ensure organizational readiness in the event of a cyber incident. Multifactor Authentication (MFA) – MFA is crucial for helping to prevent cyber-attacks. Anne Neuberger, U.S. Deputy National Security Advisor for Cyber and Emerging Technology, believes—based on evidence presented by key tech industry executives—that 80–90% of cyberattacks could be prevented by properly utilizing MFA. Network Segregation – Segment networks and services to separate network domains with controls designed to block improper access/traffic and restrict content. On-Premise Firewalls - Monitor and filter all incoming and outgoing network traffic. The firewalls block unwanted traffic and allow authorized traffic to pass through. Vulnerability Scans – Perform regular and frequent vulnerability scanning to identify high-priority areas of risk. Security Information and Event Management (SIEM) – Consider enhancing detective controls through a SIEM tool to provide threat detection, event analysis and incident investigation. These are just some of the high-priority capabilities that organizations should be looking to implement with regularity to ensure that they are maintaining proper cyber hygiene and readiness to avoid becoming the victim of a breach. There will always be the risk of a cyberattack, but knowing the proper precautions to take will help to mitigate the impact if or when a breach does occur. About Schneider Downs Cybersecurity Team The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### Postcard from the AADE Operator’s Forum On February 15, the Appalachia Basin Chapter of the American Association of Drilling Engineers hosted its annual Operator’s Forum. The following operators and representatives discussed their 2023 activity, as well as their drilling plans for 2024: Antero - Tom Waltz Arsenal - Ross Schweitzer Northeast Natural Energy - Josh Dalton Coterra - Greg Schneider Infinity Natural Resources - Jamie Czerneski Laurel Mountain Energy - Jarrett Toms Lola Energy - Joe Morris Olympus Energy - Joseph Yuyi Range Resources - Jon Hinson Repsol - Oliver Floyd Gabin Seneca Resources - Jhon Sepulveda STL Resources - Ian Lucas As each speaker presented his company’s customized 2024 plans, a couple of themes arose. One was uncertainty, since plans that have been developed are now subject to change due to a decrease in current pricing and general insecurity as we lead into the non-peak season. Most operators had already forecast a flat or reduced drilling plan, but with continued volatility and price uncertainty, there’s not a lot of eagerness to drill at current depressed pricing levels. The other theme was the ability to reduce drill/frac days, as technology and processes have improved, and a primary focus is on efficient and cost-effective drilling and completion schedules. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. ### SOC 2 - What is ACTUALLY required? What are a few of the most common misconceptions about SOC 2 reports? As someone who has managed the execution and delivery of countless such reports, I’m ready to lay a few of these to rest. I’ll start with my top 3: Examination Periods Have to be "X" Amount of Time There's no precise AICPA requirement around the minimum period of time for SOC 2 Type 2 examinations. Theoretically, you could have a 1-month SOC 2 Type 2 report—it just may be difficult to find a reputable firm to do it. That’s because it's up to the CPA firm to render an opinion that will provide "reasonable assurance" that the service organization’s commitments and system requirements were achieved based on the criteria. That’s likely not possible with a 1-month period, let alone 2-months. Our firm's stance is to allow 3-month periods for first-time reports and then at least 6-month periods in all subsequent reports. Regardless, we push for 12-month continuous periods so that there's no gap in the coverage of the assurance. SOC 2 Reports are Required to Test All or Some of the Points of Focus The points of focus are only a guideline. That doesn’t mean you should avoid them when designing controls to satisfy each criteria, but you theoretically could have a decent report even if you did. The only steadfast requirements are the trust services criteria. CPA firms work with service organizations to design controls so they can effectively opine on the design and operating effectiveness of each criteria. We typically design 3-6 controls per criteria, and some have upwards of 15 mapped controls. This is, in part, because we try to design controls that will satisfy several different security questionnaires. This enables “a test once provide-to-all” approach to security compliance. SOC 2 Results in a Certification This can be confusing because SOC 2, for the most part, meets all the general definitions of a certification, provides a "logo" upon "passing" (like a certification) and maintains many of the attributes that other certifiable frameworks possess. The reason SOC 2 is not a certification is that it was created by the AICPA and is governed by its standards and codes of conduct. Therefore, SOC 2 is truly a reporting framework that produces an attestation report based on an examination of controls. Of course, this is by no means an exhaustive list of the common misconceptions surrounding SOC 2 reports. If you know of any others, I invite you to reach out and continue the conversation. Related Resources Schneider Downs SOC Report Brochure Schneider Downs SOC FAQs About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Romance Scams: Guarding Your Heart and Wallet What are romance scams and why are they on the rise? Valentine’s Day is here, which means many of us are celebrating the day with our significant others. Unfortunately, this annual holiday can lead to a surge in romance scams for those searching online for their valentine. Romance scams are simple enough in concept and execution, scammers target legitimate users searching for that special someone online for financial gain. After developing trust through constant communications, the scammers will find a reason to ask for financial assistance. If the "relationship" is long distance, perhaps they pretend to need gas money or an airplane ticket to finally meet in person – or, if they have built a fake story around their sick relative, perhaps it’s healthcare emergency funds. While this may seem hard to believe, these scams are extremely successful. Just last year, nearly 70,000 people reported encountering romance scams to the FTC, with losses totaling nearly $1.3 billion – which is a huge increase over the reported $547 million lost to romance scams in 2021. Romance Scams Red Flags So, how can you protect yourself from romance scams? Here are a few red flags to look for when communicating with others online. Asking For Money – regardless of the backstory or length of communications, being asked for money prior to meeting in person is an immediate danger sign. Whether you are being asked send funds via cash transfer apps, wires, gift cards or crypto, the only thing you should do is report and block them. Urgency – along with monetary requests comes the story of why. They may claim they have medical, family or personal emergencies. In fact, some may take the time to discuss a sick relative throughout conversations to lay the groundwork  for the ask. Remember, the more urgent the request is, the more likely you are being scammed. Breadcrumbing – have you been talking to a potential partner for weeks, but there’s always a reason they can’t meet in person? While breadcrumbing, which is a term used for online dating conversations that never develop in-person, is not always a scam, it’s a telltale sign that whoever you’re talking to has no intention of making a meaningful connection. In addition to those telltale signs, you can use search engines to validate the legitimacy of people through public databases, reverse image searches and even copying/pasting profiles to see if they are using the same story somewhere else. If you suspect you are being scammed, cut off communication immediately and report them to the website you met on to help protect others. You can also report romance scams on the FTC Report Fraud portal at https://reportfraud.ftc.gov. With dating networks in full marketing mode during the holiday season and Valentine’s Day, it’s easy to understand how those looking for love can get stuck in a romance scam – but don’t let your search for love leave your heart broken and wallet empty. And if you suspect your friends may be involved in a romance scam, say something before it’s too late. Love can be blinding, even to the best of us. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### 2024 Policy Shifts: Essential Updates Every College Should Know During the most recent Council of Independent Colleges annual Presidents Institute meeting new policies were discussed and highlighted, including overtime exemption rules and the Free Application for Federal Student Aid (FAFSA) application. The FAFSA overhaul aims to streamline the application process by reducing the number of questions, making it more accessible to students. However, initial rollout faced some technical glitches, leading to efforts by the Education Department to ensure round-the-clock availability of the form. This revamp is expected to extend Pell Grant access to an additional 1.5 million students, with improved data retrieval options from the IRS for quicker eligibility assessment. Beyond simplifying the form, the updated FAFSA considers changes in student aid calculations, basing Pell Grant eligibility on household size and federal poverty line criteria. Applicants will now receive prompt confirmation of their Student Aid Index and Pell Grant eligibility upon form completion. Additionally, the U.S. Department of Labor proposed increasing the overtime eligibility threshold from approximately $35,000 to around $50,000, with a final ruling expected in April. Notably, exemptions remain for certain employees, including college professors and specific sports coaches. “This is going to be really impactful on budgets and on the way, you staff complex weekend events in particular,” said Council of Independent Colleges President Marjorie Hass. “You may have to keep certain staff off campus during these really important events, which is tragic. Through the continued improvements in the FAFSA process and ongoing efforts by the U.S. Department of Education are crucial to providing equal opportunities for all students seeking an opportunity to attend higher education institutions. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. ### Update on GLBA for Higher Ed The Gramm-Leach-Bliley Act (GLBA) is a federal ruling that applies to all entities that collect consumer financial data, including institutions of higher education. The law applies to how organizations collect, store, and use student financial records that contain personally identifiable information (PII). Higher education institutions have been required to comply with the provisions of the GLBA since 2003, but the Department of Education (ED) didn’t include any compliance requirements related to the GLBA until 2019. Starting in 2019, the Office of Management and Budget’s Compliance Supplement included compliance requirements related to the GLBA and student information security for the Student Financial Aid cluster. As a result, auditors were required to perform procedures to determine if institutions of higher education were compliant with the new requirements. In 2021, additional regulations were issued that significantly modified the requirements that institutions must meet under GLBA. In response, the 2023 Compliance Supplement included additional Student Financial Aid compliance requirements related to GLBA. As part of the new compliance requirements, institutions must now develop, implement, and maintain a comprehensive information security program. The regulations require the written information security program to include up to nine elements. At a minimum, an institution’s written information security program does the following: Designates a qualified individual responsible for overseeing and implementing the institution’s information security program and enforcing the information security program in compliance. Provides for the information security program to be based on a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customers that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, and assesses the sufficiency of any safeguards in place to control these risks. Provides for the design and implementation of safeguards to control the risks the institution identifies through its risk assessment. At a minimum, the institution’s written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8). The eight minimum safeguards that the program must address are as follows: Implement and periodically review access controls. Conduct a periodic inventory of data, noting where it’s collected, stored, or transmitted. Encrypt customer information on the institution’s system and when it’s in transit. Assess apps developed by the institution. Implement multi-factor authentication for anyone accessing customer information on the institution’s system. Dispose of customer information securely. Anticipate and evaluate changes to the information system or network. Maintain a log of authorized users’ activity and keep an eye out for unauthorized access. Provides for the institution to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented. Provides for the implementation of policies and procedures to ensure that personnel are able to enact the information security program. Addresses how the institution will oversee its information system service providers. Provides for the evaluation and adjustment of its information security program in light of the results of the required testing and monitoring; any material changes to its operations or business arrangements; the results of the required risk assessments; or any other circumstances that it knows or has reason to know may have a material impact the institution’s information security program. For an institution maintaining student information on 5,000 or more consumers, addresses the establishment of an incident response plan. For an institution maintaining student information on 5,000 or more consumers, addresses the requirement for its Qualified Individual to report regularly and at least annually to those with control over the institution on the institution’s information security program. Per the electronic announcement posted by the ED on February 9, 2023, any GLBA findings identified through a compliance audit will be resolved by the ED during the evaluation of the institution’s information security safeguards as part of the ED’s final determination of an institution’s administrative capability. GLBA-related findings will have the same effect on an institution’s participation in Title IV programs as any other determination of noncompliance. In cases where no data breaches have occurred and the institution’s security systems have not been compromised, if the ED determines that an institution is not in compliance with all of the requirements, the institution will need to develop and/or revise its information security program and provide the ED with a Corrective Action Plan with timeframes for coming into compliance. Repeated noncompliance by an institution may result in an administrative action taken by the ED, which could impact the institution’s participation in Title IV programs. If you’d like further information on how to comply with the GLBA, please refer to page 5-3-77 of the May 2023 Compliance Supplement. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. Excerpt: Learn more about the new compliance requirements institutions must now follow for the Gramm-Leach-Bliley Act (GLBA). ### Governor Shapiro's Proposed FY 2024-25 PA Budget Governor Shapiro gave his budget address to the PA General Assembly on February 6, 2024.  While there are no broad-based tax changes proposed by the Governor there are several proposed initiatives that would affect the PA business environment, including programs in economic development, workforce training, and education. The following are taken from the budget address documents released by Governor Shapiro’s office. Economic Development: The governor has proposed a comprehensive economic development strategy that includes $600M in new FY 2024-25 spending.  Included in the $600M are: $500M for PA SITES funding to bring commercial and industrial sites in PA online for development. $25M for the Main Street Matters program that supports small businesses and commercial corridors. $20M for large-scale innovation to leverage PA research and development assets. $3.5M for the creation of the Pennsylvania  Regional Competitiveness Challenge. Workforce Training: The governor’s proposed budget increases spending in workforce training programs such as Career and Technical Education, Vo-Tech, and the Military Occupational Crosswalk.  The budget also proposed leveraging federal funding from the Infrastructure Investment and Jobs Act(IIJA) and the Inflation Reduction Act (IRA) for organizations working on infrastructure projects to receive a $40,000 per worker credit for new workers who are trained to accelerate infrastructure projects. Education:  K-12 $1.1B increase in basic education funding $900M in a first-year adequacy investment $200M distributed through the Basis Education Funding Formula Among other increases: $300M for environmental repair projects in school buildings. College and Universities Combine the universities in the PASSHE and the 15 PA Community College under one governance system. $975M appropriation to the new governance system A 5% increase in fund for state-related universities(Pitt, Penn St., Temple and Lincoln). $279M annually of PA students attending in state schools. Revenues: While no broad-based tax changes were proposed by Governor Shapiro additional revenues are budgeted from an increase in the state minimum wage to $15/hour ($9/hour for tipped workers) that take effect on January 1, 2025; and sales of adult use cannabis that would begin on January 1, 2025. FY 2024-25 begins July 1, 2024.  The Governor and PA Legislature have until June 30, 2024, to pass a balanced budget. About Schneider Downs Tax Services Schneider Downs& tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Read more about the proposed initiatives that would affect the PA business environment. ### PA Tax Credit Aggregation On November 22, 2023, the Pennsylvania Supreme Court issued an opinion in the case Zilka v. Tax Review Board City of Philadelphia. The Court concluded that the City of Philadelphia’s tax scheme does not discriminate against interstate commerce by not allowing credit for certain income taxes paid by a Pennsylvania resident to Delaware. The Court’s decision in Zilka directly impacts Pennsylvania residents who work outside of Pennsylvania and claim credits on their Pennsylvania state and local income tax returns. Personal Income Tax Most states impose a personal income tax as a source of revenue. State income taxes generally vary in the rate of tax, what income the tax applies to, and who is subject to the tax. Both residents and nonresidents can be subject to state personal income tax depending on their specific contacts with the taxing state. Many states also allow local personal income taxes for individuals who live or work in the local jurisdiction. Pennsylvania has both a state income tax (currently 3.07%) and local income tax (varies by jurisdiction) that applies to both Pennsylvania residents and nonresidents who work in the state. While Pennsylvania law allows local jurisdictions to establish and collect local income tax, the Pennsylvania Department of Revenue only administers the state personal income tax. Local jurisdictions must collect the tax or contract with local or regional groups to collect the tax on their behalf. Some states enact reciprocal agreements where residents of one state will not be subject to state income tax in the other state where the individual works. Reciprocal agreements generally apply to only state income tax, not local income tax. Pennsylvania maintains reciprocity agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Pennsylvania residents who work in a state without a reciprocal agreement are still required to file Pennsylvania income tax returns and remit Pennsylvania state and local income tax. However, these residents are generally able to claim a credit on their Pennsylvania state and local returns for income taxes paid to other states and jurisdictions. Zilka Case Overview Diane Zilka was a resident of Philadelphia who worked exclusively in Wilmington, DE from 2013 to 2016. Delaware and Pennsylvania do not have a reciprocal agreement, so Zilka’s income was subject to both Pennsylvania and Delaware state tax and Philadelphia and Wilmington local taxes. Zilka received a credit for Delaware state tax paid on her Pennsylvania state return and credit for Wilmington tax paid on her Philadelphia return. However, with Delaware’s personal income tax rate at 5%, she was unable to receive full credit for her Delaware state income tax on her Pennsylvania state return. Zilka claimed the remaining 1.93% of Delaware state income tax as a credit on her Philadelphia local return, which was ultimately rejected by the City of Philadelphia. Zilka argued Philadelphia was required to provide her credit for tax paid to Delaware to avoid the double taxation of her income. Philadelphia argued that it provided Zilka credit for her Wilmington local tax, and that it was not required to provide her credit for state tax paid to Delaware. Zilka unsuccessfully appealed the rejection of the credit with the Philadelphia Tax Review Board and the Pennsylvania Commonwealth Court and ultimately appealed the issue to the Pennsylvania Supreme Court. Pennsylvania Supreme Court’s Zilka Decision The Pennsylvania Supreme Court ultimately upheld the decision of the Commonwealth Court in rejecting the credit and Zilka’s argument that she was subject to double taxation on her income. The Court determined that since Zilka received credit for her Delaware state and Wilmington local income taxes, she was only subject to one state and one local income tax. Although she was unable to obtain credit for the additional Delaware state tax paid, the additional tax paid compared to other Philadelphia residents was solely the result of her choosing to work in Wilmington. The Court held that Philadelphia’s policy to not provide credit for Delaware state tax was both internally and externally consistent and did not discriminate against interstate commerce. What Impact does the Zilka Decision have on Pennsylvania Taxpayers? Pennsylvania residents who work outside of Pennsylvania should be aware of their state and local income tax filing obligations. Even in reciprocal agreement states, PA residents may have local income tax filing obligations. While credits are generally available for taxes paid for work outside of Pennsylvania, taxpayers may not receive credit for all income tax paid outside of the state. Pennsylvania residents who choose to work outside of Pennsylvania need to be aware of the tax implications both in Pennsylvania and their state of employment. Schneider Downs State and Local Tax (SALT) professionals are poised to help taxpayers with state personal income taxes, including working outside of your state of residence and the impact of the Zilka decision on Pennsylvania resident taxpayers. Please contact Stephen Worth or Mark Balistrieri with questions about personal income taxes or other state and local tax matters. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more on our dedicated Tax Services page. Excerpt: Learn how the Pennsylvania Supreme Court’s decision in Zilka directly impacts Pennsylvania residents who work outside of Pennsylvania and claim credits on their Pennsylvania state and local income tax returns. ### A First of Its Kind: The $25 Million Deepfake Scam AI Deepfakes are on the hype cycle today, thanks to a CFO who was tricked into paying $25M to a scammer. This is a very real and current threat to organizations of all types and sizes. While the regulatory landscape around deepfakes continues its struggle to strike a balance of depth and breadth, all business leaders should prepare to respond to an inevitable attack (currently, there's no federal law governing deepfakes, though the creation and/or distribution of deepfakes is illegal in some U.S. states). For those new to this technology, deepfakes are AI-generated videos or audio clips that make it appear as though someone is saying or doing something that they never did. In this instance, a finance worker was tricked into processing a $25.6 million payment to scammers using deepfake AI to pose as the company’s CFO on a conference call (in fact, every single person on the call was fake). Here are some tips to help prevent and detect deepfakes. How to Prevent Deepfakes at Your Business Start with prioritizing cyber awareness training Incorporate a corroborative verbal and/or physical approval process for certain financial transactions Maintain a secret code word/phrase with other organizational leaders Test your response to a variety of incidents through a tabletop test scenario Tighten up and TEST logical security controls (MFA, password-management or PAM tool, etc.) How to Detect Deepfakes at Your Business There are several signs of deepfakes which, when you know what to look for, are still perceptible to your human eye. Be on the lookout for: Any irregularities on the skin or body parts Blurred or misaligned visuals Inconsistencies in audio/video Unnatural coloring/shape (lips, teeth, skin coloration or facial hair compared to face) Unrealistic beauty marks on the face Unusual emotional response Unusual eye movement or blinking, mouth/body movements or posture or facial expressions Unusual glare on eyeglasses Unusual shadows around the body or eyes From a software perspective, you should also consider tools that automatically look for AI-generated glitches and patterns to separate legitimate audio/video from fake through hashtag discrepancies, digital fingerprints and reverse image searches. Deepfake attacks are evolving rapidly in sophistication and accuracy, and failure to swiftly recognize the very real potential of these attacks can have severe implications for businesses across all industries. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn how scammers used a deepfake attack to steal more than $25 million from a multinational firm. ### House of Representatives Approves Tax Relief for American Families and Workers Act The House, with broad support from both parties, overwhelmingly passed proposed legislation late Wednesday geared towards reviving expired business tax breaks coupled with a proposal to boost the child tax credit. The bill, introduced in the House on January 17, 2024, and passing two weeks later, now moves to the Senate, where it faces additional hurdles. The Wall Street Journal observed that passage in the Senate will take 60 votes. Timing of Senate action is also uncertain; for example, current priorities also include immigration and spending issues. A two-week recess is scheduled to begin February 12, 2024. Options to passage exist – but it’s unclear at this time which, when, and how options might be exercised. The Act does not include a provision to expand the state and local income tax deduction. To obtain support and address the concerns of certain lawmakers, House leadership committed to working on a separate bill proposed to double the cap on the SALT deduction for married couples filing a joint return, raising the limit to $20,000 from $10,000 (the Marriage Penalty Elimination Act). This bill faces an uncertain future. Further delay, either in passing the Act in the Senate or being signed into law by President Biden, potentially risks implementation of the Act’s provisions for 2023. IRS computer software and forms likely will need to be updated; additionally, tax return preparation software used by accountants and taxpayers (particularly for the child tax credit portions of the bill) likely also needs to be updated. Due to continued uncertainty, it could make sense to proceed with compliance as the tax law exists today—while staying aware of the bill’s legislative status and any compliance impacts arising from actual passage of the bill. Another important aspect of the current proposal, not considered by our federal government leaders and representatives, is the uncertainty this act has on state taxable income calculations. Not all states update their tax laws using the same effective dates used in the federal legislation, creating additional complexities with state tax compliance. This is an area that also warrants continued monitoring and consideration. We understand the uncertainty arising from this late legislative action. Our goal is to keep you informed of the Act’s progress, of the federal and state uncertainties created by the proposed legislation, and work closely with you on resolving any issues that arise. If you have current questions, please do not hesitate to reach out to your Schneider Downs tax team. NOTE: View an executive summary of the Tax Relief for American Families and Workers Act of 2024 (the Act). About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Tax Relief for American Families and Workers Act, Tax Relief, Tax Services ### Fortifying Retail Security: Essential Cybersecurity Tools and Software The retail industry's digital transformation has introduced unparalleled conveniences for both businesses and consumers. However, this digital evolution has also brought about new security challenges. Cybercriminals are continually developing sophisticated tactics to exploit vulnerabilities in retail networks and systems. To counter these threats, retailers must leverage cutting-edge cybersecurity tools and software. In this article, we'll explore some essential cybersecurity tools and software that are indispensable for securing the retail industry. In 2020, U.S. consumers spent $861.12 billion on online retail transactions – 44% more than in 2019. Many retailers have launched or revamped their e-commerce stores, offering services such as curbside pickup, to help meet the growing demand.   While these trends create great opportunities, they also generate new attack vectors. Retailers have always been attractive targets for cyber attackers. But now, cybersecurity issues in retail have become an even bigger concern. Consider these recent retail cybersecurity statistics: 24% of cyberattacks targeted retailers, more than any other industry. 34% of retailers said cybersecurity worries were their primary hindrance in moving to e-commerce. 34% also said that cyberattacks or privacy breaches were their most serious digital threat. Financial motives drove cyber attackers in 99% of retail cyberattacks. When data is compromised in an attack, 42% is payment information and 41% is personally identifiable data. Firewalls and Intrusion Detection/Prevention Systems Firewalls and Intrusion Detection/Prevention Systems (IDS/IPS) are the front line of defense against cyber threats. Firewalls filter incoming and outgoing network traffic, allowing only authorized communication. IDS/IPS systems monitor network activity, identify suspicious patterns, and take action to prevent unauthorized access or data breaches. Antivirus and Anti-Malware Solutions Retailers need robust antivirus and anti-malware software to detect and eliminate malicious software from their systems. These solutions constantly scan for malware and suspicious files, providing real-time protection against known and emerging threats. Endpoint Security Software Endpoint security software secures individual devices (e.g., point-of-sale terminals, employee workstations and mobile devices) from threats. It includes features like antivirus protection, firewall capabilities and data encryption to safeguard data on endpoint devices. Encryption Tools Data encryption is a fundamental aspect of retail security. Retailers should use encryption tools to protect sensitive data, such as customer information and payment details, both in transit and at rest. Encryption ensures that even if a breach occurs, the stolen data remains unreadable to unauthorized parties. Security Information and Event Management (SIEM) Systems SIEM systems collect and analyze data from various sources to provide a comprehensive view of a network's security posture. These tools help retailers detect anomalies, manage security incidents and respond promptly to potential threats. Access Control and Identity Management Access control and identity management tools ensure that only authorized personnel have access to specific systems and data. This is vital in preventing insider threats and unauthorized access. Two-factor authentication (2FA) and single sign-on (SSO) solutions enhance access control. Network Segmentation Software Network segmentation divides a network into distinct segments, each with its own security policies. This approach limits the lateral movement of attackers, containing potential breaches and safeguarding critical systems.  Be sure and segment any third-party vendor’s network from your own and only allow access to the resources they need. Vulnerability Scanners Regular vulnerability assessments are essential for identifying and addressing weaknesses in the retail network. Vulnerability scanners help retailers find and fix vulnerabilities in their systems and applications before cybercriminals can exploit them.  Be sure and scan any LoT devices you have on the network. Mobile Device Management (MDM) Solutions Given the prevalence of mobile devices in retail operations, MDM solutions are crucial for securing these endpoints. MDM allows retailers to enforce security policies, remotely wipe lost or stolen devices and manage app installations. Wireless Security Today in the retail industry, the use of wireless devices is ever more present.  Wireless inventory-scanning tools are a great time-saving convenience, but wireless is using radio waves to send data, so like with any radio signal, someone in the area and pick up those signals so use strong encryption on all connections to the access point.  Also restrict access to the access points from the known devices you have.  This can be done by whitelisting the MAC addresses of the company devices and only allowing access to the access point from these devices. Security Awareness Training Platforms Human error remains a significant vulnerability in the retail industry. Security awareness training platforms provide retailers with a means to educate employees about cybersecurity best practices, phishing awareness and how to recognize and respond to security threats.  Security, like a chain, is only as strong as its weakest link, and the user is the weakest link in network security. Incident Response and Forensic Tools In the event of a security breach, incident response and forensic tools help retailers investigate the incident, determine its scope and take appropriate actions to mitigate the damage and prevent future attacks.  In the event of a serious security breach, it is best to reach out to a security firm that works with these issues daily.  It takes experts to fully remove an attacker from the network. In the evolving landscape of the retail industry, staying ahead of cyber threats is imperative. The adoption of these essential cybersecurity tools and software solutions can significantly enhance a retailer's security posture, protect sensitive customer data and safeguard the integrity of its operations. By investing in and implementing these technologies, retailers can build a robust defense against the ever-present cybersecurity challenges in the digital age. If you would like more information on protecting your business from cybercriminals, contact a member of the Schneider Downs Cybersecurity Services team at cybersecurity@schneiderdowns.com. Related Resources Whitepaper - Enhancing Retail Cybersecurity Related Articles Ensuring Network Security in the Retail Industry: A Crucial Imperative About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Explore essential cybersecurity tools and software that are indispensable for securing the retail industry ### Defend Your Dollars and Data: How to Avoid IRS Impersonation Scams What are some of the most common IRS impersonation scams circulating this tax season? There’s more to tax season than just filing your taxes. And if you’re anything like me, I approach every new tax season with a sense of urgency. I assemble my W-2 form and other tax-related statements as soon as they’re available. While I encourage everyone to get a head start on their taxes, I also encourage everyone to be proactive about protecting themselves from potential IRS impersonation scams. Here are some common schemes to avoid this tax season. IRS Impersonation Telephone Scams Otherwise known as “vishing,” some scammers will call you pretending they’re an IRS agent, FBI detective, law enforcement officer or something along those lines. They’ll change the caller ID to make it look like the IRS is actually initiating the call. They might provide you with a bogus IRS identification badge number and speak with a sense of urgency, leading you to believe you owe money to the IRS or that you’re due a refund. The most important thing is to stay calm and ask for a reference number. If the caller provides you with one, jot it down and hang up. Verify the reference number with this list of official IRS phone numbers. If you do happen to receive a call from the so-called IRS, report the callback number in an email to phishing@irs.gov. IRS Phishing Scams Recently, the IRS issued alerts regarding the fraudulent use of the IRS name and logo in emails composed by scammers to access your financial information. If you receive an email from “the IRS,” don’t click on any links within the message. It’s also a best practice to check the “From” name. If you hover over or click on their name, it will reveal their actual email address. If it’s not a .gov address, it’s most definitely a scam! Or if you have someone prepare your taxes for you, make sure to pick up the phone and call to verify that they’ve sent you an email before responding or clicking links within the message. If you suspect you’ve received a fraudulent email, send the fake email as an attachment to phishing@irs.gov. IRS Smishing Scams Watch out for scams via text message. Any way you digitally communicate, you should be on your guard for potential tax-related schemes. The IRS will never text you for any information. If you receive a suspicious text that claims you must update your IRS e-file immediately or that you’re owed a refund, don’t click any links, even if they look legitimate. If you receive an unsolicited text message from the IRS, report it by taking a screenshot and including it in an email to phishing@irs.gov with the date, time and time zone of the text received and the sender’s phone number. Telltale Signs of IRS Scams If you’re the potential target of a different type of IRS impersonation scam than the ones mentioned above, here are some tell-tale signs that should raise your red flags: You are asked to pay through unofficial channels. The IRS will never ask you to pay via wire transfers, cryptocurrency or gift cards. You are told your ID is at risk of revocation. The IRS has no control over your identification. Threats made against your forms of ID, such as your driver’s license or Social Security number, are fraudulent. You are asked for details related to your credit cards or bank accounts. The IRS will never ask you for account-related information, but scammers will. There are other ways to flag scammers, but as a general rule of thumb, stay vigilant and don’t let the stress of tax season overwhelm your good senses. For more information on tax-related scams, please visit the IRS Tax Scams/Consumer Alerts website. About Schneider Downs Cybersecurity If you would like more information on ensuring the network security of your business, contact a member of the Schneider Downs Cybersecurity Services team. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about how to identify and avoid IRS impersonation scams this tax season. ### Technology Enhancements Continue to Infuse the Manufacturing World For the past few decades, there’s been an emphasis on incorporating more advanced technology into the manufacturing process. This directive has gone by many names – smart manufacturing, digital transformation, the fourth industrial revolution, advanced manufacturing – all under the common premise of bringing more cyber systems, intelligent automation, robotic process automation and business process management into the manufacturing process so that repetitive actions can be automated and optimized. The value of such efforts can be tremendous, with inefficiencies avoided, faster processes implemented, improved quality and cost savings just a few of the benefits. But these plusses need to be viewed alongside the potential of high initial costs, cybersecurity risks, integration/monitoring issues and regulatory compliance, among other challenges. As mentioned, these initiatives have been progressing for some time, and the industry has had its share of success stories along with some hard-learned lessons, but the movement is still in a relatively early phase. In 2019, for instance, the World Economic Forum reported that only 29% of industrial companies had deployed “fourth industrial revolution” technology at scale. While this study was performed just over four years ago, a simple Google search reveals that today closer to 50% of companies in the manufacturing sector are in the process of implementing AI and other practices into their operations. That means it’s time to consider the impact technology improvements can make to your operation before your company is outpaced by the industry. When implementing new processes and procedures into your business, consider a few of the following Schneider Downs Consulting services that can help make a difference: digital transformation, cybersecurity, business process automation and data analytics. Don’t hesitate to contact a member of your SD team for more information. About Schneider Downs Industry Groups Schneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit Schneider Downs Industries or contact us at contactsd@schneiderdowns.com. Excerpt: Learn how Manufacturing Technology Enhancements are tackling inefficiencies, slow process implementation, poor quality and high costs within the manufacturing process. ### IRS Modifies Position on Grantor Trust Tax Reimbursement Clauses On November 28, 2023, the Internal Revenue Service (“IRS”) took the estate planning world by surprise by issuing a memorandum (the “CCA”) concluding that the modification of a grantor trust to add a tax reimbursement clause will constitute a taxable gift. The CCA marks a stark departure from the IRS’s previous position that such modifications will not trigger gift taxes. This new guidance will reshape how practitioners plan for grantor trusts in the future. Irrevocable grantor trusts are a valuable tool in the estate planner’s toolbox. These trusts are structured such that the grantor remains responsible for income taxes, while the trust assets are excluded from the grantor’s estate for federal estate tax purposes. This favorable treatment allows assets such as stocks and real estate to appreciate within the trust without being subject to estate taxes, and also permits transactions between the grantor and the trust, such as sales and loans, to be executed free of income taxes. Despite their advantages, grantor trusts can create liquidity concerns for taxpayers who must pay taxes on trust income. A solution many advisors felt comfortable with, until the release of the CCA, is to modify the trust instrument to add a tax reimbursement clause that permits, but does not require, the trustee to reimburse the grantor for the income taxes paid. In 2016, the IRS noted its approval of this strategy, holding in a private ruling that the modification of a trust to add a tax reimbursement clause was administrative in nature and did not trigger transfer taxes. The CCA reverses the IRS’s previous taxpayer-friendly stance. In direct contradiction to its 2016 position, the IRS now concludes that modifying a grantor trust to add a tax reimbursement clause, with the consent of the beneficiaries, constitutes a taxable gift from the trust beneficiaries to the grantor. In reaching this conclusion, the IRS reasoned that, under a governing trust instrument, trust beneficiaries have an interest in the trust property. When a trust is modified to include a tax reimbursement clause, a portion of this interest is transferred from the beneficiaries to the grantor, and the value of the interest transferred will be categorized as a taxable gift. It is crucial to note that the CCA only applies if a trust agreement is modified to incorporate the tax reimbursement clause. The IRS maintains its position, established in 2004, that a discretionary tax reimbursement clause contained in an original, unmodified trust agreement will not trigger transfer taxes. The CCH does not change this outcome, provided there is no preexisting agreement between the grantor and the trustee to exercise the reimbursement clause. The CCA leaves many unanswered questions in terms of its scope and application. For example, will gift tax be triggered if the trust is somehow amended without the consent of the beneficiaries? What if, instead of amending the trust, the trustee simply decants the trust assets into a new trust that is drafted to contain a tax reimbursement clause? If a taxable gift is triggered by the addition of a tax reimbursement clause, how is the gift measured?  We will be closely tracking new developments in this area and will keep you informed with respect to any pertinent updates. CCA 202352018 PLR 201647001 Rev. Rul. 2004-64 About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Read more about the CCA memorandum issued on November 28, 2023. ### Ensuring Network Security in the Retail Industry: A Crucial Imperative In the rapidly evolving landscape of the retail industry, one aspect remains constant: the need for robust network security. With the increasing digitization of retail operations and the growing threat landscape, ensuring the security of networks has become a critical imperative. In this article, we will delve into the challenges faced by the retail sector and explore strategies to bolster network security. The Retail Industry: A Prime Target The retail industry is a prime target for cyberattacks due to the vast amount of sensitive data it handles, including customer information, payment details and inventory data. Additionally, the sector's growing reliance on e-commerce and digital payment methods has made it even more attractive to cybercriminals. The consequences of a breach can be devastating, including financial losses, damage to reputation and legal repercussions. Challenges in Network Security Point-of-Sale (POS) Systems: POS systems are crucial for retailers, and they are often vulnerable to malware and data breaches. Attackers may infiltrate these systems to steal payment card information.  By compromising these devices, all credit card transactions that run through them can be copied and sent to a remote attacker’s system. Phishing and Social Engineering: Retail employees are frequently targeted through phishing emails and social engineering attacks. These tactics are designed to trick individuals into revealing sensitive information or clicking on malicious links, which can lead to network compromise. Supply Chain Vulnerabilities: Retailers have complex supply chains, making them susceptible to attacks that can disrupt operations, compromise product integrity or introduce malicious software into the network.  Third-party vendors’ access to the retailer’s network should be restricted to only the resources they need. Insider Threats: Employees, both intentionally and unintentionally, can pose a significant threat to network security. Insider threats could result from negligence, malicious intent or inadequate training. IoT Devices: The proliferation of Internet of Things (IoT) devices in retail, from smart shelves to security cameras, increases the attack surface and requires a robust security strategy to protect these endpoints.  Sadly, security is an afterthought during the design and development of a lot of these devices.  Do your own research before buying a device.  Do a Google search for “Security flaws in .” This will provide you with information on the security of the device from many different sources.  Also, change the default password on the devices.  As a hacker during a penetration test, one of the first things I look for is devices with default passwords. Strategies for Enhanced Network Security Regular Security Audits and Assessments: Conducting periodic security audits and risk assessments can help identify vulnerabilities and prioritize security investments. Strong Access Control: Implement robust access control measures, such as two-factor authentication (2FA) and access restrictions, to prevent unauthorized personnel from gaining access to sensitive systems. Employee Training: Regularly educate employees about the importance of security best practices, recognizing phishing attempts and maintaining secure passwords. Encryption: Ensure that sensitive data is encrypted both in transit and at rest. This adds an extra layer of protection against data breaches. Network Segmentation: Divide the network into segments to limit lateral movement by attackers. This helps contain potential breaches and safeguard critical systems.  Especially restrict access to third-party networks from your network and allow access only to the resources they need. Threat Intelligence: Stay informed about the latest threats and vulnerabilities by subscribing to threat intelligence feeds, which can help you proactively protect your network. Patch Management: Keep software and hardware up to date with the latest security patches to eliminate known vulnerabilities.  This also includes updating IoT devices and their operating system. Incident Response Plan: Develop a comprehensive incident response plan to minimize damage and downtime in the event of a breach.  Make off-site backups of all critical data. Vendor Management: Ensure that third-party vendors and partners adhere to your security standards to avoid vulnerabilities through the supply chain.  During a penetration testing engagement, test the vendor’s security of its product. Data Backup and Recovery: Regularly back up data and test recovery procedures to mitigate the impact of ransomware or data loss incidents. Network security in the retail industry is an ongoing process that requires a multifaceted approach. As the sector continues to evolve in the digital age, retailers must prioritize security to protect their customers' data and maintain a strong, trusted brand image. By implementing the strategies outlined above, retailers can significantly enhance their network security and defend against the ever-present threat of cyberattacks. If you would like more information on protecting your business from cybercriminals, contact a member of the Schneider Downs Cybersecurity Services team at cybersecurity@schneiderdowns.com. Related Articles Fortifying Retail Security: Essential Cybersecurity Tools and Software About Schneider Downs Cybersecurity If you would like more information on ensuring the network security of your business, contact a member of the Schneider Downs Cybersecurity Services team. The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. Excerpt: Learn more about the need for robust network security in the retail industry and discover effective strategies for enhancing it. ### Oil and Gas M&A Outlook We have entered a period of accelerated M&A activity, with two global megadeals leading the way: ExxonMobil’s $59.5 billion purchase of Pioneer Natural Resources and Chevron’s $53.0 billion acquisition of Hess. Over the previous 21 months, we’ve seen an increase in activity, and an increase in overall deal value while companies maintain fiscal discipline demanded by investors.  The list below represents M&A activity since the second quarter of 2022. What is driving the uptick in deals?  Strong commodity prices over the previous few years have allowed companies to strengthen their balance sheets, fueling the M&A trend.  Additionally, continued conflicts in the Middle East and the Russian/Ukraine War as well as OPEC+’s extension of production cuts indicate that commodity prices will remain at current levels or increase over the next year. Companies also expect higher natural gas demand as the U.S. continues to build more LNG export facilities. Since companies expect to see stable or increased commodity prices, and with continued international conflict, and with the appearance that the energy transition is farther off than originally expected, we expect to see continued M&A activity as companies build their inventories. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page.   Excerpt: Read more about accelerated M&A activity in the oil and gas space since 2022. ### An Increase in LNG Exports Could Lead to Higher Seasonal Price Volatility The U.S. is expected to expand LNG export capacity to 25 Bcf/d by 2028, which could cause volatility in natural gas prices, with different patterns in summer versus winter months. Is the market prepared for more pronounced seasonal swings? The Henry Hub forward curve as of December 2023/January 2024 implies a tighter supply/demand balance in future years. The rise in forward prices is primarily caused by planned U.S. LNG export capacity changing the fundamentals of the forward prices. As the U.S. natural gas market becomes more reliant on LNG exports as a primary driver in demand, it’s possible that seasonal price volatility will increase. The summer and fall months could be more susceptible to price deterioration, whereas winter months or peak demand months could see an increase in price risk premiums. Recently, the spread has changed, showing October 2024 through January 2025 changed since late 2021 from -$0.425 to -$1.118. The spread is wider than we have seen in the October through January period. What is causing the wider spreads? We believe that it is consistent with more anticipated export demand as the U.S. adds additional capacity, and that demand will follow similar seasonal swings. Since natural gas swings have already occurred in the first few weeks of 2024 with colder seasonal weather, and since LNG is a seasonal fuel burned mostly in the northern hemisphere in winter, we expect seasonal price volatility to increase in the future. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. Excerpt: Read more about the seasonal price volatility that may accompany an expanded LNG export capacity. ### The New IIA Global Internal Audit Standards - What You Need to Know Now What do the new IIA Global Internal Audit Standards mean for your internal audit function? After what the Institute of Internal Auditors (IIA) described as a long multi-year project, the new Global Internal Audit Standards were released on January 9, 2024. This multi-year project included a remake of the standards, as well as the Internal Professional Practices Framework (IPPF), and was especially important as it will impact global internal auditing for years to come. The IIA describes the key changes to the Global Internal Audit Standards as the following: Strengthening governance frameworks to improve organizations’ responsiveness to rapidly changing business environments. Specific guidance to assist internal auditors in the public sector and for small internal audit functions. A more flexible framework that can adapt to the unique challenges faced by auditors in different parts of the world. Specific guidance and standards for critical areas like cybersecurity. With the release of the new standards, the hard work for Chief Audit Executives and internal auditors begins. How to Prepare for the New IIA Global Internal Audit Standards The task in 2024 will be to evaluate what the new standards require and consider how the changes will impact your internal audit function, as well as determine how and what steps you will take for a smooth implementation. While this might seem like a very daunting task, below are key steps to take as you embark on the journey of assessing your department’s conformance. Take the Time to Understand Everything that has Changed The new standards become effective one year after publication; therefore, you have until January 2025 to conform with the new standards. Many of the new standards include portions of the previous standards, mission, code of conduct and core principles, so take some time to digest everything that is new and assess everything that your current internal audit function is already doing. Perform an Internal Audit Readiness Assessment While learning the new standards, put together a readiness assessment. A readiness assessment will allow your department to identify key areas in which you are already conforming to the new standards, as well as identify areas in which enhancements to your current practices might be needed or areas in which implementation will be needed.  Once you have completed a readiness assessment, you can discuss all aspects of the changes with key stakeholders including the Board, Audit Committee and Senior Management. This will allow everyone to fully understand the impact of the changes, as well as help to determine the best action plan for the organization. Create and Implement an Internal Audit Strategy and Action Plan Once you have performed a readiness assessment and discussed it with the key stakeholders, you should have three key areas: Standards in which you are already fully conforming Standards in which you are partially conforming Standards that the department is not conforming Your organization should review all of the standards in which you are partially conforming, as well as the standards in which you are not conforming and create action plans. Make sure to identify ownership and deadlines as you create these plans. Holding accountability is key in executing the action plans and to ensure conformance by 2025. Track and Communicate Your Action Plan Progress Over the next year, as you continue to make progress on your action plans, ensure that you are tracking your progress and communicating achievements. Communicating progress and obtaining feedback from key stakeholders can help identify areas where the organization is getting the most value from the changes, as well as serve as a roadmap for key action items. You can also utilize your action plan as documentation for your Quality Assurance and Improvement Program (QAIP). About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. Excerpt: Find out what the newly finalized IIA Global Internal Audit Standards mean for your internal audit function. ### Investment Corner with Jason & Sean: Japanese Stock Market Japan’s Nikkei blows past 34,000 mark for the first time in over 30 years. In the late 1980’s many investors thought that Japan was going to eat the world as the Japanese index had risen almost 600% over the last decade. In December of 1989, Japan’s Nikkei stock market index hit a high of 38,916, a level that proved to be the last milestone of the country’s asset-inflated bubble economy – a period of excess consumption and overconfidence in the inerrancy of Japan. Soon after, the Bank of Japan (BOJ) raised interest rates to try to tame the elevated inflation alongside speculation nestled in the economy, and equity markets soon lost over $2 trillion over the next 12 months. It has taken over 33 years for the Japanese equity market to recover, and now, with a relatively tamed perception, appear attractive on a relative basis. There are many times when investing in capital markets that certain themes or ideas are perceived to be permanent, and they don’t quite end up that way. Japanese equities in the late 80’s were one example and U.S. equites can feel as a present-day example. Many investors feel that U.S. large caps are the only asset class that is needed in a portfolio, but with valuations nearing multi-year highs, recent elevated inflation, and central bank intervention, there are similarities between the late 80’s in Japan and present day in U.S. large caps. While we are not predicting a dramatic decline in U.S. equities, we remind investors to remain prudent with a diversified portfolio that is set up to weather many macro-economic backdrops. “Although history does not repeat, it often rhymes.” Article: Asia markets today: Nikkei 33-year high, China 5-year low About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. Excerpt: Learn more about Japan’s Nikkei blowing past the 34,000 mark for the first time in over 30 years. ### Proposed Bipartisan Tax Plan Released – Overview of the Tax Relief for American Families and Workers Act of 2024 Learn more about the proposed Tax Relief for American Families and Workers Act of 2024 and the highlights included within the Act. On January 16, 2024, the websites of the United States Senate Committee on Finance and the United States House Committee on Ways and Means, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.) jointly announced “a commonsense, bipartisan, bicameral tax framework that promotes the financial security of working families, boosts growth and American competitiveness, and strengthens communities and Main Street businesses.” The plan, introduced as The Tax Relief for American Families and Workers Act of 2024 (the Act), generally proposes to revive expired breaks for businesses and increase the child tax credit for low-income families (but also includes disaster relief provisions and other tax relief measures). Congress hopes to push the roughly $80 billion in tax breaks through Congress in the next few weeks (before the January 29, 2024 start of tax season) with parts of the bill being retroactive. The agreed-to framework proposes to pay for the tax breaks by cutting off new claims for the COVID-19 era employee retention credit program filed after January 31, 2024. THE ACT HIGHLIGHTS Supports Working Families with an Enhanced Child Tax Credit Expands access to the child tax credit: phased increase to the refundable portion of the child tax credit for 2023, 2024, and 2025. Eliminates the penalty for larger families, allowing the child tax credit phase-in to be available to families with multiple children. Provides a one-year income lookback, creating flexibility for taxpayers to use either current or prior-year earned income to calculate the child tax credit in 2024 or 2025. Indexes the tax credit for inflation starting in 2024. Expands Innovation and Competitiveness with Pro-Growth Economic Policies Retroactively allows an immediate deduction for research & development (R&D) expenditures, allowing businesses of all sizes to immediately deduct the cost of their U.S.-based R&D investments. The bill delays, rather than eliminates, the requirement to capitalize and amortize U.S. based R&D until 2026. The provision does not change current requirements for non-U.S. based research activities. Retroactively expands the ability to deduct business Interest expense by allowing depreciation and amortization deductions in the computation of adjusted taxable income through 2025. The provision for 2022 and 2023 is elective. Provides for full and immediate expensing for investments in machines, equipment, and vehicles by extending the 100% bonus depreciation provision generally through 2025 and by increasing the Section 179 expensing allowance beginning in 2024. Increases Global Competitiveness Provides relief for the current double taxation on U.S. – Taiwan cross-border investment. Provides Disaster Relief Extends previous rules for qualified disaster related personal casualty losses, including eliminating the requirement that casualty losses must exceed 10% of adjusted gross income (AGI) to qualify for the deduction, requiring losses to exceed $500 per casualty in order to be deductible, and allowing taxpayers to claim the casualty loss deduction “above the line,” i.e., without itemizing their deductions. Provides exclusions from gross income for payments for losses or damages resulting from certain wildfires and the East Palestine, Ohio train derailment. Targets Affordable Housing Restores the Low-Income Housing Tax Credit ceiling to 12.5% from 9% for calendar years 2023 through 2025. Reduces tax-exempt bond financing requirements. Ends the Employee Retention Tax Credit Program Accelerates the deadline for filing claims under the COVID-era employee retention tax credit program to January 31, 2024. One important measure left out of the proposal advocated by some politicians is an increase to the State and Local tax deduction limitation. The deduction is currently limited to $10,000. Finally, there is no guarantee that the proposed legislation embodied by the framework in its current form will make it past both the House and Senate, let alone be signed by the President. We will continue to monitor the situation closely, providing status updates and insights regarding appropriate actions once any provisions become law. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about the proposed Tax Relief for American Families and Workers Act of 2024 and the highlights included within the Act. ### Cap Table Basics for Startup Companies When is the last time you checked on your capitalization table? A startup company’s cap table typically is constantly evolving. If your cap table doesn’t already accurately and effectively depict the current ownership structure of your business, there are several reasons why it’s important to get it up to speed: Benefits of an Organized Cap Table Growth: When you’re looking to make a PE deal or raise funds, the first document that potential investors will consider is your cap table. Keeping it organized and updated will help ensure a smooth fundraising process. Transparency: Your employees want to know the precise percentage of ownership they have in your company. Those answers can get complicated, especially if you issue options or warrants to outside parties. An organized cap table gives everyone an accurate understanding of their equity incentives. Clarity: Truly sound business decisions (i.e. granting options to employees or compensating outside vendors with warrants) require an understanding of exactly how your company is structured. Simplicity: As you get closer to a full valuation of your company or are looking to execute a series raise, an organized cap table will simplify the process of offering and negotiating term sheets. As much as an organized cap table can make your life easier, an unruly one can create unnecessary headaches and inefficiencies. Once you do get your cap table in order, there are certain steps you should take to keep it that way: Best Practices for Your Cap Table Assign Ownership: Right off the bat, you should select one person will take ownership of maintaining the cap table. Ideally, the lucky party will be knowledgeable about board minutes, board approvals, equity transactions, etc. We’ve found that it’s usually better when someone in the finance and accounting (rather than HR) department takes the lead. Review and Update Consistently: Not all adjustments are created equal. Being proactive about updating your cap table will save you a good deal of time and money in the long run. Late fixes, on the other hand, require that you reach out to your lawyers and accountants to find documents that might be years old. That won’t be a quick or cheap process. Utilize Software: As your cap structure gets more complex, there’s only so much Excel can do. If you’re at a point where you have different categories and classes of shares, cap table software (the one we see most often is Carta) can help keep things simple. In addition, software like Carta can store shareholder information and can speed up the process of obtaining shareholder approval for equity raises. Consider How Much Information to Share: The level of information you want to share with potential investors will vary with each transaction. It’s important to decide how much detail of your cap table you want investors to have. Is it a high-level view of the overall number of shares? Or do you want investors to have access to everyone who has an ownership in the company? (Another benefit of utilizing cap table software is the ability to generate reports with different levels of detail). With a bit of planning, keeping an organized cap table can be a simple task. And, if you’re ready to take a deeper dive into some more accounting considerations relevant to your cap table, including equity, capital raising and revenue recognition, I recently presented on all of these on Audit Day of our CPE webinar series in December, which you can watch on-demand here. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. Excerpt: Learn more about both the reasons and ways to keep your cap table organized. ### Selecting the Right Partner for your Corporate Performance Management (CPM) Solution Implementation A critical task in selecting the right Corporate Performance Management (CPM) solution is ensuring you have the right consulting partner to help you implement it. Here are six reasons why choosing the right consulting partner is arguably just as important as selecting the CPM solution. Reason #1: Industry Expertise Selecting a consulting partner with resources that understand your industry and can apply that knowledge to the implementation is critical to its success. The implementation of a new CPM solution inherently needs to support your industry-specific processes and business requirements. A professional services firm focused on key metrics such as resource utilization and project realization does not have the same needs as a process manufacturer needing to manage recipes and batches, and vice versa. Most CPM solutions can be configured or customized to handle the unique requirements of an industry, however, not every consulting vendor selling the software has the skills to properly configure the system and help your organization through a successful implementation. Reason #2: Don’t Go It Alone Drawing on a partner’s experience to implement the solution using best practices will maximize the adoption and utilization of the solution. We have yet to meet a business owner who completed a CPM implementation solely with internal resources – and we’ve worked with Fortune 500 companies, 500-person companies, and 5-person companies. Consultants draw from a depth of experience and resources to make sure things are set up correctly using proven best practices. It’s a situation of “you don’t know what you don’t know”. Reason #3: Seeing Is Believing Have the partner “prove” their qualifications with a software demonstration focused on how they would implement the solution to address your unique and industry-specific requirements. This will accomplish several things. First, you get a peek at the consulting vendor’s technical capabilities and their ability to “talk the talk” within your industry. Second, it’s an opportunity for you to vet any assumptions that you’ve made about the system and ensure that all the research you’ve done to this point is accurate. Third, it allows you to ensure the solution delivers meaningful value to your business (don’t fall in love with the technology, fall in love with the outcomes the technology produces). Reason #4: Meet the Delivery Team Ensure what the sales team promises is what the implementation team can deliver, and that the delivery team is compatible with your team. Sales teams don’t implement, the partner’s delivery team does. If you can’t meet a member of the delivery team during the sales process, that should cause you to pause. It is important to meet with them and ensure your needs are understood by the people who will be responsible for delivering the solution. It is also the ideal time to gauge if your team and the delivery team will mesh, or if instead, you sense a misalignment between your culture and the consulting vendor’s culture. A major component of CPM implementation is change management. When speaking with the delivery team ask for advice on how they would approach change management and make sure that your ethos on organizational change aligns with theirs. Reason #5: Project Staffing Avoid unnecessary project risk by ensuring your partner has the appropriate amount of experience with the solution. Will the consulting vendor outsource some of the work to a 3rd party? How many years of experience implementing the solution and in your specific industry does the implementation team have? These may be the most critical questions to ask. Even with the best project management controls, polished sales pitches, and personable delivery team, if your partner lacks experience with the solution that you are paying them to implement you are introducing an unprecedented level of risk to the project. You should also ask any vendor you are considering about turnover on their implementation teams because staffing changes mid-project can negatively impact the project budget. Reason #6: Ensuring Success After Go-live Be sure to understand how the implementation vendor delivers post-go-live support, both in the short-term and long-term. Typically, in the first several months after a project goes live your team will be building up their confidence and overcoming the learning curve as they adopt the solution.  You must have a partner who doesn’t take a “cut the cord” approach so you can go back to the vendor for support as needed. You should also consider your long-term needs for the solution. Commonly, CPM solutions are implemented for a specific business function or department need, but over time become a critical reporting, planning, and visualization tool for multiple areas of the business.  Having a partner who can also be your “trusted advisor” will ensure your investment will have long-term benefits to your business. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information contact the team at contactsd@schneiderdowns.com or visit our dedicated Technology and Data Services page. Excerpt: Learn the 6 most important vendor considerations when selecting the right Corporate Performance Management (CPM) solution. ### Diversifying Revenues in the Trucking Industry: Strategies for Growth Diversifying revenue streams is a strategy that offers several business advantages, one of the most significant being risk mitigation. By expanding its sources of income, a trucking company, for instance, can reduce dependency on a single revenue stream, thereby minimizing the impact of several risks – including periodic economic downturns and market volatility, regulatory changes, dependency on a few major clients or the cyclical nature of industries – that could affect the organization as a whole. Here are a few ways your company can look to better diversify revenues while mitigating risk: Customer Base Analysis One helpful objective is to create an ongoing understanding of your existing client base through customer segmentation, then analyze the contributions of each segment to your company’s revenue. This segmentation and related analysis is often delineated by industry and revenue stream/service offering, and helps management identify and categorize customer sectors into buckets like growth, stability and devaluation. It also helps to understand your client base so it can be properly diversified and not run the risk of being comprised of a sole or small group of customers or a particular industry concentration. In general, if a large customer represents more than 20% of revenues, you may be exposed to customer concentration risk. How risky this concentration is for your business depends on a few factors, including the profitability of the revenue and how impactful losing the large customer would be together with the ability and promptness to replace lost revenue. Especially for those existing large customers, it’s best to avoid relying on a sole relationship at a particular client. Rather, management should work at building strong, personal connections with the right people at various levels, including the C-suite. Also, when it comes to contracts with large customers, you should look to increase the strength and enforceability for breaking the contract where possible. If a customer is unwilling to sign the contract with conditions and share the risk, it could be a warning sign of future issues. Expanding Service Offerings and Geography An obvious but effective way for trucking companies to diversify revenues is to expand service offerings beyond traditional freight transportation. Easier said than done, perhaps, but by incorporating brokerage and supply chain management services, for instance, trucking companies can create additional value for clients and generate new income streams, even with existing customers. With IBISWorld market research reporting that the U.S. freight brokerage business grew 4.8% per year on average between 2018 and 2023, the freight brokerage segment has seen rather explosive growth over the years, and the forecast for the coming years is positive. According to Mordor Intelligence’s market research, the industry’s forecasted compound annual growth rate (CAGR) is 8.35% from 2024 to 2029. As the DAT Freight & Analytics’ data on rates depicts, specialized freight services like reefer, hazardous materials or oversized typically command higher prices and are in niche markets attracting clients with unique needs. Another diversification opportunity is geography, which could involve opening a terminal across the country to reach new customers in new regions or even mean expanding internationally. A trucking company operating primarily in the United States, for example, might consider expanding operations to emerging markets in Mexico and Latin America. The globalization of supply chains and the increasing demand for cross-border transportation are cause for review of a company’s presence in particular markets. Reducing Deadhead Miles and Converting a Portion of Them to Revenue-Generating Miles It’s estimated that between 20% and 35% of trucks in the U.S. travel empty. Not only are the vehicle and its driver not earning revenue for being on the road, they’re also burning through fuel and adding mileage and wear onto the tractor and trailer. These “deadhead” miles can be a drag on a company’s finances and productivity, particularly when fuel prices are at current levels. Organizations should place extra emphasis on operational efficiency in the coming year and continue to adapt to demands of the market, including route optimization, delivery consolidation and improved real-time tracking. Technological investments certainly have a price tag, but leveraging digital tools and platforms that use advanced telematics, real-time tracking and data analytics might provide a return on investment quicker than anticipated. Diversifying revenues is crucial for the long-term success and resilience of trucking companies in a rapidly evolving industry. Schneider Downs’ Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends, and can work with you to seek innovative ways to reach your strategic goals. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page. Excerpt: Learn more about how your company can look to better diversify revenues while mitigating risk. ### OH CAT Update Ohio enacted H.B. 33 on July 4, 2023, which made changes to Ohio’s Commercial Activity Tax (CAT). Businesses subject to Ohio CAT should be aware of the updated CAT rules, including the elimination of the annual minimum tax and increases to gross receipt exclusions. What is Ohio CAT? The CAT is an annual tax imposed on the privilege of doing business in Ohio. CAT is measured by taxable gross receipts from business activities in Ohio. The tax applies to retailers, service providers, manufacturers, and other types of businesses. Businesses subject to CAT are required to register, file returns, and make corresponding payments. What’s changing? Prior to 2024, businesses liable for Ohio CAT were subject to a $150 annual minimum tax (AMT), regardless of gross receipt totals. For tax periods starting on and after January 1, 2024, the AMT is eliminated. Additionally, Ohio excluded $1 million of gross receipts from CAT liability for tax years starting before January 1, 2024. This exclusion is currently scheduled to increase to $3 million in 2024 and $6 million in 2025. The CAT rate remains 0.26% for gross receipts over the exclusion amount. Additional changes to Ohio CAT include the elimination of annual returns and adjustment of who must file CAT returns. Currently, Ohio CAT requires either annual or quarterly filing depending on the entity’s Ohio gross receipts. All CAT taxpayers must file quarterly returns for tax periods beginning on or after January 1, 2024. Current annual taxpayers must file a final annual return, due May 10, 2024. Prior to 2024, entities with greater than $150,000 of Ohio taxable gross receipts were subject to the CAT and were required to file and pay the AMT. Starting January 1, 2024, entities that do not exceed $3 million of Ohio gross receipts are not subject to CAT and do not have to file returns. This amount increases to $6 million for periods starting January 1, 2025. Entities that exceed these thresholds must file quarterly returns and remit CAT. Current CAT taxpayers who anticipate having $3 million or less in taxable gross receipts during calendar year 2024 should file final returns and close their CAT accounts to avoid potential notices and assessments. CAT accounts can be canceled through the Ohio Business Gateway, or by submitting a Business Account Update Form to the Ohio Department of Taxation. Schneider Downs State and Local Tax (SALT) professionals are poised to help taxpayers with the Ohio Commercial Activity Tax, including determining CAT liability and compliance with updated filing requirements. Please contact Stephen Worth or Mark Balistrieri with questions about Ohio’s Commercial Activity Tax or other state and local tax matters. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-Profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn more about Ohio’s Commercial Activity Tax (CAT) enacted on July 4, 2023, including elimination of the annual minimum tax and increases to gross receipt exclusions. ### Comcast Xfinity Breach Impacts Nearly 36 Million Customers Learn more about the Comcast Xfinity breach that exposed login credentials of 35.8 million customers. When I went to log into my Xfinity account this morning, I was greeted with a prompt to change my password – which is usually a telltale sign a company was breached in some fashion. A quick search confirmed that Comcast-owned Xfinity was impacted by a security breach caused by a vulnerability from the software cloud company Citrix. The vulnerability, known as Citrix Bleed, impacted thousands of other companies in addition to Xfinity including Boeing and the Commercial Bank of China. While Xfinity claims they quickly patched their systems after discovering they were impacted by the vulnerability, there are several reports accusing Xfinity of waiting nearly a week to patch their network, leaving additional time for the hackers to steal customer data. Regardless of how fast Xfinity moved to patch the vulnerability, the fact is that the personal information for nearly 36 million customers was breached. According to Xfinity’s official statement, the personal information breached so far includes: Username and hashed passwords Account names and contact information Date of birth and the last four digits of user’s social security numbers User’s personal secret questions and answers While no other personal information is confirmed as part of the incident, Xfinity does state they are still analyzing the breach to gauge the full extent of the damage. What Should You Do if You Are Impacted by the Xfinity Data Breach? If you are part of the Xfinity data breach, there are several quick steps you should take: Change Passwords – Change your passwords on any other account sharing the same breached credentials as Xfinity. Remember, shared passwords mean shared vulnerability when breaches occur, if you use the same password on all accounts, it only takes one breach to give a master key to threat actors. This is a prime reason why we always advocate using different passwords (across multiple accounts) or password managers. Update Secret Questions and Answers – Just like shared passwords, using the same secret questions and answers on accounts makes them not-so-secret after a breach – so be sure to update these wherever needed. Enroll in Multi-factor Authentication – Multi-factor authentication (MFA) is one of the easiest ways to stay secure online and should always be enabled whenever possible. Xfinity has offered MFA for quite some time, so if you have not enrolled in it, now is the time. Monitor Your Credit Report – Credit reports provide a quick way to review your accounts for any cases of potential fraud. While Xfinity has not announced free credit reporting services, you are entitled to a free copy of your credit report annually from one of the major credit reporting bureaus. In the same vein, be sure to watch your credit card and banking statements for any red flags. Keep in mind that these are security measures that you should take as preventative steps when creating any online accounts so that you have some peace of mind when breaches like this occur. Related Resources Comcast Xfinity Notice to Customers of Data Security Incident Comcast Xfinity Two-step Verification Setup About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Excerpt: Learn more about the Comcast Xfinity breach that exposed login credentials of 35.8 million customers. ### Dealers Get an Extension for Time-of-Sale Reports for EVs Back in the beginning of November, the IRS released guidance on how to report the time-of-sale of the electric vehicles (“EVs”). We explained the registration in a prior Our Thoughts On article,  which can be found here. Most dealers appear to dread this program and registration because of their lasting memories of how the Cash for Clunker program went for them. Just like with most things, the IRS delayed guidance, which put a sense of urgency on taxpayers and caused frustration. Our year-end discussions with our dealer clients seemed to be dominated by the EV seller’s reports and on-line IRS portal. The rule for the time-of-sale reports is within three days of the sale. The online registration has been delayed by various things such as: the IRS delay of the guidance; the dealers’ dreading it; the backlog of registrations; the verification of dealer licenses and bank account confirmation. These are among the few snags in the process. The IRS has acknowledged it and has provided more time. The IRS released Rev. Procedure 2023-38 which extends the three-day time period through January 16. This means that the time-of-sale transactions for EV deals from January 1, 2024 to January 16, 2024 can be submitted by January 19, 2024. Please note that the vehicles that qualify for the Commercial Clean Vehicle Credit (45W) do not need to be submitted, which includes leased vehicles. If you still need assistance regarding your online registration of EV reporting, please reach out to Steve Barber or Brett Cubellis from our SD Auto Advisor group. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To discuss, please reach out to Steve Barber or any of the other SD Auto Advisors. To learn more, visit our Automotive Industry Group page. Excerpt: Learn more about the IRS-released Rev. Procedure 2023-38 that extends the three-day time period through January 16. ### Shocking! A Dealer Reporting EV Sales to the IRS is Confusing! The IRS requires those auto dealers who sell electric vehicles (“EV”) to file a seller’s report with the IRS. Did you know that this seller’s report needs to be reported on a timely basis? Are you shocked that the IRS made it confusing for the dealers to know exactly what they are supposed to be doing? It has been interesting over the past several months figuring out what needs to be done with a seller’s report. There is a process for how the 2023 EV sales need to be reported. (But beware, there is a different process for how the 2024 and beyond EV sales need to be reported.) Here are some highlights of the 2023 process for reporting EV sales to the IRS: The due date of the seller’s report had been January 15, 2024, but now it has been extended to January 31, 2024. Dealers can use Form 15400, Clean Vehicle Report, for each EV sold. The preferred format of the summary is Excel, containing all the necessary data which is laid out in Form 15400. The choice of Excel format is interesting. How can the dealer sign this, which is a requirement? The report can be submitted via email to irs.clean.vehicles.seller.reporting@irs.gov. I am interested in this email address, because who wants to send social security numbers of your clients through an email address that you don’t know is secure? The IRS has simplified the process over the past few months, but the delayed guidance has created sense of urgency, and ultimately, an extension to submit the information through January 31, 2024. Even if the Form 15400 is not used, please refer to it to understand the information that is required to be submitted. Please note that the vehicles that qualify for the Commercial Clean Vehicle Credit (45W) do not need to be submitted, which includes leased vehicles. The process for the seller’s report for years 2024 and beyond can be found on Our Thoughts On under a different article written by our team. For more information on these credits, please refer to our EV Tax Credit Guide which explains each credit available. If further assistance is needed, please reach out to Steve Barber or Brett Cubellis from our SD Auto Advisor group. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page. Excerpt: Learn more about the confusing requirements of auto dealers that sell electric vehicles and the highlights of the 2023 process for reporting EVs. ### PA Grantor Trust On December 14, 2023, Pennsylvania Governor Shapiro signed Senate Bill 815 into law. Senate Bill 815, now PA Act 64 of 2023, amended Sections 302 and 305 of the Pennsylvania Tax Code relating to the taxability of income received by resident and nonresident trusts. Pennsylvania Trust Taxability In Pennsylvania, certain income of both resident and nonresident trusts is subject to Pennsylvania’s 3.07% personal income tax. Under the Internal Revenue Code’s rules for grantor trusts, the grantor of a trust may be treated as the owner of all or part of a trust for personal income tax purposes. The federal rules subject the grantor to tax on the trust’s income and allows the grantor to report trust deductions. Pennsylvania is the only state that does not conform to federal grantor trust rules. Under Pennsylvania law, income of trusts is taxable to trust beneficiaries to the extent the income is required to be distributed or is paid or credited to the beneficiaries. Act 64 of 2023 Changes Under Act 64, Section 302 is updated to make trust income taxable to the grantor of the trust or another person treated as the owner of the trust. The trust income is taxable to the grantor or trust owner regardless of whether or not the income is distributed or distributable to the beneficiaries of the trust or accumulated by the trust. Section 305 is updated to remove the beneficiary’s personal income tax liability for trust income to the extent the grantor or trust owner is taxable on the income. While the Act 64 changes bring Pennsylvania grantor trust law closer to federal conformity, the updates to Section 302 and 305 do not apply until tax year 2025. While the changes are effective February 12, 2024, the changes apply to the tax year starting on or after the following January 1st. Unless a further update is passed in subsequent legislation, the prior grantor trust provisions will apply to tax years starting in 2023 and 2024. Schneider Downs State and Local Tax (SALT) professionals are poised to help taxpayers with state personal income taxes, including the impact of the updated Pennsylvania grantor trust taxability laws. Please contact Stephen Worth or Mark Balistrieri with questions about Pennsylvania’s taxability of grantor trusts or other state and local tax matters. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-Profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Uncover the changes to the Pennsylvania Tax Code Senate Bill 815, now Act 64 of 2023 relating to the taxability of income received by resident and nonresident trusts. ### Potential Accounting Changes for Environmental Credits The Financial Accounting Standards Board (FASB) is considering a change in Generally Accepted Accounting Principles (GAAP) that would impact the way companies account for environmental credits. The change could impose material effects on balance sheets – if the changes are approved. FASB has indicated in its tentative decision, that credits which would be subject to the new accounting would include those that represent the prevention, control, reduction or removal of emissions or other pollution. The FASB has stated that it intends to improve the recognition, measurement, presentation and disclosure of environmental credits. Currently, there is no explicit guidance in GAAP, and inconsistencies in practice have caused the FASB to review the accounting. Currently, many companies capitalize the purchase of environmental credits such as carbon credits. This means that they are recorded as assets on the balance sheet and only removed from the balance sheet when the company retires or sells the credit. During the mid-October working session to deliberate an update to accounting standards, FASB reached a tentative decision stating that it plans to require companies to expense many of these types of credits rather than capitalize them. That means when companies purchase credits, they would often be required to record an immediate expense through profit and loss in the period the credits are purchased as opposed to when used. Under the new guidance, the purchase of carbon credits would be more of a period cost. The FASB has tentatively decided that it would provide companies with a consistent framework for how to account for most environmental credits. This would promote consistency and provide comparable results across entities, helping financial statement users evaluate information. The FASB also decided that environmental credit obligations would also be within the scope of the new guidance. These obligations arise when existing or enacted laws require settlement with environmental credits. The FASB plans to continue its outreach to stakeholders and further deliberate the accounting for environmental credits before issuing a proposed update to accounting standards. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. Excerpt: Learn more about the environmental credits impact from the possible change in Generally Accepted Accounting Principles (GAAP) from the Financial Accounting Standards Board (FASB). ### 10 Cybersecurity New Year's Resolutions for 2024 Strengthen your cybersecurity defenses in 2024 with these tips from the Schneider Downs cybersecurity team. Happy New Year! As we start 2024, many of us are making new year’s resolutions to achieve a goal, improve behavior or continue good practices. In the spirit of the tradition, we asked our cybersecurity team to share the top resolutions end users and organizations can make to improve their security posture in the new year. 1. Use a Password Manager Password managers offer a convenient and secure method to access your accounts by allowing you to create, store and use strong passwords in a centralized manner. They also allow you to keep track of a variety of passwords for individual accounts, as you should never use the same password for more than one account in case of a breach. 2. Implement Multi-factor Authentication (MFA) Whenever Possible Strong passwords are a great start, but implementing MFA is even better. MFA is a key defense against phishing attacks, creating an additional step to the account login process to protect your accounts. Just be sure that you made the initial request if you receive an MFA prompt – as threat actors are using MFA fatigue to take advantage of our learned behavior to automatically approve these requests. 3. Uninstall Unused Apps One of the simplest ways to keep your information secure is to uninstall unused apps from your smart devices. Even if apps are legitimate, many of them have default privacy settings that access your data and could potentially put you at risk if the app’s company is part of a breach. Be sure to take advantage of your smart device’s settings that may allow you to set up automatic app cleanup. 4. Commit to a Penetration Test Schedule Our team has done countless penetration tests, which help organizations assess their security postures. Unfortunately, many organizations don’t commit to a regular schedule of testing, which prevents them from fully maturing their security program, since threats and defenses are constantly evolving. 5. Install Patches and Updates Your security is only as up to date as your software, so it’s important to commit to regular patches and updates as needed. The majority of these are done automatically, either triggered by a restart or prompted through push notifications. Just be cautious about web browser update prompts, as fake browser malware attacks have been on the rise in recent months. 6. Create a Home Network Dedicated to Work The rise of remote work continues to put a strain on organizational security simply because personal home networks are often integrated with work networks. If you or anybody in your home uses your home internet for work, creating separate networks for professional and personal use is an important defense mechanism. If you are unsure how to do this, simply reach out to your IT department. 7. Don’t Trust Unsolicited Phone Calls Fraudulent phone calls, known as vishing, are still a popular phishing method of threat actors. If you receive an unsolicited phone call asking for private or financial information, simply hang up. If you think the call is legitimate you should hang up and call back a verified number. While these attacks still happen, the good news is many smartphones have technology dedicated to outing potential scams before your phone rings at all. 8. Stop Blindly Scanning QR Codes One of the odd trends of the pandemic was the resurgence of QR codes as conveniently contactless methods of viewing information such as restaurant menus. Unfortunately, phishing attacks via QR codes (known as quishing) are on the rise, to the tune of 587% between August and September of 2023. QR codes are useful but be cautious and verify the domain associated with a QR code before you scan it. Remember, anybody can make a QR code, especially those with malicious intent. 9. Avoid Public Wi-Fi Whenever Possible This cybersecurity best practice is pretty self-explanatory, but still one of the leading security concerns for individuals and organizations. Even if the Wi-Fi network is legitimate, it doesn’t mean it’s safe – and you don’t know who is on the network with you. If you must use public Wi-Fi, avoid accessing any sites with personal information or credentials, and use a VPN for additional security. 10. Regularly Check if Your Information is Part of a Breach Chances are your information has been part of a breach in recent years. If so, you may have received an email or letter with a vague explanation of the breach and an offer for free credit monitoring, but we recommend being proactive by using verified resources, such as "have i been pwned?", to find out if your information is exposed. If your data is out there, be sure to check your credit report, change passwords and check the breached party’s website for additional resources. Those are our cybersecurity resolutions for the new year, what are yours? If you have any questions about our list or how to achieve your cybersecurity goals for 2024 contact our team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. Excerpt: Strengthen your cybersecurity defenses in 2024 with these ten tips from the Schneider Downs cybersecurity team. ### Digital Products and Services Tax Unclear Mark Balistrieri recently authored an article highlighting considerations for the taxation of digital products and the challenges these products present. Article Summary The taxation of digital products and services is a tangled web due to evolving state definitions and inconsistent legal rulings. While many states tax software and digital purchases, services involving them may or may not be taxable, leaving businesses confused and facing potential tax burden increases. To navigate this complexity, service providers and consumers should consult tax professionals to understand the various rules and make informed decisions about sales and use tax. Read the entire article About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Excerpt: Learn More about the taxation of digital products and services and the evolving state definitions and inconsistent legal rulings. ### Research and Development Tax Credits - Are You Claiming Yours? Manufacturers whose activities consist of the development of new or improved business products or processes may be eligible for federal and/or state research and development credits. Internal Revenue Code Section 41 provides for two primary methods of determining a credit for increased research activities. The credits are calculated based upon the amount of current-year “qualified research expenses” relative to prior years’ qualified research expenses or average gross receipts. Qualified research expenses (QREs) include 1) wages paid to employees performing qualified services, 2) supplies used in qualified research, and 3) 65% of contract services paid or incurred for qualified research. The Federal research credit is equal to 20% of a taxpayer’s QREs for that tax year in excess of a calculated base amount. If the R&D credit generated in the current tax year cannot be fully utilized, the credit can be carried-back one tax year to recover taxes previously paid, or can be carried-forward 20 years to reduce future tax liabilities. An Alternative Simplified Credit was introduced beginning with tax year 2007 that allows a taxpayer to claim a research credit equal to 14% (12% for tax years 2007 and 2008) of the amount by which current year QREs exceed 50% of the average QREs for the three preceding years. The credit is reduced to 6% if there are no QREs in any of the three preceding years. The advantage of this method is the relative simplicity of the calculation. If your company incurred QREs in prior years, and did not claim the R&D credit on your federal tax return, amended returns can be filed for any tax year that is not statutorily closed. Many states also offer a research and development credit against income and/or franchise taxes. The Commonwealth of Pennsylvania provides the opportunity to generate research and development tax credits. The credit is calculated based the current year QREs relative to the average QREs of the four prior years. Unused Pennsylvania R&D tax credits can be carried-forward 15 years. For those taxpayers in the early stages of development, or currently experiencing cash shortages, an application to sell Pennsylvania R&D credits can be made if the credits are not otherwise currently being used. The State of Ohio permits an R&D tax credit against the Commercial Activity Tax (CAT) for tax years beginning after 2008. The credit equals 7% of the amount of QREs in excess of the average QREs for the three preceding years. Any unused credit can be carried forward for up to seven years. Contact the Schneider Downs Manufacturing Group today to discuss your opportunities to claim research and development credits. Schneider Downs provides accounting, tax and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of client. Our offices are located in Pittsburgh and Columbus. This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter. Excerpt: The R&E capitalization requirement under IRC Section 174 has surprised some taxpayers and resulted in a significant increase in their taxable income for 2022. This blog post explains the new requirements and provides tips for minimizing tax liabilities. ### Postcard from the 38th annual AICPA & CIMA Construction and Real Estate Conference The 38th Annual AICPA & CIMA Construction and Real Estate Conference covered a broad spectrum of topics on accounting, tax, legislative and industry-based information. Artificial Intelligence The speaker at the AI session explained the distinction between deep learning and generative AI: deep learning turns data into information, whereas generative AI (ChatGPT) turns knowledge into wisdom. Some key pieces of advice from the session on where AI can be implemented in the construction industry included: Taking a look at processes that create the most mistakes and have the most redundancy Utilizing AI to consume and summarize data Instead of a top-up review, taking a bottom-up review Ultimately, we are moving from what machines can "do for us" to what machines can "be for us." Workforce From the AGC survey, companies stated that it has been challenging to find candidates for 86% of salaried positions and 88% of craft positions. The impact of this demand causes “wage compression” with two types: When the pay rate of an inexperienced hire increases faster than that of an experienced employee. Think of hiring a new person with no experience who will make more than someone who worked for you for several years. When you hire experienced personnel, their salary compared to your team upsets the apple cart. These items are at the forefront of all your hiring decisions. Economy Some key insights from an economic perspective included: Increased cash in circulation coupled with higher interest rates will have a lagging impact on the economy. The CPI index has come back into historical percentages. However, inventories are increasing to historical highs. The US office vacancy rate is 12.5%, but over the next 2 years as leases come up, that number will go up, given that 68% of today's workforce want to work from home. Construction Industry Outlook From a construction perspective, the industry outlook was broken into three segments: First was 3-5 years, where evidence suggested both bulls and bears have compelling arguments. The amount of forecasted construction spending is at an all-time high. However, while the historic increase is indeed positive, adjusting for inflation reveals that it hasn’t gone up by a lot. Construction has a positive forecast, but when you drill down into segments, some are positive, and some are negative. Positive segments are transportation, power and highway/street. The negative ones are multi-family, commercial and lodging. The second was 7-10 years where the new and old economies will be present, and construction will follow. Population increases in urban settings change the dynamics. While the old economies focused on being in the office, banks, sports/recreation and shopping malls, urban living causes a faster-paced lifestyle, characterized by processed foods, boosting big pharma and online purchasing. Work is increasingly computer-based, requiring computer chips, power and data centers. The long-term segment is defined as 10-15 years, with a focus on megatrends and their consequences. Big companies will follow the big dollars. The three consequences are bigger, faster and better. Bigger - megaprojects will consume an increasing share of construction spending. The pipeline of mega projects is projected to increase from 10% in 2020 to over 20% by 2023. Faster - project schedules will continue to compress. Nonresidential projects over $25M have shortened the timeline over that past decade by 12 months. Better - alternative delivery will become normal delivery. Industry stakeholders consistently identify the ability to deliver a project in an expiated manner as a main driver of alternative delivery method utilization. The construction industry will be impacted by technological advancements, remote and flexible work, e-commerce and digitization, climate change and sustainability and political polarization. Can you imagine design in-house with AI? How about no employees but teams for a single job?  Maybe the construction site becomes an assembly site of modular and prefabrication items. How about converting all equipment to electric and monitoring emissions and waste? This has been longer than a typical postcard, but, when it comes to the future of construction, there are a lot of variables to unpack. I would like to hear your perspective on it. Excerpt: Explore a construction accounting professional's takeaways from the 38th Annual AICPA & CIMA Construction and Real Estate Conference. ### Holiday Spending and Budgeting Even though the holiday season is something most of us look forward to, it has a way of sneaking up on us every year. Many of us catch ourselves having no budget or gift plans by the time Thanksgiving comes around, which leads to frenzied Christmas shopping and overspending. To alleviate some of the hectic holiday obligations, we’ve put together some ways to help you get ahead on seasonal spending and budgeting. Start Early and Stick to a Budget The most logical tips that seem to allude most people (including myself) is to start early, formulate a plan and stick to it. Create a list of everyone you want to buy for and what you will ideally spend. Once you have your list, commit a dollar threshold above budget per gift. For example, $20; if the budget was $50, the maximum you can spend is $70. Assign a number to the threshold and don’t go above it for ANY gift. In an ideal world we would know the perfect $25 gift for everyone—but let’s be realistic, if you’re anything like me, you’ll overspend just to check it off the list and get out of the store. By baking some wiggle room into your plan, you can stay on track and better prepare yourself for when the bill comes. Consider a Group Gift Sometimes it’s unavoidable to go above budget, especially in situations where you know the person will get much more use out of a more expensive gift. Ask others you know that plan to buy this person a gift and see if they’d be willing to buy it together. One expensive gift they can use is better than a couple gift cards and some hand lotion, in my opinion. Throw a Party Instead Look at the people you’ve allocated smaller amounts for and consider throwing a party instead. Most material things will depreciate over time, but memories are valued. If you have friends or co-workers you’d like to buy something small for, a party can be a cost-effective way to consolidate the planning and expenses. It doesn’t have to be luxurious, and these people will likely be talking about the party for years to come rather than the bottle of cologne or gift card you bought them. This is also a prime opportunity for a White Elephant gift swap, which keeps costs low. Keep a List of Ideas One thing we know for sure is that the Christmas season will inevitably roll around again—it’s never too early to prepare! My tried-and-true process is to keep a list of all people I generally buy gifts for in my phone and jot down ideas as I spend time with them throughout the year. Even if it’s April and they merely mentioned that they’ve picked up hiking or yoga, write it down—it will remind you of ideas for when you need to buy a gift and it will save you a headache in the future. Think outside the box and don't forget to compare prices! If you are buying electronics, consider buying last year’s model. Most electronics only have minor tweaks between the last one and the new one, and it can save you quite a bit of money. Personalized gifts from Etsy or other platforms are another way to buy great gifts while keeping costs low. It puts a more planned and thought-out touch on your gifts. And finally, make sure to use price comparison apps while you’re in the store or shopping online. The link below lists the best websites such as ShopSavvy and Price.com where you can scan items in store or search online and find which retailer offers the lowest price. Most of these advertise deals and coupons to save some extra money as well. However, maintain some caution while you are hunting for deals online—the holiday season is the most lucrative time of the year for most retailers, so scammers will be looking to take advantage of unassuming shoppers. The Schneider Downs Security practice has put together a list of tips to keep your private financial information safe and has been listed below as well. We hope these best practices will help ease the financial burden of the holiday season for this year and for many years to come. Happy holidays! Related Articles These Price-Comparison Apps Can Help You Save More Buyer Beware: Five Common Holiday Scams of 2022 Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. ### Achieve Financial Freedom with the Help of Basic Financial Ratios Having financial freedom means doing the things you want to do when you want to do them without having to question if you have the available finances. The roadmap to successfully reaching financial freedom begins with creating a sound financial plan, yet a recent study shows that only 30% of U.S. households have a long-term financial plan in place (fortunly.com). Basic financial ratios are the building blocks of creating a successful financial plan. If you want to accomplish financial freedom faster, try using these four ratios: liquidity, savings, debt management, and withdrawal rate. Liquidity – How much cash should you have available? Liquidity Ratio – Cash or Cash Equivalents / Monthly Expenses  Ex. If you have a total of $12,000 in cash and your monthly expenses are $4,000, your Liquidity Ratio would equal 3 months of expense coverage. The Liquidity Ratio ensures that you have enough cash available for your expenses and the ability to navigate through any unforeseen financial circumstances with limited stress. The rule of thumb is to include 3 to 6 months of expenses when calculating this ratio. Typically, if you have multiple sources of income, you can stay closer to 3 months of expense coverage, but if you only have one source of income it would be better to stay closer to 6 months. In order to determine your Liquidity Ratio, start by gathering data on your living expenses and your total cash or cash equivalents (i.e., checking accounts, CDs, savings accounts, and cash on hand). Then, create a budget worksheet based on your bank account activity to determine your monthly expenses. After calculating your ratio, if you have less than three months of expense coverage, you should increase the amount of cash you have. On the flip side, if you have more than six months of expense coverage, you can consider investing that cash into other types of securities (i.e., stocks, fixed income, or other). Savings – Are you saving enough each month? Savings Ratio – Monthly Savings / Monthly Gross Income Ex. If you are saving $1,200 per month and your monthly gross income is $6,000, your Savings Ratio would be 20%. People are often surprised to hear that attaining financial freedom has more to do with how much you save vs. how much you earn. Knowing how much to save is never an easy question to answer, but the financial rule of thumb is the 50/30/20 rule which allocates 50% of your cash flow to your essential needs, 30% to your non-essential spending, and the remaining 20% for saving or paying down debt. Of course, if you can save more than 20%, you will be better positioned to achieve financial freedom sooner rather than later. To learn more about the 50/30/20 rule, please visit Your Guide To The 50 30 20 Budgeting Rule – Forbes Advisor. Are you curious how your savings compare to those in your income and age brackets? Take a look at the below chart to see how much J.P. Morgan recommends you have saved at your current stage of life. Debt Management - How much debt can you have? Debt Servicing Ratio – Total Monthly Debt Repayments / Monthly Net Income Ex. If you are paying a total of $2,100 per month in debt repayments and your monthly net income is $6,000, your Debt Servicing Ratio would be 35%. Debt typically arises for people when purchasing a home or car, through student loan debt, or credit card spending; but how much debt is too much? Debt management is more important than ever. According to Kasasa, almost half of the American population is carrying credit card debt totaling $807 billion with an average interest rate around 16%. When assessing your Debt Management Ratio, your goal should be 35% or less and it is imperative to look at your interest rates; the higher the rate, the more it ends up costing you down the road.  To learn more about high-interest debt, you can visit Your Guide to Handling High Interest Debt | SoFi. Retirement – How much can I spend annually in retirement? Withdrawal Rate – Annual Withdrawal Amount / Total Portfolio Assets Ex. if you have $1,000,000 in portfolio assets and you withdraw $40,000 per year, your withdrawal rate would be 4%. As you draw on your portfolio, you should aim for an annual withdrawal rate of no more than 4%. That is the industry rule of thumb. Withdrawing any more than that can start depleting your portfolio at a quicker rate than what is sustainable. The lower your withdrawal rate, the higher the probability of your long-term financial success. See the below chart from JP Morgan regarding withdrawal rate vs. longevity. In order to calculate your Retirement Withdrawal Rate, you first need to determine your annual withdrawal amount. To do so, you will need to subtract the total of your annual expenses by your annual income (i.e., Pensions, Social Security, etc.). Whatever expenses are left over will equal how much you will need to withdraw from your portfolio assets. Are You on the Right Track? Curious if you are on the right track? Working through the above ratios should give you a better idea. If you are interested in learning more about how to stay on the fast track to financial freedom, contact us at sdwealthmanagement@schneiderdowns.com and we would be happy to setup a consultation with one of our advisors. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Postcard from the 2023 ISACA Pittsburgh Information Security Awareness Day Since our dedicated IT Risk Advisory and Cybersecurity professionals are so heavily involved with ISACA, I jumped at the opportunity to attend the annual ISACA Pittsburgh Information Security Awareness Day to learn more about their world. Though I came to the conference as an infosec newbie, 2023 happened to be a great year to get my feet wet. There are several reasons this is a fascinating time to be paying attention to the world of information security. “Era of Transparency” The day kicked off with a keynote address from Facebook whistleblower Frances Haugen. She talked us through some recent legislation and litigation and explained how they are transforming the expectations of transparency from organizations moving forward. Legislation Both the European Union (EU) and United Kingdom (UK) have recently passed standard-setting legislation. For Haugen, the silver bullet of both the EU’s Digital Services Act and the UK’s Online Safety Act, is that they alter the incentive structure for social media companies. By requiring regular disclosures, both pieces of legislation effectively build transparency and accountability into an organization’s governance structure, which gives companies the freedom to take the short-term loss of, say, a teenager’s social media click, for the more long-term gain of maintaining compliance. Litigation Haugen also cited the recent suits 41 states brought against Meta for knowingly endangering children and teenagers, as well as the recent ouster of Sam Altman from OpenAI, as the beginning of a new “era of transparency.” Expectations of companies are changing and, according to Haugen, we can expect more whistleblowers and regulations going forward as the “black box” mentality becomes less and less acceptable. My main takeaway from her talk was that organizations must proactively develop stronger audit processes and internal controls to prepare for the world Haugen envisions—where “lies are liabilities.” Opportunities for Women Another exciting development in the information security world is the increasing number of women seizing opportunities to get involved. Later in the program, the conference audience heard a panel of women from One in Tech, an ISACA foundation whose mission is to increase awareness of barriers and foster opportunities for underrepresented groups to join the tech world. The panel discussed how mentorship, sponsorship and allyship—from both men and women—were critical to shaping and enabling their impressive careers. They explained how, since more women have entered the field, there are more opportunities for female mentorship. And, in the wake of COVID and as conversations are changing around DEI, there is more opportunity to find flexible and supportive leaders who prioritize keeping their top talent. Threat Actors are Adapting Schneider Downs’ own Stephen Bish gave a talk on the current state of the cyber world and shared some insights into the tactics he’s seeing threat actors gravitate towards in 2023. A takeaway I found particularly surprising is that cyber criminals are responding to the increasing sophistication of cyber defenses by becoming…less sophisticated. Stephen explained that he’s beginning to see threat actors dipping into more manual hacking tactics and relying less on automated approaches that are more likely to be detected and prevented as companies become more aware of cyber risk. In the same vein, Stephen noted that while “switching off” defenses may have been a go-to tactic for the threat actors of the past, this is more often a technique of last resort for today’s cyber criminals, who know that it would likely blow their cover in a more cyber-savvy world. Innovative Approaches to Best Practices As Stephen emphasized in his talk, every organization, of any size and within any industry, is a potential target for cybercrime. To help organizations shore up their defenses therefore, several speakers at the conference focused on some best practices. Training Since an organization’s people or “wetware” (a term I had never heard before) are its greatest vulnerability, several speakers justifiably spent a lot of time talking about training. Dr. Bob Hausman, of ProofPoint, explained how to harness neurological insights into learning, motivation, and retention to structure internal information security programs. Gregory Toulhill, current lecturer at Carnegie Mellon University and former first Federal CISO for the U.S. Government, emphasized the importance of investing in hardening the workforce over hardening tech, and he and described a creative twist on phishing simulations he used in the military. Governance As several lectures stressed, good information security policy starts at the top. Some speakers, like Frances Haugen, highlighted the importance of building transparency into governance. Others, like Gregory Toulhill, underlined the necessity of frequent and regular communications between technical teams and leadership. And Jon Zeolla of Seiso, outlined some innovative strategies for how to write good policy and avoid some of the common policy pitfalls that might lead a company to fail an audit. Artificial Intelligence Best practices surrounding artificial intelligence (AI) were, of course, on everyone’s mind at the conference. The One In Tech panel detailed some safety considerations organizations must keep in mind when deciding to adopt or prohibit the use of AI. And, on the topic of AI safety, Sanjay Chopra, of Cognistx talked about the limitations of LLM’s like Open AI’s Chat GPT and Google’s Bard and explained how truly safe organizational AI tools can be transformative, but subject to a slow implementation. It seems that true deployment of AI tools will march to a beat much slower than the one I’ve come to expect after the rapid explosion of interest following the release of Chat GPT. I feel incredibly fortunate to have attended the ISACA Pittsburgh Information Security Awareness Day. Though I certainly was no help to my team in “InfoSec Jeopardy,” at the end of the conference, I do think I learned quite a bit about the exciting and changing world of information security. I can’t wait to learn more. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### ESMA produces Final Report on SFDR RTS On December 4th, 2023, the European Securities and Markets Authority (ESMA) produced its final regulatory technical standards (RTS) regarding the Sustainable Finance Disclosure Regulation (SFDR). The SFDR is a comprehensive set of standards aimed to increased transparency around green financial products and financial market participants’ activities in the EU. The SFDR was first drafted in 2019 and has a series of deliverables in tranches sinch 2021; its impact typically cascades down from financial services companies to private equity firms, public investee companies, and large private companies. What are the key takeaways for the financial services sector and investee companies? Financial Sector: The draft technical standards focus on a number of key areas, including: the addition and refinement of technical definitions around mandatory indicators to be disclosed, the requirement to provide greater clarity around the achievement of GHG emissions reduction, and enhancements to simplify client reporting. Public & Private Companies: Changes in the technical criteria may lead to questions from your private equity firms, investors, and ratings agencies around the parameters surround ESG calculations of GHG emissions, water usage, hazardous waste, and others. Furthermore, a requirement to disclose what % of data is reported by companies versus what is estimated may prompt additional disclosure requests from those key partners. Lastly, an emphasis on social indicators may require you to gather additional data internally around wages, alignment with key ESG frameworks, and board diversity. What are the key changes in the final draft? Principal Adverse Impact (PAI) changes: Extension of social principal adverse impact (“PAI”) indicators: originally, the SFDR contained 18 mandatory indicators covering both environmental and social impacts. The finalized RTS adds two mandatory PAIs: Exposure to companies active in the cultivation and production of tobacco and Share of employees of investee companies earning less than the adequate wage. Additionally, the non-cooperative tax jurisdiction PAI now has a consolidated revenue threshold of EUR 750mm. Lastly, the verbiage has been amended slightly on the PAI concerning alignment to OECD Guidelines for Multinational Enterprises and UN Guiding Principles in addition to the ‘unadjusted gender pay gap’ definition on that PAI. Changes to technical definitions for environmental PAIs: Carbon footprint & GHG Intensity – change denominators to express as ‘per million EU invested’ (carbon footprint) and per million EU of revenue of investee companies (GHG intensity). Exposure to companies active in the fossil fuel sector – change the definition to align with the EU Taxonomy definition of revenues derived from fossil fuel activities. Energy consumption – change from GwH to MwH to provide more substantive data to the end user. Others – changes to non-renewable sources of energy, emissions to water, hazardous waste and radioactive waste, deforestation, and sovereign GHG intensity. Disclosure of share of estimate: Reporting entities should include, for each PAI, the % of data coming directly from investee companies and the % of data that is estimated. GHG Emissions Reduction: Regulatory standards drafted to align reduction commitments to a maximum of 5-year intervals, as specified in the Paris Agreement Verbiage requirements to present reduction targets in both pre-contractual and perioding reporting disclosures in simplified language; furthermore, a third set of disclosures has been added. Additional information on how the reduction target will be achieved, primarily through/: Financed GHG emissions reduction through portfolio reallocation – divesting from assets with GHG emissions and intensity exceeding determined thresholds. Financed GHG emissions reduction via delivery of GHG reduction at investee company or asset level, achieved through: Investment in assets that are expected to deliver GHG emissions reduction over the duration of the investment. Engagement with investee companies to contribute to the emissions reduction. Allowance for reporting of volumes of carbon credits, alongside relevant certification and environmental integrity/quality of credits. Do No Significant Harm (DNSH): The RTS includes a requirement to disclose PAI thresholds or criteria for how financial products ensure that its sustainable investments comply with the DNSH principle Under the auspices of the European Commission’s June 2023 Q&A around safe harbor provisions for taxonomy-aligned investments, the RTS includes a section confirming that any taxonomy-aligned investments will be considered sustainable. Pre-Contractual and Periodic Reporting Simplification: Introduction of a ‘dashboard’ on the first page of pre-contractual and periodic reporting documents to simplify a product’s Article 8/9 designation, Taxonomy Alignment, PAI consideration, and GHG emissions reduction targets. When does this take effect? The European Commission has until 4 March 2024 to endorse the changes. Thereafter, the changes would take effect 20 days after the final publication in the Official Journal of the European Union. Who’s in scope? Financial market participants currently required to produce entity-level PAI reporting in addition to financial products with an Article 8 (promoting environmental or social characteristics) or Article 9 (sustainable investment objective) designation. What should in-scope entities do right now? Review the PAI calculation technical criteria with their internal teams and external data providers. Substantiate how your products will quantify financed emissions as a baseline to establishing an emissions reduction glidepath. Examine how you’re using PAIs and if you’ve established any thresholds to comply with the DNSH disclosure requirement. Identify if you have a mechanism to track whether a PAI data point from a company is reported or estimated. Review the ‘dashboard’ changes to your design of pre-contractual and periodic reporting disclosures in addition to the new Annexes (VI and VII). About the Author Tony Ielase leads the firm’s Risk Advisory Services (RAS) practice for the Columbus market and has over 25 years of experience providing risk advisory and compliance services to a diversified number of retail, manufacturing, higher education, healthcare, technology, utilities and financial services clients. His areas of expertise include internal audit strategic planning, internal audit co-sourcing, enterprise risk management, compliance assessments, fraud risk assessments, business process improvement and SOX program implementation and optimization, among others. Tony can be reached at tielase@schneiderdowns.com About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement and meet the the SFDR disclosure requirements. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### The Pros and Cons of I-Bonds Although I-Bonds are a good way to generate tax-free yield in today’s economy, they are subject to penalties if surrendered before their maturity date. The question that begs to be answered is this: are these bonds a good investment in the long run? Do their pros outweigh the cons? Read more below to decide for yourself. Pros of I-Bonds Higher Income: Can potentially earn a higher interest rate than what is available in the current market. Capital Preservation: The redemption value of the I-bonds cannot decline. Tax Efficient: Savings bonds are exempt from taxation by any State or political subdivision of a State, except for estate or inheritance taxes. Interest earnings are subject to Federal income tax. Interest earnings may be excluded from Federal income tax when used to finance education. Cons of I-Bonds Variable Rate: The rate on the I-bond is not completely fixed, where part of the interest rate is variable based off of the change in CPI-U. Limited Amount to Purchase: The maximum purchase per calendar year is $10,000. Early Redemption Penalties: If the bond is redeemed before 5 years, you forfeit the interest from the previous 3 months. You cannot redeem the bond prior to the first 12 months being passed. Please don’t hesitate to reach out to one of our Schneider Downs Wealth Management Advisors if you have additional questions. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Marginal Well Credit Back to Zero for 2023 Tax Year Just months after declaring the total phase-out of the 2022 Marginal Well Credit, the IRS has released Notice 2023-58, announcing that the Marginal Well Credit will be zero for the 2023 tax year as well.  For background, the Marginal Well Credit was enacted in 2004 and is a production-based tax credit granted to taxpayers that hold an operating interest in qualified marginal wells. To qualify, wells must be domestic, and their production cannot exceed 25 barrel-of-oil equivalents per day. The credit amount is adjusted each year based on the applicable reference price of natural gas and an inflation factor. Generally, the credit is phased-out if the reference price for the tax year exceeds $2.00 per MCF, adjusted for inflation. These figures typically represent the prices and inflation from the prior tax year. For tax year 2023, the reference price is $5.57; and the inflation factor is 1.4993. Due to the higher natural gas prices during the prior tax year, the credit reduction amount exceeds the tentative credit amount, causing the 2023 credit to be completely limited for the year. More information on the calculation of the credit and limitations can be found in our prior Our Thoughts On articles.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Happier With An Advisor Can working with a financial advisor lead to greater happiness? A recent industry survey strongly suggests that yes, individuals and couples are happier when working with a financial advisor compared to similar consumers who do not engage an advisor by an almost 2-to-1 margin. In its 2021 Consumer Financial Behaviors Study, Herbers & Company asked 1,000 people around the country about their levels of happiness. Respondents had to self-report assets equal to or greater than $250,000.  54% of respondents were male, and 79% of total respondents reported that they were married or living with a significant other. Four Predictors of Happiness Herbers’ study defined happiness as the feeling that reflects how well individuals’ needs are being met, including a person’s emotional, mental, physical, and relational needs. The financial impact on happiness from money was due to a person’s ability to meet their needs and those of their families. Researchers identified four core factors that make people happier, with all four of those factors heightened among the 66% of consumers who work with a financial advisor versus 34% who do not: Fulfillment Intention Impact Gratefulness Based on this study, people who hire a financial advisor were statistically happier than those who did not—by a wide margin. This held true even when controlling for gender, age, income, and asset levels. As Household Assets Grow, Advisor Impact Expands  The happiness of individuals and the positive impact of a financial advisor amplify as assets grow. The Herbers & Company research identified $1.2 million of total household assets as a critical crossover point, where the divergence of consumers’ happiness with and without a financial advisor begins to accelerate as noted in the chart. Beyond the $1.2 million point, the comparable happiness of consumers working with a trusted advisor is even more magnified.  “Why” Increased Happiness with Advisor As a firm that focuses on establishing meaningful lifelong relationships with clients by delivering personalized, multi-disciplined wealth management solutions, we wanted to elaborate on the “Why” to client happiness when working with a trusted financial advisor. From a client point of view, with assets of $1M+, the financial implications of their personal finance decisions become amplified from a dollar amount. The perspective of a trusted advisor who has a complete understanding of their long-term financial goals becomes more important as assets grow. At the $5M+ asset level, client desire for long-term, holistic financial planning advice (investment management, estate, and tax planning) increases significantly in our experience, which is consistent with Herbers’ survey. In our view, the benefits of a financial planning-focused advisor to clients with $1M+ of assets comes into focus in preparing a long-term financial plan together. During the process, the client(s) and advisor discuss and clarify long-term goals such as retirement age and desired spending, retirement picture (i.e. 2nd home), or philanthropic goals, as some common client examples. Working through the financial planning process, a trusted advisor should foster open financial dialogue between couples, that in our experience typically does not naturally occur, if not for an advisor encouraging the conversation. The financial dialogue that naturally occurs in evaluating and establishing financial goals, paired with an execution strategy to achieve one’s long-term financial goals, drives financial clarity. Long-term financial clarity is the ultimate client goal, and with clarity comes financial peace of mind and long-term happiness. To hear more about our experiences with clients and providing them long-term financial clarity, please see the video below for a conversation between Investment Relationship Manager, Alissa Garcia, CEO, Nancy Skeans, and Managing Partner, Derek Eichelberger. If you would like to speak with a Schneider Downs Wealth Management Advisor, please contact us at sdwealthmanagement@schneiderdowns.com. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Tis the Season: Unwrapping the Top Holiday Scams of 2023 What are the top holiday scams in 2023? Along with turkey, football and crazy relatives, Thanksgiving also marks the start of the busiest shopping season of the year. Even with inflation and increased cost of living, Thanksgiving, Black Friday and Cyber Monday tend to bring out the shoppers and this year is no different. Early reports show that online spending was up 5.5% year over year on Thanksgiving day with Americans spending nearly $5.6 billion shopping online, and an additional $9.8 billion on Black Friday. Unfortunately, but not surprisingly, the spike in consumer spending also creates a spike in scams. While the scams rarely change, they often work because consumers innately let their guards down during the busy holiday season. Here are some of the most common scams making the rounds this year and what you can do to protect yourself. The Package Delivery Notification One of the most common holiday scams consumers will encounter is fraudulent delivery notifications. Usually delivered via text, messages of this type impersonate a delivery service provider, such as FedEx, UPS or USPS, and cite a delivery issue  (i.e., bad address) with a malicious link conveniently included to remediate the problem – which is most likely a malware download. How can you avoid falling for this scam? If you are expecting a package, always check the original confirmation email for shipping information (timeframes, tracking numbers, etc.). If you are expecting a package, always check the original confirmation email for shipping information (timeframes, tracking numbers, etc.). If you receive a suspicious delivery message, do not click on any links or respond. Delete or report it. Treat any unsolicited delivery message you get via phone or email the same way. If you think there is a legitimate shipping issue, contact the retailer directly. Be sure to verify you are contacting their real number or email first. The Malicious Imposter Website Another common holiday season scam is malicious imposter websites. These sites masquerade as legitimate online retailers but are built with the intent of stealing financial and personal information. The sites are usually promoted through phishing emails, texts, social media or digital advertising – and usually advertise items at low prices or customized items such as “your animal as a cartoon” art print. Whether the malicious websites are spoofing large retailers like Amazon and Target, or smaller boutique businesses, there are several red flags to watch out for. If a deal is too good to be true, it usually is – even during the holiday sale season when marketing efforts are in full overdrive mode to promote unbelievable deals. Chances are the site offering you a 75” OLED television for $199.99 is malicious. The website has poor design, grammar errors or simply doesn’t look right and is asking for a ton of personal information – there’s no reason any retailers should be asking for your social security number to buy a new Bluetooth speaker. The URL is missing a padlock icon and doesn’t start with “https” – if a site doesn’t have either of these in the URL bar, chances are it is malicious in nature. The website is asking you to pay via bank wire or with gift cards. If the website doesn’t accept credit or debit cards, you should not be purchasing from it. Be wary of social media pages the same way as websites. Many scammers use social media to defraud shoppers with imposter pages or direct them to imposter websites. If you prefer to shop online, only shop from trusted retailers and use credit cards as much as possible, which usually offer inherent fraud protection. And if you come across any advertisements for a potentially malicious site, practice caution and avoid clicking. The Vacation Rental Scam Travel-related scams traditionally increase during the holiday season and this year is no different. With nearly 47% of consumers planning to hit the road this year, scammers will be looking to capitalize on the traffic. With the rise of rental sites like Air BNB and VBRO, many travelers are on the lookout for good rental deals, and many threat actors are advertising fraudulent ones that simply don’t exist. Once a party is interested, they try to persuade them to communicate and place a deposit through unsecured or untraceable methods and disappear. Here are some best practices to avoid falling for this popular scam. Book rentals through established travel websites such as VRBO and Air BNB, and while there are surely some legitimate postings on sites like Craigslist, it’s best just to avoid them altogether. Never send money via wire or payment services like CashApp or Western Union for rentals. Any legitimate renter or agency will take payment via credit card on a secure app or website. If somebody offers a better price if you pay them directly (i.e., send me the deposit via payment app as friends and we can avoid the website fees), report them and move on. The Fraudulent Charity Scam The holiday season is also the season of giving. Unfortunately, the season of giving means the season of stealing for scammers who use fake charities to solicit donations, which reached $1.6 billion in 2021 alone. Below are some of the best practices to ensure you are donating securely and safely to legitimate organizations. Avoid unsolicited donation requests – including phone calls, emails and texts, chances are they are fraudulent. If you’re not sure about a charity, ask for their Tax Identification Number or use the IRS’s online Tax Exempt Organization search to verify charitable organizations. Stick to well-known charities such as the United Way, Salvation Army or Red Cross, or to known local organizations you have previously worked with. Use trusted websites like Charity Navigator and Guidestar.org to verify charities and understand how they allocate donations. Tying it All Together: Identifying and Avoiding Scams During the Holiday Season While there are many other scams out there with different coats of paint, they often share the same red flags, which include: The offer or request is unsolicited from an unknown sender. There is a sense of urgency to click or send funds. You are asked to pay with gift cards, wire transfers or cash transfers. You are asked for sensitive information like your social security number. The offer is simply too good to be true. No matter what scam is used, you can protect yourself online by using simple, yet effective online shopping behaviors, including: Use a credit card whenever possible. Do not answer, click or respond to suspicious communications. Be wary of social media advertisements and pages. Verify you are on the actual retailer's website before purchasing. If you are unsure about a deal, simply call the verified company phone number. Remember, these scams are around all year, but go into overdrive during the holidays. We hope this article helps you and yours enjoy the holiday season securely. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Understanding CA SB 261: The Greenhouse Gases: Climate-Related Financial Risk Act On October 7th, California Governor Gavin Newsome signed the Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261). The climate-focused legislation will impact thousands of companies, both public and private operating in California. This article will breakdown each legislation and answer the key questions organizations are asking themselves as the journey to California’s new climate legislation begins. What is the Greenhouse Gases: Climate-Related Financial Risk Act? The Greenhouse Gases: Climate-Related Financial Risk Act (CA SB 261) requires both public and private companies meeting revenue requirements and operating in the state of California to produce an annual report summarizing both their climate-related financial risk and the steps they will take to reduce and adapt to it. Who Does CA SB 261 Apply To? CA SB 261 affects corporations, limited liability companies, other business entities and specified partnerships with total annual revenues greater than $500 million and operating in California. How Does CA SB 261 Define a Climate-Related Financial Risk? A climate-related financial risk is defined as any material risk to immediate or long-term financial outcomes due to physical and transition risks. What are the CA SB 261 Requirements? Produce a report summarizing the entity’s climate-related financial risks in alignment with the final recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD) from 2017. Organizations must disclose which measures they’re taking to reduce and adapt to the climate-related financial risks that they’ve disclosed. The organizations must submit a statement to the CA Secretary of State affirming that the disclosed report satisfies the requirements of the signed bill. The final report must be made available to the public on the organization’s website. What is the CA SB 261 Framework? CA SB 261 reporting will use the TCFD framework. What is the CA SB 261 Timeline? The TCFD report is due no later than January 1, 2026. Organizations impacted by CA SB 261 need to start preparing for the California climate disclosure immediately. By properly preparing for the disclosures, your organization will have stronger controls over emission data and reporting and avoid the risks and penalties associated with non-compliance. Schneider Downs Resources Fact Sheet - CA SB 253: Climate Corporate Data Accountability Act Fact Sheet - CA SB 261: Greenhouse Gases: Climate-Related Financial Risk Act Related Articles Understanding the Climate Corporate Data Accountability Act Climate Corporate Data Act – What to Know About California SB 253 How Can Schneider Downs Help? Schneider Downs can help organizations identify material climate-related financial risks and create an accompanying report in line with Task Force on Climate-Related Financial Disclosures TCFD recommendations. In addition, our team can help develop a greenhouse gas inventory and calculation process, as well as eventual limited assurance on the calculations. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement and meet the disclosure requirements. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### Understanding CA SB 253: The Climate Corporate Data Accountability Act On October 7th, California Governor Gavin Newsome signed the Climate Corporate Data Accountability Act (CA SB 253). The climate-focused legislation will impact thousands of companies, both public and private operating in California. This article will breakdown each legislation and answer the key questions organizations are asking themselves as the journey to California’s new climate legislation begins. What is the Climate Corporate Data Accountability Act? The Climate Corporate Data Accountability Act (CA SB 253) requires both public and private companies meeting revenue requirements and operating in the state of California to report on Scope 1, 2 and 3 emissions. Who Does CA SB 253 Apply To? CA SB 253 affects corporations, limited liability companies, other business entities and specified partnerships with total annual revenues greater than $1 billion that do business in California. What is the CA SB 253 Assurance Requirement? CA SB 253 requires reporting companies to obtain an annual assurance report conducted by an independent third-party assurance provider. The report must be disclosed in a public place that maximizes access for consumers, investors and other stakeholders in a manner that is easily understandable and accessible, such as a company website. What is the CA SB 253 Framework? CA SB 253 reporting will use the Greenhouse Gas Protocol (GHGP) and associated guidance framework. What is the CA SB 253 Timeline? 2026 Disclosure and limited assurance of scopes 1 and 2 emissions based on 2025 fiscal year. 2027 Disclosure of scope 3 emissions based on 2026 fiscal year. 2030 Companies to obtain reasonable assurance of scopes 1 and 2 emission disclosures and limited assurance over their scope 3 emissions disclosures. Organizations impacted by CA SB 253 need to start preparing for the California climate disclosure immediately. By properly preparing for the disclosures, your organization will have stronger controls over emission data and reporting and avoid the risks and penalties associated with non-compliance. Schneider Downs Resources Fact Sheet - CA SB 253: Climate Corporate Data Accountability Act Fact Sheet - CA SB 261: Greenhouse Gases: Climate-Related Financial Risk Act Related Articles Understanding the Greenhouse Gases: Climate-Related Financial Risk Act Climate Corporate Data Act – What to Know About California SB 253 How Can Schneider Downs Help? Schneider Downs can help organizations identify material climate-related financial risks and create an accompanying report in line with Task Force on Climate-Related Financial Disclosures TCFD recommendations. In addition, our team can help develop a greenhouse gas inventory and calculation process, as well as eventual limited assurance on the calculations. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement and meet disclosure requirements. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### Squish the Quish – Stop and Think Before You Access a QR Code What are quishing attacks and why are they growing in popularity? Back in May, I attended Cyburgh, an annual conference held by the Pittsburgh Technology Council to bring together cybersecurity professionals and enthusiasts across the Greater Pittsburgh region to discuss challenges and opportunities within the cybersecurity industry. I was enraptured by one of the keynote speakers, Summer Craze Fowler, then-Senior VP of Cybersecurity and IT at Motional. As she moved through her slide deck, she really worked to engage the audience with humor and pop culture references to liven up the cybersecurity discussion she was leading us through. She moved to one slide with a QR code, and I was surprised when she said something like, “Don’t worry. This QR code is safe, I promise.” QR codes aren’t safe? I thought to myself as I picked up my iPhone to scan the QR code to access the link. Once COVID-19 restrictions eased in 2021, QR codes were everywhere you went – restaurants, bars, retail stores, the office. They became second nature to me, and I’m assuming to many others too. Even my grandmother knows how to scan a QR code via her iPhone. When something becomes expected as a convenience and established as a norm, it’s natural to let your guard down and assume it’s inherently safe. But QR codes should make us all pause. What’s so bad about QR codes? Quishing is defined as a phishing attack initiated via a QR code. And make no mistake about it, quishing is on the rise. According to research conducted by Check Point, there was a significant increase of 587% in quishing attacks between August and September 2023. QR codes can direct you to a website, add a contact, download an attachment, initiate an email, or another action, which could or could not be malicious. Malicious information or links can easily be encoded in the standard QR code image format. This makes it harder to detect if it’s malicious or not because it will appear as a “normal looking” QR code you’re exposed to every day. What can I do to protect myself and my company? Awareness is key. Knowing that you should be wary of QR codes – at home, work or in public – is the first step. Take the precautionary measure to verify the domain associated with a QR code before you scan it. Also, if you’re using a mobile device to scan a QR code, remember that there are often fewer security measures than on your network-connected corporate devices. Some devices automatically go the URL when you hover over the code, and even if your device prompts you to accept the redirect, the link could be malicious. Be sure to double check the that the URL is valid just as you would on a web browser and avoid scanning any codes you find in the wild. For example, if you are eating at a restaurant with QR code menus, be sure to verify the URL is legitimate before clicking through. Remember, it takes seconds for a threat actor to cover up a genuine QR code with a malicious one. Always alert your IT team if you receive a suspicious email with a QR code. When in doubt, don’t scan! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### ESG in the Construction Industry: Electrification The construction industry plays a critical role in the delivery of key initiatives in the Environmental, Social and Governance (“ESG”) space. After all, companies with ambitions to reduce energy consumption via more efficient spaces or lighting, electrifying their company fleet or installing solar panels need expertise from the construction industry to complete those projects most efficiently. Integration of ESG and sustainability factors across the design, materials sourcing and implementation phases of construction allows for input and partnership across the project. One particular area of opportunity for the construction industry is the prevalence of the electrification theme across sectors. Electrification is seen as a logical step in the advancement of the sustainability industry as it allows for inputs into the energy generation process that are not reliant upon fossil fuels. Many companies and industry bodies, both in the power generation sector and outside it, have made electrification a mainstay in their approach to tackling many ESG topics within the ‘E’ stripe. With the passage of the Inflation Reduction Act (IRA) in 2022, a host of incentives were made available to the public and private sectors related to electrification. These credits and incentives further strengthened the case for initiatives and programs geared towards electrification. This article aims to identify the top electrification opportunities, risks, and next steps for companies in the construction industry. Areas of Opportunity: 1. Electric charging station installation – The Alternative Fuels Data Center1 lists almost 56,000 Level 2 and DC Fast charging stations in the US; this is an increase of almost 6,000 additional charging stations since the end of 2021. It’s not just growth in urban areas either – 92% of the US population now lives within ~6 miles of a charging station. With the continued demand set to increase from a wide range of different applications, construction companies can benefit from this development in multiple ways. First, companies looking to purchase electric construction equipment can be assured that there will be a continued focus on adding additional charging stations in urban, suburban and rural areas. Additionally, companies with the expertise or those looking to develop the expertise to install charging stations will know that the demand for these will be there in the future. 2. Electric vehicle usage in the construction industry – Electric vehicles utilized in the construction industry have two main advantages: one, reduced carbon emissions relative to diesel-based vehicles, and two, reduced noise. Based on your client base or the geographic area that you’re operating in, these may be significant advantages that can compensate for some of the risks that we’ve outlined in the next section. 3. Rising fuel costs and greater electrification subsidies and incentives – While diesel prices have decreased from their peak in June 2022, they are still above their five-year average. This paired with the increased availability of subsidies and incentives (based on jurisdiction) has changed the historical cost-benefit analysis that favored diesel over electric. Risks: 1. Battery capacity within heavy-duty electric vehicles – as it stands today, current battery life for heavy-duty construction applications is limited by the efficiency and size of the battery required. This is a space where continued research and development is ongoing to improve life and efficiency but may not be ready for commercial operation yet. 2. Grid readiness for additional electric applications – utilities and transmissions and distribution companies are taking the lead in preparing for a future more attuned to electrification. However, this process will require significant spending and infrastructure upgrades over the next 5-10 years. Existing infrastructure was not built with the idea of a society reliant on electrification for many applications; load management and capacity planning remain key issues that utility providers need to solve in this space. 3. Increased regulatory and investor scrutiny around ESG claims – any company that is publicly disclosing ambitions, metrics, or targets related to electrification or other ESG data needs to be aware of the potential for regulatory and investor scrutiny of these claims. The SEC has previously mentioned that new rulemaking around greenwashing – or the advertisement of green initiatives without the action to back them up – is not top of mind. However, for companies with a presence in EMEA, there is proposed legislation2 providing specific rules on ESG claims. Furthermore, any publicly disclosed metric can be utilized by the financial community as an input to investment, credit, and lending decisions. As a result, the accuracy and materiality of these disclosures should be fully vetted by internal or external specialists with the appropriate subject matter expertise. Next Steps: 1. Decide where to focus first – with the utility of electric vehicles in construction continuing to evolve, it’s important to identify which parts of your construction business are best suited to embrace electrification first. It may be a choice to start with a lighter-duty piece of equipment or explore options with a diesel-electric hybrid while batteries continue to become more efficient over the next five years. 2. Determine what SME knowledge you have in-house and where you’ll need help – some companies have at least one or perhaps a team of people devoted to their ESG efforts. For other companies, it may make sense to consider whether an outside expert could help with helping to convey the benefit of electrification to your company, understanding the cost-benefit analysis of electrification, or ensuring your data-capturing electrification efforts are well-governed. Schneider Downs offers a full suite of ESG services that can help with these and other ESG opportunities. 3. Create a roadmap to implementation – Once you’ve identified your area of focus and what you’ll need to accomplish it, then a roadmap can be created to understand current capabilities and identify where meaningful action can be taken to close gaps. 1 https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC&country=US 2 https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1692 About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.   ### “Constructing” Your Estate to Meet Your Needs As an owner of a construction company, at some point you will need to determine what the next steps are for your legacy and the business you have built. It is important to take the time to reflect on your goals and how they will integrate with your estate and succession plans. Creating an estate plan is the best way to protect your business interests and beneficiaries. The main documents used to create an efficient estate plan are:(a) Last Will and Testament – a document that expresses your wishes as to how your property is distributed after death.(b) Financial Durable Power of Attorney – document which names someone to manage your financial affairs.(c) Healthcare Power of Attorney- document that names someone to manage your medical decisions and care.(d) Living Will – a document that allows you to predetermine your end-of-life care decisions.(e) Trust Document – a fiduciary arrangement to hold assets for the benefit of a third party. Trusts help to avoid probate, create asset protection and aim to create estate tax savings. Many different types of trusts can be utilized to create the most appropriate estate plan. The first step in estate planning is to compile a list of your assets, (including business investments, real estate, retirement accounts, etc.) debts and insurance plans, to quantify your net worth. It is important to see how your net worth compares to your lifetime exemption amount. This is the amount of property or cash that you can gift either during your life or at death before having to pay the Federal Estate Tax. As of September 2023, this lifetime exemption amount is currently at $12,920,000 per person (if married you can utilize your spouse’s exemption as well for a total of $25,840,000). However, as of January 1, 2026, this amount is set to revert to the exemption amount from 2017, plus inflation (current industry experts estimate the number to be around $7.5 million per person). Any amount left in your estate, depending on the date of death, over these amounts will be subject to a 40% federal estate tax. Accordingly, it is important to begin thinking about how you can transfer your assets to lessen any pending estate tax. There are two major concerns as it relates to estates subject to the Federal estate tax if not planned properly. First, the Federal estate tax is due within nine (9) months after a decedent’s date of death. This can put severe strain on the fiduciaries to even make the payment in a timely fashion. In addition, the ability to generate the cash needed to pay the estate tax can not only be challenging, but it can also cause assets to potentially be liquidated for less than fair value in a distressed sale. It is common that many business owners do not have sufficient liquid assets to pay the estate tax upon death. Instead, the business that perhaps they wished to be carried on by the next generation is forced to be sold hastily to generate the cash needed to pay the tax, wreaking havoc on the decedent’s succession objectives and overall estate value. Some techniques specifically for business owners to avoid the aforementioned issues and utilize the lifetime exemption while it is at its highest level are as follows:(a) Gifting the annual exclusion amount – you are entitled to transfer $17,000 (2023 amount) or $34,000 if married, per person per year without using any of your lifetime exclusion. (b) Gifting highly appreciable assets into a trust or to your children. By getting these assets out of your estate now, any future appreciation will be tax-free upon your passing.(c) LLC Transfers – you can transfer ownership of assets (marketable securities, investment properties, etc.) into a single-member LLC, which can then be gifted to a trust or your children. If done correctly, you can likely take valuation discounts on the interests gifted. (d) Spousal Lifetime Access Trust – “SLATs” – assets are placed in an irrevocable trust for a donor’s spouse, the beneficiary spouse can receive distributions, and the trust is excluded from the donor’s and donee’s gross estate upon either of their passings. (e) Grantor Retained Annuity Trusts – “GRATs” - assets are placed in trust for a set number of years. During this time, the grantor is entitled to a rate of return. When the GRAT term expires, the leftover assets are given to the grantor’s beneficiaries. It’s equally as important to be thinking about how your estate plan coincides with the future of your business. The term succession planning is used to describe an exit strategy from a business so that it can continue to run smoothly or be wrapped up successfully. The four main pillars of succession planning are (1) merger, (2) inter-company or inter-familial transition, (3) sale, and (4) dissolution. A succession plan usually runs congruently with an estate plan.   A merger (two or more businesses consolidating) or a transition (leaving the business to someone you trust) keeps the company running and can be used to produce passive income during your retirement. These work well when looking to continue the viability of the business. If you are looking to truly exit – a sale or dissolution may be more in line with your goals. To review a more detailed analysis of this topic, head to our Exit Plan Options page. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.     ### Frauds of the Rich and the Famous: The Star-studded Saga of Jennifer Shah Jennifer Shah rose to fame through her appearances on the TV reality show "The Real Housewives of Salt Lake City." More recently, however, she made headlines for her role as a real-life fraudster.Alongside her accomplice, Stuart Smith, Shah faced accusations of orchestrating a telemarketing scheme that spanned nearly a decade, from 2012 to March 2021. Their scam, which peddled various "business services" for online ventures, targeted hundreds of victims across the United States, with a substantial number being over the age of 55, a demographic particularly susceptible to such swindles.Behind the scenes, Shah and Smith generated lists of "leads" (a.k.a. potential victims) exclusively for the purpose of defrauding certain individuals. The duo was well aware that these unsuspecting folks would become prime targets for exploitation by others involved in the operation, wherein they would be lured into buying seemingly helpful coaching sessions and other products and services, all in the hope of achieving financial success online. Shah and Smith, in turn, reaped a portion of the proceeds generated from each lead they provided to the telemarketing network.According to court records, victims were led to believe that the paid coaching sessions would empower them to generate more income from their online ventures. The true purpose behind these sessions, however, was to convince the victims that they needed to invest in additional products and services, most of which offered little or no genuine value, in order to achieve success with their online businesses. There was also a well-coordinated effort to obstruct victim refund requests.Shah and Smith took extensive measures to conceal their activities. They registered their business entities under third-party names, used encrypted messaging apps for communication and orchestrated cash withdrawals to evade reporting requirements. Their intricate charade allowed them to perpetuate their scheme for years, all while amassing substantial ill-gotten gains.Facing the Real Consequences of the Law Shah pled guilty to conspiracy to commit wire fraud as part of her involvement in the scheme. During her sentencing hearing, adorned in a Hollywood-worthy camel-colored pantsuit and leopard-print stilettos, she was ordered to pay restitution of over $6.6 million to her victims and forfeit $6.5 million, along with various luxury and counterfeit luxury items. She received a prison sentence of six-and-a-half years, followed by five years of supervised release. After reporting to prison, her release date was moved up by a full year to August 30, 2028.While Shah's story shines as a glamorous example of fraud, it's essential to acknowledge that not all fraudulent activities are cloaked in rhinestones, glitter and leopard-print stilettos. As we observe International Fraud Awareness Week, it’s imperative for individuals and businesses alike to remain vigilant, recognizing that fraudsters can emerge unexpectedly from within their organizations. Shah's narrative serves as a high-profile reminder of this fact, but it is equally important to remember that numerous other less flashy fraud cases occur every day.This article is part of a series exploring some of the most famous fraud cases straight from the headlines, additional articles include: Fraud Week 2023: Frauds of the Rich and the Famous Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival While Fraud Week may only be featured once a year, the professionals in our Consulting group help to rewrite the script for our clients by educating, assisting, and preparing them throughout the year to address their unique fraud concerns.Check out our Schneider Downs Consulting LinkedIn page throughout the week for additional information from the ACFE. If you have any questions or concerns about fraud in your organization, please contact our team. About International Fraud WeekInternational Fraud Awareness Week, or Fraud Week, was established by the ACFE in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.Learn more at www.fraudweek.com.About Schneider Downs Business ConsultingOur experienced team of business advisors leverage their experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Our team of experienced business advisors includes Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs).To learn more, visit our dedicated Business Consulting page.     ### President Biden Signs Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence On Monday, October 30th, President Biden signed an Executive Order (EO) on Artificial Intelligence (AI) in efforts to mitigate risks and lay the framework for the responsible development and use of AI. The EO establishes new standards for AI safety, security and protecting Americans’ privacy. AI developers will need to perform safety tests and share those results with the government, as well as make it obvious when content is made using AI. According to the White House press release, the EO intends to: Require developers of AI systems to share their safety test results, results of all red-team safety tests, with the US Government before companies make them public. Task the National Institute of Standards and Technology (NIST) to set standards for red-team testing which the Department of Homeland Security will use to establish an AI Safety and Security Board. Require agencies that fund life-science projects to establish these NIST standards as a condition in receiving federal funding. Instruct the Department of Energy and Homeland Security to address AI systems’ threats to critical infrastructure, such as chemical, biological, radiological, nuclear, and cybersecurity risks. Task the Department of Commerce will develop guidance for AI content authentication, including watermarking AI-generated content, in an effort to protect Americans from fraud and deception. Develop AI tools to find and fix vulnerabilities in critical software, building on the Biden-Harris Administration’s ongoing AI Cyber Challenge. Develop a National Security Memorandum on AI and Security by the National Security Council and White House Chief of Staff.  The document will ensure the US military and intelligence communities’ use AI safely, ethically, and effectively in their missions. The Dean of Carnegie Mellon University’s Heinz College, Ramayya Krishnan, praised the EO stating that  "The commitments on AI safety, security and reliability are the strongest I have seen globally. I look forward to rule making to follow as well as legislation from Congress aligned with the themes highlighted in this order. It is essential for both our economic and national security.” Ramayya is not alone in supporting the EO. Managing director of the AI Now Institute, Sarah Myers West, also voiced her support and applauded the White House for setting “the tone on the issues that matter most to the public: labor, civil rights, protecting privacy, promoting competition.” Without safeguards, AI can put Americans’ privacy further at risk. President Biden called on Congress to pass bipartisan data privacy legislation providing funding to the National Science Foundation to work on strengthening privacy-preserving research and technologies. As part of the safeguard, Federal agencies will need to evaluate how private data, including information they procure from data brokers, is collected and used commercially to account for AI risks. Biden called for federal agencies to develop guidelines to protect American’s data, stating that he was “determined to do everything in my power to promote and demand responsible innovation.” In addition to President Biden’s EO and call on congress, the administration has already published a draft for an AI Bill of Rights to implement a list of actions which include: Accelerating the hiring of AI professionals as part of a government-wide AI talent surge led by the Office of Personnel Management, U.S. Digital Service, U.S. Digital Corps and Presidential Innovation Fellowship. Advancing the responsible use of AI in healthcare and creating resources to support educators deploying AI-enabled educational tools. Developing principles and best practices to mitigate the harms and maximize the benefits of AI for workers through labor standards, workplace equity, health, safety and data collection. Issuing guidance for agencies’ use of AI to ensure responsible government implementation of AI while improving AI procurement and strengthening AI deployment. Promoting a fair, open and competitive AI ecosystem by providing small developers and entrepreneurs access to technical assistance and resources through a pilot of the National AI Research Resource. Providing clear guidance to address algorithmic discrimination and civil rights violations related to AI. The Biden-Harris administration is not alone in combating the rise of AI. The administration consulted with over 20 countries, including the European Union. Senator Chuck Schumer is leading a push in Congress to introduce the AI legislation, but no formal documentation has been presented yet. The EO is the latest in a series of orders, legislation and memorandums from the Biden Administration’s ongoing AI Cyber challenge, which focuses on strengthening the nation’s cybersecurity. The complete statement on the EO is available at here. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page or contact us. ### Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival Who’s excited for Fyre Festival II? What’s the Fyre Festival you ask? If you missed the original Fyre Festival, here’s what you missed. The original Fyre Festival was billed as an ultra-luxurious musical event that was supposed to take place over two spring weekends in 2017 on the Bahamian island of Exuma. Customers paid thousands of dollars hoping to see 30+ artists and bands, including Blink-182, Lil Yachty and Migos. In the weeks and days leading up to the festival, the caterer withdrew, all of the musical acts cancelled, and plans to erect temporary villas were abandoned. Despite all of this, the decision was made to go on with the musical festival without any musicians. When attendees arrived, the luxury accommodations were leaky tents and the food was bread and cheese. There were many other problems, including no lighting and insufficient toilets! – To get a picture of the magnitude of the issues, I highly recommend the documentaries on Netflix and Hulu about the original Fyre Festival. In June 2017, Billy McFarland, the founder of the original Fyre Festival, was arrested and charged with wire fraud. After his arrest in the Fyre Festival scam, he participated in a fraudulent ticket-selling scheme in which he sold tickets that he didn’t have to the Met Gala and Victoria’s Secret Fashion Show. As part of the case against Mr. McFarland, he admitted to defrauding investors and ticket-holders of approximately $26 million in the original Fyre Festival. He was sentenced to six years in prison. In 2022, Mr. McFarland was released from prison. In 2023, he announced Fyre Festival II. Despite what happened with Fyre Festival I, and despite no proof that Fyre Festival II has a venue, a date, or a musical lineup, the first tier of 100 tickets to Fyre Festival II (with tickets beginning at $499) has already sold out (according to Mr. McFarland). If you bought tickets to Fyre Festival II or if you have questions or concerns regarding fraud in your organization, contact Tom Pratt or Brian Webster. This article is part of a series exploring some of the most famous fraud cases straight from the headlines, additional articles include: Fraud Week 2023: Frauds of the Rich and the Famous Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys Frauds of the Rich and Famous: The Star-studded Saga of Jennifer Shah While Fraud Week may only be featured once a year, the professionals in our Consulting group help to rewrite the script for our clients by educating, assisting, and preparing them throughout the year to address their unique fraud concerns. Check out our Schneider Downs Consulting LinkedIn page throughout the week for additional information from the Association of Certified Fraud Examiners (ACFE). About International Fraud Week International Fraud Awareness Week, or Fraud Week, was established by the ACFE in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education. Learn more at www.fraudweek.com. About Schneider Downs Business Consulting Our experienced team of business advisors leverage their experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Our team of experienced business advisors includes Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs). To learn more, visit our dedicated Business Consulting page. ### Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys “Life is a dream for the wise, a game for the fool, a comedy for the rich, a tragedy for the poor” – Sholom Aleichem When I was younger, life did feel like a dream, and the plethora of movies and TV shows I had at my fingertips encouraged this mindset. I remember being confused, though, wondering how actors were able to come back to play multiple characters in different shows and movies after I watched them survive something seemingly impossible. Of course, that’s the whole point of acting; make it believable. But that skill set hasn’t been too kind to the famous individuals identified below. In this installment of Frauds of the Rich and Famous, we’ll be diving into a couple stories involving celebrities and their fraudulent activities. FTX Bankruptcy and the Federal Prosecution of Sam Bankman-Fried Like numerous others in the past decade or so, celebrities often saw cryptocurrency as a financial opportunity, especially given its increase in value during 2020 and 2021. Following the FTX scandal, however, the Securities and Exchange Commission placed additional scrutiny on cryptocurrency financial markets, resulting in crypto fraud charges against eight celebrities, including Lindsay Lohan, Jake Paul, Soulja Boy and Lil Yachty. The commission filed the complaint based on the celebrities’ involvement with crypto asset companies Tron and BitTorrent. According to sources, the celebrities were expected to advertise across social media and use their respective influence to encourage trading via these crypto asset companies. The SEC became involved when it was determined that the celebrities performed their promotion without disclosing their compensation. To settle the charges, the celebrities agreed to pay over $400,000 in disgorgement, interest and penalties. If you were unlucky enough to invest in crypto during its rise and held for too long, like many people, for you it too became a Hollywood tragedy. Look no further than the FTX bankruptcy and the federal prosecution of Samuel Bankman-Fried. It’s interesting to see how something as simple as advertising on social media can have costly repercussions. While the previous case involved marquee names and cryptocurrency -- which is relatively new – celebrities may also become involved in more traditional types of fraud schemes, as described in our next example. Chrisly Knows Best... About Bank and Wire Fraud I enjoy watching home remodeling shows like “Property Brothers,” “Love It or List It” and “Flip or Flop.” Reality TV star Todd Chrisley built his wealth on real estate and had his own show, “Chrisley Knows Best,” which aired for 10 years on the USA Network. Chrisley’s image of wealth, however, diminished leading up to – and eventually ceased to exist – after a United States Attorney’s Office for the Northern District of Georgia’s press release. According to the release, Chrisley and his wife Julie conspired to and committed bank fraud and wire fraud. After acquiring more than $36 million in loans using fraudulent documentation, then spending the money, Chrisley later filed for bankruptcy in an effort to walk away from over $20 million of these personal loans. Along the way, the couple transferred ownership of corporate bank accounts to a relative to avoid collection of delinquent taxes, an action that resulted in sentences of 12 years for Todd Chrisley and seven years for his wife. Unfortunately, bank fraud, wire fraud and issues with the IRS are not necessarily unique to the Chrisleys, as we seem to hear about other celebrities and non-celebrities alike being involved in these issues every day. Celebrities are not immune to fraud and may take on the unfortunate role of target or willing participant. We hope these incidents of fraud involving the rich and famous increase your awareness. This article is part of a series exploring some of the most famous fraud cases straight from the headlines, additional articles include: Fraud Week 2023: Frauds of the Rich and the Famous Frauds of the Rich and Famous: The Star-studded Saga of Jennifer Shah Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival While Fraud Week may only be featured once a year, the professionals in our Consulting group help to rewrite the script for our clients by educating, assisting, and preparing them throughout the year to address their unique fraud concerns. Check out our Schneider Downs Consulting LinkedIn page throughout the week for additional information from the ACFE. If you have any questions or concerns about fraud in your organization, please contact our team. About International Fraud Week International Fraud Awareness Week, or Fraud Week, was established by the ACFE in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education. Learn more at www.fraudweek.com. About Schneider Downs Business Consulting Our experienced team of business advisors leverage their experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Our team of experienced business advisors includes Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs). To learn more, visit our dedicated Business Consulting page. ### Fraud Week 2023: Frauds of the Rich and the Famous Schneider Downs is proud to once again support the Association of Certified Fraud Examiners (ACFE) as it recognizes International Fraud Awareness Week.Join us as we pull back the curtain on the seedy world of celebrity fraud, where glitz and glamour often overshadow darker truths. We’ll delve into tales that read like a Hollywood drama but, unfortunately for the victims, are more fact than fiction.As we dig into these riveting stories, we'll unravel the layers of deceit and consequences that define the frauds of the rich and famous, and that are, unfortunately, also present in frauds involving “regular” businesses and people.We have a long and established role in the fraud investigation and awareness field: we have performed numerous investigations over the years, and we sponsor  the annual Fraud and Corruption Awareness Seminar each year. Our Consulting group includes several Certified Fraud Examiners (CFE) and board members of the Greater Pittsburgh chapter of the ACFE.In recognition of Fraud Week, a few of the CFEs in our group have written Our Thoughts On articles highlighting some of the more high profile fraud cases in recent history. Please see the following links for the articles:   Frauds of the Rich and Famous: The FTX Collapse and the Chrisleys Frauds of the Rich and Famous: Billy McFarland and The Fyre Festival Frauds of the Rich and Famous: The Star-studded Saga of Jennifer Shah While Fraud Week may only be featured once a year, the professionals in our Consulting group help to rewrite the script for our clients by educating, assisting, and preparing them throughout the year to address their unique fraud concerns.Check out our Schneider Downs Consulting LinkedIn page throughout the week for additional information from the ACFE. If you have any questions or concerns about fraud in your organization, please contact our team. About International Fraud WeekInternational Fraud Awareness Week, or Fraud Week, was established by the ACFE in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.Learn more at www.fraudweek.com.About Schneider Downs Business ConsultingOur experienced team of business advisors leverage their experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Our team of experienced business advisors includes Certified Fraud Examiners (CFEs), Certified in Financial Forensics (CFFs) and Certified Mergers and Acquisition Advisors (CM&AAs).To learn more, visit our dedicated Business Consulting page.     ### Deal Me In: Close and Settle-up As a transaction advisor, one of the most difficult concepts to explain to an owner/seller is the close and settle-up considerations of a purchase agreement. Close and Settle-up In addition to the peg amount and definition of Transaction Working Capital, the purchase agreement will contain a mechanism to assess the impact of working capital at close and the ultimate settle-up of the working capital balance. Typically, to facilitate the close, a good faith estimate of Transaction Working Capital as of the close date is calculated by the seller, and the difference between the peg and estimate is treated as an adjustment of the purchase price. If the estimated Transaction Working Capital exceeds the peg, the excess is treated as additional purchase price. Conversely, if the estimated Transaction Working Capital is less than the peg, the deficit is treated as a reduction in purchase price. Since the amount of Transaction Working Capital at the close is based on an estimate, it is standard practice for the purchase agreement to include a mechanism for the true-up of the balance once the amount of Transaction Working Capital can be definitively calculated. Some 60 or 90 days post-close, the buyer will prepare and provide the seller with a calculation of the actual Transaction Working Capital as of the close date. The seller will have an opportunity to review the calculation and assuming it is in agreement, the delta between the amount of estimated Transaction Working Capital as of the close date and the actual Transaction Working Capital is paid to either the buyer or seller (paid to the seller if actual is greater than the estimate and paid to the buyer if actual is less than the estimate).  Frequently, an escrow will be carved out of the purchase price to protect the buyer if the actual Transaction Working Capital turns out to be less than the amount estimated at closing. As an alternative to, or in order to, limit the amount of escrow, a buyer and seller may negotiate a working capital collar. A working capital collar establishes a floor and ceiling amount. The floor represents the minimum amount that the seller is to deliver at close, and the ceiling is the maximum amount. This can be useful to facilitate the settle-up process. If the actual amount of Transaction Working Capital falls within the collar, no amount is due to the buyer or seller, and the escrow is released. The Benefits of Working Capital Management Effective working capital management can result in tangible benefits at the time of the sale. By promoting working capital management and improving the cash conversion cycle, the working capital peg can be minimized (and cash maximized), while also creating efficiencies within the business. Typical strategies include improving collections, payables and inventory management. Since trending in establishing the peg is a key consideration, effective working capital management should be initiated well in advance of the sale of the business. This exercise will also create additional value in the business that can be realized upon the sale. This article is part of a series exploring the importance of working capital in a sale transaction. Additional articles include: Deal Me In: Working Capital 101 Deal Me In: Calculation and Negotiation of the Peg For the complete series, download the Deal Me In: The Importance of Working Capital Management in a Transaction whitepaper. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Take 10 With Tom - Our New M&A and Transaction Advisory Video Series One of the most challenging and complex decisions as a business owner is not just understanding “what’s next” for your business, but how you get there. Whether it’s a sale, merger, acquisition, succession or simply closing down, business owners face a gauntlet of financial, tax, business and personal considerations to ensure their best interests are properly represented and realized at every stage of a transaction. In response to the growing interest in this topic from our clients, Schneider Downs is introducing our new video series “Take 10 with Tom”, featuring M&A and Transaction Advisory Shareholder Tom Springer. In this new series, Tom sits down with Schneider Downs practice leaders to discuss the key business, financial, tax and personal considerations business owners need to know on both the buy-side and sell-side of a transaction. The first video features Peter Lieberman, CEO of Schneider Downs Corporate Finance, who shares the common tripwires to successful transactions and how to mitigate these risks. Common Tripwires to a Successful Transaction Additional videos in this series are available at the links below and feature topics that include middle-market compensation strategies, purchase price adjustments, key tax considerations and the importance of engaging early with wealth management. Compensation and Incentive Strategies for Middle-Market Companies  Retirement Solutions Senior Manager Shad Fagerland, JD discusses the the compensation and incentive strategies middle-market companies are using to attract and retain key talent in today's market. Understanding Purchase Price Adjustments M&A and Transaction Advisory Director Stu Lawson examines the importance and impact of purchase price adjustments in the transaction journey. The Importance of Wealth Management in the Transaction Journey Derek J. Eichelberger, CEO of Schneider Downs Wealth Management, discusses on the importance of engaging with wealth management professionals early in the transaction journey. Key Tax Considerations and Best Practices for Transactions Tax Advisory Shareholder Justin C. Steele, ESQ discusses the key tax considerations and best practices in the transaction journey. Each video can be viewed in its entirety or by the key discussion points linked in the video descriptions. We encourage you to share these with your network and if you have any questions or suggestions for future topics, please let us know at contactsd@schneiderdowns.com. How Can Schneider Downs Help? The Schneider Downs M&A and Transaction Advisory Team provides clients with strategic, operational and financial guidance to create value, prepare for future growth, increase operational performance and achieve maximum value in a transaction. About Schneider Downs M&A and Transaction Advisory Services The Schneider Downs Transaction Advisory Services and Corporate Finance Teams provide the strategy, guidance and services organizations need to create value through all stages of a transaction, including due diligence and quality of earnings, mergers and acquisitions, exit and succession planning, capital raising and corporate finance. Visit our dedicated M&A and Transaction Advisory Services page or contact the team directly at contactsd@schneiderdowns.com. ### Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration The U.S. Department of the Treasury has issued long-awaited guidance on how customers can elect to transfer New Clean Vehicle Credits and/or Previously Owned Clean Vehicle Credits to auto dealers at the time of purchase.This election is available to buyers of eligible clean vehicles purchased on or after January 1, 2024. The purpose of the election is to provide a taxpayer/buyer with the financial benefit of an allowable clean vehicle credit at the time of purchase (via purchase price reduction) rather than waiting until they file their income tax return for that year. While the buyer still has the option to wait until filing to claim the credit, we don’t expect many will choose that option once advance payments are permitted. What Auto Dealers Need to Do Prior to January 1, 2024Register your dealership using the new IRS Energy Credits Online tool. All dealers MUST complete the Time of Sale Registration on this portal in order to sell clean vehicles eligible for the New Clean Vehicle Credits and/or Previously Owned Clean Vehicle Credits on or after January 1, 2024. Seller reports will be required to be submitted electronically through this portal at the time of sale, effective January 1, 2024.Dealers are not required to but can also register for the Advance Payment Program on the same IRS Credits Online tool after the Time of Sale Registration is complete. This second registration will allow dealers to offer the credits to customers at the time of purchase and be reimbursed by the IRS.Once fully registered, dealers will be able to offer the advance payment of the clean vehicle credits to customers and receive reimbursement from the IRS beginning January 1, 2024. When selling an eligible vehicle, the IRS Credits Online tool will provide real-time confirmation as to whether the advance payment request was accepted or rejected so a dealer will know before the sale is complete. The IRS will promptly issue advance payment reimbursements to dealers via direct deposit within 48 to 72 hours of a successfully submitted seller report and advance payment request.As these rules were being considered over the last year, many dealers were concerned that they would need to obtain and verify taxpayer tax return data as part of the program. The good news is that it is not necessary to do so in this process. The dealer will simply be required to disclose to the buyer what modified adjusted gross income (AGI) limitations are applicable to the credit they are seeking.Adjusted Gross Income (AGI) LimitationsNew Clean Vehicle Credit (30D): MFJ - $300k; HoH - $225k; Single/MJS - $150kPreviously Owned Clean Vehicles Credit (25E): MFJ - $150k; HoH - $112.5k; Single/MFS - $75kThe buyer must then attest that his or her prior-year modified AGI did not, or their current-year modified AGI will not, exceed the modified AGI thresholds. If it does, the buyer will be required to pay the credit back to the IRS when filing their income tax return for the year. There are various other dealer disclosures and buyer attestations required to be captured on the seller report/time of sale report, but the modified AGI limit attestation is one that’s new to the credit transfer program in the most recent guidance.You may have noticed that the Commercial Clean Vehicle Credit, also enacted within the Inflation Reduction Act, was not referenced above. That was not a mistake. The credit transfer/advance payment option is not available for the Commercial Clean Vehicle Credit, nor is a seller report required to be completed. Taxpayers purchasing a vehicle eligible for the Commercial Clean Vehicle Credit must wait until the filing of their income tax returns to claim and realize the benefit of the credit. The Commercial Clean Vehicle Credit is only available to taxpayers purchasing an eligible clean vehicle that’s subject to depreciation in the taxpayer’s trade or business.As a reminder, Schneider Downs has developed an EV Tax Credit Guide to help dealers navigate these complex credits. For more information, or if you need any assistance registering for the IRS Energy Credits Online tool, please reach out to Brett Cubellis, Steve Barber or any of our SD Auto Advisors. About Schneider Downs Industry GroupsSchneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique. For more information on additional industries we serve please visit www.schneiderdowns.com/industries or contact us at contactsd@schneiderdowns.com.   ### New Research and Development Capitalization Requirement Shuffles System For tax years beginning before January 1, 2022, taxpayers could deduct research and experimental (R&E) costs in the year they were paid or incurred. For years beginning after December 31, 2021, however, Internal Revenue Code (IRC) Section 174 requires those taxpayers to capitalize “specified R&E expenditures” (including any amount incurred in connection with the development of any software) and amortize the costs over the five-year period beginning with the midpoint of the tax year in which the expenditures are paid or incurred, essentially allowing the taxpayer to deduct 10% of the R&E expenses in Year 1.A 15-year period (instead of the five-year) applies in the case of any specified R&E expenditures attributable to foreign research (IRC Section 174(a)(2)(B).As an example, a calendar-year taxpayer typically pays $1,500,000 of specified R&E expenses in a tax year beginning after December 31, 2021. IRC Section 174 now requires that taxpayer to amortize the amount paid ($1,500,000) over 60 months at $25,000 per month in Year 1. The amortization period begins with the midpoint of the tax year in which the expenses are paid or incurred (July), so the taxpayer's deduction under for the first year would be $150,000.This new R&E capitalization requirement has surprised some taxpayers and resulted in a significant increase in their taxable income for 2022. In the example above, the taxpayer would have been allowed to deduct the entire $1,500,000 of R&E expenses in a tax year that begins before 2022, but for any tax year beginning after January 1, 2022, the taxpayer’s taxable income is $1,350,000 higher after capitalizing $1,500,000 of R&E expenses and subtracting $150,000 of amortization expense. Costs Includible for Section 174 TreatmentA good starting point for determining which costs are required to be capitalized under IRC Section 174 is the “qualified research expenditures” that were used to calculate the R&E credit under IRC Section 41 as a conforming amendment to Code Sec. 41(d)(1)(A), which clarifies that after 2021, qualified research relates to R&E expenditures that are amortizable under IRC Section 174. Costs required to be capitalized under IRC Section 174 are even more broad. The category “specified research or experimental expenditures” used in IRC Section 174 generally includes all costs incurred in the taxpayer’s trade or business related to the development or improvement of a product that would eliminate uncertainty concerning the development or improvement of a product. This includes both direct and indirect costs of carrying out research or experimentation.An example in the existing regulations – which have yet to be updated to reflect provisions of the current law – includes the following indirect and overhead costs as IRC Section 174 costs to the extent allocable to the research: Salaries Utilities (heat, light, power) Drawings and models Laboratory materials and other supplies related to research  Depreciation of the building attributable to the project  Other costs also required to be capitalized under IRC Section 174 include: 100% of qualified contract research expenses, even though only 65% of these costs are permitted when calculating the R&E credit under IRC Section 41 Other indirect costs that may need to be capitalized under Section 174 include: Payroll taxes Employee benefits Indirect labor Rent Maintenance Insurance The change from the ability to fully deduct R&E expenses to being required to capitalize is a change in method of accounting for tax purposes.The capitalization requirement under IRC Section 174 will likely result in businesses allocating more of their operating cash to fund taxes for years beginning after 2021. It will be critical for taxpayers to consult with their advisors to comply with the requirements of IRC Section 174 and to implement other strategies to minimize their tax liabilities.About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. Learn more at our dedicated tax landing page. ### Contractors May Benefit From SALT Cap Workaround Contractors organized as a pass-through entity (PTE) may be eligible for a sizeable federal income tax benefit on their personal tax returns stemming from a newly created state and local tax (SALT) deduction. In recent years, a considerable number of states – including Ohio, West Virginia, New York and Maryland – have enacted legislation allowing for such a deduction, which benefits individuals who pay state income taxes in those jurisdictions. With proper planning and tax benefit modeling, businesses can take advantage of the federal tax savings associated with this opportunity.Background of SALT CapA PTE is organized as a partnership, an S corporation or an LLC taxed as either a partnership or an S corporation and is owned – directly or indirectly – by at least one individual, estate or trust. Income is generally passed through to the individual and not taxed at the entity level. The Tax Cuts and Jobs Act of 2017 (TCJA) created an annual limit of $10,000 on the amount of state and local income tax payments that individuals could deduct for federal income tax purposes (known as the “SALT cap”). Prior to the TCJA, there was no annual limit. In response, 36 states have since created an election to impose state PTE tax at the entity level, as opposed to flowing income through to be taxed on an individual’s federal return. Because there’s no SALT cap on the amount of state income taxes an entity can deduct, the electing entity’s federal income tax is reduced by the full amount of state and local income taxes paid. The benefit of the state election is passed along to the individual, either by exclusion of income from the individual’s federal income tax return or through a tax credit equivalent to the tax paid by the entity. As a result, the individual receives the federal benefit for state taxes paid as if there was no SALT cap in place.Requirements vary, depending on the state, and the business structure and location of owners may impact whether the election is beneficial. The level of income generated by each business needs to be considered as well, since some states utilize inconsistent tax rates at the entity and individual levels.ConclusionContractors operating in states where the PTE tax deduction is available may benefit from the election, but a number of factors must be considered, including those mentioned above and a host of other technical considerations. Therefore, careful consideration is required when reviewing whether to make the election, to avoid unintended consequences. About Schneider Downs SALT PracticeThe Schneider Downs SALT practice is equipped to help you evaluate the benefits of PTE elections and to assist you in the mechanics of making the election. Please direct your inquiry to Stephen Worth, State & Local Tax Practice Leader, at sworth@schneiderdowns.com.  ### What are the OCC’s Key Areas of Focus for Fiscal Year 2024? The Office of the Comptroller of the Currency (OCC) released their "Fiscal Year 2024 Bank Supervision Operating Plan" on September 28, 2023. The plan defines their priorities and objectives for the year ahead and is a guide to the OCC’s planning and resource allocations. The plan is utilized by managers and staff to develop and implement risk-focused supervisory strategies as well as individual operating unit plans. The following areas were determined as a focus for the upcoming year based on their risks: Asset and liability management Credit Allowance for credit losses (ACL) Cybersecurity Operations Distributed ledger technology (DLT) related activities Change management Payments Bank Secrecy Act (BSA)/Anit-money laundering (AML)/Countering the financing of terrorism (CFT) and Office of Foreign Assets Control (OFAC) Consumer Compliance Community Reinvestment Act (CRA) Fair Lending Climate-related financial risks The OCC is taking various ongoing risks into account, including high inflation, rising interest rates, the possibility of a continuing recession, and geopolitical events that may have adverse financial, operational and compliance implications on financial institutions. Furthermore, in light of the bank failures in 2023, there has been a spotlight on liquidity, a major aspect in asset and liability management. To mitigate these risks, management should review these potential risks and how they may apply to banking operations and services, particularly in the areas listed above. This process may include a deeper dive into due diligence and risk assessments of the financial institution to ensure that any emerging risks are recognized, can be mitigated and control functions are in place. A few items to consider during this review are policies, procedures, limits, liquidity stress tests, scenario analysis capabilities, data and metrics, and governance/oversight. For additional details regarding the OCC’s areas of focus, please review the OCC’s Fiscal Year 2024 Bank Supervision Operating Plan. Additionally, the OCC provides periodic updates in their "Semiannual Risk Perspective" regarding supervisory priorities, emerging risks, and horizontal risk assessments. Analyzing and preparing for potential risks is crucial in the ever-changing financial services industry. Being able to mitigate potential risks that arise is key to protecting your institution. How Can Schneider Downs Help? The Schneider Downs Risk Advisory Services team can aid with reviewing areas of focus that may be of high risk as well as assist with the mitigation of risks in regards to compliance, operational, or financial challenges. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com ### Deal Me In: Calculation and Negotiation of the Peg As a transaction advisor, one of the most difficult concepts to explain to an own/seller is the calculation and negotiation of the working capital target or peg. Mostly, this is due to the inherent complexities that arise and that determining a peg is often more of an art than a science. This article will explore the critical act of calculating and negotiating the peg in the transaction process. Calculation and Negotiation of the Peg The starting point for the calculation of the peg is the accounting-based working capital calculation as adjusted for specific transaction-related impacts, such as the elimination of cash, current portion of funded debt, owner payables, etc. Typically, it is important to review the calculation on a month-over-month trailing 12-month basis, starting with the most recent month-end close and looking backward for a period of 12-18 months. From a seller’s perspective, anomalies should be identified, eliminated or normalized, inclusive of one-time transactions, unusual terms or conditions related to receivables/payables that will not be applicable to the buyer post-sale, etc. Also, it is crucial to examine the uniform application of the seller’s accounting principles over this period because changes can potentially impact the working capital calculation. A rolling 12-month average is then calculated so that trends can be identified. Peaks or valleys may indicate that additional normalization is warranted or that the results are from normal seasonal flow, industry trends or business growth. Regardless, further analysis may be warranted. Historical trends, as adjusted for the above, will create a basis for the establishment of the peg. Once the peg is established, the parties will include the definition of Transaction Working Capital and the peg amount in the definitive purchase agreement. A careful review of these provisions is warranted to ensure that the document adequately reflects the understanding between the parties. The clearer and more detailed the definition of Transaction Working Capital is and the items included or excluded in the calculation, the less likely a dispute or litigation will arise post-transaction. From a deal perspective, it is advantageous for the seller to take the lead in establishing and negotiating the peg. Buyers will typically engage a firm to perform a Quality of Earnings analysis that will include an analysis of working capital. As is the case with many buy-side advisors, they will be highly incentivized to demonstrate value by identifying and driving a higher peg. Compromise will frequently be required as the two sides work together to reach an agreement on the peg amount. After the peg is determined, changes in Transaction Working Capital relative to the peg frequently result in a timing difference versus a permanent impact on purchase price. For instance, an increase in sales volume may create higher than anticipated accounts receivable. This could result in working capital at close exceeding the peg and an increase to the amount paid at closing because the seller is delivering working capital in excess of the peg amount. While the buyer may be impacted at close, as the receivables are paid and cash is received post-closing, the buyer is placed in a cash-neutral position relative to the additional amount paid. The Benefits of Working Capital Management Effective working capital management can result in tangible benefits at the time of the sale. By promoting working capital management and improving the cash conversion cycle, the working capital peg can be minimized (and cash maximized), while also creating efficiencies within the business. Typical strategies include improving collections, payables and inventory management. Since trending in establishing the peg is a key consideration, effective working capital management should be initiated well in advance of the sale of the business. This exercise will also create additional value in the business that can be realized upon the sale. This article is part of a series exploring the importance of working capital in a sale transaction. Additional articles include: Deal Me In: Working Capital 101 Deal Me In: Close and Settle-up For the complete series, download the Deal Me In: The Importance of Working Capital Management in a Transaction whitepaper. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### 2024 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2024 Cost-of-Living Adjustments (COLA) in Notice 2023-75 on November 1, 2023. The COLA increases will become effective on January 1, 2024, and impact many aspects and types of retirement plans as well as Individual Retirement Accounts (IRAs). 2024 COLA Retirement Plan Highlights The elective deferral limits for 401(k), 403(b) and most 457 plans increased to $23,000 for 2024 compared to $22,500 for 2023. The catch-up contribution limit for 401(k), 403(b) and most 457 plan participants who are age 50 or older remains $7,500 for 2024. Therefore, plan participants who are 50 and older can contribute up to $30,500 starting in 2024. The annual contribution limit for 401(k) plans and 403(b) plans, which includes both employee deferrals and employer contributions (e.g., match and/or profit-sharing contributions), increased to $69,000 for 2024 compared to $66,000 for 2023. Note that catch-up contributions are not included in the annual contribution limit of $69,000, so a participant who is age 50 or older could have their 401(k) or 403(b) plan funded with up to $76,500 in 2024, assuming the plan is designed to accomplish as much and otherwise passed IRS required annual nondiscrimination tests. 2024 COLA  IRA Highlights The limit for annual contributions to an IRA increased to $7,000 for 2024 compared to $6,500 in 2023, but the additional catch-up contribution limit for individual aged 50 and older remains unchanged at $1,000. Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2024: For single taxpayers covered by a workplace retirement plan, the phase-out range is $77,000 to $87,000, up from $73,000 to $83,000 in 2023. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $123,000 to $143,000, up from $116,000 to $133,000 in 2023. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $230,000 and $240,000, up from $218,000 and $228,000 in 2023. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $146,000 and $161,000 for singles and heads of household, up from between $138,000 and $153,000. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000 and $228,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000. The income limit for the Saver's Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $76,500 for married couples filing jointly, up from $73,000; $57,375 for heads of household, up from $54,750; and $38,250 for singles and married individuals filing separately, up from $36,500. The amount individuals can contribute to their SIMPLE retirement accounts is increased to $16,000, up from $15,500. Additional changes made under SECURE 2.0 are as follows: The limitation on premiums paid with respect to a qualifying longevity annuity contract to $200,000. For 2024, this limitation remains $200,000. Added an adjustment to the deductible limit on charitable distributions. For 2024, this limitation is increased to $105,000, up from $100,000. Added a deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2024, this limitation is increased to $53,000, up from $50,000. For a list of these and other retirement-related cost-of-living adjustments for 2024, please click HERE, or visit www.sdretirementsolutions.com. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SEC Charges SolarWinds and CISO Timothy Brown For Misleading Investors The U.S. Securities and Exchange Commission (SEC) has charged SolarWinds and CISO Timothy Brown with allegedly misleading investors on SolarWinds’ cybersecurity practices and controls.The SolarWinds hack captured headlines in 2020 and stands as one of the largest cybersecurity breaches in history. The massive breach led to a global supply chain incident that impacted more than 30,000 organizations, including the federal departments of Homeland Security, Justice, Energy, Treasury and Commerce, and global companies such as Microsoft and Cisco.The U.S. government officially named the Russian Foreign Intelligence Service as the perpetrator but also hinted that charges would be levied against SolarWinds executives for their role in the breach. This past Monday, the SEC made the speculation official, formally charging SolarWinds and Timothy Brown for: Violating the antifraud provisions of the Securities Act of 1933 and of the Securities Exchange Act of 1934 (Brown and SolarWinds). Violating reporting and internal controls provisions of the Exchange Act (SolarWinds). Aiding and abetting the company’s violations (Brown). The SEC believes that SolarWinds knew about the specific vulnerabilities and poor cyber controls but chose to ignore them between their initial public offering in October 2018 and the December 2020 announcement of the hack.The complaint alleges that SolarWinds’ public statements about their cybersecurity practices and risks were at odds with its internal assessments, including an internal report from a company engineer in 2018 citing vulnerability concerns, and that their SUNBURST disclosure report itself was incomplete. The SEC also believes that Brown knowingly misled investors by failing to publicly disclose alleged cybersecurity failures prior to the breach, including false claims that “SolarWinds had a strong password policy and strong access controls despite maintaining weak controls for years that granted employees administrative access”.Perhaps the most damaging allegation is that Brown acknowledged the backends of SolarWinds’ Orion software were not resilient and knew about previous attacks on it, which was the exact software the malicious code was deployed into that caused the historic 2020 breach. The complaint seeks “permanent injunctive relief, disgorgement with prejudgment interest, civil penalties, and an officer and director bar against Brown". This case is unique due to for several reasons, including that it is the first time that the SEC has: Charged an individual in a cyber case. Alleged an organization intended to deceive investors. Alleged a company knowingly had internal control failures for safeguarding themselves. “We allege that, for years, SolarWinds and Brown ignored repeated red flags about SolarWinds’ cyber risks, which were well known throughout the company,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement. “Rather than address these vulnerabilities, SolarWinds and Brown engaged in a campaign to paint a false picture of the company’s cyber controls environment, thereby depriving investors of accurate material information.”SolarWinds released a statement disputing the SEC charges, calling them unfounded. The statement also confirmed they will be fighting the charges in court and reinforced their full support of Brown, who is still their acting CISO at the time of this article.  Should Security Executives Be Concerned About the SEC Charging SolarWinds?In theory, security executives should not be concerned about being blamed for incidents, provided that, to the best of their ability, they are being truthful to the board, the public when applicable, regulatory bodies and investors.Most importantly, they must adhere to federal disclosure laws and reporting requirements – which the SEC believes were intentionally not followed in this case and is the basis for the complaint.The last time a security professional was charged in connection with a cybersecurity incident was after Uber’s 2016 data breach. Joe Sullivan, Uber’s CSO at the time, was charged with obstructing justice for “taking deliberate steps to conceal, deflect, and mislead the Federal Trade Commission about the breach.”It is important to remember that these charges weren’t brought because the attack happened but because the SolarWinds and Brown allegedly knew about vulnerabilities and incidents and knowingly chose to mislead investors and give incomplete disclosures.So, while many headlines may push the idea that CISOS and CSOs are being scapegoated for cyber-attacks, this case demonstrates that their legal liability is actually based on alleged personal actions, investor communcations and public statements, as well as following federal disclosure laws – which are only getting more stringent in the public sector.On the other hand, given the recent scrutiny from the SEC and FTC, there is a case to be made that security executives should be concerned about both how they’re presenting their company’s cybersecurity practices internally and publicly and, more importantly, how regulatory bodies view the burden of responsibility in these cases. If you consider how often public policies don’t align with the internal reality of an organization, you can see the concern some have over this case.If the CISO or CSO makes a good faith effort to establish, document and enforce cybersecurity controls and practices, but they aren’t enforced, is it fair that only the CISO or CSO is held accountable? Or should the blame be placed on the organization?  The more complex question may perhaps be: how can organizations better support their security executives in the increasingly complicated landscape of regulatory oversight, disclosure requirements, investor demand and federal law to prevent a situation such as this from happening in the first place?What do you think? Let us know at cybersecurity@schneiderdowns.com.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### PCAOB’s New Standard Enhances Auditors’ Use of Confirmations The Public Company Accounting Oversight Board (PCAOB) recently implemented a new standard that aims to strengthen confirmation requirements and provide additional protection for investors.Historically, confirmations have been known as information obtained by the auditor directly from knowledgeable external sources, which includes the use of electronic or third-party intermediaries. Auditors will typically use confirmations in situations where reliable information can be obtained directly from a third party that transacts with the company. This is a crucial tool used in the audit process, as it ensures audit quality and helps auditors obtain evidence relating to a company’s financial statements.As described in Auditing Standard (AS) 2310, The Auditor’s Use of Confirmation, the process involves selecting one or more items to be confirmed and sending a request to a confirming party (e.g., a financial institution). Auditors then evaluate the information received and can make informed decisions relating to one or more financial statement assertions. The new standard replaces AS 2310, The Confirmation Process, which took a more generalized approach at audit confirmations and failed to account for the variety of unique scenarios that can occur during the audit process.The Auditor’s Use of Confirmation includes the following key points: A new requirement regarding confirmations of cash and cash equivalents held by third parties, or otherwise obtaining relevant and reliable audit evidence by directly accessing information maintained by a knowledgeable external source. Carries forward the existing requirements for confirming accounts receivable while addressing the need to account for scenarios where it would not be feasible for the auditor to perform confirmation procedures or obtain relevant and reliable audit evidence for accounts receivable by directly accessing information maintained by a knowledgeable external source. States that the use of negative confirmation requests alone does not provide sufficient or appropriate audit evidence. Emphasizes the auditor’s responsibility to maintain control over the confirmation process and provides that the auditor is responsible for selecting the items to be confirmed, sending confirmation requests and receiving confirmation responses. Identifies situations in which alternative procedures should be performed by the auditor. The new standard and related amendments will apply to all audits conducted under PCAOB standards and will take effect for audits of financial statements for fiscal years ending on or after June 15, 2025, subject to approval by the Securities and Exchange Commission.This modernized standard amplifies the auditor’s responsibilities for obtaining relevant and reliable audit evidence through the confirmation process. It also takes a more principles-based approach to requirements for the confirmation process that’s designed to apply to all methods of confirmation. Additionally, the standard combines the requirements for auditors’ use of confirmations with the PCAOB’s risk assessment standards, which is accomplished by including risk-based considerations in the confirmation process and emphasizing the auditor’s responsibility to obtain reliable audit evidence. With the updated standard in place, investors can have additional assurance that they have the necessary information to make appropriate financial decisions for years to come. About Schneider Downs Audit and Assurance ServicesSchneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met.  To learn more, visit our dedicated Audit and Assurance page.  ### ESG in Retail – A Movement Towards Sustainability Environmental, social, and governance (ESG) policies and practices are a continuously growing aspect of business in today’s world, with impact across industries. The retail sector is on the forefront of the ESG movement—as consumers, stakeholders and regulators look for retail companies that are making efforts to improve ESG practices. ESG policies address environmental and social injustice issues that might arise due to the actions of a company, including effects on climate change; and where human rights might be in jeopardy due to manufacturing processes. Robust ESG initiatives have been linked to access to funding at lower rates, with higher volumes of investments in companies which have solidified ESG principles. Another driver of ESG in retail and other sectors is the risk implications that come with ESG-related regulations and reporting. A goal of more transparency is created by ESG, as people are questioning methods used by large retail corporations more than ever. While the reasoning behind this questioning might be caused by changing attitudes or realizations, the fact is that regulation of the industry is increasing. Regulatory scrutiny has increased among regulators including the EU Emissions Trading System. The cost of future noncompliance with ESG regulation will likely be higher than proactive action now. The standards set forth for ESG in the retail industry are created by high-profile companies with large representation. Examples include The Home Depot (U.S.), Rewe (Germany), and Carrefour (France), which are helping set standards across the globe. The emphasis for these companies includes utilizing renewable energy sources, creating sustainable products and having full transparency in emissions released. A major goal of large retailers is to attract ethical consumers, alongside the positive global effects of increasing ESG compliance efforts. Key risks within retail companies implementing ESG practices involve supply chain methods, greenwashing and shareholder activism. When it comes to supply chain, forced labor and human trafficking are key items to prevent. With new efforts, including regulations demanding responsibility among businesses for their practices, businesses must implement greater monitoring to ensure that sustainable methods and humane working practices are used throughout manufacturing and distribution of products for retail. Greenwashing (misleading claims on environmentally sound products/services) has been an issue for companies looking to falsely improve their image. In 2023, companies risk legal action over such false claims, and therefore, must be even more conscious of their transparency. Shareholder activism campaigns related to ESG have substantially increased in the past few years; which again, can lead to legal action against companies who are seen as having bad practices or behavior when it comes to ESG. ESG has a large upside for retailers who choose to invest in sustainable and transparent business practices. However, with the risks involved with the process of ESG implementation, retailers are wary of going about the process “correctly,” to ensure that their efforts create positive impacts for themselves as well as the world around them. When moving towards more sustainable practices that support the ESG movement, retail companies have a lot to keep in mind. About Schneider Downs Retail and Business-to-Consumer Services At Schneider Downs, we strive to maximize the potential of our retail clients’ operations, while growing revenue and reducing costs. As one of the largest firms in the tri-state region, we know the value of personal focus and are a PCI Certified Quality Security Assessor. Our Retail industry group professionals have experience working with several regional, national and international organizations, and we possess the knowledge and capability to provide value to any entity within the retail industry. To learn more, visit our Retail and Business-to-Consumer Industry Group page. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement, and meet the SEC Name disclosure requirements. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### What You Missed at Dynamics Community Summit Wow! What a week at Dynamics Community Summit in Charlotte. A short blog post cannot do all the great content and presenters justice – so I’ll try to summarize a few of the key themes I saw. Let me start with the most valuable piece of advice on attending Summit that I can give you: if you plan to carry a laptop or anything beyond pen and paper, bring a backpack. Carrying a laptop bag all over the Charlotte conference center took quite a toll on my back. Now for the overarching themes. There is a TON of curiosity around the Dynamics 365 Business Central platform There was no shortage of “Business Central 101” material geared toward customers using one of the legacy ERP platforms from Microsoft, such as Dynamics GP, Dynamics SL, Dynamics AX or Dynamics NAV (less so NAV). I attended four sessions on this topic, two of which were standing-room only. The hype is real. Many of these sessions spent a lot of time focused on the “quality of life” features in Business Central. There was a good mix of titles, industries and current ERPs in attendance. Of the GP customers whom I had a chance to speak with, about 98% were actively planning their migration to Business Central. There were three main questions GP and SL users were trying to answer: How does the reporting work in BC? What are the functionality gaps between my current system and BC? What about _____ (fill in 3rd party add-in solution here)? All the Dynamics NAV customers that I spoke with were planning a migration, too. The challenges these customers were facing were slightly different: Should I migrate all my historical data or treat this project as a new implementation? What should I do with all the customizations that we wrote? Do we need to rebuild all of them or are some of the features we built part of the product? I was excited to see the partner and user community beginning to embrace the idea that Business Central is not just an “SMB” accounting platform. I spoke with CIOs and CFOs from $1B+ organizations who were investing heavily in the Business Central platform over its “enterprise” cousin F&O. In 2024 and 2025, I expect to see larger organizations continue adopting Business Central. The platform is extremely mature at this point (in fact, it evolved from Dynamics NAV), and if your organization has less than $3B in annual revenues, you should not assume that you require a “tier 1” platform like F&O or S/4HANA. If you have questions about your journey to cloud ERP, please reach out to us. We can perform an initial assessment of your Dynamics deployment and make recommendations on the best approach for migration, no strings attached. The partner community is growing rapidly The Microsoft partner ecosystem has always been and continues to be an extremely friendly and helpful bunch. I had many insightful and engaging conversations with other consultants and leaders in the community who, on paper, would be considered competitors. If you are considering the Microsoft platform as your next ERP home, know that the people you speak with genuinely care about you and your business. The demand for D365 implementation work is also quickly outpacing the supply. The partner ecosystem is vast and growing every day. You should focus on finding a partner that fits your needs in terms of culture, industry experience, personalities and average customer size. For example, if you run a $500M manufacturing business, you should look for a partner with platform experience, industry experience and a portfolio of clients where you are in the 75th – 90th percentile in terms of size and complexity of needs. This helps ensure your project will be a priority, that you’ll get access to the “A” team and that the infrastructure is in place to support you after going live. With over 10 years of experience on the NAV/BC and GP platforms, we have the experience to get things done right the first time – and we have the humility and honesty to know we may not be a fit every time. If you are looking at potential partners, reach out to us today. In the meantime, check out this blog on how to select an ERP implementation partner. AI and Automation are still the buzz Across the entire conference AI and intelligent automation seemed to weave its way into nearly every conversation. Many organizations are eager to adopt the technology, while others are more hesitant. The majority of the booths on the expo floor were offering some form of automation or AI capabilities. Nothing I heard or saw surprised me. It is what I did not hear that was a little worrisome. Before embarking on an automation journey or incorporating AI into the process, it is important to fully understand what the output should look like and have a clear understanding of what areas need to be automated. The first step toward thoughtful and responsible use of AI is to write a policy, then create a playbook. Most importantly, do not expect to become an automation-driven corporation overnight. The process takes time and requires careful change management. In the meantime, check out this blog on some of the privacy concerns around artificial intelligence. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. To learn more, visit our dedicated Technology and Data Services page.   ### Gainful Employment Disclosures in Higher Education What is the Financial Value Transparency and Gainful Employment rule in higher education?Gainful employment regulations are disclosures that post-secondary institutions must provide to prospective students about their programs that prepare them for gainful employment in a recognized occupation.These disclosures contain information about program expenses, debt, earnings and completion rates are meant to assist families and students in making educated judgments about their educational alternatives. These are also meant to help students steer clear of programs that could leave them with unsustainable debt and unfavorable career prospects.The U.S. Department of Education has been updating and releasing a new gainful-employment rule for almost two years, building on an Obama-era initiative that was shelved under the Trump administration.The final rule, titled the Financial Value Transparency and Gainful Employment, is thought by many to be more stringent than the one that the previous rule, which will result in more programs failing. Some of the key changes and updates include: A new federal rule that aims to give families greater information about the costs and hazards associated with programs will require students who enroll in an academic program that leaves them with debt they can't manage to sign a disclosure notice as of 2026. Part of the new rule requires programs in any sector to show that graduate students can afford the debt payments. They will also show graduates they are earning more than the average adult in their state who did not attend college. These programs need to pass those tests in two consecutive years to keep their access to federal financial aid. With the new disclosure requirements, the department estimates roughly 400 graduate programs, and 120,000 students would be affected by this. These proposed regulations would make it simpler for the government to take action against institutions and impose new requirements on institutions before they could receive federal financial aid. Along with the general gainful-employment rule, the new reporting obligations will go into force in July of next year. According to experts and supporters, this profitable rule is stricter than earlier versions and would offer crucial protections for students. The fact sheet states that the first metrics for gainful employment will be released in the first quarter of 2025. In 2026, certain programs might lose their access to financial aid.  The new disclosure requirement is part of the United States education department’s new financial value transparency and gainful-employment rule, that was confirmed in September 2023 and explains how to prepare graduating students for successful careers.“Our goal is to empower students and families with more data than ever before about the true cost of college,” stated Miguel Cardona, Secretary of Education. “This rule would make sure students know if they’re about to take out loans for programs known to leave graduates with unaffordable debt and poor career prospects.”Multiple education groups are opposing the disclosure, while consumer protection advocates are showing continued support over the changes and some higher education associations claiming that emphasizing student economic outcomes does not correctly assess the true value of gaining college degrees.According to the department, 1,700 programs that serve close to 700,000 students would not pass the earnings level or the debt-to-earnings ratio test, which is based on how much adults who did not attend college make.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### Deal Me In: Working Capital 101 What is working capital and how can it impact a sale transaction? Beyond the pure accounting definition of working capital, the working capital target or “peg” and associated true-ups can be confusing. Mostly, this is due to the inherent complexities that arise and that determining  a peg is often more of an art than a science. This article will help you understand what working capital is and why it matters in a transaction. What Exactly is Working Capital? From an accounting perspective, working capital is defined as current assets minus current liabilities, as derived from a company’s balance sheet. Fundamental to this calculation is the appropriate classification of assets and liabilities as long-term or current. Perhaps the easiest way to think about this is that a current asset or current liability is expected to convert to cash or result in a cash outlay over the course of 12 months from the balance sheet date. Accounts receivable and accounts payable; for example, are two common types of current assets and liabilities that would be expected to impact cash within a 12-month period. Items such as rent deposits need to be examined to determine whether a current classification is indeed appropriate. The accounting definition; however, is just the starting point for calculating working capital in a transaction. Inherent in most deals that involve the sale of an owner’s equity interest, is that the transaction is on a cash-free, debt-free basis. Thus, cash and funded debt are excluded from the calculation of working capital. That is, the buyer does not assume the seller’s funded debt or keep any of the cash. Other items that are commonly excluded from the transaction-based calculation of working capital (the “Transaction Working Capital”) include any federal or state income taxes payable or receivable, amounts due the owner/seller, interest payable, amounts payable resulting from transaction-related costs or bonuses, and related party transactions or transactions which are not at arm’s length. One of the more complicated areas that can arise for technology companies is the treatment of deferred revenue. For subscription-based businesses, cash is typically received in advance of the obligation to perform a service. Although the seller will receive the cash, the buyer is nevertheless responsible for funding the downstream obligation created by the subscription agreement. Buyers will frequently seek to have deferred revenue carved out of the working capital calculation and treated as debt. While it can be advantageous for the seller to treat deferred revenue as a component of working capital, compromise is often warranted. Ideally, whether treated as a component of working capital or carved out as debt (and paid for by the seller as a reduction of purchase price), the seller should seek to have the obligation reflect the actual cost of the future obligation as this may be a fraction of the deferred revenue balance. Why Does Working Capital Matter? A seller is typically expected to provide a buyer with a “normalized” amount of working capital as of the closing date of a transaction. This is important to the buyer as the working capital left by the seller will be used to support the operations of the business post-close. If a buyer does not have an adequate amount of net working capital, short-term needs must be identified and funded. While it is not unusual for a buyer to infuse some amount of cash into the business post-close, an inadequate level of working capital can effectively result in an additional cost for the buyer. This article is part of a series exploring the importance of working capital in a sale transaction. Additional articles include: Deal Me In: Calculation and Negotiation of the Peg Deal Me In: Close and Settle-up For the complete series, download the Deal Me In: The Importance of Working Capital Management in a Transaction whitepaper. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Think Before You Click: Fake Browser Updates are Back in Style Why are malware-laced fake browser updates having a moment in 2023? The adage “what’s old is new again,” is certainly true in the cyber threat landscape, and recent reports indicate that one of the oldest malware tricks in the books, fake browser updates, is making a major comeback. The fake browser update is a simple, yet complex malware attack due to the fact it requires the use of a legitimate website to host malicious JavaScript code. So, how do legitimate websites get infected? In most cases, threat actors can inject malicious code by finding unpatched vulnerabilities or WordPress misconfigurations–but they can also find their way in through almost any asset hosted on a website, even from third-parties such as media players or templates. Once installed, the malicious code, hand-in-hand with the website and the campaign, turns its attention to the end user. The job is simple: refer website visitors to the malware by prompting them to update their browsers. The moment a visitor lands on an infected page, the code starts to run. If the target is a good match, the code will open a new page prompting the end user to update their web browser. In reality, the “update” just downloads malware onto the user’s machine. While phishing emails and fraudulent websites are increasingly easy to spot, these malicious update pages can be extremely realistic, as shown in the screenshots below. Screenshots courtesy of Jerome Segura Why Are Fake Browser Updates Coming Back? Krebs on Security reports that these attacks are back on the rise because of a new technique making them harder to stop. The report believes law enforcement and security experts are unable to flag the attacks due to threat actors hosting the malicious files on a decentralized, anonymous cryptocurrency blockchain. Why Do Fake Browser Update Attacks Work? These attacks are simple, but effective for a number of reasons. First, these attacks originate from a trusted channel. These aren’t a random link from an unsolicited email or text, these are pages that flip over from real websites. Inherent end user trust is already more established than in the standard phishing attack. Second, think about one of the most common pieces of cybersecurity advice we receive (and should be following): update your software. In fact, updating software is so important to cyber hygiene that CISA highlighted it as one of the four steps in this years’ Cybersecurity Awareness Month campaign. In many instances, software updates are automatic, which could be because your IT department set  your laptop to restart on a specified cadence or because you selected an automatic update option when configuring software. With these circumstances in mind, think about what you would do if you were reading a news article on a website you visit daily and you receive a prompt to update your browser… chances are you would follow what you have been trained to do and click update. How Can You Avoid Fake Browser Updates? The easiest way to avoid fake browser updates is a little more complicated since these attacks are harder to spot than most others in the wild. One suggestion is simply letting browsers take care of themselves. In fact, most modern web browsers automatically update in the background, so if you get a prompt to update your browser, it’s safer to simply close the window and move on. Another option is going through the browsers themselves to verify if any updates are needed. Those using Chrome on Windows OS can do so by: Click the Settings icon (three vertical dots) in the top-right corner of the Chrome browser window Select Settings from the drop-down menu Click About Chrome in the left-hand menu that appears This will confirm if Chrome is up to date and, if there is a new version of the browser available, you can securely download and install it here. If you are a Microsoft Edge or Firefox browser user, links to trusted instructions to verify/update the browsers are below: Microsoft Edge Update Settings Firefox Latest Release Settings Remember: updating your software is important, but so is verifying the source of the request. If you have any questions about update prompts or versioning, please reach out to your IT department or a security professional. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.   ### Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the manufacturing industry in 2023?In support of Cybersecurity Awareness Month, we are examining reported incidents by industry. The focus of this article will be on manufacturing.With a fourth industrial revolution upon us, the manufacturing industry is getting smarter by the minute with autonomous systems fueled by intelligent data sets and machine learning capabilities. But new technology breeds new vulnerabilities, creating new entry points for threat actors, such as supplier entities, operational software, Industrial Internet of Things (IIoT) devices and more. This invites opportunities for industry disruption.So, what were the most common cybersecurity attack methods targeting the manufacturing industry in 2023?According to the Verizon 2023 Data Breach Investigations Report (Verizon DBIR), 83% of all reported incidents in the manufacturing industry were from system intrusion, social engineering or basic web application attacks.And external actors with financially driven motives continue to be the biggest thorn in the side of the manufacturing industry, with 90% of the reported incidents carried out by external parties and 96% of them being financially motivated.System Intrusion and the Manufacturing IndustryFor more than two years, system intrusion rates have risen across the manufacturing sector. System intrusion usually takes the form of hacking or malware, with ransomware accounting for the most breaches. But don’t discount Denial of Service (DoS) attacks.The Verizon DBIR reports that DoS attacks account for 67% of the system intrusion-related attacks on the manufacturing industry. DoS attacks occur when threat actors flood a host or network with traffic until the target can’t respond or crashes altogether.This can shut down critical manufacturing infrastructure, delaying a company or supplier’s ability to meet production deadlines. CISA recommends enrolling in a DoS protection service and creating a thorough disaster recovery plan that’s familiarized throughout your organization to ensure swift action can be taken to mitigate risk and/or recover in the event of an attack.  Social Engineering and the Manufacturing IndustryWith the growing volume of digital infrastructure in the manufacturing industry, it’s more important than ever to secure your digital ecosystem. Although not as prevalent as the system intrusion trend, we continue to see social engineering attacks hitting this industry, tricking people into providing access to sensitive information.But the good news is there is a lot that can be done to reduce the threat of social engineering attacks, including but not limited to, advanced email filters, penetration testing, network segmentation and user awareness training.Basic Web Application Attacks and the Manufacturing IndustryDon’t overlook your website as an entry point for attackers. In June 2015, the American clothing manufacturer, Hanesbrands, Inc., was hit with a website attack that compromised the online and telephone data of more than 900,000 customers.The attacker pretended to be a guest customer checking on their order, using security gaps in the website design to access the customer database. Mailing addresses, phone numbers and the last four digits of payment cards were exposed in the process. Making sure you have the necessary security plugins and implementing a firewall are critical steps in encrypting and securing web-based communications.This article is part of a series highlighting the most common cybersecurity incidents by industry and is based on data from the 2023 Verizon DBIR. Additional articles include: Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Our for in 2023 Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Cybersecurity Awareness Month Celebrates 20 Years It is important to note that the data referenced is from organizations that chose to disclose incidents and data breaches.About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats.Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.  ### Construction Talent Retention In the realm of college athletics today, the advent of NIL (Name, Image, Likeness) has led coaches to repeatedly emphasize the need not only to recruit fresh players but also to secure their existing ones before they're lured away by rival teams. This principle resonates in the business world as well. While sourcing talent poses its own challenges, the task of retaining that talent might even be more formidable.The pursuit of talent retention encompasses a broad spectrum – from the nature of work and work location to professional growth, mentorship, performance assessments, cultural alignment and an array of other factors. Within this domain, our focus here is primarily on the aspect of work. It involves identifying roles that are a perfect fit for both the employee and the employer, forming what we refer to as the "golden triangle." This triangle represents the convergence of tasks that align with the employee's strengths and passions, while concurrently delivering value to the company. It's important to note that this configuration is distinctive for each organization. However, a common thread lies in recognizing and reevaluating non-value-added aspects that impact both the company and its employees. Thoroughly addressing these elements ensures that individuals are assigned tasks that reflect their optimal skills, resulting in a mutually rewarding experience for all parties involved.Oftentimes, this principle becomes particularly evident during digital transformation initiatives. Mundane tasks that consume valuable time can emerge as bottlenecks that hinder productivity. The solution often lies in automation, liberating employees from these routine tasks and allowing them to channel their efforts into more impactful activities that enhance the company's value proposition. For a more detailed exploration of how our digital transformation team has assisted construction companies in this context read Digital Transformation in Construction. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.   ### Construction Talent Foundations In the post-COVID landscape, a noticeable shift due to talent shortages is that the evaluation process has evolved beyond being a mere interview procedure; it's now a comprehensive recruitment endeavor. Candidates, having multiple employment options, are assessing you as much as you are evaluating them. Thus, the initial step in a strategic approach to talent is to ensure a strong foundation in your recruitment process. This begins with meticulously crafted job descriptions for each role. For an outsider unfamiliar with your organization, these descriptions should unmistakably outline responsibilities, roles, and performance metrics. We recommend having existing employees draft written job descriptions for all positions. Subsequently, the hiring process should be more robust than simple job postings and interviews. This is your opportunity to impress candidates through effective organization, punctuality, and transparent communication. Implementing these seemingly basic steps can set you apart in the competitive landscape of recruitment. Moving on from the hiring process, attention should shift to the onboarding procedure. Engage in discussions with recent hires to gain insights from their perspective regarding what aspects were advantageous and where the process fell short. Often, organizations maintain the same onboarding approach for an extended period. This phase presents another avenue to distinguish yourself in the recruitment process. Finally, when it comes to compensation packages, they should encompass more than just a basic salary. Clearly delineate all offered benefits. An emerging trend includes incorporating deferred compensation or post-employment benefits into compensation packages. A valuable resource in this realm is a member of Schneider Downs Advantage Retirement Solutions, who previously worked for the Internal Revenue Service in this domain. To delve deeper into the subject of deferred compensation, you can explore one of his articles at the following link: Incentive Compensation for Construction Industry Employers. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. ### Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in higher education in 2023? In support of Cybersecurity Awareness Month, we are examining reported incidents by industry. The focus of this article will be on the educational services sector. With a wealth of student, staff and faculty data and countless entry points from student record databases, third-party vendors and web-facing assets, the educational services industry is teeming with opportunities for threat actors to extort higher and lower educational institutions for financial gain. In fact, the Verizon 2023 Data Breach Investigations Report (Verizon DBIR) found that 92% of the reported incidents were financially motivated and 56% targeted personal data. So, what were the most common cybersecurity attack methods in the educational services industry in 2023? According to the 2023 Verizon DBIR, 76% of all reported incidents in the educational services industry were from system intrusion, miscellaneous errors or social engineering. System Intrusion and the Educational Services Industry Earlier this summer, the MOVEit data breach devastated the higher education sector, targeting over 3,000 colleges in the U.S. and stealing at least 38 million individual student records. So, it should come as no surprise that system intrusion is the number one cyber attack method used to target educational service providers in 2023. System intrusions involve cases where a threat actor uses technological means to gain unauthorized access to a system or database. Though it is mainly reported as hacking or deploying malware, this attack method also includes ransomware-related activities, which are a growing issue for educational institutions and have been involved in almost one-third of all educational services industry breaches this year, according to the Verizon DBIR. Miscellaneous Errors and the Educational Services Industry Attackers are always up to something new, and, sometimes, an attack doesn’t fall under a specific category. In the educational services world, miscellaneous errors commonly take the form of mis-delivery, publishing errors and misconfigurations. Mis-delivery occurs when an employee sends personally identifiable information to an unintended recipient via email or another communications channel. Publishing errors happen when someone publishes confidential data on a public forum such as a website, either by mistake or for retaliation (someone who was recently fired, has a major disagreement with their manager, etc.). And, last but not least, misconfigurations occur when assets are poorly protected, allowing for unwanted access. This is why it’s extremely important to regularly update software and have strong security policies surrounding the lifecycle management (access, retention deletion, etc.) of sensitive data. Social Engineering and the Educational Services Industry While awareness of social engineering schemes is growing, many still fall victim to threat actors using phishing attacks and pretexting scenarios to manipulate them into providing sensitive information. In the context of the educational services industry, threat actors are capitalizing on phishing (via email), vishing (via phone call) and smishing (via text message) attacks to gain access to the sensitive and valuable information of students, faculty and staff. Another growing type of attack method that falls under the social engineering category is pretexting scenarios, which can be a multitude of methods but usually take the form of psychological manipulation, impersonation or personalized messages using urgent and convincing language to trick someone into providing access to student databases with bank account data; institutional network information; or student, faculty and staff credentials. This article is part of a series highlighting the most common cybersecurity incidents by industry and is based on data from the 2023 Verizon DBIR. Additional articles include: Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Our for in 2023 Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Cybersecurity Awareness Month Celebrates 20 Years It is important to note that the data referenced is from organizations that chose to disclose incidents and data breaches. About Cybersecurity Awareness Month Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats. Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Cybersecurity Awareness Month Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats. Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The Latest on the NCAA's National NIL Proposal In less than a year, collegiate athletics, which have remained mostly unchanged for more than a century, have undergone unparalleled transformation.However, in June 2021, the name, image and likeness (NIL) have played a significant role in this transformation following the Supreme Court ruling in NCAA v. Alston which ruled the NCAA could not restrict payments to student-athletes linked to their education. Prior to the ruling, only scholarships were provided to student-athletes. In places where regulations hadn't been passed, the NCAA then deferred to the institutions themselves and to state laws regarding NIL.According to the NCAA, there could be no pay-for-play and no quid pro quo. It wasn't allowed for athletes to get pay based on their performance, and it was illegal for recruits to sign contracts that required them to attend a particular university.NIL was initially approved by the NCAA in 2021. The regulations controlling how college athletes can generate money by using their name, image, and likeness will be put to a vote by the NCAA's governing bodies as early as January.The proposals will be voted on in January by two of the NCAA groups that oversee Division I, the association's top level of competition. The proposals are the result of conversations between the council's NIL Working Group and different stakeholders, including college athletes, service providers, and campus administrators, at a summit in July.The NCAA is trying to implement a national NIL standard due to the different laws in every state. States like Texas and Oklahoma both prohibit the NCAA from regulating NIL deals.The plan would require athletes to notify their universities of any NIL contract worth more than a specific sum, which the NCAA indicated could be $600. If they reached a NIL agreement, they would have 30 days to take that action.The idea states that agents and financial advisors who engage with athletes on NIL transactions would be entitled to register with the association. The NCAA would then make this information public so that athletes could, for example, determine how much those services would cost.Under the new proposal athletes would be able to evaluate their experience with these agents and report any wrong doings against them with the NCAA.Schools and student-athletes would be required to attest as part of the reporting process that the information is complete and accurate, that no school staff members offered benefits pertaining to NIL as an incentive for enrolling or continuing at a school, and that all relationships adhere with NCAA rules and applicable federal, state, and local laws.The NCAA wants to install trainings for their athletes so they can learn about NIL. Trainings would include how state and federal laws interact with the association’s policies.“Division I members support college athletes benefiting from the use of their name, image and likeness to the fullest extent, and in no way intend to limit their potential” said University of Florida executive associate athletics director Lynda Tealer. “It is our hope that these changes will improve outcomes for student-athletes and help campus leaders navigate this issue with greater clarity.”The final proposal, which will be taken into consideration the following year, would create a thorough plan to create educational resources, which would then undergo regular evaluation to make sure they are current and representative of the NIL setting.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### Key Takeaways from the 2023 CUPA-HR Higher Education Employee Retention Survey What are they key takeaways from the 2023 CUPA-HR Higher Education Employee Retention Survey?The College and University Professional Association for Human Resources (CUPA-HR) conducted a Higher Education Employee Retention survey in Spring 2023, with 4,782 higher-ed employees from 529 institutions. Some of the key highlights from the study are listed below: The survey results point to instability within the industry, with a third of respondents that were “likely” or “very likely” to seek other employment. More than half responded, “somewhat likely”, “likely”, or “very likely” to seek other employment. Employees in Student Affairs, Enrollment Management, and Academic Affairs departments are the most likely to look for another job with responses show that these careers face expanding responsibilities and limited resources that lead to staff being overworked and stressed. 70.7 % of those likely to seek out new job opportunities are looking to other higher education institutions. Fiscal/Business Affairs, Human Resources and Information Technology were the least likely to seek other employment. Pay was the top reason cited for searching for a new job, although remote work opportunities pulled in second which isn’t a surprise considering the ongoing expectations of workplace flexibility in the post-pandemic atmosphere. This difference in employee preference and current work schedules can cause unhappiness in employees and ultimately cause staff to search for other opportunities. Per the CUPA-HR survey, 53.9% of those that work completely or mostly on-site are unsatisfied or very unsatisfied with their current work arrangement. The Advantages of a Hybrid Workplace in Higher EducationOne way to add in some flexibility is to adapt to a hybrid workplace. This can be as simple as adding a work from home day once or twice a week, depending on the role.This can especially help departments most at risk for retention (Student Affairs, Enrollment Management, and Academic Affairs), where roles can be performed remotely for the most part, although are mainly working on-site.The survey also took a look at supervisors’ challenges, noting filling positions and maintaining morale as their top challenges, both of which indicate issues with employee retention.The survey showed that supervisors are picking up responsibilities of unfilled positions or those that have left the institutions, and that 38.3% of supervisors agree that it is normal to work weekends and 63.9% agree that their job duties require additional time.The Importance of Empowering Management in Higher EducationCreating an environment where management and supervisors have the ability to advocate for staff and make decisions on schedule flexibility, implementing adequate training for supervisors and providing adequate resources are all ways to better support management, and create a solid tone at the top to trickle down into overall staff happiness at the workplace.Additionally, there are a few simple ways to increase job satisfaction and retention: regular verbal recognition for a job well-done, professional development opportunities/opportunities for career enhancement, regular salary increases, and taking measures to reduce overworking including distributing increased demands and responsibilities where possible.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.   ### Single Audit Reporting Reminders There are some reporting changes for entities who spend $750,000 or more of federal awards in their fiscal year. Expending $750,000 or more of federal awards during a fiscal year triggers a single audit requirement.  Uniform Guidance is the current regulation that is referenced during a single audit.  The single audit is required by federal agencies to determine if entities are in compliance with the requirements of the federal program. Entities are required to submit reporting packages as part of the audit submission process.  Submissions are due to the Federal Audit Clearinghouse (FAC) by the specific due date.  The reporting package includes the auditor’s report on compliance and internal control over compliance for major program, the auditor’s schedule of findings and questioned costs, the entity’s summary of schedule of prior audit findings (if applicable) and the entity’s corrective action plan (if applicable).  In addition to the reporting package, the data collection form (DCF) is required to be completed and submitted to the FAC.  Inputs to the DCF include a summary of the single audit reporting schedule of expenditures of federal awards (SEFA) information, references to findings (if applicable), relevant compliance requirements and electronic signatures of both the auditee and auditor. Submission Changes The provider of the FAC has changed as of October 1, 2023.  Single audit submissions will be transitioned from the Census FAC to the U.S. Government Service Administration (GSA) FAC. Entities can access this new site at https://www.fac.gov/. The site is now open for all single audits with fiscal periods ending in 2023.  Audits completed for fiscal years ended between January 1, 2023 and September 30, 2023 were not able to be submitted to the GSA until October 1, 2023.  The submissions to the FAC 30 days after receipt of the auditor’s report was waived for these audits.  As noted in the 2023 Compliance Supplement, these audits will be considered to be on time if they are submitted within nine months after their fiscal period end date. 2022 and Earlier Submissions Any audit submissions for fiscal years 2022 and earlier are now closed on the census FAC site.  Currently, the new GSA FAC site is only accepting 2023 submissions and is not able to accept prior fiscal years submissions until later in the year. Stay turned for further updates on the FAC submissions as Schneider Downs closely monitors key updates. Resources https://www.fac.gov/ https://www.whitehouse.gov/omb/office-federal-financial-management/ About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page.   ### 2023 Legislative & Regulatory Update As we prepare to close out 2023, let’s take a look at the year’s legislative updates for the tri-state area.Pennsylvania Legislative UpdatePennsylvania opened its legislative session January 3 and is scheduled to close on November 30. HB1273, which attempts to improve a volumetric severance tax on unconventional natural gas, was introduced May 31. The tax fee does not affect the collection of the unconventional gas well fee imposed under Chapter 23 of the Tax Code (Impact Fee), and is graduated based on the average annual price of natural gas for the calendar year preceding the start of the imposition period, as shown in the table below. Average Annual Price of Natural Gas for Calendar Year Immediately Preceding the Start of the Imposition Period Tax Rate per MCF Severed Less than $3 $0.134 Equal to or greater than $3 and less than $5 $0.152 Equal to or greater than $5 and less than $6 $0.174 Equal to or greater than $6 $0.200 For fiscal year 2023-24, the imposition period is July 1, 2023, to April 30, 2024. For FY 2024-25 and beyond, the imposition period is May 1 of the preceding fiscal year to April 30 of the current year. By June 15, 2024, and by that date each year thereafter, every producer must submit payment of the volumetric severance tax to the department and submit a report on a form prescribed by the department for the imposition period.West Virginia Legislative UpdateWest Virginia’s legislative session ran from January 11 through March 11. SB13 would amend sections 22-6-2 and 22-6-29 to provide for a $100 annual oversight fee per well for wells producing more than 10,000 cubic feet of gas per day (10 MCF) and allow for transfer of this fee to the Oil and Gas Reclamation Fund. It failed sine die.Ohio had no legislative updates.This update is based on legislative and regulatory information available at the time of publication and is not intended as legal, tax or accounting advice.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page. ### Americans with Disabilities Act – What to Know about Web Content Accessibility Guidelines 2.1 You’ve likely encountered a wheelchair ramp while entering a public building or heard a pedestrian crosswalk counting down the time to aid those that are visually impaired. The Americans with Disabilities Act (ADA) ensures accommodations like these extend to online websites to allow equal access while accessing healthcare, public records, or applying to a college. In 2018, Web Content Accessibility Guidelines (WCAG) were introduced by the World Wide Web Consortium (W3C) to meet the needs of accessibility. The WCAG 2.1 are a set of technical standards focused on the accessibility of web content, websites and web applications for people with a wide range of disabilities—including auditory, cognitive, neurological, physical, speech, and visual disabilities. There are three levels of WCAG conformance (A, AA, AAA) and the U.S. Department of Justice has referenced WCAG 2.1 level AA as a benchmark for many of its most recent ADA enforcements. With the influx of ADA guidelines and standards, those that don’t comply can face severe legal consequences. In fact, lawsuits for non-compliance with ADA and the WCAG 2.1 have increased rapidly throughout 2023, with some of the top headlines including: State courts in New York and California have had 414 lawsuits to date as of June 2023, in the entire calendar year of 2022 there were only 313 lawsuits. Domino’s Pizza and Target have both been sued over their websites being non-accessible when using a screen-reader. Over 70% of the 2023 lawsuits being filed are against organizations with under $25 million in revenue. In 2023, Education became the third most targeted sector, superseding Travel, Hospitality, Healthcare and the Entertainment sector. In many court cases, including Dominos’ and Targets’, the court’s final decision has been based on the website’s compliance to the WCAG.  WCAG 2.1 lays out over 200 unique guidelines built upon four principles: Perceivable, Operable, Understandable, and Robust (AKA the POUR Principles). These criteria divide among 18 guidelines. W3C lists the WCAG 2.1 guidelines and includes successful actions that can be implemented to comply. You have likely pressed the “Tab” key on your keyboard to navigate through a website, played an embedded video which had subtitles or paused a scrolling timeline of events. These are common solutions on many websites developed with disabilities in mind. To remain compliant and competitive, large business are seeking guidance on implementing WCAG 2.1. WhatsApp invested resources to be more accessible for a broader audience and by 2023 were ranked India’s most accessible app for people with disabilities and received a rating of ‘Highly Accessible’ based on the WCAG 2.1 For many companies, the response and compliance with WCAG 2.1 can be a challenge. Schneider Downs suggests meeting the conformance level of AA and documenting all actions taken, complete and ongoing. Schneider Downs has performed ADA Compliance audits, investigating company websites according to WCAG 2.1. Ultimately, our team provides a remediation roadmap to AA conformance. Not only can Schneider Downs help companies comply with the ADA, but with improved accessibility comes a wider range of users to attract. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page or contact us. ### Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the retail industry in 2023?In support of Cybersecurity Awareness Month, we are examining reported incidents by industry. The focus of this article will be the retail industry.With a wealth of payment data and countless entry points from e-commerce shops, third-party vendors and physical store locations, the retail industry is teeming with opportunities for threat actors to capitalize on for financial gain.In fact, to nobody’s surprise, the Verizon 2023 Data Breach Investigations Report (Verizon DBIR) found that 100% of the reported incidents were financially motivated, and 37% specifically targeted payment card data.So, what were the most common cybersecurity attack methods in the retail industry in 2023?According to the 2023 Verizon DBIR, nearly 90% of all reported incidents in the retail industry were from social engineering, system intrusion or basic web application attacks.Social Engineering and the Retail IndustryOne of the usual suspects in the cybersecurity world, social engineering is a common, yet extremely effective, tactic. Threat actors prey on human nature to manipulate individuals into exposing sensitive information. In the context of the retail industry, this can include manipulating someone into providing access to customer databases with payment card data, company network information or customer credentials.System Intrusion and the Retail IndustrySystem intrusion may seem like a straightforward concept, but it’s still a commonly reported attack pattern that many retailers aren’t completely protected from. System intrusions involve cases in which a threat actor uses technological means to gain unauthorized access to a system or database. Mostly reported as hacking or deploying malware, this attack method also includes ransomware, which is a growing issue for retailers. A recent report suggests that there was a 75% increase in the rate of ransomware attacks on the retail sector in 2022.Basic Web Application Attacks and the Retail IndustryA very simple attack method, basic web application attacks are akin to a smash-and-grab in the cybersecurity world – get in, get the goods and get out. In the retail world, web applications commonly take the form of an e-commerce website or app, as well as third-party sites, plugins, vendors and supply chains, all of which can hold a treasure of payment, personal and proprietary data.The good news is the risk of basic web application attacks can be mitigated with automated security tools, multi-factor authentication, best-practice controls and proactive incident response planning. While protective measures aren’t error-proof, they do offer some peace of mind.This article is part of a series highlighting the most common cybersecurity incidents by industry and is based on data from the 2023 Verizon DBIR. Additional articles include: Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Our for in 2023 Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Cybersecurity Awareness Month Celebrates 20 Years It is important to note that the data referenced is from organizations that chose to disclose incidents and data breaches.About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats.Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The SEC ‘Names Rule’: Unpacking the Impacts to ESG Funds On September 20th, the SEC finalized its amendment to the Investment Company Act of 1940 (“Act 40”) that addresses the naming convention of certain investment companies. Included in these changes are a variety of impacts to funds using ESG terms, including, but not limited to, “green”, “sustainable” and “impact.” Funds must be in compliance within 24 months of final publication of the ruling to the federal register. The likely compliance date will be sometime in 2025. The growth of investing in ESG and Sustainable funds across both Europe and the US has been substantial over the past three years. Despite peaking in Q4 of 2021 at $3.0 trillion, cumulative assets under management (“AUM”) in ESG funds have been steadily rising again over the last year and reached their second-highest total by the end of Q2 2023: Image Source: https://www.morningstar.com/lp/global-esg-flows Furthermore, the number of funds launched in the US with ESG and Sustainable names has stayed relatively steady over the past several years, despite decreasing in Europe and other parts of the globe: Image Source: https://www.morningstar.com/lp/global-esg-flows In Europe, tenets of the Sustainable Finance Disclosure Regulation (“SFDR”) govern the way that funds promoting environmental or social characteristics (“Article 8”) or those with a sustainable investment objective (“Article 9”) must disclose their intent both qualitatively and quantitatively to align with their stated objectives. Furthermore, periodic reporting back to the client is mandated in order to monitor progress against those espoused objectives. All of this is to say that there has not been a corresponding regulatory initiative in the US to address a number of the concerns that exist in the marketplace. These concerns include the alignment of a fund’s assets to the strategy of the fund, the way in which a fund defines how it invests from an ESG perspective and treatment of items such as portfolio drift and derivatives. The expansion of the SEC Names Rule provides this clarity and focuses on the following key elements: 80% Alignment of Investments for Funds with ESG Names  Funds with names indicating that they emphasize or incorporate ESG factors must now align 80% of their investments to those factors. It’s important to note that the final ruling does not crystallize how funds should define certain terms; for example, two funds’ names with ‘Climate Change’ in the byline may have radically different definitions of that terminology and how their investments will align accordingly. Temporary Departures from 80% Alignment The final ruling provides slightly more flexibility from departures from the mandated 80% alignment. “Under normal circumstances,” funds should be aligned to the 80%.’ This is a slight softening of language from the original proposal indicating departure is only allowed under specified circumstances. Furthermore, funds must have a process to review alignment to the 80% at least quarterly. Lastly, the finalized rule allows funds 90 days to realign to their mandated 80% if the portfolio is out of alignment due to natural portfolio drift or another departure falling under the “normal circumstances” clause. Use of Derivatives The final ruling emphasizes the notional amount, standardized to the 10-year bond equivalent of derivative holdings must be used to calculate 80% alignment as opposed to the market value of the holding. Additionally, any derivatives used as currency hedges must be removed from the calculation of the 80% and can deduct cash or US treasuries with maturities under 1 year from the final calculation. Enhanced Prospectus Disclosures Funds will need to begin adding definitions in their prospectus relating to ESG factors that they emphasize. As previously mentioned, the final ruling provides flexibility for funds in defining these terms. Greater Portfolio Disclosure via Form N-PORT On a quarterly basis, funds will now need to specify whether each investment holding aligns with one of the emphasized ESG factors and quantify what % of their total portfolio is aligned, as they define it. This could be a heavy lift for funds’ Risk Management and Compliance departments and should be considered one of the most extensive parts of the final ruling! Recordkeeping enhancements A fund must maintain written records at the time of investment that state whether the investment is included in the 80% bucket, what the basis for the inclusion of that investment is and the % value of the aligned assets relative to total assets. Additionally, funds must maintain records that their internal functions, likely 1st and 2nd line, have reviewed portfolio holdings and justification for inclusion in the 80% bucket on at least a quarterly basis. Lastly, any departure from the 80% alignment due to portfolio drift or as a result of the “under normal circumstances” clause must be rationalized, reviewed and documented accordingly. A notable omission from the final legislation is an explicit direction from the SEC on ESG funds emphasizing “ESG Integration.” ESG integration is a complicated and opaque part of the ESG investing world and has generated scrutiny and regulatory action from the SEC previously related to greenwashing claims of fund managers. Despite the lack of regulatory direction here, the message from the SEC is clear: If you’re publicly disclosing how your fund invests in the ESG space, you need to have clearly defined and implemented the methodology, governance, and controls to defend it. If you have any questions about this article or other ESG-related topics, please contact our ESG team at contactsd@schneiderdowns.com. Related Links Schneider Downs ESG Consulting Overview Schneider Downs ESG FAQ Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees  Schneider Downs ‘Our Thoughts On’ ESG Articles About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement, and meet the SEC Name disclosure requirements. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com.   ### Dumb Money: An Honest Review of the Film Adaptation of the GameStop Short Squeeze The film, Dumb Money (2023), directed by Craig Gillespie, is a dramatized representation of the events that unfolded at the beginning of 2021. The specific event I am referring to is the GameStop (GME) short squeeze that occurred in January 2021 and continued to provide extreme volatility in the stock until the end of June of that same year. Our team published a piece in February of 2021 that summarized the events - Our Thoughts on the GameStop Saga.While most of the movie is a comedic representation of the GME short squeeze, the film’s main points are historically accurate. The film is based on the real-life story of amateur trader Keith Gill, who goes all in on GameStop shares and convinces thousands of others to do the same through his YouTube channel, Roaring Kitty. The film represents the big-name players on the short side of the trade: Gabriel Plotkin of Melvin Capital, Steve Cohen of Point72 (even Steve Cohen’s pet pig is represented), and Ken Griffin of Citadel.  Although most of the story is factually correct, not everything happened exactly as shown. For example, some of the people who followed Keith Gill’s trade, such as the character Jenny, are mere representations of the type of people who participated in the GameStop mania. The movie seems to focus more on the idea of class warfare between retail traders and the Wall Street elite; retail traders being the “good guys” in this case, while the other side is being portrayed as the “bad guys.”  Possible Questions Leaving the Movie I was able to convince my wife to come with me to see Dumb Money. While the movie is informative at times, she left with some important questions that our readers may also be curious about (the Big Short film from 2015 does a good job of providing some clarity, in my opinion).  “What is a call option? How does it work?”  A call option is a derivatives contract giving the owner the right (“the option”), but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time. Often, the underlying for these options are stocks or equities. But technically, the underlying could be almost anything.  These call options gain value when the price of the underlying value rises above the strike price of the options contract. To keep it simple, if you buy a call option on stock XYZ with a strike price of $100 and the stock is trading at $110, then the underlying value of the option is $10.  “How do people use gains from investments to buy more investments?”  There are two main ways investors are able to do this. First, the investor could close the position from their “first” investment. After closing out this position (for example selling a stock you own), you can then use the proceeds to make another trade.  The second way would be to utilize leverage. You can use the securities from the first trade as collateral for a loan to fund a second trade. This entails additional risk but there is the possibility for additional return this way.  Lessons Learned Overall, the movie was enjoyable, but I felt that the fast-paced movie glossed over a valuable lesson to be learned from the GameStop craze of 2021: risk management. Lots of money was made and lost by both sides of the GameStop trade. Some people sold at the top while others held on and rode the stock all the way up and all the way down.  On the short side, the main risk when taking on this trade is that the possible losses are unlimited while the potential gains are limited. This short trade also commonly utilizes leverage1. An important reminder when using leverage is that leverage can amplify returns upwards but can also amplify losses downward. So, while leverage is helpful in up-trending markets, it can be very hurtful in down-trending markets. These lessons on leverage apply in both long and short trades.  The other big risk management point I took away from watching Dumb Money is the consideration of taking gains over time. There are many traders out there who rode the GameStop craze all the way to the top, didn’t sell and rode it all the way down, erasing their potential gains. Although there are tax implications to taking gains, realizing gains can allow investors to rebalance portfolios, take profits, and manage risk. While maximum returns can be enticing, managing the tradeoff between risk and return can be integral to reaching an investor’s goals over time.  1) A short sale is when you borrow the stock, sell it into the market, and the proceeds of those trades come back to the seller. In exchange for borrowing the stock, the short seller has to buy an agreed upon interest rate to the owner who lent them the shares. The short seller must pay the interest rate as well as deliver the shares back to the owner at some point in time. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.       ### Opportunities and Challenges in the Current Construction and Engineering Environment The operating environment today’s construction and engineering professionals face is rapidly changing. Conditions and demands placed on front line workers, contractors, project managers, operational and financial executives and owners continue to evolve. Internal and external factors weigh on all as they work towards the common goal of delivering high quality product in a timely, cost-efficient manner. This has always been challenging for these professionals but recent economic, operational and regulatory realities present new and/or expanded issues to be resolved. Below are just a few of the issues, as well as opportunities, created by these realities. As Winston Churchill once said, “The optimist sees opportunity in every difficulty.” Economic The current state of the economy continues to affect E&C professionals, particularly in relation to increased prices and supply chain management. Prices According to the Bureau of Labor Statistics (BLS), the producer price index inputs to the construction industry as of April 2023 showed a 39.2% increase since February 2020 (pre-pandemic levels). Significant inflationary pressures have been seen in the most significant cost categories impacting construction companies, specifically materials, labor, and energy. Not only are those costs impacting profitability, but so too is the cost of money. The Prime Rate, as published by JPMorgan Chase, increased from 3.25% to 8.00% from March 2020 to March 2023. It currently stands at 8.5%. To combat unrelenting third-party cost increases, principally contractor costs, materials, and energy, companies are becoming more transparent in detailing with subcontractors by sharing cost and capacity concerns that can be mutually addressed. Additionally, hedging opportunities where available are more frequently being considered, as well as procurement policies to maximize cost efficiencies across projects. Negotiating price escalation clauses into contracts, to the extent possible, is also becoming more prevalent. Supply Chain Management  While supply chain issues have improved from the early days of the pandemic, material availability, pricing, lead time and logistics remain a significant challenge. Supply chain management is also a factor to be considered, potentially reducing material costs through utilizing more localized sourcing to reduce shipping costs as well as potential volume discount/rebate opportunities. Vertical integration is becoming more prevalent and can provide a significant return on investment in certain situations. The pace of inflation has slowed recently but is still a significant consideration for all. Operational Today’s construction industry faces significant operational challenges related to workforce management, from both a talent acquisition and productivity perspective. Talent Acquisition The BLS reports that as of the end of 2022, approximately 43% of the construction workforce is made up of individuals over 45 years old, including approximately 22% being 55 or older. Many companies report difficulty in attracting new talent and maintaining adequate workforce levels. The struggle to attract, train and retain employees is a struggle across most, if not all, industries. It is not unique to the construction industry but is a bit more alarming given the Department of Labor Statistics that show the median age of construction workers as a whole exceeds that of many other industries. Considerations need to be given to what the employees of the future are seeking. Companies should prioritize providing varied career paths, an employee wellness focus, enhanced training opportunities and work/life balance. They should also genuinely embrace DEI and sustainability initiatives internally and in the work they do. Companies that do this, as well as optimize the use of technology, will be well positioned to attract and retain the future leaders of the industry. For more information on addressing talent issues in the industry, see the Talent articles in the Construction series: Talent Foundations and Talent Retention. Productivity  While arguments exist surrounding the methodologies used to calculate productivity within the construction industry, BLS statistics consistently show flat to declining total factor productivity over the last several decades. Strong risk management and workforce productivity maximization are both heavily dependent upon the utilization of technology. Streamlining the use of multiple platforms to enhance communication and data sharing, and identifying efficient and effective uses for process automation, artificial intelligence, and digital transformation continues to provide benefits to companies embracing their use. Of course, with technology comes risk. The availability of real-time, relevant and accurate information is critical for project management to access project results and identify negative performance trends and issues early, to better manage resources and enhance workforce productivity. More time focused on a formal risk management system and the use of technology in the scoping/bidding process, planning and procurement phases as well as through project performance will enhance productivity and results. For additional information on how a focus on cybersecurity and digital transformation is aiding the industry, see the additional articles on Cybersecurity and Digital Transformation. Regulatory  Increased governmental focus and funding to the industry including passage of recent legislation such as the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act which directly and indirectly increase spending impacting the construction industry. As everyone is aware, with increased government funding comes increased regulation. Implementation of the above-mentioned items in addition to a strong sense of what’s materially relevant to your stakeholders from an Environmental, Social, and Governance (ESG) perspective can be a differentiating factor for companies. Working towards adopting a formal ESG program allows companies to convey to the public and anyone they intend to do business with how they focus on topics such as efficient resource utilization, worker safety initiatives and good governance principles. Furthermore, companies doing business with the federal government as either significant or major contractors need to be aware of proposed greenhouse gas (GHG) reporting requirements across Scope 1, 2, and 3. The cost of compliance can be significant, but the cost of noncompliance is even greater. Contact our ESG professionals to help guide you through these questions. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. ### Digital Transformation in the Construction Industry – Why So Much Hesitation? Why are so many construction companies still reliant on manual processes? Since investing in enhanced processes and technology most likely means spending money, time and human capital, it’s easy for companies to become complacent. However, changes, especially technological changes, are a critical avenue to growth in all aspects of business. One of the most beneficial measures for catalyzing growth involves using technology to deliver strategic transformative solutions to drive business processes. This is also called digital transformation. Although this phrase may seem intimidating, this article is intended to demystify the term for Construction professionals. Specifically, we will cover management challenges, technology implementation challenges and the long-term advantage of embracing digital transformation. Construction clients are traditionally slow to change their processes. Owners generally hesitate to invest resources into new technology, especially if they think their traditional processes are still working. In fact, nearly 40% of construction companies are still using manual methods, including spreadsheets, whiteboards and printed paper. To illustrate the toll manual processes take on resources in the construction industry, we have listed some of the most common cost management and resource gaps construction companies face due to a lack of investment in digital transformation. Based on the responses of trade contractors that utilize more than one primary tool, their top five cost management challenges include: Managing change orders and documentation through the whole approval process Status reporting during the project Effectively integrating cost and schedule information Tracking costs for every aspect of the job to determine how they impact overall project costs Tracking units of work completed in the field Though there are several challenges associated with adherence to manual processes, a poor technological implementation can bring its own trials. When it comes to implementing construction technology, some of the main challenges include resource availability and capability gaps. The top five challenges include: Too much training required Lack of time to evaluate technology options Lack of internal capability to implement/manage technology Resistance from field staff Lack of senior management support Given the very real challenges that can come with implementing a new technology, there are certain best practices we use to help make your life easier as you consider and undergo a technology change. These include: Identifying business needs and confirming the technology meets requirements before implementation Developing and following a phased rollout plan that allows for incremental corrections a structured process for engaging all stakeholders Using metrics to determine success against identifiable needs Openly communicating about progress towards mutually understood goals Due to the expanded capacity afforded by digital transformation, the upfront ‘investment’ of time needed to implement technology will often ultimately save you time in the long run. If you have any questions on how digital transformation may benefit your organization, please contact our team or visit our website. Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Digital Transformation Solutions Overview Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. ### Cybersecurity in the Construction Industry All companies are susceptible to cybersecurity attacks; however, this article focuses on some of the main vulnerabilities within the construction industry, as well as proactive steps that organizations can take to boost cyber defense. What are some of the most common entry points for threat actors in the construction industry? Threat actors are always looking for a way in, and the construction industry is a prime target due to the variety of ways their organizations can be attacked, including: Construction project management software and SaaS solutions Outdated security policies or lack thereof Proprietary company software and cloud storage Smartphones and laptops – used both at the office and on-site Subcontractors, outsourcing jobs can lead to uncertainty and lack of oversight How can construction companies boost their cybersecurity efforts? While there is no sure-fire solution to cyber-attacks, there are several best practices companies can take, including: Choosing the right software and keeping up to date on security measures/updates Conducting a third-party security analysis/risk assessment to develop an appropriate cybersecurity plan Creating an incident response plan with a trusted partner to make sure they are prepared for an incident For a construction company employing high numbers of workers, each of whom is logging in from a different location, zero trust security can be a good blanket policy that protects widely dispersed points of entry. Making employees knowledgeable about cybersecurity/ hosting training Exploring cyber insurance options Setting expectations and ensuring they are followed when dealing with 3rd party vendors About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page. ### 8 Bonding and Surety Trends to Watch in 2023 Below is an overview of the current trends in surety and bonding that middle-market construction companies should consider when formulating their strategic plans. In an industry as dynamic and risk-prone as construction, staying abreast of these trends is essential for ensuring the company's financial stability and continued growth.1. Digital Transformation in Bonding Processes One of the most prominent trends in recent years is the digital transformation of bonding processes. Traditional paper-based systems are being replaced with digital platforms that streamline the application, approval and issuance of bonds. Middle-market construction companies should explore adopting these digital tools to reduce paperwork, improve efficiency and reduce turnaround times when obtaining bonds.2. Increased Focus on ESG Factors Environmental, Social, and Governance (ESG) factors are gaining traction in the construction industry. Surety providers are placing more emphasis on companies' commitment to sustainability, safety practices and ethical conduct. As part of your strategic planning, consider how your company can align with ESG principles, as this can enhance your bonding capacity and reputation.3. Cybersecurity and Data Protection With the increasing reliance on digital platforms, the risk of cyberattacks and data breaches has grown significantly. Construction companies are becoming prime targets for cybercriminals. Investing in robust cybersecurity measures and insurance coverage is crucial for protecting sensitive data and maintaining trust with clients and surety providers.4. Rising Surety Bond Costs The cost of obtaining surety bonds has been steadily increasing due to factors like rising construction costs, more stringent underwriting standards, and increased risk awareness. As part of your strategic planning, you should anticipate these rising costs and incorporate them into your project budgets to maintain profitability.5. Collaboration with Surety Providers Building strong relationships with surety providers has become increasingly important. Collaborative partnerships can help construction companies access larger bonding capacities and more favorable terms. Consider engaging in regular discussions with your surety provider to understand their requirements and expectations, which can inform your strategic planning.6. Supply Chain Disruptions The global supply chain disruptions witnessed in recent times have significantly impacted construction projects, causing delays and cost overruns. As part of your strategic planning, assess supply chain risks and develop contingency plans to mitigate disruptions that could affect your bonding capacity and project timelines.7. Talent Acquisition and Retention Securing skilled talent is a growing challenge in the construction industry. Surety providers may inquire about your workforce's expertise and qualifications when evaluating bonding applications. Your strategic plan should include initiatives for talent acquisition, training and retention to demonstrate your company's ability to complete projects successfully.8. Compliance and Regulatory Changes Construction companies must remain vigilant about evolving regulations and compliance standards. Failing to adhere to these requirements can lead to bond claims and project delays. Stay informed about regulatory changes and ensure that your strategic plan includes measures to address compliance challenges.In conclusion, the construction industry is evolving rapidly, and middle-market construction companies must adapt to these changes in their strategic planning. Embracing digital transformation, addressing ESG considerations and enhancing cybersecurity are all vital steps to secure bonding capacity and thrive in a competitive market. Collaborative partnerships with surety providers, proactive supply chain management and a focus on talent acquisition and compliance will further strengthen your company's position.About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.   ### Planning Considerations for Business Transitions When assessing the future of their business, it’s never too early for an owner to start planning.  Business owners have several pathways available when contemplating a transition of their company: they can sell all or a portion of it to an outside party; offer ownership to a key member (or members) of management; or transfer it as a gift or sale to family members. Regardless of choice, during the planning stage it’s important to prioritize three key considerations: business, personal, and financial.Based on our experience, business owners tend to prioritize one or two aspects and neglect the others. Unfortunately, it’s the personal aspect that’s often overlooked as many business owners haven’t yet decided what they want to do in the future. Since most owners typically spend about 50-60 hours a week managing or thinking about their business, it’s essential for them to determine how they can find fulfillment once they’re no longer involved by identifying other interests and discovering new ways to make a positive impact in their next phase of life.Business owners need to pay attention to their financial or wealth management portfolios to determine the dollar amount they’ll require to maintain their current or desired lifestyle. Adequate knowledge and proper planning allow owners to avoid any unexpected surprises and set suitable goals to achieve their objectives.An always important aspect of running a business is the ability to reduce risk. The five Ds that can significantly impact a business are death, disability, divorce, disagreement and distress.It is important to take steps to mitigate these risks. For example, an owner can obtain key person life insurance to ensure appropriate coverage. It’s essential, for instance, to have updated buy/sell agreements in place that align with your desired business transition plan in the event of any of the five Ds.Proper estate planning can also help address unforeseen events and ensure that your wishes are carried out in managing the business and other affairs. These are just a few examples, and it is recommended to tailor your risk management plan to your unique situation.These are just a few considerations that should be addressed to evaluate and understand your options for transitioning your business, ensuring you have no regrets and maximizing the value of your business. We’ll discuss many other areas of focus in future articles, including wealth management and key steps you can take to maximize the value of your business.Please contact your Schneider Downs advisor if you have any questions or would like to discuss further.About Schneider Downs Exit and Succession Planning Schneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Exit and succession planning is one of the most important strategies you will need to implement throughout the life of your business, and whether you are ready to start today or in 10 years, it’s never too early to begin the discussions. Schneider Downs is uniquely qualified to provide you with ideas, options and innovative solutions to meet whatever objectives you have in mind.To learn more, visit our dedicated Exit and Succession Planning Services page.  ### Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the financial and insurance industry in 2023?In support of Cybersecurity Awareness Month, we are examining reported incidents by industry. The focus of this article will be on the financial and insurance sector.Despite the plethora of standards and regulations affecting the financial and insurance sector, threat actors continue to target this group at an alarming rate. In fact, finance and insurance was ranked as the most attacked sector for four consecutive years between 2016 and 2020 according to the IBM X-Force Threat Intelligence Index.So why are threat actors continuing to go after this sector despite the regulatory and compliance obligations that ensure minimum control hurdles that make it more difficult to compromise? The answer is pretty simple: the pure volume of sensitive data.In fact, the Verizon 2023 Data Breach Investigations Report (Verizon DBIR) found that 97% of the reported incidents were financially motivated, and 74% pursued personal data – motivation and targets that go hand-in-hand in the cybersecurity world.And while some may think this sector has extra protection with so many regulations and standards, extra layers of protection exist because this sector is so often successfully attacked.So, what were the most common cybersecurity attack methods in the financial and insurance sector in 2023?According to the 2023 Verizon DBIR, 77% of all reported incidents in the financial and insurance sector were basic web application attacks, miscellaneous errors and system intrusions.  Basic Web Application Attacks and the Financial & Insurance SectorBasic web application attacks are exactly what they sound like: attack methods that require low complexity including brute force attacks. Brute force attacks are simply when threat actors use automation to gain unauthorized access by guessing usernames and passwords. Companies can reduce their risk by limiting the number of login attempts from individual IP addresses or automatically locking accounts after too many failed logins.  Additionally, increasing the strength and complexity of passwords can decrease the likelihood of success for threat actors implementing brute force or other password cracking techniques.Also, companies should keep up to date on when their data has been part of previous breaches and change the security information – as many threat actors may just source security credentials from previous breaches and apply them to new ones.Miscellaneous Errors and the Financial & Insurance SectorMiscellaneous errors are another simple threat with major consequences and occur when protected data is sent to the wrong person.Just think about the pure volume of protected data such as social security numbers of clients and beneficiaries, financial account information and corporate data exchanged every day in this sector –  both electronically and physically – and what could happen if it falls into the wrong hands.The threat of miscellaneous errors goes beyond stolen data and breached accounts. A threat actor armed with the right information can employ social engineering to impersonate both customers and companies to advance attacks.The security burden also falls on the end user in this case. Be sure to update your physical mailing information and change your passwords if you have been part of a breach, and use different passwords for different accounts. Don’t let a breached password be a master key for all of your personal and private information.System Intrusion and the Financial & Insurance SectorSystem intrusion is the more sophisticated of the top three attack methods and is more methodical in that these attacks leverage malware and hacking to gain access, which can include ransomware. This attack method dropped from 27% to 14% compared to 2022 because miscellaneous errors increased, but it is still a popular attack method in the financial and insurance sector.Organizations across all industries can be proactive against system intrusion attacks by employing more comprehensive intrusion prevention and detection capabilities within their network security strategy, such as System Information and Event Monitoring (SIEM), Security Orchestration Automation and Response (SOAR) and Managed Detection and Response (MDR) to emphasize automated controls which scale to improve effectiveness of preventing attacks.This article is part of a series highlighting the most common cybersecurity incidents by industry and is based on data from the 2023 Verizon DBIR. Additional articles include: Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Cybersecurity Awareness Month Celebrates 20 Years It is important to note that the data referenced is from organizations that chose to disclose incidents and data breaches.About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats.Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Incentive Compensation for Construction Industry Employers Good employees are hard to find, particularly in the construction industry. If your business has struggled to attract and retain top talent, a nonqualified deferred compensation plan (“NQDC plan”) may be the tool you have been missing.Compensation packages in the construction industry typically combine a relatively low rate of base pay with substantial project-based commissions or bonuses. While effective at rewarding productive employees upon completion of key projects, such compensation packages leave the door open to poaching by competitors once annual bonuses have been paid.Adding a NQDC plan would enable the employer to introduce an additional element to the compensation package: time. For example, instead of offering a $50,000 annual cash bonus, a NQDC plan might offer a $200,000 cash bonus that is payable only if the employee remains with the employer for four years. Making a significant amount of compensation dependent on future services encourages retention and incentivizes employees to take the long-term financial success of the company into account. A well-designed NQDC plan offers the following features and advantages: Participation can be limited to only a few key employees, with no requirement to offer similar benefits to the workforce at large. Any benefit amount is allowable, and benefits can differ from participant to participant. Benefit determinations can be discretionary; formula-based (for instance, a specified percentage of revenue or profits); or a combination of the two. Vesting provisions can extend as long as the employer desires. (Typical vesting schedules include a rolling four-year vesting schedule applied to each annual benefit, or, for employers looking to encourage longer-term retention, a graded 10-year vesting schedule with the bulk of vesting delayed until the later years). Accelerated vesting and/or early payout can be provided in certain circumstances, such as death, disability or a change in control event. Benefits are not required to be pre-funded by the employer. Benefits are taxed to the employee and deductible by the employer in the year paid (i.e., not until after vesting).  A NQDC plan can also be designed to include “phantom equity” features that mimic the economic impact of business ownership. A phantom equity plan measures benefits not in terms of cash, but rather in terms of hypothetical shares that mirror the value of the enterprise or even the employee’s specific division. As the company grows, so does the value of the participant’s account.Reach out to a member of the Schneider Downs Retirement Solutions team to learn more about how your company might benefit from a custom-tailored NQDC plan.  ### Understanding Coronavirus State and Local Fiscal Recovery Funds Audit and Reporting Requirements Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Overview. The SLFRF program authorized by the American Rescue Plan Act delivers $350 billion to over 30,000 recipients across the country to support their response to and recovery from the COVID-19 public health emergency. The Department of Treasury is still accepting requests for funding today through its submission portal. The 2022 Final Rule, issued on April 1, 2022, describes how recipients can use SLFRF funds to replace lost public sector revenue, respond to public health and negative economic impact of the pandemic, provide premium pay for essential workers and invest in water, sewer and broadband infrastructure. A 2023 Interim Final Rule, issued by Congress in September as part of an amendment to the SLFRF program through the Consolidated Appropriations Act, provides additional flexibility for recipients to use SLFRF funds. Recipients are encouraged to review the 2022 Final Rule, the Overview of the 2022 Final Rule and the 2022 Final Rule Frequently Asked Questions to assist in determining eligible uses of funds. The 2022 Final Rule FAQs have been updated to address the 2023 Interim Rule. Recipients are required to meet compliance and reporting responsibilities, which vary by the type and amount of funds received. Treasury released updated Compliance and Reporting Guidance on September 27, 2023, providing additional detail and clarification, which should be read in conjunction with the Award Terms and Conditions, the authorizing statute, the Final Rule and other regulatory and statutory requirements. Audit Requirements Treasury has recognized that many recipients of SLFRF funds may be required to comply with Single Audit or program-specific audit requirements for the first time. An alternative approach, available for recipients of SLFRF that would otherwise not be required to undergo an audit if it were not for SLFRF expenditures, permits eligible recipients to have a compliance examination engagement performed in accordance with the Government Accountability Office Government Auditing Standards. Eligible recipients include those entities whose total SLFRF award is at or below $10 million and other federal award funds expended are less than $750,000 during the fiscal year. Subrecipient vs. Beneficiary It’s important for an entity receiving SLFRF funds to understand its designation as either a subrecipient or a beneficiary. This determination will result in either inclusion or exclusion of funds on the Schedule of Expenditures of Federal Awards (SEFA) and, ultimately, whether the entity is required to comply with all requirements of recipients, including a Single Audit and subrecipient reporting requirements. The distinction between subrecipient and beneficiary comes down to whether the entity is receiving the funds to carry out the program or as an end user. End users are considered direct beneficiaries and are receiving SLFRF funds due to experiencing a public health or negative economic impact of the pandemic. Beneficiaries, then, would not include SLFRF funds on their SEFA. Subrecipients of SLFRF funding, on the other hand, receive funds to carry out program requirements on behalf of the SLFRF recipient and therefore would include SLFRF funds on their SEFA. A unique situation exists under the “lost revenue” concept when considering subrecipient versus beneficiary. Recipients may use SLFRF funds to replace lost public sector revenue to provide government services. Treasury has determined that there are no subawards eligible under the “eligible use” category of lost revenue. The definition of subrecipient states that the subrecipient carries out the program and the use of lost revenue funds does not give rise to a subrecipient relationship, therefore any funds received to replace lost revenue by an entity, other than the original recipient, should be excluded from the SEFA. Entities should review their SLFRF agreements, as well as the most recent compliance supplement, for important information regarding audit requirements and to assist in determining whether they’re a subrecipient or a beneficiary. They’re strongly encouraged to consult with the SLFRF funder on the determination. Helpful Resources: 2023 Compliance Supplement U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 What were the most common cyber attack patterns in the healthcare industry in 2023?In support of Cybersecurity Awareness Month, we are examining reported incidents by industry. The focus of this article will be on the healthcare sector.When hospital operations shutter and patient medical records are exposed, life-threatening consequences can occur. Some estimates suggest that hospitals produce nearly 50 petabytes of data on a daily basis, which is an extremely large volume to process…let alone protect. And countless entry points, such as medical record databases, web-facing telehealth applications, health insurance and pharmacy exchanges and more, leave the healthcare industry vulnerable to threat actors looking for financial gain through means of extortion.In fact, the Verizon 2023 Data Breach Investigations Report (Verizon DBIR) found that 98% of the reported incidents were financially motivated with 67% of breaches targeting personal data, 54% targeting medical data and 36% targeting credentialsSo, what were the most common cybersecurity attack methods in the healthcare industry in 2023?According to the 2023 Verizon DBIR, 68% of all reported incidents in the healthcare industry were from system intrusion, basic web application attacks or miscellaneous errors.System Intrusion and the Healthcare IndustryThe U.S. healthcare industry continues to battle system intrusions, which involve situations where a threat actor uses technological means to gain unauthorized access to a healthcare system or database. According to the Verizon DBIR, although the number of ransomware incidents peaked across the healthcare industry back in 2021, the last three years resulted in a significant increase in ransomware-caused data breaches.Data breaches occur when sensitive patient and/or hospital information is compromised and obtained by unauthorized individuals, which in the healthcare world, is a constant danger with the amount of sensitive data stored in hospital databases and EMR systems.And while hospitals and security personnel can be properly informed of how to detect and protect against data breaches, it's only a matter of time before most experience one, unfortunately. This not only affects patient record data security, but it can also impact the quality of care. For example, this article explains a recent ransomware attack that caused a data breach resulting in emergency room and clinic shutdowns across 16 hospitals in 4 states.Basic Web Application Attacks and the Healthcare IndustryThe COVID-19 pandemic reshaped virtually every industry, but most arguably healthcare. When in-office visits became obsolete for all non-life-threatening medical concerns, doctors and caretakers took to third-party web-based and mobile applications to conduct virtual visits, refill prescriptions and send follow-up messages directly to patients. Even with the proper controls, such as multi-factor authentication and automated security tools, these apps have vulnerabilities that threat actors are ready to expose. In a number of reported cases, threat actors were able to obtain unauthorized access through virtual platforms, with the ability to view sensitive payment, personal and medical data.Nevertheless, you should still trust telehealth services. Hospital networks across the country are ramping up their preventive and detective controls to avoid attacks from occurring, enhancing response capabilities to reduce the impact of an attack and accelerating the time it takes to recover system availability and lost data.While hospital systems continue to work toward better cyber hygiene, it is important to recognize our individual role in securing data, particularly where patients are given options of utilizing controls, such as multi-factor authentication and increasing the strength of passwords for access to medical web-based applications.Miscellaneous Errors and the Healthcare IndustryWith the ever-growing volume of data and the fast-paced nature of the healthcare industry, it’s easy for miscellaneous errors to occur. In the healthcare world, miscellaneous errors are often rooted in human mistakes and take the form of mis-delivery. Mis-delivery occurs when a healthcare employee sends personally identifiable data to an unintended recipient via email or another communications channel, such as the U.S. Postal Service.When sensitive medical paper documents are mailed, sometimes there are signs on the envelopes that their contents include test results, explanations of benefits or other personal information. If there’s too much information revealed through an envelope’s clear window, your mail carrier or a potential threat actor could be privy to sensitive information that they could use against you.This article is part of a series highlighting the most common cybersecurity incidents by industry and is based on data from the 2023 Verizon DBIR. Additional articles include: Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Our for in 2023 Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 Cybersecurity Awareness Month Celebrates 20 Years It is important to note that the data referenced is from organizations that chose to disclose incidents and data breaches.About Cybersecurity Awareness MonthSince 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month to raise awareness about the importance of cybersecurity in the public and private sectors and tribal communities. The year marks the 20th year anniversary of Cybersecurity Awareness Month and this year's campaign, Secure Our World, focuses on four ways to protect yourself, your family and your business from online threats.Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.  ### Prevention and Detection – Key Methods to Protect Against Identity Fraud Learn the key methods to prevent and detect identity fraud before it happens to you. There’s always a risk that identity fraud can happen to you. In fact, nearly 33% of Americans have faced some kind of it in their lives. Experts indicate that this percentage will increase significantly in the coming years. Nevertheless, there are key steps and regular practices you can implement TODAY, to reduce your overall risk. Follow these key methods to prevent and detect identity fraud. #1 - Freeze. Your. Credit. Perhaps the single best thing you can do to reduce the risk of identity fraud – freeze your credit with each of the big 3 credit bureaus – Experian, Equifax, and TransUnion. A credit freeze keeps the sensitive data in your credit files from being accessed without your consent. This act is one of the very few ways to truly prevent several means of identity fraud. If your credit is frozen, the credit bureau will not release the data to the potential creditor to approve your application. Each time that your credit needs to be legitimately pulled, however, you’ll need to “unfreeze” your credit with the bureau that needs to pull your credit. Unless you’re buying a car every month, it’s very likely you can set and forget your credit freezes for 99% of each year. What’s seldom talked about is that this process of freezing and unfreezing your credit would previously cost you up to $10 for each act of freezing/unfreezing, with each bureau! That’s up to $60 just to run your credit. This practice ended with each bureau during the 2020 pandemic when it became completely free to freeze/unfreeze credit with each bureau. To this day, it’s never been easier to freeze/unfreeze credit. You just need to be mindful of maintaining strong authentication controls with each credit bureau account (more on that later). How to Freeze Your Credit OK, so you want to protect you and your loved one’s identities, but how? Step one is to contact each of the three major credit bureaus individually by online or phone (via snail mail is an option too, but it’s 2023 folks!). If you’re doing this online, you’ll need to sign up for an account with each bureau. To do so, you’ll need to provide a decent bit of sensitive personal information such as your name, address, SSN, passport/license, tax documents, utility bills, etc. Once the freezes are in place, your credit files are secured until you lift the freeze or “unfreeze” each account. You can even issue timed temporary unfreezes to apply for credit. In the meantime, you can configure email notifications related to activity with each account. You can also freeze the credit of a child, spouse, or incapacitated adult at all the 3 below credit bureaus by providing required documentation (birth certificates, social security cards, court orders, etc.). You’ll just need to ensure they have credit to freeze. Experian https://www.experian.com/freeze/center.html 888-397-3742 Equifax https://www.equifax.com/personal/credit-report-services/credit-freeze/ 800-349-9960 TransUnion https://www.transunion.com/credit-freeze 888-909-8872 How to Unfreeze Your Credit As previously mentioned, you can likely keep your credit frozen with all bureaus for 99% of the year. However, you may need to unfreeze your credit to apply for credit so that the lender can assess your ability to pay – whether you’re trying to buy a car, furniture, a mortgage, rent an apartment, etc. The actual act of unfreezing your credit is the same as freezing it. You simply need to contact each bureau (online or by phone). Pro tips – when applying for credit, identify the bureau(s) that the creditor will be pulling and only unfreeze with the relevant bureau(s). Then set a limited time to unfreeze the credit, execute your credit application, and sleep tight knowing your credit freeze was only temporary. #2 - Use Strong Authentication Protocols Strong authentication protocols aka the way in which you access your accounts – should be in place for all accounts that are important to you. This should be an absolute no-brainer for your email, financial accounts (including credit bureau accounts), healthcare accounts, social media accounts, computing devices (including laptops and phones), etc. Here are 3 easy ways to implement strong authentication protocols. Set a Strong Password Remember this – password length matters more than complexity (special characters and numbers). Your brain will find that last sentence hard to comprehend because every account you sign up for these days requires the opposite (usually only a minimum length of 8 characters, and almost always requires complexity). However, truth be told, the password length is the more critical factor – our professional offensive cybersecurity team will tell you. These folks simulate the actions of real bad actors and can obtain 15-character-or-less passwords (regardless of complexity) more easily than you would be comfortable with. If you’re relying on a password alone (and please don’t) to secure your accounts, it better have a minimum of 16 characters. But why stop there – even at 16-character passwords, your accounts are still very vulnerable. The fact that this password minimum character recommendation continues to increase year after year should tell you that accessing your accounts with only a password is not enough. Set up Multi-Factor Authentication (MFA) Setup required extra steps to get into your accounts. There are a lot of effective ways to implement these steps: SMS-based 2FA codes – where a random temporary code is sent to your mobile device App-based 2FA codes – where a new random temporary code is continuously generated on an app on your mobile device App-based 2FA prompts – where a prompt is sent to an app on your mobile device Physical device-based tokens – where a random temporary code is sent to a separate physical device Physical device-based biometrics – where a request for biometric data is sent to a separate physical device Beware that even MFA is still susceptible to an attack. If a bad actor gets access to your phone number, SIM, or mobile device, this becomes a very real threat. Use a Password Manager To effectively implement passwords and MFA, a password manager is imperative. Password managers are one of the best ways to authenticate efficiently and effectively so that you a) use strong passwords; b) don’t reuse passwords; and c) remember the passwords. Keep in mind that your password manager will have ALL the keys to your digital kingdom. When you sign up for a password manager (I recommend 1Password or Bitwarden’s offline versions), you’ll want to save your “secret key” somewhere safe and separate from the password manager itself, so that you can recover your account if ever needed. Stay Frosty! Detection of identity theft is a critical step to protecting your identity. Here’s the punch list of items to regularly perform related to detection: Be on the lookout for scams – phishing, spoofing, skimming, the methods are endless and continue to get more sophisticated each day as we get better at protection. When in doubt – trust, but verify – before providing personal information, codes, PINs, etc. to unexpected contacts or unfamiliar sources. Just like they say it’s probably fake if it’s too good to be true, it’s probably a scam if you’re not expecting it. I whitelist all phone calls so that you have to be in my contact list to call my cell phone. Check your mailbox before your mail even arrives with Informed Delivery from USPS. Stolen mail = a high impact + easy route to ID fraud. Check your credit reports regularly through AnnualCreditReport.com and subscribe to alerts through your credit card and sites like CreditKarma or NerdWallet. Monitor financial accounts and statements – subscribe to alerts with your financial institutions and reconcile all of your transactions. Monitor healthcare statements – review your “Explanation of Benefits (EOB)” statements and reconcile your services against your insurance benefits. Subscribe to alerts with each credit bureau. Subscribe to alerts with HaveIBeenPwned.com to know when accounts associated with your email address(es) have been compromised in a breach. If you’ve made it this far and have already done or plan to do ANY of the above, then hats off to you! You and yours are safer as a result, and what feels better than that? Stay tuned for the next article in our identity fraud series focusing on the correction efforts, should you unfortunately fall victim to all-too-common fraud. This is the third article of a series dedicated to navigating the identity fraud landscape through effective detection, prevention and correction efforts. View the other articles here: Identity Fraud vs. Identity Theft - What's the Difference? Top 5 Identity Fraud Schemes of 2023   How Can Schneider Downs Help? The Schneider Downs IT Risk Advisory Team can advise you on how to strengthen your organization’s risk management position to ensure optimal asset protection, now and in the future. Feel free to reach out to our team directly at contactsd@schneiderdowns.com. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### Employee Benefit Plans Can Do More Than Satisfy Regulatory Requirements While some believe that an employee benefit plan audit is obtained simply to satisfy a regulatory requirement, there are certain areas in which an employee benefit plan audit can assist, or add value, to plan sponsors. As our own Josh Zimmerly mentioned in his article “Benefit Plan Audit by Infomercial,” an audit can help to evaluate plan health and aid administrative performance by providing recommendations, including flagging potential problems or identifying cybersecurity risks and helping to implement solutions to mitigate risk. Let’s break down these points a bit further. Plan Document Reviews In a benefit plan audit, the auditor typically will perform a comprehensive review of the plan document and understand the mechanics of the plan by performing walkthroughs of key cycles, such as enrollment, distribution, and payroll/contribution process. Additionally, an audit consists of performing substantive testing procedures around eligibility, contributions, distributions, plan expenses, and notes receivable from participants, if applicable. The procedures outlined above could identify potential operational issues associated with the Plan. This discovery then gives the plan sponsor the opportunity to take appropriate corrective action in order for the plan to maintain its qualified tax-exempt status and avoid any potential future liability from the Internal Revenue Service or Department of Labor. Audits also aid in the evaluation of the plan’s health. Plan sponsors should not only be focused on the cost side of the Plan, but also on increasing employee participation so that employees have adequate income at retirement age. One strategy that plan sponsors should consider is the adoption of an automatic enrollment provision for newly hired employees. Additionally, to bolster retirement readiness, plan sponsors should also consider implementing auto-escalation clauses within their plans. Finally, with all of the security breaches (from Target to Equifax), cybersecurity is a hot topic. Plan sponsors should be closely monitoring their service providers’ Service Organization Reports (SOC reports) to ensure that third-party administrators are mitigating information technology risks surrounding physical access, logical access, and change management. Having another set of eyes on the information technology environment through a third-party audit can help identify potential gaps or vulnerabilities while trying to maintain data integrity, protect employee information and retirement assets. So don’t just “set it and forget it”. Plan sponsors should continuously be monitoring the plan to ensure that participants have the available resources to take action and become retirement-ready. Plan sponsors should also consistently evaluate the plan processes to ensure continued compliance with regulatory requirements. Remember, an audit is not just a regulatory requirement, it’s a valuable part of the process. For questions regarding any of the issues discussed in this article, contact Schneider Downs’ employee benefit plan experts. ### Cybersecurity Awareness Month Celebrates 20 Years October is right around the corner and that means another Cybersecurity Awareness Month is here. Since 2004, the United States and Congress have recognized October as Cybersecurity Awareness Month (NCSAM) to raise awareness about the importance of cybersecurity. In celebration of the 20th anniversary, the Cybersecurity and Infrastructure Security Agency and the National Cybersecurity Alliance have introduced the "Secure Our World" campaign, which highlights 4 simple steps you can take to protect yourself, your family and your business from online threats. In support of NCSAM, the Schneider Downs Cybersecurity team is releasing a new article series focused on industry-specific cyber threats based on the 2023 Verizon DBIR Report. The articles are available to view on our dedicated Cybersecurity Awareness Month webpage or at the links below: Protect Your Patients and Their Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Financial and Insurance Data: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Manufacturers: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Retail Business: 3 Common Cyber Attack Methods to Watch Out for in 2023 Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023 Additionally, our team is highlighting some of our most popular security awareness materials and thought leadership of the past year, outlined below. Webinar Replay - Inside a Ransomware Attack: Chronicles of a Rapid Responder So, what actually occurs after a ransomware attack happens? Find out in the replay of our popular “Inside a Ransomware Attack" webinar and learn about the real-world experience of a large-scale ransomware attack that threatened global business operations. View the Replay Guide - 7 Best Practices for Keeping Your Home Network Safe We often focus on network security at the office, but how secure is your home network? Learn how to “layer” controls and maintain strong defensive security measures at home to protect your data from digital intruders. Download the Guide Guide - Understanding the Security and Privacy Concerns of TikTok TikTok is one of the most popular apps out there, but also one of the most controversial. Learn more about the data TikTok users share, with whom the information is shared and why the platform is considered to be such a high security risk. Download the Guide We encourage you to share this article or any of our cybersecurity resources with your network. You can find additional cybersecurity resources and articles on our Cybersecurity Resource Library. If you have any questions about our security awareness materials or cybersecurity solutions, please reach out to our team at cybersecurity@schneiderdowns.com. Related Resources CISA – Secure Our World Homepage CISA – 4 Things You Can Do To Keep Yourself Cyber Safe Schneider Downs Cybersecurity Resource Library Verizon 2023 Data Breach Investigations Report About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### More States Considering FASFA Mandates for High School Students Why are more states considering Free Application for Federal Student Aid (FAFSA) mandates for high school students? High school FASFA mandates are gaining traction across the country in an effort to increase application rates.  Last year only 54% of high school seniors completed the form, falling from the 61% completion rate of years past. One of the reasons why the percentage of students filling out the FAFSA each year may be low is that the form is seen as “awkward” due to the personal questions included in the application.During the 2017-18 academic year, Louisiana became the first state to mandate that high school students complete the FAFSA. As a result, Louisiana had the highest percentage of FAFSA completions in 2018 (70%) which in turn increases higher education enrollment.So far this year, four states, Indiana, Oklahoma, Nebraska and Connecticut, have implemented requirements for FAFSA completion. Michigan, Pennsylvania, Tennessee and Massachusetts are also considering making changes to their FAFSA a requirements for high school students outlined below: Michigan has a proposed bill regarding the mandate but allows for exemptions for students who are either ineligible for financial aid or simply uninterested in attending college. Pennsylvania has a proposed bill mandating the FAFSA through making the FAFSA required for graduation, unless granted permission from a parent or guardian to opt out. Massachusetts has a proposed bill which will mandate the FAFSA, but alongside that will have a fund that helps families fill out the FAFSA. Tennessee has not mandated FASFA for high school students, instead opting to incentivize it by offering free community college for those who completed the application – and, as a result, has a the highest FASFA completion rate in the country. These mandates can increase students’ awareness of financial aid opportunities. The intention is to help students who believed they could not afford college find a way to support their further education. In fact, nearly 3.8 billion in Pell Grants were left on the table in 2021, due to FAFSAs not being completed by students.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### Can “Moore” Tax be Refunded from IRS? How to Protect Your Potential Claim for Refund of §965 Foreign Corporation Transition Tax The Supreme Court has agreed to hear a case challenging the constitutionality of the transition tax on deferred foreign earnings imposed by Section 965 of the Internal Revenue Code.BackgroundInternal Revenue Code Section 965 imposed a one-time transition tax (essentially a toll charge) on the undistributed, non-previously taxed post-1986 foreign earnings and profits of certain U.S.-owned foreign corporations. The tax, included in the 2017 Tax Cuts and Jobs Act (TCJA), requires mandatory inclusion of deferred foreign income as subpart F income by U.S. shareholders of deferred foreign income corporations (DFICs), including domestic pass-through owners of a domestic pass-through U.S. shareholder. It is a tax on foreign income deemed distributed to shareholders that was previously treated as not currently taxable under the Internal Revenue Code existing prior to the TCJA.The tax, calculated at a reduced rate dependent upon whether the deferred earnings were held in cash or other assets, could be paid immediately with a 2017 return (generally) or was allowed to be paid in installments over eight years ranging from 8% for the first five installments to 15%, 20%, and then 25%, respectively, over the last three installments.Taxpayer Challenge to Tax on Income Not ReceivedTaxpayers from Washington state, Charles and Kathleen Moore (the Moores) are challenging the assessment of tax on their proportionate share of corporate income earned by a foreign corporation. The income was never distributed to them in cash (or other property); rather, the corporation reinvested all earnings in its business of assisting rural farmers in India.The Moores lost a refund claim case in the Western District of Washington in which they argued that Section 965 violated the Sixteenth and Fifth Amendments to the U.S. Constitution. They appealed to the Ninth Circuit court which affirmed the district court’s ruling. The Moores petitioned the Supreme Court to review the Ninth Circuit’s decision; on June 26, 2023, the Supreme Court agreed to hear whether the tax is constitutional under the Sixteenth Amendment.The Moores argued that under previous Supreme Court rulings, income had to be realized in order to be taxed. In part, that decision provided that income is realized when there are instances of [1] undeniable accessions to wealth, [2] income is clearly realized, and [3] income is that over which the taxpayers have complete dominion.The case will be argued before the Supreme Court later this year and a ruling is likely sometime in the middle of 2024.Possible Ramifications of Supreme Court’s DecisionThere are a number of possible (and uncertain) outcomes resulting from the Supreme Court’s decision. Obviously, the Supreme Court could agree with the Ninth Circuit’s decision, in which case the tax regimewould be found to be constitutional and there is no change in law. Another option includes the Supreme Court striking down all or possibly some part of the deemed repatriation tax regime. In this instance, there may be opportunities to recover taxes paid in earlier years.What Should Taxpayers Do Now?Taxpayers typically have a limited time to file refund claims with the IRS. Occasionally, this time limit may expire before the taxpayer’s right to the refund claim is finalized and determinable (e.g., during pending litigation). To preserve its right to claim a refund in these instances, the taxpayer can file a protective refund claim.The deadline for filing for administrative relief is generally the later of three years from the time a return was filed, or two years from the time the tax was paid. However, for taxpayers who made the election under §965(h) to pay the liability over eight years, filed their returns late, or have open years due to audits or other arrangements, they might want to consider the merits of filing a protective claim to preserve the ability to file for refunds on amended returns for tax years that might close between now and the ruling. Given that many taxpayers with this issue may file returns on extension in September and October, the statute of limitations on some tax years might be closing between now and October 15 for some tax years.However, as with most things in life and tax, there are other positive and/or negative implications of choices that might need to be considered before making a decision to file a protective claim. For help in making this decision, please reach out to your Schneider Downs tax consultant, who can discuss your options with you in more detail.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### How LinkedIn and a Phone Call Led to the Massive MGM Ransomware Attack How did the ransomware attack on MGM Resorts start?“I know more about casino security than any man alive, I invented it, and it cannot be beaten. They got cameras, they got locks, they got watchers, they got timers, they got vaults, they got enough armed personnel to occupy Paris!” - Reuben Tishkoff, Ocean’s Eleven.When many of us think about casinos, we probably think about the top-tier security measures we have seen in movies such as Ocean’s Eleven, a film whose entire plot surrounds the slim odds of getting past these impenetrable security measures.Incredibly, just like the heist in the popular film, the MGM ransomware attack was largely successful. The culprits employed the tried-and-true tactic of social engineering.The ransomware attack has had a far-reaching impact on both internal and client-facing operations. Since the attack, casino operations have come to a halt with electronic gambling and slot machines being impacted – which is estimated to be costing MGM nearly $8.4 million a day in revenue and cash flow.Additionally, physical operations across MGM properties, including the Bellagio, Mandalay Bay and the Cosmopolitan, were severely impacted as a result of the system outage. Guests reportedly waited for hours to get physical room keys, verify reservations, access parking kiosks, were stuck in elevators, couldn’t verify reservations and had to get hand-written receipts for casino winnings.Both Scattered Spider and ALPHV/BlackCat have claimed responsibility for the attack and shared that they used LinkedIn to find an MGM IT help desk worker and simply picked up the phone to start the attack. While we don’t know precisely what was said on the phone call, security experts believe that the end result was that somebody at the MGM help desk handed over the credentials needed to access the system… within ten minutes.This attack method, known as vishing, relies on phone calls to gain access to systems and, while not as common as email-based phishing accounts, have up to a three-times higher success rate, for several key reasons, including the human factor, limitations of security software and lack of training.The Human Factor and VishingThreat actors target the human factor in nearly all attacks, but it is especially crucial in vishing, since the entry point is a conversation with an actual person, who inherently wants to help the best they can – especially when they work for an IT help desk, as was the case for MGM. The threat actor can impersonate anybody they want on the phone to establish credibility and, assuming they do the proper research, can sound so authentic that they are often given whatever access they need.Security Software Limitations and VishingThe very fact the threat actor was able to get through to the MGM help desk illustrates another key vulnerability vishing attacks exploit: access. Think about the amount of phishing or smishing attacks that are automatically flagged and triaged through security software, which effectively minimizes the human risk by simply not letting them reach the recipient.In the case of vishing, the phone calls may come from an unknown number, but have a familiar area code – or if a company is a national or international conglomerate like MGM, people may expect random phone calls. While most cell phones come with anti-vishing security measures, corporate communication systems most likely do not, and workers expect calls from unknown numbers.  Lack of Training on VishingFinally, we know what phishing and smishing communications look like. Common red flags, like demonstrating  a sense of urgency, poor grammar, typos, links and attachments, are often easy to spot in the wild with educated eyes.The reason most people know this is hopefully because they were provided with proper training that includes security awareness materials and simulated phishing attacks. But when was the last time your organization did any training on non-electronic social engineering?Remember, social engineering can be conducted over the phone and in person, so be sure to educate your employees on how to screen phone calls and physical interactions with the same filter as email or text.With a recent attack on Caesars Casino (also claimed to be by Scattered Spider) that ended in a reported $15 to 30 million ransomware payment and the demonstrated impact of MGM refusing to pay the ransomware, now is a great time for your organization to remind your end users of how they can identify and prevent attacks.While the casino attacks are currently at the top of the news cycle, the reality is that an operational shutdown like this within a municipality or hospital can have far more deadly implications than breaking out the sliding credit card machines or writing physical cash out tickets.If you have any questions about security awareness training, incident response planning or any other cybersecurity-related concerns, please reach out to the Schneider Downs Cybersecurity team at cybersecurity@schneiderdowns.com.Please note specific details on the attack have not been confirmed by MGM, Caesars or FBI outside of the statement posted on MGM’s website and X. About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page.  ### 5 Red Flags of Fraudulent ERC Providers The IRS has issued increasing warnings urging taxpayers to beware of ads that promise big money for claiming the employee retention tax credit.  The ERC provides needed relief to help businesses affected by the pandemic; however, the incentive has also catalyzed the creation of a cottage industry of ERC providers that profit from calculating huge benefits for taxpayers who may not actually qualify based on the letter of the law. Warnings regarding Employee Retention Credit claims feature on the IRS’s 2023 Dirty Dozen list, IRS News Releases and in recent updates to the IRS’s Frequently asked Questions on their ERC page.  The IRS has signaled that they have entered a new phase of increased scrutiny on ERC claims. Going forward, there will be more emphasis placed on auditing claims, investigating fraud and identifying of promoters of fraudulent claims. Taxpayers who are discovered to improperly claim the ERC must pay the credit back, possibly with substantial penalties and interest.  These five tips can help ensure a taxpayer does not become a victim of an unscrupulous ERC promoter: Beware of Aggressive Marketing: Radio, television, online ads, unsolicited calls or direct mailings made to look like official IRS correspondence promising “$26,000 per employee” and an “easy application process,” are all tactics to be wary of.  Beware of Quick Determinations of ERC Eligibility:  ERC eligibility cannot be determined in minutes; determining eligibility for a claim involves reviewing an organization’s gross receipts and/or conducting an in-depth analysis of “more-than-nominal” impacts from government orders.  Beware of Firms Unwilling to Sign as a Paid Preparer: If preparers refuse to prepare and sign the amended Forms 941-X, the taxpayer is taking on the sole risk for the claim.  Beware of Fees Based on a Percentage of the Refund: Fees based on a percentage of the refund incentivize providers to calculate higher ERC claims.  Beware of Providers Who Do Not Provide Documentation: Claiming the ERC is a complicated procedure that requires careful review of federal, state and local orders to determine eligibility as well as complex entity aggregation and full-time employee rules. Providers should be able to provide detailed documentation citing specific government orders that support a taxpayer’s eligibility and their calculations.  If you believe your organization might qualify for the employee retention credit, it’s increasingly important to be careful in deciding who will help you make that determination. In this era of increased IRS scrutiny, choosing the wrong provider could be putting your business at risk. About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.   To learn more, visit our dedicated Tax Services page. ### IRS Issues Moratorium on Processing New Employee Retention Credit Claims Over the past few months, the IRS has issued increased warnings urging taxpayers to beware of ads that promise big money by claiming the employee retention tax credit (ERC). On September 14, the agency progressed from warnings to action, issuing an immediate moratorium on processing new ERC claims through the end of 2023. In IR-2023-169, the IRS notes, “aggressive marketing to ineligible applicants highlights unacceptable risk to businesses and the tax system.”  The agency will utilize the moratorium to allow the addition of increased safeguards to prevent future abuse of the ERC program and to work with the Justice Department to pursue fraud. Answers to all taxpayer questions are not immediately evident in this developing situation, but here's what we know: The ERC program is under an immediate moratorium through at least the end of 2023 on processing new claims. The IRS will continue to work on previously filed ERC claims received prior to the moratorium but emphasize that the standard process goal of 90 days will shift to 180 days due to detailed compliance reviews. Hundreds of criminal cases are already in the works and thousands of ERC claims have been referred to audit. The IRS is developing new initiatives for businesses, including a settlement repayment program for taxpayers who received an improper ERC payment. More details will be available this fall. The IRS Criminal Investigation Division is actively working on identifying fraud within the ERC program. As of July 31, IRS-CI has initiated 252 investigations of ERC fraud involving $2.8B of potentially fraudulent ERC claims. Fifteen of those investigations have already brought federal charges, with the average sentencing on ERC related convictions being 21 months. You can view the complete release from the IRS here. As further guidance is issued, our Credits & Incentives team will continue to monitor the situation and provide updates. If you have any questions, please get in touch with Matt Werner or Ross Alessandro at Schneider Downs & Co., Inc. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures the delivery of technical tax strategies that can be implemented as practical business initiatives. Learn more at our dedicated tax landing page. ### Fraudsters Might Have Stolen $200B in COVID-19 Aid The Washington Post reports that the U.S. Small Business Administration (“SBA”) Office of Inspector General (“OIG”) estimated that more than $200 billion was disbursed in potentially fraudulent loans and grants from COVID-19 relief initiatives. These funds were meant to help small businesses survive during the worst health crisis of the century, but the OIG’s report stated that, “at least 17% of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors.” Specifically, the amount of estimated fraud from the COVID-19 Economic Injury Disaster Loans (“EIDL”) is over $136 billion and Paycheck Protection Program (“PPP”) fraud is estimated at $64 billion from March 2020 to January 2022. These numbers are even greater than the previous projections that the SBA OIG had released. The SBA OIG had previously estimated fraud in the COVID-19 EIDL program at $86 billion and the PPP at $20 billion. A report by The Associated Press stated that scammers had potentially swiped around $280 billion in COVID-19 relief funds and that another $123 billion was wasted or spent improperly. The bulk of losses are from the two SBA programs (EIDL and PPP) and another for unemployment benefits for workers who were affected by the pandemic. The SBA inspector general (“IG”), Hannibal “Mike” Ware, said in a statement that the report by the SBA OIG, “utilizes investigative casework, prior (inspector general) reporting, and cutting-edge data analysis to identify multiple fraud schemes used to potentially steal over $200 billion from American taxpayers and exploit programs meant to help those in need.” Mr. Ware also stated that his office will continue to further assess fraud until investigations are complete. So far, according to the report, the OIG Hotline received more than 250,000 fraud tips since the start of the pandemic, in which 90,000 turned into “actionable leads.” At the 2022 Fraud and Corruption Awareness Seminar, co-sponsored by Schneider Downs, SBA Inspector General Mike Ware and the team of investigators who joined him stated that the volume of tips their office received related to COVID-19 fraud was the equivalent volume of decades of work normally performed by their office. The OIG stated that there were some obvious potential fraud red flags, including various loan applications being submitted from foreign countries or multiple loan applications coming from the same IP address. The report specifically highlighted a fraudster who scammed SBA loan programs over 150 times to receive over $3 million in COVID-19 aid. Up to this point, there has been at least $30 billion in COVID-19 EIDL and PPP funds recovered, returned, or seized by the U.S. Treasury. The OIG’s oversight and investigative work has produced 529 fraud convictions; and 570 investigations are ongoing.If you have any questions regarding potential fraud schemes, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. The Schneider Downs Consulting group has worked with an array of clients, addressing their forensic accounting needs including the investigation of potential and actual cases of fraud, waste and mismanagement. ### Climate Corporate Data Act – What to Know About California SB 253 What are the implications and impact of the CA SB 253 – Climate Corporate Data Accountability Act? On September 12, the California Assembly approved CA SB 253 – Climate Corporate Data Accountability Act. The proposed legislation, set to go to Governor Gavin Newsome’s desk as soon as mid-October, would require both public and private companies meeting revenue requirements and doing business in the state of California to report on Scope 1, 2, and 3 emissions. Here’s a brief snapshot of the proposed legislation and some thoughts about the importance and directionality of this legislation: Impacted Parties: Corporations, limited liability companies, other business entities, and specified partnerships with total annual revenues greater than $1 billion that do business in California. Requirement: Disclosure of Scope 1, 2, and 3 emissions and assurance of those figures Date: Disclosure beginning in 2026 based on a company’s 2025 fiscal year. Limited assurance of Scope 1 and 2 beginning in 2026 and Scope 3 in 2030. Reasonable assurance of Scope 1 and 2 beginning in 2030. Framework: Greenhouse Gas Protocol Where: Disclosed in a public place that maximizes access for consumers, investors, and other stakeholders in a manner that is easily understandable and accessible. This marks the first time in the US that the scope of GHG disclosure extends to privately-held entities and reflects a broader trend of ESG regulation bringing private companies into the disclosure fold. For public companies, the disclosure and assurance effects of the regulation is largely duplicative of the EU regulation CSRD and the SEC proposed Issuer Rule. However, the impact will be more profound on private companies, that were previously not subject to these rules. Furthermore, private companies need to begin to consider what data their supply chain partners can provide as they work through the ramifications of Scope 3. The implications will be far-reaching into this community and the partners that support their business. The train has officially left the station. Schneider Downs Resources Fact Sheet - CA SB 253: Climate Corporate Data Accountability Act Fact Sheet - CA SB 261: Greenhouse Gases: Climate-Related Financial Risk Act Related Articles Understanding the Greenhouse Gases: Climate-Related Financial Risk Act Understanding the Climate Corporate Data Accountability Act About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization prepare for the proposed disclosure requirements and additional ESG-related risks by developing an ESG strategy that aligns with your overall corporate strategy. Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at contactsd@schneiderdowns.com. ### IRS Releases Guidance on the Requirement to Capitalize Research and Experimental Expenditures On Friday, September 8, 2023, the Treasury Department and Internal Revenue Service (collectively the IRS) released Notice 2023-63 (the Notice) (https://www.irs.gov/pub/irs-drop/n-23-63.pdf, providing interim guidance to address three matters.  The Notice also indicates that the IRS intends to issue rules in forthcoming proposed regulations consistent with this interim guidance. Items addressed in the notice are: The capitalization and amortization of specified research or experimental (SRE) expenditures under Section 174 of the Internal Revenue Code amended under the 2017 legislation commonly referred to as the Tax Cuts and Jobs Act (TCJA); The treatment of SRE expenditures under the long-term contract rules of Section 460; and The application of Section 482 to cost-sharing arrangements involving SRE expenditures. The first item has been keenly awaited by taxpayers and their advisors, as the capitalization requirements have been known about since December 2017 and since they are already required for the 2022 calendar year (for which likely most returns have already been filed or due September/October 15, 2023). While research and experimental costs could be fully deducted in the year incurred or paid prior to 2022, these same costs are now required to be amortized over a five-year period for U.S.-sourced costs or over a 15-year period for foreign expenditures. Section 4 provides taxpayers with clarity in determining whether expenditures are SRE expenditures subject to capitalization and amortization under Section 174 (while Section 5 provides rules specific to software development). The general focus of this article is to highlight some of the general provisions contained in Section 4. At an executive level, the Notice provides definitions and rules for complying. The Notice reminds us by reference that specified research or experimental expenditures (SREE) are costs incurred in a taxpayer’s trade or business in the experimental or laboratory sense incident to the development or improvement of a product if they are for activities intended to discover information that would eliminate uncertainty concerning the development or improvement of a product (pilot model, process, formula, invention, technique, patent or similar property).  The ultimate success, failure, sale, or use of the product is not relevant to a determination of Section 174 qualification. The Notice also clarifies that SREEs include “all costs” incident to the development or improvement of a product (or components and subcomponents). The notice includes a “non-exhaustive” list of examples of the types of costs that are SREEs, including: a) Labor costs (includes all elements of compensation such as vacation pay, payroll taxes, pension costs and other employee benefits), b) Materials and supplies, c) Cost recovery allowances (depreciation, amortization, and depletion), d) Patent costs, e) Certain operating and management costs (rent, utilities, insurance, taxes, repairs and maintenance, security costs and other similar overhead costs with respect to facilities and assets used in the performance of research activities and in the direct support of research activities), and f) Travel costs. Interest expense incurred to finance research activities is not a cost requiring capitalization under Section 174. Some other costs not requiring capitalization include expenditures for quality control, advertising, and promotion. The Notice also provides guidance on methods to allocate costs to research activities based on a “cause-and-effect” relationship. Allocation methods can be different between types of costs; however, the method chosen must be consistent for each type of cost. For example, labor costs could be allocated based upon a ratio of time, while facility cost recovery allowances could be determined by a ratio based upon square footage. Finally, Section 4 provides a comprehensive example of cost allocation for a taxpayer with six different departments (manufacturing, research, engineering, legal, personnel and accounting) where both direct and indirect costs are incurred on research projects. While the Notice is not intended to change the eligibility rules for qualifying for the research and development credit, the Notice does provide guidance regarding expenditures that are treated as SRE expenditures under Section 174 and, therefore, affects expenditures that may be treated as SRE expenditures for purposes of calculating the research tax credit. Also, the Notice is not the last word on the capitalization requirements. Proposed regulations are forthcoming. Further, the Notice provides that the IRS is continuing to study issues not addressed in the Notice and is also requesting comments on issues arising from the interim guidance that is expected to be addressed in regulations. Finally, the IRS anticipates the forthcoming proposed regulations will apply for taxable years ending after September 8, 2023. However, a taxpayer may choose to rely on the rules described in the Notice, provided they are applied in a consistent manner. However, the capitalization requirements of Section 174 apply even when a taxpayer chooses not to rely upon the guidance in the notice. If you have questions regarding research and experimental costs required to be capitalized, and how to potentially minimize the impact on taxable income by considering whether your activities qualify for a research credit please don’t hesitate to reach out to Schneider Downs. While staying current in tax credits and economic development incentives can be daunting, our tax professionals are fully committed to assisting you in identifying and securing the tax credits and incentives available to you and your business. Contact one of our R&D Tax Credit experts or learn more on our dedicated R&D landing page. ### Top 5 Identity Fraud Schemes of 2023 What are the most common identity fraud schemes hitting Americans in 2023? Identity fraud losses totaled $43 billion in 2022, affecting 40 million adults nationwide. While the list of identity fraud schemes grows longer every day, there are five common schemes you should know: credit card fraud, bank fraud, tax fraud, medical identity theft, and home title fraud. To detect these before they happen, there are a few red flags you’ll want to be on the lookout for. What are the top identity fraud schemes of 2023? Credit Card Fraud To detect credit card fraud, you’ll want to keep a watchful eye on your account activity. If you spot a transaction you didn’t make, happen to lose your credit card or it’s confiscated, report it immediately. Also, regularly check your credit. CreditKarma, NerdWallet, Mint and Credit Sesame are all free tools to help monitor your credit. Additionally, once a year, you’re entitled to a free report from each of the three main credit bureaus (Experian, Equifax and TransUnion). AnnualCreditReport.com is the only website authorized by the federal government to issue free, annual credit reports from the three bureaus. Bank Fraud Like credit card fraud, to detect bank fraud, you’ll want to regularly monitor your account activity for suspicious transactions or unauthorized access. If you use a mobile banking app, make sure to enable two-factor authentication. Never open the app while connected to a public Wi-Fi network or with an open Bluetooth connection. Tax Fraud While trickier than credit and bank fraud, tax fraud may be detected if you stay on the lookout for any unfamiliar tax documents, forms or transcripts in your physical or digital mailboxes. Also, be aware of scammers calling you pretending to be the IRS. This should immediately raise a red flag. Medical Identity Theft  In 2021 alone, there were 60,000 fraud reports related to healthcare. And that only includes the ones reported to the FTC. Medical identity theft is on the rise, but you can mitigate your risk by keeping an eye on your medical bills and always reviewing your Explanation of Benefits statements to make sure they’re on track with the care you received. If not, it’s a telltale sign that fraud is being perpetrated against you. If you’re denied insurance coverage for a pre-existing condition you don’t have or get a notice that you’ve reached your benefits limit when you know it’s impossible, you have cause for concern. Home Title Fraud Home title fraud occurs when identity thieves fool your mortgage loan servicer into thinking your home title belongs to them. This type of fraud has key warning signs worth mentioning. For starters, monitor all information related to your property through your county’s deeds office. Sometimes free and sometimes not, it’s worth it if you spot something you don’t recognize early. Also, if you have a second home that you don’t visit frequently, have someone routinely check on your house for any sale signs or unauthorized activity. There are several other types of fraud to familiarize yourself with, but with a little research and a vigilant eye on your personal asset activity, you can successfully detect fraud before it happens. This is the second article of a series dedicated to navigating the identity fraud landscape through effective detection, prevention and correction efforts. View the other articles here: Identity Fraud vs. Identity Theft - What's the Difference? Prevention and Detection – Key Methods to Protect Against Identity Fraud   How Can Schneider Downs Help? The Schneider Downs IT Risk Advisory Team can advise you on how to strengthen your organization’s risk management position to ensure optimal asset protection, now and in the future. Feel free to reach out to our team directly at contactsd@schneiderdowns.com. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. To learn more, visit our dedicated IT Risk Advisory page. ### The Push for Electric Vehicle Utilization and Some Challenges that Lie Ahead In April 2023, the California Air Resources Board (CARB) adopted the Advanced Clean Fleets (ACF) rule, with regulations targeting truck buyers.The rule has sparked much conversation since it comes on the heels of a previous rule passed by CARB in 2021 called the Advanced Clean Trucks (ACT) rule, which targeted truck manufacturers with electric vehicle (EV) production requirements. States like Massachusetts, New Jersey, New York, Oregon, Vermont and Washington have adopted ACT, giving rise to speculation as to whether the same states or additional states will step in to adopt the new ACF rule.Although ACF principally aims to reduce emissions and increase zero-emission vehicle fleets, concerns have been raised by fleet operators as to the rule’s feasibility. One point of contention lies in the proposed timeline, which calls for different fleets to be zero-emission depending on the truck class. For instance, sleeper cab tractor fleets would have to be 25% zero-emission by 2033 and 50% zero-emission by 2036. Such tight timelines have raised concerns due to the technical challenges and costs associated with implementing zero-emission or EV fleets. Plus, at this juncture, it’s clear that battery technology is not yet up to par with the capabilities inherent with a CNG or diesel truck. Long-haul battery electric trucks have an operating range of about 150-330 miles, while a clean diesel truck has a range of around 1,200 miles. Weight factors must also be taken into consideration. Currently, battery-electric trucks use batteries that are much heavier than their diesel truck counterparts. This is a concern since trucks are subject to federal weight limits, meaning that operators will have to decrease the payload of each battery-electric truck, which will put more trucks on the road and ultimately increase traffic congestion and tailpipe emissions.Sourcing the materials needed to produce the lithium-ion batteries that power battery-electric trucks has also been an ongoing issue from both a supply chain and an environmental perspective. Most car manufacturers are looking to gain footholds in lithium mines for EV battery materials since two-thirds of the world’s lithium is sourced there, but it can take an average of 16 years or more for a mine to be ready for production. Further, the process of mining lithium and cobalt is energy-intensive and has negative environmental impact, including land degradation and groundwater contamination. Due to these concerns, alternative methods, such as extracting lithium from lakes and clay deposits, are being researched. Switching to an EV fleet also requires reliable charging infrastructure. Significant utility planning, processing time and production time are needed before electric vehicle fleets are up and running. Finally, shortage concerns over lithium and cobalt will ultimately drive up the cost of EVs, which would put smaller trucking companies in a bind if the tight zero-emission timelines proposed in California’s ACF rule is adopted by more states. Many in the industry, particularly those in privately owned small-to-middle market companies, view this type of regulation as yet another government agency with unelected bureaucrats injuring the industry – in its outlook, driver shortage and pipeline – and ultimately the sector’s ability to ship goods to and for customers for a fair price. About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.  To learn more, visit our Transportation & Logistics Industry Group page.   ### Erroneous IRS Form 8955-SSA Penalty Notices Learn more about the CP 283-C penalty notices mistakenly sent out on timely filed Forms 8955-SSA.On September 1, 2023, the Internal Revenue Service announced that a programming error led the agency to issue erroneous notices to plan sponsors regarding late or incomplete filing of Form 8955-SSA.In a bulletin dated September 1, 2023 (view bulletin), the IRS indicated that CP 283-C penalty notices distributed by the agency may have been issued in error. The bulletin further advises plan sponsors that if Form 8955-SSA was timely filed, there is no need to respond to penalty notices dated prior to September 1, 2023.If your company received an IRS penalty notice that is related to the filing of Form 8955-SSA and is dated prior to September 1, 2023, contact the service provider responsible for filing your retirement plan’s annual returns to confirm that the form (if applicable to the plan) was in fact filed on a timely basis. If the form was timely filed, then no response to the IRS penalty notice is required.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Top New Features in Business Central 2023 Release Wave 2 We’re excited about the next release of Dynamics 365 Business Central. There are many new features that make the platform easier to use and help organizations drive scale. We reviewed the new features list, and here are some of the most impactful new features for mid-size businesses. Additional Warehouse Handling Options Business Central has long had a robust inventory management feature set. In this release, it gets even more robust with additional handling options on the following transactions: Production consumption Production output Assembly consumption Job consumption Adding an inventory put-away step on the production output screen gives users greater control over when a finished good is available for sale to customers. This also creates another option for developers to extend QA functionality. The job consumption step also makes the system more usable in an engineer-to-order environment where parts are specific to each job and move within a warehouse before the job is complete or the inventory is consumed in the system. Better Financial Consolidation & Intercompany Tools Previously consolidating Business Central data across environments required handling files and manual effort. With the new release, users can automate the process of consolidating financial data across multiple environments. This release also includes functionality to make intercompany journal entries across environments. These features will benefit any company using multiple localizations of Business Central that must manually perform month-end consolidations. Edit in Excel Added to More Pages The powerful “Edit in Excel” feature has been added to the following pages: Item Reclassification Journal (page 393) Physical Inventory Journal (page 392) Production Journal (page 5510) Output Journal (page 99000823) Consumption Journal (page 99000846) Requisition Worksheet (page 291) Planning Worksheet (page 99000852) Warehouse Item Journal (page 7324) Warehouse Reclassification Journal (page 7365) Warehouse Physical Inventory Journal (page 7326) Pick Worksheet (page 7345) Put-away Worksheet (page 7352) Movement Worksheet (page 7351) Bin Contents (page 7374) Many Improvements in Inventory and Warehousing Create warehouse employees “on the fly.” Better experience when converting a catalog item to actual items. Receive more items than ordered on an inventory put-away document (previously had to create a new PO to receive against). Scan barcodes in the mobile app for iOS and Android. Better Visibility into Inventory Availability A new screen has been added called Reservation Worksheet where users can reserve and allocate incoming goods in bulk. Additionally, a new “Reserved from Stock” field has been added to the Sales Order Statistics page and Sales Order Line fact box to give users a quick insight into whether the order is ready to ship. Copilot has Entered the Bank Rec Process The existing transaction matching feature on the bank rec screen has been enhanced with AI. Overall matching improvements are coupled with a natural language explanation of any proposed matches. We’ll be hosting a webinar showcasing some of these new features. Stay tuned for updates! Please contact Mike Scalamogna or Bob Whalen to request an invite to our upcoming new feature webinar. Click here for the full list of new features. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information visit our dedicated Technology and Data Services page. ### IRS Extends Roth Catch-Up Contribution Effective Date On August 25, 2023, the Internal Revenue Service issued guidance extending the effective date of a controversial provision of the SECURE 2.0 Act of 2022 (“Secure Act 2.0”) for an additional two years.Section 603 of Secure Act 2.0 requires that for certain highly compensated employees, catch-up contributions to a 401(k) or 403(b) plan must be made in the form of after-tax Roth contributions rather than pre-tax deferrals. This provision was originally set to go into effect starting in 2024.In IRS Notice 2023-62, the IRS announced a two-year delay in the effective date of these changes to the catch-up contribution rules. Plan sponsors now have until the first plan year beginning after December 31, 2025 to bring plans into compliance with the new rules.Implementing these Roth changes may prove challenging, particularly for plans that do not include Roth features. In order to continue to accept catch-up contributions by employees with prior-year compensation above $145,000 (as indexed), plan documents, administrative procedures, and payroll systems will need to be revised to provide that catch-up contributions can be made only in the form of Roth contributions.The recently announced delay in the effective date of these requirements provides welcome relief for plan sponsors and service providers who may need to overhaul systems in order to properly administer the new catch-up contribution rules.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Identity Theft vs. Identity Fraud – What’s the Difference? What are the key differences between identity theft and identity fraud?Did you know that identity theft is three times higher in the U.S. than in other countries? In fact, recent reports indicate that nearly 33% of Americans have experienced some kind of identity theft attempt in their lives. Many experts agree that this number will increase significantly in the coming years.In the first article of a series dedicated to navigating the identity fraud landscape through effective detection, prevention and correction efforts, we discuss the basics when it comes to identity theft and fraud.Protecting yourself from identity theft and fraud starts with familiarizing yourself with key definitions and examples. According to Javelin Strategy & Research, identity theft and identity fraud are sometimes used interchangeably, but they are, in fact, different. Identity Theft vs. Identity FraudIdentity theft is when unauthorized access of your personal information occurs. There are also Special Forms of Identity Theft that the FTC recognizes such as Tax, Child and Medical Identity Theft. Tax Identity Theft is when someone uses your Social Security number to get a tax refund. Child Identity Theft is when someone uses your child's information to commit fraud. Medical Identity Theft is when someone uses your information to get medical services and/or get copies of your medical records.Identity fraud goes a step further when threat actors use their unauthorized access of your personal information for illicit financial gain. Criminals use individual identities to create false applications for loans and credit cards, process fraudulent withdrawals from bank accounts, conduct fraudulent use of telephone calling cards or online accounts, or obtain other goods or privileges that the criminal might be denied if they were to use their real name.Identity theft can occur without identity fraud; for example, a fake dating profile posing as you. But identity fraud can’t occur without identity theft, i.e., opening a new credit card in your name after gaining access to your personally identifiable information. Other key examples are outlined below:While identity theft and identity fraud are both undesirable, it’s important to distinguish one from the other and be aware of the different methods criminals will use to exploit your personal information.This is the first article of a series dedicated to navigating the identity fraud landscape through effective detection, prevention and correction efforts. View the other articles here: Top 5 Identity Fraud Schemes of 2023 Prevention and Detection – Key Methods to Protect Against Identity Fraud  How Can Schneider Downs Help?The Schneider Downs IT Risk Advisory Team can advise you on how to strengthen your organization’s risk management position to ensure optimal asset protection, now and in the future. Feel free to reach out to our team directly at contactsd@schneiderdowns.com. About Schneider Downs IT Risk AdvisorySchneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.To learn more, visit our dedicated IT Risk Advisory page. ### How Did the IPIC Method Fare for Auto Dealerships Inventory in Year 2? The SD Auto Advisors were all over the Inventory Price Index Computation (“IPIC”) method of accounting for our automotive dealerships’ inventory for the 2021 tax filing year. We saw some serious tax savings by capitalizing on inflation and combining more inventory items into our LIFO pool.If you recall, we experienced the following in 2021: LIFO pools – we combined new, used and parts inventory in one LIFO pool. New vehicle inventory – Dealers had a drastic drop in total inventory and had inflation of 12% Parts – Dealers had a drop in inventory and had inflation of 11% Used vehicle inventory – Dealers had an increase in total inventory and had inflation of 37% Our goals were to diversify dealership inventory by combining inventory pools and to capitalize on inflation. This is a strategy similar to diversifying your investment portfolio. This change in accounting worked out to be very beneficial for dealers and saved some millions of dollars in taxes.Our one hesitation in 2021 was concern about volatile used vehicle prices. What would happen in Year 2 with used vehicles? Well, we considered simple economics, assuming that when new vehicles come back to normal levels, used vehicle prices would deflate. In that scenario, our weighted calculation of our “diversified” inventory should still be favorable, with new vehicle inventory being up and used vehicle inventory being down. Well, that is exactly what happened.Here is what we are seeing as we finalize 2022 tax returns: New vehicles – Dealers’ new inventory levels are back up and had 6% inflation. Parts vehicles – This inventory had 10% inflation. Used vehicles – Dealers’ used inventory levels did drop and did have deflation of 9%. If you think about how this works, the weighted average used to calculate the current-year inflationary index considers the inventory values and the new, used and parts inventory indexes. With new inventory coming back (and we are seeing higher levels of new inventory than used vehicles), the calculation indicates positive indexes for the current year, which is a great result.As you know, we like to think through things. When we changed most dealers’ accounting methods in 2021 to the IPIC method, we anticipated some drastic changes to used vehicles for the following year, but we were prepared: We knew that combining the inventory pools saved the day in 2021. Then in 2022, once again, using a combined pools method, most dealers had increases to their LIFO reserves.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.  To discuss, please reach out to Steve Barber or any of the other SD Auto Advisors. To learn more, visit our Automotive Industry Group page.   ### 3 Key Reasons You Need a Quality of Earnings Analysis The decision of whether or not to conduct a Quality of Earnings analysis can significantly affect the success of a transaction for buyers and sellers. The purpose of a Quality of Earnings analysis is to minimize any unexpected developments that could occur with the proposed transaction and to maximize transaction value.When it comes to buying or selling a business, a Quality of Earnings analysis will help ensure the integrity of financial and non-financial information. Buy-side due diligence helps buyers uncover an accurate valuation of a target company, have confidence and clarity about their business opportunity, and aid a smooth transition process post-closing. When it's time to sell your business, a comprehensive sell-side due diligence can help sellers get an accurate understanding of their Company’s value, reduce the concerns of the buyer, and minimize surprises that can threaten a successful deal. Three key beneficial considerations of a quality of earnings report include:1. Identify Issues that affect value Buyers and sellers alike can benefit when issues that affect value are accounted for ahead of a transaction. A Quality of Earnings Analysis can help buyers and sellers identify accounting, operational and other issues that can result in earnings adjustments. This helps reduce risks for buyers and sellers as they approach a transaction. 2. Confidence in earnings sustainability A common concern of buyers in a business transaction is earnings sustainability. Buyers need to know if their target earnings are the result of one or two big years or if they are sustainable in the future. Earnings sustainability is a major factor that will determine a buyer’s return on investment. Sellers can use a Quality of Earnings analysis to account for and communicate earnings opportunities that have not yet been fully realized, increasing the value of their business in the eyes of a buyer. 3. More successful acquisitions Buyers and sellers that conduct financial due diligence usually find a smoother process before and after closing on their transaction. A Quality of Earnings analysis helps buyers make informed decisions to ensure they are acquiring a valuable asset. For sellers, having a Quality of Earnings analysis prepared can increase buyer confidence and increase credibility throughout the process.  A Quality of Earnings analysis can also help with integration planning as opportunities for operational improvements are identified ahead of time, rather than after the fact.Here are some additional benefits of having a quality of earnings report: Identify areas of improvement in your company's operations.  By understanding the factors that are driving your company's earnings quality, you can identify areas where you can make changes to improve your profitability. Negotiate better terms with lenders and investors.  When you have a quality of earnings report, you can demonstrate to lenders and investors that your company is financially sound and that your earnings are sustainable. This can give you more negotiating power when you are seeking financing or investment. Trust Schneider Downs for Quality of Earnings AssessmentsAt Schneider Downs, our experienced professionals specialize in providing comprehensive quality of earnings (QofE) and due diligence assessments for mergers, acquisitions and divestitures. With our swift, precise, and discreet approach, we help buyers, sellers, investors, private equity firms, and lenders make informed decisions with confidence. Our due diligence process goes beyond just financial factors. We have the expertise to assess potential risks in areas such as tax, operational, information technology (IT), and cybersecurity to help prevent lost value in the deal. Our thorough assessment helps identify potential risks and provides recommendations for risk mitigation, ensuring a smooth and successful transaction. When it comes to quality of earnings assessments, you need a trusted partner with the expertise and experience to provide accurate and comprehensive assessments. Schneider Downs has a proven track record of assisting buyers, sellers, investors, private equity firms, and lenders in evaluating the financial integrity of businesses involved in M&A transactions. For more information, visit the Transaction Advisory Services page. ### PE Industry Grapples with High Interest Rates, Declining Exit Activity According to PitchBook’s Second Quarter 2023 PE Breakdown, the first half of 2023 resembled the latter part of 2022 for the U.S. Private Equity (“PE”) industry.The sector is grappling with consistently high interest rates, which are making it expensive to borrow and manage floating-rate debt. Although PE funds have performed well as an asset class over the last ten years, their performance over the past year has slipped to an average level. Concerns persist about the decline in exit activity, with the number of exits dropping by 22.2% from Q1 2023 and consistently staying below pre-COVID levels. This has resulted in more investments than exits, creating an imbalance. Some significant exits include M&A deals such as Adenza ($10.5 billion) and Apptio ($4.6 billion), as well as public listings like Savers Value Village ($2.9 billion IPO) and Kodiak Gas Services ($1.2 billion IPO).PE managers are adjusting strategies to maintain deal momentum and prevent slowdowns in the leveraged buyout (“LBO”) process. One notable change is a move towards smaller deal sizes, making transactions easier to manage and finance. Almost four out of every five buyouts are now considered add-on deals.Prices for PE buyouts are undergoing a significant correction. Multiples of enterprise value (“EV”) to EBITDA showed a relatively consistent range of 11.5x to 12.4x over the four years ending in 2022, but has fallen by 18.5% this year. The median EV to EBITDA multiple stands at 10.5x for the 12 months ending in Q2 2023, down from 12.1x in 2022. A similar trend is observed in EV to revenue multiples, which, after a slight increase to 2.2x in 2022, have decreased by 10%. EV to revenue provides a broader measure of value, encompassing a larger range of companies and therefore being less volatile. It accommodates tech companies with robust revenue growth but limited EBITDA and is also more suitable for financials where EBITDA might not be as relevant. The median EV to revenue multiple for PE buyouts now rests at 2.0x over the trailing 12 months, down from 2.2x at the start of the year. Looking ahead to the latter part of 2023, there is anticipation of more uncertainty regarding whether higher interest rates will stick around or if the PE industry will see a more favorable environment for leveraged buyouts. In this ever-changing landscape, PE firms will need to stay flexible and creative to effectively tackle these challenges.If you’re considering making an acquisition or exit, we highly recommend putting together an experienced diligence team to cover all aspects of the business to limit surprises. Schneider Downs has extensive experience providing services to PE firms, including buy-side and sell-side due diligence, tax structuring, valuation and managed accounting services. For more information on Schneider Downs and the services we can offer to your organization, please visit our website or the Schneider Downs Our Thoughts On blog, or contact us at contactSD@schneiderdowns.com.About Schneider Downs Private Equity Firm ServicesSchneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions.  To learn more, visit our dedicated Private Equity Firm Services page.  ### 20 Pre-Contract Questions To Ask Your Next SOC 2 Audit Firm What information do you need to know before your SOC 2 audit?When it comes time for a SOC 2 report, there are several things you must know before selecting a firm. Failing to establish mutual expectations pre-contract can lead to miscommunications, process errors and, ultimately, inefficiencies within the audit.That’s why it’s important to determine upfront if the firm’s approach will be a good fit with your organization. Below are 20 questions and sub questions to ask any prospective audit firm before you sign: Experience: What's your firm's experience with SOC reports? How many have you performed in the last year and can you provide references from our industry? Industry Expertise: Do you understand our industry's nuances? Scope: Can you help define the scope of the report? What areas should/shouldn't be covered and what controls will be tested? Team: Who will be leading the engagement? What are their qualifications, certifications and experience? Will he/she be the dedicated point of contact throughout the engagement? Resources: Will you be leveraging any subcontractors to conduct the engagement? If so, where are they located and do they maintain the same level of security controls? Timeline: What's the estimated timeline for the report? How flexible can you be to accommodate our needs? Remote/On-site: Can you perform the entire engagement remotely? How's that compare in terms of effectiveness and cost to coming on-site? Communication: What are your preferred communication protocols? How will findings be communicated? Issue Resolution: If an issue arises during the engagement, how will you help to resolve them? Cost: What factors determine the cost of the engagement? Are there any potential additional fees we should be aware of? What will the report cost in subsequent years? Conflicts of interest: Do you or anyone at your firm have any conflicts of interest that would impair your independence? Continuous Monitoring: Do you offer any ongoing monitoring services or partner with any tools/solutions to help us maintain compliance and operate controls effectively over time? Technology: How does your firm stay current with the emerging technologies that we have or might adopt to ensure you can competently test our controls? Data Protection: How does your firm ensure the Security, Availability, Confidentiality, Privacy, and Processing Integrity of our data? Can you provide a SOC 2 Type 2 report of the systems that process our data? Approach: Can you walk us through your methodology and approach? Questionnaires: Will this report ultimately diminish the number of security questionnaires that we receive? Results: How frequently do you issue reports with qualified or adverse opinions when you also performed a readiness assessment? Future: How long is the report good for? Will you help us write a bridge letter? What is the process for renewal? Contract: Are you able to incorporate any of the above into our contract? The Closer: What questions haven't we asked that we should have? A great SOC 2 audit firm should be partnership – an evolving collaboration to enhance the security and trustworthiness of your services. These upfront questions will help you forge a successful partnership and ensure a thorough and effective audit process.Most of these questions are applicable to other Cybersecurity Risk and Compliances services, too, such as ISO 27001/2, PCI-DSS, NIST 800 Series, CMMC, HIPAA, HITRUST, Privacy frameworks, and everything in between.How Can Schneider Downs Help?If you have any questions about SOC compliance, assessments and readiness, please contact us at contactsd@schneiderdowns.com or visit our dedicated SOC page. About Schneider Downs IT Risk AdvisorySchneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.  To learn more, visit our dedicated IT Risk Advisory and Third-Party Risk Management pages.  ### Compilation, Review or Audit? What Early-Stage Companies Should Know Does my emerging technology company need a compilation, a review or an audit?This is a question that often comes up for early-stage companies and must continually be reassessed throughout the lifecycle of a business.Schneider Downs offers three types of assurance services: compilations, reviews and audits. A new company might not need any of these services during its first few years, but it may eventually require a compilation or review as it grows. Then, as the company further matures, an annual audit can become beneficial or may be required by investors or lenders. What’s the difference between a compilation, a review and an audit? A compilation entails organizing client data into a financial statement format but does not offer any sort of assurance. A review involves inquiry and analysis and offers limited assurance that the financial statements are free from material misstatement. An audit, meanwhile, is the highest level of assurance service we provide. In an audit engagement, we obtain evidence through testing and inquiry to provide reasonable assurance that the financial statements are free from material misstatement. How do I determine whether my company requires one of these services, and which is the most appropriate?Compilations are the least time-consuming and the least costly, but do not provide any assurance from the accounting firm regarding completeness or accuracy of the information presented within the compiled financial statements. During a compilation, the accountant does not gain a full understanding of the control environment nor perform any procedures related to fraud risk or any substantive testing of source documents. Compilations can be appropriate for smaller businesses that are seeking a personal or business loan and need to provide compiled financial statements to a bank but don’t want to incur the expense of a review or audit.    Reviews are often required as a business grows or begins to seek more significant financing. Reviews are more in-depth and time-consuming than compilations. A review provides limited assurance that the financial statements are being presented in accordance with the relevant accounting framework. It involves inquiry and analytical procedures but does not include any internal control or fraud procedures nor any substantive testing. Limited assurance means the accounting firm did not encounter any information during its review procedures that would suggest that material modifications need to be made in order to be compliant with the applicable framework. Reviews are often required by banks when companies take out smaller business loans or open a revolving line of credit.Audits deliver the highest level of assurance provided by CPAs. To perform an audit, an accountant must be independent, and they must obtain an understanding of the business’ internal control environment, assess the risk of material misstatement and perform procedures related to fraud risk. They will perform a combination of substantive testing, third-party confirmations, physical observation, inquiry and analytical procedures to obtain reasonable assurance that the financial statements are free from material misstatement. Audits are more time-consuming and costly but are often required when a company is receiving grants, securing larger loans or lines of credit, raising equity or being sold. Additionally, audits are required when businesses are publicly traded.If you’re questioning whether your business requires one of these services, Schneider Downs can help. We’ll consult with you to determine your needs, requirements and future growth goals, and we will weigh the costs of an audit, review, or compilation. If you think you may need an audit in the future, it can make sense to start having one performed now, in order to gain comfort on beginning balances for future years. Having an independent CPA perform an audit of your business can also result in beneficial consulting or recommendations related to your internal controls, business processes or accounting records, and it can give you access to the other services and expertise we offer for early-stage companies.  Whether you’re a new business considering your first compilation, review or audit, or a growing company that needs additional assurance or has a new audit requirement, the Schneider Downs Emerging Services team is here to assist. Related ArticlesThis article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Best Practices After an Equity Raise for Start-Up Companies Five Tax Considerations for Start-up Companies Understanding Leases In Technology Arrangements Pros and Cons of IPO for Early-stage Companies Emerging Technology Companies and the R&D Tax Credit Top Accounting Advisory Needs for Emerging Technology Companies About Schneider Downs Emerging Technology ServicesSchneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page.  ### Top Accounting Advisory Needs for Emerging Technology Companies For both true start-ups and mature emerging technology companies, we have seen that there are numerous accounting advisory projects with which our prospects and clients need help.Early-stage companies place significant emphasis on preserving cash to fund research and development-related costs: starting and continuing to develop the software and its concept. Therefore, their accounting departments typically need support for several of the accounting research projects and analyses that must be performed as they seek to expand operations and/or explore various avenues for debt and equity financing.Below, we've compiled a list of the top accounting advisory projects we've done to support our emerging technology clients:  Accounting for stock options  Accounting for stock warrants  Accounting for stock appreciation rights  Evaluation of revenue recognition under ASC 606  Revenue recognition  Contract assets  Accrued commissions  Unbilled receivables  Contract liabilities   Deferred revenue  Accounting for convertible debt  Capitalized software cost accounting  State and local tax implications  Accounting for capital raises  Evaluation of debt vs. equity accounting considerations  Lease accounting services under ASC 842  Accounts receivable and deferred revenue gross up issues on the balance sheet  Valuation services – both impairment and business combination fair value reports Assistance with capitalization table  R&D tax credits  ESOP accounting services  Do you have an audit and accounting advisory services question or concern? Contact us today. Related ArticlesThis article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Best Practices After an Equity Raise for Start-Up Companies Five Tax Considerations for Start-up Companies Understanding Leases In Technology Arrangements Pros and Cons of IPO for Early-stage Companies Emerging Technology Companies and the R&D Tax Credit Compilation, Review or Audit? What Early-Stage Companies Should Know About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page.    ### New Pennsylvania Annual Report Filing Requirement Starting in 2024, all businesses, including foreign associations, that are registered to do business in Pennsylvania will be required to file an annual report.This change is a result of Act 122 that was signed into law by Governor Wolf in November of 2022. The new annual report will replace Pennsylvania’s current decennial reporting requirement.The annual report will include the following: Business entity name Jurisdiction of incorporation Name of at least one director, member or partner Names and titles of the principal officers Address of the principal office Entity number issued by the PA Department of State The annual filing fee associated with the report will be $7 for corporations, limited liability companies, and limited liability partnerships. There will be no fee required for non-profit corporations. The Pennsylvania Department of State estimates that the new annual report filing fee will bring in $4.6 million in net revenue. The deadline for filing the annual report depends on the type of entity. For non-profit and for-profit corporations, the deadline is June 30. For limited liability companies, the deadline is September 30, and all other entity types are due December 31.The penalty for failing to file the annual report could result in dissolution and the loss of the right to the company’s name. The Pennsylvania Department of State recognizes that the annual report is a significant change for Pennsylvania. Therefore, it will provide organizations with a transition period before imposing any penalties for the failure to file. Organizations will be given an additional six months after the due date of the annual report before they become subject to dissolution, termination or cancellation. The Department will mail the annual notice to all registered entities at least two months prior to the deadline. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-Profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### My Greatest Job Yet! My experience with the Schneider Downs team was impactful and rewarding. Schneider Downs went above and beyond to welcome all of the interns and established a friendly, collaborative workplace environment.We had breakfasts provided, golf happy hour, gifted SD gear, a Pirates game and more. Every day I looked forward to going to work to contribute to a firm that I can see myself working for long-term. The culture and care for all employees, along with the professionalism of working in one of the largest accounting firms in Pittsburgh, allowed me to acquire real-world skills and knowledge that will benefit my future career. Additionally, the flexibility of the hybrid work option was convenient and appreciated. It highlighted the importance of self-discipline and the benefit of working for a firm that appreciates its employees as individuals who all contribute to the collaborative effort of assisting clients. Remote work taught me how to remain on task amid distractions, stay organized in my work and be conscious of timing. Although I value the option of remote days, working from home also made me look forward to driving and coming into the office much more, due to my experiences with the people of Schneider Downs.One of my most memorable work experiences was traveling on-site to visit a client. We took a tour, saw how the company operated and then regrouped to work on the plan for the client. It was interesting to work with that engaging business client – an opportunity that I likely would not have had at another firm. The opportunity to understand the impact and importance of the firm’s services first-hand revealed another impressive aspect of working for Schneider Downs. Another memorable experience from my internship occurred while I was walking to the Pirate game. Alongside my fellow interns, I noticed a van on the road with a familiar logo. I recognized that it was one of the clients I had worked on for a few weeks. Seeing the van was rewarding because I was able to reflect on my efforts for the client in a small way, which I shared with the interns I was with. This is a memory I will never forget because I was able to see a client I worked on, doing work out in the real world.Finally, volunteering at the Greater Pittsburgh Community Food Bank with Schneider Downs was my favorite experience of all because it showed SD’s volunteering commitment to the community beyond the walls of the firm. Together in teams, we boxed food items in an assembly line that were then given to people in need. We were also given a tour of the facility. I could see the gratitude of the Food Bank towards the volunteers and Schneider Downs for taking the time to volunteer for the day. It felt good to help, and the whole experience reminded me about the importance of service and giving back in any way I can. I do not think I could have worked for a better accounting firm this summer, especially at this point in my life. I am grateful for the opportunities I had at Schneider Downs this summer and to all of those who have guided me as an audit intern and have welcomed me as a young professional!Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### Starting from Scratch: My First Internship Back in May when I started my internship, I didn’t know much about the business world, and, a week later, I found myself traveling to New York to meet a client.Although I was very nervous at first, my seniors and managers always made sure I was comfortable and capable of doing what I was doing.Getting StartedBefore I even started, I met with my buddy and senior to get coffee and discuss traveling and to go over any questions I had in general about the internship. It was that day that I realized what an incredible, friendly and welcoming environment I would be working in.Becoming Part of the TeamSomething I love about the people at Schneider Downs is their willingness to answer questions. Feeling awkward or like you are being a bother about asking lots of questions is inevitable, but everyone who I worked with was more than happy to answer all my questions and even encouraged me to ask anything! Being able to feel comfortable asking questions made the learning curve much less intimidating.In addition to that, grabbing coffee, eating lunch with coworkers and even joining the RAS Women’s Golf League made me quickly feel like I was a part of the team.  Everyone was always so welcoming and friendly; it truly is the perfect work atmosphere.By the end of my internship, I can confidently say I learned more than I ever could have anticipated in the best way possible. Starting my career at Schneider Downs was the best decision I have ever made!Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### 7 Key Steps For a Smooth Transition from Dynamics GP to Microsoft Dynamics 365 Business Central Moving to Microsoft Dynamics 365 Business Central? Here’s our SmartList of 7 key steps to ensure a smooth transition. Microsoft has been making huge investments in their “Ground to Cloud” initiative, which is a different way of saying that Microsoft is no longer investing in their on-premises ERP platforms like Dynamics GP (GP). For many businesses using GP, the next logical step is Microsoft Dynamics 365 Business Central (Business Central). If your team has been using GP for a while, they will be familiar with the concept of SmartLists. A SmartList can be used to create customized inquiries to provide easier, faster access to information stored in the GP system, including information about accounts, customers, employees, vendors, transactions, and items. You can print or export the search results or display them on the screen. When thinking of the transition to Business Central, there are many important steps and considerations that can be the difference between your transition being successful or stressful. This is why our team created our own SmartList with 7 key steps to ensure a smooth transition to Business Central. Custom Reports. Where are they? SSRS? PowerBI? Management Reporter? Jet? Solver? Somewhere else? Pull this list together, then find out who is using them. Ask if they are still relevant. If they are, this should be a consideration in the migration. If they aren’t, you just gave someone valuable time back each month! 3rd Party Products. Increasingly more 3rd party products that companies using GP know and love (Kwiktag & Binary Stream MEM, for example) have made their products available for Business Central. Customizations. Do you have any dexterity or VBA customizations? What do the customizations do? Business Central is highly customizable, so the customization you had can very likely be replicated; however, it’s also possible that it may no longer be needed. Version Numbers. If you plan to use the migration tool, make sure that your GP and SQL versions are compatible. If you are planning to deploy Business Central on-premises, you should share the hardware requirements with your hosting provider and/or IT team. Integrations. What applications do you have that integrate with GP today? Common examples are CRM, Warehouse Management, 3rd party payroll systems, and line-of-business billing systems. You should understand what each 3rd party does and compare it to existing Business Central functionality. You should also have a clear understanding of how each integration works. Data. Now is the time to determine whether you want to realign your chart of accounts. If you choose to do this, there’s a simple way that will allow you to still use the out-of-the-box migration tools from GP to Business Central, and that’s using the account modifier tools available in GP prior to the migration. Use this as an opportunity to clean up other data too. Remove duplicate customers/vendors and obsolete items prior to migrating. Also, consider your requirements for historical reporting. Remember that the more historical data you want to bring with you, the longer the project will be. Scale. What server(s) and on-premises hardware can be decommissioned or scaled back? You should work with your IT team to build this list out. This is one of the biggest cost savings areas. Download our 7 Key Steps to Ensure a Smooth Transition from Dynamics GP to Microsoft Dynamics 65 Business Central infographic here. Have questions about migrating from GP to Business Central? Once you have gathered this information, the next step is to carefully evaluate implementation partners. Our team has also compiled a list of best practices for evaluating ERP implementation partners here. Have questions about migrating from GP to Business Central? Contact me directly at mscalamogna@schneiderdowns.com, or schedule an introductory call here. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information visit our dedicated Technology and Data Services page.     ### Ransomware Attack Shuts Down Emergency Rooms Across Four States A ransomware attack on Prospect Medical Holdings had life-threatening implications last week as hospitals in four states were forced to shut down emergency rooms and divert ambulances to alternative facilities.Prospect Medical Holdings (Prospect) describes the attack as a “data security incident that has disrupted our operations”. Shortly after the initial detection on August 3rd, Prospect formally disclosed the incident.Once the incident was detected, Prospect immediately took their systems offline, which caused emergency rooms and clinics in their system to shut down operations in 16 hospitals across Pennsylvania, Rhode Island, California and Connecticut – creating a ripple effect on ambulance routes, hospital volumes and most importantly, patients.According to reports, the impacted Pennsylvania facilities are primarily in the Philadelphia region, including Crozer-Chester Medical Center in Upland, Taylor Hospital in Ridley Park, Delaware County Memorial Hospital in Drexel Hill and Springfield Hospital in Springfield.While some hospitals operated through the attack using pen and paper, some facilities estimated it may take at least a week to completely recover.In addition to emergency rooms shutting down, the attack also reportedly disrupted key operations, including outpatient appointments, surgical procedures, blood drives and ambulance routes. Elective surgeries and urgent care in Connecticut were also halted, according to the Eastern Connecticut Health Network, as well as podiatry, wound care, women's wellness and gastroenterology services.This attack is a staunch reminder that the healthcare industry will always have a target on their back as outages like this put human lives at risk. The attack directly prevented the availability of emergency health services while simultaneously straining resources at other facilities due to rerouting ambulances and patients.Thankfully, there are no reports of the attack causing any deaths or complications; however, it is eerily reminiscent of the Duesseldorf University Hospital incident that resulted in one death due to emergency services being unavailable, as well as the CommonSpirit Health attack this past October that resulted in similar system outages and hospital closures.The FBI and White House are currently investigating the incident, and as of the publication of this article, no ransomware group has taken credit for the attack.Ransomware on the Rise in 2023This attack also dispels the optimism around the idea that ransomware was on the decline due to a decrease in reported ransomware attacks and payments in 2022.In fact, 2023 is forecasted to be one of the largest years for ransomware revenue, as  recent reports show ransomware victims’ payments totaled nearly $449 million in the first half of 2023 – in comparison to 2022, which didn’t even reach $500 million.And even if there is a decline in the volume of attacks, at some point, the healthcare industry will most likely still be a top target due to the dangerous impact an outage can have.About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page.  ### PA PIT Section 179 Deduction The Pennsylvania Department of Revenue issued Personal Income Tax Bulletin 2023-02 (the “Bulletin”) on August 3, 2023, allowing deductions from Pennsylvania Personal Income Tax for Section 179 Property (§179 Property). Prior to the Bulletin, deductions for §179 property were capped at $25,000 annually. The Bulletin increases the available §179 Property deduction to $1,000,000 annually for property placed into service on or after January 1, 2023. What is §179 Property?  The Pennsylvania Legislature passed legislation bringing Pennsylvania into conformity with Federal Tax Rules effective January 1, 2023. The Federal Income Tax rules contained in the Internal Revenue Code include deductions for §179 Property. As defined in the IRC, §179 Property subject to depreciation includes most types of tangible property except land. Examples of tangible property include buildings, machinery, vehicles, furniture, and equipment. §179 property also includes intangible property such as patents, copyrights, and computer software. Property must meet four requirements to be considered §179 depreciable property. These requirements include: the property must be owned by the individual or entity claiming the deduction, the property must be used in a business or income-producing activity, the property must have a determinable useful life, and the property must be expected to last more than one year.  The IRS has provided rules and examples for determining if a specific property is §179 property. If a property meets these requirements, it is considered deductible §179 property for both Federal and Pennsylvania Income Tax purposes. What are the changes to Pennsylvania’s tax treatment of §179 Property? The Department has determined that Pennsylvania taxpayers can treat the cost of §179 Property as a currently deductible expense, subject to specific limitations. Taxpayers may claim a deduction to offset gain from net profits, or Schedule C income, for personal income tax purposes. §179 Property deductions cannot be used to offset gain from any other Pennsylvania income class. §179 Property deductions are subject to dollar and business income limitations. §179 Property placed in service before 2023 has a maximum annual limitation of $25,000. However, the annual dollar limitation for §179 Property placed in service on or after January 1, 2023, increases to $1,000,000 subject to an annual inflation adjustment. The business income limitation prevents taxpayers from using §179 deductions to reduce their taxable net profits below zero for any year. Any amount of §179 Property deductions that cannot be utilized in a tax year is carried over indefinitely to subsequent tax years until the amount is exhausted. Partnerships and S-Corporations may elect to currently expense §179 Property at the entity level. All partners and shareholders must follow the entity’s election, and receive their pro rata share of the pass-through deductions. What do the §179 changes mean for Pennsylvania taxpayers? Pennsylvania taxpayers with business net profits now have access to up to $1,000,000 of business deductions starting Tax Year 2023. Entities and individuals subject to Pennsylvania income tax with business net income should review purchases to determine if they qualify as §179 property subject to the deduction. Additionally, taxpayers may be able to immediately reduce their taxable income by placing §179 property into service rather than depreciating the property over its useful life following the normal Pennsylvania depreciation rules. Schneider Downs’ State and Local Tax (SALT) professionals are poised to help taxpayers with the Pennsylvania §179 changes. Please contact Stephen Worth (sworth@schneiderdowns.com) or Mark Balistrieri (mbalistrieri@schneiderdowns.com) with questions about Pennsylvania’s treatment of §179 deductions or other state and local tax matters. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### More Than Just Public Accounting I began my internship at Schneider Downs as a fresh college graduate. It was my fifth internship, after wrapping up my time with the AT&T Corporation and other small CPA firms in the northern panhandle of West Virginia.Like most recent college graduates, I had no clue what I wanted to do with my career, community activities or even what I wanted to cook for dinner that night. At Schneider Downs, I was given the opportunity to explore the accounting industry during my Audit Internship. Three months later, I am still unsure of where life will take me professionally, but I am confident that I have solved one of the most important pieces of the puzzle. I discovered that what I am looking for might be even more important than what I want to do. I am looking to be a part of a positive workplace culture. During my internship, I learned valuable skills regarding audit practices, but I think I learned something even more important regarding the company. Although an accounting firm at its core, Schneider Downs is focused on making their community, industry and employees better and that included me.   From the moment I expressed that accounting might not be a part of my future plans to the Schneider Downs team, I have been provided with opportunities within the company to find and harness my other skills and desires.   No matter what the future holds, or where work takes me, Schneider Downs has set the bar high for all of my future endeavors. Wrapping up my internship with Schneider Downs is bittersweet—I leave confident that I have real-world experience in public accounting, mentored by some of the best, but I move on with a heavy heart knowing I won’t work side-by-side with those who make the firm so great: its employees. Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### Best Practices After an Equity Raise for Start-up Companies Fundraising is an essential function for any start-up company. And, after undertaking a fundraising event, companies must decide whether to obtain a valuation report.From a financial reporting standpoint, the best practice is to obtain a new valuation each time a capital raise occurs. This provides evidence both for the value of the shares after the equity raise and for inputs into share-based compensation models, which is common in start-up companies because of how often they issue stock options or restricted stock. Accounting Standards Codification Section 718, Compensation–Stock Compensation (ASC 718) requires equity-based awards to be valued at fair value. One of the most common ways to value equity-based awards is through a pricing model. Because one of the key inputs in a pricing model is the value of the stock, having a valuation of the stock price as of the date of a capital raise provides additional third-party evidence for those inputs. Additionally, for tax purposes, a 409A valuation is required any time a Company is going to be giving out equity over a period of time. In fact, a 409A valuation can be used for both tax and financial reporting purposes.This is because Accounting Standard Update 2021-07 (ASU 2021-07) allows as a practical expedient, a nonpublic entity to determine the current price input of equity-classified share-based awards issued to both employees and nonemployees to use a reasonable valuation method.The same characteristics used in a 409A valuation are an example of a way to achieve the practical expedient; therefore, a 409A valuation report would provide evidence for both tax and financial reporting purposes. If you have any questions about business valuation or fundraising for an early-stage or startup company, please contact the team at contactsd@schneiderdowns.com.Related ArticlesThis article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Top Accounting Advisory Needs for Emerging Technology Companies Five Tax Considerations for Start-up Companies Understanding Leases In Technology Arrangements Pros and Cons of IPO for Early-stage Companies Emerging Technology Companies and the R&D Tax Credit Compilation, Review or Audit? What Early-Stage Companies Should Know About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page.   ### SD Auto Advisors Continue to Work on Our Own Succession Plan I must say, I am proud of our SD Auto Advisor Team at Schneider Downs. I remember thinking to myself at one point: How did I go from being the younger person in our auto industry group to now helping to lead it? In the last six years, we have seen a few Schneider Downs shareholders from the automotive group retire. Paul Matvey retired in 2017; then Joe Patrick and Kathy Petrucci retired shortly afterward. Our automotive industry group is now seeing the positive results of our efforts over the past 10 to 15 years. The changing of the guards included Trevor Warren and Steve Barber being promoted to shareholder in 2017. Then, Carl Scharf was promoted in 2018.  Now, we would love to welcome Brett Cubellis to the shareholder group this year. Also, let’s not forget our automotive practice director Henry Szymanski, who has been with Schneider Downs since 1986. We call him our liaison from one generation to another.Succession planning is crucial to any business, ours included. We work with many dealerships to make sure that their success continues for generations. The first step to any succession is an open line of communication. Our team does this on a continuous basis. I am proud of this team, and I look for the next team members to progress.We encourage you to keep talking about your teams’ succession. We can help. Please reach out to any of our SD Auto Advisors to discuss.About Schneider Downs Automotive Industry GroupThe Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.To learn more, visit our Automotive Industry Group page.About Schneider Downs Exit and Succession PlanningSchneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners.To learn more, visit our dedicated Exit and Succession Planning page. ### New Electronic Filing Requirements for Forms W-2 This past February 23, the IRS published Treasury Decision 9972 requiring filers of 10 or more tax or information returns in aggregate within a calendar year to file electronically. Previously, electronic filing was only required if the filing was for more than 250 returns of the same type for a calendar year. The new regulations are effective for filings on or after January 1, 2024. Authorized by Congress’ enactment of Section 2301 of the Taxpayer First Act, revised requirements push for a significant reduction in the number of paper returns covering a broad variety of submissions, including: Partnership returns Corporate income tax returns Unrelated business income tax returns Withholding tax returns for U.S. Source Income of Foreign Persons Information returns Registration statements Disclosure statements  Actuarial reports As part of the Treasury decision, organizations will no longer be able to determine e-filing requirements by separately considering the number of forms W-2 and 1099 individually. For example, a company with 150 Forms W-2 and 100 Forms 1099 was not required to file electronically in previous years since regulations applied to each type of return independently. Under the new regulations, filers will be required to aggregate all return types (e.g., W-2s and 1099s) in calculating whether the company is at or above the new 10-return threshold.  Note, however, that Forms 940 and 941 do not have to abide by the new e-filing obligations. These new regulations may raise some concerns for organizations filing returns that were under the previous threshold, including a potential learning curve at small companies that may not have the software compatibility to follow the updated e-filing requirements. The new mandate also assumes that these organizations have adequately trained employees and protected networks. Additionally, the new regulations may create challenges and potential costs for companies unfamiliar with the current e-filing technology, specifically as it relates to these new tax requirements. Given that the new mandatory electronic filing requirements are complicated, please feel free to reach out to us at Schneider Downs where we can assist you in both understanding and compliance with the new rules, as well as helping to facilitate electronic filings. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Dealership Transactions Are Bittersweet I recently witnessed history as Al Hendrickson, Jr. said goodbye to his dealership, which his family has owned since 1989.  Schneider Downs has been riding with the Hendrickson family for nearly two decades.  We can certainly say, “We’ve appreciated the ride!” To elaborate, the sale didn’t just make history because the notable dealership exited long-time family ownership.  It also made history in that Al Hendrickson Toyota set a record for the highest transaction price for a single dealership, per Haig Partners.  Al’s family grew their dealership location into the #2 highest-volume Toyota dealership in the nation. Our relationship with the Hendrickson family is about to change.  The beauty of what we do at Schneider Downs is that our scope of services can change to accommodate a family’s next venture. We have served as their automotive advisors for quite some time.  Now we will serve them in other ways as they move into other opportunities.  We are happy for the Hendricksons!  We are sad that our time with them as automotive advisors has come to an end, but we look forward to helping them with whatever their future holds.We bid adieu to one phase and embrace another, committed to accompanying the Hendrickson family on their voyage, no matter the route they choose. With heartfelt congratulations, a tinge of melancholy, and excitement, we embark on this new leg of our shared journey, ready to embrace the unwritten chapters that lie ahead.View Haig Partners’ full write-up of the transaction.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.  To learn more, visit our Automotive Industry Group page.   ### “Trust” Me, Interning at Schneider Downs is a Rewarding Experience This summer, I had the privilege of interning at Schneider Downs, supporting their Estates and Trusts group and their Private Family Office (hope you enjoyed my trusts pun in the title). It is hard to believe the summer is over. It feels like just yesterday I was sweating trying to figure out how to use the office printer. Now, I still need technical help, but at least I can print. As a law student who is interested in a nonconventional law path, I was nervous about what my workload might entail being at an accounting firm. I can say without a doubt that I have learned and grown so much in my 12 short weeks at the firm. Regardless of where my future will take me, I can say that Schneider Downs has helped prepare me for whatever the professional world may throw my way. What I enjoyed most about my time at Schneider Downs is the sophisticated projects I was able to work on, the respect that is given to each employee regardless of job title and, most importantly, the phenomenal people. I describe myself as someone who learns by doing. A hands-on approach seems to stick with me more than anything else. At Schneider Downs, you are doing real work for clients that genuinely need your expertise. You are forced to be a doer, and for good reason. Struggle creates strength, and while I have struggled in some of my tasks, the resiliency has paid off and cultivated industry knowledge that I can carry with me throughout my professional career. For any JD student who has an accounting background, and even ones who do not, I found most rewarding the intersection of accounting and law that I was able to work on during my time at the firm. For anyone who finds themselves intrigued in their tax law classes, Schneider Downs may be the place for you. At Schneider Downs, you are treated as a valued team member. It might sound like this goes without saying, but everyone is respected and trusted at this firm (you would be surprised at the number of places where this is not the norm in workplace culture). My internship offered me lots of flexibility, and, when conflicts came about, there were no questions asked from my superiors. When I had a maintenance emergency and had to work from home I was told “hope everything is ok, see you Monday.” No questions were asked because everyone here truly trusts one another. If you deliver quality work, then the sky is the limit for you at Schneider Downs. The workplace culture at Schneider Downs has created a work environment that attracts incredible talent. When asked to describe my coworkers I always say, “they are hardworking, intelligent, and everyone has such a personality.” Some people dread going into the office (I do not envy those people) but going into the office is exciting at Schneider Downs. From peers to superiors, everyone at the firm is so welcoming and personable it makes it hard to want to go elsewhere. What I enjoyed most about the internship program is the buddy system Schneider Downs has in place. In this program, the firm teams interns up with a recently hired analyst to be their “buddy” for the summer. I want to take this moment to say THANK YOU to my buddy Danielle for always being there for me and my 57 silly questions every day. Having her as a resource made the office environment far less intimidating. As someone who lost out on office experience in my undergraduate years due to Covid, it was great to have someone next to me to show me the ins and outs of all things Schneider Downs (including how to use the printer). If you want a challenging but rewarding summer, consider sending in your resume to Schneider Downs. I promise, the work is not as “taxing” as it seems. Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### A Perfect Storm for Interest Expense Limitation is Brewing for Auto Dealerships! Learn about the changes and limitations of the provision to limit interest expense in the Tax Cut and Jobs Act of 2017.Did you know that changes came into play for the interest expense limitation in 2022?As you recall, the Tax Cut and Jobs Act of 2017 included a provision to limit interest expense. The limitation is calculated by multiplying a taxpayer’s adjusted taxable income (“ATI”), which is similar to EBITA by 30%.However, this limitation does not apply to floorplan interest. If floorplan interest expense does exceed 30%, all of the floorplan interest is deductible; however, the dealer will not be eligible for bonus depreciation. In 2022, depreciation and amortization are not eligible to be added back in the ATI calculation. As you can see, there a few moving parts. We have seen record profits and some pretty low-interest rates among the dealership groups in recent years. Therefore, we haven’t seen much interest expense limited. However… Are profits back to normal? What is the interest rate now? Where are your inventory levels? Did you acquire a dealership?  How much is your dealership and/or real estate leveraged? If you factor in the answers to the above questions, your profits are probably down in 2023, interest rates have risen, your inventory levels are back, you borrowed for the blue sky amount for a new dealership and you have leveraged your real estate potentially for an acquisition. Let’s think about what this might do. The ATI calculation starts with taxable income, which if profits are down, so is ATI. Your interest rate is the highest in recent years, which means that interest expense is up. You have vehicles to sell, which is great, but the inventory might not be moving as fast as before, which means it is costing you more interest. The newer dealers you have might have working capital loans and your blue sky is probably financed, which causes more interest. Then your real estate entity will not be able to add back that depreciation for ATI which means a lower limitation. All of this is a perfect storm for limited interest expense.A perfect storm can always be calmed by some planning. Let’s dive into these concepts sooner rather than later. With five months left for the year, we can plan now to help reduce the limitation on interest expense.Please reach out to me, Steven Barber, or any of our SD Auto Advisors. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.  To learn more, visit our Automotive Industry Group page.     ### MOVEit Data Breach: The Impact on Higher Education How has ransomware group Clop's MOVEit data breach impacted higher education institutions?Cybersecurity attacks have been happening all over the country exposing a security issue Involved with Progress Software’s MOVEit Service.The ransomware group Clop is believed to have targeted a vulnerability in the MOVEit file-transfer program that allows third parties to view and share large sensitive data sent by the tool's users.Clop is believed to have targeted over 3,000 organizations in the U.S. and reportedly stolen at least 38 million individual records, including information on the student record database.Several colleges, including UCLA, St. Mary’s University, Webster University, Trinity College and Middlebury College, have expressed concerns stating they have been caught up in the cyberattack. The extent of the impact on the higher education sector continues to grow, with some of the most high-profile names sharing their situation below. The National Student Clearinghouse has just reported a cybersecurity problem belonging to the MOVEit breach. The National Student Clearinghouse is tasked with collecting enrollment and other student data for colleges across America. According to its ongoing investigation, authorities determined these files were accessed through the Clearinghouse’s MOVEit program. The National Student Clearinghouse is unsure of what data has been breached but the organization is certain student record database files were minimally accessed and potentially exfiltrated by Clop. The Clearinghouse is now seeking support from law enforcement and global cybersecurity firms. One of TIAA’s third party vendors, PBI Research Services (“PBI”), also has been affected by the MOVEit breach. PBI’s job is to handle private information for insurance organizations and pension funds. Due to this breach, PBI is offering compromised customers two years of free credit monitoring. Several colleges including Webster, Trinity and Middlebury reported they were impacted by both the TIAA and Clearinghouse breaches. TIAA performs work for more than 15,000 institutions so this breach could prove to be quite costly. Announced recently, the California State Teachers’ Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) have been affected by the MOVEit hack. CalPERS mentioned that this incident impacted personal information from roughly 770,000 of its members. CalPERS is taking intensive action to protect and serve its members’ financial interest. The University System of Georgia has also been hit by this wave of cybersecurity breaches. They are unaware of whether their system contracted Clop or paid a ransom. Their experts are designing software updates to fix the security problem. Another cybersecurity incident related to the MOVEit breach has been discovered within John Hopkins University and John Hopkins Health System. Some of the data included names, health billing records and contact information. The university said it will be reaching out to impacted members. How Can Schneider Downs Help?If you believe your organization was impacted by the MOVEit attack or have any other questions, please contact our team at cybersecurity@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit www.schneiderdowns.com/cybersecurity.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Five Tax Considerations for Start-up Companies When it comes to taxes, startup companies often underestimate the significance of tax planning, compliance and the implementation of effective tax strategies. Startups tend to invest less in this area because they are usually not in a taxable income position in their initial years while they are focused on developing and refining products, process and ideas. However, this mindset might cause them to miss out on valuable credits and future tax savings, and it may even create potential future tax issues for the company. Below are five common tax considerations startup companies often overlook: 1. Research and Development (R&D) Tax Credits Startups heavily invest in research and development activities to develop new products or services. These expenses may qualify for valuable tax credits. Unfortunately, many companies overlook these opportunities because they believe they will not have taxable income to utilize these credits. For some businesses, R&D tax credits may be utilized to offset the employer portion of payroll tax liabilities. Even if a business cannot offset its payroll tax liability with R&D tax credits, unused credits can carry forward and provide future tax savings to startups. 2. Tax Compliance and Reporting As mentioned earlier, startup businesses often disregard tax credits because they do not anticipate taxable income. Consequently, startups also often fail to realize the importance of being compliant with all federal, foreign, state, and local tax rules and regulations. Tax compliance rules, requirements and reporting are complex and constantly evolving. It is crucial that startup businesses work with qualified professionals who understand these rules. For businesses offering their customers innovative products and services, hiring remote employees or operating in several states (or even foreign jurisdictions), the tax reporting requirements applicable to the business can become extremely complex. Noncompliance with these regulations can create issues for businesses in the startup phase—and as the business matures. Noncompliance with tax requirements can negatively affect a business during due diligence, when the company is seeking out potential investors or buyers. Buyers and investors might decide not to proceed with a deal if they think they might face future penalties, fines or legal consequences due to a company’s tax noncompliance. 3. State and Local Tax Incentives Many state and local governments have developed state and local tax credit and incentive programs to attract and support startups. These programs can include tax exemptions, reduced rates and tax credits. These programs are being created and updated often, to include companies working on innovative ideas, especially those related to emerging technologies. It is important for startups to work with a tax professional who can identify the programs that can benefit their company. 4. Equity Compensation Plans For startups, it is crucial that they attract and retain talented employees, especially in competitive job markets. Equity compensation plans are a way for startups to attract new talent and encourage employees to stay with the company. By giving employees a financial stake in the company, these plans motivate employees to perform well and reward them for their performance. There are many ways these plans can be structured, and these plans can provide tax benefits for both the company and the employees. 5. Entity Type Choosing the legal structure for a new company is one of the first and most important decisions a business must make. While simplicity and cost often influence this decision, it is important to consider the larger impact this decision has on your business. There are tax advantages and disadvantages to each entity structure, and the future goals and plans for the business must be considered when making this decision. A qualified tax professional can provide guidance when making this decision. These are just five of the many tax concepts that startups should consider. The most important thing for startups is to work with a qualified tax professional and other advisors during the early stages of their company. Tax rules, regulations and incentive programs are constantly evolving, and the only way to ensure that a company is fully compliant with the rules and fully benefiting from available programs is to work with advisors who are specialized in these areas. If you have any questions about tax matters for an early-stage or startup company, please contact the team at contactsd@schneiderdowns.com. Related Articles This article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Top Accounting Advisory Needs for Emerging Technology Companies Best Practices After an Equity Raise for Start-Up Companies Leases In Technology Arrangements Pros and Cons of IPO for Early-stage Companies Emerging Technology Companies and the R&D Tax Credit Compilation, Review or Audit? What Early-Stage Companies Should Know About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### SEC Adopts New Cybersecurity Rule for Public Companies What does the new SEC Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure Rule mean for public companies?The Security and Exchange Commission (SEC) formally adopted the Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure Rule on July 26, 2023, following the public comment period.The final rule is designed to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance and material cybersecurity incidents from public companies that are subject to the reporting requirements of the Securities Exchange Act of 1934.SEC Public Company Cybersecurity Rule – Material Incident DisclosureThe new rule requires registrants to disclose, on the new Item 1.05 of Form 8-K, any cybersecurity incident determined to be material and to “describe the material aspects of the incident's nature, scope, and timing, as well as its material impact or reasonably likely material impact on the registrant.”An Item 1.05 Form 8-K will generally be due four business days after a registrant determines that a cybersecurity incident is material.The final ruling did note that exceptions for reporting timeframes may be made if the “United States Attorney General determines that immediate disclosure would pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing.”SEC Public Company Cybersecurity Rule – Regulation S-K Item 106 The new rule also adds Regulation S-K Item 106, which requires public companies to disclose information on their cybersecurity risk management, strategy and governance plans in their annual report on Form 10-K in an effort to provide more transparency to investors. The new disclosures required on Form 10-K include: Whether and how the described cybersecurity processes have been integrated into the registrant’s overall risk management system or processes; Whether the registrant engages assessors, consultants, auditors, or other third parties in connection with any such processes; and Whether the registrant has processes to oversee and identify material risks from cybersecurity threats associated with its use of any third-party service provider. A description of the board’s oversight of risks from cybersecurity threats and, if applicable, the identification of any board committee or subcommittee responsible for such oversight and a description of the processes by which the board or committee is informed about such risks. A description of management’s role in assessing and managing material risks from cybersecurity threats. SEC Public Company Cybersecurity Rule – Timeline and Key DatesAccording to the SEC press release, the final rules will become effective 30 days following publication of the adopting release in the Federal Register, with key disclosure deadlines as follows: The Form 10-K and Form 20-F disclosures will be due beginning with annual reports for fiscal years ending on or after December 15, 2023. The Form 8-K and Form 6-K disclosures will be due beginning the later of 90 days after the date of publication in the Federal Register or December 18, 2023. Smaller reporting companies will have an additional 180 days before they must begin providing the Form 8-K disclosure. While not all of the proposed rules were adopted as part of the final ruling, the SEC is optimistic that the new rule will have a positive impact for investors in the public space. “Currently, many public companies provide cybersecurity disclosure to investors. I think companies and investors alike, however, would benefit if this disclosure were made in a more consistent, comparable, and decision-useful way,” said SEC Chair Gary Gensler. “Through helping to ensure that companies disclose material cybersecurity information, today’s rules will benefit investors, companies, and the markets connecting them.”How Can Schneider Downs Help?The Schneider Downs Cybersecurity Team can help your organization be better prepared to meet the new disclosure demands from the SEC. If you have any questions about the new SEC cybersecurity disclosure and incident reporting requirements, please contact our team at cybersecurity@schneiderdowns.com.Related Links SEC Press Release – SEC Adopts Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies SEC Fact Sheet – Public Company Cybersecurity Disclosures; Final Rules SEC Final Rule – Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit www.schneiderdowns.com/cybersecurity.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Student-athlete to Accountant I’ve had two summer internships during my college career at Ashland University. Last summer I was an audit intern with a regional firm in Columbus, and this summer I am a tax intern at Schneider Downs.I am a division II collegiate golfer at Ashland University. Since starting my professional career, the skills I have learned from golf have been an asset to my resume. I can help my Schneider Downs scramble team during golf outings and leverage the soft skills I have developed through the many challenges I’ve faced in my golf career. These skills have transferred well to the professional world and helped me get the most out of my internships. Networking is one of the most important opportunities students have in an internship—working with professionals of all levels is great for our learning experience and making life-long connections. Being a student-athlete is a great conversation starter, as many businesses use golf as a social and networking activity. I had the privilege of being invited to a golf outing with two shareholders and a manager who were representing Schneider Downs and seeking out potential clients. As a summer intern, I was very thankful for the experience where I could network in a professional environment and have a fun day outside of the office!The life of a student-athlete can be very stressful during the school year and athletic seasons. We have practice and workouts most days, class, homework and studying to keep up with.  While it can be draining at times, I have learned to manage my time very well and maintain a strong work ethic in all my activities. As I enter the workforce, I know this will be a valuable skill to have, especially when I work my first busy season as an accountant. I have also learned to collaborate and navigate conflicts with my team in college, which will assist me as I work with many different people at my job. Overall, the skills developed as a student-athlete have made me a more well-rounded employee. Finally, the competition of college sports has taught me to deal with failure and discomfort. An essential part of the start of my career has been stepping out of my comfort zone and not being afraid to fail. Being uncomfortable allows me to grow, and I tell myself that every time I start a new tax return that looks daunting or I’m going to happy hour where I don’t know many people. Every intimidating situation is an opportunity to grow! As college students prepare for internships and entering the workforce, it’s important to reflect on the skills we learn from extracurricular activities that make us stronger contributors to our employers! ### Impacting Through Interning I received my Schneider Downs internship because of a huge referral opportunity. I wasn’t supposed to intern in Summer 2023 because I had missed the application deadline. Schneider Downs wasn’t on my radar then. Around December 2022, I had told my advisor and another church acquaintance on separate occasions about how I had wanted to try an internship doing tax work. “Schneider Downs is a great place to start,” they both said. “It provides a great, well-rounded experience to start your career.” Because of SD’s flexibility, they worked me into the Summer 2023 Tax team. After working at SD for nine weeks, I can confirm that a Schneider Downs internship provides a well-rounded experience, not only in your discipline but also in whatever fields you are interested in. I am currently going into my senior year at Waynesburg University, and I am still unsure of what discipline I want to take within public accounting or if I want to do public accounting. However, my work at Schneider Downs has put me in realistic and practical situations where my accounting knowledge in other disciplines fits into the big picture. For example: I am studying for the CMA Exam which focuses on cost management, controls, compliance with GAAP, etc. As a tax intern, I have seen company income statements and balance sheets which have allowed me to analyze their financial situation with cost management in mind. Sometimes, I see trial balances where a client has mistakenly misstated an expense. This might have tax ramifications, but it always affects their reporting. With a few corrections, I have helped clients comply, report accurately, and earn tax-savings. Non-profit clients describe their control systems and processes which must be reported on a 990 Return. I have learned some of these practices and how they keep theft and fraud from occurring within their organization. In addition, through their intern program, SD presents all the firm’s services and specific practices to the interns, which has given me opportunities to learn about each department’s work and their disciplines. I have made connections with shareholders and managers in other departments, and they have explained how their practice is interrelated with all the other practices at the firm. For example, Consulting and Managed Accounting Services help clients perform efficiently and accurately. Then, Audit performs an external audit of the financial statements, and Tax performs their tax planning and return preparation using those same statements. All the services are interrelated, and I have learned so much about each link in this chain. So, whether you are considering public accounting, corporate accounting, financial planning, or whatever other discipline withing the accounting/finance umbrella, a Schneider Downs internship provides a look into and experience in all of them. I have been able to use my specific skill set to make an impact with clients and the SD team, and Schneider Downs has intentionally given me those opportunities. That’s why I have loved and grown through my internship. I don’t know for sure what track I want to take within the finance world, but Schneider Downs has intentionally pushed me to see every aspect they can show so that I make an informed decision. They want me to be where I want to be, and, if I don’t know where that is yet, they go out of their way to help me find it. Start Your Career with Schneider Downs You’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### Pros and Cons of IPO for Early-stage Companies Founders of most early-stage companies need capital. Most initially seek capital from private investors and venture capital firms, which ultimately dilutes the founder’s ownership interest. To grow the business and get investors the return on investment that they desire, additional capital is often needed.A lot of founders would like to exit by way of an Initial Public Offering (IPO). An IPO exit strategy makes a sense given the enormous success of companies like Facebook and Amazon. However, does an IPO make sense for your company? Let’s take a look at some of the advantages and disadvantages of an IPO strategy. First, let's explore some advantages: Advantages of an IPO  The first and probably most obvious advantage is access to capital. An IPO provides a founder with access to a potentially enormous amount of capital from sources that wouldn’t otherwise be available. This capital can be used for research and development/product development, which could lead to organic revenue growth. It can also be used to fund inorganic growth via acquisitions. In addition, this additional capital can be used to build out a top-tier team. An IPO will certainly help build the management team, as well as lead to a stronger corporate governance structure, which is something that a lot of early-stage / boot-strapped companies lack. An IPO leads to access to traditional financing. Most early-stage companies with a private investor base lack the ability to obtain traditional bank financing due to a limited history of revenue growth and recurring losses. After an IPO, organizations can grow revenue, reduce losses and become more creditworthy, which makes them more attractive to traditional financing sources. By successfully completing an IPO, a company can create more brand awareness almost overnight. In addition, due to additional capital and increased liquidity, the company has more financial resources to devote to advertising and creating additional brand awareness. Lastly, an IPO can give a founder a long-term role with the company that they created. In many cases, the founder will remain with the company in a key leadership position. In contrast, when a company exits to a strategic buyer, the founder might have a much shorter tenure with the acquiring company. Now, let's take a look at some disadvantages of an IPO:Disadvantages of an IPO  First off, going through an IPO is extremely expensive and time-consuming. The professional fees spent on an IPO can be cost-prohibitive. In addition, the time commitment can be several months, or even years, as the company gets ready to become publicly traded. A company that is considering an IPO will be subjected to additional scrutiny from regulators including the SEC. Many reporting requirements will be in place for the remainder of the time the company is public. Complying with such requirements is costly, and the results are available to the public. An amplified compliance requirement increases the risk that the company could fail to meet those requirements, which could directly impact the value of the company. In addition, many companies face increased volatility in stock price for several years after an IPO. Many founders of a company that goes through an IPO will experience a loss of control of the company, due to a dilution in their ownership, even if they retain a long-term executive leadership role. Lastly, there is a higher risk of failure for companies that go through an IPO. According to a recent study by Jay R. Ritter, the Cordell Eminent Scholar, Eugene F. Brigham Department of Finance, Insurance, and Real Estate at Warrington College of Business, University of Florida, the majority of new companies coming to market are unprofitable when they undergo an IPO. Ritter’s study found that since the 1980s, unprofitable IPOs have risen from around 20% to 80% of the total IPOs each year. However, Ritter qualified that observation by noting that just because a company is unprofitable when it raises public capital for the first time doesn’t mean that it will be unprofitable over the longer term. As you can see, there are many advantages and disadvantages to going through an IPO. All of these points and others need to be considered before making the decision to go through an IPO. There are many other growth and exit strategies to consider. It can be confusing and overwhelming for a founder; however, it is important to fully understand all options before making a capital raise or exit decision.If you are considering an IPO or seeking advice on options for building capital for your early-stage company, contact Trevor Warren, Assurance Shareholder.Related ArticlesThis article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Top Accounting Advisory Needs for Emerging Technology Companies Best Practices After an Equity Raise for Start-Up Companies Five Tax Considerations for Start-up Companies Understanding Leases In Technology Arrangements Emerging Technology Companies and the R&D Tax Credit Compilation, Review or Audit? What Early-Stage Companies Should Know  About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page. ### Deutsche Bank Fined $186 Million For Insufficient Anti-Money Laundering Controls Why did the Federal Reserve fine Deutsche Bank $186 million?After years of failing to fix “unsafe and unsound practices”, Deutsche Bank (Deutsche) was fined $186 million for insufficient anti-money laundering (AML) controls by the Federal Reserve (Fed). This is in addition to two previous fines for the same offence from 2015 and 2017, which together totaled $99 million.Deutsche had pledged to address the issues since their first fine in 2015; however, the Fed claims that the bank has made insufficient progress since 2018 to ensure compliance with sanctions, improve customer due diligence and tighten AML controls.Besides the fact that this is the third AML progress fine, many believe Deutsche's involvement with a money laundering scandal at Danske Bank Estonia in 2022 played a role in the large $186 million figure. Despite the fines, Deutsche continues to claim they are making significant investments in controls and have grown their global anti-financial crime team by more than 25% since 2019 with over 2,000 employees, but has still seen the same reoccurring issues of money laundering scandals and unsafe practices.The Fed did recognized that Deutsch has made some progress recently; however, bank operations “remained exposed to heightened levels of compliance risk, including the risk of failing to detect money laundering activity or US sanctions violations". The Fed urged them to make substantial progress on fixing these issues by the end of the year or face additional penalties, and also announced a Written Agreement to address other general deficiencies relating to Deutsche’s governance, risk management and controls.How Can Schneider Downs Help?The Schneider Downs Risk Advisory team can aid your organization in effectively mitigating risk and successfully meeting regulatory and compliance obligations.About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. ### What is the Most Common Financial Reporting Issue Facing a Private Equity Fund’s Portfolio Company? One of the most challenging financial reporting issues a private equity owned company will encounter is the initial assessment of fair value when the company is originally purchased by the private equity fund or when the company acquires an additional platform entity (whether through an asset or stock deal). Usually, when a private equity fund invests in a company, the fund obtains a controlling interest in the company. Upon obtaining a controlling interest, the company is required to apply Accounting Standards Codification Section 805, Business Combinations, (ASC 805) if the company wants to be compliant with accounting principles generally accepted in the United States of America (GAAP). ASC 805 requires assets acquired and liabilities assumed to be recorded at fair value. Recording assets and liabilities at fair value may require the use of third parties such as valuation specialists to value inventory, property and equipment, intangible assets, future contingent consideration and more. Ensuring that the acquisition accounting is recorded correctly in accordance with GAAP is key from a financial reporting standpoint because it establishes the opening balances of the company. Proper planning for purchase price accounting is a key element of the acquisition.Common mistakes include, but are not limited to: The entity does not have proper cut-off of income and expenses on the date of the acquisition.  The entity does not adjust reserve accounts to zero. The entity fails to account for working capital adjustments correctly.  Schneider Downs has a team of professionals that have significant experience working with private equity funds and their portfolio companies through a multitude of different services. About Schneider Downs Private Equity Firm Services Schneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions.  To learn more, visit our dedicated Private Equity Firm Services page.  ### Making a Mark As someone from rural Pennsylvania, walking into PPG Place on my first day as a Risk Advisory intern at Schneider Downs was surreal. It’s not like I hadn’t seen the building before, as I’ve driven past it countless times as a student at the University of Pittsburgh. There’s just something different about working in it. It feels like you’ve made it – made your mark, in a sense.That’s the thing about Schneider Downs, too – you can make a mark. I started my first client engagement at the end of my first week. By the end of week three, I had worked on projects for three different clients. It sounds like a lot to have an intern involved to that degree. And it was. However, it never felt that way with all the support I had. There were many times when I simply turned to the person next to me and started asking questions. “What is this meeting on my calendar?” or “How do I test this control?”The surprising part about this experience was the willingness of every person in the office to help me, offer advice and check in later. I never once felt alone in my work, and I didn’t realize just how important that aspect of an internship was until I had it.It’s important to note that employment at Schneider Downs isn’t just all about work. It takes team building to create such a positive atmosphere, and I was able to jump right in during my first week as an intern by attending the Risk Advisory Services (RAS) Women’s Golf League. The first monthly golf outing was certainly my favorite event to participate in since it provided a fun day to connect with other women in the Risk Advisory practice. The best part? This is not the only women’s event that will be offered this summer. Throughout my internship, there will be a number of events provided for women in the firm, which makes it clear just how much Schneider Downs encourages female leadership. My Risk Advisory internship has already allowed me to grow both personally and professionally, and I can’t wait to see where the rest of the summer will take me. I am grateful for the numerous opportunities I have had to serve clients and learn more about the field of professional services. Summer 2023 will certainly be a chapter I look back on as a pivotal time of learning and development, courtesy of my internship at Schneider Downs.Start Your Career with Schneider Downs You’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### Beyond the Horizon – Developing an Exit Strategy and Understanding your Alternatives Many business owners believe that when it comes time to exit their business, they only have one option: to sell. Few understand that selling a business is a complex and time-consuming undertaking with many pitfalls. Many sales attempts result in deep discounting by the buyer or, as is the case nearly 80% of the time, never come to fruition. When considering an exit from your business, the most important consideration is how to get the most value for your company. In this blog, I look at the pros and cons of several options for doing just that: selling, structuring an ESOP, aggressively growing, maintaining controlled or “lifestyle” growth, and profitably running down your business. Option 1: Pursuing the Sale of your Business An outright exit by means of a sale can seem the most attractive option for you to cash out and pursue other opportunities – particularly if your company’s financials are in good order and past performance is positive.  But buyers will be looking for evidence of what the business is going to be worth next year or in five years’ time. They are buying future – not past — growth. So, your company can appear very successful on paper, but a deep dive — the kind that happens during due diligence — can reveal many red flags. For example, there may be uncertainty over the business’s ability to successfully scale, or the book of business and work backlog may be weaker than expected. An often-neglected point is that you must find a buyer who understands your industry and business to appreciate the assets and value you provide. Putting your business out on the open market could invite buyers who will attempt to discount the company simply because they don’t understand its market or potential. Option 2: Employee Stock Ownership Plan (ESOP) ESOPs are trusts that acquire/hold/sell the company’s stock for the benefit of participants in the ESOP – the employees. Typically, the company borrows money from lenders, investors, and/or selling shareholders, and then loans the ESOP trust funds to acquire shares. As the ESOP loan is paid down, shares are allocated to employee accounts annually, generally in proportion to the employee’s annual compensation. Employees then receive cash in exchange for their shares upon retirement, termination, disability or death. An ESOP has several advantages, if successful. It can provide you with significant potential tax benefits (section 1042 rollover), providing an avenue for deferral of capital gains taxes until the ultimate liquidation of the rollover investment assets. In a leveraged ESOP, both principal and interest payments are tax-deductible to the company. Also, an ESOP transaction has a greater degree of certainty of closing than a third-party sale. Additionally, members of your management team can retain their positions, providing greater certainty and a smoother transition post-sale. A transition to employee ownership helps provide continuity of company culture as the interests of owners (employees) and management are more closely aligned. Finally, since an ESOP structure can provide employees with potentially significant retirement benefits, it can enhance the company’s ability to attract and retain employees. However, an ESOP is not a simple solution. Success depends on a variety of criteria, for example, it requires: A track record of profitability A moderate to significant debt capacity A strong earnings/cash flow Demonstrated steady and controlled growth over time – consistent and predictable financial results A strong executive team that would stay in control after the active shareholders were no longer engaged An enterprise value that is sufficient to support the transaction There are some potential drawbacks. An ESOP will typically not generate a strategic premium that would be available via an auction-based sale (ESOP limited to FMV of shares). An ESOP is not a cost-free option and sufficient cash must be generated from the business to support ESOP administrative fees and debt service, as well as the buyback of vested shares from employees who terminate employment.  Such cash flow needs should not compete with the cash flow needed to build and grow the company. The ESOP only provides benefits if the underlying shares have value to the participants – good management and operation of the business are essential. Finally, the failure of an ESOP company can result in employees losing their jobs as well as any value in their ESOP accounts. Option 3: Hold and Aggressively Grow via a Combination of Organic Growth and Acquisition Ideally, you want to think about an exit from your business at least two to three years before your desired departure date. The strategy of aggressively growing your company through both organic and inorganic methods requires about three to five years of planning and implementation. This may require dramatic steps, such as: An investment in more experienced personnel, e.g., a strong CFO who has previous M&A and market-related experiences; A boost in business development, marketing and sales functions to help build a more robust and fuller pipeline of business over time; Substantial new debt for technology or infrastructure upgrades; or A necessary expansion of capabilities to enter a new market The advantage is that, if successful, this option would allow your company to grow and increase in value over time, but it does require cost control and spending discipline. And, you may have to accept a substantial shift in your company’s culture and management. Option 4: Hold and Pursue Controlled, Targeted Growth (a "Lifestyle" Business) This is like Option 3 in many respects but builds on it to involve targeted growth within your company’s core capabilities. Less intense than Option 3, it nevertheless sets the stage for a potential sale of the business downstream. Of course, it may still require a review of the company’s management, with specific emphasis on the role of the CFO and the mechanisms for cost controlling and spending discipline to provide a steady and dependable income stream. Option 5: A Slow Rundown To some, this is a controversial option, but it is a perfectly legitimate one. This may be well suited to you if you are doubtful of the ability of the business to operate in a free and open marketplace. Essentially, this involves continuing to operate while not seeking new contracts, reducing the backlog of business, planning for an eventual sale of assets and taking the maximum owner’s draw out of the business until close. The upside of this option is that it will allow you to exit while providing an income and reduced responsibility. It avoids the commitment required of a growth or controlled growth strategy as well as the difficulties of a sale or ESOP. The downside is that this process needs to be managed carefully. Customers and any creditors may get spooked if they learn of your plans too far in advance, as might employees. An uncontrolled exodus of staff from your business could bring it crashing down sooner than anticipated or desired. Which Option will you Choose? If you are looking to exit your business, take the time to plan and consider your options. Selling is not your only option and may not even be the most suitable for you, your employees or your business. Whichever option you decide to pursue, be sure to give yourself enough time to prepare and plan thoughtfully. Rarely is one given a second chance to exit on one’s own terms. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Understanding Leases In Technology Arrangements There are many complex transaction rules impacting technology companies, including Topic 842: Lease Accounting, which could have a significant impact on a company’s balance sheet.One of the more complex areas in accounting for leases is the treatment of technology services agreements, including agreements regarding data centers, cloud computing and dedicated servers. Under Topic 842, these types of transactions could have an embedded lease, resulting in the lessee recording a right-of-use (ROU) asset and lease liability. Definition of a Lease According to ASC 842When reviewing technology agreements for embedded leases, it is imperative to remember that the definition of a lease under ASC 842 is a contract that conveys the right to control an identified asset for a period of time in exchange for consideration. The most common embedded lease for technology services relates to servers used to store data or operate within a network; however, companies should review all of their agreements to determine if they contain embedded leases. Identified AssetFor an agreement to have an embedded lease, there needs to be a specified physical asset being used, like a server, for example. The asset can be located either at the customer’s site or at an offsite location owned by the supplier. The key is whether the specific asset can be identified and designated specifically for the customer. Right to Control Once it has been determined that there is an identified asset, the next step is to evaluate the right to control. The customer has the right to control the asset whenever they can direct the use of the asset, meaning they can direct what purpose the asset will serve without changing the contract. The customer also has the right to control whenever they will obtain substantially all of the economic benefits from the asset over the term of the contract because they have the exclusive use of the asset. Finally, there is a right to control whenever the supplier does not have substitution rights. If the supplier can substitute or move the asset without the approval of the customer, then the customer does not have the right to control the asset and the asset would not be considered a ROU asset.   In the case of a server or equipment being installed at the customer’s location, it needs to be determined if the asset can be repurposed by the customer or if the equipment is just necessary for the supplier to fulfill the service. If the use of the asset can be directed by the customer to serve a different need or project or if the supplier cannot substitute the asset without customer approval, then there is right to control by the customer and therefore is a lease under Topic 842.   In the case of a server at a supplier’s location, if there is a specific cage or section within the building designated for the customer that cannot be changed without the consent of the customer, then there is a ROU asset. Conversely, if the contract states that the customer will be able to use servers at the supplier’s location but the supplier can select which specific servers and can change the servers throughout the contract term without customer approval, there is not a ROU asset.   Once it is determined that there is a ROU asset, the customer needs to quantify the value of the asset based on the contract payments and record the related asset and liability at the start of the contract period. Depending on the size and number of these contracts, the impact to a company’s balance sheet could be significant.   If you have any questions about lease accounting for an early-stage or startup company, please contact the team at contactsd@schneiderdowns.com.Related ArticlesThis article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Top Accounting Advisory Needs for Emerging Technology Companies Best Practices After an Equity Raise for Start-Up Companies Five Tax Considerations for Start-up Companies Pros and Cons of IPO for Early-stage Companies Emerging Technology Companies and the R&D Tax Credit Compilation, Review or Audit? What Early-Stage Companies Should Know  About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.  To learn more, visit our Emerging Technology page.  About simpLEASEBuilt by accountants for accountants, simpLEASE makes the FASB’s Accounting Standards Certification (ASC 842) simple. Designed to solve leasing accounting challenges for organizations of all sizes, simpLEASE is a scalable web-based solution that streamlines the lease accounting process and provides fast and accurate results regardless of whether you have two or two thousand leases.To learn more, visit our simpLEASE Accounting Software page.   ### Guidelines for Choosing Your Organization's Record Retention Method Keeping detailed records has never been easier than in the digital age. This should come as joyful news to any business. Record retention refers to the way a business stores and uses data for a set period of time. Although many in the workforce prefer physical paper, electronic storage is a safer and more reliable option. Failure to comply with retention requirements could result in major tax and legal issues, and, unfortunately, Uncle Sam is not very forgiving when one loses a document. It is crucial for a business to decide what works best for them when navigating record retention guidelines. Some companies might stick to paper, others electronic, and some will go with a hybrid. Each method has pros and cons, and it is important for a business to carefully consider the most efficient and accurate record retention system. There are many factors to consider when deciding on a record retention strategy: Convenience and Flexibility - A system that provides an easy way to share documents is best. Electronic storage systems provide for easy transportation of what could be multiple physical boxes of information, in a single mouse click. However, there are risks of malicious third parties who try to hack into a system and steal data if it’s not properly secured. Reliability - Paper documentation is extremely dependable and is not susceptible to power outages and server failures. However, it is susceptible to floods, fires and other natural disasters. It is true that electronic records can also be damaged or destroyed, but it is much easier to create backups and recover lost work. Security and Privacy - Cybercrimes are on the rise with an average of 2,244 cybercrime attempts per day in the U.S. alone. If a company wants to use electronic recordkeeping, it is important to develop internal controls to ensure the security of customer data. A business should never rely solely on a software vendor to provide security. Storage - While paper records are tangible and can run out of space, electronic storage is nearly infinite. If a company outgrows its own servers, it is easy to find off-site storage facilities that will safely harbor records. Costs - Although this factor might have been different 10 years ago, electronic record retention is the cheapest option for almost every business. Year after year, the cost of storage goes down, making electronic storage a cheap option for businesses of all sizes. Once a method is chosen, the organization should develop a document retention policy. A document retention policy spells out how long a business keeps different types of data, how it formats data, where the data is stored, how long the data is stored, and the disposal process for the data. A fully developed document retention policy makes data more accessible, reduces storage costs, helps consolidate document storage, and can provide an improved process for disaster recovery. Deciding how long a business should retain documents can pose a challenge; a helpful tip is to look at the statute of limitations for various operating procedures, and then add a year. For example, most tax returns have a statute of limitations of three years for most items and a statute of limitations of six years for significant understatements. It would be recommended that businesses retain tax return data for a minimum of four years, or seven years if they want to be cautious. Record retention procedures are not a one-size-fits-all approach. It is important for any business to do due diligence before deciding on a document retention policy. If you have any questions on how document retention implementation strategies can benefit your organization, please contact our team at contactsd@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### The Biden Administration Automatically Discharges $39 Billion in Federal Student Loans – Do You Qualify? Who is eligible for automatic student loan forgiveness because of fixes to income-driven repayment plans? Following the Supreme Court ruling that struck down the Biden Administration’s Student Loan Forgiveness Plan, President Biden and the U.S. Department of Education (Department) announced they were automatically canceling $39 billion in student loans for more than 800,000 borrowers. The announcement is causing increased speculation regarding who qualifies and how the process will work. For any borrowers wondering about eligibility for student loan forgiveness under the new plan, the following conditions apply: It applies to borrowers on an income-driven payment plan or borrowers on an income-driven payment plan in the past. It also applies to people in the public service loan forgiveness program or people with direct or federal family education loans held by the Department. According to the Department, borrowers are already eligible for some forgiveness through a program that already exists after they’ve made at least 240 or 300 monthly payments. It depends on what specific repayment plan they’re on/the type of loan they took out. Previously, months when payments were late, partial or deferred didn’t count toward the 240 or 300 monthly payments; however, the announcement changes the 240 or 300 payment requirement, and monthly payments that didn’t count toward the forgiveness will now count. Eligibility is then determined by adding the number of months they have paid late, made a partial payment, or the number of months they paused repayment (but only if they’ve spent 12 or more consecutive months or 36 or more cumulative months pausing payments) and the number of months they have deferred payment(but only economic hardship or military deferments count after January 1, 2013, while in-school deferments don’t count if they happened before 2013). If you have any questions regarding the new student loan forgiveness programs, please contact a member of the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com. Related Resources Biden-Harris Administration to Provide 804,000 Borrowers with $39 Billion in Automatic Loan Forgiveness as a Result of Fixes to Income Driven Repayment Plans About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.   ### Personal Finances as a College Student College can be a daunting time. The constant stress of academia, maintaining relationships with friends and family, the pressure of getting involved in clubs or activities and possibly balancing all of this with a job or collegiate sport.Despite all these challenges, attending college is both valuable and rewarding; as it is an investment in yourself. College students’ biggest struggle is maintaining their finances during a chaotic time. As a senior finishing my tenure in college, I have learned how to keep my personal finances in order. I have achieved this by trial and error in the last few years. I did not get it right 100% of the time, but I learned throughout my journey.Go in With a PlanEveryone reading this knows that college is expensive and going into it with a plan is especially important. When a freshman or sophomore high school student decides to attend college their first thought should not be “What should I study?” but rather “How will I pay for it?”. This may require a student to save by working long hours at a high school job. Students can also apply for Federal Student Aid (FASFA) or other loans and develop a plan to pay it early and often. Others may explore opportunities with the military to receive discounted, or in many cases, free college. The Ohio 529 (or other states’ equivalent) is a wonderful way to set aside money for higher education. This is an investment plan that grows tax-free at the federal and state level and offers an Ohio state income tax deduction. Taxpayers can deduct up to $4,000 per beneficiary, per year. Any contributions exceeding the $4,000 limit can also be carried forward and deducted on the next year’s return. Furthermore, this is a great account for others to contribute to, whether it is $25 from grandma every birthday or a $500 gift from a parent. Some practical advice is to work hard in high school to receive locally sponsored and university scholarships based on grades, test scores and extracurricular activities. Keep tuition price in mind while visiting colleges and exploring options. This may mean going to a public in-state or commuting to a local college.Create Semesterly Budgets (and stick to them)Utilizing spreadsheets for budgets can be a useful tool. This is a fantastic way to see your personal cash flow, and how/where your money is being spent. Recently, I moved to an off-campus apartment, and I have found this to be the best way of keeping rent, utilities, groceries, entertainment and savings in order. I use this budget to track my rent and utility payments to ensure I am staying up to date. There is no right way to do this, so find a way that works for you. Sometimes sticking to budgets may mean saying no to friends on various activities like golfing, restaurants and bars, shopping, concerts and trips. It will be hard, but your future self will be grateful.Work an On-Campus JobMost college students work/intern in the summer and take the fall and spring off to focus on their studies. If you find yourself in this group, I strongly encourage getting an on-campus job if your schedule allows. On-campus jobs allow students to work for 5-15 hours a week, working around class schedules. These flexible jobs provide a way to have an inflow of cash and help with the abounding expenses during the semester. These work opportunities require little to no skill and sometimes allow students to study while on the clock.Look Out for ScholarshipsScholarships are a great opportunity for students to receive money for educational purposes. At most colleges, faculty will send out departmental emails with various scholarship possibilities. College faculty is the greatest resource for scholarships as they are always looking out for their students. Other ways for college students to look out for scholarships are with platforms like Handshake and LinkedIn. The process for scholarships varies, but it usually requires basic information on an application, and an essay or two (usually no longer than five hundred words).Start Improving Credit ScoreStarting and building a credit score in college can help you significantly when making a large purchase in the years following. If you have never used credit, it can be particularly challenging to start. Many credit card companies have student cards. These student cards allow you to build a credit score from scratch and offer some rewards. Utilizing autopay on your credit card is one of the best things to do with it. Autopay allows the card to pay its balance each month, as it is linked with a personal bank account. This ensures that you pay the statement balance on time, avoiding any late fees, interest, and penalties. Autopay is a great method to rapidly increase credit score. When doing this, one needs to be mindful not to overspend the card. Credit card companies will hate you if you pay your bill off fully, and on time. You will be getting cash-back rewards while increasing your credit score.Invest Spare ChangeIf you find yourself in a position with a surplus of cash, it is a great idea to invest it. According to the time value of money principle, money in the present is worth more than in the future; due to its potential for earnings when invested. There are several brokerage firms where you can invest for free. I highly encourage investing in mutual funds with a Roth IRA. A Roth IRA is an individual retirement account that offers tax-free growth and withdrawals for retirement. You can withdraw at 59.5 years old, or in some cases, buying your first home. A person in 2023 can contribute up to $6,500 in a year. However, your Modified Adjusted Gross Income (MAGI) can disqualify you from contributing to a Roth IRA. For 2023, a MAGI of over $153,000 for single filers and $228,000 for married couples filing jointly can prohibit you from being able to contribute. There is no better time to put into a Roth IRA when one is in college, nowhere close to the disqualifications.The road during college is not perfect, but I hope these tips can encourage prospective and current college students on how to take control of their personal finances!Start Your Career with Schneider Downs You’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### How I got hired This amazing opportunity all started when I took a chance and started networking during the fall of my freshman year. I met with the amazing Gretchen, and she told me to see her the following year. I took her up on that offer and accepted an intern position soon after my interview.Working with Schneider Downs has been a revolutionary experience. I have learned so much, more than I ever thought possible. I cannot wait to keep learning and growing as an accounting professional. This regional firm opened my eyes to a smaller work environment that has made the learning curve much less steep and something I have really loved during my time here. I have gained valuable experience while working with clients, other interns and the full-time staff. I have worked on many programs, in several different software systems. I value the immense importance that SD has for learning and growing as professionals. I have loved the opportunity to attend industry updates and other trainings alongside the full-time staff. SD opened my eyes to all the possibilities, and I have gained so many valuable connections that I know I can utilize in my future. I am solidified in my decision to continue my accounting career path and even more excited to continue growing and learning more about the field and all I can accomplish in it. Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page. ### What is the Future of Dynamics GP? In recent years, it has become clear that Microsoft is shifting its investment away from Dynamics GP and focusing on Dynamics 365. This has left a lot of companies using GP fearing that it is going to stop working one day soon. That is not true, but that is also not the right question to ask. Instead, it’s important to ask yourself whether your business can operate on software that is not going to be continually invested in and evolved over time. As a former Dynamics GP consultant, I can tell you that while Dynamics GP is not going to disappear, it will become increasingly difficult and costly to maintain. If you decide to stay on the platform, review what this blog post mentions. Before going any further, what is happening with GP is not unique. We are seeing this trend across the industry. It is impossible to predict the future but “the writing is on the wall”. Price Increases and Mixed Messages After speaking at Community Summit in 2022, one of the ERP leaders at Microsoft posted the below on LinkedIn. The TLDR? Microsoft is not going to take GP off life support. View the post on LinkedIn here. Shortly after the LinkedIn post, Microsoft made the following announcements: On October 1, 2023, Dynamics GP (and NAV) subscription license pricing is set to increase by 9%. On October 1, 2023, Enhancement Plans and Advantage Plans will increase by 1%. Starting April 1, 2026, sales to new Dynamics GP customers will be discontinued (existing customers who are current on enhancements can still add new licenses). Based on the above LinkedIn post, we can be sure the additional revenue these increases generate are not being invested in new GP features and modules. Functionality and Support In terms of product functionality, there have also been some telling changes in recent history that I predict we will see more of. On March 1, 2022, Microsoft discontinued the Extended Human Resources and Payroll modules. This product was sold to a channel partner who now supports it. This happened in the 2010s too, with SmartList Builder, Extender, Collections Management and Audit Trails. Parts of the product are no longer tested for compatibility with Office 365 and Windows updates, namely VBA customizations. This change forced many customers to undergo costly projects to convert VBA customizations to Dexterity (a programming language that is not widely known). When Microsoft began forcing its customers to enable modern authentication, any customers wishing to send emails (e.g., vendor remittance, workflow, etc.) were forced to upgrade to avoid losing email functionality. There was a period when the web client was not compatible with modern authentication, and any customer who had web client users that used the system to send emails had to find a workaround or upgrade again. In September 2020, some customers received an Office 365 update that broke GP Word templates. The only solution was to roll back the update or wait for a service pack and be without Word templates. Many notable ISVs are shifting focus away from GP. Binary Stream, Greenshades, Integrity Data, eOne, Rockton, Kwiktag and more have all invested heavily in porting their GP products to Dynamics 365 Business Central. There is a large network of firms that provide Dynamics GP implementation and support services, however many of those firms are also shifting their focus to Dynamics 365 Business Central. Notes from the Field There are also some anecdotes that I can share about compatibility and stability. The issue of “stuck batches” has not been addressed in the nearly 15 years since I first encountered the platform. A simple stuck batch can take 15-20 minutes to fix, but more complex ones could take upwards of an hour to fix. The solution sometimes requires changing transactional data via SQL which can cause corrupt data and impact your audit trail. The solution for many of the compatibility issues (VBA, MFA, O365) has been to upgrade to the latest release of GP, which can be extremely labor-intensive and require a lot of planning.  I have seen upgrades take upwards of 60 hours to complete. I have seen many connectivity issues between the GP client and server. These issues are always extremely difficult to diagnose, require a lot of time to troubleshoot and resolve, and impact end-user productivity. GP does not play well with anti-virus software, especially if it is deployed on a terminal server. These issues are well documented. The processes that interact with the %temp% folder are foundational to how GP is designed, so it is unlikely that this will be resolved in a future release. A Path Forward As a Microsoft partner, we have the knowledge to successfully plan for and execute migrations from Dynamics GP to Dynamics 365 Business Central. Modern ERP platforms like Business Central are designed to be deployed in a cloud environment where many of the common issues that users experience with legacy platforms are non-existent. Technology is woven into our everyday lives, and we expect ERP to “just work” the same way apps like Amazon and Instagram work. To that end, antivirus does not interfere with Business Central, and the concept of stuck batches does not exist. The only obstacle to connectivity is internet access, which can be easily remedied with backup internet devices. Modern platforms also make self-service reporting much less complicated and thus considerably reduce the burden on IT and consulting resources required to maintain the platform. One common misconception about the cloud is that it translates to a costlier IT stack. In many cases, maintaining a Dynamics GP deployment over a 5-year period does not make financial sense. Below is an example comparing the cost to maintain an on-premises Dynamics GP deployment to a SaaS Business Central deployment. Company A and B have the exact same licensing requirements, except company A uses Dynamics GP and company B uses Dynamics 365 Business Central. Both companies have 15 licensed users and use the core financials and distribution modules in the system. The comparison below assumes two hosted GP servers, a total GP purchase price of $41,000, one annual GP upgrade, and $3,000 in costs to fix stuck batches and deal with connectivity issues throughout the year. The backup internet price is based on published Verizon wireless pricing available online and may vary depending on your location. I will grant that things are missing from this analysis, namely costs associated with securing the environment, one-time setup costs, and end-user support issues unrelated to connectivity or stuck batches. Those types of issues will occur regardless of the system. Among many other technology services, Schneider Downs also provides ERP implementation and support services for Dynamics 365 Business Central. Contact us today to determine whether Business Central is right for you. About the Author Mike Scalamogna is a Technology Advisory Manager with Schneider Downs Consulting Practice, who specializes in ERP Advisory services. If you are interested in speaking with him about your cloud strategy, please contact him at mscalamogna@schneiderdowns.com. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an on-going mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. To learn more, visit our dedicated Technology and Data Services page. ### Tips to Minimize the Risk of Check Washing As more apps are created for transferring money, the use of paper checks has been declining. Despite this, criminals have increasingly targeted personal mailboxes and postal service collection boxes with the goal of finding paper checks to potentially utilize in check washing fraud schemes. Check washing is a type of fraud that occurs when a stolen check is treated with chemicals, such as nail polish remover, to remove dollar amounts and the name of the payee. Typically, lawbreakers replace the information with larger sums of money and a different recipient before cashing the check into an account they control.According to the Financial Crimes Enforcement Network, the Postal Inspection Service received more than 299,000 complaints of mail theft between March 2020 and February 2021, an increase of 161 percent from the previous year. Check washing issues can arise for either outbound and inbound checks and can affect both individuals and businesses. Some common ways criminals steal checks include: Personal mailboxes Criminals will drive through residential areas in search of mailboxes with the carrier signal up, usually a red flag, to alert the postman that mail is to be picked up. That flag also signals criminals to a potential target in gaining access to paper checks. Postal service collection boxes Criminals will take large sums of mail from the blue collection boxes after purchasing or stealing a postman’s master key, also known as an arrow key. Stealing checks may also lead to additional fraud in terms of how criminals need to cash the checks. For instance, the stolen checks could have been written for personal reasons, tax refunds, business, etc., but in order to cash those checks, criminals may have to go to great lengths to steal the identity of the recipient or even create a fake business with a similar name. There are a number of ways to minimize the risk of check washing or how to catch it early, including:  Use electronic payment methods, including ACH If mailing a paper check, refrain from using your personal mailbox for a long period of time with the flag up  If mailing a paper check, walk into the post office and either place the mail in the lobby mail slot or hand it to a postal worker  If using a postal service collection blue box, drop off the mail before the day’s last scheduled pickup, which will avoid the check sitting overnight in the box After mailing a check, check your bank account to ensure it was cashed for the proper amount and check for anything suspicious about the check  Businesses can add positive pay to the checking account, which would prevent unauthorized individuals from cashing check If you think you or your organization has been the victim of check washing, contact your bank immediately. Also, contact the intended recipient of the check to let them know what happened, since the perpetrators may have been operating in their local area and other payments they were expecting could be affected. About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.    ### OHIO H.B. 33 Contains Significant Tax Changes On July 3, Ohio Governor Mike DeWine signed the Ohio Biennial Budget Bill (H.B. 33 or the Bill) into law, enacting a number of significant personal and business tax changes. Some notable provisions include: PERSONAL INCOME TAX Rate Reduction: One of the most important stipulations is the continued reduction of individual income tax rates, reducing the rate on non-business income to two brackets, as follows: 2023 Incom Brackets 2023 Marginal Tax Rate 2024 Income Brackets 2024 Marginal Tax Rate Above $26,500 - $100,000 2.750% Above $26,500 - $100,000 2.750% Above $100,000 - $115,300 3.688% Above $100,000 3.500% Above $115,300 3.750% This provision furthers Ohio’s goal of aligning its tax rates and brackets to allow the state to become more competitive. Coupled with the taxation of business income at 3% for amounts over $125,000 for single filers/$250,000 for joint filers, Ohio has made significant strides toward that objective. Expansion of Resident Credit for Pass-Through Entity Owners: Starting with taxable years beginning on or after January 1, 2023, the Bill expands the Ohio resident credit to taxes paid by a pass-through entity (PTE) to other states and the District of Columbia either on a composite return or pursuant to a state pass-through entity election. To qualify, owners must add back to their Ohio adjusted gross income the amount of non-Ohio state and local taxes paid by the PTE that were deducted for federal tax purposes. Although the provision applies to taxable years beginning on or after January 1, 2023, taxpayers may elect to apply the provision to their 2022 tax return, either on their original Ohio return or an amended return. This change is notable, as it allows Ohio residents to take advantage of the SALT cap limit workaround enacted by many states. Donation Timing for Scholarship Granting Organizations: A current program grants any single taxpayer who contributes up to $750 ($1,500 for joint filers) during the taxable year to a qualifying scholarship granting organization (SGO) an equivalent income tax credit. H.B. 33 provides that a taxpayer may elect to claim an income tax credit for a taxable year for any contribution made to an SGO until the due date of the Ohio tax return for such taxable year (generally the following April 15). This change will not accelerate the deductibility of the contribution for federal income tax purposes; a taxpayer who itemizes for federal tax purposes will only be able to deduct the contribution in the year the contribution was actually made to the SGO. SALES & USE TAX Sales Tax Holiday Expansion: While the length of the sales tax holiday is still being determined – Governor DeWine vetoed the requirement that the holiday be 14 days – the expanded sales tax holiday will apply to purchases of any item of tangible personal property with a purchase price of $500 or less with exceptions for motor vehicles, titled watercraft and outboard motors, alcohol, tobacco, vapor products or any products containing marijuana. Sales or Rental of Construction Material and Services for Traffic Control and Drainage Improvement to Government Agencies: The provision codifies the holding in Karvo Paving Co. v. Testa, 219 Ohio 3974. It should be noted that the language applying these changes to prior periods was not codified. As a result, taxpayers who paid tax or were assessed in prior periods may still be forced to litigate the position. COMMERCIAL ACTIVITY TAX (CAT) CAT Exclusion Increased: The Bill provides that the first $3 million of a business’ Ohio taxable gross receipts are excluded from the CAT calculation for calendar year 2024, increasing to $6 million in 2025 and after. The exclusion is no longer phased out, allowing taxpayers of all sizes to benefit. This expansion is expected to eliminate CAT liability for nearly 85% of previous CAT filers. Despite the increase of the exclusion threshold, taxpayers below the threshold must still file CAT returns. Minimum Tax Eliminated: The Bill eliminates the CAT’s minimum tax. Calendar Year Filings Eliminated: The annual CAT return, which is usually due May 10 of each year for calendar year taxpayers (those with less than $1 million of taxable gross receipts), has been eliminated. Research & Development Credit Modifications: The Bill makes changes to the Qualified Research Expenditure (QRE) Credit, including: Combined or consolidated elected taxpayer groups (or a financial institution group under the Financial Institution Tax) must now calculate the credit on a member-by-member basis. The expenses of an individual member may be included in the aggregate credit only if the entity is a member of the group on December 31 of the year in which qualified expenses incur. Records requirement – taxpayers are now required to retain records supporting QREs used in calculating the credit for four years after the later of the return due date or actual filing date. This includes records for the year in which the credit was claimed and the three previous years (which are part of the base calculation of the credit). Ohio Department of Taxation (ODT) QRE sampling – the ODT may now review a representative sample of the QREs to verify the credit was calculated correctly. MUNICIPAL INCOME TAX Alternate Apportionment for Remote Workers: Businesses with remote employees will be permitted to choose an alternative apportionment formula for tax years ending after 2023. Instead of using the employee’s remote work location, the employer may designate a “reporting location,” which is a location owned or controlled by the employer or the employer’s customer. Under the election, the employer may situs property, payroll and sales activities of a qualifying remote employee or owner to the qualifying reporting location rather than the individual’s qualifying remote work location. It's important to note that this provision applies to the net profits tax and does not impact the employer’s responsibility to withhold income taxes on the wages of remote employees at their actual work location (i.e., remote location). Late Filing Penalties Eliminated for First Time Offenders: Beginning with taxable years ending on or after January 1, 2023, municipalities will no longer be permitted to impose a late filing penalty of $25 per month, up to $150, for a first-time offense. OUR THOUGHTS ON The Bill contains numerous provisions that will benefit both individuals and businesses, furthering Ohio’s goal of creating a competitive and taxpayer-friendly environment. From an individual income tax perspective, the expansion of the resident credit to included taxes paid to other states at the entity level, whether through a composite filing or under a pass-through entity election, will allow Ohio taxpayers to fully enjoy the benefit of the SALT cap workarounds enacted recently by many states. Taxpayers who did not participate in PTE elections in other states or were negatively impacted by the lack of resident credit for elections made should consider making the elections going forward or adjust their 2022 filing position to fully enjoy the new benefit. On another front, with the significant increase to the CAT exclusion and elimination of the minimum tax, a substantial number of businesses will no longer be subject to a CAT liability. It’s important to note, however, taxpayers below the CAT threshold are still required to file returns, putting them at the disadvantage of having to expend effort or dollars to prepare returns to report no liability. The Schneider Downs State and Local Tax practice is well equipped to help your business navigate these Ohio changes. If you have questions, please direct inquiries to Stephen Worth, State & Local Tax Practice Leader, at sworth@schneiderdowns.com. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Getting Back on Course After a Disruption – Elements of a 360 Degree Assessment Serious business disruptions come in many shapes and sizes, from changing economic conditions to the “Dismal Ds” (death, divorce, disability, disagreement and departure). In the midst of disruption, it is all too easy to feel beleaguered and overwhelmed and to become fixated on the immediate crisis. An English friend of mine told me this is known in the British Army as the state of being “head down, bum up” — when troops crawl along the ground to avoid enemy rifle fire. While concentrating on keeping their heads down, they instinctively raise their hindquarters to compensate, thereby avoiding getting shot in the head but inviting an entirely unintended wound! Whatever the type of business disruption you encounter (short of your own death!), your chances of getting your business back on track and returning to cash flow positive will be increased significantly if you take the time to assess your business and options properly and thoroughly, and from there, create a strategic plan to move forward.  Because time is at a premium for those enmeshed in crisis, it is advisable to engage an outside expert to conduct a 360° Assessment. What is a 360° Assessment? Not all-inclusive, this process begins with a review of the company’s historical and projected financial performance, management team, functional areas, capabilities, governance, corporate initiatives, and back office structure. The following key documents and data are typically reviewed: Financial Documents Prior year audit reports Prior year internal financial statements (income statement and balance sheet) Current year interim financial statements (income statement, balance sheet and cash flows) Backlog and vendor data Trial balance and other financial data Prior year’s budget Corporate and Operational Documents Organizational diagrams Strategy plan Capability briefing Business unit (BU) growth plans All hands presentations Management business reviews (MBR) This type of assessment does not constitute an audit or review of financial statements or a formal valuation nor should it be relied upon to disclose errors, irregularities or illegal acts. But, based on the findings, recommendations and action plans can be made to successfully return the business to cash flow positive and/or to stability and growth. Key Observations, Implications with Recommendations The results of a 360° Assessment typically uncover issues in the following categories: Board and Governance Often, the mistakes and errors that endanger businesses are permitted to occur by the lack of an effective board of advisors, which should hold the management team accountable, or from a poor governance model, which should establish the rules and procedures by which the company makes decisions, undertakes operations and manages stakeholder relationships. Organizational Structure Weaknesses in the company’s structure (direct reports, employee responsibilities, skill sets, internal controls, etc.) can prevent it from achieving the optimal efficiency that comes from having the right people, with the right skills and experience, in the right positions. Historic Operating Results and Financial Projections An in-depth analysis of both historic and projected financial data can reveal unsustainable operating costs, debt ratios, EBITDA margins, DSOs, pipeline and backlog, and other critical valuation considerations. These frequently lead to improved budgeting, reporting and projection recommendations. Back Office Function While back offices may seldom make or break a business, they will in fact break one through poor financial control and planning. Compensation plans, technical accounting, internal controls, indirect cost rates, utilization rates, monthly closing processes, and human resources procedures are among the areas where changes may be necessary. Business Development Making sure that business development is strategically positioned to grow and scale the business frequently requires the adoption of a Future State Business Development and Marketing structure that aligns resources and delineates responsibility and accountability. Future Roadmap The conclusion of this assessment is a road map to implementing the recommendations and action plans. This needs to be aligned with the company’s strategic business plan, vision, goals and objectives over the next three to five years. The road map provides focus, reduces the risk of misaligning resources in pursuit of goals, and prevents the pursuit of ill-defined opportunities that might forestall progress toward your company’s goals. It also provides a checklist of actions and something to measure progress against. Conclusion Whether you chose to follow the plan outlined in this blog or not, I hope I made one thing made clear: disruptions, in whatever form they take, don’t have to be catastrophic to your business provided you take the time to properly assess your company’s strengths and weaknesses and your options, and then create a strategic plan to move forward. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Is It Time to Replace Your ERP? CFOs understand the importance of having efficient systems and accurate financial data to drive favorable business outcomes. But amid numerous competing initiatives, it's hard to know when the time is right to evaluate a new ERP system. But the good news is you can proactively prevent business performance disruptions by familiarizing yourself with common indicators that your existing ERP is causing problems. Here are five key indicators: Inaccuracies in your KPIs and financial reports Manual processes, disconnected systems, and repetitive tasks often lie at the root of these issues. By implementing a new ERP system, you not only have the opportunity to cleanse your data but also automate workflows, leading to more reliable and streamlined financial reporting. Insufficient security features and outdated software Legacy ERP platforms may not be fully compatible with modern security tools and tech stacks. As technology continues to evolve, uptime and security of financial data become bigger risks for businesses operating on legacy ERPs. Misalignment with growing business requirements As your business grows and evolves, your ERP should adapt to the changing landscape. Increasing transaction volumes, expanding product lines, and plans for additional locations and/or acquisitions are indicators of future system bottlenecks that may be removed with a cloud-based ERP platform. Compliance risks associated with legacy systems Legacy systems often introduce unnecessary compliance risks. Many of the latest ERP systems are deployed in the cloud, which shifts some of the burden of compliance to the hosting provider. More importantly, it frees your people to focus on tasks more strategically aligned to business growth. Employee morale and job satisfaction Employee morale and job satisfaction can suffer when employees are constantly hitting roadblocks or do not feel that they have the tools to successfully do their jobs. One of the biggest things we hear from clients using legacy systems is that it is difficult, time-consuming and costly for their teams to extract and analyze data. Team members empowered to make decisions and generate valuable insights are more engaged. This reduces your costs to onboard and train new people, and it also reduces recruiting costs. In a rapidly changing business climate, simply waiting for these issues to make it to your desk and taking a reactive approach to resolve them can result in unnecessary headaches and negatively impact business performance. Instead, finance leaders should proactively work to address these issues. Here are a few suggestions: Simply ask your employees if the ERP is inhibiting their productivity and whether they are frustrated with how the process works today. In the same conversation, find out what is working well because this is equally as important. Take an inventory of how many systems your team uses to complete their daily tasks. Sometimes having multiple systems is necessary, but other times, it can point to misaligned business requirements and outdated software. Look at your GL. How many entries are compiled manually? This can make KPIs difficult to reconcile or even create. It can also point to misaligned business requirements and cause employee morale issues. Recognizing the signs that it is time to consider a new ERP system is vital for CFOs and finance leaders overseeing companies with significant growth and financial targets. The scenarios mentioned above are all signs that your current ERP system may be hindering your company's potential. At Schneider Downs, we understand these challenges, and we are here to provide expert guidance and support in evaluating, implementing, and optimizing a new ERP system that aligns with your business objectives. Call us today for a no-cost, no-obligation Needs Analysis to determine if migrating to a new ERP is the best course of action.   About the Author Mike Scalamogna is a Technology Advisory Manager with Schneider Downs Consulting Practice, who specializes in ERP Advisory services. If you are interested in speaking with him about your cloud strategy, please contact him at mscalamogna@schneiderdowns.com. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. To learn more, visit our dedicated Technology and Data Services page. ### Barracuda’s Directive to Replace, Not Patch, Email Security Gateway Appliances Would your organization be able to quickly pivot to remediate a zero-day vulnerability in one of your security appliances?Recently, Barracuda, a well-known storage, security and networking products company, has come under scrutiny for complex vulnerabilities discovered in their Email Security Gateway Appliance (ESG). Currently, Barracuda is recommending appliance replacement in certain situations, and whether you’re a Barracuda customer or not, there are some important lessons for consideration when exploring the events that occurred.The DetailsOn May 18th, 2023, Barracuda was alerted to anomalous traffic coming from their Email Security Gateway appliances. Barracuda engaged Mandiant to assist in investigating the traffic. They quickly identified a zero-day vulnerability in their ESG appliances, CVE-2023-2868.They also determined that a third party had been using the vulnerability to gain unauthorized access to ESG appliances. Barracuda quickly developed and released patches for the affected appliances, but also determined that malware allowing persistent backdoor access was present on a subset of the affected appliances. In addition, evidence of data exfiltration was found on some compromised appliances. The earliest evidence of this vulnerability exploitation goes back to October 2022.Barracuda has attempted to be transparent with their customers over the course of the continuing investigation and has published the currently known Indicators of Compromise as well as Yara and Snort detection rules on their website. The investigation is still ongoing, but Barracuda has stated that they believe the vulnerability was exploited by “an aggressive and highly skilled actor,” identified by Mandiant as UNC4841, as part of a targeted information-gathering campaign.Barracuda’s GuidanceBarracuda states on their website that “Impacted ESG appliances must be immediately replaced regardless of patch version level,” and that their remediation recommendation for the compromised ESG appliances “continues to be replacement of the compromised ESG.” It is important to note that currently, only some ESG appliances have shown known indicators of compromise, which is flagged via a message in the appliance’s User Interface. If you receive a message in the User Interface alerting you of compromise and have not yet replaced the appliance, you can contact Barracuda support at support@barracuda.com to get a new ESG virtual or hardware appliance. Additionally, Barracuda recommends rotating any applicable credentials connected to the ESG appliance, including LDAP/Active Directory, Barracuda Cloud Control, FTP server credentials, SMB, and any private TLS certificates.Why It MattersWhile the investigation currently suggests that only a subset of ESG appliances were compromised, the level of compromise achieved was likely enough for the threat actor to maintain access even if the device was factory reset.  This conclusion is reinforced when reflecting on the change in guidance given by Barracuda and Mandiant from simply patching to completely replacing the compromised appliances. The investigation shows this zero-day was first exploited in October 2022, which means the threat actor may have been exfiltrating data from their targets for a significant period.Risk ManagementAs part of risk management, everyone should be performing due diligence before making security appliance purchases. However, despite all the pre-purchase research, data gathering, and risk measurements, we have no control over unknown zero-day vulnerabilities or vulnerabilities that are discovered post-purchase.Organizations should be following a risk management framework (RMF). For example, NIST’s Special Publication 800-37 discusses a Risk Management Framework. The NIST RMF includes a “monitoring” phase, which is important for ensuring ongoing reviews of your devices.  During this phase, organizations monitor the device, any controls related to the device, and the security disposition of the device. This allows an organization to be aware of new patches, updates, or informational releases for deployed devices. Monitoring can also take the form of regular reviews of vendor websites, forums, mail lists, device dashboards, and news updates.  The monitoring phase is extremely important regarding Barracuda’s ESG incident because their guidance changed from patch to replace for affected appliances.Incident ResponseAccording to the Barracuda investigation, threat actors were able to achieve malware-based backdoors on the ESG appliances. The investigation also discovered that a subset of infected appliances experienced data exfiltration of email data. If your organization were to experience a similar situation with a deployed network device, how would you respond?In our experience, the difference between a chaotic response and a professional response is a developed and mature incident response plan (IRP). An organization experiencing such events should remain calm and work through the processes and procedures expressed within their IRP. The IRP should have specific roles defined for different types of incidents.  An IRP can contain actions ranging from “patching” to “erase and reinstall” to “must replace”.Another aspect of a developed and matured IRP is a tabletop exercise (TTX).  A TTX is basically a meeting/conversation where an organization tests out their IRP. The TTX starts with a brief description of a fictitious event within the organization.  The organization must then describe its response, in real-time.  The TTX continues with additional events and/or descriptors, often called “data injects” and the organization provides additional responses guided by their IRP.The TTX provides IRP practice for an organization.  During the TTX, conversations occur that help an organization realize the strengths as well as the weaknesses of its IRP. It’s best practice to conduct a TTX on a regular basis throughout the year, especially when new security scenarios are realized.Schneider Downs can assist you with your RMF, IRP, and TTXs.  It doesn’t matter if your RMF, IRP, or TTXs are non-existent or mature, we can help.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our?Digital Forensics and Incident Response?teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page.  ### ESG and Internal Audit: Board and Audit Committee Considerations Which key considerations should the Board and Audit Committee be mindful of related to Environmental, Social, and corporate Governance (ESG)? The Board’s role in ESG is to be the oversight mechanism for the implementation of the ESG program. The Board should be made aware of progress towards stated goals, ESG-related issues during implementation, and emerging risks and opportunities for the company. A key piece of the equation is how the Board interweaves ESG integration into the company’s larger strategy, inclusive of the identification of key issues over the short, medium and long term. The Audit Committee maintains responsibility for governance of the implementation of the ESG program, the associated data and calculations that underpin its success, and the process and control architecture. An audit plan that holistically integrates the review of disclosures and associated data, testing of controls, and verification of calculations for material ESG topics should be top-of-mind for the Audit Committee. Going a layer down, the Audit Committee should verify that the assumptions anchoring the calculation and reporting of ESG data are not out of step with relevant ESG frameworks nor the company’s methodology for other publicly disclosed data. A good example of this is ensuring that the ESG data collection period reconciles with that of the financial reporting period. ESG Questions for the Board and Audit Committee to Consider Additionally, the Audit Committee should ensure that the Board has the right mix of ESG skills to properly evaluate risks, opportunities, and delivery of key objectives. Here are some additional questions for the Board and Audit Committee to consider: How is the Committee monitoring progress towards the quantitative and qualitative goals that have been set in public? What data governance processes are in place to ensure data received from internal and external partners can be confidently used? What measures are being taken to ensure calculated values are utilizing inputs and formulas in line with the stated objectives of the company? Is the disclosed data properly annotated to denote the different sources of raw data and any assumptions or transformations made during the calculation process? In the absence of jurisdictional regulation or proposed guidance, what is the decision-making process for areas that require assumption or proxy? What is the process to review new public disclosures and progress made towards existing ones? Are disclosures being made via channels that enable straightforward access for external stakeholders and minimize rote questioning of the Sustainability Team? Can qualitative claims be backed up by processes, procedures, and corresponding evidence? Have qualitative statements been independently evaluated for potential greenwashing or green bleaching? How is the Committee evaluating the practices of its audit and assurance professionals? Environmental, Social and Governance Resources Schneider Downs ESG FAQ Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees Schneider Downs ‘Our Thoughts On’ ESG Articles About the Author Tony Ielase leads the firm’s Risk Advisory Services (RAS) practice for the Columbus market and has over 25 years of experience providing risk advisory and compliance services to a diversified number of retail, manufacturing, higher education, healthcare, technology, utilities and financial services clients. His areas of expertise include internal audit strategic planning, internal audit co-sourcing, enterprise risk management, compliance assessments, fraud risk assessments, business process improvement and SOX program implementation and optimization, among others. Tony can be reached at tielase@schneiderdowns.com. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### Seeing the Woods for the Trees – How to Avoid the Top 5 Value Discounters of Your Business What’s your business going to be worth next year or in five years? If you were to try to sell your business today, you would probably have a good idea of what it’s worth, largely according to your financial statements and your market research.  But that only tells buyers what your business WAS worth when you generated that revenue last quarter or last year. It’s a look in the rearview mirror, which no one is interested in buying. That’s what buyers want to know when they assess the value of a business.  So, if I asked you to remove your company’s financial history from the picture, what would prove its current and potential value?  If you’re coming up short in any of the categories below, you can bet buyers and their agents will use this to discount the value of your business and reduce the amount they’ll be willing to pay for it. 1. Weak Contract Backlog and Sales Pipeline A major indication of future value is revealed in the current contract backlog: how many active, long-term contracts are being serviced? The backlog shows signed contracts, their size and duration, and the quality of the customer.  This may include contracts you signed or orders you paid for but have not yet serviced. It also shows whether the work is recurring business, project-based or one-off engagements/sales.  This is an indication of the relative health of the business and its current ability to generate and service contracts. Nearly equal in importance is the pipeline of sales opportunities. This can be an indicator of the health of the market, the quality of the sales force and the company’s potential for growth.  Without a robust and promising pipeline, buyers will have to factor in the cost of changing the business model or staff – investments that will be detracted from the asking price for your company. 2. Inconsistency of Earnings and Execution Consistent performance and execution offer encouraging insight into the vitality of your operations. Unpredictable earnings may be a sign of fundamental structural weaknesses within the business and a hint of unpleasant surprises for a potential buyer. Ultimately, buyers are looking for positive and consistent future revenue streams and will be highly suspicious of businesses that don’t deliver this. 3. Lack of Strategic Planning and Financial Modeling Having well-thought-out and documented strategic plans and financial models are evidence of a mature company that is on track for continued growth and success. These include: A marketing strategy based on thorough research of the competition, the target market and the perceived value of the company’s products or services; An operations plan that is sustainable and scalable; and Financial modeling that demonstrates high-level thinking about budgeting, forecasting, allocation of resources, the impact of corporate finance projects, etc. Buyers want evidence of marketing strategies that are based on more than experience and a series of best guesses. They want an operations plan that assures quality control and shows no potential “breaking point” as the company grows. And they will push to see evidence that your company has an established and detailed plan for continued growth. As a seller, you must have well-reasoned strategies and objectives in place to defend the value you assign to your business and to convince a buyer of future earnings potential. 4. Over-Involved CEO and Missing CFO A CEO who is too hands-on and involved in the daily operations of their business will signal to a potential buyer a lack of faith in the senior management team. Remember (and this is sometimes hard for CEOs who are founders of their companies), key members of the management team are often one of the prime assets being purchased, so they must project a high value. An over-involved CEO also raises the following questions to the buyer, “What will happen to the business when the CEO departs? Is the management team robust enough to continue running the business after they depart? Are future business leads solely in the hands of the CEO? What does that mean for business development or other relationships among existing clients, suppliers, partners, etc.?” Another common problem I have found is that many small- to medium-sized businesses lack someone who performs the CFO function. Most businesses have strong controllers, but they don’t have strong financial reporting, projecting or modeling capabilities that should be undertaken month by month to truly understand where the business is and where it’s going.  This is most evident among companies that do not have a month-end closing process with a clean book or do not perform monthly business reviews to analyze performance. These are big red flags to buyers. Two-to-three years in advance of the potential sale of your company is the time to be sure that a CFO and a strong back-office function are in place before these weaknesses are uncovered during a financial audit or due diligence. 5. Inexperienced Decision-Making Prior to and During the Sale Clearly, it takes time to prepare a business for sale from the viewpoint of a buyer. If you don’t have experience selling companies, it is crucial to bring on advisors who can help you identify gaps and fix structural weaknesses, assess your management team, develop growth strategies and show solid financial projections for success. Beyond preparing your company, an advisor can help you navigate the process of a sale, pick the right buyer, and optimize the structure of the offer. For instance, he/she may be able to read the buyer’s motivation and sense an opportunity that could actually increase your asking price. Selling a business is a complex process and sadly, most companies either do not sell at all or sell for considerably less than expected by their owners.  You can preserve and enhance your business’s value by planning ahead and investing in experienced guides who can provide objective advice for maximizing the value of your company. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### ESG and Internal Audit How can internal audit add value in the Environmental, social, and corporate governance (ESG) space? In our last piece on ESG, we summarized the key stakeholders in the ESG puzzle, what their roles are, and why they are important. Now, we’ll go a little deeper into the specific role of Internal Audit in ESG engagements. In ESG, the role of the audit practitioner is to provide a company’s key stakeholders (the board, the investment community, etc.) with an objective assessment of governance, processes and procedures, and underlying data to support espoused objectives. The auditor’s assessment helps to strengthen the claims made by the company in the eyes of others in the ESG community, including investors, ratings agencies, and underwriters. Pragmatically speaking, internal audit can help with the following: Prepare the Sustainability Team, Management, and the Board for limited and reasonable assurance of GHG emissions and other key data points via a readiness assessment Verify that processes and controls exist and that they are audit-ready Review public-facing disclosures for potential areas of concern to be addressed Primary Drivers for Internal Audit’s Involvement in ESG evaluations A practitioner’s evaluation helps to add a layer of credibility to a company’s publicly reported data and statements. Some of the primary drivers for internal audit’s involvement in ESG evaluations include: Environmental, Social and Governance Resources Schneider Downs ESG FAQ Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees Schneider Downs ‘Our Thoughts On’ ESG Articles About the Author Tony Ielase leads the firm’s Risk Advisory Services (RAS) practice for the Columbus market and has over 25 years of experience providing risk advisory and compliance services to a diversified number of retail, manufacturing, higher education, healthcare, technology, utilities and financial services clients. His areas of expertise include internal audit strategic planning, internal audit co-sourcing, enterprise risk management, compliance assessments, fraud risk assessments, business process improvement and SOX program implementation and optimization, among others. Tony can be reached at tielase@schneiderdowns.com. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### A Sense of Belonging: My Internship at Schneider Downs “What would you like to do for the rest of your life?” This is the question that students are trying to answer when they first begin their time in college. Like many others facing this question, there was a time when I could not give an answer. However, as I continued through college and learned more about my strengths, weaknesses and the type of work that was best suited to my personality, I decided to major in accounting and pursue a career in the field. I had heard about Schneider Downs through classmates and professors at the University of Pittsburgh, and I applied and was later accepted for a tax internship during the summer of 2023. I began my internship with three major goals in mind: Learn as much as possible about the profession and the skills that it takes to work in industry Make lasting connections with my peers and other staff Become part of a community that feels like family  When I first heard about Schneider Downs through classmates and professors, one of the things I noticed was how often they talked about the atmosphere in the workplace and the friendliness of the employees. This was important to me when deciding where to intern because I was not looking for a stepping stone to my career, but rather a place that I could become a part of and where I could begin to build a career. On the first day of onboarding, I was excited and nervous, and I did not know what to expect. However, it soon became clear that not only would I be able to meet all the goals that I had set for the internship, but I had also found a place where I could begin to build my career. Having done no prior internship, and coming in with no experience in tax software, I was worried that I would fall behind and struggle to complete tax returns on my own. However, in the weeks that followed the onboarding training, my worry gradually faded away as I witnessed how willing the people at Schneider Downs were to help us; no matter how much time it took or how quickly we worked. The first of these examples involved a group of real estate returns that both myself and another intern had been assigned to prepare. Since these were our first returns to complete, we didn’t know where to begin. When we reached out to the reviewer for help, they immediately scheduled a meeting and met us in a conference room a short time later to guide us through the returns step-by-step. Another example of everybody’s willingness to help at Schneider Downs occurred when I began work on another tax return later that week. Not only did the previous preparer help to complete the return, but the shareholder who was signing off on it stopped by later that afternoon to help make final adjustments. Whether they have been there for one year or ten, whether they are an analyst or a shareholder, everyone at Schneider Downs is truly willing to give their all to help you. These experiences helped alleviate any apprehension that I had for the internship and created an environment for success for weeks to come. Throughout my internship at Schneider Downs, I was able to take the accounting knowledge that I gained at the University of Pittsburgh, apply it to real scenarios and learn what it means to practice tax accounting in industry. I was assigned a variety of projects, including preparing partnership and individual tax returns, writing responses to the IRS for notices of tax due, and entering fixed assets for car dealerships.While I learned many important software, technical and accounting skills during my time at Schneider Downs, there was one skill that I learned that I feel is the most important, for both my career and for that of other students getting ready to take the same path. The most important skill that I learned during my time at Schneider Downs was the ability to ask the right questions. Coming out of college and into industry, there will always be techniques that are new and methods that one has never seen before. Instead of focusing on the question “What should I learn?” my internship taught me that the focus should be on the question “How should I learn?” This important lesson is one that I will continue to carry through my life, through my career and beyond. Overall, my internship experience at Schneider Downs has been full of learning, friendships and new experiences. I have met great people, made many friends and learned a lot about the field, and I did it all in an environment that is truly focused on giving its employees a personalized, welcoming time in the workplace. My internship at Schneider Downs has allowed me to plant the seeds of a career that I can be proud of, that I find fulfilling and that I can continue to build on for many years to come.If someone were to ask me ten years from now “What is one thing that stuck out to you during your internship at Schneider Downs?” I would not answer with a specific experience or event, but rather with the feeling that I had throughout my entire time there. Schneider Downs left me with a feeling that people look for in every environment, for careers and internships alike. At Schneider Downs, I felt a sense of belonging that you cannot find anywhere else, and that truly made it feel like family. Start Your Career with Schneider DownsYou’ll find that it is our people who make Schneider Downs a special place to work. Personable and gifted, our diverse group of professionals includes some of the most respected professionals in their fields. To learn more about our open positions and internship programs, visit our careers page.  ### Proposed Tax Legislation for 2023? According to govtrack.us, there have been over 350 tax-related bills introduced in Congress so far during the 118th Congress (2023-2024).  Most bills will not make it out of the respective chamber’s committee for debate on the House or Senate floors. A few bills that have been in the news recently that are of interest to many taxpayers include the following (and have been collectively referred to as the American Families and Jobs Act): Tax Cuts for Working Families Act (H.R. 3936) Renames the standard deduction the Guaranteed Deduction. Provides for a new “Guaranteed Deduction Bonus for 2024 and 2025 for taxpayers making less than $400,000 ($200,000 single and $300,000 for head of household).  The bonus deduction would be $4,000 for joint return and surviving spouse, $3,000 for head of household, and $2,000 for single taxpayers. Small Business Jobs Act (H.R. 3937) Increases the threshold requirements for information reporting (generally, form 1099-MISC and 1099-NEC) with respect to certain payees to $5,000 (up from $600) with a similar increase for when backup withholding is required beginning for payments made after 12/31/2023. Restores the reporting rule for third-party network transactions retroactive to years after 12/31/2021.  Reverts the current $600 threshold back to $20,000. Modifies the exclusion for gain from §1202 qualified small business stock.  The proposal stratifies the amount of gain that can be deferred to 50% for shares held at least three years, 75% for shares held at least four years, and 100% for shares held at least five years.  Possibly more importantly, the §1202 rules would also apply to stock of “S” corporations, and not just “C” corporations as under current law.  The cost of this exclusion may be the loss of suspended passive activity losses from the complete disposition of an activity.  The new rules would generally apply to stock acquired after the date of enactment (so current S corporation owners will not benefit from this provision). Increases Section 179 Expense in limitations on expensing of depreciable business assets beginning in 2024 to $2,500,000 compared to $1,160,000 for 2023 and phase-out threshold to $4,000,000 compared to $2,280,000 for 2023. Establishes new set of special rules (adds new §1400Z-3) for capital gains invested in “Rural Opportunity Zones” similar to the Qualified Opportunity Zone rules established by 2017’s Tax Cuts and Jobs Act.  Provides for both deferral of current gains and permanent exclusion of future gains. Adds new detailed reporting requirements (adds new §6039K) for qualified opportunity funds and qualified rural opportunity funds. Build It in America Act (H.R. 3938) Combines the temporary deferral of three revenue-raising business provisions from the Tax Cuts and Jobs Act with the repeal of certain key items from the Inflation Reduction Act of 2022. Repeals or modifies a number Inflation Reduction Act credits for the period after June 9, 2023. Repeals clean electricity production credit. Repeals clean electricity investment credit. Modifies clean vehicle credit. Repeals credit for previously owned clean vehicles. Repeals credit for qualified commercial clean vehicles Research and Development Section 174 – Essentially, temporarily suspends the required capitalization and amortization of research and development costs through lengthy legislative language and returns the rules to pre-2022 deductibility. Business Interest Deduction Limitation Section 163(j) – Temporarily extends the limitation on interest using EBITDA to years beginning before 1/1/2026 to tax years after 12/31/2022.  An election could be made to apply the EBITDA rule to 2022 tax years (though this may require an amended return in some instances). Bonus Depreciation Section 168(k) – Extends 100% bonus depreciation through 2026.  Bonus would fall to 20% for 2027 and 2028. A couple of other bills of interest include: Tax Deadline Simplification Act (H.R. 3708)   This bill was introduced May 25 in the House by representatives Debbie Lesko, Republican of Arizona, and Brad Schneider, Democrat of Illinois. It would establish that estimated tax installments for individuals, businesses, estates and trusts would be due 15 days after the end of each calendar quarter, meaning the deadlines would be the 15th day of the months of January, April, July (moving from June 15), and October (moving from September).  This bill is supported by the AICPA and National Association of Tax Professionals. Working Families Tax Relief Act (No assigned number as of date of article) A bill supported by many Democratic senators would make the 2021 expansions of the child tax credit and the earned income tax credit permanent. The proposed bill: Increases the Child Tax Credit (CTC) to $3,000 for children aged 6-17 and $3,600 for children ranging from 0-5 and makes the credit fully refundable. Delivers the CTC monthly, providing a reliable source of financial stability, so families can better keep up with the cost of living. Nearly triples the EITC for workers without children and makes the credit available for people starting at age 19 and eliminates the maximum age. It seems unlikely, given the divided nature of both the House and Senate, that these bills will pass in their current form.  More likely, the provisions contained in the bills will be bargaining chips in any final tax legislation enacted before year-end. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Out of the Wilderness – Leadership During a Disruption or Crisis Whether you lead a long-established company or a rapidly rising newcomer, trouble will eventually come your way. It’s just a part of business – and quite frankly, a part of life. True leadership is the capacity of a person to endure and stay focused on priorities during times of crisis. Performance under stress can show how quick-witted or level-headed a person is, or on the contrary, it can show where his or her weaknesses lie. I believe one of the smartest things you can do as a leader is to anticipate crises before they happen. Trite but true, you should expect – and plan for — the unexpected and develop a “crisis-ready culture” with division heads who are trained to follow established procedures and to make deliberate, wise decisions. Like a Good Boy Scout, Always be Prepared! The organizational operating models that provide the baseline for a smooth-running enterprise during normal times often evaporate during a crisis, throwing the leadership team into a morass of uncertainty and chaos. When visualizing potential crises and developing immediate response plans and procedures, most experts recommend instituting these three pre-emptive steps: Designate an insider who will be the point person for managing information. This shouldn’t be the CEO, but someone entrusted to calmly and thoroughly gather, synthesize and report on critical information (e.g., the CEO’s chief of staff, a senior communications executive or an assistant general counsel); Appoint a rapid response team to support that person; and Give that team some scenario training. The third point is vital, but all too often overlooked. Experience is the best teacher, and realistic practice sessions from time to time can pay large dividends when a true crisis arrives. Most companies have operational procedures established for crises, i.e., shut down manufacturing equipment or implement cybersecurity measures, but fewer have processes or policies for internal and external communications. In most crises, long after the issue itself has been resolved, the damage caused by poor communications continues to erode the company’s value and jeopardize its future. Crisis communications plans must consider every stakeholder – from employees who may react to rumors, to the media who may disseminate false information, to shareholders who may lose confidence in your leadership.  Providing transparency, centralizing the flow of information, and ensuring that messaging is controlled and consistent across all platforms are elements of a strong crisis communications plan. But There's More to Leadership in Crisis Than Preparation I believe the hallmark of a great leader in crisis is 360° awareness. In the eye of the crisis tornado, you will invariably be confronted with the need to learn about people, problems, details or systems far down the chain, to improvise as needed, to take a big-picture view of the situation, and to remain committed to established values. It may feel as if chaos has ensued, but it can be managed successfully if the impacts are understood and mediated: Stress management: Everyone will likely be working overtime and feeling that each decision he or she makes is monumental. Recognize that many will respond better (or worse) than expected under this tension; Time sensitivity: Circumstances can become out of control quickly, leaving little time for standard operating procedures and requiring “all hands on deck” to re-prioritize and act accordingly; Organizational flexibility: Rigid hierarchical structures can be a hindrance in crisis situations when adaptability is essential to cope with immediate needs and changes in duties or the chain of command; and Media scrutiny: Turmoil loves the spotlight, and you may not be used to juggling the pressure of the media on top of everything else. If you Haven't Walked the Office Hallways Recently, Now's the Time – Employee Engagement is Key! If you have a rapid response team in place, let them do their jobs. In the meantime, remain visible to your employees. Your presence will send the message that “Everything will be okay,” and “We’ll get through this together.” While some parts of the process will undoubtedly require confidentiality, don’t shut everyone out and hide in your bunker. This will encourage an “every man for himself” mentality that will poison the company in both the short and long terms. You’ll need to visibly demonstrate your support for your team and employees for them to reciprocate support for you and the company. If employees are asked for their feedback and ideas, they will take more ownership of the problem. Additionally, they’ll be more devoted to the cause and more motivated to help. So be collaborative. While the following tips may seem obvious, they are the kind of daily “self-talk” reminders that can help you in the heat of a crisis: Stay balanced and try not to lose control of your actions, temper, emotions or awareness; Focus on the future and moving forward as a team with a shared vision; Remember that teamwork makes all the difference, so delegate and enable others to act; Challenge the process and be open-minded and willing to adapt to changing circumstances; and Recognize the toll of the added tension and stress on your team’s physical, psychological, and mental condition, and take care of your people. In Conclusion... Strong leadership during a crisis begins with planning long before it is upon you and remaining calm and collaborative throughout. Adherence to your company’s mission statement and core values will provide the backbone for decision-making and communications.  And maintaining high visibility, transparent communications and 360° awareness of the impact of the crisis on your stakeholders will enable you to successfully lead your company out of the wilderness. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### How to Evaluate an ERP Implementation Partner On average, companies replace or make large changes to their enterprise resource planning (ERP) system roughly every 10 years. In addition to selecting the actual technology to implement (such as Dynamics 365 Business Central, Sage Intacct, or NetSuite), buyers must also select a consulting partner to help them implement the technology. The consulting partner you choose is arguably a more important decision than selecting the actual ERP, especially when you are expecting the technology you are implementing to support an industry-specific process. For example, professional services firms need to keep an eye on resource utilization and manage complex billing agreements while healthcare providers may be managing a staggering number of leases, legal entities, and material requisitions to clinics. Food and beverage manufacturers need to manage recipes and batches. Any of those name-brand systems mentioned above can be configured or customized to handle such requirements, but not every consulting vendor selling the software has the skills to properly configure the system and help your organization through a successful go-live. Here are the top 5 things you should focus on when selecting a consulting partner to assist with your ERP implementation. Do not go it alone. We have yet to meet a business owner who completed an ERP implementation with internal resources – and we’ve worked with Fortune 500 companies, 500-person companies, and 5-person companies. Consultants draw from a depth of experience and resources to make sure things are set up correctly. It’s a situation of “you don’t know what you don’t know”. See a demo tailored to your business. Seeing the demo tailored to your business does three things. First, you get a peek at the consulting vendor’s technical capabilities and their ability to “talk the talk” within your industry. Second, it’s an opportunity for you to vet any assumptions that you’ve made about the system and ensure that all the research you’ve done to this point is accurate. Third, it provides you with an opportunity to ensure the solution delivers meaningful value to your business (don’t fall in love with the technology, fall in love with the outcomes the technology produces). Meet a member of the delivery team. If you can’t meet a member of the delivery team during the sales process, that should be a big red flag. Often there is a disconnect between the sales team and the consultants and project managers who will work on your project. It is important to meet with them and ensure compatibility. At the end of the day, we’re just people. If your team’s personality clashes with the delivery manager’s personality or you sense a misalignment between your culture and consulting vendor’s culture, the change will be very difficult to manage. Ask about how your project will be staffed. Will the consulting vendor outsource some of the work to a 3rd party? How many years of experience on the specific product you are purchasing does the implementation team have? This may be the most critical questions to ask. Even with the best project management controls, polished sales pitches, and personable delivery team, if your partner lacks experience with the product that you are paying them to implement you are introducing an unprecedented level of risk to the project. You should also ask any vendor you are considering about turnover on their implementation teams because staffing changes mid-project can negatively impact the project budget. Ask about how the vendor delivers post-go-live support. Typically, in the first three months after a project goes live you are going to have to go back to the vendor for support while your users build up their confidence in the system. Some vendors have different teams who deliver support, and it’s important to know when the support will transition so that you know how to initiate support requests. This generally happens with larger vendors. Smaller vendors generally have the same teams delivering projects and support. There is no right or wrong support model, but it’s important that you understand how the vendor will support you after going live and that you are comfortable with that arrangement. With the recent proliferation of SaaS–based ERP systems and new technology, it is important to fully vet your implementation partner. About the Author Mike Scalamogna is a Technology Advisory Manager with Schneider Downs Consulting Practice, who specializes in ERP Advisory services. If you are interested in speaking with him about your cloud strategy, please contact him at mscalamogna@schneiderdowns.com. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an on-going mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. To learn more, visit our dedicated Technology and Data Services page. ### IRS Delays Release of Nonprofit Returns Generally, tax-exempt organizations have a requirement to have their annual Form 990 series and Form 990-T filings available for public inspection via the Internal Revenue Service website. For some organizations, however, certain information disclosed to the IRS is not required to be available for inspection. In these cases, the information is redacted. Unfortunately, last year the IRS discovered that some of the information reported on Forms 990-T was inadvertently made available to the public. The agency temporarily removed all filings to rectify the situation until it fixed the problem.Form 990 assists potential donors in assessing a tax-exempt organization’s financial situation, allowing them to review the organization’s compensation for certain individuals, view how funds are being spent, and how the organization is carrying out its tax-exempt programs. The returns are also used by state charitable enforcement officers to ensure transparency and accountability, as well as to monitor any potential misuse of charitable resources.A letter sent last November by the National Association of State Charity Officials urged the IRS to address the delay in the data release. Considering the number of operational and other complications encountered over the past few years, regulators want to make sure they have access to information related to the use of federal relief funds. The filings are also used by journalists and regulators to uncover any fraudulent activity. There are, too, a number of charity watchdog organizations – ProPublica, Charity Navigator and GuideStar among them – that use the returns and data within to provide the public with various information. These websites include comprehensive ratings, analyses and other types of reporting. The delay in their ability to retrieve data released by the IRS affects these organizations and their capacity to provide the most recent information to the public.Tax-exempt organizations themselves are also not happy with the delay. Form 990 filings can be complicated and involve a lot of effort to put together for a given year. Organizations, for the most part, want their returns to be out there for the public to see in a timely manner, especially since in the past couple of years every organization has had to adjust to circumstances surrounding the pandemic. It’s important for the public to see how a tax-exempt organization dealt with such drastic changes.  As this article is published, the IRS has indicated that it is making progress in releasing the returns and we have begun to start seeing these filings online.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.    ### Timing is Everything – Determining the Best Time to Exit Your Business Successfully selling your business is a combination of science and art. As with all things, failure to prepare is preparing to fail. Emotionally Ready The first question I always ask of clients contemplating selling their business is, “Are you emotionally ready?” It is not always easy to walk away when you’ve invested so much blood, tears, toil and sweat into your business. Selling a business is an arduous undertaking and timing is a critical element to a successful sale. Ideally, you will have made your decision to sell two-to-five years in advance, so in addition to emotional readiness, you will need to factor in several practical considerations, and as the saying goes, “timing is everything.” The Earlier you Plan, the Better In most cases, the further out you plan for your sale the better. This will give you time to achieve a record of consistent growth and earnings, for instance, that will be far more attractive to buyers than a series of peaks and troughs. A deep analysis of your business–what we call a ‘360-Degree Assessment’–can help to identify gaps and set in place corrective measures and achievable strategic plans for growth. This process takes time, and so does growth. A common mistake I see often is CEOs who, upon deciding to sell their business, start reducing headcount by firing people or not filling staffing gaps, or cutting their marketing or R&D budgets, for the appearance of increased profitability. These things are obvious red flags for buyers and may have the unintended outcome of slowing growth. They’re like hanging new drapes in a house to help sell it while hoping nobody notices the hole in the roof. It’s practical to reduce costs, but I recommend looking at low-hanging fruit first, like shopping all your contracts to get the best services for the lowest prices. One of the first things I perform is an assessment of cost takeouts and rationalization. I look at areas to cut or lower costs, increase profitability, and ways to better position the company for a sale. A working capital adjustment can also potentially save you money and prevent layoffs. A potential buyer would consider all these smart business decisions. Economic Cycles Obviously, your hope is to sell your business at a high point in the economic cycle. During points of low economic growth or recession, companies tend to sit on their cash. But when they are feeling confident about the future, they are more likely to look for investment opportunities and will want to put their cash reserves and capital to work. If your company has a particularly unique capability, however, then you may be more immune to the fluctuations of the economy since your business may augment or fill a capability gap for a competitor. Business and Industry Cycles Determining the best time to put your business on the market may depend on other cycles as well.  If you’re in the government contracting industry, for instance, you may want to wait until the annual budget cycle ends to add as many last-minute contracts as possible to your company’s backlog. If you’re a potential target for a merger or acquisition, there may be cycles of consolidation in your industry that you’ll need to decide whether to ride or sit out. Looking at your business specifically, you’ll want to determine the point at which your past financials will look most consistent, your backlog and pipeline will look most promising, your management team will look the strongest, and your strategic plans and financial models will look the most optimistic. Clearly, these take a couple of years of planning and optimal performance levels to predict accurately! Another area to look at is your investment cycle. For example, say your company made $25m in revenue one year with a $5m profit. That’s a 20% margin, which is pretty attractive to an investor. But what if the next year you make $35 million in revenue, but you still only make a profit of $5m. That doesn’t look so good, right? Well, that depends. If the profit is lower because you invested $2m in new equipment, then that’s planning for future growth. This can be justified to a potential buyer. However, if the profit was $5m because you and your directors took a $2m distribution, this is a lot harder to defend. This is where “assumption-based modeling” can help sellers better understand decisions and their consequences. By running through a variety of scenarios (some of which may have already played out either successfully or unsuccessfully), you’ll have a better idea of the decisions and outcomes that are defensible or not. The key to avoiding buyer discounting is being able to defend those decisions in the face of a buyer’s audit and due diligence process. The Tax Year and Tax Changes One final consideration to keep in the back of your mind is to seek advice on tax changes. Tax code changes can affect both your take-out from a sale and the implications for your family’s tax liabilities if selling is a prelude to the dispersal of funds to children. There will also be tax implications for potential buyers that may affect their risk/reward ratio. It’s extremely important to get a tax professional involved early in the sales process. Conclusion Most attempted business sales fail (or see significant buyer discounting), but that does not mean successful sales are rare. As many of my blog posts are designed to show, success requires careful planning, a strong understanding of the buyers’ perspective on your business’s strengths and weaknesses — now and in the future — and experience identifying and capitalizing on their motivations. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Navigating Uncharted Waters – Alternatives to Factoring Companies for Short-Term Capital It is likely that at some stage in the life of your business, you have found yourself in need of short-term capital. Perhaps you were developing or launching a new product or service or had to staff up for a large contract, or your customers were slow to pay.  All of these can put pressure on your cash flow and capital requirements and typically drive companies to turn to conventional lenders – like banks. However, this doesn’t work for every business. Some firms may not want to add additional debt to their balance sheets, or they may need short-term funding to cover current account spending unsuited to conventional bank loans. And, of course, it’s possible the bank may refuse the application. This is where a CEO may turn to a factoring company and invoice factoring. Invoice factoring is a financing solution that enables companies to stabilize cash flow by unlocking the cash sitting in unpaid receivables. Invoices are treated as collateral, so the firm in need of capital sells an invoice to a factoring company. The factoring company then collects payment on the invoice and pays the issuing company between 70-90% of the value of the invoice. Why Factoring Companies May Not Be Your Best Option I’ve had many issues with factoring companies and the use of this practice as a method for raising or dealing with short-term capital requirements and cash flow problems. First, the amount deducted by the factoring company is, in my view, typically too high. You’re effectively eroding your margin and your profit. The cost is far higher than any conventional debt instrument. The second issue is that having sold your accounts receivable to the factoring company, they usually approach your customer for payment before you do. The obvious problem is that this signals to your client you are experiencing cash flow problems. It looks bad, and it can potentially cause problems later on, allowing uncertainty and doubt to enter the minds of your clients as to your stability as a future supplier. For example, if you were a time-critical parts supplier, you could inadvertently be poisoning the well. For these reasons and more, I do not recommend this as a solution for any of the businesses I advise.   A Short-Term Fix to a Long-Term Problem But what if you’ve been denied capital from a conventional lender?  This may speak to deeper issues facing your business that you will need to address whether you’re raising capital, considering an M&A transaction or seeking to sell your business.  For example, inconsistent earnings may be a symptom of failures in the sales or business development processes. Failure to secure capital by conventional means may also be a sign that there are problems with your financial management systems, inadequate fiscal discipline or an inability to manage operations according to budget.  Or, as the owner, you just may be pulling too much money out of your business. The Best Sources of Capital Come From Within But how else can you raise capital? One of my many business dictums is that the best sources of capital are from within; meaning, with some in-depth analyses, businesses can often find the capital they need from internal savings without the need for external sources. A solid plan for the execution of cost-cutting measures can reduce your need for short-term capital, improve cash flow and provide resources for investment. This isn’t about hacking at the drivers of growth in your business, like your marketing, budget or sales teams. One exercise we undertake for clients is cost rationalization. The starting point of the rationalization is your Transaction Service Agreements – the services your business is buying from third-party providers; for example, telecom services. We negotiate with your providers for better deals. In some cases, we’ve saved our clients hundreds of thousands to millions of dollars annually. You’d be surprised how many businesses never look at these areas for cost reductions. For one business, as part of the assessment, we devised a plan to immediately eliminate all unnecessary expenditures and worked with senior management to implement controls that would require a higher-level authority to authorize future expenditures. We also implemented a detailed daily cash reporting and forecasting model, as well as a 12-month financial forecast. Ultimately, not only did we address the rationalization of certain costs, but we revised and enhanced the revenue model, eventually generating positive cash flow for the company. Find the Right Lender and Develop a Relationship Sometimes, you have a well-run business, but you’re still unable to raise capital from a conventional lender. This can be due to the failure to develop an in-depth relationship with a lender, or the inability to find a lender that properly understands your business. The last point is critical. There are multiple sources of capital — commercial lenders, banks, private equity firms, etc. — all of whom have different levels of knowledge about industries and market segments. Lenders also have differing investment profiles of what or who they’re willing to invest in, as well as different lending profiles. Matching a company’s needs with the right source of capital is part of the art and science of business.  For example, local banks in Washington, D.C. cultivate a deep understanding of the government contractor business model. Knowing your company’s financial strengths and weaknesses, understanding the preferences and proclivities of the lending industry, and avoiding factoring companies are vital to raising capital wisely and successfully. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Postcard from the ACFE Global Fraud Conference I had the pleasure of attending the 34th annual Association of Certified Fraud Examiners (ACFE) Global Fraud Conference in Seattle, Washington for four action-packed days starting on June 11th.The conference was truly a “global” event, with participants from around the world, including approximately 2,500 attendees in person and an additional 3,000 virtual attendees. Receptions and meals allowed for ample opportunities to network with many colleagues. And, in true Pittsburgh fashion, professionals from the Greater Pittsburgh chapter met throughout the event to socialize and enjoy some excellent local food and beverages. As president of the Greater Pittsburgh ACFE chapter, I enjoyed the opportunity to connect with chapter members, even if it required flying across the country to align our schedules.  The conference offered unique training sessions across 10 different learning tracks. Topics included artificial intelligence (AI), interviewing techniques, open-source intelligence (OSINT), fraud risk management, ethics and more. In addition to the break-out training sessions, Journalist Jo Ling Kent hosted the general sessions in the magnificent, new Seattle Convention Center Summit ballroom for in-person and virtual attendees.        Featured speakers and panelists during the general sessions included U.S. Securities and Exchange Commission (SEC) Commissioner Hester M. Pierce and Wired senior writer Andy Greenberg. New York Times bestselling author and psychotherapist Dr. David Lieberman gave a fascinating presentation loaded with thought-provoking takeaways as he discussed concepts from his latest book, Mindreader: The New Science of Deciphering What People Really Think, What They Really Want, and Who They Really Are. ACFE president and CEO, Bruce Dorris spoke with documentarians James Lee Hernandez and Brian Lazarte about two of their award-winning fraud documentaries , The Big Conn and McMillion$.At the conference each year, the ACFE grants several notable guests various long-standing awards for service and commitment to the anti-fraud effort. These special guests gave interesting presentations about the personal experiences that lead to them winning their awards. Award winners included editor in chief of the Organized Crime and Corruption Reporting, Miranda Patrucic, 1Malaysia Development Berhad (1MDB) whistleblower Xavier Justo, U.S. Small Business Association (SBA) Inspector General Hannibal “Mike” Ware and Inspector General for the U.S. Department of Justice and head of the Pandemic Response Accountability Committee (PRAC) Michael E. Horowitz.  The conference closed with a highly anticipated discussion with Billy McFarland, convicted fraudster and organizer of the ill-fated “Fyre Fest.” Mr. McFarland is currently serving his sentence under house arrest, so he spoke with John Gill, chief training officer of the ACFE, from a virtual location. Mr. McFarland discussed the events leading up to and following Fyre Fest. Those unique events included the rush of raising hundreds of thousands of dollars to pay vendors prior to the scheduled event – with the need to repeat the same process again and again for weeks on end and his belief that he could still pull-off the event even while all indications were that it was failing. Mr. McFarland also had significant concerns because of stories and allegations (which were thankfully untrue) that early attendees had been killed after arriving to the island. He also made subsequent decisions to turn around planes that were in the air with visitors at that time rather than allowing them to land. Surprisingly, Mr. McFarland said that there is considerable interest from investors for his plan to host Fyre Fest 2, which was met with audible gasps and laughs from a room full of skeptical fraud examiners.   My biggest takeaway from the conference was that fraud examiners are involved in many different roles around the globe and have unique skill sets, but we all share a common focus: preventing and responding to fraud in our organizations and communities. The lessons learned from attending the sessions and building connections with my colleagues will help me have better insights into the tools, techniques and experiences available to support the wide-ranging investigations we perform.  About Schneider Downs Business ConsultingThe Schneider Downs Business Consulting group is experienced in handling business interruption matters with forensic accounting professionals and litigation support specialists. Additionally, our Business Consulting group managed our research and consulting work on the Paycheck Protection Program (PPP), so the team is uniquely qualified to prepare potential claims related to losses from COVID-19.Learn more about our Business Consulting Services or contact us for more information.  ### Incentive and Pay Philosophies – Setting the Right Compensation and Incentive Strategies for your Employees One of the most common questions I am asked by CEOs is, “How do I determine the right pay and incentive plan for my employees?” Often, they want to know whether they should offer current cash, current stock, deferred cash, deferred stock, restricted stock or phantom options, but I like to start by asking them about their pay philosophy.  Are they willing to invest (aka accept less profit for themselves) to attract and retain the right people? Too few CEOs balance the cost of attractive salaries, benefits and incentive packages for valued employees against the often-higher cost (in other employees’ time, loss of productivity, etc.) of recruiting and training new employees (whose value is yet to be proven). Obviously, if you want your company to grow, you need skilled people who are committed to helping you grow it.  The right compensation tools, therefore, should be determined within the context of a guiding framework that is fair, competitive, consistent, scalable and sustainable. Establishing a Pay Philosophy This is simply a formal statement that clearly outlines your company’s position on employee compensation. In essence, the framework or “why” behind employee pay can serve as a frame of reference when hiring or during salary negotiations. An example of a strong pay philosophy is one that offers highly competitive starting salaries to attract a better roster of candidates. Another example might offer lower starting salaries with vesting opportunities or bonuses to develop talent and retain employees. Other factors to consider include your company’s business objectives, financial position, location and relative standard of living, the supply of qualified talent, etc. Questions to ask about your pay philosophy are: Is the overall program defensible, equitable and perceived by employees as fair? Is the overall program fiscally sound for the company? Are the programs included in the compensation philosophy and policy legally compliant? Can you effectively communicate the philosophy, policy and overall programs to employees? Are raises tied to proficiency or performance? Keep Incentive Plans Simple and Separate from Pay Pay philosophy should be seen as a framework, not a straitjacket. You can still have differing pay and incentive structures within its boundaries depending on roles (e.g., administrative versus sales). It is critical that incentive plans are clearly defined, targeted and separate from pay so employees will understand the linkage between their efforts and behaviors to their compensation. A well-designed employee incentive compensation plan will make it easy for an employee to focus on things they can control. Incentive plans fail when the structure is targeted too broadly and not focused on individual people or teams. A typical profit-sharing plan where it is “one for all and all for one” does not motivate anyone. Productive employees resent the poor performers and lack the motivation to continue their high performance. Performance Goals Linked to the idea of clarity for incentives programs is setting performance goals that are aligned with business objectives. Goals should be challenging enough to require real behavioral change but not so difficult that workers give up. Here are a few other considerations when setting employee goals: Employees need to know specifically what metric(s) will be measured. If goals are vague, managers may resort to subjectivity, opening the way to claims of unfairness, bias and ultimately resentment. Balance is key and consulting with employees can help find the sweet spot between goals that are too easy and too difficult to achieve. If you demand results that aren’t aligned with the resources available to fulfill them, this can lead to frustration on your employees’ part as well as your own. Setting incremental progress points and final deadlines for achieving goals promotes performance and allows for any necessary adjustments. Conclusion The key to determining pay and incentive strategies is aligning them to your long-term business goals to develop a fair, competitive, consistent, scalable and sustainable pay philosophy that is transparent to your workforce.  This will give you the flexibility to be creative if the talent market or your financial circumstances change without jeopardizing your bottom line or company morale. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Are Your Digital Assets Lost Forever? If you are not careful with your estate plan, your digital assets may be stuck in the cloud or remain under a company’s control, causing your digital assets to be lost forever. When people think of estate planning, they think about tangible personal assets, but a type of asset that people tend to forget about is their digital assets. It is important to consider how you want your digital assets dealt with and who has access to them after your passing. What Is a Digital Asset? Digital assets are online accounts that are password-protected, such as social media accounts, gaming accounts, financial accounts, blogs, etc. With these types of accounts, it’s easy to forget to provide your passwords to a trusted individual so that they can access them after your passing. It’s recommended to create a list of all your accounts along with the passwords. Additionally, some accounts require secondary authentication, such as private keys/codes, so make sure to include these along with your accounts and passwords. This makes it easier for your fiduciary to have access to these accounts after you pass to follow through on how you want your digital assets to be handled. However, due to data privacy laws, it’s not as simple as just providing someone with your password; you need to legally provide consent. Laws Enacted to Protect Accessibility to Digital Assets The Uniform Law Commission drafted a Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in 2015, enabling states to adopt it as law to address the issue of accessibility of a decedent’s digital assets. Both Pennsylvania and Ohio have adopted their own version of it.*  RUFADAA prevents companies from providing any individual access to the decedent’s digital account without the decedent’s consent, but it allows a named fiduciary to access the accounts of a decedent or an incapacitated person with consent. A fiduciary can be an executor, trustee, conservator or an agent named within the decedent’s estate plans. Companies have also begun to include an additional agreement beyond their general terms of agreement to allow account holders (decedents) to name an individual who they give consent to have access to their account once they pass. RUFADAA clarifies a hierarchal order for situations in which an agreement and an estate plan conflict based on the individual named and when one will supersede the other. This means that if the decedent created a digital account with a company and listed an individual access through the company’s additional term agreement, this agreement will supersede any person named in the decedent’s estate plans. However, if there is not an additional term agreement with the company or the decedent decides not to use it, then his or her estate plans are enforced. If neither a company’s additional term of agreement nor a fiduciary is listed in one of the estate planning documents (will, trust, power of attorney), then the company’s basic terms of service for the decedent’s account is used. Lastly, if the company’s terms do not address the accessibility of an account after death, the provisions within RUFADAA, given that the decedent’s state of residence adopted it, will be the default. RUFADAA affords the fiduciary with access on an as-needed basis. This significantly limits the fiduciary to carry out the decedent’s wishes on his or her digital assets. For that reason, it is important to have an individual named in one of these documents. The best practice is to contact your digital account’s company to see if it has an additional agreement in which you can list a name, and if not, read the company’s terms of agreement to see if they address the accessibility issue. Since not all companies have implemented additional agreements in which a trusted individual can be listed, it is important to also include the individual in your estate plan. This ensures your digital assets will be taken care of from both an agreement and an estate plan aspect, confirming that your digital assets are not lost after your death. How Can Schneider Downs Help? The Schneider Downs Estates and Trusts team can discuss issues regarding your digital assets with you and how they can be addressed within your estate plans to be effective. If you have any questions about your digital assets, contact us at contactsd@schneiderdowns.com. *[1] Pennsylvania Senate Bill 320, Act No. 72 (2020); Ohio House Bill 432, Chapter 2137 (2017). About Schneider Downs Private Client Services The Schneider Downs Private Client Services practice was developed to attend to the specific and individualized needs of high-net-worth individuals. From robust and complex solutions to efficient and convenient solutions, our team delivers the peace of mind that comes from working with experienced and talented professionals who can meet any challenge. To learn more, visit our dedicated Private Client Services page. ### Key Takeaways – Verizon 2023 Data Breach Investigation Report What are some of the key takeaways from the Verizon 2023 Data Breach Investigations Report?Verizon published its annual Data Breach Investigations Report (DBIR) this past week. It’s one of the most popular reports in the cybersecurity community as it provides a detailed analysis of real-world incidents.This year’s edition profiled more than 16,000 security incidents and 2,500 breaches, providing insight into some of the leading causes, financial impacts and trends.The complete online report is available here, with our key takeaways below.Business Email Compromise is Growing (BEC)BEC attacks continue to increase and now represent more than 50% of social engineering attacks. This is nearly double the amount of last year’s DBIR report and is no surprise as BEC attacks offer significantly larger payouts with less effort than ransomware attacks.  Social Engineering on the RiseSocial engineering incidents have increased since last year and 50% of these are pretexting incidents, which are commonly used in BEC attacks. In addition to an increase in incidents, the median amount stolen from these attacks has increased to $50,000.Ransomware Stays the SameWhile ransomware remains a popular tactic among threat actors, the actual share of breaches involving ransomware stayed steady from last year at 24%, although the median cost of a ransomware attack increased to $26,000. This doesn’t necessarily mean that ransomware attacks are the on decline, but rather that threat actors are evolving attack methods to combat new security technology.Money is the MotiveWhile this is no surprise to anybody, 95% of breaches are financially driven. One interesting note this year is the significant rise in breaches involving cryptocurrency. The DBIR recorded a fourfold increase in breaches involving cryptocurrency. It will be interesting to see where this number lands next year.Threat ActorsExternal threat actors were responsible for 83% of breaches, which is in line with past DBIR reports and commonplace knowledge in any cybersecurity discussion. Internal actors came in second at 19% and partners (third parties) at 8%.  it is important to note that internal actors include insider threats who act intentionally, as well as internal actors who simply make a mistake.The People ProblemSpeaking of internal actors, the human element is still a big problem as 74% of all breaches are attributed to human error, privilege misuse, stolen credentials or social engineering. This is why security education and awareness training are still crucial to securing your organization.For more information, you can access the complete DBIR at https://www.verizon.com/business/resources/reports/dbir/.About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page. ### School Yourself on Common Student Loan Cyber Scams What are some of the most common student loan cyber scams to watch out for? With the student loan pause ending and the student loan forgiveness program ruling on the horizon, it is an uncertain time for federal student loan debt holders… and cyber criminals are ready to capitalize on it. When the debt ceiling freeze agreement was reached, it guaranteed the end of the federal student loan payment pause, a pause that’s been in effect for more than three years due to the onset of the COVID-19 pandemic. With the pause set to be lifted, student loan payments will resume in October. But if the Supreme Court rules in favor of President Biden’s student loan forgiveness program, some reprieve may be on the horizon. While borrowers wait for the decision, which will happen later this month or in July, preparation is necessary. Federal student loan holders should not only be preparing for the financial impact of resuming payments but for potential cyber scams associated with student loans. Student loan-themed scams are not new, in fact, a report estimates that student loan scams stole nearly $5 billion from Americans in 2022 alone, which is why it is more important than ever to be aware of potential scams you may come across. While there are some legal yet predatory scams that target student debt holders, this article will focus on some of the most common cyber-attacks that use student loan debt as a cover. Malicious Communications Scammers use a variety of communication methods to launch malicious attacks, but they all have the same goal – to obtain information from you that can be used in stealing your identity, your money, or taking over your personal accounts, e.g., your bank account. In terms of student loan repayment scams, scammers might offer you the promise of helping refinance your student loan debt, cancelling student loan debt despite the legal ruling, applying for an extended repayment freeze, starting a FAFSA form, initiating a student loan forgiveness application, etc. To best protect yourself, you should be familiar with the following types of malicious communications: Phishing – occurs when a scammer sends you an enticing email that includes a malicious link or attachment that harbors malware. Smishing – occurs when a scammer uses a compelling text message to trick recipients into clicking a link and revealing private information or downloading malicious programs to a mobile device. Vishing – occurs when a scammer reaches out to you through a phone call to solicit personal information from you. Whatever way they try to reach you, make sure you ask yourself the following questions to analyze whether you’re the target of a scam: Did they call me from a number I don’t recognize or one without caller ID? Did they text me from a short 6-digit phone number? (This could mean it was sent from an auto-dialer API or an email account, both of which are suspicious.) Did they ask for any personal information (credit card number, social security number, FSA ID, etc.)? Did they talk with a sense of urgency? Did they try to rush me to take action? Did they offer me a quick way to get money? Malicious Websites Malicious websites are another tried-and-true way scammers will attempt to target you. These websites mimic legitimate ones in an attempt to steal your credentials and other sensitive information. Scammers will offer fake student loan services through malicious websites, promising consolidation of loans, switching repayment plans, and applications for deferment or forbearance – all of which you can apply for through the legitimate website of StudentAid.gov. If you’re googling information about student loan repayments, or, perhaps you receive a seemingly normal email with a URL in it that claims to explain or help with student loan debt, or you are simply just trying to log into your FAFSA account, make sure you trust, but verify. Ask yourself the following questions before clicking a link or navigating to a site: Does the website have a padlock icon in the web address bar? Is there an https and/or padlock icon at the start of the URL? Did I hover over the link to see where it will take me? Does the link in the email show a completely different domain? Does the website contain grammar or spelling errors? Does the website have the correct domain as a government entity? Is there incomplete or missing website content? Is the company logo on the website consistent with the company’s official logo? Helpful Resources Regardless of how vigilant you are, scammers’ methods are increasingly complex and harder to distinguish. Here are some resources to help you as you navigate the student loan repayment process and attempt to keep yourself protected from scams: Connect with legitimate sources about the Federal Student Loan Debt Forgiveness Program here. Read the Federal Trade Commission’s tips for recognizing and avoiding phishing scams here. If you ever suspect that a scammer has your information, go to IdentityTheft.gov. About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### IRS Announces No Marginal Well Tax Credit for 2022 Tax Year On June 5, the IRS released Notice 2023-41, announcing that due to the increase in the price of natural gas in recent years the Marginal Well Credit is completely phased out for the 2022 tax year. The production-based tax credit had been calculated annually based on the average wellhead price of domestic natural gas for the prior year – known as the reference price – and could be claimed on the production from each of the taxpayer’s eligible marginal wells. The credit was limited when the reference price exceeded a specified price point, which was adjusted annually for inflation. More information the calculation of the credit and limitations can be found in prior Our Thoughts On articles. The tax credit had proven to be beneficial for eligible taxpayers in previous years.A summary of the credit per MCF for prior years is below. Tax Year Credit Allowed per MCF 2016 $0.14 2017 $0.51 2018 $0.00 2019 $0.08 2020 $0.66 2021 $0.67 2022 $0.00 Schneider Downs is keeping a close watch on gas prices to evaluate the potential of a return of the tax credit for 2023. If you’re interested in learning more about the credit or have any questions, please reach out to your SD tax advisor for information.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.   ### Pathway to Growth – Diagnosing and Solving Sales Slumps It doesn’t take a business genius to recognize that stagnant or sluggish sales growth is a sound indicator that something isn’t working. But it’s often much harder to diagnose the root of the problem – especially from the inside of a company. When I’m engaged to help, I typically start by reviewing the company’s sales strategy and asking several questions: What is your value proposition? Who are you selling to? Why would they buy from you? Are you emotionally biased about what you want to sell vs. what your customers need? Who Owns the Sales Strategy? In the initial phases of setting up and running a company, contracts and leads are often pursued in a haphazard manner. There are wins but there is no real strategy in place for consistently building and prosecuting a pipeline of sales to new customers or to existing ones. Working without a plan can result in a sales team that lacks focus, dissipating their time and energies on activities that ultimately don’t augment each other or fulfill broader corporate goals. It should be the responsibility of the Sales Manager or Sales Director to create a corporate sales strategy and to own that plan, ensuring that the sales team knows what its immediate and long-term goals and operating parameters are. Performance assessments and corrective changes should be a constant process to prevent pipeline crises from arising. What are the Key Performance Indicators (KPIs)? If the company has no basis for comparing expectations against performance, then how will it know if it even has a potential problem (until it’s too late)? It is critical that these sales KPIs are in place: Book to Bill Proposals submitted/converted Percentage of sales reps hitting quota Win rate Length of sales cycle Analyzing the sales cycle by stage will allow a company to spot trends. Comparing velocity by stage (i.e., how long it takes an opportunity to go from stage 1 to stage 2) is an indicator of friction within the sales systems. For example, if it used to take seven days to go from stage 1 to stage 2 and now it takes 15 days, that’s a fair indication of a hitch in the process. This metric can be compared from sales rep to sales rep (keeping tenure in mind), across territories and industries, as well as over time. KPIs should be linked to the sales strategy. Combined, these diagnostic tools can identify an underperforming sales team or individual. To correct this, a good sales manager or sales director is critical. If the sales force does not have the necessary skills, the leader must provide them with the training, development and coaching necessary to obtain them. A sales manager sets the tone. He/she should reward results and teamwork and discourage behavior that brings down numbers and/or morale. If the sales manager isn’t leading this process, it may be time to get a new sales manager. That said, I have found that one of the most common causes of an unmotivated sales team is an overly complex compensation plan. The compensation plan should be structured in a way that transparently incentivizes each type of sales rep on the team to improve.  Often, one plan does not fit all. Is the Business Development Strategy Linked to the Sales Strategy? A good sales strategy should be tied to a business development strategy, and this requires a strong business development lead. An underperforming business development lead or lack of synergy between business development and sales can result in missing the most promising leads or wasting time on unproductive ones. The sales team could be unsure whether to cold call or wait for prospects to fall into the sales funnel. If the sales team is the furnace within the business’s engine room, then the business development lead should be shoveling in the coal. Are we Maximizing Value from Existing Customers? The quickest path to growth is maximizing sales to existing customers. In fact, it’s 75% easier than generating new business. If sales are stagnant, it could be the sales team isn’t doing enough to upsell existing clientele. Creating and tracking the results of a strategy that focuses on increasing the value of your customers is an important way to grow your business. In marketing parlance, this is called “account-based marketing” and it includes tactics like personalization in marketing outreach, which is particularly important because it strengthens the stickiness of relationships and reinforces the perception that you, uniquely, understand your client’s customers. Of course, there are libraries of books and years’ worth of boot camps devoted to improving sales skills, but following a sales strategy, instituting meaningful KPIs, aligning business development with sales and mining existing clients can help recalibrate your company’s overall course toward greater success. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### Trouble at the Top – Is a Dysfunctional Management Team Holding Your Company Back? Most business failures, whether defined as inconsistent or flat earnings, poor financial management, underperforming teams, etc., can be traced back to a dysfunctional management team. And trouble at the top usually affects and infects the whole business. Growing Pains In my experience, management problems are most commonly realized at the point where a business moves from the infancy to maturity stage within the mid-sized enterprise tier – and hopes for continued growth. A company can quickly outgrow the individuals running it, and if those individuals have been with the company since inception, replacing them with more experienced and skilled individuals can be difficult emotionally and possibly, financially and legally, too. So, what are the definitive signs of dysfunctional senior executives (even of a CEO)? And how can you avoid conflict or poor performance at the top? Many Aspire, but Few Succeed While many competent and ambitious middle managers aspire to the C-suite, the unique mix of skills, experience and temperament needed to succeed at this level means failure is more likely than success. Real leadership requires that the management team serves those on the front line. This requires senior executives to be leaders who listen. They must be equally adept at collaboration, communication and delegation. Aloof senior managers who issue directives from afar aren’t visible enough to their subordinates to lead effectively.  This is especially true of CEOs. Good leaders put themselves in front of their employees all the time. It doesn’t matter how large the company is, if the employees don’t know the CEO’s face, voice, sense of humor, and overall vision for the company, they won’t feel genuinely vested in its success. Similarly, senior leaders must know how to delegate and trust the employees who work for them. Leaders who can’t delegate restrict the ability of their divisions to expand in capacity and performance by not developing their teams’ capabilities.  Failure to delegate undermines and demoralizes staff, which often leads to high levels of turnover. Education doesn’t necessarily mean the candidate possesses the “hard skills” needed for an executive job. A C-suite-ready executive also requires the often-forgotten “soft skills” that can lead a whole team to success. These soft skills include self-awareness, which can be indicative of a willingness to learn and evolve – a crucial requirement in a good senior manager. Good senior executives will be constantly identifying their own skills gaps and working/training to bridge them. They will also have the capacity to set personal goals and challenges. Under the heading of "experience and skills" desired in top-level managers, you should also include being well-known and engaged in your industry. Top executives and CEOs should be engaged beyond their organizations, with deep industry-wide networks and relationships with suppliers, competitors, as well as regulators and subject matter experts. Warning Signs Dysfunctional habits don’t appear overnight, but more often than not, the problems they cause slowly escalate. Clues a senior manager isn’t up to snuff include: Lack of vision: Without vision, strategy and measurable objectives, you will effectively have the blind leading the blind. Senior executives should be able to articulate team goals that are inspirational, achievable and aligned with the business’s overall strategic plan. Failure to meet goals: If a senior executive doesn’t come to the company with a proven record of success or doesn’t develop a consistent one as they move up the ladder, then it’s pretty safe to assume they have ascended a rung too high. High turnover rates among subordinates: If you are seeing a revolving door of subordinates to a senior manager, this may be a sign that they do not inspire loyalty by being an encouraging mentor and team captain. Poor communication: The ability to listen, arbitrate, inspire and articulate problems and solutions with every stakeholder up, down and outside the chain of command is a hallmark and indispensable quality of a strong leader. Lack of self-awareness (aka “arrogance”): This quality presents itself among those who refuse to take the blame for any mistakes but always take full credit for successes. It is the antithesis of confidence, which is a necessary attribute for leadership. Customer tone-deafness: Effective leaders always have their ears to the ground, gauging the market and proactively responding before crises occur. They create a culture of care throughout their divisions that is reflected in customer service and in employee relations. Coachable vs. Non-Coachable Dysfunction The bar is high for valuable senior executives, but failing to meet all the criteria does not have to result in termination. Some shortcomings can be corrected with coaching. The CEO will need to make a value judgment on the executive in question to determine whether the “juice is worth the squeeze.” Ultimately, you can coach technique. You can coach certain behavioral patterns—how people deal with conflict, for example, or how they motivate teams. But coaching has its limits, and it must be accompanied by benchmarking, goal setting and a thorough evaluative process. On the flip side, there are things that cannot be improved through coaching. You cannot coach character, integrity or basic intellectual capacity. You cannot bring about fundamental changes in personality traits, like arrogance, timidity or laziness. If a senior executive is a “dinosaur,” someone who struggles with change and adaptation in the workplace and is “stuck in their ways,” it may be time (or past time) to consider termination. In a business world defined by constant change, evolution on a professional level is critical to being an effective manager or executive. If you see a division pushing against the same problem again and again and failing to adjust, this is a clear sign that something is wrong at the top. Conclusion If your company has suffered from senior management failure, you are not alone. But the best way to guard against it is to have documented expectations and collaboratively developed goals for each executive that are evaluated frequently, candidly and openly with other members of the senior management team.  Members of a governing board and experienced outside advisors can provide more objective feedback on the executive team — as well as the Chief Executive Officer.  With their help, you’ll have the ability to spot dysfunction and act swiftly, long before a problem player(s) can cause an existential crisis for your company. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### The Fiscal Responsibility Act of 2023 – What Might be the Impact on 2023 Tax Legislation? On June 3, 2023, President Biden signed H.R. 3746 Fiscal Responsibility Act of 2023 into law just two days before Monday’s default deadline. Treasury Secretary Janet Yellen had indicated that the government would shut down if nothing were done by June 5, 2023. The legislation suspends the federal debt limit through January 1, 2025, and increases the limit on January 2, 2025, to accommodate the obligations issued during the suspension period. It also establishes new discretionary spending limits for FY2024 and FY2025 that are enforced with budget sequestration, i.e., a provision of United States law that causes across-the-board reductions in certain kinds of spending included in the federal budget. The Act also rescinds spending of unobligated funds and expands work requirements for federal programs.The Fiscal Responsibility Act of 2023 provisions include: Suspend the debt ceiling, allowing for continued borrowing; Impose discretionary spending caps; Provide for defense spending increases; Improve veteran benefits; Rescind unspent COVID funds, reducing some Inflation Reduction Acts pending; Redirect $20 billion of an $80 billion funding commitment to the IRS; Require federal agencies to increase spending by $1 billion to propose equal offsets; Cancel regulations that suspended student loan payments; Impose work requirements on Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) benefit programs; Modify environmental policies to streamline environmental review processes; and Approve the Mountain Valley Pipeline through West Virginia and Virginia. The bill does not reduce the overall deficit; rather, it aims to simply slow its growth.The Committee for a Responsible Federal Budget released the following chart on June 1: (Source: https://www.cbo.gov/system/files/2023-05/hr3746_Letter_McCarthy.pdf)From a tax perspective, there are no provisions included in the bill that directly impact the taxation of individuals or businesses. There is, however, a provision to reduce the $80 billion provided to the IRS as part of the Inflation Reduction Act by $20 million. These cuts may ultimately be somewhat symbolic and may not have an immediate impact on the short-term plans of the IRS; for example, the $20 billion reduction may come near the end of the 10-year period of the planned $80 billion spend.More importantly, it’s not immediately clear what impact this legislation has on the tax priorities of Democrats or Republicans – or even bipartisan groups. For instance, there has been bipartisan support for restoration of the full research and development deduction in the year incurred rather than the required capitalization and five-year amortization rules currently in place. Many Republicans and other pro-business organizations are also hopeful for a return of 100% bonus depreciation (80% applies for 2023 and 60% applies on 2024), while a Democratic party priority is expansion of the child tax credit. These priorities may now be deferred unless other spending offsets can be negotiated or already have been negotiated through the “side agreements” to which the chart above alludes.Other longer-term tax-related deadlines that will need to be addressed include Tax Cuts and Jobs Act individual tax expirations at the end of 2025 and impending Social Security Old-Age and Survivors Insurance Trust Fund exhaustion, projected to be sometime around the year 2033. You’ve heard our thoughts on the Fiscal Responsibility Act, now let us know yours. If you have any questions, please reach out to your Schneider Downs tax consultant. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Go With Your Gut – Preventing a Calculated RFP Phishing Attack How can good instincts and cybersecurity education prevent calculated phishing attacks?As somebody who has spent a good chunk of their career working with cybersecurity professionals, two of the most common topics I end up writing about are phishing attacks and end user education.These two topics are widely discussed in the cybersecurity space for the simple fact they are two of the top reasons cyber attacks and breaches continue to happen. Even the best technology and software can’t prevent an end user from clicking malicious links or downloading malware.And while it is easy to roll our eyes about end users and laugh about the Nigerian Prince scam (he is still stranded!), there needs to be increased acceptance that phishing campaigns are growing in complexity and structure… something this author experienced first-hand this past week.This article will provide an overview of the calculated phishing campaign I recently encountered, how the campaign worked, what made the campaign realistic and why your best defense can be your end users’ gut instincts.Step 1 – Form InquiryEarlier this week, our marketing team received the following inquiry from the contact form on our website. While we get the occasional spam inquiry, they are few and far between due to our enhanced form verification measures.“We’ve recently had a request for an enterprise risk management service provider, and we stumbled upon your company, we would love to have a call on teams (preferably this week) to get more specific details about your products and services and hopefully, we could have future work together.”After reviewing the form inquiry, we took a few additional steps to verify the company was legitimate due to the international location and IP address, all of which checked out online. While most of our consulting work is national, we  have international clients and receive inquiries from abroad on a regular basis.Step 2 – Outreach and Request for Proposal (RFP) Following the initial check, we reached out to the email the person provided on their inquiry and shortly after received what read like a standard follow-up.“It’s great to hear back from you, we appreciate you getting in contact as soon as you can. You can use this email address as the point of contact for this project, I’ll attach the RFP and the requirements below for you and the technical team to have a better understanding of what is required and what are the compliances of such a project in this region.”As a professional services firm, our team fields countless RFPs, and for better or worse, receiving RFPs as email attachments is still common for some industries.But, as somebody who has worked in the cybersecurity space, I also know that threat actors use ZIP files to distribute malware on a regular basis – and our IT team did confirm that the RFP file was in fact malicious in nature.This incident is an example of how sophisticated phishing campaigns are becoming: more focused, streamlined and intelligent. Key details that made this campaign so convincing: The initial inquiry made it past spam and bot filters. The inquiry cited a very specific service and industry need with the appropriate language and asks. The threat actor responded intelligently to our response with the standard mobile email signature (sent from iPhone). The response included the appropriate language and documents that a professional services firm would expect, namely an RFP including technical specifications. There was no immediate urgency, in fact, the campaign used our inherent sense of urgency to field a lead to drive our responses. Additionally, this campaign avoided nearly all the phishing attack tropes: Distorted logos or signatures Unconventional email addresses or domain names Grammar errors or misspelled words Unusual content or requests Candidly, this inquiry and follow-up were as realistic as legitimate leads our firm receives. Whether this campaign utilized the ever-increasing AI capabilities or bots, the threat actors put together one of the most realistic phishing campaigns I have experienced.Situations like this are why end user education and training can be so important in keeping your organization secure.It wasn’t technology or software that prevented me from opening this ZIP file, it was my understanding that you never download an attachment, click on a link or send information unless you are 100% sure of who or what you are dealing with – even if the request is something as commonplace as an RFP in your industry or business.So, keep your guard up and educate your end users on what to do when they encounter a potential phishing attack – because your organization is only one click away from potential disaster.About Schneider Downs CybersecurityThe Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page. ### Back Away from the 8A Cliff and Walk Toward New, Sustainable Business Horizons Graduating from 8a status is a big step — it will be a culture shock — and without a plan, you’ll be flying blind. You need a solid strategic plan for a full & open future that defines your goals and establishes a roadmap. A small business owned by a socially or economically disadvantaged individual (an 8a firm) has outgrown several of its NAICS codes and is soon expecting to compete for full, open, government-wide acquisition contracts (GWAC).  It has determined that there will be larger profit margins and opportunities if it broadens its service offerings, but it needs an infusion of capital to establish these capabilities and to service larger and more complex contracts. Does this scenario sound familiar? While the challenge seems straightforward, the fact is that many businesses fail to make this transition successfully, despite having healthy prior earnings. There’s a reason it’s called the “8a cliff.” If you’re looking over this precipice, I know from experience that a successful transition is possible. But it requires a cold, hard-headed look at your business and comprehensive planning. (And many of the issues that need to be addressed to transition apply equally to selling a business.) Graduating from 8a status is a big step — it will be a culture shock — and without a plan, you’ll be flying blind. You need a solid strategic plan for a full & open future that defines your goals and establishes a roadmap. Otherwise, your management team may become frustrated by conflicting or unclear goals and decide to exit rather than risk an uncertain future (leaving you unable to service and retain existing customers). Proactively Planning The life cycles of 8a businesses typically unfold in the following way: They launch and get a contract, or three, under their belts as part of the privileges that come with 8a status. Then, for the next several years, they are so busy chasing and servicing 8a contracts they don’t take the time to prepare for graduation out of that status. Too late it dawns on the CEOs that they need to transition. This is the “aha” moment. At this point, they start to wonder, “Do I sell the business or try to sell my contracts?” or “Do I try to hold on and transition through?” Selling may not be the easier option. The value of 8a contracts is much less than full and open contracts. 8a businesses are rarely as secure as their balance sheets suggest, and past performance is even less of a guide to the future. Nearly 80% of the time, buyers take a pass at buying them. If you expect to transition to full and open, the answer to the question, “When should I begin planning a transition from 8a status?” should be obvious: the sooner you start planning to graduate, the more successful your transition is likely to be. Assessing Management Capability Perhaps the most painful part of self-examination for the CEOs I advise is assessing the strength of their management teams. Do they have the experience and capability to pursue and win full and open contracts? Do they have deep penetration and customer intimacy at the account level? Are they familiar with managing a large subcontractor or several subcontractors? Do they have the depth of connections across the sector and industry necessary to wade into a much larger pool of competitors? If you need to diversify your product offering, does your senior team have the experience to operate in a new product market? Often management teams grow up in their businesses and the sad truth is that the businesses can outgrow individuals and positions. One of the reasons I advise starting with a strategic plan is that it helps to define what experience you need going forward, and whether your current team can get you from point A to point B. Reexamining Back Office and Infrastructure As you contemplate growing, it’s also necessary to ask yourself questions like, “Do I have the right systems and tools in place for more complex financial controls and budgeting? Do I have the right task order management systems for contracts and business development resources?” If you are looking to move into new markets, you will need the right contracting team and knowledge to create the right pricing structure. Similarly, if you are looking to diversify your product offering, ask, “Do I have all the right certifications in place?” These are just a few of the issues you will need to assess to determine the success of your transition. Understanding Your Financials and Lenders So, your 8a business just realized it needs to raise capital to diversify its product offerings and to ramp up to win and service contracts in the full and open market…now what? There is more to raising capital than just strategic planning. First, you need the right lender in place, someone who understands your business and marketplace. And, you must prove to the lender you have the right team, financial acumen and discipline to manage larger contracts with more responsibility and a greater demand for capital. You will need to show that you understand your profit margins, capital expenditure, timeframes, sales cycles, and resource requirements in the new markets you propose to operate in. Likewise, you will need to defend your contract backlog's relative strengths and weaknesses and their types, the diversity of your contracts and customers, and your capabilities. Thinking Strategically Taking the time to develop your strategic plan will help ensure you’re making the right investment decisions, based on your existing work backlog and sales pipeline as well as your ability to retain your base of business while scaling to meet future opportunities. Graduating from 8a status is not for the faint-hearted; it can be fraught with more risk than the initial start-up.  Among the keys to success are plenty of time for planning and implementation, a comprehensive assessment of capabilities (preferably done by an impartial third party) and a management team with members who have experience competing in the full and open market. About the Author Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations. You can contact Tom at tspringer@sdcapital.com. About SD Capital SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies. Learn more at www.sdcapital.com or contact the team directly at contact@sdcapital.com. Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc. ### EV Tax Credit Overview and Reference Guide Electric vehicle tax credits were revamped under the Inflation Reduction Act (“IRA”). The good news for taxpayers is that these credits will be around for the foreseeable future, as the IRA enacted these credits through 2032. The bad news is that the rules surrounding what vehicles are eligible and which taxpayers qualify became much more convoluted in the process. There are now essentially three clean vehicle credits taxpayers can claim: 1. New Clean Vehicle Credit - $7,500 max credit 2. Previously Owned Clean Vehicles Credit - $4,000 max credit 3. Commercial Clean Vehicle Credit - $7,500/$40,000 max credit (dependent on vehicle weight) Each credit has its own nuances to be eligible to claim, such as MSRP price limitations, taxpayer income limitations, battery mineral and/or battery component sourcing requirements, battery capacity requirements, and qualified manufacturer restrictions. As all these requirements are being implemented by the IRS and manufacturers are adapting, the list of eligible clean vehicles is constantly evolving. EV Tax Credit Reference Guide by Schneider Downs Auto Advisors  To help auto dealerships and consumers navigate through these rules, we have developed an EV Tax Credit Guide. This guide provides a summary of each clean vehicle credit, links to resources to check vehicle make and model eligibility, and an overview of which taxpayers are eligible for each credit. This one-page reference guide summarizes many pages of IRS-issued guidance, FAQs and fact sheets, so it may not provide answers to every taxpayer scenario. However, it is a good starting point for consumers considering the purchase of an electric vehicle to determine if they will be eligible for tax savings in connection with their purchase. Please share with your sales team and customers. For more information on navigating these clean vehicle credits, please contact Brett Cubellis, Steve Barber or any of our Schneider Downs Auto Advisors. About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page.   ### 7 Easy Steps to Keep Your Home Network Safe What are some of the best ways to keep your home network safe? A strong cybersecurity program includes a defense in depth strategy, which means layering defensive security measures to protect assets from digital intruders. While many people think about multi-faceted security strategies from an organizational perspective, it’s equally important to think about defense in depth strategies in the context of personal security, particularly when it comes to protecting our home networks.   Download our full guide, 7 Best Practices for Keeping Your Home Network Safe, for a comprehensive overview on how to improve your home network security by implementing defense in depth strategies at home. Best practices covered in the guide include: Responsible Network and Password Security Secure USB Devices and Connectivity Secure Cloud Services and Connectivity Restrict Administrator Rights Implement Network Segmentation Continually Update Home Network Equipment Contact the Home Network Equipment Manufacturer How Can Schneider Downs Help? The Schneider Downs Cybersecurity team can help your organization develop a robust defense in depth strategy to protect your assets from digital intruders. If you have any questions about defense in depth techniques, tactics, or procedures, please contact our team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs Cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### 11th Annual Fraud and Corruption Awareness Seminar Schneider Downs, along with the Pittsburgh chapters of The Institute of Internal Auditors and the Association of Certified Fraud Examiners, recently hosted the 11th Annual Fraud and Corruption Awareness Seminar. The yearly seminar has become the premier fraud education event in the area, and this year was no exception.  The focus for this year’s seminar was the local roots of the attendees, organizations and many of the speakers in attendance, combined with their national and global reach and expertise.  In keeping with the theme, a Pittsburgh wedding-style cookie table was sponsored by Schneider Downs and included the famous DoubleTree chocolate chip cookies. This year’s seminar kicked off with an informative session by Special Agent (SA) Robert Kickbush, Program Manager/NCFTA Liaison Officer from IRS-Criminal Investigation Cyber and Forensic Services.  SA Kickbush spoke about cryptocurrency and cryptocurrency fraud, including some background on the technology and currencies available today.  He also described criminal fraud cases where there was a need to trace transactions through numerous wallets and across exchanges using complex analyses and techniques. Cynthia Cooper shared her story of being the whistleblower in the WorldCom fraud that came to light in 2002.  Ms. Cooper stressed the many ways that internal audit departments can perform procedures to avoid such a disaster.  Ms. Cooper also stressed the importance of feeling comfortable and confident when speaking up about a potential major fraud matter.  Although her life and the lives of those involved with WorldCom were changed forever, she commented that she does not regret her decision and would encourage others to always do the same. William Ward, who is a former judge and is currently in private practice as Senior Attorney at Rothman Gordon, and Assistant U.S. Attorney (AUSA) Robert Cessar gave an entertaining and unique perspective on cases they have worked on.  Judge Ward and AUSA Cessar grabbed the audience's attention by discussing a hypothetical fraud case with a Seinfeld theme.  They also discussed rules and issues that are specific to criminal investigations based on their decades of experience for an informative presentation of the behind-the-scenes processes from both sides of the courtroom. Tom Hardin, who was at one point known as Tipper X, provided thought-provoking insight into the role he played as an insider trader who then became an informant for the FBI.  Mr. Hardin told the story of how he received inside information resulting in four trades that personally earned him $46,000 but cost him much more than those proceeds in the long run.  Mr. Hardin discussed his arrest by the FBI and ensuing years of cooperating with them to provide information via the wire he wore in conversations with other individuals whom the FBI suspected of insider trading. To close out an eventful day, Schneider Downs Shareholder Carley Taslov hosted a panel discussion on the top audit and fraud risks in 2023, keeping with the theme of the day, Pittsburgh-focused but national reach, with audit executives from some of the most premier organizations in the Pittsburgh region.  The panel included Melissa Anderson, Chief Risk, Audit and Compliance Officer at Highmark Health, John Elliott, Director of Internal Audit at the University of Pittsburgh, Amy Donachy, Vice President of Audit and Security at Crown Castle, and Stacy Juchno, Executive Vice President and General Auditor at PNC Financial Services Group. The panel discussed a wide range of topics from risks associated with current and emerging technologies to how to build and develop your career path.  The panelists told attendees about interesting investigations they have been part of during their careers, including remarkable stories that prove that auditing and fraud investigation careers can be quite exciting! Overall, the 325-plus attendees enjoyed the information-packed day and the opportunity to network with their peers and hear from excellent speakers in-person. About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### Foreign Investment - 5-year Filing Due - Form BE-12 The BE-12 Benchmark Survey, “Foreign Direct Investment in the United States,” is used to report foreign investment in U.S.-operated businesses. This confidential survey is conducted every five years by the Department of Commerce’s Bureau of Economic Analysis (BEA), and 2023 presents a new deadline for filing.The survey covers all activity through fiscal years ending in 2022. All entities that have foreign investment equaling 10% or greater of the ownership interest from a single party are required to file, even if not contacted by the BEA. Roughly 26,000 entities are expected to file this report in 2023. BEA uses the BE-12 to produce statistics on the financial and operating characteristics of foreign-owned business activities in the United States. Filers will need to provide balance sheet and income statement information, intercompany transactional information and intercompany debt balances, amongst other items. These statistics help business leaders make decisions about hiring and investing and are also used by the U.S. government to determine the impact of foreign direct investment on the U.S. economy.BE-12 forms are due by May 31, 2023, if paper-filing, and June 30, 2023, if e-filing, through the BEA website. Reasonable extensions may be requested but must be made before the May 31 or June 30 filing deadlines. Failure to file a BE-12 form may result in civil penalties. Filers must be aware that there are four different BE-12 forms, which are differentiated by minimum ownership or dollar thresholds. Schneider Downs can help potential filers determine if there is a filing obligation and which forms should be completed.For more information, visit the BEA website. About Schneider Downs Government Services The Schneider Downs Government industry group addresses the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities. We advise a range of government entities, including—but not limited to—boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages.  To learn more, visit our Government Industry Group page.  ### New Advances in AI and AI Chatbots May Leave Users Concerned About Data Collection and Privacy The recent release of Snapchat’s new Internal Friend, MyAI, proves just how advanced artificial intelligence (AI) and chatbots have gotten recently. However, with these incredible features comes uncertainty about the collection of users’ data and users’ data privacy. As internet usage has increased over the years, so has the importance of data privacy. Data privacy can be defined as the ability individuals have to govern their data in regard to how their personal information is disclosed, collected, and communicated to others. Examples of personal information include a user's name, location, contact information or online or real-world behavior. Oftentimes, websites and other applications need to collect and store personal data about users in order to provide services. However, these applications often exceed users’ expectations for data collection and usage, leaving users with much less privacy than they realized. Additionally, user data not adequately stored by those platforms opens the possibility of a data breach – ultimately compromising the user’s data without his or her knowledge. In many jurisdictions, privacy is considered a fundamental human right, and data protection laws exist to guard that right. Governments around the world and in certain U.S. states have begun passing laws and regulations regarding what kind of data can be collected about users and how that data must be stored. However, with the introduction of extremely advanced chatbots like ChatGPT and Snapchat’s new MyAI that exist with little regulation over data collection, users may find themselves leery of usage and unaware of just exactly what they’re revealing to their “online friends.” In mid-April 2023, Snapchat released MyAI to all of Snapchat’s 750 million monthly users for free, after originally making it available in February to the app’s more than three million paid subscribers.  The OpenAI-powered bot was created to improve the user app experience and help the navigation of the app with recommendations and chats. However, the implications and pure computing capabilities of MyAI lend it to do much more than just that. MyAI offers personal recommendations for everyday problems, answers both interpretative and factual questions, helps users make plans, writes articles about topics, and does almost everything in between, in just seconds. The possible applications for MyAI are endless. However, this comes with the drawback of users sharing information with the AI  and straining users’ confidence about what personal data the chatbot is storing and how it is being stored. As stated on Snapchat’s Support forum: “Content shared with MyAI including your location if you’ve shared that with Snapchat, will be used by MyAI to provide relevant and useful responses to your requests, including nearby place recommendations. Your data may also be used by Snap to improve Snap’s products and personalize your experience, including ads.” Like similar statements used by most tech companies, this disclaimer is intentionally vague, designed to make the user hastily disregard it and click “agree.” Slight elaboration is found in the Snapchat Privacy Policy, where the company outlines what types of data are collected and how it is stored. Some data collection types include usage information, content information, device information, device phonebook, camera, photos and audio, information collected by cookies and other technologies, and log information. Though none of the data collected in the privacy policy is outstandingly inappropriate, with the rapid advancements of AI, users should question exactly what lengths these companies will push to achieve maximum user experience. Users should consider what types of information will be stored on them in the future if MyAI begins to alter its personality based on user-personalized interests. As for storage of the data that Snapchat collects, there are two main categories of security issues when it comes to data protection: security threats and system vulnerabilities. A security threat is defined as any risk or threat that is a possible danger to a computer system caused by intentional acts with the purpose of causing harm to the system/company, financial gain or other means of obtaining tangible or intangible value. Many chatbots, including Snapchat’s MyAI, use cloud computing services to store customer data, which handles threats and vulnerabilities extremely well. This perhaps may leave users believing that their data is impenetrable. However, in March of this year, the same OpenAI that powered Snapchat’s MyAI saw a security breach that exposed the payment-related information of 1.2% of ChatGPT Plus subscribers who were active during a specific nine-hour window. The bug exposed affected users’ first and last names, email addresses, payment addresses, the last four digits of their credit card numbers, and their credit card expiration dates. These types of breaches serve as a reminder that even with the most robust security measures in place, data breaches remain a risk. With the continuous possibility of data breaches and security vulnerabilities, companies like Snapchat can only implement best practices when it comes to data management and data storage. Some of these include: Implementing least privileges in identity access management Providing up-to-date information security awareness training and role-specific training for all employees Protecting communications through end-to-end encryption Providing vulnerability and patch management However, with all of the available data management complexities, there still exists a risk of a data breach. Users must assume some of the responsibility to ensure that they are not exposing chatbots to any personal information that can be harmful if inappropriately accessed. Some best practices for users of these chatbots include: Keeping personally identifiable information (PII) private. Do not share anything with the MyAI that would expose yourself if it were to be leaked. Credit card information, financial account information, social security information, health records, and other private documents should only be shared with well-encrypted and trusted resources. Avoiding discussing private company information. Many consumers have used the chatbot Slack GPT as a note-taking tool for business meetings. Users should be leery of using these sorts of AI tools and be conscious of the types of company information they share with AI. Abiding by the community guidelines for AI usage. Understand that these AI are not perfect and that loopholes can be created in the AI’s function to be not biased or inappropriate. The best practice for all users is to abide by the company’s acceptable use guidelines that can be readily available with a quick search. It is equally important to understand that because of the rapid expansion of AI and AI-related services, many of these processes are new and far from perfect. All that you can do in this stage of development is to be judicious of what information you provide to the chatbots and follow the best practices on the user side of communication. If you would like more information about AI and AI chatbots, contact a member of Schneider Downs’ IT Risk Advisory Services team at contactsd@schneiderdowns.com. About Schneider Downs IT Risk Advisory Our IT Risk Advisory practice helps ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. We will partner with you to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies. To learn more, visit our IT Risk Advisory page or contact us at contactsd@schneiderdowns.com. ### IRS Introduces Safe Harbor Method for Accounting Expenses in Natural Gas Infrastructure The Internal Revenue Service recently issued Revenue Procedure 2023-15, which introduces a new safe harbor method of accounting for taxpayers looking to determine whether they need to capitalize or deduct expenses associated with repairs, replacements or improvements to natural gas transmission and distribution property.However, gathering systems, such as pipelines from going from individual wells to a compressor station, are specifically excluded from this revenue procedure. The release of this guidance stems from the challenges taxpayers faced in discerning what defined a unit of property in their vast, interconnected transmission and distribution network.In response to these challenges, the IRS introduced the “natural gas transmission and distribution property safe harbor method of accounting” or “NGSH Method,” effective for tax years ending after May 1, 2023. Taxpayers who elect to use this safe harbor accounting method must first distinguish between linear and nonlinear property. Linear property includes pipes, valves, casings, and fittings. While nonlinear property consists of compressor station, gas storage and gas regulating property. Taxpayers who choose to use the new accounting method on linear property may also use it for nonlinear property but are not required to do so. However, if taxpayers elect to use the NGSH Method for nonlinear property, they are then required to also do so with linear property.Next, the revenue procedure provides the specific accounting methods for each class of property, and details how the NGSH method should be calculated and adopted. The IRS is allowing taxpayers to choose between using a 481(a) adjustment or a specified cut-off method to implement the new accounting method. Lastly, the IRS publication details the procedures for taxpayers to obtain automatic consent from the IRS to change to the new safe harbor accounting methods.With the complexity of this guidance and the rules being effective for 2023 tax returns, please reach out to your tax advisor soon to determine if this Revenue Procedure affects you and how you can plan to implement the new rules.About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.  To learn more, visit our Energy and Resources Industry Group page.  ### How Safe Are Your 401(k) Assets? Recent bank failures along with continued speculation of more to come has led many Americans to question the safety of their money.The answer to "how safe is my bank account?" is fairly simple due to the Federal Deposit Insurance Corporation (FDIC). Created by the Banking Act of 1933, the FDIC was a key factor in restoring trust in the American banking system during the Great Depression.Regarding American bank accounts, the FDIC’s Insurance rules protect your assets with the standard insurance amount being $250,000 per depositor, per insured bank and for each account ownership type. While there are additional rules to consider, especially for those with over $250,000 held in the bank, the FDIC Insurance provides stability in terms of bank accounts.But what about employer retirement accounts; are my 401(k) and/or 403(b) savings safe?The Employment Retirement Income Security Act (ERISA) requires plan sponsors to act solely in the best interest of participants and beneficiaries, and provide protection for the participants in retirement plans. In the unlikely event of the bankruptcy or dissolution of a 401(k) plan custodian, qualified plan assets that are held in custodial accounts should not be impacted. Plan assets are segregated into trust accounts that are fully protected under federal law from potential creditors of the sponsor and custodian.ERISA provides that plan assets can only be used to provide benefits to participants and to pay reasonable costs of administering the plan. This means that creditors would be unable to access plan assets to recover any of their claims.Keep in mind that money in qualified retirement savings plans like 401(k) and 403(b) plans are typically invested in securities such as stocks, bonds and mutual funds and are not FDIC insured. However, Self-Directed retirement plans such IRAs (pre-tax and Roth), Solo 401Ks, etc., may include savings accounts, checking accounts and CD’s and are FDIC insured up to $250,000 as along as affiliated with an FDIC insured bank. ERISA is meant to provide retirement plan participants with numerous protections by way of the fiduciary standards that plan sponsors are required to adhere to, e.g., acting in the best interests of employees in an effort to keep accounts safe and to give Americans peace of mind when accumulating qualified retirement plan assets.  If you have any questions about your retirement plan, please contact a member of our team at sdretirement@schneiderdowns.com.Related Resources FDIC – Deposit Insurance FDIC – Your Insured Deposits About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Google Says Goodbye to the Password, Hello to the Passkey Last Thursday may have been World Password Day, but for Google users, it was the first day they could say finally say goodbye to the password, thanks to the rollout of passkeys. Google announced the availability of passkeys via their Google Security Blog on May 3rd. The next time a Google account user logs into their account, they will most likely be prompted with the option to setup a passkey.The rollout of passkeys to Google users is being lauded in the industry as a major step towards a password-less future and, more importantly, a more secure one, given that passkeys are specifically designed to reduce phishing attacks.Google is one of the higher profile companies to roll out passkeys, but Microsoft and Apple have also established the infrastructure to support passkeys – and adoption of passkeys is on the rise with companies including PayPal, Shopify, CVS Health, Kayak and Hyatt recently introducing the passkey option to account holders.Google account holders will have the option to continue using their existing passwords, even if they set up a passkey, but the security setting will default to the passkey once it is set up.What Are Passkeys?According to Google, passkeys are a more convenient and safer alternative to passwords. Passkeys allow access to apps and websites without the need to enter usernames, passwords or other authentication factors. When a user wants to login into services that use passkeys, the system will ask them to unlock their device with methods usually associated with smartphones such as biometrics (fingerprint, face scan), PIN or pattern.How Do Passkeys Work?According to the Google Passkey Blog, passkeys use public key cryptography, which reduces the threat from potential data breaches. When a user creates a passkey with a site or application, this generates a public–private key pair on the user's device. Only the public key is stored by the site, but this alone is useless to an attacker. An attacker can't derive the user's private key from the data stored on the server, which is required to complete the authentication process.Because passkeys are bound to a website or app's identity, they're safe from phishing attacks. The browser and operating system ensure that a passkey can only be used with the website or app that created them. This frees users from being responsible for signing into the genuine website or app.Are Passkeys More Secure Than Passwords?We all know that passwords are inherently faulty. While organizations are increasingly encouraging longer and more complex passwords or passphrases, one look at the worst passwords of last year shows that end users generally opt for convenience over security when given the choice.Once a threat actor has usernames and passwords, they have access to all accounts with the same credentials. Phishing attacks specifically target usernames and passwords for this very reason and, in recent years, have used increasingly sophisticated techniques designed to trick users relying on the enhanced password security layer offered by multi-factor authentication.Unlike passwords, passkeys only exist on your devices within encrypted key storage which means passkeys cannot be written down, stolen or used across multiple accounts, which protects users from the most common risks associated with passwords, such as being reused or exposed in a data breach.Pervasive utilization of public key infrastructure has been in the making for decades.  The administrative challenges with operating certificate authorities historically have slowed the adoption, however, the passkey approach holds the promise of a simplified and trusted authority based model that can overcome some of these obstacles.  Whether or not having Google push passkeys is the start of a true password-less future, this new security feature comes with immense upside to everybody involved, from both a security and convenience perspective.Related Resources Google Security Blog – So Long Passwords, Thanks for All the Phish Google Safety & Security Blog – The Beginning of the End of the Password About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.To learn more, visit our dedicated Cybersecurity page.  ### Making the Grade: Data Analytics and the NFL Draft How are NFL teams using data analytics in the NFL draft process? By definition, data analytics is the process of analyzing and interpreting large sets of data to extract valuable insights and information. This involves using statistical and computational methods to identify patterns, trends and correlations within the data, to make informed decisions or predictions. The value of data analytics and perception of data-driven business intelligence is only growing and used in countless industries, including finance, healthcare, marketing, science and sports. The increased emphasis and importance of data analytics in the sports world can be felt from the collegiate levels to the pros – often influencing everything from play calling to evaluating talent, and personnel are increasingly buying into the idea of data analytics being a key competitive advantage. And what better day to focus on the impact of data analytics in sports than one of the biggest professional sports days of the year, the NFL Draft. The NFL Draft is a crucial event for every team as it provides an opportunity draft the next franchise superstar, trade for immediate needs and find the diamond in the rough in the later rounds – and more importantly for some franchises, avoid wasting high draft picks on “busts”. In this article, we will explore the impact data analytics has on the NFL draft, specifically on evaluating prospects, draft day strategy and trade analysis. Data Analytics – Evaluating NFL Draft Prospects NFL teams have several scout teams responsible for finding the next big pro star, and in addition are using data analytics team in the process. The data analytics team use data to evaluate prospects based on performance data from college games, combine metrics, and other factors, which provides a valuable perspective in addition to human scouting teams. Machine learning algorithms are used to identify patterns and correlations in player data to predict how players will perform at the professional level. Rick Spielman, ex-GM of the Minnesota Vikings, recently gave an interview on the Pro Football Focus (PFF) NFL Podcast where he discussed the importance of his data analytics team.  Spielman’s example referenced data surrounding a left tackle, saying “His arm measurement was less than 33 inches long and he ran a 5.25 or slower 40. Well, (our) analytics (department) said there have been seven guys with those measurements that came in and were drafted in the first three rounds and none of them ended up being starters or being significant players in the league. That would throw a red flag up for me and for us as we went through the decision process.” The ability to reference these analytics is one thing, but the storage and maintenance of the relevant data is just as crucial. Spielman noted that his analytics staff maintained a database of all players scouted in the last 15 years and used that data to compare to each prospect for the incoming draft class. Data Analytics – Developing NFL Draft Strategies Data analytics also plays a crucial role in draft strategy to balance team needs with the best available talent. This has led to a shift in drafting based on the player’s value rather than solely on the positional need. As a result, teams are drafting differently and have become more willing to trade down in the draft to acquire more picks, increase their draft capital, improve the chance later round impact players or stock up for the following year. For example, in 2018, the Baltimore Ravens’ decision to select Lamar Jackson was based in part by using data analytics. The Ravens used a machine learning algorithm to analyze the performance data of college quarterbacks and identify the specific traits that were most predictive of success in the NFL. Based on the analysis, the Ravens identified Jackson as a highly promising prospect and ultimately traded up with the Philadelphia Eagles in the first round to select him. Given that three of the four quarterbacks taken before Lamar were questionnable picks that cost significantly higher draft capital (Baker Mayfield at 1, Sam Darnold at 3 and Josh Rosen at 10) it’s easy to see why teams are buying in on the value of data analytics. Data Analytics – Assessing NFL Draft Trades Finally, data analytics are utilized heavily in the NFL draft to evaluate potential trade scenarios. Teams use data on historical trade patterns, player performance data, or other factors to identify potential trade scenarios that are most likely to improve their trade position. According to a study by PFF, trading down in the first round of the NFL draft has become a more frequent occurrence in recent years, proving that teams are making more data-driven strategic decisions during the draft. Just this year, the Chicago Bears traded down in a blockbuster trade that sent the first overall pick to the Carolina Panthers in exchange for star wide receive DJ Moore and multiple draft picks which included two first round picks and a second-round pick. In this case, analysts seemed to agree this was a move that benefited both parties based on their current rosters and future needs – one has to wonder if both teams relied heavily on data analytics when working out the compensation for each side. Overall, the rise of data analytics will only continue to grow as an integral part of the NFL draft process.  The use of machine learning algorithms, historical data, and other analytical tools allows teams to identify patterns and correlations in player data, leading to a more data-driven approach to drafting. As data analytics technologies continue to advance, we can expect them to play an even bigger role in shaping the future of the NFL draft and other professional sports. If you have any questions about how data analytics can help your organization, please contact a member of the ADAPT team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/adapt for more information. About Schneider Downs Technology and Data Services Schneider Downs Technology Advisors are committed to providing value-added technology services and solutions to our clients. We strive to create an ongoing mutually beneficial relationship with our clients by focusing on client satisfaction, delivery of quality service and the continuous education and training of our staff. In today's demanding world market, one of the most challenging tasks facing a company is utilizing and processing information effectively and efficiently. For more information contact the team at contactsd@schneiderdowns.com or visit our dedicated Technology and Data Services Page.   ### The Latest on the Department of Defense CMMC Certification Levels and Timeline What are the latest updates on the Department of Defense CMMC Certification requirements, levels and timeline?If your organization is part of the Defense Industrial Base (DIB) sector, most likely you are aware of the recent changes to the Department of Defense (DoD) requirements and timelines for federal contractors to comply with the Cyber Security Maturity Model Certification (CMMC) based on their desired maturity level. While recent news that the DODs timeline to start becoming CMMC certified will be pushed back, even though this may be relieving for some, this is not the time to let off the gas to becoming CMMC compliant.Now is a good time for organizations that need to be level 1 certified, to begin accessing their cybersecurity environment around the 17 required controls and get an understanding where any gaps may be around the storage of federal contract information (FCI) data.Organizations that handle Controlled Unclassified Information (CUI), will need to be level 2 certified, which includes the 110 controls within the NIST 800-171 framework. A CMMC readiness review will allow your organizations environments to be accessed from an outside perspective and receive a list of identified gaps are, as well as detailed recommendations for how you can reach the level 2 maturity level in the future. Companies that will be required to become level 3 certified, will need to follow the NIST 800-172 framework and will require a government led assessment. CMMC Model 2.0 – Key Changes and Requirements For those that are unfamiliar with the DoD’s CMMC requirement, in November 2021, the DoD announced a revamped effort to control supplier compliance within the DoD’s supply chain through CMMC model 2.0.This announcement came at a time where there had previously been little to no cybersecurity regulation causing a loss of sensitive data and billions of dollars due to cyber-attacks on government infrastructure. The updated CMMC model will better protect the DIB from advanced cyber-attacks on its infrastructure by requiring contractors to implement better cybersecurity hygiene.The CMMC 2.0 model revamped cybersecurity compliance through the implementation of cybersecurity controls that are designed to protect systems from attack as well as protect FCI and CUI. The CMMC 2.0 model classifies organizations on three levels of compliance that are dependent on the level of sensitive data that the supplier handles.CMMC model 2.0 replaced the previous CMMC 1.0 model which included 5 levels of compliance and required a third-party to access for all maturity levels. The updated 2.0 model allows level 1 contractors to self-access, which provided smaller organizations cost benefits, greater flexibility, and more accountability.CMMC 2.0 – Level 1 ConsiderationsLevel 1 is the “foundational” level of CMMC compliance requires all contractors that have FCI in their contracts to implement a set of 17 basic cybersecurity practices that are required by the Federal Acquisition Regulation (FAR) 52.204-21. Organizations that fall under level one may perform an annual self-assessment of the FAR 52.204-21 controls and report there score to the Department of Defense.CMMC 2.0 – Level 2 ConsiderationsLevel 2 is the “advanced” level of CMMC that requires contractors that handle CUI to implement the National Institute of Standards and Technology (NIST) 800-171 framework which includes 110 practices from 14 CMMC domains. If a contractor handles sensitive CUI, the Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.204-7012 requires the contractor to be level 2 certified by having a CMMC Third Party Assessment Organization (C3PAO) perform an independent assessment to validate that the contractor has fully implemented the NIST 800-171 framework.CMMC 2.0 – Level 3 ConsiderationsLevel 3 is the “expert” level of CMMC maturity that is required for contractors that work with critical DoD infrastructure. Organizations seeking level 3 certification will be required to comply with the NIST 800-172 framework. Level 3 contractors are also required to be accessed by the DoD directly as opposed to an independent C3PAO.  At this time, level 3 requirements are still being finalized by lawmakers.CMMC 2.0 Timeline ConsiderationsThese tiered requirements were originally required to begin in March 2023 however, the requirement has been delayed until 2024. All businesses should take advantage of becoming CMMC complaint early, as adopting the controls within the NIST framework will allow businesses to have an improved cybersecurity posture and reduce liability in the event of a cyber-attack.Companies who continue to work with the DoD and bid on federal contracts, will be required to become CMMC certified depending on the level required by the DoD contract.  Companies that do not complete the CMMC certification after 2025 will not be able to bid on DoD contracts.The Value of a Mock CMMC AssessmentAll businesses can benefit now by taking advantage of a CMMC mock assessment, which will allow an independent firm to access a business’s IT Infrastructure according to the NIST 800-171 requirements and provide recommendations for where they can improve existing controls and processes as well as implement new controls to get them to their desired CMMC maturity level.Regardless, if your business will bid on federal contracts in the future, adopting the NIST 800-171 framework will allow businesses to achieve an improved cybersecurity posture as the NIST framework includes a wide variety of cybersecurity practices across 14 domains.How Can Schneider Downs Help?If you are a business that will need to be CMMC compliant in the future, or a business that wants to improve your cybersecurity posture, the Schneider Downs IT Risk Advisory team can help your business by performing a CMMC or NIST 800-171 mock assessment.Related Links Schneider Downs CMMC Consulting   NIST 800-171 Mock Assessment About Schneider Downs IT Risk AdvisoryOur IT Risk Advisory practice helps ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. We will partner with you to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies.To learn more, visit our IT Risk Advisory page or contact us at contactsd@schneiderdowns.com. ### Six Common Lease Accounting Adoption Mistakes... and How to Avoid Them What are some of the most common mistakes organizations make when adopting the ASC 842 lease accounting standard? Over the past few years, the Schneider Downs simpLEASE accounting team has helped private and public companies across several industries prepare for and successfully meet their respective ASC 842 lease accounting standard deadlines. At the same time, our team also witnessed several pitfalls (mostly self-imposed) that impacted organizational abilities to successfully meet lease accounting deadlines. In our latest video series, our team shares six of the most common lease accounting mistakes they have seen organizations make, and best practices to avoid them. You can view the full video series here or the individual videos below. Lease Accounting Mistake - Waiting Until the Last Minute Learn about the benefits of providing enough time for your staff to meet the ASC 842 lease accounting standard and the importance of fully understanding the standard before starting the adoption process. Lease Accounting Mistake - Understanding the Adoption Process Learn about the issues that may occur when organizations underestimate the time and effort it takes to implement the ASC 842 lease accounting standard and the importance of giving your staff and vendors enough time to be successful. Lease Accounting Mistake - Rushing the Adoption Process Learn about  the dangers of rushing the ASC 842 lease accounting process and the importance of understanding all the required components, from interest rates to non-lease details. Lease Accounting Mistake - Putting Too Much Pressure on Staff and Vendors Learn about potential chaotic situations that arise when companies run out of time against the ASC 842 lease accounting deadline and the negative impact this can have on staff and vendors. Lease Accounting Mistake - Poor Decision Making Learn about the importance of making informed decisions when adopting the ASC 842 lease accounting standard and providing enough resources for your staff to make long-term decisions regarding the standard. Lease Accounting Mistake - Viewing Contractors as Adoption Panacea Learn about the importance of viewing contractors as business partners rather than a cure-all for the ASC 842 lease accounting standards. Contractors can make the process easier, but they can’t make it entirely hands-off. How Can Schneider Downs Help? If you are one of the many organizations with a non-traditional year-end that needs guidance on the ASC 842 lease accounting process, we are happy to help. Please contact a member of the simpLEASE Accounting team at contactsd@schneiderdowns.com or learn more about our lease accounting solutions at www.schneiderdowns.com/simplease. Related Resources simpLEASE FAQ simpLEASE Software Overview Managed Lease Accounting Overview About simpLEASE Built by accountants for accountants, simpLEASE makes the FASB’s Accounting Standards Certification (ASC 842) simple. Designed to solve leasing accounting challenges for organizations of all sizes, simpLEASE is a scalable web-based solution that streamlines the lease accounting process and provides fast and accurate results regardless of whether you have two or two thousand leases. About Schneider Downs Managed Lease Accounting Services The Schneider Downs Managed Lease Accounting service provides an end-to-end lease accounting solution that combines our lease accounting expertise and simpLEASE software to help clients meet ASC 842 and IFRS 16 lease accounting standards reporting requirements and deadlines. For more information on our Managed Lease Accounting solutions, please contact Nicholas D. Lombardo directly at nlombardo@schneiderdowns.com or visit our dedicated Managed Lease Accounting page. To learn more, visit our dedicated simpLEASE Accounting page.   ### Medical Device Makers Face Increased Cybersecurity Standards From the FDA A new law from the U.S. Food and Drug Administration will require medical device makers to meet cybersecurity requirements in order to gain regulatory clearance for devices. The new prerequisites are part of the Consolidated Appropriates Act, 2023 and mandate that medical devices submitted for regulatory approval must provide information on four core cybersecurity requirements. The requirements are detailed in the Cybersecurity in Medical Devices: Refuse to Accept Policy for Cyber Devices and Related Systems Under Section 524B of the FD&C Act guidance and outlined below: Submit to the Secretary a plan to monitor, identify and address, as appropriate, in a reasonable time, post-market cybersecurity vulnerabilities and exploits, including coordinated vulnerability disclosure and related procedures. Design, develop and maintain processes and procedures to provide a reasonable assurance that the device and related systems are cybersecure. Make available post-market updates and patches to the device and related systems to address, on a reasonably justified regular cycle, known unacceptable vulnerabilities; and, as soon as possible out of cycle, critical vulnerabilities that could cause uncontrolled risks. Provide to the Secretary a software bill of materials, including commercial, open-source and off-the-shelf software components. Comply with such other requirements as the Secretary may require through regulation to demonstrate reasonable assurance that the device and related systems are cybersecure. In addition, the bill requires the FDA to work with the U.S. Cybersecurity and Infrastructure Security Agency to update existing cybersecurity guidance on medical devices every two years and commit to updating online resources focused on cybersecurity in healthcare, at first within six months of the bill, then at least annually after. The law comes into effect as concerns over cybersecurity in the healthcare sector are at a fever pitch due to increasing cyber-attacks. A recent report linked a 20% increase in mortality rates to cyber-attacks targeting healthcare organizations. Additionally, a 2022 FBI report that found 53% of digital and internet-accessible medical devices had known critical vulnerabilities. According to the report, these devices included insulin pumps, intracardiac defibrillators, mobile cardiac telemetry and pacemakers. While there is a wave of initial skepticism from the healthcare industry due to previous attempts from the FDA to shore up cybersecurity, many industry experts see this law as real change for the for the medical device market, since medical device manufacturers can be blocked from the market for failing to meet the requirements. The FDA has announced that medical device makers will have a 6-month grace period before they start enforcing the new rule on October 1, 2023. However, there is still a lot of uncertainty on how the FDA will enforce the new rule on existing devices in the wild – something that will certainly be a hot topic post October 1st. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### The Genesis Market Crime Forum is Shutdown. Now What? Learn more about the U.S. Department of Justice’s recent takedown of the popular cybercrime forum Genesis Market.The cybersecurity world is filled with raids on cybercrime rings and indictments by the FBI and other government agencies.These raids and indictments often include the assistance and partnership of foreign agencies, some of which I had the pleasure of participating in during my time with the FBI.A recent example is Operation Cookie Monster. The operation targeted Genesis Market, a known online criminal marketplace, that advertised and sold account access credentials from malware attacks worldwide.The operation successfully targeted the main websites used by the cybercrime forum, resulting in the website being shutdown and more than 100 arrests around the globe.“Our seizure of Genesis Market should serve as a warning to cybercriminals who operate or use these criminal marketplaces: the Justice Department and our international partners will shut down your illegal activities, find you, and bring you to justice,” said Attorney General Merrick B. Garland.According to the U.S. Justice Department, Genesis Market offered data stolen from more than 1.5 million computers worldwide containing login details for more than 80 million user accounts. The forum used these credentials to facilitate fraud, such as ransomware and identity theft, and inflicted tens of millions of dollars in losses on its victims.So, What Does The Seizure and Raids on Genesis Market Really Mean?When it comes to an operation like Operation Cookie Monster, I think it’s difficult to decipher what the press releases really mean or even grasp the vast amount of work and time it takes to bring down these cybercriminals. In this case, the endpoint was the website shutdown and subsequent arrests of the perpetrators.Coordinated operations, especially international ones, such as Operation Cookie Monster, take a lot of time, preparation and planning – it is not as simple as mainstream media sources make it out to be.Launching an operation goes far beyond simply breaking out a laptop and identifying a cybercriminal ring to investigate. In fact, many operations take months or even years to fully get underway, depending on the complexity and scope, which makes the end result much more satisfying for those involved from the start.I also believe the perceptions of whether these operations are truly beneficial vary greatly depending on whom you talk to and how you define the term “beneficial”.Is taking down a website beneficial when the criminals just spin up another one?  Or when other criminals fill the void left and replace the ones who were just arrested? While it may be accurate to conclude the cycle seems never-ending, the fact is that these criminal operations take time themselves to develop and slowing that process down, in aggregate, can ultimately reduce the frequency of future attacks.Another important impact to consider is when physical arrests are made, as they were in Operation Cookie Monster. Since many cybercrimes don’t result in arrests and jail times, which can embolden cyber criminals the fact that law enforcement is realizing  more success in identifying and incarcerating threat actors can serve as a strong deterrent for future cyber related criminal activities. .About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. ### SECURE 2.0 Act – Section 334. Long-term Care Contracts Purchased with Retirement Plan Distributions SECURE 2.0 Act – Section 334. Long-term Care Contracts Purchased with Retirement Plan Distributions Under current law, retirement plans may only make distributions for approved reasons. Existing law provides favorable tax treatment for various forms of health and disability insurance and imposes a 10% tax penalty on early distributions from tax-preferred retirement accounts unless certain exceptions apply. Section 334 of the SECURE 2.0 Act (SECURE 2.0) permits retirement plans to distribute a certain amount per year for certain long-term care insurance contracts. The amount permitted to be distributed is the lowest of: (1) the amount paid by or assessed to the employee during the year for long-term care insurance; (2) 10% of the employee’s vested accrued benefit in the plan; or (3) $2,500 (this dollar amount will be indexed for inflation beginning in 2025). Distributions from plans and IRAs would be exempt from the 10% penalty on early distributions if used to pay premiums for high quality, long-term care insurance. This provision is effective for distributions that occur three years after December 29, 2022. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### How Are Accreditors Measuring Campus DEI Efforts? Within the past year, multiple accreditation agencies and commissions have adopted updated principles regarding diversity, equity, and inclusion (DEI) in order to push for higher success rates among students.While DEI has been a part of the standards for many years, it appears that many of the agencies are becoming stricter with colleges that are deemed as lacking in these areas. This is part of the broader efforts to ensure that institutions are taking proper initiatives to serve all students.What is Accreditation in Higher Education and Why is it Important?According to the CHEA Council for Higher Education Accreditation, accreditation is the is the quality of higher education institutions and programs. In the United States, accreditation is a major way that students, families, government officials, and the press know that an institution or program provides a quality education.Accreditation is extremely important to higher education as the amount of Federal Student Aid a college receives is largely dependent on accreditation organizations. These private not-for-profit organizations are approved by the U.S. Department of Education to determine the aid, such as Pell Grants, these colleges receive. If a college isn’t accredited by one of these agencies, then this type of aid is not awarded.Due to recent insight from the COVID-19 Pandemic, some of these agencies and institutions, including the Higher Learning Commission, became more aware of the inequities for certain students existing within higher education.Prior to these realizations, diversity, equity, and inclusion, was still a part of their accreditation agencies standards, however it was not a requirement or as enforced as other parts of their standards.The Impact of DEI in Minority Graduation RatesA recent report shows that the United States has a 60% graduation rate for first-time, full-time, six year colleges across the board.However, broken out by race, the graduation rates show a slightly different story. Graduation rates for Asian students is 74%, 64% for white students, 54% for Hispanic students, and 40% for Black students.For example, California Lutheran University has seen success through rising graduation rates, 75% for six-year Hispanic students, but still received a notice of concern regarding its inclusivity.Since then, the current University President took steps in order to craft a more inclusive environment through hiring high level faculty specifically to manage DEI programs and updating the curriculum, after receiving the notice of concern in early 2021.Accreditation organizations are starting to see how having a more thorough diversity, equity, and inclusion plan can raise the graduation rates for minority groups.Because of this, some of the major institutional accrediting agencies (including but not limited to The Western Commission, the Higher Learning Commission, the Middle State Commission, The Accrediting Commission for Community and Junior Colleges, The Northwest Commission on Colleges and Universities) are adopting new requirements for members to incorporate principles of diversion, equity, and inclusion, referred to as abbreviated DEI, within the college’s mission.The Impact of Increasing DEI StandardsThese updated standards do not come without their own challenges for colleges, however. Supporting a more diverse student body and faculty could lead to increases expenses, especially early on.Additionally, the standards set by accrediting agencies can often be vague and without specific guidance. Also, both the accreditors and colleges occasionally face political recoil when the political environment clashes with the accreditor’s standards.The accrediting agencies have stated that if colleges and universities do not adopt inclusive practices, that a decline in admissions is inevitable within the next decade. This would in turn lead to a decline in revenue if proven accurate.Overall, colleges need to be aware of these updates and the related challenges in respect to accreditor’s DEI expectations. Colleges might want to set aside specific preparation related to these actions, reading up on accreditor standards and language.If you have any questions regarding the accreditation process and DEI, please contact a member of the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### Lessons Learned from Digital Communications Challenges As private communication apps, like WhatsApp or text messaging, are becoming increasingly popular in the workplace, the risk of recordkeeping failures becomes greater, particularly in the financial services industry. In late 2022, the U.S. Securities and Exchange Commission (SEC) investigated 15 broker-dealers and one affiliated investment advisor for firm-wide recordkeeping failures through private electronic communications. According to their report, the SEC found that from January 2018 through September 2021, all 16 firms’ employees communicated via off-channel communications on their personal devices about business matters, involving various levels of authority, including supervisors and senior executives. The firms combined were charged over $1.1 billion in penalties for violating recordkeeping provisions of the Securities Exchange Act of 1934 and failing to prevent and detect these violations. One of the biggest challenges companies face is the ever-evolving messaging apps.Each app has its own methods of access, AI capabilities, and messaging abilities, which are hard to keep track of and retain records for when necessary. This can especially make it difficult to monitor and keep records of private communications, which played a role in the SEC’s investigation of these 16 firms. What best practices have we learned from their errors in digital communication and recordkeeping? Learn which messaging tools work for your employees and clients and ensure that it is being monitored. Be aware of the information security risks that are present with BYOD (bring your own device). Consider the use of corporate owned devices if communication is prevalent. Review your record retention policy on a yearly basis and ensure that your definition of “business records” is up to date with current technology and client dynamics. Review your current supervisory technology to ensure that they are up to date with messaging technology. Furthermore, perform due diligence on third party vendors. These vendors should be familiar with the regulations of the financial service industry. Policies don’t cut it! Ensure that behind a policy there is enforcement and a company culture that supports the prevention of record retention failure. Understanding the prevalence and consequences of private digital communications in the financial services industry as well as being able to mitigate its risks is crucial to protecting your institution and clients. The Schneider Downs Risk Advisory Services team can aid with the prevention and detection of digital communication via off-channel communications. About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. ### SECURE 2.0 Act – Sections 340 and 341. Defined Contribution Plan Fee Disclosure Improvements and Consolidation of Defined Contribution Plan Notices Retirement plans are required to file certain forms with the Internal Revenue Service (IRS) and Department of Labor (DOL) and deliver certain notices to plan participants and beneficiaries on a periodic basis. The specific forms and notices subject to filing and delivery depend on the type of plan and its specific provisions. For example, a 401(k) plan that is intending to satisfy the safe harbor requirements must deliver a safe harbor notice to its participants, while a traditional defined benefit plan would not have a similar requirement. Please refer to the following links for resources provided by both IRS and DOL summarizing the current reporting and disclosure requirements: IRS Publication 5411, Retirement Plans Reporting and Disclosure Requirements DOL Reporting and Disclosure Guide for Employee Benefit Plans While the delivery requirements are intended to provide regulators and plan participants with important information regarding a plan, efforts to adhere to the existing requirements have become costly and administratively burdensome for plan sponsors and confusing and overwhelming for plan participants. Sections 340 and 341 of the SECURE 2.0 Act (SECURE 2.0) attempt to address this concern by directing the DOL and Treasury Secretaries to review existing requirements and identify (1) areas for improvement and (2) opportunities for consolidation. The review process has been directed to conclude within the next 2 to 3 years with no specific timetable for implementation of any recommended changes. If you have any questions about the SECURE 2.0 Act (SECURE 2.0), please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 332. Employers Allowed to Replace SIMPLE IRA Plan with Certain 401(k) Plans Current law prohibits the replacement of a SIMPLE IRA plan with a 401(k) plan mid-year. Rollovers from the SIMPLE IRA to the 401(k) plan can take place if the SIMPLE IRA has been in place for at least two years. Section 332 of the SECURE Act 2.0 (SECURE 2.0) will permit an employer to elect to replace a SIMPLE IRA with a safe harbor 401(k) plan at any time during the plan year, given certain criteria are met. It will also waive the two-year rollover limit in SIMPLE IRAs converting to a 401(k) or 403(b) plan. This provision is effective for plan years beginning after December 31, 2023. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 603. Catch-Up Contributions as Roth Contributions SECURE 2.0 Act – Section 603. Catch-Up Contributions as Roth Contributions Under current law, catch-up contributions to 401(k), 403(b) and governmental 457(b) plans can be made on a pre-tax basis or as contributions to a Roth account within the plan by individuals aged 50 or older, if the plan sponsor permits such contributions. Section 603 of the SECURE 2.0 Act (SECURE 2.0) amends the law to require catch-up contributions under an employer retirement plan (other than a SIMPLE IRA or simplified employee pension (SEP) plan) be made on a Roth basis for participants with income in the preceding calendar year in excess of $145,000. Employees with income less than $145,000 can still make catch-up contributions on a pre-tax basis. The threshold of $145,000 is adjusted for inflation. This will be a significant change for plans that do not currently offer Roth contributions.  It will also require plans to track a new compensation amount. The provisions of Section 603 are effective for plan years beginning after December 31, 2025. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 348.Cash Balance SECURE 2.0 Act – Section 348. Cash Balance Section 348 of the SECURE Act 2.0 (SECURE 2.0) clarifies certain interest crediting rules applicable to cash balance plans. Cash balance plans are a form of defined benefit plan under which benefits are described in terms of lump sum balances, and typically provide more generous benefits for older and longer-tenure employees than for younger employees. This practice, known as “backloading,” must comply with tests that limit how much greater the benefit can be for older employees than for younger employees. Section 348 clarifies that, for purposes of the applicable backloading tests, cash balance plans can apply a “reasonable projection” of actual projected returns, subject to a maximum of 6 percent. This provision clarifies uncertainty surrounding the application of the backloading tests, and the maximum rate of 6 percent is expected to allow more cash balance plans to offer higher benefit rates to older, longer tenure employees. This change to the cash balance rules is effective immediately. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 333. Elimination of Additional Tax on Corrective Distributions of Excess Contributions SECURE 2.0 Act – Section 333. Elimination of Additional Tax on Corrective Distributions of Excess Contributions Current law requires a distribution if too much is contributed to an IRA. The corrective distribution includes the excessive contribution and any earnings allocable to that contribution, which would be subject to the 10% early distribution excise tax. Section 333 of the SECURE 2.0 Act (SECURE 2.0) exempts the excess contribution and earnings allocable to the excess contribution from the 10% additional tax on early distributions, and is effective for any determination of, or affecting, liability for taxes, interest, or penalties which is made on or after December 29, 2022, without regard to whether the act (or failure to act) upon which the determination is based occurred before such date.   If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 326. Exception to Penalty on Early Distribution From Qualified Plans for Individuals With a Terminal Illness SECURE 2.0 Act – Section 326. Exception to Penalty on Early Distribution From Qualified Plans for Individuals With a Terminal Illness Prior to the signing of SECURE 2.0 Act (SECURE 2.0), a penalty would apply to certain early distributions from retirement accounts. Effective for distributions made after December 29, 2022, Section 326 would permit an individual who has been diagnosed as terminally ill to take early distributions from a qualified plans without being subject to the 10% early withdrawal penalty. Additionally, there is no limit on the amount or number of distributions the individual would be allowed to take. The individual would need certification from a physician that the employee has an illness or physical condition that would reasonably result in death within 84 months or 7 years. If desired, the employee could repay any distributions taken within a three-year period back into their account. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 320. Eliminating Unnecessary Plan Requirements Related to Unenrolled Participants SECURE 2.0 Act – Section 320. Eliminating Unnecessary Plan Requirements Related to Unenrolled ParticipantsUnder current rules, employees who choose not to participate in an employer-sponsored plan (“unenrolled participants”) are required to receive numerous communications from the plan sponsor.Section 320 of the SECURE 2.0 Act (SECURE 2.0) amends the requirements under ERISA and the Code for defined contribution plan sponsor notices to unenrolled participants to consist solely of an annual notice of eligibility to participate during the annual enrollment period (and providing any document so entitled upon request).While this provision has the potential to reduce the burden and costs associated with distributing required notices and disclosures in theory, its ability to meet that expectation will be dependent on the degree to which plan sponsors are providing their plan recordkeepers full payroll data.  That information will be needed to aid recordkeepers in identifying who should receive various required notices and disclosures. This provision is effective for plan years beginning after December 31, 2022. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.    Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 316. Extended Time to Adopt Plan Amendments to Increase Benefit Accruals SECURE 2.0 Act – Section 316. Extended Time to Adopt Plan Amendments to Increase Benefit AccrualsSection 316 of the SECURE 2.0 Act (SECURE 2.0) provides additional time for employers to adopt amendments to increase benefit accruals in the preceding plan year.The original SECURE Act included provisions allowing employers to adopt a new plan retroactive to the prior year, provided that the employer approved the adoption of the plan no later than the employer’s extended tax return due date. Section 316 of the SECURE 2.0 builds on this expanded amendment deadline to include amendments that increase benefit accruals for the preceding plan year (other than increasing matching contributions).For example, assume that a profit-sharing plan provided for a profit-sharing contribution of 2% of compensation as of December 31, 2022, the last day of the plan year. Under this change, the employer would be permitted to amend the plan at any time up through the employer’s extended tax return due date (i.e., October 15, 2023) to increase the amount of the 2022 profit-sharing contribution to 3% or any higher amount.This extended amendment deadline, which is first effective for stock bonus, pension, profit-sharing or annuity plan years beginning after December 31, 2023, does not apply to amendments that decrease benefits or make other plan-related changes.If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.    Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 314. Penalty-Free Withdrawal From Retirement Plans for Individual Case of Domestic Abuse With the SECURE 2.0 Act (SECURE 2.0) being signed into law, there is a focus on improving the flexibility for participants to access money from their retirement account for more immediate emergencies. Section 314. of the SECURE 2.0 permits a participant who has been a victim of domestic abuse to receive a distribution from their retirement account (401(k), 403(b), and 457(b) plans. The provision would allow the individual to take the lesser of $10,000 (indexed for inflation) or 50% of their vested account balance. The distribution would not be subject to the typical 10% early distribution penalty that is normally applied to distributions taken before retirement age. The distribution must also be taken within 12 months of the domestic abuse incident. If a plan were to adopt this provision it could allow for the participant to self-certify that the incident of domestic abuse actually occurred. Additionally, the individual could repay the amount taken for the following 3-year period and receive a refund for income taxes on the amount repaid (under certain circumstances). This new plan provision will be accessible starting in 2024 for plans that choose to adopt it. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 312. Employer May Rely On Employee Certifying That Deemed Hardship Distribution Conditions Are Met SECURE 2.0 Act – Section 312. Employer May Rely On Employee Certifying That Deemed Hardship Distribution Conditions Are Met Applicable Treasury regulations provide that hardship distributions from 401(k) and 403(b) plans may be made on account of an immediate and heavy financial need or an unforeseeable emergency, if limited to the amount necessary to satisfy the financial need. These needs are evaluated using facts and circumstances, but following are specific safe harbor events that are deemed to be on account of a hardship: Medical care expenses for the employee, the employee’s spouse, dependents or beneficiary. Costs directly related to the purchase of an employee’s principal residence (excluding mortgage payments). Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the employee or the employee’s spouse, children, dependents or beneficiary. Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence. Funeral expenses for the employee, the employee’s spouse, children, dependents, or beneficiary. Certain expenses to repair damage to the employee’s principal residence. Employees must provide a written representation that they have insufficient cash or liquid assets reasonably available to satisfy the need. In general, the employee must submit records documenting the safe harbor event constituting a hardship. Section 312 of the SECURE 2.0 Act (SECURE 2.0) allows a plan administrator to rely on an employee’s self-certification that they have had a safe harbor event that constitutes a deemed hardship for purposes of taking a hardship withdrawal from a 401(k) plan or a 403(b) plan. The administrator can also rely on the employee’s certification that the distribution is not in excess of the amount required to satisfy the financial need and that the employee has no alternative means reasonably available to satisfy the financial need. A similar rule applies for purposes of unforeseeable emergency distributions from governmental Section 457(b) plans. This provision is effective for plan years beginning after December 29, 2022. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 302. Reduction in Excise Tax on Certain Accumulations in Qualified Retirement Plans SECURE 2.0 Act – Section 302. Reduction in Excise Tax on Certain Accumulations in Qualified Retirement Plans The SECURE 2.0 Act (SECURE 2.0) has changed the rules surrounding required minimum distributions (RMDs). Required minimum distributions represent minimum amounts that must be withdrawn out of retirement accounts on an annual basis depending on the individual’s age (reference Section 107 of SECURE 2.0 for new age requirements). Existing law imposes an excise tax on an individual if the amount distributed during a taxable year is less than the RMD for that year. The excise tax is equal to 50% of the shortfall (that is, 50% of the amount by which the RMD exceeds the actual distribution). Section 302. reduces the excise tax that an individual would be subject to if they failed to meet their RMD starting in the 2023 tax year. Specifically, the excise tax for failure to take RMDs reduced to 25% of the amount not taken. If a failure to take an RMD has occurred and been corrected in a timely manner (within 2 years) the excise tax has been reduced further to 10%. If an RMD has been missed the account owner should file Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts with their federal tax return for the year they failed to take the RMD. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 127. Emergency Savings Accounts Linked to Individual Account Plans SECURE 2.0 Act – Section 127. Emergency Savings Accounts Linked to Individual Account Plans Section 127 of the SECURE 2.0 Act (SECURE 2.0) establishes a new short-term savings vehicle: plan-linked emergency savings accounts (PLESA). A PLESA is an account established under an individual account plan such as a 401(k) plan, with few restrictions on a participant’s ability to withdraw the funds prior to retirement. Unlike traditional retirement savings vehicles, the purpose of the PLESA is to encourage savings to address short-term financial emergencies. Only employee contributions would be permitted to a PLESA, which must provide for contributions on an after-tax (Roth basis) only. Employer matching contributions can be made on employee contribution to a PLESA, but these matching contributions would be held in the participant’s matching account rather than the PLESA. The maximum total balance in a participant’s PLESA at any time is $2,500, or a lesser amount determined by the employer. Any excess amounts credited to a PLESA can be transferred to a separate Roth account. Investment options for PLESA funds are limited to capital-preserving investments such as stable value or money market funds. Participants must be permitted to withdraw funds from the PLESA at least once per month, and no fees or other charges can be imposed for the first four annual withdrawals. Withdrawn funds are taxed as Roth distributions and can be used for any purpose. These PLESA rules are effective for the first plan year beginning after December 31, 2023. The Department of Labor is directed to publish regulations concerning PLESAs no later than December 2023. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### The U.S. Department of Education Launches Review of Prohibition on Incentive Compensation for College Recruiters The U.S. Department of Education (Department) will be holding virtual listening sessions covering both the impact of Department guidance and how institutions might increase transparency over college and university contractors.The Department would like to hear from the public regarding an exception contained in the guidance and how it has affected the growth of online enrollment and associated federal student loan debt. The guidance in question is the following:The Higher Education Act prohibits institutions of higher education from providing a commission or bonuses to individuals or entities based on securing enrollment or financial aid. This prohibition is known as the ban on incentive compensation. In 2011, the Department issued guidance related to the ban, which created an exception for third-parties if they provide a bundled set of services, which can include recruitment.The US Department of Education is concerned about the growth in loan debt even though online education has the potential to meet the needs of many students and lower the cost of tuition.By obtaining information from the public, the Department will review the rules around how contractors recruit students for online programs. Since the guidance was issued in 2011, the number of students recruited by third parties has increased.According to the press release, the Department is interested in comments from a wide range of stakeholders, including institutions, faculty, online program managers (OPM’s) and other contractors, advocates, researchers, borrowers and students, on the benefits and disadvantages of the exception for bundled services, how the guidance has impacted institutions and students and how the Department can better ensure compliance with the prohibition on incentive compensation. If you have any questions surrounding the review of prohibition on incentive compensation for college recruiters, please contact the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### Internal Revenue Service Mandates Electronic Filing of Form 8940 through Pay.gov The Internal Revenue Service (the IRS) released Revenue Procedure (Rev. Proc.) 2023-12 that amends Rev. Proc. 2023-5, which mandates the electronic filing of Form 8940, Request for Miscellaneous Determination effective April 4, 2023. The electronic filing requirement includes a 90-day transition relief. Rev. Proc. 2023-12 also included procedures for requesting expedited handling and indicates an authorized individual may electronically sign the Form 8940 under penalties of perjury. Like the filing of Form 1023, the expedited handling request must be indicated on the Form 8940 with a supporting written statement attached to the completed form. The filing fee for Form 8940 must also be paid. The current filing fees can be found in Appendix A of Rev. Proc. 2023-5.  Form 8940 is most used by tax-exempt entities for the following purposes: Reclassification of foundation status  Private foundation advanced approval of certain set-asides in section 4942(g)(2) Private foundation advanced approval of scholarship procedures in section 4945(f) A Section 509(a)(3) organization change in type of supporting organization Advanced ruling request of termination of private foundation status under section 507(b)(1)(B) Rev. Proc. 2023-12 added the following three additional types of requests to the electronic Form 8940: Private foundations giving notice only of intent only to terminate private foundation status under Section 507(b)(1)(B) Voluntary termination of Section 501(c)(3) recognition by a government entity Canadian registered charities requesting either a public charity classification or to be included in the IRS Publication 78 data For more information regarding Form 8940, visit the IRS website.About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  To learn more, visit our Not-for-Profit Industry Group page.   ### SECURE 2.0 Act – Section 318. Performance Benchmarks for Asset Allocation Funds SECURE 2.0 Act – Section 318. Performance Benchmarks for Asset Allocation FundsExisting DOL participant disclosure regulations require that each investment alternative’s historical performance is compared to an appropriate broad-based securities market index.However, the rule does not adequately address increasingly popular investments like Target Date Funds (TDFs) that include a mix of asset classes.While the DOL’s 2013 publication, Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries, provided guidance on many of the important and unique considerations for TDF evaluation and selection, it did not change the rules for benchmark comparison disclosures to participants.The SECURE 2.0 Act of 2022 (SECURE 2.0) requires the DOL to modify existing regulations so that an investment using a mix of asset classes can be benchmarked against a blend of broad-based securities market indices, provided that: The index blend reasonably matches the fund’s asset allocation over time, The index blend is reset at least once a year and The underlying indices are appropriate for the investment’s component asset classes and otherwise meet the rule’s conditions for index benchmarks. This change in the disclosure rule allows better comparisons and aids participant decision-making. These changes are permissive for plan administrators and are not mandatory. The DOL is directed to update the regulations no later than two years after the enactment of this Act.If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 304. Small Balance Force-Out Limit Increase SECURE 2.0 Act – Section 304. Small Balance Force-Out Limit IncreaseMany qualified plans have added provisions that allow Plan Sponsors to force-out vested account balances for separated participants to IRA accounts. In the past, the limit for applying this provision has been for vested account balances of $5,000 or less.  However, with the passage of the SECURE 2.0 Act (SECURE 2.0), Plan Sponsors are now allowed to force-out separated participants with vested account balances of $7,000 or less. Since these balances are being rolled to IRA accounts, this allows Plan Sponsors to remove participant accounts with minimal effort while also avoiding a taxable event for former plan participants. Many Plan Sponsors choose to process allowable force-out distributions annually to: Assist with delaying or eliminating a plan audit requirement, Mitigate the risk of losing plan participants in the future, and/or Reduce administrative costs to the plan. Section 304 is effective for distributions made after December 31, 2023.If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Convenience Stores Should Start to Adapt to a Less Fuel Dependent Future As the United States embarks on a (long) transition from internal combustion engines (or ICE) to vehicles powered by other sources of fuel, this will put pressure on existing convenience store operators to adapt. Gasoline demand dropped approximately 5% on a daily basis between 2019 and 2022, and demand continued to drop another 1% in 2023, according to Barron’s. Some of the shift in demand is attributed to electric vehicles (EVs) - but not all of it. Fuel is many times used as a hook to get you to stop and visit a location because of the price on the pole, affinity for a certain brand of fuel or other factors such as credit card relationship. In a post-ICE world where vehicles may be powered by electricity or other means that aren’t feasible to be offered at all your existing locations - what will be the draw to bring individuals who own these vehicles to your property? While EVs bring their own complications due to challenges of charging interoperability, this is changing with Tesla beginning to open its charging network and others are rapidly adding new charging locations as a result of the funding from the Inflation Reduction Act - those issues will begin to fade into the background as time goes on. While electric vehicles make up only 3% of the total vehicles currently on the road, the owners of those vehicles are a population that is enticing to attract, as more than 60% of them earn more than $100,000 per year, according to the International Parking & Mobility Institute. Encouraging this growing portion of the driving population to stop at your location will be important. In addition, as chargers are added at many other “non-traditional” locations - people will be able to charge while shopping for groceries, buying books or electronics or while on their couch at home, potentially causing a shift in consumer behavior if they no longer need to visit their local convenience store location to fuel up and purchase other convenience items while there. What should convenience stores do to react to these shifts? Many of the same items in the traditional playbook become more important. Well designed and targeted loyalty programs are a must to understand and engage the customer. In addition, having a strong competitive offer beyond fuel, such as food, and other roadside amenities - such as seating, clean bathrooms or a unique local flair - become more important when EV owners are stopping to charge so that you can draw them into the store. Lastly, let’s not forget that they need to charge these vehicles, so design support for charging in your space with intentionality and don’t just shove it into a corner of the forecourt. Taking steps to begin to plan now is important. It will take time to be thoughtful with design changes to your forecourt, obtain the necessary permits, upgrade the electrical infrastructure to add chargers to serve these customers and also educate your customers on the decision you made. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services. To learn more, visit our Energy and Resources Industry Group page. ### What's Next: A Universal Charitable Deduction? On February 28, 2023, Senators James Lankford (R-OK) and Chris Coons (D-DE) introduced The Charitable Act (“Act”). This Act was previously a part of The Pandemic Response and Recovery Act, which was introduced in March 2021. The legislation calls for a universal charitable deduction, which would be open to all taxpayers regardless of their level of income. Since its introduction, The Charitable Act has received a number of cosponsors, with the most recent added on March 27, 2023, by Senator Marsha Blackburn (R-TN).In an attempt to sustain nonprofit organizations during the pandemic, the Coronavirus Aid, Relief, and Economic Security Act included a temporary charitable deduction up to $300 for individuals who do not claim itemized deductions on their Form 1040 for the year beginning 2020. This bill was further expanded to include the taxable year beginning 2021 and allow individuals to take up to $600 in deductions. There has been no expansion of this deduction to date, but there continues to be a push by lawmakers to reinstate the deduction.In the meantime, the State of Massachusetts enacted the state law of a universal charitable deduction. After multiple delays, every Massachusetts resident may now claim deductions on their contributions in 2022 and 2023.  This is an especially great opportunity for both Massachusetts taxpayers and nonprofit organizations as inflation is on the rise and a recession is looming. Schneider Downs continues to monitor legislation and will provide updates as information changes.About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  To learn more, visit our Not-for-Profit Industry Group page.    ### The U.S. Department of Education Announces Secret Shopper Program The U.S. Department of Education has announced that the Enforcement Office of Federal Student Aid will be launching a secret shopper program targeting predatory institutions. Secret shopping involves trained individuals posing as potential students to investigate whether an institution is engaging in deceptive practices. The U.S. Department of Education (Department) will use secret shopping as a way to protect students from institutions that make false claims or promises about their programs or services. It is another way to monitor postsecondary institutions’ compliance with the laws and regulations governing their participation in the federal student aid programs. The program will focus on identifying institutions that misrepresent their job placement rates, graduation rates and other critical information that students need to make informed decisions about their education. This program will also provide additional support for students who have been victims of fraud or other deceptive practices by institutions that participate in federal student aid programs. The Department of Education will work with state and local agencies to identify institutions that are engaging in fraudulent practices and take legal action against them. This move is part of the Department’s broader efforts to ensure that institutions receiving federal student aid programs are transparent and accountable to their students. This announcement follows recent efforts by the Department to improve transparency and accountability in higher education, which have included implementing new regulations to protect students from predatory practices by for-profit colleges and other institutions. By using secret shopping and other tools, the Department hopes to ensure that students have access to accurate information about their educational options and can make informed decisions about their future. Students are encouraged to be wary of claims that seem too good to be true and can report any suspicious activity by institutions or their representatives through the Department’s fraud website at https://www2.ed.gov/about/offices/list/oig/hotline.html. If you have any questions surrounding the secret shopper program, please contact the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com. About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. ### Succession Planning: Begin before the End In my last article, I started to discuss the importance of estate and succession planning. Today, we are going to dive deeper into succession planning. Succession planning, the process of determining how a company will continue once current business owners and/or key employees exit the business, is vital to ensure that you exit your business in a way that meets your goals.The first step to succession planning is to begin before the end.  In other words, the best way to plan for an exit is to do so with adequate time, which ideally would mean at least five years prior to the desired exit.  According to the Exit Planning Institute, only 20% of businesses that come to market sell. Of those, 75% of business owners experience profound regret within one year of exiting their business. That means that only 5% of business owners, roughly, sell their businesses and are satisfied with the results!There are several possible reasons for this.  First, some business owners who think they will enjoy retirement experience a loss of identity or purpose after the sale of their business. Others second-guess if they received full value for their business. Sometimes regret occurs if a business owner receives an unsolicited offer that they felt was too good to pass up, but ultimately, the business was not deal-ready, and if the deal went through, it was after downward adjustment to the acquisition price. Others are unhappy with the impact on their legacy or how employees are treated after the sale. Due to these various issues, here are some considerations to prepare for a successful exit: Take time to contemplate what your personal goals are and what needs to happen for you to achieve them. Don’t just have a fuzzy idea that you will golf all day once your business is sold, but really invest some time in understanding what will satisfy you in your retirement years. Also, have a realistic, concrete estimate of future after-tax income needed to support your lifestyle. Reflect on goals for your business as well, in order to protect your legacy. Be ready to consider any potential buyer’s motivations and reputation, as well as the culture of a prospective buyer’s current business if your company is to be merged into another company or companies. Mentor the next generation of leadership. Assuming you are starting this process early enough, assess the impact of you exiting the business. Are there gaps in management that you need to address? Are there relationships with key customers that need to be transitioned to another employee? And is there an existing employee capable of maintaining those key relationships? Not only will assessing human capital aid with business continuity, but it will also make your business more valuable if you have a strong management team in place. Complete a business valuation to gain an understanding of a reasonable range of what your business is worth.  If this is done in advance, areas can be identified for improvement that will drive value higher when the business is taken to market and can be used to assess the desirability of an offer (and cut down on post-acquisition second-guessing.) Lastly, make sure you have a team of advisors to help you to navigate the process and avoid costly mistakes. In addition to the business valuation, this will include tax and legal professionals and a financial planner, as well as an estate planner who can help minimize taxes upon transfer. In summary, succession planning should be undertaken with enough time to fully prepare for a successful exit. This process requires establishing exit objectives, understanding business value and working on areas that can increase the value of your business prior to going to market. Make sure to seek financial, legal and estate planning advisors to be part of your team so that the financial reward you receive at the time of exit reflects the value you have built in your business.About Schneider Downs Exit and Succession Planning Schneider Downs’ Exit and Succession Planning services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Exit and succession planning is one of the most important strategies you will need to implement throughout the life of your business, and whether you are ready to start today or in 10 years, it’s never too early to begin the discussions. Schneider Downs is uniquely qualified to provide you with ideas, options and innovative solutions to meet whatever objectives you have in mind.To learn more, visit our dedicated Exit and Succession Planning Services page.  ### Mayor Gainey’s Challenges: Tax-Exempt Properties On Tuesday, January 24th, Mayor Ed Gainey signed an executive order directing Pittsburgh’s law and finance departments to conduct a full review of all properties owned by tax-exempt organizations, which they anticipate will take years to complete. These tax-exempt organizations are currently not required to pay real estate taxes on the property they own where they conduct tax-exempt activities. These exempt properties represent nearly a third of all properties in the City of Pittsburgh. Mayor Gainey’s order is focused on ensuring that the business being conducted on these properties complies with the Pennsylvania public charity test, which is what allows them to be tax-exempt. If the business being conducted on a particular property does not meet the requirements, the business at this property cannot be considered a purely public charity, and the City of Pittsburgh will potentially move to restore tax payments. Religious organizations and places of worship will not be subjected to this review.On March 28th, Mayor Gainey’s office reported that approximately 10% of the properties have been reviewed since the executive order was signed in January. The City began its review by looking at the largest tax-exempt property owners as well as any properties reported to the City by residents.  City Solicitor Krysia Kubiak shared that if the properties reviewed to date were removed from the exempt list, this would generate about $3.5 million in tax revenue for the City. The largest group of parcels belongs to the Presbyterian University Hospital System, which is owned by UPMC. The Pennsylvania public charity test contains five criteria that nonprofit organizations must meet in order to be considered a purely public charity. These criteria were determined by the Pennsylvania Supreme Court in 1985 and include the following: the organization must advance a charitable purpose donate a substantial portion of its services benefit a class of people that are legitimate subjects of charity relieve the government of some of its burden and operate without seeking profit. Ensuring that nonprofit organizations are operating as purely public charities has been an ongoing battle between the City of Pittsburgh and major nonprofit organizations for 20 years. On March 12th, 2022, a bill was introduced to Pittsburgh City Council to determine the amount of real estate and payroll taxes that Pittsburgh nonprofits would have to pay if they were for-profit entities. The City’s goal was to partner with Pittsburgh’s nonprofits on payment-in-lieu of taxes agreements, or PILOT agreements, indicating that if Allegheny County and the City of Pittsburgh secured PILOTs with just the five largest nonprofits, this would generate $5.9 million and $8.6 million in revenues for those governments each year, respectively. Many nonprofits already make PILOT payments, but they are just a fraction of what the property tax for the organization would normally be. Any challenges made by property owners that arise will be referred to the seven-member Allegheny County Board of Property Assessment Appeals and Review for final determination. About Schneider Downs Not-for-Profit ServicesOur Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  To learn more, visit our Not-for-Profit Industry Group page.   ### State Bureau Mails Incorrect Filing Notice Post Cards to Exempt Partnerships Many limited partnerships in the Commonwealth may have incorrectly received a notice from the Pennsylvania Department of State (DOS) regarding the need to file a Certificate of Annual Registration (CAR). The mailed post card notified the taxpayer that:The records of the Department of State's Bureau of Corporations and Charitable Organizations (Bureau) indicate that your company is a domestic or foreign Limited Liability General Partnership (LLGP), Limited Liability Limited Partnership (LLLP) or Restricted Professional Limited Liability Company (RPC/PLLC) that was in existence on December 31, 2022. Pursuant to 15 Pa. C.S. § 8221 and § 8998, the company is required to file a Certificate of Annual Registration [DSCB: 15-8221 /8998] on or before April 15, 2023. This form may be filed online at file.dos.pa.gov. If the association fails to file the required Certificate of Annual Registration and applicable fees on or before April 15, 2023, additional monetary penalties and liens will follow.The cards were intended to notify only domestic and foreign Limited Liability Limited Partnerships (LLLPs) but were inadvertently sent to both domestic and foreign limited partnerships (LPs). The following DOS website provides additional information concerning the requirement to file: https://www.dos.pa.gov/BusinessCharities/Business/Resources/Pages/Certificates-of-Annual-Registration.aspxNear the top of the page is a link labeled, Notice to all Limited Partnerships – Read before proceeding with a Certificate of Annual Registration. Clicking on the link takes the user to a notice dated March 9, 2023, explaining that the recent postcard mailing from the Pa. DOS was meant for Limited Liability Limited Partnerships and certain other entities but was also “inadvertently sent to domestic and foreign limited partnerships.” It goes on to state that:Only limited partnerships that have registered for limited liability status pursuant to 15 Pa.C.S. §8201 are required to file CARs. Limited partnerships that do not have limited liability status are not required to file a CAR and should ignore the postcard.By following the link, Search | An Official Pennsylvania Government Website (pa.gov), you can confirm the type of entity under which your company is organized. The site has a drop-down screen indicating “filing subtype” that’s accessed by clicking on “taxpayer name” under the filing information. If the subtype is shown as a limited partnership, the CAR doesn’t need to be filed, as only companies that are domestic and foreign LLLPs will see the option to file.This might be one of the few times you can ignore a tax notice. Hopefully, the guidance from the DOS will resolve any confusion.  If you have any questions, please don’t hesitate to reach out to your Schneider Downs tax consultant. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.To learn more, visit our dedicated Tax Services page. ### SDWMA Thoughts on the Banking Industry and the Economy On March 13th, SDWMA published an article on the rapid fall of Silicon Valley Bank. In this article, we reviewed the particular set of circumstances that precipitated the fall of SIVB and the mechanics of the run on the bank that occurred. At that time, it was not known if there would be widespread contagion in the banking industry or if this would be contained to a small subset of a few regional banks. Almost two weeks later, it appears that there are still some unknowns as to how this will play out with smaller regional banks. Larger banks (e.g. JP Morgan, Bank of America, Wells Fargo, etc.), due in part to their regulation by the U.S. Treasury, are well funded and there is no current fear of an event analogous to SIVB that would occur with the large bank cohort. With the threat of contagion amongst regional banks amplifying in the background, Fed Chair Jerome Powell spoke to the media last week after the Fed announced a 25-point rate hike. In the days leading up to the announcement, there was speculation that the Fed might not hike at all due to the issues in the banking industry. Mr. Powell expressed this concern during the question-and-answer session and stated that the committee is unsure of the longer-term effects of the pressure on the banks. The indication was that the Fed intends to let the data dictate any deviation from its current policy posture. Chairman Powell also mentioned that the full effects of the interest rate hikes may not be seen in the stock market or inflation data that is reported every month. The Fed is committed to bringing down inflation to their 2% target and will continue to use the tools available to them to meet this goal; until there are clear signs of widespread contagion in the banking sector, the Fed appears unwilling to alter their course.While Fed Chair Powell was speaking to the press, Treasury Secretary Janet Yellen was speaking to Congress about the issues in the banking industry. What is interesting about this dynamic is their differing statements on the safety and security of bank deposits over the $250,000 FDIC limit. When Powell was asked the question, he gave the impression that all depositors’ money was safe at these banks. Yellen, on the other hand, was not willing to state the same in front of Congress. Even more interesting, the very next day (3/23/2023) Yellen seemed to reverse course and in written testimony to a committee in Congress said, “The Treasury used important tools to prevent contagion and they are tools we could use again.”*So, what does all of this mean for you as an investor? Should I still be worried about regional banks and, more importantly, the regional bank that I do business with? Do I need to only have a relationship with one of the big banks (JP Morgan, Wells Fargo, Citi, Bank of America) or should I spread my money over multiple banks to make sure I stay under the $250,000 FDIC limit? Here is how SDWMA views the current environment: The Fed and U.S. Treasury now seem to be in lockstep with putting out a similar message that if you have your money with a reputable bank, then they have the tools to make sure your money is safe even over the $250,000 FDIC limit.   Despite the fact that the Fed seems willing to insure deposits over $250,000 in case of a bank failure, it is not law. Hope is not an investment strategy. Our recommendation is to make sure you have cash under the $250,000 limit at each financial institution at a minimum. The Fed is determined to bring down inflation by continuing its monetary tightening policy. At this point, the Fed does not believe there is contagion among regional banks as a result of the SIVB failure. Even if the Fed does not raise rates any further, they are likely to keep the base rate higher to ensure inflation continues its downward trajectory. Money Markets, short-term Treasuries, and even short-term CDs are potential places to store your money in this environment.   Bank headlines will not go away. Credit Suisse was purchased by UBS in Switzerland to help stabilize that country and Europe’s banking issues. First Republic received help from larger banks to try and stabilize its deposit base amid a sizeable flight of its deposits to larger institutions. Commercial Real Estate debt exposure is something that is just beginning to be talked about, but potentially looms as a significant headwind for regional banks that issue some 70% of CRE loans in the U.S. If you have additional questions, please don’t hesitate to reach out to your trusted Schneider Downs Wealth Management Advisor.  *Source: https://www.cnbc.com/2023/03/23/yellen-says-treasury-is-ready-to-take-additional-actions-if-warranted-to-stabilize-banks.htmlAbout Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Putting the ESG Puzzle Together What is environmental, social and governance (ESG)? Who are the key participants in the puzzle, how do they fit together, and why do they matter? When building something from the ground up, each piece matters. For the better part of the past quarter-century, the business community has been constructing the framework for ESG, piece by piece. Some pieces of the framework remain more nascent than others, but great strides have been made to describe and quantify the impacts of our ESG activities. This work has allowed the community to identify the most material environmental, social and governance issues and prioritize them accordingly. ESG Defined – What Exactly Does it Mean in the Business Community? ESG is a stakeholder-centric approach to the consideration of environmental, social and governance factors. These factors represent risks and opportunities to an entity’s business strategy, governance, and control framework. More frequently than ever before, the examination of these factors is used by a host of market participants in financial analysis, investment decisions, and lending processes. ESG Stakeholders – Key Responsibilities and Impact So, who are they key participants and stakeholders in the ESG puzzle? How do they fit together and why do they matter? Download our infographic by clicking on the preview image or continue reading below to learn more. Stakeholders Key ESG Responsibilities: Stakeholders are the entities and personnel requesting proactive ESG action from companies. They are the customers, employees, management and local communities, to name a few. Impact: Stakeholders directly influence companies and regulators. They convey what is important to them and present both internal and external viewpoints. Companies need to engage in open dialogues with their stakeholders to determine the most pressing issues from their points of view. Companies Key ESG Responsibilities:  Companies are the change agents for a more sustainable world that considers the material impacts of their operations and reports on metrics to assess progress towards stated goals. Impact: Working with internal and external stakeholders can effectively determine ESG impacts and requirements. Companies can then determine which of those impacts are the most material and within which framework to report; this identification of material impacts allows for the creation of strategic goals, targets and metrics. Lastly, companies can develop the needed governance and oversight framework to ensure the ESG program is properly controlled. Regulators Key ESG Responsibilities: Regulators drive voluntary and mandatory compliance regulations for the business community to abide by. Eliciting stakeholder feedback will ensure consumer and investor protection on key ESG topics. Impact: Regulators protect investors by stipulating that the companies and products they invest in disclose how they think about ESG risks and opportunities, how they’re progressing towards their goals, and how they ensure that proper governance is in place. Asset and Wealth Managers Key ESG Responsibilities: Asset and Wealth Managers consider how companies are embedding ESG factors into business strategies and governance functions before deciding whether to allocate capital or not. Impact: Asset and Wealth Managers invest in companies with varying degrees of ESG integration, including ESG products. These products are one of the primary results of consumers expressing their preference towards ESG. Lenders Key ESG Responsibilities:  Through the underwriting process, lenders evaluate how companies are considering and integrating key ESG factors, such as climate change metrics, good governance practices, and loss of biodiversity, into their existing business frameworks. Impact: Lenders evaluate companies relative to different ESG standards. These evaluations factor into the terms of financing to ensure companies are capturing the proper ESG risks and opportunities in their framework. Rating Agencies Key ESG Responsibilities:  Rating agencies are responsible for researching and assigning ratings to companies in several ESG areas. Impact: Rating agencies evaluate key ESG risks and opportunities for companies and governments to provide more consistent and transparent information for stakeholders, asset and wealth managers, and regulators. Audit and Assurance Key ESG Responsibilities: Audit and Assurance bodies are public accounting firms that provide attestation to companies’ publicly disclosed statements and metrics due to their subject matter expertise in ESG. Impact: Audit and Assurance bodies are responsible for validating that an organization has proper processes and controls to implement its ESG strategy. Furthermore, they ensure the data underpinning the disclosed metrics is properly sourced, vetted, and governed. Lastly, their opinion helps to validate a company or product’s approach and implementation towards ESG. Governments Key Responsibilities: Government bodies and agencies provide incentives to accelerate the transition towards a sustainable and circular economy. Impact: Government bodies and agencies determine jurisdiction-wide strategies and provide incentives for stakeholders, asset and wealth managers, and companies to transition to a more circular and sustainable economy. Industry Bodies Key Responsibilities: Industry bodies develop frameworks by which companies and products can report on ESG narratives and data to end-consumers. They also validate assumptions, calculations, and progress by companies. Impact: Industry bodies provide pragmatic guidance to companies, lenders, and assurers on how to implement voluntary and mandatory guidelines. Let’s have a conversation about where you are in your ESG journey. We can help set up your ESG program, identify what’s important to you and translate that to tangible outcomes, and perform ESG-related audit and assurance services. Environmental, Social and Governance Resources Schneider Downs ESG FAQ Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees Schneider Downs ‘Our Thoughts On’ ESG Articles About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### Lease Accounting – Top Industry Considerations and Challenges of 2023 What are the top industry challenges organizations face when meeting the ASC 842 lease accounting deadline? Upon the initial release of the ASC 842 lease accounting standard, organizations across all industries went to work to understand how the rules applied to them – and more importantly, to find a solution that helped them meet their respective deadlines. And while these new lease accounting requirements have proven to be quite challenging for organizations, some face a tougher road to compliance due to industry-specific concerns, such as unique accounting structures and variable lease components. Over the past few years, the Schneider Downs simpLEASE accounting team has helped public and private organizations across  a variety of industries successfully implement the ASC 842 lease accounting standard and meet their reporting deadlines. While the initial focus was on 2022 year-end requirements for private companies, our team is now working with clients with non-traditional year ends and specialized needs based on their industry. To help organizations understand lease accounting challenges specific to them, our team is sharing some of the top lease accounting considerations by industry below. Construction Accounting for leases on assets expensed to jobs Accounting for leases on assets managed in the equipment modules Short-term or month-to-month lease management International Organizations Currency considerations SAAS global access Manufacturing Financing lease equipment with longer useful life than the lease term Leases with large buyout options Short-term or month-to-month lease management Not-for-Profits Unique accounting structure Non-traditional accounting calendars Retail/Hospitality Complex property leases that require in-depth analysis Variable lease components such as those related to sales Non-traditional accounting calendars (4-4-5 or 13 periods) Regardless of industry, the fact is that meeting the ASC 842 lease accounting standard is still an uphill battle for many organizations – and time is running out. If any of these challenges sound familiar, we are happy to help. Please contact a member of our team at contactsd@schneiderdowns.com or learn more about simpLEASE at www.schneiderdowns.com/simplease. Related Resources simpLEASE FAQ simpLEASE Software Overview Managed Lease Accounting Overview About simpLEASE Lease Accounting Software Built by accountants for accountants, simpLEASE makes the FASB’s Accounting Standards Certification (ASC 842) simple. Designed to solve leasing accounting challenges for organizations of all sizes, simpLEASE is a scalable web-based solution that streamlines the lease accounting process and provides fast and accurate results regardless of whether you have two or two thousand leases. To learn more, visit our dedicated simpLEASE Accounting page. About Schneider Downs Managed Lease Accounting Services The Schneider Downs Managed Lease Accounting service provides an end-to-end lease accounting solution that combines our lease accounting expertise and simpLEASE software to help clients meet ASC 842 and IFRS 16 lease accounting standards reporting requirements and deadlines. For more information on our Managed Lease Accounting solutions, please contact Nicholas D. Lombardo directly at nlombardo@schneiderdowns.com or visit our dedicated Managed Lease Accounting page. ### Emerging Artificial Intelligence Technology in Higher Education How is emerging artificial intelligence (AI) technologies impacting the higher education industry and how are universities managing the new capabilities?With the emergence of generative AI this year, the conversation surrounding AI technology within the higher education industry is at all-time high.Since many institutions and students have different perspectives on the ethical boundaries and uses of AI in higher education, now is an opportune time to take a look at how higher education is currently using AI, the potential risks new AI poses and how universities are addressing these risks.Higher Education and AI: Current State and UsesSeveral higher education institutions already use AI, utilizing AI research assistants, AI tools to assist in grading and providing feedback to students and even AI teaching assistants.Many of these tools can be used to replace mundane tasks that are typically performed by faculty and professors.Generative Pre-trained Transformer (GPT) is a newer tool that has become more prevalent in recent months. GPT is a neural network machine learning model trained, using internet data, to generate any kind of text. It only requires a small amount of input to generate a sophisticated text.The continued use of AI technologies can not only reduce  workloads for faculty, professors and higher education institutions as a whole, but it can also change the way students perform their tasks and assignments.Higher Education and AI: Potential RisksAs with any technology, potential advantages also pose potential risks. In the realm of higher education, there are several concerns over risks associated with AI, with key concerns being: Risk of difficulties in understanding and deploying the complex AI technologies Risk of ineffective teaching, as utilizing the technology across a range of students may reduce the personalized learning opportunities that a diverse student body needs Risk of more academic integrity issues with AI Technology, specifically GPT Risk to the privacy and security of student, faculty, and professor information if the AI technology requires data collection to function Higher Education and AI: Addressing AI RiskSo, is AI technology worth the risks that it may pose? The answer to this is not clear and, based on the conversations surrounding AI in higher education, not close. But there are some steps universities can take to mitigate the potential risks associated with AI technologies, including: Understanding the technology and having a willingness to embrace it Learning how it can be incorporated at the institutions effectively and safely Proactively preparing and assessing how the technology is being used to ensure the desired outcomes are achieved Implementing of clear and transparent policies and safeguards in order to protect sensitive data If you have any questions surrounding the AI in higher education, please contact the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com .About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### The Changing Workforce in Higher Education How is the higher education industry preparing for a workforce ready to retire?From the great resignation to quiet quitting to quiet hiring, the past few years have coined several terms to describe the different trends in the American workforce. But what about the great retirement?This is a question that the higher education industry may be facing soon, as it has one of the greater shares of older workers in the U.S workforce.With 30% of higher education staff being 55 or older, many are either beginning to think about or planning their retirements, events which pose several challenges beyond simply hiring a replacementWhen an older employee leaves, their institution loses the years of knowledge and connections that they provided and built. This tribal knowledge and expertise, as well as name value for many high-profile institutions, leaves a void that isn’t easily replaced.In addition, the higher education industry is noticing that younger employees are leaving at a higher rate, both due to the competitive labor market and non-monetary issues such as ESG or DEI initiatives.While workforce attrition can pose issues for any organization, the higher education industry workforce shift poses several unique risks and challenges, including: Potential for greater risks to operations and internal controls at university institutions Challenges to meet compliance and other reporting requirements Concern with the ability to bring in or recruit new resources and employees to fill the void left by the leaving workforce Challenges of hiring a more diverse workforce and meeting the new workforce’s demands Department turnover causing reporting and operational issues due to lost knowledge How Can Higher Education Manage the Shifting Workforce? Faculty and staff retirements will happen. And it should be celebrated when any professional can retire to enjoy the rest of their years. That’s why the focus shouldn’t be on this life stage but rather on creating a talent pool ready to take over, ready to stay and ready to recruit new contributors. Some key steps the higher education industry can take to manage high retirement levels include: Prioritize inclusive hiring of employees, which includes providing opportunities for older employees to continue to work if they so wish Actively recruit a younger and a more diverse workforce Establish well documented policies and procedures within individual institution departments to better facilitate onboarding and training of new employees Address pay equality and salary compression in order to implement better employment retention strategies If you have any questions surrounding the changing workforce in higher education, please contact the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page.  ### SDWMA Named One of the Nation’s Top DC Advisor Firms in 2022 by NAPA We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the Nation’s Top DC Advisor Teams in 2022 by the National Association of Plan Advisors (NAPA) for the third consecutive year.The 2022 NAPA Top DC Advisor Team List highlights the nation’s leading retirement plan advisor firms. Unlike other lists, this focuses on teams having at least $100 million in defined contribution (DC) plan assets under advisement and is based on self-reported assets under advisement as of December 31, 2022.NAPA was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. NAPA is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org.NAPA members like SDWMA are having a huge impact every single day, not just on the quality of retirement plan advice, but also in building a more financially secure retirement for millions of Americans. It is a great honor for SDWMA to be listed in this regard by NAPA.To our clients, friends, and colleagues, thank you for your continued trust and confidence in SDWMA. If you know someone that we could be of service to, please do not hesitate to this announcement or our email address, sdwealthmanagement@schneiderdowns.com.About Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Is Your Worthless Crypto Actually Worthless According to the IRS? Burned by crypto in 2022? No, we're not talking about burning crypto here, but your crypto may be considered worthless according to the Internal Revenue Service. There are a number of ways you could have incurred a loss due to volatility in the crypto markets or other virtual asset realm in 2022, but not all of them are considered worthless according to the IRS. Pursuant to Internal Revenue Code Section 165, taxpayers can take a deduction for losses that are evidenced by closed and completed transactions, fixed by identifiable events, and actually sustained during the tax year.What does all that mean? Perhaps you had virtual assets on the FTX platform and you can no longer access those amounts. This is an identifiable event, and you may be able to take a deduction on the losses you sustained. Or maybe you decided to burn your digital assets to increase the value of others. This is another example of an identifiable event for which you may be able to take a loss. What if you bought a notable virtual currency at $60,000 and the value was less than $20,000 at the end of 2022, but you still have it in your wallet? If this currency is still actively trading, you won’t, unfortunately, be allowed to take a deduction since there’s been no closed and completed transaction. Even if the currency was trading for a fraction of a cent, it’s still not a closed or completed transaction and, therefore, no deduction is available. Taxpayers owning virtual currency with little value, however, may take steps to abandon their investment, which may evidence a closed or completed transaction. On January 11, the Office of Chief Counsel issued Memorandum 202302011 addressing the deductibility of cryptocurrency declines in value.In summation, if you’ve realized a cryptocurrency loss and relinquished all rights and control to the virtual property, you may be able to take a loss. If you still hold the virtual property, however (no matter how little value it may have), and it is still able to be traded, you won’t be able to take a deduction for the reduction in value. If you have any questions regarding the tax implications of virtual currencies or other digital assets, contact your local Schneider Downs tax professional.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Sunlight for Unaccountable Non-Profits Act: Impact on Schedule B Disclosure Requirement On January 23, 2023, Senator Jon Tester (D-MT) reintroduced the Sunlight for Unaccountable Non-Profits Act (the “SUN Act”) as a part of his efforts to increase transparency and eliminate certain groups’ influence on politics in the United States.This bill includes two main objectives:  The bill would require tax-exempt organizations and deferred compensation plans to be made available to the public at no charge, processable with computers and easy to access. The bill would require non-profit organizations that engage in political campaign activities to make their Schedule B, Schedule of Contributors, open to public inspection.  Senator Tester explained in his press release that this bill would bring back transparency and accountability and eliminate the influence of “dark money” from U.S. elections. Senator Angus King (I-ME) has expressed his support for the bill and noted that political donations lack transparency and openness in his press release. He added that “secretive special interest groups” should not be allowed to influence the democratic process. Schedule B, Schedule of Contributors, is a part of the Form 990 series in which non-profit organizations are required to disclose contributor information. This includes donors’ names and addresses, the type and description of the contributions and the amounts donated. As noted in one of our previous posts on Donor Information Disclosure Requirements, this requirement is intended for tax-exempt organizations that receive contributions and meet certain thresholds. However, this form is only required to be provided to the Internal Revenue Service and is not open to public inspection.   Schedule B and the disclosure of this personal information have often been contentious. Legislation similar to the SUN Act has previously been introduced going back to 2014. A non-profit organization based in Ohio filed a lawsuit claiming that reporting names and addresses of contributors to the IRS is unconstitutional. David L. Thompson, Vice President of Public Policy for the National Council of Nonprofits, doubts that the requirement will be repealed by Congress. However, there is a movement to limit access to donors’ information, not only to the public but also to law enforcement. Mr. Thompson added that there’s a possibility of aggressive questioning on the matter in an upcoming House oversight hearing and that litigation might make its way to Supreme Court in 2023.  The disclosure of this information has also been debated at the state level. In July 2021, the U.S. Supreme Court ruled that public inspection of Schedule B is unconstitutional, as it “violates the right to free association protected by the First Amendment to the U.S. Constitution.” The Supreme Court granted a review of the case after the State of California required non-profit organizations to include the full copy of Form 990, Schedule B, as a part of their state annual report.Schneider Downs continues to monitor this proposed legislation and related court cases and will continue to provide updates as information changes.About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  To learn more, visit our Not-for-Profit Industry Group page.   ### The Impact of Bot-Driven Fraud in Higher Education What is bot-driven fraud and how are these attacks impacting the higher education industry?The COVID-19 pandemic brought about many changes for higher education institutions, most notably the necessary shift from in-person to online and hybrid learning environments.This seismic shift forced these institutions to lay the groundwork for enhanced online educational tools to remain competitive and increase enrollment numbers.Not only does this benefit students by allowing them to access institutions that may not have been available in prior years due to time or location constraints, but it’s also opened the door for bots and fraudsters to take advantage of these establishments.In conjunction with an increase in online enrollment and a reduction in the requirements for physical interaction, bots can now disguise themselves as real students to defraud universities and harm their reputations.Two of the most prevalent types of bot-driven fraud schemes focus on financial aid and university email theft. Bot-driven Financial Aid Fraud Although COVID-relief funds are winding down, financial aid fraud is still rising. In the state of California, there were over 65,000 fake applications for financial aid submitted in its community college system in 2021. One of those community colleges identified and declined around $1.7 million in attempted student aid fraud. And in 2022, a single community college in Utah received thousands of fraudulent applications.There is also the risk of more sophisticated attackers impersonating real students and applying for financial aid on their behalf with stolen information. In this instance, it is much more difficult to detect fraudulent activity, especially for smaller colleges that do not have admissions committees to vet applicants.Bot-driven University Email TheftThere is a large market for @edu email addresses. These are usually obtained through automated form-fill attacks that target student application processes. These email addresses can be used to access student discounts, sold for profit on the dark web or used to inform future attacks.Financial Impact on Higher EducationTo make matters worse, bot-driven attacks can not only steal hundreds of thousands in financial aid funds but can cause administrative and business costs that are ultimately passed down to students through increased tuition prices and fees.And with a recent report verifying the acquisition cost for new students is nearly $2,795 per student for a four-year private college, the last thing universities need are bots convoluting their recruitment marketing.Marketing keywords are competitive and can lead to massive marketing spending from colleges and universities attempting to hit higher enrollment targets. Bot engagement would waste this spend and effectively hurt  conversion efforts and marketing intelligence.Some ads for higher education are on a cost-per-click basis. Even a small number of bots can become costly for a university or college. Although most advertising platforms have a built-in bot-mitigation capability, it is important to remember that ads are not the only targets for bots.Every time a bot or fake user interacts with a marketing campaign, it becomes a data point within a CRM and effectively leads to poor and inaccurate data. These inaccurate data points can lead to poor decision-making, creating tension among leadership and negatively impacting future budgets and strategy.How Can Higher Education Protect Against Bot-Driven Fraud?There are several ways the higher education industry can fight back against bot-driven fraud and fake users, one of which is to implement harsher verification processes for new enrollments, such as: Require proof of identity, such as a government-issued ID, to create an account. Monitor website traffic for signs of bot activity, such as unusual locations, spikes in traffic or single IP address visits. Add reCAPTCHA verification to form fills (although more sophisticated bots can bypass this). Educate, educate, educate… help faculty and staff know the warning signs of bots and what to do if they discover fraudulent activity. If you have any questions about bot-driven fraud or any other higher education concerns, please contact the Schneider Downs Higher Education Industry Group at contactsd@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.  To learn more, visit our Higher Education Industry Group page.    ### Questions Regarding Cash Management in the Current Market Environment With the recent takeover of two regional banks by the FDIC, and other regional banks under pressure to show that their customers' deposits are safe, we have received numerous questions from business owners regarding their cash management. (Please note that as of this writing, Federal regulators have guaranteed that depositors in these failed banks will receive 100% of their deposits regardless of the $250,000 FDIC limit.) The first item to think about is laying out a timeline of how cash is to be used in the business.  A common way to look at this is using the following timeframes: Cash that is going to leave the business in the short-term (less than 30 days) should be held in cash at a bank ready to be dispersed.  The FDIC insurance coverage guarantees deposits up to $250,000.  It is not uncommon to have cash at multiple banks to ensure that the amount does not exceed this guarantee.   Cash that is going to stay in the business for greater than 30 days, but less than 3 months, has additional investment options.  Money market funds are a great way to generate a reasonable level of interest on your cash.  Money market funds are a mutual fund that invests solely in cash and cash equivalent securities.  These investments are very liquid, short-term investments that are of the highest credit quality.  After an era of low rates in the debt market, the Federal Reserve has raised short-term interest rates over the past two years to allow these money market funds to provide greater rates of return at very low risk to the investor.  Many Money Market funds as of 3/16/2023 are yielding over 4% annually.  These yields are adjusted weekly depending on the performance of the underlying investments held in the fund.  Examples of the investments typically held in money market funds are:   Certificates of Deposit (CDs) Commercial Paper (a short-term debt instrument used by companies to finance their short-term liabilities) U.S. Treasuries   Cash that is going to stay in the business for greater than 90 days provides a business owner with even more options to invest cash in other high-quality investments such as short-term U.S. Treasury bills.  Treasury bills are backed by the full faith and credit of the U.S. government.  They provide a higher return on your cash due to the longer time frame compared to money market funds.  Treasuries are a very liquid market, so if for some reason cash is needed sooner than anticipated, then T-bills can be sold and cash available in 2 days’ time.  These investments are commonly held to maturity to ensure the investor gets the specified rate of return when purchasing the Treasury bill.  Current yields (as of 3/16/2023) on these short-term Treasuries are:   3 month - 4.73% 6 month - 4.73% 9 month - 4.60%   Another option for cash that is going to stay in the business for greater than 90 days is a Certificate of Deposit or CD.  This investment will usually offer the highest rates of return compared to the other investments above.  This is due to the lack of liquidity the product offers.  The money cannot be taken out without penalties or loss of promised interest.  A CD offers a fixed interest rate that will not change.  This certainty of promised rate of return that is backed by the federal insurance program is often a good alternative to other types of investments that provide volatility.  A business owner just needs to decide on the risk of not having the money readily available if something is needed to fund business activities.  These rates can vary among the many financial institutions that offer them, and if this is an option that someone is interested in, a great place to start is the financial institution that you work with or your financial advisor to find the best rate.  Also, you should be aware that CDs held in the same bank as your other deposits are subject to the same $250,000 FDIC limits per account registration. (Corporate, Individual, joint, etc.) In closing, we hope that this provides a good overview of some of the options that you have for your cash so that you can increase the return and manage the risk for those assets.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### DOE Significantly Expands Definition of Third-Party Servicer in New Guidance to Higher Education Institutions Download the PDF version of this article here.A recent Department of Education  (DOE) update expanding the interpretation of what a third-party servicer (TPS) is in relation to Title IV of the Higher Education Act of 1965 may lead to adverse effects, including chaos in the learning environment and increased tuition costs.On February 15, the DOE issued a Dear Colleague Letter, (GEN-23-03) Requirements and Responsibilities for Third-Party Servicers and Institutions, as new guidance surrounding third-party servicers  for higher education institutions (HEIs). The letter was updated on February 28, extending the effective date for the guidance to September 1, 2023 (from May 1, 2023), as well as extending the public comment period to March 30, 2023 (from March 17, 2023).As part of the new guidance, the definition of TPS has been significantly updated to include functions of student recruiting and retention, the provision of software products and services involving Title IV administration activities, and the provision of educational content and instruction.The guidance also notes that “an institution may not contract with a TPS to perform any aspect of the institution’s participation in a Title IV program if the servicer (or its subcontractors) is located outside of the United States or is owned or operated by an individual who is not a U.S. citizen or national or a lawful U.S. permanent resident”. HEIs will be required to report any arrangements with TPSs not already stated, and entities meeting the definition of a TPS will be required to submit the Third-Party Servicer Data Form to the Department by September 1.Title IV of the Higher Education Act of 1965 provides for the authorization of loans and grant programs to students pursuing post-secondary education. Generally, a TPS provides functions or services necessary (1) for the institution to remain eligible to participate in Title IV programs; (2) to determine a student’s eligibility for Title IV funds; (3) to provide Title IV-eligible educational programs; (4) to account for Title IV funds; (5) to deliver Title IV funds to students; or (6) to perform any other aspect of the administration of Title IV programs or comply with the statutory and regulatory requirements associated with those programs.Since this definition has been broadened by the updated guidance, vendors now categorized as TPS will be subject to new obligations, including having joint liability with schools related to Title IV activity, heightened data privacy and security responsibilities, and reporting to the Department about possible criminal misconduct around Title IV programs.Further, the DOE clarified that these entities themselves are subject to annual nonfederal audits of the Title IV-relevant functions they perform if such functions are stated in the “audit guide,” a non-exhaustive list of functions and services that, if outsourced by an institution to a third party, would render that third party a TPS subject to the mentioned TPS requirements.While the DOE is incentivized to ensure compliance in all Title IV eligible institutions, with such strict regulations, it’s being debated that these new provisions may outweigh the affirmation of compliance. One must take the following into consideration while assessing the efficiency and effectiveness of such strict guidelines on TPSs and higher-education institutions: Enforcement and Monitoring – One of the goals of the new guidance is to provide more transparency around contracts between TPSs and HEIs to ensure compliance with applicable laws and regulations. Will Universities have the capacity to monitor and enforce this increased volume of third-party risk? Student Information Systems (SISs) Run by Foreign Companies – By barring foreign companies from being used as SISs, one must question if it’s realistic to expect these institutions to pull out and replace their SISs by September 1, 2023. For example, contracts with German software giant SAP would no longer be permitted, should their services perform any aspect of the institution’s participation in Title IV programming. The chances of Universities successfully replacing their back-end systems in this timeframe are seemingly impossible. Smaller Universities – The DOE announced that it is accepting public comment on the announced guidance for 30 days (now through March 30). One comment from regulations.gov brought to light a perspective of these new changes from an employee at small college with a religious mission that involves maintaining very low tuition costs for students, many of whom come from lower socioeconomic backgrounds. The comment highlights two negative possibilities from the DOE update. First, the institution’s partners could become TPSs, creating associated increased costs that the college would need to fund, likely ultimately increasing student costs. Second, the institution partners could decline to become TPSs, in which case schools would have to cease operations, disrupting academic operations, especially in smaller, less-resourced institutions. Smaller Businesses – A similar comment on the new provision relates to those smaller schools that use smaller vendors in saying that these new regulations favor larger, slower-moving incumbents with bigger balance sheets over nimble startups that don’t have the budget to comply. Such a high entry barrier would, in turn, impede innovation critical to student development and learning. Ultimately, the DOE made it clear that all third parties engaging with HEIs with respect to any Title IV activities are now considered to be TPSs and must comply, as such, moving forward.Recommended (Re)Actions for Third Parties Engaging with HEIs Validate your inventory of third parties and add classifications related to the following: recruiting and retention the provision of software products and services involving Title IV administration the provision of educational content and instruction servicers (or their subcontractors) that are located outside of the United States or are owned or operated by an individual who is not a U.S. citizen or national or a lawful U.S. permanent resident (related to Title IV programming) Proactively communicate with all applicable third parties Consider participating in the public comment forum How Can Schneider Downs Help?Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information please visit our dedicated Third Party Risk Management page or to get started contact us.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.  To learn more, visit our Higher Education Industry Group page.   ### DOE Budget Proposal Highlights: Pell Grant Increase, Federal Student Aid and Free Community College The Biden Administration’s fiscal year 2024 budget includes proposals to increase funding for the Pell Grant and several other initiatives focused on free community college and expanded federal student aid.One of the primary focuses of the budget proposal is increasing the Pell Grant by $820 to bring the maximum total award to $8,215. This would be the third increase to the annual Pell Grant, which has already increased by $900 over the last three years.The administration believes Pell Grants are a key component of making college more affordable and have stated their goal of doubling the maximum award by 2029. In addition to increased Pell Grant funding, the U.S. Department of Higher Education (DOE) budget proposal includes several other items, including: $90 billion over 10 years to renew free community college $620 million for additional federal student aid $500 million to jump-start free community college effort $429 million to under-resourced institutions $335 million for apprenticeships in certain industries such as construction and clean energy $200 million to connect high school students to community colleges and potential employees through dual enrollment, work-based learning and career advising $165 million more for student success grant programs $150 million for mental health programs on college campuses $100 million to help community colleges partner with employers to develop training models Tuition subsidy of up to $4,500 per year for two years for qualifying students In total, the Education department would see approximately $10.8 billion more in discretionary funds under the budget proposal, which represents nearly a 14% increase from the current federal budget.The administration believes these increases will help make quality higher education more affordable and result in an education system that grows the middle class, drives the economy forward and prepares highly-skilled students for the workforce.While critics say the increased spending will only add to the mounting federal deficit, the administration believes that the budget’s new proposed set of tax increases will decrease the deficit by nearly $3 trillion over the next decade.It should be noted that the budget request assumes the student loan forgiveness plan moves forward – an assumption that may prove short-sighted given the uncertainty of the Supreme Court cases surrounding it.The proposed budget is not approved and will likely face intense scrutiny in the House from both sides.In the meantime, if you have any questions about the potential budget changes within higher education, please contact our team at contactsd@schneiderdowns.com.About Schneider Downs Higher Education ServicesThe Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.  To learn more, visit our Higher Education Industry Group page.  ### PLAY Ransomware Gang Leaks Data From City of Oakland Attack In February, the City of Oakland, CA experienced a high-profile ransomware attack that forced them to take several systems offline and declare a local state of emergency. The City of Oakland was targeted by the PLAY ransomware gang and the attackers were able to steal sensitive data from the city's systems which included personal information of city employees (birthdates, addresses, social security numbers, etc.) as well as financial records. In addition, highly confidential records including Internal Affair investigations of the Oakland Police department and civilian city employees, as well as records revealing city whistleblowers identities, were also part of the breach. This type of data takes the risk a step further from identity theft and can very well put people in physical danger. This week, the hackers made good on their ultimatum and released nearly 10 Gigabytes of data on their website, which has attracted more than 1,100 visitors as of this article. Initial reports stated this data was mostly financial and personal information that is used for identity theft, as opposed to the confidential law enforcement and whistleblower records – but that may be intentional by the hackers, who are possibly saving the more dangerous data for the next wave to be released. The PLAY ransomware gang has signaled this is the first of many data leaks until their demands are met. What specifically these demands are have not been confirmed, but there are reports that the ransomware gang is demanding up to $9 million for the files. Ransomware attacks have become increasingly common in the government sector in recent years, due to the large-scale impact an attack can have on an entire city or municipality. In fact, 12% of all ransomware attacks in 2022 were on municipalities, according to an industry survey – and this is just 12% of the reported amount of ransomware attacks, a number much lower than in actuality. The City of Oakland has confirmed they are working with law enforcement, including the FBI, and with a third-party organization to restore any impacted systems. They are also providing resources for those who suspect, or may know, that their information was part of the attack (or leak) including credit monitoring and freezes. For more information on the City of Oakland attack, mitigation or victim resources, please visit www.oaklandca.gov/news/2023/city-of-oakland-targeted-by-ransomware-attack-core-services-not-affected. How To Avoid Ransomware Attacks Ransomware attacks are only increasing across all industries. This is why it is more important than ever to take preventative steps to safeguard your organization, people, and data, including: Keeping IT systems up to date with the latest patches and anti-virus software Protecting data with strong password policies and back up schedules Localizing and enforcing a strong data retention policy Training employees through Security Awareness training to recognize, avoid, and report potential phishing or malware attacks Developing a thorough Incident Response Plan, along with a Business Continuity Plan and Disaster Recovery Plan Preventative measures such as an IT Risk Assessment and Third-Party Risk Management can also assist in identifying high risk areas where Ransomware attacks are more likely to occur. With these controls in place, organizations can better minimize and mitigate the damage and ensure an expedited recovery effort. It’s paramount to implement these controls early to minimize the potential risks. A proactive approach to addressing cybersecurity risks can be the difference between identifying and preventing a malicious event such as a ransomware attack. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### The Biden Administration Releases Proposed Fiscal 2023/2024 Budget; Proposed Tax Changes Established a Moveable Line in the Sand On March 9, President Biden released his administration’s fiscal year 2024 budget. The President’s annual budget request traditionally kicks off the annual budget process. While Congress has the final say on spending and taxation needed to pay for the spending, the budget signals the administration’s spending priorities and includes details on the revenue needed to pay for those priorities along with the sources generating that revenue. OMB Circular A-11 - Preparation, Submission, and Execution of the Budget notes that the federal budget primarily focuses on the upcoming fiscal year for which Congress needs to make appropriations.  However, it also includes data for the most recently completed year, the current year and nine years following the budget year (outyears) to reflect the effect of budget decisions over the longer term. In addition to proposed appropriations for the budget year, the budget may include proposed changes to appropriations for the current year and legislative proposals that would affect the current year, the budget year and the outyears. With that brief background, the current budget proposes numerous changes in federal tax law (which likely would have impact on many states’ tax law for those states basing their tax law on federal tax law), including the following: Increase corporate tax rate from 21% to 28%; Increase the excise tax on corporate stock buybacks from 1% to 4%; Increase individual top marginal income tax rate from 37% to 39.6% for single filers earning more than $400,000 and joint filers earning more than $450,000; Increase the net investment income tax (additional Medicare tax) on high-income households from 3.8% to 5%; Increase the number of taxpayers subject to the net investment income tax by including taxpayers with income earned while actively participating in trade or business conducted by passthrough entities; Impose a “billionaire” wealth minimum 25% tax on citizens with wealth exceeding $100 million; Eliminate the like-kind exchange gain deferral from the sale of real estate; Require 100% ordinary income recapture of depreciation for certain depreciable real property; Tax capital gain income at ordinary income tax rates when income exceeds $1,000,000; Tax carried interests as ordinary income if taxable income exceeds $400,000; Apply the wash sale rules to digital assets and address related-party digital transactions; Modify estate and gift taxation; Permanently expand the earned income tax credit program; Enhance and expand the adoption credit; Permanently exclude from income the forgiveness of student debt; and Make permanent recent changes to the premium tax credit. The above list identifies just some of the numerous tax items included in the budget proposal.  Buried in the line-item details of Table S-6 Mandatory and Receipt Proposals are numerous other proposals including: Prevent excess accumulations by high-income taxpayers in tax-favored retirement accounts; Eliminate fossil fuel tax preferences, including repeal of expensing of intangible drilling costs and repeal of percentage depletion; Reform international tax provisions, including the restriction of interest deductions of members of financial reporting groups and adopt the undertaxed profits rule; Increase the limitation on losses of non-corporate taxpayers; Increase compliance obligations to improve tax administration such as modifying information reporting for payments subject to back-up withholding; and Increase compliance obligations to improve tax compliance such as a proposal to impose liability on shareholders for the collection of unpaid corporate income tax obligations and the withholding of tax on failed non-qualified deferred compensation plans. The budget also seeks an additional $28.6 billion and a two-year extension to the $80 billion the IRS received over 10 years as part of the Inflation Reduction Act to modernize its technology and expand enforcement. It’s important to remember that the above items are only proposals; many of these items have been floated in the past and did not make it into final legislation.  As many others have already observed, it’s likely no secret that many of President Biden’s proposals are already dead upon arrival in the current divided Congress.  However, the proposed budget effectively represents an opening salvo in the budget battle between the administration and Democratic legislators with Republicans on funding and spending for the next fiscal year beginning October 1, 2023, and directionally for the next decade.  For their part, Republicans are preparing their version of what the budget might look like.  For example, the Republican Study Committee (a Republican caucus) has recently released its vision of a 2023 budget. It’s much too early to act on these proposals, but it’s important to remain informed about the progress on the budget and the possible implications on your tax situation.  If you have any questions, please don’t hesitate to reach out to your Schneider Downs tax consultant. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### SDWMA Thoughts on Silicon Valley Bank By now I am sure a good number, if not all of you, have heard about the rapid fall of Silicon Valley Bank (SIVB). SIVB was the 16th largest bank in the United States prior to its failure late Friday afternoon, March 10th, 2023. Below you will find some high-level details of SIVB and its ultimate failure. SIVB had been in business for over 40 years, serving as the “go-to” bank for the venture capital, private equity, and technology communities.  SIVB can count every significant company incubated out of Silicon Valley as a client at one time or another: everything from Apple to Google, Kleiner Perkins to Sequoia (the premier and longest standing venture capital firms in America).  While it wasn’t the largest bank in the U.S. by deposit base or services provided, it was the most trusted financial institution in the technology/venture capital ecosystem.  A combination of a high-quality fixed income portfolio losing value as interest rates rose AND significant cash burn (e.g. cash withdrawals) by venture capital companies led to a deterioration in SIVB’s capital position.  A risk management failure to hedge the interest rate exposure would ultimately prove negligent by SIVB management. The final nail in SIVB’s coffin was a failed capital raise that gave many venture capital companies and funds no choice but to request their money out of SIVB and into other banks. As these withdrawal request outstripped the cash on hand, the FDIC took the bank over. Late Sunday evening, prior to the opening of Asian equity markets, the FDIC and the U.S. Federal Reserve announced a program that would guarantee all deposits at SIVB. While the plan is still being rolled out, it appears that SIVB stock and some junior debt holders will likely lose all of their value.  Bottom Line Up Front: SIVB was taken over by the FDIC and California state banking regulators in the early afternoon on Friday amid a “run” on the bank. For those that are not familiar with what a “run” on the bank is, it boils down to a significant number of depositors losing faith in their banking institution and withdrawing (or attempting to withdraw) all of their deposits at the same time. Understandably you might be asking how this happens in 2023, and it is entirely reasonable question to ask. The answer to how the 16th largest bank in the U.S. failed is that almost all U.S. banks/credit unions operate as fractional reserve banks. In a fractional reserve banking system, which most of the world operates under, a bank does not keep, nor are they required to keep, 100% of depositors’ cash on hand for withdrawal. There is a reserve requirement in place, tiered out by size; a bank that size of SIVB would be required to keep at least 10% of deposits on hand. While the particulars are not fully understood (some are known and others will no doubt be revealed over the next several days/weeks/months), in terms of the broad mechanics, SIVB experienced a rather traditional “run” on the bank of the course of 48 hours culminating with the bank being taken over by regulators.How did the Silicon Valley Bank collapse happen?As stated in the introduction, SIVB was Silicon Valley’s go-to financial institution for over four decades. While it no doubt had modest amounts of traditional banking clients, the majority of its depositor base were directly ingrained in the Venture Capital/Technology ecosystem. This concentration of their client base would ultimately prove to be their undoing. During 2020 and 2021, the venture capital community raised record amounts of capital as investors flocked to the promise of high growth companies in a 0% interest rate environment that, they thought, would be forever changed by the COVID pandemic. The vast amount of capital raised by venture capitalists mostly found its way to SIVB. SIVB saw its deposit base grow from approximately $60 billion in 2019 to almost $200 billion by the end of the first quarter of 2022. SIVB had to do something with the deposits, as they had to pay interest on checking and savings accounts. In other words, SIVB had to do the traditional blocking and tackling that bank(s) across the country do. However, SIVB received the large influx of cash just at the moment the Federal Reserve would begin the most restrictive and quickest tightening of interest rates since 1981-1982. SIVB invested the cash in a series of high-quality investment grade bonds like US treasuries and mortgage-backed securities. The bonds that were purchased by SIVB were classified as “Available for Sale” and thus had to be marked to market. The fixed income portfolio was not hedged for its interest rate exposure – a decision that would contribute significantly to SIVB’s demise.As interest rates went up rapidly in 2022, the value of fixed income instruments went down. While the bonds in the “available for sale” portfolio of SIVB were going down in value, the deposit base remained strong for most of 2022 as many venture capital-backed portfolio companies raised significant fresh capital in the last few months of 2021. What changed in late 2022 and early 2023 was the deposit base at SIVB was falling, as VC backed companies were unable to raise new capital and were burning cash at ever higher rates. The strong deposit base that cushioned much of the mark to market losses in the available for sale portfolio at SIVB had deteriorated and SIVB needed to pursue a different strategy. The executive team at SIVB decided to sell approximately $21 billion of high-quality bonds last week, hoping to take the proceeds and reinvest them at much higher interest rates (yields on 6-month U.S. treasuries are over 5%). In selling the $21B in bonds, the bank recognized an almost ~$2 billion loss, which eroded most of the capital cushion required by regulators. SIVB would be forced to raise fresh capital to plug the hole, which it attempted to do earlier last week. Unfortunately for SIVB, the message by the CEO of the bank was not well received by the investment community and the bank failed to raise capital. By this point, after a failed capital raise and an ill-timed (if not ill-conceived) bond sale, many depositors had started requesting money be wired to other financial institutions. The requests of SIVB grew through the day Thursday and into Friday morning, until the regulators declared SIVB insolvent and took over the bank.How does it all play out?The FDIC, U.S. Federal Reserve, and the U.S. Treasury announced early Sunday evening that all deposits at SIVB were guaranteed. The program outlined by the FDIC on its website was light on details; however, the announcement made clear that taxpayers would not be bailing out SIVB. Instead, the FDIC stated that shareholders and certain unsecured debtholders would not be protected, senior management at SIVB had been removed, and that any “losses” to depositors would be covered by a special assessment tax on banks. Reading through the release, there appeared to be concern that there were potential systemic issues, and regulators and policy makers felt compelled to make a strong move to reinforce faith in consumers of banks that their deposits were safe. In summary:This is why Schneider Downs Wealth Management embraces diversification, owning stocks (U.S. and Non-U.S.), bonds, and diversifiers (real assets and real estate). We will never have 100% of the best performer nor will we have 100% of the worst performer. That diversification is valuable in volatile markets, especially down markets, where over concentration in certain areas of the market can create significant risks, as SIVB unfortunately found out the hard way. https://www.fdic.gov/news/press-releases/2023/pr23017.htmlAbout Schneider Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. ### Digital Transformation and the Construction Industry: Embracing Technology This article is part of series focused on the benefits, challenges and impact of digital transformation on the construction industry and how companies can embrace change. For technology to work effectively, companies need to align people and processes with the technology. There is a wide spectrum of current technological capabilities at companies throughout the construction industry, spanning from entirely manual process all the way to very high integration and use of a single solution to cover most processes. The challenge for most construction organizations is evaluating the level of engagement that works best for their organization.  Technology implementations are meant to support business needs, enhance capabilities, and simplify processes.  Embracing technology can be aided by: Choosing Practical Technology Practical technology involves the design, development, and creation of systems that are useful, effective, and efficient in solving tangible problems or inefficiencies.  Practical technologies should be scalable, fairly-priced and should fill the needs of companies today and in the future.  Clearly identify the business need first, then choose the practical technology to support that need. Requiring Ease of Use Technology implemented should be designed with the user experience in mind and should be straightforward and intuitive to operate. Easy-to-use technology should be accessible and integrated, while meeting the needs of the business.  The technology should be adaptable to allow end-users of all skill levels to utilize and embrace it. Ensuring Interoperation As with implementation of any technology, it should be able to exchange information with other solutions already in place.  Interoperability refers to the systems communicating and working together seamlessly without manual intervention. Seamless integration is the buzzword here. The goal is to eliminate any barriers to the exchange of information to improve system efficiency, reduce costs and complexity, and mitigate data quality risks. Integrating Digital Workflows Similarly, to interoperable systems, integrated digital workflows aims to improve efficiency and effectiveness of exchanging information, but focuses on the actual integration of processes in a workflow, which is discussed in our previous article. By ensuring digital workflows are integrated in an organization, it provides a whole host of benefits ranging from increased efficiency of internal processes, to increased labor productivity, and to risk management/reduction. Reducing Uncertainty Any technology implementation should go through a discovery phase to verify and approve the design, cost, safety, and implementation aspects to ensure that it fits the needs of the organization. Additional due diligence should be performed through a planning phase to vet vendors and discuss pricing. Finally, an implementation team should set goals and measure results to determine ROI.  Leveraging service providers and engaging experienced outside help can help ensure proper project milestones are considered, established, and met. Throughout our series we’ve considered how digital workflows are positively impacting companies throughout the construction industry, seen how technology can help mitigate industry-wide challenges, heard some common challenges faced when implementing technology, and learned to embrace technology adoption by taking a pause to align people and process. Change and uncertainty cause disruption in any industry, but clarity can be gained by discovering the problem and understanding business needs, planning for the right path forward, and executing on the strategy to promote an environment to allow for a successful technology implementation. If you have any questions on how digital transformation may benefit your organization, please contact our team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. Related Articles Digital Transformation and the Construction Industry: Digital Workflows Digital Transformation and the Construction Industry: Combating Challenges and Realizing Benefits Digital Transformation and the Construction Industry: Technology Adoption Challenges Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Digital Transformation Solutions Overview Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page.   ### Digital Transformation and the Construction Industry: Technology Adoption Challenges This article is part of series focused on the benefits, challenges and impact of digital transformation on the construction industry and how companies can embrace change. The global construction industry has a vast number of technology solutions available for construction activities, but many contractors are still using traditional processes. Based on a recent Dodge Construction Network (Dodge) survey, only 61% of trade contractors are using either commercially available software or internally developed/modified software to manage their key construction activities (preconstruction, project execution, and performance analysis). The remaining contractors are still using manual methods including spreadsheets, whiteboards, or printed paper. Additionally, the survey proved that 55% of trade contractors use software for workforce related activities and 63% use software for financial management.  Why has the industry not seen a better technology adoption rate? There is Too Much Technology There can be many challenges involved when implementing technology, especially if multiple technology tools are required. In the Dodge survey, 44% of trade contractors responded that they utilize more than one technology tool but have a primary software they use.  Based on the responses of trade contractors that utilize more than one primary tool, their top five cost management challenges include: Managing change orders and documentation through the whole approval process Status reporting during the project Effectively integrating cost and schedule information Tracking costs for every aspect of the job to determine how they impact overall project costs Tracking units of work completed in the field To combat the challenges presented by utilizing multiple pieces of technology, it’s important to follow proper implementation strategies to ensure success.  Best practices for technology implementation include identifying business needs and confirming the technology meets requirements before implementing, developing and following a phased rollout plan that allows for incremental corrections, a structured process for engaging all stakeholders, metrics to determine success against identifiable needs, and openly communicating about progress towards mutually understood goals. Significant Resource and Capability Gaps When it comes to implementing construction technology, some of the other main challenges include are resource availability and capability gaps. The top five challenges include: Too much training required Lack of time to evaluate technology options Lack of internal capability to implement/manage technology Resistance from field staff Lack of senior management support. Persistent labor shortages highlight the strain on resources (time and money) to successfully implement technology, specifically when it pertains to back-office functions.  Training time and change to standard practices may lead to resistance from those on job sites.  The combination of these things lead to the perception that there is a lack of time available for organizations to evaluate technology options.  However, the upfront ‘investment’ of time to implement technology often equates to efficiencies gained and that time, plus some, ultimately being given back (i.e., expanded capacity). Owners are Increasingly Requiring Use of Their Tech The Dodge survey revealed that owners are increasingly requiring contractors to use their tech. The most common tool owners require contractors to use is their Project Management Information System (PMIS). PMIS is an information system consisting of the tools and techniques used to gather, integrate, and disseminate the outputs of project management processes. Per the dodge survey 90% of contractors have been required to use the owners PMIS system on previous jobs. The top risks contractors face when using an owners PMIS include: Increase in general conditions cost Lack of proper documentation in the event of a claim Lack of project performance information Lack of project performance reports. While external parties requiring the use of their technology onto contractors can be burdensome, it is inherently providing companies with an opportunity to evaluate their own existing technology and its ability to support their business needs.  In some ways, it is forcing companies to consider technology adoption at a more rapid pace than they would have without the external nudge. In our final article of this series, we will discuss embracing technology in a construction environment. If you have any questions on how digital transformation may benefit your organization, please contact our team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. Related Articles Digital Transformation and the Construction Industry: Digital Workflows Digital Transformation and the Construction Industry: Combating Challenges and Realizing Benefits Digital Transformation and the Construction Industry: Embracing Technology Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Digital Transformation Solutions Overview Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### Part of the Family: My Internship Experience at Schneider Downs When I started as a Risk Advisory Services Intern at Schneider Downs, I didn't know what to expect. As a finance major on my way into an accounting position, I didn’t anticipate what type of work would be assigned to me. While stories about interns buying coffee or printing documents while ostensibly working are common, during the interview process at Schneider Downs, I never had the sense that this internship would be like that. I could not have been more right. This experience was absolutely unique—it wasn’t simply a repetition of my college courses. From the start, Schneider Downs provided me with multiple training sessions and countless opportunities with notable clients to gain professional knowledge and experience. That was a huge part of my success during my summer at Schneider Downs: they trust their interns and treat us as part of their family.I began my journey with Schneider downs at the start of summer 2022. At the time, I was battling uncertainty and stress over not understanding how the real corporate world worked. Transitioning from basic college accounting classes to the real world is a big step. Even though I had never heard of Schneider Downs before, the RAS department’s description quickly captured my interest, since it didn’t require an accounting major. This was a huge draw for me at the time because I was honestly uncertain of my plans after school. Immediately, I knew this was the place for me because it gave me a chance to see if this was the field I wanted to pursue. I was drawn to this position because I felt I could achieve success here. Though I initially lacked accounting knowledge, I’m a quick study and a team player, so I knew I could quickly gain the knowledge I lacked. That being said, I could not have been more nervous the first week, having never seen an audit before and not understanding what risk advisory even was. Going in with almost no knowledge, I was pleasantly surprised by the kindness and courtesy of everyone I dealt with. Even though it seemed to me that I was bothering my colleagues with countless questions, each team member was more than happy to stop any work to help get me in the right direction. Within just a few weeks, I was thriving within the company and performing high-quality work, while conducting professional conversations with coworkers and clients. Schneider Downs values every one of its employees because it is a family-oriented company. It is, by far, the best working atmosphere I have encountered, and the best internship experience I could have hoped for. One aspect of my internship experience has stood out above all others. Employees at Schneider Downs take great satisfaction in the fact that they are more than simply coworkers. They are a team and a family. There were countless times when managers or even team members came over to my desk just to check in with me. We could simply have a conversation, or they would provide insight on anything I was struggling with. It was a perfect culture for an intern to learn in.During my time with the company, I did not have an accessible home close to the office. Using Microsoft Teams, Schneider Downs found a way for me to work hybrid and still feel like I was in the office interacting with everyone. The hybrid platform was so successful that I was able to continue the internship throughout my following school semester. The team and I created a schedule that perfectly balanced work and school. At first, I was hesitant because I was unsure of how I would get my schoolwork done and still manage to turn in quality work to Schneider Downs. However, I decided to give it a try anyway, and I am so glad I did. They understood my situation completely, and we worked together to balance the time I needed to study, do homework, etc. with the time I could dedicate to my work with Schneider Downs. This internship has taught me that this is what I want to do for a long time, whether it be with Schneider Downs or another company. I look forward to the end of this semester so I can begin my professional career with Schneider Downs.  ### SEC's Proposed Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies Learn more about the SEC's Proposed Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies. “Today, cybersecurity is an emerging risk with which public issuers increasingly must contend” states SEC Chair Garry Censler. Indeed, the SEC’s proposed amendments and rules would take it a step further by enhancing standardized disclosure procedures related to cybersecurity risk management, strategy, governance, and incident reporting by public companies that are subject to the Securities Exchange Act of 1934. The main component of the amendment, proposed in March of 2022, would be a requirement that mandates all public companies to disclose cybersecurity incidents within four business days once it has been determined material to the disclosing company. This requirement contains specific additional and related conditions that are further outlined in the proposal. Hence, the new additions are meant to supplement forms 10-K and 10-Q in terms of providing investors with more timely information regarding registrants’ cybersecurity disposition. What Does the SEC's Proposed Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies Mean? In the words of SEC Chair Gary Gensler, the “SEC disclosure regime has evolved alongside the evolving risks and investor needs”. More specifically, however, the core of the proposal is around item 1.05 dedicated to Form 8-K filing which would mandate companies to not only disclose a material cybersecurity incident within 4 business days but also provide additional details about the incidents; details such as whether the incident is ongoing, date of occurrence, whether the incident has caused data loss (including but not limited to unauthorized access, theft, and alteration of data), and whether an entity was able to remediate the incident. Furthermore, the 106(d) Regulation S-K of the amendment to forms 10-Q and 10-K would now require companies to disclose information regarding any previous cybersecurity incidents and whether they have been determined to be material. Another notable amendment among many would be Item 407 of regulation S-K that would mandate companies to disclose their board of director members’ cybersecurity experience, should they have any. Additionally, the proposal would also require periodic reporting on registrants’ policies and procedures to identify and manage cybersecurity risks along with management’s role in implementing such policies and procedures. Lastly, the SEC would require all cybersecurity disclosures to be presented in Inline eXtensible Business Reporting Language. What Does the SEC's Proposed Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure Mean for Public Companies? Cybersecurity controls have historically been out of scope from Sarbanes Oxley (SOX) testing for public companies, however, this proposed amendment may see those controls become incorporated into that testing process going forward. Internal Audit and External Auditors traditionally perform a yearly cyber interview based only on inquiry testing for several years to obtain a list of cyber initiatives and controls and then seek to determine if the organization has “experienced a breach within the past 12 months?”. Within SOX, this inquiry testing process will likely no longer be good enough and it is expected that companies will need to provide evidence through observations as well as detailed evidence. SOX and the auditors also require data sets (populations) to ensure completeness and accuracy. Will companies be prepared to provide logs of cyber incidents and the way they are aggregated for materiality? This is a key point that organizations need to start thinking about. The early indications are that organizations will need to implement key cyber controls within their SOX control framework. Companies should take the time to review the proposal, and familiarize themselves with the requirements so that discussions with auditors (both Internal and External) can be held to better understand what the expectations are likely to be. The potential impact of these rulings is likely to be far reaching and we anticipate forthcoming information relating to the final rulings, scope, and key dates in June of 2023. If you have any questions about the proposed rules or SOX testing for public companies, feel free to reach out to our team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page.   ### Personal Goodwill Valuations Compared to other assets transferred in a business transaction, the sale of personal goodwill can be treated more advantageously from a tax perspective by the seller. Under certain transaction structures, the owner of a business may be able to reduce his or her tax liability by selling the personal goodwill associated with the business separately from the business' assets.The owner can justify the existence of personal goodwill during the sale process by obtaining a valuation of their personal goodwill.This article discusses goodwill and some signs that personal goodwill may be present at an organization.Goodwill is an intangible asset of a business and is generally defined as the propensity of customers to return to the business. Goodwill has value only to the extent that it can generate cash flow above a reasonable rate of return on the value of a company's other assets, and assuming adequate compensation is paid to all individual employees for the services they perform.Goodwill can generally be separated into two types: enterprise and personal. Enterprise goodwill results from the assemblage and collective operations of a business's assets, location, reputation of the business, longevity and operating procedures, while personal goodwill arises from the reputation and skills of the individual. According to acclaimed valuation expert Dr. Shannon Pratt , "… separation of personal versus enterprise goodwill depends on whether (or the extent to which) the customer returns because of the individual or elements that belong to the enterprise."Classification of goodwill is influenced by the types of products or services provided by the company, the individual's participation in management and overall direction of the company, the individual's relationships with and reputation among customers and suppliers, and company factors like size and complexity.Some factors supporting enterprise and personal goodwill are: Factor Supports Enterprise Goodwill Supports Personal Goodwill Organizational Structure Entity has formalized operating policies, procedures and systems in place to help the business function. Entity lacks formalized written policies and procedures; governance limited to one or a few select individuals. Workforce Roles and responsibilities are spread among owner- and non-owner managers with no reliance on key individuals. Entity is reliant to one or a few select individuals to function. Brand Recognition Entity name and logo used on marketing materials without emphasis on individual employees. Entity is reliant to one or a few select individuals to function. Customer Relationships  Customers are served by teams of employees and relationships would largely stay intact if any individual employee left the business. Customers have strong relationships with only one individual employee. If that employee were to leave, the customer would no longer do business with the entity. Personal goodwill is most common in professional service organizations (e.g., law firms, accounting firms, medical practices, etc.) where customers often base their purchasing decisions on the reputation, skill and knowledge of individual employees. In contrast, personal goodwill may not exist at a manufacturer of machinery where customers decide to purchase from the entity based on the quality of the product and reputation of the company/brand name. About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. Schneider Downs has significant experience in preparing personal goodwill valuations and business valuations for gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) for more information about our business valuation services.To learn more, visit our dedicated Tax Services page.   ### Digital Transformation and The Construction Industry: Digital Workflows This article is part of series focused on the benefits, challenges and impact of digital transformation on the construction industry and how companies can embrace change. Schneider Downs recently attended the ‘Construction and Real Estate Conference’ held by The American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA).  Dodge Data & Analytics, powered by the Dodge Construction Network (Dodge), gave a presentation on how technology is transforming the construction industry and where it is headed. During their session, Dodge shared the results of a survey they conducted with General Contractors/Construction Manages (GCs/CMs) who have implemented the use of integrated digital workflows.  Integrated digital workflows can be defined as streamlined and interconnected processes to improve efficiency, productivity, and collaboration between divisions within organizations. The survey consisted of approximately 1,000 architects, engineers, general contractors, specialty trade contractors and owners.  Further, the GCs/CMs were size segregated based on revenue: small (under $50 million), large ($100 million to $1 billion) and very large (over $1 billion). Survey results indicated top benefits experienced by integrated digital workflows included increased efficiency of internal processes, better-informed decision-making, increased efficiency of multicompany processes, improved ability to predict and mitigate risk, and improved cost predictability. The survey went on to indicate that these benefits were most clearly seen throughout the following processes: project setup/closeout, project document management, subcontract management, change management, and job cost/projections. Reduced project costs, more timely project delivery, and a reduced amount of rework are among additional improved project outcomes that GCs/CMs can expect to benefit from using digital workflows. Collectively, 65% of all respondents saw that integrated digital workflows increased the efficiency of internal processes, where as a standalone, 73% of larger GCs/CMs responded this way. Likewise, 62% of all GCs reported better-informed decision-making because of integrated digital workflows, with very large GCs/CMs responding this way at 73%. While the majority of responding GCs/CMs experienced increased benefits, it was noteworthy that large and very large GCs/CMs more frequently reported benefits gained. This trend is not exclusive to the construction industry, as we typically see industry-wide technology trends show themselves initially in larger companies, with wider adoption over time as solutions become more affordable. Truthfully, the delta speaks to the opportunity ahead for small to mid-sized companies.  The survey determined that nearly all GCs/CMs saw improved project outcomes from the use of digital workflows, through either improved quality, faster delivery, or increased profitability.  Not surprisingly, very large GCs/CMs experienced even higher percentages of improved outcomes given their increased usage of workflows. Although the use of integrated digital workflows is certainly growing, implementation is not met without challenge.  Respondents suggested the top challenges experienced when implementing digital workflows included an insufficient understanding of the benefits and a lack of senior management support. These findings suggest that companies may not currently be convinced that digital workflows are worth the investment of money and other resources. However, the benefits reported through the study should encourage more companies to embrace transformation and incorporate digital workflows. While understanding how those who have implemented digital workflows have benefited, it's equally as important to understand where the Construction Industry currently stands as a whole related to technology adoption. Click here to read our next article that focuses on the benefits of incorporating technology and how it is being used to combat industry-wide challenges. If you have any questions on how digital transformation may benefit your organization, please contact our team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. Related Articles Digital Transformation and the Construction Industry: Combating Challenges and Realizing Benefits Digital Transformation and the Construction Industry: Technology Adoption Challenges Digital Transformation and the Construction Industry: Embracing Technology Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Digital Transformation Solutions Overview Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### Digital Transformation and the Construction Industry: Combating Challenges and Realizing Benefits This article is part of series focused on the benefits, challenges and impact of digital transformation on the construction industry and how companies can embrace change. Today, we live in a world where nearly every step of the construction process can be supported by digital technology. Dodge Construction Network (Dodge) conducted a survey with 537 specialty trade contractors based on three key issues impacting their businesses: profitability, workforce, and technology. While it may it seem obvious, the survey respondents concluded that both workforce and technology had a direct correlation to profitability, specifically, trouble with either may typically lead to lower margin jobs.  A few specific factors leading to this low profit margin include the lack of skilled labor available (i.e., labor shortage), overtime required to meet deadlines leading to excess costs, and labor productivity, planning and allocation challenges. The global construction industry is facing a well-known critical shortage of skilled workers that impacts specialty contractor’s projects and corresponding financial performance. Per the Dodge survey 41% of specialty contractors report that more than half of their projects are being negatively impacted by labor issues. The main elements of the projects impacted are the ability to respond to future bids, project costs, and project delays. One strategy to counter the negative impacts of labor issues for small to medium construction companies is to invest in technology to improve productivity. One example provided within the Dodge survey related to technology aiding the billing and collection processes.  The survey stated that the average collection time for trade contractors is 48 days from the billing date. One of the main factors contributing to delays included incorrect or slow data entry.  Each invoice requires standardized billing forms, supporting documentation, and appropriate approvals.  If any information is missing or inaccurate it will cause a delay due to the payment being re-routed through the billing workflow. By investing in technology and automation to improve the accuracy of data moving throughout the organization, this will optimize workflows, allowing companies to reduce the administrative time spent invoicing, while also potentially decreasing the time between billing and cash collection for invoiced work. Benefits include improved cash flow, better visibility for cash management, and earlier identification of unpaid invoices (which could indicate a dispute or potential legal matter). Owners can play a pivotal role in the construction industry to encourage better digital connections between players.  The Dodge survey stated 54% of owners have a high or very high engagement with technology that enables integrated digital workflows. Some stated benefits of owners having a high engagement with integrated software solutions included increased efficiency of internal processes, better informed decision making, improved quality, improved cost predictability, improved ability to predict and mitigate risk, and reductions in change orders throughout the contract. While there are certainly benefits to be gained through the use of digital workflows and technology, it’s necessary to consider the challenges related to the implementation and adoption of such technologies. If you have any questions on how digital transformation may benefit your organization, please contact our team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. Related Articles Digital Transformation and the Construction Industry: Digital Workflows Digital Transformation and the Construction Industry: Technology Adoption Challenges Digital Transformation and the Construction Industry: Embracing Technology Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Digital Transformation Solutions Overview Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### Biden Administration Unveils National Cybersecurity Strategy The Biden Administration published its long-expected National Cybersecurity Strategy on March 2, 2023. The nearly 40-page document introduces the Biden Administration’s vision of an increasingly targeted, intentional and funded approach to cyber defense that emphasizes the need to protect American infrastructure and create a digital ecosystem that is: Defensible, where cyber defense is overwhelmingly easier, cheaper and more effective; Resilient, where cyber incidents and errors have less of a large-scale or lasting impact; and, Values-aligned, where our most cherished values shape—and are in turn reinforced by— our digital world. Starting with George W. Bush, every administration has released some type of formal cybersecurity strategy at least once per term. The most recent strategy, released in 2018 by the Trump Administration, focused on pre-emptive initiatives against domestic and international threat actors, as well as concerns over foreign entities, specifically Chinese manufacturer Huawei. The Biden Administration’s cybersecurity strategy seeks to build and enhance collaboration in cyberspace based on the five-pillar approach below: Defend Critical Infrastructure – We will give the American people confidence in the availability and resilience of our critical infrastructure and the essential services it provides. Disrupt and Dismantle Threat Actors – Using all instruments of national power, we will make malicious cyber actors incapable of threatening the national security or public safety of the United States. Shape Market Forces to Drive Security and Resilience – We will place responsibility on those within our digital ecosystem that are best positioned to reduce risk and shift the consequences of poor cybersecurity away from the most vulnerable to make our digital ecosystem more trustworthy. Invest in a Resilient Future – Through strategic investments and coordinated, collaborative action, the United States will continue to lead the world in the innovation of secure and resilient next-generation technologies and infrastructure. Forge International Partnerships to Pursue Shared Goals – The United States seeks a world where responsible state behavior in cyberspace is expected and reinforced, whereas irresponsible behavior is isolating and costly. While the Biden Administration continues to prioritize cyber defense investments and actions against hacker groups, the third pillar of Shape Market Forces to Drive Security and Resilience brings what is described as “fundamental changes to the underlying dynamics of the digital ecosystem”. This translates into a potential push for increased regulatory and federal oversight on owners and operators of critical infrastructure, specifically technology and software manufacturers. In her recent Carnegie Mellon University appearance, CISA Director Jen Easterly went in-depth on the topic of how manufacturers have normalized the idea that technology is inherently dangerous, rather than be held accountable for producing flawed software and products. Citing the normalization of Patch Tuesday, a monthly day when software developers push out security updates, Director Easterly urged those in the audience to evaluate the accident boundary we are willing to walk along in exchange for cheaper and faster technology. While additional regulations and fines may sound like an overreach, the overall goal seems to be to establish some sort of security standard, like the mobility engineering industry, that will create a stronger infrastructure and user base by establishing minimum cybersecurity measures. “It just reimagines the American cybersocial contract…we are expecting more from those owners and operators in our critical infrastructure,” said acting National Cyber Director Kemba Walden, regarding the focus on technology manufacturers and software developers. The strategy also reaffirms the Biden Administration’s focus on ransomware attacks, which is now officially classified as a national security threat (as opposed to a criminal threat), and commits what is described as all elements of national power to counter ransomware with these four initiatives: Leveraging international cooperation to disrupt the ransomware ecosystem and isolate those countries that provide safe havens for criminals; Investigating ransomware crimes and using law enforcement and other authorities to disrupt ransomware infrastructure and threat actors; Bolstering critical infrastructure resilience to withstand ransomware attacks; and Addressing the abuse of virtual currency to launder ransom payments. The complete policy is available to view here and the strategy will be led by the National Security Council, the White House’s Office of Management and Budget, and the Office of the National Cyber Director. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### Postcard From Jen Easterly's “Unsafe at Any CPU Speed” Lecture at Carnegie Mellon University Read my reflection on CISA Director Jen Easterly's lecture at Carnegie Mellon University on the designed-in dangers of technology. As a member of the Pittsburgh Technology Council, I receive invitations for many informative technology events within the Pittsburgh community. On February 27, 2023, I attended one such event hosted by Carnegie Mellon University, featuring the honorable Jen Easterly, Director of the Cybersecurity & Infrastructure Security Agency (CISA). Her presentation was titled: Unsafe at any CPU Speed: The Designed-in Dangers of Technology and What We Can Do About It. As someone with minimal computer science or software engineering experience, I felt that Director Easterly explained her key topics, including the normalization of technology risk acceptance and deviance, in a way that resonated with me. She discussed her belief that unsafe technological design is often rooted in the manufacturing process. Most technology products, as she described, are “dangerous by design,” meaning products are not necessarily safe to use out of the box. Director Easterly discussed the security issues caused by technology manufacturers that knowingly prioritize speed-to-market, flashy features and cost-savings over safety and security when developing new products and services. Thus, these manufacturers may operate at the “accident boundary” line, knowingly pushing product safety and user security against the limit. Going forward, Director Easterly advocates that safety and security must be crucial components of technology software design. If we continue to blame end-users rather than the “accident boundary” products themselves, we’re wrongly placing blame and not addressing the actual problem at hand. In her view, end-users are often treated as “crash test dummies” for these new products, and it’s just not sustainable. Technology manufacturers need to commit to prioritizing safety and security in whatever they do. To help manufacturers prioritize safety, Director Easterly shared CISA’s recent development of three core principles for them to abide by, including: Adopting the mindset that the burden of safety should not fall on customers Embracing radical transparency around the safety and security of products Explicitly focusing on secure by design and secure by default products With this in mind, Director Easterly also says it is important to remember the burden does not entirely fall on manufacturers. The government has a role to play and so do the future generations of software engineers and computer science majors, who will be the next generation of technology product designers and developers. And what about the end-users? We should make our demands for safer and more secure products known. When a holistic culture of safety and security ubiquitously underpins technology product quality, we will have made significant strides in uplifting the security of our technological world. Director Easterly’s message was clear - let’s make tech even better, and more importantly, safer! About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### Dole Foods Ransomware Attack Halts North American Food Shipments A ransomware attack recently forced global produce giant Dole to temporarily shut down production plants and shipments in North America earlier this month.The impact of the ransomware attack is being described as “limited” by Dole but did cause outages of their popular pre-packaged salad kits and blends according to grocers in Texas and Nevada.The cyber-attack had initially been kept relatively quiet, but that changed when a food store posted a memo about the incident on their social media in response to customer complaints about the lack of Dole produce. Dole quickly confirmed there was a ransomware attack after the memo surfaced, releasing the following statement:"Upon learning of this incident, Dole moved quickly to contain the threat and engaged leading third-party cybersecurity experts, who have been working in partnership with Dole’s internal teams to remediate the issue and secure systems… While continuing to investigate the scope of the incident, the impact to Dole operations has been limited."The attack reinforces the recent joint advisory issued by the FBI, FDA and USDA this past December, which warns the food and agriculture sector to be on alert for business email compromise attacks targeting food product and ingredient shipments.As of this article, there is no confirmation that a business email compromise is what led to the ransomware attack. Details in general, including the length their production was stopped, ransomware demands and any payment, have not been forthcoming.Dole did confirm that they are working with a third-party cybersecurity firm, alongside their internal teams and law enforcement.While the actual impact of this incident is relatively isolated and more of a consumer inconvenience, similar attacks such as the JBS Meatpacker ransomware attack show how devastating a cyber-attack can truly be on our global food supply chain.The reality is that the Dole ransomware attack could have been much, much worse in scale and should act as another reminder of the importance of prioritizing cybersecurity to protect key operations and technology infrastructure.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.  To learn more, visit our dedicated Cybersecurity page. ### Changes to Accounting for Leases Under Common Control On February 15, the Financial Accounting Standards Board (FASB) voted to issue an amendment to accounting rules for leases between entities under common control (related-party leases). The standard will amend Topic 842, Leases. Leases between related parties have proven to be complicated and time-consuming while undergoing the adoption of Topic 842, so in an effort to simplify, the FASB will finalize an Accounting Standards Update (ASU) in March. The first part of the ASU will allow private companies to elect a practical expedient that will permit them to utilize the written terms and conditions of a lease without having to determine if those terms and conditions are legally enforceable. Prior, many companies had concerns surrounding whether the terms were sufficient to be legally enforceable, with some having to engage legal counsel in making the determination. The ASU will allow companies to save that time and effort. Application of the practical expedient may be elected on an arrangement-by-arrangement basis, but if terms are not stated in writing, companies should still apply existing guidance under Topic 842 in determining if terms and conditions of the contract are legally enforceable. The second part of the ASU will apply to both private and public companies and will require that leasehold improvements related to leases between entities under common control be amortized over the useful life regardless of the lease term, as long as the lessee controls the use of the underlying asset. When the lessee ceases to control the use of the asset, the remaining value of the leasehold improvement would be accounted for as a transfer between entities under common control, and be completed through an adjustment to equity. Previously, Topic 842 required these to be amortized over the shorter of the asset’s useful life or the lease term, which presented confusion and difficulty when analyzing leases that were month-to-month or short-term in nature.The ASU is expected to be effective for years beginning after December 15, 2023, but early adoption will be permitted. While there continue to be a number of complicated areas for the adoption of Topic 842, this change will hopefully allow some relief for companies going forward for these related-party leases.Don’t forget, Schneider Downs offers simpLEASE, a software program that assists with the accounting requirements set forth by ASC 842. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. Visit simpLEASE to learn more.  About simpLEASENearly every company or organization utilizes lease contracts as part of its day-to-day operations. (ASC) 842 will dramatically alter how companies identify leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process.simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations. ### SECURE 2.0 Act – Section 350. Safe Harbor for Corrections of Employee Elective Deferral Failures SECURE 2.0 Act – Section 350. Safe Harbor for Corrections of Employee Elective Deferral FailuresThe SECURE 2.0 Act (SECURE 2.0) contains a provision that provides guidance on the correction method relating to automatic enrollment and automatic escalation failures.Under the current law, employers that adopt a retirement plan with automatic enrollment and automatic escalation features could be subject to significant penalties resulting from failures to administer those provisions correctly. For example, these errors could include things such as improperly excluding an eligible employee from being automatically enrolled or having their deferral percentage increased via automatic escalation.The IRS has issued safe harbor guidance on the correction of such failures, which is set to expire on December 31, 2023. That guidance permits correction if notice is given to the affected employee, correct deferrals commence within certain specified time periods, and the employer provides the employee with any matching contributions that would have been made if the failure had not occurred.Section 350 of SECURE 2.0 eases concerns surround the expiration of the safe harbor guidance mentioned above by allowing a grace period to correct reasonable errors in administering automatic enrollment and automatic escalation features without penalty.Specifically, errors must be corrected prior to 9 ½ months after the end of the Plan Year when the error was made, though the time to correct the error is reduced if the employee notifies the employer of the error.This provision becomes effective for errors made after December 31, 2023.If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 110. Treatment of Student Loan Payments as Elective Deferrals for Purposes of Matching Contributions SECURE 2.0 Act – Section 110. Treatment of Student Loan Payments as Elective Deferrals for Purposes of Matching Contributions Many employees have to choose between saving for their retirement or making payments on their student loans. Those employees may have a new way to accumulate retirement savings, thanks to a provision included in SECURE 2.0 Act (SECURE 2.0). Section 110 of SECURE 2.0 allows employers to treat qualified student loan payments (QSLPs) as elective deferrals for the purposes of matching contributions. Said differently, this provision will enable employers to count payments made on student loans the same as employee retirement plan contributions, thus allowing companies to provide a match into retirement accounts when their employees make loan payments. Qualified student loan repayments eligible for match cannot exceed the lesser of the maximum deferral limit under Internal Revenue Code (IRC) Section 402(g) ($22,500 in 2023) and IRC Section 415(c) (the maximum annual addition limit, which in 2023 is the lesser or $66,000 or 100 percent of the participant’s compensation). In addition, the participant must certify annually to the employer making the matching contribution that the loan repayments were actually made. The key considerations include: The provision is not effective until 2024. It is optional whether an employer wants to amend its plan to provide matching contributions based on repayment of student loans, QSLPs. This provision applies to deferral-based plans such as 401(k)s, 403(b)s, SIMPLE IRAs, and government plans (including 457(b)s). A plan must treat the QSLP matches the same as matches on participant deferrals. An employer can rely on employee certification of payment. A plan may, at its option, test the matching contributions as a part of its general discrimination testing or as a separate group consisting solely of those receiving matches as a result of QSLPs. Other than for qualification testing, the student loan repayments are not treated as contributions to the plan. The IRS and Treasury Department are authorized to issue regulations that permit the QSLP matches to be made less frequently than regular matches, but not less frequently than annually. It is likely that the regulation will permit these QSLP matches to be made once a year for administrative convenience. The IRS and Treasury are also authorized to issue model plan amendments for QSLP matches. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Hindenburg Research Back in the Spotlight: Accuses Adani Group of Fraud Hindenburg Research, an investment research firm, gained widespread attention in 2020 after publishing a report alleging that Nikola Motor Company (“Nikola”) exaggerated the capabilities of its trucks, misled investors about its technology, and made false statements about partnerships with major companies. Nikola is an Arizona-based startup company that designs and manufactures hydrogen-electric components, drivetrains and vehicles. See our 2020 article titled Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked.These accusations sent Nikola’s stock spiraling down. Trevor Milton was forced to step down from his role as Nikola CEO in September 2020, and the U.S. Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”) launched investigations into the allegations, and several class-action lawsuits were filed against the company. Milton was indicted on three fraud counts in July 2021 and a fourth count in June 2022. In October of 2022, he was found guilty of three of the four counts. Additionally, Nikola itself settled related civil charges in December 2021 by agreeing to pay a $125 million fine. So, what is Hindenburg saying about Adani Group?Adani Group (“Adani”) is a large Indian conglomerate with business interests in various sectors, including infrastructure, energy and commodities trading. Over the years, there have been numerous allegations of fraud and misconduct against Adani and its founder, Gautam Adani. Specifically, the company has been accused of misrepresenting its finances, inflating the value of its assets, and avoiding taxes through a complex network of shell companies. Adani has always denied any wrongdoing. The Indian government has also defended the company and stated that it has not found any evidence of wrongdoing by Adani.Touting two years of research including discussions with Adani senior executives, Hindenburg released a report on January 24, 2023, accusing Adani of stock manipulation, accounting fraud and improper use of tax havens. Adani has responded saying that Hindenburg’s claims are “nothing but a lie.”  As a result of Hindenburg’s January report, Adani lost over $135 billion in market capitalization by February 20, 2023. Will Hindenburg’s accusations be proven right? Only time will tell.About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page.   ### Buyer’s Remorse: JPMorgan Sues Financial Aid Platform Frank Over Fictitious Accounts In September 2021, JPMorgan parted with $175 million to purchase Frank, a 2010s-era startup that sought to simplify the financial aid process for new college students. About 15 months later, in December 2022, JPMorgan sued Frank’s former leadership, most notably its enigmatic young founder Charlie Javice, according to the Wall Street Journal. At issue in the lawsuit are the 4.25 million users Frank claimed to have during the acquisition, over 90% of which were fake, alleges JPMorgan. The most interesting allegation is that the bank accuses Javice and fellow former executive Olivier Amar of paying $18,000 to a data scientist to develop a list of 4.5 million user profiles, including names, birth dates and email addresses. Javice, through her attorney Alex Spiro, has denied the allegations and even accused JPMorgan of attempting to evade student privacy laws. If parts of this story sound like reruns of previous scandals to you, you’re not alone. A court battle over allegedly fictitious accounts between Elon Musk and Twitter was resolved last year, resulting in Musk purchasing the company. Spiro also represented Elon Musk in that matter. This episode also has overtones of other startup scandals from the prior decade. Theranos, WeWork and Nikola – three companies with famous founders that turned out to be less than advertised – come to mind. In regard to Frank, one could argue that the signs were there. The New York Times details several potential red flags, including a settlement with the Department of Education over using ‘FAFSA’ (Free Application for Federal Student Aid – a trademark of the Department of Education) in company marketing materials, potential false associations with multiple colleges and universities and a claim that they worked with 6,000 universities even though only 5,916 are able to accept federal student aid. Most interestingly, a student aid expert interviewed for the article noted the following: Frank claimed to have served 5 million customers since its inception, but a web traffic measurement firm found that Frank had only 67,000 unique visitors per month around the time of its acquisition. The Times points out that even if it had 67,000 unique visitors per month, each month for its entire existence, Frank still would not have reached 5 million visitors. JPMorgan’s key interest in this deal appeared to be the user accounts, as it sought to establish banking relationships with over 4 million young adults, after which it could offer them financial services for decades. In fact, the alleged fraud unraveled when JPMorgan sent its first advertising email blast, finding that upwards of 70% of the emails went undelivered. While the New York Times was fairly critical of JPMorgan’s due diligence in this case, we don’t ultimately know what the bank’s diligence process looked like. However, buyers and advisors should carefully tailor their due diligence procedures to sensitive areas that will make or break a deal. While financial results are always important, there are often other aspects of a business, like synergies, customer bases, product lines and other relationships, that are equally important to a successful deal. This was arguably the case for JPMorgan. The 4.25 million potential banking customers could have proved more lucrative than any additional earnings that Frank brought in – if they were real. If you’re considering making an acquisition, we highly recommend putting together an experienced diligence team to cover all aspects of the business that you’re buying to limit surprises. Schneider Downs has extensive experience providing buy-side and sell-side financial due diligence. For more information on Schneider Downs and the services we can offer to your organization, please visit our website or the Schneider Downs Our Thoughts On blog, or contact us at contactSD@schneiderdowns.com. About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. Sources JPMorgan Paid $175 Million for a Business It Now Says Was a Scam - The New York Times (nytimes.com) ### How the Corporate Transparency Act Will Impact Small Business Owners In April of 2016, documents leaked from a Panamanian law firm (the “Panama Papers”) revealed a shocking pattern of the use of shell companies by wealthy elites and oligarchs to hide assets for purposes of money laundering, tax fraud and other acts of corruption. The leak of the Panama Papers amplified discussion of the fight against financial crimes, which culminated in the bipartisan passage of the Corporate Transparency Act (the “CTA”) by the United States Congress on January 21, 2021. Prior to the CTA, businesses were able to form and operate without disclosure of ownership information. This practice will end with the passage of the CTA because the new law will require most U.S. entities, and foreign entities doing business in the U.S., to file registration statements with the Financial Crimes Enforcement Network (FinCEN). FinCEN estimates that approximately 32 million U.S. entities will need to file registration statements under the CTA during its first year of enactment, and approximately 5 million additional entities will need to register each year thereafter. Entities subject to reporting requirements under the CTA are known as “reporting companies.” Reporting companies include any corporation, limited liability company or any other entity that is created by the filing of a document with a secretary of state office or similar office under tribal laws. Certain foreign entities registered to do business in the United States are also reporting companies. There are exceptions from the reporting rules that generally apply to heavily regulated entities that already have reporting requirements to federal agencies. Exemptions include, but are not limited to: Large operating companies with more than 20 employees. Over $5 million in gross receipts, and a physical operating presence in the United States. Publicly traded companies. Banks and credit unions. “Inactive” entities that hold no assets and are not engaged in the transaction of any business. The required report filed with FinCEN must disclose the names, dates of birth, addresses and identification numbers of all individuals who have “substantial control” over the entity or own at least 25% of the ownership interests of the entity. For entities formed on or after January 1, 2024, the report must also include identical information for the “company applicant,” meaning the person who filed the document with the secretary of state office to create the entity. The effective date of the CTA is January 1, 2024. Entities that are in existence prior to that date generally are required to file initial reports with FinCEN no later than January 1, 2025. However, entities created on or after January 1, 2024 must file initial reports within 30 days of the date of creation. Although reporting companies are not required to file additional reports each year, they are required to update their existing reports within 30 days after any change occurs to previously submitted information. Practitioners are still analyzing the mechanics and implications of the CTA. The legislation was intentionally written so broadly that it will obligate nearly every small business in the United States to comply with the reporting requirements. A key takeaway is that, even if you formed an entity simply to hold a brokerage account or a parcel of real estate for liability protection purposes, chances are that you will have to register with FinCEN under the new law. Penalties may be imposed for noncompliance. We encourage you to contact your trusted advisor to determine the steps you will need to take to comply with the CTA. About Schneider Downs Financial Services The Schneider Downs Financial Services industry group provides financial institutions of all sizes with the expertise to effectively address their needs in risk management, IT security and internal audit. Through cybersecurity, IT risk advisory, internal audit, IT compliance frameworks, risk advisory, risk management and more, our experienced professionals provide extensive and comprehensive solutions to our financial services industry clients. To learn more, visit our Financial Industry Group page. ### EPA Loads More Regulatory Burden on Big Transportation In transporting necessary goods and materials across the country, trucking certainly plays a vital role in the American economy. The industry, however, consistently faces a number of regulatory burdens that often impact its operation and competitiveness and have significant consequences both for itself and the nation as a whole. Among the latest encumbrances placed on the trucking business through various agencies, the EPA in late December finalized a 1,153-page ruling that aims to reduce harmful emissions from large vehicles like trucks, buses and construction equipment. Stakeholders are currently trying to understand the impact of the edict, which applies to new vehicles made for the U.S. market and requires manufacturers to reduce emissions of pollutants through the use of advanced technologies like diesel particulate filters, selective catalytic reduction systems and engine management systems. The ruling goes into effect for model year 2027 commercial vehicles, tightening nitrogen oxide limits to a level 80%-plus below the current standard and reducing the particulate matter limit by 50%. The agency will also require that OEMs extend warranties to 450,000 miles from 100,000 and useful life limits to 650,000 miles from 435,000. The rule then requires regular testing of vehicles to ensure they continue to meet emissions standards throughout their useful life. One of the many foreseen challenges is the high cost of compliance for manufacturers and fleet operators, who will need to invest in new technologies and equipment to meet the standards. This has raised concerns about the competitiveness of the U.S. heavy-duty vehicle industry and the potential for job loss. Although the EPA may beg to differ, according to analysis conducted by Ricardo Strategic Consulting, this ruling alone will increase manufacturing costs of diesel trucks by an average of $42,000. The higher the cost of new trucks, the higher the shipping cost for the end user. Owner-operators and smaller fleets will be left to choose between compliance and going out of business. Many in the industry believe the rule is just another regulatory burden coming from a D.C. bureaucracy that will cripple the industry – in its outlook, driver shortage and pipeline – and the sector’s ability to ship goods for customers for a fair price. While 2027 may feel far away, staying current on federal, state and local laws and regulations is important. Our Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends. We can work with you to seek innovative ways to reach your strategic goals. To learn more, visit our Transportation & Logistics Industry Group page or contact us today.About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. ### A Trip Back to the Past Were you one of the more than 200 million people who watched Super Bowl 57?I was, and it did not disappoint. Between the bad referee calls, the halftime show and the commercials, it did not lack entertainment value. Sometimes these games feel like they are fixed, and I felt the Chiefs were robbed of at least one touchdown. There were a few moments where I was asking myself, "How does this happen?" and "What does this mean moving forward?" If the referee makes the wrong call, what is the potential impact when it comes to the score? How does this relate to the FTX scandal, and how does this impact the future?These questions reminded me of the FTX scandal, which is reminiscent of Enron back in the early 2000s. People have claimed to have lost millions through FTX, including Kevin O' Leary, most notably known for his appearance on the popular show "Shark Tank." The result was a negative market reaction to the crypto industry.In addition, the scandal has led to increased scrutiny in terms of regulation and the transparency of blockchain networks. When crypto was first being introduced, the uncertainty and lack of understanding of the currency led to slow acceptance of Bitcoin. As cryptocurrencies have gained popularity, custodians such as Coinbase Pro, Binance and KuCoin have made an effort to capitalize on the market. When it comes to auditing, the tracing of these transactions was difficult, due to the sheer number of transactions maintained on the Blockchain. Not to mention, in 2018, Binance lacked individual transaction IDs. In general, this provides a strong reminder of the importance of an audit trail to improve the stability of this market and its attractiveness to investors. FTX is a great example of what happens when there is a lack of internal controls. Unfortunately, a lack of internal controls is not a new story and is all too common.Though it's always disappointing to hear about an alleged financial crime, to me, it is more important to learn from our mistakes and ask questions about what made the crime possible. The new CEO of FTX reported that the company’s "management could walk in and download $500 million in crypto wallets and no accounting record of that transaction would be recorded." This is baffling to me. It reminds me of my days in Accounting 101 and hearing the famous line, "Segregation of duties is the most effective way to prevent fraud."  There are a lot of questions surrounding this news, and management has its hands full.  Managing a company can be incredibly difficult, and it takes a certain combination of drive and responsibility. During the process of managing operations, I know details can get lost, and bookkeeping isn't always the focus.  People feel that as long as they have a general sense of how the business is trending and sufficient cash is available to allow continued operations, strong accounting information and controls don’t seem to be a requirement. However, operating this way leads to a plethora of potential issues.For example, it doesn't give your finance team the ability to ask detailed questions and understand the strengths and weaknesses of your business. It's important to understand what causes the changes year over year because the past can help inform decisions about how those changes can be handled more effectively in the future. The numbers always tell a story, and understanding the plot behind them helps with analyzing and managing operations moving forward.When members of FTX's management saw the huge potential of the crypto market, they focused on their everyday processes of gaining more deposits to increase the amount of assets controlled to focus on profitability, much like most business owners. The absurd increases in value of Bitcoin led to the creation of numerous cryptocurrencies, which led to continued deposits, as the hype around crypto grew. The crypto market aside, the issues at FTX highlight the importance of having internal controls and also maintaining historical documentation. Ensuring that you maintain detailed, accurate and timely financial information is a high priority, whether you are FTX or a small business owner.How does this relate to you?There is a great deal of information out there when it comes to accounting, but it is often easy to get caught in the day-to-day business, let internal controls slip and not examine the records with an analytical eye. It's always great to have a second or third set of eyes on something to check our work. If you have a small accounting team, it may be a good idea to have another set of eyes. Most of the time, this leads to everyone learning something, which is its own reward. It is always a blast to use past experiences to help answer problems of today. Accounting 101 is not the most glamorous concept, but neither is being on the front page with lawyers and a subpoena, trying to answer the question – How does this happen?About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.  ### Direct Deposit Now Available for Amended Tax Returns For the first time, taxpayers who file Form 1040-X Amended U.S. Individual Income Tax Return will be able to request their refunds be sent to them via direct deposit. In the past, taxpayers needed to wait for the paper check for their refund, which added time to an already long process; the IRS notes in the press release that current processing time is more than 20 weeks for both paper and electronically filed amended returns.   This change is the result of system updates by the IRS. Direct deposits can only be requested on electronically filed amended returns. Taxpayers who file a paper amended return still must receive their refunds via a paper check in the mail.“This is a big win for taxpayers and another achievement as we transform the IRS to improve taxpayer experiences,” said IRS Acting Commissioner Doug O’Donnell. “This important update will cut refund time and reduce inconvenience for people who file amended returns. We always encourage direct deposit whenever possible. Getting tax refunds into taxpayers’ hands quickly without worry of a lost or stolen paper check just makes sense.”Another IRS enhancement is the “Where’s My Amended Return?” online tool. Taxpayers can track the status of their amended returns using this tool, whether the amended return was filed electronically or on paper. If you have any questions on this or any other tax matter, please contact your Schneider Downs Tax Advisor.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.To learn more, visit our dedicated Tax Services page. ### California Heritage Provider Network Suffers Large-scale Ransomware Attack Arguably the most malicious kind of ransomware attack is the kind that targets the sensitive data of healthcare organizations.The latest victim is the California Heritage Provider Network, which recently confirmed a large-scale ransomware attack that impacted several of their affiliates and the data of more than 3 million patients. According to the U.S. Department of Health and Human Services breach portal, the data of 3,300,638 patients from the Regal Medical Group, Lakeside Medical Organization, ADOC Medical Group and Greater Covina Medical were exposed in the attack.Based on the reported attacks in the U.S. Department of Health and Human Services’ breach portal, this is the largest breach for 2023 and the second largest breach of the past 24 months.While we know self-reporting is not always a great indicator of the larger picture, the HITECH Act requires the Secretary of Health and Human Services to post a list of breaches of unsecured private health information which affect 500 or more individuals.The Regal Medical Group was the first network member to suspect an attack when employees reported technical difficulties this past December, which led to the discovery that a malware attack had successfully infected their servers. So, what kind of patient information was exposed? Like most healthcare attacks, including the recent Highmark incident, the data included patients’ full names, social security numbers, birthdays, addresses and medical records, which potentially includes medical related information such as, lab test results, prescriptions, insurance information and radiology reports, etc.Regal has notified those patients believed to have been affected  and provided them one year of free credit monitoring through Norton LifeLock (another organization who recently suffered a breach) as well as the standard mea culpa, stating they have since improved their security measures and protocols. This attack is another reminder that healthcare organizations remain a top target for threat actors. Healthcare data remains as one of the most valuable pieces of resalable information on the dark web and the critical nature of healthcare networks across the care continuum suggests a low risk tolerance for network downtown. The combination of these two factors make them highly attractive for data theft and ransomware.Even with the recent news of the FBI taking down the Hive Ransomware group, ransomware attacks continue to barrage the healthcare industry – despite the costly, public and targeted actions taken to protect U.S. hospitals and healthcare providers.As part of the Hive takedown, the FBI conducted a 7-month investigation, revealing that an estimated 80% of companies did not report potential cyber-related issues to officials. Whether the lack of self-reporting was due to fear of public backlash, working with private cybersecurity firms or simply opting to pay the ransom and move on is unknown.While the Hive ransomware group bust may not make a significant dent in the number of future ransomware attacks over the long-term, it could help change the narrative on the healthcare industry’s perception and overall mistrust of federal involvement, which may help prevent future attacks on such as this one.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.  ### Highmark Data Breach Impacts an Estimated 300,000 Patients’ Data Highmark recently announced that they were one of the recent victims of a sensitive data breach.According to their filing, the data breach was a result of a phishing attack, which compromised an employee email account.The breach gave perpetrators access to an estimated 300,000 records of patients’ data which may have included their full names, social security numbers, financial information, insurance information and protected health information.Per the filing, Highmark began notifying those who were impacted by the incident via data breach notification letters. Highmark’s filing provides additional details pertaining to the data breach including the fact that the organization first learned about the incident on December 15, 2022.Following their investigation, Highmark determined that the incident was caused by a malicious email that had been sent to one of their employee’s email addresses.Furthermore, the investigation concluded that their employee’s account had been compromised and accessed by perpetrators between December 13, 2022, and December 15, 2022. As victims of the data breach, 300,000 consumers may now be subjected to increased risk of potential identity theft and fraud. Whether you are impacted by this incident or others, here are three simple, yet effective steps you can take to mitigate the associated risks of a data breach. Self-Audit – Periodically review all your subscriptions and account details. We recommend that, wherever possible, you deactivate accounts that are no longer being used. Password Security – In addition to reviewing your subscriptions, make sure to evaluate the password “health” for each account (including password reuse, history, complexity, and age). React Quickly –Being prepared is always the best defense, but if you have been notified of a breach or suspect that you are a potential victim, immediately work to change your password and email address subject to the breach. About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our?Digital Forensics and Incident Response?teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter,?Focus on Cybersecurity, at?www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page.   ### Rough Road Ahead – Continued Headwinds in the Transportation Industry Like any industry, the trucking sector has a unique set of pain points that affect many of its member companies.Here’s a look at some of the top current challenges and issues being faced by transportation organizations, their customers and employees (both drivers and administrative) and other industry stakeholders (including end users) with regard to timeliness and cost of goods delivered. Driver shortage, driver retention, driver compensationOver the last decade, it would have been quite surprising to find any industry literature focused on challenges that didn’t name the ongoing driver shortage. Recruiting and retaining qualified driver/operators has been a consistent, longtime industry headache. The American Trucking Associations (ATA) estimates the current driver shortage at approximately 78,000, one of the highest forecasts ever and second only to the 2021 projected shortage of 81,000. Given current trends, that shortage could surpass 160,000 by 2031. Organizations are also presently seeing a problem in the quality of candidates applying for positions, thus making driver retention a priority.Turnover drains financial resources as well. Expenses that contribute to increased costs include recruiting, hiring, testing and screening, training and situationally dependent sitting product costs for delayed deliveries. Given those high-profile outlays, retention efforts are unquestionably paramount.And driver compensation is inseparable from the retention discussion. According to the American Transportation Research Institute (ATRI)’s cost of trucking update report released in the third quarter of 2022, driver wages and benefits in 2021 now account for 44% of the total average marginal motor carrier costs. Wages, meanwhile, have reached a record high, with per-mile basis increasing 56.6 cents to 62.7 cents, or around 10.8%, from 2020 to 2021. ATA data reflects that driver compensation had already increased by 18% from 2019 to 2021. Volatile 2022 economy, including diesel pricesRunaway inflation and historically high gas prices were seen throughout 2022. There was also persistent pressure on compensation and shortages in the supply chain for equipment and materials. The word ‘recession’ has been tossed around by economists so, as companies prepare their 2023 and 2024 forecasts, there are many remaining questions.According to ATRI, diesel prices were the industry’s top concern in 2022. After increasing steadily throughout 2021, last year’s surges were record-breaking, climbing more than 55% from January to June. To put it in perspective, for most months throughout the year, the diesel retail price tag in the United States was double the price from the same month in 2020. Fuel surcharges are typically paid by the shipper and are thus a pass-through cost – at least in part – to the company, but for owner-operators, volatile and soaring diesel prices overall reduced the per-mile rate. Q4 2022 trucking conditions, highlighted by those high diesel rates and sinking trucking rates, were rated by FTR Transportation Intelligence’s industry index as the lowest since April 2020. Additionally, the Federal Reserve’s increases to its funds rate to fight soaring inflation and the slowdown of residential construction and decline of consumer spending on durable goods contributed to shifts in demand and resulting freefall of spot rates seen in 2022.Contract rates are inherently more elevated than spot rates but are on a similar trendline, albeit delayed. According to research from DAT Freight & Analytics, the difference in contract and spot rates has steadily widened throughout 2022 to between 65 and 75 cents per mile in October through December 2022, while historically the delta is less than 20 cents per mile. For many sector stakeholders, there is unity on rescinding and reforming the regulatory burden placed on the industry through various agencies. One example is the zero-emission trucks (ZET) rules in certain jurisdictions that have proven to be detrimental to the profession’s pipeline, as well as adding absorbent costs to the tune of $400,000 per truck without providing intended benefits, considering that ZETs only reduce CO2 emissions by 30 percent when compared to diesel engines. All these sector challenges have wide-ranging impacts on nearly all transportation companies, from large national operations to midsize regionals and small family-owned companies with annual revenues of less than $5 million. As each of these challenges does not have a single cause, neither do they have a single solution. We can help make sense of the situation. Contact your Schneider Downs transportation consultant if you’d like to discuss.About Schneider Downs Transportation & Logistics Services The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.  To learn more, visit our Transportation & Logistics Industry Group page.   ### SECURE 2.0 Act – Section 338. Requirement to Provide Paper Statements in Certain Cases Section 338. Requirement to Provide Paper Statements in Certain Cases.Section 338 of the Secure 2.0 Act (SECURE 2.0) amended the Employee Retirement Income Security Act (“ERISA”) to require that qualified retirement plans provide each participant with a quarterly benefit statement in paper form at least once annually (for defined contribution plans) or once every three years (for defined benefit plans).As under ERISA’s current electronic disclosure rules, however, no paper statement is required to be delivered to participants who have affirmatively elected to receive all plan disclosures in electronic form.This section also directs the Department of Labor to publish guidance updating ERISA’s electronic delivery rules to ensure that participants receive at least one paper notification informing them of their right to receive plan-related disclosures in paper form prior to furnishing any plan statements in electronic form.These changes to ERISA’s disclosure rules take effect for the first plan year beginning after December 31, 2025. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 303. Retirement Savings Lost and Found SECURE 2.0 Act – Section 303. Retirement Savings Lost and Found.Section 303 of the Secure 2.0 Act (SECURE 2.0) directs the Department of Labor (DOL) to establish and implement a wide scale online database for Americans to search for lost retirement plans.This database would be administered jointly by the DOL and IRS, and if successfully implemented, could offer a valuable one-stop location for participants to track down retirement benefits from former employers.Beginning in 2025, sponsors of plans subject to ERISA will be required to submit identifying information of participants with outstanding account balances. This disclosure will likely take the form of an additional schedule to the annual Form 5500 filing.This retirement savings lost and found database may also provide a solution to a common issue impacting plan administration: lost participants.After a plan participant terminates employment, contact information may fall out of date, leaving the plan sponsor unable to locate the participant in order to provide required disclosures or distribution forms. A centralized database of participant account data could provide a means for plan sponsors to locate missing participants.If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 121. Starter 401(K) Plans for Employers with No Retirement Plan SECURE 2.0 Act – Section 121. Starter 401(K) Plans for Employers with No Retirement PlanThe recently signed Secure 2.0 Act (SECURE 2.0) authorizes a new, simplified version of 401(k) and 403(b) plans available to be adopted after December 31, 2023.These so-called “Starter 401(k)” plans provide for employee contributions only (that is, no employer matching or profit-sharing contributions), with a total annual deferral limit of $6,000 and catch-up limit of $1,000 – substantially lower than the limits available under traditional 401(k) and 403(b) plans (currently $22,500 and $7,500, respectively).Starter 401(k) plans will automatically satisfy nondiscrimination and top-heavy testing requirements, and it is expected that these plans will also be subject to simplified annual reporting requirements.While Congress appears to have targeted the Starter 401(k) plan primarily at small employers, employers of any size are eligible to adopt a Starter 401(k) or 403(b) plan provided that they do not offer any other retirement plan.While it remains to be seen how the availability of this new option will impact the retirement plan marketplace starting in 2024, the Starter 401(k) plan may appeal to employers who have resisted adopting a traditional retirement plan due to concerns about cost and administrative complexity. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### IRS Announces 2022 Individual Tax Filing Season: Open for Business! The Internal Revenue Service (IRS) has announced that the agency will begin accepting and processing 2022 tax returns on January 23, 2023, marking the beginning of this year’s tax season.Planning ahead is the first step to ensuring preparation of a complete and accurate tax return. The IRS advises taxpayers to organize all tax records before filing to avoid errors that can lead to processing delays that can slow your tax refund. Spending some extra time on this step could also save individuals from potential errors that could lead to needing to file a future amended tax return or answering tax inquiries from the IRS.Some documents you may need to file your tax return include, but are not limited to, the following: Forms W-2 from employers Forms 1099 from agencies issuing investment income, unemployment compensation, pension, retirement plan distributions, other income, etc. Form 1095-A from the Health Insurance Marketplace for those claiming the Premium Tax Credit for 2022 Marketplace coverage The filing deadline to submit 2022 tax returns or an extension of time to file will be Tuesday, April 18, 2023. Individuals will have a few extra days to file this year, because Washington D.C. will celebrate Emancipation Day on Monday, April 17, 2023. Taxpayers requesting an extension will have until Monday, October 16, 2023 to file. However, to avoid late payment penalties, any taxes due will need to be paid by the original deadline.Consistent with previous years, choosing to electronically file tax returns and to direct deposit any refunds remains the quickest and safest method to process returns. The IRS expects refunds to be issued in less than 21 days, though this is not always guaranteed, as various factors can affect the timing of a refund. Individuals claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will be unable to receive refunds prior to mid-February.The IRS also notes a handful of new items to consider when filing your 2022 tax return. Namely, a couple COVID-19-related concessions were phased out this year. Unlike 2020 and 2021, no new stimulus payments were issued in 2022. Additionally, during COVID, individuals were allowed to claim up to $600 in charitable donation tax deductions on their tax returns while taking the standard deduction. In 2023, those taking the standard deduction will no longer be able to take a charitable donation tax deduction.The IRS also expects more taxpayers to receive a Form 1099-K, Payment Card and Third-Party Network Transactions. You can expect to receive this form by January 31, 2023, if in 2022, you received payments from a single party of more than $600 through a third-party settlement organization (TPSO). TPSOs include payment apps such as Venmo, Cash App and PayPal and online third-party settlement organizations such as eBay and Amazon. In an effort to improve voluntary tax compliance on reporting certain payment transactions, The American Rescue Plan of 2021 changed the previous reporting threshold for TPSOs from reporting an excess of 200 transactions per year and payments in excess of $20,000 to reporting transactions more than $600 per year. On December 23, 2022, the IRS announced that the new $600 reporting threshold will be delayed a year. Although this reporting requirement is delayed, many individuals will begin receiving these forms. Money received as a gift or reimbursement of an expense, such as a share of a meal or rent, should not be reported on Form 1099-K. 1099-Ks should only be issued for payments related to the sale of goods or services.If you have any questions, please do not hesitate to contact a member of the Schneider Downs tax department.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### SECURE 2.0 Act – Section 114. Deferral of Tax for Certain Sales of Employee Stock to Employee Stock Ownership Plan Sponsored by S Corporation SECURE 2.0 Act – Section 114. Deferral of Tax for Certain Sales of Employee Stock to Employee Stock Ownership Plan Sponsored by S Corporation Congress took a modest step in enhancing the tax incentive available to shareholders selling stock of a corporation to an employee stock ownership plan (ESOP). Under current law, section 1042 of the Internal Revenue Code ("Code") allows an individual owner of stock in a non-publicly traded “C” corporation sponsoring an ESOP to elect to defer the recognition of gain from the sale of such stock to the ESOP. Requirements for deferral include that the seller reinvests the sales proceeds into qualified replacement property (such as stock or other securities issued by a U.S. operating corporation). Section 114 of Secure 2.0 Act (SECURE 2.0) expands the gain deferral provisions of Code section 1042 to also include shareholders of “S” corporations. Beginning in 2028, the nonrecognition of gain treatment that applies to qualifying sales of “C” corporation stock to an ESOP also applies to sales of “S” corporation stock.  However, unlike with sales of “C” corporation stock to an ESOP, only a portion of the sale of qualifying S corporation stock to an ESOP is eligible for deferral treatment. In the case of a sale of “S” corporation securities, the election to defer recognition of gain applies to no more than 10 percent of the amount realized on the sale. Other requirements under section 1042 continue to apply. As noted above, the effective date of this change is for sales made after December 31, 2027. Note that SECURE 2.0 Act makes other changes to ESOPs including Act Section 346.  This provision is intended to boost employee ownership programs through the Department of Labor, which can make grants to promote employee ownership through existing and new programs. Funds are authorized to be appropriated for the purpose of making grants for fiscal years 2025 to 2029. These changes are beyond the scope of our current series of articles on SECURE 2.0 but may be of interest to companies and ESOPs when additional details become available. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 109. Higher Catch-Up Limit to Apply at Age 60, 61, 62 and 63 SECURE 2.0 Act – Section 109. Higher Catch-Up Limit to Apply at Age 60, 61, 62 and 63.Under current law, catch up contributions allow those age 50 and older to make additional contributions to their retirement accounts in excess of the annual applicable limits. Beginning in 2025, individuals ages 60 to 63 will be able to contribute even more to their workplace retirement accounts.Under the Secure Act 2.0 Section 109, individuals will be allowed to contribute the greater of an additional $10,000 per year to a workplace plan or 50% more than the regular catch-amount in 2025. The increased amounts will be indexed for inflation after 2025.  IRA accounts currently allow for a $1,000 catch-up contribution for people age 50 and over and starting in 2024, this amount will be indexed for inflation as well. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com.This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here.About SECURE 2.0SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 331. Disaster Retirement Plan Withdrawal Rule Changes SECURE 2.0 Act Section 331. Disaster Retirement Plan Withdrawal Rule Changes. Historically, Congress has granted temporary relief on a case-by-case basis for retirement plan distributions or loans after a federally declared disaster. The SECURE 2.0 Act (SECURE 2.0) establishes permanent rules for governing plan distributions and loans in the event of qualified federally declared disasters. This means Congress no longer needs to pass special relief for each disaster. The following are key elements: Affected individuals may receive up to $22,000 in distributions per disaster, The distribution amount is exempt from the federal 10% early withdrawal fee (any state penalty would still apply), Taxes on withdrawal can be spread over 3-year period, Amounts may be recontributed to a plan or account during the 3-year period beginning on the day after the date of the distribution, Distributions to acquire a principal residence that was located in the disaster area can be recontributed if the funds were not ultimately used to acquire a residence, Increases the maximum loan amount for qualified individuals experiencing a qualified disaster to $100,000 (or 100% of the participant’s vested account balance), and Maximum loan repayment term can by extended by one year. This relief applies to qualified 401(k), 403(b), and governmental 457(b) plans with respect to any federally declared disaster occurring on or after January 26, 2021. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Chasing Enrollment Against The Odds A recent survey from the Education Advisory Board estimates that graduate-level and adult-serving programs accounted for nearly 40% of the $226 billion generated by colleges in 2019.Realizing the revenue potential  , it’s understandable that colleges are  attempting to increase  their graduate and adult service programs. However, several are either unprepared for this change and/or are facing numerous different competitors in this expanding market.  The concept may seem simple on paper: build out programs targeting the audience segment and watch tuition revenue grow –  but the reality of the situation is that these institutions are finding themselves in a highly competitive and saturated market.Not only are they competing against other higher education institutions, but they are also competing with non-university programs such as professional associations, online course provider EdX and employers.  In short, there are already plenty of options for those seeking graduate or adult level programs.These alternative programs may not have the name value of some of the national institutions, but many of those interested in graduate level and adult serving programs have time, life and job constrictions. Therefore, traditional learning paths and course programs may be less appealing than more flexible solutions.    Another challenge institutions face is the financial risk associated with the programs. From the course materials to the marketing to the instructors, these programs need to be financed.  Additionally, even though these programs have the potential to generate large revenue, if institutions can’t fill the classes, they can’t reap that revenue.From an infrastructure perspective, institutions are learning that these types of programs cannot always be offered in the traditional hybrid, online or in-person environments.While online programs may sound like an easy way to net larger audiences, these types of courses are not always conducive to 100% online learning. But if courses are hybrid or in-person, geographical considerations inevitably narrow the pool of potential students who might attend.From our perspective, higher education institutions need to be fully prepared when looking at new ways to bolster their revenue – especially when increasing graduate and adult service programs. It’s crucial for institutions to maintain constant awareness of  financial, technological and infrastructure risks.About Schneider Downs Higher Education Services The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.  To learn more, visit our Higher Education Industry Group page.    ### SECURE 2.0 Act – Section 604. Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions SECURE 2.0 Act – Section 604. Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions Historically, employers were not permitted to provide employer matching or nonelective contributions in their 401(k), 403(b), and governmental 457(b) plans on a Roth (i.e., post-tax) basis. These types of employer contributions were allowed only on a pre-tax basis. Under a new provision of the SECURE 2.0 Act (SECURE 2.0), effective immediately, plans may now allow participants to elect to receive matching and nonelective contributions on a post-tax basis. Employees should be aware that an election to receive contributions on an after-tax basis will trigger current taxation despite the fact that the employer contributions are not currently distributable from the plan. Any designated Roth contribution made by the employer on the employee’s behalf are required to be included in the employee’s taxable wages as reported on Form W-2. Additionally, any nonelective designated Roth contributions made by the employer are required to be fully vested. This new provision gives employees greater control over the tax treatment of their workplace retirement savings dollars.  Employees should carefully weigh whether it makes financial and tax sense to receive these employer contributions on a pre or post tax basis. The answer depends on several assumptions and detailed analysis including current and future tax rates coupled with future growth, the impact of receiving some portion of their future retirement distributions as permanently tax-exempt (dependent upon the earnings growth on the dollars contributed) or taxable. The long-term benefit to younger employees of this option may out-weigh the current tax inclusion in employees’ income of the employer’s matching contribution. These new rules are effective immediately as of the date of enactment. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### How Should SaaS Companies Account for their Capitalized Software Costs? As entities develop and/or acquire computer software, management needs to determine the proper accounting treatment for the costs incurred in development. There are two main topics under the Financial Accounting Standards Board's Accounting Standards Codification (ASC) that address the matter. The determining factor between the two is the use of the software. Software for internal use is accounted for under ASC 350-40 Intangibles - Goodwill and Other: Internal-Use Software, while software intended to be sold, leased or otherwise marketed as a separate product, or as part of a product or process, is accounted for under ASC 985-20 Software: Costs of Software to Be Sold, Leased or Marketed. To be classified as "Internal-use," the software must be acquired, developed or modified solely to meet the entity's internal needs and there must be no substantive plan to market the software externally. An entity's past practice of both using and selling its own software products creates a rebuttable presumption that any software developed by that entity is intended for sale, lease or other marketing. Software for internal use is accounted for under ASC 350-40 Intangibles - Goodwill and Other: Internal-Use Software, while software intended to be sold, leased or otherwise marketed as a separate product, or as part of a product or process, is accounted for under ASC 985-20 Software: Costs of Software to Be Sold, Leased or Marketed. To be classified as "Internal-use," the software must be acquired, developed or modified solely to meet the entity's internal needs and there must be no substantive plan to market the software externally. An entity's past practice of both using and selling its own software products creates a rebuttable presumption that any software developed by that entity is intended for sale, lease or other marketing. If the software does not meet the criteria above, the software is utilized in providing services and is not within the scope of ASC 985-20. In those cases, development costs of the software should be accounted for in accordance with ASC 350-40. Software-as-a-Service (SaaS) entities typically fall within the guidance in ASC 350-40. While both topics account for capitalized software costs, the different treatments of these costs under ASC 350-40 and ASC 985-20 can significantly impact the entity's financial statements in both the year of capitalization and subsequent years. Schneider Downs has the expertise to assist in the accounting for these types of transactions. Contact a member of our Emerging Technology Services Group or our Accounting Advisory Services Group for more information. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Norton Believes Credential Stuffing Attack Led to LifeLock Breach A credential stuffing attack is the likely culprit behind the recent breach of Norton LifeLock that impacted thousands of Norton Password Manager customers.Gen Digital, the parent company of Norton LifeLock, notified customers, including nearly 6,500 Norton Password Manager customers, that private information including full names, addresses and phone numbers may have been exposed to an unauthorized third party as part of the breach.According to their official statement to the Office of the Vermont Attorney General, Norton LifeLock believes the attack resulted from a third-party attack rather than a direct breach of their systems."Our own systems were not compromised. However, we strongly believe that an unauthorized third party knows and has utilized your username and password for your account… this username and password combination may potentially also be known to others,” Norton LifeLock said.Norton also warns Norton Password Manager customers that the attack may have also exposed details stored in the platform’s private vault feature – meaning whatever sensitive information users stored there may have been breached.“…we cannot rule out that the unauthorized third party also obtained details stored [in the Norton Password Manager], especially if your Password Manager key is identical or very similar to your Norton account password.”Impacted accounts have had their passwords automatically reset and should have received a notification by now regarding the breach, along with a credit monitoring offer and information on next steps.Based on an internal investigation sparked by a large volume of failed login attempts in mid-December, Norton LifeLock believes that a third-party used a cyberattack method called credential stuffing to breach their systems.How Does Credential Stuffing Work? Credential stuffing is a commonly used cyberattack that relies on people reusing usernames and passwords on several accounts.The typical credential stuffing attack starts with threat actors obtaining a list of usernames and passwords from previous data breaches through the dark web or hacker forums.After obtaining the list, the threat actor uses bots to automate large scale attacks against other websites in hopes of accessing other accounts protected by the same username and password.Credential stuffing may sound similar to brute force attacks but are quite different, since brute force attacks try to guess credentials from scratch. Without a starting point, such attacks have a much lower success rate.How Can Organizations Protect Against Credential Stuffing Attacks? There are several ways to avoid being a victim of credential stuffing attacks or, at the very least, minimize the impact if you are part of a breach like the one impacting Norton LifeLock.Enable Multi-factor Authentication (MFA)MFA provides an additional layer of security by requiring a secondary action to access an account. These actions can include confirming a code via text, a phone call, biometrics or apps such as DUO. By enabling MFA, users can still protect themselves even if their username and passwords are in the wild.Pay Attention to Breach NotificationsIf you receive a legitimate notification (breach notifications are a popular phishing email theme) that an account is part of a breach, be sure to actually read the communication to understand what information was breached, the timeline and available options which, in many cases, include credit report monitoring services.Most importantly, act fast to change other accounts that use the same credentials as the breached account.Use Different Usernames and PasswordsThe first step is simply using different usernames and passwords for online accounts. With the plethora of online accounts people have, this may sound daunting, but is an important step in protecting your private information.While you may shrug off the idea of somebody having your Netflix username and password, you won’t be so calm if the same information can be used to access your banking or retirement accounts… or your password manager.Utilize a Password ManagerYes, there is irony in suggesting a password manager in an article based on the Norton Password Manager breach. Despite the breach, password managers still offer many advantages including the ability to protect your accounts with several complex passwords without the need to remember each individual one.Just make sure your master password differs from other accounts – in this instance, the Norton customers at greatest risk were ones who used the same password for their LifeLock and Password Manager.If you have any questions about how to strengthen your password policies, or if you’re concerned your organization’s credentials aren’t the most secure, feel free to contact our team.Related Resources Article: The Top Ten Most Common Passwords of 2022 Article: Security alert: Use these most popular passwords at your peril Video: How can organizations protect themselves from attacks that bypass MFA? About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.  ### SECURE 2.0 Act – Section 126. Special Rules for Certain Distributions from Long-term Qualified Tuition Programs to Roth IRAs SECURE 2.0 Act – Section 126. Special Rules for Certain Distributions from Long-term Qualified Tuition Programs to Roth IRAs Section 126 of the SECURE 2.0 Act (SECURE 2.0) allows for tax and penalty free rollovers from 529 accounts to a Roth IRA effective in year 2024. Specifically, beneficiaries of 529 college savings accounts would be permitted to rollover up to $35,000 over the course of their lifetime from any 529 account in their name to their Roth IRA. While this provision has garnered much attention,  several conditions required in order to take advantage of Section 126: The receiving Roth IRA must be owned by the beneficiary of the 529 plan. The 529 plan must have been maintained for 15-years or longer. The rollover amount cannot exceed the aggregate amount contributed  to the 529 (including investment earnings) over the preceding 5-year period ending on the date of the distribution. The annual transfer amount from the 529 to the Roth IRA is limited to annual IRA contribution limits, and is reduced by any “regular” Roth IRA contributions made during the tax year. The Roth IRA owner must have taxable income at least equal to the amount of the rollover. The rollover transaction must be funded via a direct trustee-to-trustee transfer. While there is an extensive list of conditions for this rollover transaction to be allowable, there is one advantage for individuals that may be otherwise prohibited from making regular Roth IRA contributions as a result of Modified Adjusted Gross Income (MAGI) exceeding applicable thresholds. Specifically, the MAGI limitations that apply to regular Roth IRA contributions will not apply to eligible rollovers from 529 plans to Roth IRAs. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 111. Application for Credit for Small Employer Pension Plan Startup Costs to Employers Which Join an Existing Plan SECURE 2.0 Act – Section 111. Application for Credit for Small Employer Pension Plan Startup Costs to Employers Which Join an Existing Plan As discussed in our article on Section 102 of the SECURE 2.0 Act (SECURE 2.0), Section 45E of the Internal Revenue Code provides a tax credit that helps eligible smaller employers alleviate the administrative costs incurred in establishing a retirement plan for its employees. Certain smaller employers may not have received the same benefit when joining a multi-employer plan (MEP) as they would have if they were to have set up a separate plan, depending on how long the MEP had been in existence. Prior to SECURE 2.0, the startup tax credit only applied for the first 3 years that a MEP was in existence. While employers that began participating in a MEP at the same time it was originally established would benefit from the credit for the full 3 years,  an employer that joined a preexisting MEP would not have been be able to take advantage of the credit to the same degree. For example, if the MEP had been existence for 1 or 2 years when a small business joins, the small business may have only been able to claim the credit for 1 or 2 years. Section 111 of SECURE 2.0 aims to fix this issue so that employers joining a MEP (which includes pooled employer plans (PEPs)) are eligible for the Section 45E plan start-up costs credit for all 3 years, regardless of how long the MEP has been in existence. Section 111 is effective retroactively for taxable years beginning after December 31, 2019. This enables taxpayers who formed or joined new MEPs/PEPs in 2019, 2020, and 2021 to file amended returns and retroactively claim a credit for those earlier years applying the rules of Section 45E. Presumably, taxpayers looking to file refunds for 2019 are running up against the statute of limitations to file amended returns for 2019 and should discuss this issue with their tax advisors as soon as possible. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 102. Modification of Credit for Small Employer Pension Start-Up Costs SECURE 2.0 Act – Section 102. Modification of Credit for Small Employer Pension Start-Up Costs Section 102 of SECURE 2.0 Act (SECURE 2.0) makes some enhancements to the credits under section 45E of the Internal Revenue Code. Section 104 of the 2019 SECURE Act provided certain eligible employers (generally with no more than 100 employees who received at least $5,000 of compensation) with an election to claim an income tax credit for their qualified costs associated with establishing a new retirement plan for the plan’s first 3 years. The 3-year small business startup credit is currently 50 percent of administrative costs and can generate an annual credit between $500 and $5,000 each year. SECURE 2.0 makes several changes to these credits. First, the employer plan start-up credit is increased from 50 percent to 100 percent for employers with up to 50 employees. (Note, employers with greater than 50 employees, but no greater than 100, will continue to qualify for the for the existing 50% credit). Additionally, and except in the case of defined benefit plans (which most smaller employers likely don’t offer), an additional credit is also provided based upon employer contributions made. The amount of the additional credit generally will be calculated by applying an “applicable percentage” to the amount contributed by the employer on behalf of employees, up to a per-employee cap of $1,000. The full additional credit is limited to employers with 50 or fewer employees; the credit is reduced for employers with between 51 and 100 employees. The applicable percentage is 100 percent in the first and second years, 75 percent in the third year, 50 percent in the fourth year, 25 percent in the fifth year with no credit for tax years thereafter. The applicable percentage is reduced by 2 percentage points for every employee over the 50-employee limitation.  Also, employer contributions to an employee’s retirement account are only eligible to be included in the credit calculation if the employee wages for the taxable year are less than $100,000 in 2023 (indexed annually). Other Section 45E rules continue to apply.  Both credits are elective.  There is as an employer aggregation test to determine employer eligibility.  There is also the loss of a tax deduction for credits claimed.  And, interestingly, the tax credit associated with the administrative costs (and not the credit calculated on the employer’s contribution) can begin to be claimed for the taxable year preceding the first plan year at the election of the taxpayer. Section 102 is effective for taxable years beginning after December 31, 2022. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 101. Expanding Automatic Enrollment in Retirement Plans SECURE 2.0 Act – Section 101. Expanding Automatic Enrollment in Retirement Plans Effective January 1, 2025, this provision will require newly established qualified defined contribution plans (e.g., 401(k) and 403(b) plans) to institute an automatic enrollment feature for participants with a starting deferral percentage ranging from 3%-10% of compensation, unless the participant opts out of being automatically enrolled or elects to defer a different percentage of their compensation. Further, effective the first day of each plan year after implementation, participant deferral percentages are required to be increased by 1% up to at least 10%, but not more than 15%. Again, the participant has the option to opt-out of the 1% increase or elect a different percentage for contribution. Any qualified plan established prior to the January 1, 2025, is not required to implement the automatic enrollment or automatic increase provisions. Additionally, the following plans are excluded from the new requirements: Small businesses with ten or fewer employees New businesses that have been operating for less than three years Governmental and church plans Regardless of whether automatic enrollment is added to a plan by choice or as a requirement of this provision in the future, it is important for 401(k)/403(b) plan sponsors and fiduciaries to be aware of the liability exposure that can result if certain other elections are not made. Specifically, ERISA Sec. 404(c) elections, in conjunction with Qualified Default Investment Alternative (QDIA) elections, can effectively mitigate the liability that the sponsor and fiduciaries would otherwise bear for participant investment losses. Below is a short video explaining the benefits and application of 404(c) and QDIA elections. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### 2023 Construction Forecast The construction industry is poised for continued growth in 2023, with a number of factors figuring to contribute to the trend. A major component is the ongoing need for housing and infrastructure development.As our world population grows, there’ll be an ever-increasing demand for new homes, commercial buildings and transportation projects.Also driving growth is the increased focus on sustainability and energy efficiency. Governments and private organizations alike are investing in green building initiatives, which will lead to more demand for environmentally friendly construction materials and  open new opportunities for companies that specialize in sustainable building solutions.Advances in technology are transforming the industry as well. Building information modeling (BIM) and other digital tools are becoming more widely adopted, which is helping to improve project management, design and construction processes. The use of drones, robots and other technologies is also increasing, helping to boost productivity and reduce costs.In terms of regional trends, the industry is likely to see continued growth in developing countries, particularly in Asia and Africa. Regions there are experiencing rapid urbanization and population growth, which is driving demand for new housing and infrastructure. In developed countries, the industry is likely to see steady growth as well, with a focus on renovating and retrofitting existing buildings to improve energy efficiency and reduce costs.Despite the overall positive outlook, however, there are challenges. Chief among them is the ongoing shortage of skilled workers, a global issue, and rising construction costs – particularly for materials – which makes it difficult for companies to remain competitive. The industry will need to look for ways to mitigate these challenges if it expects to maintain its forward momentum in 2023.About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.   ### SECURE 2.0 Act – Section 317. Retroactive First-year Elective Deferrals for Sole Proprietors SECURE 2.0  Act –Section 317. Retroactive First-year Elective Deferrals for Sole Proprietors The SECURE 2.0 Act (SECURE 2.0), which was signed into law by President Biden on December 29, 2022, includes an expansion of the time a sole proprietor may establish a 401(k) plan. A sole proprietor is an individual who owns the entire interest of an unincorporated business and is the only employee of that enterprise. Prior to these SECURE 2.0 changes, sole proprietors were required to adopt a 401(k) plan by December 31st of a given taxable year in order for a plan to be effective in that year. SECURE 2.0 extends the deadline for a sole proprietor to adopt a 401(k) plan to the tax return filing date following the end of the year (without extensions). Thus, a calendar year sole proprietor will have until April 15 to decide to adopt a 401(k) plan and make contributions retroactive to the preceding year. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 307. One-time Election for Qualified Charitable Distribution to Split-interest Entity; Increase in Qualified Charitable Distribution Limitation SECURE 2.0 Act – Section 307. One-time Election for Qualified Charitable Distribution to Split-interest Entity; Increase in Qualified Charitable Distribution Limitation The SECURE 2.0 Act (SECURE 2.0) introduces a new provision allowing IRA holders aged 70-½ or older to make a one-time qualified charitable distribution to a split-interest entity. This change provides an opportunity for IRA holders to make charitable contributions while retaining lifetime income interests in the underlying funds. IRA holders who are at least age 70-1/2 may make qualified charitable distributions (QCDs) of up to $100,000 per year. Prior to the SECURE Act 2.0, this annual contribution limit had not been indexed for inflation. The SECURE Act 2.0 provides that this annual contribution limit is indexed for inflation starting in 2023. SECURE 2.0 also introduced a new one-time opportunity for IRA holders to make QCDs to split-interest entities including charitable remainder annuity trusts (CRATs), charitable remainder trusts (CRUTs), and charitable gift annuities. Different requirements apply with respect to each of these entities; however, all include the following common requirements: the split-interest entity must be funded exclusively by QCDs; the aggregate amount of allowable funding is $50,000; the contribution must be otherwise deductible under IRC section 170; any income interest in the split-interest entity must be only for the taxpayer and/or their spouse; the income interest must not be assignable; and distributions from the split-interest trust must be treated as ordinary income in the hands of the beneficiary taxpayer/spouse (reflecting no return of principal). Split-interest trusts offer a unique way for charitably minded individuals to make charitable contributions while retaining a lifetime interest in the income generated by the donated funds. The expansion of SECURE 2.0 to allow QCDs to fund these trusts may make these vehicles even more attractive to IRA holders.  Be sure to discuss all tax ramifications with your Schneider Downs tax team to see if this type of QCD is beneficial to you. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SECURE 2.0 Act – Section 107. and 325. Changes to Required Minimum Distribution Rules SECURE 2.0 Act – Section 107. and 325. Changes to Required Minimum Distribution Rules Effective January 1, 2023, the age at which individuals must begin taking required minimum distributions (RMDs) from traditional IRAs and workplace retirement plans has been increased from age 72 to age 73. The tax code requires that participants begin taking RMDs once they reach a specified age. The amount of the RMD is calculated by dividing an account’s value on December 31st by a life expectancy factor published by the IRS. This increase in the RMD beginning date will allow retirement savers to delay their first RMD until April 1st of the year following the year in which they turn age 73. In 2033, the RMD age will increase again, to age 75. Note that while the RMD rules specify the latest date when participants must begin taking distributions, each participant may begin taking distributions earlier. Delaying RMDs is not a one-size-fits-all strategy, so be sure to work with your financial advisor to implement an approach that works best for you and your family. Also starting in 2023, the penalty for failing to take a RMD will be reduced from 50% of the amount required to 25%. The penalty for traditional IRA accounts will be reduced to 10% if the account owner corrects the failure within a two-year correction period. Beginning in 2024, designated Roth accounts (Roth accounts in workplace retirement plans) will no longer be subject to RMDs. The rollout of the SECURE 2.0 Act  (SECURE 2.0) was meant to enhance and strengthen America’s retirement system and will impact how you save and withdraw money from your retirement accounts. These changes should provide more flexibility in terms of reaching your retirement savings goals. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### SECURE 2.0 Act – Section 115. Withdrawals for Certain Emergency Expenses SECURE 2.0 Act – Section 115. Withdrawals for Certain Emergency Expenses Generally, an additional 10% tax penalty applies to early distributions from tax-preferred retirement accounts, such as 401(k) plans, unless an exception applies. Section 115 of the SECURE 2.0 Act (SECURE 2.0) provides such an exception for certain “emergency expenses” from eligible retirement plans. The new exception under Section 115 defines an emergency expense as an “unforeseeable or immediate financial need relating to necessary personal or family emergency expenses.” The retirement plan participant is responsible for self-certifying the qualifying event for the distribution, and only one distribution is allowed per year of up to $1,000. A participant would have the option to repay the distribution within 3 years. While this new “Emergency Withdrawal” provision could be beneficial for some participants, there are rules and limitations to keep in mind. Participants will be disallowed from any additional Emergency Withdrawal distributions until one of the following conditions is met: A prior distribution has been fully repaid, Employee deferrals and any other type of employee contributions to the plan since the Emergency Withdrawal total at least as much as the amount distributed, or 3 years have passed since the prior Emergency Withdrawal. Section 115 of SECURE 2.0 is effective for retirement plan distributions made after December 31, 2023. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provides objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### IRS Issues Draft Instructions to Claim the R&D Tax Credit on Amended Returns On October 15, 2021, the IRS issued Chief Counsel memorandum FAA20214101F, which introduced new procedures for taxpayers claiming R&D Tax Credit refunds. Effective January 10, 2022, this new guidance required taxpayers to submit additional information that was not previously requested on Form 6765 to substantiate their R&D Tax Credit claim in order to receive refunds for the R&D Tax Credit on an amended return. On January 12, 2023, the IRS released draft instructions for Form 6765 included in a section at the end of the instructions titled “Research Credit Claims on Amended Returns.” Similar to the FAA20214101F memorandum, the Form 6765 draft instructions list five specific items that taxpayers must include to either file an amended return to claim R&D Tax Credits or to amend their return for an increased credit amount. The five items required for amended R&D Tax Credit claims are listed below: The factual basis of your section 41 research credit claim. The research activities performed. The individuals who performed early research activity. A taxpayer may instead identify the individuals who performed each research activity by listing the individual’s title or position. The information each individual sought to discover. The total qualified employee wage expenses, total qualified supply expenses, and total qualified contract expenses paid or incurred for section 41 research credit claim or complete the Form 6765. Similar to the guidance provided in FAA20214101F, the draft instructions indicate that taxpayers submitting a report or document that includes information beyond the five items listed above must identify the exact pages that contain the requested information. The draft instructions include additional guidance for partnerships subject to the Bipartisan Budget Act audit rules: BBA Partnerships must also submit Forms 8985 and 8986 to the IRS and send Forms 8986 to its partners. BBA Partnerships do not need to provide the five items of information on the Forms 8985 and Forms 8986 where the five items of information are included with the Form 6765 attached to the BBA Partnership’s AAR. Further, partners of BBA partnerships are provided with the following guidance in the draft instructions: BBA Partnerships cannot file amended returns; they must instead file AARs. A BBA AAR is a statutorily provided type of amended filing used to change partnership-related items for any partnership taxable year. If you are a partner of a BBA and filing a return that includes a section 41 credit for increasing research activities from the BBA Partnership's AAR, you may, but are not required to, include the five items of information with your return to which your Form 8978 is attached if the BBA Partnership has provided the information with its AAR. The IRS initially provided for a one-year transition period ending January 10, 2023, which has been extended to January 10, 2024. During this transition period, taxpayers will be given up to 45 days to “perfect” any deficient claims. However, according to FAA20214101F, if a claim fails to meet the minimum requirements, the IRS is directed to reject the claim as invalid. Despite the additional requirements to claim the R&D Tax Credit on amended return, taxpayers who are properly identifying and calculating their R&D Tax Credit as prescribed in Internal Revenue Code Section 41 should already possess the required information. If you have any questions with respect to the R&D Tax Credit calculation or the new information required to claim the R&D Tax Credit on amended return, contact a member of our Credits & Incentives team for further information. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Why Cybersecurity Programs are Facing Increased Scrutiny from Private Equity Firms How secure is your company? What does your cybersecurity insurance cover? Does your security program include incident response plans? Do you have a CIO or CISO?These are the types of questions that companies searching for private-equity funding can expect to answer when going through the due diligence process. Cybersecurity is quickly becoming one of the key risk considerations for private-equity firms in the modern marketplace.We know firsthand how valuable it is for an organization to have a mature cybersecurity program, as well as how potentially detrimental it can be to lack one. A poor cybersecurity program can have a significant impact on an organization’s bottom line and can put them in the crosshairs of not just of threat actors, but also of regulators and customers.When an organization suffers a cyber incident, there are a myriad of costs and impacts that must be endured. From the technical investigation and forensics analysis to legal fees to lost business and potential regulatory fines.Organizations must be aware of these potential financial impacts when considering cost/benefit decision analysis of investing in maturing and enhancing their cyber security program components. Doing so can help avoid the financial impact that suffering an incident or breach can have, which was over $9mm per breach for US based companies in 2021.So, you can understand why private equity firms are increasingly concerned about cybersecurity – poor cyber programs put their portfolio at risk from both the buy-side and the sell-side.In response to growing concerns over cybersecurity, many private equity firms are now requiring baseline cybersecurity measures through the application process. Measures include requiring potential investments to carry cyber insurance and provideaccess to incident response teams as well as other specific controls such as multifactor authentication or strong password policies.This is why it is increasingly commonplace for private equity firms to have a cybersecurity firm on retainer to help evaluate potential investments.The Growing Role of Virtual Chief Information Security Officers (vCISOs)Additionally, many private equity firms are revisiting their current portfolios to ensure companies have not only the proper controls in place, but appropriate governance structures as well, including having a Chief Information Security Officer (CISO). Realizing that not all portfolio or potential target companies may have one in-house, firms are turning towards vCISOs as a solution.A vCISO is an outsourced consulting solution that provides strategic and operational cybersecurity leadership to companies that don’t have the resources to carry one in-house.A vCISO typically provides an array of services including tactical, governance and executive leadership to help organizations build and manage programmatic capabilities, based on leading practices, and designed to enhance the organizational security posture. The vCISO can be a single person, an experienced team or a combination of both.Regardless of if you are part of a private equity firm searching for a cybersecurity partner or a company considering private equity finding, the Schneider Downs Cybersecurity practice can help.If you have any questions, feel free to contact me directly at ckriebel@schneiderdowns.com.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### SECURE 2.0 Act – Section 103. Saver’s Match SECURE 2.0 Act – Section 103. Saver’s Match The recently signed SECURE 2.0 Act (SECURE 2.0) revised what was formally referred to as the Saver’s Credit for retirement plan, IRA account and ABLE account participants – who are considered low to moderate income taxpayers. The Saver’s Credit allows for qualified individuals participating in a retirement plan or contributing to IRA to receive up to a 50% nonrefundable tax credit of a maximum contribution of $2,000 ($4,000 for if married filing jointly). Effective for taxable years after December 31, 2026, the current Saver’s Credit will be replaced with the Saver’s Match, changing it from a credit paid in cash as part of a tax refund into a federal matching contribution that must be deposited into a taxpayer’s IRA or retirement plan. The match program is equal to 50% of IRA or retirement plan contributions up to $2,000 per individual (effectively $1,000 maximum). Qualified participants will be able to choose which retirement account to receive the contribution, excluding Roth accounts. If a participant’s annual contributions are less than $100, the matching contribution will be applied against their tax liability, or if elected a participant can have their matching contribution applied against their tax return, like the current Saver’s Credit. The match phases outfor single filers and married couples filing separately, and will be gradually reduced to zero if modified adjusted gross income (AGI) is between $20,500 to $35,500. Joint filers will receive a reduced match if modified AGI is between $41,000 to $71,000, and head-of-household filers will have a reduction if modified AGI ranges between $30,750 to $53,250. Eligibility requirements will be similar to those of the original Secure Act of 2019.  Nonresident aliens will not qualify unless treated as a U.S. resident for the tax year.  Taxpayers under 18 years of age, full-time students, and anyone claimed as a dependent on someone else’s tax return are not eligible, which is the same as today’s Saver’s Credit. The early withdrawal penalties will apply for withdrawing the matching contribution from a retirement account prior to age 59 ½.  This penalty can be avoided by depositing the withdrawn funds back into an eligible retirement account. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Postcard from the PIOGA and Washington County Chamber of Commerce On January 12, 2023, the Pennsylvania Independent Oil & Gas Association (PIOGA) and Washington County Chamber of Commerce sponsored a State and Federal Legislative Forecast Breakfast. It was moderated by PIOGA Board member Ben Wallace of Penneco Oil Company, and the panel consisted of Alex Halper (Director, Governmental Affairs of the Pennsylvania Chamber of Business & Industry), Jezree Friend (AVP, External Relations of the Manufacturer & Business Association) and Charlie Gerow (CEO of Quantum Communications).The Pennsylvania legislative environment is currently politically divided, with the state legislature being controlled by Republicans, and the Governor’s office being held by Democrat Josh Shapiro. This can lead to difficulty in passing legislation, as the two sides often have different priorities.  A twist has been added with the newly elected Speaker of the House, Mark Rozzi, who is a Democrat.  However, it is rumored that in the negotiations for his leadership, he pledged to change his party affiliation to Independent. Mr. Rozzi has noted that his legislative plan is to complete a bill and then move on, rather than working on several bills at a time.  His top priority as Speaker is to see that the state opens a window for justice to allow adult survivors of childhood sex abuse to sue their abusers. Given the slim majority in the House and a controversial bill that could bottleneck progress, don’t expect much from the PA House this year.  Overall, the legislative environment in Pennsylvania is complex and dynamic, with a wide range of issues and interests being represented. The status of the legislative environment is constantly changing, and it's important to stay informed and up-to-date on the latest developments.About Schneider Downs Government Services The Schneider Downs Government industry group addresses the very specific accounting and financial needs, challenges and requirements of the broad spectrum of public sector entities. We advise a range of government entities, including—but not limited to—boroughs, charter schools, counties, cities, government agencies, municipalities, public schools, private schools, townships and villages.  To learn more, visit our Government Industry Group page.  ### SECURE 2.0 Act – Section 315. Reforms Family Attribution Rules SECURE 2.0 Act – Section 315. Reform of Family Attribution Rule When two or more businesses are part of a controlled group, then the controlled group members are treated as a single employer when applying certain employee benefit plan requirements under the Internal Revenue Code (IRC). Similarly, two or more employers who are members of an affiliated service group under the IRC are treated as a single employer for the purposes of satisfying controlled group requirements. These “aggregation” rules are generally based on the extent of common ownership of the businesses; the analysis can be complex for individuals with interests in multiple trades or businesses. When determining the level of common ownership in a business, the tax laws have certain rules of attribution whereby an individual is deemed to own stock held by other individuals or entities. Section 315 of the SECURE 2.0 Act (SECURE 2.0) updates a few of those stock attribution rules. One change addresses the unequal treatment of spouses with separate businesses residing in a community property state compared to spouses with separate businesses residing in a separate property state. Essentially, the new rules provide that “community property laws shall be disregarded for purposes of determining ownership.” The second update modifies the rules regarding the attribution of stock between parents with separate and unrelated business and their minor children. These changes are meant to aid businesses owned by each spouse independently to provide benefits to respective employees. The amendments made by this section will apply to plan years beginning after December 31, 2023. If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at sdretirement@schneiderdowns.com. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About SECURE 2.0 SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.     ### Sales and Subleases of Unproved Properties Have you received an offer to acquire nonessential unproved property? Below we consider key aspects to mineral conveyances.When unproved properties are sold or exchanged, the accounting treatment depends on the answers to a few questions.Accounting Treatment Considerations Is the impairment of unproved properties recorded individually or on a group basis? Is the conveyance an entire interest or only a partial interest? Sale of an entire working interest in unproved propertiesIf the entire interest in an unproved property is sold, the recognition of gain or loss depends on the method used to determine lease impairment. If impairment was assessed individually, ASC 932-360-55-8 requires recognition of a gain or loss as the difference between the proceeds received and the property’s net carrying value. However, if the unproved property’s impairment was determined as a group, the treatment is different. ASC 932-360-55-8 states that, “For a property amortized by providing a valuation allowance on a group basis, neither gain nor loss shall be recognized when an unproved property is sold unless the sales price exceeds the original cost of the property, in which case gain shall be recognized in the amount of such excess.”Sale of a share of a working interest in unproved propertiesIf sales proceeds for a partial interest exceed the entire original cost of the property assessed for impairment within a group, or if such proceeds exceed the carrying amount of a property assessed for impairment individually, a gain should be recorded. Any loss on the sale is recognized by using the impairment test.Sale of a working interest but maintaining an overrideIf the working interest is sold for cash and an overriding royalty interest, net profits interest or production payment is retained, the conveyance is considered a sublease. A sublease is treated like selling part of an unproved property interest, and the unrecovered book value is assigned to the retained nonoperating interest.If you have any questions on conveyances of mineral assets, reach out to Logan Kowcheck.About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.  To learn more, visit our Energy and Resources Industry Group page.  ### Inflation-Adjusted Tax Amounts for 2023 Issued Have you been looking for ways to save money as inflation has taken more of your paycheck this year? You may be in luck. The Internal Revenue Service (IRS) announced over 60 tax provisions in their cost-of-living adjustments for 2023 in Revenue Procedure 2022-38.Highlighted in Revenue Procedure 2022-38 are increased marginal tax rates, standard deductions, earned income tax credits, among many others. The trigger for this was the rising rate of inflation across the country, the highest we have seen in 40+ years. The 7% increase in the standard deduction and tax rates are to match the inflation rate.Marginal Tax Rates for 2023 are: 37% for incomes over $578,125 ($693,750 for married couples filing jointly); 35% for incomes over $231,250 ($462,500 for married couples filing jointly); 32% for incomes over $182,100 ($364,200 for married couples filing jointly); 24% for incomes over $95,375 ($190,750 for married couples filing jointly); 22% for incomes over $44,725 ($89,450 for married couples filing jointly); and 12% for incomes over $11,000 ($22,000 for married couples filing jointly). How could this mean more money in your pocket? Well, if your income stays the same year over year, your marginal tax rate could be lower in 2023, meaning less money withheld from your paycheck and more in your pocket.Increases to the standard deduction and earned income tax credit (EITC) were also made. For single filers, the standard deduction rose to $13,850 (up $900) and double that for married couples filing jointly, i.e., $27,700 (up $1,800). If you take advantage of the standard deduction (do not itemize your deductions), this could result in a decrease in your taxable income. The amount of the EITC has increased from $6,935 in 2022 to $7,430 in 2023, a 7.1% increase. Among the 60 provisions, some other notable adjustments are: Contribution limits to health flexible spending arrangements are up to $3,040 vs. $2,850 in 2022; Alternative Minimum Tax exemption is up 7.1% to $81,300, compared to $75,900 in 2022, and will start phasing out at $578,150; Foreign earned income exclusion rose from $112,000 to $120,000, a 6.7% increase; and The adoption credit of 7.1% has increased to $15,950 in 2023 from $14,980 in 2022. These increased tax brackets and uptick in credits should help taxpayers all over the country as many are looking for ways to combat inflation, and this should do just that.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.   ### Updates to Schedules K-2 and K-3 for 2022 Tax Year On December 2, 2022, the IRS released revised instructions for the 2022 Schedules K-2 and K-3. Schedule K-2 reports items of international tax relevance at the partnership level, while Schedule K-3 breaks down an individual’s share of global income, credits and other deductions.The most important changes included in these instructions relate to the domestic filing exceptions, which provide guidance on circumstances that would relieve filing requirements for the 2022 tax year. The domestic filing exception has four requirements that must be met for an entity to opt out of filing Schedules K-2 and K-3: No (or limited) foreign activity; partners must fit certain parameters; partners must be notified of lack of filing; and no partners requested a K-2 and K-3.In previous drafts of the instructions, there was a two-month deadline for partnerships to inform partners of the non-requirement to file Forms K-2 and K-3. This deadline has now been removed. Partnerships may provide this notice as late as the filing of the 2022 tax return (August 15, 2023, for the 2022 tax year). The notice may be provided as an attachment or statement with Schedule K-1. Partnerships that notify in this manner would still be exempt from filing if all other requirements are met. The deadline for partners to request a K-3 filing has not been removed but has been altered. Previously, partners were required to request a K-3 up to one month before the filing date of the partnership’s Form 1065. If a partnership did not receive any requests and all other requirements were met, the domestic filing exception applied. While this deadline has not been removed, it has been altered slightly. In the event that a partner makes a timely request, a partnership is required to provide Schedule K-3 for all partners. If a partner requests a Schedule K-3 after the one-month deadline has passed and no other request was received, a partnership is not required to file the 2022 Schedules K-2 and K-3 but is required to provide a K-3 to the requesting partner, either by the date of filing or within one month of such request, whichever is later.The updated instructions also provide required criteria for qualifying direct partners.Direct partners are now limited to: U.S. citizens Resident aliens Domestic decedent’s estates Domestic grantor and non-grantor trusts S Corporations with a sole shareholder; and Single member LLCs Any partnerships with a second-tier partnership as a partner do not currently qualify under the domestic filing exception. If you have any questions about your filing requirements, the tax group at Schneider Downs is available to assist.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Taxpayer Identification Number Matching Program Payers required to file form 1099 have been receiving a higher number of errors and notices related to incorrect name/Taxpayer Identification Number (TIN) combinations. The on-line Taxpayer Identification Number Matching Program is intended for filers of 1099 Statements from non-employee compensation, dividends, interest, miscellaneous, merchant card third-party network payments and others. Prior to filing the information return, the payer can check the name and TIN provided by the payee.Sometimes, the TIN provided by the payee contains errors, or an error occurs by the payer when entering the information on the 1099. When this occurs, the IRS may send out Notice CP2100 or CP2100A, which carry a potential penalty of $280 per 1099 incorrectly filed. In addition to potential penalties, taxpayers issuing 1099s may be required to begin backup withholding.In order to cut down on incorrectly filed 1099s, the Matching Program is available via the eServices Registration home page, available 24 hours a day. Currently, the IRS does not charge to participate in the program.The Program can accept up to 25 name/TIN combinations at a time, or up to 100,000 if using a bulk process and uploading a text file. Once taxpayers have applied and accepted the terms and agreements, they will be prompted to enter a TIN Type (Employer Identification Number, Social Security Number, or Unknown), Taxpayer Identification Number and name to be matched against IRS records. If an invalid name/TIN combination is entered, the IRS will not provide the correct name/TIN due to privacy. The payer will have to contact the payee for the correct information.  Contact a member of your Schneider Downs service team if you have any questions on the IRS TIN Matching Program, or if you have received a Notice CP2100 or CP2100A and need assistance.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Research and Development Tax Capitalization Rules: Are You Ready? As part of the Tax Cuts and Jobs Act, a significant change in the tax law occurred for research and development (R&D) costs. Although this change was passed in 2017, it did not take effect until tax years beginning on or after January 1, 2022. Previously, for tax years beginning on or before December 31, 2021 (2021 calendar years and earlier), R&D expenses could generally be deducted as incurred for tax purposes. Currently, for tax years beginning on or after January 1, 2022 (2022 calendar years and later), R&D costs must be capitalized and amortized. The amortization period is generally five years for U.S.-based R&D, and 15 years for foreign R&D. If you are deducting R&D expenses for your financial statements, this new capitalization requirement will result in an unfavorable book/tax difference in 2022. Note that these capitalization rules apply regardless of if you claim an R&D tax credit. The R&D asset that is capitalized is deemed placed in service halfway through the year and follows straight-line depreciation. This means, for R&D expenses incurred in 2022 of $100,000, the deductibility would look like this: 2022: $10,000 2023 through 2026: $20,000 2027: $10,000 As you can see, in 2022 you will have an unfavorable tax adjustment of $90,000 ($100,000 cash spent on R&D less tax deduction of $10,000). This is a timing difference that will eventually become favorable in future years but can affect your cash flows in the short term when making 2022 tax payments. Additionally, taxpayers that previously had not been tracking their R&D expenses must now find a way to accurately account for R&D costs in order to follow tax law. If you have not previously been tracking R&D costs, consider having an R&D study done to determine if any of your R&D costs qualify for the R&D tax credit. This credit could help mitigate some of the tax due as a result of the new R&D capitalization rules. It is no secret that this change stifles innovation and is not very popular. Earlier in 2022, Congress had attempted to delay the implementation of R&D capitalization requirement. Unfortunately, this resolution did not pass. As we approach the close of 2022, Congress is again looking to delay or otherwise change the R&D capitalization requirement. Schneider Downs & Co. will continue to monitor these developments closely and provide updates as needed. Make sure to account for these R&D capitalization rules when making 2022 tax payments. If you believe you have R&D expenses but have not previously claimed an R&D tax credit, now is a good time to discuss the R&D credit with your tax preparer. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. Questions? Contact Derek J. Godwin, CPA, or a member of your Schneider Downs & Co. service team. ### New Standard Mileage Rates Announced The IRS has issued new optional standard mileage rates for cars, vans, pickups and panel trucks.The revised rates, which became effective January 1, 2023, are as follows: 65.5 cents per mile for business travel driven (up three cents from 2022’s mid-year increase) 22 cents per mile driven for medical or moving purposes for certain military personnel (consistent with the 2022 mid-year increase) 14 cents per mile driven in service of charitable organizations (remains the same) The standard rate for business use is determined through an annual study of fixed and variable costs of vehicle operation, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is established on variable costs alone.On June 9, 2022, the IRS announced an increase in the optional standard mileage rate for the remainder of the 2022 calendar year. The mid-year adjustment was uncommon but was implemented due to an increase in national gasoline prices. For the second half of 2022, the standard rate increased to 62.5 cents per mile for business travel, a four-cent boost from the first half. The rate per mile for medical care or moving expenses increased to 22 cents per mile, also a four-cent increase, while the per-mile rate for charitable organizations remained unchanged. If you have questions regarding the implications of vehicle expense adjustments or mileage rates, contact your local Schneider Downs tax professional.About Schneider Downs Tax Services  Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page. ### Form 1023-EZ Under Scrutiny In July 2014, the IRS (Service) approved the three-page Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code (Code), for applicants of tax-exempt status that expect to have annual gross receipts of $50,000 or less in their current tax year and subsequent two years.In addition, the applicant organization could not have had more than $50,000 in annual gross receipts in any of the three preceding years or had more than $250,000 in assets. The Service permits only certain organizations to use Form 1023-EZ. For instance, supporting organizations, private operating foundations, schools and hospitals cannot use the form to seek exempt status.Form 1023-EZ was the Service’s solution to its problem of backlogged Forms 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, in the system. The new form has dramatically cut turnaround time for review and approval of applicants, but since the streamlined application was introduced it’s been strongly scrutinized.Prior to July 2014, all organizations seeking tax-exempt status under 501(c)(3) were required to file the 26-page Form 1023. Upon submission, organizations would need to provide evidence supporting how they meet organizational and operational tests under the Code. Now, when submitting the shorter Form 1023-EZ, an organization is only required to attest to meeting the two required tests.That’s where the scrutiny comes in. A recent report in The New York Times alleged that an individual successfully established more than 50 fake charities by filing Form 1023-EZ when seeking tax-exempt status. Based on the report, U.S. Representative Bill Pascrell, a New Jersey Democrat who chairs the House Ways and Means oversight committee, requested an audit to be completed by the Treasury Inspector General Tax Administration (Inspector General).According to the Inspector General’s report released October 3, for the period 2018-2021, approximately 249,000 Forms 1023-EZ were approved by the Service, with less than 1% of applicants denied. The report also states that in fiscal year 2021, 75% of the 90,000 applications were filed using Form 1023-EZ. The Inspector General concluded that Form 1023-EZ is “insufficient to make an informed determination about tax-exempt status and does not educate applications about eligibility,” and recommended the Service provide clear guidance on what constitutes exempt activities on the Form 990-EZ.In response, the Service disagreed with the Inspector General’s recommendation and stated that providing eligibility information on Form 1023-EZ would only increase paperwork and would not promote compliance. The Service agreed to look into potentially requiring more attachments be included when filing Form 1023-EZ and to correct inaccurate guidance on its webpage for charities and nonprofits. Compounding matters these days is the issue that the Tax Exempt & Government Entities division of the Service has been experiencing a significant amount of turnover within their commissioner ranks. Edward Killen is the current deputy commissioner of the Tax Exempt & Government Entities business operating division tasked with alleviating the issues for which the Form 1023-EZ is being scrutinized. Stay tuned.About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  To learn more, visit our Not-for-Profit Industry Group page.   ### Post-Hurricane Financial Support for Florida Homeowners Florida lawmakers passed legislation that will aid homeowners whose homes were left uninhabitable after Hurricane Ian or Hurricane Nicole. Homeowners who were unable to occupy or use their residence for at least 30 days due to damages from Hurricanes Ian and Nicole may be eligible.Eligible homeowners will receive a partial refund of their 2022 property taxes upon timely payment. Those who have already paid their 2022 property taxes when their application is approved will immediately receive their refund. To apply for the refund, homeowners need to contact their county’s property appraiser to receive an Application for Hurricane Ian or Hurricane Nicole Tax Refund form (Department of Revenue Form DR-5001). The homeowner will have to provide documentation that shows how many days his or her home was uninhabitable, up to a maximum of 95 days for damages caused by Hurricane Ian and 52 days for damages caused by Hurricane Nicole. Examples of acceptable documentation include utility bills, insurance information, contractors’ statements, building permit applications, or building inspection certificates of occupancy. The application and documentation must be sent back to the property appraiser by April 3, 2023.Ultimately, the property appraiser will determine a homeowner’s eligibility based on his or her application and documentation. All applicants will be notified by June 1, 2023, whether they were deemed eligible or ineligible. Applicants deemed ineligible will have 30 days following the notification of ineligibility to petition their application.For eligible homeowners, the property appraiser is required to provide the tax collector with the value of the residential improvement, the number of days that the improvement was uninhabitable, the post-disaster value of the residential parcel and the percent change in value. Once the tax collector has this information, he will calculate the refund owed to the homeowner. Please see the example below to learn how the refund will be calculated: The January 1, 2022, pre-disaster values of the residential improvement (the house, attached garage and attached porches only) and the parcel are $800,000 and $1,000,000, respectively.  Post-disaster, the residential improvement is worthless because it is uninhabitable, so the parcel has lost $800,000 in value. The appraiser determines the percent change in value post-disaster is 80% ($800,000 in lost value divided by $1,000,000 parcel value pre-disaster).  The home was uninhabitable for 95 days due to damages from Hurricane Ian. The percent of uninhabitable days is 26% (95 days divided by 365 days).  The tax collector determines the damage differential is 20.8% (80% multiplied by 26%).  The homeowner paid $10,000 in property taxes in 2022, so his/her partial refund will be $2,080 (20.8% damage differential multiplied by $10,000 of 2022 property taxes paid). For more information about the refund calculation, please refer to this bulletin issued by the Florida Department of Revenue.Homeowners in Brevard, Broward, Charlotte, Collier, Duval, Flagler, Indian River, Lee, Manatee, Martin, Nassau, Palm Beach, Saints Johns, Saint Lucie, Sarasota and Volusia Counties may also be eligible to participate in the Hurricane Restoration Reimbursement Grant Program. The grant is a dollar-for-dollar cost-sharing program between the homeowner of a qualified property and the Florida Department of Environmental Protection (DEP). The DEP will reimburse up to $150,000 of expenses incurred from sand placement projects and temporary or permanent coastal armoring construction projects that were made in preparation for or due to damages from Hurricanes Ian and Nicole. All projects must have the proper permits and be completed by a licensed contractor, if applicable. The DEP will release more details about the application process no later than January 31, 2023, and applications may start being submitted on February 1, 2023.Additionally, the hurricane relief package provided $750 million to support the communities impacted by Hurricanes Ian and Nicole. This funding will be used to support the FEMA Public Assistance fund, local beach renourishment projects, stormwater and wastewater infrastructure repairs, and more. If you have any questions regarding your eligibility for the property tax refund or need help with your application, please contact a member of the Schneider Downs tax team.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.   ### SECURE 2.0 Act of 2022: Key Highlights The SECURE 2.0 Act of 2022 (SECURE 2.0) was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023. December 29, 2022 will serve as the date of enactment (DOE), where several provisions became effective immediately while others become effective in 2023 or later years. For Retirement plan sponsors, the question is not whether SECURE 2.0 impacts them, it’s which of the 92 provisions apply to them and when do they take effect. Key provisions that are either retroactive, or that have effective dates on the DOE or began at the start 2023 include: Section 102. Modification of credit for small employer pension plan startup costs; effective for tax years beginning after Dec. 31, 2022. Section 111. Application of credit for small employer pension plan startup costs to employers which join an existing plan; effective retroactively for tax years beginning after Dec. 31, 2019. Section 128. Permit 403(b) custodial accounts to participate in group trusts with other tax-preferred savings plans and IRAs; effective after DOE. Section 302. Reduction in excise tax on certain accumulations (i.e., failure to take RMDs) in qualified retirement plans; effective for tax years beginning after DOE. Section 312. Employer may rely on employee certifying that deemed hardship distribution conditions are met; effective for plan years beginning after DOE. Section 317. Retroactive first year elective deferrals for sole proprietors; effective for plan years beginning after DOE. Section 320. Elimination of unnecessary plan notification requirements related to unenrolled participants; effective for plan years beginning after Dec. 31, 2022. Section 326. Exception to penalty on early distributions from qualified plans for individuals with a terminal illness; effective for distributions made after DOE. Section 331. Special rules for use of retirement funds in connection with qualified federally declared disasters; effective for disasters occurring on or after Jan. 26, 2021. Section 333. Elimination of additional tax on corrective distributions of excess contributions; effective for any determination of taxes, interest or penalties which is made on or after DOE, without regard to whether the act (or failure to act) upon which the determination is based occurred before the DOE. Section 345. Clarifies that plans filing under a Group of Plans need only to submit an audit opinion if they have 100 participants or more; effective on the DOE. Section 348. Clarifies the application of the Code and ERISA’s rules, prohibiting the backloading of benefit accruals, as they relate to hybrid plans that credit variable interest; effective for plan years beginning after DOE. Section 604. Allows DC plans to provide participants with the option of receiving matching contributions on a Roth basis; effective on DOE. The Schneider Downs Retirement Solutions practice will continue to monitor SECURE 2.0 for associated clarifications and guidance that has yet to be released, and will develop summaries of key provisions in the coming weeks, so please subscribe for updates. This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here or download our comprehensive SECURE 2.0 eBook here. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### New Year’s Resolution: Strengthen Up! 2023 – the year that you resolve to get stronger: buy some weights, visit the gym, work out more consistently, lift heavier.  We often create resolutions for ourselves to improve upon our weaknesses, so why not do the same for our companies?  How could your company strengthen up in 2023?An individual who’s really serious about getting stronger may hire a trainer.  Someone who acts like a coach to you – an external viewpoint on where you are and how you can improve. The equivalent of this for a company looking to improve is an internal audit function.  How can internal audit be the trainer you need to strengthen your organization?Provide an Objective View One of the key characteristics of an internal audit function is that it is independent and objective.  In other words, an internal auditor provides an unbiased view.  Like a coach or trainer, an internal auditor offers an honest and uninfluenced viewpoint to the organization, which is necessary as part of the journey towards continuous improvement.Help Design a Plan Once trainers understand where you are, they work with you to develop a plan on how to get you where you want to be.  This includes two things: (1) providing guidance on how you could adjust what you are currently doing and (2) identifying additional steps that should be put into your routine to achieve your goals.  Internal auditors follow a similar approach.  Once there is an understanding of risks, processes and related regulatory or policy requirements, an internal audit function will provide insight into your current control set (are controls designed appropriately?) and provide recommendations on additional actions necessary to address any unmitigated risks.Hold You Accountable If you show up to your training session and haven’t been putting in the work in between, it will show immediately.  Trainers test the execution of your plan by measuring for improvement – whether it be more reps, increased weight, a body measurement or a number on a scale, they will be testing to monitor performance and improvement.  An internal audit function provides similar assurance to companies by performing testing over various areas, including testing to ensure: Controls are operating effectively (are we executing the controls that we said we would to mitigate risk?);  Compliance with regulatory requirements, and; Compliance with company policies and procedures. Identify Opportunities to Get Lean When trainers take a wholistic view into your lifestyle, they identify ways to increase muscle while decreasing fat.  After all, you want to show off the muscles you’ve worked so hard for!  A benefit of an internal audit is that it can help get your processes lean, too.  As part of its work, an internal audit function can often identify and reduce redundant tasks, bringing efficiencies to your processes.  There is no time like the present to begin strengthening your organization’s control environment.  Like your personal goals, don’t feel that you have to do it alone.  Consider how an internal audit function may be the trainer you need to coach your organization to a stronger version in 2023.  About Schneider Downs Risk Advisory Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.Explore our full Risk Advisory Service Offerings or contact the team at contactsd@schneiderdowns.com. ### Emerging Technology Companies and the R&D Tax Credit In today’s world, emerging technology companies are facing a barrage of challenges, including, finding funding, navigating supply chain issues, defending against increased security threats, and accelerating the pace of technological advancement. While the threats to innovation are numerous, there is an often-overlooked incentive for U.S. companies which can provide a key funding opportunity. The R&D Tax Credit, formally known as the Credit for Increasing Research Activities, was first enacted in 1981 as part of the Economic Recovery and Tax Act with the goal of incentivizing innovation and retaining top talent in the U.S. This was a temporary measure, re-enacted for decades until it was finally made permanent with the passing of the Protecting Americans from Tax Hikes Act in 2015. Although the name of the credit sounds like something that should be reserved for scientists wearing white lab coats and goggles, taxpayers from all industries may be eligible if they meet the following requirements: Permitted Purpose: The activity must be related to the development or improvement of the function, performance, reliability, or quality of a qualified business component – product, process, technique, formula, invention, or computer software. Technical in Nature: The activity must fundamentally rely upon principles of “hard sciences” to qualify. Examples include computer science, engineering, physics, materials science, or biology. Elimination of Uncertainty: The activity must be intended to eliminate technical uncertainty related to the capability or method to develop or improve a business component, or to determine the final design of a business component. Process of Experimentation: Substantial activity must contain elements of a process of experimentation in which one or more alternatives are evaluated to eliminate the technical uncertainty. If a taxpayer is conducting activities that meet the criteria, then certain expenses for those activities can be used to calculate an R&D tax credit. The primary expenses that can be qualified for the R&D credit are wages, supplies, contract research expenses, and rental or lease of computer costs. Due to the rapid evolution of the technology industry, businesses are constantly working to push the boundaries of innovation. At every stage of the innovation process, companies encounter technical challenges related to developing new or improved products, software, and production processes. In recent years, areas such as software development, cloud technology, intelligent operations, and automation have seen vast growth in development efforts. Examples of development efforts that may meet the threshold for R&D include, but are not limited to, developing or improving algorithms for enhancing computer processes, artificial intelligence advancements, integration of simulation and cloud-based solutions, custom enterprise platform integration, and increased use of robotics and motion control technologies. Along with innovative emerging technology projects with an external focus, taxpayers may also be investing capital in internal use software (“IUS”) efforts. In October 2016, Treasury Decision 9786 clarified the definition of IUS. IUS can be software that enables a company to interact with third parties, software for financial management functions, software for human resource management functions, and software for support service functions. The R&D credit for IUS can apply to taxpayers developing software from the ground up; however, the credit can also apply to taxpayers that are improving purchased software through the addition of new features or functionality. IUS projects must meet a heightened test for qualification that proves that the software is: (1) Innovative, (2) Involves Significant Economic Risk, and (3) Not Commercially Available. New businesses and start-up companies may be hesitant to claim an R&D benefit because they do not have tax liability to offset with a non-refundable credit. However, with the passage of the PATH Act in 2015, qualified small businesses – with fewer than 5 years of gross receipts and less than $5M in gross receipts annually – may elect to apply up to $250,000 of their R&D tax credit to offset the employer portion of Social Security tax liability on an originally filed return. This option has become even more lucrative with the passage of the Inflation Reduction Act. For tax years beginning after December 31, 2022, eligible businesses will be able to apply an additional $250,000 to offset Medicare tax liability. This brings the total maximum credit potential for eligible small business to $500,000 annually. In addition to Federal R&D credits, many states offer their own unique R&D credit benefits, which range in credit rate, eligibility requirements, and application / filing processes.  Ohio’s R&D benefit is a non-refundable credit which equals 7% of eligible Ohio based expenses in excess of a taxpayer’s base amount and is utilized against the Commercial Activity Tax (“CAT”).  Pennsylvania has an application process for filing a tentative R&D credit claim. The Pennsylvania tentative R&D benefit equals 10% (large business) or 20% (small business) of Pennsylvania based research expenses in excess of a taxpayer’s base amount. Pennsylvania also provides for an R&D tax credit assignment program where taxpayers are able to apply for approval to sell their previously awarded R&D tax credits, which provides a great option for taxpayers with low or no tax liability. Although claiming the credit requires time, resources, and expertise, the R&D tax credit provides both monetary and operational benefits to eligible companies. If you have any questions with respect to the R&D tax credit and qualification, contact a member of our Credits & Incentives team for further information. Related Articles This article is part of a series exploring the complex business challenges startup and early-stage companies may encounter as they grow. Additional articles include: Top Accounting Advisory Needs for Emerging Technology Companies Best Practices After an Equity Raise for Start-Up Companies Five Tax Considerations for Start-up Companies Understanding Leases In Technology Arrangements Pros and Cons of IPO for Early-stage Companies Compilation, Review or Audit? What Early-Stage Companies Should Know About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page ### Start The New Year Off Secure: 5 Cybersecurity Resolutions for 2023 What key steps can organizations take to improve their cybersecurity posture in 2023?With the new year officially underway, many of us have made our new year’s resolutions in hopes of a successful 2023. From reading a new book to hitting the gym, the new year acts as a fresh start to improve a bad trait or accomplish a goal. With this in mind, we asked our team of cybersecurity professionals to share some achievable resolutions organizations can make to strengthen their cybersecurity posture in the new year.Understand Your Organization’s Cyber FootprintThe first step to reducing risk within a business environment should be developing a strong outline of every known network and the systems on those networks. Creating a thorough network map will allow you to work towards reducing your attack surface and ultimately enhancing your control infrastructure accordingly: Identify all networks and systems that can reach the internet. Ensure networks are segmented correctly and systems are only able to reach the internet if needed for a business function. Identify any systems that are near their end of life and draft a roadmap for replacement. Embrace a Password ManagerPassword practices are one of the main vulnerabilities targeted by hackers because they remain one of the weakest points in cybersecurity. While solutions such as increasing password complexity can help mitigate the threat, it can also frustrate users and result in lost productivity. Instead, organizations can use password management tools, which work in the following ways to address common problems: Providing secure storage of accounts behind one very strong master password Facilitating the use of unique and strong passwords for many accounts Reducing the risk of password reuse Allowing important accounts to be shared among team members Implement and Enforce a Remote/Virtual “Clean Desk” PolicyA typical Clean Desk Policy outlines how employees can maintain a secure work environment by clearing their desks, logging out of their computers and locking away documents and removable storage at the end of the workday.Organizations can implement a remote/virtual “clean desk” policy to help remote employees remain cognizant of security concerns and encourage the following steps to reduce digital clutter while increasing productivity: Follow a standard Clean Desk Policy, even in remote workspaces, by ensuring electronic devices, removable media, and printed hard copies are kept secured and locked when not in use and desk areas are left uncluttered at the end of the day. Purge unnecessary local files to clear up disk space and reduce clutter. Make sure to empty the Recycle Bin after cleaning up so that the deleted items are removed from your system. Consider expanding this initiative to include shared drives and collaboration platforms. While shared drives and collaboration platforms are vital tools that allow team members to work together, they may also build up a trove of outdated and unused information.  Consider implementing practices to purge data, after a period of 6-12 months and/or transfer it, as appropriate, to an archival system for longer term storage. Review Your Current Backup Procedure, Disaster Recovery Strategy and Incident Response PlanIt’s essential to perform regular backups of data that would be considered business critical and too important to lose. A good strategy to follow is the 3-2-1 rule: Keep 3 copies of any important files: 1 primary and 2 backups. Keep the backups on 2 different media types, such as cloud or removable storage. And finally, keep at least one backup file offsite, to allow for recovery due to a disaster. A good backup procedure is only half of the battle when attempting to respond to a cyberattack or hardware failure. Review or develop an incident response plan that outlines the current backup procedure and how to restore any business-critical systems. Every employee shares the responsibility of keeping the business safe and reducing cybersecurity risk. Continuous training and open dialog regarding good cybersecurity hygiene can reduce the likelihood that an employee opens a suspicious email, uses weak passwords or unintentionally posts sensitive information online. Identify and Take Action to Resolve Bad PracticesThe presence of risky security practices can leave organizations vulnerable to threats that could potentially have significant impact on critical business functions. The following bad practices, when left unmitigated, are dangerous and significantly elevate an organization’s cybersecurity risk. The risk level of such bad practices can be further exacerbated if they involve the use of technologies that are accessible from the Internet. Use of unsupported or end-of-life software Use of default passwords and credentials The use of single-factor authentication for remote or administrative access Remember, “new year, new me” can ring true, and a new year’s resolution is simply a goal that can be achieved with the right discipline and planning.If you have any questions about the resolutions in this article or you want to share yours, please contact our team at cybersecurity@schneiderdowns.com.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.  ### TikTok: Spreading Holiday Cheer and Personal Information As the holiday season approaches, we encourage everyone to relax and share in joyful experiences with friends and family. However, we also want individuals to be mindful of what else they may be sharing, especially online. In today’s digital society, the holidays are often chronicled through the lens of our camera phones and posted on social media platforms for our friends and followers to see. Although it’s a great way to spread holiday cheer with those who cannot be there in person, it can also lead to privacy concerns. Specifically, the usage of TikTok (the “Platform”) has received ample attention from privacy advocates and security experts alike.It is important to note that TikTok is a social media platform that, like other similar applications, is intended to share data and information with a large network of users. However, the full extent of what is being shared is often misunderstood. Our intent here is not to dissuade use; rather, it is to educate users on what information they are actually sharing on TikTok, with whom that information is being shared, and why the Platform is often regarded as a security risk.TikTok - What Are You Actually Sharing?TikTok was first launched internationally by parent company ByteDance in 2017, and as of Q3 of 2022, it has upwards of 1.5 billion active monthly users. TikTok expects that it will exceed 1.8 billion users by the end of 2022. With that, the prevalence of the Platform is evident.  What is not, however, is the understanding of what information is being collected on the backend.TikTok’s Privacy Policy outlines what information “may” be gathered from its users, and what is described therein is generally expected from a social media provider.  For example, some information that is gathered upon registration is the user’s age, username and password, email or phone number, name and profile image.  However, it is reasonable to assume that most users are not aware what the Platform collects beyond basic profile information. It is also worth noting that users agree to these Terms of Service and policies upon registration to TikTok.In addition to profile information, TikTok will collect any user-generated information that is uploaded within a user’s account, regardless of whether the post is saved or shared. This includes comments, photos, livestreams, audio and video.  Additionally, the Platform can access (with permission) your device’s clipboard and collect any text, images or video that may be present. TikTok can also access and collect information from any other login sources or those that are linked to a user’s profile. This can include Google, Facebook, Twitter or any other service used to authenticate users to TikTok. Furthermore, third-party services such as advertising partners, data providers and analytics providers can be leveraged by TikTok to collect information about its users.Listed in the Privacy Policy as information that is “automatically collected,” specific device information is also obtained from users. Notably, device IP addresses, mobile carriers, “identifiers for advertising purposes,” device system and model types, installed applications and file names, keystroke patterns, connected audio devices (i.e., speakers or smart home devices) and location data. The Platform will even access and collect information on audio settings and the device’s battery state.Perhaps the most concerning issue from a security and privacy perspective is that TikTok collects audio and video information that can be used to pinpoint locations and specific demographics. Through analysis of audio and video context, TikTok can use collected data to identify “the objects and scenery that appear” or use “the existence and location within an image of face and body features and attributes” to identify users or the locations in which the content was created. The stated reasoning for this is to enable effects on the video, moderate content, classify demographics and recommend content and advertisements. However, there could be additional uses of facial and environmental recognition not explicitly listed. TikTok may also generate and collect text of any words spoken in user content.What Is Done with User Data on TikTok?According to TikTok’s Privacy Policy, the Platform does not sell personal information to any third parties, but will share personal information with “service providers and business partners to help [them] perform business operations." All this information may also be shared with organizations within the corporate group of ByteDance, the China-based parent company of TikTok. Any collected information can then be used to customize content seen on the platform, help TikTok assess and understand user activity (even across devices used by that account), interpret additional information about users (age, gender, interests) and advise on algorithms used to moderate what users see. Other social media platforms arguably follow similar models of information collection and sharing. So, the question is, why is TikTok often singled out for it? The combination of what information is collected, the algorithms used to moderate user content, and the presence of ByteDance is what causes concern among professional security and privacy communities.Furthermore, all keystrokes logged within TikTok’s app and browser means that they have access to every password, credit card number, and other sensitive user data that is typed. Taxonomies of user data and behaviors are being chronicled and catalogued, to be exploited for financial gain or blackmail.TikTok And National SecurityIn November 2022, FBI Director Christopher Wray testified to Congress that the FBI has national security concerns regarding the use of TikTok in the U.S. Director Wray cited that ByteDance being a Chinese company is concerning, primarily because this includes “the possibility that the Chinese government could use it to control data collection on millions of users, or control the recommendation algorithm which could be used for influence operations if they so choose, or to control software on millions of devices.” Generally speaking, the concern is that TikTok can be used to influence American perception through data collection and content moderation.The ability to moderate user content (i.e., controlling what users see) is typically justified by platforms for advertising or safety reasons. It can be argued that this is the case for TikTok as well, but the issue is that TikTok is used for more than just watching videos. A recent Forbes article cited that the number of U.S. adults who regularly access TikTok as a news source rose from 3% in 2020 to 10% by November 2022. Additionally, Pew Research found that 26% of all U.S. adults under the age of 30 routinely get their news updates from TikTok. Overall, the amount of TikTok users who refer to the Platform as a regular news source rose from 22% in 2020 to 33% in 2022.  It is important to note that other social media platforms have not seen such growth in this regard. In other words, TikTok is increasingly becoming a news source and with that comes the potential for a foreign entity to effectively control what news is being shared in the U.S.From an IT risk advisory and cybersecurity perspective, we can appreciate these concerns, especially with the parent company being located outside of the United States. TikTok’s Terms of Service and Privacy Policy pay little attention to security, privacy and confidentiality, with the only mention of security in either document simply noting that “reasonable measures” to protect information are implemented, but security is not guaranteed. Also, user information may be transmitted and stored in data centers that are outside of the U.S. With that, data can be stored anywhere and is accessible to anyone. The fact that user data is can be stored and viewed by agencies not listed naturally merits consideration from a risk management mindset.We hope that you enjoy your holidays and can get some much-deserved time off. Share your holiday experience with friends and family, just be mindful of what else you may be sharing.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Resolve to Prevent or Detect Financial Statement Fraud in the New Year As we approach the end of the calendar year for all organizations, and fiscal year for many, it’s a great time to commit to a resolution to prevent or detect financial statement fraud in the new year.According to the Association of Certified Fraud Examiners 2022 Report to the Nations, financial statement fraud schemes were the least common of the three primary categories of occupational fraud, accounting for approximately 9% of all cases. But they’re the costliest of the schemes, with a median loss of approximately $593,000 per case. Financial statement fraud is a deliberate alteration of a company’s financial statements in an attempt to mislead users of the financial information. Some common manipulations of earnings include: Recording revenue too soon An example would be recording future expected sales or uncertain sales, thus creating a false picture that may inflate a company’s share price Shifting expenses between periods This can cause a company’s net income to be exaggerated and costs to be understated, creating a false impression of net income Recording fictitious revenue Examples include double-counting sales, creating false customers, or even altering legitimate invoices of current customers A unique aspect of financial statement fraud is the need to “correct” or “continue” the manipulation in the new year or subsequent period through journal entries, so it’s important for financial professionals to review entries early in the new year for odd or unusual items related to the prior year. Numerous red flags or warning signs that can help recognize financial statement fraud include: A spike in earnings or performance before the end of the fiscal year or period Increasing revenue while cash flow remains static Missing or altered documents Unexplained journal entries When attempting to prevent financial statement fraud, it’s better to set up anti-fraud controls early to minimize the potential risk. For example, strong internal controls are a must, especially when it comes to segregation of duties. Segregation of duties related to journal entries, for instance, entails having more than one person be involved in the preparation, documentation, processing, review and authorization of significant entries, and subsequent review of the process by others, including internal audit.Remember that even though financial statement fraud is the least common of the three primary categories, internal controls are still important because of how costly fraud can be. It’s an important resolution to prevent and detect financial statement fraud by recognizing those red flags as we head into the new year.About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.    ### Key Benefits of Server Message Block Signing What is Server Message Block (SMB) signing and how can it help your organization?Primarily used to connect Windows computers, SMB (also known as security signaling) is a commonly used client server communication protocol used for sharing access to files, printers, serial ports and other resources on a network. To help detect threats that target SMB data, specifically man in the middle attacks, organizations can configure SMB signing via group policy objects (GPO).Image Source: https://www.techtarget.com/searchnetworking/definition/Server-Message-Block-ProtocolWhen SMB signing is configured, the origin and authenticity of network data traffic can be easily confirmed. This ensures the data's integrity and protects against potential attacks targeting any data transmitted over networks.Why should your organization enable SMB Signing?By implementing SMB signing, organizations can ensure the integrity of their data and detect potential attacks. Key benefits of enabling this measure include: Increased security: SMB signing helps detect unauthorized access to data and protect against potential attacks. Improved network performance: SMB signing improves the efficiency of data transmission over a network. Enhanced data protection: Organizations can detect data tampering and ensure data is not altered in transit. Compliance with industry standards: Many organizations are required to adhere to strict security standards and enabling SMB signing can help meet those requirements. In summary, enabling SMB signing via GPO is a crucial step for organizations looking to improve their network security.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### SEC and PCAOB Developments Conference Day 2 During Day 2 of the Current Securities and Exchange Commission (SEC) and Public Accounting Oversight Board (PCAOB) Developments Conference, some themes carried over from Day 1 such as digital assets, ESG, the importance of auditors and other standard setting bodies, and ensuring that investors are receiving the information necessary to make informed decisions. Members of the Division of Corporation Finance continued the discussion surrounding digital assets. While there are no new disclosure requirements at this time related to digital assets, the Division has provided some examples of disclosures based on existing requirements that focus on the direct and indirect impact of recent events (i.e., exposure to counterparties, risk to a company’s liquidity, a company’s ability to obtain financing, and legal impacts). In terms of accounting for digital assets, the Division has seen several methodologies applied by issuers. The appropriate accounting depends on several factors including the terms and conditions of the assets being offered, the rights of the holder & obligation of the issuer, vesting terms, conversion features, etc. The FASB noted that they are accelerating the standard setting for these assets. While ESG standards were not a primary focus today, the Center of Audit Quality (CAQ) noted that they support the continued enhancement of disclosures related to ESG to meet investor priorities. They plan to phase in these requirements both by registrant type and disclosure type. Both the PCAOB and CAQ spent time discussing audit quality, the importance of our audits and meeting investor needs. The members from the PCAOB emphasized the mission of their board, which is to serve and protect public interest. CAQ discussed audit quality and resources for audit committees. Audit quality is a shared responsibility between the external auditors, management, and members of the audit committee. The CAQ has seen an overall increase in audit quality over the past decade, primarily due to the implementation of SOX, and evidenced by the results of audit inspections. As technology has been used to enhance audits and firms continue to invest in technology, data analytics have enhanced the precision of audit quality and have allowed auditors to focus on higher-risk areas. One member noted that audit committees are often the “kitchen sink” of boards, taking much of the leftover responsibilities of boards. They encouraged audit committee members to revisit and possibly refresh their missions and responsibilities. Several resources for audit committees were mentioned, even including a tool committees can use to evaluate their external auditors. The CAQ has also placed an emphasis on reaching a more diverse range of students, particularly Black and Hispanic high school students, to the accounting field, as it is a field that many of those students are not aware of as a possibility. They have created an initiative titled Accounting Plus and involved a diverse group of successful individuals in both industry and public accounting and even social media influencers to reach the widest range of students as possible. Another recurring topic discussed related to the disaggregation of information on the income statement, segment reporting and income tax disclosures. The Division of Corporation Finance touched on the identification of reportable segments and encouraged management, auditors, and the audit committee to ensure that consideration is given to business lines separated and analyzed by chief operating decision makers (CODM) as individual reportable segments. This identification is important as it directly impacts the financial statement disclosures. The FASB noted that the disclosure of segment expenses, assets and profit/loss may be required on an interim basis as well as in the annual 10K. Some new topics arose as well, such as non-GAAP measures, areas of focus and agenda items of the PCAOB and FASB, and a general economic update. The Division of Corporation Finance placed significant emphasis on ensuring that undue prominence is not placed on non-GAAP measures (i.e., inclusion of tables/graphs and other ratios derived from non-GAAP information). They noted that this type of information can be misleading to users of the financial statements. They also reiterated that items included in the non-GAAP schedule must be non-recurring items disclosed as such. The Division of Corporation Finance members noted a couple of items that issuers should be considering throughout the process of preparing their 10Ks this upcoming reporting season. They noted that issuers’ disclosures surrounding critical accounting estimates should be revisited to ensure that they clearly show investors why the estimates are critical and the related uncertainties. Management’s analysis surrounding these items should become more robust in these times of uncertainty when judgment becomes more material. Issuers should also consider revisiting their disclosures of potential future risks in light of the current inflation, labor shortages, increased interest rates, etc. The PCAOB staff discussed the proposed quality control (QC) standard. They noted that it will require, among other things, the involvement of independent individual(s) in firm governance (for firms that audit more than 100 issuers), require firms to report on the effectiveness of their QC systems to the audit committees of every issuer they audit and to the PCAOB directly, and expand their responsibilities to correct deficiencies identified through PCAOB inspections. Both the PCAOB and FASB have many different projects in their pipelines. A few of the PCAOB’s more prominent projects include updates to the guidance on confirmation procedures, noncompliance with laws and regulations, going concern, substantive analytical and fraud procedures, and independence standards. Items on their research agenda include firm/engagement performance metrics and the usage of data and technology in audits. The FASB is currently in their post-implementation review process of the revenue recognition, lease, and current expected credit loss standards. This process includes getting feedback from stakeholders and improving the process of implementing significant, future standards. The FASB discussed their four standards released during 2022 (and the two more to come before the end of 2022). They are working on guidance to standardize accounting for digital assets. The Economic update panel noted that 2023 will be a challenging year for the US and global economies with slow growth, high-interest rates, high energy costs, and overall tight financial condition. Throughout 2022 we have already seen a spike in the default rate, it is the highest it has been since the 1980s. One member mentioned that financial crises (almost) never originate in the same place as the most recent crises, so he doubts that we will see a significant residential real estate crisis in the US. At this point, the residential housing supply cannot keep up with the demand. Additionally, consumers have accrued a decent cushion of equity over the past three years that is still available for use. The members also discussed a structural shift in global trading, specifically the pharmaceutical and medical industries moving away from using suppliers in China and moving to other countries instead. About Schneider Downs Public Company Assurance Services Schneider Downs provides audit, assurance and consulting services to publicly traded businesses in a wide range of industries. Schneider Downs is the independent auditor of record for operating companies in various industries and has experience with IPOs, IPO readiness, secondary offerings and underwriting diligence. We work proactively with management and the audit committee to develop an audit plan that effectively manages a registrant's risk in an increasingly complex regulatory environment, delivering on our promise of "Big Thinking, Personal Focus." For more information on the conference or interest rate reform, please contact a member of the Schneider Downs SEC and Public Company Industry Group. ### SEC and PCAOB Developments Conference Day 1 The American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) held its first day of the Current Securities and Exchange Commission (SEC) and Public Accounting Oversight Board (PCAOB) Developments Conference in Washington D.C. on December 12, 2022. The conference included notable speakers, including the SEC Commissioner, Acting Chief Accountant from the Office of the Chief Accountant (OCA) of the SEC, PCAOB Board Members, and others. The first day of the conference discussed the key roles that the profession plays in society through the communication of relevant and reliable information to investors while also stressing the importance of independence (in both mind and appearance) and ethical behavior to instill confidence in investors when making decisions.Matters on the mind of regulators and standard-setting bodies include reporting on disaggregation of financial information, digital assets, and Environmental, Social and Governance (ESG) efforts. At its heart, accounting is a communication profession that takes complex transaction events and communicates the matters to investors in a concise and transparent manner so that investors can make informed decisions. In an effort to increase focus on information that is relevant to investors, standard setters have narrowed their focus on the disaggregation of financial information, such as further disaggregation of cost of sales on the income statement, segment reporting, income taxes paid to include amounts paid in various jurisdictions, and cash flow data. Similarly, with the rising popularity and volatility of digital assets, the OCA has seen a rise in the number of consultations associated with accounting for these types of arrangements. With an expansive permutation of arrangements, there is a lack of authoritative guidance that points to the appropriate accounting; however, interpretation of other sections of the codification by analogy has been permitted. Future regulation is expected to gain traction in the upcoming years.Next, the SEC has received a significant number of comment letters surrounding ESG reporting, which are currently in the process of being reviewed. The speakers discussed the proactive steps that public entities should be taking today in order to be ready for the inevitable reporting requirements coming down the pike. The first recommended step was for entities to establish a governance figure to oversee the process. Once a governance body over ESG has been established, the next step is to identify the entity’s current capabilities to report ESG metrics and identify gaps as an internal readiness assessment. Entities should begin developing an overall level of comfort and understanding of how data is being accumulated. Entities should not underestimate the level of effort that compliance with ESG reporting requirements will take. One speaker noted that some of the complexities associated with implementation, modeling and reporting can make derivative accounting look simple. Entities should consider establishing cross functional teams to ensure that information is adequately documented in a SOX-like environment, so this information is auditable for external auditors. This is where serious rigor and discipline in internal controls, along with collaboration between accounting and operational teams, will be essential to meeting future reporting requirements.The first day of the conference wrapped up with discussions related to significant estimates and uncertainties, and cybersecurity matters. In terms of the current state of the economy, the inflationary economic environment, rising interest rates, labor shortages and supply chain challenges have posed challenges to entities when thinking about an entity’s internal control environment and the development of significant estimates. As a result, there is heightened risk of management bias over those estimates, including the impact on financial reporting and disclosures. Auditors should assess these economic uncertainties and document the potential fraud risks associated with these significant estimates to maintain good audit quality and protect the interests of investors with the reporting of reliable information.Cybersecurity defense is still trying to keep up with the pace of change in technology over recent years. Entities should ensure that there are sufficient policies and procedures in place to serve investor needs. Entities should also ensure that they provide sufficient disclosures to allow investors to make informed decisions and “price for risk” when making investment decisions, particularly if a breach occurs. Stay tuned for our future updates on Day 2 of the conference!About Schneider Downs Public Company Assurance Services Schneider Downs provides audit, assurance and consulting services to publicly traded businesses in a wide range of industries. Schneider Downs is the independent auditor of record for operating companies in various industries and has experience with IPOs, IPO readiness, secondary offerings and underwriting diligence. We work proactively with management and the audit committee to develop an audit plan that effectively manages a registrant's risk in an increasingly complex regulatory environment, delivering on our promise of "Big Thinking, Personal Focus." For more information on the conference or interest rate reform, please contact a member of the Schneider Downs SEC and Public Company Industry Group. ### How the Recent Economic Landscape is Impacting the M&A Market Were you planning on retiring soon? I’m sure this market has given you second thoughts. I’ve tried to not be a worrywart over the past year, and I do my best to listen to the Dollar-Cost-Averaging (DCA) theories and continue buying. Then I think, is this overbuying what’s keeping this market from full recession? Then again, Amazon had just under $5B in sales over the last holiday weekend. The short of it is, we never can predict the future, but we will sure try and make our best guess.How does this relate to M&A?On a broad level, the macroeconomy impacts the M&A market. As the federal reserve has been raising interest rates, the cost of borrowing has continued to rise combined with higher risk-free rates of interest being earned on cash. The impact of the losses from the last few quarters of the stock market were felt by everyone. Companies have been affected via their earnings reports or stock fluctuations. The impact is then felt by M&A.Factors impacting the level of M&A activity include the following: Overall market trends and the sentiment of the macroeconomy Inflation Money supply and the availability of debt Each of these items are hot topics.   According to the U.S. Bureau of Labor Statistics for October of 2022, the All Items index increased 0.4%, totaling 7.7% over the last 12 months. Many companies are beginning to have difficulty passing on the higher costs to customers because fiscal tightening continues to put stress on the overall market and cash flows for many companies and individuals.  As inflation has been on the rise, the Fed has been raising interest rates in an effort to reduce and curb inflation. Although the economy appears to be a in rough patch, there are always opportunities to invest and improve internally. Sometimes another set of eyes is just what you need.  In other recent news, The Federal Reserve raised the federal funds interest rates from 3.75% to 4.00%. This is not just impacting the VC market, but also consumers. Mortgage rates have climbed from 2.86% this time last year to 5.81% according to Forbes Advisor. Inflation combined with higher federal funds rates and the negative overall sentiment towards the market is leading to shrinking profitability.What we are seeing: Adobe’s planned acquisition of Figma for $20B was announced approximately two months ago. For some, this may be an exciting topic and show future earning potential. However, only 173 acquisitions of VC-backed companies were announced or closed in the last quarter (Q3). That might sound like a significant number of transactions, but compared to historical levels, it’s quite low. On the other side of the coin is Private Equity (PE). PE has both the capital and willingness to do deals. Overall, they have seen a comparable number of deals compared to last year. PE has run into some difficulties much like the market has, but not for the same reasons.  The macroeconomy is stifling growth for companies across many industries and as a result, the opportunities don’t seem as prevalent.  However, everyone can agree that 2021 was an outlier, and not sustainable. The resulting impact has been a slowdown in the number of transactions. However, PE has assured us that the appetite for deals is high and optimistic. If you are planning to retire, M&A is an option, along with succession planning and various useful approaches that we have assisted our clients with. If you have more questions on the process of a deal, feel free to reach out. Sell-side due diligence could be an option.About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page. ### The Top Ten Most Common Passwords of 2022 What were the most commonly used passwords of 2022? NordPass recently released their Top 200 Most Common Passwords list. The list includes several old favorites, including 123456 and password, but also gave way to some new ones as well like Euphoria and Encanto. The annual list offers a comprehensive breakdown of common passwords by country, gender and even the average time it takes to crack the listed passwords. The most common password across all countries polled is… password, which took the top spot from 123456, the most common password of 2021 and 2020. Prior to 2020, the most common password in the world was 12345. In the United States, the most common password of 2022 was guest with password coming in fourth place. 12345 and 123456 are also on the list. For a comparison, the top ten most common passwords of the United States and the rest of the countries are listed below. Source: https://nordpass.com/most-common-passwords-list/ Did you see one of your passwords on the list? Even if you didn’t, chances are people within your organization are using some of these passwords. Here are some helpful tips from our team on keeping your passwords secure… and off these lists in the future. Implement Strong Password Policies If you look at the most common passwords over the past few years, it seems quite evident that people are simply typing the easiest word/numerical sequence to meet their policy character requirements. Password (8 characters), 123456 (6 characters), 12345 (5 characters)… clearly not secure at all, but the thought process seems quite likely that their password choice is simple and easy to remember. This is a prime example of a policy that may sound secure but is setting up their systems to be easily breached.  With easily guessed passwords being a common avenue for a hacker to breach systems, it is extremely important to maintain rigorous password policies that maintain requirements for strong and complex passwords. Consider that a hacker’s time is valuable and if they have to spend considerable time trying to crack passwords that are complex, they will likely avoid wasting it if they deem that effort to be futile and they’ll move on to the next potential target. Requirements can include special characters, capitalization, and restricting any numerical/letter sequences – especially given that six of the top ten most common passwords in 2022 are repetitious or numerical sequences. Develop Password Blacklists Another way to force stronger passwords is to blacklist words or phrases. These can include common words like password and guest, but also phrases or words associated with a company or location that may sound secure but are easily guessable with any knowledge of a company’s background or location.  Sports teams, flagship products and company names are a great place to start in terms of blacklisting terms specific to an organization. For example, FlyEaglesFly may not appear on this list, but if you’re a Philadelphia-based company, it may be prudent to consider blacklisting that phrase. Create Passphrases Another alternative is passphrases. As our previous article discussed, passphrases are something only you would know and, in many cases, meet password policy requirements in terms of character count. Remember, a secure password is not automatically secure because it meets a site’s requirements. It’s level of security is based on its uniqueness, such as, something only you would know, that makes it very difficult to guess or crack. Require Multi-Factor Authentication (MFA) MFA became commonplace due to the shift to remote work during the pandemic and is a great way to supplement your password security. MFA is a layered approach to securing data and applications where a system requires a user to present a combination of two or more credentials to verify a user’s identity for login purposes.  Most commonly, MFA contains a combination of “something you know”, such as a password, and “something you possess”, such as a mobile phone. Secondary credentials can be a user or company-defined password, a randomly generated code from an app, phone call, email or simply a tap on a smart device. The requirement of a secondary action not only helps protect unauthorized access but can act as an alert that a breach is being attempted with compromised passwords. Use Password Management Software Another option to increase password security is to use password management software. The software acts as a master lock of sorts for your passwords and not only adds a layer of convenience to password security, but helps you create strong passwords with stringent requirements. And no, writing passwords on a slip of paper you hide under your keyboard at home is not a secure password management solution. Just ask Saul Goodman. If you have any questions about how to strengthen your password policies or if you’re concerned your  organization’s credentials aren’t  the most secure, feel free to contact our team at cybersecurity@schneiderdowns.com. Related Links NordPass – Top 200 Most Common Passwords Schneider Downs – What Are the Most Common Passwords of 2021? About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.   ### Why We Focus on Industry Specialization On November 30, 2022, the Schneider Downs industry group leaders gathered for a team dinner – essentially a meeting of the minds among of our subject matter experts across many of the industries we serve. The dinner marked the one-year anniversary of Schneider Downs’ efforts to further enhance our commitment to the industries we serve most commonly. Team leaders from all of industry groups celebrated their collective efforts over the year. Each group is individually challenged to identify and meet client needs that are unique to each industry, as well as to create opportunities for both professional and social networking. Additionally, team leaders are also challenged to identify new client opportunities as part of the firm’s commitment to ongoing growth. Our firm is always looking to grow, and our industry group leaders help fuel those efforts. We believe that our industry groups bring value to our clients through experience, expertise and our dedication to specialization across multiple business units of the firm: Audit Tax Technology  Consulting  No two industries are the same, and having teams dedicated to such specialization benefits the clients, and also provides professional development opportunities for our team members. We believe it is an important differentiator for Schneider Downs.Today, we have over 100 industry group team members focused on nurturing and cultivating relationships in their sector. The industry group leaders provide the direction and coordination of our firm’s resources to achieve its Vision 2030 strategy.  The team dinner on November 30th presented an opportunity for all groups to compare notes and best practices, but it was also a chance to celebrate their success and commitment. These leaders created the infrastructure of team management, vision and most importantly, execution of that strategy. (In fairness, I should also note that this is a group that always enjoys a good meal.)Schneider Downs recognizes the importance of relationships – from the community, employees, clients and prospects.  Our success comes from our people.  We acknowledge them and thank them. To learn more about Schneider Downs’ industry expertise, visit our industry group page.  ### Potential Income Tax Attribute Limitation with Ownership Change Whether we’re in a buying market or a selling market, it seems the M&A world continues to spin. With any potential acquisition, the buyer can be attracted to any number of aspects of the target company, which typically include the assets within the company, either tangible or intangible. And while the saying goes, “don’t let the tax tail wag the dog,” tax implications can certainly impact the value of the assets to be acquired. The target’s tax attributes, such as net operating losses (NOLs) that have been previously generated and carried forward, may hold value to the potential buyer. But, buyer beware, the IRS has restrictions in place that may limit the utilization of NOLs under Section 382 and income tax credits under Section 383 of the Internal Revenue Code. Section 382 was enacted by the IRS to prevent loss-trafficking by imposing a limitation on the use of NOLs that were generated prior to an ownership change of a C corporation. This limitation impacts companies classified as “loss corporations,” whereby the target has either NOL carryforwards, tax credit carryforwards, a net unrealized built-in loss or a carryover of disallowed business interest expense under Section 163(j). Should the target be a “loss corporation” under the above-mentioned rules, the impact of the Section 382 limitation upon sale needs to be considered if there’s to be an ownership change. This is where things can get complicated, as the determination of an ownership change – like most areas in tax – is not easily defined. While selling the entire stock of a corporation to an unrelated party can clearly be considered an ownership change, often there are partial sales, stock issuances or stock redemptions that can constitute a change in ownership and thus trigger the Section 382 limitation. Generally, an ownership change occurs when the cumulative ownership of 5% or more shareholders of a loss corporation has increased by more than 50% within a three-year period. Once we go through these complex rules and determine that a proposed transaction would cause a triggering event under Section 382, we need to look at the impact on tax attributes like the NOLs. This requires a determination of the value of the company at time of ownership change. The value of the C corporation, multiplied by the long-term exempt rate as prescribed by the IRS for the month of the transaction, will become the basis for the annual NOL-limitation calculation. Should the company also have income tax credits as of the date an ownership change is determined under Section 382, a similar calculation will need to be done to determine any limitation under Section 383. This article is intended to serve as a reminder of these rules to ensure consideration is appropriately given before completing a transaction. Contact your Schneider Downs representative if you’d like to discuss your current situation and any tax implications that may result from a proposed transaction. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Accounting for Pennsylvania Corporate Income Tax Rate Change It’s hard to believe it’s been five years since the Tax Cuts and Jobs Act of 2017 was enacted. Nearly everyone in the U.S. was impacted in one way or another by this reform. For corporations, the change to a flat U.S. income tax rate of 21% required nearly all companies to remeasure their deferred tax assets and liabilities against the new rate. And while changing tax rates can seem straightforward, aligning tax law with U.S. GAAP reporting requirements in accordance with ASC 740 is never as easy as it seems. Now, five years later, companies with a significant presence in Pennsylvania are being tasked once again with accounting for a recently enacted decrease in the state’s corporate income tax rate. On July 8 of this year, Pennsylvania Governor Tom Wolf signed PA House Bill 1342 into law. The bill includes a gradual reduction in the corporate net income tax rate over the next nine years, from its current 9.99% to 4.99%. For tax years beginning on or after January 1, 2023, the rate is decreased to 8.99%, then reduced by 0.5% annually through tax year 2031 to end at the 4.99% rate. Under ASC 740-20-45-8, companies are required to adjust their deferred tax assets and liabilities from changes in enacted tax laws or rates and record this impact in income tax expense/benefit in the period of enactment. The gradual rate change in Pennsylvania creates an additional step when calculating this adjustment. The company will be required to record its deferred tax assets and liabilities at the tax rate(s) in which they’re expected to reverse. Therefore, a rollout of the ending deferred tax assets and liabilities will be required each year to estimate the state tax rate that should be applied. Keeping in mind that the timing of these reversals is estimated, the impact of this rate change will continue to be adjusted for each period until 2031 when the state rate will stay at 4.99% under current law. There’s one other item companies should consider when adjusting their deferred tax balances. ASC 740 requires that any adjustments to deferred balances that relate to other comprehensive income (OCI) are required to be adjusted through income from continuing operations rather than adjusting OCI leaving a “stranded tax effect.” In 2018, the Financial Accounting Standards Board issued Accounting Standards Update No. 2018-02, reclassification of certain tax effects from accumulated other comprehensive income, to allow for a one-time adjustment to remove the “stranded tax effect” from U.S. tax reform and permit an adjustment between OCI and retained earnings. At this time, we note that the impact of the Pennsylvania rate change will be required to be adjusted through income from continuing operations even if related to OCI. Proper consideration should be given to remeasuring your company’s deferred tax assets and liabilities due to the recent Pennsylvania corporate income tax rate change. Contact your Schneider Downs representative if you’d like to discuss further the impact to your company’s financial statements. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Private Equity Transactions and 1202 Stock Normally, when we think of private equity owned entity structures, some type of flow-through structure comes to mind. Private equity owned structures are often set-up as flow-through entities because of the flexibility that flow-through agreements provide and the potential for a single layer of tax.However, for private equity firms targeting middle-market companies, there might be advantageous tax benefits of structures that include C-Corporations (in addition to the 21% tax rate).IRC Sec. 1202 (Sec. 1202) provides 100% gain exclusion of the greater of $10,000,000 or ten times aggregate basis of qualified small business stock (QSBS).This gain exclusion can provide a meaningful tax savings for structures that include QSBS. As a result, Sec. 1202 is worth a look, as private equity firms structure acquisitions of their portfolio companies.The requirements to qualify for the Sec. 1202 gain exclusion include: The shareholder must be a non-C Corporation shareholder and have held the QSBS for more than five years. At least 80% of the corporation’s assets must be employed in an active trade or business (other than certain service-type businesses such as accounting, law, and financial services) during substantially all the time the stock was held by the shareholder. The aggregate gross assets of the issuing company up to the time of, and immediately after, the stock issuance is no greater than $50 million.  “Aggregate gross assets” means the amount of cash and the aggregate adjusted bases of the other property held by the corporation.  For this purpose, the adjusted basis of any property contributed to the corporation shall be its fair market value at the time of the contribution. The issuing company must be a domestic corporation which is a C corporation for tax purposes. The stock was acquired by the shareholder at its original issuance by the corporation in exchange for money or other property or as compensation for services provided to the corporation. As with any detailed requirements in the tax code, the devil is in the details, including when you look at the requirements under Sec. 1202. However, for the acquisition of entities that fit the profile of a qualified small business or if you can structure into the profile, the exercise of analyzing these requirements and considering the potential tax benefits of Sec. 1202 and QSBS might be well worth the effort.About Schneider Downs Private Equity Firm ServicesSchneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions. To learn more, visit our dedicated Private Equity Firm Services page.  ### Bring Extra Water to Put Out That EV Fire On the morning of November 17, reports of cold, snowy and slick roads were all over the news. I’d heard “take your time” repeatedly. Actually, this isn’t what caught my ear. I’m a kid from Central Pa., so bring on the snow! But when the news reported a Tesla fire on Interstate 80 near my hometown, that’s what captured my attention. We talk about so many things regarding electric vehicles (EV), including infrastructure, tax credits, mileage and, supposedly, zero emissions (note my sarcasm; see my writeup on this one here). But this news caught my interest, since Zurich Finance & Insurance Manager Steve Schoener had just wrapped up a talk at the Pennsylvania Automotive Association controllers’ meeting where he discussed EV fire hazards. I hadn’t stopped to think about how flammable EV batteries are and how much water it takes to put out a fire until hearing Steve’s presentation. The Tesla in question that November 17 simply caught fire, apparently, when a large piece of debris became stuck under the vehicle near where the batteries are located. The news report went on to say that it took 12,000 gallons of water to put out the fire . Take a moment to think about that. According to the website firefighterinsider.com, the average fire engine holds only 500 gallons of water, which lasts about 15 seconds until empty. And as a comparison, one restoration company stated that it can usually take up to 20,000 gallons to put out an ordinary house fire.  As part of the report, Pittsburgh Bureau of Fire Assistant Chief of Risk Management Brian Kokkila noted, “You see the violent nature of the failure of the lithium-ion battery. This changes the complete environment we operate in when we’re suppressing fires.”Also interviewed was Praschant Kumta, a professor at the University of Pittsburgh Swanson School of Engineering, who mentioned that he’d seen this before when a pebble sparked a fire underneath an EV. He pointed out that a Tesla Model S contains around 8,000 batteries, which means there’s also 8,000 liters of organic materials that can catch fire. Professor Kumta is currently working on a safer version of these batteries at the Energy Innovation Center. One last interesting factoid: lithium-ion batteries are the same type we use on a regular basis, including in devices like cellphones. There’s a lot to think about when it comes to EVs. Hopefully, you’re evaluating your dealership insurance to protect you and your employees. Do you have enough to cover these fire hazards? We have a lot to do and a lot to learn when it comes to this changeover to electric. Our Schneider Downs Auto Advisors would love to talk more about it. Please feel free to reach out to discuss.You can reach a member of our team directly at contactsd@schneiderdowns.com.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.  To learn more, visit our Automotive Industry Group page.   ### Shared Assessment SIG Questionnaire – What’s New for 2023? Download the PDF version of this article here. Do you ever feel the burden of endless third-party questionnaires? Do they seem to be slightly different, yet similar at the same time? Do they seem to relate to various other frameworks that you follow and document, but they are not exactly the same? If you feel any of these frustrations, some of the changes made to the Shared Assessments 2023 Standardized Information Gathering (SIG) Questionnaire may provide you a little sigh of relief! For those that are not familiar, the SIG Questionnaire is a widely accepted tool that is used by many organizations as a part for their third-party risk management process, with the goal of a standardized questionnaire that can be used and relied upon in the industry. As 2022 is quickly rolling to a close, we are seeing the beginning of releases for new templates and guidance for 2023. One of those new releases is the 2023 Shared Assessment Third-Party Risk Management Product Suite, which includes the updated SIG Questionnaire. The various changes and additions to the SIG Questionnaire for 2023 will ensure that organizations have adequate coverage of all key and emerging risks as well as streamline the process and provide enhanced mapping to additional existing frameworks to avoid duplication of efforts, where possible. The changes to the 2023 SIG fall into three buckets: Clarity/Organization/Functionality – As the SIG Questionnaire is a very large, comprehensive tool, it requires frequent updates to ensure that it remains relevant, clear, concise, and user friendly.  Shared Assessments updated 1,600 control points, retired legacy questions, assigned “control category” and “control attribute” to all questions, improved visibility to content across domains, expanded content based on mapping reference documents, reorganized questions in each domain by topic and sequence for easier evaluation, as well as made functionality enhancements to the template. Risk Domain Updates – As emerging topics and trends fluctuate, Shared Assessments re-evaluates the Risk Domains within the SIG Questionnaire to ensure adequate coverage, while maintaining efficiency and alignment. This year, there were four updates to the Risk Domains. First, for greater visibility, a Risk Domain was added to migrate existing Environment, Social, and Governance (ESG) content form the Compliance and Operations Risk Domains into its own Risk Domain. Second, after the ESG questions were migrated to their own Risk Domain, the Compliance Risk Domain was renamed to Compliance Management. hird, the Security Policy and Organization Security Risk Domains were merged together to create Information Assurance. Lastly, the Fourth Party questions were moved into their own Risk Domain for greater visibility as this continues to be an area of focus for organizations and regulators. New Key Mappings – In efforts to allow the SIG Questionnaire to be widely used and cross-referenced to existing standards/guidelines, Shared Assessments completed four new key mappings and two special initiatives. The SIG Questionnaire was newly mapped to the following four standards: Federal Financial Institutions Examination Council (FFIEC) Outsourcing Technology Services guidance, the Federal Financial Institutions Examination Council (FFIEC) Architecture, Infrastructure, and Operations (AIO) guidance, the Federal Risk and Authorization Management Program (FedRAMP), and the North American Electric Reliability Corporation (NERC) Reliability Standards. Additionally, one of the special initiatives for the year was around ESG and expanding the depth of coverage of this topic. Finally, Shared Assessments has partnered with Secure Controls Framework (SCF) and will now be able to map directly to SCF’s comprehensive controls catalog and mappings using questions in the SIG Questionnaire. This collaboration expands the SIG Questionnaire library related to frameworks, laws, and regulations. In addition to the SIG Questionnaire, Shared Assessments also offers the Standardized Control Assessment (SCA) Procedure and a Vendor Risk Management Maturity Model (VRMMM) that were also updated for 2023 as well. Although these tools are less widely used, they are great resources to help your organization depending on the stage that your third-party risk management program is currently in. Additional information regarding these tools can be found at www.sharedassessments.org/products/. About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information or to get started contact us or visit us online at www.schneiderdowns.com/third-party-risk-management.   ### 2023 Cost-of-Living Adjustments for Retirement Plans and IRAs The Internal Revenue Service published 2023 Cost-of-Living Adjustments (COLA) in Notice 2022-55 on October 24, 2022. The COLA increases will become effective on January 1, 2023 and impact many aspects and types of retirement plans as well as Individual Retirement Accounts (IRAs).While most of these limits are typically adjusted each year by the IRS, the changes that will take effect in 2023 are relatively significant and impact nearly all retirement-related limits. The prevailing inflation dynamics in the United States are the driving factors behind the 2023 increases being significant relative to past years when compared on a dollar-basis.Retirement Plan Highlights:The elective deferral limits for 401(k), 403(b) and most 457 plans increased to $22,500 for 2023 compared to $20,500 for 2022.The catch-up contribution limit for 401(k), 403(b) and most 457 plan participants who are age 50 or older increased to $7,500 for 2023 compared to $6,500 for 2022. Therefore, plan participants who are 50 and older can contribute up to $30,000 starting in 2023.The annual contribution limit for 401(k) plans and 403(b) plans, which includes both employee deferrals and employer contributions (e.g., match and/or profit-sharing contributions), increased to $66,000 for 2023 compared to $61,000 for 2022.Note that catch-up contributions are not included in the annual contribution limit of $66,000, so a participant who is age 50 or older could have their 401(k) or 403(b) plan funded with up to $73,500 in 2023, assuming the plan is designed to accomplish as much and otherwised passed IRS required annual nondiscrimination tests.Individual Retirement Account (IRA) Highlights:The limit for annual contributions to an IRA increased to $6,500 for 2023 compared to $6,000 in 2022, but the additional catch-up contribution limit for individual aged 50 and older is not subject to a COLA and remains unchanged at $1,000.Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)Here are the phase-out ranges for 2023: For single taxpayers covered by a workplace retirement plan, the phase-out range is $73,000 to $83,000, up from $68,000 to $78,000 in 2022. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $116,000 to $136,000, up from $109,000 to $129,000 in 2022. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $218,000 and $228,000, up from $204,000 and $214,000 in 2022. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000. For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.For a list of these and other retirement-related cost-of-living adjustments for 2023, please click HERE, or visit www.sdretirementsolutions.com.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### FTX Filed for Chapter 11 Bankruptcy During the 2022 Super Bowl, Larry David told us in ads for FTX Group (FTX) that cryptocurrency wouldn’t work and was not worth investing in. Now, less than a year later, FTX has filed for Chapter 11 bankruptcy and will likely be investigated by the SEC and the Justice Department.Larry David, meanwhile, is being sued as part of a class action suit due to his representation of FTX.In the bankruptcy filing, new FTX CEO John Ray III stated that, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” It should be noted that Mr. Ray was once the CEO of Enron and oversaw its liquidation during its years in bankruptcy.Some of the more egregious examples of poor internal controls at FTX include: Alameda Research LLC, an affiliate of FTX, loaned former FTX CEO Sam Bankman-Fried $1 billion. Many FTX entities never had board meetings FTX did not maintain centralized control of its cash and did not have an accurate list of bank accounts and account signatories. FTX employees submitted payment requests through an online chat platform, which were then approved by supervisors using emojis. Corporate funds were used to purchase homes and other personal items for employees and advisors. It appears very few records were kept. Mr. Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time and encouraged employees to do the same. This is only a partial list of the internal control issues at FTX and the full story behind what happened there will take years to be written. Mr. Bankman-Fried’s net worth, once estimated at $23 billion, has all but evaporated. Hopefully, Larry David listened to himself and didn’t invest in FTX.All entities, no matter the size, need internal controls. If your entity needs a review of internal controls, suspects fraud or has a “complete failure of corporate controls,” please contact Tom Pratt or Brian Webster.About Schneider Downs Accounting Advisory Schneider Downs Accounting Advisory Services offers a variety of technical accounting advisory services as well as outsourced accounting and financial advisory services for every type of organization. To learn more, visit our Accounting Advisory Services page.  ### EVs Are Zero Emissions? Not! I’m sorry, I’m going to talk about the elephant in the room. Electric vehicles (EV) are not zero emissions. This is like saying, “I don’t eat.”Before you object, let’s ask ourselves a few questions about EVs: What minerals are in the battery and how did we get them? How did the battery get here? Where did the electric come from? Are there a million hamsters on wheels somewhere? There are a lot of other questions, too, like, “How do we dispose of these batteries?” Maybe they can be recycled; maybe they can’t. But let’s concentrate on the questions from above. I recently saw Graham Conway, principal engineer from Southwest Research Institute, discuss and compare the carbon dioxide (CO2) output of conventional, electric and hybrid vehicles. Conway argues that we’re inappropriately rushing to implement EVs. This video (click on the link to watch) is just under 14 minutes, but well worth the time. In it, Conway addresses the true carbon emission footprint of vehicles, the CO2 penalty that would catch most EV proponents off guard. He discusses the complexity of securing the minerals to make EV batteries and the current renewable electrical energy, factors that determine the true CO2 output over the vehicle’s life. Based on Conway’s expert advice, we should only be considering hybrids today, based on current available technology.Getting more of these minerals is going to be interesting. We all like tax credits, but to be eligible for some of the new credits available under the Inflation Reduction Act, there are restrictions surrounding where battery minerals can come from. You can find these rules by clicking here for a prior Our Thoughts On article written by a Schneider Downs Auto Advisor team member. Clearly, we’ll need to find new ways to get these minerals from the eligible countries, which is just another factor. The video was well received by controllers at our latest Pennsylvania Automotive Association meeting. Let us know your thoughts, and please feel free to reach out to your SD Auto Advisor to discuss.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry.  To learn more, visit our Automotive Industry Group page.   ### Buyer Beware: Five Common Holiday Scams of 2022 The holiday season means overeating, overspending, and if you’re not careful… oversharing financial information with cyber criminals.With the holiday season right around the corner, retailers across the country are ramping up their advertising efforts for the busiest shopping season of the year. Given that consumers have spent nearly $18 billion online on Black Friday alone the last two years, the holiday shopping season is one of the most lucrative times of the year for retailers. But retailers aren’t the only ones chasing holiday spending revenue.The shopping season is also one of the busiest times for cyber criminals, who view the holiday season as a prime opportunity to cash in on consumers who let their guard down due to increased holiday stress and shopping volume.While scams may be wrapped differently, here are some of the top cyber threats to watch out for this holiday season.The Amazing Deal If a deal seems “too good to be true,” it’s usually a tell-tale warning sign of a scam, but this old adage may not ring true during the holiday season when consumers are expecting large sales and discounts in line with Black Friday and Cyber Monday specials.  A 75” flat screen television for $100? A $500 recliner for $50?Under normal circumstances, nobody in their right mind would think that was a real deal, but on Black Friday or Cyber Monday, consumers may see this as a legitimate deal versus an obvious scam.This is the exact mentality threat actors prey on to get consumers to click their way to fraudulent websites and provide personal and sensitive financial information.Pro Tip: During and after the holiday sale season, be skeptical of all deals and don’t let your guard down even if you’re on a well-known retailer's website shopping for toys for your kids. Turbo Man isn’t worth having your credit card information stolen.Shipping and Payment ScamsOne of the fastest growing scams in recent years involves fraudulent communications regarding shipping or payment issues. Scammers simply send a text or email or pick up the phone to notify their target that a recent purchase has been declined or there is a shipping issue on a recent purchase.In many cases, scammers imitate large retailers like Amazon or FedEx with the hope their target recently ordered something online or made a shipment, both of which are extremely likely during the holiday season.Scammers will offer to remediate the issue, which normally involves the target providing credit card information or clicking on a link to an imposter website loaded with malware.The good news is, for people who remain vigilant, these scams are fairly easy to spot. The following list highlights some of the more frequent tactical mistakes and common warning signs to be aware of: Unexpected and urgent requests for money in return for delivery of a package Requests for personal and/or financial information Links to misspelled or slightly altered website addresses, such as "fedx.com" or "fed-ex.com" Spelling and grammatical errors or excessive use of capitalization and exclamation points Certificate errors or lack of online security protocols for sensitive activities Pro Tip: Avoid clicking on any links or providing information to unsolicited communications, and remember, you can always review your receipts for tracking numbers or contact the retailer directly if you have concerns over payment or shipping status.Imposter Charities The holiday season is also a season of giving, with many charitable organizations receiving an influx of donations during November and December.  In fact, the Tuesday after Thanksgiving is now recognized as Giving Tuesday, which began in 2012 to promote philanthropic giving during the busy retail season.Unfortunately, but not surprisingly, scammers have used the spirit of giving as an opportunity to pad their pockets through the creation of fraudulent charities.Whether they are imitating a well-known charitable organization or fabricating one like “The Human Fund,” the concept is simple… ask for monetary donations and keep all the money. In recent years, these imposter charities have asked for cryptocurrency or worse, stolen financial information by imitating legitimate online donation portals.If you are interested in donating this holiday season, the Federal Trade Commission offers consumer guidance on how to give to charity securely in this article.Pro Tip: Be wary of charitable requests that sound urgent, contain links or send you to websites requesting financial information.Social Media Scams Another popular holiday shopping trend is Small Business Saturday, which promotes supporting small businesses in local communities.With a growing number of small businesses using social media as an extension of their ecommerce ecosystem, it is no surprise that social media scams are common during the holiday season.In addition to ecommerce, social media is filled with advertisements from national retailers and primary channel crowdsourced fundraisers, such as GoFundMe.As easy as it is for a legitimate business to post advertisements and host an online store with secure payment options, it is just as easy for scammers to use the same functionality.Pro Tip: Be wary of clicking on social media advertisements or providing payment information to unverified online shops.Malicious Websites One of the common cornerstones of all the above mentioned scams is a malicious website.Some of these websites imitate authentic websites with the intent of tricking the target into providing financial and other private information. In other occasions, these websites are designed to install malware to breach connected devices, which are usually accessed when someone clicks on a phishing email, text or an advertisement.While there are typically red flags that would indicate that you are on a malicious website such as typos, disproportionate logos or bogus URLs, scammers are relying on the notion that you’ll be too busy to think before you act this holiday shopping season. If there is a hot item that is sold out at large retailers or you clicked on an ad from another site, chances are you may overlook something you would have noticed under normal circumstances.There are several free online tools that can help verify websites, including Google’s Transparency Report Tool.Pro Tip: Verify that you are on a secure website by looking for https:// and a padlock icon in the address bar.Whether you are shopping on Black Friday, Small Business Saturday or Cyber Monday or donating on Giving Tuesday, we hope our article helps you and your network do so more securely.CISA Holiday Cybersecurity Resources CISA Shop Safely Home Page CISA Online Holiday Safety Tip Sheets CISA Holiday Scams and Cyber Threats Press Release About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### The FTC Safeguards Rules Are Extended to June 9, 2023 The Federal Trade Commission (“FTC”) has extended its deadline to implement its safeguards rules for dealerships from December 9, 2022 to June 9, 2023. This seems to be a good move from the FTC to relieve some of the pressure that’s been put on our dealer clients.  Just like our tax returns, a six-month extension will give us some time to do this right!Schneider Downs’ cybersecurity leader, Carl Kriebel, gave his insight on the process back in August of 2022.  Please read Carl’s thoughts on the process titled "Automotive Dealerships and the FTC Safeguards Rule Deadline: Is Your Information Security Program Compliant?". About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page. If you have any questions on these safeguard rules, please reach out to any of our SD Auto Advisors.   ### Current E-commerce and Brick-and-Mortar Trends In recent years, e-commerce has become a main presence in the retail industry due to its convenience. However, after the pandemic people are more likely to shop in person now to get out of their house and be able to see and feel the product.Prior to the pandemic, we saw e-commerce growing rapidly and the pandemic only accelerated that growth. This led to retail stores having reduced hours, less staff, and closing of stores. With consumer behavior changing in this way, it has left retailers in a unique position. A key recent trend is the use of omnichannel strategy for retailers. This multichannel approach has mostly been benefiting the e-commerce side of the business. Some customer trends include customers trying on sizes and styles of goods in stores then purchasing them online as well as purchasing several sizes online then returning them in their nearest store. Although this is mostly negative for the brick-and-mortar retailers and the in-person experience, it can provide the customer with interaction with the staff and potentially introduce them to new products. There are situations where companies have used this approach to their benefit such as providing the sizes and quantities available in the nearest store and the location within the store. The delivery time and fees are the main downside to the e-commerce experience and providing the customer with an opportunity to eliminate those is important. While the main trend of brands has been to introduce products in store then move to online, Digitally Native Brands (DNBs) have shifted this trend. DNBs are companies that generate most or all of their sales from e-commerce. DNBs have started with a strictly online presence and then used their success online to grow their business through in-person sales. In the last few years, countless of DNBs have used the omnichannel approach in this way to help their brand immensely. The omnichannel strategy will be a crucial factor in the future of retail.Another key trend is the use of marketing to enhance the in-person shopping experience. Companies must create an atmosphere in their stores that can not be replicated by an online experience. Examples of this are offering free samples as well as conducting contests or giveaways within their physical store. This has been made easier to these stores due to the desire for interaction that was restricted because of the pandemic. These stores must focus their marketing efforts locally to enhance their stores. With the variety options available to advertise through social media, the companies must focus on local audiences that they will be able to get to go into stores.Companies have been using certain events like having a local celebrity in their stores to get the customers into the store to build a connection with them. These types of promotions and events in stores have been common in the last several years and they will continue to be prevalent as they are an effective way to get their customers into their stores. It creates an impression with their customers and can persuade them to spend more time shopping in person rather than online. Black Friday has always been a huge time to shop for the best deals in your local store, but it tends to be hectic. Companies have combatted this by starting their Black Friday sales early from a week to a month before the day. With the rising inflation levels, holiday spending is expected to drop but retailers are still optimistic about the upcoming season. This results in less of an emphasis on the big items and more of a value on the essential items. The holiday season is also when customer service is put to the test and most Americans prefer collaborating with live agent rather than communicating with one online. With all the current economic factors, the focus will be centered around the experience.About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance and Retail and Business-to-Consumer Services pages or email us at contactSD@schneiderdowns.com. ### Consumer Spending as Impacted by Increased Gas Prices American consumers are always concerned with their financial situation and their spending. Prices of given goods can drive spending habits across all types of consumers. With the residual effects of the COVID-19 pandemic and the economic fallout from the Russian invasion of Ukraine, many American consumers find themselves in a state of constant financial uncertainty.These major world events influence consumer spending drastically, and the effects could be seen earlier this year, specifically as gas prices crept toward peaks in June. From April to May, consumer spending on gas increased 4%, contributing to an increase of 43.2% from a year earlier. When looking at spending on retail goods outside of gas stations and grocery stores, consumers were spending 1% less in May compared to April. The implication is that because gas prices have increased similarly to the spring, consumers may have less ability to spend on other goods.The significance of these spring numbers is that we saw what happened to consumer spending on goods leading up to the gas price peak in June. Over the first half of the year, prices increased from an average of $3.315 in January to an average of $4.929 in June. Since then, prices have been steadily declining month over month until October as domestic supply began to meet the high customer demand. However, recently the national average has slightly increased to $3.815 compared to $3.700 in September. While this average is significantly lower than June, it is over 50 cents greater than the 2021 October average ($3.291) and over a dollar greater than 2020 averages.The important distinction about this increase from September is that while the national average had increased by about 7 cents a gallon last month, more than half of the 50 states have seen a weekly decline in gas prices: similar to the recent monthly trend after June. Certain regions are seeing increased gas prices because of refinery outages at plants in the Midwest and on the West coast. The most significant increases can be seen in California (10% week over week) and Alaska (11% week over week) due to the West coast outages as well as in Ohio (11 cents) and Illinois (18 cents) due to the Midwest outages.The higher fuel prices, particularly in these regions, are forcing retailers to pivot from more conventional methods of transportation of goods. Transportation providers are increasing delivery charges to offset their increased costs. Some retailers are even prompting suppliers to help them cover their fuel costs for transportation from supplier warehouses. We are seeing retailers start to rely on coal and renewable energies to maintain their supply chains across the country. The net effect of these changes is that retailers are forced to increase prices in order to pass on their transportation costs to customers. The issue with this is that consumer spending slowed down over the course of the year, resulting in retailers’ holding excess inventories. All this inventory piling up has a negative effect on the overall growth of the economy and health of these retail businesses. Now, with inventories hitting record highs, the traditional holiday discounts are starting to become more prevalent earlier to help get rid of excess inventory. Luckily for retailers, consumers have become more willing to spend during this gas price hike now, as we head into the holiday season.Both discussed time periods in the spring (April-June) and recently in the late summer (August-September) saw increases in gas prices, which in the spring led to the decrease in consumer spending, but the time of year is key when discussing the consumer reaction. To compare consumer spending on goods in the months of August and September, August saw a decrease in consumer spending overall while September saw an increase. The driving factor of these changes is the difference in gas and energy. In August, gas spending decreased by over $40B but in September, gas spending decreased by only about $8B. We can see the effects of increasing gas prices as the year wanes, but what is key about the difference between these two months is that spending in every single goods category tracked by the Department of Commerce increased by at least $900M in September. Consumers are spending more on goods in spite of increased gas prices. It is important to note that Americans’ spending tends to increase over the holiday season. In October, non-farm payrolls added increased by about 261,000. These people with new jobs and their willingness to spend could be the key to pushing the American economy toward healthy progress moving forward, similar to what we have seen over the course of Q3, where the US GDP saw growth of 0.6%. The long-term health of retailers during the holiday season is yet to be determined. If consumer spending continues to increase through to the new year, that could be the stimulant needed to help abate the negative effects of the rising cost of fuel in significant regions of the country.About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance and Retail and Business-to-Consumer Services pages or email us at contactSD@schneiderdowns.com. ### International Fraud Awareness Week 2022 Schneider Downs is once again proud to support the Association of Certified Fraud Examiners (ACFE) as it celebrates International Fraud Awareness Week.We have a long and established role in the fraud investigation and awareness field, through the numerous investigations we’ve performed over the years and our sponsorship of the annual Fraud and Corruption Awareness Seminar.Our Consulting group includes several Certified Fraud Examiners (CFE), and I serve as the president of the Greater Pittsburgh chapter of the ACFE.Our theme for this year is the Fraud Triangle, the graphical representation of a theory developed by Donald Cressey in the 1950s. Cressey was a criminologist and is widely regarded as a pioneer in the study of white-collar crime, along with his teacher and co-author Edwin Sutherland. The Fraud Triangle includes three elements found in most instances of fraud: Real or perceived financial pressure that the perpetrator is experiencing Rationalization that their violation of trust is acceptable or justified The opportunity to carry out the act While the elements of the Fraud Triangle are found in essentially every instance of fraud, some CFEs in our group have written Our Thoughts On articles in recognition of Fraud Week that highlight one particular aspect. Please see the following links for the articles: Perceived Opportunity: The Insider Threat Fraud at Wells Fargo: The Pressure to Perform The Rationalization Leg of the Fraud Triangle We may only focus on Fraud Week once per year in this way, but our professionals educate, assist and prepare clients throughout the year with their unique fraud concerns.Check out our Schneider Downs Consulting LinkedIn page throughout the week for additional information from the ACFE. If you have questions or concerns about fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com.About International Fraud Awareness WeekInternational Fraud Awareness Week, or Fraud Week, was established by the Association of Certified Fraud Examiners (ACFE) in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.Learn more at https://www.fraudweek.com.About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.     ### 5 Key Indicators Your Processes Need Digital Transformation How can digital transformation help maximize the value of an organization’s processes? Digital transformation can be defined several ways. At Schneider Downs, we define digital transformation as the use of technology and business process optimization to improve the stakeholder experience. But even beyond the basic definition, we also like to consider exactly how digital transformation truly impacts an organization’s people, processes and technologies. In this article, we explore some of the key indicators that a company may need digital transformation to help improve and streamline key organizational processes. 1. Duplication of Efforts Are there several processes that your organization uses to achieve the same goal? Are there instances where you find out there are duplicative efforts being made such as double entry or manual data management? In these cases, digital transformation can help identify process gaps and reduce instances of duplicative efforts or unnecessary work. 2. Lack of Data-Driven Decisions How are decisions being made? Does management have access to data to help drive strategy? The decision-making process is one that needs to take into consideration qualitative and quantitative data which, if not easily accessible, can lead to delayed, misinformed or uninformed decisions. 3. Multiple Locations and Procedures Standardized processes and procedures help organizations maintain stability across teams, departments and locations. If your organization has several locations that are not using standardized processes or even have internal issues due to compartmentalized procedures, digital transformation may help to define, streamline and improve those processes. 4. Processes Not Keeping Pace Just because a process was sufficient for a company in the first few years, it may not continue to work when the company grows. Whether the growth is organic from expansion or due to acquisition, leadership must evaluate if processes are keeping pace with the business needs. 5. We’ve Always Done It This Way When the immediate answer to a process question is “we have always done it this way”, chances are high that the process is broken to some extent. Not every process needs to be overhauled, but at the very least, they should be evaluated regularly to ensure it still aligns with its intended role and objectives. If any of the points noted above resonate with you, it may be time to consider how a digital transformation may help or organization improve your human capital, processes and technology. This article is part of series highlighting the different ways digital transformation can improve critical functions across organizations. Additional articles include: 5 Key Indicators Your Human Capital Needs Digital Transformation 5 Key Indicators Your Technology Needs Digital Transformation If you are interested in learning how Schneider Downs can help your organization with digital transformation, please contact the team at contactsd@schneiderdowns.com. Is Your Organization Ready for Digital Transformation? Take our brief Digital Transformation Readiness quiz to find out! Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap Schneider Downs Digital Transformation Solutions Overview About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### The Rationalization Leg of The Fraud Triangle The most widely accepted explanation of why some people commit fraud involves what is known as the Fraud Triangle. Coined by accounting sage Steve Albrecht, the Fraud Triangle consists of three legs -- financial pressure, rationalization, and opportunity – and hypothesizes that if all three legs are present, a person is more likely to pursue fraudulent activities. The Rationalization leg can vary based on the individual(s) involved. Some perpetrators have personal or family issues that provide them with reason to justify their actions, while others convince themselves that they’ve found a valid or deserving reason to carry out a fraudulent act, such as “everyone else is doing it.” In one of the most widely known acts of fraud in recent history, Bernie Madoff rationalized his illegal actions by stating that the stock market was rigged anyway, so there was no other way to get ahead of others. He also later shamed his clients for trusting him in the first place, claiming that they’d be wealthy regardless, stating, “None of my clients, even if they’d lost every penny they put in there, can plead poverty.” Another example: in 2015, a board member of the Somerville Homeless Coalition, located in Somerville, Mass., reviewed the organization’s annual financial statements and noticed that Chief Operating Officer Warren McManus had earned $12,000 more in compensation than the organization's top executive. It was then revealed that Mr. McManus had embezzled around $108,000 over 18 months by padding his paychecks and used the organization's credit card for personal expenses. He rationalized carrying out the fraudulent acts by convincing himself that he deserved the extra money due to working seven days a week and never taking vacation days. The executive director of the organization stated that the fraud prevented the organization from assisting nearly 100 families from going homeless. Other ways an individual could rationalize why they committed fraud include: Potentially losing a job unless the fraud is successfully committed Being spiteful toward upper management and committing fraud to get payback Needing extra money for a personal matter and “I have no other choice” Rationalization is known to be the wild card of the Fraud Triangle because it factors in emotional challenges, as well as the ability to manipulate others while operating in a false reality. Understanding why people commit fraud can help in preventing fraud at your organization. We may only focus on Fraud Week once per year in this way, but our professionals educate, assist and prepare clients throughout the year with their unique fraud concerns. If you have questions or concerns about fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. Related Articles International Fraud Awareness Week 2022 Perceived Opportunity: The Insider Threat Fraud at Wells Fargo: The Pressure to Perform About International Fraud Awareness Week International Fraud Awareness Week, or Fraud Week, was established by the Association of Certified Fraud Examiners (ACFE) in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education. About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. Sources: https://www.cnbc.com/2021/04/14/bernie-madoff-dies-mastermind-of-the-nations-biggest-investment-fraud-was-82.html#:~:text=He%20pleaded%20guilty%20in%202009,two%20sons%20turned%20him%20in. https://www3.bostonglobe.com/metro/2018/01/27/taking-from-charity-employee-theft-shockingly-common-nonprofit-groups/aGzL6qg5JnhkAsAbj7tMkO/story.html?arc404=true ### Perceived Opportunity: The Insider Threat This year, in recognition of Fraud Week, Schneider Downs is presenting a series of articles detailing each leg of the fraud triangle.An industry term coined by Steve Albrecht while working as an accounting professor at Brigham Young University and based on research done by criminologists Edwin Sutherland and Donald Cressey. In Albrecht’s words, “The Triangle states that individuals are motivated to commit fraud when three elements come together: Perceived pressure Apparent opportunity Rationalization that fraud is not inconsistent with one’s values The story below is a prime example of how the element of apparent opportunity  can play a role in leading insiders to commit fraud, even in well-resourced organizations.On November 1, 2022, the U.S. Attorney’s Office in the Northern District of California issued a press release titled ‘Former Apple Employee Admits Defrauding Apple of More Than $17 Million’ that provided details of a series of fraudulent acts committed by Dhirendra Prasad, a former Apple employee who pleaded guilty to conspiracy to commit mail and wire fraud and conspiracy to defraud the United States.Mr. Prasad was a buyer in Apple’s Global Service Supply Chain, mostly from 2008 through 2018. During that time, he was responsible for purchasing parts and services for Apple from vendors. His earliest known fraud began in 2011, in the form of corruption and asset misappropriation schemes in which Mr. Prasad would accept kickbacks, inflate invoices and steal parts. Those schemes ended up costing Apple over $17 million.Mr. Prasad had co-conspirators who owned vendor companies that did business with Apple. On many occasions, he and his collaborators colluded to resell Apple its own materials. Upon receiving payment for the stolen goods from Apple, the vendor-collaborators would then remit Mr. Prasad his share of the proceeds. To close the loop, Mr. Prasad created a shell company that would send false invoices to his collaborators, which would allow them to pass the illicit payments off as legitimate and claim fraudulent tax deductions. The total loss realized by the IRS was $1.8 million.This example illustrates the potentially catastrophic consequences of insider fraud – the type perpetrated by those inside the victim organization. In this case, Mr. Prasad had the ability to direct Apple inventory to his co-conspirators, generate purchase orders for materials that were shipped from Apple, and then was able to have those purchase orders converted into payments for his co-conspirators after Apple received its own inventory back. He was able to pull off various schemes like this for approximately seven years, costing his employer $17 million, despite the fact that he worked for one of the world’s largest companies, which presumably has a robust system of internal controls and a well-resourced internal audit function.The takeaway here is that insiders, even in large, well-resourced companies, may have opportunities to commit fraud for years without being discovered. This opportunity is only amplified when the insider is colluding with other insiders or, in this case, outsiders. According to the Association of Certified Fraud Examiners’ (ACFE) 2022 Report to the Nations, organizations that fail to promptly detect fraud can face losses that are many orders of magnitude larger than those organizations that detect fraud promptly. Organizations that detected fraud within six months, for instance, saw median losses of $47,000, while those that failed to detect fraud within five years saw median losses of $800,000. 3Organizations must develop and implement effective internal controls to combat insider fraud. While it’s likely impossible to eliminate entirely, those organizations that can promptly detect fraud can save hundreds of thousands, if not millions, of dollars. Per the ACFE, 42% of frauds are initially detected via a tip. Of those, 55% come from employees.3 If something is amiss or normal procedures are not being followed, employees will often be the first to know.To assist in eliminating insider fraud, organizations should have formal reporting procedures, including a fraud hotline or an online mechanism that allows employees to report fraud directly to the internal audit function or to those responsible with responding to fraud, without having to go through the usual chain of command. The hotline should include an option to report anonymously, so as not to miss out on tips from employees who fear reprisal. Organizations should also offer fraud reporting mechanisms for customers, vendors or anyone with whom it does business.Additionally, organizations should have clearly posted codes of conduct and should train employees regularly regarding their ethical obligations. This will help employees identify fraudulent and unethical behavior and also raise the perception of detection in the minds of would-be offenders.Segregating duties, along with greater management oversight, are also powerful tools that could help reduce the opportunity for fraud. For example, organizations could require the approval of purchase requisitions over a certain dollar amount by a supervisor before a purchase order can be generated. Additionally, those who process sales orders, generate purchase orders and those who have custody of inventory should ideally all be separate.Organizations with internal audit functions should test these controls regularly. It may not be feasible for smaller organizations and those without IA functions to completely segregate duties, but in these cases management should take an active role in reviewing transactions and procedures randomly on a regular basis.In general, organizations need to be vigilant toward the insider threat. Insiders are familiar with organizational controls and have the most opportunity to exploit control gaps and trust. Organizations that have effective anti-fraud controls can reduce the opportunity to commit fraud and lower the risk that fraud will persist undetected, potentially saving millions of dollars.We may only focus on Fraud Week once per year in this way, but our professionals educate, assist and prepare clients throughout the year with their unique fraud concerns.If you have questions or concerns about fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com.Related Articles International Fraud Awareness Week 2022 Fraud at Wells Fargo: The Pressure to Perform The Rationalization Leg of the Fraud Triangle About International Fraud Awareness WeekInternational Fraud Awareness Week, or Fraud Week, was established by the Association of Certified Fraud Examiners (ACFE) in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.Learn more at https://www.fraudweek.com.About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.    ### Fraud at Wells Fargo: The Pressure to Perform Over the course of a decade, Wells Fargo employees opened more than a million checking and savings accounts and over a half million credit cards for their customers. This might sound like quite an achievement, but the kicker is: they opened these accounts without the customers’ consent.In 1998, Wells Fargo shifted to a volume-based sales model, with cross-selling as its core strategy to increase growth. The company’s compensation structure was highly focused on cross-selling as a performance metric. A high-pressure “perform or be fired” culture, coupled with unrealistic sales expectations, resulted in employees using several “gaming” tactics to meet their quotas: Convincing customers to open accounts they didn’t need Forging customer signatures to open unauthorized accounts Creating PINs to activate unauthorized debit cards (referred to as “pinning”) Changing customers’ contact information to that of Wells Fargo employees to prevent customers from receiving satisfaction surveys or other account information Although top managers within the company were aware of these unlawful practices as early as 2002, it wasn’t until 2016 when customer complaints began to accumulate and regulators took notice.According to a Department of Justice February 21, 2020 press release, the investigation into the company’s business practices led to Wells Fargo admitting that “… it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.”In 2020, Wells Fargo agreed to settle the civil lawsuit and pay a $3 billion fine. The Office of the Comptroller of the Currency fined John Stumpf, former chairman and chief executive officer of Wells Fargo, $17.5 million. Other executives were fined smaller amounts. The bank also agreed to change its compensation structure and performance metrics to better align with the best interests of its customers.While all three components of the fraud triangle certainly played a part, pressure clearly played an exceptionally integral role in cultivating the environment that led to these unsavory practices.We may only focus on Fraud Week once per year in this way, but our professionals educate, assist and prepare clients throughout the year with their unique fraud concerns.If you have questions or concerns about fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com.Related Articles International Fraud Awareness Week 2022 Perceived Opportunity: The Insider Threat The Rationalization Leg of the Fraud Triangle About International Fraud Awareness WeekInternational Fraud Awareness Week, or Fraud Week, was established by the Association of Certified Fraud Examiners (ACFE) in 2000 as a dedicated time to raise awareness about fraud. The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.Learn more at https://www.fraudweek.com.About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.   Sources: https://corpgov.law.harvard.edu/2019/02/06/the-wells-fargo-cross-selling-scandal-2/ https://www.justice.gov/opa/pr/wells-fargo-agrees-pay-3-billion-resolve-criminal-and-civil-investigations-sales-practices https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/ ### The Impact of Inflation and Rising Interest Rates on Private Equity After an extended period of low interest rates, central banks around the world have been aggressively hiking rates in an attempt to control rising prices and prevent hyperinflation from taking hold. These increased rates have had a negative impact on global markets, but what effect do they have on the private equity industry? Private equity firms use a substantial amount of leverage, which makes them particularly sensitive to changes in interest rates. In a typical leveraged buyout, firms rely on debt issuance to fund a significant portion of the transaction. Lower interest rates produce larger returns, while higher rates require additional cash outflows to service the debt. Furthermore, lower rates mean that there are more funds available to private equity firms, which can result in increased competition and higher asset prices. When it comes time to exit an investment, firms can benefit from the lower rates with higher asset valuations, more buyers, and larger returns. Rising rates have the reverse effect. As borrowing becomes more expensive, private equity funds generate lower returns. Overall competition decreases and asset valuations drop, which can hinder returns for firms planning exits, but also provides increased buying opportunities for firms looking for undervalued assets. In addition, higher interest rates also make it more expensive for businesses to take on debt, which can stifle growth and reduce private equity returns. At the same time, rising costs and inflation might cut into profit margins and make businesses less profitable. The new interest rate environment is causing private equity firms to change their strategies and creating additional pressure to generate returns and ensure that cash flows are sufficient to service debt. Turning a profit in this environment will become more difficult, but firms that have produced excess cash during the extended period of low interest rates could benefit from more affordable valuations and lower multiples. With inflation and high interest rates stifling returns, private equity firms will need to rely on value creation, innovation, and genuine business growth in order to generate cash flows and keep investors happy with steady returns.   About Schneider Downs Private Equity Firm Services Schneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions. To learn more, visit our dedicated Private Equity Firm Services page.   ### 5 Key Indicators Your Human Capital Needs Digital Transformation How can digital transformation help maximize the value of an organization’s human capital? Digital transformation can be defined several ways. At Schneider Downs, we define digital transformation as the use of technology and business process optimization to improve the stakeholder experience. But even beyond the basic definition, we also like to consider exactly how digital transformation truly impacts an organization’s people, processes and technologies. In this article, we explore some of the key indicators that a company may need digital transformation to help with personnel-related shortcomings and opportunities. 1. Keeping Pace with Growth Organizations that are growing fast due to acquisition, new markets or market demand will most likely run into a scenario where their people simply cannot keep pace. This is not due to lack of effort or work ethic on their part; the simple fact is that there are only so many hours in a week and scaling manual processes to accelerated growth is a recipe for failure. 2. High Turnover in Specific Areas of the Business Unusually high levels of turnover in specific departments of an organization may be a sign that digital transformation is needed. Antiquated technology or processes may be causing workers unnecessary stress and extra hours, leading to turnover. 3. Inability to Find and Retain Talent Is your organization struggling to find or retain talent? Organizations that bog down their staff with dated technology and processes run the risk not only of high turnover, but also of not being able to attract new talent. 4. Misalignment of Roles and Responsibilities Do you have members of your C-suite or senior management team spending time on manual tasks such as searching through piles of spreadsheets or moving files between endless applications? Not only are tasks like these unnecessary, but they’re also simply not a good use of time, especially for executives and senior staff. Think about some of the most time-consuming tasks you or your co-workers spend time on – are they a good use of time? Do they fall under your job responsibilities? Is there an easier way they could be done? If the answers are yes, digital transformation may be a good option. 5. Single Point of Failure In the context of people, a single point of failure is an individual that there is no backup for – if this person quits or leaves, so does the business operation or process. The old adage of only being as strong as your weakest link really applies in this scenario and, believe it or not, we have first-hand experience seeing entire organizations coming to a halt when a person leaves unexpectedly or retires early. If any of the points noted above resonate with you, it may be time to consider how a digital transformation may help or organization improve your human capital, processes and technology. If you are interested in learning how Schneider Downs can help your organization with digital transformation, please contact the team at contactsd@schneiderdowns.com. This article is part of series highlighting the different ways digital transformation can improve critical functions across organizations. Additional articles include: 5 Key Indicators Your Processes Need Digital Transformation 5 Key Indicators Your Technology Needs Digital Transformation Is Your Organization Ready for Digital Transformation? Take our brief Digital Transformation Readiness quiz to find out! Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap Schneider Downs Digital Transformation Solutions Overview About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### Estate and Succession Planning: Eat the Elephant! It is often said that business owners are too busy working IN the business to work ON the business. I certainly understand. Who gets to the end of their daily to-do list early in the afternoon and thinks, “I have too much time on my hands, what else can I add to my plate?” Anyone raising their hands? I didn’t think so!As such, long-term goals are sometimes sacrificed for short-term goals and the daily grind. As the saying goes—How do you eat an elephant? One bite at a time—we are going to tackle estate and succession planning in a series of Our Thoughts On articles, designed to introduce the topic in small, bite-sized pieces. Let’s begin by making a distinction between estate planning and succession planning: The goal of succession planning is to determine how the company will continue once current business owners and/or key employees exit the business. Estate planning has the purpose of developing a plan for your personal assets (which include your ownership interest in the business) upon the occurrence of either death or incapacitation so that your assets are passed on according to your wishes in an efficient manner that minimizes taxes and other liabilities. In a closely held business, estate and succession planning can overlap, but these are two distinct concerns that must be addressed.One final word on the timing of estate planning. This is currently an excellent time to address estate planning since the current lifetime estate and gift tax exemption has an expiration date. In a nutshell, on the federal level, taxpayers can make annual gifts up to the annual gift tax exclusion, which is $16,000 per recipient in 2022 and will increase to $17,000 per recipient in 2023. In addition to the annual limits, a taxpayer may gift over that amount up to a lifetime gift and estate tax exemption, which is the total amount that you can transfer over your lifetime or your estate after your death without having to pay gift or estate taxes. The Tax Cuts and Jobs Act of 2017 (“TCJA”) temporarily boosted the lifetime exemption amount from $5.49 million to $10.98 million. Since it is indexed for inflation, the exemption is currently $12.06 million and will increase to $12.92 in 2023. For a married couple, that means that a combined exemption amount will reach $25.84 million in 2023. However, this TCJA provision is set to sunset at the end of 2025, meaning that the lifetime gift and estate tax exemption is set to be cut roughly in half beginning in 2026—or sooner depending upon what the politicians come up with next. (A version of the Build Back Better Act that was floated earlier this year included a provision to cut the exemption amount beginning in 2023, but this provision was not included in the final legislation.)Therefore, unless further legislation is passed that either limits or extends the current lifetime gift and estate tax exemption, your ability to transfer assets in a tax-efficient manner may be significantly reduced within a few years. As such, now is an opportune time to consider forming an estate plan.Estate and succession planning are key considerations for business owners and should be addressed years in advance in order to provide the greatest strategic benefit, to take advantage of changing tax laws and to be prepared for unforeseen circumstances.Congratulations, you have finished the first bite! Stay tuned for additional posts in this series on estate and succession planning considerations. About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties. Our combined expertise helps our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page.  ### A Sigh of Relief for Beneficiary IRA Owners Meeting Internal Revenue Service (IRS) requirements for required minimum distributions (RMDs) is of utmost importance for owners of traditional IRAs considering that a burdensome 50% penalty is levied on any undistributed portion of yearly RMD amounts. However, this has become increasingly troubling in recent years as the Secure Act, passed in December 2019, introduced significant changes to the distribution rules for non-spouse beneficiaries of traditional IRAs whose original owner passed away after December 31, 2019. This act effectively put an end to the use of “stretch IRAs”, an inherited IRA in which the new owner was permitted to defer taxability by basing the RMD calculations using their own life expectancy. Instead, the Secure Act introduced new requirements for non-spouse beneficiary IRA holders to fully distribute funds held in traditional IRAs by the 10th year following the year of the owner’s death. For many, these funds may be taken at any time within the 10-year window. However, beneficiaries will be required to take distributions in years one through nine if the original owner died following their required beginning date for RMDs. Provided that the IRS is still drafting final regulations for these rules, advisors and beneficiary IRA holders alike have been awaiting guidance as to 2021-2022 RMD requirements and potential penalties for having missed these distributions. Notice 2022-53, released in early October by the Internal Revenue Service, provided necessary guidance for beneficiary IRA holders regarding such concerns. While final regulations regarding the distribution rules for such accounts are not complete, the IRS advised that they are soon to come. In the meantime, Notice 2022-53 clarified that non-spouse beneficiary IRA holders may waive their 2021-2022 RMDs, provided the original owner passed before their required beginning date, and that the 50% penalty for undistributed funds will not be levied. As a result, the earliest RMD date for such beneficiary IRA holders would occur in 2023. Some important considerations arise from this communication by the IRS. First, a common goal of individuals and advisors is to pay taxes at the lowest rate possible. Accordingly, it may be advantageous for beneficiary IRA holders to take 2022 RMDs, although not required, to avoid being pushed into higher tax brackets in future years. Secondly, increasingly complex distribution requirements set forth by the IRS leads to important beneficiary designation concerns. Aging account owners with relatively little funds remaining in their traditional IRAs may want to reconsider beneficiary elections as to limit the complexity of account separation and distributions for their heirs. Finally, the IRS may issue refunds to beneficiary IRA owners who paid the 50% excise tax on specified RMD amounts for 2021 prior to Notice 2022-53’s release. Notice 2022-53 provides an opportunity for non-spouse beneficiary IRA holders to prepare accordingly for potential 2023 distributions, and as always, we at Schneider Downs Wealth Management Advisors recommend coordinating with your financial professional to learn how changing rules and regulations may affect your personal financial situation. View Notice 2022-53 Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Want More Money? Start Investing Early For a young college-aged student, the idea of retirement is often viewed as a topic of discussion for later in life. The more that college-aged students push the idea of retirement away, the more money they may be losing. In order to maximize growth potential, investing should begin as early as possible.There are many different ways to invest one’s hard-earned money. People can invest their money into individual stocks and bonds, real estate, retirement plans, and even cryptocurrency. Given these investment opportunities, one question always seems to arise: Which one is “the best?” Many factors play into cumulating an answer for a specific investor. One of the primary factors of choosing the best retirement plan option is the age of the investor. The given age of an average American college-aged student is typically between 18-22 years, and the average retirement age is 65. This allows for roughly 45 years to invest one’s money.Given this information, one of “the best” retirement savings options for a young adult is the Roth IRA.A Roth Individual Retirement Account (IRA) was created by the Taxpayer Relief Act of 1977 and was named after the late Delaware Senator William Roth, who was the primary sponsor of the bill. What makes a Roth IRA beneficial is the type of money that is invested. Investments are made with post-tax money rather than pre-tax money as with a traditional 401k plan.Another intriguing component of the Roth IRA is that the withdrawal of earnings is tax-free under basic circumstances. Similar to a 401k, once an individual becomes 59 ½ years old, they are allowed to take withdrawals from their Roth IRA. However, the difference is that withdrawals from a 401k plan are taxed at the investor’s marginal tax rate in the year of distribution. A retired individual may be in a higher tax bracket later in their life, which makes 401k withdrawals treacherous. On the flip side, Roth IRA withdrawals are tax-free, because the taxes were already paid on the money at an earlier stage in life.College-aged students are generally in the lowest tax bracket and should reap the benefits of this by contributing to a Roth IRA early. No matter how young you are, the reality of retirement is fast approaching, and it is better to face that reality with a well invested Roth IRA.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.To learn more, visit our dedicated Tax Services page.  ### New Phishing Scam Targets Verified Twitter Accounts The ambiguity around Twitter’s verification system has become a cybersecurity concern as threat actors are using the uncertainty to fuel a recent round of phishing emails.The month-long “will he or won’t he” saga surrounding Elon Musk’s purchase of Twitter effectively came to an end on October 28th when he officially acquired the social media platform for approximately $44 billion.One of the first Twitter features Musk indicated he would change is the verification process. Since Twitter’s inception, the platform has offered a “verified badge,” which is a small blue check mark on accounts to notable users, including politicians, organizations, journalists, athletes and other public figures.Being “verified” has been an important feature for the social platform where spambots and ill-intentioned people can easily create a fake account imitating a news source or public figure. If you are an avid Twitter user, you most likely use the blue check mark to validate the source of content—something especially important in the environment over the past few years.After officially taking over, Musk made clear his plan to change the verification process, suggesting a paid subscription for every user as part of the existing Twitter Blue premium subscription. He initially considered a $19.99 monthly fee, but following backlash, recently suggested an $8 package that includes less advertisements, priority interactions and extended media capabilities in addition to the verified badge. However, it is important to note nothing is official as of the timing of this article.This, of course, has set off many users who were already opposed to Musk owning Twitter—those who were vocal in their opposition of a paid requirement of any kind, citing the danger of verifying anybody who wants to be and in turn, making it extremely difficult to trust information.This debate about a new paid verification process has become a popular headline, which in turn, has gained the attention of threat actors who wasted no time getting involved.There have been several reports circulating with regard to a new phishing campaign  that attempts to obtain account usernames and passwords from existing users under the guise of a Twitter help form. The email targets existing verified accounts, requesting users provide account information to keep the free verified status before the $19.99 a month fee starts on November 2, 2022.As with most phishing campaigns, there are obvious warning signs the email is fraudulent. The sender email address is "twittercontactcenter@gmail.com", the subject line is “RE: Twitter Warning” and there is a soft sense of urgency with the narrative. It is also important to note that, unlike many phishing campaigns, there is no request for financial information and those who are managing social media for businesses or public figures may use poor judgement and just chalk up the request as part of the “new” Twitter verification process. This phishing campaign was built through several Google apps that may have helped it bypass Google’s automatic scanning tools and included an embedded Russian web host. The campaign was eventually taken down, but is likely just the first of many campaigns trying to capitalize on both rumored and real changes to Twitter under its new ownership.Twitter is aware of the recent phishing campaign and has tweeted a reminder from @TwitterSupport reminding users that they will never solicit users for login information via email, DM or non-Twitter websites.Regardless, the fact that we rely on the verified badge on the Twitter Support account to trust the information is ironic given the topic of the article.The new Twitter model should be an interesting experience at the very least.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Cybersecurity Awareness Month is Over… Now What? While 2022 Cybersecurity Awareness Month “officially” ends today, keeping ourselves and our organizations safe from cyber threats is a year-round responsibility. The unfortunate reality is with the end of the October most organizations will most likely pack up their security awareness materials for the year and move to the November’s themes. But, as we know from first-hand experience and daily headlines, threat actors don’t take any time off. That’s why keeping cybersecurity top-of-mind needs to be a personal and professional priority all year round, especially with the holiday shopping season right around the corner. With that in mind, the resources our Cybersecurity Team has compiled for 2022 Cybersecurity Awareness Month will be available year-round, and we encourage you to take a few minutes to review/share them again—both today and as necessary throughout the year. Our Latest Cybersecurity Resources Below, you can find links to educational resources covering top cybersecurity concerns, best practices and industry-specific challenges. Video Series: What Are the Top Cybersecurity Questions of 2022? This series of short videos cover topics including business email compromise, callback phishing campaigns, strengthening multi-factor authentication measures and third-party risk management. View the Video Series Whitepaper: Qualifying for Cyber Insurance in 2022 Learn about key requirements and security controls organizations must have in place before an insurance company will consider underwriting a cybersecurity insurance policy. Download the Whitepaper  Guide: Automotive Dealerships and the FTC Safeguards Rule Deadline Keep up to date with the new compliance requirements outlined by the updated FTC Safeguards Rule for automotive dealerships’ information security programs. Download the Guide Infographic: 10 Steps Contractors Can Take to Reduce Cyber Attacks Review ten key steps contractors can take to bolster cyber defenses and reduce cybersecurity attacks. Download the Infographic Schneider Downs Cybersecurity Articles Get the latest insights and thought leadership on trending cybersecurity news and current events from our cybersecurity team. Explore the Articles Schneider Downs Cybersecurity Resource Library Explore our robust cybersecurity resource library of infographics, quick reference charts, original articles, multimedia, whitepapers and webinar replays. Explore the Library CISA Cybersecurity Awareness Month Public Toolkit Download the 2022 CISA Cybersecurity Awareness Month toolkit that includes several tools and resources focused on cybersecurity basics and best practices. Download the Kit If you have any questions or are looking for resources on another topic please feel free to contact the team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### 5 Key Indicators Your Technology Needs Digital Transformation How can digital transformation help maximize the value of an organization’s technology? Digital transformation can be defined several ways. At Schneider Downs, we define digital transformation as the use of technology and business process optimization to improve the stakeholder experience. But even beyond the basic definition, we also like to consider exactly how digital transformation truly impacts an organization’s people, processes and technologies. In this article, we explore five key indicators that digital transformation can help your organization with technological shortcomings and opportunities. 1. Significant Use of Spreadsheets If your organization has endless spreadsheets for project management, accounting and other key business functions, chances are, significant time is being wasted tracking files, allowing data security to be put at risk. 2. Lack of System Integration Is your organization using multiple systems that rely on manual processes to speak to each other? Many organizations upgrade or introduce new systems as technology and business needs grow. While a commitment to new technology is a positive attribute, this often creates issues where system A doesn’t talk to system B, so staff must manually move files or data. Not only is this tedious, but this can also create data security issues, and becomes a waste of resources. 3. Lack of System Optimization One common pain point is the issue of having great software or technology but feeling that your organization is underutilizing systems and not grasping the full value of an investment. Remember, learning how to get the most out of your systems allows you to optimize work processes which maximize the value of your investment. 4. Lack of Data Access How accessible is your data? And more importantly, how fast can you access it? The ease of access and timeliness of critical reporting data (as well as the data security) are important considerations on evaluating if your technology is serving your business needs. 5. Technology Not Contributing to Growth Technology should ideally help organizations meet their organizational growth objectives, therefore, it is imperative to evaluate whether technology is a pain point or contributor to your organization’s growth. If any of the points noted above resonate with you, it may be time to consider how a digital transformation may help or organization improve your human capital, processes and technology. If you are interested in learning how Schneider Downs can help your organization with digital transformation, please contact the team at contactsd@schneiderdowns.com. This article is part of series highlighting the different ways digital transformation can improve critical functions across organizations. Additional articles include: 5 Key Indicators Your Human Capital Needs Digital Transformation 5 Key Indicators Your Processes Need Digital Transformation Is Your Organization Ready for Digital Transformation? Take our brief Digital Transformation Readiness Quiz to find out! Digital Transformation Resources Schneider Downs Digital Transformation Articles Schneider Downs Digital Transformation FAQ Guide Schneider Downs Whitepaper: Key Indicators Your Organization Can Benefit From Digital Transformation Schneider Downs Whitepaper: Navigating the Digital Transformation Roadmap Schneider Downs Digital Transformation Solutions Overview About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. To learn more, visit our dedicated Digital Transformation page. ### IRS Gave the Gift of Higher Estate and Gift Tax Limits for 2023 You know what they say: it is always better to give than to receive. Coincidentally, there is no better time to give than 2023 because the Internal Revenue Service (IRS) is anticipating that you will be able to give more tax-free gifts than ever before! Rev. Proc. 2022-38 announced projected inflationary increases in estate and gift tax limits in 2023. These include increases in the annual gift exclusion amount, the unified credit against estate tax amount, tax-free gifts to a spouse who is not a United States citizen, and the maximum reduction for real property under the special valuation method.The annual gift exclusion is the amount that you can gift to a person each year without having to utilize any of your lifetime exemption amount. In 2023, the IRS announced that you will be able to give gifts of up to $17,000 per person to as many people as you want. If you are married and choose to split gifts with your spouse, you can give up to $34,000 per person. This is an increase from the 2022 annual exclusion amount of $16,000 per person (or $32,000 for a married couple).If you feel like a $17,000 gift is just not enough, any amount given in excess of the $17,000 will be counted toward your unified credit against estate tax. The unified credit against estate tax is the amount you can give away tax-free during your lifetime over and above any gifts given that qualify for the annual exclusion. This amount will increase to $12,920,000 per individual, or $25,840,000 for married couples, in 2023. Without having a proper estate plan, if you end up giving more than your allotted unified credit amount, then that excess gift, as well as the value of anything passed down at your death, could be subject to estate and gift taxes.  Gifts between spouses are normally considered tax-free, but the tax-free gifts are limited if a spouse is not a United States citizen. The limit on tax-free gifts to non-United States citizen spouses will increase from $164,000 to $175,000 in 2023.In addition, the maximum reduction for real property under the special valuation method is projected to be increased to $1,310,000. This can help reduce applicable estate taxes on real property that is used in a family business if passed down from a departed loved one in 2023.  Whether your generosity is sparked by the upcoming holiday season, or you are hankering to learn about the benefits of creating an estate plan, please feel free to reach out to our office to see how you can take advantage of these increased exemptions and exclusions.About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### The Latest on the CommonSpirit Health Ransomware Attack CommonSpirit Health continues to deal with the fallout of a large-scale cyber-attack that impacted several patient-facing operations, including online portals, appointment scheduling and surgeries.CommonSpirit Health is one of the largest healthcare providers in the U.S., with more than 140 hospitals and 700 care sites spread over 21 states.In early October, CommonSpirit Health confirmed they were responding to a “major IT issue” that took several of their systems offline. A person close to the remediation efforts suspected the outage was a ransomware attack, which CommonSpirit Health confirmed in the statement below, along with more information on the ongoing mitigation efforts.“As previously shared, upon discovering the ransomware attack, we took immediate steps to protect our systems, contain the incident, begin an investigation, and ensure continuity of care. Our facilities are following existing protocols, which includes taking certain systems offline, such as electronic health records and patient portals. In addition, we are taking steps to mitigate the disruption and maintain continuity of care. To further assist and support our team in the investigation and response process, we engaged leading cybersecurity specialists and notified law enforcement.”How Did the CommonSpirit Health Ransomware Attack Impact Hospitals?CommonSpirit Health quickly released a statement confirming that clinic, patient care and associated systems at Dignity Health, Virginia Mason Medical Center, TriHealth and Centura Health facilities were not impacted by the ransomware attack. CommonSpirit did acknowledge that other sites had experienced operational impact but did not provide locations or affiliate names.  However, several hospitals have acknowledged they were impacted by the ransomware attack  including CHI Memorial Hospital in Tennessee, a portion of St. Luke’s hospitals in Texas, and Virginia Mason Franciscan Health in Seattle.How Did the Common Spirit Health Ransomware Attack Impact Patients?CommonSpirit Health patients felt the impact of the ransomware account in several instances, including an outage of the online patient portal and experience scheduling delays.Perhaps the most concerning report is from the St. Luke hospital system in Texas, where the cyber-attack reportedly delayed a major surgery due to the surgeon’s concern that post-operation care would be delayed because of the ransomware attack.In terms of patient data or personally identifiable information, CommonSpirit Health states that they are in the process of a forensic investigation, and they will determine if any data was impacted as part of the process. So, stay tuned to learn more on that front!More importantly, CommonSpirit Health patients are still able to get care at hospitals and affiliates based on their latest update. While they have acknowledged patient portals are still experiencing outages, CommonSpirit Health stated that their facilities are able to see patients without issue.For more information on the CommonSpirit ransomware attack, please go to www.commonspirit.org/update.The Healthcare Industry and RansomwareWhile CommonSpirit Health may be in the headlines today, the truth is they are not the first or last healthcare provider that will be impacted by a ransomware attack.OakBend Medical, Methodist McKinney Hospital, Yuma Regional Medical Center, Christus Health and an unidentified Missouri hospital are just a few of the other big name healthcare organizations that have reportedly  been impacted by ransomware in 2022 alone.So unfortunately, news of yet another attack on a large healthcare provider is not a huge surprise. In fact, according to a recent report from Sophos, 66 percent of healthcare organizations reported being hit with ransomware last year, an alarming increase from 34 percent in 2020. The report also found that 44 percent of healthcare organizations took “up to a week” to recover from a ransomware attack in 2021, and 25 percent took up to a month to recover. The average time for healthcare organizations to recover was one week.The Human Impact of Ransomware Attacks Targeting HealthcareIn the healthcare industry, that period of downtime can have dire effects that go far beyond monetary losses or breached data. Consequences from the inability to access medical data or healthcare services can impact the patients, such as this instance where a major surgery was delayed or even more severe consequences, including patient deaths.In 2020 a German hospital was forced to re-route a woman who needed emergency services due to their systems being shutdown from a ransomware attack. The woman was sent to a facility 20 miles away, but she tragically passed away in transit before arriving. More recently, a lawsuit was filed against an Alabama hospital alleging that a ransomware attack was responsible for removing safeguards that would have prevented the death of a newborn during surgery.Did You Know October is Cybersecurity Awareness Month?In support of Cybersecurity Awareness Month 2022, the Schneider Downs cybersecurity team is introducing a library of cybersecurity resources to help keep cybersecurity top-of-mind every day—at home, in the office and everywhere in between.Explore the new resources at www.schneiderdowns.com/ncsam.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Former Uber CSO Joe Sullivan Found Guilty of Obstruction of Justice and Misprision The verdict is in for Uber’s former Chief Security Officer (CSO) Joe Sullivan, who was found guilty of all charges related to the 2016 Uber data breach cover-up.A federal jury found Sullivan guilty of obstruction of justice and misprision, which is the deliberate concealment of one's knowledge of a treasonable act or a felony.Sullivan now faces up to a total of eight years in prison—five for the obstruction of justice charge and three for misprision. A sentencing date has not been announced.The prosecution opted to waive three additional counts of wire fraud charges related to the payments after the trail began, which saved Sullivan from facing a much longer sentence.    The trial and verdict have taken center stage in the security world, as this marks the first time a chief security officer has faced criminal charges stemming from incident response related activities.About the 2016 Uber Breach and Cover-upUber found itself at the center of one of the largest, most high-profile cyber attacks in 2016 that resulted in the breach of personally identifiable information, including full names, contact information and nearly 600,000 driver license numbers of more than 55 million Uber users and seven million drivers.The threat actors reportedly carried out the attack by obtaining access to Uber’s Amazon Web Server account through credentials stored on GitHub. They demanded $100,000 in exchange for deleting the stolen data.Following the ransom demand, Sullivan made the decision to pay the full amount via bitcoin in exchange for the data being destroyed.How Exactly Did Sullivan Break the Law?While paying the ransom is never recommended or advised, it is not a federal crime. What is a crime is covering up the said payment, which Sullivan chose to do in an attempt to hide the nature of the breach.Sullivan knowingly mispresented the ransomware payment as a bug bounty submission and had the attackers sign non-disclosure agreements. Bug bounty programs are commonplace among organizations and are designed to provide financial incentives for those who report vulnerabilities of products or services.By portraying the breach and ransom payment as a bug bounty reward, Sullivan changed the narrative from a serious cybersecurity breach to a more benign group of helpful individuals being rewarded for exposing a critical vulnerability.Sullivan knowingly concealed the breach from the Federal Trade Commission (FTC)and hid it from Uber CEO Dara Khosrowshahi, who went on to testify against Sullivan at trial.The obstruction of justice charges that came afterward were due to Sullivan failing to amend his testimony to the FTC regarding Uber’s security conditions after learning of the 2016 breach.Uber disclosed the incident and terminated Sullivan in November 2017. Additionally, Uber was hit with a $148 million penalty related to the cover-up in 2018 and agreed to 20 years of privacy audits.Uber also acknowledged guilt as part of a non-prosecution agreement that stated that Sullivan took steps to keep knowledge of the data breach tightly controlled and that Uber attorneys communicating with the FTC weren't told of the breach, even though they represented the company's security practices as much improved since 2014.Should Cybersecurity Executives Be Worried About the Sullivan Verdict?The simple answer is no.It is important to remember that Sullivan was not charged and convicted as a result of a breach happening under his leadership.  He was charged and convicted due to his cover-up and false testimony, and obstructing an existing FTC federal investigation over Uber’s 2014 breach.  “We expect those companies to protect that data and to alert customers and appropriate authorities when such data is stolen by hackers,” said U.S. Attorney Stephanie Hinds. “Sullivan affirmatively worked to hide the data breach from the Federal Trade Commission and took steps to prevent the hackers from being caught.”Did You Know October is Cybersecurity Awareness Month?In support of Cybersecurity Awareness Month 2022, the Schneider Downs cybersecurity team is introducing a library of cybersecurity resources to help keep cybersecurity top-of-mind every day—at home, in the office and everywhere in between.Explore the new resources at www.schneiderdowns.com/ncsam.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of expert practitioners offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Join us this December for “CPE Month” Schneider Downs is pleased to announce the return of an annual tradition: our year-end Continuing Professional Education (CPE) presentation events. Each year, the firm is proud to offer a collection of free CPE sessions to help clients and other friends of the firm stay current on the latest trends and developments in the industry. This year, Schneider Downs has expanded our roster of presentations to offer a record 12 hours of possible CPE, spread across four virtual sessions, over four days. Each presentation is themed around a specific topic or discipline. Included among the sessions will be:Tax Update (3 CPE Hours) Thursday, December 1, 2022  9:00 a.m. – noon Audit Update (3 CPE Hours) Tuesday, December 6, 2022 9:00 a.m. – noonConsulting, Technology & Advisory Update  (3 CPE Hours) Thursday, December 8, 2002 1:00 p.m. – 4:00 p.m.Personal Finance & Retirement Planning Matters  (3 CPE Hours) Tuesday, December 13, 2022  1:00 p.m. – 4:00 p.m. Specific presentations and speakers for each session will be announced in the near future. Please note that allocated CPE hours may be subject to change as the curriculum is finalized. As noted above, all sessions will be virtual, hosted on Schneider Downs’ On24 webinar platform. Those interested are invited to participate in all or some sessions by visiting the event’s registration page. “We are pleased to expand this year’s roster of CPE sessions to accommodate the broad range of interests our clients have expressed to us,” explained Sean Smith, Chief Marketing Officer. “By creating individually themed sessions, we can provide a deeper dive into each selected topic and also make it easier for our registrants to specify the content that interests them the most. One of the great benefits of virtual events is our ability to tailor each day to a specific topic or theme.”For more information about Schneider Downs’ CPE Month Webinar Series, send a message to contactsd@schhneiderdowns.com.     ### Electric Vehicle Tax Credit Imagine a couple of hours meaning the difference between saving tens of thousands of dollars and leaving that money on the table. That could be the case for many corporations or individuals considering buying Electric Vehicles “EVs” in the next year or two.Waiting to buy electric vehicles until after January 1, 2023 could mean forgoing $7,500 in tax credits per vehicle.As part of the Inflation Reduction Act of 2022 (“Act”), signed into law on August 16, 2022, Congress and President Biden changed the existing tax benefits available for purchases of new and used EVs. The Act changed many major aspects of Internal Revenue Code “IRC” Section 30D which provides the requirements and funding amounts for Qualified Plug-in Electric Drive Motor Vehicles Credit. First, the Act removes a limit on the number of EVs that any individual manufacturer can produce and still have their vehicles qualify for the credit. Previously, the American Reinvestment and Recovery Act of 2009 limited manufacturers to being able to produce 200,000 qualified vehicles for use in the U.S. and still have consumers qualify to receive the credit. Notable U.S. EV manufacturers, Tesla and GM have been disqualified from receiving this credit for a number of years because of hitting this lifetime limit. Now their vehicles will be eligible for the credit, provided they meet new additional requirements.Second, in order for a vehicle to qualify for the credit, the vehicle must have final assembly occur in North America and materials for batteries must not be sourced from “foreign entities of concern,” which include countries such as Russia and China. Notably, vehicles purchased before January 1, 2024 do not have to meet the sourcing requirements for battery production. Vehicles purchased either through a written binding contract before August 16, 2022, but which have not received delivery of the vehicle until after August 16, 2022 or were purchased after August 16, 2022 but before December 31, 2022 do not have to meet the final assembly requirements. The National Highway Traffic Safety Administration (NHTSA) has a VIN Decoder where consumers can search the VIN of their vehicle and see if it meets the final assembly requirement.Third, for vehicles placed into service after December 31, 2023, used vehicles are able to qualify for the credit as well. Previously, under the American Reinvestment and Recovery Act of 2009, used vehicles were not able to qualify for the credit. Used vehicles will not be subject to the same final assembly and battery material sourcing requirements as new vehicles but will receive a reduced maximum credit value of $4,000 per vehicle. In addition to the requirements outlined above, there are several other considerations consumers should make before purchasing an EV with the intent of receiving maximum value from the tax credit. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page or reach out to your Schneider Downs tax consultant.  ### Industry Keeps Eye on Rising Costs in Driver Recruitment and Retention Recruiting and retaining qualified truck drivers is and always has been a top-tier concern for nearly all transportation companies, from large national operations down to midsize regionals and small family-owned companies with annual revenues of less than $5 million.The only known published study that’s ever addressed the industry’s average cost to recruit truck drivers was performed by the Upper Great Plains Transportation Institute back in 2001. In that now-dated report, the average cost to replace a driver was estimated to be $8,200. The Bureau of Labor Statistics consumer price index says that the number in today’s dollars would be over $14,000. Expenses that contribute to driver turnover costs include recruiting, hiring, testing and screening, training and situationally dependent sitting product costs for delayed deliveries. Given those high-profile outlays, retention efforts are paramount. In 2021 and into 2022, trucking companies have also seen the cost of retaining current drivers grow. According to the American Transportation Research Institute’s cost of trucking report released this past August, driver wages and benefits in 2021 now account for 44% of the total average marginal motor carrier costs, followed by fuel costs at 22% and truck/trailer lease or purchase payments at 15%. The study notes that drivers’ wages have reached a record high, with the per-mile basis increasing 56.6 cents to 62.7 cents, or around 10.8%, from 2020 to 2021.Following a regressive 2019 and 2020, when the industry saw declines in total marginal costs per mile, last year saw the highest costs ever recorded, which has impacted many trucking companies’ gross margin as a percentage in 2021 and into 2022. Those organizations are closely monitoring the industry outlook and, depending on movements in the market, will need to be nimble in combatting the marginal costs per mile.About Schneider Downs Transportation & Logistics Services Schneider Downs’ Transportation & Logistics professionals possess the most current knowledge of transportation issues, regulations, trends and related financial impacts.The Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We have the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry. To learn more, visit our Transportation & Logistics Industry Group page.    ### Will a Gas Tax Holiday Aid in Lowering the Price of Gas? For the past few months, many Americans have been adversely affected by inflated gasoline prices at the pump.The government has attempted to lower the price of gas in several ways, including releasing 50 million barrels of oil from its Strategic Petroleum Reserve. President Biden has also proposed establishing a gas tax holiday to further alleviate the burden Americans are bearing daily.President Biden’s proposed gas tax holiday would temporarily suspend the current federal taxes of 18 cents and 24 cents per gallon for regular gasoline and diesel fuels, respectively.In addition, the President is urging states to contribute to this proposal by asking them to suspend their gas taxes as well, citing that the average state gas tax is approximately 30 cents per gallon, with Pennsylvania and Ohio amounts being 0.58 and 0.39 cents per gallon, respectively.Some critics believe that while it may help consumers at the pump, eliminating both federal and state gas taxes may create problems for industry projects that rely on the aforementioned taxes for funding. For example, funds derived from gas taxes would normally be earmarked to pay for infrastructure projects across the nation. An additional concern regarding President Biden’s tax proposal is the significant amount of trust he would be giving to the oil companies to pass the savings from the tax holiday to the consumer, rather than manipulating the prices at the pump to benefit themselves.Considering the pros and cons of President Biden’s proposed gas tax holiday and the concerns which surround the proposal, it is unlikely that the proposal will be approved by Congress, resulting in the Biden Administration having to find another solution to the inflated gasoline prices across the nation.About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.  To learn more, visit our Energy and Resources Industry Group page.  ### State Tax Considerations in a Remote Environment The COVID-19 pandemic has shifted many employees to working from their home or in another remote environment away from their traditional offices. These changes are becoming more permanent, in the form of remote employees as well as hybrid employees -- those working partly at the employer’s office location and partly from home.These changes in how employees work have created additional complexity in determining where taxpayers have nexus for state and local tax compliance purposes, what their state registration requirements are or should be, and eventually, how that impacts the income, franchise and sales and use tax filing positions.A key distinction in analyzing state tax considerations is determining where the employee’s tax home is located, time spent at that location, and business activity performed there.Generally, if employees are hired with the expectation to be at the employer’s office regularly and they are provided a workspace (even if it’s a shared space), the tax home would be the employer’s office. These would be your in-office or hybrid employees. If the employees are not expected to come into the office regularly but rather work out of their home, their tax home would be their personal residence. These would be your remote employees. When determining the tax home, the IRS and states would consider time ordinarily spent by the taxpayer at each post (office and personal residence) and the degree of business activity performed at each post. These classifications can impact not only where the employer is required to file tax returns for income, franchise, sales & use taxes, etc., but also what expenses employees may be eligible to claim reimbursement from their employer.  This can also impact any number of other considerations related to unemployment compensation insurance, workers’ compensation insurance, etc.Employers should closely monitor where they are hiring employees or where their employees are moving to ensure they are addressing all state and local tax implications. In Ohio, the local tax rules require filing where employees are working if they are working remotely, which could further expand the scope of tax filings and the tax compliance burden.Please contact your Schneider Downs representative if you would like to discuss your current situation and how these situations may impact your tax compliance requirements and state and local tax exposure.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### Hackers Leak 500GB Stolen Data from LAUSD Ransomware Attack The Los Angeles Unified School District (LAUSD) ransomware attack just got worse as Vice Society, the group behind the attack, decided to release 500GB of stolen data this past week.Following the initial attack on Labor Day weekend, Vice Society gave LAUSD until October 4th to pay the ransom but grew impatient with LAUSD’s decision to work with the FBI and U.S. Cybersecurity and Infrastructure Security Agency (CISA).According to TechCrunch, Vice Society grew frustrated that CISA was allegedly stalling the release of data and stated that CISA was “wrong” to advise LAUSD not to pay the ransom demand.Vice Society went into victim blaming mode, stating that LAUSD should have just paid the ransom since they typically always delete the documents, help to restore networks and never talk about companies that pay the ransom.The stolen (and now leaked) data includes a trove of personal information containing social security numbers, passport information, tax forms, contract and legal documents, criminal records, COVID-19 testing results and student psychological assessments.Vice Society is well known for targeting the education sector and suspected to be behind at least eight other education attacks this year.Another factor that may have led to the early release of the data was a press release from LAUSD outlining the attack, mitigation efforts and the staunch decision to not pay the ransom.  “It is important to note that this investigation is ongoing. Los Angeles Unified remains firm that dollars must be used to fund students and education. Paying ransom never guarantees the full recovery of data, and Los Angeles Unified believes public dollars are better spent on our students rather than capitulating to a nefarious and illicit crime syndicate. We continue to make progress toward full operational stability for several core information technology services.”While the ransom has not been disclosed by anybody involved, LAUSD Superintendent Alberto Carvalho stated that the level of demand was, “… quite frankly, insulting. And we're not about to enter into negotiations with that type of entity.”With the data now released, LAUSD awaits to understand the amount of damage this ransomware attack may likely cause.As the second largest school district in the United States, LAUSD has more than 1,000 schools and 600,000 students—making it a prime target for a large-scale ransomware attack like this.Details on how the attack happened and any related mitigation efforts are minimal at this point, but LAUSD has launched a dedicated incident-response line for questions about the attack. The phone number is 855-926-1129, and its hours of operation are 6:00am to 3:30pm PT, Monday through Friday, excluding major U.S. holidays.You can also follow LAUSD social media for updates on Twitter @laschools and @lausdsup, Instagram at @laschools and @lausdsup, and Facebook at @laschools and @AlbertoMCarvalho1.Did You Know October is Cybersecurity Awareness Month?In support of Cybersecurity Awareness Month 2022, the Schneider Downs cybersecurity team is introducing a library of cybersecurity resources to help keep cybersecurity top-of-mind every day—at home, in the office and everywhere in between.Explore the new resources at www.schneiderdowns.com/ncsam.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Something Fishy – Catching Fraud Before It Happens This past spring, a local fishing club hosted a children’s fishing derby, and my sons were excited to participate.While I’m not a fisherman, their great uncle is. He was able to attend with us and kindly outfitted the boys with fishing rods and a tackle box. We caught a few sunfish and fed the other fish plenty of worms from our hooks, but we didn’t catch any bass or trout to qualify for the biggest catch trophies. We had a great time, and my boys were hooked on the sport, but the lure of the “big catch” and the trophies presented during the hot dog lunch was strong. While children’s derbies offer a taste of competition and excitement, competitive local and regional fishing tournaments often offer lucrative prizes. At one recent such tournament, the Lake Erie Walleye Trail tournament, two competitors were accused of stuffing their catches with filets of other fish and lead weights.The pair submitted five fish for the competition and were set to win the top prize, but after questions arose about how much the fish weighed, a dramatic scene unfolded. Video of a confrontation between the tournament director and one of the competitors appears to show the director cutting open the fish and finding the foreign objects.The pair in question has faced allegations of cheating in prior tournaments and will likely now face renewed scrutiny of their prior performance.All organizations can benefit from developing antifraud programs, especially when it comes to hosting tournaments and competitions.Unfortunately, in many cases involving prizes and/or fame, some people are going to look for ways to bend or break the rules for their own benefit. I don’t know about the formal controls that were in place for the tournament in question, but it’s been reported that – contrary to most of the other competitors – the pair in question did not offer to donate their catch to a local food bank.This could be similar to a behavioral red flag in an occupational fraud situation, such as refusing to take a vacation or living beyond one’s means. One suggestion I’d make is to institute mandatory onsite cleaning and gutting of fish in a controlled environment prior to the distribution of any awards, similar to the antifraud controls we may suggest to small businesses, and not unlike a management review or proactive data monitoring.At Schneider Downs, we have years of experience helping organizations respond to fishy stories and red flags of potential fraud and helping them develop antifraud programs to catch fraud before it happens.If you have questions or concerns – or find a fish that weighs twice what it should (!) – contact our Business Consultants Tom Pratt at tpratt@schneiderdowns.com or Brian Webster bwebster@schneiderdowns.com.Read the full Walleye cheating scandel story on the Post Gazette here.About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.  To learn more, visit our dedicated Business Consulting page.    ### What Are The Top Cybersecurity Questions of 2022? The Schneider Downs cybersecurity team discusses some of the top cybersecurity trends and questions they faced in 2022.This series of short videos cover topics including business email compromise, callback phishing campaigns, strengthening multi-factor authentication measures and third-party risk management.Stephen Bish, Cybersecurity Consulting Manager, kicks off the series answering one of the most common questions he fields:How often should an organization rotate penetration test vendors?You can view the entire Top Cybersecurity Questions of 2022 series at https://vimeo.com/showcase/9849136 or select individual videos below. Business Email Compromise – What is business email compromise and why is it so lucrative for threat actors? Compliance – Which cyber maturity framework is right for us? Detection Responses – What is the difference between Endpoint Detection and Response (EDR) and eXtended Detection Response (XDR)? Multi-factor Authentication – How can we prevent attacks that bypass multi-factor authentication? Phishing – What is “callback phishing” and why is it growing so fast?  Planning for the Worst – What are the differences between business continuity, disaster recovery and incident response plans? Purple Team – What exactly is a purple team assessment and how does it work? Tabletop Exercises – What is a tabletop exercise (TTX) and who should be involved? Third-Party Risk Management – How can we reduce supply chain and third-party risk? The video series is just one of the many resources available from the Schneider Downs Cybersecurity team. We invite you to explore our full library of Cybersecurity Awareness Month resources at www.schneiderdowns.com/ncsam.About Cybersecurity Awareness MonthFormerly National Cybersecurity Awareness Month, Cybersecurity Awareness Month is a joint effort between the NCA and CISA started in 2003 to help individuals protect themselves online as threats to technology and confidential data become more commonplace. This year’s theme is “See Yourself in Cyber" and demonstrates that while cybersecurity may seem like a complex subject, ultimately, it’s really all about people.Learn more about Cybersecurity Awareness Month at www.cisa.gov/cybersecurity-awareness-month.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### October is Cybersecurity Awareness Month! October is right around the corner and that means Cybersecurity Awareness Month is back to help raise awareness on the importance of cybersecurity across the nation. Since 2004, the President of the United States and Congress have declared October to be Cybersecurity Awareness Month, helping individuals protect themselves online as threats to technology and confidential data become more commonplace. In support of Cybersecurity Awareness Month, the Schneider Downs cybersecurity team is introducing several new security awareness and educational resources including a  new video series which answers the top cybersecurity questions of the past year. You can view the new cyber resources on our dedicated Cybersecurity Awareness Month resource page at www.schneiderdowns.com/ncsam. We encourage you to share these resources with your personal and professional networks. Video Series: The Top Cybersecurity Questions of 2022 Members of the Schneider Downs cybersecurity and IT risk advisory teams share some of the top cybersecurity questions they have encountered over the past year in our new video series. Cybersecurity Shareholder Carl Kriebel, kicks off the video series with a discussion on how to mitigate supply chain and third-party risk. Topics include cybersecurity framework selection, businesss continuity plannning, callback phishing and tabletop exercises. Be sure to keep an eye out on our social channels for new videos throughout October. Whitepaper: Qualifying for Cyber Insurance in 2022 Learn about key requirements and security controls organizations must have in place before an insurance company will consider underwriting a cybersecurity insurance policy. Download the Whitepaper Guide: Automotive Dealerships and the FTC Safeguards Rule Deadline Learn about the new compliance requirements outlined by the updated FTC Safeguards Rule for automotive dealership’s information security programs. Download the Guide Webinar Replay: Chronicle of Higher Education's How to Recover From a Cyber Attack  Schneider Downs Cybersecurity Manager David Murphy joins a panel of experts to discuss the impact of cyberattacks on colleges and universities with the Chronicle of Higher Education. Please note The Chronicle of Higher Education requires registration to access the replay. Schneider Downs Cybersecurity Resource Library Tour our robust cybersecurity resource library of infographics, quick reference charts, original articles, multimedia, whitepapers and webinar replays. Explore the Library About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity.   ### Ten Steps Contractors Can Take to Reduce Cyber Attacks All organizations are subject to cyber-attacks, but during 2020 and 2021, the construction industry was the no. 1 target. Not an honor to be proud of, but it goes to show the face paced industry, coupled with an increased amount of remote users, causes a lot of opportunities for hackers. In addition, subcontractors’ invoices, owners’ payment applications and the day-to-day create magical holes in your system—and all it takes to exploit those vulnerabilities is for one employee to click something. To protect themselves, contractors must create a culture whereby cybersecurity is taken seriously, and that starts at the top of the organization. Below are ten steps contractors can take to reduce cyber attacks.Cybersecurity Best Practices for Contractors  Require multifactor authentication for remote access and cloud services. Provide regular cybersecurity training and security awareness education Perform regular vulnerability assessment and penetration testing to identify weaknesses. Implement real-time detection and response. Ensure proper vulnerability management. Test your backup and recovery plans. Block traffic to and from countries in which you don’t conduct business. Get appropriate levels of cyber coverage. Work with your trusted service provider to listen to their recommendations and observations. Implement strong password policies and requirements In addition to our article, you can download our infographic to share with your network. How Can Schneider Downs Help?If you are interested in learning more about our Cybersecurity services, please visit  www.schneiderdowns.com/cybersecurity or contact the team directly at cybersecurity@schneiderdowns.com.About Schneider Downs Construction Services Led by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. To learn more, visit our Construction Industry Group page.   ### ATA Wins Decision Blocking Rhode Island Truck-Only Tolling Plan Breaking News - On September 21, 2022, the United States District Court for Rhode Island ruled that the State of Rhode Island’s truck-only tolling plan (known as RhodeWorks) was unconstitutional. The trucking industry, represented by the American Trucking Associations (ATA) and three co-plaintiffs (Cumberland Farms, M&M Transport Services and New England Motor Freight), filed the suit in 2018. They argued that the RhodeWorks plan violates the Constitution’s Commerce Clause by discriminating against out-of-state trucking companies and by designing the tolls in a way that does not fairly approximate motorists’ use of the roadsThe complaint stated:“This toll regime was designed to, and does in fact, impose discriminatory and disproportionate burdens on out-of-state operators and on truckers who are operating in interstate commerce. By design, the tolls fall exclusively on the types of trucks that are most likely to be engaged in the interstate transport of cargo, while exempting automobiles and the smaller vehicles that are relatively more likely to be engaged in intrastate travel. The toll program also limits the tolls collected from trucks that make multiple trips within Rhode Island in a single day, a feature that was expressly intended to, and does in fact, provide disproportionate benefits to Rhode Island operators and those engaged in intrastate commerce.” This argument won the day.The reactions from the trucking industry leaders were swift: “We told Rhode Island’s leaders from the start that their crazy scheme was not only discriminatory, but illegal,” said ATA President and CEO Chris Spear. “We’re pleased the court agreed. To any state looking to target our industry, you better bring your A-game… because we’re not rolling over.”Also, the Rhode Island Trucking Association President Chris Maxwell stated, “It has been a long road to get to this point. But this is a tremendous day for our industry – not just here in Rhode Island, but across the country. Had we not prevailed, these tolls would have spread across the country and this ruling sends a strong signal to other states that trucking is not to be targeted as a piggy bank.” About Schneider Downs Transportation & Logistics ServicesThe Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.  To learn more, visit our Transportation & Logistics Industry Group page. ### The Latest on the Uber Hack The popular share-ride and food delivery company Uber suffered a significant cybersecurity incident which reportedly exposed private data, source code and vulnerability reports.Uber confirmed they were the victims of a severe hack that compromised key internal systems. The hack caused Uber to shut down several of their internal communication and engineering systems, but customer-facing operations were not impacted.Uber realized they were under attack this past Thursday when Uber employees reported seeing a message on Slack stating “I announce I am a hacker and Uber has suffered a data breach”. While some thought this was initially a joke, they quickly realized the severity of the situation when additional messages with screenshots listing the databases and systems the hacker claimed to have compromised appeared on the thread.Who Hacked Uber?The person who claimed responsibility for the hack stated they are 18 years old and targeted Uber because the company had weak security and underpaid their drivers.The person also reached out to the New York Times and other cybersecurity researchers with proof of his exploits, including images of emails, cloud storage and code repositories, which is a considerable given the fact that somebody who may still be in high school was behind this hack.Uber now believes he is affiliated with the Lapsus$ extortion group due to the hack focusing on attention rather than ransom demands. How Did Uber Get Hacked?According to Dark Reading, the attacker obtained the VPN credentials of an external contractor, likely by purchasing them on the Dark Web. The attacker then repeatedly tried to log in to the Uber account using the illegally obtained credentials, prompting a two-factor login approval request each time. After the contractor initially blocked those requests, the attacker contacted the target on WhatsApp posing as tech support (a popular social engineering tactic), telling the person to accept the MFA prompt — thus allowing the attacker to log in.Over the past few years, MFA themed attacks like this have grown in popularity due to increased remote work settings and with many phishing campaigns incorporating some sort of MFA feature to try and catch a target off guard.What Did the Uber Hack Expose?Following the hack, the threat actor had complete access to Uber’s Amazon and Google cloud environments that stores their source code and customer data. Additionally, the hacker retrieved large amounts of sensitive data including internal systems, email dashboards, Slack server, security software and VMware ESXi virtual machines.Perhaps the biggest concern is what many cybersecurity professionals view as the most valuable asset, Uber’s vulnerability reports.Uber participates in the HackerOne bug bounty program which allows security researchers to privately disclose vulnerabilities in their systems and applications in exchange for a monetary bug bounty reward. These reports are highly confidential, and are necessary to allow Uber the time and opportunity to develop a fix to prevent vulnerabilities from being exploited.According to BleepingComputer, the attacker quickly downloaded every single vulnerability report in Uber’s bug bounty program before losing access. These reports carry considerable value to a hacker as they can dramatically reduce the amount of time it takes to compromise an environment and exploit their vulnerabilities. In this instance, the threat actor may have chosen to use these reports themselves or they may have chosen to sell these reports to other threat actors on the dark web.HackerOne has disabled the Uber bug bounty program to prevent additional access to the Uber vulnerability report. The fact that Uber’s are out in the wild is extremely concerning and a prime example of how tools used to protect an organization can be quickly used against them.Repeat TargetThis is not the first time Uber has experienced a cyber-attack. In 2016, Uber suffered a breach that exposed information from 57 million drivers and riders.Unlike the 2016 breach that resulted in their security executive Joe Sullivan being fired and charged with obstructing justice due to supposedly covering up the ransom payment, Uber released a public statement immediately via Twitter and continues to provide updates on their newsroom website at www.uber.com/newsroom/security-update.While hacks on large companies, like Uber, make for great headlines, the truth is that social engineering is a threat to companies of all sizes and industries. Google, Facebook, the Department of Labor and Toyota, are some of the other big names on the social engineering victim list over the past few years.How to Spot Social Engineering AttacksSocial engineering is one of the most popular tactics used in cyber-attacks that targets the human element to coerce people into providing private data and/or system credentials. By targeting the human element of security, attackers can bypass strong password requirements, data security and other security measures – remember, as long as one person has credentials, threat actors may be able to obtain them as well.These attacks share many of the same red flags as other scams, which include unprompted communications, a sense of urgency and asking for credentials or private information.Remember, if you receive an unprompted communication requesting private information or one that is asking you to take an action that seems suspicious, you should verify the request by contacting a trusted contact, wherever possible.In this case, the employee could have contacted the IT department directly to see if the repeated MFA notifications were legitimate.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.  ### Zero-Based Budgeting: The Continued Pursuit of Savings As inflation continues, companies are turning to zero-based budgeting as a tool to scrutinize costs, find efficiencies and lower expenses. What is Zero-based Budgeting? Zero-based budgeting is a review of all expenses, with each line item expense needing justification to remain in the budget. In the recent Wall Street Journal’s CFO Journal article by Nina Trentmann, Robert Willems, a senior managing director at consulting firm Accenture PLC, said that many companies are “starting with a clean sheet, because they can’t rely on their budgets from previous years due to the impact of the pandemic.” According to S&P Global Market Intelligence, a data provider, total operating expenses at S&P 500 companies rose 17% in the second quarter, from $2.86 trillion in 2021 to $3.34 trillion in 2022, quantifying why financial chiefs are looking at ways to lower costs. Companies such as auto manufacturing giant, General Motors; industrial firm, Honeywell; cosmetics business, Coty; chocolate maker, Hershey; and alcoholic beverage company, Diageo have leveraged zero-based budgeting to improve business performance. Not each company is applying zero-based budgeting across their entire enterprise, but areas of cost scrutiny range from: operations, real estate, logistics, marketing, selling, general and administration, information technology, research and development, as well as slowing previously planned hiring. At Honeywell, CFO Greg Lewis mentioned that the company is entering into planning for 2023 with caution, targeting to bring fixed costs down by 1% per year. For Pennsylvania-based chocolate maker Hershey, the company regularly goes through every line of its profit and loss statement, Finance Chief Steve Voskuil said. For Diageo, with zero-based budgeting becoming part of everyday management, the company expects annual productivity savings of around $460 million a year. In each case, companies are leveraging data and developing decision support tools to help uncover areas of opportunity. With 2023 fast approaching, this could be as good a time as ever, if you have not done so already, to incorporate zero-based budgeting as a best practice for your company. This article was summarized from the September 6, 2022 article by Nina Trentmann in The Wall Street Journal: https://www.wsj.com/articles/zero-based-budgeting-gains-clout-as-a-way-for-companies-to-find-savings-11662463800?mod=hp_lista_pos5 About Schneider Downs Business Consulting Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experiences professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. ### Post-Pandemic Fraud Landscape Global data mining firm LexisNexis released its annual True Cost of Fraud Study for Ecommerce and Retail earlier this year. The report seeks to quantify the costs incurred as a result of fraud. It does this by calculating the total cost for each dollar lost to fraud inclusive of the fraud itself and all organizational costs associated with the fraud, including but not limited to investigation, remediation, legal, etc.  Trends identified in the report can give us clues about how the fraud landscape has changed and what it will look like going forward.In this year’s report, LexisNexis found that the cost and volume of fraud in ecommerce and retail increased substantially during 2022. Every $1 lost to fraud costs retail and ecommerce merchants $3.75, compared to $3.13 prior to the pandemic and $3.60 just last year, marking a nearly 20% increase since the beginning of the pandemic and a $0.15 increase over the past year alone.2 The increase is said to be related to the greater use of mobile commerce and coincided with the largest year-over-year increase in online/mobile transactions in history from 2020 to 20213, which has largely continued into 2022 despite the receding pandemic. Given the increased convenience of transacting digitally, this trend may slow but is unlikely to reverse. What kinds of attacks are online merchants increasingly facing? Card testing/credential stuffing These occur when an attacker obtains stolen credit card information or account credentials. The fraudster attempts to use the information to access a customer account and make unauthorized purchases. While consumers are the targets of this fraud, merchants may end up reimbursing customers when the fraud is detected. Return/refund frauds These occur when fraudsters request refunds for items, claiming that the merchandise never arrived, is broken or that they intend to return the merchandise. These kinds of frauds are on the rise. CNBC found that, on average, retailers expected returns of about 16.6% of merchandise during 2021 compared to 10.6% in 2020. It also found that for every $100 in returned merchandise, $10.30 is lost to fraud.1 Interception fraud A fraudster ships merchandise using a stolen account to an address the fraudster can access. This can be their own address, an address near them, or it could be the actual customer’s address, where the fraudster intends to intercept the merchandise from the customer’s doorstep. Many others, mostly attacks involve fraudsters posing as customers.  What are some strategies to combat the rise of these types of frauds? Lexis Nexis recommends several potential solutions: Assess the transaction risk. Monitor transaction patterns of individual accounts to see if current transactions match against previous patterns and identify irregularities. This is otherwise known as transaction scoring. Authenticate the individual. Verify names, addresses, dates of birth. Use two-factor authentication. Authenticate the account. Utilize biometrics, digital fingerprints, facial identification, geolocation, etc. Other potential mitigation strategies include: Maintain Payment Card Industry (PCI) standards Monitor IP addresses; flag and/or block those that appear suspicious Make CVV codes mandatory at purchase All indications are that in the coming years these kinds of incursions will become more common and attackers will develop new strategies to obtain sensitive customer information. Merchants will have to be creative if they hope to weed out fraudulent activity.Schneider Downs offers risk advisory, forensic accounting and other services to retailers and other business to consumer organizations. For more information, please email us at contactSD@schneiderdowns.com.About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity and Forensic and Investigative Accounting pages. 1CNBC: ‘A more than $761 billion dilemma: Retailers’ returns jump as online sales grow’ by Melissa Repko on January 25, 2022 2LexisNexis Risk Solutions: “True Cost of Fraud Study for Ecommerce and Retail”. 2022 US & Canada Edition 3US ecommerce grows 14.2% in 2021. Jessica Young, Digital Commerce 360. February 18, 2022Additional Sources:LexisNexis Risk Solutions: “True Cost of Fraud Study for Ecommerce and Retail”. 2021 U.S. & Canada Edition Statista: • UK: impact of COVID-19 on grocery shopping 2021 | Statista ### Effects of Rising Natural Gas Prices The market price of natural gas is currently near $8.00 per MMBtu, following a recent surge to above $9.00 per MMBtu, which was the highest price since 2008. The current forward NYMEX strip shows an average natural gas price close to $6.15 per MMBtu over the next 18 months.Forward gas prices are primarily driven by the following factors: Current and expected production levels Forecasted storage levels Industrial and international demand Weather expectations and availability of alternative fuels However, natural gas production has not always been equally responsive. Supply chain issues, the ability to secure labor and crews, and a general hesitancy of producers are collectively holding back the drilling of new wells and completing previously drilled wells. And while higher natural gas prices are good for producers and marketers, it brings attention to certain issues for companies that may have been on the “back burner” since natural gas prices had been exceptionally low during 2019 and 2020.Of course, higher gas prices result in higher net income, improved cash flow, higher margins, more easily met covenants, improved liquidity, increased availability to capital resources and improved credit ratings, among other benefits. Companies will need to weigh decisions regarding capital expenditure levels, debt reduction and dividends, to name a few.In addition to cash flow management, higher natural gas prices bring up the following accounting and audit concerns: Receivables will grow and bad debts will need to be considered. Customer credit limits and credit worthiness will need to be revisited. Planning for and explaining hedging losses and increased payments to hedge counterparties will be required. For public companies, additional MD&A disclosures may be needed. Income tax provisions will need to be monitored with the higher pretax income. Impairment testing becomes less likely to result in impairment charges with the higher future prices and estimated cash flows. Reported reserve quantities may be impacted. There’s certainly a lot to take in and understand. If you have questions surrounding the current natural gas pricing environment, feel free to contact your Schneider Downs consultant.About Schneider Downs Energy & Resources ServicesThe Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.  To learn more, visit our Energy and Resources Industry Group page.  ### Electric Vehicle Charger Tax Credit Extended and Expanded by the Inflation Reduction Act President Biden’s August 16th signing of the Inflation Reduction Act (IRA), a $739 billion tax, climate, healthcare, and energy law, is changing the landscape for the auto industry and upping the ante for an electrified and “cleaner” future. In addition to the sweeping changes in the electric vehicle tax credit, the IRA revives and expands the credit for electric vehicle (EV) charging equipment that had initially expired on December 31, 2021. The Alternative Fuel Refueling Property tax credit is extended through December 31, 2032; however, the rules have slightly changed.Commercial EV Charger InstallationsBusinesses that install EV chargers and station equipment at their property can qualify for a tax credit of up to 30% of the cost.  With the passage of the IRA, the maximum amount of the tax credit increased from $30,000 to $100,000 for projects completed after December 31, 2022. Projects completed before December 31, 2022 will still be subject to the $30,000 cap.The credit extension came with a few changes for installations completed between January 1, 2023 and December 31, 2032. The credit will now require that projects pay the prevailing wage for labor and meet certain apprenticeship requirements.The updated credit also limits the eligibility to installations completed along approved “census tracts”, which are typically low-income communities or non-urban areas.  If the additional requirements are not met, the credit may be reduced to 6% of the total installation cost.Residential EV Charger InstallationsHomeowners who install EV chargers on their property also qualify for a tax credit which will cover hardware and installation costs. The credit remains the same under the new bill; 30% of the project costs up to $1,000 cap. Like the commercial installation requirements, home installation projects must pay the prevailing wage for labor of qualifying equipment and bi-directional charging equipment is also eligible.It's important to remember that the federal tax credit is just one of the incentives available for customers installing electric vehicle charging equipment. On top of that credit, customers may be eligible for rebates from their state, utility, county, regional organization, or municipality.This is a nice win for taxpayers, as the cost of this equipment is extremely expensive, and the timeline to complete the project can be long. For more information about the Alternative Fuel Refueling Property tax credit or to assist you in maximizing your electric charging station credit, please reach out to myself or any Schneider Downs Auto Advisor at contactsd@schneiderdowns.com.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page.  ### Everything You Need to Know about the New Electric Vehicle Tax Credit President Biden’s August 16th signing of the Inflation Reduction Act (IRA), a $739 billion tax, climate, healthcare, and energy law, is changing the landscape for Americans interested in buying an electric vehicle (EV). The law replaces a previous EV tax break with a new set of credits called the Clean Vehicle Credits, which are dependent upon where the vehicle is assembled and where key vehicle components are manufacturedElectric Vehicle Tax Credit ExpansionFor EVs placed into service beginning January 1, 2023, the IRA extends the $7,500 tax credit for 10 years through December 31, 2032. The exact amount of the credit will be based on a calculation that considers factors such as the vehicle’s sourcing and assembly.Additionally, used EVs will finally receive a separate tax credit. To qualify, the used EV must be at least two years old and not being purchased for resale. The eligible credit will be the lesser of $4,000 or 30% of the used EV price.A couple other noteworthy changes include: Other eligible “clean vehicles” – hydrogen fuel cell vehicles, plug-in hybrids with four to seven kilowatt hours of battery capacity and commercial clean vehicles Beginning in 2024, consumers have the option to take the EV credit as a discount at the time of purchase vs. waiting until tax time to receive the credit benefit So what about the rest of 2022?What if you have a written, binding sales contract for an EV, but have not received the vehicle yet?The IRA includes a “transition rule” by which any customer who entered into a “written binding contract for purchase” of a new EV before August 16, 2022 (the date the law was in effect), may choose to take the old tax credit and conform to the old rules, even if the vehicle is delivered after the January 1, 2023.  Customer reservations are not explicitly covered in the bill’s language, but 5% deposits and signed contracts are.For any consumer that enters an EV sales contract between August 16, 2022 and December 31, 2022, the credit eligibility is subject to the new North America assembly requirements, but the old 200,000 sold EV cap.Once a manufacturer hits the 200,000-vehicle sold cap, the credit drops to 50% and eventually zero. Today General Motors and Tesla have reached the manufacturer cap and are not currently eligible for the Clean Vehicle Credit through December 31, 2022.That means if you want to buy a new Chevy Bolt today, a US made EV, it will not qualify for the Clean Vehicle Credit. But if you wait until January 1, 2023, those old 200,000-vehicle limit rules will disappear, and you can once again qualify for the EV tax credit.Steps and rules to consider today in determining eligiblity and maximizing your credit So now that you have the new Clean Vehicle Tax Credit background and you’re in the market for a new EV since August 16th; here are 4 steps to help determine your eligibility and maximize your credit.1. Your income mattersNow that you’ve found that perfect EV, the last hurdle to obtain the Clean Vehicle credit is an income cap.  Beginning January 1, 2023, tax filers are eligible for the credit if their income is less than $150,000, for heads of households less than $225,000 and joint taxpayers if their combined income is less than $300,000.2. EV assembly must be in North AmericaAs of today (the list will continue to grow), there are 30+ Clean Vehicles assembled in North America which can be found here on the Department of Energy’s website.  If the EV is not listed, the assembly location can also be determined by typing in the VIN at the bottom of the website.3. The 200,000-vehicle sales cap expires December 31, 2022Some manufacturers that assemble vehicles in North America but have sold 200,000 units will be eligible for a reduced credit or no credit at all. Those EVs can also be seen on the Department of Energy’s website. The IRS has a list of qualified vehicles and credit amounts here sorted by manufacturer for EVs purchased and delivered before December 31, 2022.  The 200,000-vehicle sales cap will be removed beginning January 1, 2023.4. The EV final purchase price matters beginning January 1, 2023New battery electric cars that cost more than $55,000 do not qualify for the Clean Vehicle tax credit. New electric SUVS, vans and pickup trucks that cost more than $80,000 are ineligible.  And no, there is not inflation adjustment for future years and final vehicle price matters (so all add-on packages impact eligibility).Complicated enough?Added battery manufacturing complexities to 2024 and beyond – 2 additional stepsThere is an important nugget on page 366 of the IRA that adds battery component requirements beginning January 1, 2024 that is already giving auto manufacturers headaches.Under the new rules, EVs with battery components sourced from “foreign entities of concern,” like China (where most battery parts and minerals come from), will no longer qualify for the tax credit if they are placed in service after January 1, 2024.  If the battery only contains minerals from these countries and no other parts, the vehicle will become ineligible beginning January 1, 2025.What are the battery requirements in the Clean Vehicle Tax Credits?  And how can it limit my $7,500 credit?EVs that go to market by January 1, 2024 must exceed 40% battery components assembled in North America threshold. EVs that come to market during 2024 must exceed 50%. And it goes up from there: 60% for EVs that go on sale in 2025 70% for EVs that go on sale in 2026 80% for EVs that go on sale in 2027 - 2028 100% for EVs that go on sale in 2029 Let’s break this down. It’s 2024 and you’re buying an EV that is assembled in North America. If 41% of its battery components are assembled in the region as wellyou have met half of the EV tax credit criteria and will be eligible for $3,750.Let’s review the raw materials criteria for the other half of the credit.Where do the battery materials come from?Just like battery component assembly, the law tackles the problematic issue of where the raw materials used in the battery come from.After 2024, any vehicle with “critical minerals” that were extracted, processed, or recycled in a “foreign entity of concern,” will not qualify for the other half of the EV tax credit, so $3,750.That same year, the law has a percentage requirement for where these critical minerals come from. In short, a certain percentage of critical minerals must be extracted or processed in countries with which the U.S. has a free trade agreement.The percentage requirement can also be met if they have been recycled in North America. That recycling part is going to become even more important as these percentages increase, and perhaps big business for startup battery recycling companies. The percentage requirements: 40% of critical minerals through end of 2023 50% in 2024 60% in 2025 70% in 2026 80% after 2026 So what is a critical mineral, anyway?The law has a long list of critical minerals including lithium, graphite, cobalt, nickel, and manganese.Final food for thoughtAccording to the Alliance for Automotive Innovation, there are currently 72 EV models available for purchase in the US. Of these models, only 22 qualify under the new Clean Vehicle tax credit rules. By 2029, when the additional sourcing restrictions go into effect, no EVs today would qualify for the full credit. As you can imagine, the pressure will continue to mount for automakers to curb reliance on “foreign entities of concern” and pave a path forward to a battery powered future.Schneider Downs Automotive Services Group will continue to monitor guidance relative to the new Clean Vehicle Tax Credit. Detailed guidance on the credit is expected to be issued before year-end. In the meantime, feel free to reach out to any of our Schneider Downs Auto Advisors at contactsd@schneiderdowns.com for accounting, tax, technology, and business advisory needs.About Schneider Downs Automotive Industry Group The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. To learn more, visit our Automotive Industry Group page.  ### 2022 Down Markets: Costly Investor Mistake and The Powerful Growth Opportunity For investors, the year 2022 has been quite the challenge, as markets are experiencing some of the worst performance in decades. The year has brought a significant amount of uncertainty due to sticky inflation, risk of U.S. recession, a war in Europe, residual COVID-19 supply chain crises, and the weakening of corporate profits from eroding consumer optimism.For many investors the previous market declines in our past have become a distant memory, including the 2008 housing market collapse, the dotcom crash of 2000, and the market crash during early 1970s. More recently the 2020 market decline taught investors some valuable lessons about staying invested during the selloff rather than make an irrational emotional response to the temporary market conditions, specifically when COVID-19 first arrived in the U.S.In addition to these lessons learned, the uncertainty in the market during this time also presented opportunities for investors to take advantage of, specifically within retirement plans, if they increased their contributions when stock prices were down. It is an important strategy that investors with a long-term investment horizon can incorporate to potentially reduce the negative effects and potentially maximize gain opportunities for individual retirement portfolio values.It is important for investors to remember that it is simple to stick to an investment strategy when markets are performing well, and that it takes real fortitude to weather the underperforming markets when they are present. The long-term effects of prematurely selling out of positions are more significant than the short-term losses in most cases.As a retirement investment advisor, one of the most common narratives that I hear from participants is, “I should move to a more conservative portfolio and reduce my contribution amount during the market volatility, until things straighten out.” In most cases, this is usually the exact opposite of what we would recommend to investors during these short-term volatile markets, especially within a retirement account. Addressing these two narratives are critical for participants to hear from their investment advisor.Emotional Selling Can Be Very Costly to Your Retirement AccountFirst, in addressing the thought process off moving to a more conservative portfolio when markets are down, it is important to understand the consequences of loss aversion. It is commonly expressed that most individuals feel the pain of losing twice as much as the pleasure of gaining, and this is especially true within individual finances.The thought to get more conservative during and after the downturn, and then aggressive again when markets are up, is essentially selling low and buying high, which is the opposite of what investors should aim for.Selling out of a portfolio and into a more conservative portfolio locks in your investment loss up to that point, and then limits your ability to capture the upside when markets begin to correct themselves. Most individuals with a longer time horizon, usually more than five years, will more than likely ride the market back up if they stay true to their investment allocation.Increasing Contributions and “Buying the Dip” Can Be a Powerful Growth OpportunityRetirement accounts present a unique opportunity for individual investors, in that in most circumstances payroll contributions are automatic and consistent. In down periods it means that you are buying when the market is low, enabling your ability to “dollar cost average". This strategy aims to spread out purchases of investments; so ultimately, your total price paid should be less affected by market timing.Maintaining your contributions or even increasing them during down markets should provide the opportunity to reduce your overall dollar cost average and have a larger share value for when the markets begin to correct themselves. This larger share value allows you to recapture your investment losses faster, as well as gain more than someone who would reduce or stop contributing altogether.As mentioned before, it tends to be easy to stay true to an investment strategy when markets are performing well and difficult when markets are down. In most cases, individuals who can weather the bad periods and stay true to their investment allocation and contributions have a better chance of outperforming those who do not.If you find yourself debating making an allocation change and you have 5, 10, 20, or even 30 years until retirement, it is encouraged to solicit more advice from your SDWMA Retirement Plan advisor.As always, for individuals who are closer to retirement (within the 5-year window), it is always a great time for you to have a deeper discussion with one of your SDWMA Retirement Plan advisors.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.About Schneider Downs Retirement SolutionsSchneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations.  To learn more, visit our dedicated Retirement Solutions Solutions page.  ### Ohio Enacts Pass-Through Entity Tax On June 14, Ohio Governor Mike DeWine signed Senate Bill 246 into law, making Ohio the latest state to allow Pass-Through Entities (“PTEs”) to elect into an entity-level tax. Ohio joins over 20 other states that have enacted this “SALT Cap workaround,” allowing PTEs to elect to be taxed at the entity level to avoid the $10,000 federal cap on deductions for state and local taxes. SALT Cap Workarounds, Generally States adopting a SALT Cap workaround have adopted a similar framework: because the pass-through entity elects to have the state tax paid by the business (i.e., at the entity level), the income that passes through to the individual owners from the business is lowered, reducing each owner’s federal adjusted gross income (“FAGI”) reported on his or her federal income tax return. This lowers the owner’s federal tax liability without the owner having to deduct state and local taxes as an itemized deduction on his or her return. Because the decrease to FAGI is not an itemized deduction, it is not impacted by the $10,000 cap on state and local tax deductions imposed by the Tax Cut and Jobs Act of 2017. The Internal Revenue Service validated these workaround methodologies pursuant to its guidance in IRS Notice 2020-75. Ohio’s SALT Cap Workaround Taking effect for tax years starting on and after January 1, 2022, a qualifying PTE can make an annual and irrevocable election by the due date for filing PTE tax withholding returns1, including as extended, to be taxed at the entity level in Ohio. Qualifying PTEs include S corporations, partnerships and limited liability companies taxed as partnerships. The PTE tax will be imposed on the electing PTE’s qualifying taxable income2, and the tax liability is computed without regard to any deductions or credits that can be claimed by a PTE owner in computing the owner’s individual income tax liability. The PTE will pay tax on its Ohio income at a rate of 5% for tax year 2022, and 3% tax year thereafter. The Ohio PTE election allows estimated taxes paid by the PTE to be applied to that PTE’s tax liability for either its IT 1140 (Pass-Through Entity and Trust Withholding Tax) or the elective PTE tax. Electing PTEs are required to file estimated tax returns and make the following quarterly estimated tax payments: 1st-quarter payment of 22.5% of the PTE’s estimated tax liability for the tax year. 2nd-quarter payment of 45% of the PTE’s estimated tax liability for the tax year. 3rd-quarter payment of 67.5% of the PTE’s estimated tax liability for the tax year. 4th-quarter payment of 90% of the PTE’s estimated tax liability for the tax year. Owners of electing PTEs are entitled to a refundable credit equal to their pro rata share of the Ohio PTE tax imposed on the electing PTE. The refundable credit offsets an owner’s Ohio income tax liability pursuant to the Ohio credit ordering rules specified in Ohio Rev. Code § 5747.98. A nonresident individual or trust owner with Ohio adjusted gross income from only one or more electing PTEs is not required to file an Ohio nonresident income tax return. However, a return is required to claim the amount of the refund from the refundable Ohio PTE tax credit. Ohio Department of Tax Releases Additional Guidance On August 5, the Ohio Department of Tax released an alert titled “Ohio’s PTE SALT Cap Workaround for ’Electing Pass-Through Entities’ beginning in Tax Year 2022” to provide some clarification on the recently enacted elective PTE tax. The guidance notes that the Department has recently begun to develop a new PTE tax form (IT 4738) for tax year 2022, along with instructions and FAQs. The guidance additionally reiterates: The election is made by the entity and is bound on all owners of the entity. All owners’ qualifying taxable income is required to be included if the entity makes this election. A disregarded entity is ineligible from making the election. The election is made known to the Department by filing the IT 4738. No refundable or nonrefundable credits can be claimed on the IT 4738. Owners who file an Ohio individual income tax return, IT 1040, must add back the tax amounts paid on the IT 4738 to the extent not included in computing federal or Ohio adjusted gross income using the Ohio Schedule of Adjustments. A refundable credit for the proportionate share of the tax paid on the IT 4738 is available for owners who file an IT 1040 using the Ohio Schedule of Credits, Pass-Through entity credit line. Additional guidance is expected to be coming in the near future as Ohio works to finalize the framework of the PTE election. Our Thoughts On Ohio becomes the latest state to adopt an elective PTE tax as a workaround to the SALT Cap. The Department has indicated more guidance is forthcoming, so PTEs and their owners subject to Ohio taxation should monitor the current and future guidance to evaluate whether making the Ohio PTE election would be beneficial. The Schneider Downs State and Local Tax (SALT) practice is equipped to help you evaluate the benefits of PTE elections in Ohio and the other adopting states and to assist you in the mechanics of making the election.  Please direct inquiries to Stephen Worth, State & Local Tax Practice Leader, at sworth@schneiderdowns.com. About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Visit our Tax Services page to learn more. 1Under Ohio Rev. Code Section 5747.42(A)(2), the due date is the 15th day of the fourth month following the end of the qualifying entity's tax year that ends in the preceding calendar year, subject to extension. 2Qualifying taxable income is defined as: The electing PTE’s business income apportioned to Ohio after the adjustments required by Ohio Rev. Code Section 5733.40(A)(2) to (A)(7), plus The electing PTE’s nonbusiness income allocated to Ohio   ### What You Should Know About PA’s Latest Tax Law Changes Pennsylvania Governor Tom Wolf signed House Bill 1342 (“HB 1342”) into law on July 8, 2022, phasing in a corporate net income tax (“CNIT”) rate reduction over nine years.Along with the rate change, the new bill codifies the economic nexus standard for entities subject to the CNIT and implements market-based sourcing rules for receipts from sales of intangibles. HB 1342 also imposes sales and use tax on peer-to-peer car sharing, provides Internal Revenue Code (IRC) conformity updates for the Pennsylvania personal income tax (“PIT”), and modifies certain tax credit and economic development zone provisions.Corporate Income Tax Rate ReductionPennsylvania currently levies the CNIT at a rate of 9.99% for tax year 2022, making it the second-highest corporate income tax rate in the country. HB 1342 implements an incremental rate reduction to occur automatically as follows: 8.99% for tax year 2023 8.49% for tax year 2024 7.99% for tax year 2025 7.49% for tax year 2026 6.99% for tax year 2027 6.49% for tax year 2028 5.99% for tax year 2029 5.49% for tax year 2030 4.99% for tax years beginning January 1, 2031, and thereafter Sales Factor Update: Market-Based Sourcing for Receipts from Sales of IntangiblesCurrently, under the Pennsylvania sourcing rules, sourcing of gross receipts from intangibles – those receipts that are neither sales of tangible personal property nor sales of services (e.g., receipts from patents, royalties, franchise agreements, securities, loan interest) – are subject to the cost-of-performance method.With the passage of HB 1342, Pennsylvania will now employ market-based sourcing standards for sales of intangibles. This change aligns the sourcing of this revenue with the methodology already employed for the sourcing of tangible personal property and services. Specifically, market-based sourcing will apply to the sourcing of the following receipts: the lease or license of intangible property the sale of intangibles the sale, redemption, maturity or exchange of securities held by a taxpayer primarily for sale to customers receipts for lending activities involving real property and tangible personal property receipts received from interest, fees and penalties from credit card holders receipts received from interest not otherwise addressed in the revised law Intangible property not described is excluded from both the sales factor numerator and denominator.The law directs the Pennsylvania Department of Revenue to promulgate rules and regulations to implement this new methodology.CNIT Economic Nexus Provisions Are Now LawHB 1342 codifies the Pennsylvania Department of Revenue’s Corporation Tax Bulletin 2019-04, imposing for tax years beginning January 1, 2020, a rebuttable presumption of substantial nexus for corporations with $500,000 or more of PA sourced gross receipts. The bulletin, released in response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, created the possibility of Pennsylvania nexus without regard to physical presence in Pennsylvania.The new law applies the CNIT to corporations that have a “substantial nexus” with Pennsylvania – a “direct or indirect business activity that is sufficient to grant the commonwealth authority under the Constitution of the United States to impose.” Such business activity includes: Leasing or licensing intangible property utilized in Pennsylvania Regularly engaging in transactions with Pennsylvania customers involving intangible property, including lending to unaffiliated entities or individuals Selling intangible property that was used by the corporation in Pennsylvania. Personal Income Tax: Conformity UpdatesApplicable to property placed in service in tax years beginning after December 31, 2022, Section 179 property may be deducted consistent with IRC Section 179 “in effect at the time the property is placed in service.” The federal 2022 tax year limit is $1,080,000.Prior to H.B. 1342, such property generally was depreciated under Section 179 of the Internal Revenue Code of 1986, which limited the expense to $25,000.Applicable to transactions occurring in tax years beginning after December 31, 2022, Pennsylvania provides that Section 1031 of the Internal Revenue Code is applicable. Prior to H.B. 1342, Pennsylvania personal income tax did not follow the federal nonrecognition rules in IRC Section 1031.Sales and Use TaxBeginning January 1, 2023, HB 1342 places new peer-to-peer market facilitator requirements for sales and use tax on shared vehicle rentals. However, the Commonwealth’s 2% vehicle rental tax does not apply to a shared vehicle that is rented through a peer-to-peer car sharing program. The bill also extends the computer data center sales tax exemption qualification period from 15 years to 25 years for qualified purchases of equipment installed in the computer data center.Our Thoughts On Pennsylvania’s CNIT rate reductionPennsylvania’s CNIT rate reduction is a welcome change that has been years in the making.  Unlike recently enacted rate reductions in other states, Pennsylvania’s rate reductions are not dependent on revenue thresholds being met to take effect.  While the CNIT rate reduction may be a welcome change, the economic nexus provisions may surprise companies that previously did not have Pennsylvania nexus under a physical presence standard.  These companies should evaluate whether they meet Pennsylvania’s new “substantial nexus” standard and model the tax impacts of the new legislation.  Further, because the codification of the economic nexus provision is not effective until tax years beginning after December 31, 2022, a refund opportunity may exist for corporate taxpayers that filed their Corporate Net Income Tax returns pursuant to the economic nexus standard beginning in 2020.Finally, companies with receipts from intangibles should evaluate the need to source to Pennsylvania and model the economic impact, especially in light of the economic nexus provisions, which may impose a CNIT obligation on entities that did not previously have Pennsylvania nexus. The Schneider Downs State and Local Tax practice is well equipped to help your business navigate these changes in the Pennsylvania tax code. If you have questions, please direct inquiries to Stephen Worth, State & Local Tax Practice Leader, at sworth@schneiderdowns.com.About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Visit our Tax Services page to learn more.   ### Student Loan Forgiveness Scams on the Rise Those carrying student loan debt weren’t the only ones anticipating President Biden’s Student Debt Relief plan—within minutes of the student loan announcement, my phone rang with a scammer conveniently offering me quick access to the “loan forgiveness program."I didn’t stay on the line long enough to hear what they wanted and knew that it was a scam thanks to the warning from my phone filter. So why did I answer?Curiosity. I wanted to see if scammers would really be that quick to the draw with a student loan forgiveness campaign.Since then, multiple reports have come out about fraudulent calls and emails using the Student Debt Relief plan as their latest coat of paint. In fact, many of the scams are hybrid vishing campaigns discussed in my previous article Callback Phishing Attacks Increase 625% in Q2 2022.As the screenshot below shows, these campaigns start with an email or voicemail offering a callback number to discuss an issue—in this case, student loan forgiveness prequalification. If called, the caller is connected with a threat actor who will use social engineering tactics to obtain sensitive information or remote access to their network.Photo: Antoinette PalmieriOther fraudulent communications include offers for early program opt-in, program eligibility verification and the student loan payment freeze deadline.With the sharp increase in student loan forgiveness scams, the Federal Trade Commission (FTC) has released a Consumer Alert outlining the popular scams and best practices. The alert is available here and the FTC recommends reporting any fraudulent communications to ReportFraud.ftc.gov.The fact that scammers are using student loan forgiveness as the bait is not a huge surprise. There have been a few related scams on student loans since the initial payment freeze—but with the plan officially announced, these themed-attacks should continue to increase in volume and complexity.Remember, despite the theme of the attack, most scams include common warning signs that incorporate: Attachments – download the attached debt forgiveness application PDF Bogus Hyperlinks – click here for more information (misspellings, bad URLs, etc.) Sense of urgency – if you do not respond you will forfeit forgiveness eligibility!!! Suspect Sender – from: studentloandebtforgivenessnow2343 @ gmail.com Too Good to Be True Offer – get your student loan debt erased now Unusual Requests – provide your social security number to process your forgiveness At the time of this article, the student loan forgiveness program is still working on the processes and timeline for forgiveness, but has confirmed that the student loan repayment pause will automatically continue until the end of the calendar year.For more information on the program, you can visit the Federal Student Aid’s Debt Relief Announcement website at www.studentaid.gov/debt-relief-announcement for the latest updates and frequently asked questions.Related Articles Callback Phishing Attacks Increase 625% in Q2 2022 President Biden Announces Student Debt Relief Plan About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Pennsylvania Natural Gas Production Declines Natural gas plays a key role in almost every Pennsylvanian’s day-to-day life. Every time someone turns on their stove to cook dinner or powers on their dryer to finish the weekly laundry, the natural gas that was drilled from the ground is being put into practical use. As of 2020, the United States produces nearly all the natural gas that the country consumes. In terms of volume of natural gas produced in each state, Pennsylvania and Texas lead the pack with over 7,000 billion cubic feet of natural gas produced per year. These states are followed by Ohio, West Virginia, Louisiana and Oklahoma with over 4,000 billion cubic feet of natural gas produced per year.With that said, it is clear that Pennsylvania’s natural gas production has the potential to impact nation-wide natural gas supply with any change or fluctuation that occurs in the market. Therefore, it is surprising to see that, for the second consecutive quarter, Pennsylvania natural gas production has dipped lower than it has in the past five years. This comes as a contrast when compared to the growth in producing wells, which has picked up significantly since the shutdowns caused by COVID-19 in 2020. The overall cause for the decline in Pennsylvania natural gas production can be attributed to the elevated market prices related to production, global supply and demand pressures, environmental concerns, and nationwide labor shortages that many companies are facing. Experts predict that, with the increase in wells and the continued economic recovery following the pandemic, Pennsylvania natural gas production will return to a more normalized rate and begin to trend upwards again as the year progresses. Schneider Downs will continue to monitor the natural gas market. Please contact your Schneider Downs representative with any questions. About Schneider Downs Energy & Resources Services The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.  To learn more, visit our Energy and Resources Industry Group page.  ### President Biden Announces Student Debt Relief Plan President Joe Biden introduced the Student Debt Relief plan on Wednesday, August 24, 2022. The White House states that the plan will provide financial relief to approximately 43 million borrowers—an estimated 20 million of whom will have their entire remaining balance cancelled. Below are some questions and answers based upon information contained in the Federal Student Aid Debt Relief Plan announcement and White House news release. Who Qualifies for Student Loan Forgiveness? Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households. What If My Income Exceeds the Cutoff? Unlike the recent stimulus payments there is no sliding scale. So, it seems that those who exceed income limits will not qualify for any sort of pro-rated student loan forgiveness. How Much Student Loan Debt Will be Forgiven? The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education. Non-Pell Grant recipients can receive up to $10,000 in debt cancellation. Do Current Students Qualify for Loan Forgiveness? Those that are currently enrolled in college and already borrowed from the federal government are covered under the plan for any loans that were disbursed by June 30, 2022. Will Student Loan Forgiveness Impact My Federal Taxes? While some loan forgiveness programs are considered taxable in the year the debt is written off, President Biden’s student loan forgiveness program is not taxable due to 2021 American Rescue Plan, which made any form of federal student loan forgiveness tax-free through 2025. How Do I Receive Student Loan Forgiveness? Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education. If the U.S. Department of Education doesn't have your income data, or if you don't know if the U.S. Department of Education has your income data, you can use a simple application that the Administration will launch in the coming weeks. How Are Public Servants Under the Public Service Loan Forgiveness Program Impacted? The Department of Education has announced time-limited changes to PSLF that provide an easier path to forgiveness of all outstanding debt for eligible federal student loan borrowers who have served at a non-profit, in the military, or in federal, state, Tribal or local government for at least 10 years, whether consecutively or not. You can find out other information about the temporary changes on PSLF.gov. You must apply to PSLF before the temporary changes end on October 31, 2022. The application will be available before the pause on federal student loan repayments ends on December 31st. You can sign up to be notified by the U.S. Department of Education when the application opens. Will the Student Loan Repayment Freeze Continue? The current student loan repayment pause will be extended automatically through December 31, 2022, with payments resuming in January 2023. Who Does Not Qualify for Student Loan Forgiveness Under This Plan? Borrowers who have private student loans are not eligible for loan forgiveness. How Does the Plan Impact Current and Future Borrowers? Borrowers will pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan. The amount of income that is considered non-discretionary income is raised to be protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment. Loan balances will be forgiven after 10 (down from 20) years of payments for borrowers with loan balances of $12,000 or less. Borrowers’ unpaid monthly interest will be covered, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low. As with many plans, there are additional details and guidance that still need to be provided. It appears that there are still missing details regarding the definition of income and the year used in the determination. Additionally, state law treatment of income and deductions sometimes vary from the federal treatment. While many states are likely to follow the federal treatment, you should not assume that this will be the case in your state. Be sure to consult your state’s treatment regarding the taxability of cancelled student indebtedness. Schneider Downs will continue to monitor the latest updates on the Student Debt Relief plan and related topics. To keep up to date with our latest insights on this topic and more, subscribe to our weekly Our Thoughts On newsletter. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Has the Pandemic Increased the Value of Golf Courses? Rewind back to the spring of 2020, where for many of us, our daily routines came to a halt and boredom was making its presence known. Hobbies and passions were developed to pass time. One of the most popular activities adopted was golf. Prior to 2020, finding a tee time was simple, and consisted of calling the local golf course, getting a time locked in, and heading to the course. Now, almost two and a half years and many swings later, landing a tee time is still a challenge. According to an article in Forbes, in the summer of 2020, 67% of golfers claimed that their increased golf play was related to lack of activities available for leisure time. In late 2021, 56% of golfers had deemed golf as a priority. Golf play had increased by 6% nationwide in 2021, which resulted in an additional 30 million total rounds. According to the National Golf Foundation, 3.2 million people in the U.S. played golf for the first time in 2021. The total U.S. golf population was closing in on 25 million people, including 3.1 million junior players. Of the 3.1 million juniors, 36% were females. In comparison to the last golf surge prior to 2020 when Tiger Woods’ success and popularity in 2000 inspired many to pick up the clubs, just 15% were females. Now, 25% of all golfers are women, and represent over 1/3 of total beginner golfers. More than 20 years ago, just 6% of golfers were minorities, but now more than 25% of total golfers are non-Caucasian. The game is growing across the board, in all categories. However, while demand has picked up, so have the costs to maintain the conditions of the course. Golf course owners have had to raise their spending on maintenance to keep up with the increased volume of action their course experiences regularly. Industry experts state that costs have had an equal response to the rise in revenue. Depending on location, golf course maintenance ranges from $500,000 - $1.5 million annually. Additionally, the supply of golf courses has historically exceeded consumer demand, therefore greens fees remain competitive. So, while Ibis World predicts that revenue will grow by 1.4% annually from 2022 through 2027 the supply of golf courses combined with the required maintenance makes it unclear what the impact to cash flow would be and is likely specific to each individual golf course. The valuation of a golf course, much like any other business, is a complicated process that takes many factors into account, with cash flows being critical along with things like land value and market multiples. The recent surge of interest in golf has most likely impacted the cash flow, and ultimately, the value, of golf courses overall. About Schneider Downs Business Valuation For more information about our business valuation and other advisory services, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com, Steve Thimons at 412.697.5281 or sthimons@sdcpa.com, or Adam Goode at 412.697.5411 or agoode@sdcpa.com. ### Lease Accounting in the Deal You’ve heard it before, “Every deal is different,” and that’s no different when it comes to companies reporting their lease liabilities. Effective January 1, 2022, companies are required to adopt Topic 842 – Leases (“Topic 842”), which significantly changes the presentation of a company’s leasing transactions. We’re likely going to see the adoption in M&A transactions treated differently - differently in their adoption in past accounting presentations and treatment in the structure of the deal. Typically, in an asset debt, the buyers and sellers enter into cash-free, debt-free transactions, which the buyer purchases the company and its assets on the basis that the seller will pay off all debt and extract all excess cash prior to completion of the transaction. The debt items to be paid off are not typically stated in the letter of intent (“LOI”) and negotiated. Lease obligations are typically treated as debt-like items, but prior to adoption of Topic 842, operating leases weren’t considered as part the buyer’s assessment of debt-like items. Comparability and consistency are important in many aspects of a deal. Changes that resulted from the adoption of Topic 842 need to be factored into various aspects of the deal, like the calculation of EBITDA and working capital trends and projections. Buyers and sellers should understand the impact from the new accounting adoption because financial information will look different, and it’s likely going to the impact the deal. Don’t forget, Schneider Downs offers simpLEASE, a software program that assists with the accounting requirements set forth by ASC 842. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. Visit simpLEASE to learn more.  About Schneider Downs Private Equity Services Schneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions. To learn more, visit our dedicated Private Equity Firm Services page. ### Callback Phishing Attacks Increase 625% in Q2 2022 What are callback phishing attacks and why are they becoming so popular with threat actors?Callback phishing attacks, also known as hybrid vishing attacks, have increased 625% from the Q1 2022, according to the recent Quarterly Threats Trends & Intelligence Report from Agari.The large spike in callback phishing attacks comes after another report that vishing attacks had already increased 550% between the Q1 2021 and Q2 2022. In fact, a UK phone carrier recently reported they block close to one million vishing calls a day.What is Callback Phishing?While many of us are trained to report or ignore the typical fraudulent emails that are riddled with typos and malicious links, callback phishing attacks rely on the victim to call them first. These attacks use multi-tiered communications and social engineering tactics to trick the end users into calling a fraudulent number to provide their sensitive information.How Do Callback Phishing Attacks Work?The typical callback phishing attack begins by sending the target a phishing email usually under the guise of a subscription or invoice notice that includes a callback number that puts the recipient on the phone with a threat actor who uses social engineering to get sensitive information out of the caller or remote access to their network. One of the first large-scale callback phishing attacks was the BazarCall campaign perpetrated by the Ryuk ransomware group in March 2021.Image: www.techrepublic.com/article/bazarcall-attack-increasingly-used-by-ransomware-threat-actors/The BazarCall campaign started with an email notifying the recipient that a subscription was set for auto-renewal and to call the customer service number to cancel the payment.Those who called the number were sent to a call center that used social engineering tactics to convince the caller to begin a remote session using legitimate desktop software that gave direct, undetected access into the caller’s network.Once the session began, the call representative continued to distract the caller on the phone while a network intruder was silently infiltrating the network.Why are Callback Phishing Campaigns Rapidly Growing?At this point, many of us are able to quickly identify a phishing email or phone scam pretty easily, and even if some campaigns are designed well, most computers and smart devices have built-in blocking technology that makes it so we don’t even see them. So why are callback phishing campaigns seemingly more effective than the traditional phishing or vishing scam?First, the phishing emails used are a bit more sophisticated than the standard Nigerian prince scam—the urgency is subtle and provides a callback number versus the traditional “this is super urgent, click here or else” narrative.Second, many of us have been told that if you are suspicious of an email, you should call the company to verify if the communication is legitimate. By placing a callback number in the body of the phishing email, these campaigns are preying on the instinct to call and talk to a “real” person.Third, the threat actor picking up the phone may be part of a well-trained call center, specifically trained to be professional and sound legitimate. Remember, many ransomware groups are organized very business-like and know that the longer they keep you on the phone, the more damage they can likely do.Fourth, the software used for remote sessions contain legitimate tools that are widely used, so when remote sessions open up, the tools usually go undetected by security software.In fact, this approach is now reportedly being used by three Conti-based ransomware groups who have adopted and independently developed their own targeted phishing tactics derived from the call back phishing methodology.How to Identify and Avoid Callback Phishing AttacksThe best way to avoid becoming a victim of a hybrid vishing campaign is to quickly identify and delete/report the initial email.While these emails impersonate legitimate companies, they still have several characteristics of phishing emails, such as coming from a public email domain (gmail, outlook, etc.) and containing grammatical errors. Organizations should share the responsibility with the end users by providing adequate cybersecurity training and investing in security software to prevent the emails from even reaching inboxes.Another identifier is the callback number, which in most cases, the email provides only one number to call despite most companies supplying several numbers to call based on your needs.We strongly recommend only using verified callback numbers for your accounts—found on the back of financial cards, by safely visiting their website (typing the address, not clicking hyperlinks or googling) or even visiting brick and mortar locations. Think about it, if the email is suspicious, the phone number isn’t any better.Finally, use common sense, especially when dealing with company systems. If somebody was to knock on your front door and say they were there to fix your HVAC despite the fact you never called anybody, would you let them in?Same rules apply here. If anybody is requesting remote access, credentials or other sensitive information on the other end of the phone, disengage and contact the appropriate person or department.If for whatever reason you do provide remote access or notice anything indicating your system has been compromised, immediately disconnect from the internet and contact your IT team.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Estate Tax Savings Opportunity: Estates Have Five Years to Make Portability Election Estate tax portability is the capability of a first spouse to die to transfer, or port, his* unused estate tax exemption to a surviving spouse. Every person has a certain amount of assets he can pass on to heirs without incurring estate tax. This amount is called the estate tax exemption, which in 2022 is $12.06 million. Prior to allowing an individual to pass unused estate tax exemption to his spouse, each spouse, at the time of his or her death, had to use his own exemption, and it could not be shared with the spouse. This created problems, since both spouses would then be required to have assets in their own names and careful planning had to be done in order to utilize the exemption. In 2013, Congress attempted to minimize the problem by creating estate tax portability. Under portability rules, when the first spouse passes, his estate can elect portability by filing an estate tax return within nine months of death (15 months if an extension was filed). For example, if a person passes away in 2022, an estate tax return would be filed for portability purposes and a $12.06 million estate tax exemption would be transferred to the surviving spouse. The transferred estate tax exemption is added to the amount the surviving spouse already has, which would be an additional $12.06 million, providing the surviving spouse with a total of $24.06 million in estate tax-free transfers. Without this election, the surviving spouse would have only her own individual $12.06 million exemption, thereby effectively wasting the deceased spouse’s exemption and causing potentially significant estate tax to be incurred at the surviving spouse’s death. Many taxpayers didn’t realize they needed to file an estate tax return to make this election; therefore, they missed the election and requested exceptions.  Because the IRS had so many requests for exceptions, in 2017, the IRS extended the deadline to two years from the date of the spouse’s death.  As taxpayers continued to miss this election, however, in July 2022 the IRS extended the timeframe to file an estate tax return for portability purposes to five years. Rev. Proc. 2022-32 outlines the requirements for compliance. Most importantly, the deceased spouse would otherwise have not been required to file an estate tax return under Internal Revenue Code Section 6018(a). Considering the estate tax exemption is slated to drop to approximately $6 million in 2026, many more taxpayers will be subject to estate tax, and the extended timeframe to make the portability election creates a significant estate tax savings opportunity. If you think your family may benefit from filing an estate tax return to ensure maximum estate tax savings, please reach out to Laura DelFratte, a director on our Estates and Trust team, to discuss the available tax savings. Telephone: 412-697-5686, Email: ldelfratte@schneiderdowns.com *The first spouse to die is referred to as a male in this article because, statistically speaking, that’s the more likely scenario. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### How To Identify Supply Chain Vulnerabilities How can companies identify supply chain vulnerabilities to be better prepared for the future?Supply chains have been hit hard by volatility over the last few years due to the pandemic and turbulent economic environment. Now, as economies are starting to settle and we’ve realized just how fragile supply chains can be, companies are ready to act.Here are some best practices that can help companies better prepare for supply change disruption and risk.Become More Agile Companies have learned how valuable and necessary an agile workforce is—not only for responding to supply chain risk, but also for research and development, procurement, planning, manufacturing and logistics, etc.Build a Culture of Risk Management Companies that successfully managed supply chain issues in recent years all share one common denominator: a culture of risk management. Developing and maturing a management infrastructure that recognizes, prioritizes and plans for risks including supply chain and other disruptive events is important as ever.Conduct Stress TestsSince supply chain risk is a constantly moving target, companies should proactively conduct stress tests to determine if the current supply chain remains appropriate.Create Supply Chain KPIsCreating and communicating supply chain KPIs helps the entire organization understand the company's performance. Key supply chain KPIs can include fill rate, inventory turnover and customer order cycle time. KPIs will help companies evaluate supply chain design and execution, as well as where to make necessary adjustments.Identify Internal, Third-Party and Economic Risks To truly understand their supply chain risks, companies need to conduct comprehensive vetting of suppliers, processes and facilities that test  points of failure. They should also identify what critical inputs are at risk from shortages or price volatility.Improve Supply Chain Management Systems Since the pandemic, many organizations realized how limited the systems they use  to measure and monitor supply chain vulnerabilities are, with few having direct visibility beyond direct suppliers.In fact, a 2021 McKinsey survey of senior supply chain executives reported that just under half understood the location of their tier-one suppliers and the key risks those suppliers face, but only 2% could say the same about suppliers in the third tier and beyond – where most disruptions originate.To address the issue, companies should consider developing systems and tools to monitor vulnerabilities beyond their direct suppliers.Move Past Six Sigma and Process Optimization Prior to the pandemic, six-sigma and process optimization drove most supply chains to achieve stability and minimize costs. However, the past few years show that companies will need to be much more agile and dynamic moving forward to respond to rapidly changing demand and vendor shortfalls.While there is no one solution for supply chain risk management, a commitment to continued efforts that balance enhanced flexibility, productivity and quality while moving at the speed of customers will be the new status quo to prepare for long-term uncertainty.Related Articles Measuring and Managing the Impact of Inflation on Business Profitability Strategies Beyond Price Increases Understanding the Value of Value Chains About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experiences professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page. ### IRS Notice 2022-33 – Extensions for Certain Provisions of the SECURE Act, CARES Act, and Miners Act Internal Revenue Service Notice 2022-33 was issued on August 3, 2022. The Notice extends the deadline for amending some retirement plans to reflect certain provisions of the SECURE, CARES, and Miners Acts. The Notice extends the amendment deadline for a qualified retirement plan (including an applicable collectively bargained plan) that is a non-governmental plan to December 31, 2025.  Qualified governmental plans including 457(b) plans have different deadlines applied. The amended deadline of December 31, 2025 applies to the required or optional features of the SECURE Act. The extension also includes amendments relating to the relief of the 2020 required minimum distributions under the CARES Act; however, does not include all of the CARES Act’s optional features. The Notice does not extend the deadline for coronavirus-related withdrawals and increased loan limits for participants affected by COVID-19. Additionally, the reduction in permitted age for in-service distributions to 59 ½ for defined benefit plan and money purchase pension plans under the Miners Act is included in the extension. In order for plans to benefit from the extension, the plan is to be operated consistently with the amendment as if the amendment was in effect during the period beginning with the amendment being applied retroactively to the effective date. About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. To learn more, visit our dedicated Retirement Solutions Services page. ### Automotive Dealerships and the FTC Safeguards Rule Deadline: Is Your Information Security Program Compliant? How can automotive dealerships ensure they meet the new compliance requirements outlined by the updated Federal Trade Commission (FTC) Safeguards Rule by the December 8, 2022, deadline? The Federal Trade Commission (FTC) announced several updates to the Safeguards Rule this past October with the intent of combatting cyber-attacks and safeguarding consumer information. Citing the widespread data breaches impacting consumers, the FTC updates aim to better protect consumers from breaches and cyberattacks that lead to identity theft and financial loss. What must an automotive dealership’s information security program include? The nine required elements of an information security program are outlined in Section 314.4 of the Safeguards Rule: Designate a “qualified individual” to implement and supervise your company’s information security program. Conduct a risk assessment to determine foreseeable risks and threats. Design and implement safeguards to control identified risks from risk assessments. Regularly monitor and test the effectiveness of safeguards. Train staff by providing security awareness training and regular refreshers. Monitor service providers with the appropriate safeguards (third-party risk management). Keep information security programs current. Create a written incident response plan that meets specific Safeguards Rule requirements. Require the “qualified individual” to report to the Board of Directors or governing body. The complete listings, requirements and details are available to view at https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-314/section-314.4 and a PDF version of our guide is available here. Are any other institutions or businesses impacted by the FTC Safeguards Rule? While the focus of this piece is on automotive dealerships, the updated FTC Safeguards Rule also applies to non-banking financial institutions, such as mortgage brokers, and payday lenders. How can Schneider Downs help automotive dealerships' information security programs meet the updated FTC Safeguards Rule? The myriad of information security program requirements under the updated FTC Safeguards Rule has put a huge burden on automotive dealers who do not have the internal resources to meet the outlined security information requirements. The Schneider Downs cybersecurity team and automotive industry group work together to provide the industry knowledge and technical talent to help automotive dealers meet the FTC Safeguards Rule’s December 9, 2022 deadline. If you have any questions about your information security program or the FTC Safeguards Rule, please reach out to me directly at ckriebel@schneiderdowns.com. Related Links PDF: Schneider Downs FTC Safeguards Rule Guide for Automotive Dealerships FTC Strengthens Security Safeguards for Consumer Financial Institution Following Widespread Data Breaches FTC Safeguards Rule: What Your Business Needs to Know 16 CFR Prat 314: FTC Standards for Safeguarding Customer Information (Final Rule) About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### The IFRS ESG Standards Impact on US Companies U.S. entities should be aware of the global push towards Environmental, Sustainability and Governance (ESG), as many organizations within our economy operate as part of an international supply chain.Public demand for ESG reporting has accelerated reporting requirements globally, which will likely have an impact on organizations throughout supply chains, despite geographic borders.  As the landscape continues to evolve, the International Financial Reporting Standards (IFRS) Foundation is moving quickly to establish a global standard. The IFRS Foundation has established the International Sustainability Standards Board (ISSB) to address general ESG considerations with consistent, international standards. This board sits alongside the International Accounting Standards Board (IASB) and will be working in close cooperation going forward on the creation of standards with the ultimate goal of creating a global framework for ESG reporting. ISSB anticipates working with various international organizations and governments to create these standards. Countries will then consider adoption of the ISSB standards individually. The ISSB recently issued its first two proposed exposure drafts: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information – Establishes the general requirements for sustainability-related disclosures in line with IASB’s conceptual framework. Under IFRS S1, entities would be required to report all material information about significant sustainability-related risks and opportunities for the purpose of providing users with additional information to assess the value of the organization. Organizations would be required to report on governance, strategy, risk management, metrics and targets. The proposal also would require adopters to report sustainability information alongside their financial reporting and discuss the connections between this information.  IFRS S2 Climate-related Disclosures – This exposure draft would require entities to provide information about their exposure to climate-related risks and opportunities to assist users in assessing an entity’s future cash flow and enterprise value. Issued alongside IFRS S1, the ISSB views climate change as a significant risk for all entities. The proposal draws heavily on the Task Force on Climate-related Financial Disclosures (TCFD) standards, which have already been widely adopted. Entities would be required to disclose governance, strategy, risk management, metrics and targets relating to climate-related risks and opportunities.  Similar to the ISSB standards, the Security and Exchange Commission’s (SEC) proposed greenhouse gas (GHG) disclosures have also been based on the framework developed by the TCFD. While U.S. companies await the developing SEC guidelines, the ISSB standards may provide an expectation of future requirements. In addition, entities that have voluntarily disclosed this information ahead of requirements have already seen benefits from investors, customers and employees. The SEC has also joined the Sustainability Standards Advisory Forum, which was created by the ISSB to enhance compatibility of their sustainability standards.  Under the proposals, U.S. companies with large customers operating in a county adopting these standards will see pressure to provide GHG reporting, as these entities will be required to report the carbon footprint within their entire supply chain. Currently, 144 legal jurisdictions require the usage of the IFRS standards. Of the Group of Twenty (G20) economies, 15 economies require IFRS, while three are closely aligned. The G20 is comprised of the world’s largest 19 industrialized and developing economies and the European Union, representing approximately 90% of gross world product. Given the IFRS adoption rate, it is expected that the majority of these nations will adopt the ISSB standards. In addition, China, one of the G20 nations whose standards are closely aligned to the IFRS standards, has already signaled intention to adopt the ISSB standards.The ISSB anticipates finalizing standards by the end of 2022. The effective date will be announced following finalization, with early adoption permitted. Dates may also vary as individual nations enact adoption for companies operating within their borders. Additionally, the ISSB has announced plans for further standards, including industry-based standards similar to the approach used by the Sustainability Accounting Standards Board (SASB). The ISSB is encouraging financial statement preparers to continue to use the SASB standards alongside the IFRS S1 and S2 during this transition phase. About Schneider Downs Assurance Services  Schneider Downs provides assurance and advisory services for companies. For more information concerning ESG matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.  ### The World's Most Valuable Beer Brand (Alas, it’s Not Iron City) Brand Finance, a global brand valuation consulting company, recently released its annual study of the most valuable alcohol brands in the world. Corona, with a valuation of $7.0 billion, took the top spot in the beer category for another consecutive year. Although some consumers (largely in the United States) have begun to associate the name with the coronavirus pandemic, the Corona brand name has still grown in value by 21% since 2021. A list of the top 10 beer brands (listed in $USD billions) appears below: Source: Brand Finance Unfortunately, Pittsburgh’s Iron City didn’t crack open the top 50, but fingers crossed for next year. Moet & Chandon was ranked most valuable champagne/wine brand with a value of $1.4 billion. Interesting to note that the most valuable alcohol brand category by far was spirits. Moutai, the number one spirit brand, had a whopping valuation of $42.9 billion. In all, Chinese brands took six of the top 10 spots on the top Spirits list: Source: Brand Finance About Schneider Downs Business Valuation Schneider Downs has significant experience in determining the value of intangible assets, including brand names, for a wide range of purposes, including financial reporting and potential transactions. For more information about our business valuation and other business advisory services, contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Steve Thimons at 412.697.5281 or sthimons@schneiderdowns.com.     ### Slack Leaked User Passwords For 5 Years Did you or any of your colleagues who use the messaging platform Slack receive a password reset notification last week?If you did, the reason is due to Slack’s recent announcement that they accidentally exposed the passwords of users over a five-year period between April 2017 and June 2022.The password exposure happened due to a glitch that sent hashed passwords to a user’s workspace whenever a user created or revoked a shared invitation link.  According to the Slack press release:“When a user performed either of these actions, Slack transmitted a hashed version of their password to other workspace members. This hashed password was not visible to any Slack clients; discovering it required actively monitoring encrypted network traffic coming from Slack’s servers. This bug was discovered by an independent security researcher and disclosed to us on 17 July 2022. It affected all users who created or revoked shared invitation links between 17 April 2017 and 17 July 2022.”Slack did state they believe less than one percent of users were affected, but that small percentage amounts to nearly 50,000 users based off their daily active user count of around ten million.What is a Hashed Password?What separates this leak from others is that only hashed passwords were leaked, so no plain text passwords were exposed. The exposed passwords were in a format known as a hashed password, which is a cryptographic technique to store data more securely—but can be reverse engineered with enough effort from a threat actor.The consensus from security professionals is that the time it would take to use a brute-force attack to automate the reverse engineering of the hashed passwords are usually not worth the investment, but a bounty as big as 50,000 potential passwords from a pool of one of the largest tools in business may just be worth the time investment for attackers.So far, there are no reports of additional security issues or concerns associated with this incident.Should You Be Concerned if You Were Part of the Slack Password Leak?To an extent, you should feel better about this leak than the standard ones where your entire password is exposed in plain text. In addition to the mandatory password reset, Slack enforces multi-factor authentication security (MFA), so if your password was used to log in to your Slack account with a stolen password, you can stop the attack by denying the MFA request.Remember, MFA is one of the better security features most accounts offer and provides an additional layer of security when passwords are leaked.Regardless, despite the comfort of knowing that “only” hashed passwords were leaked, the fact it took five years and a third party to alert Slack to the glitch, is understandably concerning.You can read more about the Slack password leak and updates on the Slack website at https://slack.com/intl/en-gb/blog/news/notice-about-slack-password-resets.Also, be wary of any imposter emails trying to take advantage of the situation with fraudelent communications that may include malicious links or requests for private information. About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### UPDATE: Inflation Reduction Act – Final Senate Version Eliminates the Change in Carried Interest Rules As observed in our recent blog on the Inflation Reduction Act (or IRA), the vote of Senator Kyrsten Sinema (D-Arizona) was critical to the original proposed bill making it through the Senate approval process intact. Well, the bill was passed but not in its original form.  It made it through, but it did not make it through intact. On Sunday, the Senate agreed to a slightly modified version of the IRA in a 50/50 vote that was broken in favor of the passage by Vice President Kamala Harris. In this version of the bill, the carried interest provision desired by most Democrats was eliminated (keeping intact the current law). It was replaced with a provision calling for a 1% excise tax incurred on corporate stock repurchases, with the tax set to go into effect in 2023. The newly proposed minimum corporate tax of 15% on adjusted financial reporting was also modified, adding a carve-out that further limits the impact of this change. Some early estimates, including from the Joint Committee on Taxation, indicate that about 150 companies might be impacted. The House is expected to take up voting on the bill this coming Friday. While a coalition of Democratic lawmakers from high-tax states have been adamant that they would not support a budget reconciliation bill that lacked provisions increasing the $10,000 limit on the state and local itemized tax deduction, they now appear to be on board. Some members of the coalition including Representatives Josh Gottheimer (D-N.J.), Tom Suozzi (D-N.Y.), and Mikie Sherrill (D-N.J.) say they will vote in favor of the proposed legislation, even though it doesn’t include SALT cap reforms. With only a small majority in the House, Democrats cannot afford many no votes from their party to pass the IRA bill. Might that group, or other more progressive members of the Democratic party advocating for a larger economic package, play hardball after seeing the favorable results to Senator Sinema?  House Speaker Nancy Pelosi stated Tuesday that she will ask members of the House to pass the bill without any changes to the version passed by the Senate and told NBC’s “Today” show: “Quite a bit of what is in the bill is what we had worked (on) together - the House and Senate - to do.” We should know come Friday.  However, any changes by the House would need the approval of the Senate and could also impact its support in the Senate. Note that the current bill still excludes various items highlighted in our original column.  If you have questions on the proposed IRA Act, please reach out to your Schneider Downs tax consultant for additional insights. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Inflation Reduction Act – Tax Provisions Included in Proposed Legislation Late in July, Senator Joe Manchin (D-WV) announced that he had reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on a budget reconciliation package that would replace the stalled Build Back Better legislation which had lacked Senator Manchin’s support (in part over his concerns of its impact on the federal deficit and its potential inflationary impact).  The agreement addresses initiatives on clean energy, health care and taxes. Draft language of proposed legislation, named the Inflation Reduction Act of 2022 (IRA Act or the Act), was released shortly after the agreement was announced.  Over 525 pages of tax provisions are included under Title I of the proposed IRA Act. Title I of the proposed IRA Act tax provisions include: Create a new corporate alternative minimum tax regime based on financial statement income (as adjusted for items including net operating loss carryovers) on corporations with profits exceeding $1 billion. Modify the “carried interest” rules: (updated on 8/9/2022 Final Senate Version Eliminates the Change in Carried Interest Rules) Replace the three-year holding period with a five-year holding period requirement (with an exception for real property businesses) for taxpayers with adjusted gross income of $400,000; Expand the scope of income subject to the rules to include income from regulated futures contracts marked to market under IRC Section 1256, long-term capital gain under IRC Section 1231, and qualified dividend income; Expand, extend, and create numerous investment tax credits and production tax credits supporting green energy initiatives; Increase the research & development tax credit amount that can be claimed against payroll taxes for small businesses; Provide additional funding to IRS; Create prescription drug pricing incentives by proposing up to a 95% excise tax; Extend the Affordable Care Act health insurance premium tax credits, including allowing higher-income households to qualify for the credits and boosting the subsidy for lower-income households, through the end of 2025. Just as critical (for many taxpayers) as the tax provisions included in the proposed IRA Act are the tax provisions excluded from the Act contained in other proposed legislation such as the Build Back Better legislation that had passed the House of Representatives in 2021 (but had stalled in the Senate) (/our-thoughts-on/tax-reform-build-back-better-act-update) or proposals from other sources such as those included in the General Explanations of the Administration’s FY2023 Revenue Proposals (the so-called Greenbook) released in March 2022 (/our-thoughts-on/greenbook-2023-budget-revenue-and-tax-proposals). Proposals excluded from IRA Act include the following (Although this is not a complete list, it includes many proposals that have been floated at various times over the past 1½ - 2 years): Expansion of the 3.8% net investment income tax to include active flow-through income from partnerships and S corporations, The millionaire income surtax coupled with a separate increase to the highest individual marginal tax rate, Increase the corporate tax rate from 21% to 28%, Taxation of capital gains at higher ordinary income tax rates, Limitation on ability to utilize like-kind exchange provisions on sale of real estate; and Increasing the state and local income tax (SALT) deduction above the current limit of $10,000. Finally, while the bill is moving forward, there are still obstacles that could delay or even prevent passage.  These obstacles include: Will the Senate Parliamentarian approve the provisions?  The bill is still being reviewed by the Senate Parliamentarian to ensure that it meets the rules required under the Senate reconciliation process. Will Senator Kyrsten Sinema, Democrat of Arizona, vote in favor of the bill?  It’s still unclear whether Senator Sinema will vote yes on the bill.  All 50 Democratic senators need to support the bill (assuming no Republican senators decide to vote in favor of the bill).  Further, senate vote must be in person and some senators might not be able to attend due to COVID restrictions (and, depending upon the party of a senator, nonattendance could swing the vote either way). Will enough Democratic House members support the bill?  Some Democratic party House of Representative members previously voicing opposition to any bill lacking an increase in the SALT deduction might now be on board, providing sufficient yes votes in the House. Many of the effective dates included in the proposed legislation are for tax years beginning after December 31, 2022. If you have questions on the proposed IRA Act, please reach out to your Schneider Downs tax consultant for additional insights. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Understanding the Value of Value Chains How can cross-functional value chain teams promote efficiency and resilience in today’s rapidly evolving market conditions?With the velocity and volatility of change in the market, businesses need to be nimbler than ever to successfully respond to financial and operational risks.We know organizations want to be able to (and think they can) turn on a dime, but the reality is many are slow to respond to market conditions due to a lack of communication, planning and analysis.As they say, time is money, and a delayed response can directly impact an organization’s profitability. For the best results, organizations must have  proper processes, policies and procedures in place to guide them through market challenges.So, how can organizations be better prepared to address changing market conditions at the speed of change?While there is no one-size fits all solution for companies, the creation of a value chain team is a sensible starting point.What is a Value Chain Team?A value chain team is traditionally constructed of members from sales, finance, product management, operations and supply chain who meet regularly to share quantitative and qualitative data from each of their respective departments.A productive value chain team can help identify key risks and opportunities within each area of the organization and use their time together to develop strategic solutions to a gamut of market and customer challenges. Some of the key contributions a value chain team can make are: Developing decision support tools that provide early warnings and situational awareness of relevant challenges and obstacles facing the organization Evaluating potential scenarios and developing the appropriate response strategies if various events trigger a needed response By committing to the development and maturation of value chain teams, organizations will have the foresight to successfully identify and respond to market challenges, build cross-functional capabilities and handle uncertainty in a nimble, agile manner.If you have any questions about the advantages of value chain teams or models, please feel free to contact me directly at mhart@schneiderdowns.com.Related Articles How To Identify Supply Chain Vulnerabilities Measuring and Managing the Impact of Inflation on Business Profitability Strategies Beyond Price Increases About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experiences professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page.  ### Private Equity Activity Update While 2021 was a record year for deal activity, it is becoming tougher to make things happen in 2022. Last year there was a ton of money on the sidelines and deals were done at a record pace. Dealmakers have benefited from two decades of low interest rates which assisted in making the deal process easier.Most of today’s investors were either too young or don’t remember what it was like to try and get a deal done during an inflationary period.Now in 2022, times have changed, and some dealmakers are dealing with issues they have never faced before:   Inflation is currently at its highest rate in forty years and interest rates continue to rise. Even after the most recent interest rate increase, there are signals that more increases are anticipated for this year. The Covid-19 pandemic has caused supply chain issues and contributed to the labor shortage as workers have jumped out of the job market. The war in Ukraine is also contributed to inflation. So, what does this all mean to dealmakers? Dealmakers are concerned that company values will decline. Valuations may not support what sellers are asking for their company. The rising costs of everything are impacting the bottom line and reducing multiples. Even if the multiples are being averaged over a number of periods, the current decline will impact the value.Based on these concerns, private equity groups may hold onto portfolio companies longer, hoping there is a rebound and the potential recession is mild. The hold time of portfolio companies has decreased the last few years, but that trend may reverse in 2022.It will be interesting to see what happens with deals and how much activity there will be in the second half of 2022.About Schneider Downs Private Equity Firm Services Schneider Downs provides all the traditional audit and tax services needed by private equity firms and their portfolio companies, as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions.  To learn more, visit our dedicated Private Equity Firm Services page.  ### Complexities with Funding for Start-Ups Start-up entities face significant challenges, and one of the biggest is finding and acquiring funding. Up until the time that the entity is able to issue preferred equity instruments, there are other mechanisms for funding purposes. The most common is a convertible note. Typically, these notes are issued with a stated interest rate and a maturity date; however, they also contain a stipulation that allows for the conversion of the principal and interest into the next round of funding at a discount. The discount can vary, but it usually is anywhere from 15% to 25%. While convertible notes are extremely helpful in securing “bridge” financing between equity rounds, oftentimes the accounting for the loans can be overlooked. As a complex financial instrument, convertible notes are first analyzed under Accounting Standards Codification (ASC) 470, Debt, and then are generally analyzed under ASC 815, Derivatives and Hedging. One of the most complex areas relates to determining whether or not a component of the principal balance should be bifurcated and allocated to equity. Another financial instrument that start-ups often use is a Simple Agreement for Future Equity (SAFE). These agreements are popular because they typically do not have maturity dates and are not required to be repaid. SAFEs  usually only convert upon a triggering event outlined in the SAFE. The classification is intricate as a result of the characteristics of the SAFE, and there has been significant debate on the classification between debt and equity as it relates to SAFEs. While both types of instruments bring value to the entity in between equity rounds, it is important to not forget about the complex accounting rules that must be applied to these types of agreements. Schneider Downs has the expertise to assist in the accounting for these types of instruments.  Contact a member of our Emerging Technology Services Group or our Accounting Advisory Services Group for further information. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Changes to R&D Expense Rules Affecting Manufacturers The Tax Cuts and Jobs Act of 2017 (TCJA) included a deferred “gift” to manufacturers and other taxpayers in the form of one of its revenue raisers. For tax years beginning prior to December 31, 2021, taxpayers had the choice to either deduct R&D expenses or amortize them over five years. The TCJA takes away this choice and mandates that taxpayers amortize R&D expense over five years (with a mid-year convention) for R&D performed in the U.S. and 15 years (with a mid-year convention) for R&D performed outside of the U.S. As a result, companies with significant R&D expenditures will likely be facing higher taxable income and tax liability in 2022.This change in the tax law may also have far-reaching consequences for manufacturers and other taxpayers beyond the delaying of tax deductions. Because the types of expenses that qualify as 174 R&D deductions are often deductible under IRC Sec. 162 or other Sections of the Code (wages, supplies, attorneys’ fees, etc.), taxpayers may not have focused intently on breaking out Section 174 R&D expense prior to this year. Book classification of expenses as R&D or QREs from an R&D credit study may help; however, the expenses that qualify under IRC Section 174 are likely broader than what has been broken out under these classifications. As a result, taxpayers should be currently performing an analysis of which expenses will be amortized under these new rules.  Taxpayers should also be aware of the ancillary effects of this treatment of R&D expenditures. For example, the potential need for new deferred tax amounts for C corporations and changes to expected outcomes for any limitations or other calculations that are based upon taxable income (e.g., the 163(j) limitation, among others).  While a full analysis is beyond the scope of this article, taxpayers should also consider the effect of these new rules on developed software, as capitalization and amortization may now be necessary.Please contact a member of the Schneider Downs Manufacturing Industry Group if you have any questions or would like more information on this subject.About Schneider Downs Manufacturing Services Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively.  To learn more, visit our Manufacturing Industry Group page.   ### Versus Capital Real Assets Update: SDWMA Tours Timberland Many of the clients and friends of Schneider Downs Wealth Management Advisors have heard my teammates and I espouse the virtues and potential investment benefits of owning real assets (infrastructure, farmland, timberland, high quality commercial real estate) in a client portfolio.From an investment standpoint, we believe the low correlation to traditional asset classes like stocks and bonds, highly contracted cash flows, and ability to grow cash flows with inflation are among the most prominent reasons to allocate capital to real assets if they fit within your investment allocation. If one were to attend our investment meetings, you would hear me describe real assets as a “high floor, low ceiling” investment that can add ballast AND return prospects to a client portfolio. Our partners over at Versus Capital put it more succinctly: the functioning of modern society requires the use of real assets. When you take a step back and think about it, try to envision your day without the use of real assets. Turning on the bedroom lamp as you wake up in the morning (electricity), moving the dial in the shower toward warm water, crossing a bridge or bridges if you live in Pittsburgh (infrastructure), and stopping at the grocery store for food on your way home. All of these daily functions that are so integral to our daily lives involve real assets. In May, several of my teammates and I were fortunate enough to visit Timberland assets in Jackson, Ohio (an hour or so south of Columbus). BTG Pactual’s US investment arm, TIG (Timberland Investment Group), showed us the timber assets that were originally owned by the Mead Paper company (for those of us old enough to remember, back to school shopping could not be complete without a few Mead spiral notebooks and their formidable “Trapper Keeper”). The timber assets had many different species of trees, but one species that TIG honed in on was “white oak.” Many of you may already know that white oak trees are coveted for their durability and beauty, and demand is high in the furniture, flooring and cabinet space. What may surprise the non-bourbon/whiskey aficionados reading this email is that “white oak” trees are highly coveted by the whiskey industry. White oak barrels impart bourbon/whiskey’s color and improve the taste and finish as well.While visiting our timber assets, my colleagues and I were treated to a tour of the Speyside Bourbon Cooperage in Jackson, Ohio. Our tour guides from Speyside and TIG guided us through this world class manufacturing facility, viewing some of the best bourbon barrels on the planet. What made the tour even more special was the knowledge that some of the timber assets we viewed a few hours prior, would likely end up at Speyside; yet another example of a real asset making its way into our daily lives.Versus Capital sat down with CIO, Casey Frazier & Managing Director, Spencer Schomer to discuss real assets. In this video, they take a look at the historical performance of real assets during periods of high inflation and rising interest rates. We encourage you to check it out here to learn more.As always, please don’t hesitate to contact your Schneider Downs Wealth Management Advisor with questions about your real assets holdings or the potential of holding this asset class in your portfolio.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### PNC Bank Issues Phishing Scam Alert PNC Bank is warning its customers of an uptick in phishing, vishing and smishing scams targeting them under the guise of “unauthorized activity” communications.  An old cybersecurity scam has been given a fresh coat of paint— now with threat actors targeting PNC Bank customers under the facade of helping with fraudulent activity on their bank accounts. The communications are being deployed by phishing (email), smishing (text) and vishing (phone)—all methods in which scammers contact people to steal personal information—in this case, online banking credentials and social security numbers. “Some cybercriminals have shifted their approach and are targeting consumers directly through known and trusted channels of communication. One such scam involves fraudulent outreach via text, e-mail or phone calls,” said a PNC spokesman. “These communications appear to be initiated by PNC, but instead are being sent by a fraudster in hopes of obtaining customers’ personal or account-related information.” As with other scams, the strategy isn’t groundbreaking, but results are effective enough that scammers continue to deploy these types of campaigns on consumers and financial institutions. How To Identify Cyber Scams and Protect Your Data In terms of cybersecurity, the adage of “the best offense is a good defense” rings especially true. Below are a few tips from the Schneider Downs cybersecurity team to help you identify these types of scams and protect your personal information. Avoid Malicious Websites - If you are directed to a website, verify that the website is legitimate by reviewing the URL and typing in the address itself versus clicking on link(s) provided to you. Be Wary of Urgent Narratives - One of the top warning signs you are receiving fraudulent communication is an urgent tone to the message. In most cases the communication says something is very important with dire consequences (i.e., your account will close, or you will owe $$$) with the only remedy to provide private information immediately or by clicking on a link to resolve the concern. Report and ignore these communications. Do Not Answer - The easiest way to avoid identity fraud is to simply not answer or respond. If you receive unsolicited communications, chances are it is a scam. You can always call the verified customer service number on the back of your card or visit the local branch to validate information. Do Not Click on Links - If you receive an unsolicited email or text, do not click on the any of the links. These links may install malware or lead you to a website that’s been set up to steal your information. Do Not Provide Personal Information - While some organizations allow you to provide your social security and account numbers for access, if the communication is unsolicited, avoid providing this type of private information. In its recent alert, PNC Bank makes it very clear that they will never ask for mobile/online banking passwords. Only Use Verified Contact Information - Scammers are smart, to the extent they have fraudulent “customer service” agents waiting for you to call imposter numbers or email bogus accounts. Always verify you are contacting the correct number by looking at the back of your card or statements. Review Your Financial Statements -  Look at your statements for any unauthorized or suspicious activity and speak to the appropriate contacts if you find fraud. What If You Took the Bait? If you are a PNC customer who believes they have been targeted or provided information to a scammer, PNC recommends immediately changing your online credentials, e.g., your password, and contacting the bank directly at 1-888-762-2265 (888-PNC-BANK). You can also forward suspicious emails and/or screenshots of fraudulent text messages to abuse@pnc.com. To read more about banking scams, go to https://www.pnc.com/en/security-privacy.html. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com.  Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Real Estate and the Impact of ESG By now, in the summer of 2022, the same trends are discussed in just about every industry as we emerge from the pandemic -- inflation, labor shortages, supply chain disruptions, new working trends, among others. These trends are driving business decisions and are already impacting companies in observable results.We are seeing the impact, some positive and some negative, with our clients. But one trend that is not yet having such an immediate impact is environmental, social and governance (ESG) criteria. But what does this mean for the real estate sector? It might not seem like real estate is at the heart of environmental issues, and other industries would be more impacted by sustainability legislation. However, this topic will eventually become a top priority for every real estate investor, both commercial and residential. According to the United States Environmental Protection Agency (EPA), the commercial and residential real estate sector contributed to 13% of U.S. greenhouse gas emissions in 2020.  That represents the fourth-highest sector in the U.S. behind transportation, electricity production and manufacturing. As an investor, this would mean building sustainable practices into new buildings and revamping old ones to conform to the developing ESG regulations. Especially if the goal is to continue to build a sustainable real estate company well into the future, investors and capital-raising could be heavily impacted, depending on a company’s willingness to adapt and innovate. While new SEC required disclosures are applicable only to publicly traded companies, and most real estate investing companies are privately held, these new requirements are just the first step in pressuring all industries to implement sustainable practices.In the foreword to the Biden administration’s Climate-Related Financial Risk: A Roadmap for Safeguarding the U.S. Economy, it states that “the United States government is using all of its tools to properly account for and mitigate climate change-related financial and economic risks […].” So, while the real estate sector might lag behind in the immediate impact of required legislation, operators will need to continually assess the risk of new developments and seek to find value opportunities in new ventures. Schneider Downs ESG Resources ESG Consulting Services ESG Assurance Services ESG Our Thoughts On Articles ESG Frequently Asked Questions About Schneider Downs ESG ConsultingWith our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy.For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development.   To learn more, visit our Real Estate Industry Group page.   ### Potential Updates to Reporting on Software Development Costs In June 2022, the Financial Accounting Standards Board (FASB) unanimously voted to undertake a project to update accounting and disclosure guidance related to the reporting of software development costs. Currently, there are different rule sets for accounting costs incurred to development software for internal use (ASC 350) and those for external use (ASC 985). The proposed project from the FASB would update and merge guidance around the recognition, measurement, presentation and disclosure requirements related to software development costs for both internal and external use. The project was proposed based on the costs and complexities of the current guidance related to accounting and reporting on software development costs. Tracking software development costs, which are mainly payroll related, is time-intensive for accounting teams and requires precision in tracking costs incurred once technological feasibility has been established for the software project and includes many gray areas of when and how long costs can be capitalized. From a complexity perspective, the current guidance requires companies to interpret what costs can be capitalized, which necessitates significant judgment, and presents challenges in determining the time period in which costs can be capitalized. FASB Chair Richard Jones had the following to say about the new project: “I do think it’s time to develop a single model; I think the differentiation in the models interestingly enough are more about cost apportionment versus the incurrence of cost. Because, if I think about software, it’s either you’re using it or you’re allowing someone else to also use it and maybe multiple parties use it -- to me that’s a cost apportionment issue, that really isn’t a cost incurrence and capitalization issue.” He added, “I think our new model needs to be more reflective of how software is developed.” Schneider Downs will provide more guidance around potential rule changes and their impact on accounting for these costs as the FASB project progresses. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more, visit our Emerging Technology page. ### Is your Venmo transaction reportable? - IRS intensifies 1099-K reporting requirements for Third-Party Network Transactions Many small businesses and self-employed individuals have adopted the use of Third-Party Network Transactions through services such as Venmo and PayPal to receive payment for goods or services that the business or self-employed individual provides.For calendar years after 2021, there are new minimum reporting thresholds that determine what must be reported to the IRS.  For calendar years prior to 2022, small businesses and individuals that received gross payments in excess of $20,000 AND more than 200 such transactions were required to receive Form 1099-K.  For calendar years after 2021 (tax year 2022 onward),  small businesses and individuals are now required to receive Form 1099-K for gross payments that exceed $600 annually AND any number of transactions. These changes are also applicable to individuals who utilize auction sites like eBay for the selling and reselling of goods. These minimum reporting thresholds apply only to payments settled through a third-party network.  There is no threshold for payment card transactions.However, not all payment networks issue Form 1099-K for transactions that are considered taxable. Zelle, for example, facilitates communication between financial institutions but does not handle the settlement of funds. Therefore, it is the responsibility of the individual to accurately record and report goods and services  transactions of this nature to the IRS. All business income should be reported on your tax return and is often referred to as gross receipts on income tax returns. Thus, transactions qualifying for Form 1099-K should be considered when calculating gross receipts for income tax purposes. Amounts generally excluded from gross income (selling personal goods for a loss), would not be subject to income tax. In addition, it is important to separately track the cash back amounts that customers may receive, since those amounts would be reported on Form 1099-K, but should not be reported as gross receipts for income tax purposes.  There may be other situations where taxpayers will be required to retain more detailed information to support any differences between the amounts reported on Form 1099-K and their taxable gross receipts such as the sale of the business or change in entity structure during the tax year.Since payment networks operate differently, it is important that you be aware of any transactions that may result in tax obligations. If you have any specific concerns about reporting your income from Third-Party Network Transactions, or whether your income is taxable, please reach out to our team. About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### New Tax Law for Payment Apps Users Recent and, in some cases, ongoing restrictions related to COVID-19 have led to increased popularity in the use of mobile payment applications like Cash App, Venmo and PayPal.Many small businesses now accept payments through these third-party applications, which has necessitated an update to corresponding IRS reporting requirements. The change, which became effective January 1, 2022, was included in the $1.9 trillion American Rescue Plan stimulus package signed into law in March 2021.Before the new law was passed, the IRS only required the reporting of payments received through third-party providers for amounts of over $20,000 and if more than 200 transactions were completed during the tax year. Under the newly passed legislation, users who receive payments that total over $600 for goods and services through third-party payment networks will receive a Form 1099-K, Payment Card and Third-Party Network Transaction from those payment providers. Initially there were concerns that this requirement would also impact individuals who utilize the services for nontaxable payments they receive, such as for reimbursements from a friend or family member, or money received as a gift. Those types of payments will not receive Form 1099-K, but the payment applications may not be able to determine which transactions should be classified as business transactions or payments received for the provision of goods and services without input from the user. Many of these applications now include a toggle that allows the user to classify transactions appropriately. As we approach the end of tax year 2022, users who receive business payments through these applications should be sure to review and, if necessary, inquire with the provider of how to make proper indications of taxable transactions within the application to ensure proper reporting to the user on Form 1099-K. If you have any questions, contact your Schneider Downs tax advisor.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.  To learn more, visit our dedicated Tax Services page.  ### CISA Issues MiCODUS MV720 GPS Tracker Advisory The Cybersecurity & Infrastructure Security Agency (CISA) released an Industrial Controls Systems Advisory (ICSA) listing six unpatched vulnerabilities that can allow threat actors remote control of vehicles that are outfitted with the MiCODUS MV720 GPS tracker systems.The CISA Advisory (ICSA-22-200-01) warns that successful exploitation of the vulnerabilities can allow threat actors to remotely takeover any MV720 GPS tracker which can grant unauthorized access and controls to vehicle locations, fuel and oil supply, or vehicle control.According to the MiCODUS website, the MV720 GPS tracker is a hardwired locator that provides real time location tracking and anti-theft capabilities including oil and fuel cutoff, remote control and geofencing capabilities. Features that are extremely useful, but also extremely dangerous in the wrong hands."The exploitation of these vulnerabilities could have disastrous and even life-threatening implications," BitSight states in their MiCODUS MV720 report. "For example, an attacker could exploit some of the vulnerabilities to cut fuel to an entire fleet of commercial or emergency vehicles. Or, the attacker could leverage GPS information to monitor and abruptly stop vehicles on dangerous highways."While the MV720 network is not available in the United States, there are reportedly more than 1.5 million trackers currently in use across approximately 420,000 customers in industries including government, miliary, law enforcement and Fortune 1000 companies.What can companies do that are impacted by the MiCODUS MV720 GPS tracker vulnerability? The CISA Advisory outlines recommendations including: Minimizing network exposure for all control system devices and/or systems, and ensure they are not accessible from the Internet. Locating control system networks and remote devices behind firewalls and isolating them from business networks. When remote access is required, using secure methods, such as Virtual Private Networks (VPNs), recognizing VPNs may have vulnerabilities and should be updated to the most current version available. Also recognize VPN is only as secure as its connected devices. As of this article, MiCODUS has not made any public comments on the vulnerabilities or CISA advisory. Related Links BitSight – Critical Vulnerabilities Discovered in Popular Automotive GPS Tracking Device (MiCODUS MV720) CISA ICS Advisory (ICSA-22-200-01) – MiCODUS MV720 GPS Tracker About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### ATA President Chris Spear Updates NAFC Conference Several members of our Schneider Downs’ transportation group attended the 2022 National Accounting and Finance Council Conference of the American Trucking Associations in Austin, Texas. One of the highlights of the conference was a breakfast briefing by ATA President, Chris Spear.The organization and been busy in the past year, and Mr. Spear gave an interesting recap of the activities and upcoming challenges.He began his presentation by reiterating the importance of the ATA to the member firms and drivers. He then listed some the organization’s accomplishments to prove this point. Mr. Spear reminded the attendees that the ATA led efforts to establish the transportation industry as an essential business during the COVID-19 pandemic. These efforts included lobbying government agencies and working with states to keep facilities such as rest stops open for the truckers. He then moved on to the passage of the 2021 Infrastructure Investment and Jobs Act. This was a once-in-a-generation investment in roads and bridges as well as other types of infrastructure including high-speed internet, public transit, passenger rail, etc. Mr. Spear also covered the federal trial that is underway related to the State of Rhode Island’s plan to set up tolls that impact only Class 8 trucks. ATA and two motor carriers filed the suit against the State of Rhode Island, stating that the plan violates the commerce clause of the U.S. Constitution by discriminating against interstate commerce and out-of-state truckers. The ATA’s position is that the tolls do not reflect a fair approximation of the use of the tolled facility; and the tolls are excessive in relation to the benefits conferred. We will share more on the outcome of this case once it is decided.Mr. Spear was excited to share that the ATA recently moved to a new headquarters in Washington, D.C. The location is one block away from the U.S. Department of Transportation. The space is more collaborative, less expensive, and closer to the government regulators than the former headquarters in Northern Virginia.  He also noted that diesel prices and driver pay are two of the leading challenges that the industry will be navigating in the remainder of 2022 and beyond. Mr. Spear’s presentation was informative and well received by the conference attendees. About Schneider Downs Transportation & Logistics ServicesThe Schneider Downs Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. We possess the capabilities and industry expertise to provide our clients with state-of-the-art technologies and timely communication of the most current and pervasive legislative and regulatory changes impacting the industry.  To learn more, visit our Transportation & Logistics Industry Group page.   ### Business Interruption Claims and Fraud Business interruption insurance typically covers losses sustained by a business due to disaster-related damages (including the COVID-19 pandemic) that affect the entity’s ability to continue operating in the manner it had before the event. The relevant business interruption insurance policy should define the actual coverage, loss calculation methods, limits of coverage for claims and procedures for filing a claim. Forensic accountants have the expertise and understanding to prepare business interruption claims and can evaluate potential fraud risks surrounding them. Whether working with the insured in preparing a claim or the insurer in reviewing, there are several key areas that may be susceptible to fraud, including: Period of loss – from the date of the event until the time the physical condition of the business is corrected. These dates can be manipulated as part of a claim. Base period – operating results in prior base periods can be manipulated, causing potentially inflated loss claims. Mitigation of loss – cost savings that would reduce a business interruption claim may be incurred but not reported. Books and records – financial records in pre-loss and post-loss periods must be accurate. Forensic accountants may uncover any of these red flags as part of the discovery process with adjustors or vendors, in reviewing claims history, receiving tips from an employee hotline, or through an analytical review of the claimant’s financial statements.Based on their initial review of the claim, the client or insurance carrier should determine whether further investigation is warranted. An investigation by the insurance carrier’s own investigation team, or in tandem with outside forensic accountants, provides the expertise necessary to assess the potential red flags of fraud. If you have questions or concerns about your business interruption or insurance claim, please contact Tom Pratt or Brian Webster.About Schneider Downs Accounting Advisory Schneider Downs Accounting Advisory Services offers a variety of technical accounting advisory services as well as outsourced accounting and financial advisory services for every type of organization. To learn more, visit our Accounting Advisory Services page.  ### A Positive Workplace Can Help Retain Construction Employees With the construction industry sustaining a high turnover rate these days, retaining employees can be challenging. One of the easiest and most effective ways to encourage workers to stay at their current company, however, is by creating a positive workplace environment.Start by engaging more with your team. Extending genuine compliments on an employee’s work, for example, can go a long way. Offering occasional incentives like free lunch or free coffee and doughnuts is also beneficial. Celebrating birthdays, holidays and work anniversaries can create a positive environment, too. Making employees feel valued, and visibly demonstrating that they’re not just another worker, gives them more reason to stay.Demonstrate how workers have meaningful purpose by explaining the big picture of projects. Instead of simply instructing a worker on a task, illustrate how that task will help the project as a whole.Providing training and challenging employees are another way to help with retention. All workers like to progress at their job, and by offering training, it can be done. Challenging workers to take on tasks they’re unfamiliar with is also effective, as it provides a break from repetitive tasks and provides them with a greater sense of purpose. Promoting from within also goes a long way in demonstrating the potential benefits of staying with the company.Consider having solution sessions that seek employee input into how to solve identified problems. These types of gatherings are much more focused than general meetings, which can often be a bit of a wildcard of ideas and create complaints versus solutions.Employees want to work at a place where they are motivated and can grow. They leave companies that don’t have a great culture and/or opportunities. Be innovative in interacting and engaging your workforce. It’s frequently said that what made you successful as a company historically might not be the reason you’ll be successful in the future. Be willing to embrace the changing times and workforce.About Schneider Downs Construction ServicesLed by a diverse group of shareholders and managers, Schneider Downs provides strategic and practical solutions for our construction clients in all facets of their business. Our dedicated team of more than 350 professionals have a wide background of tax, accounting, technological and business experience in the region, specifically in Pittsburgh and Columbus. Our Construction industry group is committed to helping our clients solve the growing list of complex business and accounting problems facing the construction industry. To learn more, visit our Construction Services page.   ### Changing Trends in the Workplace Due to the COVID-19 pandemic, both the physical office and office environment are changing. After being fully remote, companies are now focused on revolutionizing office space and increasingly the overall wellness of their employees. One aspect that companies are now looking for in office space is a collaborative environment. After being remote for an extended period of time, many employees have desired to go back into the office to interact with other employees in ways that are unattainable remotely. When workers have the ability to collaborate, they are 20% more satisfied with their work, in turn, resulting in a higher retention rate and less turnover. In addition to this, with employees being able to talk freely amongst one another, both communication and teamwork improves. This translates into an increase in productivity, as employees work, on average, 15% faster when collaborating with their peers. Not only do these collaborative spaces promote efficiency, but also creativity and innovation, as employees are able to bounce ideas off one another more frequently. There are several approaches that companies are taking to improve the office environment. The first of which is “hot-desking,” where employees do not necessarily have an assigned desk. As an alternative, there are open desks set up with monitors and keyboards that anyone can occupy during the workday. Another seating arrangement that is becoming more prominent is “soft seating,” such as couches and sofa chairs. Soft seating provides a positive atmosphere that encourages employees to work alongside one another and collaborate. Both of these arrangements promote “collision space,” where employees that typically would not interact with one another on a regular basis are now more likely to either purposefully or by chance “bump into” each other… These unplanned interactions allow for impromptu conversations, sharing and further collaboration. These interactions are also being achieved when companies seek out a reduced office footprint as an adaptation to the hybrid work model. On average, new tenants are seeking a 17% reduction in space, while The current environment of increased construction costs and interest rates will keep lease rates at current or elevated rates based on tenant needs. Aside from the physical office itself, there is a growing shift that places more emphasis on focusing on employees and their wellness. A main component of employee wellness that companies are working on is the amenities offered to them in close proximity to their workspace or office environment. For example, some employers are now bringing trainers and barbers into the office or otherwise requiring various wellness facilities be made available to their employees such as exercise facilities within the building. Prospective tenants and their representatives are looking to find a space that helps to provide their employee with the “five in five,” which is five amenities within a five-minute walk from the office. In addition to this, employers are transitioning from the traditional five-day work week to promote wellness. Instead, companies are now offering a mix of alternatives, such as four, ten-hour workdays or simply closing the office at noon on Fridays. Employers also recognize that some employees are still uncomfortable being asked to leave their homes to come into the office where they feel unsafe. To combat this, there has been a recent shift where most professionals have the ability to work partially in the office and partially at home, or even fully remote. In order to make employees more comfortable in the office, companies are looking for offices with higher standards, such as quality lighting and air filtration. Both the workplace and working conditions have been constantly changing and progressing throughout time for different reasons, and they are evolving once again. This time, collaboration and employee wellness are at the center of attention as we collectively navigate beyond the last two years marked by COVID related office shutdowns and drastic changes in how and where we are able to effectively work together. References: Collaborative & Social Space Design After COVID-19 Collaboration at Work: The Secret Ingredient for Better Results NAIOP Pittsburgh Event The Future of the Office: 7 Innovative Ways Companies Are Changing the Workplace ### Profitability Strategies Beyond Price Increases With inflation currently at 8.6 percent, the fastest rate in 40 years, businesses may not be able to simply pass along cost increases to customers. So, what options beyond price increases do companies have to address the impact of inflation?As inflation continues to change how consumers navigate the marketplace, businesses are looking for profitability strategies to curb inflation without the consumer sticker shock.  The decision to raise prices comes with potential risks and limitations, such as customers taking their business somewhere else. There are a few ways for businesses to address the impact of inflation other than price.Offer Low-Cost AlternativesFind ways to offer customers low-cost alternatives to the current product or service they are purchasing. Taking this proactive approach provides customers options to save money and can therefore be a win-win for both buyer and seller. The buyer may no longer need or expect the level of service or product at the same price as a year ago, but a low-cost alternative could be a viable solution that keeps the customer happy without impacting the business’s bottom line.The seller would still need to thoroughly vet the low-cost alternative to ensure that they are no worse off from a margin dollar perspective. Depending on the product or service, it could even be an opportunity to expand margin. When low-cost alternatives are provided as options, a buyer can perceive the existing product or service as having a higher value, for which they could be willing to pay a higher price.Many streaming services have begun offering low-cost alternatives such as cheaper memberships that include paid advertisements or limited content.Review The Cost-to-Serve Reviewing the cost-to-serve a client can help determine if there is profit erosion that can be addressed. The three primary areas to review are: Order frequency – Customers who order frequently are costly from a packaging and shipping perspective. We recommend working with customers to reduce order frequency to find savings. This may include simply delaying shipping timeframes to allow bundling or updating shipping costs to reflect incentives for larger orders. Additionally, look at your own company’s purchase orders and see if there are ways to limit shipping costs while balancing inventory levels. Scrap Rate/Utilization – For manufacturing companies, we recommend reviewing areas of operating waste like scrap rate and re-working operations to utilize more of the inputs/capacity being used to make products. Evaluate Freight and Fuel Costs Determine which customers pay for freight and fuel and which do not.  Are all the customers who are supposed to pay for freight doing so? Are sales team members waving freight and other fees to capture sales? Review these hidden profit leaks and update policies to ensure the sales team is limited in waiving freight for customers.  Just recently announced, Walmart is going to charge some suppliers for the fuel Walmart uses to haul products from supplier warehouse to the retailer’s own depots and stores.Understand your Customer’s Share of Wallet Believe it or not, this tough economic environment can be an opportunity to strengthen relationships with current customers. Take the time to understand the customer wants. Yes, we know everyone wants prices to go down, but in the meantime, you can help your customers understand where you can provide more value to capture more of their spend for good and services. Effectively a price for volume strategy, working with customers to understand how pricing is determined and listening to their ideas can build quite a bit of consumer loyalty.Maintain Prices, Increase Market ShareIf your business can, refrain from quickly increasing price. Instead, wait to see how competitors in the marketplace are addressing inflation. By watching how customers in the market react to other vendor price increases, you can gauge if increasing prices immediately is the right move. Offering lower prices than competitors can be an opportunity to capture more market share and attract new customers.If you have any questions about how to better manage the impact of inflation on your business, please feel free to contact me directly at mhart@schneiderdowns.com.Related Articles How To Identify Supply Chain Vulnerabilities Measuring and Managing the Impact of Inflation on Business Understanding the Value of Value Chains About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experiences professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page.   ### Measuring and Managing the Impact of Inflation on Business How can a business realistically measure and manage the impact of inflation in today’s market?This is a question filling up board rooms in countless industries as inflation continues to soar across the country. Businesses are continuously looking for ways to reduce the impact on their bottom line and calm an increasingly frustrated consumer base.We understand that businesses are facing the complex challenge of balancing pass-through cost increases while maintaining margins and not losing customers. However, if cost increases outpace price increases over the long term, a company will eventually go out of business.While there is no universal solution to combat inflation’s effect on the cost of doing business, the following actions can help your business better measure and manage the impact of inflation.Implement a Tactical Approach To offset inflation costs, a tactical approach is needed.  A one price increase for all approach typically does not maximize the likelihood of offsetting impacts of inflation.  Companies need to understand where they can increase price, but just as importantly, they also need to know where they should not raise price.To better understand the impact of inflation, it’s helpful to generate a detailed analysis of raw material and product cost increase, mapping the total impact to profitability to specific customers and products. Knowing where and when profit will be impacted can help decision makers determine actions to offset inflation.Leverage Data and ReportingWe recommend actively forecasting your business’s revenue and profitability on a regular basis—at least monthly (and even weekly depending on the amount of new qualitative and quantitative data available). Have reviews each week to understand:  Which customers are accepting or rejecting price increases? Are specific items harder than others to increase price? Sales velocity of products: What products are selling or not moving?  How should I change my purchase orders accordingly? Feedback of what is going on in the market, including customer, competitor and vendor intel that could be a threat or opportunity to the business. By implementing formal reporting schedules, your business can increase individual accountability and make better informed decisions. You will also be able to determine which customers and product lines are not meeting profitability standards and decide if they are expendable.Measure Cost Pass-Through PercentIt’s important to actively measure changes in cost and price to determine the percent of costs dollars passed through in the form of a price increase (Cost Pass-Through Percent). With this metric, a business can quickly determine which customer, product and internal leaders can increase price to offset inflation and continually readjust their strategy to improve profitability.Be TransparentConsumers are rightfully frustrated with the impact of inflation on their finances. We know that discussing prices with customers can be tough with tensions already high, but you must be willing to have the difficult conversation.Having a candid and transparent conversation can help consumers understand why prices are increasing and dispel some of the common myths surrounding the current economic environment. Communicate the need for the price increase in a clear, easily understood message, emphasizing the need for the increase to maintain the value and service levels  provided to the customer.If you have any questions about how to better manage the impact of inflation on your business, please feel free to contact me directly at mhart@schneiderdowns.com.Related Articles How To Identify Supply Chain Vulnerabilities Profitability Strategies Beyond Price Increases Understanding the Value of Value Chains About Schneider Downs Business ConsultingSchneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experiences professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations.To learn more, visit our dedicated Business Consulting page.   ### In the 2008, the Housing Market Bubble Went POP! Is the Used Vehicle Market Next? In the mid to late 2000s, I think we all knew a storm was brewing. How can homeowners owe $365,000 on their $325,000 houses? Well, we found out the hard way… you can’t. The housing market came crashing down, homeowners lost their houses, and the banks took some major losses.  Now, fast forward to 2021. Haven’t we learned from the past? Here we go again. The market has inflated used vehicle prices, and banks are offering five-year loans on used vehicles with 75,000 miles on them. Sounds like the housing market bubble. Well, I can guess demand vs. supply is driving it. Let’s do some math. The 75,000-mile vehicle bought today will potentially have 99,000 miles in two years. You paid $25,000 for that vehicle today and still owe $18,000 on it when it has 99,000 miles on it. By the way, the rise in interest rates is not helping this storm brewing. I don’t know about you, but I don’t like that math.  Are we sticking our heads in the sand about what is coming? We can’t predict the future, but we can learn from the past. It is going to be an interesting ride while the average family struggles to afford a new vehicle at these prices and the push for electric vehicles (“EV”) keeps coming.We can go on and on about the EVs. The interesting part about EVs is two-thirds of drivers don’t even park in the same parking spot every day. Until we figure out the charging infrastructure, it appears the demand for used vehicles will be there, but will these vehicles last as long as we need them before people start defaulting on their loans?We will continue to monitor used vehicle prices and our LIFO approach. Click here to learn about our LIFO approach in this new era. Buckle up--it will be interesting. Reach out to Steve Barber or any of the SD Auto Advisors to further discuss this.About Schneider Downs Automotive ServicesSchneider Downs serves dealers of all sizes, from single-point locations to mega-dealerships.  Our Automotive Industry Group members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. Our personalized business approach emphasizes active listening, proactive insights, exceptional guidance and practical solutions to drive results. To learn more, visit our Automotive Services page.   ### Distributor Method for Valuation of Customer Relationships In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC“) Topic 805, Business Combinations, intangible assets acquired in a business combination must be recorded at their fair values on the acquirer’s balance sheet.Customer-related intangible assets are one common type of intangible asset recorded in a business combination. Although numerous valuation methodologies may be applied to estimate the value of customer-related intangible assets, this article discusses the Distributor Method, which is a variation of the Multi-Period Excess Earnings Method (“MPEEM“).The MPEEM and Distributor Method are described below: MPEEM – A form of the income approach to valuation, the MPEEM measures the value of an asset by forecasting cash flows attributable to the asset and discounting them back to the present day using an appropriate rate of return estimated based on various market-specific, company-specific and asset-specific data. Cash flows related to the asset are also adjusted for appropriate returns for contributory assets (“CACs”) used by the business to support the asset’s revenue and earnings. This approach is applied in the valuation of customer relationships when the customer-related asset is the primary asset of the acquired business, or when the primary asset can be appropriately valued using another valuation methodology. Distributor Method – The Distributor Method is a variation of the MPEEM that may be used when the acquired entity’s relationship with its customers is similar to the relationship between a distribution company and its customers. Specifically, the Distributor Method might be appropriate when strong brands or unique, high-value technology are driving customer demand and customer-specific efforts are limited. The Distributor Method utilizes margins and CACs consistent with a distributor within the applicable industry in order to isolate cash flow attributable to the customer-related assets. Schneider Downs Consulting recently performed an intangible asset valuation related to the acquisition of a wholesale business (referred to as “WB”) operating in the food and beverage industry. The main driver for the acquisition, and primary intangible asset, was WB’s supplier relationships. WB essentially acted as a distributor to its customers, who largely decided to purchase from WB because WB had a reputation for sourcing products from only the highest-quality suppliers. Since the supplier relationships were the primary asset acquired, we selected the MPEEM to value the supplier relationships.Although we originally considered the MPEEM to value WB’s customer relationship assets, the nature of the MPEEM does not allow for more than one asset of a business to be valued under this approach. Considering that WB essentially acted as a distributor to its customers, we determined that the Distributor Method would provide a reasonable indication of value for the customer relationships.We then performed the following steps to estimate the value of the customer relationships using the Distributor Method: Forecasted sales to existing customers – Management provided estimated sales forecasts for the customers in place on the acquisition date, which we adjusted for expected future annual attrition based on an analysis of historical attrition and management’s future expectations. Forecasted earnings – Applied average distributor margins for the industry (obtained from relevant market databases) to forecasted sales to existing customers. We also adjusted for appropriate income taxes. Contributory asset charges – Adjusted for the fair return on contributory assets supporting the customer relationships including working capital, property and equipment and workforce. Discounted future cash flows to present day – We applied a discount rate (based on relevant market-specific, company-specific and asset-specific data) to the forecasted cash flows for the customer relationships. Tax amortization benefit – We also considered the present value of the tax benefit that WB receives from amortizing the customer relationship asset over a 15-year period for tax purposes. The resulting analysis of the customer relationships (and the valuation analysis of other intangible assets) was reviewed and accepted as part of the acquiring company’s annual audit to meet the requirements under ASC 805.Schneider Downs has significant experience in determining the fair value of intangible assets acquired through business combinations in order to comply with ASC 805. For more information about Schneider Downs’ valuation and other business advisory services, please contact Stephen D. Thimons (412-697-5281; sthimons@sdcpa.com) or Joel M. Rosenthal (412-697-5387; jrosenthal@sdcpa.com).About Schneider Downs Business Consulting ServicesSchneider Downs’ Financial Advisory team’s collective experience provides practical advice to guide clients through making better business decisions. We deliver actionable solutions that help make our clients’ lives easier, and make their companies even better. To learn more, visit our dedicated Business Consulting page.  ### Will Potential Laws Change the Tax Implications of Cryptocurrency? In the past few years, increase in the use of cryptocurrency has skyrocketed. Last November, the issuance of digital assets from private entities reached a market capitalization of $3 trillion. Just five years earlier, that capitalization was $14 billion.All this activity has led to questions about the tax treatment of these digital assets. For tax purposes, you should know, virtual currencies are treated as property. And while this generic rule tries to simplify the matter, it fails to answer potential issues. For instance, what are the tax consequences of earning passive income through trading cryptocurrency? How are taxpayers treated when one uses cryptocurrency to buy non-fungible tokens on the blockchain? Cryptocurrency experts believe America’s digital asset sector needs more regulation to protect the economy and investors. On March 9, President Biden took steps to do just that, signing an executive order to better regulate virtual currency. The order expects the Treasury Department and other government agencies to publish digital asset reports that prioritize the effects digital assets have on the U.S. financial system and economy. Additionally, the Infrastructure Investment and Jobs Act will require the issuance of Forms 1099-B to detail cryptocurrency exchanges. Plus, the Treasury Department’s 2023 revenue proposals want to require certain taxpayers to report foreign digital asset accounts in order to avoid tax evasion. Clearly, with the matter in a state of constant flux, staying educated on current tax news regarding cryptocurrency will help prepare taxpayers for this and upcoming tax seasons.About Schneider Downs Tax ServicesSchneider Downs’ tax advisors have experience and expertise in a wide range of industries including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensures the delivery of technical tax strategies which can be implemented as practical business initiatives. To learn more visit our dedicated Tax Services page.  ### What is Greenwashing and What Are the Associated Risks? The term “greenwashing” initially originated from the environmentalist Jay Westerveld when he criticized hotels’ environmental efforts. They promoted reusing towels instead of using a new, clean towel every day; however, Westerveld noticed how these hotels did nothing else to help the environment and realized that they were simply attempting to reduce costs and advertise their efforts as environmentally friendly. The term then became widespread when addressing other companies exaggerating their environmental efforts. However, its meaning has since been extended to Environmental, Social and Governance (ESG) reporting. Simply put, greenwashing is whenever a company makes misleading, false or unproven claims about the sustainability of their business or its operations. One reason companies fall victim to greenwashing is because they do not understand the full extent of ESG disclosures, as these reports are expected to be thorough and high quality. Also, most companies do not have experts determining the effectiveness of their environmental efforts, causing ESG-friendly efforts to not be as impactful as they were believed to be. In addition to this, there is pressure from outside elements, such as shareholders and customers. For example, 66% of consumers reported that they would spend more on products that come from sustainable brands. Since ESG issues are becoming more relevant topics, companies are highly influenced to become—or appear—more ESG-friendly in order to increase profits. In addition, shareholders have heavily invested in ESG funds, which have boasted the valuation of companies with strong ESG financials and metrics. There are several consequences if companies are caught greenwashing. The first of which is a negative impact on the organization’s reputation. Consumers are unlikely to use or recommend a brand that has violated their trust in the past. As a result of losing customers and shareholders, both profits and stock price could decrease. Most importantly, greenwashing is both illegal and unethical. The US Securities and Exchange Commission (SEC) has begun to address this issue more aggressively, creating a Climate and Risk Task Force that identifies misleading and false ESG disclosures. Recently, the Task Force investigated BNY Mellon for allegedly misleading claims about funds using ESG factors to pick stocks. BNY Mellon neither admitted nor denied the allegations, but they did agree to pay a penalty of $1.5 million. Deutsche Bank AG has also been suspected of greenwashing within DWS Group GmbH & Co. KGaA, a company they have majority ownership in. Deutsche Bank AG’s Frankfurt offices were raided by German prosecutors over accusations of inflating ESG credentials. As a result of these allegations, both Deutsche Bank AG’s and DWS’ stock prices have dropped and Asoka Woehrmann, CEO of DWS, has resigned. Both consumers and investors have demonstrated their demand for ESG reporting, and it is likely that this demand will be further emphasized in the future. Organizations that have voluntarily reported this information ahead of legal requirements have seen benefits from both individual shareholders and other stakeholder groups. However, entities should be fully aware that accurate and complete reporting is as vital as traditional financial reporting. Schneider Downs provides assurance and advisory services for private and public companies. Environmental, Social and Governance Resources Schneider Downs ESG FAQ Schneider Downs ESG Infographic - Putting the ESG Puzzle Together Schneider Downs ESG Article - What Are the Key Roles Internal Audit Plays in ESG? Schneider Downs ESG Article - Top Ten ESG Questions for Board and Audit Committees Schneider Downs ‘Our Thoughts On’ ESG Articles About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### SEC’s Proposed ESG Disclosures for Investment Funds and Advisors The Securities Exchange Commission (SEC) continues to focus on enhancing Environmental, Social, and Governance (ESG) disclosures and has issued proposed regulations to cover registered investment companies, business development companies, and investment advisors.Investors have flocked to ESG funds over the past several years with ESG investment funds attracting nearly $70 billion in new money during 2021. ESG is a focus for large portions of the investor community. Investor stakeholders care about the impact of ESG initiatives on the world. Investor sentiment is also indicating that companies who have thought through these challenges and derived a plan to make improvements internally and externally are overall better companies, which in turn, generate a higher valuation. Currently there is not consistent reporting required from asset managers over ESG fund offerings.  If approved, the SEC’s proposed regulations would provide potential investors with more consistent information by requiring additional reporting requirements for ESG strategies in fund prospectuses, annual reports, and advisor brochures. The SEC believes that requiring objective metrics in these documents will provide users with necessary information to guide their investment decisions. The requirements also build a standardized reporting framework to enhance comparability of ESG funds. The SEC’s proposal defines three types of ESG funds: Integration Funds: Funds that integrate ESG factors alongside non-ESG factors in investment decisions would be required to describe how ESG factors are incorporated into their investment process. ESG-Focused Funds: Funds for which ESG factors are a significant or main consideration would be required to provide detailed disclosure, including a standardized ESG strategy overview table. Impact Funds: A subset of ESG-Focused Funds that seek to achieve a particular ESG impact would be required to disclose how it measures progress on its objective.  The proposal anticipates streamlining the disclosure of advisor considerations for ESG funds as standardized discussion over ESG factors within their investment strategies would be required. ESG-Focused Funds that consider environmental sustainability would also need to disclose greenhouse gas (GHG) emissions associated with their portfolio holdings. Information on their portfolio’s carbon footprint would be designed to meet the requirements of environmentally focused investors. Funds which disclose they do not consider GHG emissions would be exempt from this requirement. The SEC is looking for input on this proposed regulation from both funds and investors. The public has until August 16th to provide comment.  Schneider Downs provides assurance and advisory services for companies. Schneider Downs ESG Resources ESG Consulting Services ESG Assurance Services ESG Our Thoughts On Articles ESG Frequently Asked Questions About Schneider Downs ESG ConsultingWith our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy.For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com.  ### Does the Future of Natural Gas and Oil Companies Include Cryptocurrency? Although cryptocurrency prices have been on a steady decline from its $2.97 trillion market cap in November 2021, it remains a largely traded asset with the market cap of all cryptocurrencies now hovering around $1 trillion.Due to its growing popularity, an increasing number of both individuals and companies are beginning to mine for cryptocurrencies or upscale their existing production. Cryptocurrency mining creates individual blocks that are then integrated into the blockchain, which in turn, makes the blockchain more secure. As a reward for adding new blocks to the blockchain, miners are given cryptocurrency, which is how new coins are put into circulation. The process of creating new blocks is attainable through using costly, high-processing computers that solve difficult mathematical equations.However, these computers require a significant amount of energy in order to mine cryptocurrency, as the energy consumed for bitcoin mining alone would place it within the top 30 countries of energy consumption. Because of this, cryptocurrency mining companies have begun looking for a reliable and relatively cheap energy source. As a solution, companies have started to use both stranded and opportunistic natural gas.One major benefit for natural gas and oil companies is that it allows them to revolutionize flaring into an efficient and useful process. Crusoe Energy Systems Inc. has developed a “Digital Flare Mitigation” program that has no upfront costs to operators. The company delivers its systems to the site, as well as oversees logistics and operations. Instead of flaring natural gas, their system pipes it into generators, producing electricity that fuels their bitcoin mines. Crusoe Energy pays the company for the gas consumed, that would have otherwise been burned for nothing. Not only does this process provide an additional stream of revenue, but it also reduces emissions. With growing pressure for oil and gas companies to reduce emissions from both the government and individuals, Crusoe Energy’s process could be a potential solution, as methane emissions can be reduced by up to 95% when compared to flaring. Exxon Mobil has already partnered with the company and is currently providing 18 million cubic feet of gas per month to Crusoe Energy Systems to mine bitcoin. Recently, Exxon Mobil has been considering expanding this process to sites in Germany, Guyana, Argentina, and Nigeria. Similarly, one of their competitors, ConocoPhillips, has also started to sell their excess of natural gas to third parties to mine bitcoin. With such large natural resource companies paving the way into the cryptocurrency market, it would not be surprising to see many other companies follow suit. Even though cryptocurrency prices have been on a recent decline, this idea presents a potentially lucrative opportunity that is something to be on the lookout for in the future. About Schneider Downs Energy and Resources ServicesThe Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries. To learn more visit our dedicated Energy and Resources page.References:Exxon Eyes Expanding Program That Fuels Crypto Mining With Natural Gas Global Cryptocurrency Market Charts How (And Why) Natural Gas Flaring is Being Used to Mine Bitcoin How Much Electricity Does A Bitcoin Mining Rig Use? Meet Crusoe Energy, Which Mines Bitcoin Using Flare Gas From Oil Drilling What is Crypto Mining? How Cryptocurrency Mining Works ### What is the FICA Tip Credit and How Can Employers Take Advantage of It? Employees who work in the restaurant industry and earn gratuities from customers are required to report monthly tips in excess of $20 to their employers. Employers are then required to withhold both the employee’s and the employer’s share of employment taxes on the tip income reported. The FICA Tip Credit was enacted to provide tax relief to a business paying employment taxes on tip income and can potentially save employers hundreds of dollars per employee. To calculate the credit, employers must first calculate an amount known as “creditable tips.” Tipped employees are typically paid an hourly rate below the federal minimum wage rate. The creditable tips calculation removes the tip income that makes up the difference between the employee’s hourly wage and the federal minimum wage. The steps in calculating the credit available are: Multiply the number of hours the employee worked times the federal minimum wage rate (federal minimum wage amount) Subtract from that number the actual wages paid to the employee (tips not eligible for the credit) Subtract the amount of tips not eligible for the credit from the total tips reported by the employee (creditable tip amount) Multiply the creditable tip amount by the combined FICA and Medicare tax rate (currently 7.65%) to determine the credit available Example: Restaurant LLC operates a restaurant and employs Jane. Jane worked 150 hours and received $600 in wages and $900 in tips last month. The federal minimum wage is $7.25 and the FICA and Medicare tax rate is 7.65%. The FICA Tip is calculated based on the following: Federal minimum wage amount: $1,087 (150 hours x $7.25 minimum wage) Tips not eligible for the credit: $487 ($1,087 wage minimum - $600 wages paid) Creditable tip amount: $413 ($900 tips - $487 tips not eligible) FICA tip credit: $32 ($413 creditable tips x 7.65% tax rate) It is important to note that in order to qualify as a “tip,” the customer cannot be required to pay it and must have the right to determine the amount. If the employer dictates the receipt or amount, such as a service charge applied to a bill and shared among multiple employees, the amount will generally not qualify for the credit. It is also important to note that if the state minimum wage rate is higher than the federal minimum wage rate, the higher rate applies. The information needed to calculate the credit should be readily available from the business’s payroll provider. The credit can be claimed by filing Form 8846 (Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips) with the business’s annual income tax return. For further information on this credit program, please contact Schneider Downs. ### Deferring Gain on Sale of Vacation Property In light of current economic conditions, the vacation home market continues to be robust.  In the past few weeks, we have received inquiries regarding the use of the like-kind exchange strategy for clients who are considering selling their vacation homes in various markets. Depending on your specific facts and circumstances, you may be able to defer gain in accordance with Internal Revenue Code (IRC) Section 1031. Generally, IRC Section 1031 provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment if the property is exchanged solely for property of like kind that is to be held for productive use in a trade or business or for investment. There is well-established guidance that holds that the deferral provisions in accordance with IRC Section 1031 are not available for property that is used as a personal residence.  Holding a property as a residence with the hope or expectation that the property may be sold at a gain does not establish an investment intent. However, in recognition that taxpayers often hold dwelling units for the production of current rental income and also use the property occasionally for personal purposes, the IRS issued Rev Proc 2008-16, which provides a safe harbor for which the IRS will not challenge whether a dwelling unit qualifies as property for held for productive use in a trade or business for investment purposes. Rev Proc 2008-16 defines a dwelling unit as “real property improved with a house, apartment, condominium, or similar improvement that provides basic living accommodations including sleeping space, bathroom and cooking facilities.” The IRS will not challenge whether a dwelling unit qualifies under IRC Section 1031 if it satisfies both the qualifying use standards as follows: 1. for relinquished property (property that you currently own) as follows: the dwelling unit is owned by the taxpayer for at least 24 months immediately before the exchange; and within this period, in each of the of two 12-month periods immediately preceding the exchange, the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more, and the period of the taxpayer’s personal use of the dwelling does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at fair value. 2. For replacement property (property that you will acquire): the dwelling unit is owned by the taxpayer for at least 24 months immediately after the exchange; and within this period, in each of the two 12-month periods immediately after the exchange, the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more, and the period of the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at fair value. There are additional rules related to fair rental and personal use that are beyond the scope of this article.  Further, all of the other requirements of IRC Section 1031 must be satisfied in order to achieve deferral on the exchange of a second home or vacation home. Please contact any member of our real estate industry group if you have any questions or would like to learn more about this valuable deferral technique. ### Some Things You Probably Aren’t Thinking About as a Dealer When It Comes to the Rise in Interest Rates We all know the easiest way to stem inflation is to increase interest rates. Well, the Fed just did that, and it will probably happen again soon.And while rising interest rates impact more than you think (monthly vehicle loan payments just got more expensive, for instance, unless a customer increases their down payment), my first thought was this might not be so bad, since most of the dealers we work with aren’t charging over MSRP. So, does this just decrease demand to where supply is? Peeling back the onion always brings about more things to think about. For instance: Does a higher monthly payment make a customer decline the F&I products? Does a customer lengthen the term of the loan, and how does this impact a dealer’s GAP insurance? How are we going to pay for the facility upgrades coming our way? Let’s dive a little deeper into that last point. Did you know that the Tax Cuts and Jobs Act changed the interest expense deduction for 2022? Under current law, interest expense deduction is based on a taxpayer’s adjusted taxable income (ATI), which is basically earnings before interest and taxes (with some other adjustments). A taxpayer can only deduct, in the current year, up to 30% of ATI. The floorplan interest expense is still deductible, but you might lose out on bonus depreciation I mentioned back in February. Click here for more information on potentially ending bonus depreciation expense early.Loans for facility upgrades, meanwhile, just got more expensive based on the increased interest rate and the potential delay in the deductibility of the expense. Any interest expense that exceeds 30% is nondeductible in the current year but is carried forward indefinitely until the expense is below this threshold. I encourage you to think about solutions like evaluating your rent, etc. Click here for the rent consideration that could potentially be a solution like we discussed back in February to help alleviate this trap of nondeductible interest expense.The time to act is now. Be proactive to see how this interest expense impacts you. Reach out to Steve Barber or any of our Schneider Downs Auto Advisors for assistance. ### The Future of Retail Shopping As a whole, Americans spend a total of 37 billion hours waiting in line each year. Due to technological innovations and a global pandemic, a drastic change is currently taking place within the entire retail market. Store wait times can now be completely eliminated through checkout-free systems. One of the first movers in the industry was Amazon, which opened its first “Amazon Go” store in Seattle in January 2018. The only thing the customer needs to do is scan a QR code provided for them in the app. After that, the customer can walk throughout the store shopping as they normally would. They can even see a live view of their shopping cart inside the app. Once they are done shopping, instead of waiting to check out, they can simply walk out of the store and be on their way. Through using cutting-edge technology, including artificial intelligence, computer vision and data collected from multiple sensors, Amazon can implement its ‘Just Walk Out’ system. With cameras and sensors, this system can determine exactly what the customer takes off the shelves, as well as what is put back on. Amazon has ambitious plans for the future, as the company hopes to open an additional 3,000 cashier-less stores, giving Amazon a strategic advantage over its competitors. This disruptive innovation can be seen spreading across the country, as a number of technology companies are now selling their own checkout-free platforms. Even local grocers and convenience stores have begun to implement similar features into their own businesses. Although these checkout-free systems were created to make the shopping experience more efficient and enjoyable, the COVID-19 pandemic has been a recent catalyst for the systems’ growth, as both customers and employees have had a growing interest in contactless interactions. There are several other reasons why companies are eager to integrate these technology systems into their stores: Profit: Retailers can see increased profit both because they have fewer employees working at cash registers, and because consumers are more likely to shop in a store that does not have lines. About 86% of US consumers claimed in 2017 they left a store due to there being long lines, resulting in $37.7 billion being lost in potential sales that year. Theft protection: This technology can also reduce theft, as anything taken off the shelves is automatically added to the customer's cart. Improved shopping experience: Retailers will be able to access new data that will create more efficiency and innovation, resulting in a better shopping experience for their customers. However, with these benefits also comes disadvantages. One of the biggest obstacles retailers face is the cost of infrastructure. Amazon spent $1 million on hardware alone for the original Amazon Go store in Seattle. With this store only being 1,800 square feet and the typical grocery story being much larger, the fixed costs of this system are hefty and create a barrier to entry. Another disadvantage of this system is the elimination of jobs created by automation. However, early adopters have also realized the opportunity to redeploy their workforce to more value-add assignments. Regardless of these disadvantages, it is evident that checkout-free stores will become much more prominent in the future. Schneider Downs provides assurance and advisory services for retail and business-to-consumer organizations. For more information concerning retail and business-to-consumer matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Mid-Year Optional Standard Mileage Rate Change in 2022 On June 9, 2022, the IRS announced an increase in the optional standard mileage rate for the final six months of 2022 as follows: 62.5 cents for every mile of business travel driven (up four cents from the rate effective at the start of the year); 22 cents per mile for medical care or moving purposes (up four cents from the rate effective at the start of the year); and The 14-cents-per-mile rate for charitable organizations remains unchanged, as it is set by statute. Mid-year increases in the optional mileage rates are rare; however, due to the recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022.  The IRS normally updates the mileage rates once a year in the fall for the next calendar year.  For travel from January 1 through June 30, 2022, the rates are set forth in Notice 2022-03.The last time the IRS made a mid-year increase in the standard rates was in 2011.  About Schneider Downs Transportation & LogisticsThe Transportation & Logistics industry group includes assurance, tax, technology and management consulting professionals who combine their individual expertise to serve transportation and logistics companies throughout the United States. For more than 30 years, we have worked with multiple large clients in the top 100 and continue to provide innovative solutions to help our clients reach their strategic goals. For more information visit our dedicated Transportation and Logistics page. ### Don’t Overlook the Work Opportunity Tax Credit (WOTC) The Work Opportunity Tax Credit (WOTC) is an often-overlooked program that provides a reduction in federal income taxes to employers that hire individuals from certain targeted groups that face significant barriers to employment. In general, the maximum credit per qualified employee is $2,400. Exceptions to this, as well as other frequently asked questions regarding qualifying for and claiming this credit, are detailed below.For which employees may an employer claim the WOTC?An employer may claim wages paid or incurred to an employee who is certified as being a member of one of the following identified targeted groups: Veterans, including disabled veterans Recipients of Temporary Assistance for Needy Families (TANF) Recipients of Supplemental Nutrition Assistance Program (SNAP) Recipients of Supplemental Social Security Income (SSI) Individuals who were formerly incarcerated or those previously convicted of a felony Individuals referred by an approved vocational rehabilitation program Individuals who are residents of areas designated as empowerment zones or rural renewal counties Individuals who are experiencing long-term unemployment Individuals who are qualified summer youth employees How is the WOTC calculated?The WOTC is calculated based on qualified first-year wages, beginning on the day the employee starts work. The maximum amount that may be considered for WOTC is $6,000 per employee, with the following exceptions: $1,200 for qualified summer youth employees $12,000, $14,000 or $24,000 for qualified veterans (depending on the category under which the veteran qualifies) The credit is also available for up to $10,000 of qualified second-year wages paid to long-term TANF recipients.The employer’s total WOTC for the year is calculated by adding three different wage categories: 25% of qualified first-year wages for employees who worked at least 120 hours but fewer than 400 40% of qualified first-year wages for employees who worked at least 400 hours 50% of qualified second-year wages of employees certified as long-term family assistance recipients. What does an employer need to do to claim the WOTC?On or before the day an employment offer is made, the employer and job applicant must complete Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Tax Credit. The employer then has 28 calendar days from the employee’s start date to submit this form to the designated local agency. Note that additional forms may be required by the individual state’s department of labor to obtain certification.Once an employee is certified by the local agency, eligible wages paid or incurred in the year can then be claimed as a credit on the employer’s tax return by filing Form 5884, Work Opportunity Tax Credit.Can an employer claim more than one wage-based credit?An employer may be able to claim WOTC and another wage-based credit for the same employee, as long as the wages used to calculate WOTC are not the same wages used to calculate the other credit.Is an employer limited on how many individuals they can hire that qualify for the WOTC?No, there is no limit to the number of employees that can be hired that qualify for the credit.Is the WOTC a permanent tax credit program?The WOTC was extended by the Consolidated Appropriations Act through December 31, 2025. Under current law, the credit will no longer be available for wages paid or incurred as of January 1, 2026.For more information on this credit program, please contact your Schneider Downs representative. ### Can Solar Power Assist with the Infrastructure Needed to Charge EVs? The electric vehicle (EV) movement is here to stay, whether you like it or not. Between the miles-per-gallon argument, manufacturers’ push for new product and facility upgrades, and the reduction of vehicle emissions, there are a lot of moving parts.One thing, though, that makes me scratch my head is: where do we expect all this electric to come from? It’s not like there are millions of hamsters on millions of wheels working out 24 hours a day to make electricity. Our ongoing conversations with dealers always center around some discussion of us getting more electricity from the grid.So, let me ask … have you investigated solar? Did you know there are credits, incentives and accelerated depreciation out there for you? Here’s a list: Federal investment tax credits based on an installed solar photovoltaic (PV) system. The current credit is 26% of qualified costs for construction that begins in 2022 and is placed into service before 2024; 22% credit for construction that begins in 2023 and placed into service before 2024; and 10% for 2024 and years beyond. State and local tax incentives/rebates. Each state has its own program. Click here for more information. Federal accelerated depreciation. The PV system is eligible for bonus depreciation, which is 100% through 2022 then reduced 20% per each following year. Keep in mind that the depreciable basis needs to be reduced by 50% of the credit. Remember, of course, that tax law is fluid. These incentives can always change or be extended.Another thing to consider is the climate. You don’t have to be Joe the Weatherman to know that Western Pennsylvania doesn’t get a lot of sunshine. I would challenge the proposals you’re provided to make sure they make sense, though with rising energy costs, the sun is certainly a great free alternative. You just have to deal with the upfront costs of the capital improvements, with which the above-mentioned credits, incentives and tax write-offs can help. Oh, and did I mention that if you collect more solar energy than you use, you can sell it back to the grid? That can certainly end up being beneficial.The next step is to secure a proposal, compare your utility bills and think about your future energy needs. Our concern has always been where the energy is going to come from. Maybe this is the solution or will at least provide a way to alleviate stress on the system.If this all sounds like it makes sense, please reach out to Steve Barber or any Schneider Downs Auto Advisor. There are a few construction companies out there that can help you walk through the process, provide you with a proposal and complete your project. If you need options, let us know. ### Benefits of a Trusted Co-Source Audit Partner During the Great Resignation Employees are leaving the workforce and switching jobs at a rapid pace, and the Internal Audit profession is no exception.Baby boomers are retiring, and the younger generations entering the workforce are not staying at the same company for as long as compared to just 20 years ago. Therefore, companies are having an increasingly difficult time retaining and replacing this experienced talent. Staff retention is becoming a bigger risk that many chief audit executives are facing. For example, companies are investing a lot of time and money on training audit staff, just to see them walk out the door. For audit departments composed of only a few financial, cyber and IT audit resources, it is becoming just not worth the risk to develop this talent in-house.Many organizations are turning to large audit firms, such as Schneider Downs, who demand high-quality standards with deep talent pools as a co-source audit partner. The Schneider Downs Risk Advisory Services Department is not immune from losing key talent, either; however, with a large talent pool and a mature onboarding program, the firm can absorb these employee losses much easier.Another benefit of selecting a trusted co-source audit partner is that these firms have a variety of other services that can benefit clients. For example, a company can outsource Sarbanes-Oxley management testing to an external firm, so their internal resources can focus on emerging projects, then in later years add supplemental IT audits and tax services. Many organizations start small then build trust and confidence with a co-source firm and later contract other services. Co-source firms also have the capability to complete the audit plan or perform cybersecurity services, such as an external penetration test, maturity assessment, or brainstorm audit committee communication strategy on demand. Companies can rest easy knowing that skilled resources are available for their current and future audit needs.Audit budgets are increasing with cybersecurity and compliance requirements, and many Internal Audit departments do not have the expertise to satisfy these requirements. Internal Audit departments need to assess if they have the necessary skilled resources in-house to cover these risks. Companies also need to measure and evaluate their strengths and weaknesses to identify improvements in their audit program. It is easy for companies to settle in and stay consistent year after year. Companies, though, need to maintain a holistic mindset and continue to improve, innovate, and transform their programs to maximize the most value.  That is where firms like Schneider Downs excel by understanding the current risks through research and by seeing how other companies are solving the same business challenges to maximize value.  Companies should evaluate their strategy, resources, scope, risks, testing strategies and design of controls annually. Their programs should also be agile enough to react to changes in their business throughout the year. Examples that cause change includes auditor risk assessments, system implementations, system changes, acquisitions, compliance requirements, cybersecurity, and changes in the business.  Ask yourself these questions to see if your Internal Audit department is operating at its highest level:Strategy and Vision Do you have the correct Internal Audit leadership and resources with a continuous improvement mindset that covers all company risks? Does your external auditor rely on Internal Audit’s testing? Do you have an agile program to adjust audits and management requests effectively and efficiently? Is Internal Audit viewed as the control expert throughout the organization? Is the C-suite satisfied with the quality in Internal Audit? Operating Structure Is there adequate manager/leadership oversight and governance over Internal Audit?  Are roles and responsibilities clearly defined and communicated to stakeholders/owners? Are processes standardized across Internal Audit? Is Internal Audit appropriately budgeted and funded to mitigate risk?  Is there an effective risk assessment performed annually/continuously for the audit plan? People Do you have an appropriate mix of Internal Audit resources to complete the audit plan?  Resources include IT, financial, operational, compliance and cybersecurity.   Is there a continuous learning and development model to improve Internal Audit’s knowledge of the business, technical and emerging risk areas?  Is staff performance measured against criteria that reflects the mission and vision of Internal Audit and the organization? Do training plans include elements to improve business acumen, judgment, and perspective? Technology and Innovation Is technology integrated in the program? Examples include automated workpapers/request systems, continuous auditing, and data analytics? Are innovation and continuous improvement embedded in the Internal Audit culture and are they consistently fostered and rewarded? Are robotics process automation (RPA) and application controls leveraged to reduce manual control reliance on key controls? If your company is considering co-source services, contact a member of the Schneider Downs Risk Advisory Department. ### Accelerating Charitable Efforts Act Under Consideration Proposed bipartisan legislation known as the Accelerating Charitable Efforts (ACE) Act would reform tax laws to require Donor Advised Funds (DAFs) to disburse charitable dollars to working charities more quickly. Currently, DAF account holders receive a tax deduction in the year in which they fund the account, but there is no distribution requirement for the DAF to make a charitable grant. At this time, more than $140 billion in funds designated for charitable causes are being held in DAFs.As proposed, the ACE Act would reform tax laws requiring DAFs to distribute funds to nonprofits within a reasonable period of time and keep charitable funds from sitting in investment accounts when the donor(s) have already received tax deductions for their contribution. The ACE Act would divide DAFs into four new categories. The tax benefit to a donor who makes a gift to a DAF will differ depending on which type of DAF receives the gift. The goal is to reduce the timing mismatch between when the donor receives a federal income tax deduction and when the charity receives a grant from the DAF. The four categories are:Qualified Donor Advised Funds (QDAF) Donors get all tax benefits at the time of contribution if the account is distributed within 15 years. If the QDAF fails to distribute the contribution (including earnings), the organization faces a penalty (excise tax) equal to 50% of the contribution that was not distributed by the required date.When a donor contributes a non-publicly traded asset to a QDAF, he or she will receive a charitable deduction until the sponsoring organization sells the asset. A non-publicly traded asset is described as “any asset for which (as of the date of the contribution) market quotations are not available on an established securities market.” A donor who contributes assets other than those non-publicly traded should receive a charitable deduction in the year of the contribution, subject to regular rules governing charitable deductions.Non-Qualified Donor Advised Funds (NQDAF) This is similar to a QDAF, but monies must be distributed within 50 years. Failure to do so also results in a penalty of 50% of the undistributed contributions and earnings. Donors of cash receive charitable tax deductions in the year that includes the date the sponsoring organization made a qualifying distribution of the contribution. The amount of the deduction is limited to the amount of the qualifying distribution.When a donor contributes property other than cash, he or she receives a charitable deduction in the year that the property is sold for cash and the sponsoring organization made a qualifying distribution of the sale proceeds. Qualified Community Foundation Donor Advised Fund (QCF-DAF)There are two types of QCF-DAFs, both of which must be sponsored by a Qualified Community Foundation (QCF), an organization that operates for the purpose of understanding and serving the needs of a particular geographic community by engaging donors and pooling donations to create charitable funds in direct furtherance of those needs and which holds at least 25% its total assets outside of DAFs. A donor who makes a gift to a QCF-DAF has the same tax consequences as a donor making a gift to a QDAF described above. The two types of QCF-DAFs are: One where the donor has advisory privileges and the DAF has an aggregate value at any time of $1 million or less, adjusted for inflation after 2021.  One established under an agreement that requires the DAF to make qualified distributions each calendar year in an amount not less than 5% of the value of the fund determined as of the last day of the preceding calendar year.  The ACE Act would also reform existing rules governing Private Foundations (PFs). Contributions to DAFs from PFs would not count toward the 5% payout requirement unless the funds are distributed from the DAF by the end of the year following the contribution. Salaries, travel expenses and other administrative expenses paid to family members of a substantial contributor to the foundation cannot meet payout obligations.The ACE Act also provides incentive for faster payouts out of PFs: if a PF were to distribute at least 7% of the value of its assets, the 1.39% excess tax on net investment income would be waived. In addition, the ACE Act would put a maximum lifespan of 25 years on PFs, eliminating families’ abilities to give into perpetuity.The ACE Act would also impact the public support test for tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code. When a public charity receives a grant from a DAF, it would no longer be treated as coming from a public charity. The sponsoring organization would need to identify the donor to the DAF making the distribution and provide it to the public charity. Certain exceptions would apply. This change would discourage anonymous giving from DAFs and could flip small charities to a PF. The debate over the ACE Act is far from over. There will likely be opposition from the nonprofit sector for many reasons, including the complexity of the changes that will create significant difficulty to donors and charities alike. For more information, contact your Schneider Downs representative. ### Illumina Cybersecurity Vulnerability Advisory Issued to Healthcare Providers The Cybersecurity and Infrastructure Agency (CISA) and Food and Drug Administration (FDA) have issued advisories to healthcare providers regarding a cybersecurity vulnerability affecting Illumina medical devices. The FDA website released a statement on June 2nd warning laboratory personnel and healthcare providers of the the cybersecurity vulnerability associated with the Illumina software, which includes the Illumina NextSeq 550Dx, the MiSeqDx, the NextSeq 500, NextSeq 550, MiSeq, iSeq and MiniSeq, next generation sequencing instruments. According to the statement, the cybersecurity vulnerability impacts the Local Run Manager (LRM) software and could allow unauthorized users to exploit the vulnerability by taking over instrument controls remotely and accessing the system to alter settings, configurations, software or data on the instrument or customer’s network. The vulnerability may also allow unauthorized users to alter the instruments intended for clinical diagnosis, including causing the instruments to produce incorrect or no results, altered results, or even a potential data breach. The CISA ICS Advisory (ICSA-22-153-02) provides a more technical overview of the vulnerability, including a detailed list of the affected products outlined below. The following devices and instruments using LRM software are affected: Illumina In Vitro Diagnostic (IVD) Devices NextSeq 550Dx: LRM Versions 1.3 to 3.1 MiSeq Dx: LRM Versions 1.3 to 3.1 Researcher Use Only (ROU) Instruments NextSeq 500 Instrument: LRM Versions 1.3 to 3.1 NextSeq 550 Instrument: LRM Versions 1.3 to 3.1 MiSeq Instrument: LRM Versions 1.3 to 3.1 iSeq 100 Instrument: LRM Versions 1.3 to 3.1 MiniSeq Instrument: LRM Versions 1.3 to 3.1 The good news is that Illumina has developed a software patch to remediate the vulnerability, which is available at https://support.illumina.com/downloads/illumina-local-run-manager-1.0.html. In addition to downloading the patch, the FDA recommends impacted organizations to take the following actions if applicable. Review the Urgent Safety Notification or Product Quality Notification (for RUO Customers) sent by Illumina on May 3, 2022, to affected customers. If you did not receive a notification from Illumina, but believe you should have, please contact techsupport@illumina.com. Immediately download and install the software patch (Dx mode and RUO mode) on every affected instrument, including each stand-alone instance of the off-instrument LRM for RUO mode on the Dx instruments, while connected to the internet. Contact techsupport@illumina.com for instructions on other ways to install the software patch if you are not connected to the internet. Immediately contact techsupport@illumina.com if you suspect your instrument may have been compromised by an unauthorized user. CISA has provided additional mitigation recommendations to minimize the risk of exploitation of this vulnerability that include: Minimizing network exposure for all control system devices and/or systems, and ensuring they are not accessible from the Internet. Locating control system networks and remote devices behind firewalls and isolating them from the business network. Using secure methods, such as Virtual Private Networks (VPNs) when remote access is required, recognizing VPNs may have vulnerabilities and should be updated to the most current version available. Also recognizing VPN is only as secure as its connected devices. Related Links FDA - Illumina Cybersecurity Vulnerability May Present Risks for Patient Results and Customer Networks: Letter to Health Care Providers CISA ICS-CERT Advisories – ICS Advisory (ICSA-22-153-02) Illumina Local Run Manager About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Depp v. Heard – IP Damages Expert Makes Red-Carpet Appearance Intellectual property (IP) isn’t always the most glamorous of topics; however, it did make a red-carpet appearance in the defamation trial between actor Johnny Depp (plaintiff) and his former wife and actress, Amber Heard (defendant). During the trial, an IP damages expert witness testified that Depp’s image had been damaged as a result of allegations made by his ex-wife. Mr. Depp made claim for three counts of defamation for $50 million in damages, and Ms. Heard initiated a counterclaim for $100 million. What is intellectual property?According to the World Intellectual Property Organization (WIPO), “IP refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” Legal protections such as trademarks and patents seek to safeguard IP by allowing businesses or individuals to be recognized for such creations. Some of the most common intangibles recognized as IP include patents, copyrights, trademarks and trade secrets.How is IP valued?The following are common approaches used to value IP:  Income Approach – The income approach determines the value of IP by assessing its income-generating ability, based on expected cash flows, its economic life and a discount rate.  Market Approach – This approach uses market data related to recent transactions of similar IP in similar markets to determine value. Cost Approach – Often used when the IP is not yet producing cash flows, the cost approach determines value by calculating the cost to reproduce or replace the asset. The TrialAfter six long weeks, the jury began deliberations on Friday, May 27, 2022, and delivered a verdict on June 1, 2022. The jury awarded Depp $10 million in compensatory damages and $5 million in punitive damages (reduced by the judge to the state’s statutory punitive damages maximum of $350,000). Heard was awarded $2 million in compensatory damages. Schneider Downs has extensive experience performing intangible asset valuations as well as damages calculations. For more information about our advisory services, contact Thomas Pratt at 412.697.5615 or tpratt@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com.    ### Startup Home-Based Business Basics According to an article by Ben Casselman, NYTimes.com dated August 21, 2021, “The coronavirus pandemic appears to have unleashed a tidal wave of entrepreneurial activity.”  This notion is supported by the United States Census Bureau, Business Formation Statistics, in that business applications in 2021 were up over 20% since December 31, 2020. Granted, not all business applications turn into successful thriving businesses, but it supports a potential realignment in business activity.As a result of the pandemic, lifestyles have changed dramatically, leading to more entrepreneurial endeavors such as: personal shopping, blogging, online tutoring and fitness, pharmacy delivery, custom baking and crafts, interior design, just to name a few.The expectation is that small businesses will continue to grow, and the majority of entrepreneurs will continue to start their businesses in their homes. So, if you have that entrepreneurial spirit, the following is a list of considerations for creating a home-based startup business:Considerations for Creating a Home-based Startup Business Develop a winning idea  -  Consider your talents and an area of marketplace need. Think about things that frustrate you and what would solve the frustration or consider the marketplace and gaps upon which you could improve. Create a business plan - A business plan will assist in defining your business and can be used for potential investors, should you go that route. An excellent resource when writing a business plan comes from the U.S. Small Business Administration. This information can be found at  https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan. Decide on your business’s name and legal structure -  Select a name that is memorable and fits the product or service you are providing. You will have to make sure that the name is not already in use by checking the secretary of state’s website or business bureau’s website in the state in which the business is formed. As for legal structure, you should consult legal counsel and/or a tax advisor for guidance. The type of entity, be it a sole proprietor, limited liability company, corporation or partnership, all have varying risks, tax implications and filing requirements that should be considered. Apply for an Employer Identification Number (EIN) -  If you plan to register your business or hire employees, you will need an EIN. In addition, the EIN protects you from using your own Social Security number. An EIN is free, can be applied for on the IRS website, and received within minutes. Establish a business bank account for your entity -  This will separate your personal finances from the business’s finances and will assist in maintaining an accurate set of accounting books and records.               Explore the necessity of business licenses and permits - Depending on your location, you may be required to obtain a permit for your home-based business. In addition, various licenses and permits need to be considered such as: a business operating license, professional or trade license, sales tax permit or sales tax exemption certificate. Consider obtaining insurance -  Insurance will mitigate the exposure to such risks as personal injury, property damage, potential lawsuits, data breaches or business interruption. Hire an accountant -  An accountant can assist you with the business structure, business setup, bookkeeping, and accounting, taxes and payroll, if necessary. Set up a home office -  Studies have shown that it is important to designate a specific home office space in order to be successful at working from home. This promotes productivity and helps separate work from personal life. Be sure and invest in appropriate furniture and technology to promote a strong work environment. Develop a marketing plan – A marketing plan includes your market goals, target market, a timeline and metrics for measuring success. There are opportunities abound; so, if you have a business-worthy idea, consider the next steps in starting your own business. If you would like to learn more about how to plan for, launch, and run a successful business, please contact a Schneider Downs advisor. ### United States Deals with Baby Formula Shortage Over the past few weeks, as you’ve been running errands or completing your grocery shopping, you may have noticed some empty shelves in the baby formula aisle. The short supply has stemmed from a number of factors, including rising costs, supply chain issues and recent product recalls by Abbott Laboratories, a primary manufacturer of formula, that led to the temporary closure of a manufacturing plant in February. These circumstances have left the company with low inventory levels and the challenge of how to fix the issues, since certain critical supplies are either out of stock or backordered.Last month, in an op/ed piece in the Washington Post, Abbott CEO Robert Ford offered an apology to families across the country.The unfortunate situation brings to light how fragile the current manufacturing environment is due to ongoing supply chain issues and rising costs of input. Many of these issues are in part attributable to the coronavirus pandemic and the related shutdowns and disruptions over the prior two years, but as we’ve witnessed, all it takes is one event – like the temporary closure of a plant – to be the catalyst that can cause a significant shortage or crisis.Is your business ready to react to such a situation?The Baby Formula Shortage is an excellent example of the need for companies to consistently evaluate supply risk to their organization. Regardless of industry, as supply chain challenges continue from the pandemic, each company should run scenario analysis to better prepare for potential impacts.  Areas to investigate include in inventory stock levels (max/mins), re-order points (based on ever changing lead times) and qualify new suppliers in case a main supplier is unable to deliver.By scenario planning, potential remedies can be put in place when a crisis arises to minimize impact to customers.Sources https://www.washingtonpost.com/dc-md-va/2022/05/11/formula-shortage-parents-inflation/ ### Business Continuity and Disaster Recovery Planning Schneider Downs is committed to helping organizations in various industries understand the importance of planning for Business Continuity (BC) and Disaster Recovery (DR). First, we debunk the common myth that BC and DR planning are one in the same.We want organizations to understand that BC planning consists more of a holistic view of the organization and focuses on ensuring the business remains operational during any type of disruptive event. Whereas DR focuses more granularly on how fast the business can restore its critical data, operations, systems and infrastructure. It is important for organizations to plan for and understand their ability to react and respond to maximize business resiliency for any type of business disruption and reduce any risks associated with operational downtime. Organizations can think of their BC Plan as the heart of their company that identifies all the business operations and their associated risks in the event of a disruption. Whereas the DR Plan ties the technologies back to each business processes to ensure procedures are in place to remain operational. Without defined BC and DR Plans, an organization could succumb to significant financial loss, legal and regulatory repercussion, operational and reputational risk, and breach of sensitive information. We understand that BC and DR planning can be a daunting task for organizations, and sometimes it is unclear where to start. Based on our experiences working with clients, we feel that the most important phase of planning starts with governance structuring. The organization should have clear policies, roles, responsibilities and strategies in place for each business process. Leaders should understand what the business objectives are and how each business process plays a part to achieve those objectives. Management should identify the organization’s most critical processes, technology and vendors. The most critical and effective exercises that can help organizations identify these during planning are Business Impact Analyses (BIAs) and Risk Assessments (RAs).A BIA is an exercise that allows an organization to gather critical information for each business unit in order to develop recovery strategies. The RA will allow each business unit to risk rank its critical processes, technology and vendors and understand the major impacts to the organization if there were a disruption of service. With the help of Schneider Downs, your organization can receive the expertise and knowledge our team members can bring to help map your critical process, technology and vendors. By having one of our highly qualified team members conduct BIAs and RAs, you will understand what each of the following are for every business process throughout your organization: Critical business processes, Critical times of operations, Critical applications, equipment, infrastructure requirements and hardware, Critical third-party vendors, System dependencies and single points of failure, Critical personnel,  Workarounds.   Additionally, we can help identify the impacts on the organization if a disaster was declared and critical communication, facilities, human capital, technology and/or third-party vendors were impacted. Our team can perform an RA to identify the threats and risks that may impact business operations. Assessing the risks based on impact and likelihood of occurrence will allow the business owners to rank and prioritize the recovery of disruptions. Risk assessments allow organizations to understand what risks are present to their business operations and what controls are currently in place to mitigate those risks. After a risk assessment is performed, management will have an idea of the controls that are required to implement and mitigate risks. After BIAs and RAs are performed, the BC and DR plan is ready to be developed and/or evaluated. We help organizations either fully develop and implement their plans or review pre-existing plans to ensure all key points are being documented. From the information gathered during the BIA and RAs, the plans can be compiled to ensure that a complete understanding of the organization’s ability to recover, as a whole, as well as recovering all criticalities to each business unit is documented. The BC Plan will focus more on how the organization will function during any type of disruption and the approach to return to normal operations. When developing or evaluating an existing BC Plan, we can help organizations ensure all the following key areas are defined: Purpose and objectives, Roles and responsibilities, Results from BIAs, RA results and mitigation plans, Existing recovery and response strategies and manual or alternate procedures, Key contacts for critical vendors, Call tree for critical personnel, Plan activation and notification procedures, Plan monitoring and updates.  Alternatively, when developing or evaluating an existing DR Plan, we can help organizations ensure all the following key areas are defined: Purpose, scope and objectives, Assumptions, Roles and responsibilities, Data and infrastructure requirements, Key contacts for critical vendors, Call tree for critical personnel, Critical application, equipment and hardware tiering, Critical system dependencies, Recovery strategy and solutions phases Assessment Phase, Activation Phase, Communication Phase, Alternate Site/Rebuild Phase, Return to Primary Systems Phase. Insurance requirements and expense handling. Schneider Downs recommends organizations develop a BC Team that compiles the plans and monitors them on an annual basis. Additionally, the organization should test its BC and DR Plans on at least an annual basis. Management should develop exercises and testing scenarios that include many business disruption possibilities. An example exercise scenario includes a failover of a critical application to ensure that it meets its Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs).  RTO - The amount of real time a business has to restore its processes at an acceptable service level after a disaster to avoid intolerable consequences associated with the disruption. RPO - The maximum amount of data – as measured by time – that can be lost after a recovery from a disaster, failure or comparable event before data loss will exceed what is acceptable to an organization. Schneider Downs can help an organization develop its BC and DR exercise scoping and testing requirements, as well as detailed procedures to follow to ensure that there are no gaps in testing. The organization should also consider having its exercises subject to independent audit reviews to ensure the organization is effectively managing its programs. Management should develop training plans to ensure all employees are familiar with the BC and DR strategies and procedures. Monitoring of the plans on an annual basis will ensure that they are current with any changes to the organization's business operations, systems and infrastructure. For additional information on how we can help, please see our website at Business Continuity | Disaster Planning | Schneider Downs      ### Accounting Challenges for Emerging Technology Companies – Accounting For Research and Development Costs Emerging technology and startup companies face many unique challenges that mature businesses don’t necessarily encounter. Some of these challenges are fundraising and attracting potential investors, product development, cashflow management and talent attraction with a limited budget. In addition to these challenges, many early-stage and emerging technology companies face unique and technically challenging accounting requirements with limited internal accounting resources. One of these areas that has both unique accounting and tax implications is research and development costs. Arguably, one of the biggest spends for an emerging technology or early-stage company is research and product development. These costs include some of the following items: Materials, equipment and facilities Salaries, wages and other related costs Contract services for research and development Reasonable allocation of indirect costs Computer software used in research and development It is very difficult to determine if research and development activities will result in a future economic benefit; therefore, generally speaking, these costs should be charged to expense as incurred and disclosed in the financial statements in accordance with Accounting Standards Codification (ASC) Topic 730. If certain materials and equipment costs have a future alternative use, those costs may be capitalized and depreciated over their estimated useful lives, with depreciation expense being recognized as a research and development cost. In addition to the financial reporting side of research and development costs, there are certain unique tax considerations as well. There is a possibility for early-stage companies to claim a research and development tax credit. Certain qualified small businesses (businesses with less than $5 million in annual gross receipts and within five years of generating gross receipts) may be eligible to claim an annual credit of up to $250,000 against their payroll tax. If the business is not a qualified small business, there may still be an opportunity to claim this credit against income tax. If you have any questions with respect to the accounting or tax implications regarding research and development costs, please feel free to reach out to us. About Schneider Downs Emerging Technology Services Schneider Downs understands the ever-changing landscape of the emerging technology industry. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution. To learn more visit our dedicated Emerging Technology Services page.   ### Nonprofit Staff Cuts Due to Lack of Q4 Retention Credit The employee retention credit (ERC) was enacted by Congress in March of 2020 to provide relief to employers affected by the COVID-19 pandemic. The original ERC was further extended and modified to allow for a credit through the end of 2021. Many of the nonprofits that have applied for these credits have used them to continue to employ their staff and continue to provide their programmatic activities.Unfortunately, the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021, cut the ERC short by three months to only apply through the third quarter of 2021. Because of this, employers were not able to apply any of the credit amounts to payroll after September 2021. Nonprofits are being hurt by this lack of revenue. Most notably, the credits were originally promised for all of 2021, and many of these organizations were counting on the funds and included them in their budgets. The credit offered a means to keep workers on payroll due to the severe revenue decline. Organizations that were counting on the fourth-quarter ERC are having to drastically adjust their budgets. The immediate impact of Congress failing to extend the ERC is lost jobs and the potential for these organizations to have limited resources to achieve their missions.A proposal from Rep. Carol Miller (R-WV) and a companion bill from Sen. Maggie Hassan (D-NH), issued in the beginning of 2022, hopes to reinstate the credit to include the fourth quarter of 2021. Even with bipartisan support, the bill has not been passed, leaving an expected $8.2 billion in revenue off the table for nonprofits.The obvious challenge that comes with extending the ERC is funding the legislation, especially in an election year with a narrowly divided Congress. Lawmakers are currently working on a way to bridge the gap, but there’s been no word on the final tax provisions. A compromise on the ERC will probably mean some sort of limitation on the credit, if there is anything done at all. Senate Finance Committee Chair Ron Wyden (D-Ore.) has expressed doubts on the chance of this proposal being passed, even with the importance of this credit to nonprofits.Schneider Downs continues to monitor these proposals. ### IRS Proposes Regulations Creating an Exception to the Anti-Clawback Rule Effective January 1, 2018, the Tax Cuts and Jobs Act (TCJA) more than doubled the size of the federal estate tax exemption, from $5.49 million to $11.8 million, adjusted each year for inflation. In 2022, the exemption amount is $12.06 million for individuals and $24.12 million for married couples. Due to the sunset provisions in the TCJA, however, the exemption amount is scheduled to revert back to $5 million, adjusted for inflation, in 2026. The IRS estimates that the inflation-adjusted exclusion amount that year will be $6.8 million. Following enactment of the TCJA, a level of uncertainty existed as to whether gifts made while the exemption was high would still be tax free if the donor died after the exemption was reduced. For example, assume that in 2022, when the estate tax exemption is $12.06 million, a donor makes an $8 million cash gift. If the donor dies after the exemption is reduced to $6.8 million, it was unclear whether the donor would pay estate tax on the excess $1.2 million.Consequently, the IRS issued Final Regulations in 2019 that created a special rule, referred to as the “Anti-Clawback Rule,” ensuring the donor’s estate would not be taxed on completed gifts that were tax free when made as a result of the higher exemption. Under 2019 regulations, then, the donor would not pay estate tax on the additional $1.2 million gift from the previous example. But the 2019 regulations created an opportunity for astute taxpayers to capture the benefit of the higher exemption by giving away property for estate and gift tax purposes without completely giving away the right to use and enjoy the property. As a result, the Final Regulations noted that there would be further consideration on how to treat gifts that are complete at the time of transfer but still includible in the decedent’s estate for federal estate tax purposes. New Proposed Regulations issued by the IRS on April 26, 2022, seek to curb the perceived abusive planning opportunities created under the 2019 regulations by clarifying that certain gifts that are includible in the decedent’s estate upon the decedent’s death will be excepted from the Anti-Clawback Rule and will only be given the benefit of the exemption available on the date of the donor’s death. This exception has been referred to the “Anti-Clawback Rule Exception.” Regulations propose that the Anti-Clawback Rule Exception will apply to the estates of decedents who die on or after April 27, 2022. Gifts includible in the decedent’s estate under the Anti-Clawback Rule Exception are those where the donor continues to have title, possession, use, benefit or control of the transferred property. Examples include gifts subject to a retained life estate under Internal Revenue Code (IRC) Section 2036; partnership freezes under IRC Section 2701; gifts made by enforceable promises; GRATS, GRUTS AND QPRTS pursuant to IRC Section 2702; and certain life insurance proceeds pursuant to IRC Section 2042. As exceptions to the special rule, these gifts will only be given the benefit of the exemption available on the date of the decedent’s death rather than the amount on the date the gift was made.As an example, assume that when the estate tax exemption was $12.06 million, a donor transferred an enforceable $7 million promissory note to the donor’s child where the assets of the donor’s estate would be used to satisfy the note. Under 2019 regulations, the transfer would likely receive the benefit of the higher exemption amount even though the assets were includible in the donor’s estate. Under the proposed regulations, however, because the donor retains ownership over the assets until the donor’s death, and if the donor dies after a reduction of the exemption amount, the credit to be applied to the donor’s estate tax is based on the exemption at the time of the donor’s death. Accordingly, if the exemption on the date of the donor’s death is less than $7 million, estate tax would result. The Proposed Regulations note that the Anti-Clawback Rule Exception will not apply in certain situations, such as if the taxable amount of the transfer is de minimis (less than 5% of the transfer). In light of these Proposed Regulations, taxpayers who were relying on these types of planning strategies should reconsider their estate plans. If you’d like to learn more about the potential impact of these regulations, please contact us at constactsd@schneiderdowns.com. ### Observations From Our Construction Accounting Practice Recently, the Schneider Downs Construction Group convened off-site for an all-day construction industry-focused summit. The goal of the meeting was to share experiences from our clients and the construction industry and to answer the following questions: What are the internal and external factors impacting our clients? What are the current and future challenges facing the construction industry? How can Schneider Downs assist construction companies in navigating these challenges? We identified the following four topics as challenges facing nearly all of our construction clients. Cybersecurity Cybersecurity continues to be top of mind within the construction industry. With the sophistication and frequency of attacks continuing to increase, organizations are finding it difficult to keep up. As a means of combatting cyberattacks, companies are turning to cyber insurance. Only one problem: as the number of cyberattacks has increased, so has the cost of cyber insurance. Additionally, many insurance companies are requiring that specific controls and other preventative measures be in place before they will even consider providing coverage. If you are struggling to navigate the complicated cyber insurance landscape, we encourage you to take advantage of some of our resources. The Schneider Downs Cyber Team recently published a whitepaper about how to qualify for cyber insurance and will also host a cyber insurance webinar on June 8. Employee Retention Employee retention and lack of qualified labor is an issue that all companies, regardless of industry, are currently fighting. The construction industry, however, has been facing this challenge for years. Among others, a main driver of turnover is compensation and benefits. A well-developed compensation plan attracts talent, improves retention and also encourages stronger employee engagement. To ensure employees are being adequately compensated, companies will often have a compensation study performed.  A compensation study involves benchmarking an entity's selected job positions to what similar entities are paying for similar positions. Factors such as geographic area, industry and company size are considered. Exit and Succession Planning Having an exit and succession strategy is just as important as having any other corporate strategy. Many business owners are contemplating their next stage. Exit and succession planning can take many forms, such as the outright selling of the business, choosing to maintain ownership while stepping away from the day-to-day and everything in between. The key to exit and succession planning is to start early and know your options. To assist business owners considering an exit or succession plan, Schneider Downs developed a Masterclass webinar that broke the process into four parts. All four sessions can be accessed below: Process Overview and Goal Setting Setting and Executing Strategy Analyze and Develop a Plan Closing the Deal and Beyond  Lease Accounting The long-awaited lease accounting standard is finally upon us. For years ending after December 15, 2022, companies will need to adopt Accounting Standard Codification (ASC) 842, which will require them to record all substantial leases on their balance sheets. There are significant challenges management will encounter with the implementation of this new standard, including capturing the entire population of leases, tracking and accounting for the leases and compiling the necessary information required for financial statement disclosures. Additionally, companies will want to determine the impact this new standard will have on their financial statements from a debt covenant compliance to bonding perspective as well as educate the users of the financial statements. Schneider Downs just hosted a lease webinar to help organizations address these very topics. Additionally, we have developed a software solution, SimpLEASE, to assist companies with the tracking and accounting for leases under ASC 842.     ### Staying Secure During Vacation Season Although summer technically does not start until the June solstice, the Memorial Day weekend marks the unofficial start to the summer vacation season for many of us.While gearing up for travel, here are some cybersecurity best practices and tips to keep you and your data secure on the road.   Avoid Public Wi-FiYes, we know this tip is one that readers have heard for years, yet it’s one that is still important to remember when on the road. With the growth of internet providers placing free wi-fi connection points in cities, as well as the airlines and transit providers offering in-ride connectivity, threat actors will continue to use fraudulent wi-fi networks to connect to devices with malicious intent.But what if you need network connectivity?If you absolutely need an internet connection, be on the lookout for some common warning signs for malicious networks. These include connections that require no credentials (the adage of nothing is free rings true here) or networks that are misspelled/mimic legitimate networks from airports or mobile carriers. If you are still unsure or want to err on the side of caution, you can purchase mobile hotspots from authorized internet providers that may offer pay-as-needed plans ideal for a short trip.Be Wary of DealsWith gas prices reaching record highs and the price of everything in general greater than years’ past, many Americans are understandably looking for the best vacation deals out there. When researching vacation packages or planning a trip, don’t let an unbelievable price or deal hook you into visiting a malicious website or fraudulent situation.Be sure to verify that you are on legitimate websites when booking trips (always verify the URL­), avoid clicking on advertisements or social media links as they may take you to fraudulent websites and do not respond to unsolicited phone calls or emails offering deals too good to be true... because chances are they are.Disable Auto ConnectMany smart devices offer the option to automatically connect to Wi-Fi networks when in range. While this feature is useful when enabled to secure networks that you trust such as your home or work connection, we recommend disabling any auto-connect options on the go.Data and App PermissionsI tend to only download apps as needed, and when traveling, I know that I will need to download several for my trips.From boarding flights to checking into hotel rooms, Apple’s 2009 trademarked phrase “there’s an app for that” still rings true in 2022. Add on the many large theme parks requiring visitors to have an app to make ride reservations and you can see why managing app permissions and your data is so important while on the road.Although app stores do a diligent job of removing fraudulent apps, there are still some that can slip through the cracks. When downloading apps for vacation, be sure to verify you are downloading official apps and granting the proper permissions when setting up your account. Details to verify before downloading an app are the developer’s name, website and number of downloads and reviews.Evade Physical Threats Physical threats are also a top concern for your data privacy and security when on the go. If traveling with devices, we strongly recommend (and most companies require) you to always carry smart devices and computers with you. If flying, be sure to have your devices in your carry-on bag. If driving, be sure to take them with you—even if just stopping to use a restroom or grabbing a bite to eat.For many criminals, a smash-and-grab is a lot faster and less complex than hacking, but just as lucrative when they sell devices.Also, remember "stranger danger"? Everybody with a camera phone can take a photo of others’ screens in seconds, so be sure to double-check your surroundings when viewing or entering personal information or passwords in public spaces. You also can find privacy protector screens online and some phones have them built in for convenience.Pack SmartBefore packing your smart devices, ask yourself if you really need to bring your work laptop, personal laptop, work phone, personal phone and tablets. Recently, I have been asking myself this question when packing. Based on what I plan on doing during the trip is how I choose which devices to take, and which to leave in a secure location at home or the office.Remember that every device you take is another entry point for threat actors to steal your data, so pack accordingly. Update Your SoftwareBefore leaving for vacation, check all your devices for any important updates or patches that need installed. Most smart devices have options to automatically download updates when connected to Wi-Fi or send notifications as a reminder to manually download the update.  Also, restarting computers should prompt updates. These updates and patches are extremely important in protecting your devices and should never be ignored.Use Credit CardsWhile not a “cybersecurity” tip in the pure sense, using credit cards over debit cards will add another layer of security to your trip. Using credit cards doesn’t just help you avoid the large holds hotels place on you for deposits, they offer an array of features that can make combatting fraud much easier.In general, disputing fraud on a credit card is a seamless process and, in my personal experience, credit card companies can identify fraudulent charges on an account before they show up on a statement.Additionally, using a credit card offers convenient features, including the ability to lock your card for trips, automatic currency exchanges and trip insurance in most instances. About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.To learn more, visit our dedicated Cybersecurity page or contact the team at cybersecurity@schneiderdowns.com. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.    ### An Introduction to Industry 4.0 The fourth industrial revolution is upon us. Better known as Industry 4.0, the digitization of manufacturing, which focuses on interconnectivity, automation, machine learning and real-time data, is driving significant transformation in the way industry produces products.From the first industrial revolution, which involved the transition from human and animal power to mechanization through water and steam power, to the mass production and assembly lines using oil, gas and electricity, to the third industrial revolution, which added computers, advanced telecommunications and data analysis, the fourth industrial revolution will take what was started in the third with the adoption of computers and automation and enhance it with smart and autonomous systems fueled by data and machine learning.Applications employed as part of Industry 4.0 can help deliver value across every area of the factory. Anchored by cloud computing, manufacturers are integrating new technologies like the Internet of Things (IoT), analytics and artificial intelligence into their operations, including engineering, supply chain, production, sales and distribution and service. These digital technologies lead to increased automation, predictive maintenance, self-optimization of process improvements and, above all, a new level of efficiency and responsiveness to customers not previously possible.Digital transformations are revolutionizing all aspects of manufacturing, touching not just processes and productivity but also people. The right applications of technology can lead to more empowered decision making; new opportunities for upskilling, reskilling and cross-functional collaboration; better talent attraction and retention; and improved workplace safety and employee satisfaction.By pinpointing high-leverage areas across the manufacturing value chain and deploying an implementation roadmap successfully, Industry 4.0 solutions can deliver substantial returns. According to the consulting firm McKinsey, it’s not uncommon to see 30 to 50 percent reductions in machine downtime, 10 to 30 percent increases in throughput, 15 to 30 percent improvements in labor productivity and 85 percent more accurate forecasting. Customers also see the impact through reduced manufacturing lead times, right-first-time launch management, and improved customer service and complexity management.Referenceshttps://www.forbes.com/sites/bernardmarr/2018/09/02/what-is-industry-4-0-heres-a-super-easy-explanation-for-anyone/?sh=34121da99788https://www.mckinsey.com/business-functions/operations/our-insights/capturing-the-true-value-of-industry-four-point-zerohttps://us.nttdata.com/en/services/consulting-services/manufacturing-consulting ### Inflation Tracking and Cost Pass-through Analysis With inflation increasing at 40-year record highs, nearly every business is impacted with higher input costs. Along with supply chain challenges and increased labor wages due to labor shortages, a company’s profitability is at risk if the impacts of these challenges are not measured and strategic actions to offset the impacts are not executed.  One of our clients was looking to purchase a company that had been significantly impacted by inflation, with its gross margin rate declining steadily since the start of the covid-19 pandemic.  Schneider Downs was asked to do a profitability study on the targeted company to determine root cause(s) of the declining margin and the potential future risk to profit based on backlog orders.   The profitability study analyzed sales and margin data for all customer transactions over the previous 24-month period.  Key findings include: Each business unit within the company showed declining margin rate Evaluating customer transactions show that items purchased this year and not last year had a lower gross margin rate (-1.1%) while sales growth of +33%   Customer products purchased in each of the last two years, which represents 80% of total sales, showed the gross margin rate declining (-3.1%) with gross profit dollars declining slightly Further evaluation of customer products purchased in each of the last two years showed: Cost increases of $2 million was only partially offset by price increases of $1.6 million Year-over-year price increase of 3.7% and cost increase of 8.2% The amount of cost increases passed through to the customer as in increase in price was only 78% for the company and only 70% for the company’s largest business unit Backlog profitability showed an even further margin rate risk, with the average gross margin rate of 36.2%, or an additional (-2.3%) margin rate decline from the previous 12 months After performing the profitability study, Schneider Downs recommended that after the acquisition was completed that a Strategic Profitability Plan be developed and executed quickly to target specific actions to offset the unfavorable trending from the last two year period.Over the long run, if cost increases outpace price increases, a company will eventually go out of business.  Conducting a profitability study and proactively analyzing impacts of cost, price and mix at a transaction level provides visibility of a company’s performance and assists decision-makers in addressing areas of concern to better manage profitability.Schneider Downs' team of dedicated Business Consultants are experienced across a wide scope of specialties, allowing us to help our clients make more informed business decisions across every facet of their operations. For more information contact a Schneider Downs Business Consultant today! ### Reshoring to Combat Global Supply Chain Disruptions While Covid-related restrictions have been largely lifted and the world is returning to a new normal, the impact of the pandemic on manufacturers’ supply chains is not likely to go away any time soon. The pandemic, along with high gas prices and the ongoing conflict in Ukraine, has led to supply chain disruptions that will continue to affect manufacturers.Not only does this hit the bottom line, but it also creates inventory management issues, as manufacturers have seen longer lead times for receiving raw materials. The impact has been felt both domestically and internationally, but with the additional costs and challenges associated with international supply chains, many companies have begun to place a focus on sourcing materials from domestic suppliers.The U.S. has not been immune to supply chain disruptions, and many American companies are finding that there’s more uncertainty and additional cost associated with relying heavily on offshored materials. The low supply of available shipping containers has created additional unpredictability for manufacturers, along with a significant increase in costs. When coupled with consistently high gas prices, it’s made domestic sourcing a more attractive option.Per the Oden Technologies 2021 State of Manufacturing Report, 45% of all survey respondents said they were planning to reshore parts of their supply chain, and 58% were planning to add additional suppliers to meet their raw material needs. Survey respondents cited costs, as well as a desire to reduce risk within their supply chains, as the primary reasons for reshoring. With costs of shipping containers and gasoline remaining high, these trends are expected to continue through 2022. Supply chain issues will continue to be a challenge for manufacturers going forward, but the current situation could also provide opportunity. Increasing the number of suppliers and moving more of the supply chain back to the U.S. would give manufacturers greater control over their supply chains and protect them from any future disruptions that may happen overseas. Plus, if the reshoring trend continues, the U.S. economy as a whole would benefit. Domestic suppliers would see increased business, which will lead to job creation. The pandemic has forced companies to reevaluate the way they do business, and many manufacturers are making significant changes to their supply chain as a result. Reshoring is one way that manufacturers can stabilize their supply chain to reduce costs and increase predictability.  ### LIFO Relief Update Well, the main tax deadlines for the year have come and gone, and things still keep getting published about LIFO relief. I say, let’s just move on. I called this article “LIFO Relief Update,” but there really isn’t much happening. Last week, the AICPA once again released its opinion in support of S. 4105, the Supply Chain Disruption Act, which wants to treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the IRC. The AICPA has reached out to eight senators who keep pushing for the relief.The association believes that LIFO relief based on IRC Code Section 473 should provide the necessary support for auto dealers to replenish their inventories within three years without having to recognize any LIFO reserve, which would save current tax liabilities and cash flow over the next year. The Treasury’s response, however, has left us with little confidence. It believes it doesn’t have the authority to grant this relief, which dealers have been talking about since the fall of 2020. I’m certainly not holding my breath for this measure to be passed. Here’s an article I wrote last month that’ll help us understand how a bill can become a law.So, no relief; no problem! We still believe the best way to tackle your lack of inventory and your tax liabilities is to consider the Inventory Price Index Computation method of accounting, which captures the current inflation of the consumer price index. You can read more about that method here. For even more information or to discuss this method in depth, reach out to Steve Barber or any of our Schneider Downs Auto Advisors.  ### What Should a Service Organization Consider When Determining Its SOC Report Testing Period? The American Institute of Certified Public Accountants does not mandate a minimum testing and reporting period for System and Organization Controls (SOC) reports. Instead, it suggests a reporting period of at least six months. Reports covering less than six months may not provide meaningful results to end users. Whether for SOC 1 or SOC 2, a Type 1 report covers procedures and controls at a certain point in time. Type 2 reports cover the existence and performance of procedures and internal controls over time. If the organization is commissioning a SOC report for the first time, an auditor may agree to a shorter reporting period. A short reporting period might also be appropriate when an organization has made changes to its system or scope of the SOC examination (e.g., included additional applications or services covered by the examination) or has made other key changes that would impact the SOC report. Once the changes have been implemented and sufficient time has passed to allow controls to operate, the SOC reporting period should revert to at least a six-month period. Management of a service organization is often asked to issue a bridge letter when a SOC report only covers a portion of the calendar or fiscal year of its customers. Since management issues the bridge letter, there’s no auditor assurance. However, it does provide management’s representation regarding changes made to the organization’s controls or confirmation regarding the lack of changes from the SOC report’s date to the effective date of the bridge letter. Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit, and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients’ expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc.  ### Lincoln College Closes Due to Ransomware Attack Lincoln College became the first U.S higher education institution to close in part due to a cyber attack on May 13, 2022.The historically black college in Illinois announced the closure after 157 years, citing the irreversible financial impact of a 2021 ransomware attack and the COVID-19 pandemic.“Lincoln College has notified the Illinois Department of Higher Education and Higher Learning Commission of permanent closure, effective May 13, 2022. The Board of Trustees has voted to cease all academic programming at the end of the spring semester.”Opened on President Abraham Lincoln’s birthday in 1865, Lincoln College reached record enrollment levels in 2019, but saw numbers sharply decline during the COVID-19 pandemic. This impacted their financial stability, putting them in a vulnerable position when they suffered a ransomware attack in December 2021.The ransomware attack is believed to have originated in Iran. Though the college opted to pay the reportedly $100,000 to $115,000 ransom, the  effects of the attack were irreversible, which the college outlined below:“Lincoln College was a victim of a cyberattack in December 2021 that thwarted admissions activities and hindered access to all institutional data, creating an unclear picture of Fall 2022 enrollment projections. All systems required for recruitment, retention, and fundraising efforts were inoperable. Fortunately, no personal identifying information was exposed. Once fully restored in March 2022, the projections displayed significant enrollment shortfalls, requiring a transformational donation or partnership to sustain Lincoln College beyond the current semester.”While Lincoln College may be the first higher education institution in the U.S. to shut down in part due to a cyber-attack, chances are they won’t be alone forever.In fact, a recent report estimates over 1,000 schools in the United States were victims of ransomware attacks in 2021. A quick Google search for “higher education ransomware attacks” reveals how frequent and impactful  ransomware attacks on higher education are today.To put the danger of ransomware in perspective, before they were attacked, Lincoln College survived the 1918 Spanish flu pandemic, the Great Depression, two world wars and the Great Recession.Would they have survived the COVID-19 pandemic without the ransomware attack? Nobody knows the answer to that, but their odds would likely have been  a little better.So how can higher education institutions and businesses in general protect themselves from similar attacks?Secure Back up MethodsSchneider Downs strongly encourages organizations to emphasize building robust recovery controls and capabilities such as secure backup and disaster recovery (DR) processes. Having offline backups is a plus, as is implementing network segmentation of backup traffic and management.And while having DR systems connected to the domain (or domain authenticated) might not be the most secure choice, it does offer some protection.Cyber InsuranceOrganizations that want to be prepared for an attack like this need to determine if they should purchase cyber insurance and ensure that they have purchased an amount that can help them recover for losses incurred. However, while cyber insurance can be an important business tool against cyber breaches, our recent article Cash and Controls: Qualifying for Cyber Insurance in 2022 explains why insurance is not a panacea for all organizations.Employee Education While the root cause of the December ransomware attack was not released, in many cases the initial breach occurs through end user error.In an interview with WAND News, Sean Thomas, Senior IT Risk Advisory Manager at Schneider Downs, encourages organizations to make sure its employees are aware of the types of the attacks they may face and how to identify warning signs of a potential attack. Whether they learn  this through simulated phishing attacks or periodic training, a better-educated employee is a more secure one. Related Links Lincoln College – Abraham Lincoln's Namesake College Set to Close After 157 Years WAND News – Ransomware, Pandemic Brought Down Lincoln College    About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Superfund Excise Taxes Are Back Under the Infrastructure Investment and Jobs Act Effective July 1, 2022 The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. Additionally, the Infrastructure Investment and Jobs Act (“IIJA”) double the tax rate on chemicals or chemical products and expands the reach of the tax for chemical importers.BackgroundIn November 2021, President Biden signed the IIJA into law, which reinstated the Superfund chemical excise taxes under sections 4661 and 4671 of the tax code. In 1980, the Comprehensive Environmental Response, Compensation, and Liability Act established superfund programs to be administered by the Environmental Protection Agency (EPA) which was funded through the excise tax on petroleum and chemical manufacturers, producers, and importers. The EPA used the funds to clean up hazardous waste sites as determined under its direction. This original Superfund Excise Tax program expired in 1995, when hazardous waste site clean-up efforts became funded through general disbursements of other tax revenues.Excise Tax on Chemical SalesSection 4661 of the tax code, as reinstated, will impose a per-ton tax on the sale of 42 specific chemicals, which include ammonia, butane, benzene, mercury, and other common chemicals. Any manufacturer, producer, or importer that sells or uses a listed chemical must pay the per-ton tax of $0.48 to $9.47, depending on the specific chemical. These proposed tax rates are generally doubled from the rates that were used before the excise tax expired in 1995.There are some allowable exceptions from the tax under Section 4662, including some of the following:Methane, butane and other substances when used to produce motor, aviation, or diesel fuel Nitic acid, sulfuric acid, ammonia, or methane used to produce ammonia that is a qualified fertilizer substance Substances derived from coalAdditionally, chemicals sold for export or for resale by the purchaser to a second purchaser for export are exempted from the tax if the manufacturer or producer receives proof that the chemical was exported or resold for export.Excise Tax on Importers of Taxable SubstancesThe IIJA also directed the IRS to review and update the list of taxable substances for importers. Originally, the excise tax on importers consisted of 50 substances as provided in Section 4672 – however, under Notice 2021-66, the IRS had now identified an additional 101 substances that will be subject to tax for importers.The IIJA also expanded the threshold for the excise tax to apply for importers under Section 4671 of the tax code. Section 4671 previously applied to substances where the base taxable chemical constituted more than 50% of the weight of the materials used in the substance in question. The excise tax will now apply to substances where base taxable chemicals are more than 20% of the weight, widening the net for chemical importers that will be subject to the tax.Registration and Reporting RequirementsTaxpayers subject to the Superfund Excise Tax will report the tax on Form 6627 which is attached to Form 720, Quarterly Federal Excise Tax Return. Additionally, taxpayers will remit the tax on a semimonthly basis.ImplicationsThe Superfund Excise Tax will require impacted companies to closely monitor the changing laws and guidance surrounding the reinstatement of the tax, since many details are forthcoming.  Further, impacted companies will need to perform additional analysis on the chemicals they manufacture or import to determine the taxability of the substance. The tax advisors at Schneider Downs are well equipped to guide chemical companies through the changing landscape surrounding the Superfund Excise Tax. If you have any questions, please reach out to Stephen R. Worth.  ### The Sting of Section 163(j) for Private Equity-Owned Companies The impact that Internal Revenue Code (IRC) Section 163(j) will have on debt-leveraged private equity-owned businesses is startling. It is not unusual for tax practitioners to find themselves caught between multiple tax years when working with their clients.  As practitioners, we’re busy determining extension payments or filing returns for the 2021 tax year; but, we also got our first real look at what tax year 2022 may bring as we worked through first quarter estimated tax payment requirements. To step back a bit, the Tax Cuts and Jobs Act enacted IRC Section 163(j), which placed limitations on the deductibility of business interest expense for certain taxpayers, including those with average revenues in excess of $25 million (indexed for inflation to $27 million for 2022).  For tax years 2018-2021, interest expense was generally deductible up to 30% of adjusted taxable income (ATI), which was effectively a tax EBITDA (Earnings Before Interest, Depreciation and Amortization).  Given the large amortization deductions from which many private equity-owned companies benefit (resulting from acquisition goodwill), the IRC Section 163(j) limitations were, in many cases, not terribly impactful.  Additionally, the CARES Act made the limitation less restrictive in tax years 2019 and 2020 for certain entities. The IRC Section 163(j) limitation increases significantly beginning with the 2022 tax year.  Tax practitioners knew this day was looming, and now we are seeing the impact.  Effective for tax year 2022, ATI will be calculated based on a tax EBIT (Earnings Before Interest and Taxes), which means that taxpayers will no longer gain the benefits of depreciation and amortization in determining business interest expense deductibility.  As a result, and as we saw in calculating first quarter 2022 estimated taxable income, the limitation is a substantial shift from the four previous tax years for most taxpayers.  Capital-intensive and/or highly leveraged companies should expect to see a considerable amount of their business interest expense limited, if not limited entirely. All is not lost, however.  While portfolio companies may experience increased taxable income in 2022 because of reduced interest expense, the disallowed interest expense, referred to as excess business interest (EBI), carries forward indefinitely.  And the EBI, at least in the partnership context, will generally be realized as a basis increase upon a partner’s disposition of their interest (if not able to be used prior to disposition). Private equity-owned companies will likely feel the sting of this change more than most other privately held businesses, but any business, aside from the carved-out exceptions, can be caught by the provision.  Please reach out to Evan Ogrodnik or your Schneider Downs tax advisor for more information. About Schneider Downs Private Equity Firm Services Schneider Downs provides all of the traditional audit and tax services needed by private equity firms and their portfolio companies as well as specialized services including accounting advisory, investment valuations, equity incentive structuring, benefit plan analysis, operational efficiency and risk assessments, cybersecurity and technology solutions. To learn more visit our dedicated Private Equity Firm Services page.   ### 401(k) Plan Strategies: Options for Addressing Failed ADP Tests What is the ADP test? The actual deferral percentage (or “ADP”) test is an annual nondiscrimination testing requirement applicable to 401(k) plans.Download the PDF Version HereThe test is conducted shortly after the end of each plan year based on the contributions (“deferrals”) elected by each eligible employee during the year. If the plan fails the ADP test, appropriate corrective action must be taken.The ADP test compares the average deferral rate (measured as a percentage of compensation) of eligible highly compensated employees (“HCEs”) with the average deferral percentage of eligible non-HCEs. If the deferral percentage of HCEs exceeds the deferral percentage of non-HCEs by more than a specified margin, the ADP test is failed.In general, the ADP for a plan’s non-HCEs must not be less than two percentage points of the ADP of the HCEs.  If the ADP of the non-HCEs is less than 2%, then the ADP of HCEs must not be more than two times the ADP of the non-HCEs. Example 1: If the ADP for non-HCEs is 3.5%, then the ADP for HCEs must be less than 5.5%. Example 2: If the ADP for non-HCEs is 0.8%, then the ADP for HCEs must be less than 1.6%. What corrective actions can be taken to correct a failed ADP test?A failed ADP test is typically corrected in one of two ways: (1) excess contributions are distributed from the accounts of HCEs and included as taxable compensation on the W-2s of the impacted employees; or (2) additional employer contributions are made to the accounts of non-HCEs in an amount sufficient to bring the non-HCE average deferral percentage up to a passing margin. Due to the expense of the second approach, most employers choose to correct failed ADP tests by distributing excess contributions to the plan’s HCEs – resulting in an unwelcome tax hit to the impacted employees.What strategies are available to help ensure that a 401(k) plan satisfies the ADP test? The following strategies are available to increase the likelihood that a plan will satisfy the ADP test or otherwise mitigate the impact of a failed ADP test on the plan’s HCEs:Strategy 1 - Safe Harbor Plan DesignSummary: Special election that allows the plan to automatically pass ADP testing in exchange for a minimum, fully vested employer contribution.Required Employer Contribution:  3% nonelective contribution for all eligible employees, whether or not they make deferrals under the plan OR Matching contribution of 100% of each employee’s deferrals up to 3% of compensation, plus 50% of each employee’s deferrals between 3% and 5% of compensation (resulting in a total match of 4% of compensation for employees contributing 5% or more).Pros: A safe harbor plan automatically satisfies ADP testing. Thus, no more taxable distributions to HCEs. Cons: Additional cost to fund the employer match. Safe harbor employer contributions are fully vested, so forfeitures will not be available to reduce contributions in future years. Annual notice requirements. Strategy 2 - Automatic EnrollmentSummary: Increase deferral percentage of non-HCEs by automatically enrolling eligible employees at a specified contribution rate unless the employee affirmatively elects to opt out of participation.Additional Optional Safe Harbor: A plan that uses automatic enrollment can also elect the qualified automatic contribution arrangement (“QACA”) safe harbor, provided that the employer makes a minimum employer contribution that can be slightly lower than the contribution required under a regular safe-harbor plan (total maximum match of 3.5% of compensation under a QACA versus 4% under a non-QACA safe harbor).Pros: QACA safe harbor plans automatically satisfy the ADP test. Employer contributions under a QACA can be subject to a two-year vesting requirement. Even if the plan does not elect the QACA safe harbor, automatic enrollment can substantially boost participation rates by non-HCEs. Cons: Additional administrative burden, including notice requirements. Strategy 3 - Class ExclusionsSummary: Boost the non-HCE deferral percentage by excluding specified classes of employees with traditionally low contribution rates (e.g., seasonal, temporary, interns, etc.). Generally, a plan is permitted to exclude up to 30% of its non-HCEs.Impact on ADP Test: The ADP test includes the deferral percentage of all eligible employees, including those with a deferral rate of zero. Employees in an excluded class are not included in the ADP test.Pros: Can increase the deferral percentage of non-HCEs without requiring an increased employer contribution. Cons: Additional coverage testing is required to ensure that the plan covers a sufficient percentage of the company’s overall non-HCE workforce.  Excluded employees lose a potentially valuable employee benefit. Strategy 4 - Nonqualified Deferred Compensation PlanSummary: Separate and distinct from the 401(k) plan, a nonqualified deferred compensation (“NQDC”) plan can be established to “capture” any taxable distributions to HCEs resulting from a failed ADP test.Analysis: The NQDC plan would be set up to automatically transfer corrective distributions from a failed ADP test into an account under the NQDC plan (unless the HCE has elected not to participate). Amounts credited to the NQDC account are not taxed until distributed to the HCE, typically upon termination of employment, death or disability. Earnings can be credited by mirroring the rate of return under the participant’s 401(k) account.Pros: Mitigates the tax impact of failed ADP tests on participating HCEs. Cons: Employer is required to carry the cost of the NQDC plan on its books; no deduction is available until benefits are paid to the participants. Benefits under an NQDC plan are not fully protected and could be forfeited in the event of the company’s insolvency. ### Fraud is Happening at Your Organization; You Just Don’t Know It The ACFE Anti-Fraud Playbook declares that fraud is happening at your organization; you just don’t know it, and then it provides ten “plays” drawn from best practices and leading guidance designed to help reduce fraud risk. One play provided as a best practice is the use of data analytics to uncover fraud. The playbook asserts that data analytics is a powerful fraud prevention, detection and investigation tool, making it an important part of an effective and holistic fraud risk management program.As part of utilizing data analytics in preventing and detecting fraud, you must understand and organize all relevant data. Preparing the data for analysis includes data extraction and consolidation and data cleansing. Data extraction and consolidation is collecting the relevant data, selecting necessary records and variables and integrating or merging records from multiple data sources. One challenge of working with multiple data sources can be that some of the data may be organized and formatted (structured) and some of the data may be qualitative in its native format (unstructured).  Data cleansing should be employed: removing unwanted observations, fixing structural errors, handling missing data and managing unwanted outliers.Preparing the data for analysis can be time-consuming. However, it is a valuable investment that is necessary at the beginning of a data analytics project in ensuring that data is ready for analysis. ETL (extract, transform, load) software such as IDEA or Alteryx is designed to assist in the data preparation phase.The next step in evaluating potential fraud is then the actual analysis of the data itself. This can be done by utilizing statistical tools such as Alteryx, Excel, or Power BI. After the data is analyzed, data visualization software such as Tableau or Power BI can be used to understand and communicate the data.It can be very challenging to know how to pull all of the disparate pieces of data together into a cohesive final analysis product that is useful in preventing and detecting fraud. Schneider Downs’ professionals have years of experience using the software listed above in data analytics projects and have helped many organizations prevent, detect or investigate fraud. If you have questions or concerns about fraud risk, or would like to discuss the use of data analytics as a way to evaluate potential fraud, please contact Tom Pratt or Brian Webster.  ### IRS Announces 2022 Automobile Depreciation Limitations For owners of passenger automobiles, IRC §280F(a) places a limitation on the allowable depreciation deduction in the year the automobile is placed in service, as well as the subsequent years. IRC §280F(d)(7) requires the IRS to adjust the dollar limitations annually for inflation.To that end, the IRS recently released Rev. Proc. 2022-17, which outlines the inflation-adjusted annual depreciation limitations and lease inclusion amounts for passenger automobiles placed in service in 2022. It’s important to remember that these depreciation caps and lease inclusion amounts do not apply to automobiles with a gross vehicle weight rating (GVWR) of more than 6,000 pounds. The updated annual depreciation limitations and lease inclusion amounts are listed below:Table 1: Passenger Automobiles Acquired After September 27, 2017, and Placed in Service During Calendar Year 2022, for which § 168(k) “Bonus Depreciation” Applies Tax Year Depreciation Amount Allowed 1st Tax Year $19,200 (increased from $18,200) 2nd Tax Year $18,000 (increased from $16,400) 3rd Tax Year $10,800 (increased from $9,800) Each Succeeding Year $6,460 (increased from $5,860) Table 2: Passenger Automobiles Acquired After September 27, 2017, and Placed in Service During Calendar Year 2022, for which § 168(k) “Bonus Depreciation” Does Not Apply Tax Year Depreciation Amount Allowed 1st Tax Year $11,200 (increased from $10,200) 2nd Tax Year $18,000 (increased from $16,400) 3rd Tax Year $10,800 (increased from $9,800) 4th Tax Year $6,460 (increased from $5,860) Lessees of passenger automobiles are also subject to deduction limitations under IRC §280F(c)(2). If an automobile is first leased in 2022, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of lease is greater than $56,000. The lease inclusion table is below: Table 3: Dollar Amounts for Passenger Automobiles with a Lease Term Beginning in Calendar Year 2022 Fair Market Value  Tax Year During Lease  Over              Not Over         1st 2nd 3rd 4th 5th and over  $56,000 $57,000 1 1 1 2 2 $57,000 $58,000 2 4 5 7 7 $58,000 $59,000 3 7 9 11 13 $59,000 $60,000 4 9 14 16 19 $60,000 $62,000 6 13 20 23 28 $62,000 $64,000 9 19 27 34 38 $64,000 $66,000 11 24 36 43 50 $66,000 $68,000 14 30 43 53 61 $68,000 $70,000 16 35 52 63 72 $70,000 $72,000 19 40 61 72 83 $72,000 $74,000 21 46 68 82 95 $74,000 $76,000 24 51 77 91 106 $76,000 $78,000 26 57 85 101 117 $78,000 $80,000 29 62 93 111 128 $80,000 $85,000 33 72 107 128 148 $85,000 $90,000 39 86 127 152 176 $90,000 $95,000 45 100 147 177 204 $95,000 $100,000 52 113 167 201 233 $100,000 $110,000 61 133 198 238 274 $110,000 $120,000 73 161 239 286 330 $120,000 $130,000 86 188 279 335 387 $130,000 $140,000 98 216 319 384 443 $140,000 $150,000 111 243 360 432 499 $150,000 $160,000 123 270 401 481 555 $160,000 $170,000 135 298 441 529 612 $170,000 $180,000 148 325 482 578 667 $180,000 $190,000 160 352 523 626 724 $190,000 $200,000 173 379 563 676 779 $200,000 $210,000 185 407 603 724 836 $210,000 $220,000 198 434 644 773 892 $220,000 $230,000 210 461 685 821 949 $230,000 $240,000 222 489 725 870 1,005 $240,000 and over 235 516 766 918 1,061 Contact your Schneider Downs tax advisor if you need assistance or would like to discuss how these depreciation and deduction limitations could impact your business. ### IRS Announces 2021 Marginal Well Credit There is an exciting opportunity for natural gas well owners who held an operating interest in a qualified marginal well during 2021.The IRS finalized and released the natural gas reference price used to compute the Marginal Well Credit for the 2021 tax year with the issuance of Notice 2022-18 on May 2, 2022. Eligible taxpayers can receive a credit of $0.67 per qualified MCF produced during the year.To qualify for the Marginal Well Credit, a well must be a marginally producing domestic well under the percentage depletion rules, which is 15 barrels of oil equivalent per day (90 mcf or less per day). This presents a significant tax savings strategy for owners of qualified stripper wells because the potential credit could be as much as $4,401.90 in tax savings per qualified well. Note, there is no limit on the number of qualified wells any one taxpayer can use to determine their credit.The marginal well credit is part of the general business credit and cannot offset tax liabilities generated from the alternative minimum tax, and any unused credit can be carried back five years and carried forward 20 years.If you think you could benefit from the credit or would like to discuss the 2021 Marginal Well Credit, please contact a Schneider Downs tax advisor. ### EV’s are Changing the World, but Who will be Left Behind? As manufacturers transition production from internal combustion engines to electric vehicles, are they being short-sighted about supplying vehicles to many areas around the globe?  We are hearing announcements from many manufacturers of their plans to go to 100% electric vehicle production in the coming 5 to 10 years. Jaguar Land Rover has announced its Reimagine Plan which calls for their Jaguar brand to go all electric beginning in 2025. Stellantis has confirmed plans for Alfa Romeo to be its first brand to go all electric with that transition happening in 2027. Volvo has announced plans to be EV only by 2030, and General Motors is also using that date as its target for Cadillac.  Other manufacturers have announced an onslaught of electric vehicles, such as Mercedes Benz, which plans for the brand to be all electric by 2030. Toyota has ambitious EV plans, with Lexus leading the way and going all electric by 2030 in North America, Europe and China. All other markets are targeted for 2035. Audi has pledged to go electric by 2033, with the release of their last new gasoline powered car in 2026.  While most vehicle makes that have made announcements of their plans would be considered luxury brands, General Motors has also pledged to go all electric for all of its other domestic brands by 2035.In major markets such as North America, Europe and China, plans to develop an infrastructure to support EV charging have been at the forefront of discussions amongst government officials and environmentalists. But what about those markets outside of the highly developed nations and population centers? What about areas such as Central and South America, Africa and parts of Asia? If electric grids and charging capacity cannot be developed in these countries at the same pace as the EV conversions, will those markets be left behind? Will they be left to be supported by pre-owned, gasoline powered vehicles? And if that scenario turns out to be a byproduct of the EV rush, additional pressures may be placed on the used vehicle market due to a potential redirection of the vehicle supply chain.Manufacturers should be careful about becoming too dependent on EVs and their limited, targeted distribution. Production issues could also arise as the supply chain of raw materials for batteries is currently controlled by China. The electric vehicle world is moving fast, but the brakes still need to be checked! ### Don’t Ignore an IRS 5071C letter! Now that your tax return has been filed and you are waiting for your refund, you think that everything is ok. Well, for most of our clients, that is the case. However, if you receive a 5071C letter from the IRS, you have to respond to it.What is a 5071C letter? It is a letter sent by the IRS if a tax return filed with your name and social security number looks suspicious.This letter notifies the taxpayer that the IRS received a tax return, usually electronically, that has your name and social security number, and which has unusual or unexpected information.  The trigger could be as simple as an address change. The IRS might be concerned that a false return is being filed with your information.  If the IRS believes that the return could be associated with identity theft, before they process that return, they need to hear from the taxpayer to verify the information received.What do you do if you receive a 5071C letter? Be sure to inform your tax advisor Do not ignore it. There are two courses of action: Call the IRS at 1-800-830-5084 between 7 am and 7 pm, Monday through Friday or alternatively, Go to the IRS’ identify verification service website at www.idverify.irs.gov and click on the box that says Verify Your Identity Now. While calling is an option, getting through via phone continues to be difficult and time-consuming. The IRS prefers that you log on to the website. The website is quick, secure and available 24 hours a day. Before you call or go online, make sure that you have ready the 5071C letter and your most recently filed tax return.After you have successfully authenticated your identity, the IRS will begin to process your tax return. The IRS is stating that the wait time will be about nine weeks from the time you verify your identity to the time that you receive your refund.  The actual response period could be longer.  The IRS will generally pay interest on refunds which take longer than 45 days to process. In summary, if you filed your 2021 tax return and received a 5071C letter from the IRS, please do not ignore it. Go online and verify your identity, so that your tax return can get processed and you can get your refund! Contact your Schneider Downs representative if you have questions.   ### Benefits of a Contract Lifecycle Management System Contract Lifecycle Management (CLM), the management of an organization’s contracts from inception to expiration, can help ensure compliance with contractual obligations by all parties, while allowing for greater efficiency and cost-saving opportunities. CLM software first establishes a repository for your organization’s contracts, allowing them to be easily accessible to appropriate personnel. Most software is equipped with a number of features to make contract management seamless and more efficient, including the ability to create standard templates, customize language and provisions, collaborate with team members and other departments – even automate simple, yet time-consuming tasks. This frees your legal team to focus efforts on projects more valuable to the success of the organization.CLM software also incorporates unique reporting capabilities to help management gain insight into contract activity and understand where each contract is in its lifecycle, such as total spend, contracts approaching expiration, contracts pending signatures, etc. The ability to quickly analyze information relating to hundreds or even thousands of contracts is essential to properly manage your organization’s contract activity.Organizations may face many contract-related risks that can have both legal and reputational implications if not properly mitigated. Utilizing CLM software can help organize contracts in a way that allows your personnel to easily identify any changes that might need to be implemented. As laws and regulations change, you need to be able to easily determine if current contracts are in compliance. CLM software also gives organizations the tools necessary to not only maintain and organize their contract repository, but to ascertain valuable insights surrounding contract data. Leveraging this type of technology can help your organization get the most value out of its general counsel function. Schneider Downs offers a variety of Risk Advisory Services that can help your institution access, navigate and assist with your contract management objectives. Contact us if you have additional questions. ### What is blockchain? How can I secure my blockchain environment? What is Blockchain:Blockchain definitions vary by source, but at its essence, blockchain is a continually expanding list of digital records of information in the form of “blocks” that are linked in a “chain” by using cryptography. To break it down further, each block has a unique cryptographic signature (hash) and includes a timestamp and detailed transaction data. This data provides an unmodifiable audit trail of evidence that the transaction existed when the block was created (hashed). When a block reaches its storage limit, the block is closed and then linked to the previously filled block. This forms the “chain” with each block containing the previous block’s data. Nodes communicate on networks and validate each new block and this verification is available in a digital distributed ledger.Due to this cryptographic linking, blockchains are resistant to modification because the data in any block cannot be altered without altering every single block in the chain. This makes the blockchain technology very desirable due to its cryptographic complexity, which is why Bitcoin and cryptocurrency is the first thing to come to everyone’s mind when discussing the topic. Bitcoin uses blockchain technology to maintain a secure record through decentralized digitized transactions guaranteeing the integrity of the data. More recently, blockchain technology is famously (infamously) used as the backbone for NFTs (nonfungible tokens) acting as a digital receipt for purely digital one-of-a-kind assets.Types of Blockchain:Over the past few years, blockchain technology has evolved (and continues to evolve) into different types. Common types include: Public – Permissionless. Anyone on the internet can access the blockchain and create new blocks of data and validate blocks of data. Distributes the transactions to all nodes, and all nodes have equal access rights. Fully decentralized. Private – Permissioned. Allows only selected and verified users to access the environment. The Security Admin can restrict users regarding what users are permissioned to see. Nodes don’t have to be equal, as the Security Admin can restrict access rights. Hybrid - The best of both worlds. Allows for specific permissions to be allocated to specific users but certain transactions require oversight by the public blockchain. Business use cases: Supply chain management – provide a secure platform for all parties and reduce errors. Financial transaction, data recording and trading – faster processing and reduced risk of error. Loans utilizing digital assets – use cryptocurrency as collateral for loans.  How can I secure my blockchain environment?Just like any other digitally maintained environment and/or application, good controls need to be in place to prevent internal and external bad actors from performing malicious actions. While blockchain itself is a secure technology, proper access management, change management and risk management (including monitoring) controls are needed for managing blockchain systems. Without adequate controls, hackers could gain access to supporting systems and create business disruptions and data integrity concerns. To help prevent this review the following: Ensure that Zero-Trust Framework and Smart Contracts and Cryptographic Keys are properly configured. Ensure that highly privileged access is tightly restricted. Ensure that proper user access, logging, monitoring, alerting, incident and breach response controls are in place. Ensure that your existing policies and procedures include your use of blockchain. Ensure that staff are trained on blockchain and blockchain security best practices. Ensure that you’re testing for positive and negative results prior to production rollout. Regularly perform regression testing to ensure continued operating effectiveness and detect any vulnerabilities early and often. Ensure that regularly reoccurring penetration testing is performed. How can I ensure that my blockchain environment is secure?1. SOC Report – Have an independent external third-party review of your environment.Schneider Downs employs a unique approach to System and Organization Controls (SOC) reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we effectively deliver on our clients' needs and expectations for the SOC report – including our expert understanding of blockchain environments and controls. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc.About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the SOC examination. This flexibility means that reports are unique to each organization, while also providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.2. Cybersecurity Penetration Testing – Have an independent external third-party perform penetration testing.About Schneider Downs Cybersecurity ServicesThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.Emergency Response – Digital Forensics and Incident Response Team Available 24/7Schneider Downs Digital Forensics and Incident Response teams are available 24/7/365 at 1-800-993-8937 if you suspect that you have been hacked or you are experiencing a network incident of any kind. Call 1-800-993-8937 immediately for intervention and diagnostics. Or for best practice, plan ahead or understand your options in case of a cybersecurity breach: Digital Forensics and Incident Response   ### What Were the Most Routinely Exploited Vulnerabilities of 2021? Several of the leading cybersecurity agencies around the world have released a joint cybersecurity advisory alert (AA22-117A) outlining the top 15 Common Vulnerabilities and Exposures (CVEs) of 2021 and recommended mitigation strategies to apply.According to the advisory alert, the document was developed by U.S., Australian, Canadian, New Zealand and UK cybersecurity authorities to continue their respective cybersecurity missions, including their responsibilities to develop and issue cybersecurity specifications and mitigations.The global cybersecurity authorities and agencies contributing to the report include the FBI, CISA and NSA from the United States, the Australian Cyber Security Centre, Canadian Centre for Cyber Security, New Zealand National Cyber Security Centre and the United Kingdom’s National Cyber Security Centre.The report found that most threat actors targeted internet-facing applications including email servers and VPNs in 2021, with the top 15 routinely exploited vulnerabilities outlined below.Source: https://www.cisa.gov/uscert/ncas/alerts/aa22-117aIt is no surprise that the Log4Shell vulnerability is on the list, as this vulnerability took over the headlines for several weeks last year; however, the fact that it was not disclosed until December 2021 and still made the list shows how rapid and widespread the exploitation of this vulnerability was.The list also includes three repeat offenders—CVE-2020-1472, CVE-2018-13379 and CVE-2019-11510— all appearing on the list last year, illustrating the frustration with organizations that fail to patch software and address vulnerabilities despite knowing that they exist.In addition to the top 15 exploited vulnerabilities, the advisory alert shares other widely reported vulnerabilities exploited in 2021 that impacted several widely used products such as Microsoft Office, Accellion FTA and Cisco IOS software.The advisory also provides a comprehensive section on mitigation, with best practices to maximize vulnerability and configuration management, protective controls and architecture, and identity and access management.The complete advisory alert and list are available at www.cisa.gov/uscert/ncas/alerts/aa22-117a. Related Articles Apache Log4j Vulnerability Update Apache Log4j Vulnerability Update – Government Responses and Ransomware Activity Apache Log4j Vulnerability Update – CISA Issues Emergency Directive Apache Log4j Vulnerability Update – Remediation Tools and Patches  About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### The Benefits of a Compliance Automation Platform An organization without established security and governance is as good as a straw home; a wolf is bound to blow it down. A critical task for young organizations is to determine how governance, risk, and compliance (GRC) should be incorporated into their culture to ensure their formative years set them up for success. Although compliance does not equal security, compliance allows organizations to outline what their processes and procedures should be, which in return allows organizations to grow alongside a framework of generally accepted standards. With this in mind, the rise of compliance automation platforms has helped alleviate some of the stress that goes along with understanding the requirements of various compliance and/or frameworks (System and Organization Controls (SOC) 2, Health Insurance Portability and Accountability Act (HIPAA), and International Organization for Standardization (ISO) to name a few). It is important to note that although these tools can help an organization determine their compliance, the compliance automation platform provider cannot produce an official attestation or certificate to report on an organization’s compliance. Organizations may find a compliance automation platform beneficial for the following reasons: 1. Transparency & Centralization Some compliance automation platforms utilize Application Programming Interfaces (APIs) to connect to various company systems (Infrastructure-as-a-Service (IaaS), HR systems, code repositories, etc.). These AP’s connect company systems to the compliance platform, allowing the compliance platform to display results of various tests that they apply to the configurations within company systems. These tests (i.e., controls) can be  mapped to a desired requirement or criteria. Depending on the framework or standard an organization wants to achieve, the centralization of tests performed through the APIs allow an organization to visualize where they stand in terms of being compliant. Once an organization initially assesses their current state of compliance, they can then begin evaluating how to achieve the compliance they desire. This could be by implementing a policy, remediating current processes in place, and other multitudinous options that help provide perspective on the comprehensive state of compliance, thereby allowing for visibility. 2. Continuous monitoring Some compliance platforms also provide the ability for organizations to continuously monitor controls using automation. Within these compliance automation platforms, tests are run on a schedule to ensure that controls are effective. When a control is not operating effectively, management can see how long it was ineffective, and determine a course of action to remediate. Without the platform, the ineffective control may go unnoticed, opening the organization to preventable risks. 3. Resources & Education Compliance platforms typically provide organizations with a point of contact or Customer Success Manager that can help aid organizations in understanding controls, compliance, and GRC as a whole. This individual is assigned to help answer questions on the platform, questions on the frameworks, and questions on your organization’s current compliance. Taking on an audit or gaining compliance does not have to be scary or intimidating – these platforms can provide endless support and educational resources from the start to the finish. With these benefits in mind, a compliance automation platform may be something to consider for your organization. It gives companies the opportunity to visualize how effective their current internal programs are. When choosing your platform, it is important to choose one that has strong security standards themselves. Be conscious in trusting all of your company data in a platform and be sure to select one that practices what they preach. Whichever route you choose for your organization, any opportunity to gain compliance and address the effectiveness of your organization’s current operations is a step in the right direction. If you enjoyed this article, we encourage you to view the recent episode of Drata's "Ask an Auditor" featuring Schneider Downs' Timothy Wolfgang and Drata's Troy Fine answering some of the top questions about SOC 2 and compliance. About Schneider Downs IT Risk Advisory Our IT Risk Advisory practice helps ensure that your organization is risk-focused, promotes sound IT controls, ensures the timely resolution of audit deficiencies, and informs the board of directors of the effectiveness of risk management practices. We will partner with you to provide comprehensive IT audits and compliance reviews that will ensure your organization has effective and efficient technology controls that better align the technology function with their business and risk strategies. Learn more at www.schneiderdowns.com/itrisk or contact us at contactsd@schneiderdowns.com. ### Greenhouse Gas Emissions, Scope Levels, & The Future of Disclosures Environmental, Social, and (Corporate) Governance (ESG) is an evaluation of goals and initiatives beyond the profit and loss of a corporation that extend into the support and active social responsibility to do well by the environment, employees, and executive oversight of each company.As of March 21st, 2022, the Securities Exchange Commission (SEC) proposed a rule that would require U.S. based SEC registered companies to include climate-related disclosures in registration statements, periodic reports, and audited financial statements. Before addressing the SEC proposal and its potential impact, let’s take a closer look at the three levels of scope in which emissions can be classified. Scope 1 contains direct emissions, Scope 2 contains indirect emissions still owned by a corporation, and Scope 3 contains indirect emissions not owned by a corporation. Each level of scope is important in addressing the overall impact of emissions per corporation.  Emissions Scope Classifications Scope 1:Direct emissions, result from company-owned and controlled resources necessary for day-to-day business. Within itself, Scope 1 can be broken down into four distinct categories as defined by the United States Environmental Protection Agency (EPA): stationary combustion, mobile combustion, fugitive emissions, and process emissions. Stationary combustion includes fuels and heating sources such as boilers, heaters, furnaces, ovens, dryers, or other equipment or combustion machinery. Mobile combustion is all fleet vehicles owned or operated by a corporation which burns fuel. With the uptick in electric vehicle adoption, some fleets may increasingly shift to Scope 2 emissions. Next, fugitive emissions are unintended emissions related to facilities or activities such as aerosols, quarries, and leaks from compressors or valves. Lastly, process emissions which are released during the direct industrial manufacturing process such as factory fumes and chemicals. Scope 2:Indirect emissions, come from the purchase and generation of emissions not produced by a corporation. Examples of these emissions include electricity utilized in steam, heating and cooling purchased via external utility companies. When looking at global emissions, nearly 40% of emissions can be traced to energy generation, half of which is used by industrial businesses. Scope 2 emissions often create a significant impact on the carbon footprint due to the nature of current methods of production and the need to meet consumer demand. Scope 3:The most wide-ranging and difficult level of emissions to measure relates to all other indirect emissions from a corporation that are not covered within scope levels 1 or 2. Indirect emissions contained in Scope 3 include both upstream and downstream emissions throughout the value chain of company operations. Examples of these emissions include business travel, employee commuting, generated waste, disposed raw materials, leased assets, use of sold products, and end of product life treatment. Additionally, shipping and handling of both product and raw materials occurring in between stages of the supply chain create a difficult level of emissions to measure due to a lack of clear ownership. Scope 3 emissions can contribute up to 95% of a corporation’s carbon footprint, differing between industries. Failure to address Scope 3 creates a limited situation on reducing emissions if corporate initiatives are strictly aimed at Scope levels 1 and 2, which has led to the SEC’s latest proposed disclosures. With all three scopes of emissions covered, Scope level 3 arguably creates the most challenges for a corporation in terms of calculating the impact for adequate disclosures. Many businesses are focused on Scope levels 1 & 2 as they fall under direct management and remain easier to control within the organizational structure. Ownership of level 3 emissions often creates differing opinions among management and related parties as they fall in various places within the supply chain. In order to make an impactful difference, all members of the supply chain must track, improve upon, and actively implement ways of reducing emissions. Lack of transparency, knowledge, or effort among those within the supply chain creates both upstream and downstream issues in reducing the carbon footprint. As we look ahead, increased pressure from entities throughout the supply chain will be applied to manage and adequately disclose emissions.  As of March 21st, 2022, the SEC proposed rule changes that would require registrants to report on climate-related disclosures and risks that are reasonably likely to have a material impact on their business and financial statements. The disclosure of greenhouse gas emissions would be the primary source of information in assessing the risk per each registrant. While the proposal creates a new set of hurdles in implementing rules across different industries, both the public and investors are calling for enhanced transparency. Globally, the United Kingdom is already requiring companies to disclose emissions under the Streamlined Energy & Carbon Reporting Requirements. Companies operating both domestically and internationally will need to be cognizant of required disclosures and potential financial statement impacts among the countries in which they conduct operations. If U.S. companies resist, they will face increased pressure from investors to produce disclosures or risk falling behind global competition.  Consistent, comparable, and reliable information on emissions remains nearly non-existent for investors across the market, which raises the question, how exposed are corporations to the latest SEC proposal?  The costs associated with tracking, measuring, and aggregating the emissions data will vary depending on the size of the corporation. Corporations such as Anheuser-Busch, Coca-Cola, and Kraft-Heinz currently report full emissions (Scope 1+2+3) on a voluntary basis, which will likely keep them ahead of the curve if the SEC proposal is adopted. Smaller to mid-size corporations will likely be impacted at a higher clip due to financial budgeting constraints that large corporations do not typically face. While these costs may create difficulty in the short term, in the long term all corporations will produce comparable statements on emissions, leaving investors with clear answers with respect to emissions. Despite the cost associated with producing emissions data, corporations who actively work towards reducing emissions while disclosing their progress may retain and attract new investors due to improved social perceptions. The proposal for disclosures among SEC registrants is a positive step towards transparency and ownership over emissions caused through day-to-day business activities related to the production of goods and services. Corporations that organize early to track, aggregate, and report on their emissions will likely be in the best position going forward amongst investors concerned with these disclosures. Schneider Downs provides assurance and advisory services for public companies.Schneider Downs ESG Resources ESG Consulting Services ESG Assurance Services ESG Our Thoughts On Articles ESG Frequently Asked Questions About Schneider Downs ESG ConsultingWith our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy.For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. References SEC Focusing on ESG Investment in 2022 (natlawreview.com) Proposed rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors (sec.gov) Introduction to ESG (harvard.edu) Scope 2 Guidance | Greenhouse Gas Protocol (ghgprotocol.org) Measuring Carbon Footprints - Scope 2 emissions explained - Ecochain Scope 3 Emissions: A Wicked Problem That Requires Genuine Strategic Focus | L.E.K. Consulting (lek.com) SEC.gov | SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors Why Companies Should Be Required To Disclose Their Scope 3 Emissions - Center for American Progress Signaling Through Carbon Disclosure (harvard.edu) Top US Food and Beverage Companies Scope 3 Emissions Disclosure and Reductions | Engage the Chain   ### Hello, Your Federal Tax Return Was Not Accepted... This past Monday marked the federal filing deadline for most taxpayers across the country, which provides an opportune time for a refresher on the inevitable IRS-themed scams and impersonators coming to a phone and computer near you.Now that many of us have filed our federal taxes, scammers have shifted their IRS-themed schemes to the post-filing period. As a friendly reminder, here are some of the top IRS scams and narratives circulating via phone, text and email.This is a Real IRS Agent Calling, We Need Your Social Security Number…The most common IRS-themed scam tends to be communication you get out of the blue stating that an urgent matter requires your immediate attention.Usually under the context of your return being rejected, money being owed or a pending audit, these scams follow the tried-and-true method of threatening that if you don’t pay immediately, law enforcement will intervene. In more recent years, themes of stimulus-related tax issues and threats of deportation have joined the scammer playbook as well. Call Us Immediately…Another way scammers use during post-tax filing season is through email, texts and voicemails, providing the same urgency as unsolicited calls but leave a call back number for the recipient. The phone number leads back to a scam call center or individual who presents the same scam pitch as the aforementioned unsolicited scam calls.Click Here to Avoid Jail…The popular phishing and smishing (fraudulent texts) attack uses the same urgency/threats the phone calls do and provides links that the recipient can click on to “get more information,” “pay the outstanding tax bill” or “access their IRS account.” These malicious links may download malware directly onto the phone or lead to imposter websites built to mimic legitimate pages with the sole purpose of stealing the recipient’s personal information.Also, it is important to never download an attachment from unconfirmed email sources, as these are just as dangerous as malicious links.We Take Amazon Gift Cards…The gift card scam is another approach appearing with the post-tax filing deadline and consists of unsolicited phone calls or texts encouraging taxpayers to purchase gift cards or prepaid debit cards to pay off fraudulent tax debts. And as crazy as the idea of the IRS encouraging you to go buy $1,000 in Amazon gift or prepaid debit cards to pay your tax bill is, these scams exist because they work.If you get one of these calls, simply hang up. And if you receive a voicemail with a callback number from IRS, delete it and move on. The IRS encourages taxpayers who receive these types of calls to: Report the call to TIGTA using the IRS Impersonation Scam Reporting form or by calling 800-366-4484. Report the number to phishing@irs.gov and be sure to put "IRS Phone Scam" in the subject line. How to Spot Fraudulent IRS CommunicationsIRS scams can easily be identified and avoided by watching out for the same characteristics shared by other phishing, vishing and smishing scams. Urgency – Any communications presented as urgent situations that require immediate action are obvious red flags. Sensitive Information – Scam communications will eventually ask you for private data such as your social security number and bank account information. Aggressiveness – While many fear hearing from the IRS, their communications will never be aggressive, threatening or forceful. Too Good to Be True – On the opposite side of aggressive communications are ones that are too good to be true, such as your refund being available immediately or being asked to claim a larger than expected refund. How to Spot Legitimate IRS CommunicationsIt is also important to remember that the IRS may legitimately need to get in touch with you about your tax returns and will almost always initiate contact through the United States Postal Service. Even when there are special situations that require the IRS to contact a taxpayer or business, the IRS will generally send several notice letters.Again, the IRS will never contact you in an unprofessional tone. Any correspondence you get out of the blue with aggressive tones, threats or requests for personal information is a scam. The IRS website explicitly states that the IRS will never do any of the following when communicating with taxpayers: Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. Threaten to bring in local police, immigration officers or other law enforcement to have the taxpayer arrested for not paying. Threaten to revoke the taxpayer's driver's license, business licenses or immigration status Remember, you can always contact the IRS directly to confirm the legitimacy of communications by contacting them via phone or their online tools listed on the IRS telephone assistance website at https://www.irs.gov/help/telephone-assistance.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Is There Additional COVID-19 Relief Incoming? With spring in full affect and summer right around the corner, many workers are starting to see a return to “normal” work environments as the effects of the COVID-19 pandemic lessens. However, even two years since the start of the pandemic, there are still industries trying to recover. Some of them being the businesses we frequent weekly or even daily. Industries such as retail and hospitality, especially restaurants, have faced unprecedented challenges due to the pandemic. In their continued effort to provide financial assistance, the House recently approved a new bill that will pump over $50 billion into industries affected by the pandemic. This bill includes an additional $42 billion for the Restaurant Revitalization Fund. The Restaurant Revitalization Fund was created by the American Rescue Plan Act, signed into law in March 2021 and provides funding to help restaurants and other eligible businesses such as bars, caterers, and bakeries to help keep their doors open. The bill also includes $13 billion for non-industry specific businesses with 200 or fewer employees and each business would be eligible for $1 million each. While this is good news for such industries, the bill is unlikely to gain enough support in the divided Senate. In response to the potential difficulty in passing, the Senate has introduced its own bill that would provide $40 billion to restaurants and $8 billion to various small businesses through the creation or renewal of specific industry funds. This $8 billion in funding includes: $2 billion for gyms $2 billion for live event venues $2 billion dollars to bus and motor coach companies $1.4 billion to small business located near border crossings that were closed during the pandemic $500 million for minor league sports teams. Similar to the House bill, $40 billion of restaurant money would go to the Restaurant Revitalization Fund with eligible businesses being those realizing significant losses during the course of the pandemic. The fact that the majority of funding from both bills is allocated for the restaurant industry is no accident. As one of the hardest hit industries from the pandemic’s effects, only about one third of restaurants that applied to the Restaurant Revitalization Fund received a portion of the original $28.6 billion approved by Congress. For struggling restaurants, either bill would provide additional funding as well as welcomed news after years of hardship. As the country is facing record inflation numbers, detractors of the bills point to the potential negative impacts more government spending could have on the economy. While those in support, call on Congress to put aside political differences to support not just an industry but local business owners. Regardless of politics, these bills would have a significant impact across a variety of industries as small business owners look forward to their resolution and possible assistance. Sources https://newjerseymonitor.com/2022/04/12/u-s-lawmakers-look-for-path-ahead-on-billions-in-restaurant-small-business-aid/ https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund https://www.cbsnews.com/news/independent-restaurants-restaurant-revitalization-fund-closing/ https://www.restaurantdive.com/news/congress-restaurant-revitalization-fund-42b-refill/621652/ https://www.liherald.com/stories/house-approves-aid-for-restaurants-small-businesses,140087     ### Semiconductor Chip Shortage’s Continual Impact The onset of the COVID-19 Pandemic has placed an increasing amount of pressure on manufacturers to meet the demand of businesses. All industries have been impacted by manufacturing and supply chain issues but none more than the semiconductor or “chip” market as it is more commonly referenced. The semiconductor shortage has impacted computing, consumer electronics, industrial electronics, wireless communications and, most notably, the automotive industry. Origins of the chip shortage can be tied to the beginning of the pandemic when lockdowns slowed or stopped production completely. With lockdowns in place and increased time spent at home, consumer technology saw an increase in demand which placed an additional constraint on the supply of semiconductor chips. As if the pandemic and lockdowns were not enough, severe winter weather forced domestic production of semiconductors to shut down, a fire in Japan’s Renesas plant where 1/3 of the world's car chips are produced and an ongoing trade war with China also hampered production. All these factors created a demand that was impossible to meet by suppliers. According to Goldman Sachs, 169 industries have been impacted by the global chip shortage. The price of computers, computer accessories and smart devices increased 3.7% year-over-year. The rise in price of smartphones and smart devices such as the iPhone and iPad can also be attributed to the shortage in chips. Apple relies on third-party chips to drive display and audio functionality of their devices but with large margins on the sale of their devices, Apple will remain mostly unaffected by the shortage.Other electronic companies such as Samsung and LG have been deeply impacted by the shortage. Televisions, household appliances, smartphones and other electronic devices offered by both companies have been susceptible to low stock, backorders and increased prices due to the inability to source chips. Additionally, both Microsoft and Sony have faced issues in fulfilling demand for their new consoles and accessories beyond the normal holiday season surge. Both companies have stated that the supply issues should be resolved by 2023 for gaming consoles and accessories.While the consumer electronics market has been impacted, the automotive industry has taken the biggest hit financially from the chip shortage, which is estimated to have cost $210 billion in revenue for 2021, due to the 7.7 million vehicles that were unable to be produced.During the initial stages of the pandemic, consumer demand fluctuated but the need for semiconductors never subsided as consumer habits have shifted more towards the purchase of goods. Over the course of the last two years, demand has steadily increased within the automotive industry as consumers have remained interested in the latest and greatest technology, thus requiring more advanced semiconductors when producing vehicles. From a financial perspective, revenues in 2021 declined across the board for four of the largest automotive groups. Stellantis (Fiat-Chrysler / Peugeot-Citroen) saw a 14% decrease, Volkswagen only dropped 4% due to sales of their high-end brands (Audi / Porsche), Ford declined 5%, and GM saw the worst of it at a staggering 24% large in part due to limited inventory issues. As one of the few companies to remain unaffected by the shortage, Tesla has seen both increased production and profits, mainly because they use fewer chips and were able to adapt with substitutes when necessary. While automakers are seeing a decrease in revenue, consumers are left absorbing the inflated costs with limited choices when it comes time to buy a vehicle, new or used. As of January 2022, the average cost of new and used vehicles has reached all-time highs at $47,000 and $28,000, respectively. With the used car market soaring, many consumers are leveraging their high-value used cars on trade-ins towards a new car, offsetting the rising costs. Affordable new and used cars are still available but are extremely limited due to automakers' lack in means of production and consumers' unwillingness to part with their current vehicles with the many uncertainties across the industry. With all things considered, opinions differ in terms of when the industry will get back to “normal”. Automakers such as GM, Ford and Hyundai remain optimistic that the chip shortage will decrease in the second half of 2022 as they have seen improvements in production year-over-year with the supply chain improvements made throughout the pandemic. Chipmakers such as Infineon and NXP remain skeptical that the supply chain issues are over, citing the spread of new variants that would shut down production in China. Despite differences in opinion, the pandemic has been a major wake-up call for the automotive industry and its key players throughout the supply chain. As we look ahead, both parties are heavily invested, both financially and strategically, in solving the supply chain issues and mitigating the chip shortage. Presenting a unified front, the automotive industry is poised for a strong comeback and consumers should remain optimistic for the future. Schneider Downs provides assurance and advisory services for retail and business-to-consumer organizations. For more information on these matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Federal Leases for Oil and Gas Drilling On April 15, President Biden announced that the Department of the Interior will resume selling leases for oil and gas drilling on federal land. This is a quick turnaround for Biden, who, during his 2020 presidential campaign, proposed a moratorium on the sale of new oil and gas leases on federal land. In his first week in office, he signed an executive order to deliver on that promise; however, a federal judge in Louisiana later blocked that order.It’s not business as usual with the new leases, though. Royalties will increase from 12.5% to 18.75%, and the acreage available for drilling leases has been reduced by around 80% from the amount previously under evaluation. The Bureau of Land Management has also "assessed potentially available and eligible acreage" in the states of Alabama, Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Utah and Wyoming.With soaring gas prices driving 40-year-high inflation,  the Biden administration has been under pressure to do more to lower them. Industry experts say it would take at least six months to a year before new drilling on federal land would lower the cost of gasoline. The administration is contending that the reopening of drilling is based on being more responsible and “says everything about what we value as a nation.”Don’t forget, Schneider Downs offers simpLEASE, a software program that assists with the accounting requirements set forth by ASC 842. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. Visit simpLEASE to learn more.  ### IRS Revises Form 1024: Application for Exempt Organizations On January 3, the IRS released Revenue Procedure 2022-8, delineating revisions to Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code. The most notable change is in requirements surrounding the filing of the form. An organization seeking a determination letter from the IRS recognizing tax-exempt status under Sections 501(c)(2), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (21), (22), (23), (25), (26), (27), (28), (29) or § 501(d) must now submit a completed Form 1024 electronically, effective immediately. Organizations seeking a letter recognizing tax-exempt status under Section 521 may also submit electronically.The IRS has provided a grace period for the transition and had accepted paper versions for 90 days, up until April 4. At this time, all Forms 1024 must be filed and paid for electronically at Pay.gov. The application fee will remain $600 for 2022.On January 20, 2020, the IRS began to require Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, to be filed electronically. Since then, the agency has noted reduced errors and improved processing time, making the complete application process for those entities seeking tax-exempt status smoother. With an IRS priority to continue to improve services for tax-exempt organizations, it believes transitioning the Form 1024 to electronic filing will be as beneficial to applicants as the process has been for those using Form 1023.The Revenue Procedure also modifies which individuals or representatives (officers, directors, trustees and other officials) are authored to sign the Form 1024, eliminating the option for a paid preparer, authorized by a power of attorney, to sign on behalf of the organization. ### E.U. Environmental, Social, and Governance Proposals under CSRD and their Impact on U.S. Companies The European Union (E.U.) has proposed its own set of required disclosures covering Environmental, Social, and Governance (ESG) reporting. The scope of organizations under this proposal extends well beyond those proposed by the Securities and Exchange Commission’s (SEC) greenhouse gas requirements for public companies. Europe’s proposal is expected to impact roughly 50,000 organizations operating in E.U. member countries, substantially expanding the current scope of organizations subject to ESG disclosures from approximately 11,000 under the previous regulations. Under the Corporate Sustainability Reporting Directive (CSRD), the E.U. is proposing mandatory disclosure requirements to drive ESG initiatives as organizations must report targets and progress towards achieving their goals. This aligns with Europe’s goal of achieving climate-neutrality by 2050. This will have an impact on E.U. subsidiaries of U.S. companies. The current proposal would cover most companies publicly traded on E.U. exchanges as well as all large private E.U. companies. However, the large threshold is lower than might be expected; defined as meeting two of the following thresholds:  Total assets over €20m for two consecutive years end Revenue (net turnover) over €40m for two consecutive fiscal years Average employees exceeding 250 for two consecutive fiscal years  This threshold includes subsidiaries of companies with global headquarters outside the E.U. In addition, subsidiaries below the individual reporting thresholds would also need to assess if they are part of a consolidated group that is deemed a public-interest entity. Public-interest entities with more than 500 average employees in consolidation would be required to comply with CSRD disclosures. Subsidiaries may be exempt from separate reporting if their parent company is reporting ESG matters in a manner considered equivalent to CSRD. However, it is unknown how CSRD will determine equivalency and if the SEC’s proposed disclosure requirements would qualify. The new standards are also being developed in conjunction with the International Financial Reporting Standards (IFRS) Foundation’s International Sustainability Standards Board. This will help to ensure consistency and comparability between CSRD and IFRS requirements.CSRD would include a double materiality concept, which would require reporting on the impact the company has in driving sustainability matters and how sustainability matters are impacting the company’s performance. The company would need to consider both sides separately and then disclose matters deemed material. CSRD is expected to be approved by the European Council and Parliament in the coming months, with the initial adoption of the standards expected by the end of the year. Standards for small and medium-sized companies are expected during 2023. Initial reporting under CSRD is anticipated for the fiscal year ended 2023, with reporting occurring during 2024. The organization’s audit committee would be responsible for overseeing the CRSD internal control, reporting and assurance process.  CSRD will initially require limited assurance. The European Commission will then review the assurance requirement after three years to determine if reasonable assurance would be required for fiscal years ended in 2026, with reporting in 2027. Assurance services could be provided by the organization’s statutory auditor or another assurance provider. Schneider Downs provides assurance and advisory services for international organizations.Schneider Downs ESG Resources ESG Consulting Services ESG Assurance Services ESG Our Thoughts On Articles ESG Frequently Asked Questions About Schneider Downs ESG ConsultingWith our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy.For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com.   ### What Would You Say You Do Here? As our firm continues to grow in capabilities and many have returned to the office in some form, we felt it was a great time to see some old faces and meet new ones, and to pose the question that always gets a laugh from Office Space fans… What would you say you do here? The result of these conversations is a new video series featuring practice unit leaders, shareholders and managers discussing how big thinking and personal focus are driving client success in some of our key service and solution areas. The first video features shareholders James B. Yard and Tony Ielase discussing how our Risk Advisory practice believes their responsive, flexible and focused approach helps deliver the best outcome for their clients. We invite you to watch the rest of the video series at the links below. Accounting Advisory Business Consulting Cybersecurity Data and Analytics (ADAPT) Digital Transformation Estate Planning Mergers & Acquisitions Private Family Office Real Estate Retirement Solutions Risk Advisory simpLEASE Accounting Software SOC Reports State and Local Tax (SALT) Tax Credits and Incentives Technology Advisors Wealth Management Advisors   You can also access the entire series on our vimeo showcase page at vimeo.com/showcase/9428747. We hope you enjoy the new video series and encourage you to share with your professional networks. If you have any questions or comments, we welcome your feedback at contactsd@schneiderdowns.com. ### Changes in Athletics with the New NCAA Constitution Approval The National Collegiate Athletic Association (NCAA) voted to approve a new constitution on January 20, 2022 that will pave the way for substantial changes to college sports when the new constitution becomes effective on August 1, 2022. Of the changes, the most notable will be the provision to grant the schools and conferences the authority to reorganize and restructure. Other updates include granting each division oversight of its own budget, expenditures and financial distributions to its members. This new governance model will give the NCAA’s three divisions more power to govern themselves. The revisions mark the first major changes to the NCAA’s governance model since 1997, which also granted greater autonomy to each division. Granting divisions more power to govern themselves will also lead to additional changes that will need to be adopted -- specifically, handling student-athlete benefits, including name, image and likeness (NIL). Last year’s Supreme Court ruling against the NCAA led the NCAA’s Board of Directors to adopt a temporary rule change to allow student-athletes to profit from NIL activity. At the time, the NCAA instructed schools to develop their own policies regarding NIL activity. Now, the new constitution officially places that responsibility on the NCAA’s three divisions, conferences and schools. The new constitution still provides that student-athletes, “may not be compensated by a member institution for participating in a sport.” However, the new constitution does expand on the educational and other benefits permitted to student-athletes, as long as they fall within the guidelines established by the respective division that the student-athletes are a part of.  The additional changes are expected to be adopted by each division in the coming months, as each division has been working within its own internal committees and councils to address its new governance models. Sources: usnews, nytimes, ncaa.org, espn.com ### SEC Outlines Greenhouse Gas Assurance Timeline The U.S. Securities and Exchange Commission (SEC) has published their proposal for required climate change disclosures. This would be the first required disclosure for U.S. companies. In addition to the impact on the environment, the SEC is concerned about the risks to organizations from climate change-related events.This would include threats to a company’s business, future strategy and economic outlook from climate-related physical and transitional risks over the short, medium and long term. Under the proposal, large accelerated filers and accelerated filers would be required to receive reasonable assurance in the near future. The proposal would also require companies to provide their greenhouse gas emissions data and certain metrics in a note on their financial statements. The SEC’s proposal would phase in these reporting requirements over the next several years, laying the groundwork towards assurance requirements. There has already been adoption from S&P 500 companies, with roughly 95 percent of the S&P 500 voluntarily disclosing ESG information last year. Over half of those companies received some form of third-party verification or assurance. The proposal has mandatory requirements on Scope 1 emissions (direct) and Scope 2 emissions (indirect). Many registrants and trade groups believe Scope 3 emissions (emissions from assets not owned or controlled by the organization) would be burdensome to estimate. In response, the SEC has proposed that companies and assurance providers could determine if Scope 3 emissions are material to their disclosures. However, this scope exclusion would then be subject to challenges by investors or the SEC. Smaller filers will be exempt from reporting Scope 3 emissions.If the registrant has reported climate-related goals publicly, discussion would be required on the scope of their target, the timeline to achieve these goals and the actionable items in their plan. Relevant information on the progress toward those goals would be reportable each year. Any carbon offsets or renewable energy certificates utilized as part of the organization’s plan should also be disclosed.  Once effective, an organization would be required to provide environmental disclosure information when registering as a public company and in its annual filing. The proposed timeline envisions rules being finalized by December 2022 with Scope 1 and 2 emission metrics for 2023 to be included in 2024 filings for large accelerated filers. Scope 3 emissions would then be phased in the following year. Accelerated filers and non-accelerated filers would have one additional year for each deadline. Smaller reporting companies would have two additional years. The requirements will also be mandatory by foreign private issuers. Limited assurance on greenhouse gas emissions would be required for 2024 filings reported in 2025, with reasonable assurance being required for 2026 filed in 2027 for large accelerated filers. Accelerated filers would also be required to have third-party assurance, but with one additional year until required at each level.The public has until May 20, 2022 to provide comment. The SEC has stated that they want to incorporate feedback into the required metrics and financial reporting.Schneider Downs provides assurance and advisory services for SEC organizations. For more information concerning ESG matters and their impact on your organization, please visit the Schneider Downs Our Thoughts On blog or visit www.schneiderdowns.com/esg.Questions? Contact the ESG consulting team at contactSD@schneiderdowns.com. ### Is LIFO Relief for Automobile Dealers on the Horizon? Who remembers the School House Rock! video involving a sad little scrap of paper on the Capitol Hill stairs singing, “I’m just a bill; yes, only a bill”? A bill can take a long journey to become a law. If you recall, that piece of paper was already exhausted halfway up the steps. It sounds like the automotive community’s journey waiting for tax relief for LIFO inventory. Is good news on the horizon?     Well, Automotive News is reporting that U.S. Rep. Dan Kildee (D-MI) earlier this week announced plans to introduce legislation that would provide tax relief to automobile dealers that use the LIFO (last-in, first out) method of accounting for automobile inventories.   Govtrack.us, which tracks the status of proposed legislative bills, notes that “H.R. 7382: To treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the Internal Revenue Code of 1986” is in the first stage of the legislative process. It also notes that bill text is not yet available. We have been talking about LIFO relief since September 2020. We are tired… and sad, just like that scrap of paper. The little boy in the “I’m Just a Bill” video said you must have patience and courage to go through this process. He wasn’t kidding!   If you watch the whole video (about three minutes long), it breaks down the long journey for a bill to become law. To keep it simple: An idea becomes a bill. A bill is introduced to Congress. Committee needs to discuss and debate it. If passed by the committee, it goes to the House. If passed by the House, it goes to the Senate. If passed by the Senate, it goes to the president. Then the president can sign or veto it! I am going to take it further than the cartoon. Trust me, it left a bunch out. After tax legislation is enacted, then comes the regulations to explain the law in further detail.  Who knows how long that takes? Here are some potential questions that will need to be addressed in the legislation and/or regulations: The tax filing deadline already passed; can I qualify for LIFO relief? I already paid the tax at extension; can I get a refund? What happens if I went off LIFO; can I go back? What happens if I went on the IPIC method of LIFO and actually increased my LIFO reserve; does this impact me? The message to take away is to not put the cart before the horse (or the car before horsepower, to make a bad pun). We do not have answers for this filing deadline and probably won’t for the final deadlines this fall. There are other legislative priorities such as next year’s budget and competitiveness with China. Washington is also going into mid-term elections.   We are not too confident while in the midst of post-pandemic economic issues, the war in the Ukraine and the other priorities that this legislation will see passage any time soon.  We have other solutions. Please keep in mind that we still believe the IPIC method of accounting is a valid solution for most auto dealers’ LIFO recapture concerns. To read more about the IPIC method of accounting, please click here.  Please reach out to Steve Barber and the Automobile Dealership Group for more information.          ### Higher Education Institutions Looking to Cryptocurrency for Future Gift Acceptance Considerations Cryptocurrency first appeared on the scene in 2008 and now, 14 years later, is no longer considered just a fad. As of early this year, there are thousands of active cryptocurrencies in circulation, the most notable being Bitcoin. As the world continues to move toward greater acceptance of the digital exchange method, some institutions of higher learning have begun to embrace the medium as a way to accept donations. Not wanting to lose out, perhaps, on potential bequests by limiting themselves to non-cryptocurrency contributions, a few of the nation’s colleges and universities started to accept the digital gifts as early as 2014. Lately, it’s become an acceptable form of donation for all types of institutions in the U.S. The overall acceptance of cryptocurrency is part of a larger effort on our nation’s campuses to convey the message to alumni and non-alumni alike that the institution is up to speed with the latest financial trends. Colleges, for instance, have begun including classes in cryptocurrency as part of their curriculum in an attempt to educate future alumni. The thought is that as the next wave of donors prepares for graduation and moves into their careers, it’s very possible that some will consider making a donation to their alma mater via some form of cryptocurrency. And making that contribution can potentially be a great tax benefit to the donor. Per the IRS, cryptocurrency is viewed as virtual currency and is treated as property to the holder, meaning it’s eligible for a capital gain tax when sold. But if the donor were to donate cryptocurrency directly to the institution, he or she could avoid this tax.For the institution, however, the potential for risk with a cryptocurrency gift is certainly higher than with other traditional methods of donation. The best way to alleviate that risk is to plan and prepare by establishing a cryptocurrency gift acceptance policy that provides guidance on what an acceptable donation would be. The policy should include the types of cryptocurrencies the institution is willing to accept, the limitations on the size of the donation (both minimum and maximum), how the institution will be able to accept the donation (third-party processor or in-house), and the frequency of donations the institution will accept, since the price of cryptocurrencies can fluctuate drastically each day. How the institution accepts the cryptocurrency may be one way to reduce the risk surrounding a donation of this type. It can choose to process in-house, taking into consideration the knowledge, time and internal controls already in place to accept and process the donation, but if it would rather not internalize processing, it may decide to contract with a third-party payment provider to manage the risk. In doing so, institutions should know exactly how the cryptocurrency will be processed within the provider, and understand the provider’s limitations and abilities in processing these payments. Whichever way the donation is processed, institutions will need to report it for tax and financial reporting purposes. The IRS and the FASB have established respective guidelines on how to do so. The IRS guidance, as stated above, is to treat cryptocurrency like property. The FASB has not formally established cryptocurrency-specific GAAP rules, but, in general, cryptocurrencies are to be treated as indefinite-lived intangible assets under FASB ASC Topic 350 and can be subject to impairment. Contact a member of your Schneider Downs team for more information. ### The Bureau of Cyberspace and Digital Policy Officially Starts Operations The U.S Department of State announced the Bureau of Cyberspace and Digital Policy (CDP) officially began operations on Monday, April 4, 2022. According to the U.S. Department, the CDP bureau will focus on key national security challenges, economic opportunities and implications for U.S. values associated with cyberspace, digital technologies and digital policy. Initially announced in October 2021, the CDP official launch is another sign that the recent tensions with Russia and China may be accelerating cybersecurity initiatives in preparation for foreign cyber threats. The CDP bureau consists of three primary policy units: the International Cyberspace Security, International Information and Communications Policy and Digital Freedom. Jennifer Bachus, former deputy chief of mission at the U.S. Embassy in Prague, was named  Senior Bureau Official and the interim director until a Senate “Ambassador-at-Large” is confirmed. Other acting leadership announcements include Michele Markoff as Acting Deputy Assistant Secretary for International Cyberspace Security, Stephen Anderson as Acting Deputy Assistant Secretary for International Information and Communications Policy, and Blake Peterson as Acting Digital Freedom Coordinator. “On cyberspace and emerging technologies, we have a major stake in shaping the digital revolution that’s happening around us and making sure that it serves our people, protects our interests, boosts our competitiveness and upholds our values,” said Secretary of State Anthony Blinkin. “We want to prevent cyber attacks that put our people, our networks, companies and critical infrastructure at risk.  We want the internet to remain a transformative force for learning, for connection, for economic growth, not a tool of repression.” The CDP is regarded as a critical piece of Secretary Blinkin’s focus on bolstering foreign and national security through modernization in emerging technologies and cyberspace. With the operational launch in the rearview mirror, Secretary Blinkin is planning to ask for a 50 percent increase in the department’s information technology budget. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Move Over, Standard Shopping. Hello to Self-Checkout! Big corporations like Wal-Mart, Target, Lowes and McDonald's have years of experience using self-checkouts to make shopping efficient for others. Using self-checkout helps businesses reduce operating costs, alleviates long wait times and helps customers get in and out when they have a few items.The increase in self-checkout shipments was determined by the pandemic-fueled desire of shoppers who did venture out to stores to avoid personal interactions with others. There has been momentum for service-oriented stores to add self-checkout—with so many people paying with debit and credit cards, it has become a global trend.  RBR, which conducts primary research in banking automation, payment cards and retail technology on a worldwide basis, forecasted that by 2026, there will be 1.5 million self-checkouts installed globally.In North America, big-time grocers continue to broaden self-checkout availability. Other types of retailers like discount stores, convenience stores and pharmacy chains have started to add self-checkouts as well.There have been several C-store chains that have implemented self-checkouts:  Global Partners owns 264 company-owned convenience stores across the northeast that have self-checkout kiosks.  Royal Farms started implementing self-checkouts in the beginning of 2019 and they have taken off in 2021. Royal Farms has more than 250 locations in Maryland, Delaware, Virginia, West Virginia, Pennsylvania and New Jersey.  Circle K also decided to have cashier-free checkout lines. They have a new partnership with Grabango, a software company in Berkeley, CA. They planned on bringing 6 units across Tucson, Arizona. Wawa has also tested the waters with self-checkout. In Alexandria, Virginia, they plan to install more self-checkouts in their stores in addition to the 61 that they already have. Wawa also plans to include self-checkout lanes in their new stores.  Self-checkouts have been around for quite a while and new companies have been implementing them into their stores. So, what are the pros and cons of having self-checkout lines?Pros and Cons of Self-Checkout The pros of having self-checkout lines, as I mentioned above, are efficiency and quickness. No one likes to wait in line for one item, so having the self-checkout line is quick and efficient. It also frees employee time for other tasks. With self-checkout lines, employees can stock shelves, help customers or clean the store. This improves operations in the current labor environment because the stores do not need a cashier in each line.Another great pro is that customers just love self-checkout lines. According to Consumer Reports, customers generally like self-checkout due to the perceived time savings. The cons of having self-checkout lines are theft, high up-front costs, customer confusion and equipment issues. Theft is a big concern for stores that have self-checkouts because it increases shrink and since there are fewer employees watching the lanes, it will increase the theft risk. Not only can people steal items, but they can steal other card information with skimmers. The cost for a four-lane self-checkout is approximately $125,000, not including security. Customer confusion and equipment issues can be time-consuming and pricey, based on the problem. This includes software glitches and dealing with items left in the bagging area.  Self-checkouts will be a new norm in the coming future. The pros and cons should be considered when implementing self-checkouts because the customer’s experience is what matters the most.     ### Key Changes in the Payment Card Industry Data Security Standard - PCI DSS v4.0 The PCI Security Standards Council has published version 4.0 of the Payment Card Industry Data Security Standard (PCI DSS) on March 31, 2022. As a Qualified Security Assessor (QSA), members of the Schneider Downs team were able to review the major revision to the standard prior to release and have collected our thoughts on how the changes will impact entities seeking to maintain compliance under PCI DSS v4.0.Planning for PCI DSS v4.0The good news is there are no immediate changes taking effect  for most merchants. However, there are new explicit requirements for documentation that were essentially implicit requirements under PCI DSS v3.2.1. Service providers must also provide information to customers regarding which responsibilities fall on the customer and which are handled by the provider.What is the New Targeted Risk Analysis?The new phrase, “targeted risk analysis”, appears over fifty times in the new PCI DSS publication. The appendix E2 provides a template for evaluating the likelihood of “mischief” (this is the word they chose to describe a negative event). There are eight requirements that ALL entities must complete for a targeted risk analysis to determine how the control should be applied to their cardholder data environment (CDE). While this ultimately creates more paperwork for everyone, it does afford some flexibility in control implementation.What is the New Customized Approach?While the concept of compensation controls has been a part of PCI DSS for some time, PCI DSS v4.0 introduces the "customized approach”. This allows entities to take their own approach to meeting any DSS requirement without the “documented technological or business constraints” required to use the compensating controls approach. Any control met using this approach does require a targeted risk analysis and detailed documentation of the design (effective immediately). One important note is that your QSA cannot assist with control design in order to maintain independence.Summary of New or Changed RequirementsWhile most of the new requirements are considered “best practices” until March 2025, there are others that must be implemented effective immediately for any company seeing attestation under PCI DSS v4.0. We recommend companies evaluate all other requirements in the short term and develop a roadmap for implementation over the three-year grace period.Changes Effective Immediately*For all entities Roles and responsibilities are now required to be formally documented, assigned, and understood for each of the PCI requirements 1-12. 12.5.2 - PCI scope must be documented and confirmed at least once every 12 months and upon any significant change to the environment. For service providers only 12.9.2 - Third-party service providers (TPSPs) must provide information to customers regarding their own PCI compliance and a breakdown of customer versus TPSP responsibilities. Changes Effective March 31, 2025*For all entitiesData Management 3.2.1 - Data retention and disposal policies, procedures, and processes must be in place to minimize any SAD stored prior to authorization. 3.3.2 - Any SAD stored electronically prior to authorization must be encrypted using strong cryptography. 3.4.2 - Technical controls must be in place to prevent the copy of primary account numbers (PAN) when using remote-access solutions. 3.5.1.1 - One-time pads are no longer an acceptable means for making PAN unreadable. Hashes used to render PAN unreadable must be keyed cryptographic hashes with appropriate key management. 3.5.1.2 – Disk- and partition-level encryption may only be used to render PAN unreadable on removable media. For non-removable media another mechanism must be used. 3.6.1.1 - All certificates used to encrypt PAN over public networks must be confirmed as valid and not expired or revoked. 4.2.1.1 - An inventory of all trusted keys and certificates must be maintained. Anti-Malware 5.2.3.1 & 5.3.2.1 - A targeted risk analysis must be performed to determine the frequencies of both: Evaluation of systems identified as not at risk for malware Frequency of scans on systems running anti-malware 5.3.3 - Malware scans must run when removable media is in use. 5.4.1 - Anti-phishing controls must be in place to protect personnel. Custom Software & Web Applications 6.3.2 - An inventory of all custom and bespoke software must be maintained. 6.4.2 - An automated technical solution (such as a web application firewall) must be in place to continually detect and prevent web-based attacks. 6.4.3 - Any client-side scripts used on payment pages must be inventoried and integrity-checked. 11.6.1 – Change/tamper detection must be deployed on any web-based payment pages. Identity and Access Management 7.2.4, 7.2.5 & 7.2.5.1 - User access must be reviewed and validated at least every six months. This applies to both privileged and non-privileged accounts. 8.3.6 - Standard password length must be a minimum of 12 characters. Characters must contain both letters and numbers. 8.4.2 & 8.5.1 - All access to the CDE must be secured using multi-factor authentication (MFA). MFA must be configured to prevent bypass or replay. 8.6.1 - Any interactive logon using system/service accounts must have documented business justification, management approval, and traceability to the individual acting under the system account. 8.6.2 - Passwords for system/service accounts must not be used in hard-coded scripts, configuration files, source code, etc. 8.6.3 - System/service account password length and rotation schedule may be determined based on a targeted risk analysis, but the standard suggests at 15 characters with rotation at least once per year. 9.5.1.2.1 - A targeted risk analysis must be performed to determine the frequency of POI device inspections. Logging and Alerting 10.4.1.1 - Log reviews must be automated (e.g., through a properly configured SIEM solution) for all critical system components, those that store, process, or transmit cardholder data or SAD, and all security components or appliances. 10.4.2.1 - A targeted risk analysis must be performed to determine the frequency of log reviews for all other systems components. 10.7.2 & 10.7.3 - Prompt detection and response must be in place for all critical security components. A3.3.1 – Failures of automated log review mechanisms and code review tools must be promptly detected and addressed. Vulnerability Management 11.3.1.1 – Vulnerability remediation plans must address vulnerabilities rated lower than high or critical. 11.3.1.2 – Internal vulnerability scans must be performed in authenticated mode, with any systems not supporting authenticated scans documented appropriately. Risk Assessment and Documentation 12.3.1 – A targeted risk analysis must be performed for all controls with flexibility in implementation. 12.3.3 – All cryptographic cipher and protocols in use must be documented, reviewed at least annually, and a documented strategy must be in place for the rapid replacement of any ciphers or protocols found to be vulnerable to compromise. 12.3.4 – Hardware and software technologies in use must be documented and reviewed at least annually to ensure they will continue to be supported by the vendor. Awareness and Training 12.6.2 – The security awareness program must be reviewed at least annually and updated as needed. 12.6.3.1 & 12.6.3.2 – Awareness training must address threats and vulnerabilities that could impact the security of the CDE, to include at a minimum phishing and other social engineering. Training must also address the acceptable use of end-user technologies. Incident Response 12.10.4.1 – A targeted risk analysis must be performed to determine the frequency of training for incident response personnel. 12.10.5 – The security incident response plan must account for events from the change/tamper detection on web-based payment pages. 12.10.7 – Specific incident response procedures must be in place to handle the detection of PAN outside the CDE. Changes for Service Providers Only*Data Management 3.3.3 - Issuers must store all SAD using strong cryptography. 3.6.1.1 - Documentation and design of the cryptographic environment must prevent the use of the same keys in both production and test environments. Identity and Access Management 8.3.10.1 - If utilizing passwords/passphrases as a single factor for customer authentication (i.e., no MFA enabled) those passwords must be changed at least every 90 days or “the security posture of accounts is dynamically analyzed to determine real-time access to resources”. For further information on the latter option, PCI SSC suggests reading NIST SP 800-207 Zero Trust Architecture. Penetration Testing 11.4.7 - Third-party hosted/cloud service providers must now support their customers for external penetration testing. This means as a service provider, you must provide evidence of your own penetration test to meet Requirements 11.4.3 and 11.4.4 on the shared infrastructure or allow prompt access to each customer to perform their own penetration test of the infrastructure. A1.1.4 – Logical separation of the customers’ and provider’s environments must be confirmed via penetration testing at least once every six months. Vulnerability Management 11.5.1.1 - Covert malware communication channels (e.g., DNS tunneling) must be addressed via a combination of intrusion detection and prevention techniques. Testing procedures require examination of configuration settings but not tests of effectiveness of the controls. Risk Assessment and Documentation 12.5.2.1 - The PCI scope must be documented and reviewed every six months (instead of the 12-month cycle established in 12.5.2) and after any significant changes. 12.5.3 – The impact to PCI compliance of any significant organizational changes must be documented and reported to executive management. A1.1.1 – Logical separation must be established between the customers’ and provider’s environments. A1.2.3 – The provider must implement mechanisms for customers to securely report suspected incidents and vulnerabilities to the provider. Want to share this article? Download the PDF version.How Can Schneider Downs Help?As a certified Qualified Security Assessor (QSA), Schneider Downs is equipped to assist clients with their PCI Compliance requirements by providing scalable, efficient solutions for meeting the rigorous demands of PCI compliance. If you have any questions regarding PCI DSS 4.0 feel free to contact the Schneider Downs team at contactsd@schneiderdowns.com or visit our PCI DSS solutions website.*Source: Securing the Future of Payments: PCI SSC Publishes PCI Data Security Standard v4.0 (pcisecuritystandards.org ### Treasury Department Releases Greenbook Outlining 2023 Budget Revenue and Tax Proposals On March 28, 2022, the Biden administration released its Fiscal Year 2023 Budget proposal (beginning October 1, 2022). Simultaneously, the U.S. Department of the Treasury released the General Explanations of the Administration’s FY2023 Revenue Proposals, (or “the Greenbook”) explaining the Administration’s revenue-raising proposals included in the budget.The purpose of this article is to solely focus on the revenue proposals and the related Greenbook explanations. A broader discussion of the budget-related social policies is beyond the scope of this article. The Greenbook includes over $2.5 trillion in tax increases on wealthier individuals and larger corporations over the next decade (2023-2032). The revenue proposals include what many in the media are referring to as the “Billionaire Tax”; this tax appears to kick in, however, at a net worth threshold of greater than $100 million and to which CBS News is estimating could include approximately 30,000 taxpayers.Some of the current proposals are a repeat of proposals included in the Build Back Better legislation passed by the House in 2021 but which stalled in the Senate. Some highlights of the current proposals included in Greenbook include (but are not limited to): Raises the corporate income tax rate to 28% Repeals BEAT and proposes to replace it with an “undertaxed profits rule” (UTPR) consistent with OECD pillar two model rules for large international businesses Increases the marginal individual income tax rate to 39.6% in 2023 (which would accelerate the return to that marginal rate called for under the sunset provisions of the TCJA for 2026) Taxes capital gain income at ordinary tax rates for those making in excess of $1,000,000 with the highest rate capped at 37% (or 40.8% inclusive with the Net Investment Income tax) Taxes “carried interests” as ordinary income Reduces the ability to utilize like-kind exchange treatment on dispositions of real estate Eliminates certain fossil fuel tax preferences Creates incentive for locating jobs and business activity in the U.S. Treats transfers of appreciated property by gift or upon death as a realization event triggering an income tax Imposes a 20% minimum tax on “total income” (generally inclusive of unrealized capital gains for all taxpayers with net wealth (gross assets minus liabilities) greater than $100 million Permanently excludes “certain” discharged student debt from income Modifies income, estate, and gift tax rules for certain grantor trusts The above are just some of the proposed provisions in the Greenbook. We will provide more details and information in future articles. However, it’s important to remember that this is just a vision of what future federal tax rules might look like.As in 2021, these revenue-raising proposals have a long road to travel before being enacted, and they might break down before reaching the final destination. This is an election year, and we are still in an uncertain economic environment. These proposals must make it through both the House and Senate; Senator Joe Manchin of West Virginia has already come out against the “billionaire tax” for example. Many of these or similar items have been proposed in the past but did not make it into final enacted tax legislation. Accordingly, some of the above provisions will likely not find their way into future legislation. It is far too early to make any significant decisions based on these initial proposals. Continue to monitor our Tax Reform blog site for updates and additional analysis.   ### SDWMA Named One of the Nation’s Top DC Advisor Teams in 2021 by NAPA We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the Nation’s Top DC Advisor Teams in 2021 by the National Association of Plan Advisors (NAPA) for the second consecutive year.The NAPA Top DC Advisor Team list highlights the nation’s leading retirement plan advisor firms. Unlike other lists, this focuses on teams having at least $100 million in defined contribution (DC) plan assets under advisement and is based on self-reported assets under advisement as of December 31, 2021.The National Association of Plan Advisors was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. NAPA is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org.NAPA members like SDWMA are having a huge impact every single day, not just on the quality of retirement plan advice, but also in building a more financially secure retirement for millions of Americans. It is a great honor for SDWMA to be listed in this regard by NAPA.To our clients, friends, and colleagues, thank you for your continued trust and confidence in SDWMA. If you know someone that we could be of service to, please do not hesitate to share this email or our contact information.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Registration with the SEC does not imply any level of skill or training. ### CISA, FBI and DOE Issue Joint Cyber Advisory for the Energy Sector On March 24, the Cybersecurity and Infrastructure Security Agency (CISA), the Federal Bureau of Investigation (FBI) and the Department of Energy (DOE) published a joint advisory for the U.S. and international energy sector organizations.The joint advisory, titled  “Tactics, Techniques, and Procedures of Indicted State-Sponsored Russian Cyber Actors Targeting the Energy Sector” provides information on multiple intrusion campaigns conducted by state-sponsored Russian cyber actors from 2011 to 2018 which targeted U.S. and international Energy Sector organizations.“In light of the indictments announced today and evolving intelligence that the Russian Government is exploring options to conduct potential cyberattacks against the U.S., CISA, along with our FBI and DOE partners, is issuing this joint advisory to reinforce the demonstrated threat posed by Russian state-sponsored cyber actors,” said CISA Director Jen Easterly.The advisory includes technical information on previous Russia state-sponsored attacks between 2011 and 2019, including details of a global energy sector attack and a Middle East-based energy sector organization malware compromise. The alert recommends organizations immediately: Enforce multifactor authentication to authenticate into a system. Implement and ensure robust network segmentation between information technology and industrial control systems (ICS) networks. Manage the creation of, modification of, use of and permissions associated with privileged accounts. Citing these past incidents with the current concerns of potential Russian cyber-attacks on U.S. businesses, the advisory reiterates the importance for the U.S. energy sector and critical infrastructure organizations to take immediate actions to mitigate cyber risk and protect their networks. The full advisory is viewable at https://www.cisa.gov/uscert/ncas/alerts/aa22-083a.Easterly encouraged organizations to visit the CISA Shields Up page, which provides important information about the potential direct and indirect cybersecurity threats U.S. businesses may face due to the escalating Russia and Ukraine conflict.The page also provides verified contact information to report threats, free cybersecurity tools and services, a list of cybersecurity best practices to help organizations reduce the likelihood of a damaging cyber intrusion, steps to quickly detect a potential intrusion, guidance regarding intrusion response preparation and tips on how to strengthen current defenses. The Shields Up page is viewable at https://www.cisa.gov/shields-up.White House Releases Act Now to Protect Against Potential Cyberattacks Fact SheetIn addition to the joint advisory, the Biden Administration recently released the “Act Now to Protect Against Potential Cyberattacks" fact sheet in response to reports from the intelligence community indicating Russia was exploring options for cyber attacks on the United States.The fact sheet reiterates the growing concerns over the potential cyber attacks Russia may deploy in response to the economic sanctions from the United States and states that there is now evolving intelligence that Russia may be exploring options for potential cyber attacks.The fact sheet encourages the private sector and other U.S. businesses to visit the aforementioned CISA Shields Up page and urges companies to take several immediate actions including: Back up your data and ensure you have offline backups beyond the reach of malicious actors.Deploy modern security tools on your computers and devices to continuously look for and mitigate threats. Check with your cybersecurity professionals to make sure that your systems are patched and protected against all known vulnerabilities and change passwords across your networks so that previously stolen credentials are useless to malicious actors. Mandate the use of multi-factor authentication on your systems to make it harder for attackers to get onto your system. Run exercises and drill your emergency plans so that you are prepared to respond quickly to minimize the impact of any attack. The fact sheet also lays out several recommendations specifically for technology and software companies including: Build security into your products from the ground up — “bake it in, don’t bolt it on” — to protect both your intellectual property and your customers’ privacy. Develop software only on a system that is highly secure and only accessible to those actually working on a particular project. This will make it much harder for an intruder to jump from system to system and compromise a product or steal your intellectual property. Software developers are responsible for all code used in their products, including open-source code. Most software is built using many different components and libraries, much of which is open source. Make sure developers know the provenance (i.e., origin) of components they are using and have a “software bill of materials,” so they can rapidly correct any vulnerabilities they may find in those components.   The fact sheet is viewable at www.whitehouse.gov/briefing-room/statements-releases/2022/03/21/fact-sheet-act-now-to-protect-against-potential-cyberattacks/.Related Links CISA Alert (AA22-083A) Tactics, Techniques, and Procedures of Indicted State-Sponsored Russian Cyber Actors Targeting the Energy Sector White House Fact Sheet: Act Now to Protect Against Potential Cyberattacks CISA Shields Up About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.  ### Navigating the Great Resignation The Great Resignation is real! During 2021, an average of nearly 4 million workers quit their jobs each month, the highest record on average since the Bureau of Labor Statistics (BLS) began tracking workers who quit their jobs more than 20 years ago.Businesses and non-profits are looking for ways to stem the tide and attract new talent in a tight labor market. I have received an uptick in inquiries lately from clients interested in performing a compensation study either because they have experienced increased employee attrition or because they want to act before they do. Across the board, companies have concerns about attracting and retaining the right talent.  The bottom line is demand for talent is outpacing supply and compensation is rising as a result. In broad terms, we can look to the Bureau of Labor Statistics Employment Cost Index for a sense of the overall trend in increasing compensation.The BLS recently reported that wages and salaries of private industry workers increased 5.0% for the twelve months ended December 2021, compared to a 2.8% increase for the twelve months ended December 2020. The employer cost for benefits has also increased over the same time period, increasing by 2.9% in 2021 and 2.1% in December 2020. Of course, this is just an average, which is a helpful starting point, but specific facts and circumstances must also be taken into account.As organizations continue to combat the Great Resignation, here are some suggestions to best navigate current labor conditions:Know the Market and Make Informed DecisionsIgnorance is not bliss in this instance. Compensation studies can help to inform a comprehensive human resources strategy.Here’s an example to illustrate—I worked recently with an executive who was concerned about losing key employees and wanted to adjust compensation so that his key employees were paid competitively relative to any job offers they might receive. We provided him with market data on base salary and annual cash incentive compensation for each key position, which is typical data that we provide for compensation analyses. We also tailored the engagement to provide the value of long-term equity incentives and multi-year cash plans, since a large public company would be a competitor for this company’s key talent and would likely include these compensation elements in job offers. Based on this study, the client was able to determine which key employees were underpaid relative to the market.Our Schneider Downs Retirement Solutions Team then helped to develop a long-term incentive compensation plan that would encourage retention and align the key employees’ goals with the long-term goals of the company. By being proactive in understanding current market conditions and using this information to inform compensation practices, including the consideration of other elements of compensation beyond salary, this company is in a better position to attract, retain and motivate its employees, which is a win-win for all involved.Develop a Comprehensive Hybrid/Remote Work PolicyWhen remote work became the norm for many jobs at the start of the Covid-19 pandemic, the general expectation was that productivity would diminish. Instead, productivity has improved due to fewer meetings and in-office interruptions, the reduction of commuting/travel time and the ability to work when and where it makes sense for each individual.As workers begin to come back into the office, successful executives will recognize that talented people have come to value and expect this flexibility and may be willing to move on if that autonomy is significantly reduced, a fact that is supported by the Great Resignation. In fact, workers who left the workforce and recently returned cite workplace flexibility as the number one reason for returning.Of course, as part of this new vision of work, companies must communicate the importance of key activities which do require a certain amount of in-person interaction: activities such as staff training, mentoring and networking, which are crucial to building relationships both internally and externally and are vital to the company’s and the employees’ continued success.Policies will also need to be updated to communicate which positions are eligible for hybrid or remote work and how workers will be compensated. Successful companies are innovative companies, and those that best adjust to this new vision of work and create strong cultures that empower their people will best weather the Great Resignation.  Communication is KeyMany employees have faced prolonged stress due to disruptions caused by the pandemic and uncertainty in the workplace and their personal lives. As Covid-19 protocols are dialed back, employees are facing renewed uncertainty and stress as the post-pandemic modes of work continue to be fine-tuned. Company leaders who provide regular and effective updates and consider employee feedback will be in the best position to retain workers. Recruitment StrategiesConsider adding or beefing up employee referral programs, contracting with staffing firms or streamlining your recruitment and interview processes to target worthwhile candidates and make job offers more quickly. In conclusion, companies that have best learned how to adapt during the Covid-19 pandemic will continue to evolve to navigate current challenges, including the talent shortage. Although salary and wage pressures are expected to continue in 2022, other items should also be considered in a total compensation package, including variable compensation tied to individual performance metrics, flexible and remote work arrangements and other perks that provide the work/life balance that workers value.If you would like to discuss current market trends in compensation, please contact Jen Doering (412-697-5275) for more information about our compensation consulting services. ### SEC Releases New Proposal to Standardize and Enhance Cyber Reporting The Securities and Exchange Commission (SEC) recently proposed new amendments to the Securities Exchange Act of 1934 to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance and incident reporting by public companies.According to the SEC, the proposed amendments aim to improve investors’ knowledge about a registrant’s risk management, strategy and governance, and provide timely notification of cybersecurity incidents through several key requirements, including: Filing or furnishing a report within four business days after occurrence of the event unless otherwise specified. If the event occurs on a Saturday, Sunday or holiday on which the Commission is not open for business, then the four-business day period shall begin to run on, and include, the first business day thereafter. If the event occurs on a Saturday, Sunday or holiday on which the Commission is not open for business, then the four-business day period shall begin to run on, and include, the first business day thereafter. Current reporting about material cybersecurity incidents and periodic reporting to provide updates about previously reported cybersecurity incidents. Periodic reporting about a registrant’s policies and procedures to identify and manage cybersecurity risks; the registrant’s board of directors' oversight of cybersecurity risk; and management’s role and expertise in assessing and managing cybersecurity risk and implementing cybersecurity policies and procedures. Annual reporting or certain proxy disclosure about the board of directors’ cybersecurity expertise, if any. The SEC rule proposal joins what seems to be a laundry list of federal regulatory efforts to formalize cyber incident reporting procedures and processes across several industries. In just the last 12 months, we have reported on numerous executive orders, legislation and proposals, including the three listed below.Federal Deposit Insurance Corporation (FDIC) Computer-Security Incident Notification Final RuleThe FDIC, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (OCC) issued the Computer-Security Incident Notification Final Rule.FDIC-supervised banking organizations will be required to notify the FDIC no later than 36 hours after the banking organization determines that a computer-security incident that rises to the level of a notification incident has occurred. The final rule takes effect on April 1, 2022, with full compliance extended to May 1, 2022. The FDIC will provide supervised institutions the logistics for the FDIC notification in early 2022.You can read more about the rule in our recent article. The full copy is viewable at www.fdic.gov/news/board-matters/2021/2021-11-17-notational-fr.pdf.Cyber Incident Reporting for Critical Infrastructure ActPresident Biden signed the Cyber Incident Reporting for Critical Infrastructure Act into law on March 15, 2022. The law requires critical infrastructure entities to report material cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency (CISA) within 72 hours, and ransomware payments within 24 hours. This is intended to provide the federal government with a better understanding of the nation’s cyber threats and to facilitate a coordinated national response to ransomware attacks.The full bill is viewable at www.congress.gov/bill/117th-congress/house-bill/5440/text.Transportation Security Administration Security Directive-Pipeline-2021-01The Transportation Security Administration (TSA) Security Directive-Pipeline-2021-01 went into effect on May 28, 2021, shortly after the largest ransomware attack in history hit the Colonial Pipeline. It was the first-ever mandatory cybersecurity ruling for pipelines and liquefied natural gas facilities.The directive requires owners and operators of critical hazardous liquid and natural gas pipelines to conduct a detailed gap assessment of their cybersecurity programs within 30 calendar days of the directive’s effective date. It also requires them to report information and physical security incidents affecting their IT or operational technology systems to CISA within 12 hours of identification.The full directive is viewable at www.federalregister.gov/documents/2021/07/20/2021-15306/ratification-of-security-directive.Information on how to report cyber incidents have been around for years. The Department of Homeland Security (DHS) provides plenty of information on how to report cyber incidents in their Unified Message for Reporting to the Federal Government release, so why are there so many efforts on Capitol Hill to formalize cyber incident reporting?Historically, the majority of private companies have always had the option to report an incident; however, the recent uptick in large-scale attacks and lack of transparency, combined with the negative press— just google “Colonial Pipeline”—has caused a flurry of reactionary actions from federal agencies and regulatory bodies.The increased focus on industry-specific cyber incident reporting tends to focus on three primary requirements: Incident Reporting Time – whether it is 36 hours or weeks, a key requirement is the timeframe from when an organization must disclose a cyber incident to the required agencies following discovery. Company Contact – another common requirement we have seen is the designation of a primary contact for cyber incidents and, in most cases, is registered with the appropriate regulatory body for around-the-clock availability. Reporting Requirements – the days of hiding incidents is coming to an end, and for good reason. By establishing formal reporting requirements, regulatory and federal bodies capture critical data that can provide important information on how an incident occurred and how to prevent similar ones in the future. The development of the CISA Cybersecurity Advisory Committee indicates that transparency in reporting will be an important theme moving forward. While the regulations and requirements surrounding cyber incidents will continue to grow across all industries and after each high-profile attack, it will be interesting to see how private and public companies react; and more importantly, if they can meet the requirements and if not, how regulators institute the consequences.Related Links FDIC Computer-Security Incident Notification Final Rule Cyber Incident Reporting for Critical Infrastructure Act Transportation Security Administration Security Directive-Pipeline-2021-01 Unified Message for Reporting to the Federal Government Related Articles FDIC Issues Final Computer-Security Incident Notification Requirements for Banking Organizations TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators US Lawmakers Look to Set Federal Cyber Breach Alert Standard About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.  ### SEC’s New Proposed Environmental Disclosures Financial statement disclosures are a key part of any public company’s report. With the ever-changing nature of our world, it is only fitting that financial statement disclosures follow suit. One thing on the minds of many people today is climate change. As such, on Monday, March 21, 2022, the U.S. Securities and Exchange Commission (SEC) proposed a change to the required financial statement disclosures that would now require public companies to report on the environmental impact of climate change on their business operations. In some instances, companies have been reporting on these factors for years prior to this announcement, on the basis of their individual business models. However, this recent announcement is the first time that a standardized disclosure of this nature has been proposed by any regulatory agency as it relates to public financial reports. This proposed change stems from the general public’s growing interest and concern for our global climate and the corporate carbon footprint that these large public companies have on our environment. There are three “scopes” of data relating to environmental disclosures, as the proposal currently stands. “Scope 1” relates to the disclosure of the company’s own greenhouse gas emissions. “Scope 2” relates to the disclosure of how much energy the company consumes. Finally, “Scope 3” relates to the disclosure of emissions generated by the company’s customers and suppliers. “Scope 3” has proven to be the most controversial topic of disclosure for these public companies given the cumbersome nature of reporting on other companies’ emissions alongside their own. The SEC’s response to the hesitation of a “Scope 3” requirement has resulted in a determination of materiality regarding customer and supplier emissions. If this proposed change is passed and becomes a formal SEC regulation, the reporting rules would be phased into use. A new registrant with the SEC would be required to provide climate-related information upon their registration as a public company. These companies would be required to include this information in all future publicly filed reports. As it currently stands, the target date to have all public companies disclosing these environmental impact factors would be 2024 at the earliest. For more information concerning ESG matters and their impact on your organization, please visit the Schneider Downs Our Thoughts On blog or visit www.schneiderdowns.com/esg. About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### Pennsylvania Raising Tip Threshold for Tipped Worker Minimum Wage An Independent Regulatory Review Committee on Monday unanimously approved a proposal by the Wolf administration to raise the tip threshold for tipped worker minimum wage. The new rule could take effect in the coming months and would primarily impact restaurants and their employees.Currently, restaurant workers can be paid an hourly wage rate of less than the state’s minimum wage of $7.25, to as low as $2.83 an hour, as long as they make at least $30 a month in tips. It should be noted that the hourly wage, when combined with tips received, must equate to at least the $7.25 state minimum wage. An employee that does not receive the required minimum wage when their hourly wage is combined with tips received is required to be equalized to at least the $7.25 minimum wage rate.Under the newly approved rule, for a tipped employee to have an hourly wage rate of less than $7.25 an hour, they must make at least $135 a month in tips, a $105 increase meant to adjust for inflation from the last 45 years. It’s not currently clear how the hourly wage rate should be handled if tips received were to fluctuate above and below the threshold from month-to-month.Pennsylvania regulations are also being updated to conform to federal guidance on who can be classified as a tipped employee. Under the new rule, an employee must spend at least 80% of their time on tipped work. Employees who do not meet that threshold cannot be classified as a tipped employee and must be paid the $7.25 an hour minimum wage rate.It’s estimated that there are between 93,000 and 160,000 workers in Pennsylvania who are currently paid a tipped minimum wage of below $7.25 an hour. If you have any questions, do not hesitate to contact a member of the Schneider Downs team. ### Authentication Technology Provider Okta Breached by Lapsus$ Hacking Group One of the largest identity authentication technology service providers, Okta, has confirmed a January security incident after the Lapsus$ hacking group published several screenshots on Twitter. According to reports, the screenshots included internal Okta applications, a Jira bug ticketing system and company Slack channels. As the photos went viral and speculation on an Okta breach spread on social media, Okta co-founder and CEO Todd McKinnon confirmed the breach via Twitter. Shortly after, Okta Chief Security Officer David Bradbury released an official statement stating that their analysis concluded that roughly 2.5% or approximately 360+ of their customers had been potentially impacted, and those customers had been identified and contacted. There are several important questions and concerns as the story develops. From my perspective as an experienced cybersecurity professional, there are three primary topics to examine at this point How did the LAPSUS$ Okta compromise happen? Okta stated that the initial compromise originated from one of their sub-processors, Sitel. Specifically, it started in a support engineer’s laptop when it was accessed remotely by one or more malicious RDP sessions. Forensic efforts identified a 5-day window in which a threat actor had access to the Sitel environment. Additional details regarding root cause are unavailable at this time, but this should be seen as another example of third-party / supply-chain risk. What is the potential impact of the Okta compromise? Although Okta claims the potential impact was limited, the fact that a threat actor had access to reset passwords and MFA for 2.5% customers is worth noting as a significant concern and should not be easily dismissed. LAPSUS$ even responded to Okta’s original downplayed statements by calling out how significant their access was, suggesting that Okta hire a top-tier forensic firm publish the report. What is next for impacted Okta clients? Okta was and is confident that no corrective actions need to be taken by their customers. However, having known about the malicious activity since January, Okta failed to communicate to potentially affected customers. Bradbury directly addressed the impact on a live webinar that was broadcast on March 23 to the public. “I am greatly disappointed by the long period of time that transpired between our initial notification to Sitel in January, and the issuance of the complete investigation report just hours ago,” said Bradbury. “Upon reflection, once we received the Sitel summary report last week, we should have, in fact, moved more swiftly to understand its implications." In addition to this admission, the Okta team claims to aim for transparency, which they are demonstrating by providing each customer with details of all related Sitel activity to enable them to perform their own analysis if desired. Our cybersecurity team will be monitoring this story as it develops and are happy to discuss any concerns you have if you believe you are impacted by this or any other large scale cyber incident. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.   ### Highlights from the ACFE's 2022 Anti-Fraud Technology Report The Association of Certified Fraud Examiners, in partnership with the analytics firm SAS, recently released the "2022 Anti-Fraud Technology Benchmarking Report." The report discusses the findings of a 20-question survey that was sent to 80,011 ACFE members and follows up on an earlier benchmarking report issued in 2019. The report allows organizations to compare their current and future anti-fraud technology programs to their industry and region and assists with spending and training decisions within an organization.  The report provides several valuable insights, including:  43% of organizations increased their use of data analytics in response to Covid-19. Consistent with the 2019 report, the 2022 report again found that disbursements and purchasing are the two most common areas where data analytics are used to monitor potential fraud. In addition, data analytics are utilized to monitor a wide range of other risk areas including travel and entertainment expense fraud, fraud involving customer payments and financial reporting fraud.  The most common anti-fraud data analysis techniques used by organizations include exception reporting, automated red flags and data visualization.  The survey asked which programs are used for the various analytical techniques and Excel and was listed for each of the three anti-fraud techniques mentioned above. IDEA, ACL / Galvanize, SAS and programs developed "in-house" were also represented multiple times for the same three anti-fraud techniques, with Tableau, Power BI and SAP each listed once.  Budgets and financial constraints are the biggest perceived challenges for organizations implementing anti-fraud technologies, with 78% of organizations listing these issues as a major or moderate challenge. The main takeaway I had from the report is that while Excel is a great tool, the frequency of its use in anti-fraud controls may speak to the level of sophistication (or lack thereof) of the anti-fraud programs in place at the survey respondent's organizations. Despite the near-term challenge of budgetary constraints, the report demonstrates an opportunity for increased training and investment in more advanced data analytics tools which often result in long-term savings.  Schneider Downs has years of experience with the technology tools listed in the report and has helped many organizations develop anti-fraud programs that address their unique needs to monitor and respond to fraud risks. If you have questions or concerns, contact Tom Pratt or Brian Webster. ### FDIC Issues Final Computer-Security Incident Notification Requirements for Banking Organizations The Federal Deposit Insurance Corporation (FDIC) issued a Final Rule (the rule) establishing computer-security incident notification requirements for all FDIC-supervised institutions.The Final Rule was a joint effort between the FDIC, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (OCC) and aims to provide agencies with early awareness of threats to both banks and the financial system.According to the FDIC press release, FDIC-supervised banking organizations will be required to notify the FDIC no later than 36 hours after the banking organization determines that a computer-security incident that rises to the level of a notification incident has occurred. The press release also provides key definitions and instructions outlined below for FDIC-supervised institutions.What Is a Computer-Security Incident Under the FDIC Rule?The rule defines a computer-security incident as an occurrence that results in actual harm to the confidentiality, integrity or availability of an information system or to the information that the system processes, stores or transmits.What Is a Notification Incident Under the FDIC Rule?A notification incident is defined as a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, a banking organization’s (i) ability to carry out banking operations, activities or processes, or to deliver banking products and services to a material portion of its customer base, in the ordinary course of business; (ii) business line(s), including associated operations, services, functions and support, that upon failure, would result in a material loss of revenue, profit or franchise value; or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States. For example, a notification incident may include a major computer-system failure, a cyber-related interruption—such as a distributed denial of service or ransomware attack, or another type of significant operational interruption.How Do Bank Providers Notify the FDIC?The rule also requires a bank service provider to notify at least one bank-designated point of contact at each affected customer banking organization as soon as the bank service provider determines a computer-security incident has materially disrupted or degraded, or is reasonably likely to disrupt or degrade, covered services provided to the banking organization for four or more hours. If the banking organization has not previously provided a designated point of contact, the notification must be made to the banking organization’s chief executive officer and chief information officer or to two individuals of comparable responsibilities.The final rule takes effect on April 1, 2022, with full compliance extended to May 1, 2022. The FDIC will provide supervised institutions logistics for FDIC notification in early 2022.Related Links FDIC Press Release FDIC Final Rule PDF About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### DOL Releases Cautionary Guidance on Crypto in Retirement Plans Cryptocurrencies have been promoted and have garnered significant attention in recent years as innovative investments that offer unique potential for outsized profits, but it’s the opinion of the Department of Labor (DOL) and many investment professionals that the potential pitfalls associated with these investments are not widely understood or appreciated by investors.On March 10, the DOL’s Employee Benefit Security Administration (EBSA) published Compliance Assistance Release 2022-01, cautioning plan fiduciaries to, “exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants.”This guidance should serve as a stark reminder to plan fiduciaries – those individuals responsible for overseeing the menu of investments that are made available to plan participants – of their responsibilities under ERISA. Fiduciaries have an ongoing obligation to ensure the prudence of the investment options in their plans, and must do so with the care, skill and diligence of a prudent expert familiar with such matters would exercise in similar circumstances. Fiduciaries found to have breached their duties by offering imprudent investments are personally liable for any losses to the plan, and cryptocurrency investments are no exception.The guidance further states that cryptocurrencies, or other investment products whose value is tied to cryptocurrencies, present significant risks and challenges to plan participants’ retirement accounts – including the threat of fraud, theft and loss – for the following reasons: Speculative and Volatile Investments – Cryptocurrencies have been subject to extreme price volatility, which may be due to the many uncertainties associated with valuing these assets, speculative conduct and widely published instances of theft or fraud; The Challenges for Plan Participants to Make Informed Investment Decisions – Participants are less likely to have sufficient knowledge about these investments, as compared to traditional opportunities, or to have the technical expertise necessary to make informed decisions about investing in them; Custodial and Recordkeeping Concerns – Cryptocurrencies are not held in trust or custodial accounts like traditional investments, meaning they might not be valued regularly and available to pay benefits and plan expenses; Valuation Concerns – Experts note that none of the proposed models for valuing cryptocurrencies are as sound or academically defensible as traditional discounted cash flow analysis for equities or similar models for debt; and Evolving Regulatory Environment – Rules and regulations governing the cryptocurrency markets may be evolving, and some investors may be operating outside of the existing regulatory framework or not complying with it at all. Based on these and other concerns, the EBSA expects to conduct an investigation focused on plans that make cryptocurrency investments available to their participants. Any fiduciaries that make these investments available in their plans should expect questioning surrounding the prudent evaluation process that was deployed (hint - it’ll be difficult, if not impossible, to present a defensible case, especially in light of the latest guidance).Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary.  Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### President Biden Signs Executive Order Focused On Cryptocurrency President Biden signed an Executive Order (EO) on Wednesday, March 9th ordering government agencies to coordinate their efforts to develop a regulatory plan for the cryptocurrency and digital asset sector. According to the White House press release, the Executive Order on “Ensuring Responsible Development of Digital Assets” outlines the first whole-of-government strategy to address the risks and harness the potential benefits of digital assets and their underlying technology to help protect consumers, financial stability and national security, as well as to address climate risks associated with digital currency. The initial reaction was mostly positive from those in the cryptocurrency space, who saw this as an official recognition of the popularity of cryptocurrencies. Bitcoin, one of the most recognized cryptocurrencies, saw a 9% jump following the announcement. “I am pretty darn optimistic about it,” said Alexis Ohanian, Reddit co-founder and a major investor in crypto technology. “I’m grateful we’re at the point where the utility of this tech has proven to be very obvious to all levels of our government.” While the overall reaction from the space was positive, there are those reserving their judgement, including Guy Gotslak, co-founder of My Digital Money, a popular cryptocurrency investment platform. “The executive order is, more than anything, defensive," said Gotslak. "The main goals of the EO are to protect the US’ financial position globally, make sure US regulations are not circumvented using crypto, make sure crypto investors and users are protected legally, and that crypto as an industry is regulated in general." So, What Does This Mean for Cryptocurrency Investors, Holders and Platforms? The short answer is nothing... yet. The EO focuses primarily on research to better understand the potential impact of cryptocurrency and digital assets, and provides agencies defind time periods ranging from 60 to 120 days to develop policy recommendations on the six key topics listed below. Protect U.S. Consumers, Investors, and Businesses The EO directs the Department of the Treasury and other agency partners to assess and develop policy recommendations to address what the growing digital asset sector and changes in financial markets could mean for consumers, investors, businesses and how they could affect equitable economic growth. The Order also encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets. From the countless overnight investors claiming they were going to the moon with Doge during the pandemic to the Superbowl crypto exchange commercials (Coinbase anyone?) to Tom Brady’s FTX campaign, cryptocurrency is now mainstream – which means consumer protection was bound to be included in an order such as this. Protect U.S. and Global Financial Stability and Mitigate Systemic Risk The EO encourages the Financial Stability Oversight Council to identify and mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps. Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets The EO directs an unprecedented focus of coordinated action across all relevant U.S. Government agencies to mitigate these risks. It also directs agencies to work with our allies and partners to ensure international frameworks, capabilities and partnerships are aligned and responsive to risks. The inclusion of illicit finance activity in the order is not surprising, as cryptocurrency is a popular payment method for threat actors, specifically ransomware gangs. With the Biden Administration recently announcing the first ever sanctions against a cryptocurrency exchange on SUEX OTC for laundering cyber ransoms, illicit finance mitigation was bound to be included as a research point. Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System The EO directs the Department of Commerce to work across the U.S. Government in establishing a framework to drive U.S. competitiveness and leadership in digital asset technologies and to leverage them going forward This framework will serve as a foundation for agencies and integrate this as a priority into their policy, research and development and operational approaches to digital assets. Promote Equitable Access to Safe and Affordable Financial Services The EO affirms the critical need for safe, affordable and accessible financial services as a national interest that must inform our approach to digital asset innovation, including disparate impact risk. Such safe access is especially important for communities that have long had insufficient access to financial services. The Secretary of the Treasury, working with all relevant agencies, will produce a report on the future of money and payment systems, to include implications for economic growth, financial growth and inclusion, national security and the extent to which technological innovation may influence that future. Support Technological Advances and Ensure Responsible Development and Use of Digital Assets The EO directs the U.S. Government to take concrete steps to study and support technological advances in the responsible development, design and implementation of digital asset systems while prioritizing privacy and security, combating illicit exploitation and reducing negative climate impacts. Explore a U.S. Central Bank Digital Currency (CBDC) The EO places urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest. The Order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans’ interests. The Order also encourages the Federal Reserve to continue its research, development and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work. This effort prioritizes U.S. participation in multi-country experimentation and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values. The Executive Order on “Ensuring Responsible Development of Digital Assets” is the latest in a series of Executive Orders, legislation and memorandums from the Biden Administration that focuses on strengthening the nation’s cybersecurity. Related Articles President Biden Signs National Security Memorandum To Improve National Security Systems Cybersecurity Three New Cybersecurity Bills Pass the House Biden Administration Announces First Ever Sanctions Against Cryptocurrency Exchange White House Issues Executive Order on Cybersecurity About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.   ### How Your Age Shapes Your Exit Plan Your age has a big impact on your attitude toward your business and your feelings about one day getting out of it.In fact, one person who runs a boutique mergers and acquisitions business refuses to take assignments from business owners over the age of 70.He has found that septuagenarians are so personally invested that they can rarely bring themselves to sell their business – frequently calling off the sale halfway through, claiming they just wouldn’t know what to do with themselves if their business closed.While it’s always dangerous to generalize – especially based on something as touchy as age – a few patterns emerged in John Warrillow’s 2012 book, Built to Sell: Creating a Business That Can Thrive Without You.Owners aged 25 to 46Twenty- and thirty-something business owners grew up in an age when job security did not exist. They watched as their parents got downsized or packaged-off into early retirement. That experience, along with other generational factors, resulted in a readjustment of the way many in their age group view the role of a business in society.Business owners in their twenties and thirties generally see their companies as a means to an end, and most expect to sell in the next 5 to 10 years.Similar to their employed classmates, who move to a new job every 3 to 5 years, business owners in this age group welcome and expect change in their working life, and often, they expect to start a few companies in their lifetime.Owners aged 47 to 65Baby boomers came of age in a time when the social contract between a company and an employee was sacrosanct. An employee agreed to be loyal to the company, and, in return, the company agreed to provide a decent living and a pension for a few golden years.Many of the business owners in this generation think of their company as more than a profit center. They see their business as part of a community and, by extension, see themselves as community leaders.To many boomers, the idea of selling their company feels like selling out their employees and their community. That’s why so many chief executive officers in their fifties and sixties are torn: they know they need to sell to fund their retirement, but they agonize over where that will leave their loyal employees.Owners aged 65 and above Older business owners grew up in a time when hobbies were impractical and discouraged. Business owners (men) went to work while their wives tended to the kids. Then they came home, ate dinner, watched the news, and went to bed. (Today, more than half of businesses are started by women, but those were different times.) With few hobbies and little other than work to define them, business owners in their late sixties, seventies and eighties feel lost without their business – that’s why so many refuse to sell or experience depression after they do sell.Of course, there will always be exceptions to general rules of thumb, but frequently – more than your industry, nationality, marital status or educational background – your birth certificate defines your exit plan.Remember, it is never too early to plan for your exit. It is also always appropriate to focus on building business value regardless of your timeline. If you would like to learn more about ways to accelerate the value of your business and plan for a successful exit or transition, please contact your Schneider Downs advisor to determine next steps.   ### Which SOC Report Is Right for You? Selecting the appropriate System and Organization Controls (SOC) report requires knowledge of the types of reports available. The American Institute of Certified Public Accountants created three primary kinds of SOC reports, as well as some additional reporting options. SOC for Service Organizations SOC Readiness Assessment – Designed to assess preparedness for a SOC examination. Relevant for non-attest consulting engagements to identify gaps in controls and advise the service organization of necessary corrective actions in preparation for the SOC examination. SOC 1 – SOC for Service Organizations: Internal Controls over Financial Reporting – Report on the controls at the service organization that impact user entities’ financial statements. Use restricted to organizations and their customers. SOC 2 – SOC for Service Organizations: Trust Services Criteria – Report on the controls at a service organization relevant to security, availability, and processing integrity of the systems the service organization uses to process users’ data and the confidentiality and privacy of the information processed by these systems. Use restricted to organizations, their customers, and other specified parties. SOC 2+ – SOC 2 report with additional subject matter or criteria included within the scope of the examination (e.g., PCI, HIPAA, HITRUST, ISO 27001). Use restricted to organizations, their customers, and other specified parties. SOC 3 – SOC for Service Organizations: Trust Services Criteria for General Use Report – Scope is the same as for SOC 2, but the report does not contain a description of the auditor’s tests or results. General use report. Specialized SOC reports also exist: SOC for Service Organizations: SOC 2® HITRUST SOC for Service Organizations: SOC 2® CSA STAR Attestation SOC for Cybersecurity – General use report on the effectiveness of cybersecurity risk management programs. SOC for Supply Chain – Report on an entity’s system and controls to enable users to better understand and manage the risks arising from business relationships with their supplier and distribution networks. The following scenarios can help determine which report is appropriate for your organization. Scenario: The report will be used by customers and their auditors to plan and perform an audit or integrated audit of the customers’ financial statements. Relevant report: SOC 1 Report Scenario: Customers will use the report as part of their compliance with the Sarbanes–Oxley Act, HIPAA, PCI, HITRUST, or similar law, regulation, or framework. Relevant report: SOC 1 or 2 Report Scenario: Customers or stakeholders will use the report to gain confidence and trust in a service organization or other organization systems. Relevant report: SOC 2 or 3 Report, SOC for Cybersecurity, SOC for Supply Chain Scenario: The report needs to be generally available. Relevant report: SOC 3 Report, SOC for Cybersecurity, SOC for Supply Chain Scenario: Customers need to understand the details of the processing and controls at the service organization and/or other organization, tests performed by the service auditor, and results of those tests. Relevant report: SOC 1 and  2 Reports Scenario: Customers do NOT need to understand the details of the processing and controls at the service organization and/or other organization, tests performed by the service auditor, or results of those tests. Relevant report: SOC 3 Report, SOC for Cybersecurity, SOC for Supply Chain SOC 1 and SOC 2 can either be Type 1 or Type 2 reports. Type 1 – Report on the fairness of the presentation of management’s description of the service organization’s system and the suitability of the design of the controls to achieve the related control objectives (SOC 1) or applicable trust services criteria (SOC 2) included in the description as of a specified date. Type 2 – Report on the fairness of the presentation of management’s description of the service organization’s system and the suitability of the design and operating effectiveness of the controls to achieve the related control objectives (SOC 1) or applicable trust services criteria (SOC 2) included in the description throughout the specified period. In simple terms, a Type 1 report focuses on the existence of internal controls; Type 2 covers their performance over time. Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit, and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients’ expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. ### The Russia/Ukraine Conflict: What Happened and What it Means for Investors Authored by Schneider Downs Wealth Management’s own Miles Gibson, a former Active Duty Intelligence Officer in the U.S. Marines. Miles continues to serve as an intelligence officer in the U.S. Marine Corps Reserves. Russia began an invasion into Ukraine early Thursday morning, creating a humanitarian crisis and a whirlwind of global economic uncertainty. A significant amount of activity has transpired since that time, and it is still developing as this piece is being written. The overall intent of this message is to provide some information as to the conflict between the two nations, how it impacts the world economy and investments, an outlook of what to expect moving forward and lastly, what it means for your retirement saving strategy. It is important to note that this is an ongoing and evolving situation being played out, and that we at Schneider Downs Wealth Management Advisors are monitoring it very closely. What happened? Over the past three months, Russia built up a large military presence along the border of Ukraine, threatening an invasion. The world watched closely, contemplating whether President Vladimir Putin would conduct an invasion into a sovereign nation. Commentators have declared Putin’s aggression into Ukraine as an invasion which the world has not seen since Germany invaded Poland in 1939, starting World War II. Leading up to Russia’s military build-up, the United States and several European nations threatened Russia with diplomatic sanctions to avoid an armed conflict, specifically the cancelation of the Nord Stream 2 pipeline. This pipeline is a 1200-kilometer pipeline that runs under the Baltic Sea from the Russian coast to Germany, which was completed in September of 2021. This was an $8.4 billion dollar project that would increase natural gas production and dissemination. To date, Russia is responsible for nearly 40% of Europe’s natural gas imports. Russia’s decision to invade Ukraine has caused global energy and commodity sectors to react during this conflict. (BBC, February 22, 2022) What is happening now? Russia invaded Ukraine with heavy mechanized infantry and troops, entering the country from numerous points of entry, conducting airstrikes against dozens of cities, including the capital of Kyiv. Most of these airstrikes have targeted airfields, government buildings and military installations. President Vladimir Putin ordered a military invasion with the intention to regain control of territory once belonging to the Soviet Union and to deepen their Russian influence on Western Europe. As of Monday morning, Russian Forces were still moving toward Kyiv. The Ukrainian people continue to defend their land, stalling Russian forces operationally. Russian and Ukrainian leadership met earlier this week, which prompted the speculation that an all-out war may not be the end state. The meetings were unsuccessful, with it being reported that the Russian government was demanding too much. Leadership from both nations are set to meet later this week for a second time, which will be monitored closely. (WSJ, 2022) How does the Russian invasion affect the world economy? The U.S. and international markets reacted rapidly upon Russia’s invasion, causing investors to rush to safety, with oil, commodity and gold prices soaring. Domestic and international stocks have seen steep selloffs in the recent months as the Russian buildup began, along with rising inflation and supply chain crises. Oil prices reached an 8-year high as of Thursday morning, at over $100 a barrel. With Russia being one of the largest suppliers of energy and key commodities to the global economy, their invasion resulted in higher prices for each. In response to Russia’s invasion, the United States and other European nations levied a number of sanctions against Russia earlier this week and are likely to impose more vigorous sanctions as a result of Russia’s full-scale invasion. Specifically, the United States and Western Europe removed Russian banks from the Swift Network over the weekend. This is the world’s largest messaging data system for cross-border transactions. And secondly, sanctions have been imposed on Russian commercial and central banks. These sanctions put significant pressure on the Russian economy; however, the important concept to remember about sanctions is that they tend to ricochet back against the nations that impose them. The question will be how much pain are Europe and the United States willing to endure in order to punish Russia? It’s very clear that U.S. and International markets will be affected, especially with the already existing pressure of inflation and supply chain issues. (WSJ, Russian Attack on Ukraine Roils Markets, 2022) Investing During Uncertain Times When reading the news and assessing the way the markets have moved, are moving currently and likely, how they’ll move in the short-term, you might be asking yourself, “What should I do?” Remember that retirement investing is a long-term plan and that during your working life, significant events will occur, causing substantial market volatility, which is usually short-term. Investors who make short-term decisions based on emotional reactions are susceptible to missing their long-term retirement objectives and goals. Reassessing your portfolio during these times of market stress with minor adjustments to asset allocation percentages might be prudent.  Those with a longer time horizon may want to increase contributions during these periods of market stress to “buy” more at a lower price. As always for individuals who are closer to retirement, this might be a time to have an active discussion with one of your SDWMA 401(k) advisors. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary.  Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.     ### Cash and Controls: Qualifying for Cyber Insurance in 2022 As cyber insurance premiums continue to climb, insurance providers are getting increasingly selective about who and what they’ll cover.Cyber criminals are only getting better—a fact reflected in their increasingly sophisticated attacks. And with the heightened frequency, scale and impact of these attacks comes higher cybersecurity insurance premiums for many businesses. Many organizations are finding that the cost of cyber insurance has increased dramatically in the past few years.But premiums aren’t the only costs that are rising. The price of admission to even be considered for coverage is going up as well. If a business wants to qualify for cyber insurance, there are several security controls they need to have in place before an insurance company will consider underwriting the policy: Multi-factor authentication: When it comes to any remote access or accounts with administrative privileges, it is critical that businesses require users to identify themselves with something more than just a username and password. The second form of identification needs to be something you are or something you possess. Endpoint Detection and Response (EDR): Businesses need to make sure that their employees’ devices are protected by second generation anti-virus and anti-malware software. The solutions that only look for a virus’ “fingerprint” are no longer considered acceptable. Secured, Encrypted and Tested Backups: To protect their data, businesses need to ensure that their backups are both encrypted and stored in a secure location. Many of the underwriters are defining “secure” as: the backups are either offline or immutable. Privileged Access Management: Businesses should make sure that access to highly privileged accounts (including system accounts) are protected and managed using an encrypted password vault. E-mail Filtering and Web Security: The easiest way for a cybercriminal to access an organization's system is to take advantage of human curiosity. Automatically interrogating emails for suspicious content (attachments and links) before the designated recipient has a chance to open them can help reduce the risk of falling for a phishing attack.   These are the five controls that are most important to insurance companies right now. In the coming years however, organizations can expect these additional controls to come into play:  Patch Management and Vulnerability Management: Businesses should make sure they are continuously patching their applications, databases and operating systems timely. Incident Response Plan: It is critical that organizations have a formalized plan for how to respond if something goes wrong. It is equally important that this plan is periodically tested and modified as needed. Required Cybersecurity Awareness Training: While technology can help reduce the risk of cyber-attacks, your employees are still the easiest path to compromise. Mandatory security awareness training, with a focus on phishing, for all employees is a critical component of improving your overall cyber security profile. Network Device Hardening Standards: Organizations should have configuration standards defined to improve the security of network devices by eliminating non-essential services and minimizing vulnerabilities. Login and Active Monitoring of Network Devices: This is not as simple as monitoring the network traffic that enters and leaves the system. Organizations must also be cognizant of the traffic that flows between their internal network devices. Logs should be aggregated, and analytics should be used to identify and alert management of suspicious activities.  Management of End-Of-Life Systems: When an organization’s technology is no longer receiving updates or support services from vendors, the end-of-life systems must either be replaced or isolated from the rest of the network through segmentation. Robust Third-Party Risk Program: Companies must have protocols in place to assess the controls of vendors that have access to your systems or data. Going forward, businesses can expect the cyber insurance landscape to remain pricey and more difficult to obtain the desired coverages. Given the cost and frequency of today’s cyber-attacks, more companies are looking to outsource some of the risks as part of their mitigation strategy. Continuously monitoring and investing in their cybersecurity postures can help organizations improve their chances of obtaining the cyber coverages they desire.    About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.  ### Consumer Demand for ESG Companies are continuing to see increased pressure on Environmental, Social and Governance (ESG) issues from customers, employees and investors. While this will affect all industries, the progress of Business-to-Consumer organizations have the most visibility to these stakeholder groups. Roughly 90% of consumers expect companies to make improvements related to these matters, and they are more willing to give their business to those that do.While consumers have long valued the elements of ESG, this has accelerated since the beginning of the pandemic as customer behavior has undergone a fundamental change. Individuals are now more aware of extreme weather events, social unrest and economic pressures on society. Consumers also have access to more information than ever before to inform their purchasing decisions. While price continues to be the top consideration, it is closely followed by the customer’s feelings about the company selling the product or service. Customers today are more attentive to product reviews and reputation. The growth of e-commerce has created a new generation of retail entrants, many of which center their brands around ESG. Out-of-stock items from supply chain disruptions have also led customers to become more aware of alternatives as they are forced to research substitutions.Consumers are increasingly aware of the impact they have in selecting brands focused on ESG, while corporations are increasing public awareness of their efforts. Google, Salesforce and numerous auto manufacturers aired high profile ESG ads during Super Bowl LVI. Companies are becoming more public with their inclusion practices and net-zero emissions pledges. Organizations participating in e-commerce are also promoting their initiatives to reduce both the environmental impact of shipping materials and the carbon costs of transporting products directly to customers. The pressure is also extending to entities within their supply chain. Internal pressure is also strong from employees who want to feel that they contribute to an organization making a positive difference in the world. This has become critical to attracting talent in the current hiring environment.It seems that history is repeating itself. In the early 20th century, The Securities and Exchange Act of 1934 gave the U.S. Securities and Exchange Commission (SEC) authorization to require public companies to regularly submit audited financials. However, prior to this legislation, roughly 80% of companies on the New York Stock Exchange were already voluntarily disclosing audited financial statements to satisfy the public. Today, while the SEC is currently working on and expected to provide their ESG reporting requirements in the coming months, many companies have already started disclosing this information. As a result of consumer and investor expectations, roughly 95% of the S&P 500 voluntarily disclosed ESG information last year, and over half of those received some form of third-party verification or assurance. ESG focused investment has also continued to grow and reached nearly $70 billion in new money invested in ESG funds during 2021.Privately held organizations have also started to make public statements about their initiatives, post ESG information to their websites and enjoy positive press coverage on their progress. ESG presents significant challenges; however, as organizations navigate this competitive Business-to-Consumer environment, they should place these initiatives alongside their other priorities. ESG is a top consideration for most customers, and they’re willing to vote with their wallet for organizations they want to see succeed. Schneider Downs provides assurance and advisory services for retail and business-to-consumer organizations. For more information concerning ESG matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Are You Ready to Implement SAS 136? The time is here for employee benefit plans to adopt Statement on Auditing Standards No. 136 (SAS 136), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to the Employee Retirement Income Security Act of 1974 (ERISA).There are new performance requirements for an audit of an employee benefit plan subject to ERISA effective for all plan years ending after December 15, 2021. SAS 136 includes new requirements for all areas of the audit and has transformed the auditor’s opinion. Additionally, the terminology of a “limited scope audit” is eliminated and is now referred to as an “ERISA Section 103(a)(3)(C) audit.” Additionally, plan management is now required to acknowledge their responsibility for maintaining a current plan instrument and administering the plan. If plan management requests an ERISA Section 103(a)(3)(C) audit to be completed, the new requirements for engagement acceptance necessitate that the auditor request plan management’s acknowledgment that plan management has determined that an ERISA Section 103(a)(3)(C) is permitted by performing procedures to determine whether the body that is certifying the accuracy and completeness of the investment information meets the definition of a qualified institution. Additionally, plan management must ensure that the certified investment information is appropriately measured, presented and disclosed in accordance with generally accepted accounting principles. SAS 136 requires that the auditor receive a copy of Form 5500 in its entirety, including all schedules, for review prior to issuance of the financial statements. Additionally, formal communication during the planning phase of the audit will be provided to the governance group and plan management that addresses the auditor’s responsibility under auditing standards generally accepted in the United States of America, the auditor’s scope and timing of the audit, independence considerations, reliance on the plan sponsor’s internal audit department, and the risks of material misstatement that the auditor considers to be significant. The following are steps that you can start to take to ensure that you are ready for implementation: Ensure that you have a current, executed copy of the plan document and associated amendments. Request a copy of the new audit opinion from your audit team, so that you are aware of what the new opinion looks like for both ERISA 103(a)(3)(C) audits and full-scope audits. Start to obtain all of the certifications for ERISA103(a)(3)(C) audits. Ask your audit team for templates to document management’s considerations of whether the body that is certifying the accuracy and completeness of the investment information meets the definition of a qualified institution. Start to talk to your plan’s Form 5500 preparer to ensure that a full draft of Form 5500 will be available for the auditors during their scheduled fieldwork. Request additional educational materials from your audit team to familiarize yourself with SAS 136.    ### CISA Introduces New Cybersecurity Resource Center The Cybersecurity and Infrastructure Security Agency (CISA) introduced their “Free Cybersecurity Services and Tools” resource center earlier this week. The resource center was developed to provide a trusted central repository of cybersecurity resources to help organizations reduce cyber risk and advance their security capabilities. Resources include tools and services from CISA, the open-source community and public and private sector organizations in the cyber community. The resource center is accessible at www.cisa.gov/free-cybersecurity-services-and-tools and tools were selected based on the four goals outlined in the recent CISA Insights: Implement Cybersecurity Measures Now to Protect Against Critical Threats: Reducing the likelihood of a damaging cyber incident Detecting malicious activity quickly Responding effectively to confirmed incidents Maximizing resilience “Many organizations, both public and private, are target rich and resource poor,” said CISA Director Jen Easterly. “The resources on this list will help such organizations improve their security posture, which is particularly critical in the current heightened threat environment. This initial catalog will grow and mature as we include additional free tools from other partners.” The catalog is expected to grow moving forward through more joint partnerships and CISA driven initiatives.  Prior to exploring the free services and tools, CISA recommends taking the following actions to set a strong foundation for a cybersecurity program. Fix the Known Security Flaws in Software Check the CISA Known Exploited Vulnerabilities (KEV) Catalog for software used by your organization and, if listed, update the software to the latest version according to the vendor’s instructions. Note: CISA continually updates the KEV catalog with known exploited vulnerabilities. Implement Multifactor Authentication (MFA) Use multifactor authentication where possible. MFA is a layered approach to securing your online accounts and the data they contain. When you enable MFA in your online services (like email), you must provide a combination of two or more authenticators to verify your identity before the service grants you access. Halt Bad Practices Take immediate steps to: (1) replace end-of-life software products that no longer receive software updates; (2) replace any system or products that rely on known/default/unchangeable passwords; and (3) adopt MFA (see above) for remote or administrative access to important systems, resources, or databases. Sign Up for CISA’s Cyber Hygiene Vulnerability Scanning Register for this service by emailing vulnerability@cisa.dhs.gov. Once initiated, this service is mostly automated and requires little direct interaction. CISA performs the vulnerability scans and delivers a weekly report. After CISA receives the required paperwork, scanning will start within 72 hours and organizations will begin receiving reports within two weeks. Note: vulnerability scanning helps secure internet-facing systems from weak configurations and known vulnerabilities and encourages the adoption of best practices. Get Your Stuff Off Search (S.O.S.) While zero-day attacks draw the most attention, frequently, less complex exposures to both cyber and physical security are missed. Get your Stuff Off Search–S.O.S.–and reduce internet attack surfaces that are visible to anyone on web-based search platforms. In addition to these five recommendations, the Schneider Downs cybersecurity team encourages routine preventative assessment exercises to identify risks and assess overall cybersecurity posture. Through the foundational steps and resource center*, CISA hopes organizations will have another way to reduce the likelihood of cyber incidents, understand the steps to detect potential intrusion, be confidently prepared for an incident and strengthen their overall resilience to cyber threats. * CISA applies neutral principles and criteria to add items and maintains sole and unreviewable discretion over the determination of items included. CISA does not attest to the suitability or effectiveness of these services and tools for any particular use case. CISA does not endorse any commercial product or service. Any reference to specific commercial products, processes, or services by service mark, trademark, manufacturer, or otherwise, does not constitute or imply their endorsement, recommendation, or favoring by CISA. Related Links CISA – Free Cybersecurity Services and Tools CISA – CISA Launches New Catalog of Free Public and Private Sector Cybersecurity Services About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Hey Washington, We Don’t Need No Stinking LIFO Relief! If we hold our breath any longer while waiting for Washington to rule on some Last-In-First-Out (LIFO) relief, we’re going to pass out.Back in June, we wrote an Our Thoughts On article about LIFO Liquidation Relief for Automotive Dealers. Under Internal Revenue Code 473, the U.S. Treasury can issue a notice to provide relief, due to supply chain interruption, regarding LIFO reserve recapture.As always, we try to be proactive when it comes to auto dealers’ pain points. But now, tax filing season has started. Returns need to be submitted. Some tax needs to be paid within the next month. So, as joint frustration builds with the Treasury, we sought out and found a potential solution to your LIFO problem. We recommend exploring the Inventory Price Index Computation, a calculation based on the consumer price index (CPI) issued by the U.S. Bureau of Labor Statistics. As you’re probably feeling it, that CPI has increased pretty significantly lately. Plus, we can include parts and used vehicles to the LIFO calculation, with which we can manage your LIFO recapture even without the Treasury’s LIFO relief.As we sit here at the end of February, we can’t wait any longer for the Treasury to act. They’ve not responded to the AICPA or the NADA, and we all have been talking about this LIFO relief since October 2020 when the inventory issues started. Reach out to Steve Barber or any of our Schneider Downs Auto Advisors to discuss your inventory situation.  ### EVs on the Rise Super Bowl LVI featured a number of memorable electric vehicle (EV) ads featuring everything from a Sopranos reunion to electric puppies and even Dr. Evil achieving corporate domination. Seemingly every major auto manufacturer is featuring their new EV models. EVs are continuing to gain market share and are expected to surpass 30% of new U.S. vehicle sales by 2030, along with another 4% of new U.S. vehicle sales consisting of gas / electric hybrids. The industry has seen rapid growth: from 2% of U.S. auto sales in 2020 to 4% last year. For many potential buyers though, there remain concerns about finding available charging locations. The average EV has a range that’s under 300 miles. This provides plenty of power for most commutes but can be a concern for long-distance trips and single-car households. Currently, there are only 41,000 public charging stations across the U.S., many of which are concentrated closely together - including over half in California. To address this concern, the U.S. Congress included $7.5 billion for EV charging stations as part of the $1 trillion bipartisan infrastructure bill that passed in November. From this amount, $5 billion has been designated for states to build an EV charging network across the country and, in particular, across the 161,000-mile National Highway System. This program would reach the majority of the country, as 90% of Americans live within 5 miles of the network. A second grant-based program targeting rural and underserved communities will also begin this year. Combined, these programs plan to build half a million EV charging stations across the nation. However, the majority of these will likely be the “Level 2” slower chargers, which are currently much cheaper to install at roughly $2,000 per charger. The federal government is also in the process of prioritizing purchasing U.S. manufactured EVs for their fleet, which should continue to advance EV adoption. Over the next several decades, EVs will continue to grow as a percentage of the total vehicle population as more charging stations come online and technology reduces consumer purchase costs while improving vehicle range and reliability. EVs contain around 20 moving parts, far less than the over 200 parts in traditional combustion engine vehicles, which could significantly reduce repair and maintenance costs over the vehicle’s life. Charging times will also continue to decline, making vehicles more attractive.The adoption of EVs will have a significant impact on the Convenience Store (C-Store) industry. C-stores are long-term assets with decades of useful life. Each charge on-site provides an opportunity for an inside-store sale. C-store owners should continue to monitor their operating market and consider allocating space for EV charging locations. New store builds should also consider incorporating EV chargers during the initial construction or as an option for a second phase build over the next decade. Schneider Downs provides assurance and advisory services for retail and business-to-consumer organizations. For more information concerning this industry and the impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Experiencing Excess Liquidity in the Dealership… Unfamiliar Territory! We all know that owning an auto dealership is very cash-intensive. It takes cash flow for working capital, to carry vehicles and parts in inventory and to wait for warranties and incentives to be reimbursed. Currently, our conversations with our dealer clients have involved excess liquidity, which is unfamiliar territory.  This is a good problem to have. Here are some thoughts to consider with the excess cash you might have: Have you maximized your floorplan offset with your bank? Are you paying enough rent to your rental company? (See a previous article titled As an Auto Dealer, Are You Paying Enough Rent?) Should you pay down your debt with looming potential increase to interest rates?  Managing your interest expense for 2022 and beyond might keep your dealership eligible for bonus depreciation. (See a previous article titled Will Bonus Depreciation End Earlier Than Expected for Auto Dealers?) Time to invest your earned premium accounts in your reinsurance company. Did you know once you have your premiums earned within your dealership that you can distribute this money, lend it to yourself for operations or invest it more aggressively within the reinsurance company because the contracts are earned out? Consider a life insurance review because premiums might be affordable now. Most dealers have kept all their eggs in one basket. Maybe it’s time to diversify!  It’s time for you to start or add to your own personal portfolio. It’s time for you to invest in something besides a dealership. How about some real estate investments? We have some options. Obviously, these are just some of the options that come to mind. Let’s discuss further. Many dealers are in a great position to be successful into the future. It’s time to be as proactive as possible by putting your excess cash to work. If you have any questions, please contact Steve Barber or any of our SD Auto Advisors.  ### 457(b) Plans – What You Should Know A 457(b) plan is a retirement/pension plan that provides benefits to government employees, as well as those of tax-exempt organizations.Participants in 457(b) plans are allowed to defer their compensation on a before-tax basis via regular payroll deductions. Money placed in these accounts grows on a federally tax-free basis until withdrawn.Importantly, contribution limits for persons working for employers sponsoring a 401(k) or 403(b) are essentially doubled if they are also eligible for a 457(b) plan. Instead of being confined to a single contribution limit in each of their 401(k), 403(b) and 457(b) plans, employees are allowed to defer the maximum contribution amounts to each plan individually instead of combining each plan into a single limit.Nongovernmental 457(b) PlansNongovernmental 457(b) plans are limited to a select group of management or highly compensated employees – typically directors or officers of the company. Often this compensation limit is the same as that used for 401(k) participation testing purposes. Because these plans are usually limited to highly compensated employees or a select group of executives, they’re sometimes referred to as "top hat" plans.457(b) Plan RestrictionsPlans for nongovernmental entities are much more restrictive than their governmental counterparts. For example, money deferred into the plans cannot be rolled over into any other type of tax-deferred retirement plan – only another nongovernmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee who makes the deferral. Instead, the money remains the property of the employer and therefore is available to creditors.Elective DeferralsElective deferrals (governmental and tax-exempt) are not subject to income tax withholding in the year of deferral. For purposes of 457(b) plans, the definition of elective deferrals includes nonelective contributions made by the employer.Deferral Limits 2022In 2022, the contribution limit on a 457(b) plan is $20,500. For years 2023 and beyond, the limit on these plans will be indexed for inflation, and applies to both governmental and nongovernmental 457(b) plans.Catchup ContributionsTwo types of catchup contributions are potentially available under a 457(b) plan, if provided for in the plan document. Governmental 457(b) plans may provide for an age 50 catchup contribution similar to those permitted under 401(k) and 403(b) plans. An eligible participant of a governmental 457(b) plan who is over age 50 by the end of the calendar year could qualify for an additional catchup contribution of $6,500 in 2022.Both governmental and nonprofit employers may allow for a “special” 457(b) catchup contribution in the three years prior to attainment of normal retirement age as defined in the plan document. This catchup feature can be as high as the normal annual deferral limit ($20,500 for 2022), however these contributions are limited to unused deferral limits from previous years. Participants who previously deferred the maximum amount into a 457(b) plan every year would not be eligible to use this special catchup.A governmental 457(b) plan can provide for only one of these two types of catchup contributions, not both. A nonprofit 457(b) plan can only provide for special catchup contributions.Governmental 457(b) Plan DistributionsA distribution from a governmental 457(b) plan that qualifies as an eligible rollover is subject to 20% income tax withholding unless the participant directly rolls over the distribution to another governmental 457(b) plan, IRA, 403(b) plan or qualified plan. If not an eligible distribution (e.g., a periodic distribution), it is subject to 10% withholding unless the participant elects to waive the withholding. The plan administrator (generally, the employer) is responsible for the withholding unless it directs the payor to withhold income taxes on the distribution. The plan administrator reports the distribution on a Form 1099-R in the same manner as a qualified plan. Further, the 457(b) plan reports the withholding annually using the EIN and Form 945 of the person responsible for the withholding (generally, the plan administrator), though the plan may use the EIN of the trust if the trust obtains its own trust EIN. If that’s the case, the 457(b) plan uses the trust’s EIN to report distributions and withholding on Forms 1099-R and 945.Tax-exempt 457 Plan DistributionsDistributions from a 457(b) plan sponsored by a nonprofit employer are taxed as wages in the year paid. Accordingly, the plan administrator needs to withhold income taxes with respect to such distributions in the same manner it would any other wages. Distributions are reported on Form W-2 and the withholding on Form 941. Distributions to a beneficiary are reportable on Form 1099-R and such distributions are not subject to withholding. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary.  Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.  ### Will Bonus Depreciation End Earlier than Expected for Auto Dealers? Automotive dealers have enjoyed the immediate expense of their capital expenditures over the years. The rules currently allow these expenditures with a useful life of 20 years or less to be expensed immediately instead of over a useful life.We have grown to love this bonus depreciation for the past 20 years, since we can use it as a way to manage our tax liabilities and improve cash flow. Under the current law, bonus depreciation will start to be reduced from 100% expense in 2022 to 80% in 2023 to 60% in 2024 to 40% in 2025 to 20% in 2026.However, we need to be aware. Interest expense limitations also exist under the current law. For 2021, interest expense that exceeds 30% of your adjusted taxable income (which is like EBITA, which is a term we know) is nondeductible for the current year and is carried forward indefinitely. There are special rules for floorplan interest. If a dealer’s floorplan interest exceeds this 30%, the interest is deductible, but the tax entity is ineligible for bonus depreciation.Further, starting in 2022, the adjusted taxable income calculation does not allow the add-back of depreciation and amortization. Therefore, it will be more common for the floorplan interest to exceed the 30% adjusted taxable income calculation, starting in 2022. Here are some examples:For tax years 2021 and prior: Taxable Income  $100,000 Interest Expense (excludes floorplan) $5,000 Floorplan Interest Expense  $40,000 Depreciation and Amortization  $50,000 Adjusted Taxable Income $155,000 30% Limitation  $46,500 Results: No limitation on interest expense based on $45,000 of total interest and eligible for bonus depreciation.For tax years 2022 and beyond: Taxable Income  $100,000 Interest Expense (excludes floorplan) $5,000 Floorplan Interest Expense  $40,000 Depreciation and Amortization  $50,000 Adjusted Taxable Income $105,000 30% Limitation  $31,500 Results: No limitation on interest expense based on $5,000 of non-floorplan interest, but since floorplan interest exceeds the limitation, the dealer is ineligible for bonus depreciation.As you can see, the limitation decreases significantly based on no depreciation addback in the adjusted taxable income calculation that starts in 2022. The good news is that recent profits have been high and floorplan interest expense has been low, which should help with the adjusted taxable income calculation. Also, the Section 179 deduction can still come into play to expense some capital expenditures.We advise you to monitor this change starting in 2022 to manage your capital expenditures and a potential increase in tax liability. Please contact Steve Barber or any of your Schneider Downs Auto Advisors for any questions regarding the limitation.   ### Most Schedule K-2 and K-3 Reporting Can Now Be Postponed Until 2022 Tax Return Filing The IRS just announced that it is providing transition relief from Schedule K-2 and K-3 reporting for certain domestic partnerships and S corporations with no foreign activities, foreign partners or shareholders, and for those without knowledge of partner or shareholder need for information on items of international relevance. For 2021, these qualifying partnerships and corporations will not have to file the new schedules.Schedules K-2 and K-3: BackgroundThe Tax Cuts and Jobs Act, passed in December 2017, brought major reform to U.S. international tax. To implement the changes, the IRS introduced a new filing requirement for passthrough entities – Schedules K-2 and K-3 – starting in tax year 2021. The schedules were added to further enhance Schedule K-1 foreign reporting. Originally, a partnership was only required to provide Schedules K-2 and K-3 if it had operations with international tax relevance, which includes international activities, foreign partners with reporting obligations or withholding tax. But with its announcement on January 18, the IRS expanded original guidance, requiring passthrough entities to file schedules K-2 and K-3 unless they could determine that all of their partners or shareholders did not have to file Form 1116 (foreign tax credit form for individual taxpayers). This requirement added significant burden and additional paperwork for many partnerships and S corps with only U.S. activities. Consequently, many taxpayers and preparers complained about the greatly increased reporting requirements that contained minimal tax impact. The IRS February 16 announcementWhen the IRS became aware of the concerns, it provided an exception for tax year 2021, via an announcement on February 16. Specific requirements are: In tax year 2021, the direct partners in the domestic partnership are not foreign partnerships, foreign corporations, foreign individuals, foreign estates or foreign trusts.  In tax year 2021, the domestic partnership or S corporation has no foreign activity, including foreign taxes paid or accrued or ownership of assets that generate, have generated, or may reasonably expected to generate foreign source income. In tax year 2020, the domestic partnership or S corporation did not provide to its partners or shareholders nor did the partners or shareholders request the information regarding (on the form or attachments thereto): Line 16, Form 1065, Schedules K and K-1 (line 14 for Form 1120-S), and Line 20c, Form 1065, Schedules K and K-1 (Controlled Foreign Corporations, Passive Foreign Investment Companies, 1120-F, section 250, section 864(c)(8), section 721(c) partnerships, and section 7874) (line 17d for Form 1120-S). The domestic partnership or S corporation has no knowledge that the partners or shareholders are requesting such information for tax year 2021. If a partnership or S corp qualifies for this exception, it does not need to file Schedules K-2 and K-3 with the IRS or with its partners or shareholders. But if the partnership or S corp is subsequently notified by a partner or shareholder that all or part of the information contained on Schedule K-3 is needed to complete their tax return, the partnership or S corp must provide the information to the partner or shareholder. Conversely, if a partner or shareholder notifies the partnership or S corp before the partnership or corporation files its return, conditions for the exception are not met and the partnership or S corp must provide the Schedule K-3 to the partner or shareholder and file the Schedules K-2 and K-3 with the IRS.The February 16 announcement is certainly welcome news for many tax practitioners and purely domestic passthrough entities. For additional details about Schedules K-2 and K-3, contact your Schneider Downs advisor.  ### Why The Coinbase Super Bowl Commercial Left Security Professionals Shaking Their Heads In what seemed to be a perpetual tribute to millennials this year, brands of all industries put on their Sunday best for Super Bowl Sunday, hoping to go viral. There are several front runners for best commercial, including fun ones from Uber Eats and Turbo Tax, as well as my personal favorite: the return of Dr. Evil promoting General Motors. But it is the Coinbase commercial that is being talked about the most in security circles—and for all the wrong reasons. The Coinbase ad featured a QR code that changed colors as it moved all over the screen, a callback to DVD screensavers (or for Office fans, the cold open of Launch Party). Once scanned, the QR code led viewers to an offer: $15 in BTC for new customers who join Coinbase by February 15, 2022, or a $3 million giveaway for existing customers. The commercial proved immensely popular with viewers, so much so that it sent the Coinbase app crashing almost immediately. While the advertising agency behind the commercial had to be ecstatic about the response, security professionals everywhere were cringing, and with good reason. First, the logic behind the commercial reinforced one of the key behaviors security professionals warn about, blindly clicking. We all know by now that you should never click on a link you aren’t 100% sure about and scanning a floating QR code is the same thing. Nobody viewing the commercial knew where the QR code went until the Coinbase logo appeared at the very end, yet many curious viewers still scanned it. And even though some Android and iOS devices offer preview links when scanning QR codes, users don’t know where they’re truly going until they click, and the destination for “mystery links” is usually a place they don’t want themselves, their computers or information to be. Second, it’s easy for scammers to imitate a legitimate site with a malicious one, and to use QR codes to trick users into visiting it. Then, the imposter site can be used for phishing, data theft and other malicious purposes. If you imagine an imposter site mimicking Coinbase, you can understand the type of personal and financial information being entered under the pretense of a promotional offer. "Many individuals are not aware that [QR] codes are being spoofed by cybercriminals and woven with malware or malicious URLs in hopes of opening the door to sensitive data," said Lisa Plaggemier, Interim Executive Director of the National Cybersecurity Alliance. "Yet, for all of the talk about how the negative impacts of the Coinbase ad from a cyber perspective, the ad also stands to do a bit of good as well by raising the profile of the QR code security conversation in a way that it frankly hasn’t been yet." QR codes have made somewhat of a comeback since COVID-19, especially in the restaurant industry, and the FBI recently released an alert (Alert I-011822-PSA) to raise public awareness of malicious QR codes being used by cyber criminals to steal victim funds that echoes the concerns raised by the Coinbase commercial. Oh, and if you’re wondering how many people scanned the ad when it aired… reportedly more than 20 million. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### As an Auto Dealer, Are You Paying Enough Rent? As an auto dealer, you normally own the real estate you pay rent to. Let me ask you… are you paying enough? You might think it is left pocket, right pocket, but let us discuss why it is not.Most dealers normally pay enough rent to cover their debt service on the property that is in another entity, and that is it. Here are a few things to consider when paying this rent: Rent should be paid based on fair market value, even though it is to a related party. The value of your dealership has probably increased over the past few years. Facility upgrades should be completed by the rental property entity because there are depreciation advantages. Therefore, the property might need some excess cash flow for the improvements. The real estate entity that owns your property can capitalize on the Tax Cuts and Jobs Act, if grouped correctly. Excess cash from your real estate property can be distributed to an owner in a very tax-efficient manner. Additional rental income can help with potential interest expense limitations that could be looming. Let’s dive a little further into the potential interest expense limitation that could be looming. Under the Tax Cuts and Jobs Act (known as Trump’s tax cuts), an interest expense limitation rule was put into place.  Interest expense is limited to 30% of adjusted taxable income (ATI), which is like the EBITDA calculation. For tax years 2021 and prior, ATI includes an addback of depreciation and amortization. However, for years 2022 and later, the ATI calculation does NOT include an addback for depreciation and amortization. This potential limitation of expense could be significant. In a roundabout way, debt might have just gotten more expensive if a taxpayer cannot currently deduct its interest expense. Please keep in mind that the limited interest expense does carry forward indefinitely, but for how long?Therefore, an increase in rent income on your rental entity can help with the ATI calculation for 2022 and beyond. If taxable income increases, the ATI does, too. We recommend planning for the tax year 2022 today. Being proactive with the tax law is your best approach.To be completely thorough, there are a couple of items for your dealership to pay attention to -- the impact on your working capital and net worth requirements. You can reach out to Steve Barber or any of our SD Auto Advisors to discuss this further.  ### CISA, FBI, NSA and International Agencies Issue a New Ransomware Trend Advisory On February 9, 2022, multiple federal and international agencies issued a joint alert on new ransomware trends from 2021.The alert, 2021 Trends Show Increased Globalized Threat of Ransomware (AA22-040A), was issued jointly by the Cybersecurity and Infrastructure Agency (CISA), National Security Agency, FBI, Australian Cyber Security Centre and the United Kingdom’s National Cyber Security Centre.The alert provides a comprehensive breakdown of the top trends recorded last year by the US, Australia and UK, including: Cybercriminals are increasingly gaining access to networks via phishing, stolen Remote Desktop Protocols (RDP) credentials or brute force, and exploiting software vulnerabilities The market for ransomware became increasingly “professional” and there was an increase in cybercriminal services-for-hire More and more, ransomware groups are sharing victim information with each other, including access to victims’ networks Cybercriminals are diversifying their approaches to extorting money. Ransomware groups are having a larger impact thanks to approaches targeting the cloud, managed service providers, industrial processes and the software supply chain. Ransomware groups are increasingly targeting organizations on holidays and weekends. The advisory goes more in-depth with technical trends including new tactics used to gain access to networks, information sharing, the emergence of “triple extortion” and moving away from “big-game” targets in the United States.“We live at a time when every government, every business, every person must focus on the threat of ransomware and take action to mitigate the risk of becoming a victim,” said CISA Director Jen Easterly. “Reducing risk to ransomware is core to CISA’s mission as the nation’s cyber defense agency, and while we have taken strides over the past year to increase awareness of the threat, we know there is more work to be done to build collective resilience.”The alert also shares how ransomware groups increased the impact of their attacks in 2021, including targeting weekends and holidays, and attacking industrial processes and software supply chain. As many recall, REvil used all three strategies to carry out the largest ransomware attack in the United States history over the 2021 Fourth of July holiday weekend. More importantly, the alert shares mitigation recommendations from each agency to help reduce the risk and impact of a ransomware attack. Some of the top recommendations include: Keeping all operating systems and software up to date If you use RDP or other potentially risky services, secure and monitor them closely If using Linux, use a Linux security module (such as SELinux, AppArmor, or SecComp) for defense in depth Collecting telemetry from cloud environments The full version of the alert is available https://www.cisa.gov/uscert/ncas/alerts/aa22-040a.Related Articles Three New Cybersecurity Bills Pass the House White House Issues Executive Order on Cybersecurity Largest Ransomware Attack on Record Hits During the U.S. Holiday Weekend About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Public University Research Infrastructure Credit The Build Back Better Act (Act) introduced in late October included a $1.75 trillion spending package. The bill has seen multiple iterations and to date has not been signed into law, but as we have seen historically, often portions of bills are picked up in future legislation.One of the more interesting features included in the Higher Education section of the Act is the Public University Research Infrastructure Credit (Sec. 137501).The Public University Research Infrastructure Credit (Sec. 137501) provides a 40 percent general business credit for cash contributions made by a taxpayer to a public college or university (or a nonprofit organization to which authority has been delegated by the institution to apply for administering credit amounts on behalf of the institution[i]) in connection with a qualifying research infrastructure program[ii].Taxpayers may elect to claim this credit with respect to a qualifying cash contribution in lieu of treating such contributions as a charitable deduction. The amount of cash contributions an institution may designate as qualified cash contributions may not exceed 250% of the credit amount allocated to it under this provision. The provision provides $500 million of credits for calendar years 2022-26 to be awarded by the Treasury Department on a project[iii] application basis.The intent would be to spur an influx of funding to smaller universities that need the money due to their general lack of resources when compared to their larger counterparts. The ability to create a tax credit (to directly reduce the amount of tax owed) versus a tax deduction (which just reduces the amount of income is subject to tax) would be significant to any taxpayer.Schneider Downs will continue to monitor the Act and future legislation that may pick up this credit and will share additional information as it becomes available. If you have additional questions, please reach out to us.[i] An eligible institution includes an institution of higher education that is a state college or university described in section 511(a)(2)(B) that is an agency or instrumentality of any government or political subdivision. An eligible institution could also be an organization that provides support for a state college or university described in 170(b)(1)(A)(iv) or section 509(a)(3) that has been delegated authority for applying for or administering credit amounts on behalf of the institution, which is an organization that receives a substantial part of its support from the United States of any state or political subdivision.[ii] A project to purchase, construct or improve research infrastructure property.[iii] A portion of a property, building or structure of an eligible educational institution or any land associated with such property that is used for research.   ### IRS Released Standards for LLCs to Receive Tax-Exempt Status To receive tax-exempt status under Section 501(c)(3) of the Internal Revenue Code (the “Code”), an applicant must pass the organizational and operational tests established in Section 1.501 (c)(3)-1 of the Treasury Regulations.These requirements require the entity to be organized and operated exclusively for charitable or exempt purposes and forbid any private shareholder or individual to receive a private benefit such as receiving part of the entity’s net earnings. On October 21, 2021, the Internal Revenue Service (the “Service”) released Notice 2021-56 that sets forth the organizational standards that LLCs must satisfy to qualify for tax-exempt status. Under this guidance, the following standards must be met: The IRS will recognize an LLC as tax-exempt only if both the LLC’s articles of organization and its operating agreement include: Requirements that each member of the LLC be either: An organization described in Section 501(c)(3) of the Code and exempt from taxation under Section 501(a) of the Code A governmental unit described in Section 170(c)(1) (or wholly owned instrumentality of such a governmental unit) Charitable purposes and charitable dissolution provisions in compliance with existing regulations under Section 501(c)(3) of the Code The express Chapter 42 compliance provisions described in Section 508(e)(1), if the LLC is a private foundation The acceptable contingency plan (such as suspension of its membership rights until a member regains recognition of its Section 501(c)(3) status) if one or more members cease to be Section 501(c)(3) organizations or governmental units (or wholly owned instrumentalities thereof) The LLC must represent that all provisions in its articles of organization and operating agreement are consistent with applicable state LLC law and are legally enforceable, and LLCs formed under state law that allows only certain specific provisions in their articles of organization, meet certain requirements. The Service is seeking public comment regarding Notice 2021-56 through February 6, 2022.  Comments may be submitted in one of two ways: Electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2020-0042 in the search field on the regulations.gov homepage to find this notice and submit comments). Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2021-56), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. The Service strongly recommends that commenters use the electronic method to submit comments. ### Be Alert of IRS Scams - Stop, Look and Listen! With another tax filing season beginning, taxpayers must be mindful of the various IRS impersonation scams and schemes. This article summarizes popular schemes that criminals utilize to obtain vital information.Text Message FraudLast year, text message scams referenced COVID-19 and/or stimulus payments. The messages contained fake links that claimed to direct a taxpayer to his or her account with the IRS to claim these benefits.The IRS does not send text messages. If a taxpayer does receive an unsolicited text message from the IRS, the taxpayer should report it by taking a screenshot of it and include it in an email to phishing@irs.gov with the date, time, and time zone in which they received the text and the phone number that received the text. Email FraudThe IRS does not initiate contact with a taxpayer by email. If a taxpayer suspects it has received a fraudulent email, it should be reported by sending the fake email as an attachment to phishing@irs.gov. Phone Calls and Messages FraudIdentity thieves also use pre-recorded, urgent or threatening phone messages to demand payments and convince taxpayers to release financial information. Phone scams should be reported to the Treasury Inspector General at IRS Impersonation Scam Reporting and the Federal Trade Commission at FTC.gov. Taxpayers should also report the callback number to the IRS at phishing@irs.gov.Generally, the IRS will contact the taxpayer by mail if a taxpayer owes taxes, and when remitting payments, any payment should only be made to the U.S. Treasury. Unemployment FraudAn area of increased focus by criminals is unemployment benefits. Criminals fraudulently apply for, and obtain, unemployment benefits, using a taxpayer’s identity. Since unemployment benefits are taxable, states issue Form 1099-G to the recipients and to the IRS.  If a taxpayer receives a fraudulent 1099-G, it should be reported to the state and the person should request a corrected 1099-G Form. Assistance with unemployment fraud can be found on the U.S. Department of Labor’s page at DOL.gov/fraud.More identity theft information can be found under Tax Scams and Consumer Alerts on IRS.gov. Please also don’t hesitate to reach out to your Schneider Downs professional for assistance at contactsd@schneiderdowns.com. ### 2022 Priorities of Focus for Financial Institutions As we continue to look ahead, what risks and enhanced areas of focus will 2022 bring?Compliance PrioritiesAs compliance risk remains heightened, various regulations and compliance-related areas continue to face increased scrutiny.Financial institutions must continue to enhance their efforts surrounding fair lending and enforce it as a top priority. It is important that compliance reviews embody the formation, operation and outcomes of fair lending decisions.A review of the institution’s overdraft program should also be a priority. As the impact tends to be greater for lower-income customers, banks should be considering updates to their program features to assist in providing alternatives to overdrawing accounts. These practices should be easy to understand and fully disclosed to customers.Although compliance with regulatory requirements is essential, financial institutions should also be focusing on their overall effectiveness and efficiency across the organization. This entails automating processes and enhancing third-party relationships.Cybersecurity FocusAs the trend is showing no sign of slowing, ransomware can be devastating for financial institutions, especially if regular data backups are not maintained. Threat monitoring, incident response and overall risk management are critical when preventative tools fail. Additionally, even with sophisticated monitoring tools in place, employees are still recognized as a significant risk to cybersecurity. Continuous education on best practices is vital to strengthening the front line of defense.Financial institutions may do a good job of protecting their networks from invasion, but cyber risks remain. Various solutions in the industry are available to help deliver control of cybersecurity. Interest RatesAlthough interest rates have been low and margins have remained steady, volatility is likely to emerge.  Inflation will be a key driver in terms of the frequency and volume of increasing rates.  As a result, financial institutions should review and potentially revamp their interest rate risk management and asset liability management strategies.  This will help ensure effective management in a more volatile interest rate market.Given the continuing economic uncertainty, risk management and governance have become more crucial for success in the banking industry.  A strong governance structure must be in place to ensure that the appropriate decisions are being made by management and that up-to-date information consistently flows throughout the organization.  New risks will continue to emerge related to social and financial issues. ### What Are the Trust Services Criteria and Categories? To comply with the System and Organization Controls (SOC) 2 reporting requirements, auditors must evaluate whether controls at the service organization meet the applicable trust services criteria (TSC), which can relate to a broad range of systems. As defined by the American Institute of Certified Public Accountants (AICPA), the TSC include five categories.TSC categories: Security (or common criteria) – Information and systems are protected against unauthorized access, unauthorized disclosure of information, and damage to systems that could compromise the availability, integrity, confidentiality, and privacy of information or systems and affect the entity’s ability to meet its objectives.  Availability – Information and systems are available for operation and use to meet the entity’s objectives. Processing integrity – System processing is complete, valid, accurate, timely, and authorized to meet the entity’s objectives. Confidentiality – Information designated as confidential is protected to meet the entity’s objectives. Privacy – Personal information is collected, used, retained, disclosed, and disposed to meet the entity’s objectives. The AICPA requires the application of the TSC for every SOC 2 engagement. Since security is a common component of each of the five categories, a SOC 2 engagement must cover security as a minimum requirement. These security requirements are also referred to as the common criteria and are applicable to all SOC 2 examinations.  Organizations can exercise discretion regarding which of the remaining categories they apply. The application of availability, processing integrity, confidentiality, and privacy depends on: Organization’s industry sector Types of services it provides Customer contracts, service level agreements, and their stipulations Key stakeholder requirements Types of data that the service organization maintains or stores Criticality of operational tasks or processing activities With certain exceptions, such as an engagement with a limited scope or the non-applicability of certain criteria, every criterion should be analyzed and included in the report. Regardless of the categories included within the scope of the examination, SOC 2 reports are restricted use reports, meaning that only the organization, its customers, and certain other parties should use them. SOC 2 reports can help organizations: Improve oversight Demonstrate a commitment to data protection and risk management Streamline compliance with additional regulations Establish and maintain security as a competitive advantage  Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit, and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients’ expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc.    ### Wait… What? There Are Other Methods to Calculate LIFO for Dealers? Last-In-First-Out (“LIFO”) is something that all auto dealers have talked about at some point over the last 20 months. With new vehicle inventory levels down, the assumption is that some, if not most, of a dealer’s LIFO reserve is going to be recaptured on your 2021 financial statements and tax returns. That means more tax due come April 15. The concept of LIFO has been great for the automotive industry. We look at it as an interest-free loan from the government. For example, your truck inventory might be recorded on your books at 1980 prices, which means you have accelerated your expenses. That is a good thing for you since less tax paid to date has helped the cash flow of your business. LIFO ultimately has allowed dealers to expand, stay in business through downturns or meet other financial goals.  But now with the new vehicle inventory level being very low, a LIFO recapture is more likely to happen, and much of that cash tax savings is going to be paid back… OR IS IT?We have found a lot of success working with our dealership relationships regarding use of the Inventory Price Index Computation (“IPIC”) method of calculating your LIFO reserve instead of the historical industry standard of the Alternative LIFO method we are accustomed to. Here are some things to think about if considering the IPIC LIFO accounting method change: The IPIC method uses the consumer price index (“CPI”) which, as you know, is extremely inflated currently. The December CPI inflationary rates year over year are above 35% for used vehicles, 10% for new vehicles and 10% for parts.  Why did we mention used vehicles and parts, you ask? The IPIC method can bring other inventory items into your LIFO calculation. If you bring more inventory items into your LIFO pool, it should help the LIFO calculation as you build layers over the years. Not to mention that potentially there will be no more used vehicle write-down analysis needed… Yay!! The Alternative LIFO method calculation only compares the same new models year over year and won’t get you inflationary rates as high as the CPI for 2021. Let’s stop and consider the possibility of deflation in the used vehicle market in 2022. What impact might that have on your 2022 calculation? Let’s discuss. Will tax rates go up with the Build Back Better Plan? Good question. After we discuss some 2022 assumptions, let’s see if it still makes sense after we project the 2022 LIFO calculation.  If you have not yet considered using IPIC for 2021, it is not too late! This LIFO accounting method change can be made up to the due date of filing your 2021 tax return, including extension. Let’s talk about real results. Due to low year-end new vehicle inventory levels, we saw 75% of a dealer’s LIFO reserve being recaptured in 2021 using the Alternative LIFO method. This same dealership increased its 2021 LIFO reserve by 30% by using the IPIC method. Once again, to think this through, let’s look at the 2022 LIFO calculation too. We know many dealers have liquidity right now. So, you might ask: why not just pay the LIFO recapture tax due and get part of the monkey off your back? Our response is why?! Don’t you like interest-free money? With the liquidity that dealers have now, it is a good time to expand and/or diversify portfolios. Liquidity within a dealership is not normal, since it takes much capital to run the business. For the first time as a dealer owner, there is excess cash. Let’s do something other than pay tax (at least for today).For more information on navigating through the potential switch to the IPIC LIFO method, please reach out to Steve Barber, Brett Cubellis, or any of our Schneider Downs Auto Advisors. ### White House Announces Industrial Control Systems Water and Wastewater Sector Action Plan In a continued effort to bolster national cybersecurity defenses and information-sharing, the Biden Administration introduced the Industrial Control Systems Cybersecurity Initiative – Water and Wastewater Sector Action Plan on January 27th, 2022. According to the White House statement, the Industrial Control Systems Cybersecurity Initiative – Water and Wastewater Sector Action (Water Sector Action) Plan is a collaborative effort between the federal government and the critical infrastructure community to facilitate the deployment of technologies and systems that provide cyber-related threat visibility, indicators, detections and warnings. Developed collectively by the Water Sector Coordinating Council (WSCC), Environmental Protection Agency (EPA) and the Cybersecurity and Infrastructure Security Agency (CISA), the Water Sector Action Plan outlines surge actions that will take place over the next 100 days to improve the cybersecurity of the public and private water sector. “Over the past year we’ve seen cyber threats affecting the critical infrastructure that underpins our communities and the services we all rely on, including safe and clean water,” said CISA Director Jen Easterly. “To reduce the likelihood and impact of damaging cybersecurity intrusions to the water sector, we’re teaming up with our EPA partners to provide guidance, technology, and direct support to the sector.” The full Fact Sheet from the White House briefing room is available at www.whitehouse.gov/briefing-room/statements-releases/2022/01/27/fact-sheet-biden-harris-administration-expands-public-private-cybersecurity-partnership-to-water-sector/ and key points are outlined below: Similar to electric and pipeline action plans, this plan will assist owners and operators with deploying technology that will monitor their systems and provide near real-time situational awareness and warnings. The plan will also allow for rapidly sharing relevant cybersecurity information with the government and other stakeholders, which will improve the sector’s ability to detect malicious activity. EPA and CISA will work with water utilities and invite them to participate in a pilot program for ICS monitoring and information sharing. This pilot will demonstrate the value of such technology to the sector. The WSCC, CISA, and EPA will also collaborate to promote cybersecurity monitoring to the entire sector. The plan will meet the particular requirements of this sector. This sector is made up of thousands of systems that range in size from the very small to ones that service major metropolitan cities that have little or no cybersecurity expertise and are unsure what steps they should take to address cyber risks. EPA and CISA will work with appropriate private sector partners to develop protocols for sharing information. The government will not select, endorse, or recommend any specific technology or provider. The plan will initially focus on the utilities that serve the largest populations and have the highest consequence systems; however, it will lay the foundation for supporting enhanced ICS cybersecurity across water systems of all sizes. The Water Sector Action Plan is an extension of the Industrial Control Systems Cybersecurity Initiative which was developed to help the federal government and critical infrastructure entities partner to provide transparency, indicators, detections and warnings for cyber-threats. Related Articles Three New Cybersecurity Bills Pass the House TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators White House Issues Executive Order on Cybersecurity Related Links US Environmental Protection Agency – EPA Announces Action Plan to Accelerate Cyber-Resilience for the Water Sector White House – Fact Sheet: Biden-Harris Administration Expands Public-Private Cybersecurity Partnership to Water Sector White House – National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.   ### There Is Still Time for Auto Dealers to Claim the Employee Retention Credit There have been various versions of the Employee Retention Credit passed as part of the COVID relief bills that introduced, expanded who is eligible, extended the timeline and then reduced the timeline.  So, we can understand the confusion about an auto dealer’s eligibility.Let us quickly summarize a few things to help you consider your eligibility:Employee Retention Credit Timeline March 2020 to September 2021 Employee Retention Credit Eligibility Requirements Was your dealership negatively impacted by a government order?  Does March 2020 ring a bell? For 2020, did your gross receipts drop more than 50% in the 2nd, 3rd or 4th calendar quarter compared to the same calendar quarter in 2019? For 2021, did your gross receipts drop more than 20% in the 1st, 2nd or 3rd calendar quarter compared to the same calendar quarter in 2019? We can talk other facts and circumstances depending on whether you think your business was negatively impacted by COVID. The credit can be claimed on your payroll tax return.  These payroll tax returns can be amended up to three years after the date they were filed.  For example, if you are a Pennsylvania dealership and your business was partially shut down due to the state government order denying you the ability to sell vehicles during the second quarter of 2020 and you filed your quarterly payroll tax return in July 2020, you have until July 2023 to file an amended return to claim the credit.  We have had a lot of success working with our dealership clients to identify and claim these credits.  You can reach out me or any other SD Auto Dealer Advisor to assist you in figuring out your eligibility and calculating the credit.  We look forward to hearing from you.For any questions please reach out to Steven A. Barber – Shareholder, Tax Advisory Services. 412-697-5463  ### The Top Ten Most Common SOC 2 Exceptions Download the PDF version of this article here. What are some of the most common SOC 2 audit exceptions the our teams have encountered? SOC 2 (Type 2) report exceptions are when a service organization fails to effectively operate its control as designed. From my experience, the top ten most common exceptions I have seen in the field are: Failure to remove/disable access to terminated user account(s) in a timely manner Failure to complete or retain evidence of policy (InfoSec, code of conduct, etc.) acknowledgment/sign off Failure of user(s) to complete security awareness training upon hire and/or annually thereafter Failure to retain evidence of or document a system change for approval or testing Failure to complete or retain evidence of annual performance review of employees with responsibilities related to security, availability, and confidentiality Failure to complete a background check for new hire user(s) in a timely manner Failure to perform an annual third party risk review of subservice organizations and/or third parties Failure to design action plans or remediate moderate/high-risk vulnerabilities identified in scans Failure to complete or retain evidence for regular password or key rotation Failure to deploy anti-virus software or endpoint management solution on all in-scope devices Both our Third Party Risk Management and SOC practices see these exceptions most often when service organizations are going for their first SOC report, switching audit firms, or migrating to new systems/infrastructure. Are these exceptions similar to your experiences, or are there others you are running into not on the list? About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started and learn more about our practice at www.schneiderdowns.com/soc. ### PA DEP to Study Petitions Seeking to Raise Oil and Gas Bonds The state of Pennsylvania has been a leader in the production of oil and natural gas, dating back to 1859. This not only led to the start of the petroleum age for America but has vastly increased the popularity and usage of oil, which has remained consistent to this day. Although oil production remains high, the world has put forth significant resources into finding different types of renewable energy that can be used in the future. Coinciding with that, environmental organizations have also increased in popularity, to help preserve Earth’s landscape before it is too late.As a result, the continuance of drilling oil has led to more questions being asked, which includes petitions being brought forth to address these issues. The Pennsylvania Department of Environmental Protection is set to study petitions that seek to raise the oil and gas bonds, which would require the gas well owners to plug their respective wells with no outside financial assistance.  Environmental groups that initially introduced the petitions argue that increases should not only occur but are necessary to protect both the state and its taxpayers from having to pay additional costs that companies did not account for; this is especially a problem for abandoned wells, which could involve even greater cleanup costs and environmental damages. If the petitions are successful, they would raise bond rates for traditional and shale wells that were drilled since 1985, to the full costs of plugging the well. Wells drilled beforehand would remain unaffected, as they don’t require a bond. According to the environmental groups, the cost of plugging a conventional oil and gas well is $38,000, while a Marcellus shale well can be significantly more expensive, at $83,000. As it stands today, Pennsylvania’s current bond rate for conventional wells is $2,500 per well, or a blanket bond of $25,000 to cover all of a company’s wells that were extracted. The current bond rates for shale wells depend on the length of the well, as well as the number of wells covered under a blanket bond, but usually amount to $10,000 or less per well.All in all, it remains to be seen what will come out of these petitions; whatever the result, the topic of environmental conservation will continue to be discussed for years to come, as the world continues to assess available energy resources.See the link below for more information referenced in the article:Pa. DEP to study petitions seeking to raise oil and gas bonds to cover the full cost of plugging wells - Shale Gas Reporter ### E-filing of New Pass-Through Schedules K-2 and K-3 Starts in March The IRS has announced it will be rolling out the ability to electronically file the new Schedules K-2 and K-3 this year, but not at the beginning of the filing season. This will likely impact the timing of 1065/1120-S filings, especially those that have items of international tax relevance.Schedules K-2 (Partners’ Distributive Share Items — International) and K-3 (Partner’s Share of Income, Deductions, Credits, etc. — International) are new for the 2021 tax year. If taxpayers have items of international tax that are relevant, they’re required to report the information on Schedules K-2 and K-3 if they file Forms 1065 or 1120-S.Electronic filing of these forms will be available March 20, 2022 for partnerships and mid-June 2022 for S corporations. If you want to electronically file 1065/1120-S returns before these timeframes, you’ll need to submit schedules K-2/K-3 as separate PDF files attached to the return.Generally, items of international relevance include the existence of foreign partners or foreign activities. The new forms are extensive (K-2 is 20 pages long, while K-3 is 23) and are designed to supplement and clarify the former Form 1065 international information and provide pass-through entities a “standardized format” for reporting international tax information.Recognizing that the adoption of the new Schedules will create challenges, the IRS has provided transition relief. For tax years that begin in 2021, certain penalties will not be imposed for incorrect or incomplete reporting on Schedule K-2 or K-3 if the filer establishes to the satisfaction of the IRS that it made a good-faith effort to comply with the new reporting requirements.For more information about this topic, including reporting requirements for all entities with international activities, please contact your Schneider Downs international tax advisor. ### 2022 401(k) Contribution Limit Increase Early in the new year is a good time for individuals to revisit how much they are contributing to their retirement plan. The IRS recently announced the updated 2022 maximum retirement plan contribution limits for 401(k)s and IRAs, which reflect cost-of-living adjustments.2022 401(k) Contribution LimitsIn 2022, employees can contribute $1,000 more to their 401(k) compared to 2021. The 2022 additional catch-up contribution allowed for employees who are 50 years old and over is unchanged from 2021 and remains at $6,500.  401(k) Maximum Employee Contributions   2022 Limit 2021 Limit Max Employee (EE) Contribution $20,500 $19,500 EE Additional Catch-Up Contributions (Age 50 or older) $6,500 $6,500 Therefore, employees under 50 years old can contribute $20,500, and employees 50 years or older can contribute a maximum of $27,000 to their 401(k) plan in 2022. This limitation is the same for traditional or Roth 401(k) plan contributions. Many employers also offer 401(k) matching contributions or 401(k) profit-sharing contributions. Employer contributions do not impact an employee’s allowed contributions outlined above; however, there is a total combined contribution limit. The combined employee plus employer 401(k) contribution limit for 2022 is $61,000 ($67,500 for those 50 or older). That overall limitation is a $3,000 increase compared to 2021. 2022 IRA Contribution LimitsThe limit on annual contributions to an IRA remains unchanged at $6,000 for 2022. The additional IRA catch-up contribution for individuals 50 or older, is also unchanged at $1,000. Therefore, individuals under 50 years old can contribute $6,000, and individuals 50 years or older can contribute $7,000 to their IRA in 2022. This limitation is the same for traditional or Roth IRA contributions. IRA Maximum Contributions   2022 2021 Max Individual Contribution  $6,000 $6,000 Catch-Up Contributions (Age 50 or older) $1,000 $1,000 Individuals can deduct contributions to a traditional IRA if they meet certain conditions. If neither the taxpayer nor their spouse is covered by a retirement plan at work, their full contribution to a traditional IRA is deductible. If the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated. The amount of the deduction depends on the taxpayer's filing status and their income.A taxpayer’s filing status and income also impacts whether an individual can contribute to a Roth IRA for the year. Please contact your Schneider Downs advisor if you would like to discuss your retirement planning goals or strategies. ### NIST Releases Special Publication 800-53A Revision 5 The National Institute of Standards and Technology (NIST) has released their finalized version of the Assessing Security and Privacy Controls in Information Systems and Organizations.The final version of the Special Publication (SP) 800-53A Revision 5, Assessing Security and Privacy Controls in Information Systems and Organizations (SP 800-53A Revision 5), comes after an initial draft copy and the required comment period.The NIST press release outlines several key updates and points related to the SP 800-53A Revision 5 outlined below:  The revision corresponds with the security and privacy controls in SP 800-53 Revision 5 and provides a methodology and set of assessment procedures to verify that the controls are implemented, meet stated control objectives and achieve the desired security and privacy outcomes The revision includes new assessment procedures that address recently added and updated privacy and supply chain risk management controls in SP 800-53 Revision 5 The revision introduces a new structure for assessment procedures to better support the use of automated tools, improve the efficiency of control assessments for assessors and organizations and support continuous monitoring and ongoing authorization programs  SP 800-53A assessment procedures are flexible, provide a framework and starting point for control assessments and can be tailored to the needs of organizations and assessors SP 800-53A facilitates security and privacy control assessments conducted within an effective risk management framework The full version of the NIST SP 800-53A Revision 5 is available at https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-53Ar5.pdf and the abstract reads:This publication provides a methodology and set of procedures for conducting assessments of security and privacy controls employed within systems and organizations within an effective risk management framework. The assessment procedures, executed at various phases of the system development life cycle, are consistent with the security and privacy controls in NIST Special Publication 800-53, Revision 5. The procedures are customizable and can be easily tailored to provide organizations with the needed flexibility to conduct security and privacy control assessments that support organizational risk management processes and are aligned with the stated risk tolerance of the organization. Information on building effective security and privacy assessment plans is also provided with guidance on analyzing assessment results.NIST is a non-regulatory federal agency within the U.S. Department of Commerce. NIST's mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards and technology in ways that enhance economic security and improve our quality of life. NIST promotes their mission by developing special publications that are devoted to specific information security topics.For more information on our NIST services visit www.schneiderdowns.com/cybersecurity/nist or contact the team at cybersecurity@schneiderdowns.com.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.  ### What To Know About Updated Required Minimum Distribution Rules As of January 1, 2022, the updated Uniform Life Table for calculating a required minimum distribution (RMD) has now taken effect. To account for the overall increase in current life expectancy, RMD factors have increased, resulting in lower required distributions from tax-deferred accounts in 2022 relative to last year.For illustration purposes, we’ll assume a 75-year-old individual has a $500,000 IRA balance. In 2021, their RMD on a $500,000 IRA with a RMD factor of 22.9 equates to 2021 RMD of $21,834. Compared to 2022, with the same $500,000 IRA balance, but updated RMD factor of 24.6, the RMD equates to $20,325, a 7% year-over-year reduction in the distribution. As one can see, the increased 2022 RMD factors result in incrementally lower required distributions. Readers will note that the penalty for not distributing one’s required minimum distribution is 50% on the amount of the distribution not taken. Below you will find the updated Uniform Life Table showing the changes to the RMD factor, as well as differences between the new and old RMD tables. We have also provided some frequently asked questions regarding RMDs.Should you have questions about required minimum distributions, retirement cash flow planning, or other financial planning considerations, please reach out to your trusted Schneider Downs Wealth Management Advisor. If you do not have an advisor, please contact us at sdwealthmanagement@schneiderdowns.com.What Is a Required Minimum Distribution (RMD)?A required minimum distribution is the minimum amount that you must withdraw from your tax-deferred retirement accounts each year beginning at a certain age.  Examples of tax-deferred retirement accounts include, but are not limited to, Traditional IRAs, 401(k) accounts, or 403(b) accounts.When Do You Need to Take RMDs?In recent years, the rules around the ages for taking RMDs have been adjusted. Initially, the rule for those who were born before July 1st, 1949 is that they begin taking distributions by April 1st of the year after they surpassed 70 ½. For those who were born after June 30th, 1949, a person must begin taking their RMD no later than April 1st of the year after you turn 72.How Much Do You Need to Withdraw Each Year? Your RMD coincides with the IRS Uniform Life Table for 2022, which was recently updated.  First, calculate the total amount of money in your tax-deferred accounts on December 31st of the previous year.  Then, refer to your age on the IRS Uniform Lifetime Table to find your RMD factor.  Next, divide your total tax-deferred account balance by the RMD factor determined by your age on the table.  The amount calculated is the amount of money that you will need to withdraw from these accounts in the current year. What Are the Three Life Expectancy Tables Used for RMDs? Uniform Lifetime Table (ULT): Calculates lifetime RMDs. Starts at age 72 if one turns 70 ½ after 2019. Joint & Last Survivor Table: Used instead of ULT when the spouse is the beneficiary and is more than 10 years younger than the account owner. Single Life Table: Calculates the RMD for eligible beneficiaries. Eligible Beneficiaries Include: surviving spouse; a minor child; a chronically ill individual; a disabled individual; or someone no more than 10 years younger than the account owner. All other individual beneficiaries who inherit a tax-deferred account after 2019 are subject to a 10-year payout rule and do not use this table. IRS regulations include a special “reset” provision for calculating RMDs for non-spouse beneficiaries who inherit before Jan. 1, 2022.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### President Biden Signs National Security Memorandum To Improve National Security Systems Cybersecurity President Biden signed a National Security Memorandum (NSM) to improve the cybersecurity of National Security, Department of Defense (DoD) and Intelligence Community Systems. The Memorandum on Improving the Cybersecurity of National Security, Department of Defense, and Intelligence Community Systems or NSM-8, requires that, at minimum, National Security Systems employ the same network cybersecurity measures that are required of federal civilian networks outlined in Improving the Nation’s Cybersecurity Executive Order (EO 14028). The memorandum is another step in validating the need to map the network requirements for civilian federal agencies under the E.O. 14028 across applicable national security systems in an effort to standardize cybersecurity requirements for military agencies and the intelligence community with civilian agencies. The memorandum also provides the National Security Agency authority to issue binding operational directives on cyber issues which will mirror the civilian agency directives issued by the Department of Homeland Security. The complete NSM-8 memorandum is available to view at www.whitehouse.gov/briefing-room/presidential-actions/2022/01/19/memorandum-on-improving-the-cybersecurity-of-national-security-department-of-defense-and-intelligence-community-systems/, key points are outlined below. Specifies how the provisions of EO 14028 apply to National Security Systems.  The President’s May 2021 Executive Order required that the government “shall adopt National Security Systems requirements that are equivalent to or exceed the cybersecurity requirements set forth in this order.” Consistent with that mandate, this NSM establishes timelines and guidance for how these cybersecurity requirements will be implemented, including multifactor authentication, encryption, cloud technologies, and endpoint detection services. Improves the visibility of cybersecurity incidents that occur on these systems. It requires agencies to identify their national security systems and report cyber incidents that occur on them to the National Security Agency, which by prior policy is the “National Manager” for the U.S. government’s classified systems. This will improve the government’s ability to identify, understand, and mitigate cyber risk across all National Security Systems. Requires agencies to act to protect or mitigate a cyber threat to National Security Systems. The NSM authorizes the National Security Agency, through its role as National Manager for National Security Systems, to create Binding Operational Directives requiring agencies to take specific actions against known or suspected cybersecurity threats and vulnerabilities. This directive is modeled on the Department of Homeland Security’s Binding Operational Directive authority for civilian government networks. The NSM directs NSA and DHS to share directives and to learn from each other to determine if any of the requirements from one agency’s directive should be adopted by the other. Requires agencies to secure cross domain solutions – tools that transfer data between classified and unclassified systems. Adversaries can seek to leverage these tools to get access to our classified networks, and the NSM directs decisive action to mitigate this threat. The NSM requires agencies to inventory their cross-domain solutions and directs NSA to establish security standards and testing requirements to better protect these critical systems. “I applaud President Biden for signing this order to improve our nation’s cybersecurity,” said Senate Intelligence Committee Chair Mark Warner. “Among other priorities, this National Security Memorandum requires federal agencies to report efforts to breach their systems by cyber criminals and state-sponsored hackers.” The Memorandum is another step in the Biden Administration’s focus on modernizing the nation’s cyber defenses and prioritize protecting federal networks. Related Links White House – Memorandum on Improving the Cybersecurity of National Security, Department of Defense, and Intelligence Community Systems White House – Fact Sheet: President Biden Signs National Security Memorandum to Improve the Cybersecurity of National Security, Department of Defense, and Intelligence Community Systems Related Articles Three New Cybersecurity Bills Pass the House President Biden Signs K-12 Cybersecurity Act into Law TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators White House Issues Executive Order on Cybersecurity About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### New Allegheny County Paid Sick Leave Requirements In September 2021, the Allegheny County Council passed an ordinance compelling employers with 26 or more employees to provide their workers with paid sick leave1.  Although the rule took effect on December 15, 2021, fines and penalties for failing to adapt to the new rule will not be levied against employers until one year following the effective date (December 15, 2022). Full-time and part-time employees located or working in Allegheny County are eligible for paid sick leave; however, seasonal workers2 and independent contractors are not. Employees3 covered under the rule will accrue one hour of paid sick time for every 35 hours worked in the county. A single employee can only accrue up to 40 hours per calendar year. If an employee has not used all accrued hours by the end of the year, that time will roll over to the following year. However, no employee can accrue more than the 40-hour cap, including any time rolled over from the prior year. Employers that have a paid time off or paid sick leave policy in place do not have to change their policy, so long as that policy meets or exceeds these requirements. Paid sick time may be used on the 90th day after the employee begins his or her employment. Employees are allowed to utilize their paid sick time, either in the smallest increment used by their employer’s payroll structure or hourly, whichever is smaller. The rule provides for a handful of circumstances in which the paid sick time can be utilized, including illness, canceled childcare or care for other family members. Employers are allowed, but not required, to develop a notice policy for anticipated events stating how far in advance employees need to inform the employer before using paid sick leave. If the event is unexpected or unforeseeable, the employee should provide notice to his or her employer as soon as possible. Employers may ask for reasonable documentation showing that the paid sick time off was for a reason within the scope of the rule only if the absence is beyond three days. However, this documentation does not have to include the nature or details of the employee’s or an employee’s family member issue or illness. Employers must dispense the employee’s usual salary and benefits during paid sick leave. Employees who rely on commissions or tips cannot receive payment for potential tips or commissions that may have occurred while they were on paid sick leave, but these employees must receive at least minimum wage. At the end of an individual’s employment, he/she is not entitled to receive payment for any accrued paid sick time that he/she did not use during his/her employment. Employers are responsible under the rule to find different or additional personnel to cover the hours in which an employee is using paid sick time, and paid sick time cannot be the reason to fire, demote, suspend or exercise any adverse action against the employee. Allegheny County compiled answers to commonly asked questions about the new ordinance to help employers and employees understand their responsibilities and rights. Consult your attorney or employee compensation advisor before proceeding with any policy modifications to ensure compliance with this new law. 1Ordinance No. 15-21-OR (the “Allegheny County Paid Sick Leave Ordinance”) 2The rule defines “seasonal employee” as “a person who has been hired for a temporary period of not more than 16 weeks during a calendar year and has been notified in writing at the time of hire that the individual's employment is limited to the beginning and ending dates of the employer's seasonal period, as determined by the employer.” 3The ordinance guidelines define “Employees” the same way that PA does in 43 P.S. Section 333.103 (h), and excludes federal and state workers, independent contractors and seasonal workers.   ### The Pandemic’s Impact on Contractors’ Backlogs The COVID-19 pandemic has resulted in financial concerns and uncertainty for contractors, primarily with respect to generating enough revenue and earnings to sustain business. However, not too far behind revenue and earnings is backlog and the pandemic’s potential impact on it.A contractor’s backlog is a significant measuring tool for a company’s financial health and future revenue. For some companies, the pandemic has caused temporary delays in ongoing projects, which negatively impacted revenue during 2020. Though this didn’t immediately impact those companies’ backlog, it left them limited in securing additional contracts, since they had to ensure they had the workforce and capacity to complete contracts once they resumed. Some contractors, though -- primarily in road and highway construction -- found efficiencies during the pandemic, as fewer people were utilizing roadways, which allowed them to work through active contracts and move on to the challenge of securing additional work amid the pandemic.The question remains: what impact did the pandemic have on contractors’ backlogs? According to Construction Dive, out of 13 public companies tracked, four saw their backlogs grow more than 25% from the first quarter of 2020 to the third quarter of 2021. An additional three companies experienced backlog growth during that time frame, while six experienced a decline. In a comparison of backlog ratios obtained from the Construction Financial Management Association, average months in backlog decreased only slightly from 8.2 to 7.9 from calendar year-end 2019 to 2020.As is consistent within most industries, the pandemic has impacted each contractor differently. Overall, the industry has performed well through the pandemic, and backlogs have remained strong and balanced. Additionally, the passing of the $1.2 trillion Infrastructure Investment and Jobs Act is likely to generate backlog growth over the next two to three years, with the potential for this funding to begin hitting backlogs as early as 2022. The pandemic has brought severe pressure and uncertainty for contractors, but after a challenging couple of years, the future looks promising.Contact a Schneider Downs representative to discuss how your company stacks up.See the link below for more information referenced in this article:How these public contractors' backlogs changed during the pandemic | Construction Dive ### Individual Tax Filing Season to Begin January 24 The Internal Revenue Service (IRS) has announced that the nation’s individual tax filing season will officially begin when the agency starts accepting and processing 2021 tax returns on January 24, 2022.To avoid processing delays, the IRS encourages taxpayers to have all the information they’ll need in hand in order to ensure a complete and accurate return is filed.  This is especially important for those who have received Child Tax Credit advances and Economic Impact (stimulus) payments in 2021.  To assist with this, the IRS will be issuing Letter 6419, 2021 Advance Child Tax Credit, and Letter 6475, Your Third Economic Impact Payment, to individuals who received either or both of these payments.  The letters will provide taxpayers with important information, including amounts paid, that will need to be reported on their tax returns.  For a quicker option, taxpayers can check amounts received by using the Child Tax Credit Portal or their IRS Online Account.Additionally, the IRS is urging taxpayers to file returns electronically and with direct deposit information for the quickest processing of returns and refunds. The filing deadline to submit 2021 tax returns or an extension of time to file is April 18, 2022 for most taxpayers.  Taxpayers requesting an extension will have until October 17 to file, though any tax due must be paid by April 18 to avoid late payment penalties.  This filing deadline is currently not expected to be delayed as it has been for the prior two tax filing seasons.The above announcements come on the heels of what National Taxpayer Advocate Erin M. Collins is calling “the most challenging year taxpayers and tax professionals have ever experienced.”  Lengthy delays by the IRS in processing tax returns and taxpayer correspondence, overwhelmed telephone assistance, and shortcomings in new online tools all combined to make 2021 a historic ordeal.  As of late December 2021, the IRS was still processing a backlog of 6 million original paper-filed returns, 2.3 million amended returns, 2 million Forms 941 and 941X, and 5 million items of taxpayer correspondence.  Still waiting on processing of a prior-year tax return? The IRS is advising that you do not need to wait for processing to be completed before filing your 2021 return.If you have any questions, do not hesitate to contact a member of the Schneider Downs tax department. ### Applicant Promoting and Engaged in Providing Travel Tours Denied 501(c)(3) Status The Internal Revenue Service (IRS) released a section 4943 ruling last week, Private Letter Ruling (PLR) 202143001, which is very similar to PLR 202142004. The only variance is that PLR 202142004 is to “Public Charity,” whereas PLR 202143001 is to “Foundation.” Denial 202141028 is a travel tour case in which the IRS referenced Revenue Rulings 77-366 and 77-430 as precedent, and they continue to be relevant in future cases. The PLR is heavily redacted, so we are unsure of all the exact facts. Knowing the facts and circumstances is important because the exemption for travel tour cases depends on all the facts and circumstances. According to the PLR, the travel tour would stop in various countries and would last for several days. The application stated that the travelers would have the following opportunities: To engage and work alongside community leaders, local people; Give travelers the opportunity to actively participate in bettering the environment and the communities, which enables them to become better global citizens; and Create tremendous benefits such as carrying out valuable and meaningful change during their travels. As Bruce Hopkins states on page 654 of his book The Law of Tax-Exempt Organizations, Twelfth Edition: “Whether travel tour activities conducted by an exempt organization are substantially related to an exempt purpose is determined by an analysis of all of the relevant facts and circumstances, including how a travel tour is developed, promoted, and operated,” citing Section 1.513-7(a) of the Treasury Regulations, which, while addressing unrelated trade or business under IRC Section 513, contains seven examples of travel tours also applicable to exemption cases. The IRS ruled that the applicant failed to provide any additional information from which it can be concluded that its activities exclusively further or advances a purpose described in IRC Section 501(c)(3). The IRS also stated the applicant operated for a substantial nonexempt recreational and commercial purpose. The presence of these substantial nonexempt purposes precludes exemption under IRC Section 501(c)(3).The IRS seems to agree with Mr. Hopkins. See the EO ATRI textbook for 1979, Chapter T, “Travel Tour Programs – Effect on IRC Section 501(c) Exemption and UBIT Liabilities,” pp. 453-485, wherein it is stated: “Each individual case must be resolved on the particular facts and circumstances,” but with a warning, “There is much controversy in this area.” If you have any questions do not hesitate to contact a member of the Schneider Downs tax department. ### New Beneficial Ownership Reporting Rules On December 7, 2021, beneficial owners of reporting companies received an early Christmas present. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a highly anticipated Proposed Rule implementing certain provisions of the Corporate Transparency Act (CTA), which was passed in January of 2021. The CTA, coupled with the Anti-Money Laundering Act of 2020, brings much-needed revisions to the United States’ anti-money laundering and financing of terrorism compliance laws. The United States has long been criticized for its lack of appropriate regulations to ensure and enforce corporate transparency. The Proposed Rule is a response to that problem, requiring “reporting companies” to disclose their beneficial owners to FinCEN either within 14 days of the formation of new entities or within one year of the final rule’s effective date for existing entities. With the proposed rule, the CTA now defines a “beneficial owner” as “any individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise—(i) exercises substantial control over the entity; or (ii) owns or controls not less than 25% of the ownership interests of the entity.” The statute does not define “substantial control,” but the Proposed Rule provides various factors for consideration: Service as a senior officer of a reporting company Authority over the appointment or removal of any senior officer or dominant majority of the board of directors of a reporting company The ability to direct or determine, or exercise a substantial influence over, important matters of a reporting company Under this standard, more than one person can have “substantial control” over a reporting company. Thus, all such individuals would be required to disclose. The Proposed Rule has also expanded the definition of “reporting companies” to include “domestic reporting company[ies]” and “foreign reporting company[ies].” Although this is not a significant departure from the existing statutory definition in the CTA, FinCEN is proposing the inclusion of limited liability partnerships, limited liability limited partnerships, business trusts and limited partnerships. This provides much needed clarity to the end of the existing definition: “…a corporation, limited liability company, or other similar entity.” Finally, the Proposed Rule, while it does not provide more exemptions from the definition of “reporting company,” clarifies the scope of existing exemptions. One such exemption is the exemption for “dormant entities,” which generally captures investment funds, real estate enterprises, and other entities that typically involve a shelf company within an organization. Since the CTA now covers entities that have been “in existence for over 1 year,” the Proposed Rule further whittles the application, stating that the current 1-year rule is a Grandfathering Provision, meaning it covers only “entities in existence for over one year at the time the CTA was enacted.” Therefore, it does not apply to those in existence for more than one year when the statute is being applied. The grandfather clause, in other words, acts as an anti-abuse provision by preventing the exploitation of exemptions. As a final note, many with a hat in the ring had advocated for a de minimis exemption allowing inactive entities with relatively small value assets to skip out on reporting. FinCEN did not create such an exemption this time around. So, any entity holding assets must report, regardless of the value of the assets that are held. Whether or not these regulations will turn out to be a gift or a lump of coal for the reporting companies depends on who you ask. But if you have questions about whether you may qualify as a beneficial owner or whether you may fall under the list of reporting companies, our international tax professionals possess the most current knowledge of the applications of the CTA and how it might apply to you. The Schneider Downs team will continue to monitor the progress of the FinCEN Proposed Rule and can answer any questions you may have. ### Apple Reaches $3 Trillion Value On January 3, Apple, Inc.'s market capitalization briefly exceeded $3.0 trillion, an accomplishment that no other publicly traded company has ever been able to claim. Considering that Apple began 2017 with a market cap of approximately $620 billion, that means the company has nearly quintupled its value in less than five years.Apple's share price and earnings per share reached highs of $182.88 and $5.61, respectively, on January 3, implying that investors believed the company's stock was worth approximately 32.6 times (price to earnings, or P/E ratio) the earnings it generates. As a comparison, two of Apple's closest competitors, Samsung and Alphabet, Inc. (Google's parent company), had market caps of $1.8 trillion (P/E ratio of 25.43) and $441 billion (P/E ratio of 16.74), respectively, when this article was written on January 7. (Apple's market cap has since dropped to $2.8 trillion, implying a P/E ratio of 30.75 as of January 7 ... so cheap!). Remembering that a company’s P/E ratio is a function of growth and risk, Apple’s high numbers imply that investors think the company’s earnings will continue to grow significantly in the future.To put this into perspective, Apple's $3.0 trillion value represents approximately 4% of total U.S. GDP for all of 2020, or more than four times Pennsylvania's 2020 GDP. Even at $2.8 trillion, the company's market cap is larger than Amazon’s and Tesla's combined ... or more than the combined market cap of JPMorgan, Samsung, Home Depot, Procter & Gamble, Bank of America and Walmart.The 10 largest companies in the world, as ranked by market capitalization, were as follows on January 7, 2022:(Source: https://companiesmarketcap.com/)It’s interesting to note that eight of the top 10 companies are based in the U.S. Saudi Arabia’s Saudi Aramco and Taiwan’s TSMC were the only foreign businesses to crack the list.Although we have yet to value a company at $3.0 trillion, Schneider Downs has significant experience providing business valuation services to companies of all sizes and types for a wide range of purposes. For more information about our business valuation and other advisory services, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com.  ### Are you still waiting for your 2020 IRS refund? What you need to know… Recent discussions with Internal Revenue Service (IRS) representatives have uncovered one reason for taxpayers experiencing significant delays in receiving their individual income tax refunds for the 2020 tax year.As you may recall, the deadline to file federal individual income tax returns (Form 1040) for the 2020 tax year was delayed, from the typical April 15th due date, to May 17, 2021.  As a result, taxpayers who requested an extension of time to file their 2020 individual income tax return had until May 17, 2021 to make their required extension payment.  The fact that the 2020 extension payments were made after April 15th appears to be creating chaos for the IRS’s computer system and return processing procedures.   During our discussions with several different IRS representatives, we were informed that refunds for a least some specific taxpayers who made a payment with their 2020 extension request are being delayed due to a “glitch” in the IRS computer programs.  This “glitch” is causing overpayments to be suspended and requires IRS representatives to manually release the refunds on a case-by-case basis.  Our efforts in assisting these specific taxpayers by having discussions with the IRS uncovered the “glitch” and the necessary correction that will now allow the taxpayer to receive their federal tax refund within 3-8 weeks (per the IRS representatives) rather than sit and wait in the dark for the IRS to discover the problem and solution on their own.  If you made a payment with your 2020 individual income tax extension (Form 4868) and have not received your refund, you may want to contact the IRS by calling 800-829-1040 (7 a.m. to 7p.m. local time) to determine if your refund has been suspended by this computer glitch.If you have any questions relative to your individual income tax return or refund, do not hesitate to contact Mark Di Pietrantonio or another member of the Schneider Downs tax department. ### Adoption Requirements for ASC Topic 842, Where Are Your Embedded Leases Hiding? As the deadline for private and not-for-profit entities to adopt the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842 (“Topic 842” or “the new standard”) quickly approaches, lessees need to think about identifying embedded leases. The concept of embedded leases is not new; however, it is receiving renewed attention as companies adopt the new standard. This article investigates the definition of an embedded lease, the common types of agreements that contain embedded leases and best practices for identifying embedded leases within contracts when transitioning to Topic 842 and subsequent to the adoption date. What is an embedded lease? To identify embedded leases, it is important to remember the Topic 842 definition of a lease. ASC 842-10-15-3 defines a lease as a contract that conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration. Additionally, under ASC 842-10-15-9, an asset is typically identified by being explicitly specified in a contract. However, an asset also can be identified by being implicitly specified at the time that the asset is made available for use by the customer. The two key elements to consider when identifying a lease include the identification of a tangible asset, either explicitly or implicitly and the right to control the asset as determined by the lessee Simply put, an embedded lease is a lease within a larger contract or arrangement. Under previous guidance, operating leases and service contracts were expensed to the income statement, and there was no balance sheet recognition.  Therefore, from a recognition standpoint, it was easy for embedded leases to hide in the income statement and continue to be accounted for as service contracts, particularly if those embedded leases would have otherwise been classified as operating leases. Under the new standard, companies are required to record right-of-use (“ROU”) assets and lease liabilities for all leases, including any identified embedded leases, and, therefore continuing to expense the cost of these assets without balance sheet recognition is not appropriate, provided that these assets are not short-term in nature. Common Areas to Identify Embedded Leases Transportation and Delivery Services (e.g., railcars, dedicated trucking fleets) Complex Service and Information Technology Contracts (e.g., specified equipment, servers) Dedicated Manufacturing Capacity Advertising (e.g., billboards) Joint-Operating Agreements (e.g., drilling rigs) 1 Warehousing Agreements (e.g., dedicated location within a warehouse) Identification Process for Embedded Leases The discovery phase for the search for embedded leases can be the most time-consuming. It is important to put together a strong project team to aid in the smooth implementation of the new standard. It is crucial to identify best practices for identifying embedded leases within contracts across operations of a business and ensure all team members are educated on Topic 842 and particularly on embedded leases Take a close look at the business and operations. The project team should review operational areas with a greater likelihood of service agreements with potential embedded leases. Hold discussions with non-accounting departments to explain leases within the context of Topic 842 so that these individuals understand the broad concepts of the new standard.  This may help individuals think through their day-to-day processes and identify arrangements that could potentially have embedded leases that are unknown to the accounting team Review cash disbursement listing and recurring expense activity. Contracts that contain embedded leases will typically have a recurring payment attribute throughout the contract term. Reviewing general ledger transactions and cash disbursement listings can help in identifying lease-related payments that were not previously known. Meet with the legal department. In-house legal counsel is very well versed in the common legal jargon that is included in contract language and service agreements. It is beneficial to meet with the legal team to see if there are any contracts that they are aware of that would be beneficial for the implementation team to review. Their expertise may also be helpful in answering the implementation team’s questions on specific contracts that have already been reviewed. Perform a risk assessment. The implementation team should select high-risk contracts after discussion with various departments and evaluate the details of the agreement. Overall, the steps above can aid in identifying embedded leases for the implementation of Topic 842. The identification steps above should continue until companies are reasonably certain that there are no longer any material-embedded leases that have not been identified.  On a go-forward basis, lessees should work with management and the internal audit function, if present, to develop controls surrounding the identification of embedded leases for new and modified contracts. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of only a few leases.  If the lease profile is more complex and voluminous, management is better served by a lease software solution. In addition to offering our clients simpLEASE (a lease solution software), Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. 1 In joint operating agreements, operators should determine which party or parties are counterparties to the contract and if a sublease exists. In most cases, a supplier enters into an agreement directly with the operator, but if it is entered into with multiple operators and/or non-operators where each party is proportionality liable, then the right of use asset and lease liability should be proportionately split between the parties.      ### New Pennsylvania Electronic Payment Requirements for Personal Tax Payments Greater than $15,000 Beginning January 1, 2022. Tucked into legislation that passed June 30, 2021 that begins to impact certain taxpayers beginning January 1, 2022 is a requirement that personal income tax payments equal to or greater than $15,000 must be paid electronically.  Taxpayers should expect to find themselves subject to a 3% penalty not to exceed $500 if a payment required to be paid electronically is made by check.  Pennsylvania 2021 House Bill 952 added 72. Pa. Stat. §7332.1 reads:Any payment in the amount of fifteen thousand dollars ($15,000) or more remitted to the department for the tax imposed under this article shall be remitted electronically as prescribed by the department. This section shall not apply to employer withholding payments under Part VII of this article and section 9 of the act of April 9, 1929 (P.L. 343, No. 176), known as "The Fiscal Code."Even though the law was effective June 20, 2021, it appears that the Pennsylvania Department of Revenue (the DOR) will only begin enforcing the provision beginning January 1, 2022.  On December 30, 2021 and January 3, 2022, the DOR updated two questions and answers on the DOR customer support webpage that noted:Payments made after December 31, 2021 for personal income tax payments equal to or greater than $15,000 must be made electronically.  Payments not made electronically will be subject to a penalty equaling 3 percent of the payment amount not to exceed $500.DOR's Updated Questions: Can I pay estimated personal income tax payments online?  What are my options for paying the personal income tax that I owe?  The DOR directs taxpayers needing to make estimated tax payments electronically to its “myPath” website.  Taxpayers have a couple of options available to them when paying electronically.  Payments can be made by debit or credit card (ACI Payments), or by ACH transfer.  There are fees associated with paying by credit/debit card, and credit limitations might make this option effectively unavailable for some taxpayers (depending upon individual facts and circumstances).  Paying by ACH transfer will require taxpayers to transfer funds directly from a savings or checking account.  If you have questions concerning the above requirements, please reach out to your Schneider Downs tax advisor for additional guidance.    ### FASB ASC Topic 842 Leases – Contract Modifications After all the diligent work to assemble your “day-one” accounting for leases under the new lease accounting standard (Topic 842), including identifying a complete population of leases, carefully applying transitional practical expedients and selecting the appropriate discount rates, there are more challenges with the subsequent “day-two-and-thereafter” accounting. In its most simplistic form and holding the lease portfolio constant, the subsequent accounting is as easy as running the amortization schedules for lease assets and liabilities and posting the journal entries. A challenge is how to account for lease modifications, new leases and lease terminations. Of these, lease modifications are particularly arduous under the new rules. According to the Topic 842 glossary, lease modifications are a change in the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease. Depending on the nature of the modification, a change to a lease contract is accounted for either as a separate lease contract (i.e., a separate unit of account) or a modification to the original lease (i.e., the existing unit of account). Common examples of lease modifications are extensions or reductions in the lease term not originally included in the contract, changes in lease payments and changes in the scope of the leased asset, such as obtaining additional square footage in a warehouse lease. Before analyzing the nature of the modification, Topic 842 requires a lessee to reassess whether a contract is or contains a lease only if the terms and conditions of the contract are changed. Presuming that a modified contract still qualifies as a lease under Topic 842, the next step is determining the nature of the modification. A modification is accounted for as a separate lease contract if: 1.a. the modification grants the lessee a right to use an additional asset(s) not contemplated in the original agreement; and 1.b. the lease payments associated with the additional right-of-use asset(s) are commensurate with standalone pricing. Following this type of modification, the lessee will have two units of account, the original lease and the new lease. A modification is not accounted for as a separate lease contract if the modification: 2.a. . grants additional right-of-use asset(s) not included in the original contract and the lease payments associated with the additional right-of-use assets(s) are commensurate with standalone pricing, but the modification is also changing other elements of the contract (e.g., a change to the consideration of the original right-of-use asset); 2.b. extends or reduces the term of the existing lease, other than through the exercise of an existing renewal or termination option; 2.c. changes the consideration in the contract only; or 2.d. fully or partially terminates an existing lease. These types of modifications require the lessee to reassess the lease classification (i.e., operating or finance classification), remeasure the lease liability using the discount rate on the lease modification effective date and adjust the right-of-use asset. In modification examples 2.a., 2.b. and 2.c., the change in the lease liability through the remeasurement process results in a direct adjustment to the right-of-use asset (i.e., a balance sheet adjustment only). In modification example 2.d., the change is recognized in the income statement as a gain or loss. Modification example 2.a. is unique. It seemingly contains all the necessary elements to be accounted for as a separate contract as outlined in 1.a. and 1.b., but because it also contains another modifying action (a change to the consideration of the original right of use), Topic 842 prohibits it from being accounted for as a separate contract. Organizations need to find a suitable way to calculate Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting. Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of only a few leases. If the profile is more complex and/or voluminous, management is likely better served by a lease software solution like simpLEASE from Schneider Downs. In addition to offering clients this solution, we also provide advisory services for the technical aspects of lease accounting. ### 2022 Standard Mileage Rates The IRS just released the 2022 standard mileage rate, and it comes with some increases. The rates are for the use of vehicles including cars, pickups, vans or panel trucks. The new mileage rates have increased due to the higher fuel prices in the past year. The new standard mileage rates starting on January 1, 2022, are as follows: 58.5 cents per mile for business travel driven (up 2.5 cents from 2021) 18 cents per mile driven for medical or moving purposes (up 2 cents from 2021) 14 cents per mile driven in service of charitable organizations (remained the same) The rate for business use is updated each year based on an annual study of fixed and variable costs of operating an automobile. These costs include, but are not limited to, depreciation, insurance, repairs, tires, maintenance, gas and oil prices. The rate for medical and moving purposes is only based on variable costs for operating.As a reminder of the rules under the Tax Cuts and Jobs Act (TCJA), any unreimbursed travel expenses are no longer allowed to be claimed as miscellaneous itemized deductions for individual taxpayers. The TCJA also disallowed the deduction of moving expenses, excluding armed forces on active duty with orders of permanent change. Both rules will continue to be in place through the beginning of 2026.Along with the TCJA changes, it should also be noted that no business mileage is allowed when using the Modified Accelerated Cost Recovery System (MACRS) or when a 179 deduction was used. Taxpayers continue to be limited on the number of vehicles (no more than four) that can be applied using the standard rate at one time. Individuals can also use their actual allowable expenses instead of the standard rates, given they have kept the appropriate records for evidence.If any questions arise when implementing these mileage rates or adjustments, please reach out to your local Schneider Downs tax professional.  ### Apache Log4j Vulnerability Update – Remediation Tools and Patches This article provides updates from The Cybersecurity and Infrastructure Security Agency (CISA), Apache and Microsoft who continue to work to develop patches and tools to help organizations protect themselves from one of the most severe cybersecurity vulnerabilities on record. As many of us are just returning to the office from the holiday weekend, cybersecurity professionals around the globe continue to work around the clock to develop tools to identify and remediate Log4j vulnerabilities. CISA Log4j Scanner Tool CISA announced the release of a Log4j scanner last week that works to identify web services impacted by the CVE-2021-44228 and CVE-2021-45046 remote code execution vulnerabilities. The open-sourced tool is based on scanners created by other members of the open-source community, including FullHunt’s automated scanning framework for the CVE-2021-442288 bug. According to CISA, the tool allows security teams to scan network hosts for Log4j RCE exposure and identify web application firewall bypasses that act as entry points for threat actors to potentially gain code execution within the environment. The scanner is available on the CISA GitHub page at https://github.com/cisagov/log4j-scanner and features include: Support for lists of URLs Fuzzing for more than 60 HTTP request headers (not only 3-4 headers as previously seen tools) Fuzzing for HTTP POST Data parameters Fuzzing for JSON data parameters Supports DNS callback for vulnerability discovery and validation WAF Bypass payloads CISA also revised the “Alert (AA21-356A) Mitigating Log4Shell and Other Log4j-Related Vulnerabilities” to include mitigation guidance for CVE-2021-44228, CVE-2021-45046, and CVE-2021-45105 Log4j vulnerabilities. The revised alert is available at www.cisa.gov/uscert/ncas/alerts/aa21-356a. Apache Fixes and Updates Apache released Log4j version 2.17.1 this past Monday which fixes a newly discovered remote code execution (CVE-2021-44832) vulnerability. Prior to the release, version 2.17.0 was believed to be the safest release to upgrade to, but the new version is recommended until the next release. Apache also released patches to contain an arbitrary code execution flaw in Log4j that could be abused by threat actors to run malicious code on affected systems according to Hacker News. Apache has now addressed four key vulnerabilities and updated their notes listed below. CVE-2021-44228 (CVSS score: 10.0) - A remote code execution vulnerability affecting Log4j versions from 2.0-beta9 to 2.14.1 (Fixed in version 2.15.0) CVE-2021-45046 (CVSS score: 9.0) - An information leak and remote code execution vulnerability affecting Log4j versions from 2.0-beta9 to 2.15.0, excluding 2.12.2 (Fixed in version 2.16.0) CVE-2021-45105 (CVSS score: 7.5) - A denial-of-service vulnerability affecting Log4j versions from 2.0-beta9 to 2.16.0 (Fixed in version 2.17.0) CVE-2021-4104 (CVSS score: 8.1) - An untrusted deserialization flaw affecting Log4j version 1.2 (No fix available; Upgrade to version 2.17.1) Microsoft Defender Log4j Scanner Microsoft announced their Defender for Containers and Microsoft Defender received updates to identify and remediate the Log4j vulnerabilities. The Microsoft Security blog “Guidance for preventing, detecting, and hunting for exploitation of the Log4j 2 vulnerability” was updated on December 27th with new information related to Log4j vulnerability tools. Key excerpts from the blog are listed below for the Defender for Containers and Microsoft Defender updates. Microsoft Defender for Containers Microsoft Defender for Containers is capable of discovering images affected by the vulnerabilities recently discovered in Log4j 2: CVE-2021-44228, CVE-2021-45046, and CVE-2021-45105. Images are automatically scanned for vulnerabilities in three different use cases: when pushed to an Azure container registry, when pulled from an Azure container registry, and when container images are running on a Kubernetes cluster. Microsoft Defender for Endpoint Alerts with the following titles in the Security Center indicate threat activity related to exploitation of the Log4j vulnerability on your network and should be immediately investigated and remediated. These alerts are supported on both Windows and Linux platforms: Log4j exploitation detected – detects known behaviors that attackers perform following successful exploitation of the CVE-2021-44228 vulnerability Log4j exploitation artifacts detected (previously titled Possible exploitation of CVE-2021-44228) – detects coin miners, shells, backdoor and payloads such as Cobalt Strike used by attackers post-exploitation Log4j exploitation network artifacts detected (previously titled Network connection seen in CVE-2021-44228 exploitation) – detects network traffic connecting traffic connecting to an address associated with CVE-2021-44228 scanning or exploitation activity Microsoft Defender for Servers Microsoft Defender for Cloud’s threat detection capabilities have been expanded to ensure the exploitation of CVE-2021-44228 in several relevant security alerts. However, reports of the tool capturing false positives started popping up on Twitter shortly after the release. Administrators reported receiving a message reading “Possible sensor tampering in memory was detected by Microsoft Defender for Endpoint”. Microsoft is currently investigating the situation and is encouraging any users encountering the issue to visit their Microsoft Defender for Endpoint Support page for updates and service requests. This article is a continuation of our Apache Log4j Vulnerability series, available at /our-thoughts-on/category/cybersecurity. We encourage you to share our article with your network and reach out with any questions at cybersecurity@schneiderdowns.com.  Apache Log4j CISA Resources CISA Apache Log4j Vulnerability Guidance CISA Log4j (CVE-2021-44228) Vulnerability Guidance Github Repository Apache Log4j Web Resources Apache – Log4j Security Vulnerability Center GitHub – BlueTeam CheatSheet * Log4Shell* Github – Log4j RCE Exploitation Detection Related Articles Apache Log4j Vulnerability Update Apache Log4j Vulnerability Update – Government Responses and Ransomware Activity Apache Log4j Vulnerability Update – CISA Issues Emergency Directive About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Donor Information Disclosure Requirements Tax-exempt organizations that receive contributions as part of their revenue are required to include Form 990 Schedule B, Schedule of Contributors, listing the contributors who donated more than a specific threshold.Schedule B indicates their names, addresses and amounts contributed as part of their annual filing requirement with the Form 990. Unlike the Form 990 and the other additional required schedules that are attached to the Form 990, Schedule B is not subject to public inspection and is only provided to the Internal Revenue Service (the “IRS”).While the federal filing requirements are clear for Schedule B, the states’ instructions still vary or are unclear. As such, up until recently, the state of California required tax-exempt organizations to submit a full copy of their Form 990, including Schedule B as part of their state annual report. In July of 2021, the U.S. Supreme Court ruled that these reporting requirements violate the right to free association protected by the First Amendment to the U.S. Constitution. In October of 2021, the New Jersey Division of Consumer Affairs (the “Division”) proposed amendments to its rules to no longer require the submission of Schedule B as part of the charitable registrations with the state. In light of the U.S. Supreme Court’s decision in the case with the state of California, the Division has determined that the requirement for charitable organizations to file Schedule B can no longer be enforced.The Division is collecting comments in regards to this amendment until December 17, 2021.Other states, such as New York and Florida, have a requirement to submit a full Schedule B to the state, but it is likely to change in the near future due to the U.S. Supreme Court’s ruling.  ### Schneider Downs Trucking Industry Whitepaper Series Update The Schneider Downs Transportation and Logistics industry group continues to focus on topics critical to the trucking industry in our State of the Industry whitepaper series. With response rates to the annual Business Outlook and Economic Survey down this year, Schneider Downs and the Ohio Trucking Association (OTA) introduced a series of whitepapers starting this past September to address top issues facing the trucking industry. We invite you to explore and download our available whitepapers below. State of the Industry – Infrastructure Investment and Jobs Act On November 15, 2021, President Joe Biden signed the $1 trillion bipartisan infrastructure bill, known as the Infrastructure Investment and Jobs Act, into law. This whitepaper reviews key components of the bill including targeted infrastructure repairs and allocated spending, and how the improvements will benefit the trucking industry. State of the Industry – Economic Update Currently, we are in a new run of economic expansion that began in May 2020 and has by many measures, surpassed even the strongest metrics of the previous economic expansion. However, the overall economic picture is complicated by many factors, including the impact of the COVID-19 pandemic, supply chain issues, inflation and unemployment. This whitepaper will describe current macroeconomic conditions, current microeconomic conditions and, hopefully, provide some context for considering what lies ahead on the economic horizon. State of the Industry – Leasing Equipment As the pandemic evolved over 2020 and 2021, it created an even greater reliance on the transportation industry to deliver much-needed supplies throughout the country. As we settle into the new normal, trucking companies now need to be aware of a significant change coming right around the corner regarding the tracking and accounting for leased assets. We’ve included in this white paper information about the standard, how it will impact the financials and what you should be doing now to prepare. Download the Whitepaper State of the Industry – Driver Shortages The current labor market, which is consistently and predictably one of the transportation sector’s top pain points, and the resulting driver shortage pose unique challenges within the industry. This white paper will describe several tactics for recruiting and retaining talent, then present several less obvious options for consideration. Download the Whitepaper Upcoming Whitepaper Topics (tentative) January: State of Industry - Data Analytics and Technology February: State of Industry - Tax Update March: State of Industry - Cyber/Technology Next year we expect to relaunch our membership survey and encourage you to look out for it. You can access all of the Schneider Downs Transportation and Logistics resources at www.schneiderdowns.com/transportation-logistics-resources. About the Schneider Downs Transportation and Logistics Industry Group Our Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends. We work with you to seek innovative ways to reach your strategic goals. For more information visit our dedicated Transportation and Logistics page. ### Apache Log4j Vulnerability Update – CISA Issues Emergency Directive The US Department of Homeland Security’s Cybersecurity Infrastructure and Security Agency (CISA) issued an emergency directive this past Friday concerning the Log4j vulnerability. According to CISA, the Log4j vulnerability poses an "unacceptable risk" to Federal Civilian Executive Branch agencies and requires emergency action. This determination is based on the current exploitation of this vulnerability by threat actors in the wild, the likelihood of further exploitation of the vulnerability, the prevalence of the affected software in the federal enterprise and the high potential for a compromise of agency information systems. CISA’s directive, titled the Cybersecurity and Infrastructure Security Agency’s Emergency Directive 22-02, “Mitigate Apache Log4j Vulnerability” requires federal civilian departments and agencies to immediately identify all software impacted by Log4j by close of business on December 23, 2021, and to either patch vulnerabilities or remove the impacted software from the networks. The directive also requires agencies to report the impacted software and actions taken to CISA by close of business on December 28th. “The log4j vulnerabilities pose an unacceptable risk to federal network security,” CISA Director Jen Easterly said following the emergency directive. “CISA has issued this emergency directive to drive federal civilian agencies to take action now to protect their networks, focusing first on internet-facing devices that pose the greatest immediate risk.” The emergency directive is available to view online at www.cisa.gov/emergency-directive-22-02 and an excerpt from the full description of the required actions are below for quick reference: By 5 pm EST on December 23, 2021: Enumerate all solution stacks accepting data input from the internet. Evaluate all software assets in identified solution stacks against the CISA-managed GitHub repository (https://github.com/cisagov/log4j-affected-db) to determine whether Log4j is present in those assets and if so, whether those assets are affected by the vulnerability. If the software product is not listed in the repository, request addition by submitting a “pull” request using the link on the GitHub page. For all software assets that agencies identify as affected by CVE-2021-44228: Update assets for which patches have been provided. Remediation timelines prescribed in BOD 22-01 “may be adjusted in the case of grave risk to the Federal Enterprise.” Given the criticality of CVE-2021-44228, agencies must immediately patch any vulnerable internet-facing devices for which patches are available, under an emergency change window. OR Mitigate the risk of vulnerability exploitation using one of mitigating measures provided at: link. OR Remove affected software assets from agency networks. For all solution stacks containing software that agencies identified as affected: assume compromise, identify common post-exploit sources and activity, and persistently investigate and monitor for signs of malicious activity and anomalous traffic patterns (e.g., JDNI LDAP/RMI outbound traffic, DMZ systems initiating outbound connections). By 5 pm EST on December 28, 2021: Report all affected software applications identified in (3) above using the provided template, including: Vendor name Application name and version Action taken (e.g. updated, mitigated, removed from agency network) Confirm with vulnerability@cisa.dhs.gov that your agency’s Internet-accessible IP addresses on file with CISA are up to date, as required by CISA Binding Operational Directive 19-02. These required actions apply to agency applications in any information system, including an information system used or operated by another entity on behalf of an agency, that collects, processes, stores, transmits, disseminates or otherwise maintains agency information (i.e. all applications in agency ATO boundaries). For federal information systems hosted in third-party environments (such as cloud), each agency is responsible for maintaining an inventory of its information systems hosted in those environments (FedRAMP Authorized or otherwise), conducting all necessary reporting to CISA accounting for such systems and working with service providers directly for status updates pertaining to, and to ensure compliance with, this Directive. This article is a continuation of our Apache Log4j Vulnerability series, available at /our-thoughts-on/category/cybersecurity. We encourage you to share our article with your network and reach out with any questions at cybersecurity@schneiderdowns.com.  Apache Log4j CISA Resources CISA Apache Log4j Vulnerability Guidance CISA Log4j (CVE-2021-44228) Vulnerability Guidance Github Repository Apache Log4j Web Resources Apache – Log4j Security Vulnerability Center GitHub – BlueTeam CheatSheet * Log4Shell* Github – Log4j RCE Exploitation Detection Related Articles Apache Log4j Vulnerability Update Apache Log4j Vulnerability Update – Government Responses and Ransomware Activity Apache Log4j Vulnerability Update – Remediation Tools and Patches About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe.   ### Do Millennials Value a Caddy? Recently the Wall Street Journal published an article titled, “Rich Millennials to Financial Advisers: Thanks for the Golf Invite, But You Can’t Invest My Money”, noting that young, wealthy investors don’t see the value in working with an advisor, preferring to pick their own investments such as individual stocks and cryptocurrency. As a wealth management practice that prides itself on client service and forming personal connections, we wanted to respond with our thoughts regarding Millennial clients, defined as individuals born between 1981 and 1996. Self-Managed to Start the Round As noted in the article, according to Federal Reserve data analysis from 2019, roughly 70% of households with a net worth of $500K or more, headed by a person under 45 years old, were mostly self-directed investors. Nearly half of these households were aiming to take an above-average level of risk with the expectation of earning above-average returns. When we layer in the tremendous market rebound that we’ve seen since COVID-19 capital market lows on March 23, 2020 (see chart): The S&P 500 is up almost 110% on a total return basis (including dividends) thru November 30, 2021; and The price of Bitcoin is up a tremendous 750%+ over the same time. See Jason Staley’s article, “Bitcoin, Bitcoin, Read All About It” for additional cryptocurrency commentary. Given the recent run-up in traditional capital markets and speculative cryptocurrency investments, it proves to us that Millennials, initially, are electing to “carry their own golf clubs” regarding their investment management. Dalbar Study Highlights Long Term, Self-Management Challenges However, long-term research continues to illustrate the value of having a trusted, third-party advisor. Since 1994, Dalbar, Inc. (“Dalbar”) has measured the effects of the “average investor” and their decisions to buy, sell, and switch in and out of investments over various periods of time. Dalbar utilizes the net aggregate mutual fund sales, redemptions, and exchanges each month as a measure of investor behavior. According to Dalbar, the average investor, for the 20-year period ending December 31, 2020, earned 2.9% per year relative to the S&P 500 Index, up 7.5%, and to the Barclays Aggregate Bond Index, up 4.8%, over the same time period. As we’ve written about before in our article on behavioral investing challenges, behavioral finance has illustrated that individual investors tend to make poor investment decisions because of personal biases and emotions resulting in sub-optimal investment performance. This is an area in which a trusted advisor can really add value for millennials long-term. (For more information on effective ways to minimize personal biases that impact investment results, see our videos on Disciplined Investment Approach and Importance of a Financial Plan.) Financial Advice Later in Life As Pew Research Center studies indicate, compared to other generations, the financial well-being of Millennials can be complicated. Higher Debt Burden - The share of young adult households with any student debt doubled from 1998 (when Gen Xers were ages 20 to 35) to 2016 (when Millennials were that age). In addition, the median amount of debt was nearly 50% greater for Millennials with outstanding student debt ($19,000) than for Gen X debt holders when they were young ($12,800). Living At Home Longer - In 2018, 15% of Millennials (ages 25 to 37) were living in their parents’ home. This is nearly double the share of early Boomers and Silents (8% each) and 6 percentage points higher than Gen Xers who did so when they were the same age. Marrying Later - In 1968, the typical American woman first married at age 21 and the typical American man first wed at 23. Today, those figures have climbed to 28 for women and 30 for men. The above data paints a picture that asset accumulation for Millennials is likely delayed. Club Selection Still Key When It Matters An underappreciated aspect of wealth management is not only generating wealth, but also keeping one’s wealth. According to the National Endowment for Financial Education, about 70 percent of people who win a lottery or receive a large windfall go bankrupt within a few years. To us, this continues to illustrate the value of a trusted, long-term advisor advocating for prudent, thought-out financial decisions. While Millennials may not be receptive to the industry’s golf invitations today, we still expect them to eventually want the guidance of a trusted caddy, it just might not be until the back 9. The Journal article notes that a financial advisor is still important at any age and stage of life, such as for the individual that partially monetizes his advertising agency for $9 million or the individual that is working through a complicated estate. As income, assets, and families grow, the need and desire for holistic wealth management services (i.e., investment management, tax planning, and overall estate planning) for Millennials, in our opinion, will remain consistent with previous generations. If you have questions about this article or are curious about whether you need wealth management services, please reach out to us at sdwealthmanagement@schneiderdowns.com and we will connect you with one of our trusted advisors. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Apache Log4j Vulnerability Update – Government Responses and Ransomware Activity Private and public officials continue to scramble around the clock to address the Apache Log4j vulnerability since initial reports of the exposed code sent the cybersecurity world into turmoil last Friday. This article provides an update on the government initiatives aimed at the Apache Log4j vulnerability, recent statistics showing the severity of attack attempts and the possibility of threat actors exploiting the vulnerability for future ransomware attacks. Government Response to Apache Log4j  As cyber and IT professionals continue to work endlessly to combat the Apache Log4j vulnerability, government officials are joining the fight by developing resources and partnering with industry experts and officials to address what is considered one of the worst security flaws of all time. Cybersecurity and Infrastructure Security Agency (CISA) Director Jen Easterly held a phone briefing regarding the vulnerability, stressing its severity and scale. “We expect the vulnerability to be widely exploited by sophisticated actors and we have limited time to take necessary steps in order to reduce the likelihood of damage,” said Easterly. “The issue is an unauthenticated remote execution vulnerability that could allow an intruder to take over an affected device.” CISA Information Security Specialist Jay Gazlay of the Vulnerability Management Office also commented that he estimates hundreds of millions of devices are now vulnerable to unauthenticated remote execution, which allows intruders to take them over. CISA has joined several other agencies across the world, including Canada, New Zealand and the United Kingdom (UK), to develop dedicated webpages providing trusted resources for organizations to leverage. The CISA page is at www.cisa.gov/uscert/apache-log4j-vulnerability-guidance and provides real-time updates on the the Log4j vulnerability, including the alert below: Apache released Log4j version 2.15.0 in a security update to address this vulnerability. However, in order for the vulnerability to be remediated in products and services that use affected versions of Log4j, the maintainers of those products and services must implement this security update. Users should refer to vendors for security updates. Given the severity of the vulnerability and the likelihood of increased exploitation by sophisticated cyber threat actors, CISA urges vendors and users to take the following actions outlined. Vendors Immediately identify, mitigate, and patch affected products using Log4j Inform your end users of products that contain this vulnerability and strongly urge them to prioritize software updates Affected Organizations In addition to the immediate actions—to (1) enumerate external-facing devices that have Log4j, (2) ensure your SOC actions alerts on these devices, and (3) install a WAF with rules that automatically update— review CISA's upcoming GitHub repository for a list of affected vendor information and apply software updates as soon as they are available. See Actions for Organizations Running Products with Log4j below for additional guidance. Note: CISA has added CVE-2021-44228 to the Known Exploited Vulnerabilities Catalog, which was created according to Binding Operational Directive (BOD) 22-01: Reducing the Significant Risk of Known Exploited Vulnerabilities. In accordance with BOD 22-01, federal civilian executive branch agencies must mitigate CVE-2021-44228 by December 24, 2021 Actions for Organizations Running Products with Log4j CISA recommends affected entities: Review Apache’s Log4j Security Vulnerabilities page for additional information and, if appropriate, apply the provided workaround: In releases >=2.10, this behavior can be mitigated by setting either the system property log4j2.formatMsgNoLookups or the environment variable LOG4J_FORMAT_MSG_NO_LOOKUPS to true. For releases from 2.7 through 2.14.1 all PatternLayout patterns can be modified to specify the message converter as %m{nolookups} instead of just %m. For releases from 2.0-beta9 to 2.7, the only mitigation is to remove the JndiLookup class from the classpath: zip -q -d log4j-core-*.jar org/apache/logging/log4j/core/lookup/JndiLookup.class. Apply available patches immediately. See CISA's GitHub repository for known affected products and patch information. Prioritize patching, starting with mission critical systems, internet-facing systems, and networked servers. Then prioritize patching other affected information technology and operational technology assets. Until patches are applied, set log4j2.formatMsgNoLookups to true by adding -Dlog4j2.formatMsgNoLookups=True to the Java Virtual Machine command for starting your application. Note: this may impact the behavior of a system’s logging if it relies on Lookups for message formatting. Additionally, this mitigation will only work for versions 2.10 and above. As stated above, BOD 22-01 directs federal civilian agencies to mitigate CVE-2021-44228 by December 24, 2021, as part of the Known Exploited Vulnerabilities Catalog. Conduct a security review to determine if there is a security concern or compromise. The log files for any services using affected Log4j versions will contain user-controlled strings. Consider reporting compromises immediately to CISA and the FBI. Additionally, the UK National Cyber Security Centre (NCSC) created a sourced A-Z list on GitHub of all known affected software products marked with one of the defined statuses outlined below. The list is available at https://github.com/NCSC-NL/log4shell/tree/main/software. Apache Log4j Attack Update A recent report states that Log4j-related attacks accelerated throughout the past few days and, at points, researchers were witnessing more than 100 attacks per minute. The same report identified Chinese state-backed threat actors as some of the largest perpetrators, launching an estimated 840,000 attacks on companies since last Friday. So what are attackers after? A large-scale vulnerability such as this provides endless motives for threat actors, including scanning systems to install malware, stealing user credentials and cryptojacking. Reports also confirm several botnets, including Mirai, Tsunami and Kinsing, are attempting to take advantage of the vulnerability. Additionally, Microsoft has stated they are witnessing activity including credential theft, lateral movement and data exfiltration in a post to their Guidance for preventing, detecting, and hunting for CVE-2021-44228 Log4j 2 exploitation blog. One positive note coming out of the updates is that there is no evidence of an active supply-chain attack (for now at least). Unfortunately, the omnipresent nature of the vulnerability means the window for threat actors to gain access remains open. A number of organizations are still unsure if the vulnerability impacted them, and vendors are still scrambling for patches. While data breaches are nothing new, the scale and scope of this flaw has many cybersecurity professionals extremely concerned. Director of Threat Intelligence and Research for Checkpoint Lotem Finkelstein commented on the potential long-term impact of the situation. "I cannot overstate the seriousness of this threat. On the face of it, this is aimed at cryptominers, but we believe this creates just the sort of background noise that serious threat actors will try to exploit in order to attack a whole range of high-value targets such as banks, state security and critical infrastructure." Apache Log4j and Ransomware Shortly after the Log4j vulnerability took over the headlines, two major ransomware attacks hit global HR software provider Kronos and the Virginia State Legislature. As of the time this article was written, the timing is simply coincidental, with neither incident reporting connections with the Log4j vulnerability. However, that does not mean threat actors are not strategizing about how to exploit the vulnerability for ransomware attacks. A large cybersecurity firm stated that they are seeing indicators of attackers exploiting Log4Shell to lay the groundwork for ransomware attacks. Microsoft’s threat intelligence teams also reported they are seeing Log4Shell exploited to install the popular cybercriminal tool Cobalt Strike, which is a regarded as a precursor to deploying ransomware. Despite the speculation and recorded activity, no ransomware groups have pulled the trigger as of the time this article was written – however, our team will continue to monitor the potential ransomware threat as it develops. Apache Log4j Government Resources Canadian Center for Cyber Security Active Exploitation of Apache Log4j Vulnerability Center CISA Apache Log4j Vulnerability Guidance New Zealand Log4j RCE 0-Day Actively Exploited Advisories NCSC Apache Log4j 2 Vulnerability Alert This article is a continuation of our Apache Log4j Vulnerability series, available at /our-thoughts-on/category/cybersecurity. We encourage you to share our article with your network and reach out with any questions at cybersecurity@schneiderdowns.com.  Apache Log4j CISA Resources CISA Apache Log4j Vulnerability Guidance CISA Log4j (CVE-2021-44228) Vulnerability Guidance Github Repository Apache Log4j Web Resources Apache – Log4j Security Vulnerability Center GitHub – BlueTeam CheatSheet * Log4Shell* Github – Log4j RCE Exploitation Detection Related Articles Apache Log4j Vulnerability Update Apache Log4j Vulnerability Update – CISA Issues Emergency Directive Apache Log4j Vulnerability Update – Remediation Tools and Patches About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### HR Management Software Provider Kronos Hit by Ransomware As IT and cyber professionals across the globe scramble to address the Log4j flaw—considered among the worst cyber vulnerabilities ever—one of the largest human resources solution providers is reporting a major ransomware attack. HR management platform provider Kronos reported to customers on December 13th that they had suffered a ransomware attack, preventing clients from processing payroll, managing schedules and handling timesheets. The primary target of the attack is the popular workforce management solution, Kronos Workforce Central, which is built specifically for clients to manage their workforce on a cloud platform. The attack comes at a sensitive time of year with many clients scrambling for solutions to handle payroll and vacation schedules in time for the holiday season. One client confirmed that the attack will cause them to miss payroll for at least one week. Parent company, Ultimate Kronos Group (UKG), has advised clients to seek out alternative solutions and released the following statement: “While we are working diligently, our Kronos Private Cloud solutions are currently unavailable … Given that it may take up to several weeks to restore system availability, we strongly recommend that you evaluate and implement alternative business continuity protocols related to the affected UKG solutions.” The statement also lists out the specific platforms and solutions affected by the attack, outlined below for quick reference. Impacted – Kronos Private Cloud—the portion of our business where UKG Workforce Central, UKG?TeleStaff, Healthcare Extensions and Banking Scheduling Solutions are deployed. Not Impacted – UKG Pro, UKG Ready, UKG Dimensions or any other UKG products or solutions, which are housed in separate environments and not in the Kronos Private Cloud. Kronos’ software is widely used throughout the country by major clients, including Tesla, the YMCA, the UK grocery chain Sainsburys, multiple health agencies, the New York City Metropolitan Transportation Authority and the City of Cleveland’s government. In addition to disrupting the software, UKG has informed clients, including the City of Cleveland, that the attack also resulted in a data breach comprised of employees’ full names, IDs and partial social security numbers. Although cybersecurity professionals believe recent Log4j exploits indicate attackers are gearing up for ransomware attacks, UKG officials have not stated that this is related at the time of publishing this article. The last two days have been chaotic for IT and cyber professionals and an attack like this is not just a reminder of how dangerous ransomware attacks are, but also what the inherit risks are for third party vendors. We know that outsourcing business functions to third parties is essential in today’s business environments, but any partnership can result in downstream effects like the issues Kronos’ clients are encountering with their inability to process payroll and manage schedules. If you have any questions about third party risk management or the other topics discussed in our article, please contact the team at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Apache Log4j Vulnerability Update A new remote code exploitation (RCE) vulnerability (CVE-2021-44228 / CVSS score 10.0) dubbed LogJam/Log4Shell hit the internet on Friday December 10th, 2021 that has security individuals extremely concerned, and for good reason. The vulnerable code is part of the Apache logging framework, which is an open source framework used by developers for logging purposes. The source of the vulnerability, Log4j, is a java library within the framework and is used to collect activity. Recent reports indicate the exploit may have started as early as December 1st, but there was no evidence of mass exploitation until the vulnerability went public. The vulnerability first gained notoriety through Microsofts’ Minecraft (the java-based client edition) where individuals were able to run malicious command through the in-game chat function.  Since then, the vulnerability has spread to all corners of the internet, including Steam, iCloud and various hardware-based and software-based applications. As this vulnerability allows for RCE, the patches should be applied as soon as possible. A threat actor can take advantage of this vulnerability by simply sending java code to the device if it contains Log4j libraries. By crafting commands so that systems execute malicious code as they are logged by the Log4j libraries, they can potentially gain unauthorized remote control of these devices. As this java library is commonly utilized for logging purposes, any application which utilizes the library (versions 2.0 to 2.14.1)  is vulnerable to the RCE. If the service of the logging is externally facing, this only compounds on the problem. The vulnerability is fixed in the latest version (2.15), however this isn’t as easy of a fix for end users as it may initially seem. As the vulnerability stems from software built into the hardware and application-based software, an end-user IT department can only update the library if they own and manage the source code of the device/software. If the IT department does not manage it, they must wait for the vendor to release a patch or cease using the device/software. For most organizations, the company must first: Ensure they are aware of all of their software (hardware and application-based software) in use Analyze those software pieces for potential vulnerable Log4j libraries Monitor the vendor’s patch releases for an update patch (if the software is vulnerable) Upon release of the update, apply emergency patches following your organizations emergency patch process. A security researcher (SwitHak) created a GitHub repository of links to all major company announcements as it relates to Log4J. Using this repository, an IT team can quickly search through the vendors listed for the vendors disclosures as it relates to Log4j, to determine if the software is vulnerable and if so, if a patch has been released. The repository is available at https://gist.github.com/SwitHak/b66db3a06c2955a9cb71a8718970c592. Cybersecurity and Infrastructure Security Agency (CISA) Director Jen Easterly released the following statement concerning the vulnerability early Saturday morning. “CISA is working closely with our public and private sector partners to proactively address a critical vulnerability affecting products containing the Log4j software library. This vulnerability, which is being widely exploited by a growing set of threat actors, presents an urgent challenge to network defenders given its broad use. End users will be reliant on their vendors, and the vendor community must immediately identify, mitigate, and patch the wide array of products using this software.  Vendors should also be communicating with their customers to ensure end users know that their product contains this vulnerability and should prioritize software updates.” CISA recommends asset owners take three immediate steps as soon as possible: Enumerate any external facing devices that have Log4j installed. Make sure that your security operations center is actioning every single alert on the devices that fall into the category above. Install a web application firewall (WAF) with rules that automatically update so that your SOC is able to concentrate on fewer alerts. The Schneider Downs cybersecurity team recommends starting this repository to check if any of your software is vulnerable and to act accordingly. If there is additional software in your organization that is not linked within this repository, we recommend checking with the vendor or analyzing the software to determine if it is potentially vulnerable, while focusing on any software or hardware that is externally facing first, and then moving inward in the environment. Fortunately, detecting indicators of compromise can easily be done by looking for specific strings within the log files for Log4j. A quick check would be to search for any user-agent containing “${jndi” in the URL field with a 200 HTTP status code. For further detection, you can use these commands and rules to suit your needs. This article is a continuation of our Apache Log4j Vulnerability series, available at /our-thoughts-on/category/cybersecurity. We encourage you to share our article with your network and reach out with any questions at cybersecurity@schneiderdowns.com.  Apache Log4j CISA Resources CISA Apache Log4j Vulnerability Guidance CISA Log4j (CVE-2021-44228) Vulnerability Guidance Github Repository Apache Log4j Web Resources Apache – Log4j Security Vulnerability Center GitHub – BlueTeam CheatSheet * Log4Shell* Github – Log4j RCE Exploitation Detection Related Articles Apache Log4j Vulnerability Update – Government Responses and Ransomware Activity Apache Log4j Vulnerability Update – CISA Issues Emergency Directive Apache Log4j Vulnerability Update – Remediation Tools and Patches About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### What Caused the Recent Amazon Web Services Outage? An outage at Amazon Web Services’ (AWS) biggest data center, the AWS-us-east-1 cloud region, created a chaotic morning for countless smart devices, services and companies on Tuesday, December 7th across the globe. The outage impacted several of Amazon services including the AWS Management Console, Support Center, Elastic Compute Cloud, Amazon Connect and Amazon Dynamo DB. With millions of private, public and federal organizations connect to the AWS cloud computing services, users across the globe felt the impact of the outage. Popular websites and apps such as Spotify, Netflix and Disney+, as well as smart home devices including Ring, smart robots and Alexa, all reported interruptions. Also affected were high-traffic websites, including My Social Security (SSA), Delta Airlines and Billboard and banks. The outage really hit home for Amazon when their automated warehouse bots and the app Amazon delivery drivers rely on for logistic management came to a stop at one of the busiest times of year. Amazon started to provide updates on the outages mid-morning on the AWS Service Health Dashboard, with the final two messages below stating the issues had been resolved. [3:03 PM PST] Many services have already recovered, however we are working towards full recovery across services. Services like SSO, Connect, API Gateway, ECS/Fargate, and EventBridge are still experiencing impact. Engineers are actively working on resolving impact to these services. [4:35 PM PST] With the network device issues resolved, we are now working towards recovery of any impaired services. We will provide additional updates for impaired services within the appropriate entry in the Service Health Dashboard. You can view the full transcript and updates at https://status.aws.amazon.com/. What caused the AWS outage? Whenever an outage occurs, the question on everybody’s mind is “what caused this?” Amazon has stated that a “network device issue” caused the outage, but a recent Business Insider report claims the true cause is still under investigation internally. According to the report, internal communications indicate that network devices may have failed due to a surge of traffic from an unknown source and that their firewalls were being “overwhelmed by an as of yet unknown source" or Amazon’s digital advertising auction. While this version of events may sound a bit more colorful than a simple technical issue does, it is only speculation at this point. Despite the article, Amazon has not commented again since simply stating that the outage had been resolved and the underlying issues mitigated. Our team will be keep an eye on any updates that come through regarding the cause of the outage. Whether this was a simple tech issue or something more, this is a good reminder of how connected, and more notably, reliant, our world is and will continue to be on cloud services. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Important Tax Savings News for the Construction Industry: Meals Portion of Per Diem Rate or Allowance Now 100% Deductible for 2021 and 2022 Internal Revenue Service (IRS) Notice 2021-63 recently provided guidance that could provide a significant tax benefit for the construction industry (and other industries that pay their employees a per diem rate or allowance) for 2021 and 2022.Internal Revenue Code (IRC) Section 274 generally limited the deduction for certain meals and entertainment expenses to 50% of the amount otherwise deductible.  However, IRC 274(n)(2)(D) provides a temporary exception to the 50% limitation for expenses that are paid or incurred after December 31, 2020, and before January 1, 2023, for food or beverages provided by a restaurant.  As a result, in general, expenses paid for eligible meal expenses are 100% deductible for the 2021 and 2022 calendar years.When IRC Section 274(n)(2)(D) was issued, tax professionals generally assumed that per diem amounts paid to employee would not be eligible for the 100% deduction allowance because the amounts were not paid to (provided by) a restaurant.IRS Notice 2021-63 provides taxpayers with good news by indicating that a taxpayer may treat the meal portion of a per diem rate or allowance paid of incurred after December 31, 2020 and before January 1, 2023, as being attributable to food or beverage provided by a restaurant.It should be noted that the details of “accountable plans” and the rules related to per diems are beyond the scope of this article, and taxpayers should ensure that they are in compliance with the IRS substantiation rules provided by Revenue Procedure 2019-48.In general, Revenue Procedure 2019-48 provides rules for taxpayers that choose to use a per diem rate in lieu of reimbursing actual lodging, meal and incidental expenses incurred by an employee for travel away from home.  If you would like to discuss the tax implications of per diems paid by your business, do not hesitate to contact Mark DiPietrantonio or a member of the Schneider Downs tax department. ### Navigating the Digital Transformation Roadmap Digital transformation is one of the more popular business buzzwords thrown around these days, but what exactly does it mean? The Schneider Downs Digital Transformation team views digital transformation, in its simplest definition, as the use of technology and business process optimization to improve stakeholder experience. Our team focuses on understanding both how our business expertise and technological capabilities can assess opportunities for process improvement, and how we can collaborate to implement the needed changes with clients. In an effort to educate organizations and providers exploring the possible use of digital transformation, the Schneider Downs Digital Transformation team has authored a whitepaper titled Navigating the Digital Transformation Roadmap. DOWNLOAD THE WHITEPAPER Our whitepaper takes a deep dive into the world of digital transformation in the business world. In it, we demonstrate how organizations can benefit from digital transformation, provide best practices for developing project frameworks and explain how to quantify a successful engagement. The whitepaper also shares our teams’ digital transformation methodology, which focuses on enhancing stakeholder experiences through measurable improvements to an organization’s business processes and technology environment. In addition to the whitepaper, the Schneider Downs Digital Transformation team has a robust FAQ guide available at www.schneiderdowns.com/digital-transformation-faq and a video overview of digital transformation solutions below. If you are interested in learning more about Schneider Downs Digital Transformation solutions, please contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. Related Articles Digital Transformation Frequently Asked Questions Digital Transformation: Not as Difficult as You Think About Schneider Downs Digital Transformation Solutions  The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. Our solutions identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. Through our cross-functional team of risk and technology professionals, we provide insights and assistance in improving the foundational business processes of an organization, and identify and implement technology to further automate and support critical business processes.   ### ASC 842, Leases – ASU 2021-09 Provides Additional Guidance on Use of Risk-Free Rate and Required Disclosures for Non-Public Entities As the deadline to implement the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842 quickly approaches for private companies and not-for-profits, the FASB published a tapered amendment to the previously issued guidance. The amendment could have a minor impact on private and non-for-profit entities; however, it may ease lease accounting rules for these entities by enabling lessees to have a more flexible way to elect a discount rate to measure leases at the present value on the balance sheet.  It also may have a favorable impact on entities that were electing to apply the risk-free rate as an accounting policy over all leases. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016- 02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The Board has made efforts in assisting stakeholders by creating a post-implementation review of Topic 842 to help field questions and feedback surrounding potential implementation issues experienced while implementing Topic 842. The Board has also hosted two public round tables to solicit feedback from stakeholders. This update stems from some private company stakeholders indicating that there could be significant costs and complexities that come along with implementing the new standard primarily related to the practical expedient that allows the use of a risk-free discount rate as an accounting policy election for non-public entities. To understand the new Update, there are several factors that need to be considered including what stakeholders are impacted by the Update, what the main provisions are and why they are an improvement from the current Generally Accepted Accounting Principles (GAAP), when will the amendments be effective, and what are the transition requirements for early adopters and private/non-for-profit entities that will be adopting Topic 842 for the fiscal years beginning after December 15, 2021. The main stakeholders impacted by ASU 2021-09 include non-public business entities including all not-for-profit entities and employee benefit plans. Under Topic 842, private companies and not-for-profit entities have an opportunity to elect a practical expedient to use a risk-free rate to discount lease payments rather than using an incremental borrowing rate. The use of the risk-free rate had to be implemented as an accounting policy across all asset classes.  ASU 2021-09 allows lessees to make the determination of which asset classes to apply the risk-free rate and no longer requires entities to use this as an overarching approach over all asset classes. The entity must disclose which asset classes the risk-free rate election was made. Additionally, the FASB clarified in the recent Update that the rate implicit in the lease when it is readily determinable must be used to discount future lease payments instead of a risk-free or incremental borrowing rate. The effective date for early adopters and those entities that have not yet adopted Topic 842 as of November 11th, 2021 will differ. Entities, that have not adopted Topic 842 as of November 11th, are required to adopt the risk-free rate update at the same time as the initial adoption of Topic 842. For entities that were early adopters of Topic 842 as of November 11, 2021, the amendments are effective for the fiscal year ending after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. These entities are required to apply the amendments on a modified retrospective basis to leases that exist at the beginning of the fiscal year of adoption of a final Update. The adoption of the Update should not be treated as an event that would reallocate or remeasure the contract consideration or adjust the lease term or classification. As you might imagine, the use of the risk-free rate for specific asset classes rather than adopting for all leases as an accounting policy may be a beneficial option for private and not-for profit entities. Prior to this Update, entities that chose to elect the practical expedient to use the risk-free-rate across all asset classes faced several challenges including (1) the risk-free rate election raises the likelihood that the present value of the lease payments and any residual value guaranteed by the lease would equal or exceed the fair value of the leased asset, potentially resulting in a classification of the lease as a finance lease and potentially leading to a day-one impairment charge and (2) the use of a lower rate would increase the initial measurement of a lessee’s lease liability and right-of-use asset. Overall, the recently issued ASU will grant private and not-for-profit entities more flexibility in utilizing the risk-free -rate by asset class when applicable. There will be additional disclosures required to note which asset classes the risk-free -rate was used for; however, the newly issued Update provides more clarity and could potentially ease implementation of Topic 842 for private and not-for-profit entities in the upcoming year. ASU 2021-09 Use of Risk-Free Rate and Required Disclosures guidance at a glance Entities impacted include non-public business entities including all not-for-profit entities and employee benefit plans Lessees now can elect the use of the risk-free rate on an asset class basis rather than taking an overarching approach over all asset classes Asset classes where risk-free rate election was made must be disclosed If readily available, the rate implicit in the lease is still required to be used to discount future lease payments Entities that have not adopted Topic 842 as of November 11th, are required to adopt ASU 2021-09 at the same time as the initial adoption of Topic 842 ASU 2021-09 is effective for early adopters for the fiscal year ending after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 on a modified retrospective approach For early adopters, the modified retrospective application of ASU 2021-09 should not be treated as an event that would reallocate or remeasure the contract consideration or adjust the lease term or classification For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.   ### 2022 Retirement Plan Limitations The Internal Revenue Service recently announced the cost-of-living adjustments (COLA) that will take effect January 1, 2022 (IRS Notice 2021-61). These COLAs affect various contribution and deduction limits for qualified retirement plans, as well as the deductible contribution limits for traditional Individual Retirement Arrangements (IRAs).Section 415 of the Internal Revenue Code (“Code”) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.Increased Limits The limitation on the annual benefit under a defined benefit plan increases from $230,000 to $245,000 (415(b)(1)(A)). For a participant who separated from service before January 1, 2022, the participant’s limitation under a defined benefit plan is computed by multiplying the participant’s compensation limitation, as adjusted through 2021, by 1.0534 (415(b)(1)(B)). The limitation for defined contribution plans is increased in 2022 from $58,000 to $61,000 (415(c)(1)(A)). The annual deferral limit for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increases from $19,500 to $20,500 (Code Sections 402(g)(1),402(g)(3)). The annual compensation limit increases from $290,000 to $305,000 (401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii)). The dollar limitation concerning the definition of “key employee” in a top-heavy plan increases from $185,000 to $200,000 (416(i)(1)(A)(i)). The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period increases from $1,165,000 to $1,230,000, while the dollar amount used to determine the lengthening of the 5-year distribution period increases from $230,000 to $245,000 (409(o)(1)(C)(ii)). The limitation used in the definition of “highly compensated employee” increases from $130,000 to $135,000 (414(q)(1)(B)). The annual compensation limitation for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, increases from $430,000 to $450,000 (401(a)(17)). The limitation regarding SIMPLE retirement accounts increases from $13,500 to $14,000 (408(p)(2)(E)). The limitation on te aggregate amount of length of service awards accruing with respect to any year of service for any bona fide volunteer, concerning deferred compensation plans of state and local governments and tax-exempt organizations increases from $6,000 to $6,500 (457(e)(11)(B)(ii)). The limitation on deferrals concerning deferred compensation plans of state and local governments and tax-exempt organizations increases from $19,500 to $20,500 (457(e)(15)). The limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan increases from $50,000 to $55,000 (664(g)(7)). The compensation amount under § 1.61-21(f)(5)(i) of the Income Tax Regulations (“Regulations”) concerning the definition of “control employee” for fringe benefit valuation purposes increases from $115,000 to $120,000. The compensation amount under § 1.61-21(f)(5)(iii) increases from $235,000 to $245,000 (1.61-21(f)(5)(iii)). The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under § 1.401(a)(9)-6, A-17(b)(2)(i) of the Regulations increases from $135,000 to $145,000. Unchanged Limits The maximum amount that can be contributed to an IRA remains unchanged at $6,000 (Code Section 219(b)(5)(A)). The IRA catch-up contribution limit for IRAs remains unchanged at $1,000 (Code Section 219(b)(5)(A)). The dollar limitation for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $6,500 (414(v)(2)(B)(i)). The dollar limitation for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $3,000 (414(v)(2)(B)(ii)). The compensation threshold for simplified employee pensions (SEPs) remains at $650 (Code Section 408(k)(2)(C)). Quick reference guide to key limitations for 2021 and 2022                         Item                                         2021 Limit                               2022 Limit            401(k)/403(b)/457                                 $19,500                                    $20,500            Elective Deferral Limit            ______________________________________________________________________________________________________            Defined Contribution Plan                      $58,000                                    $61,000            Annual Limit            ______________________________________________________________________________________________________            Defined Benefit Plan                              $230,000                                  $245,000            Annual Limit            _______________________________________________________________________________________________________                       Annual Compensation Limit                   $290,000                                  $305,000            _______________________________________________________________________________________________________            Catch-Up Contribution Limit                   $    6,500                                  $    6,500            401(k)/403(b)/457(b)/SEP            _______________________________________________________________________________________________________            Highly Compensated Employee             $130,000                                  $135,000            Compensation Threshold            _______________________________________________________________________________________________________            Key Employee                                       $185,000                                  $200,000            Compensation Threshold            ________________________________________________________________________________________________________            Social Security Taxable                         $142,800                                  $147,000            Wage Base Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Three New Cybersecurity Bills Pass the House The U.S. House of Representatives has passed three major cybersecurity bills in a continuation of legislation aimed at strengthening national cybersecurity. All the bills passed with overwhelming bipartisan support, with members on both sides of the aisle favoring strengthening network security and increasing cyber literacy. The three bills are listed below with links to full descriptions, as well as to the bill sponsors and house vote counts.H.R. 2685 – The Understanding Cybersecurity of Mobile Networks Act (Passed 404-19)Sponsors: Anna Eshoo (D-CA), Adam Kinzinger (R-IL) - This bill requires the National Telecommunications and Information Administration to examine and report on the cybersecurity of mobile service networks and the vulnerability of such networks and mobile devices to cyberattacks and surveillance conducted by adversaries. H.R. 4055 American Cybersecurity Literacy Act (Passed 408-17)Sponsor: Adam Kinzinger (R-IL) - This bill requires the National Telecommunications and Information Administration to develop and conduct a cybersecurity literacy campaign to increase knowledge and awareness of best practices to reduce cybersecurity risks. H.R. 4045 – The FUTURE Networks Act (Passed: 394-27)Sponsors: Mike Doyle (D-PA), Bill Johnson (R-OH) - This bill directs the Federal Communications Commission to establish a task force called the “6G Task Force”, to examine the potential advantages and vulnerabilities of the future use of 6G technology. “Today the House came together to pass three critical bipartisan bills that aim to strengthen our telecommunications networks for a safer, more secure wireless future,” Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) Communications and Technology Subcommittee Chairman Doyle (D-PA) said in a joint statement. “Together, these bills will promote the secure, thoughtful deployment of our next generation 6G networks, arm Americans with the information and tools they need to protect themselves from cyberattacks, and improve wireless network security in the face of growing cybersecurity attacks on our critical infrastructure.”With the major cyber-attacks from this year still fresh on everybody’s mind, cybersecurity continues to emerge as a priority for the federal government and as a key focus for the Biden Administration. Additionally, recognition of cybersecurity's increasing importance recently led U.S. financial regulators to approve the Computer-Security Incident Notification Requirements for Banking Organizations and Their Bank Services Providers.The Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency (OCC) approved the regulation, which will apply exclusively to financial institutions regulated and/or insured by one of the governing bodies or to organizations that provide services to a regulated bank.The regulation requires banking organizations to report significant cyber incidents that impact operations, service delivery or financial sector stability within 36 hours of discovery. It takes effect on April 1, 2022 with full compliance expected by May 1, 2022.Related Articles President Biden Signs K-12 Cybersecurity Act into Law TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators White House Issues Executive Order on Cybersecurity About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### Disappointing News for Employers: Employee Retention Credit Ends Before Fourth Quarter of 2021 The Employee Retention Credit (“ERC”) of the March 2020 Cares Act provided aid to small businesses that did not qualify for Paycheck Protection Program (“PPP”) loans. Congress extended the ERC twice, finally settling on December 31, 2021 as the end date for eligible employers to participate in this program. On August 4, 2021, the IRS issued Notice 2021-49 to provide additional clarity on updates to the ERC for the 3rd and 4th quarters of 2021, signaling to businesses and tax professionals that the credit would be in play for the entirety of 2021.New legislation now says otherwise.The Infrastructure Bill signed by President Biden on Nov. 15 contains a provision that ends the employee retention credit retroactively to September 30, 2021, instead of the previous December 31, 2021 sunset date. This means that employers can only claim the credit for wages paid through the end of September 2021. The legislation does not impact the ability or timing for employers to claim the credit for either 2020 or the first three calendar quarters in 2021.  It should be noted that this is not a cut-off for ERC claims.  Employers will be still able to claim the credit for 2020 and/or the first three calendar quarters in 2021.  These claims must be filed within three years of the original due date of Form 941, with respect to the credit being claimed within the quarter.  This credit is a refundable credit that that can be up to $5,000 per employee in 2020 and up to $7,000 per employee, per quarter in 2021 (max $21,000 for three quarters in 2021). The Tax Services group at Schneider Downs has experience consulting with businesses on all aspects of the Employee Retention Credit. For more information on how your business can take advantage of the ERC and other relevant grants under COVID-19 tax legislation, please reach out to one of the contacts below or a member of your Schneider Downs team. Matthew Werner – Shareholder, Tax Advisory Services 412-697-5403 mwerner@schneiderdowns.comRoss Alessandro, III – Shareholder, Credits and Incentives 412-697-5637 ralessandro@schneiderdowns.com  ### Welcome News for the Trucking Industry - Clarification of 100% Meals and Entertainment Deduction for Per Diems With all the current issues related to the driver shortage and supply chain disruptions, there was some welcome news from the IRS for the trucking industry. On November 16, 2021, the IRS issued Notice 2021-63 “Temporary 100 Percent Deduction Applies to Meal Portion of 2021 and 2022 Per Diem Rate of Allowance.”This guidance clarified that motor carriers with drivers that are subject to the hours-of-service rules can deduct 100% of the meals portion of the per diem expense for the calendar years 2021 and 2022. The deduction was 80% before 2021 and will return to 80% after 2022. In April 2021, the IRS issued guidance related to the temporary 100% restaurant meals deduction that was enacted into law under the tax act passed in December 2020. One reason this law was passed was to assist the restaurant industry as it struggled with the impacts of the COVID-19 pandemic.The per diem amount covers meals and incidental expenses when traveling away from home. The per diem rate was updated by the IRS effective October 1, 2021. Currently, the rate is $69 for travel in the continental United States and $74 outside the continental United States. Of this amount, $5 would be considered incidental and may be subject to the 80% deduction rule.If you have any questions, please contact me or any members of our Transportation Industry Advisors noted below:Jim Gilboy – Senior Manager, Tax Advisory Services 412-697-5249 jgilboy@schneiderdowns.comMatt Werner – Shareholder, Tax Advisory Services 412-697-5403 mwerner@schneiderdowns.comCarl Scharf – Shareholder, Tax Advisory Services 614-586-7139 cscharf@schneiderdowns.com ### What Are The Most Common Passwords of 2021? For security professionals, passwords can be either a pleasant surprise or an unfortunate reminder of how seriously end users take their security credentials—and usually it’s the latter.  Nordpass has released their annual Top 200 Most Common Passwords list, which acts as an annual reminder that creating strong passwords is still something that, for whatever reason, many people struggle with. The list provides the most common passwords across 50 countries and includes information about how many times the passwords are used and how long they take to crack.The most common password from last year, 123456, holds onto the top spot. In fact, in the United States, over one million more users decided this was a good password to use in 2021. The majority of the rest are repeats, although the third most used password of 2020, picture1, has fallen off the list. The top ten most common passwords from the United States and around the globe are below.2021 Most Common Passwords – United States 123456 – Less than one second to crack, 3.5M+ uses counted Password – Less than one second to crack, 1.7M+ uses counted 12345 – Less than one second to crack, 958K+ uses counted 123456789 – Less than one second to crack, 873K+ uses counted password1 – Less than one second to crack, 666K+ uses counted abc123 – Less than one second to crack, 610K+ uses counted 12345678 – Less than one second to crack, 440K+ uses counted qwerty – Less than one second to crack, 382K+ uses counted 11111 – Less than one second to crack, 369K+ uses counted 1234567 – Less than one second to crack, 356K+ uses counted 2021 Most Common Passwords – All Countries 123456 – Less than one second to crack, 103M+ uses counted 123456789 – Less than one second to crack, 46M+ uses counted 12345 – Less than one second to crack, 32M+ uses counted qwerty – Less than one second to crack, 22M+ uses counted password – Less than one second to crack, 20M+ uses counted 12345678 – Less than one second to crack, 14M+ uses counted 111111 – Less than one second to crack, 13M+ uses counted 123123 – Less than one second to crack, 10M+ uses counted 1234567890 – Less than one second to crack, 9.6M+ uses counted 1234567 – Less than one second to crack, 9.3M uses counted Additional common passwords include names, sporting teams (Liverpool is a popular password), automobile brands, swear words and animals. Bands are also popular, with Metallica and Slipknot coming in as the top two most common, and with One Direction making a reappearance after falling off the list last year.The full list of the 200 most common passwords is available at https://nordpass.com/most-common-passwords-list/. If you see your password on the list (which we hope you don’t), you can use their password generator to create stronger credentials. Password Best PracticesWe know that the notion of password security is nothing new but, as we saw above, insecure passwords continue to be low hanging fruit for threat actors. To help keep password security in focus as we end the year, our cybersecurity team is sharing some best practices for creating secure passwords and policies below:Avoid Bad PasswordsSee the list above? Do not be on the list.If only it were that simple, right? In all seriousness, good passwords are always necessary. Yet, they are increasingly hard to come by. A good first starter tip for creating a secure password is to avoid those that are easily guessable. Some of the worst type of passwords we have encountered include: Sports Teams Birthdays Pet’s Names Season / Month / Year Address Regional Interests Variations of “Password” Incremented Passwords Reused Passwords Implement Password BlacklistsEven with secure password policies in place, end users can make passwords that still include common terms or phrases. One of the growing security measures organizations are utilizing to combat this challenge is called password blacklisting. This tactic restricts the choice of potential passwords, removing common phrases and terms, as well as variations that use special characters and/or numbers, from the list. Senior IT Auditor Sarah Hudak touches on password blacklists in one of our recent videos from our Top Cybersecurity Questions of 2021 video series below.   Create PassphrasesWe recommend end users think about passwords as passphrases. Look beyond password criteria such as length, numbers and special characters, and think about something that only you would know. Put together random words from a personal story or memory. Stringing along several small words can increase password complexity and meet most length requirements. Remember, a secure password is not automatically secure because it meets a site’s requirements. It is secure if it is something only you would know.Use Password Management SoftwareWe know how hard it can be to remember all of your passwords, especially with the amount of unique requirements from different sites. One way to make it easier is to use password management software, which acts as a master lock of sorts for your passwords. Password managers not only add a layer of convenience to password security, but many also help you create strong passwords with stringent requirements. And no, writing passwords on a slip of paper that you hide under your keyboard is not a password management solution.Create Multiple PasswordsIf you are not using a password manager, having unique passwords for accounts is an absolute must. One of the first things threat actors do when stealing a password is to see  which other accounts it might crack Using a strategy known as credential stuffing, attackers will see how many accounts they can compromise with stolen credentials to increase their earning potential. If you take a moment to think about how many accounts you have that use the same password and username/email address, chances are you can see the potential damage of having one password.Update Security QuestionsSecurity questions commonly used to protect our accounts. However, with our digital footprints and information strewn throughout social media and search engines today, they can be easy targets for threat actors. Think about some of the most common questions asked and where the answers can be found, including: Birthday – Social media, public records Where did you and your spouse meet – Social media, wedding registry sites What high school did you go to – Social media, public record, alumni associations What was your first job – Social media, professional biographies Pretty concerning, right? Remember to treat the answers to these questions as you would a password and update them frequently.Did you find this article helpful? You may also be interested in our How Much Does a Data Breach Cost in 2021? article.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Build Back Better Tax Legislation Update – International Tax Changes This article summarizes the proposed changes regarding international tax provisions of the Tax Cuts and Jobs Act (TCJA). The Build Back Better proposal will mainly affect the following areas: Global Intangible Low-Taxed Income (GILTI) regime; Subpart F regime and foreign tax credit; Section 250 deduction and Foreign-Derived Innovation Income (FDII); and BEAT and SHIELD. Changes to the GILTI regime have been addressed in the separate article.Changes to Subpart F and the Foreign Tax CreditNew limitations for foreign tax credit carryovers and carrybacks would apply. Also, the foreign branch income category would be repealed. Perhaps the most significant change would be the determination of the foreign tax credits on a country-by-country basis. This would be a significant limitation affecting foreign tax credits.Changes to Section 250 Deduction and FDIISection 250 allows a domestic corporation that has FDII to deduct a specific percentage of the excess of the corporation’s income from export sales over a fixed return on tangible depreciable assets. FDII rules operate in tandem with GILTI rules.New rules would eliminate or reduce deemed tangible income return (DTIR) and qualified business asset investment (QBAI) from the FDII calculation. Eliminating or reducing QBAI discourages taxpayers from owning depreciable assets abroad. The proposal also adds a new element in FDII calculation, Domestic Innovation Income, which is designed to reward R&D efforts in the U.S. Many details about Domestic Innovation Income are still unknown, but the newly created term could have a great impact on the FDII calculation.BEAT and SHIELDBEAT is a minimum tax enacted under TCJA, mainly applicable to large multinational corporations, with a purpose to prevent generating tax benefits in connection with shifting income from the U.S. to abroad. The new international tax proposals would modify BEAT tax with a SHIELD (stopping harmful inversions and ending low-tax developments). Even though sufficient detail is not currently available to evaluate tax implications on specific taxpayers, it is likely that the changes will be significant and will need to be addressed at the appropriate time.Schneider Downs tax professionals will continue to monitor these and future developments. Please contact Schneider Downs with any questions.  ### IRS Joins Forces to Combat Fraud Against Charitable Organizations During the week of October 18-22, the Internal Revenue Service (the “IRS”) joined many organizations, domestic and international, to raise awareness on fraud schemes conducted against charities.The IRS advised taxpayers that in addition to the rising amount of cyber crime against charities, criminals are creating fake charities, a fraud scheme which is once again part of the IRS’s “Dirty Dozen” tax scams for 2021. The IRS reminds everyone to use the Tax Exempt Organization Search tool on IRS.gov to ensure that organizations are legitimate and qualified charities prior to making charitable contributions. Taxpayers should always verify the tax-exemption status of a charity before they donate and should not feel pressured to give immediately. The charity fraud awareness week had live webinars, free resources and a social media campaign to combat fraud. IRS Director of Exempt Organizations and Government Entities, Rob Malone, stated, “We especially advise taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public’s generosity.  They take advantage of tragedies and disasters, such as the COVID-19 pandemic. Campaigns like Charity Fraud Awareness Week can help remind everyone to remain vigilant.” The Preventing Charity Fraud website has provided the public “Useful Links” to combat fraud. In addition, Charity Navigator, is a well-known organization that rates charities and is a useful source in determining an organization’s legitimacy.  ### Estates and Trusts Tax Update - November 2021 The Schneider Downs team of estate planning professionals provide an estates and trusts tax update for November 2021. We are all familiar with the old proverb that nothing in life is certain but death and taxes.  While this may have held true in Benjamin Franklin’s time, there is little certainty in taxes today. Just  four years after the Tax Cuts and Jobs Act (“TCJA”) brought about the most sweeping overhaul to the tax code in over three decades, Congress has once again set its sights on changing the playing field.  On September 12, 2021, the House Ways and Means Committee introduced a series of proposals to be included in President Biden’s budget reconciliation bill known as the “Build Back Better Act.” The initial bill included various proposals that would significantly impact the opportunities for estate and gift tax planning that exist under the TCJA framework. The changes included a reduction in gift, estate, and generation-skipping transfer (“GST”) exemptions, significant changes in the rules affecting grantor trusts, and the disallowance of valuation discounts for nonbusiness assets.    Negotiations on the Build Back Better plan are ongoing, and the current $1.75 trillion package is roughly half the size of the bill envisioned back in September. To the surprise of many estate-planning professionals, the most recent version of the legislation omits the above proposals, leaving the estate tax system virtually unchanged. Although this is tentatively good news for taxpayers, it is important to remember that this does not mean that individuals considering estate planning should cancel appointments with their advisors.  First, even if final legislation makes no changes to the estate tax system, the increased exemption amounts of $11.7 million are only temporary and will revert to pre-TCJA levels in 2026 even without Congressional action.  Individuals should be mindful of how this sunset could affect their estate planning objectives.  Second, although the estate tax provisions have not been incorporated into the current bill, certain adverse income tax provisions remain intact. As part of what has been called the “Millionaire Surtax,” a surtax of 5% would be imposed on estates and irrevocable trusts with income greater than $200,000 and an additional 3% surtax at the $500,000 income level. This surtax would create an additional layer of complexity when planning for trusts.Finally, it is important to remember that we remain in an environment of significant uncertainty. Although the unfavorable estate tax provisions do not appear in the current version of the legislation, these provisions have already been drafted and it would not require significant effort to “cut and paste” some or all of them back into final legislation. It is also possible that they reappear in a future legislative process following the 2022 and 2024 elections.There are several estate planning techniques that are well suited to this uncertain environment. We encourage you to reach out to us to discuss which planning opportunities may work best for you and your family.About Schneider Downs Estate, Trust and Succession PlanningSchneider Downs is uniquely positioned with a diverse team of credentialed professionals, including CPAs, CFPs, LLMs, MBAs, JDs, and non-practicing attorneys who are committed to comprehensive service. From business entity succession planning to estate administration, Schneider Downs professionals can synthesize the most complex financial situations to develop an effective, customized, tax-efficient estate and succession plan.For more information please visit www.schneiderdowns.com/private-client-services/estate-trust-and-succession-planning or contact us at contactsd@schneiderdowns.com.Schneider Downs & Co., Inc. is not a law firm and does not provide legal services. In furtherance of the estate planning services provided, it may be necessary to retain legal counsel. Tax and legacy planning services are offered through Schneider Downs & Co., Inc. Investment and asset management services are provided through Schneider Downs Wealth Management Advisors, LP. Each service may require you to sign a separate engagement agreement that will outline the services to be provided and the respective fees.  ### Higher Estate Tax Exemption Amount for 2022 Few estates have been subject to federal estate tax since the enactment of the Tax Cuts and Jobs Act of 2017. The federal estate tax applies to the portion of the estate’s value that exceeds the exemption amount. Effective as of January 1, 2018, the Tax Cuts and Jobs Act more than doubled the size of the estate exemption amount from $5.49 million to $11.18 million, adjusted each year for inflation. The increased exemption essentially means that so long as your estate is valued at under the exemption amount, it will not pay any federal estate taxes and, consequently, individuals can gift more to their heirs during their lifetime or at their death tax-free. In 2021, the exemption amount is $11.7 million for individuals, and that number is doubled for married couples to $23.4 million. Additionally, the annual gift tax exclusion provides an additional shelter. The annual gift tax exclusion allows you to gift up to $15,000 in 2021 without incurring any federal estate or gift tax and without deducting from the lifetime exemption amount. What's Changing in 2022?On November 10, 2021, the Internal Revenue Service announced that the estate tax exemption is going up again in 2022. In 2022, an individual can leave $12.06 million to heirs and pay no federal estate or gift tax, while a married couple can leave up to $24.12 million. Notably, for individuals or couples who have already maxed out their lifetime gifts in 2021, the increased exemption means that there is room for individuals or married couples to leave an additional $360,000 or $720,000, respectively, in 2022. The IRS also announced that the annual exclusion for gifts is increasing to $16,00—up from $15,000—in 2022. This means that individuals can gift up to $16,000 per year without touching any of their exemption amount.Due to the sunset provision in the Tax Cuts and Jobs Act, however, the historically high exemption amount is scheduled to drop back to $5 million, adjusted for inflation, on January 1, 2026, absent an action by Congress. In light of these announcements, individuals should review their current estate plans and work with their advisors on what steps should be taken to reduce or eliminate their estate tax. Should you wish to learn more or have any questions about your estate plan, please feel free to contact us at contactsd@schneiderdowns.com           ### Proposed Tax Changes to GILTI In August, the Senate Finance Committee released draft legislation that would overhaul the international provisions of the Tax Cuts and Jobs ACT (TCJA). Included in these changes are alterations of the GILTI regime.What is GILTI?Introduced by the 2017 TCJA, Global Inclusion of Low-Tax Income (“GILTI”) is a category of income earned abroad by U.S-controlled foreign corporations (CFCs). GILTI was instituted to discourage the shifting of profits from the US to foreign subsidiaries’, which was then only taxable if the earnings were repatriated as dividends. A U.S shareholder’s GILTI inclusion is generally defined as the excess of a US Shareholder’s aggregated “net tested income” over its net deemed tangible income return (“net DTIR”). While this calculation can be complex, for simplicity’s sake “tested income” is the corporation’s gross income less certain deductions, including income effectively connected with a US trade or business, Subpart F income, dividends received by a related person, and certain foreign oil & gas income. Net DTIR is the excess of 10% of the aggregate of the U.S. Shareholder’s pro-rata share of Qualified Business Asset Investment (QBAI), which is essentially the bases of items held abroad including buildings, machinery, or equipment.What changes have been proposed?The draft legislation would change the structure of GILTI in a few key ways. First, it would eliminate DTIR and QBAI from the GILTI calculation itself. US Shareholders would include in gross income their net CFC tested income, instead of GILTI as currently calculated. The elimination of QBAI would likely discourage taxpayers from owning depreciable assets abroad.Second, GILTI would be calculated on a country-by-country bases, meaning losses incurred in one country would no longer offset income earned in another. This could be bad news for taxpayers with CFCs in multiple countries. This change would also limit the application of the Foreign Tax Credit for many taxpayers, which currently functions in tandem with GILTI.For more information on how these changes may impact you, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com.  ### Postcard from the AICPA & CIMA | PDI Oil & Gas Conference Each November, the AICPA hosts its annual oil and gas conference in Denver. This year’s event kicked off on November 9 with a keynote address from economist Mark Snead, president of RegionTrack, an Oklahoma City-based firm specializing in regional economic forecasting and analysis.Mr. Snead’s discussion on the current economic landscape and political climate of the industry was followed by sessions on ESG reporting and attracting and maintaining talent. The afternoon began with a talk on cybersecurity and was followed by a review of accounting/FASB updates. The day wrapped up with a presentation on funding innovation in the global energy transition.Day two was opened by SEC Associate Chief Accountant Jonathan Duersch, who discussed a commission update, and was followed up with a talk on transformative approaches to reducing costs, cybersecurity and basin economics and carbon capture opportunities. The afternoon concluded a discussion on restructuring and a review of capital markets in a transitioning world.Key Points from the Conference Energy prices remain volatile, after oil prices went negative at the beginning of 2021 and rose to greater than $80 a barrel in Q4.  The future of energy in America will likely present a different landscape, with a transition from gasoline-powered cars to electric, but it won’t be the end of the industry since the demand for other products manufactured using oil and gas will remain high. ESG has become and will remain a key topic for energy companies. This matter has been in the sightlines of public companies for a while, but as private companies look for capital to drill new wells, it will be an essential requirement to secure future funding. The industry has been long known for high pay that has attracted talent, but it’s also been famous for pulling a quick trigger on layoffs during down markets. In the next 10-20 years, talent will become more difficult to obtain as specialization and attracting and retaining talent becomes more challenging.   ### Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Joshua J. Bellamy, former New York Jets wide receiver, was charged in 2020 for his alleged participation in conspiring to obtain millions of dollars from fraudulent Paycheck Protection Program (“PPP”) loans. Through his company, Drip Entertainment LLC, Bellamy is purported to have obtained a PPP loan for over $1.2 million. It is believed that he used the loan proceeds to purchase luxury items and partake in other excess spending. In addition to receiving his own PPP loan, Bellamy worked with other conspirators to refer others to the scheme, draft fabricated documents and collect a percentage of the kickback monies received. The fraudulent scheme consisted of at least 90 false PPP loan applications encompassing more than $24 million in loans applied for, of which approximately $17.4 million were paid. Bellamy pleaded not guilty to the charges of wire fraud, bank fraud and conspiracy to commit wire fraud and bank fraud. The case is currently pending. If you have any questions regarding potential fraud schemes, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. This article is part of series highlighting fraud from the professional sporting world in support of  the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below. International Fraud Awareness Week 2021 Flag on the Play - Football and Health Care Fraud Foul Ball - John Ruffo Attends a Baseball Game Soccer Kickbacks - Red Cards and Red Flags Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges About International Fraud Awareness Week ACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE. ACFE International Fraud Week Resources Behavioral Red Flags Snapshot: Cyberfraud and COVID-19 How to Be a Fraud Fighter in Your Organization About Schneider Downs Business Consultants Schneider Downs Business Consultants leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Learn more at www.schneiderdowns.com/business-advisory-services. ### Soccer Kickbacks - Red Cards and Red Flags A scandal involving officials of the Fédération Internationale de Football Association (FIFA), the governing body of international soccer, has been public since 2015, when the United States Department of Justice (DOJ) indicted 14 FIFA officials and sports marketing executives. To date, the investigation has resulted in criminal charges for over 50 individuals, banks and other corporations across 20 different countries.  Charges have included conspiracy to commit money laundering, bribery, wire fraud and racketeering conspiracy, with the focus of the investigation on bribes and kickbacks related to contracts to televise soccer matches. The Association of Certified Fraud Examiners’ (ACFE’s) Fraud Examiners Manual defines kickbacks, a form of bribery, as “improper, undisclosed payments made to obtain favorable treatment.” Kickbacks and bribes can take many different forms and can be perpetrated using a variety of means, but at the most basic level, kickbacks are an illegal transaction between colluding parties. Often, kickback schemes result in the victim overpaying for goods or services to defray the cost of the kickback itself.  Possible red flags of a kickback scheme include steadily rising prices for the same product or service or an unusually close relationship with a vendor. Kickback schemes are difficult to detect because the transactions may occur outside of the victim’s normal accounting system -- for example, in the case of a cash bribe or a trip paid for by a vendor.  In addition, internal controls to detect suspicious transactions will likely fail to detect a kickback, but a fraud hotline or another anonymous reporting tool may allow a whistleblower to step forward.  Establishing a hotline is an important control for businesses to establish, as the ACFE’s 2020 Report to the Nations states, a hotline or email was the reporting method used by whistleblowers in 33% of cases. The scope and number of schemes investigated over the last several years is remarkable and necessitated the creation of a FIFA Task Force within the U.S. Attorney’s Office to prosecute the cases and coordinate the return of victims’ funds. The proceeds paid to victims is largely the result of the work of the DOJ’s Asset Forfeiture Program, which works to recover the proceeds of illegal activity and return them to victims. The victims in this case, including FIFA and several other international soccer organizations, have been granted more than $201 million in victim remission. Activity related to the investigation continues with the announcement of $32 million recently being remitted to these organizations, which have committed to supporting charitable missions by using the proceeds to create and support the World Football Remission Fund. The government’s case is ongoing, and it will likely be years before the final prosecutions related to the case are brought to justice. Kickback schemes are hard to detect, but they can affect any business. The expertise of the Schneider Downs Business Consulting team can help you identify red flags of fraud within your organization. If you have any questions or concerns, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. This article is part of series highlighting fraud from the professional sporting world in support of  the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below. International Fraud Awareness Week 2021 Flag on the Play - Football and Health Care Fraud Foul Ball - John Ruffo Attends a Baseball Game Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges About International Fraud Awareness Week ACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE. ACFE International Fraud Week Resources Behavioral Red Flags Snapshot: Cyberfraud and COVID-19 How to Be a Fraud Fighter in Your Organization About Schneider Downs Business Consultants Schneider Downs Business Consultants leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Learn more at www.schneiderdowns.com/business-advisory-services. ### Flag on the Play - Football and Health Care Fraud As part of the NFL’s 2006 collective bargaining agreement, the Gene Upshaw NFL Player Health Reimbursement Account Plan (the “Plan”) was created in order to provide up to $350,000 in tax-free reimbursements for out-of-pocket medical expenses incurred by former players and their families. To date, 15 retired football players have pleaded guilty in connection with defrauding the Plan. These former players created and submitted false and fraudulent claims to the Plan for medical equipment, such as hyperbaric oxygen chambers and cryotherapy machines, that was never actually purchased. Suspicions arose due to the rather large claims that were being submitted, often ranging between $40,000 and $50,000. This prompted Cigna, the insurance company, to alert federal investigators. According to a recent press release by the U.S. Department of Justice, Robert McCune, a 2005 fifth-round draft pick and linebacker for Baltimore, Miami and Washington, coordinated the multimillion-dollar health care fraud scheme.  According to prosecutors, several former players solicited other players to participate in the scheme by offering to file false claims in exchange for kickbacks. This led to McCune impersonating Plan participants when making calls to verify the status of the false claims. Fabricated prescriptions and letters of medical necessity were also used as part of the scheme. McCune and nine other defendants were indicted in December 2019. Since then, however, five other retired players have also been charged for their roles in the scheme, which include conspiracy to commit health care fraud. McCune pleaded guilty to conspiracy to commit wire fraud and heath care fraud, 13 counts of health care fraud, 11 counts of wire fraud and three counts of aggravated identity theft. On November 19, 2021, McCune faces sentencing of up to 20 years in prison for conspiracy to commit wire fraud and health care fraud, 10 years for each count of health care fraud, 20 years for each count of wire fraud and two years for each count of aggravated identity theft. Schemes like this are not limited to the health care industry. Billing schemes, where false claims induce the victim company to issue payments for goods or services that are not actually received, happen frequently across various industries. Companies should continuously monitor relationships with vendors and also verify that all vendors are legitimate. If you have any questions regarding potential fraud schemes, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. This article is part of series highlighting fraud from the professional sporting world in support of  the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below. International Fraud Awareness Week 2021 Foul Ball - John Ruffo Attends a Baseball Game Soccer Kickbacks - Red Cards and Red Flags Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges About International Fraud Awareness Week ACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE. ACFE International Fraud Week Resources Behavioral Red Flags Snapshot: Cyberfraud and COVID-19 How to Be a Fraud Fighter in Your Organization About Schneider Downs Business Consultants Schneider Downs Business Consultants leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Learn more at www.schneiderdowns.com/business-advisory-services. ### Foul Ball - John Ruffo Attends a Baseball Game U.S. Marshals recently reported that a man with a strong resemblance to a John Ruffo was quite visibly present at a Los Angeles Dodgers game, four rows behind home plate, on August 5, 2016. That may seem like an innocuous sentence, but there’s obviously more to the story.  What does this have to do with Fraud Week you ask? What’s the big deal?  Who’s John Ruffo?  Just a most wanted fugitive who’s evaded the law for almost 23 years, that’s who. Mr. Ruffo, it turns out, was convicted of a $350 million bank fraud scheme in the late 1990s and sentenced to 17 ½ years in prison.  He was to report to a federal prison on November 9, 1998 in New Jersey, but never showed up and is still on the run.  He was last seen in a surveillance video from an ATM in Queens on that day. Photo Courtesy of CBS Boston If that part isn’t unusual enough, the actual fraud Mr. Ruffo committed may be even more bizarre.  In 1993, he and a partner devised a scam where they told banks they were leading an international research program on a tobacco alternative for Philip Morris that required the purchase of hundreds of computers and the hiring of staff at five offshore locations.  Even though neither of the men worked for Philip Morris at the time, they convinced seven foreign and domestic banks, with a fake project name, corporate stamp and executive sign-off, to loan them more than $350 million. The scheme eventually unraveled in 1996 and Mr. Ruffo was indicted on 160 counts of bank fraud and money laundering.  When he subsequently disappeared, one FBI agent believed he may have socked away more than $8 million. So remember this on Fraud Week, even the most wanted fraudsters need to get out and see a baseball game occasionally.  But here’s a tip: don’t sit right behind home plate. If you have any questions or concerns about detecting or deterring fraud, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. This article is part of series highlighting fraud from the professional sporting world in support of  the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below. International Fraud Awareness Week 2021 Flag on the Play - Football and Health Care Fraud Soccer Kickbacks - Red Cards and Red Flags Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges About International Fraud Awareness Week ACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE. ACFE International Fraud Week Resources Behavioral Red Flags Snapshot: Cyberfraud and COVID-19 How to Be a Fraud Fighter in Your Organization About Schneider Downs Business Consultants Schneider Downs Business Consultants leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Learn more at www.schneiderdowns.com/business-advisory-services. ### International Fraud Awareness Week 2021 The Association of Certified Fraud Examiners (ACFE) celebrates the annual International Fraud Awareness Week this year from November 14th to 20th.Schneider Downs is proud to once again be a supporter of Fraud Week. We have a long and established role in the fraud investigation and awareness field, through the numerous investigations we’ve performed over the years and our sponsorship of the annual Fraud and Corruption Awareness Seminar. Our Consulting group includes several Certified Fraud Examiners (CFE), including the president of the Greater Pittsburgh chapter of the ACFE.Some of the CFEs in our group have written Our Thoughts On articles, listed below. This year we chose a sports theme for our articles as a fun way to discuss topics that apply to many different professions and organizations and the games fraudsters play. Flag on the Play - Football and Health Care Fraud Foul Ball - John Ruffo Attends a Baseball Game Soccer Kickbacks - Red Cards and Red Flags Illegal Reception - Former NFL Wide Receiver Receives Fraudulent PPP Loans Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges While we may only focus on Fraud Week one week per year in this way, the professionals in our Consulting group educate, assist, and prepare our clients throughout the year with their unique fraud concerns.About International Fraud Awareness WeekACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE.If you have questions or concerns about fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster bwebster@schneiderdowns.com. ### Alley-OOPS! Former NBA Players Indicted on Alleged Insurance Fraud Charges The latest scandal to rock the sports world was the recent announcement that 18 former NBA players have been charged in relation to an alleged multi-million dollar health insurance fraud.The indictment filed with the U.S. District Court in Manhattan stated that $2.5 million in proceeds were received by the players as part of the scheme to defraud the NBA’s Health and Welfare Benefit Plan (the “Plan”). The Plan’s purpose is to reimburse certain out-of-pocket medical expenses incurred by current and former NBA players, their spouses and dependents.Running point in this scheme was Terrence Williams, 11th overall 2009 NBA draft pick by the former New Jersey Nets. In addition to the $2.5 million received by the players, Williams allegedly received at least $230,000 in kickbacks in exchange for creating fake invoices and letters of medical necessity. Williams also purportedly posed as a manager for the Plan in an effort to intimidate another defendant who had not followed through with a kickback payment.Two dental offices in Beverly Hills, a chiropractic office in Encino, California and a wellness office in the state of Washington have been implicated in the scheme. According to Audrey Strauss, United States attorney for the Southern District of New York, one of the charged defendants submitted a claim to the Plan for IV sedation, root canals and crowns on eight teeth at a dentist office in Beverly Hills for a total cost of almost $48,000. However, evidence shows that the defendant was playing professional basketball in Taiwan during the time that these medical services were supposedly received.  The defendants’ charges consist of conspiracy to commit health care and wire fraud. In addition to these charges, Williams was also charged with identity theft.If you have any questions regarding potential fraud schemes, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com.This article is part of series highlighting fraud from the professional sporting world in support of  the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below.About International Fraud Awareness WeekACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE.ACFE International Fraud Week Resources Behavioral Red Flags Snapshot: Cyberfraud and COVID-19 How to Be a Fraud Fighter in Your Organization  About Schneider Downs Business AdvisorsSchneider Downs Business Advisors leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions.Learn more at www.schneiderdowns.com/business-advisory-services. ### Buyer Beware: 2021 Holiday Shopping Scams With Black Friday quickly approaching, now is an ideal time for a refresher on cyber scams and best practices to keep your information secure this holiday season. As many of us are starting to make our Thanksgiving plans (2021 really went fast, didn’t it?), we are also starting to browse upcoming holiday sales. From traditional Black Friday and Cyber Monday sales to early access deals and store exclusives, advertisements are pushing consumers online through every channel possible. Add in the increased shift to online shopping due to the pandemic and the convenience of shopping at home, as well as the increase in stores opting to close their physical doors this Thanksgiving, and you have a perfect storm for threat actors searching for personal and financial information due to heightened online activity. In fact, the National Retail Federation (NRF) reported that holiday sales totaled $789.4 billion in 2020 (an 8.3% increase from 2019), with online and other non-store sales increasing 23.9%. Consumers show no signs of slowing down this year either according to the NRF, who report that the average shopper will spend approximately $1,000 during the holiday season and that 28% of consumers, are planning on shopping more this year. Unfortunately, with the increased spending came an increase in reported security incidents last year, when Experian reported that one in every four American reported falling victim to fraud during the holidays. And we expect to see more of the same this year. In an effort to help keep our communities, clients and friends secure this year, the Schneider Downs cybersecurity team is sharing some of the top scams to look out for and best practices for keeping your information secure during the holiday shopping season and beyond. Top Holiday Shopping Scams Malicious Websites and Apps One of the new challenges consumers are set to face in 2021 are stock shortages associated with the supply chain issues of the last year. This means that popular gifts may not be widely or even sporadically available through major retailers. These shortages can cause consumers to look to third-party websites in desperation, setting aside their best judgement in order to do whatever it takes to get the big-ticket items – including using malicious websites. When shopping online, be sure to only use verified websites and verify URLs, since imposter sites frequently use a similar nomenclature as popular sites in order to fool consumers. Additionally, be sure to go to authorized websites directly and avoid any sort of pop-up advertisements or suspicious social media links, as scammers can purchase advertisements with the intent of directing shoppers to a malicious site. The same thoughts go for apps. We recognize that many authorized retailers and shopping platforms have mobile apps design to provide a smart device experience, but there are also countless malicious apps out there waiting to be downloaded. While the majority of app stores are good about finding and deleting these quickly, many still slip through the cracks and expose your information. Remember, not even Turbo-Man is worth providing your financial information to third-party websites, especially when all of your instincts are telling you the site is shady. Verify you are on a secure website by looking for https:// and a padlock icon in the address bar, double-check the full URL to ensure you are on the correct site and keep your guard up against websites of all forms (charities, retailers, etc.). If you want to verify a website, there are several free online tools that can help, including Google’s Transparency Report tool at https://transparencyreport.google.com. Imposter Wi-Fi Networks We know the whole “don’t use public Wi-Fi” message has been around forever, but brick and mortar stores are making it even more difficult to resist connecting to public networks during the holiday season. A majority of stores offer incentives for using their networks including coupons or free items with a minimum spend. In most cases, this just allows the store to collect your data, but it sometimes also provides an opening for threat actors to set up imposter networks to connect to your device. So next time you see a store offering incentives to use their Wi-Fi, remember a $5 coupon is most likely not worth the risk of having your data stolen. Shipping Scams Another scam that is not new, but continues to be used because it succeeds is fraudulent shipping communications. Threat actors send a litany of communications out during the holiday shopping season impersonating major shipping companies (Fedex, UPS, USPS) and retailers. By claiming to report shipping issues, they to get you to click on malicious links or hand over credit card information. While historically these scams come through standard phishing attacks, many still arrive via smishing (texting) and vishing (phone). Remember, if you have concerns about shipping, you can always contact the shipping company or retailer directly through the contact information listed on their official websites. We also suggest keeping copies of receipts (or taking a photo) which usually have the tracking number and direct customer service number listed. Additionally, Fedex offers a great resource center to help consumers recognize and report fraud at www.fedex.com/en-us/trust-center/report-fraud.html. The resource center shares common warning signs, scams and fraud types. Protecting Your Information Identify Phishing Scams The first step to protecting your personal information during the holiday season and beyond, is to learn how to identify scams. Thankfully, phishing (vishing and smishing too) uses the same techniques it has used for years – the holiday season just gives them a different coat of paint. Our article “Six Common Elements of Phishing Scams and How to Spot Them” provides some of the most common warning signs to watch out for, including: Too good to be true - Usually the email will include some type of draw that will grab your attention. In the case of the latest scam, a mention of tax savings would be eye-catching. Sense of urgency - There is usually an expiration date on the aforementioned draw or a warning that you will be locked out from the online account if the matter is not addressed within a certain period of time. Bogus hyperlinks - While they can appear to lead to legitimate websites,  bogus hyperlinks contain slight changes or variations that will lead you to visit a fake website or to download a malicious file. Phishy “From” addresses - The email address of the sender can easily be spoofed in a similar way as a bogus hyperlink can be. A phishing email can appear to be from someone you know like a colleague or a superior; it is recommended that you hover over the address to check for errors or variations in spelling or formatting. It is also important to consider the tone of the email. If it appears to be from a sender that you know, is their pattern of language and email signature consistent with previous correspondence? If it seems out of the ordinary, don’t open the email. Attachments - Any attachment should warrant additional scrutiny. It is prudent to never open unsolicited attachments. Password-protected PDFs have become an increasingly popular tool by which scammers gain access to your personal information. Upon attempting to open a password protected PDF, the recipient is prompted to enter their username and password, which is then collected and can be used to gain access to their other accounts. If you use password-protected PDFs frequently, we highly recommend refrain from including your password in the email message. Unusual requests - Many phishing schemes will prompt the reader to send gift cards, cashier’s checks, money orders etc. This should be a red flag that the request is not legitimate. Secure Your Devices One of the first steps you can take to protect your information is to ensure the devices you are using are up-to-date. The majority of devices have regularly scheduled updates or send push notifications when new ones are available – so commit to performing the updates for your security. We recommend using automatic update options if possible and restarting your computer on a regular basis. Device security also includes separating personal activity and work devices, especially during a time when many of us are still remote and shopping online. As we stated last year, activity as simple as shopping or checking personal email can lead to security issues that can compromise the device and your entire organization. Update Your Passwords Even if you have secure passwords that meet requirements, chances are your information was exposed over the last year or will be next year. In 2021 alone, major companies including T-Mobile, Volkswagon, Audi, Kroger and Facebook all reported major data breaches that put customer data at risk. This is why the holiday season is a good time to refresh your passwords and monitor your accounts for unusual activity. Another option to ensure password security is using password management software, which essentially acts as a master lock for all of your passwords. Password managers not only add a layer of convenience to password security, but many help you create strong passwords with stringent requirements. Many password management software providers offer options for personal and enterprise security needs. Manage Data Privacy Settings We recommend taking the time to monitor and adjust your data privacy settings so that you fully understand how your data is being collected. Many devices and apps have liberal settings that allow developers to collect your data usage, location and phone data – which can act as a starting point for countless attacks and expose you to unnecessary risk if the app is breached. Use Credit Cards While using credit cards is not a security strategy perse, it is a best practice to limit your liability when shopping and can minimize the financial damage if your information is stolen. Many credit cards have 24/7 activity monitoring that flag unusual activity, including large purchases and spending in geographical areas outside the norm. Plus, credit cards are exactly that: credit. In most cases, you can report fraud with minimal impact to your liquidity. If your debit card is stolen, on the other hand, that is cash out of your account and can involve an extremely long process to remediate. We also recommend reviewing your credit card statements, especially during the holiday season, and notifying your financial institution if you see any fraudulent activity. Another method that you can use is locking cards that aren’t in use, which keeps your account active, just not accessible for purchase until unlocked. One new feature popping up over the last year has been the virtual credit cards. Virtual credit cards were introduced to help reduce the risk of fraud and work by providing a randomly generated number that allows you to transact on your credit card without exposing the main card number. These can be limited per retailer and locked just like regular cards. There is a ton of upside with virtual cards, but they can make returning items and reoccurring purchases challenging. CISA Holiday Cybersecurity Resources CISA Shop Safely Home Page CISA Online Holiday Safety Tip Sheets CISA Holiday Scams and Cyber Threats Press Release About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Approaching Year End, Beware of the Lurking Ninja Tax As we approach the end of the year, investors begin to ponder their taxes ahead of next April’s personal filing deadline. For investors, a material portion of their tax liability can potentially come from capital gains.As most readers know, a capital gain occurs when one sells an asset for more than they paid for it. Without paying close attention, most investors are unaware of capital gain distributions and their associated income tax, which some investors have referred to as “the ninja tax.” Let’s elaborate on capital gain distribution taxation and potential strategies to minimize capital gain impact on investor performance. When a mutual fund or exchange trade fund (ETF) sells securities that have appreciated in value and the fund doesn't have any offsetting capital losses, it must distribute those capital gains to shareholders in the form of a capital gain distribution. This capital gain distribution represents the distribution of net capital gains to the underlying shareholders of record, but it is not a reflection of the fund’s investment performance for the year. These distributions typically occur at the end of the year, with investors having the option of receiving the distribution in the form of additional fund shares (reinvestment) or cash. Investors may recognize this capital gain distribution regardless of whether it is reinvested or received in cash, depending on the investment account the position is held in, as noted below:  Tax-Deferred / Roth Accounts (i.e. traditional & Roth IRAs, other tax-deferred accounts) - Investments held in tax-deferred or after-tax Roth accounts will not recognize the capital gain distribution as income.  Taxable Accounts (i.e. individual or jointly-held accounts) - For taxable accounts, investors will recognize the capital gain distribution. Whether investors recognize a short- or long-term capital gain will depend on how long the mutual fund held the underlying position. See this article for a deeper dive into short- vs. long-term capital gain distributions.   How investors can effectively manage capital gain exposure1. Rebalance a client’s portfolio by electing to receive the distribution in cash. If the client has an overweight position in U.S. Large Cap stocks and an underweight position in international stocks, an advisor could turn off the capital gain distribution reinvestment for U.S. Large Cap stocks, forcing the distribution to cash, and then re-invest the cash into international stocks.  2. Skip year-end distributions by selling positions with unrealized gains that are lower than the estimated capital gain distribution. Toward the end of the year, when a majority of capital gain distributions occur, investors should evaluate their current holdings compared to the anticipated capital gain distributions. Mutual funds typically release distribution estimates weeks prior to the actual distribution. As an example, let’s assume you have an unrealized gain of 3% in a mutual fund position compared to the mutual fund company’s estimate of a 5% capital gain distribution. You could sell the position, trigger the 3% unrealized gain, and “skip” the 5% distribution, thereby saving 2% in additional capital gains. 3. Take advantage of tax loss harvesting opportunities throughout the year. During the year, one or more of our funds may be at a capital loss due to near-term capital market volatility. When those opportunities arise, investors will want to take advantage of the capital loss in a fund by selling it (locking in the capital loss), replacing it with an equivalent fund (typically an ETF that trades commission-free) that is held for at least 31 days, and then re-purchasing the original security after the wash sale period has concluded.  By doing this, the investor maintains their exposure to the asset class, while harvesting a capital loss that can be used to offset other capital gains throughout the year. In addition, should investors’ capital losses exceed their gains in a tax year, investors can deduct these additional losses to offset ordinary income, up to $3,000 per year, with any additional losses eligible to be carried forward to future tax years. As we have illustrated, it is important for investors to be cognizant of capital gains and capital gain distributions to maximize their after-tax investment performance.If you have questions or would like to discuss this topic further, please reach out to a Schneider Downs Wealth Management Advisor. We welcome a conversation with you.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SDWMA Spotlight: The Voyage Program Join Schneider Downs Wealth Management Advisors (SDWMA) Investment Relationship Managers, James Moyer and Alissa Garcia, as they discuss the SDWMA Voyage Program. The SDWMA Voyage Program focuses on individuals and families in the asset accumulation phase of life and recognizes the value of developing a financial plan as the foundation for a secure financial future. The Voyage Program offers you a confident approach, knowing a diverse group of experienced professionals are overseeing your financial future with your best interest in mind. This video and others are available on the SDWMA YouTube page at www.youtube.com/channel/UCvRwIfCVv0VIa97-xZCJGHA.Voyage clients have access to our team of experienced professionals, including Certified Financial Planner™ Practitioners, Chartered Financial Analysts®, Certified Public Accountants, a Chartered Alternative Investment Analyst, and many more designations and certifications. To read more about The Voyage Program download our service overview or visit www.sdwealthmanagement.com/voyage. As always, please do not hesitate to reach out to your trusted SD Wealth Management Advisor with questions. If you are searching for a trusted advisor, we invite you to begin a conversation by contacting us at sdwealthmanagement@schneiderdowns.com. About Schneider Downs Wealth Management AdvisorsSchneider Downs Wealth Management, LP (“SD Wealth Management” or “SDWMA”) is an SEC Registered Investment Advisor specializing in the Investment Management and Financial Planning Services for Individual Investors; Investment Management and Investment Committee Services for Institutions and Non-Profits; and Corporate Solutions and ERISA Fiduciary Services. Registration with the SEC does not imply any level of skill or training.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### SDWMA Financial Planning Video Series Now Available The Schneider Downs Wealth Management Advisors (SDWMA) team is introducing a new series of videos exploring some of the most important financial planning topics.The series kicks off with a video on the importance of a financial plan because we truly believe that a properly constructed financial plan should serve as the roadmap to all of your goal-planning and investment-related decisions. Additional videos are listed below for quick reference and focus on essential financial planning elements including the importance of an estate plan, a disciplined investment approach, and cash flow planning in retirement. The Importance of a Financial Plan – https://youtu.be/p_0hxNKFNJM  Is Your Estate in Order? – https://youtu.be/tnxEl13VgQk A Disciplined Investment Approach – https://youtu.be/tjhoR3ph0ms Cash Flow in Retirement – https://youtu.be/dmq7Izh-B48 The full series is available on the SDWMA YouTube channel at www.youtube.com/playlist?list=PLt8ZEUmrR5GFAsWQ3eiw3UBZ7zHPkVe8p. As always, please do not hesitate to reach out to your trusted SD Wealth Management Advisor with questions.  If you are searching for a trusted advisor, we invite you to begin a conversation by contacting us at sdwealthmanagement@schneiderdowns.com. About Schneider Downs Wealth Management Advisors Schneider Downs Wealth Management, LP (“SD Wealth Management” or “SDWMA”) is an SEC Registered Investment Advisor specializing in the Investment Management and Financial Planning Services for Individual Investors; Investment Management and Investment Committee Services for Institutions and Non-Profits; and Corporate Solutions and ERISA Fiduciary Services. Registration with the SEC does not imply any level of skill or training. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### The IRS Hunt for S Corporation Compensation Underreporting There are a lot of issues for management to keep top of mind these days. The pandemic, of course. The political landscape, and its ever-present promise (or threat, depending on your viewpoint) of new legislation.Then there’s inflation, supply chain problems, worker shortages… the list is endless, right? Is there even time for other business concerns? Certainly there is! And tools like the Schneider Downs Our Thoughts On series can help you keep track of them. Today, let’s discuss whether officer compensation in S corporations should be added to that already long list of things to consider sooner rather than later.S corporations are required to report reasonable compensation for the services that shareholder-employees perform for the company.  That compensation is subject to employment taxes.  An issue arises if shareholder-employees receive distributions, dividends or other forms of compensation instead of wages in an effort to avoid paying employment taxes.It may appear that the IRS has not been thinking too much about officer compensation, given that less than one percent of all S corporations are chosen for examination. Of those selected, almost half of the examinations don’t look at officer compensation, based on a report issued by the Treasury Inspector General for Tax Administration (TIGTA) dated August 11.The report, entitled Efforts to Address the Compliance Risk of Underreporting of S Corporation Officers’ Compensation are Increasing, but More Action Can Be Taken, is the first TIGTA report on shareholder compensation since 2012. Its purpose is to determine whether the IRS’ current compliance efforts surrounding officer compensation are sufficient. As the title suggests, TIGTA advises the IRS to expand its compliance efforts. The agency estimates that between processing years 2016 and 2018, approximately $25 billion in compensation may not have been reported, resulting in unpaid FICA tax of roughly $3.3 billion.TIGTA makes several recommendations within its report, one of which is that the Commissioner of the Small Business/Self-Employed Division of the IRS should evaluate the risks of noncompliance with officer compensation and consider updating the examination plan. TIGTA also recommends the IRS evaluate the benefits of using a threshold and specific criteria as part of classification guidance and use compliance results from established workstreams to inform decision-making.Although IRS management took issue with some of the conclusions drawn and recommendations proffered, one thing is certain—while TIGTA and IRS management may not completely agree on the most efficacious policies and procedures going forward, IRS scrutiny of shareholder compensation is here to stay. Case in point, in August 2020, the Small Business/Self-Employed Division of the IRS launched a compliance initiative project to focus more resources on this topic, which will likely result in officer compensation challenges outside the traditional audit process.If you have any questions or concerns regarding reasonable compensation in S corporations, we’re here to help! Schneider Downs has significant experience preparing compensation analyses. Please contact Jen Doering (412-697-5275; jdoering@schneiderdowns.com) for more information about our compensation consulting services. ### How Much Does a Data Breach Cost in 2021? This article shares some of the key takeaways and statistics from the IBM Cost of a Data Breach Report 2021 and is a staunch reminder of the impact breaches can have on an organization from a cost, time and labor perspective.The annual report provides a detailed analysis of the current landscape of data breaches on organizations across all industries, including the financial impact of incidents, the most targeted data and best practices to mitigate risk.What is a Data Breach?The report defines a breach as an event in which an individual’s name and a medical record and/or a financial record or debit card is potentially put at risk — either in electronic or paper format. Breaches included in the study ranged from 2,000 to 101,000 compromised records.Defining the Cost of a BreachThe report calculates the total cost of a data breach by adding up the costs for Detection and Escalation, Notification, Post Breach Response (Incident Response) and Lost Business Cost. In 2021, Lost Business Cost was the primary cost driver, with Notification being the least. A full breakout is below. 38% Lost Business Cost 29% Detection and Escalation 27% Post Breach Response 6% Notification Reputational cost is not included in this figure as that is hard to quantify, but we know that this type of damage can have a long lasting impact that can sometimes be near impossible to overcome.So How Much Does a Data Breach Cost in 2021?$9.05 Million – Average Total Cost of a Data Breach by Country or RegionFirst place is not always something to brag about, but for the eleventh year in a row the United States ranks as the top country for average total cost of a data breach. In 2021, the United States averaged $9.05 million, an increase from the $8.64 million in 2020. The other countries/regions in the top five include the Middle East, Canada, Germany and Japan – the same group from 2020.$4.62 Million – Ransomware BreachesAccording the report, the percentage of companies where ransomware played a role in the breach was 7.8% and the average cost of a ransomware breach in 2021 came to $4.62 million, which is higher than the average cost of a data breach ($4.24 million).An important note on this number is that the cost does not take any ransom paid into consideration, which can range from a few hundred thousand to tens of millions. In fact, a US insurance company reportedly paid out a $40 million ransom in March according to Business Insider – which shows how the cost of a ransomware breach can  far suprass the average $4.62 million with all factors considered.$4.24 Million – Average Cost of a Data Breach The average cost of a data breach increased 10% from 2020’s $3.86 million, which is the largest increase year over year since the report’s inception. The report did note that while the overall cost increased, organizations with more mature security postures did have lower associated costs vs organizations that had low scores in security AI and automation.$1.07 Million – Cost Difference Where Remote Work Was a Factor in a BreachWith the shift to remote work accommodations, the report highlights a more than $1 million cost difference where remote work factored into a breach. Out of the companies surveyed, 17.5% reported remote work being a factor in a breach and organizations with more than 50% working remotely took 58 days longer on average to identify and contain breaches than those with the majority working on-site.Data Breach by Industry HighlightsHealthcare Industry – For the 11th year in a row, the healthcare industry had the highest cost of breach per industry with a reported $9.23 million average data breach cost. While the healthcare industry being the most impacted was not a surprise, the fact the average cost was a 29.5% increase from 2020 is alarming.Financial Industry – The financial sector came in with the second highest average total cost of a data breach by industry with a reported $5.72 million price tag, which is actually an improvement over 2020’s average cost of $5.85 million.Public Industry – The public sector reported a whopping 78.7% increase in the average cost, with a price tag of $1.93 million from 2020’s $1.08 million. With the increased targeting of municipalities and local governments over the last year, the sharp increase comes as no surprise to those in the cybersecurity world.Energy Industry – Not every statistic in the report was negative. In fact the energy sector recorded a noticeable improvement with the average cost of a data breach falling to $4.65 million (the average cost for an energy industry breach was $6.39 million in 2020).What Data is Being Targeted?So what exactly are cyber criminals targeting when breaching organizations? The general answer is whatever is the most valuable on the dark web and in 2021 that was customer personal identifiable information (PII). Other targeted records include intellectual property (Quanta Computer anyone?). The top five types of records targeted and their average cost per records is below. 44% Customer PII ($180) 28% Anonymized Customer Data ($157) 27% Intellectual Property ($169) 26% Employee PII ($176) 12% Other Sensitive Data ($165) Responding to Data Breaches in 2021The old "adage of time" is money rings true in the cybersecurity world and unfortunately, the 2021 report shows that the average time to identify and contain a data breach lifecycle has increased a full week since 2020 to 287 days. Many may take a double look at that number as it is almost a full calendar year, but the data shows on average it took organizations 212 days to identify a threat and an additional 75 days to contain the breach.The most time consuming attacks were Compromised Credentials (342 total days), Business Email Compromise (317 total days) and Malicious Insiders (306 days). Additional average response time based on the initial attack include: 293 Days – Phishing 292 Days – Physical Security Compromise 290 Days – Social Engineering 286 Days – Third-Party Software Vulnerabilities How Do I Protect My Organization from Data Breaches?While the numbers are new, many of the types of breaches and entry points are the same as we have seen for years and we suspect the cost of a data breach will only grow as threat actors have grown more brazen and greedy over the last year. In fact, the largest ever ransomware attack took place over July 4th weekend and the Biden Administration is increasing focus on cybersecurity due the increasing targets on infrastructure and supply-chain providers.As for strengthening security posture, our team will always promote developing a comprehensive cybersecurity plan that fits your organizational culture, structure and industry. There is no “one size fits all” approach to cybersecurity, but a commitment to regular vulnerability assessments, automated software, end user security education and proactive planning are foundational pieces that every organization should be able to benefit from.We also recognize that the increasingly connected world has placed an emphasis on third-party risk, as many of the high profile breaches are usually rooted in a vendor or partner. Which is why it is more important than ever for every organization to consider working with third-party risk management professionals as part of their security and risk management plans.About the IBM Cost of a Data Breach Report 2021The annual report, featuring research by the Ponemon Institute, offers insights from 537 real breaches to help you understand cyber risk in a changing world. Now in its 17th year, this report has become a leading benchmark tool, offering IT, risk management and security leaders a lens into factors that can increase or help mitigate the cost of data breaches. The full report is available for download at https://www.ibm.com/security/data-breachIn addition to the report, we invite you to explore our library of open-source security awareness materials including infographics, whitepapers and videos at www.schneiderdowns.com/cybersecurity/resources.Did you find this article helpful? You may also be interested in our Most Common Passwords of 2021 article.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Michael Jackson vs. Kenny Pickett Two of my long-time personal interests, sports, and music, recently collided with my professional experience.As a little background, I have been a sports fan for as long as I can remember. Baseball, football, hockey, basketball, soccer – professional, college or amateur – I have followed them all. As for music, I grew up around it, was originally a music major in college, and continue to play in the band at my church most every Sunday.I have spent much of my professional life as a business consultant, often dealing with issues of value and trying to make sense of “unusual” financial situations and transactions. Some of that work has involved the business of professional sports. Additionally, I have also had the opportunity to do some valuation work related to the entertainment and music business.So where and how did the recent collision of business, sports and music occur in my head? The collision occurred when I read the Federal Tax Court’s opinion regarding the Estate of Michael J. Jackson, Deceased (U.S. Tax Court, Dkt. No. 17152-13, TC Memo. 2021-48, May 4, 2021), and when I watched the University of Pittsburgh football team last Saturday beat Clemson, with the play of quarterback Kenny Pickett. Yes, I am talking about THAT Michael Jackson, the King of Pop, who died in 2009, and a college student named Kenny Pickett, who is being recognized as one of the top players in college football in 2021, and a candidate for the prestigious Heisman trophy.I know these are strange times, but the thought crossed my mind – could Kenny Pickett be worth more than Michael Jackson? Or, more specifically, could Kenny Pickett’s Name, Image and Likeness (NIL) be worth more than Michael Jackson’s?According to the NCAA, starting July 1, 2021, all student-athletes were granted permission to capitalize on their NIL. Kenny Pickett reportedly signed a NIL deal in July with the Oaklander Hotel and its restaurant to treat his blockers to weekly dinners. Pickett may have signed other NIL deals as well, but, at a minimum, the Oaklander Hotel deal must be worth thousands of dollars given how much a group of college athletes, treated to free dinner, probably eat!The Estate of Michael J. Jackson, Deceased (the “Estate”) recognized that Jackson’s NIL was an intangible asset. The Estate valued Jackson’s NIL at the time of his death at $2,105 on the estate tax return. At a value of $2,000, the thought that Kenny Pickett’s NIL is worth more than Michael Jackson’s may not be crazy. Kenny Pickett is currently at the height of his popularity because of his athletic success, thus leading to many potential NIL opportunities.  In contrast, when Michael Jackson died in 2009, he did not have any NIL deals in place. Jackson had earned nothing from his NIL during the years 2006, 2007 or 2008. This is not surprising since he had not released any new music for a number of years, had become infamous for unusual behavior and had become reclusive after allegations of child molestation. As one potential marketer stated, “as sweet as [Jackson] is, the parade of ‘unusual’ personalities in his life, leaves me very nervous”, describing Jackson’s image and likeness as “candidly toxic.With Jackson’s toxic image and likeness, it is not hard to understand why the Estate valued Michael Jackson’s NIL at next to nothing at the time of his death. However, upon audit, the Internal Revenue service (“IRS”) disagreed with the $2,000 value placed on Jackson’s NIL by the Estate, instead valuing Jackson’s NIL at $434 million. That is a BIG difference!Because of the huge difference in perceived value of Michael Jackson’s NIL, the Estate ended up in US Tax Court, debating the value of Jackson’s NIL, as well as the value of his ownership interests in the Sony/ATV Music Publishing and Mijac Music. By the time the dispute got to Tax Court, the Estate had increased the value of Jackson’s NIL from $2,105 to $3,078,000 – obviously a substantial increase, but still significantly less than the value asserted by the IRS.Long story short, the Tax Court ultimately decided that Michael Jackson’s NIL was worth approximately $4.15 million at the time of his death.  Although Kenny Pickett may have some valuable NIL opportunities, both now and in the future, I believe his current value is less than Michael Jackson’s.My analysis of the Estate of Michael Jackson case, and comparison of the value of Jackson’s NIL to that of Kenny Pickett, reinforces several critical issues that are applicable to all valuations, not just the valuation of celebrity NIL, including: Date of value – remembering that value is at a point in time, based on the economic conditions and expectations of income at that time. In this example, Michael Jackson’s NIL is valued in 2009, immediately before his death, when he was not the most famous entertainer in the world, but instead was in serious financial difficulty and was infamous for unusual behavior and toxic allegations of heinous acts. There was a substantial risk at the time of Jackson’s death that the Estate would be able to monetize Jackson’s NIL at all. The discussion about Kenny Pickett is about value in 2021, when he is currently at his athletic peak, with significant opportunity for future success on and off the football field. Known or knowable information at the date of value – the Tax Court identified several problems with the valuation of Jackson’s NIL by the IRS expert, importantly including the IRS’s estimates of licensing and merchandising revenues that were foreseeable (or in this case, not foreseeable) at the date of Jackson’s death. The Court identified that in spite of the fact that Jackson’s Estate successfully and skillfully rehabilitated Michael Jackson’s image after his death and were able to create hundreds of millions of dollars in revenue as a result, that income was unforeseeable at the time of death. The court confirmed that foreseeability can’t be subject to hindsight. Want to know a lot about Michael Jackson and the music business? Take a read through the Tax Court Opinion in Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor v. Commissioner, it is well worth the read. The Court got into a lot of interesting details and if you are like me, you will then need to dial up the Best of Michael Jackson on Amazon Music. Do you want to know more about Kenny Pickett? Go to Heinz Field in the upcoming weeks and enjoy the action. Cheers! ### Cybersecurity Awareness Month is Ending... Now What? This year's Cybersecurity Awareness Month may formally end tomorrow, but cyber threats will continue to target end users every month, week, day, hour and minute of the year. The 18th annual Cybersecurity Awareness Month is coming to an end and chances are organizations are already swapping out Cybersecurity Awareness Month posters from their break rooms for November themes and initiatives. Unfortunately, we know from first-hand experience that cyber threats never rest, and encourage our clients and community to keep their guard up year-round to keep themselves and their organizations cyber safe. If your organization is looking for a November activity to keep cybersecurity top-of-mind, our cybersecurity team is hosting a webinar exploring one of the fastest growing cyber services across all industries, Purple Team Assessments. The webinar will focus on several aspects of a Purple Team Assessment and is scheduled for Wednesday, November 10 at 10am ET. Registration is open at www.schneiderdowns.com/the-benefits-of-a-purple-team-assessment. Attendees qualify for 1 CPE and a recording will be made available following the event for all registrants. Additionally, our new resources introduced throughout Cybersecurity Awareness Month are available perpetually in our Cybersecurity Resource Library at www.schneiderdowns.com/cybersecurity/resources and listed below for quick reference. Video Series: Top Cybersecurity Questions of 2021 This new video series features members of the Schneider Downs cybersecurity team answering the top questions they answered in the field over the last year. You can view the full series at www.vimeo.com/showcase/8866271 and individual video links are below. Cloud Penetration Testing Once everything is in the cloud, will people still need penetration testing? Compliance Frameworks How do I know which compliance requirements my organization should follow/adhere to? Cyber Insurance Why are cyber insurance premiums increasing? Digital Forensics What TTPs can we expect threat actors to be utilizing over the next few months? Incident Response One of our users opened a malicious attachment, but shut down their computer about 20 minutes later. What now? Multifactor Authentication Are there any MFA methods more/less secure than the others? (Push Notification, PIN, SMS, Token, etc) Network Penetration Testing Why do our pentesters own us year after year, even though we keep fixing all the findings each time? Password Blacklisting We have strong password policies, but users keep making guessable passwords that meet our requirements… Please help! Phishing We run our own internal phishing campaigns every quarter, so can we exclude phishing from our annual penetration test? Purple Teaming How can we better manage false positives from automated tools without reducing security? Whitepaper: Top Ten Cybersecurity Strategy Mistakes of 2021 With at least 70% of business leaders feeling their cybersecurity risks are increasing, the need to develop and implement strong cybersecurity strategies continues to be a top priority for organizations across all industries. Learn about the top cybersecurity strategy mistakes organizations are making and best practices to avoid these common pitfalls. Download the whitepaper at www.schneiderdowns.com/top-ten-cybersecurity-mistakes-2021. In addition to our Cybersecurity Resource Center, we invite you to subscribe to our 'Focus on Cybersecurity' newsletter. The bi-weekly newsletter shares the top stories from the cybersecurity world and original articles from our team. You can subscribe at www.schneiderdowns.com/subscribe. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### What to Expect When You’re Expecting a Single Audit With the significant uptick in federal dollars authorized to be passed out over the last 18 months, many organizations will likely experience their first single audit. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations (CRRSAA) Act and the American Rescue Plan (ARP) Act added a significant amount of COVID-19 federal funding to new and existing federal programs.  Significant funding for the Education Stabilization Fund and Shuttered Venue Operators Grants Program will impact many recipients, including governments and not-for-profits, and may trigger the single audit requirement.  A single audit is a type of audit that occurs when a non-federal entity expends more than $750,000 of federal dollars during its fiscal year.  These federal expenditures can be awards from grants, cost reimbursements or pass-through dollars, among others.  For entities that have never experienced a single audit before, the process can be daunting, so here are a few things to expect when you are expecting a single audit. The first thing that an entity should do is prepare a schedule of expenditures of federal awards, otherwise known as a SEFA.  The process of preparing a SEFA involves categorizing and tabulating all federal dollars expended by their respective assistance listing number (AL number), previously called catalog of federal domestic assistance (CFDA) number.  This will ensure that you are able to determine if a single audit is required, and it will allow your independent auditor to determine the major program the auditor must test.  The major program is determined by a process outlined by Uniform Guidance, the authoritative guidance for single audits.  The auditors will determine the major program(s) and then will identify the areas of compliance and internal controls required for testing.  Once your auditors determine the compliance areas and internal controls to test, they will provide a sample to test your compliance under Uniform Guidance.  The Compliance Supplement, which is a document that lists the audit requirements for all AL numbers, is the primary reference point for the auditors in determining their procedures.  Also, entities should carefully review the Compliance Supplement annually for programmatic and agency requirements and changes along with the award agreement for any specific provisions and requirements to ensure those are met.  After the provision of the samples and the testing of such requirements, the auditors and the entity will work jointly to create the single audit reporting package.  This reporting package consists of the entity’s financial statements and SEFA, an opinion on the financial statements, as well as the SEFA, an opinion under governmental auditing standards, single audit compliance opinion, a schedule of findings and questioned costs, a summary schedule of prior audit findings, and a corrective action plan. Entities should pay special attention to the completeness and timing of the SEFA expenditures this year with the influx of COVID-19 federal funding related to the new federal programs.  Challenges can arise when the AL number is not provided by the grantor and the entity needs to reach out to the agencies or pass-through entities to obtain the AL number.  As a general rule, expenditures should be included on the SEFA when the underlying activity occurs and there is an award or terms of condition in place.  Entities are encouraged to follow the developments related to the COVID-19 federal programs on the timing of the SEFA expenditures. To ensure that your audit goes smoothly and efficiently, have your SEFA ready before the audit is scheduled.  Also, stay in constant contact with your auditors and have any and all necessary records available at the start of the audit.  If there are areas that are problematic, communicate those areas to your auditors in a timely manner and work together to resolve those issues.  While the process can be cumbersome, the federal dollars are worth it!  Please contact us with any questions on the single audit process or any federal funding questions. ### Key Takeaways from the September ISM Manufacturing Report In early October, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that provides analysis of industry trends and statistics relevant to the manufacturing industry based on surveys of purchasing and supply executives.The report evaluates the state of the industry and focuses on areas like new orders, backlog status, inventory levels and prices. The overall attitude of the latest report seems to present an outlook of optimism, with evidence of continuing month-over-month growth, despite a rising number of challenges.The Purchasing Managers Index (PMI), an indicator of the prevailing direction of economic trends in the manufacturing and service sectors, is utilized to predict the state of the economy and the growth or contraction present within the industry. A PMI metric over 50% is considered to be in a growth state, while one less than 50% is in a contraction state. PMI grew to 61.1% in September, up from 59.9% in August, marking the 16th straight month of growth. But while the industry has continued to see expansion each month since the shutdowns in April 2020, manufacturers are highly concerned about the prevailing labor shortage and the current state of supply chains. Almost half the companies surveyed indicated that hiring difficulties continue to persist and the problem seems to be worsening, with the workforce continuing to turn over due to retirements and other employment departures.Companies are also expressing concerns over the supply chain. Delivery performance of all six top manufacturing industries (Fabricated Metal, Food, Beverage and Tobacco Products, Petroleum and Coal, Chemicals and Transportation) slowed in September, with supplier hiring challenges, raw material lead time and inflation the key issues.Yet while challenges persist, the majority of industries surveyed have reported growth, with only the wood product industry showing a contraction in September. Demand continues to rise, shutdowns are lessening and being managed appropriately, and consumption has grown, all trends that bode well for the future of the industry, assuming the kinks can be worked out.  ### Tax Reform 2021 - Build Back Better: Proposed Changes to Section 199A Qualified Business Income Deduction The Section 199A Qualified Business Income Deduction, enacted as part of the Tax Cuts and Jobs Act in 2017, was meant to provide a tax benefit to smaller flow-through businesses in response to the large decrease in the C corporation tax rate from 35% to 21%. Under current law, for taxable years 2018 through 2025, individuals and trusts generally may deduct 20 percent of qualified business income from partnerships, S corporations or sole proprietorships, in addition to a separate component of the deduction for aggregate qualified real estate investment trust dividends and qualified publicly traded partnership income. There are certain other requirements and limitations, however, that come into play. The amount deductible, for instance, may not exceed 20 percent of taxable income for the taxable year (reduced by net capital gain). Limitations based on W-2 wages and capital investment generally also apply. A disallowance of the deduction of income for specified service trades or businesses (e.g., accounting, legal and consulting businesses) also phases in above a threshold amount of taxable income, indexed for inflation. For 2021, the threshold amount is $329,800 for married filing joint returns, $164,925 for married filing separate returns and $164,900 for all other returns. Other than through the limitations above, the maximum dollar amount of the deduction was essentially unlimited to the extent of 20% of the eligible income. The Build Back Better Act proposes to add a fixed-dollar limitation, not indexed for inflation, on the maximum amount of the deduction for tax years beginning after December 31, 2021. The amount proposed is to not exceed $500,000 for a joint return or surviving spouse, $250,000 for a married individual filing a separate return, $400,000 for certain other taxpayers and only $10,000 for a trust. Present law phaseouts of the deduction above the threshold amount would continue to apply, but while the Build Back Better legislation proposes to make the excess business loss limitation permanent, it does not propose to permanently extend the 199A qualified business income deduction, which is still slated for termination for taxable years beginning after December 31, 2025. Keeping in mind that this change still must survive in a final version of the bill, taxpayers with the potential ability to accelerate income into 2021 (while deferring significant deductions and/or losses) may want to begin considering these options now to optimize the total federal taxes paid over 2021 and 2022. Otherwise, the impact of the proposed changes on the 199A deduction coupled with the impact of other proposals (see our articles on the proposed changes to net investment income tax and the proposed surcharge tax) could subject a taxpayer to a substantial increase in their overall effective tax rate on certain levels of trade or business income from 29.6% (37% tax rate multiplied by 80% income subject to tax) to an effective rate in excess of 46%. Proposed highest individual income tax rate on trade or business income More than the 199A fixed-dollar deduction limitation 39.6% Proposed change in Net Investment Income Tax Regime  3.8% Surcharge tax regime on certain High-Income Taxpayers  3.0% Highest Total Effective Tax Rate 46.4% As an example, consider a single taxpayer who materially participates in a trade or business that has a qualifying business income of $10 million for 2021. Assuming the taxpayer can obtain the maximum benefit under section 199A after application of other limitations, tax on this income in 2021 would be approximately $2.96 million. Now assume the same taxpayer earns the same amount of qualifying business income in 2022 under the proposed law. Projected tax on the income could approximate $4.4 million (39.6% of $10M less $500,000, plus 3.8% NIIT on $10M and 3% surcharge on $5M), for a potential effective tax rate exceeding 44% (the effective rate approaches the highest effective rate of 46.4% as income increases), representing an increase in tax of approximately $1.4 million and an increase of 14.4% in the effective rate. Trustees may want to begin reviewing their options to optimize the impact of the proposed changes between taxes paid by trust and taxes assessed on individual beneficiaries resulting from trust distributions of income. As with other provisions in the proposed legislation, taxpayers and advisors will need to monitor this provision closely. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com. ### Lease Accounting Guidelines for the Trucking Industry Schneider Downs, in partnership with the Ohio Trucking Association, is pleased to announce the release of the second installment in our series of trucking industry white papers. The series is aimed at addressing the most critical issues currently facing the trucking industry. This white paper focuses on Accounting Standards Codification (ASC) 842 Leases.  Download the Whitepaper  Effective for all private entities for fiscal years beginning after December 15, 2021, ASC 842 requires companies to recognize essentially all long-term leases on the balance sheet. This is a significant change from the prior leases guidance which only required balance sheet recognition of capital leases (operating leases under the old guidance were disclosed and expensed as rents were incurred). Under the new guidance, companies must record a right of use (ROU) asset and lease liability at the present value of lease payments not yet paid. Income statement presentation for subsequent periods will vary depending on a lease’s classification; interest expense and amortization expense will be separately presented for finance (formerly “capital”) leases, and a single lease expense line will be presented for operating leases. Given the changes noted above (and addressed in greater depth within the white paper), the new standard has the potential to both impact your loan covenants and cause much heartache as you move to implement the new accounting standard.  Schneider Downs recommends you begin now to review your loan covenants, inventory the leases across your organization, discuss the impacts with your certified public accountant, and consider the need for a lease software package (if you have at least 10 leases to track). As you navigate through ASC 842 and find that your organization needs some guidance on the technical aspects of lease accounting, Schneider Downs can help. Schneider Downs has been tracking and anticipating the changes to lease accounting standards over the years and has worked extensively to understand the specifics and intricacies of the standards. Additionally, Schneider Downs offers simpLEASE, a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. To learn more about simpLEASE visit www.schneiderdowns.com/simplease. Over the next six months, we will be researching the topics below and providing you with relevant, real-time information you can use to make strategic decisions in your trucking company. September: State of the Industry - Driver Shortage October: State of the Industry - Lease Accounting November: State of the Industry - Economic Update December: State of the Industry - ADAPT/Infrastructure January: State of Industry - Tax Update February: State of Indsutry - Cyber/Technology Next year we expect to relaunch our membership survey and I encourage you to look out for it.  But in the meantime, we hope you enjoy the Schneider Downs Trucking Industry White Paper Series available at www.schneiderdowns.com/transportation-logistics-resources. Related Articles Schneider Downs Trucking Industry White Paper Series Transportation and Logistics Industry Practice Our Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends. We work with you to seek innovative ways to reach your strategic goals. For more information visit our dedicated Transportation and Logistics page. ### Tax Reform 2021 - Build Back Better: Excess Business Losses Further Limited than Under 2017 Tax Cut and Jobs Act Section 461(l), which limits the amount of business loss deductions from trade or businesses that noncorporate taxpayers can offset against other types of income, was enacted as part of the Tax Cuts and Jobs Act in 2017. Business losses in excess of the current-year deduction convert to net operating losses and are available to offset future year income. These loss limitation rules were initially applicable to tax years beginning after December 31, 2017, but COVID-19 put the kibosh to that implantation date. As amended by the CARES Act, the limitation was retroactively postponed for tax years beginning in 2018, 2019 and 2020. The provision now applies to tax years beginning after December 31, 2020, with the limitation set to sunset for tax years beginning after December 31, 2026. As background, an "excess business loss" is the excess, if any, of: a taxpayer’s aggregate deductions for the tax year from the taxpayer’s trades or businesses, determined without regard to whether such deductions are disallowed for such tax year under the excess business loss limitation, minus the sum of: the taxpayer’s aggregate gross income or gain for the tax year from such trade or business, plus $250,000 or $500,000 for a joint return (adjusted annually for inflation). For example, if a married taxpayer incurs a $1,000,000 loss from a trade or business, their loss is limited to $500,000. The excess is carried over to future years and treated as a net operating loss carryover. Losses from flow-through entities carry through to the owners and are combined. Excess loss limitation rules are not applied at the entity level. The proposed legislation changes the current law in several ways: It eliminates the sunset provision and makes the limitation permanent. It retroactively applies the changes to taxable years beginning after December 31, 2020. It modifies the carryover rules by eliminating its character as a net operating loss; it will remain a trade or business loss that’s included in the trade or business income or loss bucket in the following year for purposes of calculating the limitation. Therefore, the prior year loss may again be subject to the excess business loss rules in the following year, possibly postponing the deductibility of a loss for multiple years. It repeals the limitation placed on excess farm losses. Item 3 may be the most detrimental. As noted, treatment of the excess loss as a net operating loss carryover provided the ability to deduct a large portion of the loss in the following year. The modification may tend to extend the utilization of a sufficiently large loss over a longer period. Even worse, it appears that upon death, any unallowed loss may disappear; currently there appears to be no provision in the existing bill to treat otherwise. The effective date of the legislation is also problematic in that it’s retroactive. Taxpayers may have already been planning on using the loss carryover under the existing net operating loss rules. With the recharacterization in the type of the loss, and depending on specific facts and circumstances, some portion of the loss may now not be available for 2021 or 2022, throwing wrenches into current planning scenarios. Further, as with almost all tax legislation – proposed or enacted – there appear to be open issues that need further clarification in a final bill. The AICPA is recommending in a comment letter to members of the Senate Finance Committee and House Ways and Means Committee that: Gains (and losses) from the disposition of partnership or S-corporation interest be included in the definition of business income used in the calculation; Suspended Section 461(l) losses be allowed in full in the year of complete disposition; and The issue of remaining losses at death, by either allowing losses in the final return or allowing a carryover of the loss to the estate, is addressed. Taxpayers and advisors will need to monitor this provision closely. Possibly the Senate will change the effective date and address some of the other concerns with this portion of the proposed legislation. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com.       ### Top Risks to Consider in 2022 If nothing else, the past 18 months have shown just how resilient people and companies can be. But now more than ever, corporate leaders are finding themselves focused on risk management and are challenging how their organizations view and manage risk. Threats that were not top-of-mind before are now being considered. So, what are the top risks organizations are looking at? The Institute of Internal Auditors (IIA) recently published OnRisk 2022: A Guide to Understanding, Aligning and Optimizing Risk, a report that provides perspective from key members of risk management functions and offers insight on potential areas of focus. OnRisk 2022 was developed from qualitative interviews conducted with 90 professionals to capture viewpoints of the boardroom, C-suite and chief audit executives. Results were analyzed to draw conclusions on how the three roles aligned, both regarding the risks that exist within organizations and how equipped those organizations are to manage the threats. Several key insights resulted. Top 12 RisksThe following were identified as the top 12 risks organizations expect to face in 2022 (in order of relevance): Cybersecurity Talent Management Organizational Governance Data Privacy Culture Economic and Political Volatility Change in Regulatory Environment Supplier and Vendor Management Disruptive Innovation Social Sustainability Supply Chain Disruption Environmental Sustainability Cybersecurity was also the top risk in 2021 and maintains that position for 2022. Such risks are now heightened as a result of continuing work-from-home scenarios, which some organizations are now making permanent. Moving up on the list is Talent Management. Finding, hiring and retaining top talent is more difficult than ever and many organizations are struggling to maintain full teams. The increased ability to hire from any location and work remotely has created additional competition in the talent market. Respondents also expect risks related to Culture, Economic and Political Volatility and Disruptive Innovation to continue to grow in relevance over the next several years.Business Continuity and Crisis Management have fallen off the list since 2021, which is not surprising given organizations’ abilities to prepare, react, respond and recover have recently been augmented, creating more comfort over the capacity to respond to and manage this risk. Ability to Manage Top RisksThe IIA noted that while this year’s report indicates better alignment among individuals managing risk than what was identified in prior years, there’s still a significant gap between how risk management leaders rate risk relevance versus organizational capabilities in most of the top 12 risks, most notably in Talent Management, Culture, Disruptive Innovation, Data Privacy and Cybersecurity. In other words, leaders often recognize that these are significant risks to their business, but don’t have confidence in their organization’s ability to effectively manage them. ESG RisksSustainability was included as an overall risk last year, but makes the list in several forms this year, including Organizational Governance, Social Sustainability and Environmental Sustainability. Awareness of environmental, social and governance (ESG) risks is increasing as pressure for ESG reporting grows. Challenging these risks at a more detailed level is important as the report showed that leaders find certain of these risks, specifically Organizational Governance, to be more relevant than others. Respondents also felt that organizations’ ability to manage certain risks were less in line with the relevance of the risk, specifically for Social Sustainability and Environmental Sustainability. Understanding where those knowledge gaps might exist allows for more proactive management of the specific risks.The risks noted above should be considered as organizations look forward to 2022. Since the threats included in the report are fairly industry-agnostic, it’s important that your organization also consider the industry-specific risks that may impact you directly. A well-established enterprise risk management program that’s appropriately sized for your business and aligned to your strategies and objectives can help you proactively manage risk, reduce negative surprises, embrace risks to act on opportunities and bring value to your organization. Alignment across all levels of the organization on how risks are identified, assessed and managed continues to be critical. Interested in learning more about how to identify, assess and manage risks within your organization? Contact our Risk Advisory Services team by emailing us at jyard@schneiderdowns.com. For the complete report, click here to download OnRisk 2022: A Guide to Understanding, Aligning and Optimizing Risk.  ### Digital Transformation Frequently Asked Questions What are some of the most common questions related to Digital Transformation? Digital Transformation is one of the fastest growing terms across all organizations and industries, but what exactly does this mean, how does it work and why are organizations constantly speaking about it? To help better understand Digital Transformation, Schneider Downs Technology Advisors developed a Digital Transformation FAQ Guide available at the link below. DOWNLOAD THE FAQ Our Digital Transformation FAQ Guide covers several questions and provides our insight on Digital Transformation. Questions range from basic to complex, including:Why is Digital Transformation important?More than ever before, businesses today are in need of timely, accurate, and meaningful data.  Shortcomings in existing processes and technologies result in issues such as data integrity, timeliness, and completeness of information that business operations need to make informed business decisions. Combined with the increasingly digital world and dependency on data, the importance of Digital Transformation will continue to grow. Will Digital Transformation and technology replace my employees?No, the intention of Digital Transformation is to enable people across all functional areas to perform value-added tasks.  While technology may be able to replace redundant tasks, it is not meant to replace people. We believe technology is supplemental and supports what people will do for an organization because technology cannot replace a human’s ability to think creatively, critically, strategically, and collaboratively.What are some indicators that it is the right time to start Digital Transformation?The right time to start depends on a number of factors, but in general, the sooner the better.  Factors such as your organizational readiness, industry, market, finances, long-term strategy, compliance and government regulations may all come into play. Common triggering events include: Accelerated growth outpacing current finance and accounting abilities;  Acquisitions or divestitures;  Implementation of a new system or systems;  Inefficiencies;  Significant employee turnover;  Multiple locations lacking standardization or alignment of best practices;  Staffing or cost reduction initiatives;  Untimely or inaccurate operational or financial information to make informed business decisions; and Desire to scale and be an industry leader. What are the key starting steps to Digital Transformation?Digital Transformation requires a culture that supports innovation and we understand getting started can seem daunting. Organizations should begin by laying out a communication plan that outlines the organization's goals, objectives for Digital Transformation, and states the plan that will facilitate and support this important organizational change.  The plan should also convey why it is important, what that change looks like and means to the organization and individuals involved, and that leadership is committed and invested in promoting and supporting the Digital Transformation initiative.You can view the complete FAQ at www.schneiderdowns.com/digital-transformation-faq and download the PDF version here.About Schneider Downs Digital TransformationThe Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. Our solutions are built to identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. For more information contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation.    ### President Biden Signs K-12 Cybersecurity Act into Law The Biden Administration kicked off Cybersecurity Awareness Month by signing the K-12 Cybersecurity Act of 2021 into law on October 8, 2021. U.S. Senator Rick Scott (R-FL) initially introduced the bipartisan legislation this past May after a string of ransomware attacks targeted school districts across the country and gained sponsorship support from Senator Jacky Rosen (D-FL) and Senator Bill Cassidy (R-LA). The K-12 Cybersecurity Act requires the Cybersecurity and Infrastructure Security Agency (CISA) to perform a 120-day review of cybersecurity risks faced by school districts and provide a report back to Congress. The law states that CISA is required to examine “how identified cybersecurity risks specifically impact K–12 educational institutions” and evaluate the challenges schools face in securing their information systems, protecting student and teacher data and implementing and enforcing cybersecurity controls. Following the report, the law provides CISA with 60 days to develop guidelines for K-12 organizations and then another 120 days to create an online toolkit school districts can use to implement those strategies and recommendations. One key note of the law is the lack of direct funding for K-12 cybersecurity. However, a separate bill is currently in review that would provide a $10 million annual fund for cybersecurity initiatives such as this. A recent study shows that in 2020, a total of 1,681 schools, colleges and universities in the U.S., as well as 560 health care facilities, reported ransomware attacks. The key word is reported, as the total number of attacks is likely much higher than that. Following the high-profile ransomware attack on Clark County School District in Nevada, Senator Rosen (D-NV) joined the bipartisan sponsorship of the bill. “Malicious cyber actors are increasingly targeting K-12 schools across the United States, including the Clark County School District, the fifth-largest school district in the country, which was the victim of a ransomware attack,” said Senator Rosen. “Cyberattacks can be expensive and debilitating, especially for small organizations or public entities. Schools and school districts need an immediate federal response to improve cybersecurity in Nevada and across our nation to prevent the personal information of students, faculty, and staff from falling into the wrong hands. I’m proud to see that this bipartisan legislation, which I co-sponsored, passed the Senate and is one step closer to becoming law. This bill will provide schools with tools and resources to prevent and combat cyber threats.” The bill summary is available at https://www.congress.gov/bill/117th-congress/senate-bill/1917/all-info and reads: This bill requires the Cybersecurity and Infrastructure Security Agency (CISA) to study the cybersecurity risks facing elementary and secondary schools and develop recommendations that include cybersecurity guidelines designed to assist schools in facing those risks. The use of such recommendations shall be voluntary. The study must evaluate the challenges that schools face in securing (1) information systems owned, leased, or relied upon by those schools; and (2) sensitive student and employee records. Further, the bill requires CISA to (1) develop an online training toolkit designed for school officials; and (2) make available on the Department of Homeland Security website the study's findings, the cybersecurity guidelines, and the toolkit. The K-12 Cybersecurity Act of 2021 is another step forward in the Biden Administration’s prioritization of cybersecurity as a national security matter. Since taking office, President Biden has developed several steps in strengthening the nation’s cybersecurity defenses, including  Improving the Nation’s Cybersecurity Executive Order, issuing the very first sanctions on cryptocurrency exchanges for laundering cyber ransoms and hosting a private company cybersecurity summit that resulted in a $30 billion commitment from Google and Microsoft. “Today, I was pleased to sign the K-12 Cybersecurity Act into law to enhance the cybersecurity of our Nation’s K-12 educational institutions,” President Biden stated. “This law highlights the significance of protecting the sensitive information maintained by schools across the country, and my Administration looks forward to providing important tools and guidance to help secure our school’s information systems. I want to thank Congress for passing it with bipartisan support.”. Related Links Statement of President Joe Biden on Signing the K-12 Cybersecurity Act into Law All Information (Except Text) for S.1917 - K-12 Cybersecurity Act of 2021 Related Articles Biden Administration Announces First Ever Sanctions Against Cryptocurrency Exchange TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators US Lawmakers Look to Set Federal Cyber Breach Alert Standard White House Issues Executive Order on Cybersecurity About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Digital Transformation: Not as Difficult as You Think While understanding the features, functionality, importance, and benefits of emerging solutions is critical to staying in tune with the ever-changing technology space, it is equally important to separate fact versus fiction as it relates to the perceived barriers of entry for implementation. It may not always feel this way, but technology implementation and digital transformation is truly attainable and accessible for ALL companies. As a technology consultant and CPA, I often discuss these topics with clients and prospects hearing common themes or reasons they feel they are unable to implement emerging technologies and go through digital transformation at their organizations.  Below, I highlight three of those themes and address the concerns head-on: Reasons to implement emerging technologies Cost As CPAs, we are financially driven and come by it honestly.  Cost is certainly a factor with implementing new technology, however, performing a simple cost/benefit analysis after having a clear understanding of the value of the emerging technology, will provide clarity into the actual ‘cost’. Often there is an intrinsic value that digital transformation brings to an organization, making a cost/benefit analysis more challenging to calculate. Determining efficiencies to be gained is one way to quantify a benefit in terms of dollars: Example: Assume implementation of a data visualization solution eliminates the need for manual report generation and distribution, conservatively resulting in the corporation saving time equal to 1 day a week for an individual with a $100,000/year salary.  That translates into approx. $20,000 of benefit (capacity) back to the organization. Further, if the same data visualization solution saves that amount of time for 5 employees in the same position (i.e., regional managers, project managers, etc.), now our benefit is approaching $100,000 annually or 1 FTE at that level. By calculating those benefits, a $20,000 price tag for technology implementation may not appear as significant as it once did. Calculating tangible value returned to help determine a return on investment can ease the pain of upfront implementation costs.  Additionally, any successful technology consultant should be able to provide you with multiple options for implementation spanning various price points that still meet your needs without pricing you out. Size & Complexity There is a misconception that emerging technologies and digital transformation are only realistically accessible or economically feasible for large or complex companies. The fact is most, if not all companies can realistically implement and benefit from emerging technologies today! Will a ‘Mom & Pop’ retail store benefit enough from implementing a CPM solution to justify the cost?  Maybe not, but they can certainly benefit from Robotic Process Automation processing invoices and online orders to free them up throughout the day to serve their customers face to face without hiring an additional employee. Likewise, does a $10M wholesaler need Machine Learning? Maybe not, but a data analytics and visualization solution may allow them to perform recurring analysis to identify, monitor, and grow their most successful markets thus improving their top line. It is easy to hear about emerging technologies and mentally jump right to a basement full of data scientists working for NASA and developing advanced algorithms to send astronauts into space. The truth is there is a use case to implement different emerging technologies at every company, at a variety of price points and regardless of industry, workforce skillset, company size or complexity. Readiness “We aren’t ready for any new technology, we have too many manual processes to convert.”  Have you said that to yourself when reading this or any of our other previous posts? Or what about, “We can’t change, that’s the way we’ve always done it!” Does anybody else cringe when they hear this?  Personally, I enjoy hearing those comments because it means the need is there! Processes that have existed seemingly since company inception are certainly challenging, but not impossible, to enhance (notice I did not say replace). Layering technology into previously manual tasks takes time, planning, and training, but it is imperative in keeping the company positioned to be as profitable as possible moving forward. Investments in technology equate to investments in your people, as automating mundane and repetitive tasks will provide the opportunity for employees to perform more value-added tasks for the organization while simultaneously increasing the capacity of the existing workforce. Getting from current state to future state in terms of business processes often requires outside consulting to assist with the transformation and implementation, but the journey can easily begin by equipping employees that have the institutional knowledge with the appropriate technology to carry out existing process is the most efficient and effective way possible. All companies can go through digital transformation and those who perceive they are “not ready” or “unable” to implement change, are simply at a different rest stop on the roadmap of readiness than others. When considering implementing any new emerging technology, my advice is this: ask questions, get answers, consider your options, and find a trusted partner to help you fully understand your pain points and work through the implementation process. Each question answered and every piece of information received about the digital transformation process will continue to make developing and executing an implementation strategy easier. Perception is not always reality and understanding the technology and implementation process will transform those perceived barriers of entry into realized opportunities of growth. About Schneider Downs Digital Transformation The Schneider Downs Digital Transformation team leverages technological innovations and our business expertise to develop strategic transformative solutions that drive business process improvement for organizations of all sizes. Our solutions are built to identify and implement process and technology enhancements that are scalable and enable improved data reliability, productivity and timely reporting and analysis. For more information contact the team at contactsd@schneiderdowns.com or visit www.schneiderdowns.com/digital-transformation. ### What Are the Top Cybersecurity Questions of 2021? The Schneider Downs cybersecurity team answers some of the top cybersecurity questions of 2021 they have encountered in the field in our new video series. In support of Cybersecurity Awareness Month 2021, members of the Schneider Downs cybersecurity team answer some of the top questions they have faced in the field over the last ten months. This series of short videos covers topics including the future of penetration testing, how to reduce false positives from automated tools, why cyber insurance premiums are increasing and password policies. Cybersecurity Manager David Murphy kicks off the series answering the question: How can we better manage false positives from automated tools without reducing security?   You can view the full series at https://vimeo.com/showcase/8866271 and individual videos at the links below. [Cloud Penetration Testing] Once everything is in the cloud, will people still need penetration testing? [Compliance Frameworks] How do I know which compliance requirements my organization should follow/adhere to? [Cyber Insurance] Why are cyber insurance premiums increasing? [Digital Forensics] What TTPs can we expect threat actors to be utilizing over the next few months? [Incident Response] One of our users opened a malicious attachment, but shut down their computer about 20 minutes later. What now? [Multifactor Authentication] Are there any MFA methods more/less secure than the others? (Push Notification, PIN, SMS, Token, etc) [Network Penetration Testing] Why do our pentesters own us year after year, even though we keep fixing all the findings each time? [Password Blacklisting] We have strong password policies, but users keep making guessable passwords that meet our requirements… Please help! [Phishing] We run our own internal phishing campaigns every quarter, so can we exclude phishing from our annual penetration test? [Purple Teaming] How can we better manage false positives from automated tools without reducing security? Additional Resources The Schneider Downs cybersecurity team is offering several new security awareness resources for Cybersecurity Awareness Month at www.schneiderdowns.com/ncsam. We are also hosting a webinar exploring the benefits of a purple team assessment on November 10, 2021 at 10:00 a.m. EST. You can learn more and register for the webinar at www.schneiderdowns.com/the-benefits-of-a-purple-team-assessment. In addition to our new video series and webinar, you can view our entire library of cybersecurity resources including whitepapers, infographics and articles at www.schneiderdowns.com/cybersecurity/resources. Related Articles Cybersecurity Awareness Month 2021 Benefits of a Purple Team Assessment About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Tax Reform 2021 – Build Back Better: Proposed Changes to Increase Net Investment (NII) Income Tax on S Corporation Shareholders and Limited Partners Congress is proposing to expand the scope of existing income subject to the Net Investment Income (NII) tax, which originated in 2013 under the Affordable Care Act. As the Joint Committee on Taxation notes in its analysis of the Build Back Better proposed tax legislation, a principal effect of this proposal “is that those S corporation shareholders, limited partners, and LLC members who currently are not liable for FICA or SECA tax (self-employment tax), respectively, on their pro-rata shares, distributive shares, and partnership income and gain, become subject to NII tax on this income and gain above certain income thresholds” beginning in 2022.  Where previously the tax applied to passive-type investment income, the proposal provides that high-income individuals will be subject to NII tax on net income or net gain even when they materially participate in a trade or business that generated the net income or net gain. Thus, more taxpayers will be caught by the new NII tax regime. As Table 6 on Page 79 of the Joint Committee on Taxation Report highlights, the current taxation of various types of income under FICA, self-employment tax (SECA), and NII tax regimes under current law is as follows:   Type of Taxpayer FICA Self-Employment Tax (SECA) NII Tax No 3.8% Tax Employees Wages S corporation shareholders - active Reasonable compensation Distributive share in excess of reasonable compensation; net gain from sale of business property General partners Self-employment income LP, LLP, and LLC limited partners or members - active Guaranteed payments Distributive share of partners claiming limited partner exception from SECA; net gain from sale of business property S corporation shareholders; LP, LLP, and LLC limited partners or members - passive Distributive share; net gain from sale of business property Sole proprietors Self-employment income Investors Investment income and net gain from passive activities or trading businesses Investment income and net gain from active interests   The current proposal is designed to generally capture the income under the “No 3.8% Tax” column currently not subject to the current tax regime. Under the proposal, for individuals with modified AGI exceeding the “high-income threshold amount,” the NII tax of 3.8% would apply to the greater of “specified net income” or “net investment income” (as defined under present law).  Certain trusts will similarly be subject to the tax. For individual taxpayers, the “high-income threshold amount” is $500,000 in the case of a joint return or surviving spouse, $250,000 in the case of a married individual filing a separate return, and $400,000 in any other case. Specified net income is a new term under the provision.  It will include income derived in the ordinary course of a trade or business and is the sum of (i) gross income from interest, dividends, annuities, royalties and rents, (ii) other gross income derived from a trade or business, and (iii) net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property; it’s reduced by deductions properly allocable to such income. While intended to generally increase NII, the proposal appears to allow nonpassive losses to be used in the calculation of specified net income.  There is a limited income phase-in included in the proposal that reduces the impact of the tax based upon a ratio on the first $100,000 ($50,000 for marrieds filing separately) exceeding the applicable income. The proposal also clarifies a few items regarding the determination of net investment income (and specified net income): Wages received with respect to employment subject to FICA taxes are not subject to the NII. Net operating losses are not included as a deduction properly allocable to net investment income. Net investment income includes subpart F and GILTI inclusions in respect of stock of a CFC and QEF inclusions in respect of stock of a PFIC and codifies existing regulatory treatment of mark-to-market inclusions in respect of PFIC stock as net investment income. If the proposed legislation passes in its current form, Section 1411 of the Internal Revenue Code will be a tiered tax regime for individuals based upon income earned; a taxpayer’s income level will determine if and how the tax applies. Income Earned Section 1411 Applicability AGI < $250,000 Not subject to NIIT AGI = $250,001 – $399,999 Subject to current NIIT rules Modified AGI > $400,000 or $500,000 Subject to proposed NIIT rules           Like the new proposed surcharge tax discussed, this tax is scheduled to apply to tax years beginning after December 31, 2021.  For taxpayers looking to sell an active trade or business, this is another reason to close your transaction before December 31, 2021. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com. ### Tax Reform 2021 – Build Back Better: Temporary Rule for S-Corporation Conversions to Partnerships One of the surprises contained in the current version of the proposed Build Back Better Act legislation (going against the general grain of proposing increased taxes on the wealthy) is a provision that would allow only certain “S-corporations” an election to reorganize or convert to a domestic partnership without the recognition of gain. Under current law, the conversion of an S corporation to a tax partnership is a taxable event; gain is recognized on the appreciation of any assets inside the S-corporation and there may be gain recognition with respect to the stock surrendered by the owners.  The amount of tax due upon such a conversion often dissuades many taxpayers from proceeding with a conversion.  This proposal would be beneficial to S-corporations (and their owners) with significant built-in-gain that desire to convert to a partnership. For some background, per 2015 IRS statistics, an S-corporation is the most popular form of business entity (excluding sole proprietorships).   Entity Type Number of Returns Business Receipts (thousands) Net Income (Less deficit) C Corporation 1,611,000 $20,145,398,231 $1,154,967,740 S Corporation 4,487,000 $7,346,364,503 $559,607,011 Partnership 3,715,000 $4,877,414,510 $780,504,367   The classification of an entity for tax purposes as partnerships (LLCs, LPs, GPs, and other entities) generally has advantages over S-corporations.  Partnerships often provide more planning flexibility than do S-corporations.  Additionally, certain types of business activities are clearly better carried out under a partnership structure.  These activities include owning real estate or other passive investments, for example.  Other business needs such as having multiple types of ownership or equity rights also drive the business entity selection choice (that discussion is generally beyond the scope of this article). There are S-corporation advantages over partnerships that should not be ignored in any entity choice analysis.  One example includes the state and local taxation of S-corporation earnings after payment of reasonable salaries compared to the flow-through earnings from a partnership.  Another benefit has been the historical treatment of S-corporation earnings escaping the self-employment assessed on partnership income.  Corporate status may also offer better personal liability protection than partnerships. To be an eligible S-corporation, there are certain requirements that need to be met; these requirements may also present planning restrictions. S-corporation requirements Be a domestic corporation, No more than 100 shareholders, Only U.S. individuals and certain trusts, estates and charitable organizations can be shareholders, No more than a single class of stock is permitted requiring all income and distributions to be pro-rata (Certain arrangements can be reclassified as a second class of stock), Not be an ineligible corporation (i.e., certain financial institutions, insurance companies, and domestic international sales corporations). For an S-corporation to be eligible for the elective tax-free conversion proposed in the current version of the Build Back Better legislation, it must have been an S-corporation at all times since May 13, 1996.  Additionally, such conversion or reorganization must occur within a two-year period beginning on Dec. 31, 2021.  Without going into the technicalities of the proposed legislation, if the election is made in accordance with rules the Treasury promulgates, the result should be a tax-free liquidation of the S-corporation followed by a formation of the new partnership. The proposed legislation grants the Secretary the authority to “prescribe such regulations or other guidance as may be necessary or appropriate to carry out” this proposed section.  This granting of authority by Congress to the Treasury may present its own problems, since there are certainly unanswered questions raised by this proposal, given the short window of time within which an election needs to be made, and given the current IRS workload that is already backlogged. As noted above, there are unanswered questions that will require guidance from the IRS.  For example, the impact on QSUBS is unknown.  Further, the impact on potential built-in-gains tax, on excess business interest expense carryovers under Section 163(j), and shareholder debt basis would need to be considered.  Also, the state law impact needs to be addressed by taxpayers.  Not all states follow the rules of the Internal Revenue Code.  Those states that do generally follow federal rules often have different effective dates of adoption.  Accordingly, the conversion might not be tax-free for all state tax purposes. This proposal is certainly one to watch for S-corporations and their shareholders as the BBB Act moves through the legislative process.  The window to act would be two years beginning December 31, 2021; so, it’s not too early to begin consideration of whether this election is beneficial to eligible entities.  Please don’t hesitate to reach out to your Schneider Downs tax advisor for more information and guidance. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com.   ### Tax Reform 2021 – Build Back Better: Surcharge on High Income Taxpayers and its Impact on Capital Gain Rate Taxes and Planning A provision that burst upon the scene in the current version of the proposed Build Back Better Act (BBBA) legislation (not discussed in earlier versions of tax proposals offered by Democrats and the Biden Administration) is Act Section 138206 which would add a “Surcharge on High-Income Individuals, Estates, and Trusts” under what would become Section 1A of the Internal Revenue Code. Under current law, there is no surcharge (though the net investment income tax may come close in some respects) assessed on individuals, estates, and trusts with income exceeding certain levels. The surcharge would be assessed at 3% of income exceeding “modified adjusted gross income” (defined for this purpose as “adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest expense”.  The surcharge is scheduled to kick in for applicable taxpayers as follows: Individual and married filing joint $5,000,000 Married filing separate $2,500,000 Estates or trusts $100,000       It appears that tax-exempt municipal bond income will not contribute to modified adjusted gross income as currently defined.  While many high earners use municipal bond interest income to minimize taxes, this income exclusion does not yet appear to be targeted by legislators looking for additional tax revenue at this time. The proposed BBBA legislation also increases the highest tax rate on capital gain income (including qualified dividend income) from 20% to 25% (down at least from the 37% to 39% range proffered in earlier proposals by the Biden Administration).  The capital gain tax rate under the proposed legislation is generally scheduled to kick in for applicable taxpayers as follows: Married filing joint $450,000 Single $400,000 Head of household $425,000 Married filing separately $425,000         Capital gain on collectibles will continue to be taxed at 28% and unrecaptured Section 1231 gain will continue to be taxed at 25% under the current proposal. The Tax Foundation notes that the top marginal capital gains tax rate would reach 31.8% (combined rate on capital gains plus the net investment income tax rate plus the surcharge tax rate) at the federal level which would be the highest federal tax rate on capital gains since the 1970s.  Combined with state tax income tax rates, this would place the combined federal and state tax rate on capital gains in the mid-30% range and at more than 40% in some states (Oregon, New Jersey, California, New York, Vermont, and Minnesota). This combined rate is causing concern among some investors.  Nancy Skeans, CEO of Schneider Downs Wealth Management Advisors notes that “there are always concerns and questions from our clients when taxes go up on individuals.  However, if the proposed increases pass (and that is a big if), it won’t impact most individuals, especially individuals who have retired and don’t have large W-2 or business income.  Our clients who are impacted will probably not see the impact annually but in years where they experience large capital gain transactions.  That being said, it is so important for individuals to work with investment advisors who understand the tax laws and who make tax efficiency in portfolios and tax planning a top priority for their clients.” Note however that different effective dates can impact the tax rate on gains (and on dividend income) realized.  The current effective date for the increase in capital gains tax rate is September 13, 2021 (Note: losses incurred after 9/13/2021 appear to effectively reduce gains realized prior to 9/13/2021).  There is a proposed transitional rule for binding contracts entered into prior to September 13 and closed before December 31, 2021. The current effective date for the surcharge tax is December 31.  This effective date provides taxpayers with an opportunity for a limited time only to close on capital gain transactions before December 31 to avoid the imposition of the 3% surcharge tax that begins on January 1, 2022. Finally, don’t overlook other capital gain deferral strategies available (legally) to reduce taxes that are not currently under the “tax avoidance” or “not paying a fair share of tax” microscope of many legislators. Capital Gain Deferral Strategies Available Using the like-kind exchange rules for sales of real property. Reinvesting capital gain proceeds into qualified opportunity zones for a limited exclusion of capital gains reinvested before December 31, 2021. Reviewing a portfolio at least annually to trigger transactions on investments with substantial unrealized depreciation to offset realized capital gains will continue to be important (while avoiding wash sale treatment). Charitable donation of appreciated securities. For owners of small businesses, the ESOPs rules under Section 1042 and eligible qualified small business stock rules under Section 1045 may also provide options to defer the recognition of capital gain at the proposed higher tax rates. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com.   ### The Benefits of Having an Independent SAP Controls Team on Your SAP S/4HANA Project Many companies using SAP ERP are in the process of implementing or planning for migration to SAP S/4HANA. SAP S/4HANA is not just a new release of SAP.It is a new product that introduces new features and functionality. SAP made significant changes to their database design, processes and transactions that project teams need to address in their SAP S/4HANA journey. SAP describes potential incompatibility changes between SAP ERP and SAP S/4HANA in their Simplification List, which is free to download from SAP. The Simplification List is more than 900 pages, so there are many changes that will need to be evaluated and implemented. The migration process to move to SAP S/4HANA is most likely a multiple-year effort and organizations need to start planning soon. Several key decisions must be made by management prior to the project commencing. Organizations will need to decide if they want to engage in a new SAP implementation (greenfield) or treat the migration as a system conversion (brownfield). No matter what type of project is selected, the migration to SAP S/4HANA will be a costly investment, with significant financial risk to organizations. Regardless of the size of the organization using SAP, many changes will need to be made. Larger companies using SAP with multiple domestic and international instances of SAP will also have the opportunity to include in the project’s scope the consolidation of their SAP environments. When combining various entities from legacy systems or multiple SAP instances, companies need to decide if it makes more sense to tackle these projects in phases or to use the “big bang” approach. These early decisions will make each SAP S/4HANA project unique; however, the risks are largely consistent across these projects. An independent SAP Controls Team can help reduce risks by providing expert SAP controls consulting in real time to assist the organization’s project teams. An independent control’s team can help steer the project in the right direction to avoid costly audit deficiencies that might otherwise not be discovered until after the project is migrated to production. All projects should include an independent controls team, so that they can keep up with the project and ensure that all relevant and required the security, control, and compliance considerations are built-in during the project. The organization’s culture and the project scope will determine the extent of the involvement of internal control experts. The project complexities include the risk of not being Sarbanes-Oxley (SOX) compliant, including potentially receiving a significant or material weakness. To best position themselves for a successful migration, organizations are engaging with external SAP audit and control consultants who understand control and audit compliance requirements and have experience with other SAP S/4HANA projects. These consultants can be active participants of the project instructing the project team on the control requirements, or part-time members evaluating key deliverables, based on scope. In today’s compliance heavy environment, migration to SAP S/4HANA that works for end-users is just one part of the project. Organizations will also need to ensure that all compliance requirements and cybersecurity risks are addressed. Part of the success of the project will be how well SAP S/4HANA fares in the next internal audit, external audit, SOX or cybersecurity audit. Benefits of Having an Independent SAP Controls Team on Your SAP S/4HANA Project: Ensure that security, segregation of duties, controls, and compliance are appropriately addressed for various audit and regulatory requirements Address key aspects of your project control requirements Assess project stage readiness Provide independent and objective value-added feedback and assurance in real time Free the project team to primarily focus on implementing the system Assist in mapping existing controls to To-Be controls Utilize a proven project implementation controls framework Provide “in-flight” control reviews and recommendations Knowledgeable on management and external auditor SOX requirements Organize external audit control requests Coordinate with external auditors on requirements and deadlines Coordinate SOX narrative and control updates Provide project control status updates to management, project team, steering committee, internal audit and external audit About Schneider Downs SAP Audits and Controls Schneider Downs can help your organization with your SAP systems control needs. We offer a comprehensive set of SAP IT services, from one-time projects to ongoing co-sourcing and outsourcing engagements, including control design, operating effectiveness testing, training of staff, security, and application controls. Our expert team has experience on many different projects, industries, and SAP systems to assist with assurance of industry best-practice SAP controls. For more information visit our website at www.schneiderdowns.com/SAP-audit or contact us at contactsd@schneiderdowns.com. ### Cybersecurity Awareness Month 2021 October starts tomorrow and that means Cybersecurity Awareness Month is back to help raise awareness about the importance of cybersecurity across the nation. In support of Cybersecurity Awareness Month, the Schneider Downs cybersecurity team is introducing several security awareness resources, including our new video series, Top Cybersecurity Questions of 2021, as well as hosting a webinar on November 10, 2021 exploring Purple Team Assessments, one of the fastest growing security assessment engagements across all industries. You can view the new resources on our dedicated Cybersecurity Awareness Month webpage at www.schneiderdowns.com/ncsam or learn more about them below. Video Series: Top Cybersecurity Questions of 2021 The Schneider Downs cybersecurity team shares the top questions they have encountered on the frontlines over the past calendar year in our new ten-part video series. Lead Cybersecurity Strategist Stephen Bish kicks off the series reviewing some of the different factors that are causing a sharp increase in cyber premiums. Additional videos include: [Cloud Penetration Testing] Once everything is in the cloud, will people still need penetration testing? [Compliance Frameworks] How do I know which compliance requirements my organization should follow/adhere to? [Digital Forensics] What TTPs can we expect threat actors to be utilizing over the next few months? [Incident Response] One of our users opened a malicious attachment, but shut down their computer about 20 minutes later. What now? [Multifactor Authentication] Are there any MFA methods more/less secure than the others? (Push Notification, PIN, SMS, Token, etc) [Network Penetration Testing] Why do our pentesters own us year after year, even though we keep fixing all the findings each time? [Password Blacklisting] We have strong password policies, but users keep making guessable passwords that meet our requirements… Please help! [Phishing] We run our own internal phishing campaigns every quarter, so can we exclude phishing from our annual penetration test? [Purple Teaming] How can we better manage false positives from automated tools without reducing security? View the full series at www.vimeo.com/showcase/8866271. Webinar: The Benefits of a Purple Team Assessment | Nov. 10, 2021 @ 10AM ET  Purple Team Assessments are growing in popularity as organizations are increasingly interested in understanding how their current cybersecurity defenses hold up against the evolving threats of today and tomorrow in real-time. The one-hour webinar will focus on several aspects of a Purple Team assessment including what exactly a Purple Team Assessment is, how the exercise works and tangible benefits. Attendees will qualify for 1 CPE and a replay will be available to all registrants following the live event. Register at www.schneiderdowns.com/the-benefits-of-a-purple-team-assessment. Whitepaper: Top Ten Cybersecurity Strategy Mistakes of 2021 With at least 70% of business leaders feeling their cybersecurity risks are increasing, the need to develop and implement strong cybersecurity strategies continues to be a top priority for organizations across all industries. Learn about the top cybersecurity strategy mistakes organizations are making and best practices to avoid these common pitfalls. Download the whitepaper at www.schneiderdowns.com/top-ten-cybersecurity-mistakes-2021. Infographic: Types of Personal Data What kind of data are cybercriminals looking for? Our quick reference infographic outlines the different types of personal data targeted on a regular basis. Download the PDF at www.schneiderdowns.com/UserFiles/File/PDF/Cyber_Types_PersonalData_9_2021.pdf. Newsletter: Focus on Cybersecurity Our bi-weekly newsletter shares the top stories in the cybersecurity world our experts are reading, as well as original content and articles. Subscribe at www.schneiderdowns.com/subscribe. Schneider Downs Cybersecurity Resource Library We invite you to explore our full library of cybersecurity resources which includes infographics, quick reference charts, original articles, multimedia, whitepapers and webinar replays. The majority of resources are open-access and updated throughout the year, because we know first-hand cybersecurity is not just one month, but every day, hour and minute. Explore the library at www.schneiderdowns.com/cybersecurity/resources. About Cybersecurity Awareness Month Cybersecurity Awareness Month is a joint effort between the National Cyber Security Alliance (NCSA) and the Cybersecurity & Infrastructure Security Agency (CISA) started in 2003 to help ensure Americans have the resources to keep themselves secure online, at work and home. This year’s theme is a continuation of past years’ “Do Your Part. #BeCyberSmart.” and will focus on four key areas throughout the month. Week of October 4: Be Cyber Smart. Week of October 11: Fight the Phish! Week of October 18: Explore. Experience. Share. – Cybersecurity Career Awareness Week Week of October 25: Cybersecurity First CISA also offers several cybersecurity tools that are available year-round to help keep communities and organizations secure at the following links: CISA Cybersecurity Technical and Non-Technical Resources CISA Cybersecurity Awareness Month Resources CISA Telework Resources CISA Cybersecurity Hub About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Social Security’s Inadequate Cost-of-Living Adjustment As time moves forward, the purchasing power of the consumer gets chipped away as the value of the U.S. dollar decreases due to ever-persistent inflation. Inflation can be especially harmful to those who are receiving fixed payments, such as lenders, owners of fixed-income assets, and those who are receiving Social Security benefits. While the Social Security Administration (SSA) has an annual cost-of-living adjustment (COLA) in place to reduce the impact of inflation on retirees’ benefits, this is not usually enough to maintain the purchasing power you have had all along. To determine the COLA, the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third calendar quarter of the most recent year a COLA was determined, is compared to the average CPI-W for the third calendar quarter of the current year. The resulting percentage increase, if any, represents the percentage that will be used to increase Social Security benefits beginning in January of 2022. When Social Security announces its cost-of-living adjustment for 2022 later this year, beneficiaries are expected to receive one of the biggest percentage increases in the last 40 years, thanks mostly to inflation. The predicted COLA for 2022 payments is around 6.2% and would result in an increase in monthly payments of nearly $100 a month for those beneficiaries receiving the average monthly payment of $1,555. While a 6% increase in benefits may sound enticing to retirees, it is important to remember that this 6% increase is not necessarily additional income when considering all applicable factors. One of the main reasons why these cost-of-living adjustments are not keeping up with retirees’ needs is Medicare Part B premiums. Most people enrolled in Medicare have their premiums, which cover doctor visits and other types of outpatient care, deducted from their monthly social security payments. Year-over-year, Medicare premiums increase and eat into the increase of the cost-of-living adjustment. In addition to Medicare premiums, the other major factor that eats into Social Security benefits is tax, as income from Social Security is subject to federal income tax. Individuals with less than $25,000 in combined income, or married couples with less than $32,000, do not have to pay taxes on their benefits. The combined income is calculated by adding adjusted gross income, non-taxable interest income, and one-half of the Social Security benefits of the individual/married couple. Social Security beneficiaries who are above these combined income thresholds may be subject to pay taxes on up to 85% of the benefits. Although there have been calls to change the way the COLA is calculated, the COLA and Social Security benefits often cannot be relied upon to fund the lifestyle most retirees aim to achieve after retiring. It is important to have a plan outside of this benefit for funding retirement expenses and other financial goals and objectives. If you have questions or would like to discuss this topic further, please reach out to a Schneider Downs Wealth Management Advisor. We welcome a conversation with you. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### Proposed Legislation Targets Estate and Gift Tax Planning On September 12, 2021, the House Ways and Means Committee introduced a series of proposals to be included in President Biden’s $3.5 million budget reconciliation bill known as the Build Back Better Act. If passed into law, these proposals would significantly impact the opportunities for estate and gift tax planning that exist under the current framework. The changes would include the following: Opportunities for Estate and Gift Tax Planning Reduction in Gift, Estate, and Generation-Skipping Transfer (“GST”) Exemptions: The proposed bill would reduce the federal estate, gift, and GST exemptions from the current $11.7 million per person to $5 million per person (indexed for inflation) for decedents dying, or gifts made, after December 31, 2021. Changes in Rules for Grantor Trusts: The proposed bill would largely eliminate current planning opportunities involving grantor trusts by 1) including grantor trusts in the grantor’s taxable estate at death; 2) treating lifetime distributions from grantor trusts as taxable gifts of the trust assets; 3) treating the termination of grantor trust status as taxable gifts of the trust assets; and 4) requiring the recognition of gain on sales of assets between a grantor and a grantor trust. These changes would be effective for trusts created and transfers made after the date of enactment. Disallowance of Valuation Discounts for Nonbusiness Assets: Under the proposed legislation, no valuation discounts would be permitted for certain transfers of interests in entities that hold “nonbusiness” assets. For purposes of this rule, nonbusiness assets are those that are not used in the conduct of an active trade or business. The rule would apply with respect to all transfers made after the legislation becomes law. Increased Tax Rates for Trusts and Estates: The proposed bill would increase the top marginal tax bracket for estates and trusts from 37% to 39.6%. In addition, trusts and estates with income over $100,000 would be subject to a 3% surtax based upon the entity’s modified adjusted gross income. It is important to recognize that we are still in the initial stages of the legislative process and that these proposals may be seen as a starting point for a discussion of what changes will ultimately be made. It is impossible to state with any degree of certainty what provisions might be included in a final version of this bill. For now, individuals who might be impacted by these proposed changes might wish to consult their advisors to discuss what opportunities might be currently available before any new legislation comes to fruition. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com. ### Schneider Downs Trucking Industry White Paper Series Over the past several years, Schneider Downs has partnered with the Ohio Trucking Association (OTA) to publish the annual Business Outlook and Economic Survey report. This resource, drafted based on the responses of OTA members, was historically aimed at helping trucking companies operating within the State of Ohio become more operationally efficient and profitable. Response rates were down this year, likely driven by the ongoing pressures facing the trucking industry, and we did not feel the volume of responses was sufficient to yield meaningful, broad-based conclusions. However, determined to produce something of value, we instead set our collective focus on drafting a series of white papers aimed at addressing the most critical issues currently facing the trucking industry. Exploring the Driver Shortage Issue At the OTA Annual Conference on September 13, 2021, we issued the first white paper in the series, focused on the #1 issue currently terrorizing trucking companies – the truck driver shortage.  Coordinated attraction and retention efforts and incentives are more necessary now than ever. Increasing age, along with the effects of the lingering pandemic, have pushed many seasoned drivers from the workforce. With new attitudes of the Millennial generation—workers desiring more work-life balance and flexibility—age limitations and a strong job market, companies are struggling to develop younger talent. This white paper highlights multiple considerations for retaining and recruiting drivers. Following these topics, this white paper looks at some less obvious business strategies you should consider, including unique retirement benefits programs and several tax strategies. You can download the Driver Shortage whitepaper here. State of the Industry Whitepaper Series Over the next six months, we will be researching the topics below and providing you with relevant, real-time information you can use to make strategic decisions in your trucking company. September: State of the Industry - Driver Shortage October: State of the Industry - Lease Accounting November: State of the Industry - Economic Update December: State of the Industry - ADAPT/Infrastructure January: State of Industry - Tax Update February: State of Indsutry - Cyber/Technology Next year we expect to relaunch our membership survey and I encourage you to look out for it.  But in the meantime, we hope you enjoy the Schneider Downs Trucking Industry White Paper Series available at www.schneiderdowns.com/transportation-logistics-resources. Related Articles Lease Accounting Guidelines for the Trucking Industry Transportation and Logistics Industry Practice Our Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends. We work with you to seek innovative ways to reach your strategic goals. For more information visit our dedicated Transportation and Logistics page. ### Persistent Challenges Facing Manufacturing With the majority of the U.S. and the world now attempting to get back to some semblance of normalcy, we are struggling with how to properly transition into a post-COVID economy. Most governmental entities and businesses are committed to safely reopening, even with the added challenges of COVID variants, fluctuating numbers of hospitalizations, and vaccine breakthrough cases. But it seems that every time we get a little traction, issues arise that threaten to derail all of our progress.The long-term future of manufacturing is bright as ever in the fourth industrial revolution, but the short-term future is still rife with uncertainty, specifically surrounding supply chain disruptions, and labor and raw material shortages. The entire situation almost reads like a comic strip joke: “We can’t buy it, but if we could, we’d have no way to get it here, but if we could, we’d have no one to put it together!”COVID's Effect on ManufacturingSince the pandemic began tearing across the globe, our established supply chains have struggled to keep up, balancing safety and lockdowns with the greater global duty to supply the world’s needs. Truck drivers and shipping crews were pushed to the very edge to try and keep an industry still viable while juggling all their safety responsibilities. Had the pandemic ended after a few months, I believe everything could have returned to normal, but time and circumstance have a way of wearing us down, and 18 months later our supply chains are still feeling the effects, which are passed on directly to industries like manufacturing. In a June 2021 article released by the White House illustrating national data, the manufacturing industry reported the greatest percentage of supply chain disruptions from domestic shipments over any other industry, topping out at just above 60%. The trend with international shipping does not look better than the domestic picture, either. An accumulation of global shipping disruptions, such as the shipping container shortage, port closures and lockdowns, or the Ever Given blocking the Suez Canal for a full week (a pathway for about 12% of global trade), has culminated in a massive increase in the cost of shipping via ocean freight, sometimes upwards of four-fold, and increased wait time due to shipping backlog. It does not take much analysis or imagination to realize how these factors impact the operations and margins of a manufacturer, since the typical model requires shipping of raw materials in and shipping of finished goods out.The other side of “The Big Short[age]” facing manufacturers is the labor market.The question of labor had already been at the forefront of the industry’s mind even before the pandemic. With a projected need of 4.6 million new skilled manufacturing workers by 2028 to keep up with forecasted growth in the industry, but a projected labor output of only 2.2 million workers to fill those roles, the pandemic has only served to exacerbate the issue by making tomorrow’s problem today’s nightmare. According to the Bureau of Labor Statistics’ August 2021 news release, the manufacturing sector added about 37,000 jobs during the month, but the total number is trailing pre-pandemic levels of employment by about 378,000 jobs. At the current pace, it will take at least several months under good conditions to return to a state similar to that of February 2020.However, the one thing there is no shortage of demand. Demand for raw materials, demand for transportation, demand for human capital, but even beyond these sectors into the larger economy: housing, auto and basic consumer goods. Economics 101 is ruling the day since supply is uniformly down in industries across the board. While this may spell dismal news for manufacturers in the short term, the outlook overall is still positive and continually getting better. The August 2021 Institute for Supply Management report touts another month of modest growth in manufacturing, and the 15th month of consecutive growth. Slowly but surely, we are clawing our way back on track. We will reach that goal by continuing to stay focused on understanding, managing and mitigating challenges like supply and labor shortages. We are not out of the woods yet, but the end is in sight. ### Biden Administration Announces First Ever Sanctions Against Cryptocurrency Exchange The Biden Administration announced they are imposing the first ever cryptocurrency exchange sanctions on SUEX OTC, S.R.O (SUEX) for laundering cyber ransoms. The U.S. Treasury Department (Treasury) announced the first virtual currency exchange sanctions on Tuesday, September 21 against SUEX, a private company based in the Czech Republic. The Treasury believes SUEX knowingly enabled financial transactions involving illegal funds for at least eight ransomware variants with over 40 percent of their transactions coming from unlawful actors. In an official press release, Treasury touted the sanction as an important step in the fight against ransomware.“Virtual currency exchanges such as SUEX are critical to the profitability of ransomware attacks, which help fund additional cybercriminal activity. Treasury will continue to disrupt and hold accountable these entities to reduce the incentive for cybercriminals to continue to conduct these attacks. This action is the first sanctions designation against a virtual currency exchange and was executed with assistance from the Federal Bureau of Investigation.”"Exchanges like (SUEX) are critical to attackers' ability to extract profits from ransomware attackers," Treasury Deputy Secretary Wally Adeyemo added.  “(The sanction) is a signal of our intention to expose and disrupt the illicit infrastructure using these attacks."According to Engadget the sanctions suspend SUEX’s access to their direct and indirect interests in property covered by U.S. jurisdiction and extends to any entity where SUEX owns a controlling stake, as well as prevent banks and people from a defined set of transactions.Treasury further described the sanctions as “…all property and interests in property of the designated target that are subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Additionally, any entities 50% or more owned by one or more designated persons are also blocked. In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. Today’s action against SUEX does not implicate a sanctions nexus to any particular Ransomware-as-a-Service (RaaS) or variant.”The sanctions are another step in the Biden Administration’s commitment to strengthen the nation’s cybersecurity, specifically attacking the ever-prevalent ransomware threats that continue to target critical infrastructure and supply chain providers.  One important aspect of the news is that the sanctions are not a reflection of cryptocurrency or exchanges, rather the use of them. With the rise in acceptance of crypto as a mainstream currency and investment (we all remember Dogecoin going to the moon, right?), understanding that the sanctions are focused on illegal activity, not virtual currencies is paramount. Just like paper money, as long as funds are not being laundered or used for anything illegal, law enforcement and the government should have no interest.As the recent failed FBI REvil sting demonstrates, capturing the actual ransomware gangs behind the attacks may be near impossible (especially when most are in foreign countries). The sanction shows that the U.S. government is open to getting creative in their approach to dismantling cyber criminals, in this case simply going after their ability to profit from the attacks. “As cyber criminals use increasingly sophisticated methods and technology, we are committed to using the full range of measures, to include sanctions and regulatory tools, to disrupt, deter, and prevent ransomware attacks,” said Treasury Secretary Janet L. Yellen.The Treasury also announced an Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments from the Office of Foreign Assets Control (OFAC).The full press release is available at https://home.treasury.gov/news/press-releases/jy0364. Related Links Google and Microsoft Announce $30B Cybersecurity Investment at White House Summit White House Issues Executive Order on Cybersecurity About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Confronting the Driver Shortage Crisis The current labor market, which is consistently and predictably one of the transportation sector’s top pain points, and the resulting driver shortage pose unique challenges within the industry. The imbalance in the supply of and demand for drivers has been a chronic issue but, more recently, has risen closer to the level of crisis.How severe is the driver shortage? According to the American Trucking Associations (ATA), the industry is short approximately 61,000 drivers. Since freight volumes have been steadily on the rise since the end of the recession of 2008, the experts at the ATA predicted the shortage numbers would surge to roughly 160,000 nationally by 2028. Over the course of 2020 and 2021, the pandemic and the accompanying government mandates helped exasperate the shortage.  As e-commerce and the demand for shipped goods skyrocketed, there was a surge in driver early retirements, and some drivers were incentivized by the government to collect unemployment rather than work.  Moreover, the ATA’s Chief Economist Bob Costello remarked, "Truck driver training schools shut down, or they trained a fraction of what they normally do. Plus, DMV's were issuing fewer drivers licenses because they had limited hours."In addition to the pandemic-related effects and the driver supply/demand, there are further contributing realities and barriers that contribute to the driver shortfall. There is an aging workforce and, as retirements continue, create looming outlook concerns.  According to the Bureau of Labor Statistics, almost thirty percent (27.4%) of the industry’s workforce is over the age of 55. On the other side of the age spectrum, the federal age requirement that a driver must be 21 years old to haul loads across state lines and must possess a commercial driver’s license (CDL) creates a large recruitment challenge. There is currently bipartisan legislation under consideration in the House and Senate that would encourage younger individuals to join the trucking industry. The DRIVE-Safe Act includes a two-step program for prospective young drivers to complete once they obtain a CDL. As the legislation presently stands, these drivers would be required to log 400 hours of on-duty time and 240 hours of driving time with an experienced driver in the cab after earning a CDL. Once completed, the young driver would be able to participate in interstate commerce.Attracting and retaining qualified truck drivers is a primary concern for nearly all transportation companies, ranging from the small family-owned companies with annual revenues of $5 million to the mid-size regional companies to the larger national trucking companies. Coordinated attraction and retention efforts and incentives are more necessary than ever. Among others, the following tactics are being used across the industry to retain their drivers: compensation increases, performance recognition, miscellaneous driver appreciation perks, wellness benefits, better health insurance, and enhanced retirement options. Other strategies that are being employed across the industry to recruit new drivers include healthy sign-on bonuses, competitive pay, lease purchase programs, talent referral bonuses, use of mobile-friendly applications, employment screenings, and use of non-traditional recruitment channels including social media, truck driver schools, outside recruiters, and even college recruitment. With their efforts to get younger generations in the driver workforce, companies are seeing that the Millennial workers desire more work-life balance and flexibility than those in the Baby Boomer and X generations. It is doubtless that consumers are affected by the driver deficit.  The shortage of drivers contributes to a slowed supply chain, and there are resulting in price increases across the board. However, the trucking companies are experiencing the most severe effects of this shortage. The desperation for qualified drivers is leading to higher wages and recruitment costs for the trucking companies. If the benefits of increased revenue are not passed along to the companies and consumers who pay for shipping, these are undoubtedly worsening a trucking company’s bottom line. The duration and trajectory of the driver deficit is uncertain. In a market defined by high demand and rising labor costs, targeted and strategic efforts to recruit and retain solid, reliable drivers will assuredly expend resources of both time and money.  However, at this point, the trucking industry has no other option. Our Transportation and Logistics professionals possess the most current knowledge of transportation issues, regulations and trends. We work with you to seek innovative ways to reach your strategic goals. For more information visit our dedicated Transportation and Logistics page. ### Tax Reform 2021: Build Back Better Act Update as of Wednesday September 15, 2021 On Wednesday, September 15, the House Ways and Means Committee (Ways and Means), chaired by Congressman Richard Neal of Massachusetts, completed its markup of proposed legislation (the plan) that could bring significant tax changes (positive or negative based upon perspective) to individuals and businesses as part of a budget reconciliation bill referenced as the Build Back Better Act. September 15 was the self-imposed deadline by the Democratic Party for 13 House and 12 Senate committees to write their portion of the reconciliation bill under a blueprint advanced in August.  The markup now moves to the Budget Committee, which will assemble all the other committees’ markups into one piece of consolidated legislation. From there, it will head to the House Rules Committee before it can be brought to the House floor for a vote.  Any bill approved by the House will also need the approval of the Senate. Ways and Means is overseeing the proposed tax changes to pay for President Biden‘s social spending plans (to address climate change and extend benefits for workers and families). The mark-up was approved mostly along party lines 24-19 (one Democrat voted no with concerns over the proposed cost of the bill). Earlier in the week, the proposed tax-related bill language was released and exceeded 850 pages of text. Below are some (subjectively) selected proposals contained in the plan that may be of most interest to many of our clients and friends: The top “C” corporation tax rate would be 26.5%; this is an increase from the existing flat 21%rate. Additionally, a graduated corporate tax would be reintroduced to the Internal Revenue Code as illustrated below. Taxable income not over $400,000 18.0% Taxable income over $400,000 but not over $5,000,000 21.0% Taxable income over $5,000,000 26.5% For corporations with taxable income over $10,000,000, an additional 3% tax is imposed not to exceed $287,000; this additional tax eliminates the benefit of the lower tax rates. The top individual ordinary income tax rate would be 39.6%.  The top tax rate, excluding the surtax discussed below, would apply to taxpayers married filing joint (MJF) with taxable income exceeding $450,000 and single with taxable income exceeding $400,000. A new “surtax” is proposed on high-income individuals, estates, and trusts.  This tax would be 3% on taxpayers with modified adjusted gross income (as defined) above $5 million which applies to both single and married taxpayers ($2,500,000 for married filing separate).  The tax applies to estates and trusts with income exceeding $100,000. Top capital gain tax rate of 25% for high-income individuals.  The rate would be retroactive to the date after the introduction of the Act (September 13).  This rate is significantly lower than the rate originally proposed by President Biden earlier this year. Significant expansion of the net investment income tax.  This change would now apply the tax to active business income of “S” corporation shareholders and partners.  This tax would apply to taxpayers with taxable income exceeding $400,000 single and $500,000 MFJ. The Qualified Business Income deduction would be limited to $500,000 MFJ, $250,000 single and $10,000 for estate and trusts. Limitations on the use of excess business losses are proposed.  Section 461(l) would become a permanent part of the Internal Revenue Code and would not expire in 2026 as originally provided under The Tax Cuts and Jobs Act enacted during the Trump administration.  The losses would no longer be treated as a net operating loss in future years; there would need to be active business income to deduct losses in excess of the $500,000 limitation ($250,000 for single taxpayers) provided.The effective date of this provision is currently noted as for years beginning after 12/31/2020 (and not 2021). Valuation discounts would not be allowed for certain non-business asset transfers.  The effective date of this proposal is the date of enactment. The ability to exclude gain from certain small business stock under Section 1202 would be severely limited and would apply to exchanges after September 13, 2021.  For qualified small business stock acquired any time after February 17, 2009, taxpayers with adjusted gross income (AGI) equal to or greater than $400,000, as well as all trusts and estates, may only exclude 50 percent of the gain for income tax purposes from the sale of qualified small business stock. AGI for this purpose is determined without regard to the exclusion for the gain.  This provision applies to exchanges on or after September 13, 2021, unless a written binding contract exists in effect on September 12. The unified gift and estate tax credit would be reduced to $5,000,000 per individual adjusted for inflation after 2011. The Joint Committee staff currently estimates that the basic exclusion amount under the proposal would be $6,020,000 for 2022. Certain grantor trusts could be pulled into grantor’s estate (but only applies to future trusts and future transfers). The proposal generally is intended to more closely align the income tax and transfer tax (Federal estate and gift tax) rules for grantor trusts by imposing transfer tax consequences on certain assets held in or distributed from a grantor trust.  Further, in the case of any transfer of property between a trust and a person (whether or not the grantor) who is a deemed owner of the trust (or portion thereof), the proposal provides that the person’s treatment as the owner of the trust is disregarded in determining whether there is a sale or exchange for income tax purposes. As a result, such a transfer might now result in the realization and recognition of gain.The proposal is effective for (1) trusts created on or after the date of enactment and (2) any portion of a trust established before the date of enactment that is attributable to a contribution made on or after such date A temporary rule allowing any “S” corporation existing on May 13, 1996, and at all times thereafter, to reorganize as a partnership without triggering tax. This provision would apply during the two-year period beginning on December 21, 2021. Deductions for Qualified Conservation Easement contributions would be limited to 2.5 times the sum of each partner's adjusted basis in the partnership. This rule is proposed to be retroactive to 2016. Not clear how this would work for taxpayers whose years have already closed. Almost as important as items included in the proposed plan are items that are currently not included.  These include: The proposed repeal of the like-kind exchange rules for real estate proposed by President Biden earlier in the year is not in the current draft before the ways and means committee. Eliminating the step-up on basis of inherited assets is also absent from the current plan. A SALT deduction is not in the current version of the plan. However, Chairman Richard Neal of Massachusetts joined other Democrats in releasing a statement that the SALT cap would be addressed later in the legislative process. Repeal of favorable tax deductions for the oil and gas industry has not been included in the current plan. Good news for the industry though environmentalists will continue to push for limitations. In addition to the above items, there are numerous other provisions including significant proposed changes to both in-bound and out-bound international transactions, significant extension and expansion of business and energy credits, and other proposals to individual retirement plans. This is major tax legislation; these proposals still have significant legislative processes to pass before they would become law though.  There will likely be additions and/or deletions to plan over the next weeks or months. We will continue to monitor developments as these proposed changes move through the legislative process.  Additional articles and analyses will be provided in the coming weeks.  In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant or contact us at contactsd@schneiderdowns.com. ### Employee Benefit Plan Audit Requirement FAQs What are the most common questions related to employee benefit plan audits?Employee benefit plan audits are required for a majority of plans that are covered by the Employee Retirement Income Security Act of 1974 (ERISA). With an increased scrutiny on employee benefit plan audits, the Schneider Downs ERISA group has prepared a ERISA Audit FAQ Guide to help parties better understand the requirements and types of benefit plan audits.  Download the FAQ The guide covers several topics including the required filings, characteristics to look for in an audit firm, and advice on preparation for an audit, with  additional questions including:What reporting and disclosure requirements are associated with a plan subject to ERISA?There are a number of different federal reporting and employee disclosure requirements associated with maintaining a benefit plan that is subject to ERISA.  While many of these requirements are consistent across all types of ERISA plans (Form 5500 reporting, for example), others depend upon a plan’s specific provisions and features.To assist plan sponsors with identifying their reporting and disclosure responsibilities, the Department of Labor has published a Reporting and Disclosure Guide for Employee Benefit Plans, which can be found at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdfWhen is an audit of an employee benefit plan required?Generally, employee benefit plans with 100 or more participants (includes eligible, but not participating as well as separated employees with account balances) are considered to be “large” plans and are required to have an audit performed on an annual basis. Plans with fewer than 100 participants (“small” plans) generally do not require an audit to be performed.What are the five most common tips for a successful employee benefit plan audit? Prepare and be proactive: Ensure that the timing of the audit is agreed upon with the audit team and ensure the audit team has provided the client assistance listing in advance of fieldwork. Suggest alternatives: If there are difficulties in fulfilling an audit request, talk to your audit team. There maybe alternative reports your auditor can use to accomplish the required test. Communicate: Request regular status meetings with your audit team to discuss open items, testing exceptions, and more. Set Realistic timelines: The timeline should be agreed upon by both the plan sponsor and the audit team in advance. If the plan is going through an audit for the first time, make sure to build additional time into the schedule. Ask Questions: Audit teams welcome the opportunity to answer questions. The audit process should be an interactive process. You can view the complete FAQ at www.schneiderdowns.com/erisa-frequently-asked-questions and download the PDF version here. About Schneider Downs ERISAThe Schneider Downs ERISA audit practice consists of a service model that is not limited to attest services, but includes providing support and oversight to clients, year-round access to experts, annual education seminars for clients that includes both regulatory and accounting updates, and more.  For more information, visit www.schneiderdowns.com/audit-assurance-services-employee-benefit-plans. ### Apple Releases Emergency Security Update to Address Critical Spyware Vulnerability Apple released an emergency security update for its iPhone, iPad, Apple Watch and iMac devices to address a critical vulnerability being exploited by Pegasus spyware.The spyware works by hijacking control of Apple devices through iMessage and using a flaw in Apple’s image processing software to silently infect devices. This type of exploit is especially dangerous, as the attack does not require any sort of action from the victim. Apple credited the University of Toronto’s Citizen Lab for discovering the zero-day vulnerability who estimates the exploit has been in use since February."Attacks like the ones described are highly sophisticated, cost millions of dollars to develop, often have a short shelf life, and are used to target specific individuals,” Ivan Krstic, head of Apple's Security Engineering and Architecture. "While that means they are not a threat to the overwhelming majority of our users, we continue to work tirelessly to defend all our customers, and we are constantly adding new protections for their devices and data."While the general consensus among the cyber world is that the majority of Apple device users do not need to worry since these types of attacks tend to target specific targets (journalists, press, etc.), the discovery of a zero-day vulnerability such as this is significant due to how the exploit worked through iMessage. The majority of Apple device users should have received a push notification with software update instructions. If you have not, you can access the latest software updates and instructions at the links below. Apple Security Update - https://support.apple.com/en-us/HT201222 Update iPhone, iPad, or iPod - https://support.apple.com/en-us/HT204204 Update MacOs on Mac - https://support.apple.com/en-us/HT201541  Update Apple Watch - https://support.apple.com/en-us/HT204641 Israeli spyware firm, the NSO Group, is reportedly behind the attack and describes itself as an organization that creates surveillance and hacking software for governments. They claim their flagship product, Pegasus, is an important tool in counter-terrorism and law enforcement rather than malicious spyware. The group did not address the allegations directly but did release a brief statement through their spokesperson."NSO Group will continue to provide intelligence and law enforcement agencies around the world with lifesaving technologies to fight terror and crime."This is not the first time the NSO Group has been in the news for spyware allegations, with Facebook filing a lawsuit against them in 2019 for their role in the hack of 1,400 mobile devices using WhatsApp, a charge NSO disputed.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### IRS Announces New Update Regarding Streamlined Filing Compliance Procedures and Section 965 What is Section 965 Tax?In 2017, Congress passed the most significant tax legislation since 1986 – the Tax Cuts and Jobs Act of 2017 (TCJA). Under the TCJA, U.S. shareholders were required to pay a transition tax on untaxed foreign earnings of certain specified foreign corporations, as if those earnings had been repatriated to the U.S.The “transition tax” per Section 965 of the Internal Revenue Code generally treats the accumulated untaxed post-1986 deferred foreign income of a specified foreign corporation as Subpart F income. Under Section 965, corporations are expected to pay 15.5% transition tax on accumulated earnings and profits (E&P) related to cash assets. Other assets are subject to an 8% transition tax. Slightly higher rates apply to individuals.What are Streamlined Filing Compliance Procedures?The purpose of the IRS Streamlined Filing Compliance Procedures is to bring taxpayers into U.S. tax and reporting compliance. Specifically, it is to bring non-willful applicants with foreign income, assets, accounts, and investments into compliance. Generally, this includes the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed.The IRS’s announcementThe IRS has updated the guidelines for the Streamlined Filing Compliance Procedures so that now the taxpayers that own foreign entities and have a Section 965 inclusion using the Streamlined Filing Compliance Procedures must come into compliance with the Section 965 transition tax in their submission and include the tax year in which the transition tax inclusion might occur (generally 2017 and/or 2018) even if that tax year would not be within the standard three-year lookback Streamlined period. In other words, the lookback period for any submission to the Streamlined Filing Compliance Procedures involving taxpayers with a Section 965 inclusion in 2017 must include tax year 2017 and include all subsequent tax years.Also, the election to pay net tax liability in installments under Section 965(h)(1) is not available for taxpayers submitting delinquent returns under the Streamlined Filing Compliance Procedures.The program still provides taxpayers a way to come into compliance with increasingly stricter requirements. For more information on how you might qualify for the Streamlined procedures, please contact your current Schneider Downs representative for additional information. ### REvil Ransomware Group Resurfaces Over Labor Day Weekend REvil, the ransomware group behind the JBS meat supplier and massive July 4th Kaseya attacks, reportedly resurfaced over the U.S. Labor Day weekend.Shortly after what is still considered the largest ransomware attack in history, the Russia-based REvil ransomware gang seemingly disappeared into thin air with media outlets reporting their infrastructure and websites going offline on July 12. These sites included the group’s negotiation and payment site, public forum and contact chat (if this sounds like a business website, it’s because it is in many aspects despite the illegal nature of the operations).Many experts cited the fact all of their sites being shut down simultaneously was unusual and speculated the gang may have erased their servers due to a supposed government subpoena. Additionally, their XXS administrator banned a user known as “Unknown” from their hacking forum – a user which was believed to have been their public-facing representative of the gang. While there was a brief sigh of relief when their servers disappeared, this ended the ability for those negotiating for their data to contact the group.Following the abrupt disappearance of their digital footprint, experts who were curious when the gang would resurface did not have to wait long as associated dark web servers for their websites resurfacing over the U.S. Labor Day weekend, including the Happy Blog. This site is where REvil publishes samples of stolen data before locking victims out of the networks and starting the ransomware negotiations. Another portal REvil uses to negotiate payment was also reactivated, although no new activity has been reported.So why has REvil seemingly reappeared and what’s next?First, there were very few who thought the gang had disbanded permanently. With a string of high profile victims including U.S. meat supplier JBS, Apple manufacturer Quanta and the now infamous July 4th Kaseya ransomware attack, REvil was one of the top targets of the Biden Administration, who promised to shut down their servers if the Russian government would not act. There was never an official statement from either side, but many speculated that either the White House had delivered on their promise or REvil went into hiding with all of the heat on them.Another possible explanation is that they were simply on vacation No, really. Like those of us in the workforce, ransomware groups are known to slow down during the summer months and focus on “getting back to work” in the fall and holiday season. Alternatively, there are some that think the sites being reactivated are actually being controlled by law enforcement or the reactivation is simply an accident – this are best case scenario in many views for obvious reasons.If the servers being activated again are not law enforcement or accidental, the re-emergence of their online presence is plenty cause for alarm based on their track record and a developing story to monitor moving forward.Related Articles Jen Easterly Named Director of the Cybersecurity and Infrastructure Security Agency Largest Ransomware Attack on Record Hits During the U.S. Holiday Weekend US Lawmakers Look to Set Federal Cyber Breach Alert Standard About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### New Per Diem Rates Announced for the Transportation Industry – Can Your Company Use This as a Driver Retention Tool? The IRS recently released Notice 2021-52 which announced an increase in the Special Per Diem Rates for 2021 – 2022 for the Transportation Industry. The rate for Meals and Incidental Expenses has been increased to $69 from $66 for travel in the continental United States.For travel outside of the continental United States, the rate has increased to $74 from $71. The new rates will be effective on October 1, 2021. If your transportation company currently has a per diem program in place, you will want to update your per diem calculations to meet the October 1, 2021 effective date.If your transportation company has not adopted a per diem program for your company drivers, then now may be a great time to examine if this expense reimbursement program could help with driver retention and recruitment. A per diem payment is a reimbursement, as defined in the Internal Revenue Code and Regulations, designed to cover meals and incidental expenses of drivers when they are away from home. The transportation company is allowed a tax deduction for the per diem paid and the only record-keeping consists of logging days away from home for your drivers. The driver collects the reimbursement for the expenses, and that reimbursement is not included in the driver’s taxable compensation.  Per diem programs in the industry have become very attractive after the Tax Cut and Jobs Act of 2017 eliminated the employee business expense deduction that many company drivers used to deduct these expenses from their personal income tax returns before 2018.Independent drivers will also be able to use the new per diem rates to deduct their meals and incidental expenses while away from home on their tax returns. In this competitive labor market, having per diems treated as nontaxable income for your drivers could be a great recruiting and retention tool. If you would like to learn more about how your trucking company could benefit from a per diem program, please contact me or one of our Transportation Industry Advisors noted below:Jim Gilboy – Senior Manager, Tax Advisory Services 412-697-5249 jgilboy@schneiderdowns.comMatt Werner – Shareholder, Tax Advisory Services 412-697-5403 mwerner@schneiderdowns.comCarl Scharf – Shareholder, Tax Advisory Services 614-586-7139 cscharf@schneiderdowns.com ### The unexpected… Being an audit intern at the Schneider Downs was one of the best decisions I have ever made. My first interaction with Schneider Downs was in February of 2020. I received an email from school that stated Schneider Downs was interviewing people who want to participate in the Summer Leadership Program 2020. At the time, I was struggling with the anxiety of not knowing anything, and the stress of not knowing how the real business world operates. Though I have not heard of Schneider Downs before, the description of the program quickly grabbed my attention. Shortly after I passed the interview for the Summer Leadership Program, COVID hit. Not doubt that I was anxious about whether the program would continue, but Schneider Downs exceeded my expectation, not only did they continued the program, but also offered us an opportunity to interview for their 2021 internship class. As with the Summer Leadership program, Schneider Downs adapted quickly and moved everything online. We had monthly meetings where we got time to meet all the other interns and got to meet different employees working at Schneider Downs. Those monthly meetings were also very valuable as we got to hear senior’s firsthand experience about CPA testing strategies and many more. COVID-19 has been a great challenge for everyone, but Schneider Downs has done a terrific job at overcoming those challenges. Although my internship still ended up being virtual, Schneider Downs contributed a great effort to make the virtual work environment as if we were working in the office. Coming in knowing just about nothing, I noticed that everyone I worked with was so patient and kind. During the times when I had no clue what I was supposed to be doing, the seniors and managers would give me a call and go through exactly what I needed to know and what I needed to do. I really appreciate their effort in making this internship a great learning experience for us, as they keep us very involved in every project we were assigned to. Being a family-oriented company, Schneider Downs truly cares and values each of its employees, and by far, it’s the best working environment that I have experienced, and the best internship experience I could ever ask for. ### Tax-Exempt Organizations Must Notify IRS of Responsible Party Changes The IRS recently posted a news release reminding tax-exempt organizations of the requirement to notify the agency whenever there’s been a change to their responsible party.IRS regulations require businesses and tax-exempt organizations with employer identification numbers (EIN) to update their responsible party information within 60 days of any change, by filing Form 8822-B, Change of Address or Responsible Party – Business. It’s critical the agency has accurate updated information on file in the unfortunate event of identity theft or other fraud issue related to EINs or business accounts.For tax-exempt organizations, the responsible party is generally the same as the “principal officer” as defined in Form 990, Return of Organization Exempt from Income Tax, instructions. The definition states that a principal officer is “an officer of the organization who, regardless of title, has ultimate responsibility for implementing the decisions of the organization's governing body, or for supervising the management, administration or operation of the organization.”For those tax-exempt organizations whose governing body changes regularly, it may be a best practice to include Form 8822-B within the orientation packet to ensure the IRS notification doesn’t get missed. Please reach out to us if you have any questions relative to this or any other tax-exempt organization matter. With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at www.schneiderdowns.com/tax-services. ### Introducing On-Demand CPE Courses from Schneider Downs In the midst of today’s changing times, the need for up-to-date information and analysis on all types of business and financial matters has never been more pronounced. For that reason, Schneider Downs strives to consistently provide informative events and webinars to keep the friends of our firm informed. Over the past year, in fact, we’ve been proud to provide more than 75 hours of continuing professional education (CPE) to nearly 7,000 participants across more than 45 webinars. (That’s a lot of knowledge.) Of course, we also recognize that not all interested parties can attend a webinar as it is taking place. For that reason, we’ve very proud to introduce our new Remote Learning Library, which allows visitors to experience the content even after the webinar is over.  We encourage all of our readers to visit this page to explore the broad spectrum of programs available. New and Improved – We are particularly pleased to announce that many of our previously recorded webinars may now be viewed on-demand for CPE credit. Through this feature, visitors may register for the course, view the material in its entirety and – by completing the embedded polling questions – also qualify for CPE credits. Documentation is provided immediately upon completion. To view all qualifying programs, visit our Remote Learning Library and select the “CPE Eligible Webinars” option on the menu. Schneider Downs is incredibly proud of the broad spectrum of our expertise, and we consider it a privilege to share it with interested parties. We hope you’ll find this new feature helpful, and we encourage you to let us know if there are additional topics you’d find helpful. ### Google and Microsoft Announce $30B Cybersecurity Investment at White House Summit Cybersecurity continues to take center stage on Capitol Hill as several high-profile private companies announced initiatives to help strengthen the nation’s cybersecurity, including a $30 billion investment from Google and Microsoft. Business leaders, including Apple CEO Tim Cook, IBM CEO Arvind Krishna and Google CEO Sundar Pichai, met with the Biden Administration in an effort to discuss how the private sector and government can work together in an effort to advance the nation’s cybersecurity. Representatives from Amazon, Microsoft, ADP, JP Morgan, Bank of America, TIIA Bank and U.S. Bancorp were also in attendance. The summit reportedly focused on maturing existing cybersecurity efforts, protecting critical infrastructure and the cybersecurity workforce itself. "Most of our critical infrastructure is owned and operated by the private sector, and the federal government can't meet this challenge alone," President Biden told participants at the summit. "I've invited you all here today because you have the power, the capacity and the responsibility, I believe, to raise the bar on cybersecurity." Following the event, the White House released a press release sharing some of the outcomes and commitments from the private sector, including: Apple announced it will establish a new program to drive continuous security improvements throughout the technology supply chain. As part of that program, Apple will work with its suppliers—including more than 9,000 in the United States—to drive the mass adoption of multi-factor authentication, security training, vulnerability remediation, event logging and incident response. Google announced it will invest $10 billion over the next five years to expand zero-trust programs, help secure the software supply chain and enhance open-source security. Google also announced it will help 100,000 Americans earn industry-recognized digital skills certificates that provide the knowledge that can lead to secure high-paying, high-growth jobs. Microsoft announced it will invest $20 billion over the next five years to accelerate efforts to integrate cybersecurity by design and deliver advanced security solutions. Microsoft also announced it will immediately make available $150 million in technical services to help federal, state and local governments with upgrading security protection, and will expand partnerships with community colleges and non-profits for cybersecurity training. IBM announced it will train 150,000 people in cybersecurity skills over the next three years, and will partner with more than 20 historically black colleges and universities to establish cybersecurity leadership centers to grow a more diverse cyber workforce. Amazon announced it will make available to the public at no charge the security awareness training it offers its employees. Amazon also announced it will make available to all Amazon Web Services account holders at no additional cost a multi-factor authentication device to protect against cybersecurity threats like phishing and password theft. Girls Who Code announced it will establish a micro credentialing program for historically excluded groups in technology. The program will make scholarships and early career opportunities more accessible to underrepresented groups. The Biden Administration also committed to several new initiatives, including: The National Institute of Standards and Technology (NIST) will collaborate with industry and other partners to develop a new framework to improve the security and integrity of the technology supply chain. The approach will serve as a guideline to public and private entities on how to build secure technology and assess the security of technology, including open source software. Microsoft, Google, IBM, Travelers and Coalition committed to participating in this NIST-led initiative. The formal expansion of the Industrial Control Systems Cybersecurity Initiative to a second major sector: natural gas pipelines. The Initiative has already improved the cybersecurity of more than 150 electric utilities that serve 90 million Americans. Related Articles White House Issues Executive Order on Cybersecurity Jen Easterly Named Director of the Cybersecurity and Infrastructure Security Agency TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Experience with a Digital Internship I first heard about Schneider Downs from a family friend. When I mentioned to him that I was going to apply for audit internships following my junior year, he immediately recommended that I apply to Schneider Downs. He said that it was an excellent firm full of excellent people. I am happy to report that he was definitely right. After doing some research on the firm, I was impressed by its impressive track record, variety of audit and tax clientele, as well as the impressive culture and values instilled throughout the firm. I had my initial interview with Tom Harvey, a second interview with Doug Morally, and then I was offered a position as an Audit Intern at the Pittsburgh office, which I gladly accepted.Before beginning my internship, I was worried about how the internship experience would be affected by the COVID-19 pandemic. I was worried about learning and working in a digital environment, and had reservations about the lack of face-face interaction that would come with a digital internship. However, I quickly realized that if I viewed the challenges of working in a digital environment as an opportunity for unique growth and learning, instead of as a series of barriers, I would have a much more meaningful experience.Being an intern in this digital setting taught me a variety of things: how to be a better communicator, how to be a more organized and to be a more intentional worker, just to mention a few. I would consider myself a “people person” and being forced to do 90% of my work from my desk at home made me appreciate the days when I was on-site at a client with my team that much more. While learning and working in a digital environment was more difficult for me, I was thankful for the challenges and the unique learning opportunities it gave me. I was also thankful for the managers, seniors, shareholders, and other employees that I worked with throughout my internship: they were always happy to answer one of my many questions, and they often took valuable time out of their days to help me learn and understand the entire audit process and practice much better.The team at Schneider Downs did a phenomenal job with the internship experience as a whole. From day one I felt valued and respected as an employee, even though I was just an intern. The people at Schneider Downs are truly great and working with and getting to know them better was undoubtedly the best part of my internship experience. Special thanks to Kevin Begley, Jon Grim, Greg McGuire, and Lindzee Nicholson (just to name a few), for all of the help and advice that you all gave me throughout the summer- I truly appreciate it.Overall, my experience as an Audit Intern at Schneider Downs in Pittsburgh was a phenomenal experience: I got to work with truly great people every day, I learned so much about auditing, and I gained skills that will greatly benefit me in my future career. I am incredibly grateful that I had the opportunity to work at Schneider Downs over the past summer, and I am incredibly thankful to everyone that I worked with at the firm as who made me feel valued and welcome from my very first day. ### OMB Releases 2021 Compliance Supplement On August 12, 2021, the Office of Management and Budget (OMB) released the 2021 Compliance Supplement.  The Compliance Supplement is issued annually to describe the compliance requirements for organizations that received funding from a variety of federal financial assistance programs.  Organizations should carefully review the Compliance Supplement annually for programmatic and agency requirements and changes.  Part of this supplement details the requirements for the 14 new programs added related to COVID-19 funding legislation, along with additional reporting requirements in the Federal Funding Accountability and Transparency Act (FFATA). The 2021 Compliance Supplement is effective for audits of fiscal years beginning after June 30, 2020.  This Supplement has been updated for funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Coronavirus Response and Relief Supplemental Appropriations (CRRSAA) Act, along with part of the Compliance Supplement for the American Rescue Plan (ARP) Act. There will be two future addendums issued this fall to cover all programs within the ARP funding.  The first addendum is anticipated to include the Coronavirus State and Local Fiscal Recovery Fund (21.027) program and updates to the Education Stabilization Fund (84.425) Section 1.  The second addendum is expected to cover three Treasury programs, including Capital Projects Fund (no Assistance Listing number yet assigned); Homeownership Assistance Fund (21.026); and the Local Assistance and Tribal Consistency Fund (no Assistance Listing number yet assigned). Most noted changes throughout the 2021 Compliance Supplement include updates for the Revised Uniform Guidance and programmatic changes for the new COVID-19 programs.  The OMB is required to review the Uniform Guidance every five years.  The Revised Uniform Guidance is effective for all new Federal awards and modifications of existing awards on or after November 12, 2020.  Updates for the Revised Uniform Guidance have been made directly in Part 3 of the Compliance Supplement and are not contained in a Part 3.1 or 3.2 version.  Procurement thresholds and the reporting requirements for FFATA are two of the largest changes.  Appendix II of the Compliance Supplement lists the agencies and their progress on adopting the Revised Uniform Guidance.  The OMB has revised terminology in how it refers to program numbers from Catalog of Federal Domestic Assistance (CFDA) to Assistance Listing (AL) Number.  Remember, this change is effective after November 12, 2020, so start updating your vocabulary to include Assistance Listing Number. The largest of the COVID-19 programs include the Education Stabilization Fund (ESF), Coronavirus Relief Fund (CRF), and Provider Relief Fund (PRF), which have all been identified as higher-risk programs in the 2021 Compliance Supplement, and as such, these are likely to be audited as major programs by your auditors, regardless of the current year spend.  The following are some of the highlights of these three programs: ESF – This program was funded by the CARES, CRRSAA and ARP Acts. Funding to K-12 entities is commonly referred to as ESSER under Section 1. For institutions of higher education, this is known as the Higher Education Emergency Relief Fund (HEERF) program under Section 2.  The HEERF program was granted in three tranches, each including a student and institutional piece, and later tranches include a reimbursement for lost revenue.  Section 1 was only updated in the 2021 Compliance Supplement for the implications of CRRSAA but has not been updated for implications of ARP. However, Section 2 was updated for all three of the aforementioned Acts; CRF – This program was funded by the CARES Act, but provisions of CRRSAA extended the spending on these funds from December 30, 2020 to December 31, 2021.  The Compliance Supplement notes that Uniform Guidance does not apply to these funds, and Treasury Requirements should be followed; and PRF – This program was also funded by the CARES Act to provide relief funds to hospitals and other healthcare providers.  When to report these program expenditures has been in flux since the release of the 2020 Compliance Supplement Addendum last year.  Clarity has been provided on how to report expenditures and/or lost revenues of the Schedule of Expenditures for Federal Awards (SEFA) beginning with fiscal year-ends on or after June 30, 2021.  Organizations should also review the PRF Reporting Portal submissions for the correct period to record the expenditures on the SEFA based on the award date. In addition to these three larger COVID-19 programs, Appendix IV of the Compliance Supplement contains a list of all other programs that have been designated higher risk as result of them including funding due to COVID-19 legislation.  The Appendix also walks through various considerations for auditors’ major program determination on Type A and Type B programs with these higher-risk designations. Appendix VII of the Compliance Supplement should be read by all organizations, as it contains additional information on the COVID-19 funding.  It is noted within this section that OMB issued a Memorandum in March 2021 giving recipients and subrecipients an extension of six months for the completion and submissions of the single audit reporting package not yet submitted as of March 19, 2021 through June 30, 2021 fiscal year-ends.  Unlike previous extensions, no action is required for this extension. This section also contains reminders on identification of COVID-19-related programs on the SEFA and reporting to the Federal Audit Clearinghouse.  Along with COVID-19 funds, any donated personal protective equipment (PPE) should be identified.  If the donated PPE was provided to organizations without any compliance or reporting requirements, the fair market value of the donated PPE is to be presented in a footnote and may be marked unaudited.  When the recipient uses federal funds provided under an Assistance Listing to purchase PPE, the PPE must be reported on the SEFA in that case. Please stay tuned as we follow the current updates related to the COVID-19 funding and the future releases of the addendums this fall.  In the meantime, please contact us with questions on the Compliance Supplement or any federal funding questions. ### More Than a Marketing Internship One of the key experiences recommended during your undergraduate career is completing an internship.  However, after my summer at Schneider Downs & Co. I understand now that an internship is more than just checking off a step on a carefully curated list to success. This summer I had the amazing opportunity to work for Schneider Downs and its marketing team.  When I first accepted this position, I was unsure of what this internship would hold.  Working in a fully remote environment was not something I was unfamiliar with, but the bigger question I had was what my days would look like working in marketing for an accounting firm.  I entered this position with cautious enthusiasm and an eagerness to learn.  To say the Schneider Downs marketing team was a pleasure to work with would be a massive understatement; I have learned so much from this team of professionals in just three months of working for the firm and will carry the skills and knowledge that were presented to me during this internship with me for the rest of my career.There is a lot to be said for working with a smaller firm.  For one, the internship experience in general is more close-knit and personal.  I was able to meet with all of my team members one-on-one (although be it over Microsoft Teams) and form personal connections with everyone.  Secondly, you get more of a customized experience where you know everyone on your team and everyone knows you.  I especially enjoyed working in the marketing department because they are such a friendly group of individuals that instantly made me feel welcome and created a productive space for creativity. Throughout my time with the marketing team, I have been able to use skills I learned in a classroom setting in a real-world environment and was able to get my feet wet in the world of social media and digital marketing.  I was always given a variety of projects to keep busy and was able to create my own HR-marketing campaign around sharing other interns’ experiences with Schneider Downs to be posted on our website and social media platforms.This internship has been one of the most fulfilling experiences I have had in my professional career thus far, and I will greatly miss all of my team members and the company atmosphere of Schneider Downs.  As I move forward with my professional career, I will always be incredibly thankful for the three months I spent interning at Schneider Downs. ### ‘Family’ Matters One of the first questions I’m always asked relates to why I chose Schneider Downs after attending the University of South Carolina. As I’ve come to learn, it is apparently somewhat rare for interns and new hires to come from universities outside the region, which makes my perspective and experience especially unique.As someone who spent their teenage years in the Pittsburgh area before choosing to attend a university over 500 miles away, I had always felt a connection to the city. However, my initial career plans never included the possibility of coming back and choosing to stay in the Steel City. The major cities closest to my university included Atlanta, Charlotte, Nashville, and the whole state of Florida. So, what happened? Why trade palmetto trees and sunshine for bridges and clouds?Before the globe fell under “these trying times,” my plans were to stay close to my alma mater and ideally work in the Charlotte area. I had become familiar with the area, and the new life I had created was centered around the region with many of my closest friends living in the Southeast and along the East coast. When COVID sent everyone home in the spring of my junior year, my perspective began to change. I valued the time I was able to spend with my family, and the realization of having aging grandparents made it that much harder to leave in July 2020 to begin my internship with a regional accounting firm in the Southeast. The experience I had at my previous internship cemented a few early ideas I had about my future career path. For instance, I like the feeling of a more regional firm, as the teams and organizations are more connected and not overwhelmed with ‘warm bodies.’While navigating my first full semester of a COVID education, I was faced with the additional task of trying to determine what my next career move would be. While discussing my plans with one of my professors and mentors during one of our semi-regular meetings, she brought up if I had thought about looking for roles in the Pittsburgh area at all. I hadn’t, but after further discussion, she revealed that one of her bigger career regrets was not being closer to home (specifically family) when she started, and that really got me thinking.Fast forward to my first interview with Schneider Downs, which I initially thought I bombed, and I knew something had changed in me. It was the first time that I could remember being genuinely nervous for an interview, and it made me realize just how much I wanted to return to Pittsburgh – especially if it included being a part of a prestigious firm such as Schneider Downs. Following a few more interviews and an especially captivating conversation with shareholder Joseph Bruce, I was responding to my offer letter the day I received it.Throughout my internship experience, one thing has stood out above all else. Schneider Downs employees really pride themselves on being more than just coworkers - but being a team and a family. And more than that, Schneider Downs is a family that cares. This is evident throughout the firm from top to bottom. I look forward to a post-COVID world where I can meet many of these remarkable individuals face-to-face and continue to learn and grow throughout my accounting career. If we’re fortunate, these experiences aren’t all that far away. ### Looking for Clarity from the IRS Regarding Foreign Activities? Be Careful What You Wish For! If you own a foreign entity or joint venture, you’re likely familiar with the associated IRS reporting requirements (if not, contact your tax advisor IMMEDIATELY!).It was about 10 years ago that the IRS started enforcing required reporting for controlled foreign entities. The passing of the TCJA in 2017, meanwhile, resulted in significant changes in the taxation of foreign investments, and the IRS is now catching up with expanded reporting requirements.Over the years, I’d often thought how helpful it would be to have tracking schedules for Forms 5471, 8865 and foreign tax credit forms. Well, wish granted! For 2020 reporting, the IRS created several new schedules for Form 5471. The current form can now be more than 20 pages of separate schedules and information. Draft forms for foreign partnerships were also released to provide guidance on how to report items on international relevance. These new schedules, K-2 and K-3, are 20 and 22 pages long, respectively. So, thanks.Foreign-owned companies aren’t spared from information reporting, and the IRS has also expanded the definition of reportable transactions for foreign-owned entities (Form 5472) to include all monetary, nonmonetary and less-than-full consideration transactions between the U.S. entity and the related foreign corporation. What does this all mean? That reporting is not the end of the story. The burden on U.S. taxpayers with foreign operations and investments continues to increase, and enforcement actions are sure to follow. Undoubtedly the IRS will use the information provided in future tax audits in determining potential areas of abuse. Because penalties for noncompliance are high, a thorough understanding of the reporting requirements and timely compliance is crucial. Be sure to contact your Schneider Downs tax advisor if you have any questions. ### Proposed Interagency Guidance on Third-Party Risk Management Download the PDF version of this article here.Roughly a month ago the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) jointly proposed guidance on Third Party Risk Management that is intended to supersede the existing guidance of each agency.The proposed interagency guidance is an effort to harmonize and modernize Third Party Risk Management (TPRM) guidance amongst three of the federal banking agencies. The National Credit Union Administration (NCUA) is excluded from this guidance. The OCC's 2013 guidance is being used as the baseline for the updates.The public has until September 17, 2021, to provide commentary to the proposed guidance. This is a generational opportunity for industry leaders to help add value to the guidance. The existing guidelines are available to view below. OCC Bulletin 2013-29: https://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html Board's Guidance on Managing Outsourcing Risk (2013): https://www.dwt.com/-/media/files/blogs/financial-services-law-advisor/2021/07/fdic--guidance-on-managing-outsourcing-risk.pdf FDIC's Guidance for Managing Third-Party Risk (2008): https://www.fdic.gov/news/financial-institution-letters/2008/fil08044a.html The official communication from the Board, the FDIC and the OCC can be viewed at www.federalregister.gov/documents/2021/07/19/2021-15308/proposed-interagency-guidance-on-third-party-relationships-risk-management.We are paying particular attention to the handling/inclusion of the 2020 FAQs, Information Security Considerations and whether more specific guidance is provided on the data element sensitivity and how that equates to commensurate assurance.About Schneider Downs Third-Party Risk ManagementSchneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. For more information or to get started contact us or visit us online at www.schneiderdowns.com/third-party-risk-management. ### IRS Provides Taxpayer-Friendly Guidance for the Employee Retention Credit As if the world of taxes could be any more confusing for business owners, COVID has truly turned things on their heads. PPP, ARP and ERC are just a few of the programs in this alphabet soup that are designed to aid employers during difficult economic times.What Is the Employee Retention Credit?The Employee Retention Credit (ERC) permits eligible employers, including tax-exempt organizations, that pay wages after March 12, 2020 and before January 1, 2022 to file for a “refundable” payroll tax credit.  Organizations can become eligible by either meeting a gross receipts test or by being impacted fully or partially by Federal, state or local government orders suspending operations.  To be eligible based on decline in gross receipts, an organization must compare calendar quarters in 2020 and in 2021 to the same calendar quarters in 2019 (pre-pandemic).  If, when comparing those quarters, the organization has a 50% decline (2020 quarters) or a 20% decline (2021 quarters), it could be eligible for the ERC. Clarity on “Gross Receipts.”IRS Rev Proc. 2021-33 shines some light on safe harbors that allow employers to exclude certain items from “gross receipts” when determining eligibility for the ERC. The items covered by this safe harbor are: (1) the amount of the forgiveness from the Paycheck Protection Program (PPP) loan, (2) Shuttered Venue Operators Grants (“SVOG”) under Section 324 of the Economic Aid Act, and (3) Restaurant Revitalization Grants (“RRG”) under Section 5003 of the American Rescue Plan Act. Employers are required to apply this safe harbor consistently for each relevant quarter.This guidance reflects Congress’s intent that an employer be able to participate in relief programs and be able to claim the ERC. Including the amount of the forgiveness of a PPP loan or the amount of previously stated grants in gross receipts for determining eligibility to claim the ERC would frustrate this intent and make it more difficult for small businesses to qualify for the ERC. An employer is not required to apply this safe harbor. Application or revocation of this safe harbor election may be done at the employer’s discretion, so long as applied consistently.With this guidance, the IRS has provided taxpayer-friendly guidance to organizations that may have otherwise not been able to qualify for the ERC under the gross receipts test.  The Tax Advisory group at Schneider Downs has significant experience consulting with organizations on all aspects of the ERC.  For more information on how your business may qualify for the ERC and other relevant grants under COVID-19 legislation, please contact Matthew Werner, Ross Alessandro or your current Schneider Downs representative for additional information.   ### Exit and Succession Planning – The Challenges of What’s Next According to studies conducted by the McKinsey Global Institute and Oxford Economics, it could take five years or longer for businesses to recover to pre-COVID economic levels. Although the businesses are starting to rebound and are expected to improve throughout 2021, owners who are planning to sell their company or implement a succession plan must be aware and actively manage the many evolving business climate challenges. Potential Impact of Selective Biden Administration Federal Tax Proposals Proposed Increase in Capital Gains Tax Rate President Biden is proposing a capital gains rate increase to 37% (from 20%) under existing law. The rates would be assessed on individuals with adjusted gross income that exceeds $500,000 for single taxpayers and $1,000,000 for married taxpayers filing jointly. Including a separate 3.8% tax on net investment income, the combined federal income tax rate on long-term capital gains and dividends would be 40.8% if legislation were to be passed. Separate state tax rates could put the combined rate north of 50% in some locales. Observation: The Section 199A qualified business income deduction is not a deduction in arriving at adjusted gross income. Further, in 2022 the Section 461(l) $500,000 excess business loss limitation will again be in place. Net operating losses will be limited to 80% of taxable income. These types of loss limitation provisions have the impact of increasing adjusted gross income and, therefore, increasing the likelihood of the higher tax rate applying to gains and dividends. The Green Book, a publication that explains the proposed tax proposals recently released by the U.S. Department of the Treasury, indicates the higher tax rate will apply to “gains” beginning on the date of President Biden’s announcement (presumably on or around April 28, the date of his first address to Congress). Note that it does not separately address when the increased rate would apply to dividend income, but specific use of the word “gains” may imply that the effective date would not be until after December 31, 2021. Potential Impact of Proposed Changes to Gift and Estate Asset Transfers The donor or deceased owner of an appreciated asset would realize a capital gain at the time of transfer. For a donor, the amount of the gain realized would be the excess of the asset’s fair market value on the date of the gift over the donor’s basis in that asset. For a decedent, the amount of gain would be the excess of the asset’s fair market value on the decedent’s date of death over the decedent’s basis in that asset. The Green Book appears to indicate that the tax would be borne by the party making the gift or the estate. Exceptions to the general rule include: $1,000,000 per-person exclusion (up to $2,000,000 for married couples) for property transferred by gift or held at death; Transfers in death to a U.S. spouse (prominently omitted are transfers to spouses in divorce); Transfers to charity (though certain transfers to split-interest trusts would be taxable); Certain tangible property; appreciation on household furnishings and personal effects (but not collectibles) would be excluded; Gain on sale of a principal residence; the $250,000 ($500,000 married filing joint) gain on the sale of a principal residence would be excluded; and Small business stock under section 1202 would continue to be excluded. While gain on the appreciation of family-owned businesses is not excluded, the Green Book does indicate that payment of the tax would not be due until the interest in the business is sold or the business ceases to be family-owned and operated. The proposal would also allow a 15-year fixed-rate payment plan for the tax on appreciated assets transferred at death, other than for liquid assets like publicly traded financial assets or for businesses for which the deferral election is made. The IRS would be authorized to require security at any time there’s reasonable need. That security may be provided by any person and in any form deemed acceptable by the IRS. PPP Forgiveness Eligibility for Change in Ownership Companies The sale of your business could affect PPP forgiveness eligibility. In November 2020, the U.S. Small Business Administration (SBA) issued a procedures notice to lenders that carry with it borrower responsibilities when there’s a change of ownership, which the SBA defines as a transaction that falls into one of three categories: The sale or transfer of at least 20 percent of common stock or other ownership interest of a PPP borrower, including to an affiliate or an existing owner of the entity; The sale of at least 50 percent of a PPP borrower’s assets; or A merger of a PPP borrower with or into another entity. All transactions require that if the new owner has a separate PPP loan, the borrower and the new owners are responsible for segregating and delineating PPP funds and expenses and providing documentation to demonstrate compliance with PPP requirements by each PPP borrower. In the case of a merger, the successor is responsible for segregating and delineating PPP funds and expenses and providing documentation to demonstrate compliance with PPP requirements with respect to both PPP loans. Additionally, prior to closing any change of ownership transaction, the PPP borrower must notify the lender in writing. Depending on the circumstances, different procedures may be required and could include obtaining approval by the SBA, which carries a decision timeline of up to 60 days or establishing an interest-bearing escrow account. The risk for the borrower is that if they don't follow SBA change of ownership guidelines, the PPP loan could be at risk for not being forgiven and/or payment may be accelerated. Looking Ahead With the economic revitalization still taking shape, here are a few actions to consider to help guide you through these uncertain times. Constantly update forecasts and contingency plans. Create rolling forecasts that incorporate new data and identify areas of risk, particularly with regard to cash flow. Develop trigger points to take further action based on defined business results. Track costs and inflationary pressures from suppliers. Communicate this impact on your business to customers. Add language to contracts and bids requesting price increases based on elevated input costs, with supporting information sourced from published data, like that from the U.S. Bureau of Labor Statistics. Evaluate vendors and purchasing policies. Your entire supply chain is affected. With inflation for input materials continuing to constrain the industry, take time to review and update your purchasing policies. Create a list of all vendors and evaluate whether you’re getting the best deal for the volume you purchase. Understand which vendors can provide you with the supplies you need and pivot, as necessary. Divest of excess assets. Optimize your inventory levels to match demand. Part ways with unnecessary equipment or other assets. While you may not receive optimal prices, cash is king right now. Remain current on the impact and opportunity of legislative changes. In light of the constantly changing landscape, it’s important to make sure you understand the implications of current laws. Speak with your professional advisors to ensure you’re taking advantage of available opportunities. Exit and succession planning is one of the most important strategies you’ll need to implement throughout the life of your business. Whether you’re ready to start today or in 10 years, it’s never too early to begin the discussion. About Schneider Downs Exit Planning and Succession Advisory Our Exit Planning and Succession Advisors are comprised of advisory professionals from five practice units—assurance and tax advisors, business advisory, technology advisors, corporate finance and wealth management—to deliver seamless, fully integrated exit and succession solutions. Download our Exit Planning and Succession service overview to learn more or contact us today to get started.     ### What to Know About the Latest Title IX Guidance On July 20, 2021, the U.S. Department of Education (ED) issued a Q&A to provide additional guidance for institutions navigating the changes to Title IX of the Civil Rights Act of 1964 that took effect last year. The Q&A clarifies how the Office for Civil Rights interprets institutions’ obligations under the changes made in 2020.The document also includes an Appendix that provides example scenarios and the applicable Title IX procedures for institutions to reference. Some of the highlights from the new guidance are discussed below.One of the main changes to the Title IX regulations in 2020 was the narrowing of what defined sexual harassment. As a result, institutions are required to investigate harassment only if it is “so severe, pervasive, and objectively offensive that it effectively denies a person equal access” to education. ED guidance clarified that, while they are not obligated, institutions can still investigate an incident if it does not necessarily fall under the established definition of harassment.The new regulations also stated that institutions are not required to investigate incidents that take place in off-campus locations. The ED has clarified this component by emphasizing “off-campus settings if the school exercised substantial control over the respondent and the context in which the alleged sexual harassment occurred (e.g., a school field trip to a museum), and off-campus buildings owned or controlled by a student organization officially recognized by a postsecondary school, such as a building owned by a recognized fraternity or sorority” as settings covered by the 2020 amendments.For an institution to be required to respond to a harassment allegation under Title IX, certain personnel must be notified. Typically, this would include the institution’s Title IX Coordinator, but ED guidance states that the institution may designate other personnel as officials with the authority to institute corrective measures on the institution’s behalf. If any of the designated personnel are notified of misconduct, through verbal, written or various other means, the institution is required to respond under Title IX.The new regulations also permit institutions to force accused students or personnel to leave campus if they appear to be a threat to others while a Title IX grievance process is pending. The institution must, however, provide the individual with notice and opportunity to challenge the decision immediately after the individual has been removed from campus.Previous ED guidance suggested but did not require a 60-day time frame for institutions to resolve harassment complaints. This guidance has since been removed, causing a bit of confusion. The new guidance clarified that while the 60-day suggestion has been removed, there is nothing in the 2020 amendments prohibiting an institution from implementing a 60-day time frame. The main takeaway from this component of the new regulation is that the institution’s grievance process for formal complaints of misconduct must include “reasonably prompt time frames” under Title IX.The final highlight from the new ED guidance is that if an individual involved in the investigation does not participate in the live hearings, any previous statements provided by that individual may not be relied upon by the decision-making party. The institution is permitted to use discretion to temporarily postpone the hearing for “good cause,” such as to accommodate a post-investigation disability sustained by one of the parties involved.While the future of the regulations under Title IX is uncertain due to the shift in administrations, it is essential to keep up to date with the most recent guidance. Schneider Downs offers a variety of Risk Advisory Services that can help your institution navigate, implement and assist with your compliance objectives. For any additional questions, contact Schneider Downs. ### Earmarks Are Back Seven of the Appropriations Bills Approved by the House Committee Include Funding That Would Go Directly to Colleges and Universities.The leadership of the House and Senate Appropriations Committees announced at the beginning of 2021 that, after a 10-year suspension, they would accept requests from lawmakers for earmark spending.  This type of funding refers to a bill that specifically allocates money to a location, institution or project; the funding is commonly used to allocate money for research projects, parks, laboratories, business contracts or academic grants.  The earmarking process is meant to encourage bipartisanship, as the funding has the potential to directly benefit Democrats and Republicans. However, it appears that stronger support for earmark spending currently comes from Democrats; requests for the approved bills came from 178 total members, 126 Democrats and 52 Republicans. The main criticism of earmark spending is that the funding for the bills is collected through taxes from one community and redistributed elsewhere, and those outside the organization will ultimately receive no benefit from the spending.The Democratic leadership of the House and Senate made notable updates to the earmark spending process, citing several weaknesses in the previous literature.  Now, all requests must be available online; lawmakers cannot have a financial interest in the project; the funding is limited to no more than 1% of discretionary spending, and funding is reserved for not-for-profit entities.The House Appropriations Committee approved more than $272 million in funding through earmarks that would go toward projects at 228 colleges and universities.  The project funding levels span from large projects, such as $20 million for the University of Nebraska at Lincoln to assist with construction, to smaller projects, such as $350,000 to North Carolina State University for computer science professional development. According to Inside Higher Ed, “most of the projects relate to facilities and equipment upgrades, curriculum and program development, and workforce initiatives.”  Further, $186 million of the earmark funding is a part of the Labor, Health and Human Services, Education and Related Agencies bill.In order for the colleges and universities to receive this funding, the appropriations bills must still be passed by Congress and signed by President Biden. The return to earmark funding closely aligns with President Biden’s plans and budget to increase student financial aid and research. For example, the House Appropriations Committee recently approved a bill that includes nearly $31 billion in total higher education spending for fiscal year 2022.  If the appropriations bills pass, the selected colleges and universities may not all receive large sums of money, but they will receive additional funds that would not have been raised to support their students and community. For more information regarding updates to the earmark spending process, please contact Schneider Downs. ### IRS Announces 2021 Automobile Depreciation Limitations This week the IRS released Rev. Proc. 2021-31, which includes the inflation-adjusted annual depreciation limitations and lease inclusion amounts for passenger automobiles placed in service in 2021. It’s important to remember that these depreciation caps and lease inclusion amounts do not apply to automobiles with a gross vehicle weight rating (GVWR) of more than 6,000 pounds. For owners of passenger automobiles, IRC §280F(a) places a limitation on the allowable depreciation deduction in the year the automobile is placed in service, as well as the subsequent years. IRC §280F(d)(7) requires the IRS to adjust the dollar limitations annually for inflation.The updated annual depreciation limitations and lease inclusion amounts are listed below:Table 1: Passenger Automobiles Acquired After September 27, 2017, and Placed in Service During Calendar Year 2021, for which § 168(k) “Bonus Depreciation” Applies Tax Year Depreciation Amount Allowed 1st Tax Year $18,200 (increased from $18,100) 2nd Tax Year $16,400 (increased from $16,100) 3rd Tax Year $9,800 (increased from $9,700) Each Succeeding Year $5,860 (increased from $5,760) Table 2: Passenger Automobiles Acquired After September 27, 2017, and Placed in Service During Calendar Year 2021, for which § 168(k) “Bonus Depreciation” Does Not Apply Tax Year Depreciation Amount Allowed 1st Tax Year $10,200 (increased from $10,100) 2nd Tax Year $16,400 (increased from $16,100) 3rd Tax Year $9,800 (increased from $9,700) Each Succeeding Year $5,860 (increased from $5,760) Lessees of passenger automobiles are also subject to deduction limitations under IRC §280F(c)(2). If an automobile is first leased in 2021, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of lease is greater than $51,000. The lease inclusion table is below: Table 3: Dollar Amounts for Passenger Automobiles with a Lease Term Beginning in Calendar Year 2021 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th and later $51,000 $52,000 0 0 1 0 1 $52,000 $53,000 1 1 1 2 2 $53,000 $54,000 1 2 2 3 4 $54,000 $55,000 1 3 3 5 5 $55,000 $56,000 2 3 5 6 6 $56,000 $57,000 2 4 6 7 8 $57,000 $58,000 2 5 7 8 10 $58,000 $59,000 3 5 8 10 11 $59,000 $60,000 3 6 9 11 13 $60,000 $62,000 3 7 11 13 15 $62,000 $64,000 4 9 13 15 18 $64,000 $66,000 5 10 15 18 21 $66,000 $68,000 5 12 17 21 24 $68,000 $70,000 6 13 20 23 27 $70,000 $72,000 7 14 22 26 30 $72,000 $74,000 7 16 24 29 33 $74,000 $76,000 8 18 26 31 36 $76,000 $78,000 9 19 28 34 39 $78,000 $80,000 9 21 30 37 42 $80,000 $85,000 11 23 34 41 48 $85,000 $90,000 12 27 40 47 55 $90,000 $95,000 14 30 45 55 62 $95,000 $100,000 16 34 50 61 70 $100,000 $110,000 18 40 58 71 81 $110,000 $120,000 21 47 70 83 97 $120,000 $130,000 25 54 81 96 112 $130,000 $140,000 28 62 91 110 127 $140,000 $150,000 31 69 103 123 141 $150,000 $160,000 35 76 114 136 157 $160,000 $170,000 38 84 124 149 172 $170,000 $180,000 41 91 135 163 187 $180,000 $190,000 45 98 146 176 202 $190,000 $200,000 48 106 157 188 218 $200,000 $210,000 51 113 168 202 232 $210,000 $220,000 55 120 179 215 247 $220,000 $230,000 58 128 190 227 263 $230,000 $240,000 61 135 201 241 278 $240,000 and over 65 142 212 254 293 Please contact your Schneider Downs tax advisor if you need assistance or would like to discuss how these depreciation and deduction limitations could impact your business.  ### Universities Are Exploring New Business Models The higher education sector has been headed down a path of declining financial stability for years, which recently has been accelerated by the COVID-19 pandemic.Government funding is fluctuating, causing an ever-increasing reliance on tuition revenue, and the pool of high school graduates continues to shrink. And as current and future students are looking for options that better fit their needs and lifestyles, more traditional institutions have limited ability to adapt quickly to those changing market demands.The pandemic pushed resources in higher education to new extremes, with most institutions needing to switch operations substantially or fully remote in a short period of time. Many institutions are looking to turn that challenge into a new opportunity for business by increasing online learning (through both more online courses offered and fully remote program offerings). Institutions are also investigating revisions to existing business models that involve creating shorter-term programs and courses, as well as more part-time options. Targeting individuals outside of the traditional pool of students may also lead to success through workforce training programs or high school partnerships for dual enrollment or pre-college prep courses.Alternatively, institutions are also searching for ways to earn revenues beyond the typical tuition-centered approach. Some examples include energy generation, space rentals and leasing parking operations. However, it’s important to consider that while these alternative revenue streams contribute to financial goals, a need exists to also balance them with the institution’s mission. Engaging key stakeholders early in the exploration process is critical to success.Whether it be adapting current revenue streams to respond to student demands or heading down alternative revenue paths, it’s evident that institutions are using this time to implement changes and to gauge the potential for value in new and sometimes unexpected places.  Utilizing the Internal Audit function to assess the risk associated with new revenue streams and new business models can help your institution to further focus on achieving its core mission and to ensure future success. ### Let’s Get Flexible It’s no secret that flexibility has become a staple of the COVID-19 era. Whether it comes to work schedules, childcare or health mandates, billions across the world have had to adapt over the last year-and-a-half to the ever-changing demands forced on them by the pandemic.Two of the largest groups most affected have been students and educators. With most schools from elementary to university-level having taken the virtual approach to learning since the start of the pandemic, we’re now starting to see a shift back (or plans to shift back) to the old reality of in-person learning. But does that mean a complete halt to the virtual approach?According to a global survey of 1,128 university students and 1,076 university institution staff conducted by Salesforce.org, 43% of students and 54% of staff said they prefer a hybrid approach to learning. In the U.S. alone, students noted that their preference for all-virtual instruction is now comparable to that of in-person learning. While many university students are eager for schools to reopen to in-person learning, and for the experiences that come along with it, the flexibility associated with virtual learning should not be overlooked.It doesn’t appear that on a global level the majority of students and staff prefer to continue with an all-virtual learning approach. They seem to be looking for more hybrid learning options, an approach that allows students and staff to get the best of both worlds and gives them the freedom and flexibility to make that choice. According to Salesforce.org, a number of European institutions have reported a growing demand for more flexibility in learning, with eight of 10 students who participated in the survey noting that they prefer either full in-person or hybrid learning options.Not only does a hybrid approach provide flexibility and options to the typical university student (about ages 18-21 in the U.S.), but many institutes of higher learning are also seeing the option as an opportunity to get older students back to campus. This is particularly prevalent in Australia, where six in 10 undergraduate students are age 30 or older. The flexibility of a hybrid approach, then, appears to be appealing to more mature students who have families and are working while attending school. But hybrid approach considerations are still important to universities as a whole in that 36% of students surveyed said that flexible course options would play a deciding factor on which school they’d ultimately enroll.While the results of the survey proved that most students and staff still prefer an either all in-person approach or an all-virtual approach, the findings still provide key takeaways for universities at this pivotal point in this pandemic era regarding the demands for flexible learning. It remains uncertain as to whether this trend of increasing demand for a hybrid approach will continue, but for the moment it appears that hybrid offerings by universities could only benefit the institutions.Internal Audit functions can assess risks associated with hybrid learning and perform analytics to help determine what your institution's hybrid approach should look like. ### Pennsylvania 2021-2022 Budget Expands the Educational Improvement Tax Credit Program Pennsylvania Governor Tom Wolf recently signed a $39.7 billion state budget into law on June 30, instituting the largest increase in state education funding in recent memory.Included in the $300 million influx in general education funding was a $40 million boost for the educational improvement tax credit (“EITC”) program, which in turn provides an extra 13,000 eligible scholarships for students seeking a private education.What Is the EITC Program?The Pennsylvania EITC program, administered by the Department of Community and Economic Development (“PA DCED”), provides eligible businesses the opportunity to earn tax credits for contributing to Scholarship Organizations, Educational Improvement Organizations and/or Pre-Kindergarten Scholarship Organizations.Scholarship Organizations and Pre-Kindergarten Scholarship Organizations are nonprofit organizations that provide scholarships to students who are pursuing a private school education. Educational Improvement Organizations are nonprofits that develop innovative educational programs for public schools.For corporate and pass-through taxpayers to be eligible for the credit, the business must be authorized to do business in the Commonwealth and be subject to either the corporate net income tax or personal income tax.The EITC Program’s Benefit to Pennsylvania TaxpayersThe potential tax credit for businesses is equal to 75% of the contribution to the qualified organization with a maximum credit of $750,000 for the taxable year. Additionally, the credit can be expanded up to 90% of the contribution if the business agrees to provide the same dollar amount in contributions for consecutive tax years. Unfortunately, a taxpayer cannot carry forward any unused portion of the credit, and the credit cannot be transferred to another taxpayer. The credits are awarded on a first-come, first-serve basis.Corporate and pass-through entities that have large PA tax liabilities can take advantage of the EITC program, as it provides the potential for a dollar-for-dollar decrease in their PA tax liability while providing life-changing scholarships and educational funding to Pennsylvania residents looking to better their education. The latest expansion of the EITC program through the state budget gives more business taxpayers the opportunity to take advantage of the program than ever before.The State and Local Tax practice at Schneider Downs has experience consulting with businesses on all aspects of obtaining state tax credits and incentives such as the PA EITC. For more information on how your business can take advantage of the PA EITC or the potential savings through other state tax credits and incentives, please reach out to Stephen Worth or Justin Premich of the Schneider Downs SALT team. ### NCAA Rule Changes Mean for Athletes and Schools On July 1, the NCAA put into effect an interim policy that allows its student-athletes to profit from their name, image and likeness (NIL).The ruling comes on the heels of several states creating similar laws that allow college athletes to monetize their NIL. For now, the NCAA has instructed schools and athletes to follow existing laws respective to the state where their institution is located and has asked those states without current NIL laws to create their own policies based on loose guidelines provided by the inter-collegiate organization.Even before the rule change, any American had the right to earn money using his or her NIL, but college student-athletes had to forfeit those rights when they accepted their athletic scholarships. Now those athletes will be able to profit from companies that wish to use them to promote their business or product. Student-athletes will also be able to promote themselves in public or on social media by using their status as college athletes. To assist, athletes are now permitted to hire professional help like agents, lawyers and tax professionals. The NCAA rule change places responsibility on the individual schools for determining if NIL deals are consistent with state laws. Some states, for example, don’t allow schools to help athletes reach NIL deals and endorsements, while others do. In some states, any potential NIL deal must be disclosed with the school prior to the athlete signing. With each state able to create its own laws regarding the use of NIL, schools may be faced with the difficult challenge of keeping up with inconsistencies.The NCAA hopes that eventually federal laws will be passed to establish uniform guidelines that will help simplify and clarify rules surrounding NIL, but members of Congress have yet to come to an agreement on what should be included in such a law. The NCAA is also concerned that if they were to create universal NIL rules for all schools and athletes, the organization could be hit with antitrust violation lawsuits. For the time being, then, NIL laws and rules will vary between states and schools all over the country.  ### Keep School in Session - Study up on Your Business Continuity Plan As the worldwide pandemic continues to evolve, higher education institutions (HEIs) must evolve with it.  Over the past two years, those universities and colleges that have had business contingency plans in place prior to the onset of the pandemic have risen to the occasion. Unfortunately, “roughly 41% of HEIs lack a general business continuity plan for emergencies. Additionally, in universities with BCPs, 33% of the plans do not cover biological hazards and pandemic risk management, and 60% of the plans did not include conducting any advanced simulation exercises,” according to Takako Izumi, associate professor at the International Research Institute of Disaster Science, Tohoku University, Japan. Based on this research, it is evident that roughly one in three HEIs may have experienced a business continuity event that caused significant disruptions to in-person learning.  With that said, to most people a simple class cancellation for either a day or week may not seem like a large issue, but for most universities and major programs, losing an entire week of a class schedule can be detrimental to the professor, student and university.  This is because most classroom schedules are developed to be completed without significant interruptions.  By altering a learning program by a week or more may drive final examinations and projects into the winter or summer break (when students and professors are not typically required to be present on campus). Business continuity events and classroom disruptions or cancellations will have trickle-down effects across HEIs.  These trickle-down effects include strains on educational resources as a result of working into the holidays or scheduled breaks, strains on technical resources (requiring Zoom/WebEx accounts for all professors and training of students on how to use these tools) and delays in graduation and semester end dates (thus affecting employment opportunities following graduation). These resource restraints mentioned above illustrate the perfect scenarios to prepare for when drafting a university-wide Business Continuity Plan (BCP).  The key is to lay out a strategy in developing an HEI-related Business Continuity Plan and be mindful of the key touchpoints during the process.According to Educause, a nonprofit whose mission is to advance higher education through information technology, “a Business Continuity Plan begins with a university-wide commitment to develop, staff, and support efforts that will be activated when circumstances clearly indicate that business has been or will be disrupted for more than a brief or acceptable time. A plan is not intended to address routine disruptions such as planned or routine maintenance. On the contrary, well-developed, and tested plans are essential during and after catastrophic events that preclude the resumption of normal business functioning within well-defined time frames.” Furthermore, a large part of the plan development process is to obtain buy-in from executive-level members of the institution because this establishes overall ownership, support and ability to design an effective BCP. Also important during BCP development is to understand that this is not just a technology-related plan; it is a much broader view of the functions and information resources of your institution.The following diagram outlines the entire BCP development process: A key point to remember in the BCP development process is that once a BCP has been developed and finalized, the process does not stop there.  Business Continuity Plans are living documents that must change and evolve to reflect institutional changes. To be effective, plans must be continually revised and improved to be in alignment with the current environment. A review should be conducted annually (or more frequently) to document all institutional changes that will impact the plan, including: Information gleaned from recent incidents. Information gleaned from plan training and testing. Changes in the Business Impact Analysis. Implementation of new equipment and technology. Organizational restructuring. Major additions or changes to facilities. By including all the necessary BCP touchpoints mentioned above in your HEI’s BCP, your institution will be on the right track for handling a major business or operational disruption.  Whether faced with another global/regional pandemic, a natural disaster or other type of catastrophic event on the grounds of your HEI, a BCP can be enacted to begin necessary recovery efforts to bring operations back online, or at least to an acceptable level of operation. Sources:https://www.emerald.com/insight/content/doi/10.1108/IJDRBE-06-2020-0054/full/html?skipTracking=truehttps://www.educause.edu/focus-areas-and-initiatives/policy-and-security/cybersecurity-program/resources/information-security-guide/business-continuity-and-disaster-recovery ### Considering an Exit of Your Business? Start Planning Now Often when we talk to clients, they’re ready to sell or otherwise exit their business, but they may have not thought through all the implications to both their personal and professional lives. For most company owners, their business is their single biggest asset and, oftentimes, the one they’re relying on for their retirement or funding the next phase of their life.When we discuss a potential exit or succession, there are a few areas where we focus the planning. Chris Snider, in his book “Walking to Destiny,” describes what he refers to as the “three legs of the stool” approach to planning the exit or transition from a business: the owner’s personal goals, his or her financial goals, and his or her business goals. It’s critically important that all three areas are addressed as early as possible in the process to ensure a successful transition. The Exit Planning Institute’s (EPI) 2013 “State of Owner Readiness Survey” soberly notes that 49% of respondents have done no planning at all, while 93% have no formal plan for life after the sale of their business.Personal planning focuses on the business owner’s goals and objectives, including what they plan to do to live a fulfilling and enriching life following the exit or transition of their business. Remember, for most owners their business is their life. They spend 50 to 60 hours a week (or more) devoted to the work, and when they sell, there’s often a large void in their schedule. That in part may be responsible for a finding in the EPI’s 2013 Owner Readiness Survey, where 75% of business owners profoundly regret selling their business within one year post transition.These are just a few reasons we recommend starting the planning process as soon as possible. In addition, the benefits to early planning often translate into greater transaction values and more satisfied sellers.We’ll address how planning in the other areas can significantly impact the overall sale/exit and succession process in future articles. In the meantime, please contact your Schneider Downs representative for more information or to schedule a meeting to learn how proactive planning can benefit you and your business when contemplating a sale, even if that sale is five to 10 years away. ### ‘Work Smarter, Not Harder’ – Can Your Organization Benefit from a Business Process Review? The age-old phrase “work smarter, not harder” can often come at an inconvenient time when we do not want to hear it, but it usually stands to be true. We find that most times, there is an easier way to accomplish any given task. However, sometimes the obstacle in these tasks is applying a change to our current logic. The reality is that change tends to be more difficult when you don’t have a clear understanding of what needs to change or have the knowledge or skills to make it happen.   Oftentimes, organizations are reluctant to take a closer look at their overall processes, especially if no issues have surfaced. Change can be a serious hurdle for many organizations. However, these organizations may not appreciate the impact that an operational process review may have. A business process review could be the key to unlocking the full potential of any given department within an organization.  Overall, an operational process review allows for an objective, in-depth look at the big picture from the organizational level down to a specific functional level with the goal of increasing productivity with a more streamlined approach. It allows management to reevaluate business objectives, even to the extent of taking a closer look at the culture within the business. Sometimes, there are even triggering events that may create a more obvious need for a process review due to a key employee leaving, an occurrence of fraud, or even change in the day-to-day workplace function (such as the work-from-home protocol as a result of COVID). An operational review may help management to not just react to growth and change, but to deal with and address these issues.   While a process review helps to optimize the current state of an organization, it also sets the stage for more opportunities in a future state. Some of the most common issues that affect true realization can include:   Inefficient or underutilized use of software available   Increased manual processes leading to risk of error/fraud  Lack of proper training due to undocumented procedures/SOPs  General process inefficiency   Data integrity concerns  So how do we begin to tackle these issues?The overall goal of a process review is to identify opportunities and increase value throughout the business to provide the appropriate recommendations to optimize business needs. Such recommendations can include:   Creating or updating policies and procedures  Conducting appropriate training  Implementing procedures to strengthen controls  Optimizing system functionality to align with business needs  Our team is always focused on efficiency and striving to make our clients’ lives easier on a day-to-day basis. We also work with our clients to develop risk mitigation strategies to prioritize planning and prepare for any potential risk. From problem-solving to continuous improvement, we are focused not only on the day-to-day processes but also on the future state.    Discover how your organization can benefit from an operational review at www.schneiderdowns.com/business-process-optimization or contact a member of our team today.     ### COVID-19 Scams Surge with New Variants While COVID-19 scams are nothing new, the recent surge of new cases presents a fresh coat of paint for threat actors to modify pandemic-related scams with new narratives focused on vaccine passports, vaccination mobile apps, travel policy changes, COVID-19 financial relief and returning to the office/school. With the recent surge on COVID-19 cases due to the Delta variant, there is a growing state of confusion on the changing recommendations and requirements from the federal government, public health officials and private business, which is opening the doors for scammers to continue to capitalize on the pandemic for financial gain. We know that software solutions and cybersecurity education are standard process now in most organizations, especially since the shift to remote work accommodations – but a friendly reminder never hurts, because as we have all seen, it only takes one email and click to have devastating effects. Some of the latest angles scammers are using include vaccine passports, malicious websites, new financial relief and returning to the office/school. COVID-19 Vaccine Passport Fraud Since the vaccine was introduced, there have been several reports of fraudulent vaccine cards being sold to non-vaccinated individuals who were concerned not having proof would prevent them from travel or activities. The search for fake vaccine cards is only heating up as multiple universities are requiring students to be vaccinated, as well as several countries requiring vaccinations for travel, including Canada, who recently fined a couple who used fake cards $16,000 each. Simple way to avoid this scam... avoid websites or individuals that sell vaccine cards. Not only is this illegal, but chances are the website is malicious and a channel for threat actors to attack. If you have questions about vaccine passport or proof requirements, your best bet is is to contact your state or local government through their official website or phone number. COVID-19 Vaccine Mobile Apps Perhaps the most aggressive vaccine passport initiative occurred last week when New York announcing proof of vaccination being required for daily activities including dining out and health clubs. Along with the announcement of the upcoming requirement, came the introduction of two mobile apps that individuals can use for a digital vaccine passport, Excelsior Pass and NYC Covid Safe. The introduction of vaccine apps will undoubtedly result in several malicious apps being introduced that can contribute to cyber incidents through mobile malware. As always when downloading a mobile app, use best practices to ensure you are downloading a verified and secure app, such as: Only downloading apps from verified stores such as Google Play and Apple’s app store. Although, remember many malicious apps appear on these even for just a short amount of time before being pulled. Review the content ratings and download volume, if you see an app with poor ratings or a new app with a handful of downloads, chances are you should avoid downloading. Be aware of what permissions you provide apps – many apps, even legitimate ones, default to nearly full control of your phone and data. You are able to modify these settings in most cases and if you think something is not right, follow your gut instinct. Check the vendor, is this a brand or company that you know, or is there background questionable or non-existent? If so, avoid. COVID-19 Malicious Websites With the country and international traveling reopening over the last few months, many people are understandably visiting travel sites including airlines, cruise lines and hotels/resorts for information on COVID-19 policies and requirements. As the second surge increases, chances are volume to these sites will only increase with people concerned about booked trips or looking to book at cheaper rates. No matter what camp you are in, you can keep your guard up and information secure by utilizing the same cybersecurity best practices you should be using online every day, including: Verify you are on the actual website of the company/business by using the full URL provided on their marketing materials. Many imposter websites are setup to mirror legitimate sites and exist to simply steal your personal and financial information. Avoid googling or clicking ads for websites if you can, if all else fails you can call the number on marketing materials to verify you are on the right site. If somebody randomly calls, emails or texts you with information on COVID-19 updates, hang up or delete without clicking – scammers know many people are planning travel and have modified their phishing/smishing/vishing campaigns to capitalize on the uncertainty. Remember the adage, if it’s too good to be true, it probably is. Keep this in mind when surfing for the best prices, chances are if you find an unbeatable deal you are being setup. COVID-19 Financial Relief Scams As the government introduced a number of COVID-19 stimulus packages, threat actors used the angst around these to target people through phishing, smishing and vishing campaigns. Fraudulent communications requesting personal information (social security numbers, credit card numbers, bank accounts, etc.) under the guise of COVID-19 themes have flooded our inboxes and phones since the pandemic began. While these contain all the red flags that we are trained to spot including requesting private information, pushing a sense of urgency, and typos that are easily spotted, the anxiety surrounding the financial aspects of the pandemic is surging with the start of Child Tax Update, the federal foreclosure moratorium and student loan deferral extensions and the endless articles speculating new stimulus payments for clickbait. Remember, always be suspicious of unsolicited communications in any form requesting personal information, no matter what the message is about. COVID 19 Return to the Office/School While organizations have hammered the importance of cybersecurity (at least we hope) to their remote team members through the pandemic, the impact the COVID-19 surge is having on return to office plans has opened up a new door for threat actors. Many of us are expecting communications from our leadership on updates to policies and returning to the office, as well as a large portion who are most likely job searching on their employer's devices with the economic upswing or in response to employers forcing a full-time return to the office. Regardless of your employees’ reasons, we encourage you to protect your organization by reminding your team of email cybersecurity best practices, including: Utilize security software solutions and multi-factor authentication, as well as forcing updates to computers and company-connect phone and tablet devices. These pre-emptive steps can prevent threats from even getting to your employees. Be wary of any communications asking for personal or sensitive information, while the request may even sound a bit normal, this could be part of large spear-phishing campaign where threat actors are gathering information to go after a high-profile target. Watch out for phishing emails that have an urgent call-to-action to click, this can also include urgent emails disguised from company leadership such as an email to “click here immediately for an update on our work from home policy”. Avoid downloading any attachments that seem unusual or you are not expecting, in the virtual environment this can also mean attachments sent via collaboration platforms including Teams and Slack. Remember if you get a suspicious email from somebody representing your employer or organizations, you can always call them to verify if it was real. These same attacks are also targeting parents and college students who are anxiously awaiting information for back-to-school policies, especially now with many college campuses announcing campus vaccination requirements. So to our parents and students out there, follow these same steps to help keep your personal information and network secure. With all the uncertainty we face as the different COVID-19 varients are seemingly placing the return to normal a few steps backwards, the one certainty is that threat actors will continue to exploit the COVID-19 pandemic for financial gain. Remember, while the themes and narratives may change, their strategies and warning signs are mostly the same – so stay diligent and safe out there! COVID-19 Federal Resources FBI COVID-19 Pandemic Resource Page www.fbi.gov/coronavirus FTC COVID-19 Pandemic Resource Page www.ftc.gov/coronavirus FTC Consumer Advice for Consumers www.ftc.gov/coronavirus/scams-consumer-advice FTC Poster – Avoid COVID-19 Scams www.ftc.gov/system/files/attachments/coronavirus-covid-19-pandemic-ftc-action/keep_calm_infographic_en_letter_508.pdf FTC Video - Avoid COVD-19 Stimulus Payment Scams www.consumer.ftc.gov/media/avoid-covid-19-stimulus-payment-scams Related Articles FTC Issues COVID-19 Vaccine Scam Alert Coronavirus Cyber Scams are on the Rise About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind ### More Potential Changes to the U.S. Retirement System Are on the Horizon. Here’s What’s in Store… It was only two years ago that the Setting Every Community Up for Retirement Enhancement (SECURE) Act was put in place; however some more modifications may be on the way. There are two similar, bipartisan bills in early stages that are aiming to build on the SECURE Act, and it looks as though action will be taken on them soon.The House bill, called the Securing a Strong Retirement Act, recently received unanimous approval, while the Senate bill, called the Retirement Security and Savings Act, is expected to receive committee’s attention in the next few months.  Some of the main provisions include student loan debt and retirement savings, catch-up contributions, required minimum distributions, annuity changes and auto-enrollment.As they relate to student loan debt and retirement savings, both bills would enable employers to make contributions on behalf of their employees who are making student loan payments instead of contributing to their 401(k) plan.The current legislation caps contributions at $19,500 for 401(k) plans and allows an additional $6,000 for catch-up contributions in 2021 for those who are age 50 or older.  The House bill would adjust the annual catch-up amounts based on inflation and expand the 401(k) catch-up to $10,000 for individuals who are ages 62-64.As it relates to required minimum distributions, the SECURE Act already changed these to begin at age 72, up from 70.5.  The new House bill wouldn’t mandate these to begin until age 73 in 2022, and then age 74 in 2029 and age 75 in 2032.  The Senate is on the same page, as its bill would raise the age to 75 by 2032 and also reduce the penalty for failing to take the required minimum distribution from 50% down to 25%.For auto-enrollment, the House bill would require employers to automatically enroll their employees in their 401(k) plan at a rate of at least 3% and then increase it each year until 10% is reached.  While the Senate bill does not require an auto-enrollment feature, it does include incentives to encourage companies to implement an auto-enrollment process.We are always here to help with your retirement planning needs.  For more information on this issue or our employee benefit-related services contact a member of the ERISA group at Schneider Downs. ### Potential Changes to Certain International Provisions of the Tax Code proposed by the Biden Administration In May, the U.S. Department of Treasury released General Explanations of the [Biden] Administration’s Fiscal Year 2022 Revenue Proposals, which specifies the many corporate tax changes proposed to take effect in 2022, including several modifications to the international provisions of the Internal Revenue Code.This article presents a brief overview of some of those changes, namely the rules regarding Foreign Derived Intangible Income (FDII), anti-inversion, and sourcing of income from the disposition of an interest in a hybrid entity, as well as the elimination of certain deductions related to foreign income items. FDII is defined as “the portion of a domestic corporation’s intangible income that is derived from export operations.” The FDII inclusion, codified in IRC § 250, is calculated based on gross sales derived from certain tangible depreciable property located abroad. In addition to the income inclusion, IRC § 250 also makes available a deduction of 50% (in most circumstances) of the FDII included in the taxpayer’s gross income. The permanent benefit of this 50% deduction is a lowered effective corporate tax rate for those taxpayers able to utilize it. If approved, the Biden proposal would repeal the 50% deduction enumerated in § 250, an elimination that will significantly decrease the incentive to have significant exports and tangible property abroad. In place of the § 250 deduction, Biden would create a new general business credit equal to 10% of the expenses associated with the creation of U.S. jobs through onshoring of foreign trade or business. There may be additional changes to the R&D sections of the Code to encourage investment within the U.S., but information detailing these changes has not yet been published. The Biden proposal would also disallow various deductions that would otherwise be allocable to tax-exempt foreign income, including foreign income that’s removed from a taxpayer’s income (e.g., a dividends received deduction). The disallowance of these deductions is meant to further the breadth of § 265, which disallows deductions that arise from income that is otherwise excluded from income. Effectively, this disallowance would lower the foreign tax credit limitation by excluding foreign income not actually included in a taxpayer’s gross income from the overall calculation of the limitation. Finally, Biden’s proposal would alter the anti-inversion rules, as well as the sourcing and characterization of gain/loss from the sale of hybrid entity interest. The anti-inversion rules were designed to prevent different methods of taxation on the income derived from the sale or conversion of a hybrid entity interest solely based on where the new parent company resides (e.g. in the U.S. versus abroad). The rules, as written currently, are not triggered unless the shareholders of a U.S. parent company receive 80% or more of a new foreign parent’s stock in an exchange or merger transaction. The Biden proposal would alter the anti-inversion rules by replacing the 80% shareholder continuity test with a much lower “greater than 50% continuity” test.  As for hybrid interests, the proposal would not change the overall realization or recognition of gain or loss on the sale of a hybrid entity interest but would change the sourcing and characterization of these gains, likely to source more gain/loss to the U.S. than in the past. While all these changes are just proposed at this time, taxpayers should prepare for the scenario where at least some, if not all, will be adopted into law for the tax year 2022 and beyond. Schneider Downs is continuously monitoring new proposals and guidance as they’re released. Our experienced tax professionals would be happy to discuss any concerns you may have, international or otherwise, in this ever-changing tax landscape. ### It's The Final Countdown: ASC-842 Join the Schneider Downs simpLEASE team for our "Lease Accounting: The Final Countdown to ASC 842" webinar on August 19th to learn best practices and critical steps organizations need to take to successfully meet the ASC 842 deadline.If you are a fan of 70s Rock and Roll you’ll know that time keeps on slippin’ (slippin’, slippin’) into the future.  If you have attended any accounting CPE in the last few years you’ll know that the future is now for lease accounting.  After a series of delays, the time has come to face the music and adopt ASC-842 lease accounting standard.Originally published in February of 2016, ASC-842 was developed to increase transparency in regard to off balance sheet leased assets.  The Financial Accounting Standards Board (FASB) issued an initial one year delay after realizing that the effort required to comply was greater than initially expected.  A second delay was issued during COVID-19 while the world figured out how to work from home.  Now that we have passed the half way point of 2021, ASC-842 is very much on the horizon and is something that should be addressed sooner rather than later.If you have been holding off in adopting ASC-842 you should keep that first delay in mind as you are preparing to incorporate the lease accounting changes into your accounting practices.  The initial delay was put in place because the effort in adopting ASC-842 was substantial.  While a few things changed with that delay (the removal of the prior two year restatement requirement as an example) the amount of overall effort required to adopt ASC-842 has not changed.   Register for our “Final Countdown to ASC 842” Webinar   If you have a lease portfolio of any size and have not yet adopted ASC-842, you have your work cut out for you.  You’ll have to organize all of your existing lease agreements and make the necessary determinations to classify them as either finance or operating under the new standard.  Once that work is done, you will need to calculate amortization schedules for the full life of each of the leases.  Once the schedules have been calculated you will need to start to make balance sheet entries for your leases.  While this may be straight forward initially, things start to get more complicated once you have to adjust a lease during the agreement term.  Adjustments to any lease agreement will often involve updating the discount rate and recalculating the remaining amortization schedule.  All of these things take time and patience and require a high level of accuracy.  ASC-842 also has the added requirement of a footnote disclosure that can be rather onerous depending on the size of your portfolio.None of this is to be taken lightly.  Your auditors will need to review your lease accounting policy and practice after you adopt ASC-842.  Additionally, since there is a change to the balance sheet any debt covenants may need to be reviewed so accuracy is all the more important.On Thursday, August 19th we will be hosting our "Lease Accounting: The Final Countdown to ASC 842" webinar,  explaining some of the complexities of adopting ASC-842 and how simpLEASE can help.  Not only is the webinar a great way to learn more about some best practices you can earn 1 hour of CPE credit and potentially find a solution to all your lease accounting needs. Hope to see you there.Adopting ASC-842 is not a one time event, lease accounting will now require more time and attention moving forward.  With all that in mind you may want to consider a software solution to help make lease accounting as simple as possible.  Schneider Downs has developed a tool, simpLEASE Accounting, that aims to minimize the time and effort spent on lease accounting.simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations. For more information on simpLEASE please contact Jason Reljac at jreljac@schneiderdowns.com or visit www.simpleaseaccounting.com. ### Advanced Child Tax Credit The American Rescue Plan (ARP), which was signed into law by President Joe Biden on March 11, 2021, included important changes to the Child Tax Credit. The ARP increased the 2021 Child Tax Credit from $2,000 per child to $3,000 per child ages 6-17, and to $3,600 for children under the age of 6. Taxpayers with adjusted gross income of less than $150,000 ($75,000 for individuals) are fully eligible for the credit, with credit phaseouts if income exceeds those thresholds.In addition, the ARP allowed the Internal Revenue Service to deliver half of the expected credit to eligible families beginning in July. The advanced payments will be up to $250 per month for each child between 6-17, and $300 per month for each child under 6. Advanced payments will be paid through December, with the remainder of the credit being claimed or refunded when 2021 tax returns are filed in 2022.While the increase of the Child Tax Credit is a major benefit, advancing the payments may be a concern for some families. For one, many Americans budget for one large tax refund rather than smaller amounts each month.  Another major concern that comes with advancing the payments is on the tax compliance side. People may not remember how much they received in advance and, therefore, may not factor in what was already received when filing their 2021 tax return or paying quarterly estimated tax payments.  This, in turn, could result in tax adjustment notices and even penalty assessments for errors on the taxpayers’ return.  Additionally, many taxpayers who will not be eligible to claim the Child Tax Credit on their 2021 income tax returns (due to income limitations) are receiving the advanced payments.Fortunately, the IRS has given taxpayers an option to opt out of receiving the advanced payments. This can be done at the following IRS website: https://www.irs.gov/credits-deductions/child-tax-credit-update-portalEven if the first advanced payment was received in July, taxpayers can opt out of receiving any remaining payments through the end of the year.As of now, there are no plans for the expanded credit or the advanced payments to continue after 2021. We will continue to provide more information on the advanced Child Tax Credit as it becomes available ### The Stock Pays a Good Dividend The investing axiom, “the stock pays a good dividend,” is about as old and seasoned as my grandfather’s La-Z-Boy recliner1. Whether you are a casual investor, or someone who is steeped in the mechanics and fundamentals of investment analysis, you have most likely heard (multiple times) that phrase used in conjunction with a reason to invest in a stock.Using the dividend amount (size) or the percentage yield as the sole justification for owning a stock, exchange-traded fund (ETF), mutual fund, or investment strategy is misguided at best, and at its worst, can cause significant opportunity cost to an investor. In this article, I am going to illustrate some of the misconceptions regarding pure dividend investing, and why using it as the sole underpinning of an investment thesis can lead to sub-optimal outcomes. I’ll also discuss how using dividends as a component of a broader investment strategy can be a tailwind for asset allocations and investors.A common refrain, especially among those who’s peak earning power came of age and/or largest influences were adjacent to the 40s, 50s, 60s, and 70s, is that a good dividend equates to a good company/stock. This makes sense, as a common way publicly-listed companies compensated their equity holders during the 1940-1979 time period was through consistent and steadily increasing dividends. Investors were conditioned to focus on dividends and not total return.2 The chart below3, generated by the folks over at Wellington Management and Hartford Funds earlier this year, details the percentage return contribution of dividends (blue bar) relative to the overall return of the S&P 500. With dividends contributing 67% and 73% of total performance in the S&P 500 in the 1940s and 1970s respectively (with 30% in the 1950s and 44% in the 1960s for good measure!), it is easy to see how investors can become “anchored” in the belief that dividends are an essential ingredient in making a stock “good.” Like most things in life, the markets and publicly-listed companies have evolved in how they compensate and create wealth for their stakeholders. As the chart above shows, a decline in the contribution in dividends as a percentage of the S&P 500 total return began in the 1980s, and has remained well below the levels seen in the 1940-1979 period.4  In particular, the concept of share buybacks and shareholder yield5 (% dividend yield + % change of net share buybacks) began to gain traction. For taxable investors, the concept of a company buying back stock in the open market (thereby increasing an investor’s share of earnings and ownership of the company) was a more palatable and capital-efficient compensation tool than receiving a dividend that would be taxed at the federal, state6,  and local levels.7  Whether share buybacks are a net positive for investors is a subject much too intense for this writing; for those interested, I recommend reading a white paper by AQR’s Cliff Asness, Scott Richardson, and Todd Hazelkorn that is linked in the footnotes below. 8In many cases, using a “dividend-only” filter omits several key components: 1) How is the company paying for its dividend, via free cash flow or through debt financing? 2) Would investors be better off in the long run if the company eschewed paying a dividend and/or growing its dividend in favor of reinvesting these funds in its business? 3) Should a company strategically and/or tactically reduce their share count, thereby increasing the ownership percentage of stakeholders in a more tax-efficient manner?  As companies began to focus on shareholder yield (or total return more broadly, e.g., reinvesting cash flows into research and development, acquisitions, paying down debt), investors who pursued an investment strategy solely focused on stocks that paid a “good” or “big” dividend did so at a significant opportunity cost to their portfolios and their overall wealth. Consider the last ten years, which have encapsulated one of the longest and largest bull markets in domestic equities ever (and the largest of the last 30+ years); the S&P 500 ETF (symbol: SPY) had an annualized return of +14.7% vs. +12.3% for the Vanguard High Dividend Yield ETF (symbol: VYM), an annualized outperformance of +2.4%.9  Whether you are a young investor with a long time horizon or an investor that is near retirement, missing out on 2.4% compounded annually over ten years represents a significant risk to the accumulation of wealth over time. While deploying a “dividend-only” investment filter can lead to significant opportunity cost and investment concentration (no exposure to low or no dividend payers like Amazon, Facebook, Microsoft, Apple), utilizing dividends as a component of an investment philosophy/strategy can be a tailwind for asset allocations and investors. The chart below shows the power of reinvesting dividends (and compounding capital) in the S&P 500 versus an investor just receiving the price return (appreciation). A $100,000 investment in the S&P 500 with dividends reinvested (green line) on January 1, 1970, turned into $2,268,947 as of June 30th of this year; the same $100,000 investment in the S&P 500 receiving just the price return (red line) turned into $505,469 as of June 30th, a difference of $1,763,478.10  The power of compounding, and the incremental additional yield generated by dividends that are reinvested, create a powerful flywheel effect on the initial capital. Diversification is the only free lunch in investing, and investors have been rewarded over time by deploying portfolios that were not concentrated in any one strategy. There was a time when dividends represented a significant source of investment return for investors. However, investment markets are never static, and as companies have changed the way they compensate stakeholders, prudent investors and investment advisors need to approach markets and stocks with flexibility that meets the current market paradigm. Dividends as a component to a broader investment strategy can be a powerful wealth accumulation tool (as evidenced in the chart above) but used as the sole investment filter/strategy, can lead to underperformance and significant opportunity cost for investors.  If you have questions or would like to discuss this topic further, please reach out to a Schneider Downs Wealth Management Advisor. We welcome a conversation with you.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.1 My grandfather, John Patric Lucrezi, was a proud 1st generation Italian American, who joined the Army at 17 and served during WW II, was a lead pipefitter at the Diamond Shamrock, and drove an 18-wheel truck after the Diamond Shamrock went bankrupt. He loved his family, an ice-cold Pabst Blue Ribbon beer, and his beloved La-Z-Boy recliner that NO ONE was allowed to sit in but him. EVER. Miss you Pops!  2 Total Return = Price Appreciation + Dividends  3 https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/WP106.pdf  4 Save for the 2000-2009 time period where the dividend made up all of the return as the Dot-Com bubble bursting combined with September 11th and the fallout from the Great Financial Crisis, led to a negative annualized price return in the S&P 500 point to point.  5 https://osam.com/Commentary/shareholder-yield-a-differentiated-approach-to-an-efficient-market  6 There are some states that do not have a state income tax, Florida, Texas, and Washington State most prominently. 7 Share buybacks are currently NOT TAXED, but there have been several proposals by Democratic lawmakers to create some mechanism to tax these transactions. None of the proposals appear to have traction as of this writing.  8 https://www.aqr.com/Insights/Research/Journal-Article/Buyback-Derangement-Syndrome  9 Calculations were done using Morningstar Direct. 10 Calculations done using Morningstar Direct from 1/1/1970 through 6/30/2021 using the S&P 500 total return in US Dollars and the S&P 500 price return in US Dollars.     ### TSA Issues Second Cybersecurity Directive for Pipeline Owners and Operators The Department of Homeland Security’s Transportation Security Administration (TSA) released a second security directive for additional enhancements to pipeline cybersecurity on July 20, 2021.According to the Department of Homeland Security’s press release, the July directive requires owners and operators of TSA-designated critical pipelines to (1) implement specific mitigation measures to protect against ransomware attacks and other known threats to information technology and operational technology systems, (2) develop and implement a cybersecurity contingency and recovery plan, and (3) conduct a cybersecurity architecture design review. Secretary of Homeland Security Alejandro N. Mayorkas commented on the directive: “Through this Security Directive, DHS can better ensure the pipeline sector takes the steps necessary to safeguard their operations from rising cyber threats, and better protect our national and economic security. Public-private partnerships are critical to the security of every community across our country and DHS will continue working closely with our private sector partners to support their operations and increase their cybersecurity resilience.”The first directive issued in May required critical pipeline owners and operators to (1) report confirmed and potential cybersecurity incidents to CISA, (2) designate a Cybersecurity Coordinator to be available 24 hours a day, seven days a week, (3) review current practices, and (4) identify any gaps and related remediation measures to address cyber-related risks and report the results to TSA and CISA within 30 days.Both of these directives are a result of the increased pressure on the federal government to strengthen cybersecurity defenses and regulations following the attack on Colonial Pipeline, who provides nearly 45% of the oil supply on the East Coast. The attack resulted in panic buying of gasoline, fuel supply shortages and is now the focus of developing class action lawsuits, citing inadequate cybersecurity as the basis to sue.  While there has been no indication of additional directives, it would not be surprising to see additional regulations and legislation proposed in the near future as the federal government continues to try and keep pace with the increasing cyber threats targeting critical infrastructure and supply chain providers.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind ### Benefits of a Purple Team Assessment Learn about the benefits of extending your routine cybersecurity testing with a purple team assessment to help improve your organization’s cybersecurity program and posture.Purple team assessments have become one of the more popular cybersecurity exercises organizations are adding to their cyber programs to help improve their alerting and detection posture, as well as extending visibility into potential malicious activities. With the increased focus on purple team assessments, the Schneider Downs cybersecurity team has introduced a new whitepaper, Benefits of a Purple Team Assessment, to help interested parties better understand Purple Team assessments.  Download the WhitepaperOur whitepaper provides a comprehensive overview of what purple teaming really means, how the process works and the top benefits for your organization, including:Validation of your Security Infrastructure InvestmentThe cyber budget is an incredibly important part of the operating budget, and it is rare that you would be able to discover opportunities to save money while increasing security. Since a purple team assessment allows you to test all layers of your security architecture, it also provides a chance to reevaluate and streamline processes. Purple team assessments include tests of architecture such as the Firewall, IDS/IPS, SIEM platforms, Anti-virus or Endpoint Detection and Response (EDR), in addition to numerous other areas of monitoring. By testing each platform through carefully crafted tests, you can identify these areas and “cut the fat.”Gain Knowledge and Know How to Respond During a traditional penetration test, you may be blind to activities until the tester lets you know that they are performing a certain part of the test or have accomplished some goal. During a purple team assessment, you are sitting side-by-side with your red team and blue team analysts. We can show you the attack technique, describe its significance and how it furthers the goals of the attackers, and what remediation or response would be suggested.Improve Active Directory, Group Policy and Systems Configurations Purple team assessments put your active directory configurations to the test and ensure that the policies that you have in place are in tip-top shape. If there is room for improvement, new group policy objects can be tested as part of the as part of the assessment and show results—which could block multiple attack techniques versus just alerting on the activity.To view the complete whitepaper and full list, download our Benefits of a Purple Team Assessment.About Schneider Downs Purple Team AssessmentsA Schneider Downs purple team exercise brings together our red teamers and blue teamers, onsite, to work alongside your team to learn how to prevent and detect specific offensive techniques from the MITRE ATTACK framework and other hacker tools, techniques and procedures. As part of a purple team exercise, our goal is to provide the hacker with the toolsets and mentality of our red team experts, along with the incident responder and defensive thinking of our blue team experts in a way that encourages, engages and sparks knowledge transfer.Learn more at www.schneiderdowns.com/cybersecurity/services/purple-team-assessment.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Pennsylvania Oil and Gas Industries Respond to State Joining RGGI On July 13, the Pennsylvania Environmental Quality Board voted 15-4 to adopt final rulemaking surrounding the state’s participation in the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program.The initiative establishes limits on CO2 emissions from fossil fuel-fired electric generating units (EGU) in Pennsylvania. Tuesday’s vote comes nearly two years after Governor Tom Wolf’s October 2019 executive order instructing the state to formally join the RGGI. In addition to placing the regulatory limits, RGGI permits the trading of CO2 allowances to help facilitate cost-efficient compliance with those limits in other participating states, each of which establishes its own annual CO2 emissions budget for fossil fuel EGUs. Final form rulemaking from the PA Environmental Quality Board includes a declining annual CO2 emissions budget of 78 million tons for 2022. The emissions limit would then decrease to 58 million tons by 2030, representing a 31% decrease from 2019 levels.Following the vote, Pennsylvania Independent Oil & Gas Association President and Executive Director Daniel J. Weaver issued a statement condemning the program and the governor’s executive order:“Gov. Tom Wolf continues his use of strongarm tactics to impose an expensive, unwise and job-killing policy on the Commonwealth by placing a tax on carbon production and joining the Regional Greenhouse Gas Initiative … multiple independent state advisory boards, legislative committees and regulatory commissions have expressed their opposition to this blatant example of executive overreach, which would make Pennsylvania the only state in the RGGI program that did not seek legislative approval to join the group … at its most basic level, this proposal ignores state laws that require legislative approval of any new tax and do not authorize, under the state's Air Pollution Control Act, the regulation of carbon dioxide.”Weaver continued to describe the shortcomings of the Wolf administration’s policy and its effects on the future of electricity generation for Pennsylvania moving forward:“Economically, RGGI will result in the loss of thousands of jobs at fossil fuel electric generating facilities around the state by taxing those facilities and favoring more-expensive renewable sources. Environmentally, RGGI will have little impact on our air quality, as the electricity Pennsylvania demands would be generated in states to the west that will never join RGGI and whose emissions will drift to the east into our state. Pragmatically, Pennsylvania has already reduced CO2 emissions from fossil fuel generation by almost 40 percent in the last dozen years without the economic burdens of RGGI.”For states that have joined the RGGI, the program has reportedly generated hundreds of millions of dollars a year in funds to allocate toward investment in clean energy and emission reduction technologies. The Pennsylvania Department of Environmental Protection estimates that RGGI would bring the Commonwealth nearly $2 billion in federal funding and net 30,000 jobs between 2022 and 2030. As of the time of Tuesday’s vote, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia have all formally joined the RGGI, with Pennsylvania neighbors Ohio and West Virginia unlikely to join in the near future.  ### Impact to Oil Prices following the OPEC Deal The Organization of Petroleum Exporting Countries (OPEC) reached a deal Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022 as prices of oil hit their highest levels in over two years. Crude oil futures fell sharply Monday to end below $70 a barrel with U.S. prices posting their biggest daily percentage loss since September 2020. The agreement followed a standoff that began in early July and a rejection to cut oil production by Saudi Arabia. Saudi Arabia demanded an increase in its own maximum volume recognized by OPEC; however, OPEC demanded that Saudi Arabia follow the group’s output agreements. Members cut the same percentage from their baseline; so having a higher baseline would allow Saudi Arabia a greater production quota.Concerns over the COVID-19 delta variant continue to muddy the waters of the demand outlook, hindering OPEC’s ability to increase production without pulling down prices further. The agreement and increase in production is expected to keep prices down at least through the second half of 2021.For questions, please contact us. ### Ohio's New Budget On July 1, Ohio Governor Mike DeWine signed Am. Sub. House Bill 110 (HB 110) into law. This covered general spending for the two-year period from July 1, 2021, through June 30, 2023, and containing several important provisions, including revisions to personal income tax, sales tax, municipal income tax withholding and deductions for qualifying capital gains.Personal Income Tax Rate Reduction and Bracket ChangesThe bill includes a reduction in the number of tax brackets, as well as lowering the rate within each. While most brackets will see a 3% reduction, HB 110 also applies a new top rate of 3.99% and eliminates income tax for those earning less than $25,000. A comparison of the new rates and brackets are as follows: Ohio’s New Tax Rates and Brackets Old Individual Income Brackets Old Rate New Individual Income Brackets $0 0% $0 >$22,151 2.850% >$25,000 >$44,251 3.326% >$44,251 >$88,451 3.802% >$88,451 >$110,651 4.413% >$110,651 >$221,301 4.797%   All rate cuts are retroactive to January 1, 2021.Repeal of Sales Tax on Employment Services and Employment Placement ServicesBeginning October 1, Ohio will no longer subject employment services and employment placement services to the state’s sales tax. The Ohio Revised Code had defined employment service as “providing or supplying personnel, on a temporary or long-term basis to perform work or labor under the supervision or control of another, when the personnel so supplied receive their wages, salary or other compensation from the provider of the service,” while employment placement service was defined as “locating or finding employment for a person or finding or locating an employee to fill an available position.”The change is welcome, as the tax had created a great deal of controversy and litigation in its three decades of existence. Industries impacted most include manufacturing, distribution and similar industries that commonly use the services of temporary employees and/or employment service agencies. Because the change is not effective until October 1, employers will need to continue to analyze and document the taxability of exemptions for periods prior to that date. They should also analyze the impact of the change on existing direct pay permits.Municipal Income Tax Withholding ProvisionsHB 110 also addresses municipal income tax withholding, important because Ohio’s emergency order ends on July 18, 2021, and many Ohioans continue to work remotely fulltime or under a hybrid work arrangement. HB 110 permits employers to extend HB 197’s withholding procedures through December 31, 2021, providing employers with additional time to evaluate and develop their post-COVID return-to-work plans.As you may recall, HB 197 was enacted in response to the COVID-19 pandemic and required employers to continue to withhold at the employee’s principal place of work prior to the pandemic as opposed to the municipality where the employee was temporarily working. Effective January 1, 2022, employers will once again be required to apply the pre-COVID 20-Day Occasional Entrant Rule with respect to employee withholding.Schneider Downs is well-positioned to assist employers in analyzing the impact and costs of these provisions and design remote workplans that are tailored to the provisions of HB 110.The bill also addresses the impact of COVID withholding provisions to the employee, allowing them to file refund claims with their principal place of work municipality for days they didn’t actually work within the taxing jurisdiction. This provision applies to 2021 only, leaving those employees looking for 2020 municipal withholding refunds to seek relief through the courts. While lawsuits challenging the ability to claim refunds for days worked away from the principal place of work have been filed, it’s expected that a final decision on the issue may take a while. As a result, employees should consider filing protective refund claims if they believe a refund is due. Both employers and employees should note: HB 110 clarifies that if an employee requests a tax refund pursuant to the temporary rule, the municipality may not require the employer to provide documentation of the employee’s work location other than a statement verifying that the employer has not already refunded any withholding tax and the number of days the employee worked at the principal place of work.Income Tax Deductions on Qualifying Capital GainsHB 110 also includes two capital gains carveouts for business owners. Unfortunately, these deductions are not effective until tax year 2026, meaning taxpayers currently selling their business will not benefit. The two new provisions include:1. Qualifying Capital Gains Deduction. Allows a deduction for taxpayers who derive capital gains from the sale of a business interest. The deduction equals the lower of the qualifying capital gain or deductible payroll, as defined by the Ohio Revised Code. By limiting the deduction to the lesser of the qualifying capital gain or deductible payroll, the provision aligns the tax benefit with the number of jobs created by the business.2. Venture Capital Gains Deduction. Provides a capital gain deduction for all or a portion of capital gains received by investors on the sale of their equity interests in certain Ohio-based venture capital operating companies (VCOCs), as defined by the Ohio Revised Code and certified by the director of development.It is important to note that these deductions apply only to the sale of a business interest and appear to not apply to transactions treated as asset sales. Further, since the benefits do not become effective until 2026, business owners seeking to sell a business interest should carefully consider the timing and form of the sale of the business.Schneider Downs State and Local Tax professionals will continue to monitor the impact of the tax provisions of HB 110 and provide timely updates as necessary. Should you have further questions about any of the provisions discussed above, please contact any of our tax advisors.  ### The Impact of Environmental, Social and Governance Factors on Business Valuation Environmental, social and governance (“ESG”) factors have become increasingly important to corporations and their investors.The International Valuation Standards Council (“IVSC”) released a report earlier this year on ESG factors and their impact on business valuation.1  Part of the report focuses on a study performed by Morningstar that indicated that open-end and exchange-traded funds investing in ESG-minded companies have often outperformed otherwise similar funds without an ESG focus. Specifically, 59% of sustainable funds that have survived over the last 10 years have outperformed the average surviving traditional fund with otherwise similar investment criteria. In addition, 72% of sustainable funds were still available to investors 10 years later, compared with only 46% of traditional funds. The report shows that sustainable funds often delivered higher returns during the economic downturn created by COVID-19 in the first quarter of 2020. The following factors were noted as likely causes for these higher returns exhibited by the sustainable funds:• ESG-focused companies tend to enjoy more conservative balance sheets and competitive advantages, which allow them to be more resilient during market downturns. • Companies that score high on ESG also tend to be well-run businesses that treat all their stakeholders fairly, address their environmental challenges, and have lower levels of controversies. COVID-19 has forced most management teams to evolve each day to improve their governance structures. COVID-19, coupled with increased environmental disasters and widespread social unrest, caused 2020 to be a natural time for many companies to adopt ESG frameworks. Even in 2019, 9 out of 10 companies on the S&P 500 produced sustainability reports. Although most organizations agree on the importance of ESG factors on value creation, succinct guidance, metrics and standards on the topic are lacking. To address this need, the IFRS Foundation has begun to seek input on the need for international ESG standards. Other organizations, including the CFA Institute and the European Financial Reporting Advisory Group (“EFRAG”), have also started to develop ESG standards.Some stakeholders argue that ESG disclosures are nonfinancial in nature and would not impact the financial statements. However, increasing numbers of investors are asking questions like the following to assess the long-term viability of a potential investment:• Would the business be impacted by climate change and regulation?• Are the business’s social practices and policies conducive to attracting and retaining quality customers and employees?• Is the business’s governance environment able to handle future challenges?The IVSC report shows that ESG factors impact all stakeholders of any business. Studies show that implementing an effective ESG framework may also result in increased business value because ESG considerations contribute to sustainable financial performance and the mitigation of future risks.   Schneider Downs has significant experience consulting with clients to increase the value of their business and preparing business valuations for a wide range of purposes.  For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com.1 https://www.morningstar.com/content/dam/marketing/emea/shared/guides/ESG_Fund_Performance_2020.pdf   ### My Virtual Internship I was skeptical about how effective a virtual internship could be when I began applying to internships last fall – I wondered just how possible it was to gain the exposure and knowledge I wanted to deem an internship as successful. To say the least, I was certainly wrong. During my first week at Schneider Downs, I was acclimating to getting the perfect workspace set up in my Pittsburgh home in hopes of being in-person, and I was excited to finally start my professional career; however, family matters from home arose and I moved my workspace to my home in Montgomery County, PA.  Without the virtual environment that allowed me to continue my internship seamlessly, I may have missed out on valuable and useful experiences. I believe Schneider Downs takes great care of their interns – for example, there are your “buddies,” or your staff counterparts, who are meant to assist you whenever possible.  Furthermore, the perks included with being an intern are especially warming and I believe all interns could attest to that. However, my favorite part about Schneider Downs are the trainings and continued professional education (CPE) opportunities.  As a professional services firm, you need to stay up to date on all things current, such as tax legislation and new cloud opportunities.  Schneider Downs’s system for trainings, called Cornerstone, is an immensely helpful resource and I am beyond glad that Schneider Downs’s educational opportunities are both bountiful and useful.  Additionally, my work on employee benefit plans has greatly enhanced my understanding of how pensions and retirement plans work, for both for-profit and non-profit organizations.  I find my engagements very rewarding, and I am excited to see topics from my classes in the real world. Overall, my internship experience has been much better than I initially predicted, and I take pride in knowing that I am gaining valuable experience from this great firm.  I enjoy the work I am doing, the people I am working with, the education opportunities, and everything else in between the lines.  I highly recommend students or early-career professionals seeking an audit internship to seriously consider Schneider Downs. ### Embracing the Unexpected My academic and professional career have turned out much better than I could have imagined (so far). In 2018, I was getting ready to graduate high school and looking at a wide variety of universities.  My top choice at the time, and the one of five schools I was not granted admission to, was the University of Pittsburgh.  I thought it was the end of the world, as everything is when you are 18.  It was shortly after this that I received a brochure in the mail from Point Park University.  Point Park stood out to me and after I toured campus, I could not picture myself anywhere else.  The biggest appeal to me was the small, community-like feel that Point Park provided while also offering valuable professional opportunities.  I never had a class larger than 15 students, and this allowed me to build important relationships with professors as well as my peers.  Fast forward to 2021- I have graduated with a B.S. in accounting in three years.  The full course loads, summer courses, and waiting tables part-time was well worth it. I completed one internship prior to starting at Schneider Downs, and it was an on-site tax internship.  While I did have remote classes since COVID-19 started, I have never worked full time from home.  I was extremely nervous in the beginning, sitting in front of a screen with all these people I have never met.  That feeling quickly faded as everyone I have met so far has been genuinely helpful and kind.  The onboarding process went so smoothly, and the buddy system that has been implemented is extremely useful.  It is very clear that Schneider Downs values community and inclusiveness between its employees.  The efforts the company has made to make the virtual environment feel like being at the office is something I have never experienced before.  All of this is one of the reasons Schneider Downs stood out to me.  The company gives off a tight-knit community feel that competing firms cannot match, while also providing extremely rewarding opportunities. The work that I have done up until this point has been so beneficial.  From performing assessments on my own to drafting formal reports and communicating with clients, this has been an opportunity I would not want to experience anywhere else.  ### Understanding Windows 11 TPM Support Requirements As of June 2021, Microsoft has confirmed TPM 2.0 support will be required to install Windows 11. So what does this mean for the enterprise users? What is a TPM? A TPM or “Trusted Platform Module” is a dedicated piece of hardware with the capability to generate and store encryption keys; as well as perform cryptographic functions in a tamper-resistant manner. TPM’s have been common on major mobile devices for the past few years. Apple’s Secure Enclave and Google’s Titan M chip are both proprietary variants of a TPM. How does a TPM work? A TPM generates and stores cryptographic keys as a separate hardware entity on a device outside of the main disk/storage. This prevents an attacker from gaining access to private keys and other sensitive data even if the device’s operating system is compromised. TPM’s also safeguard data if an attacker attempts to bypass encryption to access the disk contents even if they were to remove the TPM chip or try to access the disk on another device. The TPM is manufactured with a key pair (private/public) built into the hardware, called the endorsement key (EK). The EK is unique to a particular TPM and is signed by a trusted Certification Authority (CA). This manufacturing practice further prevents tampering and can also be used to establish trust as well as be used as a form of non-repudiation. Figure 1 Example of TPM architecture. Source: https://courses.cs.washington.edu/courses/csep590/06wi/finalprojects/bare.pdf  J. Christopher Bare While a TPM has been required for OEM’s to achieve Windows Certification, this is the first time a compatible TPM has been required for Windows to be installed. Microsoft claims that a combination of their latest security features: Windows Hello, Device Encryption, virtualization-based security, hypervisor-protected code integrity (HVCI) and Secure Boot “have been shown to reduce malware by 60 percent.” With the current rise of Ransomware and user credential abuse, Microsoft believes the utilization of a TPM will significantly damper this threat. How to Check a Device for Windows 11 Compatibility One method of checking the state of a Windows device TPM: Open a run prompt Type “tpm.msc” and click Ok You will then be presented with the TPM status of the device Microsoft plans to offer a PC Health Check Tool to check for Windows 11 compatibility and will be available at https://www.microsoft.com/en-us/windows/windows-11#pchealthcheck (coming soon at time of writing). Overview: The new security requirements for Microsoft’s newest operating system seems to be a big push to raise the security posture of the modern enterprise. Microsoft Windows is the de facto operating system for billions of corporate assets all over the world. Applying more stringent hardware-based security for Windows seems to be the method Microsoft has chosen to combat credential harvesting and ransomware attacks that have been on the rise. Additional requirements: A UEFI BIOS (firmware) will be required to utilize TPM 2.0 and all legacy options such as “CSM” must be disabled. Among the TPM 2.0 requirement of Windows 11 is also the validation of new hardware. Only Intel 8th-gen and newer, as well as Zen 2 AMD architecture are officially supported. Since support relies on in house validation done at Microsoft; it is possible older hardware will be added to the support list. TPM functionality has been baked into most major hardware vendors at the firmware level since 2015. Thus, it is unlikely a TPM will have to be added to most enterprise machines. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Supreme Court Ruled State Request for Donor Information Unconstitutional In a 6-3 vote on July 1, 2021, the U.S. Supreme Court ruled that it is unconstitutional for the State of California to require charities to provide their Form 990 series, Schedule B, Schedule of Contributors, when registering and providing annual reports with the state. Schedule B requires charities to report donor information, including the name, address and total amount of contributions, annually to the Internal Revenue Service (“IRS”). Unlike Form 990 and other required schedules, Schedule B is not open to the public disclosure requirements and is redacted from Form 990 prior to being released to the public.  The case was brought by the Americans for Prosperity Foundation, a tax-exempt organization. The State of California argued that the Attorney General needs donor information to help police misconduct by charities. Opposition to the California requirement argued that it would violate the First Amendment of the U.S. Constitution under the protections of free speech and free association. Chief Justice John Roberts in his opinion wrote, “This information includes donors’ names and the total contributions they have made to the charity, as well as their addresses. Given the amount and sensitivity harvested by the State, one would expect Schedule B collection to form an integral part of California’s fraud detection efforts. It does not.”  This ruling is very impactful to the exempt organization sector. Several other states such as New York and Florida followed California by requiring charities to submit Schedule B when registering with their state. These states will likely change their registration requirements after this ruling. For Pennsylvania, the Bureau of Corporations and Charitable Organizations has never required Schedule B to be attached to form BCO-10, Charitable Organization Registration Statement.The IRS has been very straightforward in stating that Schedule B of the Form 990 series is not required in order for the IRS to enforce the Internal Revenue Code (“IRC”). Revenue Procedure 2018-38 was the IRS’s first attempt on September 10, 2019 to require that only IRC Section 501(c)(3) public charities and private foundations and political organizations exempt under IRC Section 529 file Schedule B. The new rule changed donor reporting requirements for various tax-exempt organizations, including social welfare organizations described in Section 501(c)(4), labor organizations described in Section 501(c)(6), and trade associations described in Section 501(c)(6). This procedure was challenged by several states. Final Treasury Regulations were released on May 28, 2020. It will be very interesting to see if the IRS continues to require charities to provide this donor information on Schedule B now that it has been deemed unconstitutional for states to require this information. ### Projections: The Dirty Little Secret of Business Valuation Forecasting is not only a useful tool for business owners to develop business strategies and make operational decisions, but it is also a key component of the business valuation process.While all business owners wish that they had a crystal ball to reveal the future, historical data is what is available, and it may or may not be indicative of the future. According to Jim Hitchner, a well-known business valuation expert and managing director of Financial Valuation Advisors, “Projections are valuation’s dirty little secret.”  Even the smallest change to a key underlying assumption in a company’s forecast can have a significant impact on the resulting fair market value. Those preparing projected financial information should be mindful of the potential for bias when determining key assumptions and expectations. Important questions to consider when preparing forecasts include:  Do the key underlying assumptions used appear reasonable when compared to historical performance? Are the forecasts consistent with historical performance? If not, why? How do the forecasts compare to the economic and overall industry expectations? Do the forecasts correspond to internally prepared budgets? How do previously prepared forecasts compare against actual results? Both the qualitative and quantitative drivers of any significant changes expected in future performance should be thoroughly understood and documented. As business valuation experts, we apply an appropriate level of professional skepticism when working with business owners and management to assess and substantiate forecasts that are to be used in our valuation models. The more reliable the forecasts, the stronger and more supportable the valuation conclusion will be.Schneider Downs has extensive experience performing business valuations and analyzing sales, earnings and cash flow forecasts for its clients. Please contact Steve Thimons (412-697-5281) or Joel Rosenthal (412-697-5387) to ask a question or discuss Schneider Downs’ various business valuation services.  ### My Summer at Schneider Downs Entering Schneider Downs as an Internal Computer Support Intern, I was not sure what to expect.  COVID-19 put a pause on nearly everyone’s plans. In my case, it had delayed previous internships, making this my first.  From the beginning, I was greeted with open arms by my department.  I quickly realized that my internship at Schneider Downs was much different than other interns, the main difference being I knew nothing about Tax or really anything legal.  But I also realized that our department here is a vital one, especially in remote times.COVID-19 came with a lot of adjusting.  Schneider Downs has done a terrific job at accommodating the challenges that arose with the remote setting and the transition as we go back in the office.  Being in the ICS department, I also get to see and participate in these transitions and learn how to implement them seamlessly.  This is a skill that I did not expect to be so important in a working environment- adaptation.Although the portion of the internship that I have experienced has mostly been virtual, I still feel very well connected to the individuals I work with daily.  Schneider Downs has done a great job of implementing Office Products as their main form of communication, specifically Microsoft Teams, which has allowed me to still make personal connections from my Apartment in Cincinnati.  As we prepare for colleagues to return to the office, I was also able to experience in-office visits more than other current interns.My main daily responsibility is to assist with our IT Help Desk and am treated like a traditional help desk employee.  But I also appreciate the accommodations that my management has provided during my internship.  They truly look at my internship as a learning experience and continue to strive to keep me feel challenged and involved.  I was able to work with each role within the ICS department and experience what their day-to-day role looked like.  My experience has been a far cry from “coffee fetching” or “busy tasks” that one would traditionally associate with interns.  Schneider Downs is also a very family-oriented company, which is something that I had never experienced before. Everyone truly cares about their work and their colleagues, which is a great environment to work in and has provided me with the best internship experience I could ask for. ### Building on a Foundation Coming into college, I wanted to pursue a career in IT security.  I did not know exactly how it would all play out, but I knew I needed to build a foundation of experience and knowledge. With that in mind, I began my freshman year at Pitt looking to get involved in something IT-related and had a sense of what I needed to do to kickstart it. I was fortunate enough to discover a student-worker position on campus and decided to go for it.  The official title of the position was IT Associate for the Dietrich School of Arts & Sciences.  Essentially, I was what you would call the “break/fix” guy, meaning something would suddenly stop working or break, and I would fix it for that person.  I was fortunate because this was the perfect “foot in the door” into the IT industry.  In terms of career progression this was my starting point. In the industry, this is described as desktop support and is a place where many IT professionals begin their careers.  Being an 18-year-old and obtaining such an opportunity, I would say my career began on the right track.However, I felt this opportunity on its own would not be enough to advance my career to the next step.  I wanted to come up with a way to further solidify my resume, and so, I turned to industry certifications.  The summer after freshman year, I was able to pick up my first certification, the CompTIA A+.  Getting the first certification helped me in two ways.  First, it reassured me that getting certifications are worth the time and effort you put into them.  Second, it allowed me to make that next step in IT.Second semester of sophomore year, I interviewed with a company called Range Resources and was offered a position.  I accepted the offer and became an End User Support Associate.  This was a step up in my career, as this position encompassed everything I did at the university and also introduced vital IT fundamentals.  These fundamentals provided me enough of an edge for the next step in my career.The next step involved sending out numerous applications to companies seeking a cybersecurity internship.  Schneider Downs was one of the companies that responded to my application and scheduled an interview with me.  At the end of January 2021, I accepted an offer made by Schneider Downs and became a Cybersecurity Intern. Everything I have done since the time I came into college has been for the betterment of my career in IT.  I have always stressed to myself to keep progressing every year, gain knowledge and hands on experience, and stay on track with my progression.  This mindset is what drew me to Schneider Downs.  The ability to be at one of the region’s top accounting firms, further develop my IT knowledge and gain hands on experience daily, is another important step in my career progression.  This opportunity is one that I am extremely grateful for, as I continue to build on the foundation I began not too long ago. ### My Internship Experience with ADAPT Like many other college students, I was unsure of the path I wanted to take while starting my education. Halfway through my first year at Duquesne University I was introduced to Information Systems Management (ISM).  With a pairing of business management practices and systems development and integration, ISM provides innovation in the workforce today and is what I want in a future career. While searching for an internship, I looked for two main things; how it aligned with my major and career path and how the company lives up to its Mission Statement and Values.  When I came across the opening for a Technology Consulting Summer Intern at Schneider Downs, I was more than ecstatic.  Fast forward a couple months later and here I am, working on the Automation and Data Analytics Process Team (“ADAPT”), and working to make our firm, clients and communities better. After a year of online classes, I was not very worried about doing an internship online.  When the pandemic first started, I thought I would never get used to an online environment, but I feel very comfortable and have learned to adapt to the sudden changes.  Schneider Downs has made working online feel like I am in the office, even though I am in my bedroom and not in busy Downtown Pittsburgh.  My team meets a few times every week to catch up like we would in the office, and I am on face-to-face video calls every day to work on different projects.  Very early on in my internship I realized that Schneider Downs is not like many other firms, and I am extremely lucky to be a part of a community that really cares. So far, I have been provided many opportunities to apply the skills I have learned in my classes to many projects.  Not only that, but I have also learned a lot more and am continuing to develop in Power BI, Solver, Excel, Power Query, and Macros.  My team and mentors are always there to push me to succeed and are always willing to help me along the way.  They have instilled a trust in me that has helped me build a confidence within myself and in my work.  My favorite projects that I have worked on so far include Power Query and Power BI, where I manipulate data, build and create visualizations, and provide working dashboards for internal projects and clients.  I am excited for the rest of my time here at Schneider Downs and hope not only to develop my expertise, but also grow as a person, employee, and coworker! ### The Importance of an Internship and My Experience Thus Far Going through the internship searching process, I knew that I wanted to go into it with an open mind and leave my options open. I knew I wanted to complete an internship over the summer and maximize my experience in a firm.  When I first signed up for the internship fair at my school, I had great responses from firms that wanted an interview with me.  Completing those interviews taught me a lot about the different firms and allowed me to connect to people who were in the profession of accounting.  I was able to ask questions and get a feel of how my internship experience would be.  As time passed and I was offered an internship with Schneider Downs, I knew it was the one I wanted.  The people of the firm seemed so personable and willing to answer questions, address my concerns and were able to point me in a direction to jumpstart my career in accounting. Now that I am about halfway through my internship with Schneider Downs, I am very happy to say that I have learned so much these past couple of weeks.  Even though we are virtual, the firm has provided us with great technology and access to many people that have reached out as resources to us.  Anytime I have reached out, I get a response in a timely fashion and my seniors/staff are always willing to answer questions. I think completing an internship is very beneficial to young professionals like myself.  This is the first time for many of us to experience the field of accounting in the real world and allow us to get a good feel of how our futures may look.  I find it very beneficial to get experience before I graduate so I can find my career path and have some knowledge when accepting my first job.  I find sitting through audit rooms and meetings to be the most beneficial.  It is a good time to ask questions or just listen and take in everyone working.  One takeaway I have experienced is the willingness to help others at the firm.  As an intern completing tasks for the first time, I have asked a lot of questions to my seniors and staff, and they all are more than willing to help me out and explain the reasoning behind the tasks I complete.  I find this very helpful in my learning and have enjoyed my time working with my teams and for the firm! ### My Summer Experience with Schneider Downs Completing an internship is a crucial component to a student’s college experience.  Internships allow students to gain valuable knowledge in multiple facets. These facets include education, professional growth and personal growth.  My internship with Schneider Downs has proven to be beneficial in each of these aforementioned areas. This internship with Schneider Downs has been great for my education.  It has allowed me to apply the knowledge I have gained in the classroom to real-life work scenarios.  Through my internship with Schneider Downs, I have gained a more comprehensive understanding of the material I have learned in class and am excited to apply my work experience to the classroom in the fall. My internship with Schneider Downs granted me the ability to grow as a professional.  First and foremost, this internship taught me the ins-and-outs of the IT Audit industry while simultaneously exposing me to work life and culture.  This is my first full-time position and could not be happier with the workforce introduction Schneider Downs provided me with.  This internship is also an excellent resume builder, setting me up for future success down the road. Arguably the most beneficial aspect of my internship with Schneider Downs is the personal growth I have been able to gather throughout my experience.  I have developed a strong work ethic while taking on the responsibilities of an adult.  Working this summer opened my eyes to work life in a way that is unattainable without an internship.  Completing an internship should be a top priority for all college students and I could not recommend applying to Schneider Downs enough as my experience has been nothing but positive.   ### Jen Easterly Named Director of the Cybersecurity and Infrastructure Security Agency Former NSA Counterterrorism Deputy, Jen Easterly, was unanimously voted in as the Director of the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) on Monday July 12, 2021.Easterly becomes the second ever CISA director following the highly publicized firing of former Director Chris Krebs via Twitter during the 2020 election due to his rejection of voter fraud claims. Formed in 2018, CISA is responsible for protecting federal networks and offering security advice to critical infrastructure operators, small businesses and local governments.Easterly was nominated in June, but the final vote was delayed due to political issues between Senator Rick Scott (R-Fla) and the Biden administration over immigration issues. Aside from Scott, Easterly’s nomination and vote was non-partisan with no pushback from either side. Easterly takes over from interim director Brandon Wales, both of which Krebs tweet his support for.Easterly brings more than 20 years’ experience spanning the private and federal sectors, most recently leading Morgan Stanley’s Firm Resilience and the Fusion Resilience Center. Easterly spent three years as the special assistant to the president and senior director for counterterrorism where she helped develop and coordinate U.S. counterterrorism and hostage policy. Additionally, Easterly spent 7 years with the NSA, working as a cyber-advisor, battalion commander and deputy director for counterterrorism and helped to build the US Cyber Command.As cyber-attacks continue to increase in scale and complexity, As cyber-attacks continue to increase in scale and complexity, Easterly faces very difficult and complex challenges as she takes over CISA including – protecting the nation from cyber-threats and increasing the trust between the private sector and CISA.A few of the more notable and disruptive attacks include the Russian-based REvil, which recently became the largest ransomware attack on record, the Colonial Pipeline attack that led to gasoline panic buying and the increased targeting of supply chains, as well as the continued fallout from the SolarWinds attack.The progress of an Easterly led CISA will undoubtedly be a primary focus throughout the Biden administration, who has shown a preference for NSA experienced professionals when selecting cybersecurity leadership. While Easterly is just starting this week, having a formal director and clear leadership is an important step for helping CISA fulfill their mission of protecting the nation from the cybersecurity threats of today and tomorrow.Related Articles Largest Ransomware Attack on Record Hits During the U.S. Holiday Weekend White House Issues Executive Order on Cybersecurity About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind.   ### Impacts of Networking During my time at the Ohio University College of Business, I searched for ways to become more involved in school life and interviewed to join the Ohio Women in Business (OWIB). OWIB’s motto is “Attract. Develop. Launch” and held weekly meetings throughout the academic year to work on professional development, interviewing skills and networking.  In spring of 2020, there was a networking opportunity to visit Pittsburgh. There was one stop on my list that I was the most excited for.  Schneider Downs was the first company we would visit.  Once we arrived, everyone was in awe looking at PPG Place and the beautiful skyscrapers.  During the visit we were able to tour the many levels of the office as well as hear from a panel of shareholders.  It was refreshing to hear from so many different people, especially the strong women in the workplace.  Hearing their stories was inspiring and made me hopeful for my professional future.  New staff were also able to speak on their experiences and explain how they chose Schneider Downs.  The mobility throughout Schneider Downs was impressive and there is a major emphasis on bettering each individual staff member. Specialized training, certificates, and higher education is promoted and encouraged at Schneider Downs.  There was a discussion comparing Schneider Downs to the Big Four.  In Pittsburgh, Schneider Downs had beat out one of the Big Four in years past.  What separates Schneider Downs is their culture and how every employee is treated as a person, not a statistic.  The work-life balance of working at a major regional accounting firm appears nearly nonexistent at the Big Four, and Schneider Downs provides the balance that their employees deserve.After the networking trip, I became determined to apply for an internship role at Schneider Downs. During my interview process I was able to speak on my experience at the Pittsburgh office and give real reason as to why I was so interested in working for the firm. Thanks to my coursework, professional development through OWIB, and my passion for Schneider Downs, I was able to receive an offer for the Summer 2021 RAS Ops internship.  ### Finding My Way in a Global Pandemic If I had been asked three years ago to describe my desired career path, I would have been answerless. I spent most of my high school years and even my freshman year of college clueless and frustrated with not knowing what I wanted to do with the rest of my life.  Anybody who reads my transcript could see the confusion I had during my early college years due to the wide array of classes that I took.  Introductory to Childhood Education, Psychology, Sociology, Environmental Science, Sport Coaching, Survey of Economics, and the list could go on and on.  My sophomore year of college I made the switch from being an undecided major to an accounting major.  While I had some feeling of getting my life on track, I still was not 100% certain with my career path.Bounce forward 2 years and I am now entering my senior year of college.  I had interned at an oil and gas company as an accounting intern.  I left the company still in daze and unsure if that was the way I wanted to spend the rest of my life.  At this point, I am a senior and far too late to switch career paths without drowning in student loan debt.  This past year, I applied to Schneider Downs as an Audit Intern, the interview process went well, and here I am.  Throughout my time with Schneider Downs so far, I have come to enjoy the work I am doing and to better understand the profession. It is extremely difficult being an intern during a global pandemic.  I wish I were getting to experience a normal day at the office and building relationships with my fellow interns.  But, with every hardship there are victories.  There was one time when I finished the workday with the biggest smile on my face.  I was given the opportunity to travel to a client and have the in-person experience.  I hopped all over the offer.  My day flew by, I never once got distracted, I built a relationship with the client, and I received the experience that I have been craving.  On that day, I felt like I belonged in the accounting profession and Schneider Downs. I am continuing to perform my best work with Schneider Downs given the circumstances.  I have so much thanks to give to Schneider Downs for the one-day experience of being on-site.  I can see the hard work that people are putting in to get us back into the office.  I am forever grateful for this internship with Schneider Downs and the positive impact it has had on my career path.  ### A Remote Audit Experience During my time at college, I always asked myself, “When am I actually going to be able to apply what I am learning to real life scenarios?” After taking my first auditing class, I knew it was time to apply what I was learning to the real world.  Schneider Downs has done exactly that throughout my intern experience so far. I began my interview process with Schneider Downs right before the start of my junior year, and ever since I have enjoyed every interaction with the firm.  After receiving my internship offer, we had monthly check-ins to talk about certain accounting topics and to see how the future interns were doing.  Throughout the process of joining the firm, everyone was extremely welcoming and kind. When I found out that my internship was going to be remote, I had mixed emotions on what to expect during my time with the firm as I had never experienced a fully remote work environment.  Schneider Downs made sure we were well prepared by providing certain pieces of technology equipment like computers and laptops to make sure our experience went smoothly.  So far, the remote experience has exceeded my expectations and everyone in the firm has made working remotely incredibly enjoyable.  People are always available to help and answer any questions I may have. The best part of my internship experience has been the work I am doing and the people I am working with.  Schneider Downs does not expect its interns to perform administrative work, but rather the same work staff and seniors are doing.  No matter what, every engagement I have been on has had a helpful team that was always available.  From daily meetings to quick Microsoft Teams calls, there was always someone there to answer questions. Schneider Downs has done an amazing job at exposing me to real work experience in a public accounting firm.  The internship has been amazing from the actual work I am doing to being on client calls and interacting with the client.  The most impressive element of this experience is that Schneider Downs was able to give me the best work experience ever while being remote. ### Summertime, Learning Strides, and Cybersecurity Childhood summers are often full of simple days spent soaking up the sunshine and getting your feet wet in the swimming pool.For a college student, summers are a great time to prepare for your future. This year, while I still fit in some time in the sun, my days were also full of soaking up knowledge and getting my feet wet, so to speak, with consulting experience as a cybersecurity intern. Because of the Schneider Downs Cybersecurity Team, this internship was both a valuable and enjoyable way to spend my summer.The beginning of my internship was filled with attending orientation, setting up accounts and virtual machines, learning about the company, and getting to know my team members. Soon, many of my days were spent shadowing team members as they conducted pen tests and blue team engagements. Between shadowing opportunities, I read through procedures and utilized resources to expand my technical knowledge. I also got to conduct a practice pen test and write a report on my findings. Each of these preparations eased me into the world of cyber consulting so that I was more confident and ready when I got to help with the early stages of some real pen tests. The team’s willingness to share knowledge, answer questions, and provide great learning opportunities added so much value to this experience.As this is my last internship before graduation, I knew entering the position that I wanted it to be not only a chance to strengthen my cyber skills but also a way to help me decide what I want to do after graduation. Every semester, professors and guest speakers would share different career paths to take with a cybersecurity degree, and I would ponder which path would best fit with my personal goals and strengths. Before I fully understood penetration testing and consulting, I crossed them off the list of possibilities. However, when I happened upon the Schneider Downs cybersecurity intern posting last fall, I felt it was what I was meant to do this summer. Through this opportunity, I better understand the world of consulting and can more clearly consider cybersecurity consulting as an option for my career.My experiences over the past several weeks serve as a reminder not to be intimidated by what I do not know and to be open-minded about possibilities for the future. I could not have predicted all the ways I would grow and benefit from this internship, and I am so glad that I spent this summer as an intern on Schneider Downs’ Cybersecurity Team. ### My Virtual Internship COVID-19 has had a drastic effect on the entire world and has essentially revolutionized the internship experience. When the pandemic first began, I had just started an internship at Robert Morris University, and unfortunately, when the university closed my internship ended abruptly.  At the time, I was currently interviewing for future internships and had no idea what these internships may look like in a post-pandemic world. After the interviewing process, I was extended an offer to intern with Schneider Downs but with all the uncertainty surrounding the pandemic I had no idea what my internship was going to look like.  As my internship grew closer it became clear that I was going to have to complete my internship virtually.  Although I did my best to prepare myself, the thought of completing an internship remotely was both scary and exciting.  While I was excited to not have to make the long commute into Pittsburgh every morning, I was concerned about whether I could have an effective experience in a virtual world. Before starting at Schneider Downs, my expectations for a virtual internship were extremely low.  I did not think it would be possible to effectively learn how to become an auditor without being in person with experienced colleagues there to help me.  Even though I went into my internship extremely concerned, I soon realized that there was nothing to worry about. My virtual internship with Schneider Downs has been anything but a disappointment, in fact, it has been amazing.  I was concerned with how I could be an effective employee in a remote environment, but I have been able to excel in a virtual world.  I not only have my engagement team as a resource, but I also have countless other coworkers that I have met throughout my experience that I can contact at any time for assistance. The fact that I am always connected to everyone else in the firm through Microsoft Teams has truly been an invaluable resource.  This has not only allowed me to effectively work on my current clients, but it also keeps me connected with my engagement team long after I have moved on to the next client, so as things come up I can effectively and efficiently respond to the needs of my previous client. While I cannot wait to be in person and see what it is like being an auditor in the real world, I have been pleasantly surprised by my experience working remotely.  I enjoy my work every day so much that before I know it the day is over, and the best part is I do not have to spend my evenings making the long commute home with the rest of the Pittsburgh traffic.  With this internship Schneider Downs has provided me both an amazing opportunity and experience and it is something that I would not hesitate to do again. ### Given the Proposed Changes in President Joe Biden’s Tax Plan, Could A Non-Qualified Annuity Make Sense? What is an annuity and what are the associated costs? What are the pros and cons of annuities? How do the proposed tax law changes affect annuities?I almost always tell family, friends, clients, and prospective clients to run the other way if they are speaking to a Financial Advisor, and they mention the word ‘Annuity’. Typically, when the word ‘annuity’ comes up during a sales pitch, it often ends with a signed contract, a very happy financial advisor, potentially 8 years of high fees for the client, and little to no understanding of the benefits received. Generally, my opinion on annuities has not changed much, but in President Biden’s current tax proposal plan, there is a potential tax law change that might make non-qualified annuities worth further analysis. This tax plan proposes the elimination of favorable long-term capital gains tax treatment for wealthy Americans in favor of ordinary income tax treatment (i.e. higher tax rates). Before diving deep into the proposal, let’s review the key features of an annuity. An annuity is a contract between you and an insurance company in which you make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning immediately or at some point in the future1. You can purchase an annuity two different ways: within an IRA, referred to as a qualified annuity, or with after-tax money, known as a non-qualified annuity. Some annuities have guaranteed payout rates, and some have other unique features. Annuities in general, and each additional annuity add-on, can come at a hefty price. Listed below are typical fees that annuities charge: Mortality Expenses (M&E): Provides death benefits to your heirs. Investment fees can cost up to 1.5% of the account value annually2. Administrative Fees: A service fee for your retirement account. You can expect to pay up to .30% of the account value annually2. Investment Expense Ratio: An investment advisory fee for choosing various investment choices (equity and fixed income) called sub-accounts. Annuity owners can expect to pay up to 2% of the total value annually2. Guaranteed Lifetime Withdrawal Benefit: An income rider (Guaranteed Lifetime Withdrawal Benefit) fee similar to an index annuity’s income rider. Annuity owners can expect to pay up to 1% of the account value annually2. Enhanced Death Benefit Riders: An optional estate planning rider to protect the annuity owner’s beneficiaries’ investment. The cost can be up to .50% of the account value annually2. After learning of all the fees associated with annuities above, you are probably asking yourself why would a Financial Advisor suggest an annuity in the first place? Annuities often come with high commissions, ranging from 1% - 8% of the contribution depending on the type of annuity3. You can see why some advisors would want to sell annuities; it can be a very lucrative business. To this point, I have painted the picture of why annuities can be expensive investments, but they can have some benefits. Non-qualified annuities work very similarly to an IRA from a tax perspective, meaning that once you make a contribution to the annuity, the earnings grow tax-deferred; however, you do not receive a tax deduction for the contribution like you would for an IRA (if you meet the income tests).While the tax deferral inside a non-qualified annuity is a nice benefit, when you withdraw funds from the non-qualified annuity in the future, a portion of that money will be subject to ordinary income tax (versus capital gain tax treatment inside a brokerage investment account). For individuals at the highest tax brackets, long-term capital gains tax is much lower than ordinary income tax. In addition, under the current law, you would also be giving up a step-up in basis upon your death for your beneficiaries. Let’s review the pros and cons of annuities. Pros of annuities: guaranteed rates of return for risk-averse investors; tax-deferred growth for non-qualified annuities; and no required minimum distribution for non-qualified annuities. Cons of annuities: many of them have high fees; limited investment options; investment gains are taxed at ordinary income tax rates; do not receive step-up in basis upon death; and qualified annuities do not give you additional tax-deferral benefits. Now that you understand the basics of annuities, we will discuss why non-qualified annuities might be a good fit in your financial plan, if President Biden’s tax proposal is passed.Under his current tax proposal, President Biden would increase the long-term and short-term capital gains tax rate to 43.4% (39.6% long-term capital gain plus 3.8% Obamacare tax) for anyone with over $1 million of income per year. In addition, he is proposing the elimination of the step-up in basis tax treatment upon death for beneficiaries. For those with income over $1 million, this would eliminate the long-term capital gains tax benefits of holding assets in a brokerage account for over a year by almost doubling the tax rate. If this plan comes to fruition, a more compelling argument for holding assets in a non-qualified annuity may be made. As I mentioned earlier, assets held inside a non-qualified annuity grow tax-deferred. If you are going to pay close to the same tax rate on distributions from the annuity (ordinary income rates) and gains from a brokerage account (43.4%), the tax-deferred growth in a non-qualified annuity may be a good option.There are still plenty of uncertainties in President Biden’s tax proposal and what Congress might actually pass into law. However, the potential change in long-term capital gains rates for those making over $1M a year could make non-qualified annuities worth additional consideration. Interested in learning more? We would be happy to discuss financial planning in more detail with you. Please contact Schneider Downs Wealth Management to set up a conversation.1https://www.investopedia.com/ask/answers/12/what-is-an-annuity.asp 2https://www.annuityexpertadvice.com/annuity-101/annuity-fees/ 3https://www.annuity.org/annuities/fees-and-commissions/#:~:text=Typical%20Commissions%20on%20Varying%20Annuity%20Types%3A&text=The%20commission%20on%20a%2010,of%202%20to%204%20percent. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.    ### Largest Ransomware Attack on Record Hits During the U.S. Holiday Weekend The REvil hacker group is suspected to have carried out the largest ransomware attack on record over the Fourth of July weekend. The attack targeted organizations across 17 countries and the group is demanding $70 million for a universal decryptor key.The ransomware attack is suspected to have started on Friday, July 2nd with the knowledge that many domestic organizations would be closed or light staffed with the holiday weekend. A post on  the dark web site Happy Blog, a forum REvil traditionally uses to communicate their actions and demands, stated that the initial attack impacted more than 200 U.S. managed service providers, infecting more than one million systems.The primary target of the attack were managed service providers which once breached causes a domino effect through their client base. Florida-based IT service provider, Kaseya, was one of the first targets due the large percentage of managed service providers in their VSA server database. The attackers knew once they breached Kaseya they would have access to all of their clients.  Gartner Analyst Katelle Thielemann gave Kaseya credit for reacting swiftly, but stated that "the reality of this event is it was architected for maximum impact, combining a supply chain attack with a ransomware attack". The attack impacted organizations of all sizes and industries across the globe according to a report from Sophos. Coop, the popular Swedish grocery store was forced to close more than 800 stores Sunday due to the attack shutting down their cash register software supplier. Several Swedish gas stations and pharmacy chains, as well as state railways and select television stations were also impacted by the attack. The attack also impacted a large German IT services company, as well as two of the largest Dutch IT service companies, Hoppenbrouwer Techniek and VelzArt.The first reports of the attack stated that individual ransom demands per company ranged from $45,000 to $5 million, but the narrative changed when the ransomware gang offered a pooled ransom request of $70 million for a universal decryptor that would unlock everything. Some industry professionals believe this may be an attempt to play the numbers game where organizations and insurers would prefer to pay a lump sum instead of the complexity of individual payments. There has been no confirmation of payment, but many experts believe the $70 million tag is more of a starting point for a lump sum payout rather than a set in stone amount.So how did this ransomware attack happen? Right now details are light as usual, but initial reports suggest the attack was a result of a zero day attack that exploited third-party software. The strategy behind this attack is nothing new and the act of targeted managed service providers to gain quick access to their client base will only continue to grow in popularity. This type of supply-chain attack typically targets widely used software providers which helps spread the malware automatically.The thought process is simple and other criminals think the same way – why would a car jacker take the time to break into several cars in a parking lot when he could just break into a valet station and grab them all at once?  This strategy was used in the August 2019 ransomware attacks on more than 20 Texas municipalities and the large scale U.S. dental practice attack the same year.The White House stated that they had reached out to victims of this attack and the FBI is involved, but there has been no confirmation if Russia was directly involved. In an updated report, a cybersecurity firm claims that the computer code was written to avoid systems that primarily used Russian or related languages.Cybersecurity incidents, specifically ransomware attacks, continue to dominate the headlines and have become a larger political issue following the Colonial Pipeline and JBS Foods attack. The federal government is becoming increasingly involved as cybers-attacks have become a growing national security concern. Recent government actions include an Executive Order targeting cybersecurity and pending legislation establishing federal cyber breach disclosure standards.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Microsoft Officially Introduces Windows 11 After months of speculation, Microsoft officially introduced Windows 11 on June 24th, the first update to Microsoft’s operating system since the arrival of Windows 10 in July 2015. The Windows 11 redesign’s theme focuses on bringing you closer to what you love professionally and personally, since many users’ lives were so heavily impacted by the pandemic and the virtual get-togethers and remote working that followed. Some of the newest features touted in their blog include: Simplified Design and User Experience – Windows 11 will introduce a new layout that aims to simplify the user experience with customizable apps, quick access to Microsoft 365 and a new centered task bar. Faster Way to Connect to People – With the increased reliance on Teams throughout the pandemic, Windows 11 will introduce an integrated chat from Teams option in the taskbar that allows instant access to contact people across compatible Windows, Android and iOS platforms. Improved PC Gaming Experience – Windows 11 will have technology options available to PC gamers including DirectX 12 Ultimate, DirectSTorage and Auto HDR. Microsoft Widgets – Windows 11 will introduce a personalized feed powered by AI and Edge that allows users to get direct access to relevant information and news direct from your desktop view. New Microsoft Store – The introduction of a new Microsoft Store was one of the rumored Windows 11 updates from day one. The new store provides a single location for users to access Microsoft apps, content and will support third-party apps such as Disney+, Visual Studio, Zoom and the Adobe Creative Cloud. Additionally, Android apps will be available through the Microsoft store for the first time ever. The blog also discusses key security updates for Windows 11 and states that Windows 11 will be available through a free upgrade for eligible Windows 10 PCs and on new PCs beginning this October and continue into 2022. To check if your current Windows 10 PC is eligible for the free upgrade to Windows 11, visit www.microsoft.com/en-us/windows/windows-11 to download the PC Health Check app. Initial Reaction to Microsoft 11 While the Microsoft Blog focused on the improvements in a positive light as expected, industry and press reaction to the announcements have ranged from positive to cautiously optimistic. CNBC – Windows 11 Will Look Different From What You’re Used To In regards to Microsoft’s focus on simplifying the user experience, CNBC shares how these changes may be received from users – and best practices to help adjusting to the updates. The Verge – Windows 11 is a New and Refreshing Approach to an Old and Familiar Home  The Verge reacted favorably to the Windows 11 preview, specifically complimenting Microsoft for making calculated improvements to the operating system instead of forcing users to learn a whole new system. The Verge – Windows 11 Will Leave Millions of PCs Behind. And Microsoft is Struggling to Explain Why Another article from The Verge focuses on concerns over how many users will actually be eligible for the free update based on the listed requirements. ZD Net – What Windows 11 Means: We’ll Be Stuck with Millions of Windows 10 Zombies ZD Net also focuses on the true percentage of Windows 10 users eligible for the Windows 11 upgrade and reviews some of the security concerns associated with running outdated versions of Windows. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### What Evidence Is Requested During SOC 2 Audits? One of the most common questions our team fields is what kind of evidence is requested for SOC 2 audits? The type of evidence requested for SOC 2 audits can be grouped into eight main groups based on our experience: New Hires, Terminated Employees, Risk Management, Logical Security, Incident Response, Change Management, Governance and Vendor Management. While the requested evidence changes based on the engagement, common examples for each category are listed below. New Hires Background checks Employee handbook acknowledgement System access requests/approvals Terminated Employees Access removal requests User lists showing account removed/disabled Risk Management Completed risk assessment Vulnerability scans and third party penetration testing reports Remediation plans for identified risks Disaster Recovery testing Logical Security Role-based access Super-user/Administrator access restricted appropriately Data at rest encryption Minimum password requirements Anti-virus/patching Incident Response Incident response plan/procedures How anomalous activity indicative of security incidents is detected and addressed Incident response plan tabletop exercise Change Management Code reviews and testing documentation How segregation of duties is maintained Emergency change process Governance Information security governance structure Annual policy review Confirm those charged with infosec governance are formally communicated Information about infosec Annual security awareness training Vendor Management Vendor inventory Vendor risk classification Confirm key vendors are monitored at least annually (i.e. formal review of vendors' SOC 2 reports). Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 Reports With SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes. Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### IRS Experiencing Delays: Exempt Organizations are Encouraged to e-file Forms 8868 and 990-ez The Internal Revenue Service (IRS) recently announced that it is experiencing delays in processing paper-filed returns.The IRS emphasized that organizations that filed and continue to paper file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, and Form 8868, Application for Extension of Time to File an Exempt Organization Return, may potentially be at risk of receiving premature notices for failing to file the required returns.  Paper filing may also cause a delay in receiving the IRS extension approval confirmation letter. Therefore, organizations are strongly advised to file these forms electronically.However, it should be noted if such forms had already been paper filed, no further actions should be taken.  The IRS has indicated that organizations should not submit a copy of the originally filed return.  The IRS is also requesting that organizations not contact its offices to question the status.The Taxpayer’s First Act, enacted in July of 2019, requires tax-exempt organizations to electronically file information returns.  The new law affects tax-exempt organizations in tax years beginning after July 1, 2019.   For small tax-exempt organizations, the legislation specifically allowed for a transitional period. For tax years ending before July 31, 2021, the IRS will accept either paper or electronic filing of Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. For tax years ending July 31, 2021, and later, Forms 990-EZ must be filed electronically. ### ASC 842, Leases – Proposed Discount Rate Updates for Non-Public Entities The advent of ASC 842 on leases brought with it considerable changes to the way companies accounted for leases. On June 16, 2021, the FASB released a proposed ASU for comment that seeks to simplify the standard for non-public entities, as well as produce some cost savings. The proposed ASU currently under review focuses on enhancing the uses of the risk-free rate practical expedient. In order to form a proper understanding and appreciation for the proposed ASU, you should understand the three main rates prevalent throughout the ASC 842 codification. These rates are significant as they dictate which rate companies should use in their adoption and implementation work of ASC 842. Those rates are listed and further explained below. • Discount rate for the lease o For a lessee, the discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the lessee is required to use its incremental borrowing rate. o For a lessor, the discount rate for the lease is the rate implicit in the lease. • Rate implicit in the lease o The rate of interest that, at a given date, causes the aggregate present value of (a) the lease payments and (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease term to equal the sum of (1) the fair value of the underlying asset, minus any related investment tax credit retained and expected to be realized by the lessor, and (2) any deferred initial direct costs of the lessor. However, if the rate determined in accordance with the preceding sentence is less than zero, a rate implicit in the lease of zero shall be used. • Incremental borrowing rate o The rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. ASC 842-20-30-3 permits a lessee (that is a non-public business) to use a risk-free discount rate for the lease, determined using a period comparable with that of the lease term. Should a non-public business wish to use the risk-free discount rate, an accounting policy election must be made. Use of the risk-free discount rate is reserved for instances in which the rate implicit in the lease is not readily determinable and it would be cost-prohibitive to determine the incremental borrowing rate. Electing to use the risk-free discount rate is currently on an entity-wide basis, meaning that once this policy is elected, all leases—regardless if there is a readily determinable rate implicit in the lease—were required to use the risk-free rate. As you might imagine, use of the risk-free rate on the surface seems to be the easier approach for non-public business entities. While it is indeed an alluring option for non-public business entities, to rationalize the position you will take, it is important to understand two key potential challenges associated with use of the risk-free rate. First, using the risk-free rate election raises the likelihood that the present value of the lease payments and any residual value guaranteed by the lease would equal or exceed the fair value of the leased asset, potentially resulting in classification of the lease as a finance lease and potentially leading to a day-one impairment charge. Second, use of a lower rate would increase the initial measurement of a lessee’s lease liability and right-of use asset. The FASB recently promulgated a proposed ASU (PASU) that would update and improve discount rate guidance for lessees that are not public business entities—including private companies, all not-for-profit organizations (whether or not they are conduit bond obligors) and employee benefit plans. It is intended to reduce the expected cost of implementing the lease standard (Topic 842) for those entities, while retaining the expected benefits for users of financial statements. The biggest change under the PASU would allow non-public businesses to use the risk-free rate election by class of underlying asset rather than at the entity-wide level, as required under the existing ASU 2016-02. An entity that makes the election to apply a risk-free rate would be required to disclose that asset classes to which it has elected to apply a risk-free rate. The amendment also requires the use of the rate implicit in the lease if it can be readily determined, regardless of whether an entity has made the risk-free rate election. If accepted in its current form, the PASU would mitigate the potential drawbacks of electing the risk-free rate option for non-public businesses. Application of the risk-free rate on an asset class level, as opposed to a business-wide level, can help businesses avoid a day-one impairment while preserving reduced cost and effort of adoption and implementation associated with determining the incremental borrowing rate. Currently, the PASU is undergoing comment until July 16, 2021, and has yet to receive final approval and admission into the codification. ### Applying for Federal Income Tax Exemption? Most organizations seeking exemption from federal income tax under Section 501(c)(3) are required to complete and submit Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, which is filed with the Internal Revenue Service (IRS). Form 1023 is very lengthy and requires information such as the purpose, information on the board/officers, compensation practices, etc.  The processing of Form 1023 by the IRS can take up to 180 days.  Certain organizations, however, are eligible to file a much less cumbersome version—Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.  The instructions to Form 1023-EZ include an eligibility worksheet that organizations can use to determine if they can use this streamlined form.  A few requirements within the eligibility worksheet are: Projected annual gross receipts must not exceed $50,000 in any of the next three years. Actual annual gross receipts must not have exceeded $50,000 in any of the past three years. Total assets must not exceed $250,000. The organization must not be a foreign organization, LLC, successor to a for-profit entity, church, school or hospital. The organization must not request classification as a supporting organization or a private operating foundation. The organization must not maintain or plan to maintain one or more donor-advised funds. Form 1023-EZ can only be electronically filed, and a user fee is required to process the application.  Previously, you could expect to be contacted within 90 days from the date you submit the application.  Recently, the IRS Tax-Exempt and Government Entities Division issued a memorandum (IRM 7.20.9) updating its procedures for processing applications, including the following modifications to the time frame for which it assigns cases to review Form 1023-EZ: Cases are assigned to a tax examiner within 11 workdays from the submission date. A specialist will respond to a request for involvement within two workdays. Pre-determination review and tax examiner referral cases are assigned to a specialist within 15 workdays from the submission date. For further information or with any questions, please contact a member of our Schneider Downs team.   ### Ohio Update on the Unemployment Benefits Exclusion for Taxpayers Who Filed Prior to the Enactment of the American Rescue Plan Act The American Rescue Plan Act (ARP), enacted on March 11, 2021, allowed a federal unemployment compensation exclusion of $10,200 from 2020 taxable income for taxpayers with an Adjusted Gross Income (AGI) of less than $150,000. On March 31, 2021, Governor DeWine signed Sub. S.B. 18 into law which allowed individuals filing Ohio income tax returns for the tax year 2020 to claim the same unemployment compensation exclusion allowed on their federal income tax return. The problem with these tax law changes occurring in March of 2021 is that many individuals had already filed their federal and/or Ohio income tax returns prior to the passage of the ARP and OH S.B. 18. The IRS subsequently issued guidance stating that taxpayers who filed their 2020 federal income tax returns prior to the ARP enactment would not need to file an amended tax return to claim the benefit of the allowable unemployment compensation exclusion. The IRS has begun automatically calculating the benefit and issuing refunds to eligible taxpayers. The Ohio Department of Taxation has made the process a bit more difficult for taxpayers who filed Ohio tax returns prior to the passage of the ARP. The Ohio Department of Taxation recently issued guidance stating that Ohio will require impacted taxpayers to amend their originally filed 2020 tax returns to claim this Ohio benefit. After the IRS makes the automatic adjustment referenced above, taxpayers impacted must do all of the following to obtain the exclusion on their Ohio income tax return: File an amended Ohio IT 1040 (and an amended SD 100 for those who reside in a traditional tax base school district) to report your new federal adjusted gross income (AGI); Include a copy of your IRS Tax Account Transcript showing your new federal AGI, which are available at irs.gov/individuals/get-transcript or by calling 800-908-9946; and Complete the Ohio Reasons and Explanation of Corrections (Ohio form IT RE or SD RE). When completing the “Reasons and Explanation of Corrections” form, check the “Federal adjusted gross income decreased” box and list “Federal unemployment deduction refund” in the “Detailed explanation” section. Please note, if you are required to file an amended return with the IRS related to your unemployment benefits (for example, to claim a credit you are now entitled to based on a reduced federal adjusted gross income), you must wait to file your amended Ohio IT 1040 (and amended SD 100, if applicable) until after your federal amended return has been accepted by the IRS. Please contact your Schneider Downs tax advisor if you need assistance with this matter and/or for any other tax issues you may be facing.   ### LIFO Liquidation Relief for Automotive Dealers The COVID-19 pandemic has completely disrupted supply chains around the world for nearly every business, including automotive dealers, which are experiencing a huge inventory crunch that has impacted their ability to acquire inventory, while customer demand remains high.The American Institute of CPAs (AICPA) is asking the Internal Revenue Service to help automotive dealers who have been unable to maintain inventory due to the pandemic.The AICPA requested relief under Section 473 for qualified taxpayers that (1) use the last-in, first-out (LIFO) method of accounting for inventory and (2) that have experienced a decrease in their ending inventory because of the ongoing pandemic. For taxpayers that account for their inventory under LIFO valuation methodology, when inventory levels significantly decrease, the previous years’ layers are liquidated, and the taxpayer must then recognize income. Section 473 relief would allow a qualified taxpayer to replace the inventory over a three-year “replacement period,” thus decreasing the significant tax liabilities that most automotive dealers are experiencing relative to the inventory shortage.Under Section 473 relief, taxpayers would make an election on their timely filed federal income tax return for the first tax year following the LIFO layer liquidation year. For most dealers, this election statement would be made on their 2021 income tax returns, unless they elect a new safe harbor method. The AICPA recommended a new safe harbor method, which would allow a qualified taxpayer to disregard the LIFO layer liquidation year and retain the LIFO layers relative to the beginning inventory balances of the liquidation year. If the taxpayer increases its inventory balances to pre-COVID levels by the end of the replacement period, no income will need to be recognized on the liquidated layers.In instances where a dealer’s income tax return has already been filed for the liquidation year, the AICPA letter requests that the taxpayer be able to make a late election by filing an amended return within 90 days of IRS guidance being published, or by filing a Form 3115 Application for Change in Accounting Method with its 2021 income tax return.Schneider Downs Automotive Services Group will continue to monitor guidance relative to potential inventory tax relief. If your dealership has experienced an inventory disruption and you would like to discuss this issue further, please contact any of our tax advisors. ### Will We See Charitable Gift Breaks Post 2021? As a result of the coronavirus pandemic, we saw an expansion of tax incentives for donors with the goal of assisting nonprofits and their communities. The Coronavirus Aid, Relief and Economic Security Act passed in March 2020 provided an above-the-line deduction for both single and married taxpayers of $300. This was extended and increased with the passing of the Consolidated Appropriations Act in December of 2020, which provided a more generous $600 above-the-line charitable deduction for gifts made in 2021.As we near the halfway mark of the 2021 tax year, there have been bipartisan discussions on whether to extend these benefits to taxpayers who do not itemize.  Proposals for expanding the tax breaks continue to focus on addressing the economic fallout from the pandemic while also allowing a deduction for working families that claim the standard deduction and would typically not benefit from a tax perspective.One of the proposed bills titled the Universal Giving Pandemic Response and Recovery Act (S. 618), which was presented by Sen. Chris Coons, D-Del. and Sen. James Lankford, R-Okla., proposes to raise the above-the-line charitable deduction to one-third of the standard deduction for 2021 and 2022. This would increase the cap to approximately $4,183 for single taxpayers and $8,367 for married taxpayers in 2021.Lawmakers are also reviewing other ways to expand charitable giving incentives such as the cap of 60% of adjusted gross income for taxpayers who itemize that is set to expire and revert back to 50% after 2025.  The tax professionals at Schneider Downs continue to monitor these discussions, but if you have any questions on the current law, please contact Schneider Downs. ### What is a SOC 3 Report? One of the most common questions we hear field is, what is a SOC 3 report and do we need one?What is a SOC 3 report?SOC for Service Organizations: Trust Services Criteria for General Use Report - Trust Services Report for Service Organizations (SOC 3) are general use reports that can be posted on a company's website, they provide assurance to user entities about controls relevant to security, availability, processing integrity, confidentiality, or privacy and are intended for users that don't have the need for information included in a SOC 2 report.What is not included in a SOC 3 Report?SOC 3 reports do not include management's descriptions of the system or descriptions of the service auditor's tests of controls and test results.When are SOC 3 reports appropriate?SOC 3 reports are appropriate when you determine prospective customers don't require a SOC2 Type 2 report in order to make an informed decision about using your services. However, since SOC3 reports omit key information, your prospective customers will eventually want the assurance of a SOC2 Type 2 report. Therefore, always engage your auditor to perform a SOC2 Type 2 first, prior to determining if a SOC3 is appropriate.How are SOC 3 reports performed?SOC 3 reports include management's assertion stating controls were effective over a period of time, the system boundaries, and the service commitments and system requirements, and auditor's opinion about whether the assertion is fairly stated. SOC 3 reports are performed with the same procedures as a SOC 2 Type 2 audit.SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles About SOC 3 ExaminationsSOC 3 examinations are designed to meet the needs of users that desire assurance about the controls at a service organization that cover the same five categories as the SOC 2, but do not have the need for or the knowledge necessary to make effective use of the details contained in a SOC 2 report. Because they are general use reports, SOC 3 reports can be freely distributed or posted on a website.How Can Schneider Downs Help?Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc.  ### US Lawmakers Look to Set Federal Cyber Breach Alert Standard Following the string of recent high-profile cybersecurity attacks, a group of senators are leading a bipartisan effort to introduce legislation that will require select organizations to alert the government within 24 hours of a cybersecurity breach.The effort is being led by Senator Mark Warner (D-Virginia), Senator Marco Rubio (R-Florida) and Senator Susan Collins (R-Maine) in response to the wave of recent high-profile cyber incidents, namely the Colonial Pipeline and JBS USA ransomware attacks, and the realization that critical infrastructure controls and supply chains are growing targets for cyber criminals.The proposed bill would be the very first federal standard for cybersecurity breach notifications and would apply to US government agencies, federal contractors, critical infrastructure owners and digital security firms under the projected legislation. Impacted organizations would be required to report breach notification reports to the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) within 24 hours of a breach. Those who violate the 24-hour deadline would face loss of contracts and financial penalties, although no specifics are in the draft. The legislation also provides liability defenses for participating organizations that would protect them from lawsuits associated with the submitted reports – a step that many cite as critical in driving compliance in the program.The ability for organizations to have a safety note in exchange for disclosure is an important factor in the proposed legislation. Our Digital Forensics and Incident Response team knows first hand how common it is for incident reports to never make it public due to the lack of requirements. The more regulations around incident disclosures will likely result in raused awareness and shared use case data for all industries to learn from. If the bill passes, CISA will then have 180 days to develop a secure channel and process and define the rules for when agencies and companies are to report breaches, what information will be required and how to archive the breach data. For transparency, the bill requires CISA to release summary reports to the public at least once a month to help communicate cybersecurity threat trends and statistics. In addition, CISA would be required to provide annual reports to Congress tracking the program’s progress, industry trends, participation statistics and threat mitigation strategies.While this would be the first federal standard, it is important to note there are industries that have established reporting guidelines. The Transportation Security Administration recently enforced a 12-hour breach reporting requirement on U.S pipeline companies following the Colonial Pipeline incident – the proposed legislation states existing requirements such as these would take precedent over the federal 24-hour standard.The bill is currently being shared for feedback and is planned to be formally introduced to the Senate this week. This follows the White House’s recent Executive Order introduced earlier in May focused on strengthening cybersecurity.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### How to Incorporate Cybersecurity in a SOX Framework In today’s technology-driven financial world, the increasing number of cybersecurity attacks has heightened the risk of material misstatement in reporting from breached (or previously breached) financial applications.With this increase, cybersecurity has become a deeper focus within the Sarbanes-Oxley security framework of many organizations. Companies need to remember that the scope of SOX only includes financial controls and, therefore, testing is limited to production in-scope financial applications, servers, operating systems, and databases. There are many other servers and devices not reviewed for SOX compliance that may be compromised and, in turn, impact financial reporting. Thus, it is critical to take a holistic security and internal audit approach that includes prevention, detection, and corrective controls to address cybersecurity risks.For starters, internal auditors should be incorporating cyber risks within their annual audit risk assessments and should be interviewing key cybersecurity personnel during the process. Now that boards are asking more questions about cyber risks and mitigation efforts, there’s value in scheduling these meetings even more frequently. It is critical, then, that Internal Audit has IT audit resources that are familiar with current cybersecurity risks and that these resources are budgeted on non-SOX cyber audit work throughout the year. After cyber risks are identified and controls are designed, it is important to baseline your company’s SOX and cyber controls with a cybersecurity framework like NIST to test/monitor the effectiveness of mitigation efforts.IT controls that companies review in SOX can be used in other applications and IT environments to strengthen cybersecurity posture, including: Using least privilege for access control  Changing network, application, firewall, database, and operating system admin passwords regularly Password controls Restricting service accounts to only those with necessary privileges Segregation of duties in change management and access modification  Access review and certification of applications  Change management procedures Backup procedures For direct SOX evidence, companies should complete a SOX cybersecurity memo annually and consider additional SOX controls. A SOX cybersecurity memo should be completed by the internal and external IT auditors to assess how prepared the company is for a cyberattack. These discussions often lead to how the IT security and internal audit groups in a company can benefit from each other. Based on the cyber discussions, obvious design gaps should be addressed, including issues like limited cyber resources, no cyber risk assessment, no cyber maturity framework, poor cyber policies and procedures, inadequate cyber training, etc. These discussions give auditors a high-level understanding of the current state of the cyber program. Disaster recovery is also starting to appear as a SOX key control, despite being historically viewed as a corrective control and, subsequently, out of the scope of SOX. Adding this control includes additional focus if companies can recover their in-scope financial applications in the case of a cyberattack. Not all necessary cyber controls will ever be within your SOX framework; therefore, security departments should require additional cyber controls and frameworks and Internal Audit departments need to schedule high-risk cyber/IT audits to validate the cyber department’s procedures, especially for controls out of scope of SOX compliance. Source:https://www.auditboard.com/blog/sox-cybersecurity-compliance/?utm_campaign=sox-cybersecurity-compliance-03312021&utm_medium=email&utm_source=marketo&utm_content=content?&mkt_tok=OTYxLVpRVi0xODQAAAF8dXu_AtFOXk4tru4R3lnPY1jaETAqaodKQNTQR5BxhgoyQzvSFk5ZhLDWCMZpikGuIeOccydRRZbi1-8Ktk3FsBSMNVonUx6xNKr6q5Fa  ### How To Scope a SOC 2 Audit One of the most common questions we hear from clients and colleagues is how do you scope a SOC 2 audit? Based on our experience, here are some best practices for determining the scope of your audit.First, choose the services that will be in scope. For small organizations and startups, there is usually one umbrella service for the audit and the entire company will be in scope. For large organizations with multiple service lines, there may only be a few service lines that need to be included. Only include the services that will be relevant to the needs of the users of the report. The audit can also be limited to specific business units or subsidiaries if service lines are clearly defined. Office locations may need to be considered if service lines are location-dependent. Next, for each included service, determine the following components that make up the boundaries of the system: Infrastructure Software People Data Procedures Third, determine which SOC 2 Categories (Availability, Confidentiality, Processing Integrity, Privacy) should be included in addition to the Security Category. For most organizations, Security, Availability, and Confidentiality will be the most appropriate ones to include. Finally, determine the as of date for a Type 1 or the audit period for a Type 2 that will be covered. Typically, your customers will expect a Type 2 period to cover six to 12 months in order to rely on it. Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### Do I Need a SOC 2 Type 1 Before a SOC 2 Type 2? Should I engage a CPA firm to perform a SOC 2 Type 1 audit before jumping straight into a SOC 2 Type 2 audit? When asking this question, consider the following: A CPA firm can start a Type 1 audit soon after all your policies, procedures and controls are implemented. Type 2 audits require controls to be audited over a period of time (typically a minimum of six months) and the audit period cannot start until all policies, procedures and controls are implemented. Your audit will not be completed until a few months after your audit period end date. Customers may specify in contracts that a Type 2 audit is required. Type 1 audits will provide your customers with less assurance over your controls, and customers may require you to undergo a Type 2 audit shortly after completing your Type 1, resulting in audit fatigue. Type 1 audits typically cost less since auditors perform less audit procedures during the audit. Type 1 audits serve as a barometer to help you gauge if you are truly ready for a Type 2 audit. There is a lesser chance of an auditor identifying exceptions during a Type 1 audit since the auditor only has to obtain comfort over the design of controls as of a specified date.So what happens when an auditor identifies control exceptions during a SOC 2 audit? Hopefully, the first thing they do is communicate them to the client to confirm their understanding. They should ask clarifying questions and inquire to see if there are alternative means by which operating effectiveness can be demonstrated. They should do this well before the final report is issued (good auditors don't like surprising their clients).Once exceptions are confirmed, the auditor will determine the impact of the exceptions and whether the exceptions cause one or more criteria to not be met. If they determine criteria are not met, then the auditor will be issuing a qualified opinion (again, the auditor should communicate this early). The auditor then has to document the exceptions in the SOC 2 report as follows.Regardless of the opinion rendered:- Section 4 will be updated to call out the said controls as exceptions.- Section 5 may be added to the report to document the client's responses to exceptions to communicate how exceptions were/will be remediated.If an unqualified opinion is rendered:- No additional reporting requirements other than Section 4 updates.If a qualified opinion is rendered:- Section 1 will be modified to explain which criteria were qualified and why.Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### Why Do CPA Firms Perform SOC 2 Audits? One question our team hears from non-industry contacts and friends is why do CPA firms perform SOC 2 audits?The technical reasons why CPA firms perform SOC 2 audits are pretty simple: SOC audits are attestation engagements governed by the Association of International Certified Professional Accountants (AICPA). Attestation standards, such as SSAE18, and the #SOC2 Trust Services Criteria, were codified by the AICPA. CPA firms must perform SOC 2 audits according to the AICPA's attestation standards. From a non-technical perspective, there are several reasons CPA firms perform SOC 2 audits: CPAs are subject matter experts in risk management. It was a natural progression to go from auditing against financial risk to auditing against cybersecurity risk. CPAs understand internal control concepts and the appropriate evidence required to support the operating effectiveness of controls. Depending on an organization's software, infrastructure, people and data, CPAs can determine the high-risk components that should be the focus of the SOC 2 audit. CPAs understand that SOC 2 audits are not compliance and certifications. CPAs understand how to use their professional judgment to determine if security risks are mitigated. In our case here at Schneider Downs, we specialize in understanding cybersecurity risk, which some CPA firms do not have. The next question we usually hear is how do CPA firms actually perform SOC 2 audits? Typically, they divide SOC 2 audits into the following phases (length and timing may vary):1. Planning One to two months prior to Fieldwork phase. Confirm examination period for a Type 2 or "as of date" for a Type 1. Confirm in scope #SOC2 categories. Confirm audit timeline, including key milestones and expected report issue date. Review client's controls and system description. Schedule audit fieldwork, including interviews and walkthroughs with control owners. Provide document request list to the client. 2. Fieldwork Two to three weeks to complete. Inspect evidence to support the design (Type 1) and operating effectiveness (if Type 2) of controls. Interview control owners and perform walkthroughs as necessary. Document tests performed and results based on audit standards. Communicate audit results with the client. 3. Reporting Four to six weeks to complete after the Fieldwork phase completed. Perform required quality control procedures to ensure audit standards were followed correctly. Develop the SOC 2 draft report. Provide draft report to the client for review. Issue final SOC 2 report. There will be more involved with each phase, but hopefully, this provides some insight when starting down your SOC 2 journey.Another important note is that finding the right CPA for your SOC 2 audit is not an easy or pleasant experience. Take the time to find the right one and you will be satisfied. Here are some factors to consider when searching for a CPA firm:Clear and Concise Responses - Do they answer your questions in CPA lingo or do they communicate requirements in terms you understand?Educator Mindset - Will they educate you on the process and guide you throughout the audit?Audit Process - Does their audit process make sense at a high level?Competency - Do they understand your tech stack? If you are cloud native, ask them how they would audit cloud services, such as S3; if you get a poor answer or blank stares, it’s time to move on.Audit Tools - Will they use software that makes the audit easier? Ask for a demo.Audit Approach - Will they take a "by the book" approach or will they be fair and reasonable and willing to collaborate.Management Involvement - Talk with a manager in the firm's SOC 2 practice as part of the evaluation process. These are the people that will be driving the audit, not the salesperson.Leadership - Do managers exhibit qualities that show they care about their employees?Price - Is the price fair and reasonable?Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### What Financial Institutions Need to Know About R-SAT The Ransomware Self-Assessment Tool (R-SAT) was developed by the Bankers’ Electronic Crimes Task Force, state bank regulators and the United States Secret Service in October 2020.The R-SAT helps financial institutions (no matter the size) assess their level of information security, recognize gaps in that security and, most notably, measure their ability to mitigate the possibility of a ransomware attack. As defined by the Cybersecurity and Infrastructure Security Agency, ransomware is “an ever-evolving form of malware designed to encrypt files on a device, rendering any files and the systems that rely on them unusable.” When a hacker maliciously encrypts confidential files within a financial institution’s system, what usually occurs is a subsequent monetary demand, and payment must ensue before the perpetrator will release the information back to the institution.If your organization is victimized by ransomware, you have a number of questions to ask yourself to help determine your response strategy. If you provide the money, for instance, are you certain the information will be released? Will the payment create a bigger target for hackers? If you refuse to pay, will the information be released to the public? For any financial institution, an attack could be decidedly detrimental because of the nature of the information it holds – account numbers, addresses, Social Security numbers, etc. – not to mention the hit on its reputation.Whether your data is held on-premises or at a third party, recognizing the vulnerabilities in your security practices is crucial in protecting yourself from ransomware. R-SAT can assist and better prepare you to respond. The tool is sectioned into four categories (with 16 questions in total): Identify and Protect, Detect, Respond and Recover. The first section, Identify and Protect, includes a wide range of topics that are crucial to understanding what data a financial institution currently holds, access to the data, and preventive security currently in place. At a high level, subjects include current security controls in place, risk assessments, cyber insurance, location of critical data, vendor access, employee training programs, backup procedures, preventive controls and incident response processes.The Detection section focuses on determining what monitoring is in place for servers, workstations, networks, endpoints and backup systems, while the Response section follows with the incident response plan. The last section, Recover, focuses on “return to normal” operations procedures, including test plans after the restore, lessons learned processes, and notification procedures to all affected parties. Understanding the vulnerabilities in your financial institution’s security processes and procedures is imperative to aid in your protection from ransomware. R-SAT is a strong place to start to help identify gaps in your protection strategy, as well as validate effective security practices. The tool can be found at https://www.csbs.org/ransomware-self-assessment-tool. Additional resources can be found at https://www.cisa.gov/publication/ransomware-guide.  ### Valuing a Business: Why Your Deli (Likely) Isn’t Worth $100 Million In one of the stranger financial stories in a year of many, it was reported widely that a New Jersey deli, with one location and less than $100,000 in annual sales, was valued at over $100 million.Right away, this story doesn’t pass the sniff test, but you have to dig a little deeper to figure out why this value could be justified to investors.A common element of any business valuation is the amount of money that can be expected to be received in the sale of the business. For operating companies, this is most often determined using the income approach, by discounting the future cash flows of the business to their present-day value. In the case of the deli, it’s very unlikely that any buyer would value the future cash flows of a business with less than $100,000 in sales in the range of $100 million.So what gives? Turns out the stock of the company is owned by a close-knit group of 60 investors, many of which appear to be based in foreign countries. It’s speculated that as the company is traded on the U.S. stock market, it would provide opportunity for a foreign company to enter the market through a merger and avoid the scrutiny and red tape involved with a normal offering.Although this is a fringe case and the company has subsequently come under scrutiny for its business practices, it does show the potential for the type of nuance involved when determining the value of a company. As was the case with the deli, there are factors beyond the operating cash flows, such as entity structure or restrictions on the sale of the company’s stock, that determine the value to a potential buyer. ### Education About Student Loans Overview Student debt is an expanding liability. Understanding your loan options, interest rates, and terms are key. Is college worth it? What are important planning considerations? Current Finances Facing College FreshmenLooking at the college graduating class of 2019, 69% of graduates had student debt with an average balance of roughly $30K. In addition, according to a study by New America (a nonprofit, nonpartisan think tank), the average interest rate on this outstanding student debt is roughly 5.8%, implying an average annual interest on student debt of roughly $1,700 per year before graduates even begin to pay down principal. With current outstanding student debt of roughly $1.7 trillion, up from $480 billion in 2006 with a nearly 9.5% annual increase, it is clear that student debt planning is a key financial planning topic.How Does the Process Work? Student Loan TypesMany students rely on the Federal Government for school loans, for which they may be eligible for any of the following: subsidized, unsubsidized, and PLUS loans. If a student is not eligible for Federal Government school loans, or those loans do not cover their full tuition balance, students may apply for private loans. The main differences between subsidized and unsubsidized loans are that students must demonstrate a financial need to qualify for a subsidized loan. Direct Plus loans are only available to graduate/professional students and parents of dependent undergraduate students.    Federal Direct Subsidized Loans allow students that qualify for financial aid to borrow money for school payments with the Department of Education covering one’s interest while enrolled at least half-time in school. Direct subsidized loans have a relatively low-interest rate of around 2.75%. The downside to subsidized loans is their relatively low cap, which was $3,500 for 2020-2021.   Federal Direct Unsubsidized Loans are offered to undergraduate and graduate students without a demonstrated financial need. Consistent with subsidized loans, unsubsidized loans offer an attractive interest rate of 2.75%. However, unsubsidized loans also have a low cap relative to the aggregate cost of a college education. In addition, the interest on an unsubsidized loan begins accruing as soon as the loan is made.   Federal Direct PLUS Loans are for graduate/professional students or the parents of undergraduate students. The benefit of PLUS loans includes no specific caps on loan amounts. However, the typical maximum for PLUS loans is the school’s cost of attendance (i.e. tuition and fees, room and board, books and other supplies) less other financial aid received. Students will want to max out subsidized and unsubsidized loans prior to a PLUS loan given their higher interest rate of 5.3% and higher origination fees.  Private Loans are loans that students should only consider after exhausting all of the above federal loan options. When applying for a private loan, financial institutions will evaluate the student’s credit quality (i.e. credit score and history) and offer financing terms accordingly. Typically, the terms on private loans will not be as lenient or as favorable as the above federal loan options. Is college worth it?We will not be going in-depth on the recent “Is college worth it?” debate, but the data below makes a compelling case for the very positive impact of a college education on an individual’s long-term earnings potential in the workforce. As illustrated in the charts below, the average earnings and unemployment data for college-educated individuals paints a favorable picture relative to high school-only graduates. There is a caveat to the debate about whether to attend college or not. What is the caveat? The trick to navigating the college finance question is a clear understanding and plan for education prior to enrollment. Key college planning considerations include: Major and Future Earnings Potential - What do you plan to study and what is the long-term earnings potential of that field of study? See this article by Indeed.com, comparing starting salaries by college major and industries, respectively. Community College for General Education Classes – This option can be a great way to cut down on the overall price of college, particularly for the general education classes most colleges require. According to the American Association of Community Colleges, for the 2019-20 academic year, average annual tuition and fees at community colleges were $3,730, compared to $10,440 average annual tuition and fees at public four-year institutions. Consider Trade School – Trade schools focus on teaching skills and abilities directly related to a specific job such as electrician, plumber, and HVAC technician. Given the lower cost of trade school education, paired with the expected increasing demand for skilled labor, trade schools are increasingly becoming an excellent choice for students looking to forego large student debt balances while securing employment with a living wage. As student debt balances continue to balloon, having a plan in place coupled with a clear long-term vision is crucial in effectively managing student debt obligations. If you have questions about managing student debt that you’ve already incurred or are preparing for a child or grandchild to go to college, please reach out to one of our Schneider Downs Wealth Management Advisors.  ### Pandemic Costing American Women Now and for 20 Years Whether we like it or not, regardless of political affiliation, or how our lives were impacted over the course of the past 15 months; the COVID-19 pandemic flipped our world upside down. Life as a woman in 2020, and now into 2021, has been significantly impacted due to the ongoing pandemic.A recent article in Newsweek, written by Emily Peck, provided some staggering statistics and insight into the toll the pandemic has taken on American women from both a financial and mental standpoint. “More than 4.5 million fewer women are employed now than at the start of the pandemic, either through layoffs in the female-dominated industries hit hardest by the virus or because they were pushed out of work to care for children home from school or daycare,” Peck reported. “Collectively, women in the U.S. who left the workforce in 2020 could take a financial hit of $885 billion for two years out of work. A typical woman earning a median wage of $47,299 before the pandemic stands to lose more than a quarter of a million dollars in income over her lifetime, assuming she returns to full-time work by 2022.” The long-term effects these losses have on women are enormous. Economic losses include, but are not limited to: the income they've given up during the pandemic, the future income they'll miss out on, and the lack of compounding retirement benefits.Peck reported that a study published by the National Bureau of Economic Research found that the pandemic is likely to cause the already problematic gender wage gap to increase by five percentage points. Further, the gap in wages between men and women likely won't even recover to pre-pandemic levels for another 20 years.Over the recent year and a half, four out of every 10 women in the United States has had a change to their career, which for many meant ultimately choosing between a rock and a hard place. Some women had no choice but to either stop working or cut back on their hours because of COVID. Peck reported in Newsweek: “By last fall, four times as many women as men had left the labor force. The percentage of women working hasn't been as low as pandemic levels since 1988. At the current rate of recovery, the National Women’s Law Center (NWLC) estimates, women will need more than two years, or 28 straight months, to recover the jobs lost since February 2020. Research shows just how costly the career timeouts that many women take to care for children typically are. Being out of work for just one year over a 15-year period translates into 39 percent lower annual earnings, according to a 2018 study from the Institute for Women's Policy Research.” As mentioned above, the current impacts are just the start of increasing problems. As Peck reported, reentry into the workforce and retirement are other battles altogether: “Many women might not feel the full hit of the past year until they approach retirement, and receive lower Social Security payouts: an average of $1,154 a month vs. $1,466 for men. COVID will exacerbate the situation. In a January survey, nearly three-quarters of the women surveyed by Nationwide Financial said the pandemic had negatively impacted their retirement savings. And a Capital Group study out in May found that nearly 45 percent of millennial women had stopped contributing to or withdrew funds from their employer's retirement savings plans last year.”As a member of Schneider Downs’ Focus on Women Committee and as a woman in the early part of her career, I am shocked and disheartened to hear these statistics. Living through this part of history will be a story to tell for a lifetime, and I can only hope that many of these long-term statistics won’t come to fruition. However, I am honored that most of my personal story will have been with the Schneider Downs team. To be a part of a team that is committed to the success of our future women leaders is a privilege I didn’t realize I had. I am so proud of the direct efforts Schneider Downs has made, and continues to make, towards our women leadership throughout the firm. Source: Newsweek Magazine, “Pandemic Could Cost Typical American Woman Nearly $600,000 in Lifetime Income,” By Emily Peck ### Timber! The Rise and (Hopeful) Fall of Lumber Prices Have you recently asked yourself why lumber prices are so darned high? Well, you’re not alone. The cost of wood products has been one of the many unexpected challenges faced by the construction industry during the COVID-19 pandemic.According to the National Association of Home Builders, this past April the price of lumber was up to $1,200 per thousand board feet, a 250% increase over April 2020. The uptick has caused the price of the average new single-family dwelling to increase by $35,872, an amount that could put that potential dream home out of reach for many. Through June 2021, the price increase has remained steady. But this isn’t just a product of the pandemic; the roots go deeper than that. In 2015, America relied heavily on Canada for its supply of softwood lumber, with the largest share of imports at approximately 41%. That same year the Softwood Lumber Agreement of 2006, which had provided certain restrictions to both parties, expired, allowing Canadian producers unregulated access to U.S. customers. Canada wanted to export more, while America wanted to import less. Cue the trade dispute montage. Fast forward to 2017, when the Trump administration introduced a tariff that averaged 20% on Canadian softwood lumber exports. The seed was thus planted, and prices immediately began to rise as both sides adjusted for necessary production levels. The catalyst of the current price hike was the 2020 COVID-19 pandemic, when worldwide government-mandated shutdowns affected mill production, transportation, importation and distribution, crippling supply. At the same time, with most of the American labor force working from their dining rooms and tens of millions furloughed, home improvement projects once on the back burner were now taking center stage, skyrocketing demand. The price increases that started in 2017 were now reaching historic levels. It’s difficult to predict how long all this will last. The tariff with Canada was decreased to 9% in December 2020, but the subsequent price correction clearly has yet to reach the consumer and may never shine through the treetops. The U.S. Department of Commerce, meanwhile, recently published a report indicating that the country needs to double the tariff to 18%, leaving the regulatory side of the situation up in the air. As the world begins to see workforces normalizing, the upcoming spring harvest may help adjust for the supply shortage. The biggest question mark is demand. Will consumers continue remodeling their basements, or will the projects collect dust as the world opens back up?If you have any questions, don’t hesitate to contact us or check out the Schneider Downs Construction Industry Group. ### Fact or Fiction: SOC 2 There is a lot of misleading information about SOC 2 audits out in the wild. Hopefully, this article clears up some of the confusion.Myth: SOC 2 audits result in certification and compliance reportsSOC 2 audits do not result in a "certification" or "compliance" report. CPA firms render their opinion and the result is a report explaining their opinion.Myth: SOC 2 audits are pass/fail onlyThere is no pass/fail result. The result of the audit will be either Unqualified (all criteria met), Qualified (most criteria met) or Adverse (several criteria not met)Myth: Control Exceptions do not impact resultsControl exceptions can exist and result in an unqualified opinion.Myth: SOC 2 Type 1 audits are a pre-requisite for SOC 2 Type 2 auditsSOC 2 Type 1 audits are not required before undergoing a SOC 2 Type 2 audit.Myth: SOC 2 audits can be completed in about two weeksSOC 2 audits cannot be completed in 2 weeks - even if using software to prepare, you then need to take time to find a CPA firm and get on their schedule. After that, the audit itself could take 2-3 weeks to complete.Myth: There is one set of standard controls for SOC 2 auditsControls are not prescriptive or required. You can meet the criteria how you see fit (hopefully, an auditor will agree with your approach).Myth: SOC 2 audits only focus on infrastructure and softwareThe audit will cover more than your infrastructure and software. Several security criteria deal with controls such as policies, onboarding/offboarding procedures, risk management, training, governance, and vendor management.Myth: All SOC 2 Trust Service Categories are requiredAll categories are not required - Only security is required.While we’re at it, let’s clear up some confusion about the relationships between the SOC 2 Trust Services Categories, Criteria, Controls, Points of Focus and Evidence, and do some math.Categories – The subject matter covered in a SOC 2 audit. There are five categories: Security, Availability, Confidentiality, Processing Integrity, and Privacy.Criteria – Each Category has its own set of Criteria. There are 61 Criteria (33 for Security, 3 for Availability, 2 for Confidentiality, 5 for Processing Integrity, and 18 for Privacy).Controls – Policies and procedures that are part of the entity’s system of internal control. Each Criteria must be met by controls implemented by the entity.Points of Focus – Important characteristics of the criteria and may be used by the entity when designing, implementing, and operating controls. The Points of Focus are not Controls and are not required to be met.Evidence – For each Control, artifacts will be needed to support that Controls are in place.On average there will be two to three unique controls required for each Criterion. A SOC 2 audit covering Security may require about 80 controls. A SOC 2 audit covering all Categories may require about 150 controls. For each Control, 1 to 2 pieces of evidence may be required.Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### IRS Announces 2020 Marginal Well Credit With the issuance of IRS Notice 2021-34, natural gas well owners holding an operating interest in a qualified marginal well during 2020 are eligible to claim a $0.66 credit per qualified MCF. The IRS finalized and released the reference price used to compute the Marginal Well Credit for the 2020 tax on June 7, 2021.This is a significant opportunity for gas producers that own interests in qualified stripper wells because the credit could provide as much as $4,336.20 in tax savings per qualified well. (There is no limit on the amount of qualified wells taxpayers can use to determine their credit.)As previously indicated in a prior post (2020 Credit Available for Natural Gas Producers), the marginal well credit is a production-based tax credit for marginal domestic wells that have marginal production under percentage depletion rules, which is 15 barrels of oil equivalent per day (90 mcf or less per day).The marginal well credit is part of the general business credit and cannot offset tax liabilities generated from the alternative minimum tax, and any unused credit can be carried back five years and carried forward 20 years.If you think you could benefit from the credit or would like to discuss the 2020 Marginal Well Credit, please contact a Schneider Downs tax advisor. ### NIST Introduces NISTIR 8374 to Tackle Ransomware Risk Management On June 9th, 2021, the National Institute of Standards and Technology (NIST) released its preliminary draft for the Cybersecurity Framework Profile for Ransomware Risk Management (NISTIR 8374), a new ransomware risk management framework.This framework allows organizations to assess their ransomware readiness and protections through a defined control framework. The framework utilizes NIST’s already popular Cybersecurity Framework (CSF) as a base to leverage its control existing mappings. The full NISTIR 8374 draft is available at csrc.nist.gov/CSRC/media/Publications/nistir/draft/documents/NIST.IR.8374-preliminary-draft.pdf and the abstract reads:Ransomware is a type of malicious attack where attackers encrypt an organization’s data and demand payment to restore access. In some instances, attackers may also steal an organization’s information and demand an additional payment in return for not disclosing the information to authorities, competitors, or the public. This Ransomware Profile identifies the Cybersecurity Framework Version 1.1 security objectives that support preventing, responding to, and recovering from ransomware events. The profile can be used as a guide to managing the risk of ransomware events. That includes helping to gauge an organization's level of readiness to counter ransomware threats and to deal with the potential consequences of events.For those that have not used the CSF prior, the CSF focuses on 5 categories (Identify, Protect, Detect, Respond, and Recover) which under them contain numerous subcategories.  These subcategories are then mapped to specific controls under various frameworks such as NIST 800-53, COBIT 5, ISO, CIS CSC and ISA.  By leveraging this existing control framework, NIST utilized the existing control mapping to both NIST 800-53 and ISO 27001 and then selected specific controls from each of these that focus on policy and processes related to ransomware prevention and incident response.  An organization wanting to assess its capabilities would then focus on either the NIST 800-53 or ISO defined controls, based on their internal selected control framework.NIST is currently seeking public feedback on the framework up to July 9th, 2021, from which they will review and potentially edit the framework based on the feedback.  While it cannot be determined how much will change based on public comments, the expectation is that it will not be substantial when the framework is finalized.  If your organization has concerns around ransomware protection, detection, and response, NIST has got your back with another one of their industry recognized frameworks.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### G-7 Countries Reach Milestone Global Minimum Tax Agreement On June 5, finance ministers from the G-7 countries (the United States, Japan, Germany, Britain, France, Italy and Canada) reached a milestone agreement to impose a new global minimum corporate tax of at least 15 percent.The levy would impact the largest of multinational companies, potentially forcing technology giants like Amazon, Facebook and Google, as well as other big global businesses, to pay taxes to countries based on where their goods or services are sold.U.S. Treasury Secretary Janet Yellin has been calling for the introduction of such a minimum for some time, in an effort to slow the race to the bottom on corporate tax rates. Yellin notes that the Biden administration has already announced plans for bold domestic action, which include raising the U.S. minimum tax rate, and is in the process of renewing its international engagement with other countries, which she says is vital to ending the pressures of tax competition and corporate tax base erosion. Yellin argues that such a rate could be used to ensure that the global economy thrives based on a “more level playing field in the taxation of multinational corporations, and spurs innovation, growth and prosperity.”How will the global minimum tax work?The new rate minimum would apply to overseas profits of large multinational companies. Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could "top up" their taxes to the agreed minimum rate, thus eliminating the advantage of shifting profits to a tax haven.The Biden administration has said it wants to deny benefits for taxes paid to countries that do not agree to a minimum rate.Next stepsWhile this is an unprecedented milestone, the next big step is to get the G-20 nations to agree to the minimum rate. Yellin says the U.S. is working toward that accord, and notes that interplay with the European digital services tax will also need to be addressed.Given the number of countries involved, it remains to be seen how this type of sweeping agreement will be finalized. The G-7 nations do exert significant influence and they’ll be pushing to obtain a similar agreement from the rest of the G-20. The pact is, in principle, aligned with the OECD framework on base erosion and profit shifting and, as such, the OECD welcomed the G-7 announcement as a step toward every company paying its “fair share” of taxes. ### Getting Started with SOC 2 Reports Need some help getting started with SOC 2 Reports and don’t know where to begin?Before you get stuck in a Google rabbit hole, the following are some best practices based on our experiences. The SOC 2 Trust Services Criteria (TSCs) consists of five Categories: Security, Availability, Confidentiality, Processing Integrity, and Privacy. Security is required; the other four are optional and each Category is made up of Criteria. During a SOC 2 audit, organizations will be required to demonstrate to their auditors that they have sufficient controls in place to meet all the criteria for the in-scope Categories. For each control, the auditor will request evidence to illustrate that the controls are designed appropriately and operate effectively. The audit must be performed by a CPA firm. There are two types of SOC 2 examinations: Type 1 and Type 2. A Type 1 only covers the design of controls as of a specified date and a Type 2 covers design and operating effectiveness of controls over a period of time. At the end of the audit, the CPA firm will issue a SOC 2 report that includes its opinion on whether controls are appropriate to meet the criteria. Depending on the size of a company, some control areas may cause angst for some. The list below outlines someof the most important control areas to take into consideration for your SOC 2 journey. Governance – Policies for governance over security need to be established. Communication to Leadership – Formal procedures need to be established to communicate the state of security to leadership on a regular cadence. Risk Assessment – Threat events need to be identified and quantified annually based on likelihood of occurrence and impact on the organization. HR Controls – New hires and current employees need to sign off on policies and complete security awareness training and performance reviews annually. Background Checks – Backgrounds for new hires must be validated. Country-specific and privacy laws can make this one complicated. Endpoint Security – Endpoints will require endpoint protections. Onboarding/Offboarding – Workflows need to be implemented to ensure these processes can be audited. Security Monitoring – Events that indicate incidents should trigger alerts to personnel. Business Continuity – Plans need to be documented and DR procedures need to be tested annually. Vendor Risk Management – Security controls for key vendors need to be monitored and reviewed annually. Additionally, before committing to a date to deliver a SOC 2 Type 2 report to a customer, you should be aware of the following: Your customers will probably expect your first SOC 2 Type 2 report to cover an audit period of six months. In ourexperience, on average, it takes three to six months to remediate control gaps to ensure SOC 2 control requirements are met. Time is needed to formalize policies and procedures, make changes to software, integrate new workflows, and implement tools required for security. All controls need to be in place on day one of the SOC 2 Type 2 audit period. If they aren't, you risk having significant exceptions noted in your report. CPA firms must have a quality control (QC) process in place. It could take four to six weeks to complete. The QC process starts when testing is completed, which will be near the end of the audit period. Based on the above, it could take one year or more from the day you begin your SOC 2 journey to the day you obtain a SOC 2 Type 2 report. Our recommendation is to complete a SOC 2 Type 1 examination first to show customers you are on your way to a SOC 2 Type 2. The Type 1 examination will cover a specific day and you can schedule your audit with a CPA firm shortly after the second bullet point above is completed.Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### Starting a Cybersecurity Consulting Career Interested in starting a career in the cybersecurity consulting world? This article provides a brief introduction for young professionals diving headfirst into modern cybersecurity consulting.Getting into cybersecurity can sometimes seem overwhelming. There is a plethora of technical topics to learn, and the technology is always evolving. The good news is there are plenty of ways to make the transition into cybersecurity consulting easier.  Here are five tips from two of current cybersecurity team interns on starting your journey.1. Learn LinuxLinux is used frequently in cybersecurity consulting, so exploring a Linux distribution and getting comfortable with the commands and system layout will be immensely beneficial. Having even just basic knowledge of common commands and tools can go a long way in grasping new topics and feeling more comfortable when starting out in the cyber field. The wide variety of free Linux distributions provides easy access to begin developing skills in this important area.2. Gain Fundamental IT KnowledgeStarting with general IT experience before entering cybersecurity consulting can be a big advantage. Familiarity with IT infrastructure, software, basic concepts, and conventions can make understanding a client’s network and picking up on unusual configurations and behaviors much more natural. For example, Active Directory (AD) acts as the backbone of traditional corporate networks, so understanding the way AD is managed and used improves a consultant’s ability to test the system and advise a client.3. Get Practice with Common Consulting ToolsIt is not necessary to be an expert with every tool used in cybersecurity consulting, but having a little background on some different tools will ease your transition into the field. Virtual machines (VM) are used for many cybersecurity consulting activities, so knowing how to set them up and being comfortable with working simultaneously on a VM and the host computer makes the beginning of the job go more smoothly. While directions for what tools to use and how to run them may be provided, experience with common tools, like Nmap, Wireshark, or Burp Suite, increases efficiency and makes troubleshooting issues easier.4. Use Your Resources There is always more to learn and fortunately, a variety of resources exist to support knowledge transfer to up-and-coming cyber professionals. Certifications not only provide a way to gain knowledge and skills but also to prove core competencies. Courses and test prep books provide specific and practical information to ensure that certified individuals are knowledgeable and capable in the area of the certification. Educational programs are another great way to prepare for cybersecurity consulting. Degree programs are expanding and improving to provide students with more hands-on experience and give them the knowledge they need for the industry. Professional organizations, like ISACA, and community resources also provide learning opportunities through conferences and other networking events.Less formally, there are many instructional books, YouTube channels, twitter feeds and websites, like LinkedIn Learning, to support learning new skills. Podcasts, email lists, and websites, like Ars Technica, can also be beneficial for staying in the loop on current cybersecurity topics. If you haven’t already, be sure to subscribe to our bi-weekly newsletter: Focus on Cybersecurity for the latest cyber tips and news!5. Embrace Your RoleEspecially in a new position, network with people and listen to their experience and advice. Introducing yourself to others and getting to know your teammates will create a more comfortable environment for working and learning. Your teammates are there to support you, so always ask questions about anything you need help with. The sooner your questions are answered, the faster you will settle into your new role.Everyone should take their own path into the world of cybersecurity consulting, but in our experience, these five tips can go a long way in preparing someone for this exciting field.Seeking an Internship?You can view and apply for our summer 2022 internship at www.schneiderdowns.csod.com/ats/careersite/JobDetails.aspx?id=562&site=4. To learn more about careers at Schneider Downs visit www.schneiderdowns.com/careers.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Heavy Equipment Dealers Increase Profitability with GPS Tracking Heavy equipment dealers’ profitability depends on efficiently renting out their assets and keeping them in good working order for the long term. Additionally, to protect and preserve their assets for as long as possible, dealers also must deter theft and reckless use by customers. On top of that, if the dealer’s name/logo is emblazoned on vehicles for the public to see, it is critical for safety and for brand reputation to prevent any dangerous actions, such as speeding, that could damage the brand or even invite liability in the case of serious accidents. As a proactive move, a growing number of dealers are choosing to add a real-time, around-the-clock GPS tracker for heavy equipment rentals to ensure better fleet management. Continuous GPS tracking enables dealers to see instantly where all of their heavy equipment assets are at any given moment. Compared with typical GPS tracking devices that might update only every few minutes, advanced systems today can provide real-time location updates every 10 seconds, as well as location, speed and idle time alerts if something is amiss. Additionally, such systems have access to speed limits nationwide in their databases. When considered from the perspective of contractors with heavy equipment such as cranes, bulldozers, moving trailers, dump trucks, etc., the GPS tracking technology could be a relevant and prudent application. GPS tracking would increase the level of accountability of the company’s workers by tracking their speed and providing real-time notifications of improper use, which would deter workers from improper use as well as provide project supervisors an opportunity to intervene prior to an accident occurring, thus potentially reducing a company’s liability at a job site while increasing safety. In the rare instance that heavy equipment was to be stolen from a job site, GPS tracking technology would also provide the company an opportunity to recover the equipment by providing law enforcement with a precise location of the equipment at any time. See the link below for the article from which this Our Thoughts On article was developed. Heavy Equipment Dealers Increase Profitability With GPS Tracking (constructionexec.com)   ### SOC 2 – The Importance of Leadership Buy-In In our experience, there is one key factor that almost always leads to a successful SOC 2 audit— leadership buy-in. So why is leadership buy-in so important to SOC 2 audits?Without it, the SOC 2 audit will be a very unpleasant experience for both the CPA firm and the client personnel involved with the audit. Here are some key reasons having supportive leadership sets your SOC 2 report up for success: Multiple teams will be involved – leadership will need to communicate to team leaders that participation from them will be valued. New processes/controls – leadership will need to communicate the importance of changes to the organization. Potential increase in security spend – you may need additional funding for products, tools and people. Audits take time to do right – SOC 2 audits can take anywhere from 6 to 12 months to complete. Leadership should understand this, so the audit isn't rushed to meet customer/prospect demands. External communication – leadership will need to ensure communication with external parties on progress and completion is consistent. Prioritization – leadership will need to prioritize the audit so that personnel are given the necessary time to prepare and work on the audit. Culture shift – SOC 2 audits are the first step in your journey to a strong culture of security. If leadership doesn't believe this, then the audit will become an annual "check the box" exercise. Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. About SOC 2 ReportsWith SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company, while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes.Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### ASU 2021-03 – Private Company and Not-For-Profit Updates to Evaluating Goodwill Impairment Triggering Events The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2021-03, Accounting Alternative for Evaluating Trigger Events. This updated guidance eliminates the need for private companies and not-for-profit entities to continually assess goodwill for impairment throughout the reporting period, and rather perform only one analysis at the end of a reporting period.  The reporting period can be either an interim or an annual reporting period. Current guidance under Subtopic 350-20, Intangibles--Goodwill and Other--Goodwill, stipulates that an entity is required to monitor and evaluate whether goodwill is impaired due to a triggering event on an ongoing basis whenever a triggering event occurs. Naturally, given the COVID-19 pandemic, entities were finding that the uncertainty surrounding the whole situation was basically a non-stop triggering event. The ensuing analysis for triggering events was found to be continuous, costly and complex. This concern was communicated to the FASB, and as a result, the FASB issued ASU 2021-03. The accounting alternative should alleviate a lot of the cost and burden of evaluating triggering events, by aligning this exercise with closing procedures.  The alternative provides the added benefit of hindsight when assessing for goodwill impairment, which is a tremendous advantage in a rapidly changing environment similar to that during the COVID-19 pandemic. Private companies or not-for-profit organizations that elect this alternative should include impairment assessments as part of period-end closing procedures, in order to capture any triggering events that could have occurred. The amendments in this Update apply only to private companies and not-for-profit entities, and are effective on a prospective basis for fiscal years beginning after December 15, 2019. Additionally, the amendments in this update do not require additional disclosure beyond the existing requirements. ### Proposed Tax Reform 2021 as Explained by the Department of the Treasury As hinted in our article last week, the U.S. Treasury (Treasury) has released its General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals” (the Green Book or the proposal ). The Green Book is a 114-page explanation of the tax proposals included in the Biden Administration’s 2022 fiscal year budget (beginning October 1, 2021).  Recall that President Biden released two plans earlier this year; the American Jobs Plan and the American Families Plan that is incorporated in the 2022 budget. To finance these plans as reflected in his projected budget, President Biden is proposing a number of reforms to the Internal Revenue Code. These proposed changes are described by the Treasury in the Green Book as being intended to “raise revenue, improve tax administration, and make the tax system more equitable and efficient”. The Green Book discusses the Treasury’s interpretation in some detail of how these changes may appear if Congress can pass the legislation needed to enact the proposals.  The Green Book addresses Biden Administration proposals to: Increase individual income taxes on high-income taxpayers with incomes exceeding $400,000; Increase wealth transfer taxes on wealthy individuals with a net worth exceeding $1,000,000; Increase “C” corporation tax rates and providing for a new corporate alternative minimum tax on reported earnings in excess of $2 billion; Reform tax provisions on multi-national businesses; Eliminate tax incentives and “subsidies” in the traditional fossil fuel industry; Create tax incentives and subsidies supporting the renewable (clean) energy industry; Create incentives for on-shoring business to the U.S. and creating American jobs; Expand individual tax credits such as the earned income tax credit, the child and dependent care credits, and health insurance credits; and  Improve IRS funding to increase audit rates, provide more oversight of tax preparers, increase attention to tax shelters and listed transactions, and extend the statute of limitations on listed transactions, among others. We will be reviewing and analyzing many of the detailed proposals in separate Our Thoughts On Articles beginning in the next week. For example, the wealth transfer provisions of the Code could substantially change the taxation of transfers under current law. As communicated in Green Book, the Administration believes that “the amount of appreciation accruing during the decedent’s life on assets that are still held by the decedent at death completely avoids federal income tax”. Therefore, the proposals introduce concepts that will tax unrealized gains when transferred through lifetime gifts or upon death.As we noted when President Biden first released details of the American Families Plan, it’s necessary to remember that the proposals summarized in the Green Book are just that – proposals. It is the Treasury’s perspective on the President’s policy vision; it is not enacted law. The Green Book is a high-level summary provided by Treasury and is not statutory language or proposed bills.  There is much negotiation that still needs to take place, even among Democrats, before any of these items would become law.   Related ArticlesThis article is part of a series discussing the Treasury Department’s Green Book Explanation of President Biden’s Tax Proposals.  Proposed Tax Reform 2021: Wealth Transfer Tax Proposals as Explained by the Department of the Treasury Proposed Tax Reform 2021: Proposed Increased Individual Income Taxes on High Income Taxpayers ### Proposed Tax Reform 2021: Wealth Transfer Tax Proposals as Explained by the Department of the Treasury The recently released U.S. Treasury Department’s Green Book (the Green Book or the proposals) provides information on the Biden Administration’s tax proposals.  This article is part of a series examining the Green Book’s explanations and focuses on the items aiming to increase taxes on account of transfers of wealth by wealthy taxpayers (generally those with wealth in excess of $1,000.000). Gift and Inheritance Asset Transfers of Appreciated Property by Individual will Trigger Income and Tax The donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer.  For a donor, the amount of the gain realized would be the excess of the asset’s fair market value on the date of the gift over the donor’s basis in that asset. For a decedent, the amount of gain would be the excess of the asset’s fair market value on the decedent’s date of death over the decedent’s basis in that asset. The Green Book appears to indicate that the tax would be borne by the party making the gift or the estate.  Exceptions are provided to the general rule: $1,000,000 per-person exclusion (up to $2,000,000 for married couples) for property transferred by gift or held at death; Transfers in death to a U.S. spouse (prominently omitted are transfers to spouses in divorce); Transfers to Charity (though certain transfers to split-interest trusts would be taxable); Certain Tangible Property - Appreciation on household furnishings and personal effects (but not collectibles) would be excluded; Gain on sale of principal residence - The $250,000 ($500,000 married filing joint) gain on the sale of a principal residence would be excluded; Small business stock under section 1202 would continue to be excluded. While gain on the appreciation of family owned businesses is not excluded, the Green Book does indicate that payment of the tax would not be due until the interest in the business is sold or the business ceases to be family-owned and operated. The proposal would also allow a 15-year fixed-rate payment plan for the tax on appreciated assets transferred at death, other than liquid assets such as publicly traded financial assets and other than businesses for which the deferral election is made. The IRS would be authorized to require security at any time when there is a reasonable need for security to continue this deferral. That security may be provided from any person, and in any form, deemed acceptable by the IRS. OBSERVATION:  The Green Book only mentions that transfers to spouses upon death are tax free.  It does not specifically address whether transfers of property between spouses or incident to a divorce will also be an exception to taxation.  There is some precedence for transfers to spouses causing a taxable event under the qualified opportunity zone regulations.     Transfers of Property to and from Partnerships, trusts, or other Non-corporate Entities The Green Book indicates that taxable recognition events will also occur for transfers of property into, and distributions in kind from, (i) a trust, (ii) a partnership, or (iii) other non-corporate entity, other than a grantor trust that is deemed to be wholly owned and revocable by the donor. There is very little additional information provided on the above types of transfers. Taxing Unrealized Appreciation on Long-Held Assets of Partnerships, Trusts, and Other Non-Corporate Entities is Proposed Gain on unrealized appreciation would be recognized by a trust, partnership, or other non-corporate entity that is the owner of property if that property has not been the subject of a recognition (taxable) event within the prior 90 years.  The testing period would begin on January 1, 1940. The first possible recognition event for any taxpayer under this provision would thus be December 31, 2030. There is no additional information provided on how this provision would be administered (for example would the tax be paid by the partnership or would the income pass-through to the partners). Valuation Rules   A transfer would be defined under the gift and estate tax provisions and would be valued using the methodologies used for gift or estate tax purposes. However, transferred partial interests would be valued at its proportional share of the fair market value of the entire property.  This proposal appears to attack the use of minority interest discounts on transfers of certain property.  How this proposed rule will work in final form is not clear.  For example, would a transfer of some percentage of a family limited partnership interest from a parent to a child fall under this provision. If you have any question on the above topics, please don’t hesitate to reach out to your Schneider Downs tax advisor or contact us at contactsd@schneiderdowns.com. Related Articles This article is part of a series discussing the Treasury Department’s Green Book Explanation of President Biden’s Tax Proposals. Proposed Tax Reform 2021 as Explained by the Department of the Treasury Proposed Tax Reform 2021: Proposed Increased Individual Income Taxes on High Income Taxpayers ### Proposed Tax Reform 2021: Proposed Increased Individual Income Taxes on High Income Taxpayers The recently released U.S. Treasury Department’s Green Book (the Green Book or the proposals) provides information on the Biden Administration’s tax proposals. This article is part of a series examining the Green Book’s explanations and focuses on many of the items aiming to increase taxes on income of high-income taxpayers (generally those with incomes in excess of $400,000).The proposed effective implementation date is generally for tax years beginning after 12/31/2021 unless otherwise indicated.Increase in Top Marginal Tax RatesThe highest tax bracket rate will be increased to 39.6% up from 37%.  The highest tax rate bracket kicks in at lower income levels than under existing law.    Note that there is no separate analysis in the Green Book related to the income tax brackets for taxable trusts and estates.  Currently, the highest rate for those types of taxpayers begins at $13,050. Increase in Capital Gain and Dividend Tax Rates for High Income TaxpayersThe tax rate on long-term capital gains and qualifying dividend income is proposed to be increased to 37% up from 20% under existing law (excluding the tax on net investment income of 3.8%). These rates will be assessed on individuals with adjusted gross income that exceeds $500,000 for single taxpayers and $1,000,000 for married taxpayers filing jointly. Including the separate 3.8% tax on net investment income, the combined federal income tax rate on long-term capital gains and dividends will be 40.8%OBSERVATION: Section 199A qualified business income deduction is not a deduction in arriving at adjusted gross income.  Further, in 2022, the Section 461(l) $500,000 excess business loss limitation will again be in place.  Net operating losses will be limited to 80% of taxable income.  These types of loss limitation provisions have the impact of increasing adjusted gross income and therefore increasing the likelihood of the higher rate applying to gains and dividends. The Green Book indicates the higher tax rate will apply to “gains” beginning on the date of President’ Biden’s announcement; this is presumably on or around April 28, 2021 (the date of President Biden’s first address to Congress).  The Green Book does not separately address when the increased rate will apply to dividend income, but the specific use of the word “gains” may imply that the effective date for dividend taxation will not be until after 12/31/2021 (but again more details are needed). Effectively Eliminates Deferral of Gain from Like-Kind ExchangesThe proposal would continue to allow the deferral of gain on like-kind exchanges but only up to an aggregate amount of $500,000 for each “taxpayer” ($1 million in the case of married individuals filing a joint return) each year for real property exchanges that qualify as like-kind.  Any gains from like-kind exchanges exceeding the maximum deferral during a taxable year would be recognized by the taxpayer in the year the taxpayer transfers the real property subject to the exchange. The proposal would be effective for exchanges completed in taxable years beginning after December 31, 2021.OBSERVATION: This seems to imply that replacement property received in deferred like-kind exchange transactions would need to be closed by the end of the year.  Taxpayers contemplating like-kind exchanges in 2021 should plan accordingly and continue to monitor legislative developments.   There is no discussion in the Green Book of how this rule would be implemented and applied to flow-through entities such as partnerships or S Corporations with multiple owners; additional details would be needed. Broadens the Scope of Net Investment Income Tax (NII) and Self-Employment Tax (SECA) To Include Certain Limited Partners and S Corporation ShareholdersThe proposal would (i) ensure that all pass-through business income of high-income taxpayers is subject to either the NIIT or SECA tax, (ii) make the application of SECA to partnership and LLC income more consistent for high-income taxpayers, and (iii) apply SECA to the ordinary business income of high-income nonpassive S corporation owners.In other words, the proposal is designed to ensure that all trade or business income of high-income taxpayers will be subject to a total of 3.8% tax that is dedicated to the Medicare trust fund either through the NII tax regime or SECA tax regime (combined with the additional Medicare tax).First, for taxpayers with adjusted gross income in excess of $400,000, the definition of net investment income would be amended to include gross income and gain from any trades or businesses that is not otherwise subject to employment taxes.This would pull-in income that currently is exempt from the NII tax such as the distributive share of S corporation income of shareholder-employee as well as those claiming exemption from the tax as limited partners.The net investment income tax would be applied to all trade or business income that is not otherwise subject to employment taxes.Next, limited partners and LLC members treated as limited partners who provide services and materially participate in their partnerships and LLCs would be subject to SECA tax on their distributive shares of partnership or LLC income to the extent that this income exceeds certain threshold amounts (the explanation of which will be saved for a future time).Finally, S corporation owners who materially participate in the trade or business would be subject to SECA taxes on their distributive shares of the business’s income to the extent that this income exceeds certain threshold amounts.Material participation standards would apply to individuals who participate in a business in which they have a direct or indirect ownership interest. Taxpayers are usually considered to materially participate in a business if they are involved in it in a regular, continuous, and substantial way (often meaning work for at least 500 hours per year). The statutory exception to SECA tax for limited partners would not exempt a limited partner from SECA tax if the limited partner otherwise materially participated.Carried Interests Will Be Subject to Ordinary Income Taxation The proposal would repeal IRC Section 1061 for taxpayers with taxable income (from all sources) in excess of $400,000 and would generally tax as ordinary income a partner’s share of income from an “investment services partnership interest” (ISPI) in an investment partnership, regardless of the character of the income at the partnership level. In addition, the proposal would require partners in such investment partnerships to pay self-employment taxes on such income.An ISPI means a profits interest held by a person who provides services to an investment partnership (substantially all of its assets are certain securities, real estate, interests in other partnerships, commodities, cash or equivalents, and derivative contracts with respect to those assets).While there are exceptions, the proposal assumes that gain recognized on the sale of an ISPI would generally be taxed as ordinary income and not as capital gain. This area will require additional guidance and explanation and the Green Book notes that anti-abuse rules may be necessary.  Losses on Working Interests in Oil and Natural Gas Properties Becomes PassiveThe exception to passive loss limitations provided for working interests in oil and natural gas properties would be repealed. Capital Gain Treatment for Coal Royalties RepealedThe treatment of royalties received on the disposition of coal or lignite and that generally qualifies as long-term capital gain under existing law would be repealed.  This type of income would be taxed at ordinary income tax rates. If you have any question on the above topics, please don’t hesitate to reach out to your Schneider Downs tax advisor or contact us at contactsd@schneiderdowns.com. Related ArticlesThis article is part of a series discussing the Treasury Department’s Green Book Explanation of President Biden’s Tax Proposals.  Proposed Tax Reform 2021 as Explained by the Department of the Treasury Proposed Tax Reform 2021: Wealth Transfer Tax Proposals as Explained by the Department of the Treasury ### Peter Lieberman on Investment Banking in 2021 Schneider Downs Corporate Finance’s Chief Executive Officer, Peter Lieberman, recently sat down with Joe Bruce, audit shareholder at Schneider Downs, for an in-depth video interview to discuss the state of investment banking and the current mergers and acquisitions climate in 2021. Questions spanned a spectrum of topics, ranging from how Peter’s career as a newspaper reporter prepared him for investment banking to whether buyers should expect bargains in a post-COVID marketplace. Other topics discussed in the 13-minute video: How did your career path lead you to Corporate Finance? Are there any industries that present challenges or opportunities to consider in a COVID 19 environment in 2021? What impact could the change in the White House have on certain industries, or on the mergers and acquisitions market in general? What impact will private equity have on the mergers and acquisitions market in 2021? Are there industries you expect to be particularly active in, or to avoid? Do you expect the overall M&A market activity to be in a growth mode in 2021? Are there key drivers to focus on (tax policy, impact of vaccinated workforce, interest rate changes, etc.)? Do you expect valuations to be strong in 2021? Do you expect buyers to be active? If a seller’s company had a down year in 2020, how can it maximize value in 2021? Can buyers expect bargains in the marketplace in 2021 due to the pandemic? To learn more about our complete suite of Exit Planning and Succession Advisory services visit us online or contact us. About Schneider Downs Corporate Finance Schneider Downs Corporate Finance is a leading, full-service investment banking, corporate finance and strategic advisory firm serving the needs of mid-market and small companies. With close to 100 combined years of financial transaction and executive management experience across a broad spectrum of industries and client situations, our focus is to provide premier advisory services in the areas of company sales and divestitures, acquisitions, fund-raising and strategic advisory. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. Schneider Downs Corporate Finance, LP Customer Relationship Summary (Form CRS). ### What’s the Difference Between SOC 1 and SOC 2 Reports? What are the differences and similarities between SOC 1 and SOC 2 reports? SOC 1 Reports SOC 1 reports focus on an organization’s business processes and IT controls and are specifically designed to meet the needs of entities that use service organizations and their external auditors as they evaluate the effect of the controls at the service organization on user entities’ financial statements. Use of these reports is restricted to the management of the service organization, user entities and user auditors. Used by your customers' financial statement auditors to get comfort over the controls you perform that impact your customers' financial statements. During a SOC 1 audit, you are required to have controls in place to meet control objectives. Control objectives are defined by the organization being audited. IT controls are included as part of the SOC 1 audit, but will not be as comprehensive as in a SOC 2 audit. SOC 2 Reports With SOC 2 reports, organizations decide which categories to include in the scope of the examination. This flexibility means reports are unique to each company while providing a consistent framework to evaluate whether organizations meet the criteria for the categories included in the examination. These examinations are designed for a broad range of users that need information and assurance about the controls at a service organization relevant to security, availability and processing integrity of the systems the service organization uses to process users’ data, and the confidentiality and privacy of the information processed by these systems. The use of this report is restricted. These reports can play an important role in oversight of the organization, vendor management programs, and internal corporate governance and risk management processes. Used by your customers to get comfort over the controls you have in place to ensure the security, availability, confidentiality, processing integrity, and privacy of their data and proprietary information. During a SOC 2 audit, you are required to have controls in place to meet the AICPA's Trust Services Criteria. The Trust Services Criteria are defined and cannot be altered. Security controls are the primary focus, but processing integrity may include controls over financial operations. SOC 1 and SOC 2 Similarities The reports will include the same sections, but with different content. Similar types of testing procedures will be performed. CPA firms will use the same process to perform the audits. Do I Need a SOC 1, SOC 2 or both? To decide which one you need, ask the following questions: Do we process financial transactions for customers?  You need a SOC 1 and SOC 2. Do we host customers' financial applications (i.e. cloud service providers/data centers)  You need a SOC 1 and SOC 2. Do our customers only require assurance over the security of their data? You only need a SOC 2. If you need a SOC 1 Report, you will also need a SOC 2. This is because the security controls in a SOC 1 will not be comprehensive enough to meet the SOC 2 criteria. Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or learn more about our practice at www.schneiderdowns.com/soc. Schneider Downs SOC Resources Schneider Downs SOC FAQs Schneider Downs SOC Case Studies Schneider Downs SOC Articles ### Amazon Sidewalk Opt Out Date Approaching Amazon device owners have until June 8, 2021 to opt out of Amazon’s new wireless mesh service, Amazon Sidewalk. A little over two years ago Amazon introduced Amazon Sidewalk, a product that would use Amazon devices to essentially share internet connections with others, borrowing bandwidth from popular devices including Echo, Ring, Alexa, Tile trackers, outdoor lights and security systems. The goal of the product is to allow customers’ devices to communicate more efficiently over long ranges. For instance, if your Amazon controlled outdoor lighting system loses connection from your home network, Sidewalk—hypothetically—allows the device to borrow bandwidth from your neighbor to operate. The official product description from Amazon reads: Amazon Sidewalk is a shared network that helps devices work better. Operated by Amazon at no charge to customers, Sidewalk can help simplify new device setup, extend the low-bandwidth working range of devices to help find pets or valuables with Tile trackers, and help devices stay online even if they are outside the range of their home wifi. In the future, Sidewalk will support a range of experiences from using Sidewalk-enabled devices, such as smart security and lighting and diagnostics for appliances and tools. Amazon Sidewalk is currently only available in the US and their product webpage located at https://www.amazon.com/Amazon-Sidewalk includes an in-depth overview and FAQ, with questions such as: How will Amazon Sidewalk impact my personal wireless bandwidth and data usage? Why should I participate in Amazon Sidewalk? Where can I change my Amazon Sidewalk preferences? How does Amazon Sidewalk protect customer information? Is Amazon Sidewalk a replacement for a home wifi network? Should I Opt Out of Amazon Sidewalk? Amazon has indicated multiple times that Sidewalk is designed securely and uses multi-layer encryption to ensure that individual customers are not able to access any of their neighbor’s data through the shared mesh network. However, our team has several security concerns about the concept, such as the drastically increased impact of a potential compromise, even though unlikely, as well as Amazon’s approach to auto-enroll users into such a significant change to the original scope of their product(s). Making Sidewalk an opt-out service versus an opt-in speaks volumes to how Amazon believed Sidewalk would be received by a consumer base that is increasingly educated and concerned about their digital privacy. Although Sidewalk may have good intentions and, in theory, be a secure and beneficial idea, we prefer to err on the side of caution and opt-out for the time being since shared connection technology has a history of being insecure. How Do I Opt Out of Amazon Sidewalk? If you would like to opt-out of Amazon Sidewalk, the process is relatively simple: Open the Alexa app Open More Open Settings Select Account Settings Select Amazon Sidewalk Disable Amazon Sidewalk Moving forward past June 8th, new devices will prompt owners if they want join Amazon Sidewalk, but all devices prior to the date are auto-enrolled unless they opt out with the steps above. Please note that you cannot disable this through your Amazon account, you will have to download the Alexa app to opt-out. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### White House Issues Executive Order on Cybersecurity On May 12, 2021, the White House issued an Executive Order (EO) on cybersecurity titled, Improving the Nation’s Cybersecurity. The EO claims to make a significant contribution towards modernizing cybersecurity defenses by protecting federal networks, improving information-sharing between the government and private sector and strengthening the nation’s ability to respond to incidents. Influenced by several high profile cyber incidents including the Colonial Pipeline and SolarWinds, the EO targets several cyber initiatives including: Remove Barriers to Threat Information Sharing Between Government and the Private Sector. The EO ensures that IT Service Providers are able to share information with the government and requires them to share certain breach information. Modernize and Implement Stronger Cybersecurity Standards in the Federal Government. The EO helps move the Federal government to secure cloud services and a zero-trust architecture, and mandates deployment of multifactor authentication and encryption with a specific time period. Improve Software Supply Chain Security. The EO will improve the security of software by establishing baseline security standards for development of software sold to the government, including requiring developers to maintain greater visibility into their software and making security data publicly available. Establish a Cybersecurity Safety Review Board. The EO establishes a Cybersecurity Safety Review Board, co-chaired by government and private sector leads that may convene following a significant cyber incident to analyze what happened and make concrete recommendations for improving cybersecurity. Create a Standard Playbook for Responding to Cyber Incidents. The EO creates a standardized playbook and set of definitions for cyber incident response by federal departments and agencies. The playbook will ensure all Federal agencies meet a certain threshold and are prepared to take uniform steps to identify and mitigate a threat.  The playbook will also provide the private sector with a template for its response efforts. Improve Detection of Cybersecurity Incidents on Federal Government Networks. The EO improves the ability to detect malicious cyber activity on federal networks by enabling a government-wide endpoint detection and response system and improved information sharing within the Federal government. The Federal government should lead in cybersecurity, and strong, Government-wide Endpoint Detection and Response (EDR) deployment coupled with robust intra-governmental information sharing are essential. Improve Investigative and Remediation Capabilities. The EO creates cybersecurity event log requirements for federal departments and agencies. Poor logging hampers an organization’s ability to detect intrusions, mitigate those in progress, and determine the extent of an incident after the fact. While the consensus is that the intentions of the EO is in the right place, industry experts debate if good intentions will have an immediate impact on the rampant cybersecurity attacks impacting the federal and private sectors. It is important to remember that an EO are not statutes, rather formal documentation of policy directives and expressions of a president’s opinion – and without congress’s support, are not enforceable on the private sector. White House Resources Executive Order on Improving the Nation’s Cybersecurity FACT SHEET: President Signs Executive Order Charting New Course to Improve the Nation’s Cybersecurity and Protect Federal Government Networks About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Tax Increases on the Horizon? Proposed Budget Spending Plan Would Indicate A Need for Increased Revenue.It’s going on two months since President Biden shared his American Jobs Plan (AJP) and almost one month since his joint session in Congress where he shared his American Families Plan (AFP). We highlighted the major talking points of those plans in earlier articles (Introduction to The American Jobs Plan and The Made in America Tax Plan;  The American Families Plan – Proposed $1.8 Trillion Spending and Tax Plan).  The full details of those plans have still not been released though they may be getting a little closer.  Earlier today, the New York Times released an article noting that the President plans on releasing a proposed $6 trillion dollar budget tomorrow; further, the budget is proposed to increase to $8.2 trillion by 2031.  For some perspective on the size, the Congressional Budget Office in 2010 reported the 2010 fiscal budget ending September 30, 2010 was $3.5 trillion.  The Times article notes that the growth is driven by the plans outlined in the AJP and AFP (or the Plans).   The President’s proposed budget is a request; ultimately it is Congress that controls the purse.  As was clear when the Plans were released, President Biden’s plan to fund these programs and initiatives is, in part, to raise taxes on corporations and high-income earners (above $400,000).  Specific details are still being worked out.   However, more details, though not specific statutory language, may soon be forthcoming.  Historically, the U.S. Treasury Department has issued a “Green Book” in conjunction with budget releases.    The publication details how much revenue could be raised from the President’s tax proposals.  Businesses, individuals, and tax professionals are expected to find some direction on the size, breadth, and timing of any tax increases proposed.  While the Green Book was eliminated under President Trump, its issuance has been revived under the Biden Administration.When the Green Book is released, its contents will be analyzed, and the results shared with you.  In the meantime, taxpayers generally need to be patient but alert to its potential impact.  There is still a lot of distance that needs to be covered before a final bill will cross the finish line and await the President’s signature in the Oval Office.   ### Moody's Releases Update on Higher Education Sector As we approach audit season for higher education institutions, we are pleasantly surprised at how private universities navigated their way through the pandemic and remained financially steady compared to fiscal year 2019. In the most recent study done by Moody’s, private colleges and universities maintained operating cash flow margin of nearly 14% for fiscal 2020, which is consistent with the prior year, by executing cost-savings efforts, yet still remaining operationally stable.  In addition, many colleges and universities also received federal aid in various forms over the past year, which helped boost performance amid the decline in fiscal 2020 operating revenues. While the recently passed American Rescue Plan Act and the Coronavirus Response and Relief Supplemental Appropriations Act will positively impact results in 2021, the higher education sector does not expect future emergency funding beyond these bills. The significant uncertainties of the pandemic led some colleges and universities to obtain lines of credit to increase their liquidity and give them more cash flow flexibility.  Across the institutions that Moody’s rates, monthly days cash on hand grew to a median 344 days in fiscal 2020, compared to a median 330 days in 2019, as many sought to preserve cash, delay capital expenditures and explore various methods of cost-cutting to bolster this figure. Although colleges and universities were able to have their short-term liquidity remain steady from 2019, they were challenged with a significant decrease in total revenue and enrollment in fiscal 2020. The median net auxiliary revenue for fiscal 2020 dropped a whopping 19% compared to a 2% increase in the prior fiscal year due to the closure of campuses and the issuance of significant room and board refunds.  In an article Medians – Private universities demonstrated flexibility amid pandemic in fiscal 2020,  Moody’s Investor Service says small universities were challenged with the largest enrollment loss of nearly 5%, which may indicate those colleges were already facing enrollment issues prior to the pandemic, as stated in the article written by Mo.  Yet, despite these declines in tuition and auxiliary revenue, many college campuses are still holding strong. What have we learned from all of this?  Many organizations, especially higher education institutions, have yet again adapted to the ever-changing dynamics the pandemic has dealt them. More so than ever, this pandemic leaves decision-makers to reevaluate campus and capital needs, and we expect each institution to make financial and operational changes to better suit their future goals with an eye on sustainability.  As Winston Churchill said, “Never let a good crisis go to waste,” and institutions of higher education should seek to use this time to implement changes to ensure future success. ### Employee Benefits Security Administration Cybersecurity Guidance As we approach ERISA season, it is more important now than ever to remember that even our retirement benefits are at risk for cybersecurity attacks. For the first time in history, the Employee Benefits Security Administration (EBSA) has issued cybersecurity guidance for ERISA-covered retirement programs, which outlines best practices for record-keepers, plan sponsors and fiduciaries, participants and beneficiaries.  The guidance came in three forms: (i) cybersecurity program best practices for record-keepers and other service providers, (ii) tips for plan sponsors on selecting a service provider, and (iii) general online security tips. While ERISA has always required plan fiduciaries to take appropriate precautions to mitigate internal and external cybersecurity threats, such precautions were undefined and ambiguous prior to this guidance. Now that this guidance has been released, it is important for plan sponsors and fiduciaries to incorporate it into existing plan oversight processes. Any action taken should be documented in plan-related records in order to demonstrate conformity with the guidance, e.g., service provider due diligence, enhancements to internal controls, etc.  See below for some tips that the guidance suggests plan sponsors, fiduciaries and participants take in order to stay ahead of cybersecurity crime:1. Hire a service provider with strong cybersecurity practices and monitor their activities Understand their security standards Ask the service provider if they have had previous security breaches and how they responded to the situation Make sure the contract requires ongoing compliance that includes cybersecurity and information security standards For a comprehensive list, please visit the following link: Tips For Hiring a Service Provider With Strong Cybersecurity Practices (dol.gov) 2. Stay at the forefront of cybersecurity risks by following these best practices Develop a well-documented, formal cybersecurity program Have an independent auditor assess your organization’s cybersecurity controls to identify existing risks, vulnerabilities and weaknesses Clearly define and assign information security roles and responsibilities For the full list of best practices, please visit the following link: Cybersecurity Program Best Practices (dol.gov) 3. For plan participants who access their retirement accounts online, here are some basic tips to mitigate the risk of fraud and loss Routinely monitor your account for unusual activity Keep personal contact information current with your employer and retirement service providers Use multi-factor authentication Be aware of phishing attacks and try to stay clear of “free Wi-Fi” For additional tips, please visit the following link: Online Security Tips (dol.gov)  If you have any questions related to the information above or cybersecurity in general, please contact our office to speak to an expert in our Retirement Solutions Group or Risk Advisory Group.    ### Warping Through ASC Topic 842: Practical Expedients Available to Lessees Whenever practical expedients are mentioned in casual conversation, my mind typically runs straight to Super Mario Brothers. Not the Goombas and Koopa Troopas, but the warp zones, swiftly moving through the game at record speeds utilizing the shortcuts between worlds. (For those unfamiliar, there are ways to beat the game without playing every level – talk about a time saver!) While it’s not quite the same as pipe-transporting players through video game realms, the FASB is also offering shortcuts in the application of recording leases under ASC Topic 842 or said another way, providing lessees a practical implementation process. The first is a “package” of three practical expedients that must be elected together in an all-or-nothing format. This package includes the option to (1) not reassess whether a contract is or contains a lease, (2) not reassess the lease classification (meaning if all prior leases were classified as operating leases in accordance with ASC 840 they will be classified as operating leases, and if all existing leases were classified as capital leases under ASC Topic 840 they will be classified as finance leases), and (3) not reassess initial direct costs. ASC Topic 842 defines initial direct cots as those that could have been avoided had the entity not entered into a lease agreement. The next practical expedient offered allows lessees to use hindsight in determining the lease term and in assessing the impairment of the entity’s right-of-use assets. The hindsight practical expedient allows lessees to look back at other factors when determining lease terms such as options to buy, terminate, or extend a lease and reassess on a go-forward basis at the time of application. While it might be advantageous for lessees to select the hindsight practical expedient, it can be a very time-consuming process because it must be applied to all leases.  Hindsight is available separately from the package of three transitional practical expedients above. An additional expedient permits lessees to not assess whether existing or expired land easements that were not previously accounted for as leases under ASC Topic 840 are or contain a lease under ASC Topic 842. A land easement (also known as a right-of-way) refers to a right to use, access, or cross another owner’s land for a specified purpose. Some contracts in place may contain more than just leases. They could have options and agreements to purchase or sell other goods or services which are considered non-lease components such as maintenance activities. These non-lease components are normally identified and accounted for under other applicable Generally Accepted Accounting Principles. However, under the practical expedient election, lessees are given the option to account for each lease component and its related non-lease component as a single lease component. This election must be made by class of underlying asset. Private entities have an additional expedient available to them. A private company can elect to use a risk-free rate to discount lease payments instead of using an incremental borrowing rate. These optional practical expedients generally make it easier for lessees to transition from legacy lease accounting guidance; however, mistakes can occur that unintentionally violate the practical expedients during adoption through misapplication. For example, the new lease standard potentially allows entities the ability to reassess whether or not certain contracts are or are not leases.  However, if the package of three transitional practical expedients is elected, then lessees should not reassess these contracts at transition, unless the contract was incorrectly assessed under legacy lease accounting guidance. The practical expedients do not shield lessees from errors in assessment under legacy lease accounting guidance and, therefore, completeness analyses are critical. While implementation of the new lease accounting standard may not seem as fun as dusting off the Nintendo Entertainment System to defeat Bowser, the FASB has put their own warp zones in place to ease the implementation of the new standards. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. ### M&A Activity on the Rise in 2021 Pitchbook recently released its Global Mergers & Acquisitions (M&A) report for Q1 2021. Overall, the quarter saw 8,753 deals close with values totaling over $917 billion.Deal activity has increased this year as companies begin to gain confidence in their outlook for the economy, both domestically and internationally. The low interest rate environment has also made it extremely affordable for businesses to finance acquisitions.The median Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA) multiple for Q1 2021 was 9.3x, the lowest since 2013 when it stood at 9.0x. Between 2018 and 2020, the median multiple was relatively consistent, ranging from 10.3x and 10.5x. The current multiple has the potential to jump back to those levels of the prior three years during the remaining three quarters of 2021 as economies open across the globe.In North America, 4,078 deals closed with values totaling $493.4 billion. Activity in the U.S. is predicted to increase throughout the year as the country’s expected stimulus package flows through the economy. It will be important to watch for future legislation and action from the current administration. Special Purpose Acquisition Company (SPAC) mergers are expected to be a significant part of M&A activity during the year.If your plans for 2021 include the possibility of a deal, learn more about Schneider Downs’ experience in advising clients throughout the course of a merger or acquisition by contacting Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com. ### Survey Now Open Schneider Downs, in partnership with the Ohio Trucking Association (OTA), is pleased to announce that the third annual Transportation Business Outlook and Economic Survey is now open for responses.Back in 2018, Schneider Downs joined forces with the OTA to co-develop a survey that would gauge perceptions of OTA members, as well as friends and affiliates of the Ohio trucking industry, on a wide range of industry topics. Launched in the fall of 2019, the inaugural Transportation Business Outlook and Economic Survey presented the first-ever barometer of the industry’s economic, operational, political and regulatory climate, as told by the people who live it every day.  Now in its third year, we are more excited than ever to open the 2021 survey for responses.Due to the continued Covid-19 and economic challenges facing the industry, it is expected that this year’s survey will yield valuable data that transportation and logistics companies throughout Ohio can use to make forward-looking decisions. We encourage all trucking companies, shippers, logistics providers, related regulatory bodies, and any other entities involved in transporting goods in the state of Ohio to respond to this year’s survey.  The 2021 survey will remain open to respondents until June 15, 2021.  Please access the survey via the link below.https://www.surveymonkey.com/r/BNYYQN8 ### Benefits of a System and Organization Controls (SOC) Report With the increasing utilization of third-party service providers, the need for trust and transparency between service organizations and their customers is essential.For service organizations that handle customers’ sensitive data, what assurance does the service provider have that proves to the customer that their sensitive data is handled in a safe and secure manner? How do current or prospective customers know that a current or prospective service organization has adequate controls in place from both operations and IT standpoint?Obtaining a SOC report has become increasingly relevant for organizations of all sizes. Customers and prospective customers need assurance that effective internal controls and related safeguards have been implemented at the service organization they use. Ensuring that the organization has effective internal controls and practices in place is essential. In fact, many customers expect to see a SOC report as part of their due diligence before deciding to do business with an organization.The benefits a SOC report provides to service organizations and their customers (user entities) are highlighted below.Benefits of a SOC Report to a Service Organization: Increase trust and provide transparency to internal and external stakeholders. Provide management with assurance regarding the effectiveness of an organization’s internal controls, while also providing insights for opportunities to improve internal controls and risk mitigation activities.  Reduce, manage and mitigate business and organizational risk. Differentiates the organization from competitors regarding the maturity of the internal control environment and the discipline to maintain that environment. Reduce compliance costs and time spent on audits and filling-out vendor questionnaires. Discover internal weaknesses and improve upon them to ensure business process efficiency. Provide assurance regarding effective internal control as it relates to HIPAA, PCI, HITRUST and/or other laws, regulations or frameworks. Benefits of a SOC Report to a Customer (User Entity): Customers are assured that procedures and controls are in place and that the organization can provide consistent quality and reliable services. Management is assured that business and operational risks are managed and mitigated. Indicates that the service organization is willing to invest time and resources into maintaining an effective control environment to ensure that the customer’s data is handled in a safe and secure manner. Shows that the organization is investing in improving its controls to better serve its customers. User entities (and prospective users) gain transparency regarding a system providing services, and assurance that relevant inherent risks are effectively mitigated (i.e., vendor risk management). The assurances provided from a SOC examination increase profits, reduce risk, strengthen brands, and create a competitive advantage. Schneider Downs employs a unique approach to delivering SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients’ expectations. If you are interested in learning how we can assist your organization, please contact us to get started or view more SOC FAQs at www.schneiderdowns.com/soc-report-faq. About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or view more SOC FAQ's at www.schneiderdowns.com/soc-report-faq.    ### Time Again for Cyburgh – and Additional Cyber Resources As we have seen over the last month, cybersecurity and data privacy issues continue to dominate the headlines and be a top concern for organizations of all sizes and industries. Just over the last few weeks, ransomware attacks prompted those in the southeast to panic buy and hoard gasoline after an attack on the Colonial Pipeline, and we learned of the release of thousands of sensitive Washington DC Metropolitan Police documents to the dark web, including gang informants, personnel records and background checks. While these are high-profile instances involving large institutions, the reality is that organizations of all sizes continue to be at risk every day. With the conversation around cybersecurity concerns only increasing, the Schneider Downs cybersecurity team would like to extend an invitation to our networks to attend the 2021 Cyburgh Initiative virtual event for free with promo code SD21. The annual event is hosted by the Pittsburgh Tech Council and brings together cybersecurity professionals from the western Pennsylvania region to discuss critical topics in the cybersecurity world. This event runs from Tuesday, May 25 to May 27, and will focus on how vulnerability impacts the bottom line, you can register at www.pghtech.org/events/2021Cyburgh_1. Additionally, the event is hosting a panel discussion on the Cybersecurity Maturity Model Certification (CMMC) . The panel, Cybersecurity Maturity Model Certification – Navigating through the Murky Waters of Certification, will focus on the nuances and best practices of obtaining this certification, and lessons learned from those who have completed the process. Troy Fine, Senior Manager of Risk Advisory at Schneider Downs, who is qualified as a CMMC Provisional Assessor, will lend his expertise to the discussion and shared his thoughts on the panel: “The panel is made up of industry experts playing different roles in the CMMC ecosystem and each panel member will bring a wealth of knowledge and insight to help attendees navigate CMMC compliance.  This is a great opportunity to learn about CMMC compliance and what to expect as you begin your CMMC journey.” ­ Introducing New Resources To support the event and panel discussion, the Schneider Downs cybersecurity team has introduced a number of new resources to our robust cybersecurity resource library. The new pieces focus on cybersecurity strategy in 2021 and CMMC, and are available below. Top 10 Cybersecurity Strategy Mistakes of 2021 Whitepaper Learn about the top ten cybersecurity strategy mistakes our team has encountered in 2021 and best practices to avoid these common pitfalls. Access the Whitepaper CMMC Preparation Checklist Be better prepared for your CMMC engagement using our preparation checklist. The checklist organizes critical steps organizations need to consider starting from 12 months out. Download the Checklist CMMC FAQ Guide As part of our continued commitment to helping organizations prepare for and understand CMMC, our team has curated some of the most frequently asked questions from authorized resources and professionals for quick reference. Download the FAQ About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Earnouts in Today’s Environment There’s no question that every industry and organization in the world has been impacted by the COVID-19 pandemic. Perhaps as a result of that overall effect, Schneider Downs Consulting has seen an uptick lately in the utilization of earnout provisions. For those not familiar, an earnout provision is an agreement between a buyer and seller to share in the risk and reward of future operations of an organization after the transaction close. It’s commonly referred to as contingent consideration because the payment from the buyer to seller is contingent on the company meeting certain thresholds. With many financial results being impacted by COVID-19, these provisions have provided an opportunity for sellers to reach pre-pandemic and reach valuations they might have seen prior or, conversely, the opportunity that the changes are going to stay. A September 2020 article in the Wall Street Journal, “Earnout Provisions Regain Popularity as Investors Address Market Uncertainty” by Laura Kreutzer, cites one estimate that claims 50% of recent transactions had earnouts, compared to pre-pandemic levels closer to 20% (after removing the life sciences industry). And the crafting of these agreements cannot be overlooked. Even prior to the pandemic, Schneider Downs Consulting saw several of these provisions lead to litigation. Our team of experienced advisors works with clients to maximize the success of all business transactions, including mergers, acquisitions, capital raising, due diligence, valuations and succession planning. We help companies along every stage of the process, guiding them toward successful outcomes. Learn more about our Transaction Advisory services or contact us for more information. ### Carriers Impacted Amidst Fuel Supply Chain Issues and Fuel Price Escalation Trucking companies across the country are bracing for effects in the fuel supply chain.  An increasing fuel shortage is possible and being closely monitored, given a variety of causes. The latest and largest reason being the shutdown of the Colonial Pipeline, due to the May 7th cybersecurity attack by an Eastern European-based criminal organization.This pipeline transports approximately 45 percent of the fuel consumed on the East Coast. Another reason includes the government relieving of coronavirus restrictions of which have led to recently increased activity among consumers, amidst supply that was artificially low. As these supply chain issues in many East Coast states are leading to a decrease in overall fuel supply, there is an immediate heightened consumer panic demand on top of the consistent diesel fuel trucking demand. Due in part to this, fuel price is climbing and is anticipated to climb even more. Per the United States, Energy Information Administration (EIA)’s weekly releases, the price of diesel per gallon has escalated for a record of 17 consecutive weeks. A semi truck's fuel economy averages around 7 miles per gallon. And although a particular driver’s mileage varies based on route, weather and traffic, most drivers travel over 600 miles on any given workday. Thus, what are some of the ways that carriers are impacted by the current fuel supply chain issues as well as increased fuel prices? Drivers with routes in states on the East Coast, along with their carriers, are closely and increasingly monitoring the fuel shortage, and determining if the planned load delivery should be delayed to those particular areas hit the hardest.  As most trucking companies tie their fuel surcharges to the weekly United States’ EIA’s average diesel pump price, the nation’s diesel price increases correlate with the increased amount charged to the shipper for freight transportation  Ordinarily, higher fuel prices mean higher overall carrier-imposed freight costs. The shipper has to then pay more to transport the freight, of which the receiver, and eventually the consumer, help to shoulder that burden. In times of rising fuel prices, shippers often consider more fuel-efficient and economically practical alternative modes of transportation, such as intermodal carriers or rail. In addition, some companies that have flexibility in the usage level of goods or services tied to fuel costs will look to cut back on the frequency of services as a cost reduction measure. Many carriers begin to emphasize fuel cost controls and waste management to drivers. For example, these measures, among others, all greatly impact a driver’s overall fuel economy: reducing idling time, maintaining tire pressure, cutting out-of-route miles, and driving above the truck’s fuel-efficiency optimal point. Although the Colonial Pipeline resumed operation on the evening of May 12th, there is uncertainty about the collateral damage of this pipeline shutdown amidst the economy rebounding from the coronavirus-related government shutdowns. Fuel availability and pricing considerably affect the carriers, as well as most parties in a supply chain. If your organization would like assistance in navigating throughout the transportation & logistics industry business conditions, we invite you to contact us and visit the Schneider Downs Transportation & Logistics Industry Group. For additional information, visit the Our Thoughts On blog. ### Thinking About Selling Your Business? Here Is Your Checklist to Get Prepared Planning and preparation are key to a successful exit plan.  Following the steps below will ensure you maximize the overall results of a process and increase the likelihood of achieving your desired outcome. Engage with an M&A advisor early – 12 to 24+ months out An M&A advisor will help you understand the value of your business and educate you on the value drivers, potential buyers, the M&A market, and a transaction process. Get financials in order Messy financials create doubt. Valuations will deteriorate and interest from potential buyers will dissipate if financials can’t readily validate the performance of the business. Formalize a monthly reporting and financial close process if one is not in place Create a forecast Have a quality-of-earnings analysis done prior to seeking buyers. For more information on Q-of-E analyses, contact SDCO. Build a strong management team A buyer wants to know that once you hand over the keys, someone will still be around to run the show. A strong management team is a value adder. Gather diligence materials An M&A advisor can provide a sample diligence request list. It is never too early to start gathering this information in order to identify potential issues and speed the sale process later. Put a full team in place consisting of an M&A advisor, accounting and tax advisors, estate planners, wealth management, and a transaction attorney Generating proceeds from the sale is the first step. The full team will help you keep as much of the proceeds as possible, grow it into the future so you can maintain your lifestyle and transfer it efficiently to your heirs. If your strategic plans include the possibility of a transaction, learn more about our experience in advising clients through the course of a merger or acquisition, by contacting Peter Lieberman at 412.697.5364 or plieberman@schneiderdowns.com. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC ### Ohio Sales Tax Holiday 2021 Ohio’s sales tax holiday this year runs from Friday, August 6, through Sunday, August 8, 2021. During the holiday, clothing priced at $75 or less, school supplies priced at $20 per item or less and school instructional materials priced at $20 per item or less are exempt from state and local sales and use tax.Qualified items sold to customers via the internet, phone or mail will qualify for the sales tax holiday as well. The following actions will need to occur during the holiday period for the exemption to apply: Order is placed Payment is initiated Retailer accepts order and processes for immediate shipment Items used in a trade or business are not exempt during the sales tax holiday. Likewise, clothing accessories and sports and recreational equipment do not qualify.Details and frequently asked questions can be viewed on the Ohio Department of Taxation’s website.  ### HEERF III is Finally Here – Why Your Institution Needs to Understand Practices to Monitor and Suppress COVID-19 The following is a brief summary of some of the more significant questions that were answered by the U.S. Department of Education (Department) when they published new FAQs in conjunction with the institutional aid portion of the funds that are now available under the American Rescue Plan Act (ARP). This article specifically discusses the requirements under ARP to “implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines.” What are the desired evidence-based outcomes that are desired as a part of the Act? There are two main outcomes that are desired: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the Higher Education Act (HEA). What are the expectations by the Department on how institutions should be using these funds to mitigate COVID-19? The Department has outlined four buckets that would be permissible and demonstrate compliance of ARP requirements. The below are examples of allowable expenditures and activities include, but are not limited to, costs associated with the following: Testing: Establishing a diagnostic or screening testing strategy, such as setting up a testing site, purchasing tests, or hiring additional personnel to administer tests. Hiring personnel to support contact tracing efforts in collaboration with local public health authorities. Prevention: Costs related to setting up vaccination sites on or off campus to bring the vaccine to students, faculty, and staff, including bringing sites to rural and satellite locations, and costs associated with building awareness and confidence of the vaccine among students. Providing masks and other personal protective equipment to students, faculty, and staff. Supporting clean and sanitary campus environments, including purchasing hand sanitizer and handwashing stations that can be placed throughout the campus. Cleaning and disinfection. Enhancing ventilation in classrooms or common areas. Using mask campaigns to increase mask compliance on campus. Implementing physical distancing guidelines, such as modified layouts. Costs associated with vaccination efforts. Redesigning food service facilities. Developing training and communication systems to communicate with students. Cost associated with campus and local outreach on the benefits of vaccination as a virus-mitigation strategy. Reducing Barriers to Vaccination: Paying for time off for staff to get the vaccine. Providing sick leave to employees to get vaccinated. Spreading awareness and building confidence in getting vaccinated, including setting up clinics for students to receive vaccinations, or other confidence and awareness building efforts. Supporting Students: Procuring additional space both on or off campus to house students, and supporting other costs associated with meeting the basic needs of students in isolation and quarantine. Providing academic support services and mental health services for students in isolation or quarantine. Supporting coping and resilience for students. Additionally, the CDC has developed several COVID-19-focused resources tailored to institutions of higher education available at www.cdc.gov/coronavirus/2019-ncov/community/colleges-universities/index.html, including “Considerations for Institutions of Higher Education” at www.cdc.gov/coronavirus/2019-ncov/community/colleges-universities/considerations.html. Also relevant are those activities found on the Department’s Best Practices Clearinghouse. What are the direct outreach activities that are mandated under the Act? This requires institutions to provide notice to financial aid applicants and current financial aid recipients that they may be able to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances. The Office of Postsecondary Education published guidance in January 2021 reminding financial aid administrators that they may use professional judgment to reduce or adjust to zero the income earned from work for a student and/or parent if the student or parent has received unemployment benefits. As such, institutions should work to disseminate this opportunity widely for their financial aid applicants and make use of the professional judgment authority as needed. “Direct outreach” requires an institution to actively engage financial aid applicants and recipients regarding the opportunity to receive a financial aid adjustment. Such outreach should be more than a passive notification of the opportunity to receive a financial aid adjustment, such as posting this opportunity on the institution’s website. Direct outreach is not considered advertising or recruiting. Direct outreach could include, but is not limited to, any of the following: Email to students who receive financial aid, Mail to students who receive financial aid, Phone or voice communication, Webinar invitations, and In-person interviews or meetings. Please note that direct outreach does not require in-person interaction to financial aid applicants. Additionally, grantees are reminded that marketing is an impermissible use of HEERF III funds. Is there a minimum threshold that institutions are required to meet in order to demonstrate permissible use of these funds? Congress did not set a specific threshold or amount that institutions must use to implement these two required activities. As such, recognizing that each institution’s needs and circumstances are different, institutions should be guided by the Cost Principles in 200 CFR part 200 subpart E, which require that an institution spend a reasonable and necessary portion of its HEERF grant funds in order to successfully implement these two required grant activities. Any institution that receives an ARP (a)(1) Institutional Portion award (both supplemental awards and new awards) or ARP (a)(2) or (a)(3) award must implement these two required activities as part of the implementation of its HEERF III grant, provided it has not allocated its entire institutional portion to emergency financial aid grants for students. How will my institution be required to document these activities? Institutions should document how they implemented these two required activities consistent with 2 CFR § 200.334. Specifically, institutions should document (1) the strategies used to monitor and suppress COVID-19, (2) the evidence to support those strategies, (3) how those strategies were in accordance with public health guidelines, (4) the manner and extent of the direct outreach the institution conducted to financial aid applicants, and (5) how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. The Department is exploring following up by collecting more information on an institution’s implementation of these two required activities in the 2021 HEERF Annual Report to be submitted in early 2022. Related Articles HEERF III is Finally Here – Some Administrative Reminders HEERF III is Finally Here – A Quick Guide to the Changes for Student Portion HEERF III is Finally Here – A Quick Guide to the Changes for Institutional Portion How Can Schneider Downs Help? Schneider Downs’ Higher Education Industry Group is a dedicated team of experienced professionals, specializing in serving colleges and universities.  Our team consists of individuals who have devoted their professional careers to thinking big within the higher education sector and delivering personal focus to each institution, their management teams and governing bodies. Learn more at www.schneiderdowns.com/education. ### HEERF III is Finally Here – A Quick Guide to the Changes for Student Portion The following is a brief summary of some of the more significant questions that were answered by the U.S. Department of Education (Department) when they published new frequently asked questions (FAQs) in conjunction with the student aid portion of the funds that are now available under the American Rescue Plan Act (Act). A reminder that all previous FAQs still apply, unless directly superseded by a subsequent FAQ. You should carefully review all of the FAQs as these documents have not been carried forward into the current document. What types of students can obtain Higher Education Emergency Relief (HEERF) relief funds? Students are no longer required to be eligible for Title IV student financial aid in order to receive HEERF grants. That includes citizens, permanent residents, refugees, asylum seekers, Deferred Action for Childhood Arrival (DACA) recipients, other DREAMers, and similar undocumented students. Students studying abroad may receive HEERF emergency financial aid grants from the recipient institution where they are enrolled. These students must meet the criteria based on prioritizing exceptional needs that the institution has established for distributing its HEERF emergency financial aid grants. What about concerns regarding discrimination when awarding the funds? HEERF grantees must not distribute student emergency financial aid grants in a manner that discriminates against individuals on the basis of race, color, national origin, disability, or sex. See, e.g., 42 U.S.C. § 2000d et seq., (Title VI), 29 U.S.C. § 701 et seq. (Rehabilitation Act), 20 U.S.C. § 1681 (Title IX). The Department finally provides better clarification of what they mean by exceptional need. This concept was addressed in the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) grants: Other types of exceptional need could include students who may be eligible for other federal or state need-based aid or have faced significant unexpected expenses either for themselves or that would affect their financial circumstances, such as the loss of employment, reduced income, or food or housing insecurity. In addition, the CRRSAA explicitly states that emergency financial aid grants to students may be provided to those exclusively enrolled in distance education provided they have exceptional needs. The Department encourages institutions to prioritize domestic students, especially undergraduates, in allocating this funding. What are preconditions you can’t impose when determining exceptional need? An institution may not do any of the following (e.g., (1) establish a minimum GPA requirement, (2) imposing other academic or athletic performance or good standing requirements, (3) requiring continued enrollment in the institution or (4) required the student to first pay any outstanding debt or balance that results in failure to prioritize students with exceptional need. How will these grants impact future federal awards to students? They will not impact awarding. Aid (in the form of grants or low-interest loans) received by victims of an emergency from a federal or state entity for the purpose of providing financial relief is not counted as income for calculating a family’s Expected Family Contribution (EFC) under the Federal Methodology or as estimated financial assistance for packaging purposes. What happens if the student doesn’t cash their check? If a student does not cash their emergency financial aid grant check by a reasonable date, the institution may choose to void the check and redistribute the funds to other students by the end of their HEERF grant performance period. Institutions should engage in reasonable attempts to contact a student prior to voiding a check for an emergency financial aid grant and should document the procedures, policies, and general student contact efforts made and followed as part of their administration of their HEERF grants. I have questions about the institutional portion, where I learn more? We have an article covering institutional questions at www.schneiderdowns.com/our-thoughts-on/heerf-iii-changes-institutional-portion. You can read the full set of FAQs from the Department at www.schneiderdowns.com/our-thoughts-on/heerf-iii-changes-institutional-portion. Related Articles HEERF III is Finally Here – Some Administrative Reminders HEERF III is Finally Here – Why Your Institution Needs to Understand Practices to Monitor and Suppress COVID-19 HEERF III is Finally Here – A Quick Guide to the Changes for Institutional Portion How Can Schneider Downs Help? Schneider Downs’ Higher Education Industry Group is a dedicated team of experienced professionals, specializing in serving colleges and universities.  Our team consists of individuals who have devoted their professional careers to thinking big within the higher education sector and delivering personal focus to each institution, their management teams and governing bodies. Learn more at www.schneiderdowns.com/education ### HEERF III is Finally Here – A Quick Guide to the Changes for Institutional Portion The following is a brief summary of some of the more significant questions that were answered by the U.S. Department of Education (Department) when it published new frequently asked questions (FAQs) in conjunction with the institutional aid portion of the funds that are now available under the American Rescue Plan Act (ARP). A reminder that all previous FAQs still apply, unless directly superseded by a subsequent FAQ. You should carefully review all of the FAQs, as these documents have not been carried forward into the current document. Are there any changes in the types of expenses that can be claimed under the latest round of the Higher Education Emergency Relief Fund (HEERF)? Under the Act, similar to the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), allowable uses under the HEERF III (a)(1) Institutional Portion awards include: Defraying expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff training, and payroll); and Making additional emergency financial aid grants to students. The Act has added two new required uses of HEERF III institutional portion grant funds for public and private nonprofit institutions. Namely, a portion of their institutional funds must: (a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the Higher Education Act (HEA). HEERF has not permitted the use of the funds for the acquisition of real property, but what happens if we need to perform minor remodeling as a result of changes needed to promote social distancing. Is minor remodeling defined? Minor remodeling means minor alterations in a previously completed building, for purposes associated with the coronavirus. The term also includes the extension of utility lines, such as water and electricity, from points beyond the confines of the space in which the minor remodeling is undertaken, but within the confines of the previously completed building. The term does not include permanent building construction, structural alterations to buildings, building maintenance, or repairs. Some examples of permissible minor remodeling may include, but are not limited to: The installation or renovation of an HVAC system, to help with air filtration to prevent the spread of COVID-19. The purchase or lease of temporary trailer classroom units to increase social distancing. The purchase or costs of the installation of “room dividers” within a previously completed building to increase social distancing. I understand the concept of lost revenue, but my institution is experiencing significant growth in outstanding balances from students. Can I use the institutional portion to help with this? Institutions may discharge student debt or unpaid balances by discharging the complete balance of the debt as lost revenue and reimbursing themselves through their HEERF institutional grants, or by providing additional emergency financial grants to students (with their permission). The Department strongly encourages institutions to discharge such debt.  There are specific examples that can be found in FAQ #26. Has the definition of lost revenue, the types of permissible costs or the excluded costs changed at all under HEERF III? No. The Department continues to use the same definitions and references the same cost guidance. We have previous articles on lost revenue and how to calculate lost revenue. As a reminder, the other types of excluded costs include: HEERF grant funds must not be used for: Funding contractors for the provision of pre-enrollment recruitment activities; Marketing or recruitment (See FAQ #27 for further explanation on re-engagement activities); Endowments; Capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship; Senior administrator or executive salaries, benefits, bonuses, contracts, incentives, stock buybacks, shareholder dividends, capital distributions, and stock options, or any other cash or other benefit for a senior administrator or executive; Religious worship, instruction or proselytization, or the equipment or supplies to be used for religious worship, instruction or proselytization; or Construction or purchase of real property (See FAQ #23 for further examples). Where can I learn more about the practices to monitor and suppress COVID-19? Our article "Why Your Institution Needs to Understand Practices to Monitor and Suppress" describes this. Is the reporting information now available for HEERF II and HEERF III? Yes. The detail on reporting is now available. Similar to HEERF I, there are quarterly reporting requirements that are being mandated. Those reporting requirements include: • Quarterly Institutional Public Reporting Form for (a)(1) Institutional Portion, (a)(2), and (a)(3) Funds. This form must be conspicuously posted on the institutions’ website no later than 10 days after the calendar quarter (July 10, October 10, January 10, April 10). • Quarterly Student Public Reporting Requirement for (a)(1) Student Aid Portion and the CRRSAA (a)(4) and ARP (a)(4) program. The responses to these questions must be conspicuously posted on the institutions’ website no later than 10 days after the calendar quarter (July 10, October 10, January 10, April 10). The Department will be collecting an annual report for HEERF III ARP grantees in early 2022. The Department will share more information regarding this annual report, which will also require institutions to report on their uses of any remaining HEERF I CARES Act funds and HEERF II CRRSAA funds, in advance of the ARP annual reporting deadline. Will these funds be subject to audit? This will depend on the specific funding your institution receives. We expect the majority of the institutions that receive this aid have their HEERF Funds (I, II or III) subject to be audited. These awards (student and institutional) will need to be reflected on your schedule of expenditures of federal awards when the funds are deemed to be expended. You can read the full set of FAQs from the Department here. Related Articles HEERF III is Finally Here – Some Administrative Reminders HEERF III is Finally Here – Why Your Institution Needs to Understand Practices to Monitor and Suppress COVID-19 HEERF III is Finally Here – A Quick Guide to the Changes for Student Portion How Can Schneider Downs Help? Schneider Downs’ Higher Education Industry Group is a dedicated team of experienced professionals, specializing in serving colleges and universities.  Our team consists of individuals who have devoted their professional careers to thinking big within the higher education sector and delivering personal focus to each institution, their management teams and governing bodies. Learn more at www.schneiderdowns.com/education ### HEERF III is Finally Here – Some Administrative Reminders The following is a brief summary of some of the more significant questions that were answered by the U.S. Department of Education (Department) when they published new frequently asked questions (FAQs) in conjunction with the student aid portion of the funds now available under the American Rescue Plan Act (ARP). All previous FAQs still apply, unless directly superseded by a subsequent FAQ. It’s important to carefully review all FAQs, as these documents have not been carried forward into the current document. How long do I have to spend the various Higher Education Emergency Relief Fund (HEERF) funds I received? Institutions generally must expend their HEERF grant funds within one year from the date the Department processed the most recent obligation of funds for each specific grant. Thus, institutions that received a supplemental award under ARP have one year to spend all remaining funds authorized by Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (Pub. L. 116-260), the Coronavirus Aid, Recovery, and Economic Security Act (CARES Act) (Pub. L. 116-136), and new ARP funds for each grant from the date their ARP supplemental award is made. The specific period of performance will be indicated in Box 6 of your institution’s Grant Award Notice (GAN). The Department understands that some grantees—even given the emergency nature of the HEERF grant—may be unable to expend funds by this time. Consequently, no-cost extensions (NCEs) of up to 12 months are available, as provided for in 2 CFR § 200.308(e)(2). NCEs extend a grant’s period of performance. NCEs may not be exercised merely for the purpose of using unobligated balances. Given the emergency nature of HEERF grants, the Department encourages grantees to use their awards to cover expenses associated with the coronavirus as they arise and not hold off on doing so. When should I draw my funds via the G-5 platform? HEERF grantees are under an obligation to minimize the time between drawing down funds from G5 and paying obligations incurred by the grantee (liquidation). The Department may evaluate for compliance with the rule grantees who have not drawn down the funds from G5 and not paid the obligations (the emergency financial aid grants to students) to the students within 15 calendar days. When must I draw a portion of the funds? Institutions that receive an ARP (a)(1) or (a)(4) supplemental award(s) must draw down any amount of its grant funds within 90 days of the date of each supplemental award. Failure to draw down any amount of the institution’s award(s) may constitute nonacceptance of the terms, conditions, and requirements of the Supplemental Agreement and the Department may choose to deobligate and redistribute the ARP supplemental grant funds or take other appropriate administrative action, up to and including terminating the grant award pursuant to 2 CFR § 200.340. Please note this requirement is the same as it was for CRRSAA (a)(1) supplemental awards. When is the earliest time my institution can charge expenses to these grants? Institutions may charge expenses associated with coronavirus (pre-award costs) that were incurred on or after March 13, 2020, the day the national emergency was declared due to the coronavirus, to their ARP awards. I received a notification about excessive cash draw down; what does that mean? This notification is triggered when grantees draw down large balances, instead of gradually throughout the entire length of their performance periods. Because of the nature of the HEERF grant program, some institutions may have a large expense that requires a drawdown of all or most of their HEERF grant funds at once. For example, if an institution has determined which students will receive emergency financial aid grants, it may incur an expense for all or most of its (a)(1) Student Aid Portion grant. Once an institution has incurred these valid obligations (as opposed to drawing down funds in advance of need), a large drawdown in your HEERF grant may prompt G5 to send an automated “Excessive Cash Drawdown” email. My institution has spent all of the HEERF funding. Are there additional steps I need to take with the Department to close out the grants? Contact the ED Program Contact listed in Box 3 of your GAN. Ensure that they have liquidated remaining funds for expenditures incurred during the grant period of performance. Per recent changes to the Uniform Guidance, institutions now have 120 calendar days to liquidate all financial obligations incurred under the award after the period of performance. Ensure that all quarterly reporting is properly publicly posted online and submitted to the Department as required by the HEERF Quarterly Reporting requirements. Additionally, public quarterly reports should remain online for at least three years after the submission of the last quarterly or annual performance report. Submit the annual performance report covering the last period of grant performance when the Department opens the system for annual performance reporting (the next annual performance report will be submitted in early 2022). Maintain all grant financial records, supporting documents, statistical records, and all other entity records pertinent to the HEERF grant award for a period of three years from the date of submission of the last quarterly or annual performance report per 2 CFR § 200.334. Submit all required audits as described in Question 38 and the Department’s HEERF Grant Program Auditing Requirements Letter (issued on March 8, 2021). There are a lot of FAQs out there. Which are still applicable as of right now? The following FAQ documents remain, in whole or in part, applicable to the HEERF III ARP programs (unless superseded by the text of ARP): Lost Revenue FAQs (issued on March 19, 2021) CRRSAA HEERF II (a)(1) FAQs (issued on January 14 and updated March 19, 2021) CRRSAA HEERF II (a)(4) FAQs (issued on January 14 and updated March 19, 2021) HEERF CARES Act Rollup FAQs (issued October 14, 2020 and revised January 28, 2021) HEERF Grant Program Auditing Requirements Letter (issued on March 8, 2021) The Department intends to consolidate all applicable HEERF FAQs into a single document soon for ease of program administration and compliance. You can read the full set of FAQs from the Department here. Related Articles HEERF III is Finally Here – Why Your Institution Needs to Understand Practices to Monitor and Suppress COVID-19 HEERF III is Finally Here – A Quick Guide to the Changes for Student Portion HEERF III is Finally Here – A Quick Guide to the Changes for Institutional Portion How Can Schneider Downs Help? Schneider Downs’ Higher Education Industry Group is a dedicated team of experienced professionals, specializing in serving colleges and universities.  Our team consists of individuals who have devoted their professional careers to thinking big within the higher education sector and delivering personal focus to each institution, their management teams and governing bodies. Learn more at www.schneiderdowns.com/education. ### Going Cashless We’ve likely all had similar shopping experiences during the pandemic – being offered contactless payment options at retailers, placing more online and pickup orders, and generally keeping less cash in our wallets. But if you’re like me, you’ve been having those experiences all along; there’s just been a really significant increase over the past year.Cashless forms of payment usually result in faster transaction times and are generally more hygienic, two factors that make the option more appealing during a time when we’ve been asked to limit exposure to other individuals. For everything else that it’s affected, the pandemic has certainly accelerated the path we’ve been moving down for some time, that of a cashless society. For financial institutions to succeed through this transition, here are a couple of key considerations:Digital currenciesAs newer currencies like Bitcoin and Dogecoin are increasingly accepted by merchants, there’s a likelihood that financial institutions will see a demand for such assets to be included in their operations. Opportunity exists to start adapting processes now to prepare for future demand.CybersecurityAn increase in the number of electronic payment methods brings about additional cybersecurity concerns. Digital currencies have lower levels of regulation than traditional forms of payment and are a more appealing target for cybercriminals. Plus, newer forms of technology can often be more susceptible cyber threats. An institution’s means of cybersecurity should be assessed regularly for new and evolving technologies.While the exact outlook may appear to change almost every day, the continued shift toward a cashless world is likely inevitable. If you have any questions related to this topic or would like to learn more about our Risk Advisory Financial Services or Cybersecurity teams and related offerings, please contact us at contactsd@schneiderdowns.com. ### What Are The Top Ten Cybersecurity Strategy Mistakes of 2021? The Schneider Downs cybersecurity team shares the most common cybersecurity strategy mistakes organizations are making in 2021. The Schneider Downs cybersecurity team dedicates significant time and resources to maintaining a detailed understanding of advanced threat actors’ current capabilities and methodologies. Our team leverages this knowledge to help organizations of all sizes and industries be better prepared for the evolving threats of today and tomorrow. In our latest whitepaper our team highlights key insights gained through strategic discussions with business and technology leaders attempting to navigate the shifting landscape of modern cybersecurity.  Download the Whitepaper  Many organizations still lack a comprehensive understanding of cybersecurity risks and with so many technical variables and threats, their cybersecurity strategy could find itself relying on thought processes that are outdated or based on false assumptions. From a penetration tester’s perspective; these strategic mistakes are often the root cause of significant compromises. In this whitepaper, we discuss several critical misconceptions and overlooked risks that may be lurking within your organization’s cybersecurity strategy and review practical approaches to help reach an effective cybersecurity posture, such as: Bystander Mentality: Underestimating the Probability of Being Targeted by Threat Actors The bystander mentality is one of the most small to mid-sized organizations, and it often results in within their cybersecurity strategies. Every organization is a potential target and should take a “not if, but when” approach to cybersecurity threats. Seesaw Logic: Intentionally Excluding Security Controls Due to Convenience Concerns One of the largest misconceptions organizations have is that increasing security always decreases convenience. While truly effective cybersecurity strategies impact existing processes, the idea that a change in routine is worse than poor cybersecurity strategies is simply not true. Tunnel Vision: Focusing on the Specific Instances Instead of Root Causes Organizations tend to focus on individual instances versus the underlying cause of cybersecurity incidents. Leadership will ask “who clicked on something bad?” or “who is using weak passwords?” instead of reflecting on their phishing education, technical controls or policies. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Ransomware Attack Shuts Down Major U.S. Pipeline Operator This weekend, U.S. pipeline operator, Colonial Pipeline, shut down its entire network due to one of the largest cyber-attacks in American infrastructure history.Colonial Pipeline is one of the largest pipeline operators in the U.S. and operates pipelines that transport gasoline, diesel fuel and natural gas along more than 5,000 miles from Texas to New Jersey, making up approximately 45% of all fuel consumed on the east coast. DarkSide, an Eastern European-based criminal organization is the primary suspect according to U.S. officials, but that has not yet been confirmed.In an official statement published on their website, Colonial Pipeline stated:On May 7, the Colonial Pipeline Company learned it was the victim of a cybersecurity attack. We have since determined that this incident involves ransomware. In response, we proactively took certain systems offline to contain the threat, which has temporarily halted all pipeline operations, and affected some of our IT systems. Upon learning of the issue, a leading, third-party cybersecurity firm was engaged, and they have launched an investigation into the nature and scope of this incident, which is ongoing. We have contacted law enforcement and other federal agencies.  The Biden Administration has been vocal about bolstering the nation’s cybersecurity efforts and is reportedly taking an all hands on deck approach to the situation. Eric Goldstein, Executive Assistant Director of the CISA Cybersecurity division, commented on the attack:This underscores the threat that ransomware poses to organizations regardless of size or sector. We encourage every organization to take action to strengthen their cybersecurity posture to reduce their exposure to these types of threats. While there is no ETA for service restoration and no sign this disruption will have an immediate effect on the fuel markets, there is concern that a prolonged shutdown could eventually impact gas supplies and prices – especially with many parts of the country lifting COVID-19 restrictions and the existing discussion around potential fuel shortages this summer.This attack joins the growing list of high profile ransomware attacks over the last year, and is part of a concerning trend of ransomware gangs targeting companies in the industrial sector due to their willingness to pay and in many cases not report the incident publicly. In fact, CISA released an official warning on ransomware threats last year specifically for pipeline operators following an attack on a natural gas compression facility that caused a two-day shutdown.The Schneider Downs cybersecurity team has experience working with several clients in the oil and gas industry, with our red team working with multiple SCADA systems. We know first hand how dangerous controls like these can be in the wrong hands and while this case is simply financially motivated, there are many instances where hactivist groups and foreign bodies are simply looking to send a message through cyber-attacks.  Regardless of how the Colonial Pipeline situation is resolved, cybersecurity experts agree that attacks on critical infrastructure in the public and private sector will only continue to grow until organizations can build defenses to keep pace with the ransomware epidemic.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Guidance for NERC-CIP-013-01 Compliance Background On July 21, 2016, the Federal Energy Regulatory Commission (FERC) issued Order No. 829, directing the North American Electric Reliability Corporation (NERC) to develop a new or modified ‘Reliability Standard.’ NERC is a not-for-profit international regulatory authority whose mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid. NERC develops and enforces Reliability Standards; annually assesses seasonal and long?term reliability; monitors the bulk power system through system awareness; and educates, trains, and certifies industry personnel. This would govern third parties, otherwise known as supply chain risk management in the power and utilities sectors.  In 2018, NERC released NERC-CIP-013-1, which mandates that power and utilities secure their global supply chain by holding their vendors to cybersecurity requirements.  The standard covers industrial control system hardware, software and computing and networking services associated with the Bulk Electric System (BES). Third Party Risk Management (TPRM) has become an increasingly popular focus for businesses.  As this has happened, there are more and more industry-specific guidelines and standards for TPRM, like NERC-CIP-013-1.  The risks addressed in CIP-013-1 are highly specific to supply chain risk management.  Some of the rationale for the new standard is due to third party cyberattacks, such as sneaking micro-chips into servers which were designed to alter servers upon activation.  Power and utility (P&U) organizations must develop and implement plans that both identify vulnerabilities in the supply chain and mitigate them.  The focus is on suppliers because the electric grid is one of the largest targets for cyberattacks.  The reason for this is because of the merging of Operational Technology (the technology supporting the grids), typical IT/Information Systems, Third Party Risk, and physical security risk.  All of these together increase the attack surface.  The urgency of CIP-013-1 stems from increasing nation-state threats, the societal consequences of failure, and heightened regulatory pressures and compliance hurdles.  A breach in a supplier/third party could lead to an attacker gaining access to the power and utility organization.  Other organizations other than just power and utility organizations may also be subject to the CIP-013-1 requirements.  These include organizations who have a vast number of vendors, or third-parties, that provide services and solutions that allow P&U’s to reliably support the BES. The cyber requirements in CIP-013-1 aim to improve security against attacks that target supply chains, especially in the electric power and utilities sectors.  Some of the requirements included in CIP-013-1 include implementing controls that limit exposure to malware, limit exposure to tampering, vendor procurement guidelines, vendor permissions and vendor monitoring. The effective date for NERC CIP-013-1 was July 1, 2020.  Organizations have 18 months from that date to be confident in their proof of compliance to avoid penalties.  For each outstanding violation of the requirements, NERC is authorized to find organizations up to $1 million per day.  Reasons for enforcement actions include both incomplete or insufficient evidence of compliance, to nonconformance to established policies and procedures within the organization, and unintended disclosure of information considered sensitive. Implementation Requirements There are three major requirements in order to become CIP-013-1 compliant, which are broken into three (3) main categories: R1, R2 and R3. Requirement R1 states that “Each responsible entity shall develop one or more documented supply chain cyber security risk management plan(s) for high and medium impact BES.”  The plan needs to include multiple components.  The first being that one or more process(es) must be used in planning for the procurement of BES Cyber Systems to identify and assess cyber security risk(s) when procuring and installing vendor equipment and software, and when transitioning from one vendor(s) to another vendor(s) (aka transition risk).  The other is that there must be one or more process(es) in place to address the following when procuring BES Cyber Systems: Notification of vendor-identified incidents which involve the products or services to the responsible entity; Coordination of responses to vendor-related incidents; Notification by vendors when remote or on-site access is no longer required from the vendor; Disclosure by vendors of known vulnerabilities; Verification of software integrity and authenticity of all software and patches provided by the vendor for use in the BES Cyber System; Coordination of controls for (i) vendor-initiated Interactive Remote Access, and (ii) system-to-system remote access with a vendor(s). Requirement 1 The focus of Requirement R1 is on the steps the Responsible Entity takes to consider cyber security risk from vendor products or services during BES Cyber System planning and procurement.  A Responsible Entity could require vendors to meet minimum cyber security control requirements based on the criticality of the product for given products or services that a vendor must meet prior to transacting with that for those products or services.  These “must-have” controls could vary based on the various products the Responsible entity procures for its BES Cyber Systems.  This risk based approach can be applied to all aspects for Requirement R1 in order to increase efficiency of procuring vendors that meet the security objectives of R1.  The evidence required to demonstrate compliance for R1 include on or more documented supply chain cyber security risk management plan(s) as specified in the Requirement. Requirement R2 Requirement R2 states that “Each Responsible Entity shall implement its supply chain cyber security risk management plan(s) specified in Requirement R1”.  This does not require the responsible entity to renegotiate or abrogate existing contracts.  Contracts that enter the Responsible Entity’s procurement process on or after the effective date are within scope of CIP-013-1.  Entities must show that for the BES Cyber Systems and/or related services, the Responsible Entity has implemented its Plan as required in Requirement R1.  This can be completed by an independent assessor which evaluates a vendor’s cyber security controls.  In fact, the ERO promotes this practice as it provides disinterested third parties or departments that are independent from the department performing a reliability function.  The evidence required for R2 shall include documentation to demonstrate implementation of the plan from R1, which could include correspondence, policy documents, or working documents that demonstrate use of the supply chain cyber security risk management plan. Requirement R3 Requirement R3 declares that a Responsible Entity requires the supply chain security risk management plan(s), as identified in R1, be reviewed and approved by a CIP Senior Manager or delegate at least once every 15 months.  The evidence required to demonstrate compliance is the dated supply chain cyber security risk management plan(s) approved by the CIP Senior manager or delegate(s) as long as any additional evidence to demonstrate review.  This may include, but is not limited to, policy documents, revision history, records of review, or workflow evidence from a document management system that indicate review of supply chain risk management plan(s) at least once every 15 months; and documented approval by the CIP Senior Manager or delegate. What’s Next Department of Energy (DOE) has just recently launched an initiative to enhance the cybersecurity of electric utilities’ industrial control systems and secure the energy sector supply chain (April 20, 2021).  This comes as part of the Biden Administration’s effort to safeguard U.S. critical infrastructure from persistent and sophisticated threats. Over the next 100 days, the DOE’s Office of Cybersecurity, Energy Security, and Emergency Response (CESER)—in partnership with electric utilities—will continue to advance technologies and systems that will provide cyber visibility, detection, and response capabilities for industrial control systems of electric utilities. The initiative: Encourages owners and operators to implement measures or technology that enhance their detection, mitigation, and forensic capabilities; Includes concrete milestones over the next 100 days for owners and operators to identify and deploy technologies and systems that enable near real time situational awareness and response capabilities in critical industrial control system (ICS) and operational technology (OT) networks; Reinforces and enhances the cybersecurity posture of critical infrastructure information technology (IT) networks; and Includes a voluntary industry effort to deploy technologies to increase visibility of threats in ICS and OT systems. The DOE also released a new Request for Information to seek input from electric utilities, energy companies, academia, research laboratories, government agencies, and other stakeholders to inform future recommendations for supply chain security in U.S. energy systems.  The responses received will enable DOE to evaluate new executive actions to further secure the nation’s critical infrastructure against malicious cyber activity and strengthen the domestic manufacturing base. How Can Schneider Downs Help? Schneider Downs can help with NERC CIP-013-1 compliance through their ThirdParty Risk Management function.  As a part of the IT Risk Advisory Services department, the team has the expertise, credentials and tools to help you build, implement, recalibrate, and manage a world-class third-party risk management program.  Learn more at www.schneiderdowns.com/tprm or contact us at contactsd@schneiderdowns.com. ### Financial Institutions and COVID-19 – One Year Later As businesses continue to slowly transition to a post-COVID-19 world, financial institutions are no different. BAE Systems, a global company with offices in 17 countries, recently released the BAE Systems Applied Intelligence COVID Crime Index 2021 Report, which examines and provides analysis of the impact cybercrimes had on the financial services and customers during the pandemic. The data is based on a survey performed against 902 financial institutions, two instances of which I wanted to highlight in this article. The first statistic from respondents indicates that slightly over half of them (51%) had to adapt their security posture and strategy as a result of COVID-19, with an average of 18 weeks to recalibrate.  While financial institutions weren’t the only institutions in this situation as a result of COVID, this statistic stresses the need for all institutions to understand the importance of a comprehensive business continuity and disaster recovery program that includes considerations for a pandemic. In regards to cybercrime during the pandemic, 74% of those that responded stated they experienced an increase in malicious activity due to the pandemic.  Respondents also indicated that their budgets for security, fraud and risk had been cut on average by 26% over the prior 12 months.  This sets up an interesting questions to whether the increased activity is due to decreased budgets or just due to a continued increase of cybercrime in the world. Either way, financial institutions aren’t the only ones suffering decreased budgets and increased attacks. Organizations across all industries should prioritize cost-effective preventative steps despite budgeting challenges due to the long-term benefits to ensure their security posture and prevention/detection techniques will protect them from attacks. Schneider Downs recently held a Financial Services Webinar where we spoke on fraud risk assessments, implementing secure systems in the cloud and cybersecurity.  A replay of the webinar is available at www.schneiderdowns.com/2021-financial-services-webinar. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### The Restaurant Revitalization Fund – Part II On March 11, 2021, the American Rescue Plan Act (ARPA or the Act) became law. As discussed in our article on March 24, (American Rescue Plan and the Restaurant Revitalization Fund), its numerous programs included the Restaurant Revitalization Fund (RRF), which directed federal government support towards the food service industry.  Since that time, the industry has been awaiting detailed guidelines from the SBA (Small Business Administration) on the process for applying for the support.  On Tuesday, April 27, the SBA finally released additional program details. The SBA will open its application process on Friday, April 30th by allowing applicants to register, but not taking actual applications until Monday, May 3rd.  Detailed information is available on the SBA landing page. Per the SBA website, eligible businesses can apply through SBA-recognized Point of Sale (POS) vendors or directly via SBA in a forthcoming online application portal.  Participating POS providers include Square, Toast, Clover, NCR Corporation (Aloha).  If an applicant is working with a POS vendor, they do not need to register beforehand.  If not working with an approved vendor, but rather with the SBA directly, applicants will need to create an account.  For applicants working directly with the SBA, it has published a 22-page RRF Program Guide (most recent version 4 is dated April 28, 2021) that provides the following detailed instructions: Gather documentation outlined in this document. Visit restaurants.sba.gov to access the application platform if you have access to the internet and will not apply through one of SBA’s Restaurant Partners. Create an account. Complete the application questionnaire and attestations. Upload necessary documentation. Upon application completion, a DocuSign package will be sent to the email entered in the application portal. Execute DocuSign package immediately in order to trigger the SBA review process. SBA will begin the review of your application. Review will take approximately 14 days to complete when complete and validated documentation is provided. Applicants may check the status of their application on the application portal. Application decision information or request for further documentation will be sent to the email associated with the Applicant account. If approved, funds will automatically be deposited to the bank account entered into the application. Visit The Restaurant Revitalization Award Portal to begin your application. In addition to the Resource Guide, the SBA has established a “Restaurant Revitalization Fund Knowledge Base” containing over 130 FAQs involving program questions or technical help issues: Revitalization-Fund-Knowledge-Base    Eligible entities that include bakeries, brewpubs, tasting rooms & taprooms, Breweries & Microbreweries, wineries & distilleries, and Inns must provide documentation that 33% of their gross receipts are from on-site sales consumed on the Applicant’s premise. Applicants must make a good faith certification that the current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations, and that it does not have a pending application for and has not received a Shuttered Venue Operator grant from SBA. There has been a lot of information released in a short period of time.  The important first step is to be in a position to apply on Monday May 3; contact your POS Restaurant partner to help you or register with the SBA directly and be prepared to apply yourself.  Also, gather any necessary information.  If you have any questions while you are preparing for this program, please don’t hesitate to contact your Schneider Downs professional.   ### Financial Boot Camp Series: To Refi or Not to Refi, That Has Been the Question Overview of the Refinancing Process Refinance to Save on Financing Costs or Tap into Accrued Equity Closing Costs are the Key Factor to Analyzing a Refinance With the pullback in interest rates in 2020 given the monetary response to the COVID-19 virus, refinance activity was very robust. Individuals should always be cognizant of their financial liabilities and the associated interest rates on these obligations. While interest rates have ticked up since last year’s lows, historically, rates remain very low. In 2021, refinancing existing debt could still be a worthwhile option to consider for individuals seeking to lower their financing costs. Refinancing debt is the process of revising or replacing an existing credit agreement with a financial institution. When individuals apply for debt refinancing, they are typically seeking more favorable terms such as a lower interest rate, a different loan term, or other key provisions. Consumer loans that are often considered for refinancing are mortgages, car loans, and student loans. Desiring a lower interest rate is the most popular reason borrowers look to refinance debt. According to a March 2021 research note from Freddie Mac, a key player in the secondary mortgage market, because of mortgage rates touching historical lows in 2020, refinancing activity correspondingly reached its highest level since 2003. When considering an individual’s refinance application for approval, financial institutions will re-evaluate one’s credit profile including credit score, the credit history (i.e. late payments), size and length of the loan, and employment and income history. Generally speaking, individuals are going to need a fair to good credit rating to be considered for most refinance programs. The two most common refinancing scenarios are either to save money via a lower interest rate or a shorter term or a cash-out refinance.  Refinance to Save Money Via Lower Interest Rate or Shorter Term In the above-linked March report by Freddie Mac, borrowers who refinanced their 30-year fixed-rate mortgage to a new, lower interest rate, 30-year fixed-rate mortgage saved over $2,800 in annual mortgage payments by refinancing in 2020. The typical refinance loan in 2020 was a loan for about $300,000, with the borrower lowering their rate from 4.3% to 3.1%. In addition to refinancing to a lower interest rate to save money, individuals also sometimes refinance shorter-term loans to save on interest costs over the life of the loan. When the difference between the interest rate on a 30-year fixed rate (currently 3.21% per Bankrate.com) and a 15-year fixed-rate mortgage (2.48% per Bankrate.com) widens, a refinance could be appealing. Cash-Out Refinance According to Zillow, U.S. home prices increased almost 11% year-over-year in March 2021 with Zillow also projecting price increases of 10% over the next 12 months. For individuals seeking to tap into their home’s appreciation and associated equity (appraised market value less outstanding mortgage balance), a cash-out refinance could be an option. A cash-out refinance could be a source of capital for a home renovation, education costs, other investment opportunities, or an opportunity to consolidate debt to a lower interest rate (i.e. use the cash-out proceeds to pay off other higher-interest loans such as credit card or student debt). In the event that a homeowner is considering a cash-out refinance, we would also suggest exploring a home equity line of credit given the potential lower closing costs. Closing Costs Key Factor As noted, when a consumer applies to refinance debt, the financial institution re-evaluates their creditworthiness and unfortunately, banks do not perform credit due diligence for free. According to Nerd Wallet, average closing costs can run between 2% and 5% of the loan amount, so on a $300,000 loan, closing costs could range from $6,000 to $15,000. Given the significant amount of closing costs, it is imperative that individuals have a firm grasp on expected loan costs before proceeding with a refinance. Assume an individual is considering a refinance of their existing 4.3% interest rate, $300,000, a 30-year fixed mortgage to a new 3.1%, $300,000, 30-year fixed mortgage. They would save about $204 per month from a lower principal and interest (P&I) monthly payment or $2,443 annually. To evaluate whether refinance is beneficial, analyze the payback period of this refinanced loan (how many years until the lower annual debt service compensates for the upfront closing costs). Below, we illustrate the payback period for closing costs ranging from 2% to 5% of the loan. As you can see, the payback period ranges from 2.5 to over 6 years depending on closing costs. Ultimately, the decision to or not to refinance is a personal decision factoring in how long the individual plans to live in that house, but the longer it takes to recoup the upfront closing costs should give individuals pause before proceeding with a loan refinance. Should you be looking for ways to gain more control over your finances and liabilities, please contact Schneider Downs Wealth Management Advisors, LP. Our advisors would welcome a conversation with you.     ### IPE and ITGCs – What You Need to Know During the yearly audit cycle, companies are sure to provide a substantial amount of information to their auditors. This is referred to as Information Provided by the Entity (IPE) and is considered to be all types of information used by an auditor to arrive at conclusions that are used to form the audit opinion.This could include the testing of internal controls or performing other substantive procedures.  For companies that undergo Sarbanes Oxley (SOX) testing, a key piece of the information provided to the auditors is financial reports. Since reports are so vital for testing, companies that undergo SOX testing need to ensure they are using controlled and independently tested applications to generate financial reports instead of manually updated spreadsheets or applications that do not follow or are not compliant with the SOX information technology general controls (ITGC). ITGC controls become more important to ensure that those financial reports are complete and accurate. Within a company’s environment, auditors will usually group reporting IPE in the following categories: Standard Application Reports – These reports have been developed by the vendor who owns the application. The company has no ability to modify or edit these reports. Custom Reports – These are reports that are created by the company’s IT team, based on requirements that are set by the business team.  Ad-hoc Reports – These are reports that business users create by themselves to use on an as-needed basis. Some of the most important ITGC controls for companies to consider when using custom reports are the change management procedures that are performed over the reports. Effective change management should include: Identifying the in-scope SOX reports that are used in financial reporting. The in-scope reports should be baselined, which means the reports need to be tied back to the source system or another report/method if the report is in the source system during user acceptance testing.  Changes to reports should be documented within a ticketing system. Business users should be performing user acceptance testing and baseline testing for each change. Approval from the business and IT teams should be performed and captured within the change ticket. Developers should not have the ability to migrate their own changes to the production environment. There should be separate environments for development, quality assurance (QA) and production. System-generated log of report changes should be available for the auditors. When there are ineffective change management procedures in place over reports, such as no process to track changes, segregation of duties issues or lack of logging, companies may need to implement additional procedures to ensure that the in-scope SOX reports are complete and accurate and to ensure the auditors will rely on the reports. These additional procedures could involve recreating reports and tying the numbers back to the source system, to ensure they are correct. It could also involve performing a periodic review of the reports and changes that are made to ensure that the changes are appropriate. Finally, ad-hoc reports should be used with caution for financial reporting.  Ad-hoc reporting provides value to business users by being flexible and great for investigating issues.  However, this flexibility usually is at the cost of control and auditability of the changes.  If ad-hoc reports are used, the user should document parameters with the report each time the report is generated.  Even with documenting these parameters, your auditors will most likely push for a more controlled environment for key financial reports.  Overall, companies need to have the necessary processes in place to ensure that all reports used in their environment are complete and accurate. This involves having the correct ITGC controls and specifically change management controls in place to monitor and track changes to these reports. Both the IT and business teams need to work together to make sure the correct controls are in place and the reports are accurate. The IT teams are responsible for setting up reports, ensuring the appropriate users have access, making sure the reports are run on the necessary schedule, and that the reports have the correct data within them. On the other hand, the business users are responsible for working with IT to set up all necessary reports and validating that the correct information is included in each of the reports. The involvement of both IT and business uses, along with strong change management controls over the in-scope SOX reports, ensures that companies will be providing accurate and up-to-date data to be used when generating financial reports. For additional information please visit our dedicated Sarbanes-Oxley solutions page or contact us.   ### Florida Enacts Sales and Use Tax Economic Nexus On April 19, 2021 Florida became one of the final states to pass legislation adding sales and use tax economic nexus for remote sellers.The new law requires out-of-state vendors to begin collecting Florida sales tax on July 1, 2021 if their taxable remote sales in Florida exceeded $100,000 in 2020. With the passage of this law, Kansas and Missouri remain the only two states with a sales tax that have not added economic nexus provisions. The new law also includes requirements for marketplace providers to collect Florida sales tax. The same standard ($100,000 in the calendar year 2020) applies to marketplace providers.The Florida Department of Revenue is providing tax, penalty, and interest relief to new registrants on remote sales made prior to July 1, 2021 if registration is completed by October 1, 2021. The relief offered by Florida is not available to taxpayers under audit or taxpayers that have received a notice from the Department. Businesses with substantial sales activity in Florida should consider registration and prepare their sales and tax systems to begin collecting Florida sales tax on July 1, 2021.If you have any questions on Florida’s new sales and use tax law and how it may impact your business, contact your Schneider Downs tax advisor. ### The American Families Plan – Proposed $1.8 Trillion Spending and Tax Plan Last night in his first address to a joint session of Congress, that was also televised to America, President Biden unveiled a $1.8 trillion spending proposal envisioned to further boost the economy while helping the lower and middle class.  The American Families Plan (AFP) is his 3rd spending plan released in his first 100 days in office. The first, the American Rescue Plan signed into law in March, was an emergency pandemic aid bill that mostly focused on direct financial infusions to individuals and state and local governments along with funding for the vaccine rollout and other healthcare provisions. The second package, the American Jobs Plan (including the Made in America Tax Plan), released earlier in April during an appearance in Pittsburgh, is designed to invest in improving traditional physical infrastructure, broadband, R&D and other less non-traditional infrastructure such as home and community-based care for the elderly and disabled.  These programs are to be funded through tax law changes targeted at corporations.  A comprehensive bill is still being developed and negotiated.   See our article from April 1 (Introduction to The American Jobs Plan and The Made in America Tax Plan) for further details. The AFP is the 3rd plan released.  Coupled with the American Jobs Plan, together these two spending and tax proposals are being promoted by the White House “as once-in-a-generation investments in our nation’s future.” A White House fact sheet notes so that to “grow the middle class, expand the benefits of economic growth to all Americans, and leave the United States more competitive, President Biden’s American Families Plan is designed to: Add at least four years of free education by providing 2 years of universal preschool to three- and four-year-olds at the front-end of learning with 2 years of free community college at the higher end of learning. Provide direct support to children and families by subsidizing child-care, creating a national comprehensive paid family and medical leave program, and providing additional nutritional assistance to families in need. Extend tax cuts for families with children and American workers by extending and increasing key tax provisions in the American Rescue Plan including the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit while also extending expanded health insurance tax credits. Additional details on each category above can be found in the White House fact sheet (see below for link). President Biden proposes to pay for this increased federal spending by proposing changes in the current tax law affecting individuals.  The proposed changes include: Increasing the top individual income tax rate to 39.6% from 37%; Doubling the individual capital gain tax rate to 40% for taxpayers making over $1 million; Eliminating the “stepped-up” basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) with limited exceptions provided for family-owned businesses and farms; Eliminating the “carried interest” provisions available to hedge fund partners; Eliminating the like-kind exchange provisions for real property for gains greater than $500,000; Permanently extending the excess business loss rules limiting the deduction of business losses exceeding $500,000 annually; Changing the Medicare tax rules so they apply “consistently to those making over $400,000 ensuring that all high-income Americans pay the same Medicare taxes. Calling for “financial institutions to report information on account flows so that earnings from investments and business activity are subject to reporting more like wages”; Increasing IRS enforcement on wealthy individuals. Additional details can be found in the White House fact sheet. It’s important to keep a sense of calm when considering this proposal. What are the chances of a tax hike in 2021?  No one really knows.  But some things to consider: There may be some Democratic senators who are not completely on board with this proposal (Senator Manchin from West Virginia for example). Given the current 50/50 split in the Senate, this could cause problems for President Biden and Democratic Party leaders in trying to get this proposed spending and tax plan passed as currently envisioned. Tax increases have generally not been retroactive so there may still be time to plan in 2021 once more details become available. A 40% capital gains tax rate is outside the normal range based over the past 40 years.  Since 1981, the capital gains rate has been between 15% and 28%.  We may see proposals for an increase in the capital gains tax rate to 40% to help pay for the deficits generated over the past 20 years (due in part to the global COVID-19 pandemic) and to pay for the additional programs being proposed.  However, it’s just as possible that, through political negotiation between the two parties, a capital gain rate could be agreed to that falls in between the current 20% rate and the proposed 40% rate (excluding the impact of the NII Tax). The proposed bill language has not been released yet.  Many different proposals will likely be offered by both Republicans and Democrats over the next few months.  Note that if the 2017 Tax Cuts and Jobs Act legislative process is any indication of the process that lies ahead for this proposal, this release is likely the first volley in a drawn-out battle for yet another major tax law change.  Recall that the Republicans controlled the House and Senate in 2017, but it took most of the year to get the legislation enacted on December 23, 2017. In the meantime, continue to stay tuned to Schneider Downs as we continue to monitor the proposals coming from Congress and develop insights and ideas for responding to proposed changes.  If you have any questions or need additional insights about President Biden’s proposals and their impact on you or your business, please reach to your Schneider Downs advisor.   ### Ransomware Groups Attack Washington DC Police and QNAP Clients Two ransomware groups are making headlines this week following major attacks on the Washington DC Metropolitan Police Department (MPDC) and QNAP Systems.These two attacks illustrate how diverse ransomware attacks can be based on their endgame and strategy. Are they looking for a large payday from an entire organization? Are they going after smaller ransoms directly from individuals? MPDC Ransomware AttackThe attack on the MPDC is an example of an organizational attack, with the threat actors gaining unauthorized access to large pools of sensitive data – in this case 250GB of confidential information. The data includes information from the January Capitol Riots, police reports, internal memos, mugshots and personal information of police informants. The hacker group Babuk is believed to have orchestrated the attack and warned the MPDC had three days to contact them or they would start contacting gangs with information on police informants in the note below.“Hello! Even an institution such as DC can be threatened, we have downloaded a sufficient amount of information from your internal networks, and we advise you to contact us as soon as possible, to prevent leakage, if no response is received within 3 days, we will start to contact gangs in order to drain the informants, we will continue to attack the state sector of the usa, fbi csa, we find 0 day before you, even larger attacks await you soon.” – via Bleeping ComputerThe MPDC confirmed the attack via an official spokesperson Monday and stated they are working with the FBI. The terms/amount of the ransomware demands have yet to be confirmed as of the publication of this article.  This attack is part of the growing trend of ransomware groups targeting government organizations, with The Verge reporting 26 other agencies have reported ransomware attacks in 2021, with 16 of them having stolen data released online. What is even more troubling is the average ransom demand growing to $100,000 during the pandemic based on reports from the Justice Department.QNAP Ransomware AttackThe other ransomware attack making headlines this week is on the other end of the spectrum as the attack targeted clients of QNAP devices. QNAP Net Attached Storage (CAS) systems are storage solutions popular with small business and consumers. The physical storage devices are constantly connected to the internet – providing a backup option that can be taken on the go both as a device and virtually.Unfortunately, the constant connectivity made QNAP an attractive target with the ransomware group Qlocker quickly exploiting vulnerabilities on the QNAP NAS devices to lock up customers files using the 7zip archive utility. The ransom demand was reportedly modest, with the group focusing on a low-cost, high-volume model, asking for approximately $525 in exchange for the encryption key for the locked files. As many small businesses and customers were faced with this amount or the scenario of losing sensitive/personal data, a large number understandably chose to pay. As of this article, Bleeping Computer reported more than 500 victims had paid, totaling at least a $260,000 payday for Qlocker.During the initial attack, security researcher Jack Cable took to Twitter with offers to help victims by exploiting a bug within the Qlocker’s website to help recover their data. Shortly after, Qlocker patched the exploit and no other workarounds have been found.Source: Hot HardwireQNAP has provided some guidance for preventing future ransomware attacks for customers in their Response to Qlocker Ransomware Attack press release, including an updated malware removal and security advisories, but have not made any public statements on financial reimbursements or help for impacted customers. Some customers have reported QNAP is simply advising customers through customer support to pay the ransom. Obviously this answer has been met with increased negativity and will be interesting to follow if/how QNAP customers respond – whether it be switching providers or exploring legal options.Related Articles Ransomware Still a Growing Problem for Organizations of All Sizes Ransomware Attack Disrupts Popular Sports Gambling Sites ProLock Ransomware Attacks Overview and Mitigation Strategies About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Proposed Changes to Goodwill Topic 350 On March 30, the Financial Accounting Standards Board (FASB) issued an update to Topic 350-20 (Intangibles – Goodwill and Other) with regard to the Accounting Alternative for Triggering Events.The new standard applies to private companies and not-for-profit (NFP) entities that report goodwill in accordance with Subtopic 350-20 and is not limited to those entities that have also elected the accounting alternative for amortizing goodwill. The standard will not require incremental disclosures beyond the existing requirements in Subtopic 350-20 or Topic 235 (Notes to Financial Statements). It takes effect for fiscal years beginning after December 15, 2019.Under previous Subtopic 350-20 guidance, entities were required to monitor and evaluate goodwill impairment throughout the fiscal year, as impacted by qualifying triggering events. After such an event, a company was required to assess whether it was more likely than not that the fair value of the reporting entity was less than its carrying value; if so, the company would need to test goodwill for impairment. Testing and subsequent analysis were required to be performed on the date of the triggering event, without the benefit of hindsight or other known changes to facts or circumstances that may have occurred after the event date.The FASB recognized that there may be significant cost and complexity involved in performing an interim triggering event evaluation when compared to conducting one on an annual basis or at the end of the reporting period. Additionally, interim impairment analyses may not always provide useful information to users of certain private company financial statements since facts and circumstances that led to the impairment triggering event may have changed or are not present at the end of the annual reporting period. In such instances, an updated triggering event analysis that reflects current circumstances may be more relevant to financial statement users than the interim impairment analysis.This update by the FASB provides private companies and NFP entities with the option to perform the identification and evaluation of a triggering event for goodwill impairment as of their reporting date rather than the date of the triggering event. Entities that select this alternative will no longer be required to monitor goodwill impairment triggering events in interim periods, but instead evaluate facts and circumstances as of their financial statement reporting date to determine whether it is more likely than not that goodwill is impaired.  ### Contractors’ Expectations Continue to Rise Based on the latest U.S. Chamber of Commerce Commercial Construction Index, U.S. contractors are growing increasingly more optimistic which is mainly driven by a rise in revenue expectations. In the first quarter of 2021, 36% of contractors said they expect to see an increase in their revenue over the next 12 months, which is an increase of over 11% since the fourth quarter of 2020.  Over 87% of contractors expect their revenue to either stay the same or increase over the next months which is again showing an increase from the fourth quarter of 2020.  In addition, approximately 46% of contractors are confident they will employ more people in the next 6 months which is nearly a 10% increase from the fourth-quarter report.Despite the positive news from the contractors polled above, the index remains approximately 12 points below its score from the first quarter of 2020, which was pre-pandemic  Currently, contractors’ top concerns, which are of no surprise, are related to the ongoing effects of the COVID-19 virus.  Those concerns include project shutdowns and worker safety to highlight a few.  Another challenge contractors are going to be faced will be finding skilled workers, material shortages and cost fluctuations, with the rising cost of lumber being of the utmost concern.A few additional findings from the index show that tariff and trade concerns are increasing with most contractors saying steel and aluminum tariffs will have a significant impact on their business over the next handful of years.  Additionally, more contractors are planning to increase their spending on tools and equipment, however not nearly to the levels before the pandemic.  One final and interesting finding from the most recent Index is that nearly 80% of contractors are still experiencing delays that are directly related to COVID-19.  Clearly, the impact of the COVID-19 pandemic will continue to be felt in the year ahead.If you have any questions don’t hesitate to contact us or check out the Schneider Downs Construction Industry Group. ### How Internal Audit Can Assist with SOC Reviews at Higher Education Institutions With the rise of cloud computing and software-as-a-service (SaaS) playing a key role within higher education institutions, outsourcing certain functions to third parties is becoming more frequent.Since third parties are being held accountable for providing services, computing, processing, storage and the protection of customer data, higher education institutions are requiring these third parties to complete a System and Organization Controls (SOC) report, or similar, prior to engagement.  Depending on the services being provided by the third party, a different report might be provided.  SOC 1 reports are specifically intended to meet the needs of entities that use service organizations (user entities) in evaluating the effect of the controls at the service organization on the user entities’ financial statements. SOC 2 reports are designed to provide assurance for the security, processing integrity, availability, confidentiality, and/or privacy of other services provided by a service organization that does not impact the user entities’ financial statements.  Service organizations are held to a standardized set of control criteria for each of the categories covered in the report.  SOC reports can be classified as either a Type 1 report or a Type 2 report.  Type 1 reports represent a point-in-time and only opine on the design of the controls at the time at which the report was completed.  Type 2 reports represent a period over time and reflect the operating effectiveness of controls throughout the review period.  Thus, Type 1 reports provide less assurance of third-party controls, and the Type 2 reports are typically required to provide a greater level of assurance.  If no report is available, a third-party security questionnaire should be provided to these third parties to be completed and returned.SOC reports should be reviewed on a frequency commensurate with the criticality of a third party.  Criticality of third parties depends on many attributes including, without limitation, on the type of data they receive, the type of access they have to your network, the institution’s Recovery Time and/or Point Objective (RTO and RPO), which should be based on a Business Impact Analysis (BIA).  A good rule of thumb is that all critical and high-risk third party SOC reports should be reviewed annually, moderate risk third parties should be biennial, and low risk subservice organizations should be triennial.  With this process of reviewing SOC reports growing as the industry standard, some higher education institutions might not be staffed and/or prepared to complete the tens to hundreds of SOC reports that require regular review.  This is where the Internal Audit function at institutions is proven to be a natural fit. For example, our Risk Advisory team issues hundreds of SOC reports annually, and therefore, maintains a deep understanding of SOC report requirements. SOC reports are not built equally, so having a trusted SOC expert to perform the review of other reports brings the assurance process full circle and produces otherwise unrealized value-added recommendations.As part of Schneider Downs’ SOC report review process, we review the following areas to verify the security of the higher education institution’s third parties. You can also use the AICPA’s SOC Report Review Template to guide your review (Download it at schneiderdowns.com/TPRM) or reference “How to Review a Vendor’s SOC Report”:  Opinion Period Covered by the Report Scope of Report Types of Testing Complementary User Entity Controls (CUECs) Complementary Subservice Organization Controls (CSOCs) Control Objectives (SOC 1) and Trust Services Criteria (SOC 2) Audit Firm Reputation Subservice Organizations Results of Testing Once the review of the report is complete, Internal Audit also assesses the CUECs and CSOCs by leveraging other audits performed for the institution. Complementary controls are essential to ensure the third party’s controls operate effectively, so the practice of mapping them to an institution’s internal controls allows for a true gap analysis to be performed. In summary, utilizing the Internal Audit function to perform third-party assessments is a practical approach for assessing and monitoring the controls of third parties and allows your institution to further focus on achieving its core mission.  ### Controlled Unclassified Information: Labeling Requirements for CMMC and NIST 800-171 As the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) framework begins rolling out and working its way into DoD contracts, one of the most common questions we get are: “What is Controlled Unclassified Information (CUI)” and “How do you label CUI appropriately?”In the Federal Government’s own words: “CUI is information the government creates or possesses, or that an entity creates or possesses for or on behalf of the government, that a law, regulation, or government-wide policy requires or permits an agency to handle using safeguarding or dissemination controls.” The other part of information being considered CUI is that it is not meant for public release without proper authorization, but does not warrant a Confidential, Secret, or Top Secret classification from the Federal Government.CUI is further broken into 24 categories and 83 subcategories. Each subcategory then provides a designation as either CUI Basic or CUI Specified. These categories and subcategories can be found here: https://www.archives.gov/cui/registry/category-list. Information that is designated as CUI Specified contains specific marking, handling, and dissemination requirements that must be followed. But what about CUI Basic?CUI Basic has a general handling, dissemination, and marking requirement that must be applied to every record containing information which is considered CUI Basic. To start, all records must have a header that reads: “CUI”. This header cannot contain anything else. Then on the first page or cover page of every CUI containing record, the following information must be annotated: Line 1: the name of the DoD Component (not required if identified in the letterhead) Line 2: identification of the office creating the document Line 3: identification of the categories contained in the document Line 4: applicable distribution statement or limited dissemination control (LDC) Line 5: name and phone number or email of POC This marking requirement applies to every CUI containing record, whether that is a document, presentation, email, or any other type of record designated as containing CUI. Both NIST 800-171 and CMMC, have a control that directly requires these markings.In NIST 800-171, this is Control 3.8.4 and in CMMC, this is Practice MP.3.122 which reads:“Mark media with necessary CUI markings and distribution limitations.”There are two simple questions to determine if information is CUI: Does the information meet the standards for classification? If yes, it is not CUI, it is classified information. Does the information fall within a law, regulation, or government-wide policy? If no, then it cannot be considered CUI. If the information is considered CUI, the next steps are to determine which category and subcategory of CUI the information falls into. If the subcategory is CUI Specified, follow the listed marking requirements. If it is CUI Basic, apply the required header and annotation listed above.CMMC and NIST 800-171 both require a policy and procedures document for meeting the labeling requirements for CUI, and individuals handling CUI must be trained on how to label CUI appropriately. This training is provided by the DoD, who also provide a CUI Marking Job Aid with this training that lists out the specific CUI marking requirements. This Job Aid can be found through the link below.If you would like to learn more about CUI, the purpose of establishing the CUI designation, or CUI marking requirements, the DoD’s CUI training is the best place to start: https://securityhub.usalearning.gov/index.html.How Can Schneider Downs Help?Schneider Downs currently offers CMMC readiness and consulting services as a Registered Provider Organization (RPO). Our team includes a Certified CMMC Provisional Assessor, and several other members currently in process of applying for CMMC Certified Assessor status who plan on completing training in Q2 of 2021. OSCs should note that a single firm cannot perform both consulting and audit services for a single client per the CMMC-AB standards. In the meantime, until such requirements are made public, we can help your organization prepare for CMMC by performing an assessment against the NIST 800-171 framework. For more information visit www.schneiderdowns.com/cmmc or contact us to get started.  ### SD Focus on Women Spotlight: Rachel Carson In honor of Earth Day today, Thursday, April 22nd, I want to highlight environmental advocate, Rachel Carson.  She was a woman influenced by her mother’s love of nature as a child.  Little did she know her poetic gift of writing and passion for the environment would spark a movement. Rachel Carson was born on a farm in Springdale, Pennsylvania on May 27, 1907 just outside Pittsburgh on May 27, 1907. She was the youngest of three children.  At a young age, Rachel’s mother taught her the calls of animals and the names of plants.  Her love of nature was captured in her words as she began to write stories of the animals and birds that lived around the farm. In her heart, Rachel knew she would be a writer.    She became a published author at 10 years old for several children’s magazines and writing living a lifelong passion with a purpose. After graduating high school, Rachel attended Pennsylvania College for Women (now Chatham University).  Her mother sold apples, chickens and the family’s china to pay for her tuition and traveled from the farm to the college every weekend to type her daughter’s papers (and later her books as well).  After taking a biology course, she decided to attend an oceanographic institute for a summer research project. While there, her love of the sea was born, and she changed her major from English to Biology.  She graduated magna cum laude in 1929. In 1932, Rachel moved her sick father, mother, divorced sister and nieces to Baltimore where she earned a master’s degree in Zoology and began studying for her doctorate at John Hopkins University. Since her father was ill, she had to abandon the doctorate program to support her family and became the second female to be hired at the US Bureau of Fisheries. After a short time in her position, she wrote an 11-page essay about sea life that her department head commented was “too good” for a government brochure. He encouraged Rachel to send to the essay to a publication, The Atlantic, where it was published and the renamed “Undersea” was published.  Not long thereafter, she began reading government reports about fish and wildlife and the effects of DDT, a chemical pesticide that stopped the spread of typhus by killing lice.  This chemical had not been tested for civilian use and many creatures other than insects appeared to be dying.  Rachel was intrigued, so she wrote an article on the imbalance of nature caused by the chemical and pitched it to Reader’s Digest.  Reader’s Digest decided not to publish her article so she decided to focus on writing books. Rachel wrote her first book about sea life, “Under the Sea-Wind” in 1941.  Regardless of health issues (doctor found and removed lumps in her breast), Rachel continued writing and published “The Sea Around Us” was published in 1951. This book earned her a National Book Award, a national science writing prize and was on the Times best seller list for 86 weeks.  She also won a Guggenheim Grant, which along with the earnings from her books, provided her with the means to move to Southport Island, Maine, where she built a cottage by the ocean.  In 1955 Rachel wrote “The Edge of the Sea”. A couple of years later, Rachel faced another family tragedy when one of her nieces died of pneumonia and left her with her four-year-old son, Roger, whom she adopted. At that time, she decided to set aside from taking on long writing projects. In January 1958, Rachel received a letter from Olga Owens Huckins, a member of the citizen’s Committee Against Mass Poisoning. Ms. Huckins wrote about the devastating effects of statewide insecticide aerial-spraying programs in the Northeast. She also wrote that the insects were not dying but everything else was.  but the insects were dying. There was a trial against the chemical company and she suggested that Rachel cover the story in New York.  Since Rachel was needed to care for her mother and nephew Roger, she convinced The New Yorker to publish the story. Rachel received reports at home regarding the trial, wrote the article and it was published. In the fall of 1958, her mother had a stroke and passed away in December.  Her mother’s love of nature-inspired her last and most famous book “Silent Spring” published in 1962.  “Over increasingly large areas of the United States, spring now comes unheralded by the return of the birds, and the early mornings are strangely silent where once they were filled with the beauty of the bird song,” Carson wrote.  The topic of “Silent Spring” focuses on the devastating effects of pesticides, namely DDT, on ecosystems and people.  Rachel accused the chemical industry of misinformation and they in turn, discredited her as a “hysterical woman” or Communist while being interviewed on CBS TV special that aired in April 1963.  Over 15 million people watched the special broadcast and the topic became a major, political issue. Rachel’s appearance on CBS and book “Silent Spring” about the destruction of pesticides was validated by President Kennedy’s Science Advisory Committee Report.  Rachel received medals from the National Audubon Society and the American Geographical Society and was inducted into the American Academy of Arts and Letters. After a long battle with breast cancer, she died in 1964. Since her death, a variety of groups have celebrated her life and work and in 1980 Rachel was posthumously awarded the Presidential Medal of Freedom by President Jimmy Carter. Rachel Carson’s persistence and passion in her beliefs over her lifetime is an illustration of how we can all make a difference in our own lives, communities, and the greater world.   Change often occurs slower than we like but investing time, effort and enthusiasm allows us all to make the world a better place. Sources: Lepore, Jill.  “The Right Way to Remember Rachel Carson”. The New Yorker Magazine. The New Yorker, 26 March 2018, https://www.newyorker.com/magazine/2018/03/26/the-right-way-to-remember-rachel-carson Michals, Debra. “Rachel Carson.” National Women’s History Museum. National Women’s History Museum, 2015. Date accessed ### What is a SOC for Cybersecurity report and who needs one? Organizations that undergo a SOC for Cybersecurity examination will obtain a report on the effectiveness of their cybersecurity risk management program from an independent CPA firm. The report can be presented to the organization’s board of directors, analysts and investors, business partners, industry regulators and customers and will demonstrate whether the organization has effective cybersecurity controls in place to achieve its cybersecurity objectives.The following could be potential users of a SOC for Cybersecurity report: Members of an organization’s board of directors who need information about the cybersecurity risks the organization faces and the cybersecurity risk management program that management implements to help them fulfill their oversight responsibilities. They also want information from independent third-party assessors that will help them evaluate management’s effectiveness in managing cybersecurity risks. Analysts and investors may benefit from information about your organization’s cybersecurity risk management program. This information is intended to help them understand the cybersecurity risks that could threaten the achievement of an organization’s operational, reporting, and compliance (legal and regulatory) objectives and, consequently, have an adverse impact on an organization’s value and stock price. Business partners may need information about an organization’s cybersecurity risk management program as part of their overall risk assessment. This information is intended to help business partners determine matters such as whether there is a need for multiple suppliers for a good or service and the extent to which they choose to extend credit to an organization. Customers and industry regulators may benefit from information about an organization’s cybersecurity risk management program to support their oversight role. About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or view more SOC FAQ's. ### FTC Issues COVID-19 Vaccine Scam Alert The Federal Trade Commission (FTC) recently released a consumer alert warning against fraudulent COVID vaccine surveys designed to steal personal information and money. With nearly half of U.S. adults at least partially vaccinated, scammers have shifted their focus on to target the vaccinated population. Consumers have reported receiving emails and text messages inviting them to complete a post-vaccine survey for the Pfizer, Moderna and AstraZeneca vaccine. (The FTC has not reported any surveys associated with Johnson & Johnson, but that’s likely because no one has reported it yet.) The surveys are not only possible phishing/smishing attacks that link to malware, but in some reported cases surveys you can finish for a “free gift” with the caveat that you pay shipping—which requires your credit card or bank information. Images courtesy of FTC Regardless of the type of fraud, protect yourself by avoiding these types of scams with the same best practices cyber professionals have encouraged from the beginning. Don’t click on any suspicious links or open attachments. Don’t use the contact information provided on the emails/texts—look them up online if you need to. Don’t provide your bank account, credit card or personal information to unsolicited communications. Don’t assume the sender name means a valid person (i.e. From CDC ) The Better Business Bureau also shared best practices for spotting a COVID-19 text messaging scam during the first wave of attacks that still stands true: Government agencies do not typically communicate through text messages. Go to the agency's website yourself (without clicking on the link) to verify any activity you receive via text. Ignore instructions to text "STOP" or "NO" to prevent future texts. This is a common ploy by scammers to confirm they have a real, active phone number. If you think your text message is real, be sure it's directing to a web address like "agency.gov" or “agency.ca,” not "agency.otherwebsite.com." Check for look-alikes. Be sure to do your research and see if a government agency or organization actually exists. Find contact info on your own and call them to be sure the person you’ve heard from is legitimate. COVID-19 related fraud isn’t new, but continues to change as the pandemic evolves. The first wave of Coronovirus cyber scams included the John Hopkins coronavirus tracker malware, fraudulent PPE, spear phishing campaigns focused on pandemic financial legislation and a host of smishing campaigns for “mandated” federal COVID-19 testing. As the pandemic continues, we know scammers will do what they do best—capitalize on current events and shift their campaigns as needed. So, remember erring on the side of caution is your best bet. The FTC encourages anybody who receives potentially fraudulent texts or emails to report them online at ReportFraud.ftc.gov, and you can keep up-to-date with the latest FTC updates on their webpage Coronavirus Advice for Consumers. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### SDWMA Named as one of the Nation's Top DC Advisor Teams in 2020 by NAPA We are pleased to announce that Schneider Downs Wealth Management Advisors, LP (SDWMA) has been named as one of the Nation’s Top DC Advisor Teams in 2020 by the National Association of Plan Advisors (NAPA).The NAPA Top DC Advisor Team list highlights the nation’s leading retirement plan advisor firms. Unlike other lists, this focuses on teams having at least $100 million in defined contribution (DC) plan assets under advisement and is based on self-reported assets under advisement as of December 31, 2020.The National Association of Plan Advisors was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors. NAPA is part of the American Retirement Association, based in the Washington, D.C. area. More information about NAPA is available at www.napa-net.org.NAPA members like SDWMA are having a huge impact every single day, not just on the quality of retirement plan advice, but also in building a more financially secure retirement for millions of Americans. It is a great honor for SDWMA to be listed in this regard by NAPA.To our clients, friends, and colleagues, thank you for your continued trust and confidence in SDWMA. If you know someone that we could be of service to, please do not hesitate to share this article or have them contact us at sdwealthmanagement@schneiderdowns.com.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Registration with the SEC does not imply any level of skill or training. ### Was My Data Breached or Scraped? Linkedin and the Apple exclusive app, Clubhouse, have joined Facebook in the headlines over the past week with reports of members’ personal information being leaked.In addition to sharing space in the cybersecurity headlines, Linkedin and Clubhouse have joined Facebook in pushing the narrative that user information was not part of a hack, rather a data scrape. The push to position the incidents as data scrapes seems two-fold, it makes the problem seem less severe (and to a point this is true) and also in some countries, the ability to define these as non-breaches, helps the companies avoid regulatory consequences.So what’s the difference between the two? And is scraping really less problematic as the platforms infer?Data BreachAlso referenced as a data leak, a data breach is defined as an incident that involves the unauthorized or illegal viewing, access or retrieval of data by an individual, application or service. It is a type of security breach specifically designed to steal and/or publish data to an unsecured or illegal location. Breaches can be accidental, but are more often intentional incidents led by hackers looking for private information such as financial records, passwords, social security numbers and health information. Some of the largest breaches include Equifax, Capital One and Marriott International.Data ScrapingA data scrape is defined as an incident where software is able to download public information from a website, like member information or even just the content. It’s like an automated browser that downloads public information. Public data can include names, phone numbers, emails, user IDs, location and linked social accounts.Facebook, Linkedin and Clubhouse are promoting the concept that since only public information from their platforms were collected, technically no private information was accessed illegally, so there is no true breach. While personal information was collected and either sold or dumped on hacker forums, there was no sensitive or private data, and at the end of the day, I’d rather find out my full name and hometown were leaked versus my social security or credit card number.Should I Be Concerned?While there is merit to the idea that a data scrape is less severe than a data breach of sensitive information, the idea that a data scrape won’t be useful to hackers is wishful thinking. Hackers are smart and can make the most out of any information to attack, including:Phishing and Spear PhishingArmed with public information including names, employer information and network contacts, hackers can craft convincing phishing and spear phishing campaigns, which are one of the most popular entry attacks that cause full scale data breaches.Password CrackingDespite the constant reminder of securing passwords, we know a large portion of end users simply don’t take developing strong credentials seriously. While data scrapes don’t include passwords, they include information that can help hackers piece together usernames and potential passwords.Imagine that John Doe has his name scraped with his company from Linkedin, in many instances a hacker may simply google the company email nomenclature and use the most commonly hacked passwords to try and gain access to their systems. While John Doe’s email and password may not have been leaked, a little ingenuity and online search can quickly result in a full scale breach if his email is jdoe@company.com and password is 123456 (before you laugh, this was the most common password of 2020).What Should I Do?Regardless of whether you discover you are part of a breach or scrape, we encourage you to take steps to secure your accounts, including changing passwords, exploring password management software and checking your credit through one of the three reporting agencies for any changes. You can also check if you have been part of a breach on the popular HaveIBeenPwned website at https://haveibeenpwned.com. This site tracks data breaches and can tell you if you have been part of any breach, including the Facebook one, by providing your phone number or email. Additionally, we encourage you to be mindful of what information you are making public on your online account and to maximize the privacy settings of each platform.Related Articles Was Your Facebook Data Exposed? Part of a Data Breach… Now What? About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Operationalizing a Third-Party Risk Management Program in Higher Education Why Third-Party Risk Management is NecessaryHigher education regulatory requirements are increasing year over year. The price to pay is more than just lagging behind – lack of formal policies and procedures to meet these requirements can lead to financial repercussions, bad press, and overall lack of trust which can hurt the university in more ways than one. Compliance needs to be at the forefront of every strategic initiative, ensuring preparedness for any regulations set for the industry.Complying with these regulations all begins with creating tried and true policies and procedures for dealing with internal and external parties; from performing an annual risk assessment to address GLBA requirements, to engaging in meaningful conversation with your third parties to ensure the comfort of the controls they perform to secure your data, robust controls need to be implemented. The latter is often an area in which many organizations struggle; all too often the process for selecting new third parties is unilateral or lacks involvement from necessary parties such as general counsel, IT, or compliance. Further, most procurement departments do not have the resources to perform the proper vetting or due diligence of new or existing third parties, and to add to that, haven’t agreed-upon metrics to vet against. A defined Third-Party Risk Management (TPRM) program is crucial to ensure all third parties that a university engages with are tracked and cycled through standardized processes.Current State vs. Desired State The TPRM lifecycle can be broken down into two major parts: acquisition and continuous monitoring. Acquisition focuses on both inherent and residual risk, while continuous monitoring by the organization mainly corresponds to the level of comfort that a university has with the residual risk that a third party maintains. Inherent risk is defined as the natural level of risk inherent in a process or activity without doing anything to reduce the likelihood or mitigate the severity of a mishap, while the residual risk is defined as the amount of risk associated with an action or event remaining after natural inherent risks have been reduced by control mitigation. In this case study, we will be highlighting a university that realized the importance of TPRM and how we assisted them in standing up and operationalizing their program.The university maintained existing processes but was still missing key parts of the TPRM lifecycle. Namely, processes were in place to understand inherent risk and residual risk, however, risk classifications were not formally defined, which made it difficult to establish procedures for inventorying/classifying third parties and performing continuous monitoring. For the focus of this ‘Our Thoughts On’ article, we will be analyzing the current state and desired state of the third-party acquisition and continuous monitoring steps in the TPRM lifecycle.Current StateAs part of the due diligence process, university procurement spearheaded a process to evaluate new potential third parties. This due diligence process included assessments to understand the inherent and residual risk that a new third party possessed based on questions around operational, financial, and data security. Procurement was responsible for assessing the operational and financial risk, while IT was responsible for assessing data security; each assessment was given a score, which in turn allowed procurement and IT to make informed decisions on whether to continue or terminate the acquisition process. Once this initial assessment was performed, and if the university decided to move forward, the legal department was involved to draft a contract to engage with the third party.Desired StateThe university’s acquisition process had all of the basic tools to make informed decisions about potential third parties. However, procurement was unilaterally responsible for assessing potential third parties based on their initial responses to operational and financial questionnaires, and similarly, IT was unilaterally responsible for assessing data security. We recommended that a TPRM committee be formed that included members from procurement, IT, accounting, and legal to ensure a shared responsibility model. Additionally, the TPRM committee should define criteria to establish the level of inherent and residual risk that the university is comfortable (aka their risk appetite or tolerance) with to provide the departments with agreed-upon metrics to use when deciding to engage with a new third party.After accepting a third party, and based on the operational, financial, and data security assessments performed, the university should use agreed-upon risk classifications (i.e., critical, high, medium, low), as determined by the TPRM committee, to apply a risk classification to a third party. Also, a criticality assessment should be performed to determine the impact that a third party may have on university operations if third-party operations were to cease and there was no alternative third party to support the role that was being performed. Criticality assessments may bump low-risk third parties to a higher category based on the services that they provide.By assigning third parties to risk classifications, it allows organizations to define the level at which, both in frequency and depth, that operational, financial, and data security assessments need to be performed on an ongoing basis. The TPRM committee should design the frequency and depth of review for existing third parties based on their risk appetite and bandwidth to perform these tasks. For example, a university may decide to perform annual and complete data security assessments for a third party classified as critical. On the other hand, universities may only perform bi-annual data security assessments that contain some of the questions for third parties classified as medium or low.Expert AssistanceSchneider Downs IT Risk Advisory team is working as a consultant to create a formal TPRM framework to follow. By using our experience in the third party space with Global Systemically Important Banks (G-SIBs), healthcare institutions, energy conglomerates, retail, and higher educational institutions, we provide scalable TPRM processes to allow organizations to streamline their process and improve their overall risk posture. ### FedLine Solution Security and Resiliency Assurance Program Overview In October 2020, the Federal Reserve announced the Security and Resiliency Assurance Program for FedLine Solutions. FedLine Solutions are a suite of applications that allow banks to perform electronic transfers such as ACH and wires and other functions such as ordering cash from the Fed. The purpose of the Security and Resiliency Assurance Program (Program) is to ensure the security of the FedLine Solutions system and reduce the risk of fraudulent transactions being sent through the system. The Program requires institutions that utilize FedLine to complete the following by the end of 2021:Conduct an assessment of their compliance with FedLine security requirements published by the Federal Reserve for each FedLine application. Submit an attestation that they have completed the assessment to the Federal ReserveThe assessment portion of the Program must be completed by all institutions that use a FedLine Solutions product, no matter which products are used. The scope of the controls to be assessed will differ by product, though the Federal Reserve publishes different security controls and guidance for each application.  For example, Institutions using FedLine for reporting will have a different set of controls to assess than those that are using wire and ACH applications. The security requirements for each application are accessible to the designated end user authorization contact (EUAC) for each institution on the EUAC support webpage.     The assessment itself can be conducted as either a self-assessment or an independent review by a third party. The Federal Reserve will determine if an institution needs to complete an independent review on a case-by-case basis using a variety of factors such as institution size and complexity and products used. Institutions that are allowed to complete self-assessments can utilize internal staff, while those requiring an independent review must use either a third-party audit/security consultant such as Schneider Downs to complete the assessment.  Alternatively, an independent internal function such as an internal audit can complete most of the assessment but an independent third party must review the work conducted by internal staff to complete the assessment.  Once the self-assessment or independent review has been completed, a signed attestation must be submitted to the Federal Reserve, stating that the institution has completed the appropriate assessment.  The first attestation must be submitted by December 31, 2021 and completed annually, thereafter. The individual signing the attestation should be an executive in charge of payment solutions or the primary group(s) using FedLine at the institution but does not need to be a user or EUAC themself. There is no exemption to this requirement.  To prepare for the assessment, institutions should do the following:Make sure your institution’s EUAC contact information is up to date. Review the security requirements for the FedLine Solutions utilized by your institution and develop a plan to complete the assessment. Consult with an audit firm like Schneider Downs to assist with developing a self-assessment or independent review. If you have any questions related to this requirement or would like to learn more about our Risk Advisory Financial Services team and related offerings, please contact us at contactsd@schneiderdowns.com  ### FBAR Deadline/Extension Clarification Last week, the Internal Revenue Service posted a notice on its website stating that the FBAR deadline remains April 15 and the extension of the tax filing deadline for individuals to May 17, does not affect the FBAR requirement.This posting (especially the part “May 17 extension does not affect the FBAR requirement”) can cause confusion about the 2020 deadline to file FBARs because FBAR filers are granted an automatic extension until October 15, 2021.Therefore, we wanted to confirm again that filers missing the April 15 deadline will receive an automatic extension until October 15, 2021, to file the FBAR. They do not need to request an extension. What is FBAR and Who Must File It?FBAR (Foreign Bank Account Report), also known as “FinCEN Form 114”, is one of the most common IRS international tax forms. If you are a U.S. person who has ownership or signature authority over foreign accounts with a combined value of over $10,000 in the calendar year, you are required to file an FBAR report. The purpose of the FBAR is to fight tax evasion in connection with offshore accounts and to disclose money and other foreign holdings and accounts to the IRS.Most U.S. taxpayers are subject to FBAR reporting and FBAR non-compliance can be subject to harsh penalties. There are several IRS programs taxpayers may use to resolve prior non-compliance. If you need assistance or have any questions about filing FBARs, please contact Schneider Downs International Group. ### Starting the Exit and Succession Planning Process We’ve all heard the statistics.  The largest wealth transfer in history is on the horizon.  Baby boomers will transfer (either on purpose or otherwise) $10 trillion in wealth in the coming years.  Certainly, this past year of Covid has made some folks rethink their plan (or start thinking about creating a plan).Schneider Downs has created a four-part education series to help you as you start thinking about your eventual exit plan.  In this series, we will review the exit planning process, considerations and potential roadblocks.  We will also provide tools that you can use to develop a plan to successfully achieve company, financial and personal goals.  From developing a plan, understanding how valuations work, to estate planning and a review of actual transaction steps, subject-matter experts will offer their insight and experience to attendees.  And, we’ll also talk about the importance of having a personal plan. Please join us for this important series. Attendees qualify for 1 CPE per session and replays will be available to registrants following the live event. Registrants only need to register once to be enrolled in all four sessions. All sessions are scheduled from 9 a.m. - 10 a.m. EDTAs a part of the webinar series, we are offering a complimentary Exit Map Assessment and Debrief to help you determine your preparedness for succession or exit. Click here to take our online survey and we will provide a report and be available to discuss the results with you. Individuals who register for the webinar series and complete the assessment will be provided a copy of “Navigating the Boomer Bust” by John Dini.Webinar Series Overview May 5, 2021 – Process Overview and Goal Setting The first entry explores the exit and succession planning process, including role of advisors focused on key planning considerations for the business owner(s), internal succession or external transaction options, and overall key decision points and milestones throughout the exit and succession process. May 19, 2021 – Analyze and Develop a Plan Understand the importance of developing an exit and succession plan and the interrelation between personal, financial and business goals and objectives. June 2, 2021 – Setting and Executing Strategy Review key value drivers of a business and focus on developing your succession plan followed by advice from dealmakers.  We will cover the legal aspects of a transaction and what to expect from the sale process. June 16, 2021 – Closing the Deal and Beyond: Lessons Learned from Successful Transactions Our series concludes with a review of the previous sessions, what happens after the deal and how to measure success. For more information or help with registration please contact us at contactsd@schneiderdowsns.com.About Schneider Downs’ Exit Planning and Succession Advisory Schneider Downs’ Exit Planning and Succession Advisory Services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Learn more at www.schneiderdowns.com/exit-planning-succession-advisory. ### Special Alert: ParkMobile Data Breach The parking assistant platform ParkMobile recently experienced a cybersecurity breach compromising private information for 21 million users.ParkMobile is an app designed to make finding and paying for parking easier for users across the United States. The app offers contactless payment—which has become important during the pandemic—and the ability to reserve parking ahead of time. This convenience is especially important in major metropolitan areas, with many parking authorities using this platform, including the Pittsburgh Parking Authority.Reportedly, the data breached includes email addresses, phone numbers, license plate numbers and encrypted passwords. While details are still emerging, ParkMobile confirmed that this was a result of a third-party vendor and that they were able to cease any further infringement before sensitive data, such as payment information, was compromised. The platform does not store location history, drivers license numbers or social security numbers, so there are no concerns of this information being part of the breach.While ParkMobile published a security notice on March 26, they have not provided any official outreach or notification to users, as this article and the statement is noticeably hidden from the company’s app and homepage. This lack of communication is concerning to many security experts such as Brian Krebs. At the very least, users should be notified of the breach and encouraged/required to update their passwords.The stolen data is currently priced at $125,000 on the dark web, which is considered extremely high, so the data has yet to fall into threat actors hands.The Schneider Downs cybersecurity team encourages those with the Pittsburgh Parking Authority app or other apps on the ParkMobile platform to update their passwords immediately and change any other accounts with the same credentials (and ideally stop using the same password on multiple accounts or utilize password management software), and share this article with anybody who uses the popular app.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### NIST 800-171 for Higher Education While it’s been more than four years since Educause released the Introduction to NIST Special Publication 800-171 for Higher Education Institutions, Federal Student Aid (FSA, an office of the U.S. Department of Education (DoEd)) plans to encourage a self-assessment effort in 2021 to understand the higher education community’s readiness to comply with NIST 800–171 Rev 2.According to the FSA announcement from December 2020, “The self-assessment effort will help the Department determine the cybersecurity posture, maturity and future compliance of each [institute of higher education] with NIST 800–171 and other cybersecurity requirements.”It remains to be seen whether DoEd Secretary Miguel Cardona, who was appointed subsequent to the FSA announcement, will make modifications to the effort or its timeline, but institutes of higher education (IHE) should nevertheless begin to consider their readiness to comply.Information within the scope of potential NIST 800-171 compliance is considered Controlled Unclassified Information (or CUI), i.e., information that is not classified in the sense that one must obtain a security clearance to handle it, but controlled due to its sensitivity. Within the context of IHE, it’s information that’s used in the administration of federal student aid programs authorized under Title IV of the Higher Education Act.The recent abundance of data breaches at organizations entrusted with personally identifiable information has necessitated the DoEd and IHEs to collaboratively fight cybersecurity threats and to strengthen the cybersecurity infrastructure at each IHE.Of note is that under the Higher Education Act, the Family Educational Rights and Privacy Act, the Privacy Act of 1974 (as amended), the GLBA and state data breach and privacy laws, institutions may be responsible for losses, fines and penalties (including criminal penalties) as a result of data breaches, so mitigating the risk of such breaches occurring is a first necessary step.To assess its readiness to comply with NIST 800-171, an IHE should first identify what CUI it stores, processes and disposes of and where that CUI is logically and physically located. Next it should assess which of the 110 individual controls are being performed currently and which are not. Controls not being met are gaps the IHE should strive to close.Admittedly, the challenge is with the timeline. When will IHEs need to evidence their compliance or even readiness for compliance? When will sanctions be handed down to force compliance? As this remains unknown, striving for clean cyber hygiene and performing reasonable controls to safeguard CUI are crucial to protecting such information and should be commonplace in the higher education industry and beyond. ### What is a SOC Report and Who Needs One? What are SOC reports?System and Organization Controls (SOC) reports, formerly Service Organization Control reports, are examinations provided by CPAs in connection with system-level controls of a service organization or entity-level controls at other organizations. These engagements are performed in accordance with Statement on Standards for Attestation Engagements (SSAE) No. 18, which is a professional standard promulgated by the American Institute of Certified Public Accountants (AICPA).Who needs a SOC report?A SOC report is often requested by organizations (user entities) that receive significant services from a service organization and the user entities’ auditors (user auditors). Reasons why organizations or their auditors might request to review a SOC report include: Organizations need assurance regarding effective internal control as it relates to SOX, applicable trust services principles and/or categories, HIPAA, PCI, HITRUST and/or other laws, regulations or frameworks. User entities (and prospective users) need transparency regarding a system providing services, and assurance that relevant inherent risks are effectively mitigated (i.e., vendor risk management). Other organizations may need to provide their users with useful information about their cybersecurity risk management program in order for their users to make informed decisions. About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or view more SOC FAQ's at www.schneiderdowns.com/soc-report-faq.  ### Higher Education Implications Under a Biden Administration America’s Vice President and First Lady bring diverse educational backgrounds to the Biden Administration – the former, a graduate of one of our nation’s Historically Black Colleges and Universities (HBCUs) and the latter a long-time community college professor. Unsurprisingly, both avenues of higher education were featured in Joe Biden’s 2020 presidential campaign promises. The Biden campaign ran on the platform to invest in community colleges and training to help grow and develop America’s middle class, promising a $50 billion investment in community-college business partnerships and apprenticeship programs. Led by Dr. Jill Biden, the administration is currently pushing for free two-year access to community colleges and training programs to help alleviate the economic impact of COVID-19. The Biden campaign also proposed having public higher education schools be tuition-free for those families earning less than $125,000 a year and a revamping of the student loan program. Biden’s platform also placed an emphasis on supporting under-resourced colleges and universities that play vital roles in their communities, including HBCUs and other Minority-Serving Institutions (MSIs). Potentially investing $70 billion in these types of institutions, the administration aims to refresh infrastructure, make higher education more affordable through additional grants, create programs to aid in increasing enrollment and completion, and develop internship and career channels for teaching, health care and STEM programs. As of early April 2021, there has been an executive action to extend the CARES Act moratorium on student loan repayment through September 30, 2021 and a proposed bill that calls for immediate cancellation of $10,000 in federal student loan debt and forgiveness of up to $10,000 for every year of national or community service, up to five years. Additionally, there are signs of an upcoming overhaul of Title IX through an executive order to the Secretary of Education regarding the existing regulations. With the Administration’s immediate focus on the COVID-19 pandemic, immigration, and racial equality, among other topics, it may be a while before the higher education sector feels the full impacts of Biden’s campaign promises. ### Climate Change – A Key Risk to Financial Stability Although numerous financial regulators have moved towards incorporating climate-risk assessments into their planning and supervisory activities, climate change has been flagged as the most significant emerging risk for the Department of Treasury to address. Financial institutions must act by creating (or enhancing) a green strategy, while also managing their own financial exposures.  Both are essential to climate-risk management.Financial institutions should consider the following related to climate-risk management: Does an enhanced ERM or governance framework need to be established and implemented? Does the governance structure need to be enhanced? Should the current risk assessment be reevaluated and revamped? Does the current modeling for analyzing and stress-testing need to be enhanced? Is the business and credit strategy aligned? Areas of focus have also emerged relating to increased coordination globally and to public and private partnering since the financial system must be prepared for credit and market risks related to any climate-related events. Rising expectations from investors and clients have also added to this push for alignment on climate risk.Additionally, increased regulations are requiring financial institutions to effectively manage climate risk.  The Department of Treasury plays an important role in coordinating these regulatory efforts that relate to measuring and managing this risk. Overall, the global alignment surrounding these efforts is expected to accelerate under the new administration.  ### Was Your Facebook Data Exposed? This past Saturday a hacking forum was flooded with stolen personal data from nearly 533 million Facebook users from 106 countries, including more than 32 million users from the United States.The personal data includes phone numbers, full names, locations, email addresses and other biographical information. More concerning is that because the personal data was dumped on a hacking forum, the data was open to any threat actor who wanted to use it. Facebook has stated that the leak stems from their 2019 breach that resulted in the exposure of hundreds of millions of Facebook users’ phone numbers, an issue that was fixed as a result of the Cambridge Analytica scandal.As with any data breach, the main question those potentially impacted are asking is, was my data breached? And with more than 30 million accounts in the US impacted, there are many Facebook users looking for answers. The good news is there are a few online tools available to help.HaveIBeenPwned - https://haveibeenpwned.comHaveIBeenPwned is a website that tracks data breaches and can tell you if you have been part of any breach, including the Facebook one, by providing your phone number or email.The News Each Day - https://www.thenewseachday.com/private-facebook-phone-numbers-usAccording to Gizmodo, this website allows you to check your phone number against breaches and according to the site creator, generates random phone numbers that start with the same five digits as your number and sends 99 fakes along with the real one to the server masking your real number. While a breach of this size makes great headlines, the truth is that personal information such as this is most likely already out there for many of us. If you find out you are part of this breach or any others, there are a number of steps you can take which our team shared in our previous article, Part of a Data Breach… Now What?, including: Password Management Software - We recommending utilizing a password manager for all your accounts, such as 1Password, Keeper, Dashlane, Bitwarden, or LastPass. Password managers are apps that will set strong random passwords for all your accounts, so you don’t have to remember them and if one site gets hacked the compromise stops there. You just need to remember one strong password for the password manager that is used to protect your passwords (If you are forgetful, make sure to enable the account recovery option and consider storing the password or recovery key in a safe or safe deposit box). Most password managers support biometrics, so accessing and auto-filling your passwords on your mobile device is as simple as doing a face unlock or fingerprint. Web browser plugins allow password managers to be easily used on your computer. In most cases, once you configure the password manager for a site (a task most do automatically as you login or create a new account), it will fill in your login credentials for you when you need to login again.  If you used the same password for an account that was breached anywhere else, make sure to change that password everywhere it was in use. If that is the case, what a great time to start using a password manager. We also recommend the use of multi-factor authentication (MFA) to mitigate risk if your passwords are leaked.  Credit Protection - Make sure to review your credit card and bank statements every month and call the bank if you see unusual activity. In addition to monitoring you credit activity, freezing your credit is a strong and cheap protection. Go to the three major credit reporting agencies, Experian, TransUnion and Equifax and freeze your credit with all of them. This can be done online or via phone and at the most costs around $5 per agency. If your credit is frozen and somebody attempts to open a credit card in your name, they will be denied. The downside of this, is that you will need to unfreeze or thaw your credit whenever you apply for a new credit card, get a mortgage, etc. so make sure to do that a couple days before you submit any credit applications. Credit monitoring services are advertised all the time and are often provided for free if you are involved in a data breach, but they only detect fraud after it happens. It is much better to prevent it than have to recover from it, but many of the credit monitoring services do provide insurance or help in dealing with fraud you encounter, so they are worth considering. About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q1 2021 On April 1, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines industry trends and statistics within the manufacturing sector. The composite Purchasing Managers Index (PMI), referenced below, is compiled and used by the ISM to analyze the state of the economy and predict future growth or contraction based on five categories: New Orders, Production, Employment, Supplier Deliveries and Inventories. A PMI over 50% indicates that the manufacturing environment is expanding. Here’s a rundown of the PMI for each month in Q1 2021 and Q1 2020:     Month 2021   PMI 2021   Month 2020   PMI 2020 January 58.7 January 50.9 February 60.8 February 50.1 March 64.7 March 49.1 Average 61.4 Average 50.0 High 64.7 High 50.9 Low 58.7 Low 49.1 Q1 2020 marked the beginning of the COVID-19 challenges for the industry. A year later, the manufacturers have learned to adapt, but continue to face many of the same challenges noted at the end of 2020. March 2021 was the tenth straight month of expansion since April 2020. Panelists expressed optimism, offering eight positive comments to every one negative comment in their responses. Demand, which includes New Orders, New Export Orders and Backlog of Orders, continued to increase. New Orders and New Export Orders were at 68% and 54.5%, respectively, in March 2021. Food, Beverage & Tobacco Products, Chemical Products, Fabricated Metal Products and Transportation Equipment all saw growth in New Export Orders. The backlog of Orders increased significantly from December 2020 (59.1% in December 2020 vs. 67.5% in March 2021).  This growth in Backlog of Orders was seen in five of the six big industry sectors. Consumption, which is comprised of Production and Employment, continued to expand. Production’s reading came in at 68.1% in March. This was the highest reading since January 2004, when it had reached 69.3%. All six of the big industry sectors saw growth in production. Employment clocked in at 59.6% in March, which is the highest reading since June 2011. Based on the most recent Department of Labor news release, unemployment has stayed consistent from December 2020 through February 2021 at 6.2%. Inputs, which include Supplier Deliveries, Inventories and Imports, continued to expand to meet increased demand. Supplier Deliveries increased from 67.7% in December to 76.6% in March. Supplier Deliveries is a unique index, since it shows an inverse relationship. It assumes that deliveries will be slower in times of economic growth due to increased demand. Inventories decreased from 51% in December to 50.8% in March but still showed growth, since the reading is greater than 50%. Imports grew over the last three months from 54.6% in December to 56.7% in March. Of the 18 tracked manufacturing industries noted, 11 increased imports in March. Only Paper Products experienced decreased imports in March, and the other six industries neither increased nor decreased. Although inputs show expansion, panelists noted continued challenges with supply chain management and personnel matters. They continue to experience shortages of materials and increased lead times on delivery. Prices have increased significantly on commodities. Lumber increased from $873.10 in December to $1,009.10 in March. Crude oil prices grew from $48.42 in December to $59.43 in March, and aluminum jumped from $1,979.35 in December to $2,213.44 in March. Aside from the materials, labor continues to be a challenge. Many panelists noted they are having trouble attracting and retaining employees. Additionally, they have seen continued absenteeism from their employees. For further information visit the ISM Report on Business at ismworld.org. ### What are the differences between a SOC for Cybersecurity examination and a SOC 2 examination? The following list highlights some of the key differences between a SOC for Cybersecurity report and a SOC 2 report.PURPOSESOC for Cybersecurity:  To provide intended users with useful information about an entity’s cybersecurity risk management program, so that users may make informed decisions.  SOC 2: To provide a broad range of system users with information about controls at the service organization relevant to security, availability, processing integrity, confidentiality and/or privacy to support users’ evaluations of their own systems of internal control.INTENDED USERSSOC for Cybersecurity: Management, directors, analysts, investors, and others whose decisions might be affected by the effectiveness of the entity’s cybersecurity risk management program. SOC 2: Management of the service organization and other specified parties with sufficient knowledge and understanding of the service organization and its system.GENERAL/RESTRICTED USESOC for Cybersecurity: Appropriate for general use; however, the practitioner can restrict the report to specified parties, if necessary. SOC 2: Restricted to user entity personnel and specified parties.CONTROL CRITERIASOC for Cybersecurity: The 2017 Trust Services Criteria are considered suitable criteria; however, other information security control frameworks such as NIST’s Cybersecurity Framework, ISO 27001, and HITRUST may also be considered suitable control criteria. SOC 2: The 2017 Trust Services Criteria for security, availability, processing integrity, confidentiality and privacy are the only control criteria that can be used although additional criteria/frameworks may be included.CONTENTS OF THE REPORT The SOC for Cybersecurity report and the SOC 2 report includes the same sections with the exception of the description of the service auditor’s tests of controls and results of the tests. The SOC for Cybersecurity report does not contain this section.About Schneider Downs SOC Services Schneider Downs employs a unique approach to SOC reports, integrating the expertise of information technology, internal audit and external audit professionals. By combining cross-disciplinary knowledge and project management expertise, we are able to effectively deliver on our clients' expectations. If you are interested in learning how we can assist your organization, please contact us to get started or view more SOC FAQ's at www.schneiderdowns.com/soc-report-faq.   ### Tax Credits for Electric Vehicle Charging Stations The automotive industry continues to discuss and innovate towards electric vehicles (“EV”). It has been a long journey.  We have come a long way from the electric wagon invented in the 1800s. There have been many roadblocks (no pun intended) for EVs including limited charging stations and the amount of time it takes to receive a full charge. However, the manufacturers’ progress and plans appear to be breaking through these roadblocks.  With anything, there are costs that come with progress and innovation. The infrastructure for these fast-charging stations has taken some time. Some manufacturers are now requiring these stations as part of their facility improvements. Believe it or not, the IRS is ready to help alleviate some of these costs.  Currently, there is a 30% credit of the costs of any qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year. The credit is limited to $30,000.  However, it is limited to $1,000 for a personal residence.Please note that this credit is currently set to expire on December 31, 2021. The Biden administration plans to continue the effort to strive toward alternative fuel resources. Our team of Schneider Down Auto Advisors will continue to monitor the changes and extension of these credits. In the meantime, contact us if you have any questions regarding the credit. ### Introduction to The American Jobs Plan and The Made in America Tax Plan During a presentation in Pittsburgh yesterday, President Biden spoke on the first part of his vision for America and unveiled his American Jobs Plan (AJP or the plan), a $2.3 trillion infrastructure spending plan for the next decade. Included in the AJP’s broad agenda are plans for the rebuilding of roads, bridges and water systems, expanding broadband internet access, funding research and development, improving housing and education facilities from pre-school through college, upgrading veterans hospitals and other federal buildings, along with funding additional programs.  The AJP is the first of at least two large programs to be proposed by President Biden and his administration; a second is expected to be released later in April and is believed to target childcare and healthcare programs. The funds to pay for the AJP are to be generated from proposed changes to corporate income tax provisions.  These changes are projected to raise $2 trillion dollars over 15 years.  The tax portion of the overall AJP is being called the Made in America Tax Plan. A broad summary of both prongs of the initial proposal was released by the White House in a Fact Sheet The Made in America Tax Plan proposes the following general provisions: Increase the corporate tax rate from 21% to 28%. Enact a corporate minimum tax rate of 15% based upon reported profits to investors. Reform and increase the Tax Cuts and Jobs Act tax assessed on Foreign Derived Intangible Income. Work with other countries to propose a worldwide minimum tax system to “end the race to the bottom” on global corporate tax rates. Strengthen provisions on profit-stripping strategies that shift profits to lower-tax-rate countries. Aim to prevent corporate inversions. Deny deductions related to offshoring jobs. Eliminate current tax preferences (subsidies, favorable deduction rules, and special foreign tax credits) for the fossil fuel industry. Restore Superfund Trust Fund assessments on industries generating pollution. Increase IRS enforcement on corporations. The AJP, as laid out in the Fact Sheet, is essentially a broad policy declaration reflecting many of the president’s talking points made during his election campaign.  Specific details and the final shape of this spending and tax reform plan will take months to work through and negotiate.   Predictably, there are lawmakers who believe the package does not go far enough on spending, while others call the costs too high. Further, the tax plan details released yesterday don’t include any proposed changes to individual income taxes; these are expected to be detailed with the release of the second spending plan. We will continue to monitor and write about the ongoing policy changes involving tax reform, and its impact on businesses and individuals.  Future articles in this series will be provided as additional ideas are presented by lawmakers, specific bills are proposed that may (or may not) ultimately become law, and as more details emerge. ### 2021 Standard Mileage Rates Just as the never-ending year of 2020 was concluding, the IRS released the updated standard mileage rates for 2021. The rates for the use of a vehicle (including cars, pickups, vans, or panel trucks) had a small downturn from the 2020 rates.The new standard mileage rates starting on January 1, 2021, are as follows: 56 cents per mile for business travel driven (down 1.5 cents from 2020) 16 cents per mile driven for medical or moving purposes (down 1 cent from 2020) 14 cents per mile driven in service of charitable organizations (remained the same) The rate for business use is updated each year based on an annual study of fixed and variable costs of operating an automobile. These costs include, but are not limited to, depreciation, insurance, repairs, tires, maintenance, gas, and oil prices. The rate for medical and moving purposes is only based on variable costs for operating.As a reminder of the rules under the Tax Cuts and Jobs Act (TCJA), any unreimbursed travel expenses are no longer allowed to be claimed as miscellaneous itemized deductions for individual taxpayers. The TCJA also disallowed the deduction of moving expenses, excluding armed forces on active duty with orders of permanent change. Both rules will continue to be in place through the beginning of 2026.Along with the Tax Cuts and Jobs Act changes, it should also be noted that no business mileage is allowed when using the Modified Accelerated Cost Recovery System (MACRS) or when a 179 deduction was used. Taxpayers continue to be limited on the number of vehicles (no more than four) that can be applied using the standard rate at one time. Individuals can also use their actual allowable expenses instead of the standard rates given they have kept the appropriate records for evidence.If any questions arise when implementing these mileage rates or adjustments, please reach out to your local Schneider Downs tax professional. ### The Catalyst for the Women’s Suffrage Movement March is Women’s History Month. This article tells the story of the indigenous women that inspired the suffrage movement in the United States. When I began learning more about the women’s suffrage movement, I wondered how it all began. Just like a spark ignites and creates fire, every movement starts with a single idea or cause.  The spark was the power of Native American women of the Haudenosaunee culture. The cause was women’s rights in the United States--a cause for which Matilda Gage and Elizabeth Cady Stanton were willing to fight. Matilda and Elizabeth were two early crusaders of the women’s suffrage movement.   They both lived near Seneca Falls, New York, which was also close to where the Haudenosaunee people lived. These early suffragists learned about their integration of female empowerment through newspaper articles before experiencing it when they met and visited them. The Haudenosaunee is a group of six Native American nations (Mohawk, Oneida, Onondaga, Cayuga, Tuscarora and Seneca) that united in order to create a peaceful way to co-exist with each other. It is considered as one of the oldest democracies in the United States and has existed for centuries. They structured their governmental system on the foundation of female authority.  Their belief is that women have great power – along with the Earth – because both have the ability to create life.  Another reason why this system was chosen is due to the men were warriors, hunters or traders.  The men could be gone for several days or longer before returning home.  It was imperative that women have an authoritative role. The women in the tribe are responsible for the economy and agriculture.  They raise and sell food and other goods and vote to appoint the chief. The Clan Mother (oldest woman of each family) works alongside the chief.  She can also remove him if he does not make wise decisions on behalf of everyone and seven generations to come.  The children come through the mother’s lineage, not the father’s and are raised with their siblings, parents and extended family. Whatever a woman earns, whether she is single or married, it becomes her own property. If a husband and wife separate, the children stay with the mother and she takes her possessions and all that she has acquired with her. In glaring contrast, Euro-Americans (those from England and Europe) like Matilda and Elizabeth and women of color in the United States like Matilda and Elizabeth did not have rights at all. A woman could not vote and would be arrested and fined if caught. If she married and worked, her wages belonged to her husband.  Any property that she owned became the property of her husband. The Haudenosaunee way of life showed Matilda and Elizabeth that women’s voices, votes and contributions mattered and were, and still are, vital to their democracy. They decided after witnessing firsthand that the influence of women is what they wanted for women in the United States, and the women’s suffrage movement was born. Schneider Downs, in conjunction with the SD Focus on Women committee, is dedicated to empowering our women to excel and reach their highest potential. Sources for this article are below: Wagner, Dr. Sally Roesch. “How Native American Women Inspired the Women’s Rights, Suffrage Movement.” Ms. Magazine. 8 Aug 2020. ### What is the Shuttered Venue Operators (SVO) SBA Grant Program? UPDATED Live entertainment venues have been hit hard during the pandemic, with many theaters and performance halls completely closed since last March. As part of the Consolidated Appropriations Act, the Small Business Administration (SBA) has been authorized to issue $16 billion in grants to support struggling venues. Eligible applicants may qualify for Shuttered Venue Operators (SVO) grants equal to 45% of their gross earned revenue in 2019, with the maximum amount available for a single grant of $10 million. Applications will be administered through the SBA. SBA is currently building the grant program and expects to open applications in early April. Eligible entities for the program include: Live venue operators Promoters Theatrical producers Performing arts groups Movie theaters Talent representatives Nonprofit museums, botanical gardens, historic homes and zoos that meet specific requirements To be eligible for the program, the entity must have been fully operational on February 29, 2020, and its gross earned revenue during a calendar quarter in 2020 must have decreased by at least 25% from the same quarter in 2019. Upon receiving the grant, the entity has to intend to resume its respective operations if it has not done so already. Update on Eligibility A PPP loan recipient may apply for a SVO grant. If a PPP borrower receives a First Draw or Second Draw PPP Loan after December 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the amount of the First Draw or Second Draw PPP Loan.  If a PPP borrower receives both a First Draw and a Second Draw PPP Loan after December 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the combined amount of both PPP loans. A PPP loan received before December 27, 2020 will not reduce the amount of the SVO grant award. If a PPP applicant is approved for an SVO grant before SBA issues a loan number for the PPP loan, the applicant is ineligible for the PPP loan, and acceptance of any PPP loan proceeds will be considered unauthorized use. SVO grant applicants may apply for EIDL, but funds cannot be used for the same purpose/costs as SVO grants.   Entities not eligible for the program include: Issuers of securities listed on a national securities exchange, or those owned or controlled by an issuer of securities listed on a national securities exchange Those that received more than 10% of its gross revenue from federal funding in 2019 (certain exclusions apply) Those with more than two of the following characteristics: Owns or operates businesses in more than one country Owns or operates venues or businesses in more than 10 states Employed more than 500 FTEs as of February 29, 2020 Has received a PPP loan (round 1 or round 2) on or after December 27, 2020 Other business-type requirements may apply Grant disbursements will be prioritized During the first 14 days of the program, eligible entities with a year-over-year revenue decrease of 90% or more from April through December 2020 versus 2019 will have first priority. During the next 14 days, eligible entities with a year-over-year revenue decline of 70% from April through December 2020 versus 2019 will have second priority. Keep in mind that “revenue” for year-over-year comparisons excludes amounts received under the CARES Act (e.g., PPP loans), and first and second priority grants cannot exceed $12 billion, or 80% of total funding. After the initial 28-day period, eligible entities with one-quarter of year-over-year revenue losses between 25% and 70% may be awarded a grant. SBA affiliate rules do apply; the number of grants for a group is limited to five entities. Also, $2 billion has been set aside for entities with fewer than 50 FTEs. Grant award amounts Grants initially issued by the SBA will be the lesser of 45% of an entity’s gross earned revenue in 2019, or $10 million if it was in operation as of January 1, 2019. If the entity was not in operation until after January 1, 2019, the grant would be the lesser of $10 million or the amount equal to the average monthly gross earned revenue for each full month the grantee was in operation during 2019, multiplied by six. Museum operators are limited to $10 million across all museums operated by the operator. In addition to initial grants, supplemental grants may be awarded. A supplemental grant is available to an entity that received an initial grant and if, by April 1, 2021, its revenues for the most recent calendar quarter are not more than 30 percent of its revenues for the same quarter in 2019 due to the pandemic. The amount for the supplemental grants will equal 50 percent of the initial grant received, and the overall maximum for the total amount awarded, including the initial and supplemental grants, will not be more than $10 million. What are allowable uses of SVO Grant funds? Grants may be used for costs incurred during the period March 1 through December 31, 2021 or,  if a supplemental grant is awarded, ending on June 30, 2022. Funds must be used or they must be given back to the SBA. Any non-supplemental grant amounts that are not spent within one year after disbursement must be returned to the SBA or, if a supplemental grant is awarded, 18 months from the date of the initial grant disbursement. Funds may be used for specific expenses, including payroll, rent, utilities and scheduled mortgage payments or debt payments. They could also be used for covered worker protection expenses, payments made to independent contractors, maintenance expenses, administrative costs, state and local taxes and fees, operating leases (as of February 15, 2020), insurance policies, and advertising, production transportation and capital expenditures relating to producing a live performance or exhibition (this may not the be primary use of funds). Funds are prohibited to be used for certain expenses, such as the purchase of real estate, payments of interest or principal on loans originated after February 15, 2020, investments or relending funds, contributions to or on behalf of any political party, party committee or candidate for elective office, or any other use as prohibited by the SBA. What type of documentation will I need to maintain compliance with the program? Applicants must make a “good-faith certification” that all information to apply is accurate. To demonstrate compliance, the recipient must retain employment records for a four-year period, and all other records for a three-year period after the distribution of funds. The SBA is committed to auditing usage of the funds, but guidelines have yet to be published. There are many other important details to this legislation. We encourage you to view our videos on this subject or reach out to us at ContactSD@schneiderdowns.com if you’d like to start a conversation. ### SBA Raises Disaster Loan Limits Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic.  The U.S. Small Business Administration (“SBA”) is more than tripling the maximum amount that small businesses and nonprofit organizations can borrow under the COVID-19 Economic Injury Disaster Loan (“EIDL”) program. Starting the week of April 6, 2021, the loan limit will increase from six months of economic injury and a maximum loan amount of $150,000 to 24 months of economic injury and a maximum loan amount of $500,000. Any COVID-19 EIDL applications in process as of April 6 will be considered for the new maximum limits.  Businesses that already received a smaller EIDL will not need to resubmit a request for increase.  The SBA will provide updated instructions on how to request a loan increase on its website and will reach out directly to existing COVID-19 EIDL borrowers. COVID-19 EIDLs have a 30-year maturity with interest rates of 3.75% for small business and 2.75% for nonprofits. This announcement of increased loan limits follows the SBA’s March 12 announcement that it was extending deferment periods for COVID-19 EIDLs.  For COVID-19 EIDLs made in 2020, the first payment due date is 24 months, extended from 12 months, from the date of the loan.  For loans made in 2021, payments would start 18 months, extended from 12 months, after the loan is made. For more information on COVID-19 EIDLs, visit the SBA website at: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/covid-19-economic-injury-disaster-loan#section-header-5 If you need more information or assistance with COVID-19 EIDLs or Paycheck Protection Program (“PPP”) loans, visit our website at www.schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### RPA Client Success Stories Robotic process automation (RPA) technology continues to see a growing interest from companies in every industry. Business leaders have been investing in technology for years and now more than ever, there is a need to leverage their systems to their fullest. Leaders are turning to automation as a way to enhance existing investment in systems and software. As a company with a foundation in public accounting, the team at Schneider Downs works with our clients’ finance departments, but we have also become involved in helping solve business challenges that go beyond accounting. Our expertise in business technology and process optimization provide insights that have proven tangible value to our clients. Every business is unique, and every company has different operational needs, systems and processes. These differences mean that there is no single best process a business should automation. Understanding your company’s inefficiencies and pain points is key to deciding where to apply automation. Here are a few recent examples of how we have applied RPA technology for our clients. Retail Client - Sales and Use Tax – Automation saved dozens of hours per month and could produce a tax report in about an hour. Transportation Client - Road Toll Reconciliation – The time and money saved with the automated solution provided an easily calculable ROI validating the implementation costs. Not-for-Profit Client - Monitoring Legal Compliance – Introducing automation ensured that the company was staying in compliance with state legislature to protect itself from fines or other penalties. Payroll Provider Client - Internal Auditing – The capabilities and task executions provided by automation would not be feasible with manual processes. Wealth Management Client - Fee Processing – Automation reduced the average time of processing from multiple weeks to about 16-20 minutes. Professional Services Client - Cash Conversion Cycle – Automation improved lockup from 100 to 67 days. SaaS Provider Client - Bill Rates Adjustment – Our solution completely automated the billing adjustment process by generating the necessary report for the service provider. How Can Schneider Downs Help? The Schneider Downs Business Process Automation team is committed to assisting clients with the evaluation, adoption and implementation of robotic process automation technology. We work with our clients to evaluate use cases, develop cost-benefit analyses, implement process automation, and provide continuous support to the operation of your business automation processes. For more information please contact us or visit www.schneiderdowns.com/rpa. ### American Rescue Plan and the Restaurant Revitalization Fund On March 11, the American Rescue Plan Act (ARPA or the Act) became law. Among its many programs is one intended to provide support for businesses in the food service industry suffering from a “pandemic-related revenue loss” (or revenue loss). The Restaurant Revitalization Fund (RRF) will provide up to $28.6 billion in federal grants to eligible entities to offset their revenue losses. Eligible entities, as defined in the Act, include restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, and other similar places of businesses in which the public or patrons assemble for the primary purpose of being served food or drink. There are some limitations that will disqualify otherwise eligible businesses, including those operated by state or local governments, publicly traded companies, larger businesses owning or operating more than 20 locations, or a business that has received or applied for a shuttered venue operators grant. Importantly, ARPA also provides that these grants shall not be included in the gross income of the recipient and that expenses paid for with the proceeds of the grant will be deductible in full. The amount of an RRF grant that an eligible entity is entitled to receive is equal to its revenue loss (as further limited).  This loss is measured in several ways, depending generally upon when the entity was formed: For an eligible entity in existence before 2019, revenue loss means its 2019 gross receipts less its 2020 gross receipts. For an eligible entity not in operation for the entirety of 2019, revenue loss is calculated by taking 12 times its average monthly gross receipts in 2019, minus 12 times its average monthly gross receipts in 2020; For an eligible entity that opened between January 1, 2020 and March 10, 2021, revenue loss means its payroll costs (generally as defined for PPP) minus its gross receipts; or For an eligible entity that has not yet opened as of the date of application for an RRF grant but has incurred payroll costs (generally as defined for PPP) as of March 10, 2021, the amount of those payroll costs. The SBA can also establish a formula to determine the revenue loss for the items above except for those businesses in existence prior to 2019. Further, the amount determined by the above formulas is reduced by any amounts received from the First and Second Draw PPP loans. However, the maximum amount of grant to any eligible entity shall not exceed $10,000,000 and $5,000,000 per physical location. Grants can be used against the following expenses during the period beginning February 15, 2020 and ending December 31, 2021 (or as later established by the SBA): Payroll costs (as defined) Mortgage principal and interest (excluding prepayment of principal) Rent (excluding prepaid rent) Utilities Maintenance including: Construction to accommodate outdoor seating, and Walls, floors, deck surfaces, furniture, fixtures and equipment Supplies (including protective equipment and cleaning supplies) Food and beverage expenses within the scope of normal business practices Covered supplier costs as defined under Section 7A of the Small Business Act Operational expenses Paid sick leave (Any other expenses that the administrator determines are essential In addition, an eligible entity will need to certify in good faith that (i) the uncertainty of current economic conditions makes necessary the grant request to support its ongoing operations; and (ii) it has not applied for or received a grant under SBA’s Shuttered Venue Operators Grant Program. The grants are generally awarded in the order applications are received (with priority given to business concerns owned and controlled by women, owned and controlled by veterans, or to socially and economically disadvantaged small businesses during the initial 21-day application period). Further, The SBA will “prioritize the ability of each applicant to use their existing business identifiers over requiring others forms of registration or identification that may not be common to their industry and imposing additional burdens on applicants.” Unfortunately, two weeks after ARPA’s enactment, the industry is still awaiting specific guidance on the application process. It is imperative, though, that an entity be in a position to apply as soon as the application process is ready. The National Restaurant Association is advising eligible entities to: Sign up for a Data Universal Number System number from Dun and Bradstreet; Register with the U.S. Federal Government’s System for Award Management (SAM) via www.SAM.gov; Send a SAM-notarized letter to the Federal Service Desk; and Gather documents to support the extent of gross revenue decline from 2019 to 2020. If you have any questions while you are preparing for this program, please don’t hesitate to contact Kristyn Stang or Zackary Davis with any questions. ### Lost Revenues under HEERF Defined Higher Education institutions have seen more than $75 billion provided through the Higher Education Emergency Relief Funds program (HEERF) from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (HEERF I), the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (HEERF II) and the American Rescue Plan (ARP) (HEERF III).  All three HEERF funds require a certain level of spending to go directly to students as emergency financial aid grants.  They also allow a certain amount to be used to offset institutional expenses due to significant changes to the delivery of instruction or other expenses directly related to the coronavirus pandemic.The concept of reimbursement for lost revenue falls into the institutional portion of all three funds.  However, there has not been ample guidance on what is defined as “lost revenue" and how it can be calculated - until now.On March 19, 2021, the Department of Education (DOE) published the HEERF I, II, and III Lost Revenue Frequently Asked Questions to provide further guidance.  In this FAQ, the DOE cautions institutions that they should devote the maximum amount of funds possible to financial aid grants for students and prioritize costs associated with student safety and support and testing services.  Here is what you need to know if you determine to charge lost revenue to any of the three HEERF funds. Allowable sources of lost revenue may include, but are not limited to, the following: Academic sources:  tuition, fees, and institutional charges (including unpaid student accounts receivable or other student account debts), room and board, enrollment declines, including reduced tuition, fees, and institutional charges, supported research, summer terms and camps. Auxiliary services sources:  cancelled ancillary events, disruption of food service, dormitory services, childcare services, use of facilities or venues, including external events such as weddings, receptions, or conferences (other than facilities associated with sectarian instruction or religious worship), bookstore revenue, parking revenue, lease revenue, royalties, other operating revenue. Unallowable sources of lost revenue include the following:  capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, investment income (including endowment and quasi-endowment revenue).  In other words, the lost revenue reimbursement must be used for activities and expenditures that are generally allowable under the HEERF grant program, which are primarily associated with coronavirus pandemic. Institutions are able to calculate lost revenue from March 13, 2020, the day of declaration of the national emergency, through the end of its HEERF grant performance period. The lost revenues will be shown on the Schedule of Federal Expenditures (SEFA) in the year that it is charged against the award.  If an institution now decides to charge lost revenues dated back to March 13, 2020 to HEERF I, it would be included on the 2021 SEFA. There is flexibility on how the lost revenue can be calculated, as long as it is reasonable and consistent with cost principles under Uniform Guidance.  Lost revenue may not include the estimated amount of lost revenue for another federal program (such as the CARES Act). Lost revenue may not include any refunds previously provided to students.  For example, if an institution charged the refunds given to students against the HEERF I Fund, then this amount should not be included in the calculation of lost revenue. This new guidance gives added clarity, as well as flexibility, to institutions and how the institutional portion of HEERF funds received can be utilized.  To support the institution’s determination of these uses, it is imperative that appropriate documentation is kept.  This should include documentation of the institution’s rationale, calculations, methodology, underlying data and budget or projections utilized.  This documentation must be retained for a period of three years from the date of submission of the final expenditure report.  Your auditors will be asking for it!See the last page of the FAQs for examples of calculating HEERF Lost Revenue.Schneider Downs also has other articles in this series: DOE Announces Changes to HEERF Guidance Department of Education Issues HEERF Clarifications to Common Questions What is lost revenue according to the Department of Education?   ### What is lost revenue according to the Department of Education? On March 19, 2021, the Department of Education (DOE) issued long-awaited guidance clarifying its definition of lost revenue.  In conjunction with their clarification, the DOE also noted that institutions are now able to use a longer window to determine the full impact of lost revenue that an institution experienced.  As noted by the DOE, you do not need to allocate expenses to lost revenue since the expenses are lost revenue.  This may be advantageous to institutions that are looking to maximize other items such as Paycheck Protection Program forgiveness or Employee Retention Tax Credits since you cannot double-dip on expenses. Similar to HEERF I, the DOE has attempted to provide as much flexibility as possible. This means that institutions have the options to use various methods including; a year over year comparison, semester to semester comparison, multi-year budget projections (i.e. 3 to 5-year budgets) to develop a baseline revenue, previously budgeted revenue to actual or comparison a baseline from the date of the national emergency declaration to a prior year. The DOE permits institutions to select a method on how they will determine lost revenue, which permits institutions the most amount of flexibility in making this determination.  Within the frequently asked questions (FAQs) published by the DOE, they outline/provide three examples. For the first example, the institution should establish the impact using the three years prior to the declaration of the national emergency to establish a baseline of what revenue has been.  Under this method, a simple average is performed using the prior three years actual data and comparing it to the actual revenue recorded during the fiscal 2021 year.  This may the simplest method. For the second example, the institution would compare a fiscal year (i.e., fiscal 2020) to fiscal 2019 and then prorate the decline in revenue during fiscal 2020 from the declaration of the national emergency to the end of that fiscal year (i.e., May 31 or June 30).  This requires some additional work to determine the pro-ration of revenue. The last example uses budgeted information. The DOE does note that the budget should be a budget that was made prior to the declaration of the national emergency.  In this case, the institution would compare the budgeted revenue to the actual revenue received, and the difference is lost revenue.  If the budget information did not exist, it may be necessary to use one of the first two methods for this determination. Sounds simple right? Check out this article from Brittany Becker, CPA of Schneider Downs, which describes further the types of revenue that are and aren’t permitted. Also, make sure to exclude from the calculation the impact of any previously used HEERF funds to offset tuition refunds to students. For any of the strategies elected, it is important to have clear documentation of how the lost revenue is determined since this will be part of the Schedule of Expenditures of Federal Awards (SEFA).  For most institutions, this will be a major program subject to audit.  Ensure the documentation clearly demonstrates the method selected, all calculations, how the expected estimated revenue was determined, and other items, such as board minutes and documents evidencing budgets and other items that were established prior to March 13, 2020. Schneider Downs also has other articles in this series: DOE Announces Changes to HEERF Guidance Lost Revenues under HEERF Defined Department of Education Issues HEERF Clarifications to Common Questions   ### Goodwill Impairment Trends and the Impact of COVID-19 Goodwill impairment trends are of interest to many as we continue on in the midst of the COVID-19 pandemic.  Arriving on the scene is the Duff & Phelps 2020 U.S. Goodwill Impairment Study, which was released in February 2021.  In its 12th year of publication, Duff & Phelps analyzed 8,896 publicly traded companies incorporated in the U.S. through December 2019 and also provided a glimpse into how public company goodwill impairment is shaping up in 2020. According to the 2020 U.S. Goodwill Impairment Study (“the Study”), total goodwill impairment has decreased from $78.9 billion in 2018 to $71.0 billion in 2019. However, 2018 goodwill impairment includes a $22.1 billion impairment reported by a single company, General Electric, which accounts for roughly 28% of the 2018 total goodwill impairment.  Excluding this outlier from the 2018 total, goodwill impairment would have risen 25% in 2019. Of the nearly 8,900 publicly traded U.S. companies included in the study, nearly one-third of the companies had goodwill.  Of those companies, nearly 12% recorded goodwill impairment in 2019.  The percent of goodwill impaired was approximately 1.8% of total goodwill recorded.  Goodwill impairment in 2019 was the second highest annual impairment level in the study since the 2008 financial crisis.  For seven out of 10 industries evaluated, 2019 goodwill impairment was greater than or equal to the previous year.   Communication services, information technology and consumer staples were the industries that experienced the largest increase in goodwill impairment in 2019. In 2020, it is unsurprising that goodwill impairment appears to be on the rise.  Based on the data available as of January 28, 2021, the top ten goodwill impairments of 2020 added up to $54 billion compared to the top ten goodwill impairments of 2019, which totaled $37 billion—a 46% increase.  Although the total goodwill impairment in public companies’ 2020 calendar year-end results are not known yet, initial reporting indicates goodwill impairment has already topped $120 billion.  In comparison, the Duff & Phelps study measured goodwill impairment at $188 billion in 2008 during the financial crisis at the time.  The Study notes that if the 2020 total goodwill impairment remains less than the goodwill impairment recorded during 2008, “it will be partly a reflection of the unprecedented level of support provided by both the Federal Reserve (with swift implementation of liquidity-enhancing monetary policies) and the U.S. government (with large fiscal stimulus packages) in response to the COVID-19 crisis.”  Based on the information currently available, the energy industry has been the most impacted industry in 2020 as a result of the global collapse in oil prices resulting from the pandemic. As COVID-19 continues to evolve, both public and private companies must assess the impact of the pandemic on their operations and the value of their assets, including goodwill. Please contact Jen Doering at 412-697-5275 or jdoering@schneiderdowns.com of the Schneider Downs Business Advisory Group to further discuss how we can assist you with your goodwill analysis needs. ### DOE Announces Changes to HEERF Guidance With the passing of new relief, funding comes additional questions and the need for further guidance.  Finally, on March 19, 2021, the Department of Education (DOE) released guidance on the timing of expenses allowable under the various relief grants, as well as further defining and calculating lost revenue.Previously, funds received under the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) were only to be used for costs incurred on or after December 27, 2020, which is the date the CRRSAA was signed into law.  On March 19, 2021, the DOE announced that, “Grantees will now have the flexibility to charge costs back to March 13, 2020, the date of declaration of the national emergency.”  Furthermore, the DOE clarified that this guidance applies to all Higher Education Emergency Relief Funds, including unspent from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), CRRSAA, and American Rescue Plan Act of 2021 (ARP).In addition to this announcement, the DOE has released the following: HEERF Lost Revenue FAQs – Discusses how institutions may calculate and account for the amount of lost revenue they incurred as a result of COVID-19.  Specifically, lost revenue was defined to include tuition, fees, room and board, enrollment losses, canceled events, food and dormitory service expenses, bookstore revenues, parking fees, and others. Updated FAQs for CRRSAA (a)(1) – Provides guidance on whether HEERF funds may be used to support non-degree seeking, non-credit, dual enrollment, and continuing education students, among others. Click here to access the DOE’s official announcement.Schneider Downs also has other articles in this series: Department of Education Issues HEERF Clarifications to Common Questions Lost Revenues under HEERF Defined What is lost revenue according to the Department of Education? ### Department of Education Issues HEERF Clarifications to Common Questions On March 19, 2021, the Department of Education (DOE) issued several additional amendments to the frequently asked questions (FAQs) for the various programs that have been authorized under the Higher Education Emergency Relief Funds program (HEERF) from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (HEERF I), the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (HEERF II) and the American Rescue Plan (ARP) (HEERF III).  The period of permitted usage for all of the funds has been extended to cover the period from March 13, 2020 (the date of the declaration of the national emergency) to the expiration of the funds as noted in each piece of legislation. HEERF permits the usage of funds for students who are enrolled primarily in online programs, which was not permitted under HEERF I. For funds awarded under HEERF II, institutions are required to grant these funds to students with exceptional needs.  The updated FAQs note that these grants can be awarded to “students who receive Pell Grants, in awarding financial aid grants to students.  However, students do not need to be only Pell recipients or students who are eligible for Pell grants.”  While an explicit formula is not given, institutions must develop a methodology and retain documentation on how they believe they have fulfilled this requirement. Institutions are permitted to have these funds appropriated to reduce outstanding balances on student accounts, assuming that students have affirmed this and it was not a precondition for receiving the funding. Institutions can use HEERF grant funds to make financial aid grants to non-degree seeking, non-credit, dual enrollment, and continuing education students.  Students who are qualified aliens, as defined within 8 U.S.C. § 1641 (including refugees and persons granted asylum), may also receive HEERF financial aid grants. Institutions are permitted to charge indirect costs to these grants, except for the student portion.  These costs must be reasonable and necessary. Institutions may use CRRSAA funds and unspent CARES Act funds to pay for employee benefits costs as payroll costs if (1) such costs are newly associated with coronavirus, and (2) the costs were incurred on or after March 13, 2020, the date of the declaration of the national emergency due to the COVID-19 pandemic. Institutions may choose to make financial aid grants to students who have left school for any reason during the period of the national emergency, beginning March 13, 2020, the date of the declaration of the national emergency. Schneider Downs also has other articles in this series: DOE Announces Changes to HEERF Guidance Lost Revenues under HEERF Defined What is lost revenue according to the Department of Education?   ### Financial Boot Camp Series: Why You Need to Ensure That Your Property is Properly Insured To start the year, our focus has been on insurance-related articles, including the basics of life insurance and why life insurance policies are typically not an effective savings vehicle. This month, we explore property and casualty insurance basics, key planning considerations, and understanding coverage details.The property and casualty industry traces its roots to the late Middle Ages when maritime merchants worried about damage to their ships and cargo. While the industry has evolved significantly since then, modern-day property and casualty policies still provide financial protection from unforeseen or unexpected events.Property and casualty policies incorporate a wide variety of insurance, with all policies providing one of two forms of coverage – personal property coverage or liability protection.Personal property coverage protects your items should they be damaged or destroyed, whereas liability insurance provides protection should one be legally responsible for an accident resulting in damages.While beyond the scope of this article, understanding the nuances of your property and casualty coverage, specifically what items/events are covered and not covered, are critical. Given the potential complexity to these policies, it is important to have a trusted insurance advisor that understands policy details, coverage specifics, and any unique individual planning considerations when thinking through your property and casualty coverages.Most individuals will have a variety of property and casualty policies, including: Homeowner’s Insurance – provides financial protection if a covered event causes damage to one’s home, property, or personal items. While homeowner’s insurance is not required by law, if you have a mortgage, the lender will require insurance to protect its investment.Almost 66% of Americans are homeowners according to the Census Bureau, and for most individuals, their home is one of, if not their largest, assets. A few of the key coverage areas of a homeowner’s policy include dwelling, personal property, liability, and medical payments. For a more in-depth look into homeowner’s insurance coverage and types of insurance, see this article by NerdWallet. Auto / Boat / Motorcycle / RV / Camper Insurance – coverage on these vehicles could include bodily injury, uninsured and underinsured motorist, collision equipment, guest coverage, etc. While these vehicles provide excitement and thrills, you want to understand levels of coverage to avoid any unexpected insurance chills.   Personal Umbrella Policy – this additional insurance provides protection beyond existing policy limits and coverages. An umbrella policy may provide additional insurance coverage when your other property and casualty policies (i.e. homeowner’s, auto, boat, etc.) have been exhausted. In addition, umbrella policies also provide coverage for insurance claims that may be excluded by other policies.            As we have discussed throughout this quarter’s insurance articles, when thinking about life or property and casualty insurance from a financial planning perspective, putting a plan in place may limit the financial downside for loved ones or oneself.As you can see in these hypothetical scenarios presented by Nationwide insurance, there are almost an infinite amount of potential liability situations, highlighting the importance of understanding one’s homeowner’s policy in advance of any unforeseen events.These hypothetical liability scenarios also illustrate why we often advocate for individuals to have additional personal umbrella coverage.Personal umbrella polices can provide additional liability protection beyond existing policy limits and coverages in order to limit the potential financial downside of a worst-case liability scenario, typically, in a very cost-effective manner. According to Insurance Information Institute, an umbrella policy with $1M of coverage costs roughly $150 to $300 per year, a cost most individuals are happy to bear for the additional peace of mind an umbrella policy can provide. For further details on umbrella insurance, see this Geico article about how umbrella policies work and what typical coverage looks like.  We recognize that life or property and casualty insurance is unlikely at the top of mind for individuals. However, given the potentially grim financial ramifications of inadequate coverage, it is critical that individuals and families either understand their policies or work with trusted advisors to ensure they are appropriately covered.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### IRS Extends Federal Individual Tax Filing Deadline. State deadlines to follow? In a news release earlier today, (IR-2021-59, March 17, 2021), the IRS officially announced that it will extend the individual tax filing season by 1 month until May 17, 2021.  (https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline).No forms need to be filed with the IRS for this deadline extensionPayments of 2020 balance due are similarly delayed. Unfortunately, an extension of 2021 first-quarter estimates is not available.  It is expected that most, if not all, states with income tax deadlines of April 15 will also establish a similar delay in their filing deadlines.  At this point in time, Maryland has already extended the deadline.  We will continue to provide updates on other return extensions and state treatment as information becomes available. ### Paycheck Protection Program – American Rescue Plan Act Revisions to PPP Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic. On March 11, 2021, the American Rescue Plan Act (ARP Act) was signed. The ARP Act provides several revisions to increase the eligibility and add requirements for organizations under the Paycheck Protection Program (PPP). Previously, under the CARES Act, as amended, only those organizations described under Internal Revenue Code Section 501(c) (3), (4), (6), and (19) were eligible for PPP. As amended by the ARP Act, PPP loans are available to all organizations described in any paragraph of Section 501(c) of the Internal Revenue Code of 1986. These newly eligible entities are subject to additional eligibility criteria including: The entity does not receive more than 15% of its receipts from lobbying activities; The lobbying activities of the organization do not comprise more than 15% of the total activities; and The cost of the lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year that ended prior to February 15, 2020. Also, the ARP Act increased the eligibility for all other not-for-profit organizations operating in more than one physical location.  Under the ARP Act, a not-for-profit organization that employs less than 500 employees per physical location may be eligible for a PPP loan if it meets the other eligibility requirements. The ARP Act also expanded the eligibility of internet publishing organizations to include organizations that are assigned a North American Industry Classification System code of 519130.  An entity is eligible to receive a covered loan for the continued provision of news, information, content, or emergency information if it: “certifies in good faith as an Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information” and it meets the following criteria: Employs no more than 500 employees per physical location; and The loan will be used to support expenses at the component (physical location) that supports local or regional news. Unrelated to eligibility, the ARP Act also added premiums paid in determining the credit allowed related to premium assistance for COBRA (under section 6432 of the Internal Revenue Code of 1986) to payroll costs that are eligible for forgiveness. If you need more information or assistance regarding a PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com.     ### Third Party Risk Management IT Tools Are Not A Fix-All Solution One of the biggest risks an organization faces today involves third parties and how third parties handle an organization’s data.  While outsourcing provides benefits such as increased efficiency and cost savings, it also increases an organization’s risk exposure to a myriad of threats.Any outsourcing or business relationship where another entity accesses, stores, processes or transmits an organization’s data puts that organization at risk.  Third parties that process highly confidential data elements have the potential to be the root cause of a data breach, yet both the third party and its customers can experience significant downstream effects.Third Party Risk Management (TPRM) has become increasingly mainstream over the last decade, for the reasons stated above.  However, there is also increased pressure from global and domestic regulators who recognize the impact third parties can have, and have had, on their customers’ operations.  Therefore, TPRM should not just be a check-the-box task.  TPRM is a practice that involves continuous risk management. Due to the persistent high demand of TPRM, an explosion of new solutions have emerged to assist TPRM teams identify, manage and validate third party risk. According to Gartner Research, IT TPRM solutions “supply the tools to automate processes, provide risk and performance reporting, and enable better risk-based decision making over the life cycle of a vendor relationship.” Niche TPRM markets are still ripe for opportunity to increase efficiencies, without sacrificing quality. The current use cases vary solution-to-solution, but typically include one or more of the following use cases: Third party risk identification Third party risk assessment Third party risk analysis Third party risk remediation Third party risk monitoring While these tools are helpful in the development and maintenance of TPRM programs, they cannot be solely relied upon to manage or even understand third party risk. It is imperative that organizations maintain TPRM governance and perform monitoring at a frequency and depth that is commensurate with the organization’s risk appetite. Third party risk is not a one-size-fits-all approach. The scope of procured third party goods/services should be carefully considered as part of risk management activities. When data or access to data is shared with another company, organizations must be able to understand how the data flows to/from the company, what type of data elements flow to/from the company, and the relative sensitivity of that data. The growing market of IT TPRM tools solves many problems; however, there are still many TPRM activities that require skilled human resources. Some companies do not have these resources or expertise or believe their practices are sufficient. Nonetheless, failure to deploy adequate resources to manage TPRM won’t excuse organizations from third party risk, and the potential negative impacts that can occur. There are many experienced partners in the TPRM space today that can help you fine-tune, mature and run a TPRM program. Much like the IT TPRM solutions that are available, the people who use a variety of them and see a variety of TPRM programs and environments are very adept at developing, recalibrating, managing and assessing third parties. This, in turn, allows your program to do more, with less. Afterall, isn’t that the beauty of outsourcing in the first place?If you would like to discuss how third-party risk management can help your organization, please contact a member of the Schneider Downs Risk Advisory Services team.About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights.  Learn more at www.schneiderdowns.com/tprm or contact us for more information.  ### Oracle Cloud: Raining Risk? This article highlights some of the key considerations when working with Cloud ERP systems for Sarbanes-Oxley (SOX) requirements. Pick your favorite cloud infrastructure; what do they all have in common? If the word scalability comes to mind, you aren’t alone; many organizations are opting to switch out their on-premise systems for scalable tools like Oracle’s Fusion Enterprise Resource Planning (ERP) Cloud and Oracle Enterprise Performance Management (EPM) Cloud. One of many benefits of using a cloud ERP system is the ability to scale and to centralize an organization’s many applications into one system, all while the vendor is responsible for managing the behind the scenes infrastructure. This sounds like a dream come true, but don’t get your hopes up too high, because your organization still has many key responsibilities. Organization’s must understand that with implementing a cloud ERP system, they are still responsible for how the application is configured, how to use them securely, and how to implement robust controls across the entire platform. Oracle’s Fusion ERP Cloud is a popular cloud ERP system that organizations may choose when opting for a scalable cloud ERP system. Oracle’s Fusion ERP Cloud has become a one-stop-shop; from providing modules for inventory, fixed assets, payables, receivables, general ledger, to creating custom reports to help with month-end close, everything is contained within one platform – and that just naming a few of the modules they offer. In addition to this, Oracle also offers Oracle EPM Cloud, which offers organizations modules for account reconciliation (ARCS), financial consolidation and close (FCCS), data management (EDM), and planning and budgeting (EPBCS), which can tie directly into the Fusion ERP Cloud to provide a seamless integration that is invaluable to an organization. Implementing a cloud ERP or EDM system can quickly change an organization’s IT systems from legacy to legendary; but what are the key responsibilities as mentioned above? From a 1000-foot view, organizations are still responsible for their overall control environment.  They must implement formal controls to ensure the control effectiveness of change management, user access management, and monitoring and support. Change Management Oracle Cloud change management can be grouped in the following categories: 1) vendor upgrades, 2) custom report changes, 3) configuration changes.  Oracle Fusion ERP Cloud system upgrades are released quarterly, and Oracle EPM Cloud system upgrades are released monthly. Organizations should create defined procedures to test any and all upgrades. In addition, key business stakeholders should be involved when functionality is changes to any module and formal approval should be given. All key controls should be tested for efficacy to ensure the upgrade does not affect functionality. Further, end-users should be notified of system outages. Change management is not limited to system upgrades. Organizations have control over the development of custom reports and also configurations of different key settings within the various modules. Managing changes to custom reports and configurations, including who can perform changes and how they are tracked, is fundamental to ensuring proper change management procedures. Development activities such as these should be limited to appropriate individuals and tracked. Organizations new to the Oracle Fusion ERP Cloud and Oracle EPM Cloud must understand that changes to custom reports and configuration settings are not logged out of the box. Without the proper logging of changes, organization will not be able to maintain a complete and accurate audit trail of these changes. This audit trail is required to comply with Sarbanes-Oxley (SOX) compliance in order to provide auditors with a complete and accurate population to ensure that  all changes were approved and followed necessary procedures as defined by the organization. For custom reports, logging is not systematically available to capture the changes to key reports throughout the year; the organization must develop alternative procedures to track all changes throughout the year. For configuration changes, logging must be turned on for each individual configuration setting. Audit policies must be turned on for the area in which the configuration setting lives for each key automated control. The process is time consuming and manual. When defining requirements for the implementation of the cloud system, organizations should budget the necessary hours to ensure completion during the overall implementation effort. A good starting point is to identify key Oracle automated controls. User Access Management Understanding the Oracle security structure can be cumbersome. Inappropriate user access can have catastrophic affects if not restricted appropriately. Oracle’s Fusion ERP Cloud and EPM Cloud come jam-packed with out-of-the-box roles that can be used to implement role-based access. Organizations, however, should use caution when relying exclusively on out-of-the-box roles; separation of duties (SOD) analysis should be performed, and custom roles should be developed if SOD issues exist. Each role is comprised of many entitlements, also known as privileges. A user is typically assigned one or more roles. Using only out-of-the-box roles may violate the principle of least-privilege as users may be inadvertently be given inherited entitlements that are not needed to perform their job function. To assist with analyzing roles and entitlements, organizations should consider implementing the Advanced Access Controls (AAC) Cloud, which “…enables continuous monitoring of all access policies in Oracle ERP, potential violations, insider threats and fraud”. Oracle’s AAC service allows organizations to evaluate access to sensitive areas within the system, as defined by the organization. Oracle’s Fusion ERP Cloud and EPM Cloud are completely separate, and therefore user security is different. Oracle Fusion ERP Cloud’s most powerful roles include the Application Implementation Consultant (AIC) role, which has administrator level access, and IT Security Manager, which is used to manage users and their assigned roles. Oracle EPM Cloud has separate user security for each module implemented (i.e. ARCS, FCCS, EDM, EPBCS, etc) in addition to having completely separate user security than Oracle Fusion ERP Cloud. Although user security must be configured separately, the most privileged role stays the same: Service Administrator. Organizations must place heavy emphasis on restricting access to these roles and implementing least privilege to ensure users do not inadvertently modify system configurations that are critical to the organization. Unauthorized changes may affect system functionality, and from a SOX perspective, be the cause for a control exception. In addition to the highly privileged roles mentioned above, organizations should identify all roles that have access to modify key control configurations. To do this, an organization must identify where the configuration item lives, and then parse through the entitlements for every role to determine the roles that have that access. For example, a key configuration might live in the “Manage Journal Sources” area within Oracle Fusion ERP Cloud; any control that has a key configuration within this area may be affected by any role with the “Management Journal Sources” entitlement. Monitoring and Support So you’ve completely implemented Oracle Fusion ERP Cloud or Oracle EPM – what’s next? Your organization needs to be able to provide continuing support for your user base, and chances are, the current IT department doesn’t have the knowledge or size to support it to the level that is needed. Until those resources are gathered and information is learned, a third-party provider may be brought in to support user tickets or to troubleshoot items. Emphasis should be placed on the roles and/or entitlements given to these users; although they may be an extension of your company, privileged roles such as AIC, IT Security Manager, or Service Administrator should be heavily restricted. From a completeness and accuracy perspective, your organization should also implement controls to ensure data transfers and reconciliations between cloud systems are correct and timely. Tollgates should be placed in the process to require review and approval prior to final signoff after any data transfer. From a due diligence perspective, procedures should be performed on any vendor or third-party that is providing a service. Oracle’s SOC 1/2 Type II reports for Oracle Fusion ERP Cloud and Oracle EPM should be reviewed in depth on an annual basis, and management may also decide to perform a walkthrough of the data center that is housing their infrastructure. Further, any third-party with access to your systems, if applicable, should be reviewed on an annual basis, and reliance should only be placed on a SOC 1/2 Type II report, which shows the operating effectiveness of the controls in place at that organization. Schneider Downs’ dedicated IT, financial, and operational audit professionals have Sarbanes-Oxley experience working with a wide variety of industries of all sizes, both domestic and international.  We have proven experience with the all the commonly used processes, applications, platforms, and databases, including Oracle Fusion ERP Cloud and Oracle EPM Cloud. ### IRS Releases Section 4960 Final Regulations It has been a long time coming, but the IRS has released final regulation on the excise tax imposed on tax-exempt organizations for excess remuneration. These final regulations mostly follow the proposed regulations issued in June 2020, with the exception of a few changes resulting from public comments.To provide some background on the topic:  As part of the 2017 Tax Cuts and Jobs Act (TCJA), Section 4960 imposes a 21% excise tax on tax-exempt organizations that pay their covered employees remuneration in excess of $1 million, or parachute payments equal to at least three times a covered employee’s average pay over the past 5 years. The final regulations are consistent with the proposed regulations when defining a covered employee. These regulations state that whether an employee is one of an applicable tax-exempt organization’s five highest-compensated employees is determined separately for each organization, not for a group of related organizations. This means one individual could be considered a covered employee of more than one organization for a tax year. Further, for determining whether an employee is the highest-compensated employee for the tax year, the final regulations provide that remuneration paid by an applicable tax-exempt organization is aggregated with any remuneration paid by a related organization for that specific tax year.The final regulations follow the proposed regulations related to the limited-hours exception. Some practitioners were worried that the section 4960 tax could be imposed on for-profit companies when their highly paid employees volunteer for their firm’s foundations – thereby discouraging employees from volunteering for their tax-exempt organizations. However, the limited-hours exception adopted under the proposed and final regulations state an individual is not one of the applicable tax-exempt organization’s five highest compensated employees if he/she receives no remuneration from the tax-exempt organization or related tax-exempt organization, and his/her services at the tax-exempt organization consist of no more than 10 percent of the total hours worked at these tax-exempt organizations, including the time worked at the for-profit company, or for no more than 100 hours in a year.If you have any additional questions, please contact a member of the Schneider Downs tax-exempt group. ### IFRS 16, Leases - Lessee Perspective Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Principles (U.S. GAAP) should be aware of key lease accounting differences between both accounting standards.  IFRS 16, Leases (IFRS 16) establishes a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases that have a term greater than 12 months unless the lease assets are of a low value. Lessees record a right-of-use asset that represents the right to use the leased asset and a lease liability that represents the obligation to make lease payments.  IFRS 16 was effective for all entities for periods beginning on or after January 1, 2019.  Subsequent to the IFRS 16 effective date, certain companies may find it necessary to report under IFRS 16 due to a change in reporting requirements or dual reporting requirements.   The lease accounting updates in International Financial Reporting Standard 16, Leases (IFRS 16), are challenging to implement regardless of the complexity or simplicity of a lessee’s portfolio of leases.  The calculations used to determine the right-of-use asset and lease liability are not terribly complex, as they follow well-established effective interest method and asset amortization models; however, all of the analyses leading up to the actual calculations present significant challenges.  This article is part of a series covering considerations for organizations contemplating conversion from U.S. GAAP to IFRS. This article will highlight some of the key aspects of IFRS 16 and compare those provisions to its U.S. GAAP counterpart (Topic 842) and highlight common adoption questions. The single lease accounting model referred to in the IFRS 16 text means that there is not a distinction between operating leases and finance leases, whereas Topic 842 retains the distinction between operating and finance leases.  The classification analysis under Topic 842 is similar to the current capital-lease-versus-operating-lease test under Topic 840, but the Topic 842 classification tests do not contain bright-line thresholds.  Those with dual reporting requirements might be wondering what the difference is between operating leases and finance leases under Topic 842 since leases are reported on the balance sheet regardless of classification. The key distinction is in the expense recognition during the subsequent accounting.  Operating leases under Topic 842 will recognize a straight-line lease expense, whereas Topic 842 finance leases recognize amortization and interest expense.  This results in accelerated expense recognition in the earlier period of a finance lease compared to an operating lease.  The recognition and initial and subsequent measurement of a finance lease under Topic 842 are the same under IFRS 16. IFRS 16 contains similar exemptions and practical expedients to Topic 842, including the package of three transitional practical expedients: the hindsight practical expedient, short-term lease exemption, practical expedient to not separate lease and non-lease components, and the portfolio approach practical expedient.  IFRS 16 includes a low-value lease exemption not contained in Topic 842.  The low-value threshold is not explicitly defined in the IFRS 16 standard.  Many organizations have elected to utilize their capitalization threshold to identify low-value leases, which we believe is an appropriate accounting policy. The discount rate is used to calculate the present value of the lease liability in IFRS 16 and should ideally reflect how the contract is priced.  If it is readily determinable, the rate implicit in the lease contract should be used to discount the lease liability.  If the implicit interest rate cannot be readily determined, a lessee is permitted to use its incremental borrowing rate.  There are conceptual differences in the definition of the incremental borrowing rate within IFRS 16 compared to Topic 842.  Under IFRS 16, the incremental borrowing rate is the rate of interest that a lessee would have to pay in order to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.  For those with dual reporting requirements, the Topic 842 definition of incremental borrowing rate is less prescriptive than the IFRS 16 definition.  It is defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.  Topic 842 also includes an optional accounting policy election for nonpublic entities to use a risk-free discount rate in lieu of an incremental borrowing rate, whereas IFRS 16 is silent to any such accounting policy election for nonpublic entities.  Depending on the sophistication and resources of an entity’s treasury management function, it may be appropriate and necessary to select an incremental borrowing rate(s) from published sources, seek rate quotes from lenders, and perform sensitivity analyses over the rate(s). The optional practical expedients generally make it easier for lessees to transition from legacy lease accounting guidance; however, it can be easy to unintentionally violate the practical expedients during adoption.  Common errors include misapplications of the hindsight practical expedient and the package of three transitional practical expedients.   For example, the new lease standard potentially allows entities the ability to reassess whether or not certain contracts are or do not lease.  However, if the package of three transitional practical expedients is elected, then lessees cannot reassess these contracts at transition unless the contract was incorrectly assessed as a lease under legacy lease accounting guidance. Why would a lessee need to perform completeness procedures if the transitional practical expedients seemingly protect a lessee from have to reassess whether or not contracts are leases or to reassess the lease term?  On the surface, yes, the practical expedients allow lessees to carry forward their leases as determined under legacy lease accounting guidance.  However, the practical expedients do not shield lessees from errors in assessment under legacy lease accounting guidance.  For this reason, it is important to perform a completeness assessment at transition. Two of the most frequently asked questions that we receive during IFRS 16 implementation projects are, “What should I do with my deferred rent liability under previous lease accounting?” and “Why do I have an adjustment to retained earnings as a result of adoption?”  The most common answer to these two questions is accrued rent (deferred rent liability).  Deferred rent liabilities resulted from the recognition of straight-line rent expense for operating leases with escalating rent payments.  When transitioning to IFRS 16 or Topic 842, an existing deferred rent liability is subsumed into the right-of-use asset balance, which results in a right-of-use asset balance that appropriately does not match the lease liability.  If the deferred rent liability was missed under legacy lease accounting, then the accounting debit would be to retained earnings as a transition adjustment to “catch up” expense that should have been recognized earlier in prior periods.   Other items that may impact the transition to the new lease standards include prepaid rent, lease incentives such as tenant improvement allowances, and initial direct costs. An Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as SimpLEASE. Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. ### American Rescue Plan Act and Shuttered Venue Operators Grant On March 11, 2021, President Biden signed into law the latest COVID-19 relief legislation, “American Rescue Plan Act of 2021” (Act).  The majority of the Act expands provisions already in place by previous legislation, such as the Coronavirus Aid, Relief and Economic Security Act, and the Consolidated Appropriations Act. One of those expansions is related to the Shuttered Venue Operators Grant (SVOG) program. The SVOG program was first established as part of the Consolidated Appropriations Act (CAA), which was signed into law in December of 2020. Currently, the U.S. Small Business Administration is in the process of setting up the grant program and is not yet accepting applications.  The new Act appropriated additional funds toward the program in the amount of $1.25 billion. Approximately $500,000 of these funds is allocated to provide technical assistance to applicants to help access System for Award Management (SAM) or any other alternative grant application system. CAA prohibited organizations that received Paycheck Protection Program (PPP) loans on or after December 27, 2020, from applying for SVOG.  The new Act amended that section, now allowing PPP recipients to apply for SVOG funds. However, the grant amount will be reduced by the PPP loan received on or after December 27, 2020. Schneider Downs will keep monitoring SVOG program development and provide updates as they are received. If you have any additional questions, please contact us. ### Contents of The American Rescue Plan Act The American Rescue Plan Act of 2021 (ARPA or the Act) was signed into law on Thursday March 11, 2021.  The Congressional Research Service (CRS) notes that the $1.9 trillion dollar “bill provides additional relief to address the continued impact of COVID-19 on the economy, public health, state and local governments, individuals, and businesses.” As noted by the CRS, the bill provides funding for numerous necessities identified by Congress and the President. Programs benefiting from the American Rescue Plan Act funding include: agriculture and nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program); schools and institutions of higher education; programs for child-care and for older Americans and their families; COVID-19 vaccinations, testing, treatment, and prevention; mental health and substance use disorder services; emergency rental assistance, homeowner assistance, and other housing programs; state, local, tribal, and territorial governments with payments for economic relief; multi-employer pension plans; small business assistance, including specific programs for restaurants and live venues; programs for health care workers, transportation workers, federal employees, veterans, and other targeted populations; international and humanitarian responses; tribal government services; scientific research and development; state, territorial, and tribal capital projects that enable work, education, and health monitoring in response to COVID-19; and health care providers in rural areas. The bill also includes provisions that: extend unemployment benefits; extend the employee retention credit through December 31, 2021; extend and expand the emergency sick pay and family medical leave credits for eligible employers voluntarily providing these types of benefits; clarify that EIDL advances and restaurant revitalization grants are tax-exempt income and that expenses paid for from the proceeds of these funds are deductible; treat up to $10,200 of 2020 unemployment compensation as exempt from taxable income; treat student loan forgiveness through 2025 as exempt from taxable income; provide a maximum recovery rebate of $1,400 per eligible individual (including dependents) though the benefits phase-out at much lower adjusted gross income levels than the two previous rebate programs.  Individual taxpayers with 2021 adjusted gross income exceeding $80,000 and married filing joint taxpayers with 2021 adjusted gross income exceeding $160,000 will not qualify; substantially expand and modify certain tax credits, including the child tax credit and the earned income tax credit; provide premium assistance for certain health insurance coverage; require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children’s Health Insurance Program (CHIP); and ARPA contains some additional tax law changes also. These include provisions that: extend by one year to 2026 the sunset of the excess business loss limitation enacted under the Tax Cuts and Jobs Act; expand the limitation on the deduction for executive compensation to the CEO, CFO and the next five highest-paid employees (increased from the next three highest-paid employees) after December 31, 2026; and repeal the election to allocate interest expense on a worldwide basis by members of a multi-national affiliated group beginning after December 31, 2020. The above is an executive summary of the contents of the Act. Additional detailed guidance will be forthcoming on the various provisions contained in the  Act. For additional information, please check our American Rescue Plan Act resource page for additional information. In the meantime, if you have questions, please contact your Schneider Downs tax advisor.       ### American Rescue Plan Earmarks $40 Billion for Higher Education On March 11, President Biden signed a $1.9 trillion stimulus bill that brings another $40 billion to higher education. This is on top of the approximately $14 billion that was part of the Coronavirus Aid, Relief and Economic Security (CARES Act) and the $21.2B that was included in the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA). This latest round of funding will be available to institutions be used through September 30, 2023 in a manner similar to the CARES Act. The new bill once again appears to mandate the use of Pell grants for the determination of the funding allocation, but also has a new requirement to prioritize institutions with endowments of $1 million or less. It also includes a new directive that institutions, “implement evidence-based practices to monitor and suppress [the] coronavirus in accordance with public health guidelines.” The Department of Education (DOE) will need to clarify the intent of how institutions will be able to implement this. The bill also notes that, “50 percent of such allocation [should] provide emergency financial aid to students,” which is consistent to the stipulations of the CARES Act. Once again, students with extreme need are to be prioritized, and institutions will be required to “conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances.” With the passing of the CRRSSA, the DOE signaled that it will introduce a reporting requirement that will monitor that this is occurring. While this supplementary funding is welcome to higher ed institutions, there’s still additional needed clarification on a variety of topics and further interpretation of the new legislation. Schneider Downs will continue to monitor and post updates as more information becomes available. For additional information, please check our American Rescue Plan Act resource page for additional information. ### Microsoft HAFNIUM Update: Exchange Server Patches At the start of the year, Microsoft detected four concerning zero-day exploits that have since been widely leveraged to attack on-premises versions of Microsoft Exchange Server.Thankfully, Exchange Online users are not affected by these specific vulnerabilities, but if your organization uses on-premises Exchange, any account tied to that server may be at risk and any connected networks should be analyzed for further indications of compromise (IOC). As our previous OTO article shared, these exploits have given threat actors access to email accounts and the ability to install additional malware for persistence. It is recommended that all Exchange Servers be patched immediately by installing the latest updates outlined below. Exchange Server 2010 – be sure to install the update, KB5000978, that was released on March 2, 2021. Exchange Server 2013, 2016, and 2019 – install the update, KB5000871, that was released on March 2, 2021. While this can stop further attacks, the updates will not evict a threat actor that has already compromised the system. So additionally, it is recommended to externally validate the patch and investigate if any compromise has occurred. Microsoft Safety Scanner has also been updated to be able to scan Microsoft Exchange Servers in order to find and remove web shells and malware. The tool can be found https://docs.microsoft.com/en-us/windows/security/threat-protection/intelligence/safety-scanner-download and is recommended to be run immediately.To determine the exploit status of an Exchange server, it is recommended to scan the logs using a PowerShell script from the Exchange Management shell, Test-ProxyLogon.ps1, which checks the Exchange server and saves the report. The GitHub Repository containing the script and instructions on how to use it can be found here: https://github.com/microsoft/CSS-Exchange/tree/main/Security.If you have already been exploited, every second matters in ensuring your data is secured and that any existing unauthorized access is eradicated. Schneider Downs has a team of Digital Forensics and Incident Response (DFIR) experts available to help 24x7x365 at 1-800-993-8937.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world. ### Top Ten Technology Risks for 2021 The United States has been dealing with the Covid-19 pandemic for about a year. In February/March 2020, many organizations sent most or all employees to work from home due the pandemic. It has been a year of disruption and change in how we work, and a year of increased risk to organizations as a whole, including technology-driven risk. In the fall of 2020, ISACA and Protiviti conducted a global survey of almost 7,500 IT audit and risk leaders and professionals to gain their insight on some of the biggest technology risks their organizations will face in 2021. The organizations surveyed were broken into two groups: digital leaders and other organizations. Digital leaders were identified as organizations who claim to either have a proven track record of adopting emerging technologies or disrupting traditional business models; have digital aspects of strategic plans in place that are managed quantitatively or continuously improving; and have enabled high levels of process optimization or innovative and disruptive technologies. The top 10 technology risks for 2021 were identified as: Cyber Breach Confidentiality and Privacy Regulatory Compliance User Access Security Incident Management Disaster Recovery Data Governance Third-Party Risk Remote Workplace Infrastructure Availability Risk The top 10 list of risks is similar for both digital leaders and the other organizations. The biggest discrepancy is regarding cloud strategy and adoption. While digital leaders are highly concerned with this, other organizations are not. This stems from digital leaders moving more processes and systems into the cloud and preparing for the future. It should come as no surprise that there are inherent risks any time you introduce new technology solutions. With this, cyber breach is the top technology risk for 2021, so identifying the risk of exposure remains ever so critical. In a year where the majority of office workers may continue to work from home, it remains critical for organizations to continuously assess, monitor and effectively manage technology risks. Risk Assessment Frequency Assessing risk is a very important part of any organization’s security, especially in today’s technology-driven work environment and in the midst of a pandemic. Of the organizations surveyed, 92% claim to assess technology risk in some capacity. The frequency of risk assessments depends on the type of organization. 49% of organizations who claimed to be digital leaders identify and assess technology risk on a continual basis (more than monthly). Only 24% of other organizations continually identify and assess technology risk. 41% of other organizations (not digital leaders) identify and assess technology risk on an annual basis. As expected, some organizations are beginning to adjust how often they are assessing risk due the challenges of the pandemic. Of the organizations who completed risk assessments, at least a third (41% of digital leaders and 34% of other organizations) claim that pandemic-related disruptions and changes have caused them to adjust the nature or frequency of technology risk assessments. Managing Risk Of all industries and regions, Cyber Breach was either the first or a top 3 technology risk identified.  Confidentiality and Privacy, Third-Party Risk and Security Incidents all were near the top as well. Organizations need to be able to manage and assess risk in order to protect client, employee and third-party data. All organizations should conduct a technology risk assessment on at least an annual basis or more frequently as their technology landscape changes or new systems are introduced. As evident in the survey results, these assessments are starting to occur more frequently for more technology-focused and technology-reliant organizations. How Can Schneider Downs Help? Schneider Downs IT Risk Advisory practice can help conduct an organization’s technology risk assessment and assist in performing third-party risk management, as well as perform privacy assessments such as GDPR compliance and gap assessments. Schneider Downs Cybersecurity team can help with preventing and responding to cyber breaches and incidents. To learn more about our Risk Advisory and Cybersecurity services please visit www.schneiderdowns.com/risk-advisory-services and www.schneiderdowns.com/cybersecurity If you specific questions please feel free to contact the team at cybersecurity@schneiderdowns.com. ### Related-Party Transaction Adjustments Understanding the historical and forecasted earnings for a business is a key part of any business valuation. One important item for the valuation analyst to consider when analyzing historical and future earnings performance is whether the target business is involved in any related-party transactions.If the business were sold to a third-party buyer, the transactions with previously related parties may be charged at different prices once the relationship with the previous owners is lost. For example, let us consider everyone’s favorite celebrity Kim Kardashian West. In a hypothetical scenario, we will assume that Kim’s popular beauty and fragrance line, KKW, is owned through a company (“Company A”) that purchases its various product ingredients from a range of suppliers. Company A purchases aloe from another beauty products company (“Company B”) that is partially owned by her half-sister, Kylie Jenner. Due to the familiar relationship between owners, Company B sells aloe at a discount to Company A for $2 per ounce, but sells to all of its other third-party clients for $3 per ounce. Other aloe suppliers in the market also charge $3 per ounce.Company A sells its aloe-based face cream for $10 per bottle, and total costs to create the product amount to $6 per bottle, which includes the $2 for one ounce of aloe used in each bottle. This results in earnings margins of 40% per bottle for Company A. Without the relationship with Company B, however, margins would only be 30% per bottle, since one extra dollar would be charged for the aloe. If 1,000,000 face cream bottles are sold per year, resulting in $10,000,000 in annual sales, purchasing aloe from Company B creates a $1,000,000 annual savings for Company A.This simplified example shows how discounts given to related parties can translate into inflated earnings margins (in the case of Company A), or deflated earnings margins (in the case of Company B). Potential buyers of Company A would consider the costs that they would incur when running the business, and the discount on aloe would not be available if Kim was no longer an owner. Therefore, with all other factors held constant, removing the impact of the aloe discount would result in a lower valuation for Company A. Schneider Downs has significant experience preparing business valuations for a wide range of purposes.  For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com. ### IFRS Conversion Considerations: Revenue Recognition Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Principles (U.S. GAAP) should be aware of key revenue recognition differences between both accounting standards.   This article is part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS. The revenue recognition guidelines contained in International Accounting Standards Board’s (IASB) IFRS 15 and Financial Accounting Standards Board’s (FASB) ASC Topic 606 have mostly converged, but there are a few key differences between both standards, one of which is the accounting treatment for shipping and handling activities. While both standard-setting bodies reached the same conceptual interpretation of the performance obligations inherent within shipping and handling activities, the IASB did not provide the same shipping and handling performance obligation practical expedient as did the FASB.  Entities with dual reporting requirements or first-time adopters of IFRS should be cognizant of this difference in accounting for shipping and handling activities, because it affects the timing of revenue recognition.Promises and goods identified in a contract are separate performance obligations if they are distinct or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.  In order to be distinct, a good or service must be capable of being distinct and distinct within the context of the contract.  The issue is whether or not shipping and handling activities constitute a separate performance obligation.  In situations where control of the goods passes to the customer at a point in time after shipment has occurred, as in FOB destination arrangements, there would likely not be a separate performance obligation for shipping and handling.  In contrast, when shipping and handling activities occur at a point in time after control of the goods passes to the customer, as in FOB shipping point arrangements, there is a separate performance obligation.The FASB’s revenue recognition model provides sellers with an optional practical expedient to treat shipping and handling activities that occur after the customer has obtained control of the goods as a fulfilment activity and not as a separate performance obligation.  The IASB’s IFRS 15 does not provide the same practical expedient and requires sellers to analyze whether or not shipping and handling activities create a separate performance obligation.  If a seller determines that the activity of shipping and handling is a separate performance obligation, a portion of the transaction price is allocated to that performance obligation and deferred until the goods ship to the customer.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### DRI Offers Predictions to Remain Resilient Disaster Recovery Institute International (DRI) is the oldest and largest nonprofit that helps organizations around the world prepare for and recover from disasters. The DRI’s Future Vision Committee recently published the sixth installment of its annual predictions report, covering topics that have direct or indirect impact on business resiliency. During a time that few people will ever forget, DRI’s predictions for 2021 focus on an array of subjects, including the effects of the COVID-19 pandemic on society and its impact on the remote work environment. Here are a few key topics noted in the report: Remote Working – Working from home was the urgent temporary solution employed by many companies when COVID-19 forced social distancing. Businesses where remote work was possible scrambled to upgrade virtual private networks (VPNs) to increase capacity and network throughput as added numbers of remote workers put increased stress on systems. Figures collected by DRI from various university studies about the effectiveness of remote working ranged from 40% effective down to 25% effective. If remote work does in fact become the new norm, businesses everywhere will need to adapt and revise current Human Resources and IT policies and procedures to effectively maintain the welfare of employees and stress and throughput on VPN traffic, along with managing short- and long-term business and technology strategies that encompass internal systems and applications and recovery strategies. Climate Change and Natural Disasters – Often overlooked by businesses, a natural disaster can wreak havoc on an organization’s ability to remain functioning amid chaos and panic. Flooding or storm damage from a hurricane, for instance, can leave businesses without power to their main data or backup data sites. Considering that the potential of such events can be well covered in a business impact analysis (BIA), completing that process can help a company be better prepared for a disaster-type incident that may otherwise leave it scrambling for solutions. Pandemic or Health Emergency – It’s been said that pandemics come once every 100 years, and dare we even consider another COVID-like event when we’re not yet out of our current situation. DRI contends that travel bubbles and lockdowns will continue to cause disruption to business and may persist throughout 2021 until the pandemic is brought under control. With multiple vaccines having been approved and now being issued to the populace, however, a return to normal office life may soon be on the horizon for many businesses. The aforementioned issues are but a few considerations businesses must strategize to remain resilient and, most importantly, protect employees. Topics in the DRI report cover some vital pieces of the puzzle to consider when conducting BIAs and developing business continuity and disaster recovery strategies. If you have questions about completing the BIA process or developing and reviewing current business continuity and disaster recovery strategies, please contact us at contactsd@schneiderdowns.com. We welcome discussion. ### Impact of Variable Lease Payments Under ASC 842 In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-02, Leases (Topic 842). This standard requires lessees to recognize a liability and a right-of-use asset for all leases. When calculating a lease liability, there are several factors that must be considered. One of these is variable lease payments. A variable lease payment is a payment made by a lessee that varies because of a change in factors or circumstances occurring subsequent to the commencement date of the lease (other than the passage of time). Generally, variable rent payments are excluded from the calculation of the lease liability and right-of-use asset; however, those which are dependent on an index or rate shall be included. Examples of variable lease payments that depend on an index or rate include those dependent upon a consumer price index, benchmark interest rates, or changes in market rental rates. When initially calculating the right-of-use asset and lease liability, an organization should measure the variable lease payment using the index or rate at the commencement date. No changes would be assumed for the initial calculation. Subsequently, any change to the rate should be treated as a contingent rent. The lessee would not remeasure the lease payments, but instead, the change would be a period cost in the period in which it was incurred. Conversely, when a lessee remeasures the lease payments for another reason, such as when another lease modification is being made, the variable lease payments will need to be remeasured. Other variable lease payments that should not be considered in the initial calculation include payments based on the lessee’s performance or usage derived from the underlying asset. One example of this includes a retail organization paying a percentage of sales for the rental of space within a mall. Another example includes paying an additional amount if a lease of a vehicle exceeds a specified mileage. These costs are instead recognized as an expense in the period in which the event triggering the additional payment occurs. When considering variable lease payments, it will not be sufficient to simply capture the fact that the obligation exists. As we have noted, the different structures have differing treatments for accounting purposes. Disclosures will include an additional level of complication because you will need to ensure that preparers of the financial statements have the appropriate information available to easily compile and report the differing lease structures. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### CMMC FAQs Part 3 – Common Questions This article highlights some of the key questions and answers our Cybersecurity Maturity Model Certification (CMMC) team has encountered in recent conversations. Download our CMMC FAQ Guide for the full list of frequently asked questions. As part of our continued commitment to helping organizations prepare for CMMC, we are curating some of the most relevant frequently asked questions from authorized resources and providing an overview of them in our CMMC FAQ series. What Is the DFARS Interim Rule and How Does It Impact CMMC and DOD Prime and Subcontractors? The DFARS Interim Rule is a rule issued by the Department of Defense that went into effect on December 1, 2020. The new rule applies to all contractors who are subject to DFARS 252.204-7012 clause, which is based on the contractors handling CUI. The rule will therefore apply to all DoD primes and subcontractors who are in possession of CUI. The DFARS Interim Rule will be in effect from December 1,2020 until the successful implementation of CMMC in the next 5 years. This Interim Rule includes three new clauses: DFARS 252.204-7019 DFARS 252.204-7020 DFARS 252.204-7021 DFARS Clause 252.204-7019 outlines a requirement that all contractors (primes and their subcontractors) that handle CUI must complete a new NIST 800-171 Self-Assessment, which contains a new scoring methodology, and post this self-assessment score in the DoD’s Supplier Performance Risk System (SPRS). The assessments must be completed, and scores posted before a contract can be awarded to a contractor. The self-assessment also requires a completed System Security Plan (SSP) and a Plan of Action and Milestones (POAM) for all 800-171 requirements that are currently not being met by the contractor’s system. Finally, the Defense Contract Management Agency (DCMA) will be conducting random audits of these self-assessments to ensure that primes and their subcontractors are accurately self-assessing their systems. DFARS Clause 252.204-7020 states that the DoD will conduct the assessments for Medium or High-risk contractors. The clause itself outlines this process. Contractors are required to provide the DoD with access to their facilities, systems, and personnel for the DoD to conduct these assessments. The DoD will then post the summary of these scores within the SPRS (e.g., 100 out of 110 requirements met) as well as an expected implementation date for all requirements to be implemented. The contractor in question will then have 14 days to rebut any findings in question and/or provide evidence for controls that could not be assessed by the DoD during the initial assessment. The contractor also must insert the substance of this clause into all subcontracts. Finally, DFARS Clause 252.204-7021 defines the scope and requirements for the CMMC itself. This clause includes the definition of a current CMMC score (No older than 3 years), the requirement to maintain CMMC certification throughout the duration of the contract, and the requirement for subcontractors to also maintain a CMMC certification. How Do You Pass CMMC Certification Assessment? The answer to this question depends on what level of CMMC assessment you are required to undergo. The requirements for a Level 1 assessment are significantly different from the requirements for a Level 3 assessment, which are significantly different from a Level 5 assessment. A Level 1 assessment consists of 17 CMMC Practices which must be met before CMMC certification can be awarded. A Level 2 assessment is 72 total CMMC Practices, a Level 3 consists of 130 total CMMC practices, a Level 4 is 156 total CMMC Practices, and a Level 5 consists of 171 total CMMC Practices. The best place to determine what Level of CMMC assessment your organization will require is the specific contract that is being bid on, which going forward, should include a required level. However, for contracts already in place, if you are a prime or subcontractor for a prime in possession of DoD CUI, you will at least need a Level 3 assessment. With that said, there is currently no way to pass a CMMC assessment. A CMMC assessment must be completed by a C3PAO, who themselves need to undergo CMMC certification. At the time of writing, there are no C3PAO firms authorized to conduct a CMMC assessment, which is where DFARS Interim Rule comes into play. In the meantime, to prepare your organization for a CMMC assessment, your organization should examine the latest CMMC documentation and determine which CMMC practices are in place, and which are still being implemented. All practices within the CMMC assessment your organization is undergoing must be implemented prior to the assessment. To achieve certification, all practices at the CMMC level being assessed must be in place in order to be certified and the CMMC does not allow for Plans of Actions & Milestones (POA&Ms). The CMMC-AB does however allow for a 90-day remediation period, wherein a contractor has 90 days to remediate any findings identified by the C3PAO. If a practice is not in place after 90 days, the Organization Seeking Certification must restart the CMMC assessment process. What Happens if Your C3PAO Determines That a Practice Has Not Been Implemented Sufficiently? If your C3PAO has determined that a practice has not been sufficiently implemented, as currently outlined by the CMMC AB, your organization will have a period of 90 days to remediate these practices and conform to the CMMC practice. But not all practices are equal in terms of their difficultly to remediate. For some gaps, this 90-day period may be sufficient for remediation, but other practices may take longer. In the event that a gap cannot be remediated within 90 days, your organization will have to reapply for an assessment after the gap has been addressed and begin the CMMC certification process again. What Organizations Make Up the CMMC Ecosystem? Acronym Full Name Function within CMMC Ecosystem DoD Department of Defense Created the CMMC Framework DIB Defense Industrial Base The organizations that the DoD uses as an industrial asset, of direct or indirect importance for producing equipment or services for the Nation’s armed forces. CMMC-AB CMMC Accreditation Body Validates CMMC assessments and credentials organizations within the CMMC Ecosystem CAICO CMMC Assessors and Instructors Certification Organization Arm of the CMMC-AB that is responsible for training and certifying assessors RPO Registered Provider Organization Organizations that can performing consulting work related to the CMMC framework RP Registered Practitioner Employee at an RPO who performs the consulting work C3PAO CMMC Third-Party Assessor Organization Organizations that can perform CMMC assessments. OSC Organization Seeking Certification Organization that is undergoing a CMMC assessment. CP Certified Professional Can participate in a CMMC assessment under the supervision of CA-1 and higher-level assessor CA-1 Certified CA-1 Assessor Can perform a CMMC ML-1 assessment and supervise a CP CA-3 Certified CA-3 Assessor Can perform a CMMC ML-1 or ML-3 assessment and supervise a CA-1 or lower-level assessor CA-5 Certified CA-5 Assessor Can perform any level of CMMC assessment and supervise any level of assessor What CMMC Certification Level Is Required for Prime and Subcontractors That Possess CUI? The level required for CMMC that prime and subcontractors will need to meet will be dependent on their contracts and the information they obtain from the government.  If an organization possesses CUI, the organization will be required to be at least CMMC level 3, however the Department of Defense has indicated that they will specify the required CMMC level in both Requests for Information and Requests for Proposals.  Depending on the type of CUI, organizations may be required to be certified at level 4 or 5. How Should an Organization Prepare for CMMC Certification? As the CMMC certification requires all controls in place and operating effectively to be certified, we recommend working with an independent party that has CMMC experience prior to engaging in the CMMC assessment.  The independent party can perform a gap or readiness assessment to determine if you are meeting the controls at your desired CMMC level before you attempt the certification review. Before working with an independent party to perform a gap or readiness assessment, it is critical to review the CMMC level 1 and CMMC level 3 assessment guides, which can be found at: https://www.acq.osd.mil/cmmc/draft.html. These guides will provide the required background knowledge for your organization to determine which CMMC practices the organization needs to meet for the level of CMMC certification being sought. Within these assessment guides are the specific CMMC practices that must be in place as well as the processes that must be in place to support these practices. Policies should be written to fulfill these processes. As an example, the process to support Access Control (AC) practices states that organizations must “Establish a policy that includes Access Control”. Finally, the entire IT environment does not require CMMC assessment and certification. Only portions of the environment that store, process, transmit, or receive CUI and FCI are required to undergo CMMC certification. Therefore, your organization should analyze the environment to determine which portions of the environment contain CUI and FCI. To simplify the implementation of CMMC practices and CMMC assessment, the portions of the environment containing CUI and FCI can be isolated within a network enclave. Segmenting this portion of the network or system from the general IT environment will reduce the scope of the assessment and simplify the implementation of CMMC practices. When Will an Organization Need To Be CMMC Certified? An organization will need to be certified at the required CMMC level specified in the contract to obtain the contract for work from the DoD.  The DoD has indicated it plans to do a phased rollout of CMMC requirements within prime contracts starting in FY21 with approximately 15 pilot contracts, continuing to increase that roll out over the next 5 years, including rolling out CMMC level 5 requirements in contracts starting in FY22.  As it currently stands, all DOD prime and subcontractors will need to be CMMC certified at the appropriate level specified in their contracts by 2026. How Will Third Parties Such As Managed Security Providers (MSPs) and Cloud Service Providers (CSPs) Impact an Organizations CMMC Certification Requirements? A contractor can inherit practice objectives. A practice objective that is inherited is met because adequate evidence is provided that the enterprise or another entity, such as an External Service Provider (ESP), performs the practice objective. Evidence from the enterprise or the entity from which the objectives are inherited should show they are applicable to in-scope assets and that the assessment objectives are met. For each practice objective that is inherited, the Certified Assessor includes statements that indicate how they were evaluated and from whom they are inherited. If the contractor cannot demonstrate adequate evidence for all assessment objectives, through either contractor evidence or evidence of inheritance, the contractor will receive a “NOT MET” for the practice. What Type of Evidence Is Required To Prove That Each Practice Has Been Implemented? There are three types of objective evidence that are recognized by the assessor.  For each practice, two out of the following types of evidence will be required: Examine: The process of checking, inspecting, reviewing, observing, studying, or analyzing one or more assessment objects or artifacts to facilitate understanding, achieve clarification, or obtain additional evidence. The results are used to support the determination of security safeguard existence, functionality, correctness, completeness, and potential for improvement over time. For an artifact to be accepted as evidence in an assessment, it must demonstrate the extent of implementing, performing, or supporting the organizational or project processes that can be mapped to one or more CMMC practices and those artifacts must be produced by people who implement or perform the processes. Interviews: The process of conducting discussions with individuals or groups of individuals in an organization to facilitate understanding, achieve clarification, or lead to the location of evidence. The results are used to support the determination of security safeguard existence, functionality, correctness, completeness, and potential for improvement over time. For an interview statement to be accepted as evidence in an assessment, it must demonstrate the extent of implementing, performing, or supporting the host, supporting function or enclave processes that can be mapped to one or more CMMC model practices; interview affirmations must be provided by people who implement, perform, or support processes. Tests: The process of exercising one or more assessment objects under specified conditions to compare actual with expected behavior. The results are used to support the determination of security safeguard existence, functionality, correctness, completeness, and potential for improvement over time and institutionalization. For a test/demonstration to be accepted as evidence in an assessment, it must pass its requirements and criteria while being observed by the CA and assessment team. Any failed test results in a failed CMMC practice/control or process. What Is Federal Contract Information (FCI)? FCI is information that is not meant to be released to the public and is provided by or created for the Government under a contract during the development or delivery of a product or service. FCI does not include information that the Government provides to the public, such as the data on public Government websites, or transactional data used to process payments by the Government. If your organization is only in possession of FCI and not CUI, you will only need a Level 1 assessment performed. How Much Will a CMMC Assessment Cost? The answer to this question depends on a number of factors. First and foremost is the level of CMMC certification that your organization requires. A CMMC ML-1 assessment consists of 17 CMMC practices and an ML-5 assessment consists of 171 CMMC practices. Because of the differences in the number of practices being assessed at each level of CMMC certification, a higher-level assessment will cost more than a lower level CMMC assessment. The second factor that will have a direct effect on the cost of the assessment is the scope and complexity of the environment being assessed. A relatively simple system or network segment will cost level overall to assess than a situation where the C3PAO must assess the entire IT environment. Katie Arrington, Chief Information Security Officer for the Acquisition Office of the DoD has estimated that a level 1 CMMC assessment could cost as little as $3,000-$5,000, however, these numbers are only estimates based upon the currently outlined CMMC requirements. As these requirements change, so will these estimates, where they may increase or decrease. In addition to the certification assessment cost, organizations will also have to consider costs associated with preparing for a CMMC assessment (i.e. consultants, gap analysis, etc.) and purchasing technology necessary for meeting CMMC requirements (i.e. SIEM tools, Firewalls, etc.). The more important item to note is that for current DoD contractors, the cost of the CMMC assessment and remediations that fall under the 90-day remediation period are considered as allowable costs by the DoD. This means that current defense contractors are able to be reimbursed for the cost of having the assessment performed and validating the remediation efforts. It is critical to note, however, that the initial costs of actually getting the environment ready for the CMMC assessment are not considered allowable costs at this time and will be paid fully by the Organization Seeking Certification. Do You Need To Use GCC High To Meet CMMC Requirements? No. This is a common question related to CMMC compliance, so common in fact, that Regan Edens of the CMMC Accreditation Body (CMMC AB) has even addressed this question back in early 2020. The answer provided is that GCC High is not a requirement to meet any level of CMMC assessment. The current commercial and GCC versions of Office 365 can be configured to meet all the requirements of NIST 800-171, which the CMMC framework is based upon. Because of this, GCC High is not a requirement to pass a CMMC assessment, but when using the commercial or GCC versions of Office 365, extra attention should be paid to the configuration of the environment to ensure compliance with NIST 800-171 and CMMC practices is implemented correctly. With this comes a large caveat, however. If you are a current contractor with the Department of Defense and subject to DFARS clause 252.204-7012 (DFARS or DFARS 7012), GCC High is the only offering from Microsoft for Office 365 that can be configured in a manner that is compliant with the DFARS 7012 requirements. This also holds true for manufacturers, exporters, and brokers of defense articles or defense services who are subject to International Traffic in Arms Regulations (ITAR). If your organization falls into either of these categories, GCC High will meet all the CMMC framework practices, at any level of assessment, when configured correctly. In either case, your organization should already be in GCC High, though some contractors do make the choice to ignore this, running the risk of falling out of compliance with DFARS 7012 and ITAR. If you believe that your work with the DoD may expand after achieving CMMC compliance, migrating to GCC High might make sense in the long term. Are Prime Contractors and Subcontractors Required To Complete a NIST 800–171 Self-Assessment in the Supplier Performance Risk System (SPRS) Since the DFARS Interim Rule Went Into Effect on November 30, 2020? Beginning on November 30, 2020, contracting officers will have to confirm that an organization has an active SPRS assessment in its system before awarding a new contract or exercising an option under an existing contact where the contractor or offeror is required to implement NIST 800-171. The assessment in SPRS cannot be older than three years. Based on the above, November 30, 2020 is not a deadline for every contractor and subcontractor.  However, if you are a prime contractor and you are planning to bid on a new contract with DFARS 252.204-7012 included or a current contract with DFARS 252.204-7012 included that has an exercise option looming, then it is highly recommended that you complete a self-assessment in SPRS system as soon as possible. Should I Enter My Self-Assessment Into SPRS Even if My Score Is Low or Even Negative? It is unclear on how the DoD will use the scores entered in SPRS when awarding contracts and if the actual score will impact decisions.  Since contracting officers will have to confirm that an organization has an active SPRS assessment in its system before awarding a new contract or exercising an option under an existing contact, it is recommended to complete a self-assessment in SPRS even if the score is low or even negative.  Contractors without scores in SPRS bidding on new contracts with DFARS 252.204-7012 included, will not be considered when the contract is awarded. Are Prime Contractors Required To Flow Down Requirements to Their Subcontractors for Completing a Self-Assessment in SPRS? Yes – prime contractors will be required to confirm that all subcontractors included a contract they are bidding on have an active score in SPRS. As a Subcontractor, Are We Required To Comply With Our Prime Contractor’s Request for Us To Complete a Self-Assessment in SPRS? Technically, you are not required to complete a self-assessment in SPRS unless you are bidding on a new contract with your prime contractor that includes DFARS 252.204-7012 or if your prime contractor’s contract that includes DFARS 252.204-7012 has an exercise option looming. Most prime contractors are planning for future contracts and are currently requiring all their subcontractors to complete self-assessments in SPRS.  Considering how many subcontractors prime contractors may work with, it makes sense that prime contractors would require this, since they do not want to be overlooked for future contracts because their subcontractors do not have an active scores in SPRS. What Will Reciprocity Look Like for Companies Who Have Already Achieved FedRAMP Authorization? There are plans for CMMC to provide reciprocity to organizations that have successfully completed a FedRAMP certification.  However, there has not been an official policy document outlined on when this will happen or how it will work. Related Articles CMMC FAQs Part 1 – OUSD A&S CMMC FAQs Part 2 – CMMC Model Guide v1.02 How Can Schneider Downs Help? Schneider Downs currently offers CMMC readiness and consulting services as a Registered Provider Organization (RPO). Our team includes a Certified CMMC Provisional Assessor, and several other members currently in process of applying for CMMC Certified Assessor status who plan on completing training in Q2 of 2021. OSCs should note that a single firm cannot perform both consulting and audit services for a single client per the CMMC-AB standards. In the meantime, until such requirements are made public, we can help your organization prepare for CMMC by performing an assessment against the NIST 800-171 framework. For more information visit www.schneiderdowns.com/cmmc or contact the team at contactsd@schneiderdowns.com. ### Coronavirus Related Distributions – What Now? During 2020, rules and procedures implemented under the Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed individuals to take early distributions from certain retirement plans as a way to ease any financial burden they may have felt during the unprecedented times the country was facing.  As we enter the heart of tax reporting season, we thought it important to let individuals know the reporting procedures surrounding any distribution they may have received from their eligible retirement plan related to the CARES Act and the COVID-19 pandemic.  For your reference, IRS Notice 2020-50 clarifies the process for withdrawing eligible funds and provides guidance on the various tax-reporting options related to these transactions.Under normal circumstances, a taxpayer withdrawing funds from a traditional retirement account before age 59½ may be subject to a 10% additional tax for early withdrawal. Due to the pandemic, the government recognized that people may need to rely on their retirement savings in order to survive during uncertain financial times.  As such, provided certain conditions are met, under the CARES Act, early withdrawals taken in 2020 due to hardships that result from COVID-19 will not be subject to the 10% additional tax.The conditions referenced above include the following: The distribution must be made to a qualified individual. The distribution must be from an eligible retirement plan between January 1, 2020 and December 31, 2020. The aggregate of all distributions must be $100,000 or less. Provided all these conditions are met, the eligible distributions must be reported as income and are subject to income tax, but without additional tax or penalty for early distribution.If you are a qualified individual, the taxable portion of an eligible CARES Act distribution may be spread evenly over a three-year period starting with 2020 on your federal income tax return, unless you elect to have it all taxed in 2020.You must use IRS Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments) when filing your 2020 federal income tax return to claim the tax benefits for any CARES Act distributions.Further, the taxable portion of your CARES Act distribution will be subject to 10% federal income tax withholding unless no withholding or additional withholding is elected. If applicable, your distribution may also be subject to state income tax withholding.Your CARES Act distribution will be reported on IRS Form 1099-R, which will include information about the gross and taxable amount of your distribution and any applicable federal and state income tax withholding. As you may know, the information on IRS Form 1099-R is also reported to the IRS.  The information on the 1099-R is used to prepare your income tax returns and to qualify for any income tax relief.If you have any questions, please contact your tax preparer or your Schneider Downs Retirement Solutions representative for assistance.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### CMMC FAQs Part 2– CMMC Model Guide v1.02 This article highlights some of the key excerpts and summaries from the Office of the Under Secretary of Defense for Acquisition & Sustainment Cybersecurity Maturity Model Certification CMMC Model Guide v1.02. Download our CMMC FAQ Guide for the full list of frequently asked questions. As part of our continued commitment to helping organizations prepare for CMMC, we are curating some of the most relevant frequently asked questions from authorized resources and providing an overview of them in our CMMC FAQ series. How Is the CMMC Framework Organized? The CMMC framework consists of maturity processes and cybersecurity best practices from multiple cybersecurity standards, frameworks, and other references, as well as inputs from the DIB and DoD stakeholders. The model framework organizes these processes and practices into a set of domains and maps them across five levels.  In order to provide additional structure, the framework also aligns the practices to a set of capabilities within each domain. What Are Maturity Processes and How Do They Fit Into the CMMC Framework? The CMMC model consists of five maturity processes that span Maturity Levels (ML) 2-5 and apply to all domains. What Are Practices and How Do They Fit Into the CMMC Framework? Practices are synonymous with controls.  The CMMC framework consists of 171 practices that are mapped across the five levels for all capabilities and domains. The majority of practices (110 of 171) originate from the safeguarding requirements and security requirements specified in FAR Clause 52.204-21 and DFARS Clause 252.204-7012.  Level 1 is equivalent to all the safeguarding requirements from FAR Clause 52.204-21.  Level 3 includes all of the security requirements in NIST SP 800-171 plus 20 additional practices.  The remaining practices stem from multiple references as well as inputs from the DIB and DoD stakeholders. What Domains Are Included in the CMMC Framework? The CMMC framework consists of 17 domains. The majority of these domains originate from the security-related areas in Federal Information Processing Standards (FIPS) Publication 200 and the related security requirement families from NIST SP 800-171.  The CMMC framework also includes three additional domains of Asset Management (AM), Recovery (RE), and Situational Awareness (SA). Related Articles CMMC FAQs Part 1 – OUSD A&S CMMC FAQs Part 3 – Common Questions How Can Schneider Downs Help? Schneider Downs currently offers CMMC readiness and consulting services as a Registered Provider Organization (RPO). Our team includes a Certified CMMC Provisional Assessor, and several other members currently in process of applying for CMMC Certified Assessor status who plan on completing training in Q2 of 2021. OSCs should note that a single firm cannot perform both consulting and audit services for a single client per the CMMC-AB standards. In the meantime, until such requirements are made public, we can help your organization prepare for CMMC by performing an assessment against the NIST 800-171 framework. For more information visit www.schneiderdowns.com/cmmc or contact the team at contactsd@schneiderdowns.com. ### IFRS Conversion Considerations: Provisions, Contingencies and Subsequent Events Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should be aware of the different treatment for subsequent events and commitments and contingencies.Subsequent events are generally treated in a similar manner between the two standards. Events that provide additional information on the conditions that existed at the balance sheet date are usually recorded at the reporting date. Significant events that occur after the reporting date but before issuance are generally disclosed, but not recorded in the financials. Under U.S. GAAP, subsequent events are evaluated through the date of the financial statement issuance, while IFRS requires an evaluation until the date the financial statements are authorized for issuance. Both standards require disclosure of the date through which subsequent events were evaluated.Both standards implement a conservative approach, requiring the recognition of a loss based on the probability of occurrence and if a reasonable estimate of the loss can be determined. The definition of probable is different between the two standards. U.S. GAAP defines probable as “future events or events that are likely to occur,” while IFRS defines probable as “more likely than not,” which is a lower threshold. Both standards prohibit the recognition of costs associated with future operating activities. Both standards also require disclosures for contingent liabilities that have more than a remote likelihood of occurring, but lower than the probable threshold. Under U.S. GAAP, provisions may be discounted only when the amount and timing of the payments are fixed or readily determinable; however, under IFRS, significant provisions should be discounted based on the time value of money and the risk specific to the liability. Under U.S. GAAP, the most likely outcome of the provision within a range should be accrued. If all outcomes are as likely as others, then the minimum amount should be accrued. Under IFRS, the best estimate of the liability should be accrued, and the middle of a range should be used when all outcomes are as likely. This treatment could result in a higher accrual under IFRS.Restructuring costs under U.S. GAAP are generally expensed as they occur, other than involuntary employee termination costs, which are expensed over the future service period or immediately if there is no future service period. Under IFRS, the approach is to analyze the entire restructuring plan, rather than individual costs. Therefore, costs are generally recognized earlier and should be recorded when management has committed to a detailed exit plan.In connection with IFRS 1, First-Time Adoption of International Financial Reporting Standards, a first-time adopter must use estimates that are consistent with the estimates previously made under U.S. GAAP, after considering any changes to the accounting policies. The entity cannot apply any hindsight knowledge to make better estimates unless there is evidence that errors existed in the previous estimates and disclosures.This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS. Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### CMMC FAQs Part 1 – OUSD A&S This article highlights some of the key CMMC FAQS from Office of the Under Secretary of Defense for Acquisition & Sustainment Cybersecurity Maturity Model Certification. Download our CMMC FAQ Guide for the full list of frequently asked questions. As part of our continued commitment to helping organizations prepare for CMMC, we are curating some of the most relevant frequently asked questions from authorized resources and providing an overview of them in our CMMC FAQ series. What is CMMC? CMMC stands for “Cybersecurity Maturity Model Certification” and is a unifying standard for the implementation of cybersecurity across the Defense Industrial Base (DIB). The CMMC framework includes a comprehensive and scalable certification element to verify the implementation of processes and practices associated with the achievement of a cybersecurity maturity level. CMMC is designed to provide increased assurance to the Department that a DIB company can adequately protect sensitive unclassified information, accounting for information flow down to subcontractors in a multi-tier supply chain. What is Controlled Unclassified Information (CUI)? CUI is information the Government creates or possesses, or that an entity creates or possesses for or on behalf of the Government, that a law, regulation, or Government-wide policy requires or permits an agency to handle using safeguarding or dissemination controls. CUI is a newer term developed for all Executive Branch Agencies. Prior to the establishment of the term “CUI”, each agency used their own internal terminology to describe the same information. Some of these retired terms would be: Unclassified Controlled Technical Information (UCTI), For Official Use Only (FOUO), Sensitive but Unclassified (SBU), and others. CUI encompasses two other classifications of data: Covered Defense Information (CDI) and Controlled Technical Information (CTI). CDI is information that is marked and subject to the protections outlined within DFARS Clause 252.204-7012. CTI is any technical information with a military or space application that is subject to the protections within DoDI 5230.24. All CDI and CTI are CUI, but not all CUI is CDI or CTI. A CUI Registry provides information on the specific categories and subcategories of information that the Executive branch protects. The CUI Registry can be found at: https://www.archives.gov/cui and https://www.dodcui.mil/Home/DoD-CUI-Registry/ and includes the following organizational index groupings: Critical Infrastructure Defense Export Control Financial Immigration Intelligence International Agreements Law Enforcement Legal Natural and Cultural Resources NATO Nuclear Privacy Procurement and Acquisition Proprietary Business Information Provisional Statistical Tax Resources, including online training to better understand CUI can be found on National Archives’ website at https://www.archives.gov/cui/training.html as well as the Department of Defense’s website https://www.dodcui.mil/. Why Was CMMC Created? The Department of Defense (DoD) is migrating to the new CMMC framework in order to assess and enhance the cybersecurity posture of the Defense Industrial Base (DIB) sector. The CMMC is intended to serve as a verification mechanism to ensure that DIB companies implement appropriate cybersecurity practices and processes to protect Federal Contract Information (FCI) and Controlled Unclassified Information (CUI) within their unclassified networks. When Is the Interim Defense Federal Acquisition Regulation Supplement (DFARS) Rule Implementing CMMC (DFARS Case 2019-D041) Effective? The interim rule became effective on November 30, 2020. The public review and comment period for DFARS Case 2019-D041 ended on November 30, 2020. Due to its designation as a major rule change, the interim rule must also complete a Congressional Review. What is the relationship between National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 and CMMC? CMMC Level 3 includes the 110 security requirements specified in NIST SP 800-171. The CMMC Model also incorporates additional practices and processes from other standards, references, and/or sources such as NIST SP 800-53, Aerospace Industries Association (AIA) National Aerospace Standard (NAS) 9933 “Critical Security Controls for Effective Capability in Cyber Defense”, and Computer Emergency Response Team (CERT) Resilience Management Model (RMM). How Will CMMC Be Different From NIST SP 800–171? Unlike NIST SP 800-171, the CMMC model possesses five levels. The model is cumulative whereby each level consists of practices and processes as well as those specified in the lower levels. The CMMC Model includes additional cybersecurity practices in addition to the security requirements specified in NIST SP 800-171. In addition to assessing a company’s implementation of cybersecurity practices, the CMMC will also assess the company’s maturity processes. Will There Be a Self-Certification? No, there are no self-certifications for CMMC. However, DIB companies are encouraged to complete a self-assessment based on CMMC Assessment Guides prior to scheduling a CMMC assessment. The Department of Defense posts versions of the CMMC Assessment Guides on its website How Often Does My Organization Need To Be Reassessed? In most cases, a CMMC certificate will be valid for 3 years. My Organization Does Not Handle Controlled Unclassified Information (CUI). Do I Have To Be Certified Anyway? If a DIB company does not possess, store, or transmit CUI but possesses Federal Contract Information (FCI), it is required to meet FAR clause 52.204-21 and must be certified at a minimum of CMMC Level 1. Companies that solely produce Commercial-Off-The-Shelf (COTS) products do not require a CMMC certification. I Am a Subcontractor on a DoD Contract. Does My Organization Need To Be Certified? If the DoD contract has a CMMC requirement and so long as your company does not solely produce COTS products, you will need to obtain a CMMC certificate. The level of the CMMC certificate is dependent upon the type and nature of information flowed down from your prime contractor. How Will I Know What CMMC Level Is Required for a Contract? The DoD will specify the required CMMC level in Requests for Information (RFIs) and Requests for Proposals (RFPs). What Is the Department’s Phased Rollout Plan for CMMC? The Department is implementing CMMC through a phased rollout approach. Until September 30, 2025, the Office of the Under Secretary of Defense for Acquisition and Sustainment must approve the inclusion of the CMMC requirement in any solicitation. The Department is currently working with military Services and Defense Agencies to identify candidate programs that will implement CMMC requirements during the FY2021-FY2025 phased rollout. During the first year of the rollout, the Department will require no more than 15 new Prime acquisitions to meet CMMC requirements as part of a CMMC pilot program. These contracts will focus on mid-sized programs that require the contractor to process or store CUI (CMMC Level 3). Primes will be required to flow down the appropriate CMMC requirement to their subcontractors. For subsequent fiscal years of the rollout, the Department intends to incorporate CMMC Levels 4 and 5 on a small number of contracts while increasing the quantity of Prime acquisitions that include a CMMC requirement to the following targets: The full list can be found at https://www.acq.osd.mil/cmmc/faq.html. Related Articles CMMC FAQs Part 2 – CMMC Model Guide v1.02 CMMC FAQs Part 3 – Common Questions How Can Schneider Downs Help? Schneider Downs currently offers CMMC readiness and consulting services as a Registered Provider Organization (RPO). Our team includes a Certified CMMC Provisional Assessor, and several other members currently in process of applying for CMMC Certified Assessor status who plan on completing training in Q2 of 2021. OSCs should note that a single firm cannot perform both consulting and audit services for a single client per the CMMC-AB standards. In the meantime, until such requirements are made public, we can help your organization prepare for CMMC by performing an assessment against the NIST 800-171 framework. For more information visit www.schneiderdowns.com/cmmc or contact the team at contactsd@schneiderdowns.com. ### Construction Industry Opportunities for Extended Employee Retention Credit On February 27, 2021 the House of Representatives passed the American Rescue Plan Act of 2021 (ARPA).  One of the items included in this bill is an extension of the Employee Retention Credit (ERC).  The ERC is a refundable payroll credit that is currently set to expire in June 2021.  The ARPA proposes extending the ERC period through December 2021.  The bill will next go to the Senate where it is expected to be approved using the budget reconciliation process.  If the bill is signed into law this would be great news for all qualifying businesses, especially those in the construction industry. While companies engaged in residential construction may have seen increased demand, those who work in the nonresidential construction sector are more likely to have experienced a decline in the volume of jobs available.  According to Ed Zarenski’s “2021 Construction Economic Forecast”, new jobs started in 2020 declined 24% for nonresidential buildings and 14% for non-building construction work.  This is anticipated to result in reduced construction spending and jobs over the next two years.  A reduction in construction spending into 2021 would make construction companies prime candidates for the extended ERC. The ERC currently allows employers to claim a refundable payroll tax credit for 70% of eligible wages and health insurance costs for up to $10,000 per employee, per quarter for the first two quarters in 2021.  Eligible employers include businesses that have full or partial restrictions due to a government public health order.  It also includes businesses with a 20% or greater reduction in gross receipts for a quarter of the year in 2021 as compared to the same quarter in 2019 (for example, Q3 2021 as compared to Q3 2019). Businesses with fewer than 500 employees may include wages and health benefits when calculating the credit regardless of whether the employees were providing services.  Businesses with more than 500 employees may only include wages and benefits paid to employees who were not providing services (i.e. employees who continued to receive compensation or health benefits while furloughed) when calculating the ERC. If passed, the ARPA would extend the aforementioned rules for calculating the ERC through December 2021, giving employers who may see more long-term negative effects of the pandemic an additional opportunity to utilize the ERC. For more detailed information on the Employee Retention Credit check out our prior article, “The Latest Stimulus Package Enhances the Employee Retention Credit”. For additional information or assistance with the Employee Retention Credit, reach out to any of your contacts at Schneider Downs or contact Matthew Werner at mwerner@schneiderdowns.com or Ross Alessandro at ralessandro@schneiderdowns.com. ### Working Parents Panel There is no question that we have all had to make adjustments during the pandemic that affect every part of our life. It was like a sudden shift where every part of our life and the life of everyone we live with merged, and we had to take on responsibilities we never anticipated. Without warning, we all found ourselves in an entirely new world and while we all likely had the skills and tools to adjust, that certainly wasn’t going to happen overnight.To remind everyone that nobody is alone in these circumstances, we asked a small panel of SD employees and shareholders to share their experiences both good and bad. As I listened to the townhall the following were the themes that seemed to be consistent:360-degree communication is critical to managing through this We need to communicate with family members that are now sharing our home/work/school space in one location to let them know what we need and what we expect.   We need to communicate with co-workers when we need additional help or additional time or other adjustments to work hours or meeting times to accommodate this merger of responsibilities that must happen all at the same time We need to communicate with clients, so we understand their expectations and let them know we are here for them and that they are important. Planning is critical to avoiding difficult situations Looking ahead to see where adjustments might need to be made will be very important. For example, try not to plan meetings or call during a time when you know you don’t have childcare. Don’t be afraid to talk with other team members to see if they can help reschedule a call or meeting if you know that it will be difficult for you to participate without being distracted or distracting others on the call.  Giving yourself a break During this period of time where it seems we cannot escape the worries of all of the things demanding our attention at the same time, make it a point to schedule a time for yourself to do something you enjoy, or find something new to enjoy, and unplug even if it is only for 15 minutes a day. Don’t be too critical of the mechanisms you are using to get through the day. If your child is spending more screen time than you would typically allow in order to get things done, remember you are doing the best you can, so don’t be too hard on yourself.   We are all doing our best and it is important to still focus on identifying things that you are grateful for. There were a lot of great ideas shared in the discussion, so don’t hesitate to reach out to your colleagues and talk about difficulties you are encountering.    ### Nonresident Taxpayers May Be Eligible for Refunds of Ohio Tax for Gain on the Sale of a Business Interest The Ohio Supreme Court’s decision in Corrigan v. Testa.1 has led the Ohio Department of Taxation (“Department”) to issue refunds to nonresident taxpayers who have previously paid tax on the capital gain from the sale of a business interest that is conducted within the state.Under R.C. 5747.212, amended in 2002, tax is imposed on a capital gain realized by an out-of-state investor in a pass-through entity if that investor held a 20% or greater interest in the entity during a three-year period. The statute imposed the tax on the gain based on the apportioned percentage of the entities business conducted in the state.In the case, Mr. Corrigan, a resident of Connecticut, owned 79% of an LLC that produced sanitary ware, with plants in Texas and California, but conducted business in all 50 states. Corrigan’s role in the company’s management was as “an investor who bought companies with the intention of providing financing and strategic expertise to grow the company for an eventual exit via a sale to a third party”.2 Corrigan stressed in his argument to the Department that he did not participate in the active management of the business’s day-to-day operations. In 2004, Corrigan sold his interest in the business realizing a capital gain that was sourced outside of Ohio, specifically since he was not a resident within the state. Ohio then assessed Mr. Corrigan for the gain that should have been apportioned to Ohio under R.C. 5747.212.The Court noted the difference in treatment for business and non-business income for nonresidents in its opinion. Business income is the income from the regular course of a trade or business and apportioned by the percentage of the business’s property, payroll, and receipts located in Ohio.3 Ohio nonbusiness income includes capital gains from the sale of intangible personal property, which is sourced to the domicile of the taxpayer. 4The Court concluded that while Mr. Corrigan availed himself of Ohio’s protection and benefits with respect to the LLC’s income during his ownership, the opposite was true for the gain that resulted from the sale of his intangible interest in the business. The Court held that Corrigan’s intangible ownership interest did not avail him of Ohio’s protections and benefits in any direct way and therefore R.C. 5747.212, as applied to Mr. Corrigan, violated the Due Process Clause of the Fourteenth Amendment of the Constitution. It’s important to note, that the court held that R.C. 5747.212 was unconstitutional as it applied to Mr. Corrigan and not on its face. The Court noted, conceivably, that a taxpayer may engage in conduct with or through a business entity where the imposition of the statute would not be unconstitutional – mainly if the taxpayer establishes a unitary relationship with the business.What does this mean for taxpayers?Mainly, nonresident taxpayers who sourced the gain on the sale of their partnership interest in a business that was being conducted in Ohio should analyze their factual situations in order to determine if there is a potential refund opportunity under the state’s four year statute of limitation. Strong consideration should be given to the level of involvement that taxpayer had in the business’s Ohio operations and whether the taxpayer would be considered “unitary” with the business. Additionally, the Corrigan decision raises planning opportunities around the sale of an interest in a business, whether that being the type of sale (asset v. intangible) or taxpayer residency considerations.Have questions on how the Corrigan decision may affect your Ohio state taxes? Reach out to the State and Local Tax team at Schneider Downs. [1] Corrigan v. Testa, 149 Ohio St.3d 18, 2016-Ohio-2805, 2016. [2] Id. [3] Ohio R.C. 5747.01(B); R.C. 5747.21(B). [4] Ohio R.C. 5747.20(B)(2)(c) ### Managing Leases Under ASC 842 with Excel – Does It Make Sense for Your Organization? You have gone to some CPE and read up on how ASC 842 impacts your organization, now it’s time to adopt.  You may be thinking that managing your lease portfolio in Excel should be an easy exercise.  Create a workbook, build a worksheet that stores the pertinent lease details, create an appropriate amortization schedule.  Copy the worksheet for each lease that you have, and you are all done. While that seems like a reasonable plan let’s think through some details.       “the best-laid plans of mice and men often go awry” - Robert Burns For each lease that is covered under 842 you’ll need to create an amortization schedule based on the classification of the lease (finance or operating).  That classification is determined by a number of factors of the lease and that classification could change if the terms of the lease change over time.  You’ll also need to account for non-lease components (common area maintenance, plate fees, etc.), escalating payments and any other associated payments made on the lease including down payments, initial indirect costs, tenant allowances, purchase option payments and so forth.  Taking that all into account, you now have a rather complicated Excel worksheet that covers a single lease. Since the goal of ASC 842 is transparency, upon adoption, leases now need to be included on the balance sheet and reoccurring journal entries will be required.  Your Excel worksheet needs to include a way to calculate these journal entries on a monthly, or at minimum, quarterly basis.  While you are creating the reoccurring entries, don’t forget to include new leases, calculating the initial long- and short-term liability as well as the ROU asset value for each lease. Additional activity entries will need to be recorded on the income statement.  Lease expense will be straight lined over the life of the lease for operating leases.  Finance leases will include amortization and interest expense.  No longer will your AP invoice simply hit a rent or lease expense account, this activity will be derived from the Excel schedule.  Reconciling with the AP invoices will be another step in the process. With all of that, you have the Excel worksheet for one of your leases doing everything you need.  You are happy with the details it stores, the amortization schedule it creates, and the journal entry it produces for you.  You have validated the results based on the standard and you have hopefully built the worksheet in a way that prevents you from unintentionally modifying data that would change the schedule in any way unknowingly. Now, sometime in the future you renegotiate the terms of a lease by extending the life by 2 years.  That renegotiation causes a review of the discount rate and a requires a substantial change to the amortization schedule.  This change only impacts the future periods.  Additional changes to a lease could include an early termination, expansion of space, payment changes due to CPI, etc.  Each scenario requiring a slightly different approach to modifying the future activity of the lease. Your Excel worksheet will need to know how to deal with these changes and, for completeness it should keep a history of the lease before and after the change. After you think through all of the above don’t forget, ASC 842 includes additional disclosures that need to be included on your annual financial reports.  From the Excel workbook, data will need compiled and calculated to arrive at the right of use assets obtained in exchange for new lease liabilities, the weighted-average remaining lease term for operating and finance leases along with a list of other new reporting items.  Granted, these typically only need to be done annually but they need to factor in any lease adjustments, new and terminated leases. Thinking through all of the above, how much time (and money) have you now spent on your Excel workbook?  How accurate is it?  What happens if it gets accidentally deleted or a macro gets changed without you realizing it?  As you add leases to your portfolio does that workbook become unmanageable?  Do your auditors agree with your calculations?  Lots of questions that you should not have to be bothered with.  At some point it may make more sense for you to investigate a system that will manage lease accounting under ASC 842 for you.  The comparison should be how much does a properly vetted lease accounting system save me in terms of time, money and stress, not what does a lease accounting package cost as compared to Excel. If your lease profile is greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### IFRS Conversion Considerations: Foreign Currency Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that there are significant differences surrounding the treatment of foreign currency. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS.U.S. GAAP covers foreign currency in section ASC 830 of the Codification, while IFRS uses International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. Both standards require foreign currency transactions to be remeasured at the entity’s functional currency, with changes in exchange rates being recorded into income using average rates. Similarly, both standards require assets and liabilities to be translated at the reporting date currency rates, with translation amounts recorded in other comprehensive income.   Some of the most common issues entities encounter when transitioning to IFRS are discussed below.While the criteria in determining an entity’s functional currency is different under the two standards, both usually result in the same currency determination. Under IAS 21, the concept of reporting currency has been replaced with two separate notions. Functional currency is the currency of the primary economic environment in which the entity operates, and presentation currency is the currency in which the financial statements are presented. The functional currency can be translated into any presentation currency.Consolidation of foreign entities under U.S. GAAP utilizes a step-by-step method, where each subsidiary must directly translate its currency into its immediate parent’s currency during the consolidation process. Under IFRS, the step-by-step method is permitted; however, the entity may also elect to use the direct method, where each entity within the consolidated group directly translates into the functional currency of the reporting entity. This method essentially skips converting to the intermediary parent’s currency rate. IFRS provides more flexibility for currency derivatives to qualify for hedge accounting. Under IFRS, there is no requirement for an indicated notional value for the hedge to be effective. IFRS also provides additional hedging opportunities for entities within a consolidated group to hedge on behalf of a subsidiary with foreign currency exposure. A parent organization is permitted to bypass an intermediate subsidiary and directly hedge against currency risk at a lower-level subsidiary.Both standards require an assessment of hyperinflationary economies. While the standards have different criteria for determining hyperinflationary economies, the same economies are generally identified as hyperinflationary. Both standards require restatement as it is deemed that the reporting of the operational results and financial position in the local currency without restatement is not useful as the currency has lost significant purchasing power.Under U.S. GAAP, an economy is automatically deemed hyperinflationary if the economy reaches a three-year cumulative inflation of 100% or more. Under IFRS, an assessment must made based on judgment factoring in characteristics of the country. These factors include whether the general population holds wealth in another currency, transactions occur in another currency, rates are generally linked to another currency or it is highly probable that three-year cumulative inflation rate will exceed 100%.  The International Monetary Fund publishes reliable inflation rate information for every country each month that can be utilized in this assessment.Under U.S. GAAP, an entity in a hyperinflationary currency would remeasure its statements as if the functional currency were the parent’s reporting currency, recognizing the difference into income. Monetary items are remeasured at the period-end exchange rate. Nonmonetary items are remeasured into the reporting currency at the historical exchange rate. All remeasurement gains and losses are recognized into profit and loss. When the economy ceases to be hyperinflationary, the reporting amounts would be translated back into the local currency, with those balances becoming the new basis for the nonmonetary assets and liabilities.IFRS follows a restate-and--then-translate approach for entities in hyperinflationary economies. IFRS requires that local functional currency financials, including comparative information, be maintained but restated to reflect the effect of inflation at the balance sheet date, recognizing the difference into income. For many balance sheet items, restatement should be at a general price index. For nonmonetary items carried at cost, these should be restated to reflect the effect of inflation since they were acquired. All income statement items should also be stated based on the general price index. Once the financial statements are adjusted by applying the general price index, the financial statements are then translated into the reporting currency at the current conversion rate. When an economy ceases to be hyperinflationary, the amounts reported at the end of the previous reporting period become the basis for future statements.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### How Can Robotic Process Automation Help The COVID 19 Vaccination Process? Since late December 2020, the Pfizer-BioNTech and Moderna COVID-19 vaccines have been authorized for emergency use by the FDA and recommended for use by the CDC. Nevertheless, many states have seen sluggish rollouts or delays in getting vaccine doses to nursing homes, pharmacies, clinics, etc. With the recent emergency use authorization of the Johnson & Johnson vaccine, there will be a lot of pressure on state governments to ensure that there won’t be further slowdowns in getting their residents vaccinated. As technology continually enables us to challenge existing processes and allows us to become more effective and efficient, state governments could surely benefit from examining their COVID-19 vaccination process and utilize technology, particularly robotic process automation (RPA), to make these vaccination programs run smoothly.  Here are a few ways that RPA could help in the coming weeks for the continued COVID-19 vaccination process: Large-scale vaccination events – When putting together clinics or events which will allow a significant amount of people to get vaccinated quickly, there are a lot of logistical matters to consider such as personal protective equipment, staffing/volunteers and training people to appropriately assist at the event. The utilization of RPA could help both guests receiving the vaccine and volunteers; guests could utilize bots to potentially automate the enrollment process by auto-populating registration forms and volunteers could benefit from RPA to reduce the amount of training needed. Temperature tracking for doses – COVID-19 vaccines will spoil if they reach a certain temperature, so when being transported, extra care must be taken to ensure that the doses remain at a safe temperature.  RPA could be used in conjunction with sensor tags that would continuously measure the temperature of vaccine doses and transmit that data to a platform that could be utilized to monitor and track each individual batch.  The information could be pushed to a tablet, smartphone or another medium for analysis. As the country ramps up vaccination efforts in the coming weeks, RPA will undoubtedly play a role in helping these programs operate effectively and efficiently. If your company is looking into implementing RPA in your day-to-day operations to improve internal processes, and you have questions or need assistance, please don’t hesitate to reach out to Pat Armknecht (parmknecht@schneiderdowns.com) of Schneider Downs Tech Consulting group or visit www.schneiderdowns.com/rpa. ### Special Alert: Microsoft Releases Critical Update for Exchange Server Microsoft announced the release of a critical security update on Tuesday, March 2nd to address four zero-day vulnerabilities that allowed hackers to steal email communications from companies using their Exchange Server products.Microsoft stated the flaws were being actively exploited in a sophisticated attack chain deployed by the Chinese cyber espionage group HAFNIUM. While Microsoft traditionally releases security updates on the second Tuesday of the month, commonly known as “Patch Tuesday”, the severity of the vulnerabilities called for an additional update ahead of the schedule. Microsoft is urging all customers to install the emergency patches as soon as possible and released a special alert from Tom Burt, Corporate Vice-President, Customer Security and Trust on Tuesday.“Even though we’ve worked quickly to deploy an update for the HAFNIUM exploits, we know that many nation-state actors and criminal groups will move quickly to take advantage of any unpatched systems. Promptly applying today’s patches is the best protection against this attack.”The security updates are available on the Microsoft Security Response Center and address the four security issues with Microsoft Exchange Server 2013, 2016 and 2019 outlined below. CVE-2021-26855, a server-side request forgery (SSRF) vulnerability that allowed the attackers to send arbitrary HTTP requests and authenticate as the Exchange server. CVE-2021-26857, an insecure deserialization vulnerability in the Unified Messaging service. Insecure deserialization is when untrusted user-controllable data is deserialized by a program. Exploiting this vulnerability gave HAFNIUM the ability to run code as SYSTEM on the Exchange server. This requires administrator permission or another vulnerability to exploit. CVE-2021-26858, a post-authentication arbitrary file write vulnerability. If HAFNIUM could authenticate with the Exchange server, then it could use this vulnerability to write a file to any path on the server. The group could authenticate by exploiting the CVE-2021-26855 SSRF vulnerability or by compromising a legitimate admin’s credentials. CVE-2021-27065, a post-authentication arbitrary file write vulnerability. If HAFNIUM could authenticate with the Exchange server, they could use this vulnerability to write a file to any path on the server. It could authenticate by exploiting the CVE-2021-26855 SSRF vulnerability or by compromising a legitimate admin’s credentials. Microsoft did confirm their Exchange Online service, most commonly used for business email hosting, was not impacted by the attacks, and specifically cited that the exploits had no connection to the SolarWinds-related attacks.For more information we encourage you to visit the full update from Microsoft at https://msrc-blog.microsoft.com/2021/03/02/multiple-security-updates-released-for-exchange-server/.How Can Schneider Downs Help?If you have any questions, we are here to help! In addition to our services and software solutions, our team offers a diverse library of complimentary cybersecurity resources including case studies, whitepapers and security awareness materials. You can explore the library at www.schneiderdowns.com/cybersecurity/resources.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.If you suspect or are experiencing a network incident, our Incident Response Team is available 24x7x365 at 1-800-993-8937.Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world. ### Letter of Intent? Our mother always made sure we knew where she kept her “important” papers. So, on the day of her passing, my sister pulled out those papers, which included a copy of her will, a durable power of attorney and a prearranged funeral contract, along with a letter addressed to her children.Needless to say, the letter was moving. It spelled out her final intentions, including how her funeral was to be conducted, the attire she was to wear for her wake and her desire for celebration of life festivities. She also included explanations for the specific bequests contained in her will. After we recovered from the initial shock of reading her personal thoughts, written in her flowing cursive, we were grateful for her direction and input at a time when we were overcome with grief.My mother’s letter to our family was a letter of intent. Often thought of in terms of business transactions, a letter of intent is also a beneficial tool in estate planning. Unlike traditional estate documents (will, durable power of attorney, healthcare power of attorney, living will), a letter of intent is not drafted by an attorney and it is not a legally binding document. It does not take the place of a will but serves as a set of suggestions and requests to your loved ones on personal and financial matters. The informal nature of the letter, personally drafted, allows for it to be easily changed and kept up to date as circumstances change.The following are topics to be considered for inclusion in a letter of intent:Funeral or Memorial ServicesTo assist grieving family and friends, include in your letter information regarding any pre­planned funeral arrangements, as well as the location of burial plots or vaults and any associated contracts. Also consider including ceremony details, such as type of service, preferred officiator, music and celebration of life suggestions.If there are people to be notified of your passing, provide a list of names and contact information.Financial InformationInclude with the letter a list of contact information for your advisors: attorney, accountant, investment professional. Also provide bank account information, the location of safety deposit box(es), insurance policies and active credit cards. Consider including the location of other important documents, such as your birth certificate, Social Security information, marriage license, divorce papers, mortgage documents, other debt instruments and contracts.Login and Password InformationIn today’s digital world, there are logins and passwords for everything. Providing a summary of electronic sign-ins and other codes could be invaluable to your family. Consider including logins and passwords for social media, internet access and for devices themselves, as well as security alarm codes for your primary and/or secondary residences or business.PetsIf not addressed in your will, your wishes for the care of your pets can be included in your letter of intent. If someone in particular would serve as an appropriate caregiver, you could recommend them, as well as provide an explanation of your pet’s habits, feeding schedule and suggested funding for its care.Explanation of WillA letter of intent may also be used to explain certain aspects of your will; for instance, the rationale behind your decision of making or not making a bequest. It can also be used to augment your will with regard to shared gifts. For example, you may leave the remainder of your assets to your children equally. In your letter of intent, you could provide your executor with your thoughts on how the assets should be divided. Again, the letter of intent is not legally binding, but it can provide invaluable guidance.No one wants to think about their own demise, so try and think of writing a letter of intent as a way to ease your loved ones’ grief and despair. This is a mechanism to assist those left behind with guidance to properly honor your legacy. Our mother’s letter of intent to us was a true gift. Despite our sorrow, we took some comfort in knowing that what we did following her passing aligned with her wishes and it helped keep my siblings and me in check. ### IPE Assessment Best Practices Information Provided by the Entity (IPE) represents all information used by an auditor in arriving at the conclusions on which the audit opinion is based, whether for testing internal controls or performing substantive procedures.  When using IPE as audit evidence, the auditor must evaluate whether it is sufficient and appropriate for the purposes of the audit, which is accomplished by performing procedures to test the accuracy and completeness of the information or by testing the controls over the accuracy and completeness of that information.Most companies still rely heavily on various spreadsheets, system uploads and manual updates in their day-to-day operations.  These procedures create numerous opportunities for information to be misreported due to error or possible fraud.  Although financial systems and other technologies continue to advance, companies – as well as auditors – must continuously assess the risks related to the information generated from these applications (i.e., key reports).When assessing IPE, pertinent risks to be addressed include: Data processed by the application (source data where IPE is produced) is not complete or accurate Data extracted from the application (defined parameters or range to execute and obtain IPE results) is not complete or accurate Computations or classifications performed (creation of IPE) from the application are inaccurate Data output from the application to the end-reporting tool is modified or lost (exporting issues) in the transfer Information added or changed (manual updates), including computations and classifications using the end-reporting tool, is incomplete, inaccurate or inappropriate To address risks related to IPE, assessment questions should be covered in detail: Which reports, spreadsheets and other key sources of information are used? From what underlying data are these reports pulling? How does the process owner verify that information contained within the report is extracted as intended? How does the process owner verify that calculations performed by or classifications assigned by the system are accurate? How does the process owner ensure that data exported is complete and accurate? How does the process owner ensure the integrity of any modifications made to the exported data? Can this process be automated to reduce the overall risk? Can an RPA be developed for this process to increase efficiency? Risks can be mitigated through automation, ITGC testing and SOC report reliance, while others require thorough documentation of an overall assessment of IPE.  Verifying the accuracy and completeness of this information is crucial, as it is relied on for the performance of daily tasks and controls. ### Bitcoin, Bitcoin, Read All About It It seems these days that you can’t turn on CNBC or read the Wall Street Journal without seeing Bitcoin (BTC) in one of the headlines. The usual headline reads, “Bitcoin Surges” or, “Bitcoin Plummets.” These articles tend to get a lot of interest and make for a great story, one that does not seem likely to end any time soon. But that begs the questions, what really is Bitcoin and why all the excitement?Bitcoin, a digital currency without the need for a central bank, was created in 2009 by the mysterious pseudonym Satoshi Nakamoto1. There are no physical coins associated with Bitcoin but rather balances kept on a public ledger that everyone has transparent access to. Bitcoins are not backed by any bank or government; in other words, they are the antithesis of a fiat currency (e.g. the U.S. dollar, the Euro, or the Japanese yen). The supply of Bitcoin is limited to just twenty-one million Bitcoins with the last Bitcoin to be released in the year 2140. As of February 2021, there are about 18,624,350 Bitcoins in circulation, or 89% of the total supply.The most plausible use case for Bitcoin is for payment.Bitcoin can be transferred from person to person for payment much easier and more efficiently than a wire transfer (in which money is sent from bank to bank). A typical wire transfer fee from a bank is roughly $302, but a wire transfer for $500,000,000 is much more expensive. Typical transfer fees for wires over $10,000 can be 1%3 of the total wire. If you transfer money via the Bitcoin network, the fee is minimal. In 2019, there was a transfer of $450,000,000 worth of Bitcoin from an unknow wallet to another unknown wallet and the fee for the transfer was only $4404.To create a Bitcoin, you must “mine” it with a computer.Bitcoin mining involves using computing power to solve complex problems on the Bitcoin network. Whoever solves the problem first is awarded a block. That block contains a certain number of Bitcoin. The current amount of Bitcoin per block is 6.25 Bitcoins, but that number is halved, roughly every 4 years. In the media you will hear talks about the “halvening” as an inflexion point; the reduction in the amount of Bitcoin mined by 50% is what it is referring to.The price of Bitcoin recently rose above $50,000 USD/Bitcoin. You may be wondering how something that isn’t tangible, is not controlled by a central government, and can’t really be used to broadly purchase goods has any value.The value of Bitcoin is derived from a few sources. The most obvious is supply and demand. Its limited supply (21,000,000 Bitcoin) creates a demand issue. The more that companies and people adopt Bitcoin, the more the price will be driven up due to the limited supply. From a BTC investment “language” perspective, you will hear both bullish proponents cite the “stock to flow” valuation model to justify and/or project the price of Bitcoin; “stock to flow” is another way of saying supply and demand. From a portfolio perspective, many investors are correctly asking the question: Does Bitcoin belong in my portfolio? For the bullish proponents of the digital currency, the answer is yes, while prominent bears, like gold enthusiast Peter Schiff, say the asset is nothing more than a bubble because “a financial asset is in a bubble when its price has no relationship to its underlying present value or a reasonable expectation of its future value, and investor conviction in price appreciation is high and fear of loss is low. At $50k bitcoin is the biggest bubble of them all.5” Prior to making the previous statement, Mr. Schiff said “a temporary move up to $100k is possible, a permanent move down to zero is inevitable.6”Like most things in life, and investing, the answer is more nuanced than a simple black or white explanation/answer.Using one of the most liquid and easy to access vehicles for Bitcoin as a proxy for BTC, the Grayscale Bitcoin Trust7, Bitcoin has some interesting diversification properties that in a vacuum may be attractive from a portfolio construction and asset allocation point of view. However, like the old adage says, there is no such thing as a free lunch, and with Bitcoin, those valuable diversification properties and tantalizing returns comes with a hefty amount of volatility (as measured by standard deviation). This was never more evident than the 15% correction that occurred on February 23rd after comments from Elon Musk8 in which he suggested the crypto currency was overvalued at the $1 trillion market capitalization. Mr. Musk’s comments came alongside Treasury Secretary Janet Yellen opining that Bitcoin was “extremely inefficient.”9 The chart below shows the YTD chart on Bitcoin with several wide swings just in the last 44 days. ### IFRS Conversion Considerations: Financial Reporting Organizations planning a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should consider the impact to their financial reporting. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS.The basic reporting requirements of the two standards are similar and require a statement of financial position (balance sheet), statement of profit and loss (income statement), a statement of comprehensive income, a statement of cash flows, a presentation of changes to equity, and note disclosures accompanying the financial statements. Both standards incorporate the concepts of materiality and consistency in accounting policies. U.S. GAAP does not have a general requirement to present the income statement under function or nature. IFRS permits presentation under either function or nature; however, if the expenses are presented by function, then certain disclosures about the nature of expenses must be included. While the direct method is preferred for the statement of cash flows under IFRS, both standards permit the direct or indirect method. The standards also have significant reporting differences.First-Time IFRS AdoptersIn connection with IFRS 1, First-Time Adoption of International Financial Reporting Standards, a first-time adopter must recognize all financial assets and liabilities at their opening valuations on the balance sheet. In addition, first-time adopters must present at least three statements of financial position, two statements of profit and loss, two cash flow statements, and two statements of changes in equity along with the related notes on their initial IFRS financial statements. Under IFRS, the reporting entity and all consolidated entities are required to have the same uniform accounting policies. If entities follow different polices, then consolidating adjustments are required.Debt ClassificationIFRS has strict guidance for measuring assets and liabilities at the reporting date. Subsequent information cannot be utilized to change debt classification.  Short-term loans that are refinanced after the balance sheet date cannot be considered long-term and must be presented on the balance sheet as short-term, unless a refinancing agreement existed before year-end that stated extensions were at management’s discretion. Similarly, debt associated with a covenant violation must receive a waiver before the reporting date; otherwise, an organization would have to present the liability as short-term under IFRS. Entities with multiple debt agreements subject to financial ratios should be mindful of this presentation, as it could create a domino effect impacting current ratio calculations. Under U.S. GAAP, entities are permitted get waivers before the issuance date that extend the debt beyond one year, which would permit long-term classification. Interim ReportingBoth standards have similar reporting requirements. The accounting policies in effect in the prior annual period should still be applied other than disclosed newly adopted policies. Both standards also permit condensed interim financial statements. Under U.S. GAAP, interim periods are viewed as integral parts of a complete annual reporting period. This can result in more flexibility in allocating costs over these interim periods. IFRS treats each interim period as its own discrete reporting period and requires a strict cut-off of the valuation of assets and liabilities at the reporting date. Costs that do not meet the definition of an asset cannot be deferred, while liabilities recognized at the interim date must represent an existing liability at the measurement date.Segment ReportingThe standards are largely converged under U.S. GAAP’s ASC 280, Segment Reporting, and IFRS 8, Operating Segments. Segment reporting is required for public entities under both standards.  The segment determination under U.S. GAAP is based on products and services as well as geographic markets. Under IFRS, all entities must determine the segments based on the management approach without consideration to the form of the organization. In general, separately reported segments and aggregated segments should be presented if they account for more than 10% of the total revenue, assets or net income (loss) under both standards. Aggregation is appropriate under both standards if the segments are similar and meet specific requirements.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Top 5 Implementation Lessons Learned Under ASC 842 The deadline for private companies to implement the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 842 is fast approaching. While the standard was effective for public companies in 2019, private companies have continued to receive deferrals on the implementation date, most recently being pushed back from years beginning after December 15, 2020 to years beginning after December 15, 2021. Through our experience in working with many of our clients who have already adopted ASC 842, we have included a listing of five key lessons learned from the adoption of this standard. Lesson #1: Start the Process Early! Most organizations that have adopted the new standard have found that the implementation process took much longer than originally planned. The process will require changes to business processes and controls, identification of all lease agreements, data extractions, and likely implementation of new software. Lesson #2: Know Your Lease Portfolio Once the process begins, organizations have found their knowledge of their leasing portfolio may not be as strong as they thought. It is crucial to know all the critical data points. Many have found there to be more lease agreements than their accounting departments were aware of. There have also been many situations where there was little to no documentation of lease agreements or outdated information on the leasing structure. Another significant issue has been embedded lease agreements.  Organizations will be required to assess current service contracts to identify if they qualify as lease agreements. Lesson #3: Cross-Functional Collaboration Is Needed! With all the nuances involved in the standard, it is critical to have more than just your accounting department involved in adoption and implementation. Other key areas that should be involved include legal, IT, purchasing and any other areas that may have knowledge of any leasing needs or will be included in the collection of key data. Lesson #4: Discuss Expected Impact With Stakeholders The adoption of ASC 842 will have a significant impact on the balance sheet of many organizations.  To avoid unnecessary complications, be sure to discuss the expected impact with all key stakeholders involved early in the process. This includes those inside and outside the organization, such as the Board of Directors, management, banks and investors. Lesson #5: Software Is Key Selection and implementation of a lease accounting software will be vital to ensure a smooth implementation of ASC 842. Whether it is data collection, the output of monthly entries or the generation of reports, the software must be easy to use with little learning curve required. It is important to know how a new system connects with existing software applications, as well. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting. Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Is Your Association Required to File a Pennsylvania Decennial Report? A Pennsylvania Decennial Report is a report of an entity’s continued existence, or a report of continued use of certain marks filed with the Pennsylvania Department of State Bureau of Corporations and Charitable Organizations (Bureau). Decennial filings are made every ten years during the years ending with the numeral “1.”  The reason for these filings is to identify business names and marks that are no longer in use, so that they can be reissued and placed back into the stream of commerce. The associations that are required to file the Decennial Report are all domestic and foreign business corporations, non-profit corporations, limited liability companies, limited partnerships, limited liability partnerships that are not also limited partnerships and business trusts, as well as insignias and marks used with articles and supplies that have not made a new or amended filing with the Bureau from January 1, 2012 to December 31, 2021.  Fictitious names and trademarks are not required to file Decennial Reports.A mark that requires the filing of a Decennial Report is either: 1) an insignia or label or 2) a reusable marked article or receptable.  An insignia includes a name, badge, motto, button, decoration, charm, emblem, rosette, label or other insignia of an organization.  A label is defined by Pennsylvania as a label, symbol or private stamp.  A reusable marked article or receptacle is any item designed and intended for reuse in the normal course of trade by the person filing and includes towels, aprons, coats, uniforms, vessels and receptacles.  A mark, as applied to a reusable marked article or receptacle, is defined as any word, name, symbol, picture, design or device or any combination thereof, produced upon and used by a person to indicate ownership of materials.The Bureau has been notifying entities by postcard dated January 15, 2021 of the filing requirement. There are two forms that may need to be completed, one for associations and one for insignia and marks used with articles and supplies. The forms should be filed during 2021 and are due by December 31, 2021. There is a $70 fee, payable to the PA Department of State due with the filing of the Decennial Report.  As a result, if your association wants to have exclusive use of its name and marks, it should file the Decennial Reports as needed.  ### Fraud Considerations for Lessees and Lessors The main driver behind the FASB’s issuance of the new lease standard (Topic 842) is to increase transparency within organizations regarding their leasing arrangements. Under the current guidance, a look at an entity’s balance sheet does not provide a clear picture of all leasing transactions and the obligations related to operating leases. With the implementation of Topic 842, lessee organizations must recognize a right-of-use asset and liability arising from its operating lease arrangements. This change provides a more accurate depiction of a lessee’s indebtedness. From a lessor’s perspective, although the accounting for leases will not fundamentally change, the definition of a lease has been altered and there might be an indirect impact to lessors as lessees react to the lease accounting changes. Although Topic 842 is an improvement to financial reporting, especially in regard to transparency, the impact on both lessees and lessors brings about new complexities and challenges in both reporting and operations. As companies navigate implementation, it is essential that management recognize the risks of fraud inherent in these changes. Implementation of the standard will increase leverage on a lessee’s balance sheet, and in turn, may negatively impact balance sheet ratios and debt covenants. Financial performance-based incentives or bonuses may also be negatively impacted by bringing operating leases onto the balance sheet. The pressure to maintain healthy debt ratios, comply with covenants, or ensure performance metrics are met, can lead to an increased risk of fraud. The time and effort that is required to both implement the standard and maintain the records and knowledge of all leasing arrangements going forward, on both the lessee and lessor sides, can be significant.  These changes may also require personnel from various areas of an organization outside of accounting to assist in determining the proper treatment of lease transactions. Complexities in implementation inherently lead to additional risks. Those responsible for implementation may lean on significant judgments or estimates to try to reduce the time commitment needed to review a large volume of lease documentation. A lack of understanding of the detailed guidance can also lead to a risk that implementation is not done properly, or certain guidelines are not followed appropriately and therefore reporting of leases may be misleading. How can organizations mitigate these risks? A strong internal control environment will assist in preventing and detecting fraud. Organizations will need to implement new key controls or modify current controls surrounding lease accounting, gathering and retention of documentation, and review and approval policies. Organizations should also ensure that the appropriate technology and software are in place to ensure proper accounting and reduce the level of risk inherent in manual transaction processing and accounting. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### IFRS Conversion Considerations: Employee Benefits Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that there are differences surrounding employee benefit plans. This could result in a significant impact to the financial statements, particularly for organizations with large defined benefit plans. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS.The U.S. GAAP guidance is discussed in Sections 710, 712 and 715 of the Codification, while the guidance under IFRS is primarily found within International Accounting Standard (IAS) 19, Employee Benefits. Defined contribution plans are treated in a similar manner between two standards. The cost for these plans is recognized in each period based on the contribution due from the employer. Defined benefit plans are similar in principle between the two standards. Both standards require the defined benefit obligations accounted for based on actuarial methods and measured at the present value of the benefits employees had accrued at the reporting date. Both plans require the funded status to be recognized on the balance sheet as the difference between the present value of the benefit obligation and the fair value of the plan assets and disclosure surrounding these amounts.Actuarial MethodsU.S. GAAP provides multiple methods for calculating the plan’s benefit formula based on the characteristics of the plan. U.S. GAAP permits the use of the traditional unit credit method, which estimates the employee’s actual cost of compensation to date as well as the projected unit credit method, which also estimates the employee’s future compensation levels. Flat-benefit plans and plans not tied to pay thresholds generally use the traditional unit credit method, while final-pay and career-average plans generally use the projected credit method.  IFRS requires the projected unit credit method for all plans.Under U.S. GAAP, actuarial gains and losses may be recognized into net income as they occur or deferred into other comprehensive income (OCI) and then subsequently amortized into in net income over time. Actuarial gains and losses under IFRS must be recognized immediately into OCI and are not subsequently recognized into net income.Discount rate for some U.S. plans are specifically calculated by the actuary based on the plan’s high-quality bond holdings. However, under IFRS this rate is deemed to be biased to a particular plan and must instead utilize third-party market yields for their discount rate. In addition, under IFRS if a market for bonds does not exist in the currency dominated by the benefit obligation, then the yield from government bonds dominated in that currency should be used. This assessment should be performed at the currency level rather than on an entity or country basis. Therefore, there could be significant difference in the calculated benefit obligation in countries without a deep market for high-quality corporate bonds.Service CostsUnder U.S. GAAP, the service cost component of the net periodic benefit cost should now be presented on the same line of the income statement as other compensation costs relating to that employee. IAS 19 does not specify where these costs must be presented on the income statement other than amounts that should be recorded to OCI. A portion of service can be capitalized into inventory under U.S. GAAP, while IFRS permits a proportion of all component costs for capitalization.Plan AssetsU.S. GAAP utilizes an expected long-term rate of return on invested assets; however, this concept does not exist under IFRS. Instead, IAS 19 requires the recognition of a net interest expense or income on the net defined benefit liability or asset as a component of the defined benefit cost. Net interest represents the change in the deferred obligation or asset as a result of the passage of time and incorporates the discount rate used in determining the benefit obligation.Plans in a net asset position under U.S. GAAP measure the surplus of the fair value of the present value of plan assets over the present value of the defined benefit obligation. U.S. GAAP does not limit the size of the defined benefit asset that can be recognized on the balance sheet. IAS 19 limits the measurement of the net defined benefit asset or surplus to the present value of the economic benefits available as cash refunds from the plan or reductions to future contributions to the plan. This limitation is known as the “asset ceiling” and could have a significant impact to plans with large net defined benefit asset positions.Plan RevisionsUnder U.S. GAAP, prior service costs or credits from plan amendments are initially recognized into OCI and then subsequently recognized into income over the average service period of active participants or the average life expectancy of plan participants, based on the nature of the revision. Under IFRS, these amounts are immediately recognized in net income.Settlement gains or losses are recognized in net income when the obligation is settled under U.S. GAAP, but when it occurs under IFRS. Under U.S. GAAP, benefit curtailment loss is recognized into net income when the curtailment is probable, and the amount can be estimated, while curtailment gains are recognized when they occur. Under IFRS, changes in the defined benefit plan obligation from curtailment are recognized immediately into income at the earlier of its occurrence or when the related restructuring costs or termination benefits are recognized.Plans with More Than One EmployerThe transition to IFRS could have a significant impact to entities participating in a multiemployer plan. Under U.S. GAAP, a multiemployer plan is accounted for in a similar manner to a defined contribution plan. Under IFRS, these plans are accounted for as either a defined contribution plan or as a proportionate share of a defined benefit plan, based on the substantive nature of the plan. If recognized as a defined benefit plan, the entity would record its proportionate share of the fair value of plan assets, defined benefit obligations and costs associated with the plan.Most multiple employer plans are already accounted for as defined benefit plans under U.S. GAAP, with each entity recognizing its proportionate share of the plan. Therefore, the treatment will generally be similar under IFRS.First-Time IFRS AdoptersIn connection with IFRS 1, First-Time Adoption of International Financial Reporting Standards, a first-time adopter must recognize the benefit obligation or asset for each plan at the adoption date. Any revisions to the recorded asset or liability on the balance sheet should be recorded against retained earnings.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### DOL Announces Final Proxy Voting Rule In December, the U.S. Department of Labor unveiled final regulations on fiduciary duties relating to proxy voting. The final rule states that plan fiduciaries should engage in proxy voting decisions only when it is determined that the decision could have a financial impact on the retirement plan. If deemed necessary to vote, the rule states that a plan fiduciary is required “to carry out their duties prudently and solely in the interests of the plan participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries and defraying the reasonable expenses of administering the plan.”One of the changes from the proposed rule is the shift from a rules-based approach to a principles-based approach. The decision was made to eliminate the specific rules that would require a vote or non-vote in certain instances and instead lead fiduciaries to adopt principles that focus on employing a prudent process when deciding whether and how to vote proxies. The DOL noted that this change avoids significant cost increases and potential liability for plan fiduciaries.As part of the principles-based approach, the DOL produced a list of principles that fiduciaries should comply with when making decisions, in order to meet their prudence and loyalty duties. When a plan fiduciary decides whether to exercise shareholder rights, the plan fiduciary should comply with these six principles: The fiduciary must act solely in accordance with the economic interest of the plan, its participants, and beneficiaries. The fiduciary must consider any costs involved. The fiduciary may not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to any non-pecuniary objective, or promote non-pecuniary benefits or goals unrelated to those financial interests of the plan’s participants and beneficiaries or the purposes of the plan. The fiduciary must evaluate material facts that form the basis for any particular proxy vote or other exercise of shareholder rights. The fiduciary must maintain records on proxy voting activities and other exercises of shareholder rights. The fiduciary must exercise prudence and diligence in the selection and monitoring of persons, if any, selected to advise or otherwise assist with exercises of shareholder rights, such as providing research and analysis, recommendations regarding proxy votes, administrative services with voting proxies, and recordkeeping and reporting services. Included in the final rule, a fiduciary may adopt two safe harbors to satisfy their proxy voting duties. The safe harbor provisions can be adopted, as long as they are created solely in the best interest of participants, and in following the six principles discussed above. Each would satisfy the fiduciary duties of prudence and loyalty in deciding to vote or not. Plan fiduciaries may adopt either or both of the following policies: A policy that limits voting only to specific types of proposals that the fiduciaries have prudently determined are “substantially related to the company’s business activities or are expected to have a material effect on the value of the plan’s investment.”  A policy to refrain from voting when the size of the plan’s holdings are below a certain threshold that the fiduciary prudently determines, resulting in the decision being immaterial to the investment performance of the plan. The final rule on proxy voting will likely be reviewed by the Biden administration. Regardless, fiduciaries should be mindful of the rule’s effective date, January 15, 2021.  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Key Changes for Lessors Under FASB ASC Topic 842 In June 2020, the FASB issued ASU 2020-05 and delayed, for a second time, ASU 2016-02, Leases Topic 842 for non-public entities to be effective for annual periods beginning after December 15, 2021 and for public not-for-profit entities to be effective for annual periods beginning after December 15, 2019. Since its initial release, discussions around Topic 842 have typically focused on how lease accounting changes will affect lessees, but what about the parties on the other side of the contract? Although lessor accounting has not been fundamentally changed, the impact felt by lessees inevitably trickles over to those who own the leased assets. In addition, with the release and adoption of new revenue recognition standards under Topic 606, criteria have been updated to better align key aspects of lessor accounting with the new standard.The following key changes to lessors have been implemented under Topic 842 Definition of a lease – to align with Topic 606, a contract will qualify as a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.  Consideration allocation - Lessors are required to separate lease components from non-lease components and allocate consideration in the contract similar to transaction price allocations under Topic 606. Lessors may elect as a practical expedient, by a class of underlying asset, to not separate lease and non-lease components and instead account for them as a single combined component. To qualify for this election, the timing and pattern of transfer of the lease and non-lease components to the lessee must be the same, and if the lease component had been accounted for separately, it is classified as an operating lease. If the non-lease components are the predominant component under the practical expedient, the lessor should account for them under Topic 606. Leveraged leases – The concept of a leveraged lease is not recognized under the new guidance. Any leveraged leases in effect at the effective date of Topic 842 are allowed to be accounted for under current guidance until expiration. Sale leaseback transactions – The treatment of sale leaseback transactions is required to follow Topic 606 to determine whether or not control has transferred to the buyer-lessor. If the transfer of the asset meets Topic 606 requirements for the transfer of control and it is determined that a sale has occurred, the lessor will recognize a sale leaseback transaction under the new lease guidance. If the transaction does not qualify as a sale under Topic 606, the lessor cannot account for a purchase and any consideration paid for the asset is accounted for as a financing transaction between the two parties. Real estate leases – The new guidance does not differentiate between leases of real estate and leases of other assets. Topic 842 does not substantially change lessor accounting models. The criteria and classification of leases remain similar to current guidance with leases classified into the following types: operating, sales-type, or direct financing leases. Overall balance sheet and income statement treatment remain relatively unmodified.How could this impact lessors from an operational standpoint? Lessees are now required to report both an asset and liability for any operating leases that are longer than a 12-month term. Bringing these transactions onto the balance sheet will impact lessees in a number of ways, not limited to increases and impacts in balance sheet leverage and ratios which may affect debt covenant calculations.  This may shift lessees to request shorter-term leases or drive an overall increase in lessee negotiation or scrutinization of lease terms, as the impact of these transactions now impacts their balances sheets. These changes can ultimately affect the lease income recognized by those who own the assets.Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### IFRS Conversion Considerations: Intangibles and Goodwill Valuation With a number of entities transitioning from following U.S. Generally Accepted Accounting Principles (U.S. GAAP) to International Financial Reporting Standards (IFRS), it is important to be aware of the differences between the two standards when it comes to matters related to fair value and impairment testing guidance.Goodwill AllocationUnder U.S. GAAP, goodwill is allocated to each reporting unit of an entity. A reporting unit is an operating segment or a segment one level below an operating segment (also referred to as a component). Under IFRS, meanwhile, goodwill is allocated to each cash-generating unit (CGU) of an entity, with a CGU being the smallest identifiable group of assets that generates cash flows largely independent of those of other assets or groups of assets. This difference may not impact an entity switching from U.S. GAAP to IFRS, however, since depending on the circumstances a reporting unit and CGU could be identical.Testing Goodwill for ImpairmentWhen testing goodwill for impairment under U.S. GAAP, the carrying value of a reporting unit is compared to its fair value. A loss is recognized in the amount, if any, by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.1The carrying value of a CGU, however, is compared to its recoverable amount under an IFRS impairment test, with the recoverable amount being the greater of: The fair value of the CGU less cost to sell, and The value in use, or the present value of the cash flows expected to be generated by the CGU. A loss is recognized in the amount, if any, by which the CGU’s carrying value exceeds its recoverable amount. Generally, any loss exceeding the carrying value of goodwill is allocated on a pro rata basis to the CGU’s other assets.While there are some definitional differences, a goodwill impairment test might have the same result under U.S. GAAP and IFRS, since depending on the circumstances ‘value in use’ under IFRS will often approximate fair value under U.S. GAAP.Unlike IFRS, however, an entity may elect to perform a qualitative test for impairment under U.S. GAAP before proceeding with the quantitative test described above. If the qualitative test determines that it’s more likely than not there is no impairment, the entity is not required to perform the quantitative test. A private company may also elect to amortize acquired goodwill over a period of up to 10 years under U.S. GAAP, an option unavailable under IFRS.Intangible Assets with Indefinite LivesIntangible assets with indefinite lives are recorded and tested for impairment in a way similar to goodwill, except that each intangible asset’s fair value is tested instead of the entire entity, with applicable impairment losses not to exceed the carrying amount of the asset.2While impairment losses for indefinite-lived assets may not be reversed under U.S. GAAP, under IFRS, when an asset impairment loss has been recognized previously the entity must perform annual tests for indicators of reversal. If reversal is indicated, the carrying amount is increased, but the adjusted amount may not exceed the initial amount. Note that goodwill is not subject to impairment loss reversal under either U.S. GAAP or IFRS.Assets with Defined LivesUnder U.S. GAAP, an impairment loss is recognized on assets with defined lives when the carrying value of an asset group is greater than the undiscounted cash flows expected to be generated by the asset group. 3 If undiscounted cash flows are less than the carrying value, the loss is measured as the excess of the carrying value of the asset group over its fair value.Under IFRS, an impairment loss is recognized when the carrying amount of an asset4 exceeds its recoverable amount, as defined previously. The loss is measured as the excess of the carrying amount of the asset over its recoverable amount.Similar to goodwill, impairment losses may not be reversed under U.S. GAAP, while IFRS requires annual tests for indicators of reversal. If reversal is indicated, the carrying amount is increased, but the adjusted amount may not exceed the initial amount adjusted for regular depreciation.Acquired ContingenciesUnder U.S. GAAP, an acquirer should recognize contingent assets and liabilities if their fair value can be determined. When it cannot, contingent assets and liabilities are only recognized if it is probable that an asset or liability exists on the acquisition date and the amount can be reasonably estimated.Under IFRS, an acquirer records contingent liabilities of an acquiree only if they represent present obligations that can be quantified; acquired contingent assets are not recorded.Schneider Downs has significant experience performing valuation services, including goodwill and intangible asset impairment analyses and intangible asset valuations, for international organizations following U.S. GAAP and IFRS. For more information about valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com. Schneider Downs also provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.1 Explanation assumes ASU 2017-04 has been adopted. ### IFRS Conversion Considerations: Financial Instruments Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that there are significant differences surrounding financial instruments. Financial instruments encompass a number of balance sheet items, including trade receivables and payables, notes receivable and payable (issued debt), investments in debt and equity securities, loan receivables and payables, derivative assets and liabilities, and ordinary equity shares and preferred shares. The concept of financial instruments is covered under board concepts in the IFRS guidance through International Accounting Standard 32, Financial Instruments: Presentation; IFRS 9, Financial Instruments; IFRS 7 Financial Instruments: Disclosures; and Fair Value Measurement, while U.S. GAAP includes guidance for financial instruments in numerous areas within the Codification. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS.The basic principles of the two accounting standards are similar. Both require financial instruments to be classified into specific categories for measurement of the instruments, provide guidance on when to recognize and derecognize instruments, require derivative instruments to be recognized on the balance sheet, require detailed disclosures for these financial instruments, and permit hedge accounting. Financial instruments are permitted to be measured at amortized cost, fair value or both for bifurcated combined instruments depending on their nature. Both require subsequent measurement of the valuation and a regular determination if the financial instruments become impaired. While there are a number of differences between the two standards, some of the most common areas are discussed below.Collectability of Financial Instruments:Under IFRS 9, instruments such as trade and other receivables, contract assets, loans receivable and lease receivables should be considered for collectability, and appropriate reserves should be established to determine their proper valuation. The U.S. GAAP impairment model (before the adoption of the Current Expected Credit Loss (CECL) model under Accounting Standard Codification Section 326) is an incurred loss model, while the IFRS 9 model is an expected loss model. Under an expected loss model, an entity is required to assess whether there has been a significant deterioration in credit quality since initial recognition. The differences between the models could cause significant variances in the impairment losses recognized and the timing of their recognition.IFRS requires that forward-looking information be considered when assessing the need to record a potential credit loss. If the risk of an expected credit loss has significantly increased, management should consider the need for additional reserves based on the facts and circumstances that exist at that measurement date. In instances where collection on these financial instruments is delayed, a credit loss should also be recorded if the entity is not able to recover compensation for the lost time value of money.Given the complexities of determining an expected credit loss, IFRS 9 provides a simplified approach that may be elected for trade receivables. Under this election, a provisions matrix can be established based on historic collection using a probability-weighted outcome of their aging categories. The consideration should also incorporate forward-looking macro-economic indicators. The simplified approach allows entities to recognize lifetime expected losses on all trade receivables without the need to identify significant increases in specific credit risk.U.S. GAAP guidance has worked towards convergence with some of the forward-looking principles under the CECL model. Large SEC filers adopted this model in 2020; however, subsequent reporting relief has been provided for other reporting entities, pushing CECL implementation back for years beginning after 12/15/2022 for smaller reporting company SEC filers, private businesses, and nonprofits.Measurement of Debt Securities, Loans and Receivables:Under U.S. GAAP, the classification is largely dependent on the instrument’s legal structure and management’s intent. At acquisition, debt instruments are classified as one of three categories: held-to-maturity (amortized cost), trading (fair value recorded through income), or available-for-sale (fair value recorded through other comprehensive income (OCI)). Loans and receivables are classified as either held-for-investment (amortized cost) or held-for-sale (lower of cost of fair value). The fair value option is also an available election under all circumstances.Under IFRS, the classification and measurement are based on the instrument’s contractual cash flow (CCF) and the business model under which it is managed. The assessment of the CCF determines whether the contractual terms of the financial asset solely provide cash flow interest and principal payments on specified dates. Instruments with these terms are then subsequently measured based on the managing business model. If the instrument is being managed with the objective of holding to collect future cash flows, then the debt instrument may be recorded at amortized cost. An instrument with specified future cash flows being managed with the objective of both collecting the cash flows and selling the asset should be measured at fair value, recorded through OCI. If OCI is elected, gains and losses are realized into profit or loss at the derecognition date.  The fair value option measured through profit or loss should be utilized for all other instruments. This method may also be elected in place of amortized cost or utilizing OCI for any instrument. Transitioning from U.S. GAAP to IFRS could result in some instruments being previously classified as held-to-maturity or available-for-sale now being recorded through the fair value option against profit or loss.Derivatives and Hedge Accounting:Derivatives should be accounted for at fair value under both standards, with changes recorded through profit and loss and outline certain contractual characteristics that must be present to be accounted for as a derivative. Embedded derivatives are required to be bifurcated if there are differing economic characteristics and risks than the associated host contract under both standards. While U.S. GAAP requires an underlying notional value to qualify as a derivative instrument, IFRS does not maintain a requirement that a notional amount be indicated. Contracts without a defined notional value, such as requirement contracts that do not specify a certain number of units, but rather refer to the number of units required to satisfy a party’s actual utilization or consumption needs, may not meet the definition of a derivative under U.S. GAAP, but would qualify under IFRS. Both standards also provide exceptions for when a derivative may qualify for hedge accounting.IFRS considers cash flow hedges to be effective if the following criteria are met, in accordance with IFRS 9 6.4.1: The hedging relationship consists only of eligible hedging instruments and eligible hedged items. At the inception of the hedging relationship, there is a formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. In addition, the hedging effectiveness requires that an economic relationship exist between the hedged item and the hedging instrument, the effect of credit risk does not dominate the value changes that result from that economic relationship, and the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. IFRS outlines three types of permissible hedging relationships: fair value hedge (a hedge against exposure against fair value fluctuations in assets and liabilities), cash flow hedge (a hedge against variability in cash flows attributable to particular assets and liabilities), and hedge of a net investment in a foreign operation. Generally, the U.S. GAAP threshold is a higher standard for instruments to qualify for hedge accounting.First-time adopters of IFRS are required to account for derivatives at their opening IFRS balance as assets or liabilities measured at fair value. Both standards require entities to document and continuously assess hedge effectiveness. Generally, hedges that are determined to be highly effective under U.S. GAAP would expect to meet the IFRS requirement of having an economic relationship. IFRS also provides additional hedging opportunities for entities within a consolidated group to hedge on behalf of a subsidiary with foreign currency exposure. A parent organization is permitted to bypass an intermediate subsidiary and directly hedge against currency risk at a lower-level subsidiary.Alternative Investments:U.S. GAAP provides a practical expedient to determine the estimated fair value of certain alternative investments based on the net asset value (NAV). Under IFRS, there is no practical expedient for measurement under NAV. Instead, IFRS requires alternative investments to be measured at their fair value on the recognition date and at fair value for subsequent measurement.Derecognition of Financial Instruments:When assessing the derecognition of financial instruments, U.S. GAAP focuses on legal isolation and control, while the IFRS model is based on the principles of a risk-and-rewards model and then a control model. Under U.S. GAAP, derecognition of financial assets occurs following legal transfer of the asset. The asset must be legally isolated from the transferor, effective control is provided to the acquirer, and the asset can be pledged or exchanged by the acquirer. Derecognition may be applied to a portion of the asset if it meets the participating interest requirement. Under the participating interest requirement a share must: (1) have proportionate ownership rights with equal priority to other holders, (2) have no recourse to, or subordination by, any other participating interest holder, and (3) not entitle any participating interest holder to receive cash before any other participating interest holder.IFRS considers a mixed model incorporating both transfers of control and risk and rewards from ownership. Control is surrendered when the transferee can sell the transferred asset without any restrictions. IFRS does not incorporate a legal isolation test. Derecognition can be applied to a portion of the financial assets only if the cash flows are specifically identified, represent a pro-rata share or the asset, or a pro-rata share of specifically identified cash flows.Once the transfer of financial instruments meets the conditions for derecognition, both U.S. GAAP and IFRS provide similar guidance for determining the gain or loss incurred as well as the carrying amounts of any assets obtained and liabilities assumed. However, as the standards have different definitions of the unit of account for derecognition and different definitions of a newly created asset, the measurement of the gain or loss may differ between the two standards.First-Time IFRS AdoptersIn connection with IFRS 1, First-Time Adoption of International Financial Reporting Standards, a first-time adopter must recognize all financial assets and liabilities at their opening valuations according to the provisions outlined in IFRS 9. In addition, IFRS entities must apply the IFRS 9 derecognition criteria prospectively following adoption. There is no requirement for retrospective application of transactions that have already been derecognized before the adoption date.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Top Risks to Consider in 2021 In a year full of disruption and change, one thing remains the same – the existence of risk.  While the types of risks we face may evolve and the perceived likelihood and impact may change, organizations will continually be faced with the need to identify, assess and manage risks in order to effectively achieve their objectives and initiatives.   The Institute of Internal Auditors (IIA) recently released its report OnRisk 2021: A Guide to Understanding, Aligning and Optimizing Risk, which provides perspective from key members of risk management functions and offers insight on potential areas of focus over the next year.OnRisk 2021 was developed from qualitative interviews conducted with 90 professionals to capture viewpoints of the boardroom, C-suite and chief audit executives. This data was further supplemented by results from a quantitative survey conducted with 348 chief audit executives.  Results were analyzed to draw conclusions on how the three roles aligned, both regarding the risks that exist within organizations and how well-equipped those organizations are to manage the threats. Several key insights resulted from the report.Top 11 RisksThe following were identified as the top 11 risks that organizations have identified are top of mind for 2021: Cybersecurity Third party Business continuity and crisis management Data governance Organizational governance Board information Talent management Culture Sustainability (Environmental, Social and Governance - ESG) Disruptive innovation Economic and political volatility Three new risks--organizational governance, disruptive innovation, and economic and political volatility--were added since the IIA’s 2020 list.  This is not surprising, given the past year.  A year challenging the norms of how our companies are managed.  A year where innovators who embrace risk have risen to the top.  A year where global pandemics, national elections, and the related policy and regulatory changes have created economic and political volatility.Cybersecurity and business continuity and crisis management were the top-rated risks for 2021.  While cybersecurity was also a top risk in the 2020 report, it is heightened in 2021, as companies now have employees operating in less-secure work-from-home scenarios with more reliance on technology than ever before.  The past year has also put business continuity and crisis management plans to the test, as many companies were forced to utilize a portion or all of them for the first time ever, which brings higher attention to the topic.Risk Relevance PerceptionsThe IIA reported that while board members and chief audit executives had alignment on which risks were the most relevant, their perspectives did not necessarily align to management’s perceptions.  Specifically, management’s perception was that operational risks, including talent management, culture and business continuity, had higher relevance, while the more macro-level risks, such as organizational governance and economic and political volatility, had lower relevance. Ability to Manage RisksResults of the survey show that perceptions on an organization’s ability to manage risks are becoming more aligned between management and boards than what was detailed in the 2020 report, which noted that boards were overconfident in an organization’s ability to manage risk.  The IIA suggests that perhaps the pandemic prompted more communication around risk within organizations, resulting in a more realistic understanding of capabilities to manage risks.The areas noted above should be considered as companies assess risks in the coming year.  As the risks included within this report are fairly industry-agnostic, it’s important for your organization to also consider industry-specific risks that may impact you directly.  Alignment across all levels of the organization on how risks are identified, assessed and managed continues to be critical.  A well-established enterprise risk management program that is right-sized to your business and aligned to your strategies and objectives can help you proactively manage risk, reduce negative surprises, embrace risks to act on opportunities, and bring value to your organization. Interested in learning more about how to identify, assess and manage risks within your organization? Contact our Risk Advisory Services team by emailing us at jyard@schneiderdowns.com.   For the complete report, click here to download OnRisk 2021:  A Guide to Understanding, Aligning and Optimizing Risk. ### Financial Boot Camp Series: Is Life Insurance A Savings Vehicle? In our January article, we covered life insurance basics. This month, we probe further into permanent life insurance policies and the commonly asked question, “Is life insurance a saving vehicle?”.After reviewing an individual’s financial data and goals, our most common response is that permanent life insurance is not a recommended savings vehicle. In our experience, the majority of individuals do not completely understand the key aspects of permanent life insurance and are often sold a policy rather than performing their own due diligence to purchase one. Permanent life insurance is often sold as a tax-advantaged, savings vehicle providing tax-free income, which is only partially true.Life insurance representatives are often very effective at presenting permanent life insurance policies as tax-advantaged products. In all fairness, permanent policies do grow tax-deferred, and policy interest and dividends are initially sheltered from taxation upon receipt if they stay in the policy. In addition, the funds that you pay into the policy (money invested in the policy or your cost basis) can also be withdrawn free of tax.However, should you withdraw more than your cost basis in the policy, or the earnings of the policy, that money will be taxed at your ordinary-income tax rate (for many highly compensated individuals, this is likely to be the highest tax rate paid on investment income).  While life insurance is commonly sold as tax-free, it is only true if you take a loan against the cash value of your policy, which will need to be re-paid at some point in the future to keep the policy in-force and on which one will pay interest on the amount of the outstanding loan. So essentially, to tap into the earnings of a permanent life insurance policy tax-free, a loan is required. Permanent insurance policies are expensive to maintain. Permanent life insurance is significantly more expensive than term life insurance. Depending on your age, amount of death benefit coverage, and the term, it could cost you significantly more dollars per month more to own a permanent policy compared to a term policy. According to data tracked by the Society of Actuaries1 : Approximately 33% of whole life policies are surrendered within 5 years and roughly 80% of policies are surrendered within 30 years.  Why is this? When you commit to making a larger, recurring premium payment, it may initially be affordable but could become a future financial burden not worth paying for. What are alternative savings vehicles to permanent life insurance? In our experience, investment brokerage accounts, company 401k plans, or Individual Retirement Accounts (IRAs), are generally much more effective savings vehicles for most individuals relative to permanent life insurance policies. Below, we present a side-by-side comparison of a brokerage account and whole life policy: Investment Vehicle Brokerage Account Whole Life Insurance Policy Ability to take out loans? Yes Yes Death Benefit Beneficiaries receive account value, with a step-up in basis Death Benefit to heirs can be tax-free Cost/Fees Internal Fund Fees plus a professional management fee Cost of life insurance coverage (mortality and expense) Taxation Varies from ordinary income tax to long-term capital gains tax depending on the type of investment Tax-Deferred. While living, the cash value is taxed at ordinary income tax rates above your basis (see above for more details) In closing, for most individuals, the general suggestion is to purchase adequate term life coverage providing protection up to potential future retirement age. With the money that is saved in monthly premiums, you can fund other more tax-efficient investment accounts. In using this strategy, your net worth should grow long-term, such that you are able to self-insure by the time your term policy expires.If you would like to discuss your specific needs further, please contact one of our trusted advisors at Schneider Downs Wealth Management Advisors.1  https://www.soa.org/globalassets/assets/Files/Research/Exp-Study/research-2007-2009-us-ind-life-pers-report.pdfSchneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.  ### How will ASC Topic 842 Lease Accounting impact your organization’s operations? Over the last few years, we’ve discussed the impact of ASC Topic 842 Lease Accounting on financial statements.  Discounted lease liabilities and corresponding assets will be required to show on the balance sheet. Finance type leased assets will incur amortization and interest expense, while operating leases will be expensed through a lease expense account.  Organizations with even a small lease portfolio will need to manage lease liability schedules for each lease.  Many will opt for a lease accounting system to track and maintain these schedules.  This article discusses what happens after the lease information has been gathered and leases have been added to the financials. Each month, an activity entry will be created to report reductions to the asset and liabilities, along with expenses related to those leases.  The final portion of the entry is a credit to accounts payable for the payment of the lease.  The lease accounting system could create the payable in the accounting system, or it could apply the payment portion of the entry to a clearing account.  If the clearing account method is used, the lease portion of the accounts payable invoice entry would also need to hit the clearing account and not the lease expense.  The lease expense will be calculated and applied from the lease accounting system entry. There are many reasons using a clearing account option may be more desirable.  First, an invoice could be received from the vendor, and if entered in addition to the invoice created from the lease accounting system, there is a risk of doubling the expense.  Second, the invoice amount may not tie exactly to the lease system due to variable type items, non-lease components, or late fees, for example.  Even though many lease payments will tie to the payment exactly, some will not, causing an accounts payable nightmare.  Finally, there may be a timing difference between the lease accounting system and the invoice payment date.  The invoice may need to be paid prior to the month the payment relates to.  For all these reasons, there will need to be a reconciliation process between the lease accounting system and the actual payments made for appropriate reporting of the expense. Beyond accounts payable, this reconciliation may also capture adjustments required in the lease accounting system, if they were not identified sooner.  Ideally, the operations team is trained on the lease accounting system so they can update changes in the life of a lease in real time.  Some of the changes impacting the lease schedule include expansions of space, renewal or extension of the lease, renegotiation of lease terms, or early termination of a lease. These changes can be entered by the lease users and reviewed by the accounting department prior to the finalization of the journal entry.  If the update doesn’t happen timely, the reconciliation should flush out changes in the leases not previously recognized. The last control step that should be considered is a completeness test, as this will assure there are is not an excess of unreported leases.  Reviewing expense accounts for reoccurring, consistent payments can help uncover leases that had not been correctly reported in the lease system.  This is a step the external auditors will take, so to avoid excess adjusting entries; the completeness test is often in an organization’s best interest. As you step down the road of ASC 842 lease accounting, recognize there are many departments outside of the accounting team that will need to be involved in maintaining the lease accounting requirements.  The sooner the start of the conversation, the better.  Consider making lease training a part of onboarding employees who may be involved or impacted. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### IRS Tax Exempt & Government Entities Program Letter for 2021 The Internal Revenue Service Tax Exempt & Government Entities (TE/GE) division, just like most of us, had to quickly figure out a way to function in the times of a pandemic.  In 2020, the Internal Revenue Service had to move their workforce to a remote work environment, mostly homes, and adapt internal policies and processes while keeping service interruptions to a minimum.  This new way of working is here to stay for at least some portion of 2021 and TE/GE feels confident that with the experience of the prior year it can focus on its mission without disruptions. The division laid out its main priorities for the new year in their annual program letter issued in November.TE/GE summarized its 2021 priorities in six main points that are described below: Strengthen Compliance Activities – the focus is on syndicated conservation easements and abusive charitable remainder annuity trusts, as well as private foundations and retirement pans as it relates to global high wealth area.  TE/GE is using enhanced techniques to identify civil and criminal fraud, and to recommend criminal prosecution and/or civil penalties against taxpayers who evade the assessment or payment of tax. Improve Operational Efficiencies – the focus is on improving efficiencies and internal controls within the division. Maintain a Taxpayer-Focused Organization – expansion of e-filing services, including electronic determination letter applications.  Development of additional online tools and resources to assist taxpayers with various issues. Ensure Awareness and Collective Understanding – proactive communication with the communities to encourage compliance and to increase voluntary compliance. Leverage Technology and Data Analytics – TE/GE continues to incorporate technology into their processes for efficiency and it appears to be the largest area of focus for the division.  In 2021, TE/GE is planning to expand taxpayer digital communications efforts and use of robotic process automation.  In addition, it will collaborate with Research Applied Analytics & Statistics to improve identification of issues with a high risk for noncompliance.  TE/GE is partnering with Health and Human Services for Medicare and Medicaid to develop a systematic method to identify the universe of hospitals subject to Affordable Care Act review.  TE/GE is using noncompliance research and data analytics to detect emerging issues.  And lastly, the division will continue comparative data analysis of Form 990-N and 1023-EZ filings to identify trends and emerging issues. Develop Our Workforce – continuing efforts with enhanced employee training and coaching, mentoring programs.  In addition, in 2021 TE/GE plans to merge TE/GE Knowledge management into IRS Knowledge Management platform to encourage information sharing. For further information or with any questions, please contact a member of our Schneider Downs team. ### Building a Strong Phishing Defense One of the most prevalent vulnerabilities that we exploit to get into clients' are phishing campaigns.We aren't the only ones phishing corporate networks either, with 66% of organizations experiencing phishing attempts in 2020, according to ProofPoint’s 2021 State of the Phish Report. Despite training and awareness campaigns educating users about phishing threats, these attacks are still one of the most tried and true methods employed by threat actors for a simple reason… they work. Which brings us to one of the most common questions our team encounters.Outside of mock phishing and awareness campaigns, what are other strategies and tactics that are available to reduce their vulnerability to phishing attacks? Increased Email Filter and Security Many of our clients are currently using Microsoft's Office 365 as their email exchange service. Office 365 is a great service, after all it has some incredible team collaboration tools that are just hard to beat. However, Microsoft’s E5 security services for Office 365 leaves a lot to be desired. This is worrying considering that 94% of attacks on organization start with email. Another worrying statistic that was brought up in a recent Mimecast webinar is that 28% of emails delivered after being scanned by Microsoft’s E5 security are spam, phishing, malicious files, and ransomware. This also is an applicable statistic over the different organization segments, ranging from small businesses to enterprises. Because of this, we suggest that companies add another layer of security to their email services, as well as an increase in user training and awareness – while technology will never full protect phishing emails from getting through, the combination of educated end users and strong filters is a great start to protecting your organization from phishing attacks.While there are a number of vendors and services out there, Mimecast is the preferred platform that our team uses internally, as well as the one that we suggest clients utilize. Mimecast specializes in cloud-based email management for Microsoft Exchange and Office 365 with the email security service covering email filtering as well as user training, helping to lower the effect of phishing attacks on your users. The service helps to protect users by running on top of the Microsoft Exchange and O365 and helps identify malicious emails. According to Mimecast, their service is able to find an additional 28% of emails that passed through Microsoft's E5 security that can be identified as spam, phishing, malicious files, or ransomware. Mimecast works as a sandbox, stopping messages at the perimeter so that possible threats do not reach the actual mailbox environment. However, this is only one of the four attack vectors that Mimecast defends against.The next attack zone that is protected is in the mailbox and network of an organization. These attacks usually target users, and so Mimecast offers their Security Awareness Training to help mitigate this risk. It is also worth noting here that organizations that provide engaging security awareness training to their employees are five times less likely to suffer an attack. The next zone is beyond an organization's inbox and deals with email domain spoofing and brand exploits, where attackers will act as an organization by imitating either a style or domain name to trick users into trusting them. The last zone deals with APIs, and connected ecosystems. This deals with security that can extend and integrate with other security controls, giving an organization protection with their integrated solutions and services.Improved User Training Besides email filtering, the other suggestion we have is increased user training as human error is something that malicious actors depend on in order to get into networks. Even with a great email filtering system, attackers are still able to get some content through, and can force unknowing users to activate an attack. Evaluate your current training program and have a combination of security awareness materials that support your mock phishing campaigns. When developing your simulated phishing attacks take the time to make them complex and relevant to your employees. Remember, if your end users aren't trained to be ready for an attack, neither is your organization.How Can Schneider Downs Help?If you have any questions, we are here to help! In addition to our services and software solutions, our team offers a diverse library of complimentary cybersecurity resources including case studies, whitepapers and security awareness materials. You can explore the library at www.schneiderdowns.com/cybersecurity/resources.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.If you suspect or are experiencing a network incident, our Incident Response Team is available 24x7x365 at 1-800-993-8937.Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world. ### Analytics & Internal Audit With the evolving IT landscape we have been in for the past 10 years and the emphasis that Covid-19 has put on a remote workforce, there is more data created daily than ever before. This high volume of data creates increased risk for organizations and internal audit to manage. It also creates opportunity for innovation – using analytics and scripting to wrangle all the data at our fingertips. Utilizing analytics and scripting will help IA increase audit coverage while increasing efficiency.Analytics can often be a buzz word in the internal audit world, and using analytics to your advantage is easier said than done. But the benefits include increased audit productivity, reduction of audit risk, increased audit assurance, and increased opportunities for internal audit. The use of analytics can change the perception of internal audit’s role from “gotcha auditor” to a source for decision-making, process improvements and collaboration. Using analytics for purposes beyond audit will help get rid of that stigma.I think we would all be lying if we said we have enough time, budget and resources to effectively finish our audit plan each year while also providing value to our organization. This is where analytics and scripting can be a platform for innovation and efficiency. While looking at your audit plan, try to find 2-3 procedures from one audit that could be repeated or replicated on other audits. Or, if you have a high-risk area that is audited each year, see if any of the steps can be easily automated through an audit software or an analysis tool. Being able to script out 2-3 procedures to be used on other audits or part of an audit you complete each year will increase audit productivity, potentially increase audit coverage and free-up time for IA to be a resource to your organization.Assessing your audit plan will also allow you to identify areas to incorporate analytics, which can be used in many ways for audit purposes, such as to audit digital evidence, increase assurance by auditing more samples or entire populations with the same amount of work or less work, select a targeted or statistical sample, identify outliers and trends for investigation, and identify process improvements. Analytics in conjunction with automating or scripting audit procedures or the analytic itself, will enable us as internal auditors to spend more time evaluating the results instead of being buried in procedures that need to be completed. As mentioned above, the transition is easier said than done.To start this scripting and analytic journey, you must understand how the data is created and the structure in which it is stored. Then begin to identify analytics to perform and procedures that are repeatable that can be scripted for use on other audits or in future years. If you don’t know where to start on your data journey or need some assistance on performing analytics or scripting procedures, please contact us. ### IFRS Conversion Considerations: PP&E Organizations that are considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that property, plant and equipment (PP&E) is accounted for in a similar manner with a few notable exceptions. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS.Both standards require that PP&E be capitalized and then depreciated over the future period of economic benefit and that depreciation is required to be recognized on a systematic basis. Both standards require that asset retirement obligations be recorded when legal requirements exist. Both also require that borrowing costs be capitalized during the construction of assets. General, administrative, maintenance and startup costs are not permitted to be capitalized under either standard. Assets held for sale are also treated similarly under both standards, requiring separate presentation on the balance sheet at the carrying value and a pause on depreciation being incurred.The most common issue organizations face when converting their PP&E to IFRS is the requirement for componentized breakout of future depreciation. In connection with IFRS 1, First-Time Adoption of International Financial Reporting Standards, entities are permitted to consider the carrying value at the conversion date as the fair value of PP&E to simplify the initial transition. Under this expedient, the carrying value is permitted to become the deemed cost under IFRS and would then be subsequently depreciated over its estimated useful life at that measurement date. The deemed cost exemption is intended for use on an item-by-item basis. Alternatively, a company may also elect to not use the available expedient and use the initial recorded value of an item of PP&E and recalculate the depreciation as if it had always been under the IFRS requirements. Under either election, subsequent depreciation would be based on the depreciable lives of the asset’s components in accordance with International Accounting Standard 16, Property, Plant and Equipment. U.S. GAAP permits entities to elect depreciation based either on the individual components or a weighted average of the components’ lives. If the organization is currently depreciating under the weighted average method, it could become a time-consuming process to determine the component-level depreciation.Impairments to the valuation of PP&E can be reversed under IFRS if the facts and circumstances at a measurement date indicate that reasons for the asset impairment no longer exist. IFRS PP&E can then be carried at any amount up to the original cost less the depreciation that would otherwise have occurred to that point. Under U.S. GAAP, these costs cannot be reversed and the reserves in place are only removed on an individual-item basis when the product is either sold or abandoned. Impairment may also occur more frequently under IFRS, as the carrying value is compared against a determined recoverable amount rather than future cash flows under U.S. GAAP.IFRS organizations are also permitted to record their PP&E valuation at the historical cost model, as required under U.S. GAAP or a revaluation model. The historical cost model is followed by most organizations, which record the valuation of PP&E as the initial cost less depreciation, based on the pattern of the asset’s economic benefit and impairment incurred to date. Under the revaluation model, PP&E is recorded at fair value less any subsequent accumulated depreciation and subsequent impairment losses. Increases to the carrying value should be recorded against a reversal of any previous loss recorded, with the remainder recorded as other comprehensive income as a revaluation surplus.  If the carrying value results in a decreased valuation, it should be immediately recognized as a loss to the extent it surpasses that individual asset’s previously recorded other comprehensive income surplus. Most entities do not utilize this election, since it can be costly to implement tracking of the fair market valuation at regular measurement dates. In addition, if elected, the policy must be applied to all assets within that class of PP&E.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Warning Signs of a Business Email Compromise Attack Business Email Compromise (BEC) is an increasingly common scam targeting companies and individuals who perform financial fund transfers.These complex attacks work by threat actors hacking into corporate e-mail accounts and using the information to trick third-parties into making fraudulent wire transfers, with a heavy reliance on social engineering to convince somebody to hit send. This type of cybercrime can sometimes pay off better than ransomware-related compromise events, with the FBI reporting this type of attack costing organizations an estimated $1.77 billion in losses in 2019.Luckily, these types of attacks are typically easy to spot early on. Here are a few warning signs you should be aware of that would tip you off. You have noticed an increase in phishing emails to your employees Your clients or vendors are reporting an increase in phishing emails that are spoofed and have convincing signatures or email addresses similar to yours Wired money goes missing, or it is discovered that the payments went to the wrong account Your employee(s) notice they are missing parts of an email conversation or emails are being forwarded to their RSS Subscriptions or Junk email folders Alerts are being generated for email forwarding rules that route email outside of your domain You just moved your employees into Microsoft Office 365 or G-Suite and have not gone through the process of securing the environment About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.If you suspect or are experiencing a network incident, our Incident Response Team is available 24x7x365 at 1-800-993-8937.Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world. ### Pennsylvania PPP Loan Forgiveness and Deductibility of Expenses Pennsylvania businesses that obtained Payroll Protection Program (PPP) loans under the federal CARES Act received some good news as the Pennsylvania governor signed Senate Bill 109 into law on Friday, February 5, 2021. Among the bill’s provisions are two items that make it clear that PPP loan forgiveness is not taxable under any of the classes of income subject to tax under the Pennsylvania income tax code.  Further, expenses paid from the proceeds of the loan are fully deductible. This legislative clarification favorably impacts sole proprietors, partnerships, and “S” corporations and aligns the Pennsylvania tax treatment with the federal tax treatment. The bill also clarifies that federal individual economic stimulus rebates paid to individuals as part of the COVID-19 economic relief and stimulus packages will not be included in taxable income for Pennsylvania purposes either. The provisions above were part of an overall bill approving over $900 million in spending geared towards providing relief to help restaurants, schools, and individuals impacted by the COVID-19 pandemic.  The funding source for most of the spending is provided through federal government COVID-19 relief programs. Our team of Business and Tax Advisors at Schneider Downs has extensive experience with the issues surrounding PPP loan forgiveness, so please do not hesitate to contact us with any questions. ### Pennsylvania Hospitality Industry Receives Assistance in Pa. COVID-19 Spending Bill Pennsylvania businesses in the hospitality industry received some good news as the Pennsylvania governor signed Senate Bill 109 into law on Friday, February 5.In an effort to help Pennsylvania’s hospitality industry, $145 million of the spending bill is dedicated to providing grants to eligible applicants including hotels, restaurants, bars, and taverns.  The money would be available in increments of $5,000, up to a total of $50,000, through grants to businesses that employ less than 300 full-time equivalent employees.  Eligible applicants must meet additional qualification requirements including reporting a 25% decline in revenue and less than $15,000,000 maximum net worth.  Further, businesses will also be required to certify in good faith defined representations (listed in the bill).  Priority in awarding the grants will be given to applicants who can demonstrate a 50% reduction in gross receipts in the period March 31, 2020 to December 31, 2020 compared to the prior year and who did not receive a Payroll Protection Program loan under the federal government’s CARES Act or the Consolidated Appropriations Act.  Applications will be made through economic development organizations identified for each county in the state, under processes to be developed by each county, beginning mid-March and will need to be submitted no later than June 15 (or prior if funds are exhausted prior to that date).   The provisions are part of an overall spending bill approving over $900 million in funds geared towards providing financial relief caused by the COVID-19 pandemic.  The funding source for most of the spending is provided through federal government COVID-19 relief programs.  Our team of Business and Tax Advisors at Schneider Downs has extensive experience with these types of issues, so please do not hesitate to contact us with any questions.   ### Implementing Data Analytics The old mantra, “That’s how we’ve always done it” has gone out the window over the past year in many aspects of our lives, including our businesses. Times of uncertainty provides an opportunity for change, to reevaluate past business practices, and identify new ways to optimize resources.  At Schneider Downs, we are constantly being proactive in looking for ways to help serve our clients and their needs.  SD ADAPT (Automation & Data Analytics Process Team), a part of our Technology Consulting Group, achieves this by using data analytics and visualization, process automation, and business intelligence to serve a variety of industries in a variety of ways. On Wednesday, February 17, 2021, at 11 am, SD ADAPT will be presenting during a free 1-hour webinar hosted by the Master Builders’ Association of Western Pennsylvania (MBA) titled “Implementing Data Analytics: Finding Opportunity During a Pandemic.”  SD ADAPT will show how utilizing a commonly untapped resource, data, can improve workforce capacity and streamline executive insight into financial and operational performance.  Implementing a data analytics strategy will help push your company forward as we search for opportunities during a turbulent time, not back to normal. During this webinar, ADAPT will cover industry-specific examples of how to use data to your advantage. Although the content of the webinar will be construction-focused, the concepts and tools that will be utilized during the presentation are industry-agnostic.  All are welcome and encouraged to join!  Takeaways include: Using data to evaluate job risk, optimize project manager meetings, and manage job performance How to make better informed, data-driven business decisions with confidence and clarity Why data analytics improves the efficiency and effectiveness of existing processes If you are interested in joining us and learning more about how data analytics can help your company, please use the link here to register.   ### Differences Between FASB ASC Topic 842 and IFRS 16 for Lessees The FASB and the IASB issued their respective lease accounting standards in early 2016 as part of a joint project between both standard-setting bodies.  Despite the joint project initiative, the FASB and the IASB diverged on key accounting issues for leases. Dual reporters and those transitioning to or from IFRS 16 to FASB ASC Topic 842 should be aware of the key differences between the two lease standards including the difference in lease classification, discount rate definitions, lease payments that depend on an index or rate, and the low-value lease exemption. The single lease accounting model referred to in the IFRS 16 guidelines means that there is not a distinction between operating leases and finance leases, whereas FASB ASC Topic 842 retains the distinction between operating and finance leases.  The classification analysis under FASB ASC Topic 842 is similar to the current capital-lease-versus-operating-lease test under FASB ASC Topic 840, but the FASB ASC Topic 842 classification tests do not contain bright-line thresholds.  Those with dual reporting requirements might be wondering what the difference is between operating leases and finance leases under FASB ASC Topic 842, since leases are reported on the balance sheet regardless of classification. The key distinction is in the expense recognition during the subsequent accounting.  Operating leases under FASB ASC Topic 842 will recognize a straight-line lease expense, whereas FASB ASC Topic 842 finance leases recognize amortization and interest expense.  This results in accelerated expense recognition in the earlier period of a finance lease compared to an operating lease.  The recognition and initial and subsequent measurement of a finance lease under FASB ASC Topic 842 are the same under IFRS 16. The discount rate is used to calculate the present value of the lease liability in FASB ASC Topic 842 and IFRS 16 and should ideally reflect how the contract is priced.  If it is readily determinable, the rate implicit in the lease contract should be used to discount the lease liability.  If the implicit interest rate cannot be readily determined, a lessee is permitted to use its incremental borrowing rate.  There are conceptual differences in the definition of the incremental borrowing rate within IFRS 16 compared to FASB ASC Topic 842.  Under IFRS 16, the incremental borrowing rate is the rate of interest that a lessee would have to pay in order to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.  The FASB ASC Topic 842 definition of incremental borrowing rate is less prescriptive than the IFRS 16 definition.  It is defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.  FASB ASC Topic 842 also includes an optional accounting policy election for nonpublic entities to use a risk-free discount rate in lieu of an incremental borrowing rate, whereas IFRS 16 is silent to any such accounting policy election for nonpublic entities.  Depending on the sophistication and resources of an entity’s treasury management function, it may be appropriate and necessary to select an incremental borrowing rate(s) from published sources, seek rate quotes from lenders, and perform sensitivity analyses over the rate(s). Lease payments that depend on an index or rate are measured based on the index or rate on the lease commencement date and are not remeasured in each subsequent year according to the guidelines of FASB ASC Topic 842, whereas under IFRS 16, lease payments that depend on an index or rate are remeasured annually to reflect the most current index or rate. IFRS 16 contains similar exemptions and practical expedients to FASB ASC Topic 842, including the package of three transitional practical expedients, the hindsight practical expedient, the short-term lease exemption, the practical expedient to not separate lease and non-lease components, and the portfolio approach practical expedient.  IFRS 16 includes a low-value lease exemption not contained in FASB ASC Topic 842.  The low-value threshold is not explicitly defined in the IFRS 16 standard, although in the Basis for Conclusions contained within IFRS 16, the Board quotes $5,000 as a possible threshold.  Many organizations have elected to utilize their capitalization threshold to identify low-value leases, which we believe is an appropriate accounting policy. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases. If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### FASB ASC Topic 842 Lease Accounting - Discount Rate The new lease accounting rules retain the two-classification concept that existed under previous lease accounting rules.  Leases are classified as operating leases or finance leases.  Finance leases are the same as the former capital leases under FASB ASC Topic 840.  The most striking difference in the new accounting standard is that operating leases are recognized on the balance sheet. At the commencement date of a lease or at the date of transition to FASB ASC Topic 842, a lessee will recognize the assets and liabilities arising from leases with the lease liability measured at the present value of the lease payments not yet paid, discounted using the discount rate for the lease.  The right-of-use asset is measured at the value of the lease liability, adjusted for certain items such as initial direct costs and deferred rent liabilities under legacy lease accounting guidance. Lessees with capital leases are familiar with the concept of discounting the present value of minimum lease payments and the importance of selecting an appropriate discount rate, but lessees that have traditionally only had operating leases could be faced with the challenge of identifying and sourcing an appropriate discount rate.  We will explore the definitions of the discount rate under FASB ASC Topic 842 and provide some tips and tricks to evaluate this crucial component of lease accounting. As stated directly in the text of FASB ASC Topic 842, the discount rate for the lease initially used to determine the present value of the lease payments for a lessee is calculated on the basis of information available at the commencement date.  A lessee should use the rate implicit in the lease contract whenever that rate is readily determinable. If the rate implicit in the lease contract is not readily determinable, a lessee uses its incremental borrowing rate. Many lessees find themselves unable to determine the implicit interest rate in a lease contract.  The definition of implicit interest rate within the FASB ASC Topic 842 Glossary is the rate that the lessor is charging the lessee or the rate that causes the aggregate present value of (a) the lease payments and (b) the amount that the lessor expects to derive from the underlying asset at the end of the lease term to equal the sum of (1) the fair value of the underlying asset minus any related investment tax credits retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor.  Many components of the implicit interest rate definition may be proprietary to the lessor and therefore unknown by the lessee.  If the implicit rate cannot be readily determined, the lessee may use its incremental borrowing rate. The FASB ASC Topic 842 Glossary defines the incremental borrowing rate as the rate of interest that a lessee would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. FASB ASC Topic 840 contained a similar definition of the incremental borrowing rate to the FASB ASC Topic 842 definition; however, there is a key difference between the definitions.  The previous definition of the incremental borrowing rate is the rate, at lease inception, that the lessee would have incurred to borrow, over a similar term, the funds necessary to purchase the leased asset.  The new definition is based upon an aggregate lease payment input, whereas the previous definition is based upon a fair value input.  In most circumstances, the aggregate of the lease payments would be less than the fair value of the underlying asset. A lessee could reference its other collateralized borrowings in the determination of the incremental borrowing rate and ensure appropriate adjustments to achieve a similar term in an amount equal to the lease payments.  It might be the case that a lessee only has unsecured financing sources and no recent history of secured financing or quoted secured interest rates.  In these cases, it would be appropriate for the lessee to formulate an incremental borrowing rate starting from unsecured base rate and adjusting for the various definitional attributes of the incremental borrowing rate in order to achieve a collateralized rate, similar payment structure, prepayment terms, lease term and economic environment. In the Basis for Conclusions to FASB ASC Topic 842, the board noted that it may be appropriate in some circumstances for a lessee to establish a single discount rate and apply it to all leases in a portfolio because using that discount rate would not result in a materially different measurement than using a discount rate determined for each individual lease. Depending on the sophistication and resources of an entity’s treasury management function, it may be appropriate and necessary to select an incremental borrowing rate(s) from published sources, seek rate quotes from lenders, and perform sensitivity analyses over the rate(s). The new lease guidance includes a practical expedient that is only available to lessees that are not public business entities that permits an accounting policy election for the initial and subsequent measurement of lease liabilities to be discounted using a risk-free rate.  This accounting policy election must be elected for all leases.  Risk-free rates are generally lower than interest rates meeting the definition of the incremental borrowing rate.  As such, the measurement of the initial lease liability and the right-of-use asset would be higher using a risk-free rate than using the incremental borrowing rate.  This could potentially cause a day-one impairment of the right-of-use asset if the amount recognized at the transition date or lease commencement date exceeds the fair value of the underlying asset. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### FASB ASC Topic 842 Lease Accounting: How to Handle Legacy Deferred Rent Liabilities Transitioning to FASB ASC Topic 842, Leases presents first-time adopters with many qualitative and quantitative challenges.  A common challenge in the final stages of transitioning to the new standard is how to account for legacy deferred rent liabilities that were required under FASB ASC Topic 840. You may recall that lessees with operating leases containing escalating rent payment schedules are required to recognize rent expense on a straight-line basis, necessitating a deferred rent liability (accrued rent) for the imbalance between actual cash payments and straight-line rent expense.  After assisting clients with multiple transition projects, we are often asked the question, “What do I need to do with my deferred rent accounts?” On the transition date to FASB ASC Topic 842, a lessee measures an operating right-of-use asset at an amount equal to the lease liability, adjusted for prepaid or accrued rent, the remaining balance of any lease incentives, unamortized initial direct costs and any impairment.  The starting point for the measurement of the right-of-use asset is the lease liability, which is calculated as the present value of lease payments, including fixed payments less any lease incentives, such as tenant improvement allowances, paid or payable to the lessee.  After determining the lease liability, you begin the right-of-use asset measurement by determining the lease liability value and then adjusting for prepaid rent, accrued rent, lease incentives, initial direct costs and impairment.   It is common for the lease liability to not match the right-of-use asset at the adoption date due to these adjustments. A simplified example illustrates the journal entries necessary to account for an existing deferred rent liability at transition.  In this example, an entity has a lease contract for an office building with annual rent increases of 2%.  Under legacy lease accounting, the entity has appropriately accounted for the lease rent expense on a straight-line basis and recognized a lease liability throughout the term of the lease.  On the transition date to FASB ASC Topic 842, the balance of the deferred rent liability is $100,000.  After analyzing the terms and provisions of the contract, the entity calculates a $1,500,000 FASB ASC Topic 842 operating lease liability.  There are no lease incentives or initial direct costs. The journal entry to record the lease is as follows: Example 1 Debit Credit Operating right-of-use asset $1,500,000 Deferred rent liability $100,000 Operating right-of-use asset $100,000 Lease liability $1,500,000 If the entity did not previously recognize a deferred rent liability under legacy lease accounting in this example, the journal entry at transition would be as follows: Example 2 Debit Credit Operating right-of-use asset $1,400,000 Retained earnings $100,000 Lease liability $1,500,000 The debit to retained earnings in Example 2 represents a catch-up adjustment of expense that should have been recognized in prior periods.  Many organizations that had not correctly accounted for operating leases under legacy guidance will have an adjustment similar to Example 2. Organizations need to find a suitable solution for calculating the FASB ASC Topic 842 right-of-use assets and lease liabilities at the transition date and the subsequent lease accounting.  Generally, an Excel-based solution would be appropriate for a noncomplex portfolio of 10 or fewer leases.  If the lease profile is more complex or greater than 10 individual leases, management is better served by a lease software solution, such as simpLEASE. In addition to offering our clients simpLEASE, Schneider Downs provides advisory services for the technical aspects of lease accounting. For more information concerning lease accounting and the impact on your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com.   ### Importance of Foreign Corporations Filing Form 1120F Form 1120F is filed by foreign corporations in order to report income, deductions and credits to determine its U.S. tax liability. Generally, all foreign corporations are required to file Form 1120F if they are engaged in a U.S. trade or business. In the court case of Adams Challenge (UK) Limited v. Commissioner of Internal Revenue, the court ruled against Adams Challenge (UK) Limited in concluding that they were not entitled to deductions and credits for 2009 and 2010.  The Tax Court sided with the IRS to deny deductions and credits to a foreign corporation that failed to file timely Forms 1120-F. For 2009 and 2010, the UK company filed Federal income tax returns in February of 2017, waiting almost 2 years after the IRS prepared the returns for the company and sent them a notice to file.  In backing this, the IRS used Internal Revenue Code section 882(c)(2) which states “a foreign corporation shall receive the benefit of the deductions and credits allowed only by filing or causing to be filed a true and accurate return in the manner prescribed.” As we know, foreign corporations are not technically required to file returns timely if there is no US sourced income, so the big question for the courts was, does Internal Revenue Code section 882(c)(2) establish some sort of cutoff date when it is too late to file a return while still getting the benefit of those deductions and credits? In the end, the court ruled that the terminal date was established when the notice of deficiency and IRS prepared returns were sent to the UK based company.The next factor, since dealing with a UK company, was whether deductions must be allowed in accordance with the US-UK tax treaty. It was argued deductions should be permitted based on the treaty business profits article that “expenses incurred shall be allowed as deductions.”  The court ruled against the company stating the interpretation is that "shall be allowed" does not mean "must be allowed", but instead means "shall be allowed so long as certain conditions are met." In this case, the court ruled those certain conditions were not met.The tax court’s ruling represents a clear signal to foreign taxpayers:  they should timely file nonresident tax returns – including protective filings – in order to prevent the IRS denial of deductions and credits. Please contact your SD tax advisor if you need assistance.  ### U.S. Department of Labor Issues Missing Participant Guidance On January 12, 2021, the US Department of Labor’s Employee Benefits Security Administration (EBSA) announced guidance to plan fiduciaries regarding their obligation to locate and distribute retirement benefits to missing or nonresponsive participants.  This guidance comes in three sub-sections:Missing Participants – Best Practices for Pension PlansThe EBSA has categorized these best practices into several areas.  The first is maintaining accurate census information for the plan’s participant population.  This includes such things as contacting current and retired participants on a periodic basis to confirm contact information, flagging undeliverable mail/e-mail for follow-up, providing various ways for participants to provide contact information updates to the plan sponsor among other suggested tips.  The second is to implement effective communication strategies.  Examples include using plain language and non-English when appropriate and including contact information confirmation in the onboarding and exit processes.  The third is the search for missing participants.  They have identified several steps to assist in this area.  These steps including using free data base searches like obituaries, death searches or social media, contacting former fellow employees who worked with the participant, publishing a list of missing participants on a private intranet or registering the list on the National Registry of Unclaimed Retirement Benefits or pension registries.  The last step is to document in writing the procedures and actions that the plan’s fiduciaries have taken to ensure they are clear and result in consistent practices.Compliance Assistance Release No. 2021-01The purpose of this release is to ensure consistent investigative processes among the EBSA offices who are conducting Terminated Vested Participants Project audits.  The purpose of the project is to ensure that plans are maintaining an adequate census, that plans have appropriate procedures for advising participants with vested benefits of their eligibility to apply and that plans have implemented search procedures such as those listed above in the best practices.  This memorandum provides a summary of information that may be requested during one of these audits as well as errors they may look for during their investigation.Field Assistance Bulletin No. 2021-01This bulletin provides a temporary enforcement policy allowing fiduciaries of a terminating defined contributions plan, under some circumstances, to make use of the Pension Benefit Guaranty Corporation’s Missing Participant Program rather than transferring the funds of missing participants to an IRA or a state unclaimed property fund (as previously required under a safe harbor in the DOL regulations).  The temporary enforcement policy states that the DOL will not pursue violations against plan fiduciaries who forward funds of missing participants to the PBGC’s missing participant program, provided that the fiduciaries comply with guidance in the memorandum. Note that this guidance includes the requirement to “diligently search” for missing participants and beneficiaries before utilizing the PBGC program. The guidance further indicates that fiduciaries must follow similar requirements of the safe harbor regulations, which include notices to participants indicating the balance is being submitted to the Pension Benefit Guaranty Corporation’s Missing Participant Program and include the PGBC’s website address and customer contact number.This guidance is meant to reflect the importance of plan fiduciaries ensuring that their plan participants and beneficiaries are receiving the benefits that they are entitled to. ### Private Foundation Mandatory E-Filing of Form 4720: Delayed! The Taxpayer’s First Act was signed into law on July 1, 2019.  Under this Act, effective for tax years beginning on or after July 2, 2019, private foundations are required to electronically file Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code.  Form 4720 is used by private foundations to report taxes on, among other things, undistributed income, excess business holdings and self-dealing.    Form 4720 is filed by a private foundation as part of the Form 990-PF which is required to be electronically filed.   The IRS is modifying the Form 4720 so it can be electronically filed in accordance with the Taxpayer’s First Act mandate.The IRS released Notice 2021-01 in January 2021, which announced the delay in the application of the electronic filing mandate.   Under the notice, private foundations may continue to paper file the Form 4720 until the IRS announces the availability of the electronic filing.   The IRS expects the electronic version of the form to be available early 2021.For additional information, reach out to any of your contacts at Schneider Downs. ### IFRS Conversion Considerations: Inventory Organizations that are considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that inventory is accounted for in a similar manner with a few notable exceptions. This article is the part of a series covering considerations for organizations contemplating a conversion from U.S. GAAP to IFRS. Under both the U.S. GAAP Accounting Standard Codification Section 330 and IFRS’s International Accounting Standard 2, Inventories, inventory is defined as assets held for sale in the ordinary course of business or in the process of production, or an asset to be consumed in the production of goods or services. Inventory under both standards permits FIFO, retail and weighted average costing methods. The LIFO method permitted under U.S. GAAP is not permitted under IFRS. Any organization using the LIFO inventory method for book and tax purposes would need to select a different method as part of its conversion to IFRS, which could result in a significant tax impact. Both standards define the cost of inventory as all direct expenditures to bring inventory to sale, including an allocation of overhead. Selling costs along with general administrative costs are excluded from inventory overhead capitalization under both standards. The measurement of inventory under FIFO and weighted average costing has seen convergence between the standards, which now require inventory to be stated at the lower of cost and net realizable value (NRV). NRV is defined slightly differently under the two standards. U.S. GAAP defines NRV as the estimated selling price in the ordinary course of business less reasonable predictable costs of completion, disposal and transportation. IFRS defines NRV more generally as the estimated selling price less the estimated costs necessary for the sale. Both standards require write-downs when the inventory costs exceed the NRV. Under U.S. GAAP, these costs cannot be reversed, and the reserves in place are only removed on an individual-item basis when the inventory is either sold or when it is disposed and completely written off. Under IFRS, write-downs can be reversed if current information indicates that the reasons for the asset impairment no longer exist. IFRS inventory can then be carried at an amount up to the original cost based on the facts and circumstances at the measurement date. Under IFRS, each interim period is viewed as a discrete reporting period rather than an integrated part of an annual period, as interim reporting is considered under U.S. GAAP. Therefore, the measurement of inventory reserves and allocation of the overhead burden should be assessed each interim reporting measurement date based on the significance of these balances. Abnormally low production periods should result in some overhead costs being expensed in the month incurred. Organizations consolidating multiple entities under IFRS also need to ensure that all entities use the same accounting policies to arrive at their inventory valuation. If entities do not use the same policies, then IFR 10, Consolidation, requires that adjustments must be made during consolidation to ensure conformity with the group accounting policies. Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Preparation for Shuttered Venue Operators Grant Application Process The U.S. Small Business Administration (SBA) published Frequently Asked Questions (FAQs) on January 27, 2021 for the Shuttered Venue Operators Grant (SVOG) program.  The FAQs cover eligibility, definitions and other aspects of the grant.  Applications for the grant are not being accepted yet, but there are several steps organizations can take in the meantime to be ready to apply.SVOG applicants must be registered with System for Award Management (SAM).  Applicants cannot use an Individual Taxpayer Identification Number, Employer Identification Number or other means of identification.  A prerequisite for the SAM registration is a Dun and Bradstreet number (DUNS).  The DUNS should be obtained as soon as possible.  Once an organization has a DUNS number, it should register with SAM immediately (SAM.gov), as the SAM registration may take up to two weeks once submitted.To prepare for the application, organizations should gather all documentation providing the number of employees and monthly revenues to calculate the average number of qualifying employees over the previous 12 months.  The employees are counted based on full-time employee calculation.Organizations also should determine the extent of gross earned revenue loss experienced between 2019 and 2020. The SBA defined gross earned revenue as monies an organization receives from the sale of goods or services and does not include donations, sponsorships, governmental assistance or returns of investment.  The SBA further details that gross earned revenue is the total of earned revenue from various sales of goods or services, such as admission tickets, merchandise, food and beverages, advertising sales and contracted presentation income.  Rental income for event hosting should also be included in earned gross revenue.The SBA states that the information above, as well as floor plans, contract copies and other evidence of eligibility will be needed to apply for the grant.An important reminder on the eligibility requirement is that if an organization received a Paycheck Protection Program (PPP) loan on or after December 27, 2020, it is not eligible for SVOG.Schneider Downs will keep monitoring the updates on SVOG and provide updates as they are received. ### The Importance of a Personal Financial Plan During Exit Planning When planning an exit from a business, there are numerous factors to consider. While many of these factors pertain to the business itself, I would argue that a personal financial plan (often overlooked) is a significant factor in exiting a business successfully. In turn, this article will focus on the quantitative and qualitative factors that pertain to a personal financial plan.If you are exiting a business, you have most likely spent a significant portion of your life (and finances) building the business to a point in which it is desirable for someone to purchase. While there might be a transition period in the exit, it is important to think beyond to when you will no longer be associated with the business. There are a few qualitative factors to consider in your timeline. Why will you wake up every morning? How will you use your time? What are your personal and financial goals? You may be able to answer these questions easily, but you’ll need to ensure that these ideals and goals are able to be met within the confines of your financial situation. If you can’t answer these questions so easily, make it a priority to do so. Otherwise, you may end up developing bad habits in this new phase of life that are detrimental to what you’ve worked so hard to build. Once you’ve answered those questions, a personal financial plan should incorporate quantitative factors into your future goal planning and is key in determining whether or not your goals are realistic. Whether you are in the process of selling your business or just considering it, I would encourage you to consult your trusted financial advisor or find a CERTIFIED FINANCIAL PLANNER™ practitioner to move forward with a financial plan. When constructing this plan, there are several areas of focus, broadly outlined below, that may serve as a starting point for you.Cash Flow ModelingDefining your projected inflows (income from all sources) and outflows (expenses) should equal out. Is there a discrepancy creating a cash need that your future income is not covering? If this is the case, you will most likely turn to your investment portfolio to supplement your income. While everyone’s situation is different, an industry rule of thumb is to try and maintain a “burn rate,” or portfolio withdrawal rate, of less than 4% per year as to not exhaust your investment portfolio during your lifetime.Oftentimes, we forget about large future expenses that may or may not occur. Whether they be new cars, unforeseen home repairs and improvements, or future education funding and wedding payments for children or grandchildren, planning for potential surprises through cash flow modeling may save you from a world of financial hurt in the future. Are you carrying a mortgage and/or other large debt balances? Hopefully, your business payout reduces or eliminates the balances, but if it doesn’t, these payments need to be factored into your cash flow calculation.Investment PlanningEqually important to keeping a low portfolio “burn rate,” defining your personal Investment Policy Statement (IPS) is a critical piece of your plan. Included in the IPS are a set of standards and beliefs that should serve as a long-term guidepost for your investment portfolio and determine your asset allocation. This document should paint a clear picture your risk tolerance, cash needs, investment objectives and other considerations, such as tax strategies and restricted investments. Another important part of investment planning is diversification, and it comes in two forms. The first and the most well-known definition of diversification is investing your funds into different asset classes. This strategy allows you to spread your risk and dampen volatility. The other and less often discussed type of diversification is represented by an age-old saying: “don’t put all of your eggs into one basket.”  Baskets, or “buckets,” are an important part of your investment and cash flow planning and include cash, equities and bonds. Varying the type of investments you hold also helps to manage volatility should you need to pull from your portfolio in the near-term. If you need to take distributions from your portfolio for cash flow purposes, it is suggested that you hold a year’s worth your funding needs in cash or a cash-like investment.Estate PlanningNow that you’ll be selling one of your biggest assets – your business – and most likely creating an investment portfolio as a result, it is crucial to review and, if necessary, update your estate plan to ensure that your assets are distributed to the appropriate beneficiaries at your passing.Risk ManagementIn most cases, your business may have provided insurance – life, disability and health, at least. Personal insurance policies, no matter the type, are typically more expensive and often harder to attain than business policies. It is critical to determine your insurance needs, research different policies, and budget appropriately.Tax PlanningThere is a good chance that if you are selling a business, you will be receiving a large payout. If this is your first time investing a serious amount of cash, be prepared to pay taxes on capital gains, dividends and interest on a yearly basis. You may also need to make estimated tax payments, since you will no longer have taxes withheld from your paycheck. Working with your trusted tax advisor before and throughout your exit planning process, alongside the financial advisor producing your financial plan, should help to produce vital tax strategies to set you up for future success.Although a high-level summary, the financial planning topics listed above should be added to your exit planning checklist. Forming a relationship with a CERTIFIED FINANCIAL PLANNER™ practitioner, alongside your trusted tax advisor, and completing a detailed personal financial plan is the first step to ensuring a bright financial future as you transition into a well-deserved phase of life.  You’ve worked hard to make it this far. Don’t look past the personal details that are essential to making your exit plan successful.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### 1099 Reporting for the Transportation Industry Every January, the Schneider Downs tax advisors receive many questions from clients related to the requirement to send or receive the Form 1099. In general, before 2020, any payment for services by a non-employee that is $600 or more should be reported on a Form 1099-MISC. For the 2020 tax year, there is a new form to report this nonemployee compensation – Form 1099-NEC.  Generally, the form is not required if the payments are made to a corporation (or an LLC that has elected to be treated as an S or C corporation) unless the payments are made to attorneys. Visit "IRS Issues New 1099 Forms for 2020" for a full discussion of the changes related to the Form 1099-NEC and Form 1099-MISC. There are certain exceptions to the general rule and one of those exceptions is especially important to the transportation industry – Section 1.6041-3 (c) of the Income Tax Regulations exempt freight payments from 1099 information reporting. This exception applies to reporting of payments for truck, rail, ship and air freight services.The most common follow-up question that we receive asks how the Form W-9 should be completed since no Form 1099 reporting is required. The instructions to the Form W-9 do not address this situation. The exemptions that can be listed on the form apply solely to backup withholding and FATCA (Foreign Account Tax Compliance Act) reporting. One option would be to complete the Form W-9 as usual, but to add the following statement to the top of the form: “Exempt from Form 1099 Information Reporting by Reg. 1.6041-3 (c).”If you have questions on this or any other tax matters please contact us. ### Tax Implications of Cryptocurrency Transactions The cryptocurrency, “crypto” hereafter, market has been a roller coaster for most of 2020, with Bitcoin leading the way.While the markets crashed in a similar fashion as the stock market in March due to the COVID-19 pandemic, they’ve come roaring back toward the end of 2020. Bitcoin even hit an all-time high in early January of over $40,000 per Bitcoin. In 2019, the IRS added a question to Schedule 1 asking, “Did you receive, sell, send, or exchange, or otherwise acquire any financial interest in any virtual currency?” The IRS has now moved this question to Page 1 of Form 1040 on the 2020 tax return in effort to make it more visible, as it continues to target crypto.While crypto is starting to become more widely used, it’s important to understand the various tax implications. In Notice 2014-21, the IRS has declared that crypto will be treated as property. Being treated as property means it’s treated similarly to stocks. This means that upon selling crypto for cash, trading for another crypto, or spending it on goods or services, a capital gain or loss will be realized. These are the most common taxable transactions and will be reported on Form 8949 and Schedule D. Information including the date acquired, date sold or traded, gross proceeds (fair market value), cost basis, and gain or loss will be reported. If crypto is held for a year or more, it qualifies for long-term capital gain treatment. This is important because under current tax law, beneficial tax rates are offered on long-term capital gains with a maximum tax rate of 20% compared to the highest tax rate on ordinary income of 37%. Taxpayers may want to consider that only $3,000 of net capital losses can be taken each year, while any amount exceeding $3,000 will be suspended and utilized in future years. With all that being said, one of the keys for tax reporting is being able to identify the cost basis of each transaction. There are a few different scenarios of how the cost basis is determined. The most common scenario being that the cost basis is the amount initially paid for the crypto when purchased from an exchange. Another scenario would be if you were to receive crypto in exchange for performing services or you received it from an Airdrop. In this scenario, the fair market value (in USD) of the crypto received would need to be included as ordinary income in the year received. This amount then becomes the cost basis when it is eventually sold, and a gain or loss will be realized. It is recommended that the first-in, first-out (FIFO) method of accounting be used in reporting disposals of crypto.  The unfortunate part about crypto compared to stocks is that you will not receive accurate year-end tax reports, like 1099s for example. Exchanges can send year-end reports, but since crypto can be transferred to other exchanges or wallets, which is a nontaxable event, the exchanges are unable to provide accurate information detailing the original cost basis. This becomes a big problem and ultimately means that record-keeping is absolutely essential and becomes the responsibility of the taxpayer. While taxpayers in most cases can track this information down on whichever exchange they prefer to use, it can be a strenuous process especially for high-volume traders.A potential tax planning opportunity or crypto “loophole” that everyone should be aware of is related to wash sales. A wash sale is when a security is sold at a loss, but then the same security or “substantially identical security” is purchased within 30 days of the sale. If this were to happen with a stock, taxpayers can’t use a capital loss from this transaction. However, with crypto being treated as property, and not considered a security, it is not subject to wash sale rules. This can be extremely valuable for tax purposes in times when your positions have gone down in value. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the tax implications of crypto currency transactions in further detail.  ### IFRS Conversion Considerations: General Organizations with a global presence have increasingly considered converting to the International Financial Reporting Standards (IFRS). Entities currently under U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that IFRS and U.S. GAAP have more similarities than differences and are grounded in the same basic principles. IFRS is generally viewed as policies that apply in a more general principles-based approach, while U.S. GAAP applies a more rules-based approach. This article is the first in a series covering considerations for conversion from U.S. GAAP to IFRS. IFRS has grown to become a standard across the globe and is currently accepted in 144 countries. Reporting under IFRS is also permitted to any foreign registrant that files with the U.S. Securities and Exchange Commission.  Organizations should first consider the needs of the end users of the financial statements. This could include management, ownership group, potential business partners, prospective buyers and banking relationships. Organizations should consider if IFRS could provide better access to financing. Also, entities should consider the impact to their current and future financial covenants. Discussions with current and potential lending providers should occur early in the process to get their input. In addition, it is important to perform pro-forma covenant calculations to determine the impact and consider if the current covenant thresholds are appropriate.Organizational structure is also important to consider. Is the organization currently operating in multiple countries with their own separate local GAAP accounting rules and regulations? Many countries will accept IFRS financials and accounting method. Converting to one single standard could result in significant time savings, as it eliminates entries to bring the local financials into the consolidated standard while providing the organization with conformity in its accounting policies. It is important to note, however, that all consolidated entities under IFRS must follow uniform accounting policy elections and methodology. It is also vital to gain by-in from every accounting team within the global organization to ensure a smooth transition to IFRS.The information technology team should also be consulted early in the process. An assessment should be performed to determine if the current infrastructure is capable of the conversion or if additional investments are needed.Schneider Downs provides assurance and advisory services for international entities and organizations following IFRS. For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### 2021 Consolidated Appropriations Act Increases Relief for Higher Education The Consolidated Appropriations Act of 2021 (Act), signed by President Trump on December 27, 2020, provides a new COVID-19 relief package including over $22 billion for the Higher Education Emergency Relief Fund (HEERF).Of this emergency funding, 89% is to be provided for public and private non-profit institutions. Allocations of 7.5% are provided for historically black colleges and universities, as well as minority-serving institutions. 3% of the funds are to be allocated to for-profit institutions and the last 0.5% of funds are reserved for institutions determined to have the most unmet needs stemming from the COVID-19 pandemic.Both non-profit and for-profit institutions will receive their funds based on the following criteria, which is similar to the allocation method set by the CARES Act: 37.5% based on full time equivalent enrollment students and 37.5% based on total students, each who receive Pell Grants and who were not exclusively enrolled in distance learning prior to COVID-19.  11.5% based on full time equivalent enrollment students and 11.5% based on total students, each who do not receive Pell Grants and who were not exclusively enrolled in distance learning prior to COVID-19.  1% based on full time equivalent enrollment students and 1% based on total students, each who receive Pell Grants and who were exclusively enrolled in distance learning prior to COVID-19.  As for the use of the funding, institutions of higher education are again required to provide a portion of the funding to students. The student portion will need to be in the same amount (not percentage) as required to be provided by the CARES Act for emergency financial aid. Institutions may spend their portion on the following: To help defray the costs incurred due to COVID-19, such as lost revenue, technology used to transition to distance education, faculty trainings and payroll. Student support activities authorized by the Higher Education Act of 1965 (HEA) that address needs related to COVID-19. Grants to students for student’s cost of attendance or other emergency expenses incurred related to COVID-19 such as tuition, food, housing, health care or childcare. The act also specifies how relief may not be spent. This includes contractors for pre-enrollment recruitment, marketing or recruitment, endowments, capital outlays related to athletic facilities, sectarian instructions, religious worship, executive and senior administrator salaries or bonuses and similar executive benefits.As was the first round of HEERF funding, the relief funds will be available through the U.S. Department of Education (USDE.)  The announcement of specific allocations to schools has been posted to the USDE website and can be found here:  https://www2.ed.gov/about/offices/list/ope/314a1allocationtableheerfii.pdfOne caveat of the Act’s funding is a 50% reduction of funding allocations to institutions of higher education who paid excise tax on their endowment during 2019, under IRC section 4968. Additional restrictions on expenditures of the relief funds also applies to these institutions. If you have any questions regarding the impact of The Consolidated Appropriations Act of 2021 on your institution, please reach out to our not-for-profit and higher education experts.   ### 1099-NEC Form 2020 Requirements Starting in tax year 2020, the IRS is bringing back a form that hasn’t been used since 1982 – Form 1099-NEC. This form will be used to report non-employee compensation. An image of what this form will look like is shown below. From 1983 to 2019 non-employee compensation was included on Form 1099-MISC in box 7. However, it will now be reported in box 1 on Form 1099-NEC. Employers are required to file this form for any non-employee compensation paid to independent contractors of $600 or more and for non-employees who have provided services to the company. The amount reported should include payments for services and payments for parts or materials used to perform the services. A 1099-NEC can go to an individual, partnership, estate, or corporation. Some examples of independent contractors who might receive a 1099-NEC are attorneys, architects, and IT consultants amongst others. One of the main reasons the IRS decided to bring back the 1099-NEC is because of the due date for non-employee compensation compared to all other payments. During the 2017 tax year, the IRS changed the filing deadlines for non-employee compensation to January 31, while all other payments were still due on February 28. By now creating a separate form, they are hoping to alleviate any confusion and complexities for employers. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the filing of Form 1099-NEC. ### The Benefits of Incurring a Net Operating Loss in 2020 As companies close out their books for 2020 and see just how large of an impact the COVID-19 global pandemic had on their businesses, it is important to keep in mind that there can be significant tax benefits associated with net operating losses (“NOLs”).  While the Tax Cuts and Jobs Act of 2017 (“TCJA”) made noteworthy changes to the tax treatment of NOLs that were not taxpayer favorable, the CARES Act of 2020 came to the rescue and not only reversed these changes temporarily, but also expanded on the time period taxpayers can utilize for an NOL carryback.  These changes impacted losses incurred in 2018 and 2019, but the scope of this article focuses on losses incurred in 2020. Under the CARES Act, an NOL generated in 2020 can either be carried back five years (with any excess utilized in subsequent years of the carryback period and any remaining excess used in future tax years) or the taxpayer can elect out of this carryback period and instead carry forward the loss to offset future taxable income.  Taxpayers should analyze whether it is more beneficial to carryback an NOL or carry it forward taking into consideration the following: The effective tax rate on income that will be offset by the loss.  Carrying back the loss 5 years allows many taxpayers the ability to offset income at pre-TCJA rates that were higher than current rates. The value of a near term cash infusion from an NOL carryback refund weighed against the future value of tax savings if the loss were carried forward. Current tax laws will only allow a 2020 loss that is carried forward to 2021 and future years to offset 80% of taxable income whereas a 2020 loss that is carried back can offset 100% of income. If a taxpayer carries back their NOL, they can either file a tentative refund claim or file amended returns for all carryback years.  Typically filing a tentative refund claim results in a faster refund because the IRS is required to process the application and either allow or deny it within 90 days.  Whereas, amended returns do not have a 90-day requirement and the IRS is currently experiencing a large backlog of amended returns to process.  To file a tentative refund claim, a corporate taxpayer uses Form 1139 Corporation Application for Tentative Refund and noncorporate taxpayers file Form 1045 Application for Tentative Refund.  These tentative refund claims must be filed after the taxpayer files its return for the tax year that generated the NOL and within 12 months of the end of the tax year that generated the NOL.  For calendar year taxpayers with NOLs incurred in 2020, these refund claims must be filed by December 31, 2021.  The IRS released a temporary procedure that allows taxpayers to fax in Forms 1139 and 1045 that will help to expedite processing. Taxpayers may also be able to receive state tax refunds from carrying back an NOL.  It is important to understand the specific rules relative to NOL carrybacks for each applicable state including the state’s conformity with the CARES Act, the impact of state adjustments such as bonus depreciation and state specific deadlines for claiming refunds.  Our team of Tax Advisors at Schneider Downs has extensive experience with NOL, so please do not hesitate to contact us with any questions. ### State and Local Tax Update for Q4 of 2020 Below is a link to Schneider Down’s Latest State and Local Tax Developments. The state and local tax practice at Schneider Downs has summarized the latest state tax developments for the quarter ended December 31, 2020. This summary includes both enacted state tax legislative developments, judicial developments and administrative guidance. Please take note that this summary is not an all-encompassing list of all the changes in tax law.The following are some highlights from states in our region:PennsylvaniaThe Pa legislature enacted SB 30, establishing the PA housing tax credit which will be administered using the same guidelines, procedures and priorities that the PA Housing Finance Agency uses to administer the federal housing credit under IRC Sec. 42.City of PhiladelphiaPhiladelphia extended its waiver on teleworkers creating nexus when working from home within city limits. Through its website, the city extended its waiver “until the earlier of June 30, 2021, or 90 days after the Proclamation of Disaster Emergency in Pennsylvania is lifted.”District of ColumbiaBeginning for tax years after December 31, 2017, corporations, unincorporated businesses, and financial institutions will now be allowed only an 80% deduction for their D.C. net operating loss carryovers. This measure was taken in order to balance their budget in reaction to the Covid-19 pandemic. The law additionally excludes loans under the federal Paycheck Protection Program and the subsequent forgiveness under 1106 of the CARES act from D.C. gross income.ConnecticutHouse Bill 7006 was enacted to provide an exception for “disaster-related or emergency-related work” for out-of-state individuals and out-of-state businesses. If the business or the individual meets the definition under the statute, the taxpayer will not be subject to any Connecticut tax on income from performing disaster-related or emergency-related work during the disaster period.The state and local tax practice at Schneider Downs will continue to provide these updates on a quarterly basis. Any questions regarding the content of this update please contact Matthew Dodge or Justin Premich of the state and local tax team.Our State and Local Tax team of professionals is available to help you.  Please don’t hesitate to reach out to them, or to your Schneider Downs tax advisor for additional information regarding SALT issues needing to be addressed. ### Many Flavors of Life Insurance: Which is Right for You? When working with individuals and families, we strive to prepare a comprehensive financial plan that serves as a long-term roadmap to financial success.An aspect of this overall planning process includes reviewing life insurance needs and options. For most individuals, life insurance is typically a key aspect of one’s overall plan to provide peace of mind that loved ones will be financially secure should something unexpected happen to you. However, starting the life insurance conversation is difficult for most. As it forces one to think about their own mortality and what things would look like if they were not around. But by not having the proactive life insurance conversation, many individuals become under insured or not insured at all, potentially leaving loved ones in an unstable long-term financial position.In this article, we’ll highlight typical life insurance policy options and how to evaluate how much insurance you may want to consider. Life Insurance Basics - term and permanent life insuranceTerm life insurance is the simplest form of life insurance and typically the cheapest. Term insurance protects you for a pre-defined period of time and has a fixed annual premium. According to Quotacy, a $1M, 30-year term policy for a 30 to 40 year old male or female have annual premiums in the range of $400-700 per year. The concept behind term insurance is over this 30-year period, you continue to expand your earnings potential and accumulate savings (i.e. 401k, IRAs, brokerage assets). Such that should something unfortunate happen to you after this 30-year period, your need for life insurance is much lower because you’ve accumulated assets that could provide financial security for loved ones. For most individuals, term insurance is the most cost-effective option to address their life insurance needs.Where term insurance provides life insurance coverage for a certain length of time, permanent insurance offers life-long coverage. Permanent insurance, in the form of whole or universal life, typically has a cash value component that may grow over time as you make annual premium payments. Relative to term insurance, permanent life insurance policies will have a higher associated premium. Permanent life insurance policies could make sense for people that have a significant financial obligation that is not time sensitive. Significant financial obligations could be, but are not limited to, alimony obligations, ownership in a business, or future estate tax liability (all beyond the scope of this article). In these instances, a permanent life insurance policy may make sense as it provides coverage throughout an individual’s life assuming the policy is properly funded.       How much insurance do I need?The second component to any life insurance decision beyond policy type is how much life insurance coverage you might need.While there are industry rules of thumb regarding life insurance coverage, such as 6-10x annual salary (i.e. annual salary of $100K so $600K - $1M of life insurance coverage), in practice, the amount of life insurance coverage that you need is a very personal conversation and decision. Ultimately, one is trying to answer the question: should something happen well before normal life expectancy, what would you like to provide to your heirs? Some examples for a young family might be: to ensure that your spouse will be financially secure enough to pay off the home mortgage, finance college for children without incurring debt, and fund future weddings, etc. Clearly articulating and communicating from a financial perspective the state that you would like to leave your spouse in is key to concluding the appropriate amount of life insurance for an individual now and into the future. While life insurance can initially feel a bit morbid and perhaps daunting, recognizing its purposes within your overall financial plan should help simplify the initial conversation, clarify your goals for the policy, and allow you to make a sound financial decision.At Schneider Downs Wealth Management Advisors, we would be happy to help you review the type and amount of coverage that might be best suited for you. Please contact your trusted Schneider Downs Wealth Management Advisor for more information.This article does not constitute insurance advice, nor does SDWMA sell any type of insurance policies. We are also not affiliated with insurance companies. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Timely Tax Opportunities: Eight Immediate Considerations from the Consolidated Appropriations Act According to the Senate Historical Office, the Consolidated Appropriations Act (CAA), at 5,593 pages, is the largest bill in terms of text ever passed by Congress. It was signed into law December 27, 2020 after being approved by both houses of Congress on December 21. The bill combines a $1.4 trillion spending package with $900 billion in COVID-19 stimulus relief and aid. Contained in this omnibus package are more than 70 tax-related provisions, including many extensions of existing law, but also several new provisions. We’ve prepared a summary of the tax provisions contained in the bill, but there are a few provisions that you may want to take immediate action on to determine if you are optimizing the benefits available to you.  1. Determine if you qualify for the enhanced Employee Retention Credit (ERC).The ERC’s new expansive provisions provide qualifying employers with the opportunity to claim up to a total of $19,000 (depending upon specific facts and circumstances) in refundable credits per employee during 2020 and 2021. This credit now applies to taxpayers previously shut out of the ERC program by participating in the Payroll Protection Program (PPP). Our analysis is showing that with the enhanced provisions, more taxpayers are qualifying for significant credits.      For more information on the ERC, check out our video discussing the opportunity and benefits: https://vimeo.com/497989407/50ddac206e2. Optimize the deductibility of expenses paid for with PPP loan proceeds.  For taxpayers qualifying for loan forgiveness, which should be many to most taxpayers, make sure you coordinate the types of deductions claimed for forgiveness with similar expenses allowed for other tax benefits, such as the employee retention credit, research and development credit and work opportunity credit. Since some of these expenses may qualify for use in more than one calculation, you’ll want to be diligent in identifying expenses to optimize your benefits, as expenses generally cannot be used more than one time in any of the calculations.  This may also be an opportunity for you to consider (or reconsider) whether changes to your operations can generate popular credits, such as the research and development credit, that were not claimed in the past.3. Determine if by “going green,” you can save some green.Section 179D, now made permanent as part of the CAA, provides immediate tax benefits in the form of deductions for the installation of energy-efficient interior lighting, HVAC and building envelope systems. It’s available to building owners and lessees that make energy-efficient improvements to their commercial buildings located in the United States. By reviewing your plans for 2020 and 2021, you may be able to reduce estimated tax payment obligations in the short-term.   More information on this deduction can be found here: /our-thoughts-on/179d-energy-efficient-commercial-building4. Residential real estate owners may be able to improve business interest limitation.The CAA retroactively changed depreciation rules for residential real estate to now allow for a 30-year alternative depreciation system (ADS) recovery period for all residential rental real estate, including property placed in service before 2018.For taxpayers desiring real property trade or business treatment enabling them to deduct 100% of business interest, an election was necessary, and they were required to use depreciable lives over 40 years (rather than over 30 years). Depending upon facts and circumstances, taxpayers may have decided that the depreciation deductions over a shorter life were more valuable than being able to claim 100% of interest expense incurred.   Taxpayers may be able to amend prior-year returns; however, additional guidance from the government is likely needed to allow for late elections.  With the change in law, it is critical that taxpayers review their current and prior elections and analyze their options to choose the best course of action.5. Determine if you qualify for the General Business Employee Retention Credit Related to Other Types of Natural Disasters.In addition to the COVID-19 pandemic, 2020 seemed to be quite the year for natural disasters, including hurricanes, tropical storms, tornados, wildfires, straight-line winds and severe thunderstorms. If your business or organization is located in a qualified disaster zone and incurred a shutdown, it may qualify for the 2020 qualified disaster employee retention credit up to $2,400 per eligible employee. (NOTE: this is a separate credit apart from the credit discussed in item 1. above.) More information regarding declared disasters is provided by the Federal Emergency Management Agency:  https://www.fema.gov/disasters6. Modify accounting procedures to separately track restaurant business meals in 2021 and 2022. The ACA provides a short-term opportunity to deduct 100% of business meals paid or incurred in a restaurant during 2021 and 2022. This is a change from the long-standing limitation of 50% for such business meals. Consider reviewing your expense tracking systems to ensure you can separately capture these expenses when material.  7. Charitable contribution limitation increase to 100% of AGI provides opportunity to give more.For individuals who itemize their deductions and have the resources and desire to contribute to charitable organizations they support, for 2021 (in addition to 2020) an individual may deduct any qualified cash contribution so long as the contribution does not exceed 100% of the individual’s adjusted gross income. Qualified cash contributions are those paid during 2021 in response to the COVID-19 (coronavirus) crisis, but there is no requirement that they must have been specifically made for relief efforts.  8. Individuals suffering from a natural disaster may find additional tax relief.As noted in item 5. above, there were many types of disasters that occurred in 2020. The CAA permits individuals who suffer a qualified disaster-related loss (other than the COVID-19 disaster) during 2020 to increase their standard deduction amount by the amount of the net disaster loss. In the past, the loss needed to exceed 10% of adjusted gross income, preventing many taxpayers from being eligible. Review locations of second homes to determine if you qualify and begin gathering information necessary to document your loss.  Our team of professionals are available to help you optimize the above tax benefits, and others, provided by Congress. Please don’t hesitate to reach out to your Schneider Downs professional or contact us at contactsd@schneiderdowns.com for additional information.   ### Malwarebytes Hack – Dark Halo Strikes Again Malwarebytes is the fourth cybersecurity vendor hacked by the “Dark Halo” hacker group, the same group behind the attacks on SolarWinds, FireEye and Crowdstrike.What makes these attacks so interesting is how the group uses different attack strategies for each company they target. The attack on Malwarebytes is a completely different attack, not related to the supply-chain based attack on SolarWinds which caused quite a stir last year. Similar to SolarWinds, Malwarebytes reported their products were not impacted by the hack following a complete investigation into their production environments. The SolarWinds hack proved to be devastating as multiple companies and organizations became compromised, including several departments within the U.S. Government. While the scope of this attack is smaller, it remains troubling how security vendors are being specifically targeted by Dark Halo in such a myriad of different ways.A representative from Malwarebytes said “We can confirm the existence of another intrusion vector that works by abusing applications with privileged access to Microsoft Office 365 and Azure environments.”Attackers were able to gain access to internal emails and so far, there has been no evidence of unauthorized access or compromise to the Malwarebytes production environments. The hackers first breached the system by getting past authentication measures employing methods such as password spraying or password guessing in combination with using an Office 365 email protection product which was lying dormant on the system. They then exploited a flaw within Azure to escalate privileges by assigning credentials to certain applications and then, using a self-signed certificate with credentials to a service account, were then able to authenticate, request, and obtain internal emails from within the company.Due to the limited scope of this attack, Malwarebytes was able to bring the situation under control. They recommend securing any and all Azure tenants for any company using Azure to avoid a similar attack in the future, although this could be difficult to implement due to the fact there are many third-party applications that make it challenging to enumerate such tenants.While this coordinated attack specifically targeting security vendors is concerning, it is heartening to see the security community come together and help one another in the wake of these incidents. Malwarebytes reports that there has been a lot of open communication with the other targeted companies which allowed them to share details and develop resolutions much faster. Now more than ever, there is a dire need for people to step up to the plate and harden their defenses.Security vendor companies are just like any other company. There is a need for organizations to begin reviewing their infrastructure, conducting more rigorous penetration tests, and reassessing the third-party risk management applications and services they’ve come to rely on to protect themselves from such savvy attackers. The attacks in the recent days just prove that no matter what company or industry, there will always be a threat of compromise and there must be a concerted effort to minimize this risk in the months to come.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com.If you suspect or are experiencing a network incident, our Incident Response Team is available 24x7x365 at 1-800-993-8937.Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world. ### You, Your Exit Plan and Your Options When it comes time to enjoy your retirement, you may reach a crossroads in deciding what to do with the business you have built. It is important to take the time to reflect on your goals and timeline in exiting your company, as well as each of your possible options when making such a tremendous, albeit personal, decision.  The four main corners of exit planning are (1) merger, (2) inter-company or inter-familial transition, (3) sale and (4) dissolution. Each corner comes with its own set of peaks and pits and should be looked at carefully to decide what is best for the future of your business.In a merger, two or more businesses will consolidate to form a single entity in order to strategically grow, change their business model, or even eliminate competition. In thinking about a merger, first assess the strength of your business, your employees, your management, your finances, any intellectual property and more. Ask yourself: Will this produce investment income when I’m retired? Will this merger allow my employees to continue to succeed? Or Is there someone in my current business prepared to lead instead of merging? If this last question is nagging at you, you may be looking at a transition, instead.In a transition, consider whom you trust to leave your business to – is it your CEO? Someone you have taken under your wing? Your child? Focus on how and why you want this transfer to take place. Do you want to transition gradually -- taking the time to train your protégé -- or do you want to remove yourself sooner than later? If sooner, do you have an action plan to allow the business to continue to see growth? Think about why have you chosen your successor – does this person bring new strengths to the table you think the company could benefit from? Additionally, consider the current business dynamics. Take time to think about how your additional employees will perceive this shift in power if you would like to transition to someone already inside the business.Mergers and transitions work well when the owner is working with a long-term plan, and is there to oversee the changes to the business and continue to help it succeed (although this is not always the case). However, if you are looking to exit in a timelier fashion, a sale or dissolution may be more in line with your goals.When thinking about a sale, consider whether you are ready to step away completely. If the answer is yes, begin by getting your financials in order and soliciting a valuation to assess your business’s worth so that you are prepared when taking your company to the negotiation table. Think through whether you have a buyer in mind or whether you need to reach out to a professional service firm to assist you in finding a buyer. Decide on representation that you trust via accountants, attorneys, and corporate finance and other sales professionals. All of these moving parts will set you up to have your best chance of the most lucrative sale. If you feel that your company may not be in the place for a total sale, next, consider a dissolution.If you are ready to close the doors of your business once and for all, a dissolution may be the best exit plan for you. Ask yourself whether you are ready to say goodbye. Begin by reviewing your company’s articles of organization, incorporation, operating agreement or by-law agreements for the terms required when planning a dissolution. Take an inventory of your current creditors and take the time to get your financials in order before completing any necessary paperwork/notifications based on your state requirements. Much like in a sale, it is important to consult with the same team of expert planners. The professionals will help you achieve your goals while managing legal and stressful topics, as there are very specific state-by-state rules in dissolving your business.If you feel that you are ready to exit your business, Schneider Downs has a full complement of professionals suited to meet your needs. We have experience in helping clients in each of these areas and would be happy to help you reach your goals. Reach out to us today to get started! ### A Privilege Tax for Those who Work from Home? As the pandemic rages on, 56% of Americans have hunkered down with a comfortable work from home setup that rivals their office space, all the while saving money on transportation, parking, lunches, work clothes and other associated costs. There’s no doubt that once the pandemic is over, most workplaces will choose to keep the “WFH” perk.Economists at Deutsche Bank, however, have proposed a privilege tax for those who work from home. In their published research report, What We Must Do To Rebuild, they suggest that remote workers’ wages be taxed 5% for each day they choose to stay at home. The report argues that, “A big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life. That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.”If that 5% tax were to be implemented on remote workers in the U.S., the country would receive an additional $48 billion of revenue, which could potentially be used to help rebuild the economy. Worthy of consideration?References:Deutsche Bank’s report (pages 32-34) ### Paycheck Protection Program Second Draw Loans Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On December 21, the Consolidated Appropriations Act was passed by both houses of Congress. See our article for a high-level summary of its provisions, which include a second round of Paycheck Protection Program loans dubbed Paycheck Protection Program Second Draw Loans (PPP2). As a follow-up, on January 19th the U.S. Small Business Administration released guidance surrounding maximum loan amounts, how to calculate revenue reduction, and what documentation to provide in determining eligibility and amounts.  Our previous OTO article,  Update to Paycheck Protection Program Second Draw Loans, provides a summary of this update. Revenue Reduction Under PPP2, eligible borrowers must have experienced a reduction of revenue in excess of 25%. While there isn’t anything new in the description of what constitutes revenue reduction, the guidance clarifies the definition for not-for-profit organizations: “Gross receipts means gross receipts within the meaning of section 6033 of the Internal Revenue Code of 1986, which is the gross amount received by the organization during its annual accounting period from all sources without reduction for any costs or expenses, including, for example, cost of goods or assets sold, cost of operations, or expenses of earning, raising or collecting such amounts” For borrowers that have received forgiveness of their first-round PPP loans, the guidance explicitly states that the forgiveness should not be included in gross receipts, nor should EIDL advances. No guidance was provided on other CARES Act relief received. Borrowers are required to submit any of the following documentation to substantiate the 25% reduction of revenue: Quarterly financial statements for the entity. If the statements are not audited, the applicant must sign and date the first page and initial all other pages, attesting to their accuracy. If the statements do not specifically identify the line item(s) that constitute(s) gross receipts, the applicant must annotate which line item(s) do. Quarterly or monthly bank statements for the entity that indicate deposits from the relevant quarters. The applicant must annotate, if it is not already clear, which deposits listed on the bank statement constitute gross receipts (e.g., payments for purchases of goods and services) and which do not (e.g., capital infusions). Annual IRS income tax filings of the entity (required if using an annual reference period). If the entity has not yet filed a tax return for 2020, the applicant must fill out the return forms, compute the relevant gross receipts value, and sign and date the return, attesting that the values entered into the gross receipts computation are the same values that will be filed on the entity’s tax return. Entities that recognize a fiscal year to file their taxes may document a reduction in gross receipts with income tax returns only if their fiscal year contains all of the second, third and fourth quarters of the calendar year, i.e., they have a fiscal year start date of February 1, March 1 or April 1. The approach is not permissible for others. Maximum Second Draw PPP Loan Amounts The guidance also describes the calculation of the following eligible borrowers based on their entity type: Self-employed with no employees Self-employed with employees Self-employed farmer and rancher Partnerships Corporations (S-Corp, C-Corp and LLC) Not-for-profit organizations, veterans’ organizations and tribal businesses Under the Economic Aid Act, the reference period for payroll costs may be either 2019 or 2020, and borrowers may seek a loan amount that includes employer contributions for employee group health, life, disability, vision and dental insurance. Also, if a borrower is using the same lender and same payroll timeframe it used for its First Draw PPP Loan and already submitted the required documentation to the lender, no additional documentation is required. If a borrower did not use their calendar 2019 payroll costs for their first-round loan, i.e., they used the preceding 12 months from the date of the loan, the lender may not rely on the information submitted and will need to calculate their maximum PPP2 loan based on the 2019 or 2020 reference period. Borrowers seeking loans under the NAICS 72 business activity code that left the code box blank in their most recent income tax return should report the industry code that’s most applicable to their primary business activity. Borrowers may only report a NAICS Code beginning with 72 if they can substantiate with alternative documentation, such as permits or licenses issued by local governments that are unique to this sector. If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### IRS Updates Guidance for Filing Delinquent International Information Return Recently, The IRS updated the instructions for the “Delinquent International Information Return Submission Procedure” (DIIRSP).The DIIRSP was announced in 2014 and designed to provide taxpayers with delinquent international information returns, such as Forms 5471, 5472, 3520 and 3520A, an alternative zero-penalty voluntary disclosure process available to qualifying taxpayers. Prior to the revisions, taxpayers who were submitting delinquent international information returns under DIIRSP were required to attach a statement of all facts establishing reasonable cause for failing to file and to certify that foreign entities were not engaged in tax evasion. Generally, the IRS did not impose penalties in these situations.Under the updated procedure, taxpayers now must present delinquent international information returns through normal filing procedures, and a reasonable cause statement may be attached (in the past, the statement was required). According to the IRS, during processing of the delinquent information return, penalties may be assessed without considering the reasonable cause statement, and it may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.Until more guidance is provided by the IRS, it is unclear if penalties will be automatically assessed under DIIRSP and if reasonable cause statements will face more scrutiny.The procedure for filling delinquent reports of Foreign Bank and Financial Accounts (FBAR) remains unchanged.For more information about this topic, please contact your Schneider Downs international tax advisor. ### Introducing The Economic Aid Act FAQ Video Series The passage of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (EAA) has resulted in a number of significant changes to the Paycheck Protection Program (PPP). These new changes offer expanded tax credits, forgivable and low interest loans, and grant money to help businesses through the pandemic. Because these changes impact so many different areas, our Business Advisors group is introducing a number of short videos answering some of the most commonly asked questions we have received regarding PPP updates in our new video series "The Economic Aid Act – What You Should Know". Steve Thimons, Director with Schneider Downs, kicks off the FAQ series with an introductory video discussing what the Economic Aid Act is. Schneider Downs EAA FAQ: What are the Significant Changes That the EAA Made to the Original PPP? from Schneider Downs on Vimeo. Additional videos from the series are linked below for quick access and sharing. EAA FAQ: What is New with EDL? EAA FAQ: How Do I Qualify for an EIDL2 Advance? EAA FAQ: How is PPP2 Different From the Original PPP Loan Program? EAA FAQ: What are the Significant Changes that the EAA Made to the Original PPP? EAA FAQ: What Documentation Will I Need to Submit with My PPP2 Loan Application? EAA FAQ: Who is Eligible for Another Round of PPP Loans? EAA FAQ: What is the Shuttered Venue Operators (SVO) SBA Grant Program? Part 1 - Eligible Entities EAA FAQ: What is the Shuttered Venue Operators (SVO) SBA Grant Program? Part 2 - Non-eligible Entities EAA FAQ: What is the Shuttered Venue Operators (SVO) SBA Grant Program? Part 3 - Grant Disbursements & Award Amounts EAA FAQ: What is the Shuttered Venue Operators (SVO) SBA Grant Program? Part 4 - What Type of Documentation is Needed to Maintain Compliance with the Program? In addition to the video series, our team continues to provide the latest thought leadership and insights on legislative changes, market conditions, and business considerations brought on by the COVID-19 pandemic at our COVID-19 Resource Center. Related Articles Be Aware of Interplay Between the ERC, PPP and Other Payroll-Related Incentives Consolidated Appropriations Act – 501(c)(6) Organizations Qualify for PPP Funding Meal and Beverage Expenses Fully Deductible for the Next Two Years Update to Paycheck Protection Program Second Draw Loans Interim Final Rule – PPP as Amended by the Economic Aid Act What Is in the Second Round of Stimulus for Nonprofits? Round Two of Economic Injury Disaster Loan Advances Revisions to the Paycheck Protection Program Want to be in the know? Subscribe to the “Our Thoughts On” weekly newsletter for the most recent articles from Schneider Downs. About Schneider Downs Business Advisors Schneider Downs Business Advisors leverages our experience and industry expertise to maximize value and minimize risk during acquisitions, litigation, arbitration, corporate reorganization and other major business transactions and transitions. Have specific questions about the PPP or other CARES Act programs? Learn more about our PPP team at www.schneiderdowns.com/ppp or contact us today.   ### Additional Funds Available for Colleges and Universities On December 27, 2020, President Donald Trump signed the Coronavirus Response and Relief Supplemental Appropriations Act (“Appropriations Act”), within which the Department of Education (ED) provided an additional $21.2 billion to institutions of higher education (IHEs) to serve students and ensure education continues through the COVID-19 pandemic.The Higher Education Emergency Relief Fund II, or HEERF II, presents similar requirements to the first-round Higher Education Emergency Relief Fund (HEERF I), permitting IHEs to use their awards for financial aid grants to students, student support activities and certain institutional costs. As with HEERF I, IHEs have one calendar year from the award date to expend the funds. They must also provide the same amount in financial aid grants to students under HEERF II that was disbursed or required under HEERF I. Grants can be used for the student’s cost of attendance or for emergency costs caused by the coronavirus, including tuition, food, housing, healthcare and child care. The money may be used to cover costs incurred on or after December 27, 2020.Differing from its predecessor, HEERF II requires IHEs to prioritize students with exceptional need (e.g., those who receive Pell Grants) and authorize grants to students who are exclusively enrolled in distance education. Additionally, the institutional piece of the funds under HEERF II may be used for expenses associated with the COVID-19 pandemic but can now include lost revenue. The ED has not yet provided guidance or examples of the lost revenue concept, so expect additional information to be forthcoming.A fact sheet comparing HEERF I and HEERF II, issued by the ED, can be found here.The Appropriations Act also made changes to the Employee Retention Credit (ERC) by removing Paycheck Protection Program disqualifications, extending the credit through June 30, 2021, and changing eligibility criteria for 2021, all modifications that could offer significant opportunity for IHEs. More information related to the ERC can be found here.If your organization needs help reviewing and discussing treatment of the HEERF I, HEERF II or ERC, or navigating the Appropriations Act, please reach out to a member of Schneider Downs Higher Education Industry Group. ### What is the Shuttered Venue Operators (SVO) SBA Grant Program? Live entertainment venues have been hit hard during the pandemic, with many theaters and performance halls completely closed since last March. As part of the Consolidated Appropriations Act, the Small Business Administration (SBA) has been authorized to issue $15 billion in grants to support struggling venues. Eligible applicants may qualify for Shuttered Venue Operators (SVO) grants equal to 45% of their gross earned revenue in 2019, with the maximum amount available for a single grant of $10 million. Applications will be administered through the SBA.  Details of when they will be accepted are still in development Eligible entities for the program include: Live venue operators Promoters Theatrical producers Performing arts groups Movie theaters Talent representatives Nonprofit museums, botanical gardens, historic homes and zoos that meet specific requirements To be eligible for the program, the entity must have been fully operational on February 29, 2020, and its gross earned revenue during a calendar quarter in 2020 must have decreased by at least 25 percent from the same quarter in 2019. Upon receiving the grant, the entity has to intend to resume its respective operations if it has not done so already. Entities not eligible for the program include: Issuers of securities listed on a national securities exchange, or those owned or controlled by an issuer of securities listed on a national securities exchange Those that received more than 10% of its gross revenue from federal funding in 2019 (certain exclusions apply) OR Those with more than two of the following characteristics: Owns or operates businesses in more than one country Owns or operates venues or businesses in more than 10 states Employed more than 500 FTEs as of February 29, 2020 Has received a PPP loan (round 1 or round 2) on or after December 27, 2020   Grant disbursements will be prioritized During the first 14 days of the program, eligible entities with a year-over-year revenue decrease of 90% or more from April through December 2020 versus 2019 will have first priority. During the next 14 days, eligible entities with a year-over-year revenue decline of 70% from April through December 2020 versus 2019 will have second priority. Keep in mind that “revenue” for year-over-year comparisons exclude amounts received under the CARES Act (e.g., PPP loans), and first and second priority grants cannot exceed $12 billion, or 80% of total funding. After the initial 28-day period, eligible entities with year-over-year revenue losses between 25% and 70% may be awarded a grant. SBA affiliate rules do apply; the number of grants for a group is limited to five entities. Also, $2 billion has been set aside for entities with less than 50 FTEs. Grant award amounts Grants initially issued by the SBA will be the lesser of 45% of an entity’s gross earned revenue in 2019, or $10 million if it was in operation as of January 1, 2019. If the entity was not in operation until after January 1, 2019, the grant would be the lesser of $10 million or the amount equal to the average monthly gross earned revenue for each full month the grantee was in operation during 2019, multiplied by six. Museum operators are limited to $10 million across all museums operated by the operator. In addition to initial grants, supplemental grants may be awarded. A supplemental grant is available to an entity that received an initial grant and if, by April 1, 2021, its revenues for the most recent calendar quarter are not more than 30 percent of its revenues for the same quarter in 2019 due to the pandemic. The amount for the supplemental grants will equal 50 percent of the initial grant received, and the overall maximum for the total amount awarded, including the initial and supplemental grants, will not be more than $10 million. What are allowable uses of SVO Grant funds? Grants may be used for costs incurred during the period March 1 through December 31, 2021 or,  if a supplemental grant is awarded, ending on June 30, 2022. Funds must be used or they must be given back to the SBA. Any non-supplemental grant amounts that are not spent within one year after disbursement must be returned to the SBA or, if a supplemental grant is awarded, 18 months from the date of the initial grant disbursement. Funds may be used for specific expenses, including payroll, rent, utilities and scheduled mortgage payments or debt payments. They could also be used for covered worker protection expenses, payments made to independent contractors, maintenance expenses, administrative costs, state and local taxes and fees, operating leases (as of February 15, 2020), insurance policies, and advertising, production transportation and capital expenditures relating to producing a live performance or exhibition (this may not the be primary use of funds). Funds are prohibited to be used for certain expenses, such as the purchase of real estate, payments of interest or principal on loans originated after February 15, 2020, investments or relending funds, contributions to or on behalf of any political party, party committee or candidate for elective office, or any other use as prohibited by the SBA. What type of documentation will I need to maintain compliance with the program? Applicants must make a “good faith certification” that all information to apply is accurate. To demonstrate compliance, the recipient must retain employment records for a four-year period, and all other records for a three-year period after the distribution of funds. The SBA is committed to auditing usage of the funds, but guidelines have yet to be published. There are many other important details to this legislation. We encourage you to view our videos on this subject or reach out to us at ContactSD@schneiderdowns.com if you’d like to start a conversation.   ### Treasury Releases Proposed and Final Foreign Tax Credit Regulations The Foreign Tax Credit (FTC) is one U.S. taxpayers can claim on foreign source income to minimize double taxation. There are different types of credit (direct and indirect) and different “baskets,” including Sec. 951A (GILTI) category, passive and general.The Tax Cuts and Jobs Act (TCJA) of 2017 enacted significant changes with respect to FTC rules, which have been addressed in several proposed and final regulations. The latest were released in late 2020. Foreign Tax Credit Highlights: New guidelines on allocation and apportionment of expenses under §861 through §865, including research and experimentation expenditures Updates regarding accounting for foreign tax redeterminations, availability of foreign taxes under the transition tax, and application of the FTC limitation to consolidated groups New transition rules to account for the CARES Act's amendment of NOL carryback provisions Revision of the timing rules for claiming an FTC and revising the definition of a “foreign income tax,” including adding a jurisdictional nexus requirement and amending the net gain requirement Significant impact on the future FTC landscape. For example, for digital service tax to be creditable in the U.S., the IRS has determined that the foreign tax law must require a sufficient nexus between the foreign country and the taxpayer’s activities. To achieve this result, the proposed regulations impose a “jurisdictional nexus requirement” Along with other international provisions included in the TCJA, the new FTC rules will affect many U.S. taxpayers, including multinational companies, and will increase the tax compliance burden. Contact your Schneider Downs professional for guidance on how these rules may impact you. ### Interim Final Rule – Consolidating Prior Rules and Changes from the Economic Aid Act Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On December 21, the Consolidated Appropriations Act of 2021 (the Act), which included the Economic Aid to Hard-Hit Businesses, Nonprofits and Venues Act (the Economic Aid Act), was passed by both houses of Congress. As a follow up, on January 19 the Small Business Administration (SBA) issued an Interim Final Rule (IFR) that implements and consolidates changes related to the forgiveness and review of loans under the Paycheck Protection Program (PPP) and incorporates changes made by the Economic Aid Act. The IFR provides borrowers and lenders guidance on requirements governing forgiveness of PPP loans and informs borrowers of SBA’s process for reviewing loan applications and loan forgiveness applications. It incorporates and restates prior IFRs relating to loan forgiveness and loan reviews, and is divided in the following sections: Amounts eligible for forgiveness Loan forgiveness process Payroll costs eligible for loan forgiveness Nonpayroll costs eligible for loan forgiveness Reductions to loan forgiveness amount Documentation requirements PPP SBA loan review procedures and related borrower and lender responsibilities For a summary of these updates to PPP loan eligibility, loan forgiveness, eligible costs and limitations on forgiveness, please see our OTO article at: /our-thoughts-on/update-ppp-second-draw-loans The actual IFR is located at https://home.treasury.gov/system/files/136/PPP--IFR--Loan-Forgiveness-Requirements-Loan-Review-Procedures-Amended-Economic-Aid-Act-1192021.pdf If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs, or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### 2020 Credit Available for Natural Gas Producers Since tax year 2016, the marginal well credit (MWC) has created opportunities to reduce taxes for natural gas producers holding an operating interest in qualified wells.A marginal well is defined as a domestic well that has marginal production of crude oil or natural gas under percentage depletion rules, which is 15 barrels of oil equivalent per day or 90 mcf or less per day.While the MWC does not limit the number of qualified wells to be utilized to determine the credit, it is subject to the following limitations:  Taxpayers must have an operating interest in a marginal well. The credit amount is determined based on the average wellhead price of domestic natural gas for the prior year, namely the reference price. The credit can only be claimed for qualified production on the first 1,095 barrels of oil equivalents (6,570 mcf) for the tax year. Limitations exist for production in a short year. The MWC is part of the general business credit and cannot offset tax liabilities generated by the alternative minimum tax. Any unused credit can be carried back five years and carried forward 20 years.The IRS states in Notice 2020-34 dated May 18, 2020 (Internal Revenue Bulletin 2020-21), the same methodology will continue to be utilized to calculate the credit for the tax years after 2018. The IRS typically will release and finalize the reference price and its calculation of the credit months after the end of the applicable tax year (usually after 3/15 and 4/15 filing deadlines).For natural gas producers, based on the methodology outlined by the IRS, the credit could potentially exceed 60 cents for tax year 2020 and could provide a significant tax savings to qualified taxpayers compared to the prior tax years, as outlined below.   Tax Year Credit Allowed 2016 0.14 2017 0.51 2018 0.00 2019 0.08 2020 >.60   Projected As expected, the IRS will not release the MWC until after 4/15, so it may benefit taxpayers to extend their returns to claim it on a timely filed return that doesn’t require amending. It also should be noted the MWC includes oil production under the definition of qualified marginal wells; however, it is subject to a separate limitation (not described within this article). The credit related to oil has been phased out for all tax years the credit has been in existence due to high oil prices (relative to the requirements for the credit).If you think you could benefit from the credit or would like to discuss production and projections available for the credit, please contact a Schneider Downs tax advisor.Source: https://www.irs.gov/forms-pubs/updates-for-form-8904-rev-december-2018-per-notice-2019-37-and-notice-2020-34 ### Mind Your T’s and C’s Parler, the “free speech” social media platform, has filed suit against Amazon after the cloud provider cut off the application from its AWS hosting services as of January 10th, 2021 at 11:59 pm. The social media app, popular with conservatives, has come under scrutiny after the insurrection at the U.S. Capitol. The suit alleges that Amazon’s action to cut Parler off from Amazon Web Services is politically motivated. Amazon has responded to the suit, siting that Parler’s claims have no merit. According to the cloud provider, Parler had been notified of 98 instances of "posts that clearly encourage and incite violence." These violations left Parler in violation of the Terms and Conditions set forth in their contract with Amazon, and therefore warranted the suspension of services in the eyes of Amazon. Politically motivated or not, this case is a reminder to that the relationship between organization’s and their third parties goes both ways. Mutual respect and communication can do wonders to nurture a healthy business relationship. This communication could prevent losing a critical third party and strengthen your business continuity posture when relying on third parties. One industry best practice control that should be considered is the completion of a Business Impact Analysis (BIA), at least annually. A BIA is a systematic process to determine and evaluate the potential effects of an interruption to critical business operations as a result of a disaster, accident or emergency. As a part of this exercise, it is important to identify alternative parties that may be able to replace each third party should a business relationship fracture or services are not elected to continue. Alternative parties may be identified as another third party or an in-house solution via an existing internal business unit. This is a public reminder of the importance of being proactive as Parler initially struggled to bring their application back from the dead and move their infrastructure to another hosting platform.  The “free speech” platform has since found a hosting partner; however, the site will most likely face a few weeks of downtime before its return as the company transitions its infrastructure.  Parler has certainly learned their lesson after being caught off guard, and we would all be remiss not to learn from this case. Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management  Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information. ### Are Energy Companies Eligible for the Employee Retention Credit? President Trump signed The Consolidated Appropriations Act (“the Act”) on December 27, 2020,  which provides nearly $900 billion in additional aid to families, businesses and individuals.  The Act significantly expands the Employee Retention Credit (“ERC”) eligibility in 2020 and the credit dollars available for employers for the first two quarters of 2021. The most significant ERC changes at a glance:  In 2020, under the CARES Act, employers receiving a PPP Loan had been ineligible for the ERC. Under the Consolidated Appropriations Act, those employers can retroactively apply for the ERC, if they meet the new eligibility requirements.   For Q1 and Q2 of 2021, the credit rate increased from 50% to 70% of qualified wages, and the limit on per-employee wages is now $10,000 per quarter, rather than per year. In other words, employers can receive a maximum of $14,000 per employee for the first two quarters of 2021.   For Q1 and Q2 of 2021, employers can now be automatically eligible for the ERC if gross receipts are less than 20% from the corresponding quarter in 2019 (for example, Q1 2021 gross receipts compared to Q1 2019 gross receipts).  There is additional flexibility in quarter comparison, but a specific election is required.   Employers impacted by a government order (full or partial shutdown) are eligible even if they do not meet the gross receipts test.   For Q1 and Q2 2021, the threshold number of employees increased from 100 to 500 when determining how “qualified wages” are to be calculated.  As such, employers with less than 500 employees can include all wages paid and health benefit expenses (up to the thresholds mentioned above) regardless of whether those employees were providing services.   For employers with more than 500 employees, “qualified wages” include only those wages and healthcare benefits paid to employees to NOT provide services.   The Act also provides that group health plan expenses can be considered qualified wages even when no wages are paid to the employee.   Even with the more lenient rules, most energy companies likely won’t be eligible for the ERC during 2020.  However, the changes in 2021 make the credit more attainable.  Increasing the number of employees from 100 to 500 and reducing the decrease in gross receipts (compared to the same quarter in 2019) from 50% to 20% opens the credit to more companies. Looking at key metrics that drive gross receipts, we take a deeper dive into natural gas pricing, rig counts in the Marcellus Basin and well permits in Pennsylvania, comparing current activity to Q1’19:  Pricing - The 12-month average Dominion South Point pricing has decreased from an average of $2.65/MMBTU during Q1’19 to $1.402/MMBTU for Q4’20, representing about a 47% decrease.  Prices would have to increase over $2.12/MMBTU to near the 20% decrease mark. Rig Counts - According to the Baker Hughes rig count report, rig counts in the Marcellus Basin have decreased from an average of 63 rigs during Q1’19 to 30 during the first two weeks of 2021, representing over a 50% decrease in rig counts. Well Permitting - According to the Pennsylvania Department of Environmental Protection website, there were 1,478 unconventional wells permitted during 2019 compared to 920 in 2020. If you believe your company will meet the criteria outlined above and could be eligible for the ERC, reach out to any of your contacts at Schneider Downs or contact Matthew Werner at mwerner@schneiderdowns.com or Ross Alessandro at ralessandro@schneiderdowns.com. ### OMB Releases Holiday Present On December 22, the Office of Management and Budget (OMB) released its long-awaited 2020 Compliance Supplement Addendum (Addendum), intended to be used in conjunction with the 2020 Compliance Supplement to provide additional guidance on COVID-19 expenditures. The Addendum includes guidance on fourteen COVID-19 funded programs and identifies compliance requirements that are subject to audit.There are four changes to that are important to be aware of in the Addendum: There will be an automatic three-month extension for submissions of single audits for those organizations with fiscal year-ends through September 30, 2020 that received COVID-19 funds. The extension is tacked on to the traditional nine-month due date. No formal approval is needed, but the organization will need to document why the single audit was not submitted by the original date. If it thought its COVID-19 program would be subject to single audit, it could document that as the reason it’s submitting with the extension. Note that the extension does not apply to organizations that did not receive COVID funds, and no other extensions are expected to be granted. An additional reporting requirement has been added to the Compliance Supplement relating to the Federal Funding Accountability and Transparency Act (FFATA) that necessitates direct recipients of grants who make first-tier subawards of $25,000 or more to report that data through the FFATA Subaward Reporting System. The auditor must test FFATA for all COVID-19 programs in the Addendum when the reporting compliance requirement is subject to audit. This requirement is phasing in for all major programs testing for single audits of fiscal year-ends after September 30, 2020. Organizations that received donated Personal Protective Equipment (PPE) should include a footnote to the Schedule of Federal Awards (SEFA) to indicate the fair market value of the PPE at the time of receipt. The footnote can be marked “unaudited.” Donated PPE should not be counted for purposes of determining the threshold for a single audit or determining type A/B program threshold for major programs and is not required to be audited as a major program. Also, organizations should also be aware of whether they received donated PPE from a state agency that may have originally come from a federal source and should consider this as part of their disclosure. The Addendum clarifies when Provider Relief Funds (PRF) expenditures and lost revenues should be reported on the SEFA (December 31, 2020). If an organization has a June 30, 2020 year-end, no amounts will be recorded, which might change audit thresholds. If an organization has a December 31, 2020 year-end, the amounts will be included and will continue to report expenditures after this period. This adjustment was made in order to better line up with U.S. Department of Health and Human Services reporting requirements. Finally, for all new and existing programs presented on the SEFA, all COVID-19-related awards are required to be separately identified with the leading “COVID-19” before the name. Organizations will need to override the program title and present a separate line on the Data Collection Form. ### Be Aware of Interplay Between the ERC, PPP and Other Payroll-Related Incentives In March 2020, the CARES Act created the Employee Retention Credit (ERC), which allowed qualifying employers of any size to claim a refundable payroll credit for up to 50 percent of qualifying wages, with a maximum of $10,000 per employee ($5,000 of credit). Later, in December, the Consolidated Appropriations Act (the Bill) significantly expanded ERC’s eligibility to include Paycheck Protection Program (PPP) loan recipients and the actual credit dollars available for employers for the first two quarters of 2021. (For additional details /our-thoughts-on/stimulus-package-enhances-employee-retention-credit.)While the Bill has created additional opportunity for taxpayers to receive much needed financial assistance, without careful planning and consideration, taking advantage of one program may limit or even eliminate your ability to benefit from others. Here are some things to consider: While the Bill enables PPP loan recipients to retroactively claim the ERC for 2020, how a taxpayer completes the loan forgiveness application may limit or even eliminate the opportunity to do so. Certain payroll expenses may be eligible for more than one program (e.g., the PPP, ERC, the R&D Tax Credit, WOTC, etc.), but they may only be claimed toward one program. As such, thoughtful consideration should be given to which programs result in the greatest benefit to your organization and whether other nonpayroll expenses could be included, for example, as part of the PPP loan forgiveness application. If your organization has obtained a PPP Loan and has not yet filed an application for loan forgiveness, it may be prudent to pause and assess the interplay between the various programs before submitting your application. Due to the obvious allure of a forgivable loan with the PPP, many businesses disregarded the ERC because they could derive more benefit from the PPP. Now, with the ERC back in play even for PPP borrowers, it’s necessary for every borrower to quickly determine if they’re eligible for the ERC and, if so, to determine the interplay with PPP loan forgiveness and other credit and incentive programs.Our skilled professionals stand ready to help your organization carefully consider the best way to maximize the benefits you receive from the PPP, ERC and other payroll-related credits and incentives. For additional information or assistance with the ERC, reach out to any of your contacts at Schneider Downs or contact Matthew Werner at mwerner@schneiderdowns.com or Ross Alessandro at ralessandro@schneiderdowns.com.If you have questions regarding PPP matters, contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Learn How Employer-Provided Autos Can Benefit From IRS Notice 2021-7 Do you provide company-owned vehicles to your employees? Are you and/or your employees using the automobile lease valuation rule? As a result of the COVID-19 pandemic, the IRS released Notice 2021-7, which grants temporary relief to those who use the automobile lease valuation rule. If certain requirements are met, employers may use the vehicle cents-per-mile valuation rule instead, effective as of March 13, 2020. Employers may choose to return to the automobile lease valuation rule for 2021 or continue to use the vehicle cents-per-mile rule.When an employer provides its employee with a company-owned vehicle, the value of the personal use portion of the vehicle must be included in the employee’s gross income. Despite the decreased business and personal use of employer-provided vehicles arising from COVID-19, employers that use the automobile lease valuation rule have noted an increase in the value required to be included in an employee’s income for 2020 compared to prior years. However, the vehicle cents-per-mile valuation rule considers only the portion that relates to actual personal use when determining the value to be included in gross income. As a result, this valuation method may deliver a more accurate representation of the employee’s income.Employers may choose to switch to the vehicle cents-per-mile valuation rule beginning on March 13, 2020 if, at the beginning of the 2020 calendar year, the following requirements are met: The employer was using the automobile lease valuation rule for the 2020 calendar year. The employer reasonably expected that an automobile with a fair market value not exceeding $50,400 would be regularly used in the employer’s trade or business throughout the year, but due to the COVID-19 pandemic, the automobile was not regularly used in the employer’s trade or business throughout the year. Employers that decide to make the switch must prorate the value of the vehicle using the automobile lease valuation rule for January 1, 2020 through March 12, 2020 (72 days) and may begin using the vehicle cents-per-mile valuation rule on March 13, 2020. The prorate calculation can be done by multiplying the applicable Annual Lease Value by (72/365). Employees using the automobile lease valuation rule must also make the switch to the vehicle cents-per-mile valuation rule if their employer does so.As for 2021 reporting, employers that decided to switch special valuation rules may return to the automobile lease valuation rule (assuming they still meet the applicable requirements of section 1.61.-21(d)), or continue using the vehicle cents-per-mile valuation rule for 2021, if they meet the requirements of section 1.61-21(e). Consequently, the special valuation rule chosen for 2021 must continue to be used by the employer and the employees for all subsequent years.For additional information regarding Notice 2021-7, please don’t hesitate to reach out to your Schneider Downs contact. ### Consolidated Appropriations Act as it Relates to Individuals At the end of December 2020, President Trump signed the Consolidated Appropriations Act (CCA). While much of the CCA is directed at businesses, there are several key components related to individual taxpayers.  Much of the CCA relates to clarification or modification of previous coronavirus legislation.  Other portions of the act relate to extending certain expiring provisions.   The following are matters included that pertain specifically to individual taxpayers: Deferred Employee Payroll Tax Extension—The payback time for those individuals who chose to delay paying their payroll taxes for the period of September 1, 2020 through year-end 2020 has been extended.  The original due date for having those deferred taxes fully paid was April 2021.  The payback due date has now been extended to December 31, 2021. Additional 2020 Recovery Rebates—Similar to the spring program of direct “rebate” payments to taxpayers, an additional stimulus payment of up to $600 per taxpayer and qualifying child is being made in January 2021.  AGI and age limitations are in effect.  As with the prior program, this rebate is a prepayment toward a credit that will be shown on an individual taxpayer’s 2020 income tax return.  The filing of a taxpayer’s Form 1040 will allow another opportunity to obtain this credit toward 2020 taxes owed, if he/she is eligible and did not receive the direct payment already. Educator Expense Adjustment—The $250 adjustment to gross income for teachers’ out-of-pocket expenses for supplies for their classrooms has been expanded to include equipment relative to COVID-19 supplies. Emergency Financial Aid Grants—College students who received qualified emergency financial aid grants from their institutions of higher learning will not need to report those grants as income; nor will these grants serve as a reduction in calculating educational tax benefits. Medical Deductions—The itemized deduction threshold of 7.5% of AGI has been made permanent beginning in 2021. Charitable Contribution Changes Extended—Under the CARES Act, a temporary increase for deductibility of cash charitable contributions from 60% of AGI to 100% was enacted for 2020 tax returns.  Also, non-itemizing taxpayers may claim a $300 above-the-line charitable contribution on their 2020 tax returns.  The CAA has extended both of those provisions to tax year 2021. Miscellaneous Extenders—Some other year-end provisions included in CAA: Mortgage insurance premiums treated as qualified resident interest (extended through 2021); Credit for new qualified fuel cell motor vehicles (extended through 2021); and Residential energy efficient property credit (extended through 2022). While the CAA is more than 5,000 pages long, it is our hope that this very high-level summary provides individual taxpayers with some knowledge of what specifically pertains to them.  As always, please don’t hesitate to consult your Schneider Downs team to discuss these or other matters in further detail. ### Where Cybersecurity and Fiduciary Responsibility Meet It’s rare to go a day without seeing a headline about a data breach, fraud, ID theft, or some other cybersecurity issue occurring.  It’s a constant battle that businesses and organizations have to wage to stay ahead of hackers and fraudsters who want to steal their data and take control of their systems.Certain attacks constitute a specific form of identity theft known as account takeover fraud. Account takeovers typically leverage personally identifiable information (PII) and website credentials compromised in data breaches and avoid triggering credit monitoring alerts since they are not associated with the opening of a new account.As a plan sponsor, you need to make sure the vendors and providers that have access to your employees’ personal data and workplace accounts are safeguarded against data breaches and hackers. It’s your obligation to vet your providers and ensure that they have strict controls in place to protect employees.Schneider Downs Implements and Recommends these Best PracticesAccount CreationIn many cases, setting up an online account for an existing retirement account requires knowledge of certain personally identifiable information, such as a mailing address, Social Security number, or account number. Because this type of data is regularly compromised via data breaches, Schneider Downs recommends that additional verification steps be added to online account creation processes.Additional verification steps may include: A one-time code sent to the email address or mobile phone number on file for the account Integration of a third-party identity verification service into the online account creation process Allowing account owners to “lock” their account to prevent the creation of an online account without going through a separate unlocking procedure Schneider Downs Retirement Solutions works with partner firms and their employees to set up retirement accounts as employees become eligible to participate in the company’s retirement program. System-generated eligibility reports are based on completed census data provided by the plan sponsor immediately following the end of each payroll period. Participants may enroll online through the participant website or by completing and executing a hard copy enrollment form.Participants may access the participant website by entering a default username and password, which must be changed upon initial login. Participants logging in for the first time will be directed through a series of election options, including personal information, contribution amounts, investment elections, etc. The final step presents a summary of all elections for approval by the participant. Once approved, the participant is provided with a transaction confirmation number and a confirmation email is sent to the email address of record.Session ManagementAttackers often attempt to compromise accounts by using password dumps from one of the various data breaches that have occurred in recent years. These attacks typically follow one of two strategies: Attempting to reuse compromised passwords with the original username/email address (in the hopes that individuals have reused a password across multiple online accounts) Password spraying, or attempting to use a compromised password across many target accounts with the goal of evading account lockout thresholds In order to reduce the risk of these types of attacks, Schneider Downs recommends the following baseline settings: Multi-factor authentication (MFA) be implemented either as a required or optional configuration for all plan participants Device trust settings should default to untrusted; and the implications of trusting shared devices should be made clear Session timeouts should be configured to 30 minutes or less Account lockouts should be configured to occur when an incorrect password is entered five or more times in the span of no more than one hour Advanced detective controls implemented by industry leaders include: Analysis of source IP addresses and other system information to identify non-typical geographic locations and potential password spraying attacks Behavioral analytics to establish a baseline of user behavior and alert on suspicious activity Blacklisting passwords that are known to have been compromised Schneider Downs Retirement Solutions utilizes multi-factor authentication (MFA) to enhance data security protection for our partner firms and their retirement plan participants. When MFA is enabled for a plan, participants will be required to enter a one-time PIN that is sent to their mobile phone number in order to login to their online retirement account.We require that a participant’s second form of contact come from the plan sponsor in order to safeguard the integrity of the information.Further, Schneider Downs Retirement Solutions engages a third party to complete a System and Organization Controls for Service Organization (SOC 1® Type 2) report, which can be provided to prospects and clients upon reasonable request.  This report details the suitability and design and operating effectiveness of various control objectives.Transaction MonitoringIn order to evade detection, many criminals will make small adjustments to account settings over the span of days or weeks. This activity will typically culminate in the distribution of funds to a throwaway bank account. To aid in detection of fraudulent activity, Schneider Downs and account owners have the ability to configure a variety of alerts to be sent to their email address of choice.Actions that may trigger alerts include: Online account creation Account distributions Loan distributions Loan payments Changes to investment elections Investment rebalancing Changes to beneficiaries Schneider Downs implements by default all of the alerts noted above, which are sent to the email on file as provided by the employer sponsoring the retirement program. Further, before a distribution may be processed, our team will request information to confirm the identity of the requestor.Data Handling ProceduresSome procedures, such as back office activities and phone conversations, can sometimes be manipulated by scammers. For example, scam artists often pose as an account owner on the phone and employ various social engineering tactics to gather information they can later use to compromise an account. Additionally, sensitive account information may be stolen intentionally via “dumpster diving” or as a crime of opportunity by individuals passing through an area where sensitive information is left in plain sight.Schneider Downs recommends the following: A clean desk policy Secure document disposal policies A documented procedure for establishing identity over the phone Regular training for all staff on data handling procedures Vet and understand data sharing policies of third-party providers Schneider Downs Retirement Solutions’ control environment reflects the philosophy of senior management concerning the importance of securing financial data and information. The importance of security is emphasized through the establishment and communication of policies and procedures and is supported by investment in resources and personnel to carry out the policies.Schneider Downs has a dedicated information security team consisting of a chief information security officer (CISO) and senior security specialist responsible for management of information security throughout the organization. Specifically, the information security team and CISO are responsible for developing, maintaining and enforcing Schneider Downs Retirement Solutions’ Information Security Policy (ISP). The ISP is reviewed annually by the CISO and is approved by the firm’s Security Steering Committee. These standards and policies address the management and implementation of security controls, ranging from the physical security of facilities and equipment to the logical security at the data element layer.Our heightened level of diligence around data and privacy security is especially important given some of the litigation issues that have been raised recently. Two recent cases have brought into question how participant data collected by a plan’s third party recordkeeper can and should be used for non-plan purposes. For example, certain recordkeepers have shared the investment data and financial asset information that they acquire through the normal course of business with affiliated companies to solicit plan participants to sell other non-plan related products like an IRA accounts, life insurance, credit cards, and brokerage accounts. The underlying issue at hand regarding this dynamic and whether or not it constitutes a break of fiduciary duty boils down to whether participant data is considered to be a “Plan Asset” under the Employee Retirement Income Security Act of 1974, as amended (ERISA), which is not currently spelled out in the legislation.For this reason, it is increasingly important that plan sponsors stay abreast of developing litigation and review service agreements with third-party recordkeepers and administrators to understand what types of data are collected and retained by such vendors, and what those vendors are able to do with such data. At Schneider Downs Retirement Solutions, we do not share participant level data with third-parties without plan sponsor approval, to mitigate the possibility of it being used for unintended purposes.If you have questions related to our retirement services, please contact our offices at sdretirement@schneiderdowns.com or visit our website, www.sdretirementsolutions.com. About Schneider Downs Wealth ManagementSchneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### U.S. Infrastructure Not Making the Grade We have all complained about the state of our highways, bridges, and transportation in general.  But how bad is it really?  Turns out, its bad.  Every four years, the American Society of Civil Engineers (ASCE) publishes The Report Card for America’s Infrastructure.  The report card grades the various categories of infrastructure (i.e., bridges, dams, highways, transit, etc.)It should not come as a surprise to anyone that in the ASCE’s most recent report in 2017, the U.S. did not score very well.  In fact, the U.S. received a D grade.So just how bad is it?  Just consider that the estimated investment gap between projected needs and likely investment for infrastructure needs will be more than $2.6 trillion by 2029 and more than $5.6 trillion by 2039.  The report goes on to state that if these infrastructure needs remain unaddressed, the impact to the economy could be significant, including a loss in gross domestic product of $10.3 trillion and 3 million fewer jobs by 2039.The incoming administration has promised a $2 trillion infrastructure plan to be deployed during the next four years aimed at addressing many of the infrastructure needs facing our country.  While it remains to be seen what the final plan will look like, the problem cannot continue to be ignored.While it’s probably too late to improve our grade for the ASCE’s 2021 report, it’s never too late to begin turning things around.  We can do better and need to do better.  ### Consolidated Appropriations Act – 501(c)(6) Organizations Qualify for PPP Funding With the passing of the of the Consolidated Appropriations Act, 2021 (the Act) on December 27, 2020, organizations exempt under Internal Revenue Code Section 501(c)(6) are now eligible for the original Payroll Protection Program (“PPP”) loan and possible forgiveness. In order to obtain this the loan, 501(c)(6) organizations must meet each of the following requirements. 501(c)(6) loan requirements The organization does not receive more than 15% of its receipts from lobbying activities; The lobbying activities of the organization do not comprise more than 15% of the total activities of the organization; The cost of the lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year of the organization that ended prior to February 15, 2020; and The organization does not employ more than 300 employees. 501(c)(6) organizations that are professional sports leagues and organizations with the purpose of promoting or participating in a political campaign are excluded from this opportunity. Included in the Act is the opportunity for nonprofit organizations to receive a second round of PPP funding.  501(c)(6) organizations do not meet the definition of an eligible entity for this funding. If you would like additional information or want to have a discussion regarding your 501(c)(6) organization qualifying for PPP funding, please contact Schneider Downs.   ### New $67 User Fee for Estate Tax Closing Letters Proposed by IRS The IRS issued Proposed Regulations (REG-114615-16) on December 31, 2020 that would establish a new user fee of $67 for authorized persons who wish to request an estate tax closing letter. An estate tax closing letter is a nonbinding acknowledgement by the IRS that the estate tax return has been accepted and there is no outstanding tax liability.  Executors rely on closing letters when determining that it is safe to distribute assets and close a probate estate.  In some states, an estate tax closing letter must be filed with the probate court before an estate can be officially closed. The IRS provides that the new user fee is necessary because the volume of estate tax return filings has increased significantly, especially due to the required filing for portability. The IRS is stating that it does not does not have enough resources to keep up with the filings.  The estate tax closing letters are also offered as a convenience to the executor, making the $67 user fee appropriate to cover the costs incurred by the IRS in issuing the letters. In order to reduce the burden associated with the new user fee, the Treasury Department and IRS intend to implement a one-step, web-based procedure for requesting estate tax closing letters and paying the user fee.  The IRS claims that this will also increase the convenience of the process to request a letter. The user fee will apply to requests for estate tax closing letters that are made 30 days after the date the Proposed Regulations are published as final in the Federal Register. If you have any questions about estate tax closing letters or the new user fee, please do not hesitate to contact us at Schneider Downs. ### Oil & Gas New 1099 Reporting Requirement - Form 1099-NEC Historically, Form 1099-MISC has been used to report miscellaneous income – which includes nonemployee compensation – to persons who perform services for a business over the course of the year. Beginning in tax year 2020, the IRS will require businesses to report nonemployee compensation on a new form, 1099-NEC. Nonemployee compensation that was reported in Box 7 on Form 1099-MISC will now be reported in box 1 on Form 1099-NEC. Part of the reason the new form was introduced was to eliminate confusion surrounding the filing deadline. The previous version of Form 1099-MISC had a different filing deadline for box 7 than for the rest of the boxes on the form. Starting in 2020, the Form 1099-NEC filing deadline is January 31 (February 1 for 2021), while Form 1099-MISC remains the same as prior years: February 28 if filing on paper; March 31 if you file electronically. The following conditions would require an employer to issue Form 1099-NEC: A payment was made to someone who is not an employee A payment was made for services rendered over the course of the business year The payment was made to an individual, partnership, estate or corporation The payment made was at least $600 during the year So how does this relate to oil and gas companies? Since the IRS treats O&G payments for a working interest as nonemployee compensation, in prior years those payments, like nonemployee compensation, were reported in box 7 on Form 1099-MISC. Beginning in 2020, then, it follows that oil and gas payments for a working interest will be reported on box 1 of Form 1099-NEC. Reporting of oil and gas royalty payments, meanwhile, has not changed. Gross royalty payments of $10 or more should still be reported in box 2 on Form 1099-MISC. For more in-depth instructions, the IRS has dedicated a webpage to Form 1099-NEC with several resources and examples. If you have any questions on the instructions for Form 1099-NEC, contact your Schneider Downs tax advisor. ### Meal and Beverage Expenses Fully Deductible for the Next Two Years When President Trump signed into law the recently passed stimulus legislation known as the Consolidated Appropriations Act (Act), most discussion and concern focused on the Payroll Protection Loan program and whether expenses would be deductible that allowed, or will allow, many taxpayers to receive full forgiveness of their loans. An aspect of the bill that’s largely gone unnoticed, however, is a provision that gives taxpayers the ability to fully deduct the cost of meal and beverage expenses for the next two calendar years, beginning January 1, 2021.The Act adds an exception to the 50 percent limitation of the deductibility of business-related food and beverage expenses, stating specifically that the limitation shall not apply to such expense for food or beverages provided by a restaurant if paid for or incurred after December 31, 2020 or before January 1, 2023.What’s unclear is the definition of restaurant. It’s uncertain, for instance, whether purchase of food at a sporting event will be eligible for the full deduction. Hopefully the IRS will provide additional guidance on the matter. It would be in the best interest if this definition is as broad as possible, since this part of the Act is clearly aimed at providing an incentive to resume meal and beverage business expense activity and provide a much-needed boost to the struggling hospitality industry.   We will continue to monitor guidance as it becomes available.Please consult your Schneider Downs tax consultant if you have additional questions or would like to discuss this topic in further detail. ### Large Declines Expected for 2020 PA Impact Fee Collections In early January, the Pennsylvania Independent Fiscal Office (PA IFO) released its impact fee estimate for 2020. Total impact fee revenues are expected to be $144.85 million, representing a 28% decrease from 2019’s revenue of $200.37 million.This decline marks a record low of revenues generated since the initial imposition of the impact fee in 2011 and beats the previous record low of $173 million in 2016. This decline reflects the overall difficult year the upstream oil and gas industry has experienced with 2020. Imposed on unconventional natural gas wells, impact fees are determined by a schedule based on type of well, the well’s operating year, and the price of natural gas. Lower pricing places fees into lower brackets. The large drop in revenues from 2019 is primarily driven by the sharp decline in natural gas prices in March 2020 due to the ongoing COVID-19 pandemic. The average price in 2020 fell to $2.08/MMBtu compared to 2019’s average of $2.63/MMBtu. As pricing fell below $2.25, fees were charged per the lowest bracket, representing a decrease of $5,000 per well. In addition, as pricing drops, the incentive to drill and operate new wells declines, which further drove a decrease in impact fees generated. Who does this drop in revenue impact? Fees are disbursed to the counties where natural gas drilling and production occurs, to help municipalities in the repair of affected infrastructure and other side effects of operations. Although upstream industry players will incur lower fees, the counties and municipalities in which those players operate will take the hit. Fees allocated to these counties are expected to fall from $109.2 million to $75.9 million. The state’s allocation of fees is expected to remain unchanged, with $10.5 million and $7.9 million allocated to commonwealth agencies and conservation districts, respectively. Additional details can be found on the PA IFO’s website.  ### Pennsylvania Revises EITC and OSTC Credit Guidelines for 2020 As a result of circumstances surrounding the ongoing COVID-19 pandemic, Pennsylvania has enacted numerous changes to the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) programs for 2020. EITC and OSTC Changes Include: The deadline to make required EITC and OSTC contributions has been extended until the business entity’s tax year-end. Prior guidelines granted 60 days from the date of the application approval letter. If the business did not make its contribution before its year-end, however, the offer is rescinded. Businesses entering the second year of their two-year commitment in 2020 are now permitted to donate a lower amount in year two and still retain the 90% contribution tax credit for both year one and year two. EITC tax credits are to be applied against the Corporate Net Income tax liability in the tax year in which the contribution is made. In November 2020, however, Pennsylvania issued guidance allowing firms that cannot use tax credits awarded during the 2020-21 or 2021-22 fiscal years to carryforward those credits for two years. Any business unable to receive its EITC or OSTC approval letter due to remote working status can request an electronic copy via the Tax Credit Division. Please consult your state and local tax adviser if you have any questions with regard to either the EITC or the OSTC. ### Update to Paycheck Protection Program Second Draw Loans Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis.  On December 21, 2020, the Consolidated Appropriations Act (the Act) was passed by both houses of Congress.  See our article for a high-level summary of some of the provisions included in the Act.  One of the provisions was the inclusion of a second round of Paycheck Protection Program loans, which has been titled under the Act, Paycheck Protection Program Second Draw Loans (PPP2). Update:  On January 6, 2021, the U.S. Small Business Administration (SBA) released a new Interim Final Rule (IFR) that includes the implementation guidance of Section 311 of the Economic Aid to Hard-Hit Businesses, Nonprofits, and Venues Act (the Economic Aid Act).  The Economic Aid Act was a component of the Act that includes the approval of second-round draws of the Paycheck Protection Program.  The information below has been updated for revisions that resulted from the issuance of the SBA’s IFR (revisions/updates are presented in italics).    Who’s Eligible? Under PPP2, eligible employers are those entities, including nonprofit organizations, housing cooperatives, veterans’ organizations, Tribal business entities, eligible self-employed individuals, sole proprietors, independent contractors or small agricultural cooperatives, that: Were in operation on February 15, 2020; AND Have fewer than 300 employees; AND Had a reduction of gross receipts during the first, second or third quarter in 2020 in excess of 25% from gross receipts during the same quarter in 2019.  For applications submitted on or after January 1, 2021, applications may include the fourth quarter of 2020 in comparison to the same quarter in 2019. Update: The SBA provided a definition of gross receipts that is consistent with the definition of receipts in 13 C.F.R. 121.104.  Under the IFR, gross receipts include all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns and allowances. It does not include proceeds from transactions between a concern and its domestic and foreign affiliates. Gross receipts also does not include forgiveness attained pursuant to the first round draws during 2020.  Also, under the IFR, a borrower is deemed to have met the revenue reduction requirement if the business was in operation for all four quarters of 2019 and experienced a decline in revenue in excess of 25% in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.  Borrowers with loans greater than $150,000 are required to substantiate the revenue decline with their application; however, others are provided a relief that does not require the substantiation until filing for forgiveness.  The IFR also provides rules for businesses that have acquired or divested a business during 2020.  If an applicant was not in operation during the first or second quarter of 2019, the applicant will compare its applicable 2020 quarter to the third quarter of 2019.  If the applicant was not in operation during the third quarter of 2019, the applicant will compare its applicable 2020 quarter to the fourth quarter of 2019.  Applicants that were not in operation during the fourth quarter of 2019 will compare their second, third or fourth quarter (only if the application is on or after January 1, 2021) to their first quarter of 2020. For business with more than one physical location that operate under a North American Industry Classification System (NAICS) code beginning with 72 (typically restaurants and hotels), if they meet the reduction of quarterly gross receipts above, they can employ up to 300 employees per physical location. The same affiliation rules (and waiver of affiliation rules for businesses under NAICS 72 and franchises with a franchise identifier code) apply to the determination of employees that were established under the CARES Act apply to PPP2 loans. Eligible entities are still required to make a good-faith certification that: the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient; and funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments. (It appears that the bill has not updated certification to included newly eligible costs that are described below.  This may be a future revision by the Treasury and SBA.) Eligible entities are entitled to only one PPP2 loan. Who’s not eligible? The following businesses are not eligible for a loan under PPP2: Under Title 13, Section 120.110, certain businesses are not eligible for SBA business loans or PPP2 loans except for: nonprofit business and businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting, which have been allowed under the Act. Any business that is primarily engaged in political or lobbying activities, research or engaging in advocacy for public policy or political strategy. Any business that receives a “Shuttered Venue Operator Grant” under the Act. Certain entities that are 20% or more owned, directly or indirectly, by entities organized under the People’s Republic of China or Special Administrative Region of Hong Kong. Entities that retain a member of the board of directors with a person who is a resident of the People’s Republic of China. Agents representing the interests of foreign powers in a "political or quasi-political capacity" that are registered under the Foreign Registration Act of 1938. A business that did not receive a loan under the original PPP loan; however, they may still apply for a first draw.  Also, those that did receive a PPP loan must have used or will use the full amount of the loan received under the original PPP on or before disbursement of PPP2.  (Update:  Under the IFR, the SBA defined the term “full amount” as including any increase to a first round draw that has been requested by a borrower in accordance with the Economic Aid Act.  Also, a business that received a first draw under the CARES Act and was not eligible is not eligible for a second round draw.  If a borrower’s first round draw is currently being reviewed for allowable forgiveness and the eligibility of the borrower is unresolved, the SBA will expedite the review under the IFR.) Update:  Businesses that the President, Vice President, head of an Executive department, or member of Congress, or the spouse of such persons owns, controls or holds at least a 20% interest in any class of equity. Update:  Entities that are permanently closed.  How much of a loan amount is a business eligible for? The amount that businesses are eligible to receive will also be consistent with the formula from the first round of loans.  Generally, the maximum amount is the lesser of $2,000,000 or 2.5x the businesses monthly payroll costs for calendar year 2019, or the one-year period before the date on which the loan is made. Update:  Eligible recipients may use their 2020 payroll costs to determine the loan amount, which the SBA believes will be a simplified approach in relation to the one-year period before the date of the loan that was included in the Economic Aid Act.  However, an eligible recipient using the 2020 payroll costs will need to submit with its loan application document to support the loan.  Borrowers that are using the 2019 payroll costs are not required to resubmit the document if they are using the same lender as their first draw loan.  Seasonal employers are required to use any 12-week period between February 15, 2019 and February 15, 2020 to compute monthly payroll but are still eligible for up to $2,000,000.  New entities, i.e., those not in existence for the one-year period to February 15, 2020, have special rules also. NAICS 72 entities are eligible for the lesser of $2,000,000 and 3.5x their monthly payroll costs. Update:  Corporate groups are limited to $4,000,000 of second round draw loans in the aggregate, which is considerably less than the first round limitation, but consistent with decrease in the maximum loan amount from $10,000,000 to $2,000,000 under the second round draw.  Gross Receipts and Simplified Certification of Revenue For loans less than $150,000, borrowers may certify that that they meet the loss of revenue requirement under the Act.  Upon filing for forgiveness, the company will be required to submit the documentation of the revenue loss.  For nonprofit organizations and veterans’ organizations, gross receipts are those within the meaning of Section 6033 of the Internal Revenue Code of 1986. Update:  For loans greater than $150,000, borrowers will be required to substantiate the decline of revenue at the application date.  Documentation for the revenue decline may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements.  Quarterly income statements may also be sufficient.        Loan Forgiveness Borrowers that use the PPP2 loan proceeds during the covered period may be eligible for forgiveness.  There is more flexibility in PPP2 than the original PPP1 loan covered.  For PPP2, the covered period will start from the loan origination date and span a minimum of eight weeks up to 24 weeks.  A borrower may elect a covered that is between eight weeks and 24 weeks also. The amount to which a borrower is entitled to is equal to the following costs incurred or expenditures made during the covered period: Payroll costs, excluding: those taken into account for determining the employee retention credit qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020, which is a general employee retention credit for a qualified disaster. Payment of interest on any covered mortgage Any covered operations expenditure Any covered property damage cost Any payment on any covered rent obligation Any covered utility payment Any covered supplier cost Any covered worker protection expenditure Limitation on Forgiveness Similar to the first round of the PPP, there may be a limit to the amount of forgiveness that a borrower is eligible for.  Those are: The reduction associated with maintaining headcount; and The borrower is required to use at least 60% of the loan proceeds on payroll costs.  Forgiveness will be a limited to the quotient obtained by dividing the amount of payroll costs incurred by 0.60. Availability and Rules The SBA has 10 days from the enactment of the Act to issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans. Under the original PPP, loans were available until August 8, 2020.  Once the Act becomes effective, loans for entities still eligible for PPP1 loans and second draws will be available until March 31, 2021 or until the funds have been exhausted.  The total available funds for PPP1 and PPP2 is $806.45 billion.  As of August 8, 2020, $525.01 billion was distributed during the first round. If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Interim Final Rule – PPP as Amended by the Economic Aid Act Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis.  On December 21, 2020, the Consolidated Appropriations Act of 2021 (the Act) was passed by both houses of Congress, which included the Economic Aid to Hard-Hit Businesses, Nonprofits, and Venues Act (the Economic Aid Act). On January 6, 2021, the Small Business Administration (SBA) issued an Interim Final Rule (IFR) regarding the Act’s impact on the Paycheck Protection Program (PPP). What is the Purpose of this IFR? To summarize changes to the PPP under the Economic Aid Act. To consolidate prior guidance into one document. The IFR is intended to govern new PPP loans made under the Economic Aid Act and applications for forgiveness on existing PPP loans where the loan forgiveness has not been remitted.  However, the IFR clearly states that it is not intended to substantively alter or affect PPP rules that were not amended by the Economic Aid Act. Additionally, rules related to the second round of PPP (PPP2) are addressed in a separate IFR and the SBA intends to issue a consolidated rule governing all aspects of loan forgiveness and the loan review process. While the IFR does not contain significant new updates that were not in the Economic Aid Act, the main benefit of the IFR is the consolidation of all guidance in one place.  Borrowers and their advisors can use this as their “one-stop shop” to PPP guidance without having to reference nearly 25 other IFRs issued by the SBA and Treasury. What are the Big Changes? As mentioned above, in reality, there is not much new in the IFR that was not addressed in the Economic Aid Act and summarized in our December 23, 2020, OTO article Revisions to the Paycheck Protection Program. However, there was one change of significance between the Economic Aid Act and the IFR.   For PPP loans that were made in 2020, most borrowers used 2019 payroll costs.  The IFR allows first draw PPP borrowers to use either 2019 or 2020 payroll amounts to calculate their maximum loan amount.  The Economic Aid Act did not change the original guidance for borrowers who were not farmers and ranchers.  Therefore, this would have resulted in new first draw PPP borrowers who were newly eligible being required to use 2020 payroll to determine their maximum loan amount. The Act also required farmers and ranchers to calculate their maximum loan amount using 2019 payroll costs. The SBA made these adjustments in order to allow all borrowers to obtain funding on terms consistent with other new and existing PPP borrowers.  Additionally, it avoids borrowers having their loan amount reduced if 2020 operations were negatively impacted. Applying for PPP Loans The SBA also announced that the PPP portal for accepting applications will officially reopen on Monday, January 11, but with an interesting timeline. January 11 – Accept PPP1 loan applications from businesses who have not received a PPP loan.  Further, it will only be accepting applications from lenders considered “community financial institutions.” January 13 – Accept PPP2 loan applications, but only from lenders considered “community financial institutions.” This appears to be a response to some earlier criticism that certain smaller businesses and lenders initially had difficulty getting PPP loans.  The PPP is supposed to open to other lenders some time shortly after. If you need more information or assistance regarding the PPP, visit our dedicated PPP Loan website, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### What Is in the Second Round of Stimulus for Nonprofits? There is no question that nonprofits have faced challenges in the wake of the pandemic.  In some cases, the demand for services provided by many nonprofits has increased substantially, making it a challenge for them to keep up with demand or ensure that there will be enough funding available to meet the demand. In other cases, nonprofits have been forced to all but shut down completely due to government-imposed quarantines.  The latest stimulus package signed by President Trump includes the following benefits directly affecting nonprofits. Benefits Affecting Nonprofits An extension of Universal Charitable Deduction through 2021, which allows non-itemizers to take a deduction for charitable donations up to $300 for single filers and $600 for joint filers. Another round of Paycheck Protection Program funding through March that includes a broader population of 501(c)(6) organizations.  To qualify for this second round of PPP funding, organizations must demonstrate a 25% reduction in gross receipts in any quarter of 2020 compared to the same quarter in 2019.  Specific to 501(c)(6) organizations, they must have 300 or fewer employees (up from 150), 15% or less (up from 10%) in lobbying activities and receipts and less than $1 million in spending for lobbying activities during the most recent tax year that ended prior to February 15, 2020 to be eligible. $15 billion allocation of funds to “Save Our Stages” dedicated to Broadway music venues and other cultural institutions; however, these organizations must show at least 25% decline in revenues as compared to 2019 to be eligible. An extension of the 50% coverage of unemployment costs for reimbursing nonprofit employers until mid-March. The Employee Retention Credit has been extended into 2021, and the eligibility requirement has been expanded.  Please see the following link for more details related to this provision: Stimulus Package Enhances the Employee Retention Credit. We will be issuing more information related to the new stimulus funds as they impact the various sectors of the nonprofit industry.  Please reach out to any of your contacts at Schneider Downs or contact Kim James or Staci Brogan. ### Revisiting Debt Modifications As companies continue to apply for Paycheck Protection Program (PPP) loan forgiveness and many wait to hear from the U.S. Small Business Administration on the status of their applications, accounting personnel are having to revisit the Financial Accounting Standards Board’s (FASB) guidance on debt modifications and extinguishments. Debt modifications and exchanges are typically analyzed on the basis of the underlying terms of existing and new debt instruments. Should terms between the two be substantially modified, accounting for the exchange is accounted for like an extinguishment of debt. A primary way to determine whether the terms are ‘substantially’ different can be ascertained by verifying the present value of cash flows under the new agreement. An exchange of debt instruments between or a modification of a debt instrument by a debtor and creditor in a nontroubled is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. If terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10%, the debt instruments are generally not considered to be substantially different should there be no conversion option (FASB Accounting Standards Codification 470-50-40-10). Depending on your type of company, there are a few different ways to treat the extinguishment of your PPP loan. Some entities will treat the loan as income in the period it’s forgiven, while others will be able to treat loan proceeds as an offset to the underlying expenses for which the loan was issued and proceeds are utilized. As you continue to work your way through the PPP loan forgiveness process, please don’t hesitate to reach out to our team with any questions or visit our dedicated PPP Loan webpage. ### Postcard from Prime Global’s International Tax Session Every January, Prime Global hosts its annual North American Tax and Business Assurance Conference.  This year is no exception. Well, except for the location, of course! No warm climate or sunny locale this year; I participated from my home office.On January 5, the International Special Interest group held its ½-day technical session via Zoom. The online format allowed for a record number of attendees. Our afternoon included a presentation about the Office of Foreign Assets Control (OFAC) Sanction rules, COVID-19 pandemic stimulus programs around the world, a Brexit update, and an open discussion forum which focused on some of the changes in tax laws, compliance matters and growing tax complexity relating to international tax.  The session reinforced a few things: No matter where we are in the country and the world, we are all dealing with tax ramifications from the COVID-19 pandemic, in addition to its impact on global health and our daily activities. The U.S. tax rules continue to become more complicated. (There is no issue with job security for tax professionals.) Although the remote nature of the conference allowed us to include more participants, we all miss meeting in person! We did manage to include an optional remote happy hour at the end of the day. Here’s hoping next year’s seminar can be live and in 3D!  ### PPP Recipients Now Eligible for the Employee Retention Credit! The CARES Act signed into law in March of 2020, includes a refundable payroll tax credit called the Employee Retention Credit (ERC), under which tax-exempt organizations could receive up to $5,000 per employee for calendar year 2020 if certain eligibility requirements are met. However, under the CARES Act, organizations that received a Payroll Protection Program loan (PPP) were not eligible to also receive the ERC. On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021 (Act), which modified many aspects of the ERC and expanded it into the first two quarters of 2021. It also expanded eligibility to those organizations that had received a PPP loan, making it an excellent opportunity for many organizations to receive additional cash. Please visit /our-thoughts-on/stimulus-package-enhances-employee-retention-credit to learn more about the Employee Retention Credit and the changes that have been made under the Act. For more information, feel free to reach out to your Schneider Downs contact. ### Behind the Numbers in ISM’s Q4 Report on Business On January 5, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines industry trends and statistics within the manufacturing sector. The composite Purchasing Managers Index (PMI), referenced below, is compiled and used by the ISM to analyze the state of the economy and predict future growth or contraction based on five categories: New Orders, Production, Employment, Supplier Deliveries and Inventories. A PMI over 50% indicates that the manufacturing environment is expanding. Here’s a rundown of the PMI for each month in 2020: Month PMI Month PMI January 50.9% July 54.2% February 50.1% August 56.0% March 49.1% September 55.4% April 41.5% October 59.3% May 43.1% November 57.5% June 52.6% December 60.7% Average for 12 months – 52.5% High – 60.7% Low – 41.5% Keeping up with the overall economy, manufacturing expanded over the past eight months, closing out the year with a PMI higher than any clocked in 2019. Panelists expressed optimism entering 2021, offering three positive comments to every one negative comment in their responses. Sixteen of the 18 manufacturing industries tracked recorded growth in December 2020, with only Printing & Related Support Activities and Nonmetallic Mineral Products reporting overall contraction. Prices (77.6% in December) reached its highest reading since mid-2018, with steel, copper, aluminum and lumber continuing to experience increases. Aluminum gained 11% from the beginning of 2020 and 36% from April 2020, while the price of lumber opened 2020 at $404.51 per 1,000 board feet, peaked in September at $909.77 and closed the year at $881.70. Demand, which is comprised of New Orders, Customer Inventories and Backlog of Orders, continued to grow. Expansion in New Orders (67.9% in December) was supported by New Export Orders (57.5% in December). The panelist representing Computer and Electronic Products noted strong business growth in China. Backlog of Orders (59.1% in December), meanwhile, reached its highest reading since 2018, and what may show even more promise for continued orders are very low levels of Customer Inventories (37.6% in December). Expansion continued for consumption, which is comprised of Production and Employment. Production (64.8% in December) clocked in at its highest reading since January 2011 when it reached 65.3%. Only two of 13 industries tracked experienced a contraction in production, Nonmetallic Mineral Products and Miscellaneous Manufacturing. In November, Employment dropped back into contraction territory (48.4%), but has since rebounded, clocking in at 51.5% in December. A panelist noted that the November contraction was due primarily to challenges in attracting and retaining direct labor. Although there has been some recovery since the initial COVID-19 outbreak in the U.S., panelists note that industry growth has been limited by the effects of the pandemic, with companies facing ongoing personnel challenges as they continue to try to hire new employees and integrate returning ones. Worthy of note is the median age for employees in the manufacturing sector, which stands at 44.1 years. The CDC warns that risk of hospitalization and death is significantly higher for older adults than in individuals age 18-29. Plus, some individuals in this age range may be taking care of elderly parents, which may result in concerns of being physically able to return to work. Additionally, facilities have been forced to shut down for frequent cleaning to comply with CDC recommendations, disruptions that result in slowdowns in production and inefficiencies. These challenges won’t in and of themselves bring an end to growth, but will continue to delay manufacturing from reaching its full potential. For further information on the Report on Business, go to https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/december/ ### 179D Energy Efficient Commercial Building Deduction Made Permanent On December 27, President Trump signed into law the Consolidated Appropriations Act, 2021 (the Act), a provision of which makes the Energy Efficient Commercial Building Deduction (179D) permanent. Originally passed as part of the Energy Policy Act of 2005 and expiring in one to two-year increments since, the 179D deduction was set to elapse again on December 31.Prior to the Act, 179D provided a maximum deduction of $1.80 per square foot of the building and measured energy efficient improvements to commercial property by referencing the 2007 ASHRAE standard. The Act makes two significant changes; first, the deduction of $1.80 per square foot (which had not changed since 2005) will increase annually starting in 2021 to account for inflation and, second, taxpayers will utilize the ASHRAE standard in effect two years prior to the start of construction.What are the tax benefits and who qualifies?The 179D deduction allows taxpayers to take a federal deduction for the installation of energy-efficient interior lighting, HVAC and building envelope systems. It’s available to building owners and lessees that make energy-efficient improvements to their commercial buildings located in the United States.Designers (architects, engineers, contractors or energy service companies) of government-owned buildings may also be assigned the 179D deduction from a government agency if they’re the primary designer of the applicable system and the agency allocates the deduction to them by signing a municipal allocation letter. Examples of the type of public projects that may qualify for the assignment of the 179D deduction include: Schools, including state universities Libraries Airports Government offices Post offices Courthouses How the 179D Deduction WorksA building completed in 2020 is eligible for the entire $1.80 per square foot federal tax deduction if it saves at least 50% in energy and power costs for improvements in lighting, HVAC and building envelope, as compared to a building that meets 2007 ASHRAE standards, based on the date the building is placed in service. If the building fails to meet the full 50% energy savings standard, a partial deduction of $0.60 per square foot is available for each subsystem that meets certain energy-saving requirements. To claim the 179D deduction, the property must be certified by a qualified independent third party.The deduction is generally available in the year the property is placed in service. If a property is certified in a year after that, the taxpayer may be required to amend prior returns to claim the deduction. But if the taxpayer owns or leases the commercial building (as opposed to being allocated the deduction from a government agency), the IRS allows them to file for a change in accounting method to claim the deduction in the year the accounting method is changed, the advantage of which allows them to avoid costs and other issues associated with amending tax returns.It’s important to note that taxpayers that own or lease the commercial building must reduce their tax basis of the building by the amount of the 179D deduction. Also, a taxpayer that’s allocated 179D deductions from a government agency must reduce his or her stock basis for the 179D deductions.If you have any questions about the potential benefits of 179D, don’t hesitate to contact Mark A. Di Pietrantonio or another member of the Schneider Downs Construction Industry Group. ### The Latest Stimulus Package Enhances the Employee Retention Credit In March 2020, the CARES Act created the Employee Retention Credit (“ERC”), which allowed qualifying employers of any size to claim a refundable payroll credit for up to 50% of qualifying wages, with a maximum of $10,000 per employee ($5,000 of credit). Congress has now passed The Consolidated Appropriations Act (“the Act ”) , signed by President Trump on December 27, 2020 which provides nearly $900 billion in additional aid to families, businesses, and individuals. The Act significantly expands the ERC’s eligibility in 2020 and the actual credit dollars available for employers for the first two quarters of 2021.  The most significant ERC changes at a glance:  In 2020, under the CARES Act, employers receiving a PPP Loan had been ineligible for the ERC credit. Under the Consolidated Appropriations Act, those employers can retroactively apply for the ERC credit, if they meet the new eligibility requirements.   For Q1 and Q2 of 2021, the credit rate increased from 50% to 70% of qualified wages, and the limit on per-employee wages is now $10,000 per quarter, rather than per year. In other words, employers can receive a maximum of $14,000 per employee for the first two quarters of 2021.   For Q1 and Q2 of 2021, employers can now be automatically eligible for the ERC if gross receipts are less than 20% from the corresponding quarter in 2019 (for example, Q1 2021 gross receipts compared to Q1 2019 gross receipts).  There is additional flexibility in quarter comparison but a specific election is required.   Employers impacted by a government order (full or partial shutdown) are eligible even if they do not meet the gross receipts test.   For Q1 and Q2 2021, the threshold number of employees increased from 100 to 500 when determining how “qualified wages” are to be calculated.  As such, employers with less than 500 employees can include all wages paid and health benefit expenses (up to the thresholds mentioned above) regardless of whether those employees were providing services.   For employers with more than 500 employees, “qualified wages” include only those wages and healthcare benefits paid to employees to NOT provide services.   The Act also provides that group health plan expenses can be considered qualified wages even when no wages are paid to the employee.   The Act includes new, expansive provisions for advance payments of the ERC to small employers (less than 500 employees). The Treasury and the SBA are expected to issue guidance explaining that payroll costs paid during the PPP covered period can be treated as qualified wages, as long as those wages were not paid from the proceeds of a forgiven PPP loan. The Act also allows employers to take the ERC for bonuses paid to essential workers. The CARES Act required employers to pick either a PPP loan or the ERC and did not allow them to take advantage of both programs. An encouraging piece of the new legislation is Section 206(c) which provides that employers that received PPP loans can now qualify for the ERC with respect to wages that are not paid for with proceeds from a forgiven PPP loan.  In theory, an employer who received a PPP loan should consider reviewing their forgivable expenses to allow for a larger pool of “qualified wages” to possibly be utilized for the ERC if the employer qualifies.  Section 206(c) applies retroactively, as if it were included in the CARES Act.  Due to the obvious allure of a forgivable loan with the PPP, many businesses disregarded the ERC because they could derive more benefit from the PPP.  Now, with the ERC back in play even for PPP borrowers, it is necessary for every borrower to quickly determine if they are eligible for the ERC, and if so, to determine the interplay with PPP loan forgiveness.  We will continue to provide more information on the ERC and its interaction with PPP forgiveness as it becomes available. For additional information or assistance with the Employer Retention Credit, reach out to any of your contacts at Schneider Downs or contact Matthew Werner at mwerner@schneiderdowns.com or Ross Alessandro at ralessandro@schneiderdowns.com.  ### Shuttered Venue Operator Grants Provided Under the Consolidated Appropriations Act, 2021 The Consolidated Appropriations Act, 2021 (Act) was signed by President Trump on December 28, 2020.   Included in the Act is $15 billion in funding reserved for the Small Business Administration (SBA) to make grants to “shuttered venue operators.” The Act defines eligible entities to include a live venue operator or promoter, theatrical producer or live performing arts organization operator, a relevant museum operator, a motion picture theatre operator or a talent representative that meets certain requirements.  The definition of an eligible entity includes nuances for each type of venue operator.Similar to the Paycheck Protection Program, grants will be provided to eligible recipients that meet certain criteria.  Amongst other items, an eligible recipient must demonstrate that it: Was fully operational on February 29, 2020; Had a 25% gross earned revenue decline in any 2020 quarter compared with the same quarter in 2019; Is open or intends to reopen as of the date the grant is received; Is not owned or controlled by an entity that is publicly traded or received more than 10% of its gross revenue from federal funding during 2019; and Has not received a Paycheck Protection Program loan after December 27, 2020.  Organizations submitting an application through the SBA for a grant will be required to submit a good-faith certification that the uncertainty of current economic conditions makes necessary the grant to support the ongoing operations.   For organizations in operation on January 1, 2019, grants will be awarded in the amount equal to the lesser of an amount equal to 45% of the gross earned revenue of the entity during 2019, or $10,000,000.  There is a carve-out to set aside not less than $2,000,000,000 of the total grants for entities that employ not more than 50 full-time workers.  Amounts received under this grant must be used for costs incurred between March 1, 2020 and December 31, 2021 and are required to be used for specific expenditures.  The list of specific expenditures is extensive and incudes items such as payroll costs, mortgage or rent obligations, utility payments, maintenance, insurance, payments made to independent contractors and administrative costs.During the first 14-day period, first priority of awarding grants will be for eligible entities whose revenue during the period April 1, 2020 through December 31, 2020 is not more than 10% of the revenue during the same period of 2019, due to the COVID-19 pandemic.  A second priority 14-day period will follow for awarding grants with the same criteria but will replace the percentage of revenue at 30%.  After these two periods, grants will be awarded to all other eligible entities. ### The Top Ten Most Common Passwords of 2020 As we approach the end of the calendar year, NordPass has released their list of the 200 most common passwords of 2020.While there are a number of the usual suspects listed, senha (Portuguese for password) and picture1 were new entries on the list, and 2019’s worst password, 12345, came in 8th this year. You can also sort by password categories including names, numbers, swear words and entertainment. The entertainment list was especially interesting, showing that superman, pokemon, naruto and blink182 were quite popular in 2020.2020’s Top 10 Common Passwords 123456 – 2.5M+ users 123456789 – 960K+ users picture1 – 371K+ users password – 360K+ users 12345678 – 322K+ users 111111 – 230K+ users 123123 – 189K+ users 12345 – 188K+ users 1234567890 – 171K+ users senha – 167K+ users The full list is available here and shares the risers/fallers, how many times the password was exposed and used, and how much time it would take to crack it. So what can you do to strengthen your credentials for the New Year? Senior Cybersecurity Analyst Stephen Bish recently shared password security tips in this short video:   In addition, our cybersecurity team has shared best practices for creating secure passwords and password management below. Avoid Bad Passwords The first step is simple: stop using passwords that can be commonly guessed, including sports teams, regional terms, company names, seasons or variations of the word password (i.e. P@ssw0rd). While these are not as egregious as the ones listed in the top ten list, they are just as susceptible and easy to guess for many threat actors. And if you saw your password in this article or on the full list, change it immediately. Create Passphrases Look beyond password criteria such as length, numbers and special characters. Think about something unique to you that only you would know. We like to say think about passwords as passphrases. Put together random words from a personal story or memory. If you string along several small words, this helps to increase password complexity and should meet most length requirements. Remember, a secure password isn’t secure just because it meets a site’s requirements. It’s secure if it’s something only you would know. Password Manager Solutions We know how hard it can be to remember all of your passwords, especially with the vast amount of unique requirements from different sites. One option is to use password management software, which essentially acts as a master lock for all of your passwords. Password managers not only add a layer of convenience to password security, but many help you create strong passwords with stringent requirements. Many password management software providers, such as LastPass and 1Password, offer options for personal and enterprise security needs. P.S. – writing passwords on paper is not a password management solution… Use Different Passwords If you are not using a password manager, having unique passwords for accounts is an absolute must. One of the first things threat actors do when stealing passwords is see where else it works. Known as credential stuffing, attackers will see how many accounts they can compromise with stolen credentials to increase their earning potential. Take a moment to think about how many accounts you have the same password and username/email address protecting and chances are you can see the potential damage of having one password. Update Security Questions Security questions are a common part of account protection at this point, but with the growing world of digital footprint left through social media and search engines, can be easy targets for threat actors. Think about some of the most common questions asked and where the answers can be found: Birthday – Social media, public records Where did you and your spouse meet – Social media, wedding registry sites What high school did you go to – Social media, public record, alumni associations What was your first job – Social media, professional biographies Pretty concerning, right? Remember to treat the answers to these questions as you would a password and update them frequently. Multi-Factor Authentication With the reality that passwords will get compromised, implementing supporting authentication controls is an important step in all security programs. Since moving to remote accommodations, many of us are used to multi-factor authentication through mobile apps, texts or receivers, which require you to enter your password to receive a temporary code to login.  Monitor Breaches Just because somebody has your credentials doesn’t mean they use them immediately. In many cases, data breaches occur and account owners are notified through email months later. Major companies including Capital One, Yahoo, Equifax and Intel are just a few of the major companies who experienced breaches over the last year resulting in personal data theft. So what happens if you find out you are part of a data breach? Hopefully you are implementing password best practices outlined in this article, but if not, change your password immediately on other sites that are using the same one or a variation of the compromised credentials. We also recommend using a rapid breach alert service such as www.haveibeenpwned.com, which sends you an email alert if they find your email address tied to any breaches as they become known. Remember, the New Year marks an opportunity to remind your end users of the importance of password security to keep both their personal information and your organization secure against the growing threat landscape of today and tomorrow. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. If you suspect or are experiencing a network incident, our Incident Response Team is available 24x7x365 at 1-800-993-8937. Want more cybersecurity content? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, for the latest insight and news in the cybersecurity world.   ### Social Security Tax Deferral and Repayment Explained On August 28, the IRS issued Notice 2020-65 to provide further clarification regarding a presidential memorandum that permits employers to defer the withholding and submission of the employee portion of Social Security taxes from September 1 through December 31, 2020. Employees who make less than $4,000 per biweekly period can qualify to have their Social Security taxes deferred under the memorandum; employers who defer the withholding of the employee portion of the taxes in 2020 must withhold the deferred amount from employee’s paychecks starting January 1 through April 30, 2021.When filing the 2020 Form W-2, Wage and Tax Statement, employers need to report in Box 3 the total amount of taxable Social Security wages earned by the employee, but in Box 4, the employer need only report the amount of Social Security tax withheld from the employee’s paychecks in 2020. Box 3 should not include any portion of Social Security taxes that were deferred.Once an employer withholds the entire amount of deferred Social Security tax from 2020 in 2021, they’ll issue a Form W-2c, Corrected Wage and Tax Statement, to the employee. On that form, employers will enter tax year 2020 in Box c and report in Box 4 (Social Security tax withheld) the Social Security taxes collected in 2020 and the Social Security taxes collected in 2021 for wages earned in 2020. Employers also need to file Form W-3c, Transmittal of Corrected Wage and Tax Statements, with the Social Security Administration. The IRS requests employers collect any deferred 2020 Social Security taxes as soon as possible.Employers who elect to defer Social Security tax collection from employees’ 2020 paychecks will experience delays, as employees will need Form W-2c to complete their personal income tax returns. It’s recommended that employers advise employees to wait until they’ve received a W-2c to file their tax returns in order to avoid being assessed an underpayment penalty and having to wait 16 weeks for the IRS to process an individual amended tax return.To illustrate what the Forms W-2 and W-2c will look like for employers who’ve elected to defer Social Security tax, we’ve prepared a brief example.John Smith is paid $2,000 on a biweekly basis during 2020. In the month of December, John’s employer elects to defer the withholding of Social Security taxes in order to provide John’s family with extra money during the holidays; they defer $248 of Social Security taxes ($2,000 per paycheck times two paychecks times 6.2%). In this situation, John’s 2020 W-2 will appear as depicted in Illustration 1, with Box 3 containing all John’s taxable Social Security wages earned in 2020 and Box 4 reporting only the amount of Social Security taxes withheld during 2020 and not the deferred tax portion.Illustration 1 – 2020 Form W-2 ### Your Exempt Status Has Been Revoked "Your exempt status has been revoked." That sentence is the last thing a tax-exempt organization wants to read. Yet, the IRS sent out a wave of letters in late October 2020 indicating the revocation of tax-exempt statuses to unexpecting organizations. While the revocation notices were cause for initial concern, it was quickly discovered that these were generated due to a system limitation.As background, if an exempt organization does not file an information return (Form 990 series) for three consecutive years, the IRS has a method to automatically notify the organization of the revocation of their exemption. The due date for filing an exempt return is May 15 for a calendar-year filer.Unique to the 2020 tax season was an additional extension of time to file until July 15, 2020. The extensions for many tax forms, including Form 990, were announced through IRS Notices 2020-23 and 2020-35 as part of pandemic relief efforts. Despite this allowable extension, auto-revocation notices were automatically generated due to the inability to change the due date in the IRS system.If you filed your return or extension on or before July 15, 2020, but received a notice, not to worry! The IRS has announced that organizations can send documentation of their timely filed returns to a dedicated fax number: (855) 247-6123. They are also continuing to process paper filings and bring organizations’ accounts back into compliance.If you have any questions about auto-revocation or other IRS notices your nonprofit organization may have received, contact our exempt organization experts. ### Economic Impact on Multiemployer Pension Plans Multiemployer pension plans have been facing significant difficulties over the past several years, and the COVID-19 pandemic continues to add more barriers to keep these plans afloat. Sponsors of these pension plans have to manage workforce availability as employees are out sick, business interruptions due to lockdowns and closures, and investment uncertainty. Organizations that participate in multiemployer pension plans may have workers in nonessential businesses that closed temporarily or permanently during the year, leading to reductions in work being performed and difficulty making contributions to the pension plan. Other industries that were deemed essential may be impacted by shortages of employees available to work, and may look to bring back recent retirees. Due to these troubling circumstances, many multiemployer pension plans could become bankrupt within the next 5-15 years.To touch on some of the most recent government action taken related to these plans, in 2014, President Obama signed the Multiemployer Pension Reform Act (MPRA). This Act extended some of the original actions set in the Pension Protection Act (PPA) of 2006, and added a new funding zone called “critical and declining.” This status means that the plan has funding and/or liquidity problems. If a fund is in this zone, a plan may suspend benefits; however, there are certain requirements that must be met in order for this to occur, which include, but is not limited to, an application to the Secretary of the Treasury and notification to participants.  Additional plans in a critical and declining status are required to adopt a rehabilitation plan. As of September 2020, there were approximately 125 funds that were “critical and declining” that are predicted to be bankrupt in 20 years. This impacts approximately 1.3 million participants. If a multiemployer pension plan becomes bankrupt, the Pension Benefit Guaranty Corporation (PBGC) offers financial assistance and may pay a portion of the benefit obligations that were guaranteed by the plan. The main concern with this solution is the PBGC’s latest Projections Report shows the Multiemployer Program is expected to run out of money by 2026. With all of these concerns arising surrounding pension plans, specifically multiemployer pension plans, all parties generally agree that some action needs to be taken.  For more information on multiemployer plans or other employee benefit-related services, our team is here to help. Contact a member of the ERISA group at Schneider Downs for additional information. ### 2020 Schneider Downs Manufacturers’ Economic Survey Results Released Each year, Schneider Downs collects insights from leaders in the manufacturing industry through our annual Manufacturers’ Economic Survey. This year, our survey participants shared their perspectives on a wide array of topics including: the 2020 presidential election, the COVID-19 pandemic and associated relief provisions, as well as the general state of the industry. The 2020 survey results indicated that nearly 90% of participants felt the 2020 election will have some impact on their business in the coming years, with three-quarters of participants anticipating that taxes will increase in 2021. Additionally, as expected, the majority of the survey respondents were significantly impacted by the COVID-19 pandemic. Over 30% of survey participants’ businesses were shut down for some period of time, and over 75% enacted some form of cost-cutting during the year. Despite the devastating impact of the pandemic on the world, nearly all of our participants remain optimistic that their businesses will fully recover. Review a full summary of the survey results as well as insightful articles from our professionals about the above topics, among others. Thank you again to all of our survey participants! ### Round Two of Economic Injury Disaster Loan Advances Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On December 21, 2020, the Consolidated Appropriations Act (the Act) was passed by both houses of Congress. See our article for a high level summary of some of the provisions included in the Act. One of the provisions was the inclusion of additional funds to support the Economic Injury Disaster Loan Advance program (EIDL2). How Much Additional Funding Was Approved? $20 billion. What are the Eligibility Requirements? The appropriation of EIDL2 is primarily to those entities in low-income communities. Entities that had received an advance under the original program pursuant to the CARES Act will have priority, followed by entities that meet the below eligibility criteria. An entity must meet the following eligibility requirement to be considered a covered entity: Applies for/is eligible for a loan under section 7(b)(2) of the Small Business Act during the covered period; Is located in a low-income community; Has suffered an economic loss of greater than 30%; and Employs not more than 300 people. How is an “economic loss” defined? The amount by which gross receipts declined during an 8-week period between March 2, 2020 and December 31, 2021, relative to a comparable 8-week period immediately preceding March 2, 2020, or during 2019. If the entity is a seasonal business, the amount will be determined by the Administrator of the Small Business Administration. How much of an advance amount is a business eligible for? Up to $10,000. Is the entity entitled to the full amount of the advance? Yes, once the Administrator verifies the entity is a covered entity, it is entitled to the full $10,000 advance without regard to whether: The applicable loan an entity applies or applied for under Section 7(b)(2) of the Small Business Act is or was approved; The covered entity accepts or accepted the offer of the Administrator in regards to an approved loan; The covered entity has previously received a loan under section 7(a) of the Small Business Act. If a covered entity received less than $10,000 previously pursuant to the CARES Act EIDL advance, the payment will be the difference between $10,000 and the amount previously received. Is the Advance Deducted from any PPP Loan Forgiveness? In a change from the original rules, EIDL advances are no longer deducted from any PPP loan forgiveness which would be effective as of the enactment date of the CARES Act. Is the Advance Considered Taxable Income? In a change from the original rules, EIDL advances will not be considered taxable income.  Additionally, no deduction will be disallowed. For How Long is the Advance Available? Until the $20 billion is exhausted, or December 31, 2021. If you need more information or assistance regarding an EIDL advance, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com.     ### Paycheck Protection Program Second Draw Loans Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On December 21, 2020, the Consolidated Appropriations Act (the Act) was passed by both houses of Congress. See our article for a high level summary of some of the provisions included in the Act. One of the provisions was the inclusion of a second round of Paycheck Protection Program loans which has been titled under the Act, Paycheck Protection Program Second Draw Loans (PPP2). Who’s Eligible? Under PPP2, eligible employers are those entities, including nonprofit organizations, housing cooperatives, veterans’ organizations, Tribal business entities, eligible self-employed individuals, sole proprietors, independent contractors or small agricultural cooperatives, that: Were in operation on February 15, 2020; AND Employ less than 300 employees; AND Had a reduction of gross receipts during the first, second or third quarter in 2020 in excess of 25% from gross receipts during the same quarter in 2019.  For applications submitted on or after January 1, 2021, applications may include the fourth quarter of 2020 in comparison to the same quarter in 2019. If an applicant was not in operation during the first or second quarter of 2019, the applicant will compare their applicable 2020 quarter to the third quarter of 2019. If the applicant was not in operation during the third quarter of 2019, the applicant will compare their applicable 2020 quarter to the fourth quarter of 2019. Applications that were not in operation during the fourth quarter of 2019 will compare their second, third or fourth quarter (only if the application is on or after January 1, 2021) to their first quarter of 2020. For business with more than one physical location that operate under a North American Industry Classification System (NAICS) code beginning with 72 (typically restaurants and hotels), if they meet the reduction of quarterly gross receipts above, they can employ up to 300 employees per physical location. The same affiliation rules (and waiver of affiliation rules for businesses under NAICS 72 and franchises with a franchise identifier code) apply to the determination of employees that were established under the CARES Act apply to PPP2 loans. Eligible entities are still required to make a good faith certification that: the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments. (It appears that the bill has not updated certification to included newly eligible costs that are described below.  This may be a future revision by the Treasury and SBA). Eligible entities are only entitled to one PPP2 loan. Who’s not eligible? The following businesses are not eligible for a loan under PPP2 Under Title 13, Section 120.110, certain businesses are not eligible for SBA business loans or PPP2 loans except for: non-profit business and Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting, which have been allowed under the Act. Any business that is primarily engaged in political or lobbying activities, research or engaging in advocacy for public policy or pollical strategy. Any business that receives a “Shuttered Venue Operator Grant” under the Act. Certain entities that are 20% or more owned, directly or indirectly, by entities organized under the People’s Republic of China or Special Administrative Region of Hong Kong. Entities that retain a member of the board of directors with a person who is a resident of the People’s Republic of China. Agents representing the interests of foreign powers in a "political or quasi-political capacity" that are registered under the Foreign Registration Act of 1938. A business that did not receive a loan under the original PPP loan, however they may still apply for a first draw. Also, those that did receive a PPP loan must have used or will use the full amount of the loan received under the original PPP on or before disbursement of PPP2. How much of a loan amount is a business eligible for? The amount that businesses are eligible to receive will also be consistent with the formula from the first round of loans. Generally, the maximum amount is the lesser of $2,000,000 or 2.5x the businesses monthly payroll costs for calendar year 2019, or the 1-year period before the date on which the loan is made. Seasonal employers are required to use any 12-week period between February 15, 2019 and February 15, 2020 to compute monthly payroll but are still eligible for up to $2,000,000. New entities, i.e. those not in existence for the 1-year period to February 15, 2020, have special rules also. NAICS 72 entities are eligible for the lesser of $2,000,000 and 3.5x their monthly payroll costs. Gross Receipts and Simplified Certification of Revenue For loans less than $150,000, borrowers may certify that that they meet the loss of revenue requirement under the Act. Upon filing for forgiveness, the Company will be required to submit the documentation of the revenue loss. For non-profit organizations and veterans’ organizations, gross receipts are those within the meaning of Section 6033 of the Internal Revenue Code 1986. Loan Forgiveness Borrowers that use the PPP2 loan proceeds during the covered period may be eligible for forgiveness. There is more flexibility in PPP2 than the original PPP1 loan covered.  For PPP2 the covered period will start from the loan origination date and span a minimum of 8 weeks up to 24 weeks. A borrower may elect a covered that is between 8 weeks and 24 weeks also. The amount to which a borrower is entitled to is equal to the following costs incurred or expenditures made during the covered period: 1) Payroll costs, excluding a. those taken into account for determining the employee retention credit b. qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020, which is a general employee retention credit for a qualified disaster. 2) Payment of interest on any covered mortgage 3) Any covered operations expenditure 4) Any covered property damage cost 5) Any payment on any covered rent obligation 6) Any covered utility payment 7) Any covered supplier cost 8) Any covered worker protection expenditure Limitation on Forgiveness Similar to the first round of the PPP, there may be a limit to the amount of forgiveness that a borrower is eligible for. Those are: The reduction associated with maintaining headcount The borrower is required to use at least 60% of the loan proceeds on payroll costs. Forgiveness will be a limited to the quotient obtained by dividing the amount of payroll costs incurred by 0.60. Availability and Rules The SBA has 10 days from the enactment of the Act to issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans. Under the original PPP, loans were available until August 8, 2020. Once the Act becomes effective, loans for entities still eligible for PPP1 loans and second draws will be available until March 31, 2021 or until the funds have been exhausted. The total available funds for PPP1 and PPP2 is $806.45 billion. As of August 8, 2020, $525.01 billion was distributed during the first round. If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Revisions to the Paycheck Protection Program Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On December 21, 2020, the Consolidated Appropriations Act (the Act) was passed by both houses of Congress. See our article for a high level summary of some of the provisions included in the Act. The Economic Aid to Hard-Hit Small Businesses, Nonprofit, and Venues Act (the Economic Aid Act), which is part of the Act, includes revisions to the Paycheck Protection Program (PPP) that was established under the Corona Aid, Response and Economic Security Act (CARES Act). Additional Eligible Expenses For loans that have not yet been forgiven, borrowers may now also include as forgivable costs, as defined by the Economic Aid Act, the following: Any covered operations expenditure; Any covered property damage cost; Any covered supplier cost; and Any covered worker protection expenditure Additionally, eligible health benefit costs have been expanded to include more than the continuation of group health care benefits under the definition of the maximum loan and forgivable uses.  Now included in health care costs are group life, disability, vision and dental insurance.  Under interim final rules issued by the Secretary of the Treasury and the SBA, vision and dental insurance costs were already included as forgivable costs, but this expands those costs to be included as a part of the calculation of a borrower’s maximum loan. This is important since borrowers have the ability to increase their original loan under the Economic Aid Act. The effective date of the revision and inclusion of these costs are as of the effective date of the CARES Act, March 27, 2020. Selection of Covered Period for Forgiveness The definition of the covered period has been revised under the Economic Aid Act to be any period between 8 weeks and 24 weeks. Under the original rules, borrowers with a loan origination prior to June 5, 2020, had the option to select a covered period of 8 weeks or 24 weeks.  Borrowers with loan originations after June 5, 2020 could only use a 24-week covered period.   Many borrowers have found themselves spending significantly more than the loan proceeds throughout their covered period and weighting prudent business decisions (i.e. layoffs and furloughs) due to lasting impact of COVID-19 on some business sectors and the impact of their forgiveness.  Revising the covered period to allow for a business to “cut-off” the period prior the end of 24 weeks will allow the borrower to better manage their business based on economic conditions. Simplified Forgiveness Application For loans less than $150,000, a simplified forgiveness application will be required to be released by the SBA within 24 days from the enactment date of the Economic Aid Act. The application is required to be not more than 1 page and will require the borrower to provide the following information: Description of the number of employees the borrower was able to retain as a result of the loan; The estimated amount of the covered loan amount spent; and The total loan value Borrowers seeking forgiveness will be required to attest that the applications accurately provided the required certification and complied with requirements under the PPP forgiveness costs (i.e. spent funds on eligible costs). Borrowers will be required to retain records related to their forgiveness that support employment matters for 4 years, and other records for 3 years. Documentation requirements remain unchanged for loans greater than $150,000. Requests for increase loan amounts The Economic Aid Act requires that, within 17 days of the enactment date, the SBA issue guidance for eligible entities to request increases in their loan as a result of changes to the rules.  Also, for approved borrowers that returned their loan funds or did not take the maximum loan amount allowed under the rules, those borrowers may also re-request the loan. Definition of Seasonal Employers The Economic Aid Act provides a definition of a seasonal employer: (a) a business that does not operate more than 7 months during a calendar year; and (b) during the preceding calendar year gross receipts for any 6 months were not more than 33.33% of the other 6 months. Eligible Entities The following entities as defined by the Economic Aid Act are now eligible for PPP loans: Housing Cooperatives, however, these entities are subject to a limit of 300 employees; Individual stations, newspapers and public broadcasting organizations; 501(c)(6) and Designation marketing organizations; and Certain organization under bankruptcy proceedings Prohibition of lobbying activities The Economic Aid Act included other provisions that impact the PPP.  It prohibited the use of loan proceeds for the use of lobbying activities that it defines. Commitment and Authority Under the original PPP, loans were available until August 8, 2020.  Once the Economic Aid Act becomes effective, loans for newly eligible entities and second draws will be available until March 31, 2021 or until the funds have been exhausted.  The total available funds for PPP1 and PPP2 is $806.45 billion.  As of August 8, 2020, $525.01 billion was distributed during the first round. As we seen over the existence of the PPP, the Small Business Administration (SBA) will be a under significant time crunch to issue regulations to carry out this Act, as it has 10 days from the enactment of the bill issue such regulations unless otherwise provided in the Economic Aid Act. If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com.   ### Coronavirus Relief Bill Includes Retirement Plan Relief The $900 billion coronavirus relief package, which is expected to be approved by President Trump in the coming days, includes some good news for retirement plan sponsors.  The massive 5,600-page bill includes a “temporary rule preventing partial plan terminations” for plan sponsors of defined contribution retirement plans.  The provision specifically states, “A plan shall not be treated as having a partial termination (within the meaning of 4119(d)(3) of the Internal Revenue Code of 1986) during any plan year which includes the period beginning on March 13, 2020 and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.” This provision allows defined contribution retirement plan sponsors to avoid requirements that are attached to partial plan termination rules, the biggest of which includes terminated participants to become 100% vested in plan benefits.  Plan sponsors that previously concluded they may trigger partial plan termination due to layoffs, furloughs or terminations of employment should evaluate participant counts to determine whether their active participant count as of March 31, 2021 is 80% of the active participant count on March 13, 2020. If you would like more information regarding the coronavirus relief bill and how it will affect your retirement plan, please contact a member of our Employee Benefit Plan Practice. ### Next Round of Coronavirus Economic Stimulus on the Way After months of negotiating, Congress has finally agreed to additional COVID-19 relief. The Emergency Coronavirus Response Relief Act, 2021, expected to be incorporated into a larger overall spending bill, contains $900 billion of emergency funds. The bill includes several provisions providing targeted relief to individuals and smaller businesses through renewed support for the Paycheck Protection Program and extension of unemployment benefits. These provisions, which have bipartisan support, are intended to provide financial relief for individuals and businesses until vaccines are widely available next year and economic activity can begin to return to pre-pandemic normalcy. The bill, which is still being drafted as we go to press but is expected to be signed, contains many provisions, a few of which include: Business expenses paid for with proceeds from PPP loans are now tax-deductible. With this legislation, Congress confirms their original intent when enacting the CARES Act back in March. Recent guidance issued by the IRS indicating that these expenses are nondeductible is now overridden. Expansion of deductions for business meals. Small businesses with 300 or fewer employees and a sustained 25% revenue loss in any quarter of 2020 would be eligible to receive a second forgivable PPP loan. Additional information and guidance are needed regarding the application process, the definition of “sustained,” how the reduction is specifically calculated, and whether related businesses are counted on the employee limitation. The employee retention credit will be extended and expanded. Additional financial support for live entertainment venue operators, independent movie theaters and museums impacted by the health crisis. An extension of the six-month SBA program under Section 1112 of the CARES Act that covers the payment of principal, interest and certain fees of qualified borrowers. An extension (from December 31) of unemployment benefit programs, including the Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation and Federal Pandemic Unemployment Compensation programs. Federal supplemental insurance benefits are expanded for an additional 11 weeks but are set at a lower level of $300/week (versus $600/week under the CARES Act). Provides $2 billion in funding for nursing homes and other assisted living facilities to support testing for and tracing of the COVID-19 virus. Simplified loan forgiveness application process for borrowers with PPP loans less than $150,000. Additional Economic Stimulus Payments of $600/person (compared to the $1,200 per person payment under the CARES Act). We will share more information when the final bill becomes executed and as additional details become known. Please don’t hesitate to reach out to your Schneider Downs professional for additional information.   ### Still No Change in the Nondeducibility of PPP-funded Costs The IRS issued Rev. Rul. 2020-27 on November 18, 2020 affirming that a taxpayer who receives a covered loan guaranteed under the Paycheck Protection Program (PPP) and paid or incurred certain otherwise deductible expenses listed in section 1106(b) of the CARES Act may not deduct those expenses in the taxable year in which the expenses were paid or incurred if the taxpayer reasonably expects to receive forgiveness.The following situations provided by the revenue ruling have the taxpayer computing taxable income based on the calendar year for federal income tax purposes for receiving a covered loan in 2020. Situation 1. During the period beginning on February 15, 2020, and ending on December 31, 2020, Taxpayer A (A) paid expenses that are described as eligible expenses. These qualifying expenses include payroll costs, interest on a mortgage, utility payments, and rent. In November 2020, A applied to the lender for forgiveness of the covered loan based on the eligible expenses it paid during the covered period. At that time, and based on A’s payment of the eligible expenses, A satisfied all requirements for forgiveness of the covered loan. The lender does not inform A whether the loan will be forgiven before the end of 2020.Situation 2. During the covered period, Taxpayer B (B) paid the same types of eligible expenses that A paid in Situation 1. B, unlike A, did not apply for forgiveness of the covered loan before the end of 2020, although, considering B’s payment of the eligible expenses during the covered period, B satisfied all other requirements for forgiveness of the covered loan. B expects to apply to the lender for forgiveness of the covered loan in 2021.The issued revenue ruling does provide a safe harbor which allows taxpayers to claim a deduction in their taxable year beginning or ending in the tax year 2020 under the following scenario. Taxpayers can claim a deduction if eligible expenses are paid or incurred during the tax year 2020, the taxpayer receives a covered PPP loan which the taxpayer expects to be forgiven, and in the subsequent year request for forgiveness is denied.Under this scenario, taxpayers may be able to deduct some or all of the eligible expenses on their timely filed tax return or amended tax return. We will continue to monitor any legislative changes regarding the nondeductibility of PPP-funded costs and provide updates in order to help taxpayers monitor their tax situations. If you have any questions regarding the impact of your Payroll Protection Program Loan, do not hesitate to contact Schneider Downs. ### COVID-19 Fraud Risks: Remote Working, Internal Controls and Corporate Disbursement Fraud The COVID-19 pandemic has changed where we work, how we work and ultimately how companies execute and sustain their internal control environment.Recent studies show that the top 5 fraud schemes have increased on an average of about 85% through 2020 due to the current pandemic, with notable increases in corporate fraud schemes, specifically, corporate payment fraud. These numbers are truly astounding and cannot be ignored when assessing how companies can protect themselves against these types of threats. As we continue to work with our clients through this unprecedented time, we are tasked to answer a number of critical questions to identify and mitigate additional fraud risk. Common questions include: What impact has COVID-19 had on increased fraud risk and exposure to additional threat actors as it relates to corporate disbursements? What can companies do to protect against payment fraud? How can companies identify key gaps within the internal control environment? With all the new challenges we face, developing awareness and understanding of these new fraud risks is the first step in mitigating the risk of payment fraud. However, focusing on a culture of strong internal control is imperative to ensuring the lasting health and growth of any organization.To learn more about these increased fraud risks and ways to mitigate the risk of corporate payment fraud, we invite you to download our whitepaper, COVID-19 Fraud Risks: Remote Working, Internal Controls and Corporate Disbursement Fraud.About Schneider Downs Risk AdvisorySchneider Downs offers several risk advisory services to help our clients navigate these changing business risks. As part of these services, we work with our clients to assess control environment maturity and develop appropriate risk mitigation plans to enhance corporate governance and control activities. To learn more visit www.schneiderdowns.com/risk-advisory-services or contact us for more information.  ### Unreported Income Notices En Route Taxpayers who have not filed an amended Ohio Individual Income Tax Return after resolving a CP2000 audit with the IRS should be on the lookout for a CP2000 income tax billing notice. The Ohio Department of Taxation (ODT) began mailing notices for tax years 2015-2018 on September 3.The CP2000 audit – or unreported income program – shows adjustments to Form 1040, while the billing notice details the types and amounts of unreported income identified by the IRS and the total amount of additional tax due and interest owed to ODT.It’s important to respond to these notices promptly to avoid an assessment, collection action and/or additional charges. If you agree with the total amount owed, you do not need to file an amended return, and can pay online, by phone or through the mail. If you disagree, you must obtain a Tax Account Transcript from the IRS and send it along with a copy of the CP2000 billing notice to ODT’s Compliance Division electronically, by mail or eFax.For details, questions or help with these billing notices, contact your tax professional at Schneider Downs.  ### Third Party Risk Management Virtual Assessments Forced by Pandemic Due to the COVID-19 pandemic companies have been mandated to work remote as much as possible to with over 95% of all business travel paused and employees being required to work outside of traditional work environments, including client site visits, conferences and group lunches. For specialized areas like third-party risk management (TPRM), this has been quite an adjustment. Typically, TPRM practices require on-site visits to their critical and high risk third parties to validate logical and physical security controls are in-place, but with most travel has been restricted, virtual assessments are more important now than ever. Over the years, TPRM teams have continuously sought to reduce overhead and increase efficiency. With improvements in technology, the concept of virtual assessments is not new to TPRM groups, however, the abrupt industry shift to virtual assessments was one in which no one would have guessed.There are certain welcomed advantages to virtual assessments including cost reduction, ease of scheduling and coordination, and timesaving’s for all parties involved. There are also several disadvantages presented by the virtual environment – virtual reviews can take longer due to the nature in which information is shared and digested, lack of physical and environmental control assurance, and reduced third party accountability.  Although the shift to virtual assessments raises some concerns, the potential benefits seem to outweigh the drawbacks. Perhaps this is another situation in which COVID-19 propelled digital transformation.Have you considered how your organization will continue to provide assurance and comfort to management without physical assessments, in a secure and efficient manner? Well, as you continue to mature your virtual assessment approach, consider implementing these tried and true practices:Initial Contact with the Third Party TPRM assessor will email their Third Party that an assessment is required to be completed; TPRM assessor will provide their questionnaire to be completed or alternative questionnaires that will be accepted; The TPRM assessor will schedule an introduction call. Introduction Call/Evidence Request TPRM assessor will clearly define the virtual assessment process; TPRM assessor will request the documentation/policies that will need reviewed; TPRM assessor will inform how to upload/provide the documentation/policies; TPRM assessor will inform what physical controls will need to be reviewed and request SOC reports; TPRM assessor will work with the Third Party to scheduling the assessment; TPRM assessor will set expectations of the Third Party; Determine what technology will be used to conduct the virtual assessment (Zoom, Teams, WebEx, etc…).  Perform the Assessment TPRM assessor will perform the assessment by reviewing the completed questionnaire and leverage provided documentation/policies; TPRM assessor will conduct a virtual session to review the required physical controls and any controls not covered by the documentation/policies; TPRM assessor will document any gaps/findings identified. Wrap Up the Assessment TPRM assessor will summarize the key points of the assessment to confirm their understanding; TPRM assessor will confirm remaining follow up items with the Third Party and provide a closeout communication that is detailed and knowledgeable.  It is important to keep in mind that virtual assessments are being utilized to strengthen and designed to make important relationships with third parties even more valuable.Related ArticlesThis article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Mind Your T's and C's About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights.  Learn more at www.schneiderdowns.com/tprm or contact us for more information.  ### PCAOB Critical Audit Matter Interim Report (Release No. 2020-002) On October 29, 2020, the PCAOB released its Interim Analysis Report on the initial impact of critical audit matter (CAM) requirements on key stakeholders in the audit process. Included in the 2017 changes to PCAOB Auditing Standard 3101, auditors are required to include CAMs in the auditor’s report, effective for fiscal years ending on or after June 30, 2019 for large accelerated filers, and for fiscal years ending after December 15, 2020 for all other companies to which the requirement applies. The PCAOB notes that “CAM communications are intended to inform investors and other financial statement users about matters that require especially challenging, subjective, or complex auditor judgement, and the auditor’s response to those matters.” The PCAOB analyzed 2,420 audit reports containing CAM communications, and reported an average of 1.7 CAMs per audit report with a range of 0-7 CAMs communicated per report. The most commonly identified CAMs were Revenue Recognition, Goodwill, Other Intangible Assets, and Business Combinations.As evidence of the PCAOB’s commitment to understanding the impact of the CAM requirements, the Office of Economic & Risk Analysis at the PCAOB focused its analysis on the significant costs, benefits, and unintended consequences of three main areas impacted by CAMs: Audit firm and audit engagement team responses to the CAM requirements; investor use of CAM communications; and audit committee and preparer experiences related to CAM implementation.Key Findings Audit firms made significant investments to support initial implementation of the CAM requirements. Investments made by audit firms include developing tools, guidance and trained personnel, and establishing networks of CAM subject matter experts. Additionally, audit engagement teams spent 1% of total audit hours “identifying, developing, and communicating CAMs” in the year of implementation. Based on the results of the large accelerated filers implementation, the PCAOB believes that costs related to audit implementation of the CAM requirements were “largely inconsequential.” Investor awareness of CAMs communicated in the auditor’s report is still developing, but some investors are reading CAMs and find the information beneficial. Investors are using CAMs to better understand the work of the auditor and company disclosures, and some have suggested expanding CAM requirements to include the outcome of audit procedures. The staff has not found evidence of significant unintended consequences from auditors’ implementation of the CAM requirements for audits of large accelerated filers in the initial year. Audit Firm SurveyThe Big Four firms estimated that, on average, they spent 23,000 hours developing process and procedures to support CAM implementation (53% at the partner level), in addition to 14,000 hours of firm-wide CAM requirement related training (32% at partner level). The PCAOB estimates that these hours correspond to $6.5M in implementation costs for Big Four firms. Additionally, four “smaller” audit firms with 15 or more large accelerated filers were surveyed, and those firms estimated that they incurred approximately $1.0M of CAM implementation costs each, based on an average of 3,700 hours of process development and 3,100 hours of CAM related training.Engagement Partner Survey Engagement partners indicated 1% of total audit hours were spent on CAM matters, with approximately two-thirds of that time incurred before year-end. Prior to implementation by large accelerated filers, engagement partners were concerned that the additional CAM requirements would inhibit communications among the auditors, preparers, and the audit committee, over fears of what communication will be publicly disclosed; however, less than 2% of engagement partners in the survey reported that the new requirements constrained auditor communication with the audit committee, while 41% reported enhanced communications. Additionally, approximately one-third of engagement partners reported that the issuer made changes to the financial statement disclosure or other corporate reporting as a result of CAMs. Lastly, only 3% of partners report making changes to the nature, time and extent of audit procedures due to CAM requirements.Investor SurveyInvestor knowledge of CAMs is widening, with approximately only two-thirds of responders reporting to have heard of CAMs, and less than a third had seen CAMs in an audit report. Investors have reported using CAMs to “better understand the work of an auditor, better understand financial statement disclosures, and develop questions for company management” among other uses. Audit Committee Chair and Preparer Interviews Audit committee chairs and preparers were also interviewed regarding their opinions of CAM implementation, and some responders noted that significant up-front preparation by auditors (including dry run programs) contributed to a generally smooth experience for issuers. Furthermore, none of the 12 audit committee chairs interviewed reported negative impacts to communication with their auditors as a result of CAM requirements. Preparers also noted that CAMs have not significantly changed their company’s financial reporting process or controls.Moving ForwardThe PCAOB expects to issue a similar report in 2022 to provide a prospective on any changes in the communication of CAMs and the initial impact on smaller issuers, in addition to a more comprehensive report in 2024 to provide a complete analysis of CAM implementation, since some of the effects of the new requirements may take several years to manifest. ### Paycheck Protection Program – Loan Necessity Questionnaire FAQ Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. In November we wrote about the release of Forms 3509 and 3510, which were intended to assist the U.S. Small Business Administration (SBA) in evaluating a borrower’s good-faith certification that economic uncertainty made its Paycheck Protection Program (PPP) loan request necessary. On December 9, the SBA released a new question-and-answer document related to the PPP that provides clarity on the agency’s intentions and process behind loan necessity questionnaires. Why are some PPP borrowers receiving a Loan Necessity Questionnaire (SBA Form 3509 or 3510)? Borrowers with loans in excess of $2 million (including affiliates) are being requested to complete the Loan Necessity Questionnaire to assist the SBA in reviewing loans for eligibility, fraud and abuse and loan forgiveness requirements. Borrowers “should” complete the questionnaire once requested by the lender within 10 business days. The completion of the questionnaire is not the SBA challenging the borrower’s certification. The agency recognizes that it has a limited amount of resources, and its intention is to accumulate information it believes is relevant to borrowers’ certification in their loan application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,” as required by the CARES Act. The SBA is taking a multistep approach in reviewing the certification, the first part of which is the borrower’s completion of the appropriate questionnaire. Upon review of the 3509 or 3510, the agency may request additional information, with which the borrower should comply and where they will have opportunity to provide additional narrative responses. If necessary, the SBA will then make a final determination that a borrower lacked an adequate basis for its loan necessity certification after reviewing any additional information that a borrower chooses to submit. If you need more information or assistance regarding your PPP loan, visit our website at schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### A Look at Some Ongoing Trends in the Construction Industry As we head into 2021, it’s time to embrace some innovative new developments under way within the construction industry.  Over the past year, there have been significant changes due to the COVID-19 pandemic that have led us to pay closer attention to sustainability and the integration of technology.  These trends are very likely to persist into next year and continue to change the industry as we know it.  According to a recent report from the Construction Helpline, three major developments will lead the charge in 2021.First is the continuing integration of technological advances into the construction process.  As many of us saw in 2020, technology is playing a more important role in the everyday workplace than ever before.  The construction industry is now moving beyond inferior software and light business models to more recently developed technology like drones and 3D printers, which can be used to take aerial photographs and videos of the landscape while also monitoring security risks, and 3D printers, which can help make the industry significantly safer with flexible design prototypes while maintaining extremely high quality, detail and integrity.Next, are trends that lean towards increased focus on structural stability.  Throughout the country, facilities are being redeveloped at an extremely high rate with sustainable construction as a focal point, often referred to as “green building” a technique to construct in an environmentally responsible and resource efficient manner.The last major development centers around the labor force.  Job shortages continue to be a concern for the industry, thanks to, insufficient technical training and an increase in the number of young professionals looking for career paths outside of construction.  Of course, COVID-19 also had no small impact in that area as well.If you have any questions don’t hesitate to contact us or check out the Schneider Downs Construction Industry Group. ### Manufacturing - State of the Industry While 2020 has been challenging, the manufacturing industry continued to perform well in the third quarter of 2020. According to an article released by Bloomberg, U.S. manufacturing output increased for a sixth consecutive month leading up to October 2020.   The article also noted that “the October gains in factory output were broad-based with increased production of consumer goods, business equipment and construction supplies that indicates a solid start to the fourth quarter.” The question then becomes, what is driving this increased output, and are we likely to see this trend continue after the COVID-19 pandemic subsides?  The answer to this question may be found within a recent survey of more than 200 manufacturing and distribution companies that was conducted during the summer of 2020.  As summarized in an article posted by the Boston Business Journal, Citrin Cooperman – Accountants and Advisors surveyed more than 200 manufacturing and distribution companies within the United States to gain an understanding of the state of the industry.  Of those surveyed, 47% reported significant or modest growth during the months impacted by the pandemic.  A common trend within this group of respondents was the increased focus on the importance of e-commerce performance as a necessity for future success.  Throughout the pandemic, more consumers have purchased goods online than ever before.  Sixty-eight percent of surveyed respondents within the Citrin Cooperman study alone noted that their online sales have grown between 11%–50% over the last year.  Many noted that Amazon or other e-commerce platforms had aided in this growth.  This statistic aligns with similar data conducted by Marketplace Pulse, which reported that Amazon has experienced an approximate 29% increase in traffic in the United States from February 2020 to August 2020.   As this data suggests, continued emphasis on e-commerce may be the key for many organizations to continue to grow, not only in the months ahead, but also within the post-pandemic economy.   If you or your organization have questions regarding how we can help your business continue to adapt, please contact a member of the Schneider Downs Manufacturing Industry Group.  Sources:  https://www.msn.com/en-us/money/markets/u-s-manufacturing-output-increased-for-sixth-month-in-october/ar-BB1b64ZI  https://www.bizjournals.com/boston/news/2020/11/15/the-post-pandemic-pivot-for-manufacturing.html  https://www.marketplacepulse.com/articles/amazons-fastest-growing-markets-during-the-pandemic#:~:text=Amazon%E2%80%99s%20Fastest%20Growing%20Markets%20During%20the%20Pandemic%20,%20%2025%25%20%2013%20more%20rows%20    ### Taxation Implications for Foreign Nationals Working in the United States, in a Nutshell – PART 1 Today’s global workforce is evolving, and many American companies with international employees find they often need assistance in comprehending the tax implications pertinent to the foreign nationals who work for them. The U.S. imposes taxes on worldwide income for all individuals deemed to be “residents,” whereas nonresidents are taxed only on their U.S. source income, but under what conditions is an inpatriate (inpat) considered a resident for U.S. tax purposes?Tax rules provide several options to help make that distinction, including the Substantial Presence Test, which delineates two parameters in determining resident/nonresident status: 31 consecutive days of stay in the initial year of the U.S. assignment; and the 183 Days Test, wherein the total of physically present days is calculated as follows:  a. Total days in the current year, plus b. 1/3 of the days in the preceding year, plus c. 1/6 of the days in the year preceding that one Visa status may also impact residency determination. Holders of some visas, including the J and F type, are automatically considered nonresidents, so it’s important to know which visa your inpats are holding to avoid double taxation of income. Also, once an individual obtains a green card, they are treated as a U.S. resident.Of course, there are exceptions. The Treaty Tie Breaker Provision states that even if a taxpayer meets the Substantial Presence Test, certain international tax treaties treat the taxpayer as a nonresidents if he or she can establish a domicile of origin. Each country has its own unique tax treaty with the United States; understanding their various nuances can reduce tax liability for inpats. Also, just because a foreign national meets the Substantial Presence Test, he or she is not necessarily a U.S. tax resident. There are exceptions and elections available. If the taxpayer’s U.S. presence in previous years is already known, an advisor can prepare possible scenarios to determine the best tax position and may be able to suggest the best timing of arrival for their U.S. assignments.   ### Statement changes coming On September 18, 2020 the U.S. Department of Labor (DOL) published an interim final rule under the Setting Every Community Up for Retirement Enhancement (SECURE) Act that would require 401(k) plan sponsors to annually disclose lifetime income estimates to plan participants.  The annual disclosure is designed to give participants a realistic picture of how much monthly retirement income they could expect to purchase as an annuity with their current account balance.  Annual Disclosure of Projected IncomeUnder the rule, plan administrators must show participant retirement savings as monthly income under two scenarios: as a single-life income stream, and as an income stream that factors in a survivor benefit.The estimates must explain what the lifetime income examples mean and the assumptions that were used to calculate them. Among others, plan administrators are instructed to follow these assumptions: Assume that the lifetime income begins as of the last day of the statement period. Assume that participants are age 67 (or actual age, if older) on the statement date. Assume participants are married, and their spouse is the same age. Use an interest rate equal to the 10-year constant maturity Treasury securities yield rate to approximate the rate used by the insurance industry to price immediate annuities. Further, according to the DOL, plan fiduciaries that use the regulatory assumptions and the model language prescribed by the new rule will not be held liable if participants are ultimately unable to purchase equivalent monthly payments. Importantly, although the lifetime income illustrations are required to show the form of payment as annuities, neither the SECURE Act nor the interim final rule requires defined contribution plans to offer an annuity distribution option.Effective DateThe rule takes effect on Sept. 18, 2021, and will apply to plan statements furnished to participants after that date.  ### Sign Me Up for Insurance Says no one ever. Why is that? Because that means you have to pay for something that may never benefit you. Another reason why people tend to avoid buying insurance is due to the pushy sales culture within the insurance industry. In this article, we are going to discuss the need for life insurance and property and casualty insurance.A basic risk management strategy will include automobile, homeowners or renters, and umbrella insurance policies.Each of these policies protect you and your assets against many different risks, while also providing liability protection. Each insurance policy will carry a certain amount of liability coverage, and it is very important that you ensure that you have the required liability coverage amounts for each policy. If you do not, your umbrella policy (which provides liability coverage beyond your traditional homeowners and auto coverage) may not provide the protection you thought it would. In addition to the policies above, a basic risk management strategy also includes life insurance. In this article, we will discuss how to evaluate life insurance needs. In future boot camp articles in 2021, we will delve deeper into other insurance policies and associated planning considerations. Life insurance can be very complex, but ultimately its purpose is to provide security to loved ones should something unfortunate occur. To illustrate the life insurance planning considerations, let’s assume we are talking with a married individual who is the primary breadwinner, with a spouse that stays at home with two young children. To determine the individual’s potential life insurance need, we will want to first gain an understanding of their overall personal balance sheet, illustrating all of the couple’s personal assets and liabilities. Along with this couple’s personal balance sheet, a review of their monthly cash flow, including any potential large future purchases, should be performed. With a good understanding of their personal finances, we then begin to evaluate how much life insurance they want to consider purchasing. When advising our clients, we try to simplify life insurance as much as possible. Typical questions posed to frame the life insurance need discussion include:  Does someone depend on them for my income?  Do you have any debt that would need to be paid off in the event of my death (i.e. mortgage)?  Are there any future debt obligations on the horizon (i.e., education for young children)?  Note: Life insurance can become complicated quickly depending on the policy (i.e. term, universal life, whole life) and any potential policy riders (i.e. additional benefits added to a life insurance policy often requiring additional premium payment). The type of life insurance and other add-on features to a policy are beyond the scope of this basic article. Also given the personal and sensitive nature of life insurance considerations, these more in-depth conversations are best discussed with a trusted advisor.Through conversations with the couple, we determined that should something unfortunate occur to the income earning spouse, they would like to be in a financial position to pay off the home mortgage and build up a comfortable nest egg for the surviving spouse to maintain their current standard of living, as well as materially fund future education expenses for the children. While the above example is overly simplified, the review of personal finances, as well as future aspirations, are critical financial planning steps needed to determine one’s potential life insurance need. If you have life insurance related questions or would like to have a more in-depth conversation, please contact our team at Schneider Downs Wealth Management Advisors to learn more.   ### Impact of Gifting Ownership Interest on PPP Loan Procedures If you are considering gifting your ownership interest in a business that has a PPP loan, that transfer may have complicated implications on ownership procedures. The Paycheck Protection Program (PPP) was created by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses stay viable and keep workers on the payroll despite any negative impact that may have been caused by the coronavirus.  These loans can be forgiven if employee retention criteria are met and funds are used for eligible expenses.  A change in ownership of a business that has a PPP loan can impact the procedures needed to comply with the PPP in order to maintain forgiveness status. For PPP purposes, a change in ownership occurs when at least i) 20% of the ownership interest of a PPP borrower is transferred; ii) the PPP borrower transfers at least 50% of its assets; or iii) a PPP borrower is merged with another entity.  All transfers since the date of approval of the PPP loan must be aggregated to determine whether a change in ownership occurred. Restrictions on ownership transfer procedures may apply depending on whether the PPP loan has been satisfied.  If the loan is fully satisfied, then there are no restrictions on change of ownership.  In order to avoid restrictions, the PPP borrower must either i) repay the note in full prior to the closing of the transfer or ii) complete the loan forgiveness process and verify that the SBA remitted the funds to the PPP lender, or the PPP borrower must repay any remaining balance on the PPP loan. If the loan is not fully satisfied, restrictions may be placed on the change of ownership procedure.  SBA approval of the change in ownership is not required for i) a transfer of 50% or less of  ownership interest of the PPP borrower or ii) when the PPP borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it to the PPP lender, along with an interest-bearing escrow account controlled by the PPP lender that contains funds equal to the remaining unpaid balance of the PPP loan.  After the forgiveness process is complete, the escrow funds must be disbursed to repay any remaining PPP loan balance, plus interest. If the above are not met, SBA approval is required for all other transfers of ownership interest.  In order to obtain SBA approval for changes in ownership, the PPP lender must submit the request for the change in ownership to an SBA Loan Servicing Center.  The request must include: The reason why the PPP borrower cannot fully satisfy the note or provide escrow funds, The details of the requested transfer, A copy of the executed PPP note, A letter of intent of transfer setting forth the responsibilities of the PPP borrower, Disclosure of whether the transferee has an existing PPP loan and, if so, the SBA loan number, and A list of all owners of 20% or more of the transferee entity’s owners, if the transferee is an entity. The SBA will review and provide a determination within 60 calendar days of receipt of a completed request. Regardless of any change in ownership, the PPP borrower is still responsible for performing all obligations under the PPP loan and complying with all applicable rules required by the PPP.  The PPP borrower will also remain responsible for obtaining, preparing, and retaining all required forms and supporting documentation for the PPP loan. If the new owners misuse the PPP funds, then the new owners will be liable for the unauthorized use.  Also, if the new owner or successor has a separate PPP loan, then the PPP borrower and the new owner are responsible for separating PPP funds and expenses and providing documentation to show compliance with the PPP rules for each borrower. If your business has a PPP loan and you have gifted or are considering gifting any portion of your ownership interest in that business and have any questions related to the impact of that gift on subsequent PPP procedures, please do not hesitate to contact us at Schneider Downs.   ### Data Analytics: Where to Start? At the heart of every successful business and organization is the underlying data within the entity’s operating system.  Data has been, is and will continually be a key component to shaping financial decisions and building better businesses.  As data analysis becomes increasingly important, many small-to-medium-sized companies struggle  with their initial steps in corralling the data and making it useful for analysis.To ready the data for analysis, companies must first gather and ‘clean’ the data, ultimately putting it through the ‘extract, transform and load’ (ETL) process.  The extraction of data is the process of pulling the necessary information to be used for analysis regardless of source or system.  Upon the gathering of the data, the transformation takes place.  Depending on the data sources and underlying system, this process can consist of filtering, cleaning, joining or sorting the data.  This transformation will allow the data to be loaded into the applicable analytics or visualization tool —Tableau, Microsoft Power BI, Solver, Alteryx, etc.Once the data has been loaded and is ready to be analyzed, the possibilities are endless.  In addition to providing for better statistical analyses and projections, data analytics can allow companies and organizations to make internal processes more efficient, focus on value-added tasks, and have timely access to real-time data. In an ever-changing business environment, if you feel that your company could benefit from better data warehousing, analysis and analytical technique, don’t hesitate to contact a member of our automation and data analytics process team:Matt Kraemer - mkraemer@schneiderdowns.comChris Kosty - ckosty@schneiderdowns.comRobert Morgan - rmorgan@schneiderdowns.co ### Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Download the PDF version of this article here. When it comes to matters of IT security assurance, there is at least one guaranteed “assurance” – that there’s no one-size-fits-all approach to IT security. Our IT Risk & Compliance and Cybersecurity teams at Schneider Downs have had the pleasure of working with many different types of security teams, part of many different types and sizes of global corporations and organizations, in varying industries. It is high time to give back to the people who enabled us to gain such world-class experience in our fields. Nausea, Heartburn, Indigestion, Upset Stomach… IT questionnaire requests! If your organization frequently receives vendor questionnaire requests, has varying levels of customer requirements, or has experienced third party risk assessment scope creep, this article is for you. We’re here to simplify your response and quiet the noise from the all too common security seesaw. Symptoms First, let’s define that term – security seesaw. This alludes to the idea that certain compliance and security practitioners have slightly different objectives. Generally speaking, where a compliance practitioner’s main goal is to achieve compliance within an established framework, regulation, organizational requirement, etc., a security practitioner’s goal is to effectively protect organizational assets from potential threats. To be very clear, our teams at SD work on both sides of the floating fence, so we empathize with both schools of thought. Fortunately, both parties do share one common goal that bring us all together: managing and mitigating risk! Diagnosis Question: So, you have multiple customers with different requirements. Many of whom are asking the same questions in a different way. How can your organization normalize these requests to achieve higher efficiency, while still meeting, and potentially exceeding customer demands? Answer: Work together to achieve the same goal in managing and mitigating risk. Each side of the security and compliance coin needs to understand the objectives of the other party in order to reach and achieve that common goal. So called, “Gotcha” auditors are hopefully few and far between anymore. It’s common now that your auditor has a much more relationship-driven style of auditing, intended to work with people rather than against them (if not, we could probably recommend a few!). This style stems from basic concepts of humanity and affirms the idea that you can work together through that common goal. Treatment Here are some tips, tricks, and techniques we’ve learned along the way for how to effectively work with third party auditors: 1. Third party audits start and end with a contract. That contract is the holy grail of your customer relationship and is also the foundation of your control requirements. Many contracts require a third party audit, not necessarily a specific control. Best practice TPRM guidance requires organizations to ensure a commensurate level of control with each relationship. However, the specific controls you implement to mitigate risk should be negotiable (if all parties talk in terms of risk mitigation). a. There’s more than one way to bake a cake, and there’s more than one way to mitigate risk. The controls being requested by third party auditors aren’t the end all, be all. Consider and discuss other options to mitigate risk to find the balance of security vs. functionality that is acceptable for both parties. b. Consider “accepting” the risk. Should your organization be unwilling to implement a certain control (due to cost or business rationale concerns), consider a contract amendment to accept the risk, should that risk ever be exploited. 2. As you plan for an upcoming third party risk audit/assessment, pay particular attention to the scope of the engagement. Focus closely on the data elements that your organization “processes” (stores, transmits, accesses, etc.) on behalf of your customer. The systems and controls surrounding these data elements are all that should be relevant. a. If you’re unsure about what data elements are “processed,” clarify. 3. Most standards-based assessment reports don’t show the tests that are performed to determine operating effectiveness. The only standards-based assessment reports that show these tests are SOC 1 Type II and SOC 2 Type II reports. Every other type of standards-based assessment report only shows the design of the controls or the results of the tests (For example, ISO, HITRUST Certifications, PCI, SOC 1 Type I, SOC 2 Type I, SOC 3, etc.) a. Don’t be surprised if your third party auditor can’t leverage standards-based assessment reports that aren’t a SOC 1 or 2 Type II. 4. Consider isolating customer data. If you’re not willing to budge on certain security requirements within your frequently used environments, consider isolating the in-scope customer data that your customers are concerned with. Specifically, air-gapping is an effective network security measure to physically isolate networks and/or interfaces. However, there are many ways your organization can isolate data and limit third party requirements. 5. If you have a list of findings that you accepted, don’t commit to a timeline that will cause an issue. Timelines are negotiable. The key word to remember here is, “reasonable.” If everyone agrees that timelines are fair and reasonable, then you’ll generally fulfill your third party requirements. 6. Customers that need certain your organization to implement specific controls without leeway might not be speaking in terms of risk. For example, customers that “need you to obtain an ISO certification” or “need you to change your passwords every 30 minutes.” a. Consider asking what the risk they’re concerned with is, and what could happen if the risk was exploited (i.e., understanding why it is a requirement) to get to the bottom of the concern. 7. Cloud requirements – that’s right, third party auditors are concerned with more than just third parties, namely fourth and potentially fifth parties. If your customers are asking about your cloud vendor, it’s your responsibility to uphold their third party requirements for your vendor, and you might need to do so to the same degree you’re being held accountable. a. Fortunately, cloud service providers are facing the same third party requirements you are and can often provide a SOC 2 Type II report to independently demonstrate security assurance. 8. Concerned with your upcoming contract renewal? Or better yet, seeking a first-time contract with a new customer? a. Regardless of the number of egregious gaps that are found during a third party audit, you can generally still satisfy a third party auditor by documenting comprehensive remediation procedures. Ultimately, we want to see that you care about your security and have plan. 9. Are your third party auditors not accepting your SOC Report? Or asking questions above and beyond what was tested within the SOC report? a. If you’re being asked to map your SOC controls to your customer’s questionnaire or if they have questions above and beyond what was tested in the SOC report, then you’re receiving valid requests. This just means that your customer has a higher sensitivity to risk. Refer to the first sentence of this article again. Security isn’t a one-size-fits-all-approach, and different customers/third party auditors are going to have different requirements based on their risk appetite. Good news is there are a few easy ways to handle this sort of request: i. Have your SOC auditors map the control crosswalks for you. They are, after all, the ones that independently designed and tested your controls. They might have a more intimate relationship with the wording of your controls than you do. ii. Add the controls that your third party auditors are requesting to be tested to your future SOC report. This will further enable you to adhere to the “test once, provide to many” approach of TPRM. 10.  Last but not least – we know your policies and procedures are “Top Secret.” We also know that they’re generally nothing we haven’t seen 100 times over :) Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors How Third Party Risk Management Caters to Your Organization Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information.   ### Chronicles of a Penetration Tester The massive shift to a remote workforce landscape has expanded the technology perimeter for most organizations and correspondingly increased their overall exposure to the most common cybersecurity threats of 2020. Throughout these challenging times, the team of experienced cybersecurity professionals at Schneider Downs continue to work hard every day to make our firm, clients and communities better prepared to prevent, detect and respond to modern cybersecurity threats. The graphic below highlights some key vulnerability trends in our findings. Social Engineering – As you can see, user susceptibility to phishing attacks is higher than ever. Although there are likely a number contributing factors, we attribute this increase to the dangerous combination of new internal processes and individual distractions. With so many new standards of communication and remote workforce procedures, users are struggling to follow basic email security principles, which can be particularly challenging for those with high-traffic home office setups where they may experience increased interruptions and background noise. Logical Access Controls – We’ve also observed a significant spike in the number of remote resources lacking the enforcement of multifactor authentication (MFA). The utilization of remote resources has understandably exploded throughout 2020, but too often these resources have been rapidly deployed without proper security configurations, like MFA, the single most effective cybersecurity control an organization can implement. Data Governance – We continue to see data governance issues on the rise. As we all continue to adjust to a remote workforce landscape, increased dependence on collaboration tools like Microsoft Teams has made it easier than ever for individual users to share and manage data. However this is a double-edged sword, and has significantly contributed to the volume and variety of sensitive files stored within unstructured and often unprotected data. Patch Management – On a positive note, patch management issues have declined. Don’t get me wrong, we still see our fair share of missing critical security patches, and we are far from done worrying about the zero-days of tomorrow, but it’s nice to see a more widespread adoption of effective patch management efforts. A long overdue win for the cybersecurity community. Be sure to check out this recent recording from a speaking engagement where I discuss these trends and much more, including a deep dive into some of the most effective methods to-date, in which pentesters and threat actors alike are successfully compromising the average network. Lastly, keep in mind that not all penetration tests are created equal. Far too often, we see organizations of all sizes and industries relying on a glorified vulnerability scan to fill the increasingly important role of a proper penetration test. I challenge us all to maintain high expectations when it comes to the methodologies, toolsets and techniques of those performing these types of highly technical consulting services. If a penetration test comes back with no significant findings, be skeptical of the tester’s capabilities. Now more than ever, it’s crucial for decision-makers to have an accurate and actionable understanding of the cybersecurity risks we all face. For more information about penetration testing please visit our penetration testing service page or download our penetration testing service overview. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident.   ### Financial Factors in Selecting Plan Investments-Final Rule Ethically responsible investing has been a hot topic in recent years. In response to increasing demand from investors, a new class of “sustainable investing” vehicles – that is, investments that focus on non-pecuniary interests such as environmental, social, and governance (“ESG”) factors – has emerged in the marketplace in recent years. The availability of ethically responsible investment options raises an important question for fiduciaries of ERISA-covered retirement plans: to what extent are plan fiduciaries permitted to consider non-financial interests such as ESG factors when selecting plan investments?The Department of Labor (DOL) first addressed the application of the fiduciary duties of prudence and loyalty under ERISA to plan investments that promote non-pecuniary benefits in Interpretive Bulletin 94-1 (IB-94-1), which stated that when competing investments serve the plans economic interests equally well, fiduciaries may use non-pecuniary considerations as a “tie-breaker.”  Since IB-94-1, additional guidance came in 2008 with IB 2008-0, in 2015 with IB 2015-01, and more recently with a 2018 Field Assistance Bulletin.  Each one of these pieces of guidance made clear that ERISA requires plan fiduciaries to consider the financial interests of the plan participants and beneficiaries above everything else.    In June 2020 the DOL published a proposed rule on ESG investing, noting concern “that the growing emphasis on ESG investing may be prompting ERISA plan fiduciaries to make investment decisions for purposes distinct from providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the plan.”  The DOL added that it was “concerned that some investment products may be marketed to ERISA fiduciaries on the basis of purported benefits and goals unrelated to financial performance.”The final rule, published October 30, 2020, prohibits fiduciaries from selecting investments based solely on non-pecuniary considerations.  However, in the case of participant-directed plans such as 401(k) plans that allow participants to select from a broad range of investment options, plan fiduciaries may in some circumstances offer ESG or other investment options that focus on non-pecuniary interests as one of the plan’s available investment alternatives, provided that generally applicable fiduciary duties are otherwise satisfied in connection with the investment.The final rule adds the following six “core additions” to the current investment duties regulation at 29 CFR 2550.404a-1:Loyalty DutyThe final rule continues to treat the original 1979 regulation’s provisions on the fiduciary duty of prudence as a safe harbor. In addition, the rule separately sets out a new provision regarding a fiduciary’s duty of loyalty under ERISA section 404(a)(1)(A) as minimum requirements for meeting the statutory standard of loyalty.Pecuniary Factorsthe final rule adds a specific provision to confirm that ERISA fiduciaries must evaluate investments and investment courses of action based solely on pecuniary factors. This provision also states that the duty of loyalty prohibits fiduciaries from subordinating the interests of participants to unrelated objectives and bars them from sacrificing investment return or taking on additional investment risk to promote non-pecuniary goals.Reasonable AlternativesThe final rule adopts the provision that requires fiduciaries to consider reasonably available alternatives to meet their prudence duties under ERISA, however this does not suggest a fiduciary has to evaluate an infinite number of possible alternatives.  Investment Analysis and DocumentationThe final rule includes new regulatory text setting forth required investment analysis and documentation requirements for those limited circumstances in which plan fiduciaries may use non-pecuniary factors to choose between or among investments that the fiduciary cannot distinguish based on pecuniary factors alone.Investment AlternativesThe final rule does not categorically prohibit the fiduciaries of plans from considering or including, as designated investment alternatives, investment funds, products, or model portfolios that support non-pecuniary goals if the plans allow participants and beneficiaries to choose from a broad range of investment alternatives, as defined in 29 C.F.R. § 2550.404c-1(b)(3). However, fiduciaries must first satisfy the prudence and loyalty provisions in ERISA and the final rule, including the overarching requirement to evaluate investments solely based on pecuniary factors when selecting any such investment fund, product, or model portfolio.QDIAsThe final rule prohibits plans from adding or retaining any investment fund, product, or model portfolio as a QDIA (as described in 29 C.F.R. § 2550.404c-5), or as a component of such a default investment alternative, if its objectives or goals or its principal investment strategies include, consider, or indicate the use of one or more non-pecuniary factors. ### Women in Politics This article is the next installment of our Women’s Suffrage series celebrating the 100th anniversary of the 19th Amendment, which in 1920 provided women in the U.S. the legal right to vote in 38 of the then 48 American states. The movement started back in 1848 and took over 70 years to reach fruition when the amendment was finally ratified. Women’s suffrage didn’t include all women, though. Those of color were initially excluded from the right to vote, a situation it took decades to rectify. And it was even longer before they secured the right to serve in political office. Today’s feature highlights a few trailblazing women who have served – and currently serve – in Congress. Side question: can you guess what year the first woman was elected to Congress? It was 1916. I know, I was surprised, too! Check out her story below…. Jeanette Rankin (R- Montana) was elected to Congress four years before passage of the 19th Amendment. Montana added an amendment to its own constitution in 1914 that granted women the legal right to vote in that state. Congresswoman Rankin served in the House from 1917-1919 and later from 1941-1943. In her first victory, she won with 7,500 votes. During her first term, Rep. Rankin formed a committee on women’s suffrage and initiated the House floor debate on what would become the constitutional amendment. She was also a noted pacifist, voting against U.S. involvement in both World Wars I and II. Patsy Mink (D-Hawaii) was the first Asian-American woman and woman of color to serve in Congress from 1965-1977 and again from 1990-2002. She collaborated with fellow congresswoman Edith Green to set up legislation that barred gender discrimination in academics and athletics at schools receiving federal funding (Title IX), an action that dramatically changed opportunity and participation for women in sports across the country. She also championed civil and women’s rights and education reform, and was an early critic of the Vietnam War. Shirley Chisholm (D-New York) was the first African-American woman to serve in Congress, from 1968 - 1982. She introduced more than 50 pieces of legislation, championed racial and gender equality, supported daycare funding and minimum wages for domestic workers, and advocated ending the Vietnam War. In 1971, she founded the Congressional Black Caucus. Rep. Chisholm also ran for the democratic nomination for president in 1972 and was defeated by George McGovern. Ileana Ros-Lehtinen (R-Florida) is the first Latina woman to serve in Congress, from 1989-2019, succeeding longtime Rep. Claude Pepper following his death. She served 15 terms before retiring, writing legislation that awarded the Congressional Gold Medal to the Women Airforce Service Pilots (WASP) who had served as pilots in World War II. Rep. Ros-Lehtinen was also the first Republican in the House to support same-sex marriage, in 2012.              Sharice Davids (D-Kansas) and Deb Haaland (D-New Mexico) share the distinction of being the first Native American women in Congress, both elected in 2018. Rep. Davids, from the Ho-Chunk Nation, is also the first openly LGBT member of Congress. She recently advocated a $3.75 million grant to the University of Kansas Medical Center to address disparities in COVID-19 testing. Rep. Haaland, from the Laguna Pueblo tribe, sponsored a bill to help break cycles of poverty in native communities through smart economic development that was signed into law earlier this year. As you can see, being female was only one hurdle these determined, unrelenting women had to overcome in paving the way for those now serving in Congress. The total number of women serving in Congress was 127 – the highest number ever in 2018. Shirley Chisholm said it best: “If they don’t give you a seat at the table, bring a folding chair.” No doubt we’ll continue to see more women run for political office and serve in the future. Schneider Downs, in conjunction with the SD Focus on Women committee, is dedicated to empowering our women to excel and reach their highest potential. Resources www.time.com/4551817/50-women-political-history https://www.huffpost.com/entry/unbought-and-unbossed-shirley-chisholm-stands-as-a_b_5a200c23e4b02edd56c6d71d https://history.house.gov/People/Detail/14080 https://davids.house.gov/ https://haaland.house.gov/ ### Successfully Transitioning Significant Processes During Business Succession When preparing to exit their business, many owners will need to hand off the tasks for which they have always been responsible.  It comes with the territory of owning and operating a company.  Owners face the challenge of effectively transitioning responsibilities to the next leaders of the organization.  Additionally, it is beneficial to owners to ensure that their processes create value in order to maximize potential sale price of the business. An approach needs to be followed to allow owners to identify processes with significant impact in order to avoid interruption of processes during ownership transition.Identify Significant ProcessesIn order to best utilize their time, owners need to focus on the key areas of their business that are essential to operations, require their involvement, and address significant risks to the organization.  For example, payroll is a significant process that typically involves some level of involvement from owners or executives.  If employees are not paid, there is a risk of loss of workforce, which may result in the inability to operate the business.  Examples of areas that require owner time and are essential to successful day-to-day operations of the business include order-to-cash, procure-to-pay and payroll.Assess Identified ProcessesOnce significant processes have been identified, owners will want to gain a deeper understanding of the people, processes and technology within each.   Assessing these three main aspects of key processes to understand existing procedures and what could go wrong within each area will help identify potential areas of risk, as well as opportunities for optimizing processes to gain efficiencies.  Develop and OptimizeThe assessment of significant processes may identify gaps or inefficiencies in an organization’s existing processes, which could create risk in transferring these responsibilities during the business transition.  Additionally, the more defined a process, the easier it is to transition.  Efficient and defined processes will result in strong control structure, which can add value in the sale of a business.  The following outcomes may result from the process assessment: Elimination of non-value-added tasks for efficiencies  Addition or standardization of processes and controls Implementation of technology, such as robotic process automation (RPA), for automation of processes and controls Whether the exit strategy is selling the company or leaving a legacy for the next generation, improving organizational structure, functional processes and controls will prepare your organization for more successful due diligence with potential buyers or with a stronger company for the next generation of owners.  Schneider Downs Risk Advisory Services (RAS) professionals can assist owners as they plan to exit their organization by acting as a strategic advisor to implement changes to the organization’s processes to achieve cost reductions and efficiencies, while also providing recommendations to better manage risk and strengthen control activities.  ### Fraud Risk Assessments – What your Organization Should Consider Fraud. The dreaded word no organization wants to hear. Or do you? I would say it’s one word you do want to hear – and talk about – well before it happens to your institution.Combating fraud is always a challenge, and with recent indicators pointing to a significant uptick in fraud instances since the pandemic set in, now is a great time to institute or reevaluate your current fraud risk management practices.A strong fraud risk management program will help you prepare for, protect and enable your organization to develop a response plan in the event fraud risk elevates to unacceptable levels. Our recommended approach leverages recognized frameworks and guidance from COSO and the ACFE. Some critical steps to consider would be.Step one in the process is to understand where your organization’s fraud risk management program currently stands and to assess where you’d like the program to be in the future. Evaluating the current state of your organization will help you develop a plan to achieve your long-term vision.Second, determine how fraud awareness can be promoted throughout your organization, whether it’s through creating a fraud risk governance policy, instituting a fraud risk training program, or simply by communicating fraud risk management roles and responsibilities to employees. This exercise will lead you to build a unique program that fits your needs, since there’s no cookie-cutter model when it comes to fraud risk management.The remaining steps dovetail with identifying fraud risk schemes your institution may be vulnerable to, assessing how you’re managing those schemes, and how you’re evaluating and managing fraud risk areas that are not properly mitigated. When identifying fraud risk schemes relevant to your institution, we recommend considering your risk universe, looking at what’s occurring in the industry at-large and leveraging the FDIC Bank Fraud and Insider Abuse Framework.Once the initial assessment is complete, it’s imperative to perform ongoing monitoring and periodic evaluations to ensure the assessment doesn’t become stale, and mitigation of fraud risk schemes don’t “slip through the cracks” to open up vulnerable areas. During this stage, we also recommend evaluating the level of assurance you have on existing fraud mitigants through first-, second- and third-line defenses.If your institution doesn’t currently have a fraud risk management program in place, or has never performed a fraud risk assessment, it’s highly recommended you do, since it can add great value to your organization. If you have any questions regarding fraud risk assessments for your institution, contact Jessica Miller or James Yard of the Risk Advisory group at Schneider Downs. ### Tracking and Communicating COVID-19 at Your College or University Many U.S. colleges and universities have taken to publishing information related to COVID-19 cases on their campus online dashboard. These helpful consoles are meant to provide a measure of comfort and give reopening colleges a way to present themselves as transparent to students and faculty. Dashboard strategies vary from school to school, but there are some methods of updating data that have proven to be useful.The most successful dashboards are those that are updated at least once every weekday. Information can include the number of positive cases in the community and the total number of COVID-19 tests conducted, along with the frequency of the testing. Some institutions are providing information on trends in the surrounding city or county, the number of individuals in isolation/quarantine and an update of the campus’ operating status.Colleges may be worried, however, about what their dashboard will communicate to their community or students if there’s an increase in cases. They may also be concerned with how the number of cases at their institution looks compared to their peers. These concerns are ones that colleges need to address in order to respond to the needs of their students, faculty members and other key stakeholders, and help continue to improve the COVID-19 standing of the school.As the country grapples with its third spike of the pandemic, clear and concise data can assist the information-sharing process with students, parents and other key stakeholders. Using this information along with other established metrics can aid in future decision-making on how your institution’s response to the pandemic will continue to evolve and provide the appropriate transparency. As we’ve learned, being able to share reliable, easy-to-digest and concise information also boosts credibility with those relying on its accuracy.The Schneider Downs ADAPT team can aid your institution in evaluating your current dashboard and provide feedback on these and other data dashboards. Contact a team member today. ### Selling Your Business to the Next Generation While Deferring Tax Liability and Supporting a Favorite Charity Many people who seek estate planning advice are the owners of family businesses. As such, one of their critical concerns is how to pass the business on to the next generation. Consider this hypothetical. George, age 63, is the sole shareholder of Brick By Brick, Inc., a corporation that specializes in building structures for commercial and residential use. George’s daughter, Julia, is actively involved in the business and is fully prepared to take over the company. As George recognizes he cannot run the company forever, he is thrilled to find out that Julia wants to begin taking over the business. George, however, is concerned with needing sufficient cash flow to support him through retirement.Brick By Brick is valued at $20 million. George has a basis in Brick By Brick of $100,000. George could sell the business to Julia, but George would be liable for tax on a $19.9 million capital gain immediately. Another method would be for George to sell the business to Julia in an installment sale over 10-15 years.  This method will successfully transfer the business to Julia and will provide George with a steady stream of income for the remainder of his life. However, payment of the purchase price for a 10-15 year period, without a gifting component, on that valuation could be burdensome. What if George wanted to sell it for $10 million, but didn’t want a gifting component to the transaction?Consider the option of establishing a Charitable Remainder Trust (“CRT”). By utilizing a CRT, George can provide retirement security to himself, transfer ownership of the business to Julia with minimum transfer and income tax liabilities, all while satisfying his philanthropic goals.To illustrate, George could create a CRT and reserve the right to receive an annual percentage, say 6%, of the fair market value of the assets of the trust for his lifetime. To fund the CRT, George transfers 95% of his Brick By Brick shares. By creating and funding the trust, George receives an immediate charitable income tax deduction. George’s remaining 5% of Brick By Brick is worth $1,000,000. After applying a 30% discount for lack of control and marketability, George could gift the shares to Julia with a gift tax value of $700,000—well within George’s gift tax exemption.Examining only one of the techniques to transfer majority stock to Julia, the board of directors of Brick By Brick can subsequently extend a redemption offer to all shareholders—Julia and the CRT—at the fair market value of the shares. The CRT trustee will accept the offer, and as a result, the CRT will be left with the fair market value of the shares to continue making investments, and Julia will be the sole owner of Brick By Brick, without incurring gift tax. As George receives his unitrust payments, the gain will “leak” out to him over time. However, if George passes away before the entire gain is paid out, the balance of the gain is effectively not recognized.With careful planning, you can choose an option that makes the most sense for your business, your family and your long-term goals. If business succession planning interests you, please feel free to contact Schneider Downs. ### Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors While independent studies have repeatedly shown roughly three out of five reported data breaches stem from a third-party relationship, the simple fact of the matter is that many organizations still cannot effectively quantify their cyber risk attributable to third parties. While the best third-party risk management (TPRM) programs coordinate the efforts of stakeholders from across the business, there are specific considerations that impact cybersecurity and should be a part of any program, whether overarching or focused only on IT vendors. Due to its overall complexity, TPRM is an elephant that must be eaten one bite at a time. Vendor-specific knowledge is often decentralized and third-parties can be hesitant to share details about the internal safeguards they have implemented. For these reasons, security professionals will benefit greatly from partnering with the primary business owners of each relationship. We have outlined the following high-level steps that programs of any maturity level can include in their TPRM program. 1. Know Your Third Parties This is often not as straightforward as it sounds. Most organizations do not have a single vendor repository, and there may be third parties that fit outside the traditional definition of a “vendor”. An important first step in TPRM is building not only a complete listing of third parties, but also understanding how each third party interacts with organizational data or supports critical business functions. Schneider Downs recommends defined processes for the identification of new vendors, closure of terminated third-party relationships, and reconciliation of the existing vendor list. 2. Leverage the Pareto Principle While the 80/20 rule is not absolute, most organizations will find that a small subset of third parties expose the enterprise to the greatest risks. For instance, a security incident impacting a cloud provider, internet service provider, or utility company will clearly cause greater downstream effect than the compromise of a supplier of office supplies or furniture. Assessing the criticality of each vendor using the CIA triad of confidentiality, integrity, and availability is straightforward way to rank the inherent risk of third-party relationships. Once all vendors are identified and ranked by criticality to the organization’s strategic goals, we recommend selecting a subset of the highest risk partners (top 20 percent, top 10, etc.) to perform detailed risk treatments for in the following steps. 3. Set Your Ground Rules It can be easy to ask for the world when developing standards for third-party cybersecurity, but most security professionals should understand that business objectives often take priority over risks. Lengthy questionnaires and complex requirements for security complicate the vendor selection process, leading to both frustration amongst internal stakeholders and misdirected focus on low-risk vendors. Third-party requirements should be tied to common cybersecurity risks and be revisited regularly to address emerging threats. A few baseline examples include: Requiring all third-parties agree to a standard notification process in the case that they experience a data breach Specifying baseline levels of encryption that must be implemented by any third party storing or processing organizational data Standardizing policies for network access, BYOD, etc. for vendors and contractors Requesting and reviewing appropriate SOC reports from vendors based on their relationship Documenting requirements for the disposal of organizational data at the termination of a relationship 4. Rinse and Repeat Once the cyber risks around a given set of third parties are considered “managed” (i.e., the inherent risks are documented and residual risks have been addressed either by requesting action by the vendor or by an internal exception process), the entire process can be repeated for lower risk relationships. Schneider Downs recommends the highest risk vendors be evaluated annually for any major changes, but known security events should trigger an immediate review of a vendor at any risk level. Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management  Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information. ### ‘Tis the Season – Cybersecurity and Holiday Shopping The holiday season has traditionally brought out cyber criminals looking to take advantage of the influx of online consumer activity, and in a year where online shopping is primed to be at an all-time high due to the affects of coronavirus, threat actors will be out in droves. A recent survey from creditcards.com reports that 70% of Americans plan to make the majority of their holiday purchasing online, up nearly 20% from 2019. While online shopping has been an option for many years, this year it may be the only option for the majority of consumers. This increase is not a surprise due to a combination of social distancing considerations and many popular retail chains opting to close for the holidays due to the current pandemic. In fact, a number of popular retailers have already pivoted their holiday sales strategy, offering early access to Black Friday and Cyber Monday as early as October. While the annual reminder to keep your online shopping secure during the holiday season is not new, it is especially important to remind your end users amongst a tumultuous fourth quarter that has included new travel restrictions and modified family plans due to coronavirus, as well as the aggressive push retailers are making to end the year on a positive fiscal note. We know threats come in all shapes and sizes, especially in 2020, so here are some helpful tips to help keep yourself, end users and organizations secure during the holiday shopping season. Separate Personal Activity and Work Devices I think most of us can say that we are guilty of shopping online while using company equipment, but with the number of us working remotely, the separation between conducting personal activity and work devices has never been more important. Simple browsing activity such as online shopping or searching for the latest sports article can lead to security issues that can directly impact not only the device, but the security of an entire organization. Our recent whitepapers, Staying Secure from Home and Securing a Remote Workforce, offer best practices to help organizations keep their data and end users safe in our increasingly remote environment.  We also introduced a Cybersecurity Tips from Home video series that makes a great resource to share with your organization. Don’t Go Phishing Despite the alerts and constant reminders about phishing attacks, the simple fact is that they work, which is why it’s no surprise researchers have reported a near 80% surge in email phishing campaigns over the recent weeks ahead of the 2020 holiday shopping season. Targeting online shoppers, the phishing emails focused on terms such as special offer, sale and X% off, in fact the number of special offer phishing campaigns over November 9th and 10th exceeded the entire first week of October. One of the more popular attacks this holiday season was sent under the guise of popular jewelry store Pandora. Adding legitimacy to the attacks, the solicitation was sent from an email address with an Amazon domain. Other phishing attacks may include fake shipping notifications, travel promotions or customer service focused messages. Despite the fresh coat of paint the holiday shopping season gives phishing attacks, their key elements mostly stay the same. Learn more about how to spot a phishing attack in our previous article, Six Common Elements of Phishing Scams and How to Spot Them. Shop on Verified Sites and Apps During the holiday season many consumers are on the lookout for the absolute best deal possible and they can make the mistake of shopping on unsecured sites that offer huge discounts or advertise online coupon codes. When shopping online be sure you are using verified sites and never enter payment information on sites unless you are 100% confident the site is legitimate and secure. And while many of us are trained to look for the https prefix on addresses as a sign of security, malicious websites are getting more sophisticated at appearing legitimate. This also applies to mobile apps that may promise steep discounts or early access to deals only to lead users to corrupt sites. Remember, if you spot a deal that is too good to be true, it probably is – even in the holiday season. Update Your Passwords Even if you securely store your passwords, if a site you visit is part of a breach, chances are your passwords have been compromised. Chances are the popular shopping sites you have an account with have most likely been breached and it is safe to assume that they are being actively targeted. This is why the holiday season is a good time to refresh your passwords and monitor your accounts for unusual activity. Another option to ensure password security is using password management software, which essentially acts as a master lock for all of your passwords. Password managers not only add a layer of convenience to password security, but many help you create strong passwords with stringent requirements. Many password management software providers, such as LastPass and 1Password, offer options for personal and enterprise security needs. Avoid COVID-19 Themed Attacks As COVID-19 numbers continue to surge, many of the initial pandemic themed attacks are resurfacing in an attempt to take advantage of the confusion surrounding new guidelines, PPE and vaccine news. The FBI and Better Business Bureau are trusted sites that can be referenced for the latest alerts and updates on fraudulent activities related to COVID-19. We also encourage you to download and share our Avoiding COVID-19 Scams Infographic to reinforce identifying and avoiding these themed attacks. Due to the impact of the coronavirus, we know first-hand that this holiday season is unlike any other in recent memory, but if there is one holiday tradition that we can keep going during all of this, it’s keeping ourselves, organizations and data secure online. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### International Trade Deal Creates the World’s Largest Trading Bloc On November 15th, fifteen counties joined together to form the Regional Comprehensive Economic Partnership (RCEP).  The trade pact covers nearly one third of the global economy and is made of up of the following Asia - Pacific nations: China, Japan, South Korea, Australia, New Zealand and the 10 Association of Southeast Asian Nations (Asean) member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The agreement is notable as the first free trade agreement between China, Japan, and South Korea. While RCEP is not as comprehensive an agreement as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the vast size of the economies under the agreement will have significant impact on global supply chains. The agreement will eliminate various tariffs for a 20-year period for products produced in member countries and, similar to other recent global trade deals, provides protections covering e-commerce, professional services, financial services, intellectual property, telecommunications, and protections for small and medium sized enterprises. Unlike some other agreements, RCEP does not cover unified standards on labor and the environment or commit countries to open vulnerable areas of their economies. Seven nations are members of both RCEP and CPTPP: Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam.   The agreement also provides for new rules of origin terms, which allow for easier movement of goods between member counties. Under the various free-trade agreements currently in place, global supply chains could still face tariffs based on their product’s components if produced elsewhere. Under RCEP, parts from any member nation would not be subject to additional tariffs. This could have a significant impact to US organizations as they design future supply chains. The agreement is also expected to aid these economies in future recovery from the COVID-19 pandemic. The Peterson Institute for International Economics anticipates an annual increase to global income by $186 billion by 2030 and expects the agreement will add 0.2% to the RCEP member state economies. The deal now faces ratification by member countries, a process which is expected to take two years. The agreement is also open for other nations to join at a later date.For more information concerning international business matters and their impact to your organization, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### International Fraud Awareness Week 2020 Schneider Downs is proud to once again be a supporter of the Association of Certified Fraud Examiners (ACFE) annual International Fraud Awareness Week. The ACFE established Fraud Week back in 2000 as a way to raise awareness of fraud, and we’ve been an supporter of that effort for several years.Schneider Downs, as you know, has a long and established role in the fraud investigation and awareness field, through the numerous investigations we’ve performed over the years and our sponsorship of the annual Fraud and Corruption Awareness Seminar. Our Business Advisors group includes a number of Certified Fraud Examiners (CFE), including the president of the Greater Pittsburgh chapter of the ACFE.In support of Fraud Week, some of those CFEs have written Our Thoughts On articles, listed below, that discuss current topics in fraud investigation and prevention. Additional information will be available throughout the week on the Schneider Downs Business Advisors LinkedIn page. Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked How Descriptive, Diagnostic, Predictive and Prescriptive Analytics Can Be Used To Stop Fraud in Its Tracks Employee Refund Fraud at Amazon Coronavirus Fraud: Unfortunately, We Told You So While Fraud Week only occurs one week per year, the risks of fraud are present year-round. The ACFE estimates that 5% of an organization’s annual revenue is lost to fraud, so it’s important you understand the risks of fraud and ways to mitigate that risk or respond to fraud that’s occurred.If you have questions or concerns about detecting or deterring fraud, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster bwebster@schneiderdowns.com. ### How Third Party Risk Management Caters to Your Organization Download the PDF version of this article here.Imagine you are hosting a dinner party... You hired the caterer, queued up the Spotify playlist, and you uncorked the responsibly priced chilled champagne. You are ready to go.The guests arrive and start socializing as they dig into the hors d’oeuvres tastefully scattered on reclaimed wood platters... and then they start to feel sick. The caterer’s food prep was not exactly vigilant. You think back to that single one-star online review.Will the guests blame you or the caterer? Truth is, it doesn’t matter. The damage is done and you have lost their trust. Expect your next event invitation to go right to the spam folder since you are now known as the host who gave everybody food poisoning.Now, imagine hosting hundreds of dinner parties every day with caterers that you have to evaluate carefully, to ensure they do a great job and maintain your esteemed reputation.That is not too far from what your organization’s third-party risk management (TPRM) team must do every day, monitoring how the firm engages with each of your 100 to 1000+ third parties, and ensuring that those third parties represent your organization appropriately if engaging directly with clients. It is no small task, especially given that third parties are often the weakest link in a company’s security, opening up back doors to proprietary systems and sensitive data and, possibly giving malicious actors an entry point.Did you know the massive 60 million customer data hack of Target was caused by someone stealing the computer credentials of one of Target’s many air conditioning contractors? It was literally the cyber equivalent to crawling through the air ducts to commit a robbery.Third parties can include everyone that your organization works with, from the massive banks to the smallest technology third parties. TPRM teams must determine that anyone you do business with has the resiliency to respond to an adverse event, their information systems are adequately protected, and their reputations reflect well upon your organization, among many other things. And even though a breach may target a vendor’s systems, your organization owns all these risks, making adequate risk-monitoring not just business imperative, but a regulatory requirement.In order to properly monitor your third party relationships, your TPRM team works with the business to conduct due diligence and examine risk, ranks third parties by their potential impact on your organization. Those engagements deemed critical or high risk should be monitored regularly and reviewed annually. A recruiting agency, for example might be deemed lower risk because not much sensitive financial information would need to be shared and the agency wouldn’t need access to your systems. On the other hand, a law firm could be deemed a higher risk, given the large amount of restricted information that may need to be exchanged in order to receive effective counsel. Other examples of higher risk engagements include payment and messaging systems used to transact with customers or human resources related systems which hold sensitive information about your employees.Your TPRM team, along with the business lines, need to collaborate and stay vigilant together to ensure that your organization has safeguarded itself against malicious actors, knowing that they will go to extreme lengths to obtain information and that breaches can originate in the most unlikely of places. As they say, the supply chain is only as strong as its weakest link.So when you hire a third party to cater your party, be like TPRM and do your due diligence. Chances are the next plate you serve guests won’t send them home indisposed.About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights.  Learn more at www.schneiderdowns.com/tprm or contact us for more information.  ### How Descriptive, Diagnostic, Predictive and Prescriptive Analytics Can Be Used To Stop Fraud in Its Tracks Fraud analytics is a somewhat abstract concept to explain, but becomes easier once you break it down into its core concepts – analytics, the analysis of data or statistics, and fraud – wrongful deception intended to result in financial gain.Taken together, fraud analytics can be described as the analysis of data to detect financial deception. These procedures can be as simple as scanning a disbursements ledger for proper approval, to building a neural network predictive model to detect fraudulent credit card activity. Fraud analytics has evolved over the years into a very complex field that consists of combining business knowledge with statistics and computer science to better identify and understand the actions and intentions of fraudsters, and even to stop fraudulent activity before it occurs.Descriptive and Diagnostic Fraud AnalyticsTwo of the main types of analytics often performed are: descriptive analytics – answering the “What is happening?” question. diagnostic analytics – answering the “Why did something happen?” question. In practice, descriptive analytics often involve the use of business intelligence tools to summarize and display data to business leaders in the form of dashboards or other types of reports. For example, metrics related to employee spending, such as the number of expenditures at different spending levels, could be gathered in a dashboard for the examinations of trends. Once this is done, trends are often identified, such as a higher proportion of expenditures at a given threshold.Diagnostic analytics would then determine why this trend is happening. For example, the higher proportion could be a result of receipts being required for all purchases over a given amount.  Predictive and Prescriptive Fraud AnalyticsOnce the “What is happening?” and “Why is it happening?” questions have been answered, it is often useful to take fraud analytics a step further and answer the questions of “What’s likely to happen?” and “What to do next?” These questions relate to predictive and prescriptive analytics, respectively.A predictive fraud analytic related to the previously described employee expenditure scenario would be to determine the likelihood of an employee to commit fraud based on past fraudulent events. This would take into account characteristics of both the expenditure, such as those just under the amount requiring a receipt, and the employee, such as their role, duties, or even yearly salary, to come up with a “profile” of employees and expenditures most likely to indicate that a fraudulent event will occur.Prescriptive analytics can then answer the question of what to do next. For example, if it is determined that employees under a given level of salary are more likely to commit fraud than those with higher salaries, a higher level of review could be required for these employees’ expenses. Prescriptive analytics would also evaluate the cost and benefit of the solution to make sure that the organization isn’t spending more trying to catch the fraud than it would be losing from the potential fraud.Overall, fraud analytics is a fascinating domain that can bring enormous value to organizations. With a proper plan and infrastructure in place, not only can organizations identify fraud that is happening within their organization, they can proactively implement policies that would stop fraud before if even starts.If you have any questions regarding potential fraud schemes, internal controls, or the use of data analytics to detect fraud at your organization, please contact Andrew Trettel, CPA, CFE, CVA at 412-697-5436 or Brian Webster, CPA/ABV/CFF, CVA, CFE, CMA at 412-697-5307 of the Business Advisory group at Schneider Downs.This article is part of a series supporting International Fraud Awareness Week 2020, additional entries are linked below for reference: International Fraud Awareness Week 2020 Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked Employee Refund Fraud at Amazon Coronavirus Fraud: Unfortunately, We Told You So   ### Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked Nikola Motor Company (“Nikola”) is an Arizona-based startup company that designs and manufactures electric components, drivetrains and vehicles.In June of 2020, Nikola was valued at around $12 billion and in September, announced a manufacturing partnership with General Motors (“GM”) where GM would acquire an 11% interest in Nikola. After the announcement, the company’s market cap then increased more than twofold to $30 billion subsequent to its June Nasdaq debut.The company’s electric semi-truck, Nikola One, also made headlines in September after the forensic financial research firm, Hindenburg Research, made claims that Nikola faked many of its claims related to the Nikola One, going as far as saying that Nikola is “an intricate fraud built on dozens of lies.”  Hindenburg Research alleged that various photos and videos of the Nikola One semi-truck were falsified, stating that the semi-truck could not in fact move on its own and the videos showed it rolling down a hill. Nikola released a statement essentially admitting this, stating that the company “…ultimately decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion.” Hindenburg Research’s website also details a history of alleged inconsistent and inaccurate statements by Nikola’s founder, Trevor Milton.While the allegations made by Hindenburg Research are quite serious, there is an important caveat to this story. One of Hindenburg Research’s primary goals in this scenario is to profit from a decline in Nikola’s stock by shorting the stock. According to Hindenburg Research’s website, “…we use fundamental analysis to aid our investment decision-making, we believe the most impactful research results from uncovering hard-to-find information from atypical sources.” For many, this may call into question Hindenburg Research’s motives and whether or not the firm is providing a public service by alerting the public to potential investor deception.Nikola’s shares dropped more than 30% following the release of Hindenburg Research’s report. The accusations made in Hindenburg Research’s report resulted in Milton resigning from his role as executive chairman and board member on September 20, 2020. After the news of Milton’s resignation, shares declined another 30%. Currently, Nikola is still in talks with GM, but there is a December 3, 2020 deadline to solidify a deal.According to the Financial Times, the Department of Justice and the Securities and Exchange Commission are in the early stages of investigating the allegations against Nikola by Hindenburg Research, as well as Nikola’s claims against Hindenburg Research for market manipulation.If you think your organization might be a victim of fraud, contact Thomas Pratt at 412.697.5615 or tpratt@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com. This article is part of a series supporting International Fraud Awareness Week 2020, additional entries are linked below for reference: International Fraud Awareness Week 2020 How Descriptive, Diagnostic, Predictive and Prescriptive Analytics Can Be Used To Stop Fraud in Its Tracks Employee Refund Fraud at Amazon Coronavirus Fraud: Unfortunately, We Told You So Sources: https://nikolamotor.com/ https://hindenburgresearch.com/nikola/ https://www.ft.com/content/a45a6638-167b-4e27-a9fd-576e7229f959 https://www.forbes.com/sites/advisor/2020/09/21/nikola-corp-versus-hindenburg-research/?sh=505fdfac19b8 https://markets.businessinsider.com/news/stocks/nikola-stock-price-plan-work-without-gm-deal-falls-apart-2020-10-1029689351 ### Employee Refund Fraud at Amazon Amazon is the largest online merchant and one of the largest overall retailers in the world, with reported net sales of $96 billion in just the 3rd quarter of 2020 ($260 billion for 2020, year-to-date).Like every organization, though, Amazon must diligently and continually assess their risk of fraud and mitigate or respond to it as necessary. In the 2020 Report to the Nations, the Association of Certified Fraud Examiners (ACFE) estimated that organizations lose 5% of their revenues to fraud each year. If that estimate were to hold true for Amazon, that would mean approximately $13 billion lost to fraud so far in 2020. Although founder Jeff Bezos could probably personally cover that – it’s been reported that on a single day in July he increased his net worth by $13 billion – the company certainly has a financial incentive to manage and assess fraud.In that same July, Amazon reported Selling Support Associate Vu Anh Nguyen to the FBI for allegedly issuing fraudulent disbursements over a four-month period to himself and his associates in the amount of $96,508. The criminal complaint alleges that the employee utilized his company granted access to issue over 300 fictitious refunds for items purchased by himself and others. The complaint also alleges theft and wire fraud along, with other schemes related to third-party seller accounts.While the techniques Mr. Nguyen is alleged to have used are particular to Amazon and the online environment, they’re similar to what’s been perpetrated for many years when performing a fraudulent disbursement scheme. According to the ACFE’s Fraud Examiners Manual, “in fraudulent disbursement schemes, an employee makes a distribution of company funds for a dishonest purpose.”Schemes like this can take several forms, including false refunds, which can be further defined to include fictitious refunds or overstated refunds. In a fictitious refund scheme, like what Mr. Nguyen is alleged to have concocted, a refund is issued but no merchandise is returned to inventory. The accounting for a fictitious refund results in an overstatement of inventory, which is one of the ways the scheme can be uncovered. Separation of duties and detailed or analytical reviews of refunds are two ways organizations might mitigate the risk of fictitious refunds.Interestingly, in a separate case Mr. Nguyen was charged in August 2020 by the SEC for allegedly orchestrating a “free-riding” securities trading scheme. It’s alleged Mr. Nguyen and his associates fraudulently traded a total of $16 million in securities while having insufficient funds to cover the trades. He’s said to have caused over $1 million in losses to several brokerage firms. While the SEC charges aren’t related to Amazon, it’s worth noting that an individual may participate in multiple fraudulent schemes at once, and when fraud is uncovered in one area, a comprehensive review of the individual’s roles, responsibilities and access is warranted.If you have questions or concerns about detecting or deterring fraud in your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster bwebster@schneiderdowns.com.This article is part of a series supporting International Fraud Awareness Week 2020, additional entries are linked below for reference: International Fraud Awareness Week 2020 Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked How Descriptive, Diagnostic, Predictive and Prescriptive Analytics Can Be Used To Stop Fraud in Its Tracks Coronavirus Fraud: Unfortunately, We Told You So   ### Coronavirus Fraud: Unfortunately, We Told You So As my colleague Bernie Rafferty predicted in April, people attempt to take advantage of situations arising from natural disasters or man-made crises and commit fraud. While the Paycheck Protection Program (PPP) was not yet established when he wrote his article, Bernie’s prediction still proved to be true.  With more than $525 billion in PPP loans approved through program close as of August 8, 2020, fraudsters were keen to get their hands on these funds. The FBI has opened hundreds of PPP-related investigations, involving hundreds of millions of dollars, while the Justice Department has already charged 73 defendants in PPP fraud cases.  Two of the more notable cases involve David T. Hines, a Florida businessman, and Martin Kao, a prominent Hawaii defense contractor and political activist. According to federal prosecutors, Mr. Hines sought more than $13.5 million in PPP loans for seven companies, and received $3.9 million in loans for three of the companies.  Federal prosecutors allege that Mr. Hines inflated payroll costs and employment figures on his applications.  As a result, Mr. Hines received far more in loans than he should have, based on his monthly payroll.  Upon receiving these funds, Mr. Hines did not waste any time in exploiting them for his own gain.  Mr. Hines allegedly paid $320,000 for a Lamborghini, which he was spotted driving around Miami less than a week after receiving funding. Mr. Kao was arrested in Hawaii in September with charges of bank fraud and money laundering for falsifying PPP loan applications.  According to prosecutors, Mr. Kao falsified the number of employees who were under his employment in order to receive more money than he was eligible for.  Additionally, Mr. Kao allegedly used his subsidiary companies to apply for loans in order to “double-dip” into the program. In response, the Small Business Administration has recently circulated for comment two new forms (Form 3509 and Form 3510) in order to evaluate the good-faith certification made by borrowers upon application.  However, as more and more businesses begin to apply for forgiveness, there will still undoubtedly be an increase in fraud investigations and cases. Schneider Downs is here to assist you with your PPP forgiveness needs.  Please contact shareholders Tom Pratt at tpratt@schneiderdowns.com or Joel Rosenthal at jrosenthal@schneiderdowns.com. This article is part of a series supporting International Fraud Awareness Week 2020, additional entries are linked below for reference: International Fraud Awareness Week 2020 Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked How Descriptive, Diagnostic, Predictive and Prescriptive Analytics Can Be Used To Stop Fraud in Its Tracks Employee Refund Fraud at Amazon   ### Key Value Indicators in Evaluating a Business When looking to execute a transaction such as selling your business, it is often beneficial to put yourself in the shoes of the buyer, to determine what characteristics are seen as favorable or unfavorable to the market. A sophisticated buyer is going to come to the table with a list of questions and concerns about the business, so taking a proactive approach to identifying these things and working to improve them will pay dividends in the long run. The following is a listing, among many, of indicators that should be evaluated during this process.Customer Base:In most cases, having a broad customer base both in number and across economic sectors is seen as preferable, as it reduces risk associated with companies going out of business or a sector of the economy contracting. Having a broad customer base has been proven to be a key indicator of value, especially during 2020 with the economic impact of COVID-19 straining resources for many organizations. Customer Relationships:The turnover rate, or the amount of customers that are retained on a year-over-year basis, is a good way of evaluating customer relationships. A high turnover rate can indicate that the company is not performing to the level of expectation of the customers. In addition, a high turnover rate often means higher costs associated with bringing in new business. Historical Profitability:Although this has been proven wrong by many of the exit events within industries such as tech, in most cases a company with a history of solid profit is going to be seen as a favorable target to a buyer. Even in cases where the company has not yet turned a profit, an investor is still going to want to see a solid strategy in place to eventually become profitable. Regardless, profit should still be evaluated to determine whether it can be replicated going forward, and that “profit” as shown is not mostly a result of non-market conditions that might have lowered costs of the business during a limited timeframe.Receivables:When compared to industry averages, the amount of day’s sales that are currently receivable will indicate how effective the company is at collecting on jobs completed for customers. A high number of days sales indicates that customers may have trouble paying, and could lead to cash constraints down the road. While these metrics mainly focus on quantitative factors that can be measured with numbers, there are also many qualitative factors, such as age of the business, motivation of the owners, and the capability of the management team, that need to be factored as well. Performing a thorough self-evaluation of the business puts a potential seller in a place to maximize the value received for the business.  ### Secure Act in the Presence of COVID-19 The Internal Revenue Service (IRS) recently released IRS Notice 2020-68 to provide guidance for employers implementing the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law by President Trump in December 2019.   This release comes at a time when many of the country’s organizations are navigating their way through the COVID-19 pandemic.  A continuing topic of discussion among employers during the pandemic is how to manage the organization’s personnel and continue to provide employees with optimal benefit options.    IRS Notice 2020-68 clarifies many of the benefit options provided under the SECURE Act, including coverage of part-time employees within employer-sponsored retirement plans and penalty-free withdrawals for the birth or adoption of a child.  Other key details within the SECURE Act that you and your organization should be aware of include: Small Employer Automatic Enrollment Credit – This $500 credit is eligible to organizations with no more than 100 employees who receive at least $5,000 of compensation from the employer for the preceding year, and have established an eligible automatic contribution arrangement (EACA).  The eligible period to receive this credit begins when the employer first includes an EACA in a qualified employer plan.  For example, if a plan implements the EACA in 2021, the organization may be eligible to receive the $500 tax credit for the successive three-year credit period that begins with the initial adoption year of 2021 (2021 – 2023). Multiple-Employer Plans (MEPs) and Pooled-Employer Plans (PEPs) – The SECURE Act allows for employers to pool resources from multiple organizations and create MEPs or PEPs in order to reduce the administrative costs of maintaining an employee benefit plan and take advantage of economies of scale. PEPs are similar to MEPs, except that they are not subject to the common interest rule. Meaning, participating employers in a PEP can be unrelated to each other, whereas they are required to share a common interest – other than the participation in the plan – in order to participate in a MEP e.g., members of a common industry group or employers located within a narrow geographic area. The new law under the SECURE Act also shields participating employers from penalties should another member of the MEP or PEP violate its responsibilities under the plan. These are just a few of the provisions included within the SECURE Act.  If you (or your organization) have further questions, please review our internal Schneider Downs Retirement Services SECURE Act eBook or contact a member of the ERISA group at Schneider Downs for additional information. Sources: https://www.jdsupra.com/legalnews/irs-notice-2020-68-implementing-long-23208/  https://www.hrmorning.com/articles/irs-issues-401k-guidance-on-secure-act-regs/ https://www.irs.gov/pub/irs-drop/n-20-68.pdf   ### Prop 24 passes in California What is it? What does it mean for privacy? The United States election of November 3, 2020 featured a big win for consumer privacy. 56% of California residents approved Proposition 24 by voting “Yes” to the measure on their ballots. So, what is Prop 24, what does it mean for privacy, and how should all states, not just California, prepare for it? What it isThe approval of Prop 24 means that the California Consumer Privacy Act (CCPA), which was signed into law in mid-2018, will be amended to become the California Privacy Rights Act (CPRA). The provisions of Prop 24 allow Californians the ability to tell businesses not to sell or share particular categories of sensitive information, such as race, religion, health, location, and biometric. The CPRA also makes explicit that companies cannot share/sell data between each other. Fines have been tripled from their original value for any violations of data in which the consumer is under 16 years old.Additionally, the CPRA requires businesses to obtain permission from the consumer before collecting their data if they are under 16, and permission from a parent or guardian if the consumer is under 13.The amendment establishes the California Privacy Protection Agency, a new enforcement agency for California privacy laws.What it meansCalifornia continues to pioneer progressive laws for privacy, and with the passage of Prop 24, it continues to set the standard. Several other states have tried to pass their own version of a consumer privacy law, but none has been quite as strong.Undoubtedly, CPRA will impact tech companies that rely on collecting data to sell to advertising partners. This makes up the bulk of revenue for such companies, and likely will require tech companies to embrace an evolving profit strategy to navigate the new regulatory climate.But this law extends beyond the tech giants.While some companies have extended their standards for CCPA protections to all states, they are not required to do so, and are not required to do so at a federal level. With that being said, any companies that do business with Californians do need to pay attention, and to plan now to comply with CPRA.Even for companies that do not do business with California residents, Prop 24 provides food for thought. With the passage of another strong privacy law by California, it might be the start of a federal legislation that would affect all businesses.How to PrepareThe CPRA will not officially be enforced until January 2023, but preparation can and should begin as early as possible, especially for any companies already doing business with California residents.Here are some ways to begin preparing for CPRA: Awareness - Ensure that appropriate members of your organization are aware of the new regulation, and consider how it impacts the business. This includes all level of employees, from the decision-makers to the personnel who might handle relevant data. Policies and Procedures - Review privacy policies and procedures already in place and update them as needed to reflect CPRA requirements. Key to this preparation step is reviewing that these privacy policies cover all rights to individuals (such as an opt-out option). Data Mapping – Understand the nature and extent of personal data acquired and held by the business.  Especially any data from California residents. In general, gain an understanding of the personal data held, where it comes from, and who it might be shared with. This data should be inventoried if possible and reviewed by an appropriate authority, determining business justification. Technical Controls - Review your data protection controls and determine how they can be strengthened to avoid breaches and stringent fines. Seek Expertise - Reach out to a trusted and knowledgeable authority, such as Schneider Downs, to help you prepare to and continue to maintain compliance with CPRA.   ### PA Unemployment Compensation Benefits Charges Update This article is a follow-up to our previous article regarding PA Unemployment Compensation Covid-19 Relief published on July 17, 2020. The Pennsylvania Office of Unemployment Compensation has subsequently provided additional guidance on unemployment compensation (UC) charge statements and requesting relief from charges.Under PA Act 60 of 2020, UC charge statements for Covid-19 related claims during the PA disaster period beginning March 7, 2020 are automatically relieved. The Pennsylvania Department of Labor (Department) has yet to configure a system to institute this relief, therefore charging statements continue to show charges that have been relieved on employer’s accounts. The Department is working diligently to provide a system to institute this relief, and all employer accounts will be adjusted as soon as the system is up and running.For base year employers who may be interested in requesting relief from charges to avoid charges in any subsequent benefit year after the PA disaster period ends, mailing of UC-44(FR)s has resumed as of September 24, 2020, but will not include a reach-back of forms to mail. Therefore, employers can refer to their notices of claims filed or use their charging statements to see which former employees have filed claims, and request relief by sending an email to ra-li-bucb-uiempcharge@pa.gov with the following information: Employer name Employer Account number Claimant’s full name Claimant’s social security number Claimant’s last day worked Reason for separation from employment For individuals who separated from their employment for potentially disqualifying reasons, employers should respond to the UC-SIDES or UC-45 mailing within four business days of receiving the notice.Have questions regarding PA UC relief during the COVID-19 pandemic? Please reach out to your Schneider Downs tax advisor.  ### Postcard from Schneider Downs Construction Industry Webinar Due to Coronavirus pandemic-related reasons, travel plans for many of us have been very limited since March 2020.  Trips and stories about travel to the Outer Banks, Disney, Yellowstone or the Grand Canyon have been replaced with travel to exotic locations such as local parks and walking trails, the grocery store, the drive-through line at Chick-fil-A and the parking lots in Robinson Town Centre.  I am not necessarily the biggest postcard type person, but clearly none of those hotspot destinations are postcard-worthy.  With that being said, Schneider Downs’ Construction Industry Update was on October 27 (via webinar of course), and if you happened to miss it, it was absolutely postcard-worthy.  Therefore, without further ado, here is my lone postcard for 2020, direct from the balmy confines of my kitchen table, of our 2020 Construction Industry Update.  Construction Market OutlookTall Timber Group’s Jeff Burd was our keynote speaker and delivered an update on the current construction market and outlook for the next year or two.  On a macro level, GDP is expected to be down 3% - 4% year over year, many large construction projects have been delayed, unemployment (although stabilized) is still high, and construction company owners continue to adjust workforce downward to reflect demand.  A medical solution to solve the virus and a construction stimulus package are both still direly needed.  On a positive note, interest rates continue to be low, leaving the opportunity for growth to outpace cost of borrowing.  Additionally, overall cash reserves and liquidity are strong, consumer spending continues to show signs of recovery and construction costs are rising at less than a 2% pace.On a micro level in the Pittsburgh market, health care and higher education, which comprise approximately 40% of the construction market, continue to be important players and both have shown sign of recovery.  Health care has resumed non-essential treatments and procedures and enrollments in local colleges and universities have stabilized.  The local housing market has been relatively unaffected, as the year started with low inventory and development and higher demand.  Overall, local construction is expected to be down approximately 30% in the Pittsburgh market as major projects (USS, UPMC, Airport, Presby, PTT) have experienced delays and the Shell Cracker Plant is operating at about two-thirds of its workforce.  The outlook for the 2021 Pittsburgh market is expected to be positive for industrial, multi-family, technology and life sciences construction, while hospitality and office construction, particularly in the central business district, is expected to trend downward.  As interest rates continue to remain low and large capital reserves exist, real estate becomes an attractive option looking forward.  Non-residential construction expects a recovery in 2021, as major projects are anticipated to go back online.  However, overall backlog absent major projects is not strong heading into 2021 due to the economic downturn, and periods of hyper-competition could ensue, with potential for business failures, foreclosures and bankruptcies on the rise.  Additionally, the uncertainty regarding the election results will likely influence a potential stimulus package, projects in health care and federal research, as well as the state’s overall economic position and status.Paycheck Protection Program (PPP) Loan ForgivenessNext up, Schneider Downs Business Advisory group covered the Paycheck Protection Program (PPP) Loan Forgiveness applications, including requirements for which forms to utilize based on the underlining requirements.  Form 3508EZ can be utilized if the borrower meets one of three of the following criteria:  (1) Self-employed independent contractor with no employees and did not include employee salaries in the average monthly payroll calculation on the application.  (2) For employees with less than $100,000 in earnings, salary wages were not reduced greater than 25% in the covered period, and the number of employees or average paid hours from January 1, 2020 through the covered period were not reduced.  (3) For employees with less than $100,000 in earnings, salary wages were not reduced greater than 25% in the covered period, and the applicant was unable to operate during the covered period due to Coronavirus pandemic compliance regulations.  Additionally, our Business Advisory group walked through how to complete the standard Form 3508 and noted that banks have 60 days following the submission of the forgiveness application to review and approve, while the SBA has 90 days to review and approve the applications once the financial institutions have provided reviewed submissions to the SBA.Tax OpportunitiesOn the income tax planning front, experts from Schneider Downs Tax Advisory group focused on planning ideas to maximize tax opportunities over the next few months.  After leading off with a discussion of both the Republican and Democrat tax plans and proposals, they covered impact of PPP loan forgiveness, including IRS Notice 2020-32, which excludes business expenses paid with PPP funds from being deductible.  Additionally, they focused on opportunities associated with employee retention credits, employee payroll deferrals, sick pay and FMLA credits, NOL carrybacks, quick refunds, and gifting strategies and considerations.ADAPT (Automation & Data Analytics Process Team)Finally, the talented group from Schneider Downs ADAPT (Automation & Data Analytics Process Team) took the stage and covered how construction companies can utilize software and automation tools to manage their data, discover outliers, exceptions and trends, solve operational and financial problems, and visualize large amounts of data from multiple sources in state-of-the-art, interactive dash boards.  Their expertise and software allow them to install, configure and integrate your data sources into a warehouse, automate business processes, implement customized interactive dashboards, tackle complex data analytic projects, assess data readiness and provide industry best practices.  Additionally, and particularly important to the construction industry, these tools can be key resources in risk identification and risk management.If you have an interest in any of the topics from our 2020 Construction Industry Update, do not hesitate to reach out to me, or any of the Schneider Downs professionals in our Construction Industry Focus Group. Safe travels! ### CONFINDEX Remains Unchanged for Q3 2020 The Construction Financial Management Association (CFMA) surveys construction management professionals quarterly to assess the outlook of the industry.  Respondents are asked eight questions related to:• Current Business Conditions• Future (one year) Business Conditions• Current Bank Credit Availability• Future (one year) Bank Credit Availability• Future (one year) Bond Credit Availability• Line of Credit Status• Current Backlog• Future (one year) BacklogResults are then compiled into a single number – the CONFINDEX index – which is calculated by taking the net of positive responses minus negative responses and adding 100. As the neutral point of this index is 100, a CONFINDEX index less than 100 indicates a negative outlook, while an index greater than 100 would indicate a positive outlook.The CONFINDEX index for September 2020 came in at 87, the same reading as the prior quarter, and only 10 percent above the all-time low for the index in December 2008.No doubt the COVID-19 pandemic has contributed to the stagnation of the index. CFMA reports that around half of the construction management professionals surveyed reported there was concern for future demand. Backlogs continue to decline as heavy projection cancellation lingers.Despite the current anxiety, there are some segments of the industry expected to improve due to the pandemic, including fulfillment centers, datacenters, manufacturing and healthcare. Additionally, as concern for public safety has grown, certain contractors can expect to see an increase in demand for HVAC to improve air circulation, as well remodeling of office spaces to accommodate social distancing.Additional optimism was recognized as 47% of respondents indicated that their profitability has returned and will have fully recovered within one-to-three years in the current environment.Looking ahead, a federal infrastructure package may be on the horizon and borrowing costs are expected to remain low, but there’s still concern surrounding a resurgence of the COVID-19 virus and possible renewed economic shutdowns. Only time will tell as to what the impact will be on the construction industry, but a stable CONFINDEX points to more of the current situation.Source: https://www.cfma.org/resources/content.cfm?ItemNumber=959 ### The 5Ws and H of Third-Party Risk Management If you’re questioning whether third-party risk management (TPRM) applies to you or your organization, you’re in the right place. And I’ll give you a hint… yes, it does. Third-party risk should be a concern of everyone on both personal and professional levels. Personal applications of TPRM aside, here you’ll find some guidance on understanding the importance of TPRM and best practices for developing successful programs for your organization. Who should consider TPRM?   All of us! Whether you outsource one function or 25, or, actually, even zero, you should consider TPRM as a critical step to set your organization up for success. Who is a third party?  Any organization to whom another organization outsources a function. Outsourced functions can range anywhere from cleaning and custodial staff, to payroll processing, to data storage. If you’ve ever uttered the phrase “_____________ does that for us” you’ve got yourself a third-party. And they will present risk to your organization. What should you do to address that risk?   Whether you’ve not yet outsourced or you currently contract with a plethora of third parties, a formal, documented and approved TPRM program is imperative in order to manage risk during the entire third-party lifecycle. When is a TPRM program applicable?   A TPRM program should be applicable throughout the entire third-party lifecycle. An effective TPRM lifecycle is comprised of three phases: 1. Onboarding  Onboarding begins at the point at which an organization begins looking for a third-party to perform a certain function for them. It includes planning activities in order to manage relationships as they become involved in TPRM lifecycle, and continues into a due diligence phase whereby an organization performs research on potential third parties in order to verify that they meet certain established, required criteria. 2. Monitoring Monitoring follows onboarding and is the phase in which a third-party has been selected and continues until termination is necessary. . Monitoring is the fun part! (Without getting too existential, even the monitoring-of-a-third-party phase can be outsourced to a third-party.)  For the Monitoring phase to be effective, an organization should, during Onboarding, plan for the Monitoring activities that are most suitable to gain adequate assurance over the third-party’s security. For example, verifying that the third-party will have a SOC report available for review on an ongoing basis, and/or that a right-to-audit clause exists in the contract and/or verifying the willingness of the third-party to complete a security questionnaire at an agreed-upon frequency, etc. Monitoring phase requirements include the need for an organization to develop criteria to determine the criticality of their third-parties which should dictate the scope and frequency of vendor assessments. The higher the criticality, the more often the third-party should be assessed for controls that directly relate to the risk posed by the third-party. For example, third-parties that store and process highly confidential data that are crucial to financial or operational activities will likely be scored with a high criticality rating and should be assessed annually. Another factor that could impact the criticality ranking of a third-party is the related replacement risk of that third-party. i.e., a third-party may be high-criticality simply because of the lack of competition in their space, and, thus, no other third-parties to perform that service should your selected third-party cease operations. 3. Termination Termination is the final phase of the third-party lifecycle and should be planned for during onboarding and exercised whenever needed to ensure relationships terminate and transition (whether back in-house or to another third-party) in an efficient manner. Anywhere that your own third parties have a presence, where your data lives, or where fourth parties have a presence, etc. The physical locations where the TPRM process is relevant and should be established during the onboarding process and updated as necessary. Why are TPRM programs necessary?   Depending on your industry or regulatory environment, you may be required to do so. However, whether required to or not, TPRM addresses a specific kind of risk that in the past has gone unaddressed and resulted in multiple instances of data breaches due to third-party risk not being managed. It all boils down to one important fact: you can outsource nearly any function, but you cannot outsource risk. How to implement a TPRM Program?  Implementing TPRM programs vary based on organizational landscape. However, one important first goal must be accomplished: executive support. In close second is cross-functional participation. Without a top-down, all-in approach, from C-Suite to staff, and from procurement to operations, a TPRM program will not be successful. Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management  Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information. ### How to Review a Vendor’s SOC Report When Microsoft reported a 12% increase in revenue in their latest quarterly earnings report, the company attributed much of that growth to the ongoing development of businesses continuing to migrate to the cloud. In what’s been a turbulent 2020, to say the least, many companies are still operating remotely and a number of those are preparing to remain remote for an extended period of time. In this volatile climate, monitoring your organization’s vendors has never been more important, and one way to do that is to request and review the reports a vendor provides created by an independent third party. A popular narrative that companies can have to provide to existing and prospective clients is a System and Organization Controls (SOC) report. What is a SOC report? A SOC report is an attestation detailing the work performed by a CPA firm. The standards behind the report, the Statement on Standards for Attestation Engagements No. 18 (SSAE 18), are written and maintained by the American Institute of Certified Public Accounts (AICPA). These standards define two types of reports for detailing the work CPA firms carry out when they examine the controls in place at service organizations: the Type 1 (point-in-time), which examines only the design of controls, and the Type 2 (period), which also examines the operating effectiveness of a control throughout a specified period. Okay, but what's the difference between a SOC 1 and a SOC 2 (and others)? In addition to the two primary types of SOC reports, there are also different reporting standards, as defined by the AICPA. Here’s a brief comparative summary that should allow you to determine the specific SOC report you need for your vendor. (For a more in-depth overview, check out our article, SOC reports.) SOC 1 are examinations related to internal control over financial reporting at a service organization. SOC 2 are examinations related to specific criteria set by the AICPA around the Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality and/or Privacy at a service organization. SOC 3 are general use reports. They’re essentially the same as a SOC 2, but do not include a description of the auditor’s testing or the results of the testing. These reports can be made publicly available. SOC for Cybersecurity deal with an organization’s cybersecurity risk management program. They’re a bit different in that they can be performed for anyone, not just service organizations. SOC for Supply Chains is the newest SOC, intended to help suppliers or logistics providers validate the effectiveness of their controls. How do I get these reports from my vendor? After determining which SOC report(s) you need, you’ll want to request the actual report. This process can vary from vendor to vendor; some might have a section on their website for clients to log into and download or request the SOC report, while others may require you to reach out to a designated point of contact. Alright, I have the report, now what? Now you can begin the actual review. Fortunately, all SOC reports follow the same basic structure, which helps when you’re reviewing multiple reports from different vendors. Before getting into the actual substance, though, there are some items you should note, including: Who reviewed the report? When was the report reviewed? Which vendor is being reviewed? What specific SOC report is being reviewed? (SOC 1 Type 2, SOC 2 Type 1, etc.) Documenting these items alongside your review of the actual report will help your organization keep track of its ongoing oversight of the vendor in question. Now it’s time to review the report itself. The first items to note are when the report was issued and the period of time the SOC report covers (if it’s a Type 2 report). Make sure this report is the most recent version. After you’ve recorded these details, you can move onto the first section, The Independent Service Auditor Report. The Independent Service Auditor Report Portions of this section you’ll want to review are Scope, Limitations and Opinion. Scope identifies the report period or as-of date for the examination, which services are covered by the report, whether the vendor relies on any subservice organizations (third parties that your vendor uses) and whether there are Complementary User-Entity Controls (CUECs) that you, as the client, need to have in place. Limitations will tell you if there were any events that occurred during the examination that limited the service auditor’s ability to perform their work and Opinion will note the type of opinion the service auditor has issued. There are four types: Unqualified – The service auditor has determined that the description of the system is fairly and accurately presented, and controls were operating effectively throughout the specified period (for a Type 2) or designed effectively as of a given date (for a Type 1). There could be exceptions noted, but the auditor has determined that they do not result in a modified opinion. Qualified – The service auditor has determined that the system description and most controls are fairly and accurately presented and operating effectively, but the service organization identified some controls that failed to operate effectively. These are described by the auditor in the opinion, with details of the exceptions that resulted in the modified opinion. Adverse – The service auditor has determined that the service organization failed to meet one or more control objectives (SOC 1) or criteria (SOC 2). These failure(s) are described in the opinion. Disclaimer of Opinion – The service auditor states that they cannot issue an opinion and gives the reasons, which could be anything from lack of evidence to controls that might not have operated during the period that are pervasive enough for the auditor to issue a disclaimer. After documenting these, you can move onto your vendor’s description of the system in scope for the report. The System Description This section details important background information about the organization and the system the report covers. It should include an overview of the organization, as well as its people, procedures, processes, software, infrastructure, data and any additional relevant information that’s part of the system (e.g., user entity controls, use of subservice organizations, complementary subservice organization controls, etc.). This section should also include relevant aspects of the service organization’s control environment, risk assessment, information and communication systems, monitoring and internal controls. Users should already be familiar with these areas from experience using the vendor’s system but should still review the section to see what was specifically included versus what was specifically excluded from the engagement. Also take note of the Complementary Subservice Organization Controls, they are the controls your vendor relies on third parties to provide. They’re useful in gaining an understanding of your vendor’s environment (e.g., if they send their backup data to Amazon Web Services (AWS) for storage). More significantly, you should note the Complementary User-Entity Controls, those are the controls your vendor assumes you’ve implemented and need to have in place but might not be pertinent to your organization if the report covers multiple services. Review this section and determine which controls are relevant. Finally, you can now review Section IV, the actual control testing, and Section V, if applicable, other information provided by the service organization (your vendor). Test of Controls and Other Information These sections should be reviewed closely to ensure you gain comfort over the controls and for the specific exceptions the service auditor has identified, if any. The exceptions are important because they provide an overview of the areas where the vendor’s controls failed. As you’re documenting your review, be sure to record them. Depending on the exception in question, you may need to follow up with the vendor and ask how they remediated the issue if you believe it’s relevant to your organization. For some reports, a service organization may decide to include a final section titled, Other information provided by …, which contains information the organization feels users should know about but is not otherwise included within the system description. If a report has any exceptions, this final section typically contains management’s response, which could explain how management at your vendor intends to remediate the exception or if they’ve chosen to accept the risk. You should document these responses in your review as well. Wait, there’s a gap between the end of the reporting period and my organization’s year end? You might notice that in some cases, there’s a gap between a service organizations’ reporting period and the end of your fiscal year. To address this, management at your vendor will often write a Bridge Letter, which states whether or not there were material changes between the end of the reporting period and the end of your fiscal year. If your vendor has done this, you should review the letter as well as the SOC report itself to make sure you’re aware of any changes. That’s the whole report; now what? Now that you’ve reviewed your vendor’s report, there’s still some work to do. You need to examine the Complementary User-Entity Controls you documented as relevant and determine whether your organization has controls in place to meet the requirements. Document what you’ve specifically implemented. Finally, if the SOC report had any exceptions you felt were not adequately addressed, you should reach out to your vendor and determine what they’ve implemented to alleviate your concerns. How often do I need to do this? Only you can decide how often you need to review your vendor’s SOC report. Most organizations issue reports annually, but some release more often, using a six-month or three-month period, like Amazon Web Services, which issues a report every six months. If you rely heavily on AWS, for instance, you might determine that it’s beneficial to review Amazon’s SOC reports every six months. We recommend that a SOC report for each key vendor you use is reviewed at least annually, particularly for those vendors identified as high-risk as part of your third-party risk management program. SOC report reviews are useful in two ways: they provide an excellent overview of a vendor’s control environment before you decide to contract with them, and they’re a great way to provide continued oversight. Now that you have a documented review of your vendor’s SOC report, you can refer back to it and ascertain the specific changes that occurred over the past year, whether it’s the remediation of exceptions, changes in the control environment or changes in the system itself. By doing this, you’ll gain a better understanding of the risk that working with a vendor brings to your organization, and you can more accurately measure your own risk. If you need assistance with reviewing your vendor’s SOC reports, or with evaluation or implementation of your organization’s third-party risk management program, contact our SOC and Third-Party Risk Management Professionals. Also see our SOC and Third-Party Risk Management sites for more information regarding Schneider Downs’ SOC and Third-Party Risk Management Practices. ### Paycheck Protection Program – Forms 3509 and 3510 In late October, the U.S. Small Business Administration (SBA) requested approval from the Office of Management and Budget (OMB) to collect certain information on borrowers with Paycheck Protection Program (PPP) loans in excess of $2 million. The SBA is accepting public comment on the request through November 25, 2020. Of particular note are the Loan Necessity Questionnaire for For-Profit (Form 3509) and Non-Profit (Form 3510) borrowers, surveys intended to assist the SBA in evaluating a borrower’s good faith certification that economic uncertainty made its PPP loan request necessary. If these requests for information are approved by the OMB, all borrowers who received a PPP loan of more than $2 million (together with affiliates) would be required to complete one of the forms within 10 business days of receipt. According to samples, failure to complete the form and provide required supporting documentation may result in a determination that a borrower was not eligible for a PPP loan, the PPP loan amount and/or any forgiveness amount claimed. The sample forms also state, however, that receipt of the questionnaire does not mean the SBA is challenging a borrower’s certification, and the SBA’s determination will be based on the totality of a borrower’s circumstances. Some of the information requested: Q2 2019 and Q2 2020 financial measures; If the borrower was required to shut down or alter operations by a state or local authority; If the borrower voluntarily ceased, reduced or altered operations due to COVID-19; Cash, savings and temporary investments balance as of end of quarter prior to the loan application; Dividends/capital distributions (other than estimated tax payments for pass through entities); Debt prepayments during the loan forgiveness Covered Period; Employees/owners who received more than $250,000 annualized compensation during the loan forgiveness Covered Period; Book value of borrower as of the end of the quarter prior to the PPP loan application (if not publicly traded); Ownership questions (e.g., was the borrower: (a) publicly traded; (b) more than 20% owned by a public company, private equity firm, venture capital firm or hedge fund; or (c) an affiliate or subsidiary of another company); Endowment fund details; Noncash investments, such as equity, bond and real estate holdings; Additional information if the borrower is a school, college or university, or if it provides healthcare services; Any other CARES funds received.   While these forms have just been released, there have been many initial questions about how the SBA plans on using them and whether the information requested should be relevant to a borrower’s certification of need and liquidity. For example, borrowers may have been faced with an uncertain outlook due to the pandemic at the date of their loan application and made the certification in good faith at that time, but if actual results differed from expectations, should that impact a borrower’s need for the loan at the application date? Obviously this is an important and evolving situation for many PPP borrowers. We’ll provide updates as information becomes available. If you need assistance regarding your PPP loan, visit our dedicated PPP loan page, or reach out to any of your contacts at Schneider Downs, including Joel Rosenthal (jrosenthal@schneiderdowns.com). ### Preliminary Observations on Tax Implications of 2020 Elections It’s 6:00 a.m. on Wednesday, November 4; the day after the theoretical election day.  Two critical national election outcomes are still unknown: Who won the presidency? Which party controls the Senate?  The outcome may not be known for days (particularly in Pennsylvania, where votes postmarked Tuesday but not delivered until Friday could still be counted).  It could be weeks, or worse for the country, if either or both parties decide to litigate election outcomes.  As of Wednesday morning, it appears that there are still six to seven states (Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin) that do not have a clear presidential winner. Just as important, key races in the Senate have yet to be decided.  Going into the election, the Republican party held a 53-47 majority.  Democrats would need to win four additional seats to take a clear majority.  An NBC News voting map appears to show that Republicans may maintain control of the Senate with a total of 52 or 53 seats.  If that is the case, the large “blue wave” of control Democratic supporters were hopeful for appears unlikely, leaving their proposed tax policy unlikely to be achievable in the current election cycle.  Their agenda included: Increasing the corporate tax rate from 21% to 28%; increasing the highest individual marginal tax rate to 39.6%; and repealing other Tax Cuts and Jobs Act provisions; Establishing a 15% corporate minimum tax rate on book income exceeding $100 million; Removing the ceiling on income subject to social security taxation by proposing taxation on individuals with compensation and self-employment income over $400,000 at 6.2% and subjecting the employer to an equal tax; Doubling the capital gains tax rate on taxpayers with income exceeding $1 million;    Increasing taxes on decedents estates by lowering the exemption from $11.5 million to $5.5 million; increasing the estate tax rate; and ending the stepped-up basis on inherited assets;  Eliminating the like-kind exchange deferral on exchanges of real estate;  Eliminating the ability to deduct losses on real estate against other income; and Increasing earned income tax credits and child tax credits. Likewise, the general Republican tax policy, as advocated by President Trump, for further tax reductions and extension of sunset provisions in the Tax Cuts and Jobs Act is still at risk without a presidential win.  These future tax agenda items included: Providing a middle-class tax cut; Seeking additional capital gain tax enhancements, including rate reductions and indexing for inflation; and Expanding Qualified Opportunity Zone benefits. Both parties have been advocating for an expansion of credits for improving or expanding U.S. manufacturing jobs.  Without a clear outcome by either party, bipartisan support will be required for passage of additional COVID-19 economic stimulus, which many on both sides of the aisle support.  Bipartisanship necessary for significant overall tax policy changes would seem unlikely at this point as well.With no clear outcome, taxpayers should continue to monitor the situation.  We will certainly continue to monitor federal, state and local election results (and proposed legislation) and their related tax planning opportunities (or risks).In times of uncertainty, Schneider Downs tax, investment and business advisors are always available to discuss your personal situation and help you plan to achieve your uniquely individual needs and goals.        ### Election Day Winner: Data Chris Kosty, CPA, CIDA – Manager ADAPT (Automation & Data Analytic Process Team) As I watched the election coverage on TV, I found myself focused not on the opinions of political pundits, but rather on what was going on behind the scenes to derive the content.  Whether you lean left or right, didn’t vote, or wrote in Kanye West for president, one thing was certainly on center stage this Election Day: data. You may have seen surveys of voters, red and blue counties, and races being “called” with a 1% vote tally.  But as a data analyst, what I saw was data collection and analysis, heat mapping, and predictive modeling.  Although some of those concepts may be complex in nature, they were delivered in a way that is palatable to the masses: data visualization. Data visualization was represented in large scale, from using color-coded seats to monitor the majority in House and Senate races, to something as basic as a checkmark next to candidates’ names to indicate their victory.  What we see on TV was delivered seamlessly; however, buried beneath the surface is a network of data analysts with complex algorithms driving the featured content.  The results of those analysis are packaged into seemingly basic visuals, which are strategically designed and utilized to convey results of data analysis for ease of interpretation. Communication of results can be just as important as, if not more than, the analysis itself.  What good is an analytic if nobody can understand and interpret the results?  That concept was never on display more so than it was during the election coverage.  Just think, using data visualization, TV networks were able to take well over 100,000,000 data points (votes) and turn it into a must-see prime-time television filled with hours of interactive real-time analysis.  It was the Super Bowl of data analytics!  Okay, maybe that’s just my opinion (although I do know some folks who may agree).  Even as we await the results of the presidential election, I can with certainty declare a victory for data analytics. Schneider Downs ADAPT (Automation and Data Analytic Process Team) has the tools and expertise to implement data analytics and data visualization at your organization.  For more information on how we can help, contact Chris Kosty – ADAPT Manager at ckosty@schneiderdowns.com or 412-697-5618. ### Compliance and Third Party Risk Management: A Function for Continued Success Third Party Risk Management (TPRM) has always been a compliance hurdle that seems to be a 9-headed monster, due to the ever-evolving headaches associated with vendor onboarding/off boarding, due diligence, the RFP process, legal obligations, contractual requirements, compliance requirements, performance requirements and continuous monitoring. Additionally, third party relationships carry numerous hidden risk factors including strategic risk, reputation risk, operational risk, transaction risk, credit risk and compliance risks (our main area of focus today). Fortunately for our readers, our team at Schneider Downs have developed a cheat-sheet to help you and your organization better understand the regulatory and compliance landscape, and how it fits into your third party risk management program. Our Compliance and Third Party Risk Management Guide is outlined below and also available as a PDF. 1. Understand your enterprise’s compliance concerns through an enterprise risk assessment.  An enterprise-wide risk assessment can help you better understand the interworking third party relationships that your company relies on to perform daily business operations. A few things to consider when embarking on an enterprise risk assessment is to first identify critical/high risk suppliers/third parties. For example, if you are a company positioned in the financial sector, understanding a supplier’s risk for potential bribery can be a great starting point. Additionally, other raw attributes such as time in business, degree of marketplace activity, location, severe financial risk indicators and changes in circumstances can help fuel your risk-assessment model. In assessing risk, businesses should consider leveraging third party data, insights and proprietary predictive scores, which can greatly strengthen client controls, risk triggers and defensible position pillars. Various third party “insight” tools exist, such as BitSight, RiskRecon, SecurityScorecard and RiskLens. These insights help strengthen compliance programs by enhancing depth of due diligence and moving beyond sole reliance on self-disclosed information from a questionnaire. 2. Perform necessary due diligence related to the business sector and risk of the third party. A simple employee screening/background check is not enough information to comprehensively assess a potential vendor to determine whether that third party is viable to work with your organization.  We recommend seeking a depth of diligence that includes leveraging global data assets on entities, including legal name, organizational structure, parent companies, names of all principals/officers/beneficial owners, and industry. This allows your company to understand the holistic structure behind a specific vendor/supplier and understand their risk at an even better level than through the enterprise risk assessment. 3. Establish a comprehensive Third Party Management Program  Your firm/company should leverage a third party/vendor management program that includes all the necessary steps to performing a full end-to-end third party/vendor management review.  This program should include all the necessary touchpoints your firm believes are necessary to properly assess and onboard a potential vendor or supplier.  Schneider Downs suggests that a third party/vendor management program should include the following requirements: Vendor Selection Process Vendor Risk Assessment Process Due Diligence Process Contractual / Regulatory Review Process Reporting Process Ongoing Monitoring Procedure Although a third party/vendor management program should include the items listed above, a program is not limited to this list.  It is helpful to note that the process’ noted above are “living and breathing” meaning that these process’ will need tuned in order to assist your organization in assessing third parties and vendors properly. 4. Create a process for company-wide monitoring and an approach to risk management  Having the right governance and internal controls in place helps companies benefit from complete visibility into third party transactions.  By managing internal regulatory requirements, incoming third party compliance requirements can seem less daunting as your firm may already have a process established on how to deal with evolving compliance hurdles.  Additional risks you should also consider monitoring for are financial, human rights, data privacy and cybersecurity risks. Although the listing above provides a great summary of an efficient TPRM program, we would like to direct you to the listing below that identifies the most relevant TPRM-specific compliance requirements.  The following regulatory/certification standards all include requirements that your organization (if working with third parties) must maintain the following: A listing of your critical third parties as it relates to your business operations (a company that provides your daily kitchen supplies is not a critical third party) Assess your critical third parties on an annual basis through an agreed upon methodology and determine whether your third parties are adhering to the same regulatory/certification standards Establish an ongoing monitoring program to ensure all your critical third parties are aligning to regulatory, legal and contractual standards. Regulatory / Certification Standards  System and Organization Controls (SOC) are a series of standards designed to help measure how well a given service organization conducts and regulates its information. A SOC 1 report is designed to address internal controls over financial reporting while a SOC 2 report addresses a service organization's controls that are relevant to their operations and compliance. One or both could be right for your organization. Controls in scope of TPRM CC2.3: The entity communicates with external parties regarding matters affecting the functioning of internal control. CC9.2: The entity assesses and manages risks associated with vendors and business partners. Payment card industry (PCI) compliance is mandated by credit card companies to help ensure the security of credit card transactions in the payments industry. The Payment Card Industry Security Standards Council was originally formed in September 2006 by American Express, Discover Financial Services, JCB International, MasterCard and Visa Inc. with the goal of managing the ongoing evolution of the Payment Card Industry Data Security Standard. Controls in scope related to TPRM: 8.3: Is two-factor authentication incorporated for remote network access originating from outside the network by personnel (including users and administrators) and all third parties (including vendor access for support or maintenance)? 9.9.3: Are personnel (including third party employees) trained to be aware of attempted tampering or replacement of devices? 12.3.9: Activation of remote-access technologies for vendors and business partners only when needed by vendors and business partners, with immediate deactivation after use? 12.3.10: For personnel accessing cardholder data via remote-access technologies, does the policy specify the prohibition of copying, moving, and storage of cardholder data onto local hard drives and removable electronic media, unless explicitly authorized for a defined business need? 12.8: Are policies and procedures maintained and implemented to manage service providers with whom cardholder data is shared, or that could affect the security of cardholder data? 12.8.1: Is a list of service providers maintained? 12.8.2: Is a written agreement maintained that includes an acknowledgement that the service providers are responsible for the security of cardholder data the service providers possess or otherwise store, process, or transmit on behalf of the customer, or to the extent that they could impact the security of the customer’s cardholder data environment? 12.8.3: Is there an established process for engaging service providers, including proper due diligence prior to engagement? 12.8.4: Is a program maintained to monitor service providers’ PCI DSS compliance status at least annually? 12.8.5: Is information maintained about which PCI DSS requirements are managed by each service provider, and which are managed by the entity? The Office of the Comptroller of the Currency (OCC) is a federal agency that oversees the execution of laws relating to national banks. The OCC charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. Controls in scope of TPRM: OCC Bulletin 2013-29: A bank should adopt risk management processes commensurate with the level of risk and complexity of its third-party relationships. A bank should ensure comprehensive risk management and oversight of third-party relationships involving critical activities. An effective risk management process throughout the life cycle of the relationship. Plans that outline the bank's strategy, identify the inherent risks of the activity, and detail how the bank selects, assesses, and oversees the third party. Proper due diligence in selecting a third party. Written contracts that outline the rights and responsibilities of all parties. ISO/IEC 27001 specifies a management system that is intended to bring information security under management control and gives specific requirements. Organizations that meet the requirements may be certified by an accredited certification body following successful completion of an audit. Controls in Scope related to TPRM: 15.1: Information Security in supplier relationships 15.2: Supplier service delivery management Sarbanes-Oxley Compliance (SOX) The United States Congress passed the Sarbanes-Oxley Act in 2002 and established rules to protect the public from fraudulent or erroneous practices by corporations and other business entities. The goal of the legislation is to increase transparency in the financial reporting by corporations and to require a formalized system of checks and balances in each company. Controls in Scope of TPRM: APO10.01/APO10.02: Selection of vendors for outsourced services is performed in accordance with the enterprise’s vendor management policy and process. APO10.03: A designated individual is responsible for regular monitoring and reporting on the achievement of the third-party service level performance criteria. APO10.04: Third-party service contracts address the risk, security controls and procedures for information systems and networks in the contract between the parties. HITRUST CSF is a security framework that aggregates relevant information security controls from the standards and regulations incorporated into HIPAA. Thus, it creates a single framework that healthcare providers and their business associates can use to meet the technology requirements embedded in HIPAA. Controls in Scope of TPRM: 5.02 External Parties: To ensure that the security of the organization’s information and information assets, are not reduced by the introduction of external party products or services. 05.i Identification of Risks Related to External Parties: The risks to the organization’s information and information assets from business processes involving external parties shall be identified, and appropriate controls implemented before granting access. Federal Risk and Authorization Management Program (FedRAMP) is a US government-wide program that provides a standardized approach to security assessment, authorization, and continuous monitoring for cloud products and services.  This approach uses a “do once, use many times” framework that saves cost, time, and staff required to conduct redundant Agency security assessments. Requirements to be considered related to TPRM: 3rd Party Assessment Organizations (3PAOS) play a critical role in the FedRAMP security assessment process, as they are the independent assessment organizations that verify cloud providers’ security implementations and provide the overall risk posture of a cloud environment for a security authorization decision. These assessment organizations must demonstrate independence and the technical competence required to test security implementations and collect representative evidence. 3PAOs must: Plan and perform security assessments of CSP systems Review security package artifacts in accordance with FedRAMP requirements Privacy Standards:  The Gramm-Leach-Bliley Act (GLB Act or GLBA) is also known as the Financial Modernization Act of 1999, is a United States federal law that requires financial institutions to explain how they share and protect their customers' private information. Requirements to be considered related to TPRM: A financial institution must provide notice of its privacy policies and practices, and allow the consumer to opt out of the disclosure of the consumer’s nonpublic personal information to a nonaffiliated third party if the disclosure is outside of the exceptions in sections 13, 14, or 15 of the regulation. General Data Protection Regulation (GDPR) is a regulation in EU law on data protection and privacy in the European Union and the European Economic Area. It also addresses the transfer of personal data outside the EU and EEA areas. Requirements to be considered related to TPRM: Sign a data processing agreement between your organization and any third parties that process personal data on your behalf. Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a federal law that required the creation of national standards to protect sensitive patient health information from being disclosed without the patient's consent or knowledge. Requirements to be considered related to TPRM: Privacy: An authorization must be written in specific terms. It may allow use and disclosure of protected health information by the covered entity seeking the authorization, or by a third party. California Consumer Privacy Act of 2018 (CCPA) gives consumers more control over the personal information that businesses collect about them. This landmark law secures new privacy rights for California consumers, including: The right to know about the personal information a business collects about them and how it is used and shared; The right to delete personal information collected from them (with some exceptions); The right to opt-out of the sale of their personal information; and The right to non-discrimination for exercising their CCPA rights. The New York SHIELD Act requires any person or business owning or licensing computerized data that includes the private information of a resident of New York (“covered business”) to implement and maintain reasonable safeguards to protect the security, confidentiality and integrity of the private information. Requirements to be considered related to TPRM: Is the organization conducting internal controls-based assessments of third-parties based on the requirements in applicable laws such as GLBA, HIPAA, or NYCRR Part 500? Is the organization monitoring external third-party networks and utilizing business risk intelligence such as news events, financials, layoffs, leadership changes, lawsuits, etc. that can serve as predictors of future vulnerabilities? Is there a defined process in place to identify, categorize, prioritize, and manage risks to an acceptable level? Does the organization have a defined workflow process in place to escalate identified risks for remediation? Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Third Party Risk Management Planning During COVID-19 The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management  Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information. Article Sources https://www.dnb.com/perspectives/corporate-compliance/how-to-manage-third-party-risk.html https://www.venminder.com/blog/what-is-a-vendor-management-program ### The CPA Evolution With numerous advancements in technology, as well as expansion of the Internal Revenue Code and modifications to auditing standards, the accounting profession has changed significantly over the past few decades. As such, the role of the CPA as a professional service provider has had to adapt to this ever- evolving environment just to be able to continue to meet the needs of clients and the public. CPAs, including those who’ve just entered the profession, are now tasked with responsibilities that require a vast skillset of critical thinking, problem-solving, knowledge of technology and business analytical review. As a result, the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA) have determined that the CPA license model should be updated to better reflect current competency requirements, a plan they call ‘The CPA Evolution Initiative.’Working collaboratively, NASBA and AICPA have spoken with various stakeholders to get their take on what exactly the evolution should look like. Overall feedback supports an update to the licensure model and suggests it position the CPA for the future, as well as protect the public interest. It was determined that a CPA candidate should be able to not only demonstrate common core competencies (accounting, auditing, tax, technology), but also choose a discipline to further demonstrate his or her knowledge from specialties that include tax compliance and planning, business analysis and reporting, and information systems and controls. NASBA and AICPA feel this revised model better reflects the realities of the profession and will help to ‘future-proof’ the CPA.The new exam utilizing this core-plus-discipline licensure model is expected to be implemented in January 2024. Schneider Downs continues to recruit talented individuals and this new model will allow us to continue to provide quality services to clients.For further information on the CPA Evolution, visit: https://www.evolutionofcpa.org/ ### Projected Estate and Gift Tax Changes Announced by the IRS for 2021 The Internal Revenue Service announced in Rev. Proc. 2020-45 that the unified credit against estate tax and generation skipping transfer tax exemption will continue to rise in 2021 based on new numbers that have been adjusted for inflation, while the annual gift exclusion will remain the same.The annual gift exclusion for 2021 is projected to remain unchanged from 2020 at $15,000 per person.  This means that you can gift to as many people as you want (i.e., children, grandchildren, and friends) without using any of your lifetime exemption as long as the total value of the gift to each beneficiary does not exceed $15,000.  If you are married, each spouse has a $15,000 annual exclusion meaning a total of $30,000 could be gifted to each recipient.The lifetime exemption amount for 2020 is currently set at $11.58 million and is projected to rise to $11.7 million in 2021.  This means that for 2021 (barring any potential law changes) you can transfer, during life or upon death, $11.7 million before incurring estate or gift taxes.  Similar to the annual exclusion, if you are married, each spouse can transfer $11.7 million, or $23.4 million combined, before incurring estate or gift taxes.If you have any questions about your current estate plan or would like to make an estate plan, please do not hesitate to contact us at Schneider Downs. ### EU Provides Guidance on the New E-Commerce VAT Rules VAT, or value-added tax, is a tax levied on the purchase of a product or service whenever value is added to such product or service until the final point of sale to the end consumer, and is essentially the equivalent of U.S. sales tax. The European Commission recently issued new guidance for the application of the new VAT legislation that, due to the COVID-19 pandemic, will become effective July 1, 2021. The new rules are meant to simplify the obligations of companies engaging in cross-border e-commerce sales, while also eliminating differences in the way VAT applies to EU and non-EU based companies. The regulations also create a new import scheme which requires the collection and payment of VAT on sales of low-value goods from non-EU countries, such as the United States, to consumers in the EU-member states.Under prior law, low-value goods, or goods with a value below EUR 150 (roughly $175 USD), imported into the EU were exempt from VAT, however EU based companies with sales of those same goods were not exempt from paying VAT. The result was that foreign importers of low-value goods were at a significant advantage in the EU market, compared to EU based businesses. The new system repeals this rule, and subjects all goods imported into the EU from third-party countries to VAT. If the goods sold by non-EU businesses have a value that is below the EUR 150 threshold, an online seller is required to charge the consumer for VAT at the time the goods are purchased online.If all of the criteria related to the value and shipment of the goods are met and the seller has charged VAT at the point of sale of the goods, the seller will then register with and remit all VAT collected from all consumers to the EU member state of their choosing. It will be the responsibility of the EU member state with which a company is registered, to determine which other member states are entitled to a portion of tax collected, based upon disclosed information from the seller.  Assuming the seller complies with the necessary reporting requirements, the purchased goods will be released from EU customs to the consumer, exempt from VAT.While the new system imposes a tax on a previously untaxed subset of imported goods to the EU, the new “one stop shop” system, as it is referred to in the regulations, is meant to yield a faster and more efficient delivery system to the end consumer, as well as create a better system of payment of VAT to the appropriate EU member state. This system is also meant to remove the inconsistent tax treatment of EU businesses as compared to foreign competitors. As mentioned above, this new system eliminates one large advantage that U.S. (and other foreign businesses) were receiving in the past under the prior law.The impact to U.S. importers could range anywhere from a more in-depth look at sales to evaluate risk to a requirement to register in an EU member state to collect VAT at the time of sales. It is likely that sellers to consumers in the EU will need to collect additional information from buyers to report to EU taxing authorities. Regardless, as website and internet sales continue to dominate the marketplace, companies should be aware of the tax impacts of expanding sales into international marketplaces. ### 2021 Retirement Plan Limitations On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect on January 1, 2021 (IRS Notice 2020-79). These COLAs affect various contribution and deduction limits for qualified retirement plans, as well as the deductible contribution limits for traditional Individual Retirement Arrangements (IRAs). Internal Revenue Code Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. These adjustment procedures are similar to those used to adjust benefit amounts under IRC Section 215(i)(2)(A) or the Social Security Act.While some limitations increased, the majority of the limitations remain unchanged from the 2020 limits.  The more common limitations are summarized below, along with the applicable Code Section and/or Treasury Regulations Section (Regs).Increased Limits The annual contribution limitation for defined contribution plans increases from $57,000 to $58,000 (Code Section (415(c)(1)(A)). The annual maximum considered compensation limit increases from $285,000 to $290,000 (Code Sections 401(a)(17), 404(l),408(k)(3)(C) and 408(k)(6)(D)(ii)). The dollar limitation for determining the maximum account balance in an Employee Stock Ownership Plan (ESOP), subject to a five-year distribution period, increases from $1,150,000 to $1,165,000; however the dollar amount used to determine the lengthening of the five-year distribution period remains unchanged at $230,000 (Code Section 409(o)(1)(C)(ii)). The Social Security Taxable Wage Base increases from $137,700 to $142,800. The compensation threshold for simplified employee pensions (SEPs) increases from $600 to $650. (Code Section 408(k)(2)(C)). Unchanged Limits The annual deferral limit for 401(k), 403(b), and 457 plans remains unchanged at $19,500 (Code Sections 402(g)(1),402(g)(3)). The annual deferral limit for deferred compensation plans of state and local governments, and tax-exempt organizations remains unchanged at $19,500 (Code Section 457(e)(15)). The limitation on the annual benefit under a defined benefit plan remains unchanged at $230,000. (Code Section 415(b)(1)(A)). The annual “look-back” compensation income limit for purposes of the definition of “Highly Compensated Employee” remains unchanged at $130,000 (Code Section 414(q)(1)(B)). The annual compensation threshold for purposes of the definition of “Key Employee” in a top-heavy plan remains unchanged at $185,000 (Code Section 416(i)(1)(A)(i)). The annual deferral limitation for SIMPLE retirement accounts remains unchanged at $13,500 (Code Section 408(p)(2)(E)). The maximum amount of catch-up contributions that individuals age 50 or over may make to 401(k) plans, 403(b) plans, SEPs and governmental 457(b) plans remains unchanged at $6,500 (Code Section 414(v)(2)(B)(i)). The dollar limitation on premiums paid with respect to a Qualifying Longevity Annuity Contract (QLAC) remains unchanged at $135,000. (Code Section 1.401(a)(9)-6 and Regs Section A-17(b)(2)(ii)). The maximum amount that can be contributed to an IRA remains unchanged at $6,000 (Code Section 219(b)(5)(A)). The IRA catch-up contribution limit for IRAs remains unchanged at $1,000 (Code Section 219(b)(5)(A)). The limitation concerning the qualified gratuitous transfer of qualified employer securities to an ESOP remains unchanged at $50,000 (Code Section 664(g)(7)). The maximum amount of catch-up contributions that individuals age 50 or over may make to SIMPLE 401(k) plans or SIMPLE retirement accounts remains unchanged at $3,000 (Code Section 414(v)(2)(B)(ii)).  Quick reference guide to key limitations for 2020 and 2021:  Item  2021 Limit   2020 Limit  401(k)/403(b)/457 Elective Deferral Limit $19,500 $19,500 Defined Contribution Plan Annual Limit $58,000 $57,000 Defined Benefit Plan Annual Limit $230,000 $230,000 Annual Compensation Limit $290,000 $285,000 Catch-Up Contribution Limit 401(k)/403(b)/457(b)/SEP $    6,500 $    6,500 Highly Compensated Employee Compensation Threshold $130,000 $130,000 Key Employee  Compensation Threshold $185,000 $185,000 Social Security Taxable Wage Base $142,800 $137,700 ### The IRS Wants to Verify Your Identity—Wait, Is This a Scam? What happens when you get a letter from the Internal Revenue Service?  Panic Skepticism that it’s a phishing scam A little of each Some clients have recently received IRS Letter 5071C, which seeks to confirm the identity of the taxpayer.  These have been issued in as little as two weeks after a taxpayer has electronically filed an individual income tax return. First off, don’t ignore the letter---it’s not fake.  The IRS has some indication that a confirmation of the taxpayer’s identity is required.  It does not mean that the taxpayer’s identity has been stolen.  However, be certain to deal with this inquiry in a timely manner.  If identity theft has occurred, it’s best to begin to mitigate the damage as soon as possible.The taxpayer can complete the verification process by calling the IRS, using the number on the 5071C letter or by logging on to the IRS Identity Verification Service website at:https://www.irs.gov/identity-theft-fraud-scams/identity-verification-for-irs-letter-recipientsUnfortunately, we, as your tax advisors, cannot complete this verification on your behalf.  We may assist you and be a part of the telephone conversation, but, you (the taxpayer who received the letter) will still need to be part of this process.Information that should be gathered prior to placing the phone call or logging on to the IRS website, includes the following:   The 5071C letter and the tax return referenced in the letter (generally an individual Form 1040) The prior year’s submission of that same type of tax return Supporting documents that were used to complete the tax return in question (e.g., Forms W-2, 1099DIV, etc.) Other identifying information (e.g., account numbers from a personal credit card, loan, etc.) Cell phone number associated with your name If the IRS cannot verify your identity to its satisfaction, an in-person appointment at your local office may be required.Once the IRS has confirmed the taxpayer’s identity, the return in question will be processed.  Note, however, that refunds will be delayed due to these additional steps.One final word on IRS notifications—remember that the IRS will never call, text or email taxpayers asking for information, payments, bank info, etc.  If you or anyone you know receives this type of communication, do not give out your personal information.  This is not a legitimate means of IRS communication. As always, your Schneider Downs advisors are available to help you with this type of situation. ### Ransomware Attack Disrupts Popular Sports Gambling Sites On May 14, 2018, the Supreme Court lifted the federal ban on sports gambling.  Since then, twenty-two states, as well as Washington D.C. have allowed, or plan to allow, sports gambling to take place in some form (Pennsylvania being one of them).  If you live in a state like Pennsylvania, you are able to wager through mobile apps.  FanDuel and Draftkings are the two biggest providers of mobile gambling.  These sites have also run daily fantasy sports contests long before 2018. If you were using these sites to place bets or play in any of their daily fantasy contests the weekend of 10/9/2020, you may have noticed that stats and scores for games were not updating.  This is because the stat provider, Stats Perform, was hit with ransomware.  Ransomware is a type of malicious software designed to block access to a computer system until a sum of money is paid.  Stats Perform spent a week rebuilding their servers and had issues leak into a second week as well.The outage did not just affect those two sites.  It caused disruptions in other fantasy sites around the country.  Live scoring and stats updates for some sites without backup plans were down for around 10 days.  Stats Perform did not respond to multiple requests to comment from website US Bets, nor offered any public statement since the outage. They have made just one post on their twitter account since the incident, promoting an upcoming webinar for its AI in Sport Series. This outage has highlighted a multitude of cybersecurity issues that can take place for companies, especially technology driven companies.  An organization needs to be ready for an attack like this.  Proper incident management preparation can help in cases with Ransomware and other cyber-attacks.  While proper cyber hygiene measures should be taken to try to prevent such attacks, companies need to be ready to respond in a swift and strong manor when an incident occurs. As for the companies who were affected by the outage, this spotlights potential issues with disaster recovery and third party risk management.  Organizations should always have backup plans and redundancies in place to be prepared when an outage like this occurs.  If there is an IT disruption within an organization, they should always be prepared and have disaster recovery procedures in place to limit outages.  Companies should also be evaluating all third parties to understand the likelihood and impact of breaches and outages with their vendors.Schneider Downs offers a number of services to help organizations with business continuity and disaster planning, and third party risk management through our IT Audit and Cybersecurity practices. Learn more about our services with the links below. Schneider Downs IT Audit and Compliance Services Schneider Downs Cybersecurity Services Schneider Downs Third Party Risk Management Schneider Downs Business Continuity and Disaster Planning Schneider Downs Digital Forensics and Incident Response About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident.  ### S Corporation Rollover Equity – Involve Your CPA Early and Often When selling your closely held or family-owned business, there are often multiple structures that warrant consideration.  Should you sell your assets or your stock? Should you defer a portion of the purchase price?  What are the tax consequences?  Should sellers retain equity?  How is retained equity taxed?  Each of these items should be carefully considered in the beginning phases of negotiation, and your CPA should be involved in these discussions in order to achieve the desired after-tax cash outcome of the selling parties.In particular, when a business is owned and organized as an S Corporation for tax purposes, there may be certain goals that are more difficult to achieve due to the limited flexibility with regard to ownership and allocation of income and distributions required by the S Corporation rules.  Generally, to qualify as an S Corporation, the entity must have only one class of stock that confers identical rights to distributions and liquidation proceeds.  One situation where this requirement may cause added complexity to a sale is when an ownership group includes multiple generations of a family with some members more involved in the business than others and key executives being required to roll over more equity into the proposed post-transaction structure than other members have been asked to or desire to roll over.  When the target is either a Qualified S Corporation Subsidiary or Single Member LLC and rollover equity in the post-transaction structure is held by the parent S Corporation rather than the individual shareholders, there may be a need enter into redemptions of certain shareholders or share purchases between shareholders.  The goal of disproportionate rollover equity becomes even more complicated in this situation when you have potential earn-out payments to be made in the years following the initial closing date. It is important to involve your CPA in early discussions between investors or family members when deciding or formulating the goals of a potential sale.  Your tax advisor should have an in-depth knowledge of the current structure and history of the company and your shareholders to help guide management regarding the possibilities and opportunities that are available and the associated complexity as the transaction is negotiated.  Generally, there will be planning opportunities available to achieve many, if not all, of the goals of the selling parties.  It is crucial to identify transaction complexities early in order to inform the advisory team, including investment bankers and attorneys, as they assist with the negotiation of terms of a sale.  It is equally important to be able to set appropriate expectations with selling shareholders and avoid surprises as the closing date approaches or, even worse, managing post-close tax planning related to the transaction. If you are considering a potential sale of your company, a Schneider Downs Succession Planning advisor will be able to assist you and your family or investor group in navigating these complex tax issues when negotiating the terms of your sale.  Please contact Schneider Downs and allow us to start a conversation with you regarding these matters. ### IRS Releases New Proposed Partnership Schedules (K-2 and K-3) for International Tax Reporting If you’re a U.S. partnership with international items of relevance (i.e., foreign partners or foreign activities), you will likely be required to file new Schedules K-2 and K-3 for 2021 tax year (2022 filing season), along with Schedule K-1.The new forms are extensive (K-2 is 20 pages and K-3 is 23 pages long) and are designed to supplement and clarify the former Form 1065 international information and provide partnerships a “standardized format” for reporting international tax information.Domestic partnerships with no international tax items to report would not be affected by the proposed changes.Currently, partnerships report foreign tax information in Box 16 of Part III in Schedule K-1, as well as Box 20 “other information” by attaching narrative statements to K-1s. These statements are presented in a variety of formats, which make it difficult for partners to correctly interpret and report on their own tax returns. The new proposed schedules are designed to streamline this process by better aligning the information provided by partnership with the tax forms partners use. The new draft Schedule K-2 (Form 1065), Partners’ Distributive Share Items – International would replace portions of Schedule K-1, Part III, lines 16(a) through 16(r) and Schedule K-3 (Form 1065), Partner’s – Share of Income, Deductions, Credits, etc. – International would replace portions of Schedule K-1, Part III, Boxes 16 and 20.  Draft formats are available through the IRS website.Public commenting for new schedules ended on Sept 14, 2020. The IRS is expected to release final forms later this year. Overall, the new designed schedules will create additional complexities and increased tax compliance to applicable partnerships, as the draft schedules do not replace existing reporting requirements but are intended to provide more detailed information to their partners.For more information about this topic, including reporting requirements for all entities with international activities, please contact your Schneider Downs international tax advisor. ### FASB Issues Accounting Standards Update for Not-for-Profit Entities on Contributed Nonfinancial Assets On September 17, 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-07 related to Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets.  Entities that receive contributed nonfinancial assets would be impacted by this standard.  Nonfinancial assets include fixed assets (such as land, buildings and equipment), use of fixed assets or utilities, materials and supplies, intangible assets, services and unconditional promises of those assets.This standard will improve financial reporting by providing new presentation and disclosure requirements on contributed nonfinancial assets.  Entities will be required to create a separate line item on the statement of activities to include contributed nonfinancial items, separated from contributions of cash and other financial assets.  The following items will be required to be disclosed in the footnotes: Disaggregation of the amount of contributed nonfinancial assets recognized within the statement of activities by category that depicts the type of contributed nonfinancial assets, and For each category of contributed nonfinancial assets recognized, the following need to be included: Qualitative information about whether the contributed nonfinancial assets were either monetized or utilized during the reporting period.  If utilized, the entity will disclose a description of the programs or other activities in which those assets were used; The entity’s policy about monetizing rather than utilizing contributed nonfinancial assets; A description of any donor-imposed restrictions associated with the contributed nonfinancial assets; A description of the valuation techniques and inputs used to arrive at a fair value measurement; and The principal market used to arrive at a fair value measure if it is a market in which the recipient entity is prohibited by a donor-imposed restriction from selling or using the contributed nonfinancial assets. Entities will be required to adopt this ASU on a retrospective basis, and it is effective for annual periods beginning after June 15, 2021.  This would include calendar years ending December 31, 2022 and fiscal year ending June 30, 2023.  Early adoption is permitted.At a Not-for-Profit Advisory Committee Meeting also held in September, committee members provided feedback to FASB staff on how to educate not-for-profit stakeholders on the new ASU.  Committee members suggested speaking at conferences or holding a virtual roundtable for some larger entities to ease implementation and answer questions that may arise.  Schneider Downs will also be following any implementation guidance and would be happy to answer any questions on the new standard. ### Reshoring and Manufacturers Reshoring is the practice of bringing manufacturing jobs and services back to the United States—jobs that had been previously lost to offshoring efforts. In the past 40 years, an estimated three million to five million domestic manufacturing jobs have been lost to offshoring.1 In the new world we live in since the COVID-19 outbreak started, ever-changing circumstances create endless uncertainty. However, 2020 and the years to come present a unique opportunity to increase stability and profitability through reshoring initiatives.Perhaps the most compelling argument in 2020 for reshoring efforts is to maintain control over supply chains, which have seen instability like never before due to the COVID-19 pandemic. The Reshoring Institute, a bi-partisan 501(c)3, found in its 2019 survey of global manufacturers, that over 70%2 of manufacturers experienced some type of supply chain delay in their overseas operations. While the figures are not currently available relating to the 2020 year, there is likely to have been an even greater impact due to the pandemic. In fact, Thomasnet????®, a register of manufacturers worldwide found in a June 2020 survey that 69% of respondents were “likely” or “extremely likely” to reshore,3 largely in part to create more resilient supply chains.  When supply chains are local to a manufacturer, lead times can be reduced, quality can be improved and relationships with the local supply chain can be grown and fostered.A lesser known, but equally compelling, argument for reshoring is the preservation of intellectual property (IP) owned by the manufacturer. China continues to be a manufacturing powerhouse, and according the Economic Policy Institute, an estimated 2.8 million4 manufacturing jobs were lost to China since China’s admittance to the World Trade Organization in 2001. The manufacturers in China pose a threat to international manufacturers in that IP is at risk of being infringed upon due to lack of protections in China. CNBC found through a survey of Global CFO’s in 2019 that approximately one in five CFO’s reported having their IP stolen by Chinese firms within a year of the survey.5 Manufacturers invest substantial capital into the development of IP, and when that is stolen from them and used against them, the results can be catastrophic. Reshoring can prevent the theft of IP because U.S. protections are substantially greater and there is more recourse if IP were to be infringed upon.While reshoring may not be the solution to all of the challenges presented to manufacturers, it certainly can be an option to help manufacturers weather the uncertain storm. The global pandemic, with all of its pain and struggles, also presents an opportunity to act, and the opportunity to capitalize on openings, and to rise above the challenges. Reshoring gives manufacturers the means to control their destiny and aid in the economic recovery of the United States. 1 https://reshorenow.org/?pageLink=blog-detail&blogLink=how-many-jobs-have-been-lost-to-offshoring-and-can-be-recovered-by-reshoring 2 https://reshoringinstitute.org/wp-content/uploads/2019/05/2019-Survey-of-Global-Mfg.pdf 3 https://blog.thomasnet.com/reshoring-creates-opportunities-for-manufacturers-in-2020 4 https://www.epi.org/publication/growing-china-trade-deficits-costs-us-jobs/ 5 https://www.cnbc.com/2019/02/28/1-in-5-companies-say-china-stole-their-ip-within-the-last-year-cnbc.html ### Third Party Risk Management Planning During COVID-19 2020 introduced many unforeseen circumstances across the world with very few companies prepared to tackle the challenges that a global pandemic such as COVID-19 brought to light. When the pandemic hit, most organizations had informal ideas that were loosely discussed on how to tackles the challenges of working remote, staggered scheduling of employees, or even a temporary closure, however, formal business continuity planning did not take place. Even organizations that did have thoroughly documented business continuity and resiliency plans struggled with the transition due to circumstances that were not initially considered or never fully testing these plans. Having a well-developed business continuity and resiliency plan is important, it is equally important to include any your vendors to the organization as part of the planning process. Organizations across all industries are utilizing vendors to perform or assist with performing critical tasks that are part of their core business processes. Which is why it is pertinent to understand and ensure that all your vendors have developed and maintain their own set of business continuity and resiliency plans that outline how the vendor will continue to perform the services they provide. While organizations cannot account for all potential situations, by developing, documenting and performing third party risk management controls and procedures can make a greater impact on the overall quality of your planning efforts for your organization. To better prepare your organization, we have provided several important business continuity and resiliency best practices for third party risk management, especially during COVID-19. Business Continuity Plan (BCP) – Identifying the vendors that are critical to your organization is the first step. These would be any vendors that you rely on to make your final product or provide a service. As part of performing due diligence of your vendor, ensure that your review involves inspecting your vendor’s BCP. Ensure that the Recovery Time Objectives (RTO) and Recovery Point Objective (RPO) listed in the BCP meets or exceeds your expectations so that the disruption to your clients and customers will be minimal. Additionally, take note of any additional parties involved in the products or services being provided by your vendors, as this could potentially cause an unforeseen issue. If Pandemic Planning is not included in your plans, as well as the plans for critical vendors, ensure that these plans are defined and required. Critical Vendor Risk Assessments – If vendors are assessed based upon a defined period, ensure that scheduled reviews are not missed or overlooked. Perform the appropriate due diligence for all vendors, even if the process must be modified, such performing the assessment virtually as opposed to being onsite or identifying key risk areas and modifying assessment to the key business risks. Escalation/Notification of Issues – Ensure that all vendors have defined escalation/notification procedures along with an agreed upon timing to communicate potential issues or changes. Review Contact Information – Ensure that all your vendor’s contact information is accurate and updated frequently. Additionally, ensure your vendor has the correct contact information for your organization. Performance Assessments (Monitoring SLA’s, KPI’s, or Metrics) – Ensure that your vendors are still meeting or holding to the defined Service Level Agreement’s (SLA’s), Key Performance Indicator’s (KPI’s), or key defined internal metrics. Utilize these metrics to schedule frequent meetings with critical vendors to stay in contact and to allow for constant open or direct communications to address potential issues. This helps to reduce the risk of potential instability with a critical vendor. Monitoring and Alerting – Monitoring the status or progress of any previously noted findings for all vendors including: Monitoring various threat feeds for notifications of potential security breaches (US-CERT, FS-ISAC, etc.). Additionally, setting up news notifications, or “key word” alerts for all critical vendors. Depending on your business needs, a paid third-party risk management solution could be utilize to provie active alerts on the status and integrity of your critical vendors. Assess the Risk of Potential Lock-in or Dependency for Critical Vendors – When reviewing critical vendors, assess if your final product/service of your business is solely dependent on any of the products or services that are provided by any vendors. Address if any alternatives, are available. If no alternatives are available, ensure that communications are frequent, and the previously mentioned are adjusted accordingly. Throughout these uncertain times, all companies are striving to ensure that they can provide quality services, while making the best use of their resources and vendors. As a result, maintaining responsible third party risk management practices and procedures are more important now than it has ever been. By performing the proper due diligence of your vendors, it allows you to gain an understanding the controls in place, especially as it relates to the business continuity and resiliency considerations as well as the potential long-term impacts that can potentially be realized because of COVID-19. While the considerations and suggestions outlined above are not all inclusive, these best practices are able to be implemented, even during the current pandemic. If you feel that your organization is in need of assistance to review the processes or procedures that are currently in place or assistance with implementing these best practices, Schneider Downs is here to help! Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management in 2020: What We’ve Seen Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management  Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information. ### Reflections from the Recent Employee Benefit Plan Season If you’re a plan sponsor, you may breathe a sigh of relief now that the October 15 filing deadline is over. Reflecting back on this benefit plan season, it was more challenging than prior years for both plan sponsors and audit teams due to remote working environments, considerations of applying the Coronavirus Aid Relief and Economic Security Act (CARES Act), and in some cases, spreading preparation of the work among fewer individuals at the plan sponsor. More Efficient Plan Audit There are several tips that plan sponsors can apply for more efficient and effective audits in the future. The following strategies have allowed us to be successful but are also important reminders for the 2021 benefit plan season: Plan, plan and plan. By planning the audit early, plan sponsors can ensure that it fits into a timeframe that allows them to focus on the audit while also performing all of their daily responsibilities. Audit teams are responsible for sending the client assistance list well in advance of scheduled fieldwork to ensure the plan sponsor has adequate time to review the list and pull together the requested information.  Additionally, audit teams will prioritize requests. Plan sponsors should discuss new plan features and amendments with the audit team in advance of fieldwork. Ensure copies of significant agreements related to the plan are readily accessible. Whether the audit team and plan sponsor are working in a remote environment or on site, collaboration between the plan sponsor and the audit team on a daily basis is extremely important. By setting aside specific time each day to answer questions, the audit will be completed in a timely manner. Plan sponsors should consider granting audit teams read-only access to the trustee’s or custodian’s website in order for the audit team to access reports and participant records without having the plan sponsor take the time to download the information. Additionally, consider granting the audit team read-only access to payroll systems so that they can pull payroll reports themselves. If you choose to do this, remember that it has to be read-only access. At the end of the audit, consider discussing additional efficiencies that could be applied to the next year. The 2021 employee benefit plan season will bring additional considerations to the audit process. The provisions of the CARES Act that were adopted by plan sponsors in 2020 will be subject to testing by the audit team. Also, plan sponsor management should begin to discuss the effects that Statement on Auditing Standards No. 136 will have on the plan. Additionally, some plan sponsors may choose to early-adopt the standard, as Statement on Auditing Standards No. 136 is effective for plan years ending on or after December 15, 2021. Whether it’s looking for efficiencies, assistance with CARES Act provisions, adoption of Statement on Auditing Standards No. 136, or other employee benefit-related services, our team is here to help. Contact your engagement team or a member of the ERISA group at Schneider Downs for additional information. ### CARES Act Funding to Help Ohioans Impacted by COVID-19 On Friday October 23rd, Ohio Governor Mike DeWine and Lt. Governor Jon Husted announced that the administration, in partnership with the General Assembly, is developing a package of more than $419.5 million CARES Act funding to help Ohioans. This package includes funding for small businesses, restaurants and bars, hospitals, higher education, arts, nonprofits, and low-income Ohioans impacted financially by the pandemic.The package is be taken to the State Controlling Board for approval on Monday, October 26.The package includes $125 million in CARES Act funding to provide grants to small businesses with no more than 25 employees. The grant funding will help businesses pay for a variety of expenses, including mortgage or rent payments; utility payments; salaries, wages, or compensation for employees and contractors; business supplies or equipment; and other costs. The application for the Small Business Relief Program will be available November 2, 2020 at businesshelp.ohio.gov.With this package, the administration also is allocating $50 million from the Coronavirus Relief Fund to 47 Community Action Agencies to provide rent, mortgage, and water and/or sewer assistance to Ohioans in need. This assistance will help Ohioans pay outstanding balances back to April 1, 2020.Ohio households behind on their bills with an annual income at or below 200% of the federal poverty guidelines will be eligible for assistance. For a family of four, that is an annual income up to $52,400. Starting November 2, 2020, Ohioans will be able to apply for assistance through their local Community Action Agency. A list of agencies can be found at businesshelp.ohio.gov.The administration will also designate $37.5 million of CARES Act funding for the Bar and Restaurant Assistance Fund. This fund will be available for Ohio restaurants and bars struggling financially as a result of the COVID-19 pandemic and limited in the full use of their liquor permit.Businesses with an on-premise consumption permit will be eligible to receive $2,500 per unique business location.  Businesses need to have an active on-premise permit as of close of business October 23, 2020.  Starting November 2, permit holders will be able to apply for assistance at  businesshelp.ohio.gov.Additionally, the package allocates $62 million in CARES Act funding for rural and critical access hospitals as the response continues for the COVID-19 pandemic. This funding may be applied to additional costs associated with the ongoing pandemic, including various safety measures, and the purchase of critical PPE for first responders.It also includes $100 million in CARES Act funding for higher education. This funding will support critical COVID-19-related services provided at Ohio’s universities and colleges, including expanding testing for students, faculty, and staff, and mental health services.   In addition, $25 million CARES Act funding will be designated for nonprofits, and $20 million to support Ohio’s world-class arts organizations. These funds will be used for costs incurred throughout the COVID-19 pandemic.For more information on how we can help, contact your Schneider Downs business advisor.  ### Ransomware Victims May Now Face Federal Fines On October 1st, 2020 the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released an advisory on potential consequences for facilitating payments to groups running ransomware operations.OFAC's Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments states that victims of ransomware, along with, “companies that facilitate ransomware payments to cyber actors on behalf of victims, including financial institutions, cyber insurance firms, and companies involved in digital forensics and incident response,” could face fines from the US government for paying, or assisting a company in paying, ransom demands to certain sanctioned groups. OFAC specially calls out several cyber actors designated under its cyber-related sanctions program, including the developer of Cryptolocker, Iranians associated with SamSam, the North Korean sponsored Lazarus Group linked to WannaCry 2.0 and the Russia-based Evil Corp responsible for Dridex.This appears to be an attempt to both encourage ransomware victims to report incidents to the government and dissuade companies from paying ransoms to groups that have been identified as threats to national security interests. Paying cyber criminals enables them to advance their criminal operations, encourages future attacks and, “fund activities adverse to the national security and foreign policy objectives of the United States.”   Ransomware victims often meet their attacker’s payment demands since it can be less costly and time-consuming compared to rebuilding their network and attempting to make up for lost business records and data, some of which recovery of is critical to business operations.The OFAC advisory also states that civil penalties may be imposed based on, “strict liability,” meaning that companies may be held liable for payments made to sanctioned groups or individuals, even if it was unknown that the adversary engaged with had been placed under sanctions. However, OFAC does state that disclosing cyber incidents to law enforcement and cooperating with U.S. agencies in the aftermath would be considered when deciding sanctions related to ransom payments.About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident.  ### 2020 Election from a Tax Perspective With the presidential election about two weeks away, we wanted to highlight President Trump and Democratic presidential candidate Joe Biden’s tax plans.  The election results could drastically change the tax rates for both individuals and businesses in the country.    President Trump has not really talked a lot about taxes in his campaign speeches and debates, choosing instead to focus on the economy and policies surrounding Covid-19.  When he was campaigning during the 2016 election, he touted lowering the corporate tax rate and simplifying the tax code.  After elected president, he worked with Republicans in Congress to pass the 2017 Tax Cuts and Jobs Act (TCJA), which implemented the following changes to the tax code: Lowered the corporate tax rate from a high of 38% to 21%  Repealed the corporate alternative minimum tax Lowered the highest individual income tax bracket from 39.6% to 37%  Increased the standard deduction and eliminated the personal and dependency exemptions  Increased the child tax credit from $1,000 to $2,000 per child  Increased the alternative minimum tax (AMT) thresholds for individuals so that most Americans are no longer subject to AMT Implemented the Qualified Business Income (QBI) Deduction, which allows an individual to deduct 20% of domestic qualified business income from an S Corporation, partnership or sole proprietorship President Trump continues to advocate long-term capital gains taxed at a maximum tax rate of 20% . Due to the passage of the TCJA, President Trump does not have many new tax proposals in his re-election campaign.  Since most of the provisions in the TCJA expire in 2025, if re-elected, he would most likely try to make permanent the changes he implemented with the TCJA.Former Vice President Biden, on the other hand, has very different tax plans.  If elected, he would like to implement the following changes:   Increase the top rate back to 39.6% for individuals and lower the adjusted gross income to which the highest rate takes effect Increase the top marginal income tax rate on long-term capital gains to 39.6% for those earning over $1 million annually Expand the earned income tax credit and dependent care credit and have a refundable $8,000 child care tax credit for a qualifying child or up to $16,000 for two or more children Restore the Pease limitation on itemized deductions for taxable incomes above $400,0001 Restore the corporate income tax rate to 28%.  Additionally, Biden would like to impose a minimum tax on corporations with book profits of $100 million or more In addition to the above tax plans, each candidate has stated his plans for the Affordable Care Act (ACA) put in place by former President Barack Obama in 2010 to extend health insurance coverage to millions of uninsured Americans.  President Trump wants to repeal this law, while Joe Biden wants to expand it. Based on the above, President Trump and Democratic presidential candidate Joe Biden have major differences when it comes to taxation.  Hopefully, we will find out soon which direction our taxes will be going.  If you have any questions about how a new president will affect your tax situation, please reach out to your Schneider Downs tax advisor.1 Prior to the TCJA, a limitation on itemized deductions took effect at higher income levels.  In 2017, it was $318,700 for married filing joint returns and $261,500 for single filers.About Schneider Downs Private Client ServicesThe Schneider Downs Private Client Services practice was developed to attend to the specific and individualized needs of high-net-worth individuals. From robust and complex solutions to efficient and convenient solutions our team delivers the peace of mind that comes from working with experienced and talented professionals who can meet any challenge. For more information, visit Schneider Downs Private Client Services or contact the team today.   ### The Hardware Failure That Took Down The Tokyo Stock Exchange On October 1, the Tokyo Stock Exchange (TSE) was halted for a complete day due to an issue IT professionals tend to overlook, a piece of hardware.A crucial data storage and distribution device dubbed “Arrowhead” had malfunctioned, and the automatic backup failed to initiate. Arrowhead is the heartbeat of the TSE, giving and taking commands, routing data and, most importantly, monitoring trades. Without it, the exchange was forced to shut down for a full day, its longest sustained outage since 1999.What happened?The Arrowhead system is a hardware and software suite developed by Fujitsu that consists of two shared disk devices. On the day in question, the primary disk “Number 1 shared disk” encountered a memory error. When this occurred, the secondary device “Number 2 shared disk” should have automatically taken over in a failover procedure – essentially a handshake – to seamlessly keep processes functioning as normal. But this was not the case, since a forced manual failover needed to occur and that would have required a restart of the entire system, which was out of the question since orders, trades and data were already beginning to backlog. TSE officials made the decision to halt trading and resume operations the next day.What could have prevented this? Testing recovery strategies – Testing recovery strategies and documenting results can often aid in the ability to recover in scenarios where time is of the essence. During the testing of recovery strategies, critical recovery gaps can be identified, addressed and resolved. Conducting testing scenarios better prepares an organization and can help greatly reduce the impact of downtime when dealing with a real-life disruption. Additional Backup and Recovery Considerations Configuring backups – Configuring backup jobs are vital to all types of businesses. Backing up device configurations and data allows organizations to be resilient to disruptive events and occurrences. The ability to recovery quickly and completely is invaluable. Monitoring backups – While the configuration of backups is critical, what good is backup data if it fails to actually back up successfully? Monitoring backup jobs is equally as important, as it ensures data is in a healthy state and ready for recovery. Restoration testing of backups – A crucial part of successful data backups is testing the ability to restore that data. Restoration testing will help ensure data and systems are able to be recovered as intended. Businesses should conduct backup restoration testing frequently to confirm that they are prepared for an unscheduled outage or disaster-type event similar to what was faced by the TSE. If you have questions about your backup and recovery strategies or your disaster recovery plan, please connect with us. We would welcome a discussion. ### Financial Boot Camp Series: Focus on What You Can Control to Increase After-Tax Performance 2020 has certainly been an interesting year and again has reminded investors that they only have direct control over a precious few variables. These include how aggressive or conservative their portfolio is constructed, in which accounts they hold various investments, and when and how they buy or sell investments. The other components of investing, including public policy, tax code, market sentiment, and the performance of capital markets, are largely beyond the control or influence of individual investors. In this article, we focus our guidance on the areas that investors can control to increase their after-tax rate of return.Tax-Inefficient Investments in Retirement Accounts The first step in improving after-tax rates of return is understanding how various investments are taxed and their associated tax rates. We view investments taxed at ordinary income rates (relative to capital gains tax), such as taxable bonds and high-yield bonds, to be tax-inefficient investments. Therefore, our general preference is to hold tax-inefficient assets inside tax-deferred accounts like an individual retirement account (IRA) or an employer qualified plan. Holding tax-inefficient assets inside tax-deferred accounts eliminates associated ordinary income tax; thereby, increasing an investor’s after-tax rate of return.Efficient Taxable InvestingWhen considering investment holdings within taxable (brokerage) accounts, an investor should recognize potential capital gain exposure as well as the tax benefits of municipal bonds.Mutual funds incur capital gains by selling a position for a realized gain. If at the end of the year the fund has a net realized gain (realized gains larger than realized losses), this amount is distributed to the fund’s shareholders as a capital gains distribution. Generally, capital gains distributions are made toward the end of the calendar year.ETFs and index funds typically generate smaller capital gains distributions compared to mutual funds. ETFs are able to transact on an in-kind basis compared to cash inside of a mutual fund, resulting in lower capital gains and distributions. In addition, index funds typically have lower turnover (buying and selling activity), again resulting in lower capital gains and year-end distributions. With this understanding of capital gains distributions, our preference is to hold ETF and equity index investments within taxable accounts given their more advantageous capital gains distribution exposure.In addition, to the extent that investors seek to hold fixed income exposure within their taxable brokerage accounts, we would typically suggest municipal bonds given their favorable tax treatment. In general, interest paid on municipal bonds is exempt from federal taxes, and sometimes state and local taxes as well. In the current low interest rate environment, municipal bonds have at times been yielding more than taxable bonds on a pre-tax basis. Layer in the added tax benefit of municipal bonds not being subject to the Net Investment Income Tax, and one can see how municipal bonds improve after-tax performance.Tax-Loss Harvesting OpportunitiesOur final strategy to increase after-tax investor performance is tax-loss harvesting. Tax-loss harvesting is the selling of a security at a capital loss with sale proceeds simultaneously used to purchase a similar asset to maintain current portfolio exposure. The IRS stipulates that an investor must wait at least 30 days before re-purchasing the investment sold at a loss; otherwise, a wash sale is triggered and the capital loss harvested is voided and added back to the investor’s initial investment basis in the position.  Tax-loss harvesting is a fairly simple planning strategy, but in our opinion, is often overlooked or not executed properly. Tax-loss harvesting implemented effectively allows investors to maintain market exposure, while capturing capital losses that can be used to offset other capital gains during that tax year and/or deduct up to $3,000 of capital losses against taxable income on their tax return. As investors, we are always looking for opportunities to increase our investment performance. Awareness of how various investments are taxed, constructing a portfolio to minimize your tax liability and capturing capital losses while staying fully invested are effective strategies to improving after-tax rates of return. If you are looking for ways to increase your after-tax investment returns, one of our Schneider Downs Wealth Management Advisors would welcome the opportunity to have a conversation with you to discuss further.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Using External Data and Process Automation to Enhance Analysis As anyone who has paid attention to the stock market over the past six months could attest, the amount of price variation on any given day has been overwhelming. Although I am more of a boring index-fund guy, I often find myself daydreaming of investing my son’s college fund in Tesla shares and watching it go to the moon.  Given the task of evaluating hypothetical stock market investment returns, such as my Tesla scenario, one must begin by gathering specific price data. That data is a key aspect of the analysis to model out the gain or loss over a set period. Although the price information is readily available on the web, it would be a very tedious process to gather the information manually each time you want to model a different scenario. However, one can make use of data analytics tools such as Python or Alteryx to automate the data gathering and manipulation process. For example, using Alteryx, one can put together a repeatable visual workflow that downloads investment data from Yahoo Finance for a period and organizes the data for analysis. Once the workflow is set up, it is an effortless process to update the inputs for other requirements such as adding more reference dates or stock tickers.  In this case, having an easily repeatable workflow reduces the amount of time spent pulling the data. Whether one would need information for 10 stocks or 1000 stocks, the automated workflow gathers the data in seconds instead of hours. In addition, if the analysis needs to then be updated for a later period, one needs only to update their workflow to pull the added data and rerun the workflow to obtain it in a useable format.  By using external data sources and process automation, one can enhance analysis and remove manual processes when obtaining the data, allowing for more time in value-added areas of analysis. External data gathered using process automation could include economic information, population data, or even things such as social media statistics. In cases like this, it is beneficial to have a tool available that can gather a large amount of data efficiently and effectively.  If you have any questions about using data analytics to solve your business problems, please contact Andrew Trettel, CPA, CFE, CVA at 412-697-5436 or Brian Webster, CPA/ABV/CFF, CVA, CFE, CMA at 412-697-5307 of the Business Advisory Group at Schneider Downs. ### Third Party Risk Management in 2020: What We’ve Seen Chaos and disruption has been the story thus far in 2020 and the world of third party risk management has been no exception. Knowing how your organization’s data is being handled and protected by your third parties has always been a challenge and the current situation has only complicated these procedures. While there is no perfect roadmap to navigate these difficulties, companies are finding ways to adapt and gain peace of mind over the protection of their data. These are a few best practices we have seen over the past year that can help improve your vendor management program. Communication Beyond the annual assessment or questionnaire, maintaining an open dialogue between you and your vendors is absolutely critical. Whether it be staffing issues, financial problems within the company, or even just the regular stresses of working from home, your vendors are facing the same challenges many of us are in the current setting and are often conducting business in different ways than before. Even the occasional email or 15 minute call with your vendor contact can open up communication lines and perhaps uncover challenges vendors are facing that wouldn’t show up in an annual assessment. It is important to have an open communication line in order for you and your business to anticipate and counteract any potential issues before they arise. Emphasis on Resiliency Before this year, having a Pandemic Procedure outlined in your Disaster Recovery Plan seemed like a formality. Unfortunately, as the world found out the hard way, truly anything can happen. It is important to be sure that your vendors, especially those critical to your business’ functions, have procedures and resources outlined in order to keep their business operational. Beyond documented procedures, performing a tabletop walkthrough has become a best practice in order to establish roles and responsibilities for key members prior to dealing with an actual event.  Give emphasis to your vendors’ resiliency plans and procedures. Remember, to be proactive is to be prepared. Virtual On-sites While there is no replacing in-person interaction, companies everywhere are finding ways to make do virtually. The relationship can be maintained but gaining reliance on controls can be tricky, especially physical controls that require observations. The ability to leverage third party attestations such as SOC2 or ISO 27001 is truly invaluable when unable to affirm these controls yourself. Additional evidence can be obtained to satisfy most controls but reports such as these can offer piece of mind when operating in a virtual world. Peace of mind is hard to come by these days and data security is never certain. Hopefully these tools we have learned over the past few months can be used to prep your vendor management program for whatever comes next in 2020. Related Articles This article is part of a series exploring the importance of third-party risk management programs, you can view additional articles below. Third Party Risk Management Planning During COVID-19 Compliance and Third Party Risk Management: A Function for Continued Success The 5Ws and H of Third-Party Risk Management How Third Party Risk Management Caters to Your Organization Your Cyber Program is only as Strong as Your Weakest Link - Including Your Vendors Secrets Revealed: What Your Third Party Auditors Don’t Want You to Know Third Party Risk Management Virtual Assessments Forced by Pandemic Mind Your T's and C's View our entire Third Party Risk Management article library here. About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management, and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. Learn more at www.schneiderdowns.com/tprm or contact us for more information.   ### Schneider Downs Shortlisted for PTC Tech 50 Cybersecurity Award Schneider Downs is proud to be named a finalist for the  Pittsburgh Technology Council's 2020 Tech 50 Cybersecurity Award. The PTC Tech 50 Awards recognize technology innovation in the southwestern Pennsylvania region, and finalists were selected based on their ability to represent the 2020 event theme of “Redefine. Recharge”. “We’re thrilled to be named a Tech 50 finalist,” said Daniel Desko, leader of Schneider Downs' cybersecurity practice. “The cybersecurity sector is constantly evolving, and one of our chief missions is to evolve at the same pace. This recognition helps reinforce our belief that our clients are best served if we continue to offer new innovations to meet their needs.” The virtual award program will showcase each finalist and announce the winners on November 12. For more information on the PTC Tech 50 Awards, including the full list of finalists and categories, please visit www.pghtech.org/events/Tech50_2020. As we continue to develop our practice in the region and beyond, our team has introduced a number of new services, software and educational resources to help better empower end users and organizations against threat actors to keep our clients and community safe, including: Redlure This past July, Schneider Downs introduced the open-source phishing platform Redlure at the DEF CON 28 Demo Labs. Recognizing the importance of accurately portraying real life threat actors in penetration testing and red teaming methodology, cybersecurity team member Matt Creel developed Redlure with the goal of providing customizable, scalable and most importantly, realistic phishing campaigns tailored to unique needs of users and organizations. The decision to offer Redlure as open-source was an easy one for the practice. "Our practice owes a great deal to the cybersecurity community and other companies that have previously created open-source programs for us to use. They have made us a better practice," explained Desko. "This is our contribution and effort to pay that debt forward to help other companies." You can learn more about Redlure and view our DEF CON demo, at www.schneiderdowns.com/redlure. Code repositories are available at www.github.com/redlure. 24x7x365 Incident Response Hotline We know firsthand that threat actors don’t keep banker hours, which is why we introduced our Incident Response hotline as part of our Digital Forensics & Incident Response service this past year. The hotline is available 24x7x365 at 1-800-993-8937 for those who suspect or are experiencing an incident or breach. View the video below for an overview of our services and team. Learn more about our Digital Forensics & Incident Response services at www.schneiderdowns.com/dfir. Focus on Cybersecurity Newsletter In response to direct feedback from our clients and colleagues, the Schneider Downs cybersecurity team launched our Focus on Cybersecurity newsletter this past May. The bi-weekly newsletter shares relevant news and events in the cybersecurity world as well as original articles and insights from our team, including ungated access to featured whitepapers. Learn more and subscribe at www.schneiderdowns.com/subscribe. Cybersecurity Resource Center Developing security awareness content continues to be a key focus for our cybersecurity team, especially this past roller-coaster of a year when organizations faced new complexities and concerns in keeping their data and end users secure with the shift to remote accommodations. We understand the importance of educating end users and leadership about cybersecurity, which is why our resource center is completely open access. Recent content includes our recent "Cybersecurity Tips from Home" video series, "Staying Secure from Home" whitepaper, COVID-19 focused pieces and the latest Our Thoughts On articles. Explore the Resource Center at www.schneiderdowns.com/cybersecurity/resources. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### The Impact of COVID-19 on Community Colleges In March of 2020, institutions of higher education across the United States raced to make online classes readily available for students in the midst of the coronavirus pandemic. Within a short time frame, colleges and universities experienced a dramatic shift from in-person class offerings to online or remote learning courses in order to comply with government-imposed safety regulations. Perhaps some of the most impacted segments were postsecondary institutions in the public sector, and more specifically, community colleges.  According to the most recent available data from the U.S. Department of Education prior to the pandemic, only 13% of Pennsylvania community college students were studying exclusively online in the fall of 2018, and 35%  were studying partially through distance learning or online education, nearly all of whom transitioned to fully remote learning as a result of coronavirus. A study conducted by the American Association of Community Colleges (AACC) revealed that over half of community colleges that participated expect to experience a decrease in revenue of 10%  or more as a result of the pandemic, particularly in the areas of tuition and fees, auxiliary enterprises and noncredit activities stemming from changes in state and local appropriations. Many included in the study also mentioned the cost of technology as a key factor in determining other significant budgetary impacts. Furthermore, as a primary driver of revenue for community colleges, student enrollment will continue to play a critical role in the financial stability of institutions in the foreseeable future. Experts in higher education are paying particular attention to the somewhat surprising downturn in community college enrollment, since this sector has historically thrived during times of economic recession. Data recently released from the National Student Clearinghouse (NSC) Research Center showed a significant decline in summer enrollment for community colleges, which decreased by more than 5% this year. However, community colleges typically offer a significant number of career and technical education courses, which can be difficult to facilitate in a remote environment, as the programs tend to necessitate hands-on learning. Community colleges also frequently serve students who are now facing job losses, decreases in income and the inability to afford course fees, and who are straining to divide their time between work and childcare. Attendance for adult learners this fall has also seen a decline, whether due to concerns over health and safety, financial instability or uncertainty about future academic plans. Despite the current challenges, there are several unique characteristics of community colleges that could also factor into student enrollment. For instance, demand in the industry of higher education tends to be substantially influenced by price, which makes inexpensive community colleges an attractive option for prospective students seeking to attend at a lower cost. Additionally, community colleges often have rolling admissions, meaning that applications are evaluated as they are submitted, and usually there is no official deadline to apply. Many community colleges are also designed in such a way that allows for a greater ability to adapt to fluctuations in the regional job market, and work with local businesses to create programs that suit the needs of the community, just in time for a growing demand of essential workers. In the short-term, colleges and universities are implementing additional programs in an attempt to better retain and support students, and to respond to their specific needs. Some institutions have enacted policies that provide institutional grant aid to students who have been forced to go part-time, and have offered extra assistance in the form of mental health services to students most impacted by the pandemic. As events continue to unfold, a heightened ability to adapt and adopt new policies will become increasingly important to the retention and financial stability of institutions in the near future. For more information, be sure to check out our additional COVID-19 resources or contact Schneider Downs. Sources: https://www.ccdaily.com/2020/09/covid-19-crisis-in-community-colleges-what-does-the-data-say/ https://www.ccdaily.com/2020/04/datapoints-shifting-to-online-education/ https://www.usnews.com/education/blogs/college-rankings-blog/articles/2020-08-06/advantages-of-community-colleges-during-the-coronavirus-pandemic https://www.insidehighered.com/views/2020/08/04/analysis-data-national-survey-impact-pandemic-higher-ed-opinion https://eab.com/research/enrollment/custom/what-the-coronavirus-crisis-means-for-college-enrollment/ https://www.washingtonpost.com/education/2020/09/24/college-enrollment-coronavirus/   ### IRS Issues Final Regulations for Non-Grantor Trust Deductions The IRS has issued final regulations on the deductions available to estates and non-grantor trusts.Under the Tax Cuts and Jobs Act, which was enacted in December, 2017, certain miscellaneous itemized deductions are disallowed. However, these recently issued final regulations distinguish the following deductions as available to estates and non-grantor trusts: Costs paid or incurred in connection with the administration of an estate or non-grantor trust that would not have been incurred if the property were not held in the estate or trust; The personal exemption of an estate or non-grantor trust; The distribution deduction for trusts distributing current income; and The distribution deduction for estates and trusts accumulating income. On termination of an estate or trust, to the extent these deductions are in excess of gross income, they are deductible to beneficiaries in the tax year of the estate or trust’s termination. These deductions are not available in future tax years and must be taken in the tax year of the estate or trust’s termination.A beneficiary may claim all or part of the excess distributions before, after, or together with the same character of deductions separately allowable to that beneficiary.Taxpayers may choose to apply these updated regulations beginning in tax year 2018.  ### Don’t Forget About Your HEERF Reporting Requirements The Department of Education (ED) conducted a webcast October 14 to clarify a few of the requirements pertinent to disbursements it made under the Higher Education Emergency Relief Fund (HEERF). Institutions that received funds under A-1, A-2 or A-3 are subject to the following reporting obligations: Initial public reporting of student-portion funds that should have occurred within 30 days of receipt. Subsequent reports are due quarterly, with the first due October 30 for the period that ended September 30. Following this, reports are due within 10 days of the end of the quarter until all funds are exhausted. Future quarterly reports should apply only to that quarter and not be cumulative. The report blank can be found here. Annual reporting will be due sometime in early 2021 and will occur via a portal still under development. An in-depth table showing all reporting requirements can be found here. Institutions are required to make these reports public and available on their respective websites, preferably in the same location as the initial student-portion public reporting. Once posted, institutions should notify ED via HEERFreporting@ed.gov with a link to its location. ED wants the transparency of this information to demonstrate that these funds have been used appropriately to support larger relief and recovery efforts of the federal government. The agency continues to update their FAQs to address additional issues as they arise. If you have questions as you begin to complete your report, don’t hesitate to contact us. ### A Closer Look at Meals and Entertainment Expenses Two of the most common business expenses, and their related tax adjustments, are meals and entertainment expenses.  Internal Revenue Code Section 274 governs the deductibility, and largely the disallowance, of certain meals and entertainment expenses and other miscellaneous expenses including gifts, travel, and club dues. In the context of a professional services entity, a significant portion of expenses are incurred in client development and client retention activities.  Too often, these expenses are overlooked resulting in improper additions to taxable income or overstated deductions. Treasury has recently released final regulations under IRC §274 which remain largely unchanged from the proposed regulations issued earlier this year in February 2020.The final regulations serve to confirm the nine exceptions previously detailed under IRC §274 as to deductible treatment.  The Regulations also serve to incorporate much of the guidance offered previously in IRS Notice 2018-76.Under the Tax Cuts and Jobs Act (TCJA) of 2017, IRC §274(a) was amended in such a way that disallowed any business deduction with respect to an activity which is considered to constitute entertainment, amusement, or recreation and any related facility costs associated with said entertainment, amusement, or recreation.    Previously, these expenses would have been deductible under two exceptions known as the “directly related” exception and the “business discussion” exception.  Essentially, these exceptions were met if the expense was directly related to a trade or business (directly related) or if business was discussed before or after the entertainment event (business discussion).  Gone are the days of running half the expense of those season tickets through other deductions on the tax return.Now that entertainment and recreation costs are off the table, what now?  It makes sense to take a deeper dive into IRC §274 and look at what might still qualify as a good deduction.  In the scope of this article, our focus is on deductible meals.  IRC §274(k) is where you’re going to find business meals and the exceptions that make these expenses deductible.  The two factors to consider and defined in this section are that (1) the expense is not lavish or extravagant for the circumstances and (2) the taxpayer or someone employed by the taxpayer is present for the meal.  A quick jump to IRC §274(n) provides that only 50% of the meal expense is permitted as a deduction.  The 50% deduction for business meals isn’t new, but what’s now more important is that these expenses are properly tracked and bifurcated from their nondeductible entertainment expenses. When the TCJA put entertainment expenses on the chopping block to make up for some of the revenue lost to other provisions there was a lot of grey area and interpretation as to what expenses, if any, were still deductible as meal expenses under IRC §274(k) and IRC §274(n).  We now turn our attention to the final regulations under IRC §274, which built upon the interim guidance provided in IRS Notice 2018-76 and the proposed regulations under IRC §274. Specifically, we look to Final Regulations §1.274-11 and §1.274-12.  We find that we can generally deduct our expenses related to meals (subject to the 50% limitation) if we meet the following criteria: The expense is not lavish or extravagant for the circumstances.  The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages.   The food and beverages are provided to a “business associate.” A “business associate” in this context means a person with whom the taxpayer could reasonably expect to engage or deal in the active conduct of the taxpayer’s trade or business such as the taxpayer’s customer, client, supplier, employee, agent, partner, or professional adviser, whether established or prospective. Food or beverages are not included in the definition of entertainment if they are purchased separately from the entertainment, or the cost of the food or beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.  It’s important to focus on the fourth criterion.  If there are food or beverage expenses that are purchased separately or stated separately then these expenses can potentially be treated as deductible meal expenses (provided the other criteria are also satisfied).  In order to meet these requirements the IRS requires the substantiation of these expenses. Specifically, IRC §274(d) requires that the taxpayer substantiates the amount of such expense, the time and place of the expense, the business purpose, and the business relationship to the taxpayer.Final Regulations §1.274-12(c) also provides for exceptions to the 50% limitation on business meals resulting in 100% fully deductible treatment.  One particular section of note provides for an exception for recreational expenses for employees.  Food and beverage expenses that are provided for all employees and, do not discriminate in favor of highly compensated employees, are exempt from the application of IRC §274(a) and are fully deductible.  Examples given in the final regulations for these recreational events include holiday parties, annual picnics, and company outings. There are several other exceptions under this section which could potentially result in a full deduction for food and beverage expenses.  These exceptions should be evaluated on a case by case basis. The next time you take that client or prospect out to an event you may want to take a second look at those food and beverage expenses.  Good documentation can go a long way in reclaiming some of that seemingly lost benefit in “entertainment” expenses in the form of partially, or fully deductible food and beverage expenses.  Please contact a Schneider Downs tax advisor if you would like to discuss these rules in greater detail. ### The FFIEC’s Take on Addressing Pandemic Planning within Business Continuity Processes The last time the Federal Financial Institutions Examination Council (FFIEC) issued guidance to financial institutions regarding pandemic planning was in 2007 in response to the avian flu pandemic.  Many institutions likely have a pandemic response section within their business continuity plans but have not had to put such procedures into effect until this year.  In March 2020, an update to the original interagency guidance was issued to provide additional considerations for minimizing the potential impact of a pandemic in response to COVID-19.  Based on this new guidance, and the events of 2020, institutions should be revisiting and updating their pandemic plans to incorporate the new guidance and lessons learned from COVID-19. The FFIEC says pandemic plans should be incorporated into an institution’s overall business continuity plan, but the objectives of pandemic planning have several distinctions.  Business continuity plans typically focus on disruptions that are relatively short in duration and are limited to a specific geographic area or location.  Pandemic plans should be designed to mitigate events that could vary significantly in scale and duration.  Pandemics, as we have seen, could impact an organization’s entire geographic area and may occur in multiple waves over a longer duration of time than business continuity plans are typically designed to address.  One of the most significant challenges a pandemic presents is a staffing shortage due to employee absenteeism.  Due to these factors, a pandemic plan needs to be flexible and scalable to respond to a wide range of potential effects.  The potential impact a pandemic could have on critical financial services should be incorporated into ongoing business impact and risk assessment processes to determine if additional mitigation plans need to be developed. To adequately address the threat of a pandemic, institutions should incorporate the following elements into their plan: 1.  A preventative program to reduce the likelihood of a pandemic affecting the institutution’s operations.  Items to consider include monitoring of a potential outbreak, cross-training employees on other job roles, educating employees on practices to reduce the spread, ensuring adequate hygienic supplies are on hand and coordinating potential response activities with critical vendors. 2.  A documented strategy to deal with the effect of a pandemic.  The FFIEC’s guidance references the Center for Disease Control’s Pandemic Intervals Framework, which describes the progression of a pandemic using six intervals.  Response strategies should be modeled after the effects of each interval to ensure institutions can respond quickly when a pandemic event occurs and then pivot to prepare for additional waves that may occur. 3.  A comprehensive framework of facilities, system or procedures to allow the continuation of critical operations and services in the event of staffing shortages.  These procedures could include remote work arrangements, restriction of visitor or customer access to facilities, responses to actions by government officials and increased reliance by customers on electronic banking, customer support centers and ATMs. 4.  A testing program to ensure that the identified strategies and framework will allow the continuation of critical operations and services through a pandemic-like scenario.  Testing procedures could include stress-testing remote work systems and procedures via planned work-from-home days, coordinating with vendors to ensure infrastructure can adequately handle spikes in electonic banking and telephone banking usage, completing tabletop exercises to test work procedures and communication protocols that could be impacted by absenteeism rates and participating in regional or industry-wide testing exercises for the financial services sector such as those hosted by FS-ISAC. The ultimate responsibility for business continuity and pandemic planning lies with senior management and the Board of Directors.  The Board or a committee should be responsible for reviewing and approving the pandemic plan and ensuring sufficient resources are invested into each element of the plan.  Senior management’s responsibilities should include developing specific policies and procedures to implement the plan, communicating the plan through the institution and ensuring that a regular testing program is completed that is appropriate for the size and complexity of an institution’s processes. If you want to read the full guidance, it can be found on at the following link on the FFIEC’s website. Additionally, if you have questions or would like to discuss business continuity or pandemic planning, please contact us, we would be happy to talk. ### Cybersecurity Tips from Home Video Series In support of National Cybersecurity Awareness Month 2020, Schneider Downs has introduced a new video series aimed at increasing participant education and knowledge on staying safe in remote environments. The series, Cybersecurity Tips from Home, features members of the Schneider Downs cybersecurity team direct from their remote spaces, sharing best practices and tips on several important topics related to keeping organizations and end users secure. Lead Cybersecurity Strategist, Stephen Bish, kicks off the series with his video highlighting the importance of  passwords and password management options.   Additional videos from the series are linked below for quick access and sharing. Password Management Enforce Multi-Factor Authentication Communicate Security Policies Avoid COVID-19 Scams Secure Your Personal Networks Safely Work from Anywhere Separate Work and Personal Devices Learning from Home Install Patches and Updates The video series is just one of the new resources available from the cybersecurity team. Be sure to explore our Cybersecurity Resource Center for the latest security awareness materials from the team, including our new whitepaper, Staying Secure from Home. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### Behind the Numbers in ISM’s Q3 Report on Business On October 1, the Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines industry trends and statistics within the manufacturing sector. The composite Purchasing Managers Index (PMI), referenced below, is compiled and used by the ISM to analyze the state of the economy and predict future growth or contraction based on five categories: New Orders, Production, Employment, Supplier Deliveries and Inventories. A PMI over 50 indicates that the manufacturing environment is expanding. Here is a comparison of PMIs for the first nine months of 2020 and 2019: 2020 2019 Month PMI Month PMI January 50.9 January 56.6 February 50.1 February 54.2 March 49.1 March 55.3 April 41.5 April 52.8 May 43.1 May 52.1 June 52.6 June 51.7 July 54.2 July 51.2 August 56.0 August 49.1 September 55.4 September 47.8 Average 50.32 Average 52.3 High 56.0 High 56.6 Low 41.5 Low 47.8 Manufacturing proved to be surprisingly resilient during a difficult Q3. Many panelists noted their organizations learned how to maintain output despite working in reconfigured factories. September 2020, in fact, marked four consecutive months of industry growth following the government-imposed shutdowns first endured in April. Overall, panelists were optimistic, offering 2.3 positive comments for every negative remark. Only one of the top six manufacturing industries, Petroleum & Coal Products, did not report expansion. Demand – which is comprised of New Orders, Customer Inventories and Backlog of Orders – grew. Customer Inventories, (37.9% in September) dropped to its lowest figure since June 2010 when it stood at 38%. Unlike some other categories, lower figures for Customer Inventories are typically indicative of increased demand, especially when coupled with increasing New Orders and Backlog of Orders. Backlog of Orders itself came in at 55.2% in September, and New Orders reached 60.2%. Four of the six big industry sectors (Fabricated Metal Products, Chemical Products, Food, Beverage & Tobacco Products and Transportation Equipment) experienced increases in those two categories. Prices came in at 62.8%, with commodities aluminum, copper, lumber and steel products all experiencing price increases. Aluminum prices have, in fact, been on an overall upward trend since April, increasing 20%. The price of lumber increased 61% from January 1 to September 30. Employment continued to increase in Q3. While unemployment in April reached 14.7%, it later recovered to 8.4% in August. Although still not as low as February, which stood at 3.5%, the numbers do indicate significant improvement, which is seen as both a sign of increased production and a potential increase in consumption. While this all paints a much improved picture of the industry, there are still challenges. Delays in deliveries have restricted production for some organizations, with supplier deliveries coming in at 59% in September. When this index is greater than 50%, it’s a sign of slower deliveries. Challenges with both labor and transportation continue to be the culprit. A panelist in Food, Beverage & Tobacco Products noted, “All of our factories are still struggling with manning shifts due to positive COVID-19 cases and/or quarantine because employees came in contact with someone who contracted the virus.” Computer & Electronic Products, which is heavily dependent on imports from China to produce goods, is experiencing delays in receiving components. And there’s still uncertainty around COVID-19. Will there be surges in cases? Will the virus continue to mutate? When will a vaccine be released? With all these questions and more, manufacturing needs to be prepared to pivot to adjust to government regulations and public health concerns. For further information on the Report on Business, go to https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/september/ ### PPP - Interim Final Rule: Additional Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis.  On October 8, 2020, the U.S. Small Business Administration (SBA) released a new Interim Final Rule (IFR) related to the Paycheck Protection Program (PPP) that addresses revisions to prior IFRs on Loan Forgiveness and Loan Review Procedures. The SBA’s latest IFR provides guidance for : (1) loan forgiveness for loans less than $50,000; and (2) lender review responsibilities for loans of all sizes when eligible costs for forgiveness are in excess of the loan amount. 1. Form 3508S Form 3508S is now available for borrowers with loans less than $50,000 (unless the borrower, with affiliates, received more than $2 million).  Borrowers eligible to use this form are exempt from any reductions to loan forgiveness for reductions in full-time employee (FTE) counts and reductions to salary and wages. The SBA stated that this de minimis exemption was appropriate because there were 3.57 million loans of $50,000 or less totaling $62 billion.  Approximately 1.71 million of these loans were to businesses with zero or one employee, so the exemption for reductions would not be relevant to them.  Therefore, this exemption is only applicable to approximately $49 billion, or 9%, of the total available PPP loan amounts and most of these borrowers would likely have not reduced FTEs or salary/wages or would qualify for one of the existing exemptions from loan forgiveness amount reductions. 2. Changes to the Loan Review Rules There are two separate items addressed in the IFR for lenders as follows: Procedures for 3508S For lenders, when a borrower submits Form 3508S, or the lender equivalent, the lender is required to do the following: Confirm receipt of the borrower certifications; Confirm receipt of documentation required to verify payroll and nonpayroll costs as specified in Form 3508S, or the lender equivalent. Providing an accurate calculation of loan forgiveness is the borrower’s responsibility and lenders may rely on borrower representations. Procedures Related to Submission of Excess Costs The IFR addresses what lenders should do if a borrower submits documentation of eligible payroll and nonpayroll costs in excess of the borrower’s loan amount. Since the amount of loan forgiveness cannot exceed the principal amount of the loan, lenders should confirm receipt of the appropriate documentation (according to the specific Form 3508 submitted) and, if applicable, confirm the borrower’s calculations on the application up to the amount required to reach the requested forgiveness amount. If you need more information or assistance regarding your PPP loan, visit our dedicated PPP Loan resource, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal. ### Update: Could your PPP loan affect the sale of your business? Last month I wrote about how a Paycheck Protection Program (PPP) loan might affect the sale of a business. Now, as we continue to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis, comes a new procedural notice from the SBA that formalizes the requirements of borrowers and lenders that are going through a business sale.First, the SBA has defined a “change of ownership” as a transaction that falls into one of three categories: The sale or transfer of at least 20 percent of common stock or other ownership interest of a PPP borrower, including to an affiliate or an existing owner of the entity; The sale of at least 50 percent of a PPP borrower’s assets; or A merger of a PPP borrower with or into another entity. Transactions that don’t fall into one of those categories do not need to follow the new procedures, but there is a requirement to aggregate transactions to determine if sales or other transfers meet the definition of a change in ownership.While the new procedures are being issued to lenders, many of the responsibilities are actually borne by the PPP borrower. That includes the requirement that the borrower notify the lender in writing of the potential transaction and provide the lender with a copy of the proposed agreement(s) or other documentation of the proposed transaction.Regardless of any change in ownership, the PPP borrower remains responsible for: 1) the performance of all obligations under the PPP loan; 2) certifications made in connection with the PPP loan application, including certification of economic necessity; 3) compliance with all other applicable PPP requirements; and 4) obtaining, preparing and retaining all required PPP forms and supporting documentation.There are distinct procedures, as well, depending on whether the PPP loan is fully satisfied: If fully satisfied – There are no restrictions on a change of ownership if, prior to closing the sale or transfer, the borrower has repaid the PPP loan in full or completed the loan forgiveness process in accordance with program requirements (defined as the date the SBA has remitted funds to the lender in full satisfaction of the PPP loan or the date the borrower has repaid any remaining balance on the loan). If the PPP loan is not fully satisfied: There may be restrictions and requirements, depending on the circumstances of the change in ownership. Transactions that do not require approval by the SBA: A sale or merger if the proposed transaction represents 50 percent or less of the common stock or other ownership interest of the PPP borrower OR the borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it together with any required supporting documentation to the PPP lender AND an interest-bearing escrow account has been established with funds equal to the outstanding loan balance. A sale of assets if the PPP borrower is selling 50 percent or more of its assets only if the borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it together with any required supporting documentation to the PPP lender AND an interest-bearing escrow account has been established with funds equal to the outstanding loan balance. Transactions that require the approval of the SBA: If the proposed transaction doesn’t meet the description of a transaction that does not require the approval of the SBA, then it must be approved by the SBA. The PPP lender must submit documentation of the proposed transaction (i.e. letter of intent, purchase agreement, etc.) and the reason the borrower cannot fully satisfy the PPP loan or establish an escrow account as described above. The SBA will review the submission and provide a determination within 60 calendar days of receipt. Additionally, for a proposed transaction that involves the sale of 50 percent of more of assets, the SBA’s approval will be contingent on the purchasing entity assuming all of the borrower’s obligations under the PPP loan.All proposed transactions require that if the new owner has a separate PPP loan, the borrower and the new owner are responsible for segregating and delineating PPP funds and expenses and providing documentation to demonstrate compliance with PPP requirements by each PPP borrower. In the case of a merger, the successor is responsible for segregating and delineating PPP funds and expenses and providing documentation to demonstrate compliance with PPP requirements with respect to both PPP loans.If you need more information or assistance regarding your PPP loan or transaction assistance, visit our website, or reach out to any of your contacts at Schneider Downs, including Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Announcing the Second Annual Ohio Trucking Association and Schneider Downs Transportation Business Outlook and Economic Survey Schneider Downs has again partnered with the Ohio Trucking Association (OTA) to produce the Transportation Business Outlook and Economic Survey - 2020.  More than 850 OTA members were invited to participate in the survey which analyzed economic conditions, industry challenges, technology and regulations currently impacting the transportation industry in the state of Ohio.Like most industries, the economics of the transportation industry were hit hard by the COVID-19 pandemic.  On a macroeconomic level, U.S. gross domestic product dropped by 5.0% and 31.7% in the first and second quarters of 2020, respectively; U.S. Consumer Sentiment decreased from 101.0 in February 2020 to 71.8 in April 2020, and it hasn’t reached above 80.0 since; U.S. unemployment rates increased from a low of 3.5% in February 2020 to a high of 14.7% in April 2020, and they remained above 10.0% through July 2020.  On a microeconomic level, all analyzed trucking sectors and customer industries saw COVID-related impacts to revenues and operations significant enough to skew 5-year average growth firmly into the negative.  However, economists forecast that a recovery is on the way, and OTA members are optimistic that conditions will soon improve.Despite the challenges caused by COVID-19, OTA members have found that their biggest challenges really haven’t changed much.  Driver shortage remains the top issue in the industry.  As American Trucking Association Chief Economist Bob Costello said, “The fundamentals of why we had a driver shortage did not go away…demographic issues, age, gender, lifestyle issues…but for the moment, what has changed is that the demand side of the equation has fallen significantly.”  This persisting issue has led OTA members to explore new and unique tactics aimed at hiring and retaining qualified drivers.  Further plaguing the industry is the continued rise of insurance costs, driven by precipitous increases in both the number and size of nuclear verdicts (i.e. any large jury awards in which the penalty exceeds $10 million).  To combat this issue, trucking owners/executives must invest considerable time and resources into increased training and documentation, more rigid human resource practices, building relationships with their insurance carriers and upgrading technologies.Technology itself was deemed to be significant in this year’s survey.  The increased emphasis on new and improved technologies has resulted in trucking companies accumulating copious amounts of data, but not always knowing what to do with it.  Although a majority of companies were found to be utilizing data analytics to further their business, the results of our survey indicated that over 5% of companies are not utilizing it to forecast financial results, almost 15% of companies are not utilizing it to forecast operational results, and over 25% of companies are not utilizing at all.  And of course, with increased data comes the increased concern of data security.  Over 70% of respondents identified cybersecurity as a critical issue to their business (a sharp increase to the prior year’s results).  And over 30% of respondents indicated that they either had implemented or were in the process of implementing a formal disaster recovery plan since the onset of COVID-19.Although COVID-19 caused turmoil within the industry, it did come with somewhat of a silver lining, in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The CARES Act provided for, among other things, Paycheck Protection Program (PPP) Loans and a host of tax law changes.  Over 76% of respondents have received COVID-related aid, with the vast majority (92%) of those being in the form of PPP Loans.  Our survey report provides informative guidance aimed at helping companies maximize their forgiveness under these loans, as well as detailing the most significant tax changes resulting from the CARES Act.Finally, no transportation industry report would be complete without mention of infrastructure.  Although it did not make the top 5 list of industry challenges, it remains a perennial issue impacting drivers and companies alike.  Congestion (note: Ohio contains 4 of the top 100 bottlenecks in the country) and deteriorating roads and bridges continue to add costs to OTA members operations, in the form of wasted fuel, labor, and vehicle maintenance costs.  Fortunately, the U.S. Congress is currently working on legislation (i.e. the INVEST in America Act) that would provide billions of dollars in much needed funding for road, rail, transit, and vehicle safety initiatives.We invite you to read the full report here.  ### ERM for Financial Services Enterprise risk management (ERM) is a business strategy that aims to help organizations understand, articulate and control the nature and level of risks based on exposure.  It also creates accountability for risks taken and activities engaged in.  A major benefit of ERM is that it provides an enhanced perspective and focus on risk management across the entire organization.Recent events, such as the global pandemic, economic uncertainty, growing complexity of risks related to product/service offerings, and an ever-changing regulatory environment have helped fully launch ERM strategies into the financial services industry.  Because of this, financial institutions recognize that strong risk management practices are important.A bank’s ERM program should include processes to detect, measure and manage risks related to the achievement of their goals.  When implementing ERM, banks should perform the following: Define roles and responsibilities for oversight and governance Define key strategies and objectives for achieving success Establish a risk appetite and determine performance measures Perform a risk assessment to identify and prioritize key risks Credit risk, liquidity risk, operational risk, market risk, cybersecurity risk Establish risk mitigation/action plans Communicate results and monitor action plans Review/revise the program as necessary ERM is important because it helps an organization determine a plan to guide the overall success and safety of the business.  It supports better structure, analysis and reporting, and helps executives focus on making better risk mitigation decisions.  Ultimately, ERM can help enhance organizational resilience. ### Congratulations, PrimeGlobal! Schneider Downs is proud to be a founding member of Prime Global, one of the five largest associations of independent accounting firms in the world.  Since the late 1970’s Schneider Downs banded together with other firms to create a global resource to provide service to clients no matter where they are located. With  almost 300 member firms in 90 countries (and growing), we provide insight and assistance for our clients.PrimeGlobal recently announced that the association has been named both the Association of the Year and Sustainable Organization of the Year at the International Accounting Bulletin Digital Accountancy Awards.  ### National Cybersecurity Awareness Month 2020 October is here, which means for the 17th year in a row, the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) will be celebrating National Cybersecurity Awareness Month (NCSAM) in an effort to raise awareness about cybersecurity and provide resources to keep us secure online. The themes for this year are Do Your Part, #BeCyberSmart and If You Connect It, Protect It, both of which are especially relevant with the increased reliance on remote work and learning settings, and stress the importance of personal accountability in keeping families and organizations safe. You can view the full schedule and resources, including social media posts and tip sheets, at www.cisa.gov/national-cyber-security-awareness-month. In support of NCSAM, the Schneider Downs cybersecurity team has created several new resources in our continued effort to help organizations and end users stay secure year-round. Staying Secure From Home Whitepaper: Our latest whitepaper shares best practices and helpful tips from our team to help you stay secure while working and learning from home. Download the Whitepaper Focus on Cybersecurity Newsletter: Be in-the-know with our bi-weekly newsletter that shares the latest news and insight on happenings in the cybersecurity world. Subscribe Cybersecurity Resource Center: Browse our entire library of security awareness resources, including our popular Avoiding COVID-19 Scams infographic, whitepapers and case studies. Explore the Library In addition, our cybersecurity team will be sharing tips for safely working at home from their homes in a new video series aimed at increasing participant education and knowledge on staying safe remote. Be sure to keep an eye out for these short videos on our website and our Linkedin and Twitter accounts. As much as we love cybersecurity taking center stage every October on a national scale, as always, we stress the importance of cybersecurity every month, day and hour of the year. Over the past months, we have adjusted to the new normal (or is this just normal for now?) in so many ways —from how we socialize to how we work to how we learn—and cybersecurity is an essential element throughout an increasingly connected world. Whether you are concerned about keeping your organization, end users or students secure, the need to prioritize cybersecurity will only increase as we move forward. If you have any questions on how the Schneider Downs cybersecurity team can help your organization, please feel free to contact us at cybersecurity@schneiderdowns.com. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### 2020 Title IX Updates In 2011, the Obama administration released guidance, known as the “Dear Colleague Letter,” on Title IX regulations in order to reinforce the obligations that institutions had to prevent and address sexual harassment. In 2017, Secretary of Education Betsy Devos retracted this guidance and created revisions to the existing Title IX regulations. The Department of Education’s changes to the regulations under Title IX of the Education Amendments of 1972 took effect on August 14, 2020. Title IX applies to all colleges and universities that receive any type of federal funding and relates specifically to prohibiting discrimination on the basis of sex, which includes sexual harassment. While universities all over the country are working to safely reopen their campuses amid the COVID-19 pandemic, it is important to stay up to date with the changes surrounding Title IX regulations. These changes will undoubtedly have many implications regarding how colleges and universities are to address claims of discrimination and harassment. Some of the major changes to Title IX regulations are discussed below.Sexual harassment has been redefined to have a narrower meaning than prior guidance. Under the new Title IX regulations, sexual harassment is defined as “any unwelcome conduct on the basis of sex that a reasonable person would find so severe, pervasive and objectively offensive that it denies a person equal access to the school’s education program or activity.” The prior definition of sexual harassment did not include the “severe, pervasive and objectively offensive” language, which stems directly from the Davis v. Monroe County Board of Education case in 1999. The new definition is meant to place a greater focus on the effect of denying the victim equal access to an education program or activity. In addition, stalking, domestic violence and dating violence are now officially considered examples of sexual harassment under Title IX.The new regulations also provide updated guidance regarding the responsibility of the institution under Title IX. Prior to the new regulations, institutions were obligated to take action when a student filed a complaint of alleged sexual misconduct, where the school “knows or reasonably should know of the incident.” The updated regulations state that the alleged misconduct must occur in the school’s education program or activity in order for the school to be obligated to take action under Title IX. This includes any building that is owned or controlled by an organization that is officially recognized by the institution. Any misconduct that occurs outside of these areas may be investigated by the institution, as they deem necessary, but is not required by the new Title IX regulations. The due process under Title IX has been revised to require institutions to allow the students’ advisers to cross-examine any of the parties involved, including witnesses, during live hearings. Under previous guidance, the allowance of cross-examination was highly discouraged. Additionally, school officials are advised to presume students and faculty accused of misconduct innocent until proven guilty.In addition to changes in the due process, guidance regarding the standard of evidence in Title IX cases has been revised. The Obama administration’s “Dear Colleague Letter” advised college officials to utilize the “preponderance of the evidence” standard when determining guilt of the accused party. This means that there had to be just over a 50 percent chance that the incident occurred based on the evidence presented. Under the new Title IX regulations, institutions can now decide whether to utilize the “preponderance of the evidence” standard or the “clear and convincing evidence” standard. The “clear and convincing evidence” standard requires that the incident must be highly and significantly more likely to be true than not, which greatly increases the burden of proof. Although institutions may decide which standard to adopt, they must apply the same standard to all complaints, regardless of the parties involved (i.e., students, faculty).The new Title IX regulations present some of the most drastic changes since its inception in 1972. While colleges and universities are operating a little differently these days amid the COVID-19 pandemic, it is essential to ensure your institution is in compliance with the updated regulations under Title IX.Schneider Downs offers a variety of Risk Advisory Services that can help your institution navigate implementation and assist with your compliance objectives. For any additional questions, contact Schneider Downs. ### How to Knock the SOX off Compliance: a Sarbanes-Oxley Roadmap Businesses required to comply with the Sarbanes-Oxley Act (SOX) can come across a number of uncertainties and questions about what needs to be done in order to be compliant. In short, SOX compliance requires companies to have an internal control environment in place over financial reporting to ensure that financial information from a company fairly depicts the financial condition and the results of the company’s operations. For SOX to be completed both efficiently and effectively, organizations need to have a framework in place. From there, they will begin to experience benefits that can be felt by the entire company.Organizations should consider the following elements to implement and maintain a successful SOX framework: Strategy - Includes defining the needs of the company and the mission they’ll follow as they implement their SOX processes. Also, in this first step a risk assessment is performed to identify risks that could affect the business. Structure – Defines the department setup, including stakeholders and internal audit, as well as the budget for the engagement. People - Understanding which employees will be involved in the SOX process, which includes employees and third-parties who will be responsible for coordinating the SOX efforts. Technology – Applications or tools that will be used to complete the SOX processes and make the audit more efficient. Process - Includes documented methodologies and procedures to define clear guidance on how the SOX process should be completed. ### Women’s Voices Across the Nation For the next segment in our Women’s Suffrage series to honor the 100th anniversary of the 19th Amendment, which legalized a Women’s Right to Vote, we wanted to explore women’s involvement in our U.S. democracy across the nation.  This article will explore some recent women’s political milestones throughout the country. According to a study done at the Center for American Women and Politics at Rutgers University (“CAWP”), women have outnumbered men as registered voters since 1980. In the 2016 Presidential election, CAWP reported that around 83.8 million women in America were registered to vote, outnumbering their male counterparts by around 10 million. Further, in every presidential election since 1964, “the number of female voters has exceeded the number of male voters.” In the 2016 election, 63.3% of eligible women went to the polls vs. 59.3% of eligible men. Therefore, not only are women registering to vote in higher numbers, there are also more women consistently going to the polls. The Status of Women Data Organization (statusofwomendata.org) released a study of State-by-State Voting Participation; New Hampshire, Minnesota, and Maine came in as the top three female voting states, while Utah, Texas and West Virginia had the worst female turnouts. With Schneider Downs’ locations in Ohio, Virginia, and Pennsylvania, our states came in at 28th, 43rd, and 45th, respectively. In addition to political participation via voting, women taking over political seats in the House and Senate is also on the rise.  CAWP reported that the first female to run for the House of Representatives did so in 1866, 54 years before women were even eligible to vote. During this election, the female candidate received just 24 out of 12,000 votes. In 1917, three years before women became eligible to vote, the first woman was elected to the House. Today, there are 101 women currently serving, which makes up 23.2% of the House. As for the Senate, the first woman was elected in 1932, with about 25% of the Senate being made up by women today. It is obvious that while women are making immense strides in the political world, they are still behind in the fight for equal representation. The Status of Women Organization provides many resources for women who wish to get more involved in politics. These resources include campaign trainings, political action committees, women’s commissions and state chapters of the National Women’s Political Caucus. Schneider Downs, in conjunction with the SD Focus on Women committee, is dedicated to using these and countless other resources in order to develop and inspire women to reach their highest potential. ### Updated 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund During the COVID-19 crisis, Form 941 was revised as new relief bills have offered opportunities for employers to qualify for credits and deferral of employment taxes. On September 11, Form 941-X was further revised to allow for corrections related to COVID-19 reported on the original Form 941 that was filed for the second quarter of the calendar year.  Form 941-X is now to be used to report corrections to the following items reported on the originally filed Form 941: Corrections to amounts reported on Form 941 for the credit for qualified sick and family leave wages. Corrections to amounts reported on Form 941 for the employee retention credit Corrections to the deferred amount of the employer share of social security tax. The revised Form 941-X has added several new lines in order to accommodate corrections to the newly added lines on Form 941 for these COVID-19 relief related items.  The IRS has stated that taxpayers who amended the second quarter filing either attempted to use the previous version of Form 941-X, or filed Form 941 with an “Amended” notation, should wait for correspondence from the IRS to find out if the form was processed or rejected.  Due to a large backlog of paper filings and other correspondence, the service cannot estimate when their response may be received.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the filing of Form 941-X.  ### Innovation and Implementation of New Technology in Manufacturing Innovation continues to increase from the new opportunities brought by COVID-19; technological innovation presents as the most notable. With the utilization of technology on the rise, manufacturers have new ways to solve problems related to remote work oversight and complex workflows. The implementation of digital technologies can help increase efficiencies by providing connectivity like never before. Cloud computing, Internet of Things (IoT), digital manufacturing, Artificial Intelligence (AI), Smart Factory, Digital Twin, and the Fourth Industrial Revolution, to name a few, are progressions that have helped merge the gap between people and machines. These advancements can provide instantaneous connections anytime from anywhere. In a survey from the Manufacturing Alliance for Productivity and Innovation (MAPI), for the summer of 2021, 85% of manufacturing CEOs say their annualized investment in smart factory initiatives will be rising. In addition, 64% noted that digital innovation in distribution will drive a larger share of sales. According to Manufacturing Global, many companies had to adapt to the digital changes quicker than originally anticipated. Changes included companies operating “lights out” as they use predictive systems to improve efficiencies to lower costs. However, the digital adoption is not going to be the same for every company. Manufacturing Global noted that many companies are in different stages of adoption as the world is working through varying levels of recovery. The disruption of COVID-19 has helped accelerate the consideration of new technologies in manufacturing. In fact, analysts are claiming that manufacturing will experience years of innovation in the next 18 months. Innovation and implementation of new technology will help to shape the “new normal” brought by the pandemic. If you would like more information on digital technologies that can increase efficiencies for your company, please contact a member of Schneider Downs’ manufacturing practice. ### Perspectives on Remote Working in the Age of COVID How much can we talk about “unprecedented” or “unusual” times? For more than six months now, all of us have had to make changes to our daily routines. For some, this has included becoming part-time teacher, IT “expert” and meeting production coordinator. Just a few short months ago, we used video conferencing mainly for personal chats, rarely for business. Now, we’re all proficient in Zoom, Teams and a host of other platforms. Making a phone call is so 2019.We’ve changed where we work and how we work, but work continues. Early reports indicated a loss of productivity, with employees working longer hours from home. Because they could. Everyone was unsettled, adjusting to the new conditions. Impromptu coaching and check-ins didn’t occur. We were all too busy with our scheduled video meetings. But as folks adjusted both mentally and physically, things started moving forward. Because we had to get things done!So where are we now? A number of businesses have reopened offices – with appropriate social distancing measures, of course – while others have announced extended work-from-home dates, some through the third quarter of 2021. It’s hard to find conclusive overall data, so here are some unscientific observations: We’ve created new routines and processes. Some were long overdue. We’re “getting back to business” – moving from maintaining through the pandemic to addressing business issues and opportunities NOT related to COVID. Across organizations, there’s increased communication. Making sure we communicate effectively is an ongoing challenge. People are looking for new ways to develop new business beyond traditional sales calls. We’re more connected than ever, yet we miss the human connections. Will we ever go back to working in centralized work environments? My bet is yes. 2D is not as good as 3D. Some of us, though, really enjoy our short commute. The thought of rush-hour traffic that was previously just an annoyance now seems intolerable. But while remote work may be here to stay, I suspect we’ll eventually band together in our offices again in some capacity. After all, humans are social beings.  ### Manufacturing in the New Normal The manufacturing industry has been described as being at the dawn of a Fourth Industrial Revolution (4IR), the early stages of an era of technological innovation in production and efficiency. Of course, this was before the days of COVID-19 and the seemingly endless havoc it’s wreaked on our economy. Second quarter GDP data released by the U.S. Department of Commerce reported a nearly 33% decline on an annualized basis, the worst drop in 100 years. The coronavirus pandemic threatens manufacturing viability in the most basic ways: factory closures due to exposure or outbreak, supply chain disruption, low demand or low production, and financial liquidity issues. Now, we’re struggling to find our way amidst a seemingly never-ending sea of uncertainty and left wondering what could possibly help bring us to the other side of the new normal.The keys to overcoming the present hurdles that face manufacturing will stem from understanding and adapting to those challenges – and the industry’s foremost priority should be the protection of its workforce. To accommodate safe labor environments, some manufacturers are engaging flexible staffing levels or optimized crewing schedules, which take production ramp-ups or slowdowns into consideration, as well as physical distance requirements and necessary cleaning procedures. Slowdowns in production also provide critical opportunities for the design and implementation of digital capabilities and technological resilience strategies. Increasing reliance on digital solutions will augment manufacturers’ flexibility and reliability beyond just the current state of disrupted operations, but also in unencumbered operations. Appropriately mapping out the disruptions that have been created as a result of workforce, supply chain or financial issues will be a crucial step in maintaining and regaining 4IR level agility. Implementing swift and measured solutions will prove invaluable to propelling manufacturing beyond the pandemic.So how is manufacturing currently holding up in the wake of the largest economic catastrophe in decades? Well, the good news is there’s hope. According to a survey by the Institute for Supply Management released in August, the index of national factory activity reached 54.2 in July, up from 52.6 in June (anything above 50 is indicative of growth). In addition to increased factory outputs, in early September, the Bureau of Labor Statistics released updated manufacturing job opening numbers for July. According to the report, the industry saw a whopping 408,000 jobs open up in the month, an increase by a margin of 60,000 over June and the best numbers posted since before the beginning of the pandemic.While these figures appear promising, there’s still a long road to recovery in all industries and sectors. The full impact of this crisis will most likely not be known for years to come and a return to a sense of normal familiarity will likely also take years, but if manufacturing continues to understand the challenges it faces and adapts to meet those challenges, we’ll continue to excel. ### IRS Provides Foreign Trust Reporting Requirements The IRS has provided on its website a summary of reporting requirements for foreign trusts and their U.S. owners. Though these regulations are not new, this summary is a helpful and concise resource for filers to consult.As summarized on the IRS website, under U.S. federal tax laws, any “U.S. person” who creates or has transactions with a foreign trust may be subject to taxation or informational reporting requirements in the U.S. An individual is considered to be a U.S. person if he or she is a U.S. citizen or resident. However, entities such as partnerships, corporations, or estates or trusts domiciled in the U.S. can also be considered U.S. persons. In regard to foreign trusts, not only may a trust itself be subject to tax in the U.S., but U.S. owners or beneficiaries of a foreign trust may be subject to tax, as well.A U.S. person who substantially controls or owns a foreign grantor trust with U.S. beneficiaries by means of asset transfer will be subject to tax on the trust’s income, and on any gain from the appreciation of assets transferred.Any U.S. person who owns substantially controls or is a beneficiary of a foreign trust as explained above must file Forms 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Owners of foreign grantor trusts must also file an informational return annually with the IRS, Form 3520-A, including a complete accounting of the foreign trust’s activities and operations in that tax year. This information must also be provided to all trust owners and beneficiaries.In addition to these two primary foreign filings, other potential filing requirements include Form 709, Form 1040 Schedule B, Form 1040-NR, Form 8939, and FinCEN Form 114.The U.S. owners of a foreign trust are responsible for filing required Forms by the 15th day of the fourth month following the end of the U.S. person’s tax year. Extensions of time to file are available.  Failure to timely file these forms, or incomplete filing, may subject owners to a penalty of $10,000 or 5% of the gross value of the trust assets owned by a U.S. person, whichever is greater. Additional penalties may also be imposed.As U.S. tax advisors at Schneider Downs, we frequently help taxpayers who have either misreported or misunderstood their foreign filing requirements, avoiding costly tax consequences and headaches for our clients. If you think you may be required to file any of the above forms or have additional questions, please contact us. ### IRS Issued Final Regulations on the GILTI High-Tax Exclusion Are you a U.S. shareholder of a controlled foreign corporation (CFC)? The final regulation on Global Intangible Low-Taxed Income (GILTI) high-tax exclusion (HTE) published by the IRS in July 2020 may allow you to exclude “high-taxed” foreign income if certain requirements are met.As part of the 2017 Tax Cuts and Jobs Act (TCJA), Global Intangible Low-Taxed Income (GILTI) rules require U.S. shareholders of controlled foreign corporations (CFCs) to include their share of the CFC’s GILTI in their gross income every year and pay a minimum 10.5% tax regardless of whether they received a distribution.After the release of the final regulation, taxpayers now are allowed to electively exclude GILTI inclusion items of a CFC's gross tested income if the CFC’s effective foreign tax rate exceeds 18.9%. The election adopts an “all or nothing” approach, which means that once the election is made, it applies to all CFCs owned by the same U.S. shareholders (if that shareholder owns more than 50% of the CFC) and to all of the CFC’s U.S. shareholders.When it comes to repatriation tax, the corporate U.S. shareholder can repatriate the excluded income, tax-free, while an individual U.S. shareholder would have to pay either at ordinary income tax rates (37% maximum rate) or at the qualified dividend rate of 20% if the CFC is treaty-protected. Therefore, careful modeling is recommended as the taxpayer’s individual circumstances may vary.The final regulation provides that the GILTI HTE is effective for tax years of foreign corporations beginning on or after July 23, 2020. However, the IRS allows taxpayers to make the GILTI HTE election annually or retroactively to CFC tax years beginning after December 31, 2017 by attaching a statement to a tax return or an amended return.In conclusion, the GILTI HTE rule provides taxpayers with another planning tool. However, whether it is advantageous or not depends on the taxpayer’s individual circumstances. Especially with the benefits of other regulations, like Section 962 Election or foreign tax credits, the potential benefits require detailed comparison.For more information about this topic or learn more about GILTI HTE, please contact your Schneider Downs’ international tax advisor.  ### Financial Modeling a Remote Workforce As we continue to work remotely in the fall, many ask how long we’re going to be working in this fashion.  A recent article in The Wall Street Journal quotes top executives of notable companies such as Netflix, Blackrock and Facebook regarding their thoughts about remote work.  Interesting, but maybe not surprising, is that there isn’t a consistent view on what the workforce will look like in the future based on the quotes in the article. As a business owner, you may be asking yourself the same thing.  You may be planning for a capital expenditure project or another product line, but how can you do that with a remote workforce?  Maybe you’re beginning your planning for 2021 and wondering what your financial results will look like if you continue to be remote in 2021.  And what if you’re only remote for half of the year?  What do the results of your business look like without that new product line or capital expenditure? As everyone deals with the very same challenges with a remote workforce and not having the vision of how long this will last, business owners should be scenario-planning to make sure that they are prepared for the impact.  Decision-making in critical times needs to be timely to have the greatest impact, and scenario-planning for the unknown will help business owners prepare for the impact before it happens. Our business advisors can help in modeling and analyzing these decisions.  We have performed numerous financial analyses models for a wide range of industries and scenarios.  If you need more information or assistance with financial modeling, visit our website at /financial-modeling-and-analysis, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). Source:  https://www.wsj.com/articles/what-ceos-really-think-about-remote-work-11600853405 ### Estate Planning and Valuation During an Uncertain Economy – and an Election Year Schneider Downs has published a number of articles in recent months discussing valuation and estate planning strategies during this difficult economic time (links are included at the bottom), but now these strategies are even more relevant as the upcoming election could significantly impact future estate tax laws.If there is any bright side to an economic downturn, it may be that ‘less is more’ when it comes to planning your estate. Generally, the less assets remaining in your estate upon death, the lower its tax burden. To minimize the size of an estate, an individual can make gifts during their lifetime by taking advantage of the lifetime gift tax exemption, currently $11.58 million per person, and the annual gift tax exclusion of $15,000 per donee.During an economic downturn, investment values, including ownership interests in private and public companies, often become depressed. One receives the added benefit of gifting such assets while they have declined in value since a larger piece of their would-be estate may be gifted while still remaining below the lifetime exemption and annual exclusion limits. The donor will have reduced their estate tax burden, while the donee receives assets that will potentially increase in value when the economy recovers – a win-win situation.It is unclear how lifetime exemption and annual exclusion amounts will change, if at all, after the November election. The Tax Cuts and Jobs Act passed by President Trump in 2017 doubled the gift tax lifetime exemption to its current level and sunsets on December 31, 2025. Many predict the estate tax exemption would be reduced if former Vice President Joe Biden were to take office, but the magnitude of that reduction is not certain.  Therefore, it would be beneficial to take advantage of the exemption at its current level before it is potentially reduced.To be sure, the future of the current estate tax environment is uncertain, and the values of many investments have decreased as a result of volatile market conditions, so this may be an ideal time to discuss your estate planning strategy with your financial/tax advisor.Schneider Downs has significant experience providing estate planning consulting.  We have also prepared numerous valuations for gift and estate tax purposes.  Contact Greg Allison (412-697-5341; gallison@sdcpa.com) or Melanie LaSota (412-697-5242; mlasota@sdcpa.com) for more information about our estate planning services and Steve Thimons (412-697-5281; sthimons@schneiderdowns.com if you have questions regarding valuation services. Sources:/our-thoughts-on/use-it-or-lose-it/our-thoughts-on/current-market-conditions-valuations-estate-planning/our-thoughts-on/estate-planning-tool-business-succession-plan/our-thoughts-on/decipher-estate-trust-deduction-changes/our-thoughts-on/estate-planning-opportunities-covid19/our-thoughts-on/estate-planning-volatile-market    ### Schneider Downs Manufacturing Webinar a Success! On Wednesday, September 23, the Schneider Downs Manufacturing Group held an informative webinar for leaders in the manufacturing industry across western Pennsylvania.  With the help of Schneider Downs’ Automation and Data Analytic Process Team (ADAPT) and Tech Consulting group, attendees were given insight to the current state of the manufacturing industry and how technological advancements could benefit a company’s operating effectiveness and efficiency.Our webinar began with our Tech Consulting team providing some background on Robotic Process Automation (RPA) and the impact to the manufacturing industry. RPA is a digital enablement technology that is expanding companies’ abilities to automate using existing IT infrastructure.  Since automation is expected to grow to 70% of work tasks in the next two years, RPA will enable companies to save time on repetitive tasks and allow employees to focus their time on problem-solving and developing new ideas.The ADAPT team then provided some information on data analytics and their benefits to the manufacturing industry.  Data analytics generally provide for the utilization and customization of previously unused data to fit a company’s specific needs.  In turn, this will allow companies to save time and money, gain efficiencies and empower decision-makers to make data-driven decisions.We thank all of those who took the time out of their day to join the webinar.  If you’d like to hear more about the benefits that data analytics and RPA can provide for your company, please contact Matt Kraemer, mkraemer@schneiderdowns.com, or Patrick Armknecht, parmknecht@schneiderdowns.com, respectively. ### The 19th Amendment Turns 100 Years Old – How We Got Here On August 26, 1920, U.S. Secretary of State Bainbridge Colby certified the 19th Amendment, and women throughout the United States achieved the right to vote.  The Amendment turned 100 years old this August, and allowed us an opportunity to reflect on the difficulties and struggles overcome to arrive at where we are today.  The amendment reads, “The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of sex.  Congress shall have power to enforce this article by appropriate legislation.”  Two basic sentences that have had such a great impact on so many.Eleven states, including Pennsylvania and Ohio, all voted to ratify the 19th Amendment by July 1919.  At least thirty-six states needed to vote in favor of the Amendment for it to become law.  Ohio voted and ratified the Amendment on June 16, 1919, and had always been a leader in the women’s suffrage movement.  As early as 1850, the Ohio Women’s Convention met to discuss women’s rights.  It was the first women’s rights convention outside of New York State and the first statewide women’s rights convention. Pennsylvania ratified the amendment shortly thereafter on June 24, 1919.  Pennsylvania also was an early leader in the women’s suffrage movement, with Pennsylvanians Angelina and Sarah Grimke writing and speaking on women’s equality as early as 1838.  In 1871, Pennsylvanian Carrie Burnham attempted to vote and was denied the ability to do so.  She took her case to the Pennsylvania Supreme Court, arguing that voting was a right of citizenship.  She lost the case and the Pennsylvania constitution was subsequently amended to limit voting rights to “male citizens.”During 1919 and 1920, six states voted against ratifying the Amendment, leaving its ratification in doubt, as most states remaining were high anti-suffrage states.  However, in August 1920, Tennessee provided the deciding 36th state ratification of the Amendment, and over 8 million women across the United States voted in the November 1920 elections for the first time.  Strangely enough, it took over 60 years for the remaining 12 states to ratify the 19th Amendment, with Mississippi being the last to do so in March 1984.On one hand, it is great to celebrate the 100th anniversary of the 19th Amendment and its importance to women achieving equality in this country.  On the other hand, it is shocking and disgusting. It took 144 years – from the Declaration of Independence adopted in July 1776 to August 1920, for half of the population to gain the legal right to vote.  Even then, 12 states voted to deny the basic right of voting equality to women.  With that thought, we are committed to taking actions to create an equal workplace, through creating workplace teams that have gender balance, having higher expectations for what equality looks like, celebrating women’s successes, having performance and leadership equality, and by mentoring and advocating for women colleagues.  We started this year in March by celebrating International Women’s Day, a focus on championing women of all backgrounds who dare to innovate, lead and uplift others towards a more equal and inclusive work place.  That was just the beginning.  We challenge everyone to consider doing your part in creating an equal and inclusive workplace.  What will you do?Sources for all relevant dates, data and figures all obtained from U.S. National Park Service articles on the 19th Amendment.  For further reading on the 19th Amendment and your state, go to www.nps.gov.  ### Zerologon: Instant Elevation to Domain Admin Zerologon, also known as CVE-2020-1472, has taken the security world by storm the last several weeks. Initially discovered by researchers at Secura and detailed in a whitepaper released in mid-September, Zerologon, holding a 10/10 CVSS score, is the rare vulnerability that allows any attacker with internal connectivity to a domain controller to elevate to domain administrator access. No previous account compromise or credentials are required, just network access to the target DC.Microsoft patched the Zerologon vulnerability in a Windows Server security update on August 11,  but organizations often take time to apply these updates, leaving themselves vulnerable to attack until they do so. To limit that exploitable window, the Department of Homeland Security’s cybersecurity division issued a rare emergency directive on September 18 requiring federal agencies to patch all domain controllers before September 21 or remove unpatched systems from the network.So how does Zerologon work? The vulnerability lies in how Microsoft utilizes an initialization vector for a cryptography protocol (AES-CFB8) deployed by the Netlogon protocol run by domain controllers. Among functionality utilizing Netlogon is the procedure to change computer passwords. By sending Netlogon messages to a domain controller containing specially placed zeros, an attacker can connect to the domain controller, impersonate the domain controller itself, and set the domain controller’s machine account password to a null (zeroed) value. The attacker can then pillage secrets, including the password hashes for all Active Directory accounts, from the compromised domain controller by connecting to the DC with a null password.Exploit DemonstrationSeveral proof-of-concept exploits for Zerologon have been released in the public domain since Secura’s whitepaper release. These exploits can be used by security researchers, penetration testers and attackers alike. Schneider Downs has tested one of them in our lab. The walkthrough below should demonstrate just how easy it is to take advantage of Zerologon. The code we used to test system vulnerability was released by Secura (available here) and the exploit code came from Dirk-jan Mollenma (available here).Here’s how the process worked. Once connected to the target network, we checked the unpatched domain controller for vulnerability to Zerologon. This was done by passing two parameters to Secura’s Python script, the NetBIOS name of the target (RANDY) and its IP address.Success! The script indicated that our target was vulnerable and that exploitation should be possible. The next step was to exploit the vulnerability using Dirk-jan’s exploit code, which set the target domain controller’s machine account password to a null value. We then passed the same two parameters to the exploit code. ### Final 163(j) Regulations a Win for Manufacturers and Private Equity-Owned Businesses In late July, the Internal Revenue Service (IRS) issued final regulations on Internal Revenue Code (IRC) Section 163(j) that limits the deductibility of business interest expense. The Tax Cuts and Jobs Act, enacted in December 2017, had limited the deductibility of business interest expense to, generally, 30% of “adjusted taxable income” (ATI), making it, in essence, a tax-based on EBITDA. This provision was quite detrimental to private equity-owned and other highly leveraged businesses, including capital-intensive manufacturers.Proposed regulations to IRC 163(j), issued by the Treasury in late 2018, contained a provision that did not permit taxpayers to add back depreciation subject to capitalization under the IRC Section 263A (UNICAP) rules to their calculation of ATI. This was particularly impactful to manufacturers and producers whose depreciation expense is largely related to machinery and equipment used in the production process, and the depreciation thereon generally subject to capitalization under IRC Section 263A.Additionally, the proposed regs defined business interest to include financing commitment fees and debt issuance costs, which are typically amortized. As such, these expenses that were fully deductible prior to 2018 also became subject to the 30% of ATI limitation. It became quite common to see significant amounts of business interest expense deductions disallowed on taxpayers’ returns for tax year 2018 and 2019 (at least those filed in the first half of 2020).The final 163(j) regulations issued in July provide relief in these two areas, which is welcome news for producers and private equity-owned companies. The final regs provide that all depreciation and amortization is added back in determining ATI, which should allow for additional business interest expense deductions. Separately, the final regulations also remove commitment fees and debt issuance costs from the definition of business interest, which will allow for greater tax deductions for these expenses (similar to pre-2018). These provisions can be retroactive to January 1, 2018, so there may be opportunity to amend 2018 and 2019 returns to take advantage of the changes.Manufacturers and private equity-owned companies should also be mindful of changes to the deductibility of business interest expense under the CARES Act, which temporarily increased the deductibility to 50% of ATI for tax years 2019 and 2020 (with exceptions to the rules for partnerships). Additionally, for 2020, taxpayers may elect to use their 2019 ATI in determining their 2020 business interest expense limitation, which will likely be beneficial to many companies whose business operations are reduced in 2020 as result of the COVID-19 pandemic.Please consult your Schneider Downs tax advisor if you have any questions. ### COVID-19’s Impact on Collegiate Athletics Higher education has undoubtedly been one of the most significantly impacted industries across the United States related to the coronavirus pandemic. This ranges from a loss of room-and-board income in the spring to current-year enrollment drops due to first-year students taking a gap year between high school and college. The industry has funneled extraordinary amounts of money into online learning, research on CDC guidelines to ensure compliance for a safe return of their students, and training employees to comply with the new rules and regulations. All of these actions have taken a significant financial toll despite the higher education emergency relief funds provided by the government. The financial impact from coronavirus is obvious; however, there is another area impacted that is often overlooked -- collegiate athletics.With Big Ten and Pac-12 football seasons starting later than originally planned and games being played without fans in the stands, major NCAA Division I football programs could lose up to $156 million of revenue in 2019. These revenues stem from ticket sales, media contracts and conference-owned networks. An adjusted fall football schedule this year for these two major college football divisions will impact revenue and some significant fixed costs for coaches under contract and field maintenance.Along with football, many other colleges and universities are stopping all fall sports, which further exacerbates the financial impact of collegiate athletics being cancelled.  The impact is not necessarily the same for Division III schools across the nation, since they do not rely on athletics for revenue, and they don’t have significant coaching contract expenses negatively weighing their financials. Division III schools do, however, rely on tuition revenue from athletes. Studies have shown that for more than 400 Division III schools, one out of every six students participates in varsity sports (Zimpher and Mariner 2020). Many of these schools use athletics as a recruiting strategy to increase enrollment, which now may be significantly impacted in the coming year.A modified or curtailed schedule of collegiate sports in the fall will certainly impact colleges and universities in the United States. Financial results for the entire higher education industry will likely show decreases in revenue, causing financial struggles after the fall semester. Spring sports are currently being discussed as the pandemic progresses and more information becomes available to collegiate athletic decision-makers. Given the impact of the fall sport cancellations, spring seasons being cancelled will only result in additional financial struggles for the higher education industry. Reference:Nancy Zimpher, and Jonathan Mariner. “As Big Ten and Pac-12 Cancel Their Football Seasons Because of COVID-19, College Sports Programs Are Facing a Financial Apocalypse.” MarketWatch, MarketWatch, 11 Aug. 2020, www.marketwatch.com/story/big-college-sports-programs-face-a-financial-apocalypse-if-the-football-season-is-cancelled-its-time-for-new-priorities-focused-on-the-athletes-11597154899.  ### Choosing The Wrong Accounting Method for Home Construction Contracts is a Costly Mistake Often you learn the most from your mistakes.  If a contractor chooses the wrong accounting method, during the first two years of operations, the contractor will either not be eligible to defer the maximum amount of income on home construction contracts, or will have to pay the Internal Revenue Service (IRS) a user fee ($10,800 in 2020) to request permission to change its accounting method (for contacts not subject to the percentage of completion method of accounting). That’s an expensive lesson.General Requirement to use the Percentage of Completion Accounting MethodInternal Revenue Code (IRC) Section 460(a) states that in the case of any long-term contract, taxable income shall be determined under the percentage of completion method of accounting. Easy enough, right? Well, get ready for some definitions courtesy of the IRC.IRS Section 460(f) defines the term “long-term contract” as any contract for the manufacture, building, installation, or construction of property if such contract is not completed within the taxable year in which the contract is entered into. For example, if a calendar year taxpayer begins a contract on December 30 and completes the contract on January 5 of the subsequent year, the contract is considered a long-term contract. As a result, a contractor may be required to account for this 7-day contract under the percentage of completion method of accounting.Exception to the Percentage of Completion RequirementFor every good tax rule, there’s usually a good exception. IRC Section 460(e) contains an exception to the general rule requiring the use of the percentage of completion method. The following contracts and taxpayers are exempt from the general percentage of completion requirement: Home construction contracts Any other construction contract if the estimated completion time is within two years beginning on the contract commencement date and for which the taxpayer’s average annual gross receipts for the preceding three taxable years does not exceed $26 million. (the “small contractor exception”) What is a Home Construction Contract?Internal Revenue Code Section 460(e)(5) defines a home construction as a contract where 80% of more of the estimated total contract costs (as of the close of the taxable year in which the contract was entered into) are reasonably expected to be attributable to: Dwelling units contained in buildings containing four or fewer dwelling units and Improvements to real property directly related to such dwelling units and located on the site of such dwelling unit When dealing with townhouses, for purposes of IRC Section 460, each townhouse or rowhouse is treated as a separate building. However, a condominium building containing more than four units would not be eligible for the home construction contract exception.Tax Benefits of Home Construction ContractsFrom a tax perspective, classifying a contract as a home construction contract is a significant benefit because these contracts are exempt from: Percentage of Completion method of accounting Look-back interest Alternative minimum tax adjustments What Accounting Method Does a Taxpayer Use When it has Contracts that are Subject to Percentage of Completion and Contracts that are Exempt from Percentage of Completion (Home Construction Contracts or “Small Contractors”)?IRC Section 460(e)(1) permits the use of different methods of accounting for exempt contracts and nonexempt contracts within the same trade or business. As a result, a taxpayer may use a method of accounting, such as the completed contract method, for exempt contracts (home construction contracts) even though it must use the percentage of completion method for nonexempt contracts.However, a taxpayer may have only one long-term contract method of accounting for all exempt contracts within the same trade or business. In accordance with the consent requirements of IRC Regulation Section 1.446-1(e), once a taxpayer adopts a method of accounting for long-term contracts that are not subject to the percentage of completion method of accounting, the taxpayer must continue that method of accounting until the taxpayer obtains the consent of the Commissioner to change its method of accounting. In certain circumstances, changing a taxpayer’s accounting method is not automatic and actually requires the IRS’ consent. For example, a request to change from the accrual method of accounting to the completed contract method of accounting is not an automatic method change. As a result, a taxpayer would have to pay a user fee ($10,800 in 2020) to make this method change. The user fee, in addition to the professional fees required to prepare the change in accounting method application, makes this a costly decision that could have been avoided if the proper method of accounting was elected when the contractor started doing business.If you have any questions, or would like to discuss the most advantageous method of accounting for your construction company, do not hesitate to contact a member of the Schneider Downs Construction Industry Group. ### 2020-2021 Special Per Diem Rates The IRS recently released Notice 2020-71, detailing the new special per diem rates taxpayers use to substantiate necessary business expenses while traveling away from home. The rates will apply to allowances for lodging, meal and incidental expenses or for meal and incidental expenses paid to an employee on or after October 1, 2020.Three specific categories are addressed in the notice: Special transportation industry meal and incidental expenses. Rates for taxpayers in the transportation industry remain unchanged from the prior year: $66 for travel within the continental U.S. (CONUS) and $71 for any locality outside the continental U.S. (OCONUS). Incidental expenses-only deduction. Also remains unchanged from the prior year at $5 per day. Rates and list of high-cost localities. Rates used for purposes of the high-low substantiation method have changed slightly from the prior year. Special per diem rates are: High-cost locality - $292Any other locality within CONUS - $198The amount treated as paid for meals is:High-cost locality - $71Any other locality within CONUS - $60Taxpayers that use the high-low method must comply with Rev. Proc. 2019-48.Please contact Schneider Downs if you need further information related to per diem rates. ### Virtually Fantastic Great experiences are sometimes born from unprecedented events. When I accepted the offer to intern in the Audit Department with Schneider Downs last fall, I never expected the internship would be entirely remote. After all, how can you audit effectively and efficiently without interacting personally with the client and accumulating evidence firsthand? Well, the answer is: quite effectively and efficiently, actually. It turns out that auditing can be done well remotely.My experience has been fantastic. Unlike some prior internships, I feel that I have really gained an understanding of audit. I wasn’t just asked to complete busywork, but rather was asked to complete work that that was contributing to the team in a meaningful way. Utilizing technology, I was able to keep in touch with the engagement teams quite well. Seniors and staff continuously offered assistance through online calls. I was even able to call and speak with a few clients directly. It almost seemed as if the internship wasn’t remote after all.I’m preparing to the take the AUD section of the CPA exam this week. Being able to learn about auditing firsthand has helped me study immensely. It’s one thing to learn about positive confirmations, substantive testing, tests of controls, and walkthroughs, but it’s another thing entirely to actually have the opportunity to complete those things in real life. Such an experience provides a deeper understanding that textbooks and studying cannot really provide.I don’t think anyone was prepared for the effects that COVID restrictions would have on everyday life. It has definitely disrupted things and changed the way the business world functions. One thing’s for sure, though: there will always be opportunities to learn and grow. ### Unconventional Internship Unlike a lot of students today, I knew coming into college that I wanted to major in accounting, become a licensed CPA, and work for a public accounting firm. Throughout my time in school, I have constantly been working to improve. My experience with Schneider Downs has tremendously helped shape me into a better public accountant and young professional.I interviewed with Schneider Downs in my junior year of college and was invited to the Summer Leadership Program and offered an internship position with the audit department for this summer. I attended the Summer Leadership Program for two days and was able to learn more about the firm, meet different people in the firm, and learn more about the accounting industry as a whole. It was clear by the end of the two days that Schneider Downs was a top firm in the accounting industry, and I was eager to start my internship the next summer.I wasn’t sure what to expect coming into the internship. I had prior knowledge of what a traditional internship is like from past experiences, but conditions due to COVID-19 would make it a different experience working from home. I was nervous about how limited my internship experience would be because I knew there would be a lot of training and communicating, which is difficult in a completely digital world. The thought of going to work in my dining room instead of the PPG building or to a client site was odd, but Schneider Downs did an incredible job of keeping me and the other interns engaged with the firm’s people and culture. I could see from day one how dedicated Schneider Downs is to its people and how dedicated they were to making this internship as meaningful and impactful as possible.Throughout this experience, I have had the opportunity to work and get to know some of the great people at Schneider Downs who have helped me tremendously throughout my internship. I was given the opportunity to work in the Audit Department as well as the Risk Advisory Services Department. I could quickly see the care that Schneider Downs has for it clients and people. The experience in both departments has truly been a great experience and I feel like I have gained a wide range of knowledge. Coming from a family of accountants, I thought I knew a lot about public accounting, but I learned quickly at the beginning that I knew very little and that the only way to learn was to ask questions. Everyone was always willing and eager to answer any questions that I had and make sure I was able to learn and improve on each engagement.I am grateful and privileged to be able to have had this experience given the current conditions. While other firms may have canceled their internship programs, Schneider Downs stuck with us and made sure we were able to absorb as much as possible from this internship. Throughout this experience, I can see that Schneider Downs lives up to its motto, “Big Thinking. Personal Focus.” ### Taking Chances In my opinion, taking a chance is most often a good thing. For some people it may be more closely associated with negative attributes such as risk, but for me it is a chance for unforeseen opportunity. It’s by no means certain, as unforeseen opportunities may pose unforeseen challenges, but to me it seems better to rise to the challenge than back down from it. Due to worldly circumstances arising right after I accepted an internship with Schneider Downs, I was worried these would be challenges too great for the internship to go on. In spite of this however, Schneider Downs proved to have a similar mentality regarding chance and its challenges and I couldn’t be happier to work for a company that values and pursues this attitude.When applying to the internship, I had also felt like I was taking a chance on myself. I had never done any real work with hacking or cybersecurity before applying. I had dealt with the technologies you work with in the cybersecurity field, just never from an exploitative perspective, but, with the encouragement of a then-current employee at the firm, I decided to apply. He constantly assured me that they didn’t expect me to come in and know everything, and in fact they didn’t, with the kind and welcoming people that led the first day orientation telling us “We don’t expect you to know anything!”Now when I say they didn’t expect us to know anything, I mean it in the absolutely best way possible. I’m referring to the astounding amount of encouragement I got to ask questions and talk to people of all levels within the company. Getting to talk to everyone from fellow interns, to seniors, to shareholders, I was able to get a great understanding of the goals of the company and its team as a whole. Additionally, this made acquiring knowledge and asking for help from fellow employees feel natural and welcomed. I never found myself feeling out of place, that my question was a bad one, or that I was taking up someone’s time, and that to me is the most perfect team atmosphere for encouraging growth of everyone on the team. I truly feel I grew both personally and professionally from the work and experiences provided by this internship.Now, having worked with all the amazing people at Schneider Downs, I can see why they were so determined to take a chance and rise to the challenges of providing a virtual internship. The open and welcoming atmosphere made it so easy to come in and mix with long-time employees of the firm and instantly start to learn from them. Had this not been the case, I can easily see how a virtual internship would be a nightmare for both intern and employer. I’m so grateful to have had the opportunity to work for a company that is so dedicated to the comfort, experience, and growth of its employees. Taking chances is easy when you have a team as amazing as the one at Schneider Downs backing you up. It is because of these chances and the company’s responses to them that the internship was as valuable an experience as it was and I can’t thank Schneider Downs enough nor recommend the internship enough to others. ### My Virtual Internship COVID-19 has put a hold on nearly everyone’s plans. In my case, I was afraid it would halt the start of my accounting career. I started my first internship in the office of a small local tax firm right before coronavirus outbreak hit. Unfortunately, after only a month I was sent home, ending my brief experience and making me even more apprehensive about my upcoming summer tax internship with Schneider Downs. I wasn’t very optimistic of being able to complete my summer assignment, and was afraid the steps I’d taken through education and work would be for nothing. As days rolled on, it was beginning to look like the virus would never leave and I would be stuck in an endless limbo. Finally, after weeks of waiting, I learned that not only would my internship be carried out, but the whole experience would be online. Needless to say, I came into this internship with low expectations; I ended up being pleasantly surprised with the outcome. Schneider Downs embraced the virtual experience with open arms. There were three ways in which I feel I was able to get the most out of my internship. For one, I was finally working in the field I wanted. No longer would I have to take care of landscaping my neighbor’s yard or do contracting work on houses in the South Side Slopes. Within my actual internship, I was able to learn more than I thought possible in a virtual setting. I was totally immersed in an environment where I would not only be able to utilize the knowledge I’d received in the past three years of college, but also build upon it. I saw more, and learned more, about tax in the three weeks of my internship than I thought I would. Even in a virtual setting, I was able to work on a wide mix of different assignments. From 1040s to 990s, I truly received a wealth of experience. My favorite aspect of the internship, though was how Schneider Downs was able to keep me connected. Even working at home in my lonesome, I never felt like I was left on an island. I was able to meet and connect with so many people. And not only did I learn of the work Schneider Downs does in more detail but, more importantly, I was able to discover the personality of the firm. In this virtual reality, I met people in a more intimate setting than I ever thought possible. The ability to connect and create relationships while sitting alone in my apartment was remarkable. That was my biggest takeaway from this whole experience. Everyone I was able to meet along the way, from a first-year staff member to a shareholder, was personable and helpful. I can see how Schneider Downs has such a great reputation in the community and with its clients. This three-week virtual internship has taught me more than just accounting. Through it, I learned the importance of opportunity, relationships and experience through any situation the world is facing. ### How the Global Pandemic has Shaped my Internship Experience Before starting my internship at Schneider Downs I was very nervous about what it would be like training and learning remotely during a pandemic. Thankfully, Schneider Downs has done a great job running its remote internship program. Training, learning the software systems, and communicating with coworkers have all been so much easier than I had imagined.During the global pandemic it has been interesting to see how different companies are handling the sudden switch to being out of the office. Some were more prepared than others for the transition to the remote workplace. Schneider Downs seems to be handling the transition very well, allowing employees to work from home with ease -- so much so that they were still able to have a summer internship program. I find it amazing that Schneider Downs was still able to dedicate time and energy to educating a group of interns during a worldwide pandemic. During this internship I have had the opportunity to meet numerous people throughout the tax department. Everyone has been extremely welcoming and helpful, always willing to answer questions and help each other out. I have learned so much about the company during this internship and gained considerable real world experience.I think it was extremely beneficial that each intern was assigned a “buddy” and a shareholder to meet and talk with. The one-on-one meetings with these individuals were much less intimidating and allowed me to ask more questions and learn more about the company. Even though the internship had to be shortened, Schneider Downs did a great job of ensuring that each intern gained substantial knowledge and experience from their time here. I am extremely grateful for the opportunity to have had this internship and for all that I have already learned and all the connections that I have made. ### OMB Issues Final 2020 Compliance Supplement On August 18, the Office of Management and Budget released its final 2020 Compliance Supplement. The release comes five months after the OMB issued a number of memoranda in response to COVID-19- related concerns surrounding single audits, including filing dates and the allowability of costs not normally chargeable to awards.Changes to the 2020 Supplement are more routine in nature when compared to last year’s overhaul of program requirements, which included the move to reduce testing compliance attributes for programs to no more than six. A comprehensive list of changes from the 2019 Supplement can be found in Appendix V. High-level information has been added regarding CARES Act-established programs and their single audit impact, included within Appendix VII: Other Audit Advisories, which clarifies that new clusters of programs will not be added nor will any revisions be made to existing clusters listed in Part 5 of the Supplement. Recipients of federal awards have been instructed to separately identify COVID-19 expenditures on the Schedule of Expenditures of Federal Awards by CFDA number.Further guidance surrounding requirements specific to federal programs under the CARES Act are not included in the final 2020 Compliance Supplement. The OMB will issue an addendum to the Supplement for some COVID-19 programs but has not communicated an anticipated release date. For single audit reports issued prior to release of the addendum, adherence to the additional requirements is not required. In these instances, COVID-19 programs identified as major programs will be required to follow the framework provided by Part 7.Schneider Downs will continue to monitor the OMB’s progress towards the addendum release. You can access the full final supplement here. ### Is this the “New Normal?” We can all probably agree that 2020 has been one of the most interesting years of our lives. Personally, I have experienced a change in my social life, my work life, and my college experience. While I have completed internships in an office, I found this situation to be quite interesting. As a result of my experience participating in a “remote internship,” although we were not able to interact with others in person, I think that employees are able to learn a new way to work. As an intern and someone who will, hopefully, have a full-time job in the next year, I am left wondering how this will change how people my age will start their first full-time job. The current state of business operations is quite different depending on the field and location. While some may find this time to be difficult and inconvenient, others find it helpful for their work-life balance.During the past six months, it has been extremely hard to stay positive during all the negativity. I have been trying to find how this time has affected people in a positive way. With people not being able to go into work, there has been an opportunity for small savings in areas such as transportation, food, and possibly, day care. The fact that many people had to work from home may have resulted in a decline in pollution. People may joke around that they have been forced to spend more time with their families, but I feel there are advantages to this. Not only is this helping with a work-life balance, but people who have to commute more than an hour each day for work now have the opportunity to complete more tasks around the house and spend time with family that they may have had to miss throughout the week. Although this time has been difficult for so many businesses, I believe the office environment is going to change severely. Companies may allow people to work from home more often or even work in a different state. This could be a major change for companies, especially in the next five years.There are many stereotypes that go around about Millennials, and most of them are negative. We hear how this generation is attached to their phones and have less social skills than other generations yet they are dedicated at staying with a job. I have heard about companies having high turnover rates or people leaving because they want to move. This “new normal” may change that problem completely.  Companies can now change their way of work by allowing people to work from home permanently or with a set schedule. Additionally, companies may allow people to work from another state. Some people argue that the switch to working online has strained relationships between the company and their employees. Personally, I think that working online has added so much flexibility in work schedules and could possibly increase employee’s job satisfaction.Although there are so many ways that we can complain about this current state of the world, we need to think about the positives and run with them. Take the extra hour or two that you have saved in commuting and do something for yourself. I have taken this internship as a way of learning how to deal with a different environment. I may not have been able to meet as many people as I would in the office, but I was able to work in circumstances that I would not have before. Hopefully I am able to look back on this year and remember the challenges that I overcame and lessons I have learned rather than the difficulties that came my way. ### 2020 Internship It was November of 2019 and I had received an offer to be an intern at Schneider Downs.  I hadn’t taken an audit class before, and I hadn’t even finished Intermediate II yet.  I had no expectation of what the internship would be like, or public accounting, for that matter, but I knew Schneider Downs would be the best place for me to learn.  What I couldn’t have predicted was that I wouldn’t  meet anyone physically at Schneider Downs.  By April we were told we’d only fulfil half of the time we thought we’d work at Schneider Downs, and that we would be working fully remote, from our own houses.  I didn’t know what to think it was going to be like now.  I’d read and heard that a lot of places had cancelled their internship program, so I felt very lucky and thankful, but I was afraid I was going to miss out on things, especially the Schneider Downs atmosphere I felt during the interview process.   I was totally wrong.Yes, I did miss out on going into town every day, and I missed out on after work activities, but I couldn’t have imagined I’d still do so much meaningful work and meet so many people online.  Everyone was just as friendly and helpful as I could’ve hoped for if we were in person, let alone being at home online.  Every person you talked to wanted to help you with whatever work you were doing, or to just talk about careers and the CPA exam.  Being remote and using Microsoft Teams made it even a little easier to communicate, because you knew if someone was in a meeting and when someone finished a meeting just by their status on Teams.  You had instant access to your team which was very helpful, not just with doing work, but also meeting and talking to people.  It was easy to do work while talking to someone at the same time, which made it possible to be efficient with work but also take the time needed to make the internship more meaningful in a networking/personal interaction way.   I might not have been able to meet everyone as easily as an internship completed in-person, but the conversations and help I got from everyone will have a lasting impact on my career and life.The work I did was not what I expected.  You see or hear stories about interns getting coffee or printing things, and not really doing any actual work.  I never got the impression that that’s how this internship would be during interviewing, and even with everything that’s happened in 2020, I still was right.  The work I was doing was real, and vital to the audit as a whole.  I never knew half the stuff I did was what auditors normally do, and I would guess that I’ll never learn any of it in a classroom.  This internship wasn’t a rinse and repeat of the things I learned in college, it was completely new, and without this experience, I’d never know how to do any of it until I got a job.  I didn’t just meet great people who cared and helped me, but I got an experience of public accounting I could not have gotten without working here at Schneider Downs.  Most importantly, this internship has taught me that, whether it be at Schneider Downs or any other firm, this is what I want to do for a long time. ### My SD Internship I’d been interested in accounting as a career since my junior year of high school when I took an introductory course. After that I was intrigued, and as I went to college and continued to explore various interests, accounting was always a staple on my schedule. It didn’t take long after my freshman year to decide to pursue a career in the field, but first I wanted to get an inside look into the profession, and there’s no better way to do that than through an internship. As I searched in both the Pittsburgh and Columbus areas, I stumbled upon Schneider Downs, a fast-growing firm with, coincidentally, offices in both those locales.I immediately applied to the Pittsburgh office and, after completing the interview process, was elated to be offered an internship. The start of my journey, however, commenced right around the time of the beginnings of the COVID-19 pandemic. Here I was, preparing to spend my summer coming into an office five days a week, visiting clients and socializing with other professionals. Instead, I slowly saw what I thought of as my ideal internship slipping away as prolonged quarantines continued.The situation would convert my experience into a virtual internship and bring along all sorts of new challenges. As the start date approached, I grew anxious. What would it be like, working 100 percent online? How will I be able to communicate with people? What if I get lost during work? What happens if my technology fails? Etcetera, etcetera.These fears quickly dissolved within my first week. Everyone I worked with or came into contact with was beyond understanding and more than willing to help in any way I needed. One of the best parts about the experience, in addition to the SD people, was meeting the various clients and working the different jobs. It was a new experience almost every week.Schneider Downs has given me what I believe is the best experience I could have asked for during these trying times. I look forward to using the knowledge I’ve gained from my internship to further my career in audit and to maintaining the friendships I’ve made at the firm. ### Financial Boot Camp Series: Maximizing Gifting and Charitable Impacts By David Brinkman, CFA, CPA, CFP®, CPFAWhen working with individuals and families that are on track with their overall financial plan and wanting to explore ways for their wealth to have a positive impact beyond their own personal happiness, our financial planning conversations typically transition toward other long-term financial goals, including to loved ones and charitable organizations. In this article, we explore gifting to family and other individuals, leveraging appreciated securities to fund charitable aspirations, and utilizing tax-deferred assets for gifting intentions.When discussing gifting, it’s important to understand (2) key numbers, annually set by the Internal Revenue Service (IRS) $15,000 and $11.58 million.$15,000 is the annual amount of money that any individual can gift to another individual, gift tax-free, referred to as annual exclusion gifts. $11.58 million is the 2020 lifetime gift tax exemption amount, meaning that an individual can make up to $11.58 million of gifts during the course of their lifetime before paying any gift tax. If married, you and your spouse could give away an aggregate of $23.16 million during your collective lifetimes before paying any gift tax or estate tax.Let’s review a simple gifting example to illustrate the annual exclusion and lifetime exemption concepts. An individual gives $25,000 to their niece as a gift. The first $15,000 is an annual exclusion gift with the remaining $10,000 reducing their lifetime gift tax exemption and federal estate tax exemption amount to $11.57 million. While further explanation of financial planning strategies around the federal estate tax exemption is beyond the scope of this article, in our example upon that individual’s passing, their net worth (i.e. assets less liabilities) in excess of one’s remaining federal estate tax exemption ($11.57 million) would be subject to estate taxes.Utilizing one’s annual exclusion gifts of $15,000 per year per individual can be a very powerful gifting strategy, particularly over several years, and especially with the additional benefit of both you and a spouse gifting to the same individual. Demonstrating the power of annual exclusion gifting to family members, an individual and a spouse each give $15,000 to their daughter, or $30,000 in total. This couple continues to give the maximum annual exclusion gift each year to their daughter for a five-year period. At the end of this year five-year period, they have gifted $150,000 to their daughter gift tax-free!In addition to gifting to family, philanthropic individuals typically also look to benefit charitable organizations. Appreciated securities, investments that have materially appreciated since initial purchase, are great assets to consider using to accomplish charitable intentions while also lowering individual income taxes.Let’s assume you own $25K of Big Tech Stock, with an initial investment of $5K in the stock. If you were to sell the $25K of Big Tech Stock and give the cash to a local charity, your stock sale would generate a $20K capital gain. Applying a 15% capital gains tax rate to this $20K capital gain, the resulting capital gains tax would be $3K, leaving a charitable gift of $22K, and therefore, a $22K itemized deduction.Alternatively, you could gift the $25K of Big Tech Stock directly to your local 501(c)(3) charity, forego the $3K of capital gains tax altogether, and provide a $25K contribution to your charity with a $25K itemized deduction. The charity, given its not-for-profit status, is able to liquidate the Big Tech Stock without incurring any capital gains tax.Another effective way of utilizing appreciated securities is by establishing a Donor Advised Fund (DAF). A DAF is like a charitable investment account established for the sole purposes of supporting charitable organizations. Typically, we recommend funding your DAF with appreciated securities to forego the capital gains tax as noted above. Gifting appreciated securities into a DAF is best utilized when you expect itemized tax deductions to be over $12,400 (single)/$24,800 (married filing jointly) in order to maximize one’s tax benefit. DAF accounts provide tremendous charity flexibility as DAF funds can be distributed in the form of a grants directly to any 501(c)(3) charity at any point in the future. This allows for one to pre-fund and deduct several years of future gifts in the current year.Our final charitable gifting strategy applies to individual’s over age 70.51 with an individual retirement account (IRA). These individuals came make a Qualified Charitable Distribution (QCD) up to $100,000 from their IRA directly to a 501(c)(3) charity. The benefits of the money going directly from one’s IRA to charity is the exclusion of QCD from their taxable income, while counting toward fulfilling one’s Required Minimum Distribution. This can lower one’s taxable income and Adjusted Gross Income significantly in the year of the gift. In this case, the QCD cannot be treated as an itemized deduction.The above planning strategies are very effective ways to gift assets to loved ones and charitable entities in a tax-efficient manner. Should you like to learn more about gifting strategies, one of our Schneider Downs Wealth Management Advisors would welcome a chance to have a conversation with you to discuss further.Note, this age remains 70.5 although the required minimum distribution age is now age 72. There are no required minimum distributions in 2020, as a result of the CARES Act.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### FMCSA Proposes Promising Pilot Program On September 4, the Federal Motor Carrier Safety Administration (FMCSA) proposed a pilot program that would allow 18-, 19- and 20-year-old drivers to operate commercial motor vehicles (CMVs) in interstate commerce, a move hailed by FMCSA Deputy Administrator Wiley Deck as an opportunity that will allow the agency to “carefully examine safety, feasibility and possible economic benefits.”Aimed at curbing the industry’s aging workforce and overall driver shortage, the program seeks to bring data into the initiative to safely remove barriers to entry for the next generation of operators. As 2020 began, the American Trucking Associations estimated a current shortage of over 60,000 drivers, a number that’s expected to rise to over 100,000 in next five years and top more than 160,000 in the five years following, as older operators retire.Currently, 18- to 20-year-olds are only allowed to operate CMVs in intrastate commerce in 49 states. The FMCSA program would expand on that, permitting drivers to participate if they fall into either of two categories:1) 18- to 20-year-old commercial driver’s license (CDL) holders who would operate CMVs in interstate commerce while taking part in a 120-hour probationary period and a subsequent 280-hour probationary period under an apprenticeship program established by an employer, or2) 19- and 20-year-old commercial drivers who have operated CMVs in intrastate commerce for a minimum of one year and 25,000 miles.Additionally, study group drivers would be prohibited to operate special configuration vehicles hauling passengers or hazardous materials.The feasibility study is modeled after the DRIVE-Safe Act, bipartisan legislation currently under consideration in the House and Senate that would encourage younger individuals to join the trucking industry. Enhancing safety and training standards, the proposed bill includes a two-step program for prospective young drivers to complete once they obtain a CDL. As the legislation presently stands, these drivers would be required to log 400 hours of on-duty time and 240 hours of driving time with an experienced driver in the cab after earning a CDL. Once completed, the young driver would be able to participate in interstate commerce.Program proponents are optimistic that the project’s data will put additional pressure on Congress to create a more permanent path for younger driver participation in this essential industry. If you’d like assistance navigating current transportation and logistics industry business conditions, contact us and visit the Schneider Downs Transportation & Logistics Industry Group. For additional industry articles, visit the Our Thoughts On blogsite. ### Distance Education Program Compliance Requirements and COVID-19 The August 2020 release of the Office of Management and Budget’s 2 Code of Federal Regulations (CFR) Part 200, Appendix XI (Compliance Supplement) includes an increased focus on distance education program compliance requirements. According to the Compliance Supplement, “a distance education course is a course offered to students who are separated from the instructor and involves regular and substantive interaction between students and the instructor. Such courses are offered via: (1) the internet; (2) open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite or wireless communication devices; (3) audio conferencing; and (4) video cassettes, DVDs and CD-ROMs if these are offered in conjunction with any previously offered methods (34 CFR 600.2).”The Compliance Supplement focuses on requirements related to program accreditation, and student participation. “Institutions must have been evaluated and accredited for its effective delivery of distance education” by a recognized accrediting agency. “An institution must demonstrate that a student participated in class or was otherwise engaged in an academically related activity, such as by contributing to an online discussion or initiating contact with a faculty member to ask a course-related question” to achieve compliance. It is not sufficient for an institution document that “a student has logged into an online” class to prove student participation. “All Title IV funds disbursed to students attending these programs must be reported as questioned costs” if an institution is unable to substantiate compliance with either requirement.Due to the COVID-19 pandemic, many institutions have been anticipating the possibility of moving substantially all students off campus, and transitioning to online programs. The U.S. Department of Education (DOE) released information related to these programs in a series of letters between March and June of 2020 that provided “broad approval to institutions to use online technologies to accommodate students without going through the regular approval process.” Additionally, the DOE is “permitting accreditors to wave their distance education review requirements for institutions working to accommodate students whose enrollment is otherwise interrupted as a result of COVID-19.”  The DOE has also lowered the bar when it comes to institutions’ responsibility to document student attendance. To meet the DOE’s “requirements for providing distance education, an institution must communicate to students through one of several types of technology, including email,” and “instructors must initiate substantive communication with students, either individually or collectively, on a regular basis.”  The DOE has made these provisions effective “through the end of the academic year that includes December 31, 2020, or the end date for the COVID-19 Federally declared emergency, whichever occurs later.”Institutions are experiencing a variety of results across the nation in response to their attempts to mitigate the spread of COVID-19 on campuses, and there is still substantial uncertainty as to what the Spring 2021 semester will look like. Institutions should consider the risks related to online programs as they react to changing circumstances, and plan for 2021. There has been no guarantee that the provisions listed in the DOE COVID-19 emergency response will extend past December 31, 2020. If the provisions lapse, institutions will be required to be accredited to offer distance education programs, and will be subject to the compliance requirements in the August 2020 Compliance Supplement for the Spring 2021 semester. Any non-compliance will result in questioned costs. If you have questions about Distance Education Program compliance requirements, contact your subject matter experts at Schneider Downs. ### A Once in a Lifetime Experience When first applying for an internship at Schneider Downs, I had an image of what I believed this summer experience would be like, but I never could have imagined the experience I got. Due to the Coronavirus pandemic, Schneider Downs had to work remotely for the protection of their employees and clients. I was nervous, of course, that they would have to postpone or cancel the internship, especially knowing that so many other companies had needed to do that for lack of resources or any number of things. However, Schneider Downs exceeded my expectations by continuing with their internship program and allowing their interns to be a part of what their firm was experiencing. Honestly, although I did not get to work in the office and meet these people face to face, I did not feel like I was missing out. I decided to intern in the audit department at Schneider Downs because auditing had piqued my interest in college, and SD seemed to have a family-like atmosphere that came with a good balance of fun and hard work that would allow me to learn a lot. I am very fortunate that this atmosphere did not go away, even with the remote environment.Everyone at Schneider Downs was very responsive and helpful. They were quick to answer any questions that I had and made sure that I stayed busy throughout the weeks, giving me a wide range of experiences. SD encouraged the interns to ask questions and get everything we could out of this experience. My first couple of weeks, I would have long calls with audit seniors and staff to learn how to work through different workpapers and tests. I found it easier to compile a list of questions and get them all answered at once instead of asking one question at a time, because you could never be sure if wifi would be working or if the senior or staff member had the extra time to stop what they were doing and help. When they could, they would go through, step by step, what needed to happen and would explain why I was doing it. That second part was the most important to me, because I like to understand the purpose behind what I am doing in order to get the bigger picture, which helps me to remember how to do things long-term. The engagement teams that I worked with would always make me feel like I was a part of the team and made sure that I was comfortable asking the questions that I had. Schneider Downs had the technology to be able to include each of us in the social aspects of their firm as well. I was invited to virtual meetings simply to meet and catch up with many different people at the firm. Occasionally during lunch, SD would host games that teams, composed of people throughout the firm in both the Columbus and Pittsburgh offices, would participate in. The teams were competitive and everyone seemed to have a fun time interacting with old friends and meeting new ones. I met so many people despite sitting in my home. Needless to say, interning in a remote environment had its ups and downs, but SD was attentive, inclusive, and provided a great space for learning and growth. I had a wonderful experience as an audit intern at Schneider Downs. ### An Unconventional Internship Experience Interning with Schneider Downs this summer was certainly an experience I will never forget, despite not once stepping foot in the office. I had been definitely worried about working a virtual internship, but in the end my apprehension proved unwarranted and my expectations were far exceeded.Obviously the global pandemic has forced changes in our everyday lives, but the thought of working a new job virtually was a potentially very scary experience. Clearly this was a first for me, but I had to remember: it also was a first for Schneider Downs. I learned very quickly that it was all going to be okay, and from my very first Teams meeting I knew this internship would work out and be amazing. Working in my chosen field—even as just an intern—can be intimidating at first, but the staff at SD&Co. made the experience completely free of fear. I had started out feeling stressed about the work, but in no time I was confidently assisting in audits and asking for even more assignments.My experience as a whole was extremely educational, but the best part was networking with coworkers. At Schneider Downs, I was treated just like another member of the staff, and the friends and connections I’ve made will absolutely stay with me past the end of my internship. The stereotype of the intern “getting coffee” was most certainly not the case with this job, as the culture of the firm allowed me to fit right in and make a real contribution. Pairing me with staff and shareholder mentors and being able to ask questions every week allowed me to gain insight of what it’s like working at the firm under normal circumstances, and what to expect in the years to come.I’ve learned more about auditing and the daily tasks of an accountant from this internship than I ever thought imaginable! While it was my first experience working in the field, I now feel more than prepared and comfortable handling assignments in audit and risk advisory services. Working at SD&Co. has truly been the best professional experience I’ve ever had, and I cannot wait to bring some of my newfound knowledge into my final year of college. ### Summer Tax Internship I was 12 years old when I decided I would become a lawyer. With that goal in mind, I knew I wanted to study a versatile subject in undergrad in case my career did not pan out as I anticipated. I always enjoyed the challenge of the advanced math courses I took in high school, and with the advice of my very entrepreneurial father, I graduated with a Bachelor of Science in Business Administration (BSBA) in Economics in 2018. Later that year, when I inevitably began law school pursuing my Juris Doctorate, I decided that I wanted to use the education and experience from both undergrad and law school in my future career. Thereafter, after several tax classes, I developed a passion for the tax code and how individuals and business owners alike could be incentivized to act in myriad of different ways based on tax law and the tax implications of their decisions.While most of my peers were pursuing more traditional “Big Law” jobs after our 1L year, I recognized that my career path would be less traditional. Knowing I wanted to work in an industry with a focus on tax, I was incredibly excited when I discovered that Schneider Downs was recruiting from Duquesne Law School. From the outset, I recognized that Schneider Downs could provide me with an opportunity to use my legal background and knowledge to support a much broader array of services and expertise that goes beyond what I could ever provide to clients while strictly practicing law. Accordingly, I applied, interviewed, and was ecstatic and grateful to have been offered a summer tax internship from Schneider Downs.Several months later, the COVID-19 outbreak occurred, and while most of my friends’ internships were cancelled, Schneider Downs transitioned to a remote internship. Admittedly, I was nervous to begin this internship remotely; however, I am very impressed with the way the internship has been handed. I had a great opportunity to get to know the people of Schneider Downs and experienced how supportive and friendly everyone is and how everyone seemed to be interested in me. More importantly, I got a sense of the culture and how everyone seemed to genuinely enjoy their jobs and working with each other. Though my time at Schneider Downs to date has been short, I have also experienced the advantages of being a lawyer in an accounting firm. While not the most traditional path for J.D.s, I feel that the breadth and depth of Schneider Downs grants it a distinct advantage over a traditional law firm. I have witnessed firsthand that Schneider Downs’ internal capabilities offer real value-added services to its clients, and the expertise that it offers is a deeper and much broader level of support than most law firms can offer. Schneider Downs allows lawyers to become more analytical while also being able to provide advice to clients that reflects the natural synergy between law and business. Further, when lawyers are completing transactions, they are in charge of not only the legal aspects, but they are also part of a larger team addressing the entire issue for the client. That is what holds the most allure for me as an aspiring lawyer, and I am so grateful for the opportunity to experience that. ### Life as an Intern during Unprecedented Times When I first started the interview process for a summer 2020 internship, I had no idea what to expect. Being that most of my work experience was in construction, I knew that the atmosphere would be vastly different, among many other things. When I started interviewing with companies in the beginning of October 2019, however, I began to get more comfortable with formal interviews and sharing my experiences in an articulate way.  All of the companies I talked to seemed interesting and appealing, but one stood out among the others. Being that most of the companies structured their process in a very mechanical way, where an initial interview leads to a potential office interview and an internship offer after that, I was instantly intrigued when Schneider Downs sent an email invitation to a dinner at a local restaurant. This showed that they were interested in getting to know us before the formal interview, making the process more comfortable and interactive.Following the initial interview and subsequent office interview at Schneider Downs, I knew I wanted to intern for the company. After accepting the offer at a morning coffee meeting with Tom Harvey, Schneider Downs’ Director of Human Resources, and Adam Goode, Audit Senior Manager, I was immediately looking forward to the experience of being a Tax Intern at Schneider Downs. However, that experience ended up being much different than the one I expected.When I was notified that the internship was going to be shorter than originally planned and 100% remote, I was uncertain about how I would get to connect with people in the firm, on top of learning how to effectively perform my job. What I expected was completely blown out of the water. However, Microsoft Teams allowed for seamless face-to face interaction during my internship, and the assignment of “buddies,” or employee mentors, was extremely helpful both in terms of learning about the job and meeting a multitude of people within the firm. We were also assigned a shareholder buddy, who was available for any questions throughout the process. Everybody I talked to through “virtual coffees” was extremely down-to-earth and was open to any questions I had, illustrating the culture that was prevalent during the dinner and office visit in the fall. Additionally, I was able to experience a wide array of areas within Tax, getting to know different managers along the way. Overall, the “Big Thinking, Personal Focus” slogan was exhibited through unprecedented times that brought unprecedented circumstances, and I am exhilarated that I got to be a part of something that I will remember forever. ### My Eight Weeks at Schneider Downs It was June 29, 2020, the first day of my internship with Schneider Downs.  The interns had training to start the day at 9:00 that morning, but at 5:30 a.m., I was awake.  Nervous, anxious, scared for what the future holds.  I couldn’t sleep.  I psyched myself out so much to believe this experience was going to be terrible and I would fail miserably.  Well, eight weeks later, I can tell you it wasn’t anything like I thought it would be.  Over my eight weeks at Schneider Downs, I’ve changed drastically to better my professional career.  I went from choking on my words when I had to introduce myself in front of all the interns on a Teams call, on the first day,  to being able to conduct a portion of a planning meeting for an engagement and comfortably being able to speak in front of all the interns.  My comfort level on the job now compared to eight weeks ago is invaluable to me and the betterment of my career.              Even without the experience I gained in the audit field, I would be extremely happy with everything else I learned over my time here.  But with an audit internship, the largest portion of the experience gained is auditing.  I can say confidently that I’ve learned more than I could have imagined from working on six engagements.  It all started on my first engagement during my second and third weeks on the job.  I was on a year-end audit.  At this point in my life, the only “audit” experience I’d had in my life was an audit college class I took over a year ago.  In the beginning, I was assigned to complete four folders within the binder.  In first week, the learning curve was comparable to learning how to do everything in a new job in one day.  But through persistence and help from others, I was able to competently complete all four binders in my first week.  This allowed me to get feedback while still working on the engagement and start working on other things I normally wouldn’t see.  Throughout my internship, I was able to work through my assigned work efficiently to receive new responsibilities and broaden my understanding of an audit.              Looking back at June 29 at 5:30 a.m. with me lying in my bed, tossing and turning trying to get a couple more hours of sleep, I find it funny how I was scared about failing and having a terrible experience.  It’s so funny to me because I felt everyone wanted me to fail, but I couldn’t have been more wrong.  With all the people I’ve worked with and met, each and every one of them has helped me succeed and wanted me to succeed.  Nobody is here to tear other people down and hoping they fail.  So, during the eight weeks I’ve worked at Schneider Downs, I’ve gained so much not just as an audit professional, but also as an individual. ### Internship: Global Pandemic Edition My internship with Schneider Downs has definitely been different from many internships anyone has had in the past, due to working during a global pandemic. Typically with an internship, you are surrounded by other employees and gain a personal connect with each other, from conversations that naturally occur while working in the same space, along with being able to grab coffee or lunch with staff to get to know one another and see how other employees have experienced the company. However, this summer of interning has been all working remote, which makes it harder to get those normal intern experiences. Workers at Schneider Downs try to make this switch to remote working easier on interns by having weekly calls for the interns to get to know one another.As well, I, personally, have had the opportunity to have a “coffee break” with some of the staff members. One staff reached out to me explaining how they felt that the interns were really missing out by not getting to meet others and go out for a coffee/lunch break. Since she had those experiences, she felt like reaching out to another staff and setting up a call with me so I would be able to meet two people that remember what it was like being an intern. There are many instances where people reached out and just caught up with the interns. Even though it may not be how internships in the past have worked, it is a nice gesture that Schneider Downs employees do still try to make connections with the interns.Working remote is a difficult transition for anyone. But the people at Schneider Downs made it seem that much easier: by people reaching out, calling to show you how to work through work papers, and just reassuring you that it is okay to reach out and ask questions as well as giving advice. ### Ransomware Postpones First Day of School for Hartford Students As educators, parents and students braced for the start of the academic calendar, the focus on the uncertainties of returning to school during COVID-19 gave way to a different type of threat when a ransomware attack forced a Hartford, Connecticut school district to cancel the first day of classes. The ransomware attacked more than two-thirds of the school districts servers, impacting essential systems which made on-site student learning and district-provided busing impossible. Citing these two challenges, Hartford officials had no choice but to send out notices that the first day of school was being postponed for the nearly 18,000 students and 1,600 teachers. After further investigation, the city confirmed that the ransomware virus had entered their systems a few days prior to being discovered and investigators were confident that no personal, private or financial information was accessed or stolen in the attack. Upon learning about the attack, the city was quick to act, and administrators spent the weekend restoring and rebooting their systems, as well as inspecting all district hardware to confirm devices were safe for in-person and remote instruction. The attack also impacted Hartford’s first responders, but the harm was described as more of an inconvenience to their back-end services and did not impact any operational capabilities that would prevent or delay emergency service response time. Hartford Mayor Luke Bronin stated the ransomware attack was the "most extensive and significant attack in the last five years in the city". As of this article no details have been released on the amount of ransom requested or if the attack was even targeting to delay the first day of school. The FBI and Hartford Police Department are still investigating the attack and classes resumed without incident the following day. While the postponement was met with understandable frustration and disappointment from faculty, students and parents, the reality of the situation is that the damage could have been much worse if the city of Hartford did not take cybersecurity seriously. Bronin had seen the impact of ransomware attacks on other Connecticut communities in the past and worked with city officials over the prior year to invest approximately $500,000 in cybersecurity improvements, which he directly attributes to the successful response to the attack and for preventing any significant damages. This is the second confirmed ransomware attack on a school district this fall, with the other being a 16 year-old student at South Miami Senior High School reportedly responsible for 12 cyberattacks on the Miami-Dade County Public School system in Florida. With the focus on how students are returning to class, and an increase in virtual learning in the current pandemic world, this story is another reminder that organizations need to keep their guard up against cyber threats. We know firsthand that incidents like this can strike at any moment, and the importance of assessing security posture, investing in cybersecurity and planning for incidents can be the difference between missing one day of school or shutting down an entire municipality. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### Notices for Nonpayment of Income Taxes Did you have federal income tax due on July 15, 2020?  Did you pay the income tax on July 15, 2020?  Did you receive a notice from the Internal Revenue Service stating that you haven’t paid the income tax and are now assessed interest and penalties?Each person panics slightly until he remembers that the check was sent to the IRS.  The next step is checking the bank statements and realizing that the check has not cleared. This has happened to many taxpayers since July 15, 2020. In fact, it has happened to so many people that the IRS has issued a statement that it has suspended the mailing of notices to taxpayers who had a balance due on their return.  Because of the COVID-19 pandemic, the IRS has a considerable amount of unopened mail, so many checks have not been processed.  If checks have not cleared the bank, the IRS’s statement indicates that taxpayers should not cancel their checks because the IRS will credit the checks as of the date the IRS received them. To be fair and equitable, the IRS is also providing relief from bad check penalties for dishonored checks it has received between March 1 and July 15 due to delays in processing.Some notices may still slip through and be sent, so the IRS is asking for patience.If you have any questions regarding this matter, please contact your Schneider Downs tax representative. ### My Thoughts On My Internship As an accounting student at Robert Morris University, I remember my first interaction with Schneider Downs. It was the year before I was expected to graduate, so I knew that landing an internship at a top firm this summer was a must. I attended our university’s yearly “accounting day” and received an overwhelming amount of information from numerous firms and businesses in the area. After talking with some employees from Schneider Downs, I knew that it was somewhere I really wanted to apply for my summer internship. The people were very nice, friendly, and willing to give you career-related advice. I quickly applied to be a summer audit intern online within the next day. I had applied for summer internships at several firms, and I remember this time was full of anxiousness and excitement. I was particularly excited when I saw I had received an invitation for an on-campus interview from Schneider Downs. The interview at Schneider Downs was unique because it was the only firm that offered a pre-networking dinner the night before. I remember feeling so impressed that I was invited to dinner the night before my interview; I would get to know the people in a more relaxed environment. Surely, it helped immensely. I felt comfortable and confident walking into my interview the next day and knew this was something really unique that I liked. After another round of interviews in the office, I was overjoyed with excitement when I received an offer to be a summer audit intern at Schneider Downs. This was in late October, and I had been looking forward to the experience ever since then.While I was looking forward to my landed internship, this year brought some unexpected challenges to world as we are used to living. The effects of COVID-19 caused my previous internship in the spring semester to end unexpectedly early. I was worried about what this would mean for my summer internship at Schneider Downs. However, despite what was going on in the world, Schneider Downs rose above the situation and informed all of the interns that they still planned on welcoming us to the firm as interns this summer. I was relieved and excited, but still a bit anxious when I found out the internship would be conducted remotely. However, I am now in week 7 of the internship, and I can say I am very pleased with the way things are going. As an intern, I am still able to complete my work, ask for help when I need it, and connect with my peers, mentors, and other individuals at the firm. While the internship may be “online,” I am still gaining valuable work experience and learning new things every day. I get to work with and meet new people every week, just as I would in person. While my internship experience at Schneider Downs may not have been what I originally expected, I can honestly say I am very pleased with my experience and the way that Schneider Downs created an environment that allowed me to learn and gain valuable accounting experience while still feeling connected and engaged with the teams I worked with this summer.    ### My Summer Internship My experience with Schneider Downs began with the Ohio Dominican University career fair in the fall of 2018. Being a sophomore at the time, the firm’s booth representatives suggested to me a two-day leadership program that was scheduled for the following summer. I sent in my application later that night and was soon contacted for a phone interview, which then led to an in-person interview at the Schneider Downs Columbus office. During my meeting, I was able to talk with a senior staff and a senior manager representative from both the audit and tax departments. A short time later, I received a call saying that I was accepted into the program.The first day was informational, as our group learned about Schneider Downs, the various services the firm offers, and how a career in public accounting might look. Day one also included mock interviews and career development tips.The second day was focused on building connections and service. For a majority of the time, our group created blankets that were to be donated to the Ronald McDonald House in Columbus. The program concluded in a much more relaxed social setting, with students, staff members, managers and shareholders enjoying a Columbus Clippers baseball game.Shortly after completing the summer leadership program, I received and accepted an offer for a summer internship in the tax department of the SD Columbus office.My internship with Schneider Downs has given me great experience in the world of public accounting, allowing me to apply knowledge learned in the classroom to a real tax environment, plus a plethora of information that I was not exposed to in my classes at ODU. During my internship, I prepared returns for individuals, partnerships and nonprofit organizations. The biggest learning curve I faced was in understanding the tax software and how to prepare returns for entities I was unfamiliar with. The people I worked with at Schneider Downs were the greatest help. All my team members were very warm, welcoming, friendly and willing to answer any questions.I have really enjoyed working and learning with the tax department, and I feel that this internship has given me a great starting point for my career in public accounting. ### COVID-19: The Long Road to Recovery “Five years?” my client howled as he reflexively lunged forward in his chair. Then silence. The man slumped back in his chair processing an answer he never contemplated, let alone anticipated. No further questions. No quips. Just a person slowly coming to grips with the economic consequences of COVID-19. The seemingly innocuous question the man had posed — “How long do you think it will take for the economy to recover?” My answer, “It could take five years.” A few simple words had revealed that he needed to change his entire approach to navigating the pandemic. No longer could he hunker down and ride out the storm. He had to act quickly and decisively. According to studies it could take five years or longer for businesses to recover to pre-COVID economic levels. If you want to maximize your company’s recovery in this crisis, you need to be proactive and not reactive – the reality is that the longer a company waits to take action, the lower the probability of success. Our latest whitepaper, Long Road to Recovery, provides a comprehensive guide on best practices to help guide your company through the uncertain time including aggressively addressing expenses, back to business expense planning, cash cycle management and more. You can download the whitepaper here, please note a valid email is required to access the content. For more information, please contact Michael Hart or visit www.schneiderdowns.com/business-restructuring. ### Summer at Schneider Downs When I was first contacted by Schneider Downs about an interview for an internship opportunity I was eager and excited because I had always wanted to intern at the firm’s Columbus office. I had learned about Schneider Downs in my accounting classes and was familiar with the prestige that encompassed one of the largest accounting firms in Columbus, Ohio. From the moment I started my interview, Schneider Downs felt like home to me. I could see the passion that each employee held for the company, which to me spoke volumes. I was thrilled when Schneider Downs offered me a spot as an Audit Intern for the summer of 2020. As the internship neared, COVID-19 grew stronger and I began to worry that the internship that I had been looking forward to for over a year would get cancelled. Schneider Down’s assured me that even if the internship had to be completely virtual, it would not get cancelled. When I got confirmation that the internship would be entirely online, I was nervous as to how I would still be able to meet other employees of the firm and get a real internship experience. I can’t say enough about how impressed I am with how Schneider Downs handled our entire internship during the adversity that struck the world. I got to meet many different employees throughout the company in different departments, sit in on client calls and network while being virtual. Everyone was willing to go above and beyond to answer questions and arrange meetings to introduce me to employees of the firm. I think this really shows how passionate the employees are at Schneider Downs when it comes to helping the firm succeed and the commitment that each employee has to helping their colleagues strive to be the best. The thing I loved the most about this internship was the team environment that surrounds the Audit Department. I have been a student-athlete my whole life and I understand how important it is to work as a team towards a common goal. Teammates are meant to push you, and help you learn and grow, which I have learned is very important to Schneider Downs and the development of their employees. After a summer full of learning about the public accounting industry, I couldn’t be more confident with the career path that I chose and the company I chose to intern with this summer. The employees of Schneider Downs really helped form my passion for the public accounting profession during my seven week internship. Their commitment to helping us succeed was prevalent from the day we started our internship.  I can’t thank Schneider Downs enough for the best internship experience I have had thus far. ### Could your PPP loan affect the sale of your business? Are you considering selling your business and did you receive support from the Federal government under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP)? If you received the latter you’re probably focused on ensuring that your business receives the most forgiveness possible under the terms of the program.  Visit our Paycheck Protection Program Advisory webpage for further assistance. But what if both are relevant to you? When was the last time you looked at your loan agreement?  The PPP loan was likely structured similar to a traditional loan agreement that includes certain events of default which may accelerate the payment provisions of the agreement.  One event in particular that we’re seeing in PPP loan agreements is that reorganizations, mergers, consolidation or changes in ownership or business structure without the lender’s prior written consent constitute an event of default.  Business owners should be aware of these provisions so there are not issues with the deal late in the process. Another area that may impact the sale of your business is the timing of forgiveness acceptance, since many lenders are still not accepting forgiveness applications.  Many businesses that are being sold prefer to have this arrangement behind them, but what if that’s not an option.  Sellers and buyers should consider what could happen if the lender or the SBA upon their review disallow a portion of forgiveness or any forgiveness.  Both parties should make sure they’re both protected in any result of the review by the lender or SBA. Have you considered the impact of the current IRS’s position on deductibility of costs covered by the PPP?  As of September 4, 2020, the IRS holds that expenses that have been reimbursed through the PPP are not deductible.  The timing of when these expenses are not deductible will impact the value of the business and the purchase price.  That position may also change between now and the filing of the business’s tax return.  Communication is even more important when it comes to circumstances like these, to make sure the party entitled to the benefit truly receives it. So what should business owners being doing in the meantime? If you can; complete the forgiveness application to start your lender’s clock on their review of the application.  That might not be the most beneficial option.  So it’s important to be informed of the impact of the PPP loan.  Communication is essential with your business advisors, including the CPA, tax professional and counsel, to limit if not eliminate the surprise and have a successful transaction. Paycheck Protection Program Assessment If you are participating in the Paycheck Protection Program (PPP) or have questions related to your forgiveness circumstances or the application, our Paycheck Protection Program Advisory team can help.  We have developed an online loan forgiveness assessment questionnaire to help identify key variables in your organization’s forgiveness assessment.  Your answers will be sent directly to our team who can help you through your forgiveness assessment.  You can visit our assessment questionnaire at www.schneiderdowns.com/ppp-forgiveness-assessment. Additionally, we recently launched a new PPP Services page to help you remain current on the PPP guidance at www.schneiderdowns.com/ppp.  The page contains all of our previously-developed webinars and Our Thoughts On articles, presented in an organized fashion to help our clients answer any questions they may have. If you need more information or assistance regarding your PPP loan or transaction assistance, visit our website, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### New Year…New Challenges Over the span of just four short months, life as we knew it was flipped upside-down.  December 31, 2019 –Chinese health officials inform the World Health Organization (WHO) about a cluster of 41 patients with a mysterious pneumonia. January 20, 2020 – The first U.S. case is reported: a 35-year-old man in Snohomish County, Washington.  January 30, 2020 –The WHO declares a global public-health emergency.   February 6, 2020 – A person in California dies from the coronavirus, the first known American death.  February 11, 2020 – The WHO announces that the disease caused by the novel coronavirus will be called “COVID-19.” March 11, 2020 – The WHO declares the outbreak a pandemic.  March 13, 2020 – President Donald Trump declares a national emergency in the United States.  April 7, 2020 – Roughly 95% of all Americans are under lockdown as 42 states issue stay-at-home orders. Daily routines were broken, thousands were left without jobs, school systems resorted to online learning, and many were left with the same thought racing through their head: “What do we do now?” I cannot even begin to count the number of times I asked myself this question.  I went from being able to go to my college classes every morning, to being forced to figure out how I am supposed to attend classes remotely in a household that was unable to support the large increase in wireless connection needed.  My collegiate athletic career had essentially come to an abrupt end in what was looking to be my best season yet.  And worst of all, I was left with constant questions from those around me about whether or not I was going to be able to complete my internship…this internship.  Thankfully through all the efforts and open lines of communication from those in the Human Resources Department at Schneider Downs, all my worries had subsided. Management at Schneider Downs not only set their focus on making sure their full-time employees were prepared to work from home, but they also paid close attention to making sure that each and every intern was adequately prepared to work remotely as well.  From mailing necessary resources to each intern, to setting up a meeting before the scheduled start date just to check accounts and making sure everything worked properly, Schneider Downs took each and every step necessary to ensure that the interns felt like part of the family atmosphere the company embodies. Even though this year’s summer internship with Schneider Downs has been a full 180 from my one with the company last year, the takeaway was just as memorable and meaningful.  I was able to get another look at public account with an exceptional company.  The relationships I made last year were not only deepened, but also accompanied by new ones.  I am extremely appreciative of the time I have been able to spend as a Schneider Downs tax intern, and I look forward to seeing where these opportunities will lead my future career as a public accountant. ### My Path to Schneider Downs I started my internship with Schneider Downs at the tail end of my college career in a very different world from the one in which it began. About four years ago (what now feels like only four days ago), I was starting school at Robert Morris University (RMU). I wasn’t sure if accounting, or even college for that matter, was for me. I started to develop a motivation problem. I wasn’t branching out of my comfort zone and my grades were not at the level they should have been. Fast-forward to the fall of my junior year; I decided I would push myself and work hard for my grades and my career and see how I felt at the end of the semester. I finished off my semester with a good GPA and my first internship. This made me realize that the only thing holding me back from having a successful college career was myself. My real challenge would be the spring semester where I would have to balance a full-time class schedule and an internship that required 30 hours a week. I finished off that year with another improved GPA and finally some work experience that consisted of more than being a cook at a local pizza place.Since RMU is a premiere accounting school in the Pittsburgh area, I had obviously heard of Schneider Downs—through the many recruitment events that the firm held on campus. One thing I’ve always appreciated about RMU is their extremely helpful networking events for accounting majors. Whether it’s a resume workshop, mock interviews on campus or the Accounting Career Day, students have endless opportunities to meet and connect with a wide range of potential employers.  Additionally, I had interned that summer in the internal tax department of one of Schneider Downs’ clients. I was able to work on some of the client-prepared documents that would be sent to and used by the firm. In the following fall semester, I had a mock interview scheduled with a recruiter from Schneider Downs. The interview went well, and she suggested I apply for a spring or summer internship position. I scheduled an on-campus interview that would be preceded by a dinner event the night before at a restaurant nearby, something that immediately made the firm stick out. One thing that caught my attention immediately was the genuine enthusiasm with which people talked about their work. They had a representative presence of people there from tax analyst to shareholder, and everyone had a positive relationship with one another. My interview the following day went well, and I was invited to the office for another interview. At the office interview, I noticed the same positive energy and passion that I had previously experienced at the dinner. The shareholders who I interviewed with were more than willing to answer all of my questions and discuss some of the ways they had planned on expanding and growing the firm. The next week, I received the call offering me the internship. I was excited, relieved and very much looking forward to my summer. When Governor Wolf implemented work-from-home requirements, there was a lot of uncertainty, among other things, about how this internship would look. I was kind of nervous about being able to make an impression and gain experience at the firm with a shortened time frame. I can now confidently say that my internship was successful. I was able to (virtually) meet with many different people from all areas of tax. I was able to gain actual work experience even though the extended federal deadline had just passed (which generally marks a slow period for tax work). Was it the experience I would have preferred? No. Of course, I would rather have interacted with Schneider Downs professionals and clients in person. Even so, given the uncertain circumstances, it exceeded all of my expectations! ### Exploring My Internship I had just started my third year at Ohio University and was eager for the semester to begin, since I was taking 21 credit hours. Along with classes, it was also the semester everyone fears: the search for an internship. And I was not only exploring internships, but was also applying to study abroad.As I walked around a career fair, talking with different companies, I came across Schneider Downs. After about an hour of chatting with their team, I decided to leave. The communication that took place during that hour led me to believe that I’d found the place where I wanted to intern, so I took the next step, and applied. Ultimately, my credentials were reviewed and I was among several chosen for on-campus and in-office interviews. Shortly afterward, I landed the internship.Next, communication took place surrounding start and end dates. During that time, I explained my situation and my plans to study abroad, which were supposed to take place in May. Without hesitation, SD pushed my start date back to June so I could take part in my trip to Greece. Shortly thereafter, the global pandemic hit and, the Greece trip was cancelled, which allowed SD to move my start date back up to May. A few weeks later, the pandemic hit harder, which required everyone to work from home. At this point, I was beginning to worry about whether I was even going to be able to have this experience, but then received confirmation that my internship would be conducted remotely.  Even though I wasn’t able to experience life in the SD office, I still felt like I was part of the team. The culture at Schneider Downs was great. Everyone was welcoming and was always willing to help whenever I needed. The past several weeks of my internship here at Schneider Downs taught me so much and I cannot wait to continue learning in the future. ### CARES Act Summary of Key Provisions Impacting 401(k) Retirement Plans On March 27, 2020, the U.S. House of Representatives passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the President signed the bill into law that same day. A guide including a summary of provisions contained in the CARES Act as well as subsequent guidance from the IRS that impacts 401(k) retirement plans is available on our Retirement Solutions Resource library, please note a valid email address is required to access the content. Below are some of the topics covered in our summary: Relief impacting “Coronavirus-Related Distributions” for qualified participants; Relief impacting plan loans to qualified participants; Waiver of Required Minimum Distributions for calendar year 2020; Layoffs possibly resulting in Partial Plan Terminations; Employer contribution assistance under the Paycheck Protection Program (PPP); Compensation considerations under the expanded paid leave policies; Safe Harbor 401(k) Plan Modification or Suspension; Final electronic disclosure rules; and Expanded DOL authority to postpone filing deadlines. If you have any questions, or if you would like more information, please contact us or visit our www.sdretirementsolutions.com for more information.  ### Schneider Downs’ Construction Practice Ranked Once Again Last year, Construction Executive (CE) unveiled its inaugural ranking of the Top 50 construction accounting firms.  In August, CE released its second annual rankings, and Schneider Downs once again appears in the Top 50.  Schneider Downs has offices in Pittsburgh, PA, Columbus, OH and Washington, DC from which it provides services to over 120 construction clients.  Ranked at #24, Schneider Downs is the only firm on the list headquartered in Pittsburgh.   “We’re very proud of the construction industry practice that Schneider Downs has developed, and we will continue to challenge ourselves to deliver value-added professional services our clients, who are the reason we’re on that list,” noted Mark DiPietrantonio, Schneider Downs tax shareholder and construction industry practice leader. CE surveyed hundreds of U.S. construction accounting firms and determined the rankings utilizing an algorithm on the following factors: 2019 revenues from construction practice;  number of CPAs in the construction practice; percentage of firm’s total revenues from construction practice; number of construction clients in 2019; number of office locations with a construction accounting practice; number of employees with CCIFP certification; and year construction accounting practice established. CE’s publication also included the practice areas served by the firms in the rankings.  Among others, Schneider Downs provides the following services that CE noted are most relevant to companies in the construction industry: Audit, Accounting and Assurance Tax Preparation Employee Benefit Plans Litigation Support/Expert Testimony Fraud Investigations Mergers & Acquisitions Succession Planning Risk Management Business Planning Bookkeeping Valuation Services Forensic Accounting Family Office Services Wealth Management Surety Bonding Assistance If you have any questions about the Schneider Downs Construction Practice, please contact a member of the Schneider Downs Construction Focus Group. ### Pennsylvania Commonwealth Court Decides Market-Based Sourcing for Services Prior to Legislative Change in 2014 In late July, the Pennsylvania Commonwealth Court rendered its decision in Synthes USA HQ, Inc. v. Commonwealth of Pennsylvania, No. 108 F.R. 2016. The case revolved around the state’s pre-2014 sourcing statue for services as a part of its overall sales factor. Prior to 2014, the Pennsylvania Department of Revenue (“PA DOR”) had a long-standing interpretation of the states’ service receipt sourcing statute that resulted in taxpayers using a “benefit received” analysis despite the language of the law leading many taxpayers and tax professionals to believe the statute called for a “cost of performance” analysis on its face. Along with providing a definitive clarification on the uncertainty of “cost of performance” vs. “benefit received” for sourcing of receipts for the performance of services, the case also presented an unusual procedural history before the court where the Commonwealth (represented by the Pennsylvania Attorney General’s Office) argued against the PA DOR’s interpretation of the sourcing statute.BackgroundThe taxpayer, a Pennsylvania-based corporation, provides research, development and management services to affiliates outside Pennsylvania. On the taxpayer’s originally filed 2011 tax returns, the taxpayer sourced its service revenue based on a reading of the service sourcing statute as it existed at that time. The law stated that the sales of services are sourced to PA if (a) the income-producing activity is performed in the state or (b) the income-producing activity is performed both in and outside the state and a greater proportion of the income-producing activity is performed in the state than in any other state, based on costs of performance. Unfortunately, the statute did not define “income-producing activity” or “costs of performance.”As a result, the taxpayer apportioned its out-of-state sales of services based on where the performance of those services were performed, which was Pennsylvania. After realizing that the PA DOR interprets the statute as a “benefit-received” statute, where sales for services are sourced to where the benefit of the services is received, the taxpayer filed a refund claim, since under the “benefit-received” method, the taxpayer’s tax liability to the Commonwealth would be significantly decreased because the benefit received for the performance of the taxpayer’s services would be sourced out of state.The PA DOR then denied the refund request on the basis that the taxpayer did not present sufficient evidence to demonstrate where the benefit of the services the taxpayer performed actually were received. The taxpayer then appealed to the Board of Finance and Revenue, which denied relief on the same basis, compelling the taxpayer to appeal to the PA Commonwealth Court.Upon the appeal, the parties stipulated that the taxpayer produced enough evidence that would entitle the taxpayer to a refund. However, the Attorney General’s office decided to take the unusual position against the PA DOR and argue that the DOR’s interpretation of the statute was incorrect and that the statute should be interpreted as a “cost of performance” statute, and therefore the taxpayer’s 2011 returns were filed correctly. The taking of this position by the AG’s office forced the DOR to intervene in the litigation.The Court’s DecisionThe DOR argued that, as the agency delegated with interpreting and applying the tax code, it is entitled to deference by the court. The DOR defended its interpretation of the statute by arguing that “cost of performance” as mentioned in the statute at the time referred to performance as “fulfilling a contract or obligation”; therefore, when looking at the location of where the performance is fulfilled, the taxpayer must source the receipts to the customer’s location rather than the taxpayer’s location in PA, since that is the ultimate location where the contract or obligation is fulfilled.The state urged the court to deny the DOR deference in its interpretation of the statute, since it was never reflected in a regulation or legislative change, and therefore its interpretation has no force of law. Additionally, the state argued that the legislative change that took place in 2013, where PA enacted market-based sourcing for the sales of services beginning in 2014, showed that the intention of the legislature for years prior to 2014 was to subject taxpayers to a “cost of performance” analysis in sourcing receipts for services.Ultimately, the court decided that the statute was ambiguous on its face while both the DOR’s and state’s interpretations were reasonable. Since the statute was ambiguous, the court decided to give deference to the DOR and grant the taxpayer the refund. The court reasoned that the legislature acquiesced to the Department’s interpretation by passing the legislation for the tax years starting in 2014, clarifying the intent of the statute.Impact on Current TaxpayersAs noted above, the legislature clarified its intention to use market-based sourcing beginning in 2014 through the enactment of a new sourcing statute for the performance of services, and therefore the court’s decision should have no impact on its current sourcing of service revenue. However, PA continues to use the Pre-2014 sourcing statute for the sale of intangibles, and taxpayers should consider whether they are correctly sourcing receipts from the sale of intangibles.If you have any questions regarding the Commonwealth Court decision, please contact a Schneider Downs state and local tax professional. ### Ohio Net Operating Loss’ Impact on the Bonus Depreciation Adjustment The passing of the Tax Cuts and Jobs Act in December 2017 increased the federal bonus depreciation deduction from 50% to 100%, providing taxpayers the ability to completely expense the full purchase price of eligible assets like machinery and equipment, and even some improvements. Unfortunately for taxpayers, most states – including Ohio – do not conform to the federal bonus depreciation deduction and require some addback adjustment to the federal depreciation amount.In this article, we’ll cover the state of Ohio’s adjustment rules in hopes to simplify this complexity and help taxpayers successfully navigate these regulations.Ohio’s Rules for Bonus DepreciationThere are three different addback/deduction scenarios for the state of Ohio surrounding federal bonus depreciation:  addback 5/6 in year one and deduct 1/5 in subsequent years addback 6/6 in year one and deduct 1/6 in subsequent years addback 2/3 in year one and deduct 1/2 in subsequent years We’ll focus on the two most common situations; the 5/6 and 6/6 addbacks. The less common 2/3 addback is required if, in a given tax year, the taxpayer’s business increased its Ohio employer withholding by at least 10% over the prior year.5/6 addbackIf the taxpayer has positive federal adjusted gross income (FAGI), they must addback 5/6 of federal bonus depreciation. They can then deduct 1/5 of the remaining amount over the following five years as shown in the example below:  Fed Bonus Dep. 100,000                         Ohio Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Addback 83,333.33           Deduction   16,666.67 16,666.67 16,666.67 16,666.67 16,666.67 It’s important to note that amounts may only be deducted if they were added back in a prior year. Additionally, the deduction can still be claimed even if the taxpayer has disposed of the asset responsible for the bonus adjustment. The deduction is nontransferable to another entity or taxpayer.6/6 addbackThe taxpayer is required to addback all bonus depreciation if FAGI is negative (i.e. a net operating loss or NOL) for the tax year. They may then deduct 1/6 of the addback amount over the following six-year period, as shown in the example below:  Fed Bonus Dep. 100,000                             Ohio Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Addback 100,000             Deduction   16,666.67 16,666.67 16,666.67 16,666.67   16,666.67 ExceptionIf the taxpayer’s federal return includes an NOL carryback/carryforward, they are not eligible to take any deduction for bonus depreciation in that year. They will instead carry the amount forward to subsequent years and may take the deduction in a year with positive FAGI.ConclusionThe pandemic has caused businesses to face an economic environment that’s not only challenging, but also unprecedented. Unfortunately, the slowdown in business activity has substantially increased the likelihood of potential losses. It’s therefore important to understand the above rules to ensure compliance, and prudent to give thoughtful consideration to whether you would take bonus depreciation in a given year or delay to future years.Please contact your Schneider Downs tax advisor if you would like to discuss the provisions of the Ohio bonus depreciation addback/deduction or have any other questions. ### IRS Extends 2020 Rollover Period and Other Deadlines for Retirement Account RMDs In March, the CARES Act provided taxpayers opportunity to skip this year’s (2020) required minimum distribution (RMD) from their retirement accounts. The provision was available even if the taxpayer had already taken his or her distribution before the Act was passed. For those individuals, the IRS issued Notice 2020-51, which allows previously taken RMDs to be rolled back into retirement accounts. The provision was extended until August 31, and taxpayers don’t need to amend the terms of their IRA if they choose to take advantage of the RMD waiver.Also, if a plan holder passed away in 2019, Notice 2020-51 highlights further extensions for beneficiaries to make certain elections. For example, some plans permit the employee or beneficiary to elect whether RMDs are determined using a five-year rule or a life expectancy rule. Under 2020-51, elections that were due to be made in 2020 resulting from a plan holder’s death in 2019 now have until the end of 2021 to complete the election. This applies to non-spouse designated beneficiaries of plan holders who passed away in 2019 as well. Those beneficiaries also have until 2021 to make a direct rollover and opt to use the life expectancy rate.An IRA trustee, issuer or custodian is required to notify IRA owners that no RMD is due for the year 2020, which may be accomplished if a copy of Form 5498 (filed with the IRS) is provided to the owner.If you have questions regarding the above information or would like to discuss further, please don’t hesitate to contact our office.  ### FASB Proposes Changes to the Definitions of Financial Statement Elements On July 16, the Financial Accounting Standards Board (FASB) issued exposure draft Concepts Statement No. 8, Conceptual Framework for Financial Reporting, Chapter 4: Elements of Financial Statements (CS 8), which will modify the existing definitions of elements of financial statements presently outlined in Concepts Statement 6 (CS 6). While such statements do not establish accounting principles generally accepted in the United States (U.S. GAAP), they are meant to provide structure and direction for financial accounting and reporting, thereby facilitating the provision of unbiased information. The standards serve to help the FASB develop new U.S. GAAP that is applicable to both businesses and not-for-profit entities, including colleges and universities.The major distinction in CS 8 will be to simplify the wordy definition currently in place for assets and liabilities, a welcome update. Under CS 6, assets are defined as “probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events,” while liabilities are defined as “probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.”The proposed change in CS 8 would modify the definition of assets to “a present right of an entity to an economic benefit,” while a liability would be more simply defined as “a present obligation of an entity to transfer an economic benefit.” Both definitions are unquestionably more straightforward and much easier to understand.One distinction in the new definition is a present right or obligation, which could have specific implications for not-for-profit entities. A present right would mean the right exists at the financial statement date, which could raise questions relating to possible changes to balance sheet accounts. CS 8 also provides further clarification on a number of unique accounting scenarios that could help entities assess the potential impact.Entities are encouraged to read the draft and submit any questions or comments, which are due to the FASB by November 13. As past practice, the FASB will provide a transitional period for all entities once final changes are approved. ### Deferral of Employee OASDI Withholding Set to Begin on September 1 – Limited Guidance Issued Late on the afternoon of August 28, the IRS and U.S. Treasury released Notice 2020-65, providing limited guidance surrounding deferral of the required 6.2% employee Social Security tax withholding. The Notice leaves a number of important questions unanswered. Crucially, for impacted employees, this program is only a temporary tax deferral and not a permanent tax cut. The guidance only delays the required withholding of Social Security tax from wages paid during the period from September 1 through December 31, 2020; the deferred tax will need to be withheld from employee compensation paid from January 1 through April 30, 2021. This temporary deferral will then double the Social Security taxes required to be withheld from employees during the first four months of 2021 from 6.2% to 12.4%. While not specifically stated, it appears the withholding deferral is elective. Language in the press release accompanying the Notice explains that it is “allowing employers to defer” the withholding; it does not provide that employers are required to defer. Further, it notes that deferral “may apply” and does not provide that it will apply. As reference, the president does not have the authority to change the underlying law requiring withholding, only the power to direct the Secretary of the Treasury to use his  authority granted under section 7508A of the Internal Revenue Code to defer withholding and deposit of the withholding taxes. The notice also does not give any indication that employees have a say in the election, providing only that “today’s notice postpones the time for employers to withhold and pay employee Social Security taxes.” Providing each individual with the ability to make an election would likely create a large compliance burden on employers. The notice does not specifically provide how withholding will occur if the employee is no longer working for the employer after the deferral period ends December 31. Nor does it address whether the employer would be required to make up the difference, providing only that “if necessary, the Affected Taxpayer (the employer) may make arrangements to otherwise collect the Applicable Taxes from the employee.” This language implies potentially increased compliance burdens on employers related to the collection of tax from former employees. Plus, for amounts unpaid beginning May 1, 2020, additional taxes, penalties and interest apply. The notice does not indicate if these additions could be passed on to employees or former employees, but the deposit obligation is on the employer. Deferral only applies on biweekly wages under a $4,000 threshold amount during that particular pay period. Likely, though unstated, similar pro rata threshold amounts would apply for pay periods other than biweekly. Further, deferral does not absolutely need to begin September 1; each pay period is considered separately. Employers deciding to move forward with deferral still appear to have time to adjust their payroll systems. Finally, there’s been much discussion about whether the deferred tax would ultimately be forgiven. Congress would need to take action for such clemency to be allowed, and given the current political climate, there’s no assurance such legislation would pass. Additionally, there could be potential risk for employees for whom the deferral election was not made, if and when Congress does enact some form of forgiveness. For example, would an employee be able to defer future taxes or be able to claim a refund under such future legislation? On the employer side, and given our litigious environment, would employees try to hold employers liable for not electing to defer if refunds or future deferral is not available but Congress provides a forgiveness for current deferrals as allowed under current guidance? Interesting questions during interesting times. Employers should consider clearly communicating their decision, either way, to employees. If you have any questions, please don’t hesitate to contact Schneider Downs. Related articles on this topic can be found below: Update on Executive Order Deferring Withholding of Employee Social Security Taxes – What Should an Employer Do? Executive Order Deferring Withholding of Employee Social Security Taxes    ### Benefits of Prefabrication and Modular Construction As the world faces new challenges presented by the COVID-19 pandemic, construction contractors continue to struggle with a number of old challenges within the industry.  According to the quarterly report published by the United States Chamber of Commerce (Chamber), the commercial construction industry’s biggest obstacles are the challenges created by the COVID-19 pandemic.  However, challenges such as a lack of skilled workers and sunk costs associated with delays continue to impact the industry in a material way. According to the Chamber’s second-quarter report for 2020, nearly 90% of contractors surveyed expressed, at minimum, a moderate level of concern as it relates to hiring seasoned workers who possess the appropriate skill level.  Interestingly enough, with unemployment currently in the double digits, this percentage remains remarkably unchanged from pre-pandemic months.  Furthermore, hiring expectations have declined to compensate for the lost sources of revenue anticipated from the pandemic.  In addition to the skilled labor shortage, over 85% of contractors report experiencing some type of delay in construction within the last three to four months.  With global supply chains being continually uprooted due to the virus, and contractors bearing much of the cost, the effects of delays in construction pose a significant risk to contractors. One possible solution to the challenges presented is the growing acceptance and utilization of prefabrication and modular construction.  As major advances continue to be made in the prefabrication and modular construction process, more contractors are seeing these processes as viable options. These methods, coupled with advances in Building Information Modeling (BIM), which gives the tools and technology needed to more accurately plan for and execute projects, present opportunities to address the challenges noted above.  According to Dodge Data & Analytics (Dodge), the leading provider of commercial construction data, prefabrication and modular construction has continually shown that outsourcing certain elements of construction to more skilled contractors, can lessen the impact of labor shortages. Additionally, Dodge found in its survey that approximately 90% of respondents who utilize prefabrication or modular construction saw, at minimum, a moderate level of increased productivity and quality.  When mated with BIM, these projects can realize savings due to improved budget and schedule performance. This often means that delays can be avoided and profitability can be increased. Prefabrication and modular construction may not be the answer to all the challenges that the construction industry faces: however, it certainly can help contractors continue to grow and remain profitable.  The incorporation of these methods and the appropriate use of technology may lead to more profitable contracts, safer job sites and higher-quality products. Sources:https://www.uschamber.com/report/usg-us-chamber-of-commerce-commercial-construction-index-2020-q2https://www.construction.com/toolkit/reports/prefabrication-modular-construction-2020 ### Working Remote OH Where are Employee Wages Taxed Ohio municipal income tax laws often add a layer of complexity for businesses operating within the state. Back in March, as companies scrambled to move employees to telework locations (employees’ homes in most instances), state lawmakers took action in an attempt to simplify municipal income tax compliance for businesses. Section 29 of Ohio House Bill 197 states that during the period of emergency declared by Executive Order 2020-01D, issued on March 9, and for 30 days after the conclusion of that period, any day on which an employee performs personal services at a location, including the employee’s home, shall be deemed to be a day performing personal services at the employee’s principal place of work. While this meant that businesses were not troubled with having to change their Ohio local income tax withholding processes for employees working remotely, it also meant that employees were being required to pay tax to Ohio local jurisdictions where they weren’t even allowed to work.On July 2, the Buckeye Institute, an Ohio-based think tank whose mission is to advance free-market public policy, along with three of its individual employees, filed a lawsuit calling for the court to declare Section 29 of Ohio HB 197 unconstitutional. The lawsuit argues that subjecting an employee’s wages to taxation at their principal place of work for time periods in which the employee was prohibited from working at that location is unlawful. It also claims this unlawful taxation is in violation of due process rights under the Fifth and Fourteenth Amendments to the U.S. Constitution and violates Article I, Section 1 of the Ohio Constitution. In August, Senate Bill 352 was introduced to the Ohio General Assembly by Senator Kristina Roegner to address the issue. If enacted, SB 352 would repeal Section 29 of HB 197 and nonresidents would only be required to pay tax in localities in which they are physically present performing services. While the passage of SB 352 in its current form may result in a lower tax bill for employees in some situations, it will certainly create administrative headaches for employers. Stay tuned as Schneider Downs continues to monitor this situation and track progress of SB 352. In the meantime, if you have any questions, please do not hesitate to contact your Schneider Downs tax advisor. ### U.S. Car Manufacturing at Risk? The automotive industry plays a major role in the United States’ economy, comprising approximately 4% of the country’s economic output each year (Boudette, 2020). So, when U.S. car manufacturers were shut down in March for two months due to the coronavirus pandemic, the financial well-being of the industry, as well as the U.S. economy, was threatened.Today, automakers are operating at full capacity by allowing several shifts of workers into the factories at a time. In the midst of the country reopening, demand for car buying increased far more than the industry anticipated. Many believe that social distancing standards have caused a surge in car buying, which has been depleting automotive dealers’ lots. Increased demand in car buying is putting pressure on the large automakers to produce more cars and trucks to meet the needs of the dealers. After an all-time low production level of approximately 10,000 vehicles in the U.S. in April, production levels have steadily increased to approximately 540,000 in May, 1.7 million in June, and returned to normal production levels of 2.6 million in July.Although this sounds promising for a struggling industry after the first coronavirus shutdown, can automakers keep their plants open with the pandemic surging in many areas around the country? Many automakers believe that they are able to safely maintain operations by following CDC guidelines, noting safety measures such as mandatory face coverings, social distancing (even with employees who need to work in closer quarters), and sanitation stations. Despite what these automakers believe, just one case within a plant can bring fear among other workers. At this point in the pandemic, it is very difficult to say whether these manufacturers will remain on the same path to meet the larger-than-expected manufacturing demand. Many have already made the decision to shut down plants in areas where coronavirus cases are spiking. The ultimate question is: how will this affect the American economy in the next few months?The economy, which is slowly rebounding from the effects of the virus in March, will undoubtedly be impacted if car manufacturing shuts down for the second time. Production forecasts for the remainder of 2020 shows below average levels compared to previous Q3 and Q4 result. Automakers are doing their best under the world’s microscope to keep their work environment safe for their employees in order to continue production, but is it sustainable in the current situation of the country? Only time will tell.             ReferencesBoudette, Neal E. “Automakers Are Making Cars, but Virus Surge Puts That at Risk.” The New York Times, The New York Times, 14 July 2020, www.nytimes.com/2020/07/14/business/economy/automakers-production-shutdown-coronavirus.html.“United States Car Production1967-2020 Data: 2021-2022 Forecast: Historical.” United States Car Production | 1967-2020 Data | 2021-2022 Forecast | Historical, tradingeconomics.com/united-states/car-production. ### Paycheck Protection Program – Treatment of Owners and Forgiveness of Certain Nonpayroll Costs Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis.  On August 24, 2020, the U.S. Small Business Administration (SBA) released a new Interim Final Rule (IFR) that addresses the ownership percentage that triggers the applicability of owner compensation rules for forgiveness purposes and clarifies limitations on the eligibility of certain nonpayroll costs for forgiveness purposes. Question:  Are any individuals with an ownership stake in a PPP borrower exempt from application of the PPP owner-employee compensation rule when determining the amount of their compensation that is eligible for loan forgiveness?Answer:  Yes.  The IFR provided a threshold that owner-employees with a less than 5% ownership in S-Corporation and C-Corporation entities are exempt from the owner-employee compensation limits for forgiveness.  This is a favorable change from the previous no-exception rule that was established under the June 26, 2020 IFR issued by the SBA. Question:  Are amounts attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, in the context of home-based businesses, household expenses, eligible for forgiveness?Answer:  No.  Borrowers are not eligible for forgiveness on nonpayroll costs that are reimbursed/paid by tenants or sub-tenants.  The IFR provides several examples to illustrate the rule, which relate to rents, mortgage interest and shared space.  In general, borrowers should include on their loan forgiveness application net amounts paid for their usage/consumption. Question:  Are rent payments to a related party eligible for loan forgiveness?Answer:  Yes, however, there are limits to the costs that are eligible for forgiveness.  Rental payments to a related party are limited to the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented by the business.  There is no exemption on the ownership stake to this rule. Any ownership in common between the business and the property owner is deemed to be a related party, and the agreement will be subject to the limitation.  This is in addition to the prior requirement that the mortgage or lease be in place as of February 15, 2020.The SBA issued this rule in order to provide equitable treatment to businesses that hold property within the business as those that hold property in a separate entity.  If you need more information or assistance regarding your PPP loan, visit our website at www.schneiderdowns.com/ppp, reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### The Pandemic Effect on the Lease Accounting Standard 842 If there is any one thing we can thank the pandemic for, it is the delay in the Accounting Standard Codification Topic 842 (ASC 842).  Public companies and some not-for-profits with public debt were required to incorporate this new lease standard back in 2019, while private companies and other not-for-profit entities will once again receive a reprieve. Not-for-profits holding public debt that haven’t issued statements reflecting the adoption of ASC 842 can delay until fiscal years beginning after December 15, 2019.  This pandemic-related delay means that for these not-for-profit entities, reporting would be required for most fiscal years starting in 2020.  Many of these entities benefiting from the delay are hospitals and universities.Private entities and not-for-profits without public debt will be required to start adoption in fiscal years starting after December 15, 2021.  So take a breather, the reporting burden isn’t going to start until the fiscal year starting in 2022 for these entities. Do not wait too long though because the delay is not only because of the pandemic but also because of the time and effort in the adoption of ASC 842. As you look towards adopting this standard, Schneider Downs can help with your lease accounting needs.  We have staff available to train your personnel on the guidance and help develop organizational procedures in relation to leases, and we have software available to manage, track and create your lease accounting entries.  Contact Jason Reljac at 412.697.5483 or jreljac@schneiderdowns.com to find out more. ### IRS Issues New 1099 Forms for 2020 Effective for the 2020 tax year, the IRS has created a new form – the 1099-NEC -to report “Non-Employee Compensation” that was historically reported on the form 1099-MISC.  Previously the IRS had required most income provided to individuals, partnerships, and law firms or attorneys that were not wages to be reported on the Form 1099-MISC.  This new form requires reporting amounts paid for compensation related items not paid to employees, e.g., subcontractors and attorneys, are now to be reported on the form 1099-NEC. The change also updates Box 7 of the 1099-MISC to remove the former Non-Employee Compensation and replaces it with “Payer made direct sales of $5,000 or more”.  There is no dollar amount that will now be reported on the 1099-MISC box 7. It’s also important to note that any gross proceeds paid to attorneys or law firms in connection with a legal settlement and not for the attorneys’ services should still be reported on Form 1099-MISC, Box 10.  Payments to an attorney or law firms for services provided should be reported on Form 1099-NEC. If questions arise when you’re getting ready to prepare your 2020 1099 forms as to which forms to utilize or where to report specific payments, feel free to reach out to a Schneider Downs Tax Team member for assistance.  ### COVID-19 Small Business Tax Relief Legislation Introduced in PA Senate Pennsylvania Senators Camera Bartolotta and Judy Ward recently introduced legislation to provide additional economic relief through state tax laws to small businesses that have been impacted by the COVID-19 pandemic.The first area of change allows small business taxpayers to take a net loss against other sources of income by allowing entities that had to sell off personal resources in order to support the business to continue to report losses.The second change would allow small business taxpayers that are not corporations to carry forward net operating losses (NOLs) for up to 20 years. Under current state tax law, carryforwards of NOLs are disallowed for individual tax payers. The proposed legislation would align the corporate net income tax NOL carryforward periods with PA individual income tax laws.Lastly, the proposed legislation would allow small business taxpayers to carry back NOLs as a form of relief. The purpose of the provision is to facilitate getting cash into the hands of small businesses faster, without the creation of a new grant or loan program. This section of the proposed legislation closely mirrors the NOL carryforward provisions of the federal CARES Act enacted in March.The State and Local Tax department at Schneider Downs will continue to provide updates on the proposed legislation. ### Is Your Chip Card Implementation Secure? As payment technology around the world continues to change, one consideration at the back of everyone’s mind is payment security. Whether you are completing a payment transaction using an app, crypto currency or credit card there is the potential for malicious actors to potentially eavesdrop and even hijack your financial payment information. Benefits of EMV Cards With the modernization and increased distribution of EMV cards (or chip cards) it was a major belief that the technology  would strengthen the security protections around credit card payments, both in person and online. The reason for the optimism surrounding EMV cards was due to a number of reasons: Designed to Prevent Fraud - The chip card design was formulated to prevent fraud when it comes to face-to-face purchases as the technology would make counterfeit credit cards easier to identify. Difficult to Clone - To clone a non-chipped card a malicious actor would only need to skim the card in order to steal the associated data. This could be done with a skimmer device at a pay station/kiosk such as a gas station or ATM machine or by brushing up to your purse/wallet with an RFID Skimmer which scans the magnetic strip without your knowledge. EMV cards renders the act of simply skimming a card useless since the data on chip cards is constantly changing, making it extremely hard to isolate and extract. In order for a malicious actor to steal this information, they would have to access and manipulate the physical chip circuit to get your bank information. Not only are these actions difficult to perform, but the equipment needed can cost hundreds of thousands of dollars, or even up to one million dollars. Sophisticated Encryption - Magnetic strip cards have the ability to broadcast your banking information as-is at the point of swipe, but chip cards are different because encryption is built into the card itself. When a chip card is used at the payment terminal, the chip communicates back and forth in a secret language to verify the cardholder’s identity. This is designed to protect the transmission of data associated with your card to prevent eavesdropping and financial theft. “For EMV’s security protections to work, the back-end systems deployed by card-issuing financial institutions are supposed to check that when a chip card is dipped into a chip reader, only the iCVV is presented; and conversely, that only the CVV is presented when the card is swiped. If somehow these do not align for a given transaction type, the financial institution is supposed to decline the transaction.” – Brian Krebs, www.krebsonsecurity.com. What Makes a Chip Implementation Compliant? Based on recent research by Brian Krebs, several financial institutions have not set up their systems to perform the sophisticated encryptions to secure payment validations properly. As EMV cards continue to become more prevalent, threat actors are adapting as they continue to develop new methods targeting consumer credit card data. One popular method targeting EMV cards is the creation of point-of-sale malware which is used to capture the EMV transaction data in order for this information to be resold and used to create magnetic strip copies of chip-based cards. In early July, this type of malicious attack came to the forefront of the financial industry when Visa put out a security alert detailing the prevalent of this type of malware. The Potential Costs of Non-Compliance As with most industry standards, there are a variety of costs that come into play for non-compliance. While every organization should perform an assessment of their unique risks, some commonalities arise across industries: Fines & Penalties - Merchants may face fees specific to EMV non-compliance as well as general fees for non-compliance with Payment Card Industry Data Security Standard Compliance (PCI DSS). These fees are determined by the individual processor and can add up to thousands of dollars annually. Fraud Liability - Beginning in October 2020, all businesses accepting point-of-sale card payments using magnetic stripes will be liable for fraudulent transactions processed on their terminals (all businesses aside from pay-at-the-pump gas stations have faced this liability since October 2019). The likelihood of card fraud will be different for each merchant, but implementing EMV-capable technology is a straightforward way to mitigate this risk. Data Compromise or Breach - While employing EMV-capable terminals mitigates the risk of fraudulent transactions, point-to-point encryption (P2PE) provides an additional safeguard against the compromise of transactional data in transit. With data breaches costing organizations an average of $150 per record in fines and lawsuits, identity protection services for victims and unmeasurable reputational damage, being the name associated with a data breach can be catastrophic for any company. How can Schneider Downs help? At Schneider Downs, we assist clients with their PCI Compliance requirements by providing scalable, efficient solutions for meeting the rigorous demands of PCI compliance. Incorporated within our compliance approach is the strategy to develop a control environment that will ensure future compliance is sustainable. For more details on our PCI service offering, please visit our website or contact us if you have any questions. Sources Chip Card Security: Why Is EMV More Secure? Is Your Chip Card Secure? Much Depends on Where You Bank About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### State Tax Nexus Considerations and COVID-19 The onset of the coronavirus pandemic has led to an increase in the number of employees telecommuting for work.  While this telecommuting trend may be temporary, some of these employees are now working in states other than the state of their office or primary worksite, and that may lead to state tax nexus considerations for their company. Prior to COVID-19, the majority of states imposed nexus on a business if the business had a telecommuter in its state unless the telecommuter’s activity was protected under P.L. 86-272 -- i.e., the telecommuter’s activity was limited to solicitation of sales of tangible personal property.  The current expansion in work from home raises a number of issues for companies, including nexus concerns for corporate income/franchise tax and sales and use tax. (Payroll considerations, including withholding obligations, will be addressed in a separate article.) A number of states have issued specific guidance related to nexus resulting from temporary COVID-19 work-from-home orders, but many have not specially addressed the issue or have indicated they will assert their current nexus standards.  Members of the U.S. Senate recognized that state taxation issues resulting from employees temporarily working from home create problems and potentially burden employees and employers with more tax obligations. As a result, Senators John Thune (R-SD) and Sherrod Brown (D-OH), introduced the Remote and Mobile Worker Relief Act (S. 3995), which addresses a number of employee and employer income tax issues generated as a result of the pandemic.  Specifically, the act would provide nexus relief from state business income tax for temporary situations where employees worked in a state other than their primary worksite due to COVID-19.  The nexus relief provided by the act is generally limited to a “coverage period,” which ends on the earlier of December 31, 2020 or the date employees are allowed to return to their primary worksite by their employer.  The act was introduced on June 18, 2020, but it remains to be seen whether it gains any traction.  Notably, provisions from S. 3995 have been included in the Republican-led HEALS Act proposal, but negotiations with the Democrats are currently at a standstill.Most states have been silent on the nexus and taxation issues resulting from telecommuting as a result of COVID-19, with only a minority issuing formal guidance.  The following information summarizes the positions of the states in which many of our clients reside[KSG1] :CaliforniaThe Department of Tax and Fee Administration has not issued any formal nexus guidance as a result of COVID-19. District of ColumbiaThe Office of Tax and Revenue is not pursuing the imposition of franchise tax nexus if employees work from home in the District temporarily.  The Office’s position only applies to periods declared a public emergency.  The Office has indicated that the nexus waiver does not apply to sales and use taxes.IndianaThe Indiana Department of Revenue issued guidance stating that it will not assert nexus for income tax based on an employee’s temporary remote work as a result of COVID-19.  The protections offered cover periods where an official work-from-home order is in place as issued by federal, state or local government or based on the order of a physician.  The Department of Revenue has indicated that the nexus waiver does not apply to sales and use taxes.MarylandThe Comptroller of Maryland issued an alert stating that it will not use the change in workplace resulting from COVID-19 for purposes of imposing business nexus.  The Comptroller has also indicated that it will not impose sales tax nexus if the seller’s only connection with the state is an employee temporarily working in Maryland.MichiganThe Department of Treasury has not issued any formal nexus guidance as a result of COVID-19. New JerseyThe Division of Taxation has issued guidance waiving nexus as a result of the presence of employees working from home temporarily.  The Division is also waiving the nexus standard for sales tax as long as the seller has no other presence in the state and it does not exceed the state’s economic nexus thresholds.New YorkThe Department of Taxation and Finance has not issued any formal nexus guidance as a result of COVID-19. OhioThe Department of Taxation has not issued any formal nexus guidance as a result of COVID-19. PennsylvaniaThe Department of Revenue has issued guidance stating that it will not impose nexus for Corporate Net Income Tax as a result of temporary activities resulting from COVID-19.  The Department’s guidance also applies to sales and use taxes.West VirginiaThe State Tax Department has not issued any formal nexus guidance as a result of COVID-19. Companies with employees working remotely should promptly evaluate whether those employees impact the company’s state tax obligations.  An employee suddenly working from home in a new state may not immediately impact state corporate income tax filings until the following year, but the telecommuting employee may result in a contemporaneous obligation to file a sales tax return.  Businesses with telecommuting workers should track and document employees working from home during COVID-19. This employee work location information may become critical in determining state tax filings and obligations. In addition, when the pandemic or emergency periods end, any temporary nexus waivers issued by state and local governments will expire, and traditional physical presence nexus considerations for income tax and sales tax will remain.  If employees continue to work from home after the pandemic, businesses will need to reevaluate their nexus footprint and should be prepared for more state tax obligations. Please consult your state and local tax adviser if you have any questions on telecommuting and state tax nexus. ### 100-Year Anniversary of the 19th Amendment, Granting Women the Right to Vote Schneider Downs is celebrating the 100-year anniversary of the passing of the 19th Amendment to the U.S. Constitution, which granted women the right to vote.  August 26 is Women’s Suffrage Day.  Over the next few months, we will be publishing a series of Our Thoughts On articles (OTOs) focusing on women’s suffrage and community events celebrating ratification of the 19th Amendment and honoring those who participated in the 70-year struggle. As a member of the SD Women’s Committee at Schneider Downs, I am excited to share some interesting highlights with everyone. The passing of the 19th Amendment in 1920 was a huge accomplishment for American women.  However, women did not turn out to vote en masse in their first election.  Exit polls did not exist in 1920, but a survey sample of Chicago voters by the University of Chicago showed that the top reason that there was not a huge turnout of women voting in the 1920 presidential election was indifference to politics.  In other areas of the country, state and local restrictions kept some women from being able to exercise their right to vote.  Certainly, Black women faced discriminatory voting practices in the Jim Crow south, and Native Americans and Asian Americans had been denied citizenship, thereby denying their right to vote. It took 60 years for women to turn out to vote in equal proportion to men.  In 1980, 59.4% of voting-age women voted, in comparison to 59.1% of men. Another interesting point is that prior to 1920, women had the right to vote in certain states.  New Jersey was the first state to recognize some women’s right to vote in 1797, but that was reversed 10 years later.  The territory of Wyoming next extended the right to vote to women in 1869 and retained the law when it became a state in 1890.  Twenty states granted the right to vote to women prior to the passage of the 19th Amendment, including Ohio in 1917. In 1848, the first women’s rights convention occurred in Seneca Falls, NY, where several resolutions were signed by those in attendance including a resolution for women to gain the right to vote.  Though there was bad press at the time—in line with then-prevailing attitudes regarding “a woman’s place” in society, the convention was considered to be the beginning of the women’s rights movement.  It took 72 years for women’s suffrage to be recognized on a national level, meaning that most in attendance did not live to see the 19th Amendment’s passage. If you would like to learn more, please visit some of the references noted below.  Also, if you are aware of another event happening in the Pittsburgh or Columbus area, please email us. Helpful Voting Registration Information Registering to Vote in Pennsylvania or Ohio – The deadline to register to vote is October 19 in Pennsylvania and October 5 in Ohio. Voter registration can be completed online (see links below) or by mail. Voting by Mail – PENNSYLVANIA:  If you plan on voting by mail-in ballot in Pennsylvania for the 2020 election, you must complete a quick application to get a mail-in ballot (see links below). The application for the mail-in ballot must be completed online or received in the county office by October 27. Then, a vote-by-mail ballot will be mailed to you. After you receive your vote-by-mail ballot, you will fill out the ballot with your votes, and then mail the completed ballot according to the instructions on the ballot. You may fill out and return your vote-by-mail ballot as soon as you receive it. Your completed vote-by-mail ballot must be received in your county election office by 8:00 PM on 11/03/2020. A late application will not be accepted, even if it was postmarked before the deadline. https://www.pavoterservices.pa.gov/Pages/VoterRegistrationApplication.aspx https://www.pa.gov/guides/voting-and-elections/ Voting by Mail – OHIO:  If you plan on voting by mail-in ballot in Ohio for the 2020 election, you must complete an application to get a mail-in ballot (see links below). That application must be received by October 31. Events: Ohio Women Vote: 100 Years of Change – A Virtual Exhibit Media: WQED Show Frick Museum Exhibition Heinz History Center   Citations: https://www.pewresearch.org/2009/03/18/reluctant-suffragettes-when-women-questioned-their-right-to-vote/ https://www.americanbar.org/groups/public_education/publications/insights-on-law-and-society/volume-20/issue-1/did-women-vote-once-they-had-the-opportunity-/ https://www.businessinsider.com/when-women-got-the-right-to-vote-american-voting-rights-timeline-2018-10#1952-the-mccarran-walter-act-grants-all-asian-americans-the-right-to-become-citizens-and-vote-10 http://tag.rutgers.edu/wp-content/uploads/2014/05/suffrage-by-state.pdf https://www.rd.com/article/states-where-women-could-vote-before-1920/ https://www.history.com/news/the-state-where-women-voted-long-before-the-19th-amendment https://www.history.com/topics/womens-rights/seneca-falls-convention https://www.reuters.com/article/us-usa-election-ohio/ohio-set-to-send-all-voters-absentee-ballot-applications-before-presidential-election-idUSKBN23N00Q ### New FISAP Instructions Under the CARES Act On August 3, 2020, the Fiscal Operations Report for 2019-20 and the Application to Participate for 2021-22 (FISAP) instructions became available. The reporting instructions include additional flexibilities provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The submission of the FISAP was extended this year from October 1 to November 2. The FISAP added five supplemental reporting instructions and additional flexibilities to provide relief to schools under the CARES Act due to COVID-19: Schools that meet certain guidelines will not need to request an underuse waiver, and underuse penalties will not be applied on any 2021-22 Federal Work-Study (FWS) or Federal Supplemental Educational Opportunity Grant (FSEOG) awards for all schools due to the impact of the COVID-19 emergency. Schools are permitted to transfer up to 100% of their unexpended FWS allocation to FSEOG. Institutions are allowed to reimburse themselves from the FWS allocation for the nonfederal portion of wages paid to students on or after March 13, 2020. Schools are provided an option to use any amount of their FSEOG allocation to award emergency financial aid grants to assist undergraduate or graduate students with qualifying emergency expenses. A specific section within the FISAP is included to report any FWS wages paid to students after they ceased working due to COVID-19. For additional information, please refer to the Department of Education announcement or contact Schneider Downs.  ### Does Your Institution Offer the Correct Number of Courses? During this unprecedented time, navigating the uncertainty of the upcoming semesters for higher education institutions is essential for student, faculty and staff safety, but it is also crucial for an institution’s reputation and short and long-term financial health. A 2017 study by the National Center for Education Statistics (NCES) showed, on average, instruction cost represents the highest or second highest expenditure for an institution.Whether it represents the highest or one of the highest expenditures at your institution, when was the last time you looked at the effectiveness of that expenditure? Are full-time and part-time instructors teaching the amount of credits their contract or the faculty handbook dictates? Have your course offerings been analyzed to see if they meet the demands of your current enrollments? Analyzing the workload of your instructors to the expectation set in contracts or the faculty handbook will show which instructors are underperforming or over performing. This analysis will help you make informed decisions about staffing levels based on the historical performance of current staff. Summarizing this analysis by school or department will identify which areas need more staff and which areas are overstaffed.While the workload of instructors will identify their performance, an analysis of course offerings will help identify adequate staffing levels needed. Taking a deep dive into the courses offered each academic year, focusing on the percent of seats filled for the course, would analyze whether offering a course multiple times is necessary. In order to assess whether a course needs to be offered multiple times a semester or in an academic year, the course enrollment must be compared to the maximum enrollment set for registration. With visualization applications, such as Tableau or Power BI, it is easy to identify courses with consistently low enrollment. In the example below, each course is represented by a data point (circle) with the average fill rate (course enrollment/maximum course enrollment) being the Y-axis, and the number of times the course is offered being the X-axis. The color legend helps to easily identify lower-level courses, as these courses tend to be offered more frequently.The graph above focuses your attention on the bottom-right corner where the average enrollment is below 20%, and the courses are offered 16 times or more. However, the left side of the graph should not be ignored. Understanding why a course is offered six times with an average enrollment below 40% should be investigated.Doing this analysis could provide insights into how to plan for future semesters, which in conjunction with the instructor workload analysis will assess the effectiveness of the expenditure. Another consideration when planning the course offerings for future semesters is analyzing students within each degree and the courses required to graduate for that degree. Comparing how many students have completed a specific course for a degree compared to the number of students who have yet to complete it will enable you to better plan the number of times to offer a course.The predictive analytic and the visual above can be customized to help fit your institution’s needs and concerns. Need help assessing the effectiveness of your institution’s expenditures on instruction or utilizing analytics to make informed decisions? Ask how Schneider Downs can help analyze your instructor workload, low-enrolled course optimization, course offering predictor and more. ### District Court Dismissal in Lee v. Argent Trust Company Upheld in Appeals Court Employee Stock Ownership Plans (“ESOPs”) can be a useful tool allowing business owners to facilitate succession planning while simultaneously providing retirement assets to their employees. The Employee Retirement Income Security Act of 1974 (“ERISA”) sets standards governing ESOPs which are enforced by the U.S. Department of Labor (“DOL”). One goal of ERISA is to protect ESOP participants and beneficiaries, while minimizing reasonable expenses of administering the plans.ESOPs have come under increased scrutiny in recent years, mainly through DOL audits or lawsuits against plan fiduciaries filed by owner-employees. Owner-employees, and/or the DOL, may argue that an ESOP was not created with the best interests of the plan participants/owner-employees in mind. Specifically, the claims often state that the ESOP acquired its shares for more than the stock was actually worth, which can negatively impact the future retirement assets for the owner-employees. One such recent case, Lee v. Argent Trust Company, is described below.Ms. Sharon Lee alleged that the creation of the Choate Construction Company (“Choate” or the “Company’s”) employee stock ownership plan (“ESOP”) was not conducted in the best interest of its owner-employees, including herself.The Choate ESOP was formed in mid-December 2016 in a transaction where the ESOP paid $198 million for an 80% ownership interest in the company (the “Transaction”). The ESOP financed the Transaction by issuing $141 million in notes to the selling shareholders, and taking out a bank loan to cover the remaining $57 million balance.However, Ms. Lee claimed that the value determined by an independent appraiser as of December 31, 2016 provided proof that the $198 million price paid by the ESOP to acquire its shares earlier that month was excessive. Specifically, Ms. Lee relied upon a valuation performed on behalf of the ESOP’s trustee, Argent Trust Company (“Argent”), by Stout Risius and Ross (“Stout”) who also performed the initial valuation upon which the Transaction price was based.Stout valued the ESOP’s shares at $64.8 million as of December 31, 2016. Ms. Lee claimed that this $64.8 million valuation was proof that the $198 million price paid by the ESOP for its shares earlier that month was excessive.The district court concluded that Ms. Lee had in fact benefited from the initial Transaction and was essentially ignoring the debt financing required.  That is, the value of an 80% interest in the Company before the transaction would have been $198 million.  However, after deducting the $198 million of debt, the value of the interest was now $0 (i.e., $198 million value less $198 million of debt owed).  The court equated it to purchasing a $200,000 house with a $200,000 mortgage.  The underlying value of the house would remain the same, but the owner’s equity in the house would be $0.Therefore, the $64.8 million value of the ESOP shares determined weeks later actually represented a significant increase in value from the Transaction price. Argent was granted a motion of dismissal, which was upheld by the 4th Circuit Court of Appeals.This case demonstrates why it is important to understand valuation concepts, at least from a high level, when considering submitting a claim challenging an ESOP valuation. When unsure, it is wise to consult with a valuation specialist to clarify the situation. Although the details are unknown, it is clear that time and money could have been saved on both sides of this case if Ms. Lee had first consulted with a qualified valuation specialist before making her claim.Schneider Downs has significant experience in preparing business valuations for shareholder disputes, gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) for more information about Schneider Downs’  business valuation services. ### Update on Executive Order Deferring Withholding of Employee Social Security Taxes – What Should an Employer Do? It’s been almost two weeks since President Trump’s August 8 executive order “directing the Secretary of the Treasury to use his authority” under Section 7508A of the Internal Revenue Code “to defer certain payroll tax obligations with respect to the American workers most in need.”  Since that date, there has not been any official guidance from the IRS or the Treasury on how this deferral program will work. (See our OTO article published on August 10 for specific details: /our-thoughts-on/executive-order-deferring-withholding-employee-social-security-taxes As time goes by, and based upon comments made by Treasury Secretary Steven Mnuchin in a Fox Business News interview published August 12, it appears that the decision is going to rest upon each individual business on whether to move ahead and defer withholding of employee social security taxes.  In response to a remark from Fox News’ Maria Bartiromo that employers are “facing a series of costs, uncertainties and headaches,” Secretary Mnuchin responded: "Well, we're going to create a level of certainty for employers that want to participate.  We can't force people to participate.  But I think many small businesses will do this and pass on the benefits.  But I think the President would like to do a payroll tax cut so he'll go back to Congress when he wins the election and ask Congress to have this money forgiven and have the Social Security trust fund fully topped up so that in no way does this impact Social Security." https://www.foxbusiness.com/money/steven-mnuchin-white-house-coronavirus-aid-negotiations  (Note: approximately six minutes into the piece) His response certainly seems to indicate that the program is elective and that, under the executive order, the program only provides for an employee payroll tax deferral and not a tax cut to employees.  Businesses need some level of certainty for which, to date, they have not received.  Further, many employees may not appreciate the difference between a temporary tax deferral and permanent tax cut, and the employer may have some business ethical responsibility to explain the program to them. Based upon the lack of guidance to employers, the uncertainty facing employees regarding an obligation to repay the deferral, Secretary Mnuchin’s statement, and the limited time between now and September 1 to update payroll systems and communicate the plan to employees, it would be understandable for businesses to conclude that they will not offer the employee payroll tax deferral program beginning September 1.  Nor would it seem likely that businesses would offer the program after that date without specific governmental program guidance and an understanding of any potential business liability they may face for incorrect deferral or non-repayment of deferrals by employees. We are continuing to monitor this situation on a daily basis.  As details emerge, we will keep you informed.  In the meantime, if you have any questions, please do not hesitate to contact your Schneider Downs tax advisor. ### Is Your Transportation Company Ready for the New HOS Regulations? Revisions to the Federal Motor Carrier Safety Administration’s (FMCSA) hours of service (HOS) regulations kick into gear starting September 29. The agency of the DOT that regulates the trucking industry set up the revisions to allow pliability without adversely affecting safety. The modifications were released back in June to give companies a few months to gain overall understanding and educate drivers accordingly. Here are the changes: Short-haul Exception - Allows property and passenger carriers to not take a 30-minute break from driving. Carriers are also allowed to record hours in a time record instead of an electronic logging device (ELD) or graph grid log. The exception change expands the air-mile radius from 100 to 150 and lengthens the maximum allowable workday from a 12- to 14-hour shift. Adverse Driving Conditions Exception - Allows for the duty day to be extended by two hours when adverse driving conditions are encountered (this is in addition to the extra two hours of driving time already allowed). The change applies for both property (14-hour driving window) and passenger (15-hour on-duty limit) motor carriers. In addition, the definition of adverse driving conditions now considers the driver’s knowledge of the weather conditions or unusual road or traffic conditions prior to beginning their duty day or before driving after a qualifying rest break or sleeper berth period. 30-Minute Break Requirement - Previously required for property-carrying commercial motor vehicle (CMV) drivers after eight hours of on-duty time, with the break satisfied by time off-duty or time spent in the sleeper birth. The modifications state that CMV drivers are required to take a 30-minute break after eight consecutive hours of driving time, and break satisfaction now can include non-driving on-duty time. The 30 minutes must be consecutive and can be satisfied by any non-driving combination. Sleeper Berth Provision - Specific exclusively to property-carrying CMV drivers, this provision has been modified to allow drivers to break up their 10-hour off-duty period in varying ways, provided one off-duty period, whether in or out of the sleeper berth, is at least two hours long and the other involves at least seven consecutive hours spent in the sleeper berth. Both periods must add up to 10 hours and, when paired, neither time period counts against the maximum 14-hour driving window. In addition, the eight-hour sleeper berth period by itself can no longer be excluded from the 14-hour driving window. There’s been no change unique to this provision for drivers of passenger-carrying CMV drivers. From their inception, the primary purpose of HOS regulations was – and is – to reduce accidents from driver fatigue. Added flexibility while maintaining a continued measure of safety are the desired ends of these regulation modifications, which were brought about as the FMCSA received feedback from the industry, Congress and the public.Prior to the September 29 effective date, it’s imperative to complete clear and thorough communication of the changes to drivers and all those involved with your organization’s carrier operations. If you’d like assistance navigating current transportation and logistics industry business conditions, contact Schneider Downs and visit the Schneider Downs Transportation & Logistics Industry Group. For additional industry articles, visit the Our Thoughts On blogsite. ### Using Text Mining Sentiment Analysis to Detect Fraud: An Enron Email Case Study Most accounting professionals are familiar with the story of Enron – the former worldwide energy company that went bankrupt as a result of accounting fraud. The case is the gift that keeps on giving – because the situation can be used for case studies across many topics of the accounting profession. One of the most intriguing items that was made publicly available as a result of the investigation was a database of email messages that were exchanged by various members of the company during the time that the fraud was occurring.Although email monitoring tools were not as prevalent during the time, an analysis of conversations among the executives could have tipped off an observer that something was going awry within the company, either through sentiment analysis, phrase extraction, or even simple “key word” monitoring. Sentiment analysis is a great tool to determine meaning from mass amounts of “unstructured” data such as emails, and is further described in the following paragraphs.Sentiment analysis is the act of categorizing attitudes and emotions expressed in a piece of text. Usually, the sentiment is evaluated as either positive, negative, or neutral, but sentiment can also be evaluated on a numerical scale. For this example, I used a rule-based sentiment analysis method known as VADER (oddly relevant for this case study) to find sentiment trends in the email messages.  The population of emails in my study was limited to messages sent to show the sentiment of the Enron employees and scored on a scale of -1 to 1, with -1 being negative sentiment and 1 being positive. For this analysis, the emails were scored and the average sentiment by month was determined, resulting in the following graph. The median monthly closing price of Enron stock was also included for reference.  Upon first inspection of the sentiment graph, there are some distinct trends present in the sentiment – a sharp increase in positive sentiment, followed by a drop at the beginning of 1999, followed by a gradual increase until the end August of 2001. These trends are interesting when viewed in the context of the stock price of the company at each of these points in time.At the beginning of 1999, the company was riding high from record earnings in the year before; it would be expected that sentiment would be positive at this time as employees relished in the accomplishments. The company showed continued success through September 2000, with the stock price increasing through this date in line with the general increase in positive sentiment through that point. However, from that point on, the stock price began to fall as the company’s earnings began to falter, but a similar decrease is not seen within the email sentiment. This is explainable when taken into context with who is sending these emails – Enron executives. During this period, they were encouraging employees to buy stock in the company – which would make use of more “positive” language to instill confidence. By August 2001, however, the cat was out of the bag – analysts were downgrading the stock and the sentiment decreased as the employees lost faith in the company.  Overall, this exercise has shown how sentiment analysis can be an extremely useful tool in evaluating the content of unstructured data, either in the context of e-discovery or fraud analysis. Using these methods, an analyst can notice otherwise undeterminable trends across large sets of data, a task that would otherwise be impossible or time-prohibitive.If you have any questions regarding potential fraud schemes, internal controls, or the use of data analytics to detect fraud at your professional services organization, please contact Andrew Trettel, CPA, CFE, CVA at 412-697-5436 or Brian Webster, CPA/ABV/CFF, CVA, CFE, CMA at 412-697-5307 of the Business Advisory Group at Schneider Downs. ### Part of a Data Breach… Now What? Data breaches continue to place personal information at risk on a daily basis, learn about important steps to take to protect your data from being compromised before and after a breach. Last summer Capital One made national headlines due to their absolutely massive data breach that exposed the personal data of more than 100 million customers. To make matters worse, the breach initially happened in March and April of 2019, but Capital One was not aware of the problem until mid-July of that year. In addition to consumers and the press, the breach drew the ire of regulatory bodies with all asking the main question… what’s next? Nearly one year later the bill is due in the form of a civil penalty of $80 million (which is large, but still nowhere near the estimated $575 to $700 million dollar Equifax data breach settlement) and continued regulatory oversight from the federal government. The reality is, this probably isn’t the first time personal data was stolen and it won’t be the last. Capital One joins other major companies including Yahoo, Equifax, and Intel who have reported major data breaches within the last few years and at this point breaches are not a matter of it, but when. With this in mind, our cybersecurity team shares best practices you can take to protect yourself from becoming a victim of fraud or identity theft before or after a data breach. There are two practical things you can do to prevent yourself from being a victim as a result of a data-breach. They are using unique passwords for all your logins and protecting your credit. Password Security Let’s start with passwords. It is critical to use unique passwords for all of your accounts. Why? One of the first things a criminal does when they steal a password is to see where else it works. This is known as “credential stuffing” and is how attackers take the compromise of one account and find ways to increase their earning potential. Does this email address and password I stole also login to Netflix, Chase, PNC, Amazon, etc? If it does, that is another one that can be listed for sale on a criminal website. $5 for a valid Netflix doesn’t seem like a lot of money, but if you are selling thousands of them that adds up, and you didn’t even have to attack Netflix. There is one way to prevent credential stuffing, that is to simply use a unique password for all of your accounts and no, you don’t need to have some kind of formula or remember all of them in your head. Managing unique passwords for all your accounts is easily and securely performed using a password manager, such as LastPass or 1Password, which are the two most recommended by security professionals. Password managers are apps that will set strong random passwords for all your accounts, so you don’t have to remember them and if one site gets hacked the compromise stops there. You just need to remember one strong password for the password manager that is used to protect your passwords (If you are forgetful, make sure to enable the account recovery option and consider storing the password or recovery key in a safe or safe deposit box). Most password managers support biometrics, so accessing and auto-filling your passwords on your mobile device is as simple as doing a face unlock or fingerprint. Web browser plugins allow password managers to be easily used on your computer. In most cases, once you configure the password manager for a site (a task most do automatically as you login or create a new account), it will fill in your login credentials for you when you need to login again.  If you used the same password for an account that was breached anywhere else, make sure to change that password everywhere it was in use. If that is the case, what a great time to start using a password manager. To get more rapid notification of a potential breach that involved your email addresses, consider using the free service haveibeenpwned.com, which will send you an email alert if they find your email address tied to any breaches as they become known. Credit Protection Protecting your credit against fraud from cyber or other attacks isn’t too complicated. Make sure to review your credit card and bank statements every month and call the bank if you see unusual activity. In addition to monitoring you credit activity, freezing your credit is a strong and cheap protection. Go to the three major credit reporting agencies, Experian, TransUnion and Equifax and freeze your credit with all of them. This can be done online or via phone and at the most costs around $5 per agency. If your credit is frozen and somebody attempts to open a credit card in your name, they will be denied. The downside of this, is that you will need to unfreeze or thaw your credit whenever you apply for a new credit card, get a mortgage or etc. so make sure to do that a couple days before you submit any credit applications. Credit monitoring services are advertised all the time and are often provided for free if you are involved in a data breach, but they only detect fraud after it happens. It is much better to prevent it than have to recover from it, but many of the credit monitoring services do provide insurance or help in dealing with fraud you do encounter, so they are worth considering. Simply doing the two things outlined in this article, creating unique passwords for all your accounts and protecting your credit will greatly increase your defenses against cybercrime. Lessons from the Frontlines The Schneider Downs cybersecurity team continues to see these types of attacks from both sides – defending clients who have fallen victim, and proactively providing offensive security testing (penetration testing or ethical hacking) to show firsthand how an attack could happen – and most importantly, how to prevent attacks. Attackers are better than ever at performing their attacks and turning them into money. They slip in via a phishing email, slowly or quickly gain full control of the network and then lock everything up before IT or the security team knows what hit them. With recent attacks we have seen a newer trend where the attackers get a ransom, but also steal data for resale, which may quickly become the new norm. Our team is well equipped to help organizations proactively improve their security, going beyond compliance standards and testing the real impact an attacker can have on their networks. Our defensive team has helped numerous clients recover from the direst of cyber-attacks, the worst of which required rebuilds of essentially every system on the network. We also tune any number of defensive security products to better and more accurately detect the latest attack techniques. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### IRS Announces Transition Tax Added to Examination Target List In 2017, the IRS identified and announced 13 campaigns meant to build out a more supportive infrastructure for international reporting and compliance, and further, the Large Business and International's (LB&I) overall goal to "improve return selection, identify issues representing a risk of noncompliance, and make the greatest use of limited resources."[1] This ever-growing list puts taxpayers on high alert as to which areas the IRS will spend its time and resources auditing in upcoming years. Practically speaking, these are the big-ticket items that taxpayers should focus on correctly reporting on their returns.In July, the LB&I added a new campaign to its list, bringing the overall total to 59. The new campaign focuses on U.S. shareholders who should be reporting and paying taxes, under Section 965, on the deferred income of a specified foreign corporation. For those who need a quick refresher, Section 965, also known as the "transition tax," was added to the Internal Revenue Code by the Tax Cuts and Jobs Act (TCJA) in 2017 and was meant to end the deferral of income by U.S. shareholders abroad in foreign corporations. Section 965 requires taxpayers who own at least 10% of stock (directly or indirectly) in a specified foreign corporation to include their share of the specified foreign corporation's deferred income accumulated after 1986 through the end of 2017 in gross income. This inclusion amount is then to be treated as if it had been repatriated to the U.S. in 2017, and the taxpayer is required to pay tax, at a preferential rate (generally, 15.5% for liquid assets and 8% for non-liquid assets), on those reported earnings.It should come as no surprise that the transition tax has become an area of targeted enforcement by the IRS, since the goal of the tax is to bring in revenue lost due to the domestic tax rate cuts enacted in the TCJA. Per its press release, the IRS says it will focus on U.S. shareholders who are required under Section 965 to report and pay tax on their deferred foreign income in 2017 (and/or 2018). Enforcement will be done through the use of "soft letters" from the IRS, asking taxpayers to voluntarily self-correct and report income, as well as through full IRS examinations.If you’re not sure whether you had Section 965 liability to report, or you’ve received one of these soft letters from the IRS, our tax professionals are available to discuss your options with you. Contact Schneider Downs for more information.  [1] IRS Website, IRS Announces the Identification and Selection of One Large Business and International Compliance Campaign ### Financial Boot Camp Series: Getting your Digital Ducks in Order Getting your Digital Ducks in Order Nancy L. Skeans, CPA, CFP® CEO, Schneider Downs Wealth Management AdvisorsWhat are your digital ducks, you ask? Let’s start with a simple question. How many internet accounts do you have? This includes social media, retail, work-related, travel (hotels, airlines, and travel-booking sites), newspapers, magazines, restaurants, games, bank accounts, credit cards, investment accounts, and insurance (just to name a few). I have 80-something internet accounts, assuming that I did not miss any, and I probably did. Some of them are more important than others, but they all possess information about me.Many people may think that their digital presence is their social media interaction such as Facebook, LinkedIn, Twitter, and Instagram, but it is so much more than that. Many of the accounts that you have opened online or have created online to facilitate viewing invoices and paying bills or just playing games are all part of your digital presence.  Think of the information that you supply in order to set up your initial login – name, email address, address, phone number, and sometimes, birthday, for starters. Some ask for a credit card number to link to your account. Some ask for security questions, such as: What is your dog’s name? Where were you born? What high school did you attend? The list goes on and on, and your presence on the internet, directly or indirectly, grows and grows.The purpose of this article is to help you understand the breadth of your digital presence and the importance of documenting it via an inventory. This article may raise more questions than it provides answers. If you take the article seriously, at the very least, it is also going to create some work for you in the short term. That is, if you do not already have your digital ducks in order.Now that we can agree that our digital footprint is most likely larger than we realized, I am going to focus on two reasons why it is important for you to understand and inventory your digital existence. The first reason is the security of your personal information.  Cybercrime occurs every second of every day. If you do not understand the number of accounts you have on line and what information those accounts contain about you, and potentially other family members, how can you really protect yourself?Were you one of the thousands of folks that received one or multiple emails earlier this year titled: Your password is XXXXXXXXX (you fill in the blank)?  What was your first reaction? Panic? Were you still using that password? If so, did you know to which accounts it applied? Did think you had just been hacked? The truth is that the hack occurred a long time ago, and the phishers were just using old data (hopefully you had already updated passwords) to provoke you into sending them bitcoin. The point of this story is just to remind you that when the next hack occurs, if you have your digital landscape mapped out, you can quickly react to, stop, or minimize any damage.The second reason that understanding and documenting one’s digital presence is important is with respect to your estate or the estate of someone you love. What happens to those 80+ internet accounts that I have when I pass away? The actual answer to this question is not very straightforward and differs by state. Because of these technicalities, I am going to focus on what you can do to make the process easier for your heirs. However, don’t forget the next time you review your Will with your attorney, ask him or her the questions: How does my state protect my online presence in the event of my death? What language can I add to my Will to give my executor the ability to close my online accounts?In the meantime, there are actions you can take right now. You can make an inventory of all of your internet accounts. At the very least, include your user name and password, but also include the answers to any security questions. As you are making this inventory, go to each account. Check the strength of your password and update it if needed. Close old and unwanted accounts. Did you just say to yourself - I do not even know what accounts I still have that could be old and unwanted? If so, after you make your first list, if you feel like you have missed some accounts, go to your email. The likelihood is that you receive several emails a day from old accounts that need to be closed. You just ignore those annoying emails – you know the ones:  Ruby Tuesday, Seat Geek, JCPenney, Pets.com (just kidding, they went bankrupt), and the list goes on.One last important thing to note. Please keep this inventory safe. If you create a paper inventory, do not leave it on your coffee table or take it with you on vacation because you cannot remember your passwords. Keep it locked in your firebox with your estate documents or in a locked office drawer where you can easily access it and update it if you add or delete an internet account. Another option is an electronic password keeper. A password keeper contains an inventory of your user names and passwords. Just make sure that this too is up to date, and that it provides all of the information an executor needs to access your digital accounts to delete them. Information regarding your password keeper, along with any instructions, should be kept with your estate documents.Given that most of us are still spending more time at home than ever before, now may be a great time to start this project. Seek out and close the accounts that you no longer use; do not just ignore them. Check the accounts that you do use, and while logged in, strengthen your passwords. It may feel like a big job, but when you have completed it, you will have improved your personal internet security and you will have made the job of your executor much easier.  ### IRS Audit Campaign: Examinations to begin on Hundreds of High-Wealth Individuals The Internal Revenue Service (IRS) announced in June a renewed focus on auditing high net-worth individuals and their related entities.  First, there is an initiative to collect taxes from individuals who have not filed federal income tax returns for 2018 or earlier years. The IRS estimates that billions are lost in tax revenue from these non-filers. Second, the IRS plans to examine several hundred high-income households that have either a private foundation or related pass-through entities such as a partnership or S-Corporation. The IRS is particularly interested in determining whether private foundations have engaged in prohibited “self-dealing” transactions.The IRS will place particular attention on taxpayers who have foreign assets such as foreign bank accounts, offshore retirement accounts, foreign trusts, and business interests in entities holding foreign accounts.  The initiative will begin in mid-July and will involve high-net-worth taxpayers with pass-through entities who have taken advantage of changes under the Tax Cuts and Jobs Act of 2017 (the TCJA). This campaign comes in light of a recent report issued by the Treasury Inspector General of Tax Administration who stated that over the past few years, a significant portion of high-wealth tax returns were never audited. The new audit campaign will be headed by the Global High Wealth Industry Group of the Large Business and International Division, often referred to as the “wealth squad.”  The “wealth squad” is a specialized, experienced group of examiners solely focused on conducting audits of high-income/high-wealth taxpayers. These auditors are specially trained to examine complex domestic financial affairs, offshore accounts, foreign trusts, and entities controlled by the taxpayer, including partnerships, corporations, foundations, and trusts.High-net-worth individuals who are concerned that this audit campaign could impact them or who have already received a notice from the IRS should reach out to their Schneider Downs tax advisor. ### Business Interruption Claims and COVID-19 Part Two (This is an update to Tom Pratt’s April 6, 2020 article, Business Interruption Claims and COVID-19) Many businesses throughout the country continue to lose income because of statewide quarantine orders that have been issued in response to COVID-19. Some have submitted business interruption claims to their insurance providers in an attempt to recover from losses, and a number of restaurants have filed lawsuits trying to confirm coverage under their policies. Bills have been introduced in several states, which, if passed, would require every policy insuring against loss or damage to property for small businesses be construed to include coverage for business interruption due to global virus transmission or pandemic, notwithstanding any law, rule or policy language to the contrary. Whatever the outcome of the lawsuits and potential legislation, all parties involved – businesses, insurance providers and state, local and federal governments – are strained as they struggle to deal with the negative economic impact of COVID-19. At this time, it’s unclear how the financial burden will be distributed among the parties involved. In spite of this uncertainty, entities can immediately prepare for a potential business interruption claim by: Reviewing existing insurance policies and coverage; Contacting their independent accountant to assist in preparing a comprehensive claim; Contacting their legal counsel; Contacting their insurance carrier; Reviewing previous budgets and business plans; Gathering historical monthly financial statements; Updating budgets and business plans to reflect current conditions and potential scenarios for operations during the upcoming six to nine months; and Beginning to actively identify and track all areas of impact that may be included in any claim, such as: Additional direct costs incurred as a result of dealing with the virus, including cleaning supplies, wage premiums, additional staffing, etc. Lost revenues Lost profits Ongoing or continuing costs Lost business value Detailed accounting information is key to any potential claim. Best practices include contemporaneous recordkeeping and documentation of impact, along with: Creating separate cost centers to segregate COVID-19 expenses from normal operating expenses; Tracking staffing changes and overtime; and Issuing separate purchase orders for COVID-19 items. Schneider Downs’ professionals are experienced in helping clients through difficult financial situations. We are at your disposal to assist during these unusual and trying times. Please contact us. ### Appeals Process Established for the Paycheck Protection Program Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis.  On August 8, 2020, the U.S. Small Business Administration (SBA) released a new Interim Final Rule (IFR), establishing rules of practice for appeals of certain SBA loan review decisions under the Paycheck Protection Program (PPP).This IFR provides a process for borrowers to appeal to the SBA’s Office of Hearings and Appeals (OHA) regarding certain SBA loan review decisions under the PPP and any other PPP matter referred to OHA by the Administrator of the SBA.  This IFR defines the term “SBA Loan review decision” as an official written decision by the SBA, after the SBA completes a review of a PPP loan, that finds that a borrower: was ineligible for a PPP loan; was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses; is ineligible for PPP loan forgiveness in the amount determined by the lender in its full or partial approval decision issued to the SBA (with certain exceptions); and/or is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to the SBA. A borrower may request a SBA review of a lender’s decision to deny the borrower’s loan forgiveness in full, however that review would be by the SBA and would not be an OHA appeal.  A borrower may only appeal a final SBA loan review decision to the OHA.   Additionally, an appeal by a PPP borrower of any SBA loan decision does not extend the deferral period of the loan; rather, the borrower must begin making payments of principal and interest on the remaining balance of its PPP loan at the end of the loan payment deferral period or when SBA remits the loan forgiveness amount to the lender.  Lastly, if the SBA remits to the lender the PPP loan forgiveness amount set forth in the decision issued by the lender to the SBA, the borrower may not file an appeal with OHA, and the borrower must begin repayment of any remaining balance of its PPP loan.If a borrower wishes to file an appeal of an SBA loan review decision as defined above, the appeal must be filed within 30 calendar days of the earlier of either the appellant’s receipt of the final SBA loan review decision or the notification by the lender of the final SBA loan review decision.If a borrower files an appeal, the appeal petition must include: the basis for OHA’s jurisdiction, including, but not limited to, evidence that the appeal is filed within the time period described above; a copy of the SBA loan review decision that is being appealed; a full and specific explanation as to why the decision is alleged to be erroneous, including factual information and legal arguments in support of the allegations; the relief being sought; signed copies of relevant payroll tax filings reported to the IRS and relevant state,  for the relevant periods of time, if not provided with the PPP loan forgiveness application; signed copies of applicable federal tax returns filed with the IRS, with appropriate schedules, documenting income for self-employed individuals or partners in a partnership, if not provided with the PPP loan forgiveness application; and the contact information and signature of the appellant or its attorney. Only the borrower may file an appeal to the OHA of the SBA’s final loan review decision, which means that owners of businesses and lenders may not appeal the SBA’s final loan review decision.  Upon receipt of an appeal challenging a final SBA loan review decision, the OHA will assign the matter to either an Administrative Law Judge or an Administrative Judge in accordance with CFR §134.218.  Generally only the written information will be available to the judge to make a decision on the appeal, unless the judge feels that the circumstance requires an oral hearing.  The judge is required to issue his or her decision within 45 calendar days after the closing of the record, as practical.  The decisions may be affirmation, reversal or remand of an SBA loan review decision.  Prevailing appellants are not entitled to recover attorney fees. If you need more information or assistance regarding the PPP appeals process, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### IRS Notice 2020-52 Makes Midyear Change To Safe Harbor Plans On June 29, the IRS issued Notice 2020-52, offering welcome relief for plan sponsors that find themselves in a difficult financial situation as a result of the COVID-19 pandemic. The notice allows for the reduction or suspension of safe harbor contributions during the plan year without regard to typical annual requirements. It also addresses whether and how an organization can reduce safe harbor contributions for highly compensated employees (HCEs) only.Under normal circumstances, and in a normal year, the IRS requires a plan’s safe harbor contribution to remain in effect for the entire plan year. Any suspension or reduction would be allowed only in the event of an economic loss for the plan sponsor or if the annual notice includes a statement to the effect that the plan may be amended during the plan year to suspend or reduce safe harbor contributions. In that case, the plan sponsor would be required to provide all eligible participants with a second notice, explaining the consequences of the amendment, the procedures for changing contribution elections and the effective date of the amendment.As mentioned, the new notice provides relief to the requirements outlined above and gives plan sponsors a little more flexibility if they opt to amend plans between March 13, 2020 and August 31, 2020 to reduce or suspend safe harbor contributions (either match or non-elective). Plans may be amended for the reduction or suspension of safe harbor non-elective contributions without providing 30 days’ notice to plan participants as long as a notice is provided no later than August 31, 2020 and the amendment is not retroactive. Importantly, the above method and a delay of the participant notice requirement is not allowed for plans reducing or suspending safe harbor matching contributions, since those contributions affect employees’ contribution decisions. In order to reduce or modify a safe harbor match contribution, participants must be given the proper 30-day notice.The guidance also provides clarification that sponsors can eliminate safe harbor 401(k) contributions for HCEs only and retain the plan’s safe harbor status, provided the safe harbor 401(k) contributions continue to be made for non-highly compensated employees. Note that a reduction or suspension for HCEs would change the content that’s required to be included in a plan’s safe harbor notice, so affected HCEs would have to be given an updated safe harbor notice and an opportunity to change their contribution elections.Notice 2020-52 should be helpful to plan sponsors who have suspended or reduced, or are considering suspending or reducing, safe harbor matching contributions or safe harbor non-elective contributions in response to the COVID-19 pandemic. If you have any questions or need additional information, please don’t hesitate to reach out to your SD Retirement Solutions representative. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Using Data to Build Value It’s sometimes difficult to give your business a critical evaluation, but when you’re aware of an actual or perceived weakness, you have an opportunity to take corrective action and turn that weakness into a strength. It’s essential, then, to perform a recurring objective self-evaluation, whether you’re in the startup phase, trying to build value or planning an exit strategy, and one of the most effective ways to do so is to use the power of data. Every business collects data that can be used to identify opportunities for improvement, whether financially, operationally or from a human capital perspective.To perform an accurate analysis, you need to first ensure you’re collecting the appropriate data in an organized, timely and digitized manner. In a 2019 survey of 1,300 business leaders, 90% of respondents felt that every organization would need to extract value from data to be successful in the future. It’s widely recognized, though, that the overwhelming majority of data produced each day is “dark data,” information that cannot be used either due to its structure (i.e., the data is not collected, processed or stored in a way that can be accessible) or that the organization is not even aware that it’s collected.The key is to minimize the amount of dark data your company produces. This will allow for a more robust and impactful data analytic program, the process by which your organization utilizes data to objectively evaluate the business from all aspects. When used correctly, data can help improve efficiency, productivity and profitability. It can also help build value, which is important in every stage of your company, particularly in planning for an exit strategy. This is ultimately how any buyer will view your company, and the sooner you become data ready and implement data analytics, the sooner you’ll be able to identify trends, outliers and abnormalities that you may not have identified before.When you collect, process and store data appropriately, you can also automate reporting and analytics, so you spend less time compiling analysis and more time interpreting results and planning your action.For more information on how to build value with a data analytic program, contact Matt Kraemer of Schneider Downs ADAPT (Automation and Data Analytic Process Team) at mkraemer@schneiderdowns.com. 2019 Survey by Splunk:https://www.splunk.com/pdfs/dark-data/the-state-of-dark-data-report.pdf ### Tracking The 2020 Presidential Tax Plans With COVID-19 going on and having no end in sight, it might be a little bit difficult to remember that this is an election year. There will be, after all, no Republican or Democratic National Convention, and we have yet to see a live debate between President Donald Trump and Democratic presidential nominee Joe Biden. In less than 100 days, however, we will elect a president, and each of their tax plans for our country are very different. With economic recovery on a lot of people’s minds, tax policy should play a big role in the election, since any new economic initiatives will have to be paid for somehow and that usually means altering the tax code.President Trump has not really talked much about second-term tax proposals. He does want to keep taxes low, including a 21% rate on corporate tax profits, low capital gains rates for individuals, the ability to defer up to $1 million in gains invested in qualified opportunity zones and the 20% qualified business income deduction.Meanwhile, on July 21, Mr. Biden unveiled a 10-year, $775 billion plan that prioritizes child care. It would include new tax credits for children, seniors and disabled Americans and build thousands of new child care centres nationwide. It would also expand the child and dependent care tax credit to provide a fully refundable credit. Other tax plans he envisions include: Tax wages and capital at the same rate. Mr, Biden wants to have wages taxed the same as capital, which consists of long-term capital gains and the sale of real estate and companies. He wants to eliminate the favorable capital gain tax treatment on long-term investments and have these items taxed at progressive rates. Increase taxes on the wealthiest Americans by limiting unequal and unproductive tax expenditures.  Wealthy Americans benefit significantly in their taxes from expenditures that provide deductions and credits to specific groups and for specific activities. Some of these expenditures include self-employed health insurance, benefits for tax-qualified retirement saving accounts and investments in qualified opportunity zones.  All of these deductions reduce adjusted gross income; Mr. Biden wants to end them. Increase corporate tax rates. As part of his tax plan, President Trump cut corporate tax rates in the U.S. from 35% to 21%, a reduction of 40%. Mr. Biden wants to increase this rate from 21% to 28%. Increase estate taxes back to their norm before the Tax Cuts and Jobs Act of 2017. Before the TCJA, any assets from estates valued at less than $5.49 million (or about $11 million for couples) were exempt from being taxed when passed down from deceased persons to their heirs. Anything over that threshold is taxed at about 40%. President Trump more than doubled the exemption in 2017 to $11.4 million per person or about $22.8 million for couples.  Finally, as mentioned earlier, Mr. Biden wants to expand the child and dependent care credit, which would increase from a maximum nonrefundable $3,000 tax credit per one child to a refundable $8,000 tax credit and from $6,000 to $16,000 for those with two or more children.  Mr. Biden’s plan would also expand afterschool, weekend and summer care programs for children and provide pre-kindergarten education at no cost to all three- and four-year-old children. Mr. Biden’s 10-page plan document does not contain a lot about how these new changes would be paid for, but it does state that they would be paid for in part by rolling back unproductive and unequal tax breaks for real estate investors with incomes over $400,000, and by taking steps to increase compliance for high-income earners. He also wants to do away with like-kind exchanges for real property. Like-kind exchange rules enable a property investor to avoid capital gains taxes on sales if the proceeds are invested in another piece of real property.We can’t predict who’s going to win the election, but if Mr. Biden wins, taxes will very likely increase. If you’re thinking of divesting an asset held long term, you might want to sell before January 1, 2021. Contact your Schneider Downs representative and they will be happy to discuss the situation with you. ### IRS Micro-Captive Letter 6336 Round 2 Issued In January, the IRS announced that it would be significantly increasing enforcement activity around abusive micro-captive insurance transactions. In late March 2020, the IRS sent Letter 6336 (3-2020) to taxpayers it believes participated in micro-captive insurance transactions to kick off enforcement. Taxpayers had until June 4, 2020 (note: the May 4 original deadline was automatically extended) to respond to that initial letter. However, taxpayers were required to respond only if they were no longer participating in the micro-captive insurance transaction.We are now seeing that the IRS is issuing a second round of these letters with the same language. The due date for a response to this second round of letters is September 14, 2020. Again, no response is necessary if you continue to participate in a micro-captive transaction. If you continue to participate in a micro-captive insurance transaction covered under Notice 2016-66, you should continue to file a protective disclosure on Form 8886 with your tax returns to disclose your participation. However, if you ceased participation in these transactions and did not respond to the first letter, please contact your tax advisor to assist with a response to this letter as soon as possible.The timing of this second letter is interesting because the first letter indicates to keep disclosing the transactions on your tax return if you continue to participate in a non-abusive micro-captive insurance arrangement. However, the IRS is now sending a second letter before the 2019 extended tax returns are even due to allow you to disclose the transactions on your tax return.Please note that the letter does not represent a notification of an audit or examination of the reinsurance company, dealership entity or individual to which the letter was directed. Rather, it is a request for information. The transaction identified in IRS Notice 2016-66 and the tax court cases cited in the letter do not necessarily describe your reinsurance company’s current transaction as we understand it.We continue to believe that the F&I reinsurance arrangements utilized by auto dealers continue to comply with current tax laws and do not exhibit the characteristics determined to be abusive by the U.S. Tax Court in several decisions. This is the consensus within the auto dealer industry regarding the auto dealer micro-captive insurance transactions.If you have any questions regarding your micromicro-captive insurance, please contact our tax advisors. ### The Coronavirus Impact on Infrastructure Some might think being quarantined at home due to the COVID19 global pandemic would have a positive effect on our infrastructure. Fewer vehicles on roadways would increase the lifespan of our nation’s streets and highways due to less wear and tear, right? Similar to how the quarantine inadvertently cleaned up air pollution, this positive spin would be just the news we need. But while all this might be true in part, unfortunately, there have also been some negative economic ripples that could prove worrisome down the road.According to a recent report published by the American Society of Civil Engineers, fewer vehicles on the road also means less user-generated revenue flowing in from sources like transit receipts, other transportation fees, and gas taxes. The federal Highway Trust Fund, in fact, posted a 49% decline in receipts in May 2020 compared to the same period a year ago. Additionally, the Departments of Transportation are projecting a 30% revenue decline in the next 18 months, which represents a major setback to what is already a funding shortfall in efforts to improve the nation’s infrastructure.The lack of user-generated revenue is just part of a ripple effect that more clearly defines a bigger picture. According to a recent survey polled by the National League of Cities (NLC), municipalities across the U.S. are currently experiencing significant budget cuts due to the effects of the coronavirus. Cities expect to face a loss of approximately $360 billion over the next three years, which will likely hamper their financial ability to maintain and upgrade already aging infrastructures. In fact, 65% of municipalities are being forced to delay or cancel capital expenditure and infrastructure projects, so the impact is already being felt.Also according to the NLC survey, 24 states have yet to announce if they plan to distribute federal Coronavirus Relief Funds to help out their cities and the cities are calling for additional aid from Congress. To answer the call, the House Rules Committee has unveiled a $1.5 trillion Moving Forward Act infrastructure bill that includes a $494 billion INVEST in America Act surface transportation reauthorization bill. The intent of the legislation is to support replacing outdated systems within the current infrastructure to keep the country competitive in an evolving global economy. The bill does account for the economic downturn caused by the coronavirus outbreak and will ensure money is available at both the state and local level. At the time of this publication, the bill has moved onto the U.S. House of Representatives. Stay tuned to see how Congress decides on the proposed action. ### SOC for Supply Chains Advances in technology impact a number of facets of our lives, perhaps most notably those that have enabled closer relationships among manufacturers, suppliers and logistics providers and allowed us to order a product online and have it delivered within a day or two, sometimes even later the same day. Vendors up and down the supply chain have incorporated new technologies to keep up with the speed needed to meet customer requirements, and forward and reverse logistics providers continue to receive more and more orders, two trends that come with a large volume of end-user data being regularly exchanged and a corresponding heightened risk of cyber-threats. These days, a common cyberattack, for instance, could result in a breach of consumer personally identifiable information, trade secrets and/or confidential production details or locations. One or more of these breaches could lead to negative publicity for the entire supply chain, and possibly even fines or some other financial repercussion.There’s no question that quicker delivery times and the ease of purchasing products online have put pressure on each step of the supply chain. Performance metrics are always of utmost importance to manufacturers for each third party they hire to perform a service on their behalf, but monitoring performed by manufacturers can be burdensome on suppliers and logistics providers as they satisfy data requests, respond to inquiries and host site visits. This is especially true when suppliers or logistics providers are fulfilling requests for multiple customers year after year. To address these risks and interruptions, a supplier or logistics provider could complete a System and Organization Controls (SOC) examination to show its commitment to information security, internal controls and service performance. Fortunately, to help meet the vast change in supply chains, the AICPA recently released a new SOC report type to mitigate the associated risks.SOC for Supply Chain contains a common set of criteria for disclosures and assessing control effectiveness, provides useful and relevant information to users, provides comparability, and will be updated to meet changes in the industry. SOC for Supply Chain would deliver an advantage when competing for work with user entities, manufacturers, or producers, and can demonstrate to users your company’s commitment to keeping data secure and meeting performance metrics.As a supplier or logistics provider, you’re most likely working with a number of user entities who may be monitoring your performance. Being able to provide those user entities with a SOC report may reduce this burden. SOC for Supply Chain is not the only option either - a SOC 1 report would provide users with insight into your performance commitments and the impact on users’ financial statements, while a SOC 2 report would provide users with insight on the sophistication of your data security. Depending on your customers’ needs, a SOC 1, SOC 2 or SOC for Supply Chain report might be just what your organization needs to gain a competitive advantage, reduce time spent responding to customers, and allow you more opportunity to focus on operations.Could your organization benefit from a SOC report? Visit our Service Organization Controls page or contact one of our Schneider Downs professionals to discuss your needs. ### Executive Order Deferring Withholding of Employee Social Security Taxes On Saturday, August 8, President Trump issued an Executive Order “directing the Secretary of the Treasury to use his authority” under Section 7508A of the Internal Revenue Code “to defer certain payroll tax obligations with respect to the American workers most in need.”  Unfortunately, this is another situation where businesses and advisors need more information and official guidance before making decisions on processes needed to comply with the rule.Executive Summary of the Executive Order: It is not effective immediately; it only applies for wages “paid” between 9/1/2020 and 12/31/2020.  The deferral is only on the 6.2% social security income tax portion assessed on employees only; it does not apply to the 1.45% hospitalization portion of payroll taxes.  The order does not affect the assessment of the portion of the tax on employers.  (Recall though that these taxes are already subject to a payment deferral). It only effects employees making less than $4,000 during a bi-weekly pay period ($104,000 annually).  Though not specific, this appears to be a cliff provision where if wages exceed the limit, no deferral will be available.  Further, and though the order does not specifically provide details, presumably the $4,000 would be calculated in a similar fashion for different payroll periods.  The order may only be a “deferral” of the tax on employees and not a permanent elimination.  Affected employees may need to repay this deferral (without penalties, interest, or any additional amount of tax}”.  However, the Order does authorize the Secretary of the Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred.”  The tax deferral may be elective to employees.  The order is written with language that the “deferral shall be made available (emphasis added) with respect to” employees with wages less than the $4,000 ceiling.  The language used in the order does not seem to impose a requirement to defer the tax.  This could cause bookkeeping headaches.  Possibly, repayments could be handled through an individual’s Form 1040 versus additional changes in employer withholding rules. The President may have given the House and Senate an opportunity to, effectively, override his executive action by coming to some joint solution acceptable to both Republicans and Democrats by delaying the effective date of this Order. Hopefully, since there is no official guidance on implementation of this deferral under the Treasury Department’s authority (to defer withholding, deposits, and payment of the applicable taxes imposed), additional detailed guidance will come sooner rather than later.  In the meantime, we will continue to monitor developments.  Please check Our Thoughts On regularly and do not hesitate to call your Schneider Downs tax advisor. A copy of the order can be found here. ### Construction Industry Faces Continuing Labor Supply Struggles Over the last decade, the labor shortage in the construction industry has consistently ranked as one of the sector’s top pain points. At the moment, that challenge may have been at least temporarily eclipsed by the impact of the coronavirus and its related government-imposed shutdowns, with many projects delayed or even cancelled, supply chains in disarray and lenders increasingly cautious with financing. Nonetheless, the industry’s labor environment still has its fair share of uncertainty.As government-mandated shutdowns began to emerge in the spring, the United States Bureau of Labor Statistics (BLS) reported that construction industry national employment was mildly reduced in March by 29,000 before plummeting by 975,000 in April, which represented approximately 13% of total industry employment and the worst one-month decline ever. Conversely, when restrictions began to be lifted in May, construction employment increased by 453,000, followed by a gain of 158,000 in June, which helped reverse over half of April’s decline. The BLS’ July employment report showed a meager construction employment increase of 20,000. Employment in the industry remains approximately 444,000 below its February level.Associated General Contractors’ Chief Economist Ken Simonson notes that approximately 2.3 million construction jobs were lost from the effects of the housing crash and the Great Recession, and early years of its recovery. Many of those displaced were skilled workers who either retired or pursued other careers. Ever since, the industry has been dealing with a skilled labor shortage, magnified by the attitude of Millennials, who as a whole either don’t have the skills or as much interest in construction work as prior generations.Will the 2020 economic recession add to the industry’s labor shortage? There’s reason to believe that construction will not keep pace with restarts in other sectors of the economy, despite the fact that interrupted projects and a backlog allowed some companies to return a portion of workers in May, June and July.There are still many unknowns and it’s hard to predict the short- and long-term effects to the industry’s employment market. As each company handles skilled labor shortages and bears the economic consequences of the shutdowns, it’ll be pivotal to implement a strategic plan. Simply relying on a humming economy for a steady backlog of contracts is no longer an option.If your company would like assistance in maneuvering the construction climate, we invite you to contact us or visit the Schneider Downs Construction Industry Group webpage. For additional construction industry articles, visit the Our Thoughts On blogsite. ### Evolving Cyber Threats of the New Normal The COVID-19 pandemic has been a difficult experience for everyone as both businesses and employees try to adjust to a fully remote working environment while other businesses deemed “essential” were able to remain open for physical operations with additional restrictions in place. This quick pivot as businesses tried to adjust has resulted in decreased business for some and outright closure for others. One sector benefiting from the shift to remote work continues to be cybercrime, including Malware-as-a-Service (MaaS) model cybercrime groups, who will attack a specific target for the right price. The shift by many to fully remote operations has presented cybercriminals with an continuous opportunity for financial gain during the pandemic. Businesses that may not have had a remote work policy in place or properly implemented security controls to manage remote work are easy targets for threat actors. Additionally, without the ability to communicate face-to-face during the course of business, the volume of emails being sent to conduct business has increased. Attackers have seen these factors and decided to capitalize on the opportunity presented to them. One organization tracking this trend is Mimecast, a company specializing in cloud-based email management and security. Mimecast provides solutions that filter emails to provide protection against malicious URLs, malware, impersonation attacks and internal threats. In June of this year, Mimecast released their Threat Intelligence Report – Black Hat USA Edition 2020 whitepaper. This whitepaper covers the overall cyber threat landscape both in the United States and globally for the period January 2020 to June 2020. Using data from the threats that Mimecast’s email security solutions have detected and blocked, the report provides key insights into the latest trends occurring in the 2020 cyber threat landscape. From January 2020 to June 2020 the Mimecast Threat Center analyzed more than 195 billion emails in the US and Caribbean region, and globally, Mimecast processed over 378 billion emails. 92 billion emails of the 195 billion emails processed in the US were rejected as being potentially malicious. 671 million emails globally and 290 million emails in the US were linked to a cyber-attack campaign. The day with the greatest number of detections was April 21st, 2020 in the United States with 3.9 million detections and February 11th, 2020 globally with 7.1 million detections. From analyzing these blocked emails, Mimecast was able to report that threat actors were increasingly attempting to impersonate legitimate email senders, otherwise known as phishing. Mimecast reported a 24% increase in phishing attempts from January 2020 to April 2020 alone. The Mimecast Threat Center attributed these attacks to organized crime groups with the primary motivation being financial gain, in contrast to other motivations such as intellectual property theft. The most common means of attack was to pair these phishing attempts with ransomware to allow attackers to extort payment from the owners of the systems affected. With this shift to remote work, businesses had to quickly roll out the infrastructure to support their new remote environment and policies, procedures, and controls have not been as stringent as they would in a traditional work environment. This gave attackers a golden opportunity to launch more attacks and increase the success of the attacks they perform. In their report, Mimecast split these threats into four categories: spam, impersonation attempts, opportunistic attacks, and targeted attacks: Spam – We have all experienced spam, it is simply a part of owning an email address. The unwanted messages that get sent out en masse, often times in an attempt to scam or steal from the recipient. But some industries get targeted more heavily than others and Mimecast’s report declares that the five industries most affected by the increase in spam in 2020 are: Professional Services, Legal Services, Retail & Wholesale, Manufacturing and Insurance. The week of March 15th, 2020 recorded the highest amount of detections through Mimecast’s solution with 32.58 million threats blocked. This represents a 36% increase when compared to the week with the highest number of spam detections in Q4 2019. Impersonation Attacks – Impersonation attacks are a cyber-attack involving a malicious actor attempting to disguise themselves as a legitimate email sender in an attempt to get the email recipient to perform an actions that goes against their own best interests. This is also known as phishing when conducted through electronic means like email, but could take the form of vishing when conducted over the phone or smishing using text messaging. The top industries reported to be targeted using impersonation attacks in 2020 according to Mimecast are: Media & Publishing, Legal Services, Retail & Wholesale, Insurance, and Manufacturing. This is interesting because in previous reports, the Management & Consulting sector was the top target for phishing and the switch to Media & Publishing as the new top target with 48.4 million attempts detected represents a dramatic shift in attack targets. We explored the rise in these types of attacks on Microsoft Teams in a previous Our Thoughts On article. Opportunistic Attacks – Opportunistic attacks are attacks that are conducted out of convenience. The attacker identifies an opportunity to quickly and effectively target a business or system and takes action against them. These types of attacks are very common because the attackers don’t have to expend much effort to execute them successfully and they can often be carried out using off-the-shelf or commodity malware that an inexperienced attacker can download or, in some cases, buy. Mimecast states that the top industries affected by these attacks in 2020 are the Retail & Wholesale, Manufacturing, Professional Services, Transportation, Storage, & Delivery, and Insurance Providers. This also represents a shift away from previous years, as Transportation, Storage, & Delivery businesses were at the top of this list in years past. Targeted Attacks – Targeted Attacks are a departure from the previous categories and are carried out when attackers decide to start an attack campaign against a particular target or set of targets they choose for a variety of reasons. It could be that the target or targets have data that the attacker wants, such as financial information, or the attacker may have decided that a particular target is more likely to pay a ransom if the attacker can install ransomware on the target’s systems. During the period from January 2020 to June 2020, Mimecast uncovered 42 large-scale campaigns threat actors carried out. These campaigns show that unlike the previous three threats, attackers can also carry out well disguised, complex attacks over a period several days using multiple different attack strategies. Some of the strategies that Mimecast noted include bulk/attachment-based malware like the previous threats, but also fileless malware or malware that only executes in memory and doesn’t interact much with a file system, polymorphic malware that can disguise itself to prevent detection, and malicious URLs. What Can You Do To Protect Yourself? Looking at the numbers from Mimecast’s report, with 290 million malicious email detections in the first six months of 2020 alone, it’s not a matter of if an attacker attempt to act against you or your organization, it’s a matter of when. We have all been targeted in some way by malicious actors, whether that takes the form of spam emails, phishing, or something more complex. But the good news is that there are easily achievable ways of reducing the likelihood of a successful attack. Security Awareness Training – The most effective way to reduce the likelihood of a successful attack is through user security awareness training. Attackers take the path of least resistance to achieve their goals, and oftentimes, this is through tricking a user into doing their work for them. This is where user security awareness training comes into play. If you train your users on how to recognize a potential attack and how to respond to them, an attacker’s job suddenly becomes much harder. It is fully possible to create your own custom user security awareness training program specific to your needs, however, there are also a variety of products and services that already exist to provide end user security awareness training to your organization. In addition to their email security and archiving solutions, Mimecast also provides user security awareness training. Schneider Downs is an authorized reseller and value added partner of, we would be glad to discuss how Mimecast can assist your organization. Feel free to contact us with any questions or to setup a demonstration. Simulated Attacks – One method of testing how an employee would respond to spam, phishing, or other attacks is to conduct a simulated attack and note how the employee responds. There are commercial products on the market; however, there are also open-source alternatives that perform just as well if not better than some of the commercial competitors. One product is redlure, our open-source phishing campaign simulator that allows for easy scalability, the ability to run multiple, simultaneous phishing campaigns, and key metric tracking to note how users respond to an attack. The redlure code repositories are available on GitHub at www.github.com/redlure. If you are interested in learning more about redlure, would like a demo, or have any questions please contact us. Communicate the Importance of Security – Another important method for protecting your organization is to communicate the importance of security from the highest levels and demonstrate your commitment to keeping the organization secure. Policies and procedures are important parts of cybersecurity, but just having the policies written down is not enough. It is critical that employees at all level of the organization understand the importance of security and follow organizational policy to keep the company secure. But most importantly, this commitment to organizational security needs to come from the top-down. C-level employees, vice presidents, directors, and managers all need to demonstrate their commitment to keeping the organization secure because if you don’t show that you feel security is important, why should any of your direct reports? Schneider Downs provides a number of security awareness materials and resources on our complimentary online cybersecurity resource center. Update Your Remote Work Policies – The final item that applies to keeping your organization secure in the remote landscapeis to update your remote work policies. Updating all of your policies and procedures on at least an annual basis is important to ensure that your policies stay relevant and applicable to your organizational goals. But now is the best time to update your specific remote work policies by keeping what worked, eliminating what didn’t, and making any required changes that were uncovered as result of our new normal. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### Important Update on the Paycheck Protection Program under the CARES Act This article was updated on August 5, 2020. Further updates will be provided as new information becomes available. On August 4, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, provided new FAQs on loan forgiveness under the Paycheck Protection Program (PPP). Following is a summary of key questions addressed and changes or clarifications of prior guidance from the SBA. The entire list of FAQs can be found at https://home.treasury.gov/system/files/136/PPP--Loan-Forgiveness-FAQs.pdf General Loan Forgiveness FAQs Q: Which loan forgiveness application should sole proprietors, independent contractors or self-employed individuals with no employees complete? A: Loan Forgiveness Application Form 3508EZ or lender equivalent. Q: If a borrower submits a timely loan forgiveness application, does the borrower have to make any payments on its loan prior to SBA remitting the forgiveness amount, if any? A: No. As long as a borrower submits a loan forgiveness application within 10 months of the completion of the Covered Period, they are not required to make any payments until the forgiveness amount is remitted to the lender by the SBA. The borrower is responsible for paying accrued interest on any amount of the loan that is not forgiven. Interest begins to accrue on the date of disbursement of the loan. Loan Forgiveness Payroll Costs FAQs Q: Are payroll costs that were incurred before the Covered Period but paid during the Covered Period eligible for loan forgiveness [emphasis added]? A: Yes. The FAQs provide the following example: A borrower received its loan before June 5, 2020 and its Covered Period runs from April 20 through October 4. The borrower has a biweekly payroll cycle, with a cycle ending on Saturday, April 18. The borrower will not make the corresponding payroll payment until Friday, April 24. While these payroll costs were not incurred during the Covered Period, they were paid during the Covered Period and are therefore eligible for loan forgiveness. Q: Are borrowers required to calculate payroll costs for partial pay periods? A: If a borrower has a biweekly or more frequent (e.g., weekly) payroll cycle, they may elect to calculate eligible payroll costs using the period that begins on the first day of the first payroll cycle following the loan disbursement, which is referred to as the Alternative Covered Period. If a borrower pays twice a month or less frequently, they will need to calculate payroll costs for partial pay periods. Q: For purposes of calculating cash compensation, should borrowers use the gross amount before deductions for taxes, employee benefits payments and similar payments, or the net amount paid to employees? A: Borrowers should use gross compensation. Q: What expenses for group healthcare benefits will be considered payroll costs that are eligible for loan forgiveness? A: Employer expenses for employee group health care benefits paid or incurred by the borrower during the Covered Period or the Alternative Payroll Covered Period are payroll costs eligible for loan forgiveness. Payroll costs do not include expenses for group healthcare benefits paid by employees. Forgiveness is not provided for expenses for group healthcare benefits accelerated from periods outside the Covered Period or Alternative Payroll Covered Period. Group healthcare benefits paid or incurred on behalf of owner-employees are treated differently and included within the compensation limits noted below. Q: What contributions for retirement benefits will be considered payroll costs that are eligible for loan forgiveness? A: Employer contributions for employee retirement benefits paid or incurred by the borrower during the Covered Period or Alternative Payroll Covered Period, not including any retirement contributions deducted from employees’ pay or otherwise paid by employees. Forgiveness is not provided for employer contributions for retirement benefits accelerated from periods outside the Covered Period or Alternative Covered Period. Retirement benefits paid or incurred on behalf of owner-employees are treated differently and included within the compensation limits noted below. Q: How is the amount of owner compensation that is eligible for loan forgiveness determined? A: The amount of compensation of owners who work at their business that is eligible for forgiveness depends on the business type (see below) and whether the borrower is using an eight-week or 24-week Covered Period. The amount of loan forgiveness for owner-employees and self-employed individuals’ payroll compensation is capped at $20,833 per individual in total across all business in which he or she has an ownership stake. For borrowers that received a PPP loan before June 5 and elect to use an eight-week Covered Period, this cap is $15,385. C Corporations: Up to the amount of 2.5/12 of 2019 employee cash compensation. Borrowers are also eligible for loan forgiveness of borrower-paid employer state and local taxes, employer contributions for employee health insurance, and employer retirement contributions to employee retirement plans, capped at the amount of 2.5/12 of the 2019 employer retirement contribution. Payments other than for cash compensation do not count toward the $20,833 cap per individual. S Corporations: Up to the amount of 2.5/12 of 2019 employee cash compensation. Borrowers are also eligible for loan forgiveness of borrower-paid employer state and local taxes and employer retirement contributions to employee retirement plans, capped at the amount of 2.5/12 of the 2019 employer retirement contribution. Employer contributions for health insurance are not eligible for additional forgiveness for S corporation employees with at least a 2% stake in the business, including for employees who are family members of an at least 2% owner. Eligible noncash compensation payments do not count toward the $20,833 cap per individual. [Emphasis added] Self-employed Schedule C (or Schedule F) filers: Up to 2.5/12 of 2019 net profit as reported on IRS Form 1040 Schedule C line 31 (or 2.5/12 of 2019 net farm profit, as reported on IRS Form 1040 Schedule F line 34). Separate payments for health insurance, retirement or state or local taxes are not eligible for additional loan forgiveness. General Partners: Up to 2.5/12 of 2019 net earnings from self-employment that is subject to self-employment tax multiplied by 0.9235. Compensation is only eligible for loan forgiveness if payments to partners are made during the Covered Period or Alternative Payroll Covered Period. Separate payments for health insurance, retirement or state or local taxes are not eligible for additional loan forgiveness. Loan Forgiveness Non-Payroll Costs FAQs Q: Are non-payroll costs incurred prior to the Covered Period but paid during the Covered Period eligible for loan forgiveness? A: Yes. Q: Are non-payroll costs incurred during the Covered Period but paid after the Covered Period eligible for loan forgiveness? A: Yes, if paid on or before the next regular billing date. Q: If a borrower elects to use the Alternative Payroll Covered Period for payroll costs, does the Alternative Payroll Covered Period apply to nonpayroll costs? A: No. The Alternative Payroll Covered Period applies only to payroll costs. Q: Are payments made on recently renewed leases or interest payments on refinanced mortgage loans eligible for loan forgiveness if the original lease or mortgage existed prior to February 15, 2020? A: Yes Q: Covered utility payments, which are eligible for forgiveness, include a “payment for a service for the distribution of …transportation” under the CARES Act. What expenses does this category include? A: A service for the distribution of transportation refers to transportation utility fees assessed by state and local governments. Payment of these fees by the borrower is eligible for loan forgiveness. Further information on transportation utility fees is provided at: https://www.fbwa.dot.gov/ipd/value_capture/defined/transportation_utility_fees.aspx Loan Forgiveness Reductions FAQs Q: Will a borrower be subject to a reduction in its forgiveness amount due to a reduction in FTE employees during the Covered Period if the borrower offered to rehire one or more laid off employees but the employees declined? A: No, if the borrower is able to document an inability to: (1) rehire individuals who were employees of the borrower on February 15, 2020 and (2) hire similarly qualified individuals for unfilled positions on or before December 31, 2020. Borrowers are required to inform the applicable state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the rejection of the offer. Q: When calculating the FTE Reduction Exceptions in Table 1 of the PPP Schedule A Worksheet on the Loan Forgiveness Application (SBA Form 3508 or lender equivalent), do borrowers include employees who made more than $100,000 in 2019 (those listed in Table 2 of the PPP Schedule A Worksheet)? A: Yes. Q: For purposes of calculating the loan forgiveness reduction required for salary/hourly wage reductions in excess of 25% for certain employees, are all forms of compensation included, or only salaries and wages? A: No, just decreases in salaries or wages. Questions about the PPP or other CARES Act programs? Contact us or explore our COVID-19 resource center. About Schneider Downs Business Advisory The Schneider Downs Business Advisory Services team is committed to assisting clients with critical business decisions by applying our insights, providing innovative solutions and leveraging our experience in each unique situation. We work with our clients to provide strategic consulting and analysis tailored to meet their individual needs. ### Cybersecurity Update: Twitter and Garmin The following article shares updates from the recent Twitter incident and Garmin ransomware attack. Over the past month there has been an influx of cybersecurity incidents grabbing national headlines due to the targets and impact, namely the Twitter bitcoin scam impacting high profile accounts as well as the Garmin ransomware attack which grounded athletes and flights across the world. Our cybersecurity team covered the initial reports of the incidents in our Focus on Cybersecurity newsletter and the Our Thoughts On blog. With the focus shifting from the initial outages to fallout and remediation steps, this article provides an update on the pending criminal charges for those suspected in the Twitter attack and Garmin’s reported decision to pay a multi-million dollar ransom to restore their systems. Twitter Bitcoin Scam Update The popular social media platform Twitter suffered one of the most high profile cybersecurity attacks in recent history when more than 100 accounts were hijacked in a cryptocurrency scam, including public figures such as Elon Musk, Jeff Bezos and former president Barack Obama, as well as companies such as Apple and Uber. In addition to the reputational damage associated with these types of account, the scammers reportedly netted more than $100,000 in just a few hours. During the attack a group of hackers contacted media outlet VICE claiming responsibility for the attacks with screenshots indicating they had gained access to Twitter’s administrative tool through paying insiders, which allowed them to set up email addresses that enabled users to reset account passwords and tweet under different accounts. Other than stating an employee was targeted by a social engineering account, Twitter has been mostly silent on the attack. The FBI launched an investigation and on July 31, 2020, the United States Department of Justice announced the arrest of the following individuals and the charges related to the attack: Mason “Chaewon” Sheppard – a 19-year old from the United Kingdom  charged with conspiracy to commit wire fraud, conspiracy to commit money laundering, and the intentional access of a protected computer Nima “Rolex” Fazeli – a 22-year old from Orlando, Florida  charged with aiding and abetting the intentional access of a protected computer Graham Ivan Clark – a 17-year old from Tampa, Florida. The supposed mastermind of the attack, Clark’s name and charges were not disclosed from the US Department of Justice due to his status as a minor, but Tech Crunch verified his identity following the federal announcement. With arrests made and charges pending, it will be interesting to see what is next for those in custody or if additional arrests are made, and more so if Twitter will shed any more light on the incident beyond the initial statement. Although in a bit of irony, the virtual Zoom hearing for Clark got off to a rough start after the screen was zoom bombed multiple times… a security issue that we discussed since the shift to remote working way back in April. Garmin Ransomware Update As discussed in our recent article, navigation and smart device maker Garmin was hit with a massive ransomware attack that halted a number of their services including Garmin Connect, which powered popular consumer wearable technology and flyGarmin, flight planning software pilots rely on for aircraft navigation. The attack is believed to have been orchestrated by the Russian hacker group known as Evil Corp who reportedly demanded a $10M ransom in order to free their files from encryption. Garmin eventually restored their systems and a recent report from Sky News indicates Garmin paid a multi-million dollar ransom through Arete Incident Response, a third-party cybersecurity firm. Reports also state that Garmin initially reached out to another firm who declined the case due to the fact the Evil Corp, the group believed to be behind the attack, is currently on the US Treasury Department sanction list and transacting with them would violate the sanctions and open them up to fines. While it is important to note neither Garmin, Arete or Evil Corp have confirmed any of the reports or responded to media inquiries, Arete did release a whitepaper the day after the attack reporting that evidence linking WastedLocker to Evil Corp was inconclusive. Garmin has released a public statement that simply states they were victims of a cyber-attack without any specifics and provide some clarity on customer data safety, including payment information from Garmin Pay. The full account of how the attack happened and how the files were restored will most likely never be revealed, but this attack is another unfortunate reminder of how dangerous and costly not taking cybersecurity seriously can be for any organization. Be in the Know With new attacks happening on what sometimes feels like an hourly basis, the headlines of today can become thoughts of yesterday rather quickly, when in reality, some of the most interesting stories and important lessons learned are based on the fallout of the incidents. We invite you to keep up with the latest in the cybersecurity world with our Focus on Cybersecurity newsletter. Our bi-weekly communication provides a roundup of relevant news, current events and original articles from our team such as this. You can sign-up at www.schneiderdowns.com/subscribe. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### Treasury Issues Final FDII Regulations FDII is foreign derived intangible income that a U.S. domestic corporation derives from selling products or providing services to unrelated foreign persons when that product or service is for foreign use by the customer. Income successfully characterized as FDII is subject to a lower effective tax rate of tax (currently, 13.5% instead of the 21% normal corporate tax rate). Specifically, the Tax Cuts and Jobs Act (TCJA) introduced a statutory deduction under new IRC Section 250, which provides domestic corporations with a 37.5% deduction for any FDII. This deduction is calculated as a specified percentage of the excess income derived from export sales and services over a fixed return on tangible depreciable assets for the year. In March 2019, Treasury published proposed regulations (REG-104464-18), providing guidance for determining FDII deduction.Among other things, the proposed regulations described specific documentation that must be obtained in order to establish that: (1) a recipient of property is a foreign person; (2) a sale of property is for a foreign use; or (3) a recipient of general property is located outside the United States. Most of the comments objected that the documentation requirements presented an administrative burden that would lead to practical implementation issues for many otherwise qualifying taxpayers.In July 2020, the IRS finalized, with modifications, the proposed regulations.The final regulations remove the specific documentation requirements for establishing: (1) foreign person status; (2) foreign use with respect to certain sales of general property; and (3) the location of a consumer of a general service.  Instead, the general rule will apply:  general tax law requires taxpayers claiming a deduction to be able to prove that they are entitled to the deduction. Additionally, in certain circumstances, foreign person status is presumed. Also, under final regulations, no carryforwards of excess FDII deduction is allowed.Essentially, the final regulations relax the specific documentation requirements for establishing: foreign use for sales of general property for resale and foreign use for sales of general property subject to manufacture.  The regulations also provide some simplification in the calculation, by permitting taxpayers to exclude from the calculation of qualifying income certain tax circular tax adjustments.The final regulations are applicable for taxable years beginning on or after January 1, 2021. However, in some cases, taxpayers may choose to apply the final regulations for taxable years beginning on or after January 1, 2018.The final regulations adopted a more flexible approach, which is good news for taxpayers with FDII. The final regulations should result in less administrative burden for these taxpayers and should reduce compliance costs. ### Ohio Sales Tax Holiday 2020 Ohio’s sales tax holiday runs from Friday, August 7, 2020 through Sunday, August 9, 2020.  During the holiday, clothing priced at $75 or less, school supplies priced at $20 per item or less and school instruction materials priced at $20 per item or less are exempt from state and local sales and use tax.Items used in a trade or business are not exempt during the sales tax holiday.  Clothing accessories and sports and recreational equipment do not qualify for the sales tax holiday.Details and frequently asked questions regarding the holiday can be viewed on the Ohio Department of Taxation’s website at: https://tax.ohio.gov/wps/portal/gov/tax/home/news/sales-tax-holidayContact us with questions regarding sales and use tax and visit the “Our Thoughts On” blog for additional state and local tax updates as they become available ### Group Exemptions Are Finally Getting New Guidance After 40 Years In January of 1980, the Internal Revenue Service (IRS) issued Revenue Procedure 80-27, the IRS’s prevailing authority on group exemptions.  If issued a group exemption by the IRS, a set of affiliated organizations under the general supervision and control of a central organization may receive IRC § 501(c) tax-exempt status as a group. The IRS issued Notice 2020-36 in May of 2020 announcing its intention update the 40-year-old existing revenue procedure.  Reducing the IRS administrative burden, efficiency and transparency increases, data integrity improvements and enhanced compliance related to more than 4,000 group exemptions and 440,000 subordinates were cited as objectives for updating the guidance.  The IRS has indicated that the proposed revenue procedures outlined in Notice 2020-36 will function as “a comprehensive resource regarding group exemption letters” including new requirements and modifications to current guidance. Several significant changes are identified below.Subordinate RequirementsThe central organization and all of its subordinates must all be exempt under the IRC § 501(c) or all must be an instrumentality or agency of a political subdivision.  The proposed revenue procedure provides that all subordinates described in § 501(c)(3) must be classified as public charities under the same paragraph of § 509(a), except that a group exemption may include both 509(a)(1) and 509(a)(2) organizations. Subordinates classified as a church, educational organization, or hospital may all be included under one exemption.The primary purpose of each § 501(c) subordinate other than § 501(c)(3) subordinates, must be described by the same National Taxonomy of Exempt Entities code.  A uniform governing instrument must now be adopted and used for all subordinate organizations with the same charitable purpose that are included in the group exemption.Group Exemption Limitations and RequirementsThe central organization must have at least five subordinate organizations to receive exemption and must maintain at least one subordinate to keep the exemption. Under the proposed revenue procedure, central organizations may only maintain one group exemption letter. Previously, the IRS placed no limit on the number of group exemptions a central organization could have.Supervision and ControlSubordinates included in a group exemption must be subject to the central organization’s supervision and control.  Notice 2020-36 provides that a subordinate organization is under a central organization’s general supervision if the central organization annually reviews and retains information on the subordinate’s finances, activities, and compliance with annual filing requirements, and sends written notice to the subordinate about the requirements to maintain its tax-exempt status.Control occurs if the central organization appoints a majority of the subordinate’s officers, directors, or trustees; or a majority of the subordinate’s officers, directors, or trustees serve the central organization in the same capacity.Organizations Ineligible for Group ExemptionsPrivate foundations and entities organized in a foreign country are not permitted to be included as a subordinate in a group exemption; however, a domestic subordinate organization may operate in a foreign country. In addition, the following organizations may not be included in a group exemption: Type III supporting organizations; Qualified not-for-profit health insurance issuers described in § 501(c)(29); and Organizations that have had their exemption automatically revoked and have not yet had their exemptions reinstated. Authorization for Removal from Group ExemptionSubordinate organizations are required to authorize central organizations to include them in the request for group exemption. Going forward, a central organization may remove a subordinate organization from the group exemption letter if the subordinate fails to comply with the requirements of the proposed revenue procedure.  Maintaining Group Exemption LettersCentral organizations are required annually to submit the Supplemental Group Ruling Information (SGRI) to maintain the group’s exemption. Under the proposed revenue procedure, the SGRI will be required to be submitted at least 30 days before the end of the central organization’s accounting period. A central organization may add new subordinates to its group exemption provided that the central organization complies with new SGRI disclosures.ApplicabilityThe proposed revenue procedure will become effective upon publication and will apply to all organizations with group exemptions. A one-year transition period is expected to be provided. Until then, Revenue Procedure 80-27 remains in effect. Grandfather rules will apply in certain situations and will need to be reviewed.This article lists only certain changes that would affect group exemptions. The full notice can be found by visiting the IRS website at https://www.irs.gov/pub/irs-drop/n-20-36.pdf.If you have any questions surrounding group exemptions or how these changes may be applicable to your organization, please contact our tax-exempt experts. ### Extension of the Main Street Lending Program This article was updated on July 29, 2020.  Further updates will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic. On July 28, the Federal Reserve announced an extension of its lending facilities from September 30, 2020 to December 31, 2020.  The extension applies to the Main Street Lending Program (Main Street).According to the Federal Reserve, the three-month extension of its lending facilities will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic.For more information on the Main Street Lending Program, please see Schneider Downs’ previous Our Thoughts On articles:Main Street Loan Modifications for Not-for-Profit Organizations Another Expansion of the Main Street Lending Program Main Street Lending Program –FAQs Part 1 Main Street Lending Program –FAQs Part 2 If you have other questions regarding the Main Street program, reach out first to your bank and other lenders to see if you can apply for Main Street funding through them.  If you need more information, please reach out to any of your connections at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Greasing the Skids: Sell-Side Due Diligence Contemplating a company sale? Some reasons to consider sell-side due diligence After many years of hard work and dedication, you’ve made the decision to potentially sell your business. The sale process itself is typically a somewhat arduous task, with one of the most challenging parts being under the due diligence microscope after signing a letter of intent. The term ‘due diligence’ is primarily understood to be the process that a prospective buyer undertakes to learn as much as possible about a target before closing on the purchase (buy-side due diligence). Obviously, a buyer wants to be fully confident that the normalized earnings of a target are sustainable on a prospective basis and supported by accounting records, facts, circumstances and documentation. Also, a buyer needs to ensure that a target is not saddled with any significant down-side risk (e.g., warranty claims, environmental issues, regulatory noncompliance, tax obligations, etc.). Sell-side due diligence, on the other hand, is the process that a prospective seller undertakes to self-scout the company and proactively identify potential deal issues. In assisting clients with buy-side due diligence, Schneider Downs has found that small- to middle-market targets that have performed rigorous sell-side due diligence have fared much better than their counterparts that have not. Targets that have performed sell-side due diligence have already taken a hard, close look at themselves before being subject to buy-side due diligence by prospective buyers, and have identified the most vital transaction information of interest to a potential buyer. Also, as a result of the sell-side due diligence effort, many of the underlying data, documents and records have been uploaded to a data room for timely release to the prospective buyer and its representatives. Key benefits that can be derived from a sell-side due diligence evaluation include: Accurate Valuation of the Company A seller needs to project an accurate picture of the company’s financial results, including pro forma adjustments supported by data and/or documents that can be verified by the buyer. When buyers perform due diligence, their goal is to try to identify negative earnings adjustments, which would result in a lower valuation. By undertaking sell-side due diligence, a seller could find positive adjustments that could increase the valuation. Address Buyer Concerns Buyers get skittish when the reliability of financial information and/or data provided by the seller is obviously erroneous or in question. Sell-side due diligence allows for a ‘dry run’ at verifying the data and financial information by a ‘friendly’ party prior to issuance to a potential buyer so that errors can be fixed or explanations provided up front. Eliminate Surprises Sell-side due diligence will not necessarily identify every single potential problem or question involved in a deal, but it should address the most significant issues so that a ‘deal killer’ does not come from out of nowhere. It’s better to identify these concerns through sell-side due diligence and control the message to the buyer than to be surprised when a buyer finds something 45 days into the exclusivity period. If you’re considering selling your company, we highly recommend performing sell-side due diligence prior to marketing your company in order to maximize value, minimize pain and ultimately get to the finish line. Schneider Downs has extensive experience in providing buy-side and sell-side due diligence services. Contact Joel M. Rosenthal or Marc P. Brdar for more information. ### Estate Planning as a Tool for Your Business Succession Plan The year 2020 has been mired with uncertainty and unprecedented strife for many.As we reflect on the past six months and prepare for the next, now may be an opportune time to consider fine-tuning your business succession strategy. Planning ahead will allow you to rest easy, knowing that your affairs are under control in these unsettled times.Let’s look at a partnership, for instance. Without proper succession planning, upon the death or incapacity of a partner, that partner’s interest may experience undesired distribution, lost value, forced sale or goodwill concerns, not to mention a hefty estate tax. Estate planning offers some convenient solutions to better navigate such events.Though a partner may draft his or her will to guide executors on how to manage their assets upon death, there are several steps a business owner can take during their lifetime to ensure their assets are managed in a tax-efficient manner.One useful estate planning tool is the Intentionally Defective Grantor Trust, or IDGT. An IDGT is structured so that the grantor pays the income tax on the trust’s income since the IDGT is considered owned by the grantor. The trust, however, is not included in the grantor’s estate. This may allow the trust to be taxed at a lower rate during the grantor’s lifetime while avoiding both gift and estate tax.As an example, a partner may create an IDGT and sell a portion of their interest to the trust for a promissory note. The sale itself is not a taxable transaction, but the partner would continue to pay tax on the income. Payments on the promissory note made to the partner are from distributions in the sold partnership interest, but the IDGT shelters the partner’s interest from both gift and estate tax.Another useful estate planning tool is the Grantor Retained Annuity Trust, or GRAT. This trust is irrevocable and allows a business owner to transfer their shares of a partnership to the trust while retaining the right to a fixed annuity for a certain number of years. The annuity can be also be paid with distributions from the partnership to the trust. At the end of the term, which must expire during the partner’s lifetime, the property remaining in the GRAT passes on to children or an intended beneficiary.At Schneider Downs, our team of experienced tax professionals are here to help you make tax-efficient decisions that best suit you, your family and your business. Feel free to contact us with any inquiries regarding the above information.Sources:Partnership Tax Planning and Practice - Charles R. Levun,¶6565,Intentionally Defective Grantor TrustsPartnership Tax Planning and Practice - Charles R. Levun,¶9689,IRS Provides Helpful Guidance for Sales of Property to Intentionally Defective Grantor TrustsFinancial & Estate Planning, Sidney Kess, Consulting Editor: Articles,¶33,121,Practical Succession Planning for the Family-Owned Business 1©2008 S.V. Grassi and J.H. GiarmarcoReproduced from the J ournal of P ractical E state P lanning, a CCH Tax and Accounting Publication.By Sebastian V. Grassi, Jr. and Julius H. Giarmarco * ### Temporary 100% Deduction of Business Meals Proposed by Senate Republicans Senate Republicans proposed a series of bills on July 27 to address the current economic impact of the coronavirus. These bills are still in the negotiating stages, and it remains to be seen what the final form of legislation will look like.One interesting provision that is proposed would provide a temporary allowance to deduct 100% of all business-related food and beverage expenses provided by a restaurant that are paid or incurred by businesses before January 1, 2021. This provision is aimed at assisting the hospitality industry, which has been severely impacted by the coronavirus pandemic, although it would also give a break to any business that receives the 100% deduction.There has not been a significant amount of business entertaining due to the coronavirus pandemic, but hopefully, if the virus were to recede before the end of the year, businesses could begin to increase their business prospecting and client entertainment to take advantage of this full deduction – even if it is only through the end of the year. The inclusion of this proposed deduction in the bill leaves a window open for future legislation aimed at helping the hospitality industry, which is in dire need of an economic boost.Please stay tuned for updates to this proposed legislation as it evolves, as Congress works toward final passage of a second coronavirus economic relief bill or series of bills. ### Garmin Hit with $10M Ransomware Attack Early on July 23rd, 2020, navigation and smart device maker Garmin became the victim of a new strain of ransomware known as WastedLocker. Scope of the Attack The attack shut down a variety of services offered by Garmin, including Garmin Connect, which allows users to track and upload biometric data, distances traveled during a workout, and a variety of other information collected by their Garmin smart devices, and flyGarmin, a flight planning software leveraged by pilots who utilize a Garmin navigation device in their aircraft. Fitness enthusiasts woke up on the morning of the 23rd to find they could not upload not upload data from their latest workouts, and even worse, many pilots found themselves unable to update to the latest version of Garmin’s aviation database. Planes without the latest version of this database were grounded due to the Federal Aviation Association’s rules requiring planes to use the most up to date version of this database. Customers of these services looking for answers as to why their products weren’t functioning properly were met with silence as the attack also compromised Garmin’s customer service functions. A Familiar Enemy This attack appears to have been orchestrated by the Russian hacker organization known as Evil Corp (aliases include: INDRIK SPIDER, TA505, and SectorJ04). This is the same group of hackers who developed Dridex malware, Bitpaymer ransomware, and the aforementioned WastedLocker ransomware that is allegedly affecting Garmin. The group reportedly demanded $10M in ransom from Garmin in order to free the company’s files from the encryption. Broader Implications While a recent Garmin press release claims no data has been stolen, the attack does have some very serious implications regarding data security within the fitness tracker and GPS navigation domains. As we’ve seen in some cases, such as the Maze ransomware, criminals are not only encrypting data for ransom but also copying the data for their own use. Garmin’s health and fitness devices record very specific biometric data that can be transformed into identifying information alarmingly fast. On top of that Garmin houses navigational data collected from those using Garmin devices for aviation as well as fitness. If this data is not properly secured by those who are gathering it, it becomes a matter of when, not if, the data will be stolen. A Look at Garmin’s Response The first step in any disaster recovery is restoring services and ensuring business continuity. In the case of ransomware, the best chance at recovery is often through careful restoration from offline backups. Schneider Downs recommends companies work with an experienced digital forensics and incident response (DFIR) team to ensure ransomware is not reintroduced into the recovery environment from infected backups. Companies without reliable backups are often forced to pay the criminal’s ransom demands in order to restore service. Although Garmin’s systems were down for around four days after the attack, the company now reports that the majority of their services are back up and running. It is unclear at this time how Garmin restored their systems and undisclosed if they ultimately paid any ransom. When a security breach occurs it is important to be transparent with how the company plans to prevent this type of event in the future, as well as mitigating any potential harm to customers. A four day outage surrounding very personal data is something that can have lasting harm to a company’s reputation, but releasing broad and incomplete information about any cybersecurity incident can leave a company with a black eye when they later reveal the incident had a greater impact than initially reported. Garmin has the opportunity to win back trust from its customers, but that window is closing. The company has thus far put out only a limited press release regarding the incident on July 27th. Moving forward we would like to see them include how the weapon was delivered, a brief overview of how the issue was resolved, and finally, some specifics on how they plan on preventing this in the future. The question now becomes what lasting reputational impact Garmin will face. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### The Future of Manufacturing It is no secret that smart technology products are growing in popularity. Not only does this include our iPhones and Alexa home products, but the idea of smart technology has also entered into the manufacturing industry.  Smart factories, which rely on connected software and devices in order to leverage technologies such as Artificial Intelligence (AI), automation and the Internet of Things (IoT), are becoming the new norm in this industry. Companies such as Whirlpool, Hirotec, Hewlett-Packard and many others have implemented smart manufacturing in order to enhance their strategic goals. These factories are the next step from traditional automation to fully flexible and connected systems. They will aid in cutting costs through streamlined efficiencies and, in turn, increase profitability. As manufacturing companies realize the need to adapt along with their competitors, there is increasing pressure to implement these technologies in their factories.Another prevalent topic of discussion in today’s news is the impact of 5G networks and what they have to offer. According to a recent article from AT&T, 5G networks will revolutionize the manufacturing industry. The fourth Industrial Revolution, frequently termed as “Industry 4.0,” will pave the way for smart factories, which will utilize and rely on the capabilities of 5G networks. True smart factories can combine data from an entire system’s physical, operational and human assets in order to drive manufacturing, maintenance support, inventory management, digitization of operations and other sorts of activities throughout the manufacturing network.  Additionally, the connected devices in these factories have the ability to sense their environments and work in conjunction with each other in order to make decentralized decisions. Therefore, the high capacity, wireless flexibility and low-latency performance of a 5G network make it a logical choice to support manufacturers in these environments. It helps manufacturers meet the challenges that come with the implementation and beginning phases of a smart factory. There is also an expectation that the use of 5G technology will result in smaller and lighter IoT devices, which will aid in cutting costs and the need for space. In addition to these benefits, a study completed by Ericsson predicted new revenue potential for manufacturing operators that use 5G technologies to address industry digitalization. This study expects the addressable market to hit $113 billion in revenue in 2026, resulting in a 7% increase in forecasted revenue.Furthermore, it is important to address the current situation at hand in our world—the impact of COVID-19. The coronavirus pandemic has severely threatened the economy due to several government restrictions and social distancing guidelines. This, in turn, could deter companies from implementing new technologies due to significant up-front costs. However, some industry analysts suggest that these restrictions and economic downturns will not stop digitalization, but rather cause a sense of urgency to implement these technologies in order to strengthen businesses and allow for proper social distancing among factory workers. An example of this implementation is creating a network of IoT tools and sensors to help protect factory workers on the job such as: Bluetooth wristbands that buzz when workers are too close, wireless-motion detection sensors that alert others when an individual enters an occupied workspace, and remote equipment sensors that help reduce the number of employees on-site.As manufacturers continue to adapt to external pressures such as their competitors and COVID-19 workplace restrictions, they should look into the potential positive and negative impacts that implementing a smart factory could have on their businesses. Smart manufacturing may or may not be right decision at the current moment for your company, but it will lay the foundation for the future of the industry.Sources: https://www.smartindustry.com/blog/smart-industry-connect/using-wireless-sensors-to-maintain-social-distancing-on-the-factory-floor/ https://internetofbusiness.com/success-stories-five-companies-smart-factories-can-learn/ https://www2.deloitte.com/us/en/insights/focus/industry-4-0/smart-factory-connected-manufacturing.html https://keitercpa.com/blog/how-internet-of-things-iot-5g-impact-manufacturing-industry-va-cpa/ https://www.ericsson.com/en/networks/trending/insights-and-reports/5g-for-manufacturing#:~:text=5G%20networks%20offer%20manufacturers%20and,can%20create%20new%20revenue%20streams. https://www.business.att.com/learn/tech-advice/how-5g-will-revolutionize-manufacturing.html ### Use It or Lose It…Maybe: Gift Planning Considerations in an Unpredictable Election Year In a year rife with a global pandemic, intense social justice movements, tempestuous markets and dogged allegiance to party lines, the 2020 presidential election seems to be as unpredictable as the year itself. Should the Democrats take control of Capitol Hill, it is almost certain that one of the first pieces of Trump administration legislation to face scrutiny will be the Tax Cuts and Jobs Act of 2017 (TCJA). Among the significant provisions of the TCJA was the doubled gift tax lifetime exemption. This exemption allows taxpayers to make gifts of up to a certain cumulative value throughout their lives and avoid transfer taxes on those gifts. It is well-settled that Democrats favor higher gift taxes and lower exemptions, while Republicans advocate the opposite. The TCJA perfectly illustrated this paradigm by increasing the gift tax lifetime exemption from approximately $5 million to $10 million. When indexed for inflation in 2020, that amounts to approximately $11.58 million in gifts a person can make without seeing a cent of gift tax. The exemption is per individual, so it is effectively doubled to $23.16 million for married couples. For taxpayers who make gifts exceeding the exemption, the TCJA continues to impose a flat tax rate of 40% on the transfers. While the TCJA provision is written to sunset on December 31, 2025, a win for the Democrats would likely put the lights out on it much sooner. Presumptive Democratic nominee  former Vice President Joe Biden released his “Unity Task Force Recommendations,” detailing his economic plans as president.. Included within those recommendations is lowering the estate tax exemption back to the historical norm. Under the unified system for estate and gift taxes, Mr. Biden’s recommendation likewise applies to the gift tax exemption. Although Mr. Biden took a comparatively conservative position against his progressive former opponents regarding estate and gift taxes, the release does not indicate what “historical norm” he intends to revert the exemption back to. Between 1997 and 2001, the exemption ran in the $600,000s. From 2002 to 2010, the gift tax exemption was $1 million. Until the TCJA, the exemption hovered around $5 million. In addition to lowering the exemption, it is also possible that Democratic tax reform could be retroactive to a certain extent. Assume such legislation occurs late in 2021. It is a real possibility that the act could be effective January 1, 2021, for example. To this end, many taxpayers who contemplated doing some substantial gifting are accelerating those gifting strategies to 2020. If you wish to understand gifting options available to you, please do not hesitate to reach out to your Schneider Downs tax advisor. https://www.jdsupra.com/legalnews/insight-on-estate-planning-april-may-39849/#:~:text=However%2C%20the%20favorable%20estate%20tax,pre%2D2018%20levels%20after%202025. https://taxfoundation.org/federal-estate-and-gift-tax-rates-exemptions-and-exclusions-1916-2014/; https://www.taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work ### Charges Filed Against First American Title Insurance Company For Cybersecurity Lapse The New York State Department of Financial Services (DFS) has charged First American Title Insurance Company with exposing tens of millions of customers’ sensitive documents from October 2014 through May 2019 due to a known vulnerability on the company’s public-facing website.  This is the first action filed under DFS’s cybersecurity regulations, which went into effect in March 2017.According to DFS, these documents included customer bank account numbers and statements, mortgage and tax records, Social Security numbers, wire transaction receipts and drivers’ license images.  Each exposure of non-public information encompassed within the charges constitutes a separate violation carrying up to $1,000 in penalties per violation. The DFS’s cybersecurity regulations were first proposed in 2016 to protect against the ever-growing threat of cyberattacks.   They require banks, insurance companies and other DFS-regulated financial services institutions to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of the financial services industry.  New York is the first state to adopt cybersecurity regulations.According to DFS, the vulnerability was originally discovered by an internal penetration test in December 2018.  Apparently, the vulnerability was a result of a software update in May 2014 and went undetected for years.  The company then ignored the cybersecurity team’s advice to follow up on the vulnerability.  First American did not respond to the vulnerability until the breach and its serious ramifications were widely publicized by a nationally recognized cybersecurity industry journalist.The journalist, KrebsOnSecurity, first reported the leak in May 2019, and estimated approximately 885 million files, dating all the way back to 2003, were maliciously accessed.  In August 2019, First American claimed that a third party investigated the issue and identified only 32 consumers whose non-public personal information was likely accessed without authorization.  However, when Krebs asked how long it maintained access logs or how far back in time that review went, First American declined to be more specific, saying that its logs covered a period typical for a company of its size and nature.  The DFS claims that First American’s review covered only web logs retained from June 2018 onward, and only 350,000 documents were accessed without authorization. Some of the provisions DFS is charging First American of violating include failing to perform an adequate risk assessment; not maintaining proper access controls; not providing adequate security training for cybersecurity employees; and failing to encrypt nonpublic information.  According to DFS, First American allowed ”unfettered access” to customer data for more than six months, despite being aware of the vulnerability from the internal penetration testIn a statement, First American proclaimed that the company “strongly disagrees with the New York Department of Financial Services’ charges.  As we reported in July 2019, our investigation into the incident, conducted with an outside forensics firm, identified a very limited number of consumers whose non-public personal information likely was accessed without authorization and otherwise found no evidence of misuse of any non-public personal information. None of these identified consumers were New York residents. At First American, security, privacy and confidentiality are of the highest priority, and we intend to vigorously defend ourselves against the Department’s unreasonable charges.”  A hearing is scheduled for October 26.  First American’s stock price fell by more than 6% following the news of the breach.  The company could also face millions of dollars in fines if the maximum penalty is pursued for each breach by the DFS. Don’t let this happen to your firm.  Schneider Downs can help you perform a NYDFS Cybersecurity compliance assessment or penetration test to determine if there are weaknesses in your IT systems of compliance programs that could lead to similar regulatory action ### Changes to Form 1023, Application for Tax Exemption under Section 501(c)(3) News broke in early 2020 that the application for exemption under Section 501(c)(3), more commonly known as Form 1023, would be changing over to an online submission system. Revenue Procedure 2020-08 allowed for a 90-day transition period to the online filing process, which also incorporates a makeover of Form 1023.Notable changes include: Applicants are asked to provide an NTEE Code that best describes their activities, but may also request the IRS to select the code instead. Sample grant applications are no longer required. Applicants are instead asked to provide information that includes to whom the grants will be made (charitable or non-501(c)(3) recipients), whether pre-grant inquiries and monitoring will be used, and/or if the recipient will be a foreign organization. Applicants are asked whether they will operate in a foreign country or if they sponsor donor-advised funds. New questions expand upon joint ventures and conflicts of interest with regard to family members. With regard to churches, applicants are no longer asked about their formal codes of doctrine and discipline, or for copies of literature or church bulletins. Applicant schools do not need to submit materials related to racially nondiscriminatory policies Hospitals and medical research applicants are asked revised questions regarding free and below-cost service offerings. They are also not required to submit any related policies. Applicants requesting retroactive reinstatement are asked to demonstrate how they “acted reasonably and in good faith,” and provide details surrounding the request for an earlier exemption effective date. For applicants providing low-income housing, Schedule F has been revised to remove reference to housing for the elderly or handicapped. Successors to other organizations are no longer asked if the predecessor had previously requested tax exemption or had an exemption revoked or suspended. Applicants that provide scholarships, fellowships, educational loans or other educations grants are no longer asked about the terms of such loans or about details regarding the number and amount of loans or grants. Applicants also need not provide sample materials or sample loan applications. Applicants are no longer asked: whether they accept vehicle, boat, plane or similar donations; specific questions about bingo and gaming revenue, as well as states and jurisdictions of fundraising; whether they are affiliated with a governmental unit, engage in economic development or if they are a charitable risk pool; or whether they are claiming exemption as a childcare organization or cooperative service organization of operating educational organizations. The Pay.gov website guides users page-by-page through the Form 1023, directing applicants only to sections applicable to the questions they’ve answered. To see a preview of the revised Form 1023 with all schedules, visit https://www.pay.gov/public/form/preview/pdf/101If you have any questions on the updated Form 1023, please contact any of our exempt organization experts. ### Staying Ahead of The Curve Never before has the business environment for manufacturers been more rapidly changing. Over the past couple decades, manufacturing companies have invested billions of dollars to maintain standing in the industry and market share in attempts to combat the effects of Moore’s Law, which states that the speed and capability of computing factors will double every two years, and to stay relevant in constantly shifting times. While technology continues to advance at an exponential rate, creating new developments and efficiencies, for the first time we’re observing physical limitations to the industry, thanks to a global pandemic of uncertain longevity, which has raised the question, “As physical limitations limit a company’s potential production capability, what can manufacturers do to maintain market share and stay competitive?”Over the past few months, a number of manufacturers with the capital and competency to do so offered their services to aid in the production of personal protection equipment. While this was a temporary throughput solution that provided help during a critical time and yielded a positive public image for these organizations, the efforts wouldn’t be enough to provide the necessary revenue streams for most companies to sustain existence, and many of these manufacturers are once again looking toward the future of their primary production channels.Manufacturing makes up 11.4% of the total U.S. GDP, yet is considered to only be “medium” in technology change when compared to other industries, per IBISWorld. In other words, one of the leading industries in size is only in the middle of the pack in terms of technological integration. That means there’s plenty of opportunity for growth. Here are three critical steps manufacturing companies can take right now to differentiate themselves from the competition: While work is still sparse, companies that invest now to increase abilities and efficiencies may not only see immediate success, but post-COVID growth, since many of their competitors may have become lax during these times. How this looks for one company may be different from another, based on factors like risk appetite, availability of assets and available technologies, so there’s no one-size-fits-all solution. Rather, it would be better to acknowledge that there are an abundance of routes and solutions, some of which include using resources already available to the business, reallocating man-hours or doubling down on investment in new technology. Next, companies should work toward creating new production streams. The COVID era has no end in sight, so creating and implementing strategies that can limit growing pains during this complex time might assist in the sustainability of the organization. Finally, companies should keep an eye out for the availability of applicable technologies. While sales and business are down, tech companies – like many others – are looking for new ways to combat the cons that come with living in these times. Staying current with industry technology may permit a company to be an early adopter of new systems that could allow for more autonomous and enhanced production, which would ultimately allow it to avoid or better overcome the physical limitations brought about by the current environment. These steps can provide a solution to one or more of the many current problems you may be facing. By implementing them, you’ll be able to stay productive, profitable and efficient, conquer the physical limitations, and ultimately stay ahead of the curve. ### Introducing redlure by Schneider Downs Phishing assessments have always been, and will continue to be, a critical part of our penetration testing and red teaming methodology, and one of the key components is a phishing tool that allows us to accurately portray real life threat actors. In the past, our team has used several different phishing tools and platforms, and with each of them we felt there must be something out there better suited for our needs. These needs drove the decision to develop redlure, our own open-source phishing platform. Our initial goal was to develop software that provides customizable, scalable and more importantly, realistic phishing campaigns for our clients. We understand the importance of creating phishing assessment campaigns that mimic the real user experience you get when using cloud services. Examples of these cloud services include Office365 or Gmail, with each requiring your username and password to be submitted on sequential webpages. Over time, our software solution evolved to meet the following needs of our operators: Manage multiple phishing campaigns in parallel, since we often need multiple phishing servers and campaigns to be in use simultaneously while managing engagements. Chain templated webpages together in a way that allows us to accurately mimic user experiences on popular sites our targets are familiar with. Scale up and down quickly when we have a need for extra phishing servers or need to replace a server with a burned IP address. Centralize management within a single interface that allows us to control remote phishing servers and perform actions, such as remote SSL certificate generation. Encrypt sensitive data within the platform’s database, such as our SMTP credentials and client-submitted credentials. Integrate payload delivery so that we can conveniently and quickly serve payloads off our phishing infrastructure without feeling a need to needlessly expose our C2 (command and control) infrastructure for payload hosting. Improve metrics that allowing us to track which specific targets have opened emails, clicked links, downloaded payloads and submitted credentials. The result was a framework consisting of three parts: redlure-console: A python API serving as the central backend for your phishing infrastructure. The console manages the sole database, sends emails and aggregates results. It also communicates with your redlure-workers, which we’ll get to in a moment. redlure-client: A web interface built on the Angular framework which allows you to interact with the API endpoints exposed by the console. redlure-workers:  A small Python API controlled remotely by the console. Workers serve phishing webpages and communicate results and credentials back to the console. This structure allows you to attach as many remote servers running the worker API to a single console for management. A sample environment with two workers is depicted below: DEF CON 28 Demo Labs We are really excited to announce that redlure will be featured as part of the DEF CON 28 Demo Labs. During the demo we will look at the tool in a test environment, walk through the core features, create several phishing campaigns and simulate the actions of unsuspecting end-users. Our live demo schedule is below: Friday 8/7 4:00 PM - 6:50 PM (UTC-7) Sunday 8/9 10:00 AM - 11:50 AM (UTC-7) The redlure code repositories will be going public on Thursday, August 6th, 2020 at www.github.com/redlure. Please contact us if you are interested in a demo outside DEF CON. About the Developer Matt Creel has been a member of the Schneider Downs cybersecurity practice since 2017 where he helps clients with penetration testing, red teaming and incident response services. Matt has served clients in manufacturing, healthcare, automotive, financial and higher education industries. One of Matt's focuses is offensive tool development, notably password spraying and phishing tools. How Can Schneider Downs Cybersecurity Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit our website. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### Main Street Loan Modifications for Not-for-Profit Organizations This article was updated on July 23, 2020.  Further updates will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic. On July 17, the Federal Reserve announced that it would modify the Main Street Lending Program (Main Street) to allow greater access to credit for not-for-profit organizations (i.e., tax-exempt organizations as described in Section 501(c)(3) or 501(c)(19) of the Internal Revenue Code) that were in sound financial condition prior to the pandemic.The two Main Street loan options for not-for-profit organizations have updated terms, as summarized below (changes from the prior not-for-profit proposal released for comment in mid-June are in italics):   New Main Street Loans  for  Not-for-Profits Expanded Main Street Loans for Not-for-Profits Term Five years Minimum Loan Size $250,000 $10,000,000 Endowment Cap $3 billion Years in Operation At least five years Eligibility Criteria Minimum employees – 10 (previously 50) Total non-donation revenues equal to or greater than 60% of expenses for the period 2017-2019 (previously 70% of expenses) 2019 operating margin of 2% or more (previously 5%) Current days of cash on hand – 60 days (previously 90 days) Current debt repayment capacity–ratio of cash, investments and other resources to outstanding debt and certain other liabilities–of greater than 55% (previously 65%)   Maximum Loan Size Lesser of $35M or the borrower’s average 2019 quarterly revenue Lesser of $300M or the borrower’s average 2019 quarterly revenue Risk Retention 5% Principal Payment  Principal deferred two years, years 3-5: 15%, 15%, 70% Interest Payments Deferred one year Rate LIBOR + 3%  If you have other questions regarding the Main Street program, reach out first to your bank and other lenders to see if you can apply for Main Street funding through them.  If you need more information, please reach out to any of your connections at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com.   ### Estate of Jones v. Commissioner For many years there has been general consensus among valuation analysts that taxes should be considered when valuing a pass-through entity (“PTE”) (i.e., S Corporation, LLC, LP, etc.). Most valuation analysts have claimed that a potential buyer would consider income taxes when negotiating a price in a potential business acquisition.In the 1999 landmark case of Gross v. Commissioner (as well as other cases since), the Tax Courts opposed this view, holding that because the earnings of a PTE are not subject to taxes,  a PTE’s forecasted earnings should not be tax-affected in a business valuation. The Tax Court’s decision in the Estate of Aaron U. Jones v. Commissioner of Internal Revenue (“Jones Case”), however, was an unexpected change in that pattern.In the Jones Case, Aaron Jones gifted ownership in two PTEs which operated a sawmill and timberlands in May 2009. The IRS argued that the PTEs were significantly undervalued, resulting in a deficiency in gift tax of nearly $45 million. Among other issues, the IRS stated that the estate’s expert, Richard Reilly, improperly tax-affected the PTEs’ forecasted earnings when determining the value of the entities under the income approach to business valuation. Specifically, Mr. Reilly used a 38% combined federal and state tax rate to adjust the PTEs’ cash flow and cost of debt used in the discount rate determination. He then applied a premium to reflect the benefit to the PTE owners of avoiding dividend taxes that would have been owed if the entity were a C Corporation based on an empirical study analyzing S Corporation acquisitions and the entities’ histories. The tax court concluded that Mr. Reilly’s tax-affecting, although “not exact,” was “more complete and more convincing than respondent’s zero tax rate.”The court cited other cases, including Gross v. Commissioner, where tax-affecting PTEs was rejected, and explained why the Jones case was different:“While respondent correctly points out that we rejected the proffered tax-affecting in Gross and later cases, he misconstrues our rationale. In Gross v. Commissioner, [...] we concluded that “the principal benefit that shareholders expect from an S corporation election is a reduction in the total tax burden imposed on the enterprise. The owners expect to save money, and we see no reason why that savings ought to be ignored as a matter of course in valuing the S corporation. We then concluded that, on the record in that case, a zero-percent corporate tax rate properly reflected those tax savings, rejecting the expert’s offered justifications. More recently, in Estate of Gallagher v. Commissioner, [...] we again rejected tax-affecting because the taxpayer’s expert did not justify it but again acknowledged that the benefit of a reduction in the total tax burden borne by S corporation owners should be considered when valuing an S corporation. And in Estate of Giustina v. Commissioner, [...] we rejected tax-affecting in the valuation of a partnership because we found the taxpayer’s expert’s method to be faulty: He used a pretax discount rate to present value post-tax cash flow. The question in those cases, as here, was not whether to take into account the tax benefits inuring to a flowthrough entity but how.”Although this is certainly not a definitive conclusion regarding whether tax-affecting of PTEs (when valuing those entities) will always be accepted by the tax court in the future, it is a positive sign for valuation experts who largely favor this practice. As the excerpt above indicates, the tax court took issue with how a PTE’s tax benefits were considered in the various cases, not that they were considered at all. The court found Mr. Reilly’s approach to be more complete and convincing than the IRS’s, which stresses the need for valuation analysts to always thoroughly document and explain each assumption when preparing a business valuation.Schneider Downs has significant experience in preparing business valuations for gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) for more information about Schneider Downs’ business valuation services. ### Blackbaud Breach Alert! Blackbaud, one of the world's largest providers of education administration, fundraising, and financial management software, recently disclosed that they were a victim of a ransomware attack that occurred in May 2020. The breach has affected educational institutions and nonprofits throughout North America and the UK, at least. According to Blackbaud, the cybercriminals exfiltrated "a copy of a subset of data" from Blackbaud's self-hosted environment, which did not include passwords, cardholder data, bank account info, SSNs, or their solutions in public cloud environments. However, the following data elements may have been accessed by the malicious actors: Contact info such as name, address, phone number, email Gender, DOB, student number Record of event and fundraising activities including donations, event participation, etc. Employer information This marks the second incident in 2020 that a major provider to the nonprofit sector was hacked. On the Hot Seat Blackbaud has been highly criticized for their handling of the incident. Affected parties of the breach were not notified until July 2020, weeks after the attack was initially identified in May 2020 (If you're interested in the potential data breach notification law implications, check out this comprehensive Breach Law Library). Additionally, Blackbaud paid an undisclosed amount of Bitcoin to the cybercriminals, without considering input from their customers. While most in the cybersecurity community are not so trusting of hardened criminals, Blackbaud has publicly expressed their optimism that the cybercriminals destroyed the data and/or won’t misuse, disseminate or make the data publicly available: “We have credible confirmation that the data was destroyed for two reasons: The cyber ransom business model is dependent on the cybercriminal not disclosing the information or they lose credibility and leverage. We worked with a third-party expert in communicating with the cybercriminal, and we only paid the ransom when we received credible confirmation that the data was destroyed… as a precautionary measure, we have hired outside experts to monitor the Internet, including the dark web, and they have found no evidence that any information was ever released, and we will continue to monitor,” a Blackbaud spokesperson said. What Should You Do Next? Blackbaud has not publicly revealed the scale of the breach, exactly what data elements were accessed, the amount of ransom that was paid, why they took weeks to notify affected parties, or any further technical details on how the cybercriminals spread the ransomware. If your organization uses any of Blackbaud’s self-hosted software (namely Altru, Financial Edge NXT, NetCommunity, or Raiser’s Edge NXT), you should perform additional investigative procedures to get answers to these questions and determine whether your organization or any of your constituents were implicated in the breach. You may need to review your contract with Blackbaud to determine if your organization has the right to audit clause or a clause surrounding data breach notification from Blackbaud. Now is also as good of a time as any to consult your incident response plan, third party risk management program, and cyber insurance coverage. This incident certainly highlights the need for organizations to exercise detailed cybersecurity due diligence over their critical vendors. At a minimum, a certified professional in cybersecurity should review the organizations SOC report, or other third party security attestation reports. Lest we forget, you can outsource services, but you cannot outsource risk. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident. ### Changes to Spending from Restricted Funds in Pennsylvania On July 23, the governor of Pennsylvania signed into law PA 2020 Act 71, which provides not-for-profit organizations additional flexibility with their spend. The Act modifies Pennsylvania’s existing version of UPMIFA (PA Act 141, which permits spending of no less than 2% and no greater than 7% per year) as follows:(iii) The board of directors or other governing body shall, in selecting a percentage, consider both the long-term preservation of the real value of the assets and the corporation’s need for capital to fulfill its mission, and may select a percentage of not more than 10% per year. This subparagraph shall only apply during calendar years 2020, 2021 and 2022, or for the corporation's fiscal years that end during those calendar years.The changes only impact organizations that have elected to be governed under PA Act 141 and Act 71, and does not apply to gift or other instruments with specific spending policies.As both Acts note, organizations are required to find a balance that considers “both the long-term preservation of the real value of the assets and the corporation’s need for capital to fulfill its mission.” With recent challenges brought about by the COVID-19 pandemic, access to spending additional funds may be helpful, but organizations should still carefully evaluate current needs against the goal of the long-term nature of the funds they maintain, since these funds are typically established by donors and others with the objective that they be invested for the long-term sustainability of the organization.Some organizations that lack access to liquidity and capital through other means may be able to use the additional spend to meet needs during these difficult times. As always, robust documentation of the discussions that took place during the determination of revising your spend is advised to support your organization’s conclusion.With this recent enactment, now is a good time to review not only your spending policy and related practices, but also your investment policy, to ensure it remains in sync with any changes. Investment policies typically contemplate a return that is aligned with both the impact of your spending policy and considerations like fees and inflation, to ensure long-term growth and preservation of the underlying assets. Any change to your spend should consider how it might impact your benchmark returns and achievement of your goals. ### What is the Impact of COVID-19 on Dealership Valuations? When the COVID-19 outbreak was declared a national emergency on March 13, nonessential businesses were closed by government order, which triggered a national recession.  As a result, gross domestic product (GDP) declined by 5.0% in the first quarter of 2020.[1] In early July, the Congressional Budget Office (CBO) issued an economic forecast that predicted that GDP would decline by 5.8% for 2020 before rebounding to increase by 4.0% in 2021. The forecast also predicted that GDP will recover to pre-pandemic levels by the middle of 2022.[2]It’s still uncertain, however, how long the recovery will actually take. Many individuals have lost jobs, with unemployment rising from 3.5% in February to 14.7% in April before dropping slightly to 13.3% in May, according to the U.S. Bureau of Labor Statistics.[3] Consumer confidence measures turned negative in March and April as consumers lost jobs and were uncertain about the economy.[4]  The CBO’s forecast for the unemployment rate at December 2020 is 10.5%, and while its 10-year projections do not show employment recovering to pre-pandemic levels, unemployment is predicted to gradually decline to 4.4% by the end of 2030. [5]    Declining GDP, high unemployment and reduced consumer confidence all negatively impact the automotive industry. Experts predict new vehicle unit sales will fall from 17.1 million in 2019 to 13.5 million in 2020.[6] Haig Partners, a brokerage firm that assists dealerships in the buying and selling process, reports that every franchise, with the exception of Kia, reported a decline in new unit sales for the first quarter of 2020 compared to the first quarter of 2019. Dealer profits are also expected to be down in 2020, but dealerships are generally resilient and recovery is expected. Profits from used car sales and the service segment could help mitigate lost profits from less new vehicle sales.Many dealers are wondering about the impact of the COVID-19 outbreak and to their dealership’s blue-sky (goodwill) value.  Because of the uncertainties, blue-sky value would in general, seem to have declined at this point. A review of six publicly traded automobile dealerships indicates that market capitalization declined by nearly 50% from December 31, 2019 to March 31, 2020.  However, market capitalization of these same dealer groups is down by an average of only 6% from December 31, 2019 to July 17, 2020.In late June, Haig Partners released The Haig Report Q1 | 2020 Trends in Auto Retail and Their Impact on Dealership Values, wherein it reported on 13 dealership transactions that have been affected by COVID-19. Of the 13 transactions, two were cancelled, three dealerships maintained the same value as pre-COVID-19, and eight reduced their blue sky values by an average of 10%.[7]In general, it seems that potential buyers of a dealership don’t want to offer the same amount as they did before COVID-19 hit; but sellers might not want to sell at a lower number, and may be able to wait until things improve if the offer is too low.The value of any business considers future earnings and expected cash flow. The value of blue sky at an automobile dealership similarly takes into consideration future growth expectations and risk factors. Determining what is expected in the future during these challenging times can be difficult, and expectations may be dealer and franchise specific. When will a dealership return to “normal” levels of earnings?  Earnings were down for many in March and April, but have rebounded somewhat in May and June. Valuing a business requires significant judgment in determining the correct approach and assumptions. Christy Samek is a senior manager with Schneider Downs who specializes in valuing automobile dealerships for estate and gift tax planning purposes, which are required to be at fair market value and consider both the perspectives of the buyer and the seller. Since values may have declined, it might be an appropriate time to consider estate planning.  If you need help determining the value of your dealership, please contact her at 412-697-5415. [1] Hopkins, Kevin R. “National Economic Report: May 2020.” http://keyvaluedata.com. Retrieved July 14, 2020. [2] Shackleton, Robert. “An Update to the Economic Outlook: 2020 - 2030” Congressional Budget Office. July 2020, www.cbo.gov. Retrieved July 16, 2020. [3] U.S. Bureau of Labor Statistics. “Graphics for Economic News Releases” https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm. Retrieved June 24, 2020. [4] Hopkins, Kevin R. “National Economic Report: May 2020.” http://keyvaluedata.com. Retrieved July 14, 2020. [5] Shackleton, Robert. “An Update to the Economic Outlook: 2020 - 2030” Congressional Budget Office. July 2020, www.cbo.gov. Retrieved July 16, 2020. [6] Haig, Alan. “The Haig Report: Q1 | 2020 Trends in Auto Retail and Their Impact on Dealership Values.” Haig Partners, LLC. June 2020, www.haigpartners.com/the-haig-report. Retrieved June 23, 2020. [7] Ibid  ### Details of Pennsylvania’s COVID-19 Hazard Pay Grant Program; Applications Due by July 31 Recently, Pennsylvania Governor Tom Wolf announced the availability of $50 million in grant funding to provide hazard pay to employees in life-sustaining occupations during the current COVID-19 pandemic. The program, intended to keep frontline employees working in industries that are deemed vital to the Commonwealth, is being administered by the Pennsylvania Department of Community and Economic Development (DCED).Businesses, healthcare nonprofits, public transportation agencies and certified economic development organizations that have employees performing work in one or more of the following industries are eligible to apply for the program: Healthcare and social assistance (including hospitals and nursing homes) Food manufacturing Food retail facilities Janitorial services to building and dwellings Transit,  ground passenger transportation, generalized and specialized freight trucking Certain security services for the above mentioned industries Funds from the grant must be used for hazard pay to eligible fulltime and part-time employees earning less than $20 per hour for the 10-week period from August 16 through October 24, 2020. The pay must be made to the employee over the 10-week period as a $3 per hour increase to their regular pay rate, and must be paid according to their regular pay schedule. It may not be withheld and/or paid in a later lump sum, nor can it be applied to any hours worked over 40 in a given week.Recipients of the pay must be employed in Pennsylvania by an eligible employer operating within an eligible industry described above. The employees must be ‘frontline’ employees who are facing the hazards of COVID-19 and have continued to work through the governor’s March 19 business closure order as a life-sustaining business or one that received a business waiver. Employees teleworking from home are not eligible.Applicants may apply for a grant of up to $1,200 per eligible fulltime equivalent employee (FTE) and up to 500 eligible FTEs per location. Funding is currently capped at $3,000,000 per applicant. Applications are being received until July 31 on the DCED website.Evaluation will include the following criteria:  Risk of exposure by industry Location and prevalence of COVID-19 Average hourly wage paid by the employer The program’s intent is to provide hazard pay to eligible employees who have responded directly to or faced an increased risk of COVID-19,  therefore applicants for the program will be prioritized by industry in accordance with the Worker Exposure Risk to COVID-19 released by the Occupational Safety and Health Administration.Lastly, applicants must make the following certifications under penalty of perjury: Employers pay employees, at least, the federal minimum wage of $7.25 per hour.  Employers are paying the employer share of the Federal Insurance Contributions Act for the hazard pay.  Employers follow Center for Disease Control guidelines, Department of Health regulations and guidance for reopening under the governor’s phased reopening plan to protect frontline employees from contracting COVID-19.  Employers are in compliance with all relevant laws, orders and regulations during the period of the COVID-19 disaster emergency under the governor’s proclamation dated March 6, 2020, and any and all subsequent renewals. The foregoing includes, but is not limited to, orders by the governor, secretary of health or other Commonwealth officials empowered to act during the emergency. Any noncompliant businesses will be ineligible for funding under this program and may be required to return all or portion of the funds awarded. Have questions concerning the PA COVID-19 Hazard Pay Program? Contact a professional at Schneider Downs today.Please visit our Coronavirus resource page for related content.  ### Body Temperature Monitoring and Potential Coronavirus Detection This Our Thoughts On article was developed by Construction Dive's brief on the health monitoring system.With increases in safety protocols at job sites due to the coronavirus, new strategies have been implemented to comply with the CDC and governmental restrictions. For example, a simple strategy implemented by Clark Construction is to use videoconferencing to check on the status of a project and have real-time discussions surrounding issues with projects. This has allowed the company to comply with social distancing protocols and to ensure that the maximum amount of workers on a job site isn’t exceeded. Similarly, Skanska Construction is using an online platform called StructionSite to provide advanced 360-degree imagery and videos of the jobsites they are working on to provide a substitute for on-site status walkthroughs. They can also upload floor plans to this platform to compare them to the images generated from the job site.The health monitoring firm, Kenzen, has developed a new system to help monitor construction workers’ body temperatures during the warmer months of the year. The device is a patch with a black arm band that would go around the worker’s bicep and has a mobile app that monitors their body temperature with the hope to avoid the adverse effects of heat-related illnesses. The arm band would allow supervisors to view metrics of the worker’s body temperature, allowing them to intervene prior to the worker becoming ill. According to the Occupational Safety and Health Administration, construction workers are among those at the highest risk of heat exhaustion, particularly when working outdoors on roofing or roadway projects.Although the device is not designed to detect a possible coronavirus infection, the inherent capabilities of the device could be crucial in detecting whether a worker is infected based on a rise in their body temperature. The safety manager would ultimately be responsible for assessing the reason for the spike in the body temperature increase, but quick responses to unusual increases in body temperature could lead to the isolation of workers and mitigate the spread of infections at job sites.The patch is in limited release, but contractors are able to test the product now because it will be available for sale in the fall. Health experts warn that COVID-19 is unlike any infectious disease seen before. It is unclear whether a “second wave” of infections is likely to ensue, and what that second wave would look like – and, indeed, if a first wave is still underway nationwide in the U.S. and globally.However, many infectious disease experts are speaking of a second wave of outbreaks, likely occurring in the fall months in the U.S. If the device operates as intended, implementation in the fall months could be extremely beneficial to monitoring the body temperatures of workers, and reducing the transmission of the virus. ### Financial Boot Camp Series: Is Your Estate in Proper Order? Estate planning is the process of identifying one’s assets and providing clear instruction for who receives what assets, when they receive it, and any additional terms associated with inheritance of these assets. Regardless of the size one’s estate, everyone has a financial estate that at some point will need to be administered. Despite the importance of ensuring your financial affairs are well organized, allowing your loved ones to efficiently administer your estate as desired, only 40% of U.S. adults have a will or living trust, critical pieces to a well-organized estate plan. While we acknowledge typical reasons cited for delaying or ignoring estate planning altogether, including not wanting to think about one’s passing, being “too young to worry about it,” or thinking that it’s too expensive, unfortunately by not organizing your financial affairs you are leaving a potentially complicated future problem for loved ones to resolve without any guidance. In this note, we illustrate planning strategies utilized by individuals to ensure efficient and cost-effective future estate administration.An understanding of one’s overall estate plan begins with understanding one’s current financial estate. This entails summarizing an individual’s current assets (including cash holdings, taxable investments, tax-deferred accounts, real estate, life insurance, business interest, and other assets) and liabilities (mortgages and other debts) to gain a full understanding of their current financial landscape. Along with current assets and liabilities, an individual should also be aware of current and future spending/saving aspirations and other key financial factors such as pension, social security, or rental income(s). With this understanding of one’s current finances, estate planning then transitions to whom and how they’d like their assets to flow in the future.When an individual passes away, a comprehensive review of their financial picture is performed and could start the probate process (depending on complexity, asset titling, state law, and other factors). Probate is the legal process of analyzing a deceased’s assets, determining one’s heirs, with probate proceedings typically focused on the existence of a will. Probate is a state court proceeding and, as a result, becomes a matter of public record, meaning anyone could go to the courthouse to view an entire estate probate file. Again, depending on the complexity of the estate and state-specific estate laws, probate costs could range from 4% to 7% of the total estate value as additional professional service providers are required (i.e. attorney, accountant, and appraisers). Given the potential cost of the probate process along with one’s estate becoming public record, probate avoidance is a typical estate planning goal for individuals. Assets that are titled in the name of the decedent (i.e. individual name) or held jointly as tenants in common that do not provide clear future directive for how they should be distributed to future heirs must be probated. Therefore, when reviewing account titling with individuals seeking to avoid probate, we typically recommend titling assets as one of the following: Revocable Trust – A revocable trust is created by individual (grantor) and an attorney providing clear instruction for how trust assets will be managed by a trustee(s) and ultimately transferred to beneficiaries upon the grantor’s passing. When creating the trust agreement, an initial trustee (typically the grantor) and a successor trustee (an individual that becomes trustee upon the grantor’s passing) would be named. A key benefit of revocable trusts is the ability to alter and adjust key trust terms throughout one’s lifetime. Trust language can be as flexible as needed to provide guidance on the management and distribution of trust assets. In addition, trust language can provide specific timelines regarding distribution of assets to beneficiaries and dictate if those beneficiary distributions are to be made outright or held in future trust. The flexibility to adjust trust terms throughout one’s lifetime and provide specific guidance, along with assets titled in the name of a trust being distributed per the terms of the trust and thereby avoiding probate, are why revocable trusts are a commonly used by individuals for account titling.   Transfer on Death / Payable on Death – Upon one’s passing, the named beneficiary will inherit the asset automatically without probate.  Joint with Right of Survivorship – If an asset is owned jointly with someone, the surviving owner automatically owns the asset when the other owner passes away. While not a method of titling an asset, a review of one’s beneficiary designations is also recommended to ensure they are up to date. Beneficiary-designated assets would include individual retirement accounts (IRA) and Roth IRAs, qualified retirement plans (i.e. 401(k)), and life insurance policies. Beneficiary-designated assets will transfer to the named beneficiary(s) upon one’s passing, again, without probate court oversight.Having worked with clients on their initial estate plan construction and, ultimately, administration, the key to a successful and cost-efficient estate plan is the review of one’s personal balance sheet combined with ongoing dialogue about the client’s overall estate goals. Ensuring estate documents such as a will and/or trust documents have been created, periodic review of key estate factors (i.e. trust provisions), and confirmation of how various personal assets are titled (i.e. individual, joint, or trust name) is a key part of financial planning. If this proactive estate planning is not accomplished, fairly straightforward estates, let alone more sophisticated estates such as the musician Prince’s estate, can be stressful, time consuming, and, ultimately, expensive to administer and typically something no one wants to leave for loved ones to resolve.If you have questions about your estate plan and how your accounts are titled, contact your financial advisor. If you don’t have an advisor, one of our Schneider Downs Wealth Management Advisors would welcome a conversation with you.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### PA Unemployment Compensation Covid-19 Relief On March 27, Governor Tom Wolf signed Act 9 of 2020, significantly amending Pennsylvania Unemployment Compensation (UC) Law. Here’s a summary of those changes, some temporary and some permanent, that may impact state employers. First, Act 9 includes special temporary provisions related specifically to the COVID-19 global pandemic. Under the measure, contributory employers and reimbursable employers who have paid the 2020 solvency fee are provided automatic relief from charges for those employees whose UC claims are due to the COVID-19 outbreak or public health officials’ efforts to contain and prevent spread of the virus. Reimbursable employers who have not paid the solvency fee will continue to pay their full charges, but will receive reimbursement for 50% of their COVID-19-related charges, per the federal CARES Act. The act also temporarily waives the one-week waiting period and job search and registration requirements for claimants “for the duration of a disaster emergency declared by the Governor because of COVID-19.” These temporary changes will be in effect until January 1, 2021. Act 9 also institutes a permanent change to PA UC law in the form of section 206.1, which now requires employers to notify all separating employees of the following information regardless of whether the employee was terminated, furloughed or discontinued employment voluntarily: Availability of unemployment compensation benefits to workers who are unemployed and who meet the requirements of Act 9; Ability of an employee to file an unemployment compensation claim in the first week employment stops or work hours are reduced; Availability of assistance or information about an unemployment compensation claim on the Department of Labor’s publicly accessible internet website or by calling a toll-free number (provided by the employer); and That the employee will need certain information in order to file a claim, including: The employee’s full legal name; The employee’s Social Security number; and If not a citizen or resident of the United States, valid authorization to work in the United States. Have questions on the latest changes to the PA UC law? Contact an advisor at Schneider Downs today. Please visit our Coronavirus Resource Center for related content. ### Special Considerations in Acquisition Accounting The ink is dry and the deal is done! Your company just made a giant leap with an acquisition in hopes of increasing the top line and boosting shareholder value. From a bookkeeping perspective, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805 states that the acquired entity’s assets and liabilities that are assumed are required to be adjusted to fair value. But after this allocation is made, there’s still more to consider. Let’s take a look at some common pitfalls to avoid within acquisition accounting. One common issue involves the treatment of acquisition-related costs or transaction costs incurred by the acquirer as part of the combination. According to Topic 805, the costs – which typically include finder’s fees, along with advisory, legal, accounting, valuation and other professional or consulting fees – should be expensed as incurred when services are received. There is, however, an exception to the rule, in which costs to issue debt or equity securities in conjunction with the acquisition should be treated in accordance with other applicable sections of U.S. GAAP. For example, if a new debt instrument was obtained as part of the acquisition, the associated expenses – otherwise known as debt issuance costs – should be capitalized as part of the outstanding debt instrument and subsequently amortized over the life of the instrument using the effective interest method. Debt issuance costs are recorded as a contra-liability, which reduces the value of the debt shown on the balance sheet. Another topic that can be difficult to account for correctly due to its subjective nature is contingent consideration, a potential obligation of the acquiring company to transfer additional assets or equity interests to the acquired company if a specified future event is to occur, sometimes referred to as “earn out” provisions. Contingent considerations are useful in business combinations when the two parties are far apart on the valuation of the company and can help facilitate a deal. FASB guidance stipulates that any contingent consideration should be recognized at fair value as of the acquisition date. Subsequently, though, if facts and circumstances were to change on the likelihood of the contingent consideration being realized, the consideration would then need to be adjusted. Considerations classified as equity should not be re-measured and its subsequent settlement should be accounted for within equity. Considerations classified as assets or liabilities should be re-measured to fair value at each reporting date until the contingency is resolved. Changes in fair value should be recognized in earnings, unless the contingency is a hedging instrument, of which GAAP requires changes to be recognized in other comprehensive income. A final matter that needs special consideration involves the measurement of goodwill. The excess of the purchase price of the acquisition over the assets acquired and the liabilities assumed should be assigned to intangible assets, including goodwill. The assets represent future economic benefits arising from other assets acquired in a business combination. In simple terms, this bridges the gap between the value of the company from the purchase price to the value of the company derived from the identifiable assets and liabilities. Goodwill should be evaluated for impairment annually at the entity or reporting unit level when a triggering event occurs. ASC Topic 350 describes the events and circumstances upon which goodwill should be assessed for impairment. In accordance with Accounting Standard Update No. 2014-02, private companies are allowed a policy election in which goodwill should be amortized using a straight-line method over a period of 10 years or less if the company demonstrates another useful life is appropriate to simplify this accounting treatment. Additionally, if the policy election is elected, noncompetition agreements and customer-related intangible assets should not be recognized separately from goodwill unless the customer-related intangible asset is capable of being sold or licensed independently from other assets of the business. Our experts at Schneider Downs are well-equipped to handle a number of complex intricacies based on our wealth of experience in a multitude of different industries. For any issues you have from implementing a business combination, we’re here to help. ### My Schneider Downs Virtual Internship As a graduating senior who saw his last 1.5 months of college and graduation ceremony essentially cancelled, I could not help but worry about the possibility of an internship opportunity being cancelled as well. I saw companies around the area freezing hiring and/or cancelling internships completely as the days got closer to summer. I was excited when we got the phone call discussing how my Schneider Downs internship would be completed. It meant a lot to all us interns that Schneider Downs valued the internship experience enough to continue with the opportunity. As the days continued, it became clear that the internship would most likely be completed virtually. It was going to be a challenge to start the internship completely online, but we were just thankful to be given the chance.Once the internship began, I noticed the team mentality within the firm quickly. Every person who spoke to the Intern group told us to ask as many questions as needed of the teams we worked with. We had access to numerous people to help us learn about the firm, auditing, and the accounting profession as a whole. The concept of working in a team resonated with a washed-up high school “athlete” like myself. I appreciated the patience the people I worked with displayed as I asked tons of questions during engagements. Every person I was fortunate enough to meet was personable and helpful. Meeting such a wide variety of personalities within the firm made me realize how effective groups work together.The internship introduced me to the auditing profession at a glance. I was thankful that each engagement team I was on took the time to teach me the various types of testing involved in an audit. It is unfortunate we did not get to experience traveling to clients or eating lunches, but the staff did an amazing job of making feel at home. The culture within the firm was evident even in a completely virtual setting. ### Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q2 2020 On July 1, the Manufacturing Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that examines industry trends and statistics within the manufacturing sector. The composite Purchasing Managers Index (PMI) referenced below is compiled and used by the ISM to analyze the state of the economy and predict future growth or contraction based on five categories: New Orders, Production, Employment, Supplier Deliveries and Inventories. A PMI index over 50% indicates that the manufacturing environment is expanding. Here are the PMIs for each month in Q2 2020 and Q2 2019: 2020 2019 Month PMI Month PMI January 50.9 January 56.6 February 50.1 February 54.2 March 49.1 March 55.3 April 41.5 April 52.8 May 43.1 May 52.1 June 52.6 June 51.7         Average 47.9 Average 53.8 High 52.6 High 56.6 Low 41.5 Low 51.7  The effects of the COVID-19 pandemic and related government-imposed shutdowns brought an end to 131 consecutive months of U.S. economic growth. As many of the stoppages came to an end in May and June, industry as a whole started to recover and now appears to be entering an expansion cycle. Panelists interviewed for this report, all manufacturing industry leaders, were more optimistic than in previous reports, offering 1.3 positive comments for every negative remark made. Of the 18 manufacturing industries reviewed, only four continued to note contraction: Transportation Equipment, Primary Metals, Fabricated Metal Products and Machinery.New Orders increased from 31.8% in May to 56.4% in June, marking the largest month-to-month increase since records began in January 1948. Food, Beverage & Tobacco Products (FBT) and Chemical Products saw the most significant growth. One FBT panelist noted a 62.5% increase in the industry as a whole from 2019. Fabricated Metal Products and Transportation Equipment, however, continued to see a decline in new orders.Production experienced its largest increase since April 1952, increasing from 33.2% in May to 57.3% in June. Despite the significant increase for manufacturing as a whole, however, Primary Metals, Fabricated Metal Products and Transportation Equipment continued to face declines in production.As one would expect, the relaxing of government-imposed shutdowns in May and June resulted in a significant increase in employment numbers. Civilian unemployment was running at about 3.5% at the beginning of 2020. At the height of the shutdowns, the rate reached nearly 15%, but by June had rebounded to 11.1%.Some commodities, meanwhile, have experienced rollercoaster pricing in 2020, including aluminum, diesel fuel and steel products. Aluminum commodities, for instance, were trading at $1,804.35 per ton at the beginning of the year. Prices had dropped to only $1,465.65 per ton on April 8, but were back up to $1,619.75 per ton by June 30. Overall, prices on raw materials increased after four consecutive months of decline. May saw the Price index at only 40.8%, whereas June ended with the index at 51.3%.Although the report paints a fairly positive picture, keep in mind that this rebound was spurred by the reopening of the economy and the loosing of restrictions. With ongoing concerns surrounding COVID-19, we may not have seen the end of government-mandated shutdowns, which will continue to pose threats to manufacturing as companies try to budget and plan for production in an uncertain market. Conversely, some industries have experienced significantly increased demand during the quarantine and while Americans continue to socially distance. This demand may not last when we finally go back to how life was and those industries will likely need to plan for decreases in demand.For further information on the ISM Report on Business, visit their website. ### A Deeper Look at the ACFE’s 2020 Report to the Nations Each year, the Association of Certified Fraud Examiners (“ACFE”) publishes the Report to the Nations, where it presents its findings related to occupational fraud and abuse. As defined in the report, occupational fraud is fraud committed by individuals against the organizations that employ them. In short, it is an attack from within.The ACFE’s 2020 study on occupational fraud and abuse was the 11th study since 1996. The 2020 study encompassed 2,504 cases (investigated between January 2018 and September 2019) from 125 countries, representing over $3.6 billion in losses.Back in April, we discussed some of the highlights from the study. This article will take a deeper dive into some of its findings.Types of FraudThe three major types of occupational fraud are asset misappropriation, corruption and financial statement fraud. Asset misappropriation is the most common form of occupational fraud, in terms of frequency, representing 86% of cases in the ACFE’s study. However, the median loss related to asset misappropriation cases was only $100,000, which is significantly less than the other two types.Corruption schemes fell in the middle, representing 38% of cases and a median loss of $250,000. However, corruption was identified as the most common scheme in every global region.Financial statement fraud was seen in only 10% of the cases investigated; however, it was certainly the most expensive type of fraud with a reported median loss of $945,000.Detection and ControlsDetection of fraud is a vital component of fraud prevention. The more proactive an organization is with identifying and addressing fraud, the more control employers have over their employees’ perception that fraud will be detected. This may help to deter wrongdoing going forward.The ACFE’s study found that organizations with formal reporting mechanisms and fraud awareness training for their employees were more likely to receive tips from their employees. Of the 43% of fraud schemes that were uncovered via tip, half of those tips were reported by an employee. Further, the study found that organizations without whistleblower hotlines had median losses of $198,000, which was almost double the losses of organizations with hotlines.Over the last decade, organizations have worked to increase the use of targeted anti-fraud controls. The use of hotlines and anti-fraud policies has increased by 13%. Anti-fraud controls reduce the magnitude of losses and increase the speed of detection. The ACFE estimates that a lack of internal controls contributed to almost one-third of the fraud cases studied.Who Are the Fraudsters?Common characteristics and risk profiles of those who commit occupational fraud were identified in the study. The perpetrator’s level of authority and the length of tenure were key factors in the size of the fraud. While executives accounted for only 20% of the frauds studied, their frauds had a median loss of $600,000. The correlation with authority and size of fraud has been proven time and time again by these annual studies. Additionally, the longer the perpetrator worked for the particular organization, the greater the damages. Fraudsters with a tenure of at least ten years stole a median of $200,000, four times larger than perpetrators with less than a year of tenure at their victim organization.Our team has investigated numerous frauds or allegations of fraud involving asset misappropriation, corruption and financial statement fraud.  Our experience is consistent with the results indicated in the study regarding controls, tips, hotlines and who commits fraud.  Also, we often see an overlap in types of fraud – such as asset misappropriations and financial statement fraud – false financial statements prepared in an effort to cover the misappropriation.Should you identify fraud, or have concerns of fraud occurring in your organization, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com to see how we can help you address those risks. ### Top Six Processes You Should Automate 1. Bank Transaction Recording Entering the financial transactions from your bank account to your accounting software is a mundane task, but it is probably taking more time than you realize. If you process credit card transaction have multiple bank accounts or just generally see a significant volume of bank activity, RPA can help speed up the recording of the transactions. When performing the recording daily, even a minor savings of 15 minutes will add up to a major savings over time. 2.  Report Generation Creating reports for management is often a significant piece of an employee’s job responsibilities. In some instances, you may have invested in a reporting tool that can do most of the work for you. However, it is more likely that the reporting function requires hours of manual data extraction, sorting, organizing, generating secondary calculations and assembling of the final report. Waiting for the server to compile the data may be a significant time investment unto itself. By employing automation, you can have the report generated overnight and waiting in your inbox in the morning. After a manual review, you can tell the bot to distribute the report to all of the interested parties. 3. Compliance Monitoring Maintaining compliance with a customer or regulatory requirements is an important part of many businesses. Without an active effort to monitor compliance, your business could risk fines, non-payment or other legal action that would negatively affect your business. Having an employee dedicated to compliance monitoring can be unreasonable or impractical. Automating compliance checks can help ensure your business is staying compliant and warn you when issues arise. 4. Data Extraction and Integration The information your business needs to operate does not always come in a form that can easily be analyzed or ingested into your applications. Without direct data integration, re-keying data into your systems or other methods of transferring the data can be required. RPA is a quick way to take structured or semi-structured data from a wide variety of sources and integrate the data into your business applications. This type of automation is common with CRM systems as well as in B2B data collection processes. 5. Cash Receipts Matching a payment to the invoice usually involves a number of different systems. Most businesses allow for a variety of payment options. You may get direct ACH payments to your bank account, but a third-party processor could be used to collect credit card payments.  In addition, there are the checks you received in the mail. Now that you have the cash, someone needs to match the payments to outstanding invoices and record them to your accounting ledger. Automating these processes can offload the majority of this task work and provide faster processing of receivables and increased accuracy. 6. Billing Generating bills is not always a straightforward process. This can especially be true in service-based businesses. Calculating what needs to be invoiced to your customer can take a long time and involve a number of complex calculations. RPA can help streamline the generation of invoices and shorten the time it takes to be paid for the products and services you have delivered. If you would like more information on automating processes for your business, contact a member of Schneider Downs Technology Advisors or visit our website. ### Do Managed Service Providers Need a SOC Report? A Managed Service Provider (MSP) is a company that performs an assortment of IT services for customers, often for small to moderately sized businesses with limited in-house IT capabilities. Services provided by an MSP can vary and may include technical support, which keeps a customer’s infrastructure up and running, and security services like managing firewalls, antivirus and patching solutions. MSPs can also help customers recover from a security breach.So should MSPs have a SOC report? While there are no established requirements to do so, it may in fact be beneficial. A SOC 2 report, for instance, would demonstrate that an MSP has appropriate controls in place relevant to the services provided to customers based on the applicable trust services criteria. That could provide a competitive advantage in the marketplace, since obtaining a SOC report makes a strong statement about the MSP’s principal service commitments and system requirements. Plus, providing the report may render customer onsite visits or periodic assessments unnecessary.Here are a few example controls that would be expected to be in place at an MSP (this is not an all-inclusive or exhaustive list): The Network Monitoring Center monitors alerts on a 24/7 basis Access to client information is permitted only via multifactor authentication The MSP can access client systems only through a VPN or other encrypted means Monitoring tools (such as a SIEM) monitor the MSP and customer systems to automatically detect threats Change requests from clients are evaluated to determine requirements and the potential effect Client approval is required for all changes prior to commencement of changes For clients where the MSP monitors the status of backup jobs, tickets are created and attempts are made to correct any detected backup failures When needed, the MSP communicates backup failures to the client Customers rely on their MSP to protect data and answer questions regarding IT issues. By obtaining a SOC 2 report, MSPs can alleviate many customers concerns and demonstrate their commitment to implementing and maintaining strong controls. ### My First Experience with Public Accounting Schneider Downs was the first experience I had with public accounting. I have had previous experience working in a small tax firm and another accounting internship for our local courthouse, but none of my previous work compared to my time at Schneider Downs. Working remotely for a public accounting firm felt nerve-racking at first, but every Schneider Downs staff member went out of their way to support and guide me through the internship. I was able to meet a variety of staff members (even though working remotely), and each of them made me feel like I knew them all personally rather than just meeting them through a webcam.    The first few days at Schneider Downs I was really nervous, having had little auditing experience, but with the guidance from my Seniors and other staff, I quickly caught on. The amount of knowledge I obtained in the past six weeks surpasses anything I ever expected. I would like to continue working in the auditing field, and I owe it all to the support and leadership shown to me by all the personnel that I worked with.Schneider downs has given me a truly terrific internship experience. Even with having completed other jobs and an internship in the past, this company has showed me an experience that I will carry on with me in the future. ### Fiduciaries and Excessive Fee Litigation As a retirement plan fiduciary, it’s your responsibility to ensure that fees associated with your plan are reasonable relative to the services rendered. In recent years, there have been a number of lawsuits by plan participants claiming a breach of fiduciary duty for issues surrounding excessive fees, so it’s important that every employer that sponsors a retirement plan be cognizant of the liability that could be experienced through potential fiduciary breach litigation.Excessive fee claims grew widespread in the early 2000s, mostly targeting very large organizations with tens of thousands of participants and billions of dollars in assets. Recently, though, there’s been an increasing number of cases involving smaller plans with fewer than 1,000 participants and less than $100 million in assets. One reason for the rise could be due to new entrants in the ERISA litigation space who are likely leveraging many of the same precedents created by more experienced firms from cases brought against larger plans. Access to the public information found in Form 5500 filings has dramatically helped to identify potential red flags for lawsuit as well.It’s important to note that plan fiduciaries can be held personally liable for a breach of fiduciary duty. While some believe they can avoid liability by hiring a professional, plan fiduciaries always maintain the overarching responsibility to oversee service providers and determine that their fees are reasonable.That said, there are steps one can take to reduce the risk of potential litigation. First, a plan fiduciary needs to always act in the participants’ best interest by following their duties with prudence and care. Further, a plan sponsor should always seek out experts in their respective areas to assist with fiduciary decision-making. Finally, when a decision is reached, the process of consideration and conclusion should be well documented.To assist with mitigating the potential loss that could stem from a lawsuit, plan fiduciaries might also want to consider having fiduciary liability insurance, which would cover legal costs to defend against claims of errors and a breach of fiduciary duty.In summary, as a plan fiduciary, it’s important to understand your duties and responsibilities, and certainly the risks associated with them. It’s also important to review how decisions are made and make sure they’re well documented. Lastly, one should consider fiduciary liability insurance from an experienced carrier to help mitigate potential liability exposure.If you’d like to discuss your individual situation, feel free to contact one of our experts at Schneider Downs Wealth Management Advisors.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Bug in the System - Patch Palo Alto OS ASAP Vulnerability Background On June 29, U.S. Cyber Command (USCYBERCOM) issued a cybersecurity alert regarding a critical flaw affecting Palo Alto Networks PAN-OS, the operating system that runs Palo Alto’s firewalls and VPN appliances. USCYBERCOM, which was established in 2010 as a sub-unified command then elevated to a Unified Combatant Command responsible for cyberspace operations in 2017, has a mission to direct, synchronize, and coordinate cyberspace planning and operations to defend and advance national interests and expects foreign hackers backed by well-resourced governments to attempt exploiting this critical vulnerability in Palo Alto products in the near term. The vulnerability itself grants an authentication bypass that allows threat actors to access the device without the need to provide valid credentials. In other words, the flaw allows unauthorized individuals to log in to networks as administrators. With those privileges, attackers could install software of their choice or carry out other malicious actions with potentially serious consequences. The vulnerability, tracked as CVE-2020-2021, can be exploited when an authentication mechanism known as Security Assertion Markup Language (SAML) is used to validate that users gave the proper permission to access a network. Attackers must also have Internet access to an affected server. CVE-2020-2021 can be exploited only when authentication is enabled and the “Validate Identity Provider Certificate” option is disabled. In that case, the affected Palo Alto products fail to properly verify signatures. Affected Products and Mitigation Affected releases are PAN-OS 9.1, PAN-OS 9.0 earlier then 9.0.9, PAN-OS 8.1 versions earlier than PAN-OS 8.1.15, and all versions of PAN-OS 8.0. PAN-OS 7.1 is unaffected. Also, the fixes are available in PAN-OS 8.1.15, PAN-OS 9.0.9, PAN-OS 9.1.3, and all later versions. To mitigate the inherent threats, organizations should patch all devices affected by CVE-2020-2021 immediately, especially if SAML is in use. Ongoing Risk Management It is critical to assess the risks that are prevalent within an organization's core network infrastructure. As technology rapidly changes, oftentimes core network appliances and other devices are shipped and installed with "out-of-box" settings, lacking the hardening required for maximum security. Schneider Downs’ Network Device Security and Configuration Assessment is a comprehensive analysis of potential vulnerabilities and misconfigurations on a device. From firewalls, to switches and routers, Schneider Downs has the expertise to identify and assess the risks of single and cumulative vulnerabilities that exist across these devices. We perform automated and manual assessments and take a collaborative approach in establishing an action plan to remediate all identified vulnerabilities. We also consider any other security components and mitigating factors to determine the overall risk to the security posture of the organization's internal network appliances. As the protection of systems and critical data continue to be a major component of cybersecurity awareness, Schneider Downs maintains in depth knowledge of industry best practices and can assist your organization in identifying vulnerabilities and overall risk to your internal network infrastructure. We have continued to establish ongoing relationships with new and existing clients to ensure coverage over the ever-changing risks posed by network vulnerabilities. Learn more about how our team can help with your network device security needs or contact the team for more information. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit our website. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### My Virtual Internship 2020 was supposed to be my year. I was supposed to be gearing up for my final football season, walking across the stage at Duquesne University’s graduation and beginning an internship at one of the top firms in Pittsburgh. Obviously, these plans were changed drastically on March 13, when we were told to pack up and leave campus. This was a shock to all of us at Duquesne. My head filled with negative thoughts about how this change would impact my life. After a day or so of naysaying, I chose to flip the situation I was in into a positive. I began using my newfound free time to study harder and prepare myself for the upcoming football season. From March to May, I focused on things that were going to make me a better student, athlete and person. During these months, however, I had one concern: Would I be able to gain the internship experience I was hoping for in the new environment created by the pandemic?I was not sure how the summer internship experience would pan out. A lot of my classmates at Duquesne had their internships cancelled by firms in the Pittsburgh area. Not me. Not Schneider Downs. When I received the news that SD was sending me a computer and delivering a fully remote internship experience, I had mixed emotions. I was excited that I was still going to have the internship experience that I had hoped for, but I was also nervous. I was nervous because I had no idea that working remote with Schneider Downs would be as easy as it is. As an intern, you come in not knowing much about public accounting. You are very dependent on the help of the staff and seniors at the firm to teach you how to perform the various tasks in an audit. This was the part I was most nervous about. I was pleased to find that communication and teamwork did not stop just because in-person meetings stopped. The virtual internship taught me a tremendous amount, not only about the world of auditing, but about myself as well.My experience during the virtual summer internship has been extremely positive. I have been able to meet so many people in the firm from the staff to CEOs. I have been afforded the opportunity to learn from a wide range of people with many different backgrounds. I am looking forward to taking what I have learned at Schneider Downs and implementing it in order grow both personally and professionally in the years to come. ### RPA for CPAs Series: Future Impacts As RPA replaces mundane data processing and entry tasks, accounting activity will shift to higher value analysis and design work. Automation will handle much of the transactional accounting work that people perform today. With this shift in job responsibilities, work typically assigned to entry-level employees will largely be eliminated. As time passes, a deep understanding of processes will tend to fade due to the lack of personnel performing the work on a daily basis. Companies will need to ensure that their process workflows are well-documented and maintained. Otherwise, the nuanced knowledge of the automated accounting processes could be lost. Companies will need to ensure that new accountants receive training on the underlying process to gain the kind of insights needed to develop and enhance accounting and audit programs. Future CPAs will be focused on the business impact of the accounting data. RPA will provide an increasing amount of structured data about businesses. As a result, a CPA will have access to more up-to-date financial data about his or her company’s business efforts than ever before. Understanding and using the data to support management decisions will become a key responsibility for CPAs. The accounting profession itself will become much more focused on data analytics and reporting. CPAs will be asked to develop predictive data analytics to forecast future needs and trends within the business. In turn, this will aid management in running performance programs based on financial statistics and trends. Use of RPA will lead to changes in how financial records are audited, too. Current practices use statistical risk-based sampling for auditing transaction documents. For high-volume transactions, audit test procedures may cover as few as 5% of the population. By incorporating RPA into the testing process, the enhanced speed and efficiency of the automation will allow for a greater amount of audit testing. Initially, larger audit firms will promote their increased testing assurance as a way to win engagements from audit firms that are not using RPA. Eventually, auditors should expect standard testing allowances to rise as automation spreads through the industry and becomes a regular tool in conducting audit test procedures. CPAs will continue to be valued for the business insights they can provide. The interpretation of complex business laws and regulations has been and will continue to be a core skill for CPAs. Subtleties in language and the meanings of tax and business laws will defy much of the codification necessary for machines to understand them. Business leaders will continue to rely on CPAs as trusted advisers when making financial decisions. RPA will not replace CPAs, but it will transform the accounting role. The digital world is overflowing with data. As businesses adopt RPA to transform their terabytes of data into meaningful, business-focused, structured financial information, CPAs should expect to be asked to put greater meaning to the numbers. This article is part of a series exploring how RPA technology can enhance a CPA’s work, past entries are listed below: RPA for CPA’s Series: Bringing on Bots to Enhance a CPA’s Work RPA for CPA’s Series: Advantages to Automation RPA for CPA’s Series: Changes Underway How Can Schneider Downs Help? The Schneider Downs Business Process Automation team is committed to assisting clients with the evaluation, adoption and implementation of robotic process automation technology. We work with our clients to evaluate use cases, develop cost-benefit analyses, implement process automation, and provide continuous support to the operation of your business automation processes. Learn more at www.schneiderdowns.com/RPA This article is reprinted with permission from Pennsylvania Institute of Certified Public Accountants, Ten Penn Center, 1801 Market Street, Suite 2400, Philadelphia, PA 19103. (215) 496-9272 ©2019. View the full article here. ### Considerations for Professional Service Firms Working in a Remote Environment In March, when most professional service firms were working tirelessly to get their employees operating in a remote environment as a result of COVID-19, internal controls, reconciliations, and review processes may have not been on the top of the priority list for most firms. Firms were focused on the safety of their employees, determining how to operate in a remote environment and within the state guidelines, how to continue to provide services to customers, how to continue to produce positive cash flow, and how to assist their customers in an uncertain time.Since most firms have been operating in a remote environment for many months now, firms may want to revisit the processes that were originally in place prior to the shift in the work environment. Prior to working remotely, management took considerable action to ensure that there was proper segregation of duties, proper internal controls, and clearly defined roles for all employees surrounding financial reporting and interrelated cycles.  As firms continue to navigate through our new normal, processes should be revisited to ensure that they can still be followed while in a different environment.Additionally, many employees are working with more distractions at home than previously within the office.  This can cause errors in a work product; therefore, it is more important than ever while working in the remote environment to ensure that there are adequate levels of review for all products being produced, whether that is reconciliation, analytical dashboards, reports, and more. Many firms have also instituted job sharing. If job sharing was introduced while working in a remote environment, firms should consider paying particular attention to those roles due to having two employees performing the job instead of one, which can lead to errors if the individuals performing the jobs are not consistently working in the same manner. Lastly, this is also a time to re-evaluate controls around email and data security as employees work remotely.  Please contact your Schneider Downs contact or any member of our team if you would like to discuss ways to improve internal controls, quality review processes, or data security in these ever-changing times. ### Experiencing the World of Auditing at Schneider Downs As I am nearing the end of my Schneider Downs internship, I cannot help but feel grateful to have had such an amazing experience. As my internship start date approached, I had feelings of nervousness and excitement all in one. I had no idea what to expect, but once day one arrived, I knew I was going to love it at Schneider Downs. Interning at a regional firm has allowed me to grow in my career by working with numerous clients, each within a different industry. I gained real exposure and was given tasks that made me feel I was fully engaged with my audit teams to help complete jobs. As an intern at Schneider Downs, you are not given mundane work. You have the ability to expand your knowledge and work on real client material, which has allowed me to gain an understanding of what external auditing really entails.Furthermore, despite the unprecedented times, Schneider Downs made sure our virtual internship was still going to be nothing less than spectacular. Not only was it great to be learning beyond the classroom and actually working with clients, but the people at Schneider Downs made it such a fun, memorable six weeks. One thing that really stood out to me was how the people at Schneider Downs throughout all levels of the firm truly took the time to get to know you. Even though our work environment was remote this summer, I was still able to build relationships and feel connected to my engagement teams as if we had been sitting in the same audit room. They were always available for me to ask questions, and they did a great job of making sure I understood exactly what I needed to be doing.All in all, I can truly say that I have learned so much in such a short period of time. I believe an internship is essential while in college, because it allowed me to grasp first-hand what it would be like to work as an auditor as well as experience the company culture. I am so happy to have had an internship at Schneider Downs where I was able to work alongside talented professionals, which has definitely helped prepare me for my future in accounting. ### Go With Your Gut In June of 2017, I was officially a high school graduate! I was more than thrilled to start my new beginning at Robert Morris University. I was going to be a Division I athlete, living my dream. Starting at RMU, I was enrolled as a dual major student studying marketing and finance. Running from class to practice to the trainers’ office and then back to class was all part of my daily life as a student-athlete. My mornings were booked with classes and my afternoons were dedicated to practice and recovery. I followed a strict schedule to keep myself on top of things.My freshman year was a complete success! I had survived my first year as a college student. I worked my summer job and was ready to dive deeper into my majors. In the end of August, I began my first semester of my sophomore year. Going to my first class of the day, I was not expecting much. It was an 8:00 am class and I was not looking forward to it. The class was Intro to Financial Accounting. My teammate and I sat down and were anticipating being bored and confused. I left that classroom that day thinking accounting wasn’t all I had originally thought it was. The more I went to class, the more I learned that accounting wasn’t just a boring person having a boring job. I even started to actually enjoy my class. Finals week had come around and I found myself sad that my class was over. As I walked out of the final, the professor had stopped me and asked me what my major was. I told him that I was a dual-major in marketing and finance, and he told me, “Think about an accounting major, I think you’d do well.” I thought about it for about a day and then forgot all about it.Beginning my spring semester, I was busier than ever. I was enrolled in six classes and we were in the peak of track season. Starting in March, I was travelling every weekend to various states to compete. I was enrolled in a few marketing classes, a general business class, and managerial accounting. Managerial accounting was hard and confusing and it stressed me out at times. I began to work at it every day. I would study and practice the same problems over and over until I could get them right without looking at the steps to complete the questions. In all of that, I fell in love with it. I loved figuring out hard questions, I enjoyed putting the pieces together for it all to make sense. My professor started to notice. I then started tutoring people outside of class. Explaining it to other students only increased my knowledge of the subject. I remember four days before one of the big exams, my computer screen had gone black. I immediately took it to Apple and they told me it was going to take at least five days to fix it. I cried in the store. All of my homework, study guides, notes and even my book was in my computer. The team was travelling to James Madison University that weekend, so I didn’t even have time to study with other classmates. I came back from that meet very late Sunday night.Monday morning at 9:00 am, I had my managerial accounting exam. I went into that exam more nervous than I had ever been and it was because I did not feel prepared. Leaving that exam, I had to run to the bus to get to practice. I felt sick the entire practice. All I could think about was how I did on that exam. My professor was a quicker grader, so by the time I was finished with practice, I received my grade. 100%. I couldn’t believe it! I was barely able to study and I was able to still get a perfect on the exam. I was on cloud nine.Finals week was nearly approaching, which means scheduling for the next semester. I had begun to think about changing my major to accounting, but I didn’t tell anyone except my one academic advisor. When I shared the news with him, he laughed and told me my accounting professors were hounding him with questions as to why I would not change my major. Those professors believed in me, my advisor believed in me, and I started to believe in myself. That next day, I officially changed my primary major to accounting and I never looked back. I fell in love with the confusing language and the difficult questions that seemed impossible to solve. I am learning new things every day because of the switch I made. Schneider Downs has allowed me to continue learning daily. If someone were to ask me if I liked auditing or not, I would say it sounds boring. After my time here, I absolutely enjoy every single second of being an auditing intern. I have learned things I never even thought I needed to know. Thank you, Schneider Downs, for giving a girl a chance when she thought this was the last thing she wanted to do: it changed my life. ### RPA for CPAs Series: Changes Underway In the accounting field, there are many processes where the required tasks are repetitious and rules-based. The nature of the work provides many opportunities to employ RPA technology to reduce the amount of time people spend on basic data processing, allowing CPAs to work on more strategic and impactful decision making tasks. Accounts payable and accounts receivable (AP/AR) automation is an area where accounting departments are currently adopting RPA and seeing a high return on investment. RPA software is well-suited to processing the variety of forms used in AP/AR workflows. Transforming the semi structured data on nonstandard forms used when working with many different vendors is a task in which RPA excels. Data captured from forms by RPA become standardized input to your enterprise accounting system. Other areas of early adoption often focus on the high-volume and manually intensive tasks that have measurable cost savings or provide timelier task execution. It is in these areas that management will see the value in RPA and commit to the investment. Accounting areas where leadership will want to invest include the following: Compiling financial reports Managing complex billing processes Reconciling bank accounts Detecting fraud Tax compliance As adoption of RPA grows, use of the technology will spread to areas where risk mitigation plays a larger role than just a cost savings return on investment (ROI). RPA use in financial controls and audits can improve financial oversight, but impact on company financials is hard to measure. This may be why implementation here tends to fall to the bottom of management’s priority list. Initial ROI calculations play an important role in the initial decision to begin adopting an RPA strategy. The first-year cost to establish an RPA program can be a deterrent due to licensing, development, and infrastructure expenses. Looking beyond year one, though, the rate of return improves greatly as maintenance costs will be significantly lower than year one’s development costs. Enterprise software has an average expected lifetime of about six to eight years, so any developed RPAs can be expected to be in service for the same length of time. The real ROI for RPA comes when you implement automation across a number of processes. Increasing the number of automated processes allows for spreading out the fixed costs across multiple projects. In doing so, more automation projects become viable because of improved ROI calculated values. Once employees see and understand the power of RPA, they begin to see the use cases where automation can improve company performance. This article is part of a series exploring how RPA technology can enhance a CPA’s work, past entries are listed below: RPA for CPA’s Series: Bringing on Bots to Enhance a CPA’s Work RPA for CPA’s Series: Advantages to Automation How Can Schneider Downs Help? The Schneider Downs Business Process Automation team is committed to assisting clients with the evaluation, adoption and implementation of robotic process automation technology. We work with our clients to evaluate use cases, develop cost-benefit analyses, implement process automation, and provide continuous support to the operation of your business automation processes. Learn more at www.schneiderdowns.com/RPA This article is reprinted with permission from Pennsylvania Institute of Certified Public Accountants, Ten Penn Center, 1801 Market Street, Suite 2400, Philadelphia, PA 19103. (215) 496-9272 ©2019. View the full article here. ### Paycheck Protection Program UPDATE JULY 7 On June 26, 2020, the U.S. Small Business Administration (“SBA”) published guidance on the determination of the maximum loan amount by entity type under the Paycheck Protection Program (“PPP”) of the CARES Act. The guidance summarized how to determine the potential maximum PPP loan amount (generally 2.5 times certain average monthly payroll costs) for each of the following entity types: S and C Corps – 2019 payroll costs are calculated by adding the following: Gross wages and tips paid to U.S. employees using 2019 IRS Form 941 Taxable Medicare wages and tips from each quarter and any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages and tips less any amounts paid to any individual employee in excess of $100,000 and any amounts paid to any employee whose principal place of residence is outside the U.S. 2019 employer health insurance contributions; 2019 employer retirement contributions (IRS Form 1120 line 23 or IRS Form 1120-S line 17); and 2019 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms). Eligible nonprofits – 2019 payroll costs are determined by adding the following: Gross wages and tips paid to U.S. employees using 2019 IRS Form 941 Taxable Medicare wages and tips from each quarter and any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages and tips less any amounts paid to any individual employee in excess of $100,000 and any amounts paid to any employee whose principal place of residence is outside the U.S. 2019 employer health insurance contributions (portion of IRS Form 990 Part IX line 9 attributable to health insurance); 2019 employer retirement contributions (IRS Form 990 Part IX line 8); and 2019 employer state and local taxes assessed on employee compensation. Partnerships – While employee compensation is generally consistent with other methodologies for determining maximum loan amounts, partners have a separate calculation. Specifically, partners’ compensation is based upon the 2019 Schedule K-1 which is net earnings from self-employment of individual U.S.-based general partners who are subject to self-employment tax, computed from box 14a (reduced by any section 179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties) multiplied by 0.9235 (to adjust for self-employment taxes) up to $100,000; Self-employed but not in operation between 2/15/19 and 6/30/19 – The maximum PPP loan amount is generally equal to 2.5 times average monthly payroll costs incurred in January and February 2020, plus the outstanding amount of any EIDL loan received between January 31, 2020 and April 3, 2020, that will be refinanced by the PPP loan. Maximum loan calculation amounts were also provided for the following: Self-employed, no employees; Self-employed, with employees; Self-employed, reports income on Schedule F; Nonprofit religious institutions, veterans organizations, and tribal businesses; and LLCs. Additional details can be found at, https://home.treasury.gov/system/files/136/How-to-Calculate-Loan-Amounts.pdf. If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) directly. Please visit our Coronavirus Resource Center for related content. ### The Supreme Court and Affordable Care Act Constitutionality - Protecting Your Ability to Recover Prior Year Federal Taxes The U.S. Supreme Court has agreed to hear a case regarding the constitutionality of the Affordable Care Act (ACA).  Without going into all the details, two of the questions before the Court are whether the Tax Cuts and Jobs Act (TCJA) rendered the ACAs individual mandate unconstitutional and, if yes, whether the rest of the ACA is also unconstitutional.  The case is not expected to be heard until later in 2020, possibly not even until after the election, and a decision by the Court could come as late as June 2021.  The importance of the decision affects not only the workings of the health care system in the U.S. but could impact the liability for certain taxes imposed on many higher income taxpayers.  As part of the ACA, the Net Investment Income Tax and the Additional Medicare Tax were added to the Internal Revenue Code and affect higher income taxpayers.  If the Supreme Court should rule that the entire ACA is invalid, these two taxes would also be invalid, and taxpayers could be in position to claim a refund of these taxes for tax years still open under the Statute of Limitations.Unfortunately, there can be no degree of certainty as to how the Supreme Court will decide.  Even if the court finds the ACA unconstitutional, it could only impact returns filed in earlier years if it is declared unconstitutional in periods before the TCJA enactment.  At this time, it appears unlikely that the finding would be retroactive to periods preceding the TCJA and therefore no immediate action would be required. However, while waiting for a decision, taxpayers with substantial ACA related tax liabilities may still desire to protect their ability to receive refunds for the above taxes before the statute of limitations closes with respect to open tax years.  This protection is obtained by filing a timely protective refund claim with the Internal Revenue Service. The Statute of Limitations for the 2016 tax year will close on July 15, 2020 for taxpayers filing their original 2016 return by April 15, 2017.  For taxpayers filing extended returns, the 2016 statute will generally be open for 3 years from the filing date of their 2016 return.  For 2017 returns, the statutes will not begin to close until 2021 so additional time is still available to make that decision. If you would like to discuss this issue and opportunity further, please contact your Schneider Downs tax advisor.  ### Do Relocation Companies Require a SOC (System and Organization Controls) Report? The answer to this question is clearly based upon the level of risk that the relocation company represents to its clients.  First, one must gain an understanding of the services provided by the relocation company, the sensitivity of the data shared with the relocation company, the risk to the user organization should the relocation company experience a data loss or security incident, and the awarding of relocation benefits not in accordance with the user organization’s relocation policies.ServicesThe primary service provided by relocation companies is relocation expense management for user organizations. Many relocation companies also provide policy development or counseling, home sales, purchasing and rental, transportation of household goods and payroll and tax assistance.  With these services, relocation companies also provide sophisticated tools for transferees to use to help manage the relocation and other services provided. These tools house sensitive transferee information and manage the expenses that impact the user organization’s financial statements.Data and RiskDepending on the type of service provided by the relocation company, the data being handled can span from names and addresses to social security numbers, bank account numbers, financial data, or payroll information.  Some of this data is highly sensitive and if breached, could be used to commit identity theft.  This could result in material impact to transferees. This could also be considered a required reportable event under most state information breach laws and result in substantial cost to the user organization.  Not only does the relocation company hold this sensitive information, any vendor utilized by the relocation company in the services performed may also have access to the same information.  Depending on where the transferees are moving from and to, there could be potentially hundreds of different vendors utilized by the relocation company. The inherent risk of providing such sensitive information must be considered by user organizations, and prior to selecting a relocation company, the sophistication of the security and internal controls of the relocation company needs to be assessed.Financial ImplicationsWhen performing services for a user organization, the relocation company is directed to follow the user organization’s policies for allowable services and expense thresholds. If these policies are not followed, there could be higher than expected costs or payments for services not allowed for the user organization. If payroll or tax services are performed by the relocation company, the accuracy of these services are essential to the employees being relocated.Industry RequirementsThird-party management and regulatory requirements have significantly increased for a number of industries.  In particular, regulators are placing increased pressure on financial institutions to assess the security and controls of third-party vendors, evaluate data protection practices and understand the risk of their business partners. Healthcare organizations have adopted policies that require all third parties to demonstrate HITRUST compliance. Organizations migrating to a cloud environment have also raised the awareness of the need to evaluate data-protection capabilities of all business partners with which they share information.Should a relocation company have a SOC report?  Clearly, there is considerable risk associated with many of the data-fueled services provided by relocation companies, along with significant financial implications, that would warrant a SOC report.  While a SOC report is not a requirement of the industry, the report would demonstrate to the user organizations that the level of security providing protection of data and the accurate and complete processing of expenses are major objectives and are taken seriously by senior management of the organization.  A SOC report would also present a distinct competitive and marketing advantage for the relocation company, providing an authoritative and respected method to communicate and demonstrate to the marketplace that protection of client information is as valuable as the quality of the service that it provides.Do you think your organization could benefit from a SOC report?  Visit our Service Organization Controls page or contact one of our professionals to discuss your needs. ### Definitions of Real and Incidental Property in New Like-Kind Exchange Regulations Like-kind exchanges have been a vehicle for tax gain deferral since §1031 was added to the Internal Revenue Code in 1921. Put simply, §1031 allows a taxpayer to defer the gain realized in the disposition of certain property if that taxpayer receives property of the same kind in exchange (as opposed to cash or other non like-kind property). The rationale being that the taxpayer is continuing an investment by exchanging one property for another of the same kind and should not recognize gain until such investment is actually disposed of. While §1031 has seen many changes since its inception, the most recent came in 2017 with the enactment of the Tax Cuts and Jobs Act (TCJA). Specifically, §1031, as amended by the TCJA, no longer allows a taxpayer to defer gain on personal and certain intangible property and now only permits gain deferral on exchanges of real property not held primarily for sale.In June, the IRS issued new proposed regulations that provide taxpayers with a definition as to what constitutes "real property." Per the proposed regulations, real property includes “land and improvements to land, unsevered crops and other natural products of land, and water and air space superadjacent to land.” Improvements to land include, “inherently permanent structures and structural components of inherently permanent structures."[1] The regulations also provide that an inherently permanent structure is "any structure that is permanently affixed to real property and that will ordinarily remain affixed for an indefinite period of time."Taxpayers can look to the regulations for definitions and listed examples of the types of structures that would qualify for §1031 treatment. The lists provided are not exhaustive and, if an asset is not one specifically listed, whether the asset qualifies for §1031 treatment is determined by applying a multifactor facts and circumstances test, which is also provided in the proposed regulations.Finally, the regulations provide that taxpayers should not rely on other provisions or laws to define property for the purposes of applying §1031.While providing definitions of the types of property that qualify for §1031 treatment is an important addition to the regulations, it’s not the only one the IRS made in the new proposed regulations. The agency also added provisions to clarify the definition of incidental property, which is what can be received by a taxpayer, in addition to a larger piece of real property, without disqualifying the larger transaction from §1031. Personal property is considered incidental if, "in a standard commercial transaction, the personal property is typically transferred together with the real property, and the aggregate FMV of the incidental personal property transferred with the real property does not exceed 15 percent of the aggregate FMV of the replacement real property received."[2]It was determined that this 15 percent threshold was high enough to encompass the amount of property typically transferred in a sale of real property without creating the opportunity for taxpayers to transfer, and subsequently defer gain on, assets that would not on their own qualify for like-kind exchange treatment.The new definitions, and accompanying examples, provide taxpayers with a much clearer picture as to what qualifies for like-kind exchange treatment and, in turn, a great opportunity for reinvestment and planning for the future. If you’re someone looking to reinvest and would like to discuss whether a §1031 transaction could work for you, a Schneider Downs real estate tax advisor would love to hear from you! [1] Prop. Treas. Reg. § 1.1031(a)-3(a). [2] Prop. Treas. Reg. § 1.1031(k)-1(g)(7)(iii). ### Pennsylvania EITC Applications Open July 1 The period for applying to Pennsylvania’s Education Improvement Tax Credit (EITC) program begins July 1 for new applicants. The program is very popular and availability of credits is typically limited.Credits are issued on a first come-first served basis and specific credit types sell out quickly. Entities applying late or for credits already sold out may not receive their first choice or may be put on a waitlist.If you or your business is interested in EITC in 2020, make sure your application is submitted early. For more information about the program, contact a Schneider Downs state and local tax professional. ### A Virtual Success: The ACFE Holds 31st Annual Global Fraud Conference As president of the Greater Pittsburgh Association of Certified Fraud Examiners (ACFE), I recently had the pleasure of “attending” the organization’s annual Global Fraud Conference. Now in its 31st year, the gathering had to take place virtually due to restrictions surrounding the coronavirus pandemic. So while we didn’t have the opportunity to chat over stale breakfast pastries or hotel bar cocktails, over 4,000 attendees from around the world learned from industry experts in breakout sessions, and networked with each other via a dedicated active message board.The conference featured a number of keynote speakers, including the remarkably entertaining duo of Javier Pena and Stephen Murphy, retired DEA Agents who were the inspiration behind the Netflix series, “Narcos.” WIRED Editor-in-Chief Nicholas Thompson was also on hand, providing an insightful assessment of the ubiquitous role technology plays in our lives, and how it had evolved and will evolve further as a result of the pandemic.ABC News Correspondent Rebecca Jarvis moderated an informative discussion on whistleblowers, overseeing a panel that featured Howard Wilkinson, who exposed an alleged multibillion dollar money-laundering scheme at Danske Bank; New York Times best-selling author Tom Mueller (“Crisis of Conscience”); Jane Norberg, Chief of the Office of the Whistleblower at the SEC; and Stephen Kohn, an attorney and leading expert in whistleblowing cases. The ACFE has highlighted whistleblowers over the last year and the panel discussion was a culmination of that coverage.The conference closed with an interview featuring Gary Foster, who spoke about the $22 million fraud he perpetrated as an assistant vice president at Citigroup. The ACFE traditionally invites a convicted (non-compensated) fraudster to speak at the conference, not to glorify his or her actions, but to offer insight to fraud examiners into the ethical breakdown and motivation that led to the fraud.Breakout sessions offered cutting-edge information and training that can be incorporated into current investigations, including data analytics, anti-money laundering and cryptocurrency fraud. The pandemic was a central theme throughout the conference and discussed by many of the speakers as it related to his or her area of expertise. Much like the change in the format of the conference itself, my main takeaway is that we must be willing to adapt to current circumstances and find new ways to perform our duties and serve our organizations, clients and communities.At Schneider Downs, we find that participating in conferences, including virtual ones like this, helps us to stay at the forefront of the latest trends in fraud, forensic accounting, data analytics and investigations. We value the information we receive, and continually seek innovative ways to incorporate what we’ve learned to provide value to our clients.If you have questions or concerns about possible fraud at your organization, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. ### IRS Guidance Provided on the Silo of CARES Act NOLs Enacted as part of the Tax Cuts and Jobs Act in 2017, Section 512(a)(6) of the Internal Revenue Code (IRC) provides that an exempt organization subject to unrelated business income tax with more than one unrelated trade or business is required to calculate unrelated business income (UBI) separately for each trade or business. This also includes the calculation and silo of net operating losses (NOL) assigned to each separate unrelated trade or business.These requirements became effective for tax years beginning after December 31, 2017. Any NOLs that an exempt organization had prior to December 31, 2017 may be used offset all future net unrelated business income. On March 27, 2020, Congress amended the CARES Act (Coronavirus Aid, Relief, and Economic Security Act 2020) to allow any NOL arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 to be carried back five years preceding the taxable year of such loss (CARES Act NOL). The five-year period includes the years prior to the enactment of the new IRC section 512(a)(6), when unrelated trades or businesses were calculated and reported in the aggregate as opposed to siloed.On June 8, the IRS provided guidance on how to apply CARES Act NOLs. In their FAQ section on the topic, the agency clarified that CARES Act NOLs arising in taxable years beginning after December 31, 2017 must be siloed. It also notes that a tax-exempt organization subject to section 512(a)(6) can carry back CARES Act NOLs against aggregate UBI in a taxable year beginning before January 1, 2018 because the section does not apply to such taxable years. An exempt organization, meanwhile, may carry back CARES Act NOLs attributable to an unrelated trade or business even if the exempt organization would not have had a CARES Act NOL, or if the deduction in the relevant taxable year was calculated on an aggregate basis. Exempt organizations are also not allowed to deduct CARES Act NOLs against aggregate UBI in taxable years beginning after December 31, 2017. When doing so, CARES Act NOLs must be siloed consistent with section 512(a)(6).If you have questions on the NOL Carrybacks, please contact any of our exempt organization experts. ### RPA for CPAs Series: Advantages to Automation As with other forms of automation, the inherent speed and ef­ficiency of machine processing gets work done faster. Automation can also scale to accommodate increases in volume. For a growing company, this can mean not having to add additional head count to handle the extra paperwork that comes with expansions to meet customer demand. Alternatively, scalability could mean being able to audit more documents to find exceptions to defined business rules. Greater traceability is another advantage. Every action a bot takes can be logged and controlled through strict codified rules. This feature makes all bot activity easy to monitor, trace, and audit. When good software governance practices are applied to develop­ing and deploying the RPA bots, business leaders can expect con­sistent and reliable results from their automated tasks. RPA helps manage risk, too. Limiting workers’ access to sen­sitive information is often a key control in business processes. Incorporating RPA into the workflow can reduce the possibility of data exposure by limiting access to sensitive data even further. RPA can also manage risk by being a control that provides continuous. This article is part of a series exploring how RPA technology can enhance a CPA’s work, past entries are listed below: RPA for CPA’s Series: Bringing on Bots to Enhance a CPA’s Work How Can Schneider Downs Help? The Schneider Downs Business Process Automation team is committed to assisting clients with the evaluation, adoption and implementation of robotic process automation technology. We work with our clients to evaluate use cases, develop cost-benefit analyses, implement process automation, and provide continuous support to the operation of your business automation processes. Learn more at www.schneiderdowns.com/RPA This article is reprinted with permission from Pennsylvania Institute of Certified Public Accountants, Ten Penn Center, 1801 Market Street, Suite 2400, Philadelphia, PA 19103. (215) 496-9272 ©2019. View the full article here. ### Extended Deadlines Granted for Ohio Property Tax Collection One of the many ongoing concerns related to the coronavirus pandemic has been understanding the due date for the payment of real property taxes for the second half of tax year 2019. Last month, the Ohio Department of Taxation extended deadlines for collecting these taxes for some counties throughout the state. See below for the list, along with the extended dates: Belmont - August 21 Cuyahoga - August 13 Delaware - August 20 Franklin - August 5 Geauga - July 22 Hamilton – July 17 Monroe - August 19 Montgomery - August 14 Paulding – August 17 Washington -August 14 These extensions were able to be approved based on the tax commissioner’s understanding of Revised Code Section 323.17, which in summary states that the commissioner may extend the timing of tax payments if it’s determined that penalties will accrue due to circumstances beyond the control of taxpayers in the respective county.You can visit our Coronavirus resource page for related content. For other matters, contact your Schneider Downs tax advisor if you have questions or would like to discuss the provisions of the CARES Act in more detail. ### Additional Guidance and Relief for Opportunity Zones from the IRS As the country begins to (somewhat) return to normal, real estate investors involved in both qualified opportunity funds (QOFs) and qualified opportunity zone (QOZ) property received additional guidance from the IRS when on June 4 the agency issued Notice 2020-39, which includes a number of extensions for key timing and testing requirements. As outlined in the notice, the extensions are automatic. This means a taxpayer does not need to reach out to the IRS via phone or letter to receive relief, though they are still responsible for the timely filing of Forms 8949, 8996 and 8997 with their annual returns.An important extension involves the 180-day deadline to reinvest capital gains, a requirement that begins on the date of a sale or exchange of property. The new deadline has been extended from July 15 (as noted in previous IRS Notice 2020-23) to December 31.Another modification affects the requirement for the QOF to hold at least 90% of its assets in a QOZ. Previously, if the 90% threshold would fail on a testing date, the QOF could face severe penalties. For QOFs whose asset test date falls between April 1 and December 31, failure to satisfy this requirement due to reasonable cause is now disregarded. If this extension is applicable to the QOF, Form 8996, Part IV, Line 8 (Penalty) should include a “0”.For a property to receive treatment as a qualified opportunity zone business property (QOZBP), the investment must satisfy three general requirements, one of which concerns the substantial improvement of post-2017 tangible property. A QOF, for instance, during any 30-month period beginning after the acquisition date of the property, must make additions to the basis of the property. With issuance of Notice 2020-39, the period between April 1 and December 31 is now disregarded for the purposes of determining the 30-month substantial period.Another requirement for a property to qualify as a QOZBP is the working capital safe harbor, which restricts QOFs to hold less than 5% of assets in nonqualified financial property. There’s also a written schedule consistent with the ordinary startup of a trade or business for the expenditure of working capital assets within 31 months of receipt of the assets. A QOZ may now extend this safe harbor period to a maximum 55-month period if the QOF was relying on the safe harbor before December 31, 2020.Schneider Downs will continue to monitor all developments related to qualified opportunity zones as updates are released. Please contact your SD tax advisor if you have any questions, or would like to discuss the provisions of the CARES Act and or the Families First Coronavirus Response Act. Also, be sure to visit our Coronavirus resource page for related content. ### Volatility is Back … and It is Here to Stay By Jason Staley, CFA, CAIA® Investment Relationship Manager/Director of Research and Due Diligence Schneider Downs Wealth Management Advisors, LPOne could be forgiven if they are feeling a case of whiplash as they look at the current state of equity markets and, in particular, the S&P 500. On the surface, the S&P is down a modest -2.4% (inclusive of dividends reinvested), which would make some sense given that in 2019 the S&P 500 returned +31.5%. To the lay observer, equity markets were taking a breather following a scorching 2019. However, due to the COVID-19 shutdowns across the country, most people were not lay observers. Instead, as a result of unique circumstances caused by the nationwide shutdown, many more people have become keen observers of equity market movements (here is where the whiplash part comes in). Starting at the market peak of February 19th, the market has experienced significantly elevated levels of volatility, with wild price swings to the downside and the upside. The S&P 500 entered a bear market in record time, falling 30% in 22 trading days ; correspondingly, the S&P 500 entered into a new bull market (using the standard definition of +20% from its low point) in a record 12 trading days  because it is 2020, a year in which anything can, and likely will, happen.One item that I think might not be appreciated fully by the newly minted “keen observers” of the market is that the best days in the market are often clustered around the worst days. In the table below, I have highlighted some of these days, and why it is important to rely on the foundational principles of identifying risk tolerance, time horizon, and liquidity needs to get you through volatile days (weeks and months) in the market. Date S&P 500 Daily Returns 2/27/2020 -4.40% 3/2/2020 +4.61% 3/3/2020 -2.81% 3/4/2020 +4.23% Date S&P 500 Daily Returns 3/13/2020 +9.32% 3/16/2020 -11.98% 3/17/2020 +6.00% 3/18/2020 -5.18% Date S&P 500 Daily Returns 3/20/2020 -4.32% 3/23/2020 -2.93% 3/24/2020 +9.39% 3/25/2020 +1.15% 3/26/2020 +6.25% 3/27/2020 -3.37% 3/30/2020 +3.37% The table above illustrates 15 trading days, with every day but one occurring in the month of March. Predicting markets as volatile as the above is a fool’s errand, which naturally leads to the question in many investors’ minds: how do we weather this type of storm? Our answer: focus on the basics and ignore the noise (daily volatility) as much as possible. Very few, if any, can exactly predict when a crisis will occur, so it the planning that investors and advisors do before a crisis hits that helps them navigate to calmer waters. Understanding your risk tolerance, the amount of drawdown in your portfolio you are willing to accept without selling, is of vital importance. Going through the events of March, investors’ risk tolerances were tested and should be updated. Were you able to tolerate the wild swings of March without altering your investment outlook? Re-evaluating your risk tolerance goes hand in hand with your time horizon and liquidity needs. If your time horizon is greater than ten years, the short term volatility we experienced in March, while unpleasant, shouldn’t materially affect your investment outlook. It especially shouldn’t alter your outlook if you have had an open dialogue with your advisor about your immediate liquidity needs; these immediate, or short-term, liquidity needs should be kept in cash or cash equivalents. If an investor’s cash reserves accurately reflect their needs, additional funds would not need to be raised during volatile time periods such as March (where raising money could “lock in” permanent losses). Ultimately, we cannot control for volatile time periods like we experienced in March. The best way to successfully traverse the explosive bouts of market volatility is with a coherent and holistic investment and financial planning strategy. Referring to that plan, holding onto it even on days where the market drops 12%, as it did on March 16th, is what gives investors the most likely chance of achieving their goals. Otherwise, rash and sometimes unwise decisions can be made, as documented in a recent Wall Street Journal article where 31% of investors between the ages of 65-68 sold all of their stocks between February and May.  Now that we have navigated back to calmer waters, the prudent course of action is to re-assess (with your advisor) whether your risk tolerance, time horizon, or liquidity needs have changed… Because market volatility is back, and it is here to stay in a post COVID-19 world. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.  ### What has COVID-19 taught us about our businesses processes? If you’re like the employees of Schneider Downs, you haven’t seen the inside of your office since mid-March. The first few weeks of work from home were filled with uncertainty, not knowing how long the quarantine would last and if you could continue performing your business processes effectively with a remote workforce. As time went on and the business adapted and settled into new routines, your processes and controls had to be adapted to address the challenges of working remotely.For example, let’s look at a standard invoice approval process that was in place at many organizations (pre COVID-19, of course). Accounts Payable received an invoice to be paid, which was forwarded to another individual within the organization for approval. That individual reviewed and physically signed the invoice to evidence their approval, and sent it back to Accounts Payable to be processed. But wait…how do you get a physical signature on a physical document while working remotely? The simple answer is that you don’t. The process would need to be revised and adapted to the new situation.  Approvals would have to be obtained electronically, which also happens to save a lot of time in the process.While the solution here may have seemed obvious, there were numerous processes that had to be changed to adjust to the “new normal.” Do you think you will continue with the new processes once you return to the office? Or will you revert back to the old way? In Western Pennsylvania, as in many regions of the U.S., as we begin to return to our offices, it’s a great time to reflect on the lessons learned and efficiencies gained while working remotely. You can start by asking the following questions about your modified process: Where have we been forced to make changes due to the remote work environment? Do the changes present new risks or concerns in regards to segregating duties? Will we save time and/or effort while still accomplishing the same goal? Would similar modifications benefit other business processes? It is important to evaluate and assess your business processes to determine if the changes made to accommodate the remote work environment have adequate controls in place to mitigate the risks and whether they are more efficient and should be permanently adopted upon your return to the office. If you’d like assistance evaluating your processes or controls, Schneider Downs Risk Advisory Services group can help. Contact us at contactSD@schneiderdowns.com. ### COVID-19 Economic Impact Data COVID-19 has had a tremendous impact on global economies and it is still unclear when and in what form economies will return to normalcy. It’s the view of Schneider Downs Wealth Management that paying attention to the data, in times like this especially, is worthwhile given there is no emotion or opinion inherent in it. With that in mind, and with the help of Natixis Investment Managers, we wanted to shine some light on the information below, which was released on June 18, 2020.What Our Outbreak Looks Like1: The outbreak has affected various age groups very differently. We found it particularly interesting that individuals age 64 or younger accounted for 68.8% of total US cases while maintaining relatively low fatality rates compared to older individuals. ### RPA for CPAs Series: Bringing on Bots to Enhance a CPA’s Work Robotic process automation (RPA) is a form of business process automation that com­bines traditional software user interfaces with optical character recognition, machine learning, and artificial intelligence (AI) to help automate the mundane and routine tasks in your busi­ness processes. Most of the technology used in RPA is not new. Rather, RPA technology is the combination of existing technologies into easy-to-use automation platforms. Bringing together the suite of tools has created a new class of automation that can be adopted across industries. At the most basic level, an RPA task can be likened to a next-generation macro. Like macros, RPA allows you to assemble a col­lection of actions into a sequence that automates a business process task. Often the tasks transform a set of data into a standard output through calculations and other data manipulations. Applications of RPA can also be much more complex. One ex­ample might be automating an accounts payable solution, where RPA handles a number of associated tasks: Setting up new supplier accounts Receiving and recording invoices Tracking payment due dates Generating recurring reports and data analytics RPA differentiates itself from software macros, however, through its broad scope of interactivity. Interactions can occur across disparate applications with nearly any computer software system. RPA software is capable of interfacing with applications just as a person would. Traditionally, interacting with applications required an application programming interface (API), but RPA can use multiple methods to interface with applications, includ­ing a graphical user interface. Websites, legacy applications, main­frames, scanned documents, emails, and more can be used in the business process making up an RPA task. Leading RPA platforms are advancing the core functionality of RPA software by integrating AI and machine learning. Use of these technologies can create solutions for understanding and manipulating your business data. Some estimates put upward of 80% of business data as either unstructured or semi-unstructured. Without structure, data becomes practically unusable. A transfor­mation to structured data is necessary to extract useful insights, which you then can apply to business decisions. The ability to transform unstructured or semi structured data is the key differentiator among RPA software alternatives. The AI algorithms built into innovative RPA engines allow the software to understand the language used on different document types, such as invoices, purchase orders, bank statements, and other com­mon business documents. RPA with built-in AI capability uses this understanding to transform data from source documents into business actionable data. AI-augmented RPA bots can classify documents into groups, and then extract meaning from the semi structured data present in documents. The data is then processed into standardized data sets for use in your business process. Should an AI-enabled RPA bot fail to process a document, the document is sent to a human operator for further processing. Dur­ing the employee’s review, the bot watches the human interaction with the user interface. Observing how a person corrects an item trains the bot to handle similar exceptions in the future. Over time, the bot increases its “confidence” in how to process documents. The increased confidence decreases the number of help requests that are sent for human review. Machine learning allows bots to become better workers as experience accumulates. RPA technology creates efficiencies in rules-driven, repeating processes. The automations are designed to handle the work using defined action sequences. But, as the saying goes, all rules have exceptions. Business process rules are not different. Because pre­dicting and handling 100% of the possible scenarios is hard and an inefficient use of development resources, RPA bots should be de­signed to allow for exceptions. Bots handle the routine and expect­ed cases, and deliver exceptions to human operators for resolution. In this way, bots transform the work that people are performing. Employees are removed from handling boring, repetitious tasks. Instead, they focus on resolving issues of unusual circumstance that require thinking and judgment. This article is the first in a series exploring how CPAs can benefit from RPA technology, new entries will be posted weekly at www.schneiderdowns.com/our-thoughts-on. How Can Schneider Downs Help? The Schneider Downs Business Process Automation team is committed to assisting clients with the evaluation, adoption and implementation of robotic process automation technology. We work with our clients to evaluate use cases, develop cost-benefit analyses, implement process automation, and provide continuous support to the operation of your business automation processes. Learn more at www.schneiderdowns.com/rpa This article is reprinted with permission from Pennsylvania Institute of Certified Public Accountants, Ten Penn Center, 1801 Market Street, Suite 2400, Philadelphia, PA 19103. (215) 496-9272 ©2019. View the full article here. ### COVID-19 Flexibility for Section 125 Cafeteria Plans and High-Deductible Health Plans Through the COVID-19 pandemic, America has seen changes to some retirement and health plan benefit provisions, since the Internal Revenue Service (IRS) has relaxed certain restrictions to provide relief to taxpayers. One area of focus has been to provide temporary flexibility for Section 125 cafeteria plans and high-deductible health plans. The change in Section 125 cafeteria plans aims to help taxpayers with unexpected expenses, like health care and dependent care, that arise due to or during the COVID-19 pandemic.Internal Revenue Code Section 125 enables employees to take certain employer-sponsored benefits that are typically taxable and convert them into nontaxable benefits. Under cafeteria plans covered by Section 125, employees can typically choose from various options for these qualified benefits. Examples include accident and health benefits, dependent care assistance, group term insurance, and health flexible spending arrangements (FSAs).The IRS recently issued notices (Notices 2020-29, 2020-33, and IR-2020-95) that allow for temporary flexibility of Section 125 cafeteria plans. Employers can amend their Section 125 plans to allow mid-year election changes and a grace period to apply unused health FSA amounts. An Amendment to Section 125 allows for some plan elections made by employees on or before December 31, 2021 to be retroactive back to January 1, 2020.These elections allow employees to revoke coverage options made during the open enrollment period and make new elections. If an employee originally decided to decline their employer-sponsored health coverage, the Section 125 cafeteria plan will permit that employee to elect into the coverage. Employees can also make similar changes to their prior elections for health FSAs and dependent care assistance programs. In addition to revoking or electing into FSAs and similar programs, employees can now elect to increase or decrease the election regarding how much they fund the plan.Generally, health FSAs and dependent care assistance programs have dollar amount limits that can either be carried into the next year or have a grace period to be used, but not both. If the adopted Section 125 cafeteria plan elects to have a grace period, an employee has two months and fifteen days directly following the plan year-end to use any unused amounts for the plan year. The new IRS rules allow an employer to also amend their Section 125 cafeteria plans to extend the grace period for a 2019 plan to December 31, 2020. Additionally, the health FSA carryover for plan years beginning in 2020 has been increased from $500 for 2019 plans to $550 for 2020 plans.If you or your organization has any questions or if you need additional guidance relating to the COVID-19 IRS regulations or Section 125 cafeteria plans specifically, please feel free to contact Schneider Downs. ### The Coronavirus Impact on Manufacturers The ongoing coronavirus pandemic has impacted virtually all industries but in differing ways. Those deemed “non-essential” are hurting from closures and shutdowns, while other “essential” businesses have been thriving, even struggling at times to keep up with increases in demand for products and services. But what about manufacturers? What important aspects of the business should entities in those industries address as the country reopens? Three main issues come to mind: namely, what impact will restrictions related to the pandemic have on direct suppliers; how do consumers want to purchase goods going forward; and how can manufacturers adjust operations to abide by CDC guidelines and keep their workforces safe and healthy? While it’s important to make immediate short-term adjustments, thinking about the effects of the pandemic from a big picture perspective will likely allow more opportunity for success in the long run. For that, we need to review a bit of recent history. In 2017, the United States imported $505.6 billion worth of goods from China, including a substantial amount of raw materials that manufacturers rely on, like plastics, steel and electronic parts. The initial outbreak of the coronavirus in China drastically affected operations in that nation, with many factories closing down, making it difficult for some U.S. manufacturers to procure needed source materials. Given that unexpected circumstance, companies would be wise to consider diversifying their supplier pools. Having greater flexibility in that area would allow them to react more quickly to sudden changes and make adjustments to operations that permit continued workflow with less interruption. One option would be to bring additional technical operations to U.S. soil, which would also create new jobs for a new type of employee, not just the typical machine operators manufacturers already hire. Meanwhile, with stay-at-home orders in place throughout the U.S., consumers began panic buying, stocking up on cleaning products and essential food items. Stores found the need to place quantity purchase limitations on items like hand soaps, antibacterial sanitizers, meats and paper products, in part to alleviate output strain on suppliers of those goods. In addition, after the initial shock of the country’s shutdown, many U.S. consumers began shifting their buying habits from shopping at brick-and-mortar stores to ordering goods online. A Nielsen study reported that online sales of consumer goods was up over 60% during mid-April compared to the same week a year ago, owing largely to consumers simultaneously wanting to abide by stay-at-home orders and trying to avoid human contact. Many shoppers are even electing to purchase directly from manufacturers when possible, cutting out the middleman, meaning there are likely changes coming on the product delivery landscape as well. What does that mean for manufacturers? In addition to expanding their list of suppliers, should they also consider new opportunities on the other side of the supply chain? In other words, can companies start to cut out that middleman and offer manufactured goods directly to the consumer? It’s becoming more of a realistic scenario as consumer shopping habits shift, so manufacturers should probably seriously consider looking into direct shipment opportunities, as compared to continuing exclusively with mass shipments to retail stores. Another factor impacting the industry are the guidelines set forth by the CDC that recommend a six-foot distance between individuals and a reduction in the percentage of capacity filled within businesses. This is an issue for manufacturing employees, who don’t have the ability to perform their tasks and duties from home. Those CDC restrictions could mean up to 50% of a manufacturer’s workforce will be unable to complete their job onsite, which poses the complication of trying to efficiently keep up with normal production. Even before the pandemic, a shift toward the use of advanced technology and artificial intelligence was on the radar of a number of companies. Now that manufacturers are likely unable to house employment to full capacity, there may be no better time to consider the impact AI could have on operations in both the short- and long-term. Usage of AI could allow companies to continue to operate at full (or nearly full) capacity without having the labor that was once needed, which solves the problem in the “now.” Since studies have shown that unplanned downtime costs manufacturers up to $50 billion annually,  preventative maintenance through the use of AI could go a long way in solving problems “tomorrow.” As we start to move out of the shutdown phase, companies are encouraged to consider what the “new normal” is going to be and adjust to the changes. Whatever choices are made, it’s important to look at the long-term impact and stay ahead of the curve. Sources:https://www.huffpost.com/entry/covid-19-spending-coronavirus-panic-consumer_l_5eb07b4fc5b602af0b8c63eehttps://www.weforum.org/agenda/2018/03/this-is-what-the-us-imports-from-chinahttps://www.cnbc.com/2020/02/10/some-factories-in-china-extend-shutdowns-amid-coronavirus-outbreak.htmlhttps://www.industryweek.com/technology-and-iiot/article/21129334/what-will-manufacturings-new-normal-be-after-covid19https://www.cio.com/article/3309058/5-ways-industrial-ai-is-revolutionizing-manufacturing.html      ### Schneider Downs COVID-19 Client Survey - Our Thoughts On Survey Results Schneider Downs Announces COVID-19 Survey Results Companies impacted by the COVID-19 pandemic expressed concerns about the global impact of reduced consumer demand, yet remain optimistic about their ability to respond should a similar pandemic strike again, according to the results of a recently-completed Schneider Downs survey. In total, nearly 200 companies from 20 industries across 11 states participated in the survey, which invited companies to share their insights and activities associated with the COVID-19 pandemic. While each organization had unique circumstances coloring their individual responses, the survey yielded several themes that resonated across all surveys received. We believe the diversity of responses provides us with a well-rounded overview of the thoughts and opinions of business in our regions. We are equally excited, however, that our survey offers the opportunity to provide a deeper dive, enabling users to explore subsets such as industry or region. It is our goal to present this data to you in variable formats. Below are six interesting trends we identified through this analysis. Links within each paragraph provide access to an interactive dashboard that will allow you to view the survey data in the manner that best meets your needs. To view only responses to a certain industry, simply just click on that industry name. To understand what industries responded to a question a certain way, just click on that response and see the percent of each industry that responded with that option. These dashboards were created by our Automation and Data Analytic Process Team (“ADAPT”) using a Microsoft tool called Power BI, a powerful software that makes it easier to review complex data in relevant profiles. We hope you’ll enjoy your introduction to Power BI through the COVID-19 Response Survey dashboard. Should you be interested in learning more about how Data Analytics could provide new insights to your organization, please reach out to us at contactsd@schneiderdowns.com . Remote work was and will continue to be a top priority. Of the organizations currently in operation, 58% are working remotely. Many lamented not implementing a plan sooner and several mentioned the need to further train employees on the tools that aid remote work or upgrade IT infrastructure to accommodate. Three in five companies are also either creating or adjusting work-from-home policies for the future. Explore the data in our dashboard. Unprecedented times inspire companies to think creatively. Half of surveyed organizations reassigned staff to complete new tasks and a quarter are creating new products, initiatives, or services. One in five are also pursuing new funding sources. Though some companies seek only to address short-term problems, many are looking to make long-term pivots as well. Explore the data in our dashboard. Revised marketing and sales strategies reprioritize customers. Fifty-six percent of organizations have developed or are planning to create new marketing, sales, or advertising strategies. The biggest change is reevaluating how they think about their customers and how their organization can accommodate shifting customer/client needs. Explore the data in our dashboard. Companies are concerned that reduced consumption will linger. The top three effects of COVID-19 that decision-makers believe will continue to impact their business are all related to customers/clients and a lack of demand. As budgets tighten and individuals and companies reprioritize spending, organizations worry that customers will reduce budgets, even after normal business resumes. Explore the data in our dashboard. Despite this, organizations believe that their customers/clients will return quickly. Though only 57% believe that they will be able to return to business as normal within three months after the pandemic ends, 76% of disrupted businesses believe that their customers will return in the same time period. The bigger concern seems to be the volume of spending rather than a fear of returning. Explore the data in our dashboard. And, businesses are both prepared for and optimistic about their ability to navigate. Approximately 77% of Schneider Downs clients are very or extremely confident about their company’s ability to handle a similar outbreak in the future. Many commended their organization’s reaction and those that did not felt that they now understand the mistakes that were made. Implementing remote work sooner, better communication with clients and customers, and faster acquisition of PPE and sanitization materials were the three most common reported regrets. Explore the data in our dashboard. On behalf of Schneider Downs, thank you to all of the participants in the survey. For a deeper dive into the results, or for more information about Schneider Downs’ Data Analytics services, contact Matt Kraemer, mkraemer@schneiderdowns.com. ### Fed Seeks Commentary on Expansion of Main Street Lending Program to Nonprofits This week, the Federal Reserve Board announced that it is considering an expansion of the Main Street Lending Program to nonprofit organizations. The current program provides loans to small and medium-sized businesses and would potentially expand to small and medium-sized nonprofits in order to provide relief for liquidity needs during this challenging time. Loans for nonprofits under this proposal would follow similar provisions as loans for businesses.The proposed loans would be for a five-year period, with principal payments deferred for the first two years and interest payments deferred for one year. Loan sizes will range between a minimum loan size of $250,000 to a maximum loan size of $300 million with interest rates on the borrowings set at LIBOR + 3%. In order to qualify for the loans, nonprofits must have between 50 and 15,000 employees, demonstrate sound financial condition before the COVID-19 pandemic through a series of financial thresholds, five years or more of operations, and endowments below $3 billion.  In addition, revenues for 2019 must be below $5 billion with less than 30% provided through donations.Commentary on the proposal can be provided to the Fed until June 22nd through their website. All comments received will be made available to the public.For additional information or assistance regarding the Main Street Lending Program, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### Changes to the PPP Forgiveness Application and Instructions This article was updated on June 17, 2020. Further updates will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the coronavirus crisis. On June 17, the Small Business Administration (SBA) and U.S. Department of Treasury (Treasury) released revised a loan forgiveness application, related revised application instructions and a new EZ loan forgiveness application, all primarily in response to changes that were made with the Paycheck Protection Program Flexibility Act (PPP Flexibility Act) enacted on June 5.Changes to the Forgiveness Application and InstructionsThe revised application, dated June 16, has been separated from the instructions. Revisions include changes that resulted from the PPP Flexibility Act: Covered Period – Throughout the application, references to the length of the Covered Period have been revised to be either (1) the 24-week (168-day) period beginning on the PPP Loan Disbursement Date, or (2) if the borrower received its PPP loan before June 5, 2020, they may elect to use an eight-week (56-day) Covered Period. Potential Forgiveness Amount – The description of Line 10 has been revised to 60%, in response to the change to the limit included in the PPP Flexibility Act. This is a calculation of payroll costs incurred during the Covered Period (Line 1 divided by 60%). Revised Certifications – Certifications have been updated to include the 60% limitation and Covered Period extension. Specifically, the dollar amount for which forgiveness can be requested if a 24-week Covered Period applies cannot exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, and is capped at $20,833 per individual. Also, the following new certification has been added: If the borrower checks the box for FTE Reduction Safe Harbor 1 on PPP Schedule A, they are indicating that they were unable to operate between February 15, 2020 and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing or any other work or customer safety requirement related to COVID-19. Full-Time Equivalency (FTE) Reduction Calculation – The application has been revised to allow for three criteria that borrowers may meet to apply for a safe harbor from FTE reduction. If any of the criteria are met, a borrower’s forgiveness will be considered without any FTE reduction. One item to note is that Safe Harbor #2 asks borrowers to enter their total FTE as of the earlier of December 31, 2020 and the date the application is submitted, which suggests that if this safe harbor is met, a borrower may submit their forgiveness application prior to December 31, 2020, but that appears to be only available if #2 applies to the borrower. Salary/Hourly Wage Reduction – Like the FTE Reduction Safe Harbor #2, the safe harbor available to borrowers for restoring reductions of salary/hourly wages is the earlier of December 31, 2020 and the date the application is submitted. EZ Forgiveness Application and InstructionsThe SBA and Treasury have released a three-page EZ Forgiveness Application, available only to those borrowers that meet one of the three following criteria: Are a self-employed individual, independent contractor or sole proprietor who had no employees at the time of the PPP loan application, and did not include any employee salaries in the computation of average monthly payroll in their application. Did not reduce annual salaries or hourly wages by more than 25% during the Covered Period in comparison to the period from January 1, 2020 through March 31, 2020 for employees that made less than $100,000 on an annualized basis during any single pay period in 2019 AND did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. Did not reduce annual salaries or hourly wages by more than 25% during the Covered Period in comparison to the period from January 1, 2020 through March 31, 2020 for employees that made less than $100,000 on an annualized basis during any single pay period in 2019 AND meet the safe harbor in their inability to operate during the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing or any other work or customer safety requirement related to COVID-19. There are still some open questions we continue to monitor. If you need more information or assistance regarding the PPP, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Can Budgeting Really Lead to A Happier Life “Put your money in the bank” - this sentence was like nails on a chalkboard to me as a child growing up.  After receiving my first paycheck from cutting my neighbor’s grass, cash in hand, I asked my father to take me to a sporting goods store to purchase a basketball. In hindsight, this would be my first budgeting lesson, as my father suggested I save the money for the future. My father’s advice to save versus spend still resonates as a lot of Americans struggle to manage their personal finances, as illustrated by a Bankrate survey, noting that a majority of Americans would struggle to pay an unexpected bill of $500 in cash. While understanding your monthly budget (i.e. cash inflows/outflows) has always been important, during these uncertain economic times, with over 42.6 million Americans filing for initial unemployment claims since early March, it is critical. In this article, we explore how to get your monthly budget started, the benefits of on-going monitoring of your personal finances, and why having a firm understanding of your personal finances can lead to a more fulfilled life. We recognize that for some the idea of sitting down and creating a monthly financial budget sounds as fun as starting a new diet or workout regimen. A Gallup survey confirms this, noting only 1 in 3 Americans has prepared a detailed financial budget. To help you get started, we would suggest utilizing technology to aggregate your financial data using software (i.e. Quicken) or a free website like Mint. These technology platforms, with some initial input, make it very easy to illustrate your current financial balance sheet (i.e. assets less liabilities), as well as begin tracking your monthly spending by categories. Getting started can be the hardest part, but fortunately, technology can make the initial budgeting process much easier. Assuming one has utilized technology to gain an understanding of their current balance sheet and monthly spending trends, the power of financial budgeting is not in the aggregation of data, but in the monitoring of the data in order to gain insight into one’s financial habits. When individuals initially review their monthly spending, they are typically surprised at the amount that they spend in certain categories (i.e. entertainment, food and dining, and shopping). Many times, their ‘financial eyes’ are opened. For those seeking to improve their financial affairs, they often become very cognizant of these monthly trends. For motivated individuals looking to improve their financial situation, they typically begin exploring and seeking advice on ways to reduce spending and/or increase income on a monthly basis. This financial awareness, in our view, is the ultimate goal of financial budgeting. Financial awareness achieved from monitoring and reviewing your monthly budget, resulting in better financial habits and personal savings, has been shown to improve one’s overall happiness. A researcher at the University of Cambridge, in conjunction with a U.K. bank, conducted surveys with thousands of the bank’s customers. The goal was to explore how and why people make certain financial decisions to determine to what extent that money leads to happiness. Their research noted an interesting effect: the amount of money people currently had in their bank account was a better predictor of happiness than aggregate wealth. Their findings concluded that having more money in the bank made people feel more financially secure, resulting in increased levels of happiness. While initially one may be hesitant to establish and embrace a monthly budget and the on-going monitoring of personal financial trends process, for those individuals looking to improve and expand their long-term financial wealth and overall quality of life, personal financial budgeting is essential. If you need assistance, or have questions regarding budgeting, reach out to your trusted advisor. If you don’t have one, please call us. We would love to hear from you and provide additional insight on the importance of budgeting and helpful ways to get started. ### Facial Recognition - Future of Law Enforcement or More of the Same? Industry giants including IBM, Amazon, and Microsoft have cooled off on their pursuit of facial recognition technology after the Justice of Policing Act of 2020 was introduced to Congress on June 8th, 2020. If passed, the bill would restrict the way police utilize facial recognition technology. Until recently, all three corporations have been developing facial recognition technology with multiple intended uses. Most notably, products were marketed to police and other law enforcement to aid in the identification of suspects through mugshots and publically available photos. The companies have committed to actions ranging from IBM completely discontinuing its facial recognition products completely to Microsoft holding off on offering these products to police until governing legislation is passed. The ethics of such technology has been drawing questions as skewed datasets limit the efficacy rates for ethnically diverse subsets of the population. According to a recent study conducted by National Institute of Standards and Technology (NIST), false positive rates (the erroneous association of samples of two persons) are highest in West and East African and East Asian people, and lowest in Eastern European individuals. In other words, the technology is more effective in identifying differences in facial features for Caucasians than it is for people of color. In addition to the efficacy issues of the technology, the use of facial recognition is no stranger to controversy in use. In 2016, Baltimore City Police used the technology to identify persons present for the protest in the Baltimore after the death of Freddie Gray. The identified individuals were then targeted for arrest for unrelated causes following the protests. As the conversation continues to evolve in how society and law enforcement operates, this is an important time to step back and think. We must reevaluate the path we are heading down with facial recognition and must establish standards for its use. What are your thoughts? About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, vulnerability assessments and a robust digital forensics and incident response team, who are available around-the-clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. For more information on our available services and software, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurityteam@schneiderdowns.com. ### Introducing the Schneider Downs Retirement Solutions Resource Center As the Schneider Downs Retirement Solutions practice has continued to grow in service offerings and expertise, so has our depth of resources for plan sponsors and participants. In an effort to make our retirement resources easily accessible, we are excited to introduce the Schneider Downs Retirement Solutions Resource Center, now live at www.sdwealthmanagement.com/retirement-solutions-resource. The Resource Center houses original thought leadership and educational content pertaining to retirement plan topics such as fiduciary best practices, the difference between an ERISA 3(21) and 3(38) advisor, cash balance plans, and summaries of legislation like the SECURE Act and CARES Act. In addition to written content, the resource center is home to a suite of short educational videos covering a number of relevant topics including:  Active Versus Passive Investing Alternative Profit Sharing Contribution Allocations Asset Allocation Employer Sponsored Retirement Plans ERISA Bonding Requirements Governance For Retirement Plan Sponsors Increasing Retirement Plan Contribution Rates Options for Retirement Accounts When Moving Jobs Pre-Tax vs Roth Contributions Qualified Default Investment Alternatives Revenue Sharing Arrangements Self-Directed Brokerage Accounts Service Provider Fee Reasonableness Target Date Funds  Our team of advisors and consultants look forward to continuing to build out the Resource Center with the addition of new and timely content and welcome feedback on additional resources that you would find valuable.Learn more at www.sdretirementsolutions.com or contact us at sdretirement@schneiderdowns.com.About Schneider Downs Retirement SolutionsAt the highest level, we strive to simplify the complexities of sponsoring and participating in a retirement plan. To that end, we offer a definable, measurable and repeatable process for governing a retirement plan that meets industry best practice standards and the requirements set forth under ERISA and IRC. Our team of advisors provide objective advice to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes, and support efficient and compliant plan operations.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Pennsylvania COVID-19 Relief Statewide Small Business Assistance This article was updated on June 12, 2020. Further updates will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Pennsylvania financial programs offered due to the disruption of the coronavirus (COVID-19). On June 8, 2020, the Commonwealth of PA announced that it was providing $225 million in available grant funds for state businesses impacted by COVID-19. Additional details were provided two days later. Here’s a summary of the programs:Uses: Grants to cover operating expenses for the duration of the shutdown and the reopening transition; Grants to cover technical assistance, including training and guidance, for business owners as they relaunch their businesses. Debt payment relief for Pennsylvania Community Development Financial Institution (CDFI) borrowers; Loan loss reserves for CDFIs. Distribution:The Pennsylvania Department for Community & Economic Development (DCED) will distribute funds to the CDFI network, which will then distribute the money under three programs: Main Street Business Revitalization Program - $100 million; Historically Disadvantaged Business Revitalization Program - $100 million; Loan payment deferment and loss reserve - $25 million. Eligibility/Terms:                                                    All businesses must apply through an eligible CDFI and meet a number of requirements, including but not limited to: 25 employees or less; Maximum grant of $50,000; Must certify the following: In operation on February 15, 2020; COVID-19 has had an adverse impact, making the grant necessary to support ongoing operations; Between June 1, 2020 and December 31, 2020, the business has not and will not receive another grant under this state program; and In compliance with all relevant Pennsylvania laws, orders and regulations during the PA COVID-19 disaster emergency declaration. More details can be found here:https://dced.pa.gov/programs/covid-19-relief-statewide-small-business-assistance/https://dced.pa.gov/download/covid-19-relief-statewide-small-business-assistance-guidelines/?wpdmdl=94994If you have other questions regarding these programs, first reach out to your local CFDI. If you need more information, please reach out to any of your connections at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### ERISA Plans Going Remote There have been many changes to life as we know it during the COVID-19 pandemic. Many people have found themselves using technology more than ever before to connect in a remote environment both in personal and professional life. ERISA plans are no exception to this trend towards a digital revolution.The IRS now allows for remote retirement plan participant elections. As social distancing has been implemented throughout the country, the IRS provides temporary relief to physical presence requirements for spousal and other qualified consents required under Treasury Regulations Section 1.401(a)-21(d)(6).Notice 2020-42, which covers the period from January 1, 2020 through December 31, 2020 aids in situations in which 1) participant elections need to be witnessed by a notary public (only in states that permit remote notarization) and 2) participant elections need to be witnessed by a plan representative.Physical presence rules will be satisfied through an electronic system facilitating remote notarization, executed via live audio-video technology that satisfies the requirements of the participant elections under 1.401(a)-21(d)(6) and is consistent with the individual state law surrounding the notary public. These requirements are broad and rely heavily on the state law surrounding notaries.On the other hand, rules surrounding participant elections witnessed by a plan representative are much more specific. Physical presence rules will be satisfied through the use of audio-video technology with the following requirements: The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference, and may not merely transmit a copy of the photo ID prior to or after the witnessing. The live audio-video conference must allow for direct interaction between the individual and the plan representative. A pre-recorded video of the person signing is not sufficient. The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed. After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of the notice and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable notice requirements. The use of online meeting systems should be sufficient to satisfy the first two requirements. From there, the individual could scan or send a picture of their document to their plan representative to satisfy the third requirement.See another result of the digital revolution relating to ERISA plans in our past Our Thoughts On article, “Department of Labor Finalizes Electronic Disclosure Rules”.Source: Notice 2020-43, https://www.irs.gov/pub/irs-drop/n-20-42.pdf ### Risks to Consider When Reopening Your Branches With the country slowly reopening from the COVID-19 pandemic, it’s time to consider the risks associated with reopening your branch locations.With the ultimate goal of providing a safe environment where customers and branch employees can conduct banking business and essential operations, banks must be proactive in their risk mitigation efforts. While considering how to reopen branches or expand operations, it’s key that financial institutions review and incorporate the requirements of the CDC, OSHA, EEOC, DHS, WHO, DOL, and FFCRA into their plans. On top of this, banks should be following the guidance issued by state and local officials. Bank policy should be assisting in next steps and determination of priorities when reopening or expanding operations.Plans for reopening should also address key risks and the associated mitigation efforts surrounding strategic, safety, operational, security, and compliance risks.  Strategic risks arise from business decisions. Developing or reviewing the bank’s re-opening/continuing operations strategic plan to ensure it includes the bank’s mission, vision, external and internal environments, and business continuity plan is essential for making business decisions consistent with the bank’s values. Insurance providers should also be engaged to assess coverage associated with the risks of reopening. Safety risks arise from potential harm to customer and employees. Deep cleaning high traffic areas, installing partitions, and providing appropriate PPE is crucial for the well-being of all individuals who enter the branch location.  Developing a temperature screening practice for all employees and customers, developing customer limits, and posting signage regarding the bank’s COVID-19 response are also essential for keeping all parties safe.  Operational risks arise form a failure of process, people, and systems. Providing appropriate training to branch personnel, developing “Know Your Customer” procedures that keep all parties protected, and assigning personnel monitor and administer safety and crowd control practices are important for addressing the operational risks. Security risks arise from the possible threat from a person or situation. Developing and executing new “Know Your Customer” procedures that effectively allow you to identify the customer without risking the health of either party is essential. With many individuals continuing to wear masks even when not required by orders, it will be more difficult to identify customers, however it is important that measures be to taken to identify those individuals while respecting their personal health concerns. The number of individuals wearing masks also increases the security risks associated with bank robberies, as the identity of individuals is partially hidden. Compliance risks arise from failure to comply with state, federal, and financial regulators and their various laws and regulations associated with business operations. Assessing the bank’s ability to comply with the laws and regulations set forth by the various regulatory bodies should be the impetus for decision making surrounding reopening branch locations or expanding operations. Failure to assess risks and develop risk mitigation strategies can impact your bank’s ability to successfully reopen branch locations. ### Accounting for Paycheck Protection Program Loans and Forgiveness The American Institute of Certified Public Accountants (AICPA) has provided interpretive guidance on how nongovernmental entities should account for forgivable loans received through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The U.S. Securities and Exchange Commission has indicated that they will also permit these accounting methods for PPP loans. Nongovernmental entities may account for the financial liability under Financial Accounting Standards Board’s (FASB) Accounting Standard Codification (ASC) 470, Debt, and accrue interest according to ASC-835-30, Imputation of Interest. As government obligations, loans received through the PPP are excluded from calculating additional imputed interest on loans with interest below market rates. Borrowers should reference the guidance at FASB ASC 405-20, Extinguishments of Liabilities, for treatment of the loan liability. At 405-20-40-1, the proceeds from the loan should remain as a liability until either of the following are met: The loan is fully or partially forgiven and the debtor has received legal release from the liability; or The liability is paid off by the debtor to the creditor. If the loan is fully forgiven or forgiven in part and legal release is received, the nongovernmental entity would then reduce the liability for the amount of the forgiveness at the forgiveness date by recording a gain on extinguishment.Borrowers that are for-profit entities may also choose to account for the PPP loans under International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, issued under International Financial Reporting Standards (IFRS). Under IAS 20, government assistance is not recognized until there is a reasonable assurance (similar to FASB’s “probable” threshold) that the conditions attached to the assistance will be met and the governmental assistance will be received. Once entities have reasonable assurance that these conditions will be met, earnings from the governmental grant should be recorded as the related costs, such as compensation, are incurred. Entities should record the cash received from the loan as a deferred liability. The liability would then be reduced with a credit to other income or as a reduction of the related expenses covered by the PPP loan.Not-for-profit entities that elect not to follow ASC 470 may account for PPP loans in accordance with ASC 958-605, Revenue Recognition, as a conditional grant. While, 958-605 generally excludes contributions made by governmental entities to for-profit entities, FASB is permitting for-profit entities to elect to treat PPP loans under this guidance. Under 958-605, the timing of recognition for a received contribution depends on whether the contribution is conditional. When conditional, the amount of loan forgiveness should not be recognized until conditions are substantially met or have been waived by the grantor. Under this method, the cash received should be recorded as a refundable advance and then recognized once conditions are met or explicitly waived.For-profit entities are also permitted to account for the PPP loans under ASC 450-30, Gain Contingencies. Under this method, funds received under the loan would be recorded as a liability with a gain contingency recognized when all conditions of loan forgiveness are met.In summary, for-profit and non-profit entities may follow ASC 470 under all circumstances. If a for-profit entity believes they will met PPP’s eligibility criteria for forgiveness will be met they may choose to follow IAS 20, ASC 958-605, or ASC 450-30. Non-profit entities may also follow ASC 958-605 if they believe the loan is a grant that is expected to be forgiven. All nongovernmental entities with material PPP loans should include accounting policy disclosures and the impact of the loans on their financial statements.For additional information or assistance regarding the PPP, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### IRS Provides Temporary Signature Relief For Retirement Plan Elections By Donna Wolfson, Schneider Downs Retirement SolutionsRecognizing the difficulty of meeting a “physical presence” requirement during the COVID-19 pandemic, the IRS on June 3 issued Notice 2020-42, providing temporary relief for certain qualified retirement plan participant elections, including spousal consents, that are typically required to be witnessed in the physical presence of a plan representative or notary public. The relief is retroactive to January 1, 2020, and continues through December 31, 2020.While Treasury regulations permit electronic notarization of participant elections, the “physical presence” requirement prevents the use of remote notarizations. Notice 2020-42 waives that requirement if certain rules are satisfied. In the case of notaries, the relief applies to any consent witnessed by a notary of a state that permits remote electronic notarization. Execution must be via a live audio-video conference that meets the state’s requirements for remote notarization, as well as the normal regulatory requirements for electronic signature.For participant elections witnessed by a plan representative, the following additional requirements apply: The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video conference and may not merely transmit a copy of the photo ID prior to or after the witnessing; The live audio-video conference must allow for direct interaction between the individual and the plan representative; The individual must transmit by fax or electronic means a legible copy of the signed document directly to the plan representative on the same date it was signed; and After receiving the signed document, the plan representative must acknowledge that the signature has been witnessed by the plan representative in accordance with the requirements of Notice 2020-42 and transmit the signed document, including the acknowledgement, back to the individual under a system that satisfies the applicable IRS notice requirements. ### COVID-19 AND THE M&A MARKET: DEAL VOLUME AND VALUE Since mid-March, M&A volume has slowed dramatically as the U.S. economy shut down and state governments implemented stay-at-home orders. The chart below illustrates the monthly decline in announced transactions through 2020 and compared to the same period in 2019. Monthly deal announcements have declined by more than 50% since January 2020. The decline in volume can be attributed to buyers focusing on stabilizing their existing businesses and the uncertainty on the timing of recovery. Also, lenders had limited financing capacity for new deals due to overwhelming demand of PPP loans and addressing issues with existing clients. Certain industries experienced a higher decline in M&A activity than others. Deal volume was lower for businesses that experienced significant disruption during the stay-at-home orders. Health care services transactions, such as physical therapy practices and dental practices, declined approximately 37% compared to the same period in 2019. Similarly, retail deal volume was down approximately 36%. On the other hand, telecommunication and biotechnology companies saw higher M&A activity. As the economy reopens, we are beginning to see evidence of renewed activity. Buyers with a strong financial position are starting to hunt for opportunities, and deals that were paused are moving forward. Alignment on valuation between buyers and sellers could be challenging. At the date of publishing, the S&P 500 is off its 2020 peak by 5%. The chart below shows where the market stands as of June 8 compared to its peak on February 19 by sector: We expect buyers to have an increased focus on financial due diligence and transaction structures that share risk. We will examine this further in our next article on the impact COVID-19 will have on future deals. If your strategic plans include the possibility of a transaction, learn more about our experience in advising clients through the course of a merger or acquisition, by contacting Peter Lieberman at 412.697.5364 or plieberman@schneiderdowns.com. This article is a part of a series. Read the first article, "COVID-19 & THE M&A MARKET," here. ### Another Expansion of the Main Street Lending Program This article was updated on June 9, 2020.  Further updates will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of federal financial programs offered in the wake of the business disruption caused by the COVID-19 pandemic.  On June 8, the Federal Reserve announced that it would expand the Main Street Lending Program (Main Street) to allow more small and medium-sized businesses to be able to receive support.Here are the changes: Lowering the minimum size for certain loans from $500,000 to $250,000. Increasing the maximum loan size for all facilities. Increasing the term of each loan option from four years to five. Extending the repayment period for all loans by delaying principal payments for two years, rather than one. Raising the Reserve Bank’s participation to 95% for all loans. The three loan options with updated terms are summarized below:   New Loans Priority Loans Expanded Loans Term Five years (previously four) Five years (previously four) Five years Minimum Loan Size $250,000 (previously $500,000) $250,000 (previously $500,000) $10,000,000 Maximum Loan Size Lesser of $35M or 4x 2019 adjusted EBITDA (previously $25M) Lesser of $50M or 6x 2019 adjusted EBITDA (previously $25M) Lesser of $300M or 6x 2019 adjusted EBITDA (previously $200M) Risk Retention 5% 5% (previously 15%) 5% Principal Payment Deferred two years, years 3-5: 15%, 15%, 70% (previously years 2-4: 33.33% each year) Deferred two years, years 3-5: 15%, 15%, 70% (previously years 2-4: 15%, 15%, 70%) Deferred two years, years 3-5: 15%, 15%, 70% (previously years 2-4: 15%, 15%, 70%) Interest Payments Deferred one year Deferred one year Deferred one year Rate LIBOR + 3% LIBOR + 3% LIBOR + 3%  The Federal Reserve states it continues to recognize the critical role played by nonprofit organizations throughout the economy and is working to establish a program for these organizations.A start date for Main Street will be announced soon.For more information, see our articles regarding Main Street Frequently Asked Questions:/our-thoughts-on/main-street-lending-program-faqs-part-1/our-thoughts-on/main-street-faqs-part-2If you have other questions regarding Main Street, first reach out to your bank and other lenders to see if you can apply for Main Street funding through them.  If you need more information, please reach out to any of your connections at Schneider Downs or contact Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Final Regulations Clarify Exempt Organization Filing Requirements After waiting nearly eight months, exempt organizations finally have clarity on the reporting requirements of Form 990, Schedule B, Schedule of Contributors. Effective May 28, 2020, the Internal Revenue Service (IRS) published final regulation TD 9898 addressing donor reporting, as well as a few other items. The most anticipated change confirms that an exempt organization, other than a 501(c)(3) or Section 527 organization, is not required to report the names and addresses of donors on its annual information return. This Regulation confirms the IRS’s 2018 Revenue Procedure 2018-38, which was criticized for not following proper notice and comment procedure as established by the Administrative Procedure Act.After issuing proposed Reg-102508-16 on September 10, 2019, the IRS received 8,387 comments on both sides of the issue. Some commenters thought the reduction of donor information reporting would afford organizations more of an opportunity to hide situations of private benefit or political activity. Others supported the Regulation on the premise that less reporting would be less of an administrative burden, allowing the organization to spend more time on their mission. Another concern pointed to the prevention of accidental disclosure of sensitive contributor information being reported to the IRS. The IRS determined that collecting this information annually from all organizations “is not necessary for the efficient administration of the internal revenue laws.”While certain organizations are no longer required to provide the names and addresses of donors to the IRS, they are still expected to maintain this information in their files. The information must be available in the event of an IRS request or examination.The final regulation also encompassed changes in other areas. The list of items required to be reported on annual information returns was expanded to include taxes imposed on certain lobbying and political expenditures as well as those related to excess benefit transactions. Second, the regulations amended IRC Section 1.6033-2(g)(1)(iii) to adjust the threshold, determining if certain exempt organizations must file an annual return, to $50,000 of gross receipts. Although Treasury and the IRS previously granted authority to adjust this threshold and have been utilizing the $50,000 amount, TD 9898 makes an official amendment. Exempt organizations under the specified threshold must still file Form 990-N., e-Postcard. Last, the final regulation clarified certain treatment and filing requirements of Section 527 organizations.Although Regulation TD 9898 was effective May 28, 2020, organizations may apply these rules to returns filed as of September 10, 2019, which was the date of proposed regulations.If you have any questions on the applicability of this regulation to your organization, please contact any of our exempt organization experts.  ### Paycheck Protection Program Extended This article was updated on June 3, 2020. Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption caused by the coronavirus crisis (COVID-19). On June 3, 2020, the Senate passed a bill that makes many borrower-friendly changes to the popular Paycheck Protection Program (PPP). The bill will need to be signed by President Trump before taking effect.Under the Paycheck Protection Program Flexibility Act, H.R. 7010, (Flexibility Act) the covered period of the borrower’s loan will be extended to the end of the earlier 24 weeks from the date of the loan origination or December 31, 2020.  This is a welcome change for many borrowers whose organizations have been shut down due to state and local orders.  Many others are just starting to open their doors, but will not be back up to pre-pandemic levels for some time. The Flexibility Act does give borrowers that have received a PPP loan prior to the enactment of the Flexibility Act the option to elect an 8-week covered period, which is likely also beneficial to those businesses that are able to utilize all the loan proceeds within the covered period. The Flexibility Act also provides relaxed rehire exemptions related to loan reductions if a borrower is unable to rehire individuals who were employed as of February 15, 2020, or unable to return to the same level of business activity due to compliance with requirements established by various governmental entities.  Documentation of a borrower’s inability will be required.The minimum maturity of the remaining loan portion has been extended to five (5) years from the earlier established term of two (2) years.  The maximum term of ten (10) years under the CARES Act remains unchanged.  Additionally, the deferral period of loan payments has been revised to be the earlier of the date on which the amount of loan forgiveness is determined and remitted to the lender [from the SBA] or ten (10) months following the end of the covered period. Another borrower-friendly provision of the Flexibility Act, that isn’t directly related to the PPP loan, is that the Flexibility Act repeals the portion of the CARES Act that disallowed a borrower receiving forgiveness of a PPP loan the ability to defer certain federal payroll tax.  This will allow for a payroll tax deferral for all businesses even if the PPP loan is forgiven. One area potentially not friendly to borrowers is the wording of the relaxing of the payroll and non-payroll limitation.  The Flexibly Act revises that limitation; however, the wording states that to be eligible for forgiveness, the borrower shall incur at least 60% of the covered loan amount for payroll costs.  This wording may result in a reduction of loan forgiveness if the SBA were to literally interpret the law as only allowing for forgiveness if the borrower meets the 60%/40% requirement.  We will continue to monitor this provision and interpretations.If you need more information or assistance regarding the PPP, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com).   ### Department of Labor Finalizes Electronic Disclosure Rules Following up on their proposed regulations from October 2019, the Department of Labor (“DOL”) on May 21, 2020 issued final regulations regarding the electronic disclosure of required information to participants in employee retirement plans under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The new final regulations are effective July 26, 2020, but employers and plan administrators may start implementing them sooner. The final regulations do not apply to required disclosures for employee welfare benefit plans. The final regulations provide a “safe harbor” method for employers to deliver required disclosures under ERISA by means of email, mobile application or website. Compliance with the DOL final regulations is optional and employers are not required to adopt the new regulatory safe harbor; they even may elect to do so with respect to some but not all of their plan participants. However, because the safe harbor provides a clearly delineated method to ensure compliance with ERISA’s disclosure requirements, most plan sponsors will likely find it beneficial to begin using these delivery procedures as soon as possible. INITIAL PAPER NOTICE OF DEFAULT ELECTRONIC DELIVERY AND RIGHT TO OPT OUT.  Before utilizing the new regulatory safe harbor, retirement plan administrators must notify each covered individual on paper that covered documents (i) will be provided electronically to an electronic address; (ii) identify the electronic address that will be used for the covered individual; (iii) provide any instructions necessary to access the covered documents; and (iv) include a cautionary statement regarding the time period the covered document is required to be available on the website (i.e., one year or until superseded, whichever occurs first).  The notice must also include a statement of the covered individual’s right, free of charge, to request and obtain a paper version of a covered document or opt out of electronic delivery, and an explanation of how to exercise these rights. “COVERED INDIVIDUALS” UNDER THE REGULATORY SAFE HARBOR The final regulations apply only to “covered individuals,” defined as participants, beneficiaries or other individuals entitled to covered documents and who provide the employer, plan sponsor, or administrator with an email address or internet-connected mobile computing device (a smart phone number capable of receiving text messages).  Employers may satisfy this requirement by providing retirement plan participants with an email address in connection with their employment, but employers and plan administrators cannot assign work email addresses for non-employee spouses or beneficiaries.  When an employee for whom the employer provides an electronic address terminates employment, the plan administrator must take reasonable measures to obtain a new electronic address or allow continued access to work email to continue to receive required documents. “COVERED DOCUMENTS” UNDER THE REGULATORY SAFE HARBOR For purposes of the final regulations, “covered documents” include any document that the plan administrator is required to furnish to participants and beneficiaries of a retirement plan (the only exception being the documents that must be furnished at the request of a covered individual, such as a plan document). This includes documents such as a plan’s summary plan description, summary annual report, and investment-related disclosures. WEBSITE The final regulations require retirement plan administrators to provide and maintain a website or mobile application for covered individuals to access the required documents.  The regulations do not specify any specific technologies or software that must be used for the website, but require that the plan administrator take measures reasonably calculated to protect the security and privacy of covered individuals’ information. They can use hyperlinks that take covered individuals directly to the website. NOTICE OF INTERNET AVAILABILITY Retirement plan administrators must furnish a notice of internet availability (“NOIA”) at the time the covered document is made available on the website. The NOIA must include a legend, title or subject line that reads “Disclosure About your Retirement Plan” and the following statement “Important information about your retirement plan is now available.  Please review this information.” The NOIA must also identify the covered document by name and include a brief description if the name of the covered document does not adequately describe the covered document.  For example, “quarterly benefit statement” would not require a brief description, but a “blackout notice” would. Covered documents must remain on the website until they are superseded by a new version, but in no event less than one year from the date they are first posted.  The NOIA must include the internet website address, or a hyperlink to the address where the document is available.  The NOIA must advise covered individuals of their right, free of charge, to request paper copies or opt out of electronic delivery and must include a cautionary statement regarding the time period the covered document is required to be available on the website.  And finally, the NOIA must provide a telephone number to contact the plan administrator or other designated representative of the plan. The NOIA must be furnished electronically to the covered individual’s electronic address and be written so that the average plan participant can understand what is being conveyed. The system must alert the plan administrator of an individual’s invalid or inoperable electronic address, and the plan administrator must take reasonable steps to correct the address or treat the individual as having opted out of electronic delivery. RIGHT TO PAPER COPIES OR TO OPT OUT OF ELECTRONIC DELIVERY The final regulations contain two safeguards for ensuring that covered individuals may receive covered documents on paper, mailed or delivered to them.  The first safeguard requires that upon request from a covered individual, the retirement plan administrator must promptly furnish to that individual at no charge a paper copy of a covered document.  Only one copy of the covered document must be provided free of charge (plan administrators may charge for additional copies of the same covered document). The second safeguard allows covered individuals to “globally” opt out of electronic delivery and receive all covered documents in paper form.  Plan administrators may offer additional opt-out election options, such as a document-by-document opt-out or one based on categories or classifications of covered documents. This new safe harbor presents a welcome change from the DOL’s prior (and substantially outdated) electronic disclosure rules, which applied only to a limited group of plan participants. Plan sponsors and administrators should update their disclosure procedures as soon as possible to ensure compliance with this new safe harbor. For additional information, including assistance with updating your administrative procedures to comply with this new safe harbor, please contact Shad Fagerland (sfagerland@schneiderdowns.com), Scott Rain (srain@schneiderdowns.com) or your regular SD Retirement Solutions contact person. ### HMDA Reporting Thresholds Increased by CFPB The Home Mortgage Disclosures Act (HMDA) as implemented by the Consumer Financial Protection Bureau’s Regulation C, 12 CFR Part 1003 (Regulation C), requires *certain depository institutions to collect, and report mortgage data used to: Identify potential discriminatory lending practices; Determine whether lending institutions are serving housing needs of their communities, and Assist public officials in the public investment where efforts are needed. On April 16, 2020, the CFPB issued the final rule to Regulation C that adjusts the reporting thresholds for closed-end mortgage loans and open-end lines of credit reportingAccording to the final rule, institutions that originate fewer than 100 closed-end mortgage loans within “either of the two preceding calendar years” are not required to report closed-end mortgage data effective July 1, 2020.  This change is an increase over the previous 25 closed-end loan disclosure threshold.Additionally, the threshold for reporting open-end lines of credit will change from 100 to 200 on January 1, 2022, upon the expiration of the current temporary threshold of 500 open-end lines of credit. Sources:FFIEC, 2020 Edition A Guide to HMDA Reporting: Getting it Right!*Depository institution determination is made based on asset-size threshold, location test, loan activity, federally insured/federally regulated, meets loan volume threshold –Federal Registerhttps://www.federalregister.gov ### What to Expect During a Sale Transaction Once they decide to move forward, many owners plow straight in and starting looking for a buyer. Good idea, but not so fast. Slow down. Think about your existing advisors, who know you and know your business. What value can they bring to the transaction? Chances are, quite a lot.Many transactions fail to deliver the value or outcome the owner expects. Think that won’t happen to you? Some statistics show that up to 80 percent of businesses on the market will NOT sell, so to position your transaction for the best outcome, make sure you’ve planned appropriately. Your accountants, attorneys, bankers and insurance brokers know – or should know – a lot about your business. They may have years of history working side-by-side with you, helping manage your ups and downs. Take advantage of that experience. They also likely know your personal situation and can help you plan for those days and months after the transaction.Start by connecting with your most trusted advisors. Let them know where you stand. Ask them what course of action they recommend. Keep an open mind. Put your best foot forward and work to position the company for the optimal sales price. It may require new approaches and changes to your current operating model, but by doing so, you can create a larger legacy for your company, your employees, and your family. ### Paycheck Protection Program Borrower and Lender Responsibilities This article was updated on May 26, 2020. Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption caused by the coronavirus crisis (COVID-19). On May 22, 2020, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, released an Interim Final Rule (IFR) on borrower and lender responsibilities in relation to the SBA’s process of reviewing Paycheck Protection Program (PPP) loan applications and loan forgiveness applications. Review of Individual Loans The SBA may review any individual PPP loans at its discretion and is authorized to review (1) borrower eligibility; (2) loan amounts and use of proceeds; and (3) loan forgiveness amounts. The timing of a loan review is also at the discretion of the SBA, but borrowers are required to maintain documentation for a period of 6 years after the date the loan is forgiven or repaid in full. Lenders are also required to maintain documentation with applicable SBA requirements for records retention (13 CFR 120.461).Borrowers will have the opportunity to respond to inquiries on eligibility, loan amount or uses, or forgiveness requests. The SBA requires the lender to contact the borrower in writing to request additional information, but the SBA may also request information directly from the borrower. Failure to respond may result in a determination that the borrower was ineligible for the loan, ineligible to receive the loan amount or ineligible for loan forgiveness.If a borrower were to apply for forgiveness and is deemed to be ineligible, the SBA will notify the lender of such. The lender will deny the loan forgiveness in whole or in part and the SBA may also seek repayment of the outstanding PPP loan balance or pursue other available remedies. The determination that a borrower is ineligible may be appealed, the process of which will be further addressed by a separate interim final rule. Lender Loan Forgiveness Process Lenders will be required to confirm: (a) receipt of borrower certifications; (b) receipt of documentation to aid in verifying payroll and non-payroll costs; and (c) the borrower’s calculations on the Loan Forgiveness Application (including lines 1, 2, 3, 4, 6, 7, 8 and 10). The accuracy of the information and calculations are the responsibility of the borrowers, but lenders are expected to perform a good faith review of the borrower’s calculations and supporting documentation. Lenders have 60 days to render a decision (approval, denial or denial without prejudice at the direction of the SBA) on the borrower’s loan forgiveness.Lenders are not eligible for process fees on loans determined to be ineligible. The SBA may seek repayment upon a loan review only to the extent that the review was completed within 1 year from the loan’s disbursement date. The determination of a loan being ineligible does not affect the SBA’s guaranty of the loan. However, if the lender were not to comply with the applicable regulations and rules, then the SBA will seek repayment of the process fee and will not guarantee the loan.If you need more information or assistance regarding the PPP, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### Financial Boot Camp Series: College Savings 101 As young parents, my husband and I met with a financial planner who asked about college savings. We responded that they were on their own. Fast forward to college and we couldn’t let them incur that much debt. So we helped. As I am now a financial planner, I cringe at that decision of my younger self.   When is the best time to start saving for college? Now. No matter how old your future student is, any set-aside savings will offset what you need to fund in the future. What is the best vehicle for savings? We will look at 529 plans, Roth IRAs, and UTMA accounts. A 529 plan is typically state sponsored. Funds contributed to a 529 plan will grow tax free and are withdrawn tax free for qualified education expenses. Many states offer a choice between two options: prepaid tuition plans and investment savings plans. Prepaid tuition plans allow you to purchase credits now to use later at a state university. Investment savings plans give you the flexibility to invest your contributions in publicly-traded funds to use later for any eligible school you wish. K-12 education can also be paid for with an investment plan, subject to certain limits.There are often state tax advantages to these accounts as well. There are no income limits for contributions. You can change beneficiaries to other members of your family if you do not use the funds for the intended beneficiary. You can also elect to front-load the account, or contribute five times the amount of the annual gift tax exclusion in a single year. There are specific ways 529 plans are considered for FAFSA (Free Application for Federal Student Aid) inclusion. Furthermore, each state may have different rules, so planning is key.A Roth IRA is also a common savings vehicle. Like a 529 plan, the funds grow tax free.  Obviously, the purpose of a Roth IRA is retirement savings, but you can also withdraw for college expenses. Unlike 529 plans, there are income and contribution limits. As long as the account has been in existence for over five years, after you attain age 59.5, funds can be withdrawn tax free for any purpose. Before age 59.5, withdrawals are tax- and penalty-free if used for qualifying expenses, which includes college expenses.Still, to avoid taxation, a Roth IRA may be a better strategy for an older account owner. Unused funds are available to fund the owner’s retirement. The account will not be considered in FAFSA calculations, but withdrawals will be considered as income to the student. There are also no state tax benefits. Still, this is a good option if you are older and have a substantial Roth IRA balance, or if you are not sure if your student will pursue higher education. More importantly, you don’t shortchange your own retirement. Finally, the UTMA (Uniform Transfers to Minors Act), or custodial account, is a savings or investment vehicle that you establish on behalf of a child. You can make gifts at any time, and in any amount, subject to the annual gift tax exclusion and gift tax reporting rules. As custodian, you can use the account to fund education expenses for your minor child. Once the child is an adult, depending upon state rules, the funds become their sole property. Earnings on the account are taxable in the year received, and subject to federal and state income tax. It is an irrevocable gift to the child and cannot be transferred to another beneficiary. There are no state tax breaks, but there are no restrictions on the use of the funds.The UTMA will be considered the child’s asset for FAFSA filing. Keep in mind, if you start with an UTMA and wish to convert it to a 529 account, it will still be a named custodial account. The child is the owner and you, as the guardian, will not be able to change beneficiaries. Furthermore, if there are capital gains in the UTMA account, they will be realized upon conversion, and additional taxes will be due. In short, these are three opportunities to save for college. Each option has additional regulations that you should consider. Evaluate your specific situation, and with the help of your financial advisor, choose your best solution. Remember, there is no wrong way to save. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Loan Forgiveness Interim Final Rule This article was updated on May 26, 2020. Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption caused by the coronavirus crisis (COVID-19). On May 22, 2020, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, released an Interim Final Rule (IFR) on Loan Forgiveness related to the Paycheck Protection Program (PPP).GeneralThe IFR provides that borrowers receiving a PPP loan under the CARES Act are eligible for loan forgiveness in an amount equal to the sum of: Payroll costs Non-payroll costs: Interest payments on any business mortgage obligation for real or personal property incurred prior to February 15, 2020; Payments of business rent for real or personal property under a lease in force before February 15, 2020, and; Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020. The component of payroll costs is consistent with previous guidance issued by the SBA and Department of Treasury. Additionally, the IFR noted, as set forth in the First Interim Final Rule (85 FR 20811), that eligible non-payroll costs cannot exceed 25% of the loan forgiveness amount.Loan Forgiveness ProcessThe IFR provides borrowers a general overview of the loan forgiveness progress, which will be initiated by the borrower through the submission of the Loan Forgiveness Application (SBA Form 3508) or the lender’s equivalent. Upon receipt of the loan forgiveness application, the lender is required to make the decision on forgiveness within 60 days of submission by the borrower. Following the decision, the lender shall receive reimbursement in the amount of principal and accrued interest from the SBA within 90 days, subject to any SBA review of the loan or loan application review.Also, the IFR provides borrowers some clarity if, upon review, certain certifications were deemed to be inadequate. The IFR states:If SBA determines in the course of its review that the borrower was ineligible for the PPP loan based on the provisions of the CARES Act, SBA rules or guidance available at the time of the borrower’s loan application, or the terms of the borrower’s PPP loan application (for example, because the borrower lacked an adequate basis for the certifications that it made in its PPP loan application), the loan will not be eligible for loan forgiveness. The lender is responsible for notifying the borrower of the forgiveness amount. If only a portion of the loan is forgiven, or if the forgiveness request is denied, any remaining balance due on the loan must be repaid by the borrower on or before the two-year maturity of the loan.Payroll Costs Eligible for Loan ForgivenessGenerally, payroll costs eligible for loan forgiveness remain consistent with our description in our previous article related to the release of the loan forgiveness application. You can read that article at /our-thoughts-on/sba-releases-ppp-loan-forgiveness-application.There have been a lot of questions regarding bonuses and hazard payments during the covered period. Under this IFR, such payments incurred and paid (subject to the time period requirements of payroll costs) would be eligible for loan forgiveness.Consistent with the loan application, payroll costs for owner-employees are treated differently than other employees. Forgiveness for owner-employees will more closely align with the provisions that are applicable to self-employed/independent contractor businesses. That is, their payroll costs are limited to 8/52 of 2019 cash compensation and health insurance and retirement benefits made on their behalf, subject to the $100,000 annualized threshold. Also, the $100,000 annualized limitation, or $15,385 during the covered period, is to be considered across all businesses.General partners are capped by the amount of their 2019 net earnings from self-employment, which is required to be reduced by the sum of claimed Section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties and multiplied by 0.9235.Non-payroll Costs Eligible for Loan ForgivenessBorrowers are eligible for loan forgiveness for non-payroll costs that were (1) paid during the covered period; or (2) incurred during the covered period and paid on or before the next regular billing date, even if the billing date is outside the covered period. The example in the IFR confirms that a non-payroll cost paid in the covered period that was incurred prior to the covered period is forgivable.Borrowers are not eligible for forgiveness on advance payments of mortgage interest.Reduction to Loan Forgiveness AmountThe reduction to the loan forgiveness stipulations remain consistent with our description of them in our article related to the release of the loan forgiveness application. You can read that article at /our-thoughts-on/sba-releases-ppp-loan-forgiveness-application.A borrower’s forgiveness should not be reduced in response to any employees who were given a good-faith, written offer to return to work at the same wage and hours during the covered period if the employee(s) rejected the offer. Borrowers are required to inform the applicable state unemployment insurance office of the employee’s rejected offer of reemployment within 30 days. Also, employees terminated for cause, voluntarily resigning or voluntarily requesting and receiving a reduction of their hours should not reduce a borrower’s forgiveness.Borrowers seeking forgiveness must document their average number of FTE employees during the covered period (or the alternative payroll covered period) and their selected reference period. Forty (40) hours per week remains the determination factor for a borrowers’ forgiveness reduction calculation on the workforce reduction. An employee is limited to 1.0 FTE even if they work more than 40 hours in a week during the covered period (or the alternative payroll covered period) and their selected reference period.For each new employee in 2020 and each existing employee who was not paid more than the annualized equivalent of $100,000 in any pay period in 2019, borrowers are subject to a salary and wage reduction for employees that are in excess of 25%, unless an exception applies. The calculation is to be calculated on an employee by employee basis. To ensure that borrowers are not penalized twice, the salary/wage reduction applies only to the portion of the decline in employee salary and wages that is not attributable to the FTE reduction, i.e., furloughed employees would not be included in the salary and wage reduction because it is anticipated that they would be included in the FTE reduction calculation.Exceptions to the reduction are consistent with the information outlined in our article related to the release of the loan forgiveness application.DocumentationThe documentation requirement remains consistent with the information noted in the loan forgiveness application which must be made available to the SBA upon request.The IFR as issued is accessible through https://home.treasury.gov/system/files/136/PPP-IFR-Loan-Forgiveness.pdfIf you need more information or assistance regarding the PPP or the forgiveness calculations for PPP loans, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### Impersonation Attacks Targeting Microsoft Teams With initial security concerns surrounding Zoom, and Google Meets not publicly available (this is now free and has reported 50 million installs on the Play Store), Microsoft Teams emerged as one of the most popular collaboration tools used by organizations during the COVID-19 pandemic. Microsoft reported an increase from 32 million daily active users to 44 million in a one-week timespan in March and a new daily record of 2.7 billion meeting minutes in their April usage blog, a 200% increase from the early stages of the pandemic in mid-March. As with any popular software with a large user base, Teams quickly became a prime target for cyber criminals who continue to attack vulnerabilities due to the changes in how and where we work during the pandemic. Threatpost reports that two attacks have targeted nearly 50,000 different Teams users attempting to steal employee credentials through impersonation campaigns. The attack strategy itself has been around for some time and follows the simple steps of sending an impersonation email with a malicious link to a fake landing page built to capture credentials or download malware. So if we are aware of these types of attacks, why do they continue to happen? The answer is simple, they work. Unlike most phishing campaigns that can easily be spotted (yes, the Nigerian prince still needs our help), these campaigns are built around strategic timing, carefully crafted landing pages and urgency. Teams users are now used to receiving email notifications about being added to a team or with meeting links, and the landing pages look identical to the legitimate pages with imagery copied directly from Microsoft. When comparing legitimate and fraudulent sites, the differences can sometimes be near impossible to find. In addition to mimicking visuals (i.e. fonts, buttons, colors), these attacks may use multiple URL redirects to bypass email security software. Add in the use of fraudulent domains for the pages and sender addresses, and you can see how even the best employees may fall for the attack. The risk is multiplied when you take into consideration that stolen credentials for Teams can lead to a larger breach of the other Office 365 apps used by your end users and organization. In an effort to raise awareness of potential security concern surrounding Office 365, the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) issued a warning on Office 365 Remote Work-Deployments in April and an analysis report in May on Microsoft Office 365 Security Observations with an overview of common vulnerabilities and best practices, including multi-factor authentication and enabling alerting capabilities. Impersonation campaigns such as this are just one of the security threats facing remote workers today. To learn more about other critical considerations and best practices to keeping a disparate workforce and your data secure, download our Securing a Remote Workforce whitepaper or contact our team at cybersecurity@schneiderdowns.com. How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services, including Office 365 security assessments, penetration testing, intrusion prevention/detection review, vulnerability assessments and a robust digital forensics and incident response team, who are available around-the-clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. Learn more at www.schneiderdowns.com/cybersecurity. ### COVID-19 AND THE M&A MARKET The two-month COVID-19 economic crisis has significantly disrupted the M&A deal market. While there are examples of transactions that have closed, most transaction processes that were not in their final stages have slowed materially as buyers and sellers have focused on preserving their companies and emerging from the crisis. In this environment, though, there are concrete steps that both potential buyers and sellers can take to maximize their potential gains from an M&A strategy as economic activity reemerges. Establish a framework to quantify the financial impact that the COVID-19 pandemic is having on the business, isolated from seasonal factors or other non-COVID influences. A good place to start is by generating bi-weekly or weekly historical P&Ls trending against 2020 periods and the same periods last year. At a very high level, buyers and financing sources will look at pre-COVID and post-COVID results as a way to understand a business’s potential under “normal” operating conditions. Develop and track key non-financial indicators to provide a snapshot of the underlying factors that drive recovery. Key indicators could include sales metrics such as quote volumes, requested order lead-times, sales funnel, or operational metrics such as capacity utilization or inventory turns. Understanding these indicators can help sellers determine when to kick-off a sales process and give buyers a more complete window into the health of the business. Determine business pain points that were discovered during the crisis, articulate and begin to execute a strategy to address the challenges and de-risk the business. Examples include management gaps, customer or supplier concentrations or obsolete technology. If sellers resolve the issues in advance of a sale process, the de-risked business has the potential to be more valuable. Buyers can use their respective pain points as a strategy for identifying targets that would help transform their business model. Over the next few weeks, Schneider Downs Corporate Finance will issue a series of articles on the impact that COVID-19 is having on the M&A market. Next up in the series, we will examine the impact on deal volume and value. If your strategic plans include the possibility of a transaction, learn more about our experience in advising clients through the course of a merger or acquisition, by contacting Peter Lieberman at 412.697.5364 or plieberman@schneiderdowns.com. ### Ohio Unemployment Benefits for Self-Employed and 1099-Misc Filers The COVID-19 pandemic continues to change our lives in ways we never imagined.  The magnitude of the pandemic has resulted in a plethora of changes in both tax law and social benefit programs.  The Ohio Department of Job and Family Services (ODJFS) recently launched the “Pandemic Unemployment Assistance” program or PUA.  The program is specific to Ohioans who typically would not have qualified for unemployment assistance such as those who are self-employed, 1099 filers, part-time employees, and those who lack a sufficient work history. Who Qualifies?The ODJFS recently released a number of qualification guidelines on their website, located at https://unemploymenthelp.ohio.gov/expandedeligibility/.  The major requirement for individuals is that they must not be eligible for regular unemployment benefits.  Eligible individuals must also meet one of the follow criteria: Individual has been diagnosed with COVID-19 or is experiencing symptoms and is currently seeking a medical diagnosis A family member of the individual has been diagnosed with COVID-19 Individual is providing care for family/household member who has been diagnosed with COVID-19 Individual has a child/household member who is unable to attend school Individual cannot reach their workplace due to COVID-19 Individual is unable to reach their workplace due to a healthcare professional advising him/her to self-quarantine due to COVID-19 Individual was supposed to commence employment and the job has been suspended or they are unable to reach the job due to COVID-19 Individual has become the primary support for a household due to a death from COVID-19 Individual has quit their job as a direct result of COVID-19 Individual was laid off as a direct result of COVID-19 The individual’s workplace is closed as a direct result of COVID-19 Additionally, there is no minimum income requirement for the program.  The Pandemic Unemployment Assistance office will utilize income tax records and proof of employment to determine eligibility. What Amount of Benefits can I Expect to Receive?The amount of unemployment compensation for the PUA is calculated in a similar manner as traditional unemployment; however, the minimum benefit an individual will receive is $189 per week.  The program allows benefits to be paid for as long as 39 weeks, with a maximum cutoff date of December 26, 2020.   The Federal Pandemic Unemployment Compensation program or FPUC provides an additional $600 per week until July 25, 2020.  The federal assistance is paid in addition to the PUA benefit amount.  The PUA and FPUC will both provide retroactive benefits to qualifying individuals.  The lookback period will start on the date the individual becomes eligible and go back to February 2nd, 2020 for PUA and March 29, 2020 for FPUC. How can I Apply?The application process is completed online at the following web address:https://pua.unemployment.ohio.gov/Claimant/Core/Login.ASPXIf the individual does not have internet access, the application process can also be handled over the phone at 1-833-604-0774.  According to the PUA website, most claims are processed in approximately 21 days and benefits are usually paid 5-7 days after approval.  Additional information as well as a list of frequently asked questions are both available at https://unemploymenthelp.ohio.gov/expandedeligibility/.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the PUA.For additional articles and other helpful tools please visit our Coronavirus Resource Page at for related content. ### FASB Delays Leasing and Revenue Recognition for Certain Organizations in Response to COVID-19 On Wednesday, May 20, 2020, the FASB voted to delay the effective date of ASU 2016-012, Leases and ASU 2014-09, Revenues from Contracts with Customers for certain organizations with a formally drafted ASU expected in June.  The concern was that certain organizations couldn’t deploy funds or human capital in the adoption of accounting standards while they contend with the business disruptions caused by COVID-19.  The FASB recognizes those challenges and concerns and acted accordingly. Previously in April, the FASB proposed to delay the leasing standard for private companies and not-for-profits that meet the FASB definition of a public business entity by one year in response to the impacts of COVID-19.  FASB had also previously proposed a one year delay in the revenue recognition standard for private company franchisors.  In a surprise move, the FASB voted to delay the revenue recognition standard by one year for all private companies that have not yet issued financial statements or made those financial statement available for issuance.  This delay will provide tremendous relief to private companies with non-calendar year end reporting dates as they work through the business challenges of COVID-19.  The delay will push the adoption date for revenue recognition for those private companies that have not yet issued, or made the financial statements available for issuance to fiscal years beginning after December 15, 2019.    The FASB did not delay the effective date for ASU 2018-08 which clarifies the scope and accounting guidance for contributions received and contributions made.   Not-for-profit entities will need to pay close attention to the effective dates listed in ASU 2018-08. The FASB previously delayed the leasing standard by one year only for private companies and private not-for-profits in late 2019; however, not-for-profits qualifying as public business entities were not granted a similar reprieve as their private company counterparts at that time.  In response to the COVID-19 economic hardships placed on all not-for-profits in executing their mission and managing their organization, FASB voted to delay the leasing standard for not-for-profits meeting the definition of a public business entity by one year if those organizations have not yet issued financial statement or made the financial statements available for issuance.  The vote also delays leases for private companies and private not-for-profits.  Private companies and private not-for-profits will now be required to adopt ASU 2016-02, Leases for fiscal years beginning after December 15, 2021 and public not-for-profits will adopt the standard for fiscal years beginning after December 15, 2019.  We believe that this decision provides timely relief to higher education institutions that typically have to adopt accounting standards as the same time as public companies. The FASB also highlighted discussions regarding the fluid and dynamic nature of the Payroll Protection Program (PPP) and affirmed is commitment in reviewing recommendations and reasonable applications of GAAP by the AICPA expert panels as it relates to accounting for the PPP. ### ProLock Ransomware Attacks Overview and Mitigation Strategies Diebold Nixdorf, a company that is a major supplier of Automatic Teller Machines (ATM’s) and software to financial institutions was infected by the ProLock ransomware in late April.  The intrusion was first reported by Brian Krebs from KrebsOnSecurity.com and confirmed by Diebold Nixdorf several days later.  Fortunately it appears that the company was able to limit the attack to only parts of its corporate network while the ATM network and customer data was unaffected.  Various stories circulating about the incident provide valuable lessons for other financial institutions that experience ransomware attacks and should be incorporated into incident response planning activities to ensure organizations are prepared as possible when attacked.ProLock ransomware is a relatively new variant first seen in March 2020.  The FBI’s Cyber Division put out an Alert in early May providing details on the attack methodology and Indicators of Compromise.  ProLock is manually controlled which means an attacker first gain must access to the victim’s network.  In the case of Diebold Nixdorf a phishing email was likely used by the attackers to gain an initial foothold.  The FBI noted the QakBot trojan is associated ProLock and attackers using ProLock typically attempt to map out the networks they access and exfiltrate internal data before launching the ransomware attack which encrypts files and appends them with either a .prolock or .pr0lock extension.  A .txt file directs victims to a TOR site to pay a ransom to obtain decryption keys.  If QakBot is discovered on a device, it should be disconnected from the network since there is a strong possibility it will be used to launch a ProLock attack. A wrinkle in this process is the decryptor for ProLock has a bug and even with the correct decryption keys data corruption may occur on files larger than 64MB. Considering these details what can organizations do to prevent and mitigate ProLock attacks?First, layers of controls should be implemented to prevent and mitigate phishing attacks as phishing remains one of the most common avenues of attack for data breaches and ransomware attacks. Technical tools such as advanced email protections can initially prevent malicious emails from reaching users and security awareness training can help users recognize phishing emails that make it past initial filters.  If users do click on phishing links and download malicious files, next generation antivirus (NGAV) tools should be considered to provide a higher level of malware detection capabilities than traditional anti-virus tools and mitigate the ability of malware like QakBot and ProLock to go undetected in a company’s network.  A deeper dive into how NGAV tools work was highlighted in another Schneider Downs cybersecurity article.  Third-party penetration tests can also provide organizations with a good gauge of how well they would fare if attacked and provide training for a real attack.Second, if an organization suspects their network has been infected with malware or has been attacked by ransomware, they need to call subject matter experts to assist with incident response.  The FBI noted the ProLock ransomware attack is multi staged with attackers first attempting to exfiltrate internal data.  While customer data is a key target, internal documents such as emails, customer lists and trade secrets could negatively impact organizations if stolen and publicly exposed.  Incident Response specialists can help organizations determine the scope of an infection or potential breach, provide expertise on negotiating with attackers, coordinate with law enforcement and  provide expertise on remediating an infection such as repairing buggy decryption tools and cleaning up persistent infections.  Organizations should partner with a response team prior to an incident to speed up response activities and purchase cybersecurity insurance to offset response expenses.Finally, good cyber hygiene and IT controls will mitigate the impact of any attack and prevent attackers from moving through a network from an initially infected device to other devices.  In Diebold Nixdorf’s case it appears effective network segmentation was implemented to prevent attackers form reaching customer data.  Internal firewall rules can be used to limit the protocols and devices attackers can use to move laterally through a company’s network.  Patching of internal devices will also limit vulnerabilities that can be exploited to move laterally.  Finally, backups should be seen as a last line of defense to recover from an attacks, storing backups offline or on a separate system will mitigate the risk that backups will also be encrypted.Data breaches and Ransomware attacks continue to be a major cybersecurity concern and new variants and attack methodologies will challenge response teams.  If your organizations needs help with developing or testing a response strategy, or if you have as experiencing and attack, reach out to Schneider Down’s cybersecurity team at cybersecurity@schneiderdowns.com.   About Schneider Downs CybersecurityThe Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### Documenting Paycheck Protection Program Requirements of “Need and Liquidity” INTRODUCTION There has been significant, additional attention and scrutiny surrounding the required Paycheck Protection Program (“PPP”) loan certification that states that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” This scrutiny has come as a result of numerous public companies (75 according to one report) and other, seemingly large private companies applying for and receiving these loans meant for small businesses. The Small Business Association (“SBA”) has since cautioned that “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” The SBA will review all loans above $2 million (and other loans as necessary).  However, any borrowers (including their affiliates) with total loans of less than $2 million will be deemed to have made the required certification of necessity in good faith.  Further, if the SBA determines during the course of its review that a borrower lacked an adequate basis for the certification, the SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness.  If the borrower repays the loan after receiving notification, the SBA will not pursue administrative enforcement. The SBA is allowing any loan proceeds to be returned prior to May 18, 2020 and will still deem the required certification in good faith. POTENTIAL DEALERSHIP ISSUES AND RESPONSES So, what should a dealership do now in preparation for any future inquiries by the SBA regarding the certification?  While detailed guidance surrounding the interpretation of these statements and implementation of the review procedures has not yet been provided, we recommend that borrowers do the following. Current Business Activity To address your dealership’s “current business activity,” consider analyses and comparisons of what would have happened “but for” COVID-19 and “but for” the PPP.  To do so, look at the following scenarios: Budget with COVID-19, but without a PPP loan; Budget with COVID-19 and PPP; Budget of expectations without COVID-19; and Prior year, same period results. When preparing these analyses, consider such questions/items as: What business decisions did my dealership make in response to the pandemic? What alternative decisions would the dealership have made without a PPP loan? Sales volumes  under each scenario (new autos, used autos, F&I, service, body shop repairs and parts); Was any part of your operations (i.e., showroom, etc.) shut down during any of the period? Employee counts (i.e., would you have had to lay off or furlough employees without the PPP loan?); Changes to employee pay and benefits – especially healthcare benefits (i.e., would you have had to lower pay without the PPP loan?); and Status of manufacturers (anticipated plant closures and impact on inventory). If the results of your analysis under (1) indicate a material deterioration in financial (or other) results compared to the other three analyses (or similar bottom-line results, but requires significant reductions in employees, pay, benefits, etc.), this may indicate that the PPP loan was necessary. Specifically, carefully document how the PPP proceeds allowed you to do such things as: (a) maintain employee counts; (b) maintain employee pay and benefits; and/or (c) pay allowable expenses under the PPP (e.g., rent, utilities, and certain interest). Ability to Access Other Sources of Liquidity Unfortunately, the SBA has yet to define what “significantly detrimental to the business” means in regard to the ability to access other sources of liquidity.  Therefore, each dealership should consider access to other sources of liquidity like working capital (cash) and debt facilities (line of credit).  As part of that analysis, you should understand how using these other sources of liquidity may impact the business: Covenants and Financial Statement Requirements – Will the dealership violate or be close to violating bank loan covenants by using other sources of liquidity? Will the dealership be in violation of manufacturer working capital and/or minimum-net-worth requirements? Future Operations – Would the use of other liquidity have a potential impact on future operations, especially if the effects of COVID-19 continue, such as: Meeting ongoing payroll obligations beyond a near-term 30-, 60- or 90-day period? The ability to satisfy manufacturer and vendor obligations in the normal course of business? The ability to meet monthly floor plan interest and/or curtailment payment obligations? Forcing additional floor planning of used vehicle inventory to accommodate near-term cash flow needs? The list above is not all-inclusive, and a dealership should consider any specific facts and circumstances. CONCLUSION Until the SBA provides specific guidance regarding loan forgiveness and the “need and liquidity” requirements associated with the PPP, dealerships are flying a little blind.  However, performing the above analyses with appropriate documentation should provide support if the SBA reviews any PPP loan.  We recommend you continue to work with your tax advisor and/or attorney to consider what we know and to be ready to react as new guidance continues to be released. For more information regarding this topic, please contact Steve Barber or Kathy Petrucci, co-chairs of the Automotive Services Group. About Schneider Downs Automotive Services Group For more than 45 years, the qualified professionals at Schneider Downs have advised automobile dealers on how to control expenses and optimize profits. Our professionals have extensive experience in every segment of the dealership business and realize what is important to you, whether it relates to retail sales, wholesale inventory, management of parts and supplies or financing for any size dealership. Please visit our COVID-19 Resource Center for additional articles. ### Ohio Programs Update May 20, 2020 Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus pandemic (“COVID-19”).   The following is one of the many resources available for impacted small businesses in Ohio due to COVID-19. Schneider Downs can assist your organization with any of these programs. In addition to the small business federal financing programs such as the Payment Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), there are a multitude of other resources for small businesses impacted by COVID-19 that can provide financial relief. State of Ohio Programs and Information Delaware County is launching a revolving loan fund program which will be administered by Buckeye State Bank and is designed to help struggling small companies. The program will offer loans of $10,000 to $25,000 for companies to pay rent, mortgage and utilities, in an effort to help those small companies and retailers shut down by COVID-19 restrictions that are just now lifting in Ohio. Buckeye State Bank will cover up to four months of rent and utilities for companies, with no payments for the first six months followed by a three- to five-year payback at 3% to 4%. Retail, restaurants and hospitality will be the most immediate beneficiaries, but the program will also help office and light industrial users. The Economic Development Office of Delaware County published a countywide poll which found that of 100 businesses, 40% had temporarily furloughed workers and 50% had permanently laid some off, with up to a quarter concerned they wouldn't be able to reopen. The county and its jurisdictions are pooling funding to support the program. Delaware County itself set aside $2.5 million, with the Delaware County Finance Authority Liberty and Orange townships set aside another $250,000 apiece. Other jurisdictions will provide additional funding in coming weeks, in addition to requested funding from JobsOhio, and it's hoped the county will amass $6 million to $7 million in all. You can follow additional Schneider Downs Ohio Program Updates by following us on: https://schneiderdowns.com/our-thoughts-on/ohio-programs-update You’ve heard our thoughts… We’d like to hear yours The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. © 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission. ### IRS Announces 2019 Marginal Well Credit Natural gas well owners holding an operating interest in a qualified marginal well during 2019 are eligible to claim a credit of $0.08 per qualified MCF since the IRS finalized and released the reference price used to compute the credit for tax year 2019 with issuance of Bulletin No. 2020-34, dated May 18, 2020. This represents an opportunity for oil and gas producers that own interests in stripper wells, as the credit could provide as much as $525.60 in tax savings per qualified well.There’s no limit on the number of qualified wells an owner can utilize to determine the credit, which, as noted in prior posts, is a production-based tax benefit for domestic wells that have marginal production under percentage depletion rules, currently set at 15 barrels of oil equivalent – or about 90 MCF or less – per day.The marginal well credit is part of the general business credit and cannot offset tax liabilities generated by the alternative minimum tax. Any unused credit can be carried back five years and carried forward 20 years. ### Individual Tax Planning Under COVID-19 Since mid-March, we have been in unprecedented times due to the COVID-19 Pandemic.  The country has been shut down for more than two months and only now are states slowly beginning to open back up.  With much uncertainty about the future, there are some individual tax planning opportunities that can be done under recent legislation.    President Trump signed the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) on March 27th in response to the COVID-19 crisis.  The CARES Act had some significant changes to retirement distributions.  If you are 70 ½ or older, you do not have to take your required minimum distribution (“RMD”) for 2020 from your retirement account.  If you do not need the money, consider calling your advisor and telling him or her that you want to waive this for tax year 2020.  This move will decrease your taxable income for 2020 and your tax liability.  However, you will have a RMD unless Congress extends this change through tax year 2021.If you have already received your 2020 RMD, there is still relief available.  If you received your RMD between the dates of February 1, 2020 and May 15, 2020 you have until July 15, 2020 to roll over that distribution to avoid paying tax on that amount.  Call your advisor and tell him or her that you want to return the distribution so that you are not taxed on it.Finally, if you are under 59 ½ years old and take an early distribution from your retirement account, you are normally subject to regular tax on this distribution along with a 10% penalty.With the CARES Act, you can now access this money early without the 10% penalty if you have been impacted by COVID-19.   How do you know if you have been affected by COVID-19?   Obviously, if you or a family member have been diagnosed with COVID-19, you are impacted.  Or, if you have suffered financial hardship due to COVID-19, you will not be subject to the 10% penalty.  Financial hardship means job loss, furlough, reduction in hours, inability to work due to lack of child care or loss of your business. Net Operating LossesFor tax year 2018, if you had a net operating loss (“NOL”) on your individual income tax return, you had to take this loss and carry it forward.  Under the CARES Act, any NOL that arose after December 31, 2017 and before January 1, 2021 can be carried back for five years.  Additionally, there is no taxable income limitation on the amount that you can carry back.  For example, if you had an NOL for tax year 2018 in the amount of $100,000 and taxable income of $120,000 in tax year 2013, you can carry back the full loss of $100,000 to tax year 2013.  This is great provision under the CARES Act.Excess Business LossesFinally, beginning in 2018, you were limited in the amount of business losses you could take on your personal return.  The losses you could take were limited to $250,000 if you were single or $500,000 if married filing a joint return.  These were limited due to the Tax Cuts and Jobs Act (“TCJA”) signed by President Trump in December of 2017.  Under the newly enacted CARES Act, however, this limitation has gone away.  If you have filed your 2018 and 2019 returns and had your loss limited, you can amend those tax returns and fully deduct the losses you incurred.In summary, although COVID-19 has taken a devastating toll on the economy, there are many tax advantages that are available because of the CARES Act.  Contact your Schneider Downs tax representative if you have further questions. ### Data and Technology Research Project Spotlight In light of the ever-increasing use of technology-based tools by auditors and preparers, the Public Company Accounting Oversight Board (PCAOB) on May 12 released an update on its Data and Technology Research Project and inquiry into the need to amend oversight board standards and other regulatory actions. The project had been initiated based on the acknowledgement that current standards don’t explicitly encourage the use of technology-based tools, nor do they indicate when their use might be appropriate or highlight related associated risks. As a result of its review, the PCAOB has stated that principles-based auditing standards are likely to be adapted to accommodate the increased use of technology-based tools in the future, but current standards don’t preclude or detract from a firm’s ability to use such tools in a way that could enhance audit quality. In the new release, the oversight board analyzed the impact of technology-based tools within the context of two standards: AS 2110, Identifying and Assessing Risks of Material Misstatement, and AS 1105, Audit Evidence, as well as some general best practices on firm policies and procedures on the use of such tools, including: Establishing and maintaining criteria for acquiring and developing new technology-based tools or making changes to existing tools. Maintaining an inventory of approved tools and policies and procedures regarding the use of such tools at the engagement team level. Establishing requirements for training necessary for engagement team members to use such tools. Establishing engagement team responsibilities regarding the use of such tools. Requiring engagement teams to involve firm personnel that have experience in the use of more complex technology-based tools. Regarding AS 2110, Identifying and Assessing Risks of Material Misstatement, the PCAOB released findings related to four areas where technology-based tools are being used and how compliance with current standards is being accomplished: Technology-based tools enable auditors to efficiently and effectively analyze much larger amounts of data to identify relationships and reveal previously unrecognized risks when compared to using manual auditing techniques alone. Technology-based tools may be utilized in addressing PCAOB risk assessment standard requirements, e.g., considering a wider range of characteristics of accounts and disclosures in the financial statements or assisting in determining whether relevant controls have been effectively implemented for certain automated processes. The use of technology-based tools may provide better information to enable compliance with requirements related to risk assessment in a more meaningful and productive manner. The auditor’s ability to select the appropriate technology-based tool, determine the appropriate parameters and appropriately interpret the results all contribute to whether use of the tool enhances the identification and assessment of risks of material misstatement (RMM). The PCAOB also identified four areas related to AS 1105, Audit Evidence, where technology-based tools are being used, and how compliance with current standards is being accomplished: The definition of audit evidence and the objective of the auditor to plan for and obtain sufficient and appropriate audit evidence can be applied regardless of the nature or form of information being considered or evaluated as audit evidence. The audit evidence standard does not preclude the auditor from using technology-based tools to perform audit procedures more efficiently to obtain audit evidence or procedures specifically described in the standard, such as inspection, recalculation or re-performance. The audit evidence standard does not preclude the auditor from designing multipurpose audit procedures including technology-based tools. When using information provided by the company as audit evidence, the requirement to test the accuracy and completeness of information and evaluate whether the information is sufficiently precise for purposes of the audit applies. In addition to the findings above, the PCAOB will continue to conduct research and engage in outreach activities focusing on the use of technology-based tools in auditing and financial reporting, how those tools are being used to identify RMM and how requirements in PCAOB standards apply, as well as collaborating with regulators and standard setters.  The PCAOB is also considering the impact of technology use by firms on engagements as part of the project on potential revisions to PCAOB quality control standards. ### Cash Flow and Liquidity Planning Opportunities The quote “cash is king” has never been truer than in the first half of 2020.  The COVID-19 pandemic has thrust cash flow and liquidity planning to the forefront of every business sector’s strategic planning.  Recent legislation from the federal government has provided American taxpayers many short-term and long-term cash flow planning opportunities. From loans and tax credits, to filing postponements and carryback claims, following is a summary, highlighting many of the opportunities to help near-term cash flow.Deferral OpportunitiesAs discussed in a previous Schneider Downs Our Thoughts On article, CARES Act - Delay of Payment of Employer Payroll Taxes, the CARES act allows for a deferral of the employer-paid portion of the Social Security tax on wages paid between March 27, 2020 and December 31, 2020. This deferral allows employers to pay 50% of the balance by December 31, 2021 and the remaining 50% by December 31, 2022.  There are no employer size thresholds; all employers are eligible.  This deferral of payroll taxes is the equivalent of a short-term interest-free loan. An employer that receives a loan under the Paycheck Protection Program (PPP) may defer the employer portion of social security taxes as long as the loan has not been forgiven.  Accordingly, once a PPP loan is forgiven, an employer is no longer eligible to defer the employer portion of social security taxes.A taxpayer can deduct the employer portion of social security taxes or the employer portion of any self-employment taxes in the taxable year in which the taxes are paid.  Therefore, if the taxpayer elects to defer the employer portion of social security taxes or the employer portion of any self-employment taxes, the taxpayer will generally not be entitled to a deduction with respect to such taxes in 2020.Credit OpportunitiesThe CARES Act provided for a new employer payroll tax credit is known as the Employee Retention Credit (ERC).  The credit is designed to assist eligible employers who have kept employees on their payroll despite experiencing economic hardship resulting from the economic impacts of the COVID-19 virus.  Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.  Please see our previous Our Thoughts On article CARES Act - The Employee Retention Credit.Eligible employers report qualified wages on their quarterly federal employment tax returns (Form 941) and reduce the employer’s share of social security tax otherwise required to be deposited.  The credit may also be refundable to the extent that the credit exceeds the employer-portion of social security taxes required to be deposited.  This credit is not eligible for taxpayers who have received a PPP loan.  However, this should provide short-term liquidity opportunities for larger employers or other businesses that did not qualify for PPP loans or those who have returned PPP loans. Separately, reinstated is the alternative fuel tax credit.  This is detached from the CARES Act.  Taxpayers wishing to claim credits for the use of alternative fuels such as liquefied petroleum gas (propane) may file a single Form 8849 to claim the propane use for tax years 2018 and 2019.  As a reminder, this refund claim must be filed by August 11, 2020.Tax Planning OpportunitiesThe CARES Act potentially provides cash flow and liquidity opportunities resulting from changes in tax law.  Following are some of the changes that may benefit businesses and their owners: The CARES Act temporarily provides for a carryback of losses originating in tax years 2018, 2019 and 2020.  Taxable losses realized in these years may be carried back five years to recover taxes previously paid.  Keep in mind that tax rates were generally higher in tax years prior to 2018 (pre-Tax Cuts and Jobs Act).  See the following article for more information /our-thoughts-on/cares-act-net-operating-losses Individuals who reported pass-through business losses in 2018 or 2019 may have been subject to limitations in utilization pursuant to IRC Section 461(l).  The CARES Act temporarily suspends this limitation and allows full utilization of business losses incurred in 2018, 2019 and 2020.  In addition to allowing full use of these losses against other categories of income reported in these tax years, any excess may be eligible to be carried back to a previous tax year, potentially at higher tax rates.  For more information, see /our-thoughts-on/cares-act-business-loss-limitation The CARES act amends IRC Section 53(e) to remove the gradual refunding of taxpayers’ AMT credits over four tax years (2018-2021) and to provide for a full refundable credit for the taxpayer’s tax year beginning in 2019.  Alternatively, taxpayers may make an election to take the entire refundable credit in 2018.  This will accelerate the refund of accumulated AMT credits that would otherwise be refundable over the next three tax years. For more on the potential AMT tax refund opportunity, please see Our Thoughts On article CARES Act - Modification of Credit for Prior Year Minimum Tax Liability of Corporations Qualified Improvement Property was updated to be eligible for 100 percent bonus depreciation by making it 15-year property.  Prior to the CARES Act, this property was depreciated over 39 years, and not eligible for bonus depreciation. For taxpayers not revoking an ADS method elected in tax year 2018, taxpayers can make late elections utilizing an accounting method change to take the cumulative adjustment on the 2019 tax return.  Otherwise, taxpayers may amend 2018 returns if it proves more beneficial.  Paycheck Protection ProgramWe have many articles regarding the PPP.  According to the Small Business Administration, as of Thursday, May 7, 2020, about 40% of the money (in excess of $100 million) remained available from the second tranche of loans. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act.Please visit our Coronavirus resource page for related content. ### SBA Releases PPP Loan Forgiveness Application – With Instructions and Changes This article was updated on May 17, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of federal financial programs offered due to the disruption of the coronavirus crisis (COVID-19).  On May 15, 2020, the U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application (Application) and detailed instructions for the Application.The forms and instructions (collectively, the Application) include several measures to reduce compliance burdens and simplify the process for borrowers.  The following summarizes the key points of the Application and the changes in the forgiveness calculation.Alternative Payroll Covered PeriodPrevious regulations stated that the covered period began on the date the lender made the first disbursement of the PPP loan to the borrower (Covered Period).The Application now provides an “Alternative Payroll Covered Period” in addition to the Covered Period.  Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using an Alternative Payroll Covered Period: “the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date.”  This alternative is specific to payroll costs.Incurred and Paid vs. Incurred or PaidAs we discussed in a previous article "Forgiveness Thoughts", there was confusion regarding terminology in the CARES Act and the use of loan proceeds for costs that were “incurred and payments made.”The Application now defines the following: For eligible payroll costs, payroll costs incurred but not paid during the borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Eligible non-payroll costs must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Any costs that were both paid and incurred should only be counted once.Interest on any other debt obligations that were incurred before the Covered Period remains an allowable use, however, is not a forgivable use. Full-Time Equivalents ReductionPrior to the release of the Application, the full-time equivalency (FTE) definition for loan forgiveness was not specifically addressed in the CARES Act.The Application now defines Average FTE as follows: For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth.  The maximum for each employee is capped at 1.0.  A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower. FTE Reduction ExceptionsThe Application provides additional exceptions in which FTE reductions do not reduce loan forgiveness: Any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Covered Period that was rejected by the employee; or Any employees who during the Covered Period or Alternative Covered Period were fired for cause, voluntarily resigned or voluntarily requested and received a reduction of their hours. FTE Reduction Safe HarborThe Application also provides additional details on how to determine if the safe harbor is met.  Specifically, the Borrower is exempt from the reduction in loan forgiveness, based on FTE employees, if both of the following conditions are met: (1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by no later than June 30, 2020 to its FTE employee levels in the pay period that included February 15, 2020.Salary/Hourly Wage Reduction By EmployeePrior to the release of the Application, it was unclear in the forgiveness calculation, how reductions in wages in excess of 25% should be analyzed and calculated.The Application now clarifies the salary/hourly wage reduction by providing PPP Schedule A and Schedule A Worksheet, which analyzes wage reductions in excess of 25% by employee and compares: the average annual salary or hourly wage for each employee during the Covered Period or the Alternative Payroll Covered Period to: the average annual salary or hourly wage between January 1, 2020 and March 31, 2020. If the average salary or wages during the Covered Period or the Alternative Payroll Covered Period is less than 75% of the average salary or wages during the previous quarter, a reduction in forgiveness may apply.  The PPP Schedule A and Schedule A Worksheet provide separate calculations of the reduction for hourly and salary workers.Salary/Hourly Wage Reduction Safe HarborThe application provides a Safe Harbor if salary/hourly wages were reduced during the Covered Period or Alternative Payroll Covered Period but then restored to prior levels as of June 30, 2020.The SBA also will soon issue regulations and guidance to further assist borrowers as they complete the Application and to provide lenders with guidance on their responsibilities.If you need more information or assistance regarding the PPP or the forgiveness calculations for PPP loans, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### ICYMI: New DOJ Collusion Guidance In news that may have largely gone unnoticed, the U.S. Department of Justice (DOJ) formed the Procurement Collusion Strike Force (PCSF) in November 2019. An interagency partnership comprised of prosecutors from the DOJ’s Antitrust Division and U.S. Attorney’s Offices, as well as investigators from the FBI, Department of Defense, U.S. Postal Service and other partner federal Offices of Inspector General, the PCSF will focus on “deterring, detecting, investigating and prosecuting antitrust crimes … which undermine competition in government procurement, grant, and program funding.”While the scope of the PCSF is limited to companies doing business with the U.S. government, all organizations can look for the schemes and red flags outlined in the DOJ guidance. The PCSF also identifies on its website a simple four-part analysis – MAPS – that can be used to prevent and detect collusion. Market - “Who is in the market for this award?” The award may be the target of collusion if there are few vendors in the market that offer the good or service; there is a small group of major vendors that control a large share of the market; and/or the good or service is standardized, so that the determining factor in the award is price, rather than other competitive factors. Applications - “Are there similarities between vendor applications or proposals?” The award may be the target of collusion if two or more proposals contain similar handwriting, typos or mathematical errors; two or more proposals are sent from the same mailing address, email address, fax number or overnight courier account number; two or more proposals reflect that last-minute changes were made to alter price quotes; and/or the document properties of two or more electronic proposals show that the proposals were created or edited by one vendor. Patterns - “Have patterns developed among competing vendors?” The award may be the target of collusion if, over a series of awards, competing vendors rotate as the award winner; routine competing vendors win the same or similar amounts of work; one vendor always wins, regardless of competition; the vendor that wins the award subcontracts work to losing vendors or to vendors that withdrew their proposals or refused to submit proposals; and/or as compared with prior awards, a smaller number of vendors submit proposals for the current award. Suspicious Behavior - "Have vendors demonstrated behavior that suggests they worked together on the award?” The award may be the target of collusion if a vendor submits a proposal for a procurement or grant award and you know that the vendor lacks the ability to provide the goods or services requested; a vendor brings multiple proposals to an in-person procurement or grant process or submits multiple proposals; and/or a vendor makes statements on the phone or by email indicating advance knowledge of a competitor's prices or likelihood of winning the award. More information, including the reporting tool, can be found at the DOJ’s PCSF website.The professionals at Schneider Downs have extensive experience investigating many types of fraud schemes, such as collusion, and developing processes and controls to mitigate potential schemes. If you have questions or concerns about detecting or deterring fraud, or suspect your organization may be the victim of a collusion scheme, contact Joel Rosenthal at jrosenthal@schneiderdowns.com , Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com. ### Are You Prepared for the Next Stage of Your Business? You’re a successful business owner who’s devoted all your time and effort into growing your company to be a best-in-class provider in the industry.  With your head down so long, you’ve probably never thought about what you were going to do as you approached the next stage of life.Planning for that next stage before you actually get there can help solve many of the problems today’s business owners often face following an exit transaction.  It may sound great to play golf every day, or to sit at the lake and fish, but does that really replace the daily rush you had while operating your business?In the most recent State of Owner Readiness Survey conducted by the Exit Planning Institute, 75% of business owners were dissatisfied with the result of their exit transition, post-transaction.[1]  While a number of factors can contribute to this dissatisfaction, developing a plan - and adjusting that plan based on what drives you emotionally - may help you from becoming one of the statistics.  As Churchill once said, “Plans are of little importance, but planning is essential.”Many owners think about what’s best for today, but aren’t necessarily giving consideration to unforeseen situations.  And planning for the unforeseen can be what helps transition a business successfully.  No one wants to contemplate what might happen to the business if you’re suddenly incapable of running it, and you most likely have key man life insurance that can help cover certain things, but do you have someone in house who can step in and keep the business afloat in your absence?.  Having such a plan in place, and making sure everyone involved in the plan is on board, could help your business continue to be successful during a transition period.Developing that type of plan also presents your company as more valuable, since it’s not viewed as being solely reliant on one person to run the operation.After all those years of working to build a respected business, you want to be able to recoup the most value out of your efforts.  With a little advance planning, you just may be able to set yourself up for a better than expected payday in the future. [1] 2013 "State of Owner Readiness" Survey ### Is Your Start-Up or Small Business Strapped for Cash? The Employee Retention and R&D Credits Could Help As businesses continue to adjust to the COVID-19 crisis, many small businesses and start-up companies are becoming significantly strapped for cash. In response to the need for businesses to both maintain cash flow and continue paying employees to remain operational, the federal government has enacted the Families First Coronavirus Response Act  ("FFCRA") and the Coronavirus Aid, Relief, and Economic Security Act ("CARES"), respectively. Among various other mechanisms for aid, the Acts include Employee Retention Credits, which are refundable tax credits that offset FICA taxes paid by employers during this crisis. The dollar amount of the employee retention credits that a business qualifies to receive is determined based on the size of a business, the number of employees, and various other factors, with a maximum credit of $5,000 per employee. One key benefit of these credits is that any excess portion of such credits can be refunded to the taxpayer in the current tax year. Thus, if businesses can minimize the amount of payroll taxes offset by the employee retention credits, and instead offset these taxes using a different provision, they can both decrease their FICA tax liability and increase cash flow into the business. So, what other provisions allow for a tax credit to offset payroll tax liability?Enter the Research and Development Credit. As of January 1, 2016, qualified small businesses can elect to apply a portion of their research and development credits to offset the payroll taxes required to be paid on wage payments made to employees.[1] A qualified small business is a taxpayer with less than $5 million dollars in gross receipts in the year of the election and also does not have gross receipts in any tax year preceding the five-year tax period ending in the year of making the qualified small business election.[2] The payroll tax credit portion of the R&D Credit is subject to certain limitations, the most significant being that the credit cannot exceed $250,000 (the total R&D Credit amount is not limited). It is also important to note, if a taxpayer claims the payroll tax credit, they will not lose the deductions allowed for payroll taxes paid in their business returns for the tax year.Thus, practically speaking, a small business that qualifies for both employee retention credits and payroll tax credits, would first apply the payroll tax credits (derived from their R&D credit) to the outstanding FICA taxes due. It would then apply the employee retention credits to cover any excess FICA taxes not covered by the payroll tax credits, and would have the remainder of the employee retention credit refunded, achieving additional cash flow, the satisfaction of the payroll tax liability, and the preservation of their valuable deductions for payroll taxes paid.Every business is different, and the benefits a business can receive from retention and R&D credits will vary depending on the financial and economic position of a particular business, as well as the availability of these credits to a specific company. Not sure whether this is a cash flow strategy that could work for your business? Interested in learning more about the benefits of claiming research and development for your particular business? We are here to support your business needs and would love to hear from you! Please contact either Ross Alessandro or Matt Werner with any questions.    [1] I.R.C. § 3111 [2] I.R.C. § 41(h) ### House Democrats Release Details of Proposed HEROES Act This article contains information that is current as of mid-day May 14, 2020. Check back soon for updated information on the HEROES Act.    On May 12, House Democrats released their vision of the next phase of COVID-19 economic relief.  The proposed Health and Economic Recovery Omnibus Emergency Solutions Act (the bill or HEROES Act) weighs in at over 1,800 pages and would cost at least $3 trillion.  The HEROES Act, which some say highlights many Democratic Party priorities, is slated to be voted on in the House as early as May 15.  While the HEROES Act is generally expected to be a non-starter in its current form in the Republican-controlled Senate, the bill’s many provisions would seem to be an indicator of the items that Democrats will press for in future negotiations with Republicans for any final version of a Phase IV COVID-19 economic relief and stimulus package. A review of the Title by Title Summary (link) notes that the bill includes, but is not limited to, the following provisions: Improvements to, and additional amounts paid, under the Economic Impact Payment Program to individuals ($1,200 per family and up to $6,000 per household) Additional Earned Income Tax provisions increasing eligibility and benefits Increases the Child Tax Credit and raises the eligible age of children to include 17-year-olds Increases the Child and Dependent Care Tax Credit Doubles the exclusion for employer-provided dependent care assistance to $10,500 Changes flexible spending account arrangements to allow for greater carryover of unused amounts and provides a longer term to be able use the carryover amount to 12 months Eliminates the SALT deduction limit for 2020 and 2021 Allows greater above-the-line deduction for teachers and new deductions for first responders Provides for an employer payroll credit for expenses reimbursed or paid for the benefit of employees for personal living, family, and funeral expenses related to COVID-19 Expands eligibility and increases benefits related to the employee retention credit Provides a new payroll credit for certain fixed business expenses for eligible employers with up to 1500 employees and $41.5 million in revenue Provides a business interruption credit for eligible self-employed individuals Expands the rules for sick and FMLA credits provisions of the first phase of relief – the Families First Coronavirus Response Act Would allow payroll tax deferral for employers receiving PPP loans Would allow loan forgiveness of EIDL loans to be excluded from income Repeals the CARES act adjustment to the Excess Business Loss Rules and makes the limitation permanent (not just through 2026). Would not allow NOL carrybacks for losses in 2019 and 2020 and prohibits taxpayers with excessive executive compensation, excessive stock buybacks, or excessive dividends from being able to carryback losses Changes rules of the PPP loan program providing greater flexibility and enhancing program benefits Employers would be required to develop and implement a comprehensive infectious disease exposure control plan Extends unemployment benefits Provides for numerous education relief programs This bill, at the time of the release of this article, has not passed the House yet and likely will not be approved by the Senate.  Therefore, it is much too early to act upon individual provisions contained in this bill.  This article is meant to keep you informed of provisions that could be included in some form in future legislation.  It will be important to monitor future developments and negotiations on the provisions progress. Please continue to monitor Our Thoughts on COVID-19 Resource Center  for the latest on commentary and analysis of COVID-19 legislation and guidance affecting you and your business.  If you have any questions, please don’t hesitate to reach out to your Schneider Downs tax advisor. Additional resources in the proposed  HEROES Act HEROES Act One Page Summary (link) HEROES Act HR 6800 (link) ### PPP SBA FAQs May 14 This article was updated on May 14, 2020.  Updates to this article will be made as new information becomes availableMAY 14, 2020 UPDATE - Important Update on the Paycheck Protection Program under the CARES ActSince early April, the U.S. Small Business Administration (“SBA”) has published Frequently Asked Questions (“FAQs”) in regards to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness under the CARES Act.  The following summarizes the key questions addressed since Schneider Downs’ last article on  May 7, 2020 regarding the PPP FAQs.Q: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request? Any borrower that, together with its affiliates, received PPP loans of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.  Additionally, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances.  The SBA will review all PPP loans in excess of $2 million, and other PPP loans as appropriate. If the SBA determines that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan, it will ask the borrower to repay the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from the SBA, the SBA will not pursue administrative enforcement.Q: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?Yes, the SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider the above FAQ.  Borrowers do not need to apply for this extension.If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) directly. ### Paycheck Protection Program Interim Final Rule on Loan Increase Paycheck Protection Program May 14, 2020 Update On May 13, 2020, the Department of Treasury issued an interim final rule (IFR) that allows for partnerships and seasonal employers to request an increase in their Paycheck Protection Program loan because there has been clarification and alternative methods on the maximum loan calculation for borrowers.The partnership guidance issued on April 14, 2020 by the Small Business Administration (SBA) that stated, “if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.”  Prior to this rule, many borrowers did not include the compensation of partners in their maximum loan calculation.All seasonal employers prior to the guidance issued on April 28, 2020 were required to use the period from February 15, 2020 through June 30, 2020 to calculate their maximum loan value; however, for many that period was not representative of their operations.  On April 28, 2020, the SBA issued an IFR that allowed for an alternative criterion for calculating the maximum loan value.  That alternative criterion included that a seasonal employer may elect to determine its maximum loan amount as the average total monthly payments for payroll during any consecutive 12-week period between May 1, 2019 and September 15, 2019.The May 13, 2020 IFR allows partnerships and seasonal employers to request a loan increase (not to exceed the maximum $10 million amount), and lenders may process the request, if the borrower did not include any compensation for its partners or the seasonal employer would be eligible for a higher maximum loan amount.  The IFR provides for a timeframe that the request must be submitted by the lender (before the SBA Form 1502 for the loan is filed), which is generally 20 days after the loan was approved.  Requests for a loan increase after the 20-day period will not be forgiven.   ### Continuing to Decipher Estate and Trust Deduction Changes In July 2018, the IRS issued Notice 2018-61 to provide insight on the suspension of miscellaneous itemized deductions for Trusts and Estates under newly enacted Internal Revenue Code Section 67(g). The notice highlighted deductions that did not fall specifically under the “miscellaneous itemized deductions” category, while suspending anything else not explicitly stated. We first reviewed the new code section here. Notice 2018-61 further highlighted that “the Treasury Department and the IRS are studying whether … other deductions not subject to the limitations imposed … should continue to be treated as miscellaneous itemized deductions,” and specifically requested comments regarding sections 67(e) and 642(h)(2). The proposed rulemaking in response to the comments solicited was published by the IRS on May 11, 2020 under the federal registration 85 FR 27693.Section 67(e) provides that “an estate or trust computes its adjusted gross income [AGI] in the same manner as an individual” except that an estate or trust may deduct costs paid in connection with administration. It also states that an estate or trust may take deductions concerning the personal exemption of an estate or non-grantor trust, the deduction for trusts distributing current income and the deduction for trusts accumulating income.Commenters agreed that all deductions under the scope of Section 67(e) were not “miscellaneous itemized deductions” subject to the disallowance under Section 67(g), and that all deductions named under this category should continue to be taken. In the proposed regulation, the IRS agreed and allows these deductions to continue, since they are deductions used to compute AGI and are not considered “miscellaneous itemized deductions.”Section 642(h), meanwhile, provides that if there is a net operating loss carryover or a capital loss carryover when the trust or estate is terminated, the carryover amount may be allowed as a deduction to the beneficiaries. This deduction can be comprised of (1) deductions allowable under AGI, (2) itemized deductions and (3) miscellaneous itemized deductions currently disallowed under section 67(g). Notice 2018-61 did not provide guidance on how to treat these excess deductions.Commenters provided a number of observations and remarks with regard to Section 642(h)(2), ranging from requests for character, cost and computation segregation to concerns of prolonged administration trusts and estates. In the end, the IRS issued proposed regulations clarifying that each deduction enumerated above retains its separate character as an above-the-line deduction or as an itemized deduction.While there’s still time for the public to submit further comments estates, non-grantor trusts, and their beneficiaries can rely on the above proposed rules for taxable years beginning after December 31, 2017. The ability to continue using these favorable deductions is another benefit to practicing effective estate planning.   ### Accounting Relief for Rent Concessions received by International Organizations due to COVID-19 Globally, organizations have been or are expected to be provided with rent concessions for their leases, especially for leases of retail properties. In some countries, rent concessions are also being required by government authorities. Rent concessions have taken the form of rent holidays, rent reductions, and moving rent payments to the end of the rental period. In some instances, payment reductions in the current period are followed by increased payments at a later point in time. Under International Financial Report Standards (IFRS) 16 Leases, organizations are required to consider changes to lease payments, including rent concessions, as potential lease modifications. A lease modification is a change in scope or consideration that was not part of the original lease terms and conditions. Unless the lease modification can be separated into a separate lease, the lessee is required to remeasure the entire remaining lease liability by discounting the revised future lease payments.The International Accounting Standards Board (IASB) has continued to monitor the impact of the COVID-19 pandemic on lease arrangements and has determined that applying this standard in the current environment could be extremely difficult to lessees, particularly for organizations with large lease portfolios. The proposed practical expedient relieves lessees from the need to assess whether the rent concessions are lease modifications. The practical expedient is limited to rent concessions specific to a negative impact resulting from the COVID-19 pandemic. For organizations adopting this standard, they would make an accounting election to treat all COVID-19 related concessions the same way they would treat lease revisions that are not lease modifications.To qualify for the proposed practical expedient, leases meet the following three conditions: Changes to the lease payments must be substantially the same as, or less than, before the rent concession. Rent reductions only apply to payments originally due in 2020. There are no substantial changes to other lease terms and conditions. Lessors are excluded from the scope of the proposed practical expedient as lessor accounting for lease modifications on operating leases does not require remeasurement. The IASB anticipates that most leases impacted by rent concessions will be operating leases. Lessors with finance leases should continue to follow the reporting requirements under IFRS 9 Financial Instruments to account for lease modifications.While the proposed practical expedient is designed to provide relief to lessees, organizations are still required to provide useful information on their lease portfolio to their financial statement users in accordance with IFRS 16 and IAS 1 Presentation of Financial Statements. The proposed amendment is expected to be finalized by the end of May 2020, and is expected to be effective June 1, 2020, with earlier application permitted. The proposed practical expedient will be permitted for adoption on any financial statements not yet issued. The standard may be applied retrospectively to beginning equity for the period. Organizations will also need to disclose the election of this practical expedient.Please visit the Schneider Downs Coronavirus Resource Page for related information and ongoing updates. For more information concerning the International Financial Reporting Standards, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### Introducing the Schneider Downs Cybersecurity Newsletter Over the past year, the Schneider Downs cybersecurity service line has made some great strides in how we communicate and share our robust service capabilities, growing resources and industry expertise. With our new website and a growing cybersecurity resource library, we continue to build our reputation as a trusted partner and thought leader in the cybersecurity space and are always exploring new channels to reach out to our audience.In response to direct feedback, we are excited to announce that we will be launching our new Schneider Downs Focus of Cybersecurity on Friday, May 22, 2020. This bi-weekly e-newsletter will provide a roundup of relevant news and current events related to cybersecurity, as well as original articles and insights from the team. We invite you to subscribe at www.schneiderdowns.com/subscribe.As a professional and a consumer, I understand the double-edge sword of e-newsletters. While I love the ability to subscribe to communications from trusted sources that curate news relevant to my interests and needs, I am sensitive to the email overload we all experience. With that said, we truly believe our newsletter will earn a spot in your inbox, as we are dedicated to creating a newsletter for cybersecurity professionals by cybersecurity professionals.We’ll continue to present new ideas, insights and opinions in the upcoming months. In the meantime, we are always listening and are very interested in your thoughts. We welcome any feedback on how to make the content valuable and relevant to your needs.Please consider sending us a short note to let us know how we can best provide you with the most useful knowledge and information. We assure you that we’ll do all that we can to continually improve our process. Your feedback will make a difference.About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com.In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### New EBP Auditing Standards Deferred Due to COVID-19 The COVID-19 outbreak may offer one hidden benefit as we enter the Employee Benefit Plan (EBP) audit season: we’ll have plenty of time to learn about some new upcoming standards.The AICPA Auditing Standards Board recently voted to defer the effective date of Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, until periods ending on or after December 15, 2021. The original effective date was December 15, 2020.The standard changes several aspects of the EBP audit itself, including the limited scope terminology, engagement acceptance, risk assessment and planning, communication with those charged with governance, audit procedures and reporting. For detailed changes and further information, contact a Schneider Downs professional or click on the AICPA link below:EBP SAS No. 136: Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.Note that early implementation is also permitted, to allow those firms that are able to proceed with implementation as of the original effective date to do so.In addition to the standard above, the AICPA also announced a few other standards that are deferred until periods ending on or after December 15, 2021, including: No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended, No. 135, Omnibus Statement on Auditing Standards—2019, No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended (mentioned above) No. 137, The Auditor's Responsibilities Relating to Other Information Included in Annual Reports, No. 138, Amendments to the Description of the Concept of Materiality, No. 139, Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134; and- No. 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137. ### How Risk Management and Internal Audit Can Add Value in Light of the Current Pandemic: COVID-19 Risk Considerations During these unprecedented times, internal audit and risk management professionals need to reevaluate risks affecting their organization. Audit plans must be realigned and reprioritized to ensure internal audit plays a pivotal role in helping the business successfully navigate significant changes.As risk management professionals, we need to serve as trusted advisors and assist with understanding and assessing challenges, while continuing to maintain independence and objectivity. Given that people, processes and technology are all changing, with many companies restructuring operations to allow employees to work from home, internal audit needs to completely understand the impact of those changes. Some of the business risks that need to be considered are: Strategic Risks Deteriorating economic conditions Adaptation of company communication channels, collaboration provisions and oversight considerations to accommodate alternative work arrangements Heightened reliance on estimates within business outlook and scenario analysis Impact on customer engagement and interaction Continued disruption; arising innovators  No prior history to govern situational decision-making Loss of key employees Crisis management and contingency plans Operational Risks Volatility in customer demand and supply chain Internal exposure to the pandemic Product safety and liability considerations Staging operational and safety measures commensurate with risk and changing regulations Impact on workforce mobility and attendance Process changes and pressures on efficiency and productivity R&D and capital investments Regional and/or international exposures Workforce reduction Vendor and third-party exposures Cost containment Financial Risks Liquidity and cash flow constraints Going concern and impairment considerations Debt restrictions Stimulus package risk and opportunities Tax positions, incentives and credits Increasing reserves Credit risk and payment deferrals and defaults Forecasting and budgeting uncertainty Control environment changes COVID-19 disclosure matters Technology Risks Elevated cyber exposure Maintenance of existing systems Delayed investments in new technology Innovation Workforce mobility Technology support Resiliency Schneider Downs Risk Advisory Services consists of individuals with expertise in accounting, operations, information technology and cybersecurity who can assist your organization with enhancing or developing your risk register, as well as developing and executing audits. We provide consulting services to your organization on critical business matters and advise on strategies needed to address emerging risks and opportunities as we navigate the unique circumstances brought on by COVID-19. ### Estate Planning Opportunities Created by COVID-19 On April 23, Schneider Downs’ Darin Schindler, Greg Allison and Derek Eichelberger led a webinar for the firm’s personnel and friends discussing Estate Planning Opportunities Created by the COVID-19 Pandemic. A replay of the webinar and a copy of the PowerPoint presentation can be found at /estate-planning-opportunities-created-by-covid19. In the webinar, the three touched on a number of topics relevant to today’s financial environment, including effects of the CARES Act and opportunities and strategies to maximize gift giving, revising trust arrangements and other wealth management options. One such opportunity may lie in smaller gifting strategies. The current annual exclusion is $15,000 per recipient (or $30,000 for married couples who split gifts). With the recent unprecedented plunge in the stock market decreasing the value of many securities, taxpayers may find that now is a good time to give these securities as a gift, while their value is low. When it comes to larger gifts, now may also be the perfect time to revisit your estate plan and determine new ways to leverage the market and favorable gifting exemptions and rates. Under the recent Tax Cuts and Jobs Act (TCJA), gift and estate tax exemptions are at historically high rates. Giving higher value gifts – or more gifts in general – at the current time will allow you to direct funds to your intended donors while the exemption is high, thus avoiding the additional gift or estate tax you would otherwise incur after TCJA expires in 2026. Vehicles that may be helpful to leverage these lower rates include Grantor Retained Annuity Trusts, Intentionally Defective Grantor Trusts, Charitable Lead Trusts and Intra-Family Loans. Additionally, under the CARES Act individual taxpayers will find a benefit in a $300 “above-the-line” deduction for charitable contributions, no AGI limitation for cash gifts to public charities, increased withdrawals from qualified retirement plans and extended filing deadlines, benefits that allow an opportunity to maximize the value of such gifts for the current year. Click the link above to listen to the webinar in full, and feel free to contact us with any questions regarding the opportunities discussed. We look forward to hearing from you. ### Tips and Tricks to Ensure You’re Ready for Your Employee Benefit Plan Audit Many benefit plans subject to ERISA that have a December 31 year-end file an extension, and delay issuing financial statements and filing the Form 5500 from July 31 until October 15. Even with current circumstances surrounding the pandemic, this could be your organization’s year to issue by July 31. With a little key planning and sound communication, the audit can be performed efficiently. Here are some tips on how you can better prepare:  Schedule Appropriately  If you’re aware of a certain week when plan management will be busy or when key employees will be on vacation, let your audit team know. And keep in mind any other busy times your organization might face that could prevent your plan administrator and human resources department from being available. The time the auditors have dedicated to the engagement is most effective and productive if management is available during the same period.Get Your Auditor’s AccessWe understand it can be tedious to pull all the support that’s requested for an audit. A great way to cut back on this workload is to have your plan’s record-keeper provide your auditor with access to the record-keeper’s site. Most large record-keepers like ADP, Vanguard and Fidelity provide such access, which allows auditors to look up participant information, run reports and even request sample support. Management should plan to get this access as soon as possible; it’s especially key when the auditors are working from a remote environment.Alert Your Auditor of Plan ChangesIf there’s been an amendment to the plan, changes to your record-keeper/trustee/custodian or any other significant change, tell your auditor. Information is power, and info like this can save everyone time. If the audit team knows about changes, they can plan accordingly. But if instead they’re surprised during fieldwork, additional testing may be needed.SamplesBe sure to have all samples ready on day one of the dedicated timeframe. If you think you might not have time to pull samples the week before the audit, ask if your auditors can send you the samples earlier. In many instances, records are more difficult to find than you think, and some might be in storage. This way you’ve given yourself enough time to find all the requested information, and both you and the engagement team can be more efficient.Compliance TestingAll 401(k) plans are required to undergo nondiscrimination testing each year, typically performed by your third-party record-keeper. Be sure to talk to your record-keeper to verify status of the process. Your auditors are required to look at this testing and ensure that if the plan has failed any tests management has made appropriate corrections. Delays in compliance testing could cause delays in issuing financial statements.Form 5500 PreparationTouch base with whoever prepares your Form 5500 to see if they plan to wait for the audit to be completed, or if they’ll be preparing a draft based on figures provided by the recordkeeper. If the former, have them provide the Form 5500 to your auditor before or during fieldwork. This way your audit team can provide the preparer with any necessary edits. Otherwise, just let your audit team know the preparer is waiting for a draft of the audited numbers so they can send the information as soon as possible.Understand the Processes and ProceduresYour audit team is required to gain an understanding of the internal control environment. They’ll look at processes at both your organization and any of those outsourced to third parties, such as payroll services, custodians and record-keepers. Provide your audit team with updated internal control process memos or take time to explain the changes. It’s also important you review SSAE 18 reports, which explain what controls are in place at third-parties, if those controls are operating effectively, and the complementary user controls that should be implemented at your organization.If you have any questions on how to prepare for your ERISA audit, feel free to contact your engagement team or a member of the ERISA group at Schneider Downs. ### Pennsylvania EITC Applications Open May 15 The application process for Education Improvement Tax Credits (EITC) opens on May 15 for businesses in year two of their contribution commitment and for those that have recently completed a two-year commitment. The early application period runs until June 30 and provides ongoing EITC participants the opportunity to lock up tax credits before the process opens to all businesses on July 1. The EITC program is very popular and many credit types sell out quickly, making it vital for eligible businesses to renew during the early application period. Entities waiting until July 1 to apply may not receive their first choice of credits or may be put on the waitlist. Due to COVID-19, Pennsylvania has extended the contribution deadline, as previously reported here. The state is providing flexibility, allowing businesses to make contributions later in the cycle and removing tax credit reductions for those that don’t meet full contribution commitments. For more information about the EITC program, contact a Schneider Downs state and local tax professional. ### Ohio Unemployment Fraud Reporting Site under Attack As discussed in my recent Linkedin post, the state of Ohio’s COVID-19 fraud reporting website is now under attack from an anonymous hacker. Under Ohio law, individuals are disqualified from receiving unemployment benefits during the COVID-19 pandemic if they are able to work but refuse job offers or quit their job without good cause. The policy has caused debate because some believe workers are being forced to choose between their livelihoods or health if their employers are not taking enough perceived action to provide a safe workplace. “It’s a case by case basis, but if you’re just saying ‘I’m afraid of the virus,’ that would not be sufficient. The analysis would need to be that your work environment, the conditions there, are such that you are at risk from a health and safety standard,” said Ohio Department of Jobs and Family Services Director Kimberly Hall in a recent interview regarding the law. To enforce the law, Ohio launched the Return to Work Dispute Resolution Form for employers to report employees and prevent them from collecting unemployment benefits. According to VICE news, there is an anonymous hacker that doesn’t like this idea and has taken action against the State. In an effort to sabotage the site, the hacker released a program that inputs fake data into the state website so that state investigators would be swamped with so much data, they won’t know what data is legit versus fake and would make it nearly impossible to deny people their benefits. The program works by submitting information using company names from the top 100 employers from the state of Ohio along with random name and address generators to overwhelm the system with this dummy data. The anonymous hacker told VICE… “It’s easy enough to go to the page and fill it out, but that wouldn’t amount to enough data to make these particular gears of the state grind to a halt. It needs to be so much data that their ability to investigate these ‘fraud’ cases is hampered.” The State has since implemented a stronger captcha check, using Google’s re-captcha service, however, the hacker is reportedly tweaking the program in an attempt to work around this. What are your thoughts? About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. Learn more about our cybersecurity firm and services at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### SBA Clarifies Single Audit Requirements The Small Business Administration (SBA) has been issuing quite a bit of clarifying guidance and a number of interim final rules over the past few weeks since administering the original round of funding connected with the CARES Act. One question that’s been lingering is whether the funds provided under the Paycheck Protection Program (PPP) or the Emergency Injury Disaster Loans (EIDL) are, in fact, federal awards for not-for-profit entities, and if they’re subject to the Single Audit Act, which generally requires audits of federal awards that exceed $750,000. Well, good news (at least partially)! According to Alert No. 404, released by the AICPA’s Government Audit Quality Center – of which Schneider Downs is a member – the SBA will not consider funds received under the PPP to be federal awards. Loans made under the EIDL, however, are considered to be federal financial assistance and will be subject to the Single Audit requirement. You can read the full AICPA alert on their website. ### Main Street Lending Program – FAQs Part 1 This article was updated on May 7, 2020.  Updates to this article will be made as new information becomes available.  This post is the first of two. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus crisis (COVID-19).  This is an overview and list of frequently asked questions (“FAQs”) regarding the Main Street Lending Program (Main Street or Program), as provided by the Board of Governors of the Federal Reserve System (Federal Reserve) on their website www.federalreserve.gov.  For additional information on Main Street, see our article on May 1, 2020: Expansion of Main Street Lending Program. FAQs The Federal Reserve provided 19 pages of FAQs related to Main Street, we have highlighted and summarized the following critical points regarding the purpose and design of the Main Street loans, borrower eligibility and certifications and covenants: Purpose and Design What are the differences between the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF)? Main Street includes three facilities, and all facilities use the same lender and borrower criteria, and have many of the same features, including the same maturity, interest rate, deferral of principal and interest for one year, and ability of the borrower to prepay without penalty. The MSPLF was added to the Program, with newly originated term loans, which are based on 6x adjusted 2019 EBITDA (i.e., looser terms than MSNLF). Other features of the loans extended in connection with each facility differ. The loan types also differ in how they interact with the borrower’s existing outstanding debt, including with respect to the level of pre-crisis indebtedness a borrower may have incurred. MSNLF: Lenders extend new loans to borrowers ranging in size from $500,000 to $25 million. The maximum size of a loan made in connection with the MSNLF cannot, when added to the borrower’s existing outstanding and undrawn available debt, exceed 4x the borrower’s adjusted 2019 EBITDA. MSPLF: Lenders extend new loans to borrowers ranging in size from $500,000 to $25 million. The maximum size of a loan made in connection with the MSPLF cannot, when added to the borrower’s existing outstanding and undrawn available debt, exceed 6x the borrower’s adjusted 2019 EBITDA. MSELF: Lenders increase (or “upsize”) a borrower’s existing term loan or revolving credit facility.  The upsized tranche is a four-year term loan ranging in size from $10 million to $200 million.  The maximum size of a loan made in connection with the MSELF cannot exceed (i) 35% of the borrower’s existing outstanding and undrawn available debt that is pari passu in priority with the loan and equivalent in secured status (i.e., secured or unsecured); or (ii) when added to the borrower’s existing outstanding and undrawn available debt, 6x the borrower’s adjusted 2019 EBITDA. Borrower Eligibility Which entities are eligible to borrow under the Program? To be eligible to borrow under the Program, a Business must satisfy certain eligibility criteria, as set out in the MSNLF, MSPLF, and MSELF term sheets and described further below. The Eligible Borrower criteria are the same across all three facilities. The Business must have been established prior to March 13, 2020. The Business must not be an Ineligible Business.  Ineligible Businesses include Businesses modified and clarified by SBA regulations for purposes of the Paycheck Protection Program (PPP) on or before April 24, 2020 The Business must meet at least one of the following two conditions: (a) the Business has 15,000 employees or fewer, or (b) the Business has 2019 annual revenues of $5 billion or less. Businesses must meet at least one of these conditions, but are not required to meet both.  To determine how many employees a Business has or a Business’s 2019 revenues, the employees and revenues of the Business must be aggregated with the employees and revenues of its affiliated entities. The Business must be a U.S. Business. Borrowers must be Businesses that were created or organized in the United States or under the laws of the United States with significant operations in and a majority of their employees based in the United States. The Business may only participate in one of the Main Street facilities and must not also participate in the Primary Market Corporate Credit Facility (the “PMCCF” established by the Federal Reserve for large companies). The Business must not have received specific support pursuant to the Coronavirus Economic Stabilization Act of 2020 (Subtitle A of Title IV of the CARES Act). The Business must be able to make all of the certifications and covenants required under the Program.  See the link to the term sheets below. Borrowers that satisfy all criteria above may apply to an Eligible Lender for a Main Street loan.  The lender is expected to conduct an assessment of each potential borrower’s financial condition to determine whether the loan is approved. For the avoidance of doubt, a Business that has received PPP loans, or that has affiliates that have received PPP loans, is permitted to borrow under Main Street, provided that the Business is an Eligible Borrower. How is “Business” defined? Businesses must be legally formed entities that are organized for profit as: a partnership; a limited liability company; a corporation; an association; a trust; a cooperative; a joint venture with no more than 49% participation by foreign business entities; or a tribal business concern. How should a Business count employees for purposes of determining eligibility under the Program? To be an Eligible Borrower, a Business must meet at least one of the following two conditions: (a) the Business has 15,000 employees or fewer, or (b) the Business has 2019 annual revenues of $5 billion or less.  To determine how many employees a Business has, it should follow the framework set out in the SBA’s regulation at 13 CFR 121.106.  The Business should count as employees all full-time, part-time, seasonal, or otherwise employed persons, excluding volunteers and independent contractors.  Businesses should count their own employees and those employed by their affiliates.  In order to determine the applicable number of employees, Businesses should use the average of the total number of persons employed by the borrower and its affiliates for each pay period over the 12 months prior to the origination or upsizing of the Main Street loan. How should a Business calculate 2019 revenues for purposes of determining eligibility under the Program? To determine its 2019 annual revenues, a Business must aggregate their revenues with those of their affiliates. Businesses may use either of the following methods to calculate 2019 annual revenues for purposes of determining eligibility: A Business may use its (and its affiliates’) annual “revenue” per its 2019 Generally Accepted Accounting Principles-based (GAAP) audited financial statements; or A Business may use its (and its affiliates’) annual receipts for the fiscal year 2019, as reported to the Internal Revenue Service. For purposes of the Program, the term “receipts” has the same meaning used by the SBA in 13 CFR 121.104(a). If a potential borrower (or its affiliate) does not yet have audited financial statements or annual receipts for 2019, the borrower (or its affiliate) should use its most recent audited financial statements or annual receipts. Which entities are a Business’s affiliates for purposes of the employee and revenue eligibility criteria? To determine eligibility, a Business’s employees and 2019 revenues are calculated by aggregating the employees and 2019 revenues of the Business itself with those of the Business’s affiliated entities in accordance with the affiliation test set forth in 13 CFR 121.301(f) (1/1/2019 ed.). Are non-profit organizations eligible to borrow under the Program? Non-profit organizations are not currently eligible under the Program.  The Federal Reserve and the Treasury Department will be evaluating the feasibility of adjusting the borrower eligibility criteria and loan eligibility metrics of the Program for such organizations. Certifications and Covenants Are the required certifications and covenants under the three Main Street facilities the same? While most of the certifications and covenants are the same, there are two variations. The Eligible Lender certification relating to EBITDA is different in the MSELF than it is in the MSNLF and MSPLF, owing to fact that the MSELF necessarily includes an existing loan from the Eligible Lender. In addition, the MSPLF includes a modification to the Eligible Borrower covenant regarding debt repayment to allow an Eligible Borrower to refinance existing debt owed to a lender that is not the Eligible Lender at the time the MSPLF Loan is originated. What compensation, stock repurchase and capital distributions restrictions apply? The compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the CARES Act apply under each of the MSELF, MSNLF and MSPLF, except that, in each case, restrictions on dividends and other capital distributions will not apply to distributions made by an S corporation or other tax pass-through entity to the extent reasonably required to cover its owners’ tax obligations in respect of the entity’s earnings. What restrictions are placed on the Eligible Borrower’s ability to repay existing debt? The restrictions on repaying debt vary across the various Main Street loans: MSNLF and MSELF: The borrower must commit to refrain from repaying the principal balance of, or paying any interest on, any debt until the MSNLF Loan or the MSELF Upsized Tranche is repaid in full, unless the debt or interest payment is mandatory and due. The borrower must also commit that it will not seek to cancel or reduce any of its committed lines of credit with the Eligible Lender or any other lender. MSPLF: The borrower must commit to refrain from repaying the principal balance of, or paying any interest on, any debt until the MSPLF Loan is repaid in full, unless the debt or interest payment is mandatory and due; however, the borrower may, at the time of origination of the MSPLF Loan, refinance existing debt owed by the borrower to a lender that is not the Eligible Lender. The borrower must also commit that it will not seek to cancel or reduce any of its committed lines of credit with the Eligible Lender or any other lender. These covenants would not prohibit an Eligible Borrower from undertaking any of the following actions during the term of a Program Loan: repaying a line of credit (including a credit card) in accordance with the Eligible Borrower’s normal course of business usage for such line of credit; taking on and paying additional debt obligations required in the normal course of business and on standard terms, including inventory and equipment financing, provided that such debt is secured by newly acquired property (e.g., inventory or equipment), and, apart from such security, is of equal or lower priority than the MSNLF Loan, the MSPLF Loan, or the MSELF Upsized Tranche; or refinancing maturing debt. Is an Eligible Lender permitted to accept partial repayment of an Eligible Borrower’s existing line of credit with the Eligible Lender? The Eligible Lender would not be prevented from accepting regularly scheduled, periodic repayments on a line of credit from an Eligible Borrower in accordance with the Eligible Borrower’s normal course of business usage for such line of credit. What is the Eligible Lender’s role in verifying certifications and covenants? An Eligible Lender is required to collect the required certifications and covenants from each Eligible Borrower at the time of origination or upsizing. Eligible Lenders may rely on an Eligible Borrower’s certifications and covenants, as well as any subsequent self-reporting by the Eligible Borrower.  The Eligible Lender is not expected to independently verify the Eligible Borrower’s certifications or actively monitor ongoing compliance with covenants required for Eligible Borrowers under the Main Street term sheets. How should an Eligible Lender evaluate an Eligible Borrower’s creditworthiness? Eligible Lenders should view the eligibility criteria in the term sheets as the minimum requirements for the Program.  Eligible Lenders are expected to conduct an assessment of each potential borrower’s financial condition at the time of the potential borrower’s application. Eligible Lenders will apply their own underwriting standards in evaluating the financial condition and creditworthiness of a potential borrower. An Eligible Lender may require additional information and documentation in making this evaluation and will ultimately determine whether an Eligible Borrower is approved for a Program loan in light of these considerations. Businesses that otherwise meet the Eligible Borrower requirements may not be approved for a loan or receive the maximum allowable amount. The term sheets for all of the Main Street loans are located here:  https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm As of the date of this article, the Main Street Lending Program has not launched yet.  If you have other questions regarding the Main Street program, first reach out to your bank and other lenders about whether you can apply for Main Street funding through these institutions.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). Please visit our Coronavirus resource page for related content. ### Main Street Lending Program – FAQs Part 2 This article was updated on May 8, 2020.  Updates to this article will be made as new information becomes available.  This post is the second of two posts about the Main Street Lending Program FAQs  Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus crisis (COVID-19).  This is an overview and list of frequently asked questions (“FAQs”) regarding the Main Street Lending Program (Main Street or Program), as provided by the Board of Governors of the Federal Reserve System (Federal Reserve) on their website.  For additional information on Main Street, see our article on May 1, 2020; Expansion of Main Street Lending Program. FAQs The Federal Reserve provided 19 pages of FAQs related to Main Street.  We have highlighted and summarized the following other important points regarding the purpose and design of the Main Street loans, the Main Street application process and the terms and conditions of the Main Street loans: Purpose and Design Are loans that are originated or upsized in connection with the Program forgivable? No. Main Street loans are full-recourse loans and are not forgivable.  The principal amount of a Main Street loan cannot be reduced through loan forgiveness. How long will the Program be in effect? The Program is authorized to purchase participations in MSNLF Loans, MSPLF Loans, and MSELF Upsized Tranches until September 30, 2020. MSNLF, MSPLF and MSELF Loans How does the MSNLF or MSPLF work? The borrower must have been in sound financial condition prior to the onset of the COVID-19 pandemic.  In order for a borrower to receive either of these loans, any existing loan that the borrower had outstanding with the lender as of December 31, 2019, must have had an internal risk rating (based on the lender’s risk rating system) that was equivalent to a “pass” in the Federal Financial Institutions Examination Council’s (FFIEC) supervisory rating system as of that date. How does the MSELF work? To be eligible for “upsizing,” the existing term loan or revolving credit facility must have been originated on or before April 24, 2020, and must have a remaining maturity of at least 18 months. The lender may extend the maturity of an existing loan or revolving credit facility at the time of upsizing in order for the underlying instrument to satisfy the 18-month remaining maturity requirement. The borrower must have been in sound financial condition prior to the onset of the COVID-19 pandemic.  The existing loan or revolving credit facility must have had a risk rating, based on the lender’s internal rating system, equivalent to a “pass” in the FFIEC’s supervisory rating system as of December 31, 2019. Application Process How can I apply for a Program loan? To obtain a loan under the Program, an Eligible Borrower must submit an application and any other documentation required by an Eligible Lender.  Borrowers should contact an Eligible Lender for more information on whether the lender plans to participate in the Program and to request more information on the application process. Updates regarding the Program, including the official launch date and the time will be made available on the Board’s Main Street page Is a Business eligible to borrow if it receives a PPP loan? A Business that receives a loan through the SBA’s PPP can be an Eligible Borrower under Main Street if it meets the Eligible Borrower criteria. Do Eligible Borrowers qualify automatically for a loan under the Program? No. The term sheet contains minimum requirements for the Program. Eligible Lenders are expected to conduct an assessment of each potential borrower’s financial condition at the time of the potential borrower’s application.  Lenders will apply their own underwriting standards in evaluating the financial condition and creditworthiness of a potential borrower. A lender may require additional information and documentation in making this evaluation and will ultimately determine whether a borrower is approved for a Program loan in light of these considerations.  Businesses that otherwise meet the Eligible Borrower requirements may not be approved for a loan or may not receive the maximum allowable amount. Terms and Conditions How will adjusted 2019 EBITDA be calculated? For MSNLF and MSPLF, the methodology used by the lender to calculate adjusted 2019 EBITDA for a borrower must be a methodology it previously used for adjusting EBITDA when extending credit to the borrower or to similarly situated borrowers on or before April 24, 2020. For MSELF Eligible Loans, the methodology used by the lender to calculate adjusted 2019 EBITDA for the borrower must be the methodology it previously used for adjusting EBITDA when originating or amending the underlying loan on or before April 24, 2020. How will “existing outstanding and undrawn available debt” be calculated? “Existing outstanding and undrawn available debt” includes all amounts borrowed under any loan facility, including unsecured or secured loans from any bank, non-bank financial institution, or private lender, as well as any publicly issued bonds or private placement facilities. It also includes all unused commitments under any loan facility, excluding (1) any undrawn commitment that serves as a backup line for commercial paper issuance, (2) any undrawn commitment that is used to finance receivables (including seasonal financing of inventory), (3) any undrawn commitment that cannot be drawn without additional collateral, (4) any undrawn commitment that is no longer available due to change in circumstance. Existing outstanding and undrawn available debt should be calculated as of the date of the loan application. When do I need to start paying interest on my loan? No payments of principal or interest will be required during the first 12 months of the loan. Principal and interest payments for all loans obtained under the Program are deferred for one year. Unpaid interest will be capitalized. How will principal be amortized after the first year? MSNLF: No principal is paid in the first year. The loan will be amortized over the remaining term of the loan, with one-third of principal due at the end of each of years 2 and 3, and one-third due at maturity at the end of year 4. MSPLF and MSELF: No principal is paid in the first year. The loan will be amortized over the remaining term of the loan, with 15% of principal due at the end of year 2, 15% of principal due at the end of year 3, and a balloon payment of 70% of principal due at maturity at the end of year 4. For purposes of this question, principal includes capitalized interest. Eligible Lenders will provide Eligible Borrowers with payment information during the Program loan origination process. Is collateral required for Main Street loans? MSNLF Loans, MSPLF Loans, and MSELF Upsized Tranches may be secured or unsecured. An MSELF Upsized Tranche must be secured if the underlying loan is secured. Are there fees associated with Main Street loans? Yes, there are fees associated with the MSNLF, MSPLF, and MSELF. MSNLF and MSPLF: Lenders will pay a transaction fee of 100 basis points of the principal amount of the MSNLF or MSPLF Loan at the time of origination, and may pass on this fee to borrowers. In addition, the borrower will pay the lender a fee of up to 100 basis points of the principal amount of the MSNLF or MSPLF Loan at the time of origination. MSELF: Lenders will pay a transaction fee of 75 basis points of the principal amount of the MSELF Upsized Tranche at the time of upsizing, and may choose to pass on this fee to borrowers. In addition, the borrower will pay a lender a fee of up to 75 basis points of the principal amount of the MSELF Upsized Tranche at the time of upsizing. What constitutes “commercially reasonable efforts” to maintain payroll and retain employees? Borrowers should make commercially reasonable efforts to retain employees during the term of the Program Loans.  Specifically, a borrower should undertake good-faith efforts to maintain payroll and retain employees, in light of its capacities, the economic environment, its available resources, and the business need for labor. Borrowers that have already laid-off or furloughed workers as a result of the disruptions from COVID-19 are eligible to apply for Main Street loans. Can an Eligible Borrower receive more than one Main Street loan? A borrower may only participate in one of the Main Street facilities.  However, a borrower may receive more than one loan under a single Main Street facility, provided that the sum of MSNLF Loans or MSPLF Loans received by a single borrower cannot exceed $25 million; and the sum of MSELF Upsized Tranches received by a single borrower cannot exceed $200 million. The term sheets for all of the Main Street loans are located here:  https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm The Main Street Lending Program has not launched yet.  If you have other questions regarding the Main Street program, first reach out to your bank and other lenders about whether you can apply for Main Street funding through these institutions.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). Please visit our Coronavirus resource page for related content. ### Employee Retention Credit - Excluding Family Members' Wages from Qualified Wages Amidst guidance surrounding the CARES Act and other COVID-19 legislation, it’s important to note additional limitations on the qualified wages used for calculating the Employee Retention Credit. One of these is the exclusion of wages paid to related individuals, as defined in Section 51(i)(1) of the Internal Revenue Code. Wages of individuals excluded from qualified wages would be those with the following relationship to the employer, if the employer is: 1) An individual: Child or descendent of a child Brother, sister, stepbrother or stepsister Father, mother or ancestor of either Stepfather or stepmother Niece or nephew Aunt or uncle Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, sister-in-law 2) A corporation: Any of the above (listed under individual) who are related to an individual owning (directly or indirectly) more than 50% of outstanding stock 3) An entity other than a corporation: Any of the above (listed under individual) who are related to an individual owning (directly or indirectly) more than 50% of the capital and profits interests 4) An estate or trust: Grantor, beneficiary or fiduciary Any of the above (listed under individual) who are related to an individual who is a grantor, beneficiary or fiduciary An additional resource to these nuances can be found at IRS FAQ website. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act and or the Families First Coronavirus Response Act, and visit our coronavirus resource page for related content. ### Nondiscrimination and Additional Eligibility Criteria Update on the Payroll Protection Program This article was updated on May 7, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus crisis (COVID-19).  On May 5, 2020, the U.S. Small Business Administration (SBA) published an Interim Final Rule (IFR) which supplements the previously posted IFRs by providing guidance on nondiscrimination obligations and additional eligibility requirements.The following summarizes the key points of this IFR that are either new or provide clarification to previous guidance.Non-DiscriminationPrior to the CARES Act, nonprofit organizations were not eligible to participate in SBA’s 7(a) Loan Program.  Section 1102 of the CARES Act expanded eligibility, limited to the Payroll Protection Program (PPP), to include certain nonprofit organizations, among other organizations. Because of various discrepancies between SBA regulations and Federal Government policies, organizations have faced uncertainty about whether participation in the PPP would require them to substantially change their operations for a short period of months.  To provide certainty to recipients of PPP loans and to address the burdens that SBA regulations may impose on recipients, this IFR provides guidance clarifying that for purposes of the PPP, nonprofits recipients of PPP loans are entitled to exemptions on the grounds provided in Federal nondiscrimination laws for certain sex-specific admission practices (under Title IX of the Education Amendments of 1972), sex-specific domestic violence shelters and coreligionist housing (under the Fair Housing Act of 1968), and Indian tribal preferences in connection with adoption or foster care practices (under the Indian Child Welfare Act of 1978).In addition, for purposes of the PPP, SBA regulations do not bar a religious nonprofit entity from making decisions with respect to the membership or the employment of individuals of a particular religion.Student WorkersWhile student workers generally count as employees, the IFR has made an exception for institutes of higher learning where student workers’ services are performed under the Department of Education’s Federal Work-Study regulations. Specifically, to enable certain eligible small educational institutions to participate in PPP, this IFR provides that institutions of higher education shall exclude work study students when determining the number of employees for purposes of PPP loan eligibility and must also exclude payroll costs for work study students from the calculation of payroll costs used to determine the PPP loan amount.  Educational institutions that filed loan applications prior to the issuance of this IFR are not bound by this interpretation but may rely on it.If you need more information or assistance regarding the PPP or the forgiveness calculations for PPP loans, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). ### 100% Bonus Depreciation Available for Qualified Improvement Property On April 17, the IRS released Revenue Procedure 2020-25, which provides guidance that allows a taxpayer to change depreciation for qualified improvement property (QIP) under §168 of the Internal Revenue Code. The CARES Act retroactively changed the recovery period for QIP to 15 years, thus making it eligible for bonus depreciation. The new guidance permits taxpayers to file an amended return, administrative adjustment request (AAR), or Form 3115, Application for Change in Accounting Method, to change their method of depreciation in the 2018, 2019 or 2020 taxable year for QIP placed in service after December 31, 2017.It’s important to note that Rev. Proc. 2020-25 does not apply to QIP placed in service by a taxpayer that made a late (or withdrew a) real property trade or business election under Section 163(j), but does address changes to depreciation affected by a late or withdrawn election related to the business interest deduction limitation.Rev. Proc. 2020-25 also provides guidance related to several depreciation elections, allowing taxpayers to make a late election or revoke a prior election that was made during a tax year ending in 2018, 2019 or 2020. The following are covered: Elections to depreciate any class of property under the alternative depreciation system (ADS); Elections out of bonus depreciation for a class of property placed in service during the taxable year; Elections to claim bonus depreciation at 50%, in lieu of 100% for the tax year that included September 28, 2017; and Elections for farming businesses to apply special bonus depreciation rules to one or more plants. For the most part, taxpayers can make late elections or revoke previously made elections described above by either filing an amended return or a Form 3115. If the taxpayer is revoking its use of the ADS method for a class a property, however, Rev. Proc. 2020-25 requires the filing of an amended tax return or an AAR.If you’re interested in learning more about what’s described above, or any other strategies to maximize the tax benefits of real estate ownership, contact a member of the Schneider Downs Real Estate Team or email contactsd@schneiderdowns.com. ### Tax Accounting/Provision Considerations Due to COVID-19 In the midst of the COVID-19 pandemic and the tax law changes within the CARES Act, companies are starting to consider the impact to their financial statements.  Within this article, we will outline some of the tax accounting considerations that companies should review prior to the issuance of their financial statements.The CARES Act was enacted on March 27, 2020 and it includes many measures to assist companies, including the temporary reversal or adjustment of many of the revenue raisers within the Tax Cuts and Jobs Act of 2017.  The following outlines some of the key income based tax law changes within the CARES Act: Eliminating the 80% of taxable income limitation by allowing corporate entities to fully utilize net operating loss (NOL) carryforwards to offset taxable income in 2018, 2019 or 2020.  The 80% limitation is reinstated for tax years after 2020 Allowing NOLs originating in 2018, 2019, or 2020 to be carried back five years Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for the tax years beginning January 1, 2019 and 2020 Allowing taxpayers to elect to use 2019’s adjusted taxable income for their 2020 interest expense limitation calculation Allowing taxpayers with alternative minimum tax credits (“AMT credits”) to claim a refund in 2020 for the entire amount of the credit rather than over a period of time Allowing companies to deduct more of their cash charitable contributions paid during the calendar year 2020 by increasing the taxable income limitation from 10% to 25% Under ASC 740 tax law changes are to be recognized in the period in which new legislation is enacted.  This means that any impact of the CARES Act would be reflected in the first interim period that includes the enactment date.  For calendar year companies, this would be their first quarter financial statements.Net operating losses (“NOL”)Companies need to consider whether the elimination of the 80% of taxable income limitation impacts their ability to use additional NOLs in 2018 and 2019.  In addition, companies need to consider whether they have NOLs that can be carried back to a previous taxable income year (5 year carryback).  If it is expected that an NOL (measured at 21% enacted tax rate) will be carried back to a year in which the enacted tax rate was 35%, companies should reclassify the amount of tax affected NOLs they expect to carryback to a current income tax receivable or payable (if a refund is expected within 12 months).  Companies may also need to reevaluate valuation allowance conclusions that were made prior to the CARES Act.  With the changes to the carryback rules, elimination of the 80% of taxable income limitation, and the increase to the interest expense deduction; valuation allowance conclusions made pre-enactment date may have a different outcome.Additionally taxpayers will need to consider the interplay of any NOL carrybacks with the disallowance of tax deductions (such as GILTI or FDII) and tax credits. A deferred tax asset should be recorded for any credit carried forward as a result of NOL carrybacks.Increase to interest expense deductionCompanies with deferred tax assets for interest deduction limitations in 2019 will need to consider the impact of the increase from the 30% to 50% limitation.  In addition, the impact of the potential NOL generated or utilized in that tax year should be considered as well as the ability to carryback.AMT creditsDue to timing change of when companies will be able to claim a refund for any carried over AMT credits, companies should reclassify the amount of the AMT credit from a long-term deferred tax asset to a short-term prepaid tax (or offset to current taxes payable) account.Asset impairments With all of the business related uncertainties during the coronavirus pandemic, companies are working with their advisors to determine the need (if any) for asset impairments.  The tax teams should be working closely with financial management to understand the potential for impairments to ensure that the proper tax impact of those impairments are properly considered under ASC 740.If you have any questions regarding the COVID-19 legislative changes and the impact on your company’s tax provisions, do not hesitate to contact Matthew Werner, James Sayre, or any other member of Schneider Downs & Co., Inc.   Please visit our Coronavirus Resource Center for related content. ### Stopping Ransomware Cold: Lessons from the Front Lines At Schneider Downs, we are all too familiar with the costly impact ransomware attacks can have on organizations of all sizes and across all industries. Our cyber team continues to respond to countless incidents, helping our clients identify, contain, eradicate and recover from a wide variety of compromises, the most common of which, and most devastating, being ransomware. In Q1 of 2020 the reported average ransom demand was $111,605 which is significantly lower than many of the demands our team has experienced firsthand. What the monetary amount does not account for are the immeasurable costs including reputational damage, business interruption, customer perception, forensics experts and legal fees, just to name a few. As incident responders, it’s our job to help minimize the impact of these attacks. A crucial component is having effective solutions readily available for our clients when they need it most and when it comes to stopping ransomware in its tracks, our team trusts VMware’s Carbon Black. That’s why one of our first steps in any ransomware attack is to deploy Carbon Black onto every endpoint as quickly as possible. If critical data and systems are being encrypted by threat actors, the existing antivirus clearly wasn’t cutting it and will likely be of little help. What’s the big deal with next-generation antivirus (NGAV)? Traditional antivirus products rely on unique file signatures, essentially just comparing each executable, attachment and web download to a list of known malware. Attackers have found that they can easily sidestep this type of solution by obfuscating their malicious code or by deploying “fileless” malware via Windows PowerShell or VBScript embedded in Office documents. These approaches either result in a new signature that the antivirus protection does not recognize as malicious or avoid antivirus scanning entirely by hiding in the endpoint’s runtime memory, or RAM. Carbon Black’s next-generation antivirus behavioral analytics and unique, data-driven prevention technology is certified to replace traditional antivirus, using predictive modeling that identifies and stops more known and unknown threats including malware, “fileless” attacks and of course, ransomware behavior. As incident responders we appreciate the endpoint detection and response (EDR) features, such as remote quarantine and rapid triage for the quick containment and analysis of pesky malware. As trusted cybersecurity advisors, we understand how frustrating it can be to ask all the right questions, hire the smartest people, lock everything down, perform countless audits, remediate every finding, invest reasonably at every turn, and still end up a victim of a ransomware attack because of a reliance on traditional antivirus products and their poorly communicated, yet significant, limitations. The simple truth is that without a next-generation antivirus (NGAV) or endpoint detection and response (EDR) solution, your environment will always be susceptible to a modern ransomware attack. As countless tales have taught us, an ounce of prevention is worth a pound of cure. How Can Schneider Downs Help? Our team can help test the effectiveness of your existing products, offer guidance on which Carbon Black features make the most sense for your organization and even provide pricing discounts by taking advantage of our incident response team’s partnership with VMware. As with any product, configuration is key, so be sure to leverage a trusted advisor like us to ensure proper tuning and execute test payloads against it to validate its effectiveness. Just let us know how we can help. To learn more about our team and capabilities, including our Ransomware Security Service visit our Cybersecurity Website or contact us at cybersecurity@schneiderdowns.com. If you are experiencing or suspect an incident, our Incident Response Team is available around the clock at 1-800-993-8937. ### SEC Oversight – Helping Investors during a Time of Uncertainty and Confusion As companies and investors try to adapt to the many challenges presented by the COVID-19 pandemic and economic crisis (“COVID-19”), the SEC is adapting to fulfil its mission to protect investors. The SEC is actively monitoring the markets for fraud, schemes or instances related to COVID-19 in which investors can be potentially misled. As of April 30, 2020, there have been at least 24 instances where the SEC halted trading of companies in connection to COVID-19 for reasons that include: Statements about distribution of tests to detect COVID-19 antibodies Confusion over similarly named publicly traded companies Press releases and other public statements relating to customer orders of COVID-19 tests Statements about the development of drugs and vaccinations related to COVID-19 One example of a cause for suspension was related to popular videoconference company, Zoom Video Communications (ticker: ZM). As a result of increased reliance on technology during a massive global switch to working remotely, Zoom Video Communications saw a surge in daily users. Investors looking to capitalize on this increase rushed to the markets to invest in what they thought was the video communication software company that everyone was talking about. Little did they know, some were investing in Zoom Technologies Inc. (ticker: ZOOM) which saw its stock rise 56,000% in the month leading up to when ZM made its debut on the NASDAQ on April 18, 2020. The SEC halted trading of ZOOM, as it was discovered that there was investor confusion due to similarly named stock. As we all try to adapt to the new normal, we have to be increasingly skeptical of the world around us. Investors in both public and private companies need to have a heightened sense of professional skepticism, and thorough research can play a critical role in whether you make the right or wrong investment. More information regarding the SEC response and potential enforcement measures related to COVID-19 can be found at the U.S. Securities and Excange Commission. Please visit our Coronavirus Resource Center for related content. ### Important Update on the Paycheck Protection Program under the CARES Act This article was updated on May 7, 2020.  Updates to this article will be made as new information becomes available. Since late March, the U.S. Small Business Administration (“SBA”) has published Frequently Asked Questions in regards to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness under the CARES Act.  The following summarizes the key questions addressed since Schneider Downs the last article on the PPP FAQs (https://schneiderdowns.com/our-thoughts-on/ppp-sba-faqs-update):Q: Do businesses owned by large companies (including private companies) with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP?All borrowers must assess their economic need for a PPP loan and certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”This certification should consider current business activity and the ability to access other sources of liquidity in order to support ongoing operations in a way that is not significantly detrimental.  The FAQ states that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.  Any borrower that applied for and received a loan and repays it in full by May 14th will be considered to have made the certification in good faith.Q: Will the SBA review individual PPP loan files?The SBA will review all loans over $2 million, in addition to other loans as appropriate.  Additional guidance regarding this is forthcoming.Q: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?Yes.  The employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.Q: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?No.  An IFR will be issued that states that, as long as the borrower made a good faith, written offer to rehire the employee for the same salary/wages and hours and the employee’s rejection of that is documented, that employee will be excluded from any calculation of loan forgiveness.  However, an employee who rejects an employment offer may forfeit eligibility for continued unemployment compensation.Q: How do SBA’s affiliation rules at 13 C.F.R. 121.301(f) apply with regard to counting the employees of foreign and U.S. affiliates?An applicant must include all of its employees and the employees of its U.S. and foreign affiliates.Q: Can a seasonal employer that elects to use a 12-week period between May 1, 2019 and September 15, 2019 to calculate its maximum PPP loan amount under the interim final rule issued by Treasury on April 27, 2020, make all the required certifications on the Borrower Application Form?Yes.Q: Do nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code qualify as “nonprofit organizations” under Section 1102 of the CARES Act?Yes, if the hospital, in a written record maintained by the hospital, reasonably determines that it is also an organization described in section 501(c)(3) of the Internal Revenue Code and is therefore within a category of an organization that is exempt from taxation under section 501(a).Q: To determine borrower eligibility under the 500-employee or other applicable threshold established by the CARES Act, must a borrower count all employees or only full-time equivalent employees?For loan eligibility, it should include all individual employees (full-time, part-time, or other).  For loan forgiveness, the CARES Act uses the standard of full-time employee equivalents.Q: Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?Yes.Q: Is there existing guidance to help PPP applicants and lenders determine whether an individual employee’s principal place of residence is in the U.S.?Yes, see IRS regulations (26 CFR Section 1.121-1(b)(2)).If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) directly. ### Additional Guidance Provided on Separating Unrelated Businesses Activities The Internal Revenue Service (IRS) issued proposed Regulations (REG-106864-18) on the “siloing” of unrelated business income under §512(a)(6). The Tax Cuts and Jobs Act (“TCJA”) added this section that required tax-exempt organizations to separate their various activities into separate trades or businesses. Losses from one activity would not be allowed to be used to offset income from another—in effect placing each activity in a silo. The TCJA did not define a trade or business. In August 2018, the IRS had released interim guidance on the subject with Notice 2018-67. The proposed regulations supersede that notice.The proposed regulations continued the use of the NAICS codes as the primary method for determining separate trades or business activities. NAICS is an industry classification system that uses up to six digits to classify trades or business. The notice used all six digits to classify activities; this resulted in over one thousand different classifications. The proposed regulations use only the two-digit method to classify activities. The result is only 20 different classifications. This should make it easier for organizations to combine similar activities into one activity.One of the more vexing issues for exempt organizations under the new rules was the question of how to treat investment income from partnerships. If each partnership and activity were required to be accounted for separately, it would be an extremely burdensome calculation. The proposed regulations generally follow the notice in allowing organizations to group most of these activities together under one trade or business. The proposed regulations adopt both the de minimis test and control test. Under the de minimis test, if the organization owns less than 2% of the profits and capital interest of the partnership, it could grouped with other partnerships. Under the control test, if an organization owns less than 20% of the capital interest of the partnership and does not control the partnership, it can be included with the other partnership interests. The proposed regulations loosen the aggregation rules for both the de minimis test and the control test. In addition, the control test no longer requires an organization to include the interests of disqualified persons in the control test.Overall, the proposed regulations seem to have made the application of the separate trade or business rule easier to manage and easier to group activities into broader categories.If your organization needs assistance interpreting or applying these new rules, please let one of our exempt organization experts know. ### AICPA Provides Guidance for COVID-19 Considerations in a SOC Examination In late April, the AICPA published non-authoritative guidance to assist service auditors as they prepare for and perform SOC examinations in the wake of the COVID-19 outbreak. The guidance can also be applied by service organizations that are undergoing or planning for a SOC exam in the wake of the pandemic, which has certainly altered how most companies conduct business.Highlights for service organizations from the published guidance follow:Consider how COVID-19 has affected how you provide services, the systems you have in place, and your controls around these items. Your service auditors will inquire as to how these items have changed and, where controls are involved, test to ensure that they’re still designed and operating effectively. Note: one such change may be that key personnel were laid off or furloughed. It’s important to understand how loss of key personnel may have affected how your controls operate. Management is responsible for determining and mitigating any new risks that may have arisen from changes made. Be prepared to share these risks with your service auditor in case they require new or redesigned testing procedures. For example, if your employees are now working from home, your service auditors may increase testing around the security of your remote connections. When writing or updating your description of the system, ensure that any significant changes made as a result of the pandemic, and tested by your service auditors, are properly disclosed. Your service auditor will still need to obtain an appropriate amount of evidence to support their opinion. Documentation provided as evidence should still be cognizant of its reliability to a service auditor, as well as completeness and accuracy of populations. This may require some creative problem-solving on both sides. For example, walkthroughs to test physical access controls may not be possible in person, but video calls could serve as an alternative if performed within the period. If there’s evidence that can only be provided in hard copy form, and employees are restricted from going to the office due to social distancing restrictions, discuss this with your service auditor so an alternate course of action can be decided. While your service auditor will not be testing your company’s ability to operate as a going concern, consider if disclosures of this nature may be needed in your system description. Attestation standards require your service auditor to inquire of management if any events have occurred subsequent to the period of time covered by your report. If there have been events related to COVID-19 that occurred subsequent to your reporting period, be sure to make your service auditor aware. Your service auditor may ask you to add additional representations to your representation letter. Examples provided by the AICPA include: Effects of COVID-19 on the organization, its technologies, etc. New risks identified from any changes made to systems Going concern issues identified If you utilize the inclusive method to disclose services provided by a subservice organization, determine if your subservice organization is still able to participate in a SOC engagement. The carve-out method may be required if your subservice organization simply doesn’t have the time or ability to participate in the examination. If this is the case, work together with your service auditor to determine if the carve-out method presents your system in an accurate manner. A scope limitation like this may require modification of the assertion and service auditor’s report. Be proactive in speaking to your customers to understand the impact a delay in producing your SOC report may have on them, and make your service auditor aware of customer concerns or needs. If you have any questions on how to handle these or any other COVID-19 considerations in preparation for your SOC examination, feel free to reach out to the team at Schneider Downs.Please visit our Coronavirus Resource Center for related content. ### Financial Boot Camp Series: Financial Planning is Key to Maintaining Long-Term Balance for Retirement Planning Recent financial markets have certainly been a roller coaster ride for investors, with the S&P 500 falling 30% in 22 trading days in March, subsequently having its best month since 1987 in April.  Historically, these violent market swings have created a lot of uncertainty and anxiety for investors, particularly for those investors operating without a well thought-out, long-term financial plan. Citizen’s Financial Group notes that while investors with an established plan report a higher level of confidence (87%) and overall positive outlook for their financial security (75%), only 55% of investors have a plan in place commonly citing fear as their biggest barrier.   When advising clients for the long term, initial and on-going financial planning and analysis is a critical component of our service model, particularly during volatile markets. In this article, we explore what is a financial plan, how we construct a financial plan with clients, and how we utilize that plan to advise clients.When developing an initial financial plan for clients, our process consists of a thorough review of their personal balance sheet. This includes an accounting for all of their assets including brokerage and retirement investments, cash holdings, business interests, real estate, life insurance, and any debts such as mortgages and other liabilities. In addition, we review their monthly cash flow for current monthly spending and savings, as well as desired future spending in retirement and other key long-term financial goals (i.e. inheritance to children, charitable donations, etc.).This initial balance sheet and cash flow assessment is utilized to make forward projections of a client’s financial future under various scenarios (i.e. future investment rates of return, retirement ages, spending levels, etc.) with a focus on desired future spending levels. Spending as a percentage of a client’s investment portfolio is a key barometer when assessing the likelihood of the lifetime longevity of a client’s assets. Industry studies note a 4% withdrawal rate as having a high probability of being sustainable for the duration of one’s lifetime. Per J.P. Morgan data, the average household spending rate for 65-74 year-old individuals is $68K and declines to $54K for individuals over 75 years old with the decline in spending attributed to lower transportation, entertainment, and shopping expenses later in life.Using a spending amount of $68K, along with the average 2020 Social Security benefit of $18K per Social Security Administration, we illustrate the 4% spending principle below at various portfolio sizes.  (For more information on Social Security, please reference my colleague Victoria Roger’s article, "I Want Mine, but When? Social Security Claiming").As you can see, a reasonable spending level, including Social Security for an investment portfolio ranging from $1M to $3M using the 4% withdrawal rate, implies a spending range of $58k to $138K.  Investment Portfolio Balance $ 1,000,000 $ 2,000,000 $ 3,000,000 Income from Portfolio (4% withdrawal rate) $ 40,000 $ 80,000 $ 120,000 Average Social Security Income (2020) $ 18,000 $ 18,000 $ 18,000 Gross Annual Income $ 58,000 $ 98,000 $ 138,000  For the reader, we kept the planning variables very simple. In practice, we factor in other financial variables such as cost-of-living inflation, portfolio turnover and associated tax costs, taxation and timing of withdrawals from brokerage and tax-deferred accounts, respectively, and other unique client financial variables. As one can appreciate, a financial plan developed as noted above quickly becomes customized to that client’s unique financial circumstances and is a key resource when advising clients. As a simple example of how we utilize a financial plan to advise clients, let’s assume we are working with John and Jane Doe and the following financial assets, desired spending, and retirement goals: Current aggregate investment balance of $500K Spend $70K per year in retirement with expected future Social Security benefit of $25K at age 66  Both want to work another 5 years and retire at age 66  In constructing John and Jane’s financial plan, we assessed their current balance sheet and monthly cash flow, and most importantly projected forward their financial picture under conservative investment return, taxation, and spending assumptions. During the projection process, we mutually agreed to the following key financial decisions: Monthly savings over the next 5 years until retirement Construction of an investment portfolio that has a high probability of achieving their long-term financial goals, while ensuring an asset allocation that they can “stomach” during periods of high uncertainty and volatility  Maximum tax efficiency, evaluating when to claim Social Security, when to begin distributions from tax deferred accounts, and if there may be future opportunities for a Roth IRA conversion After deciding on these initial key financial decisions, we periodically re-evaluate John and Jane’s financial variables as their financial plan unfolds for any potential adjustments to the plan.Capital markets are likely to continue to be volatile as the Coronavirus and its associated financial impact unfolds. However, as we have illustrated in our experience working with clients, a detailed financial plan should serve as the roadmap to achieving one’s long-term financial goals without veering off track due to any near-term market volatility.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.  https://www.cnbc.com/2020/03/23/this-was-the-fastest-30percent-stock-market-decline-ever.html / https://www.cnbc.com/2020/04/29/dow-futures-jump-100-points-after-solid-tech-earnings-facebook-up-10percent.html  https://investor.citizensbank.com/about-us/newsroom/latest-news/2018/2018-12-05-140121733.aspx  https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-retirement?slide=1383275316799 (4% withdrawal – page 24 / Average Spending – page 21)  https://www.ssa.gov/news/press/factsheets/colafacts2020.pdf ### ADDITIONAL COVID-19 DISASTER RELIEF FOR RETIREMENT PLANS In response to the COVID-19 pandemic, the U.S. Department of Labor (DOL) has announced emergency relief from certain deadlines and enforcement actions applicable to sponsors of ERISA-covered retirement plans.On April 28, 2020, the DOL’s Employee Benefits Security Administration (EBSA) issued “Disaster Relief Notice 2020-01,” which provides plan sponsors with limited enforcement relief relating to various reporting and disclosure requirements under ERISA.Specifically, the Notice extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA that otherwise would have been required to be delivered between March 1, 2020 and the 60-day period following the announced end of the COVID-19 National Emergency.  Furthermore, the Notice provides that an employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA for a failure to timely deliver these required documents provided a “good faith effort” is made to furnish the required documents “as soon as administratively practicable.” According to the Notice, a “good faith effort” includes the use of alternative, electronic means of communicating with plan participants and beneficiaries, as long as the plan fiduciary reasonably believes that those participants and beneficiaries have effective access to email, text messages and continuous access to websites.The Notice also includes compliance assistance guidance on plan loans, participant contributions and loan payments, blackout notices, Form 5500 and Form M-1 filing relief, and other general compliance guidance applicable to fiduciary responsibilities.Below are some of the specifics of the Notice as they apply to retirement plans:Participant Loans and DistributionsIf an employee pension benefit plan fails to follow procedural requirements for plan loans or distributions as stipulated by the plan document, the DOL will not treat it as an operational failure if: that failure is solely attributable to the COVID-19 pandemic; the plan administrator makes a good-faith, diligent effort to comply with those requirements; and the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable (e.g., spousal waivers for distributions and/or loans). Deposit of 401(k) DeferralsNormally, these deferrals must be forwarded to the plan on the earliest date on which they can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the amounts were paid to or withheld by the employer.The DOL recognizes that some employers and service providers might not be able to comply with these requirements under the current circumstances.  Therefore, the DOL will not take enforcement action with respect to a temporary delay in forwarding such payments or contributions to a plan as long as employers and service providers act “reasonably, prudently, and in the interest of employees” to comply as soon as administratively practicable under the circumstances.  This relief from enforcement applies to payments or contributions that were withheld from March 1, 2020 to the end of the 60-day period following the announced end of the National Emergency.DOL NoticesApplicable regulations provide for an exception to the 30-day advanced notice requirement for blackout periods when the delay is due to events beyond the reasonable control of the plan administrator and a fiduciary so determines in writing.  For this purpose, a blackout period represents a period of time extending beyond three (3) business days during which a participant cannot access their account or provide instructions to execute a transaction.In this case, the DOL will not require the written determination by a fiduciary that adherence to the general blackout notice requirement was not possible, since a pandemic, by definition, is beyond a plan administrator’s control.General Fiduciary ComplianceThe guiding principle for plans must be to act reasonably, prudently, and in the interest of the covered employees and their beneficiaries; therefore, plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments and should attempt to minimize the possibility of plan participants losing benefits because of a failure to comply with pre-established timeframes.The DOL will provide compliance assistance in the form of grace periods and other relief where appropriate, when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claims’ decisions or disclosures impossible. ### Processes Under Pressure COVID-19 has impacted work environments in ways never imagined. Teams, offices – even entire companies – have shifted to working from home. The “new normal” is pressure-testing processes and technology at most every organization.We so often hear, “that’s the way we’ve always done it,” but this pandemic is forcing us all to challenge whether the way things have been done in the past is optimal, or even necessary. It might be a good time to complete a business process optimization to help identify gaps in your organization’s internal controls and processes. For instance …Have your processes, people or technology resources been reduced in light of COVID-19?If yes, how has this impacted your control environment? Many times, we adjust in order to make things work with a “do more with less” mentality, but this can expose organizations to more risk. For example, as the number of people supporting a process decreases, risks related to inappropriate segregation of duties increase. New and adjusted processes should be challenged to ensure there are no major gaps in your internal control environment.Are current pressures requiring you to challenge how processes can be more efficient?Now’s the perfect time to challenge your existing processes – even more than you have since this all started! Teams have been getting used to making workplace adjustments and will be open to thinking of new ways to complete tasks. Processes, for instance, can often be over-controlled, making them prime candidates for optimization. Do you have reports that go through several levels of review? Why? Are you using technology to its fullest capacity? Understanding existing processes versus risks will allow for identifying efficiencies that will grant more time for employees to focus on other tasks while still ensuring that risks are still appropriately mitigated.Schneider Downs Risk Advisory Services team can assist with a Business Process Optimization. We’ll review risks and processes within specific areas of your organization, challenge existing practices and controls, and identify opportunities for efficiencies and risk enhancement to ensure that your organization is as efficient as possible while avoiding significant risk exposure during these unprecedented times. ### Planning for Reference Rate Reform The FASB recently issued ASU 2020-04 to provide accounting relief from the impact of reference rate reform.  Reference rate reform is the expected cessation of the London Interbank Offered Rate (LIBOR), the most commonly used benchmark interest rate in the world, which is expected to cease publication after 2021.  Due to the significant volume of debt, lease, and derivative contracts referencing the LIBOR, stakeholders raised concerns with the FASB about the cost and complexity of accounting for reference rate induced changes including contract modifications, debt modification versus debt extinguishment analyses, and dedesignating and redesignating derivative instruments in hedge accounting relationships. The FASB listened and issued ASU 2020-04 to provide temporary expedients to existing accounting guidelines only in situations precipitated by reference rate reform.Greatest benefit of ASU 2020-04 provision: The main provision of ASU 2020-04 that could have the greatest benefit to organizations is the optional expedient for contract modifications. This provision of the amendment stipulates that a contract modification resulting from reference rate reform may be accounted for as a continuation of the existing contract rather than the creation of a new contract, thus easing the accounting complexity and cost burden of accounting for these changes. Additionally, changes to reference rates in derivative contracts could adversely impact certain hedge accounting relationships and cause otherwise highly effective relationships to appear ineffective. ASU 2020-04 stipulates that changes in the critical terms of hedging relationships, caused by reference rate reform, should not result in the dedesignation of the instrument, provided certain criteria are met. This relief will help organizations avoid earnings volatility and costs to amend derivative contracts. Given the far-reaching impact of reference rate reform, now is the time to assess the risk of each LIBOR-based financial contract that your organization holds. Any contracts that extend past 2021 should avoid using LIBOR as a benchmark, or should ensure that appropriate fallback language is incorporated into the contract. Monitor ongoing contract negotiations and identify a comprehensive list of all LIBOR-based contracts that extend beyond 2021. Watch out for existing long-term debt agreements that extend beyond 2021, as these contracts may include provisions that grant the lender power to determine the rate adjustment if the existing rate written into the contract becomes unavailable.   For long term contracts where this type of renegotiation is unavoidable, the FASB has issued ASU 2020-04 which provides expedients for contract modifications and hedge accounting as it relates to reference rate reform. ### Manage Your Emotions During Volatile Times The history of the stock market has always had a consistent message; volatility is a normal part of investing.  Another consistent message is that the U.S. stock market has been resilient throughout its history, and has weathered the storm during periods of crisis, only to recover and move higher over longer periods of time. While the severity of the impact COVID-19 will have on the global economy is still highly unknown, we recommend keeping your emotions in check during these volatile times. As financial advisors, we often hear phrases such as “I am going to get out of the market now and will get back in when things are good again.” Translated, this basically means, “I am going to sell low, let the market recover, miss the gains, and then I am going to buy high.” For those of us who have been through the tech crash in the early 2000’s and the financial crisis during 2007-2008, we have seen what the impact of maintaining a strategic asset allocation policy can have during market recoveries. The chart below, produced by BlackRock, is a good piece to review when fear and emotion come into play. Investors tend to ride markets up and then debate selling when markets go down.   As you can see on these charts, periods that followed investors cashing out (based on the S&P 500 Index) have experienced above-average returns (14.1% one year later), while periods where cash flowed in have experienced below-average returns (6.1% one year later).  People know the concept of buying low and selling high but still tend to let emotion take over and do the exact opposite; buy high and sell low. During volatile times, we continue to recommend: Sticking to your strategic asset allocation policy and not selling into panic. Reach out to your Advisor to discuss your questions and concerns. Reviewing your risk tolerance, but also not selling based on short-term performance of the market. Long-term investing is exactly that; long term. Build your portfolio based on your risk tolerance and reduce your risk level over time. Please visit our Coronavirus Resource Center for related content. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.   ### Expansion of Main Street Lending Program This article was updated on May 1, 2020.  Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (COVID-19).  On April 30, 2020, the Federal Reserve, as part of its efforts to support the economy and small and medium-sized businesses, announced that it was increasing the scope and eligibility for the Main Street Lending Program (Main Street). After public input, the Federal Reserve made the following changes to Main Street: A third Main Street loan option (Priority Loans) was added, with increased risk sharing by lenders for borrowers with greater leverage. The minimum loan size for New and Priority Loans was decreased from $1,000,000 to $500,000. The pool of businesses eligible to borrow was expanded.  Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible for Main Street. There are now three loan options: new, priority and expanded, as detailed below: New Loans Priority Loans Expanded Loans Term 4 years 4 years 4 years Minimum Loan Size $500,000 $500,000 $10,000,000 Maximum Loan Size Lesser of $25M or 4x 2019 adjusted EBITDA Lesser of $25M or 6x 2019 adjusted EBITDA Lesser of $200M, 35% of outstanding and undrawn available debt, or 6x 2019 adjusted EBITDA Risk Retention 5% 15% 5% Payment (year one deferred for all) Years 2-4: 33.33% each year Years 2-4: 15%, 15%, 70% Years 2-4: 15%, 15%, 70% Rate LIBOR + 3% LIBOR + 3% LIBOR + 3% The Federal Reserve stated it “recognizes the critical role that nonprofit organizations play throughout the economy and is evaluating a separate approach to meet their unique needs.”  It also stated that it will be evaluating the feasibility of adjusting the loan eligibility metrics for asset-based borrowers. A start date for Main Street will be announced soon. The Federal Reserve has addressed Frequently Asked Questions about the Main Street Lending Program. If you have other questions regarding the Main Street program, first reach out to your bank and other lenders about whether you can apply for Main Street funding through these institutions.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com). Please visit our Coronavirus Resource Center for related content. ### Documenting PPP “Need and Liquidity” This article was updated on May 1, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (COVID-19).Over the past week or so, there has been additional attention and scrutiny surrounding the required PPP loan certification that states that “"[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”  The SBA has since added that “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.”These items are specifically addressed in the SBA’s PPP FAQs #31 and #37.  The SBA then added FAQ #39 that indicates that all loans above $2 million (and other loans as necessary) will be reviewed.While detailed guidance surrounding the interpretation of these statements and implementation of the review procedures has not been provided, borrowers should retain solid documentation and consider the following in determining if they can respond in good faith that the loan request is necessary: Current business activity, which may be supported through comparable sales and results between the eight-week loan period (likely projected) and the prior year and prepare related projections/budgets. Future business activity, which may be supported through updated projections/revised budgets. Business decisions that have been made in response to the pandemic. Alternative business decisions that would have been made had a loan not been received (i.e. layoffs, pay cuts). Based on the above points, consider what would have happened “but for” COVID and then “but for” PPP.  This would include an analysis/comparison of: a.) prior year same period results; b.) budgets for the eight-week loan period prior to COVID; c.) budget of what was expected to happen with COVID, but without PPP; d.) budget with COVID and PPP.  If (c) has a material deterioration in financial results compared to the other analyses (or similar bottom line results, but requires significant reductions in employees), this may indicate that the PPP loan was necessary. Access to other sources of liquidity to support their ongoing operations, like working capital (cash) and debt facilities (line of credit).   Other documentation that should be maintained, including evidence or correspondence detailing operational, cash flow, collections, staffing, payroll and industry issues. The list above is not all-inclusive and borrowers need to consider their facts and circumstances, but companies that are not in compliance may be subject to criminal penalties for falsely certifying the need for funds.  Loans can be returned prior to May 7, 2020 and will be deemed by the SBA to have made the required certification in good faith.If you have any questions regarding the PPP, first reach out to your bank and other lenders.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com).Please visit our Coronavirus Resource Center for related content. ### Deductions Disallowed for Expenses Related to Payroll Protection Program Loan Forgiveness On April 30, 2020 the IRS released Notice 2020-32 (the Notice) answering a major tax question involving the Paycheck Protection Program (PPP); understandably, taxpayers will not like the answer.  The IRS has concluded that otherwise allowable expenses allocable to the use of proceeds from PPP loan forgiveness will not be deductible in computing the taxpayer’s income.  This conclusion is irrespective of the language in the CARES Act (the Act) under Section 1106(i) that the cancellation of indebtedness of a PPP loan, under the provisions of Section 1106(b), “shall be excluded from gross income” in computing the taxpayer’s taxable income.  The IRS points out in the Notice that while the Act provides that PPP loan forgiveness is not taxable income, no provisions of the Act address the ability to deduct eligible expenses paid from such loan proceeds. In summary, the IRS reached their conclusion by analyzing Internal Revenue Code Section 265 (Expenses and Interest Relating To Tax Exempt Income), underlying regulations and rulings, and IRS favorable case law.  Under their analysis, the IRS determined that the PPP loan forgiveness is a class of tax exempt income that requires expenses associated with that income to be disallowed as a deduction for federal income tax purposes.  The IRS states this conclusion is consistent with prior guidance that addresses the application of Section 265(a) to otherwise deductible payments. In particular, the IRS notes that Rev. Rul. 83-3 provides that where tax exempt income is earmarked for a specific purpose, and deductions are incurred in carrying out that purpose, Section 265(a) applies because such deductions are allocable to the tax-exempt income.  Following the analysis set forth in Rev. Rul. 83-3, the IRS believes there is a direct link between (1) the amount of tax exempt covered loan forgiveness that a recipient receives pursuant to Section 1106 of the Act, and (2) an equivalent amount of the otherwise deductible payments made by a recipient for eligible section 1106 expenses (payroll costs, certain employer paid healthcare benefits, certain interest, rent, and utilities) constitutes a sufficient connection for Section 265(a) to apply.  Accordingly then per the IRS, tax deductions for such payments under any provision of the Internal Revenue Code, to the extent of the income excluded by the application of Section 1106(i) of the Act, are disallowed. Is this Notice the final word on this issue?  Maybe not; first, it is possible a taxpayer could decide to challenge this position in court.  Whether a taxpayer would or would not prevail is open to question.  Another option would be for Congress to act in the next Coronavirus bill (assuming there will be such a bill) to enact an amendment to make clear that expenses used to justify PPP loan forgiveness are specifically deductible.  The IRS could also be pressured into withdrawing the notice under demands from Congress, the Administration, and the public that the outcome was not the intended understanding when the law was enacted.  Time will tell. Unfortunately, The IRS position is clear at this time that deductions are not allowed related to the forgiveness of the PPP loan.  In the meantime, if you have any questions, or need assistance modeling the cash flow affects of this decision, please contact your Schneider Downs tax advisor. Please visit our Coronavirus Resource Center for related content. ### Construction is Open for Business in PA – Are You Ready? Beginning May 1, 2020, all businesses in the construction industry in Pennsylvania are permitted to maintain in-person operations pursuant to amendments to the business closure orders originating from the COVID-19 pandemic.  However, contractors must now adhere to strict guidelines published by the state.  Construction projects previously granted an exemption to continue in-person operations also must adhere to this new guidance, which includes many safety protocols that were unheard of on job sites before the pandemic. The new requirements are as follows: Follow all applicable provisions of the Order of the Secretary of Health providing for business safety measures, issued April 15, 2020 Establish protocols for execution upon discovery that the business has been exposed to a person who is a probable or confirmed case of COVID-19 Every person present at a work site must wear a mask/face covering Require social distancing (6-feet minimum distance between workers) unless the safety of the public or workers require deviation (e.g. drywalling, team lifting).  Provide hand wash stations at appropriate locations on the site such as building entrances, break areas, food truck areas, offices, trailers, and job site egress areas.  Implement cleaning or sanitizing protocols such as regularly clean and disinfect areas that are at high risk for transmission (common areas and regularly trafficked spaces) Ensure all gatherings are limited to no more than 10 people, maintaining 6-foot social distancing, when required to meet, even when conducted outside Use virtual meetings, and disseminate information electronically to the extent feasible Stagger shifts, breaks, work areas and/or stacking of trades where feasible Limit tool sharing and sanitize tools if they must be shared Employ jobsite screening based on CDC guidance to determine if employees should work Prohibit from working any employees with any symptoms of COVID-19 Encourage sick employees to stay home.  Prohibit unnecessary visitors to any project or work site, and limit supplier deliveries  Limit access to enclosed spaces to the extent feasible  Workers travel to and from the job site separately - where possible no vehicle sharing  Identify a “Pandemic Safety Officer” for each project or work site, or, if a large-scale construction project, then for each contractor at the site. The primary responsibility of the Pandemic Safety Officer will be to convey, implement, and enforce the social distancing and other requirements of the guidance for the protection of employees, suppliers, and other personnel at the site.  The new guidance also limits the number of workers allowed in enclosed projects or spaces, including residential construction, to no more than four people on job sites of 2,000 square feet or less.  One additional person is allowed for each additional 500 square feet of enclosed area over 2,000 square feet. These numbers include employees of both general and subcontractors, but do not include delivery persons, code inspectors or others who require temporary access to the site and are not directly engaged in construction activity.In addition, local jurisdictions in the state may elect to impose more stringent requirements.  In such instances, businesses must adhere to the more stringent requirements.  Finally, local political units and public entities should officially communicate to contractors whether their specific project will be resumed.  Notwithstanding the general authorization to resume construction activities, contractors should not resume work on public construction projects until directed to do so by the applicable governmental unit.Certain commonwealth agencies and independent commissions have previously issued guidance for critical or essential projects that are continuing.  Those specific directives should be followed unless there is a direct conflict with the new guidelines, in which case the new guidelines control.  Contractors working on public construction projects must follow construction restart or resumption plans established by that agency or commission. ### The Employee Retention Credit – Significant IRS Guidance Just Released As discussed in our article on March 30, “2020 CARES Act - The Employee Retention Credit”, the CARES Act (the Act) provided for a new employer payroll tax credit known as the Employee Retention Credit (ERC).  The credit is designed to assist eligible employers who have kept employees on their payroll despite experiencing economic hardship resulting from the economic impacts of the COVID-19 virus. To recap, the ERC is a fully refundable tax credit for employers equal to 50 percent of qualified wages paid after March 12, 2020 and before January 1, 2021 (including allocable qualified health plan expenses) that eligible employers pay their employees.  The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for qualified wages paid to any employee is $5,000.  Critically, an employer may not receive the ERC if the employer receives a Paycheck Protection Program (PPP) loan that is authorized under the Act.  An eligible employer that receives a PPP loan, regardless of the date of the loan, cannot claim the ERC. The Internal Revenue Service subsequently issued preliminary guidance through 15 “Frequently Asked Questions” or FAQs.  This guidance laid some basic groundwork, but left many issues unaddressed.  Late yesterday, the IRS significantly increased the amount of guidance and redesigned its web pages addressing the ERC.  The ERC FAQs include the following topics: General Information Determining Which Employers are Eligible to Claim the Employee Retention Credit Determining Which Entities are Considered a Single Employer Under the Aggregation Rules Determining What Types of Governmental Orders Related to COVID-19 May be Taken into Account for Purposes of the Employee Retention Credit Determining When an Employer’s Trade or Business Operations are Considered to be Fully or Partially Suspended Due to a Governmental Order Determining When an Employer is Considered to have a Significant Decline in Gross Receipts Determining the Maximum Amount of an Eligible Employer’s Employee Retention Credit Determining Qualified Wages Determining the Amount of Allocable Qualified Health Plan Expenses How to Claim the Employee Retention Credit Interaction with Other Credit and Relief Provisions Special Issues for Employees: Income and Deduction Special Issues for Employers: Income and Deduction Special Issues for Employers: Use of Third Party Payers Other Issues We are analyzing the FAQs in more detail and will provide more comprehensive guidance soon.  In the meantime, if you have questions regarding this or other COVID-19 issues, please don’t hesitate to contact your Schneider Downs tax advisor. Please visit our Coronavirus Resource Center for related content. ### Construction in a New PC World Whether it be days, weeks or months, contractors, like companies in every other industry, will need to adjust to a new PC world.  PC as in post-coronavirus.  While in many ways, the daily tasks we perform at our jobs will stay the same, the way we go about performing those tasks will undoubtedly change, and probably already has.Contractors will be looking to deliver the quality construction their customers have come to expect, all while ensuring the safest job site possible.  Two recent trends, modular construction and increased use of technology, may help contractors achieve both.  In fact, the use of modular construction and technology may actual accelerate as a result of the coronavirus.Modular construction has a wide range of benefits from increases in efficiency and quality, to decreases in costs and construction time.  Additionally, modular construction has been seen as a way to combat the shrinking, aging workforce.  A report by McKinsey & Co. published last year found that modular construction could potentially cut construction time by as much as 50% and reduce costs by upwards of 20%.Contractors are also turning to technologies such as building information modeling (BIM) and virtual reality (VR).  BIM is allowing for easier, more effective collaboration between architects, engineers and contractors while planning and designing projects.  The use of BIM coupled with VR provides owners the ability to experience the project in ‘real life’ prior to the first shovel of dirt being moved.  These technologies are making it possible to identify design flaws and errors before they occur, resulting in fewer changes and delays once the project has begun and increasing the owner’s overall construction experience.These practices are not without their challenges or difficulties; however, they can be beneficial in providing quality and efficient service all while reducing the number of people that will be needed at job sites, factories and even conference rooms.Some companies are better suited to adjust to whatever comes their way, but there is no question that those that can adjust most efficiently and effectively have the greatest chance to thrive in our new PC world.Please visit our Coronavirus Resource Center for related content. ### Natural Gas Rig Count Declines in Major Basins Natural gas rig count is often viewed as an indicator of future gas production. An increase in rigs leads to an increase in the amount of wells from which gas can be extracted, which in turn drives up the possible upper limit of production. Rig count can also be seen as an indicator of where companies are choosing to invest their capital, as an increase in the amount of rigs in a particular region may suggest a focus by industry leadership on that area. Finally, the count is frequently indicative of the market for these resources as a whole. An increase in the price of these goods makes the industry more profitable and allows for increased drilling. Baker Hughes, one of the world’s largest oil field services companies, publishes a weekly analysis of rig counts in North America. The aggregated data is presented as a combined figure representing both oil and gas rigs. Baker Hughes also releases the weekly source data for their calculations, which includes details such as the country, type (oil or gas), and specific geographic location of each rig. Using this data, Schneider Downs was able to perform an analysis on natural gas rig count by basin, as well as an oil rig analysis provided later in this article. For the four week period from March 20, 2020 to April 17, 2020, the Marcellus Shale basin (PA, WV, OH) saw its rig count decreased from 39 to 35, a 10% drop. The Haynesville Shale (LA, TX, AR) saw its count dip from 43 to 38, or 19%. The Arkoma Woodford (OK), Barnett (TX), and Utica (PA, OH, WV, NY) basins all saw no variance in count, remaining at one, one, and nine rigs, respectively. The Eagle Ford basin (TX) saw a decrease from three rigs to two. The largest drop, however, came in the region designated as “Other” by Baker Hughes. This consists mainly of rigs stationed in the Foothills Front of Canada and Northern British Columbia. These areas saw a drop from 56 rigs to 29, a 27% decrease. The chart below visualizes these changes. The energy sector has experienced high volatility recently, with oil prices falling to historic lows. As domestic and global social distancing efforts have dramatically reduced the amount of travel done by the average consumer, the demand for oil has correspondingly decreased.                   Further intensifying the situation was a refusal by Russia to reduce oil production in unison with the other member nations of OPEC. The decrease in production of oil by the major oil producing countries was intended to stabilize the price of the commodity.  However, after  Russia backed away from the agreement, Saudi Arabia took measures to begin a price war, which in turn sparked an even larger drop in oil prices internationally. In mid-April, the price of West Texas Intermediate oil futures fell below zero for the first time in history. The prediction by many experts is that production will be cut by natural gas producers, as has already been done by oil producers, in order to keep the price of gas from dropping further. The data from Baker Hughes shows that total rig count for Oil and Gas have fallen during the period of March 20 to April 17 from 98 to 30 in Canada, and from 772 to 529 in the United States. However, some believe this decrease in the production of energy is a positive sign for the natural gas industry. According to Goldman Sachs analyst Samantha Dart, depressed gas prices over the previous few years have been driven mainly by the overproduction of gas, leading to a saturation of the market compared to demand. When oil is drilled for in states like Texas, which also sits on large natural gas deposits, gas is often collected simultaneously with the oil, termed “associated gas”. The supply of associated gas will drop in line with the decrease in oil production, and so the overall natural gas supply should decrease as oil drilling falls.  Samantha believes that this will lead to an increase in price, helping to drive growth in the industry. The chart above shows recent variances in the count of oil rigs in states that also lie on major gas deposits, and so produce the previously mentioned associated gas. Louisiana’s rig count fell from 18 to 16, Oklahoma’s count fell from 42 to 23, and Texas’ count dropped from 373 to 246 during this period. While time will tell how the recent economic uncertainty will influence the oil and gas industries long-term, as of now rig counts have fallen across the board. To see additional information and the source data used by Schneider Downs to create the charts above, visit https://rigcount.bakerhughes.com/rig-count-overview. Sources https://www.barrons.com/articles/natural-gas-prices-could-double-by-next-winter-goldman-sachs-analyst-says-51585072900 ### The ACFE’s 2020 Report to the Nations The Association of Certified Fraud Examiners (ACFE) recently released the Report to the Nations: 2020 Global Study on Occupational Fraud and Abuse.  This is the 11th Report to the Nations since 1996, and over its history it has become the primary source of fraud data and research.  The 2020 report covers 2,504 cases from 125 countries; cases which resulted in losses of $3.6 billion from fraud.  The data contained in the report is generated by Certified Fraud Examiners (CFEs) around the world who submit information on cases they have investigated over approximately the last two years.Some interesting findings from the report include: Consistent with the findings in prior years, it is estimated that organizations lose 5% of revenue to fraud each year. Median losses per case were $125,000, while the average loss per case was $1,509,000. Fraud schemes were detected by tip 43% of the time, and half of those tips came from employees. A lack of internal controls contributed to nearly 1/3 of the frauds reported. While the report is full of excellent information, it is important that organizations are able to use that information to guide their anti-fraud controls and responses, as effective anti-fraud controls are associated with lower fraud losses and quicker detection of fraud.  Based on information in the report, small businesses are more likely to experience billing fraud, payroll fraud, and check and payment tampering fraud than large organizations.  The report notes, the typical fraud lasts 14 months before detection and causes $8,300 per month in losses, and there is correlation between the length of the fraud and the median loss.Unfortunately, because of our experience, we are never surprised at the findings from the ACFE report.  We will provide further in-depth analysis related to the various industries and schemes represented in the report in subsequent Our Thoughts On articles.  Our team of will incorporate the updated information presented in the report to assist our clients to assess controls and respond to fraud that has occurred within their organization.  If you have questions or concerns about detecting or deterring fraud please contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster bwebster@schneiderdowns.com.  ### The Future of your Business - Natural Resources and Construction Post-Covid-19: Where does my organization go from here? You don’t have to look far to see the impact of the COVID-19 pandemic on the workplace. The transformation of a huge portion of the U.S. workforce to working remotely occurred basically overnight. In addition, physical distancing will change work in the field. Truly, we accelerated workplace environment changes more in one week than in 5 years! The actions taken today by businesses in response to this national emergency will become a great foundation of experiences to build upon when we ask the questions: What will the future workplace look like? Where does my business go from here? It’s these challenging events that make us stronger. So what should you consider when the next phase of your organization? Post-COVID-19 – What’s the next phase of your organization? Consider these steps. Gap analysis – Develop a task force to look at all facets of your organization, to understand the limitations you faced during this period. Areas of emphasis are technology, communications, human resources, personnel and supply chain management. Use innovative techniques to draw this information from your employees. Their experiences and input during this period will provide a wealth of business intelligence. Don’t assume that you have the whole picture simply from your perception of the gaps, especially in a remote work environment. Receivables – Reset the receivable cycle and the collection process. Look at what your true key performance indicators are now and going forward, compared to historically. Inventory – What is your cash to cash conversation cycle? Coordination of receivables, payables and inventory will become more critical than profits, at least for the near future. Supply chain – Be prepared for long-term supplier disruption. Address the possibility of shortages, and locate back-up suppliers. Facilities – Create an alternative plan for operations. Prepare for facility closures and rerouting of operations. Contracts – Look for contract provisions that were missing, helpful or unfavorable in these times, so you can adjust them in future contracts—to avoid any issues that occurred as a result of contract terms or omissions. Derivatives – Derivatives used correctly can reduce multiple risks across your organization. Reevaluate your risk mitigation plans associated with your materials, interest rates, foreign currency, etc. Now is the time transform your organization and shape it into the way you want it. To achieve the changes necessary for your post-COVID-19 organization, it takes focus and management’s support. Listen to your team to get their insight on the future. Good luck, and stay strong! Schneider Downs’ Natural Resources and Construction advisory professionals are here to help with questions and to share our insights  during this time of transition. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Amended Regulation Provides Relief for Importers amid the COVID-19 Crisis Importers, like many other businesses, have faced a severe decline in revenues in the last three months. This decline is due, in large part, to the federal, state, and national restrictions placed on imports. Additionally, due to contractual obligations to purchase certain levels of product, many importers are still required to accept shipment from manufacturers, regardless of the lack of demand for these goods in the marketplace or the lack of warehouse space to store such goods. These problems are then exacerbated by the fact that, even if they are able to receive and ship the goods, demand has substantially disappeared due to pervasive legislation that mandated retail store closures. So, while importers' revenues are rapidly declining, they are still incurring significant costs, such as government mandated import fees and taxes, causing many of them to experience hardship and start to worry whether they will survive the pandemic.On April 20, 2020, in an attempt to remedy some of the financial hardships importers have faced in the months of March and April, U.S. Customs and Border Protection ("CBP") and the U.S. Treasury Department have jointly issued regulations allowing for an extension to pay certain fees and taxes that would otherwise be payable upon entrance or withdrawal from the United States. If an importer can show they are facing significant financial hardship, they will be entitled to a 90 day postponement of payment of estimated duties, taxes, and fees otherwise required as of the date goods enter into (or are withdrawn from) the U.S.  Financial hardship, as defined in the amended regulations, means that an importer, must have had their operations fully or partially suspended during March or April of 2020, such that, gross receipts in the second half of March or April of 2020 "are less than 60% of the gross receipts for the comparable period in 2019."  Businesses seeking to take advantage of this postponement are not required to file any application or additional form, but should be sure they are maintaining detailed books and records and can show they meet the financial hardship threshold if ever called into question. The regulations also state that no interest will accrue on the estimated duties, taxes, and fees that importers choose to temporarily postpone.  It should be noted, there are several specifically enumerated fees and tariffs that are not allowed to be postponed under these regulations.These new regulations come after several other pieces of legislation, both federal and state, aimed to help businesses maintain cash flow and stay operational during this crisis. It is important to look at all of the new legislation and determine what the best plan of action for your business should be. So, whether you would like some help determining whether your import business meets the definition of financial hardship or you would like to discuss the impact of COVID-19 has had on your business more broadly, we would love to hear from you! Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### State of the Construction Industry – What President Trump’s Potential Infrastructure Bill Might Mean for Pennsylvania With most of the nation’s construction at a standstill, the Trump administration has been looking into what may be the next step for America following the COVID-19 pandemic. After passage of the CARES Act on March 27, there have been mentions that the president could be pursuing an additional $2 trillion bill to aid in repairing the nation’s aging infrastructure. The bill, driven by low interest rates and the overall decreased cost of borrowing, might demonstrate why now could be seen as opportune time to address the issue. But what would a potential bill mean for construction endeavors in Pennsylvania and surrounding states? To help evaluate that question, we looked at a 2018 study conducted by 24/7 Wall Street that ranked the country’s infrastructure and identified the most distressed states. In order, they are: Rhode Island Hawaii West Virginia Pennsylvania California The analysis took into consideration the number of bridges, roads and dams that are in a “state of despair or potentially hazardous.” Pennsylvania ranked fourth overall due to a combination of poor roads, deficient bridges and dams at a high hazard risk. The commonwealth was among the top 15 worst states in each infrastructure category. In a separate 2018 study conducted by the American Society of Civil Engineers (ASCE), Pennsylvania was issued an overall infrastructure grade of C+. Included in this report card, issued by a committee of more than 75 civil engineers, ASCE awarded grades to key areas like roads (D+), bridges (D+), transit (D) and wastewater (D-). The committee consulted staffing from both the ASCE National and its Committee on America’s Infrastructure to gather both a macro and micro perspective of the state. It appears, then, there’s significant need for Pennsylvania to receive funding to improve the state’s infrastructure. While no federal money is certain at this time, Pennsylvania’s own government has taken strides to aid in this effort. During 2019, Governor Tom Wolf unveiled the Restore Pennsylvania Improvement Plan that would potentially invest $4.5 billion into the state’s infrastructure over a four-year period. So while there’s been no federal legislation drafted at this time, there may be numerous opportunities for Pennsylvania and surrounding states to be positively impacted from construction-related infrastructure projects in the coming years. Until – and as – more information becomes available, we encourage you to visit the Schneider Downs website for the most recent updates. Sources: https://www.forconstructionpros.com/asphalt/news/21017738/all-50-states-ranked-by-worst-crumbling-infrastructure  https://www.usatoday.com/story/money/economy/2018/08/13/infrastructure-spending-states-that-are-falling-apart/37270513/  https://www.infrastructurereportcard.org/state-item/pennsylvania/    ### Update on New Stimulus Package (Phase 3.5 or Phase 4) This article was updated on April 22, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (COVID-19).  On Tuesday, April 21, 2020, the U.S. Senate passed a deal on a $484 billion relief package for small businesses, hospitals and testing.  Below is a summary of this new stimulus package: The deal would allocate an additional approximately $321 billion to the Paycheck Protection Program (PPP).  Of the $321 billion, $250 billion is unrestricted, $60 billion is set aside for community-based lenders, smaller banks and credit unions and approximately $11 billion is for administration fees.  The PPP has already committed all of the original $349 billion allocated in the CARES Act. An additional $60 billion will be allocated to the Economic Injury Disaster Loan program (EIDL), with $50 billion allocated to the EIDL program and $10 billion to Emergency EIDL grants. $75 billion for hospitals to prevent, prepare for and respond to COVID-19. $25 billion for COVID-19 testing, with $11 billion of this amount to be distributed to states. $2.1 billion for Small Business Administration (SBA) administrative expenses The new stimulus package is in the hands of the U.S. House as of Wednesday, April 22, 2020, with a House vote scheduled on Thursday.If you need more information or assistance regarding the PPP application process or the forgiveness calculations for PPP loans, please reach out to any of your contacts at Schneider Downs.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### No Honor Among Thieves: Ransomware Targeting COVID-19 Frontlines On March 18, 2020, Lawrence Abrams of Bleeping Computer reached out to a number of prolific cyber-criminal groups including Maze, DoppelPaymer, Sodinokibi, and Ryuk, and asked, “Will you continue to target healthcare and/or medical organizations during the COVID-19 pandemic?” To the surprise of many, Maze and DoppelPaymer indicated they would not. However, many asked the question—how long would this good faith last? Unfortunately we now are starting to see the answer. Despite good intentions, two facts still remain. Ransomware attacks are one of the most profitable and therefore popular tactics used by cyber criminals and blossom in times of national emergencies. Second, cyber criminals are predatory in nature and base their attacks on opportunity to create higher, faster ransomware demands, which COVID-19 offers plenty of. Notable Attacks Within one month of Abrams’s interview, Interpol (International Criminal Police Organization) reported a significant increase in the number of ransomware attacks against key organizations and infrastructure engaged in the virus response. The Maze group, who intially pledged not to target healthcare organizations, is reported to have attacked Hammersmith Medicines Research, a British COVID-19 vaccine test center. The attack stole records of patients who participated in testing trials from the past 20 years and published the data on the dark web with a ransom demand. The research lab was able spot the attack in progress and restore their systems without paying the ransom. One of the organizations who did not respond to Abrams’s initial inquiry was Ryuk. Shortly after, a healthcare organization reported a ransomware attack through PsExec, a method associated with Ryuk. According to CPO Magazine, Ryuk has gone on to target more than 10 other healthcare providers including a network of at least nine hospitals, with one reportedly in a state severely impacted by COVID-19. The Sodinokibi group also did not respond to Abrams initial inquiry, but was indicated in an attack. Abrams reported, “A strain of Sodinokibi, tracked by Microsoft as REvil, was attempting to exploit weaknesses in VPN server security to encrypt data found in hospital servers and machines.” Many groups including Sodinokibi are preying on weaknesses such as the improper configuration of company VPNS during the shift to remote workforces. The Worlds’ Response Interpol recently issued a purple notice (to seek or provide information on modus operandi, objects, devices and concealment methods used by criminals) to the 194 member countries and their law enforcement agencies alerting them of the COVID-19 cyber threats. Accompanying the notice was a statement outlining the severe consequences of these types of attacks from Interpol Secretary General Jürgen Stock stating that “Locking hospitals out of their critical systems will not only delay the swift medical response required during these unprecedented times, it could directly lead to deaths.” Recently, the U.S. government appointed America’s first COVID-19 fraud coordinator, Shaun Sweeney, to oversee the fraud prosecution of coronavirus attackers. In addition, the U.S. also announced they are waiving the threshold for initiating fraud causes related to coronavirus-related scams. To find out how to report COVID-19 related crimes and cyber best practices relating to COVID-19, refer to https://www.justice.gov/usao-wdpa/covid-19-fraud-page. Related Articles Cybersecurity Best Practices for Working from Home amid the COVID-19 Pandemic Coronavirus Cyber Scams are on the Rise How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. ### PPP Round One Complete; Where Do We Stand? Over the past few weeks, companies across the U.S. have been frantically pulling together information and filling out applications with the hope of being awarded a piece of the initial $349 billion Paycheck Protection Program (PPP) loan pie. Now that the window for the first round of loans has closed – the Small Business Administration ceased accepting applications on April 16 – where does everyone stand?Ultimately throughout the country, approximately $342.3 billion of loans were issued to 1.66 borrowers. Pennsylvania ranks in the top 10 nationwide in both number of loans and dollars received, with the manufacturing industry receiving approximately 12%.Many companies, though, were not fortunate to receive the funding, an additional $310 billion has been approved by the Senate for the PPP, which is subject to approval of the House of Representatives. If your company missed out on the first round, a second round should not be too far off. Where ever you’re at in the process, remember that Schneider Downs is here to help you with any questions you have along the way!Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Education Tax Credits and COVID-19 The contribution deadline for Pennsylvania’s popular Educational Improvement Tax Credit (EITC) program has been extended due to the COVID-19 pandemic. Under normal circumstances, businesses are required to make their contributions within 60 days of approval of their application by the state. Pennsylvania has extended that deadline until the end of the business entity’s tax year. In addition, Pennsylvania will not reduce tax credits if a business participating in the EITC does not contribute their full second-year commitment. Businesses will still receive 90% of the amount they contribute in year two, and year one credits will not be reduced. The administrative changes to EITC contributions will apply to all tax years impacted by the COVID-19 disaster emergency. Please visit our Coronavirus Resource Center for related content. ### How to Maximize PPP Loan Forgiveness As a business owner, you and your employees have been diligently working to maximize the loan available under the Paycheck Protection Program (PPP), but after a company has been approved by the Small Business Administration (SBA), the work doesn’t stop. The lender has 10 calendars days to make the first disbursement, which starts the company’s 8-week covered period. From that point onward, your 8 weeks to maximize loan forgiveness is running out.Up to the full amount of both principal and interest can be forgiven if PPP loan proceeds are used on allowable uses and you maintain your workforce and their salaries. As an added benefit, the partial or full loan forgiveness will not be recognized as taxable income for federal purposes.So how should companies facilitate the tracking of the related expenses to safeguard the forgiveness of PPP loans?Once the loan has been distributed, companies need to ensure that use of every dollar of the funds is tracked so that you can provide the proper documentation to the lender when applying for loan forgiveness. Be proactive and discuss with your lender what documentation they will require to support the forgiveness.  The CARES Act includes some of the documentation required, but your lender may require additional information.  Understanding the documentation requirements of both the CARES Act and your PPP loan lender will enable you to properly track allowable uses and locate supporting documentation.A couple of best practices include: Track PPP expenses by establishing new and separate general ledger accounts, coding or classification within the company’s accounting system. Doing so will allow the company to segregate the funds and easily track expenses without comingling.  Accounting departments and staff should ensure that additional support for the expenses is maintained either electronically or hard-copied in a separate folder.  Companies should talk with payroll providers to ensure that required payroll information is tracked in accordance with the CARES Act, since allowable payrolls costs aren’t as simple as the employee’s gross or net pay. For additional information on allowable costs, see Schneider Downs’ previous Our Thoughts On article: Important Update on the Payroll Protection Program Under the CARES Act.  Ensure that you’re aware of the rules relative to the reduction of headcount and salaries and the re-hire exemption. For additional information on these rules, see Schneider Downs’ previous Our Thoughts On article: Paycheck Protection Program – Loan Forgiveness. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### DOE releases information for the Institutional Portion of the Higher Education Emergency Relief Fund On Tuesday, April 21, 2020, U.S. Secretary of Education Betsy DeVos issued a communication announcing the release of information and funding available for the second half of formula grants to Institutions of Higher Education authorized by Section 18004(a)(1) of the CARES Act, also known as the funds for “Recipient’s Institutional Costs.”  Access to this letter as well as additional information on how to apply for the grants provided by the CARES Act for Institutions can be found here. Here are a few key highlights noted from this announcement: Institutions must have entered into the Funding Certification and Agreement for Emergency Financial Aid Grants to Students in order to receive funds for Recipient’s Institutional Costs. In order to receive funds for Recipient’s Institutional Costs, Institutions must complete a second application and submit via grants.gov.  This application is referred to as the Recipient’s Funding Certification and Agreement for the Institutional Portion of the Higher Education Emergency Relieve Fund (HEERF). Once the application has been received and verified by the Department of Education, funds will be available for draw down through the G5 system. Further instructions will be published within the Federal Register to provide instructions to Institutions on reporting requirements on the use of these funds.  The Department of Education encourages Institutions to keep detailed records of how all funds received under HEERF are expended. Funds can be used for the following costs associated with the COVID-19 pandemic: Expansion of remote learning programs through expenditures building IT capacity and training faculty and staff on effective remote learning. Reimbursement for purchases of technology made to provide to students on or after March 13, 2020, the date of the proclamation of a national emergency, to aid in the transition of remote learning due to coronavirus. Support of students with the most significant financial needs, through emergency financial aid, arising from the coronavirus pandemic and disruptions of campus operations, such as course materials, technology, health care, childcare, food and housing.  Note that those students who were enrolled exclusively in online programs on March 13, 2020 are not eligible for emergency financial aid grants. Reimbursements to institutions that have made refunds to students for charges refunded on or after March 13, 2020, the date of the proclamation of a national emergency, if those refunds were necessitated by significant changes to the delivery of instruction, including interruptions in instruction, due to the coronavirus. Institutions may use the funds to pay a per-student fee to a third-party service provider for each additional student using the distance learning platform, learning management system, online resources, or other support services.  However, the funds cannot be used for third-party recruiters or recruiting activities to enroll new students. The Department of Education has posted a list of frequently asked questions relating to this second portion of funding.  Additionally, the Higher Education Industry Group here at Schneider Downs is ready and available to help you through your questions and concerns, and we will continue to provide updates as further information becomes available and changes occur. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Forgiveness Thoughts As the Federal government continues to seek expanded funding for the Paycheck Protection Program (PPP), there are many companies that have received their loan funds and started the 8-week period to use the funds. The main benefit of the PPP is that it provides forgiveness of the loan if the borrower maintains its workforce (headcount) and salaries during the 8-week period after receiving the loan funds. Here are some important provisions related to the forgiveness of the PPP loan: 75%/25% Rule – The SBA with its Interim Final Rule included a provision that allows up to 25% of the forgivable amount to be related to non-payroll related items. Limiting non-payroll costs to 25% of the forgiveness amount aligns the overarching focus on keeping workers paid and employed. Reduction of forgiveness related to the number of employees - Borrowers that use loan proceeds for allowable purposes may have their forgiveness reduced if their full-time equivalent (FTE) employees are not the same as they were during a base period as defined by the CARES Act. That is, if the borrower’s FTEs during the base period in 2019 is greater than the number of FTEs during the 8-week period after receiving the loan funds then the forgiveness will be reduced by that percentage. Reduction of forgiveness related to the salary and wages - Borrowers that responded to the COVID-19 pandemic by reducing employee wages and salaries may also have a reduction of the loan forgiveness if that reduction was greater than 25% of non-highly compensated employees, as defined by the CARES Act. The reduction is related only to employees who did not receive, during any single pay period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000. Opportunity for exemption from reduction - There is an opportunity for the borrower’s forgiveness reduction to not be considered if they meet the re-hire exemption. If a borrower were to experience a reduction of FTEs between February 15, 2020 and April 26, 2020 (i.e. layoffs, furloughs, etc) and/or a reduction in the salary or wages of 1 or more employees as described in the CARES Act, they’re eligible. In order to meet the exemption, the borrower must eliminate the reduction in FTEs by June 30, 2020 and/or eliminated the reduction in the salary or wages of such employees. To complicate things there are several unclear matters to be addressed in the forgiveness provisions. The following matters require additional clarification from the Treasury or SBA, as outlined below to help you prepare: 1.   The 75%/25% rule is based on allowable uses of the loan proceeds, but do those costs need to be incurred or paid or incurred and paid. As stated in the CARES Act forgiveness is defined as the sum of costs incurred and payments made during the covered period. The terminology of “incurred and payments made” in the CARES Act As stated in the CARES Act forgiveness is defined as the sum of costs incurred and payments made during the covered period.   The terminology of “incurred and payments made” in the CARES Act is causing confusion for many borrowers.  Many incur certain costs, like health care insurance premiums that are incurred as the employee provides service to the employer, but will be paid 30 days after.  So was it the intent of the CARES Act to only allow for 1 month of health care benefits because if an organization does not change their internal process of bill payments they may only pay 1 month of health care costs that were incurred and paid.   However, if the interpretation were to be incurred or paid, there is the potential to prepay certain costs, which also does not seem to be the intent of the CARES Act. 2. Did the CARES Act intend to have allowable uses to be different from forgiveness amounts? The CARES Act specifically allows for the use of loan proceeds to pay interest on any other debt obligations that were incurred before the 8-week loan period, which recognizably could be quite broad, however, in the forgiveness section of the CARES Act there is no mention of the other debt obligations. Additionally, bonuses likely were included in maximum loan calculations.  It remains to be seen if during the loan period an accrual of a bonus is an allowable use, or does it have it to be paid.  What if bonuses paid represented what an employer expected to pay for the 2020 service; could that be included in allowable uses and part of the forgiveness amount? 3. How do borrowers calculate an FTE during the 8-week period and the base periods for the reduction of forgiveness related to the number of employees? There are a couple issues here.  The CARES Act  does not specifically address the definition of a full-time equivalent (i.e. is it based on a 30 hrs work week, 37.5 hrs, 40 hrs., etc).   Also, the calculation is based on monthly average FTEs for the base period (February 15, 2019 through June 30, 2019 or January 1, 2020 through February 29, 2020) which may include a partial month.   Another issue is what if an employee were to terminate their employment voluntarily.  Does that go against the Company’s forgiveness calculation? 4. How do borrowers calculate FTEs at February 15, 2020 and April 26, 2020?   In order to qualify for the re-hire exemption, borrowers will need to validate that they had a reduction of either FTEs or salaries and wages during the dates described in the CARES Act.  However, as noted in the previous item there is not a clear calculation of FTEs during a period. Further its unclear how to calculate FTEs at a specified date. 5. What’s the definition of an employee who did not receive, during any single pay period in 2019, wage or salary at an annualized rate of pay in an amount more than $100,000. The CARES Act requires employers to consider in determining the reduction related to salaries and wages of any employee that did not receive  an annualized wage or salary of $100,000 during any pay period in 2019.  Interpreting this definition is causing confusion because factoring in a bonus during 2019 for a non-highly compensated employee could be the difference between including the employee or not. 6. The definition of the wage reduction according to the CARES Act for non-highly compensated is a comparison between the most recent full quarter during which the employee was employed before the covered period and the 8-week period.  In computing the dollar amount of the reduction, the CARES Act requires borrowers to compare the most recent full quarter during which the employee was employed before the 8-week loan period.  A difference of greater than 25% between those two periods further reduces a borrowers’ forgiveness.  However, those two periods are not comparable.  A full quarter could be 12 weeks; it could be 13 weeks.  In either event, a full quarter is not 8 weeks so an employee’s wage and salary should be expected to be less than during the most recent full quarter. Is that really the intention of the CARES Act?  Or is it looking to compare the weekly or biweekly pay of the two periods and compare them to each? Please visit our Coronavirus Resource Center for related content. ### Part I: Accounting and Financial Reporting Implications of the CARES Act The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27 to address economic instability brought on by the pandemic. The CARES act was written to support individuals and businesses through various types of relief including loans, grants and tax changes. As companies begin to take advantage of these programs, a number of questions have surfaced related to the accounting and financial reporting implications. This article is a summary of some of the most important accounting impacts to date.Debt Below-market-rate loansThe CARES Act includes various loan programs, and caps the interest rate on certain loans to eligible businesses. For some borrowers, the interest rates may be considered below-market. While ASC 835-30, Imputation of Interest, provides guidance for imputing interest when financing is obtained at other-than-market terms, “transactions where interest rates are affected by the tax attributed or legal obligations, government guaranteed obligations, income tax settlements” are specifically excluded under ASC 835-30-15-3(e).  Therefore, a company would not be required to impute interest on a below-market interest rate loan from the government.Loan forgivenessFunds received through certain CARES Act provisions, such as the Paycheck Protection Program, may be eligible for forgiveness subject to certain restrictions. Forgiveness should be accounted for consistent with other government grant income discussed below. Historically, some companies have applied gain contingency accounting under ASC 450, Contingencies, to similar programs. Under this standard, a company does not recognize income related to the forgiveness until it is realized or realizable. We expect detailed guidance to be available soon.Government grants and payments for goods and servicesNot-for-profit entities will account for non-exchange transactions under ASC 958-605, Not-for-Profit Revenue Recognition, and exchange transactions under ASC 606, Revenue from Contracts with Customers. For-profit entities will also use ASC 606 for consideration received as payment for goods or services, although U.S. GAAP does not provide explicit guidance for situations in which the government is not a customer or paying on behalf of a customer. ASC 105, Generally Accepted Accounting Principles, prescribes the framework to apply when no guidance exists under U.S. GAAP for a particular transaction. Under this framework, companies should first look to apply guidance for a similar transaction within U.S. GAAP by analogy (ASC 105-10-05-2). If no such guidance exists, a company may consider non-authoritative guidance from other sources, such as International Financial Reporting Standards. Two standards that may be applicable by analogy are ASC 958-605 mentioned above or IAS 20 Accounting for Government Grants and Disclosures of Government Assistance. ASC 958-605 specifically excludes transfers of assets from governments to business entities, but that does not prevent a reporting entity from applying the standard by analogy. Payroll taxesThe CARES Act includes provisions allowing some companies to defer payroll taxes as well as take advantage of payroll tax credits. Companies that elect to defer payroll tax remittances should accrue the payroll tax liability and recognize the related payroll tax expense in the period incurred. Companies that take advantage of the payroll tax credit available in the CARES act generally should recognize the credit consistent with other government grants as discussed above.Relief for creditorsTDR accounting relief for lendersA group of banking regulators issued a joint statement on March 22 indicating that short-term modifications such as payment deferrals, fee waivers, and extensions of repayment terms that are insignificant and related to COVID-19 should not be considered troubled debt restructurings (TDRs). In order to be eligible for this relief, a loan modification must be 1) related to COVID-19; 2) modified between March 1, 2020 and the earlier of 60 days after the national emergency related to COVID-19 ends or December 31, 2020; and 3) executed on a loan that was not more than 30 days past due as of December 31, 2019. The FASB later confirmed that it agrees with the statement and the SEC’s Office of the Chief Accountant (OCA) released a statement noting that the SEC staff would not object to a conclusion that this TDR relief is in accordance with GAAP for the periods in which relief is available. The CARES Act also provides relief to certain lenders for loan modifications made in response to the COVID-19 crisis. There are currently some differences between the joint statement and the CARES Act, and further guidance is expected.Optional CECL deferralThe CARES Act allows insured depository institutions, bank holding companies, and their affiliates to defer the effective date of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which includes the current expected credit loss (CECL) methodology for estimating allowances for credit losses to the earlier of (1) the date that the national emergency related to COVID-19 ends or (2) December 31, 2020. The CARES Act includes specific criteria for determining whether an institution is eligible for this relief. The OCA released a statement noting that the SEC staff would not object to a conclusion that deferring the effective date of the CECL standard is in accordance with GAAP for eligible institutions.  The FASB is discussing the effect of the COVID-19 crisis on CECL, and new developments could occur.DisclosuresCompanies should consider disclosing the impact of any CARES Act provision used or expected to be used if the effect is material or expected to be material. Depending on the individual case, disclosures of significant terms and conditions of government assistance and accounting policies used to account for such assistance may be appropriate.Additional financial reporting changes will likely occur as the coronavirus crisis continues. Stay up to date by visiting Schneider Downs’ coronavirus resource page at /our-thoughts-on/category/Coronavirus. ### U.S. and Chinese Manufacturing Trends Made in America has not resonated more powerfully at any point in recent memory than it does now. With increasing concerns regarding goods manufactured in China and the 14 Asian Low-Cost Countries (LCCs) as defined and tracked by Kearney, governmental restrictions, and the recently enacted tariffs, consumers and manufacturers alike are showing preference for goods manufactured in North America.The Kearney U.S. Reshoring index is an annual report tracking domestic and international imports and exports. The Index analyzes trends in manufactured goods. The recently published 2019 Index shows a significant decline in the ratio of manufactured goods imported from Asian LCCs when compared to U.S. gross manufacturing output. The decrease is the first since 2011, and the most significant decrease since the index began tracking data in 2008.The ratio change was driven by a sharp decline in manufactured goods imported from Asian LCCs, which contracted from $816 billion in 2018 to $757 billion in 2019, a decrease of 7%. This was specifically driven by imports from China which saw a 17% decrease year-over-year, roughly a $90 billion reduction. Meanwhile, U.S. gross manufacturing output held steady, increasing from $6,217 billion in 2018 to $6,266 billion in 2019.Though the drop in the ratio indicates a preference for U.S. companies to source materials domestically, the modest increase in U.S. manufacturing gross output of 0.8% is the lowest increase since 2016 in both percentage and dollar amount. The slowed rate of increase is undoubtedly indicative of retaliatory trade tariffs placed on the U.S. Additionally, as Chinese manufacturing imports have declined, manufactured imports from Mexico and Vietnam have risen $13 billion and $14 billion, respectively, from 2018 to 2019. This indicates that U.S. companies have diversified supply chains from China to other low-cost countries.Just as the 2019 trade tariffs created a major disruption in Chinese and U.S. manufacturing trends, the global COVID-19 pandemic of 2020 will create interference in a new order of magnitude. At the time of this writing, the full context of the trauma is unknown. However, as 2019 events caused adjustment in trade balance, COVID-19 will require companies to profoundly reimagine their sourcing strategies. In the least, companies will be inclined to spread their risks through further diversification strategies rather than tempting fate by placing all of their sourcing in the lowest-cost bucket.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### During COVID-19, Cyber Fraud Does Not Take Time Off As the COVID-19 pandemic continues to change how organizations operate, a majority of our daily working lives and routines have been modified to function within the “new normal”. We are experiencing a great deal of disruption to business as usual and as a direct result, organized nation state and malicious threat actors are working overtime. History has shown that national emergencies such as the current pandemic tend to motivate cyber criminals, which is why it is no surprise that security product firm Barracuda Networks found a 667% increase in Coronavirus related phishing activity on traffic monitored during the first three weeks of March alone.Spear Phishing AttacksMalicious actors are using business disruptions to compromise users by exploiting the sense of urgency surrounding business processes to lure users into taking immediate actions through malicious links or attachments. While we know standard phishing attacks have a number of red flags, spear phishing attacks are more complex as they target specific individuals within an organization based on their presumptive job function based on criteria that can be easily found on professional networks like Linkedin and online business directories. These types of attacks can be extremely detailed and appear to come from a direct supervisor asking somebody to send a payment or a vendor requesting payment. The recent trend are emails requesting payments or citing late invoices due to COVID-19 business interruptions.While these threats aren’t new, with a February attack on popular Shark Tank personality Barbara Corcoran resulting in a loss of nearly $400,000, they are increasing as businesses continue to adjust functions and processes to the current pandemic. Remember, whenever you receive an email asking you for information or to take specific actions, especially payments, stop and ask yourself: Who is the email from? Check the senders email address to see if it matches what you expect. What the email is about? Review the email for details that seem suspicious. Why you are receiving the email? Substantiate the request with your supervisor on the phone or chat, even if the email appears to come from them. Business Email CompromiseThe FBI recently announced they are anticipating an increase of Business Email Compromise (BEC) attacks targeting municipalities that are purchasing supplies including personal protection equipment to combat COVID-19. As mentioned in a previous Our Thought’s On article on BEC attacks, malicious actors target email accounts related to individuals who have access to sensitive company information such as finances or W-2 information with the intention of tricking them into sharing records.  Malicious actors then try to spoof a company the business interacts with in an attempt to deceive the employee and obtain the targeted assets (data, money, etc.) without the employee being aware. The FBI has provided a list of warning signs and best practices online to help protect your organization from BEC scams.CARES Act Paper ChecksMalicious actors continue to exploit the uncertainty surrounding the CARES Act stimulus payments with a new focus on those waiting for paper checks.  While approximately 80 million US individuals are receiving direct deposits, millions are waiting on a physical check to be delivered. Phishing emails that masquerade as official government organizations offering to provide updates on the amount, shipping date, and information on the “second round” of payments in exchange for personal information are becoming commonplace. Some may even include links that lead to imposter sites mimicking official websites to capture personal and bank information. Remember, these scams are not just restricted to email, but can come in forms of texts (smishing) or phone calls. Our previous Our Thoughts On article provides an overview of other popular COVID-19 related consumer scams and best practices to avoid falling for them.COVID-19 Attack ThreatsA variation on extortion email threats are hitting inboxes targeting individuals who have had passwords leaked in prior breaches. Users will receive an email with the subject line indicating somebody has their password (i.e. Hi John, we know your password is __________) and goes on to state that unless a ransom is paid via bitcoin the sender will leak personal information and sensitive images from their computer. The new version of this email replaces threats of sharing personal files with threats of using your personal information to find you and infect your family with COVID-19. While we may roll our eyes at such a threat, we need to remember these individuals thrive on uncertainty and fear, two emotions that are at an all-time high during the current pandemic.How Can Schneider Downs Help?The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com.In addition, our Incident Response Team is available around the clock at 1-800-993-8937 if you suspect your organization is experiencing a network incident. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Wealth Management Concerns When Selling Your Business While there are a multitude of issues facing a business owner when they decide to sell their business, one of the most important areas that often gets overlooked is creating a financial plan.  The transition of having plenty of income from your business to meet your cash flow needs to one in which an investment portfolio now supports your spending needs can be a challenge for an owner after a sale.  The way to gain peace of mind on this issue and a road map for success is to create a detailed financial plan based on the facts of your current financial position.  While financial goals may differ from person to person, the process of creating a tailored financial plan to achieve your financial independence is the same.This process begins with assessing your current balance sheet, consisting of your various assets and liabilities including cash, taxable investments, retirement accounts, real estate, outstanding loans/debt, life insurance policies, and other personal and business assets. In addition to taking an inventory of your assets, a discussion should also be had regarding unique factors that play into your long-term investment strategy, including current age and your ability to stay disciplined in both up and down capital markets.Upon establishing your current financial position and investment considerations, you will then want to project forward various financial factors including your expected personal income, current and anticipated retirement expenses, and various other individual financial considerations.  This list should include all of your expected costs in the future such as new cars, children’s weddings, and annual vacations.  While we cannot predict exactly how your financial future will unfold, we can calculate a range of potential results based on likely scenarios. Once a financial base case has been established, you can then begin the value-add process of changing assumptions to assess their impact on your long-term financial plan. You will want to look to address the following “what if” questions, including: Will my current assets be enough to meet my long-term spending needs? If I retired earlier or later, what impact might that have on my investment portfolio in retirement? What if my income were to increase in the future?  What impact would that have on my financial position? What if I spend more during the first 10 years of retirement and then I reduce my spending later? What if my investment portfolio grows at a faster or slower rate than I anticipated? What is the corresponding impact to retirement age, spending, savings rates, etc.? At what age should I file for social security? What is the impact if I file before my full retirement age or after? This process will “stress test” your financial plan to make sure that it can handle a multitude of different scenarios and still take care of your spending needs for the rest of your life.  The process of analyzing your current financial position and projected financial future from an income, spending, and savings perspective greatly improves your chances of being successful over time. A financial plan, constructed as described, should serve as your financial road map and inspire confidence in achieving your long-term personal financial goals.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice.  Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice. ### The Value of Business Process Analysis in your Succession Plan Are you planning to exit your business in the next 5-10 years? Have you thought about succession plans for your business? Large companies typically incorporate succession planning into their performance management process. However, small to medium sized businesses are often less prepared and less likely to have an established succession plan. An adequate succession plan helps to prepare for a smooth transition to ensure that leadership or ownership changes don’t interrupt normal business operations or any major business initiatives underway. The transition plan may include the acquisition of new talent/management, a transition within a family business, or the sale of the company. Smaller businesses are more likely to over-rely on specific individuals, and the loss of one key person can have a wide impact. A key component in a small or mid-sized company’s transition process should include preserving institutional knowledge and identifying any skill gaps, which is essential if the same management team has been in place for an extended period of time. Whether business practices are newly developed or are long-standing within an organization, fresh eyes can help identify the existence of unmitigated risks and where improvements can be quickly realized, ahead of a transition. This can be accomplished through performance of a business process evaluation, which involves assessing all facets of the business, including policies, procedures, processes and controls, in order to provide transformational recommendations. These recommendations serve to mitigate risks within the organization, optimize business processes, and eliminate unnecessary waste and redundancies. Business process evaluations are designed to assess an organization’s governance, risk management and compliance practices with a specific focus on assessing the processes and internal controls intended to safeguard assets, properly account for revenues and expenses, and ensure strong governance is in place to ensure that the organization is adequately prepared and ready for the next phase of their transition plan. A business process evaluation involves interviews of personnel, review of documentation and observation of business practices. Accounting activities and reporting processes are evaluated as they relate to the accurate capture and reporting of key financial and performance information. The objective of the review is to provide actionable observations and recommendations intended to enhance the organization's processes and internal control. How Can Schneider Downs Help? Our team of risk advisory and information technology professionals assist our clients in optimizing and transforming their core business and information technology processes. We bring solutions to our clients’ issues through our Risk Assurance and Business Transformation Services. In addition to their technical expertise, our professionals are Six Sigma trained and have extensive experience conducting assessments across diverse industries. Our approach is risk-based and delivered by a multi-disciplinary team. We add-value to our clients’ business by improving their business processes through adoption of best practices. ### Fraud in the Retail Industry Due to COVID-19 The retail industry is at the center of the Coronavirus crisis.  While some retailers and their employees are being acknowledged for their essential role in serving their communities, their counterparts from stores within the same shopping center may not have a store to return to when this crisis subsides.  Unfortunately, history has shown that in crisis situations individuals may choose to act unethically to carryout fraud, and it is likely that during this crisis the same will be true.  While operating stores and shuttered operations each have unique issues related to fraud, in this article, we will focus on some of the factors related to fraud that are seen in stores that have remained open.   Fraud examiners rely on the model of the Fraud Triangle to investigate frauds that have occurred and also to assess the risk of fraud in a given situation.  Through years of experience retail organizations have built internal controls in response to their unique risk factors.  In the current crisis, the risk assessment that took place under normal operating circumstances may no longer be adequately assessing the risks the company faces.Donald Cressey first hypothesized the Fraud Triangle in the 1970s. It has since become a trusted model for understanding the factors associated with occupational fraud.  The Fraud Triangle focuses on three factors: Financial pressure – real or perceived financial pressure experience by the perpetrator Opportunity – access to systems or a breakdown in controls that allow the fraud to occur Rationalization – the fraudster is somehow able to justify their behavior in their own mind There is no shortage of financial pressure in today’s business environment.  How that pressure manifests itself on a personal or professional level is unique to the situation.  Companies may commit financial statement fraud to shift profits out of an already decimated first quarter to set-up a possible rebound in the second quarter.  Or, an unscrupulous executive may see the mounting losses related to COVID-19 as an opportunity to improperly characterize expenses in an attempt to salvage margin. The unique working arrangements many people find themselves in today were not likely to have been included in a fraud risk assessment performed prior to this pandemic.  Those arrangements may lead to an opportunity for occupational fraud due to a changes in the process for merchandise procurement, review, approvals, inventory counts, return authorizations, or more. The volume of on-line orders for some retailers has increased dramatically due to the virus, and some small retailers have implemented or enhanced their online services, but controls to mitigate fraud may not have kept up with the increased activity.  For example, card-not-present fraud losses have steadily increased over the years and given the increased volume of transactions it may present the opportunity for more fraudulent orders to make it through established controls.  Another scheme that may take longer to detect given the volume of online orders is so called “friendly fraud” where a customer orders and actually receives a shipment, but then claims the charge was not authorized or that they did not receive the product and requests a chargeback.        Rationalization is a deeply personal reaction to the circumstances the individual finds themselves in, but with widespread job losses managers and executives may fear for the security of their jobs if they don’t meet financial or operational goals.  Or, an individual who feels they are “owed” something from the company, for example if they were due to receive a bonus until the financial turmoil hit, may rationalize their fraud to get what they feel they are owed.Uncertainty in times like these requires communities and businesses to continue working together to meet the challenges ahead. Schneider Downs is committed to helping our clients navigate the uncertainties their businesses face due to the coronavirus and other issues.  If you have any questions or need assistance, please reach out to us, we are happy to help.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### ESOPs as a Business Succession Planning Solution Schneider Downs Retirement SolutionsBusiness owners approaching retirement face a complex set of succession planning decisions, such as how to find a buyer for the business and how to properly position the company for post-transition success.  Whatever the owner’s ultimate succession planning goal, an employee stock ownership plan (“ESOP”) should be considered as one potential solution.An ESOP is a tax-qualified retirement plan designed to invest primarily in stock of the sponsoring employer.  In a typical ESOP transaction, a business owner sells shares to the ESOP in exchange for a partial cash payment combined with a note that will be repaid over a period of time (typically 5 – 15 years, although longer payoff terms may be necessary if the transaction involves outside financing).  Note payments are financed by contributions from the sponsoring company, and shares held by the ESOP are gradually released to the accounts of ESOP participants – the company’s employees – as the note is repaid.  Upon maturity, the seller will have received full payment of the sales proceeds and beneficial ownership of the shares will have been transferred to the employees, who qualify to receive cash payments for the shares allocated to their accounts upon retirement.  An ESOP thus presents a potential “win-win” solution for both the owner and the employees of the company: the ESOP empowers the owner to cash out of the business without the need to attract an outside buyer, and also provides employees with a retirement benefit that can serve as a powerful retention and performance incentive.In addition, an ESOP transaction also presents opportunities for tax and estate planning. If eligible for tax deferral under Section 1042 of the tax code, the owner can defer taxation on any gain realized from the sale of shares to an ESOP by reinvesting the sale proceeds in qualified replacement property.  If the reinvested sale proceeds are held through the owner’s death, the replacement property passes to the owner’s heirs with stepped-up basis, effectively eliminating any taxation on the ESOP sale altogether.  An ESOP also presents certain tax advantages to the company, since contributions to fund note repayments are tax-deductible.  In addition, companies organized as S corporations can experience substantial tax savings, since an ESOP holding S corporation shares is not taxed on any K-1 income passed through from the business.While a powerful succession planning tool, ESOPs are not appropriate in every situation.  The following table summarizes some of the variables that factor into deciding whether an ESOP transaction may be appropriate. Variable ESOP May Not Be Appropriate ESOP May Be Appropriate Desired transition candidate Owner wants to keep business in family. Owner wants to transition ownership to employees.  Timing of sale proceeds Owner wants the bulk of sale proceeds to be paid up-front. Owner is willing to take a seller note that stretches sale proceeds over a period of years. Business management Current workforce not qualified to successfully run the business in the owner’s absence. Current workforce includes capable and qualified management candidates. Volatility of company performance History of volatile performance, with unpredictable cashflow year over year. Steady performance with predictable cashflow. Capital expenditures Company anticipates substantial capital expenditures in near term. Company does not anticipate substantial capital expenditures in near term. Size of workforce Small workforce; 25 or fewer employees. Larger workforce, preferably 50 or more employees. Availability of outside financing Company is maxed-out on available credit and would have difficulty obtaining outside financing to fund the ESOP transaction. Company is able to obtain additional financing to fund at least a portion of the ESOP transaction without violating existing lender covenants. For all their potential benefits, ESOPs also come with certain drawbacks that should be considered carefully.  ESOP transactions tend to involve significant up-front costs that may not be required in connection with alternative forms of transaction.  Typical ESOP-related costs include the need to conduct a feasibility study to ensure the company’s ability to service ESOP debt, and the cost of retaining independent trustees, appraisers and other advisors as required to comply with applicable prohibited transaction exemptions.  Another potential drawback is that an ESOP may not be able to offer transaction terms - such as share price and the interest rate and payment term of any deferred portion of the sale proceeds - as generous as those offered by outside buyers.  (Note, however, that any less-favorable transaction terms can be at least partially offset by the issuance of warrants to the seller in conjunction with the ESOP transaction.)If you have any questions about whether an ESOP might be an appropriate solution for your business succession planning, reach out to Jason Lumpkin or Shad Fagerland from the Retirement Solutions group. ### Employee Benefit Deadlines Postponed Through July 15, 2020 By Shad FagerlandSenior Manager of Retirement SolutionsSchneider Downs Retirement Solutions  IRS Notice 2020-23 extends certain tax-related deadlines until July 15, 2020, including the deadline to file personal and corporate income tax returns and pay associated taxes. In addition to tax filing deadlines, the relief under Notice 2020-23 also applies to certain “time-sensitive actions” listed in Rev. Proc. 2018-18. The table below discusses those time-sensitive actions that may be of interest to employers who sponsor employee benefit plans.The deadline for any actions below with an original deadline or due date falling between April 1, 2020 and July 14, 2020 is extended until July 15, 2020:Form 5500 FilingDeadline for filing Form 5500 for employee benefit plans. (Generally, the deadline for filing Form 5500 is the due date for the plan sponsor’s tax return, including extensions. This relief will impact certain plans sponsored by employers with non-calendar year tax years where the plan sponsor’s extended tax return is due between April and July.)Participant LoansRequirement that participant loans from a qualified plan be repaid within 5 years. (In other words, an extension of plan loan repayment terms will not cause the loan to be disqualified even if the repayment pushes the terms of the loan beyond 5 years. Note that under the CARES Act, additional plan loan relief may apply to participants impacted by the COVID-19 crisis.)Cafeteria PlansCafeteria plan elections (must be made before start of plan year) and forfeitures (e.g., grace period for use of FSA amounts before they are forfeited).IRA ContributionsDeadline for contributions to an IRA to be made attributable to the preceding tax year.RMD RulesRequired beginning date for required minimum distributions from a qualified plan or IRA. ESOP Diversification ElectionsDeadline for qualified ESOP participants to file a diversification election and for ESOPs to process a diversification election once received (ESOP has 90 days after receipt of election). 401(k) Elective DeferralsDeadline to distribute excess deferrals after end of plan year.Rollovers60 day deadline (after receipt of distribution) to make a rollover contribution.Plan ContributionsDeadline for plan contributions to be attributable to preceding plan year (must be made by due date for plan sponsor tax return, including extensions).ESOP DistributionsDeadline for starting ESOP distributions (1 year after end of plan year for distributions upon retirement, death, disability; 5 years after end of plan year for other distributions).QACA DistributionsDeadline to elect withdrawal from automatic contribution arrangement (90 days after first contribution).Qualified Replacement PropertyDeadline for selling shareholder in a section 1042 ESOP transaction to purchase qualified replacement property.Plan CorrectionsDeadline for self-correction of operational failures.If you need more information, please reach out to any of your contacts at Schneider Downs or contact Shad Fagerland (sfagerland@schneiderdowns.com) or Jason Lumpkin (jlumpkin@schneiderdowns.com) directly.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Amazon Web Services (AWS) Best Practices For a Successful SOC 2 Examination For Software as a Service (SaaS) companies operating in Amazon Web Services’ (AWS) cloud environment, there are a number of AWS best practices that should be considered in order to improve security and meet certain SOC 2 trust services criteria (TSC). When Schneider Downs performs a SOC 2 examination, we typically look for the following controls and configurations to be in place: Use Multifactor Authentication (MFA) for the Root User Account – The root account is the most privileged user in an AWS environment. With MFA enabled, a user signing in to an AWS website via the root account will be prompted for the account password as well as for the authentication code they’ll receive on their AWS MFA device. For stronger security, it’s recommended that a hard token device be used rather than a soft one (e.g., authenticator on a mobile device). AWS supports both methods. Store the Root User Account Password in a Secured Password Vault – Due to the critical nature of this password, there should be at least two highly privileged users who have knowledge of it. Since the password is shared, it should be stored in a secured vault so that its usage can be tracked. If someone with knowledge of the password leaves the organization, the password should be changed. Use MFA for all Identity Access Management (IAM) Users who have Console Access – Enabling MFA provides increased security for console access, since it requires the user to have both knowledge of a credential and possess a device that emits a time-sensitive key. Depending on the number of users, it could become problematic if hard tokens are used for MFA, since those devices may frequently be misplaced. If you’ve configured AWS to use single sign-on through another service, such as G Suite, ensure that MFA is turned on for the authentication service you’re using. Only Use the Root User Account when the Root User is the Only User Who Can Perform the Action – The root account should only be used for specific actions, a list of which can be found here at https://docs.aws.amazon.com/general/latest/gr/aws_tasks-that-require-root.html. Configure Strong IAM Password Policies – Complexity (use of upper and lowercase letters, numbers and symbols), minimum length, password expiration and prevention of password reuse should all be enforced. Some requirements – including minimum length – can be relaxed depending on the use of MFA. If MFA is in use and minimum length is set to a minimum of 14 characters, for instance, complexity, password expiration and password reuse restrictions do not have to be enforced. As with above, if you’ve configured AWS to use single sign-on through another service, ensure that appropriate password controls are set for the authentication service you’re using. Use Groups to Assign Permissions to IAM Users – Groups like Admin, Developers, Read-Only and Test should be created, with specific unique permissions. Once these groups are established, IAM users should be assigned appropriately, based on the principle of least privilege. Use Security Groups to Restrict Traffic Flow to your Virtual Private Cloud (VPC) – A security group acts as a virtual firewall. For each group, one set of rules controls inbound traffic to instances, while a separate set controls outbound traffic. After creating a security group, ensure you change the default rules. Monitor CloudTrail Log Files with CloudWatch Logs – Several CloudTrail events should be monitored. CloudWatch alarms can be configured to alert appropriate personnel when specific activity occurs. Examples of events that should be monitored include S3 API  calls made to bucket policies; deletion of an S3 bucket; security group configuration changes; network gateway changes; VPC changes; creating, terminating, starting, stopping or rebooting an Elastic Computing (EC2) instance; creating, updating or deleting a CloudTrail trail; stopping CloudTrail; AWS Console sign-in failures; unauthorized API calls; IAM policy changes; root account logins; and any AWS Console sign-in without MFA. Protect CloudTrail Logs – CloudTrail logs should be stored in a dedicated and centralized S3 bucket, where strict security controls access and segregation of duties can be enforced. Only authorized users should have access. The bucket should be configured to require MFA to delete. Use Correct Policies and Ensure S3 Buckets are not Publicly Accessible – Unless explicitly required for anyone on the internet to be able to read or write to them, S3 buckets should not be public. Run AWS Trusted Advisor on a Regular Basis – Trusted Advisor performs best practice checks and recommendations across five categories: cost optimization, security, fault tolerance, performance and service limits. Running this tool on a regular basis, documenting the review of the results, and making changes as necessary will show your auditor that you have a process in place to monitor for vulnerabilities. Use Amazon Machine Images (AMI) – An AMI provides the information required to launch an instance. This is essentially equivalent to creating a server-hardening standard. When a new EC2 instance is launched, an AMI can be specified to ensure the instance has the appropriate configurations in place. Deploy Critical Application Components across Multiple Availability Zones and Replicate Data and AMIs – Amazon EC2 is hosted in multiple locations worldwide and is composed of Regions and Availability Zones. Resources are not replicated across Regions unless configured otherwise. Although rare, failures can occur that affect the availability of instances that are in the same location. If all instances are hosted in a single location that’s affected by a failure, none of the instances would be available. Keep AWS Account Owner Contact Details Up to Date and Map Contact Information to Multiple Individuals – This ensures that important communications from AWS, such as breaches of the Acceptable Use Policy and security breaches, are communicated to multiple members of your organization and not overlooked. ### What do I do after I receive my Paycheck Protection Program (PPP) Funds? You have gone through the process of applying with your bank for the Paycheck Protection Program (PPP) and you’ve been approved. Now, what should you do with the money?As you recall, when applying for this loan, there is an opportunity to have 100% of the loan forgiven and, unlike other loans, having this loan forgiven will not be taxed for federal income tax purposes. The states are still considering the impact of the loan forgiveness, but you still need to focus on maximizing the forgiveness offered.Spending the FundsOnce the first installment of the loan proceeds is received from your lender, you have eight weeks to spend the money on qualifying expenses. In order to qualify for loan forgiveness, proceeds of the PPP may be used for: Payroll costs as defined in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Continuation costs of group health care benefits Payment of retirement benefits Rent and utilities Mortgage interest payments on real and personal property (but not for prepayments or principal payments) Interest payments on other debt incurred before February 15, 2020 (although these amounts are not eligible for forgiveness) Refinancing a SBA EIDL Loan Documentation for the PPP and Loan ForgivenessThe first thing an organization should do is speak with their lender and understand what the lender will require after the eight weeks to substantiate the loan forgiveness. Organizations will need to provide the documentation to the lender at the end of the eight weeks.One way that companies can segregate the funds is to set up a separate bank account to easily track the usage of funds. In addition, consider adding detail to your accounting system to track related costs separately, by either creating a special designation in your general ledger or by a unique identifier in the account number. As soon as the money is received, and the eight week period begins, all eligible expenses should be tagged to the new accounts or cost centers. Make sure the accounting department retains any additional documentation that the lender requires and that you might not already routinely track. Also consider having preliminary discussions with your payroll provider to ensure that you can easily extract any required payroll information, or if payroll is maintained in-house, evaluate what you will need to track separately.Employee Count and CompensationFull loan forgiveness will require the organization to maintain employee headcount AND compensation levels or eliminate any reductions that occurred prior to April 26, 2020.For additional information on the provisions related to headcount and compensation leve.s, see Schneider Downs’ previous Our Thoughts On article: Paycheck Protection Program – Loan Forgiveness at:/our-thoughts-on/paycheck-protection-program-loan-forgivenessApplying for Loan ForgivenessAfter the eight-week period is over, you will need to submit a request to the lender who is servicing the PPP loan. The request should include all documents supporting the funds that were spent, number of employees and compensation levels. The lender will have 60 days to decide on forgiveness. We recommend being in communication with the lender early and often to determine the lender’s required or expected loan forgiveness documents and procedures. As with most of the content within the CARES Act, we expect the required documentation requirement to continue to evolve in the near term, and so we encourage you to maintain all documentation, and to apply additional scrutiny to all proceeds spent using PPP Funds.Schneider Downs is here to provide support for you and your organization during this volatile period. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content.   ### Pennsylvania Tax Officials State that Teleworkers Will Not Create Nexus for State Taxes Stay-at-home orders in effect across the country have forced a large portion of the American work force to work from home. Businesses transitioning their normal operations from an office environment to working from home in employees’ residences could possibly create state income tax nexus that would trigger a state tax obligation that the company would not otherwise have. States are beginning to release guidance stating that temporary telecommuting employees as a result of the COVID-19 pandemic will not create nexus; these declarations are being made as a form of economic relief to employers.Telecommuting nexus had been a hot-button issue in state taxation prior to the pandemic. Before the pandemic, some states, including Pennsylvania, considered the presence of a telecommuting employee as an income tax nexus-creating activity by an employer. In order to ease business obligations during these volatile times and in response to the large shift to employees now working from home, many state tax departments have stated that temporary telecommuting employees will not create nexus during the pandemic.Recently, the Pennsylvania Department of Revenue has stated that employees temporarily working from home as a result of the COVID-19 pandemic will not be a basis by which the Department imposes nexus on taxpayers for Corporate Net Income Tax. The Department released this guidance through their Find Answers page where the Department provides customer service to taxpayers. The Department will likely be releasing formal guidance on the issue in the upcoming weeks.Pennsylvania joins Mississippi, New Jersey and the District of Columbia, which are proactively relaxing their enforcement of nexus created by temporary telecommuting employees. It is likely that additional states will continue to issue guidance with similar treatment. The Tax Advisors at Schneider Downs will continue to monitor these developments.Subscribe to Schnieder Downs Our Thoughts On blog for updates on tax implications and government economic relief provisions related to the coronavirus pandemic.Please visit our Coronavirus Resource Center for related content. ### COVID-19 Employer Payroll Tax Deferral FAQ Issued by IRS – Combining PPP and Payroll Tax Deferral The CARES Act allows for multiple tax strategies for companies to manage cash flow during the COVID-19 pandemic. As discussed in a previous Schneider Downs Our Thoughts On article, CARES Act - Delay of Payment of Employer Payroll Taxes, the CARES act allows for a deferral of the employer-paid portion of the Social Security tax on wages paid between March 27, 2020 and December 31, 2020. This deferral allows employers to pay 50% of the balance by December 31, 2021 and the remaining 50% by December 31, 2022. Additionally, the CARES Act provides the Paycheck Protection Program. The “PPP” allows businesses to receive a 100% federally guaranteed loan to assist in keeping workers employed during the pandemic. The CARES Act had appeared to make the payroll tax deferral and PPP exclusive of each other. However, thanks to a new frequently asked questions section released by the IRS on Friday, April 10, 2020, we have a clearer idea of how the payroll tax deferral and the PPP will work together. The IRS will update the frequently asked questions section as additional questions arise.Combining PPP and Employer Payroll Tax DeferralCurrently, the IRS FAQs include 11 questions, of which question 4 and question 9 provide particularly good guidance. Question 4 provides additional guidance on whether an employer can defer their share of social security tax without penalty if they have received a PPP loan that is not yet forgiven. An employer is not eligible for a deferral if they have indebtedness forgiven under the PPP. However, question 4 verifies that the employer may defer the amount up until the PPP loan indebtedness has been forgiven. As detailed in Schneider Downs’ article, Summary of the Paycheck Protection Program, this should allow for at least eight weeks of social security tax to be eligible to be deferred while the employer is waiting for the PPP loan to be forgiven.Question 9 relates to self-employed individuals who must pay the combined employee and employer amount of the social security tax. Question 9 confirms that self-employed individuals will be eligible to defer the Social Security tax on wages paid between March 27, 2020 and December 31, 2020. As mentioned in our prior OTO article, this provision does not provide any relief in the form of tax credits, but it may help with cash flow management in the near term.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Update on Main Street Lending Program This article was updated on April 14, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (COVID-19).  On April 9, 2020, the Federal Reserve announced that it would provide up to $2.3 trillion in loans to support the economy.  This funding will assist households, businesses and state and local governments struggling to deal with the COVID-19 pandemic.The part of the package that impacts Schneider Downs and its clients is the Main Street Lending Program (Main Street), which provides up to $600 billion in loans to small and mid-sized businesses.Main Street is meant to cover mid-sized businesses, not covered by the Paycheck Protection Program (PPP).  The Main Street program is for U.S. businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues that were in good financial standing before COVID-19.The Federal Reserve has not released a timeline, but interested parties may comment on these new programs through April 16, 2020.  Additional details on the Main Street application process should then be available after that date.  A Federal Reserve official has indicated that it would take two to three weeks to get the Main Street program up and running through the banks, which may indicate a potential starting date for Main Street applications of May 1, 2020.If you have any questions regarding the Main Street program, first reach out to your bank and other lenders about whether you can apply for Main Street funding through these institutions.  If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com).Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Coronavirus Relief Provisions for the Real Estate Industry – Recent Developments Recent developments related to the COVID-19 crisis have had a sweeping impact across the nation, including economically. At this time, about 95% of the country is under stay-at-home orders. The massive reductions in travel and discretionary spending by consumers have created an abundance of cash flow issues for businesses across the spectrum. Government authorities are starting to roll out measures effectively aimed at assisting cash flow challenges for individuals and businesses.For example, on April 1, Ohio Governor Mike DeWine signed an executive order requesting that landlords suspend rent payments and evictions for 90 days for small business commercial tenants facing hardship due to the pandemic. Governor DeWine is also requesting that lenders provide a 90-day forbearance on real estate loans (2020-08D).Almost every state has followed the federal government’s lead in extending their April 15 tax filing and payment deadlines to July 15. Ohio and Pennsylvania are two of the states conforming to the federal due date change. The District of Columbia is also offering taxpayers an additional 90 days after April 15, 2020 to file and pay. Along with these due date changes for tax filings, first and second quarter estimated tax payments for independent contractors and businesses are delayed until July 15, 2020 in those states and in the District of Columbia .President Trump signed into law on March 27, 2020 the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2.2 trillion stimulus package containing many taxpayer-friendly provisions. The Internal Revenue Service (IRS) has also issued separate guidance for the benefit of the real estate industry. Several of these provisions are summarized below:Small Business Loans: Small Business Administration (SBA) loans of $350 billion have been made available through the Paycheck Protection Program and there are ongoing discussions at the government level about supplemental funding. Schneider Downs recommends reaching out to your banker as soon as possible to apply for these SBA loans  . To apply you will likely need to gather a variety of financial and investor information. The maximum loan amount is $10m. The principal and one percent interest of these loans can ultimately become forgivable if used toward “forgivable purposes.” Such forgivable purposes would include payroll, interest payments on mortgages, rent/lease and utility payments. For more information see our recent OTO on Loan Forgiveness. Qualified Improvement Property Correction: The infamous qualified improvement property “restaurant/retail glitch” was a drafting error in the Tax Cuts and Jobs Act (“TCJA”) causing landlords and owners of non-residential real estate to generally depreciate their interior renovations over 39 years. The lawmakers behind TCJA did not have intentions of changing the 15-year life on these types of improvements, causing them to be ineligible for full expensing in the year of completion. However, this was not properly reflected in the final statute, and congressional gridlock prevented a technical correction of the law. The CARES Act amends the statute to allow taxpayers to claim the full amount of the deductions, as originally intended. If you or your businesses had significant non-residential interior renovations, please reach out to your tax advisor to  see if you might be eligible for additional depreciation deductions. For more information see our recent OTO on Qualified Improvement property (QIP). Interest Deduction Limitation Change: The CARES Act increases the limit on business interest expense under Section 163(j) to 50% of the taxpayer’s tax basis earnings before depreciation, amortization and interest deductions (ATI). Previously, under TCJA, this limitation was 30%. Additionally, the CARES Act allows taxpayers to use 2019 ATI in calculating the 2020 limitation anticipating operational losses and what would be lower deductions in 2020.   Some taxpayers elected out of these limitations in 2018 by making an election to be a real property trade or business. Taxpayers were required to defer certain depreciation deductions as a trade off, but often the benefit of deducting the entire interest expense outweighed that. See this previous Schneider Downs Our Thoughts On article for more information on business interest deductions: (/our-thoughts-on/limitation-on-business-interest-deductions). The IRS has since issued guidance that permits taxpayers to retroactively revoke their previously irrevocable Section 163(j)(7) election. This allows taxpayers to revisit their election in order to be able to claim additional depreciation deductions as a result of the previously discussed correction to the definition of qualified improvement property. This is a significant opportunity for landlords to amend their 2018 or 2019 tax filings and receive cash refunds from the government. Qualified Opportunity Fund Investment Extension In Notice 2020-23, the IRS has provided taxpayers additional time to fund their investment into qualified opportunity funds (QOFs). Generally, the investor would need to fund their investment in the QOF within 180 days of realizing the capital gain that they wish to defer. If this 180-day deadline fell between April 1 and July 15 of 2020, the IRS is now allowing these investors until July 15 to fund the investment. For more information see our recent OTO Qualified Opportunity Fund investment extension. Like Kind Exchange Rollover Extension Similar to the timing extension that the IRS provided to QOF investors, taxpayers currently engaged in a like kind exchange now have until July 15 if the taxpayer’s window to either identify or acquire the property falls between April 1 and July 15 of 2020. Section 461(l) Loss Limitations Business loss limitations were enacted under TCJA that would impact an individual taxpayer who incurred business losses greater than $250k if filing single, or $500k if married filing jointly. Under the CARES Act, these limitations are retroactively waived to 1/1/2018. If your business losses were limited in 2018 due to Section 461, this would be an opportunity to amend prior-year returns to claim the excess business losses. Payroll Tax Credits: Section 2301 provides for a tax credit for employee retention for those employers continuing to pay qualifying wages during a Suspension or Gross Receipts Decline. The credit amount depends on a business’s size, but it can be up to $5k per employee. Net Operating Loss Changes: Under the TCJA, net operating loss rules generally disallowed NOL carrybacks. Losses under TCJA could be carried forward indefinitely, but could only offset 80% of taxable income. Under the CARES Act, losses incurred in 2018, 2019, 2020 can be carried back five years or carried forward, if electing to waive the carryback period. CARES allows losses carried to years 2019 or 2020 to offset 100% of taxable income. If you or your company has experienced losses that could offset taxable income in other years, reach out to your tax advisor to  see how these rules may apply. For more information see our recent OTO on Net Operating Loss Changes. There are many areas of the new law that could benefit from more legislative guidance and clarity. That said, the new laws should generally be considered as taxpayer-friendly.Schneider Downs Tax Advisors are actively monitoring all new legislation, so be sure to check back to the Our Thoughts On  blog for new developments. If you are interested in taking advantage of any of the above-mentioned tax provisions, please reach out to Schneider Downs Tax Advisors  to learn more. ### PPP Supplemental IFR This article was updated on April 14, 2020.  Updates to this article will be made as new information becomes available.Important Update on the Payroll Protection Program under the CARES ActSchneider Downs continues to track the evolving landscape of Federal financial programs offered due to the disruption of the coronavirus (“COVID-19”).  On April 14, 2020, the U.S. Small Business Administration (“SBA”) published a supplemental Interim Final Rule (“IFR”) relating to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness under the CARES Act.  This IFR provides guidance for individuals with self-employment income as well as clarifications regarding eligible businesses.The following article summarizes some of the key points of the supplemental IFR that are either new or provide clarification to previous guidance.Self-Employed Individual GuidanceEligibilitySelf-employed individuals are eligible if they: Were in operation on February 15, 2020; Had self-employment income (such as independent contractor or sole proprietor); Had a principal place of residence in the U.S.; and Filed or will file a Form 1040, Schedule C for 2019. The SBA will issue additional guidance for individuals with self-employment income who were: (a) not in operation in 2019, but were in operation as of February 15, 2020; and (b) will file a 1040, Schedule C for 2020.However, a partner in a partnership cannot submit a separate loan application for themselves.  Instead, the self-employment income of active partners may be reported as payroll costs (up to $100,000) on the partnerships PPP application.  The SBA also points out that participation in the PPP may effect eligibility for state-administered unemployment compensation/assistance.Maximum Loan AmountThe determination of the maximum loan amount is dependent upon whether or not there are employees.No Employees Identify net profit from line 31 of the 2019 1040, Schedule C.  If this amount is greater than $100,000, reduce it to $100,000; Determine average monthly net profit (i.e., divide Step 1 by 12); Multiply Step 2 by 2.5; and Add any EIDL loan made between January 31, 2020 and April 3, 2020 to be refinanced, less the amount of any advance under an EIDL COVID-19 loan. The following documentation must be submitted with the PPP application for self-employed individuals: 2019 1040, Schedule C (regardless of whether or not the 2019 tax return has been filed); 2019 1099-MISC detailing non-employee compensation received, invoice, bank statement, or book of record that establishes self-employment; and 2020 invoice, bank statement, or book of record to confirm operation on or around February 15, 2020. Employees1. Compute payroll by adding as follows:a. Identify net profit from line 31 of the 2019 1040, Schedule C.  If this amount is greater than $100,000, reduce it to $100,000;b. 2019 gross wages and tips paid to employees with a principal place of residence in the U.S.  This is determined using 2019 IRS Form 941 Taxable Medicare wages and tips (line 5c – column 1) for each quarter plus pre-tax employee contributions or other fringe benefits excluded from the Taxable Medicare wages and tips.  Subtract any amounts paid to an employee in excess of $100,000 (annualized).c. 2019 employer health contributions (health insurance component of 1040, Schedule C, line 14), retirement contributions (1040, Schedule C, line 19) and state and local taxes assessed on employee compensation. 2. Determine average monthly net profit (i.e., divide Step 1 by 12); 3. Multiply Step 2 by 2.5; and 4. Add any EIDL loan made between January 31, 2020 and April 3, 2020 that you wish to refinance, less the amount of any advance under an EIDL COVID-19 loan.  The following additional documentation must be submitted with the PPP application for self-employed individuals with employees: 2019 1040, Schedule C, Form 941, and state quarterly wage unemployment insurance tax reporting forms for each quarter in 2019; and Evidence of any retirement and health insurance contributions. Loan Uses: How Can the Loan Proceeds be Used?The following are approved uses of loan proceeds for self-employed individuals: Owner compensation replacement (based on 2019 net profit as discussed above);  Employee payroll costs as defined by the interim final rule issued on April 2, 2020; Mortgage interest payments on any business mortgage obligation on real or personal property, business rent payments, and business utility payments: However, you must have claimed or be entitled to claim a deduction for such expenses on the 2019 1040, Schedule C.  Expenses incurred between January 1, 2020 and February 14, 2020 cannot be considered for individuals with income from self-employment in 2019 (although, as mentioned above, additional rules for those not in operation in 2019, but in operation on February 15, 2020 are forthcoming); Interest payments on any other debt obligations incurred before February 15, 2020 (although these amounts are not eligible for forgiveness); or Refinancing a SBA EIDL Loan. Loan ForgivenessUp to full amount of both principal and interest (the CARES Act originally limited loan forgiveness to principal) can be forgiven if used for forgivable purposes. However, not more than 25% of the forgiven amount may be for non-payroll costs.  The amount of actual loan forgiveness will depend, in part, on the total amount spent over the covered period (i.e., 8 weeks after loan disbursement) on: Payroll including salary, wages, and tips up to $100,000 annualized pay per employee; Covered benefits for employees (but not owners); Owner compensation replacement based on 2019 net profit with forgiveness is limited to 8/52 of 2019 net profit, but excluding any qualified sick/family leave equivalent amount for which a credit is claimed under Section 7002 or 7004 of the Families First Coronavirus Response Act; Payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020 to the extent they are deductible; Rent payments on lease agreements in force before February 15, 2020 to the extent they are deductible; and Utility payments under service agreement dated before February 15, 2020 to the extent they are deductible. The required documentation for loan forgiveness should include: If you have employees, Form 941 and state quarterly wage unemployment tax reporting forms; Evidence of business rent, business mortgage interest, or business utility payments; and 2019 1040 Schedule C to determine the amount of net profit allocated to the owner. Clarification Regarding Eligible BusinessesThe supplemental IFR provided additional information on businesses eligible for a PPP loan: Eligible businesses owned by directors or shareholders of a PPP lender are generally permitted to apply for a PPP loan through the lender with who they are associated subject to a few conditions; For example, a PPP lender may not provide a PPP loan to a director or officer that is a key employee of the PPP lender, however the director or officer may obtain a PPP loan from another lender.  Businesses with legal gaming revenue that: (a) did not exceed $1 million in 2019; and (b) comprised less than 50% of the business’s 2019 total revenue are eligible; If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Waives Accelerated Sales Tax Payments Amid COVID-19 Pandemic Pennsylvania Governor Tom Wolf announced businesses would not be required to make accelerated tax payments for the months of April, May and June 2020.  There will be no penalties charged for missing prepayment deadlines during this three-month period.  The waiver is intended to assist Pennsylvania businesses that are currently closed with their cash flow during the COVID-19 pandemic. As such, taxpayers will just have to remit the sales tax they collected during the prior month on the respective due dates of April 20, May 20 and June 22. Pennsylvania Department of Revenue Secretary Dan Hassell stated that the Department will continue to work with the governor in identifying other steps that the Department can take to help the business community during this crisis.The Department reminds taxpayers that while the Department’s call centers are closed during the pandemic, taxpayers can submit questions electronically via the Online Customer Service Center or review the Department’s responses to commonly asked questions at revenue-pa.custhelp.com.If you have any questions, please consult with your state and local tax professional. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Paycheck Protection Program – Loan Forgiveness Schneider Downs continues to track the evolving landscape of Federal Financial Assistance Programs offered due to the disruption of the coronavirus pandemic (“COVID-19”). The CARES Act Paycheck Protection Program (“PPP”) under the Small Business Act is one of the key parts of the Federal government’s relief efforts. Below is a summary of the PPP Limits on Amount of Forgiveness (Section 1106 (d)): The intent of the CARES Act and more specifically the Paycheck Protection Program (PPP) was to help employers maintain their workforce and pay employees during these unprecedented times.  With applications now being accepted and approved for the PPP, our focus is on the business decisions business owners should consider in maximizing forgiveness of the PPP loan. The Interim Final Rule regarding the PPP was issued on April 2, 2020 and notes that the SBA will issue additional guidance on loan forgiveness; the information below is based on information available as of April 14, 2020. Allowable uses of loan proceeds A borrower is eligible for loan forgiveness for the sum of allowable payroll and non-payroll costs incurred and payments made during the covered period. The covered period is defined as an 8-week period starting the day the borrower receives the first disbursement of the PPP loan. Lenders are supposed to make the first loan disbursement ten (10) calendar days after loan approval. For additional information on allowable uses, see Schneider Downs’ previous Our Thoughts On article: Important Update on the Payroll Protection Program Under the CARES Act at: /our-thoughts-on/update-on-payroll-protection-program Reduction of Forgiveness Even if during the covered period the borrower uses all of the funds for allowable payroll and non-payroll expenditures, forgiveness under Section 1106 (d) can still be limited for either or both of the following reasons: Reduction of Number of Employees A reduction of the number employees will be calculated by dividing the number of average monthly full-time equivalent (FTE) employees during the covered period by the average monthly FTE employees during one of two periods at the borrower’s election: February 15, 2019 through June 30, 2019; or January 1, 2020 through February 29, 2020. However, if the employer is a seasonal employer as determined by the Small Business Administration (SBA), the borrower is required to use the period from February 15, 2019 through June 30, 2019. Example: Assuming that the borrower selected the period of comparison for determining average monthly FTE to be February 15, 2019 through June 30, 2019. If during that period (February 15, 2019 through June 30, 2019) the monthly average FTE employees was 100 employees, but during the covered period the borrower’s monthly FTE employees was 80 employees, then the borrowers forgiveness is limited to 80% of the allowable uses (payroll and non-payroll) plus the reduction of salary and wages as described below, if any. Reduction Related to Salary and Wages The reduction of salary and wages is related only to employees who did not earn an annualized wage or salary of $100,000 during any period in 2019, according to Section 1106(d)(3)(B). If total wages or salary for those employees is reduced in excess of 25% during the covered period in relation to the most recent full quarter during which the employee was employed before the covered period, the borrower’s forgiveness will be further reduced by the excess. Example: Assume that the borrower had one (1) employee and their covered period started on April 1, 2020. In addition, during the most recent full quarter, which in this case would have been the period from January 1, 2020 through March 31, 2020, the one (1) employee’s annual wage and salary were $80,000 or approximately $1,538 weekly. If during the covered period, the employee’s average weekly salary and wage was less than $1,154 (or $9,232 total) the borrower would be subject to a reduction of forgiveness     Annual Salary Weekly Salary Equivalent 8-Week Salary and Wages Most recent full quarter        $80,000          $1,538         $12,308 Covered Period           60,000            1,154             9,231 Reduction         $20,000             $385          $3,077 % of Original Salary 75.0% 75.0% 75.0% Exemption of Forgiveness There is an exemption from the reduction to loan forgiveness discussed above for re-hiring of employees if: A reduction occurred between February 15, 2020 and April 26, 2020 (30 days after the date of enactment of the CARES Act); and That reduction is eliminated by June 30, 2020. If the employer experienced a reduction, the borrower will calculate FTE employees and salary and wages as of February 15, 2020 and April 26, 2020. If FTE employees and/or salary and wages have decreased between the periods, then in order to qualify for the exemption, the employer must eliminate that reduction(s) no later than June 30, 2020. It is important to note that there is no $100,000 salary and wage threshold for employees in the exemption of forgiveness. Below is a table of circumstances that a borrower might have experienced during the period from February 15, 2020 through April 26, 2020, and how a borrower might remediate the circumstance to qualify for the exception. Scenario 1 Scenario 2 Scenario 3 Period Workforce Salary and Wage Workforce Salary and Wage Workforce Salary and Wage February 15, 2020 through April 26, 2020 Reduction Reduction Same Reduction Reduction Same   Not later than June 30, 2020 Must be eliminated Must be eliminated No action Must be eliminated Must be eliminated No action   If the borrower experiences the circumstances noted above and eliminates the reduction(s), then there is no reduction of forgiveness for either the reduction of FTE employees or reduction of salary and wages noted previously. Lastly, the SBA and the Secretary of the United States of America Department of Treasury may prescribe regulations granting de minimis exemptions from the requirements. Please visit our Coronavirus Resource Center for related content. ### COVID-19 and the Equity Risk Premium Used in Business Valuation COVID-19 persists in affecting nearly everything, including business valuation.  We continue to monitor developments in the economic landscape at large, as well as within the business valuation community.  One thing that we have all witnessed is that COVID-19 has added uncertainty and therefore, more risk to the U.S. and worldwide economies. A primary business valuation method that is impacted by COVID-19 is the Income Approach, which is based on the principle that the fair market value of an entity may be measured by the present value of its future cash flows.  The present value is calculated through the use of a discount rate.  A discount rate is the way an investor reflects the risks of an investment.  In simple terms, the higher the risk, the higher the rate of return required. One element of the discount rate that has been directly impacted by COVID-19 is the equity risk premium (“ERP”).  An ERP reflects the additional return that investors demand for investing in equity securities, as a group, relative to risk-free investments. One measure of an equity risk premium is regularly provided by Duff & Phelps.  Effective March 25, 2020, Duff & Phelps increased its ERP estimate from 5% to 6%, an increase of 20%.  The rise in the Duff & Phelps ERP reflects some of the additional economic and financial risks of COVID-19 to investors.  An increase in risk, and required rate of return to investors through the ERP, with no other changes in expected cash flow, will generally lower the value of a business. As COVID-19 continues to impact both Wall Street and Main Street, we will continue to assess the situation and the impact on business valuation.  If you would like to discuss opportunities for gift and estate planning during this unprecedented time or have other business valuation questions, please feel free to reach out. Schneider Downs has significant experience in preparing business valuations for gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@schneiderdowns.com) or Thomas D. Pratt (412-697-5615; tpratt@schneiderdowns.com) for more information about our business valuation services. ### Considerations for Transitioning Your Business There are several things a business owner should consider before deciding how they would like to transition their business to the next generation, company management or outside private equity.  In many cases these considerations should be thoughtfully considered in connection with a business owner’s estate plan.  This will allow for the movement of appreciating assets prior to their increase in value and allow for an exit event to fund trusts that may be established to hold those assets.In addition to estate planning considerations, there are other operational matters that should be addressed to avoid potential due diligence issues that could arise during a sale or other type of exit event.  If these items arise at that point of the process, they can often impact the overall value of the organization and, depending on the magnitude of the issue, it could kill the deal process.Other areas to address include quality of financial statement information, evaluation of internal control processes, IT security effectiveness including disaster recovery plans and testing, as well as the timing of when a transition event would ultimately occur.  It is critically important that you are able to work with a trusted advisor to ensure that you are prepared to address these issues and confidently respond to potential buyers’ questions related to a variety of areas.  Often, just going through the process of evaluating various areas of your business can lead to greater self-awareness of improvement and efficiency areas in your business that you may not otherwise consider, as well as leading to greater clarity of your overall goals.Schneider Downs has a team of experienced and qualified advisors who assist clients in these areas.  Please contact your Schneider Downs advisor or the individuals listed on our website to start a discussion. ### PCAOB Releases Staff Spotlight Reminding Audit Firms of Responsibilities During COVID-19 Crisis Amid the evolving challenges and looming economic impacts of the COVID-19 pandemic, the PCAOB Staff released a Spotlight document reminding auditors of their responsibilities to identify, assess, and respond to risks of material misstatement and adhere to professional standards. The document primarily discusses the impact that the pandemic might have on an auditor’s risk assessment procedures, the execution of the audit, and potential impacts to client financial statements. Potential impacts to the auditor’s report and firms’ quality control considerations are also briefly discussed.Risk AssessmentThe PCAOB reminded auditors that the risk assessment process is not a discrete phase of an audit but rather a continual process that should be evaluated continuously over the course of the engagement. As new risks related to the pandemic emerge, auditors should consider these risks and design procedures that will adequately address them. Possible risks to consider include: Changing incentives or increased pressures on management that might lead to new fraud risks Changes or increased pressures on processes, systems or controls that might give rise to increased risk of error As a result of these changes, initial responses to previously assessed risks might not be adequate, and revised procedures should be considered. If changes to the planned audit strategy or identified risks are significant, these changes are required to be communicated to the audit committee.Execution of the AuditThe COVID-19 crisis may cause additional challenges in completing the audit, such as delays by management in responding to auditors’ inquiries or limited access to company personnel or information. These factors, along with a modified risk assessment, should cause the auditor to consider the following when modifying audit procedures or designing additional audit procedures: Consider obtaining audit evidence of a different form. Reliability of such evidence should be evaluated. Enhancing direction and supervision of less-experienced team members Increasing the involvement of more senior or experienced team members in performing procedures related to complex issues Involving, or increasing the involvement of, specialists Presentation and DisclosureAlthough the economic effects of the COVID-19 crisis on companies might vary widely, depending on industry, geography, or other factors, the auditor should evaluate and challenge management’s presentation of the financial statements, including the disclosures. The PCAOB specifically highlighted the following areas likely to be impacted: Subsequent events disclosures Going concern evaluation and disclosure Asset valuation, including impairment triggers and related assessments Accounting estimates, particularly those related to fair value measurement Revenue recognition, particularly with regard to contract modifications Leases Hedging Income taxes Provisions, allowances, and loss contingencies Debt modifications or restructuring Debt covenants, other regulatory ratios, and minimum net capital requirements for broker-dealers Disclosures related to liquidity, risks or uncertainties Lastly, the Spotlight discusses potential impacts to the auditor’s report, such as the auditor’s determination and reporting of critical audit matters (CAMs), and firms’ quality control considerations in light of the COVID-19 pandemic. For additional details, the PCAOB Staff Spotlight document can be found here: https://pcaobus.org/News/Releases/Pages/PCAOB-staff-provides-reminders-audits-nearing-completion-COVID-19.aspxPlease visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### IRS Issues Guidance on Option to Change §163(j) Elections for Real Estate and Farming Businesses With recent tax law changes contained within the CARES Act, including a technical correction to the definition of Qualified Improvement Property (QIP) and modifications to the limit of deductible interest expense under Section 163(j) of the Internal Revenue Code, many taxpayers have begun to ask whether there will be any provision that allows for the withdrawal of a prior election to "opt-out" of the interest limitation.Most notable among those taxpayers are property owners that placed in service significant renovations since the effective date of the Tax Cuts and Jobs Act that now meet the corrected QIP definition. Those owners are realizing substantially reduced tax benefits from the corrected definition as a result of the election to be exempt from the interest limitation rules, and might not have made an election had the retroactive QIP definition been in effect as of the TCJA.On April 10, the IRS issued Revenue Procedure 2020-22, providing guidance on the election to be exempt from the interest limitation rules under IRC Section 163(j) for real property trades or businesses and farming businesses, and allowing certain taxpayers the option to withdraw an election or to make a late election for tax years beginning in 2018, 2019 or 2020. To change or to make a late Section 163(j) election, a taxpayer must file a timely amended tax return, amended form 1065 or administrative adjustment request (AAR), as applicable, for the taxable year on or before October 15, 2021 and any affected succeeding tax years.To withdraw an election to be exempt from the interest limitation rules under Section 163(j), a taxpayer will determine its depreciation expense in accordance with Section 168 as if the election to be exempt from the Section 163(j) interest limitation rules had never been made, and include an election withdrawal statement with the amended return.A taxpayer may make a late election to be exempt from the interest limitation rules under Section 163(j) provided the taxpayer was qualified to have made the election in that tax year. The taxpayer must also include any adjustments to taxable income for the late election including the determination of depreciation for certain property in accordance with the alternative depreciation system with the amended tax return.If you’re interested in learning more about the new provisions allowing for a withdrawal of an election out of Section 163(j) interest limitation rules or to make a late election for the 2018, 2019 or 2020 tax years, or any other strategies to maximize the tax benefits of real estate ownership, contact a member of the Schneider Downs Real Estate Team or email contactsd@schneiderdowns.com.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Ohio Programs Update This article was updated on April 10, 2020.  Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus pandemic (“COVID-19”).   The following are some of the many resources available for impacted small businesses in Ohio due to COVID-19. Schneider Downs can assist your organization with any of these programs. In addition to the small business federal financing programs such as the Payment Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), there is a multitude of other resources for small businesses impacted by COVID-19 that can provide financial relief. The following are some of the many COVID-19 resources available for impacted small businesses in the Central Ohio area. State of Ohio Programs and Information The Ohio Development Services Agency has created an Office of Small Business Relief The Ohio Development Services Agency has created an Office of Small Business Relief to help coordinate and find new support to help employers survive the impacts caused by the coronavirus pandemic. This department can help navigate applying for disaster loans or stimulus funds, understanding regulations and accessing Small Business Development Centers and other forms of assistance. The website can be found here: https://business.ohio.gov/wps/portal/gateway/business/home/!ut/p/z1/04_Sj9CPykssy0xPLMnMz0vMAfIjo8ziDRw9PT0sLQz8_EP9zAwc_bzdgi0tjAz9nY31w_Wj9KPwKTGCKcABHA30C7KzAwFWcl1u/dz/d5/L2dBISEvZ0FBIS9nQSEh/ Job Search Lt. Governor Husted announced that the Governor’s Office of Workforce Transformation has developed a website specifically geared toward matching essential businesses with Ohioans who are able and willing to work as an essential employee during the COVID-19 crisis. Both essential businesses and current job seekers can visit Coronavirus.Ohio.gov/JobSearch to post and search. The site features a highly-streamlined interface with only two main links – one for essential businesses, and one for job seekers. Applicants can search through jobs in their area, their region, or the entire state. The website can be found  here: https://coronavirus.ohio.gov/wps/portal/gov/covid-19/employers-and-employees/CoronavirusJobSearch/ Ohio Bureau of Workers’ Compensation The Ohio Bureau of Workers’ Compensation will defer business premiums for March, April and May 2020.  While payments are deferred until June 1, 2020, the state could reassess before then. FAQs from the Ohio Bureau of Workers’ Compensation can be found here: Coronavirus and Unemployment Insurance Benefits FAQs from the Ohio Department of Job and Family Services can be found here: http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm?fbclid=IwAR1TvrdQew5Ze6orqygYb2UoW5WysBOSeDT69vaRAJ9KGRvFDF8UG7lw2OY Health Insurance Coverage Flexibility The Superintendent of Insurance has issued the following requirement of insurers: Employee Eligibility – Insurers must permit employers to continue covering employees under group policies even if the employee would become ineligible due to a decrease in hours worked per week. Grace Period for Premiums – All health insurers are required to provide the option of deferring payments without interest for up to 60 days from each original premium due date. Continuation Coverage – For employers with 20 or more employees, as long as one person is actively employed, eligible employees can continue coverage under COBRA. For employers with less than 20 employees and at least one active employee, eligible employees may elect to continue coverage for up to 12 months. Special Enrollment – Employees who lose coverage are eligible for a special enrollment period and premium subsidies may be available. Full details can be found here: https://iop-odicontent.s3.amazonaws.com/static/Legal/Bulletins/Documents/2020-03.pdf Ohio Department of Jobs and Family Services – Shared Work Ohio Program A voluntary layoff aversion program which allows workers to remain employed and employers to retrain staff during times of reduced business activity.  Under this plan: A participating employer reduces affected employees’ hours in a uniform manner; The participating employee works the reduced hours each week; and ODJFS provides eligible individuals an unemployment insurance benefit proportionate to their reduced hours. In order to qualify, companies are required to: Have at least two affected, full-time employees; Be current on all Ohio unemployment insurance; and Agree to the program requirements. More details can be found here: http://jfs.ohio.gov/ouio/SharedWorkOhio/ The Ohio Liquor Control Update The Ohio Liquor Control Commission passed an emergency rule which allows restaurants with liquor licenses, that are still offering carry-out meals, to also be permitted to sell and deliver alcohol, including high-proof liquor in limited quantity, for off-premises consumption. Under the rule, patrons can purchase no more than two drinks per meal.  All drinks must be closed and remain closed during transport as per the open container law cited in ORC 4301.01(B)(6). Drinks cannot contain more than two ounces of spirituous liquor per container. Breweries can also now sell beer and wine that are not their own without a food purchase, but food purchase is required for the sale of high-proof liquor. This rule will remain in effect for up to 120 days unless rescinded by the Liquor Control Commission, whichever occurs first. Ohio Department of Commerce – One-Time Liquor Buyback Bars and restaurants can return unopened, high-proof liquor products (obtained within the past 30 days) to the agency where they purchased the product. This is also available to those with temporary (F2) permits for events scheduled between March 12 and April 6, 2020.  Instructions can be found here: https://myemail.constantcontact.com/UPDATED-PROCESS--Wholesale-Return-Requests.html?soid=1102307935227&aid=Qgw_kAcrofU The Ohio Department of Transportation (ODOT) ODOT is modifying the process for haulers carrying heavy loads of essential foods.  While oversized loads usually require advanced permission, haulers can download and print a permit at https://transportation.ohio.gov/wps/portal/gov/odot/. Hauling Permits The Ohio Department of Transportation is modifying the permitting process for haulers carrying heavy loads of essential goods to waive a requirement for advanced permission. This will allow more haulers to exceed certain weight and size restrictions for loads of items such as food, non- alcoholic beverages, medical supplies and cleaning products. For information, and to download the permit, visit transportation.ohio.gov. Tolling of Deadlines for Mechanics' Liens Included in Ohio Coronavirus Relief Bill On Wednesday, March 25, 2020, the Ohio General Assembly passed Am. Sub. H.B. 197 (“H.B. 197”), which provides measures for emergency relief to families, schools, businesses and communities during the COVID-19 pandemic. Included in that relief is a mandatory tolling of various criminal, civil and administrative deadlines that will impact both active litigants, as well as essential businesses that are continuing to operate during these uncertain times. Ohio Governor Mike DeWine signed the bill into law on March 27, 2020. Of particular importance for the construction industry, H.B. 197 will toll the time period for recording and serving mechanics’ liens pursuant to Ohio Revised Code Section 1311. Notably, Section 22 of H.B. 197 includes a catchall provision that tolls any other criminal, civil, or administrative time limitation or deadline under the Revised Code.” Since the time periods for filing of mechanics’ liens are strict requirements set forth in the Ohio Revised Code (e.g., R.C. 1311, et seq.), this enactment will directly impact the deadlines for both recording and serving the affidavits for mechanics’ liens and other related documents, such as notices of commencement, notices of furnishing and notices to commence suit. Accordingly, it is important for anyone involved in the construction industry to be mindful of these issues, including, but not limited to, owners, developers, contractors, vendors, suppliers and laborers. TOLLING APPLIES ONLY DURING THE “EMERGENCY PERIOD” Importantly, the tolling of these statutory deadlines applies only to deadlines that fall between March 9, 2020 and July 30, 2020. This time period corresponds to the date of Governor DeWine’s declaration of a state of emergency in Ohio due to the COVID-19 pandemic. The tolling will expire on the date that Governor DeWine rescinds the emergency order or July 30, 2020, whichever is sooner. Unless further legislative action is taken to extend this protection, the tolling period will end on July 30, 2020 at the latest – sooner if Governor DeWine lifts his state of emergency order before July 30, 2020. Funding Opportunities at The Columbus Foundation The Columbus Foundation has activated its Emergency Response Fund.  The fund assists nonprofits who are responding to COVID-19 and experiencing financial challenges as a result of that response.  Nonprofits can apply at the following website: https://columbusfoundation.org/coronavirus-emergency-response-fund DVI Funding (National Program) The Coronavirus Financial Bridge Loan Program provides unsecured cash loans up to $100,000 to U.S. Citizens nationwide.  To review the program and start the pre-approval process, please visit the link below. https://www.dvifunding.com/coronavirus Honeycomb Crowdfunded Small Business Relief Loan (National Program) To help deliver the working capital that businesses need, Honeycomb is offering 45-day payment free periods,  6-month interest-only periods and reducing posting, success and investor fees. For more information on the loan program, please visit the link below. https://www.honeycombcredit.com/relief ### Allocations of Relief Funds for Higher Education Institutions Released by Department of Education Institutions of Higher Education were allocated approximately $14 billion as part of the Higher Education Emergency Relief Fund that was included in the Coronavirus Aid, Relief and Economic Security Act signed into law by President Trump on March 27. The funds, intended to assist in preventing, preparing for and responding to the coronavirus, are to be disbursed directly to institutions using the existing Title IV distribution system.On April 9, Secretary of Education Betsy Devos posted a letter to college and university presidents providing guidance on the required use of the funds. Included in her letter is a link to a Certificate of Funding and Agreement that all institutions are required to sign and return via the Department of Education’s G5 system in order to access their emergency assistance funding. The agreement can be found at https://www.grants.gov/web/grants/applicants/registration.html.          The Department also posted the formula allocations it used to determine amounts, which include the total allocation by institution as well as the minimum allocation to be awarded for emergency financial aid grants to students. This information can be found at https://www2.ed.gov/about/offices/list/ope/allocationsforsection18004a1ofcaresact.pdfInstitutions must use at least 50% of the funds to provide students with emergency financial aid grants to help cover expenses related to the disruption of campus operations as a result of the coronavirus. Additional guidance on these requirements is expected to be forthcoming.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### This Too Shall Pass; Start Planning Now As the toll of COVID-19 continues to climb, businesses large and small are feeling the impact of the virus. President Trump’s “15 Days to Slow the Spread” campaign has been extended through at least April 30, 2020, and most state and local governments have implemented consistent or more restrictive measures in efforts to “flatten the curve.” Many businesses have limited operations or shut down completely. And while any return to “normal” may seem far off at this point, companies should begin planning for the eventual reopening of the economy now.Many businesses have designated cross-functional pandemic response teams to address internal and external matters related to human resources, health and safety concerns, operations, information technology, and communications. A “pandemic” or other crisis management team at your organization could be charged with carefully monitoring critical work-related situations and will enable a quick response if warranted. Teams like these can also start to plan for the safe return to normal operations.On April 8, 2020, the CDC updated its guidance for essential workers who are returning to work after exposure to suspected or confirmed COVID-19 cases. Recommendations include measuring the employee’s temperature, regular monitoring for other symptoms, having the employee wear a mask at all times and continuing social distancing and cleaning protocols. Visit https://www.cdc.gov/ for the latest information and guidance on COVID-19.Automotive parts manufacturer Lear Corp., meanwhile, has published a 51-page “Safe Work Playbook” that outlines the practices it’s employed during the pandemic, a summary that may be helpful in reopening your own business when it’s safe to do so or when government mandates are lifted. Some of Lear’s protocols include screening employees and visitors for potential signs of illness and isolating employees who become ill at work, along with suggestions for advanced social distancing practices, such as staggered shifts. You can download Lear’s Safe Work Playbook at https://www.lear.com/Site/Company/Safe-Work-Playbook.aspx.To use an old phrase, this too shall pass, and businesses should be preparing for the new normal. Careful planning now will help smooth the transition for businesses, as well as their customers and employees alike.Visit the Schneider Downs coronavirus resource page at /our-thoughts-on/category/Coronavirus for more related content.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### SEC Issues Compliance and Disclosure Interpretations Related to COVID-19 Public Filing Extension As discussed in a previously published article “SEC Extends Reporting Relief for Public Companies Impacted by COVID-19”, the SEC has extended the filing periods for certain public company reports due to the impact of COVID-19. Additionally, on March 31 the commission’s Division of Corporation Finance published two new compliance and disclosure interpretations (C&DIs) in conjunction with the extended filing periods. To ensure public understanding of the requirements that must be met in order to receive the extension, further guidance has been issued.  In summary, C&DI 135.12 and 135.13 detail that if a company is unsure it can meet the deadline to file its Form 10-K, Form 10-Q or even file a Form 12b-25 (notification of public filing), one stipulation must still be met to qualify for the extension: a Form 8-K or 6-K, as applicable, must be filed by the later of March 16, 2020 or the original due date of the report. Even if a company has already filed a Form 12b-25 on time, it will not qualify for the extension without filing a Form 8-K or 6-K in the time range as stated by the order. Companies that do not meet the conditions outlined by Order No. 34-88465 (COVID-19 Order) and are late on their filing deadlines will be subject to collateral consequences. By requiring companies to issue a Form 8-K or 6-K in a timely manner, despite allowing extensions for other regulatory forms typically being filed between March 1 and April 30, the SEC ensures that entities are keeping current investors informed until normal public filings are issued. Even with filing extension relief, organizations will still face the challenge of staying on top of plans to address any material risk to their operations resulting from COVID-19. More information on the interpretative guidance on the filing extensions for the SEC can be found at https://www.sec.gov/divisions/corpfin/guidance/exchangeactrules-interps.htm#135.12 ### Qualified Opportunity Zones Deadlines Extensions for Qualified Opportunity Zone Deadlines during COVID-19 PandemicAs the COVID -19 pandemic continues to instill uncertainty throughout the country, real estate investors involved in qualified opportunity zones (QOZs) have received some relief regarding one of two key deadlines. Until recently, these deadlines jeopardized building projects that are currently suspended due to state mandated shutdowns. Additionally, developers are faced with disruption throughout their supply chains and difficulty in obtaining building permits as local government agencies remain closed.On April 10, 2020, the IRS issued Notice 2020-23 that included extending the 180-day deadline for investors to reinvest their capital gains into qualified opportunity funds (QOF) to July 15, 2020. For this automatic extension to apply, a taxpayer’s 180-day deadline must fall between April 1, 2020 and July 15, 2020.Another important deadline for QOFs that has not been commented on by the IRS or Treasury Department is the requirement for the QOF to hold at least 90% of its assets in a qualified opportunity zone (QOZ). If this 90% threshold fails on a testing date, the QOF could face severe consequences with penalties. However, there are regulations that provide relief to cure a defect that prevents the QOF from meeting the 90% threshold. Currently, there is a six-month period for which the QOF can attempt to cure the defect that caused the entity to fail. This six-month window to alleviate the defect can only be utilized once by the QOF. In addition to the six-month cure period, under Sec. 1400Z-2(f)(3), a qualified opportunity fund can assert a defense of reasonable cause if the QOF becomes subject to a penalty for failure to satisfy the 90% investment standard due to circumstances beyond its control.As new updates are released from the IRS and Treasury Department, Schneider Downs will continue to monitor all developments related to qualified opportunity zones.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act and or the Families First Coronavirus Response Act.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Manufacturers – Call to Action Amid the growing COVID-19 crisis, Governor Tom Wolf is encouraging all Pennsylvania manufacturers that produce or have the ability to produce critical medical supplies and products to submit information regarding their capabilities to the recently created Pennsylvania Manufacturing Call to Action Portal. As indicated on the state’s website, the portal was developed by the Pennsylvania Department of Community & Economic Development (DCED) to: “Match manufacturers and distributors to fill specific supply chain needs to meet increasing demands for medical supplies and related products. Assist manufacturers that have workforce needs or gaps and aid them in identifying skilled workers. Identify manufacturers that can pivot or innovate to fulfill the demand for medical supplies and related products.” Wolf said, “We’re asking everyone to do their part to mitigate the spread of COVID-19, including ensuring that our health care system is prepared to care for patients and that there is access to critical personal protective equipment and products as more individuals and businesses take preventive measures…Throughout our commonwealth’s history, our manufacturing sector has answered the call to move us forward and contributed tremendously in times of turbulence. I call upon our private sector to be a part of the solution to this crisis.” With the information gathered through the Portal, the DCED will work to identify opportunities for the state’s manufacturers to help in this critical time of need. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES Act Net Operating Loss Guidance Issued The Tax Cuts and Jobs Act of 2017 reduced the ability of most businesses to carry-back net operating losses while providing for unlimited carryforwards.  As a result of COVID-19, and the government’s desire to help struggling businesses, recently enacted legislation (commonly referred to at the CARES Act) modifies the Net Operating Loss (NOL) rules (see our article, CARES Act - Modifications for Net Operating Losses).  In summary, the CARES Act restores the ability to carryback losses for 2018, 2019, and 2020.  However, special guidance was needed for certain special situations.  Late in the afternoon of April 9, 2020, the IRS released additional guidance related to these situations.First, Revenue Procedure 2020-24 provides guidance for taxpayers wishing to waive the five-year carryback provision.  A taxpayer may elect under §172(b)(3) to waive the carryback period for an NOL arising in a taxable year beginning in 2018 or 2019.  However, in many instances, returns have already been filed for those tax years and the general rules provide it is too late to file a timely election to forego the carryback period.  However, the notice provides guidance that allows, when desired, an election to forgo a carryback can be made no later than the due date, including extensions, for filing the taxpayer’s Federal income tax return for the first taxable year ending after March 27, 2020.  Taxpayers make the election by attaching a separate statement for each of the taxable years 2018 or 2019 for which the taxpayer intends to make the election to its Federal income tax return filed for the first taxable year ending after March 27, 2020.  The election statement must state that the taxpayer is electing to apply §172(b)(3) under Rev. Proc. 2020-24 and indicate the taxable year the election applies.  Once made, the election is irrevocable.  For tax returns already filed for 2018 and 2019, this procedure alleviates the need to file amended returns for those years when there are no other changes to those returns.alleviates the need to file amended returns for those years when there are no other changes to those returns.  Second, Rev. Proc. 2020-24 also provides guidance for fiscal year taxpayers with an NOL and having a taxable year beginning before January 1, 2018 and ending after December 31, 2017.  Taxpayers in this instance can make an application by filing either Form 1045 or Form 1139, as applicable, with respect to a carryback of such NOL.  Under this special rule, a taxpayer will be treated as having timely filed the election if the application is filed no later than July 27, 2020.  Similarly, elections can be made to (i) waive any carryback period, (Ii) to reduce any carryback period, or 9iii) revoke any election made under § 172(b) to waive any carryback period; taxpayers will be treated as timely filing these elections if filed no later than July 27, 2020Finally, in Notice 2020-26, the IRS will grant a six-month extension of time to file Form 1045 or Form 1139, as applicable, for taxpayers with an NOL that arose in a taxable year beginning during calendar year 2018 and ending on or before June 30, 2019.  While these NOL’s can be claimed filing amended returns (Form 1040-X or Form 1120-X), many taxpayers choose to file using the more quick tentative refund filing options using Form 1045 for individuals and Form 1139 for corporations.  The extension of time provided under Notice 2020-26 is limited to requesting a tentative refund to carry back an NOL and does not extend the time to carry back any other item.  For example, in the case of an NOL that arose in a taxable year ending on December 31, 2018, a taxpayer normally would have only until December 31, 2019, to file the Form 1045 or Form 1139, as applicable.  Due to this relief, a taxpayer will now have until June 30, 2020, to file the Form 1045 or Form 1139.To take advantage of the extension of time provided by the notice, a taxpayer must perform the following actions:(a) File the applicable form no later than 18 months after the close of the taxable year in which the NOL arose (that is, no later than June 30, 2020, for a taxable year ending December 31, 2018); and(b) Include on the top of the applicable form “Notice 2020-26, Extension of Time to File Application for Tentative Carryback Adjustment.”If you have any questions regarding the above or any other COVID-19 legislation, do not hesitate to contact a member of Schneider Downs & Co., Inc.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Form 5500 Filing Relief for Filings Due Before July 15, 2020 The IRS issued Notice 2020-23 which includes Form 5500, Annual Return/Report of Employee Benefit Plan due to be filed between the period April 1, 2020 through July 15, 2020.  The relief is pursuant to Form 5500’s that were either due to be filed originally or through an extension.  The relief due date for filings has been extended to July 15, 2020.  It is an automatic extension in which taxpayers do not need to file official extension forms or send other documents requesting the relief.  However, additional filing extensions beyond July 15 must be requested using the appropriate extension form by July 15, but the extension may not go beyond the original or regulatory extension date.  The IRS filing relief for Form 5500 comes through Rev. Proc. 2018-58 . Notice 2020-23 states that Specified Time Sensitive Actions are covered and refers taxpayers to Rev. Proc. 2018-58 which explicitly includes Form 5500.  This relief does not include calendar year end 2019 Form 5500 filings due July 31, 2020. Source: https://www.aicpa.org/interestareas/employeebenefitplanauditquality/newsandpublications/2020/ebpaqcalertno446.html ### Coronavirus Small Business Financial Relief Options - Updated This article was updated on April 10, 2020. Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses whose operations have been disrupted by the coronavirus pandemic (“COVID-19”).  This is a summary of resources and programs that are available, specifically to small businesses. Schneider Downs can assist with any of these programs. In addition to the small business federal financing programs such as the Payment Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), there is a multitude of other resources for small businesses impacted by COVID-19 that can provide financial relief. The following are some of the many COVID-19 resources available for impacted small businesses in the Pittsburgh area. The Pittsburgh Foundation Emergency Action Fund The Emergency Action Fund will address the immediate and long-term impacts of COVID-19 by providing funding in four areas: Operating support for small and mid-sized nonprofit organizations (annual budgets under $5 million) serving communities with predominantly low-income households. Funding will be awarded to assure that these organizations can continue to meet the basic needs of the people in their communities, particularly relating to food and housing insecurity, and to cover losses associated with the disruption of their operations. Organizations that manage emergency funds that provide direct financial assistance to individuals impacted by COVID-19. Support for Federally Qualified Health Centers and other community health facilities. Small arts organizations (and individual artists) that have had to cancel productions scheduled between March 1 and June 30, 2020. ELIGIBILITY: Nonprofits applying for funding must: Have a current 501(c)(3) status or a fiscal sponsor with this designation. Serve residents of Allegheny, Westmoreland or Beaver counties. GRANT AWARD AMOUNTS: The Pittsburgh Foundation expects that the needs generated by this pandemic will exceed the available funds. Grant amounts are expected to range from $5,000 to $25,000 and will be reviewed on an ongoing basis. Larger grants will be reviewed on a case-by-case basis. Grants will be awarded on a rolling basis. GRANT TIMELINE: The goal is to provide funding decisions within 15 business days of application. https://pittsburghfoundation.org/eaf-grant-guidelines Urban Redevelopment Authority of Pittsburgh The Urban Redevelopment Authority of Pittsburgh (URA) announced that it is taking the following steps to help mitigate the unprecedented potential economic ramifications of COVID-19 on Pittsburgh’s small business community. The URA is halting ALL loan payments for the month of April 2020 for URA small business borrowers, including automatic loan payment withdrawals from borrowers’ accounts. The URA is temporarily easing and streamlining its Micro-Enterprise Loan Program to provide 0% loans to existing and new URA small businesses. Details of the Micro-Enterprise Loan: Up to an additional $15,000 Loan proceeds may be used for rent, payroll, and other approved fixed monthly business expenses 0% interest rate, no fees 3-year term, six months of no payments, 2½-year fully amortizing terms after payment deferral period For existing small businesses (not startups) located in the City of Pittsburgh For more information on URA emergency small business funding programs, please visit the link below. http://www.ura.org/pages/covid-19 Hebrew Free Loan Association Pittsburgh The Coronavirus Financial Bridge Loan Program provides interest-free loans on a nonsectarian basis for up to $5,000 to residents of Allegheny, Beaver, Butler, Westmoreland, Washington, and Armstrong counties who are facing financial challenges caused by the Coronavirus/COVID-19 outbreak. These loans are intended to address: Lost wages due to being unable to go to work Childcare costs due to school closures Small business losses Canceled study abroad programs Related medical costs Loan applicants must provide written substantiation of these costs. These loans are repayable in monthly installments of $150–$250 depending on the size of the loan. Repayments begin two months after the loan is received. A cosigner is required for all loans unless the borrower is a homeowner with a credit score of 670+. If the borrower or cosigner is married, both spouses must borrow/cosign together. DVI Funding (National Program) DVI Funding’s Coronavirus Financial Bridge Loan Program provides unsecured cash loans up to $100,000 to U.S. citizens nationwide. These loans are intended to address: Lost wages due to government-mandated shutdowns Childcare costs due to school closures Small business losses Shelter Expenses (Rent, Utilities) Food Assistance Medical bills ?Loan applicants must provide verifiable proof of income and have a minimum annual income of $30,000. Loans are repayable in monthly installments and amount will depend on the amount of the loan. Honeycomb Crowdfunded Small Business Relief Loan (National Program) To help deliver the working capital to businesses, Honeycomb is offering 45-day payment-free periods, six-month interest-only periods, and reducing posting, success, and investor fees. Options include: Option 1 Borrow $10,000-$50,000 in working capital 45-day payment-free period 3.75% interest rate over an initial 6-month interest-only payment period 5% interest rate over a 3-year fully amortizing loan after the interest-only period No pre-payment penalties Option 2 Borrow $10,000-$25,000 in working capital 45-day payment-free period 3.75% interest rate over an initial 6-month interest-only payment period 7.5% interest rate over a 3-year fully amortizing loan after the interest only period No pre-payment penalties For more information on Honeycomb Credit’s loan program, please visit the link below. https://www.honeycombcredit.com/relief Bridgeway Capital Bridgeway Capital’s COVID-19 Response Fund makes flexible financing available to help small businesses manage business disruptions and sustain vital services during the COVID-19 pandemic. The loan program is designed to help businesses with under 50 employees that are experiencing negative economic impacts in industries hit hard by the public health crisis. For more information on the loan program, please visit the link below. https://www.bridgewaycapital.org/loans-and-modifications/covid-19-response-fund/ Progress Fund The Progress Fund provides financing from $20,000 to over $1 million to people who are starting, expanding or buying small businesses. These loans can be used to: Purchase property, restore and rehabilitate buildings, purchase inventory or equipment Buy the assets of an existing business For working capital The interest rate is variable based on the risk of the project. Terms are typically five to fifteen years. An origination fee and various closing costs are charged. Application for the Progress Fund Loan can be found at: https://www.progressfund.org/small-business-loans/ Washington County Council on Economic Development Washington County offers various loan programs, including a Pennsylvania SBA Microloan and a West Virginia SBA Microloan up to $50,000 and a Manufacturing Loan Program up to $100,000. http://washingtoncountypa.org/loan-programs/pennsylvania-sba-microloan/ Kiva If you’re a small business owner in Pittsburgh, and your business could benefit from a microloan, Kiva may be an option. Loans are 0% interest, with no fees and can be up to $10,000, paid back over up to three years. Allegheny County Small Business Loan Program The purpose of the loan is to promote the establishment and expansion of new and existing small businesses, by providing low-interest financing for land development, building improvements, machinery and equipment acquisition, and infrastructure development. Eligible businesses are a legal business entity located within, or seeking relocation to, Allegheny County, and with less than one hundred (100) full-time employees at the time of the loan application. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content.   ### Methods for Claiming Employee Retention Credit for Employers Subject to Closure Due to COVID-19 Crisis As we continue to unwind and understand the nuances of the Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act), the IRS has issued some additional guidance on the Employee Retention Credit and how to claim the credit. Understanding the Credit: Please see Schneider Downs’ previously published Our Thoughts On article that dissects who is eligible for the Employee Retention Credit, how the credit is calculated, and other important details. How to Claim the Credit: 1) Reduction of upcoming deposits due with the applicable quarterly employment tax returns (Form 941 for most employers) a. Starting with the 2nd quarter filings** b. Forms to be updated prior to 2nd quarter due date to include credit c. Credit will reduce the amount of the required deposit; if credit is in excess of the required deposit, a refund will be issued 2) Requesting an advance credit by filing Form 7200 (Advance of Employer Credits Due to COVID-19) a. This form can be used to request the amount of credit that exceeds the necessary employment tax deposit for the quarter instead of waiting for the refund from the quarterly filing b. The form can be filed at any time before the end of the month following the quarter in which the employer paid the qualified wages c. If advance credit is requested, there cannot be a reduction to employment tax deposits per quarterly employment tax returns for the same expected credit d. For additional information, please see the IRS website related to Form 7200 ** On April 3, 2020, the IRS added a note to the Form 941 instructing that regardless of the method, the credit should initially be claimed on the 2nd quarter filing of the employment tax returns.  Wages related to the timeframe before the 2nd quarter begins (March 13, 2020 through March 31, 2020) should be incorporated into the 2nd quarter calculation.  DO NOT INCLUDE any wages or credits relating to the Employee Retention Credit on the 1st quarter employment tax returns. As a reminder, if an employer receives a loan under the Paycheck Protection Program, then the employer cannot claim an Employee Retention Credit for the same wages.  Also, wages for this credit do not include wages for which the employer can claim a credit for paid sick and family leave under the Families First Coronavirus Response Act or Work Opportunity Tax Credit. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act and or the Families First Coronavirus Response Act. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES Act Includes Relief from CECL As an update to our March 25 article, the Coronavirus Aid, Relief and Economic Security (CARES) Act includes a provision allowing all financial institutions to postpone compliance with the Financial Accounting Standards Board's (FASB) standard on Current Expected Credit Losses, or CECL.  The CARES Act states that these institutions are not required to comply until either the date of termination of the national emergency related to the coronavirus, or December 31, 2020.  Additionally, the SEC has stated that the election of deferral would be considered in accordance with GAAP for the periods for which the deferral is available.Many larger financial institutions have already made significant investments in systems and processes to comply with the CECL standard.  These institutions have already communicated with investors about the changes and some may decide to comply.  Given these new investments for compliance, it may be difficult for the larger institutions to revert to their prior models, as they may now be outdated and generate inaccurate results.  They may also want to avoid the additional costs that could arise from significant maintenance.  However, many mid-sized and community banks may still decide to take advantage of the option to delay CECL implementation, as they have not yet fully implemented new models.The coronavirus has created an uncertain and volatile lending environment that may result in significant credit losses for financial institutions.  The delay of CECL provides temporary relief in a time of need.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Additional Tax Return Extensions and the 2020 Estimated Tax Payment Postponement Issued by the IRS BackgroundOn March 18, 2020, the Internal Revenue Service (IRS) issued Notice 2020-17 quickly followed by Notice 2020-18 on March 20, which postponed the due date for 2019 federal income tax returns and 2020 federal income tax estimates from April 15, 2020 until July 15, 2020. In addition, The IRS indicated that due to the postponement of the due date for filing Federal income tax returns and making Federal income tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, would be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes. However, interest, penalties, and additions to tax with respect to the postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.The postponement of the 1st  quarter estimated tax payment until July 15, 2020 left taxpayers in an unusual position in that their 2nd quarter estimated tax payment was still due on June 15,  2020 (while their 1st quarter estimate was not due until July 15, 2020).Expansion of the Extension to Other Tax ReturnsOn April 9, 2020 the IRS issued Notice 2020-23 which expanded the automatic extension relief to additional returns. As a result, the automatic extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.  Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15, 2020 to file their 2019 federal income tax return and pay any tax due.Individuals that need additional time to file their 2019 tax returns beyond July 15, 2020 can request an extension until October 15, 2020 by filing Form 4868 and paying any taxes due by July 15, 2020.Correction of the Estimated Tax Payment GlitchIn addition to expanding the automatic extension to file 2019 tax returns, Notice 2020-23 also extends the due date for estimated tax payments due June 15, 2020.  This means that any individual or corporation with a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15, 2020 to make that payment, without penalty.  For individuals, this essentially means that they will be paying their 1st and 2nd quarter estimated tax payments at the same time on July 15, 2020.If you have any questions regarding the changes made by Notice 2020-23, or any other COVID-19 legislation, do not hesitate to contact Mark Di Pietrantonio, or any other member of Schneider Downs & Co., Inc. ### Restaurant Industry During COVID-19 This article was written by Cameron Fisher, Adam Goode and Nick Lombardo. The economic effects of the Coronavirus outbreak deepened this past week as the number of jobless claims in the U.S. rose to a record 6.6 million, representing approximately a 13% unemployment rate according to the New York Times. The burden of the crisis has been most prevalent in industries such as tourism, retail and restaurants, where hundreds of thousands of part-time and full-time workers have lost their jobs and many businesses are threatening to shut down. The National Restaurant Association (Association) estimated in a recent survey that within the first 22 days of March, three million jobs and $25 billion in sales (a 47% decrease), were lost as a result of closures and restrictions attributed to the virus. The Association also estimated that 3% of all restaurants in the US have closed permanently as a result of the pandemic and up to 11% have said that they may close permanently within the next 30 days. In response to the pandemic, on March 27th, 2020, President Trump signed into effect the Coronavirus Aid, Relief and Economic Securities (CARES) Act, which increases unemployment benefits and payments to many of those most affected by the crisis. The CARES Act also provides loans and other relief to restaurants and other small businesses that apply and qualify. However, there is still a significant economic hardship on these unemployed workers within the restaurant industry and a number of entities have taken notice. Several Organizations are trying to help restaurant workers affected by this crisis combat lost wages during this great time of need. Boston-based brewery Samuel Adams, for instance has partnered with The Greg Hill Foundation to setup the Restaurant Strong fund which has raised money that will be given to recently unemployed workers within the service industry due to the COVID-19 pandemic.  Individuals in several states including Ohio, can receive $1,000 if they complete an application and meet the following requirements: Full-time restaurant employee (minimum 30 hours/week, can be multiple restaurants) Employed for three months or longer at the same location Worked in a restaurant, bar, cafe or nightclub Submit the last two pay stubs received The One Fair Wage campaign is another group trying to help by providing cash assistance to restaurant and service workers who rely on tips. To apply, workers must fill out an application on the firms’ website and an organizer will reach out to discuss the application. Some restaurants, meanwhile have tried different ways to stay open and service customers, including carry-out, curb-side pickup and delivery.  There are even restaurants that are delivering their individual ingredients to people so they don’t have to go to grocery stores. Uncertainty in times like these requires communities and businesses to continue working together to meet the challenges ahead. Schneider Downs is committed to helping our clients navigate the uncertainties their businesses face due to the coronavirus and other issues.  If you have any questions or need assistance, please reach out to us, we are happy to help. ### Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q1 2020 On April 1, the Manufacturing Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that provides industry trends and statistics for the manufacturing sector. The referenced Purchasing Managers Index (PMI) below is a composite index for the manufacturing industry compiled by the ISM, and is based on five subcategories: new orders, production, employment, supplier deliveries, and inventories. A PMI index over 50% indicates that the manufacturing environment is expanding, and the ISM uses this information to analyze the state of the economy and predict future growth or contraction. See below for the PMI for each month in Q1 2020 and Q1 2019: 2020 2019     Month PMI Month PMI January 50.9 January 56.6 February 50.1 February 54.2 March 49.1 March 55.3         Average 50.0 Average 55.4 High 50.9 High 56.6 Low 49.1 Low 54.2  Although the economy technically grew for the 131th straight month, the continued growth of the manufacturing sector has come to an end as the effects of the COVID-19 pandemic are felt by the sector. With the exception of supplier deliveries, all indexes that feed into the calculation of PMI came in below 50% on March 31, 2020.Inputs are calculated using supplier deliveries (65% on March 31), inventories (46.9% on March 31), and imports (42.1% on March 31). Supplier deliveries is a unique index, since it shows an inverse relationship. It assumes that deliveries will be slower in times of economic growth due to increased demand. Therefore, the 65% for supplier deliveries would typically indicate a growing economy. Instead, many of the panelists noted supply chain constraints from China that result in slower deliveries. Inventories have been contracting for ten straight months; however, it is anticipated that this will be coming to an end. Timothy R. Fiore, Chair of the Institute for Supply Management, noted that, "… Inventories are expected to grow as disruptions in the supply chain lead to inefficiencies in material conversion and continued advance stocking to protect production schedules."Consumption is calculated using production (47.7% on March 31) and employment (45.75% on March 31). Production was affected by insufficient backlog, supplier delivery restrictions, and a lack of new orders. Among panel members, 71% noted that they planned to reduce headcount or put in place a hiring freeze. According to the Bureau of Labor statistics, the unemployment rate came in at 4.4% at March 31, 2020, which is the highest it has been since August 2017. To further put this into perspective, the number of unemployed individuals in America increased from 1.4 million to 7.1 million in March. As many face the loss of their jobs and uncertainty of the future, consumption will likely continue to decrease.Prices contracted and came in at only 37.4% on March 31. This is the lowest prices have been since January 2016. This is primarily due to decreasing prices of various raw materials and energy sources. Also, with a continued increase in inventories and a decrease in consumption, prices will likely continue to decrease.All sectors were impacted by the COVID-19 pandemic. Transportation and Petroleum & Coal Products were hit the hardest. The price of oil dropped drastically since the beginning of 2020. On January 1, 2020, the price of WTI Crude oil by the barrel was $61.06, and at March 31 2020, it was only $20.48. This was the lowest oil prices had been since 1999.Food, Beverage & Tobacco Products' industry representatives reported record orders. However, this influx in demand was due primarily due to consumers stockpiling goods in preparation for social distancing and quarantine and will not necessarily hold true after consumers have sufficiently stocked their pantries.There was a great deal of uncertainty at the end of 2019 as to where the manufacturing industry was headed. Unfortunately, we have a much better sense now that 2020 poses great challenges to all in the industry.For further information on the ISM Report on Business, go to https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?SSO=1 ### Cash Now for Tax Later: Carrying Back NOLs Could Be a Risky Choice for the Multi-National Taxpayer On March 25, 2020, Congress passed the Coronavirus Aid, Relief and Economic Security Act  (“CARES Act”) as it relates to businesses, which allows taxpayers to take advantage of various additional cash flow opportunities to keep their businesses operational. The CARES Act modified, among other things, the treatment of net operating losses ("NOLs") generated in 2018 through 2020. Specifically, the CARES Act allows taxpayers to carry back NOLs generated in 2018, 2019 and 2020 to the five preceding tax years and recover tax paid in those years. This new carryback allowance replaces the rule added to the tax code by the Tax Cuts and Jobs Act in 2017 (“TCJA”), which completely disallowed the carryback of NOL's to prior tax years. In addition, the CARES Act defers the corporate NOL usage limitation of 80% of taxable income (established by TCJA) until years beginning after 2020. These new rules are meant to allow taxpayers to apply current NOLs to prior, income-generating years, in order to generate a tax refund, and additional cash flow, in the current year.In action, this could look like the following for a domestic corporation. Company C, a U.S. Corporation, generated $100,000 of taxable income in its 2013 tax return. Company C generated an NOL in 2018 of $150,000. Company C could choose to carry $100,000 of its $150,000 NOL generated in 2018 to tax year 2013. Barring other limitations, this would bring the taxable income of Company C to $0, and would yield a refund in the amount of tax paid in 2013 in the current year. The infusion of cash flow could allow Company C to continue operations and carry on business until the end of the COVID-19 pandemic.It is not that simple, however, for multinational corporations. Specifically, those corporations that have global intangible low-taxed income ("GILTI") face a major decision when it comes to carrying back NOLs to prior tax years. GILTI, for those that may not be familiar, was added to the Internal Revenue Code in 2017 and is an additional category of income, derived from various types of intangible assets housed in lower-tax jurisdictions. Taxpayers who are required to recognize GILTI are entitled to a deduction, subject to various limitations, of up to 50% of GILTI on their U.S. tax returns. However, if a corporate taxpayer decides to carry back its NOLs, the taxpayer runs the risk of losing all or a portion of the 50% deduction in 2018 and 2019. Without careful planning, corporate taxpayers risk underutilizing the preferential tax rate for GILTI in order to gain a potentially nominal benefit. They may also be foregoing the ability to utilize other tax attributes, such as foreign tax credits, and failing to consider the interplay between GILTI and other tax attributes, such as FDII.The risks and benefits vary from business to business and are largely dependent upon the circumstances of each individual taxpayer. While purely domestic corporations likely will see very little downside to the application of NOLs to prior-year income, any company doing business abroad should think for a moment before racing to amend it prior-year tax returns. Ultimately, only the corporation will be able to decide if the choice to amend and infuse its business with cash now, is worth the potential increase in tax down the road. Whether you operate internationally or domestically, if you wish to discuss the risks and rewards of amending a prior-year tax return, our tax professionals would love to hear from you!Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Zoom ... Goes the Dynamite! With the world muddled in lockdowns and relying more and more on remote workspaces, workplace communication tools have become all the rage. Segment leaders like GoToMeeting, Skype/Teams, Zoom, CyberLink, Google Hangouts and Cisco Webex have all stepped up their presence in the marketplace. Fortunately, despite the increased use and exposure, none of those software tools have exhibited any critical flaws, with one notable exception: Zoom. Since the onset of the “work from home” mandates necessitated by the COVID-19 pandemic, Zoom’s popularity in the meeting/video conferencing space has skyrocketed. Based on recent reports, the tool is second only to TikTok as the world's current most downloaded app. During a recent week, for instance, Zoom added close to 20 million new mobile users, which represented more than 3½ times more than Skype and 8½ times more than Google Hangouts over the same timeframe. With this monumental increase in use, however, has come a constant battle with new and evolving security threats. Zoom Bombing Zoom’s main security threat – “Zoombombing” – is a type of video hijacking that occurs when conferences are hosted on public channels that are shared over the internet via URLs, making them accessible to anyone and everyone. Hijackers can sometimes guess the correct URL or meeting ID for a public Zoom session, giving them access to the feed. This is a minor flaw when it comes to having a Zoom meeting with your closest friends, but can have severe security implications when hosting a meeting associated with an educational institution or major business. Trent Lo, a security professional and founder of SecKC, Kansas City’s longest-running monthly security meetup, tested and exposed Zoom’s security issues, finding that the only meetings protected from Zoom Meeting ID auto-dialers are videoconferences that have set a password. To mitigate that issue, Lo recommends enabling the ‘Embed password in meeting link for one-click join’ function, which prevents an actor from accessing your meeting without you losing the ability to share a link to join. The FBI has also issued a warning related to Zoom Bombing, to which Zoom CEO Eric Yuan notes, “The Company’s plan for the next 90 days is to dedicate the resources needed to better identify, address and fix issues proactively.” As things currently stand, the best recommendation a casual user can take to heart is to only share meeting links with your closest circle of trust and require meeting passwords when feasible. Encryption / Confidentiality Concerns In addition to the Zoom Bombing issue, the folks at the Citizen Lab at the University of Toronto have identified a plethora of additional security threats involving Zoom that are not necessarily hitting the headlines. For instance, contrary to Zoom documentation that claims the app uses AES-256 encryption for meetings where possible, Citizen Lab found that in each Zoom meeting a single AES-128 key is used in ECB mode by all participants to encrypt and decrypt audio and video. The use of ECB mode, their report notes, is not recommended because patterns present in the plaintext are preserved during encryption. Additionally, the AES-128 keys used to decrypt intercepted Zoom packets are coming from Zoom servers in China, even though all meeting participants are located outside that country. Since Zoom was primarily developed by companies based in mainland China, the folks at Citizen Lab believe Zoom to be a “U.S. company with a Chinese heart.” With the threat of malicious users attempting to intercept communications, and even enter private calls, Citizen Lab asks users to use Zoom passwords when possible, and to not use Zoom Waiting Rooms, to ensure confidentiality. The List Goes On It seems like every day a new gap in Zoom’s security practices is uncovered. Below is the latest breakdown of other privacy/security concerns to keep in mind when considering using the popular conferencing tool: Multiple class action lawsuits have been filed against Zoom for issues related to Facebook data sharing, incomplete end-to-end encryption and an existing vulnerability that allows malicious actors to access users’ webcams. An investigation by the Washington Post found thousands of recordings of Zoom video calls were left unprotected and viewable on the open web. Security expert Brian Krebs reports that an automated tool was able to find around 100 Zoom meeting IDs in an hour, gathering information from nearly 2,400 Zoom meetings in a single day of scans. The New York Times reports that a data-mining feature on Zoom allowed some participants to surreptitiously have access to LinkedIn profile data about other users. Zoom software has now been banned for use at Google, SpaceX and a number of school districts. The U.S. Senate has recommended that its members cease using Zoom. Some Zoom installer packages have been bundled with various types of malware, including hidden Trojans and coin miners. With the increased use of video conferencing/meeting tools, Schneider Downs believes your organization should perform thorough reviews of any new software you’re looking to implement. If you’re a general user leveraging Zoom, the recommendations in this article above should give you a leg up on anyone looking to use Zoom vulnerabilities to their advantage. How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### Virtual NFL Draft is Raising Teleconferencing Security Concerns NFL commissioner Roger Goodell notified every team that the 2020 NFL Draft will be held virtually due to continued concerns over the COVID-19 pandemic. This means that that coaches and general managers will be switching to what mirrors a fantasy football draft and will be drafting players remotely via teleconferencing. This may inconvenience NFL personnel and damper what has grown into one of the largest sports spectacles in modern day, but it has also raised legitimate security concerns related to video conference technology. A number of NFL personnel have expressed unease with the virtual arrangement, including Baltimore Ravens Head Coach John Harbaugh, who called the security of teleconferencing and so called “Zoombombing” a “big concern”. Harbaugh’s concerns were not without merit as the FBI issued a warning to all Zoom Video Communications users on March 30, 2020 related to security of their very popular teleconferencing application. The warning focused on Zoombombing incidents in college classes related to a hackers gaining access to Zoom meetings and broadcasting offensive or explicit material to the class. Zoom has reached 200 million users and is being used by a wide range of users from families to the US Department of Defense. With the spike in users on Zoom’s platform, multiple security issues were exposed and the CEO, Eric Yuan, was forced to address them in a recent blog post. These concerns relate to misleading encryption practices, the sale of user information to Facebook, password cracking problems, and more. Despite Zoom becoming one of the most popular teleconferencing platforms, alternatives exist with different security features that merit consideration. Other platforms that support end-to-end encryption include Google Duo (only supports 12 users), FaceTime (Apple devices only), WebEx from Cisco, GoToMeeting, and Microsoft Teams. Not all of these platforms are free and offer the same convenience as Zoom, but the heightened security is certainly worth the investment especially when the contents of a meeting is sensitive. No matter what video conferencing platform is used, basic steps should be taken to keep the meeting private and secure. Here are some of the most basic protection steps that should always be taken: Protect meeting ID number and create a strong password: Be very mindful of the people with whom you share a meeting number and password, never make it public. Limit meeting credentials to only people required to attend a meeting. Do not use personal meeting numbers or re-use meeting numbers. Randomly generated meeting numbers that are only used once are the most secure. Designate a meeting Host: Even with a secure meeting number and password, hackers have a way of getting in. A meeting host should always be designated to control users that join. Most videoconferencing platforms offer a “waiting room” feature which forces the host to allow a guest access before joining and allows the host to remove users at any time. This should always be enabled. Restrict Screen sharing: Most platforms offer the ability to restrict which users are able to share screens during a meeting. Enabling this feature protects a meeting from unauthorized content being broadcast. Designate a secure location for sensitive meetings: In addition to a secure, encrypted platform, participants should be required to designate a secure location for video conferencing. Participants should have their access disabled if they are seen to be in a public place or an open setting with other people present. Adopt a Video Conferencing Policy: An organization wide policy for video conferencing can ensure that certain conditions are met before users join or participate in a conference. Good policy practices include restricting personal devices from recording, turning off cameras and microphones when not in use, and disabling file transfer during a meeting to ensure that users can’t display unauthorized content. For more information on cybersecurity concerns surrounding Zoom read our follow-up article, Zoom! Goes the Dynamite How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### FASB Votes to Propose Delay of New Revenue Recognition Standards for Franchisors and Lease Standards for All Non-Public Companies and Not-for-Profit Public Business Entities Acknowledging the disruption caused by the COVID-19 pandemic and the strain it has put on the resources of many organizations, the FASB voted on April 8, 2020 to propose a one-year deferral of the effective dates of the new revenue standards for franchisors and lease standards for all non-public companies and not-for-profit public business entities. After the unanimous vote was announced, FASB members expressed hope that delaying the effective dates of these standards would allow entities that are especially vulnerable to focus on their operational concerns amid the ongoing health crisis.According to a statement on the Board’s website, the Board expects to issue the proposal “in the coming days.” Once issued, the proposal will be subject to a 15-day comment period.ASC 606 - Revenue from Contracts with CustomersIn 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASC 606) which replaced most industry-specific revenue recognition guidance with a principles-based five-step reporting model for reporting revenues earned from contracts with customers. The new standard became effective for public companies in 2018 and in 2019 for private companies.Under the FASB’s proposal, franchisors that are not public business entities, and that have not yet issued financial statements reflecting the adoption of ASC 606, would now be allowed to delay implementation of the new revenue standard until their annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. The FASB cited significant concerns raised by franchisors regarding the cost and complexity of adopting ASC 606, particularly as it relates to the timing of revenue recognition for initial franchise fees. In order to support these entities, the FASB also announced that it has added a research project to its agenda to discover ways that implementation costs could be reduced.A franchisor is considered to be any party who grants business rights (the franchise) to another party (the franchisee) who will operate the franchised business. The proposed amendment is expected to further clarify the scope of companies subject to the new effective date.ASC 842 - LeasesIn 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which primarily adds new requirements for lessee accounting for operating leases, the most significant of which is the new requirement to record long-term lease obligations on the balance sheet. The new standard became effective for public companies in 2019, and was scheduled to become effective in 2021 for private companies.Under the FASB’s proposal, public not-for-profits (those that have issued, or are conduit obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market) that have not yet issued financial statements would now be allowed to delay implementation of the new lease standard until their annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Additionally, private companies and all other not-for-profit entities not included above would be allowed to delay implementation of the new lease standard until their annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### PPP SBA FAQs - Update This article was updated on April 8, 2020.  Updates to this article will be made as new information becomes available.APRIL 8, 2020 UPDATE - Important Update on the Payroll Protection Program Under the CARES ActOn April 6, 2020 (with additional questions answered on April 8, 2020), the U.S. Small Business Administration (“SBA”) published Frequently Asked Questions in regards to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness Under the CARES Act.The following summarizes the key questions addressed:Q: The amount of forgiveness of a PPP loan depends on the borrower’s payroll costs over an eight-week period; when does that eight-week period begin?After the first disbursement of the PPP loan to the borrower.  The lender must make the first disbursement no later than 10 calendar days after approval.Q: Are small business concerns, as defined in Section 3 of the Small Business Act (“Section 3”), required to have 500 or fewer employees to be eligible under the PPP?No.  A business is eligible if it meets EITHER of the following two (2) standards:1. Meets the definition of a small business concern under Section 3.  To meet this definition, a business must meet ANY (NOT ALL) of the following three conditions: SBA industry standards for employee-based size requirements; OR SBA industry standards for revenue–based size requirements; OR  The alternative size standard.  The alternative size standard requires a business meet BOTH of these two (2) conditions: Maximum tangible net worth of not more than $15 million; AND Average net income after Federal income taxes (excluding carryover losses) for the past full two fiscal years of not more than $5 million. 2. If it employs not more than the greater of 500 employees OR the size standard in number of employees established by the SBA for the industry in which the business operates.Q: Are borrowers required to apply the SBA’s affiliation rules under 13 C.F.R. 121.301(f)?Yes, borrowers must apply the affiliation rules set forth in the SBA’s PPP Interim Final Rule.  A borrower must certify on the application that it is eligible to receive a PPP loan, which means that the borrower is a small business concern under Section 3, meets the applicable SBA employee-based or revenue-based size standard, or meets the tests in the SBA’s alternative size standard after applying the affiliation rules.Q: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000.  Does that exclusion apply to all employee benefits of monetary value?No.  The exclusion applies only to cash compensation, not to non-cash benefits including: (1) employer contributions to retirement plans; (2) payment for employee benefits consisting of group health care, including insurance premiums; and (3) payment of state and local taxes assessed on compensation.Q: What time period should borrowers use to determine their number of employees and payroll costs to calculate maximum loan amounts?Borrowers can calculate aggregate payroll costs based on the last 12 months or calendar year 2019.  For seasonal businesses, the applicant may use the average monthly payroll between February 15, 2019, or March 1, 2019, and June 30, 2019.  If the applicant was not in business during this time, it may use the average monthly payroll costs between January 1, 2020 and February 29, 2020.Borrowers can use the average employment over the same time periods methodology to determine their number of employees for the purposes of applying an employee-based size standard.  Alternatively, they can use the SBA’s usual calculation: the average number of employees per pay period in the 12 completed months prior to the date of loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for the prior 12 months).Q: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower’s payroll costs?No.  Q: How should a borrower account for federal taxes when determining its payroll costs for the purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of loan that may be forgiven?Payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld (including employer and employee FICA and income taxes required to be withheld from employees).  Therefore, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by an employer.  However, payroll costs do not include the employer’s share of payroll tax.If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Board of Appeals Operation Guidelines during COVID-19 Pandemic The Pennsylvania Department of Revenue Board of Appeals recently issued guidelines that are posted on the Board’s website, notifying taxpayers on how the Board intends to operate during the COVID-19 pandemic and the closure of the Board’s office.HearingsThe Board has suspended all in-person hearings until further notice. In lieu of in-person hearings, the Board is offering the following alternatives: Skype – Petitioners who have the ability to use Skype may exercise this option to have a formal hearing. Teleconference – Petitioners may waive the formal hearing and request an informal teleconference to discuss the case. Continuance – Petitioners may request a continuance of the formal hearing as well as an extension of the decision due date. Waiver of Hearing – Petitioners can waive their right to a hearing and request that the Board make a decision based upon the record. Decision and OrdersThe Board has indicated that they will continue to make every effort to continue issuing orders. However, during the closing, all orders will be issued electronically through email. The Board advises that there may be some delays due to these circumstances. If petitioners are planning to appeal the Board’s Order to the Board of Finance and Revenue, they are urged to review the notice on the Board of Finance and Revenue’s website at https://www.patreasury.gov/bfr/. See Schneider Downs’ Our Thoughts On article –“The Impact of COVID-19 on Pennsylvania Tax Appeals.”  Board of Appeal FilingsThe Board encourages the continued filing of appeals through their on-line petition center at www.boardofappeals.state.pa.us. Upon the filing of the appeal on-line, a confirmation number will appear on the screen. Taxpayers should keep a record of the confirmation number. The Board will continue to use United States Postal Service post mark and the date of the time stamp on a petition filed electronically in determining the filing date of an appeal.Petition Filing DeadlinesThe Board reiterated it recently announced new filing deadlines, reminding taxpayers that appeals of tax assessments issued by the Department of Revenue or a petition for a tax refund is considered to have been filed timely if filed by the later of 30 days after the reopening of the Board of Appeals offices or the original appeal deadline. However, if the appeal deadline fell on a date prior to the closure of state offices on March 16, 2020, then the original deadline is still applicable. Appeals will be considered to be filed timely if they are filed by the last day of the appeal period.ExtensionsThe Board has indicated that they will extend time to accept any additional documentation that has been requested as long as that information is received by the Board with 30 days of when the Board of Appeals’ office reopens. Taxpayers may also be granted additional time to request a reconsideration from the Board.Schneider Downs CommentsWhile the Department is extending the deadline to file certain appeals and encouraging the use of the on-line petition center to file appeals, taxpayers may be better served by continuing to comply with statutory imposed deadlines and using the postmark from the US Postal Service to document the timely filing of appeals.  If you have questions about the filing deadline extension, we suggest referencing the Pennsylvania Department of Revenue Board of Appeals website at www.boardofappeals.state.pa.us or contacting Schneider Downs State and Local Tax professionals.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Department of Revenue Temporarily Suspends Some IFTA Requirements Due to COVID -19 Pandemic In conjunction with Governor Tom Wolf’s Proclamation of Disaster Emergency, the Pennsylvania Department of Revenue, which administers certain laws falling under the Pennsylvania Vehicle Code, issued an order stating that certain requirements concerning the International Fuel Tax Agreement (“IFTA”) would be waived for the purposes of expediting the delivery of essential services and emergency supplies to areas affected by the COVID-19 pandemic. Specifically, the Department is waving the IFTA prerequisite for out-of-state carriers to first apply for and obtain a Trip Permit as required by the Pennsylvania Vehicle Code, 75 Pa C.S. § 2102(d)(3) if they are delivering essential services and emergency supplies.This temporary waiver started on March 19, 2020 and remains in effect until  Governor Wolf determines that the emergency has ended, or 30 days, whichever occurs later.All other applicable laws related to the operation of a commercial vehicle, such as commercial driver licensing, safety and insurance requirements remain in effect.If you have any questions, please do not hesitate to contact your state and local tax consultant. ### U.S. Government Issues Guidance on Main Street Expanded Loan Facility On April 9, the U.S. Department of Treasury released details on another financing facility that is primarily focused on businesses with up to 10,000 employees that have revenues that don’t exceed $2.5 billion. Once again, the nation’s banks will be the primary conduit for issuing these new loans. The Federal Reserve Bank will purchase 95% of the total loans with the banks remaining responsible for the other 5%. Unlike the Paycheck Protection Program loans, the expanded “Main Street” loans will not have any forgiveness provisions, and include other limitations noted below. The total size of the loan facility will be $600 billion.The Main Street expanded loans will be structured as follows: The loans will have a 4-year maturity. The amortization of principal and interest will be deferred for one year. The interest rate will be the adjustable rate of Secured Overnight Financing Rate (SOFR) + 250-400 basis points. The minimum loan size is $1 million  The maximum loan size is the lesser of (i) $150 million, (ii) 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed six times the borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”). The loans will not have any prepayment penalties. There will be a fee of 100 basis points of the principal amount of the upsized tranche of the eligible loan at the time of upsizing. The participating lenders will have the discretion to originate new loans under the Main Street Program or use the Main Street Program to increase the size of existing loans to their eligible customers.As part of the application process, prospective borrowers will need to make certain attestations, including: You must attest that the proceeds of the upsized tranche of the loan will not be used to repay or refinance pre-existing loans or lines of credit made by the lender you are seeking the financing from, including the pre-existing portion of the loans.  You must attest that while the loan remains outstanding, you are not permitted to repay any other debt of equal or lower priority, with the exception of mandatory principal payments.  You must attest that you will not seek to cancel or reduce any of your outstanding lines of credit with the lender you are seeking the loan from or any other lender.  You must attest that your business requires financing due to the exigent circumstances presented by the coronavirus disease 2019 (“COVID-19”) pandemic, and that, using the proceeds of the upsized tranche of the eligible loan, your business will make reasonable efforts to maintain its payroll and retain its employees during the term of the loan.  You must attest that your business meets the EBITDA leverage condition stated in the maximum loan paragraph above specifying required features of eligible loans.  You must attest that your business will follow the limitations on compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  You will be required to certify that the entity is eligible to participate in the program, including in light of the conflicts of interest prohibition in section 4019(b) of the CARES Act. If you are interested in applying for one of these loans, in addition to gathering the required documentation to demonstrate the need, you should contact your lender to understand when and how they will begin to take applications. Potential applicants should be mindful of existing debt agreements and covenants, as well as provisions within their by-laws or other contracts that may restrict their ability to borrow these funds. Since the lender you select will be retaining a portion of the loan, there may be additional underwriting conditions imposed by them that did not exist under the Paycheck Protection Program.If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### False Claims Act and SIGPR Update Following-up on last week’s discussion of the False Claims Act Enforcement Related to the CARES Act, this week we will focus on the key oversight mechanism of the Act.The unprecedented Coronavirus Aid, Relief, and Economic Security (CARES) Act provides up to $2 trillion in relief funds for businesses and individuals across the country.  Similar to the CARES Act, in 2008, when Congress enacted the Emergency Economic Stimulus Act, it established a special inspector general’s office to oversee the Troubled Asset Relief Program (SIGTARP).  In the years that have followed, and continuing until the present day, SIGTARP investigated companies, individuals, and financial institutions and has recovered over $11 billion for the government.The CARES Act includes the role of Special Inspector General for Pandemic Recovery (SIGPR) who will be responsible for investigating fraud related to the CARES Act. Given the current crisis situation there may be a temptation to think that the normal rules no longer apply, but the history of investigations by SIGTARP over the last decade plus indicate the SIGPR will aggressively pursue recoveries for the government of false claims and fraudulent activity.A 2019 study regarding in-house fraud investigation teams by the Association of Certified Fraud Examiners (ACFE) found that only 58% of organizations believe they have inadequate levels of anti-fraud staffing and resources.  Cost-cutting measures due to the Coronavirus could further diminish the resources available to monitor and mitigate fraud.  Organizations that receive funds through the CARES Act must remain focused on their internal control procedures and documentation.Organizations should be diligent in documentation of their decision making process when applying for relief,  loans, applying for forgiveness of loans or making other claims under the CARES Act.  Many certifications of the accuracy of information and eligibility will be necessary from owners and management.  A “Monday Morning Quarterback” may question an organization’s “play calling” and decision making in retrospect.  However, proper documentation of adequate consideration of facts and circumstances at the time of an application or claim may prove valuable in defense of any questions regarding potential irregularities after the fact.If you need the experience of Schneider Downs Business Advisors during this challenging time, please contact shareholders Tom Pratt at tpratt@schneiderdowns.com or Joel Rosenthal at jrosenthal@schneiderdowns.com.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Charity Registration Renewal Deadline Extended Amid COVID-19 Emergency For Pennsylvania charitable organizations whose registration or renewal deadlines fall during April, May, or June 2020, a three-month extension has been announced. Typically, registration renewal applications are required to be postmarked by the 15th day of the 11th month after the close of the organization’s fiscal year. That deadline has now been pushed to the 15th day of the 14th month following the close of the organization’s fiscal year.While the Pennsylvania Bureau of Corporations and Charitable Organizations (“Bureau”) recommends that organizations renew on time if possible, organizations affected by COVID-19 who fail to meet the deadline will still remain active and may continue to solicit contributions in satisfaction of its charitable purpose in Pennsylvania.The following table outlines the time frame for charitable organization registrations that are set to expire within the upcoming months: Charitable organization fiscal year end Charitable organization renewal date and registration expiration Requesting extension of deadline and registration to May 31, 2019 April 15, 2020 July 15, 2020 June 30, 2019 May 15, 2020 August 17, 2020* July 31, 2019 June 15, 2020 September 15, 2020 * If the renewal due date falls on a weekend or holiday, the actual date will be the next business day. August 15, 2020, is a Saturday. Therefore, the renewal date is extended to Monday, August 17, 2020.The Bureau went live with its online filing system on March 20.  Even with this extended timeframe, organizations are still encouraged by the Bureau to file Form BCO-10 through the online system (https://www.charities.pa.gov). Just as before this extension was announced, users of the online filing site are to register for a “Keystone Login” account, using a code the Bureau mailed to filers on March 17, 2020. First-time registrations do not require this code.The online system is not designed to reflect the updated extended deadlines, and as such, filers will be automatically charged late fees for taking advantage of the extension. The Bureau will refund these wrongful late fees directly to the credit card utilized in the transaction. Online filers who submit renewals as of their original deadline will not face this erroneous late fee.To receive the reimbursement for these late fee charges, organizations must:1. Find and keep the email message from noreply@gge4mailer.com acknowledging receipt of the online registration and the payment of fee (transaction receipt email).2. Forward the transaction receipt email to ST-Charity@pa.gov and change the subject line to read “REFUND.”3. After the Bureau calculates and refunds the late fee, the organization will receive an email with the details of the refund. This email will be sent to the email used with the credit card at time of payment.Refunds will be processed within 15 business days, plus additional buffer time to allow it to appear on credit card and bank statements. If you have any questions on the updated deadlines or refund payments, please reach out to your Schneider Downs advisor by phone or email, or contact the Bureau at ST-Charity@pa.gov. ### PPP SBA FAQs This article was updated on April 7, 2020.  Updates to this article will be made as new information becomes available.Important Update on the Payroll Protection Program Under the CARES ActOn April 6, 2020, the U.S. Small Business Administration (“SBA”) published Frequently Asked Questions in regards to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness Under the CARES Act. The following summarizes the key questions addressed:Q: Are small business concerns as defined in Section 3 of the Small Business Act (“Section 3”) required to have 500 or fewer employees to be eligible under the PPP? No.  A business is eligible if it meets EITHER of the following two (2) standards:1. Meets the definition of a small business concern under Section 3.  To meet this definition, a business must meet ANY (NOT ALL) of the following three conditions: SBA industry standards for employee-based size requirements; OR SBA industry standards for revenue–based size requirements; OR  The alternative size standard.  The alternative size standard requires a business meet BOTH of these two (2) conditions: Maximum tangible net worth of not more than $15 million; AND Average net income after Federal income taxes (excluding carryover losses) for the past full two fiscal years of not more than $5 million. 2. If it employs not more than the greater of 500 employees OR the size standard in number of employees established by the SBA for the industry in which the business operates.Q: Are borrowers required to apply the SBA’s affiliation rules under 13 C.F.R. 121.301(f)?Yes, borrowers must apply the affiliation rules set forth in the SBA’s PPP Interim Final Rule.  A borrower must certify on the application that it is eligible to receive a PPP loan, which means that the borrower is a small business concern under Section 3, meets the applicable SBA employee-based or revenue-based size standard, or meets the tests in the SBA’s alternative size standard after applying the affiliation rules.Q: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000.  Does that exclusion apply to all employee benefits of monetary value?No.  The exclusion applies only to cash compensation, not to non-cash benefits including: (1) employer contributions to retirement plans; (2) payment for employee benefits consisting of group health care, including insurance premiums; and (3) payment of state and local taxes assessed on compensation.Q: What time period should borrowers use to determine their number of employees and payroll costs to calculate maximum loan amounts?Borrowers can calculate aggregate payroll costs based on the last 12 months or calendar year 2019.  For seasonal businesses, the applicant may use the average monthly payroll between February 15, 2019, or March 1, 2019, and June 30, 2019.  If the applicant was not in business during this time, it may use the average monthly payroll costs between January 1, 2020 and February 29, 2020.Borrowers can use the average employment over the same time periods methodology to determine their number of employees for the purposes of applying an employee-based size standard.  Alternatively, they can use the SBA’s usual calculation: the average number of employees per pay period in the 12 completed months prior to the date of loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for the prior 12 months)Q: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included on calculations of the eligible borrower’s payroll costs?No.Q: How should a borrower account for federal taxes when determining its payroll costs for the purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of loan that may be forgiven?Payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld (including employer and employee FICA and income taxes required to be withheld from employees).  Therefore, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by an employer.  However, payroll costs do not include the employer’s share of payroll tax.If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly.Please visit our Coronavirus Resource Center for related content. ### Important Update on the Payroll Protection Program Under the CARES Act This article was updated on April 6, 2020.  Updates to this article will be made as new information becomes available.On April 2, 2020, the U.S. Small Business Administration (“SBA”) published its Interim Final Rule (“IFR”) relating to the implementation of Section 1102 – Paycheck Protection Program (“PPP”) and Section 1106 – Loan Forgiveness Under the CARES Act.The following article summarizes some of the key points of the IFR that are either new or provide clarification to previous guidance.Terms and Conditions 1% interest rate which has been increased from 0.5% from prior guidance; Two-year maturity; No collateral; No personal guarantees; No payments due for six months following disbursement although interest will accrue; First-come, first served; EligibilityThere is some confusion regarding the eligibility rules under the IFR and the CARES Act.  We believe the IFR’s intention was to be consistent with the CARES Act and more clearly indicate that either of these types of businesses may qualify.  However, we understand that this issue has been raised with the SBA and Treasury for more clarity and there has not yet been a resolution.The measurement date of the 500 employees for the determination of size under the SBA standards is still unclear.The IFR added that you would be ineligible if: You are engaged in any activity that is illegal under federal, state, or local law;  You are a household employer (individuals who employ household employees such as nannies or housekeepers);  An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony within the last five years; or  You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government.  AffiliationThe SBA did issue guidance on the applicability of affiliation rules for PPP loans, but it did not provide any significant additional information beyond what was in the IFR except to waive affiliation requirements for faith-based organizations.  It is still unclear whether certain foreign-owned companies may be eligible.Loan AmountThe calculation has stayed consistent with the CARES Act.    It is average monthly payroll costs times 2.5, plus the outstanding amount of an EIDL made between January 31, 2020 and April 3, 2020 less the amount of any advance under an EIDL COVID-19 loan.  The maximum loan amount is still $10 million.  It is still unclear if independent contractors of a business concern should be included under various calculations.  Borrowers should check with their banks on this issue.Additionally, we have seen applications from banks requiring 2019 payroll costs for this calculation.  The IFR states that it should be payroll for the last twelve months.Loan Uses: How Can the Loan Proceeds be Used? Loan uses have not changed under the IFR, but it does confirm that you may include refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020.  If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan.  If the EIDL loan was used for payroll, your PPP loan must be used to refinance your EIDL loan.What is included in payroll costs?Payroll costs are defined under the IFR as compensation to employees.  Compensation to employees includes:  Salary, wages, commissions, or similar compensation;  Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips);  Payment for vacation, parental, family, medical, or sick leave;  Allowance for separation or dismissal;  Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;  Payment of state and local taxes assessed on compensation of employees; and  For an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation. The IFR explicitly states that certain amounts are excluded from compensation, include payroll taxes and compensation over $100,000 for an individual employee.What does that mean?Most notably, if an individual has any compensation in excess of an annual salary of $100,000, the compensation in excess of $100,000 is excluded.  Other exclusions include any compensation of an employee whose principal place of residence is outside of the United States and qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127). A commonly unclear provision from what is excluded from payroll costs is federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees.  The time period explicitly stated related to excluded federal employment taxes is consistent between the CARES Act and the IFR.  That period is not consistent with the time frame necessary to calculate the maximum loan, which at this point it is unclear why they differ and if payroll costs should be reduced by federal employment taxes in the maximum loan calculation.  Federal employment taxes paid after the loan origination are not an allowable use of the loan funds and thus not part of the forgiven portion.Can I Apply for More than One PPP Loan?No eligible borrower can apply for more than one loan.Forgiveness: What Loan Amounts Can be Forgiven?Up to full amount of both principal and interest (the CARES Act originally limited loan forgiveness to principal) can be forgiven if used for forgivable purposes. However, not more than 25% of the forgiven amount may be for non-payroll costs.The IFR does not mention the reduction in loan forgiveness related to any reduction in total wages of more than 25% or reduction in number of full-time employees.  It is unclear whether that rule has been waived as the SBA stated that it will provide additional guidance on loan forgiveness.If MisusedIf PPP loan proceeds are used for unauthorized purposes, those amounts must be repaid.  If a borrower knowingly uses PPP loan proceeds for unauthorized purposes, it will be subject to additional liability such as charges for fraud.  If one of a business concern’s shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against them.Required Certifications: What Must the Applicant Certify?The applicant must certify a number of things.  Please see the application for a detailed list of these items.Lending CriteriaUnder the IFR, lenders: Do not have to comply with section 120.150 of Title 13; Can rely on borrowers’ certifications regarding eligibility and use of loan proceeds; Must comply with the obligations in the IFR; Will be held harmless for borrowers’ failure to comply with program criteria. If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Talking to Your Bank During These Uncertain Times: What You Should Know In the midst of the COVID-19 crisis, most businesses are looking closely at cash flows, revised financial models and where to find additional capital. By now, you’ve probably read about the various government funding options that have been made available. Some of these arrangements, notably the Paycheck Protection Program, come in the form of government-secured loans that will be issued through your bank. These funds are available on a first-come, first-served basis, so there’s some urgency in approaching your financial institution to discuss the program and apply.Beyond these new government-backed programs, however, we’re seeing banks reluctant to issue new debt that wasn’t already in play somewhere within the credit process before this all started. Financial institutions appear to be focused on serving existing customers and ensuring companies have the resources they need to make it through the crisis before looking to issue new loans.But what about talking to your bank about existing debt? Most businesses are in the midst of modeling out the financial impact of COVID-19 and looking for ways to conserve cash, which includes taking a hard look at all normally incurring cash outflows and making decisions about what to do with those expenses during this time of uncertainty. Financial institutions understand this and may be an outlet of support in your efforts. Principal and interest payments are often significant costs that many businesses have; a number of banks are offering relief to customers in the form of restructuring principal payments, providing flexibility on interest, or a combination of the two.Beyond the need for principal and interest relief, companies may also have issues meeting certain compliance requirements outlined within existing debt agreements. Some businesses may be challenged to complete their audit or review on time. Most bank agreements require audited or reviewed financial statements to be submitted within 90 days, 120 days or within some other agreed-upon timeline. That means that audited or reviewed 2019 financial statements are generally due by April 30. Other businesses may be at risk of failing certain other financial covenants due to the economic impact of COVID-19.We’re seeing that proactive, honest and open conversation with your lender on any of these issues as the best way to go. Banks understand the challenges created by COVID-19 and want to be good business partners. At this point, we’re not aware of any financial institutions that are issuing blanket waivers for convenant violations, nor are we aware of many banks issuing any automatic principal and/or interest relief. Rather, banks seem to be addressing each issue on a case-by-case basis. Based on a number of informal conversations with certain lenders, banks will want to talk with you to understand the impact COVID-19 is having on your business. You should also be prepared to provide and discuss updated cash forecasts, financial models and best-guess assumptions based on what we know today.Although all banks want to further understand your needs and issues, we’re seeing many adopt very customer-friendly policies with respect to these conversations. Relief is often being provided to customers who need it, and many banks are being lenient on issuing waivers for covenant violations. Most lenders we’ve talked with recently are more interested in looking to the future rather than the past. They want to understand how COVID-19 will continue to impact your business.The Paycheck Protection Program has accelerated many of these conversations, but if you haven’t talked to your bank yet, you should do that very soon. Please don’t hesitate to reach out and start these conversations now.Please visit our Coronavirus resource page at /our-thoughts-on/category/Coronavirus for related content. ### SEC Releases COVID-19 Disclosure Obligations Staff Guidance As companies continue to face the challenges and economic effects of the COVID-19 pandemic, the SEC Division of Corporation Finance released Topic No. 9 which provides guidance on items that companies should consider for disclosure. The guidance stresses the importance of assessing the risks and impacts that COVID-19 is expected to have on a company since this knowledge could influence investors’ decisions. Disclosures should include both the assessment of the company’s specific circumstances and management’s planned responses. The guidance lists items that management should consider in their assessment, as summarized in the following bullet points: Impact on current and future financial condition as well as results from operations including whether there will be a change in demand for the company’s products or services and if it is expected that there will be a shift in the relationship of costs and revenues Impact on capital and financial resources including liquidity, access to funding, and the capability to meet debt covenants Contingencies arising as a result of the COVID-19 pandemic Impact on significant accounting judgments including impairment and allowances/reserves Effects of remote work arrangements on operations, financial reporting systems, internal control over financial reporting, and productivity - as well as considerations of the impact on the company’s human capital resources Whether increased costs or limited resources have caused the implementation of business continuity plans to be disrupted Disruptions to the company’s supply chain or distribution of the company’s products or services including the effect of travel restrictions on operations In addition to the considerations noted above, the guidance reaffirms the obligation of a company and insiders to refrain from trading securities until material COVID-19 disclosures have been made public. Furthermore, it is noted that a company must follow Regulation FD when material information is disclosed which requires avoiding selective disclosures by disseminating such information broadly to the public and considering whether the company should update previous disclosures if those disclosures are now considered to be inaccurate. Lastly, the guidance addresses the presentation of non-GAAP financial or performance measures to present the effects on a company of the COVID-19 pandemic. If a non-GAAP financial measure is presented, the company should disclose management’s explanation as to why the measure is useful in assisting investors in understanding the impact that COVID-19 has had on the company’s financial position and results of operations. Additionally, the guidance notes that if a GAAP financial or performance measure has been affected by COVID-19 and therefore is not available to be disclosed, the company could reconcile the non-GAAP financial measure to the preliminary GAAP result. The GAAP result should include a provisional amount based on a reasonable estimate of COVID-19 effects or a range of reasonably estimable GAAP results. It should be noted that GAAP financial statement filings like the Form 10-K and Form 10-Q should not include provisional amounts noted above. For additional details, CF Disclosure Guidance: Topic 9 can be found here:  https://www.sec.gov/corpfin/coronavirus-covid-19 Please visit our Coronavirus resource page at /our-thoughts-on/category/Coronavirus for related content. ### A Summary of Pennsylvania’s New Tax Deadlines After the Pennsylvania Department of Revenue announced that the Personal Income Tax (“PIT”) deadline has been extended to July 15, Governor Tom Wolf followed that by signing Act 10 of 2020 (HB 1232), extending the due date for additional state tax filings and payments. Specifically, Act 10 provides for the extension of the following tax filing deadlines: Extends the deadline to July 15, 2020 for declarations of estimated personal income tax. Extends the deadline to July 15, 2020 for payments of estimated personal income tax. Extends the deadline to July 15, 2020 for the filing of informational returns related to Pennsylvania S corporations and partnerships (Form PA-20S/PA-65), and estates and trusts (Form PA-41). Extends the filing date by three months for certain information returns (1099-R, 1099-MISC, and W2-G). Extension of Filing Deadline Applies to Trusts/Estates, Partnerships and S Corporations, (Pennsylvania Department of Revenue, April 2, 2020.) The Department also announced that the extension of the federal due date for calendar year corporations to July 15 means that – by definition of state statute – the due date for Pennsylvania corporations is being extended from May 15 to August 14 for both filing and payment. The June 15 estimated payment due date for corporations remains unchanged. Act 10 also provides an extension of the due date for nonresident withholding and partnership corporate net income tax withholding payments, which are now due July 15. Other notes regarding Pennsylvania tax administration include: The Department is waiving penalties for businesses that were required to make Accelerated Sales Tax prepayments by March 20. For April sales tax payments, the Department is waiving the AST prepayment requirement and asking businesses to simply remit the sales tax they collected in March. The Department has provided extensions on business tax licenses and certifications including sales, use and hotel occupancy, sales tax exemption certificates (for exempt organizations) and others. Act 10 allowed the Pennsylvania Department of Community and Economic Development to also work with local taxing jurisdictions in extending the 2019 deadlines for local tax returns and payments to July 15. Many localities have been slow to issue guidance on whether extensions are available for business privilege and mercantile taxes. We will continue to monitor those jurisdictions and provide an update when information becomes available. If you have any questions on how the tax deadline extensions affect your state and local taxes, contact your Schneider Downs tax advisor. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Business Interruption Claims and COVID-19 Loss reimbursement from business interruption insurance could be an important source of continuing funds for many.Does your business have business interruption insurance?  Do the business interruption provisions of your policy cover losses attributable to the COVID-19 virus?The answers to those two questions are typically dependent on the unique facts and circumstances of a business, its insurance policy, and legal interpretations of policy language.The purpose of this article is not to get into the details of business interruption coverage or the legal bases for coverage or claims.  However, recently bills were introduced in Ohio, New Jersey and Massachusetts that would require every policy of insurance insuring against loss or damage to property for small businesses, which includes the loss of use and occupancy and business interruption to be construed to include coverage for business interruption due to global virus transmission or pandemic, notwithstanding any law, rule or policy language to the contrary.These bills are not law yet and they each have unique particulars.  As can be expected, the bills have generated significant push back from insurers.  Legislators are working with the insurance industry to address concerns with the goal to provide relief to small businesses.How the issues of coverage and potential relief will be resolved is unknown at this time.  In spite of this uncertainty, businesses can immediately prepare for a potential business interruption claim by: Reviewing their existing insurance policies and coverage; Contacting their insurance carrier; Contacting their legal counsel; Reviewing previous budgets and business plans; Updating budgets and business plans to reflect current conditions and potential scenarios for operations during the upcoming six to nine months; Beginning to actively identify and track all impacts that may be included in any claim, such as: Additional direct costs incurred as a result of dealing with the virus, such as cleaning supplies, wage premiums, additional staffing, etc. Lost revenues Lost profits Ongoing or continuing costs Best practices include contemporaneous record keeping and documentation of impacts.  Detailed accounting information is key to any potential claim.  Some additional best practices include: Creating separate cost centers to segregate COVID-19 expenses from normal operating expenses Tracking staffing changes and overtime Issuing separate purchase orders for COVID-19 items.  These best practices are relevant not only to potential business interruption insurance claims, but also to requests for funds from other Federal, State or Local sources as well.  For example, nonprofit healthcare organizations are eligible to request assistance from FEMA for the costs of emergency protective measures taken to respond to COVID-19 and should use these best practices as they seek recovery assistance.The professionals at Schneider Downs are experienced at the preparation of business interruption and other damage claims.  We are at your disposal to assist during these unusual and trying times.  Please contact us.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Financial Boot Camp Series: Asset Location Successful investors are always looking for opportunities to improve their investment performance, reduce taxes, and increase their net worth. Asset allocation and asset location are two financial planning concepts that every successful investor should know. Asset allocation, an investor’s mix of bonds, equities, and other alternative investments such as real estate, has been the cornerstone of investment portfolio construction for decades as industry studies have clearly illustrated the long-term impact asset allocation has on investor volatility and return. Asset location, the lesser known of the two concepts, analyzes the appropriate account (i.e. brokerage/taxable, IRA/401k, Roth IRA) to hold bonds, equities, and other investments in order to maximize one’s after-tax rate of return.To demonstrate the concepts of asset allocation and asset location when working with clients, let us introduce John and Jane Doe. John and Jane Doe are in their mid-50s with a current investment portfolio of $1M.  Of that $1M, $500K of the assets are held in tax-deferred IRA accounts and $500K is held in a taxable brokerage account.Through consultation with their advisor, they have analyzed their current investment portfolio, current income and spending levels, future expected rates of return, desired retirement ages, and other unique financial factors. Through this review, they have concluded to be balanced investors with 50% of their portfolio in various fixed income investments and the other 50% invested in various equity and alternative investments.Once the allocation has been determined, we then focus on asset location as the second step in the portfolio construction process. When evaluating an asset location decision, the goal is to maximize the after-tax rates of return. For John and Jane, we would analyze the after-tax rate of return for bonds, equities, and other alternative investments, respectively, if held inside their IRA accounts as well as in their brokerage accounts.The return and taxation assumptions associated for John and Jane were:  Investment Rate of Return Tax Rate Taxable Bonds 5% 25% Equities / Alternatives 10% 15% Once these baseline assumptions have been established, we then review the after-tax rates of return based on holding the investments in various accounts. For the Doe’s taxable bonds, assuming a 5% rate of return and 25% ordinary income tax rate, the after-tax rate of return if held in their brokerage account would be: 5% * (1 - 25%) = 3.75% after-tax return, whereas taxable bonds held in their IRA would produce a 5% * (1 – 0%) = 5% after-tax return.For equities, assuming a 10% rate of return and 15% long-term capital gain tax rate, the after-tax rate of return for equities held in their brokerage account would be: 10% * (1 – 15%) = 8.5% after-tax return relative to a 10% * (1 -0%) = 10% after-tax return holding equities inside their IRA accounts.In our client example, the conclusion was to hold their bond portfolio in their IRA accounts given the tax benefit and their equity and alternative exposure in their brokerage account. The decision to hold bonds in their IRAs and equities in their brokerage account is backed up by industry studies. There have been several investment industry studies analyzing the benefit of an appropriate asset location strategy with some studies concluding the potential generation of an additional 0.20% to 0.50% of investment return, or $2K - $5K, on a $1M investment portfolio. These industry findings have also illustrated the impact this additional investment return provides each year from improved asset location over extended periods of time (i.e. working years of an investor), which generally results in materially higher net worth upon retirement for investors.While our John and Jane Doe example was oversimplified for the purposes of this article, it does illustrate that maximizing one’s investment rate of return goes well beyond just selecting the highest performing asset classes each year. In our review, best practices for maximizing an investor’s long term rates of return and net worth are initial evaluation and decision on an investor’s asset allocation, analysis to then construct a portfolio to maximize one’s after-tax rate of return via asset location, and finally, on-going monitoring of one’s tax and investment portfolio factors.    Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.  ### CARES Act - Qualified Improvement Property Technical Amendment Included among the provisions of the CARES Act is the long awaited technical correction for the definition of Qualified Improvement Property. In the original Tax Cuts and Jobs Act legislation passed in 2017, the Qualified Improvement Property provisions were meant to allow landlords and other owners of nonresidential real estate to accelerate tax deductions related to the interior renovation of their property. Congress' intent was to generally allow taxpayers to claim the entire cost of such renovations as a tax deduction in the year the renovation was placed into service; or, at the taxpayer's election, claim the deductions over a 15-year period.Instead, a flaw in the drafting of the statute resulted in taxpayers being unable to claim the entire cost as a tax deduction in the year the renovation went into service. The cost would generally have to be deducted over a 39-year time window.Until now, congressional gridlock has prevented the definition of Qualified Improvement Property to be amended to reflect the original intent of lawmakers. The CARES Act corrects the drafting error in the original statute and now permits taxpayers to receive all the intended benefits from the Qualified Improvement Property provisions.As this amendment is effective as of the same date of the original Tax Cuts and Jobs Act in 2017, taxpayers may claim the tax benefits from this corrected definition with their 2019 tax returns. Additionally, they may amend previously filed tax returns if they have performed renovations that otherwise met the definition of Qualified Improvement Property.However, property owners that also made an election to be exempt from the interest limitation rules under IRC 163(j) may not be excited for this change. Making such an election generally precludes a taxpayer from claiming the benefits of the Qualified Improvement Property provisions, and the election is currently not revocable.  There is much discussion regarding whether the government will loosen the restrictions in such situations since the rules were changed retroactively.  We will continue to monitor this development closely.Taxpayers interested in learning more about the new Qualified Improvement Property rules, and interested in other strategies to maximize the tax benefits of constructing or renovating real estate, should contact Schneider Downs' at contactsd@schneiderdowns.com.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Coronavirus Cyber Scams are on the Rise Organizations continue to increase remote workforces and leverage technology as they navigate the challenges of maintaining business as usual during the current COVID-19 pandemic. But as the amount of people working from home increases, so does the inherent cybersecurity risks associated with remote connectivity. Studies have shown that remote workers spend more time online, which means a higher exposure to attacks. Pair the increased exposure to the fact that they are most likely using an employer provided device with network access and you can see why cyber-attacks and scams are trending up. The recent attack targeting the World Health Organization (WHO) illustrates how hackers are modifying their attacks to take advantage of remote workforces. The group targeting WHO did their homework, creating a URL that mirrored the online portal to the WHO internal file system, replicating the user experience of logging on to the network from home with the hope end users would log on to the bogus portal. While this attack was prevented, this same group has gone after the United Nations and major universities, and is prime example of how cyber criminals are adjusting their strategies to the “new normal”. In addition to the increased targeting of remote workforces, cyber criminals are taking full advantage of the COVID-19 pandemic. The ugly truth is whenever there is an emergency, scammers will use the uncertainty and concern of the public to their advantage and it’s no surprise that tens of thousands of domains containing the words coronavirus and/or COVID-19 were purchased dating back to January for what can be assumed as criminal purposes. In response to the rise in COVID-19 fraud reports, the FBI issued a public service announcement (Alert I-032020-PSA) outlining schemes including: Fake CDC Emails – Emails claiming to be from the Centers for Disease Control and Prevention (CDC) or other “official” entities offering information on the virus through links or attachments. Malicious Websites and Apps – Websites and mobile apps that claim to track COVID-19 cases were one of the first reported malware scams, with the most talked about malware replicating the John Hopkins coronavirus tracker of global infection rates and deaths. Phishing Emails – These emails are on the rise with the recent CARES Act, be wary of emails asking for personal information in exchange for stimulus check information, as well as charitable contributions, financial relief options, airline vouchers, and rent/mortgage assistance. Counterfeit Products – Material hoarding has created opportunities for scammers to sell counterfeit products that claim to prevent, treat, diagnose, or cure COVID-19 including hand sanitizers, personal protective equipment, and medicine. The full alert is available online at https://www.ic3.gov/media/2020/200320.aspx. Additionally, the Better Business Bureau has published an alert warning consumers of the first COVID-19 smishing (fraudulent texts) campaign. Scammers are texting under the guise of the federal government with instructions to register for a mandatory COVID-19 tests. The alert provides important instructions on what to do if you receive the text including not clicking and not responding to instructions on disabling the texts (this confirms the number is active for scammers). The full alert is available online at https://www.bbb.org/article/news-releases/21903-scam-alert-mandatory-covid-19-test-texts-are-a-scam. Best Practices As the old adage goes, the best offense is a good defense, and now is as good a time as ever to share best practices and resources to protect your end users from falling victim to an attack. In addition to our recent article, Cybersecurity Best Practices for Working from Home amid the COVID-19 Pandemic, the Schneider Downs Cybersecurity team advises the following common ways to identify a phishing threat: Too Good to be True – Usually the email will include some type of draw that will grab your attention. In the case of the latest scam, a mention of tax savings would be eye-catching. Sense of Urgency – There is usually an expiration date on the aforementioned draw or a warning that you will be locked-out from the online account if the matter is not addressed within a certain period of time. Bogus Hyperlinks – While they can appear to lead to a legitimate website, a bogus hyperlink could actually contain only a slight change or variation that will lead you to a fake website or to download a malicious file. Phishy “From” Addresses – The email address of the sender can easily be spoofed in a similar way to a bogus hyperlink. We recommended that you hover over the address to check for errors or variations in spelling or formatting. Email Tone – It is also important to consider the tone of the email. If it appears to be from a sender that you know, is their pattern of language and email signature consistent with previous correspondence? If it seems out of the ordinary, don’t open the email. Attachments – Any attachment should warrant additional scrutiny. It is prudent to never open unsolicited attachments. If you use password-protected PDFs frequently, the Schneider Downs Cybersecurity Team reminds you to refrain from including your password in the email message. Unusual requests – Many phishing schemes will prompt the reader to send gift cards, cashier’s checks, money orders etc. This should be a red flag that the request is not legitimate. Download our How to Avoid COVID-19 Scams infographic to keep security awareness top-of-mind during this pandemic. How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We offer a comprehensive set of information technology security services including penetration testing, intrusion prevention/detection review, vulnerability assessments, and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### STUDENT LOAN DEBT RELIEF UNDER THE CARES ACT Anyone paying on federally held student loans is getting a reprieve on this debt, thanks to a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorizing the automatic suspension of principal and interest payments on federally held student loans through September 30, 2020. These suspended payments will count towards any student loan forgiveness program.Please note that this suspension of payments applies only to student loans that are held by the federal government. Loans obtained from private lenders such as banks, credit unions and schools, are not eligible for this benefit. Also, some federal student loans under the Federal Family Education Loan (FFEL) Program are owned by commercial lenders, and some Perkins Loans are held by the institution the student attended; therefore, those loans are also ineligible for this suspension. Federal student loan borrowers do not need to take any action to suspend payments. Rather, the loan servicer automatically will suspend all payments, and interest will not accrue. For credit reporting purposes, all suspended payments are being treated as if the borrower made a regularly scheduled payment.For federally owned student loans that are in default, the Department of Education has automatically stopped the collection of these loans, including the garnishment of wages, the offset of tax refunds, and Social Security benefits. No additional action is required on the part of defaulted borrowers of federally owned loans. The CARES Act stipulates that each month for which an involuntary collection is suspended, it will be as if a collection was made.While not a student loan forgiveness program, the CARES Act also expands the tuition reimbursement programs offered by employers under Education Assistance Programs. Specifically, employees do not need to include payments made by an employer as taxable income, up to a maximum of $5,250. This includes principal or interest payments on student loans, or tuition, fees, books, etc., for classroom work. This “income forgiveness” on employer payments is only effective for payments made after March 27, 2020 (the date of the enactment of the CARES Act) and prior to January 1, 2021.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES Act - Modification of Limitation on Business Interest Deductions The Tax Cuts and Jobs Act (TCJA) placed limits on the deductibility of business interest under Section 163(j) of the Internal Revenue Code.  In general, and with a number of exceptions, the TCJA limited business interest to 30% of adjusted taxable income (ATI).  The Act amends the TCJA provisions in a couple of respects.First, the Act generally increases the adjusted taxable income limitation from 30% to 50% for taxable years beginning in 2019 and 2020 (but see special rules below for partnerships). Second, in the case of tax years beginning in 2020, the Act provides that taxpayers may elect to substitute 2019 ATI in place of the ATI calculated for in 2020 only.  This election is made by the partnership (and not the partners).  Since this provision is elective, it should help taxpayers who had a successful year in 2019, but their business and taxable income has declined in 2020 because of the economic challenges wrought by COVID-19; and, taxpayers whose 2020 ATI is higher than it was in 2019, can continue to use the ATI calculated for 2020. Unfortunately, there is a complicated exception applying to partnerships.  First, the 50% ATI limitation does not apply to partnerships for 2019 only; rather, the 30% ATI limit is still applicable for 2019.  Second, and unless a partner decides not to have the rules apply, 50% of the excess business interest disallowed at the partnership level for 2019 shall be treated as business interest paid or accrued by the partner in the partner’s first taxable year beginning in 2020 that is not subject to business interest limitations.  The remaining 50% of excess business interest continues to be deductible under the existing rules of the TCJA. Special rules are applicable in the instance of short taxable years. The above rules are effective for taxable years beginning after December 31, 2018.   Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### IRS EXTENDS DEADLINES FOR SELECT RETIREMENT PLANS With all the attention focused on the stimulus bill, paid leave, and sick leave by Congress, it’s easy to overlook the IRS’s role in assisting sponsors of various retirement plans in overcoming time-sensitive deadlines. Several deadlines previously established by the IRS to adopt amendments or restatements to employer-sponsored retirement plans, specifically 403(b) plans maintained by tax-exempt entities and pre-approved defined benefit pension plans maintained by any employer, were quickly approaching.403(b) PlansThe most immediate impact concerned 403(b) plans. Originally, all 403(b) plan sponsors were required to amend and restate their plan documents by March 31, 2020. It wasn’t until March 27 that the IRS extended the deadline of that initial remedial amendment period until June 30, 2020. The American Retirement Association (ARA) campaigned extensively for a one-year extension, citing that the very entities that sponsor these plans are the same entities directly affected by the COVID-19 pandemic, such as hospitals, public schools, colleges and universities.Pre-Approved Defined Benefit Pension PlansSeveral years ago, the IRS established fixed remedial amendment cycles during which plans could be amended or restated to capture all recent legislation and/or regulatory guidance for both defined contribution and defined benefit plans. The six-year remedial amendment cycle applicable to pre-approved defined benefit pension plans was scheduled to end on April 30, 2020.On March 27, the IRS granted a three-month extension until July 31, 2020. Therefore, if an employer adopts a defined benefit pension plan that the IRS has “pre-approved” based on the 2012 Cumulative List of required amendments no later than July 31, 2020, the IRS will consider the plan to have been amended in a timely manner. Employers eligible to submit an application for a favorable determination letter also have until July 31, 2020 to submit that application.Single-Employer Funding Relief for Both Defined Benefit and Money Purchase PlansThe CARES Act does address funding issues faced by sponsors of either defined benefit or money purchase pension plans (both of these types of plans required the employer to fund benefits for plan participants.Any employer contribution that is due in the 2020 calendar year (including any quarterly contributions) is now delayed until January 1, 2021. However, interest will accrue on the delayed contributions, beginning from the original due date to the payment date, using the effective rate of interest for the plan year that includes the payment date.Relief for employer contribution for defined contribution plans was not addressed in the CARES Act. While relief for such employer contributions has been requested of the IRS, it has not yet been addressed.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### PA Tax Deadline Extended: How to Cancel Scheduled Electronic Personal Income Tax Payments The PA deadline for filing personal income tax payments has been extended to July 15, 2020, due to the economic impact of the COVID-19 pandemic. Taxpayers who have scheduled electronic personal income tax payments before the original April 15, 2020 deadline now have the ability to cancel those payments.The taxpayer is required to contact the PA Department of Revenue (“Department”) at least two business days prior to the scheduled annual or estimated payment date. The Department has created a dedicated email and fax number to field these requests. To request a payment cancellation, the request may be submitted by email to ra-achrevok@pa.gov or by fax to 717-772-9310. The Department requires the following information to be included in the request: taxpayer’s name, Social Security number, payment date, and payment amount to be cancelled.The Department currently does not have the ability to reschedule the taxpayer’s scheduled payment. Therefore, the taxpayer will need to reschedule the payment once the cancellation is processed. The Department does not have the authority to cancel payment dates without the express consent of the taxpayer.Lastly, the Department asks that taxpayers who have scheduled their electronic payments for April 15, 2020 send in their requests for payment cancellation by close of business on Friday, April 10, 2020.  There will likely be many requests from taxpayers during that time, and the Department will need sufficient time to address the high volume of cancellation requests.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Fiscal Filers Beware Fiscal-year tax filers should be aware that the Section 7519 required payments were not extended under IRS Notice 2020-18.  Section 7519 payments are required for all partnerships and S corporations that have made an election under Section 444 to have a tax year other than the required year.  The payment is required by the IRS to prevent taxpayers from deferring a portion of taxable income into a future tax year. IRS Notice 2020-18 has effectively postponed the payment and filing of taxes otherwise due April 15, 2020 for most taxpayers; however, there has been no additional extension for the returns, forms and payments that are due between April 15, 2020 and July 15, 2020.  Per IRS Instructions, the 2019 Form 8752 (Required Payment or Refund Under Section 7519) must be mailed and the required payment made by May 15, 2020. Taxpayers that have a valid election under Section 444 should try to calculate any payment or refund under Section 7519 as soon as possible in order to better manage cash flow through the coming months.  Section 444 taxpayers with a base year income lower than the prior year will most likely net a refund depending on the timing of applicable payments, while Section 444 taxpayers with a base year income higher than the previous year should expect to make a payment.  Any underpayments with regard to Section 7519 could carry up to a 10% penalty as well as interest.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### False Claims Act Enforcement Related to the CARES Act The False Claims Act (FCA) was enacted in 1863 to prevent suppliers from defrauding the Union Army during the Civil War.  Recently, President Trump called the COVID-19 crisis the country finds itself in “our big war,” and the government responded by issuing the $2 trillion Coronavirus Aid Relief and Economic Security Act (CARES Act).  As has been the case during the nearly 140 year history of the False Claims Act, unscrupulous individuals and companies will seek to exploit the crisis for their own financial gain.The CARES Act provides for the appointment of a Special Inspector General for Pandemic Recovery (SIGPR), who will have a similar set of responsibilities as the special inspector following the financial crisis of 2008.  The SIGPR will have subpoena power to investigate the expenditure of federal funds, loans, loan guarantees, and other investments.  In addition, the SIGPR will be part of a joint committee of numerous federal agencies to coordinate the investigation of FCA violations. With the broad scope of the economic hardship faced today, many large and small businesses in a variety of industries will receive federal funds under the CARES Act or other programs. In order to receive funds, individuals and businesses will be required to make certifications of accuracy and compliance during the claims process.  False certifications or non-compliance with requirements would likely be subject to the False Claims Act enforcement through the SIGPR.The FCA creates liability for any person who knowingly submits a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government.  The civil penalty ranges from $5,500 to $11,000 for each false claim, plus treble the amount of the government’s damages.The Department of Justice (DOJ) has already filed its first civil enforcement action related to COVID-19 fraud, and has advised law enforcement agencies and United States Attorneys that it has received reports of other possible fraudulent behavior.Clients and other small businesses should focus on ensuring the claims filed through the CARES Act comply with all certifications and requirements truthfully, and contemporaneously document the basis for all claims.  In addition, businesses should continue to focus on monitoring or establishing controls to detect and prevent fraud, and systems to proactively receive, document, and address employee complaints. If you need the experience of Schneider Downs Business Advisors during this challenging time, please contact shareholders Tom Pratt at tpratt@schneiderdowns.com or Joel Rosenthal at jrosenthal@schneiderdowns.com.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Important Update on SBA 7(a) Loan Program Under CARES Act On March 31, 2020, the U.S. Department of Treasury (“Treasury”) published additional information on the application process for the Paycheck Protection Program (“PPP”) which is summarized below.  More detailed information on the PPP can be found here: /our-thoughts-on/paycheck-protection-program Timing Information: When Can You Apply For The Program? April 3 – Small Businesses and Sole Proprietorships; April 10 – Independent Contractors and Self-employed Individuals. View a copy of the application here: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf. Loan Uses: How Can the Loan Proceeds be Used? Payroll costs, including benefits; Interest on mortgage obligations, incurred before February 15, 2020; Rent, under lease agreements in force before February 15, 2020; and Utilities, for which service began before February 15, 2020. The CARES Act was unclear on employees making over $100,000.  The Treasury has clarified that any employee making over $100,000 can be included, but their salaries, wages, commissions, or tips will be capped at $100,000 on an annualized basis. Forgiveness: What Loan Amounts Can be Forgiven? Specific details on the loan forgiveness can be found here: /our-thoughts-on/paycheck-protection-program The loan amounts will be forgiven as long as: The proceeds are used to cover payroll costs and most mortgage interest, rent, and utility costs over the eight week period after the loan is made; and Employee and compensation levels are maintained. The Treasury has added that, due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Terms: What are the Key Terms of the Loan? The interest rate will be a 0.50% fixed rate with a two-year term (with no prepayment penalties or fees). Required Certifications: What Must the Applicant Certify? The applicant must certify a number of things including that the loan is necessary due to the economic uncertainty and funds will be used for the purposes listed above.  A full list of the certifications are included on the application. Signatories:  Who Must Sign the Application? Sole Proprietorship – Sole Proprietor; Partnership – All general partners and any limited partner owning 20% or more of the equity of the firm; Corporation – All owners of 20% or more of the corporation; LLC’s – All members owning 20% or more of the company; and Any Trustor if the applicant is owned by a trust. The Borrower and Lender fact sheets issued by the Treasury can be found here: https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf and here: https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf For additional updates and analysis, visit Schneider Downs’ Coronavirus blog.  Register here to receive Our Thoughts On articles as they are updated. If you need more information, please reach out to any of your contacts at Schneider Downs or contact us at contactsd@schneiderdowns.com. Please visit our Coronavirus Resource Center for related content. ### SOC 2 + HITRUST vs. HITRUST Certified CSF reports - the Fundamentals The System and Organization Control (SOC) 2 Type II report is performed for service companies by CPA firms to attest to the design and operating effectiveness of the service company’s IT internal controls through AICPA Trust Services Categories. For those in the accounting and IT control world, it is probably the first report that comes to mind when considering reporting on third-party IT controls. However, also emerging in the industry for IT control reporting is the HITRUST Common Security Framework (CSF).  The HITRUST CSF is a certifiable security framework that was originally designed for companies to demonstrate protection of electronic Protected Health Information (ePHI), and will evolve with the release of the CSF version 10 to be applicable to all industries.  It is possible to combine both criteria in a “SOC 2 + HITRUST” report. This article aims to outline the differences in report opportunities with SOC 2 and HITRUST CSF, the possibility of combining both criteria into one report, and how to decide which report is right for your business. What are the major differences between the SOC 2 report and the HITRUST CSF certification? At a high level, SOC 2 Type II reports are performed by CPA firms to opine on the suitability of design and operating effectiveness of a company’s controls, and typically cover a period of one year. The AICPA is the governing body of the report and controls are based on one or more of the AICPA’s Trust Services Categories (Security, Availability, Confidentiality, Privacy, and Processing Integrity). The SOC 2 is a reporting framework in which management identifies their controls in place within a system description, and the audit firm tests and reports on them. The final report will include the independent service auditor’s report, a signed management assertion, the description of the system written by management, and a description of controls tested and their results. Exceptions noted can be addressed by management in a “management response.” However, the auditor does not opine on these responses. HITRUST Certified CSF (validated) reports require a bit more explanation.  A major difference to keep in mind is that the examiner must be a HITRUST CSF Assessor. HITRUST offers training courses for individuals to certify their knowledge, enabling their firm to perform assessments. HITRUST, a private company, owns the certification process and ultimately prepares the final report. The standards tested are leveraged from already existing regulations and standards including HIPAA, NIST 800-53, COBIT, PCI, and ISO 27001. Overall, they cover 14 security and privacy control categories which include: Access Control, Risk Management, and Physical and Environmental Security, among others. Unlike the SOC report, in which a company’s management identifies their own controls, the HITRUST CSF is a control framework that outlines the controls that are required to be implemented by organizations seeking certification. The HITRUST report contains a management representation letter, detail on the scope of systems assessed, detail on each control area, and a testing summary. If any requirements score below a certain threshold, the company’s management is required to submit a Corrective Action Plan (CAP). CAPs are required for certification and reviewed by HITRUST prior to their addition to the report. This certification, once obtained, has a life of two years. Within the second year, there is an interim assessment that consists of testing minimum samples for each domain. What does a combined SOC 2 + HITRUST report entail? The two reports described above are quite extensive and differ in a variety of ways. In acknowledgement of this, the AICPA and HITRUST have collaborated to provide guidance on mapping the HITRUST CSF to Trust Services Criteria (specifically to Security, Availability, Privacy, and Confidentiality), enabling firms to issue a single SOC 2 + HITRUST report. It’s important to note that while both frameworks are used in tandem, the AICPA is the governing body over the combined criteria.  A CPA firm can issue this report, as long as they have a valid license to utilize the HITRUST CSF. The final report is much more similar in nature to the SOC 2 than to the HITRUST report. There is a signed assertion by the company’s management, the independent auditor’s report, and a written description of the system provided by company management. The final section is the major difference, since it contains the results of tests of controls of both the Trust Services criteria and the HITRUST controls tested. This section will depict how the HITRUST controls were mapped into the Trust Services Criteria. The independent auditor’s report contains the auditor’s opinion on both AICPA and HITRUST controls. There is another combined report option which allows an organization to obtain an opinion on SOC 2 + HITRUST and obtain a HITRUST CSF Certification. This is very similar to the combined report described above; however, it also includes a separate HITRUST CSF certification report. What kind of report should my company issue? This question as not as difficult to answer as it seems, even though there are varied options available. First and foremost, understand what kind of report would best serve your clients, or be aware of what your client is already looking for from you. Continue by forming an understanding of what the scope of the report should include. Be sure to consider that if the Processing Integrity category is in scope, there is not a mapping of that category to HITRUST, and therefore the HITRUST CSF cannot report on controls in place for that category.  If your organization accesses, stores, or in any way handles ePHI (or any information of a sensitive nature), consider the combined report to leverage HITRUST’s robust controls and AICPA Security requirements to demonstrate your ability to protect data. If a joint report seems to be the most appropriate route, remember that there are two options. The SOC 2 + HITRUST report will be easier to obtain, granted you ensure that the CPA firm you utilize is licensed to perform this assessment. When SOC 2 and HITRUST criteria are combined, failure in a HITRUST control could also mean a qualified opinion in the SOC report: a double whammy. However, if your organization is able to accept that risk, this report creates significant time and cost efficiencies.  If meeting both criteria and being HITRUST CSF certified is your priority, the best option will be the SOC 2 + HITRUST CSF+ CSF Certification. This is more difficult to obtain and must be performed by an approved CSF assessor. Ultimately though, it will provide the most comprehensive report and the certification. If you would like additional information on the different reports, advice on how to decide which is right for your organization, or to contact us for further information, please visit the following website: https://schneiderdowns.com/cybersecurity/hitrust-csf-reporting ### Summary of the Paycheck Protection Program This article was updated on March 31, 2020.  Updates to this article will be made as new information becomes available.  Schneider Downs continues to track the evolving landscape of Federal Financial Assistance Programs offered due to the disruption of the coronavirus (“COVID-19”).  The CARES Act Paycheck Protection Program (“PPP”) under the Small Business Act is one of the key parts of the Federal government’s relief efforts.  This program is summarized below: 1. Background Section 1102 of the CARES Act, entitled Paycheck Protection Program (“PPP”) has allocated $349 billion to provide 100% federally guaranteed loans to small businesses to assist in keeping workers employed during the pandemic. 2. Eligibility The eligibility requirements for certain small businesses and organizations to qualify for the PPP are as follows: Small business concerns OR any business concern, nonprofit organization, veteran organization, or Tribal business concern are eligible if: It employs not more than the greater of 500 employees OR the size standard in number of employees established by the SBA for the business’ industry.  You can check the size requirements by number of employees at this website: https://www.sba.gov/size-standards/; They are sole proprietors, independent contractors, or eligible self-employed individuals; A business concern with more than 1 physical location that employs not more than 500 employees per physical location AND is assigned a NAICS code beginning with 72.  See the following website for details on what industries are included in NAICS Code 72: https://www.naics.com/six-digit-naics/?code=72. The 500 employee (or SBA industry size standard) threshold includes all employees whether they be full-time, part-time, or any other status. Additionally, the determination of a business concern’s number of employees is subject to the affiliation rules under Section 121.0103, Title 13, Code of Federal Regulations.  In general, affiliation applies when a business concern (including nonprofit organizations or veterans organizations) has control or has the power to control more than one business.  In determining a concern’s number of employees, the SBA includes the concern’s number of employees and the number of employees of all of its domestic and foreign affiliates. However, the CARES Act allows for a waiver of these affiliation rules for: Any business with not more than 500 employees AND is in NAICS 72; Any business concern operating as a franchise that is assigned a franchiser identifier code (“FIC”) by the SBA;  Whether or not a franchise has a FIC can be determined at this website: https://www.sba.gov/sites/default/files/2020-03/FrnchsTbl_03232020_UPLOAD.pdf; Any business concern that receives financial assistance from a company licensed under Section 301 of the Small Business Investment Act of 1958. 3. Loan Amounts Loan amounts can be up to 2.5x a borrower’s average monthly payroll costs (based on trailing twelve months), not to exceed $10 million.  Payroll costs are defined to include: salary, wage, commission, or similar compensation (capped at $100,000 on an annualized basis); payment of cash tip or equivalent; payment for vacation, parental, family, medical, or sick leave; allowance for dismissal or separation; payment required for the provisions of group health care benefits, including insurance premiums; payment of any retirement benefit; or payment of state or local tax assessed on the compensation of employees. For Sole Proprietors, Independent Contractors, and Self-Employed Individuals, payroll costs include any compensation to or income that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period. Payroll costs exclude: the compensation of an individual employee in excess of an annual salary of $100,000 (pro-rated for the covered period); taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986; any compensation of an employee whose principal place of residence is outside of the U.S.; qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (Public Law 116–127). 4. Documentation Lenders will ask for a good faith certification that: The uncertainty of economic conditions makes the loan necessary; The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments. Borrower does not have a duplicative application for a loan for the purpose and amounts applied for under PPP. From February 15, 2020 to December 31, 2020, the borrower has not received a duplicative loan under the PPP. We are waiting for guidance on what the specific information required for the loan application will be. 5. Loan Forgiveness A borrower is eligible for loan forgiveness equal to the amount the borrower spent during the eight-week period starting on the date of loan origination on the following items (not to exceed the loan’s principal): Payroll costs, as defined above; Interest on the mortgage obligation incurred in the ordinary course of business; Rent on a leasing agreement; Payments on utilities (electricity, gas, water, transportation, telephone, or internet); For borrowers with tipped employees, additional wages paid to those employees. However, loan forgiveness can be reduced if there is a reduction in: (1) the number of employees; OR (2) employee wages in excess of 25% since the goal of the Act is to provide “payroll protection”.  Reductions in employment or wages that occur during the period beginning on February 15, 2020, and ending 30 days after enactment of the CARES Act (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages. If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal (jrosenthal@schneiderdowns.com) or Steve Thimons (sthimons@schneiderdowns.com) directly. Please visit our Coronavirus Resource Center for related content. ### Tax Court Rules on Side of Taxpayer of Family Limited Partnership in Precedential Gift Tax Case In a decision by U.S. Tax Court reached in early March, the taxpayer was deemed victorious when it came to the valuation of nonvoting interests held by a family limited partnership and gifted to various estate planning tools. Grieve v. Commissioner, T.C. Memo. 2020-28 (March 2, 2020), is a precedential case regarding the gift tax value of 99.8% nonvoting interests in LLCs comprised predominantly of marketable assets. In the case, the Tax Court rejected the IRS valuation approach, which was based on the notion that a willing buyer of nonvoting shares would attempt to additionally purchase the voting shares, instead confirming the taxpayer’s valuation, which utilized the market approach and included discounts for lack of control and lack of marketability in determining the fair market value for gift tax purposes.The facts of the case: Pierson M. Grieve (the “Taxpayer”) established the Grieve Family Limited Partnership to manage his wealth sometime around 1990 with Pierson M. Grieve Management Corp. (“PMG”) as general partner. Taxpayer’s daughter Margaret, who helped Taxpayer manage his wealth, purchased PMG from Taxpayer in 2008 and became its president. PMG then owned the Class A voting shares of two LLCs created in 2012 and 2013, with ownership interests making up 0.2% of each LLC. The remaining 99.8% of each LLC was comprised of Class B nonvoting shares, the shares at issue in this case. These shares were owned either in a revocable trust or outright and, in 2013, were gifted to a two-year GRAT in one instance and to an irrevocable trust in exchange for a single-life private annuity in the other. The gifts were listed on Taxpayer’s 2013 gift tax return based on appraisal reports using a cost approach method with the fair market values being adjusted by applying lack of control and lack of marketability discounts to each LLC. The IRS issued a notice of deficiency, significantly increasing the fair market values of the LLC interests. This case centers on the Tax Court’s determination of an appropriate valuation method.At trial, Taxpayer provided additional valuation reports, including well-researched and well-reasoned reports using the market approach and income approach methods, and employed previous rulings (see Mandelbaum v. Commissioner, T.C. Memo. 1995-255, aff’d, 91 F.3d 124 (3d Cir. 1996) in its argument of how fair market value should be determined. The IRS took a vastly different approach and pushed for a fair market value based on the premise that a prospective buyer would try to purchase the Class A voting shares of each LLC, an approach that effectively negated any discounts for lack of control and lack of marketability.Tax Court determined that the argument of the IRS was ineffective, as it was not based on data or evidence, but supported by an additional step, the requirement of the prospective buyer to attempt to purchase the voting shares in addition to the nonvoting. By refusing to accept the “imaginary scenarios” as required by the IRS, Tax Court accepted the market approach as outlined by Taxpayer.The decision not only accepted the values as reported on the gift tax return, but also upheld the Tax Court’s acceptance of the inclusion of lack of control and lack of marketability discounts as they apply to the determination of fair market value for gifting purposes. The case will undoubtedly be cited in the future to reaffirm the fair market value of gifts from family limited partnerships to various estate planning vehicles.To learn more about family limited partnerships, gifts or other estate planning strategies, contact us. ### Effective Date for Implementation of Families First Coronavirus Response Act (FFCRA) is April 1: Exemptions for Small Employers New Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act provisions under the FFCRA take effect on April 1, 2020.  In general, the law mandates that small businesses with less than 500 employees provide employees with sick and/or paid family medical leave (see our article /our-thoughts-on/tax-impact-of-coronavirus-bill-part-2).  However, there is an exemption from these rules for employers, including tax exempt organizations, with less than 50 employees.Small Employers with Less than 50 EmployeesThe IRS, on its website, has provided some guidance for small employers who may be exempted from the small business provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act.  As you may recall, the FFCRA requires smaller employers (generally with less than 500 employees) to pay for employee benefits they were not required to pay prior to enactment.However, there is potential exemption from these rules for employers with less than 50 employees.  What was unknown was how the exemption would work.  Finally, there is some guidance.  The IRS recently updated its website providing questions and answers to the requirements of the FFCRA.  In questions 58 and 59, the IRS provides the following:58.  When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern.  A small business may claim this exemption if an authorized officer of the business has determined that: The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;   The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or   There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity. 59.  If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave? A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern.  This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the: Employer employs fewer than 50 employees; Leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and An authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied. The Department encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.It does not appear, at this time, that an employer needs to file any documents with the DOL (they should confirm with their legal advisors) but based upon the guidance published in the questions and answers, the small business can claim the exemption if an authorized officer of the business made the determination based upon the 3 requirements.  It’s recommended that the business and officer specifically document how the 3 requirements were met.  Question 4 in the Q&A indicates that more details will be provided in forthcoming regulations.  But these questions and answers provided by the IRS begin to lay the foundation upon which certain small businesses can place reliance.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act and or the Families First Coronavirus Response Act.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### City of Columbus Extends Tax Deadline to July 15, 2020 The Columbus Office of the City Auditor has announced the city’s deadline to file and pay city income tax has been extended to July 15, 2020. The extension of the deadline conforms to guidance issued by both the IRS and the Ohio Department of Taxation as a form of relief to taxpayers who are effected by the COVID-19 pandemic.The extension applies to individuals filing their Columbus individual income tax and businesses filing their annual municipal net profit returns. Quarterly estimated payment deadlines for individuals and businesses are also being extended for their first and second quarter payments. The payments previously due April 15th and June 15th now have a deadline of July 15th.This filing extension does not apply to employer deposits of withholding or returns for hotel/motel/short-term rental tax or admissions tax.Under Ohio HB 197, which has recently been signed by Ohio Governor Mike DeWine, interest charges on payments made during the extension will be waived. Similarly, the City of Columbus will not assess penalties on taxpayers before the July 15th deadline.If you have any questions on how the tax deadline extension resulting from the COVID-19 pandemic effects your state and local taxes, please contact your Schneider Downs tax advisor.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Coronavirus Small Business Financial Relief Ohio Update This article was updated on March 30, 2020.  Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus pandemic (“COVID-19”).   The following are some of the many resources available for impacted small businesses in Ohio due to the COVID-19 pandemic.  Schneider Downs can assist your organization with any of these programs. State Programs and Information Ohio Bureau of Workers’ Compensation The Ohio Bureau of Workers’ Compensation will defer business premiums for March, April and May 2020.  While payments are deferred until June 1, 2020, the state could reassess before then. FAQs from the Ohio Bureau of Workers’ Compensation can be found here: https://www.bwc.ohio.gov/downloads/blankpdf/COVID-19-BWCFAQs.pdf Coronavirus and Unemployment Insurance Benefits FAQs from the Ohio Department of Job and Family Services can be found here: http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm?fbclid=IwAR1TvrdQew5Ze6orqygYb2UoW5WysBOSeDT69vaRAJ9KGRvFDF8UG7lw2OY Health Insurance Coverage Flexibility The Superintendent of Insurance has issued the following requirement of Insurers: Employee Eligibility – Insurers must permit employers to continue covering employees under group policies even if the employee would become ineligible due to a decrease in hours worked per week. Grace Period for Premiums – All health insurers are required to provide the option of deferring payments without interest for up to 60 days from each original premium due date. Continuation Coverage – For employers with 20 or more employees, as long as one person is actively employed, eligible employees can continue coverage under COBRA. For employers with less than 20 employees and at least one active employee, eligible employees may elect to continue coverage for up to 12 months. Special Enrollment – Employees who lose coverage are eligible for a special enrollment period and premium subsidies may be available. Ohio Department of Jobs and Family Services – Shared Work Ohio Program A voluntary layoff aversion program which allows workers to remain employed and employers to retrain staff during times of reduced business activity.  Under this plan: A participating employer reduces affected employees’ hours in a uniform manner; The participating employee works the reduced hours each week; and ODJFS provides eligible individuals an unemployment insurance benefit proportionate to their reduced hours. In order to qualify, companies are required to: Have at least two affected, full-time employees; Be current on all Ohio unemployment insurance; and Agree to the program requirements. More details can be found here: http://jfs.ohio.gov/ouio/SharedWorkOhio/ Ohio Department of Commerce – One-Time Liquor Buyback Bars and restaurants can return unopened, high-proof liquor products (obtained within the past 30 days) to the agency where they purchased the product. This is also available to those with temporary (F2) permits for events scheduled between March 12 and April 6, 2020.  Instructions can be found here: https://myemail.constantcontact.com/UPDATED-PROCESS--Wholesale-Return-Requests.html?soid=1102307935227&aid=Qgw_kAcrofU The Ohio Department of Transportation (ODOT) ODOT is modifying the process for haulers carrying heavy loads of essential foods.  While oversized loads usually require advanced permission, haulers can download and print a permit at https://transportation.ohio.gov/wps/portal/gov/odot/. Hauling Permits The Ohio Department of Transportation is modifying the permitting process for haulers carrying heavy loads of essential goods to waive a requirement for advanced permission. This will allow more haulers to exceed certain weight and size restrictions for loads of items such as food, non- alcoholic beverages, medical supplies and cleaning products. For information, and to download the permit, visit transportation.ohio.gov. Tolling of Deadlines for Mechanics' Liens Included in Ohio Coronavirus Relief Bill March 27, 2020 On Wednesday, March 25, 2020, the Ohio General Assembly passed Am. Sub. H.B. 197 (“H.B. 197”), which provides measures for emergency relief to families, schools, businesses and communities during the COVID-19 pandemic. Included in that relief is a mandatory tolling of various criminal, civil and administrative deadlines that will impact both active litigants as well as essential businesses that are continuing to operate during these uncertain times. Ohio Governor Mike DeWine signed the bill into law on March 27, 2020. Of particular importance for the construction industry, H.B. 197 will toll the time period for recording and serving mechanics’ liens pursuant to Ohio Revised Code Section 1311. Notably, Section 22 of H.B. 197 includes a catchall provision that tolls any other criminal, civil, or administrative time limitation or deadline under the Revised Code.” Since the time periods for filing of mechanics’ liens are strict requirements set forth in the Ohio Revised Code (e.g., R.C. 1311, et seq.), this enactment will directly impact the deadlines for both recording and serving the affidavits for mechanics’ liens and other related documents, such as notices of commencement, notices of furnishing and notices to commence suit. Accordingly, it is important for anyone involved in the construction industry to be mindful of these issues, including, but not limited to, owners, developers, contractors, vendors, suppliers and laborers. TOLLING APPLIES ONLY DURING THE “EMERGENCY PERIOD” Importantly, the tolling of these statutory deadlines applies only to deadlines that fall between March 9, 2020 and July 30, 2020. This time period corresponds to the date of Governor DeWine’s declaration of a state of emergency in Ohio due to the COVID-19 pandemic. The tolling will expire on the date that Governor DeWine rescinds the emergency order or July 30, 2020, whichever is sooner. Unless further legislative action is taken to extend this protection, the tolling period will end on July 30, 2020 at the latest – sooner if Governor DeWine lifts his state of emergency order before July 30, 2020. Funding Opportunities at The Columbus Foundation The Columbus Foundation has activated its Emergency Response Fund.  The fund assists nonprofits who are responding to COVID-19 and experiencing financial challenges as a result of that response. TechCred Program The TechCred program is available to Ohio employers who upskill their employees while they are unable to perform their day-to-day duties.  Some key summary points of the program are: $2,000 in reimbursement for every technology-focused credential earned by an employee, up to $30,000 per employer per round; and The current application period is open until March 31. DVI Funding (National Program) The Coronavirus Financial Bridge Loan Program provides unsecured cash loans up to $100,000 to U.S. Citizens nationwide. Honeycomb Crowdfunded Small Business Relief Loan (National Program) To help deliver the working capital that businesses need, Honeycomb is offering 45-day payment free periods,  6-month interest-only periods and reducing posting, success and investor fees. For more information on the loan program, please visit the link below. https://www.honeycombcredit.com/relief Businesses Helping Abbott Labs Abbott has received emergency use authorization (EUA) from the FDA for its molecular test for the identification of SARS-CoV-2, the virus that causes COVID-19. The company is deploying 150,000 laboratory tests immediately. Testings have already been sent to hospital and academic medical center labs in 18 states including Illinois, California, New York, Massachusetts and Washington. Abbott is scaling up production at its U.S. manufacturing location to reach capacity for one million tests per week by end of March. To read more about what Abbott Labs is doing, click here. AEP & the American Electric Power Foundation AEP has temporarily suspended all service disconnections for nonpayment. If a customer is having difficulty paying their bill, they should contact AEP by phone, Facebook or Twitter to discuss payment options. The American Electric Power Foundation is donating $1.5 million in emergency funds, including approximately $500,000 in Ohio, to support basic human needs and help address the hardships faced by customers and communities. Anheuser Busch Anheuser Busch (Ambev SA) is using one of its breweries to produce a half a million bottles of hand sanitizer that will be used in public hospitals. AT&T Consistent with FCC Chairman Pai's "Keep American's Connected Pledge," AT&T is supporting customers for the next 60 days by: Not terminating the service of any wireless, home phone or broadband residential or small business customer because of their inability to pay their bill due to disruptions caused by COVID-19; Waiving any late payment fees that any wireless, home phone or broadband residential or small business customer may incur due to economic hardship related to COVID-19; and Keeping their public Wi-Fi hotspots open for any American who needs them. More information found here. Verizon For the next 60 days, Verizon will not terminate the service and will waive any late payment fees of any wireless, home phone or broadband residential or small business customers because of their inability to pay their bill due to COVID-19 Aunt Flow Aunt Flow has switched their manufacturing line over to produce FDA approved masks. Those needing masks can contact the company at hello@auntflow.com or 562-320-8250 ext. 102. Charter Communications Charter Communications/Spectrum plans to offer free internet to students without access as COVID-19 forces some schools to switch to online learning. Beginning March 16, the company commits to offering free internet for 60 days to households with K-12 or college students who don't already have a Spectrum subscription. The company also plans to partner with school districts to ensure communities are aware of the tools to help students learn remotely. It is also opening Wi-Fi hotspots for public use. To enroll, call 1-844-488-8395, or find information here. Columbia Gas Columbia Gas has announced it will voluntarily suspend all shutoffs due to nonpayment in response to the COVID-19 pandemic. This includes all residential, commercial and industrial customers and will remain in effect until further notice. In addition, Columbia Gas will offer its most flexible payment plans to customers who indicate either an impact or hardship as a result of COVID-19, and will suspend late payment charges until May 1. CVS CVS is hiring thousands of people across the U.S. from retail associates to pharmacy technicians. To find available positions and additional information on hiring, click here. For customers, CVS has implemented several new programs including waiving the fee to have prescriptions delivered. They're also working with insurers to waive early refill limits. To learn more about what CVS is doing during the pandemic, click here. Facebook Facebook has announced the creation of a $100 million grant program to help 30,000 small businesses around the world. This includes cash grants and ad credits. More information can be found here. GE Healthcare GE Healthcare and Ford Motor Company will work together to scale the production of ventilators, arming clinicians with medical equipment important in the treatment of COVID-19 patients. Through this collaboration, Ford will provide its technical and production expertise with the goal of manufacturing a simplified design of GE Healthcare's existing ventilator. This new system would be built specifically to address urgent needs during the pandemic, equipped with the essential functions required to safely treat COVID-19 patients. More information on what GE Healthcare is doing during the pandemic can be found here. Read about how GE employees and retirees have come together to help produce much-needed ventilators here. Marathon Petroleum Marathon Petroleum has donated over 100,000 N-95 masks to Ohio hospitals. Nationwide The Nationwide Foundation is donating a total of $5 million to help and support charities during the coronavirus pandemic. The foundation said it's giving $1 million each in national response grants to the American Red Cross, Feeding America and the United Way. Grants worth a total of $2 million will be given to communities where Nationwide companies do business. The foundation also donated medical supplies including masks and surgical gloves to Nationwide Children's Hospital and Ohio Health in Columbus, and Mercy One and UnityPoint in Des Moines, Iowa. Red Roof Inn Red Roof Inn understands the difficulty of this uncertain time especially for university and continuing education students who were suddenly displaced as a result of campuses closing due to CDC protocols in response to COVID-19. College students displaced because of their schools' closure can receive 30% off a hotel stay through May 31, 2020. Those impacted can make reservations at redroof.com and use VP+/ Promo Code 627535 or call 800-733-7663 and ask for the student Support Program Special Discount. Rogue Fitness The Columbus-based international fitness manufacturer has added production of medical supplies and equipment to their expansive line of fitness equipment. They are currently sewing masks and surgical gowns and are manufacturing medical equipment. Rogue Fitness is currently hiring 100 people at their Columbus headquarters to keep up with these new products. For job listings, click here. If you need assistance with any of these programs, please reach out to any of your contacts at Schneider Downs or contact Gene Logan (elogan@schneiderdowns.com) or Andrea Pfaadt (apfaadt@schneiderdowns.com) directly. Please see the following article for a summary of federal and Pennsylvania specific programs: https://schneiderdowns.com/our-thoughts-on/coronavirus-small-business-financial-relief-options. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### OMB Relief for Recipients of Federal Financial Assistance Due to COVID-19 The Office of Management of Budget (OMB) has issued additional relief to recipients and applicants of federal financial assistance due to the impact of the novel coronavirus (COVID-19) outbreak and the loss of operations. The OMB lists 13 provisions authorizing federal awarding agencies to implement as they deem appropriate and as permitted by law, including: Flexibility with System for Award Management (SAM) registration. Provides the capability to relax active SAM registration at time of application in order to expeditiously issue funding. Current registrations that expire before May 16 will be afforded a one-time, 60-day extension. Flexibility with application deadlines. Agencies have been asked to provide specific guidance on their websites re their flexibility with the submission of applications. Waiver for Notice of Funding Opportunities (NOFO) publication. Awarding agencies can publish emergency NOFOs for less than 30 days. No-cost extensions on expiring awards. Agencies may extend automatically awards active as of March 31 and scheduled to expire up to December 31, 2020 at no-cost for a period of up to 12 months. Abbreviated noncompetitive continuation requests. Asks recipients to verify that they are in a position to resume or restore project activities and accept a planned continuation award. Allowability of salaries and of project activities. Recipients can continue to charge salaries and benefits to currently active federal awards consistent with the recipient’s policy of paying salaries (under unexpected or extraordinary circumstances) from all funding sources. Agencies may also allow to be charged to federal awards other costs necessary to resume activities supported by the award, consistent with applicable cost principles. Recipients are reminded to maintain appropriate records; cost documentation is required. Allowability of costs not normally chargeable to awards. Agencies may allow recipients that incur costs related to cancellation of events, travel or other activities necessary and reasonable for the performance of the award, or the pausing and restarting of grant-funded activities due to the public health emergency to charge costs to their award. Recipients are reminded that they should not assume additional funds will be available should the charging of these costs result in a shortage of funds to eventually carry out the purpose of the project. Prior approval requirement waivers. Awarding agencies are authorized to waive prior approval requirements. Exemption of certain procurement requirements. With regard to geographical preferences, and regarding contracting small and minority businesses, womens’ business enterprises and labor surplus area firms. Extension of financial, performance and other reporting. Grantees may be permitted to delay submission of required reports for up to three months beyond the normal due date. Extension of currently approved indirect cost rates. Grantees may be permitted to use the currently approved IDR, and agencies may approve grantee requests for an extension of use of current rates for one additional year. Extension of closeout. Agencies may grant delays in the submission of any pending financial and other reports, and may not be more than one year after the award expires. Extension of Single Audit submission. Permits recipients with fiscal year-ends through June 30, 2020, to delay Single Audit reporting to six months beyond the normal due date. Recipients of federal financial aid should familiarize themselves with these additional flexibilities. If you have any questions, please contact a member of the Schneider Downs Not-For-Profit team.To receive the latest information on grants, including the COVID-19 update, sign up for the Grants Community Practice at https://www.performance.gov/CAP/grants/.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Resources for Not-for-Profits to Manage Cash Flow during the Coronavirus Pandemic As organizations throughout the United States continue to reduce operations, cancel events and go dark the old adage “cash is king” comes into clear focus.  Many organizations, after only a couple of weeks of pandemic related closures, are left uncertain as to how long payroll can be met and when vendors can be paid.  With these uncertain times it is critical for organizations to research and consider cash flow options and to develop an action plan to manage cash in both the short term and long term.  This article will address some of the areas your organization can consider when developing a cash flow plan.Operating Expenses - The first line of defense for the organization may well be to perform an assessment of the opportunities within your organization to determine non-essential or excessive expenditures as well as those that can be negotiated.  Some areas to consider for containment might include: Negotiate rental and other lease payments Curtail staff travel and entertainment Curtail staff “perks” Defer elective pension plan contributions Postpone planned long-term contractual commitments Convert mail appeals to online via social media Postpone publications and advertising Payroll – Although an anguishing decision, it might be necessary to make some difficult decisions related to payroll.  Options run the gambit from a reduction in workforce, to furloughs to wage reductions or freezes.  These decisions are as much financial as they are cultural.  Before taking action we encourage you to consider all governmental and other financial assistance options available to you to preserve your workforce.    In particular, the timing or duration of furloughs might impact SBA loan programs or unemployment compensation benefits. Donors - Many organizations might think now is not the time to ask our donors for additional contributions, as the entire economy is having challenges.  However there might be some options in this area, consider: Ask donors to release restrictions on previous donations, for use in operations Ask sponsors and ticket holders from cancelled events to convert their event payments to unrestricted gifts Strategically approach your most loyal donor base to discuss options for an emergency gift Approach long-term vendors, who might have excess inventory, for an in-kind gift Contact community resources that are providing emergency aid, such as local foundations and the United Way Research the Pittsburgh Foundation’s Emergency Action Fund or the Columbus Foundation Emergency Response Fund Banking Relationships – Contact your financial institution.  Banks are working to provide short-term and long-term solutions for their clients and the federal stimulus packages are providing opportunities for banks to assist.  Some topics to discuss with your bank include: SBA loan programs Payment deferral options Line of credit modifications to expand borrowing availability Refinancing to capitalize on rate reductions Leveraging owned real estate, without existing debt, to free up “trapped liquidity” Governmental Programs – Federal, state and local governments have enacted several programs and others are still in negotiation.  These relief packages are evolving quickly, but as of the time of this article, here are some areas for consideration Employer payroll tax deferral SBA emergency loans Expanded unemployment compensation benefits PA Department of Community and Economic Development working capital loans PA and Ohio governmental programs URA payment deferrals and emergency extended credit for its small business borrowers Bridgeway Capital financing and resources to small businesses and nonprofits Other stimulus packages to be enacted As we have all learned over the last few weeks, the scale and impact of the Coronavirus pandemic are evolving at a fast pace.  We will continue to bring the not-for-profit community Our Thoughts On ways to navigate this unprecedented challenge.  In the meantime, we encourage you to visit the Schneider Downs website for the most recent updates related to the COVID-19 legislation and business issues. ### The Impact of COVID-19 on Transfer Pricing Strategies of Multinational Corporations Corporations operating in almost every country are struggling to cope with repercussions of the COVID-19 pandemic sweeping the globe. While most companies try to figure out how to manage the swift decline – or sometimes even complete halt – in production of goods and consumer sales, multinational organizations face an additional challenge: these corporations must also consider the reasonability of the pricing strategies being utilized for their intercompany purchases and sales of goods and services. Transfer pricing regimes look to determine whether related companies are purchasing and selling goods to one another in arm's-length transactions. That is, are related companies buying and selling goods and services to and from each other using the same pricing mechanisms and strategies that two nonrelated companies would employ when purchasing and selling goods to one another? The answer to this question is not simply yes or no. In fact, many corporations spend a lot of money and resources determining how to build and maintain their intercompany pricing strategy to comply with this arm's-length standard. Pricing strategies are often driven by the risk each party takes on in the relationship, as well as the costs and revenues associated with the manufacture and sales from one entity to another. In a perfect – well, at least a normal – world, various risks, costs and revenues are things that can be budgeted and forecasted with some level of confidence on a quarterly or annual basis. So what happens to our thoughtfully crafted transfer pricing strategies when a pandemic happens and everything we planned for is no longer possible? This is the question we’ll need to continue to answer in the coming months. It largely depends both on how risk is defined from a legal perspective, as well as how we as accountants and analysts quantify the financial and economic impact of such an unprecedented situation on pricing strategies. If we put on our lawyer caps for a moment, we can start to work through questions that focus on determining which of our related parties bear the ultimate risks associated with profits and losses. It’s those companies that are truly bearing the risks that should be recognizing profits and losses. We might also ask which companies should be exempted altogether from the transfer pricing policies due to force majeure clauses in their related-party contracts? If exempted, these companies would not need to worry about deviating outside of "acceptable ranges" and could report their financials as is, with relatively low risk. Switching to our accountant hat, we ask slightly different questions, such as should companies be working to change their pricing strategies now, or documenting their financial operations within previously established transfer pricing policies while waiting for operations to go back to "normal?" Also, if a company is able to quantify the periods for which COVID-19 has had an extraordinary impact on its business, what does an acceptable alternate analyses look like? Finally, and maybe the most complicated to answer, how does one identify comparables – a principle feature in any transfer pricing study – in a world that’s been virtually shut down for almost a month (potentially longer for companies operating in China, Italy and other countries that have been feeling the impact of COVID-19 since January)? For many of these questions, like so much else right now, only time will yield the appropriate answer. Due to the subjective nature of transfer pricing, the approach for how to best deal with these questions within your own organization will likely be unique to your business structure and industry. No matter the business or industry, however, there will be a crucial need for multinational companies who have faced a change to their business due to COVID-19 to document those abnormalities in the coming year. If you’d like to discuss the impact COVID-19 may be having on your current transfer pricing policy, or your current transfer pricing strategy in general, the SD team would love to hear from you! ### Tax Day Extended to July 15: What That Means for Pennsylvania Corporate Net Income Tax Payers As previously discussed, the IRS recently extended the deadline for filing income taxes from April 15 to July 15 in an effort to provide relief to taxpayers. The 90-day extension will have a significant impact on Pennsylvania Corporate Net Income (CNIT) taxpayers.Currently, the Pennsylvania Department of Revenue (Department) has only announced that the deadline has been moved for the state’s individual income taxpayers and has remained silent on whether the extension also applies to CNIT taxpayers.The federal deadline being extended may in itself initiate changes to Pennsylvania’s CNIT group, since the state deadline is tied to the federal individual income tax deadline by Pennsylvania law. For example, IRS Notice 2020-18 states that corporations are included in the definition of “person,” to which the extension of the federal tax deadline would presumably be applicable, and Pennsylvania Section 403(a)(1)(ii) of the Tax Reform Code of 1971 states that the PA CNIT is due “… on or before 30 days after the return to the federal government is due …” Since the language in the statute expressly ties the Pennsylvania CNIT deadline to the federal deadline, by operation of law – and regardless of guidance from the Department – it’s likely the PA CNIT deadline will be extended to August 15. Stay tuned.Payment DatesAs with the filing date, the Pennsylvania CNIT payment deadline is also likely extended to August 15 by operation of law pursuant to the extension of the federal deadline, since Section 403(a)(1)(ii) applies to both the filing date and the payment date of Pennsylvania CNIT. It’s currently unclear whether penalties or interest would accrue due to the extension, but if Pennsylvania CNIT receives similar treatment to the state’s Personal Income Tax, no penalties or interest will accrue, based on prior guidance from the Department.Estimated Payments for 2020The federal extension would likely have no impact on current due dates of estimated tax payments for Pennsylvania CNIT, since Pennsylvania tax laws pertaining to due dates are not tied to the federal code. PA HB 1232, approved by the state legislature and signed into law by Governor Wolf, allows the Department to extend estimated payment deadlines for Pennsylvania Personal Income Tax, but lacks language that would give the Department express authority to change estimated tax deadlines for CNIT taxpayers.Our tax advisors will continue to monitor state legislation that affects CNIT taxpayers. If you have questions about how the extended tax deadline affects your Pennsylvania CNIT, contact Schneider Downs.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### SOC 2 Considerations When Moving to a Remote Workforce Has your organization recently moved to a remote workforce due to the COVID-19 pandemic? Although the extra-casual dress code and commute might be nice, don’t allow the change in routine to impact the criteria essential to a SOC 2 examination. Moving to a virtual workforce poses many challenges and new risks that need to be considered for SOC 2 examinations including: Standardization – Moving to a complete remote workforce may impact the scope of your organizations control environment more than you think. The American Institute of CPAs (AICPA) provides criteria that an organization should implement logical access security software, infrastructure, and architectures to protect them from security events (AICPA, Trust Services Criteria). This directly relates to those accessing organizational data from outside the organization network. Many organizations opt to implement two-factor authentication, virtual private networks, or encrypted hard drives for existing remote workers to satisfy this criteria. Organizations must be cognizant to extend the current controls implemented from their pre-existing remote workforce to the entire organization to ensure they are secure and that they are not deficient during their SOC 2 examination. Vulnerabilities – A risk assessment should be performed to identify potential gaps specific to a remote workforce. It is important to understand that your employees may not just work from home, but rather anywhere that has internet access such as hotels and airports. Controls should be implemented or revised to mitigate risk from vulnerabilities identified, such as disabling removable media, providing more robust security awareness training, and/or requiring users to acknowledge a remote work policy. Additional controls could include web content filtering, disabling local administrative rights on employee machines, and disabling VPN split tunneling. Security awareness training should provide employees with the knowledge to maintain proper cyber hygiene away from the office. Documentation – Working remotely provides a great opportunity to use collaborative tools to communicate with your team. Although substituting an in-person board of director’s meeting with a video call may sound nice, it is important to perform the same level of documentation that would typically be performed for an in-person meeting. This includes formally documenting the agenda, meeting minutes, and any approvals that result from the meeting. A SOC 2 examination relies on documentation to ensure operating effectiveness of controls. Lack of documentation to show a meeting occurred or evidence of specific items covered during the meeting can be the difference between a clean report and a report with deficiencies. Policies and procedures should be developed to ensure proper documentation guidelines. Further, a retention policy should be put into place to ensure documentation is not removed or deleted prior to the end of its useful life. Timeliness – SOC 2 Type II examinations require evidence to show the operating effectiveness of a control. New controls and expanded existing controls can add considerable time to the documentation gathering phase of an engagement. Planning your resources accordingly will allow the engagement to progress smoothly and on schedule. Understanding the impact of a remote workforce on your SOC 2 examination is important to ensure all controls operate effectively and are relevant to your organizations environment. How Can Schneider Downs Help? For more information on our System and Organization Control (SOC) Reports services, please visit /reporting-controls-service-organization-soc-reports-ssae-18-audits. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. Sources: https://www.aicpa.org/content/dam/aicpa/interestareas/frc/assuranceadvisoryservices/downloadabledocuments/trust-services-criteria.pdf ### 2020 Recovery Rebates for Individuals The most publicized part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act) is the immediate cash payments to individuals.  Taxpayers with adjusted gross income (AGI) up to $75,000 ($150,000 in the case of joint returns and $112,500 for head of household) will receive a check for $1,200 ($2,400 in the case of joint returns).  In the event that a taxpayer’s tax liability is less than the $1,200 ($2,400 in the case of joint returns), the amount received will be equal to their tax liability, but will not be less than $600 ($1,200 in the case of a joint return). Taxpayer’s will receive an additional $500 for each qualifying child.To the extent that a taxpayer’s AGI exceeds $75,000 ($150,000 in the case of joint returns), the check will be reduced by $5 for every dollar over the dollar limits noted above.  As a result, taxpayer’s whose income exceeds $99,000 ($198,000 in the case of joint returns) will not receive a check.The IRS will look at the adjusted income on a taxpayer’s 2019 tax return to determine the amount of their  check.  If a return has not yet been filed for 2019, the 2018 return will be used.  Even if a taxpayer did not file a return in 2018, the taxpayer still may be entitled to a check.  A second part of the legislation provides that a taxpayer will receive a check if in 2019 they received social security or railroad retirement benefits reported on Form SSA-1099 or RRB-1099.What taxpayers are actually receiving is an advance payment of a tax credit for their 2020 tax liability.  If after filing their 2020 tax return, it turns out that a taxpayer was entitled to a greater check, the shortfall will be treated as a credit that reduces their 2020 tax liability.  On the other hand, if the check received is greater than the amount a taxpayer is entitled to receive, based on the 2020 return, the excess does not need to be paid back as the legislation says that the credit allowed on the 2020 return shall be reduced, but not below zero, by prior amounts received.The government wants to get checks into taxpayer’s hands as quickly as possible.  In the end, however, the amount a taxpayer is entitled to receive is based on the above criteria (adjusted gross income, dependents, and qualifying income) as reported on their 2020 tax return.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Modification of Credit Prior Year Minimum The TCJA repealed the Alternative Minimum Tax (AMT) for corporations effective for tax years beginning after December 31, 2017.  In addition, IRC Section 53(e) was amended to provide a mechanism for refunding taxpayers’ existing AMT credit carryforwards.  AMT credits that were not utilized to reduce Federal income tax in tax years beginning after December 31, 2017 were to be refunded in an amount equal to 50 percent of the taxpayer’s remaining AMT credits in tax years 2018, 2019 and 2020, with the balance refunded in the 2021 tax year. The new CARES, Act signed March 27, 2020, amends IRC Section 53(e) to remove the gradual refunding of taxpayers’ AMT credits over four tax years (2018-2021) and to provide for a full refundable credit for the taxpayer’s tax year beginning in 2019.  Alternatively, taxpayers may make an election to take the entire refundable credit in 2018. Taxpayers wishing to claim the refundable credit for the 2018 tax year may file a Form 1139, Corporation Application for Tentative Refund, prior to December 31, 2020.  The Form 1139 must report 1) the amount of the refundable credit claimed under IRC Section 53(e), 2) the amount of the refundable credit claimed or refunded on a previously filed return, and, 3) the amount of remaining credit to be refunded. The Act states that within 90 days of filing the Form 1139, the Treasury will review the application, determine the amount of the overpayment and apply the appropriate credit or refund. When planning for any tax refunds or any related elections, taxpayers must consider many other implications of such filings, and this situation is no different. Please contact your Schneider Downs tax advisor if you have any questions. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### IRS Extends Deadline to File Gift Tax Returns The Internal Revenue Service (the IRS) continues to expand the list of return filing and tax payment deadlines that will be postponed due to the ongoing spread of the COVID-19 virus. On March 27, 2020, the IRS announced in Notice 2020-20 (the Notice) that the due date for filing Forms 709 (United States Gift and Generation-Skipping Transfer Tax Return), and the payment of any gift or generation-skipping taxes associated therewith, will be automatically postponed from April 15, 2020 to July 15, 2020.Because the relief is automatic, there is no need to make a formal request to the IRS to receive the extended due date. No interest or penalties will be charged during this automatic extension period. In the event a gift tax return cannot be filed by the extended deadline, an affected taxpayer can file a form with the IRS to extend the filing deadline to October 15, 2020. This extension request must be filed no later than July 15, 2020, and all gift and generation-skipping transfer taxes that are due and owing must be paid by this date to avoid interest and penalties.The Notice quickly followed earlier guidance that similarly extended the deadline for federal income tax returns and payments for individuals, trusts, estates and business entities. It is important to take notice that the relief provided in the Notice does not apply to Form 706 (United States Estate and Generation-Skipping Transfer Tax Return). Unless the IRS provides further guidance, federal estate tax returns must be filed by the original deadline, together with any properly filed extensions.If you are considering incorporating gifts into your estate plan, or require assistance in reporting gifts that you have already made, please reach out to us. Our experienced team of professionals is here to assist with your estate planning needs during this challenging time. IRS Notice 2020-20. IRS Notice 2020-18.   Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content.  ### The Impact of COVID-19 on Pennsylvania Tax Appeals The Commonwealth’s response to the COVID-19 virus has had a significant impact on taxpayers’ administrative tax appeals with the Pennsylvania Department of Revenue Board of Appeals and the Commonwealth of Pennsylvania Board of Finance and Revenue. The Board of Appeals closed its offices on March 16, indicating in a statement on its website that in certain cases additional time may be granted to file a request for tax reassessment or refund. According to the statement, an appeal will be considered filed in a timely manner if it is recorded by the later of: 30 days after the reopening of the Board of Appeals offices; or The original appeal deadline. The Board notes that if the appeal deadline fell on a date prior to the office’s closure on March 16, the original deadline is still applicable. In addition, the Board indicates that it will accept any submission of requested documentation as long as it was received within 30 days after the Board of Appeals office reopens. It should be noted that refund claims and reassessment appeals are governed by separate statutes, and there may be dispute as to whether the Department of Revenue or Board of Appeals has authority to extend deadlines for the filing of tax refund claims. As such, it behooves taxpayers to ensure their refund claims are filed in a timely manner either electronically or postmarked by U.S. Mail by the statute-imposed deadline. Additional information may be found on the Board of Appeals. In contrast to the Board of Appeals office closure, the Commonwealth of Pennsylvania Board of Finance and Revenue appears to be continuing its operations, albeit via teleworking. In a press release dated March 16, Pennsylvania Treasurer Joe Torsella stated that Treasury employees in Dauphin County and the Capital Complex would be teleworking for the next two weeks. This would appear to include the Commonwealth of Pennsylvania Board of Finance and Revenue. In statement titled BFR Operations Under Exigent Circumstances Caused by the Public Health Emergency, released on its website on March 26, the Board indicates that, effective immediately and until further notice, publicly scheduled hearings would be conducted telephonically pursuant to their schedule, pending further notice from the Board. The statement also provides guidelines for how the telephonic hearings will be conducted. The next scheduled hearings are April 7 and 8. Scheduled petitioners who wish to participate must electronically submit the hearing reply to the Board via bfr@treasury.gov at least 10 days prior to the scheduled hearing. Failure to submit a hearing reply notice will result in the Board deciding the appeal based solely on the submission. Issuance of Orders may be delayed as a consequence of restricted workplace access. The statement also details other potential options and procedures for petitioners, including Oral Hearing Waivers, Continuance Requests, Recorded Hearings, Board Orders, Board Filings and Correspondence and Deadlines and Extensions. Details can be found at the Commonwealth of Pennsylvania Board of Finance and Revenue website at www.patreasury.gov/bfr. If you have any questions regarding the revised appeal procedures and deadlines, please do not hesitate to contact your state and local tax professional. ### Department of Revenue Issues Additional Extensions With all Pennsylvania Department of Revenue offices closed, including call centers, all business tax licenses that have expiration dates have been extended until further communication is provided by the Department. Eligible for the extension are: Sales, Use and Hotel Occupancy Public Transportation Assistance Small Games of Chance Sales Tax Exemption Certificates While resolving tax matters can be difficult due to the closures, please consider using the Department’s online service center, which is accessible at https://revenue-pa.custhelp.com/.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content.  ### Delay of Payment Employer Payroll Taxes For the period beginning on the date of enactment through December 31, 2020, the timing for deposits of the applicable employer-portion of Old-Age, Survivors and Disability Insurance (OASDI), currently 6.2 percent, is deferred.  Employers will be considered to have timely made their deposits of these OASDI taxes if at least 50 percent of the total during this period (date of enactment through December 31, 2020) is deposited by December 31, 2021 and the remaining 50 percent is deposited by December 31, 2022. Similar rules apply to self-employed individuals in that the payment for 50 percent of the OASDI taxes (generally required to be paid in through estimated tax installments) for the period beginning on the date of enactment through December 31, 2020, are deferred to the dates noted above. Note that the payment deferral for employers or self-employed individuals does not include the 1.45 percent hospital insurance (Medicare) tax. The deferral in remittance of OASDI taxes is not available for taxpayers that have indebtedness forgiven under certain Sections of the Act with respect to a loan under section 7(a) of the Small Business Act. In lieu of the actual employer contributions of OASDI tax during these periods, amounts will be appropriated out of money in the Treasury that is not otherwise appropriated, and will be transferred to the OASDI Trust Fund and the Federal Disability Insurance Trust Fund at such times to approximate the amounts that would have otherwise been transferred were it not for this Act. The Act further states that for employers utilizing a third-party agent (payroll service) or professional employer organization, the employer shall be solely liable for the payment of such employment taxes before the applicable payment dates. While this provision does not provide any relief in the form of tax credits, it may help employers with their cash flow management in the near-term. Contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES ACT – Impacts on Charitable Contribution Deductions The CARES Act (hereinafter “the Act”) was enacted to provide emergency assistance in light of the 2020 Coronavirus pandemic.  With this Act comes significant change to the law to help taxpayers. This includes the following: “partial above the line deduction for charitable contributions,” and the “temporary suspension of limitations on certain cash contributions” laid out in Sections §§ 2204 & 2205 of the Act, respectively. In Section 2204, above the line charitable deductions are now allowed as “adjustments to income,” meaning, they act as a reduction of your overall income resulting in a taxpayers’ Adjusted Gross Income (“AGI”).  In 2020, any individual who uses the standard deduction and does not itemize in preparing their tax return, may now additionally deduct “qualified charitable contributions” of up to $300.00.Charitable deductions include any asset donation to an organization which has §501(c)(3) status according to the Internal Revenue Service.  These types of organizations usually operate for a religious, medical, educational, governmental, scientific, or similar purpose in order to provide a public benefit. In order to “qualify,” the contribution must be made in cash, to an organization meeting the §501(c)(3) criteria (but excluding certain §509(a)(3) supporting organizations and donor advised funds). Section 2105 allows for a temporary suspension of the limitations on cash contributions for both (i) individuals using the itemized deduction method and (ii) corporations.  Ordinarily, an individual taxpayer using itemized deductions is limited to a deduction that does not exceed 50% of the taxpayer’s AGI, while a Corporation is limited to a deduction of 10% of their pre-contributions income. These limitations are currently suspended as follows: Individual – any qualified charitable contribution can now be deducted as long as the contributions do not exceed the excess of the taxpayers AGI in its entirety, and  Corporation – the limitation is expanded to allow the corporation to now deduct up to 25% of their pre-contributions income using charitable deductions that are paid in cash or food inventory. If the contributions exceed the Act’s provisions, both individuals and corporations may apply the carryover amount to the next five (5) succeeding taxable years.While the full effect of the Coronavirus pandemic remains to be seen, it is the hope that these types of deductions can incentivize taxpayers to make continued charitable contributions to help restore the economy as well as the lives of many of our citizens.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES Act - The Employee Retention Credit Current as of April 2, 2020 The final version of the Coronavirus Aid, Relief and Economic Security (CARES) Act includes a new payroll related tax credit that was not incorporated into earlier versions of senate bills.  The employee retention credit (ERC) is designed to help businesses, or eligible employers, who keep employees on the payroll when COVID-19 forces the business to suspend or close its operations.  The benefits are not unlimited however, and the benefits are not the same for all employers.  Additionally, the amount of the ERC benefit is dependent upon the size of the employer; the provision provides smaller employers a greater opportunity to obtain benefits. Eligible employers include Section 501(c)(3) charitable organizations exempt from tax, but not governments or governmental agencies.  An employer is not eligible if it received a Small Business Interruption Loan (a payroll protection loan). There are two possible scenarios when a business can generate a credit: The operation of the trade or business is fully or partially suspended during the calendar quarter due to orders from the government limiting commerce, travel, or group meetings because of COVID-19. The business was able to remain open but experiences a significant decline in gross receipts compared to the prior year.  A significant decline is when gross receipts for a current quarter is less than 50% of gross receipts for the same quarter in the prior year.  The employer continues to qualify for the credit until the quarter following the quarter when gross receipts exceed 80% of the prior year quarter. The size of the employer determines which scenario under which the employer can qualify.  When an employer has more than 100 employees (as defined under Section 4980H to include full-time equivalents) based upon 2019 employment data, the credit is based only on qualified wages paid to employees when an employee is not providing services under either of the scenarios above. When an employer has 100 employees or less (as defined under Section 4980H) based upon 2019 employment data, the credit can be based on when the employer is paying wages whether the employee is performing services or not performing services under either of the scenarios above. The credit is equal to 50% of “qualified wages,” which includes both actual wages paid plus qualified health plan expenses allocable to those wages.  However, the credit ceases when qualified wages exceed $10,000 per employee.  The maximum credit per employee then is $5,000. The credit is allowed to offset the employer’s 6.2% share of social security taxes (or Railroad Retirement Tax Act taxes) and the excess is refundable.  By refundable, this could mean that the employer can use the credit to reduce the amount of payroll taxes required to be deposited (similar to rules provided under the Families First Coronavirus Response Act for certain qualifying sick pay or family medical leave pay). There are additional rules that come into play.  For example, wages taken into consideration for determining the new payroll tax credit under the Sick Leave Act or the Emergency Family Medical Leave Act may not be taken into consideration for this credit.  Additionally, credits on wages paid to certain business owners will not be allowed.  Further, employer aggregation rules come into play in determining the number of employees.  Employers will not be allowed a deduction for wages equal to the credit claimed. The $10,000 limitation on eligible wages prevents an unlimited tap by small business for government support.  Possibly, Congress believes the country will get back on its feet quickly.  Let’s all hope. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act. Contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act. Please visit our Coronavirus Resource Center for related content. ### The Cares Act and Its Effect on Retirement Plans The Coronavirus, Aid, Relief, and Economic Security (CARES) Act includes several provisions pertaining to qualified retirement plans and individual retirement accounts (IRAs).   These provisions ease retirement plan hardship and loan rules to free up funds for individuals impacted by the pandemic and to provide relief from the required minimum distribution (RMD) rules. The final bill also adds funding relief for single-employer defined benefit plans.Below are the key provisions affecting qualified retirement plans and IRAs:Hardship Distributions Made Between January 1, 2020 and December 31, 2020Currently, plan participants under the age of 59½ who receive hardship distributions are subject to a 10% tax on this early withdrawal.  The CARES Act waives this 10% tax on early withdrawals up to $100,000 from a qualified retirement plan (and IRA) for anyone who: is diagnosed with COVID-19; whose spouse or dependent is diagnosed with COVID-19;  who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or other factors as determined by the Treasury Secretary. The CARES Act further permits those plan participants to pay the associated taxes on the income from the distribution ratably over a three-year period; and also allows them to repay that amount, tax-free, back into the plan over the next three years. These repayments, if made, are essentially treated as rollover contributions and would not be subject to the retirement plan contribution limits.Employee certification of the need for the Hardship Distribution is all that is required.  In other words, plan administrators are not required to request or review evidence or documentation to determine qualification for the distribution.Plan Loans Currently, retirement plan loans are limited to the lesser of $50,000 or 50% of the participant’s vested account balance.  The CARES Act doubles the current retirement plan loan limits, for a period of 180 days following the date of enactment of the CARES Act, to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan.Additionally, participants with outstanding plan loans with a repayment amount due during the period beginning on the date of enactment of the CARES Act through December 31, 2020 can delay their loan repayment(s) for up to one year.  Consequently, the 5-year maximum limitation that normally applies to participant loans may also be extended for a period of up to one year.NOTE: Even if the plan does not currently allow for hardship distributions or loans, retirement plans can adopt these rules immediately, provided the plan is amended on or before the last day of the first plan year beginning on or after January 1, 2022, or later, if prescribed by the Treasury Secretary.Temporary Waiver of Required Minimum Distribution RulesThe Act waives Required Minimum Distributions (RMD) for the calendar year 2020 for defined contribution plans, including 401(k), 403(b), 457(b), and IRAs.  Currently, with the passage of the SECURE Act, individuals generally must take an RMD upon attaining age 72 from their retirement plans and/or IRAs.This waiver also applies to those individuals who turned 70 ½ (the age required to start taking RMDs prior to the effective date of the SECURE Act) by December 31, 2019 and elected to postpone their first RMD until April 1, 2020. Single-employer Defined Benefit Plan Funding RulesThe Act allows sponsors of single-employer defined benefit plans more time to meet their funding obligations by delaying the due date for any contribution otherwise due during 2020 until January 1, 2021. However, any contributions that were due earlier (such as those plans required to make quarterly funding contributions) would be due with interest.The Act also provides that a plan’s funding status for benefit restrictions, as of December 31, 2019, will apply throughout 2020 to enable a plan sponsor to elect to treat the plan’s adjusted funding target attainment percentage for the last plan year ending before January 1, 2020 as the adjusted funding target attainment percentage for plan years which include calendar year 2020.Expansion of Department of Labor Authority to Postpone Certain Retirement Plan DeadlinesThe Act provides the Department of Labor with expanded authority to postpone certain deadlines under ERISA by including a public health emergency declared by the Secretary of Health and Human Services under the Public Health Service Act as a condition to allow such deadline extensions.The American Retirement Association (ARA) has been pushing for relief from various retirement plan requirements, such as an automatic extension of the Form 5500 series, an extension to the deadline for correcting failed non-discrimination tests and an extension of the period for distributing excess contributions and excess aggregate contributions under a plan.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### CARES Act - Modifications for Net Operating Losses The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provided for the temporary suspension of the taxable income limitation for Net Operating Losses (NOL’s).  The Tax Cuts and Jobs Act (TCJA) provided that Net Operating Losses could no longer be carried backward to prior tax years, but must now only be carried forward.  In addition, TCJA limited the amount of taxable income that could be offset by an NOL to 80 percent.The modifications under the CARES act allow the net operating losses generated in tax years beginning before January 1, 2021 (therefore generated in the 2018, 2019 or 2020 tax years) to be carried back to the five preceding tax years of the year the loss was generated, and the remaining NOL will carried forward indefinitely.  In addition, taxable years beginning before January 1, 2021 will allow the aggregate net operating loss carryover plus the aggregate net operating loss carrybacks to such year to offset 100 percent of taxable income.  The TCJA previously allowed NOL’s to offset only 80 percent of taxable income.  The 80 percent limitation will be back in effect for taxable years beginning after December 31, 2020.The CARES act modifications do not apply to Real Estate Investment Trusts (REIT’s).  In addition, any loss generated in 2018, 2019 or 2020 that is not in a REIT may not be carried back to a taxable year in which the taxpayer was a REIT.In the case of life insurance companies, a net operating loss is carried back in the same manner as an operations loss within the meaning of Internal Revenue Code (IRC) Section 810.There is also a special provision relating to years to which IRC 965 income inclusion applies.  This provision will not allow a net operating loss carryback to offset IRC 965(a) income in those taxable years.The timing of elections to carryback losses for NOL’s arising out of the 2018 or 2019 taxable years shall be made by the due date (including extensions of Time) for filing the taxpayer’s return for the first taxable year ending after the date of enactment of the CARES act.As you can see these rules are fairly complex and should be carefully navigated.  These provisions will provide taxpayers with the ability to accelerate the utilization of NOL’s generated in tax years 2018 through 2020, including providing the opportunity to carryback the losses to accelerate cash flow.Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss in further detail. Read more related content. ### CARES Act - Removal of Excess Business Loss Limitation The Tax Cuts and Jobs Act (TCJA) created a provision, Internal Revenue Code (IRC) Section 461(l) that limited the allowable losses that could be deducted for noncorporate taxpayers to $250,000 for individuals and $500,000 for married filing joint taxpayers.  These loss limitations were determined at the partner and shareholder individual level.  The At-risk basis and passive activity loss limitations are applied before applying the excess business loss limitations under IRC 461(l). The Coronavirus Aid, Relief and Economic Security (CARES) Act lifted the excess farm loss limitation for taxpayers other than corporations for tax years beginning after December 31, 2017 and before January 1, 2026.  In addition, the CARES Act removes the excess business loss limitation for all other noncorporate taxpayers for tax years beginning prior to January 1, 2021.  The loss limitation will expire for tax years beginning after December 31, 2025, as originally drafted in the TCJA. Previously under TCJA, any excess business loss would carry forward indefinitely under the net operating loss (NOL) rules to offset 80 percent of the taxpayer’s taxable income in the carryforward tax year.  The CARES Act has also modified the NOL limitations to allow the reduction of more than 80 percent of taxable income.  In addition, the modified NOL rules allow for a five-year carryback of NOL’s generated in the 2018, 2019 or 2020 tax years, with the excess loss eligible to be carried forward under IRC 172.  Please see our related article that explains the revised NOL guidance in further detail. The determination of the excess farm losses will be determined without regard to allowable NOL’s or qualified business income deductions.  For all other noncorporate business losses, they shall be determined without regard to any deductions, gross income or gains attributable to any trade or business of performing services as an employee.  The CARES Act also includes language that the aggregate deductions of the taxpayer which are attributable to trades or businesses shall not include losses from the sale of capital assets.  In addition, the act provides that gains from the sale or exchange of capital assets to be taken into account in the aggregate gross income or gain of the taxpayer for purposes of the limitation ($250,000-Single/$500,000-MFJ) shall not exceed the lesser of capital gain net income determined by only taking into account gains and losses attributable to a trade or business or the taxpayer’s capital gain net income. The effective date for these provisions shall apply to taxable years after December 31, 2017, thereby providing an opportunity to amend the 2018 or 2019 tax returns that may have been filed with excess business loss limitations. Please contact your Schneider Downs tax advisor if you have any questions or would like to discuss the provisions of the CARES Act. Please visit our Coronavirus Resource Center for related content. ### Pennsylvania Covid-19 Working Capital Access Program On Wednesday, March 25th, Governor Wolf announced the COVID-19 Working Capital Access (CWCA) Program, a new program under the Pennsylvania Industrial Development Authority’s (PIDA) Small Business First Fund. Through the CWCA, PIDA has authorized making $60 million in funds available to provide working capital loans of up to $100,000 to for-profit businesses with 100 or fewer full-time employees.Here are the key details of the CWCA:EligibilityEligible businesses must: be a for-profit corporation, LLC, partnership, proprietorship or other legal business entity located in the Commonwealth of Pennsylvania. have fewer than 100 employees worldwide at the time of application. Eligible costs include: working capital, which is considered capital used by a small business for operations (excluding fixed assets and production machinery and equipment). Loan Amounts, Matching Investment, Job-Requirements Maximum loan amount is $100,000. No match is required except for retail/service enterprises.  For these companies, the CWCA can finance 50% of working capital up to a maximum of $100,000. (See this link for a definition of retail/service enterprise). No job retention/creation requirements. Terms 0% interest rate for all entities except agricultural producers. 2% interest rate for agricultural producers (See this link for a definition of agricultural producers). Three-year term with a 12 year amortization. No payments due or payable in year one. Principal and interest, if applicable, due monthly in years two and three. Balloon payment at the end of year three. Loan will be secured by a blanket lien on all business assets currently owned or acquired in the future at the highest lien position available.  Loan will be guaranteed by any individual or entity with a 20% or greater ownership interest in the entity. Application Process Applications are done in conjunction with certified economic development organizations (CEDOs). A CEDO serves a one county area or multicounty region.  They will work directly with an applicant to determine if the program can be of assistance and discuss the application process in detail. The CEDO submits the application to PIDA. You can also find a CEDO in your county. Click here for the full details on the COVID-19 Working Capital Access program. If you need more information, please reach out to any of your contacts at Schneider Downs or contact Joel Rosenthal or Steve Thimons directly.Please visit our Coronavirus Resource Center for related content ### Tax Day Extended to July 15: What That Means for Pennsylvania Personal Income Tax Payers As you know, in response to the pandemic caused by COVID-19 the IRS has extended the deadline for filing income taxes from April 15 to July 15 in an effort to provide relief to taxpayers. The 90-day extension will have significant impact on Pennsylvania individual taxpayers, including estates and trusts, which are required to report income on PA-41.Filing DatesBy state law, the Pennsylvania individual income tax (PIT) deadline is tied to the federal individual income tax deadline. The code states that, “every taxpayer … shall file a tax return on or before the date when the federal income tax return of the taxpayer is due.” So when the IRS extended its deadline to July, the PIT return deadline was automatically extended as well.Payment DatesAs with the filing date, the PIT payment deadline was also extended to July 15. According to guidance provided by the Pennsylvania Department of Revenue (Department), payments submitted by July 15, 2020 will incur no late penalties nor accrual of interest. Some practitioners, however, question whether the Department can actually waive the accrual of interest absent legislation allowing them to specifically do so.Estimated Payments for 2020The federal extension will likely have no impact on current due dates of estimated tax payments for PIT taxpayers, since Pennsylvania laws pertaining to due dates are not tied to the federal code. PA HB 1232 has been approved by both the Pennsylvania House of Representatives and Senate. If Governor Wolf signs the bill, the Department will then be allowed to extend the deadlines of estimated tax payments for individuals.HB 1232 also would have a significant impact on PA-20S/PA-65 filers. The proposed legislation would expressly give the Department authority to extend the statutory deadline for these taxpayers instituted under Sec. 330.1(B) and Sec. 335(C) of the PA Tax Reform Code of 1971, since these deadlines are also not currently tied to the federal deadline.Our tax advisors will continue to monitor state legislation. If you have questions about how the extended tax deadline affects your taxes, contact your State and Local Tax professional at Schneider Downs today. ### SEC Extends Reporting Relief for Public Companies Impacted by COVID-19 In response to the global pandemic caused by COVID-19, the Securities and Exchange Commission (SEC) announced that it is again extending the filing period for certain public company reports under the Securities and Exchange Act of 1934 (i.e., Form 10-K, Form 10-Q) for companies impacted by COVID-19. The SEC issued an order on March 4, 2020, which granted filing relief providing public registrants with a 45-day extension for certain reports due between March 1 and April 1, 2020. On March 25, 2020, the SEC issued an order extending the 45-day filing relief for certain reports due between March 1 and July 1, 2020. A registrant relying on the relief granted by the SEC must file a Form 8-K (or 6-K if a foreign public issuer) by the original report deadline stating (1) it is relying on the order; (2) a brief description of the reasons why the report cannot be filed on a timely basis; (3) the estimated filing date the report is to be filed; and (4) the risk factors explaining the impact, if material, of COVID-19 on their business. Additionally, if the report cannot be filed in a timely manner due to the inability of any person, other than the registrant, to furnish any required opinion, report or certification, the Form 8-K or 6-K must include a statement signed by that person stating the specific reasons why the individual is unable to furnish the report.  When the public registrant files its report, the registrant must disclose that it is relying on the order and the reasons the filing was not timely filed. Public registrants relying on the order that file the report within the 45-day extension period would not need to file Form 12b-25.  If a registrant is unable to file the report within the extended due date, it is permitted to file a Form 12b-25 for an additional grace period. Public registrants will remain eligible to use Form S-3 or Form F-3 (and for well-known seasoned issuer status, which is based in part on Form S-3 or Form F-3 eligibility) if it files its reports within the extended due dates granted by this order.  Also, a public registrant will be considered current under this order to remain eligible to use Form S-8 and meet the current public information eligibility requirements of Rule 144(c). This period of unprecedented turmoil has created unforeseen issues for many companies, including lack of access to financial records.  The SEC’s order provides filing relief much like that granted under Form 12b-25 and registrants should consider utilizing the grace period when circumstances warrant it.  Generally, there have not been negative consequences for registrants utilizing the grace period provided by Form 12b-25. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Phase III SBA Overview This article was updated on March 27, 2020. Updates to this article will be made as new information becomes available.Coronavirus Aid, Relief, and Economic Security “CARES” Act – Overview of the KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT also known as the Small Business Administration Business Loans ProgramSchneider Downs continues to track the evolving landscape of financial programs offered due to the disruption of the coronavirus (“COVID-19”). Schneider Downs can assist with understanding the many facets of the Coronavirus Aid, Relief, and Economic Security “CARES” Act.OverviewAs part of the CARES Act, the “Small Business Administration Business Loans Program Account, CARES Act” provides $350B of funding of guaranteed loans to small businesses.  Loans from this account would be issued through the SBA’s 7(a) program.  The 7(a) program is a partnership between private financial firms, which make the loans, and the SBA, which guarantees them. To quickly provide new capital to small businesses, the act expands the number of financial firms than can provide loans, with the Treasury Department establishing criteria for existing and potential lenders to participate in the program.  To attract more lenders and provide more loans, the act increases SBA’s loan guarantees to 100% through September 30, 2021.7(a) Loan – Paycheck Protection ProgramDuring the covered period of February 15, 2020 and ending on June 30, 2020, any business concern, private nonprofit organization, or public nonprofit organization that employs not more than 500 employees per physical location, or sole proprietor, independent contractor  or self-employed individual that is adversely impacted by COVID–19 shall be eligible to receive a loan made under section 7(a) of the Small Business Act. There are exceptions to the bill regarding size of company that we are currently seeking clarity through the SBA.  As of this writing, SBA cannot provide details of the bill at this time.    The maximum loan amount guaranteed under this program shall be the lesser of 2.5 times the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the 12-week period beginning February 15, 2019, or at the election of the eligible recipient, March 1, 2019, and ending June 30, 2019 or $10M. Lenders negotiates terms of the loan with the borrowing business, with a cap interest rate of 4%.  The plan also waives transaction fees for both lenders and borrowers.7(a) Loan - Uses of FundsProceeds of the loan may be used for payroll support, including: paid sick, medical, or family leave, costs related to the continuation of group health care benefits during those periods of leave; employee salaries; mortgage payments; rent (including rent under a lease agreement); utilities; and any other debt obligations that were incurred before the covered period.7(a) Loan - Loan DefermentThe CARES Act requires lenders under the 7(a) program to provide complete payment deferment relief for impacted borrowers that were in business as of February 15, 2020 for a period of not less than 6 months, including payment of principle, interest and fees, and not more for than 1 year.7(a) Loan - Loan ForgivenessA loan recipient may be eligible for loan forgiveness on a covered 7(a) loan in an amount equal to the cost of maintaining payroll, interest on certain debt obligations, rent, and utilities during the covered 8 week period from the start of the loan.  Amounts forgiven would be considered canceled indebtedness by lenders.7(a) Loan - Loan CollateralThe covered loan does not require a personal guarantee or collateral.Access to Funds TimelineAs of this writing, the process of how to apply for the loans and when disbursements could be made are in development.  The current plan is to have the process for the program finalized with five days of the bill passing.Emergency Economic Injury Disaster Loan (EIDL) ProgramsUnder the new CARES Act, the SBA 7(b) 2 program will be extended eligibility to businesses with no more than 500 employees, any sole proprietorship, independent contractor or ESOP.  Any 7(b) 2 loan made during the period from January 31, 2020 and ending on December 31, 2020 shall waive personal guarantee on advances and loans of not more than $200,000.Emergency Grant FundThe 7(b) 2 Loan Emergency Grant program provides $10B of funding to businesses that have applied for a 7(b) 2 loan and requests and advance on the loan of upto $10k intended to be used for payroll to retain employees during business disruption, rent or mortgage payments and repaying obligations that cannot be met due to revenue losses.  An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 7(b).Subsidy for Certain Loan PaymentsOther 7(a) loans not included in the Paycheck Protection Program, like the Community Advantage Pilot Program, may qualify for a 6 month subsidy payment on principal, interest and fees from the SBA.SBA Small Business Disaster Relief Loan ProgramThe CARE Act SBA 7(A) program is in addition to the SBA Disaster Relief program announced earlier this month.  Details regarding the SBA Disaster Relief program can be found at the following link:www.schneiderdowns.com/our-thoughts-on/small-business-disasterrelief-loanFor specific details on your businesses eligibility to funds provided to the CARE ACT SBA 7(A) program, please reach out to your local Small Business Administration banker.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Pennsylvania Authorizes Extension for Local Income Tax The Pennsylvania legislature has authorized the Department of Community and Economic Development (DCED) to address local taxation issues as a result of the ongoing COVID-19 crisis. DCED is tasked with working with local governments to ensure that all local tax filing and payment deadlines are consistent with the state deadlines for personal income tax, which have been extended to July 15, 2020. (On March 21, the Pennsylvania Department of Revenue extended the Pennsylvania state personal income tax deadline to July 15, 2020.) In addition, penalties and interest for local taxes due will not apply for periods between April 15, 2020 and July 15, 2020. This special authorization from DCED is welcomed and addresses taxpayer concerns related to Pennsylvania local taxes. The provisions of the bill will expire on July 31, 2020. Berkheimer, Jordan Tax Service, Keystone Collections and the City of Pittsburgh have each issued notice, on their respective websites, addressing the local income tax extension until July 15, 2020. For more information about current tax deadlines visit our website or contact your Schneider Downs state and local tax professional. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Ohio Passes Tax Extensions Ohio Governor Mike Dewine signed House Bill 197 on March 27, 2020 as the state’s response to the current COVID-19 pandemic.  The provisions of the bill include a number of tax-related measures, including extension of the tax filing deadline to July 15, 2020.  The extension also applies to estimated payments.The legislation also grants the Ohio Tax Commissioner with the authority to extend tax filing and payment dates as necessary during the COVID-19 emergency.  Ohio will also allow the waiver of interest on payments extended due to the crisis.The tax extension of due dates applies to the municipal net profits tax in Ohio.  The legislation provides that if the Tax Commissioner extends the date for state income tax then, “a taxpayer shall automatically receive an extension for filing of a municipal net profit tax return.”  The new deadlines for municipal net profits tax will be consistent with the state deadline for income tax.  The Ohio legislature also took action on the “20-day rule” for municipal income tax.  For the duration of the COVID-19 emergency, plus an additional 30 days, employees working from home or a temporary worksite will be considered as working from their “principal place of work.”  This provision will save employees and their employers from the burden of collecting and/or paying municipal income tax to multiple jurisdictions for as long as employees are required to work remotely.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### J5 Tax Chiefs Closing the Net on Global Tax Evasion ### Extensions for Form 11-K Filings as a Result of COVID-19 In response to the pandemic caused by COVID-19, on March 4 the Securities and Exchange Commission (SEC) enacted reporting relief from certain provisions of the Securities and Exchange Act of 1934. Three weeks later, on March 25, the SEC announced that it would extend the filing periods included in the relief. The newly issued guidance expands to registrants that file a Form 11-K with the SEC for benefit plans holding employer stock. Provisions of the reporting relief, aimed at giving registrants additional time to complete audits during a period of unprecedented turmoil, include a 45-day extension to file Form 11-K, which would have otherwise been due between March 1 and July 1. The extension is subject to certain conditions that ascertain: The registrant is unable to meet a filing deadline due to circumstances related to COVID-19 The registrant furnishes to the SEC a Form 8-K Calendar year-end plans are due on June 30; therefore, as a result of the reporting relief, if the plan meets the conditions outlined above, Form 11-K would be eligible for an extension to August. Registrants with Form 11-K filings are still required to file Form 5500 with the Internal Revenue Service (IRS). Those filings are due seven months after the plan’s year-end, with availability to extend for an additional two-and-a-half months. The IRS has not granted an extension for Form 5500 filings. Separately, the Public Company Accounting Oversight Board (PCAOB) is giving auditing firms up to 45 days of relief from inspections and will resume inspections on May 11. Please visit our Coronavirus resource page for related content. ### The Impact of COVID-19 on Pennsylvania Tax Appeals The Commonwealth’s response to the COVID-19 virus has had a significant impact on taxpayers’ administrative tax appeals with the Pennsylvania Department of Revenue Board of Appeals and the Commonwealth of Pennsylvania Board of Finance and Revenue. The Board of Appeals closed its offices on March 16, indicating in a statement on its website that in certain cases additional time may be granted to file a request for tax reassessment or refund. According to the statement, an appeal will be considered filed in a timely manner if it is recorded by the later of: 30 days after the reopening of the Board of Appeals offices; or The original appeal deadline. The Board notes that if the appeal deadline fell on a date prior to the office’s closure on March 16, the original deadline is still applicable. In addition, the Board indicates that it will accept any submission of requested documentation as long as it was received within 30 days after the Board of Appeals office reopens. It should be noted that refund claims and reassessment appeals are governed by separate statutes, and there may be dispute as to whether the Department of Revenue or Board of Appeals has authority to extend deadlines for the filing of tax refund claims. As such, it behooves taxpayers to ensure their refund claims are filed in a timely manner either electronically or postmarked by U.S. Mail by the statute-imposed deadline. Additional information may be found on the Board of Appeals website at www.boardofappeals.state.pa.us In contrast to the Board of Appeals office closure, the Commonwealth of Pennsylvania Board of Finance and Revenue appears to be continuing its operations, albeit via teleworking. In a press release dated March 16, Pennsylvania Treasurer Joe Torsella stated that Treasury employees in Dauphin County and the Capital Complex would be teleworking for the next two weeks. This would appear to include the Commonwealth of Pennsylvania Board of Finance and Revenue. In statement titled BFR Operations Under Exigent Circumstances Caused by the Public Health Emergency, released on its website on March 26, the Board indicates that, effective immediately and until further notice, publicly scheduled hearings would be conducted telephonically pursuant to their schedule, pending further notice from the Board. The statement also provides guidelines for how the telephonic hearings will be conducted. The next scheduled hearings are April 7 and 8. Scheduled petitioners who wish to participate must electronically submit the hearing reply to the Board via bfr@treasury.gov at least 10 days prior to the scheduled hearing. Failure to submit a hearing reply notice will result in the Board deciding the appeal based solely on the submission. Issuance of Orders may be delayed as a consequence of restricted workplace access. The statement also details other potential options and procedures for petitioners, including Oral Hearing Waivers, Continuance Requests, Recorded Hearings, Board Orders, Board Filings and Correspondence and Deadlines and Extensions. Details can be found at the Commonwealth of Pennsylvania Board of Finance and Revenue website at www.patreasury.gov/bfr. If you have any questions regarding the revised appeal procedures and deadlines, please do not hesitate to contact your state and local tax professional. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Loans Available to Mid-Size Companies under the CARES Act This article was updated on March 27, 2020.  Updates to this article will be made as new information become available.The Coronavirus Aid, Relief, and Economic Security “CARES” Act  Overview of Loans to Severely Distressed Sectors of the U.S. EconomySchneider Downs continues to track the Federal government’s legislative response to the Coronavirus (“COVID-19”) pandemic and its impact on our clients.  Phase III of this legislative response is the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.  Schneider Downs can assist with understanding the many facets of the CARES Act.OverviewThe CARES Act, under Title IV, Sections 4001-4028 provides emergency relief for eligible businesses.   Specifically, these sections of the CARES Act authorize making Loans, Loan Guarantees and Other Investments up to $500 billion, in accordance with the provisions of the Federal Credit Reform Act of 1990, to provide liquidity to eligible businesses, States and municipalities related to losses due to COVID-19.  Within 10 days after date of enactment, the Secretary will publish application procedures and minimum requirements for Loans, Loan Guarantees, and Other Investments.  The focus of this article is Section 4003, Emergency Relief and Taxpayer Protection.  Some of the key details of Section 4003 are summarized below.Types of Programs and Available AmountsSection 4003 delineates two “types” of programs available: (1) Loans and Loan Guarantees; and (2) Federal Reserve Programs or Facilities.The specific Loan and Loan Guarantee amounts by business are as follows: Not more than $25 billion for passenger air carriers, repair station operators under the Federal Aviation Administration (“FAA”) and ticket agents; Not more than $4 billion for cargo air carriers;  Not more than $17 billion for businesses critical to maintaining national security. (Eligible business is defined as (1) an air carrier, or (2) a U.S. business that has not otherwise received adequate economic relief in the form of loans or loan guarantees provided under the CARES Act.)The remaining $454 billion (plus the sum of any amounts still available from the $46 billion discussed above) is related to the Federal Reserve Programs or Facilities.  The $454 billion will be available to make Loans and Loan Guarantees, but will also allow the Federal Reserve to make other investments in programs or facilities to provide liquidity to the financial system that supports lending to eligible business, States and municipalities.  The Federal Reserve can do this in one of three ways: Purchasing obligations or other interests directly from issuers of such obligations or other interests; Purchasing obligations or other interests in secondary markets or otherwise; or Making loans, including loans or other advances secured by collateral. General Terms and ConditionsThe general terms and conditions associated with both types of programs are as follows: The Secretary of the Treasury (“Secretary”), will determine  terms and conditions as appropriate; Any interest rate will be determined by the Secretary based on the risk and current average yield on outstanding U.S. marketable obligations  of comparable maturity; Within 10 days after date of enactment, the Secretary will publish application procedures and minimum requirements for loans, loan guarantees, and other investments.   Federal Reserve Programs or Facilities ($454 billion) - Terms and ConditionsThe Secretary can provide Loans, Loan Guarantees, or Other Investment of the remaining $454 billion as part of a program or facility that provides direct loans only if eligible businesses agree to: Not make any stock buybacks as discussed above; Not pay dividends or capital distributions in 12 months; Comply with limitations on compensation set forth in Section 4004 of the CARES Act. These requirements can be waived if necessary to protect interest of Federal Government.   However, the CARES Act is also clear that any Federal Reserve Act Taxpayer Protections and Other Requirements apply including: Requirements under section 13(3) of the Federal Reserve Act; A program or facility in which the Secretary makes a Loan, Loan Guarantee, or Other Investment can only purchase obligations or other interests from or make loans or advances to U.S. businesses (other than index funds or a diversified pool of securities).  Specific Programs or Facilities Under Federal Reserve Programs or FacilitiesThe Federal Reserve Programs or Facilities section also outlines two specific programs or facilities that the Secretary will work to implement: (a) Assistance for Mid-Sized Business; and (b) Government Assistance.Assistance for Mid-Sized BusinessThe Secretary will work to implement a program or facility that provides financing to banks and other lenders that make direct loans to eligible business including, where practicable, nonprofit organizations, with between 500 and 10,000 employees.  The rate shall not be greater than 2% and no principal or interest will be due for at least 6 months.To qualify, any eligible borrower applying for a direct loan under this program must certify that: Due the current uncertain economic conditions, the loan is necessary; The loan will be used to retain at least 90% of workforce at full compensation and benefits until September 30, 2020; The loan recipient intends to restore not less than 90% of workforce that existed as of February 1, 2020 and to restore all compensation and benefits to the worker no later than 4 months after the termination of the public health emergency; It is located in the U.S. with significant operations and employees located in US; It is not a debtor in bankruptcy; It will not pay dividends or make any stock buybacks except as contractually required as of the date of the CARES Act; It will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan It will not abrogate existing collective bargaining agreements for the term of the loan and 2 years after completing repayment of the loan It will remain neutral in any union organizing effort for the term of the loan Additionally, nothing in the above section will limit the Federal Reserve’s discretion to establish a Main Street Lending Program that supports lending to small and mid-sized business on terms and conditions consistent with section 13(3) of the Federal Reserve Act.Government AssistanceThe Secretary will also seek to implement a program or facility to provide liquidity to the financial system that supports lending to States and municipalities.Loans and Loan Guarantees ($46 billion) - Terms and ConditionsThe Secretary may enter into agreements to make Loans and Loan Guarantees related specifically to the $46 billion in available funds discussed above (i.e., $25 billion + $4 billion + $17 billion), if the Secretary determines that, at its discretion: The applicant is an eligible business for which credit is not reasonably available; The loan is prudently incurred; The loan is sufficiently secured or at rate that reflects risk of loan and practicable (not less than an interest rate based on previous market conditions); The duration of loan is as short as practicable, but not longer than 5 years; The eligible business (or affiliate) cannot purchase an equity security of the eligible business or parent of the eligible business listed on a national securities exchange for 12 months after the date the loan or loan guarantee is no longer outstanding.  That is, the eligible business cannot make any “stock buybacks” unless it is contractually required to as of the date of the CARES Act; The eligible business cannot pay dividends or make other capital distributions until 12 months after the date the loan or loan guarantee is no longer outstanding; The eligible business must maintain its employment levels as of March 24, 2020 until September 30, 2020 and in any case cannot reduce employment levels by more than 10%; The eligible business must be organized, have significant operations and a majority of its employees in the U.S.; The eligible business must have losses or expect to incur covered losses, such that continued operations are jeopardized. Finally, in order to protect the financial interests of the government, for the $46 billion in Loan or Loan guarantees, the Secretary may not issue loans to eligible businesses, unless it receives a warrant, equity interest, or senior debt interest.  If the eligible business has securities issued on a national exchange, it must provide a warrant or equity interest.Prohibition of Loan ForgivenessThe principal amount of any obligation issued by an eligible business, State or municipality shall not be reduced through loan forgiveness.Financial AgentsThe Secretary is authorized to designate financial institutions to perform all reasonable duties the Secretary determines necessary.Loans Treated as Indebtedness for Tax PurposesAny loan made or guaranteed shall be treated as indebtedness under IRC of 1986, treated as issued for it stated principal amount, and stated interest shall be treated as qualified stated interest.Employee Compensation RequirementsThere are two competing provisions in this section that will require clarification from the Secretary (regarding the appropriate compensation level) as can be seen below. For any business that enters into a loan agreement via the CARES Act during the term of the loan and for one year after the loan or guarantee is no longer outstanding: Any officer or employee of the eligible business whose total compensation exceeds $425,000 in calendar year 2019, cannot do the following: Receive total compensation exceeding their 2019 total compensation, during any 12 consecutive months during this 2-year period; and Receive severance pay or other benefits upon termination of employment which exceeds twice the maximum total compensation received in calendar year 2019. Any officer or employee whose total comp exceeded $3 million, cannot received during any 12 consecutive months total compensation in excess of the sum of: $3 million and 50% of excess over $3M of total comp from 2019 Total compensation includes salary, bonuses, stock awards and other financial benefits ### Audit Firm Inspections Delayed by the PCAOB Due to COVID-19 The COVID-19 pandemic has led the PCAOB, in an unprecedented move, to grant a delay of audit firm inspections.  TO do its part in containing the spread of the coronavirus, the PCAOB is providing up to a 45-day relief period from inspections, which it announced on, March 23, 2020.  The PCAOB is suggesting that audit firms reach out to their designated inspections point of contact to discuss the route they are most likely to take. The Board has noted that COVID-19 presents unique challenges for investors, companies, auditors, as well as regulators.  There are two core considerations the Board believes are an integral part to best shape the inspection program during this economic uncertainty: (1) the health and safety of its employees and those they would interact with on a daily basis; and (2) the mission to promote audit quality. The Board is hopeful that this 45-day pause will grant firms time, resources and flexibility to work through matters associated with this pandemic that, quite frankly, have never been seen before.  The Board did note that its employees can continue to remotely review audit documents to prepare for the inspections when they are expected to fully resume on May 11. Schneider Downs will continue to monitor current developments from the PCAOB.  Please contact your Schneider Downs representative with any questions. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### U.S. Small Business Administration Applying for SBA Disaster Loans – Tips and FAQs This article was updated on March 25, 2020.  Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus (COVID-19).  This is an overview and list of frequently asked questions (“FAQs”) in regards to Emergency Injury Disaster Assistance Loans (“Disaster Loan” or “EIDL”), as provided by the U.S. Small Business Administration (“SBA”) on their website www.sba.gov.  Schneider Downs can assist with the EIDL application process and the documents necessary for these loans.  For additional information on SBA Disaster Loans, see Michael Hart’s article on March 20, 2020: /our-thoughts-on/small-business-disasterrelief-loan. Tips The SBA provided the following pieces of advice when applying for a Disaster Loan: Once registered, download or print application. If your application is incomplete, it will be set aside, and you will fall back into queue.  So make certain that your application is complete. If more funds are needed, applicants can submit supporting documents and a request for an increase. If the loan request is denied, the applicant will be given six months to provide new information and submit a written request for reconsideration. In the comments section of the EIDL application, you can request a specific loan amount. Ignore the “credit elsewhere” statement in the EIDL application. When checking the type of loan you are applying for, check only EIDL in the application process. When in doubt, apply. FAQ’s The SBA also provided the following FAQs in the Disaster Loan process: How long will it take to know if I am approved for a loan? The SBA is processing applications as soon as possible. Does the SBA have any grants available to small businesses? No, disaster assistance is in the form of federal low-interest, long term loans. Can the SBA refinance my loans or mortgages? The SBA economic injury disaster loan funds cannot be used to refinance pre-existing debt. I have an existing SBA Disaster Loan from a previous disaster, what are my options? Borrowers of home and business disaster loans from previous disasters that are still being paid back will now have their payments deferred through the end of 2020.  This deferral will be automatic, and borrowers of previous home and business disaster loans do not have to contact SBA to request this deferment. What banks are authorized to offer these economic injury disaster loans? The SBA offers direct loans through its EIDL program.  Traditional SBA backed loans are still available via banks as well.  To find an SBA-approved lender, visit www.sba.gov/lendermatch. Our nation now has a declared national emergency; why is the funding only for no-credit elsewhere firms? Currently, the SBA is limited by statute to only provide loans to small businesses that do not have access to credit elsewhere. I understand $2M is the limit a small business can get.  Is this enough to keep them afloat? Every small business is unique, and SBA’s EIDLs are available to be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.  The first payment on the economic injury loan issued due to the coronavirus will be automatically deferred for one year. How does a business define an impact and/or loss for this?  Is there a percentage, dollar amount, etc.? A business needs to define its loss in comparison to its 2019 operations/financials.  Losses will be compared to the effective incident period starting on January 31, 2020. Just a loss needs to be reported; there is no threshold of a percentage or dollar amount. If a business currently has an SBA-backed loan and, it fears it will not be able to make the payments, what course of action should it take? Borrowers of home and business disaster loans from previous disasters that are still being paid back will now have their payments deferred through the end of 2020.  This deferral will be automatic, and borrowers of previous home and business disaster loans do not have to contact the SBA to request this deferment. SBA is granting small businesses who receive an EIDL due to the coronavirus an automatic one-year deferment period before they are required to start making payments. Small businesses with other SBA-backed loans should first talk to their SBA lender about potential deferments of loan payments. You can apply for SBA Disaster Loans at www.sba.gov/funding-programs/disaster-assistance or www.sba.gov/page/disaster-loan-applications.  Paper loan applications can also be submitted, but the SBA encourages submitting electronically. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### IRS Inquires Are Being Issued for Micro-Captive Insurance Companies Many dealers have received an inquiry regarding “Micro-Captive Insurance” and Notice 2016-66 (“Notice”).  If you continue to participate in a micro-captive insurance transaction covered under the Notice, please continue to disclose your participation in the transaction with your tax return and no other response is necessary.  If you ceased these transactions, please contact your tax advisor to assist with the response. It appears that these letters were automatically generated for hundreds of taxpayers who have filed Form 8886 (“Form”), Reportable Transaction Disclosure Statement, pursuant to the Notice.  The Form was filed for any reinsurance company that sold gap or other dealer obligor products and the participants in the reinsurance company transaction, which would include the dealership entity selling the products.  If the company is a pass-through entity, the owners also filed the Form. Please note that the letter does not represent a notification of an audit or examination of the reinsurance company, dealership entity or individual to which the letter was directed. Rather, it is a request for information. The transaction identified in IRS Notice 2016-66 and the tax court cases cited in the letter do not necessarily describe your reinsurance company’s current transaction as we understand it, and we remain confident that a properly structured F&I reinsurance program will continue to meet IRS approval. If you have any questions regarding your Micro-Captive Insurance Company, please contact our tax advisors listed below. Sincerely, SCHNEIDER DOWNS & CO. Kathy Petrucci, Tax Shareholder Steve Barber, Tax Shareholder kpetrucci@schneiderdowns.com Phone: 614 586-7214 sbarber@schneiderdowns.com Phone: 412 697-5463   ### Impact of Current Market Conditions on Valuations for Estate Planning Schneider Downs has recently written about general estate planning strategies in this volatile market, but this article will focus more on the impact on valuationsDuring this difficult time, we at Schneider Downs hope for the safety and good health of everyone in the communities we serve and elsewhere.Although it may not be ideal to sell a business at this time, there could be an opportunity to gift ownership in your company. Donors can lower their estate tax burden by gifting during a time when the value of their company has declined.The stock market is currently in a highly volatile state which creates significant investment risk since, historically, higher volatility results in lower returns. As shown in the chart below, the Chicago Board Options Exchange's Volatility Index (“VIX”), a popular measure of the stock market's expectation of volatility based on S&P 500 index options, jumped in mid-March. Specifically, the index reached an adjusted close of $82.69 on March 16, 2020 following the CDC’s warning against large gatherings issued the day prior. For perspective, the index peaked at an adjusted close of $80.86 during the Great Recession in 2008. The VIX has since declined to $53.73 as of the writing of this article.Source: www.cboe.com Higher volatility is often one of the many factors that can lead to lower valuations. The chart below indicates that market capitalizations for public companies across all sectors have declined by approximately 25% to 55%, depending on the sector, in the past month:Source: FidelityThis increased volatility and lower market capitalizations in the public markets indicate lower valuations for privately held companies as well and could be an advantageous time for estate planning.However, no one has a clear view of what the economy will look like tomorrow or how long the decreased valuations may last. At this point in time, it may make sense to consider the tax benefits that a lower valuation would provide as part of your overall estate plan.Schneider Downs has significant experience in preparing business valuations for gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@schneiderdowns.com) or Thomas D. Pratt (412-697-5615; tpratt@schneiderdowns.com) for more information about our business valuation services.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Senate Passes the CARES Act – $2 Trillion Relief Package Moves to the House In response to the Global pandemic caused by COVID-19, or more commonly called the Coronavirus, the United Sates has enacted the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” (the Act). After much deliberation and continued delays, the Senate was finally able to pass the CARES ACT late on Wednesday night March 25. The House is not expected to vote on the bill until Friday (at the earliest)Over the course of less than one week, the package grew in size from fewer than 250 pages to almost 900 pages. The Act contains numerous provisions affecting a wide variety of areas intended to provide business relief, individual stimulus payments, enhanced unemployment benefits, support for health care providers, corporate and individual tax relief, as well as assistance to states and citiesAs the country’s economy continues to constrict from the impact of COVID-19, many businesses and individuals have been impacted in a variety of ways. We have already seen earlier bills passed related to expanded health care coverage and small business provisions, as well as extensions in tax filing deadlines and payment due dates. The CARE ACT is intended to be a “Phase 3” of the economic stimulus related packages. Further still though, some politicians have hinted additional phases may be requiredThe size of this economic package is unprecedented. The bill provides $2 Trillion in funding. Further, the U.S. Federal reserve will be able to provide $4 trillion in aid to local governments and industries. Some of the details of the bill are noted below.For businesses, governments, and health care related enterprises, the Act includes: $500 billion to back loans and provide assistance to larger companies. There are strings attached to this assistance, including limits on executive bonuses, bans on stock buy-backs, and protection of workers. $350 billion to aid small businesses including small business loans and forgiveness; however, there appear to be strings attached related to worker retention requirements. $150 billion for hospitals and other healthcare providers for equipment and supplies $17 billion earmarked for companies identified as critical to national security (believed to be Boeing); Over $50 billion to the airline and related industries. $20 billion to replenish the nation’s stock of medical supplies and the development of coronavirus vaccines and tests. $400 million to the states for 2020 election assistance. For individuals, the Act contains a variety of benefits including: Eligibility for checks up to $1,200, with married couples filing jointly eligible for checks up to $2,400, along with an extra $500 for each child. The funds begin to phase out at higher income levels. Scheduled cuts to Medicare and Medicaid are rolled back Unemployment insurance is enhanced and expanded. Student loan repayments can be deferred. A number of provisions affect business and individual taxes. Some of the significant tax-related provisions in the bill are summarized below. More in-depth analysis will follow over the coming days when the bill becomes law:Additional Individual tax provisions include: 2020 recovery rebates for individuals; Special rules for the deductibility of charitable contributions Special rules for retirement fund distributions Certain exclusions for employer-paid student loans Business tax measures (including business items in individual returns) include: Delays certain payroll taxes; Provides credits for certain employee retention Liberalization of limitations on NOLs and excess business losses; Changes to business interest deduction limitations Technical correction changes to Qualified Improvement Property (QIP) Modifications involving the payment of Sick Pay and Family Medical Leave The passage of the Act is a significant step forward in assisting many U.S. businesses, and their employees, survive the economic turmoil caused by COVID-19. As the unprecedented fight against the virus continues, it is impossible to say how long the economic down turn will last and how quickly the recovery will take. Hopefully, this Act will help both businesses and individualsPlease visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Small Business Association Loan Checklist – Prior to CARES Act This article was updated on March 24, 2020.  Updates to this article will be made as new information becomes available.Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus (COVID-19).  This is a summary of the U.S. Small Business Administration (“SBA”) loan process and documents needed to apply for an SBA loan, prior to any of the new legislation passed by the federal government as a result of COVID-19.  Schneider Downs can assist with the application process and the documents necessary for these loans.OverviewThe SBA works with lenders to provide loans to small businesses.  The SBA doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions.  The SBA reduces risk for lenders and makes it easier for them to access capital, which makes it easier for small businesses to get loans.Benefits of SBA-Guaranteed LoansSBA-guaranteed loans generally have rate and fees that are comparable to non-guaranteed loans.  Additionally, some loans have lower down payments, flexible overhead requirements and no collateral requirements.  The SBA also offers continued support with some loans.Loan Amounts and Business PurposeThe 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses and this program is currently being proposed as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.Eligibility RequirementsLenders and loan programs have unique eligibility requirements, remembering that these requirements may change with the final version of the CARES Act.  Generally, eligibility prior to the CARES Act is based on the following: Be a for-profit business – the business is officially registered and operates legally Have invested equity – the business owner has invested their own time or money into the business Do business in the U.S. – the business is physically located and operates in the U.S. or its territories Exhaust financing options – the business cannot get funds from any other financial lender Normally, businesses must meet size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding. A lender will provide a business with a full list of eligibility requirements for a business loan.  Application ProcessThe SBA loan application process works as follows: Describe your business needs – answer a few question about the business Get matched in 2 business days – receive email with contact information of lender who express interest in loan Talk to lenders – compare rates, terms, fees and more Apply for loans – submit loan applications and paperwork Brief Checklist before Meeting with a LenderBefore meeting with a lender and prior to any changes in the CARES Act, a business should have the following information or documents ready for a 7(a) loan application: Business plan – most lenders will expect a business plan when applying for funding Amount and use of funds – a business should know how much capital is needed and how it will help the business Credit history – lenders will use credit scores to determine credit risk and interest rate.  The SBA may help guarantee some loans that otherwise may not qualify. Financial projections – a business needs to understand its finances, how funds will be used and how the business plans to pay back the loan. Collateral – many lenders require a business to use another asset to guarantee the loan.  This may be a home, car, inventory or other property owned. Industry experience – this may not be required, but it’s helpful.  Knowledge of the business’ industry can make a lender feel confident about making the loan. Borrower information form – to begin the process, a small business owner will need to complete SBA Form 1919.  This form must be completed by all associates of the business applicant as required on the form, to include all owners of 20% or more of the business, all officers and directors, managing members, any person hired to manage the day-to-day operations and any other person who is guaranteeing the loan. Personal background and financial statement Statement of Personal History – SBA Form 912 (if required after completing Form 1919) Personal Financial Statement – SBA Form 413 (not required, but available for lenders to use) Business financial statement – to support the application and the ability to repay the loan, the following statements must be prepared: Year-end Profit and Loss Statement (last three years) Year-end Balance Sheet (last three years, including a detailed debt schedule) Reconciliation of Net Worth Interim Balance Sheet Interim Profit & Loss Statements Projected Financial Statements (includes month to month cash flow projections, for at least a one-year period) Business certificate/license – small business owners will need to be able to provide the original business license or certificate of doing business when closing the loan.  If the business is a corporation, stamp the corporate seal on the SBA loan application form.  This information should be readily available to provide to the lender. Loan application history – include records of any loans the small business owner may have applied for in the past Income tax returns – include the business’ signed federal income tax returns for the previous three years Resumes – include personal resumes for each principal Business overview and history – provide a history of the business and its challenges.  Include an explanation of why the SBA loan is needed and how it will help the business Business lease – include a copy of the business lease, or note for a landlord, giving terms of the proposed lease These documents are not necessary for an SBA Disaster Loan and may not be necessary for loans under the CARES Act.Please contact Schneider Downs if you have questions regarding the documents needed for the SBA loan process. Also, visit our Coronavirus resource page at www.schneiderdowns.com/our-thoughts-on/category/Coronavirus for additional related content. ### Moody’s Downgrades Higher Education Just a few weeks ago, Moody’s was an outlier among the major rating agencies by rating debt associated with higher education institutions with an outlook of stable rather than negative ratings by S&P and Fitch’s.  What a difference a few weeks can make as COVID-19 has swept the globe and significantly impacted the operations of higher education institutions across the United States.  COVID-19 has been mentioned in some of the more recent bond issuances as a factor that could impact their business model, and many are still struggling to quantify that impact.Institutions not only need to be focused on many of the same fundamentals that apply to all businesses, such as liquidity, revenue generation and cost containment, but also to some that are unique to higher education, such as outreach plans for admissions.Many of the concerns that S&P cited in its latest rating update, which focused on enrollment pressures, including pressure on international enrollment, are now potentially compounded in the wake of COVID-19 and are also highlighted by Moody’s recent update as well.The big unknown is what will happen for many institutions for their current recruitment efforts, which typically culminate around this time of year.  Many will need to rethink their budgets and projections for the upcoming year to ensure that they are realistic in light of this uncertainty.  In addition, models of prospective student engagement will be tested right now, as counselors and prospective students aren’t able to interact in person and will require institutions to find either new or different ways of connecting with those prospective students.If institutions have not already undertaken steps to model the impact on the Department of Education’s Financial Responsibility Score, financial covenants and other key metrics, now is good time to do so.  It is also critical to undertake an exercise to model your cash burn in light of institutions unexpectedly refunding a portion of room and board, as many institutions are heading into the time of year that is the typical cash low point for them.  Are there other means or sources of liquidity that you should explore, such as refinancing debt or looking to restructure vendor contracts?  What is availability under your line of credit?  How could you delay or defer certain expenditures?Additionally there are also challenges with the stock market being down more than 30% from the all-time highs.  Some institutions have temporarily opted to shift endowment draws to borrowings on their line of credit to prevent liquidating a portion of their investments in this period of market turbulence, but it may limit flexibility on liquidity when it might be needed for other priorities.  However, this market impact won’t be just felt in one year as this downturn impact the endowment draws for the next several years for many institutions. Lastly, many of your donors are also feeling the same pain in the stock market and a prolonged downturn has the potential impact charitable giving in the upcoming year as well.It is important to model the cash burn now to understand what additional sources of liquidity either can be uncovered or tapped to meet not only the typical trough in the cycle of cash for institutions, but potentially new budgetary holes that have been created as a result of COVID-19.  Institutions should think carefully and strategically on how their liquidity will be used right now until further clarity is available on how COVID-19 will impact many institutions.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### IRC Section 139 – Benefits for You and Your Employees in a “Disaster” On March 13, 2020, President Trump issued a declaration, under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, to declare the COVID-19 pandemic a federal disaster.  As a result of this declaration, employers are able to make payments to their employees that qualify as disaster mitigation relief payments. These payments will not be taxable to the individual receiving them and will remain deductible to the employer making the payments.After September 11, 2001 a new statute, I.R.C. Section 139, was added to the Tax Code.  This code section was designed to allow individuals to receive tax free payments during qualified disasters.  A qualified disaster is defined as a disaster which results from a terroristic or military action, a federally declared disaster, or an event that is determined to be of catastrophic nature by the Secretary of Treasury.Excludable qualified disaster relief payments include the following payments to or on behalf of an individual from any source, to the extent that expenses are not compensated for by insurance or otherwise: payments to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of the disaster; payments to reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that such needs are attributable to a qualified disaster;  payments by a person who furnishes or sells transportation as a common carrier by reason of death or personal physical injuries incurred as a result of a qualified disaster; or  payments by a federal, state, or local government, agency or instrumentality to promote the general welfare, when the applicable federal, state or local authority, as determined by the Secretary of the Treasury, determines that disaster relief is warranted. The exclusion does not apply to payments in the nature of income replacement, such as payments for lost wages, unemployment compensation, or business income replacement.  These items remain taxable (and deductible by payor).During this pandemic, we have seen companies offer to reimburse their employees for many different items.  As long as the reimbursements are deemed necessary personal, family, or living expenses, they would qualify as Section 139 disaster relief payments. Although documentation rules are not specified, we recommend that you keep good records in the event of future questions.As Employers are considering payments related to the COVID-19 pandemic, they need to determine the applicability of the qualified disaster payments rules. The last thing employers are trying to do under the current environment is to create an additional burden to their employees.As companies begin to think about options for assisting their employers, they should consider all options for the best way to assist the employees and the communities in which they operate.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content.  ### Estate Planning in a Volatile Market Our country now faces unprecedented challenges. As your trusted advisors, we wish you and your family health and comfort as we weather this storm together. Although estate planning may not currently be at the top of your mind, we wanted to reach out to let you know that a down market and low interest rates can present opportunities that may not be available when our lives return to normal.First, the benefits of lifetime gifting can often be maximized when the stock market turns against us. In 2020, taxpayers can gift up to $15,000 to an unlimited number of recipients ($30,000 for married couples who split gifts) without a gift tax. In addition to this annual exclusion, taxpayers may gift up to $11.58 million ($23.16 million for couples) during their lifetimes free of tax. Gifting makes sense when the stock market falls because more shares can be given away without exceeding these thresholds. When the market improves, and the gifted shares rise in value, none of this appreciation will be included in your taxable estate.Second, now might be a great time to consider the benefits of a grantor retained annuity trust, known in the estate planning world as a “GRAT.” A GRAT is a mechanism whereby a taxpayer transfers assets to an irrevocable trust and retains the right to receive annuity payments for a predetermined period of time. When the GRAT term ends, the trust assets, and any appreciation in value of such assets, are passed to the beneficiaries free of taxes. GRATs established in hard times are generally sensible because the hurdle growth rate required to be surpassed in order to successfully transfer appreciation is much lower than in times of higher interest rates. The more that the stock market rebounds during the GRAT term, the more tax-free appreciation is passed from your estate to your loved ones.Today’s environment also lends itself to the possibility of refinancing existing intra-family loans at lower rates. It may also be possible to use “swap powers” in irrevocable trusts to exchange low-basis assets owned by the trusts for high-basis assets owned individually. This will maximize the step-up in basis allowed at death and thus minimize the capital gains taxes paid by your beneficiaries when they later sell the assets.If any of these techniques are of interest to you, we encourage you act before this window of opportunity closes. Many experts believe that the fundamentals of our economy are strong and that our markets will quickly rebound once this health crisis is behind us. In addition, the political winds may shift following the upcoming election, and several of the planning tools described in this article have been on the chopping block for quite some time. Please feel free to reach out to us to discuss which planning opportunities may work best for you and your family. ### Cybersecurity Best Practices for Securely Working from Home amid the COVID-19 Pandemic On Monday, March 23, PA Governor Tom Wolf ordered residents in the seven counties hardest hit by coronavirus pandemic, including Allegheny County, to stay home for the next two weeks unless they have a dire need to leave their home. Earlier in the month though, the CDC recommended that gatherings of 50 or more people be stopped for at least 8 weeks. For the most part, any company that has the capabilities of allowing employees to work from home have been operating as such for the past 2 weeks or so. Restaurants and bars are only serving food by takeout or delivery. Only essential life sustaining businesses are allowed to remain open for the moment in PA. Transitioning from a trusted office environment to a work from home policy can create security risks. So how can employers and employees maintain best practice cybersecurity measures while employees work remotely? In response to this, the European Union Agency for Cybersecurity (ENISA) has issued a series of tips and recommendations for companies moving to a remote working environment. They are urging employees working from home to not mix work and leisure activities on the same device. As far as it is possible, use corporate intranet resources to share working files. This ensures working files are up-to-date and at the same time, prevents the sharing of sensitive information across local devices. Data at rest should be encrypted (including local drives), antivirus must be installed and fully updated, operating systems should be up-to-date and virtual meeting URLs should not be shared on any public channel. As for employers, they need to ensure corporate VPN solution scales and are able to sustain a large number of simultaneous connections. They should provide video conferencing for corporate clients and ensure all corporate business applications are accessible only via encrypted communication channels (SSL VPN, IPSec VPN). All applications portals should be secured using multifactor authentication mechanisms and direct internet exposure of remote system access interfaces should be prevented.  Where possible, provide all employees corporate devices with up-to-date security software and patch levels. Ensure adequate IT resources are in place to support staff in case of technical issues (and make sure they know who to contact) as well as policies for responding to security incidents and breaches are in place. The ENISA has also observed an increase in coronavirus-related phishing attacks. Due to the increase in phishing attacks related to the coronavirus, it is important to step up our cyber hygiene. As one should be in any situation, always be suspicious of emails that ask to check or renew any account credentials and those regarding references to the coronavirus should be navigated with extreme caution. Remember, emails that create an image of urgency or consequences are typical of phishing campaigns. Be suspicious of any email from someone you don’t know and always verify the source of an email before clicking any links or providing any information. If you are not expecting an email or it is asking for account credentials, contact the organization or person the email appears to be from in a separate communication. Emails from people you do know but are requesting unusual things (something you wouldn’t typically expect) are indicators as well, remember you can always call them to verify they sent the email. Download our How to Avoid COVID-19 Scams infographic to keep security awareness top-of-mind during this pandemic. Sources: https://www.enisa.europa.eu/news/executive-news/top-tips-for-cybersecurity-when-working-remotely https://www.zdnet.com/article/working-from-home-cybersecurity-tips-for-remote-workers/ https://www.post-gazette.com/local/region/2020/03/23/Wolf-to-issue-stay-at-home-order-for-hardest-hit-counties/stories/202003230080 Please visit our Coronavirus resource page for related content. How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. Learn more about our cybersecurity firm and services at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### The Coronavirus Pandemic and the Potential Effect on CECL Current Expected Credit Losses, or CECL, requires companies to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of a loan.  This standard went into effect for large U.S. public companies in December 2019.  However, the Federal Deposit Insurance Corporation (FDIC) approved a measure in 2018 allowing banks to take up to three years to phase in the impact of the rule on their regulatory capital. Although bankers and lawmakers have been pressuring the Financial Accounting Standards Board (FASB) for years to delay implementation, the coronavirus pandemic could now complicate U.S. companies’ efforts to comply with CECL.  Current market volatility is expected to make the implementation problematic for companies due to the difficulty in making predictions about credit risk, especially when relying on economic indicators for forecasting.  It is also challenging to understand what each bank is currently doing and to compare across all banks, as there is really no way to draw on prior experience with pandemics.  The economic uncertainty could cause higher-than-anticipated increases in credit loss allowances overall. In an effort to help financial institutions tackle the fallout from this pandemic, the FDIC Chairman requested the FASB give large public lenders the option to defer implementing CECL.  Thus, companies that decide to delay implementation would revert to the old model of recognizing losses once they have evidence the losses have been incurred.  The Chairman also requested that FASB allow companies to avoid categorizing coronavirus-related loan modifications as troubled-debt restructurings, which would encourage offering leniency to customers facing the current economic stress.  The FDIC and other federal and state banking regulators are encouraging financial institutions to work rationally with borrowers affected by the pandemic. Additionally, these agencies have confirmed with the FASB that short-term modifications made on a good-faith basis, in response to the epidemic to borrowers who were current prior to any relief, are not troubled-debt restructurings.  These modifications include payment deferrals, extensions, fee waivers, or other delays in payment that are insignificant.  Although no immediate CECL deferral was confirmed by the FASB, this could provide further drive for those who think implementation should be delayed. A recent draft of the coronavirus relief bill could provide temporary relief from CECL compliance.  Ultimately, delaying the implementation of CECL would free up billions of dollars for financial institutions to lend to consumers and small businesses that have been greatly affected by the pandemic and need assistance most right now. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### COVID-19 Considerations for IFRS Entities Following the COVID-19 pandemic, organizations and governments have imposed travel restrictions and quarantines. This situation will likely result in business disruption to entities, their suppliers, and customers. International Financial Reporting Standards (IFRS) entities should consider the impact of the virus on their financial statements in accordance with the disclosure requirements of International Accounting Standard (IAS) 1 Presentation of financial statements, including the potential need for disclosing the primary sources of uncertainty and the risk of a material adjustment in a subsequent period. IAS 10 Events after the reporting period, clarifies that adjusting events are events that had evidence of conditions that existed at the reporting date and that non-adjusting events arise from conditions after the reporting date. Therefore, the impact of COVID-19 should be assessed based on the facts and circumstances at the reporting date for adjustments. Information obtained following the reporting date, but before issuance of the financial statements should be considered for subsequent event disclosure. IFRS entities should consider the following when making these determinations:IAS 2 Inventories requires that declines in inventory net realizable value be expensed in the period in which they occur. A loss to the net realized value may result from damage, contamination, spoilage, physical deterioration, obsolescence, fluctuations in price levels, reduced demand or other causes. Seasonally dependent items should also be assessed for potential loss. Unplanned work stoppages, labor or material shortages, or production bottlenecks could cause production levels to drop below normal capacity levels. If this happens, management will need to consider the effects on its inventory costing. During abnormally low production management should expense uncaptured overhead in the period in which it occurs, rather than adjusting the overhead absorption rates.Financial Instruments within the scope of IFRS 9 Financial instruments should consider the impact of COVID-19 for the potential expected credit loss. Instruments such as trade and other receivables, contract assets, loans receivable, and lease receivables should be considered for collectability. If the risk of an expected credit loss has significantly increased, management should consider the need for additional reserves based on the facts and circumstances that exist at that date. In instances where collection on these financial instruments is delayed, a credit loss should be recorded if the entity is not able to recover compensation for the lost time value of money. IFRS requires that forward-looking information be considered when assessing the need to record a potential credit loss. Consideration should also be given to governing agencies enacting legislation that modifies payment terms. Lessors granting payment concessions to lessees should determine if concessions should be allocated over the remaining lease period as a lease modification. Any incentives provided by various governmental authorities should be considered for treatment as government grants by both the lessor and lessee.Financial Instruments with readily observable fair values, such as debt and equity securities, should be recorded at their market price at the reporting date. If investment valuations are not readily available at the reporting date, indirect considerations should be disclosed as to how the valuation was derived. Under IFRS, the reporting date acts as a hypothetical exit date for the instrument. Therefore, subsequent market fluctuation should not be considered for adjustment at the reporting date, but should be considered for subsequent event disclosure.Hedge transactions should be assessed to determine if the criteria for hedge accounting is still achieved. If hedged future cash flows are no longer anticipated then hedge accounting should be discontinued going forward.Business disruption could result in long-lived assets being underutilized in the short term. Similar to the treatment of overhead during abnormally low periods, IAS 16 Property, plant and equipment requires that depreciation begin once the assets are placed in service and continue if sitting temporarily idle or being underutilized. The capitalization on interest for construction-in-process should be suspended temporarily if construction of that asset is suspended in accordance with IAS 23 Borrowing costs.Long-lived and indefinite-life assets should assess potential impact of the virus under IAS 36 Impairment of assets.  Indefinite-life assets, including goodwill, should be tested for impairment at least every year and whenever there is an indication that these assets might be impaired. Temporary closures, decline in demand, or reduced income could indicate impairment. Management should also consider the impact to operating cash flows and assumptions for long-term cash flow forecasts. Discount rates should also be revisited for country risk, rate risk, and risk to the individual asset or group of assets. Publically traded entities should also consider any impact to their share price and market capitalization as potential indicators.The COVID-19 outbreak could affect revenue estimates on current and future customer contracts under IFRS 15, Revenue from contracts. This includes customer contracts with variable consideration such as volume discounts, early payment discounts, refunds, co-op agreements, price concessions, performance bonuses and penalties. At the contract inception, the company is required to estimate the amount of variable consideration to which customers will be entitled to in exchange for transferring promised goods or services. The amount of variable consideration an entity should include in the transaction price is constrained to the amount for which it is highly probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainties related to the variability are resolved. Capitalized contract assets should also be assessed for realizability of their related revenue.Organizations may need to obtain additional financing to manage the situation and may need to obtain waivers for failed covenants. Failed covenants could result in modifications of loan terms including loans to be due on demand. In severe situations, entities may need to consider if they remain a going concern within one year after the date of issuance in accordance with IAS 1 Presentation of financial statements. Additional disclosures in the financial statements are required if substantial doubt exists and to discuss management’s plans to address the substantial doubt.As the situation continues to develop, many entities may first report the impact of COVID-19 on their interim financial statements. Interim disclosures should be provided in accordance with IAS 34 Interim financial reporting, to ensure that information is reliable at the interim reporting date and all relevant information has been properly disclosed. For entities with significant impact, disclosure should be made for the impact on operating results along with the effect to the balance sheet and the statement of cash flows. Revisions to credit losses and changes to significant estimates should also be disclosed as should subsequent events following the interim period.Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### State Tax Filing Extensions As the COVID-19 crisis evolves its impact expands in more and more areas of our lives and business, including taxes.  The federal government has announced a deferral for 2019 tax payments and tax filings until July 15, 2020. Many states are evaluating the situation and some have issued guidance on their own extensions related to tax filings and payments.On Saturday, March 21st, Pennsylvania extended the personal income tax deadline until July 15, 2020.  In addition, the Department will waive penalties and interest on 2019 personal income tax payments through July 15, 2020.  Additional information on Department’s response to COVID-19 may be reviewed on the Department’s website at https://www.revenue.pa.gov/Pages/default.aspx.California has extended due dates for individuals and businesses until at least June 15, 2020.  The extension applies to partnerships, LLCs taxed as partnerships, individuals and estimated tax payment. California is requesting that any taxpayer request relief include “COVID-19” in black ink at the top of the tax return.Maryland has also issued guidance that the Comptroller’s office will not impose any interest or penalty if 2019 tax payments are made by July 15, 2020.  The new guidance does not impact taxpayers already on a conventional federal extension.California and Maryland, along with the federal government, have reacted to the developing cash flow concerns created by COVID-19, by issuing extension guidelines to taxpayers.  Updates from other states are being issued daily and it is expected many more state and local jurisdictions will follow suit.  It will be important to track and understand the specifics (tax payment only or payment and tax filing) of each deadline extension granted by the state or local governments.   Stay tuned to the Schneider Downs website for additional extension updates. ### Coronavirus Pandemic - Accounting and Financial Reporting Impacts under U.S. GAAP Companies are adjusting to the challenges posed by the coronavirus pandemic including managing a remote workforce, lost sales, supplier disruptions, and temporary orders to shut down.  Many of those companies are also faced with U.S. GAAP reporting requirements and will need to address accounting and financial reporting challenges exacerbated by this crisis, including potential asset impairments, customer collection issues, liquidity constraints, and financial disclosures. Accounting Impacts Recent temporary restrictions placed on essential and non-essential businesses in the United States and abroad will most certainly result in revenue shortages and earnings declines in the current quarter and future periods.  Additionally, costs for supplier replacements are further expected to erode earnings. These negative factors will likely trigger companies to perform impairment tests and potentially recognize impairment losses on its long-lived assets, goodwill, and other indefinite-lived intangible assets. Revenue and commodity market price decreases are strong indicators that the net realizable value of inventory is less than its carrying value.  Any such inventory losses are required to be recognized in the period when the loss occurs.  In addition to these types of inventory losses, manufacturers should closely monitor capitalized costs of inventory.  Manufacturing slowdowns and temporary shutdowns caused by this outbreak may cause abnormal production capacity levels.  Excess costs caused by these capacity abnormalities should be expensed in the period incurred and not capitalized into manufacturing overhead. Financial assets including trade accounts receivable, equity method investments, and available-for-sale debt securities should be assessed for collectability and impairment.  Many public business entities are just now adopting the provisions of ASU 2016-13, Financial Instruments- Credit Losses in their 10-Q filings, which requires the use of historical credit loss information adjusted for current prevailing conditions as well as reasonably supportable forecasts, to determine credit losses.  Prior to the coronavirus pandemic, this new credit loss standard was expected to significantly impact financial institutions and have a minimized impact to non-financial institutions.  We expect that the coronavirus pandemic could now have a greater impact to non-financial public business entities than previously expected due to the requirement to evaluate the impact of current conditions and reasonably supportable forecasts.  While complex financial modeling is not necessarily required in the new credit loss standard, the impacts of the coronavirus pandemic should be layered into the assessment of current conditions and forecasts in order to determine credit losses on trade accounts receivables and other financial assets measured at amortized cost.  Companies that have not yet adopted the provisions of the new credit loss standard will still need to assess the collectability of its trade accounts receivable portfolio and weigh the impacts of the recent business disruptions on the ability to collect from customers.  Contract assets arising under the new revenue recognition provisions of ASC Topic 606, should also be assessed for realizability. Most calendar year-end companies have already adopted the provisions of ASU 2016-01, Financial Instruments-Overall, which requires that equity securities, except those accounted for under the equity method of accounting and those resulting in consolidation of the investee, are measured at fair value through net income.  As such, the recent market declines will be reflected in the income statement of investors holding such equity investments.  Available-for-sale debt securities continue to be assessed on an other-than-temporary impairment basis.  For those companies that have adopted the new credit loss standard described in the previous section, the other-than-temporary impairment model for available-for-sale debt securities is eliminated and replaced.  Investors will also need to assess whether any deterioration in its equity method investments are other-than-temporary.  Similarly, equity investments that are measured under the new measurement alternative afforded under ASU 2016-01 require an assessment of impairment. Monitoring hedge accounting relationships in response to recent volatile market activity is critical to effectively manage risk and continue to qualify for hedge accounting.  The impacts of this outbreak may cause formerly highly effective hedge accounting relationships to unexpectedly become ineffective, leading to adverse impacts to the income statement.  Regression models and dollar offset calculations used to assess hedging relationships, could indicate ineffectiveness for the first time.  Qualitative effectiveness assessment methods including the critical terms match method and the short-cut method should also be reexamined.  The economic impacts of this crisis could result in a heightened risk of counterparty nonperformance for over-the-counter derivative instruments.  This risk should be captured in a counterparty credit valuation adjustment to the derivative instrument’s fair value measurement.   Additionally, any forecasted transactions designated in cash flow hedge accounting relationships should be carefully assessed to determine whether the forecasted transaction is still probable of occurring. The earnings shortages and cash flow constraints resulting from the coronavirus outbreak may require companies to refinance their existing debt or obtain bank covenant violation waivers.  It is important that companies determine whether a refinancing is a debt modification, debt extinguishment, or a troubled debt restructuring.  Covenant violations may also trigger current liability classification on historically long-term debt classifications. Financial Disclosures Companies need to carefully consider subsequent event, loss contingency, and risks and uncertainties disclosures that could impact the users of the financial statements.  Examples of disclosures of risks and uncertainties include those surrounding customer, vendor, and geographic concentrations.  There is a heightened risk of loss surrounding any type of concentration thus necessitating the disclosure.  Liquidity constraints and unfavorable revenue and earnings projections stemming from the outbreak may require companies to revisit going concern assessments. SEC Filer Impacts In addition to the disclosure matters listed above, SEC filers need to carefully consider the impact of the coronavirus situation to the discussions of operations in the management discussion and analysis section, market risks section, and the risk factors section of a filing.  SEC filers are granted an additional 45 days to submit reports that are due between March 1 and April 30, 2020, if the filer is unable to meet the regular deadline due to circumstances caused by the coronavirus pandemic. Summary As companies reallocate resources to address safety, operational, and logistical challenges created by the coronavirus pandemic, accounting resources should not be sacrificed or minimized.  Accurate, complete, and timely financial reporting will be a critical element for businesses to overcome the economic hardships of this crisis. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Technology Amid COVID-19 Data analytics is being used in a big way to track and monitor COVID-19. It’s being used to assist businesses worldwide as they face decisions regarding operations during the pandemic, and it has already played a huge role in the direct fight against the coronavirus globally. China, the first site of the outbreak, has been an example of how we can leverage technology to help us through this unprecedented time as we cope with the COVID-19 virus. By rapidly employing artificial intelligence and data analytics, Chinese cities are working hard to combat outbreaks and slow the spread of the virus. Tech company Infervision has been credited with helping hospitals in Wuhan, China with its AI technology.  Their imaging technology has helped hospitals manage an influx of patients by quickly diagnosing the virus and delivering faster results from CT scans, therefore speeding diagnosis, treatment, identification, and containment.   Blockchain is being used for the business side of hospital operations, as increased visits and claims could prove to be an administrative burden without the help of technology. Technology is also being used to help with the everyday practical aspects of the disease as governments and officials encourage social distancing.  Robots are being trained to perform necessary tasks including sanitizing surfaces and delivering food and medicine to infected persons.  Chinese companies have even developed systems capable of detecting individuals who have a fever within a distance of 16 feet. Looking to the future, AI and technology are being used to help scientists better understand the virus and how to treat it.  There are companies handling both sides, analyzing the virus itself and using big data to identify potential treatments.  Supercomputers are currently working on a possible vaccine. Data analytics is for more than just business - it is helping to solve real problems on a global scale. We at Schneider Downs are still here to bring big thinking and personal focus when it comes to data analytics. Sources: https://www.forbes.com/sites/bernardmarr/2020/03/13/coronavirus-how-artificial-intelligence-data-science-and-technology-is-used-to-fight-the-pandemic/#f1453e45f5fc https://www.itnonline.com/content/infervision-frontlines-against-coronavirus https://www.bbc.com/news/technology-51717164 ### Tax Impact of the Coronavirus Bill H.R.6201 Part 2 Current as of March 19, 2020Introduction and Executive SummaryOn March 20, 2020 the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (DOL) announced that small and midsize employers would soon be able to take advantage of two new refundable payroll tax credits.  Both credits are designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.  The credits can be used against both Federal Insurance Contributions Act and Railroad Retirement Tax Act employer taxes.  However, to turn a phrase, the devil is in the governing details.The relief for small and midsize businesses is provided under the Families First Coronavirus Response Act (FFCRA or the Act), signed by President Trump on March 18, 2020.  The Act is intended to help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide their employees with paid leave (either for the employee's own health needs or to care for family members).  The intent of the legislation is to enable employers to keep their employees on their payrolls, while at the same time ensuring that employees are not forced to choose between their paychecks and the public health measures needed to combat the virus. For small and mid-size businesses concerned with managing cash-flow and keeping their business alive, will these new tax credit provisions provide significant cash-flow relief, is a large question?  The answer is no different from what many attorneys and accountants initially provide when responding and that is “it depends”.  A calculation of the potential benefits will likely require coordination between senior business management, its employment law attorneys, its certified public accountants, and its payroll departments and/or payroll processors to determine the amount of, and to claim, the benefit.  The results are very dependent upon each businesses’ unique set of facts and circumstances; the benefits may, or may not, provide the level of assistance that high level talking points by the government and others imply.The Act mandates paid sick leave and expanded family and medical paid leave for COVID-19 related reasons on small and mid-size businesses that may not have previously offered, or have been required to offer, these benefits.  To help offset the cost of these requirements, the Act creates a refundable paid sick leave credit and a paid child care leave credit for employers with eligible employees.  It’s important to understand that not all compensation related payments to employees will generate credits.  Only those payments fitting within the parameters of the requirements will generate a credit.Employers subject to the provisions include both for-profit businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act.  Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and December 31, 2020.  It is generally viewed by most advisors that the effective date for implantation of the Act’s requirements is likely to be April 2, 2020.  Equivalent credits are available to self-employed individuals based on similar circumstances.Small businesses with fewer than 50 employees may qualify for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue.  The DOL is to provide exemptions based on simple and clear criteria as to the businesses who might qualify for this exemption.  As of the date of this article, that guidance is not yet available.Paid Sick Leave and Sick Leave CreditThe Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee's pay.  The statute requires sick pay to be paid by an employer under this Act when an employee is unable to work (or telework) due to a need for leave because the employee: Is subject to federal, state, or local quarantine or an isolation order related to COVID-19. Has been advised to self-quarantine by a healthcare provider. Is experiencing symptoms & is seeking medical diagnosis. Is caring for an individual subject to quarantine pursuant to items 1 or 2 above. Is caring for children whose school or daycare provider is unavailable due to COVID-19.  Is experiencing a similar condition specified by HHS, DOL, or Treasury The required salary and wage replacement under this portion of the Act is generally: By reasons of items 1 – 3 above - The employees regular rate of pay but capped at $511/day and $5,110 in total.  By reasons of items 4 – 6 above - 2/3 of employee’s regular rate of pay but capped at $200/day and $2,000 total. Special calculation rules apply to part-time employeesIn general, the credit generated on the payment of the above items is equal to the total amount of sick pay salary or wages paid to the specific eligible employee under the FFCRA, plus the proportionate cost of group health insurance coverage (to the extent excluded from the employee’s pay) paid for by the employer on behalf of that specific employee under the FFCRA.  The credit earned above can offset the total share of employer taxes on all employees.Paid FMLA Child Care Leave and Child Care Leave CreditIn addition to emergency sick leave, an employee unable to work due to a need to care for a child whose school is closed, or when a child care provider is unavailable, for reasons related to COVID-19 may in some instances receive up to an additional ten weeks of expanded paid family and medical leave.  This provision applies when an employee is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age. Paid leave under this provision begins after the employee has been off for 10 days and can be coordinated with the sick pay leave, which pays up to 10 days.The statute requires the employer to pay the eligible employee at 2/3 the employee's pay but capped at $200/day with a maximum of $10,000 paid to any one employee.In general, the credit generated on the payment of the above items is equal to the total amount of emergency family and medical salary or wages paid to the specific eligible employee under the FFCRA, plus the proportionate cost of group health insurance coverage (to the extent excluded from the employee’s pay) paid for by the employer on behalf of the specific employee under the FFCRA.  The credit earned above can offset the total share of employer taxes on all employees.Claiming the CreditsThe IRS on its website (https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus) indicates that, under guidance to be released the week of March 23, 2020, employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.The payroll taxes that are available for credit retention appear to include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.If there are insufficient employer payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS.  The IRS announced that it expects to process these requests in two weeks or less.Further, a draft bill in the Senate, the “CARES ACT” (Section 4607 Advance Refunding of Credits) currently being negotiated between the political parties would provide that penalties could be waived if it is determined that an underpayment was caused in anticipation of the credit being allowed.  Presumably, this means an employer made a good faith effort to calculate the credit properly allowed against the payroll tax deposit required.Simple ExampleThere are no examples provided for in a Joint Committee on Taxation’s explanation of the law issued on March 17, 2020.  Additionally, there is only a very simplistic example provided on the IRS website.In our simple example, we assumed an employer has only 10 employees (assuming the employer does not qualify for the under 25 employee exemption) and is paying its employees $10,000 per month each before consideration of any emergency leave.  After the effective date the rules are implemented, one employee was out sick for two weeks due to advice from a healthcare professional to self-quarantine and then she returned to work afterwards.  A second employee qualified for emergency family leave as he was unable to work (or telework) because of the coronavirus public health emergency and because he had his two elementary age school children at home; he was on leave for 3 months.  The remaining eight employees continued to work during the period.  Using these basic facts, it was determined that the employer would generate tax credits of $7,700 in the first month, and $4,400 for the second and third months.However, there are multiple variations on the above set of assumptions that would change the results.  The credit result is highly dependent upon each set of unique facts and circumstances.In addition, regulations are forthcoming that will provide additional clarification that should include a definition on the determination of the employer’s taxable wages for FICA purposes.Tax Credit Administration and General ComplianceThe portion of the law pertaining to the availability of tax credits does not contain specific information on documenting positions on determining which employees are eligible for tax credits.  Prudent business practice would suggest the business contemporaneously document the eligible employees, the times employees are absent and being paid leave, the qualifying reason for the payment, and their need to comply with federal, state, or local quarantine requirements.Employers should consult with their employment attorneys regarding employment requirements.  Violations of the law are subject to penalties under the federal fair labor rules.Next StepsAs businesses are considering their options, they should: Gather employee data and determine if there are any employees eligible for exclusion from the requirements (30 day employment period not met for example); Determine whether individual employees’ being provided paid leave qualify under the requirements provided in the Act; Determine rates of compensation and periods of payment during the leave; Project the economic impact of the savings generated by the credit program. Final ThoughtsIt is understood that these times are unprecedented for most of us in our lifetime; we are living in history.  In addition to our healthcare providers, governing bodies are strained.  The law is quickly written, approved by Congress, and signed into law.  The IRS, businesses, and advisors are interpreting these provisions quickly and the conclusions, when they are showing up in print, sometimes appear to be conflicting with other conclusions and interpretations.  Congress has made errors in the past in quickly drafting bills as witnessed in the Tax Cuts and Jobs Act.  There may be inadequately drafted language in some of the bills that are quickly being enacted, with good intent, to help America.  Good intent won’t ease the minds of business owners needing to make quick decisions based upon the law’s requirements.  They need to make decisions quickly, often with imprecise facts and information.  We continue to urge you to proceed carefully and thoughtfully after obtaining the best information possible under these circumstances.In the coming days, it is expected that Congress will deliver to the President another bill that will change the federal income tax laws again, including some of the provisions enacted as part of the Tax Cuts and Jobs Act.  Schneider Downs remains at the ready to help address all your needs and concerns during these challenging times.  We’ll continue to analyze the new law and will provide additional updates as information becomes available. ### Impairment Considerations in a Turbulent Market On February 12, 2020, the Dow Jones closed at 29,551. As of the time I’m writing this – March 19, 2020 at 10:08 a.m. (minutes seem to matter these days) – the Dow sits at 19,695, a 33.3% decline in just over a month. While this drop brings up a lot of issues, one thing companies are likely going to have to consider is the potential for an interim impairment of goodwill and/or other intangible assets. Accounting Standards Codification (ASC) 350-20-35-30 outlines when goodwill should be tested for impairment, as follows: “Goodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.” ASC 350-20-35-3C discusses potential “triggering events” as follows: “In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an entity shall assess relevant events and circumstances. Examples of such events and circumstances include the following: a. Macroeconomic conditions, such as a deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates or other developments in equity and credit markets. b. Industry and market considerations, such as a deterioration in the environment in which an entity or its customer operates, an increased competitive environment, a decline in market-dependent multiples or metrics (consider in both absolute terms and relative to peers), a change in the market for an entity’s products or services or a regulatory or political development. c. Cost factors, such as increases in raw materials, labor or other costs that have a negative effect on earnings and cash flows. d. Overall financial performance, such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. e. Other relevant entity-specific events, such as changes in management, key personnel, strategy or customers, contemplation of bankruptcy or litigation. f. Events affecting a reporting unit, such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing of all or a portion of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit. g. If applicable, a sustained decrease in share price (consider in both absolute terms and relative to peers).” Points (a) and (b) indicate that many companies will have to consider whether it is more likely than not that its goodwill has been impaired at an interim date. In doing this, here are a few things to be cognizant of: Reporting Unit – The test for goodwill impairment should be done at the reporting unit level, not the entire company. Be aware if each reporting unit is impacted differently by the latest market downturn and macroeconomic conditions. Prior Impairment Tests – What were the results of your company’s latest impairment tests, and when was it? If you conducted an impairment test as of December 31, 2019 and determined that the fair value of a reporting unit was $100 million, compared to a book value of $10 million, this may indicate that, even with the recent downturn, it is more likely than not that fair value exceeds carrying value. Forecasts and Recent Performance – How much has recent performance declined? How have future cash flow forecasts been impacted? What’s the expected duration and severity of any decline in future cash flows? All of these factors could impact your evaluation. Unfortunately, considerations of interim goodwill impairment are just another thing to address in these trying times. If you need assistance with this analysis, Schneider Downs has significant experience in both evaluating whether it is more likely than not that fair value exceeds carrying value and quantifying the amount of any potential impairment, if necessary. Please reach out to Joel Rosenthal (jrosenthal@schneiderdowns.com), Tom Pratt (tpratt@schneiderdowns.com) or me at sthimons@schneiderdowns.com. ### The Impact of COVID-19 on Your 401(k) For most people, the largest asset they own is their qualified retirement plan. For some, this account may be in the “accumulation” phase for 40 years or more; for others, the account maybe in the “distribution” phase, which may last 30-40 years. The point is, your retirement account is not intended to be a short-term asset. Investing involves risk, and with risk comes the potential for loss. With recent events, the Coronavirus has caused the markets to become panicked, resulting in a great deal of volatility.During stressful and uncertain times like these, the natural human inclination is to flee the markets and resort back to a cash position of safety. It can be hard to stay disciplined and invested in times of uncertainty, particularly when it seems like there is no end in sight to the market’s downward pressure. The best thing an investor can do is trust their allocation, wait for calm and clarity, reassess the risk tolerance; then, if needed, make a change to their portfolio allocation.Unfortunately, it often requires events like COVID-19 to help investors identify their own risk tolerance. With uncertainty over the long-term impact of the virus, we remain optimistic that the pessimism around the markets will pass.The charts below, produced by JPMorgan, can add some perspective. The first, titled “Annual returns and intra-year declines,” shows calendar year returns and the intra-year decline of the S&P 500 dating back to 1980. On average, we experience a 13.8% decline each year, with 30 of 40 years of annual returns ending positive.The second chart, titled “20-year annualized returns by asset class (1998-2018),” displays the returns of major asset classes and the returns of the average 60/40 investor. Due to poor decision making, the results show that the average investor far lags that of the major asset classes.In the design and construction of SDMWA’s six (6) risk-based models, we considered the long-term aspect of the asset and plan for the extreme stress the markets can place on account balances in the short term, as well as achieving sufficient accumulation as the larger long-term goal.We often tell people: “Investing is like surviving a hurricane. You prepare before the storm, hunker down during the storm, and then, evaluate the damage after the skies have cleared. But never go out in the middle of it in and attempt to secure items.” We recommend before you make any changes to your strategy during this volatile time, you pause and reach out to us.We stand ready to assist and answer questions and concerns you might have.   Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Changes to Gifts-In-Kind Reporting for Not-for-Profits On February 10, 2020, the Financial Accounting Standards Board (FASB) issued Proposed Accounting Standards Update (ASU), Not-for-Profit Entities (Topic 958), which is intended to improve transparency for how not-for-profit organizations present and disclose contributed nonfinancial assets. Contributed nonfinancial assets, or gifts-in-kind, include things like land, buildings, equipment, materials, supplies, intangible assets, and services. The proposed ASU is meant to address concerns about the lack of transparency regarding the value of gifts-in-kind received by not-for-profits, as well as the amount of those contributions used in their programs and activities.The proposed ASU would require not-for-profits that receive gifts-in-kind to present them as a separate line on the statement of activities, distinct from other types of contributions. It would also require those organizations to disclose the following: Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets For each category of contributed nonfinancial assets received (as identified above): Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods. If utilized, a description of the programs or other activities in which those assets were or are intended to be used. A description of any donor restrictions associated with the contributed nonfinancial assets. The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market), if significant, in accordance with the requirements in Topic 820, Fair Value Measurement. The amendments in this proposed ASU would be applied on a retrospective basis to the first set of financial statements following the effective date, which has not yet been determined. Comments on the proposed ASU are due to the FASB by April 10, 2020. ### Coronavirus Small Business Financial Relief Options - Ohio This article was updated on March 23, 2020.  Updates to this article will be made as new information becomes available.CORONAVIRUS SMALL BUSINESS FINANCIAL RELIEF OPTIONS - OHIOSchneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus pandemic (“COVID-19”).   The following are some of the many resources available for impacted small businesses in Ohio due to the COVID-19 pandemic.  Schneider Downs can assist your organization with any of these programs. Ohio Bureau of Workers’ CompensationThe Ohio Bureau of Workers’ Compensation will defer business premiums for March, April and May 2020.  While payments are deferred until June 1, 2020, the state could reassess before then.Coronavirus and Unemployment Insurance BenefitsFAQs from the Ohio Department of Job and Family Services can be found here:http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm?fbclid=IwAR1TvrdQew5Ze6orqygYb2UoW5WysBOSeDT69vaRAJ9KGRvFDF8UG7lw2OYHealth Insurance Coverage FlexibilityThe Superintendent of Insurance has issued the following requirement of Insurers: Employee Eligibility – Insurers must permit employers to continue covering employees under group policies even if the employee would become ineligible due to a decrease in hours worked per week. Grace Period for Premiums – All health insurers are required to provide the option of deferring payments without interest for up to 60 days from each original premium due date. Continuation Coverage – For employers with 20 or more employees, as long as one person is actively employed, eligible employees can continue coverage under COBRA. For employers with less than 20 employees and at least one active employee, eligible employees may elect to continue coverage for up to 12 months. Special Enrollment – Employees who lose coverage are eligible for a special enrollment period and premium subsidies may be available. Full details can be found here:https://iop-odi-content.s3.amazonaws.com/static/Legal/Bulletins/Documents/2020-03.pdfThe Columbus FoundationThe Columbus Foundation has activated its Emergency Response Fund.  The fund assists nonprofits who are responding to COVID-19 and experiencing financial challenges as a result of that response.  Nonprofits can apply at the following website:TechCred ProgramThe TechCred program is available to Ohio employers who upskill their employees while they are unable to perform their day-to-day duties.  Some key summary points of the program are: $2,000 in reimbursement for every technology-focused credential earned by an employee, up to $30,000 per employer per round; and the current application period is open until March 31. Ohio Department of Jobs and Family Services – Shared Work Ohio ProgramA voluntary layoff aversion program which allows workers to remain employed and employers to retrain staff during times of reduced business activity.  Under this plan, a participating employer: reduces affected employees’ hours in a uniform manner; the participating employee works the reduced hours each week; and ODJFS provides eligible individuals an unemployment insurance benefit proportionate to their reduced hours.  In order to qualify, companies have to: have at least two affected, full-time employees; be current on all Ohio unemployment insurance; and agree to the program requirements. More details can be found here: http://jfs.ohio.gov/ouio/SharedWorkOhio/Ohio Department of Commerce – One-Time Liquor BuybackBars and restaurants can return unopened, high-proof liquor products (obtained within the past 30 days) to the agency where they purchased the product and this is also available to those with temporary (F2) permits for events scheduled between March 12 and April 6, 2020.  Instructions can be found here:https://myemail.constantcontact.com/UPDATED-PROCESS--Wholesale-Return-Requests.html?soid=1102307935227&aid=Qgw_kAcrofULocal BanksMany local banks have programs available to consumers and small businesses. The Ohio Department of Transportation (ODOT)ODOT is modifying the process for haulers carrying heavy loads of essential foods.  While oversized loads usually require advanced permission, haulers can download and print a permit at https://transportation.ohio.gov/wps/portal/gov/odot/.DVI Funding (National Program)The Coronavirus Financial Bridge Loan Program provides unsecured cash loans up to $100,000 to U.S. Citizens nationwide.  To review the program and start the pre-approval process, please visit the link below.https://www.dvifunding.com/coronavirusHoneycomb Crowdfunded Small Business Relief Loan (National Program)To help deliver the working capital that businesses need, Honeycomb is offering 45-day payment free periods,  6-month interest-only periods and reducing posting, success, and investor fees.For more information on the loan program, please visit the link below.https://www.honeycombcredit.com/reliefAT&T and Verizon (National Program)For the next 60 days, AT&T and Verizon will not terminate the service and will waive any late payment fees of any wireless, home phone or broadband residential or small business customers because of their inability to pay their bill due to COVID-19.If you need assistance with any of these programs, please reach out to any of your contacts at Schneider Downs or contact Dan Phillips (dphillips@schneiderdowns.com) or Joel Rosenthal (jrosenthal@schneiderdowns.com) directly.Please see the following article for a summary of federal and Pennsylvania specific programs: https://schneiderdowns.com/our-thoughts-on/coronavirus-small-business-financial-relief-options. Please visit our Coronavirus resource page at schneiderdowns.com/our-thoughts-on/category/Coronavirus for related content. ### Billing Schemes in the Professional Services Industry In previous Our Thoughts On articles, I’ve discussed a case study regarding billing schemes in the professional services industry, and my colleague Andy Trettel has talked about using data analytics to identify check and payment tampering schemes.  In this article, we’ll combine these ideas to provide some common data analytics tests to detect billing schemes.As a refresher, billing schemes attack a company’s cash disbursements and payables cycle by making false claims for payment from the victim company.  These bogus claims induce the victim company to issue payments for goods or services not actually received.  Fraud perpetrators can accomplish this in a variety of ways: Invoicing via shell companies, wherein a fictitious entity is created for the sole purpose of committing fraud Invoicing via non-accomplice vendors, wherein fraudsters use invoices in the name of existing vendors to generate fraudulent payments Overbilling by falsifying or inflating billing records Making personal purchases with company funds, by using company accounts to buy items for themselves, their businesses, their families, etc. A company should continually monitor relationships with vendors to ensure that vendors are not taking advantage of the relationship with the company and that all vendors are legitimate.  Common data analytics tests to monitor red flags with vendors include: Identify vendors with significant increases or decrease inactivity Extract vendors with incomplete profiles, especially those with missing telephone number or tax ID numbers Review transactions that are just barely under the authorization thresholds There are various new data analytic tools, besides Excel, to perform these tests that are now available.  We are utilizing several of these tools at Schneider Downs, including: Alteryx – a business intelligence platform and data preparation tool that offers data mining and predictive analytics.  It focuses on accessing, preparing, blending and enhancing data, especially from multiple sources in different formats. Microsoft Power BI – a business analytics solution with interactive visualization and business intelligence capabilities.  It can connect to hundreds of data sources and convert data into dashboards and reports. Tableau – interactive analytics tool to integrate and combine data from multiple sources into visualizations and dashboards, with virtually no programming required. IDEA – an analysis tool that quickly analyzes data, guarantees data integrity and accelerates performing data analytics to assess risk, gather evidence and uncover trends. If you have any questions regarding potential fraud schemes or the use of data analytics to detect fraud, please contact the Business Advisory Group at Schneider Downs. ### Autonomous Mobility If you follow Automotive News, you may recall an article about a month ago that addressed General Motors’ vision for its self-driving, multi-passenger unit – the Cruise Origin. GM sees this autonomous, all-electric shuttle as a clean and profitable alternative to Uber and Lyft.  And, while the Cruise Origin is probably still a few years from production and road-readiness, the fact that existing ride-hailing services have yet to turn a profit makes this a race.As GM uses its Electric Vehicle and Autonomous Vehicle technologies to be first-to-market with a driverless, environmentally friendly shuttle service, others are watching with interest and capital, including significant institutional and equity investors.  Don’t think the current giants in the ride-hailing arena are going to sit idly by, however; they also see that the road to profitability is through autonomous vehicles.As additional motivation, a recent study from the nonprofit advocacy group Union of Concerned Scientists reported that ride-hailing services are actually responsible for increasing carbon emissions.  Although embraced by the young “woke” generation and perceived as a possible force to stem climate change, the study reveals that the emergence and popularity of Uber and Lyft have had the exact opposite impact on the environment. The convenience of ride hailing has added drivers to the road and pulled passengers away from public transportation, creating both congestion and more pollution.  The report goes on to call for companies like Uber and Lyft to electrify their fleets and increase their share of pooled rides, coincidentally demands that fall right in line with GM’s vision for the Cruise Origin.As for what’s next, as autonomous vehicle technology evolves and infrastructure and regulation on U.S. roadways develops, we should begin to see changes to personal mobility that will ultimately have a positive, lasting impact on all of us.  Stay tuned. ### Coronavirus Small Business Financial Relief Options This article was updated on March 20, 2020.  Updates to this article will be made as new information becomes available. Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus (“COVID-19”).   This is a summary of resources and programs that are available, specifically to small businesses.  Schneider Downs can assist with any of these programs. The Federal government is attempting to fast-track legislation to address COVID-19. Currently, there are three phases to this legislation: Phase I, H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act, was enacted into law on March 6, 2020. This act provided $8.3 billion in emergency funding, including a provision that impacted small businesses can qualify for the Small Business Administration (“SBA”) Economic Injury Disaster Loans (“EIDLs”).  This phase also addresses funding to ensure vaccines developed are affordable, and that Medicare recipients can consult with their providers by telephone if necessary. Phase II, H R. 6201, the Families First Coronavirus Response Act, was enacted into law on March 18, 2020 and provided provisions for the following: Paid sick leave – requires employers with fewer than 500 employees to provide two weeks’ worth of paid sick leave if employees are unable to work due to COVID-19, Free COVID-19 testing to the public, without having to use deductibles or copayments, Expanded food assistance – nearly a billion dollars to provide access to meals for those without food security, and $400 million allocated for an emergency food assistance program, Additional unemployment benefits - nearly $1 billion in state grants to cover processing and paying unemployment insurance, and Requirements that employers provide additional protection for healthcare workers Phase III is being developed and hopefully will be passed soon.  To help stimulate the U.S. economy, Phase III proposes to give small businesses $300 billion in federally guaranteed loans and $200 billion in loans for certain industries. This phase also proposes to make cash payments, or rebates, to individuals and families.  It appears the amount of the rebate to individuals could be up to $1,200, while families could receive up to $2,400.  The amount of the payment will depend on the individual’s or families’ 2018 taxable income and number of dependents.  This bill may cost over $1 trillion. Senate Majority Leader Mitch McConnell put a deadline for the $1 trillion package of midnight on Friday, March 20, 2020 - they did not meet this deadline.  We anticipate that this bill will be passed by Monday, March 23, 2020 and we will update when the details arrive. In addition, to the Federal laws that are being passed or will soon be passed, there are a multitude of resources that were available or are now being made available , in the Pittsburgh area for small businesses impacted by COVID-19, to provide financial relief.  The following are some of the many COVID-19 resources available for impacted small businesses in the Pittsburgh area. Pennsylvania Department of Community and Economic Development The Department of Community and Economic Development (DCED) offers working capital loans that could be of assistance to businesses impacted by COVID-19.  The Wolf Administration today announced the availability of low-interest loans for small businesses and eligible non-profits in all 67 counties in Pennsylvania through the U.S. Small Business Administration (“SBA”). https://dced.pa.gov/resources/ Small Business Administration Coronavirus Small Business Disaster Loans The U.S. SBA is offering loans through additional funding provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Donald Trump. The Economic Injury Disaster Loan assistance declaration will make Disaster Loans of up to $2 million available to small businesses, targeting food service and manufacturing, along with private, nonprofit organizations in states that are approved for the program. For more information on the SBA Disaster Loan program and how to apply, please visit the link below. www.schneiderdowns.com/our-thoughts-on/small-business-disasterrelief-loan Urban Redevelopment Authority of Pittsburgh The Urban Redevelopment Authority of Pittsburgh (URA) today announced that, pending Board approval, it is taking the following steps to help mitigate the unprecedented potential ramifications of COVID-19 to Pittsburgh's small business community. The URA is offering to its existing small business borrowers Emergency Extended Credit to help ease potential cash flow difficulties over the next several weeks. The URA is temporarily easing and streamlining its Micro-Enterprise Loan Program to support up to 30, 0% loans for small businesses that are not currently URA borrowers. For more information, on the URA small business funding program, please visit the link below. https://apps.pittsburghpa.gov/redtail/images/8954_URA_Biz_Assistance_Expanded_FINALa.pdf Hebrew Free Loan Association Pittsburgh The Coronavirus Financial Bridge Loan Program provides interest-free loans on a nonsectarian basis for up to $5,000 to residents of Allegheny, Beaver, Butler, Westmoreland, Washington, and Armstrong counties who are facing financial challenges caused by the Coronavirus/COVID-19 outbreak. For more information on the loan program, please visit the link below. http://hflapgh.org/coronavirusloan/ DVI Funding (National Program) The Coronavirus Financial Bridge Loan Program provides unsecured cash loans up to $100,000 to U.S. Citizens nationwide.  To review the program and start the pre-approval process, please visit the link below. https://www.dvifunding.com/coronavirus Honeycomb Crowdfunded Small Business Relief Loan (National Program) To help deliver the working capital that businesses need, Honeycomb is offering 45-day payment free periods,  6-month interest-only periods and reducing posting, success, and investor fees. For more information on the loan program, please visit the link below. https://www.honeycombcredit.com/relief Bridgeway Capital Bridgeway is offering capital for small businesses and nonprofits in Western Pennsylvania, and loan modifications for customers in need of financial relief. https://www.bridgewaycapital.org/covid-19relief/ Progress Fund The Progress Fund provides financing from $20,000 to over $1 million to people who are starting, expanding or buying small businesses.  These loans can be used to purchase property, restore and rehabilitate buildings, purchase inventory or equipment, buy the assets of an existing business, and for working capital. https://www.progressfund.org/ Fay-Pen Economic Development Council A variety of low-interest financing programs are available for companies in Fayette County through the Fay-Penn Loan Programs, Pennsylvania Department of Community and Economic Development (PA DCED) and various regional funding organizations. https://startingyourbusiness.com/business-directory/fay-penn-loan-programs-fay-pen-economic-development-council/ Washington County Council on Economic Development Washington County offers various loan programs, including a Pennsylvania SBA Microloan and a West Virginia SBA Microloan up to $50,000 and a Manufacturing Loan Program up to $100,000. http://washingtoncountypa.org/loan-programs/pennsylvania-sba-microloan/ Southwestern Pennsylvania Commission (“SPC”) SPC’s Business Finance Assistance program works with entrepreneurs to assist them in starting, developing and expanding their businesses. SPC can make loans and provide assistance to high tech, oil and gas, agricultural, tourism, recycling, manufactures, and many additional types of for profit companies.  Loan programs include the Pennsylvania Industrial Development Authority (“PIDA”) and revolving loan funds.   ### Clarity on the Small Business Association Disaster-Relief Loan Program This article was updated on March 20, 2020.  Updates to this article will be made as new information becomes available. Clarity on the Small Business Association Disaster-Relief Loan Program Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus (COVID-19). Overview The U.S. Small Business Administration (“SBA”) is offering loans through additional funding provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Donald Trump. Upon a request received from a state’s Governor, SBA will issue an Economic Injury Disaster Loan declaration.  Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state to help alleviate economic injury caused by the Coronavirus (COVID-19). It is anticipated that all states and counties will be eligible for the program.  As of this writing, state’s Governors are in the process of applying for access to the program; however, not all states, or counties within the states, are currently eligible.  If a specific state/county is not currently eligible, continue to monitor the https://disasterloan.sba.gov/ela/Declarations/Index website for declarations of eligibility. Application Process for SBA Disaster Loans The Economic Injury Disaster Loan assistance declaration will make Disaster Loans of up to $2 million available to small businesses, targeting food service and manufacturing, along with private, nonprofit organizations in states that are approved for the program. The SBA Disaster Loans are designed to help businesses without available credit with working capital needs and focusing on recurring monthly expenses such as payroll.  Businesses with credit available elsewhere are not eligible for this program. Disaster Loans are provided directly from the SBA.   By lending directly to small businesses, the SBA is able to provide lower interest rate loans than banks.  The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.  Business collateral of $25K or greater is used to back the Disaster Loan. Decisions on loans are made on a case-by-case basis and are determined by revenue lost due to the coronavirus and ability to repay the loan.  The loan is intended to be used to help businesses to get back to where they were before the disaster and not for improvement or expansion.  Proof of need for the loan is determined by the SBA Disaster Loan officer after the application is submitted.  Selection for the loan is on a first come, first serve basis. It is recommended by the SBA that applications be submitted as quickly as possible. There are guidelines specifying if a business is qualified as a small business to apply for an SBA loan.  Small business qualification varies by industry NAICS codes, and is determined by revenue or number of employees. For help in determining your small business industry NAICS code, please visit: https://www.ecfr.gov/cgi-bin/text-idx?SID=b919ec8f32159d9edaaa36a7eaf6b695&mc=true&node=pt13.1.121&rgn=div5#se13.1.121_1201 A business can determine if they qualify as a small business using their NAICS code by visiting https://www.sba.gov/size-standards/. Information needed to apply for a SBA Disaster Loan is similar to applying for a bank loan. Documentation includes: Income Statement (i.e., business and/or personal income) Balance Sheet schedule of assets (cash, property, etc.) schedule of liabilities/debts (mortgages, loans, etc.) A tax release form is required for the IRS to send the SBA federal income tax information, as there is a three-year look back period for taxes of all equity owners of the business. To apply for a SBA Disaster Loan, please visit, https://disasterloan.sba.gov/ela/Account/Login. SBA anticipates the timeframe from application receipt, approval and loan disbursement to be approximately 30 days.  Timing and amount of recurring distributions will be determined with the Disaster Loan officer. If you have questions regarding the SBA Disaster Loan program or how we can help you navigate the application process, please reach out to Michael Hart with Schneider Downs Meridian at 216-543-0821. Additional Resources regarding SBA Disaster Loans For information concerning the SBA’s response to the coronavirus, please visit https://www.sba.gov To locate a U.S. SBA district office near you, please search at https://www.sba.gov/local-assistance/find/?type=SBA%20District%20Office&pageNumber=1 For additional information, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov. ### Tax Impact of the Coronavirus Bill H.R.6201 Current as of March 19, 2020Last night, President Trump signed H.R. 6210, The Families First Coronavirus Response Act (the Act) into law. The Act has gone through a few iterations since the original version of the bill was passed by the House last week. The bill contains numerous provisions that begin to address the U.S. economic implications caused by the coronavirus outbreak. This article will provide an executive summary on the tax portions of the bill (with more details to follow as implications of the Act’s language are further digested). Businesses are advised to discuss with their employment law advisors on the employee related mandates included in the ActIn general, though, part of the Act mandates the payment of paid family leave and sick pay by certain employers not previously required to pay for these items. The mandates do not apply to all employers or employees. In general, the Act appears to require: Paid family leave required for by employers with fewer than 500 employees (with possible exceptions for employers with less than 50 employees – but prior approval appears to be required). The employee limit appears to cover both full and part-time employees. Paid sick leave for by employers employing less than 500 employees. Further, provisions within the Act provide for payroll tax credits, which can be refundable, designed to assist employers, and the self-employed, with absorbing the cost of the mandated paid sick time and paid family and medical leave. The Act provides tax credits that would only apply to wages paid with respect to a period beginning on a date, selected by the Secretary of the Treasury, within the first 15 days of the enactment. As with any tax act, there are details and exceptions that need to be considered in planning and the Act only provides credits to employers affected by the requirements of the Act.In general, the Act provides the following credits for eligible employers: Sick Leave Allowed a credit against certain payroll taxes imposed on the employer for each calendar quarter in an amount equal to 100 percent of the qualified sick leave wages paid by the employer with respect to that calendar quarter.  This credit is not available for all compensation paid but only eligible compensation paid for under the Act. The credit may not exceed $511 for wages paid to certain employees and $200 for wages paid to other certain employees dependent upon the level the individual is affected by the coronavirus as enumerated in the Act. Credit applicable only to sick pay wages paid from enactment or other date selected by the Secretary of the Treasury, through December 31, 2020 Family and Medical Leave Allowed a credit against certain payroll in an amount equal to 100% of the qualified family leave wages paid by the employer during the quarter. The maximum amount of qualified family leave wages eligible for the credit is $200 for any day (or portion thereof) for which the employee is paid qualified family leave wages, and in the aggregate with respect to all calendar quarters, $10,000. The credit is not allowed in respect of unpaid leave. Credit is only applicable to wages paid from the date of enactment or other date selected by the Secretary of the Treasury, through December 31, 2020. It is important to note that the definition of eligible employers for purposes of the tax credits is defined as employers with fewer than 500 employees.The Act does not provide for a payroll tax holiday for employees.At this time, there are still many unknowns and the details need to be worked through based upon your specific facts and circumstances. These are challenging times.  Plan on proceeding carefully and thoughtfully.Schneider Downs remains at the ready to help address all your needs and concerns during these challenging times. We’ll continue to analyze the new law and will provide additional updates as information becomes available. ### Federal Individual Tax Return and Payment Deadlines Current as of 3/18/2020 8:00 AMOn Tuesday, Department of Treasury Secretary Steven Mnuchin announced that the Treasury Department and the IRS would be accepting 2019 tax payments interest and penalty free for up to 90 days. Specifically, he said “If you owe a payment to the IRS, you can defer up to $1 million as an individual.” He noted that he believes this amount should cover “lots of pass-throughs and small businesses.” “All you have to do is file your taxes, you’ll automatically not get charged interest and penalties.”A not so common adage, but maybe appropriate here is that “governing is in the details.” What does this limited amount of information truly mean in light of the fact that there has been no formal written press release issued by the IRS or official IRS announcement? Here are our thoughts: It appears that extensions, though generally automatic, will still need to be filed by April 15, 2020. If you are owed a refund, you will still generally desire to file your federal return by April 15, assuming your particular circumstances allow. There was no comment on whether interest be paid on money the government would owe to you on refunds but generally the IRS does not pay interest when refunds are paid within 45 days of the filing deadline (including extensions).  A reasonable estimate of tax liability will need to be made for if you owe more than $1,000,000 in federal taxes. A balance due in excess of that amount does not appear to escape assessment of penalties and interest. No specific guidance on the penalty and interest provisions has been released. For example, does the penalty relief only apply from April 15 until the date of payment (or 90 days)? What if the late payment can be traced back to a payment due June 15, 2019? Will interest be due on that balance from June 15, 2019 until April 15, 2020? In addition, there is no guidance regarding whether the federal estimated tax due date of April 15 will be extended. At this time, there are still many unknowns. We, like you, are anxious for clarification from the Internal Revenue Service – the definitive source for matters related to federal tax compliance requirements. Our best advice is to move forward with the assumption that the April 15th due date is not extended. Your team at Schneider Downs is operating at full business capacity and expects to do so even if the deadline is extended. Schneider Downs remains at the ready to help address all your needs and concerns during these challenging times.  We’ll continue to monitor this situation and will provide additional updates as information becomes available. ### Coronavirus Fraud It is a sad commentary on human nature, but when natural disasters or man-made crises occur, people attempt to take advantage of the situation, and commit fraud.  The government is now warning citizens about possible fraud related to the ongoing Coronavirus (COVID-19) crisis. The Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) jointly issued warning letters to seven purveyors of various unapproved products that claimed to treat Coronavirus.  The FDA stated, “there are no approved vaccines, drugs, or investigational products currently available to treat or prevent the virus.”  The FDA threatened enforcement actions against companies that continue to market products based on scientifically unsupported or deceptive claims.  As treatments for COVID-19 are hopefully developed, the opportunity for scammers to mislead consumers will increase.  Consumers should only purchase products used to treat COVID-19 symptoms from reliable, established medical organizations.Other instances of COVID-19 fraud include cyber-criminals who created a map purporting to be from Johns Hopkins University used to track Coronavirus cases. Anyone who clicked on the map, however, infected their computer with malware.  In addition, emails appearing to come from the World Health Organization (WHO) and the Center for Disease Control (CDC) offered unsuspecting recipients an “updated list of new cases around your city,” but in reality, it was used to obtain their email addresses and passwords.  Individuals should navigate to the website of the government agency they are seeking information from directly or through a reputable search engine, and never click on links in emails from unknown sources. During previous crises, scammers have set up fake charities related to the crisis to elicit donations from innocent victims.  High-pressure or time-sensitive donation requests, along with gift card or wired money requirements are red flags of possible fake charities.  Also, charities with similar-sounding names to established charities and “thank you” letters for donations that you never gave are other ways victims may be deceived into making a donation.  If you do not have prior personal experience with the charity in question, the FTC recommends researching the organization through available online databases, including Better Business Bureau or GuideStar.Schneider Downs is committed to helping our clients navigate the uncertainty their businesses face due to Coronavirus.  If you need the experience of Schneider Downs Business Advisors during this challenging time, please contact shareholders Tom Pratt at tpratt@schneiderdowns.com or Joel Rosenthal at jrosenthal@schneiderdowns.com. ### Updated Business Continuity and the Coronavirus As President Trump has now declared the COVID-19 (Coronavirus) outbreak a national emergency, the House of Representatives has since passed a coronavirus aid package that could include free testing, paid emergency leave and other resources intended to help stem the crisis and stabilize financial markets.Furthermore, public and private institutions across the U.S. have either closed or enforced work from home procedures, as countries across Europe and the Middle East close borders and ban flights in effort to contain the virus.As we know, the CDC has provided their recommendations to prepare, prevent and protect ourselves and our loved ones. But how should employers continue to manage their business, including their people and customers during this turbulent time?Best Practices for BusinessesWhile the outbreak continues to unfold, businesses are now finding themselves either executing or developing their pandemic, crisis communications and business continuity plans. Many businesses have already had to initiate their work-from-home procedures and cross-train personnel to ensure critical business processes remain effective. Unfortunately, this is a true test to determine how prepared businesses are to safeguard people and sustain operations amid the outbreak, social distancing, travel restrictions and increased illness.These plans should have a dedicated task force with cross-functional leadership buy-in and clear objectives, to ensure pandemic-specific elements and strategies can be effectively implemented.All employers need to consider how best to decrease the spread of acute respiratory illness and lower the impact of COVID-19 in the workplace. Employers should identify and communicate their objectives, which include the following:  Reducing transmission among staff,  Protecting people who are at higher risk for adverse health complications,  Maintaining business operations, and  Minimizing adverse effects on other entities in their supply chains. Ongoing communication between the employee and employer is critical to ensure awareness, expectations and risk exposure are continuously evaluated. This will help define trigger points and drive the decisions to ensure appropriate business decisions are made, while providing a level of assurance to your employees.Recommendations for Business Continuity amid the CrisisConsider the following recommendations in planning for the safety of employees and the continued heath of your business as the pandemic continues to unfold. Require sick employees to stay home; isolate sick employees Emphasize respiratory etiquette and hand hygiene to all employees Perform routine environmental cleaning Implement international, domestic, regional and local travel restrictions Understand the outbreak severity within your region and communities Understand the impact of the disease to high-risk employees Prepare and monitor for increased numbers of employee absences due to:  Illness in employees and their family members  Closures of early childhood programs and K-12 schools Implement plans to continue essential business functions, with anticipation of high absenteeism in critical role Cross-train personnel to perform essential functions Assess your essential functions and the reliance that others and the community have on your services or product Collaborate with customers and clients on ways to continue to meet expectations, while mitigating the risk of exposure to each other Coordinate with state and local health officials so timely and accurate information can guide appropriate responses Establish policies and procedures, such as travel restrictions, flexible worksites (e.g., telecommuting) and flexible work hours (e.g., staggered shifts), to increase the physical distance among employees and between employees Ensure policies and procedures are easily accessible to employees on how to conduct remote meetings, remotely connect to systems and where to check for updated information Identify essential business functions and critical elements within your supply chains required to maintain business operations Ensure business technologies can support the ability to efficiently and effectively work remotely, through stress testing you remote capabilities and communication tools Set up authorities, triggers, and procedures for activating and terminating the company’s infectious disease outbreak response plan Establish a process for visitors to help understand the threat and risk they could impose on your organization Where have they traveled over the past two weeks? Have they been in contact with anyone that has traveled over the past two weeks? Understand their contact with anyone that has traveled to restricted or know infectious areas over the last two weeks. Throughout this process and as the pandemic spreads, employers must effectively communicate their plans with employees, explaining what human resources policies, workplace flexibilities, and pay, benefits and leave will be available to them.  If you have questions on pandemic planning for your organization, we would welcome a discussion on this increasing concern.   ### Thinking About the Future: What’s Your Plan? (MDR) We’ve all heard the saying, “Fail to plan, plan to fail.” This is extremely pertinent if you’re thinking about transitioning your business. Many owners focus solely on the exit transaction itself without spending the time to properly prepare for it. Transitioning your business can take many forms, from passing to a family member to selling to a strategic partner. Here are some things to think about before you transition.Are you ready to leave? Many business owners fail to consider what they’ll do after a transaction. Do you plan to continue to work in the business? For how long? To whom will you report? If you’re no longer the owner, then you will NOT be in charge. If you’re not present, is existing management prepared to run the business? What will you do?Have you mapped out your financial plan? Prior to any transaction, you should evaluate your finances and create a personal balance sheet with a lifetime spending plan. How much wealth does it take to retire? What kind of lifestyle to you plan to have? Have you considered medical costs? Don’t forget to update your estate plan to take into account personal and charitable bequests.What’s your business worth?Sure, you may have an idea of the value of the business. How can you best position the business for maximum value extraction? What’s your best option? What about nonfinancial considerations?The decision to turn over your business to someone else is a difficult one. Think about your goals before you proceed, then “Plan your work and work your plan!” ### City of Pittsburgh – Paid Sick Days Act The City of Pittsburgh recently announced that an ordinance initially authorized in 2015 will take effect on March 15.  The Paid Sick Days Act, codified in the Pittsburgh City Code as Chapter 626, was enacted to enhance public health by ensuring that eligible employees across the city are able to earn paid sick time.  It applies to those employees who work at least 35 hours within the geographic boundaries of the city of Pittsburgh in a calendar year.The city recently revised a set of Guidelines for Administering the Paid Sick Days Act that address, but are not limited to, the following items: The accrual start date (March 15, 2020); Accrual rates for employers both with more than 15 employees and those with less than 15 employees; Determining the number of employees; Accrual caps; Carryover of sick time; Employers located outside the city boundary that have employees working within the boundary; Administration, including complaints filed with the Mayor’s Office of Equity (MOE); and Other requirements. The guidelines are intended to help interpret the ordinance and to clarify how the MOE will administer and enforce the rules.  They also note that the MOE may also seek guidance from the Allegheny County Health Department (ACHD) regarding questions involving disease prevention and control, and, where applicable, request that the ACHD issue regulations as may be required for application or enforcement of the rules.If you are unfamiliar with this new ordinance, you should address these rules with employment counsel as soon as possible. ### Individuals Receive Information Reporting Relief for Transactions with Certain Foreign Trusts Foreign trusts are subject to many tax filing requirements, and failure to meet them can result in significant penalties. Annual information reporting generally includes a U.S. person’s transfers of money or other property to, ownership of, and distributions from, foreign trusts.The IRS has issued guidance[1] that: Exempts certain U.S. individuals from information reporting requirements for their transactions with, and ownership of, foreign retirement and foreign nonretirement savings trusts and foreign trusts; and Establishes procedures for these individuals to request abatement or refund of penalties assessed or paid under for failing to comply with the information reporting requirements. Reporting ReliefThe Treasury Department and IRS have determined that certain U.S. individuals should be exempt from information reporting requirements because:a. the trusts are generally subject to written restrictions (e.g., contribution limitations, conditions for withdrawal, and information reporting) by the laws of the country where the trust is established; andb. U.S. individuals with an interest in these trusts may be required by FATCA (Foreign Account Tax Compliance Act) to separately report information about their interests in accounts held by or through the trusts.Penalty ReliefEligible individuals who have been assessed a penalty for failing to comply with foreign trust reporting for an applicable tax-favored foreign trust and want relief must complete Form 843, Claim for Refund and Request for Abatement.The guidance is effective as of Mar. 3, 2020.The complexity that surrounds foreign trusts should be regularly reviewed by taxpayers in order to minimize unfavorable tax implications.  [1] Rev. Proc. 2020-17, Mar. 3, 2020 ### American as Baseball Games and Apple Pie – the Business Meal Deduction If there is one negative aspect of the 2017 Tax Cuts and Jobs Act (TCJA) that taxpayers have had trouble stomaching more than the reduction in the state and local tax deduction, it might be the loss of some types of deductions for meals and entertainment (see our articles of February 12, 2018 and January 15, 2018). Like a plate of bad food, the TCJA threw away the deduction for any expenses related to activities generally considered entertainment, amusement, or recreation.  It also limited the deduction for expenses related to food and beverages provided by employers to their employees. Unclear at that time was how food and beverages closely associated with entertainment would be treated, but taxpayers now have guidance that is more definitive. On February 24, the IRS issued proposed regulations addressing both meals and entertainment incurred after December 31, 2017.  Proposed regulation §1.274-11 addresses the elimination of the deduction for entertainment-related activities, while proposed regulation §1.274-12 address the limitation on the deduction for food and beverages. The entertainment regulation provides guidance defining what is and what is not entertainment.  For instance, attendance at a theatrical performance by a professional theatre critic would not be considered entertainment if he or she is attending in a professional capacity.  The regulation also provides that food or beverages separately purchased and invoiced from entertainment are not considered entertainment and, therefore, can still be deductible. Although the TCJA did not specifically amend the rules for travel expenses, the proposed regulations do provide comprehensive rules for all food and beverage expenses.  Therefore, according to the IRS and U.S. Treasury, the regulations also apply the general rules for meal expenses from Notice 2018-76, as revised in these proposed regulations, to travel meals.The regulations also address limitations on meal and beverage expenses in other circumstances, including (i) meals provided during an entertainment activity, (ii) meals incurred while traveling, and (iii) meals provided for the convenience of the employer.  In general, meals and beverages are generally deductible (to the extent of 50% of the cost, unless exceptions apply) when they are not (i) lavish or extravagant under the circumstances, (ii) the taxpayer or an employee is present when serviced, and (iii) when provided to a “business associate.” The definition of food and beverages encompasses the full cost of the items, including delivery fees, tips, and sales tax.  A business associate can be a customer or client, supplier, agent, partner, employee or professional advisor, whether established or prospective. The proposed regulations also provide that not all meal arrangements are limited to a 50% deduction. These meals, for instance, continue to be deductible in full: Expenses for food and beverage treated as compensation to an employee; Expenses for food and beverage treated as income to a person other than an employee; Expenses incurred in connection with the performance of services for another person under a reimbursement or other expense allowance arrangement; Expenses for food or beverage paid or incurred for recreational, social or similar activities primarily for the benefit of employees;  Expenses for food and beverage made available to the general public; and  Expenses for food and beverage that is sold to customers in a bona fide transaction. The proposed regulations provide a number of examples involving the deductibility of various entertainment, food, and beverages, including:  Taxpayer invites a business associate to a baseball game to discuss a business deal.  Result: the tickets are nondeductible entertainment, but hotdogs and a drink are 50% deductible when purchased separately. Taxpayer invites a business associate to a basketball game to discuss a business deal.  The price of the ticket includes meals and beverages.  Result: neither the tickets nor the meals are deductible, since the meal is not separately stated and the tickets are entertainment. Taxpayer takes client to lunch to discuss business. Result: meal is 50% deductible. Taxpayer takes employee to lunch to discuss annual review: Result: meal is 50% deductible. Employer invites all employees to annual holiday party.  Result: cost of the party, including foods, is 100% deductible.  Employer provides free coffee, soda, bottled water and various snacks in a break room to all employees. Result: Only 50% of the cost is deductible.  Taxpayers can choose to rely on the proposed regulations for entertainment, food, or beverage expenses paid or incurred after December 31, 2017, or they can rely on the guidance in Notice 2018-76 until the proposed regulations are finalized.  Hearings on the proposed regulations are scheduled for April 7 (which could result in changes to the proposed regulations). Learn more about Schnider Downs' expense entry solution at www.schneiderdowns.com/sd-insiteYou’ve heard our thoughts on this matter, let us know yours. Do taxpayers get their just desserts with these rules?  ### Tax Accounting for Construction With the passing of the Tax Cuts and Jobs Act (TCJA), contractors with average annual gross receipts less than $26 million for the three prior taxable years are now considered “small contractors” and are not required to use the percentage of completion method (PCM) for years beginning after 2017. This modification will certainly allow more taxpayers the opportunity to defer taxable income, since prior to TCJA the gross receipts threshold was $10 million.Internal Revenue Code (IRC) 460(f) defines “long-term contract” as “any contract for the manufacture, building, installation or construction of property if such contract is not completed within the taxable year in which such contract is entered into.” With all the various types of contractors and possible circumstances, it’s important to understand how to properly apply the provisions of IRC 460 to your particular situation.Simply stated, if the construction contract meets the definition of long-term, contractors are required to use the PCM to compute taxable income. While this is a general requirement, exceptions do exist for home construction contracts or if the entity is classified as a small contractor: 1) the taxpayer estimates that the contract will be completed within two years, and 2) average annual gross receipts do not exceed $26 million.Contractors who don’t meet the above exceptions have another method to defer taxable income with an election under IRC Section 460(b)(5), under which they can delay recognition of gross profit from long-term contracts accounted for under the PCM until the first tax year in which the contract is more than 10% complete.For the recognition of contract losses, Generally Accepted Accounting Principles (GAAP) and the IRC handle things differently. GAAP requires the contractor to report the total loss on a contract as soon as it’s evident the loss will occur. The IRC, on the other hand, requires taxpayers to recognize the loss as the job is completed (if on the completed contract method) or based on the percent complete (if on the PCM).A warning: owners of S corporations and partnerships who are not required to use the PCM may owe alternative minimum tax (AMT). IRC Section 56(a)(3) states that the PCM must be used for long-term contracts for alternative minimum tax purposes. For C corporations, the repeal of the corporate AMT eliminated this consideration.It’s important to know that recent changes triggered by tax reform may change a company’s ability to defer income for tax purposes. For assistance in determining whether your company could benefit from these changes, please contact a member of the Schneider Downs Construction Industry Group. ### New Revenue Recognition Standard Disclosure Examples for Construction Companies As we move into March, most private construction companies are probably well underway with their financial statement audits and reviews.  This year is the year that ASC 606, “Revenue from Contracts with Customers,” is required to be implemented by private companies.  A multitude of articles have been written discussing the impact and implementation issues concerning the adoption of this standard for the construction industries.  What I thought might be helpful right now, as companies are working on their year-end financial reporting, is to provide some examples of the required financial statement disclosures for the new standard.Revenue Recognition – An Example of Required Financial Statement DisclosuresThe financial statement disclosure language below is an example and is not meant to satisfy the required disclosure requirements for all construction companies.  Each company will need to evaluate its financial statement disclosures individually, based on its own unique facts and circumstances.Contract Revenue and Cost Recognition - The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) effective January 1, 2019.  Topic 606 was adopted on a modified retrospective basis, and the Company determined that there was no cumulative effect to retained earnings as of January 1, 2019 that was required to be disclosed as a result of adopting the standard.Topic 606 provides a five-step model for recognizing revenue from contracts: Identify the contract with the customer Identify the performance obligations within the contract Determine the transaction price Allocate the transaction price to the performance obligations Recognize revenue when (or as) the performance obligations are satisfied Most of the Company’s long-term contracts are considered to have a single performance obligation.  Although multiple promises to transfer individual goods or services may exist, they are not typically distinct within the context of the contracts because the contract promises are interrelated or they require the Company to perform critical integration so that the customer receives a completed project.  Warranties provided under the Company’s contracts with customers are assurance-type and are included as elements of the single performance obligations.  Under previous revenue recognition guidance, the Company also generally accounted for its long-term contracts as single units of account (i.e., a single performance obligation).Most of the Company’s revenues are recognized primarily under various types of long-term construction contracts, including those for which revenues are based on either a fixed price, time and materials or cost-plus-fee basis, and primarily over time as performance obligations are satisfied due to the continuous transfer of control to the project owner or other customer.  Significant contracts typically have durations of three months to three years.  Revenues from fixed price contracts, including a portion of estimated profit, are recognized as services are provided, based on costs incurred and estimated total contract costs, using the percentage-of-completion method.  If at any time, the estimate of contract profitability indicates an anticipated loss on a contract, the Company will recognize the total loss in the reporting period that it is identified and for which an amount can be estimated.  Revenues from time and materials contracts are recognized when the related services are provided to the customer.Contracts are often modified through change orders to account for changes in scope.  The Company evaluates each change order to determine whether the change in scope creates an additional performance obligation.  Due to the integrated nature of the existing work and the extended scope of work, these contract modifications are generally not determined to result in separate performance obligations.The transaction price for a contract represents the amount of consideration to which the Company expects to be entitled in exchange for the promised goods or services in the contract.  The consideration in the contract may be fixed, variable, or both, in nature. Variable consideration may include incentives, liquidated damages, change order requests, and requests for claims.  The Company estimates variable consideration using one of two prescribed methods, depending on which method better predicts the amount of variable consideration to which the Company will be entitled.  The expected value method estimates variable consideration based on the sum of probability-weighted amounts in a range of possible consideration amounts, whereas the most likely amount method estimates the variable consideration based on the single most likely amount among a range of possible consideration amounts.The Company considers all relevant information when estimating variable consideration and includes some or all of an amount of variable consideration estimated, only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.The Company’s contracts may include retention provisions to provide assurance to customers that the Company will perform in accordance with the contract terms and if the retention provisions are not considered a financing benefit.  The balances billed but not paid pursuant to these provisions generally are due upon completion and acceptance of the project by the customer.  As a result, the Company has determined that there are no significant financing components in contracts at December 31, 2019 and 2018.The Company’s contracts typically do not create an asset with an alternative use to the Company and provide an enforceable right to payment for progress completed to date, including profit, at all times throughout the duration of the contract.  As a result, the Company transfers control of a good or service over time, and therefore recognizes revenue over time as the performance obligation in the contract is satisfied.  The Company uses a cost-to-cost input method to measure progress relative to the satisfaction of a performance obligation, because the Company considers this input method to be the best available measure of progress toward satisfying performance obligations.  Contract costs include direct labor and related payroll costs, permanent materials, subcontractor costs, consumables and indirect costs, such as equipment, insurance and tools.  The Company evaluates the total estimated costs to complete for each performance obligation periodically; and it is possible that the estimate will be revised in the near term. Such changes in the total estimated cost of satisfying a performance obligation may result in a cumulative adjustment to revenue recognition in the period in which the revision is known.  If the estimated cost to satisfy a performance obligation results in a contract loss, a provision for loss is made in the period in which the loss becomes known.Contractual completion is defined according to the specific terms of individual construction or service contracts with customers.  The Company considers contracts to be complete for accounting purposes when final acceptance has been received from the customer, contract warranty periods have been fulfilled, and no significant disputes, obligations or undisposed assets remain outstanding related to the contract.Contract assets are defined in the new standard to include amounts that represent the rights to receive payment for goods or services that have been transferred to the project owner, with the rights conditional upon something other than the passage of time.  Contract liabilities are defined in the new Revenue Recognition standard to include the amounts that reflect obligations to provide goods or services for which payment has been received.  Accordingly, the amounts presented in prior balance sheets that were identified as “costs and estimated earnings in excess of billings” and “billings in excess of costs and estimated earnings” are now reflected in the line items titled “contract assets” and “contract liabilities.”  These are the only amounts recorded in contract assets and contract liabilities at December 31, 2019 and 2018.The financial statements reflect the recognition of variable consideration related to pending change orders and claims on contract values.  In each case, the Company has evaluated the underlying contractual terms related to these items and determined that a contract modification has occurred based on the Company’s legal basis and enforceable rights under the contract.  The Company has constrained the estimates of variable consideration to include only those amounts for which it is probable that a significant reversal of cumulative contract revenue recognized will not result when the uncertainty associated with the variable consideration is subsequently resolved.The Company continually records variable consideration in the form of pending change orders in connection with performance of the Company’s contracts.  Pending change orders are work changes where the revision has been ordered or agreed to, but the associated quantity or price have not been agreed to, and therefore judgement regarding eventual collection is required. ### State Tax Considerations for Service Businesses It’s becoming very challenging to stay abreast of the rules surrounding state tax compliance, not to mention developing processes to track how various states source revenue and determine when taxpayers have triggered nexus requiring registration and tax return reporting. Here’s an overview of the subject, plus a couple factors to consider when deciding to conduct business in a state.States source revenue in one of three methods. The first, and increasingly the most common, is market-based sourcing, which means the revenue is sourced to the state where the client is located. The second method is cost of performance, which involves sourcing the revenue based on the state where the majority of the services are performed. The third method, a bit of a hybrid of the other two, sources revenue based on services performed within the state versus those performed outside the state where clients are located.As mentioned, most states are increasingly changing their apportionment and state sourcing rules to source revenue based on where the client is located rather than where the services are performed, otherwise known as market-based sourcing. In some instances under this arrangement, companies could actually apportion more than 100 percent of revenue, based on a combination of applicable state sourcing methods in those locations where the taxpayer conducts business. There could also be situations when there is less than 100 percent of revenue apportioned, depending on the respective states involved and related sourcing rules. In some states, there exists a “Throwback Rule” that requires revenue that’s not allocated to any state be allocated to states with this rule.A growing trend among states is to enact gross receipts-based taxes, which are based on revenue and not on the net profits of the organization. Six states have currently enacted such a tax. In some cases, the tax has replaced corporate income taxes, but pass-through entities that are traditionally taxed under the personal income tax rules will still be subject to both income and gross receipts tax.A relatively recent change in Pennsylvania law involves mandatory nonresident income tax withholding on payments to vendors that are not state residents but perform services onsite within the commonwealth. Unless a company receives a valid exemption certificate, they’re required to withhold nonresident personal income tax on payments that exceed $5,000 per year.  This requirement also depends on the vendor legal structure.States are also taking advantage of the decision in Wayfair v. South Dakota (a sales tax case) to impose economic nexus for taxes beyond sales/use, including income tax. Pennsylvania was one of the first to adopt economic nexus post-Wayfair. While the protections afforded under P.L. 86-272 are still relevant and need to be considered, taxpayers – especially those in the service industry – will likely have additional state income tax filings.As you can see, the number of regulations to comply with tax compliance requirements at the state level is continually increasing. This article has only addressed income and gross receipts tax; there are many sales and use, personal property and miscellaneous taxes that companies should consider before onboarding clients in a new state.If you would like additional information or just want to have a discussion regarding the potential tax impact of your company’s state activity, contact your Schneider Downs tax advisor. ### Which Reinsurance/Warranty Company Structure Should I Choose? When your head stops spinning, take a deep breath and let’s discuss the types of reinsurance/warranty companies you should consider.  The number of companies that facilitate these programs continues to increase and each brings a unique relationship and added value to the mix.  It can be overwhelming. As dealers continue to see profit margins from new and used vehicle sales decrease, they search for other avenues to supplement profitability.  Most have participated in some sort of finance and insurance (“F&I”) program for decades.  At first, everyone hesitated with buying into the reinsurance company structure because it was complicated and sounded too good to be true.  But now that most are comfortable with the concept, the programs continue to change.  And for those still not participating in a program, you’re leaving profits on the table.  So let’s ask ourselves a few questions before we even consider these programs: What are the goals of your dealership group? Where do you stand with succession planning? What F&I products do you offer? How much volume of these F&I products do you sell? What are your loss ratios on these products? What are your goals with the manufacturer products and why? These questions will help determine which program will work best for you and your objectives.  Next, let’s summarize the most commonly used programs: Sales Commission – The dealer receives a fixed-dollar amount or percentage of the contract price. Bonus and Cash Advance Programs – The dealer receives an advance payment.  In return he or she will sell more of a certain product based on actual contract sales results. Profit-Sharing Programs – This is considered to be a retrospective commission arrangement.  The dealership receives compensation based on the underwriting profit of the contracts sold. Dealer Owned Warranty Company (“DOWC”) – This is a non-licensed insurance company that offers warranty or obligor contracts. Controlled Foreign Corporation (“CFC”) – A foreign reinsurance company that is majority owned by a U.S. shareholder that can partake in the underwriting profits of the F&I products sold. Non-Controlled Foreign Corporation (“NCFC”) – A foreign reinsurance company that is not majority owned by a U.S. shareholder that can partake in the underwriting profits of the F&I products sold. Each of these programs has advantages and disadvantages including ownership structure, tax planning, being risk-adverse, risk-reward, cash flows, fee structures, dealership involvement, initial capital, investment strategies, borrowings capabilities, etc.  We can help educate you with each scenario, but you know your dealership best and the ultimate decision is yours.Remember, this choice is not a one-size-fits-all.  Be open-minded, consider your goals and think about your tax situation before you make this decision.  It’s not a matter of “if” you should choose one of these programs, but “which one” is best for you.  Let our SD Auto Dealer Advisers help talk through these programs.  Contact Steve Barber (sbarber@schneiderdowns.com, 412-697-5463) to get the discussion started. ### Student Loan Discharge Recently, the Internal Revenue Service (IRS) issued guidance to certain taxpayers with federal or private student loans acquired to finance attendance at a non-profit or for-profit institution of higher education.  The new guidance (outlined in Revenue Procedure 2020-11) offers relief for students with discharged indebtedness via meeting an established safe harbor.  Generally, the discharge of debt is a taxable event and treated as income to the borrower.  Under the newly established safe harbor, affected taxpayers will not recognize student loan forgiveness income. The safe harbor will apply to any taxpayer whose FEDERAL loans are discharged by the Department of Education based on the following: Participation in the Closed School discharge process The Closed School discharge process allows the Department of Education to discharge a student loan obtained by a student, or by a parent on behalf of a student, who was attending a school at the time it closed or who withdrew from the school just before it closed. Participation in the Defense to Repayment discharge process The Defense to Repayment process allows the Department of Education to discharge a student loan obtained by a student, or by a parent on behalf of a student, if the borrower establishes, as a defense against repayment, that a school’s actions would give rise to a cause of action against the school under applicable state law.Most of these borrowers would be able to exclude from gross income the discharged amounts based on the insolvency exclusion, fraudulent or material misrepresentations, or other tax law authority.The safe harbor will also apply to any taxpayer whose PRIVATE loans are discharged by the Department of Education based on the following: Participation in legal settlement discharge actions Federal and state governmental agencies have brought legal causes of action that have resulted in settlements resolving various allegations of unlawful business practices, including unfair, deceptive and abusive acts and practices, against for-profit schools and certain private lenders that made student loans to finance attendance at these schools. Most of these borrowers would be able to exclude amounts discharged as a result of these settlements from gross income based on the insolvency exclusion, fraudulent or material misrepresentations, or other tax law authorityThe IRS believes that many of these taxpayers would qualify for forgiveness from recognizing cancellation of debt income under other Internal Revenue Code provisions. However, the IRS wanted to make it easier to qualify for the exclusion—using the new safe harbor provisions. Relief is also provided to any creditor that would otherwise be required to file information returns and furnish statements to applicable students.  To avoid any confusion, the IRS recommends that creditors do not provide students or the IRS with a Form 1099-C, Cancellation of Debt. This new guidance can be very beneficial to students who are affected by extraordinary circumstances they cannot control. The burden of debt itself is a large enough stress, and if the school closes or there is misconduct, the student isn’t truly receiving the services they have agreed to pay for. ### New Jersey Becomes Latest State to Adopt an Elective Pass-Through Entity Tax On January 13, 2020, New Jersey Senate Bill 3246 was signed into law. Also known as the Pass-Through Business Alternative Income Tax (or “BAIT”) Act, NJ S3246 creates a new elective pass-through business income tax with a corresponding income tax credit for members. The election takes effect immediately and applies retroactively to taxable years of pass-through entities (“PTE”) beginning on or after January 1, 2019.The new legislation allows PTEs to report and pay tax at the entity level. In order for the election to be available, at least one member of a partnership, S corporation or LLC must be liable for New Jersey gross income tax on distributive proceeds. Additionally, members of the PTE must execute consent under penalties of perjury at the time the election is filed and are allowed to revoke the election until the due date of the return for that tax year. Electing PTEs must file a BAIT tax return and pay the entity level income tax by the 15th day of the third month following the end of their tax year, or March 15 for calendar-year taxpayers. Estimated payments must be made by the 15th day of the fourth, sixth and ninth month of the taxable year, and by the 15th day of the first month following the close of the tax year.The elective tax is imposed on a tax base equal to the sum of each member’s share of the PTE’s “distributive proceeds,” which are defined as the net income, dividends, royalties, interest, rents, guaranteed payments and gains of the PTE derived from or connected with sources within New Jersey upon which New Jersey gross income tax would be imposed if the PTE were an individual taxpayer. For tax years beginning on or after January 1, 2020, the four tiers of income tax rates are as follows: 5.675 percent for distributive proceeds under $250,000 $14,187.50, plus 6.52 percent for distributive proceeds between $250,000 and $1,000,000 $63,087.50, plus 9.12 percent for distributive proceeds between $1,000,000 and $5,000,000 $427,887.50, plus 10.9 percent for distributive proceeds over $5,000,000 A PTE making this election will be included in a combined group and file a combined New Jersey Corporate Business Tax Act return unless the PTE meets the following: (1) all of the members of the PTE are taxpayers otherwise liable for the tax under the New Jersey Gross Income Tax Act; and (2) no business entity taxed as a corporation under the CBTA has a direct, indirect, beneficial or constructive ownership or control of the PTE.Pass-through entities under common ownership by an individual, estate or trust, or a group of related individuals, estates or trusts, are not precluded from filing a composite or consolidated PTE tax return. To determine if the PTE is under common ownership, the individual, estates or trust, or a group of related individuals, estates or trusts, must own 50 percent of the direct or indirect voting control of each pass-through entity. IRC Code 318, however, still applies for determining voting control.Under subsection 5 of the new legislation, a refundable tax credit is allowed if the taxpayer is a member of a pass-through entity that elects the PTE alternative income tax. For each pass-through entity where the taxpayer is a member, the credit is equal to the member’s pro rata share of the PTE tax for that period. Section 5(c) specifies that “if the credit exceeds the amount of tax otherwise due, the amount of excess shall be an overpayment.” Lastly, when a trust or estate receives a credit, it may be allocated to beneficiaries.For PTEs owned by both corporate and non-corporate members, the corporate member is allowed a tax credit against surtax, but the credit may not reduce tax liability below the statutory minimum for nonexempt corporations. Corporate members may carry forward the excess credit for up to 20 privilege periods.The process of states enacting elective pass-through entity taxes is a growing trend in SALT cap workarounds. New Jersey becomes the sixth – joining Connecticut, Wisconsin, Oklahoma, Louisiana and Rhode Island – in enacting mandatory/elective PTE entity tax legislation to combat the federal limitation on SALT deductions. States continue to monitor whether these SALT cap workarounds could survive scrutiny by the IRS and, if successful, whether state legislatures may continue to enact similar elective taxes. ### Maryland and Nebraska Propose Digital Services Taxes France recently created an uproar with the U.S. over passage of its digital services tax, but while the French have since stepped back as the world waits to see if the Organization for Economic Cooperation and Development can establish global guidelines, it appears at least two U.S. states are prepared to jump on board with similar legislation.A proposal in Maryland would tax digital advertising services at a rate of between 2.5-10%, based on the organization’s revenue. The bill would only apply to companies with at least $100 million in global annual gross revenues, and be effective for tax years after 2020, but the legislation creates challenges for advertisers due to its sourcing rules. For instance, the bill considers digital advertising services to be in Maryland if they “appear on the device of a user” with an IP address in Maryland or if the user “is known or reasonably suspected to be using the device in the state.” Good luck trying to determine who’s in Maryland and who’s not in the age of VPNs and mobile phones.Nebraska, too, is proposing legislation, though it’s more of an end around, as the state wants to amend its existing sales tax law rather than creating a new one. The amendment would add retail sales of digital advertisements, which are defined as “an advertising message delivered over the internet that markets or promotes a particular good, service or political message” to the definition of gross receipts for Nebraska sales tax purposes. If enacted, Nebraska’s proposed changes will be effective October 1, 2020.The proposals put forth by the two states are problematic on several fronts. The laws would certainly face legal challenges and lobbying efforts by a number of groups opposed to the legislation. Plus, the taxes would be difficult to administer and track, not to mention the increase in costs to advertisers.While these two proposals are in their infancy, all new taxes start somewhere, and the prospect of digital services taxes in the U.S. warrants close monitoring. ### The Coronavirus and Pandemic Planning As cases have now been confirmed in the states of New York, Florida and Rhode Island, along with a second known death in Washington State, at least 74 Americans have now been infected by COVID-19 (Coronavirus). The CDC has provided their recommendations to prepare, prevent and protect ourselves and our loved ones. But how should employers prepare?Best Practices for BusinessesWhile the outbreak is still unfolding and it is too early to know the true impact it will have on businesses, business continuity and resiliency experts say the time is now for organizations to look at how prepared they are and make plans to keep operations running amid travel bans and illness.“Update and review pandemic preparedness plans,” said Chloe Demrovsky, president and CEO of Disaster Recovery Institute International, which is focused on helping organizations prepare for and recover from disasters. “If you don’t have one, now is the time to write one. It needs to have leadership buy-in and clear objectives, a thorough risk assessment and an analysis of the potential impact to core functions, and it has to have pandemic-specific elements and strategies.” “You need a strategy for prioritizing critical traffic and for making sure that appropriate employees can access your systems offsite,” she said. “You should also be regularly using remote meeting and other communications tools. If everyone practices work-from-home tools regularly, they will be better able to use them during a crisis scenario when they become essential.” “Manufacturers will have a harder time if factories stay shuttered for a long time, whether yours or an upstream supplier’s factories. Do you have stock at hand, can you create stockpiles now for critical components and/or do you have alternate suppliers? Above all, communicate to your employees now to calm hysteria and let them know that you care and are prepared to keep them as safe as possible.”All employers need to consider how best to decrease the spread of acute respiratory illness and lower the impact of COVID-19 in the workplace. Employers should identify and communicate their objectives, which include the following: Reducing transmission among staff, Protecting people who are at higher risk for adverse health complications, Maintaining business operations, and Minimizing adverse effects on other entities in their supply chains. Recommendations for Business Continuity amid the CrisisConsider the following recommendations in planning for the safety of employees and the continued health of your business as the pandemic unfolds. Actively encourage sick employees to stay home; separate sick employees Emphasize respiratory etiquette and hand hygiene by all employees Perform routine environmental cleaning Advise employees before traveling to take certain steps Understand the disease severity within your community Understand the impact of the disease to high-risk employees Prepare for increased numbers of employee absences due to: illness in employees and their family members, dismissals of early childhood programs and K-12 schools: Plan to monitor and respond to absenteeism at the workplace. Implement plans to continue essential business functions if you experience high absenteeism. Cross-train personnel to perform essential functions so that the workplace is able to operate even if key staff members are absent. Assess your essential functions and the reliance that others and the community have on your services or products. Coordination with state and local health officials is strongly encouraged for all businesses so that timely and accurate information can guide appropriate responses in each location where their operations reside. Review human resources policies to make sure that policies and practices are consistent with public health recommendations and are consistent with existing state and federal workplace laws. Establish policies and procedures, such as travel restrictions, flexible worksites (e.g., telecommuting) and flexible work hours (e.g., staggered shifts), to increase the physical distance among employees and between employees. Ensure policies and procedures are easily accessible to employees on how to conduct remote meetings, remotely connect to systems and where to check for updated information. Identify essential business functions, essential jobs or roles, and critical elements within your supply chains (e.g., raw materials, suppliers, subcontractor services/products, and logistics) required to maintain business operations. Ensure business technologies can support the ability to efficiently and effectively work remotely, through stress testing you remote capabilities and communication tools. Set up authorities, triggers, and procedures for activating and terminating the company’s infectious disease outbreak response plan. Establish a process to continuously communicate and make accessible information to employees and business partners on your infectious disease outbreak response plans. Anticipate employee fear, anxiety, rumors, and misinformation, and plan communications accordingly. Establish a process for visitors to help understand the threat and risk they could impose on your organization. Where have they traveled over the past two weeks? Have they been in contact with anyone that has traveled over the past two weeks? Understand their contact with anyone that has traveled to restricted or know infectious areas over the last two weeks. Throughout this process and as the pandemic expands, employers must effectively communicate their plans with employees, explaining what human resources policies, workplace flexibilities, and pay, benefits and leave will be available to them.If you have questions on pandemic planning for your organization, we would welcome a discussion on this increasing concern. ### Tax Considerations When Selling Your Business There are many things to consider when preparing to sell a business.  Some of the items are strategic business considerations, financial considerations or family considerations.  However, an area that is often overlooked or thought to have an insignificant impact when selling a company is tax considerations.Tax considerations can have a significant impact, depending on the ownership and/or entity structure, makeup of the business and structure of the deal.  The following are a few tax-related areas to consider when preparing to sell a business.The first item to consider is deal structure regarding the sale of the assets of the company or the stock.  Often, a willing buyer will want to purchase the assets of the business to expedite the payback from a tax cost recovery standpoint.  This may be counter to a seller’s goals and can possibly result in a higher tax liability.  We frequently work with our clients to compare the tax cost of an asset sale vs. stock sale.  This analysis can provide a seller the opportunity to negotiate a higher selling price.In transactions structured as an asset sale, we also work with sellers to determine the optimal purchase price allocation related to the various classes of assets sold for tax purposes.  This is an area that can have a significant tax impact and is often overlooked or otherwise addressed post-closing of the transaction.  It is also critically important that this be negotiated prior to closing and narrowly defined in the asset purchase agreement.The last area that can be critically important to the transaction is tax due diligence.  This often can significantly impact deals for businesses operating in numerous states.  We typically see issues arise relative to state tax filing positions or lack thereof regarding income, franchise or sales and use tax exposure.  The recent Wayfair v. South Dakota case law has also increased the overall exposure related to state tax nexus (requirement to file in a specific state).  It is important to evaluate these areas prior to entering into negotiations with a potential buyer to determine the impact or amount of exposure that may exist and develop a plan to address these issues prior to a sale event.If you are considering a potential sale of your company, contact your Schneider Downs Succession Planning advisor to start a conversation regarding these matters.  ### Succession planning starts with What makes a business successful?  In many small businesses, the owner is the principal driver to that business, particularly from a technical and sales aspect.  They have been the one running around, coordinating sales, staying late to ensure that products get made, and working the relationships with clients to ensure that the orders continue to come in.  With all that, this individual is doing, have they ever thought about what they want to do next?  Unfortunately, there is a good chance that one of the 5 D’s (Death, Divorce, Disability, Distress, and Disagreement) could affect your business.  Let us hope that this does not happen, but we all know happens when we hope in one hand and do something else in the other!  Consider this, a $10MM S-Corporation manufacturer, with a single owner.  The owner’s best friend is diagnosed with cancer.  Now the owner realizes that they want to sell their company because they want to spend more time with their kids or grandkids.  Will this business be able to maximize value upon exit?Most owners have the majority of their wealth tied into the business and one of the ways to get that wealth is to sell the company.  A successful transition plan has three areas of focus, 1) understanding and maximizing the value of the company, 2) understanding the owner’s future financial needs, and 3) understanding what the owner wants to do after exit.  The owner has an idea about one of those areas, but it is very vague.  Working with owners to understand what they want to do upon exit helps with another area, the owner’s future financial needs.  It is important to create a plan to understand how you want to spend your time with your grandkids. For example, do you want to be able to pay for their future college needs, take them on nice vacations every year, or spend time skiing with them? Further understanding what the owner wants to do next will help the financial planner develop a plan to determine how much money that owner needs to achieve their desired lifestyle.  Once the future needs are determined, the owner can look at current business value.  The value is something that the company should have a rough idea about, and maybe it’s a function of EBITDA multiplied by a market multiple factor.  While this looks relatively simple, there are ways to improve the overall value of the company, and some of those factors may not be solely financially driven.   Developing a plan that addresses the owner’s exit ahead of time isn’t just good succession planning, it is good strategic business planning.  By creating this plan, the owner of the company is better able to understand the context of what the company is worth, and has found ways to maximize this value, taking into account their financial needs for the future, and finally creating a plan for how they are going to spend their time, leading to a successful exit from the company.  As a result, the owner can enjoy their time instead of wondering, “Did I do something wrong? Could I have gotten more out of the sale? What am I going to do now”? ### Asset vs Stock Deal: What’s Best for Me When Selling My Business? You’ve been approached about selling your business.  After phoning your spouse to share the good news, you call your succession planning advisor.  The first thing you’re asked is:  Did they offer to buy the stock or the assets?  There are tax differences between the two.Let’s say they’ve offered to buy your stock.  You are preferred position.  From a tax standpoint, you're only going to ever have one layer of tax - you’ll pay capital gains tax on the basis you have in the entity versus the difference in what you’re being paid.  All your liabilities go with the sale of the company, but so do any tax attributes you may have accumulated in the business (so that Net Operating Loss you were hanging onto is now gone).Typically a buyer will look to acquire the assets of a target for a number of reasons, with one of the biggest being that the buyer can depreciate or amortize those assets.  But what does that mean to you, the seller?  Well, the first thing you need to determine is what type of entity you’re in:  a C corporation?  Or a pass-through entity?  That’ll determine the amount of tax you’re going to pay.In a C corporation, the sale of assets are all taxed at the current income tax rate of the corporation, currently 21%.  The remaining 79% is available to use how you want, probably as a distribution to yourself.  But wait, don’t forget that second layer of tax to consider, the one on the actual dividend to yourself of the net remaining cash after taxes.Maybe you had a good advisor who knew that you may one day have to sell your assets and suggested you create your business in a pass-through entity (i.e., S corporation or partnership).  If this is the case, sale of the assets is passed through directly to you (hence the name) and you pay tax directly on the gain recognized in the company.  In this environment, you could have both ordinary and capital gain treatment on the sale of the assets, which could be anywhere from an additional 13% of federal tax if items are skewed more toward the ordinary income items.  The net cash received can then be distributed to you tax free to the extent of your tax basis in the entity.All of this can be very confusing and can have an impact on the amount of after cash proceeds available to you in any transaction.  If you’re in the process of selling your business and want to better understand the tax implications, contact a member of the Schneider Downs Succession Service Group to start a discussion. ### PA Commonwealth Court Allows Full Refunds for Taxpayers’ 2001 and 2006 CNIT Taxes after Analyzing the Nextel Opinion In late 2019, the Pennsylvania Commonwealth Court rendered two important decisions involving the Pennsylvania Supreme Court’s precedential opinion in Nextel Communications of the Mid-Atlantic v. Commonwealth [1] where the court found that flat-dollar net loss carryforward (“NLC”) deductions from the Corporate Net Income Tax (CNIT) violated the Uniformity Clause of the Pennsylvania Constitution.In General Motors Corporation (GM) v. Commonwealth [2] and RB Alden Corp v. Commonwealth (RB Alden)[3], the Commonwealth Court followed Nextel and found that a flat-dollar NLC violated the PA Constitution; however, the Court applied the ruling retroactively and allowed a full refund of CNIT paid for tax years 2001 and 2006 – which departed from Nextel, where the refund claim was denied.The Nextel opinion involved the 2007 tax year when the PA CNIT statute limited NLC deductions to the greater of the $3 million flat-dollar NLC cap or 12.5% of taxable income. After the court found that the flat-dollar NLC deduction violated the Uniformity Clause, the Court severed the flat-dollar cap while allowing the 12.5% of taxable income cap deduction to remain.However, In GM and RB Alden, the tax years at issue were 2001 and 2006, respectively. During these tax years, the PA CNIT statute had a flat-dollar NLC cap at $2 million with no percentage of taxable income cap NLC deduction available. One of the main issues the Commonwealth Court considered concerned whether severance of the flat-dollar NLC cap was the proper remedy when no income percentage NLC cap would remain intact and applicable.Since the parties stipulated that the flat-dollar NLC cap violated the Uniformity Clause, the Commonwealth Court had to decide between either severing the flat-dollar cap deduction or eliminating the NLC deduction altogether. The Commonwealth argued that the intention of the legislature was to not allow an unlimited NLC deduction for corporate taxpayers, while the taxpayers argued that Nextel set a precedent for severance of the flat-dollar NLC cap, ultimately leaving an unlimited NLC deduction. Ultimately, the Commonwealth Court sided with the taxpayers and found that the dominant public policy underlying the NLC deduction was to promote business investment in the Commonwealth and therefore severed the flat-dollar cap leaving the NLC deduction to be unlimited.Further, the Court analyzed whether the refunds were to be granted retroactively for the 2001 and 2006 tax years even while the applicable statutory period for refund claims had lapsed. The Commonwealth Court looked to the three-prong test established by the U.S. Supreme Court in Chevron Oil Company v. Huson[4], the same analysis used in Nextel, to determine whether retroactivity would be applied. The Chevron three-prong test looked at: (1) whether the decision establishes a new principle of law; (2) whether retroactive application of the decision will further the operation of the decision; and (3) the relevant equities. The Court found that it was clear that the flat-dollar NLC cap violated the Uniformity Clause and it merely applied well established case law in doing so, thus satisfying the first prong. Next, the Court reasoned that severing the flat-dollar NLC cap neutralized the non-uniform treatment among taxpayers, satisfying the second prong. Lastly, the Court found that the Commonwealth failed to meet its burden in proving that applying retroactivity to the refund claims would cause significant fiscal harm to the Commonwealth. The Court noted that the potential negative fiscal impact of those claims is offset by the applicable three-year statute of limitations, and applied the  reasoning [JCF1] that Nextel could cause an increase in CNIT revenue with the percentage NLC cap remaining. Ultimately, the Commonwealth Court held that the taxpayers were entitled to full refunds for the 2001 and 2006 years.The main implications for corporate taxpayers are that for tax years where there is only a flat-dollar NLC cap deduction, taxpayers are entitled to a full CNIT refund. There are, however, some serious obstacles before the taxpayers receive refunds. First, the three-year statute of limitations limits the class of taxpayers eligible. Also, it is very likely that the Commonwealth will appeal to the Pennsylvania Supreme Court, which could find against rewarding the taxpayer refunds much like it did in Nextel.Have questions regarding the implications of the Commonwealth Court’s recent decisions? Contact a member of Schneider Downs State and Local Tax Group today.  [1] Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth, 171 A.3d 682 (Pa. 2017), cert. denied, 138 S. Ct. 2635 (2018). [2] General Motors Corp. v. Commonwealth, 869 F.R. 2012 (Pa. Commw. Ct. Nov. 21, 2019 (GM Slip Op.). [3] RB Alden Corp. v. Commonwealth, 73 F.R. 2011 (Pa. Commw. Ct. Nov. 21, 2019). [4] Chevron Oil Company v. Huson, 404 U.S. 97 (1971).   ### Remember to File Your BE Benchmark Survey Every five years, the Benchmark Survey of U.S. Direct Investment in Foreign Business Enterprises is conducted by the Bureau of Economic Analysis (BEA), an agency in the U.S. Department of Commerce. This year is a survey year.To complete the study, the BEA relies on BE-10 reports filed by “U.S. reporters,” which are defined as any U.S. person who owned, directly or indirectly, 10% or more of the voting stock of a foreign corporation or partnership at any time during the previous fiscal year. This comprises anyone, including car dealerships, manufacturers, etc., with an investment in a captive insurance or reinsurance company that’s domiciled offshore. Filing of the survey is mandatory.This year’s deadline for U.S. reporters with fewer than 50 forms to file is May 31, 2020. The final form and instructions, however, have yet to be released. Any U.S. reporter who fails to file a BE-10 report could incur a civil penalty between $2,500 and $25,000, with the possibility of criminal sanctions being incurred for willfully failing to file.U.S. reporters can find additional information on the survey, including the necessary forms to file with the BEA, at https://www.bea.gov/be-10-benchmark-survey-us-direct-investment-abroad. There’s also an online filing option available on the site. ### Cybersecurity Maturity Model Certification (CMMC) What is CMMC? Cybersecurity Maturity Model Certification (CMMC) is a Department of Defense (DOD) certification process that measures a Defense Industrial Base (DIB) sector company’s ability to protect sensitive data. Designed as a requirement for all companies that have access to the DOD in any form, the effort shows how the department plans to address cybersecurity risk throughout the defense supply chain to protect defense systems and sensitive data. CMMC development has been led by Ellen Lord (Undersecretary of Defense for Acquisition and Sustainment (A&S)) and Katie Arrington (Chief Information Security Officer for Acquisition). The release of the final edition of CMMC Version 1.0 was announced January 31, 2020. CMMC is designed as a methodology and framework that will constantly evolve as technology changes. Developers intend the certification to be a tool for organizations to improve their cybersecurity practices, but the DOD doesn’t want it to become just another compliance checklist. The defense industry is a regular target of state and rogue threat actors attempting to obtain sensitive security data. CMMC is meant to help reduce risk resulting from these cyber threats. One of the goals of CMMC is to create a unified DOD cybersecurity standard. The certification will build on and replace current National Institute of Standards and Technology (NIST) standards for cybersecurity, such as NIST SP 800-171 requirements for controlled unclassified information (CUI). Practices outlined in CMMC are based on existing standards and requirements: NIST SP 800-171, NIST SP 800-53 and AIA NAS9933, as well as input from the private sector and academia. The CMMC model has 17 domains, including Access Control, Asset Management, and Awareness and Training. Many of the domains are based on the NIST SP 800-171 control families, and each contains capabilities that need to be met. There will be five levels of certification within CMMC, each with defined practices and processes. At Level 1, basic cyber hygiene practices should be in place, but process maturity is not yet required. At Level 2, however, the process maturity requirement is introduced and processes should be formally documented in policies and procedures. Meanwhile, at Level 5, practices should be advanced and processes optimized across the company. CMMC processes and practices are cumulative and carry into each subsequent level. For example, to achieve Level 3, an organization must meet the practices and processes for CMMC Level 1, 2 and 3. Who Does CMMC Affect? Starting in 2020, all companies that conduct business with the DOD and suppliers across the DIB will need to acquire some level of CMMC certification. This means that every prime contractor and subcontractor of the DOD will have to be audited and certified under the CMMC framework. The department expects CMMC to take five years to fully roll out and not really get going until 2021. This will affect more than 300,000 organizations, including entities in the U.S and their international partners. The level of certification (1-5) that each company needs to attain will depend on the amount of sensitive data or CUI it processes. Unless a higher level is specified, all contractors and subcontractors must meet a minimum of CMMC Level 1. The government and DOD will determine the appropriate tier requirement for contracts they administer. The required CMMC level will be documented within the appropriate Request for Proposal (RFP). How to Get Certified? Unlike previous standards and guidance (e.g., NIST SP 800-171), CMMC does not allow self-assessment. CMMC will be replacing the self-attestation model and is moving toward third-party certification. Independent assessments of CMMC will be completed by Certified Third-Party Assessment Organizations (C3PAOs). The CMMC accreditation body, a recently created not-for-profit independent group of stakeholders, is charged with training and certifying the third-party assessors. C3PAOs will evaluate organizations to determine if appropriate capabilities and organizational maturity, as well as proper controls and processes, are in place to reduce the risk of specific cyber threats. Once a program has been developed and assessors are trained, DIB organizations will coordinate with the accreditation board to schedule a CMMC review with a C3PAO. When requesting an assessment, an organization will need to specify its intended level of certification, which will be based on its specific business requirements. Once a company has demonstrated to the C3PAO that they have the appropriate controls and maturity in capabilities and processes, the company will be awarded CMMC certification at the appropriate level. To learn more about the potential costs and how your organization can prepare for CMMC, download our Cybersecurity Maturity Model Certification (CMMC) Guide. How Can Schneider Downs Help? Schneider Downs intends to become a C3PAO. In the meantime, until such requirements are made public, we can help your organization prepare for CMMC by performing an assessment against the NIST 800-171 framework. For more information, visit www.schneiderdowns.com/cmmc. ### States Evaluating Professional Licenses; Is The CPA At Risk? A number of state governments have recently begun to introduce bills aimed at addressing their involvement in the issuance of professional licenses. Proposed changes include lowering requirements that are viewed to be burdensome or unnecessary, and/or potentially eliminating the requirement for a license altogether. In West Virginia, for instance, a bill introduced last year would eliminate the requirement for state licenses provided the worker discloses to the consumer that they’re practicing without the license.Proponents for the changes include the American Legislative Exchange Council (ALEC), which believe in a consumer’s right to be able to choose with whom they do business. ALEC also argues that the cost of training and education required to obtain many state licenses prohibits individuals from establishing businesses.In response to the potential threat to their professions, and in expectation that more states will follow, a number of national associations like the American Institute of Certified Public Accountants and National Association of State Boards of Accountancy, along with several architectural and engineering associations, have formed the Alliance for Responsible Professional Licensing (ARPL) to promote the practice of maintaining high professional licensing standards issued by the individual states.ARPL advocates that by requiring a license, consumers can be assured of the quality of service that will be performed. The group argues that since the public generally lacks the industry knowledge required to properly perform due diligence on a vendor, professional licenses are an efficient way to vet practitioners and help avoid expensive litigation if something turns out badly.ARPL also claims that there should be distinctions made between complex, technical professions and trade and vocational occupations when considering changes in state laws, and that a broad brush approach to reform is ill-advised. ### SEC Proposal – Amendments to MD&A and Related Disclosures On January 30, 2020, the SEC voted to propose amendments to the disclosure requirements in Regulations S-K. These amendments would help modernize, simplify and enhance Management’s Discussion and Analysis, among other certain disclosures. Specifically, the amendments would eliminate Item 301 of Regulation S-K, “Selected Financial Data” and eliminate Item 302 of Regulation S-K, “Supplementary Financial Information”, since these items replicate other requirements. The proposal also includes an amendment to Item 303 of Regulation S-K “Management’s Discussion & Analysis of Financial Condition and Results of Operations” to improve the disclosures. Finally, the SEC is proposing to make corresponding updates to forms utilized by foreign private issuers. These amendments are the conclusions of the SEC’s “Disclosure Effectiveness Initiative”, which intends to improve disclosure requirements that would benefit investors while also streamlining compliance for companies. The SEC is focused on “modernizing and improving disclosure to reduce costs and burdens while continuing to provide investors with all material information.” For more information on the proposed amendments, please contact a member of the Schneider Downs SEC and Public Company Industry Group. ### The Unexpected Inconvenience of Food Delivery Services The U.S. Supreme Court issued its decision in South Dakota v. Wayfair in the summer of 2018, but the ripple effect of that monumental verdict continues to be felt across the country. Thirty-five states have since adopted new economic nexus standards to impose sales and use tax obligations on remote sellers, i.e. businesses that sell to customers using the internet or telephone but don’t actually maintain a physical presence in the state. At the same time, more and more states are also adopting “marketplace facilitator” collection laws. A marketplace facilitator is a business that contracts with third parties to sell goods and services on its platform. Facilitators enable sales by listing products, taking payments, collecting receipts and even assisting in shipments. These new laws require the facilitator to then collect and remit sales tax on behalf of the sellers. This nationwide trend to enforce sales tax on online purchases is creating unexpected compliance issues in the food and beverage industry. Fast food giant Wendy’s, for example, is asking third-party delivery services like DoorDash, Postmates and UberEats to abide by the ever-expanding marketplace facilitator laws. State rules regarding facilitation are often written in ways that would include these platforms, but according to Wendy’s Manager of Indirect Tax Tia Stern, none of the big delivery services quite know how to implement it yet. “I think restaurants and food delivery businesses were not meant to get caught up in marketplace facilitation,” notes Stern. “But here we are.” So who’s on the hook for ensuring sales tax is properly calculated, collected and remitted? In the event that sales tax appears to be calculated incorrectly, Ohio will audit the facilitators, says Sara Caldwell, legal counsel from the Ohio Department of Taxation. But under Ohio law, like many other states, sellers like Wendy’s are required to provide “sufficient and accurate information” to an online marketplace to make sure taxes are properly collected and remitted. This includes not only state sales tax, but also any local food and beverage taxes. Until the wrinkles are ironed out, restaurants will need to play a very active role in ensuring these tax obligations are communicated and followed both in-house and via third-party platforms. For questions or concerns regarding state sales and use tax compliance, contact your tax advisor or the Schneider Downs State and Local Tax group. ### Here's to John Putzier On February 13, I attended the Greater Pittsburgh Automotive Dealer Association’s (“GPADA”) “Dancing with the Cars” preview party, which is held each year to open the Pittsburgh International Auto Show. Schneider Downs has been a sponsor to this event for many, many years; this was the 15th year that I have attended the “Dancing with the Cars” party!  These events have been very enjoyable over the years and proceeds benefit the Pittsburgh Vintage Grand Prix Charities.  Schneider Downs is proud to have contributed to the event over the years.This past Thursday night, however, felt different.  As the band played its last song and the lights came up, there was a feeling of accomplishment and nostalgia more than in prior years, because it was not just another successful event but a matter of reflecting on a successful career.  John Putzier, who has been the CEO of the GPADA since 2010, is stepping down from his position and is ready to enjoy his well-deserved retirement.  John’s GPADA accomplishments were acknowledged by Mark Smail, who was the GPADA president when John started, at the end of the event and Mark then led the crowd in raising a glass to wish John and his wife, Loriann, well as they move into the next phase of their lives. John should feel a sense of accomplishment.  For the past 10 years, he has helped the GPADA to grow and to thrive.  Also, he made many lasting friendships along the way.  We want him to know that those friends, including all of us here at Schneider Downs, wish him a happy retirement!Take care John! ### Public Companies Cybersecurity Spotlight From the daily barrage of cybersecurity headlines to the increased regulatory exposure caused by emerging risks to businesses and industries across the globe, how can directors arm themselves with the knowledge and skill to govern corporations through these risks? The SEC is committed to working with federal and local partners, market participants and others to monitor developments and effectively respond to cyber threats.  As companies face these evolving risks, how well do Boards truly understand the related operational risk, as well as the risk of data or asset loss?  It only takes one headline to bring the reality home. The time is now to address these risks.  We recommend companies and boards consider the following: The SEC’s Spotlight on Cybersecurity at https://www.sec.gov/spotlight/cybersecurity. “Cybersecurity and Resiliency Observations” released January 2020 by the Office of Compliance Inspections and Examinations https://www.sec.gov/news/press-release/2020-20 Commission statement and Guidance on public company cybersecurity disclosures https://www.sec.gov/rules/interp/2018/33-10459.pdf SEC Guidance for public companies https://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm Sign up for alerts published by the Cyber Infrastructure Security Agency (CISA) The OCIE is encouraging market participants to review their practices, policies, and procedures with respect to cybersecurity and operational resiliency.  Through a deeper understanding of preparedness and addressing existing gaps, implementing the recommended measures will make your organization more secure.Schneider Downs cybersecurity experts stand ready to help companies protect themselves against these emerging threats to operations, continuity, and cash flows. Please visit https://schneiderdowns.com/cybersecurity for additional information  ### Postcard from the AADE 2020 Operators Forum On February 13, the American Association of Drilling Engineers (AADE) hosted its annual Operators Forum at the Pittsburgh Airport Marriott, with speakers from Ascent Resources, Cabot, EQT, JKLM, Laurel Mountain Energy, Penn Energy, Range Resources Rockdale Resources/Tilden Marcellus and Seneca Resources on hand to discuss their current operations as well as drilling plans for 2020.While each presenter delivered an individualized message, a few common themes emerged. All the speakers, for instance, commented on the difficulty of producing in the current depressed price environment, noting that they didn’t anticipate the situation to improve in the near term as prices are expected to remain low. They also indicated that their concentration at the moment is on maximizing return on capital and generating free cash flow.Here’s a summary of what each representative had to say:Ascent Resources (Stan Cherry, Lead Drilling Superintendent). Ascent operates approximately 460 wells and have been producing since 2014. During 2019, they drilled 38 wells with an average lateral length of approximately 16,000 feet and averaged 17.7 days of spuds-to-rig release. In 2020, Ascent plans to spud 60-70 wells with an average of three wells per pad. Laterals are expected to average 14,000 feet. To complete the plan, they expect to operate four rigs and two fracture crews throughout the year. The Company has entered into a five-point strategic plan to meet their 2020 goals: Maximize near-term cash flow and liquidity Allocate capital to lowest risk Maximize capital efficiency Take an integrated approach to managing financial and operational constraints Employ comprehensive hedging Cabot (George Stark, Director of External Affairs). Cabot currently maintains approximately 200,000 net acres and operates out of 3,450 locations. During 2019, the company experienced production growth of 18% and operated on a capital expenditure budget of $800 million. Projected budget for 2020 is expected to be reduced to $575 million, with Cabot operating two rigs throughout the year. More specific comments were unavailable until after the company’s earnings call, scheduled for February 21.Laurel Mountain Energy (Matt Weinreich, Senior Vice President). Laurel Mountain has drilled six wells since 2018 and completed two new pads in Clarion County. They plan on completing an eight-well program on the two pads and expect an average lateral length of 7,000 feet. In 2017, they started a midstream company, Stonehenge Laurel Gathering, to transport NGL-rich natural gas production from Clarion County to the Energy Transfer System in Butler County.PennEnergy (Tommy Thompson, Vice President Drilling and Completions). PennEnergy holds 212,000 gross acres/176,000 net acres, of which 87% is held by production. As of 2019, they operated 380 wells with an average lateral length of approximately 7,500 feet and held total proved reserves of 6.9 Tcfe. During the year, the company operated one top-hole rig, one horizontal rig and one fracture spread. In that time, they drilled 40 verticals, 36 horizontals and fractured 36 wells with an average lateral of 6,850 feet. In 2020, they plan to drill 12 wells and fracture 18 others. They also plan to reenter existing pads that currently have 3-4 wells and drill an additional 2-4 to maximize capital expenditure.EQT (Steve Chesher, Vice President, Drilling). In 2019, EQT operated two top-hole rigs and three horizontal rigs with a focus on drilling in Washington and Greene Counties in Pennsylvania, as well as limited drilling in West Virginia and Ohio. They averaged 12,000-foot laterals and completed 4-5 wells per pad. In 2020, they anticipate adding another top-hole rig and maintaining their horizontal rig count. The plan is to keep pads closer together and increase laterals to maximize efficiency.Seneca Resources (Bryan Bauer, Drilling Engineer). Seneca exercised capital expenditures of $492 million in 2019 and generated 211.8 Bcfe. In 2020, they’ve budgeted $375 million for expenditures and anticipate production of 235 Bcfe.JKLM (Tyler Ragan, Drilling Engineer). JKLM currently operates 42 wells with 45 wells drilled. They ran one top-hole rig and one horizontal rig during 2019 and completed four wells with laterals ranging between 3,000-10,000 feet. The company drilled a total of 13 wells in 2019, one of which was unsuccessful. Plans for 2020 are to complete 4-6 wells, including those that were top-holed in 2019.Range Resources (Pat Quinn, Drilling Engineer). During 2019, Range operated two top-hole rigs and two horizontal rigs, averaging 10,500 feet of lateral length in 59 completed wells. In 2020, they plan to utilize one top-hole rig and 2-3 horizontal rigs, expecting to increase average lateral length to 12,200 feet.Rockdale Resources/Tilden Marcellus (Jarrett Toms, Drilling Manager). During 2019, Rockdale top-holed one well and completed five others while Tilden completed four DUCs. In 2020, the company expects to complete the DUCs drilled in 2019 and has no new wells planned. Emphasis will be on extending the laterals of the DUCs drilled in 2019.Schneider Downs has a proven track record of business and accounting consulting services in the energy and natural resources industry. Contact us to assist with any of your business needs. ### Judge Hands Down Longest Sentence to Date in College Admissions Scandal On February 7, a federal judge in Boston issued the most severe verdict yet to a parent involved in Operation Varsity Blues, the college admissions scandal that surfaced last year. Douglas Hodge, former CEO of global investment giant Pimco, was sentenced to nine months in prison for paying in excess of $850,000 over more than a decade to get four of his children admitted to elite universities. On five occasions over an 11-year span, Hodge engaged scandal mastermind Rick Singer to falsify records in an effort to get his children recruited to university athletic programs, paying bribes to get two of his kids into USC and two others into Georgetown. He was unsuccessful on his attempt to get his fifth child into Loyola Marymount.Hodge pleaded guilty in October to conspiracy to commit mail wire fraud, honest service mail and wire fraud, and conspiracy to commit money laundering. The prosecution had pursued a two-year sentence, but the judge settled on nine months.We previously wrote on this bombshell and the role internal audit can play in helping to identify and respond to similar events at colleges and universities across the country. In the instances perpetrated by Hodge and Singer, for example, the universities could have had better controls in place to detect athletic scholarships that were granted based on falsified records.Don’t dismiss the importance of an independent evaluation of core business processes that could pose a risk to your university. Now would probably be a good time to evaluate your processes and controls to ensure you have adequate mitigants in place to prevent risks from impacting your reputation in enrollment, athletics and admissions.Contact Schneider Downs at contactSD@schneiderdowns.com with any questions you have about higher education risk assessments, compliance reviews, and process and control optimization. ### Liability Classification for IFRS Entities On January 23, 2020, the International Accounting Standards Board (IASB) issued Classification of Liabilities as Current or Non-current, a narrow-scope amendment on the balance sheet classification covered under International Accounting Standard (IAS) 1 Presentation of Financial Statements. This amendment will provide further guidelines for entities reporting under the International Financial Reporting Standards (IFRS).            Under IAS 1, liabilities are classified as non-current if the entity has substantive rights to defer settlement for 12 months or longer at the end of the reporting period. The new amendment specifies that management’s intentions and expectations for rights under a liability no longer impact the liabilities classification as current or long-term. The right to defer liability settlement only exists if the entity complies with relevant conditions at the reporting date. This includes the passing of covenants or obtaining a waiver for failed covenants at the reporting date. Entities that fail their covenants at or before the reporting date, but do not obtain a waiver until after the reporting date, must classify the liability as current. Liabilities that breach their covenants subsequent to the reporting date, but were in compliance at the reporting date, should be classified as non-current.            The amendment is effective for annual reporting periods beginning January 1, 2022, with earlier adoption permitted. Adoption should be applied retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.For more information concerning the International Financial Reporting Standards, please visit the Schneider Downs Our Thoughts On blog or email us at contactSD@schneiderdowns.com. ### How will AS 1210 Impact Your Company? When the PCAOB issued the new AS 1210, Using the Work of an Auditor-Engaged Specialist, which replaces existing AS 1210, Using the Work of a Specialist, it amended two existing standards, AS 1105, Audit Evidence, and AS 1201, Supervision of the Audit Engagement. The new standards will go into effect for periods ending on or after December 15, 2020 (applicable to 2020 year-end audits).The new standard defines a specialist as a person or firm possessing special skill or knowledge in a particular field other than accounting or auditing. Specialists could include attorneys, reserve engineers or actuaries, for instance. Consistent with existing guidance, the amendments identify and establish separate requirements for the following three types of specialists: Company Specialists (employed or engaged by the company); Auditor-Engaged Specialists (engaged by the auditor’s firm); and Auditor-Employed Specialists (employed by the auditor’s firm or by an affiliated entity that adheres to the same quality control and independence requirements).Changes to existing guidance include the following:Company Specialist. Applicable when the company uses the work of a specialist in the preparation of its financial statements. New guidance requires that auditors assess a specialist’s knowledge, skill and ability, along with the relationship between the company and the specialist, as well as the entity that employs the specialist if that specialist is not employed by the company. This assessment, combined with the risk of material misstatement, will impact the extent of evaluation of the specialist’s work.The requirement of assessing the entity that engages the specialist may lead to additional auditor inquiries of both the company and the company’s specialist. Key changes included in the newly issued and amended guidance on evaluating the specialist’s data, assumptions and methods is outlined below: Data: Current guidance – test the data provided to the specialist, taking into account the auditor’s assessment of controlNew guidance – test the company-produced data provided to the company’s specialist and evaluate the relevance and reliability of data from external sources Assumptions: Current guidance – understand the assumptions usedNew guidance – evaluate significant assumptions Method: Current guidance – understand the method usedNew guidance – evaluate whether the method is appropriate under the circumstancesThe auditor does not need to re-perform the work of the specialist; rather, he or she must evaluate whether the specialist’s work provides sufficient appropriate evidence to support an opinion rendered on the financial statements.Auditor-Engaged Specialist. The new guidance expands the requirements related to the auditor’s assessment of the knowledge, skill, ability and objectivity of the auditor-engaged specialist to the entity that employs the specialist. This, combined with the risk of material misstatement, will impact the auditor’s determination of the extent of the review and evaluation of the work of the specialist.Auditor-Employed Specialist. The new and amended standards outline the extent of supervision, review and evaluation of the auditor-employed specialist’s work that is meant to be risk-based, and depends on (1) the significance of the specialist’s work to the auditors opinion; (2) the risk of material misstatement of the relevant assertion; and (3) the knowledge, skill and ability of the auditor-employed specialist relevant to the work to be performed. The supervisory requirements that apply to the auditor-employed specialist are aligned with existing requirements for supervising the engagement team.The new and amended guidance is intended to promote effective communication and coordination between the auditor and specialist.So how does all this impact your company? We recommend that you evaluate your internal controls over the assessment of the qualifications of the specialist and their employer, as well as their relationship with you. As part of your system of internal control over financial reporting, you may need to obtain additional information and documentation from your specialist in order to support your evaluation of the specialist’s methods, significant assumptions and external data. Auditors will need this information to support their audit procedures.The PCAOB acknowledged in a release accompanying the new guidance the requirements to evaluate the work of a company’s specialist will have the greatest impact on audit costs. If you have any questions about how the change in guidance for Using the Work of an Auditor Engaged Specialist will impact your audit engagement, reach out to a member of the Schneider Downs SEC Industry Group. ### Using Data Analytics to Detect Check Tampering Schemes in the Professional Services Industry Professional services organizations are most at risk to be negatively impacted by expense reimbursement schemes, billing schemes and check and payment tampering schemes, according to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse. In a previous Our Thoughts On article, Brian Webster talked about how utilizing system-wide and manual controls can help detect billing schemes. This time, we’ll take a look at data analytic procedures that can be used to identify check and payment tampering schemes.Check and payment tampering occurs when an employee alters a payment intended for a third party to his or her benefit. Common tests to detect tampering schemes include: Identifying out-of-range checks Following up on checks made out to “cash” Reviewing transactions for round dollar payments Identifying checks issued to vendors with names that are similar to known vendors The first three tests can be accomplished in a relatively simple fashion using the basic features of any spreadsheet program. An analyst could also perform the fourth test manually by scanning a disbursement listing or spreadsheet for variations of vendor names, but it’s a task better and more accurately performed through use of a specialized tool.Here’s how the vendor name test would work. The analyst begins by using software to look for small variations in how a vendor is named. For example, a fraudster could pull off a check tampering scheme by changing the letter “I” in “Initech” to a “1” (one). Identifying these inconsistencies is accomplished by employing a technique known as fuzzy matching, a feature present within software programs like IDEA or the open-source “FuzzyWuzzy” Python Library (originally developed by SeatGeek to compare event-naming conventions across different ticketing sites). In each case, an algorithm is applied to assign a “score” of likeness to a subject text string for a population of text strings. Text strings from the population with scores meeting a desired threshold can then be investigated further.Remember, as fraudsters get more resourceful, it is imperative to have these types of tools at your disposal to detect malicious activity. If you have any questions regarding potential fraud schemes, internal controls, or the use of data analytics to detect fraud at your professional services organization, please contact the Business Advisory group at Schneider Downs. ### IRS Requires E-filing of Form 1023, Application for Tax Exemption Under Section 501(c)(3) On January 31, 2020, Revenue Procedure 2020-08 (Procedure) was released by the Internal Revenue Service.  The Procedure requires the filing of Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, electronically at Pay.gov.  Historically, organizations requesting exemption could only paper-file Form 1023.  The Procedure provides transition relief for Form 1023 filings postmarked on or before 90 days after January 31, 2020.  The IRS anticipates the electronic filing of Form 1023 to improve the application processing time and provide for fewer errors.The Procedure highlighted additional items as they relate to Form 1023 filings.  The application fee will be processed through Pay.gov when the application is submitted and will continue to be $600 for 2020.  Entities requesting expedited handling must do so by indicating on the form that expedited handling is requested, and a supporting written statement must be submitted as an attachment to the application.Please contact Schneider Downs with any questions regarding this update or if you would like assistance with the preparation and filling of Form 1023 and its required attachments. ### Don’t Overlook Tax Benefits When Purchasing Construction Equipment As construction company owners assess labor, material and equipment needs, it’s important to keep in mind that most equipment purchased for a jobsite will qualify for “bonus” depreciation. Increased by the 2017 Tax Cuts and Jobs Act (TCJA) and further clarified by IRS final regulations (T.D. 9874), a 100% first-year depreciation deduction is available for qualified property that’s placed into service by a trade or business after September 27, 2017 and before January 1, 2023. After 2022, the bonus depreciation deduction decreases in 20% increments until it’s fully phased out on December 31, 2026.When contractors are deciding which equipment to buy, they need to remember that both new and used equipment qualifies for bonus depreciation, as defined by regulations released last September. Since the TCJA allows for bonus depreciation when the property is considered “original use” to the taxpayer, contractors can now generally utilize bonus depreciation for used equipment, something not available under prior tax law.Bonus depreciation also applies to certain vehicles as well. Trucks, large SUVs and vans with gross vehicle weight ratings greater than 6,000 pounds are not subject to the annual depreciation limitations applicable to passenger automobiles. Therefore, heavy vehicles used either on the jobsite or on the road can also qualify for bonus depreciation.If you have any questions about the applicability of bonus depreciation on your equipment purchases, don’t hesitate to contact a member of the Schneider Downs Construction Focus Group. ### California Utility Crisis Could Reshape Regulatory Environment California’s recent fire crisis has the potential to shape the regulatory and business landscape of one of the largest energy markets in America. In past several years, there have been a large number of natural disasters throughout the state, including fires and mudslides, whose liability has been connected to three giant utilities that operate within the California market. Here’s where those utilities stand in relation to these challenges.In January of last year, Pacific Gas and Electric declared bankruptcy in response to a $30 billion penalty imposed on it as a result of starting a number of fires. The final settlement was reached later in the year for $13.5 billion, with California Governor Gavin Newsom establishing a requirement that PG&E exit bankruptcy by this summer. The company and the state are currently in dispute over portions of the Chapter 11 restructuring plan, with Governor Newsom rejecting the most recent plan. The governor has stated that if the utility does not pull itself out of bankruptcy by the established deadline, the state will take over.Also recently, in light of the vast liabilities incumbent upon the utilities, the California Public Utilities Commission (CPUC) unanimously ruled to reject rate hike requests from each of the entities. Several executives of the companies have said that without the increases, there will be continued planned power outages to manage the risk of fires for five more years. Recent legislative efforts seem to target restricting the utilities’ ability to rely on these blackouts to limit the risk of fires. These efforts would require the utility to both compensate customers for the blackouts as well as impose financial penalties for every hour a blackout remains in place.Another utility, San Diego Gas and Electric, recently had an appeal to the U.S. Supreme Court denied. The case was related to the start of wildfires in 2007. The goal of SDG&E was to have a $379 million liability passed onto ratepayers, challenging the underlying condemnation doctrine that holds utilities entirely responsible for damage caused by their equipment whether or not they were negligent. This legal result, combined with the refusal of the CPUC to increase margins for the California utilities, puts all three of the utilities (Southern California Edison is the other) in a difficult financial position moving forward, with heavy reliance on planned blackouts to combat the risk of fire liability.The three utilities are all coming off million or billion dollar settlements related to wildfire and mudslide claims. They’re still engaged in a legal battle over other many wildfire and mudslide events, but few have individuals have found solace in settlements covered in large part by their respective insurance carrier.It’s reasonable to assess that in the near future there will be significant changes to both the operations of the utilities themselves and the regulatory requirements placed upon them. The PG&E bankruptcy and its requirement to exit by this summer, the potential of the state to take over one or multiple utilities and the increasing frequency of fires and mudslides creates an environment of uncertainty over the future relationship between the state, the utilities, the scheduling coordinator and the customer.SchneiderDowns has experience with clients operating within the CAISO and other regulatory requirements within California. If you’re interested in assessing the internal control of your organization as it relates to the shifting landscape of energy legislation and regulation, please contact us at contactsd@schneiderdowns.com. ### The Redesigned IRS Form W-4 – What You Need to Know The old familiar IRS Form W-4 has a new look this year, thanks to a redesign by the IRS. The revised worksheet eliminates withholding allowances, and instead bases withholding totals primarily on the employee’s filing status and number of dependents. This is an effort to simplify the overall process, increase accuracy, and complement individual tax changes brought about by the Tax Cuts and Jobs Act. New employees as of January 1, 2020 must complete the updated form. Current employees don’t have to if they already have a form on file with their employer, though now might be a good time to reassess those withholding selections. The new IRS Form W-4 is divided into five steps: Enter Personal Information Multiple Jobs or Spouse Works Claim Dependents Other Adjustments (optional) Include other income not from jobs Include expected itemized deductions Extra withholdings Signature Step 2 applies to millions of households whose income is supported by more than one job. In this situation, employees now have three options to calculate their amount of tax withholding. Step 2(a): For maximum accuracy, employees may want to use the IRS’ newly created Tax Withholding Estimator. This calculator asks about the employee’s individual circumstances – source(s) of income, filing status and number of dependents – to provide an accurate estimate of yearly tax liability that should be withheld through paychecks. Employees will generally be guided to enter an additional amount to be withheld on Step 4(c), which should only be done for one of the jobs. There’s also a refund slider feature within the calculator that allows an employee to choose a target refund amount and adjust his or her withholdings accordingly. The slider should be used by those employees who prefer to receive a refund check during filing time. Step 2(b): Employees who don’t have access to the Tax Withholding Estimator can complete the Multiple Jobs worksheet on page 3 of the new form. This worksheet will refer to matrix tables on page 4 to determine additional withholding amount(s) needed. To properly use the matrix, it’s important to use the table that properly corresponds to the tax return filing status. Step 2(c): Households with two jobs that have similar wages can simply check the 2(c) box. Important: this option is only accurate for jobs with similar pay; otherwise, more tax than necessary may be withheld. If this option is used, this box should be checked on Form W-4 for both jobs. We recommend you fill out the new Form W-4 as soon as possible to ensure that an accurate amount of taxes are withheld from your paycheck. Additionally, if pay for any job changes significantly throughout the year, we recommend completing a new Form W-4 to adjust the amount of withholding. Please contact your Schneider Downs representative for additional information on the new Form W-4 and/or for any other tax issues. ### Internal Controls for Not-For-Profits The Institute of Management Accountants (IMA) Research Foundation studied the nature of internal controls in not-for-profit organizations and how those controls affect the incidence of fraud. This research can provide benefits to not-for-profit organizations by identifying best practices in internal controls in order to maintain management and Board integrity and safeguard resources.Based on our experience and the IMA Research Foundation’s study, many smaller not-for-profits do not have the resources to allow for appropriate internal controls and segregation of duties.  As a result, they become victims of fraud, despite the mission of the organization.  The following common-sense, low-cost improvements to internal controls can be implemented by most organizations to mitigate and reduce the risk of fraud: Pay attention.  Perpetrators can get away with fraud because most people who should be involved never look. Recognize that your organization could be a victim.  Many charities believe their charitable mission protects them from crime.  Be transparent.  An organization that keeps its stakeholders informed of where their money is received and spent is one in which it is difficult to perpetrate fraud.  Stay involved.  Members and donors should insist that the nonprofit report how much money is coming in and where it goes, and members need to review reports and be prepared to ask questions. Spread the work.  Don’t make it easy for someone to take over all the duties that surround collecting money and spending.  Divide the duties among several members. Organizations frequently resist efforts to improve their internal controls.  They may argue that fraud and abuse occur as a result of determined criminals and that their charitable mission provides unique protections.However, contrary to such thinking, the IMA Research Foundation’s study indicates that this is not the case. There are significant differences between those organizations that experienced fraud and those that didn’t.  In particular, not-for-profits that experienced fraud significantly improved their internal controls after the fraud by increasing the frequency of beneficial financial practices.  After the improvements, these not-for-profits more closely resembled those organizations that didn’t experience any fraud.  Our experience with not-for-profit organizations is consistent with the results of the IMA Research Foundation’s study.  We have seen many organizations that have ignored or resisted efforts to improve internal controls, including segregation of duties and transparency, become victims of fraud.If you have any questions regarding potential fraud schemes or internal controls at your not-for-profit organization, please contact the Business Advisory Group at Schneider Downs. ### The Role of Data Analytics in Real Estate Data has always been collected, analyzed, and used by real estate professionals and investors to make informed decisions on purchasing properties. That’s nothing new. What’s starting to take the industry by storm is the granular level of data being aggregated, along with intelligent commercial real estate (CRE) tools, to make even more informed decisions.CRE databases are evolving in both quality and accessibility. Just a few years ago, investors simply looked at a property’s revenues, made their best guess at what the building was worth, and either decided to invest or pass. Today, investors can access a myriad of data, such as flood maps, demographic reports, tenant detail, traffic counts, and EPA reports, to analyze the return on investment and risk associated with the property. Professionals can now look beyond the traditional tax record data and focus on more important components that have been researched and vetted to assist in their next big deal.The data being utilized is evolving rapidly and as a result, the transactional rates in the CRE field are higher than ever before. Properties are being listed for only days and closing in a matter of weeks, whereas before these deals could drag on for six to 12 months or longer. On both sides, data analytics puts the deal on the fast track. Investors can leverage it to speed up the due diligence process, and tenants can quickly compare rent rates to make decisions and get into spaces faster. Additionally, institutional users such as lenders are using data to assess risk, such as how much damage an earthquake would cause and what the financial impact would be.Most datasets are currently housed internally by CRE professionals, but industry tools will continue to improve and evolve as datasets expand and as more comprehensive data is needed in the market. The future of the industry is data, and investment in data infrastructure, networks, and analytics will be a competitive advantage for real estate professionals for years to come. ### Estimated Tax Payment and Voucher Address Change as of July 1, 2020 Taxpayers should be aware that the IRS will be closing its Cincinnati and Hartford mailing addresses on July 1. This is especially important for those individuals planning to send extensions or estimated payments. Returns and payments sent to Cincinnati and Hartford after that date will be returned to the sender with no forwarding service available. The IRS has not yet identified and reported the new mailing address.As an alternative to mailing payments, the agency is encouraging taxpayers to make arrangements online through IRS Direct Pay. This applies specifically to those who file Form 1040 and related returns. In the meantime, taxpayers should also check “Where to File” on irs.gov before mailing a payment to the IRS on or after July 1. ### New Optional Standard Mileage Rates for 2020 The IRS recently released the optional standard mileage rates for 2020, as follows: 57.5 cents for every mile of business travel driven (down 0.5 cents from 2019) 17 cents per mile for medical care or moving purposes (down three cents from 2019) 14 cents per mile for gratuitous services to a charitable organization The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.Due to new provisions created under the Tax Cuts and Jobs Act, business mileage rates cannot be used to claim an unreimbursed employee travel expense as a miscellaneous itemized deduction, nor can moving mileage rates be used to deduct moving expenses incurred for taxable years beginning after December 31, 2017. Members of the Armed Forces moving under permanent change of station orders are exempt, however, from the restriction on moving expenses.These limitations do not affect business travel expenses that are properly deducted on a taxpayer's Schedule C for self-employed individuals, independent contractors and freelancers.It’s also important to note that business mileage still cannot be used where Modified Accelerated Cost Recovery System depreciation is taken or after a Section 179 deduction has been claimed for a vehicle, and that the business standard mileage rate still cannot be applied to more than four vehicles at the same time. Taxpayers may still elect to use actual allowable expense amounts instead of the standard rates provided the taxpayer has maintained adequate records or retained otherwise sufficient evidence.As with all complex tax decisions, the election to use the optional mileage rate can have far-reaching implications. Schneider Downs is always here to help, so please don’t hesitate to contact your local SD tax professional if you have any questions or concerns. ### Financial Boot Camp Series: Behavioral Investing Challenges Human emotion has been shown to be the Achilles Heel of most investors as Charles Munger, long-time partner of Warren Buffet, once said, “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” Behavioral finance, the study of the influence of psychology on the behavior of investors, has sought to answer why investors are generally their own worst enemy and ways to combat this weakness.Behavioral finance highlights the fact that investors do not always act rationally (i.e. logic based decisions), are overly influenced by personal biases, and at critical times show an inability to control their emotions, resulting in poor investment decisions. Since 1994, Dalbar, Inc. (“Dalbar”) has measured the effects of the “average investor” and their decisions to buy, sell, and switch into and out of investments over various periods of time. Dalbar utilizes the net aggregate mutual fund sales, redemptions, and exchanges each month as a measure of investor behavior. According to Dalbar, the “average investor” for the 20 year period ending December 31, 2018, earned 1.9% per year relative to the S&P 500 Index up 5.6% and Barclays Aggregate Bond Index up 4.5% over the same time period.The significant underperformance of the “average investor” compared to an aggressive, 100% domestic equity portfolio and a conservative, 100% taxable bond portfolio over a 20 year period illustrates the tremendous impact investor decision making has on long-term performance regardless of investor risk tolerance.  Behavioral finance has identified several investor biases. A few investor biases that we typically encounter when working with clients and prospective clients include: Mental Accounting - the classification of funds into different buckets leading to irrational personal finance decisions. A common mental accounting example occurs when an individual is saving money in a low-interest savings account earmarked for a future vacation while also carrying a large credit card balance at a higher interest rate. Instead of funneling money to pay down high-interest debt faster, investors view the vacation fund as a different bucket of money. Herd Mentality - the tendency for investors to follow the crowd. Investors following the herd are largely influenced by emotion and instinct rather than independent analysis. As humans we are hard wired to follow the herd.  In fact, studies have shown that for some individuals going against the crowd or being a contrarian investor causes them physical and mental discomfort. Herd mentality is exhibited when an investor buys a stock because it is “hot” or they received a stock tip from a friend without doing any analysis to confirm the underlying merits of the investment. Hindsight Bias - the misconception that outcomes are obvious after the fact. The real estate crash of the late 2000s resulting from thousands of Americans purchasing homes that they realistically could not afford or the dotcom bust of the late 1990s fueled by speculative investing in unprofitable internet-based companies, in retrospect, were bad periods to invest.  But if we examine history, the investment professionals that noted these now apparent issues were either laughed at or altogether ignored in the moment.    Loss Aversion - the tendency to overly focus on the potential for, or avoidance of, a loss more so than generating investment gains. Research has discovered that investors feel the pain of a loss more than twice as strongly as they feel the enjoyment of a making a profit. A person investing in low-return, guaranteed investments despite their ability and financial wherewithal to invest in more promising, higher risk investments is an example of loss aversion. When making decisions, a human being’s default option is to trust our gut, making us more susceptible to undue influence from personal biases and emotions as well as other social influences. If left unchecked, investor biases illustrate the negative impact one’s emotions can have on long-term investment performance.Now that we have identified the potential negative impact that personal biases can have on long-term investment performance, how do we guard against these investor pitfalls?As often as possible, we try to instill a fact-based, logical investment process to remove the emotional element of investing. This is where working with a competent financial advisor to develop a comprehensive plan is a great first step to removing investor emotion from the equation. This comprehensive financial plan seeks to lay out the key financial inputs (i.e. income, spending, retirement age, etc.) to an individual’s long-term financial picture allowing them to assess future considerations in a fact-based, logical manner.Once the big picture financial plan has been constructed, we work with clients to establish long-term investment allocation targets. These long-term portfolio targets are key as they significantly reduce the emotional component when investing money. The adherence to long-term investment targets encourages investors to act rationally during any capital market environment as we are consistently applying a logical assessment of our current positioning relative to those targets.Behavioral finance has illustrated that investors have a tendency to make poor investment decisions because of personal biases and emotions resulting in sub-optimal investment performance. However, investors can more than overcome any personal shortfalls via a structured, comprehensive financial plan with long-term investment targets encouraging a repeatable, logical process for making sound long-term financial decisions.   Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### 2020 Congressional Research Service Report on TCJA Impact on Families The Congressional Research Service (CRS), which serves as a nonpartisan shared staff to members of Congress and congressional committees, and operates solely at the behest of and under the direction of Congress, released a report dated January 24 on the “Federal Income Tax Treatment of the Family Under the 2017 Tax Revisions.” The document examines certain temporary changes made to the federal tax code under the Tax Cuts and Jobs Act (TCJA or the Act) including tax rate changes, elimination of the personal exemption, increase in the standard deduction and changes to the child tax credit. While many of the changes included in the Act were meant to be permanent, the report notes that the particular changes addressed in the report are only temporary in nature and set to expire after 2025. The introduction to the report notes that the “federal income tax treatment of the family is affected by several major structural elements applicable to all taxpayers: amounts deductible from taxable income through standard deductions, personal exemptions and itemized deductions; the rate structure, which varies across taxpayer types; the earned income credit and the child credit; and the alternative minimum tax. Some of these provisions only affect high-income families and some only low-income families, but they are the tax code’s fundamental structural features.” The TCJA effectively eliminated personal exemptions claimed by the taxpayer, his or her spouse (if married) and any dependent, offsetting those losses for most taxpayers with an increased standard deduction. Further, the increase to the child credit more than offset losses from the eliminated dependent exemption for many taxpayers. Though the effect was most notable for joint return filers, the TCJA actually lowered rates for all three main types of individual tax returns (joint, single and head of household). The TCJA also retained significant aspects of the law that existed prior to 2018. The CRS report notes that the “income tax code after the 2017 tax revision remains progressive across income levels for any given type of family, although effective tax rates are slightly lower.” As to the impact on families, the report concludes that changes brought by the TCJA “continued and, in some cases, expanded the favorable treatment of families with children in the lower- and middle-income levels on an ability-to-pay basis.” At the lowest income levels, “this treatment was maintained largely due to EITCs” (referencing the earned income tax credit available to lower-income taxpayers). The report continues: “Treatment was increased and extended up through the income classes because of the increase in the child tax credit amount and the increase in the income level at which the credit is phased out.” At the highest income levels, however, “Rate changes tended to favor joint returns over singles and heads of household, largely due to the rate structure.” There is a great deal of interesting data included in the report, including tables showing effective tax rates, marginal tax rates and income levels where federal income taxes kick in. Please note the report covers federal income taxes only and does not discuss the impact of state or local income taxes or Social Security taxes. We predict that proponents on both sides of the Congressional aisle will find things they like or dislike about the information contained in the report. You can make your own decision by reviewing the report, accessible at CRS Report TCJA Impact on Families January 2020. ### Given Everything We Can Do Online, Why Not Voting? The Iowa caucus is here, meaning it’s officially become election season, so you may be thinking: if I can buy a car online, watch all my favorite TV shows online, and go online to hire a dog walker, why can’t I vote online? Well, depending where you are, that may actually be possible. If you live in King County, Washington, for instance, you can vote online in this year’s district elections. So while the concept is starting to take shape for some smaller ballot votes, let’s take a look at how the model designed to guide policies for information security within an organization, the fabled CIA triad (confidentiality, integrity, availability), would affect online voting.Distributed Denial of Service (DDoS) AttackIn a DDoS attack, a threat actor attempts to overload a website with traffic, with the intent to disrupt the availability of the website and prevent access to valid users. As these types of attacks typically require minimal effort and cost to perform for a sophisticated threat actor – to the point where NetScout reported that there were approximately 3.8 million DDoS attacks in first half of 2019 alone – a single threat actor could attempt to bring down the availability of a website during critical voting times to prevent constituents from casting their ballots. This could significantly impact the results of the election since it would also discourage voting in general, as people are less likely to continue to attempt to submit votes.Malware on the Voter’s DeviceDepending on which device the voter would use, whether phone, home computer or work computer, there’s a chance it could already be compromised by a threat actor. With voters having such a variety of technologies at their disposal and with varying voter technical sophistication, there’s likelihood that many devices may not be properly secured to ensure that malware is not already present. If that’s the case, a threat actor could perform malicious activity using the voter’s device without the voter’s knowledge. It would also be exceedingly difficult from an oversight perspective to verify the security of each user’s device prior to them casting a ballot.Man in the Middle AttacksA Man in the Middle attack occurs when a threat actor secretly relays – and possibly alters –communications between two parties who believe they’re directly communicating with each other. Assuming you have no malware on your device when you go to vote, there’s still a possibility that a threat actor may intercept or redirect your vote as it’s transmitted over an open internet. While complicated, it is possible that an attacker could compromise a relay point in the transmission process and stop or manipulate your vote, which could then be submitted by the attacker without the voter even being aware that his or her vote was intercepted.Authentication IntegrityThen there’s the issue of understanding how the voter authenticates to the system in order to vote. Is it through a combination of personal information such as their address, birthday or Social Security number? Or would each voter be provided a unique sign-in authenticator in order to access the voting system? The issue here becomes validating the integrity of the voter or, in short, validating that they are who they say they are.Using personal information of the voter always presents a chance that the information is known by a threat actor or is for sale on the dark web. By providing a unique authenticator to each individual, say via the mail, there’s always a chance, though, that the identifier is intercepted or compromised en route. In addition, the election board may need to verify the integrity of the voter when validating his or her vote by reviewing personal information, thus removing some of the confidentiality voters expect.Web Application/Server SecurityEven assuming the above four risks are addressed in some form, placing a system externally on the internet leaves it prone to be attacked by threat actors, who from anywhere in the world could target a voting system for both Web application coding misconfigurations and vulnerabilities along with the servers themselves. Any oversight board would need to ensure the application is written with security in mind and servers are properly patched and hardened to ensure the confidentiality of information, integrity of the votes and availability of the voting platform.While the above are just some of the risks involved with the implementation of online voting, it’s not to say these risks couldn’t be addressed. There are surely a number of benefits to online voting, including the potential for increased voter turnout due to the process being more efficient, accessible and convenient, so it’s entirely possible that in the future voting online may be the primary way an election is held.To learn more about the Schneider Downs cybersecurity team and service visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### TaxCaddy and Emerging Mobile Tax App Competition It’s nearly impossible to watch a live sporting event on TV this time of year and not see an ad for a tax preparation tool like TurboTax or the offering from H&R Block. Even Ernst & Young has gotten into the game with their own TaxChat, a mobile application that allows individual taxpayers to gather and send documents to their tax professional via phone or laptop. Sound familiar, users of TaxCaddy? It should, since TaxChat is quite similar to the application from SurePrep that many Schneider Downs clients have been using for over a year. Designed to simplify the process of organizing and completing your income tax return, TaxCaddy supports an assortment of file formats, including PDF, Word and Excel. Once uploaded, you can select a category in which to place each document, filed by appropriate tax year, and even add a subcategory if desired. If working from a PC, you can simply drag-and-drop the necessary documents into the TaxCaddy interface and upload accordingly. Benefits of TaxCaddy There are a number of advantages to using TaxCaddy. One, you’ll no longer receive paper tax organizers in the mail since the organizer will already be on the application in electronic format. Two, you can simply snap a photo of your documents, upload them to your smartphone, tablet or PC, and see which documents remain outstanding and which have been uploaded every time you access your account. And, three, you’ll no longer have to mail or drop off tax documents to your Schneider Downs professional because every document can be transmitted safely on the app or through the website. TaxCaddy conveniently stores your returns in one secure place (each year is stored in a different section of the application) and links to over 300 banks, brokerages and payroll service providers, which allows for the automatic retrieval of documents as soon as they become available. How to Enroll To get started, simply call or email your Schneider Downs tax professional and tell him or her that you’d like to sign up for TaxCaddy. You’ll then receive an email invite stating that Schneider Downs – Training would like to connect with you. In that email, click on “View Request” and proceed to set up an account with your email address and password. It’s that simple. And it’s important to note that you, not Schneider Downs, owns the account. Other firms are just now coming out with on-demand mobile tax applications. We’ve known this was the way to go over a year ago. Join TaxCaddy today to see what all the excitement is about. ### IRS Releases Proposed Regulations on State and Local Tax Credit Workarounds On December 13, 2019 the IRS released proposed regulations REG-107431-19 on how to treat contributions made to a charity in return for state and local tax (SALT) credits. The proposed regulations incorporate two earlier pieces of IRS guidance, Rev. Proc. 2019-12 and Notice 2019-12. This release is the latest in the effort to curb state attempts to evade the $10,000 cap on state and local tax deductions. Proposed regulations REG-107431-19 include guidance on: The treatment of business entity payments to charitable entities; The treatment of payments by individuals in exchange for state and local tax credits;  The application of the “quid pro quo” principle to benefits received or expected to be received by the donor from a party other than the donee. The treatment of business entity payments to charitable entities The first issue tackled by the proposed regulation concerns how business entity payments are treated. The proposed regulation clarifies the current state of the law regarding the taxpayer’s payment or transfer to an entity. The rule states if the taxpayer’s payment bears a direct relationship to its trade or business, and the payment is made with a reasonable expectation of commensurate financial return, the payment or transfer to the Sec. 170(c) entity may constitute an allowable deduction as a Sec. 162 trade or business expense rather than a Sec. 170 charitable contribution. The proposed regulation also contains an example that shows that the rule would apply regardless of whether the taxpayer expects to receive a state or local tax credit in return. The proposed regulation also encompasses the safe harbor contained in Rev. Proc. 2019-12. The revenue procedure states that, to the extent that a C corporation or specified pass-through entity receives or expects to receive a state or local tax credit in return for a payment to an organization described in Section 170(c), it is reasonable to conclude that there is a direct benefit and a reasonable expectation of commensurate financial return to the C corporation’s business in the form of a reduction in the state or local taxes that the C corporation would otherwise be required to pay. Therefore, the revenue procedure provides a safe harbor that allows a C corporation engaged in a trade or business to treat the portion of the payment that is equal to the amount of the credit received or expected to be received as meeting the requirements of an ordinary and necessary business expense under Section 162. Further, a specified pass-through entity other than a C corporation, for the purpose of the proposed regulation is eligible for the same treatment if certain criteria are met: (1) the business entity is regarded as separate from its owner for federal tax purposes; (2) the pass-through entity operates a trade or business within the meaning of Section 162; (3) the pass-through entity is subject to a state or local tax incurred in carrying on its trade or business that is imposed directly on the entity; and (4) in return for a payment to an entity described in Section 170(c), the pass-through entity receives or expects to receive a state or local credit that the entity applies or expects to apply to offset a state or local tax other than a state or local income tax. Under Rev. Proc. 2019-12, specified pass-through entities that meet these qualifications may treat the payments as meeting the requirements of an ordinary and necessary business expense under Section 162.   The treatment of payments by individuals in exchange for state and local tax credits Secondly, the proposed regulations incorporate the safe harbor issued in Notice 2019-12 that was released last June. Under this safe harbor, an individual taxpayer who itemizes deductions and makes a payment to a Sec. 170(c) entity in exchange for a state or local tax credit may treat as a payment of state or local tax for Sec. 164 purposes the portion of that payment for which a Sec. 170 charitable contribution deduction would be disallowed under Regs. Sec. 1.170A-1(h)(3). This treatment is allowed in the tax year in which the payment is made, but only to the extent that the resulting credit is applied under state or local law to offset the individual’s state or local tax liability for that or the preceding tax year. The application of the “quid pro quo” principle Lastly, the proposed regulations would amend Regs. Sec. 1.170A-1(h) to make it clear that the quid pro quo principle applies regardless of whether the party providing the quid pro quo is the donee or a third party. In either case, the donor’s payment is not a charitable contribution to the extent the donor expects to receive a substantial benefit in return. For further reference on the developments concerning SALT Cap Workarounds, please consult your Schneider Downs tax advisor or see the previous “Our Thoughts On” articles written by tax professionals at Schneider Downs: https://schneiderdowns.com/our-thoughts-on/final-regulations-on-charitable-contributions /our-thoughts-on/irs/tax/interplay-of-new-charitable-deduction-regulations-state-local-tax-credits ### Wawa Breach Update – Joker’s Stash Data Dump (This is a follow up to our initial article on the Wawa data breach.)Wawa may have thought they were out of the woods with regard to the cyber-incident discovered back in December, but intelligence firm Gemini Advisory has discovered a customer data dump that says otherwise.On January 27, two team members at Gemini Advisory – Stas Alforov  and Christopher Thomas – noticed a credit card data dump on the Joker’s Stash website dubbed “BIGBADABOOM-III” that’s likely to be associated with Wawa. As info, Joker’s Stash uses the media coverage of major breaches like which occurred at Target, Home Depot and Equifax to bolster the credibility of its shop and its position as the most notorious vendor of compromised payment cards. Data included in this dump identifies customer credit card numbers, expiration dates, cardholder names and state/geolocation information. At the time of Gemini Advisory’s discovery, only 100,000 records were present on the site, but the number is likely to rise significantly since upwards of 30 million sets of payment records were breached at Wawa.The Joker’s Stash data dump discovery prompted a press release from Wawa explaining that the firm’s payment processor, affected card brands and card issuers have all been alerted to heighten fraud monitoring. Additionally, Wawa also provided insight that, “no user PINs or CVV numbers were taken as part of this breach.”With the discovery of the Joker Stash dump and the resulting Press Release from Wawa, Schneider Downs continues to encourage customers who frequent Wawa locations to monitor cards and bank statements on a weekly basis. We also urge all companies and corporations to heavily consider the negative PR aspects associated with major cyber data breaches, since breach notifications, press releases and quick responses can mean the difference between a total business catastrophe and just a speed bump in overall operations.Learn more about the Schneider Downs cybersecurity team and services at www.schneiderdowns.com/cybersecurity.Sources:https://www.infosecurity-magazine.com/news/hackers-uploading-30-m-cards-wawa/You’ve heard our thoughts … we’d like to hear yours.The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com. ### Knock, Knock. Who’s there? Tips for determining if it’s really the IRS at your door. A man walks through the front door of your business claiming he is an IRS agent and demanding that you pay immediately for an overdue tax bill. Your breathing begins to quicken, your heart beats faster as the stress begins to overcome you; however, you have no idea that this man is an imposter. He is a con man that has assumed the identity of someone we trust in order to swindle you out of your hard-earned money. We wish this was a scene from a movie, but sadly, incidents like this continue to be prevalent throughout the country.According to a report issued annually by the Federal Trade Commission, of the nearly three million cases of fraud reported in 2018, the top two categories were imposter scams at 17.88% and debt collection at 15.88%While the IRS won’t always come knocking at your door, there are some legitimate reasons why you may receive a visit from an Internal Revenue Agent. Visits from the IRS typically fall into one of three categories: IRS revenue officers will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed or tax returns due. IRS revenue agents will sometimes visit a taxpayer who is being audited. IRS criminal investigators may visit a taxpayer’s home or place of business unannounced while conducting an investigation. Secondly, understand that even though an IRS agent may visit your home or place of business for one of the reasons listed above, there are still procedures and protocols that he or she must follow. The first point is especially important because it helps you to verify that the IRS agent is who he or she says they are. An IRS representative will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see these credentials. And if you would like to verify information on the representative’s HSPD-12 card, the representative will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity. An IRS collection employee will never demand that you make an immediate payment to a source other than the U.S. Treasury. IRS employees conducting audits must first attempt to notify individuals by mail to set up an appointment or discuss items with the taxpayer. If the IRS employee receives no response by mail, then he or she will call the taxpayer directly. The IRS employee will not show up unannounced. IRS criminal investigators may visit a taxpayer unannounced; however, they will not demand any sort of payment. If you do have an IRS agent visit you unannounced at your home or place of business, you should first verify the agent’s identity by verifying his or her credentials. An IRS telephone number should be provided to you by the agent. If you are not satisfied with the IRS agent’s identity or credentials, contact the Treasury Inspector General for Tax Administration at 800-366-4484. ### Delay of Game: IRS Postpones Partner Tax Basis Capital Reporting Requirement to 2020 On December 10, the IRS issued Notice 2019-66, providing guidance on various partnership reporting requirements for the 2019 tax year.Most noteworthy, the requirement to report partners’ shares of partnership capital on the tax basis method has been delayed, and will no longer be effective for 2019 tax years as previously indicated. The requirement will now first apply to partnerships with taxable years that begin on or after January 1, 2020. For the 2019 tax year, partnerships and other persons must report partner capital consistent with reporting requirements in the 2018 forms and instructions, including the requirement to report negative tax basis capital accounts on a partner-by-partner basis. Partnerships tax returns for 2019 must still include a statement identifying under what method partner’s capital is reported.The motivation behind the tax basis reporting requirement is that the IRS believes many taxpayers are deducting losses they’re not permitted to take. Tax basis capital reporting will inform both the taxpayer and the IRS of the taxpayer’s basis and the deductibility of the loss. The notice also defines the term "partner’s share of net unrecognized Code Sec. 704(c) gain or loss," which must be reported by partnerships and other persons in 2019. Net unrecognized Section 704(c) gain or loss reporting will not apply to publicly traded partnerships and their partners for 2019 and thereafter until further notice.Notice 2019-66 also addresses the requirement to report to partners certain information about separate “section 465 at-risk activities,” a requirement that will not be effective until the 2020 tax year. Nothing in the notice, however, relieves partnerships and partners from requirements of Form 6198 At-Risk Limitations for the 2019 tax year.We’ll continue to monitor tax changes and provide insight into their application to help you optimize your own unique situation. Please contact your Schneider Downs representative for additional information on the above and/or for any other tax issues you may be facing. ### Fraud in the News Unfortunately, there are new cases involving fraud almost every day.  In fact, if you Google “Fraud in the News” and go the actual news stories, you’ll find an astounding 176,000,000 results.  While it is obviously not possible to look at all of those stories, I thought it would be worthwhile to briefly discuss three cases I found interesting.  As you will see, it is a reminder of fraud’s broad reach across many facets of our society.Instagram Influencer Fraud According to influencer marketing measurement firm Instascreener, fake engagement on Instagram is on the rise again.  For us less tech-savvy folks (myself included), what does that mean?  Well, in 2019, companies spent $1.9 billion on influencer marketing in the U.S. and Canada, with $1.4 billion being spent on Instragram influencers alone.  That is, paying popular Instagram users (influencers) to promote or use a company’s products or services in posts. However, some of these Instagram accounts have fake followers and have even identified ways to demonstrate fake engagement (i.e., interaction with the accounts via likes, comments, etc.).  This makes it difficult for marketers to be sure that their $1.4 billion in spending is reaching real consumers – Instascreener indicated as much as $255 million was spent on Instagram accounts with fake followers.  Imagine if Fox were able to inflate the number of viewers for the Super Bowl to convince companies to pay more for its ads?While I’m sure all of that is disheartening, I can recommend one Instagram account that is not being paid for its posts: https://www.instagram.com/schneider_downs/.  If you see the latest pocket protector, Ticonderoga© #2 pencil, or Swingline© stapler in any of those posts, you can rest assured it is because the folks in those pictures actually use them and are not recruiting fake followers to our highly influential Instagram page to sell these products. BigRobStyleRobert Gorodetsky, known as “BigRobStyle” on social media, was recently charged with fraud for allegedly stealing $9.6 million from one victim.  According to prosecutors, Mr. Gorodetsky promised significant returns on the $9.6 million, but lied about how he would use the money and then lied about the actual returns.  Instead, the money was allegedly spent on living, travel, and entertainment expenses.Mr. Gorodetsky had been previously profiled by USA Today regarding his “unique” sports gambling, which apparently involved his gut more than any specific analysis and making massive $100,000 bets (even betting $1.5 million in a single day).Reading this story reminded me that wealth management should probably not be done with someone who is known as “BigRobStyle.”  Rather, I suggest working with a wealth manager who is a Registered Investment Advisor (RIA) with the SEC and who has a fiduciary duty to act in the best interest of his or her clients (https://www.sdwealthmanagement.com/).Hoverboarding Dentist  Seth Lookhart, an Anchorage, Alaska dentist, was recently found guilty of “unlawful dental acts,” reckless endangerment, and Medicaid fraud.  What constitutes an unlawful dental act?  Dr. Lookhart performed a dental procedure on a sedated patient while riding a hoverboard and, of course, videotaped it and sent the video to friends.The hoverboarding video apparently led to additional scrutiny, and investigators also found that he committed Medicare fraud by needlessly sedating patients and charging Medicaid $10,000 for the procedures.What to make of this?  Well, be on the lookout for any hoverboards on your next trip to the dentist.  And if you find one, should you worry that the dentist is committing Medicaid fraud?  Is there a correlation between hoverboard riding dentists and fraud?  Causation?  For now, the sample size is way too small (thank goodness) to make any conclusion, but I’m sure if any statistically valid trends start popping up, Schneider Downs’ analytics team will be all over it (https://schneiderdowns.com/data-analytics).If you need assistance with assessing or responding to fraud within your organization, please contact us at contactsd@schneiderdowns.com. For similar articles, visit Schneider Downs’ Our Thoughts On blog.  ### Exempt Organizations: Do We File Schedule B or Not? As the 2019 tax filing season commences, preparers and payers alike are still getting a handle on the latest particulars related to tax reform and other tax law modifications. One change of note for tax-exempt organizations is the new requirement to file Schedule B, Schedule of Contributors, together with their Form 990, Return of Organization Exempt from Tax. Prior to 2018, Schedule B was required to be filed by all tax-exempt organizations if donations in aggregate of $5,000 or more were received from an individual donor. The Schedule includes the name, address and gift amount of each donor that meets the reporting threshold. All information on an organization’s Form 990 is public knowledge, except for this donor information.Starting with the 2018 Form 990, however, the IRS repealed donor disclosure rules for all organizations except 501(c)(3) and 527 political groups through Revenue Procedure 2018-38, which indicated that all organizations must accumulate and document donor information, but need not report the names and addresses of donors on their information return. Shortly after the Rev. Proc. was issued, Montana’s Department of Revenue filed a lawsuit against the IRS, claiming the Rev. Proc. didn’t follow proper notice and comment procedure, as required by the Administrative Procedure Act (APA). In March 2019, Montana was joined in the lawsuit by Gurbir Grewal, New Jersey’s Attorney General.Both states claimed “information injury” because they gather donor information based on what an organization provides to the IRS on Schedule B. This includes the use of the information to identify political or controversial donors. The IRS responded that states are not legally entitled to this information. In July 2019, Judge Brian Morris of the Montana District Court sided with Montana and New Jersey’s arguments with respect to the fact that they, as well as others, were not given the opportunity to comment on Rev. Proc. 2018-38.Following the court decision, the IRS issued on September 10, 2019 proposed Reg-102508-16, which included guidance on proposed changes to donor disclosure requirements and allowed for the APA notice and comment period through December 9, 2019. Although Reg-102508 is not yet final in the Federal Register, under section 7805(b)(7), taxpayers may choose to apply these rules to returns filed after September 10, 2019. The 2019 Schedule B instructions also point to the proposed regulations.If an organization filed its 2018 Form 990 after July 30, 2019 but prior to September 10, 2019 and did not disclose donor information, it can refer to Notice 2019-47, which provides penalty relief to affected organizations who filed their returns relying on the Schedule B changes under Rev. Proc. 2018-38.If you have any questions on the applicability of Schedule B to your organization, please contact any of our exempt organization experts. We’ll post further updates as they become available. ### Are You Ready for Your Big Game? Wait, what Super Bowl?  Didn’t chances for our Super Bowl end sometime in the second quarter of Week Two?  Well, while that may have been arguably true for the Steelers, I was talking about your Super Bowl, not the local football team’s.You know, your Super Bowl. The day you take your business – something you’ve spent a lifetime building and cultivating; blood, sweat, tears, the whole nine yards – and decide it’s time to ride off into the sunset (or, as Coach Noll would say, “Get ready for your life’s work”.)  Are you ready for your life’s work?  What will become of the business?  Those are fairly weighty questions, so we’ll give you some things to consider as you ponder the answers.A majority of owners have a substantial portion of their net worth locked up in their business.  For many, that could mean 70% or more of personal wealth is tied up in the company, and the thought of parting ways with that in any manner can be intimidating.  What transactional options do you have?  What are the tax, estate and cash flow implications?  Will you have sufficient liquidity to retire in the manner in which you and your family have grown accustomed?  What are the pros and cons of these exit options and how do each align with your goals and objectives?  What is your business worth and how do you de-risk and maximize enterprise value?These are all valid questions when you consider that 60% of owners don’t have a formal exit and succession plan despite being 10 years or less away from planned retirement.  Additionally, less than half of owners have completed a formal valuation of the business in the past three years, even though receiving “full value” is often a primary goal on most exit transactions.Maybe you have family in the business and need to address gifting, trust, estate or potential generational transfer/sale considerations.  Maybe you have a management group that would be interested in taking on the risks and rewards of ownership.  Or, it’s possible you’d like to understand if a transition to an ESOP would be a good fit.Maybe you’re more outwardly focused and would consider a sale to a strategic buyer, competitor or private equity.  Perhaps the lure of the capital markets has you considering a public offering.  Regardless of the underlying transaction options that may exist, understanding how to identify and build key value factors to maximize enterprise and transaction value is paramount to any owner’s goals and objectives.Despite the fact that exit and succession planning is simply good business strategy, many owners procrastinate, allowing for the possibilities of death, disability, divorce and disagreement to cripple their Super Bowl run.  They’ll point to the many obstacles that keep them from moving forward with succession planning, including not being aware of different exit options and their implications; no urgency; too busy working in the business (and not enough working on it); inability to develop and execute a plan; or failure to develop adequate workforce successors.  For certain family businesses, owners might put things off as a means to avoid dealing with obstacles and issues unique to the family.Overall, many owners struggle with overcoming the hurdles of understanding the transferable worth of the business, growing enterprise value and developing and executing an exit and succession plan, which is a primary reason that only 20% of privately held businesses available for sale each year actually sell.  So whether you and your business are Super Bowl bound, or just trying to avoid a 7-9 season, Schneider Downs Exit Planning and Succession Advisors are ready to understand your goals and objectives, and provide holistic, customized and innovative solutions. ### SECURE Act: Treating Excluded Difficulty of Care Payments as Compensation for Determining Retirement Contribution Limitations Many home healthcare workers do not have taxable income because their only compensation comes from “difficulty of care” payments that are exempt from taxation under Internal Revenue Code Section 131. As such, these payments are also not eligible to be contributed to an IRA or a qualified retirement plan. “Difficulty of care payments” is defined in Code Section 131(c)(1)(A) as “compensation for providing the additional care of a qualified foster individual.” In other words, if you provide care in your home to an individual who has a physical, mental or emotional handicap, including payments received for caring for foster children, the income you receive is excluded from taxable income. Now, however, under Section 116 of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, home healthcare workers are able to contribute to an IRA or qualified retirement plan because the provision amends Code Sections 415(c) and 408(o) to state that tax-exempt “difficulty of care payments” are treated as compensation for purposes of calculating the contribution limits to DC plans and IRAs. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### Technology in Construction: How Modern Developments are Transforming the Industry It is no secret that with continual advancements in technology, the methods by which companies are improving their efficiency, effectiveness and productivity are becoming increasingly focused on technology. By definition, construction is the formation of something new by combining or arranging parts and elements by using suitable instruments under specified conditions. Accordingly, the construction industry in particular holds a unique opportunity to benefit from new developments in technology. With rising challenges such as the shortage of skilled labor, efficient work flow and design, sustainability with rising costs, and effective risk management, more and more construction companies are looking toward the implementation of new technology as a potential solution.            Investments in construction technology have doubled in the past decade, according to the McKinsey Global Institute, with an industry-wide investment of nearly $10 billion from 2011 to 2017. Recent results also point to a greater emphasis on technology invested in the preconstruction and back-office phases of construction. This trend is most likely the result of investors’ desire to focus investment on the stages of the construction cycle that hold the most project value. The increasing popularity of using prefabrication to assemble components off-site and Building Information Modeling (BIM) continues to yield new benefits to productivity and efficiency, including a greater ability to shelter components from adverse weather conditions, decreased influence of external factors, the opportunity to minimize waste, and ultimately, a better quality of production. The development and expansion of BIM capability also continues to provide possibilities for construction companies to more efficiently plan, design and manage infrastructure in the early stages of projects. Furthermore, the use of BIM has been shown to yield better collaboration and communication, more accurate job costs estimates, increased on-site productivity, and the mitigation of risk throughout the project sequence.            One of the single greatest challenges in the construction industry is the growing shortage of labor and availability of skilled workers. According to the U.S. Labor Bureau, as of April 2019 there were approximately 434,000 vacant construction jobs in the United States, forcing contractors to pay subcontractors higher wages, and causing delays in the timelines for completion of scheduled work. Moreover, construction costs increased an average of 4.84% in 2019, after an increase of nearly 5.86% in 2018, which can mainly be attributed to the shortage in availability of skilled labor, according to the Turner Building Cost Index. In an effort to combat the effects of labor shortage on productivity, contractors are beginning to explore new alternatives centered on technology, such as the use of robotics, automation, smart contracts and risk evaluation software, and real-time device monitoring. While still at an early stage of development, many of these new technologies hold the potential to rapidly evolve within the construction industry over the next several years.                Is technology worth the investment? According to the 2019 Construction Technology Report published by JBKnowledge, 46.7% of construction firms are still investing less than 1% of annual sales volume in technology, with the remaining 53.3% investing anywhere from 2%-7% of annual sales. On the contrary, venture capital firms invested a collective $3.1 billion in construction technology in 2018 alone, with the majority of the funds directed towards construction software, modular housing, process optimization, and improvements in project management. Even so, the challenges currently facing the industry are not likely to dissipate in the short term, and contractors will have to continue to adapt and embrace new ways of confronting these challenges in order to survive. The integration of new construction technology is merely one of the tools to be taken advantage of in an age of increasing demand and decreasing workforce.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Sources:https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/seizing-opportunity-in-todays-construction-technology-ecosystemhttps://www.ny-engineers.com/blog/2019-technology-trends-in-the-construction-industryhttps://connect.bim360.autodesk.com/benefits-of-bim-in-constructionhttps://www.forbes.com/sites/columbiabusinessschool/2019/07/31/the-construction-labor-shortage-will-developers-deploy-robotics/#5d54fc1b7198http://www.turnerconstruction.com/cost-indexhttps://jbknowledge.com/wp-content/uploads/2019/12/2019-JBKnowledge-Construction-Technology-Report.pdf ### SECURE Act: Stipends Treated as Compensation Several provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) pertain to IRAs. One of these affects stipends and non-tuition fellowship payments received by graduate and post-doctoral students. Prior to 2020 and the passage of the SECURE Act, these stipends, grants and benefits paid to aid a student in the pursuit of post-graduate study or research were not treated as compensation for purposes of making IRA contributions, since such contributions are only allowed to the extent that the taxpayer has sufficient compensation (i.e., earned income). Section 106 of the SECURE Act expands the definition of compensation so students may now begin saving for retirement earlier in their careers. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. ### SECURE Act: Special Disaster-Related Rules for Use of Retirement Funds The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes special disaster-related rules for the use of retirement funds. New provisions provide temporary relief to taxpayers whose principal residence lies in an area affected by certain qualified major disasters, as well as to disaster relief workers and certain others impacted by catastrophe. This includes reprieve from the 10% early withdrawal penalty typically assessed when taking a qualified disaster relief distribution. The relief applies to up to $100,000 of distributions from employer-sponsored retirement plans and IRAs, provided the distributions are taken within six months of the passage of the SECURE Act (that is, by June 19, 2020). Distributions may be subsequently repaid into a qualified plan or IRA, while those distributions not repaid may be taken into income ratably over a three-year period. Individuals may also repay hardship distributions for cancelled first-time home purchases due to a qualified disaster. The SECURE Act also makes additional plan loan amounts available to participants whose principal residence sustains an economic loss by reason of a covered disaster. Plan loans have typically been limited to no more than $50,000, but the SECURE Act increases this limit to $100,000 for qualifying participants. The Act also extends for one year (or, if later, until June 17, 2020) the due date of any qualified individual’s loan repayment that would otherwise be due during the period beginning on the date of the disaster and ending (180) days after the last day of the disaster. Lastly, the SECURE Act provides an automatic extension of certain filing deadlines for individuals and employers affected by disasters. The extension applies to filing returns and paying taxes, making contributions to qualified plans and IRAs, withdrawing excess IRA contributions and completing rollovers. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. ### SECURE Act: Lifetime Income Options (Sections 109, 203 and 204) Employer-based retirement systems have moved away from traditional pension plans that provide a lifetime stream of annual or monthly payments, which has led to concerns that employees approaching retirement may not be adequately prepared to face a lack of consistency in their month-to-month income. To help counteract this trend, the SECURE Act includes several provisions that encourage both employers and participants to take advantage of lifetime income options, including new income portability design features, new participant disclosure requirements, and safe harbor guidelines for the selection of a lifetime income provider. Effective for plan years beginning after 2019, the SECURE Act provides for an exception to any limit on in-service distribution options if a lifetime income option is no longer available under a plan. In those cases, the plan can allow distributions to another employer retirement plan or individual retirement account, or may allow distributions of a lifetime income investment in the form of a qualified annuity if the distribution is made within the 90-day period following the date the lifetime income investment is no longer an option under the plan. Upon the issuance of applicable guidance from the Department of Labor, employers must include, in at least one participant benefit statement issued during any 12-month period, a lifetime income disclosure, the purpose of which will be to provide an estimate of what the participant could receive from the plan if their benefits were paid in the form of an annuity. Lastly, under the rules and regulation of ERISA, plan fiduciaries must prudently select and monitor plan investment options. While existing regulations provide a safe harbor with respect to the selection of an annuity provider, the SECURE Act specifies optional steps that a plan fiduciary may take in selecting an insurer in order to fulfill ERISA requirements. The prudent steps include engaging in an objective search for potential insurers, evaluating the costs of the contract and concluding that the insurer is financially capable of meeting its obligations and that the costs are reasonable. This safe harbor will limit the potential exposure faced by plan fiduciaries when selecting a lifetime income provider. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Increase in Penalty for Failure to File (Section 402) The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) contains a provision that increases penalties for failure to file federal tax returns in a timely manner. The change applies to returns that are due beginning in 2020, including any extensions, which means these enhanced penalty amounts apply to 2019 returns. Under prior law, the penalty for filing a late federal tax return was the lesser of 5% of the unpaid taxes or $330 for each month the tax return was late, subject to a total cap of 25% of the unpaid taxes. With Section 402 of the SECURE Act, the minimum monthly penalty increases to the lesser of 5% of the unpaid taxes or $435, subject to adjustment for inflation in future years. Added to the SECURE Act as a revenue raiser, this provision will not be welcomed by taxpayers. Fortunately, the change impacts only the minimum monthly penalty for late filing and not the aggregate cap of 25% of any taxes due. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Rules Relating to Election of Safe Harbor 401(k) Status (Section 103) The Setting Every Community Up for Retirement Act of 2019 (SECURE Act) contains a provision that gives employers more flexibility surrounding the election of safe-harbor status. Under prior law, a 401(k) plan sponsor electing safe harbor status was required to send out a notice to all participants before the beginning of the plan year in which the election would be effective. The SECURE Act eliminates this notice requirement for non-elective safe harbor plans – that is, plans that provide safe harbor contributions in the form of a profit-sharing contribution rather than a matching contribution. The safe harbor notice requirement still applies to plans using the matching contribution safe harbor. The SECURE Act also allows plan sponsors to make a retroactive election to add non-elective safe harbor provisions after a plan year has started. Effective for plan years beginning after December 31, 2019, an election to provide a traditional 3% non-elective safe harbor contribution must be made no later than 30 days before the end of the plan year to which the election will apply. Further, if the amount of the contribution is at least 4% of compensation, the safe harbor election may be made as late as the end of the next following plan year. These changes add some much-needed flexibility to 401(k) plan administration, as they eliminate the need for plan sponsors to make decisions about safe harbor status before knowing whether the safe harbor election will even be necessary. For plan years beginning after December 31, 2019, employers will have the option of waiting to see whether the plan satisfies ADP nondiscrimination testing before deciding to make a non-elective safe harbor contribution. If, near the end of the plan year, the plan is anticipated to fail ADP testing based on current contribution levels, employers will now have four choices: (1) distribute excess deferrals to highly compensated employees as necessary to pass the ADP test, as under prior law; (2) make a qualified non-elective contribution to the non-highly compensated employees; (3) make a safe harbor contribution of 3% of compensation and elect safe harbor status no later than 30 days before the end of the plan year; or (4) wait until after the plan year has ended, then elect to make a safe harbor contribution of 4% of compensation or more. ### SECURE Act: Qualified Employer Plans Prohibited from Making Loans Through Credit Cards and Similar Arrangements The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes a provision that prohibits the distribution of plan loans through credit cards or similar arrangements. In recent years, some plan administrators have begun allowing participants to link a credit or debit card to their 401(k) account, with any purchases made using the card taken as a loan against their 401(k) balance. While plan loans are generally permitted for any purpose provided the terms and amount of the loan fall within prescribed limits, the use of credit cards has raised concerns that such easy access to plan loans could lead participants to deplete their retirement savings by making small or routine purchases. The prohibition on the use of credit cards, which applies to loans from all qualified plans, takes effect immediately. Any future purchases made with a credit card linked to a retirement plan account will be treated as a taxable distribution rather than a loan, which could in turn trigger additional qualification failures if the participant was not eligible for an immediate distribution at the time the purchase was made. Plans with a credit card program in place should take immediate steps to deactivate the cards and notify participants how to take plan loans through other means. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. ### SECURE Act: Pension Funding Relief for Community Newspaper Plans The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes a provision that provides welcome relief to sponsors of pension plans in the family-owned, non-publicly traded independent community newspaper industry. While such plans represent only a small segment of the retirement plan network, some note that issues within the industry are a reflection of funding issues faced on an annual basis by many pension plan sponsors. For instance, sponsors of defined benefit pension plans are required to make contributions based on the presumed future assets and liabilities of the plan, calculated on the basis of certain actuarial assumptions. Under the new provisions of the SECURE Act, community newspaper pension plans are permitted to increase the assumed interest rate used to calculate their funding obligations from 7% to 8%. In conjunction, the legislation also provides an extension of the shortfall amortization period from seven years to 30 years, though the change is only allowed for plans that have no increases in accrued benefits after December 31, 2017. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. ### SECURE Act - Part-Time Employee Participation The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes a provision that would require 401(k) plans to cover certain part-time employees who were previously excludable. Under prior law, 401(k) plans were permitted to exclude employees who failed to complete at least 1,000 hours of service in a 12-month eligibility period. Section 112 of the SECURE Act provides that, for plan years beginning after December 31, 2020, 401(k) plans must also cover part-time employees who completed at least 500 hours of service each year for three consecutive years and are age 21 or older. The provision also stipulates that service prior to January 1, 2021, is not counted for purposes of this new rule, meaning that January 1, 2024, is the earliest anyone could qualify for participation under the new regulation. An employer may elect to exclude these participants from safe harbor contributions, nondiscrimination testing, and top-heavy requirements, but if the employer provides matching or non-elective contributions, participants must be credited with a year of vesting service for each year in which they complete more than 500 hours of service. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Multiple Employer Plans and Pooled Employer Plans Among the more significant retirement plan-related changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) are new provisions that expand the ability of small employers to pool together into a single plan. Historically, many small employers have been deterred from establishing retirement plans due to the hefty costs required to set up and maintain a plan that may cover only a few employees. One potential solution has been to pool multiple employers together under a single multiple employer plan, or MEP, which has the dual effect of reducing administrative fees payable by each participating employer as well as giving the plan leverage to negotiate lower fees with investment providers. Prior to passage of the SECURE Act, MEPs have seen only limited success in the marketplace because of certain legal restrictions on MEP maintenance and operation. Under a “common interest” rule, employers participating in a MEP were required to share an interest in common with fellow participants other than mere participation in the plan. To comply with this requirement, MEPs have generally been offered only to limited groups of employers, such as members of a common industry group or employers located within a narrow geographic area. In addition, employers participating in a MEP have historically faced additional risk of tax penalties due to the so-called “one bad apple” rule, under which the tax qualification of the entire MEP could be compromised if even one participating employer failed to take actions necessary to maintain the tax-qualified status of the plan (such as passing applicable nondiscrimination tests or the timely adoption of a required plan amendment). The SECURE Act seeks to expand the adoption of MEPs in two ways. First, a new category of plan referred to as a pooled employer plan, or PEP, is created. PEPs are similar to MEPs, except that they’re not subject to the common interest rule. Thus, a single pooled plan provider may now establish a plan that is permitted to cover any employer in any industry group nationwide. Second, the SECURE Act also eliminates the “one bad apple” rule. Employers participating in a MEP or PEP no longer have to worry that the tax-qualified status of the plan will be jeopardized due to the actions of other participating employers. In the event a given employer fails to take action to maintain the tax-qualified status of the plan, the MEP or PEP provider will have the ability to segregate the assets of the plan attributable to that employer into a separate trust or account to ensure that only that employer, and no other participating members of the plan, will be liable for any associated tax penalties or other costs of correction. These provisions become effective for plan years beginning after December 31, 2020. Stay tuned for additional updates on the rollout of MEPs and PEPs, as additional guidance on these provisions is likely to be published during 2020. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE ACT: Modification of Nondiscrimination Rules to Protect Older, Longer-Service Participation The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes provisions that grant nondiscrimination testing relief for certain frozen defined benefit (DB) pension plans. Under current law, all retirement plans are required to pass nondiscrimination tests to maintain their tax qualification status. However, in cases involving closed or “frozen” DB plans where no new entrants are accepted, it can become difficult to pass such testing due to long-term participants becoming older and earning higher wages. Section 205 of the SECURE Act creates a safe harbor, deeming frozen DB plans as automatically passing benefits, rights and features testing and the minimum participation rule as long as the plan passed the test in the year it was frozen and the two succeeding years. The SECURE Act also allows closed DB plans to be tested with a DC plan that includes a match or ESOP feature. These modifications will protect the benefits of older participants as they near retirement by allowing them to continue to accrue benefits. The provision became effective December 20, 2019; affected plans may be amended at any time to incorporate the new safe harbor testing relief. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### Maze Ransomware The recent spread of ransomware has kickstarted many companies into reevaluating their current cybersecurity maturity. It has come to be generally accepted that appropriate investment in offline backups will render most ransomware attacks ineffective. The victim may still spend time and money investigating how the infection started, if and what data was exfiltrated, and how to prevent a future incident, but in the end, access to the data is not lost.Criminals have realized that for their malware campaigns to remain effective in today's cyber landscape, they must constantly evolve their tactics and techniques. New techniques include a data exfiltration step as part of the ransomware infection. If the ransom is not paid, the attackers threaten to release the victim’s data onto the public internet. While variants of ransomware have made these threats in the past, a new ransomware known as Maze has become the first to actually publish data from alleged victims.The Origins of MazeThe Fallout exploit kit first appeared for sale in September 2018, with a good deal of interest from the cyber crime community. An exploit kit is a way to automatically and silently exploit a victim's computer, and is often placed within a compromised website. When a user visits the site, the kit scans for any vulnerable browser-based applications that it can exploit. If the system is patched, it may attempt a social engineering attack on the user. Maze infected its first victim in October of 2019, having been spread by the Fallout exploit kit, hacked RDP connections, and phishing campaigns impersonating government employees.The original Fallout Exploit Kit thread. There were over 125 replies of interested buyers. How Maze WorksAfter gaining access to the machine, the attackers export any data they want and drop the ransomware portable executable on the computer. Following data exfiltration, the ransomware executable first deletes any backups that are stored on the computer and then encrypts all files with the ChaCha algorithm. Finally, it re-encrypts the ChaCha keys with RSA-2048, and appends each file with a random extension. A simple text file named “DECRYPT-FILES.txt” providing instructions for contacting the Maze organization is placed in each of the directories. This sequence of operations renders the data impossible to decrypt without paying the attacker.Minutes after the portable executable runs, the user’s desktop background is changed with an explanation of what happened.The ransom note that is dropped in all the user directories.Each user is given a url with a unique path that corresponds to the victim. The website contains five different tabs.A live chat to negotiate with the criminals.The site allows for three image files to be decrypted.Exchanges where the victim can purchase bitcoins.Links to news articles about the ransomware. Impact of Maze Maze is unique in following through with the public announcement of companies that have not paid the ransom. As of Janurary 27, more than twenty five companies have been named as not paying. The operators of Maze have also listed the date the ransomware attack occured, IPs/names of the locked computers, and several files for proof such as revenue statements, account balances, service agreements, etc. None of the ten companies have made a public statement declaring a breach. The Maze shaming website. Schneider Downs recommends that all organizations doing business with any of the listed companies perform a risk assessment to determine if the breach could impact their own operations. A proof file containing a list of deposits. Nondisclosure of a data breach involving personally identifiable information (PII) can result in lawsuits, fines, and even jail time for American companies and their Boards. For countries that fall under GDPR, fines can exceed 20 million Euros. Although pay the ransom may reduce the likelihood of Maze releasing stolen data publicly, most privacy regulations still require organizations disclose the breach of PII by a criminal organization. There is currently no indication that Maze has stolen PII from any of its alleged victims. Detecting Maze The following indicators of compromise (IOCs) can be used to detect activity related to the precense of Maze malware. File Characteristics: SHA256 - 91514e6be3f581a77daa79e2a4905dcbdf6bdcc32ee0f713599a94d453a26fc1 SHA1 - 49cdc85728bf604a50f838f7ae941977852cc7a2 MD5 - 8205a1106ae91d0b0705992d61e84ab2 Connections (All Russian Servers): 91.218.114.4 91.218.114.26 91.218.114.11 91.218.114.31 91.218.114.25 91.218.114.37 91.218.114.32 91.218.114.38 91.218.114.79 91.218.114.77 Registry Edits: HKEY_LOCAL_MACHINESOFTWAREMicrosoftTracing1473359_RASMANCS HKEY_LOCAL_MACHINESOFTWAREMicrosoftTracing1473359_RASAPI32 HKEY_CURRENT_USERSoftwareMicrosoftWindowsCurrentVersionInternet Settings HKEY_CURRENT_USERSoftwareMicrosoftWindowsCurrentVersionInternet SettingsConnections HKEY_CURRENT_USERSoftwareMicrosoftWindowsCurrentVersionInternet SettingsZoneMap HKEY_CURRENT_USERSoftwareMicrosoftSpeechCurrentUserLexicon HKEY_CURRENT_USERSoftwareMicrosoftSpeechPhoneConverters HKEY_CURRENT_USERSoftwareMicrosoftWindowsCurrentVersionShell ExtensionsCached HKEY_CURRENT_USERSoftwareMicrosoftWindows NTCurrentVersionTaskManager How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We’re an authorized reseller of both Mimecast® and Carbon Black and offer comprehensive Digital Forensics and Incident Response services. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### IRS Open for Business New year, new decade, new tax season. Opening day for 2020 filing was Monday, January 27, two calendar days earlier than last year. Individual taxpayers have until Wednesday, April 15, to file 2019 returns without an extension.The IRS is expecting more than 150 million individual tax returns to be filed this year.  Commissioner Chuck Rettig encourages taxpayers to utilize IRS resources to ease the process. “Taxpayers should know that the dedicated workforce of the IRS stands ready to help,” says Rettig. “We encourage taxpayers to plan ahead and use the tools and information available on www.irs.gov. The IRS and the nation's tax community are committed to making this another smooth filing season.”Rettig also encouraged all to consider filing electronically and choosing direct deposit. “It's fast, accurate and the best way to get your refund as quickly as possible.”Please contact your Schneider Downs tax professional with any questions you may have about this topic or any other tax planning matters.  ### Guidance Provided for Organizations Claiming Credit for UBIT Paid on Repealed Tax On December 20, H.R. 1865 - Further Consolidated Appropriations Act, 2020 was signed into law, retroactively repealing Code §512(a)(7) of the Internal Revenue Code, which had imposed an unrelated business income tax on qualified transportation fringe benefits provided to employees of tax-exempt organizations. The tax had gone into effect January 1, 2018.Organizations impacted by the enactment of the code have potentially reported UBIT on their 2017 and 2018 Forms 990-T, Exempt Organization Business Income Tax Return. Since the repeal, those affected organizations and practitioners have been awaiting guidance on how to claim refunds or credits for the taxes paid.Finally, that day has come. On January 21, the IRS released guidance on claiming refunds and advised filers to amend their 2017 and 2018 returns. Specific instructions are provided in the guidance.Please contact Schneider Downs with any questions regarding this update; we’ll post further updates on our website as they become available.  ### SECURE Act - Treatment of Custodial Accounts on Termination Of Section 403(b) Plans The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes a provision that makes it easier for plan sponsors to terminate a 403(b) plan. Contributions to a 403(b) are typically held in one of two types of annuity contract: a group contract, issued in the name of the plan to hold assets attributable to multiple plan participants, or an individual contract, issued in the name of an individual participant. Assets held under an individual contract are effectively beyond the control of the plan administrator, particularly in the case of former employees, who may have transferred the assets to a different provider. Terminating a 403(b) has historically been challenging for plans utilizing individual contracts. Because a plan is not considered formally terminated until all assets have been distributed, sponsors of a terminated 403(b) faced the risk that until all holders of individual contracts have been identified and provided with distribution paperwork, the plan might still be treated by the IRS as an ongoing plan that remains subject to applicable reporting rules and other administrative burdens. Section 110 of the SECURE Act directs the Department of the Treasury to issue regulations providing that in the case of a terminated 403(b) plan, any holder of an individual contract would be treated as having received a distribution of their account for purposes of effectuating the termination of the plan. Guidance is to be published within six months of the passage of the SECURE Act and would be retroactive as far back as 2008. This change comes as welcome news to sponsors of 403(b) plans. Keep an eye out for further updates when the Treasury guidance is released. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Increase in Penalty for Failure to File (Section 402) The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) contains a provision that increases penalties for failure to file federal tax returns in a timely manner. The change applies to returns that are due beginning in 2020, including any extensions, which means these enhanced penalty amounts apply to 2019 returns.Under prior law, the penalty for filing a late federal tax return was the lesser of 5% of the unpaid taxes or $330 for each month the tax return was late, subject to a total cap of 25% of the unpaid taxes. With Section 402 of the SECURE Act, the minimum monthly penalty increases to the lesser of 5% of the unpaid taxes or $435, subject to adjustment for inflation in future years.Added to the SECURE Act as a revenue raiser, this provision will not be welcomed by taxpayers. Fortunately, the change impacts only the minimum monthly penalty for late filing and not the aggregate cap of 25% of any taxes due.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Combined Annual Report for Group of Plans The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes provisions that would permit certain retirement plans to file Form 5500 annual reports on a consolidated basis.Section 202 directs the IRS and Department of Labor to develop consolidated filing procedures for groups of similar plans. Consolidated filing will be available to defined contribution plans that have the same trustee, fiduciary, plan administrator, plan year and investments or investment options. Governmental or church plans may be included if the same person completes the filing.The change will reduce administrative costs involved in completing and filing Form 5500s, making it easier for smaller employers to sponsor a retirement plan. The new consolidated filing procedures will not become effective until guidance is published by the IRS and Department of Labor; stay tuned for further updates.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice ### SECURE Act: Church-Controlled Organizations: Clarification of Retirement Income Account Rules Under the Secure Act Section 111 of the Setting Every Community Up for Retirement Enhancement (SECURE) Act clarifies who may be covered under retirement plans that are maintained by church-controlled organizations. But what exactly is a “church-controlled organization?”According to the IRS, church-controlled organizations can be considered either qualified or nonqualified. A qualified church-controlled organization (QCCO) is also considered to be a church-controlled 501(c)(3) tax-exempt organization, and typically does not offer any type of services or goods for sale to the public. They have less than 25% of all financial support coming from government grants or from goods and services that derive from business activity. Examples of QCCOs are seminaries, General Assembly agencies and entities, churches, and church-related primary and secondary schools.A nonqualified church-controlled organization (NQCCO) refers to a tax-exempt organization that offers goods, services and facilities for sale. They’ll normally have more than 25% of all revenue coming from government sources or the sale of goods or services. Examples of NQCCOs are church-affiliated hospitals, universities, children’s homes and retirement housing facilities.Before the enactment of the SECURE Act, the IRS opined that certain NQCCOs – including church-related nursing homes, daycare centers, summer camps, preschools, colleges, universities, hospitals and other social service organizations – shouldn’t sponsor church retirement income plans under Section 403(b)(9) of the Internal Revenue Code. As a result, employees of these NQCCOs stood to lose access to such plans.The SECURE Act clarifies who may be covered under plans maintained by church-controlled organizations. It includes the following: Duly ordained, commissioned or licensed ministers, regardless of the source of compensation; Employees of tax-exempt organizations controlled by or associated with a church or a convention or association of churches; and Certain employees who separate from service with a church, a convention or association of churches or an organization described above. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Benefits for Volunteer Firefighters and Emergency Medical Responders Back in 2007, the Volunteer Responder Incentive Protection Act (VRIPA) was enacted, exempting property tax benefits and up to $600 per year of other incentives that volunteer fire and EMS personnel receive as reward for their services from being subject to federal income tax and reporting requirements. VRIPA became law in 2008, but expired at the end of 2010. Section 301 of the Setting Every Community Up for Retirement Enhancement (SECURE) Act reinstates for one year (the 2020 tax year) the exclusions for qualified state or local tax benefits and qualified reimbursement payments provided to members of certified volunteer emergency response organizations, and increases the exclusion for qualified reimbursement payments to $50 for each month during which a volunteer performs services. These provisions are included in the underlying Protecting Volunteer Firefighters and Emergency Responders Act. Pennsylvania congressman Mike Kelly was one of two bipartisan cosponsors of a standalone VRIPA bill (H.R. 1241), introduced in the House of Representatives in February to make these benefits permanent. The National Fire Protection Association (NFPA) is hoping that enactment of the SECURE Act will improve the chances of getting the bill passed in Congress. NFPA estimates the value of services provided by volunteer firefighters in the U.S. at approximately $46.9 billion annually. Interested in learning more about the SECURE Act? Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Increase in Cap for Automatic Enrollment for Safe Harbor Plans The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes a provision that impacts 401(k) plans that utilize the automatic enrollment safe harbor.Under prior law, 401(k) plan sponsors could elect to use a safe harbor design that incorporates automatic enrollment and automatic escalation provisions. Prior to the SECURE Act, plans were permitted to increase participants’ contribution rates over time, up to a maximum of 10% of compensation. Section 102 of the SECURE Act increases this limit to 15% of compensation.As under prior law, any automatic increases are made annually at the beginning of the plan year and participants are allowed to opt out of the increase.The increase in the maximum contribution rate, which is effective for plan years beginning after December 31, 2019, is optional. Sponsors of automatic enrollment safe harbor plans who wish to increase the maximum contribution rate above 10% of compensation may amend their plans to incorporate this change.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### Proposed Regulations Issued on Source of Income for Certain Sales of Personal Property The Treasury Department and Internal Revenue Service recently released proposed regulations (REG-100956-19) that modify the rules for determining the source of income from sales of inventory produced within the United States and sold outside of the United States. The rules are important to both U.S. residents and non-residents.ResidentsSection 863 provides rules for determining the source of income, including income derived from sales of inventory produced partly within and partly outside of the United States.Before the Tax Cuts and Jobs Act 2017 (TCJA), the income from the sale or exchange of inventory property produced (in whole or in part) by a taxpayer within the United States and sold or exchanged abroad, or vice versa, would be treated as derived partly from sources within and partly from sources outside of the United States. However, the pre-TCJA rules did not provide the basis for such allocation or apportionment.The TCJA amended Section 863 to allocate or apportion income from Section 863 sales based solely on production activities. The new rules represent significant change especially for U.S. taxpayers operating in a cross-border environment. Thus, the income from the sale or exchange of inventory property is now allocated based only on production activities with respect to that inventory.Non-residentsThe regulations propose new rules for determining the source of income from sales of personal property (including inventory) by nonresidents that are attributable to an office or other fixed place of business that nonresidents maintain in the United States. Moreover, regulations introduce a change to the rules for determining whether foreign-source income is effectively connected with the conduct of a trade or business within the United States. For instance, the regulations adopt the “50/50 method” as the default rule for allocating income from IRC Section 865(e)(2) – sales between sales and production activities – but permit taxpayers to elect to use a modified “books and record” method.ConclusionFederal Register published proposed regulations on December 30, 2019. The proposed regulations apply to tax years ending on or after December 23, 2019. Additionally, taxpayers have an option to rely on the rules in the proposed regulations for tax years beginning after December 31, 2017.The application of the proposed regulations could change the amount of foreign-source income and the amount of foreign tax credits. The taxpayers should assess the impact of the proposed regulations changes to determine if they should be applied before regulations are finalized. ### What is More Beneficial for Professional Service Organizations: Accrual Basis or Cash Basis Financial Statements? One of the most important decisions management of a professional service organization needs to make as it relates to their financial statements is the reporting method that will be followed.  Most professional service organizations elect to report their financial statements on the accrual basis of accounting which is in accordance with accounting principles generally accepted in the United States of America (GAAP); however, some professional service organizations report on a cash basis (either a modified cash basis or a pure cash basis). The following are the three largest advantages and disadvantages of reporting financial statements on a cash basis.                The largest advantage of reporting on the cash basis of accounting is that new accounting standards will not have a significant effect on the organization’s financial statements. The Financial Accounting Standards Board (FASB) issues accounting standards updates (ASUs) on a regular basis that are effective for GAAP basis reporting entities; however, these standards rarely apply to cash basis reporting entities. Time and resources are needed to implement new ASUs; therefore, if an organization is reporting on a cash basis, the additional costs are not incurred and additional resources are not needed. A second advantage of reporting on the cash basis of accounting is that it allows a user of the financial statements to depict a more accurate picture of the cash flow and operations of an organization. The third advantage of a cash basis reporting model is easier tracking of revenue.                The largest disadvantage of reporting on the cash basis of accounting is the cash basis of accounting is a framework that is not in accordance with GAAP. If a professional service organization s outside debt with financial institutions, debt agreements usually require audited or reviewed financial statements in accordance with GAAP. The professional service organization would need to have the approval of the financial institution to provide cash basis financial statements in lieu of GAAP financial statements. A second disadvantage of reporting on the cash basis is that it can often be difficult to benchmark the organization against competitors or other organizations within the same industry, since most companies report under an accrual method. A third disadvantage is the cost and time that is incurred if the organization is required to switch from the cash basis to the accrual basis of accounting as a result of a transaction.  For example, if an entity enters into a transaction whereby a new investor is brought in, the investor may require GAAP-based financials to be produced. The transition from the cash basis to the accrual basis of accounting to realign revenues and expenses can be costly and time-consuming.                While there are both advantages and disadvantages for professional service organizations to report on the cash basis of accounting, the size of the entity and the requirements of the users of the financial statements should be reviewed.                When considering the type of reporting model for your organization, feel free to reach out to one of the Schneider Downs Professional Service Industry team members. ### Simplification of Accounting for Income Taxes – ASU 2019-12 The Financial Accounting Standards Board (FASB) issued ASU 2019-12 on December 18, 2019 based on recommended changes by stakeholders as part of the FASB’s initiative to reduce complexity in accounting standards (the Simplification initiative). The objective behind the initiative is to enhance the usefulness of information provided to the end user of financial statements while also reducing costs and complexity to prepare.   This element of the Simplification initiative is focused on reducing complexity and enhancing clarity within ASU 740, accounting for income tax, by identifying the proper recording under U.S. GAAP and subsequent treatment for selected tax-related matters. The new guidance issued addresses several areas including the following: Step-up in tax basis of goodwill when there is not a business combination Policy election to not allocate consolidated taxes on a separate entity basis to entities not subject to tax Requires during interim reporting that an entity reflect enacted tax law changes or rates in the annual effective rate in the interim period when enacted Treatment of hybrid tax calculations that include both franchise taxes (or similar based taxes) as well as income-based taxes Ownership changes from equity method investment to subsidiary or vice versa Removes exception to intraperiod allocation when there is income in discontinued operations and a loss from continued operations These new standards are effective for public entities for fiscal years beginning after December 15, 2020 and for non-public entities for fiscal years beginning after December 15, 2021. Early adoption is permitted for years in which financial statements have not yet been issued or made available.Accounting for income tax has continued to be a leading cause for financial restatement. While the FASB has continued to work to simplify the requirements and guidance that govern accounting for income tax under ASU 740, the fact of the matter is that it continues to be a complex area of accounting. To inquire further and to receive Our Thoughts On accounting for income taxes, please contact Jim Sayre at jsayre@scneiderdowns.com or by calling 412-697-5356. ### Fraud Detection Filters Causing Delays in Some IRS Refunds The IRS continues to place premium importance on the prevention of identity theft and non-identify theft refund fraud, but its implementation of process improvements and fraud detection filters are creating hardships for taxpayers seeking a refund, as the filters have frequently incorrectly tagged some returns.Acting National Taxpayer Advocate Bridget Roberts explained in her annual report to Congress that, for the 2019 tax return filing season, the IRS implemented a new fraud detection filter called Filter X. Despite best intentions, however, the filter erroneously marked 1.1 million tax returns for potential fraud, causing unnecessary delays in refunds. Other filters incorrectly flagged legitimately filed returns, registering a false positive rate of 71%.Despite the significant amount of delayed returns, the new filters have stopped the IRS from issuing nearly $2.7 billion in fraudulent refunds. The agency will continue efforts to improve its filters and processing times for the 2020 tax return filing season, which begins January 27, 2020. ### Crown Prince Mohamed and Jeff Bezos’ Rocky Relationship Leads to Hack, Murder Against the backdrop of strengthened relations between the United States and Saudi Arabia over the past few years, relations began between Saudi Crown Prince Mohamed bin Salman and Amazon founder and Washington Post owner Jeff Bezos. The two initiated communications though WhatsApp in April 2018, but on May 1, cybersecurity experts at FTI Consulting believe the prince sent a downloadable video file containing hidden malicious code to Bezos’ iPhone through the popular messaging application. The malware went undetected for months while a proposal totaling $1 billion for Amazon to build multiple datacenters in Saudi Arabia was established. Around this same time, a series of critical and damning articles written about Prince Mohamed and the Saudi government were published by Washington Post columnist Jamal Khashoggi. For reasons still not completely explained, Khashoggi was murdered on October 2 by assailants with ties to Prince Mohamed and Saudi government, most notably al Qahtani, president and chairman of the Saudi Federation for Cybersecurity.After the murder of the Washington Post columnist, tensions between the prince and Bezos increased. On January 10, 2019, a series of texts containing details of an affair between Bezos and his mistress surfaced in the National Enquirer. An investigation sparked by potential information implicated Prince Mohamed and the Saudi government as the source of the leak, and ultimately led to a full cybersecurity investigation of Jeff Bezos’ phone. At its conclusion, FTI Consulting stated with “medium to high confidence that Jeff Bezos’ iPhone X was compromised via malware sent from a WhatsApp account used by Saudi Crown Prince Mohamed bin Salman.” The UN, for its part, demanded a formal probe to begin on January 22, 2020.An Advanced Persistent Threat in ActionAn advanced persistent threat is a detailed attack wherein a bad actor puts long-term malware on a device in an effort to continuously gather data, or uses the malware to gain access to a network. In the case of Jeff Bezos, the attack began from a downloaded video sent from a trusted source, Saudi Crown Prince Mohamed, but there are many other ways advanced persistent threat attacks can be introduced to a device or network. The most common tactic is though malicious uploads/downloads or social engineering attacks that, in reality, companies face on a day-to-day basis. In the case of Bezos, after the video was downloaded, massive amounts of data were extracted from his iPhone that continued undetected for months. According to the UN, “FTI Consulting found that six months before the video download, Mr. Bezos’ phone averaged about 430 kilobytes egress of data per day, a small amount. Within hours of receiving the video, that number rose, and the phone started averaging 101 megabytes for months afterward.”Threat actors commonly look for sensitive information, financial information, trade secrets or access to a network in an effort to cause damage to a company’s infrastructure. Actors using advanced persistent threat attacks are usually experienced government-funded cybercriminals who use the extracted data for political, financial or personal gain. The UN report references Saudi Arabia-owned Pegasus malware as a possible threat actor in the attack on Jeff Bezos. According to accounts, the malware costs a few hundred thousand dollars to create this type of NSO Group tool, then tens of thousands of dollars more to maintain. Saudi Arabia’s clear funding abilities, expertise in cybercrime and the attack on Bezos raises questions with regard to other reported communications between Prince Mohamed and other U.S. individuals.With this recent high-profile cybercrime incident, companies and individuals are fine-tuning their cybersecurity practices to protect their organizations. When you receive emails, files or other communications from unknown individuals, always be cautious before opening. In the event it’s a known associate, always ask yourself if you were expecting the communication, and follow up over the phone if you aren’t sure.How Can Schneider Downs Help?The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. Learn more about our cybersecurity services at www.schneiderdowns.com/cybersecurity or contact the Schneider Downs cybersecurity team at cybersecurity@schneiderdowns.com. ### 2019 Mortality Table and Improvement Scale Updates The Society of Actuaries has been updating the mortality improvement scale on an annual basis since 2014. As a result, Scale MP-2019 represents the most recent mortality improvement scales. Also, a new base mortality table was released, Pri-2012 (which was developed from data for years 2010-2014), which replaces the RP-2006 base mortality tables (which were developed from data collected for years 2004-2008).The difference to Scale MP-2019 from Scale MP-2018 is that the 2017 data has been added to the historical United States population mortality experience that is incorporated into the model. Otherwise, the underlying methodology has remained unchanged. Because 2017 data primarily indicated low or negative mortality across the United States, this data might potentially cause pension liabilities to decrease when plan sponsors update from Scale MP-2018 to Scale MP-2019 and start to use Pri-2012 base mortality rates. The preliminary estimate of the decrease is between 0.3% and 1.0%, varied by the mix of characteristics (collar, age and gender) of a given plan’s population as well as the discount rate and other assumptions used to determine the liability.For financial statements of plan sponsors and employee benefit plans with balance sheet dates before October 24, 2019 that have not yet been issued, plan sponsors should consider this new information as a recognized subsequent event, and should determine the impact of it to those financial statements. In addition, while determining mortality assumptions for 2019 year-end financial reporting, plan sponsors should consider this new data for defined benefit pension and other postretirement benefit plans. ### Propane and Compressed Natural Gas Tax Credits Reinstated – Refund Claims Can Be Filed Beginning on February 14, 2020 The IRS has provided helpful guidance on requesting refunds for the 2018 and 2019 years for the Alternative Fuel Credit (more commonly known as Propane Tax Credit and Compressed Natural Gas Tax Credit). This credit expired after December 31, 2017 but has been retroactively reinstated by the Taxpayer Certainty and Disaster Tax Relief Act of 2019, signed by the President on December 20, 2019.  The credit enables taxpayers that use propane or liquefied petroleum gas (LPG) for off-highway business use in equipment like forklifts or compressed natural gas (CNG) in vehicles to receive a 50-cent per-gallon credit. Notice 2020-8 provides taxpayers the option to use a streamlined method for filing refund claims. For 2018 and 2019 only, taxpayers can file one form 8849, along with the Schedule 3 to claim refunds for both years. The IRS will accept one-time claims for the 2018 and 2019 alternative fuel tax credits during the 180-day period between February 14, 2020 and August 11, 2020.If the taxpayer follows these procedures, the IRS should issue the refund within 60 days after the claim is received or it will pay interest from the claim filing date. The IRS will not process any claims filed on Form 8849 after August 11, 2020.Alternatively, taxpayers can use the more cumbersome method of amending their 2018 tax return to include the Form 4136 to request the credit. Taxpayers would also need to file the Form 4136 with their 2019 income tax returns. This method would clearly cause the IRS to provide the refunds later than the method provided in Notice 2020-8.Another important requirement is that claimants must be registered with the IRS as an alternative fueler to file for the alternative fuel credit. If not already registered, the taxpayer may apply by filing Form 637 – Application for Registration (For Certain Excise Tax Activities).Our advice to taxpayers is to begin to gather the necessary information now, so the Form 8849 can be filed shortly after February 14, 2020. Please contact your Schneider Downs tax advisor with any questions or if you need further assistance. ### House Bill 17 Signed by Governor Tom Wolf On November 27, Pennsylvania Governor Tom Wolf signed House Bill 17, which establishes a 10-year window for the state’s Department of Revenue to collect assessed tax. The bill, sponsored by Rep. Frank Ryan with support from nearly 20 other cosponsors, is very similar to the current laws of other states, as well as the Internal Revenue Code (IRC). Originally introduced in January 2019, the bill passed with a vote of 48-1 in the Senate, and was approved in the House by a 178-9 margin. With Governor Wolf’s signature, the bill becomes law January 1, 2021.Prior to HB17 being signed, Pennsylvania law did not specify a maximum period of time for which the revenue department could collect outstanding tax. While the state should expect to be able to reasonably collect unpaid taxes, the old law did not only create additional burden for taxpayers, but also for the Department of Revenue itself. It’s not uncommon for taxpayers to receive notices regarding decades old tax return filings, but often in these cases, taxpayers no longer have records to support their filings from the year(s) in question and, in some cases, the business the tax was assessed on may no longer be active.As with similar laws in place in other states and with the IRC, HB17 excludes certain circumstances to prevent taxpayers from evading taxes. Exceptions include trust fund tax liabilities, the filing of a false or fraudulent returns, failure to file a return, attempts to evade a tax, unpaid liabilities resulting from offenses in which a taxpayer has been criminally charged and convicted, and for liabilities of eligible taxes unknown to the department that have not been extinguished within a 10-year period prior to the commencement of the tax amnesty period of a subsequently enacted or approved tax amnesty program. ### Fake Charities in the Wake of the Australia Wildfires The devastating fires in Australia have become a worldwide concern, and people are looking to donate to charities aimed at helping with the crisis. Unfortunately, scam artists take advantage of such tragedies by setting up fake charities that look and sound real. The fake charities promise to send money to Australia, but at times they are merely a scam to get a hold of your hard-earned money. Here are some red flags on spotting a fake charity and how to find a legitimate charity for your donation. A charity that promises to donate your money to a legitimate charity is often fake. Why use a middleman?  It’s often better to donate directly to the charity that intends to make good use of the funds. A vague description of how the money will be used is usually a fake. Is the money going to be used for medical expenses? Firefighting? Evacuated families? Legitimate charities will be transparent about what the money will used for and how it will be delivered. If it is unclear who controls the money, it could be a fake. Is it the person who started a crowd-funding page? Ensure that there is a clear path for the money to reach the victims. So, which charities can you trust?The Better Business Bureau has a list of vetted, legitimate charities that are sending money directly to the disaster in Australia.You can find the list here: https://www.give.org/news-updates/2020/01/08/wise-giving-wednesday-donating-to-address-the-fires-in-australia. In addition, you can conduct your own due diligence on various charities but viewing their website and reading through what they intend to do with donations.  Charities can also be verified by visiting websites such as GuideStar, Charity Navigator and even the Internal Revenue Service Business Master File.If you have any questions on ensuring that your donations are being made to a legitimate charity, please contact any of our exempt organization experts. ### Land Easements under ASC 842 and Practical Expedients In January of 2018, the FASB amended its leases standard to be a more encompassing standard for all leases and replace the variability in the way that entities were accounting for leases with a uniform method. Before the newly adopted standard was proposed, there was no consistent practice for how leases should be accounted for, and as a result, entities relied on a variety of guidance, such as: ASC 350, ASC 360, ASC 840. The proposition of ASC 842 by the FASB was intended to do away with the variety of standards in use to account for leases and replace them with one invariable standard that could be used as guidance in nearly all instances. However, in the case of accounting for perpetual leases, the guidance of ASC 350 will remain necessary.The new standard, ASC 842, was originally slated to go into effect after December 15, 2018 for public companies, and after December 15, 2019 for non-public companies. However, the FASB decided to push the release of this standard back for non-public companies by one more year, making the new date of implementation for this group after December 15, 2020. Along with the implementation of the amendment, the FASB gave entities the option to elect transition practical expedients that would essentially allow them to retain their old method of accounting for land easements and other right-of-use assets, providing the leases met certain practical expedient requirements. Furthermore, once the adoption date has passed for entities in either category, all leases and land easements must be accounted for using ASC 842. The purpose behind the practical expedient was expressly designed to reduce cost and complexity of standard implementation for entities, specifically those with older land easement arrangements or numerous land easement arrangements for which a transition to a new standard of accounting may prove to be uniquely challenging.Thus, in order to mitigate a portion of implementation issues, the FASB held that land easements and right-of-use assets that have previously been accounted for under other standards will not need to be accounted for under ASC 842 as long as some criteria are satisfied. The standard requires that land easements had to be existing or expiring before the date of adoption, and could not have previously been accounted for by an entity using the FASB ASC 840. It also holds that if a right-of-use easement is ongoing on a perpetual basis then it also does not qualify for the practical expediency implementation, because there is no time-period constraint for which access to the asset is limited. If any of those criteria could not be met, then the entity would need to implement ASC 842 for its land easement leases.Stated differently, if an entity holds land easements or other right-of-use assets before the date of adoption for FASB ASC 842 and they were not previously being accounted for using FASB ASC 840 or ongoing perpetually, then the entity is given the option of accounting for those land easements as they always have. For entities that elect the practical expedient, there will be no need to reassess their land easements under the newer standard.Additionally, although the FASB does not require entities to elect the practical expedient, it also does not allow for inconsistent application of the practical expedient. Were an entity to adopt the practical expedient for leases of right-of-use assets that existed or were expiring before the date of adoption, then the entity must adopt the same method for all similar leases that the entity possesses. If an entity holds a portfolio of land easements that exist or expire before adoption and wishes to apply the practical expedient, then the entity must elect the practical expedient for each land easement as a whole. Individual land easement elections would be prohibited, which would prevent similar land easements from being accounted for under two different standards.Furthermore, the FASB allows for any entity to early- adopt the amendment, regardless of entity type. However, once an entity early- adopts the amendment, it becomes effective immediately. Upon adoption, all land easements that satisfy the aforementioned requirements may continue to be accounted for as the entity normally has done; however, all subsequent land easements would be recognized under ASC 842, regardless of the standard's stated adoption date, since the effective adoption for that entity was elected before it was required to be. ### IRS Requests Public Comment on Forms 3520 and 3520-A, Reporting of Foreign Gifts and Trusts The IRS requested public comment regarding two reporting forms used by taxpayers in reporting for foreign gifts and trusts, Form 3520 and Form 3520-A.The U.S. taxation and information reporting imposed on foreign trusts is complex.Form 3520 is used by U.S. taxpayers when a reportable event occurs regarding a foreign trust or gift.There are several events regarding foreign trusts that must be reported on a Form 3520. Reportable events include the creation of a foreign trust by a U.S. person (meaning a citizen, resident alien, or domestic partnership, corporation, or estate) or the transfer of money to a foreign trust by a U.S. person. Other reportable events include when a foreign trust is owned in whole or in part by a U.S. person, or if a U.S. person receives a distribution from a foreign trust.Per the Instructions for Form 3520, gifts are reportable on the Form 3520 when a U.S. person receives a gift of more than $100,000 from a nonresident alien or foreign estate, or when more than $16,076 of gifts are received by a U.S. person from foreign corporations or partnerships.Form 3520-A is an informational return that must be filed by all foreign trusts owned or partly owned by at least one U.S. person. This form would be filed in conjunction with a Form 3520. The purpose of the Form is to provide information about the trust, its U.S. beneficiaries, and any U.S. owner. Each U.S. owner is responsible for ensuring that the return is filed.The IRS recently announced a campaign with a focus on the enforcement of filing requirements related to foreign trusts. Severe penalties may be imposed for noncompliance in connection with these two forms. Note that taxpayers may be subject to separate fines for each form that was not properly filed.The complexity surrounding foreign trusts should be frequently reviewed to avoid tax implications and complications. Don't hesititate to contact us if you have questions regarding the reporting of foreign trusts or gifts. ### What do your vendors think about your timeliness of payments? In the age of social media and the seeming need to share everything about anything, including a picture of your lunch, a start-up, Levelset, has launched a platform designed to bring more transparency about how certain owners and general contractors pay their vendors and other subcontractors.  While it is no surprise that many who are involved in the industry would note that payments are less frequent then they would like, will this new platform encourage some to be timelier if this information is now more easily accessible than simply by word of mouth?In the world of sharing platforms, this is another one monitor the comments section to see what is being said about your company and how it is being perceived by others.  An article from ENR noted that, “The often-stinging, anonymous comments on the company profiles may reverberate as much as the speed ratings.”  Serving this industry for a number of years, I have seen first-hand how obviously minor disputes over payments, change orders and other scope items can be disruptive to job performance, and this could be another tool to help uncover these type of items.  The article goes on to point out that “Of 23 companies and related entities profiled on Levelset that are among the top 20 on ENR's current Top 400 Contractors list, 14 are rated as slow payers, two as fast and seven as medium.”As this platform grows, it remains to be seen what the impact might on the industry, but it might be wise to spend a few minutes to see what others are posting about your company and how you are being perceived in the marketplace. ### Continuous Monitoring and Auditing – A Growing Automation Trend in Internal Audit Continuous monitoring and auditing are automated feedback tools used to monitor processes, transactions, IT systems and controls on a frequent or continuous basis.  These methodologies assist in detecting inconsistent practices, outliers, anomalies and other factors that could negatively affect a business.Continuous monitoring allows management to consistently review their business processes and procedures for adherence to, or deviation from, expected levels of performance.  This enables management to determine where it should be focusing attention and resources to improve processes, address risks, implement corrective actions or launch initiatives to better facilitate the achievement of business goals.Continuous auditing allows Internal Audit to repeatedly gather data from processes, transactions and accounts that support auditing activities.  This enables Internal Audit to determine more accurately where to focus attention and resources to improve the quality of audits and increase support from management.  It is not intended to replace traditional auditing, but rather to be used as a tool in implementing standard procedures that will enhance audit methodologies and overall effectiveness.Examples of continuous monitoring and auditing include: Monitoring of access to sensitive data Review of deposit and loan activity for missing information or unusual activity outside of company policy and limits Monitoring of pricing overrides or customer discounts Review of transaction logs for unusual or suspicious activity (security logs, journal entry logs, etc.) Review of payroll, P-card and travel and entertainment transactions for outliers Monitoring of overrides to key company metrics that may drive operational performance and/or regulatory reporting Continuous monitoring and auditing can enable an organization to adapt more quickly and effectively to changes in the regulatory and risk environment.  In implementing these processes, management and Internal Audit will gain greater visibility into the organization by obtaining and analyzing up-to-date information, increasing the scope of audit coverage and detecting errors before financial impact is realized.  Continuous monitoring and auditing assist in providing assurance over processes that are high in value or risk and allow for flexibility in an ever-changing regulatory environment. ### Tax-Exempt Organizations Receiving an Increased Number of IRS Notices Within the past month, we’ve seen a significant number of tax-exempt organizations receive notices from the IRS for a multitude of reasons, many of which are no fault of the organization. The notices often provide little to no explanation as to why the agency has assessed penalties and interest, or why they’re sending a refund. This leads to much confusion and the need to contact IRS for additional guidance, which in most cases is not received.One instance we encountered recently involved the reporting of multiple trade or business activities on Form 990-T. The IRS had significantly updated the Form 990-T, Exempt Organization Business Income Tax Return, for 2018 to reflect law changes that resulted from passing of the Tax Cuts and Jobs Act (Act). One of the changes included the requirement for tax-exempt organizations to silo each of their trade or business activities, and the Form was updated to include Schedule M, Unrelated Business Taxable Income for Unrelated Trade or Business. Organizations are now required to list a single trade or business on the face of Form 990-T and file a separate Schedule M for each subsequent trade or business.Recently, an organization received a refund for a 2018 return that included multiple trade or business activities. Upon further review, it was discovered that the IRS didn’t factor in the activities reported on the Schedules M filed with the return. The organization should not have received a refund, and are now required to return the check with correspondence of the calculation. Although the IRS has updated the forms to apply the new laws as they relate to the Act, it doesn’t appear their systems have been updated accordingly.Another issue we’re seeing is with organizations that have filed their Forms 990-T by the extended due date of November 15, but are being required to pay unrelated business income tax at this time. These organizations receive notices assessing late filing and payment penalties and interest indicating that returns were filed late and payment was not received until December 15. In each instance, the organizations have proof of payments and filings prior to November 15. Again, an apparent error in the IRS system.These are just a couple of the instances we’ve seen recently. To the extent you receive a notice or check, ensure the refund or payment due is appropriate before taking any action. Schneider Downs has a dedicated tax-exempt tax practice that’s well versed in handling these matters. If you receive correspondence do not hesitate to reach out to our team. ### NSA Makes Unprecedented Vulnerability Disclosure - Microsoft Vulnerability CVE-2020-0601 Microsoft’s Patch Tuesday has come again and, with it, another highly publicized vulnerability, CVE-2020-0601. This week’s notification is particularly interesting since it was the National Security Agency (NSA) that discovered and reported the looming potential weakness to Microsoft, which was followed by an unprecedented public disclosure. The NSA’s Director of Cybersecurity, Anne Neuberger, confirmed that the NSA first reported this vulnerability to Microsoft, and that this was the first time Microsoft will have credited NSA for reporting a security flaw. This disclosure apparently is related to a new initiative within the NSA to share important vulnerability findings on a more regular basis. A lot of people are patting the NSA on the back for handling the vulnerability in such a responsible way. It’s certainly leaps and bounds above their last major vulnerability disclosure (EternalBlue), which came in the form of leaked NSA attack tools. That said, one of the responsibilities of the NSA is to collect intelligence, and to do that effectively you need to hack people and to hack people you need attack paths. Of course, the security agency can’t disclose all of those attack paths, and the fact they disclosed this one likely shows that the benefit of disclosing it outweighed the benefit of keeping it to themselves. It may have been an active attack in use for years, but those of us outside the intelligence community will probably never know. Should you be concerned? In a nutshell, this vulnerability makes multiple forms of “man-in-the-middle” attacks possible. These are the types of attacks more likely to be used by advanced attackers, like nation states (like the NSA), than your eastern European ransomware groups that frequently target small and medium-sized companies. If you’re an organization that’s able to quickly and effectively deliver updates and patches, you don’t need to be overly concerned. Apply the latest Microsoft fixes using your standard process as soon as possible. This attack has implications for all Windows systems, so endpoints need to be updated, as well as servers, and this applies to internal systems as much as internet-facing systems. A lot of organizations, though, do not fall into the category of being able to quickly and effectively deliver patches to their systems. If that describes your company, then you should be concerned, but not just about this particular vulnerability. In our consulting and audit practices, we find organizations that struggle with operational tasks, such as effective implementation of software updates, normally have a host of other security issues that are much easier to attack than a vulnerability like CVE-2020-0601. If your approach to patching is to never patch, particularly servers, or to only patch internet-facing systems, then your organization is probably at a very low security maturity level and would benefit greatly from outside help. Good luck, don’t forget to test, backup and snapshot before you update. And if you use Citrix, don’t forget to put in place the remediation for CVE-2019-19781, which is a remotely exploitable Citrix server vulnerability that’s a higher risk than this latest Microsoft vulnerability. Helpful Links https://portal.msrc.microsoft.com/en-US/security-guidance/advisory/CVE-2020-0601 https://kb.cert.org/vuls/id/849224/ https://media.defense.gov/2020/Jan/14/2002234275/-1/-1/0/CSA-WINDOWS-10-CRYPT-LIB-20190114.PDF How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domain services, including security audits, assessments, penetration testing, incident response and indicator of compromise assessments. All organizations can benefit from one or more of our services. The benefit of being at a lower security maturity level is that you will typically get the most bang for your buck in terms of the number of findings and recommendations. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### Leases: While the standard is delayed, your analysis should not be! Back in November 2019, the FASB issued Accounting Standards Update 2019-10: Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) which delayed the effective date of previously issued ASUs for all three areas. As a result, the new lease standard will now be effective for your December 31, 2021 audits, reviews, compilations, etc. For a quick refresher on the lease standard, take a look at a previous article written by Trevor Warren that details Our Thoughts On the lease standard and its impact to the construction industry (click here). This article serves as a reminder that this standard will likely have an impact on your financial statements, related ratios and how the users interpret those results. While the accounting for this new lease standard has been delayed until January 1, 2021, do not procrastinate in evaluating the impact of this new accounting standard on your company. To provide a quick recap of just how impactful this standard has been, I reviewed the most recent quarterly filings for five, large, public construction companies (Companies A through E below). The results shown below paint a strong picture of how impactful this new accounting standard can be to your balance sheet. Company A B C D E Working Capital Decrease  $72m  $52m  $42m  $12m  $43m Lease Liability Increase  $294m  $246m  $243m  $43m  $69m % of Balance Sheet 3.73% 5.43% 4.50% 0.96% 6.55% Things to Consider Does your banker know that your lease liability/debt on the balance sheet is going to increase? Does your surety know that your working capital is going to decrease? Is anyone at your Company aware that your overall balance sheet might increase, potentially within a range of 1% - 6%? Do you know if this change will impact your covenant compliance? Do you have a good inventory of all your leases? Have you reviewed your contracts for embedded leases arrangements? Have you quantified what your entry might look like and how it will change your balance sheet? The FASB has given an extra year for all private companies to assess this new standard, in part, due to challenges companies have encountered in their analysis of this new standard. If you have not begun these discussions or are having trouble answering these questions, now is the time! If you encounter any difficulties as you begin your analysis, let us know and we can help, either through consultation or through simpLEASE, a lease accounting software that we have developed. ### SECURE Act: Business Tax Credits for Retirement Plan Startup Costs and Automatic Enrollment Provisions (Sections 104 and 105) In an effort to encourage employers to adopt a retirement plan and promote certain automated features, the Act (1) enhances an existing business tax credit relative to startup costs, and (2) implements a new credit for plans that utilize an automatic enrollment provision. Effective for tax years beginning after December 31, 2019, the business tax credit associated with the startup costs will be increased from $500 to a maximum of $5,000. This credit is available to “small” employers with fewer than 100 employees, but is not available for solo 401(k) plans where participants in the plan comprise solely the owner (or sole proprietor or partner) and his/her spouse. The credit may be taken in the tax year it is actually incurred as well as the next two subsequent tax years. As such, any plan established during the 2017 tax year or later may be eligible for the increased credit amount. The specific amount of the eligible credit is a function of the employer’s demographics, providing a minimum credit of $500 or, if greater, $250 for each non-highly compensated employee who is eligible to participate in the plan up to a maximum of $5,000. In other words, to qualify for the maximum credit amount of $5,000, the newly established plan must be available for at least 20 non-highly compensated employees. NOTE: For 2020, a non-highly compensated employee is any employee who earned less than $125,000 in 2019 (prior year), as indexed, and does not own 5% or more of the employer sponsoring the plan, either directly or indirectly via family attribution. Further, those employers that include an automatic enrollment provision in the startup plan are eligible for an additional credit of $500. Similar to the startup credit, the automatic enrollment credit may be taken in the year that the plan/provision is effective as well as the next two subsequent tax years. The automatic enrollment credit is also available for existing retirement plans that implement an automatic enrollment provision for tax years beginning after December 31, 2019. These credits, when considered in combination with the expansion of multiple employer plans/pooled employer plans (as addressed in Section 101 of the Act), provide small businesses with compelling solutions for implementation costs, ongoing retirement plan service fees, and the administrative and fiduciary responsibilities that historically have deterred many businesses from implementing retirement plans. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Modification of Required Minimum Distribution Rules for Designated Beneficiaries (Section 401) Based on the new provisions of the SECURE Act, there are now much more restrictive rules surrounding a required minimum distribution (RMD) to designated beneficiaries of retirement accounts. Under the updated rules, most non-spouse IRA and retirement plan beneficiaries will have to take distributions from inherited retirement accounts within 10 years after the account owner’s death. Prior to the Secure Act, RMD rules permitted non-spouse beneficiaries to take distributions from an inherited IRA or retirement plan over their life expectancy beginning with the year following the year the account owner died. As such, to the extent an individual inherited an IRA from a grandparent, there existed the ability to draw out or stretch the distributions over an extended period. For example, if you inherited an IRA at the age of 40, the current IRS life expectancy table says you have 43.6 years to live. Therefore, you must start taking annual RMDs from the inherited account by dividing the account balance as of the end of the previous year by your remaining life expectancy as of the end of the current year. Your second RMD would equal the account balance as of the end of the following year divided by 42.6, and the pattern would continue until the account balance was depleted. The new 10-year distribution rule significantly limits the stretch IRA strategy outlined above. It can still work, but only in the limited circumstances when the 10-year rule does not apply. The Secure Act’s RMD change will not affect accounts inherited by a so-called eligible designated beneficiary, namely one who is: (1) the surviving spouse of the deceased account owner, (2) a minor child of the deceased account owner, (3) a beneficiary who is no more than 10 years younger than the deceased account owner, or (4) disabled or chronically ill individuals. The new 10-year rule generally applies regardless of whether the account owner dies before or after his or her RMD required beginning date. Following the death of an eligible designated beneficiary, the account balance simply must be distributed within 10 years. Further, when an account owner’s child reaches the age of majority under applicable state law, the account balance must be distributed within 10 years after that date. Effective date: The Secure Act’s RMD change is generally effective for RMDs taken from accounts whose owners die after 2019. RMD rules for accounts inherited from owners who died before 2020 remain unchanged. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Expansion of Section 529 Plans (Section 302) Well established and evolved over the years, 529 plans are tax-advantaged strategies designed to encourage saving for future education costs. Withdrawals from a 529 plan are excludable from income as long as the withdrawals are used to pay qualified educational expenses. New legislation covered under the SECURE Act expands that list of qualifying expenses to include costs associated with registered apprenticeships, homeschooling and private elementary, secondary or religious schools, as well as up to $10,000 of qualified student loan repayments. The most notable expansion of the plan is that ability to use 529 funds to make student loan payments. The $10,000 is a lifetime limit, which applies to the 529 account beneficiary and each and any of their siblings. For example, a parent with four children may take a $10,000 distribution to pay loans for each child, totaling $40,000. The added inclusion of apprenticeships covers expenses like fees, books, supplies and any other equipment required for participation in a qualified program that allows an individual to obtain paid work experience, classroom instruction and a portable credential. The expansion creates flexibility for parents of those children who elect an alternative to traditional higher education. All these changes help address one of the biggest concerns for families looking to start a 529 plan, the worry that they’ll have funds leftover after the beneficiary graduates. The expansion of 529 rules made by the SECURE Act provides more options for families to distribute excess funds without incurring penalties. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Modification of PBGC Premiums for Cooperative and Small Employer Charity Plans (Section 206) Many charities and cooperative associations provide their employees with retirement benefits through defined benefit multi-employer pension arrangements known as Cooperative and Small Employer Charity (“CSEC”) plans. The Cooperative and Small Employer Charity Pension Flexibility Act (“the Act”), ratified in 2014, provides the capability for small, community-focused employers to pool their resources and achieve economies of scale otherwise only available to large employers. As defined benefit plans, they are subject to their own minimum funding standards, and plan assets are insured by the Pension Benefit Guaranty Corporation (PBGC).A bit of history helps explain how the Act came to fruition. Congress had determined that the funding rules enacted under the Pension Protection Act of 2006 were inappropriate for the structure of CSEC plans, recognizing that the plans would be forced to either divert money from services to pay PBGC premiums and fund the plans or, worse, be unable to continue to provide pension benefits.So, in March of 2014, Congress passed the Cooperative and Small Employer Charity Pension Flexibility Act, which implemented funding rules that better reflected the unique design of CSEC plans. But the formula for determining the cost of insurance premiums paid to the PBGC remained the same. As a result, between 2014 and 2018, the PBGC realized a 3,000% return on the premiums paid by the CSEC plans.Modifications to the Act now reduce PBGC premiums for CSEC plans to $19 per participant for flat-rate premiums, and $9 per $1,000 of unfunded vested benefits for variable-rate premiums. The provision is effective for plan years beginning after December 31, 2018. Since most CSEC plans have already paid 2019 premiums, these plans will be eligible for a refund. By comparison, in 2020, single-employer defined benefit plans are subject to flat-rate premiums of $83 per participant and variable-rate premiums of $45 per $1,000 of unfunded vested benefits (with a per person cap of $561).Congressman Mike Kelly of Pennsylvania was one of the House of Representative members instrumental in reducing the PBGC premiums for these CSEC plans.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.  ### SECURE Act: Plan Adopted by Filing Due Date for Year May Be Treated as In Effect as of Close of Year (Section 201) The SECURE Act contains a provision that grants employers additional time to adopt a qualified retirement plan. Under current law, in order to make tax-deductible contributions to a retirement plan for a taxable year, an employer must formally adopt the plan no later than the last day of that taxable year. Section 201 of the SECURE Act provides that a retirement plan may be treated as if it is effective for a taxable year so long as the plan is adopted before the due date of the employer’s tax return (including extensions) for that year.The new provision applies to plans adopted after December 31, 2019.  It grants employers additional time to establish a qualified plan and gives employees the opportunity to receive contributions for that taxable year. The provision will benefit both employers looking to establish a qualified retirement plan and employees looking to save for their retirement. For example, if an employer finds itself with extra cash in April 2021 after the books are closed for the 2020 fiscal year, the new provision would allow the employer to establish a retirement plan and make a tax-deductible contribution that relates back to 2020.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### SECURE Act: Increase in Age for Required Minimum Distributions (Section 114) The SECURE (Setting Every Community Up for Retirement Enhancement) Act institutes a number of changes for retirement plan sponsors and participants, including the ability for participants to delay their required minimum distributions, or RMDs, to age 72.Before the SECURE Act, if you had money in a traditional IRA or an employer-sponsored retirement plan, you were required by law to start taking withdrawals by April 1 following the year you attained age 70½. The minimum amount required to be distributed each year was calculated based on the account balance as of the end of the previous calendar year divided by a distribution period from the IRS’s Uniform Lifetime Table.The SECURE Act changes the required starting date for RMDs from age 70½ to age 72, and is applicable to those individuals who turn 70½ after December 31, 2019. For anyone who turned 70½ in 2019, the first RMD must still be taken by April 1, 2020. Individuals turning 70½ in 2020 or later will not be required to take their first withdrawal until April 1 of the year following their 72nd birthday. Please note, plan sponsors can still elect to require distributions at an earlier age and, depending on the terms of the plan, individuals may still be able to take money out at 70½, but the new legislation makes that an individual choice and not a requirement.A notable impact for plan sponsors will be the need to evaluate the new RMD rule and amend plan documents accordingly to reflect the new RMD age of 72. In addition, plan sponsors will also need to evaluate, and likely update, their current policies and procedures for notifying participants of an upcoming RMD.Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice ### SECURE Act: Penalty-free Withdrawals from Retirement Plans for Individuals in Case of Birth or Adoption (Section 113) The SECURE Act contains a number of provisions aimed at expanding Americans’ access to their retirement accounts. One such new viable option adds an exception under which 401(k) participants and IRA owners can withdraw up to $5,000 for expenses related to a qualified birth or adoption. Under the arrangement, the 10% early withdrawal penalty is waived, but applicable income taxes (including capital gains taxes) still apply at the individual’s ordinary income rate. The new provision is effective for distributions made after December 31, 2019. However, in order to qualify for the exception, the distribution must be made during the one-year period beginning on the date on which the living child is born (stillborn children don’t qualify) or the adoption (adoptees must be under 18) is finalized, which means it can’t be used for costs incurred leading up to a planned birth or adoption. New parents can opt to repay the withdrawal amount; it is not considered a loan and would be treated as a rollover. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice ### SECURE Act: Repeal of Maximum Age for Traditional IRA Contributions (Section 107) Prior to a repeal under the SECURE Act, an individual was not permitted to contribute to a traditional IRA after age 70½. Now, however, that restriction has been lifted, and individuals who are still working and receiving earned income can continue saving for retirement, regardless of age. With Americans living longer and often needing to work into later years, the change is welcome, since it allows individuals to continue retirement savings. A key benefit, of course, of contributing to a traditional IRA is that such designations are tax-deductible, meaning they could reduce modified adjusted gross income for that current year. The change aligns the traditional IRA more closely with the Roth IRA, which allows anyone to contribute regardless of age, as long as the individual has earned income below specified limitations. The repeal also has an ancillary impact on rules surrounding Qualified Charitable Distributions, which can be ordered to be paid directly from an IRA to a qualified charity by an individual who is at least age 70½. The IRA holder may exclude the amount of the QCD from taxable income, up to a maximum of $100,000 per year. The SECURE Act didn’t change the QCD rules, but with the repealed age restrictions on IRA contributions, an individual is now able to contribute to an IRA and take a QCD in the same year. In this event, the IRA contribution will reduce the QCD exclusion by the amount contributed. Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice ### Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q4 2019 On January 3, the Manufacturing Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that provides industry trends and statistics for the manufacturing sector. The referenced Purchasing Managers Index (PMI) below is a composite index for the manufacturing industry compiled by the ISM, and is based on five subcategories: new orders, production, employment, supplier deliveries, and inventories. A PMI index over 50% indicates that the manufacturing environment is expanding, and the ISM uses this information to analyze the state of the economy and predict future growth or contraction. See below for the PMI for each month in 2019: Month PMI Month PMI January 56.6 July 51.2 February 54.2 August 49.1 March 55.3 September 47.8 April 52.8 October 48.3 May 52.1 November 48.1 June 51.7 December 47.2  Average for 12 months – 51.8High – 56.6Low – 47.2Although the economy grew for the 128th straight month, manufacturing saw the ninth consecutive month of contraction, with December indicating the fastest rate of contraction since June 2009. During the panel discussion held with ISM and representatives from manufacturing industries, one of the hottest topics continues to be concerns over global trade. Representatives from the Food, Beverage & Tobacco Products industry noted that some suppliers are passing along tariff-related costs.Consumption, which is measured by production and employment, contracted during December 2019. Production decreased 4.1% from September 2019 to December 2019 and only three of the 18 manufacturing industries experienced growth: Food, Beverage & Tobacco Products, Machinery, and Miscellaneous Manufacturing. ISM’s Employment index came in at 45.15%. To put this into perspective, an Employment index over 50.8% is comparable to an increase in Bureau of Labor Statistics data on manufacturing employment.However, there is a positive side to this decrease in consumption. A decrease in New Orders and Customer Inventories, in conjunction with a growing economy, may indicate increased demand in Q1 2020. New Orders came in at 46.8%, decreasing 0.5% from September 2019 to December 2019. Representatives from the Chemical Products industry indicated that they provided customers with sales promotions in an attempt to stimulate sales in Q4 2019. Customer Inventories were too low for the 39th consecutive month, with an index of only 41.1% at December 2019.Inputs, which includes Inventories, Imports, and Supplier Deliveries, saw improvement. Inventories came in at 46.5%. An index of 44.3% is consistent with expansion in the data provided by the Bureau of Economic Analysis. Supplier Deliveries, with an index of 54.6% in December 2019, increased 3.5% from September 2019 to December 2019. Finally, Imports came in at 48.8%. This was primarily in an effort to obtain the necessary materials before production slowdowns caused by the Lunar New Year season in Asia.Although Prices are not included in either consumption or inputs, it is worthwhile to look at due to its relationship with Supplier Deliveries. With an index of 51.7%, Prices saw an increase of 2% from September 2019 to December 2019. Specifically, copper, steel, and aluminum experienced growth in price. The increase in Supplier Deliveries, coupled with an increase in prices, is another positive indicator for the manufacturing industry in Q1 2020.Unfortunately, manufacturing does not yet have 20/20 vision on how the coming year will go. Nonetheless, continued growth of the economy as a whole and the various factors noted above, may indicate a stronger Q1 2020 than Q4 2019.Learn more about the ISM Report on Business.  ### Labor Shortage, but More Projects Expected in 2020? Construction employment saw another increase in total jobs in December of approximately 20,000 and a total of over 150,000 for 2019, representing a 2% increase from 2018 according to a study completed by the Associated General Contractors of America.  Another interesting stat from the survey includes three out of four contractors expect to continue to add workers throughout 2020 even though there was a shortage in 2019 and expect it to be even harder to find qualified employees in 2020.  The unemployment rate for experienced construction workers is the lowest ever in the 20-year history of the survey.Over the course of 2019, construction employees’ average hourly earnings increased by approximately 3%, driven by companies increasing the base pay rates for hourly craft workers due to difficulties in attracting skilled laborers.  The Associated General Contractors of America have taken a few different steps to combat these labor shortages, with the increase in pay, as well as becoming more efficient.   Contractors believe that there will be an increase in overall projects in 2020 and that the key will be to bid the projects correctly.  Companies have started to increase their rates in bids as well as put in a longer completion time, which has helped them to recoup some of the additional costs associated with the labor shortage.The main focus for contractors as we head into 2020 is on the recruiting front, as they hire new workers and attempt to get federal and state officials to increase funding for technical education, which could lead to significantly more programs geared towards recruiting and equipping students who might be considering the construction industry for their future.  Will that happen?  All we can do is wait and see, but the overall outlook for 2020 is positive, with more growth anticipated.If you have any questions don’t hesitate to contact us or check out the Schneider Downs Construction Industry Group. ### Fraud, Fantasy Football Style Fantasy sports, and fantasy football in particular, are an ever-present aspect of today’s modern sports world. In fact, the Fantasy Sports and Gaming Association – yes, there is such a thing – estimates that approximately 46 million Americans and Canadians participate in fantasy football, based on a 2017 survey. So how exactly did two otherwise anonymous participants of FF manage to game the system?Introducing Tanner and Jade Tolbert, Z-List celebrities whose collective claim to fame to this point was being contestants on the reality show “Bachelor in Paradise.” Reports allege the couple colluded while partaking in DraftKings’ popular Millionaire Maker, a fantasy football contest wherein participants select a lineup of nine players at select positions from at least two games. As “luck” would have it, during the NFL’s wild card playoff round in early January, Jade happened to compile the top score among all participants, earning her the $1 million grand prize. Some lesser-known, albeit vigilant, participants smelled a rat and decided to do some investigation. Their work unveiled that not only did Jade and Tanner each enter the maximum amount of individual entries (150 lineups), but that no two lineups across the couple’s entries were the same. To other participants, this reeked of collusion.DraftKings, to their credit, has been quick to respond, with CEO Jason Robins announcing one day after the event that the company has begun an investigation into the allegations. The company’s guidelines explicitly state that “Team-building complementary lineups which serve to work together AND executing a strategy that may create any unfair advantage over individual play” as well as “Entering the maximum number of entries in a contest, type of contest, or event, and having a 3rd party, regardless of their relationship, put in additional entries for you” both constitute unacceptable behavior. Whether in fact these guidelines were breached remains to be seen, but many will be looking to see if these minor “celebrities” indeed committed fraud, fantasy football style.If you have any questions regarding potential fraud schemes or internal controls at your organization, please contact the Business Advisory group at Schneider Downs. ### Evaluating a Firm’s System of Quality Control On December 17, 2019, the Public Company Accounting Oversight Board (PCAOB) voted to issue a concept release on a potential approach to revisit the PCAOB’s quality control (QC) standard.  The original standard was adopted in 2003, and there have been significant changes to the auditing environment since this time.The PCAOB’s consideration for revisiting the standard stems from the following: (1) observations from its oversight committee, (2) information gathered through outreach efforts, (3) relevant academic research and literature, and (4) developments and trends in the internal control environment, enterprise risk management, corporate governance, and audit firm governance.The PCAOB is considering using Internal Standard on Quality Management (ISQM) 1 as the starting point for the future QC standard which is designed to focus firms’ attention on proactively identifying and responding to quality risks that may affect engagement quality.  The PCAOB also noted that many firms who follow the PCAOB standards are also subject to other QC standards and, so those firms are currently required to implement a QC system to comply with both.  This new standard would help to align the standards to be more consistent.The PCAOB requests comments on the concept release by March 16, 2020.  Check out the Concept Release (2019-003) for further information.Schneider Downs will continue to monitor current developments from the PCAOB.  Please contact your Schneider Downs representative with any questions. ### Diversified Gas and Oil Accesses $200M of Capital in "First-of-its-Kind" Securitization Diversified Gas and Oil PLC, which operates over 7,500 conventional natural gas and crude oil wells in Pennsylvania, West Virginia, and Ohio, recently obtained $200M of capital in its first asset-backed securitization (ABS). These securities have had their name tarnished recently due to their significant involvement in the financial crisis that shook the world economy in 2008. Asset backed securities work through issuing a bond or note. The bond then uses a specific asset as collateral for investors, should the issuer of the bond fail to meet the stated payments. The particular ABS class that was a major contributor to the recession used home mortgages as collateral. When individuals began to default on their mortgages en masse, the value of these ABS’s rapidly declined. Due to the sheer volume of ABS’s and their significant value in the market at that point, the crash in price sparked the largest drop in value for the stock market since the Great Depression. The novelty of the ABS offered by Diversified Gas and Oil is the collateral used to secure it. As opposed to utilizing loans, this bond extended oil and gas wells as collateral. Diversified formed a special-purpose vehicle that now owns a 22% stake in the company’s vast network of wells. This subsidiary then issued notes paying 5% interest, repayable in 10 years. The main Diversified entity continues to operate the wells, and retains majority ownership of the asset portfolio. The natural gas industry faced new challenges in 2019 as the price per million BTUs decreased nearly 30% from the start of the year. This has led to difficulties in obtaining commercial loans from banks, along with a slowing of investor interest on the equity side. Conventional debt offerings have also become less popular. This new security option, however, opens a previously unforeseen avenue for gas companies to gain financing, which is vital to fuel growth in this capital-intensive industry. According to Latham and Watkins, the law firm advising Diversified on the deal, the company entered into a series of hedging arrangements in order to minimize the effect of fluctuations in oil and gas prices. There is also a clause explicitly stating that investor’s interests in the assets would be excluded from any bankruptcy that Diversified could possibly be drawn into. These factors helped to raise the confidence of the rating agencies, and Fitch rated the offering BBB- (a stable outlook). As gas prices have remained depressed through the start of 2020, the success of Diversified’s offering could lead other energy companies to follow suit. While the possible impact on the industry has yet to be quantified, this class of security is certainly a tool that could be used to drive growth in the sector. Sources: 1 )https://www.reuters.com/companies/DGOC.L 2) https://www.post-gazette.com/business/powersource/2019/12/22/Using-old-oil-and-gas-wells-as-collateral-Diversified-gets-200M-from-hungry-investors/stories/201912180145 ### “Parking Tax” Repealed, But Still No Guidance on How to Claim Refunds On December 20, 2019, the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Act) repealed Internal Revenue Code Section 512(a)(7). Implemented as a part of the Tax Cuts and Jobs Act of 2017, the code section had imposed a tax on transportation and parking benefits provided to employees by tax-exempt organizations. In short, tax-exempt organizations were required to pay unrelated business income tax (UBIT) at a rate of 21% on providing pre-tax or free transportation and parking benefits to their employees beginning January 1, 2018.Many agree that this tax was burdensome to tax-exempt organizations not only because of the UBIT payments, but also because of the amount of time it required from an administrative perspective to calculate the tax and prepare a return that organizations may not have previously had to file. The Act repealed this tax retroactively. Tax-exempt organizations now are awaiting guidance from the Internal Revenue Service on how to claim their refunds.On January 8, 2020, Ways and Means Committee Chairman Richard E. Neal (D-MA) released a statement, calling for the IRS to establish an expedited process for tax-exempt organizations to obtain refunds of UBIT paid on transportation and parking benefits provided to their employees. Additionally, Mr. Neal requested that the IRS promptly issue guidance on the appropriate steps tax-exempt organizations should take to claim their refunds.It’s hoped the guidance will also address credits, net operating losses, etc., that may have been utilized to offset unrelated business income from providing parking benefits.Schneider Downs is monitoring the next steps that tax-exempt organizations will need to take to receive their refunds and will provide updates as soon as they become available. ### Your Institution Received a Gramm-Leach-Bliley Act Finding in 2019 – Now What? The Gramm-Leach-Bliley Act (GLBA) is a federal ruling that applies to all entities that collect consumer financial data, including institutions of higher education. This law, specifically the Safeguards Rule, applies to how organizations collect, store, and use student financial records that contain personally identifiable information (PII).  Examples of student data that need to be protected under the GLBA include information provided on the Free Application for Federal Student Aid (FAFSA) form, student application information, and student information shared with loan servicers.   Higher education institutions have been required to comply with the provisions of the GLBA since 2003, but the Department of Education (DoED) didn’t actually enforce them until recently. In July 2016, the DoED issued a “Dear Colleague” letter (GEN-16-12) reminding institutions of their legal obligations to comply with the GLBA and protect student information Following the issuance of that letter, the U.S. Office of Management and Budget’s 2019 Compliance Supplement included compliance requirements related to the GLBA and student information security.  As a result, higher education institutions’ compliance with the GLBA was required to be tested as part of each institution’s single audit. So, what does your institution need to do to ensure compliance with the GLBA for future Single Audits?  The Compliance Supplement requires institutions to complete the following steps: Designate an individual to coordinate the information security program Perform a risk assessment that addresses the following areas: Employee training and management Information systems, including network and software design, as well as information processing, storage, transmission and disposal Detecting, preventing and responding to attacks, intrusions, or other systems failures Document safeguards for identified risks The DoED has made it clear that data security and student privacy are critical issues.  It’s unclear what the repercussions will be for repeat findings, but failure to comply with the provisions of the GLBA could result in restriction or loss of eligibility for certain federal funding. In addition, please visit the Department of Education’s cybersecurity compliance page for further information on how to protect your data: ### Changes to the Financial Responsibility Ratio The U.S. Department of Education (ED) finalized borrower defense rules on September 23, 2019, establishing new regulations that will have a significant impact on institutions that participate in federal student loan programs. The regulations center on borrower defense to repayment, but a substantial portion of the rules also focuses on financial responsibility standards that were revised in response to significant new accounting standards (Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-14, Presentation of Financial Statement of Not-for-Profit Entities and FASB ASU 2016-02, Leases). This article highlights key changes to the financial responsibility ratio triggered by the new FASB standards.Appendix B to Subpart L of Part 668 provides the ED’s definitions and terminology from Section 1 of Appendix B. Because institutions have used these definitions and terms to calculate ratios since the original regulation in 1997, the historical definition and new definition are highlighted below. Changes to the new definition are in red text, while changes to the old definition are highlighted in yellow. Primary Reserve Ratio = (expendable net assets)/(total expenses without donor restrictions and losses without donor restrictions) Expendable net assets New Definition: (net assets without donor restrictions) + (net assets with donor restrictions) – (net assets with donor restrictions: restricted in perpetuity) – (annuities, term endowment and life income funds with donor restrictions) – (intangible assets) – (net property, plant and equipment) + (post-employment and defined benefit pension plan liabilities) + (all long-term debt obtained for long-term purposes, not to exceed total net property, plant and equipment) – (unsecured related-party receivables) Former Definition: (unrestricted net assets) + (temporarily restricted net assets) – (annuities, term endowment and life income funds that are temporarily restricted) – (intangible assets) – (net property, plant and equipment) + (post-employment and retirement liabilities) + (all long-term debt obtained for long-term purposes, not to exceed total net property, plant and equipment) – (unsecured related-party receivables) Total Expenses Without Donor Restrictions and Losses without Donor Restrictions New Definition: All expenses and losses without donor restrictions from the Statement of Activities less any losses without donor restrictions on investments, post-employment and defined benefit pension plans and annuities Former Definition: The total unrestricted expenses taken directly from the audited financial statements Equity Ratio = (modified net assets)/(modified assets) Modified net assets New Definition: (net assets without donor restrictions) + (net assets with donor restrictions) – (intangible assets) – (unsecured related-party receivables) Former Definition: (unrestricted net assets) + (temporarily restricted net assets) – (intangible assets) – (unsecured related-party receivables) Modified assets New Definition: (total assets) – (intangible assets) – (unsecured related-party receivables) Former Definition: (total assets) – (intangible assets) – (unsecured related-party receivables) Net Income Ratio = (change in net assets without donor restrictions)/(total revenue without donor restrictions and gains without donor restrictions) Changes in net assets without donor restrictions New Definition: Total revenue (which includes net assets released from restriction) plus total gains. With regard to gains, investment returns are reported as a net amount. and there will be need to aggregate these two amounts to determine if there is a net investment gain or a net investment loss (net investment gains are included with total gains) Former Definition: Total unrestricted revenue is taken directly from the audited financial statements and includes net assets released from retraction during the year If you have any questions in the calculation of the financial responsibility ratio, contact a member of the Schneider Downs Not For Profit or Higher Education Industry Groups. ### Management and Performance Challenges for the IRS in 2020 Each year, the Treasury Inspector General for Tax Administration (TIGTA) evaluates IRS programs, operations, and management functions to identify the areas of highest vulnerability to the nation’s tax system. For the fiscal year 2020, the IRS’s top challenge is security of taxpayer data and protection of IRS resources, according to TIGTA. Other challenges include implementing tax law changes, addressing emerging threats to tax administration, and modernizing IRS operations.TIGTA’s assessment of major IRS management challenge areas is similar to the prior fiscal year.Last year’s challenges of “identity theft and impersonation fraud” have been changed to “addressing emerging threats to tax administration,” to encompass more issues that affect the IRS and taxpayers.TIGTA still reports that staffing remains a serious underlying problem that effects all management challenges. The IRS budget has increased slightly over the years, but cost increases have resulted in a reduction in the number of full-time employees, with a corresponding impact on institutional knowledge and technical expertise. For example, the IRS anticipates that over 30% of its workforce will retire within the next five years. That’s on top of the fact that the IRS lost over 29,000 full-time positions between 2010 and 2019.  To address this fiscal year’s top priority, the IRS has a mission to ensure that taxpayers can expect that that their information will not be disclosed unless authorized by law. The IRS has developed Internet-accessible, public-facing applications to interact with taxpayers for various tax administrative purposes. These applications collect, process and store large amounts of Personally Identifiable Information (PII) and tax data. This information is extremely valuable, and as such, the IRS is a target for criminals and identity thieves. Accordingly, the IRS must ensure that its applications are secure against threats on the Internet.Recent data breaches exposing taxpayer data were discovered to have impacted the IRS eAuthentication web portal and the IRS Data Retrieval Tool within the U.S. Department of Education Free Application for Federal Student Aid website, which caused both applications to be taken offline. Without these resources, taxpayers were unable to timely file annual tax returns, and, in the case of the student financial aid application, the spring college enrollment process nationwide was negatively affected.The report notes that, “TIGTA works continually with the IRS to identify, investigate, and combat threats to the IRS’s cyberinfrastructure,” specially focusing on “how the IRS ensures that only authorized taxpayers can access their information on these public-facing applications.” It goes on to state that “Strong electronic authentication controls are needed to prevent identity thieves from succeeding at impersonating taxpayers and gaining improper access to tax records.”While the IRS believes that progress is being made at improving electronic authentication controls on its public-facing applications, the IRS’s 52 public-facing applications are not yet compliant with the National Institute of Standards and Technology guidelines. Without full compliance with the new guidelines, the IRS increases the risk of using inappropriate authentication controls, which could allow unauthorized access and activities, compromise taxpayer records, and cause revenue to be lost due to identity theft refund fraud.A word to the wise: Not only does the IRS face cyber-attacks, but businesses do as well. Recent breach reports have outlined the fact that attacks are exploiting security weaknesses faster and easier than ever before and whether small or large, most organizations are not adequately equipped to defend themselves.With the frequency of cyber-attacks on the rise, Schneider Downs can help your organization be better prepared. We offer a comprehensive set of information technology (IT) security service, including network penetration assessments, network vulnerability assessments, web application security testing, IT security maturity assessments and more. Your Schneider Downs team can provide contacts and resources to help your business deal with cyber and technology issues. ### Energy Efficient Commercial Building Deduction Extended Through 2020 On December 20, 2019, President Trump signed a $1.4 trillion spending bill that funds the government through fiscal year 2020. The bill also extends the Energy Efficient Commercial Building Deduction (179D) through December 31, 2020. Prior to the extension, 179D had expired on December 31, 2017. As a result, taxpayers claiming 179D deductions for 2018 may be required to file amended returns.The spending bill retains the majority of the prior law, including the maximum deduction of $1.80 per square footage of the building, as well as the definition of an “energy-efficient commercial building property,” which retains the 2007 ASHRAE standard.What are the Tax Benefits of 179D?179D allows taxpayers to take a federal tax deduction (up to $1.80 per square foot) for the installation of energy-efficient interior lighting, HVAC and building envelope systems.Who Qualifies for the Deduction?The deduction is available to building owners and lessees who make energy-efficient improvements to their commercial buildings located in the United States before December 31, 2020.Designers of government-owned buildings may also be assigned a 179D deduction if they’re the “primary designer” of the applicable system and the government agency in question allocates the deduction to them by signing a “municipal allocation letter.” Examples of the type of public projects that may qualify for the assignment include: Schools, including state universities Libraries Airports Government offices Post offices Courthouses How the 179D Deduction WorksA building is eligible for the entire $1.80 per square foot federal tax deduction if it saves at least 50% in energy and power costs for improvements in lighting, HVAC and building envelope (as compared to a building that meets the 2007 ASHRAE standards), based on the date the building is placed in service. If a building doesn’t meet the full 50% energy savings standard, a partial deduction of $0.60 per square foot is available for each subsystem that meets certain energy-saving requirements.To claim the 179D deduction, the property must be certified by a qualified independent third party, and is generally available in the year the property is “placed in service.” If the property is certified in a year after the building is placed in service, the taxpayer may be required to amend prior returns to claim the deduction. However, if the taxpayer owns or leases the commercial building (as opposed to being allocated the deduction from a government agency), the IRS will allow the filer a “change in accounting method” to claim the deduction in the year the accounting method is changed, which then allows them to avoid costs and other issues associated with amending tax returns.It’s important to note that taxpayers who own or lease a commercial building must reduce their tax basis of the building by the amount of the 179D deduction. In addition, a taxpayer allocated 179D deductions from a government agency must reduce his or her stock basis for the 179D deductions.If you have any questions about the potential benefits of 179D, don’t hesitate to contact us or check out the Schneider Downs Construction Industry Group. ### Contractors Could Benefit from the 10% Election As the compliance season for preparation of 2019 income tax returns kicks off, companies are likely looking for last-minute ways to lower their tax liabilities. Contractors who use the percentage-of-completion method of accounting, for instance, should be aware of an important election that may help them defer recognition of income for tax purposes.Under IRC Section 460(b)(5), contractors can elect to defer the recognition of gross profit under a long- term contract if, as of the end of the tax year, less than 10% of the total estimated contract costs have been incurred. The gross profit on these contracts continues to be deferred until the 10% threshold is met. A separate election statement is not required to be attached to a taxpayer’s return; rather, the election is made by using the 10% method for all long-term contracts entered into during the year on the taxpayer’s original return for the election year. Once made, the election applies to all future contracts and can only be revoked with permission from the IRS.It’s important to keep in mind that recent changes to revenue recognition as a result of tax reform may impact a company’s ability to recognize revenue differently for book and tax purposes. For assistance in determining whether your company could benefit from the 10% election, please contact us. ### Six Tips for Writing Effective Internal Audit Reports You’ve successfully planned and executed your audit. Now, it’s time to communicate your findings to the client, board, or committee. Here are six quick tips for writing effective internal audit reports: Know your audience. When crafting your audit report, it’s important to remember who the end user is. How much does the audience know about the audit and the processes involved? How do they plan on using the information in the report? Are your recommendations in line with their objectives? Playing to your audience is one of the best ways to reach them quickly and effectively. Consider Tone. Think about how you feel after reading these statements: “The manager failed to provide the proper documentation to verify compliance with the policy.”“Documentation was unavailable to verify compliance with the policy.”While these two statements convey the same information, the tone and connotation of each is different. Avoid using words with negative connotations, as they can come across as aggressive. Stay away from terms like failed or neglected. The more defensive and annoyed the reader feels, the less likely they are to receive the information within the report. Keep it simple and specific. You don’t have to use big words to express big ideas. Keep language clear and concise without “dumbing down” the report. For example, instead of using timely, be specific. Use terms like daily, monthly or quarterly instead. Readers of audit reports are often busy, so keeping things clear and to the point will allow them to quickly understand ideas without laboring through a lengthy, overdetailed report. Remember the basics. Proper spelling and grammar go a long way, and can ultimately be more persuasive when trying to get the report reader to consider your recommendations. While this may sound like common sense, simple errors still seem to creep into documents even with the use of spell check and proofreaders. Don’t forget to give your report a triple check for spelling and grammar. Give and take. It’s common for auditors to be considered the “bearers of bad news.” While more often than not audit reports contain findings and recommendations based on things process owners are doing wrong, it is helpful to consider communicating things they’re doing right. A little “give-and-take” will help keep a positive tone and give an overall view of the area under audit. For example, instead of only communicating that the warehouse doesn’t have proper smoke detectors, consider phrasing your finding as: “Company ABC has improved safety procedures by installing fire extinguishers at every sector of the warehouse. However, safety procedures need enhancement as smoke detectors were not found within the warehouse." Visualize. People understand information in different ways. Consider utilizing charts and graphs within your report to deliver findings, recommendations and other information you want the reader to understand. Some readers may absorb information more efficiently using a visual vehicle, as opposed to a lengthy paragraph or standard bullet points. Getting audiences to receive and truly reflect on the feedback offered in audit reports can be a challenge, but using these tips might get you one step closer to producing an effective report. ### New Decade, New Strategic Plan for your Organization? A strong strategic plan is critical to your organization’s success. It helps guide management through decision making and creates clarity for the broader group. Here are a couple things to consider when building your plan.First, begin by studying the market and competition and identify any trends. Next, perform a SWOT (strengths, weaknesses, opportunities, threats) analysis. Once you’ve established these baselines, you can start into truly defining your mission and vision.Your mission statement is the answer to “why do we exist?” while your vision statement speaks to “what do we offer and where are we heading?” From this point, you can define your corporate goals, the specific outcomes you’re trying to achieve. Drill down to the department-level. Create a purpose for each level that allows their contribution to be measured. Finally, determine staffing, budget and financing needs.Strategic plans take time and, most importantly, require everyone’s buy-in. Having employees actively participate in the plan will likely make their buy-in easier, since they’ll be in tune with the thought process. And don’t rule out third-party help. Frequently, an outside facilitator can be brought in to build the plan, keep the process on track and effectively ensure everyone is focused.At Schneider Downs, we’re in the mist of executing our own strategic plan. Ask us about what we’re doing so we can share our experience with you as you think about your plan. ### Financial Boot Camp Series: Managing Your Buckets Happy New Year, and welcome to 2020.  If we think back just twelve months, we were starting 2019 after a significant market downturn that started in the 4th quarter of 2018.  The first few days of 2019 for equity markets were not positive either……until suddenly the tide shifted.  Although the past year had its ups and downs, the equity markets recovered all of their 2018 losses and then some.  But when the year 2019 began, no one could have really known how the year would play out, nor can we tell you today what lies ahead for 2020.  As I pen this first article in our 2020 financial boot camp article series, the equity markets have just taken a hit on the chin due to increasing tension between the U.S. and Iran.  So what is an investor to do?What is the biggest risk an investor faces?  Is it a market decline or is it that the investor must sell an asset at the wrong time to meet a cash need?  I believe it is the latter.  The prices of investments can change drastically in a short period of time.  Prices can also remain under stress for much longer than our patience and mental health can tolerate.  Generally, however, this type of volatility is manageable within a well-developed investment strategy.  Investment strategies vary for investors in different stages of their investment lives.  In today’s article, we are going to focus on investors who are using their investment portfolios to fund or supplement their cash needs.This strategy is simple and effective if one is disciplined enough to follow it. The first step is probably the most difficult only because many individuals do not like budgets and do not enjoy tracking annual expenses. However, understanding annual cash flow is paramount to building and maintaining an investment strategy in retirement.  We refer to this strategy as the bucket approach.What are the investment buckets?  At the most basic level, they are: Cash Bonds – debt instruments that pay interest Equities – the stock of publically traded companies Please note: these buckets can quickly become more complicated because within the bond and equity universes are many choices, but for now, we will stick to the basics with a framework for helping investors manage cash flow from their portfolio. Regardless of your financial stage in life, you need to have some cash tucked away.  While the amount of cash can vary greatly depending upon your personal situation, the first bucket you should fill is cash.  If you are retired, the cash bucket needs to take into consideration streams of income (social security and pensions), as well as the money that you require each year from your portfolio to close the gap (hence, why it is so important to understand annual cash flow).  If this bucket is properly funded, annual market volatility should be much easier to tolerate.There are many ways to fill your cash bucket throughout the year.  One of the easiest methods is to let all of the portfolio’s income (interest, dividends, and capital gain distributions) drop to cash.  As the year progresses, rebalancing one’s portfolio can also be used to refill the cash bucket for the coming year, as can harvesting capital losses at year-end to manage income taxes. The second bucket to fill is the bond bucket.  The bond portion of your portfolio serves several purposes.  The first is income. While income generation from bonds can be challenging in low interest rate environments (like we are experiencing now), if the portfolio is high quality in nature, one’s bond portfolio should provide downside protection and asset appreciation when equity markets go south. In addition, a bond portfolio can provide a real and psychological reservoir of money that can be drawn upon when the equity market is in a multi-year funk.  If you are retired, and the equity portion of your portfolio losses value, the bond bucket should be able to cover 8 to 10 years of cash needs.  This allows the investor to give the equity market plenty of time to recover before the investor is forced to sell equities to raise cash to meet living expenses.The third bucket to fill is the equity bucket.  Some investors may want to leave this bucket empty, but I encourage you to have some allocation to an equity strategy.  A diversified portfolio that includes equities has provided long-term investors better returns than just owning cash or bonds.  Today, as we look at the very low yields that bonds and cash provide, the case for a diversified portfolio of equities as the growth engine of a portfolio still rings true. The New Year is a great time to review and evaluate your investment strategy.  In good equity market periods, such as 2019 turned out to be, take the opportunity to rebalance your equity holdings back to your long-term target.  Greed is just as dangerous to an equity investor as fear.  ### After the Auld Lang Syne: 2020 Estate Plan Resolutions The ball has dropped, Auld Lang Syne's been sung, and we’ve all rushed out to sign up for that fitness membership that we've convinced ourselves we're finally going to use this year. Statistics show, however, that by the second week of January, 25 percent of people have already abandoned their New Year's resolutions, and 80 percent of us will have given up on our pledge before February 29. So this year, why not be part of the 20 percent who succeed on their resolutions by setting something a little more obtainable than "diet" or "travel more" and schedule a short appointment with your estate planner to review these promises for 2020: Review your estate plan to be sure it still makes sense in a post-Tax Cuts and Jobs Act environment. Under the TCJA, the estate tax exemption is "doubled" through December 31, 2025, giving taxpayers the ability to transfer over $11 million dollars per person. Considering whether additional lifetime gifting makes sense, whether a credit shelter, marital or family trust is still necessary in your estate plan, and whether reallocation of assets among beneficiaries is needed, should all be part of your 2020 estate plan resolution. Review beneficiaries to ensure they’re up to date on retirement accounts and life insurance policies. Too often beneficiaries get named at the time a policy is purchased or an account is opened, never to see the light of day again. What many fail to realize, however, is that a beneficiary designation typically supersedes all other attempts to devise those assets, including via a will. At the start of 2020, make sure you've updated your beneficiaries to add that child/grandchild that was born since your last update, or remove that divorced spouse or deceased family member, especially in light of some of the changes recently enacted under the SECURE Act. Remove joint ownership designations on assets if joint ownership is no longer desirable. Just like a beneficiary designation, joint tenancies, POD accounts and TOD accounts all transfer by operation of law on the decedent's death. All joint ownership accounts should be reviewed to ensure the arrangement still makes sense. Title all assets intended to go into a revocable trust in the name of the revocable trust. Assets only obtain the protections and advantages of a revocable trust when they’re titled in the name of the revocable trust. Assets left in the name of the decedent must typically still pass through probate, which defeats one of the primary purposes of the revocable trust altogether. Titling an asset in a revocable trust is ordinarily a relatively easy process, so in 2020 make sure all those assets are properly included in that revocable trust. Confirm who owns your insurance policies. Many clients are often led to believe that life insurance proceeds are "tax-free," which is a bit of a misnomer. Life insurance proceeds can be taxable for estate tax purposes if either (1) the policy is owned by the decedent or (2) the policy names the decedent's estate as beneficiary. Making a trust the owner of the insurance policy might be a viable option for situation one, but should only be done after a thorough discussion with your estate planner. Making sure your primary and contingent beneficiaries are up to date and still living is a great way to avoid situation two. If you haven't set your 2020 resolutions, there's still time. If you have, double down on your chance for success by adding a few more. 2020 brings with it a new year and a new decade; why not get the ‘20s off on the right foot with a quick review of your estate plan? ### Wawa's Data Breach Reset the days without a major data breach back to zero.In the constantly evolving world of cybersecurity, it doesn’t look like the phrase above will ever surpass the 30-day mark. Seems as if once a month, either a major retailer, financial institution or service provider is affected by some sort of data breach. Now Wawa, a popular east coast chain of gas and convenience stores, has taken the spotlight after a breach related to financial data was discovered to be occurring within the organization from as early as March 4. The retailer joins the long list of entities affected by data breaches in the past year: Marriott, Whitepages, Facebook, First American Financial Corp., American Medical Collection Association, Capital One and Adobe.Details are still unclear on how an attacker was able to operate inconspicuously within Wawa’s environment for more than eight months, but one fact seems to be known: this breach most likely affected all retail/gas locations under Wawa’s purview. Additionally, it’s been confirmed from an anonymous source that an external firm was called on to assist Wawa in rectifying the data breach, but that firm has yet to be named.At Schneider Downs, our cybersecurity team assists a multitude of clients in matters related to data breaches, PCI compliance and security awareness. Whenever a breach hits the headlines, we like to remind our readers, clients and potential clients that there is a long list of items to focus on when it comes to payment card security. As we’ve seen across the industry, sensitive cardholder data can be stored – and therefore stolen – from many places, some more obvious than others: Compromised card readers and other supporting infrastructure (e.g., RAM scrapers) Paper stored in a filing cabinet (the old fashioned way) Cardholder data stored in a payment system database Camera footage recording entry of authentication data Secret tap into the store’s wireless or wired network Customer service call center recordings Based on the limited information we know about the Wawa breach, bulleted items 1, 3 and 5 were the most likely avenues in which the attacker was able to compromise such a large amount of data. The only good news that come out of this story is that Wawa was able to rectify the issue related to this breach within two days once it was identified. The bad news is, the hackers went unidentified in their systems for over eight months.The best news we can hope for, though, is no more news from the data breach front as we get through the holiday season. In the meantime, we encourage all readers to monitor their payment statements over the coming months if they’ve purchased anything from Wawa in the last year.Sources:https://www.cnet.com/news/biggest-data-breaches-of-2019-same-mistakes-different-year/ ### New Orleans Under State of Emergency Due to Ransomware Attack The city of New Orleans continues to operate under a state of emergency following a devastating ransomware attack. The hack was discovered in the early morning of December 13 when city officials noted suspicious activity in their computer systems. By mid-morning, the increase in activity allowed them to identify ransomware as the cause. As a result, all work by city employees came to a halt as officials were forced to disconnect computers and servers. Municipal emergency services like police and fire were not affected, but most other work is now being completed manually.Reports suggest that over 4,000 city computers have been infected and that New Orleans has already incurred costs in excess of $1 million. The ransomware involved in the attack is believed to have come from Ryuk, a variant with which the Schneider Downs cybersecurity team is quite familiar, as detailed in a related article. The link to Ryuk is related to suspicious executables that were uploaded from an IP address within the United States to VirusTotal, a scanning service, on December 14. One of those uploads contained references to Ryuk and New Orleans, specifying city domain names, domain controllers, users names and file shares. While not confirmed, these connections do appear to identify Ryuk as the culprit.This latest ransomware infection serves as a reminder that not even governments are immune from cyberattacks. In fact, state and local administrations have been hit with a near-constant stream of ransomware attacks over the past year. Underfunded and under-resourced governments are particularly vulnerable. New Orleans has been able to operate with some level of normalcy as a result of extensive training to prepare for natural disasters. Governments, organizations and individuals without this training may not be able to recover as quickly.As a quick word of advice, Schneider Downs reminds you to be suspicious of clicking links within emails (and continue training employees to be suspicious), monitor traffic on your network, and have an incident response team in mind to call if ransomware does hit. For more information on our extensive experience helping clients deal with ransomware attacks, check out our white paper, 10 Things Companies Wish They Did Before a Breach.How Can Schneider Downs Help?The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We’re an authorized reseller of both Mimecast® and Carbon Black and offer comprehensive Digital Forensics and Incident Response services. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### 2019 AICPA Conference on Current SEC and PCAOB Developments Recap The AICPA held its 2019 conference on Current SEC and PCAOB Developments in Washington D.C. from December 9-11.  The Conference provided insight and perspective related to financial reporting and trends impacting the accounting, auditing, financial reporting and other matters. Throughout the three-day conference, trending topics dominated the discussions including:  critical audit matters (CAMs); auditor independence; new FASB standards on revenue recognition, leases and credit losses; non-GAAP measures; interest rate reform; cybersecurity; and audit quality.  The overarching theme throughout each discussion was the impact of technology on the accounting, reporting and auditing profession. In this article, we are going to take a deeper dive into interest rate reform. In his address, SEC Chairman Jay Clayton and SEC Chief Accountant Sagar Teotia discussed interest rate reform, with LIBOR expected to go away in 2021.  They indicated that the transition is expected to be difficult and cautioned registrants that “the risks associated with this expected discontinuation and transition will be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner.”  Mr. Clayton encouraged companies to begin assessing their risks associated with rate reform and adjust contracts accordingly. Additionally, representatives from the Office of the Chief Accountant (OCA) gave an update on their activities related to reference rate reform as it pertains to hedging activities, specifically cash flow hedges.  The OCA discussed how the transition away from LIBOR would impact the assessment of hedge effectiveness of a cash flow hedge of LIBOR-based debt.  The OCA referenced the FASB’s proposed ASU that would provide for optional guidance for a limited time allowing companies to change to another reference rate while not impacting the status of the hedging instrument. For more information on the conference or interest rate reform, please contact a member of the Schneider Downs SEC and Public Company Industry Group. ### Update: Halfway There – Tax Cuts and Jobs Act Guidance Catching Up Planning for the 2019 tax season is in full swing now that the November 15 tax-exempt organization filing deadline has passed. In stark contrast to last year, which saw professionals navigating many interpretations of new tax reform provisions, 2019 has more guidance to support tax positions.According to David Kautter, Assistant Secretary of the Treasury for Tax Policy, guidance has been released for 60% of 2018’s Tax Cuts and Jobs Act (“TCJA”) provisions. At the AICPA’s recent National Tax Conference in Washington, Mr. Kautter said we should expect that number to increase an additional 10% by January.Guidance the Treasury hopes to publish by year end, according to Kristen Parillo, an editor for Tax Notes Today Federal, include: Carried interest proposed regulations under Internal Revenue Code (“IRC”) §1061; Proposed regulations related to the $10,000 limit on deductions for state and local taxes under IRC §164; Final regulations on the increased basic exclusion amount under IRC §2010; Final regulations on qualified opportunity zones under IRC §’s1400Z-1 and 1400Z-2; Proposed regulations on computing UBI under IRC §512 for tax-exempt organizations’ separate trades and businesses; Proposed regulations on withholding under IRC §3402; and Final regulations on the business interest limitation under IRC §163(j). Proposed regulations for carried interest and the state and local tax deduction are worth noting as they will directly impact 1040 filers. Carried interest, as detailed in a previous Our Thoughts On post, IRS Reacts to Perceived Loopholes Under the Tax Cuts and Jobs Act, represents the portion of an investment fund's return paid to managers of the fund. This return is taxed at a preferential capital gains rate to the managers. The TCJA modified the carried interest rules such that, in order to receive the preferential tax rate, managers must hold the investments for at least three years. The requirement re-characterizes long-term capital gains from either 15% or 20% to ordinary rates, which can reach up to 37%.Many Americans who historically itemize their deductions felt the impact of the TCJA change, which limited state and local tax deduction to $10,000. The Tax Foundation estimates the dollar benefit of the SALT deduction fell from $28 billion in 2017 to $7 billion in 2018.Schneider Downs tax advisors will continue to monitor additional proposals, changes and technical corrections to the Act. If you have questions, please contact us. ### The Impact of Low-Code Applications on Business Automation Many businesses would like to automate more of their processes in order to increase operational efficiency, but developing new applications the traditional way, with a common web framework, has too often become more burden than benefit. Traditional process development typically entails higher costs and a longer duration, and usually requires a greater amount of IT personnel resources. One alternative to the predicament is low-code development a set of tools that can assist in creating applications visually using a drag-and-drop interface. The approach is remarkably simple when compared to creating thousands of lines of complex code and syntax.A common operational efficiency that can be achieved through low-code are workflows that communicate information across different platforms. Jason Morris, founder of Round Table Law, structured his firm’s software and datasets to increase back-office efficiency and passes the cost savings on to his clients. Using readily available applications, he’s able to track case progress and billing information more efficiently by creating a low-code application workflow that begins with creating a new client file with his case management software. Each time a new client matter is created, a label is automatically added to Mr. Morris’ Gmail account that tracks specific emails related to the client’s case.Simultaneously, a new project under the client matter is created in his billing software to track hours and a client-specific to-do list is created in another app for any reminders. Lastly, a summary of the progress of the case is sent to a Google spreadsheet. So what was once was a tedious, time-consuming manual process is now automated with a few clicks of the mouse. Altogether, this workflow created by low-code enables Mr. Morris to save time with his administrative tasks and lets him spend more time working directly on clients’ cases.Advancements in technology have also transformed customer service, where using low code is a great way for companies to automate their support services. Implementing an automated support system provides customers with quicker and more accurate responses while reducing the costs associated with hiring, training and retaining employees for these roles. One example of low-code automation for support services are chatbots, which are especially helpful in reducing response time since they operate 24/7, a benefit for customers wishing to make inquiries from another time zone. Since these automated responses can be altered almost instantaneously, chatbots also contribute to a greater sales conversion rate.In creating low-code applications, there are a number of platforms that enable users to self-develop their own workflow configurations to meet specific needs for improving processes. Jason Wong, senior director at Gartner, projects that low-code will account for more than 65% of application development activity by 2024.Given the readily available tools and the simplistic approach to low-code development, how will you and your company adapt to the transformation of automating day-to-day tasks? Schneider Downs could be the answer. Contact our ADAPT group to get in touch with experts who can work with your data and transform your decision-making and analytics processes. ### Sustained Low Natural Gas Prices Causing Industry to Examine Long-Term Profitability Chevron Corporation announced last week that it would be writing down the value of its oil and gas assets by more than $10 billion. The company said the impairment was related to its shale holdings in Appalachia and long-term expectations about natural gas prices. Last month, Equitrans Midstream Corporation disclosed that its YTD operating performance was affected by nearly $300 million in impairment charges recorded as a result of downward revisions to forecasted natural gas production growth in the region. Industry analysts don’t expect pricing to pick up in the foreseeable future. Conventional wisdom held for years has been that production companies can plug wells and pause production to wait out low prices. Some in the industry are considering the possibility that buyers may never come, as the world considers the impact of fossil fuels on climate change and innovations that reduce the need for oil and natural gas are adopted. Suppliers who worry that prices may never rebound are selling reserves while they can, which is also keeping downward pressure on pricing. With sustained depressed pricing for natural gas, and no increase expected on the horizon, exploration & production and midstream companies in the region will need to take a hard look at their oil and gas assets to determine if impairment charges are necessary. Expect other players to announce similar reassessments as the fact that these companies are writing down the value of their assets may itself represent an indicator of impairment for the rest of the industry. Smaller, independent producers with undiversified exposure to local natural gas pricing may also need to consider the impact on their long-term profitability and their ability to continue as a going concern. Schneider Downs has experts in the oil and gas industry. Our professionals are skilled in providing audit, assurance and business advisory services to clients involved in the extraction of natural resources. Contact us for more information. Sources: https://www.wsj.com/articles/chevron-facing-fossil-fuels-glut-takes-10-billion-charge-11576012579 https://www.businesswire.com/news/home/20191105005457/en/ETRN-EQM-Announce-Quarter-2019-Results ### Alternative Fuel Credit Extension Expected to Arrive Just Before Christmas Many taxpayers in the transportation and manufacturing industries have been patiently waiting, like a child for Christmas, for an extension of the Alternative Fuel Credit. The credit expired on December 31, 2017, and it appears now the extension will become law this week when the Senate passes and President Trump signs the Tax Certainty and Disaster Relief Act of 2019 approved by the House on December 17. The credit enables taxpayers who use propane or liquefied petroleum gas for business equipment like forklifts, or compressed natural gas in vehicles, to receive a 50-cent per gallon credit.When signed, the new law will reinstate the Alternative Fuel Credit retroactively to January 1, 2018. According to the directive, the IRS will provide guidance within 30 days of the effective date for a one-time submission of claims covering the period January 1, 2018 through September 30, 2019. The guidance permits a 180-day period for submission of these claims.Schneider Downs will monitor this situation and provide an update when the IRS releases its guidance. Contact us in the interim with any questions you may have about the Alternative Fuel Credit or any other tax planning inquiries. ### New Federal Government Spending Bill Includes Significant Tax Provisions As part of an overall $1.4 trillion spending package (two separate bills) expected to make its way through the House and Senate and then onto President Trump’s desk for signature, Congress is set to repeal some unpopular tax provisions enacted as part of the Tax Cuts and Jobs Act (TCJA). The bills also extend some popular provisions that expired at the end of 2017 or 2018, repeal a medical device excise tax enacted during the Obama administration, and rescind the “Cadillac” tax on high-cost health plans. They also add provisions intended to improve retirement savings and allow for additional disaster relief.The tax portions of the bills are valued at $428 billion and are supported by both Democrats and Republicans. The current bills include provisions from the Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act), two measures that were unable to garner sufficient support within Congress for separate passage earlier this year.Unfortunately, the bill does not include a highly desired technical correction to the TCJA that would allow bonus depreciation on qualified improvement property.The spending bill’s tax-related highlights include (but are not limited to) the following: Repeals an increase to tax-exempt organizations’ unrelated business income for transportation fringe benefits Reinstates the so-called “kiddie tax” and repeals the TCJA’s tax treatment on unearned income of children Reduces the net investment income tax for private foundations from 2% to 1.39% Reduces the medical deduction floor from 10% to 7.5% for individuals eligible to itemize through 2020 Extends the gross income exclusion for discharge of qualified principal residence indebtedness Extends the following provisions: Work Opportunity Credit Section 179D deduction for energy-efficient commercial building property Section 25C credit for energy-efficient home improvements Section 45L credit for energy-efficient new homes Alternative and biofuel tax credits New markets tax credit Employer credit for paid family and medical leave Railroad tax maintenance and mine rescue team training credits Enacts changes to retirement plan plans that impact both employers and individuals Simplify 401(k) safe harbor rules Allows two or more unrelated employers to join a pooled employer plan (“open MEPs”) Increases the credit limitation for small employer retirement plan startup costs up to $5,000 Repeals the 70½ age cap on making IRA contributions Increases the age for required minimum distributions (RMDs) from 70½  to age 72 Requires inherited retirement accounts to be distributed within 10 years (i.e. eliminates the “stretch IRA”) Allows employers to adopt a new plan up to the due date of the employer’s tax return Many of the extenders and changes have been retroactively applied to 2018.  These benefits will need to be captured through the filing of amended returns or through other procedures provided by the IRS.As of the date of this article, the bill was still not final law. For more information on how these provisions might affect you, please contact your Schneider Downs tax advisor. ### An End to the Upside Down World of Taxing Expenses? Recent developments in Washington are providing hope that exempt organizations might be getting a surprise holiday present.  Lawmakers and administration officials announced that they reached an agreement on a bill extending many expired and expiring tax provisions.  In addition to extenders, the legislation has a provision to repeal Code §512(a)(7), which taxes qualified transportation fringe benefits.Since January 1, 2018, exempt organizations have been subject to a tax on the amount of parking expense that is attributable to employee parking--an income tax on an expense.  There was also tax on the expense incurred in bus passes provided to employees.  Needless to say, this tax has been very burdensome and costly to exempt organizations.  Numerous pieces of legislation have been proposed to eliminate this tax, but nothing has come close to passing.According to reports, the Taxpayer Certainty and Disaster Tax Relief Act of 2019, has passed the House on Tuesday afternoon and is in place to pass the Senate and be signed into law on Friday by the President.  The draft legislation indicates that Code §512(a)(7) will be struck as of the date of the Tax Cuts and Jobs Act.  The result would seem to be that any tax paid as the result of this code section would be refundable.  Certainly, no information is available on how this would be accomplished.If you have any questions on the Parking Tax and its tentative demise, please contact any of our exempt organization experts.  We will post further updates as they become available.     ### Potential Change to the Private Foundation Excise Tax Rate On December 17, the House of Representatives passed the Taxpayer Certainty and Disaster Tax Relief Act of 2019. The bill includes a provision to eliminate the two-tier excise tax that private foundations pay on net investment income and replace it with a flat 1.39% rate. It is expected to be passed by the Senate and signed into law before the end of the year. The new rate would be effective as of the date the new law is enacted.Each year, many private foundations spend a significant amount of time working through the five-year calculation to determine what qualifying distributions will be required for them to be at the 1% tax rate, versus the 2% rate. If enacted, private foundations will no longer have to go through the calculation and will pay net investment income tax at a flat 1.39%. To those organizations that have been paying at the 1% rate, this will be a slight increase to their tax bills, but for many others the simplification has been long-awaited. The new law would also serve to eliminate the need to make last-minute grants to reduce the tax rate.If you have any questions on the excise tax changes, please contact any of our exempt organization experts. We’ll post further updates as they become available.  ### Brian Krebs Sheds Light on Cybercrime at Pittsburgh’s Premiere Cybersecurity Event On December 9, 2019, I was honored to represent the Pittsburgh Chapter of ISACA and Schneider Downs as the leader of Pittsburgh’s Information Security Day event at the Rivers Casino. The event was decreed as such by the Mayor of Pittsburgh, Bill Peduto, and had record attendance of more than 500 professionals. The day featured various speakers from both the local Pittsburgh business community and experts from around the country who flew in to give their advice and speak about important cybersecurity matters. The highlight of the day was a fireside chat with cybersecurity investigative journalist, Brian Krebs. Mr. Krebs is a leading cybercrime journalist (formerly with the Washington Post) and New York Times bestselling author of Spam Nation. He has been featured on leading media outlets, including 60 Minutes, CNN, FOX, ABC News, and in The Wall Street Journal, Forbes and Bloomberg Businessweek. Currently, on his popular security blog, www.KrebsOnSecurity.com, he exposes information that can’t be found anywhere else, shedding light on the digital underground and dangerous activities of profit-seeking cybercriminals who make billions off of pharmaceutical sales, malware, spam, heists and data breaches, like the ones at Adobe, Ashley Madison, Target, and Neiman Marcus that he was the first to uncover. I had the honor of sharing a fireside chat with Mr. Krebs, where we talked a little bit about his career and a number of important cybersecurity topics. Below are some key takeaways I’ve prepared: from information I learned while preparing for this event, and in my conversations with Mr. Krebs along the way, and finally, from advice he shared during our fireside chat: Being an investigative journalist for cyber seems pretty tough! Mr. Krebs described how there is no shortage of companies being breached and there is a lot of information out there. He described that his process entails finding new and unique stories or angles to uncover, not just writing about what everyone else had already covered. He also enjoys getting to the heart of the matter and shedding light on those responsible. As an example, here is a story that he wrote regarding the Russian nationals that were indicted recently right here in Pittsburgh by U.S. Attorney Scott W. Brady: https://krebsonsecurity.com/2019/12/inside-evil-corp-a-100m-cybercrime-menace/ Don’t let your first computer incident be a real one. Mr. Krebs discussed how he often calls on companies that are experiencing an incident or they don’t know they’ve had one yet. In these cases he often finds that organizations aren’t well versed on how to handle these situations and could benefit from incident response testing and a more robust plan for when the seemingly inevitable occurs. Don’t underestimate the attackers. In his investigations, Mr. Krebs often gets to see the underlying economics of the cyber-crimes that occur. Some of the most lucrative attacks out there are simple business email compromise attacks whereby the attacker essentially just asks the target for money (pretending to be someone else) and they comply. Other than that, attacks like large-scale ransomware attacks are also very lucrative if the ransoms end up being paid. The attackers that we are up against are well funded and well run organizations, and their capabilities are very advanced. ### Make Sure to Let Your Tax Preparer Know About All Those Partridges Egg-laying geese? French hens? Maids milking cows? Gifts from your “true love” were a whole lot different in 1780 when the Twelve Days of Christmas was written, when compared with today’s iPhones and Echo Dots. But if nostalgia is your thing and you want to start doling out piping pipers and turtle doves, you might want to prepare for the tax consequences, since your presents will be subject to gift tax.The federal gift tax regime is essentially divided into two parts, an annual exemption and a lifetime exemption. The annual exemption is the amount you can give per person, per year, tax-free. The amount can either be a single lump sum gift or it can be in small increments throughout the year, but in either case you’ll be limited in 2019 to $15,000 per donee. For every dollar you give in excess of your $15K annual exemption, you begin to tap into your lifetime exemption. In 2019, the maximum amount a person can give away tax-free during life or at death is $11.4 million. It’s twice that for married couples, but spouses may make unlimited gifts to each other without triggering the annual or lifetime exemptions.So let’s say that you and your true love have not yet decided to make that leap and tie the knot. And let’s say your true love starts gifting drumming drummers and partridges in pear trees your way this holiday season. Thankfully for the past 36 years, the folks over at PNC have put together the Christmas Price Index to help make valuation work easier. So if your true love decides to follow the song to its literal interpretation (i.e., day 1 you receive a partridge in a pear tree, then day 2 you receive those turtle doves and a second partridge in a pear tree), you’ll have ended up with 364 gifts at the conclusion of the 12 days and your true love will have bestowed on you roughly $170,298.03 worth of gifts.But wait! The two of you aren’t married, so that means there’s no unlimited gifting. Only the first $15,000 worth of gifts is tax-free for your true love. (Fun fact: the seven swans-a-swimming is ultimately the tipping point.) Now, fret not, your true love probably isn’t going to have to pay tax on these gifts. As previously mentioned, once your true love exceeds the $15,000 annual exemption threshold, he or she starts to erode their lifetime exemption. So, if your true love follows through and gives you the full 12 days’ worth of gifts, he or she will only cut into their lifetime exemption and no tax is due.As a loving partner, though, remember that one of the best gifts you can give back to your true love this holiday season is reminding them that they should also report this to their tax preparer so the appropriate gift tax return can be completed.If you intend on gifting the Twelve Days of Christmas this year, or any other gift in excess of the annual exemption, the tax team as Schneider Downs is happy to help advise or answer any questions you may have. ### Ryuk Ransomware Facts and Protections Ransomware is a type of malicious software that either prevents access to existing files or to the computer entirely until a ransom is paid. It is so widespread that individuals are hit with ransomware every 10 seconds, and businesses are infected every 40 seconds. Technology professionals dread getting hit once with a ransomware attack, but repeat attacks are becoming more common. Drawing comparisons to 2017’s WannaCry cyberattack, the FBI says that as many as 100 U.S. and international businesses have been infected over the past 14 months after being methodically targeted by cybercriminals with a specific ransomware variant called Ryuk. The UK National Cyber Security Center sums up the threat by advising that “the Ryuk ransomware is often not observed until a period of time after the initial infection, ranging from days to months, which allows the actor time to carry out reconnaissance inside an infected network, identifying and targeting critical network systems and therefore maximizing the impact of the attack.” Like other ransomware variants, Ryuk often starts with initial delivery through a phishing email. However, this attack is typically not the ransomware itself, but usually delivery of a dropper or Trojan that can be used to obtain initial access to the environment (e.g., Trickbot or Emotet). The attackers use this access to determine how best to ultimately execute the attack and even turn off protections meant to defend against a strike. The goal is to ensure the success of the ransomware infection, thereby creating an opportunity for a high ransom payment. What makes Ryuk infections different is that the malware is typically propagated throughout the environment by the threat actor using interactive remote access to target networks and resources. In essence, the attackers use the Trojans to access your environment and gain a foothold, rummage around and shut off your protections, then eventually drop and execute the ransomware when they believe they’ll have the most success. Even when detected, Ryuk can be difficult to remove. The victim must remove not only the malware from all systems but also the Trojan that first provided access. Attackers can continue to encrypt machines if only the ransomware has been removed and not the Trojan, which sets up victims for a relentless cycle of reinfection. The Schneider Downs Cybersecurity team has experience dealing with Ryuk through our Digital Forensics and Incident Response (DFIR) services, and have determined that the threat actors behind the ransomware are specifically targeting enterprise environments in their attacks. Our forensics analyses have shown that the malicious actors often focus on specific types of organizations and perform reconnaissance on the targets for a period of time before finally executing the ransomware. From what we’ve experienced, the threat actors then use this reconnaissance to determine the ability of the organization to pay the ransomware, often in the hundreds of thousands and, in some cases, millions of dollars. So what are some good ways to protect against Ryuk and other types of ransomware? Employee training is a key first step, as your own people can often be a strong line of defense in spotting a phishing email that’s meant to deliver the initial blow. Advanced email protection tools like Mimecast® should also be reviewed to prevent initial delivery of the Trojan. To detect if an infection has occurred, advanced anti-malware tools Carbon Black should be considered. Most antivirus products block malware based on certain signatures that appear to be associated with malware recognized in the past. But Ryuk is different; it continuously adapts and disguises itself, so signature-based methods can’t deal with viruses like Ryuk because of its often unique and never-before seen signature. That’s why advanced antivirus tools look at the behavior of files and programs, to identify if they’re trying to execute potentially malicious activities like encryption. Next-generation antivirus tools are also effective at spotting techniques used to deliver and propagate the malware and the commands that are executed to turn off protections. In essence, these tools should work and neutralize the threat long before the ransomware even has a chance to execute. Additionally, ensuring that your organization has a sound and secure policy for backing up key systems and data is paramount. Just to name a few strong controls, we recommend securing backups through strong encryption, multi-factor authentication to backup servers/mounted drives/etc., along with full segmentation of backup devices and servers. How Can Schneider Downs Help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. We’re an authorized reseller of both Mimecast® and Carbon Black and offer comprehensive Digital Forensics and Incident Response services. For more information, visit www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### IRS to Focus on Companies That Owe Taxes on Offshore Profits The Internal Revenue Service recently announced it would focus on companies that owe taxes on overseas profits (a Section 965 tax, or as some call it, toll charge or repatriation tax).The toll charge ---- a one-time tax (payable over eight years) on the existing stock of offshore holdings regardless of whether the funds are repatriated ---- was introduced under the Tax Cuts and Jobs Act (TCJA), which was signed into law December 2017. It was part of the transition to the territorial tax system, which eliminated the tax incentive to keep cash abroad.A one-time toll charge tax was imposed on non-previously taxed post-1986 foreign earnings and profits of certain U.S.-owned foreign corporations. The toll charge is reduced by a deduction computed in a manner that ensured a 15.5% effective tax rate on earnings represented by cash and an 8% effective tax rate to the extent the earnings exceed the cash position.Congressional leaders and experts expect that the repatriation levy will generate significant tax revenue over 10 years. Interestingly, and in line with this expectation, the IRS recently included repatriation tax payments as an area of focus for the agency’s auditors, according to a list on the IRS website. Agency officials previously said the area is ripe for abuse because companies could try to minimize their foreign profits in an attempt to reduce their toll-charge-related tax bills.The IRS also said the audit could expand beyond reviewing taxes paid on offshore profits — it could trigger an exam of other changes companies made to their tax strategies after the 2017 law, which cut the corporate rate to 21% and overhauled the international tax rules. ### FinTech and the Risk of Convenience Financial Technology (FinTech) companies strive to work with financial institutions and consumers to provide the ability to conveniently access financial data, mobile banking and investment options. However, the opportunities for convenience open up opportunities for risk related to the sensitive data that is transferred among technologies.Potential vulnerabilities in FinTech systems inherently exist between the API and the software systems they connect. FinTech firms build Application Programming Interfaces (APIs) to connect to banking systems and provide the “seamless” and “convenient” experience. However, with no regulatory framework, FinTech firms are vulnerable to the potential for compromise of the personal data they process and maintain access to, as well as any security weaknesses and issues caused by incompatibilities or errors in the interaction with other financial institutional systems.When connecting disparate systems that have disproportionate qualities, it’s often the case that the system engineers, and any third-party developers involved, do not have access to or the detailed knowledge and intricacies of how the other system(s) work.As financial institutions continue to leverage FinTech firms for the enhancement of interface functionality and convenience, the rapid innovation exposes inherent risks – with little to no advancements to the regulatory and compliance requirements of these firms.What to Do?The best approach to secure systems and underlying data, across platforms, is to design and implement effective controls within the technology design phase. Embedding security-measures into the initial design phase will aid in reducing the number of vulnerabilities that exist due to cross-platform contamination risks.To continue to ensure that systems are secure, risks assessments, and design and effectiveness testing, need to be performed regularly through compliance initiatives related to customer and consumer requirements, including the following: The Gramm-Leach-Bliley Act (GLBA) SOC 2® The General Data Protection Regulation (GDPR) The California Consumer Privacy Act (CCPA) Third-Party Risk Management Risk Assessment Payment Card Industry Data Security Standard (PCI DSS) The Health Insurance Portability and Accountability Act (HIPAA) The Federal Financial Institutions Examination Council (FFIEC) Other compliance regulations or frameworks might also apply, depending on the specifics of the FinTech product, services and/or related industries being served.The compliance process needs to be cyclical in nature to ensure that risks are identified and addressed on a regular basis, so that the control structure can thrive alongside the business.Schneider Downs has helped FinTech firms through a number of the above compliance initiatives, and we would be happy to discuss any compliance concerns and issues you are encountering. Contact us at contactsd@schneiderdowns.com. ### Celadon Bankruptcy Makes Waves in the Trucking Industry Indianapolis-based Celadon Group, Inc., one of the largest truckload carriers in North America,  filed for Chapter 11 bankruptcy protection last week. The company failed to satisfy financial covenants with its lenders. When negotiations broke down late last week, management determined bankruptcy was the most prudent way forward.The company currently owes $33 million to the Justice Department as a result of a federal probe into the company’s accounting practices. Two former executives were indicted last week on charges that they organized a plot to overstate the value of assets related to its leasing business.Thousands of the company’s drivers found out Sunday night that they were without a job. Many of those drivers were stranded mid-route. It appears that some drivers were asked to deliver loads already in transit, while others were directed to the nearest Celadon depot or truck stop.Vendors are approaching the situation cautiously. Some drivers reported on social media that their fuel cards had been deactivated, or that truck stops were refusing to provide repairs or roadside assistance, because Celadon’s maintenance accounts had been locked. Still others reported seeing Celadon rigs being repossessed from truck stops. Rival carriers and service providers have spoken out in support of the drivers returning home safely, and quickly getting back on the road.Analysts expect that the rest of the truckload market will absorb Celadon’s relinquished capacity fairly easily because the industry has a low level of market share concentration.  The timing near the holidays adds extra sting to an already difficult situation for Celadon’s former drivers. But, the industry has been wrestling with driver shortages for years, and other carriers are taking the opportunity to add Celadon’s former drivers to their rolls.Schneider Downs has experts in the transportation and logistics industry, as well as turnaround services, corporate restructuring, and insolvency services.  Contact us for more information.Sources: https://www.freightwaves.com/news/celadon-biggest-bankruptcy-in-truckload-history-expected-by-mid-weekhttps://www.wsj.com/articles/trucking-market-will-absorb-celadon-shutdown-transport-experts-say-11575973802https://www.washingtonpost.com/business/2019/12/10/celadon-bankruptcy-leaves-truck-drivers-jobless-during-holidays/ ### Accounting Considerations When Acquiring a Company Congratulations, your firm just acquired another company! You went through the long and arduous process of vetting and selecting the best acquisition target. Buyer and seller have done their due diligence, and are confident that it’s a beneficial deal for both sides. All agreements are signed, purchase consideration has been transferred and your firm is now the proud owner of a shiny new subsidiary. You can now sit back, relax and let the synergistic benefits roll in, right?Of course, this is only just the beginning of a long process undertaken by all employees in the new combined organization to make sure the transaction is a success.From an accounting standpoint, it is important for the acquirer to record the transaction appropriately on its annual financial statements. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 requires all business combinations to be accounted for using the acquisition method. ASC 805 states that the acquirer shall measure the identifiable assets acquired and the liabilities assumed at their acquisition date fair values. This article outlines some important questions that should be answered when preparing to record the newly acquired assets and liabilities.You’ve acquired a new company. How do you record the assets and liabilities? Ask these key questions: What reporting standards will be followed? – Transactions of domestic entities should generally comply with U.S. generally accepted accounting principles (“GAAP”). If a U.S. company acquires a foreign entity, it may need to continue reporting under international financial reporting standards (“IFRS”) for statutory purposes, but also under U.S. GAAP for the new parent’s reporting purposes. This usually results in a consolidating company that converts their books from IFRS to U.S. GAAP for financial reporting purposes. Will the acquired assets be recorded on one balance sheet, or will multiple subsidiary balance sheets be required? – Depending on the acquirer’s financial reporting needs, the acquired assets may need to be recorded on one or more subsidiary balance sheets based on their particular function and/or location. Was the transaction structured as a stock or asset deal? – Under a stock deal, the buyer generally receives the same tax basis in the assets as the seller (unless an Internal Revenue Code Section 338(h)(10) election is made). Under an asset deal, the buyer receives a step-up in the basis of the acquired assets to their acquired values. The step-up in basis under an asset deal can lead to significant increases in depreciation and amortization of the acquired assets, which will reduce the buyer’s future taxable income. Although this relates to the tax implications of the transaction, and not financial reporting standards, the future taxable income and ultimate cash flows generated by the subsidiary will impact the fair value of the acquired business for financial reporting purposes. Was the transaction price representative of the fair value of the target? – If the seller employed an investment banking team to formally market the company for sale, and multiple offers similar to the transaction price were entertained, the transaction was likely representative of fair value. If not, and the business was perhaps sold to a friend of the owner for a low price, a gain on the transaction might need to be recorded on the financial statements (but not for tax purposes). These are just some initial accounting questions that should be considered when acquiring a company. Discuss these items with your audit team early on to make sure everyone is on the same page in order to help reduce issues down the road.How will you determine the value of the intangibles? You will also likely need to engage an independent valuation specialist to assist with determining the fair value of intangible assets acquired, if any. A valuation analyst may also be needed to estimate the fair value of certain tangible assets (most commonly, inventory and property, plant and equipment) depending on the situation and materiality of these assets. Although your audit firm may have valuation expertise, it will likely not be able to perform the valuation in-house, due to independence issues.Schneider Downs has significant experience in determining the fair value of intangible assets acquired and providing consulting and advisory services to make sure your business combination accounting is in full compliance with ASC 805. For more information about Schneider Downs’ business valuation and other business advisory services, please contact us at contactsd@schneiderdowns.com. ### Are you in the best structure for you? Now that we have had some time to digest the Tax Cuts and Jobs Act (TCJA) legislation passed in late 2017, it seems like a good time to sit back and ask yourself, “Am I in the most tax-efficient structure for my business?”  Many considerations go into structuring a business venture.  Taxes may not be a motivating factor, but who wants to pay more taxes anyway!  Each entity structure has pros and cons, and other business factors may be the primary driver for these choices, but the passing of the TCJA changes the tax implications of each structure.Corporations come with the double layer of tax, but now with a 21% corporate income tax rate, this may look a lot better to a professional service organization.  If your organization is continuing to leave all of its profit in the business or bonusing out the majority of the profit to the key decision-makers, the 21% tax rate is going to be an attractive alternative.  If your organization is going to dividend out the remaining, 79% of after tax dollars to its shareholders, you may be looking at a combined income tax rate of 40%, but that will adjust depending on the level of dividends to those owners due to the two layers of tax.    Pass-through entities (S-Corporations, Partnerships, and Single Member LLCs) were awarded the new Qualified Business Income (QBI) deduction.  This is a deduction of up to 20% on the income of the entity as long as the company meets a certain requirements.  However, for those in the professional services industries, no such luck (if your taxable income exceeds $415,000 (MFJ)).  Although, if you are in an engineering or architectural firm, you got the golden ticket, as the deduction was awarded to those organizations.  The individual owners of the pass-through entities pay tax of up to 37% top tax rate (can be reduced to approximately 30% with the QBI deduction) but do not have the second layer of tax that corporations pay when distributing net profit dividends to their shareholders. This is an all-time-low corporate income tax rate, and there has been some grumbling that there could be a change in rates if we see a change in the country's leadership, but those are a lot of hypotheticals for which no one has the answers.  Many of the "Individual" provisions of the TCJA are set to expire in 2026.  The QBI deduction will be an area to keep your eye on.  The government likes to keep about an 8% - 9% top income tax rate difference between pass-throughs and corporations, but as we hear some politicians lament over the lower tax rates and ways to ensure that the top earners are paying their "fair-share" all of this could change.  It is important that you ensure that you are in the best structure for your business, not solely based on the current tax environment. When considering what legal structure is best for your business, feel free to reach out to one of the Schneider Downs Professional Service Industry team members.   ### An Estate Tax Holiday Gift – From the IRS! While separated, death and taxes are widely accepted as the only certainties in life. Combined, they give a lot of people anything but certainty. The death tax – or as it is formally known, the estate tax – has been the source of increased contention following the Tax Cuts and Jobs Act (“TCJA”) temporary increase of the lifetime exclusion amount. Very basically, the estate tax requires individuals who have a vast estate after death to pay an additional tax on their wealth before it’s distributed to heirs and assignees.The estate tax is only one of a few different taxes put in place to curtail dynastic transfers of wealth before and after death. There’s also the gift tax, which coupled with the estate tax is part of a unified schedule that determines a taxpayer’s liability for wealth given away through gifts during life and bequests after death. Every taxpayer has a lifetime exclusion amount that protects assets up to a specified dollar from being subject to gift or estate taxes.Now about that uncertainty mentioned above. In 2017, Congress passed the TCJA which, among other things, temporarily doubled the estate tax exclusion amount to $11.2 million per individual. That amount will drop back down to its pre-TCJA level of $5.6 million in 2026 (both adjusted for inflation annually). For those that die between 2018 and 2025, the ephemeral nature of the increase will not cause their estate any trouble, but unfortunately, for taxpayers not gifted with precognition and/or healthy enough to likely live past the next six years, a glaring problem arises. What if a taxpayer gifts $11 million during his/her lifetime and dies in 2027? Will the amount gifted in excess of the exemption amount ($5.6 million adjusted for inflation) be recaptured and taxed upon death?Fortunately, the IRS has recognized this conundrum and given taxpayers a reprieve. In November, the agency finalized its proposed regulations amending Reg. 20.2010-1 to conform with the increases to the exemption amount post-sunset. Specifically, where estate tax would be due as a result of the taxpayer using his or her lifetime exemption, the exemption is effectively increased on the estate tax return to remove the tax, providing gift-minded taxpayers peace of mind and offering joy to many potential recipients and donees alike, just in time for the holidays.If you would like more information on these matters, contact Schneider Downs to schedule an appointment with one of our many tax professionals. ### Electric Vehicles and Their Effect on the Oil and Gas Industry “Nowadays 70% of oil production is used for transportation: the world produces about 80 million barrels a day globally, and about 60 million barrels go to cars, trucks, and airplanes, according to Vitaliy Katsenelson, Chief Investment Officer at Investment Management Associates. This is a fact that has the oil and gas industry’s attention, as electrical vehicles (EVs) become increasingly popular among well-known car manufacturers.                Car manufactures such as Tesla, BMW, Nissan, Chevrolet, Ford, Volkswagen and Kia have all jumpstarted the push to create the most advanced EVs on the market. With technology rapidly changing, it is evident that these manufacturers are increasing their efforts to support the demand for EVs in the marketplace. Ford recently announced a brand-new EV to hit the streets in late 2020 and labeled it after its most iconic symbol, the Mustang Mach E. Just days after its unveiling, the Mach E sold out its reservations for the late 2020 model. Tesla, the leading manufacturer of EVs around the world, announced its newest model, Tesla Model Y, which, much like the Mach E, has a significant following among the automotive world. These are just two of the many examples of the increase in demand for EVs in the U.S.                So the big question now is how will EVs affect the oil and gas industry around the world? The increased demand for EVs will most definitely drive negative changes in the oil and gas industry due to the fact that oil sales are mainly from transportation such as cars and trucks. Increasing demand for EVs will slow demand for combustion motor engines, which in turn will affect oil prices and sales around the world. These effects, though, will likely not be seen for another 10 to 15 years, depending on many different roadblocks such as technology, infrastructure and politics.                Even with new technology advances made daily in the EV world, there are still some major concerns with consumers about the convenience of EVs—more specifically, the range of the EVs’ batteries. Engineers are working hard to determine a solution to the limited mileage capacity of EVs. Currently, EVs range from approximately 100 miles to 350 miles per charge. The answer is still unclear on how EVs will be able to match the convenience of combustion motor vehicles that can fill up at any gas station in minutes. EVs typically take hours to fully charge, which could cause problems for consumers on long road trips.                Infrastructure is another obstacle EVs face, as the number of charging stations across the world is only increasing slowly. In order for EVs to truly gain traction and for their demand to skyrocket, consumers need to see more charging stations. Sheetz, an operator of nearly 600 convenience stores and gas stations, has begun to place charging stations at its stores around the United States. While this is a great start, EVs need more charging stations around the world in order for consumers to feel confident that they will be able to charge up anywhere.                Lastly, politics pose a significant barrier to the rise of EVs. Many politicians from oil-producing states are at odds with the EV industry. Lobbyists for the oil and gas industry are working hard to block government incentives for purchasing EVs, such as tax credits. There is a political war now between EV proponents and oil and gas lobbyists, which, for the time being, has successfully slowed the government backing of EVs.                In conclusion, the oil and gas industry should remain stable as it relates to its market share of the transportation industry for many years to come. Although, with major auto manufacturers’ support of EVs, decline in the oil and gas industry seems almost inevitable.Works CitedKatsenelson, Vitaliy “Why it’s only a matter of time before oil runs out of gas and electric vehicles power ahead,” https://www.marketwatch.com/story/why-its-only-a-matter-of-time-before-oil-runs-out-of-gas-and-electric-vehicles-power-ahead-2019-10-08. Accessed 12/2/2019. ### Is California Regulating the Barrel to Eliminate the Spoiled Apple? Does one rotten apple actually spoil the whole barrel?  According to science, the answer is yes and according to the California legislature, the answer also appears to be yes, at least when it comes to pharmaceutical donations.  Largely in response to the high-profile Giving Children Hope scandal (where a charitable organization, via subsidiaries, purchased $225,000 in pharmaceuticals from a Netherlands wholesaler and then recorded those purchases as a $34.9 million pharmaceutical donation), the California legislature passed Assembly Bill 1181 in September of 2019.  And while the bill was vetoed by California Governor Gavin Newsome in mid-October, the bill passed by overwhelming bipartisan support, setting up a potential veto override later this year.AB 1181 seeks to require any charitable organization soliciting donations in California to value drug and medical supply donations based upon the fair market value of where the drugs will ultimately be utilized.  Currently, under U.S. GAAP, a non-cash contribution, also known as a gift-in-kind, is required to be recognized at fair value.  The problem, however, is that while many donated pharmaceuticals are utilized for international purposes, most pharmaceuticals are valued based on U.S. fair market value.  It should come as no surprise that drug prices in the U.S. tend to be significantly higher than in the rest of the world, and are especially higher than where most of the drugs and supplies get utilized. Proponents of AB 1181 believe that this discrepancy leads to an over-valuation of pharmaceuticals, and allows certain bad actors to “pad” administrative costs, offer higher executive salaries, and mislead the donating public about charitable efficiency.  Proponents of the bill are lauding California for attempting to correct what both the Federal government and many states have long viewed as a loophole in US GAAP, leading to abuse and misrepresentation. Opponents, however, argue that valuing donations based on county of distribution becomes an administrative nightmare, which will lead to higher accounting costs, divert funds away from programming, and could require separate records for GAAP and California compliance.  Opponents argue that the rules of AB 1181 are difficult to implement and that additional guidance is needed.  Finally, opponents wonder if the regulation goes too far in trying to correct one-off bad actors by regulating all charities that take contributions from California sources.While AB 1181 is a California bill, it has the potential to impact any organization soliciting donations, nationwide.  Generally speaking, once a charity obtains donations from California donors, it becomes subject to AB 1181 and will need to comply on all pharmaceutical donations. For now, though, charitable organizations have gotten a bit of a reprieve thanks to the Governor’s veto, but should remain vigilant to the extent the bill comes around again.  We will continue to monitor the progress of AB 1181, but in the meantime, if you have any questions or are seeking additional information related to AB 1181, please feel free to contact us at Schneider Downs and we will be more than happy to assist! ### Seeing is Believing. The Benefits of Data Visualization. Every day, companies collect massive amounts of data, including information regarding website traffic, customer inquiries, or sales data. With all this valuable data being collected, it is important for organizations to fully utilize it. One way to do this is by creating data visualizations, which are highly customizable, interactive visual portrayals of a dataset. These graphics can be used internally or externally, depending on the data and the goal of the visualization. There are numerous reasons why it may be beneficial to create a visualization out of a dataset. First, because graphics can be created to summarize data based on any field, they allow users to visually see trends in their data. For example, it is possible to create reports showing the most common search terms from a website or highest selling products by month. Many people find data shown graphically to be much more meaningful than just seeing it numerically. The two most popular data visualization software programs are Microsoft’s Power BI and Tableau, which was recently purchased by Salesforce. These applications are able to process massive amounts of raw data and produce custom visualizations.  Developers select  fields from the data to be used for each graphic and the format of the graphic. Format options include heat maps, highlight tables, tree maps, and more traditional charts like line graphs, pie charts, histograms, and bar charts. These programs are also capable of charting data by geographic fields like states, counties and specific locations. Multiple visualizations can then be shown together as a dashboard, which allows users to see the relation and possible correlation between fields of data. These dashboards are a great way to summarize very large amounts of information. It is even possible to filter an entire dashboard to show only specific figures. Another benefit of these programs is that they are able to connect directly to data sources like SQL servers, Google Analytics, Amazon Web Services, and other internet connected servers. This allows these visualizations to update with the servers. Therefore, once the visualization or dashboard is created, it is not necessary to go into the program and import the updated dataset. Just in time for the holiday season, which has a reputation for being a heavy drinking time of year, below is an example of a data visualization dashboard showing information regarding alcohol-related car accidents in Pennsylvania from 1997 to 2016. The data used in making the visualizations is publically available and provided by the Pennsylvania Department of Transportation. The first screenshot shows three visualizations in one dashboard. Starting at the top left, there is a heat map showing which counties have had the most alcohol-related accidents. Not surprisingly, the darkest areas on the map (indicating the most number of car accidents) are in heavily populated metropolitan areas. Next, there is a pie graph showing a break-out of the most common types of accidents that occur in alcohol-related incidents. Finally, the third visualization shows the number of alcohol-related accidents by year, which indicates a steady decline since the early 2000s. The screenshot below shows a visualization of when alcohol-related accidents have historically occurred throughout the year. Also shown on this visualization is a regression analysis. This is shown as a constant line showing that these accidents are more likely to occur later in the year. Displaying this information graphically allows users to see the trends clearly in the data that would otherwise be impossible to recognize without thorough analysis. This analysis confirms that the Holiday season is the most common time of year for alcohol-related car accidents. However, the good news is there has been a significant decline in the total number of these accidents in the past several years. So what is the cause? It is hard to pinpoint one direct cause for the significant decline, but some notable developments over the period under analysis include the growth of ride-sharing services (i.e., Uber or Lyft), strong drunken driving laws, and a rise in public awareness campaigns. So, please drive responsibly this holiday season to continue the trend of declining alcohol-related car accidents in Pennsylvania! Data visualizations can transform your data into powerful graphics. If you think your business could benefit from data visualizations or want to know more, please contact a member of our data analytics team at Schneider Downs. ### Proposed House Bill Would Eliminate State and Local Tax Deduction Cap House Democrats have proposed a bill that would remove the $10,000 cap on state and local tax (SALT) deductions. Called the “Restoring Tax Fairness for States and Localities Act,” the bill would increase the cap to $20,000 for married filing joint taxpayers for the 2019 season, then eliminate the cap entirely in 2020 and 2021. The proposed legislation would offset the substantial revenue loss by restoring the pre-Tax Cuts and Jobs Act (TCJA) top individual tax rate of 39.6 percent and lowering the income threshold at which that top rate applies. If policymakers intend to extend the cap repeal beyond 2021 without increasing deficits, it appears additional income offsets would be required. Under the Ways and Means bill, the offsetting changes to the top rate would be in effect from 2020 through 2025 – even though the restoration of the deduction is in effect only through 2021 – after which the major individual tax provisions of the TCJA are scheduled to expire altogether. Reps. Thomas Suozzi (D-N.Y), Bill Pascrell (D-N.J.) and Mike Thompson (D-Calif.) sponsored the bill, which was scheduled to be marked up by the Ways and Means Committee yesterday. Given that Congress is set to break soon, it doesn’t seem likely there will be much movement on the bill until next year. Even then, with the Senate controlled by Republicans, it seems unlikely that a bill would get through given the need to increase tax rates to accommodate the increase in the SALT deduction cap. ### 2020: Provided the World Doesn’t End, We’ll Enjoy an Increased Lifetime Gift and Estate Tax Exclusion Whether society’s collective interpretation of the Mayan calendar proves correct and the world ends in 2020 remains unknown, for now. Despite this looming uncertainty, take comfort in the knowledge that, should we survive another pending apocalypse, the IRS has remained steadfast and will once again increase the lifetime gift and estate tax exclusion for the year.Ordinarily, transfers of wealth to a recipient by means of gift or estate are taxable to the donor. However, two types of exclusions exist to limit the tax on such transfers: the lifetime exclusion and the annual exclusion. The lifetime exclusion allows an individual donor to give away a certain amount of funds, tax-free, over the course of his or her lifetime. The annual exclusion allows a donor to give away a certain amount of funds tax-free per individual recipient each year. If the value of funds given in one year falls under the annual exclusion, the lifetime exclusion is unaffected.The threshold for these transfers typically increases with inflation each year. As 2019 draws to a close, it’s timely to take a look at next year’s exclusion amounts.Under Rev. Proc. 2019-44, for the year 2020, the lifetime exclusion on estate/gift tax will increase from $11,400,000 to $11,580,000. This means that transfers of wealth up to $11,580,000/individual and $23,160,000/married couple, over the duration of the donor’s lifetime, is nontaxable.There’s also an annual exclusion that permits the tax-free transfer of $15,000, per recipient, for tax year 2020. If a donor transmits wealth at or below $15K, that transfer will not count toward the lifetime exclusion of $11,580,000. Note that the annual exclusion can only increase for inflation in $1,000 increments. It remains unchanged from 2019.As an example:Jamie, with donative intent spurred by the holiday spirit, wants to give Lauren, an unrelated recipient, a cash gift in the amount of $20,000 in December of 2020.Jamie has given Lauren no other gifts during 2020, so $15,000 of the gift falls under the annual exclusion and is not taxable to Jamie.The remaining $5,000 that exceeds the annual exclusion will count against Jamie’s lifetime exclusion and reduces the amount Jamie can gift tax-free during her remaining lifetime. After this gift, Jamie may now give only $11,575,000 in tax-free gifts over the course of her lifetime, assuming no other taxable gifts were made in prior years.Feel free to reach out to our office with any related tax questions. Whether the world will end in 2020, however, we suggest that you inquire elsewhere.  ### Mixed Feelings on the Outlook of the Construction Industry? There has been much speculation recently about whether or not the economy is heading for another recession, and if so, when it will occur.  Since the last recession, the Construction Financial Management Association (CFMA) has conducted quarterly surveys of construction executives to quantify a “confidence index” in the industry, known as CONFINDEX.  The CONFINDEX assesses responses from construction executives on several topics including current conditions and future outlook.  According to the CFMA, during the first quarter of 2019, the CONFINDEX reached its lowest level since 2010, primarily due to concerns expressed about labor shortages and workforce issues, rising material costs, and uncertainty surrounding public construction budgets.  However, since the first quarter of 2019, construction executives have displayed increased optimism due to positive current conditions.  The CONFINDEX for the third quarter of 2019 climbed to its highest level in the last four quarters.  Some of the positive developments noted in the third quarter 2019 report include a larger portion of respondents experiencing profit margin increases, sufficient availability of financing, and Federal Reserve rate reductions, which have lowered the cost of capital.  This is all good news for the industry, at least in the near term.As for the long term, there is still some concern of a recession starting in 2020 and the fear that workforce issues could drive up the cost of construction, and ultimately lead to postponement of construction projects.   A number of other global economic and political uncertainties are causing consternation in the industry.  Only time will tell whether or not these long-terms fears become reality, but for now, most indications are that the industry is performing well.If you want to know if your company is well-positioned for the uncertainties that lie ahead, the Schneider Downs Construction Industry Group can help. ### Russian Hackers Indicted in Pittsburgh Two Russian nationals, Maksim Yakubets and Igor Turashev, were indicted in Pittsburgh on December 5th, for involvement in international multimillion-dollar malware attacks. Estimates on the amount netted from their attacks range up to $100 million dollars, while the attacks themselves would have cost victims millions more in business downtime and recovery. Several of the victims that the pair are accused of executing attacks against are located in Pennsylvania, including a bank and a school district. A $5 million dollar bounty has been offered for help in detaining the pair, although it seems unlikely that they would ever face trial as they are currently assumed to be residing in Russia.Yakubets has ties to the Russian Federal Security Service and is thought to be one of the leaders of a hacking group dubbed “Evil Corp.” Evil Corp is known to deploy a piece of malware called Dridex, which would commonly infect victims via a phishing email and has the potential to steal banking credentials from victims. Stolen information is then leveraged to initiate wire transfers to foreign bank accounts. Later iterations of the Dridex malware implemented the capability to load and deploy ransomware, such as BitPaymer, to victim networks.Source: https://www.spambrella.com/what-is-dridex-malware/Schneider Downs has assisted in the containment and recovery efforts of organizations that have fallen victim to various forms of malware, including the Dridex variant used to deploy ransomware. The vast majority of infections we see initially gain access with a phishing email and escalate from there due to a lack of defensive controls within the network. Many of these types can be easily prevented through some careful planning and execution of a defensive cyber strategy. For any questions or assistance with preventative or responsive measures, you can contact the Cybersecurity Team at cybersecurity@schneiderdowns.com.  ### TCJA – Could 2019 Taxable Income be Higher than Projected? As we approach the end of 2019, two separate changes in reporting of gross income from providing goods and/or services could combine for an unpleasant surprise that increases taxable income for privately held companies. The first change results from a change in reporting gross income for financial reporting purposes while the second change is a result of a change in the tax law brought by the 2017 Tax Cuts and Jobs Act (TCJA). These two changes could combine to accelerate the recognition of gross income into 2019, with a resulting increase in taxable income, compared to what it would have been without these rule changes.The TCJA amended §451(b) to generally require conformity between the reporting of gross income for tax purposes to revenue reported for financial statements for accrual basis taxpayers. The GAAP accounting rules under ASC 606, generally effective for private companies in 2019, can change the analysis of when income is generally recognized for GAAP purposes from a point in time (i.e., job completion or date of shipment) to the recognition of income over a period of time.  Before the TCJA, all accrual basis taxpayers recognized income under the earlier of one of three prongs of the “all events test”:(1) When it is received (cash in hand);(2) When it is due and payable (essentially billed or invoiced); or(3) When it is earned through the required performance.  The TCJA now adds a fourth prong. This fourth prong requires income to be recognized at the same time as it is being recognized for financial reporting purposes (with certain exceptions) but only for taxpayers having an applicable financial statement (AFS).An AFS generally is an audited financial statement prepared under GAAP (or IFRS) for the SEC, shareholders, creditors, or other government authorities (state or local) and agencies.The fourth prong of the test does not apply to taxpayers that do not have an AFS (reviewed or compiled statements). This rule then can treat identical taxpayers differently (businesses with an AFS versus those without an AFS) causing their tax liabilities to be different in any one year (but theoretically the same over a period of years - all else being equal).  These new rules can affect almost any industry, but businesses in the contract manufacturing, construction, engineering, technology, professional service industries can be particularly impacted. As with many provisions in the tax code though, there are exceptions that can apply and accounting method change alternatives to be analyzed that can possibly mitigate potentially negative 2019 consequences.The potential impact of these rules will need to be addressed on a taxpayer by taxpayer basis; the final result is likely unknown for tax purposes until the financial reporting impact is finalized and potential tax alternatives can be considered. This change will require co-operation between financial reporting professionals and tax professionals, and between the business and their outside accounting firm, so as to fully understand and document the revenue recognition process imbedded in their contractual arrangements with their customers.If you have any questions on the potential impact to your business of the ASC 606 rules, the TCJA provisions, or both, please do not hesitate to call Schneider Downs. ### Syndicated Conservation Easements Create Ire in the IRS On November 12, the IRS sounded renewed alarms for those taxpayers that, in the IRS’s view, are abusing the tax benefits associated with conservation easements. Potential repercussions include civil penalties and even criminal investigations and prosecution, leading many taxpayers to wonder if the warnings apply to them.A conservation easement is an agreement between a landowner and a land trust or government agency that permanently limits the use of the land in order protect the land’s conservation objectives (i.e., maintaining and improving water quality, wildlife habitat, etc.). Qualified organizations, including government organizations, have the right to restrict the landowner from developing the land.  Landowners benefit from this transaction by preserving the intended use of the land and conservation goals while potentially realizing significant tax savings.The Internal Revenue Code permits a deduction for perpetual conservation easements donated to a qualified organization exclusively for conservation purposes. The deduction allowed for the donated easement is the fair market value (FMV) of the easement at the time of donation based on the potential “highest and best use” of the property at the time of the donation. “Highest and best use” is essentially how much the land would be worth if it could be most profitably developed, given the constraints of reality and the law. The valuation based on “highest and best use” is a key issue relevant to the practices condemned by the IRS.While deductions for donated conservation easements are legitimate, some conservation easement syndicates have promoted and delivered returns on investment through tax deductions that potentially lack economic substance. IRS Notice 2017-10 laid out the fact pattern that is now a “listed transaction” under § 6011: A promoter seeks out high-tax bracket investors to invest in a pass-through entity that holds land, offering a potential charitable contribution deduction worth 2.5 times, or even greater, than the investment amount. The pass-through entity donates a conservation easement on the land to a qualified organization and allocates the deduction to the investor. The investor reports the conservation easement deduction on their federal income tax return. The IRS has attacked this specific fact pattern and similar cases, arguing that the valuations are unreasonable, and that these transactions violate the economic substance doctrine by existing “solely as a conduit for selling tax deductions.” The IRS has also argued that in some cases the transactions fail the basic requirements to claim the deduction for the donated easement.In the November news release, the IRS put all parties related to these transactions on notice. Participants in the syndicates, promoters, appraisers, tax return preparers and others could all be subject to penalties, including a potential 40% accuracy related penalty. The IRS is allowing for taxpayers to avoid penalties related to the deduction claimed by removing the deduction on a filed qualified amended return or administrative adjustment request.If you receive any promotional materials involving proposals similar to the ones described above, please consult with your Schneider Downs tax advisor before participating in such a transaction. Additionally, if you have already participated in a transaction with respect to a conservation easement, Schneider Downs can assist with the related compliance and assessment of risk related to the transaction. ### Recertification of PA Act 153 Clearances It’s quickly approaching the time for the recertification of Pennsylvania Act 153 clearances. Clearances are valid for 5 years. Act 153 took effect December 31, 2014 with additional amendments taking effect July 1, 2015. The act addresses clearance requirements for paid employees and unpaid volunteers who are responsible for the welfare of minors or have direct contact with minors (children under the age of 18).Act 153 requires the following clearances: Pennsylvania State Police Criminal Background Clearance Pennsylvania Department of Child Welfare Child Abuse Clearance Federal Bureau of Investigation (FBI) Fingerprinting and Criminal Background Clearance Since clearances are valid for 5 years, it means that right now is an essential time to ensure that all clearances are being recertified.It’s also an opportune time to reevaluate the controls and processes around the entire Act 153 process.It would be best practice to consider whether your organization has processes and controls in place to: Identify, track and monitor individuals who are subject to Act 153 Periodically review the designation of positions subject to Act 153 Update, communicate, and enforce related policies (including updating applicable websites) Ensure that contracts or agreement with third parties contain the appropriate language Ensure that record retention of documents is adequate (both physical copies and electronically) Additional considerations should also include monitoring the FBI check to completion, because it may require additional time to complete. It’s also important to ensure that the proper provisional procedures are in place in the interim. Those procedures include obtaining a swear and affirm waiver and requiring the individual to work in the immediate vicinity of a clearanced individual.Does your organization have adequate controls and processes to ensure compliance with Act 153? Schneider Downs can evaluate the controls and processes and can also use data analytics and robotic process automation to help test the status of individuals subject to Act 153, and whether required clearances have been obtained in a timely manner.Contact Schneider Downs at contactSD@schneiderdowns.com with any questions about Act 153 compliance or use of data analytics to streamline compliance. ### Passage of USMCA in 2019 Appears Doubtful “I’m not even sure if we came to an agreement today that it would be enough time to finish,” said Speaker of the House Nancy Pelosi in addressing the media on November 22 regarding the looming deadline for the United States-Mexico-Canada Agreement (USMCA). With less than 10 days in December where the House of Representatives and the Senate will meet, the odds of the USMCA being signed into law by the end of the year certainly look bleak.Many industries are expected to be impacted by the USMCA, including pharmaceutical manufacturing, automotive, and dairy. The deal seeks to protect citizens and corporations with stronger intellectual property regulations through things like copyrights and patents, as well as up the de minimis level on goods shipped to Canada to 40 CAD, and duty-free shipments from the U.S. to Canada and the U.S. to Mexico to 150 CAD and 117 USD, respectively.House Ways and Means Committee Chairman Richard Neal says the deal is down to its last few issues. Enforcement continues to be one of the larger matters holding up progress. Pelosi added in her Thursday address that “even if we could agree on the terminology [of the bill], if we don’t agree on enforcement, we still have a problem.”Once the agreement is passed by both the U.S. House and Senate, Mexico and Canada would each have to agree to all changes before the deal could take effect. Congress has rushed a few last-minute bills through under the current administration, but don’t expect that to be the case with the USMCA since this arrangement could potentially be used as a template for future trade agreements.Sources:https://thehill.com/policy/finance/471500-pelosi-casts-doubt-on-usmca-deal-in-2019 used the video of Nancy Pelosi speakinghttps://www.senate.gov/legislative/2019_schedule.htm Senate calendarhttps://www.house.gov/legislative-activity House of Representatives calendarhttps://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/modernizing ### Six Cybersecurity Tips for the Holiday Shopping Season Ho, ho, ho, hold on before clicking on that link advertising an amazing deal this holiday season.Phishing, that ever-present and ever-growing organizational concern, is a preferred attack method for hackers because of its relatively simple premise: deceiving a user into clicking a link that allows access to personal information. Even with the flurry of activity surrounding Black Friday and Cyber Monday now in the books, cybercriminals still have all of December to take advantage of both consumers and organizations through phishing schemes.The primary concern surrounding holiday phishing is to protect the regular consumer, but phishing can be just as threatening for organizations. An employee could cause a breach by clicking a malicious link from a personal email that they’ve accessed at work or by falling for a phishing scheme sent to their company email. So how can organizations make sure their people don’t give them the unwanted holiday gift of a security breach?Here are six tips to help you and your end users get your holiday shopping done safely: Organizations: refresh the topic of phishing to your employees Remind employees how to recognize and report a phishing email. Phishing is effective because it creates a sense of urgency, which is something that might stand out as suspicious in April, but blends in right now in a season full of ads urging users to “act before this deal disappears.” Be proactive; eliminate the attack before it reaches your employees Your people don’t need to be the first defense against suspicious holiday deals. We recommend having an email security solution in place to provide targeted threat protection against spam, malware and phishing. Do your shopping on a secure network We’re all connected all the time. To keep your personal information (name, address, credit card) and devices safe, always connect to a secure network. Verify shipping updates and tracking numbers manually The most popular phishing emails during the holiday season contain malicious links disguised as shipping updates or delivery notifications. Never click on tracking numbers; copy and paste the number (or write it down) and use the carrier’s website to get your update. Delete deals with attachments Think about it: when have you ever gotten an attachment from Amazon or Target? Vendors include sales information directly in the body of an email. If you see an attachment, don’t click; it may contain malware. Don’t click on popup ads Popups may be tempting, but cybercriminals often use them to direct you to malicious websites, so it’s best to stay away. For safest surfing, go directly to the vendor’s website or, even better, their app.How can Schneider Downs Help?Our cybersecurity practice is comprised of experts in multiple technical domains. We offer phishing simulation assessments that will help your organization build resilience against these types of actions. Our customized assessments replicate real-world attacks and are conducted by our team of skilled professionals in a controlled and secure environment. Learn more about our cybersecurity services at www.schneiderdowns.com/cybersecurity or contact us at cybersecurity@schneiderdowns.com. ### Belsnickel is Coming… Are You A Nice Boy or Girl? You know Dasher and Dancer and Prancer and… well pretty much every other holiday character that ever existed, but have you heard of Belsnickel?  For those unfamiliar with Pennsylvania Dutch folklore, Belsnickel is a companion of Saint Nicholas tasked with weeding out the naughty and nice children.  Nice children are given candy, naughty children get switched until they're nice.  Admittedly he’s not the nicest Christmas character.As 2019 draws to a close, a different kind of Belsnickel looms large right after the holiday, the Internal Revenue Service.  It’s almost impossible to avoid the IRS switch, no matter how nice you are, but with a little tax planning, perhaps you can lessen the pain from the IRS Belsnickel come April 15, 2020.Following passage of the Tax Cuts and Jobs Act, a number of valuable tax planning channels were mitigated or eliminated due to various suspensions and caps being levied on certain itemized deductions.  However, there may still be some opportunities to reduce your tax burden through planned charitable gifting.  Below are our thoughts on some gifting strategies that might make sense before the close of 2019: Bunching - the practice of making several years’ worth of contributions in a single year.  From a tax perspective, it’s better to lump several years of giving together into a single super-sized gift and nothing in subsequent years, as opposed to smaller annual gifts. Donor advised funds ("DAFs")/Private foundations ("PFs") - For taxpayers who like the idea of bunching, but don't like the "feast or famine" concept of gifting, DAFs and PFs are potential alternatives.  The full value of the contribution to a DAF or PF is potentially deductible in year one, while smaller disbursements can be made to a charity over subsequent years. Qualified charitable distributions - For taxpayers at least age 70 1/2, direct charitable rollovers are a great option for moving money out of an IRA or 401(k) plan.  Typically, these distributions are taxable income to the recipient when withdrawn, but, if done correctly, a qualified charitable contribution allows the taxpayer to divert up to $100,000 directly to a charity and not recognize the income on their tax return.  While this means there is no charitable deduction, the taxpayer avoids picking up the taxable income in the first place. Donate appreciated securities - Since the Great Recession in 2008, the Dow Jones Industrial Average has increased by roughly 285%, meaning some taxpayers could be sitting on significant taxable income when they sell those securities. Taxpayers who donate appreciated securities to charitable organizations do not recognize any of that gain, though, and get a charitable contribution equal to the fair market of the value of the security on the day of donation.  This means that a taxpayer who bought a stock for $1,000 that appreciated in value to $4,000, could receive a $4,000 charitable deduction for their original $1,000 purchase. Charitable trusts - Charitable trusts are unique in that they give the taxpayer a charitable deduction today for a donation that potentially isn't made until the taxpayer dies.  Additionally, these trusts can be structured so that the asset continues to generate income for the taxpayer or a beneficiary during their life, so there is a continued income stream. The Tax Cuts and Jobs Act has fundamentally changed how tax planning occurs.  As you look to close-out 2019, it may make sense to put charitable gifting back into your 2019 year-end planning.  The tax professionals at Schneider Downs are well versed in the previously mentioned strategies, as well as other year-ending tax planning ideas.  If you would like to discuss these items further or have any questions, please do not hesitate to contact us. ### Louisiana Issues Filing Extension After Ransomware Attack The state of Louisiana became the latest victim of a string of cybersecurity incidents involving government agencies when a ransomware attack impacted the Louisiana Department of Revenue (“Department”) on November 18. The attack impacted certain services, including the Louisiana Taxpayer Access Point and Parish e-file websites. With the sites down or functioning at impaired levels, taxpayers were unable to file electronic returns or make tax payments. In response, the Department issued Revenue Information Bulletin No. 19-017, stating that it expects services to be restored in a few days and providing a filing and payment extension until November 25, 2019. Any applicable returns filed and paid by that date will have penalties and interest automatically abated. Louisiana is no stranger to cyberattacks. This summer, a series of ransomware incidents targeting schools and district offices impacted websites, email systems and phone servers of several state agencies. While Louisiana government is confident the recent attack didn’t expose any confidential taxpayer information, it’s important for all organizations to be aware of these incidents. And while larger companies are certainly appealing targets for ransomware attacks, smaller companies are also at risk. Does your company have a process in place to stay current with cybersecurity developments? It should, since attackers are constantly creating new ways to hack into computer systems. That’s where Schneider Downs comes in. We can assist your business in staying ahead of the curve with prevention as well as recovery from cyberattacks. For examples of our cybersecurity capabilities, check out the following articles: Case Study: Ransomware Attack Halted a Global Manufacturer's Operations Questions to Ask Before Ransomware Hits Your Business Ransomware Still a Growing Pribelm for Organiations of All Sizes The Schneider Downs Risk Advisory Services and Cybersecurity team has the experience to assist with making sure your company becomes – and remains – protected. For information on our available services, please contact us at cybersecurity@schneiderdowns.com. And for more information about state and local tax matters, contact your Schneider Downs state and local tax professional. ### AICPA Manufacturing Conference Takeaways Last week, Schneider Downs sent two representatives from our Manufacturing Industry Group to the annual AICPA Corporate Finance and Controllers and Global Manufacturing Conference in Orlando.  The conference was loaded with great speakers presenting on a wide variety of topics.  In particular, there was a strong focus on the following: Cybersecurity and information privacy Selecting and implementing the right technologies, including business intelligence software Accounting standards and economic updates There were many helpful tips throughout these sessions. Cybersecurity is a main concern. Two key takeaways:The former Federal agent who presented on cybersecurity effectively scared the pants off the audience with hacking stories and the ease of which they are executed.  Two key takeaways from the session were basic steps any organization can take to thwart a majority of potential cyber-events: (1) the importance of strong passwords and (2) the use of two-factor authentication.  Business Intelligence and Robotic Process Automation are on the forefront.With the ever-increasing availability of new technologies, a large topic of focus during the conference was the implementation and use of new technologies.  There were sessions on robotic process automation (RPA) as well as data analytics and business intelligence (BI) tools.  The use of RPAs can reduce time spent on mundane repetitive tasks, freeing up employees to perform higher-level value-add work.  The wide range of BI tools available today, when successfully implemented, can provide incredibly valuable insights and assist in analysis by quickly digesting and interpreting data in a fraction of the time it takes under more traditional methods. Accounting standards and economic update.Presenters also discussed recent accounting standards and their potential impact, including ASU 2014-09 Revenue Recognition, effective for non-public entities for calendar year 2019, and ASU 2016-02 Leases, effective for non-public entities for calendar year 2021.  There were a variety of sessions discussing the availability of various tools to assist in the implementation of ASU 2016-02, which will have a significant impact on the balance sheets of a large number of companies. The overall economic update was presented by a representative from the Federal Reserve Bank of Chicago.  The speaker indicated that while the probability of recession over the next two quarters has increased, it still remains low.  Additionally, the presenter noted that even with the recently enacted tariffs, the United States’ tariffs are currently on par with those of other major economies.  However, if all currently “threatened” tariffs are enacted, it would drive U.S. tariff rates far above those of our peers. These were just some of the interesting takeaways from the three-day AICPA conference.One thing that became clear throughout the seminar is that Schneider Downs is focusing our attention in the right areas to help our clients navigate the evolving business environment.  We have dedicated practice groups for cybersecurity, automation and data analytics and accounting advisory.If you are looking to enhance your cybersecurity, implement a new BI tool or need help with the implementation of a new accounting standard, please reach out to a member of your client service team! ### All Roads Lead to Rome: Schneider Downs Helps Build Global Bridges Schneider Downs’ own Dan Desko and Mary Richter recently returned from Prime Global’s World Conference 2019 in Rome, where they were joined by nearly 200 delegates from other firms around the globe. Both presented at various sessions during the conference; Dan hosted a working group that discussed cybersecurity, while Mary sponsored the international tax session and convened a transfer pricing group discussion.Against the scenic backdrop of this infinitely historic location, conference highlights included presentations from notable speakers on a number of business topics, including trade and multilateralism, artificial intelligence in the business world and motivating employees. Featured speaker Natalia Cohen recounted a tale of resilience and perseverance in recapping her experience as part of the first all-female team to row across the Pacific. Attendees also got a glimpse of tomorrow, as futurist Magnus Lindkvist highlighted the theme of this year’s conference – Building Bridges – by noting the dichotomy between innovation and creativity and analyzing how many businesses actually function. His advice: be different. Great success comes from taking risks and doing something unconventional and unusual, postulates Lindqvist.Perhaps it is the story of Rome itself, a place from which so many inventions emerged, that continues to teach us that we can indeed impact society and history by creating new ways to approach existing problems and opportunities.Prime Global is one of the world’s largest accounting associations with over 285 member firms in almost 100 countries. ### Manufacturing in Today's Economy Gross domestic product (“GDP”) is a key economic metric. In recent years, the makeup of GDP by industry in the United States has changed. GDP in the manufacturing industry, in particular, has recently made headlines.Revenues within the manufacturing sector in the United States are expected to decline over the next several years. According to a recent study by Industry Week, in the second quarter of 2019, the manufacturing sector made up approximately 11% of total GDP and has hit a recession. The manufacturing sector’s percentage share of United States GDP in 2019 is one of the smallest it has ever been going back to 1947. This can partly be attributable to the ongoing trade war between the United States and China.One important factor in the decline relates to the consumption of goods versus services. A recent study by PBS suggests that businesses in the United States are now more concentrated on the delivery of services as opposed to the selling of goods. Historically, the ratio of goods and services in terms of GDP has been 50% goods and 50% services. However, more recently, the ratio has shifted and now services account for approximately 60%. As a result, it has led to an overall decline in manufacturing jobs in the United States.Declining revenues in the manufacturing sector causes some concerns for the United States economy. Many economists believe that the decline could also have a type of domino effect on similar industries. In addition, economists also believe that the decline relates to the manufacturing industry not keeping up with new technologies, which therefore suggests that the United States may be falling behind other countries.Despite the present challenges and uncertainty, manufacturers have already begun preparing for changes in technology in order to keep up with current industry trends.  Being proactive in keeping up with changes in today’s economy will allow manufacturing companies to thrive in a competitive environment. ### IRS Releases First Guidance Regarding Cryptocurrency Since 2014 On October 9, the IRS released Revenue Ruling 2019-24, which offers the agency’s first cryptocurrency guidance since 2014.As described in our most recent cryptocurrency article, The IRS Turns its Focus to Cryptocurrency, cryptocurrency is a form of virtual cash that allows payment to be sent online from one individual to another, while circumventing traditional financial institutions. In its brief history, cryptocurrency has largely evaded direct regulation.The most recent cryptocurrency guidance from the IRS, Revenue Ruling 2019-24, discusses a specific cryptocurrency occurrence called a “hard fork.” This is when a particular cryptocurrency “undergoes a protocol change resulting in a permanent diversion from the legacy or existing distributed ledger.” The cryptocurrency has effectively broken from the public ledger on which it was once tracked, and future transactions are now tracked on a new ledger.When a “hard fork” occurs, those broken-off units of cryptocurrency are in some cases “air-dropped,” or delivered, to users’ online cryptocurrency “wallets.” However, in some instances such as when the “wallet” is managed by a cryptocurrency exchange that does not yet recognize the new cryptocurrency, a delay occurs. A common example of this delay is when funds are “pending” in a bank account after deposit. The funds are ultimately ours, but we do not have the ability to access the funds or move them around yet. Once the cryptocurrency exchange recognizes the new units of cryptocurrency, they will be accessible to the user. Under Rev. Rul. 2019-24, it is at this point that the taxpayer “has receipt” of the cryptocurrency, and, more importantly, realizes income.According to the Revenue Ruling, “hard-forked” and “airdropped” cryptocurrency is taxable upon receipt, but also receives a new “basis” of the currency’s fair market value at the time of receipt.As discussed in our most recent cryptocurrency article, “warning letters” sent to taxpayers in July effectively stated that cryptocurrency should be treated as a capital asset. This would mean that cryptocurrency is taxable when sold.Further IRS guidance will be necessary for taxpayers to have a clearer picture of how to properly treat cryptocurrency for taxation purposes.We will continue to stay current on this topic. Please contact us if you have any questions. ### Delaware Unclaimed Property If your business is domiciled in the state of Delaware or is currently doing business in the state, your company may have significant Delaware unclaimed property reporting obligations.  Delaware entities are subject to the state’s unclaimed property reporting laws.  Unclaimed property is generally reported to the state of the last known address of the owner.  However, when the last known address is not available, property should be reported to the holder’s state of domicile. Delaware has aggressively pursued collection of unclaimed property for a number of years.  Recently, Delaware has been contacting non-reporting businesses via written correspondence and inviting them to enter into a voluntary disclosure agreement (VDA).  Recipients of these invitations from Delaware should review their obligations and respond to the state accordingly.  Businesses that fail to respond to Delaware may end up receiving an unclaimed property audit notice. Delaware’s VDA program allows a business to become compliant with the state’s unclaimed property reporting laws.  The benefits of the VDA program include a limited lookback of 10 report years (15 years when accounting for the dormancy period), waiver of penalty and interest, and the ability to control the review process and avoid an examination.  Since most businesses do not retain records or have systems that maintain documents for 15 years, Delaware allows and expects VDA participants to estimate the liability for periods where records are not available.  For more information about the current voluntary disclosure program, visit www.vda.delaware.gov or contact your Schneider Downs state and local tax professional. ### Conducting an ERM Evaluation Institutions of higher education face a number of challenges in today’s highly competitive business and social climate: reputational risk, obsolescence, tuition revenue dependence, campus crises, cyber-attacks. I could go on, but you get the idea. If your institution is sophisticated in risk management, you probably have a process in place to compile these issues, among others, into a risk inventory. But are you really getting the most out of your process? Is it effective and efficient?Institutions should periodically conduct reviews of enterprise risk management (ERM) processes to determine if the right personnel and systems are in place to effectively identify and manage risks. Internal Audit can be a great resource, but if that’s not currently an option, here are some questions that will get the ball rolling: Does our system support current risk evaluation and reporting processes? Are we even using an ERM system? Do we have all of the right people involved in the process? Is our ERM leadership appropriate and effective? Are our identified risks consistently ranked across departments, divisions, etc.? Are we considering new/emerging risks? If so, are those risks identified in a timely manner? Are we challenging identified risks? Are we communicating identified risks to the right individuals? Does our ERM process allow us to seize new opportunities? Are we performing a significant portion of the process manually? Could we automate some parts of the process with enhanced system reliance or with a new system? Are we able to measure achievement of strategic objectives and goals? Are we collecting proprietary or sensitive information? If so, is it stored in a secure manner? It’s important to remember that ERM is not just a mechanism to collect risks in one place, but rather a highly valuable tool to view, assess and address risks across your entire institution. When managed properly, ERM should provide benefits like improved decision-making capabilities, more effective strategic and operational planning, greater stakeholder confidence and enhanced organizational resilience.If you’re looking to conduct an evaluation of your ERM processes, Schneider Downs Risk Advisory Services group can help. Contact us at constactsd@schneiderdowns.com ### Operation Varsity Blues and Internal Audit When news broke regarding the college admissions scandal back in March, I couldn’t help but think: where were the internal auditors?Thirty-three parents of college applicants are accused of paying more than $25 million to William Rick Singer, who used the funds to fraudulently inflate entrance exam test scores and bribe college officials. Among the accused parents are well-known actors and prominent businesspeople. Federal prosecutors allege the scheme involved two major practices: parents bribing test administrators to facilitate cheating on college and university exams, such as the SAT or ACT, and parents bribing coaches and administrators by fabricating elite sports credentials. Through an internal audit of the admissions and enrollment function, these instances could potentially have been identified prior to Operation Varsity Blues.At the university level, the risks associated with cheating on college admissions exams cannot be controlled, but admissions and enrollment personnel should always take time to review the SOC reports of third-party providers to ensure appropriate Complimentary User Entity Controls are in place. In this instance, Internal Audit could have tested the control environment surrounding the admissions function as it relates to the reliance on standardized tests, ensuring that the university not only has the appropriate controls in place, but that they are operating effectively and efficiently.An athletic scholarship should be vetted by an individual independent of the sport, who would review the offer to validate that the athlete is indeed elite and meets academic requirements. The review would include evaluating the athlete’s profile and confirming information with his or her high school. Internal Audit would provide that review, and also perform real-time audits by attending practices and validating that all athletes on scholarship are present and active.In addition, regular reporting of legacy acceptances, due to stature or donation, should be conveyed to the university’s board of trustees. If it’s the university’s practice to accept for admission relatives of significant donors in order to ensure future donation flow, these should be reported on regularly. Internal Audit could have reviewed the admissions rate of donors and their relatives, which would have identified exceptions to the university’s requirements. Reviewing reporting of legacy admissions could also help identify trends.It’s time for universities to take a greater focus on the high risk area of admissions and enrollment to mitigate the occurrence of such a scandal happening at their institution. Internal Audit should focus on current practices and make recommendations when necessary to help the university improve its processes. IA should look to be a trusted business advisor as university management looks to make changes to its current control environment.Visit Schneider Downs Risk Advisory’s Services webpage ### What's New? Highlights of the Taxpayer First Act of 2019 With the aim of improving the interaction between the IRS and taxpayers, the Taxpayer First Act of 2019 (TFA) was signed into law on July 1. The bill includes a number of adjustments to the IRS’s organizational structure, customer service and enforcement procedures, and provides some new safeguards to taxpayers. The significant changes are summarized below. Establishment of an independent appeal process The TFA officially establishes the IRS Independent Office of Appeals to resolve federal tax controversies without litigation. The bill also requires the IRS to provide more information to taxpayers on how the appeal was decided and, in some cases, requires the agency to provide a written explanation in the event of a denial. Improvement in IRS service The IRS is required to submit a comprehensive customer service strategy along with a detailed plan to Congress within one year of TFA’s enactment. The plan will include customer expectations and improvement goals. Exceptions regarding OIC agreement Low-income taxpayers who propose an offer-in-compromise agreement with the IRS may be eligible to waive the application fee and initial payment. Modification in enforcement procedures The TFA limits IRS enforcement procedures, including the issuance of a summons, seizure of property (post-seizure review is now required) and joint liability. Expansion of electronic filing requirements The threshold for mandatory electronic filing will be reduced from 250 returns in 2020 to 10 returns in 2022, which means the majority of tax preparers will have to e-file after 2022. Meanwhile, tax-exempt organizations filing a Form 990 now are required to file electronically for taxable years beginning after July 1, 2019. Defined “small tax-exempt organizations” will have an e-filing requirement after July 1, 2021. Besides these changes, the TFA also reforms the whistleblower’s program, which allows the IRS to exchange information and update claim status with informers. Certain enhancements surrounding internet technology are also required, such as providing an online platform for Form 1099 filing and automated programs for the disclosure of taxpayer information. Work cited: https://www.cpajournal.com/2019/09/03/top-ten-changes-in-the-taxpayer-first-act-of-2019/ ### Greetings from Hamburg Start-ups are everywhere! Last week, I traveled to Hamburg, Germany to participate in a Start-up Masterclass. The event brought together over 100 entrepreneurs to discuss various aspects of growing a new business.  Schneider Downs participated in a session sponsored by Prime Global affiliate ba-group and focused on international expansion.Many types of businesses participated: cybersecurity, logistics, food companies, leadership development, data management and storage and, of course, breweries! Ina Wetzel, CFO of Babbel, Neele Wehmeyer, Tax Partner at ba-group, and I spoke to a gathering of new and established business leaders about the U.S. and German business and tax considerations and the reality of doing business internationally. From opening bank accounts to planning exit strategies, the in-depth discussion provided valuable information to some newer companies and feedback from colleagues about their specific business concerns, opportunities, traps and tips.No matter where business operate, they share many of the same issues: financing, human capital, business administration and managing successful growth.  It’s a small world, afterall. ### Digital Disruption within the Commercial Real Estate Industry Digital disruption continues to affect many industries. Advanced technology, for instance, is now beginning to change the landscape for many asset classes within commercial real estate (CRE). To that end, today’s real estate investors and developers should consider implementing available technologies that (1) impact the size and use of tenant spaces in order to extend the property’s appeal throughout its lifecycle; (2) automate and create operational efficiencies; and (3) collect data points for analytical purposes. These three key factors will undoubtedly contribute to the transformation of the commercial real estate industry over the next few years. For example, augmented reality (AR) and virtual reality (VR), two readily available technologies, can be used to show off unfinished spaces in buildings and provide a virtual tour for viewers. A real estate developer of an office building, for instance, can create a physical architectural miniature model of the building, then use AR to create a hologram-like image of the exterior and interior of the space. This enables the end user to experience and envision the potential use of the space and make an informed decision without ever having to visit the location. Operational efficiencies are also important to ensure profitability with any real estate asset. The use of smart sensors and metering systems for tenant utilities allows property managers and landlords to control costs by providing accurate billing of water and energy consumption using real-time monitoring. Once these sensors are setup throughout a property, the system collects and analyzes consumption data and pinpoints abnormal usage. Cost savings are then realized over time as maintenance crews can repair a tenant’s leaky faucet or faulty toilet before the tenant may report the issue to the property manager. Landlords can also avoid other unexpected costs, including damage to the building and personal belongings. In doing so, they would realize additional savings on expensive renovations and avoid the hassle of rehousing or relocating tenants. For most commercial and large residential properties, the cost-benefit for outfitting a building with this type of technology can be significant. Plus, these systems often allow integration with other systems, such as billing, making it easy to scale and monitor the data with additional properties in a portfolio. Retail is another CRE asset class that’s on the verge of utilizing technology more extensively. In an effort to attract higher foot traffic, many retailers are focusing on enhancing the customer experience. In doing so, they’re implementing Internet of Things (IoT) technology made up of four components: sensors/devices, connectivity, data processing and a user interface. Together, this IoT technology facilitates interaction between consumers and the personal experiences offered by the retailer while shopping. Examples are the Bluetooth devices situated around the particular store that send alerts to consumers via their smart phones, based on their proximity. Through this, consumers can receive discounts, notification of special events or other reminders, leading to an increase in the likelihood that they’ll make an in-store purchase. Another example is JLL’s PinPoint, a geofencing tool that analyzes a consumer’s mobile data points, such as where they stop and look at products while they shop. The software tracks and measures the consumer’s data in real time, supplying retailers with metrics to better locate and position their storefronts. As technology continues to advance, new applications will come to light. Whether it improves management, energy efficiency or higher space utilization, the more data that a landlord has, the more effective it can serve their tenants. Contact Schneider Downs ADAPT to get in touch with our experts that can work with your data and transform your decision making and analytics processes. ### Whistleblower While You Work Tyler Shultz, former Theranos employee, and one of the most noteworthy whistleblowers of our time, has joined a long list of professionals who chose to take a stand and expose the fraudulent behavior of their employers. Theranos, a consumer healthcare technology startup once valued at $9 billion, met its downfall after allegations that the company’s primary technology was a fraud. Shultz was a vital source for The Wall Street Journal investigative reporter, John Carreyrou, who reported for the first time in 2015 that Theranos was using traditional blood-testing machines to perform its blood-testing services, instead of the company’s proprietary Edison devices, which were unreliable at best.By March of 2018, the U.S. Securities Exchange Commission (“SEC”) charged Theranos’ CEO, Elizabeth Holmes for her part in the extensive fraud. Holmes agreed to a settlement with the SEC in which she would pay $500,000, forfeit majority voting control over the company by converting her super-majority Theranos Class B Common shares to Class A Common shares, return 18.9 million shares and be barred from serving as an officer or director of any public company for 10 years. In June 2018, Holmes was charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. If Holmes is convicted, she faces a maximum sentence of two years in prison and a $250,000 fine. Additionally, she may be required to pay restitution for each count of wire fraud and each count of conspiracy to commit wire fraud.According to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, occupational fraud is initially detected by a tip, 40% of the time. It is important to note that occupational fraud is detected by internal audit 15% of the time and by external audit only 4% of the time. Further, over half of all tips that lead to the detection of occupational fraud are supplied by employees of the organization itself, 14% of which come from an anonymous source. This speaks to the fact that many individuals are afraid to come forward for fear that they will not be protected from retaliation and other potentially negative consequences. Although Shultz did not intend to become a whistleblower, his first-hand knowledge of the deceptive practices that Theranos was engaged in became a driving force behind exposing the truth to regulators, investors and the public. If you need assistance with assessing or responding to fraud within your organization, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com. For similar articles, visit Schneider Downs’ Our Thoughts On blog. ### Wearing the Color Pink: What an Experience! In February of this year, I joined the team for the American Cancer Society’s (“ACS”) 2019 Real Men Wear Pink campaign, an effort that gives men the opportunity to take a leadership role in raising funds and awareness for the fight against breast cancer. Community leaders around the nation use the “Power of Pink” to support the ACS's breast cancer initiatives, including innovative research, patient services, and education around screenings and risk reduction. It’s one important way we can attack cancer from every angle.I learned a lot during the campaign. Cancer has touched so many people, including three generations of my own family. Almost everyone I spoke to knew someone who was a survivor of breast cancer, or someone who’d lost their battle with the disease. We should all make a point to talk more about it to help create the awareness and motivate people to get regular screenings. Just wearing the color pink was a conversation starter everywhere I went!When I joined the cause for 2019, I had no way of knowing just what this year would bring. Unfortunately, in the past year my family suffered the loss of several members, and has been rocked by new cancer diagnoses. Through my Real Men Wear Pink campaign, I’ve been able to raise awareness and provide support to both family members and friends who are going through cancer treatment.One thing I’ve learned through this experience is the power of having support systems and the power of reaching out. I’m truly amazed and humbled by the generosity of people. Everywhere I went, individuals and groups responded to my campaign by giving their time, talent and treasure to help. Your support system is larger than you think! The power of simply asking shows how supportive people can be.Success can be measured in a number of ways. This year, we supported my family members and created awareness by wearing the color pink. Hopefully, the awareness we created encouraged – and will continue to encourage – people to take the necessary steps to detect and treat breast cancer at an early stage.I also experienced success by raising over $71,000, which helped elevate the Pittsburgh campaign to the rank of #5 in the nation. Individually, I was number one in Pittsburgh and number four nationally. I tell you, the generosity of people is just unreal!And I couldn’t have done it without you. Special thank yous to my family (especially my wife Jen), who helped take charge of my fundraising, Kelly Simpson (my campaign manager) and Dawn Keefer from the ACS.Let’s continue to wear pink and raise awareness. If you haven’t contributed to my campaign and you’d like to join the cause, you can still contribute to Real Men Wear Pink.Hats off to all the Real Men; we should all be proud of the job we did during the 2019 campaign! ### Tax Considerations – Professional Service Entities Since the passage of the Tax Cuts and Jobs Act (TCJA), there has been increased discussion regarding what is the most tax-efficient entity structure.  This is especially the case with the professional services sector.  You may be aware that TCJA provided pass-through entities such as partnerships and S corporations as well as sole proprietorships with a 20% qualified business income deduction.  See Our Thoughts On article Advisors Longing Clarity on Qualified Business Income Deduction for additional details.  This was done to reduce the effective income tax rate on business income outside of a C corporation environment because the federal C corporation tax rate was reduced from a graduated tax rate maximum of 35% to a flat 21% rate.Interestingly, Congress determined that this qualified business income deduction should not apply to Specified Service Trades or Businesses (SSTBs) which are defined as any trade or business that involves the performance of services in the fields of accounting, actuarial science, athletics, brokerage services, consulting, financial services, health, law, the performing arts, investing, investment management, trading or dealing in securities, partnership interests or commodities. These law changes as a result of the TCJA have caused many business owners within the service sector to re-evaluate their legal structure for tax purposes.  The quick reaction we have heard from professional service clients is the C corporation structure obviously must be the most efficient tax structure, since the federal tax rate has been reduced to 21%, and the qualified business deduction is not available to businesses that meet the SSTB definition. There are a factors to consider before you can determine that a C corporation is the most tax-efficient structure post-TCJA.  Those considerations include state corporate tax rate differences compared to the applicable individual tax rates for pass-through income.  Another consideration is the amount of money that would be distributed from the C Corporation as a dividend versus bonuses paid to the shareholders.  C corporations have two layers of tax.  The income is taxed inside the C corporation in the year it is earned, and then any amounts that are distributed to the shareholders are taxed a second time as dividend income.A common practice in many C corporation professional service entities is to pay bonuses to the employee shareholders in an amount that would as closely as possible zero out the income inside the corporation.  That way, there is only one layer of tax on the shareholder wages and no remaining cash to distribute to the shareholders in the form of a dividend.A recent court case may cause businesses using this scenario to think twice if that practice will survive Internal Revenue Service (IRS) scrutiny.  The case, Brinks Gilson & Lione a Professional Corporation v. Commissioner of Internal Revenue[i], challenged the practice of completely eliminating the corporation’s book income through the payment of bonuses to shareholders.In this case, the taxpayer would pay bonuses to shareholder attorneys in an amount to reduce book income to zero each year.  The only remaining amount of taxable income was generated by items that were treated differently for tax purposes such as nondeductible expenses.  As a result of concessions by the taxpayer in the course of the IRS examination, bonuses in the amount of $1,627,000 and $1,859,000 were characterized as nondeductible dividend distributions for the tax years under examination.  Accordingly, there was a significant amount of income that is now subject to two layers of tax resulting in an increase in the C Corporation’s taxable income as a result of the adjustment as well as nondeductible dividend income to the individual attorney shareholders.  The basic premise of this case is shareholder employees should receive some return on their invested capital. This court case should cause taxpayers to consider if the C corporation structure is as efficient as once thought or if consideration of a pass-through entity structure would be more practical.  There are many items to consider, and each taxpayer’s situation should be individually evaluated to determine the best course of action.  Please consult your Schneider Downs tax advisor if you would like to learn more about planning considerations on this subject. [i] (T.C. Memo 2016-20) ### All-Electric Fracking Systems Bring Significant Opportunity for Natural Gas Producers All-electric fracking systems are starting to gain traction among natural gas producers. These systems are powered by natural gas directly from the well pad. Traditional fracking systems use diesel fuel, which is costly to purchase and transport. All-electric fracking systems can be significantly cheaper, quieter, and more environmentally friendly than their diesel counterparts.Several major players have been using or testing the use of all-electric fracking systems recently, and they have seen millions of dollars in savings. This innovation represents a significant opportunity for fracking outfits with all-electric capabilities and for producers. Other stakeholders also benefit from the more environmentally friendly operation, not to mention the reduced noise pollution and truck traffic to and from the wellsite.Established fracking service providers face risks if the technology becomes widely adopted because of their significant investment in traditional fracking systems. Conversion to an all-electric fracking fleet would be pricey, because all-electric units rely on natural gas turbines, which are significantly more expensive than the diesel motors that power traditional fracking units.Producers will likely be eager to implement all-electric fracking systems as more data becomes available to support the benefits over traditional systems. Established fracking service providers will be reluctant to convert their fleets because of their investment in traditional fracking systems. Ultimately, market forces will determine how quickly all-electric fracking is adopted by the industry.With offices in Pittsburgh and Columbus, the Schneider Downs Energy and Natural Resources Energy Group is available to discuss industry issues at your convenience.Sources:https://www.oilandgas360.com/range-resources-sees-success-with-all-electric-frack-testing/https://www.reuters.com/article/us-usa-oil-electric-fracturing-focus/low-cost-fracking-offers-boon-to-oil-producers-headaches-for-suppliers-idUSKCN1VX112  ### Impact of Tax Reform on Accounting for Income Taxes – Changes in NOL The Tax Cuts and Jobs Act of 2017 (TCJA) impacted nearly every U.S. taxpayer both in personal income tax filings, and indirectly through the changes in corporate tax reform. As the IRS continues to issue regulations and guidance for the proper treatment for the many law changes, the Financial Accounting Standards Board (FASB) has also revised the guidance on accounting for income tax under ASC 740 as a result of the TCJA. As the guidance is issued, we will provide Our Thoughts On the accounting considerations and impact of the TCJA.This article discusses how the changes related to Net Operating Loss (NOLs) can impact the recording of the deferred tax asset (DTA) and any potential need for a valuation allowance. For NOLs generated in tax periods beginning before January 1, 2018, there was no income limitation on future use, but they were subject to an expiring statute of 20 years. Under the TCJA, for losses generated after December 31, 2017, corporate NOLs can now be carried forward indefinitely; however, they are subject to an 80% limitation on taxable income. While this has an obvious impact on a corporation’s calculation of its tax liability when using a NOL that was generated in a tax period beginning after December 31, 2017, accounting for the future utilization can have unforeseen complexity.When a NOL is generated in a tax period beginning after January 1, 2018, the corporation will record a deferred tax asset no different than previous treatment. However, with changes in expiration (indefinite carryforward) and potential income limitations, further consideration needs to be given when determining the amount of a valuation allowance, if any, that should be recorded against this DTA. For starters, if a corporation has an indefinite-lived intangible, this may now be used as a potential source of taxable income against the indefinite-lived NOL with consideration being given to the 80% income limitation. Additionally, with the NOL having a limitation on use, a rollout of the corporation’s utilization of all DTAs and deferred tax liabilities (DTLs) is required to determine the timing of estimated use as it can be possible that the corporation’s DTLs will reverse in a period where the NOL will be limited in use which requires a potential deferred tax liability be recorded when the corporation may have a net DTA before valuation allowance. The following example illustrates these complex rules. Suppose a corporation has the following deferred tax assets and liabilities at the end of 2019 before any consideration of recording a valuation allowance, while taking no consideration at this time for state impact:Now suppose that the Corporation is in a three-year cumulative loss and it is more-likely-than-not that the Corporation will not be able to utilize the net DTA recorded and therefore must record a full valuation allowance. For simplicity, assume the Company has zero income before taxes and no permanent items. Prior to tax reform, the impact of the valuation allowance would eliminate the net DTA on the balance sheet. There would be $630 that is recorded in the current year as Valuation Allowance expense which is a component of deferred tax expense. Under the new rules for post-2017 NOLs, the Corporation must forecast the timing of the reversals to determine the valuation allowance that must be recorded. Assume the forecast for the reversals of the deferred assets/liabilities as follows:The reversals of depreciation and allowance for doubtful accounts generate taxable income and can only be offset by the available NOL subject to the 80% taxable income limitation. According to ASC 740-10-55-36, the limit on utilization of a NOL must be considered when determining if it is more-likely-than-not that some, or all, of the DTA will not be realized.In the above example, the reversals of the DTLs will be used as a source of income to utilize the corporation’s DTAs; however, due to the timing of the reversal, the corporation has forecasted that NOLs will remain with no available DTL to offset. A valuation allowance is required to be recorded for the remaining NOL expected to be more-likely-than-not to be utilized. Therefore, this would require that a valuation allowance be recorded for $1,344 ($20,000 NOL available, less the $13,600 utilized, times 21% tax rate) which would create a net DTL of $714 (Tax-effected net DTA before valuation allowance of $630, less valuation allowance of $1,344).Accounting for income tax has continued to be a leading cause for financial restatement. With further guidance and requirements on accounting for tax reform, the complexities within ASC 740 have only increased. To inquire further and to receive Our Thoughts On accounting for tax reform, please email us at contactSD@schneiderdowns.com. ### U.S. Department of Labor Proposes New Electronic Disclosure Rule On October 22, 2019, the Department of Labor (DOL) proposed new regulations giving employers a new safe harbor regarding the electronic delivery of required retirement plan notices under Title I of the Employee Retirement Income Security Act (ERISA). Under these proposed regulations, which were published in the Federal Register on October 23, plan administrators can satisfy their notice delivery requirements by posting retirement plan notices to a website, provided several specific requirements are satisfied.The current 2002 Safe Harbor electronic disclosure is available only to those participants who have electronic media at work, or to those individuals who affirmatively opt in to electronic documentation.The proposed new regulations do not replace the current 2002 Safe Harbor, but merely expands upon them. Employers may continue to rely on the 2002 Safe Harbor rule if and when the proposed new regulations become final.The regulations are proposed to be effective 60 days after the October 23 published date.  There also is an  accompanying Request for Information (RFI) on additional measures (beyond the proposed electronic delivery safe harbor) that the DOL could consider in the future to improve the effectiveness of ERISA disclosures. Comments on the RFI are due 30 days after publication in the Federal Register. The DOL estimates that expanding the use of internet technology to furnish covered disclosures to workers will result in approximately $2.4 billion net cost savings over the next 10 years for ERISA-covered retirement plans by eliminating materials, printing and mailing costs associated with furnishing printed disclosures.However, the proposed regulations do not eliminate paper distributions.  Covered individuals must be permitted to request any document in paper form (without charge) and would have the right to opt out of electronic delivery and receive only paper versions of some or all covered documents. In fact, before making use of this safe harbor (upon it becoming final), plan administrators must provide covered individuals with a paper notification of the use of the electronic delivery, with information about the right to request paper versions and to opt out.Following are highlights of the proposed rule: Retirement Plans Only:  The proposed rule applies only to retirement plans; it does not cover welfare benefit plans Covered Individuals:  Retirement plan disclosures under the proposed rule could be sent to participants, beneficiaries, or other individuals entitled to receive required notices and documents who provide an e-mail address or smartphone number. An employee with a work-related electronic address assigned by an employer is treated as having provided the electronic address. Covered documents: The safe harbor would apply to any retirement plan-related document required to be furnished under ERISA, such as Summary Plan Descriptions (SPDs), Summary of Material Modifications (SMM), Summary Annual Reports (SARs), pension benefit statements and blackout notices. Documents that must be furnished upon request (such as a retirement plan document) are excluded from the proposed rule. Notice of internet availability:  Plan administrators must provide a notice of internet availability for each covered document they plan to provide under the new safe harbor. If there are eight different documents, eight different notice of internet availability must be provided. However, the proposed rule provides for combining certain documents into one Notice. Content of notice of internet availability:  The notice, which must be written in a prescribed readability standard and which cannot contain technical or legal terminology, must include: (i) a prominent statement, such as a subject line that reads, “Disclosure About Your Retirement Plan,” (ii) a statement that includes this language “Important information about your retirement plan is available at the website address below. Please review this information,” (iii) a brief description of the covered document, (iv) the website address where the covered document is available, (v) a statement of the right to request and obtain a paper version of the covered document, free of charge, and an explanation of how to exercise this right, (vi) a statement of the right to opt out of receiving covered documents electronically, with an explanation of how to exercise this right, and (vii) a telephone number to contact the administrator or other designated plan representative. The website address must connect either directly to the covered document or to a login page that provides a prominent link to the covered document. Technical Standards: The plan administrator would be required to ensure that each document is available on a website accessible by covered individuals. Password protection is permitted, and any individual’s personal information must be protected. The regulations also address formatting requirements (e.g., the online document must be suitable for searching, printing, and saving electronically) and technical issues (e.g., regarding confirming validity of email addresses). The website does not need to be maintained by the plan sponsor; it can be a website of a third-party service provider. Timing of notice of internet availability:  The notice must be furnished no later than the deadline for providing the underlying ERISA disclosure (there are special timing guidelines for combined notices), and must remain posted until superseded. Severance from employment:  The proposed rule recognizes the need to continue to furnish information following an employee’s severance from employment; therefore, the administrator will need to ensure the continued accuracy of the covered individual’s electronic address or number. ### SOC Control Optimization and Efficiencies If you currently have a SOC examination performed, how often do you or your auditors review each control to make sure they are up to date and mitigate the risk as intended?If this is not part of your annual process, it should be. Not only can this help the auditors have a better understanding of the controls, but it can help identify opportunities for new controls, system controls, determine proper control ownership and potentially centralize controls within a department—all of which will help make the SOC examination process run smoother for everyone involved.  This exercise might appear to add time to the overall SOC process, but this will help optimize your control set and create efficiencies that over time should make the overall time investment less for your organization.When analyzing your control activities, think about what risks the control is designed to mitigate. The control will be performed either manually or systematically to prevent that risk or detect instances of non-conformity. This will help identify what controls are mitigating the key risks associated with the service you are performing for your clients and can help reduce and streamline the controls included within the scope of the SOC examination. It is helpful to assign a value to each control based on the risk the control is designed to mitigate, which will identify what the key controls actually are.As systems keep evolving, manual detective controls can potentially be replaced with systematic preventative controls if the system controls are properly designed and are mitigating the majority of the risk. Taking advantage of system controls is one aspect of control optimization to drive efficiencies in your SOC examination process. This analysis should be done in conjunction with the risk identification process when assessing the controls that the risks are designed to mitigate. While analyzing the latter, consider where there are multiple controls to mitigate the same risk, as this is an opportunity to analyze the strength of those controls. Also, question whether all these controls are necessary to mitigate the associated risk. Prior to removing any controls, you must consider if the control objective, in regards to a SOC 1, or the Trust Services Criteria (TSC), in regards to a SOC 2, can be satisfied by the remaining controls under that control objective or TSC.Control optimization should help reduce the amount of time that control owners at your organization spend pulling documentation for outdated manual controls and reduce the time the auditors spend testing the control and asking follow up questions. Another way to drive more efficiencies for your organization would be to appoint one or two employees who will be responsible for ensuring all documentation requested by your auditors is provided completely and timely. This is especially helpful when there are multiple departments or control owners involved.  It is also beneficial to ensure that the documentation to support your control set is easily accessible as well. These simple concepts will help streamline the process and provide fewer interruptions to your day-to-day operations during the SOC examination process. For more information on SOC efficiencies and control optimization or how Schneider Downs can assist in strengthening controls or identifying efficiencies please reach out to contactSD@schneiderdowns.com ### Can ISAs Help Slow the Educational Debt Crisis? With student debt projected to reach $2 trillion by 2022, traditional education financing is in a state of flux as it looks for solutions to defuse, at least in part, the looming crisis. Income share agreements – or ISAs – have emerged as one such approach to the issue. Seen as an alternative to the traditional loan, an ISA enables a student to make a deal with a college, university or another entity for upfront tuition money. In return, the student pays back a portion of their future income for a set number of years. Colleges, lawmakers and venture capitalists alike have embraced the concept.Vocational schools and boot camps, programs that typically take less than nine months, to complete, were first to pilot the idea. Traditional universities were soon to follow with their own versions, including Purdue’s Back a Boiler program, the largest ISA in operation, advancing more than $10 million in funding to over 800 students. The Purdue Research Foundation had attracted a diverse pool of 11 investors to initially fund the ISA program.A number of firms and organizations – many of the nonprofit variety – sponsor a direct-to-student model as well, offering income-driven repayment plans that differ from entity to entity based on organizational focus.Because ISAs are so new, proponents believe the aforementioned approaches have been decelerated by the lack of comprehensive data and no definitive long-term track record that can help assess their value and effectiveness in helping to reduce a student’s debt burden. Many believe there is also hesitancy on the part of institutions and other organizations due to the lack of legislative clarity. As lawmakers increasingly discuss the potential of ISAs incentivizing colleges and enabling less loan risk for students, a bipartisan bill – The ISA Student Protection Act of 2019, which seeks to set a federal legal framework for ISAs to protect students from poor outcomes and lay the foundation for the market to flourish – circulates through the Senate.As student loan debt surpasses credit card and auto debt in the coming years, your institution may need assistance in navigating the industry sector’s environment. We invite you to see our complementary article from earlier this year and visit the Schneider Downs Educational Services Industry Group. You can also contact us at contactsd@schneiderdowns.com. ### 2020 Retirement Plan Limitations On November 6, 2019, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect January 1, 2020 (IRS Notice 2019-59). These COLAs affect various contribution and deduction limits for qualified retirement plans, as well as the deductible contribution limits for traditional Individual Retirement Arrangements (IRAs).Internal Revenue Code Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. These adjustment procedures are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.Some limitations increased, while others remain unchanged from the 2019 limits.  The more common limitations are summarized below, along with the applicable Code Section and/or Treasury Regulations Section (Regs).Increased Limits The annual deferral limit for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increases from $19,000 to $19,500 (Code Sections 402(g)(1),402(g)(3)). The annual contribution limitation for defined contribution plans increases from $56,000 to $57,000 (Code Section (415(c)(1)(A)). The annual maximum considered compensation limit increases from $280,000 to $285,000 (Code Sections 401(a)(17), 404(l),408(k)(3)(C) and 408(k)(6)(D)(ii)). The annual deferral limit for deferred compensation plans of state and local governments, and tax-exempt organizations increases from $19,000 to $19,500 (Code Section 457(e)(15)). The limitation on the annual benefit under a defined benefit plan increases from $225,000 to $230,000 (Code Section 415(b)(1)(A)). The dollar limitation for determining the maximum account balance in an Employee Stock Ownership Plan (ESOP), subject to a five-year distribution period, increases from $1,130,000 to $1,150,000; and the dollar amount used to determine the lengthening of the five-year distribution period increases from $225,000 to $230,000 (Code Section 409(o)(1)(C)(ii)). The annual “look-back” compensation income limit for purposes of the definition of “Highly Compensated Employee” increases from $125,000 to $130,000 (Code Section 414(q)(1)(B)). The annual compensation threshold for purposes of the definition of “Key Employee” increases from $180,000 to $185,000 (Code Section 416(i)(1)(A)(i)). The annual deferral limitation for SIMPLE retirement accounts increases from $13,000 to $13,500 (Code Section 408(p)(2)(E)). The Social Security Taxable Wage Base increases from $132,900 to $137,700. The maximum amount of catch-up contributions that individuals age 50 or over may make to 401(k) plans, 403(b) plans, SEPs and governmental 457(b) plans increases from $6,000 to $6,500 (Code Section 414(v)(2)(B)(i)). The dollar limitation on premiums paid with respect to a Qualifying Longevity Annuity Contract (QLAC) increases from $130,000 to $135,000 (Code Section 1.401(a)(9)-6 and Regs. Section A-17(b)(2)(ii)). Unchanged Limits The maximum amount that can be contributed to an IRA remains unchanged at $6,000 (Code Section 219(b)(5)(A)). The IRA catch-up contribution limit for IRAs remains unchanged at $1,000 (Code Section 219(b)(5)(A)). The limitation concerning the qualified gratuitous transfer of qualified employer securities to an ESOP remains at $50,000 (Code Section 664(g)(7)). The maximum amount of catch-up contributions that individuals age 50 or over may make to SIMPLE 401(k) plans or SIMPLE retirement accounts remains at $3,000 (Code Section 414(v)(2)(B)(ii)). The compensation threshold for simplified employee pensions (SEPs) remains at $600 (Code Section 408(k)(2)(C)).           ### Announcing the First Annual Ohio Trucking Association and Schneider Downs Transportation Business Outlook and Economic Survey Click here to download the First Annual Ohio Trucking Association and Schneider Downs Transportation Business Outlook and Economic Survey For the first time ever, the Ohio Trucking Association (OTA) has partnered with Schneider Downs to produce an annual Transportation Business Outlook and Economic Survey.  Over the past year, members of both our organizations have worked tirelessly to survey the OTA membership, analyze those results, and produce a timely, relevant tool for our region’s transportation industry.This report is organized into three sections: Economic Conditions Industry Challenges Political/Regulatory Each section provides quantitative analyses and insightful commentary on the biggest issues impacting trucking companies that do business in Ohio.  Topics addressed include driver shortage, healthcare costs, and tax reform, just to name a few.It is our pleasure to offer this report to our clients, prospects and friends.  We hope you find it insightful and useful to your business.  If you have any questions, please contact Mike Renzelman (Columbus) or Dan Phillips (Pittsburgh). ### Results and Implications of the Manufacturing Institute for Supply Management’s Report on Business for Q3 2019 On October 1, the Manufacturing Institute for Supply Management (ISM) released its latest Report on Business, a monthly publication that provides industry trends and statistics for the manufacturing sector. The referenced Purchasing Managers Index (PMI) below is a composite index for the manufacturing industry compiled by the ISM, and is based on five subcategories: new orders, production, employment, supplier deliveries and inventories. A PMI index over 50% indicates that the manufacturing environment is expanding, and the ISM uses this information to analyze the state of the economy and predict future growth or contraction. Here’s the PMI of the first nine months of 2018 and 2019:                                                                              Despite the country’s overall economy continuing to grow for the 125th consecutive month through September 2019, the U.S. manufacturing industry’s 35th consecutive month run of expansion came to an end in August 2019. This falls in line with the decrease in business confidence expressed by survey respondents in the most recent ISM reports, citing global trade as the most significant issue. To put this recent activity into perspective, September’s PMI of 47.8% is the lowest PMI since the last month of the Great Recession (June 2009), at which point the index registered at 46.3%.Fifteen of the 18 tracked manufacturing industries reported contraction in September 2019, with only Miscellaneous Manufacturing, Food, Beverage & Tobacco Products and Chemical Products reporting growth. Contraction of the manufacturing industry is supported by nearly all measures tracked by the ISM. Specifically, the new orders index registered 47.3%, well below the 52.5% measure, which indicates an increase in orders over time. Additionally, ISM’s production index for the month of September registered at 47.3%, indicating the second consecutive month of contraction and the lowest point since April 2009.The employment index decreased from 54.5% in June 2019 to 46.3% in September 2019, the lowest reading since January 2016. Of the 18 ISM tracked manufacturing industries, only four reported employment growth in September: Miscellaneous Manufacturing, Food, Beverage & Tobacco Products, Textile Mills and Chemical Products.September 2019 also marked the 43rd straight month of slowing deliveries from suppliers. Respondents noted that they continued to face challenges with the timing of road freight transport and with transporting goods from China. To help combat these difficulties, manufacturers continue to closely manage inventory levels. ISM’s inventories index decreased 3% from August 2019, clocking in at only 46.9% in September 2019, which is the lowest reading since December 2016, when the index was measured at 46%.Many of these results point to the beginnings of industry contraction. Given the challenges outlined above, along with the increasing costs to retain employees, respondents to surveys expressed a lack of confidence in the continued growth of the industry, so these results are not outside of expectations.For further information on the ISM Report on Business, go to https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?SSO=1 ### Top Risks to Keep On Your Radar for 2020 We live in a disruptive world where the risks companies face are constantly evolving. Risks not on your radar today could easily be brought to light within the next year, month, or even week. The IIA recently released its report, On Risk 2020 – A Guide to Understanding, Aligning and Optimizing Risk, which provides perspective from key members of risk management functions and offers insight on what to look for next year. On Risk 2020 was developed from qualitative and quantitative interviews conducted with nearly 100 professionals to capture viewpoints of the boardroom, c-suite and chief audit executives. Results were analyzed to get a better picture of how the three roles aligned, both regarding the risks that exist within organizations and how well-equipped those organizations are to manage the threats. Several key insights resulted from the report. Top 11 Risks: The following were identified as the top 11 risks that organizations expect to face in 2020: Cybersecurity Data protection Regulatory change Business continuity/crisis readiness Data and new technology Third party Talent management Culture Board information Data ethics Sustainability (Environmental, Social and Governance - ESG) Overconfidence of Boards: The results overwhelmingly indicated that board members are more confident than executive management in their organization’s capability of addressing key risks, as depicted in the table below. Image obtained from The IIA’s “On Risk 2020 – A Guide to Understanding, Aligning and Optimizing Risk” Knowledge Deficit: Most interviewees felt that Cybersecurity and Data and New Technology were risks of high relevance to their organizations, but rated themselves low in knowledge of these areas. Top Three Risks to Watch: Data and New Technology, Data Ethics and Sustainability (also known as Environment, Social and Governance, or ESG), are predicted to experience extreme growth in relevance over the next five years. Talent Management Remains Crucial: As the risks we face evolve, so must our talent. Identifying, hiring and retaining innovative individuals who have the ability to develop critical skills that align with changing business practices and related risks is critical to the success of risk management. As businesses and risks evolve, collaboration between internal audit, senior executives and the board has never been more critical. Organizations should continue to understand, assess and proactively manage the risks they face and ensure this information is clearly communicated among all risk management functions. Interested in learning more about how to assess and address risks within your organization? Contact our Risk Advisory Services team by e-mailing us at contactSD@schneiderdowns.com.   For the complete report, click here to download On Risk 2020 – A Guide to Understanding, Aligning and Optimizing Risk. ### IRS Releases Proposed Regulations on Changes to the Limits on Contributions to ABLE Accounts The IRS released proposed regulations regarding changes to limits on contributions to Achieving a Better Life Experience (ABLE) accounts. The new proposed regulations seek to clarify changes made to ABLE account rules by the Tax Cuts and Jobs Act (TCJA).The proposed regulations clarify rules on: Additional contributions by an employed designated beneficiary before 2026 The definition of poverty line for additional contributions before 2026 and The return of excess contributions to a designated beneficiary. The TCJA made major changes to ABLE accounts.  Those changes allowed eligible individuals to put more money in to their ABLE accounts and allowed them to roll money from their qualified tuition programs (529 plans) into their ABLE accounts.  It also allowed certain contributions made to ABLE accounts by low and moderate income workers eligible for the Saver’s Credit.ABLE accounts are established to help people with disabilities pay for qualified disability expenses, such as housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services.  None of these expenses is covered by Medicaid or other government programs.  It allows the beneficiary to save money in a tax deferred account and can be withdrawn tax-free if used for qualified expenses.Prior to the changes by the TCJA, contributions up to $15,000, the annual gift-tax exclusion amount, could be made to an ABLE account for the designated beneficiary.  After the TCJA, if the beneficiary works, the beneficiary can also contribute part or all of their income to their ABLE account. For years 2018 through 2025, the additional contribution made can be the lesser of (1) his or her compensation includible in gross income or (2) the federal poverty line for a one-person household for the year.  Also, the employed designated beneficiary, or the person acting on his or her behalf is solely responsible for seeing that the requirements for the additional contributions are met. The proposed regulations also clarified the definition of the applicable poverty line for determining the limit on additional contributions and indicated that the poverty line used is based on the beneficiary’s residence and not the state where the ABLE account is established.And finally, the proposed regulations indicated that it is the responsibility of the employed designated beneficiary to identify and request the return of the contributions that exceed the additional contribution limits in 2018 to 2025.  The return of the contributions must be made by the due date of the return of the beneficiary, including extensions. ### Teach a Man to Phish: Six Common Elements of a Phishing Scams and How to Spot Them Sensationalist headlines about cybersecurity incidents have become the norm. Sadly, so too have clever email phishing scams. A recent notice issued by the Internal Revenue Service warns taxpayers of yet another email phishing scam. The Technology Consulting Services department at Schneider Downs describes phishing as “one of the most common social engineering methods that hackers utilize to deliver malware, compromise credentials, steal sensitive data and carry out a variety of other threats. Through phishing, attackers send email messages that appear to be legitimate, and will play on human emotions in order to force a user error.” As discussed in IR-2019-145 the latest scam is an email prompting a taxpayer to follow a link to get information about their electronic tax return or tax account. When the link is clicked, a malicious file is downloaded to their computer. These files usually contain malware that can track every keystroke – and that can eventually give a hacker access to passwords and other important financial information. Phishing scams have also resulted in some form of extortion, in which the scammer threatens to release evidence of a person’s embarrassing antics or criminal behavior, unless the victim agrees to pay them. While phishing scams are common, they are becoming increasingly more sophisticated. It is difficult for the untrained eye to determine a real email from a fraudulent one. The Schneider Downs Cyber Security Team warns of several common elements that can help one to more easily identify a phishing email threat: Too good to be true - Usually the email will include some type of draw that will grab your attention. In the case of the latest scam, a mention of tax savings would be eye-catching. Sense of urgency - There is usually an expiration date on the aforementioned draw or a warning that you will be locked-out from the online account if the matter is not addressed within a certain period of time. Bogus hyperlinks - While they can appear to lead to a legitimate website, a bogus hyperlink could actually contain only a slight change or variation that will lead you to a fake website or to download a malicious file. Phishy “From” addresses - The email address of the sender can easily be spoofed in a similar way to a bogus hyperlink. A phishing email can appear to be from someone you know like a colleague or a superior; it is recommended that you hover over the address to check for errors or variations in spelling or formatting. It is also important to consider the tone of the email. If it appears to be from a sender that you know, is their pattern of language and email signature consistent with previous correspondence? If it seems out of the ordinary, don’t open the email. Attachments - Any attachment should warrant additional scrutiny. It is prudent to never open unsolicited attachments. Password-protected PDFs have become an increasingly popular tool by which scammers gain access to your personal information. Upon attempting to open a password protected PDF, the recipient is prompted to enter their username and password, which is then collected and can be used to gain access to your other accounts. If you use password-protected PDFs frequently, the Schneider Downs Cyber Security Team reminds you to refrain from including your password in the email message. Unusual requests - Many phishing schemes will prompt the reader to send gift cards, cashier’s checks, money orders etc. This should be a red flag that the request is not legitimate. When it comes to data security it is better to be proactive than reactive. The first step to being proactive against cybercrime is to educate yourself, your friends, and your family about the potential threats and how to better identify them. It is important to remember that the IRS does not contact taxpayers by email, text messages, or via other social media platforms, nor do they demand immediate payment. If they need to contact you about your personal or business tax matters, the IRS will initiate all correspondence via the postal service.  If you suspect that you have been a victim of tax-related fraud or that your friends or coworkers could be vulnerable, we encourage you to reach out to Schneider Downs to see how we can help you address your risks. ### Amazon: Prime Time to Celebrate After Prevailing in Tax Court Dispute Internal Revenue Code §482 (“§482”) provides standards governing transactions between entities “owned or controlled directly or indirectly by the same interests.” The parties to these “controlled” transactions have the opportunity to reduce their exposure to U.S. income taxes by transacting with foreign-owned subsidiaries based in countries with lower tax rates. §482 gives the Department of the Treasury the power to reallocate these controlled transactions if necessary “to prevent evasion of taxes or clearly to reflect the income of” a taxpayer. The IRS utilizes the “arm’s length standard” to determine whether controlled transactions between related parties clearly reflect the income of the U.S. taxpayer. According to §482: “A controlled transaction meets the arm-s length standard if the results of the transaction are consistent with the results that would have been realized if uncontrolled taxpayers had engaged in the same transaction under the same circumstances (arm’s length result). However, because identical transactions can rarely be located, whether a transaction produces an arm’s length result generally will be determined by reference to the results of comparable transactions under comparable circumstances.” This article describes a recent court case involving the IRS challenging the nature of Amazon.com, Inc.’s (“Amazon US” or the “Company”) controlled transactions with one of its foreign subsidiaries. In 2004, Amazon US created a European subsidiary (“Amazon Europe”) to operate the Company’s European website business. The Company transferred intangible assets (website technology, trademarks, customer information, etc.) to Amazon Europe to support its website business for a “buy-in” payment of $255 million to be paid over seven years (resulting in a present value of the buy-in of $217 million). The IRS determined that Amazon US had deficiencies in Federal income tax for 2005 and 2006 because of this controlled transaction with Amazon Europe. Invoking §482, the IRS made substantial transfer-pricing adjustments reallocating income to Amazon US from Amazon Europe. Amazon challenged these adjustments and won its Tax Court case that was later upheld in the U.S. Court of Appeals for the 9th Circuit. Here are the facts of the case: When: The appeals court decided the case in August 2019. Main Issue: Amazon Europe paid Amazon US an initial buy-in payment of $217 million (the present value of $255 million paid over seven years) for the transfer of certain of Amazon US’s intangible assets. The IRS asserted that the buy-in payment had not been determined at arm’s length and that the appropriate buy-in should be approximately $3.6 billion. Amazon’s valuation expert utilized a comparable uncontrolled transaction (“CUT”) method to value the specific transferred intangible assets with a definite useful life for the various intangible assets. The IRS’s expert used a discounted cash flow analysis with an essentially indefinite useful life for the intangible assets. Decision: The court determined that the IRS’s method of valuing the intangible assets included other inseparable parts of the business that are non-transferrable and were thus not part of the controlled transaction: workforce, going concern value, goodwill and growth options. The court interpreted the regulations to show that the definition of an “intangible” is limited to independently transferrable assets. The court also determined that there should be a definite useful life for the intangible assets and that Amazon Europe’s annual cost-sharing payments gave it ownership in any intangible assets developed in the future. The court determined that the CUT method was the best method to determine the buy-in payment, but disagreed with certain aspects of Amazon’s determination of that buy-in payment and increased it to $779 million. The court’s decision is consistent with §482, which explicitly outlines the CUT method as one acceptable method to determine whether a controlled transaction meets the arm’s length standard. Schneider Downs has significant experience in preparing valuations of intangible assets for transfer pricing, financial reporting and litigation support purposes. Please contact contactSD@schneiderdowns.com for more information about our valuation services ### Questions to Ask Before Ransomware Hits Your Business In the past, a ransomware attack would target a single computer and ask the victim for $500. But now, what we see during our own cyber-incident response services and in incidents reported publicly, attackers are willing to take a little extra time to fully compromise a network before launching their ransomware.Why go for a $500 ransom here and there, when an attacker can compromise and encrypt an entire network, extorting victims for $1 million or more? With that said, it might be thought that smaller organizations are less juicy targets. The truth is, organizations with limited security resources are the easiest targets and are frequently targeted by attackers. Here are the questions organizations should be asking themselves before ransomware or other malware hits, and why.If attackers have the same level of network access your IT team does, can they destroy, overwrite or otherwise corrupt your existing backups?It is not uncommon for attackers to specifically target backups. If all of the organization’s backups are on the network or accessible from the network, they are potential targets. A ransomware-tolerant backup solution should ensure regular backups that cannot be overwritten, even by an attacker that has obtained all the administrator passwords for the network. That might mean including regular backups taken to disk/tape, which are rotated off-site, or using technology that allows backup archiving in a way that prevents the possibility of anyone overwriting existing backups. If your production data becomes encrypted by ransomware, backups might be the only option to recover the data, so secure backups are extremely important for any size organization.Do you have an incident response program that is regularly tested? IT and security teams are always challenged for time and budget, so it is understandable that often, incident response programs are lacking, untested, rarely updated, or nonexistent. If you do have an incident response program, test it regularly with tabletop exercises and validate its effectiveness.Do you have resources to call if an incident goes beyond your internal ability to handle it?A limited incident response program can be just as bad as a non-existent one. For organizations with no or a limited incident response program, you should, at the very least, reach out, establish and maintain relationships with two or more incident response providers that can respond quickly to incidents in your geographic area(s). That way, you have someone to call if an incident like ransomware strikes. Even if you have an incident response program, you should still have outside help you can call for an urgent, time-sensitive situation beyond your control, which is often the case with ransomware.Could your business operate without IT resources for days or weeks?A real situation we see with aggressive ransomware attacks, is that all or almost all of the resources provided by IT can become unavailable, for days and in some cases, even longer. Planning for that scenario should be part of a disaster recovery program, but as we discussed earlier when it comes to things like Incident Response and Disaster Recovery, many organizations do not have a robust plan, or any plan, because resources are already strained.An organization-wide ransomware attack is like a tornado that effects computer systems and hits every location you have.Can you operate without your IT systems (Email, ERP, databases, custom applications, phone system, etc.)? For how long? Have a plan.How effective is your antivirus software?Many attackers get in through phishing emails targeting average users, which are often overlooked by an organization as low-value targets. Those low-value targets are a great entry point for an attacker. In fact, most of our clients who get ransomware infections do have antivirus software in place. Sadly, antivirus software, particularly traditional antivirus software, is an easy obstacle for attackers to overcome. This is an area where newer security controls should be considered.A properly tested and tuned endpoint detection and response (EDR) solution can provide greater levels of attack protection and significantly more detection and logging capabilities than traditional antivirus. EDR solutions are not perfect. Despite being a big improvement in endpoint protection, a poorly configured EDR solution can be less effective than traditional antivirus. Whatever you use, test its effectiveness. Schneider Downs often performs endpoint security effectiveness testing as part of a well-rounded penetration test, which includes testing of antivirus and/or EDR solutions.If your whole network is compromised, including your backups, how much would you risk paying to decrypt the data?We don’t generally provide guidance on whether paying a ransom should be considered. The FBI and others typically recommend against paying a ransom, because it encourages the attackers to continue their work and there is no guarantee you will actually be able to decrypt the data, even if you pay. If an organization has no backups, or the backups have been encrypted by the attacker, some organizations will determine that it is worth the risk to pay the ransom. This is a question worth posing now to senior management, or to the board.If you do pay the ransom and are able to decrypt your data, take heed: Paying the ransom does not ensure that an attacker has actually left your network, and it doesn’t resolve any of the security issues that led to the successful attack. And so those weaknesses could be exploited again by the same attacker or a new attacker. Do not stop your incident response efforts at the point where your data is recovered. Ensure that the attackers are out, analyze what happened and fix the issues that led to the successful attack.Do you regularly evaluate the performance of your security controls by simulating attacks?Cyber-security audits are great, but do not show you what is possible if an attacker gains access to your network. Penetration tests, purple team exercises and red team assessments are methods to put your network to the test and to see how it actually fares against an attack. Organizations that perform these assessments regularly and remediate the findings are the most mature organizations we work with from a cybersecurity standpoint and the most resistant to successful attacks.If you had to, how would you rebuild your entire network?This is a scary thought, but while some compromises are limited, others are so extensive in nature that a full rebuild of a network has been necessary. I can’t think of any organization that has the internal capability to rapidly rebuild every system on their network. Often, it requires outside help. Who will provide that help? Many incident response providers will help to identify and stop an attack, but do not provide on-the-ground IT level support that is required to rebuild a network. Schneider Downs’ cybersecurity team has full experience assisting clients: in figuring out what the bad guys are doing, kicking them out, determining what they accessed or compromised, and assisting your organization in system recovery if needed.These are questions that should be considered by any organization before an incident hits. Being prepared could save a business millions of dollars—and prevent other losses that are harder to measure, like loss of reputation and the extenuating impact on your clients and board. Schneider Downs Risk Advisory Services and Cybersecurity team has the experience to assist with all of the questions posed in this article. Feel free to get in touch with our team to discuss your security consulting needs. ### Analyzing the Growth of Soccer in America With Major League Soccer playoffs in full swing, the growth of the sport in America is exploding!  Countless articles released over the past several years testify to soccer’s rapid growth in the United States. Most notably, Forbes stated in a 2019 article that “there’s no doubting that that popularity of soccer, both in participation and interest, is increasing in the United States.” As not only a soccer fan but also as a fan of data analytics, I had to find out for myself if the numbers were there to back it up. Using Major League Soccer attendance data dating back to the league’s inception in 1996 as well as U.S. high school sports participation statistics dating back to 2003, I set out to complete my self-assigned task.There is no doubt that Major League Soccer (MLS) as a professional sports league is growing. The league began play in 1996 with 10 total teams and operated in the 2019 season with 24 teams. Additionally, there are plans for continued expansion to 30 teams in the coming years, with expansion into Nashville, Miami, and Austin confirmed in the next two years. But has the fandom grown with the league?  The quick answer: yes.During its inaugural 1996 season, MLS averaged a total of 17,406 fans per game. Since most new things, such as retail stores and restaurants, experience a popularity bump with “grand openings,” I decided to consider the 1996 season to be MLS’ grand opening. According to the Small Business Chronicles, grand openings help attract new customers, generate buzz, gain media attention and create goodwill.Therefore, I decided begin my analysis with the 1997 season, since, without the “grand opening” popularity bump, it is more representative of the historical data. During the 1997 season, MLS averaged an attendance of 14,603 fans per game whereas the 2019 season averaged 21,310 fans per game.However, much of this growth can be attributed to expansion teams such as the Seattle Sounders and Atlanta United, which began play in 2009 and 2017, respectively. Seattle and Atlanta have consistently topped attendance statistics since their entrances into the league, with Seattle averaging 40,719 fans per game and Atlanta averaging 51,237 fans per game.Therefore, I isolated the nine franchises still remaining in the league that participated in the 1997 season: Colorado, Columbus, DC United, FC Dallas, LA Galaxy, NE Revolution, New York Red Bulls, San Jose, and Kansas City. During the 1997 season, these franchises averaged 14,969 fans per game, whereas in the 2019 season, they averaged a total of 17,370 fans per game, an increase of 16% total and 1.60% per year. Therefore, it is fair to say that popularity has grown amongst the league and should only continue with the league’s planned expansion.Typically, in business, one of the largest expenses on a company’s income statement is payroll. This is especially true of a professional sports league, where the quality of play can produce a lasting impact on the league’s overall popularity. Using data obtained from the MLS Players Union dating back to 2007, I was able to compare league attendance against the average player salary.League salaries have jumped astronomically since 2007, with the league minimum salary in 2007 being just $12,900, compared to the league minimum salary of $56,250 in 2019, a 336% increase!  The median player salary has also grown at a substantial rate of 248%, increasing from $50,400 in 2007 to $175,285 in 2019. So while the quality of the average MLS player has increased substantially from 2007 to 2019 based on salary statistics, attendance bumps have not quite matched what franchises would have hoped for when making investments in the teams.However, with investments made in big name players such as Zlatan Ibrahimovic, Wayne Rooney, and Carlos Vela, the league could see attendance bumps from fans wanting to see these world class stars in action.Next, it was time to determine if the popularity of participation in the sport has grown in the corresponding years. Starting with data from 2003 obtained from the National Federation of State High School Associations, I examined the number of athletes participating in soccer at the high school level. In 2003, a total of 658,817 boys and girls competed in high school soccer while in 2019, a total of 853,182 boys and girls competed in high school soccer. This growth of 206,576 athletes represents a 31.95% total increase, with an average increase per year of 1.75% over the time period of 2003-2019. Again, it is fair to say that interest in the sport has significantly grown over the years.For more information on Schneider Downs’ data analytic service capabilities, contact us at constactSD@schneiderdowns.com or visit us at www.schneiderdowns.com/data-analytics.  ### Auto Dealers, Automatic Enrollment, and Automatic Escalation As someone who has worked closely with automotive dealerships for over twenty years, I have witnessed first-hand that successful dealerships are extremely busy places with a lot going on throughout…every….single….day. With that being said, employees do not always have the time for benefit meetings, which can lead to missed opportunities and, with regard to retirement plans, missed 401(k) deferrals, tax deductions, employer matches, compounding, net worth, etc. For plans that are not Safe Harbor, low enrollment and low deferral rates also cause testing issues for highly-compensated employees (i.e. refunds). When low enrollment and average deferral rates continue to be an issue, plan sponsors may want to look into adding automatic enrollment and automatic escalation. According to Fidelity’s second quarter 2019 analysis,[1] 91% of participants who are automatically enrolled do not opt out. 91%!  The same data also shows an 88.3% participation rate for auto-enrolled plans compared with only 52.3% for non-auto-enrolled plans. In addition, a record 46% of plans are now auto-enrolling at 4% or higher, up from 27% five years ago. The Fidelity report also states that participation among Millennials has increased by 82% over the last 10 years, due in part to the employers implementing auto-enrollment. Another key component to pair with auto-enrollment is automatic escalation. This feature automatically increases participants’ contribution amounts and, for example, can be set to increase by 1% each year and capped at 10% or higher. The data is telling us that employees are comfortable with being auto-enrolled into plans.  This not only increases their net worth and savings, but also helps to retain quality employees. Highly-compensated employees will also be able to contribute more into the plan due to better testing results. Implementing automatic enrollment and automatic escalation can have a powerful impact on participant savings and should help both your employees and the company.  Isn’t that the goal of having an employer-sponsored retirement plan? [1] https://sponsor.fidelity.com/bin-public/06_PSW_Website/documents/Building_Financial_Futures_Q2_2019.pdf ### Reference Rate Reform Regulators will no longer require panel banks to contribute to the London Interbank Offered Rate (LIBOR) post 2021.  Contributing panel bank departures post 2021 will undermine the stability and quality of the LIBOR benchmark.  Several alternative reference rate committees have convened to find an acceptable replacement reference rate.  If your organization has debt agreements with lenders or derivative contracts with counterparties that currently reference LIBOR and those contracts extend beyond 2021, now is the time to reexamine those contracts for reference rate fallback provisions or negotiate a suitable replacement reference rate.  Please click here to read more about the transition away from LIBOR. ### Watch Your Credit Cards! Expense Reimbursement Fraud at a Not-For-Profit Organization Frequently, internal controls at not-for-profit organizations depend primarily on the integrity of their employees.  Sometimes these employees lose sight of their integrity, and fraud can occur in spite of the organization’s mission. One assignment we completed for a not-for-profit organization involved a case where the organization suspected that an executive had been conducting an expense reimbursement scheme, including significant misuse of the organization’s credit cards. Perpetrators of expense reimbursement schemes produce false documents that cause the victim organization to unwittingly make a fraudulent disbursement.  The four main types of expense reimbursement fraud schemes are: Mischaracterized expenses Overstated expenses Fictitious expenses Multiple reimbursements So, what happened with our not-for-profit organization that suspected its executive of an expense reimbursement fraud scheme?As a result of the investigation of the executive’s schemes, the executive left the organization and paid back thousands of dollars to the organization in settlement of potential claims.  During our investigation, we discovered numerous issues regarding the organization’s policies, procedures and financial activity - in addition to the fraudulent expense reimbursement issues.  Basic recommendations to help prevent expense reimbursement fraud at your organization include: Develop formal written policies and procedures regarding credit card use and spending limits Consider use of purchasing cards (P-cards) that allows limits to purchase amounts and restrict where purchases can be made Expense reports should require supporting documentation and explanation of the expense Segregate duties for cash deposits and recording of cash and accounts payable processing and disbursements If you have any questions regarding potential fraud schemes or internal controls at your not-for-profit organization, please contact the Business Advisory group at Schneider Downs. ### FASB Votes to Delay Leases, Hedging and CECL Effective Dates for Private Companies and Certain Other Entities On Wednesday October 16, 2019, the FASB unanimously voted to delay the effective dates of three major Accounting Standards Updates (ASUs) for private companies and certain other companies.  The major ASUs include ASU 2016-02 - Leases, ASU 2016-13 – Current Expected Credit Losses (CECL), and ASU 2017-12 – Hedging. SEC filers will still be required to adopt the provisions of the lease amendment and the hedging amendment for fiscal years beginning after December 15, 2018.  CECL is still effective for SEC filers for fiscal years beginning after December 15, 2019, except for certain smaller reporting companies whose required adoption effective date has been extended to fiscal years beginning after December 15, 2022. Other public business entities will continue to follow the December 15, 2018 effective date for the lease accounting amendment and the hedging amendment, but the CECL effective date was extended to fiscal years beginning after December 15, 2022 for these types of entities.  Employee benefit plans that file with the SEC and not-for-profit entities that are considered public business entities are still required to follow the December 15, 2018 effective date for leases. The lease accounting amendment and the hedging amendment effective date is extended to fiscal years beginning after December 15, 2020 for private companies.  The CECL adoption effective date is extended to fiscal years beginning after December 15, 2022 for private companies. The final ASU that formalizes these decisions is expected to be drafted and voted on in November.  While this relief is more than welcome, private companies should not delay project plan implementation.   The key to a successful transition involves careful planning and setting firm deadlines leading up to the required adoption date. Schneider Downs has created a proprietary software, simpLEASE, that can simplify the transition to the new standard. Visit the simpLEASE website for more information. ### The Physical Side of Cybersecurity At Schneider Downs, we always strive to uphold our responsibility to serve as trusted cybersecurity advisors to our clients and to the community at large. A major component of that responsibility is to comprehensively understand and provide counsel when it comes to all the significant cybersecurity threat vectors that have the potential to present risk. For example, the recent controversy surrounding physical security testing within the scope of a penetration test has offered some form or another of the following questions:“Do we really need to worry about someone trying to break into our datacenter?”“Do cyber threat actors really use malicious USB drops to deploy ransomware?”“How strictly should we design and enforce our physical security policies and procedures?To help calm these important anxieties, I’ll use this article to pass along some of the wisdom I’ve gained from performing offensive physical security testing and incident response investigations. From those experiences, I can say unequivocally that physical security vulnerabilities are being exploited by real-world threat actors to achieve significant compromises, and that taking advantage of those physical vulnerabilities is often far easier than identifying and exploiting virtual security vulnerabilities.As an example, I’ve personally broken into countless corporate buildings without being detected (with permission, of course) and have been able to leverage that physical access for virtual compromise. In general, people are trusting of anyone in appropriate clothing who acts like they belong (especially if that person is carrying a box of donuts and talking on the phone!). Unfortunately, thanks to human nature, it is far too easy to gain physical access to an organization’s computer systems. Threat actors have a tendency to utilize whatever are the easiest, most effective techniques, so just because physical security attacks haven’t been as commonly exploited in the past doesn’t mean they won’t be in the future. I strongly recommend that all organizations perform some form of annual assessment of their physical security controls to ensure an effective posture is maintained.To best defend your organization from a physical security attack in the office, there are eight things to keep in mind: Tailgating - Home Team Only For most companies, the first line of defense includes the logical access controls between publicly accessible space and restricted space. It’s your responsibility to ensure you don’t allow any unauthorized individuals into restricted space. The failure to enforce this critical security control is so common that it has its own catchy name: “tailgating.” Don’t let anyone you don’t know pass through a door that was opened with your badge or passcode. Close the door behind you. If someone is supposed to be there, they can use proper channels. (Unless they have donuts, of course, in which case you should take them directly to your datacenter and eat donuts together in the refreshing AC.) Paper Peepers You’ve probably heard of a “Clean Desk Policy.” Your office probably has one. But it wouldn’t surprise me if it wasn’t very strongly enforced, and/or no one knew the content of the policy. This is fairly common for the average office, because it’s difficult to truly enforce a clean desk policy, and most people don’t understand the risk exposure that can result from physical document visibility. The truth is that data can – and is – being collected from sensitive materials on desks, from sources as diverse as rogue employees, wandering visitors, after-hours staff and drone window surveillance. Recommendation: try to take the policy seriously and clear off your desk when you can. And please don’t leave a sticky note somewhere with all your passwords. Stop, Drop N’ Lock It Also poorly enforced in most companies is something known as a “Locked Drawer Policy,” one of the most important office policies and one that should definitely be taken seriously. The general goal of the policy is to reinstate the physical security of an object after your session of authenticated access has terminated. This includes locking your laptop in a drawer overnight, locking your computer when you step away for lunch, or locking a restricted area on your way out. Failing to comply with this policy is known as “leaving the seat up,” and is punishable via changing the background of their unlocked device. Burn After Reading More commonly referred to as a “Physical Data Destruction Policy,” this precaution is generally considered the best defense against “Physical Information Byproduct Reconnaissance,” aka “Dumpster Diving.” I’ve personally harvested significant sensitive information by searching dumpsters for paper and digital documents; i’s unbelievable what people will just throw away. I’ve found unencrypted hard drives with thousands of Social Security numbers and other assorted PII. It is crucial to destroy before discarding. This includes all paper materials, thumb drives, hard drives, CDs … even printers (an iconic scene from the movie “Office Space” comes to mind). 5bdf74912a51c34815f11e9a3d20b609 There are so many well-known exploits to bypass native security on an unencrypted hard drive, it’s fairly impossible to protect data from physical access without some form of encryption. I’ve personally stolen laptops and hard drives from desktops while breaking into a company (with permission, of course). Worth noting is that many organizations encrypt their laptops, but not their desktops. Historically, desktops didn’t have the TPM chip required for encryption, but that’s no longer the case. Modern encryption is so much easier and faster than ever before. Any Windows user can easily encrypt their USB drive with a simple password using BitLocker, and alternatives exist for most other common operating systems. In my opinion, there’s simply no excuse for media devices to not be encrypted. Encryption is your friend. Locks, Cameras and Doors, Oh My! Hardware is an aspect of physical security that’s usually focused on too much … or not enough. Proper security hardware, without enforced policy, is exploitable. Of course, so are properly enforced policies, without effective security hardware. As with most things in life, the key is a healthy balance. For physical security devices, it’s important to invest in effective locks and door systems. If your locks and doors can be easily picked or shimmed, then it’ll be difficult to achieve a strong security posture. Similarly, ensure your camera systems are designed to include adequate coverage and quality. Saying enhance over and over will only get you so far. I recommend performing some form of routine assessment that includes hardware walkthroughs. BS Detector Being familiar with commonly utilized physical attack techniques is one of the best ways to defend against them. Some of the most effective pretexts include: Go Nuts For Donuts – an appropriately dressed person with an armful of donuts and coffee FedExploit – a simple uniform and an empty box Ladder To Anywhere – two people carrying a ladder Interviewer Discretion Advised – someone in the lobby pretending to have a meeting/interview; maybe they spill coffee on their resume and ask you to print another one from their “totally safe” USB drive Free Hugs – any pretext to get close enough to your badge to clone it; wireless badge cloners exist but often have a short range; be aware of someone who wants to get near your badge Calling Mom – someone standing near a doorway pretending to be on the phone, waiting to tailgate If someone approaches you with a weird situation, be skeptical. Ask yourself what they might be trying to gain through this interaction. Pose specific questions: “What’s your name?” “Who do you work for?” “Can I see your ID?” Neighborhood Watch There are a wide variety of physical attack vectors and it can be difficult to maintain vigilance, not to mention compliance with the many policies that keep our offices generally safe. It’s important to be familiar with these policies, the incident response policies and the various legal regulations regarding physical security at your office. In the end, the most effective method of alerting or detecting physical security threats relies on users. It’s critical that you’re familiar with – and have hopefully practiced the process for – reporting security incidents. When in doubt, if you see something, say something.How can Schneider Downs help?The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. The team’s mix of skills and experiences in real-world cyberattack scenarios enables us to provide your organization with a comprehensive look at external vulnerabilities including the physical risks explored in this article, and others ranging from susceptibility to social engineering to critical weaknesses in external web applications. Learn more about our team and services at www.schneiderdowns.com/cybersecurity. ### PA DOR Will Apply $500,000 Economic Nexus Rule for Corporation Income Tax Filings in 2020 The Pennsylvania Department of Revenue recently issued Corporate Tax Bulletin 2019-04[i], which implemented a $500,000 economic nexus threshold for Corporate Net Income Tax purposes.The bulletin was issued after the decision in Wayfair v. South Dakota[ii] where the United States Supreme Court decided that a physical presence in a state is not required in order for there to be nexus with the state for sales tax purposes. In its opinion, the Supreme Court failed to create any bright-line threshold of sales activity which would satisfy nexus requirements under the Due Process and Commerce Clauses of the United States Constitution. However, it did not rule against the approach of South Dakota, where out-of-state taxpayers who had in excess of either 200 transactions or $100,000 worth of sales of goods or services were deemed to have economic nexus with the state for sales tax.There has been some uncertainty amongst taxpayers as to whether the physical presence standard overturned in Wayfair also applied to corporate net income tax. The Pennsylvania Department of Revenue analyzed the decision and determined that it allows the state to impose nexus on an out-of-state taxpayer without a physical presence for Corporate Net Income Tax purposes.Ultimately, the Department decided that corporations with no physical presence that have $500,000 or more of direct or indirect gross receipts will have a filing requirement for corporate net income tax from any combination of the following:                (1) Gross receipts from the sale, rental, lease, or licensing of tangible personal property;                (2) Gross receipts from the sale of services; and/or                (3) Gross receipts from the sale or licensing of intangibles, including franchise agreements.[iii]Lastly, the Department acknowledged that corporations without a physical presence may still potentially claim exemptions under Public Law 86-272 but should continue to file a FORM RCT-101 and complete the necessary schedules to claim this exemption.The bulletin states the Department will require taxpayers to apply this revised nexus standard starting on January 1, 2020.  [i] Corporation Tax Bulletin 2019-04, September 30, 2019 [ii] Wayfair v. South Dakota, 138 S. Ct. 2080, (2018) [iii] Corporation Tax Bulletin 2019-04, p. 3 ### Jarden Dissenting Shareholder Appraisal Case - Heated Arguments on Both Sides Unless you grew up as a member of the fictional TV family The Brady Bunch, you have been in a heated argument. If you operate a business with multiple owners, you have likely seen more than your fair share of heated arguments.Arguments among business owners, commonly referred to as shareholder disputes (at least in the case of corporations), regarding the governance of the business may arise for numerous reasons, and can be very heated, considering people’s livelihoods are on the line. One common type of shareholder dispute involves owners holding a minority share of the business (without the ability to control the operations of the business in this example) filing a dissenting shareholder action, and exercising their “appraisal rights” when the business is sold.The appraisal rights protect minority owners in a business by granting them the ability to request an independent third-party valuation of the business to test the reasonableness of the purchase price negotiated between the majority owners and the buyer.This article describes a dissenting shareholder case arising after Newell Brands, Inc. acquired Jarden Corporation. Newell Brands, Inc. (“Newell”), a global consumer products company, acquired Jarden Corporation (“Jarden,” the “Company,” or “respondent”), another large consumer products company, for $59.21 per share in 2016. Newell owns numerous brands including Sharpie, Paper Mate, Elmer’s, Rubbermaid, Lenox and Graco. Jarden owns brands including Yankee Candle, Mr. Coffee, Sunbeam, Ball and Coleman. Following the transaction, four dissenting shareholders of Jarden (“petitioners”) filed appraisal petitions in the Court of Chancery of Delaware seeking an appraisal of the fair value of the Jarden stock on the merger date. Here are the facts of the case: When: The court decided the case in July 2019. Issue: The Company’s valuation expert believed that Jarden’s fair value was $48.01 per share on the merger date, while the petitioners’ expert determined a value of $71.35 per share for the Company. The petitioners believed that the sale process leading to the merger was flawed because Jarden’s lead negotiator was willing to sell the Company for a low price and the Jarden board of directors failed to test the market before agreeing to sell Jarden to Newell. Decision: The judge, Vice Chancellor Joseph Slights, III, sided with the petitioners, indicating that Jarden’s lead negotiator acted with little to no oversight by Jarden’s board of directors. However, the court ultimately determined that the unaffected market price for Jarden’s stock of $48.31 per share was the most appropriate indication of fair value. The court further supported this conclusion with their own independent discounted cash flow analysis. V.C. Slights stated that the unaffected market price “is supported by credible, unrebutted expert testimony from Dr. Hubbard [Jarden’s valuation expert], including an event study that analyzed the market’s response to earnings and other material announcements.” V.C. Slights also stated that “Dr. Hubbard’s expert analysis of the unaffected market price is corroborated by credible evidence, including that Jarden had no controlling stockholder, its public float was 93.9%, it was well covered by numerous professional stock analysts, its stock was heavily traded and it enjoyed a narrow bid-ask spread. As important, there was no credible evidence that material information bearing on Jarden’s fair value was withheld from the market as of the [date of the] merger. This market evidence was persuasive and I have given it substantial weight in my fair value determination.” Valuation analysts should take note of V.C. Slights’ insight behind his decision, and keep it in mind when preparing future valuations. V.C. Slights’ thought process acts as an important reminder that all relevant market factors and background information should be considered when performing a business valuation.Schneider Downs has significant experience in preparing business valuations for shareholder disputes, gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact contactsd@schneiderdowns.com for more information about our business valuation services. ### Easing Financial Fright with Sweet Advice This article was originally published in Wedgewood Life magazine and is reprinted with their permission. As our thoughts turn to pumpkins, candy, and costumes, this month we explore people’s most common financial fears and advice to ensure everyone has a financially delightful Halloween. Researchers at Chapman University annually ask over 1,100 adults across the United States about their level of fear about ninety-four different phenomena including crime, the government, natural disasters, and more. The 2018 results illustrate adult Americans are most concerned about government corruption, environmental concerns, and their personal finances. In this month’s article, we highlight American’s most prevalent financial concerns and advice to proactively combat these fears from haunting your long-term financial plans. (57%) Not saving enough for retirement – Out of the American group surveyed, 57% of people indicated they were “afraid” or “very afraid” that they have not saved enough for retirement. As we have noted before, studies have shown that when individuals take the time to write out their goals, they are 50% more likely to achieve them. However, only 3% of adults actually put pen to paper and write down their goals. To ease concerns about not having saved enough for retirement, the answer is a comprehensive, long-term financial plan. This plan would analyze current financial position, future savings/spending aspirations, future income streams such as social security, and other unique financial variables. In addition, one should periodically assess their progress toward achieving their long-term goals and/or gauge the reasonableness of those stated goals. A competent advisor can reassure clients when they are on track or provide real-time observations when the plan is off-track. (53%) High Medical Bills – With roughly 60% of bankruptcies in the U.S. attributed to medical related bills, combined with nearly two-thirds of Americans not having enough cash readily available to pay for an unexpected bill (such as a $500 medical bill), it is not surprising that high medical bills are a fear. The planning response is to build up a cash reserve of three to six months of spending, and contribute to a health savings (HSA) or flex spending account (FSA) (to the extent possible). (49%) Economic/financial collapse – 49% of Americans are fearful of a financial collapse or economic turmoil ala 2008 and the Great Recession. A mapped out, detailed financial plan and adequate cash reserves (both noted above), paired with a clear understanding of the downside potential of your investment portfolio during times of economic stress, are key. A good understanding of the volatility profile of your investment portfolio should put an investor in a better position to think rationally during times of financial stress. Rational thought and an investment allocation of fixed income and equity investments that an investor is comfortable with during good and bad capital market periods, respectively, is more likely to allow an investor to capitalize on long-term investment opportunities that historically present themselves during times of high uncertainty and market turmoil. ### Vulnerability Scanning versus Penetration Testing When organizations look to assess the resiliency of their information systems, there tends to be some confusion around what exactly vulnerability scanning and penetration testing each provide. The truth is that both paint part of the larger picture necessary to spot the key gaps in existing controls. Schneider Downs recommends that organizations perform internal vulnerability scanning at least monthly and external penetration testing annually. When implementing these activities, organizations should understand the basics of each. Vulnerability Scanning Continuous vulnerability management practices form one of the cornerstones of any cybersecurity strategy. Scanning tools provide valuable insight into the current health of network-attached devices, and can identify critical gaps in patch management and change control. Vulnerabilities can be prioritized, patches deployed, and device configurations updated. But there are some key areas that vulnerability scanners often miss. Common issues with vulnerability scanners include: Lack of visibility across all devices. Scanning across a subset of devices or using a non-authenticated mode for scanning can result in high-risk vulnerabilities going unnoticed. No consideration for system criticality. Automated scanners assign a baseline risk rating to vulnerabilities, but overlooking the criticality of the underlying systems can lead to incorrect prioritization or even cause important fixes to be skipped entirely. Unable to assess architectural controls. While scanning will capture known weaknesses in software and configuration at a device level, automated tools cannot account for the impact or lack of compensating controls, resulting in false positives, or worse… Penetration Testing While vulnerability scanning uses a set of predefined rules to identify gaps in software patching and system configuration, penetration testing relies on human analysis of systems and leverages many of the same tools that actual hackers use. Some examples of targets and attack techniques used in a high-quality penetration test: Social Engineering – Phishing and “vishing” (voice phishing via phone). These are common real-world techniques that penetration testers will employ to gain unauthorized access. Web Application – A skilled team will not only look for common misconfigurations, but also will test file upload interfaces, data entry forms, and authentication/session management components of a website to identify potential weaknesses. Physical Security – Testers may use a combination of special tools to bypass traditional and electronic locks, or leverage social engineering to gain physical access to restricted areas. Network Services – A detailed penetration test will demonstrate how an attacker can use unnecessary or unsecured network services to traverse an organization’s network. Wireless Network – Wi-Fi networks must be assessed for proper logical access controls as well as the opportunity that their physical footprint may present to would-be attackers. Comprehensive penetration testing requires a diverse set of skills, and while organizations with large security teams may be able to dedicate staff to an internal red team (attackers) – a group focused on performing penetration tests – smaller organizations will primarily allocate security staff to their blue team (defenders), which focuses on maintaining technical security controls. For these smaller organizations, red team exercises are commonly outsourced to an expert firm. A growing practice is for organizations of all sizes to combine red and blue team efforts in regular purple team exercises, which allow the defenders to see attack techniques used in real time and actively tune security controls for prevention, detection and response. How can Schneider Downs help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. The team’s mix of skills and experiences in real-world cyberattack scenarios enables us to provide your organization with a comprehensive look at external vulnerabilities ranging from susceptibility to social engineering to critical weaknesses in external web applications. Our whitepaper outlining the advantages of external penetration testing is available at www.schneiderdowns.com/maximize-value-penetration-testing. ### ESOP Valuation Court Case Questions Fiduciary's Diligence in Buy-Out of CEO's Shares The Employment Retirement Income Security Act of 1974 (“ERISA”) permits an employer to create Employee Stock Ownership Plans (“ESOP”), which are formed to help incentivize employees by giving them ownership in the business that employs them.ESOPs can be funded through issuing new company shares, buying existing shares with cash or borrowing money to buy shares. The ESOP trustee, or any other person or committee designated in the plan documents as responsible for making investments in company stock, is a named fiduciary of the ESOP. The ESOP fiduciary secures an independent valuation of the company stock, assures that the ESOP transactions meet the interests of the plan participants (e.g., employees) and approves all ESOP stock transactions. The Department of Labor (“DOL”) regulates the adequacy of consideration paid in ESOP transactions to help protect plan participants.A recent ESOP court case, Pizzella v. Vinoskey[1], found that Evolve Bank and Trust (“Evolve”), the trustee for Sentry Equipment Erectors, Inc.’s (“Sentry” or the “Company”) ESOP, violated its duties of prudence and loyalty regarding the ESOP’s purchase of Sentry’s CEO’s 51,000 shares of the stock of the Company (a 52% ownership interest, at $406 per share for a total purchase price of $20.7 million) in 2010. The following main issues were identified in the case: Testimony from the trustee revealed that the goal of the transaction was to be fair to both the CEO and the ESOP plan participants, instead of protecting only the interests of the ESOP plan participants – as the trustee’s duties require. The court also found that Evolve never engaged in any negotiation over the stock price in the transaction; the first offer submitted by the trustee was the final transaction price. Early communications prior to the ESOP transaction indicated that a company representative shared an estimate of the transaction’s value with Evolve and the ESOP’s appraiser. It appeared that the appraiser had backed into the company representative’s estimate through the use of questionable inputs in his valuation model including, among other issues, the following: Valuing the 52% ownership interest on a controlling basis even though the CEO and his wife would still retain control of the Company’s board of directors, and remain the ESOP’s trustees, after the transaction. Based on the way the Company’s by-laws were structured, the board would ultimately be able to designate and remove ESOP trustees and the ESOP trustees would be able to control the vote of the ESOP shares in most matters. Therefore, the ESOP would not ultimately have control of the Company upon acquiring the 52% interest because the CEO would still be controlling the board and influencing its actions; No forecasts of the Company’s performance were considered while experts hired by both the plaintiff and defendant in the case each utilized a discounted cash flow model in their valuations; Adjusting Sentry’s earnings to remove a portion of health care benefits above typical industry levels even though management did not intend to discontinue this benefit. The appraiser argued that the ESOP would gain control of Sentry after the transaction and would thus be able to reduce this expense going forward, but, as discussed in 2a above, the court found that the ESOP would in fact not gain control of the Company; and Reducing the capitalization rate to 12.2% for the transaction valuation when the rates used in prior years’ valuations ranged from 15%-18%, thus significantly increasing value for the transaction valuation. In addition, the appraiser prepared another valuation one month after the transaction that utilized an 18.2% capitalization rate. The ESOP appraiser’s previous valuations of the Company, prepared between 2005 and 2009, concluded on a per share value of $215-$285 for the company’s stock, which was much lower than the transaction price of $406 per share. Evolve did not perform thorough due diligence to assess the validity of the valuation. Although Evolve identified many of the issues listed in number 2) above, and discussed them with the appraiser, the issues were never resolved in the final valuation. In addition, Evolve did not question whether the appraiser had manipulated his inputs to arrive at the $21 million transaction price. The court found that: The appropriate stock price was $278.50, and according to that result, the ESOP had overpaid by $6.5 million for the CEO’s shares. Evolve had violated its duties of prudence and loyalty under 29 U.S.C. § 1104(a)(1), and the CEO was jointly liable as a knowing participant in a prohibited transaction and as co-fiduciary. Schneider Downs has significant experience assisting clients with various ESOP-related needs, including audit, tax, plan design and administration. For more information, please contact Jason Lumpkin (412.697.5472; jlumpkin@sdcpa.com) of our Employee Benefits Group.Schneider Downs also has significant experience providing business valuation services. For more information, please contact Joel Rosenthal (412.697.5387; jrosenthal@sdcpa.com) or Steve Thimons (412.697.5281; sthimons@sdcpa.com) of our Business Advisory Group. [1] Patrick Pizzella, Acting Secretary of Labor, U.S. Department of Labor, v. Adam Vinoskey, et. al. 6-16-cv-00062. United States District Court for the Western District of Virginia. ### SOC 2 Examinations - Keys to Success “What do you need for a SOC 2 Audit?” Prior to starting a SOC 2 examination, clients often ask us what they can do to ensure an efficient audit process that leads to rendering a clean (unqualified) opinion. Even though we can never guarantee a clean opinion, there are definite “keys” to success that lead to a more favorable outcome when implemented by our clients. Below is a list of what we consider the most crucial factors or “keys” to success. Executive Sponsorship – This is by far the most important factor. SOC 2 examinations take time and require input and interaction with personnel from multiple departments. In addition, there are often new policies and procedures that may need to be implemented in order to meet the SOC 2 requirements. Without executive sponsorship, personnel might not be granted the additional time, or personnel from different departments might not work well together—and new policies and procedures might not be implemented and followed.   Department Cooperation – As long as there is executive sponsorship, this one should not be too difficult to implement. Typically, SOC 2 examinations require personnel from multiple departments to perform controls and provide supporting evidence. Usually, IT, Security, DevOps, Human Resources, Operations, and the C-Suite are all involved during the SOC 2 examination.   Assign an Internal Employee/Consultant to Lead the SOC 2 Engagement Process – Since multiple departments and personnel will be involved, assigning an internal employee as the project manager, who has sufficient knowledge of the culture and department roles will ensure that communications between the auditor and your personnel are routed to the correct person and not lost. Not only will your employees appreciate this, but the auditor will appreciate not having to contact personnel throughout your company to obtain the information necessary to complete the engagement. The project manager can also ensure that any new controls are implemented or existing controls are properly updated to keep the project on track and completed in a timely manner. Keep in mind that the lead person does not have to be a security expert and typically isn’t. It definitely helps, but many times, security experts do not have the time to dedicate to “managing” the process and making sure that documentation is provided in a timely manner. Security personnel are definitely an integral part of the process and will be required to gather documentation and respond to the auditor’s questions, but it might not be feasible for them to coordinate the entire SOC 2 examination.  Manage Your Clients’ Expectations – Many times, the requirement for the SOC 2 report originates from client requests. Understanding your clients’ specific needs and when they require a final report in their hands, will drive the timeline for the examination. Clients may request reports be provided on short notice or with little lead time. For organizations that have never undergone a SOC 2 examination before, it typically takes six to twelve months (depending on type 1 or type 2) before a final report is in their hands. Having conversations with your clients early on about deadlines for completing and providing a SOC 2 report will go a long way in ensuring that you are not scrambling at the 11th hour to complete a SOC 2 engagement.   Manage Internal Stakeholders’ Expectations – It is also important to have conversations early on with internal stakeholders to ensure that they understand the rigor that is required in order to complete a SOC 2 engagement. Just like many clients who request a SOC report, many internal stakeholders might have unrealistic expectations for when the SOC 2 report may be in their hands and available for customers. An organization’s sales, business development and client account management personnel will be eager to let customers and prospects know that a SOC 2 report is available for them to review. Communicating with these departments early on is essential so that they don’t overpromise and overcommit to customers and prospects.   Engage a CPA Firm or Consultant to Perform a Readiness Assessment – A SOC 2 readiness assessment is an engagement performed by a CPA firm or consultant before an actual SOC 2 engagement. The readiness assessment will help clients gauge their preparedness for the SOC 2 examination.  During the readiness assessment, a gap analysis will be performed and the current control environment will be assessed to determine if any control gaps exist. If control gaps exist, recommendations will be provided to assist with remediation. Without a readiness assessment, there is a higher chance of the SOC 2 engagement resulting in significant control exceptions. During the readiness, your CPA firm should provide guidance and advice about controls that should be implemented in order to meet the SOC 2 criteria and guidance on how to write the system description.Schneider Downs has created a proprietary catalog of SOC 2 controls.When performing a readiness, we utilize this catalog to help guide our clients through a readiness engagement.Many of our clients find this useful as it provides them an easy-to-understand list of controls to meet the SOC 2 criteria.Without a catalog of controls, the SOC 2 criteria might seem overwhelming and difficult to interpret for your particular business.In addition, we have a SOC 2 system description template that clients can tailor to their specific control environment.If you are interested in these documents, please feel free to reach out to me directly. Engage a CPA Firm with Security Qualifications – When selecting a CPA firm, choose a firm with personnel that hold certifications, such as Certified Information System Security Professional (CISSP) or Certified Information System Auditor (CISA), in addition to CPAs.  Possessing the CISSP and the CISA demonstrates that the firm understands the SOC 2 reporting framework and security risk management strategies.    Understand the Role of Your Vendors in Meeting SOC 2 Requirements – Vendors might play an integral part in meeting the security requirements for SOC 2. For instance, if your infrastructure resides in a datacenter owned by a third party, then you would expect your third party to have appropriate physical security controls in place for restricting access to your infrastructure. In order to meet the physical security requirement for SOC 2, you would be relying on the third party’s controls to be operating effectively. When this situation occurs, it is your responsibility to appropriately monitor the operating effectiveness of your third-party controls. If your vendor undergoes a SOC 2 examination, then you can monitor your vendors’ controls by obtaining and reviewing their SOC 2 report. However, if your vendor does not have a SOC 2 report available, then your SOC 2 auditor might have to include the vendor in your SOC 2 engagement and test their controls as part of the SOC 2 report. Understanding what will be required from your vendor and communicating what will be required from them, if anything, will enable a more efficient examination process.   Maintain a Culture of Internal Control – To be successful, organizations must realize that maintaining a culture of internal control and security is a top-down mindset. Controls must be implemented with the idea that the controls will be operating continuously, unless changes in the environment require controls to be modified. SOC 2 examinations cover a continuous period of time without any gaps. To show your customers that you prioritize protecting their data, you must ensure that everyone in your organization commits to security as part of their job responsibilities.   ### Crypto-Secured Lending An exciting advancement in the cryptocurrency industry will allow consumers to leverage their crypto holdings as collateral for formal currency loans. Crypto-backed lending institutions, such as BlockFi and Unchained Capital, now offer collateralized loans using Bitcoin, Ether, and Litecoin.You may wonder exactly how crypto-secured lending works. With traditional collateralized loans, the borrower stakes an asset and receives money in return. Similarly, crypto-collateralized loans require the borrower to offer cryptocurrency as collateral in exchange for another asset. These lending institutions often require the loan to be over-collateralized to offset the volatile nature of cryptocurrencies.The main benefit for consumers is that they aren’t required to sell any of their crypto assets in order to receive funding. By taking out a crypto-backed loan, the consumer is able to keep the upside potential of their crypto while it’s held as collateral on the loan.When taking out a crypto-backed loan, consumers send their crypto to a unique secure wallet address that is generated specifically for them. The lending institution is responsible for securely storing the consumer’s crypto assets at this unique wallet address.Some lending institutions store consumers’ digital assets in dedicated addresses from their multisignature cold storage wallet. Other institutions opt to utilize third-party trust companies to store the crypto assets in a cold storage system. This type of offline storage is only accessible in a secure, access-controlled facility that is protected from cyberattacks.When utilizing third parties for storing consumers’ digital assets, it is important to verify that the trust company complies with capital reserve requirements as well as banking compliance standards. Due to the digital nature of cryptocurrencies, it is also important to verify that the third-party trust company has digital asset insurance coverage and is SOC 2 Type 1 security compliant on its exchange and custodian platform.Throughout the duration of the loan, the crypto assets will not be accessible by the borrower. Once the loan has been paid in full, the crypto assets and any gains from the price appreciation that occurred during the term of the loan will be passed back to the borrower. ### Changes Coming Soon to MEPs, Other Legislative Developments Anticipated Subsequent to its October 2018 proposed directive, the Department of Labor (DOL) revealed a final ruling on July 29 that will expand access to multiple employer plans (MEPs). The new declaration went into effect September 30. The DOL had been tasked with formation of the broadened retirement options in the wake of President Donald Trump’s executive order of August 2018 that sought to clarify and expand the circumstances under which small- to mid-sized U.S. employers may provide workplace retirement options for their employees. Specific to MEPs, intended benefits include using economies of scale to lower costs, reduced administrative workload and reduced fiduciary liability. When evaluating affordable, high-quality retirement offerings, however, many businesses have been turned off by MEPs due to their accessibility constraints and complexities. MEPs were previously limited to businesses who shared a measure of congruity, such as those functioning in the same industry, which created a dilemma for specialized and/or geographically isolated entities. Under the new DOL regulation, the availability of MEPs is expanded to associations of employers in a city, county or state (also known as association retirement plans), and allows businesses to join plans sponsored through Professional Employer Organizations, outsourcing firms that provide services to small- to mid-sized companies. Although the DOL ruling broadens the overall availability of MEPs, many small businesses are feeling more optimistic when it comes to legislation that recently came through the U.S. House of Representatives. With overwhelming bipartisan support, the House passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act this past May. Among other retirement plan-related features and revisions, SECURE includes a further expansion of MEPs, allowing “open” MEPs, which would permit businesses not sharing the same geographic location, common trade, industry or profession to be administered by a financial services firm. This fall, the Senate is expected to consider their own bill – which includes many of the same conditions of the SECURE Act – named the Retirement Enhancement and Savings Act (RESA), the SECURE Act, or a combination thereof. According to the 2018 Bureau of Labor Statistics’ National Compensation Survey, 29% of all civilian workers do not have access to an employer-sponsored defined benefit (DB) or defined contribution (DC) plan. Given that those plans are by far the primary vehicles through which individuals prepare for retirement, it’s no surprise that Washington has moved relatively quickly to pass regulatory guidance that expands the access of employer-sponsored retirement plans. Whether your company is evaluating potential participation in a MEP, or if you’re continuing to assess your current retirement offerings, the DOL’s ruling – as well as the anticipated legislation coming from Congress – should be reviewed thoroughly and strategically prior to any undertaking. As you look to navigate through those often murky waters, feel free to contact contactsd@schneiderdowns.com and visit the Schneider Downs Employee Benefit Plan Group. For more detail on the MEP DOL ruling, see our companion article. ### 0-3 and a Barbecue? Has the Steelers' Season Already Gone Down in Flames? Like the rest of Steelers Nation, Schneider Downs was very disappointed when the Steelers could not march down the field on the last possession to win the game against the 49ers. Losing that game puts the Steelers in a rough spot, especially considering the key injuries they have suffered only three weeks in to the season. Looking around the NFL, there are four other teams that started the 2019 season with an 0-3 record. Fortunately for the Steelers, one of those teams, Cincinnati, is in their division. Looking back over the Steelers’ history since the NFL and AFL merger in 1966, there were five other times the team started the season with a 0-3 record. The best record a team finished with was 9-7 in 2000 and the worst record was 2-11-1 in 1968.Looking at the data for all teams that started 0-3 since 1966, the best team record was 11-5, which occurred two separate times. The worst record was 0-16 by both the Cleveland Browns in 2017 and the Detroit Lions in 2008 but most importantly, the Cleveland Browns. Looking at the win total for each season from 1966 to 2018, the Steelers have been less consistent than one would think as shown in the graph below, but they have more recently finished at least around .500.The graph below shows the number of times a team has made the playoffs after starting 0-3, and unfortunately, it doesn’t look like the odds are stacked in the Steelers’ favor. The best a team ever did was lose in the Divisional round of the playoffs, but after Sunday’s game against the 49ners, I’ll bet most Pittsburgh fans would call that a successful season.The majority of teams who start the season with an 0-3 record do not even finish the season above .500 as seen in the chart below. This may paint a bleak picture for the rest of the Steelers’ season but someone always has to be the exception to the rule, right? Just do yourself a favor and don’t look into the stats of teams that start 0-4.For any questions on the Steelers’ chances this season or how Schneider Downs can help you perform analytics or automation, contact Schneider Downs at contactsd@schneiderdowns.com. Also, click here for more info on Schneider Downs’ analytics and rob ### IRS Determination Letter Program Expansion Effective January 1, 2017, the Internal Revenue Service (IRS) and Department of the Treasury issued an update stating that employee benefit plans would only receive an IRS Determination Letter for qualification of initial plan setup and for qualification of plan termination. This update also allowed for the IRS and Department of the Treasury to decide on a yearly basis if they would accept applications for individually designed plans outside of the two circumstances described above. In connection with this yearly review, the IRS issued Revenue Procedure 2019-20, which expanded its determination letter program for individually designed employee benefit plans for a one-year period. The IRS will accept determination letter applications from September 1, 2019 through August 30, 2020 for individually designed statutory hybrid plans. The IRS will review these individually designed plans based on the 2017 Required Amendments List (Notice 2017-72). The IRS will also take all Required Amendments Lists and Cumulative Lists issued prior to 2016 into consideration. In addition, Revenue Procedure 2019-20 also stated that determination letter applications will be accepted on an ongoing basis for individually designed merged plans. An individually designed merged plan is defined as two or more plans merging or consolidating into one a single individually designed plan. This update only affects the individually designed plans, as described above. There is no impact to prototype plans for which the IRS will only issue a determination letter upon initial plan setup and plan termination. The IRS has also updated the mailing address to which submissions of determination letters should be sent. The updated address is: Internal Revenue Service 7940 Kentucky Drive MS 31A Florence, KY 41042 The address for preapproved plan submissions remains the same. ### Better Strategy Could Help Ease Trucker Shortage, Retention Issues According to the American Trucking Associations (ATA), the industry was short approximately 60,800 drivers in 2018. With freight volumes steadily on the rise since the end of the Great Recession, that shortage is expected to become even more acute in coming years, with experts at the ATA predicting the number will surge to roughly 160,000 by 2028 if the upward progression persists. With that looming demand, your company’s driver retention strategy is crucial.The ATA says that, last year, large for-hire truckload carriers and small for-hire truckload fleets experienced turnover rates of 89% and 73% respectively, likely due to aggressive recruiting tactics in the industry that’s seen carriers more frequently offering sign-on bonuses, higher wages and other benefits. Clearly, investing in perks like increased compensation rates and better health insurance could be the difference in keeping drivers on your team.Performance recognition may also help with driver retention. Such initiatives can take many different forms, including a “driver of the month” program, bonuses for safe driving, or other rewards for distinctive driving metrics. Tying performance to objective measures can help incentivize your crew and play a large part in any decision by them to stay or look elsewhere.Another action to take is to encourage driver feedback. Often when a company lends an ear, drivers feel inspired, and see themselves as true contributors to the organization. Surveys, suggestion boxes, and having fleet managers periodically meet with drivers are great ways to facilitate the dialogue. Opening avenues of communication can also provide the company with unique thoughts and insights that might not have been heard had channels not been encouraged.According to Freight Waves magazine, the average cost of turnover is $11,500 per driver. Certainly, any strategic approach to retention will have upfront costs, but in the long run will provide great payoff. In a market defined by high demand and rising labor costs, the ability to keep solid, reliable drivers will inevitably have an impact on your bottom line. If your organization would like assistance in navigating throughout current conditions in the transportation and logistics sector, we invite you to contact (contactsd@schneiderdowns.com) and visit the Schneider Downs Transportation & Logistics Industry Group. ### Ransomware Still a Growing Problem for Organizations of All Sizes While the concept of malware-based extortion has remained relatively unchanged since the first documented occurrence in 1989, attackers have spent the past 30 years refining their techniques and manipulating new technologies to build ransomware into a multibillion dollar industry. Tactics have evolved from the early days when physical floppy disks were mailed out containing the “AIDS Trojan” with the hope that unsuspecting targets would load the malware onto their PCs. Even just a few years ago, ransomware such as “WannaCry” and “CryptoLocker” was spread via widespread phishing campaigns that were generally not tailored to specifically targeted individuals or groups. But today, ransomware is increasingly deployed as a secondary attack after the bad actor has already gained a solid foothold in the organization’s internal network. Weekly, we are seeing new headlines revealing the latest victims of ransomware: state and local government offices, educational institutions, healthcare providers, and small and medium-sized businesses. Often the attacks are tailored and use advanced methods that disable the organizations’ critical resources and demand ransom payments large enough to cripple operations. Public utilities have seen billing disrupted for months, police departments have been forced to revert to paper recordkeeping, and local governments have been reduced to issuing official statements about the outages via handwritten memos. This past August, 22 cities in Texas were attacked simultaneously and held ransom for $2.5 million as the result of the breach of a shared third-party. Earlier this summer, Lake City, Florida paid a ransom of almost half a million dollars rather than attempt to recover its systems from backups. Cities that have chosen not to pay ransoms, such as Atlanta and Baltimore, have faced recovery costs of several million dollars even with reliable system backups. An event of that magnitude can quickly threaten the existence of a small or medium-sized business, but the process of preparing to face the threat of ransomware does not need to be overwhelming. Managing this risk requires focusing on three main activities: 1. Prevent Standard cyber-hygiene such as anti-virus and patch management still applies, but organizations should also be considering how to limit damage if an endpoint, or – increasingly – a service provider, is compromised. An email protection platform like Mimecast® adds an additional layer of defense from the most common means of compromise: phishing. 2. Detect Next-generation endpoint protection platforms such as Carbon Black® help detect suspicious activity, and when possible, remediate the issue before it can propagate throughout the network. Organizations of all sizes should be employing properly tuned automation platforms to sift through system event data and flag potential security concerns. 3. Respond Simply performing regular system backups does not constitute an adequate approach to disaster recovery. Organizations should ensure that appropriate plans are in place to manage cyber incidents and that these plans, as well as the organization’s data backups, are regularly tested. How can Schneider Downs help? The Schneider Downs cybersecurity practice consists of experts in multiple technical domains. Schneider Downs is an authorized reseller of both Mimecast® and Carbon Black®, and offers comprehensive digital forensics and incident response services.  For more information on our available services and software, please contact us at cybersecurity@schneiderdowns.com. Our whitepaper outlining some of top preventative measures organizations overlook is available here: https://schneiderdowns.com/10-things-companies-wish-they-did-before-a-breach. ### Is Your Construction Company Eligible for R&D Tax Credits? The Credit for Increasing Research Activities (IRC Section 41), or the R&D Tax Credit, as it is more commonly known, has been around since 1981. And while the methodologies for calculating and documenting the credit have evolved through the years, the R&D Tax Credit remains a great benefit to the taxpayers that can take advantage of this incentive. With the PATH Act of 2015 making the R&D Tax Credit permanent and enabling eligible start-up companies to offset payroll taxes, some taxpayers do not even have to be in a taxable position to benefit from the credit immediately!While the federal R&D Tax Credit is industry-agnostic, there are certain industries in which the activities undertaken lend themselves to taking advantage of the credit. One such industry is construction.If your company is in the construction industry, consider whether it performs the following types of activities: Design/build construction Geological studies Evaluation and testing of construction materials Construction equipment development/improvement Use of LEED building initiatives Building information modeling (BIM) If these examples sound applicable to your company, then your company may be eligible for federal and even state R&D Tax Credits. To learn more about the potential benefits for your company, do not hesitate to contact a member of the Schneider Downs R&D Tax Credits Team or the Construction Industry Group. ### Clarification on 100% Bonus Depreciation for Dealership Owners The Internal Revenue Service released proposed regulations on utilizing 100% bonus depreciation for dealerships that deduct floorplan interest expense.  Even though the rules were released on Friday the 13th, the rules proposed weren’t scary at all.  Dealers can use this deduction if their interest expense, including floorplan interest, is less than 30% of adjusted taxable income.We need to first revisit the mechanics of the interest expense deduction limitation.  The business interest expense deduction shall not exceed the sum of business interest income, 30% of the adjusted taxable income, and the floor plan financing interest.  Per the limitation, if the floor plan financing interest related to such indebtedness was taken into account, the taxpayer will not be eligible for 100% bonus depreciation on capital expenditures for the year.  This “if” statement did not go into further detail until these proposed regulations were released. While some originally interpreted the 100% bonus depreciation being ineligible to dealers who took $1 of floorplan interest expense, we read the original rule as being more taxpayer-friendly.  We did take the 100% bonus depreciation expense for our dealers that did not exceed the 30% limitation. Per these new proposed regulations, we choose wisely regarding treatment of bonus depreciation for dealers.  These new proposed regulations were released three days before the extended deadline.  This prevented what could have been a very stressful weekend leading up to the deadline.Please note that dealers are not out free and clear.  We recommend that dealers monitor their debt to equity ratio as they manage facility upgrades and during the course of business.  Starting in 2023, the adjusted taxable income cannot addback depreciation expense to the calculation, which means that more taxpayers will exceed the 30% limitation, while floorplan interest expense will not be limited, which then will make them ineligible for the bonus depreciation expense. For further detail on the interest expense limitation deduction, please email contactsd@schneiderdowns.com. ### Micro-Captive Insurance Companies Feel Pressure with Recent IRS Settlement Offers and Court Victories The IRS announced Tuesday that it is sending time-limited settlement offers to certain taxpayers under audit with micro-captive insurance transactions.  Eligible taxpayers will be notified of this offer by a letter containing the applicable terms. A micro-captive is a small captive insurance company that may be taxed under Internal Revenue Code § 831(b). The code section provides that captives qualifying to be taxed as a U.S. insurance company pay tax only on their investment income if written premium income is at or below $2.3M in 2019 ($2.2M in 2018). These structures are often used to provide coverage where insurance is unavailable or unreasonably priced. The risk management benefits of captives along with their tax and estate planning advantages are attractive for taxpayers with insurable risk. However, these tax-advantageous structures have come under scrutiny by the IRS in recent years and are often listed among the agency’s “dirty dozen” tax scams. Since 2016, microcaptives have been required to file additional tax forms, disclosing specific arrangements and providing additional information regarding transactions.In legal claims involving microcaptive insurance companies, the IRS recently won its last three U.S. Tax Court cases, leading some to speculate about the potential of a large-scale settlement. According to a recent IRS news release, there are more than 500 micro-captive cases sitting at the Tax Court. Many practitioners believe it’s unrealistic for the Tax Court to individually try each case.The IRS, capitalizing on its recent momentum, is now offering settlements to taxpayers currently under exam. The service has already sent notices to up to 200 taxpayers and has offered to resolve cases on applicable terms set out in the letters. The settlement offers are currently limited to taxpayers with at least one open year under exam.  Additional taxpayers may be eligible for a settlement in certain situations.The settlement terms generally require substantial concessions of the income tax benefits claimed by the taxpayer. In some cases, the lost benefit is nearly the entire amount; penalties generally will apply. Taxpayers who receive letters and do not participate in the settlement will remain under IRS audit and face potential loss of full captive insurance deductions, inclusion of income by the captive, and applicable tax penalties.  However, taxpayers retain full appeals rights.  The IRS has emphasized that taxpayers who receive offers and decline to participate will not be eligible for future settlement programs.The IRS plans to continue to open additional examinations in this area as a part of its initiative to combat these transactions. Taxpayers with micro-captives should consult with their tax advisor and specialists in the micro-captive area, and evaluate the likelihood of their position. If you are a taxpayer with a micro-captive or considering setting up a micro-captive, please contact your SD tax advisor. ### Advance Payments: Potential for Longer Term Deferral under Newly Issued Regulations, Repeal of Regulation §1.451-5 Back in July, the IRS formally removed regulation §1.451-5 from the Code of Federal Regulation. The regulation had permitted some companies to defer taxes for multiple tax years for certain types of payments received in advance of delivering goods or services to customers.  The IRS noted that these rules were “no longer necessary” after the enactment of the 2017 Tax Cuts and Jobs Act (the Act), which overhauled Section 451 by codifying existing IRS guidance under Revenue Procedure 2004-34 and allowed companies to defer taxes on all or a portion of customer advance payments for up to one tax year.  Congress observed at the time, in its conference report to the new law, that the new provision is “intended to override any deferral method” for payments advanced by customers under rules in place before the effective date of the Act.  For some taxpayers, though, the change could result in significant taxes being paid sooner than under the old rules. While newly issued regulations (see our article “IRS Releases Section 451(c) Advance Payment Proposed Regulations for Accrual Method Taxpayers Providing a One Year Deferral”) generally mirror rules under Revenue Procedure 2004-34, there appears to be one additional – and possibly material – exception added to the regulations that didn’t appear in the revenue procedure and may benefit taxpayers in certain industries.  Specifically, newly proposed regulation 1.451-8(b)(ii)(H) excludes from the one-year deferral under the general advance payment rule for “payments received in a taxable year earlier than the taxable year immediately preceding the taxable year of the contractual delivery date for a specified good”.  A “specified good” is defined as one that the taxpayer does not have on hand (or available through its normal source of supply) of a substantially similar kind, and in sufficient quantity, to satisfy a contract to transfer the good to a customer, and further, all the revenue from the sale is recognized in an applicable financial statement (think certified audited financial statement), in the year of delivery. In the preamble to the regulations, the Department of the Treasury and the IRS have determined that the exclusion noted above is appropriate for certain goods for which a taxpayer requires a customer to make an upfront payment, if the contracted delivery month and year of the good occurs at least two taxable years after an upfront payment and the other requirements in 8(b)(ii)(H) are met.  The types of goods being contemplated appear to include goods requiring “a significant amount of capital to produce and may require considerable time from development to deliver,” as is typically found in the aerospace industry. Unfortunately, with the removal of the regulations under §1.451-5, and no other specific guidance in the newly drafted proposed regulations, it’s not clear how or when to apply income deferral to potentially longer-term customer contracts where there’s a period of time two years or greater between receipt of an advance payment and the delivery of the goods or service.  In addition, it’s not clear whether any special guidance, if issued, will apply only to certain industries, like aerospace, or whether other businesses with products that would qualify as a “specified good” would also qualify.  It would seem additional guidance from the IRS is required. We at Schneider Downs will continue to monitor this area for changes. In the meantime, if you have any questions, please don’t hesitate to call. ### IRS Releases Advance Payment Proposed Regulations for Accrual Method Taxpayers, Providing One-Year Deferral On September 5, the IRS released guidance in the form of proposed regulations (Prop. Reg. §1.451-8) that address the receipt of payments from customers for goods and services (along with additional other items) in advance of when the property or service is delivered or performed by the taxpayer. The proposed regs provide guidance on Internal Revenue Code (IRC) Section 451(c), which was added as part of the Tax Cuts and Jobs Act. New IRC §451(c) essentially codified previously existing IRS guidance under Revenue Procedure 2004-34, which regulated when income from advance payments must be recognized for tax purposes compared to when that income is recognized for financial reporting purposes.The general rule of Section 451(c)(1)(A) requires that an accrual method taxpayer who receives an advance payment include that amount in income in the taxable year of receipt. Section 451(c)(1)(B), however,  provides an exception that allows accrual method taxpayers to elect to defer the inclusion of income associated with certain advance payments for one year, or to the taxable year following the taxable year of receipt of such income. The election, once made, is effective for all subsequent tax years, unless the taxpayer obtains the consent of the IRS to change.The proposed regulations define what is both included and excluded in the term “advance payment.” They also include guidance for taxpayers with short tax years of 92 days or less, when deferrals must be accelerated, and the tax consequences of financial statement adjustments.Due to the language in the IRC as passed by Congress, the proposed regs appear to unnecessarily complicate analysis and implementation by providing separate rules for those taxpayers with applicable financial statements – or AFS (generally think audited statements) – and those without AFS, such as compiled or reviewed statements. The practical difference in results between those with and those without, arising from the different sets of rules, appears to be immaterial.For those already applying the benefits of Revenue Procedure 2004-34, there will likely be no noticeable change in tax consequences and tax liability. For those not already using the deferral method, a change of accounting method will be necessary, though that change should generally be automatic, as provided under the guidance of Rev. Proc. 2019-37.The ultimate economic consequences to taxpayers of these proposed regulations depend in part on their interaction with other sections of the IRC governing the timing of deductions for federal income tax purposes, including provisions for determining when costs can be recovered under the percentage of completion method and when costs incurred by a taxpayer satisfy the all events test for tax deductibility. Additionally, changes to the accelerated cost offset rules could result in a mismatch of income and expense.The advanced payment deferral methods found in Proposed Reg. §1.451-8(c) or Reg. §1.451-8(d) are to be the sole method for avoiding immediate inclusion in income when an advance payment is received by a taxpayer. Confused? Don’t hesitate to contact us for more details or for assistance in implementing the rules. ### The Stages of Wealth - Wealth Accumulation This article was originally published in Wedgewood Life magazine and is reprinted with their permission. Over the last series of articles, we have highlighted a couple of core long-term wealth tenants such as spending less than you make and the importance of focusing on what you save, not on what you earn. This month we progress forward from wealth creation to wealth accumulation.Wealth accumulators are established in their career, nearing peak earnings potential, and begin to contemplate when, how, and what retirement might look like. As an individual accumulates wealth, the concept of retirement typically transitions from “at some point in the future”, to “getting close”, to finally “retirement reality”. When working with and advising clients with a goal of retirement and financial independence, our financial planning focuses on: Create Confidence in Your Plan – As your wealth accumulation increases and your long-term goal of retirement nears, this is the perfect time to analyze and evaluate your key financial inputs under various scenarios. This includes projecting how your retirement may proceed under different investment rates of return, higher or lower spending levels, and other variables such as the purchase of a second home. This exercise instills a higher level of confidence that retirement is not only achievable, but also allows you to proactively evaluate critical financial decisions such as retirement age, spending levels in retirement, and other inputs associated with your upcoming retirement.   Retirement Cash Flow Key Not Income – During working years, we typically focus on income levels (i.e. wages), but during retirement our focus is on how and where will we fund retirement cash flow. How much and at what age should we distribute cash flow from a taxable account (such as a joint or trust account) versus an individual retirement account (IRA)? What is the plan for claiming social security benefits? Do we have access to other sources of retirement cash flow such as pension income, deferred compensation plan, real estate income, etc.? What is the most tax efficient way to fund my retirement cash flow needs?   Healthcare Insurance Planning - According to industry analysis of U.S. Census Bureau data, the average retirement age in the United States is 63 years old (in-line with Ohio’s average age) and typically ranges from 62 to 65 years old nationwide. Assuming the goal is to retire before age 65 and prior to Medicare eligibility, your options may include purchasing a healthcare policy on the exchange (assume $500 to $1,000 a month per person as a high-level rule of thumb), or taking a part-time, low-stress, low-pay job with benefits. Once an individual is on Medicare, while they will still be paying premiums, they are likely to be more affordable and often less than half of what you might pay for a private healthcare policy. As your wealth accumulates and your financial goals come into view, a keen focus on these important planning topics will increase your financial confidence in making your retirement a reality.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice.  ### The Importance of Implementing Retirement Plan Best Practice Standards The relevance of fiduciary best practice standards for retirement plan sponsors is rather intuitive, given that legal and performance pressures endured by companies are tremendous, coming from multiple directions and for various reasons. A shift towards heightened awareness of fiduciary responsibilities and ”what not to do” can be seen in many recent ERISA lawsuit settlements alleging breaches in fiduciaries duties, but perhaps none more so than that of ATH Holding Company, LLC.At the heart of a $23.6M settlement were allegations surrounding the multi-billion dollar retirement plan’s investment and recordkeeping fees. Despite the plan’s investment lineup being almost exclusively composed of Vanguard mutual funds – which are regarded as one of the nation’s leading low-cost index providers – the plaintiffs alleged that the retirement committee should have selected even less expensive share classes. For example, the Plan was offering the Vanguard Extended Market Index Fund, which charged 0.24%, while there was a 0.06% share class available.Further, the plaintiffs alleged that collective investment trusts and separately managed accounts were available at even less expensive fees than what was available to the plan in a mutual fund product for virtually identical investment strategies.Differences between various share classes of mutual fund products include the Net Expense Ratio, minimum investment requirements, and revenue sharing amounts (12b-1, Sub-TA and Shareholder Service fees). Revenue sharing is a layered expense on top of the fee paid to the underlying investment manager and it is often used to pay or supplement outside service provider fees for service (advisor, recordkeeper, third-party administrator, etc.). Further confusing the issue, revenue sharing amounts are not consistent across the same share classes of different mutual funds.The practice of not offering participants the lowest cost share class available for a given investment strategy is out of alignment with industry best practices standards because it reduces the transparency of fees for participants and may cause certain participants to pay more for the operation of the plan than others, simply as a result of selecting certain investment alternatives.SD Retirement Solutions recommends the lowest cost share classes of our preferred investments in an effort to eliminate the consideration of how to account for revenue sharing arrangements. When some amount of revenue sharing is unavoidable, we have the option to credit the revenue sharing back to the individual participant’s account that generated it. If that option is not available, we will often credit the revenue sharing against custody fees, not advisory or recordkeeping fees. We believe that this supports our position as an independent investment advisor. Full fee transparency is a philosophy on which we have built our practice as a fee-based SEC Registered Investment Advisory firm.While the ATH monetary settlement was quite large, there were also a number of nonmonetary terms that were worth noting, including: The retirement committee must engage an independent investment consultant who is experienced with investment options in defined contributions plans. The committee must issue a request for proposal (RFP) for recordkeeping services for the plan. This case and its settlement can serve as a great example of the continued emphasis on share class alternatives and their expenses, which is now inclusive of other investment vehicles for even mid-sized and smaller plans. Similarly, this case also encompasses the preference for setting recordkeeping fees on a per-participant rather than pro rata basis—given the costs for the services does not grow with increases in assets or with new contributions. ### I Want Mine, but How? Social Security Strategies You are now ready to claim.  You’ve done your research, decided your “when” but now what about strategies?  Social Security employees do their best, but sometimes they get it wrong. Your recourse?  The Social Security Program Operations Manual System (POMS).  This is the bible that rules the claiming process. The voluminous resource linked here is the public version:  https://secure.ssa.gov/poms.nsf/home!readform. The Bipartisan Budget Act of 2015 ended most Social Security claiming strategies. Today, a single person is left with only the option of when to file. There are, however, still some strategies available for couples.  If Social Security will comprise a significant portion of your retirement income, it is vital to plan your claiming strategy. The “Restricted Application” strategy is still applicable to select married claimants.  If you are married, your spouse is receiving benefits, and you were born before January 2, 1954, you can restrict your application for just a spousal benefit.  In doing so, you allow your own benefit grow and collect the 8% per year premium.  At age 70, you can switch to the higher benefit. If you are divorced after being married for at least ten years, you gain further advantage since you don’t have to wait for your ex-spouse to file. You can receive up to a 50% spousal benefit and can then switch to your own benefits at a later date when it may prove more beneficial. This “Restricted Application” window is rapidly closing, so if you are of this age and have not yet claimed, make sure you consider this.  When you contact the Social Security office, remind them you are in the protected age class.  Anyone born after this date, upon filing, is deemed to claim his or her own benefit. For couples born on or after January 2, 1954, your analysis will be simpler.  Depending upon your cash flow and health situation, you may want to consider collecting the lower earner’s benefit first to allow for some cash flow and wait as long as possible to claim the higher earner’s benefit.  In addition to increasing cash flow in later retirement years, this also protects the highest benefit upon the death of a spouse.  Without a strategy, the survivor can be left with significantly less income. If a spouse has no earning record, he or she can still claim a benefit of up to 50% of the earner’s record with two codicils.  To explain, the earning spouse must have claimed, and if the earner is below Full Retirement Age (FRA), both that benefit and the spousal benefit will be reduced. A divorced spouse, after ten years of marriage, may also collect up to 50% of his/her ex-spouse’s record even if the ex has not claimed but can qualify for benefits, and you have been divorced for at least two years. Remember, if you are claiming based upon your ex’s record, you will lose the benefit upon remarriage.  Additionally, if your earned benefit is higher, upon filing, you will receive your own benefit. Widow’s benefits have not been impacted by the 2015 Act, and here the Social Security Administration often gets it wrong.  Widow’s benefits can begin as early as age 60 based upon the deceased spouse’s record only.  If you do not need the cash flow, it is best to wait until age 62 when you then have a choice.  At that age, a widow or widower can claim on either his/her own record or that of the deceased spouse.  They may then switch to the higher benefit at a later date.  The deceased spouse’s benefit will not grow beyond FRA and should be claimed by then.  If you are delaying your own benefit, it can grow to age 70.  Refer to POMS NL 00711.040 for the exact citation. Your local Social Security office should be able to help you with the analysis or any of the situations outlined above, but as mentioned, they sometimes do not know their own rules.  If you need additional help, refer to POMS.  The Social Security Administration also has a wealth of useful information on their website sss.gov. Other articles in the series: Social Security Simplified Social Security Claiming Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. ### IRS Follows Through with Strategic Plan by Use of Data Analytics The Internal Revenue Service (IRS) set forth a Strategic Plan for fiscal years 2018 through 2022. One of the six strategic goals within the plan is to: “Advance Data Access, Usability and Analytics to Inform Decision-Making and Improve Operational Outcomes.” The overall intent of the goal is to use data analytics to become more efficient and to improve taxpayer services, enforcement efforts, and internal operations. The IRS recently used data analytics to uncover noncompliant taxpayers who own virtual currencies. Chainalysis, an independent company used by the IRS, was able to retrieve tax information from customers of Coinbase, which was a possible source that led to 10,000 letters from the IRS being sent to crypto account holders. Three types of letters were delivered (Letter 6173, 6174, or 6174-A) indicating that the taxpayer must review their tax returns for virtual currency transactions and ensure that their reporting was completed properly. The letters indicate that amended or late tax returns should be filed if the taxpayer filed incorrectly or neglected to file. Letter 6173 is the most severe of the three letters. It requires a response from the taxpayer and indicates that the taxpayer either neglected to file a return or filed a return that did not include their virtual currency transactions. Letters 6174 and 6174-A do not require responses by the taxpayer and are more educational in nature. Letter 6174 provides information regarding how to properly record crypto currency transactions and informs the taxpayer to review their filings, while Letter 6174-A specifically indicates that the taxpayer “may not have properly reported” their crypto currency transactions. Letter 6174-A would be provided if a taxpayer disclosed their crpyto currency transactions but did not disclose them in the proper way. Data analytics will continue to be used by the IRS in relation to noncompliant crypto taxpayers. The use of data analytics and the expansion into tools such as artificial intelligence, blockchain, and crpyto trade accounting programs will allow the IRS to more effectively and efficiently detect fraud and noncompliance. The IRS has already started making great strides in achieving their goals and following through with their strategic plan initiative related to data analytics. If you have questions about effectively accounting for cryptocurrency holdings or transactions, contact the Schneider Downs tax specialists. ### Imperva Alert IMPERVA ALERTCybersecurity threats evolve every minute of every day. Best practices exist to protect against or even mitigate these growing threats, but, unfortunately, some companies still fall victim to attacks. Lapses in controls lead to many of the countless breaches that we hear about so often in the news. It was reported recently that Imperva, a leading provider of Internet firewall services, which can help web sites block malicious cyberattacks, was a victim of a cyberattack.This time the threat came from the cloud, specifically the Incapsula cloud (the company’s cloud-based Web Application Firewall (WAF) product). The result of this breach was those customer data elements dating back to September 17, 2017 were obtained by attackers. The data elements captured included email addresses, hashed/salted passwords, and for a small subset of Incapsula customers, the breach exposed API keys and customer-provided SSL certificates.OVERARCHING CONCERNCommenting in an article on the security website Krebs on Security, Rich Mogull, founder and vice president of product at Kansas City-based cloud security firm DisruptOps, stated that “an attacker in possession of a customer’s API keys and SSL certificates could use that access to significantly undermine the security of traffic flowing to and from a customer’s various Web sites.”In addition, attackers in possession of these key assets could reduce the overall security of WAF settings and could essentially “whitelist” any traffic originating from an attacker. To imagine a worst-case scenario, an attacker associated with this breach could intercept, view or modify any content meant for an Incapsula client web site, and even divert this traffic through an attacker-owned site or other malicious destination.Certain scenarios could allow an attacker to alter a WAF implementation into a state that makes it essentially meaningless for the customer. Due to the ongoing investigation associated with this matter, many questions remain unanswered. Below are a few of those questions.Imperva Incapsula breach – unanswered questions (Provided by ZDNET) Did the breach occur because of a server left exposed online by accident or due to an unauthorized, forceful intrusion? Is the “third party” who found the breach a source in law enforcement, a bug bounty hunter, or one of Imperva’s customers? Did the breach occur in 2017, but was only now discovered? WHAT YOU CAN DO – OUR RECOMMENDATIONAs of August 27, Imperva released a statement regarding this incident and has forced passwords resets for affected customers alongside encouraging the use of 2FA (two-factor authentication).The opinion of IT Security professionals at Schneider Downs (SD) is that 2FA alongside the password reset process should be required for all customers regardless of whether they were affected by this breach (/our-thoughts-on/cybersecurity/optimizing-two-factor-authentication-security).Two-factor authentication is not a new technology, nor is it a costly protection mechanism, and we believe it should be required for all Incapsula WAF customers.WHO USES 2FA?  WHY DOESN’T EVERYONE?The Elie.net blog (a blog created by the lead of Google’s anti-abuse research team, which assists in protecting users against cyber-criminal activities and Internet threats) wrote an article titled “The bleak picture of two-factor authentication adoption in the wild.” In this post, Elie Bursztein reported that “Overall, as of late 2018, 52.5% of the 1149 sites listed in the dongleauth database support 2FA.”Bursztein’s blog post paints a grimmer picture of 2FA adoption and solidifies our recommendation that 2FA should be a required implementation following a breach of this magnitude.Sources:https://krebsonsecurity.com/2019/08/cybersecurity-firm-imperva-discloses-breach/https://duo.com/decipher/imperva-discloses-customer-data-breach-theft-of-api-keyshttps://elie.net/blog/security/the-bleak-picture-of-two-factor-authentication-adoption-in-the-wild/#toc-4https://www.zdnet.com/article/imperva-discloses-security-incident-impacting-cloud-firewall-users/ ### Department of Labor Announces Rule to Strengthen Retirement Security for Millions Employed in Small and Mid-Sized Businesses Citing a 2018 report by the U.S. Bureau of Labor Statistics that approximately 38 million private sector employees in the United States lack access to employer-sponsored retirement savings plans, the U.S. Department of Labor announced on July 29, 2019 a “Final Rule” to allow small and midsized businesses to band together to offer retirement plans to their employees through Association Retirement Plans (ARPs). These plans are also referred to as multiple employer plans, or MEPs.The Final Rule, which goes into effect September 30, 2019, will enable small and midsized businesses to gain access to retirement benefit packages through ARPs, thus reducing administrative costs through the economics of scale and strengthening small businesses’ negotiating abilities with financial institutions and other service providers.The Final Rule clarifies that ARPs can cover employers not just in the same industry, but also in the same geographic area, such as a common state, city, county or metropolitan area (even if it crosses state lines). Business owners without employees, including sole proprietors, can also participate. The Final Rule includes a regulatory safe harbor for Professional Employer Organizations (PEOs) that want to offer retirement options.Before the Final Rule was issued, the DOL permitted only “closed” MEPs, in which participating employers shared a common relationship, such as being members of an established trade association. Under the new rule, employers can join an ARP as long as they meet one of the following criteria: Operate in a common city, county or state—or in a multistate metropolitan area—regardless of trade, industry or profession. Operate in the same trade, industry or profession, regardless of where they are located. Included in the Final Rule is a “Request for Information” (RFI) for what is called Open MEPs, or Multiple Employer Plans that would cover employees of unrelated employers. The goal is to provide small businesses with a cost-efficient way of offering retirement savings opportunities to all workers.The DOL has continuously taken the position that a group or association of employers must have what is called “commonality” to act as sponsoring employers of a combined ERISA plan. Responses to this RFI are due by October 29, 2019. ### How Predictive Analytics Can Yield Superior Patient Care for Healthcare Providers Have you ever had to make a trip to the emergency room only to find yourself in a crowded waiting area for a long period of time? Predictive analytics is a promising solution to alleviate patients' distasteful experiences with the quality of care they receive at healthcare facilities. Additionally, healthcare providers can use this new technology to reduce their operating costs and improve profitability. However, this opportunity is not without significant risks to both the patients and healthcare organizations.One of the benefits that patients would immediately notice is the reduced wait time to be seen by a medical professional. Healthcare providers do this by integrating various data points in their algorithm models, including historical data, reportable diseases, seasonal sickness and weather patterns, calendar variables and public holidays in order to predict the number of patients who may need medical attention. As a result, hospitals can optimize their patient-to-staff ratio and therefore improve both the quantity and quality of care for their patients.Another benefit of predictive analytics is the ability to cut down on revenue losses from patients who skip their appointments without giving advance notice. This would lead to a greater amount of available appointments for other patients seeking care and improve overall profitability. Additionally, healthcare providers can manage their supply chain operations more effectively using predictive analytics. Clinicians claim to spend 17% of their workweek managing problems related to inventory instead of providing patient care. Predictive analytics can be used to streamline inventory management and negotiate contracts with suppliers, which would enable medical professionals to spend more time caring for patients and improve the quality of treatment received by patients.There are a few significant risks related to predictive analytics that both patients and healthcare providers should consider. One of the risks is privacy protection for patients' records. Hospitals and other healthcare facilities accumulate and store an extensive amount of personal information on cloud-based databases. As big data continues to be a target for hackers, it is more crucial than ever for healthcare organizations to safeguard their patients' information and address their risks and legal responsibilities.One of the greatest risks is structuring an ethical and moral framework for developing algorithms related to predictive analytics. Maintaining such a framework is important because predictive analytics models can often yield a bias outcome. A majority of people place a high level of trust in algorithms without realizing that the algorithms are created by imperfect humans who hold natural prejudices and biases. One way for a healthcare organization to combat potential bias is to develop a collaborative framework with outside parties such as government agencies, regulatory bodies and other associations to help establish guidelines for what acceptable characteristics an algorithm should possess. This would ultimately help maintain a patient-centered perspective when it comes to implementing predictive analysis in the healthcare industry.Overall, predictive analytics open up a realm of opportunities to improve patient outcomes; however, organizations need to evaluate the benefits in line with the risks to avoid potentially disastrous effects on the business. ### The Best Things in Life Are Free - That Might Even Include Your Inheritance! If you inherit property in Pennsylvania, you may soon be able to avoid the hefty burden of paying inheritance tax!  Starting next year, minor children who receive property from a deceased parent who was a Pennsylvania resident will be exempt from the inheritance tax under new legislation put forth by Representative Carl Walker Metzgar.Pennsylvania inheritance tax is imposed on most property that is transferred at death at a rate of 0%-15% of the value of that property.  The specific tax rate that is used depends on the relationship between the decedent and the beneficiary.Until recently, Pennsylvania law imposed a 4.5% tax on the property that natural parents, adoptive parents or stepparents transfer to or for the benefit of their minor children after the parents pass away.  In other words, 4.5% of the entire value of each specific inheritance would be taken from each child.  On the other hand, the property that those same parents inherit from their minor children was taxed at a rate of 0%. In order to solve the discrepancy in the law, Pennsylvania has now eliminated state inheritance tax on transfers from a natural parent, adoptive parent or stepparent to or for the use of a child 21 years of age or younger.  Beginning after December 31, 2019, minor children will no longer be liable for tax on the inheritance they receive from their parents, with the inheritance tax rate dropping from 4.5% to 0%.Representative Metzgar introduced this legislation to the House of Representatives, stating that the purpose of this change was to ensure that minor children who inherit property when a natural parent, adoptive parent or stepparent passes away will not be subject to inheritance tax.  This is a step toward his goal of completely eliminating inheritance tax in Pennsylvania.Even if you are not a child who is 21 years of age or younger who received an inheritance from your parents, Schneider Downs can still help you understand how the Pennsylvania inheritance tax system works and how it may impact your estate.  There may be planning opportunities available to help reduce the inheritance tax burden that you or your loved ones may face. ### Putting a New Positive Spin on Education Costs As another school year, the associated costs of education continues to rise.  A way to prepare for these costs is to participate in a Qualified Tuition Program (QTP), also called a Section 529 plan, which allows a taxpayer to make contributions to an account or program to be used to pay qualified education costs. Prior to the enactment of the Tax Cut and Jobs Act of 2017 (TCJA), 529 plans could be used only for eligible colleges and universities.  Qualified education expenses include tuition, fees, books, supplies, equipment, including computers, and reasonable costs of room and board while attending an eligible school. The TCJA changed the definition of qualified higher education expenses to include tuition for attending an elementary or secondary public, private or religious school.  The TCJA also limited distributions for elementary and secondary school tuition to $10,000 for each designated beneficiary per year from all QTPs of the designated beneficiary.  Both of these amendments apply to distributions made after December 31, 2017.Contributions to 529 plans are not subject to any adjusted gross income limitations of the contributor.  The contribution is considered a gift, and contributors can elect to take contributions larger than the annual gift exclusion into account ratably over five years.  Contributions to a QTP are not deductible for federal tax but are deductible for some states.  Pennsylvania, for example, currently does allow a deduction for contributions up to $15,000 per beneficiary, and the contributions for the $10,000 costs for elementary and secondary school tuition qualify as well.  Further, the principal grows tax-free and can act as a savings vehicle for future tuition costs.If you feel 529 plans may benefit you, we encourage you to contact our tax advisors, who would be happy to help.  Something to consider for next term! ### Ohio's New Budget Although a couple of weeks late, Ohio Governor Mike DeWine finally signed into law the new state budget on Thursday, July 18. It was the third time in 28 years that Ohio lawmakers missed the annual June 30 deadline. That noted, the new financial plan does contain a number of important changes.Business Income DeductionMany were concerned that the small business deduction would be reduced, but the adopted budget kept that number the same for those eligible. Since 2016, and now going forward, the first $250,000 of business income earned by taxpayers filing “single” or “married filing jointly” is 100% deductible. Anything above that threshold is taxed at a flat 3% rate. The new budget leaves these parameters intact for tax year 2019, though for 2020 attorneys and lobbyists will no longer qualify for the business income deduction.Sales Tax UpdateOhio sales tax has a few changes as well. In light of the Supreme Court ruling in last year’s South Dakota v. Wayfair case, the state has updated its sales tax nexus. Effective August 1, vendors and sellers with $100,000 of sales to Ohio or at least 200 transactions in a 12-month period need to register and remit monthly sales tax to the state.Taxpayers may also now claim an exemption for equipment and supplies used to clean qualifying manufacturing equipment that processes food. In addition, effective October 1, investment coins/metals and the sale of vehicles, repair services and/or parts to a professional racing team are no longer eligible for the sales and use tax exemption.Individual Income Tax ReductionsIn a move that probably hits closest to home, the state has reduced individual income tax rates. For 2018 and earlier, Ohio taxation began at a taxable income level of $10,501. For 2019, the state tariff doesn’t apply until Ohio taxable income exceeds $21,100.Lawmakers also eliminated the bottom two tax brackets and gave all Ohioans a 4% rate reduction, which equates to $25 a year for an individual with a taxable income of $41,000, and $50 annually for a family of four making $73,000.Additionally, the $50 credit for contributions to candidates running for political office in Ohio was eliminated commencing with 2019 income tax returns.New Tax Credit for Investment in Opportunity ZonesBeginning in 2018, federal law allowed states to designate economically distressed areas that meet certain criteria as opportunity zones. When a taxpayer reinvests capital gains in an opportunity zone fund, the tax on those capital gains is deferred until the investment is sold or exchanged from the fund.The new state budget contains a nonrefundable income tax credit equal to 10% of a taxpayer’s investment in an Ohio opportunity zone. The bill limits the total credit allowed to any individual to $1 million and caps the total credits allowed at $50 million. Additionally, it requires 100% of the investment in the Ohio opportunity zone versus 90% for federal. Taxpayers can apply to the Development Services Agency between January 1 and February 1 following the year in which an investment is made. If successful, the credit can be claimed for the year of the investment or in the next year, based on the date on the certificate. The credit is nonrefundable and can be carried forward five years. It’s also transferable once during a five-year period.The passage of the budget was a win for all Ohio taxpayers, with the possible exception of those lawyers and lobbyists who won’t qualify for the business income deduction beginning next year. We expect further communication from the Department of Taxation to gain more clarity on all the above changes. Feel free to reach out to your Schneider Downs tax professional if you have additional questions. ### Current and Forecasted Conditions Play Havoc with Higher Ed Revenue Growth According to the National Center for Education Statistics, the number of high school graduates in the Northeast and Midwest is projected to decrease between 2013 and 2028 by 7% and 2%, respectively. Colleges and universities throughout the region, including many in Pennsylvania, Ohio, West Virginia and Michigan, are already looking at ways to address the potential effects of that shrinking supply of talent, which represents a true limiter to net tuition revenue growth. In recent years, the higher education sector has been in the hot seat amidst steadily rising tuition rates. Based on analysis by the College Board, matriculation costs at public four-year schools, when adjusted for inflation, have tripled in the last three decades, while those at public two-year and private nonprofit four-year schools have doubled. That’s scared off a number of prospective price-sensitive students and forced many institutions to implement cost containment strategies to prevent future tuition increases. The result has been a negative perfect storm of sorts, combining the aforementioned diminishing pool of candidates with a reluctance on the part of many of those candidates to “invest” in a college degree and the ongoing institutional challenge to maintain educational affordability. Endowments, then – and the income they garner – have become increasingly essential for institutions looking to fulfilling their missions. The potential for an economic slowdown, which would undoubtedly hurt endowment returns, puts further pressure on bottom lines. According to data from the National Association of College and University Business Officers covering over 800 U.S. colleges and universities, 10-year endowment returns ending in fiscal year 2018 were at 5.8%, well short of the group's 7.2% average long-term target. Despite missing that targeted return and even after considering the effects of inflation, a majority of institutions raised their endowed fund spending last year, as that income has become increasingly pivotal to the institution’s overall financial position. In addition, the changes to tax law brought about by the 2017 Tax Cuts and Jobs Act have increased the prospects that institutions may pay tax on unrelated business income, which has become key to helping institution’s diversify and grow total revenue. Revenue growth is, and will undoubtedly continue to be, a comprehensive challenge. If your institution would like assistance navigating the industry sector’s current business conditions, contact Schneider Downs and visit the Schneider Downs Educational Services Industry Group. ### Update: New Environmental Grant Program Deadlines in Pennsylvania In 2018, pursuant to the Volkswagen Environmental Mitigation Trust, the Pennsylvania Department of Environmental Protection ("PADEP") created several environmental grant programs aimed at reducing NOx emissions made by large on-road fleets. These programs range from Class 8 trucks and transit buses to ferries, tugboats and freight switchers. There are several opportunities for diesel fleets looking to convert to electric vehicles and/or install an electric vehicle infrastructure, as well.On August 1, PADEP provided an update on the funds left for allocation and revised application deadlines. Following is the most current listing of programs, due dates and funds remaining for allocation. Grant Program Application Deadline   Total 2019 Funding Available   Class 8 Truck and Transit Bus Grant Program September 23, 2019* $ 2,400,000 Ocean Going Vessel Shore Power Grant Program October 30, 2019 $ 3,000,000 Electric Cargo Handling Grant Program November 15, 2019 $ 3,000,000 DC Fast Charging and Hydrogen Fueling Grant Program October 11, 2019* $ 1,750,000 Level 2 EV Charging Rebate Program December 31, 2019 or until all funds committed $ 1,000,000 Ferries, Tugs & Freight Switchers Application unavailable at this time** Amount for allocation unavailable at this time On-road Rebate Program - Class 4-7 Trucks, Port Drayage Trucks, School Buses, and Shuttle Buses Program Closed for 2019 All funds have been allocated for current year PA State Clean Diesel Grant Program Program Closed for 2019 All funds have been allocated for current year *This is the final 2019 deadline. Any applications not submitted by this date will not be eligible until the next calendar year application cycle. **Application has not yet been released for this program.  For more information on specific programs, please check out our previous article or contact a member of the Schneider Downs Transportation and Logistics Team. ### The Wolf, the Goat and the Kid: An Unexpected Tale of Invoice Redirection Fraud In the 1668 La Fontaine fable "The Wolf, the Goat, and the Kid", a mother goat leaves home in search of food, warning her daughter about the wolf who might try to enter the house in her absence. She tells him to be careful and to only open the door upon hearing a certain watchword. Unfortunately, the wolf, who happened to be passing by, overhears their conversation. As soon as the mother goat leaves, the wolf knocks on the door. Talking his sweetest voice, he bleats out the password to the kid, already imagining what a delicious meal the young goat will make. The kid recognizes her mother’s voice but, skeptical, asks to see her white feet as proof. The wolf, knowing all too well that his big grey paws would instantly betray his true identity, resolves to return to the woods to look for easier prey, while the goat family celebrates their near escape. La Fontaine leaves us with the moral of the story: "Two sureties better are than one / And caution's worth its cost / Though sometimes seeming lost."[1] The moral of this fable is just as relevant today as it was in 1668, especially for employees involved with the maintenance of vendor information. Members of this particular department are especially vulnerable to phishing attacks, and will surely see the resemblance between the wolf and perpetrators of invoice redirection scams. In this type of widespread and prevalent scheme[2], the account payable or management employee receives a request from an existing vendor to update their banking information or address[3]. Thinking that this adjustment is a routine vendor maintenance operation and trusting the email or letter received, they proceed to change it without further verification. Weeks later, the vendor calls, asking why all their invoices are 30 days overdue, and the employee discovers that the vendor's new bank account or mailing address was redirecting funds into a scammer’s account. Thankfully, all is not lost when a company becomes aware of the situation, as investigations sometimes allow victims to recover some of these payments. For example, a Wisconsin school that fell prey to this scam was able to recover $440,000 out of the $600,000 they had lost with help from the FBI.[4] In order to avoid this type of scam, it is important to create a standard streamlined vendor management procedure that compares and verifies vendor banking information or address change requests with independent sources. For example, every time a change to a vendor’s critical information is received, the person in charge of completing the update should call an agreed-upon vendor contact to verify that the request is legitimate before editing the data in the system. This procedure should be followed even if the initial email or letter requesting the change appears to come from a known client contact and looks genuine. In order to get additional information about vendor management best practices or to discover if your business has established the proper procedures to avoid such fraud, feel free to contact our Risk Advisory practice. Our department specializes in identifying the control gaps in organizations through the use of a formal risk assessment methodology and can redesign or update your procedures to minimize existing risks. [1] http://webcache.googleusercontent.com/search?q=cache:K8_Epb02-IoJ:www.musee-jean-de-la-fontaine.fr/jean-de-la-fontaine-fable-uk-179.html&hl=en&gl=us&strip=1&vwsrc=0 [3] https://cib.db.com/insights-and-initiatives/initiatives/invoice_redirection_fraud.htm [4] https://wsau.com/news/articles/2019/jun/13/marshfield-school-district-falls-victim-to-fraud/ ### Potential Fraud in the Professional Services Industry According to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, companies in the professional services industry are most at risk to be negatively impacted by expense reimbursement schemes, billing schemes and check and payment tampering schemes.  Over the years, we at Schneider Downs have seen a number of companies impacted by each of these fraud schemes.Recently, we completed an assignment with a company in the professional services industry that suspected a senior-level manager had been orchestrating a billing scheme by overbilling clients in order to inflate revenues.  In investigating the company’s financial activity and billing processes, we discovered numerous issues, in addition to the overbilling.Billing schemes attack the cash disbursements and payables cycle by making false claims for payment from the victim company.  These bogus claims induce the victim company to issue payments for goods or services not received.  Fraud perpetrators can accomplish this in a variety of ways: Invoicing via shell companies, wherein a fictitious entity is created for the sole purpose of committing fraud Invoicing via non-accomplice vendors, wherein fraudsters use invoices in the name of existing vendors to generate fraudulent payments Overbilling by falsifying or inflating billing records Personal purchases with company funds, by using company accounts to buy items for themselves, their businesses, their families, etc. During our initial review of the company’s financial documents and interviews with personnel, we immediately noticed some red flags, including a lack of segregation of duties, a lack of formalized client billing policies and procedures, the fact that budgets were not prepared or utilized, lack of oversight and an inactive board of directors.Once we completed the investigation and interviews, we provided our findings and recommendations to improve procedures and internal controls specific to the billing process, including: Develop policies and procedures regarding fees, billings, time entry, credit memos, etc. Billing rates should be standardized, reviewed on an annual basis and approved by the board of directors each year. Engagement letters used by the company should be standardized and reviewed by legal counsel Write-ups and write-downs of work-in-process and fees invoiced when compared to standard rates need to be reported, reviewed and approved by appropriate levels of executive management and the board of directors. If you have any questions regarding potential fraud schemes or internal controls at your professional services company, please contact the Business Advisory group at Schneider Downs. ### PA DEP Issues 2018 Oil and Gas Annual Report On July 10, the Pennsylvania Department of Environmental Protection (DEP) released its 2018 Oil and Gas Annual Report. The DEP acts as Pennsylvania’s permitting and inspection body, responsible for ensuring that the construction, drilling and operation of oil and gas well sites comply with approved permits. The annual report provides a highlight of the data and trends related to the DEP’s permitting and inspection programs, as well as statistics of areas such as production and plugging activities. In addition, 2018 initiative results are presented as well as an outlook of 2019 initiatives and their current progress. The main goals of the DEP in 2018, which can be seen in its permitting process and technology changes, were to improve efficiency within the permit and inspection processes, improve consistency among the districts within the DEP, and provide greater transparency to the public.  In early 2018, the permit process was streamlined into two programs: Surface Permitting and Subsurface Programming. Technical reviewers located within the district offices now report to a central manager, rather than three separate district managers. In addition, the DEP focused on overhauling the permitting process, to reduce the backlog of submitted permits that were open for review. Within the Surface Permitting program, review timeframes decreased from an average of 230 days to 157 days within the Southwest District, with the Northwest and Eastern districts averaging 85 days. The Subsurface Permitting program now averages a review timeframe of 39 days. The DEP has also focused on continuing to update its inspection process, launching the Surface Activities Inspection Report (SAIR) app. The mobile app allows inspections to be conducted onsite through tablet computers, allowing for greater accuracy and the ability to provide information to the public within days of inspections taking place. A total of 38,673 compliance inspections were conducted during 2018, a 2% increase from 2017. The DEP is still working towards tackling its biggest issue related to the wells, the large number of orphaned and abandoned wells in the state. There are currently 12,164 identified orphaned and abandoned wells, including 8,752 unplugged wells, but the DEP estimates there to be approximately 200,000 abandoned oil and gas wells unaccounted for in PA. Due to the significant cost of locating the wells and the subsequent remediation, the DEP developed the “Good Samaritan” initiative to encourage private-sector partners to plug abandoned wells and in turn be protected from liability, for their role in reducing environmental hazards. In April 2018, one of the first proposals submitted to the program was a proposal to plug an abandoned well in the Allegheny National Forest. There had been no plans of remediation for the well due to budget constraints. Plugging was completed in September 2018. With the successful outcome of this proposal, the DEP continues work towards locating and plugging the large number of unaccounted-for and abandoned wells in the state, in a more efficient manner. In 2018, 6.1 trillion cubic feet of natural gas was produced from unconventional gas wells in PA, making the state the second largest producer of natural gas in the nation, behind Texas. This was the largest volume of natural gas on record that has been produced in Pennsylvania in a single year, a 14% increase from 2017. The DEP strives to continue this production trend, with the hopes that improvements in efficiency and technology within the permitting process will promote more drilling and production. As the DEP continues to streamline its processes, the increase in unconventional well permits can be seen over the last five years, and has influenced the DEP’s 2019 initiatives and outlook. The DEP’s main initiative for wells is changes to unconventional well permit application fees. Current fees to apply for an unconventional vertical and non-vertical well permit are $4,200 and $5,000, respectively. In May 2018 the DEP presented to the Environmental Quality Board, a proposal to increase fees to $12,500 for all unconventional well permits. The DEP is preparing responses to comments and intends to advance its final proposal before the end of the year. Work also began in 2019 on the Geologic Hazard Mitigation Plan, which enforces stronger erosion and sediment control requirements. Operators must perform due diligence including investigating and identifying formations and soil conditions as well as prior surface and subsurface uses. The intent is to provide a consistent approach to hazard mitigation investigation and reporting. 2019 also continues the DEP’s focus on data and technological improvements, with a focus on enhancing current electronic applications and developing new applications to increase transparency, with the hopes that more efficient and transparent processes will promote stronger compliance. ### Composite Financial Index A widely used metric across the Higher Education industry is the Composite Financial Index, also known as the CFI.  The CFI is intended to assist institutions in understanding the affordability of their strategies and is used to monitor the financial results of their strategic initiatives.  The institution is best served if the CFI is calculated over an established time period.  This gives a more accurate picture of overall financial health. There are four core ratios that make up the CFI:  primary reserve ratio, net income ratio, return-on-net-assets ratio, and viability ratio.The primary reserve ratio measures the financial strength of an institution in terms of whether or not its resources are sufficient to support the institution’s mission.  It is calculated by dividing the institution’s expendable net assets by its total expenses. The net income ratio helps institutions determine whether or not their operating results indicate that they are living within their available resources.  It is calculated by dividing the institution’s change in net assets without restrictions by its revenues without restrictions.The return-on-net-assets ratio helps institutions interpret their total economic return.  It is calculated by dividing the institution’s change in net assets by its total net assets.The viability ratio helps institutions determine if debt resources are appropriately managed.  It is calculated by dividing total expendable net assets by long-term debt.Once each component is computed, these numbers are then converted to strength factors across a common scale, which is then multiplied by specific weight factors.  The resulting four numbers are then added together, which results in an overall CFI score.   The CFI score will tell institutions more about the financial components of their well-being, which range from considering financial exigency to deploying resources to achieve a robust mission.  The CFI should then be utilized by management in conjunction with other metrics to help understand the overall health of the institution.If you would like to discuss the CFI of your institution, please contact a member of Schneider Downs’ Higher Education practice. ### Decline in Charitable Giving After years of growth, many tax experts thought 2018 would show a decrease in charitable giving, especially among individuals who are part of the middle class. The expected decline in giving was attributed to the Tax Cuts and Jobs Act of 2017, which doubled the standard deduction while taking away many itemized deductions. These changes led many taxpayers, especially in the middle class, to opt-out of itemizing. Taxpayers who do not itemize, do not receive tax benefits for charitable gifts, leading to fewer donations. According to “Giving USA 2019,” this prediction held true for 2018.With many taxpayers claiming the standard deduction, individual giving particularly was expected to decline from years past. “Giving USA 2019” shows a decline of 1.1% from 2017 to 2018, and the decline steepens to 3.4% when adjusting for inflation.This should not come as a surprise, considering some individuals wanted to get ahead of the tax reform by choosing to donate more than normal in 2017. Tax reform, however, was not the sole cause of the decline in charitable giving. Another potential cause of the decline in charitable giving was likely the stock market. The market was doing well throughout 2018, yet took a bit of a downturn close to year-end. End-of-year giving was likely reduced by the market not doing as well as hoped for.It will be interesting to see if the decline in charitable giving in 2018 was an anomaly or part of a trend. As always, please feel free to contact Schneider Downs if you or your organization has questions or needs assistance in developing charitable giving strategies. ### Analyzing America’s Pastime: Do Fans Really Dig the Long Ball? Everyone has their own reason to attend baseball games. Some like the food; some like the atmosphere; others long for the hope of catching a foul ball. Many, as Greg Maddux and Tom Glavine indicated in the iconic commercial 1998, come to baseball games for one thing – to see home runs. Equipped with one of my favorite data tools, Power BI, and historical attendance records, I set out to determine if this was true - that attendance is directly relational with the number of home runs hit in any given season.For the population of data, I started with historical data dating back to 1876. To standardize the data across years, I calculated the average attendance per game and average home runs per game across this period.To convey this data, I determined that a scatter plot would be the best form of visualization since it is a great way to show trends between two variables. The graph below is the result of plotting the “Home Runs per Game” and the “Attendance per Game” per year for the total period. A trend line shows the relationship between the variables, and the correlation coefficient was calculated.At this point, is worth it to sit back and evaluate if these results make sense. Although this looks great for my hypothesis, one needs to consider if additional factors would have contributed to that strong of a relationship between attendance and the number of home runs per game during this time period. As many who follow baseball know, the popularity of the sport grew tremendously during the 20th century, which could potentially skew the relationship if home runs also increased over this period. To test for this factor, I attempted to isolate the growth in attendance and see if the relationship changed. Looking into the data, the attendance per game peaked around 1991, so I limited the analysis to data from 1991 to the current day, as exemplified below.Removing these data points significantly alters the analysis, with correlation going from very strong to very weak. If the positive correlation were indeed as strong as suggested in the initial analysis, we would have expected home runs have a strong positive correlation with average attendance during this period as well. This hints that it is likely that there were more factors in play during the original period that helped to grow attendance than the number of home runs hit, such as overall population growth, additional teams added, or even ballpark size. So, the question remains – Do Fans Dig the Long Ball?For more information on Schneider Downs’ data analytic service capabilities, contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com, or Andrew Trettel at 412.697.5436 or atrettel@schneiderdowns.com. ### The Stages of Wealth - Wealth Creation This article was originally published in Wedgewood Life magazine and is reprinted with their permission.In our May article, we laid out some basic personal finance concepts including spending less than you make, pursuing a career you are passionate about, and discussing the long-term benefits of home ownership from a net-worth perspective. In addition, we highlighted the typical phases of lifetime wealth development starting with wealth creation, progressing to wealth accumulation, and ultimately the final stage of wealth distribution. This month we will focus on wealth creators.We define wealth creators as individuals beginning to understand basic personal finance concepts and starting to establish personal wealth.  Wealth creators are starting their careers, experiencing increased earnings potential, and trying to adhere to sound personal financial principles. When we work with wealth creators, we focus on the following planning items: Develop an initial high-level financial plan – The creation of a comprehensive financial plan is critical to achieving long-term financial independence. For someone beginning to experience wealth creation, the main focal points of an initial plan include establishing some long-term financial goals.  These goals could include how much to dedicate to my children’s college expenses, whether to buy a vacation home, desired retirement age and spending capabilities, or the need for life insurance planning for the unforeseen. As wealth accumulates, the financial plan will evolve. Over time your plan will include social security planning, including Medicare eligibility and other health insurance options, along with other financial planning variables. The other tangible benefit of establishing an initial baseline financial plan is the ability to reference it in the future when evaluating financial decisions such as how and where to invest additional excess cash flow as income levels increase, contemplating financing options for various expenses, and other financial decisions that will arise as one moves from wealth creation to accumulation. Your savings rate is really what matters, not your income – The below chart illustrates a simple, yet powerful message that wealth creation and longer term wealth accumulation is not about your income level, but about how much money you save. The chart below compares two individuals over a 20 year period – a lower income, higher saver earning $60,000 and saving 15% per year versus a higher income, lower saver making $120,000 and saving 5% per year.(This example assumed no wage inflation and a 5% rate of return.)As you can see, the difference in the annual savings amount is $3,000 (15% of $60,000 versus 5% of $120,000). The aggregate investment balance between the two investors widens over time which is driven by the annual $3,000 savings difference combined with the power of compounding interest at an assumed 5% rate of return. At the end of this 20 year period, the lower income, higher saver has an ending investment balance roughly 1.5 times higher and almost $100,000 larger than the high income, lower saver.In this example we kept the financial variables fairly simple.Although real-life variables will differ, the key concept remains the same – develop a personal financial discipline to increase your savings rate over time instead of spending income increases.The potential long-term financial benefits of an increased savings rate can be staggering. The continuous saving of excess cash flow paired with an investment rate of return is how a person evolves from wealth creator to wealth accumulator.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice.  Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice.  ### Gen Z Charitable Trends Generation Z, otherwise known as iGeneration, represents the quarter of the population born after 1995. In contrast to older generations, Gen Z was born into a world of digital sophistication, and has grown up in the aftermath of the War on Terror, the Great Recession, and changing norms. This has led the generation to be pragmatic and mature, especially as it concerns charitable giving.Gen Z is motivated by making a difference in the world — 60% of them even want their future jobs to have an impact on the world, and just over 1 in 10 hope to start a charity of their own. Twenty-six percent of 16-19 year olds currently volunteer, which is higher than every generation other than Gen X, which has a 28.9% volunteer rate. Additionally, 30% of Gen Z have already donated to an organization.Due in part to Gen Z's close connection with technology and social media, they like to get connected with social issues and humanitarian causes across their social media platforms, enhancing their personal brand and garnering more "likes" in the process. Because Gen Z is so young, much of the volunteering and charitable giving is not only beneficial to their social media popularity, but also for the college essays and applications they must write. Getting involved with charitable organizations supports both of these goals.When it comes to charitable giving for disaster relief, Gen Z contributors were most frequent, with 42.6% contributing to a crowdfunding site and 36.07% giving to a celebrity fundraiser in 2018. The most popular motives for donating to a celebrity's fundraiser were being a fan of that celebrity and trusting them to put the aid toward helping those in need. This lean toward celebrities is indicative of the nature of Gen Z's preference toward social media campaigns and online presence.Gen Z is a unique generation with strong charitable inclinations. Communicating visually through short and compelling content will empower and inspire members of Gen Z to fulfill their goal of making a lasting impact. ### To Comply or Not? Kansas Issues Filing Requirement for Remote Sellers and Marketplace Providers The Kansas Department of Revenue issued Notice 19-04 “Sales Tax Requirements for Retailers Doing Business in Kansas” on August 1, 2019, providing guidance to remote sellers and marketplace providers doing business in Kansas.  The notice is the result of the Kansas legislature’s failure to pass a bill containing economic nexus provisions that the Kansas Governor, Laura Kelly would sign.The basis for the notice is the U.S. Supreme Court’s opinion in South Dakota v. Wayfair, Inc. et al and its ramifications with Kansas law.  Due to the Court’s opinion, the Department indicated that all remote sellers and marketplace providers making retail sales in Kansas are responsible for registering and collecting the sales and/or use tax. Specifically, the notice references K.S.A. 79-3702(h)(1) which states in part:“(F) any retailer who has any other contact with this state that would allow this state to require the retailer to collect and remit tax under the provisions of the constitution and laws of the United States.” Like South Dakota, Kansas is a member of the Streamlined Sales and Use Tax Agreement.  However, unlike South Dakota and other states that have enacted economic nexus provisions, the notice does not provide an economic threshold or safe harbor for small sellers before nexus is established.  South Dakota’s small seller safe harbor appeared to be a significant factor in the Court’s opinion as it provided some protection from undue burdens on interstate commerce which the Kansas notice does not provide.To be compliant with the notice, remote sellers making sales into Kansas, who are not currently registered with its Department of Revenue, are required to register and begin collecting and remitting sales and/or use tax by October 1, 2019.  The Department indicated that they will not enforce the statutory requirements to remote sellers prior to the October deadline. Marketplace providers, however, are encouraged by the notice to contact the Department regarding a possible voluntary disclosure.  Thus, it appears as though the Department may go back to the date of the Wayfair opinion to impose collection responsibilities on marketplace providers. In the meantime, remote sellers making sales into Kansas will have to decide whether to comply or not, with Department of Revenue Notice 19-04 by October 1, 2019. Should you have any questions, please do not hesitate to contact your state and local tax professional.              ### Transportation Industry Struggles with Growing Driver Shortage While the U.S. Census Bureau shows the number of truckers at an all-time high in of 3.5 million drivers in 2017, the last year for which information is available,  American Trucking Association’s Chief Economist, Bob Costello argues that driver shortages remain an issue.  The American Transportation Research Institute ranks driver shortages as the number one issue in their 2018 study of trucking companies.  The American Trucking Association estimates that the transportation industry currently has a shortage of at least 50,000 drivers and foresees that number increasing unless actions are taken.  Mr. Costello was recently quoted in an article in Transport Topics as saying “It’s not that the number of truck drivers has been in a constant decline. It’s just that it’s not growing enough to match up with what has been needed with demand”.   A bipartisan effort has reintroduced legislation in the U.S. Senate and House of Representatives that may alleviate some of the driver shortage in the future.  The Developing Responsible Individuals for a Vibrant Economy (DRIVE-Safe) Act is aimed at changing federal law to allow commercial driver’s license holders under the age of 21 to transport interstate commerce.  If passed the DRIVE-Safe Act would establish an apprenticeship program for CDL holders as young 18.  The program would institutionalize rigorous safety standards with performance benchmarks.  The drivers would have to complete at least 400 hours on-duty time and an additional 240 hours with an experienced driver in the cab.  All trucks used in the training program would be equipped with safety technology that would include active braking collision systems, a video event-capture system, and a speed governor set at 65 miles per hour or below.  These safety technologies will help monitor the performance of the younger drivers to ensure they are meeting safety standards.According to an analysis from the American Transportation Research Institute (ATRI), the driver shortage is likely to become considerably worse in the coming years as the aging workforce retires. The DRIVE – Safe Act, if passed, would help the trucking industry to attract younger drivers that are often lost to other professions because of the lack of opportunity before they turn 21 years old.  ### The Fed Cuts Interest Rate in July - Time to Revisit Your Estate Plan? On July 31, 2019, the Federal Reserve cut interest rates for the first time in over a decade. Although this may be bad news for your savings account, it may be good news for your estate plan. This is because certain popular estate planning techniques become available that do not lend themselves to a high-interest-rate environment.  The first such technique is a grantor retained annuity trust, known in the estate planning world as a “GRAT.” A GRAT is a mechanism whereby a grantor transfers assets to an irrevocable trust and retains the right to receive annuity payments for a predetermined period of time. When the GRAT term ends, the trust assets, and any appreciation in value of such assets, are passed to the beneficiaries free of taxes. However, if the grantor dies during the GRAT term, the trust assets are drawn back into the grantor’s taxable estate, and the benefit of the transaction is lost. A second technique to consider is the sale of assets to an intentionally defective grantor trust, commonly known as an “IDGT.” In this transaction, a grantor sells appreciated assets to an IDGT in exchange for an interest-bearing note for the purchase price. Because the trust is structured as a grantor trust, the gain on the sale is ignored for federal income tax purposes. In addition, if the trust instrument is drafted properly, the grantor will no longer be treated as the owner of the assets, and the assets will not be included in the grantor’s taxable estate. This lack of synchronization within the tax code currently permits taxpayers to enjoy the “best of both worlds” in terms of income tax and estate tax treatment.   GRATs and IDGTs are most advantageous to taxpayers when interest rates are low. While no one can predict exactly how long today’s low interest rates will last, it is probably a safe assumption that they will not last forever. The results of the upcoming election could also determine the fate of GRATs and IDGTs. Proposed legislation put forth by presidential candidate Bernie Sanders would eliminate or greatly restrict the availability of these techniques, and would also dramatically reduce today’s generous estate and gift tax exemptions. Although Sanders’ proposals currently stand no chance of passage, this could change if the Democrats win the presidency and both chambers of Congress. Taxpayers are well-advised to explore these estate planning opportunities sooner rather than later. ### Is the Whole Greater than the Sum of its Parts when Valuing Minority Interests? Can the whole company value be greater than the sum of its parts? The answer is potentially yes in the context of a valuation of a minority interest for estate purposes. A minority interest in a company often lacks control of the company.  The IRS requires a fair market value standard for valuations of interests that are being valued for estate purposes. Under a fair market value standard, a minority interest often has less value than its proportionate share of the business if the holder of the minority interest is not able to exercise the same influence as the control owner.For example, the minority interest holder might not be able to compel a distribution, make financial decisions for the company or decide when it is time to sell the business. Therefore, an investment in a minority interest is reduced by a lack-of-control discount under a fair market value standard because an investor would not pay the same amount for a controlling interest as a noncontrolling interest that lacks decision-making ability. Additionally, minority interests are generally considered to be less marketable than a controlling interest, which means that a discount for lack of marketability might be appropriate as well.Owners of a company can gift minority interests as part of an estate planning process. Let’s use an example of a company worth $1 million in total, owned by a father with three sons. If the father wanted to give 2% of his company to each son, the gifts would be valued at less than the proportionate share of $20,000, due to the fact that a 2% interest would not have control of the business and thus would be less valuable than an interest that had control. Discounts for lack of control and lack of marketability would be determined for the 2% ownership interests based on various company-specific factors.The valuation analyst must review any shareholder/operating agreements to determine the amount of control of the interest, any restrictions on transferring the interest, if a redemption policy exists and the policy for distributions. In addition, the financial performance of the company, the nature and outlook of the company, the historical level of distributions, the quality of the management team, the expected holding period of the interest and any other factors that might affect marketability are analyzed to determine the level of discounts that are applicable to the ownership interest.In this example, assuming a 10% lack-of-control discount and a 25% lack-of-marketability discount for illustration purposes, the value of a 2% minority interest would be $13,500. The father’s 94% interest in the company would be worth $940,000. Adding together that value with the value of three separate 2% interests ($940,000 + $13,500 + $13,500 + $13,500 = $980,500), results in a value which is less than the total company value of $1,000,000, on a controlling, marketable basis. Thus, in this instance, the whole company value is greater than the sum of its parts when valuing minority interests.The IRS is known to challenge the amount of these discounts if the discounts applied to the minority interest are not properly supported. Schneider Downs has significant experience in preparing valuations of minority interests and supporting these discounts.For more information, contact Schneider Downs or visit the Our Thoughts On blog.  ### Manufacturers are Targets for Cybercriminals - How to Thwart an Attack Manufacturers are targets for cyber-attacks. How to thwart an attack. As a manufacturer, the common goal is to boost efficiency and control costs, while driving growth. When it comes time for devising a plan to achieve this common goal, often, technology will arrive front and center.Technology can be a great tool when it comes to implementing automation into operations. In the current tight labor market, automation can aid in reducing expenses by limiting the number of employees required. It can also lead to improved quality through a reduction in human error. Additionally, technology can play an important role in the prevention of cyber-related crimes.50% of U.S. manufacturers experienced data breaches over the past 12 months.As cyber-related crime rates continue to rise, cybersecurity has become less about defending against hypothetical attacks and more about defending against attacks that are sure to come. According to a survey conducted by the Alert Logic cybersecurity firm, approximately half of all manufacturers say that they have suffered some type of cyber incident. However, only 24 percent of the respondents noted that their existing cybersecurity process prevented any time of appreciable impact.Aside from money, hackers target intellectual property, as well as attacks focused on physical disruption to a company’s operations. These attacks on intellectual property and disruptions of operations can result in material damages with high repair costs and significant downtime.Hackers look for manufacturers with weak IT defenses.Additionally, cybercriminals have shifted their focus from organizations rich in sensitive personal data, to organizations with identified IT weaknesses. As such, it is crucial that manufacturing executives make an effort to push cybersecurity up the corporate priority ladder.Per Accenture’s global survey, over the past five years, security breaches have increased by 67%. However, per Juniper Research’s Cybercrime & the Internet of Threats 2018 report, cyber security spending will only increase by 9% on average per company, per annum. According to those metrics, it’s no wonder that 50% of respondents to Alert Logic’s survey reported having experienced data breaches in the past year.How do manufacturers protect themselves from cyber-related crimes? The easy answer is to encourage the adoption of new technology. Often, human error or negligence can be the root cause of majority security breaches. Encouraging the use of intelligent technology can help to prevent an entryway for cyber attackers. However, organizational cybersecurity requires more than just the latest technology.Even the most technological advanced security cannot prevent a cyber-breach if the people in the organization are not protective. Therefore, organizations must invest in influencing their employees’ attitudes and beliefs around cybersecurity. In order to become resilient to cybercrimes, you must combine technology with organization investment. After all, it only takes one mistake or poor decision by an employee of an organization to open up the system to cyber threats.The most important takeaway for the manufacturing industry is to realize that the industry has experienced an increased likelihood of becoming the target of a cyber-attack. In the past, the industry was able to operate without much investment in their cybersecurity practices. However, this is no longer the case. It is crucial that the industry as a whole become proactive in protecting against the attacks that are sure to come.How can Schneider Downs help? Schneider Downs has helped manufacturers become more secure by identifying issues in their technology environments before the hackers do, through services like our Penetration Testing. We’ve also helped manufacturers recover from and investigate minor to significant breach issues. If you would like Schneider Dows to help you identify your cyber risks, please reach out to our cybersecurity practice leader Dan Deskohttps://www.nationaldefensemagazine.org/articles/2019/6/14/viewpoint-manufacturing-and-cybersecurity---know-the-essentialshttps://www.thesslstore.com/blog/80-eye-opening-cyber-security-statistics-for-2019/ ### Ohio Truckers See Increases in State Fuel Taxes  Truckers and other drivers in Ohio saw an increase in state fuel taxes earlier this summer when the Ohio tariff on gasoline increased 10.5 cents (to a total of 38.5 cents per gallon) and the tax on diesel fuel increased 19 cents, to a total of 47 cents per gallon. Lawmakers rejected a request by Governor Mike DeWine to index the fuel tax to inflation in future years.The increase is expected to raise over $865 million per year, which will be split 55%/45% between the Ohio state government and local municipalities. The state constitution mandates that motor fuel taxes can only be used for the maintenance and construction of roads and bridges.The tax is in addition to federal fuel taxes of 18.4 cents and 24.4 cents per gallon of gasoline and diesel, respectively. The federal amounts have not changed since 1993, though the American Trucking Associations supports increasing the federal tax rate by five cents per year for four years to help provide permanent funding to address the nation’s infrastructure maintenance needs.For comparison purposes, the following chart contains fuel tax rates for neighboring states:                                Gas Tax                               Diesel Tax                               Cents per Gallon              Cents per GallonIndiana                     42.9 cents                          50 centsKentucky                  26 cents                             23 centsMichigan                 44.1 cents                          43.18 centsOhio                         38.5 cents                          47 centsPennsylvania           58.7 cents                          75.2 centsWest Virginia          35.7 cents                          35.7 centsThat translates to an additional $57 in fuel tax for the average tractor that holds 300 gallons of diesel fuel in the tank, bringing the total to $141 of Ohio fuel tax per fill-up. Also, with the increase, the average family who drives 12,000 miles in a vehicle that gets 25 MPG will pay an additional $50 per year. ### The 2019 Form 1040 Facelift Next year, taxpayers can expect to see their Form 1040 to be different than the postcard-size Form that was introduced as a result of the 2017 Tax Cuts and Jobs Act. The postcard-size Form 1040 was originally designed to "simplify and expedite filing tax returns," according to Treasury Secretary Steven Mnuchin. However, there have been many complaints about the layout of the "simplified" Form 1040.Before the new Form 1040 was introduced, the old Form 1040 consisted of two full sheets that included all of the taxpayer's information. The postcard-size Form 1040 shifted some line items from the old form's two-page format onto six additional schedules. Each of these new schedules uses its own separate page to calculate the taxpayer's additional income, credits, deductions and taxes. This resulted in the Form potentially reaching eight pages, depending on the taxpayer's situation. The additional schedules have caused taxpayers and their advisors to flip back and forth between these pages, yielding more confusion and time spent to understand their Federal income tax liability or refund.The IRS is currently redesigning the 1040 due to the concerns and complaints. On July 11, 2019, the IRS released a draft of the Form, which resembles the Form 1040 issued prior to 2018. The draft includes a two-page baseline form and three schedules instead of six. A final draft of the Form 1040 is expected to be posted later this summer, according to the IRS website.The following are changes between the 2018 Form 1040 and the draft released by the IRS:Signatures: Signatures are now on the second page. Tax preparers were concerned that their signature was not on the same page as the taxpayer's financial information. This created an opportunity for others to commit fraud and cause other issues.Filing Status: There is now a space to enter the name of the spouse if the filing status box is checked as married filing jointly or separately.Health Care Coverage: This checkbox has been removed since health care coverage is no longer mandatory for 2019.Standard Deduction: The standard deduction amounts have been moved back to page one.Tax Credits: The previous version of the Form 1040 consolidated the spaces for several tax credits into a line or two. The Earned Income Credit (EIC) and the additional child tax credit have been returned to page one of the Form.Income Reporting: Schedule D used for capital gains is now moved back to page one of the form.For more information about this, contact Schneider Downs. ### Schneider Downs & Co., Inc.’s Construction Practice Nationally Ranked In its inaugural ranking of construction accounting firms, Construction Executive magazine ranked Schneider Downs as having the 21st nationally ranked construction practice.  Headquartered in Pittsburgh, PA with offices in Columbus, OH and Washington, DC; Schneider Downs provides a variety of professional accounting, consulting and business advisory services such as audit and tax services, cybersecurity, technology, wealth management and corporate finance to over 100 construction and real estate clients annually. “We’re very proud of the practice we’ve built within the industry, and we appreciate the trust of the clients who are the reason we’re on that list.” – Mark DiPietrantonio, tax shareholder and construction industry practice leader.Now in its 17th year of publication, Construction Executive is the leading trade magazine about the business of construction. In its August 2019 issue, CE published a comprehensive ranking of The Top 50 Construction Accounting Firms™ featuring breakouts and analysis accompanied by an article in which leading accounting experts discuss their construction clients' most pressing business concerns. To determine the ranking, CE asked hundreds of U.S. accounting firms with a construction practice to complete a survey.Data collected included:1) 2018 revenues from construction practice;2) number of CPA's in the construction practice;3) percentage of firm’s total revenues from construction practice;4) number of construction clients in 2018;5) number of office locations with a construction accounting practice;6) number of employees with CCIFP certification; and7) year construction accounting practice established.The ranking was determined by an algorithm that weighted these factors in descending order of importance. ### 403(b) Universal Availability Requirements under Scrutiny by IRS A qualified 403(b) plan must satisfy the universal availability requirement with respect to elective deferrals. That means that all employees of the employer must be eligible to make elective deferrals if any employee has the right to do so, with certain exceptions.While exclusion of employee classes or groups is not allowed, 403(b) plans are able to exclude the following types of employees: Employees who normally work less than 20 hours per week Students performing services described in IRC 3121(b)(10) Non-resident aliens described in IRC 410(b)(3)(10) Employees who are eligible to make elective deferrals under another qualified plan sponsored by the same employer For the less than 20 hours per week exclusion and for the student exclusion, if any employee who falls under one of these exclusions has the right to make elective deferrals, then no employee who falls under that exclusion may be prevented from making elective deferrals.Unlike a plan that is subject to IRC 401(a), a 403(b) plan may not exclude employees based on a generic classification such as: Part-time Temporary Seasonal Adjunct Professor Collectively bargained employee How to fix a mistake: To correct any universal availability failures existing in your 403(b) plan, you should provide each improperly excluded eligible employee with the opportunity to participate in the plan in the current and future years. In addition, you may be required to make a contribution to the plan for each eligible employee for the time that the employee was improperly excluded from the 403(b) plan.The IRS has been active in examining plans that may have employees who are excluded from participation in keeping with historical or industry practices. Common themes would be colleges with adjunct or seasonal professors or coaches; or hospitals with on-call nurses.We advise 403(b) plan sponsors to duly review classes of employees or individuals who are not being given the opportunity to participate in the plan to make sure the plan is operating in accordance with IRS guidelines for universal availability.For more information or questions about 403(b) Plans and Plan governance, contact Schneider Downs.   ### The Stages of Wealth This article was originally published in Wedgewood Life magazine and is reprinted with their permission.Although everyone’s situation is different, most people will go through various stages of wealth development throughout their lifetime.  Over the next several articles, we will discuss the following stages: Creation – Individuals begin to understand basic personal finance concepts and start to create personal wealth.  They are starting their careers, experiencing increased earnings potential, and trying to adhere to sound personal financial principles. Accumulation – People transition past initial wealth creation toward greater accumulation via more established careers and progression towards peak earnings potential.  At this stage, you are starting to contemplate when, how, and what retirement might look like. Distribution – During this final stage you may be enjoying retirement, spending time with family or enjoying your hobbies.  You begin to think about your legacy within your family and community, and other ways that your wealth could impact others. We will devote future articles to creation, accumulation, and distribution, but in this article, we highlight a few key concepts that set the foundation for your overall wealth development strategy. Spend less than you make. – While a very basic concept, several studies have illustrated that roughly half of Americans spend more than they earn each month. According to the Association of Young Americans and AARP, 50% of Americans have credit card debt, more than 40% hold a mortgage or car loan, and over 30% are strapped with student debt. Typical reasons for spending beyond your means include “keeping up with the Joneses”, lack of awareness on where your money is spent each month, or living for the moment even if you can’t afford it. While these reasons for spending may seem valid, the first step to building your wealth is finding a way to live below your means and creating free cash flow to invest for your future. Find your passion. – Find a career you enjoy and not just a job. This will have a trickle down impact to your financial affairs. You are more likely to experience overall happiness with life and exhibit passion for your profession. This passion for your profession may result in higher earnings potential over the course of your career, and provide opportunities to accelerate future wealth creation. How much should I save at the start? This is a common question received from someone at the onset of their career. Most of the time people are looking for a simple percentage to save inside their employer provided 401k account. The easy answer is simply just start saving something initially and then save until it hurts.  First, you should make sure you have three to six months of monthly expenses in cash or cash equivalents for unanticipated future expenses. Then, save an amount every month that reduces your free cash flow to $0.  Discover the path to home ownership and its impact on long term net worth. – The last core concept is finding a path to home ownership. A 2016 Federal Reserve study showed that the average net worth of a homeowner is roughly $1,034,000 or 11x greater than an average renter’s net worth of $91,000. The typical path to ownership includes coming up with a realistic budget, saving for a down payment, and exploring mortgage options. These personal finance concepts should serve as the building blocks to your future wealth creation. While simple in nature, they are powerful in action, and will establish a strong base for your financial future.Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice.  Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice.  ### New Standards in SSFS 1 Intend to Improve the Consistency and Quality of Forensic Services Black’s Law Dictionary defines the term forensic as “used in, or suitable to, courts of law or public debate.”[1]  Forensic accounting services generally involve the application of specialized knowledge and investigative skills by a member of the American Institute of CPAs (“AICPA”) to collect, analyze, and evaluate certain evidential matter and to interpret and communicate findings (forensic services).[2]Investigative and forensic accounting services are handled by a specialized group of individuals from Schneider Downs who have many years of experience with engagements that might be “unusual”.  These specialists include professionals who have obtained accreditation as Certified Fraud Examiners with the Association of Certified Fraud Examiners (“ACFE”) or have earned the Certified in Financial Forensics designation with the AICPA.The ACFE and AICPA have professional standards for their members who perform forensic services, and Schneider Downs has routinely followed those professional standards regarding forensic accounting engagements.  Recently, the AICPA has released Statement on Standards for Forensic Services No. 1 (“SSFS 1”) to provide more authoritative guidance to AICPA members who provide litigation and investigative services.Annual growth in forensic accounting industry revenue was 4.8% from 2014 to 2019 and is projected at 2.5% annual growth from 2019 to 2024[3].  With the increasing demand for forensic accounting services, the new standards in SSFS 1 are intended to improve the consistency and quality of forensic services across the profession.SSFS 1 defines forensic services for “litigation” and “investigation” as follows: Litigation is an actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator, or arbitrator in connection with the resolution of disputes between parties. The term litigation as used herein is not limited to formal litigation but is inclusive of disputes and all forms of alternative dispute resolution. Investigation is a matter conducted in response to specific concerns of wrongdoing in which the AICPA member is engaged to perform procedures to collect, analyze, evaluate, or interpret certain evidential matter to assist the stakeholders (for example, client, board of directors, independent auditor, or regulator) in reaching a conclusion on the merits of the concerns. Allegations or issues of fraud are often core components of a forensic accounting engagement.  An important standard added by the AICPA through SSFS 1 clarifies and confirms that the ultimate decision regarding the occurrence of fraud is determined by the trier of fact and, therefore, an AICPA member performing forensic services is prohibited from opining regarding the ultimate conclusion of fraud.  An AICPA member may provide expert opinions relating to whether evidence is consistent with certain elements of fraud or other laws based on objective evaluation.  This standard in SSFS 1 regarding the occurrence of fraud is consistent with the professional standards of the ACFE.Please contact Schneider Downs forensic accounting professionals if you discover or suspect a financial discrepancy in your business or organization.  Our experienced professionals will help in identifying if there is a discrepancy and quantify the loss.  [1] Bryan A. Garner, ed. Black’s Law Dictionary, 10 ed., St. Paul, MN: Thomson West Publishing Co., 2014. [2] Statement on Standards for Forensic Services No. 1, AICPA. [3] IBISWorld Industry Report-Forensic Accounting Services in the US. ### Is Your Royalty Check Correct? Have you received your oil and gas royalty check and questioned the accuracy of the production, price or expenses listed on the production statement?  If you answered yes to the question, you may want to consider a royalty audit.  In the last several years, there have been unprecedented profits in the oil and gas industry, and the royalty owner could be at risk due to the operator failing to pay the correct amount.  Operators make incorrect royalty payments due to numerous reasons that range from erroneous data entries to failure to properly input correct covenants from the lease to purposely withholding payments. Operators have a responsibility to behave as a “reasonably prudent operator”; however, at times they fail to obey many covenants in their leases, operating agreements and unit agreements, which may result in underpayments to royalty owners.  What happens when the operator fails to act responsibly and underpays on your royalty?  You could be out thousands or millions of dollars and your property is stolen. Common issues identified: Minerals sold to a related party at less than market value Unallowable costs charged to the production, transportation and/or sale Producer and lease requirements Improper working interest owner percentage calculations Mathematical or data entry errors Pooling computation errors Natural gas, oil, natural gas liquids or other byproduct volumes Legal interpretations of the lease How can Schneider Downs help?  Most lease agreements contain an audit clause that allows the royalty owner to have an audit performed to verify the accuracy of the royalty payments and verify that your payments are correct.  Through our procedures, we will vouch production, substantiate prices and verify expenses charged are in accordance with the lease agreement. For more information about royalty audits, contact Schneider Downs. ### Houston, We Have a Problem Innovation Series, Part #3 This is the third post in a series on innovation. The series starts here: A Valuation of Innovation.Innovation requires taking smart risks.The natural tendency is to select viable, or profitable, ideas early on in a process, but these are not always the ideas that will have the most impact. A team with an open, creative mindset will be able to take some remarkable ideas and make them feasible, but limiting the pool of ideas to the ones that are immediately feasible often removes the ideas that could be the most remarkable.Unquestionably, we must analytically assess ideas and identify potential constraints, but only after focusing on the possibilities and considering ways to overcome any issues. This process will often include some ideas that don’t work out.Therefore, the next habit I will discuss in this series is to cultivate a mindset that allows a willingness to fail. Edison is known for attempting to invent the lightbulb 10,000 times before succeeding. James Dyson made more than 5,000 prototypes before launching the Dyson vacuum. Innovation is built upon actively trying new things, but we must be comfortable knowing that not every idea will be a home run at the first swing of the bat.Iterate. Iterate. Iterate.Another principle of human-centered design which goes hand-in-hand with a willingness to fail is iteration. Iteration is the act of repeating a process with the aim of approaching a desired goal.My most recent experience with iteration involved trying to shoot homemade bottle rockets with my kids in the backyard. We had multiple iterations. In our first attempt, our baking soda packet was too fat to slip into the bottle. In our second attempt, we realized the cork was too small to seal the opening. The third time, the bottle fell over so we decided to create feet for the bottom of the rocket. Eventually, I was satisfied that our prototype was nearly perfect. (Of course, by that time, the whole thing had devolved into the kids having a squirt gun battle.) But the point was, each failure taught something new and brought us closer to a successful launch.The ProcessWhether you are currently working on the development of a product, the improvement of a service or the design of a process, consider implementing the following steps. Be curious and open-minded at the beginning of a project and select ideas based on their desirability first, and then determine if there are ways to address issues of viability. Urge constructive feedback. Seek out people with different perspectives and different backgrounds that might add a new dimension to a problem. Prioritize and select potential projects based on a consideration of both significance and difficulty. (Consider familiarizing yourself with the human-centered design tool called an Importance/Difficulty Matrix.) Engage in disciplined experimentation. Test ideas early when it is quicker and cheaper. Iterate. Learn from each attempt and adjust the game plan. In conclusion, an expectation that failures are learning opportunities and iterations are valuable stepping stones are foundational practices for innovation.Jennifer Doering provides management advisory services, such as business valuation and compensation consulting, and would be happy to discuss any future needs or questions you have in these areas. ### Data Analytics and Baseball: the “Moneyball” Approach Data analytics offers potential benefits to practically every company and plays a huge role in obtaining the information organizations need to succeed. Specifically, data mining and predictive analytics guide organizations in making business decisions for which there are conditions of limited certainty, for assessing and detecting fraud, and for predicting outcomes.Predictive analytics and data mining use algorithms to discover knowledge and find solutions. Organizations need to constantly take advantage of current data, and seek out new datasets and metrics to continue evolving, all the while analyzing the information from different angles to stay competitive. Predictive analytics assist organizations in optimizing marketing productivity, gaining a competitive advantage, understanding customers/clients better, locating areas of attrition and identifying new revenue opportunities.Let’s put this into perspective using baseball. In the movie “Moneyball,” based on Michael Lewis’ bestselling book, “Moneyball: The Art of Winning an Unfair Game,” Oakland Athletics’ General Manager Billy Beane utilized sabermetrics to evaluate his potential roster by performing data mining on hundreds of individual baseball players, identifying statistics that were highly predictive of how many runs a player would score, a number not typically among those valued by baseball scouts in the day. In doing so, Beane sought lower-cost ballplayers with high on-base percentages, as opposed to high-priced home run hitters with high batting averages. His theory was that players who have a higher on-base percentage would be more valuable, even though they may hit fewer home runs.The efforts proved remarkably effective. Beane was able to utilize predictive analytics to develop a highly successful team despite operating under a tight budget. Over the course of subsequent years, the Athletics averaged 95 wins per season, captured four division titles and made five playoff appearances. They even managed to string together a 20-game winning streak during one of those campaigns.Beane’s story resonates the importance of data analytics today, as well as the business advantage it can give an organization. Companies no longer have to blindly trust their gut feeling, but can now make decisions based on real data after considering insights into their customers, market conditions and more. Data analytics is increasingly being welcomed to various industries, benefiting companies by offering them different sources of information and unique perspectives to guide them in making better decisions.Schneider Downs can help with your data analytic needs and offer data-driven solutions. For more information, contact Schneider Downs. ### Reversing the Rise of Hunger among the Homeless, One Lunch at a Time What may seem like just another corner that we pass through on our route to work, is actually a corner which hides a secret that the blinded eye may never see.  The corner of Stanwix Street and the Boulevard of the Allies is the beacon of hope for hundreds each and every day.  This corner is the home of the Red Door.Saint Mary of Mercy Church, founded in 1870 and located in the heart of downtown Pittsburgh, provides several kinds of assistance to the people in need within the city.  Their oldest assistance program is the Red Door Program.  This program, which began during the Great Depression, provides a bag lunch to those looking for a meal.  These lunches are distributed every day of the week, except Sundays, from 10:30 - 11:30 a.m.  The Red Door Program also provides warm soup, pastries, and breads throughout the fall/winter months, as well as popsicles and juices in the summer/spring months.  The lunches are placed in brown or plastic bags where those in need can grab-n-go.If it weren’t for the dozens of volunteers who spend their mornings preparing the lunches, those who wander the streets of Pittsburgh would have nowhere to turn for their meals.  The meal they are provided with at The Red Door may be the only meal they eat for the whole day, so the role the volunteers play each and every day is crucial.On Tuesday, August 6, 2019, dozens of employees here at Schneider Downs were given the opportunity by the Community Impact Committee to take our turn in making an impact in the community.  Starting at 7:30 am, sandwiches were prepared, cookies and snacks were packed, and bags were filled until over 175 complete lunches were ready to be delivered.  At 9 am, one intern, five employees, and two Schneider Downs family members arrived at The Red Door.  With lunches in hand, we were warmly welcomed by the five volunteers already preparing lunches for the next day. Red Door Coordinator, Heidi Potter, gave a tour and overview of The Red Door’s Mission before opening the door to those eager for food.  Many had begun lining up at the door over an hour before the door opened at 10:30 am.  After a moment of prayer, the sidewalk was filled with smiles from both the volunteers and those receiving their meals.  A simple “Hello” evoked conversations about life, family, hardships, and miracles that those who were struggling faced on a daily basis.  While deeper connections were forming, one of the regular and wise guests at The Red Door, whose name is Sarah, stood back and took in all the efforts that were being made by the Schneider Downs volunteers.  Sarah has always said, “We see miracles around us every day.” As she looked at the helpers before her that morning she said, “All here are miracles and they give us hope.” The Red Door continues to impact not only the lives of those in the community who are struggling, but also the lives of those who volunteer.  When the Schneider Downs volunteers returned to the office many were asked how the experience was.  One phrase seemed to be the common response; “The experience was eye-opening.”  It truly was an example of living our Firm Mission Statement…Working together every day to make our Firm, Clients, and Community better!!!If you would like to learn more about The Red Door or are interested in donating or volunteering, please contact any member of the SD Community Cares Committee or Ms. Heidi Potter, Red Door Coordinator, at reddoor@stmaryofmercy.org. ### Students’ Data Exposed by Pearson Hack In the same week that Capital One disclosed a data breach that affected more than 100 million individuals, London-based Pearson PLC announced a warning of its own. According to an article in the Wall Street Journal, a breach at the educational software giant affected more than 13,000 school district and university accounts, meaning that millions of records might be involved. The breach initially occurred in November 2018, but Pearson only learned about it in March 2019 when they were informed by the FBI, meaning the violation went undetected for about five months. The WSJ article noted that Pearson has been increasing its focus on digital services lately, and that data theft is often an unintended consequence of educational companies shifting to digital products. Details surrounding how and who performed the attack are still unknown. What we do know is that this delay in breach notification might cause serious ramifications with the EU’s General Data Protection Rule (GDPR), which requires organizations to notify affected parties within 72 hours of identification of a breach. Information accessed contains names, dates of birth and email addresses. The company believes that student data was not misused and that Social Security numbers and other financial information were not accessed. While Pearson is offering the standard complimentary credit monitoring services to affected victims, we’re also recommending consumers take advantage of free “security freeze” services. As a current college student, this breach is particularly concerning, considering its potential affect on my information. After all, this isn’t a failure on students’ part, but the failed responsibility of a third party used by many educational institutions. Furthermore, increased dependency on such third parties is causing organizations everywhere to struggle to gain assurance that their data is secure. To identify serious issues like these sooner, more preventative measures need to be put in place. Therefore, regular security audits and penetration tests of all assets, including cloud infrastructure, are highly recommended. If all or part of your business relies on a third party, do you have the proper oversight to ensure that your and your clients’ data is safe? For help with oversight, risk mitigation, risk assessment and cybersecurity services, reach out to us at 412-261-3644 or contactsd@schneiderdowns.com. ### Revenue Recognition: GAAP vs. IFRS: What this Means for Your Company Accountants in America are currently under pressure to comply with Accounting Standard Update 2014-09, “Revenue from Contracts with Customers,” and Accounting Standard Codification (ASC) 606, as released by the Financial Accounting Standards Board (FASB) in their convergence project with the International Accounting Standards Board (IASB) to clarify the principles for revenue recognition and to develop a common revenue standard in the United States and internationally.While working towards convergence, U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) still diverge enough to materially affect the financial statements. Companies who have entities that report locally in U.S. GAAP and IFRS should be aware of these differences and the impact to their consolidated financials.Both ASC 606 and IFRS 15, “Revenue from Contracts with Customers,” operate off of the core principle that an entity is to recognize revenue that represents the transfer of a promised good or service to another party at an amount that the entity deems appropriate for the exchange. Both standards also apply this principle with a five steps process: Create and identify a contract with the customer. Identify the performance obligations required by the contract. Set a price for the transaction. Allocate this set price to each performance obligation. Recognize the revenue at the satisfaction of each performance obligation. Although the adoption of these steps has converged many aspects of GAAP and IFRS, there are some differences that separate the two revenue recognition standards. One practical expedient permitted under ASC 606 allows for an election to recognize all revenue at the transfer of control to the customer. Thus, any shipping and handling activities that occur after the customer obtained control of the entity’s good or service can be treated as a fulfillment cost; separate from the original performance obligation. If the practical expedient is not elected, these fulfillment activities are treated as a part of the entity’s performance obligation, and revenue recognition is deferred until the obligation has been satisfied. Since IFRS 15 does not permit for this practical expedient, IFRS entities could be recognizing revenue at a slower rate than U.S. entities.Another policy election under U.S. GAAP is the presentation of sales tax and other similar taxes. ASC 606 allows companies to elect to exclude sales tax and certain other taxes from the measurement of the transaction price in step three above. If a company reporting under U.S. GAAP decides to make this election, the company then must consider the fact that IFRS does not permit for the same election. Therefore, transactions reported from entities subject to IFRS could carry a different value.One important point to note is that IFRS 15 permits a practical option for companies to elect either the full or modified retrospective approach for converting to the new revenue recognition standard. The full approach restates financials as if IFRS 15 has always been applied; whereas the modified approach reports a cumulative adjustment at the time of conversion. Under ASC 606, entities must adopt using the full retrospective method by applying the recognition methods to all contacts that are not considered complete at the first day of the earliest period presented.In order for a revenue contract to be recognizable, both the FASB and IASB approved a collectability threshold that must be met. This threshold requires that entities must determine if the collectability of revenue is “probable” before recognizing it. However, IFRS and GAAP both provide different definitions for the term “probable” in this context. GAAP defines “probable” as if the future events are likely to occur. IFRS defines “probable” as if the future events are more likely than not to occur. This subtle difference remains because changes in this definition would affect more than one standard for both GAAP and IFRS.The reversal of impairment losses has also been an area for differences in IFRS and U.S. GAAP. Under IFRS 15, impairment losses taken on contract assets (such as the recoverable costs of obtaining a revenue contract, unbilled receivables, etc.) must be reversed when the impairment conditions no longer exist or have improved. However, IFRS 15 permits an upward reversal of the contract asset’s value that would have been determined, net of any amortization, if no impairment had been previously recognized. Under GAAP, no such reversal for impairment losses is allowed.There are also some other less common differences between the two revenue recognition standards that are beyond the scope of this article. IFRS 15 was effective January 1, 2018 and ASC 606 has staggered effective dates for U.S. public and nonpublic companies.For more information concerning revenue recognition under IFRS and U.S. GAAP and how the standards may affect transactions in your domestic or international business, please visit the Schneider Downs “Our Thoughts On” blog or email us at contactSD@schneiderdowns.com. ### The IRS turns its focus to cryptocurrency On July 26, the Wall Street Journal reported that the Internal Revenue Service has mailed letters to over 10,000 cryptocurrency holders warning that those who fail to report income and pay tax on cryptocurrency transactions may be penalized. IRS Commissioner Chuck Rettig has stated that taxpayers should take the warnings “very seriously,” as the IRS is expanding its regulatory focus in this field.Cryptocurrency is a form of virtual cash that allows payment to be sent online from one individual to another, while circumventing traditional financial institutions. Unlike paying online with a credit card or other traditional means of payment, cryptocurrency is based on underlying “blockchain” technology. Blockchain is a public ledger that records every cryptocurrency transaction. Blockchain in itself is often considered to be safer than traditional money transfers, because it can document, trace and verify the currency used in every transaction. Cryptocurrency has been largely unregulated thus far because it is so unique, complex and difficult to define.Cryptocurrency transfers are anonymous, so they are frequently used to fund illicit activities. However, cryptocurrency is also in finite supply, so it is often used as a form of investment property rather than as the virtual cash it was intended to be.Thus far, it appears that the most prevalent legal use of cryptocurrency is as an investment, and the IRS has made clear that it intends to tax it as such. Further regulation from the IRS is certain, but details are yet to be released. If you currently hold cryptocurrency or have in the past, we encourage you to contact our office for up-to-date guidance regarding this dynamic new currency. ### ERISA and Non-ERISA, Options for Owners Unemployment remains at an all–time low! Which is great for our economy, but it also means employees hold all of the cards. Employers are constantly trying to find ways to differentiate themselves when recruiting for top talent.  We provide health insurance! And dental! And vision! And a 401(k) match!...... and that is the very minimum of employee expectations.  But wait there’s more! We now offer an additional retirement savings plan! Yes, there are additional options beyond the “old fashioned” pension plans and 401(k) plans to attract top executives to your company.Non-ERISA plans provide many benefits, but they come with some risks as well. We’ve broken down the key pros and cons to consider below:Benefits: No IRS limitations on contributions Employer can choose who participates and who doesn’t No DOL compliance testing required No Vesting requirements Employee is not taxed until distribution is taken Compromises: Tax deduction for Company comes later when employee takes distribution Assets and liabilities are on the books of the employer and are not protected from creditors Numerous plan design options are available to employers wishing to adopt a nonqualified plan. If you would like to design a plan that fits your Organization’s needs, contact us!  ### PUC Distributes Almost $252M in Impact Fees In late June, the Pennsylvania PUC (Public Utility Commission) released detailed data on impact fee revenue generated in 2018. The past year marked the largest distribution to date, close to $242.9 million. Additionally, $8.8 million is being distributed to areas where producer impact fees had been withheld due to ongoing litigation. The total for 2018 – close to $252 million – is over $42 million more than the prior year. In total, close to $1.7 billion has been distributed to communities across Pennsylvania over the past eight years.The increase from 2017 was primarily driven by an increase in the number of wells in Pennsylvania paying the impact fee (from 8,518 to 9,560). Year over year, the price of natural gas remained relatively consistent and did not impact the well fee calculations. In 2018, Range Resources, EQT and Cabot made the largest producer payments, totaling more than $77 million.Washington, Susquehanna and Bradford received the top benefits across all Pennsylvania counties in 2018. Center, Morris and Amwell townships were the top receiving municipalities during the year. Additional details can be found on the PUC's Act 13 website. ### Dear Diary Innovation Series, Post #2 This is the second post in a series on innovation. To see the first post in the series, follow this link: A Valuation of Innovation.Innovation can increase the pace of change. Consider that roughly half of the companies within the Fortune 500 in the year 2000 have either been acquired, merged or have declared bankruptcy. Certainly, there are multiple market forces that play a part in this outcome. However, this trend testifies to the realities that disruption can happen quickly and innovation is a factor that cannot be ignored.To innovate or not to innovate: is that even a question?In my first post, we noted examples of innovative companies that have helped to change the landscape as we know it today. We can also look back on companies that did not innovate. For example, Polaroid was riding high when it developed instant photography, but missed the boat on digital cameras. Borders, which once employed nearly 20,000 people in its bookstores, made several missteps that contributed to the company’s downfall. Among those failures was a decision to forego an online bookselling capability on its own website and misreading the importance of entering the e-book market, like Amazon did with the Kindle and Barnes and Noble did with the Nook. Blockbuster, of course, used to be the market titan in the movie rental industry, but failed to transform its business model from brick and mortar stores to mail order rentals and later, to streaming.These companies, among others, provide a warning. We cannot rest on our laurels, our past successes, and assume that continuing along in the same way will be the recipe for sustained success. We need to be alert to changes in the marketplace and the needs of our customers. We must be attentive to the impact of technology on today’s marketplace, as well as consider the future opportunities that will arise as a result of emerging technologies such as cloud computing, big data applications and artificial intelligence.There are moments when innovation can change the course of a company and can sweep aside entire industries. Of course, innovation can have beneficial effects that are less dramatic. We can, for instance, use the tools of human-centered design to refresh a weekly planning meeting or prioritize a list of projects. It is important to consider how we might spur innovation within our businesses, communities, and indeed, within our very homes.This series looks at habits that cultivate an innovation mindset.We will begin by discussing one of those habits today: journaling. There are many techniques in human centered design, and different techniques are used in different situations. Journaling can be a habit that is quite versatile. Dual Nobel Prize winner Linus Pauling once said, “The best way to have a great idea is to have a lot of ideas.”Journaling is a great way to turn on the spigot of ideas. Grab a notebook and start making lists; perhaps start with ten ideas at a time. Flipping through my journal, recent lists include how to more effectively present ideas at work and how to encourage my kids to read more.Ideating is a like a muscle—the more we do it, the stronger we become! It is important to note that brainstorming should focus on the quantity of ideas rather than the quality of ideas. Also, try to limit the brainstorming timeframe, say 5 minutes or so. The idea is to gather as many ideas as possible in short bursts of creative concentration. Additional analysis can be done later to evaluate and prioritize which ideas to pursue, so don’t get bogged down in nixing ideas during the brainstorming phase—not only will you divert energy away from idea creation, you may prematurely discard an idea without fully realizing its possibilities. As Albert Einstein once said, “If at first the idea is not absurd, then there is no hope for it.” Who wants to argue with Albert Einstein?Jennifer Doering provides management advisory services, such as business valuation and compensation consulting, and would be happy to discuss any future needs or questions you have in these areas. ### A Valuation Analyst’s Work is More Than Just “BS” (Balance Sheet) Generally Accepted Accounting Principles (“GAAP”) were developed with the purpose of benefiting the various stakeholders of a business (e.g., creditors and shareholders) by ensuring that the same financial reporting methods are used consistently by all companies. For example, GAAP financial statements would help a bank determine a business’s ability to make interest and principal payments on a loan. GAAP are always being updated to help financial statement readers better understand the financial condition of businesses.However, the value of an asset listed on a balance sheet prepared in accordance with GAAP might be much different from the fair market value of that asset.1 The three examples below describe situations when the fair market value of an asset might be much different than its GAAP, or book, value.Consider a company with valuable internally developed trademarks, patents and other intellectual property (“IP”) that have been developed and supported over many years through research, development and advertising. The IP allows the company to enjoy strong market share and earnings margins compared to its competitors. However, when preparing the company’s financial statements in accordance with GAAP, any expenses associated with developing this IP would be expensed in the period incurred, and would thus not be recorded on the balance sheet. Under GAAP, IP assets would only be recorded on the balance sheet when they are acquired from a third party, as opposed to being created internally. Internally developed IP assets can often represent a large portion of a business’s total value, but a GAAP balance sheet would miss this important piece of a business’s “value puzzle.” Consider a private company, “company A,” that owns a 20% investment in another private business, “company B.” Company A records the initial investment in company B on its balance sheet at cost in accordance with the Equity Method of accounting, which is consistent with GAAP. Each year, company A’s share of income and loss from company B acts to increase or decrease the book value of the investment on company A’s balance sheet. If the value of company B’s assets appreciate over time, the book value of the investment might not be representative of its fair market value. For example, company B may have developed valuable IP (as discussed in the previous example) since the initial investment, and that IP would not be reflected in company A’s investment balance. Consider a manufacturing business that also owns the oil and gas rights underlying vacant land near the business’s campus. The land was purchased by the company 80 years ago for $20,000 and is still recorded at that price on the entity’s balance sheet in accordance with GAAP. Not only is it likely that the fair market value of the land has appreciated significantly over this time frame, but it is also possible that the oil and gas rights could have significant additional value, especially if the property is now leased to oil and gas drilling companies. Financial statements should be prepared in accordance with GAAP so that stakeholders can consistently understand the financial condition of all businesses. All of the GAAP rules mentioned in the examples above were developed to serve various important reasons. However, when determining the fair market value of a business, it is important to recognize that there might be some differences between book/GAAP value and the fair market value of assets. In addition to considering the balance sheet, a valuation analyst considers various other factors and techniques (e.g., discounted cash flow analyses, market multiple analyses, etc.) when estimating the value of a business.Schneider Downs has significant experience preparing business valuations for a wide range of purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Joel Rosenthal (412-697-5387; jrosenthal@sdcpa.com) to ask a question or discuss Schneider Downs’ various business valuation services.1The definition of “fair market value” is beyond the scope of this article. Used in this context, “fair market value” is intended to represent the price that an asset could be sold for on the present date. ### Capital One Data Breach Exposes 100 Million Records to Seattle Hacker Barely a week after the Equifax data breach was settled for nearly $650 million dollars, there appears to be news of an almost equally large mega-breach which was announced today by Capital One. Capital One said in a statement that this breach has affected approximately 100 million individuals in the United States and approximately 6 million in Canada. This breach appears to be largely related to credit card application data as the statement notes “The largest category of information accessed was information on consumers and small businesses as of the time they applied for one of our credit card products from 2005 through early 2019.”According to complaint information noted in the United States Attorney’s Office in the Western District of Washington, a software engineer turned hacker from Seattle, Paige Thompson (aka “erratic”), is being charged for involvement in the unlawful access and exfiltration of this data under the Computer Fraud and Abuse Act (CFAA).On July 17, 2019, Capital One was notified of the potential breach through an email address (responsibledisclosure@capitalone.com) which it uses to solicit disclosures of actual or potential vulnerabilities in its computer systems. The screen capture shown below is from the complaint document, you can see that it notes that there is potential “Leaked s3 data.”The moniker “s3” stands for Simple Storage Service and it is a service hosted by Amazon Web Services (AWS). Also according to the complaint, a firewall misconfiguration was to blame for the initial allowed interaction between the hacker and the system.There are a few extraordinary circumstances surrounding this case that are unusual for cybercrime/breach issues that have really piqued my interest: A suspect is already in custody. Typically, many of these large breaches can only postulate with a certain degree of certainty who the bad actor was. In this case, they have charged someone with a crime, and in fast action. This appears to have been possible because of public boasting by the bad actor. This is strange for a couple of reasons, (1) bad people don’t like to get caught and that would be a dumb move and (2) why use a TOR node to exploit the environment if you were going to publically boast about it anyways? The suspect is from the United States and the motive seems unclear. Many breaches that we are accustomed to hearing about in the news have foreign based actors and different motives behind the attacks. This attack appears to have occurred from a bad actor within our borders and there doesn’t appear to be any disclosure of the data as the Capital One press release notes, “we believe it is unlikely that the information was used for fraud or disseminated by this individual.” Perhaps the quick action of law enforcement preempted a disclosure of this data. It appears somewhat likely that the bad actor may have exploited commercial infrastructure that she had helped to build. Follow along for a moment. The US attorney complaint notes that information posted on a GitLab page had them believe the bad actor worked for a cloud computing company at one point as a “systems engineer” from 2015-2016. However, the complaint does not name who the former employer was. A quick search for “Paige Thompson” on GitLab produces a resume for a woman named Paige Thompson that notes that she worked at AWS from 2015-2016 as a “Systems Engineer Lvl. 4” for Amazon AWS S3 division. Her experience notes that she “Assisted in the build-out and deployment of new load balancing capacity for S3.” While there is undoubtedly much more to come on this event, the initial details are very interesting. From a business standpoint, there are many lessons learned that can be gleaned from this event. Regular security audits and penetration tests of all assets, including cloud infrastructure, is a highly recommended and valuable exercise that can bring serious issues that can lead to events like these to light. In addition to security audits and penetration tests, there were several missed signs of bad activity that should have been logged, recognized and alerted on. For example, the complaint mentions the following bad activity found in the logs, VPN connection from IPredator anonymization service, TOR exit node connections, and anomalous behavior from seldom used accounts. Be sure to learn from others’ mistakes to strengthen your own environment and help avoid issues like this.Tips like these and others are mentioned in a recent white paper that I authored with along with our Incident Response Leader, David Murphy, which is available here: https://schneiderdowns.com/10-things-companies-wish-they-did-before-a-breach ### Ohio’s Budget Bill and Sales Tax Changes The state of Ohio recently passed its budget bill on July 18th, which contains several sales tax changes, including new provisions for economic nexus.  Effective August 1, 2019, remote sellers with more than $100,000 in Ohio gross receipts or 200 Ohio transactions are required to collect Ohio sales tax. Remote sellers with annual receipts of less than $1,000,000 from remote sales in the U.S. are not required to register under Ohio’s economic nexus provisions.  Ohio can now also be added to the growing list of states who have adopted marketplace facilitator legislation.  This statute requires marketplace facilitators who own or operate a marketplace where others sell their goods or services to collect Ohio sales tax if their Ohio sales are higher than $100,000 or 200 transactions annually.The budget bill also expanded the exemption of cleaning equipment and supplies for processing equipment to include any manufacturing operation that produces food for human consumption.  Previously, the exemption was limited to the dairy industry.  The sales tax exemption on vehicles, repair services and other attached items for professional motor sport racing teams has been eliminated.Ohio also authorized its counties to impose local sales and use taxes in increments of 0.05%.  The legislation also approved a 0.5% local tax for construction of detention facilities by non-charter counties. ### Delay in New FASB Standard Will Impact Financial Services As we reported earlier, on July 17 the Financial Accounting Standards Board (FASB) voted unanimously to move forward with delaying the effective start date for recent accounting changes to leases, CECL and hedges by one year for most non-SEC filers. For many community banks and credit unions, CECL’s delay pushes the implementation date from January 2022 to January 2023. It’s widely believed that implementation of the new standard will create compliance challenges, as well as significantly alter the financial standing of financial institutions. Although the FASB decision has been met with a sense of relief among smaller financial institutions, the American Bankers Association (ABA), among others, is fighting for the delay to also be applied to larger public companies. The ABA has reiterated its call for congressional leaders to act to delay CECL’s implementation until a quantitative economic impact study is completed. You can read Our Thoughts On Bill S.1564. As always, Schneider Downs will continue to keep you informed of ongoing developments related to these changes. If you have additional questions, please contact us. ### A Perfect Fit During my first few years as an accounting major, I always saw myself working for one of the Big Four firms, as those were the only ones I had been exposed to in college. So when the time came for my fall internship recruitment, my goal was to land an internship with one of those firms. However, after learning about Schneider Downs and interviewing with them, I knew that this firm was the perfect fit for me, and that there was so much more to the public accounting field than just the large global firms. I remember telling my family after my interview with Schneider Downs that I could see myself working at the firm for a long time to come.As I near the end of my internship with Schneider Downs, I can honestly say that I could not have chosen a better firm to work for. The people were the reason I chose to come to Schneider Downs in the first place, and after working with them for several weeks, I felt as if I had been working here for years. This firm has provided me with an incredible internship experience and has given me an in-depth look at what the accounting field is like outside of the classroom. I enjoyed every day of this internship and all the connections that I made along the way.     ### #1 Mobile App Garners Concerns Over Data Privacy If you haven't already downloaded FaceApp, you have probably either heard of it or witnessed your Facebook turn from an office party to a nursing home overnight. This free mobile app leverages state-of-the-art technology to allow the user to transform facial photos in a variety of ways. It's most commonly utilized for its aging feature, which colors hair, adds wrinkles and occasionally an excellent mustache, bringing you from sun-kissed to sun spots in seconds. Due to its remarkably accurate results and celebrity endorsements, FaceApp went from the 392nd most popular app on the app store to 1st within a span of five days. However, the app’s marketing success and ability to manipulate photos isn't the only reason it has been in the news lately. With a vague privacy policy and Russian origins, many users have also been asking questions about how FaceApp handles and stores their personal data. Reading through FaceApp’s privacy policy reveals a little more about the company. To start, they store data in the cloud, not locally; this means that every time you modify a photo, that photo is transferred, stored and edited remotely on servers not owned by FaceApp. This raises concerns that personal information is being sent overseas to servers with potential ties to the Russian government. Additionally, their privacy policy explicitly states, "FaceApp cannot ensure the security of any information you transmit to FaceApp or guarantee that information on the Service may not be accessed, disclosed, altered, or destroyed". FaceApp publicly responded to these speculations saying, "… most images are deleted from our servers within 48 hours from the upload date". They also explained that they don't sell or share user data with any third parties and that user data is never transferred to Russia. However, included within their terms and conditions is this concerning sentence: “You grant FaceApp a perpetual, irrevocable, nonexclusive, royalty-free, worldwide, fully-paid, transferable sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, publicly perform and display your User Content.” According to this contract, which you consent to upon using the app, even upon reaching the “after” age of your photos, FaceApp is just getting started on its license to use your photos for all of perpetuity.  (Public Statements) While there is no evidence that FaceApp has done anything illegal or even morally corrupt, there is still reason to be skeptical of them. Their public statements may be intended to make you feel safer, but there is no existing evidence to back up any of their comments. Without an independent review of the corporation by a reputable third party or stricter government regulations, all a user can do is take the company’s word and hope for the best. You may be wondering, “What would even happen if FaceApp did sell that selfie I just took?” At this point in time, it is impossible to comprehend all of the potential implications, as the capabilities and requirements of governments and organizations are evolving rapidly alongside technology. At present, however, this information can be used to train stronger Artificial Intelligence, recognize you in a crowd or create fake social media profiles and videos. So while all of this may not sound overly alarming, it is still best to avoid putting yourself in these situations. Artificial Intelligence has been growing at an exponential rate, so there's no telling to what extent your data could be used for in the future. Our Advice: We always recommend using cell phone applications carefully, and FaceApp is no exception. Although there is no evidence to indicate that FaceApp has done anything malicious or morally corrupt, it’s always best to proceed with caution. If you do decide to use FaceApp, you should use it the way you would use any other social media: always ask permission before editing pictures of your friends or family and make sure not to upload any pictures that you wouldn’t post publicly online. ### Kress Case Addresses S Corporation vs. C Corporation Issues The United States District Court’s March 2019 court decision in Kress v. United States1 created a lot of buzz in the valuation community. The case involved plaintiffs James and Julie Kress disputing gift taxes they paid related to their gifts of minority ownership interests in Green Bay Packaging, Inc. (“GBP”), a Subchapter S Corporation, to their children and grandchildren. In order to resolve the case, the court needed to determine the fair market value of the GBP stock at the time of the gifts.The Court reviewed three different valuation reports (two submitted by the plaintiffs’ experts, one submitted by a government expert). While the case addressed a number of key valuation issues, the part of the case that has received the most attention was related to GBP’s S Corporation (“S Corp”) status, as all three experts (including the IRS expert) tax-affected GBP’s earnings as if it were a C Corporation (“C Corp”). Many business valuation experts have been advocating for this type of treatment of S Corps and other pass-through entities for years, but the IRS and tax courts have generally rejected this approach, arguing that S Corps are not subject to taxes at the corporate level. However, valuation experts claim that not tax-affecting can inappropriately ignore the tax burden that individual S Corp owners face.In addition, the Court considered whether there was any additional value to GBP being organized as an S Corp instead of a C Corp. The plaintiffs’ experts did not add any “S Corp premium” while the government’s expert did.  However, the Court sided with the plaintiffs’ experts, stating that, “GBP’s subchapter S status is a neutral consideration with respect to the valuation of its stock.  Notwithstanding the tax advantages associated with the subchapter S status, there are noted disadvantages, including the limited ability to reinvest in the company and the limited access to credit markets.  It is therefore unclear if a minority shareholder enjoys those benefits.”While this is not a U.S. Tax Court memo or a precedent-making decision from the U.S. Court of Appeals, it does provide support for tax-affecting S Corps.  Further, while the Court did not allow an “S Corp premium” in this case, we believe it is necessary to consider the appropriateness of this premium on a case-by-case basis.Schneider Downs has significant experience in preparing business valuations for gift and estate tax, financial reporting, buying/selling and a range of other purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) for more information about our business valuation services.1James F. Kress and Julie Ann Kress, Plaintiffs, v. United States of America, Defendant. 1:16-C-795. United States District Court, Eastern District of Wisconsin ### Freight Exception from Business Privilege Tax The Pennsylvania Supreme Court issued a ruling in favor of S&H Transport, Inc. in its business privilege tax (BPT) dispute with the City of York over the exclusion of freight delivery and transportation charges.S&H is a freight broker that arranges transportation of goods for sellers for a fee.  S&H matches sellers of goods with common carriers in order to ship the seller’s goods.  Once the goods have been shipped, S&H invoices the seller for the shipping costs of the common carrier and its commission.  S&H then remits the shipping costs to the common carrier and keeps its commission. The dispute began when S&H was audited by York, and the city disallowed S&H’s deduction of shipping fees collected on behalf of carriers.The dispute turned on the interpretation of York’s BPT regulations and the Local Tax Enabling Act (LTEA).  The LTEA contains an exclusion for, “charges advanced by a seller for freight, delivery or other transportation for the purchaser in accordance with the terms of a contract of sale.”  York’s BPT regulation, on the other hand, excludes “freight delivery or transportation charges paid by the seller for the purchaser.”  The city argued that S&H was not a “seller” by definition, but the Court ruled there was sufficient ambiguity to rule in favor of S&H.The Court ultimately decided that the exclusion provided by the city’s regulation was broader than the exclusion allowed under the LTEA.  As a result, the city must allow S&H a deduction of shipping costs it “paid” to common carriers.  The Court’s reasoning was based on the regulation and the fact that the language in the regulation did not limit the exclusion to sellers of goods as argued by the city.  The benefit of this ruling is likely limited to freight brokers or businesses with very similar fact patterns to S&H that are located in a city with an exception written in the same manner as York’s.For more information about this case or business privilege tax issues, contact a member of the Schneider Downs’ State and Local Tax Team.    ### Mandatory E-Filing of Nonprofit Tax Returns On July 1, 2019, President Trump signed the Taxpayer First Act (Act), which requires all tax-exempt organizations to electronically file IRS Forms 990, 990-PF, 990-EZ and 990-T. In addition, Section 527 political organizations that file periodic contribution and expenditure reports are now required to e-file Form 8872.  Previously, only nonprofits with total assets of $10 million or more and organizations that file 250 or more returns were required to e-file. Under the new Act, by the year 2022, all nonprofit organizations will be required to e-file, with the exception of churches and government entities. This Act will affect organizations whose fiscal year begins on or after July 2, 2019 and for calendar year filers as of January 1, 2020.In regards to the implementation timeline, the Act allows the IRS to delay implementation for two years for nonprofits that file 990-T forms. This delay also applies to organizations with assets of less than $500,000 and annual revenues under $200,000.While these forms are already available to the general public, the Act also requires that the IRS make the return information public as soon as possible for transparency and accountability purposes.  Additionally, the Act requires the IRS to notify organizations that don’t file within a two-year time frame, reminding them that if they don’t file within three years, they automatically lose their tax-exempt status and will be required to reapply with a new application.  It is therefore important for organizations to keep their contact information updated with the IRS to ensure receipt of notices.For more information or questions regarding mandatory e-filing for exempt organizations, please contact Schneider Downs. ### Can RPAs Help Higher Education? Higher education remains one of the most heavily regulated areas of commerce. As a result, the volume of administrative burden can be significant, and costs can put quite a strain on budgets. Along with dealing with enrollment pressures, many institutions are searching for ways to either generate additional revenue or find ways to contain costs, and are increasingly turning to robotic process automation – RPA for short – as a way to increase efficiency. Use of RPAs has seen an explosion of growth throughout all industries over the past handful of years. So what makes them so great? Well, for one, they work for you 24/7/365 and excel in performing functions that need to happen regularly, are often tedious and, in many cases, are compliance or control related in nature. RPAs are not just applicable for financial transactions either; they perform well working in all environments where systems are stable and the data is digital. They also effectively employ optical character recognition technology to convert paper documents into digital. In higher education organizations, for instance, they can be used to ensure that student roster data is uploaded to the NSLDS, perform periodic background checks of staff, remove IT access from students who’ve graduated within a cohort, and handle the bank reconciliation process. So what can you do to take advantage of the benefits of using RPAs? Begin by taking inventory of your processes and focus on those that are either time-consuming, involve a significant volume of transactions or steps, or must be done on a regular schedule. Be sure to map out these processes so you can properly “teach” the RPA how to complete the tasks successfully. Many organizations throughout business are recognizing the value of RPAs, and higher education should be no different. When implemented thoughtfully, RPAs can be powerful tools that can aid institutions in strengthening compliance while also helping contain costs.   ### Accounting from a Different Perspective Considering that I’m not a business major and have only taken one accounting class in my entire life, I felt a little incompetent walking into the office on the first day of my internship. How could I, a Data Science student at Penn State, be useful to an accounting firm? My internship is quite unique as it is split up into three different departments over the course of ten weeks. I spent my first three week interval working in the Audit department on their Automating Data Analytics Process Team (ADAPT), where I had the opportunity to leverage my programming and data manipulation skills on various small projects.  I spent the majority of this time writing scripts to automate certain repetitive tasks, such as organizing data and manipulating spreadsheets.  While I was given the opportunity to tackle these projects individually, I had two great mentors who guided me through the process and were always available to answer any questions.  I wrote the first script in my preferred language, Python, while writing subsequent scripts using an unfamiliar language that was based off of Visual Basic.  Utilizing both of these languages was the perfect balance between applying what I’ve learned in college with learning something new.In addition to writing these scripts, I also attended various internal meetings and participated in company trainings and events.  While I thoroughly enjoyed working on the scripts, it was always nice to get a change of scenery and get the opportunity to learn more about the company.  The meetings gave me a chance to learn about the various departments at Schneider Downs and how each individual group fits in the firm.  These meetings and trainings were fulfilling as they showed me how to enhance my skillsets through the use of different software and technology.My overall experience with the Audit department and Schneider Downs was very positive, as I felt like I made a meaningful impact when I completed projects.  I have always had a passion for problem solving and automating tasks, and this is exactly what I had the opportunity to do with the ADAPT team. ### Tax Credits for Plug-In Electric Drive Vehicles Eco-friendly electric vehicles have received another boost in popularity after the federal government introduced tax credits for individuals and businesses opting to purchase plug-in electric drive motor vehicles.  These tax credits offer a direct reduction to the tax liability owed to the federal government. Select states also offer additional rebates to owners of alternative energy vehicles.Electric VehiclesBack in 2008, the IRS implemented Internal Revenue Code (IRC) 30D to give tax credits to qualified plug-in electric drive motor vehicles. IRC 30D states that for vehicles acquired after December 31, 2009, the credit is equal to $2,500, plus $417 for a vehicle that draws propulsion energy from a battery with at least five kilowatt hours of capacity, plus an additional $417 for each kilowatt hour of battery capacity in excess of five kilowatt hours. Credit amounts for a single vehicle are capped at $7,500. This full amount can be claimed until the second quarter after the vehicle’s manufacturer sells its 200,000th qualified vehicle and will also phase out each quarter over a one-year period. Vehicles will not be eligible for a credit if acquired after the phase-out period. For example, Tesla, a popular electric motor vehicle manufacturer, currently has vehicles in its lineup that qualify for tax credits. If a qualifying Tesla vehicle was purchased between 1/1/2019 and 6/30/2019, the owner of the car can receive a credit of at least $3,750; for vehicles purchased 7/1/2019 through 12/31/2019, the owners can receive at least $1,875.A full list of qualifying vehicle brands, models and conditions can be found on the IRS website.The state of Pennsylvania also offers an Alternative Fuel Vehicle (AFV) Rebate for PA residents. The most recent program guidelines became available on July 1, 2019 and offer rebates of up to $1,500 for new hydrogen fuel cell vehicles and battery electric vehicles, with rebates of up to $1,000 for original equipment manufacturers or certified retrofit natural gas vehicles. The guidelines also offer a $1,000 rebate for propane vehicles, plug-in hybrid electric vehicles and electric motorcycles, although there were slightly higher rebate amounts for the first six months of 2019.In order to qualify for a rebate on an AFV, a completed rebate application form, available on the PA Department of Environmental Protection’s website, must be filled out and submitted no later than six months after the vehicle’s purchase date. All applications must include the following information: Social Security numbers of the PA resident, a valid PA vehicle registration, and proof of purchase or a copy of signed lease. Any application that is missing information will not be accepted. For more information, please contact a member of the Schneider Downs Transportation and Logistics Team listed below to discuss your options and eligibility:•           Dan Phillips – Shareholder (412) 697-5299•           Mike Renzelman – Shareholder (614) 586-7203•           Jim Gilboy – Senior Manager (412) 697-5249•           Matthew Werner – Senior Manager (412) 697-5403•           Danielle Miceli – Manager (412)-697-5373  ### New Wayfair Economic Nexus Provisions Go Into Effect July 1, 2019 July 1, 2019 marks the beginning of a new fiscal year for most states and introduces some new Wayfair economic nexus rules for remote sellers and marketplace facilitators doing business in Arkansas, New Mexico, Pennsylvania, Rhode Island, Tennessee and Virginia.Arkansas – Remote sellers and marketplace facilitators exceeding $100,000 in sales or 200 individual transactions of tangible personal property, taxable services, digital code or specified digital products in the previous or current calendar year are required to register and collect sales tax.  Remote sellers who only make wholesale or non-taxable services are not required to register.Connecticut – Effective July 1, 2019 Connecticut lowers their sales threshold from $250,000 to $100,000.  The current threshold is 200 Connecticut and gross receipts are $100,000 during the preceding 12 month period ending September 30.  The new threshold includes sales of both services and tangible personal property.New Mexico – Remote sellers and marketplace facilitators making taxable sales in excess of $100,000 during the previous calendar year are required to register and collect sales tax.  Remote sellers who only make non-taxable sales in New Mexico are not required to register.New York – Increases its sales threshold from $300,000 to $500,000.  The new threshold is 100 or more sales or facilitated sales of tangible personal property delivered in New York totaling $500,000 or more.  The new threshold is retroactive to June 21, 2018.Pennsylvania – Economic nexus applies to all persons (remote sellers and marketplace providers) who in the previous 12 months made more than $100,000 in gross sales into Pennsylvania. All remote sellers and marketplace facilitators meeting the threshold are required to register and file returns regardless of whether their sales are taxable or non-taxable.  Pennsylvania’s use tax reporting requirements are still in effect for remote sellers and marketplace providers whose sales exceed $10,000 but are less than $100,000.Rhode Island – From August 17, 2017 through June 30, 2019, remote sellers and marketplace providers who had $100,000 or more in gross revenue or 200 or more separate transactions in the immediately preceding calendar year had the option of registering and collecting or complying with use tax reporting requirements.  Effective July 1, 2019, remote sellers and marketplace providers will no longer have the use tax reporting option.  They will be required to register and collect tax on all taxable sales.Tennessee – Remote sellers who regularly and systematically solicit consumers in Tennessee and have $500,000 of gross sales during the previous 12 months must register and collect the tax on all taxable sales.Virginia –Remote sellers and marketplace facilitators who exceed $100,000 in retail sales or facilitate 200 or more separate retail sale transactions in the previous or current calendar year are required to register.      ### Postcard #2 from the American Trucking Association’s National Accounting and Finance Council’s Annual Conference – Economic Address by the ATA’s Chief Economist, Bob Costello “Slowing, but Growing” was the message from Bob Costello, the ATA’s chief economist, when he addressed the National Accounting and Finance Council’s Annual Conference in Indianapolis, Indiana on June 11, 2019. Coming off of 2018, a great year for the trucking industry, this should not be surprising news, as that level of growth would be hard to maintain. He mentioned that although the risk of a mild recession in the next year is low, if all proposed tariffs go into effect, it would raise the possibility of a recession significantly.Mr. Costello also mentioned that inventory has increased in the first quarter of 2019. He attributed this to two factors: the first was related to manufacturers and retailers stocking up on inventory due to fear of Chinese tariffs , and the second concerned the continued growth of online shopping. Many retailers now guarantee package delivery in 2 days or less, making it necessary for these items to already be in a nearby warehouse and not in a large distribution center that requires at least five days of shipping to reach its destination. He did not see the increase in inventory levels as a major area of concern.One troubling sign that Mr. Costello sees in the future is the pressure on profits related to increases in driver pay and lower spot market rates, especially for smaller carriers. This convergence could cause these smaller carriers to be forced into severe financial hardship at the next downturn of economic activity.Mr. Costello mentioned that consumer fundamentals are good and the job market is strong. However, retail sales growth has slowed this year and housing starts continue to disappoint. Inflation is in check for now, and the Federal Reserve has paused any upward rate adjustments at this time. Finally, Mr. Costello believes that the new United States-Mexico-Canada Trade Agreement will be ratified by all three countries.Bob Costello has been the ATA’s Chief Economist for over 20 years. His presentation at the NAFC Conference was one of the highlights of the three-day event and was very enlightening. ### The Privacy of Consumer Banking Data and the Financial Data Exchange As cyber threats and global regulations continue to intensify, the privacy and protection of consumer banking data remains a high priority of the financial services industry. To protect their data and users, some of the largest financial institutions, financial technology firms and related industry groups formed the Financial Data Exchange (FDX) in October 2018.The FDX is a nonprofit industry consortium and subsidiary of the Financial Services Information Sharing and Analysis Center, and was established to unify the financial industry around a common, interoperable standard for the secure exchange of financial data. The FDX is the most comprehensive industry standard, designed to address the challenges of consumer-permissioned data sharing through their custom application-programming interface (API): the FDX API. The FDX API facilitates the secure exchange of information and accelerates innovation while also giving consumers greater control of their data through the establishment of the following: Standards for financial data sharing Standards for secure authentication A certification program and standards User personas and use cases for financial data sharing Consumer authentication, consent and permission models When consumers maintain multiple financial accounts, they require ongoing access and protection of their financial data. With the FDX API, consumers benefit from an accelerated application process and reduced risk due to the controls built into the data aggregation process. APIs have been used for years; however, advanced data analytics combined with innovative technologies provide the ability to transfer data in a more secure and seamless manner. Nonetheless, regardless of the apparently seamless transfer of data, transparency is critical. Consumers need to know what data is being shared with whom, for what purposes and for what amount of time.In the event you have questions related to data privacy, please contact us at Schneider Downs & Co., Inc. /In the event you want to learn more about the Financial Data Exchange, please visit https://financialdataexchange.org/. ### Results and Implications of the Institute for Supply Management’s Report on Business – 1st Half of 2019 On July 1st, the Institute for Supply Management (ISM) released their latest Report on Business, a monthly publication that provides industry trends and statistics for the manufacturing sector. The referenced Purchasing Managers Index (PMI) below is a composite index for the manufacturing industry compiled by the ISM, and is based on five subcategories: new orders, production, employment, supplier deliveries and inventories. A PMI index over 50.0 indicates that the manufacturing environment is expanding, and the ISM uses this information to analyze the state of the economy and predict future growth or contraction. See below for the PMI of the first six months of 2018 and 2019:   2019 2018 Month PMI PMI January 56.6 59.1 February 54.2 60.8 March 55.3 59.3 April 52.8 57.3 May 52.1 58.7 June 51.7 60.2   First Half of 2019 First Half of 2018 Average 53.8 59.2 High 56.6 60.8 Low 51.7 57.3  June 2019 marked the 122nd consecutive month of expansion for the manufacturing sector. However, as indicated in the table above, expansion has slowed since 2018. In June 2019, customer demand did not increase for the first time since December 2015, due to the decrease of new orders, exports, customers’ inventories, and a backlog of orders. Of the six industry sectors (Printing and Related Support Activities; Textile Mills; Electrical Equipment, Appliances and Components; Paper Products; Plastics and Rubber Products; and Food, Beverage and Tobacco Products), two contracted, three expanded, and one remained the same. Additionally, supplier deliveries saw a reduction in growth for the 40th consecutive month, and the inventories index experienced a decrease for the first time since December 2017. Relative to production, inventories were depleted as many manufacturers continued to closely manage their supply chains. Prices for some raw materials also decreased in June, including aluminum, steel, energy and copper, whereas other raw materials such as food ingredients and electronic components experienced shortages and subsequent price increases.These decreases were partially offset by the sustained increase of consumption (based on production and employment indexes) and bolstered by the continued low unemployment rate, only 3.6% in May 2019.For further information on the ISM Report on Business, please access the following link:https://www.instituteforsupplymanagement.org/ISMReport/MfgROB.cfm?SSO=1 ### The Final Issuance of SAS 136 In July 2019, the AICPA Auditing Standards Board issued the Statement on Auditing Standard (SAS) 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.  This long-awaited standard will be effective for employee benefit plan audits ending on or after December 15, 2020, and will address specific performance and reporting requirements while also changing the form and content of the auditor’s report.  The overall purpose of the standard is to enhance the quality of employee benefit plan audits through changes related to both auditor and management responsibilities. The changes to the form and content of the auditor report are very significant.  Under this new standard, the term “limited-scope audit” has been replaced with ERISA Section 103(a)(3)(c).  As a result, the Opinion Section of the report will now be in two parts. The first part will address the amounts and disclosures not covered by the certification and will affirm that they are in accordance with the applicable financial reporting framework, while the second will state whether the investment information related to the certification agrees with the information provided by a qualified institution.  In addition, the new performance requirements also call for an expanded description of the management’s and auditor’s responsibilities. These performance requirement changes affect many parts of the audit, including engagement acceptance.  SAS 136 states specific requirements for the auditor regarding engagement acceptance, which include management’s acknowledgement and understanding of their responsibilities.  These responsibilities include maintaining all plan instruments/amendments and administering the plan in conformance with the plan documents.  In addition, if they have elected ERISA Section 103(a)(3)(C), formally a limited-scope audit, then it is also management’s responsibility to determine that such an audit is permissible and that the information is certified under the requirements and by a qualified institution.  The auditor will also have to audit and evaluate management’s process for this responsibility.There are several other areas affected by this new standard, including risk assessment, evaluating misstatements/non-compliance and the communication of such matters to those charged with governance, and various tax and compliance responsibilities for both the auditor and the sponsor.  Just remember that there will be several changes that impact the responsibilities of auditors and management.  While the implementation of this standard is still a few years away, auditors and plan sponsors should discuss these details as they begin to wrap up their current audits.    ### Part of a Team My internship experience at Schneider Downs has been truly unique. Before starting at Schneider Downs, I had anticipated that my internship would resemble what most would consider a typical internship experience. I envisioned working in the field and interacting with the audit team, but I presumed my assignments would be limited to small projects and that I would have minimal contact with clients. These assumptions could not be further from what I experienced at Schneider Downs this summer.From day one, I was treated as part of the team. I was given meaningful assignments and encouraged to ask questions to truly understand the work that I was completing. Not only that, but I was introduced to clients and encouraged to reach out to them whenever necessary. Because of these experiences, I have been able to obtain a better understanding of what being an auditor is really like, which ultimately made my time at Schneider Downs invaluable. ### The Employee Plan Compliance Resolutions System Explained Everyone knows mistakes happen, but what should you do when your employee plan is the guilty party? Chances are the fix lies within the IRS Employee Plan Compliance Resolution System, or EPCRS, a way to repair plan mistakes and avoid potential disqualification. There are three correction methods available under the system. The Self-Correction Program (SCP) method allows a plan sponsor correct a mistake without having to contact the IRS or pay a fee. SCP is used to correct operational errors. If the error is insignificant, the correction can be completed at any time. If the error is deemed significant, however, the correction needs to be completed before the end of the second plan year following when the failure occurred. The Voluntary Correction Program (VCP) method allows a plan sponsor to pay a fee and receive IRS approval for correction of a failure. Different from SCP, this method can be done at any time before a plan is audited by the IRS. VCP is used to correct egregious errors. When a failure is found, a report must be submitted to the IRS through VCP. The submission should include a description of the error and what will be done to correct it. Once the IRS reviews and approves the correction process, the plan sponsor needs to maintain all records of the correction being completed. The Audit Closing Agreement Program (Audit CAP) method allows a plan sponsor to pay a sanction and correct plan failures while a plan is being audited. The plan sponsor enters into a closing agreement with the IRS, then pays a sanction that has been negotiated and is not less than the fee the plan sponsor would have paid under the VCP correction method. With most mistakes, it’s easy to determine which correction method to use, but if you’re unsure you should discuss the procedure and mistakes with your TPA. ### ACFE releases Anti-Fraud Technology Benchmarking Report With the advancement of technology over the years, the avenues for fraud perpetration, protection and detection have multiplied. In an effort to gain a better understanding of how organizations use technology to support their anti-fraud efforts, the Association of Certified Fraud Examiners (ACFE) conducted a survey of randomly selected ACFE members. The results of this survey were recently released in its Anti-Fraud Technology Benchmarking Report. When asked what techniques were currently used, commonly known techniques such as exception reporting and automated monitoring were the most popular among ACFE members, with 64% and 54% of respondents, respectively. In terms of the new technologies organizations expected to implement over the next two years, 25% of respondents selected artificial intelligence and 22% selected predictive analytics and modeling. These were the highest percentages among the techniques listed. For organizations with data analytics already in place, the survey asked how beneficial data analytics were to their anti-fraud initiatives in terms of volume, accuracy, efficiency and timeliness. The results were overwhelmingly positive with 83% to 90% deeming data analytics programs to be fairly beneficial or very beneficial in each of these categories. Implementing these new technologies into an organization is not always simple. In fact, 80% of respondents felt that budget and financial concerns are major or moderate obstacles when attempting to adopt new anti-fraud technology, while 73% indicated that internal staffing and skill sets impeded further implementation. However, there is a silver lining, as 55% expect to increase their budget in this area over the next two years, while 40% expect to maintain their current funding. For more information on the ACFE and the Anti-Fraud Technology Benchmarking Report, visit www.acfe.com. If your organization is interested in an assessment of its fraud risks, prevention techniques and readiness, contact Brian Webster at bwebster@schneiderdowns.com or Mike Valek at mvalek@schneiderdowns.com.   ### A Valuation of Innovation There is a lot going on at Schneider Downs these days! Service offerings are expanding, our geographic footprint is growing, and new talent continues to come onboard, roughly doubling the number of SD employees over the past 15 years. It is an exciting time to be part of Schneider Downs and one of the things that I enjoy about working at SD is the focus on “Big Thinking”. To that end, a group of employees took part in a two-day training seminar on innovation with the Luma Institute, a group that explores the methods behind human-centered design.Human-centered design is the process or philosophy of solving complex problems or designing products, services or systems to serve people in new or meaningful ways. Herb Simon, Nobel Laureate in Economics and champion of human-centered design, remarked, “Everyone designs who devises courses of action aimed at changing existing situations into preferred ones.”Human-centered design provides new ideas and perspectives to help us see the world in a different way and use innovation to respond to the challenges around us. To make a business case for innovation, one does not need to look very far. Entire industries have recently been upended by innovators who have asked how we might do things differently.  Think about the effects of companies like Apple, Amazon, Netflix and Uber, whose innovations have made permanent changes in the ways that we live out our daily lives in large and small ways.Naturally, as an accountant who specializes in business valuation, I can’t help including some empirical data to support the value of innovation and design. McKinsey & Company, a global consulting firm, published a report in October 2018 that studied the correlation between human-centered design and financial success. McKinsey tracked 300 publicly listed companies in various industries and countries over a five-year period. Company design practices were documented and tracked through interviews and surveys of executives and design leaders. Overall, the survey recorded more than 100,000 design actions.  Advanced regression analysis indicated that there were twelve specific design actions that showed the greatest correlation with improved financial performance. These actions were then grouped into four overall design areas—analytical leadership, cross-functional talent, continuous iteration and user experience—and companies were given a score on the McKinsey Design Index (MDI) based on their proficiency in each area. McKinsey then looked for financial trends based on companies’ design scores. The study determined that companies with upper quartile design scores outpaced other companies, outperforming industry benchmark growth by as much as two to one. For example, companies with an upper quartile design score, achieved revenue growth that was 32 percentage points higher over a five-year period. The 300 companies selected by McKinsey for this study operated within three industries: medical technology, consumer packaged goods and retail banking. The upper quartile MDI scorers outperformed the benchmark across all three industries, indicating that design-fueled growth is achievable regardless of whether a company provides digital products, physical products or services. Interestingly, differences between the second, third and fourth quartiles were marginal, indicating that only the market leaders will reap the greatest rewards.We have always been aware of the fruits of innovation in the marketplace, but studies like McKinsey’s allow us to back it up with hard data and research. Stay tuned for future posts on innovation and human-centered design. As we approach the 50th anniversary of the Apollo 11 mission and man’s first steps on the moon, I think it is appropriate to say that with innovation, the sky is the limit!Jennifer Doering also likes to focus “Big Thinking” on management advisory services, such as business valuation and compensation consulting, and would be happy to discuss any future needs or questions you have in these areas. ### Proposed Accounting Standard Update Would Delay Private Company Effective Dates for Leases, Current Expected Credit Losses (CECL) and Hedging Updates by One Year On July 17, 2019, the Financial Accounting Standards Board (FASB) voted unanimously to move forward with delaying the effective start date for recent accounting changes to leases, CECL and hedges by one year for most non-SEC filers.  The FASB directed its staff to draft a Proposed Accounting Standards Update (PASU) for formal vote and finalization at a future meeting.This decision comes after the FASB discussed a change in philosophy on establishing effective dates for major projects for private companies, not-for-profit organizations and smaller public companies.  After consultation with stakeholders, the FASB considered various challenges and related costs encountered by these entities when transitioning to a major standard, including the availability of resources, timing and source of education, ability to learn from the implementations of larger public companies, development of sufficient IT system changes and other such concerns. This new philosophy would introduce a two-bucket approach to stagger effective dates for major accounting standard updates. Bucket One – Includes SEC filers, but excludes smaller reporting companies (SRC) as currently defined by the SEC. Bucket Two – Includes all other entities Going forward, entities within Bucket Two would be afforded an effective date of at least two years after the effective date established for Bucket One on new major standards.The FASB will continue researching this new two-bucket philosophy, but will also move forward with the PASU delaying the effective date of leases, CECL, and hedges.  This PASU will include a 30-day comment period before the FASB formally votes on the delay.  Schneider Downs will continue to keep you informed of ongoing developments related to these changes. For additional questions, please contact Schneider Downs. ### I Want Mine, but When? Social Security Claiming Just when should you start claiming Social Security?   The easy answer is to postpone claiming as long as possible.  If you delay until after your full retirement age (FRA), your benefit will grow 8% for every year you wait.  So why would you want to claim earlier?  The recipe can be complicated.  Let’s see if I can simplify.If your FRA is 67, collecting at 62 will reduce your benefit by 30%.  Each $1,000 of benefit now becomes $700.  If you’re still working, it’s not advisable to collect before full retirement age.  Your benefit can be reduced one dollar for every two dollars you earn over the earnings threshold.  In addition, you could be taxed on up to 85% of the benefit you collect.  Once you reach FRA, there are no earnings limits, but taxation remains.  Your benefit will not increase past age 70, so if you’re still working at that age, start claiming.If you’re retired or working part time between age 62 and 70, Social Security can help with cash flow.  Consider this:  What assets do you have to live on while you’re waiting to take Social Security?  Do you have a pension or other deferred income?  Will you be withdrawing cash, invested assets or retirement plan assets?  If you must withdraw, you need to consider the consequences.  At age 62, those assets may need to last 25-40 years.  Your withdrawal plan needs to be tax efficient and mitigate market risk. You don’t want to be forced to sell assets for living expenses if the stock market declines, nor do you want to spend down all of your investment assets, leaving only deferred retirement assets to fund your later years.  You may end up with a large, unwelcome tax bill in your old age.  Keep a year’s worth of cash available.  Perhaps begin small withdrawals from your retirement assets to create a tax glide path.  Or start collecting Social Security. Since Social Security growth of 8% is attractive, if you have the resources to delay, do so.  Although it is hard to contemplate spending money you’ve saved throughout your working years. Decumlation studies have found retirees tend to avoid dipping into assets. For many, early claiming may be attractive, but it’s not sufficient justification to take a permanent reduction in benefits.I’ve talked to several people who decided to claim early. In each case, they were considering other risks.  One was concerned about the ambiguity surrounding future funding of Social Security; she wanted to collect now so she would be grandfathered into any changes.  Another had health concerns and felt it was to his benefit to start collecting sooner.  Still a third saw no reason to deprive himself, as he was ready to retire with a little extra cash flow while he was young enough to enjoy it.  Like a soufflé, the ingredients are simple, but the execution can be challenging.  Review the ingredients (income and assets), but study the execution.  Keep in mind your risks: market, taxation, legislative, health and mortality.   A careful technique will provide the best results.   Next up, claiming strategies.  ### Is Your Nonprofit Organization at Risk of Falling Into the Starvation Cycle? In 2009, Ann Goggins Gregory and Don Howard published an article in the Stanford Social Innovation Review that changed the way nonprofit organizations and funders think about spending.  They also coined a new term – the nonprofit “starvation cycle.”  The starvation cycle begins with funders’ unrealistic expectations about the costs of running a nonprofit, which puts pressure on nonprofits to conform to those unrealistic expectations.  This leads to reduced spending on overhead and underreporting of expenditures on things like tax forms, financial statements, and fundraising materials. This perpetuates funders’ unrealistic expectations, and ultimately results in funders expecting grantees to continually do more with less, hence the term “starvation cycle.”Due to the extreme pressure to allocate more funds directly to programs, studies have shown that the starvation cycle results in a chronic shortage of liquidity and reserves, and a lack of investment in technology, fundraising, and employee development.  These things are all necessary to successfully carry out an organization’s mission and program objectives, and as the pace of technological development continues to increase, it will become even more important for nonprofits to make the necessary investments in infrastructure and employees. So how much should your organization spend on programs?  There are no set rules regarding overhead spending, but recent reports have noted that most organizations allocate over 80% of expenditures towards programs.  In their article, Gregory and Howard suggested that taking action against funders’ unrealistic expectations is the most effective way to disrupt the starvation cycle.  With the new nonprofit reporting model taking effect this year for most organizations, now is the perfect opportunity for nonprofits to communicate their funding and liquidity challenges to funders via their financial statement disclosures.  ### 2019-2020 Pennsylvania Budget Governor Tom Wolf and the Pennsylvania legislature finalized the state budget before the beginning of the new fiscal year on July 1, 2019.  The budget does not include any tax increases or new taxes.Governor Wolf had pressed for a severance tax in his February budget proposal, but was unable to secure the tax with Republicans controlling the House and Senate. Raising the state minimum wage to $12 an hour and tethering it to inflation was a proposal Wolf supported even before he took office, but this amendment was also denied and did not make it into the final bill.The budget does include significant increases in spending for education and healthcare services.  Funding for the popular Educational Improvement Tax Credits did increase by $25 million after the Governor vetoed efforts to increase it by $100 million in June. ### The Landscape of Manufacturing: A Look Into the Past and the Future According to a 2019 Georgetown University study of manufacturing in the U.S., manufacturing used to be the dominant force in the job market in 1940, with 23% of all American jobs provided by the industry. By 2016, that percentage had decreased dramatically to only 10%, and similar losses were seen in American agriculture, mining and other labor-intensive jobs during the same period.There is no doubt that it must have been frustrating for the producers of horse drawn carriages in the early 20th century, who began to lose their monopoly on the transportation market as a result of the growing popularity of the automobile. The emerging market pushed aside a previously well-established industry, and with it, the workers in that industry. Fast forward to the present day, and it is evident that the next large industrial revolution is no longer on its way, it has already arrived. Immense strides in technologies related to big data, the internet of things, robotic-process automation, artificial intelligence, and additive manufacturing will all play a part in bringing about the new post-revolution standard.For some industries, these new standards already constitute a reality that the average individual would consider the equivalent of a sci-fi novella. Inside an Amazon Fulfillment Services warehouse, hundreds of robots hum with activity as they roll around the warehouse floor, picking up shelves filled with products or delivering items to packing chutes, all in seamless synchrony. These robots and a complex virtual management system have allowed Amazon to achieve the quickest average delivery times of any business in history.Meanwhile, back in the manufacturing sector, the industry is combining big data with AI to increase its operational efficiency, no longer focusing simply on past performance but instead using this data to perform in-depth predictive analysis. In the past, performing any sort of detailed or intricate tooling required the human hand, but now with the use of additive manufacturing and 3D printing greater precision can be achieved on the same tooling project in a fraction of the time. Even our advances within the past 20 years bear witness to the effectiveness of our technological efficiencies: Per the Georgetown University study, “In 2000, the 18 states where manufacturing was the largest employer produced $968 billion worth of output, or 46 percent of US manufacturing output. In 2016, these 18 states produced $925 billion, or 44 percent of US manufacturing output, even though manufacturing was no longer the largest employer in most of them. Combined, these 18 states employed 8.8 million manufacturing workers in 2000 and 6.3 million manufacturing workers in 2016.”In the midst of all this change, the question on the forefront of everyone’s mind is: If our manufacturing jobs are given to the products of our technological advancements, what will WE do? The answer is as simple as it is complex. We will adapt in much the same way as the manufacturers of horse drawn carriages who adapted their skillsets and began producing vehicles instead. Technical knowledge of the manufacturing will most likely always be a prerequisite for workers in the manufacturing industry, but with the advent of significant time and cost reducing innovations, technologically savvy laborers will also be needed to overcome the inevitable obstacles associated with a 21st century manufacturing revolution. The specifics associated with modernizing the workforce can often take time and create temporary deficits in the number of skilled laborers necessary to move an industry forward. However, the underlying theme is clear: We will continue to innovate and refine our processes but there will likely always be a need for human intervention and oversight. ### Not All Internships are Created Equal I often heard the phrase not all internships are created equal.  The professors at Duquesne University were persistently stressing the importance of gaining real life work experience and that this could diversify my network.  When I talked to a few peers, a lot of their intern experiences involved mundane clerical tasks. So when I embarked on exploring where I could gain valuable industry knowledge and experience I reached out to the career center on campus. Schneider Downs made the whole recruiting process student friendly. I took the opportunity to apply in September and was selected for an on campus interview with  Thomas Harvey.Following this interview I was invited to the Pittsburgh office for an office tour and additional interviews with Lauren Weddell and Matthew Kraemer. I came away from this visit knowing that this was the place I wanted to secure an internship, as I knew it would serve as a platform for enhancing my professional skills.  I was extended an offer to join the firm as a Summer Audit Intern in mid October. From the moment I accepted the offer, it was apparent that I was a part of the team as there was frequent correspondence from the HR department preparing me for this opportunity.Even though I have taken numerous accounting and business classes that provided me with the requiste skillsets, my experience in the field has given me much more insight into what a career in accounting is actually like. After a few days of orientation and training I began working directly with clients. Even though this was somewhat daunting at first, I quickly realized how helpful everyone at Schneider Downs is and that all I had to do was ask if I had questions. My engagement teams were instrumental in teaching me valuable skills. I always felt that I was part of the team rather than just a typical intern. This experience has allowed me to gain real work experience in a collaborative environment and to develop practical skills necessary for future success. I felt that I was part of a learning culture that was supported by the various Schneider Downs professionals that I encountered on a daily basis. The internship at Schneider Downs has been instrumental in my professional development. I am truly thankful for those professors that persisted about the importance of internship experience and am grateful to Schneider Downs for making the process so insightful and rewarding. ### Accounting for Cryptocurrencies under IFRS From June 11th to the 12th the International Financial Reporting Standards (IFRS) Interpretations Committee met to discuss several topics, including the determination on how to account of cryptocurrencies.The Committee defined cryptocurrencies to be a subsection of cryptoassets with the following characteristics: A digital or virtual currency recorded on a distributed ledger that uses cryptography for security Not issued by a jurisdictional authority or other party Does not give rise to a contract between the holder and another party The Committee determined that cryptocurrencies do not currently have the characteristics of cash, in accordance with International Accounting Standards (IAS) 32, such as being a medium of exchange for measurement and recognition of all transactions within the financial statements. The Committee then determined that cryptocurrency may be classified as either inven­­tory or an intangible asset.Inventory (IAS 2): If held for sale in the ordinary course of business, cryptocurrency should be classified as inventory. Cryptocurrencies classified as inventory are measured at the lower of cost and net realizable value. If the cryptocurrency holder acts as broker-trader, the asset should be measured at fair value less cost of sale.Intangible Asset (IAS 38): If IAS 2 is not applicable, cryptocurrencies should be classified as intangible assets. According to IAS 38, cryptocurrency should initially be measured at cost. Subsequent to initial recognition, cryptocurrency should be measured at cost less accumulated amortization. If the cryptocurrency`s fair value can be determined, its fair value should be used instead (IAS 2 Inventories).In addition to the standard IFRS disclosures required entities must also disclose the following:Additional information:  Any additional information relating to cryptocurrency not otherwise noted but relevant to the understanding of the financial statements should be disclosed within the financial statementsManagement Judgements: An entity must disclose any management judgements related to the holding of cryptocurrencies if those judgements had a sufficient impact on the amounts disclosed within the financial statements.Subsequent events: Entities must disclose in the notes to the financial statements any material non-adjusting events that occurred subsequent to the financial statement date, including fluctuations in the fair value of the cryptocurrencies. Disclosure should include the nature of the event and an estimate of its financial effect. ### My Intern Experience at Schneider Downs During my internship, I got to experience the great, inclusive culture at Schneider Downs.  Everyone at the firm is willing to help you along the way because they understand that interns might not have a lot of prior knowledge; I’ve learned that most of the current employees were once in the same spot as an intern at Schneider Downs.  There were also a few trainings that were very helpful in getting us interns up and running with how everything is done at Schneider Downs, as well as expectations of the interns.The term “intern” is becoming revolutionized and is carrying more importance at Schneider Downs.  During the recruiting process, this was one of the major points I remember was being told - that I would be able to perform real, important tasks as an intern.  This came true through each engagement team I was a part of; I was able to perform staff level work and did not just fill my time with typical intern tasks.  Sometimes, I was put to the test and was challenged to take the first initiative on the job, but I always had someone there to help me when needed.  Through this, I was able to develop my problem-solving skills.  One of the keys to success as an intern is that you ask questions while you’re doing the test steps, so you can really understand what you are doing.  I was able to understand the bigger picture by asking questions, which I was then able to transfer those skills across clients. One of the important things I was able to develop while interning at the firm was soft skills, which I think are a really important aspect of working in public accounting.  I was given the opportunity to talk to controllers and other key executives of major companies to help solve any issues that may arise.  Initially it may be a little daunting, but after the first couple times, you will become more comfortable.  In addition to developing my soft skills, I was also able to develop my technical skills and was exposed to various auditing techniques. The underlying principles that I learned in college were finally coming to light in the real world.  If it wasn’t for the interns doing the testing, another member of the team would have had to do it.  Sometimes, being thrown into a testing and trying to understand it from beginning to end is the best way, at least for me.  It reminds me of my first day working at a restaurant in high school; the line was constant my whole shift, but at the end of the day, I was able to get through it and learned from the experience.  My advice is that the best thing to do is to push through, and make everything a learning experience.  It was really up to myself to make the best of the opportunity and learn as much as I could in the short period of time that I had.Overall, I’m grateful for the opportunity I was given to join the Schneider Downs team this summer.  The seven weeks went by very quickly, but without a doubt I soaked in as much as I could and developed some everlasting professional relationships.  The first step of my professional career is done, and I feel a lot more prepared to tackle the next step, thanks to Schneider Downs. ### Due to Feedback, IRS is Brainstorming Other Ways to Calculate the Tax on Parking On December 10, 2018, the Internal Revenue Service (IRS) released interim guidance on the taxation of qualified transportation fringe benefits in the form of Notice 2018-99.  In the Notice, the IRS stated, "Using the value of employee parking to determine expenses allocable to employee parking in a parking facility owned or leased by the taxpayer is not a reasonable method because §274(a)(4) disallows a deduction for the expense of providing a QTF [qualified transportation fringe], regardless of its value".  On May 30, 2019, Deena Devereux, IRS Office of Associate Chief Counsel indicated that the IRS may reconsider allowing value as a reasonable method in determining parking expenses. Devereux also mentioned that the IRS is still determining possible ways to calculate the tax.  "We're looking at a bunch of ideas and a bunch of simple safe harbors that people have suggested.  Like for leases, just looking at 5 or 10 percent of the lease payment, and that's the parking lot [expense]."  Currently, no guidance has been released on allocating the cost of a lease payment to parking spots, but even if an organization's lease agreement does not apportion the cost of the parking spots provided to employees, organizations are still required to assign a value using a reasonable method.  Notice 2018-99 states, "A method that fails to allocate expenses to reserved employee spots cannot be a reasonable method."  Without providing a reasonable method as guidance for breaking out parking spots included in a lease, many organizations are struggling to calculate the value of their spots.  The positive side is that Notice 2018-99 states, "The §274(a)(4) disallowance may be calculated using any reasonable method."  As long as an organization has evidence that their method is reasonable, and it is well documented, the burden of proof is on the IRS to prove it unreasonable.  The key is that a value must be assigned to the spots or the IRS will assign one for the organization.Due to the huge impact this tax has had on exempt organizations, there is bipartisan support in Washington D.C. to repeal this tax.  Practitioners and organizations hope this troublesome tax is repealed sooner rather than later and that there is no need for additional guidance. For more information or questions regarding the taxation of qualified transportation fringe benefits for exempt organizations, please contact Schneider Downs. ### Postcard #1 from the American Trucking Association's National Accounting and Finance Council's Annual Conference - Breakfast Address by President Chris Spear Tuesday morning’s conference began with a breakfast address by Chris Spear, the President and CEO of the American Trucking Association (ATA). He provided a quick recap of the current state of relations between the organization and political leaders in Washington D.C. His update included the recent negotiations between Congress and the President regarding infrastructure funding, and he remained optimistic that a deal could be reached even after the latest breakdown in negotiations.Mr. Spear also discussed the need for dedicated funding for infrastructure spending and detailed the ATA’s recent proposal, the Build America Fund. This proposal calls for the adoption of a 20-cent-per-gallon fee on motor fuels, which would be phased in over four years at 5 cents per year. According to the ATA, this proposal would generate about $340 billion over the next ten years.Mr. Spear also covered several other topics, including the driver shortage, the implications of the restriction barring drivers under the age of 21 from hauling interstate loads, and congestion on the highway system.  The day after Mr. Spear spoke at the NAFC conference, he testified to the House Transportation and Infrastructure Committee, stating the following:“ATA pledges to help this subcommittee write legislation that takes into consideration the state and future of the trucking industry, looking beyond the hood – 5, 10, 15 years out – and how we can improve safety through innovation; how we can grow a diverse, well-trained workforce that shores up the very real and well-documented shortage of talent; how trucking can generate and invest real money into our decaying infrastructure; and, how trucking can help you shape free and fair trade agreements that make the United States the strongest economy in the world.”Mr. Spear is a dynamic, knowledgeable speaker and it is always enlightening to hear him discuss current topics in the transportation industry. ### Which States Can Tax Your Trust? Imagine that you are a taxpayer living in Pennsylvania who has recently established a trust for the benefit of your Ohio-resident children. Further imagine that you have appointed your brother, a Maryland resident, to serve as the trustee, and your trust investments perform well and earn significant income during the year. This doesn’t sound complicated so far, but there’s a catch: when tax season arrives, which of these states have the power to tax your trust?It goes without saying that each of these states will be quite willing to enthusiastically tax your trust. But their authority to do so is regulated by certain provisions of the United States Constitution which require the existence of “minimum contacts” between your trust and the state before taxation is permitted. Taxpayers and state tax authorities often don their boxing gloves to spar over the satisfaction of these minimum contacts, occasionally calling upon the courts to referee these disputes.The limits of a state’s ability to tax a trust were recently examined by the United States Supreme Court. A taxpayer, who was a resident of New York, formed a trust for the benefit of his descendants. The trust was governed by New York law and was administered in the state by a Connecticut trustee. During the years in question, the beneficiaries resided in North Carolina. However, the trust earned no income in North Carolina, made no investments there and otherwise maintained no presence in the state. The beneficiaries also had no right to, and did not receive, any distributions from the trust.The North Carolina taxing authorities sought to tax the trust on the grounds that the residence of the beneficiaries within the state was sufficient to create the minimum contacts necessary for taxation. However, on June 21, 2019, the Court unanimously ruled that North Carolina’s efforts to tax the trust violated the Due Process Clause of the Constitution. The Court reasoned that the presence of in-state beneficiaries alone does not empower a state to tax trust income that has not been distributed to the beneficiaries if the beneficiaries have no right to demand such income and their receipt of the income is uncertain.     Currently, there is no uniformity among states regarding the basis of taxation of trusts. A trust may be subject to a state’s taxation based upon the residence of the grantor, the location of the trust’s administration, the residence of the trustee or beneficiaries, or any combination of these factors. Because of this inconsistency between state laws, it is possible for more than one jurisdiction to conclude that it has the constitutional authority to tax your trust. We therefore strongly advise you to consult your tax advisor when establishing a trust to prevent any avoidable state tax consequences.North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust, U.S. Supreme Court, Dkt. 18-457, June 21, 2019. ### 2019 Compliance Supplement The Office of Management and Budget (OMB) has continued its overhaul of the 2019 Compliance Supplement, and after a significant delay, the final document was issued on July 1, 2019. This delay was a result of the additional time required by the following items: Requiring agencies to reduce the number of tested compliance attributes to no more than six (except Research and Development); More extensive changes to program compliance requirements that ask agencies to consider programs that have higher risks or errors. One program that has been identified for more changes than usual is the Student Financial Assistance Cluster due to concerns from the Department of Education regarding improper payments; and Better guidance on internal controls, including more illustrative examples and how to determine if controls are appropriate. The OMB has noted that a reduction in the audit burden should not be expected as a result of these changes.We are in the process of digesting these changes and we will provide an update after our team has reviewed the supplement. You can access the final supplement here.For more information, visit the Our Thoughts On blog or contact Schneider Downs. ### Possible Tax Ramifications of Robert F. Smith’s Student Loan Payoff Billionaire Robert F. Smith, the founder, chairman and CEO of a private equity firm Vista Equity Partners, promised to pay off the school loans of the entire 2019 graduating class of Morehouse College in his commencement speech on May 19. Morehouse College is a historically all-male liberal arts college located in Atlanta, Georgia.  The first question that comes to an accountant’s mind is what are the tax consequences of this incredibly generous gesture.Although the specific details of how the elimination of the student loans will take place are currently unknown, there are two possible scenarios. In the first one, the payment will be considered taxable as a prize and students would have to recognize it on their individual income tax returns. For example, if Mr. Smith gives money directly to school or the loan institution and then the debt is forgiven from that institution or the school. The second, more likely outcome is that the payments would be considered gifts, in which case the students would have no tax burden, and any tax to be paid would be the responsibility of Mr. Smith. In 2018, annual exclusion from tax (per person receiving a gift) was $15,000. As the collective loan total nears $40 million, it would be best for Mr. Smith to figure out a way to pay off all the loans individually over several years rather than all at once to avoid paying gift tax.In either scenario, this announcement by Mr. Smith gave graduates encouragement, motivation and a chance to focus on pursuing their dreams without the heavy burden of student loans. ### Exempt private schools offered new option to display nondiscriminatory policy As of May 28, 2019, private schools exempt under Section 501(c)(3) of the Internal Revenue Code will now be able to display their racial nondiscrimination policy online. The newly modernized Rev. Proc. 2019-22 updates the 1976 Rev. Proc. 75-50, which required schools to publicize their policy in either a newspaper or using broadcast media.Exempt private schools may now publicize their policy on the home page of the school's website, but this notice must adhere to certain criteria in order to be considered effective. The displayed homepage must be accessible to the general public, meaning it cannot require special user access such as an email address or password. The policy must be present on the page at all times during the year. Additionally, the policy has to be clearly displayed so that visitors will notice it by simply scrolling down the homepage, and it cannot be a link to a separate page displaying the policy. It is also not acceptable to provide the policy through a drop-down menu or have it appear in a carousel display. Although this new website display provides another option to private schools, they can still publish the policy in a newsprint or on broadcast media. Both medium choices must be expected to reach all racial segments of the community. ### Illinois Tax Amnesty Program The Illinois legislature recently passed and Governor J.B. Pritzker signed into law a amnesty program that will run from October 1, 2019 through November 15, 2019.The program allows delinquent taxpayers to resolve Illinois tax liabilities for tax periods between July 1, 2011 and June 30, 2018.  Taxpayers taking advantage of the program can receive significant savings, as the Illinois Department of Revenue will abate all related penalties and interest. Taxpayers must be sure that all Illinois tax liabilities are settled for the amnesty period, since any unpaid taxes may negate any amnesty granted by the Department for the entire amnesty period.Similar to other amnesty programs, it is open to most taxpayers who are not a party to any criminal investigation or any criminal or civil litigation that is pending in any Illinois court for nonpayment, delinquency or fraud in relation to any state tax imposed by Illinois state law.For more information about the program, contact a member of the Schneider Downs’ State and Local Tax Team.    ### Revised Form W-4 As a result of the Tax Cuts and Jobs Act passed in December of 2017, the IRS recently revised Form W-4: Employee’s Withholding Allowance Certificate. Form W-4 is typically completed when starting a new job and informs an employer of the amount of federal withholding to withdraw from paychecks. The newly modified Form W-4 should be finalized by November 2019, and is substantially different from the existing Form W-4.The current Form W-4 asks for filing status, number of allowances and any additional amount to be withheld from each paycheck. The value of a withholding allowance was previously tied to the amount of the personal exemption, but personal and dependency exemptions are no longer allowed in tax year 2018 due to the Tax Cuts and Jobs Act. This resulted in the long-overdue IRS update to Form W-4.The five sections on the revised Form W-4 are as follows:                Step 1: Personal information – name, SSN, address and filing status                Step 2: Multiple jobs                Step 3: Claim dependents                Step 4: Other adjustments                Step 5: Employee signature and dateThe only steps required for all employees are steps one and five. If only these two steps are completed, an employee’s withholding will be computed based on their filing status’ standard deduction and tax rates, with no other adjustments. Completing steps two, three and four, however, will more accurately match an employee’s tax liability to their withholding.Step two relates to multiple jobs. The current Form W-4 handles multiple jobs, but does so with cumbersome worksheets that most individuals are not aware of. The revised form allows employees to use a simplified worksheet or check a box if there are only two jobs in their household. This box should also be checked on the other employed household member’s form. With the “check the box option”, employees may find that more tax is withheld from their wages than necessary, but at least they will not owe tax when filing their return.Step three is used to take into account credits for dependents. If a single employee’s expected income will be $200,000 or less ($400,000 or less if married and filing jointly), the revised form factors in the amount of credit received for each dependent still under age 17 at the end of the year.Step four encompasses all other adjustments, including: Other income received for which no tax has been withheld Itemized deductions expected in the current year, such as the sum of charitable contributions, mortgage interest, medical expenses in excess of 10% of your income, and state and local taxes up to a maximum of $10,000 Any additional amount of federal withholding requested to be withheld each pay period A common question for employees is whether they are required to submit a new Form W-4 when the form is finalized in November of this year. Fortunately, employees who have previously submitted a Form W-4 are not required to submit a new form merely because of the redesign. Employers will still withhold according to the current Form W-4 on file. However, if a taxpayer and/or household has more than one job or other types of income with no withholding, it might be a good idea to update Form W-4. Additionally, if a taxpayer owed federal tax on their 2018 return and would not like to owe tax next year, they should consider completing a revised Form W-4.If you have any questions on the revised Form W-4, please reach out to your Schneider Downs professional for assistance. ### National Flood Insurance Program Extension As I watched the pounding rain from my window for the third straight day, I could only imagine the damage this unpredictable spring weather was inflicting upon Pennsylvania’s rivers and streams.  According to FEMA, floods are the nation’s most common and destructive natural disaster, and homeowner’s and renter’s insurance typically does not cover flood damage.  To help protect American homes and businesses, Congress created the National Flood Insurance Program (NFIP) in 1968 after the devastating loss of life and property caused by Hurricane Betsy.On May 31, 2019, the NFIP was set to expire.  Prior to this deadline, Congress had passed numerous short-term extensions to the program that proposed no changes and created uncertainty in the insurance and housing markets.  What the NFIP needed was a long-term extension that would give Congress time to agree upon substantive changes and updates to the program.Congress is responsible for periodically reviewing the NFIP’s legal authority to operate, and along with FEMA, it has continued to honor active flood insurance contracts with current policyholders.  If the NFIP’s authorization were to lapse, FEMA would still have the authority to ensure payment of claims with the available funds, although the lapse would stop the sale and renewal of policies for millions of properties across the nation.  A reauthorization would give Congress the opportunity to strengthen the NFIP’s financial framework and reduce the overall complexity of the program.As reauthorization discussions continued, Congress passed another limited extension to the program on May 31.  Then, on June 7, the House Financial Services Committee announced that they had reached a bipartisan agreement on a five-year extension of the NFIP: The NFIP Reauthorization Act of 2019.  The long-overdue changes will improve the accuracy of flood maps, enhance mitigation and address affordability.  One day before this agreement was publicized, a disaster aid relief package was also authorized that further extends the program’s expiration until September (the twelfth temporary solution since 2017).  The drafted bill includes a series of reforms to the program’s operations and ultimately extends it through September 30, 2024.On June 12, the NFIP proposal advanced unanimously out of the House Financial Services Committee as a result of the first major display of compromise on the program.  House leaders are now hoping to fast track the bill and advance it to the Senate before the next temporary deadline at the end of September.  Additionally, the committee also unanimously passed a bill that would streamline the NFIP claims process.Although the bills do not currently resolve the issue of the program’s debt, the bipartisan compromise provides hope that long-term certainty and key reforms can be accomplished.  If you would like more information on the NFIP, please visit www.fema.gov or contact your local Schneider Downs representative. ### Update: Tax Change to Receiving Advance Payments It’s doubtful that Bret Michaels was exhibiting any sort of clairvoyant talent and was actually referring to the Tax Cuts and Jobs Act of 2017 (the Act) when he crooned that “every rose has its thorn” some 30 years ago, but the “rose” of the new tax law – while providing many positives – is certainly not exempt from its “thorns.” While the Act has reduced corporate and individual income tax rates, amendments to Treasury Regulation 1.451 (Reg 1.451-1), are increasing the upfront cash tax expense. Under the new regulations taxpayers may now be required to accelerate the recognition of income, which is resulting in higher taxes owed upfront.Pre 2017 tax overhaul, Reg 1.451-1(a) stated that, for accrual basis taxpayers, "Income is includible in gross income when all the events have occurred that fix the right to receive the income and the amount can be determined with reasonable accuracy. All the events that fix the right to receive income generally occur when: (1) the payment is earned through performance, (2) payment is due to the taxpayer, or (3) payment is received by the taxpayer, whichever happens earliest." (Rev Rul 2003-10, 2003-1 C.B. 288). However, Revenue Procedure 2004-34 allowed a taxpayer to defer revenue, if not earned through performance, to the succeeding tax year after the year in which the payment was received under the Deferral Method.Under the Act, beginning on January 1, 2018, Reg 1.451-1 has been amended, and now requires an accrual basis taxpayer to treat the all-events test for a particular item of gross income as met no later than when the item is taken into account as revenue in the taxpayer’s applicable financial statement or any other financial statement the IRS prescribes, with the remainder being recognized in the following tax year. Additionally, the amended Section 451(c) overrides the deferral method provided by 1.451-5. The all events test will be met as the receipts are reported as revenue on the taxpayer's applicable financial statement and no deferral will be permitted.  The new revenue recognition standard pursuant to ASC 606 (effective for non-public entities for the year ended December 31, 2019) may accelerate income recognition for financial reporting purposes.  Accordingly, this may accelerate income recognition for tax reporting as well. Keep in mind this change is only a timing difference. Corporations will still be able to enjoy the 21% tax rate, and individuals with domestic qualified business income from a trade or business – which most manufactures are – will see their effective tax rate lowered to 29.6% with the section 199A deduction.Schneider Downs tax advisors will continue to monitor additional proposals, changes and technical corrections to the Act. If you have questions, please contact us. ### Income Share Agreements - The next step in higher education affordability? The student loan crisis has become a serious concern nationally, and numerous institutions of higher education are looking into alternative funding for students to help make their schools a more affordable option, with an eye also for retaining students who might be either unable or unwilling to seek more federal or private student loans.Income share agreements (ISA) could be the next step in higher education tuition flexibility. As colleges and universities continue to seek ways to make their institutions more appealing to students, and students continue to seek institutions with more reasonable funding, ISAs could help solve both dilemmas. The agreements are contracts between a student and their school. It results in the student receiving funding for their education in exchange for providing a portion of their income after graduation to the institution for a specified period of time. This is a marketable program for many schools; it can make them a more attractive option for students, and it also benefits the students as they look into the future, knowing their debt payments will not exceed a fixed percentage of their income.The income share agreements allow the institution to provide funding for students who might have used up other financial aid options. ISAs also put more responsibility on the school to help students succeed, so that graduates can begin paying back the borrowed money. This type of funding allows for financing that can help students stay in school and increase graduation rates through eliminating financial barriers. In addition, ISAs ease students’ transition into work after graduation by not requiring payment from a graduate unless the graduate makes a certain income. This allows graduates to live affordably while paying back their student debt with just a set percentage of their pay. These agreements could be a great alternative for student who have felt that traditional loans have put their education out of reach.If you are considering entering into an ISA, your institution will need to prepare for this to make sure that not only do you have the appropriate accounting, but that you also have the right infrastructure to make this a success for the institution and the students.  This includes evaluating your aid awarding process, on-going retention efforts, career services and ensuring you are partnering with a service provider that can assist you in managing the portfolio.ISAs can be an additional tool to assist with retention and attract new students if they are well planned and executed and your institution can invest the additional infrastructure needed. ### Cybersecurity and nonprofits: Time to button up! If you were to look up the biggest data breaches over the last 10 years, you would find a gathering of some of the largest companies in the world, many of which are familiar to the average person.  While any significant loss of data or large security breach of one of these companies is likely to make headlines, nonprofit organizations and their leaders should be on high alert when it comes cybersecurity within their organization.While one might assume that hackers and those trying to breach the virtual walls of security to organizations might tend to go after the large, public companies due to their ‘deeper pockets’, statistics show that nonprofit organizations, particularly those in healthcare, are just as likely to be targeted.  Hackers tend to assume that smaller, nonprofit organizations have less sophisticated security systems that make their data and underlying records more susceptible to breaching and corruption.With this in mind, those charged with governance within nonprofit organizations should recognize that while they may not have the excessive amounts of cash and funds that a large, for-profit corporation may have on hand, their entity can house a significant amount of sensitive data.  Any breach or compromising of such data could be potentially disastrous for the organization and its future.If you have any questions on your company’s cybersecurity, our technology services group is here to help! ### When to Buy New Electronics? Now! Every day we use products bearing the label “Made in China”, a mark that has become synonymous with the affordable mass production of countless objects that fill the American home. China is a manufacturing hub with the largest export economy in the world, exporting approximately $2.48 trillion of goods in 2018.  Recently, the US Trade Representative (USTR) proposed a plan to impose tariffs as high as 25% on $200 billion of imports from China, including electronics such as smartphones and laptops.  The tariffs will go into effect on June 25th unless a new deal between these economic superpowers can be negotiated. Electronics manufacturers in particular will be hit hard.  They are more likely to source components from different parts of the world, resulting in multiple rounds of exports and imports across the Pacific Ocean.  In the near future, companies may be forced to raise the prices they charge consumers to cover the increase in cost.  Some companies like Apple that have high profit margins may choose to absorb the increase in cost without changing prices, but other electronics companies with smaller profit margins will not have this option. The threat of tariffs has been an ongoing subject that is causing manufacturers to consider actions to mitigate the cost of potential impending taxes on imports.  A recent survey of more than 200 corporate executives by the consulting firm Bain showed that “42 percent [of respondents]… expected to get materials from a different region in the next year, and 25 percent… were redirecting investments out of China.”  However, changing the supply chain can be an expensive and lengthy process. Part of the thought process behind the trade tariffs is to encourage more manufacturing in the United States.  In addition, the recent tax reform included changes such as the Foreign-Derived Intangible Income deduction that provides a 37.5% tax deduction on foreign exports (applicable to C corporations).  Yet, despite the tariffs on imports and incentives for exports, data shows that while imports from China have decreased, they are being offset by increased imports from other countries rather than an increase in manufacturing in the US. While we wait to see the outcome of these negotiations, American manufacturers will continue to consider the implications of these tariffs on their business decisions. ### Final Regulations on Charitable Contributions When a State or Local Tax Credit is Received The Treasury Department and the Internal Revenue Service have issued the final regulations regarding charitable contributions for donors also receiving a state/local tax credit.  These final regulations, issued June 11, 2019, largely adopt the proposed regulations published August 27, 2018.  We previously issued an in-depth "Our Thoughts On" piece on this topic; see /our-thoughts-on/irs/tax/interplay-of-new-charitable-deduction-regulations-state-local-tax-credits. These regulations received more than 7,700 written comments during the public discussion period, along with 25 in-person remarks made at the November public hearing.  A large majority of comments were in favor of adopting the proposed regulations without change. Under the final regulations, a taxpayer who makes a contribution to an eligible tax-deductible entity must reduce the amount of charitable deduction they recognize on their personal individual income tax return by the amount of state or local tax credit received.  This is in line with the long-held position that any benefit received from a donation must be netted against the total when calculating charitable deductions. Under current Pennsylvania law, when a taxpayer makes a contribution to a special purpose entity (SPE) designed to promote education or scholarships, they can receive a credit against their Pennsylvania state income tax worth between 75-90% of the total contribution.  However, according to the changes in the final regulations, the federal itemized charitable deduction must be reduced by the exact amount of that state tax credit.  An example to illustrate:  a taxpayer makes a $10,000 contribution to a SPE, receiving a PA tax credit of $9,000.  Their federal charitable deduction is therefore limited to $1,000. An additional safe harbor has been detailed within the final regulations that allows an itemizing taxpayer who has not already reached the maximum allowable state and local tax (SALT) deduction of $10,000 per year to include the state/local tax credit within their SALT deduction.  Thus, from the example in the previous paragraph, the $9,000 PA tax credit (disallowed for charitable purposes) could be added to the total SALT deduction, up to the maximum amount of $10,000 per year. The final regulations further clarify that when the tax credit is no more than 15% of amount paid, a reduction in federal itemized charitable deductions is unnecessary. If you want to know more about this topic or others with regard to your individual income tax situation, please contact your local Schneider Downs tax team for assistance. ### Continued Compliance with CAISO SQMD Requirements in Non-Reporting Years Is your utility company ensuring continued compliance with the CAISO SQMD requirements during non-reporting years?With the California Independent System Operator (CAISO) reducing the required scheduling coordinator audit and testing requirements to every two years, maintaining compliance with the fifth replacement Federal Energy Regulatory Commission Electric Tariff on non-reporting years should still be considered a priority. This testing is performed to ensure compliance with the scheduling coordinator metered entity’s Settlement Quality Meter Data (SQMD) plan. Although the reporting is only required every other year, some companies elect to continue to perform audit procedures to ensure compliance.Continued monitoring of the company’s CAISO requirement status ensures no surprises in reporting years. This approach is especially beneficial for companies that have higher employee turnover, system changes, previous compliance issues or those that value the comfort of knowing that they’re still in compliance. The largest risk to clients that Schneider Downs has identified is a change in key personnel, key systems or key procedures. This can unknowingly create a lapse in compliance if appropriate transition procedures are not performed. Electing to perform testing in non-reporting years can identify and resolve these issues.Some companies have elected to perform full audit procedures, while other have chosen to perform limited procedures on high-risk functions. Both are good choices, but the ultimate decision should be made based on the company’s risk appetite. The greatest benefit to monitoring requirement status in non-reporting years is the ability to identify and remediate errors in a timely fashion. Contact us today to discuss how Schneider Downs can help your company with CAISO SQMD compliance and monitoring. ### Skilled Labor Shortage in the Manufacturing Industry The Federal Reserve released its most recent Beige Book on June 5, 2019, which summarizes current economic conditions, including challenges, opportunities and trends of the 12 Federal Reserve Districts. A common theme noted in the publication was tight labor markets and shortages of skilled laborers with a rising demand for such workers. This is not news to most manufacturing companies, as recruiting and hiring skilled laborers has been an obstacle for several years.There are two main causes of this shortage. First, a significant number of laborers who belong to the baby boomer generation are reaching retirement age. Second, there has been difficulty in getting the younger generation interested in jobs within the manufacturing industry.  The aging workforce combined with the trouble of attracting younger workers has presented a difficult situation for most manufacturing companies.Several solutions to the labor shortage have been presented and implemented throughout the country in the form of apprenticeships and work-based learning programs.  The goal of these programs is to attract younger workers to the engineering and technical aspects of the industry. Currently in the United States, the top four industries for apprenticeships are construction, military, public administration and manufacturing. Manufacturing apprenticeships are typically focused on production and machine workers as well as engineers. These apprenticeships provide specialized training and application-based learning, which in turn produces competent, efficient and effective workers.  Apprentices typically command higher wages, but can create cost savings in the long run.Another solution is work-based learning programs, which focus on educating high school students on the opportunities within the skilled trades industries. Throughout the country, companies have teamed up with educators to introduce students to the inner workings of the manufacturing industry, including the various jobs available and the skills needed to adequately perform them. Without these programs, it is unlikely that high school students would be aware of these opportunities.As the industry progresses and grows, companies are also faced with decisions to invest in technology and automation rather than their workforce. However, for the foreseeable future, skilled laborers are still needed. Perhaps investment in the programs mentioned above could be the solution to the labor shortage and the key to creating an effective and efficient workforce.For further information on manufacturing apprenticeships, see: https://www.apprenticeship.gov/apprenticeship-industries/advanced-manufacturing ### New Standard Mileage Rates for 2019 In December 2018, Washington D.C. embraced the Holiday spirit with a federal tax update, resulting in an increase to standard mileage rates and presumably many happy drivers. This marks the second year in a row that the federal government has increased rates for mileage deductions and reimbursements used by taxpayers.The IRS standard mileage rates for the use of a vehicle (including cars, pickups, vans or panel trucks) in 2018 were: 54.5 cents for every mile of business travel driven 18 cents per mile driven for medical or moving purposes 14 cents per mile driven in service of charitable organizations The standard mileage rates starting on January 1, 2019 are as follows: 58 cents for every mile of business travel driven 20 cents per mile driven for medical or moving purposes 14 cents per mile driven in service of charitable organizations Standard mileage rates aren’t the only vehicle expense adjustments included in the Tax Cuts and Jobs Act though; miscellaneous deductions subject to the 2% adjusted gross income limitation are no longer available to individual taxpayers. Thus, itemized claims on unreimbursed employee travel expenses cannot be deducted. It is important for taxpayers to note that the business standard mileage rate cannot be used where MACRS depreciation amounts are taken or after claiming a Section 179 deduction for a vehicle. Further, the business standard mileage rate cannot be applied to more than four vehicles at the same time.According to the IRS News Release, the standard mileage rate for business use is determined through an annual study of fixed and variable costs of vehicle operation, although the rate for medical and moving purposes is established on variable costs alone. If you have any questions regarding the implications of vehicle expense adjustments or mileage rates, please contact your local Schneider Downs tax associate. ### Manufacturing's Workforce Crisis According to the National Association of Manufacturers' latest Outlook Survey, 90% of manufacturers are optimistic about their company's future.  Yet the same survey also found 70% of manufacturers expressing serious concerns about their ability to find skilled workers capable of maintaining the momentum of the industry.  This gap between open jobs in the manufacturing sector and the number of workers able to fill them represents one of manufacturing's biggest challenges in the next decade.A 2018 report published by the Manufacturing Institute shows that the manufacturing skills gap is expected to result in as many as 2.4 million unfilled jobs between now and 2028. In turn, more than $2.5 trillion in manufacturing GDP could be at stake. That's right, trillion. These "skilled positions" require specific training or skillsets and often take months to fill.  They include everything from digital and supply chain personnel to production workers, researchers, engineers, software developers and operational managers.The Institute's report indicates that positions often go unfilled as a result of the negative perceptions of the industry (45%), the notable shift in desired skillsets due to the introduction of advanced technologies (36%) and the retirement of the baby boomers that previously occupied these positions (36%). Over the next few years, the inability to fill open positions is expected to have the greatest impact on the growth of manufacturing companies.  With a limited workforce, it will become challenging for manufacturing companies to satisfy growing customer demand and respond to new market opportunities.Fortunately, manufacturers are already using a variety of approaches to mitigate the expected shortage, from adopting learning and development programs, to creating short-term project opportunities for recent retirees.  As an added measure, 83% of companies surveyed also reported that they are prepared to pay more to attract and retain skilled talent. Manufacturers must continue to be proactive but also think long-term in their approaches.  Attracting a diverse cohort of workers with a wide breadth of both knowledge and experience can only be beneficial, as artificial intelligence and robotics are expected to transform the industry in ways yet to be seen.  Developing human-machine collaboration as well as training programs that engage a multigenerational and diverse workforce will be vital to their success.Organizations that support manufacturers should take heed as well, including schools, technical programs, businesses and policymakers.  As STEM programs pop up in schools across the country and more businesses offer hands-on apprenticeships to students, the potential for positive change far outweighs the risk of stagnation. ### IASB Proposes Annual Improvements for 2019 On May 21st, the International Accounting Standards Board (IASB) proposed four amendments for this year’s improvement consideration of the International Financial Reporting Standards (IFRS). These amendments recommend a modification of the following Standards: IFRS 1 First-Time Adoption of International Financial Reporting Standards – This proposed amendment simplifies the first-time adoption of IFRS by a subsidiary after the parent company has already adopted the IFRS Standards. The proposed amendment relates to the measurement of cumulative translation differences by permitting the subsidiary to use the amounts reported by the parent for that entity on the consolidated financials. IFRS 9 Financial Instruments – The proposed amendment clarifies that financial liabilities should be derecognized and a new liability established following significant changes to the terms of the liability. A significant change is determined when fees paid on the liability fluctuate by greater than 10% of the discounted present value of the liability’s remaining cash flows. IFRS 16 Leases - The IASB proposed clarification of an illustrative example surrounding the treatment of lease incentives provided as part of the leasing standard. This clarification was designed to eliminate potential confusion. IAS 41 Agriculture – Aligns the fair value measurement requirements with IFRS 13 Fair Value Measurement. Under IAS 41, agricultural entities are currently required to exclude taxation cash flows when assessing fair value measurement. This proposed amendment would remove this industry difference for agricultural entities and permit a number of present valuation techniques, as discussed under IFRS 13, depending on the facts and circumstances.  The IASB is now accepting written comments on the proposed annual improvements through August 20, 2019.For more information concerning the International Financial Reporting Standards, please visit the Schneider Downs Our Thoughts On blog or Email us at contactSD@schneiderdowns.com. ### Form 990-T Fiscal Year 2017 Corporate Filers Blended Tax Rate Just in case you hadn’t already heard enough about the 2017 Tax Cuts and Jobs Act (TCJA), here is some beneficial information for corporations calculating their blended tax rates.As part of the TCJA, changes were made to federal income tax rates for organizations filing Form 990-T. If you are unfamiliar with Form 990-T, it is the annual tax return filed by exempt organizations if they have Unrelated Business Taxable Income (UBTI).  The new tax law provisions introduced a flat 21% corporate tax rate for tax years beginning after December 31, 2017, but what does this mean for tax filers with other fiscal year-ended dates?According to the TCJA, corporations with fiscal years beginning in 2017 and ending in 2018 must calculate their tax by using a blended tax rate. For example, an organization that is year ended June 30, 2018 calculates its tax liability by applying the pre-2018 rate and the post-2017 rate to the organization’s taxable income for the entire year. The organization would then prorate those amounts based on the number of days in each period relative to the total days in the tax year. The blended rate may be greater or less than the 21% corporate tax rate. Please see below for an IRS example of how to calculate the tax liability and blended rate.IRS ExampleIn the example below, a corporation (not a controlled group member) filing a Form 990-T for a tax year beginning July 1, 2017 and ending June 30, 2018 is reporting UBTI of $2,000 on line 34, made up in part of UBTI from a disallowed qualified transportation fringe amount reported on line 12. The corporation calculates income tax on line 35c of 2017 Form 990-T as follows:  1.    UBTI from Page 1, Part II, line 34 $2,000 2.    Tax on line 1 amount using pre-2018 tax rate schedule from Page 19 of 2017 Instructions for Form 990?T (15%) $300 3.    Tax on line 1 amount using the 21% rate $420 4.    Multiply line 2 by the number of days in the corporation’s tax year before Jan. 1, 2018 (184) $55,200 5.    Multiply line 3 by the number of days in the corporation’s tax year after Dec. 31, 2017 (181) $76,020 6.    Divide line 4 by the total number of days in the corporation’s tax year (365) $151 7.    Divide line 5 by the total number of days in the corporation’s tax year (365) $208 8.    Add lines 6 and 7. This is the corporation’s total tax for the 2017 fiscal tax year (blended rate of 18%). $359 If you have any additional questions, please contact a member of the Schneider Downs tax-exempt group. ### Cybersecurity & Employee Benefit Plans The threat of a cyberattack is prevalent throughout the business world. Given the highly sensitive data held within employee benefit plans, it should come as no surprise that they have become a major target for hackers. Protecting participants’ personally identifiable information is a responsibility no longer limited to IT departments. Plan sponsors, fiduciaries and service providers of all employee benefit plans have an obligation to establish strong information systems practices to help prevent these attacks.In November 2016, the Department of Labor’s Advisory Council on Employee Welfare and Pension Benefit Plans released a publication entitled, “Cybersecurity Considerations for Benefit Plans” to help plan sponsors protect their clients’ data (https://www.dol.gov/sites/default/files/ebsa/about-ebsa/about-us/erisa-advisory-council/2016-cybersecurity-considerations-for-benefit-plans.pdf). Listed below are the three principal recommendations included in this publication for plan sponsors, fiduciaries and service providers managing benefit plan cybersecurity: Establish a Strategy Plan sponsors should identify how data is accessed, controlled, transmitted and stored, and assess the risks associated with these processes. Management strategies must be customized and dynamic to provide the best fit for their individual plan. Contract with Service Providers Plan sponsors should have frequent discussions with the plan’s third-party service providers and review each provider’s current policies and procedures relating to data security, including determining the best approach for evaluating the effectiveness of existing controls. Understand Insurance Any individual dealing with employee benefit plan information should have a clear understanding as to whether or not the current insurance/bond policies protect against the consequences of a cyberattack. It is important to be educated on the appropriate cyber insurance policy needed to cover the plan. Schneider Downs can help you assess your plan’s current needs and assist in implementing an appropriate cybersecurity strategy today. ### Make Europe Great Again The day after the EU Parliamentary election in May 2019, I opened my newspaper in a café in Copenhagen and read the Berlingske Tidende’s morning headline: Make Europe Great Again!With May, Merkel and Macron stepping down or losing clout, these results signal an expansion of coalition government involvement within the EU, and further increase speculation of Jean-Claude Junckers’ future replacement. Voter turnout for this continent-wide election was the highest since 1994 with 50% of Europeans coming out to vote. Clearly, the voters had something to say!The election resulted in the loss of a clear majority for most governments, which will require parties collaborate with their coalition partners in the coming years. Decreased support for the Social Democrats and Conservatives caused them to lose their “monopoly” on the majority – one they have held since 1979 when the EU Parliament was established. The Liberal and Green parties gained the most ground in nearly every EU country. While Macron’s party in France strengthened its numbers with nearly 110 mandates, the “Green Vest” protest movement that has hounded him this past year clearly resounded with the French people.The hard right groups that typically lobby for tighter immigration rules and strong border control lost ground to the Climate lobby. Despite this, they remain a strong minority in France, Germany, Great Britain, Austria, Italy, Hungary and Denmark.Without any clearly dominant party, the question remains of who will take over as head of the EU once Jean-Claude Junckers steps down, as many countries will be vying for this influential position. One name that frequently appears is that of Margrethe Vestager of Denmark, who currently serves as the European Commissioner for Competition. Many international companies will recognize her from the tough stance she has taken on monopolies, cross-border taxes and transfer pricing issues.The German and French Axis is in crisis, as Chancellor Merkel’s party had its worst election results since 1893. President Macron’s party lost mandates again to Marie Le Pen, which will weaken him both domestically and internationally.Lastly, what will happen in Great Britain? Teresa May announced on June 6th that she will step down as the UK Prime Minister and it appears that the Hard Brexit will prevail – although it is unlikely that the process will be an easy one. Interestingly, since UK citizens were still able to vote in the EU election, it resulted in the Brexit Party becoming one of the largest national delegations in the EU Parliament, with as many MEPs as Angela Merkel’s center-right CDU-CSU coalition.What trends can we expect?Coalition governments will need to develop policies with the support of parties that may not have held much influence in the past, so expect to see different tax, economic and social policies being put in place.Climate policy tends to be more costly to implement than border control or immigration reforms. Therefore, expect to see increased taxes across the board, although governments have already revealed a potential source of this revenue from an increase in estate and inheritance taxes on the wealthy.The UK will most likely exit the EU in what is being termed a “Hard Brexit”. This arrangement would see the UK give up full access to the single market and customs union, giving Britain full control over its border and requiring the establishment of new trade partnerships. The UK would also be responsible for applying those laws within its own territory and will most likely revert to the World Trade Organization’s rules with its former EU trading partners. As a result, many expect for real estate prices to continue to fall, which is always an investor’s intrigue and a buyers’ delight!The ramifications of this election will certainly be felt even by those who reside outside of the EU, as these changes will influence future international tax, policy and trade agreements. If you have any questions about the impact of these elections on your business or company, please contact your local Schneider Downs representative. ### Determining State Residency for Income Tax Purposes “How do I change my residency for state income tax purposes?” This is a common question that comes up at least several times during tax season. Sometimes clients get concerned about how much they are paying in state income taxes and start to think about establishing residency in a state that does not have state income taxes.[1] Occasionally, they might discuss taxes with their neighbors who have a second home in Florida who tell them to move to Florida full time because there is no income tax. What do you say to those clients who wish to establish residency in another state? You tell them that they must first establish domicile in the state that they wish to move to. What does domicile mean? Domicile simply means the location of your permanent home or principal establishment and the residence you intend to return to after travel. In other words, domicile means where you spend most of your time and the place where you have a substantial connection. For Ohio, you are considered a resident for income tax purposes if you are domiciled in Ohio. Think about the following items, all of which are factors to help determine your domicile: Voter registration Vehicle registration State where you have your driver’s license Location of your bank Location of your legal and medical professionals Location of any business that you own and operate Contact periods with a state Location of your property Your address on important documents, such as wills and trusts, passports and insurance policies If you want to change your residency from Ohio to another state, you will need to change most of the above to the new state that you want to become a resident in during the tax year. For tax years prior to 2018, Ohio had an irrebuttable presumption that you were not a resident as long as you did not have 212 contact periods with Ohio and also maintained another home in a state outside of Ohio. A person has a contact period with the state of Ohio when the individual is away overnight from their primary residence located outside of Ohio, and while away overnight from that home, spends at least some portion of two consecutive days in Ohio. To change their residency status, a taxpayer must complete a nonresident affidavit and confirm by filing the affidavit that they had no more than 212 contact periods for a year and therefore were presumed to be non-Ohio residents during the year. However, some taxpayers took advantage of this irrebuttable presumption, see Cunningham v. Testa 2015[2], and on June 28, 2018 Ohio passed House Bill 292, which changed the way that Ohio views a resident. As a result of House Bill 292, for tax years beginning in 2018, Ohio will consider you a nonresident if you meet all of the following requirements: During the tax year, you had no more than 212 contact periods in Ohio. During the tax year, you had at least one home outside of Ohio for which you did not claim a depreciation deduction. During the taxable year, you did not hold a valid Ohio driver’s license or Ohio state identification card at any time. You did not receive the Ohio homestead property tax exemption or the owner-occupancy tax reduction with respect to a tax lien date included in the tax year. You did not receive resident tuition benefits for an Ohio institution of higher education based on a residence located in Ohio. If your clients can meet the above five requirements, they will be considered a nonresident of Ohio for income taxation. Pennsylvania Individuals who are domiciled in Pennsylvania or who are statutory residents of Pennsylvania are subject to Pennsylvania personal income tax on income, regardless of where the income was earned. Pennsylvania defines domicile as the place in which an individual maintains a permanent abode and to which he or she intends to return whenever absent. A person may only have one domicile at any one time. The domicile of a Pennsylvania individual who has more than one abode is determined by two factors: (1) the one place where the individual has had the greatest connections during the taxable year; and (2) the place does the individual intend to be his or her domicile. In Pennsylvania’s brochure for determining residency, they list the following examples to help determine where the person has the greatest connections: Spends the greatest amount of time Supports a spouse and children Purchases the necessities of life Has doctors, lawyers and accountants Houses pets Has active banking accounts Worships regularly Participates in social, fraternal or athletic organizations Has works of art, furniture, family portraits or heirlooms Thus, Ohio and Pennsylvania have fairly similar definitions of residency.  It all comes down to domicile. Changing domicile requires planning so that you can meet the factors listed above to determine where you reside for state tax purposes. Additionally, in the past couple of years, Ohio has been increasing their audit activity for taxpayers who were once Ohio residents and then became nonresidents. If you are thinking of changing your residence to a state with no income taxation, consult your Schneider Down tax professional.  They can help you make this important decision. [1] Seven states do not have an income tax:  Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.  Tennessee and New Hampshire also do not have an income tax, but they do tax interest and dividend income. [2] Cunningham v. Testa, 144 Ohio St. 3d 40 - 2015 Please visit our Coronavirus Resource Center for related content. ### Bill S. 1564 Calls for Delay of CECL Implementation Until a Quantitative Economic Impact Study is Completed The Financial Accounting Standards Board (FASB) issued a new expected credit loss accounting standard in June 2016. This new standard introduces the current expected credit losses (CECL) methodology for estimating allowances for credit losses. The standard is effective for U.S. Securities and Exchange Commission (SEC) filers in fiscal years and interim periods beginning after December 15, 2019. For public business entities that are not SEC filers, the standard takes effect in fiscal years and interim periods beginning after December 15, 2020. For non-public business entities, it becomes effective in fiscal years beginning after December 15, 2020.Since CECL’s introduction, it has been met with backlash, specifically from the financial services industry.  In recent months, a bipartisan protest has decried the adverse effects of FASB’s CECL accounting standard on banks and their customers during times of economic stress.   Representatives Roger Williams (R-Texas) and Vicente Gonzalez (D-Texas) have called for delayed implementation of the standard until the full economic effects can be understood, citing data provided by the American Bankers Association (ABA) indicating that during periods of economic stress, CECL would cause significant spikes in loan loss reserves.  The ABA’s concerns are primarily focused on the procyclical effects of the standard.On May 21, 2019 Senator Thom Tillis (R-N.C.) introduced Bill S. 1564 to the Senate, calling for a delay of the implementation of FASB’s CECL standard until the completion of a quantitative impact study that fully details its likely effects on the economy. The Bill calls for a quantitative study of: The potential impact that the implementation of CECL may have on the availability of credit, with a particular focus on the impact of that availability: for consumers and small business concerns with respect to the credit products that consumers and small business concerns rely on during periods of economic expansion and during recessions; Whether implementing CECL could: accelerate the depletion of regulatory capital that is available for lending purposes during a recession have a greater impact on regulatory capital or extend the period in which regulatory capital is reduced during a recession pose any other systemic risks to the economy of the United States; The potentially disproportionate impact that the implementation of CECL may have on financial institutions, taking into account: the various sizes and levels of complexity of those financial institutions the different amounts of resources that are available to those financial institutions; The potential impact that the implementation of CECL may have on decisions made by investors; and The potential competitive impact that CECL’s implementation may have on institutions in the United States as a result of the differing international accounting standards used to measure credit loss. The Bill calls for the SEC and Federal financial regulators to submit a report to the FASB and appropriate committees of Congress detailing the results of the study, including the identification of any negative impacts resulting from the implementation of CECL and any recommendations for changes to eliminate or mitigate the negative impacts.  The report is due no later than one year after the date of enactment.  During this time, neither the SEC nor any of the Federal financial regulators may require a person to comply with CECL. Until the new standard becomes effective, institutions should continue to follow current U.S. GAAP guidelines along with related supervisory guidance on the allowance for loan and lease losses (ALLL). For more information regarding Bill S. 1564 or CECL implementation, please contact your local Schneider Downs representative. ### Analytics, Projections and Cannonballs into the River Most fans would agree that statistics and analytics are more prevalent in Major League Baseball than in any other sport, and have become especially pertinent with the increased deployment of the shift. Thanks to those shifts, singles are down for the fifth consecutive year and are now more rare than at any time in baseball history. There’s now, for instance, a greater percentage that an at bat will end in a homerun, walk or strikeout. Strikeouts increased for the 14th consecutive season; walks have reached their highest rate in 19 seasons; and the percent chance of a homerun, walk or strikeout has increased to 36% in 2019, compared to 31% in 2015. One might ask if “small ball” is nonexistent.In 2018, MLB teams utilized a defensive shift about 18% of the time, with the Houston Astros moving around the most at 37%. The Pirates, at 14%, were near the middle of the pack at 18th highest in the league. So far, though, numbers for the 2019 season are even higher, with teams putting on a defensive shift about 25% of the time. The Astros are still shifting the most at a staggering 48%, and the Pirates have more than doubled their shift percentage, which currently stands at 30%, 11th in the league.Needless to say, there are a wealth of MLB analytics available, and you could certainly spend hours looking at trends, graphs and projections, but here are some fun numbers for us fans of the local club. You may have heard that the Pirates’ Josh Bell was named the National League Player of the Month for May. Over his past 30 games, the slugging first baseman hit 12 home runs and drove in 32. Based on numbers so far, he’s projected to finish the season with 50 home runs and 148 RBIs, which would put him third all-time for home runs and first all-time for RBIs in a season in franchise history.Not only did Bell have a special month, he also became the fourth and fifth player to hit a ball into the Allegheny River on the fly. Currently, he’s knocked 0.29% of his plate appearances at PNC Park into the drink. So if he stays with the team, how many more cannonballs into the Allegheny can we expect? Well, consider: the average player gets about 550 plate appearances a year, which translates to 275 plate appearances on home turf. Let’s say Josh Bell plays 10 more years. That’s 2,750 plate appearances at PNC Park over the course of his career, so he would end up hitting eight more shots into the river. While that may seem like a lot, compare that number to Barry Bonds, who hit 35 homeruns into San Francisco’s McCovey Cove over his career.Josh, then, appears to have a long way to go. He would have to hit cannonballs into the river at a rate of 1.32% of his plate appearances a year for the next 10 to catch Bonds. Considering, though, that he hit the river twice in one month, that jump to 1.32% might not be too difficult a leap. So if you’re an optimist, pull out the kayak and wait on the river for your chance to catch the next Bell blast.For more data on the Pirates, MLB or – more importantly – on how Schneider Downs can help provide data-driven solutions for your business, contact Eric Davis at 412-697-5445 or edavis@schneiderdowns.com ### SECURE Act vs. RESA On May 23rd, the U.S. House of Representatives overwhelmingly passed the “Setting Every Community Up for Retirement Enhancement” (SECURE) Act by a vote of 417 to 3.  The bill is now in the Senate, where it needs to be passed and then signed by President Trump before it becomes law. The 29 provisions contained in the Act are the most significant changes to retirement plans since the 2006 Pension Protection Act made it easier for employers to automatically enroll their employees in 401(k) plans.Below are some of the key updates in the 2019 bill: Creates Pooled Employer Plans/Open Multiple-Employer Plans, enabling small, unrelated employers to band together to be covered under one retirement plan with the same trustee, fiduciary, administrator, plan year and investment options, thus encouraging more small employers to offer retirement plans without incurring significant start-up and maintenance costs; Allows long-term part-time workers (those who work at least 500 hours for three consecutive years) to participate in 401(k) plans; Increases the tax credits offered to small business owners for retirement plan start-up costs and automatic enrollment adoption in 401(k) plans for new hires; Permits annuities to be offered in 401(k) plans, giving retired employees who are concerned about outliving their retirement assets a steady stream of income; Requires 401(k) participant statements to disclose monthly income payments based on the current account balance; Waives the 10% early distribution excise tax on up to $5,000 of in-service distributions used for childbirth or adoption expenses; Simplifies the rules and notice requirements for Safe Harbor 401(k) Plans pertaining to non-elective contribution; Increases the required minimum distribution age when retired participants must begin withdrawing from their retirement accounts to 72 (up from the current 70 ½); Repeals the maximum age for traditional IRA contributions (currently 70 ½). The Senate currently has its own version of retirement legislation called the Retirement Security and Savings Act (RESA).  While some of its provisions are similar to those in the SECURE Act, RESA would: Provide a new automatic Safe Harbor contribution arrangement with contributions starting at 6% of pay and automatic escalation to 10%; this new Safe Harbor also requires employers to match contributions of up to 10% of pay; Increase the catch-up contribution limit from $6,000 to $10,000 for participants over age 60; Allow employers to make matching contributions to 401(k) plans in the amount of the employee’s student loan payment; Increase the required minimum distribution age from 70 ½ to 72 in 2023 and to 75 in 2030. Exclude those individuals with $100,000 or less in aggregate retirement savings from the required minimum distribution rules. With similar provisions in both the House and Senate versions of retirement legislation, whether the Senate decides to vote on the SECURE Act or RESA, the differences will most likely be reconciled by a joint committee. ### Business Income Deduction Changes May Impact Professional Services Firms On May 9, the Ohio House of Representatives passed House Bill 166 (“HB 166”) by a significant margin. If ratified by the Ohio Senate and signed by Governor DeWine as currently written, HB 166 could have a far-reaching impact on Ohio taxation. HB 166 formally adopts the economic nexus standards contained in the United States Supreme Court’s Wayfair decision. Specifically, HB166 provides that beginning on July 1 of this year, remote sellers with gross annual receipts of $100,000 or more (or 200 or more separate transactions in the state on an annual basis) for the current or preceding tax year would have economic nexus for purposes of the Ohio sales and use tax. Previously the substantial nexus threshold applied to sales in excess of $500,000.The bill also proposes a tentative reduction of the Pass-Through Entity Tax from 5% to 3%, which would eliminate possible over-withholding in light of the 3% tax rate currently applied to business income (assuming a favorable rate remains in place). Additionally, it creates a mechanism to avoid withholding at the pass-through level altogether. The legislation would bring Ohio statutes to conformity with the federal centralized partnership audit regime rules that went into effect January 1, 2018. In certain situations, these rules can lead to an assessment of tax at the partnership level rather than taxing the respective partners.Other changes proposed in HB 166 include the introduction of an Ohio Opportunity Zone Credit, other tax credits and reductions to individual income tax for certain taxpayers. Specifically, Ohioans with less than $22,250 of income would be exempt from personal income tax altogether.Of all the provisions in the bill, the proposed changes to the Ohio Business Income Deduction (“BID”) may have the most lasting impact on the professional services industry. Architectural firms, engineering companies, law firms and others in this arena are often structured as partnerships or S corporations for tax purposes. Owners become subject to Ohio personal income tax on business income allocated to them by the underlying pass-through entities when these companies transact business in the state. Under current law, the first $250,000 of Ohio business income is exempt from personal income tax; any remaining business income is taxed at a flat 3% rate rather than the applicable rate from the tax tables. For example, under the current system, a taxpayer with $300,000 of Ohio business income (for illustrative purposes, assume no other income, deductions or credits) would pay a state tax of $1,500 ($250,000 excluded BID and $50,000 taxed at 3%). Under the proposed rules, the deduction would apply only to the first $100,000 of business income.Additionally, lawmakers are considering eliminating the favorable 3% tax rate on business income. If both proposals are ultimately passed (assuming no other changes), that same taxpayer would now have a $12,461 liability and an effective tax rate of 4.15% (from 0.5%). Such an increase would not only mean that owners of professional services firms doing business in Ohio would have larger tax bills, but also that they would need to set aside more cash for tax distributions. Many observers, including the Ohio Society of CPAs, have criticized this component of HB 166 and it remains to be seen how this provision will change in the Ohio Senate.The tax provisions in House Bill 166 are meaningful and will impact many taxpayers doing business in Ohio. Please contact your tax professional at Schneider Downs to receive more detailed information about this legislation, or if you have questions about any other statutory or administrative changes that may impact you and your business. ### What is Liam Neeson’s Name Worth? Intellectual property (“IP”) owners will sometimes license the use of their assets to others in exchange for a fee. For example, Liam Neeson may choose to offer his name to a company that plans to market its new kidnapping escape kit in exchange for a royalty fee of 5% of the revenue the company generates from the sale of the kits. This (highly unlikely) hypothetical example involves the licensing of a celebrity name, but there are other types of IP (e.g., tradenames, trademarks, patents, technology, etc.) that are often authorized to other parties for a fee.In these instances and others, a company may set up a separate holding company to manage its IP. The holding company then licenses the use of the IP to the operating subsidiaries of the company in exchange for a royalty. The operating subsidiaries receive a tax deduction when paying the royalty and the holding company is normally based in a more favorable tax jurisdiction compared to the operating subsidiaries. In order to comply with U.S. transfer pricing regulations, however, the client must utilize a royalty rate that is determined to be consistent with the “arm’s-length principle,”1 a process that can involve reviewing licensing agreements between third parties involving relatively similar IP.Our firm has access to various databases that provide information on licensing agreements, data from which can be utilized in the valuation of IP for financial reporting purposes. The Relief-from-Royalty Method, a form of the Income Approach to valuation, calculates the value of an IP asset as the amount that a company saves by owning the IP instead of licensing the use of the IP from a third party. An applicable royalty rate is multiplied by the future sales expected to be generated by the IP asset; these future royalty savings are discounted to the present day to determine the value of the IP. The applicable royalty rate is normally based on an analysis of third-party licensing agreements for similar property.Schneider Downs has significant experience in determining the appropriate royalty rate for clients to use in transfer pricing and financial reporting applications. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Thomas D. Pratt (412-697-5615; tpratt@sdcpa.com) of our office if you need assistance valuing or determining royalty rates applicable to your IP.1 Although a discussion of details of the arm’s-length principle is beyond the scope of this article, the principle generally states that the royalty charged from one related party to another for a given transaction must be the same as if the parties were not related.  ### To Have and to Hold…and to File Jointly April showers bring May flowers, and those flowers are used in the thousands of spring weddings held across the country each year. Every ceremony hallmarks a couple’s love and commitment to each other, and brings together family and friends to celebrate the joining of two families. This past weekend, I was fortunate enough to be a part of my best friend’s wedding.  As high school sweethearts, they have experienced many life events together, including moving across state lines, changing career paths and making big purchases. They’ve also learned the importance of understanding how these events impact their taxes. As I watched them exchange vows, rings, and say “I do”, I started to wonder if they thought about how their marriage could affect their 2019 tax return.According to the IRS, a taxpayer’s marital status on December 31 determines their status for the entire year. So even if you and your significant other decide to have a New Year’s Eve wedding this winter, the IRS would consider you as married for all of 2019. Fortunately, I’ve listed a few items below that will help make filing your first tax return as a married couple as easy as possible. Adjust your withholdings. When filing a joint return, your tax rate and limits for other deductions on your return will change. Some couples might even find themselves in a lower tax bracket after combining their income. Therefore, if you have tax withheld from your paycheck by an employer, update the number of exemptions claimed on your W-4 to ensure that your employer is withholding the appropriate amount of tax. From Ms. to Mrs. Not all marriages mean a name change these days, and some marriages even mean a name change for both parties. If either you or your soon-to-be plan to legally change your name, it’s important that you report the change to the Social Security Administration (SSA) and make sure that the names on your tax return match the names the SSA has on file. If they don’t, your refund could be delayed. Bonus Tip: If you’re an international-honeymooner, make sure you update your passport as well as your license. No one wants a headache at customs. Can’t live with them, can’t live without them. Most newlyweds move into a larger rental property or decide to purchase a home together, and when you change your address, the IRS needs to know. Make sure you file Form 8822 along with your tax return to report that change. If you are moving to a home you have purchased, make sure you receive a Closing Disclosure Form and keep it in a safe place. This form summarizes the closing transactions and incoming and outgoing funds. This will determine the basis of your new home and what selling expenses you might be able to deduct on your return for the year it was purchased. Living happily ever after. Although getting married won’t affect most employer-sponsored retirement accounts, your change in marital status can affect your IRA contributions. Getting married will increase your contribution limitations for both Roth and Traditional IRAs and may allow you to take the full deduction up to your contribution limit on your tax return. If your spouse was not eligible for an IRA account before, getting married can also allow them to make a Spousal IRA Contribution if certain conditions are met. If you or someone you know is getting married or a newlywed, make sure they are aware of the tax implications of getting married. Please contact your tax professional at Schneider Downs if you want more information about these changes or other tax implications and how they could affect you. ### Fraud and Corruption Seminar Review Schneider Downs was proud to sponsor a Fraud and Corruption Awareness Seminar on May 13, 2019 alongside the Pittsburgh chapters of The Institute of Internal Auditors and the Association of Certified Fraud Examiners.  The yearly seminar has become the premier fraud education event in the area, and this year it welcomed a record-setting 500 attendees.Nicholas Smyth, the Assistant Director for Consumer Financial Protection and the Senior Deputy Attorney General of Pennsylvania, spoke about several fraud schemes that impact consumers around the Commonwealth and the country.  He discussed an effort by his office to change the way retailers manage their gift card programs as they were being used for fraud and the preventative controls in place were ineffective.  Wal-Mart, Best Buy and Target have agreed to make changes nationwide to the dollar amount of gift card transactions permitted and are using data to gain insight into the way that fraud has been perpetrated in the past.Schneider Downs Shareholder Eric Wright followed with an informative discussion on “Strengthening Cyber Resilience to Thwart Cyber Theft and Disruption”.  Mr. Wright provided numerous practical cybersecurity tips to the audience.  Participants discussed the best practices at their table and noted the suggestions for when they returned to their respective organizations. Later in the morning, Kelly Paxton, nationally known speaker and founder of pinkcollarcrime.com gave a though-provoking presentation entitled: “Honestly Dishonest: A Fraud Examiner’s Perspective”.  Ms. Paxton posed various ethical questions to the group and shared videos on the research conducted by noted Professor of Psychology and Behavioral Economics at Duke University, Dan Ariely.Following lunch, social cognitive scientist Dr. Toby Groves discussed a timeline of events which began with a promise to his father that he would not follow in the footsteps of his brother, who was previously sentenced for fraud. However, this promise didn’t last, and twenty-two years later he was sentenced for a multi-million dollar bank fraud by the exact same judge who had sentenced his brother.  Dr. Groves also led an interactive session that included audience members self-administering a test to determine how they scored on a psychopathy scale. Supervisory Special Agent (SSA) of the FBI Pittsburgh Division, Gregory Heeb, spoke about the FBI’s Financial Crimes Program and the many different types of crimes investigated under the program.  The breadth and depth of local financial crime investigation experience was highlighted in SSA Heeb’s presentation when he discussed a local case that involved an individual who committed a wide variety of different frauds and crimes.The final speaker of the day was Bill O’Rourke, who has held a number of positions over his career, mostly at Alcoa, and most recently as an advisor to the Tree of Life Synagogue.  Mr. O’Rourke’s fast-paced and entertaining presentation focused on the ethical decisions he faced in business.  Mr. O’Rourke relied on his wealth of experience to provide the context for decisions that he and Alcoa faced throughout his career. Schneider Downs hosted a networking event and happy hour following the seminar and the entire day was well-received by those in attendance.  We look forward to sponsoring the event next year and continuing our tradition of supporting quality fraud and corruption awareness training.  If you have questions or concerns about fraud at your organization, rely on our wealth of experience to help you find answers.  Please contact Shareholders Tom Pratt at 412.697.5615 or tpratt@schneiderdowns.com or Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com. ### Rock You Like a Hurricane (..Maybe) Harvey, Maria, Irma, Michael, Florence – no, not the names of my cats, but rather the names of some of the major hurricanes (category 3, 4 or 5) to hit the United States in the past two years. On May 23rd, the National Oceanic and Atmospheric Administration (NOAA) released its forecast for the 2019 Atlantic Hurricane Season. After a few years of above-normal seasons, NOAA is predicting a near-normal season, with an estimated 9-15 named storms, including 4-8 hurricanes, 2-4 of which are expected to be major.So what does this mean for you? Well, it’s possible that your summer beach vacation will be cut short, or that your loved ones living in coastal regions may have to evacuate or endure a storm. But, depending on the path of those 4-8 projected hurricanes, you can almost certainly expect to see at least one spike in prices at the pump over the course of the hurricane season.In 2017, Hurricane Harvey slammed into the Gulf Coast, shutting down numerous oil refineries and causing gas prices to rise an average of 27 cents per gallon across the country. While Gulf area refineries were not significantly damaged by Harvey, it took some time to return to pre-hurricane output to fuel the pipelines responsible for transporting oil across the U.S.In contrast, Hurricane Florence barreled over the Carolinas in 2018, but had little to no impact on the national average gas price. Unlike the Gulf area, which is home to approximately one-third of the nation’s oil refining capacity – the largest capacity of any region in the country – only pipelines and terminals are housed in the Carolinas.So will Erin or Nestor (both potential storm names on the World Meteorological Organization’s 2019 list) cause you to dig a little deeper in your wallet this summer? Only time will tell. ### Pennsylvania Legislature Proposes New Statute of Limitations for Tax Collection The Pennsylvania House of Representatives is currently considering House Bill 17 (HB 17) that would limit the Department of Revenue’s ability to collect taxes to ten years after assessment. The reduced statute of limitations would also apply to most tax returns even when returns were not made by a taxpayer. Currently, the Department has no required time limit to assess tax when a return has not been filed or to collect tax when an assessment has been issued. Many taxpayers grappled with the unlimited statute during Pennsylvania’s most recent tax amnesty program in 2017, as notices were generated for decades-old tax liabilities. The proposed legislation would remove or reduce the risk of surprise from these long-forgotten tax assessments.The new statute of limitations would not apply to trust fund tax liabilities such as sales tax or employee withholding.  HB 17 also excludes taxpayers from the ten-year limitations period if they file false or fraudulent returns, willfully fail to file, purposefully evade their taxes or are convicted of a tax offense. The proposed statute change also does not apply to inheritance tax.We will continue to post updates on the progress of HB 17, so please continue to visit the Our Thoughts On blog or contact your Schneider Downs representative. ### 2019 Compliance Supplement The Office of Management and Budget (OMB) continues to overhaul the Compliance Supplement and has delayed issuing the draft to focus on these items: Requiring agencies to reduce the number of tested compliance attributes to no more than six (except Research and Development). More extensive changes to program compliance requirements that ask agencies to consider programs that have higher risks or errors. One program that has been identified for more changes than usual is the Student Financial Assistance Cluster due to concerns from the Department of Education regarding improper payments. Better guidance on internal control, including more illustrative examples and how to determine if controls are appropriate. The OMB has noted that a reduction in the audit burden should not be expected as a result of these changes.The OMB did release a draft of the compliance requirements matrix, which the AICPA has posted on their website, which can be used for planning purposes, however, this may be revised prior to the final issuance of the 2019 compliance supplement.Additionally, it is unclear if these changes will result in alterations to the independent auditor’s opinions on compliance and internal control.As members of the AICPA’s Government Audit Quality Center, we continue to monitor these changes and will provide updates as they are available. As of right now, there is no estimate or timeframe for when the revised supplement will be released, however, many of the parts have already finished their OMB review, so it is likely that the public vetting copy will be available sooner rather than later. For more information, visit the Our Thoughts On blog or contact Schneider Downs. ### Auto Dealers in Ohio Border States Beware You May be Subject to Ohio Commercial Activity Tax Auto dealers outside of Ohio with store locations near the Ohio border should pay attention to potential Ohio Commercial Activity Tax (CAT) filing obligations. Businesses with Ohio taxable gross receipts of $150,000 or more per the calendar year are subject to CAT. Non-Ohio dealers should make sure to understand the rules in order to determine whether they have any CAT filing obligation.First, it is important to understand what sales could be considered Ohio sales. For CAT purposes, sales of vehicles or other tangible personal property are sourced to the ultimate destination of the item being sold. Therefore, if a car is sold by a Pennsylvania auto dealer to an Ohio resident who is taking the vehicle back to Ohio, the sale is considered an Ohio sale for CAT purposes.Many non-Ohio dealers will have Ohio sales for CAT purposes, but will not have a filing requirement because they won’t have enough activity to create nexus. However, they should still track Ohio activity in order to see if they cross any of the bright line presence standards which would create nexus. Crossing one of any of the following thresholds creates nexus: At least $50,000 of property located in Ohio At least $50,000 in payroll paid to employees in Ohio At least $500,000 of taxable gross receipts sourced to Ohio At least 25% of the total property, payroll or taxable gross receipts in Ohio Standalone businesses with $50,000 of property or payroll in Ohio during a calendar year, but less than $150,000 of taxable gross receipts sourced to Ohio will still generally not be subject to CAT.However, when common ownership exists amongst business entities additional factors need to be considered. If a taxpayer owns fifty percent or more in two or more businesses, then common ownership exists for CAT purposes. If a fifty percent owner in the dealership owns fifty percent or more of another dealership or other business in Ohio, the related business in Ohio may create CAT filing and liability obligations for the non-Ohio dealership. Someone in the accounting department of the dealership or dealership group should have an understanding of the owners’ other businesses when a fifty percent or greater owner exists in order to understand if there’s any CAT exposure.Dealership groups with Ohio and Non-Ohio stores should also keep in mind that depending on the filing method of the group (combined or consolidated), intercompany sales from an out of state dealership to an Ohio dealership may be considered gross receipts subject to CAT.If you believe you may have exposure to Ohio CAT that you were not aware of, or have not previously addressed, please contact your Schneider Downs advisor for assistance. ### What Happens if Your Tax Return is Lost in the Mail? Imagine this scenario: the calendar says it’s April 15th, and you realize that you can’t avoid filing your federal tax returns any longer. You rush to the post office and wait in line behind other last-minute filers. When it’s finally your turn at the counter, you pay for first-class mail and then watch the clerk affix postage to the envelope and drop it into the delivery bin. You walk out the door, confident that the April 15 postmark and the receipt in your pocket are all you need to protect yourself against a challenge that your return wasn’t filed on time. What could possibly go wrong?The answer is nothing, provided that the Internal Revenue Service (IRS) receives and properly processes your return. But what if the IRS never receives your return, or an IRS employee mishandles it?Under a common law doctrine known as the “mailbox rule”, proof of proper mailing by testimony or other evidence creates a presumption that the document was properly delivered to the addressee. This means that if the mailbox rule applies, your testimony that you mailed the return on April 15, together with the production of your first-class mail receipt, would be sufficient evidence to support the claim that you mailed the return on April 15. It would then be up to the IRS to prove otherwise. You are in good shape.The problem is, the IRS may not be bound by the mailbox rule. Under Internal Revenue Code Section 7502 (Code Section 7502), delivery is not presumed unless the taxpayer sends the document via certified or registered mail, and also produces the registration as proof. The regulations provide that such registration is the exclusive means to prove delivery. This means that if Code Section 7502 overrides the mailbox rule, your testimony and first-class mail receipt will prove absolutely nothing. You are in for a bad day.In April 2019, the Ninth Circuit Court of Appeals ruled in favor of the IRS on this issue. The taxpayers in Baldwin v. United States sought a refund for an overpayment of taxes from calendar year 2005. Per applicable rules, the amended return was due no later than October 15, 2011. They sought to rely on the mailbox rule to establish that the amended return was presumptively delivered to the IRS in June 2011, shortly after it was mailed. The IRS argued that it did not receive the amended return until July 2013, and since the taxpayers could not produce the specific mailing registration required by Code Section 7502, the taxpayers were not entitled to the presumption of delivery. The Court ruled that Code Section 7502 overrides the common law mailbox rule, and as such, the taxpayers could not claim their refund.   Avoiding the Baldwin result is as simple as paying the few extra dollars for registered or certified mail. The regulations provide that the use of a commercial or private delivery service like FedEx is also sufficient to obtain the protection of Code Section 7502. Of course, you can always e-file your return or even hand deliver it to the IRS in order to meet the deadline. Just be sure to remember that a receipt for first-class mail is not necessarily proof that you mailed your return on time. IRC §7502Baldwin v. United States, 2019 U.S. App. LEXIS 11036Treas. Reg. §301.7502-1 ### Part One of a Series: An Introduction to IRS Publication 1075 What is IRS Publication 1075?IRS Publication 1075, commonly referred to as, “Pub 1075,” lays out the guiding principles for the protection and confidentiality of Federal Tax Information (FTI). Pub 1075 contains the managerial, operational and technical security controls that must be implemented if FTI is present within a company’s information systems.The framework for Pub 1075 was developed using guidelines from NIST SP 800-30 (Revision 1, Guide for Conducting Risk Assessments) and NIST SP 800-53 (Revision 4, Security and Privacy Controls for Federal Information Systems and Organizations) with the objective of preventing unauthorized access and unauthorized disclosure of FTI. Pub 1075 was last updated September 2016, and is modified based on the emergence of new requirements that pertain to the confidentiality of FTI. If an organization handling FTI is contacted by the IRS, they must reliably demonstrate the ability to safeguard all confidential information.What constitutes Federal Tax Information (FTI)? FTI broadly includes, without limitation, federal tax returns and return information, returns or return information received directly from the IRS or obtained through an authorized secondary source, such as Social Security Administration (SSA), Federal Office of Child Support Enforcement (OCSE), Bureau of the Fiscal Service (BFS), Centers for Medicare and Medicaid Services (CMS), or another entity acting on behalf of the IRS. The IRS categorizes FTI as “sensitive but unclassified” information that may contain Personally Identifiable Information (PII). Sensitive PII includes any combination of the following: the name of a person from a filed return, a taxpayer mailing address, taxpayer identification number, telephone number, social security number, etc.Who is subject to Pub 1075 requirements?Organizations who have information systems that receive, process, store or transmit FTI are subject to Pub 1075. Agencies or agents that legally receive FTI directly from either the IRS or from secondary sources are also liable, as well as debt collectors and other agencies that procure contractor services.Key Elements Pub 1075’s section titled, “Computer System Security,” categorizes the NIST SP 800-53 control requirements in 18 comprehensive categories. Pub 1075 highlights the importance of enterprise security policies, the authorized use of FTI and secure data transfer. Other essential elements listed in Pub 1075 include data segregation, encryption, log monitoring, configuration monitoring, training and screening requirements and a detailed system security plan. Each of the key elements listed throughout the requirements are crucial for the protection of FTI in the IT environment.See Schneider Downs’ continuing series for more detail on IRS Publication 1075 and control requirements.References:  https://www.irs.gov/pub/irs-pdf/p1075.pdf https://www.irs.gov/pub/irs-pdf/p4761.pdf ### Data: The 21st Century Building Material Bid, design, build, and operate.  The amount of information required to take a job from bid all the way through completion is vast.  With market competition increasing and projected shortages in skilled laborers, the margin for error during the decision-making process has slimmed in recent years. According to IBISWorld, an industry market research and risk-rating company, both the commercial and industrial building construction industries have only experienced moderate technological growth in recent years, with information technology focuses on GPS-equipped machinery, the use of drones to assist with job site management, and Building Information Modeling (BIM).  These advances identified by IBISWorld may sound complex and out of reach, but they are all driven by the same starting point: data. Data analytics have their rightful place throughout the entire life-cycle of a contract.  In an already competitive bidding process, analytically assessing project costs, and timing thereof, from prior work can aid forecasting costs to complete and put your company in position to become more profitable.  Tracking machinery and equipment usage can provide data to reduce idle time and promote the best use of company resources by evaluating the costs versus benefits associated with buying or leasing machinery and equipment.  Lastly, evaluating and analytically assessing the duration of project close-out and punch-list completion can help a job cross the finish line with the most efficient use of time and resources. These examples, among many others, can optimize each phase of your contract and continually promote a more accurate and efficient process.  Applying an analytically driven decision-making process for any company requires both effort and creativity.  What key performance indicators (KPIs) are you currently utilizing to base your decisions on? Are those the most relevant KPIs for your business? How are you tracking these inputs to ensure the data is accurate and reliable? Schneider Downs can help with your data analytic needs.  To learn more, contact Chris Kosty at 412.697.5618 or ckosty@schneiderdowns.com, or Matt Kraemer at 412.697.5314 or mkraemer@schneiderdowns.com.   ### Bad Fiduciary. What’s it Going to Cost You? Millions.  That’s what it could cost you for failing to properly execute your fiduciary responsibilities as a plan sponsor.  In the first half of 2019, several class action lawsuits against major universities related to improper execution of the fiduciary duties over their 403(b) plans have been settled.  Brown University settled for $3.5 million, Duke University settled for $10.65 million and Vanderbilt will pay $14.5 million to settle their suit.  Each of the class action lawsuits against these universities claimed, to varying degrees, that the university failed to prevent the payment of excessive fees by the plans for investment advisory and administrative services and/or failed to prudently monitor the plans’ investment options.The Employee Retirement Income Security Act (ERISA) states that anyone who has discretionary control or authority over an employee benefit plan or provides investment advice to a plan is subject to fiduciary responsibilities.  Plan fiduciaries’ primary responsibility is to operate the plan solely in the best interest of plan participants and their beneficiaries.  This includes, among other responsibilities: Acting prudently in managing the plan’s investments to minimize the risk of significant losses; Following the terms of the plan document in operating the plan; Avoiding conflicts of interest; and Ensuring services provided to the plan are necessary and that related fees are reasonable In managing an employee benefit plan subject to ERISA, it is incredibly important for a plan oversight committee to meet regularly to evaluate the plan’s investment options, the services performed for the plan and their related fees as well as to discuss compliance issues.  These meetings and the resultant evaluations should be well documented to serve as evidence of the prudent actions of the committee.  The Department of Labor has several resources on its website related to fiduciary responsibilities which serve as a valuable reference for all plan administrators.  If you have any questions regarding your responsibility as a plan sponsor, please don’t hesitate to reach out to our experts at Schneider Downs. ### Artificial Intelligence in Higher Education Before you finish typing a key word in the search bar, it may appear as if your thoughts have been predicted. Artificial intelligence (AI) and machine learning are used to optimize search queries and search results. Every day, Google handles billions of search queries and its RankBrain AI algorithm analyzes which queries yield the best results. This allows the underlying AI to learn. By learning from these search queries, the RankBrain AI can predict future search queries with greater accuracy. AI and machine learning are being used in more industries and sectors, including higher education.The use of predictive data and AI is providing students an enhanced collegiate experience and helping universities hit KPIs. Universities seek to maintain high marks in the key performance indicators of student retention and graduation rates. Using predictive data and AI, universities can recognize early indicators that a student is “at risk.”Identifying students who are “at-risk” for retention and intervention. Early “at risk” indicators might be when a student receives a bad grade or does not register for a class which his or her major requires. Identifying “at risk” students earlier leads to better undergraduate retention rates. Advisors are alerted and can intervene and mentor the student before the problem compounds. This improves retention rates which leads to higher graduation rates and keeps tuition revenue in the door.Supplementing courses with AI can help deliver an improved learning experience. As part of language courses at Rensselaer Polytechnic Institute, students speak to an AI character in a virtual environment. Upon entering the virtual reality classroom, the student is greeted by the AI character and verbal interaction ensues. Immediate feedback is provided to the students who are instructed on correct pronunciations without the fear of being judged in a real world situation. Instructors have said this allows for learners to be less embarrassed by mistakes and promotes greater learning.AI is not only improving students’ college experience but also lowering the burden on faculty and staff. Human jobs, in higher education, are not being eliminated by AI, but rather improved. Chatbots can respond to phone calls and can answer simple inquiries that prospective students ask. In some cases, professors can rely on robo-grading to score exams. These AI and machine learning tools can allow for a reduced staff burden and more instructor time to focus on students.While the presence of a human instructor cannot be duplicated, AI proves its worth. AI’s integration into higher education will continue to improve and enhance the college experience for future generations.Visit Schneider Downs Risk Advisory Services webpage /risk-advisory-services.References:https://www.insidehighered.com/digital-learning/article/2018/09/26/academics-push-expand-use-ai-higher-ed-teaching-and-learning ### Technology Trends in Manufacturing Over the past few years, advances in technology have created a number of innovative business opportunities for the manufacturing industry. Some of the most recently developed solutions, including Internet of Things (IoT), Digital Twin technology and Augmented Reality, have created the prospect for manufacturers to improve their supply chain and business operations. These new technologies offer greater efficiency and productivity to manufacturers, and can even help cut inventory costs.IoT, which applies when physical objects and machines are connected to the internet and given the ability to communicate with each other so they can be controlled remotely, is perhaps the most dynamic advancement in the bunch and offers many potential improvements to a manufacturer’s operations. The technology assists companies in matters like predictive maintenance, smart response and automated inventory management.To date, most manufacturers haven’t been able to afford to apply these technologies to their workforce, but over the last several years, the cost of implementing this type of modernization into a supply chain has decreased and now seems more attainable. According to Manufacturing Global, companies are expected to spend about $286bn per year on digitizing their processes and IoT operations in 2020 – up from $69bn in 2015 – with larger, more established manufacturing companies acquiring younger, fast-growing tech companies. Digital Twin technology involves utilizing a digital copy of a physical object or process, a solution becoming more attractive to manufacturers since it can help improve cycle times and key processes while also reducing operational maintenance costs. Augmented Reality, meanwhile, which is similar to virtual reality, can also help improve efficiency. The technology is primarily used by companies that employ their corporate sales and marketing objectives to distinguish their business and give it a competitive edge.All these solutions are expected to add value within the manufacturing industry and will continue to develop over the next few years to become an integral part of most businesses around the world.  For more information, contact your advisor at Schneider Downs.  ### I Want Mine - Social Security Simplified I have this love/hate relationship with social media.In late April, when The 2019 Social Security and Medicare Trustees Reports were published, the key takeaway was that the trust fund will be depleted in 2035. Immediately, social media exploded. One poster claimed she’d paid in almost a half a million dollars over the years. She wants it back. Another took issue with the word “entitlement.” It’s not an entitlement, we earned it! A third panicked post claims Congress has spent our money, that’s why Social Security is running out of money.Let’s address those strident social media voices one by one. First, the reserve fund will be depleted because we currently have more people claiming than paying in. Will it ever go broke? No. As long as we have a base of workers paying in, we will have some benefits to pay out.Is Congress stealing? The trust fund is not a cashbox, and like any bank account, the funds are invested. In the case of Social Security, the investment vehicle is Treasury securities, which are backed by the "full faith and credit" of the U.S. government.The entitlement complaint is just a matter of semantics. Social Security is an entitlement since you’re entitled to claim when following the rules. But the word has taken on a negative connotation since welfare and food stamps are also considered entitlements. Maybe a better way to describe Social Security is to consider it a transfer system – income is “transferred” from the working to the retired, disabled or survivors.U.S. employees contribute 6.2% of their wages to Social Security and employers pay the same amount on their behalf. If you’re self-employed, you pay a total of 12.4%. This is assessed on all wages below the cap, which in 2019 is $132,900. Your Social Security statement will tell you exactly how much you’ve paid into the system. If you’re age 66 in 2019 and paid the maximum amount legislated from age 18, you’d have paid in almost $400,000 in nominal dollars, not too far from that half million. But not everyone has paid in at the maximum rate for all of their working years.The maximum benefit payable in 2019 is $34,332 per year. So without considering inflation, if that 66-year-old receives SS payments for 20 years, they will have collected a total of $686,640. Now I know this is a simplistic example, and of course, I haven’t considered inflation or potential investment returns, but bottom line: you’re likely to collect much more than you paid in.There’s no doubt that we need Social Security reform, but very few of our elected officials are willing to take on the issue. In 2035, without reform, we will be collecting only about 75% of the full benefit. Difficult choices for potential reform include raising the wage cap beyond the inflationary adjustments currently legislated, raising the contribution rate or delaying full retirement age, which is currently at 67 for those born after 1960. What would you decide?Now that we understand the basics, our next article will tackle the right time to claim.  ### Steel and Aluminum Tariffs: Winner and Losers The March 2018 steel and aluminum tariffs apparently have resulted in a boom in domestic steel industry production and profits. Nucor CEO John Ferriola, who heads up the nation’s largest steel producer, notes, “[2018] was a record year for Nucor. We posted record earnings per share and record revenue, and we shipped a record amount of steel.” Pittsburgh-based U.S. Steel noted advancement as well, announcing the resumption of work on a plant in Alabama that will ultimately produce up to 1.6 million tons of steel annually and employ 150 full-time workers. The company cited the tariffs as one of the reasons for the work renewal.The same tariffs have had the opposite impact on goods producers and midstream steel companies, however. According to the April 2019 National Association for Business Economics (NABE) survey, 75 percent of goods producers and more than 25 percent of all businesses surveyed report that tariffs negatively impacted their organizations. Only one percent indicated tariffs having some positive impact on their business. These respondents said tariffs have elevated costs and necessitated higher selling prices, which contributed to negative sales. The majority of goods producers surveyed reported price increases for the first quarter of 2019 and anticipated additional price increases for Q2. This is in contrast with the finance, insurance and real estate sectors that anticipate no price changes, and the transportation, utilities and communication industries that expect prices to decrease slightly over the second quarter of 2019. Goods producing respondents also reported adjustments to their hiring plans as their supply chains shift.Additionally, during 2018, CEOs from Ford and General Motors (GM) each reported that metal tariffs took about $1 billion in profits from their organizations. GM recently announced layoffs beginning in February 2019, affecting 14,000 workers in North America, with the aim of cutting $2.5 billion in costs. Locally, the layoffs included more than 1,400 at the Lordstown, Ohio GM plant. Elsewhere, Pittsburgh-based Allegheny Technologies Incorporated (ATI) said that the 100 jobs at its Midland, Pa., plant, which processes Indonesian-produced stainless steel, are in jeopardy. ATI was denied a federal tariff exemption and has reported that they have already paid $16 million in tariffs. The Midland plant has been operating at 40 percent capacity since January.The most recent NABE survey results, however, were generally favorable about the condition of the economy. All respondents expect continued economic expansion for the next 12 months, with an approximately equal split between those who expected real gross domestic product inflation to exceed two percent and those who thought it would fall below two percent. All goods producers surveyed reported open positions in their organizations.For more information, contact Schneider Downs or visit the Our Thoughts On blog.  ### Slow Start in 2019 for Mergers and Acquisitions According to Pitchbook’s Q1 2019 U.S. Private Equity (PE) Breakdown, there was a total of 993 deals during the first quarter of 2019, down 27.9% from the first quarter of 2018.  Total value of these deals was also down 26.7% in the first quarter from 2018, coming in at $121.4 billion. It is believed the volatility in the markets at the end of the year and into early 2019 factored into the declines.  With the extent of price uncertainty, firms elected to wait on entry and exit deals for a more favorable environment.  In fact, the report noted just one private equity-backed initial public offering during the quarter, the lowest since 2009.  The month-long government shutdown also likely played a role in the low number of initial public offerings.The purchasing of add-on companies to previously acquired platform companies accounted for a record 71.0% of total deals in the quarter.  This has become a popular strategy for many firms, particularly with companies in industries with prime opportunities for consolidation, including healthcare and financial services.The 2018 year was strong for the overall mergers and acquisitions market.  With the economy rebounding thus far in 2019, it will be interesting to see if deal activity reverts back to 2018 levels or if the first quarter declines will continue. If your plans for 2019 include the possibility of a deal, learn more about Schneider Downs’ experience in advising clients throughout the course of a merger or acquisition by contacting Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com. ### Why Higher Education Institutions Must Comply with GDPR The EU General Data Protection Regulation (GDPR) has been in effect for 10 months. One sector that has been affected by the newly enforced regulation, but is not always in the spotlight, is higher education.  Although, many institutions have no physical presence within the EU they are affected by GDPR since they have relationships with individuals located within the EU, which requires them to be complaint.How are U.S. colleges and universities and their students affected by GDPR?More and more universities are providing study abroad opportunities to their students, faculty and staff travel to the EU, and an increasing number of international students attend U.S. institutions. For these reasons alone, being GDPR compliant is a requirement.  Not all U.S. institutions may have a stable arrangement in the European Union, such as a campus or study center; however, these universities will not be exempt from the GDPR regulations. Personal data collected by higher education institutions requires GDPR compliance.Personal data currently collected by higher education institutions includes name and birthdate, as well as some or all of the following identifying attributes: ethnic origin, political or religious beliefs, genetic data, biometric data, sexual preference or orientation, health information and IP addresses.  There are many scenarios involving individuals that require higher education institutions to become GDPR complaint. Some examples: students in a study abroad program in an EU member state; international students applying at U.S. higher education institutions; EU faculty and staff working at a U.S. higher education institution; alumni or donors located with an EU member state; and A U.S. citizen who is a student of a U.S. higher education institution traveling in the EU. What should U.S. higher education institutions do?Institutions should work with their legal department in identifying the GDPR lawful basis for data collection, processing, and storing of GDPR pertinent information, and provide appropriate information and notice to all of their data subjects. The following compliance initiatives should be addressed by U.S. higher education institutions to ensure GDPR compliance:  revise privacy policies; gain consent from data subjects; ensure protection and encryption of personal data; perform a Data Protection Impact Analysis; review and establish procedures around protecting data; provide continuing awareness and education around GDPR for all faculty, staff and students; and implement a data breach procedure that allows for immediate notice to a Supervisory Authority if a breach occurs.  Any student that is studying abroad, and any faculty or staff working in an EU member state should be educated and aware of the greater protection provided to them regarding their personal data while outside of the U.S. Subject access requests are a major component within GDPR, and U.S. higher education institutions must be very careful and validate the data subject prior to supplying or deleting any student, faculty or staff information, to ensure that the request or submission of information is legitimate.    How has GDPR affected U.S. higher education institutions so far?Since being enforced in May 2018, GDPR has seen some cases in the EU involving U.S. higher education institutions, but none of these have led to court litigation at this time.  Some of these cases include: U.S. students traveling in the EU on study abroad programs withdrawing their consent to the institution’s use of their data once they arrive in the EU; local employees of U.S. institutions claiming data breach and unlawful data transfer to the U.S.; and U.S. donors living in the EU reporting that their personal information has been given to U.S. financial institutions without proper consent.  Even though none of these issues have reached the point of litigation or fine, U.S. higher education institutions must consider compliance with the GDPR with the same urgency as any other U.S. based organization. ### Is It Time to Overhaul the Income Statement? The changes to revenue recognition (ASC 606) and lease accounting (ASC 842) are now squarely in the rearview mirror for most public companies. And even though private companies continue to work through these changes, I’m often asked, “What does the FASB have in store for us next?”Ignoring any narrow-scope improvements for purposes of this discussion, the FASB has two broad recognition and measurement projects on its current project plan, both in the early phases. One deals with distinguishing liabilities from equity, while the other addresses subsequent accounting for goodwill (yes, again). While these are both good projects, what really catches my eye is a combination of two presentation and disclosure projects – segment reporting, and disaggregation of performance information.One of the changes under ASC 606 involved presenting revenue into disaggregated categories to help readers of the financial statements determine the nature, amount, timing and uncertainty of revenue and cash flow. The disaggregation of performance information project takes that same concept and applies it to not only the revenues, but also the expenses being reported on the income statement. Much of the FASB’s discussion on this project involves disaggregating cost of goods sold and selling, general and administrative expenses into natural components for presentation, either on the face of the statements or within the footnotes.For companies that present segment information under ASC 280, a separate project exists that could require companies to disclose even more information surrounding the operating results of its reportable segments. The FASB has discussed requiring further disclosures around cost of goods sold, R&D expenses, a measure of cash flow and inventory by reportable segment. The FASB is also working on developing principles-based disclosure requirements to supplement the list of required disclosures.The FASB is clearly focused on providing good and meaningful information to readers of financial statements. While the results of these projects could add time and complexity for preparers, the end result would yield much better information for readers of the financial statements in helping them understand the operating results of the company. A worthwhile tradeoff, in my opinion. I’ll be watching these two projects closely as they progress, and look forward to seeing how the FASB concludes. ### The Dichotomy of Cybersecurity in Higher Education Cybersecurity in the higher education (Higher Ed) realm faces many challenges. Unlike corporate entities, there may be many groups outside of central IT and security that manage systems and data in a university environment. Individual colleges and departments frequently have their own systems and IT staff. These groups may have little interaction with the University’s core security and IT teams. Consistency makes cybersecurity easier to implement, so what can you do if you are in an organization without it?There are three high-level items that I consistently see in Higher Ed institutions that help when it comes to cybersecurity. Those are two factor authentication, relationship building between IT and security staff in different departments/colleges/etc. and treatment of the vast majority of the institution’s network as hostile.Two factor authentication is no longer considered simply a nice security add-on, it is a requirement for a base level of security at any size or type of organization.  Having a physical token, cell phone app, Duo, or other solution must be required alongside a traditional password to gain access to organizational resources. As a penetration tester, my job becomes a lot simpler whenever I discover an organization is not using two factor authentication. However, two factor authentication is no silver bullet; there are ways to bypass it or trick people into giving up their SMS codes and etc., but boy is it a lot easier on me if I can send a simple phishing email, get a couple passwords and the next thing you know I’m on the inside of the network reading databases. Any organization using two factor authentication and implementing it properly is elevating the level of difficulty to break their shell. Next we move on to something less technical, that is relationship building.The more that the core IT and security teams understand about their organization’s systems—even those they don’t control—the better they are able to secure them. Making partnerships between all IT assets in an academic environment can go a long way in ensuring that central IT and security departments understand the systems in use outside of their immediate control. This can happen through semi-regular meetings, seminars, lunches, etc. Free food is never a bad bet for getting people into a room. The goal is simple: get departments, colleges, IT and security talking and learning from one another.Despite how well a higher Ed institution’s two factor authentication and integration with central IT and security are, there is one security risk that will never change. Higher Ed institutions are places of freedom, exploration and learning. That means that you will never be able to take a corporate approach and say, “This is what everyone will do and this is how they do it, or else.” Something like that would never fly in higher Ed and honestly it often doesn’t work well in the corporate world either. So what should institutions of Higher Ed do? It is most critical for them to treat their networks (both internal and external) like the warzones they are. The internal network is just the same as the Internet. Yes it is awesome, with big data, AI and ever increasing power, but it is still the Wild West and you need to carry a six shooter, even in the shower. There are a wide variety of ways to treat your internal network as hostile. At a minimum, network segmentation paired with attack detection and prevention capabilities should be standard. This could be in the form of micro segmentation, firewalls between the internal network and server segments, EDR solutions, SIEMs and so on. If you treat your internal network the same as you treat your Internet facing network, you are on the right path. Most orgs still do much better on the latter, so taking similar approaches from your Internet facing networks and shifting them inward can be very effective.Higher Ed faces many unique challenges when it comes to security, but that does not mean it is impossible or impractical to secure a Higher Ed environment. ### International Tax Update: OECD Releases Latest Edition of Model Tax Convention On April 25, the Organisation for Economic Co-operation and Development (OECD) formally released the tenth edition of its Model Tax Convention on Income and Capital (the Convention). Based in Paris, the OECD is an international organization comprised of over 100 member and nonmember countries that come together to provide guidance on a wide variety of global economic issues.One of the organization’s many focuses has been to provide uniform guidance on the application and interpretation of tax treaties between contracting countries, like the 1982 treaty between the United States and Australia that dictates when and how citizens will be taxed on specific items of income so that those citizens are not taxed twice on the same income. In addition to aiding in the interpretation of treaty provisions, the Convention also provides a baseline for negotiations that can be used by contracting countries looking to enter into a mutual treaty.The 10th edition of the Convention comes largely as a result of the OECD's Action Plan on Base Erosion and Profit Shifting, which aims to prevent double non-taxation, as well as the artificial segregation of taxable income to no or low-tax jurisdictions.1 One of the most significant changes to the Convention arose from the need to deter taxpayers from shifting income to low or no-tax jurisdictions solely for tax savings purposes. This change came in the form of the addition of Article 29, an anti-abuse provision that disallows the benefits of a particular treaty provision to the taxpayer, if “obtaining that benefit was one of the principal purposes” of the underlying transaction that yields the benefit.2 The provision explicitly disallows taxpayers to forum and treaty shop for the best tax jurisdiction for their individual needs if tax savings is the primary purpose of the underlying transaction.Other issues addressed in the new edition include a clarification of the definition of “permanent establishment,” which is the fixed place where a corporation or partnership carries out its business3, along with updates on accepted mutual agreement procedures.4 Additionally, many of the commentary explanations that accompany the Convention have been revised to reflect the substantive changes that have been made to the document.The global economy continues to rapidly expand and change, and with the changes comes a growing impact on taxpayers on an international level. It is important to understand the significant impact tax treaties will continue to have on taxpayers as more businesses and investments move into and out of the United States.Where and when a taxpayer – whether they be an individual or a business/entity – can and should be taxed are both challenging questions to answer. Those answers are never simple, since they often involve complex analyses of the multiple countries' tax laws and treaty provisions.While the above-mentioned guidance documents are a great resource, if you have any concerns regarding the potential double taxation of income, it is always best to consult your accountant or one of our Schneider Downs tax professionals![1] OECD (2013), Action Plan on Base Erosion and Profit Shifting, OECD Publishing. http:.//dx.doi.org/10.1787/9789264202719-en[2] Article 29, OECD (2017), Model Tax Convention on Income and Capital: Condensed Version 2017, OECD Publishing. http://dx.doi.org/10.1787/mtc_cond-2017-en[3] Article 5, OECD (2017), Model Tax Convention on Income and Capital: Condensed Version 2017, OECD Publishing. http://dx.doi.org/10.1787/mtc_cond-2017-en[4] Article 25, OECD (2017), Model Tax Convention on Income and Capital: Condensed Version 2017, OECD Publishing. http://dx.doi.org/10.1787/mtc_cond-2017-en ### Wayfair Sales and Use Tax Legislation Developments Recent Wayfair sales and use tax legislation developments include: California enacted new legislation increasing the sales threshold from $100,000 to $500,000 and eliminating the 200 individual transaction threshold.  This change is retroactive to April 1, 2019 and extends to marketplace facilitators effective October 1, 2019. New Mexico enacted new economic nexus standards for remote sellers and marketplace providers of at least $100,000 in sales.  All receipts from doing business in New Mexico are subject to gross receipts tax, including sales, leases and licenses of tangible personal property, and sales of licenses and services or licenses for the use of real property that are sourced to New Mexico.  Marketplace sellers, may deduct receipts from transactions facilitated by a marketplace provider.  To take the deduction the marketplace seller must get documentation from the marketplace provider showing that the marketplace provider is registered with the Taxation and Revenue Department and has remitted or will remit taxes for those transactions.  Marketplace sellers choosing to exercise the deduction should issue reliable information to marketplace providers.  If not, the Department may determine that the marketplace provider is not liable for the tax on the marketplace seller’s transactions.  The marketplace provider’s taxability depends upon the information provided by the marketplace seller.  This legislation is effective, July 1, 2019. Hawaii enacted legislation extending their economic nexus standards to marketplace facilitators.  The legislation applies to sales of intangible property and services as well as tangible personal property.  The legislation’s definition of “marketplace facilitator” is any person who sells or assist in the sale of tangible personal property, intangible property, or services on behalf of another seller by: 1) providing a forum, whether physical or electronic, in which sellers list or advertise tangible personal and intangible property, or services on the behalf or another; and 2) collets payment from the purchaser either directly or indirectly through an agreement with a third party.  This legislation is effective January 1, 2020. Indiana’s Department of Revenue released a ruling regarding an out-of–state bake goods manufacturer reaffirming that once an economic nexus thresholds is reached (when a retail merchant’s gross revenue exceeds $100,000; or 200 or more separate transactions in the state), the remote seller is required by law to register and file zero returns, even if all of their retail sales are exempt.  Revenue Ruling No. 2018-06 ST, Indiana Department of Revenue, January 7, 2019, released March 2019. Arkansas’ House of Representatives have passed economic nexus standards for remote sellers and marketplace facilitators that made sales into the state during the previous or current calendar year that exceeds either $100,000 or 200 individual transactions.  Should the bill be enacted, it would become effective July 1, 2019. Georgia’s Senate passed an economic nexus bill (H. B. 276) that reduces the economic nexus sales threshold from $250,000 to $100,000 and eliminates the 200 transaction threshold.  The Senate amended the Bill to make a marketplace facilitator a dealer on sales it facilitates that are sourced to Georgia, unless the marketplace seller, or a retailer or dealer, pay the sales taxes.  Other amendments bar Georgia class action lawsuits against marketplace facilitators regarding the over collection of sales tax and moves the effective date of the changes from July 1, 2019 to January 1, 2020.     Idaho enacted legislation for remote sellers and marketplace facilitators who lack a physical presence in the state to register and collect Idaho state level sales tax once they reach an economic nexus threshold of $100,000 in sales within the state.  The state will provide liability relief for marketplace facilitators who collect the incorrect amount of tax by reason of the retailer or retailer’s authorized agent providing misinformation.  Customers are barred from filing class action lawsuits against marketplace facilitators to recover refunds for over collected taxes.  This law becomes effective on June 1, 2019. West Virginia expanded their economic nexus standards of $100,000 in gross revenue or 200 or more separate transactions to marketplace facilitators and referrers.  Marketplace facilitators are people who contract with one or more sellers to facilitate, for consideration, the sale of the seller’s product through a physical or electronic marketplace operated by that person, regardless of whether the consideration is deducted as fees from the transaction.  A referrer is a person who contracts or otherwise agrees with the seller to list or advertise for sale one or more items in any medium, including a website or catalog.  They receive a commission, fee or other consideration from the seller for the listing or advertisement.  The referrer also connects the purchaser to the seller electronically or through other means to complete the sale but does not collect receipts from the purchaser for the transaction.  Businesses that provide internet advertising services and do not provide the marketplace seller’s shipping terms or advertise whether a marketplace facilitator charges sales tax are not considered referrers.  This standard becomes effective on July 1, 2019.          ### Additional Opportunity Zone Regulations Issued On April 17, the IRS finally issued additional guidance (the 4/17 proposed regulations) concerning qualified opportunity zone (QOZ) investments following up on the first set of rules issued in October 2018 (see our article from October 24, 2018).  The guidance came in the form of a second set of proposed regulations that had been promised since early December.  Further, in two separate announcements, the IRS noted that it may, or it may not, decide to issue a third set of regulations in a couple of months. While QOZs promise economic development in designated low-income communities in exchange for tax benefits taxpayers willing to invest in those areas (see our article from July 11, 2018), some taxpayers appeared hesitant to invest in these areas until the IRS provided the guidance necessary to fully understand how the rules would be applied.  While much too voluminous to cover in detail within this article, the 4/17 proposed regulations answer a number of open issues including: The definition of a trade or business (Hint: triple net lease activity is an issue); The treatment of Section 1231 gains and losses and timing for reinvestment; The consequences of purchasing unimproved land; The definitions of various terms including “original use” and “substantially all”; The treatment and valuation of leased property, including from related parties; The events triggering deferred gain prior to a sale of interest or December 31, 2026; How a qualified opportunity fund can reinvest capital upon the sale of qualifying property; and How qualifying testing requirements are applied. Further, the new regulations answer some, but not all, of the questions taxpayers and their advisors raised since the provision was enacted as part of the Tax Cuts and Jobs Act signed into law in December of 2017.  One significant unresolved item that potentially requires legislative action is the taxability of qualifying property sales.  Relief was provided regarding reinvestment of those proceeds to continue qualification, but the resulting gain from sale is taxable under normal tax rules. Additionally, issues left unanswered include the amount and type of data to be reported to the IRS, as well as penalty provisions for failure to meet the various qualification requirements.   In summary, for those taxpayers interested in taking advantage of the tax benefits offered by investing in qualified opportunity funds, there is now sufficient guidance to provide investors the confidence necessary 1to structure their transactions to meet regulatory requirements.  The government desires to incentivize investment in QOZs and has done so by providing generally taxpayer-favorable regulations. Please do not hesitate to reach out to us if you have any questions on qualified opportunity zones.  ### West Virginia Enacts Special Apportionment Rules for Motor Carriers Recently the State of West Virginia enacted special apportionment rules for motor carriers owned by individuals, partnerships, other pass-through entities and small business corporations.  Carriers must now apportion business income to West Virginia using a single-factor formula by dividing the total vehicle miles traveled within the state during the tax year by the aggregate vehicle miles traveled everywhere.“Vehicle mile” is defined as the operation of a motor carrier over a distance of one mile, whether owned or operated by a corporation.West Virginia defines a “motor carrier” as any person engaging in the transportation of passengers and/or property, for compensation by motor-propelled vehicle over West Virginia roads, whether traveling on a scheduled route or otherwise. The above formula does not apply to motor carriers that do not own or rent real or tangible personal property in West Virginia, except vehicles, that have traveled less than 50,000 miles in the state and made no pick-ups or deliveries in the state during the taxable year; nor those that make no more than 12 trips into or through the state during the taxable year. The number of miles traveled under 50,000 and the miles traveled in the state during the 12 trips cannot represent more than 5% of the total vehicle miles traveled throughout the United States during the entire tax year.The law if effective July 1, 2019 and applies to all tax years beginning on or after January 1, 2018. ### NFL Draft by the Data: So you're saying there's a chance? Congratulations to the 261 former college football players who heard their name called at the 2019 NFL Draft last weekend, including Kyler Murray who became the 11th QB taken Number 1 overall since 2004! This is an unbelievable accomplishment, one that defies the odds. According to www.ncaa.org, there are approximately 1,037,000 high school football participants. Of which approximately 74,000 (7.1%) make it to NCAA level competition. Of that 7.1% to make it to the NCAA, only 1.6% hear their name on draft night. For anyone calculating, that means high school football participants have a whopping 0.025% chance of being drafted into the NFL. Taking this a step further, I thought it would be interesting to see what percentage of those lucky individuals who “make it” during the draft actually “make it” onto the field for a regular season NFL game.I compiled the past 15 years of draft data from www.pro-football-reference.com, looking all the way back to 2004, when the then San Diego Chargers drafted Eli Manning with the Number 1 overall pick and ended up with Philip Rivers. During this time period, 3,818 players heard their names called on draft night but 330 of those players have never played a snap. It is important to note that 48 of those 330 players were drafted in 2018 and some of them may very well get the opportunity to play during the 2019-20 NFL season as they are still young in their career. Breaking it down by team shows an interesting paradigm.The teams with the highest percentage of their drafted players to not play in the NFL have some consistent winners over the past 15 years, like the defending Super Bowl Champion New England Patriots at 17%. However, other teams, who have been below average over the past 15 years such as Tampa Bay and Washington also make this top ten list. This data suggests that the teams on this list either take their time to develop their draft picks, like in the case of New England, or like Tampa Bay and Washington, struggle to identify and evaluate NFL talent,. This is further evidenced by the makeup of those individuals who have not played in the NFL. Six of the 22 players in this group for New England were drafted in 2018 and still may play this upcoming season. Whereas 0 and 1 of the players in this group were drafted in 2018 by Tampa Bay and Washington, respectively.Some other interesting, but more predictable data points that came from this analysis were the number of players drafted that never played by the round in which they were selected. As you might guess, the largest group of these draftees were selected in the seventh and final round, making up 40% of total players drafted who have never played a snap. But getting drafted in the first round doesn’t guarantee you playing time either. Just ask Malik McDowell, formerly of the Seattle Seahawks, who was selected 35th overall in the 2017 draft and never made it onto the field for the Seahawks before being waived by the team in March 2019. Some other names that Western Pennsylvania natives may be familiar with on this list are Senquez Golson (drafted 56th overall by the Pittsburgh Steelers in 2015) and Christian Hackenberg of Penn State University (drafted 51st overall by the New York Jets in 2016), both of whom were released without ever playing a down for the team that drafted them.So, what position has the best shot of playing in the NFL? Defensive back. It is the most common position drafted (almost 20% of total players drafted are defensive backs) and 93.4% of all defensive backs drafted over the last 15 years make it on the field eventually. What is the most difficult position to get an opportunity in the NFL? Quarterback. This one should not come as a shock as there are only 32 starting QB jobs in the NFL. Not only are they the least common offensive and defensive position drafted (less than 5% of total players drafted are Quarterbacks) but they have the highest percentage of players drafted to never play a regular season snap (19.5%).What should all of this tell fans and athletes alike? It is really hard to make it to the NFL. Even if you are one of the exceptionally hard working, talented, and lucky individuals to make up part of the 0.025% of high school football players who are drafted, there is still an 8.6% chance that you’ll only ever be able watch your team on Sundays.For more data behind the NFL Draft or information on how Schneider Downs can help provide data driven solutions, contact Matt Kraemer at 412-697-5314 or mkraemer@schneiderdowns.com. ### Minimizing Higher Ed Risks - Utilizing Internal Audit and Data Analytics We’ve all seen various colleges and universities in the news lately, and the news was not always positive. Higher education institutions face a varied and formidable army of risks, including operational, financial, regulatory and reputational.Why Data Analytics?Universities accumulate massive amounts of information, often from incongruent sources (databases, spreadsheets, ERP systems, etc.). Employee turnover and the constant entry of new students often leads to limited monitoring and data analysis.Data analytics offers the ability to combine different data sources to evaluate data and form hypotheses to uncover potential fraud, abuse, financial losses, noncompliance and quality issues. A few types of analytics include grouping by transactions, duplication identification, and Benford’s law queries. It is also important to note the importance of ensuring data integrity on the front end, so that data is accurate, relevant and consistent.Example UsesThe uses of data analytics are endless. Below are just a few examples of how data analytics can be applied in the higher education sector.Compliance Transactions outside a grant’s effective dates Act 153 Employee Compliance Financial Aid and Student Awards Excess financial aid Course withdrawals that would result in corresponding aid reduction Duplicate student awards or invalid addresses Tuition Billing Missing refund check numbers Multiple address changes Compare refund payments to refund policy Travel and Expense Noncompliance with policy Excessive expenditures Purchasing and Procurement Duplicate payments between accounts payable and purchase cards Inappropriate or unusual charges Split charges to circumvent limits Salaries and Payroll Payments to same bank account Excessive salary increases Comparing ledger amounts to check amounts Why Internal Audit?Internal Audit is trained and experienced to provide insights into data using their knowledge of operations, organizational structure and business processes. Also, Internal Audit has specific expertise in identifying, mitigating and managing risk. As a result, Internal Audit has a unique ability to compile and analyze data to provide valuable opportunities to maximize effectiveness and minimize risk.Visit Schneider Downs Risk Advisory’s Data Analytics webpage /data-analytics.References:Internal Auditing in Higher Education Using Data Analytics to Uncover Fraud & Abuse. (n.d.). Retrieved from http://idea.caseware.com.Menditto, S. and Wheeler, M. (2018, July/August). Data 411. Business Officer, 58-64. ### Data Analytics: So Easy a Cow Could Do It? In the age of technology, there is no limit to the applications of data and data analytics. This spans company type, region and industry. This includes, yes, dairy farmers. Not exactly an industry that some may think has a wealth of data available, or has the skill set or capabilities to analyze the data even if it was available. Well, many farmers are proving that stereotype wrong as they have adapted their business strategy and adopted data-driven business decisions. According to an article in the Wisconsin State Farmer, one particular dairy farm saved $70,000 on seed and fertilizer in 2018 by making business decisions based on the data interpreted from a computer program designed specifically for tracking various statistics and data sets on dairy farms. Those results were significant savings for that family dairy farm. They aren’t alone either. The movement towards data-driven business decisions has taken over their industry. According to the Wisconsin State Farmer, a startup company called the Farmers Business Network was actually founded on the idea of bringing data to independent farmers across the continent. As of April 2019, they have nearly 8,000 farmers participating as members, covering 30 million acres of cropland across North America. Farming is not the only industry changing business decision-making based on new data that is available to them. Big data analytics are being used across all industries for things such as supply chain management, profitability analysis, inventory control and selling, general, and administrative costs evaluation. How are you using data analytics to transform your business? For more information, see: www.wisfarmer.com ### 2019 Private Capital Markets Report Spring brings with it many exciting things: the ability to go outside without 43 layers on, the March Madness broadcast, the vibrancy of cherry blossoms and, most importantly, the publishing of the 2019 Pepperdine Private Capital Markets Report (“PPCMR”).  Perhaps you may not agree with that last one, but for us valuation folks, it is like Christmas in March. This publication is so important because it is one of the few sources that allows us to understand the expected rates of return/cost of capital for private companies.  Rates of return/cost of capital are generally determined based upon the historical performance of publicly traded companies.  While this data is valuable, adjustments must be made to account for differences between public and private companies (e.g., size, liquidity).  Fortunately, the PPCMR surveys actual participants in the private capital market   (e.g., bankers, private company executives, private equity groups, venture capital groups, business appraisers) to understand their view of risk and return in the marketplace. For example, the 2019 PPCMR found that interest rates on bank loans range between roughly 4% and 7% while mezzanine rates of return range between 12% and 18% depending on the size of the loan.  Private equity investors, on the other hand, expect rates of return between 20% and 38% depending on the EBITDA of the target company. While this data is a goldmine for those of us doing valuations, the PPCMR also compiles other general market information that could be valuable for businesses of all sizes.  For example, a few of the many survey topics include: Expectations for business and industry conditions; Leverage multiples for lending; Advance rates on various assets for loans; and Deal multiples by company size and industry. If you’re interested in talking more about private company costs of capital, the PPCMR, or anything valuation related, please reach out to me at 412-697-5281 or sthimons@schneiderdowns.com. ### Top 10 Revenue Recognition Considerations for Retailers For nonpublic companies, Accounting Standards Codification (ASC) 606 – Revenue Recognition, is effective for years beginning after December 15, 2018. If you are a nonpublic company with a calendar yearend that means that changes to revenue recognition were effective on January 1, 2019! While at first glance, other industries may seem to experience a greater impact, all retailers still need to assess the impact on their various revenue streams in order to determine the change under 606. The first step in assessing the impact of 606 should be reviewing all revenue streams for the company including where revenue is generated and determining the materiality of the separate revenue streams. With that in mind, below are ten considerations retailers should be examining now: Reviewing contracts in place – Contracts for material revenue streams should be reviewed to identify various performance obligations within each contract. Once identified, individual transaction prices should be assigned to the performance obligations. Consideration should also be given as to when revenue should be recognized on these contracts, particularly when revenue recognition occurs over time, rather than at a point in time. Rebate programs – Retailers with rebate programs are required allocate a portion of their revenue which will be paid to a customer or credited toward a future order. In order to achieve proper over-time recognition, a reserve should be established by reducing revenue according to this estimated amount. Sales discounts and allowances – If sales discounts only occur at a point in time, proper recognition would be to reduce the revenue at the time of sale. If there is any future discount to be used by the customer, then the retailer should also establish a contract liability for the amount they expect customers to redeem. For instance, if a retailer has a coffee program where customers can buy four cups of coffee at $1 each and then receive the fifth one for free, and they expect all fifth coffees to be redeemed, then the revenue recognized on the first four coffees should be reduced by one-fifth ($0.20) to cover the fifth sale. In total, the retailer still recognizes $4 in revenue, but spreads this revenue over the life of the entire transaction Warranty provisions – In general, revenue on warranties sold separately from the underlying product should be recognized ratably over the life of the coverage period.  Installation – Installation that is capable of being distinct from the underlying product being sold represents a separate performance obligation must be separately allocated under ASC 606.  For instance, a retailer may sell a stereo system and offer to install the product. This retailer also occasionally installs stereos not purchased through their store. As this installation could be performed by a third party, it could represent a separate performance obligation. Rights of return – Retailers will need to assess the likelihood of products being returned and establish a contact liability for this amount as a reduction to the revenue recognized. Franchise considerations – If you have contracts with franchise holders, these will need to be reviewed to determine if over-time recognition is more appropriate than point in time recognition. In addition, attention should be given to any fixed and scheduled payments as well as any agreements for a percentage of sales and how the revenue recognition may be impacted. Costs to obtain a contract – Certain expenditures incurred to obtain a contract should be capitalized and then amortized in a manner consistent with revenue recognition under the contract. This could include items such as sales commissions, legal fees, advertising fees, and travel expenses.  Gift cards – In conjunction with ASU 2016-04 – Extinguishment of Liabilities: Recognition of Breakage for Certain Prepaid Store-Value Products, entities will be required to estimate expected breakage and income in proportion to their customers’ redemption patterns. Revenue for breakage should be recognized over time based on the likelihood for customers to not redeem their gift cards. Financial reporting and disclosure – Once your company assesses the overall impact, they need to determine the adoption method through either a retrospective (restatement) or modified retrospective (disclosure of the prior-year impact in the footnotes). ASC 606 also has expanded disclosure requirements including disaggregation of the various revenue streams, outstanding performance obligations at yearend and any assets recognized from the costs to obtain or fulfill a contract. While reviewing the impact of the changes to revenue recognition may at first seem to be a large task, breaking down the individual considerations makes the job more manageable. We have subject matter experts on staff who have helped all types of entities navigate these rules and can ensure you are ready for your yearend audit. For more information on ASC 606 please visit the Schneider Downs Our Thoughts On blog or Email us at contactSD@schneiderdowns.com. ### President Trump Signs Two Executive Orders to Enhance Pipeline Production On April 10, 2019, President Donald Trump signed two executive orders that seek to make it simpler for energy companies to build oil and gas pipelines and enhance domestic energy production. The first order allows the Environmental Protection Agency (EPA) to analyze guidance associated with pipeline production in order to make it more difficult for states to intervene in pipeline production. The second order clarifies that the president is exclusively responsible for approvals on cross-border pipeline and infrastructure projects. Previously, this was the responsibility of the secretary of state.The first of the two orders, which was signed by President Trump in Crosby, Texas at the International Union of Operating Engineers’ International Training and Education Center, aims to make it harder for states to block new pipeline projects for environmental concerns. This order requests that the EPA meet with the states and local tribes before creating new rules for complying with the Clean Water Act. Currently, Under Section 401 of the Clean Water Act, companies must obtain certifications for each state in which they are building federally approved infrastructure.The purpose of the second order is to speed up the production of energy projects that cross international borders. As it currently stands, the secretary of state is responsible for issuing permits for such projects. This order will shift that power to the president. When speaking at a large rally in Texas, President Trump pledged to eliminate the bureaucratic burdens around obtaining approvals for these projects, and reiterated that pipeline approvals will take no longer than 60 days.These executive orders were not met without criticism from both sides of the aisle after they were executed. Many state government officials fear that through these orders the federal government is infringing upon their rights. Environmental organizations also voiced their concerns over these orders, fearing that the possible damage from these pipelines will have an adverse effect on water quality and the environment. Legal battles are sure to arise in the near future. Please visit us for more updates on energy legislation, which will be monitored closely here by the experts at Schneider Downs. ### March 2019: Stabilization of U.S. Manufacturing Sector, China Follows, Europe Lags Behind Despite all of the trade tariff talk and uncertainty between the United States (U.S.) and China, the March 2019 Purchasing Managers’ Index (PMI) reports have shown growth for the manufacturing sectors in the U.S. and China. As for Europe, however, similar reports show that the manufacturing industry remained sluggish through March.Timothy R. Fiore, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, recently released the March 2019 Manufacturing ISM Report on Business and the results were generally positive. The PMI registered at 55.3, compared to 54.2 in February 2019 and 56.6 in January 2019. Mr. Fiore was quoted as saying, “The PMI reversed a February expansion decline primarily through improved growth in employment, and, to a lesser extent, new orders.” Throughout the first quarter of 2019, the PMI registered over a 50 reading. This indicates that the U.S. manufacturing sector has shown growth, remained relatively stable, and shown no signs of slowing down. The ISM report indicated that March 2019 represented the thirty-first consecutive month of expansion in the U.S.China has seen similar positive reports. According to the Wall Street Journal (WSJ), “An official purchasing index in China rebounded strongly, too, with a pickup in a measure of forward-looking orders. China’s index rose to a six-month high of 50.5 in March from 49.2 in February, well above forecasts of many economists. Power consumption, steel output and sales of bulldozers all rose.”Meanwhile, IHS Market, a world leader in critical information, analytics and solutions for major industries that drive economies worldwide, publishes the Eurozone Manufacturing PMI based on survey data collected from nearly 3,000 manufacturing firms on a monthly basis.  A recent report issued by the IHS Markit on April 1, 2019, indicated a drop in Europe’s PMI, which dropped to 47.5 in March from 49.3 in February. Europe’s PMI has reached its lowest level since April 2013. The decline is primarily a result of deteriorating conditions in one of Europe’s largest economies, Germany, followed by deterioration in Italy and France. These three countries all had a Manufacturing PMI below 50, which indicates contraction. The deterioration is attributed to the lack of demand for new orders for equipment from the Chinese market as well as the toughening of emissions standards throughout the European region, which make it difficult to compete with countries that do not have such stringent standards.The next Manufacturing ISM report is slated to be released May 1, 2019. ### Balancing the Moral Scales Are charitable donations and good deeds a potential indicator of fraudulent activity?  The theory of moral equilibrium, as applied to a business environment, posits exactly this question.According to University of Texas business professor Robert Prentice, JD, moral equilibrium functions as a “mental accounting ledger.”  Rather than your typical debits and credits, entries recorded are either positive or negative.  For example, if someone were to donate money to charity, they might earn a positive point.  Contrastingly, if that same person were to cut off a fellow driver in rush hour traffic, they might then earn a negative point.  As these points are earned, our brains naturally attempt to balance our points between the two columns.  It is this primarily subconscious, but also occasionally conscious; behavior that drives even fraudsters to act as exemplary citizens.One of the prime examples of this theory in action is the now-infamous story of Bernie Madoff.  Madoff operated a Ponzi scheme in which he defrauded his investors of billions of dollars.  Throughout the duration of his scheme, the Madoff Family Foundation donated millions to hospitals, theaters, and other charities.  Mr. Madoff volunteered at several organizations and even served on the board of Yeshiva University.  Madoff was publicly “redeeming” his fraudulent acts by attempting to restore moral equilibrium by balancing out the bad with the good.This is why as auditors, investigators, and fraud examiners in particular, it is imperative to maintain professional skepticism in order to detect instances when good deeds are utilized to cover up bad ones.  At Schneider Downs, we are committed to helping our communities, and bringing awareness to the trends in consumer fraud strengthens our ability to meet those commitments.  For more information on fraud prevention or detection, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com or any member of the Schneider Downs client service team. ### Have Supply Chain Questions? Big Data Has Your Answers Verified Market Research (VMR) recently released their “Key Futuristic Trends and Competitive Landscape 2025” report, which forecasts strong growth in the Global Supply Chain Big Data Analytics market.  Valued at $2.12B in 2018, VMR projects the market’s value to reach $7.53B by 2026.  Although VMR’s report focused on supply chains, data analytics have their place in each industry and are becoming a necessary tool for optimizing business practices.  Gone are the days of reliance on gut feelings; big data is here to stay.VMR defines supply chain big data analytics as, “a software program that is helpful for organizations in order to automate the processes involved in material purchasing and inventory maintenance.”  One of the goals of big data is to enable companies to make educated, data-driven business decisions in real-time with great precision.  In most companies, there is an abundance of data available, but sorting through what is relevant and useful in the decision-making process poses a challenge.  Identifying key performance indicators and targeting those factors that drive your business’s operations are good first steps.  Accurate input of data is crucial as well, and developing processes which promote data-driven decision making in your day-to-day operations is integral for continued growth and success.VMR’s projection that the supply chain big data market will grow 2.5x by 2026, means that data-driven decisions are a necessity for your company to remain competitive in the future.  What steps has your company taken towards embracing the big data revolution? If you have questions about supply chain big data, contact us.  ### Financial Institutions - Regs on Regs on Regs Last month a colleague and I were fortunate to attend the PA Bankers Association, School of Compliance in Harrisburg, PA.  The training consisted of three days of legal and regulatory topics that pose the highest risk to financial institutions. With so many laws and regulations that touch each aspect of banking, it is clear that a robust and effective compliance program should be in place to ward off compliance infractions.An effective compliance program is not a wish list.  Compliance is a requirement that needs to be tailored to the size and complexity of the institution.  Even adding a new product offering can tip an effective compliance scale if regulatory risks are not appropriately considered and adequately mitigated or addressed. Below is a listing of some compliance considerations:1) A comprehensive compliance management system consisting of tools, tracking and communication methods.2) Engaged board/management/compliance officer with clear authority to promote compliance activities.3) Comprehensive and current risk management system, addressing appropriate risk  categories: Credit, Interest Rate, Liquidity, Price, Operational, Compliance, Strategic and Reputation.4) Appropriate and effective employee training on risks, regulations and the importance of their role within the financial institution.5) Policies and procedures that are current and approved that clearly document the law/regulation and procedures for compliance.6) Continuous monitoring and testing to verify the effectiveness of the compliance program.7) Proactive and prompt remediation of ineffective process and controls.If you need assistance developing or testing the effectiveness of your compliance program, Schneider Downs can help. Please contact Jim Yard, shareholder at (412) 697-5345 or Jessica Miller, manager at (412) 697-5457. ### Enterprise Risk Management in Higher Education, and How Internal Audit Can Help Recent history indicates that the pace of change in Higher Education is unprecedented; however, institutions are only seeing a modest increase in the use of risk-based decision making. The COSO “Enterprise Risk Management - Integrated Framework” defines ERM as “a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”Value in ERMThe value of ERM lies in understanding risk, and appropriately allocating an organization’s resources to business activities that present high risk and exposure to its strategic purpose and its ability to prosper. ERM offers a framework for effectively managing uncertainty, responding to risk and harnessing opportunities as they arise. By focusing on, dedicating resources to, and continuously monitoring these business activities, an institution can continuously improve its operations and its value.ERM in Higher EducationIn the current highly competitive environment, colleges and universities are under intense pressure to attract and retain faculty and students and maximize their assets – something that cannot be achieved without tight control of risks across the board. ERM can assist in uncovering both downside risks and upside opportunities for institutions to achieve their objectives. Focused attention on key business, using activities such as, but not limited to, the following will aid in achieving an institution’s goals. Enrollment and admissions Construction and facilities management Campus safety and business continuity Faculty and curriculum management Data privacy and security Registrar and degree conferral Tuition billing and financial aid Grant management How Internal Audit Can Help?ERM is a business process led by senior leadership that extends the concept of risk management and includes conducting an enterprise risk assessment. Internal Audit can assist with this ERM in the following ways: Identifying risks and opportunities across the entire institution; Assessing the impact of risks and opportunities to the operations, mission and objectives of the institution; Developing and practicing response or mitigation plans; and Monitoring the identified risks, holding the risk owner accountable, and consistently scanning for emerging risks and opportunities. Visit Schneider Downs Risk Advisory’s Services webpage /risk-advisory-services. ### RPAs Have a Role in SOX Cost Reduction and Efficiency If you’re a public entity, you know the strain SOX testing puts on company resources: the time to discuss controls and walkthrough processes with the testers; the time to pull documentation for the testers and answer questions; and the time to help coordinate the testing. It’s all time well spent, though, since it enables your CEO and CFO to sign a proclamation stating that the company’s internal control structure is sound, and stands able to help prevent or detect a material misstatement to the company’s financial statements.The term “SOX control” is a misnomer, however. Controls are not in place simply because of the regulation, but to protect shareholders and ensure the company’s financial information is accurate. SOX requires existing accounting controls be tested to validate that they’re designed appropriately and operating effectively.As we’re now more than 15 years into the regulation, if you haven’t already optimized your control environment, what are you currently doing? Have you implemented RPAs (Robotic Process Automation), data mining, exception reporting or other forms of data management within your internal control over financial reporting process? With the recent innovation in technology, now may be the time to readdress your optimization opportunities. Not only will it be a better way to manage your business, it could also help reduce your overall SOX compliance testing budget.If you are using RPAs to perform some of your internal controls, or if you’re using dashboards or other exception reporting, rigor would have to be performed in the first year of SOX testing to ensure the precision and completeness of the data being used to develop reports. Once a baseline understanding is obtained, however, each subsequent year should merely be a follow-up and/or refresher to that information.For more information on RPAs and other technology innovations, and how they can reduce your SOX compliance costs, contact Schneider Downs or visit our Our Thoughts On blog. ### Overcoming Bias to Deliver Accurate Data Analytic Insights As organizations implement processes that harness the power of analytical tools to extract insight from their data, it’s imperative that best practices are followed to ensure those processes result in smart decisions being made for the business.An analyst can come to a faulty conclusion, for instance, that could result in huge losses for an organization by failing to take into account the characteristics of a dataset. For example, from 1999 to 2009, the “number of people who drowned by falling into a swimming pool” might roughly correlate to the “number of films that Nicolas Cage appeared in.” An uninformed analyst may see this data and determine that swimming pool deaths can be eliminated by reducing the number of Nicolas Cage films. Thankfully for fans of National Treasure, that’s not a solution to the problem. And although that’s an extreme example of the phenomenon, it does demonstrate that even though a relationship may be found when comparing datasets, it doesn’t necessarily mean there’s a causal relationship between the variables.To avoid these types of pitfalls, one needs to take a step back and evaluate the data in two stages: 1) what data is being accumulated, and 2) what conclusions can be made based on the analysis. Optimally, the first stage should be performed early on, before substantial work is performed with the data. Identifying inconsistencies at this stage can help prevent having to restart the analysis down the line.The second stage needs to be a continual process throughout the analysis. Not only does one need to ask “What does this mean?” but also, “Does this make sense?” So in the example noted above, although the analysis may answer the first question, it takes asking the second question to determine that a conclusion shouldn’t be made based on the analysis.By using these best practices, organizations can efficiently and effectively evaluate their data and deliver accurate and appropriate insights.For more information on Schneider Downs’ data analytic service capabilities, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com, or Andrew Trettel at 412.697.5436 or atrettel@sdcpa.com. ### Improve Your Internal Audit Activity - Quality Assessment Reviews In order for your internal audit activity to be effective, it must be credible to its stakeholders. Internal auditors must be considered professionals and as professionals, internal auditors must conform to a set of professional standards: The International Standards for the Professional Practice of Internal Auditing (the Standards), as well as other elements within the International Professional Practices Framework (IPPF).Just as external auditors are required to perform financial statement audits in accordance with auditing standards and just as external auditors are audited by the PCAOB and/or peers, internal audit departments should be audited against their professional standards. A Quality Assessment Review (QAR) helps the Chief Audit Executive (CAE) demonstrate the internal audit activity’s conformance to an organization’s stakeholders. Yes, this is an audit of the auditors.In accordance with Standard 1312, external assessments should be conducted at least once every five years by a qualified, independent reviewer or review team from outside of the organization. The Institute of Internal Auditors (IIA) has provided two processes in which an Internal Audit (IA) Activity can conduct QARs: (1) contract a qualified, independent reviewer or review team from outside of the organization or (2) perform a self-assessment with independent (external) validation.Option one, although more costly, consumes less of your internal audit resources. This option, when performed by experienced QAR assessors, can provide, not only assurance that the IA activity is in compliance with the Standards, but more importantly, recommendations for improvements to your IA activity.Self-assessments with independent validation primarily provide only an assessment of the organization’s compliance with the Standards and do not consider recommendations for department efficiencies and improvements.These reviews can have considerable value to the CAE, the Audit Committee, the management team and other parties germane to the IA activity. Note that, without such an assessment, your audit reports cannot state that audits have been performed in accordance with the Standards.If you have any questions or need more information regarding QARs, you can contact the IIA at 407-937-1100, visit the IIA website at www.theiia.org or contact Nicole Saldamarco at Schneider Downs at 412-697-5368.  ### Data and Tech Among Top Concerns for CPAs In the AICPA’s 2014 publication, “Reimagining Auditing in a Wired World,” the AICPA staff uses a blue sky scenario to describe what future reporting and auditing systems might resemble after implementation of various technological advances. Fast-forward four years, and Accounting Today’s annual “Year Ahead Survey” results are out, and technology is definitely on the minds of CPAs and accountants in 2019. Accounting Today conducted the survey of more than 800 firms of various sizes in the fourth quarter of 2018 on a variety of topics and issues. When asked, “What are the biggest issues facing your firm in 2019,” firms of all sizes responded with similar results. “Keeping up with new technology” came in as the top concern for 29%, 28%, and 24% of small, midsized, and large firms, respectively. Data and IT security was ranked as the biggest issue for 27% of small firms and 28% of midsized firms. Preparation for the continued change in technology is evident, with approximately 13.3% of all firms’ budgets spent on technology. In addition, 50% of all firms anticipate to increase spending on technology during 2019 as compared to 2018. The survey results are not unexpected, since the industry has been inundated by buzzwords such as big data, data analytics, machine automation, AI, and robotic process automation. In the 2014 AICPA publication noted above, the staff indicates that the audit process has remained relatively unaltered over the past several decades. The results of the survey indicate that the audit process might undergo change in the near future. To learn more about data and technology concerns, contact us. ### New features for enhanced password protection in Azure Active Directory In a previous Our Thoughts on Article, we described a threat to organizations known as password spraying, in which an attacker attempts to login to all usernames the attacker is aware of with a single password.  The attacker, with a large array of user logins, attempts to find an account with a commonly guessable password, whether it be a frequently used password or one related to the company being attacked.  One of the best ways to avoid common passwords is to ensure users create passwords that are not easily guessable.  Many organizations’ password requirements and restrictions—despite being robust—occasionally also fail to keep user passwords from being easily guessed, such as “Spring2019!” or “Passw0rd!” and so on. If your organization utilizes Office 365 with Azure AD integration (whether fully in the cloud or with a hybrid on-premises and cloud environment), Microsoft has released a new feature to help users create stronger passwords.  On April 2nd, 2019, Microsoft made Azure AD Password Protection generally available to organizations with either Azure AD Premium P1 or P2. This new software feature enables organizations to configure AD Password Protection on ID’s and prevent usage of a global password list. Microsoft continues to develop this list by reviewing publically known breached password listings.  While Microsoft does not provide details on the passwords contained within the global password list, Microsoft has indicated that they continually update the list based on the ever-changing threat environment.  Additionally, organizations can establish an additional layer of prevention by providing their own custom password listings in the AD Password Protection configuration.  This allows an organization to prohibit passwords that use their own name, commonly known information about the organization or any other passwords for which the organization may have concerns. Azure AD Password Protection also performs a three-step process to check for similar passwords to the blocked global or custom password list: Step 1: The password will be normalized (changing an “@” -> “a” or a “0” -> “o”) to check for users performing simple character replacements. Step 2: The software will check for fuzzy matching of a banned password by seeing if a character was changed by a distance of 1 (“1” -> “2” or “a” -> “b”) Step 3: The software will check to see if a banned password is contained within a longer password.A banned password counts as 1 point in a required 5 point scoring system.A banned password is considered acceptable if the password contains an additional 4 unique characters before or after it, to obtain the additional required 4 points (where each unique character counts as 1 additional point). The Azure AD Password Protection software is an easy and free way for users with Azure AD Premium P1 or P2 to offer an extra layer of user password complexity beyond the standard mix of characters and minimum length to which users are accustomed.  To enable these features, simply go to the Authentication Methods under Azure Active Directory in your Azure cloud environment.  Additional details on setting up the service can be found in the Microsoft Tech Community: https://techcommunity.microsoft.com/t5/Azure-Active-Directory-Identity/Azure-AD-Password-Protection-is-now-generally-available/ba-p/377487 ### SEC Issues Final Ruling to Modernize and Simplify Regulation S-K On March 20, 2019, the Securities and Exchange Commission (SEC) issued final amendments to various Regulation S-K items that are intended to simplify and modernize certain Regulation S-K disclosure requirements.   With the release of the final amendments, the SEC hopes to reduce the costs and burdens on registrants while continuing to provide all material information to investors, improve readability and navigability of disclosure documents, and discourage disclosure of information that is clearly immaterial and repetitive within SEC filings.  The focus of the amendments were on Description of Property (Item 102), Management’s Discussion and Analysis (Item 303), Risk Factors (Item 503(c)), and Exhibits (Item 601).Item 102 of Regulation S-K requires that registrants disclose the location and general character of the principal plants, mines and other materially important physical properties of the registrant and its subsidiaries.  The final ruling explains that the registrant only needs to disclose information about physical properties to the extent that it is material to the registrant. The ruling leaves the decision up to the registrant to determine which properties deserve discussion based on entity-specific circumstances.  The registrant’s analysis and description of property may be on an individual or collective basis.Item 303 of Regulation S-K requires that registrants discuss their financial condition, changes in financial condition and results of operations for each year presented by the financial statements. The final ruling now allows registrants who are providing financial statements covering a three-year period to omit the discussion of the earliest year presented.  The omission is only allowed if such discussion was already included in prior filings on the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database.  If the registrant elects not to include the discussion of the earliest year, the registrant must clearly identify the location in the prior filing where the discussion may be found.Item 503(c) of Regulation S-K requires disclosure of the most significant factors that make an offering speculative or risky.  The final ruling moved the location to Item 105 of Regulation S-K and eliminated the specific risk factor examples.  The SEC wants registrants to revisit and focus on their own, entity-specific, risk identification process rather than addressing each risk factor example that was previously included in Item 503(c), regardless of the overall significance to the registrant.Item 601 of Regulation S-K requires registrants to file an exhibit of each of their material contracts entered into within the preceding two years.  The final ruling permits registrants to omit confidential information from material contracts filed without the need to submit a confidential treatment request if the redacted information is not material and if the redacted information would likely cause competitive harm to the registrant if disclosed.  Additionally, registrants now have the ability to omit personally identifiable information without having to first submit a confidential treatment request.  Only newly reporting registrants will be required to file material contracts that were entered into within two years of the applicable registration or report. Registrants with established reporting histories will no longer be subject to the two-year lookback requirement because investors will continue to have access to any material agreement through the EDGAR database.The amendments are generally effective 30 days after their publication in the Federal Register ### Using Your Mail Server Against You Occasionally on penetration testing/ethical hacking engagements we encounter misconfigured mail servers which creates an opportunity to either gather information on usernames or send emails impersonating internal users. Hackers love this scenario – we have encountered instances where threat actors find these vulnerable servers and just pour impersonation phishing attempts through, attempting to trick users into sending gift cards, bitcoin and wire transfers. Probing the mail server is a regular part of our pentest methodology at Schneider Downs and something we hunt for on each test. In the rest of this article I’ll break down what this looks like from an offensive perspective, including how you can check for this on your own domain, and touch on a few methods that can be used to secure your mail server.Finding Your Mail ServerDuring reconnaissance, testers (and attackers) are going to try enumerating systems registered to your domain name, including your email server. There are many ways to do this (here is one with a GUI called DNS dumpster), but I’ll use the command-line utility dig here. Specifying the MX (mail exchanger) record will pull back only the mail server(s) for the specified domain.In the answer section, you can see that the MX record for this domain points to the same host we put in the dig command, meaning that is the mail server. This is not always the case.ConnectingMost of the vulnerable mail servers we see are still using port 25 for SMTP – usually the use of port 587 or 465 indicates the server requires TLS/SSL and authentication before commands are evaluated. We could scan the host to see what ports are open, but let’s just try connecting on port 25:Port 25 is open, and we are now connected! Now it’s time to see what we can do. SMTP servers offer several commands, but we’re most interested in enumerating usernames and sending email.The VRFY CommandThe VRFY (verify) command checks for the existence of a user ID on a domain. This is typically disabled on the server because it could potentially allow an outsider to check for valid user IDs, which often correlate to internal usernames. Let’s try issuing a few commands:With the first VRFY, you can see I’m checking for the existence of a user on the domain with the ID mcreel. The server issues a 553 no such user response. Next, we try checking for the user ID root, which receives a 252 response (meaning: Cannot VRFY user, but will accept message and attempt delivery). Code 250 is the success code you want to look for – but root likely exists on the domain since the response differs from mcreel, which we suspect is a truly invalid user ID.An outsider can potentially use this concept to brute-force user IDs. I have found this method useful on engagements where company usernames are constructed haphazardly or with middle initial in the user ID.MAIL FROM/RCPT TO CommandsIn the event that the VRFY command is disabled, the MAIL FROM and RCPT TO commands can be used to accomplish the same thing. These are the commands used to start actually composing an email.Any address can be entered into the MAIL FROM field. If you actually attempt to send an email, an address you know or previously enumerated could be placed here as an impersonation attempt. In the RCPT TO, you enter your email recipient. Above, you will notice that I first try to make the recipient an external email address. This is denied by the server – if you can send from an external address to an external address, the mail server is called an open mail relay, which could allow the server to become a source of spam. Next, in the RCPT TO fields, I start guessing user IDs. Again, the ID mcreel gets a 553 code, but the ID root gets accepted with a 250 code, indicating the ID is valid.DATA CommandAfter picking out a target on the vulnerable server, you can attempt to phish them. The DATA command allows you to send a plaintext or HTML email to the target. The DATA command follows your MAIL FROM RCPT TO setup. Here is a real example in which I attempt to get the selected target to download a malicious HTA payload:The DATA command closes with a line containing a period. A server response follows, 250 in this case, indicating that the email will be queued for delivery.MitigationMitigation starts with determining who has the ability to access and control the mail server. If your company has its own mail server, it’s up to you. Some companies use a third party – in which case if, the server is vulnerable, you have to discuss changes with them or find a new provider. If you use a cloud service such as Office365, you may not own the mail server, but you should still be able to adjust settings that configure it. I’ve seen mail servers in all 3 scenarios that are vulnerable to the types of attacks shown above. Below are a few points to consider when securing your mail server: Require TLS or SSL. Allow messages from local IP addresses to local mailboxes and non-local mailboxes. Allow messages from clients that are authenticated and authorized. Consider whether you need to allow messages from non-local IP addresses to local mailboxes. Never allow messages from non-local IP addresses to non-local mailboxes. ### 2018 Manufacturing Statistics and Results IBISWorld and the Institute for Supply Management (ISM) provide industry trends and statistics periodically. Shown below are some key statistics for the manufacturing industry for 2018.The Purchasing Managers Index (PMI) is the composite index for the manufacturing industry compiled by the ISM, and is based on five sub-categories: new orders, production, employment, supplier deliveries and inventories. The PMI index is utilized to help analyze the state of the economy and predict future growth or contraction. The ISM considers a PMI index over 50.0 to indicate that the manufacturing environment is expanding. See below for the PMI for each month in 2018: Month PMI Month PMI January 59.1 July 58.1 February 60.8 August 61.3 March 59.3 September 59.8 April 57.3 October 57.7 May 58.7 November 59.3 June 60.2 December 54.1 Average for 12 months – 58.8High – 61.3Low – 54.1 IBISWorld notes the following metrics for the industry in its “Manufacturing in the US June 2018” report: Metric 2018 Value Annual Change Revenue $6.2 trillion 5.4% Sector Value Added (SVA)* $1.4 trillion 4.5% Employment 12m employees 3.4% Exports $1.2 trillion 9% Imports $2.1 trillion 1.5%  *Market value of goods and services produced by the sector less the cost of goods and services in production. This can also be described as the sector’s contribution to GDP.The results in the above tables show that the manufacturing industry was expanding throughout 2018. Consumer spending held strong during 2018, as is shown in the increase in gross domestic product (GDP). The Bureau of Economic Analysis estimates that GDP increased at a rate of 2.6% in Q4 of 2018. Furthermore, the 2018 tax reform decreased the federal tax rate for corporations from 34% to 21%. This tax savings left corporations with additional funds to either invest into the company or improve their bottom line income.Looking forward to 2019, growth may slow due to labor market limitations, rising interest rates and tariffs. In the December 5, 2018 edition of the Beige Book, a Summary of Commentary on Current Economic Conditions produced by the Federal Reserve District, many of the districts noted that manufacturers had employees who simply quit without notice. This means that as the manufacturing industry tries to keep up with its expansion, it will have to find ways to better retain employees. This will likely come in the form of increased wages and employee benefits. Additionally, recently enacted tariffs on imported goods have caused an increase in costs for American manufacturing companies that use parts made abroad. They will either have to find an American-made alternative or pay the higher costs to import materials. Both the increase in wages and increased costs of production inputs will have an effect on either the bottom line or selling price of the goods as companies decide whether or not to pass along the increased costs. Both of these outcomes could cause a contraction in the industry. The final item noted as a threat to the industry is rising interest rates. Demand for big-ticket manufactured items such as cars tends to go down as interest rates rise. Therefore, manufacturers of both the big-ticket items and the inputs of these items could see decreased sales.For further information from the Federal Reserve Bank, please use the following link:https://www.federalreserve.gov/monetarypolicy/beigebook201812.htmFor further information on the ISM Report on Business, please use the following link:https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=31098&SSO=1  ### Meeting the Internal Audit Requirement for ISO 27001:2013 ISO 27001:2013 is an information security framework published by the International Organization for Standardization (ISO) that formally specifies an Information Security Management System (ISMS), the framework through which an organization identifies, analyzes and addresses its information risk. It comprises 14 controls groups that consist of 35 control objectives and 114 controls, as described within Annex A of the requirements documentation. Clauses 4-10, described in detail within, are required to certify an ISMS against ISO 27001:2013 and focus on the context, leadership, planning, support, operations, evaluations and improvement of the organization.Why do I need an Internal Audit?One of the core functions of an ISMS is an independent and periodic Internal Audit against the requirements set within the ISO 27001:2013 standard. The function is specifically called out within Clause 9.0, Performance Evaluation. Clause 9.2, in fact, mandates the organization conduct Internal Audits at planned intervals to provide information on whether the ISMS conforms to the organization’s own requirements for its ISMS and the requirements of the International Standard.Each organization must complete the following steps to comply with this clause requirement: Plan, establish, implement and maintain an audit program, including the frequency, methods, responsibilities, planning requirements and reporting. The audit program should take into consideration the importance of the processes concerned and results of the previous audits; Define the audit criteria and scope for each audit; Select auditors and conduct audits that ensure objectivity and the impartiality of the audit process; Ensure the results of the audits are reported to relevant management; and Retain documented information as evidence of the audit program and the audit results What needs to be completed for the Internal Audit?The main thing the Internal Audit is not is a tick-box exercise. The Audit should be derived from the issues, scope, locations, departments, processes, risk and the Statement of Applicability. The full Internal Audit only has to be completed once every three years of the ISO 27001:2013 certification cycle, but completing the full process each year allows you to view how the business works in practice, and permits the ability to discover opportunities for improvement or uncover a possible risk that might not have been observed by simply performing a surveillance audit.The five stages to an ISO 27001:2013 Internal Audit include: Document Review. Review and read all documentation created when you implemented your ISMS program, which will set clear limits on the scope of what needs to be audited; Audit Plan. Auditors and management should create a detailed checklist of what needs to be completed. This plan should also include the timing and resources for the Internal Audit; Field Review. Auditors will complete fieldwork for the whole company, talk with employees, check equipment and observe how the ISMS works throughout the organization. Testing will also be conducted around processes and procedures; Analysis. Evidence that has been collected should be reviewed in relation to the risks and control objectives; and Report. The findings of the audit should be presented to management in a formal report. Following these five steps will allow for a successful and meaningful Internal Audit around your ISMS against the ISO 27001:2013 standards, and will be a major step in improving your organization and ISMS.Why can’t I complete my own Internal Audit?Many organizations believe they can conduct their own Internal Audit of ISO 27001:2013, but then realize the individuals who would be completing the process have operational control or ownership of the controls being audited. This leads to an independence issue that would render the audit insufficient. To combat these issues, organizations often outsource their Internal Audit requirement to CPA firms like Schneider Downs, an organization that possesses the appropriate knowledge of Internal Audit and ISO 27001:2013. ### Financial Trustee Service Considerations A financial trustee is a person or firm who manages property or assets on behalf of a third party. One may be appointed for various reasons, including, but not limited to, settlements, litigation, bankruptcy, environmental remediation or charitable funds. A financial trustee has a fiduciary duty of loyalty to the trust and its beneficiaries, and also a duty of impartiality to the beneficiaries. It’s essential that the day-to-day activities of the trust are properly managed and monitored to ensure the objectives and obligations of the trust are achieved.Examples of services that a financial trustee may provide are:Trust Establishment Establish one or more bank accounts with approved financial institutions Determine appropriate accounting methods Develop a record retention system to maintain complete and accurate records Create policies and procedures for day-to-day operations to meet individual needs of the trust Trust Administration Receive invoices and manage the invoice approval process prior to remitting payment Direct cash receipts and disbursements Manage cash flows to ensure sufficient liquidity to meet anticipated needs of the trust Manage and invest assets of the trust Maintain records of all actions and communication with respect to the trust Make, execute, acknowledge and deliver contracts or agreements related to the trust Financial Reporting & Tax Preparation Prepare and distribute monthly, quarterly and annual financial statements Prepare monthly bank reconciliations Prepare customized reporting for legal, governmental agency (i.e. Environmental Protection Agency) or other reporting purposes Plan for and prepare annual federal and state tax returns For more information on Schneider Downs’ financial trust and fiduciary service capabilities contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com. For similar articles, visit the Our Thoughts On blog. ### PCAOB Inspections Outlook for Audit Committees The Public Company Accounting Oversight Board (PCAOB) has introduced a new strategic plan to enhance external engagement and proactive communication with audit committees regarding the PCAOB’s core activities, including inspections.  During 2019, the PCAOB will provide an opportunity for audit committee chairs of certain companies whose audits are subject to inspection to engage in conversations directly with the inspection staff.  The purpose of these conversations is to provide further insight into the PCAOB’s views as well as for the PCAOB to obtain the views from audit committee members.  The PCAOB believes that audit committees will find it useful as they engage with their auditors throughout the course of the year. The PCAOB also announced that their 2019 inspections will focus on: Technical developments – the use of software audit tools and the audit response to cybersecurity risks; Audit firms’ actions addressing past inspection findings - regarding areas of repeat deficiencies, which includes revenue recognition, internal control over financial reporting (ICFR),and accounting estimates; Audit procedures on new accounting standards – revenue recognition (ASC 606 and IFRS 15), lease accounting (ASC 842 and IFRS 16), current expected credit losses (ASC 326), and financial instrument accounting (ASC 815 and IFRS 9); Implementation of the new auditor’s reporting model requirements – obtaining an understanding the critical audit matters (CAMs); Audit firms’ systems of quality control – the firms’ culture as well as their policies and procedures and whether audit quality is consistent over multiple engagements and Auditor independence In addition to the required communications from their auditors, audit committees may choose to further engage with their auditors on current issues of inspection focus by asking questions related to the auditor’s response to identified risks, changes in the auditor’s report, implementation of new standards, auditor independence, and PCAOB inspection results, to name a few.Schneider Downs will continue to monitor current developments from the PCAOB.  Please contact your Schneider Downs representative with any questions. ### It's Budget Season Again! For many not-for-profit organizations, it’s that time of year … budget season. What side do you take, are you excited for the opportunity to plan for your organization’s future, or do you dread the seemingly never-ending process of cutbacks and of having to say no? Unfortunately, since 2008 most organizations have fallen into the latter category.So what would it take to move your team and organization to the former? Imagine the following: Make the data gathering process easier and more reliable The result – a senior leadership team able to focus on decision-making and a management team not lost in fact and formula checking. The how – invest in systems and databases that bring the information to you, reduce the risk of error, and limit time and energy spent on producing spreadsheets. Spend valuable time on idea-generating activities rather than negotiations with colleagues on how to spend finite resources The result – identifying new ideas and models on how to execute the organization’s mission, and leverage all the organization’s key drivers of success (reputation, relationships, quality, intellectual capital, financial). The how – commit to doing things differently and invest in time to assess current processes against a desired future-state. Find ways to say yes The result – an organizational culture that understands reality and works together toward the desired objectives. The how – have the tough conversations, be transparent and share key indicators regularly with the team. As progress is made, the team will quickly see how achievable, the ‘yes’ really is, or what actions still need to happen to drive success. While these three steps sound simple, we all recognize the challenges organizations face, especially during the budget time. Maybe this cycle can be different? Is this the year your organization tackles the dreaded budget season and turns it into something that drives growth and opportunity?The Schneider Downs Not-for-Profit Industry Group is committed to staying up-to-date on trends and developments affecting the industry. You can click here to subscribe. ### Fraud Report Statistics from the Data Book 2018 Fraud Report Statistics from the Data Book 2018The Federal Trade Commission (FTC) released the “Consumer Sentinel Network: Data Book 2018” in February 2019.  The report was generated from consumer complaints to the FTC that were stored in Consumer Sentinel Network (Sentinel), along with reports that were filed by consumer-focused organizations and law enforcement agencies.  The information stored in Sentinel is used by law enforcement to identify trends in fraud, theft and other scams.  According to the FTC, “During 2018, Sentinel received nearly 3 million consumer reports, which the FTC has sorted into 29 top categories.”  The Data Book represents those nearly 3 million consumer reports and presents the data in graphical format to make the data more easily understood.  The data sets that are represented in the report are available on the FTC’s website for a more in-depth study of data.The largest percentage of reports, 48% of the total (or 1.4 million reports), were due to fraud.  Of those 1.4 million, 25% reported a financial loss totaling $1.48 billion as a result of the fraud, and a median loss of $375.  Imposter scams were the most common category of fraud, with 535,000 reported and total losses of $488 million.  An imposter scam is when a perpetrator impersonates another person or a group that the victim trusts and then convinces the victim to give him money.  Not all scams are successful, but one in five imposter scams resulted in financial loss, resulting in a median loss of $500.  Telephone and mobile services fraud and shop-at-home and catalog sales fraud round-out the top three most common fraud categories, with 165,000 and 143,000 reports, respectively. Other interesting statistics presented in the Data Book 2018: The number of fraud reports in the $1 - $1,000 range were 266,000, with 80,000 of those losses being within the $1 - $100 range. Wire transfers were the payment method with the highest number of reports, 101,000, and highest dollar value of total loss, $423 million. By far, the phone was the most common contact method, with 69% listing the phone, and also the most in total losses with $429 million.The next most common method, and also second highest total losses, was website or other with 12%, and $227 million in losses. It is clear by reviewing the data that many of the frauds reported to Sentinel were relatively low-dollar value, but the number of reports and total reported losses are significant at the state and national level.  It is also important to note that while the dollar values are relatively low, for the individuals who filed the reports, the losses may have been personally significant or resulted in personal hardship.  At Schneider Downs, we are committed to helping our communities, and bringing awareness to the trends in consumer fraud helps to serve that purpose.  For more information on fraud prevention or detection, contact Tom Pratt at tpratt@schneiderdowns.com or Brian Webster at bwebster@schneiderdowns.com or any member of the Schneider Downs client service team. ### Sales Tax - New Legislation Wayfair Trends in 2019 It appears that 2019 is bringing some new trends in Wayfair economic nexus legislation for sales and use taxes. The most recent trend is that states such as North Dakota and Washington that initially used economic thresholds of $100,000 in sales or 200 individual transactions have decided to drop the 200 individual transactions threshold, leaving a sale threshold of $100,000.  Georgia, which is currently using a $250,000 or 200 transactions thresholds, has introduced legislation this year to eliminate the 200 individual transaction threshold and to reduce the dollar threshold from $250,000 to $100,000.  If the legislation becomes law, it is expected to take effect July 1, 2019.  This single threshold of $100,000 in sales also appears in new Wayfair legislation in Idaho, Kansas and Oklahoma.As states are looking for more efficient ways to collect sales tax, we see another trend emerging with a growing number of states applying economic nexus thresholds, to marketplace providers.  In 2019, economic nexus thresholds are being applied to marketplace providers by states that already enacted economic nexus standards on remote sellers last year.  Alabama and Iowa started applying their economic nexus thresholds to marketplace providers on January 1.  South Dakota did the same, starting on March 3; District of Columbia will begin applying its standards to marketplace providers on April 1 and Wyoming is to start on July 1.  The aforementioned states with pending Wayfair legislation thresholds in Georgia, Idaho, Kansas and Oklahoma also include marketplace providers in addition to remote sellers.We will write on more developing trends as states interpret the significance of the Wayfair opinion and finalize their fiscal year budgets. ### The List of Nondeductible Expenses Continues to Grow The Tax Cuts and Jobs Act (TCJA) has made significant changes to the tax code and the related underlying deductions available to taxpayers.  These changes have had a significant impact on professional service organizations.  Specifically, businesses that operate in this environment have seen the deduction for expenses related to client entertainment go from 50% deductible to nondeductible.  In addition, businesses frequently bring in meals for internal meetings or to enhance their employees’ efficiency.  Those expenses were 100% deductible prior to the passage of TCJA and are now 50% deductible until 2025, and then they become nondeductible. If you thought the reduction and elimination of deductions stopped there, think again.  In December of 2018, the IRS issued Notice 2018-99 that addressed the tax treatment of qualified transportation fringe benefits, which include van pools, transit passes, bicycle commuting and qualified parking.  This notice provides that, at a high level, if the cost of qualified transportation fringe benefits is not included in an employee’s wages, the employer will not be entitled to the underlying deduction for those transportation fringe benefits.The IRS allows that any fringe benefits paid on behalf of the employee that are less than $260 per month will be considered de minimis and not required to be included in an employee’s taxable compensation.  However, to the extent these benefits are not included in an employee’s taxable compensation, they will not be deductible by the employer.  So while the IRS has provided a de minimis threshold to reduce reporting requirements and to enhance employee benefits, the TCJA has now deemed those expenses nondeductible.  The common expense that you would think of is parking paid by the employer on behalf of the employee, but this also applies to Section 125 qualified transportation fringe benefits that employers do not fund, but instead provide a mechanism by establishing a plan to enable employees to pay for all or a portion of their qualified transportation fringe benefits on a pre-tax basis.  However, now because these benefits are paid pre-tax (even though they are not paid by the employer), the employer will not be able to deduct the wage expense attributable to the pre-tax funding of qualified transportation fringe benefits.  This may be a big surprise for many employers that thought it would be limited to transportation fringe benefits paid directly by the employer.  This can have a significant impact on employers located in an urban setting, where the majority of their employees take advantage of the pre-tax funding of qualified transportation fringe benefits related to parking and transit passes.Employers that are located in suburban or rural areas that provide employees free parking will also need to quantify the cost of the parking provided, and to the extent it is not included in the employee’s wages, will need to disallow the tax deduction related to the cost of parking provided to employees.  There is a four-step process outlined in IRS Notice 2018-99 to quantify the amount of parking-related expenses that would not be deductible.  In some cases, if more than 50% of the parking area is available for use by the general public, there may be little to no expense disallowed.  Please consult a Schneider Downs tax professional to determine how these rules may impact your business. ### Preparing for Enhanced Disclosure: Liquidity and Availability Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-14 represents the single biggest change to not-for-profit financial statements in over 20 years.   This standard does not change any existing accounting, except in limited cases, but rather is designed to refresh the presentation of the financial statements with a focus on additional transparency surrounding restrictions and liquidity.The enhanced liquidity disclosures require both qualitative and quantitative information. This requirement is a result of financial statement user concerns about the lack of transparency in financial statements and the ability to assess an organization’s liquidity from the face of the financial statements.  For example, board designations and donor restrictions could mean that certain amounts of cash and cash equivalents or investments, although liquid by nature, may not be able for general expenditure over the next 12 months. When preparing this disclosure, not-for-profit organizations should determine the message that they want to convey to their financial statement users and decide on the best presentation approach.  For example, if the organization has ample resources to meet general expenditures over the next 12 months, it may want to make that clear.  On the other hand, if it is apparent from the financial statements that the organization will struggle to meet general expenditures over the next 12 months, it may want to disclose its action plan.  There are also options when it comes to presenting the qualitative information.  The information may either be presented on the face of the statement of financial position or in the notes to the financial statement.  Overall, there is no prescribed format for this new standard.  Every organization is unique, and although this is a big change, it is a great opportunity for organizations to tell their story. To prepare for this disclosure, organizations should review significant agreements that may impact their liquidity, such as bond and loan agreements, affiliation agreements, donor agreements or contracts with state or federal agencies.  It is also a good time to review any board-designated net assets to determine that they still make sense for the organization.   If the organization doesn’t have a policy regarding board designation in place, now is a good time to consider implementing one.   As a reminder, ASU 2016-14 is effective for 12/31/18 year-ends.  The liquidity and availability disclosure is not required to be comparative in the year of adoption.  ### Legislation Introduced Preventing Rolling Stock Acquisitions from Chinese Manufacturers While the U.S. – China trade war continues, members of Congress have new concerns regarding China’s push to dominate the U.S. transit car market. On March 14, 2019, United States Senators John Cornyn (R-TX) and Tammy Baldwin (D-WI) introduced the Transit Infrastructure Vehicle Security Act to prevent transit agencies from using federal funds to acquire rolling stock, meaning rail cars or buses, manufactured by any company that is Chinese owned, controlled or subsidized. The bill has received backing from Senate Banking, Housing and Urban affairs Committee Chairman, Senator Mike Crapo (R-ID), and Ranking Minority Member, Senator Sherrod Brown (D-OH). This bipartisan bill is meant to protect the United States from the threat of China’s aggressive global growth strategy.The primary aim of this bill is to counter China’s “Made in China 2025” initiative, which shifts China from low-end manufacturing to high-tech manufacturing, including robotics, information technology and clean energy. Two of China’s strategically selected sectors for growth are rail and bus manufacturing. China has penetrated the U.S. market by winning contracts using a “bargain price” approach, including state subsidies, which has been successful in a large number of metropolitan areas. The number of threats related to the procurements of these transit assets will increase, including impeding economic competitiveness and gaining control over the supply chains that support U.S. public transit agencies if the acquisition of these assets continues.Another focus of the bill is to implement proper cybersecurity standards, as Congress has noted that cybersecurity threats have increased with the influx of Chinese rolling stock. This bill would require transit operators to develop and execute appropriate plans for identifying and reducing the cybersecurity risk by reviewing best practices and determining hardware and software of rail and bus assets that would need third-party testing.If Congress approves the bill, which is likely based on strong bipartisan support, the economic outlook for U.S. manufacturers of rail cars, busses and related materials should greatly improve. ### Fostering Emotional Intelligence in Accounting Firms A recent Journal of Accounting Marketing and Sales “Growth Strategies” contained an interesting article about understanding emotional intelligence (EI) that I found interesting. Whether you are new to the business community or a seasoned professional, understanding your EI is an important consideration that we should all think about.Science journalist Daniel Goleman introduced the term “emotional intelligence” in a book with the same title in 1995. Generally, EI is described as “the set of emotional and social skills that impact the way we perceive and express ourselves, develop and maintain social relationships, cope with challenges and use emotional information in an effective and meaningful way.”Why is this important to me?It’s easy to believe that emotions don’t belong in an accounting firm. Accounting is about numbers. It’s rational, orderly and logical, right? Emotions, on the other hand, are irrational, messy and don’t follow the rules of logic. How important is EI to the real work of serving clients and growing the firm, you might ask?CliftonLarsonAllen’s chief strategy officer John Ritcher claims “We have found that an individual’s emotional quotient is often more important to their success as a leader than their intelligence quotient. Leaders may or may not be the best technicians, but they are the ones who can motivate and encourage the people around them.” Dennis Faurote, founder of the consulting and training firm The Faurote Group added “EI is one of the single biggest predictors of success in all types of jobs.”John Ritcher also sees a strong link between EI and financial performance. “People who understand themselves, their impact on others and who are able to ‘peel back the covers’ to uncover people’s pain and earn their trust are the ones who drive the greatest amount of business for us.”Contained in James Rundle’s article “Why Young Bankers, Lawyers and Consultants Need Emotional Intelligence,” published in the Harvard Business Review, James explains “Early in your career - whether it’s in banking, law, consulting or accounting – you will discover that all your colleagues are as smart and hard working as you. You’ll learn that the key to being successful must be something else. Over my 40-year banking career, I’ve learned that the critical distinguishing factor for advancing in professional services is emotional intelligence.”How it translates to marketing and business development.The skills of emotional intelligence are foundational for client service and business development, as well as people development.“We don’t ever want to “sell” anything,” John Ritcher says. “All we ever want to do is understand who they are, what their issues are, and present options and opportunities to help them solve the problems that they are facing. And you can’t do that unless you can relate to them, unless you can delay judgement, unless you can help them not only reveal but also get in touch with their pain.”Marketing and business development professionals can make a profound impact on their firms and professionals within them by helping to foster the emotional intelligence they need to connect with and engage clients and prospects.I encourage you to be aware of, and consciously think about, your emotional intelligence. Whether you are a young professional learning this complex industry or a seasoned professional tasked with growing the business, your emotional intelligence is a differentiator that should not be ignored.The following chart explains the five aspects of emotional intelligence:References: Runde, R. “Why young bankers, lawyers and consultants need emotional intelligence,” Harvard Business Review Sept. 26, 2016. Downloaded from   https://hbr.org/2016/09/why-young-bankers-lawyers-and-consultants-need-emotional-intelligence. Sparks, L. “Fostering emotional intelligence in accounting firms,” Growth Strategies, Fall 2016, p. 8-9 ### Benefit Plan Audit by Infomercial “Set it and forget it!” A familiar phrase made popular back in the 1980s thanks to an infomercial that praised the features of rotisserie ovens, but one that’s being applied today as something of a way of life. From home to work in this automated age, the option to “set it and forget it” can be found throughout daily tasks: set the Roomba, forget it; set the recurring credit card payment, forget it; set the Outlook meeting invite, forget it; set the benefit plan audit, forget it. Wait … set the audit and forget it? Not so fast!While participants in a benefit plan may have the option to live the good life by setting their benefit elections and – in the words of Kanye West – “watch the money pile up,” plan administrators and financial overseers should pay close attention to the details when maintaining an effective plan. A key instrument in the administrator’s toolbox to aid that effort is an audit.While audits are required for various regulatory reasons, the benefits of the process usually go beyond the typical compliance of filing the Form 5500. An audit can help, for instance, evaluate plan health and aid administrative performance by providing recommendations, including flagging potential problems or identifying cybersecurity risks and helping to implement solutions to mitigate risk. Plus, from an economic perspective, an audit helps provide a checkup on the financial integrity of plan assets and can ultimately help identify ways to reduce expense.So don’t just “set it and forget it.” Set your date with Schneider Downs to discuss all your benefit plan audit needs today! ### Five Questions to Assist With Identifying SOC Report Scope The SOC reporting process can start with an organization’s desire to communicate to customers and potential customers that the organization’s internal control processes are being implemented effectively. Or it can be prompted when an organization’s customers start to request to review the organization’s SOC report. Organizations are responsible for defining the scope of a SOC report engagement. If a SOC report’s scope is too narrow, then it might not be useful to the intended users of the report, since key information is omitted. If a report’s scope is too broad, organizational resources and time could be wasted implementing unnecessary control processes. We recognize that SOC reports are a significant investment and recommend the following five guideline questions be considered when defining the scope of your SOC report. 1.) What are the core services your organization provides? Is your company completing processes that are relevant to a customer’s internal control over financial reporting, such as processing payroll or taxes?If so, a SOC 1 report should be considered. If your company is providing services to other organizations, and those services are not significant to internal control over financial reporting, such as IT infrastructure hosting or support, data processing or network security, then a SOC 2 report should be considered. 2.) What are the key service commitments your organization makes with customers? Contractual agreements between your organization and customers are a good starting point for answering this question.For a SOC 1 examination, identify the classes of transactions processed or functions performed for clients.The internal controls that your company maintains over these processes and functions will be relevant to report users and should be included in the report. For a SOC 2 examination, identify the commitments or service level agreements your organization has made.All SOC 2 reports will include the Security (Common Criteria) category, but the inclusion of one or more additional categories (Availability, Confidentiality, Privacy, Processing Integrity) should be considered for inclusion based on these commitments.For example, if your organization has specified a system uptime metric, then the Availability category should be considered for inclusion in the report. 3.) What systems are used to deliver your organization’s services? In a SOC 2 examination, a system is defined as: the infrastructure, software, procedures and data that are designed, implemented and operated by people to achieve one or more of the organization’s business objectives. This SOC 2 definition can also be applied to SOC 1 report systems.Answer the following questions to assist with identifying in-scope systems: What software or applications are used to perform our services? What infrastructure supports the software?  This includes servers, firewalls, and monitoring systems. Where is the infrastructure hosted? What types of data are used by the system? What are the sources and outputs? What automated or manual procedures are completed to provide our organization’s services? Who is carrying out the procedures noted above and who is responsible for maintaining the software/infrastructure? 4.) What third parties does your organization utilize to deliver its services? Any third parties used to deliver your organization’s services should be presented in in your organization’s report.  To guide an organization’s determination regarding which third parties to present in a SOC report, Schneider Down’s SOC specialists have published full articles on how to define Vendors or Subservice Organizations and on the Inclusive and Carve-Out Methods . 5.) Does your organization need to comply with regulatory requirements? If your organization is subject to regulatory oversight, then controls around your organization’s compliance should be considered for inclusion in the SOC report. Regulatory topics can be included as individual controls, and the control can be phrased such as: “HIPAA compliance audits are conducted on an annual basis.” Or the regulatory topic can be addressed by incorporating an additional reporting framework such as the HITRUST CSF or ISO-27001 using the SOC 2 Plus reporting format. Service Auditors can help to clarify the scope for your SOC Report. The factors discussed above provide a base for defining SOC report scope. While an organization’s management is ultimately responsible for defining scope, service auditors can provide clarification as needed for management. For example, we are often asked to help determine whether a third party is a vendor or subservice organization or if the timeframe for completing a report is appropriate.  If you have questions about scoping your SOC report, we welcome the opportunity to discuss it with you. Ask your Schneider Downs representative or our SOC Report practice professionals. ### Revenue Recognition Standard finally effective for nonpublic companies. Are you ready or still in denial? I was just there for the massage.  I had no knowledge of any hush payments.  It’s all about respect in the locker room.  The adoption of ASC Topic 606, “Revenue from Contracts with Customers” won’t have an impact on us. These are all denials we’ve heard lately.  I’m not saying I believe any of them, but maybe for the construction industry, I can at least address whether one of those denials is an alternative fact or fake news.For nonpublic companies, ASC Topic 606 is effective for years beginning after December 15, 2018, which means if you are a calendar-year-end company, it would be effective January 1, 2019.  Are you ready or still in denial that it won’t impact your company?  Maybe answering a few of these questions will give you a sense of which end, fact or fiction, you are closest to. Do your contracts have modifications (changes in scope and/or price)?  If so, you will need to address whether or not to account for those modifications as a separate contract (changes relate to goods or services that are distinct, and price of the contract increases by standalone selling price) OR as part of the original contract.  Do your contracts have either multiple goods and/or services provided to a customer OR multiple contracts with the same customer?  If you have the first scenario, you may need to evaluate those multiple goods and/or services as separate performance obligations, with separate transaction price and revenue recognition.  If you have the second scenario, you may need to evaluate whether those contracts should be combined.  Were they negotiated as a package?  Is the price to be paid for one contract dependent on the price of the other?  These questions are relevant to the accounting treatment of multiple contracts. Do your contracts have warranties OR discounts?  If your customer has the option to separately purchase a warranty (or extended warranty), which represents a separate performance obligation, you may be required to allocate a portion of the contract value to the warranty.  If you have discounts and multiple goods and/or services provided within your contracts, you will need to address how those discounts are applied to the separate performance obligations. Do your contracts have variable consideration (change orders, claims, liquidated damages, bonuses, performance incentives, etc.)?  If you have any variable consideration in your contracts, you will need estimate that transaction price using an approach that best predicts the amount to which your company is entitled to (expected value or most likely amount approaches).  Once variable consideration is determined, you may need to consider whether that price needs to be “constrained,” to the extent that a revenue reversal will not be probable.  The cash basis for claims and bonuses, or waiting for a signed change order may no longer be appropriate accounting options under the new standard. Do you have uninstalled materials on your job sites?  Did you have a large shipment of aggregate, copper wire or rebar delivered to the jobsite that wasn’t installed prior to balance sheet date?  What about an HVAC system or elevators that weren’t installed before the new year? If certain criteria are met, it may indicate that those costs were incurred, and they were not in proportion to your measure of progress in completing the contract.  Accordingly, you may have to adjust your percentage-of-completion calculation to recognize revenue only to the extent of that cost incurred (no margin). Did you answer yes to any of the items listed above?  If so, the adoption of ASC 606 will likely impact your company.  If you answered no to all of them, you’re probably not in the construction industry.  The last question and most important:  Are you ready for the adoption of ASC 606?  While the questions above address some of the more common factors that impact the construction industry, the actual guidance and subsequent amendments are thousands of pages and cover a multitude of other topics.Seems overwhelming to get your arms around?  Whether you’re already starting on your implementation plan, or still trying to figure out the meaning of “distinct” and “constraint,” or somewhere in between, Schneider Downs’ advisory services can help.  Not fake news, not alternative facts.  We have the experts who know the construction industry and are ready to get you to the ASC 606 adoption finish line. ### Let's Make a Deal Do your company’s plans for 2019 include the potential for a merger or acquisition?  If so, then it would appear you have plenty of company.  Deloitte’s The State of the Deal: M&A Trends 2019, which was based on surveying 1,000 executives from corporations and private equity firms in the U.S., indicated that mergers and acquisitions were expected to increase both in the number and size of transactions in 2019.  This would follow several years of mergers and acquisitions at record levels.    Despite the continued growth in M&A activity, roughly 40% of those surveyed indicated that half of their deals over the past two years fell short of the expected value or return on investment.  External factors were most often cited as the cause, including general economic or specific industry factors, as well as regulation. What makes a deal successful?  According to the report, effective integration topped the list for what makes a deal successful (cited by 23% of respondents), followed by economic certainty (19%) and accurate target valuation (18%).Industry and sector consolidation has been a driving force in mergers and acquisitions and that trend is anticipated to continue.  Banking and securities, energy and resources, asset management and technology were the sectors most often cited as expected targets of convergence.The survey also indicated that, as a result of tax reform, companies have an increased supply of cash and the number-one intended use of those resources was mergers or acquisitions.If your plans for 2019 include the possibility of a deal, learn more about Schneider Downs’ experience in advising clients throughout the course of a merger or acquisition by contacting Joel Rosenthal. ### Pennsylvania Department of Revenue's Modernization Project Earlier this month, the Pennsylvania Department of Revenue announced some recent developments surrounding its multi-year modernization project.My Pennsylvania Tax Hub or “myPath” System On February 4th, the Department launched its new online myPATH (My Pennsylvania Tax Hub) system.  The first phase of the new tax hub rollout is related to the Department’s Bureau of Motor and Alternative Fuels for the following taxes: International Fuel Agreement (IFTA) Motor Carrier Road Tax (MCRT) Motor Fuel Tax Alternative Fuels Tax PA Fuel Transporter The Department will continue to add different systems to the hub over the next few years.  The next rollout is expected later this year, for the realty transfer and inheritance tax administration system.  A third rollout is scheduled to occur sometime in 2020 for Personal Income Tax Returns, Property Tax and the Rent Rebate Program.  The third rollout is expected to have significant benefits, allowing taxpayers to seamlessly file returns and PTRR applications while receiving refunds and rebates in a timelier manner.The new myPATH system is expected to increase efficiency and reduce administrative cost, while facilitating improved tax collection with fewer system failures.  The system will also allow the Department to respond more quickly to ever-changing tax laws, providing taxpayers access to more information while improving taxpayer services.  Additional details related to myPATH can be found on the Pennsylvania Department of Revenue website.Department’s New PA-100 Online ApplicationIn addition to launching the initial phase of myPATH, the Department has also announced that it has updated the PA-100 online application.  The new online form will require an e-Signature login, allowing taxpayers to use the same login information that they use for e-TIDES.  The online application has a new look and application screen that provides a complete list of all current applications.  The application also has pre-filled fields containing previously entered information.  The PA-100 can be used for the following taxes and services: Promotor License Public Transportation Assistance Taxes and Fees Sales, Use and Hotel Occupancy Tax Small Games of Chance License/Certificate Tobacco Products License Transient Vendor Certificate Unemployment Compensation Use Tax Vehicle Rental Tax Workers Compensation Coverage Wholesaler Certificate The Department is encouraging taxpayers to use the new online PA-100 application, since it is more efficient and improves processing time.    ### Part Five in a Series: Managing Risks of Technologies Emerging as Business Opportunities: Chatbots What are chatbots? Chatbots are computer programs or artificial intelligence (AI) that conduct a conversation via audio or text.  These programs are typically used in dialog systems, including customer service scenarios, and are often designed to simulate how a human would behave during conversation.  Chatbots can be programmed to respond the same way each time or differently to messages containing keywords.  They can also use machine-learning to adapt their responses to fit the situation, as they are built to automatically engage with received messages. One way for businesses to stay competitive is to automate as many of their processes as possible.  Chatbots assist in saving time and money which can then be allocated to other efforts.  They are also used for other business tasks, such as collecting information about users and showcasing new products and services.  Today, most chatbots are accessed via virtual assistants (Amazon’s Alexa), messaging apps (Facebook Messenger), or individual organizations’ websites or apps. What does this growing digital technology mean for Internal Audit? As auditor skills must keep pace with growing technologies, audit efforts should be focused on where risk is going.  Technological risk factors continue to evolve as companies increase reliance on new technologies.  Emerging risk considerations for chatbots include the following: Customers have poor experiences with chatbots and are unable to accomplish their objectives when contacting a company. High dependencies on the network capacity and size lead to unreliable performance of chatbots for customers. Chatbot rules/scripts are incomplete or lead to inaccurate responses. Compliance with regulatory requirements is not assessed related to usage and rules/scripts. Inadequate governance procedures are performed to identify processes to implement chatbots, resulting in operational inefficiencies and investment losses. Attackers exploit vulnerability in chatbots, leading to a loss of sensitive information. Additionally, as interactions with chatbots continue to grow, new opportunities emerge for phishing, hacking and other cyber-related attacks. Internal auditors must consider different support models for emerging technologies to provide businesses value.  Progressive risk management practices, such as assessing the impact of potential future events, should be utilized.  Internal auditors must respond proactively by helping organizations identify, monitor and manage risk.  This can be introduced by looking at risks from a high-level perspective, examining policies/procedures, inspecting current project plans, communicating risks in the context of the business’s goals/objectives, and giving an overall opinion on how the business is managing emerging risk. If you have additional questions related to chatbots, we welcome the opportunity to discuss and advise on risk assessment.  Please visit our Risk Advisory Services page. ### Good News Regarding Excess Business Losses For Your Pass-Through Construction Business If you own a construction business, you know all too well that one or more bad contracts can make or break the financial results for the year. If you were in this scenario for the year ended December 31, 2018, your tax advisor may have been bracing you for the new rules that could limit the deductibility of the potential business operating loss in 2018.  While the limitation on Excess Business Losses, still exists, the IRS has recently issued guidance (and Form 461) that may provide good news.Excess Business Loss LimitationGiven the speed at which the 2017 Tax Reform Act was passed, it’s not surprising that very little guidance exists regarding the calculation of the Section 461(l), Excess Business Loss Limitation. The IRS’s website, however, provides the following:An Excess Business Loss is the amount by which the total deductions attributable to all of your trades or businesses exceed your total gross income and gains attributable to those trades or businesses, plus $250,000 (or $500,000 in the case of a joint return).A “trade or business” can include, but is not limited to: Schedule F (farm) and Schedule C (self-employment) activities. The activity of being an employee. Other business activities reported on Schedule E (rental & pass- through income). Business gains and losses, including pass-through income and losses attributable to the sale of property by a trade or business (Form 4797 and Form 8949). Excess business losses that are disallowed are treated as a net operating loss carryover to the following taxable year.This guidance appears to be taxpayer-friendly, given the items that can be included as business income: Salaries and wages of being an employee can offset business losses from other sources.  Capital gains (and losses) reported on Form 8949 – Sales and Other Dispositions of Capital Assets will used to offset ordinary business losses, this could potentially mean that the gain (or loss) from the disposition of interests in partnerships and S corporations may offset business losses. Gains (and losses) from Form 4797- Sales of Business Property are available to offset business losses. The inclusion of salaries and wages that are attributable to a trade or business is good news, and could potentially increase the deductibility of a loss generated by a pass-through trade or business. For example, if a married taxpayer’s only source of income for the 2018 tax year was $1,000,000 of wages and a tax loss of ($1,500,000) from a 100% owned pass-through construction business, the taxpayer may be able to deduct the entire $1,500,000 pass-through loss on his 2018 individual income tax return. This is due to the fact that the wages ($1,000,000) could be considered trade or business income and be counted when determining his 2018 net trade or business loss of $500,000 ($1,500,000 - $1,000,000).It’s important to note that above example has been simplified to illustrate the utilization of wages in calculating excess business loss. The example does not consider “at-risk” and “passive activity” loss limitations that are applied before calculating the amount of excess business losses. The impact of those limitations is beyond the scope of this article.If you have any questions related to the impact of the excess business losses rules on your construction company, do not hesitate to contact Mark A. DiPietrantonio or another member of the Schneider Downs Construction Industry Group. ### New Revenue Recognition Standard Will Impact Auto Dealers In May 2014, the Financial Accounting Standards Board (FASB) issued accounting standard update (ASU) 2014-09, Revenue from Contracts with Customers, intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and clarify disclosure requirements.Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes: 1) identifying the contract(s) with a customer; 2) identifying the performance obligations in the contract; 3) determining the transaction price; 4) allocating the transaction price to the performance obligations in the contract; and 5) recognizing revenue when (or as) the performance obligations are satisfied.The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In addition, it amends existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., sale of real estate) to be consistent with the standard’s guidance on recognition and measurement, including the constraint on revenue.The FASB subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract.This accounting standard update is effective for reporting periods beginning after December 15, 2018 for non-public entities, and must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures).Public companies had to implement this guidance last year; this year, nonpublic companies are working through the implementation. The standard will arguably have a bearing on all industries, and automobile dealers could see an impact on financial reporting as a result, especially in the following areas: Sales of finance and insurance contracts Customer loyalty programs (free car washes, oil changes, etc.) Service and maintenance, including body shop repairs Dealer warranties Dealers, though, should review all revenue sources to see if there are material changes that need to be implemented. Here’s the process one company followed:We adopted the standard using the modified retrospective approach, applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption.As part of our implementation process, we performed an analysis to identify accounting policies that needed to change and additional disclosures that will be required. We considered factors like customer contracts with unique revenue recognition considerations, the nature and type of goods and services we offer, the degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is currently recognized, among other things. We evaluated all revenue streams, and noted that similar performance obligations will result under the new standard as compared with deliverables and separate units of accounting currently identified. As a result, the timing of our revenue recognition for most of our revenue streams will generally remain the same. We have, however, identified certain revenue streams that will be affected by the new standard.First, the timing of revenue recognition associated with customer loyalty programs offered in certain stores will be deferred. We currently accrue the incremental cost of loyalty points awarded under current guidance. Under the new standard, a loyalty program that provides a customer with a material right is accounted for as a separate performance obligation, with revenue recognized when the loyalty points are redeemed. Second, the timing of revenue recognition for automotive repair and maintenance services will be accelerated, as we have determined that these performance obligations are satisfied over time under the new standard. Lastly, a portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and subject to accelerated recognition.The new standard requires an entity to estimate variable consideration and apply the constraint in determining transaction price. We are finalizing our cumulative effect adjustment and expect that all changes to our revenue recognition methods as a result of adopting the new standard will result in a net, after-tax cumulative effect adjustment to retained earnings as of January 1, 2019 in the range of $XXX to $XXX.We do not expect a significant impact in the amount or timing of gain or loss recognition related to our periodic sales of real estate. We’ve also evaluated the changes in controls and processes necessary to implement the new standard; no material changes were required.The above example may be helpful in determining areas in your organization that could be significantly impacted. As you go through implementation, please feel free to reach out if you have any questions. ### California First to Require IoT Security The majority of cyber-attacks are not targeted, rather they are opportunistic, using automated phishing and vulnerability scans. Attackers usually identify the “low-hanging fruit” and investigate further. That’s not to say that attacks cannot be targeted, because when they are, a highly skilled and determined attacker often gets their way.“Internet of Things” (IoT) devices fall right into the low-hanging fruit category, unfortunately. Due to the generally weak security features of IoT devices, attackers can easily exploit vulnerabilities to spy on or expose your private life.  An IoT device can be any type of physical device with the ability to obtain an IP address and connect to the Internet. By 2020, the population of IoT devices is forecasted to grow to almost 31 billion worldwide, further increasing the probability of compromise. These devices referred to as “smart devices” open the door for attackers to exploit just as any other computing device (i.e., server, desktop/laptop, cell phone, etc.). What if a malicious attacker gained access to your home’s thermostat, security system or video baby monitor? These are the questions that state lawmakers in California are looking to address by introducing Senate Bill No. 327. This bill is the first of its kind that will regulate the cybersecurity of IoT devices.California Senate Bill No. 327 states that, “beginning on January 1, 2020 in the state of California, any manufacturer of devices that directly or indirectly connect to the Internet are required to equip the device with ‘reasonable’ security features.”What are “reasonable” security features? The bill leaves this to be interpreted. However, the bill requires that these security features be: Appropriate to the nature and function of the device. Appropriate to the information it may collect, contain and transmit. Designed to protect the device and any information contained therein from unauthorized access, destruction, use, modification, or disclosure. Also: The preprogrammed password is unique to each device manufactured. The device contains a security feature that requires a user to generate a new means of authentication before access is granted to the device for the first time. While this bill is a good step toward improving the security of IoT devices, it does not address the vulnerabilities associated with IoT devices altogether. Conveyed in a previously published Our Thoughts On article about the Internet of Things, we outline security-focused areas to consider when evaluating IoT devices. ### Application to Receive Funding for On-Road and Class 8 Fleet Vehicle Projects in Pennsylvania Now Available! As you know from our previous articles (Volkswagen Environmental Mitigation Trust Fund), Volkswagen is obligated to fund various environmental trusts for states to use on projects aimed at reducing overall air pollution (specifically, NOx emissions). Upon finalization of their Beneficiary Mitigation Plan in May 2018, Pennsylvania was allocated $118.5 million dollars to fund various on-road fleet upgrade projects. These projects include both Class 8 trucks and transit buses, as well as an Onroad Rebate Program for Class 4-7 trucks and school buses with model years 2009 and prior. Onroad Rebate Program Applications for the Onroad Rebate Program are being accepted by the Department of Environmental Protection (DEP) on a rolling basis from now until December 31, 2019 with additional programs to be released in subsequent years. To be eligible to receive funding through the Onroad Rebate Program, applicants must upgrade or replace a qualifying onroad vehicle with a model year of 2009 or older. The program is a voucher program, in which the entity pays for the new fleet vehicle or upgrade, submits proof of purchase and scrappage of the old vehicle, and will then be able to receive reimbursement in the amount of the voucher received by the DEP. An entity must submit a separate application for each individual fleet vehicle the entity plans to replace. The DEP will then either grant or deny the individual vehicle application, and issue the applicant a voucher for redemption once all appropriate project documentation is received. Due to the one vehicle-one application format, the DEP allows any one entity to have a maximum of either ten (10) vehicle vouchers or $500,000 of vouchers, at any one time. Class 8 Truck and Transit Bus Grant Program Applications for the Class 8 Truck and Transit Grant Program are also accepted on a rolling basis, however, the DEP has set multiple evaluation deadlines, with May 10, and September 23, 2019 being the next application deadlines. Like the Onroad Rebate Program, the funds are allocated on a first come-first serve basis until $6.4 million has been awarded to projects in 2019. This program is a reimbursement-style program, as well. Upon approval of an application, the DEP and the applicant will enter into an agreement that upon completion of a qualifying project, the applicant will be reimbursed in the approved amount. This application allows for multiple vehicles to be listed within the same application. Qualifying Vehicles As noted, within the document programs, the following vehicles will be eligible for the funding: Class 8 Local Freight Trucks with Engine Model Years (MY) 1992-2009, with at least three (3) years of remaining useful life Class 4-8 Transit Buses with Engine MY 2009 or older that have reached their useful life limit of at least 12 years or at least 500,000 miles on the odometer Class 4-7 Local Freight Trucks with Engine MY 1992-2009. Drayage Trucks MYs 1992-2009 that meet the definition of drayage truck in these guidelines Class 4-8 School Buses with Engine MY 2009 or older Class 4-8 Shuttle Buses with Engine MY 2009 or older We will continue to provide additional updates as states’ mitigation plans become approved.  For information, you can contact a member of the Schneider Downs Transportation and Logistics Team listed below to discuss the opportunity: Dan Phillips – Shareholder (412) 697-5299 Mike Renzelman – Shareholder (614) 586-7203 Jim Gilboy – Senior Manager (412) 697-5249 Matthew Werner – Senior Manager (412) 697-5403 Danielle Miceli – Manager (412)-697-5373 ### Financial Fitness: Setting SMART Goals This article was originally published in Wedgewood Life magazine and is reprinted with their permission. Happy New Year! As the calendar flips and a New Year begins, many individuals begin thinking of their resolutions for the upcoming year such as taking better care of themselves, spending more time with loved ones, or learning a new hobby. Studies have shown that when individuals take the time to write out their goals they are 50% more likely to achieve them. However, only 3% of adults actually put pen to paper and write down their goals. Another sobering statistic is that 92% of New Year’s goals fail by January 15th of that year. The first step in any goal setting process is to establish a Specific Measurable Achievable Relevant Time-Bound (SMART) goal. As American poet, Bill Copeland said, “The trouble with not having a goal is that you can spend your life running up and down the field and never score.” Let’s apply this to your personal finances.  Some common financial goals for individuals include planning for retirement, planning for a young family, or overall estate planning. For example, the retirement goal might be to retire in the next 10 years while maintaining your current lifestyle. By applying the SMART parameters, we define the specific goal.  The next step would be to measure your current financial position, including assets and liabilities, current income, expenses, and savings.  Next, make some reasonable forward-looking assumptions to project how achievable it is to reach your goal during your time frame.  A goal for younger families could be to ensure the family is able to pay off the mortgage and fund your children’s education should something unfortunate happen. For successful individuals that have accumulated wealth, a goal could be to ensure that their heirs, and the institutions they chose, receive future assets in a tax-efficient manner.     The process of setting and accomplishing your financial goals is the same whether it be around retirement planning, planning for a young family, or overall estate planning. While this sounds straight forward enough, successful individuals recognize that there are only so many hours in the day and individually they can only achieve so much.  This is where an advisor can play a critical part by providing clarity and accountability to the goal, establishing a pathway, and monitoring financial progress. The 92% of people who do not achieve their New Year’s goal do not set out to fail. But in failing to plan, they are more likely to fail. As it relates to financial affairs, if you want to be amongst the 8% of people whom accomplish their goal you need to get specific and write out your plan to financial success. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice.  Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice.  ### Part Four in a Series: Managing Risks of Technologies Emerging as Business Opportunities: Robotic Process Automation Are you tired of sending the same email every week? How about searching for information from past audit documents? Lucky for you, a resolution for these work woes (and many more) has arrived.  Companies are taking efficiency and cost saving to another level thanks to an emerging digital technology called Robotic Process Automation (RPA), more informally known as: bots. RPA works by using rules-based software robots, or bots, to automate business processes to increase efficiency, decrease human error, and save on staffing costs. Furthermore, RPA can work with Enterprise Resource Planning (ERP) systems in order to automate a plethora of business processes. For example, bots can take information from the aforementioned weekly email and insert it into an ERP system to be used companywide across various systems. According to the CIO.com article, “What is RPA? A Revolution in Business Process Automation,” some of the biggest names in the game such as Walmart, Deutsche Bank, Anthem, Walgreens, Vanguard, AT&T and American Express Global Business Travel are among the many companies already seeing the benefits of using bots. However, RPA may not be for every company. As we continue further into the digital age, technology seems to be slowly taking over jobs once managed by thousands of employees. Therefore, management must grapple with the decision of potentially saving on staffing costs versus eliminating jobs for its employees. Additionally, proper installation and set-up of bots can be highly complex and take significant resources. At this point, the long-term economic effects of implementing RPA is far from certain. Although RPA can provide efficiency for companies, they also come with additional risk considerations for internal auditors that span across every risk area. Some of these risk considerations can include: Management’s identification of fraud risks associated with the implementation of RPA Oversight and governance over the RPA Ineffective change management and security controls over  the RPA Compliance or regulatory risks associated with using RPA Inadequate enterprise risk and control methodology; inconsistent monitoring as a result of employing RPA Ineffective employee training on RPA which can result in inefficient use of the RPA and/or non-compliance with company policies User access abilities and segregation of duties related to the RPA RPA’s impact on financial reporting and disclosures While RPA may seem to be solely the IT department’s territory, it is critical that internal auditors engage in discussions with company management regarding their implementation of RPA and become aware of the potential risks posed to the company in order to properly plan and execute auditor responsibilities. If you have additional questions related to RPA, we welcome the opportunity to discuss and advise on risk assessment.  Please visit our Risk Advisory Services page. Sources: Boulton, C. (2018). What is RPA? A revolution in business process automation. [online] CIO. Available at: https://www.cio.com/article/3236451/business-process-management/what-is-rpa-robotic-process-automation-explained.html. Emerging Technologies. (2018). An Oversight Tool for Audit Committees. ### Is Compiling Your 2018 1040 Documents Painful? Sign up for TaxCaddy with Schneider Downs to Reduce Your Tax Compliance Burden Tax simplification has arrived! Schneider Downs is proud to introduce TaxCaddy, for our individual tax clients. TaxCaddy is a safe and secure software solution that will reduce the amount of time you spend collecting your annual tax data. TaxCaddy leverages the capabilities of today's technology to make it easier for you to send us the materials needed to complete your annual Form 1040.Whether you use a PC, Mac, tablet, or mobile phone, TaxCaddy has the capability to retrieve your Forms 1099, Forms 1098 and W-2s directly from the payor, bank and your employer, and send them electronically to your Schneider Downs tax engagement team. Documents that you choose not to link can be scanned or photographed and uploaded to TaxCaddy when they arrive in the mail using the TaxCaddy mobile application. No more paper, stamps or envelopes!In addition to easily capturing and securely storing tax documents, your TaxCaddy account maintains a complete inventory of your tax data, including a record of all the information that has been reported on your past returns.Simplifying the tax data gathering process is an innovation that provides convenience for our clients, while allowing our professionals to focus on tax planning strategies. Schneider Downs is extremely excited about teaming up with TaxCaddy to utilize this powerful and innovative solution that we feel will provide our clients with a more seamless and less stressful tax compliance experience in 2019 and beyond.To learn more, please contact your Schneider Downs advisor. ### Financial Fitness This article was originally published in Wedgewood Life magazine and is reprinted with their permission. It can be hard to differentiate between financial advisors without directly experiencing their client service, communication, and overall technical ability. In this article, I highlight a few areas to focus on: Personal Balance Sheet – A capable advisor will advise individuals on their overall personal balance sheet and not just their investment accounts. Successful individuals typically have various assets ranging from cash, taxable investments, and retirement accounts along with real estate, life insurance policies, and other personal and business assets. Individuals will want to work with an advisor that demonstrates the ability to discuss and advise on their overall portfolio from an investment, tax planning, and estate planning perspective. Tax Aware – A strong advisor will inquire about your tax situation. An advisor that has an understanding of your overall tax picture will be in a better position to advise you on such topics as; should you invest in taxable bonds or tax-exempt bonds or should you tax harvest capital losses to offset other capital gains. Fee Transparency –While fees are what you pay and service is what you receive, a competent advisor should be transparent about their fees. Fee transparency provides clarity about how the advisor is compensated and starts the conversation in an open and honest manner. Long-Term Disciplined Investment Approach – A skilled advisor should discuss with you the importance of setting and adhering to a long-term investment policy. Industry studies have illustrated, over the long run, an investor’s mix of assets (i.e., fixed income/equity investments) dictates the majority of one’s return. That mix should be determined by personal investing objectives including; age, financial goals, and tolerance for risk. An investment policy, along with rebalancing, allows one to maintain a long-term view and not make short-term decisions based on emotions. Holistic Long-Term Financial Planning – The ultimate deliverable of an advisor should be to construct and execute a long-term financial plan tailored around your unique financial goals and objectives. Factoring in various spending and income levels, rates of return, and other financial planning considerations, Advisors prepare projections on how your financial future may play out between now and your preferred retirement age.  A financial plan should clearly layout your long-term financial blueprint and instill confidence in your financial plan. Initially, it may be difficult to delineate between financial advisors. However, you should take time to inquire with an advisor about their overall services.  Use the guideline above to help shed light on key differences between advisors and put yourself in a position to make a confident and informed decision. Please contact me to learn more about the services offered through Schneider Downs Wealth Management Advisors. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Individual situations can vary, therefore, the information should be relied upon when coordinated with individual professional advice. ### Better Understanding PCI Penetration Testing Requirements If your company takes credit cards, you may be wondering if you are required to have a penetration test. In the past, it had been voluntary, but with PCI DSS version 3.0 and on, there are specific penetration testing requirements, depending on what self-assessment questionnaires (SAQS) category you fall into. The actual requirements vary based upon the number of transactions in a given year and how they are performed. For some organizations, yearly penetration testing is required, while others don’t require it at all. In this article, we discuss: why you need to be compliant, in what scenarios penetration testing is required, what that testing should cover and how to get the best value for your money in a PCI penetration test. This is also a good reference for penetration testers looking to perform PCI penetration testing. Keep in mind that all organizations that accept payment via credit card must be compliant with the Payment Card Industry Data Security Standards (PCI DSS). Compliance is expensive and monotonous-- why should I be PCI-compliant? According to the official PCI website, some of the liabilities for not being compliant are: the cost of reissuing new credit cards, legal fees and removal of the ability to accept payment cards. Any one of these consequences can be costly. Not only that, but the PCI DDS requirements are actually good security practices to follow for any company, even those that do not require PCI compliance, so there is little reason not to adhere to them. If you are not sure what SAQ category your organization falls into, your bank or payment processor should be able to tell you, since they are the parties that receive the SAQ and other PCI DSS documentation. You can find more information on SAQs and their descriptions here. As far as penetration testing goes, SAQ A-EP, D Merchants and D service providers all require penetration testing. Organizations that are SAQ B-IP, C-VT and C require penetration testing if the cardholder data environment (CDE) is separated from the rest of the network using segmentation. An example of segmentation would be that the CDE network uses some of the same networking gear as the rest of the network, but is isolated using VLANs, firewall rules and/or access control lists (ACLs). If that is the case, you may need to have penetration testing performed. Below is a matrix that breaks down the penetration testing and vulnerability scanning requirements by SAQ: For those organizations that do require a penetration test, you may wonder what all should be covered. At a high level, a PCI penetration test should be performed using techniques favored by real attackers in an effort to actually compromise the cardholder data environment. A penetration test cannot consist of a vulnerability scan alone; actual exploitation must be attempted. The test should have the PCI network as the main objective. If segmentation is in use to isolate the cardholder environment, that control must also be verified as being effective as part of the testing. Here are some tips for how to get the best value out of your PCI penetration test. The most important is to ensure that you are working with a competent penetration testing provider. The best way to do this is to evaluate a number of vendors against a couple key areas. There are three items you want to look at. First, verify the firm is familiar with the PCI DSS penetration testing requirements and that they can explain how they fulfill those testing needs. Second, ask for and talk to references who have used their services before for similar types of testing.  Lastly, review an example penetration test report from the firm. If the report does not provide clear and concise findings and recommendations, is padded with dozens or hundreds of pages of vulnerability scan results, or is difficult to comprehend, then look elsewhere. Once you have a list of potential providers, consider the scope of the penetration test. Oftentimes, we see clients doing barebones testing that does what PCI testing requires and nothing else, which may exclude large sections of your organization’s network and give you a false sense of security. Talk with your penetration testing provider to see what the additional cost is to do a full-scale test that not only tests the PCI environment properly, but also checks for common issues on the rest of your network. It may not cost much more to have a more comprehensive penetration test, which will give you a more complete profile of the risk on your network, not just the cardholder data environment. If you have any questions or are interested in Schneider Down’s services, feel free to contact a member of our sales or cybersecurity team. References https://www.pcisecuritystandards.org/ Jeff Man (Jan  8th , 2019). Skype interview. ### Pennsylvania's New Natural Gas Severance Tax Proposal On February 5, many Pennsylvanians listened to Governor Tom Wolf’s annual budget address to the state legislature, in which the governor said, in part: “Today I put forth my budget proposal. And let me cut to the chase. This proposal asks for no new taxes. Not one dollar. Not one dime. Not one penny.” What many Pennsylvanians may have missed a few days earlier, however, was the governor’s announcement of his “Restore Pennsylvania” initiative designed to address the state’s infrastructure issues, a measure slated to be funded by a proposed severance tax on natural gas. While Pennsylvania currently has an impact fee that goes to local communities, it does not have a state severance tax. Restore Pennsylvania is considered by Governor Wolf to be outside the scope of the state budget. According to Mr. Wolf, the proposed tax will be price-sensitive to the natural gas industry, with a direct correlation between the price of natural gas and the rate of tax. As the price goes up, so will the severance tax rate. The suggested structure is as follows: A natural gas price range of $0.01 - $2.99 will be taxed at $0.091 per thousand cubic feet. A natural gas price range of $3.00 - $4.99 will be taxed at $0.109 per thousand cubic feet. A natural gas price range of $5.00 - $5.99 will be taxed at $0.131 per thousand cubic feet. A natural gas price range of $6.00 or more will taxed at $0.157 per thousand cubic feet. The proposed severance tax will be levied in addition to the impact fees already paid by gas companies and addresses a number of the same or similar infrastructure issues identified by Restore Pennsylvania at the local level. The governor believes the price-based severance tax will result in effective rates similar to other major natural gas producing states, with expected rates starting out at 4.5% in 2019/2020 and dropping to 3.0% by the 2023/2024 fiscal year. The proposed tax will only apply to wells that are subject to the impact fee and will include the following exemptions: Natural gas provided to a lessor for no consideration. Natural gas severed from a storage field. Natural gas severed, sold and delivered by a producer at or within five miles of the producing site for the processing or manufacture of tangible personal property. The proposed effective date of the tax, if enacted, is March 1, 2020. ### Part Three in a Series: Managing Risks of Technologies Emerging as Business Opportunities - Blockchain Blockchain, the latest buzzword that’s made its way into mainstream media and executive boardrooms alike, is providing real solutions to real world problems. A digital, distributed (decentralized) and immutable database with seemingly endless application possibilities, the blockchain acts as a digital ledger where past records can't be altered or falsified, and each new record must be verified across a network of users with no central authority. The solution’s increased transparency and integrity can assist in streamlining the audit process while creating a more efficient means of record. For more detailed explanation of the blockchain technology, see articles here and here. So how can the blockchain provide solutions to real world problems? Take the recent E. coli romaine lettuce outbreak, for example. Beginning around March 2018, consumers began falling ill, only to later discover that the illness was a result of E. coli on the lettuce they’d purchased. Over 200 people became sick with five recorded deaths. Eventually, the contaminated lettuce was traced back to one of the country's largest lettuce-growing fields in Arizona, but figuring that out was far from easy. The question now is: how can produce companies better track product to reduce the risk of contaminated items ending up on the shelf to ensure the safety of consumers without wiping entire inventories when an outbreak is discovered? Walmart found one solution: the blockchain. The retail giant's approach is simple: take the existing manual supply chain and put it on the blockchain. Partnering with IBM, Walmart has begun implementing the IBM Food Trust blockchain solution to record and monitor the flow of produce in a digital, traceable, and more transparent supply chain. By September 2019, the company is requiring its lettuce (and spinach) suppliers to upload data to the blockchain, thus providing Walmart with the ability to quickly and easily trace back any contaminated produce directly to the source and only remove those specific items from the shelves, rather than suffering the loss of clearing all produce shelves entirely. Walmart claims use of the blockchain reduced the trace time from days to mere seconds in some test cases. Of course this has monetary benefit for Walmart, but it also creates a reliable verified transaction log for a significantly quicker and more efficient auditing process, as well as accountability throughout the entire supply chain, all while reducing the risk of another contamination outbreak reaching consumers. While Walmart’s example is significant, blockchain technology remains a vague and often confusing household discussion. One tech giant, however, is sure to turn the tables: Amazon. The mega-retailer now offers the Amazon Managed Blockchain, which essentially removes the complexity of building and monitoring your own blockchain. Already a trusted name across the ever-expanding list of industries it touches, Amazon presents a simplified means of implementing this disruptive technology without much of the hassle. With adoption, though, comes new risks for auditors to consider including but certainly not limited to: Insufficient privileged user access management Lack of Standards and Regulation (e.g. privacy, financial transactions, etc.) Inefficiencies or vulnerabilities left during implementation (poor coding) Inaccurate or fraudulent data inputs Lack of support and integration with third parties As audit professionals, we need to adapt and educate ourselves to stay on the forefront of change while constantly asking “how we can best serve our clients?” ### Financial Fitness - Are my personal finances on the right track? This article was originally published in Wedgewood Life magazine and is reprinted with their permission. This is a frequently asked question by my clients as well as prospects. As a financial advisor, I can say that the definition of “on track” is unique to each individual.  Younger clients are typically more focused on planning for a growing family or children’s future education, compared to more financially established individuals who might be focused on when can they comfortably retire and what retirement might look like for them. Our firm works with people in their 20s and 30s, 80s and 90s, and anywhere in between. Groups that clearly have different priorities. While financial goals may differ, the process of creating a tailored financial plan to achieve your financial independence is the same. It begins with assessing your current balance sheet, which consists of various assets including cash, taxable investments, and retirement accounts along with real estate, life insurance policies, and other personal and business assets. In addition to taking an inventory of your assets, a discussion should also be had regarding unique factors that play into your long-term investment strategy, including current age and your ability to stay disciplined in up and down capital market cycles. Upon establishing your current financial position and investment considerations, you project forward various financial factors including personal income, anticipated current and retirement expenses, your potential savings into retirement and non-retirement accounts, and various other individual financial considerations. While we know we cannot predict how your financial future will unfold, we can calculate a range of potential results. Once your financial base case has been established, we then begin the value-add process of changing assumptions to assess their impact on your long-term financial plan. We look to address your “what if” questions. These questions may include: When could I retire? If I retired earlier or later what impact might that have on my potential spending in retirement? What if my income were to increase in the future from a new job or promotion – what impact could that have on my retirement age? What if I spend more during the first 10 years of retirement and then my spending tapers later? What if my investment portfolio grows at a faster or slower rate than anticipated? What is the corresponding impact to retirement age, spending, savings rates, etc.? At what age should I file for social security? What if I file before my full retirement age or after? In our opinion, the process of analyzing your current financial position and projected financial future from an income, spending, and savings perspective is paramount when working with an advisor. A financial plan constructed as described, should serve as your financial roadmap and inspire confidence in achieving your long-term personal financial success. Please contact me to learn more about the services offered through Schneider Downs Wealth Management Advisors. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice.  Individual situations can vary, therefore, this information should be relied upon when coordinated with individual professional advice.  ### Vendor Audit: A Necessary Assessment A vendor audit is performed for a company that aims to attain an objective assessment of its contractors’ or vendors’ compliance to the terms, conditions and intent of the contracts and/or agreements between two entities. Vendor audits are necessary to effectively reduce cost and improve quality control throughout the procure-to-pay system. The primary areas of assessment in a vendor audit are vendor viability, management responsibility, system accuracy and data integrity, the latter of which being of particular importance in the modern business environment. The main differences when comparing vendor audits to a typical internal audit are the focus, reporting and scope.  The focus of a vendor audit encompasses examination of the entity’s quality management through its procedures and data processes, whereas an internal audit looks mainly at governances, risks and the controls in place to manage those risks. Vendor audits take into consideration the internal environment and the third-party provider’s adherence to established contracts.The vendor audit provides assurance that the system is operating effectively and efficiently in the recording and payment of goods/services of appropriate quality, at the right time, in sufficient quantity and at an acceptable price.  As a result, the reporting of the vendor audit is strictly to management, providing an opinion of the entity’s operating processes and controls as well as third party’s adherence to the standards set forth by the organization. The most desirable result of vendor audits is to achieve some level of cost reduction, which is achieved through not only direct cost reduction, but also process improvements and risk mitigation to help prevent future problems.How can Schneider Downs help? Schneider Downs can accomplish these goals by deploying a three-phase methodology; each phase represents a separate area of focus related to the vendor audit. The three-phase approach involves identifying the system’s risk assessment, investigation into the likelihood and amount of vendor overcharges, and the communication to management.  The first phase of the review consists of documenting the processes to identify risks, controls and objectives. Doing so allows us to examine the system as a whole. Specifically, we might review and analyze segregation of duties, vendor histories, and potential lack of controls or oversight. This allows us to target probable breakdowns in the system where we can focus audit efforts, enabling us to quantify the issues as part of phase two by performing analytics on costs, payments and return rates. Through the use of technology, we are able to scan thousands of invoices, purchase orders, receiving reports and inventory reports to identify overcharges and system inefficiencies. Finally, phase three incorporates our findings and suggestions into a clear report and presentation to management and/or process owners that can be used as a roadmap to process optimization. Focusing efforts into these three areas allow for an organized and effective approach to the vendor audit. If you would like to learn more on how a vendor audit can help your organization’s cost recovery efforts and operate more efficiently, we’re happy to discuss this with you.  ### Qualified Business Income and Percentage Depletion Interaction The Tax Cuts and Jobs Act (TCJA) of 2017 brought about many changes in the tax code, including the introduction of new provisions.  Luckily, deductions available to taxpayers in the oil and gas industry have survived tax reform and will continue to make oil and gas a favorable investment from a tax perspective.  One of the new provisions, the qualified business income deduction under IRC section 199A, has raised questions regarding the interaction between the new potential 20% deduction and the percentage depletion deduction familiar to oil and gas investors. In its simplest form, section 199A allows for a deduction up to 20% of a taxpayer's qualified business income (QBI) from a trade or business operated as a non-C-corporation entity. The deduction is claimed as a reduction to taxable income on the taxpayer's return. Percentage depletion allows a taxpayer to deduct 15% of the gross income (less royalties) derived in a trade or business from an oil and gas property. For non-C-corporation taxpayers, the depletion deduction is claimed on the partner or shareholder's return, where limitations may apply. One limitation is that the taxpayer's percentage depletion deduction may not exceed 65% of his/her taxable income.  P.L. 115-97, issued on December 22, 2017, amended IRC Section 613A to clarify that the 65% of taxable income limitation should be computed without regard to qualified business income deduction.  This proves to be very favorable to taxpayers, as it does not reduce the potential depletion deduction and taxpayers can enjoy a potential deduction of up to 20% on qualified business income.  For more information on either deduction, please contact a Schneider Downs Tax Advisor.     ### Impairment Considerations for the Energy Sector As witnessed, the latter months of 2018 saw a dramatic downturn in oil prices. According to the U.S. Energy Information Administration, the West Texas Intermediate spot price, for instance, fell from $75 per barrel at the beginning of October to $46 per barrel by year’s end. With the sharp decrease, regulators are likely to heighten focus on impairment testing for goodwill and on long-lived assets of energy-centric companies.Under Accounting Standards Codification Topic 360, Property, Plant, and Equipment (ASC 360), impairment is the condition that exists when the carrying amount of a long-lived asset or asset group exceeds its fair value. For the oil and gas industry, assets should be evaluated on a field-by-field basis or other logical grouping of assets.For long-lived assets to be held and used, companies should consider whether indicators of impairment are present inclusive of triggering events. The impairment evaluation should be performed on both proved and unproved properties at least annually, or when a triggering event is identified. Triggering events within the energy industry include changes in pricing; drilling costs significantly exceeding expectations; large increases in depreciation, depletion and amortization rates; production difficulties; and impending lease expirations.The following two-step approach can be used to identify, recognize and measure the impairment under ASC 360-10 “Impairment of Disposal of Long-Lived Assets”:An initial check for impairment can be completed by comparing the estimated undiscounted cash flows attributable to the asset or asset group to the carrying amount of the asset or asset group. If the undiscounted cash flows attributable to the asset are less than the carrying amount of the asset, impairment exists.The fair value of the long-lived asset and impairment loss should then be determined. Impairment loss should be measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds fair value or discounted cash flow value.In 2017, the Financial Accounting Standards Board released Accounting Standards Update (ASU) 2017-04 in an effort to simplify the process of testing goodwill for impairments. ASU 2017-04 eliminates the second step from the goodwill impairment test mentioned above, including reporting units with zero or negative carrying amounts. An impairment charge should be recognized for the amount by which the carrying amount exceeds the fair value; however, the loss should not exceed the total amount of goodwill allocated to the reporting unit.ASU 2017-04 is effective for years beginning after December 15, 2019 for public SEC filing entities and for years beginning after December 15, 2020 fir non-filing public entities. Nonpublic entities will be subject to ASU 2017-04 for years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.As companies finalize 2018 asset balances, the pricing changes and impairment considerations mentioned above should be reviewed due to increased focus on impairment testing from regulators and auditors. If you have questions or concerns about impairment or impairment consideration related to the energy and natural resources industry, we welcome the opportunity to discuss your concerns and become a trusted advisor. Please visit our Energy and Resources Companies page. ### Defining UBIA for Oil and Gas Producers One of the most impactful changes resulting from 2017’s Tax Cuts and Jobs Act was the introduction of the deduction for qualified business income established under Internal Revenue Code section 199A. This deduction allows non-corporate taxpayers to potentially exclude from taxable income up to 20% of amounts deemed to be “qualified business income.” The deduction can be limited to the greater of 50% of W-2 wages paid by the business or the sum of 25% of W-2 wages paid by the business plus 2.5% of the business’s unadjusted basis immediately after acquisition of all qualified property (UBIA). There’s been extensive discussion surrounding the calculation of what is included as “qualified business income,” and its limitations. One important distinction that must be made is what is considered “qualified property” under IRC section 199A when calculating UBIA. Qualified property is generally any tangible property that is used in the trade or business and for which a depreciation deduction can be claimed. Further, the IRS specifies that the property must be held and available for use at the end of the taxable year, used at any point during the year in the production of qualified income, and must meet the new UBIA depreciable period. With respect to oil and natural gas producers, these qualifications may limit what assets are considered qualified property. Tangible assets, such as well equipment, drilling rigs and vehicles, are considered qualified property. However, leasehold costs, capitalized geological and geophysical expenditures and generally intangible drilling costs will not be considered qualified property, and could limit the 199A deduction a taxpayer is permitted to claim. The deduction for qualified business income has presented a significant tax savings opportunity for non-corporate taxpayers. However, the application has many complex limitations, such as UBIA. To learn more about 199A deductions and the limitations that may apply to your business, contact a Schneider Downs tax advisor. ### Comment Letters Surrounding New Revenue Recognition Standard Reveal Issues Public energy companies are now one year in on their implementation of ASC 606, Revenue From Contracts With Customers, the revenue recognition guidance that reformed and replaced ASC 605. The crux of the new guidance requires revenue recognition when control of goods or services transfers to the customer, rather than an evaluation of when risks and rewards transfer. Although the energy industry may be considered a “lower impact” sector, don’t be fooled. Each major segment of the industry – upstream, midstream and downstream – is affected, and SEC comment letters surrounding the implementation and the qualitative and quantitative disclosure requirements required in ASC 606 have identified key themes that should be recognized by public companies during their second reporting year. The top of the list of trending comments includes questions surrounding the identification and proper disclosure of appropriate performance obligations. Business within the midstream sector can involve multiple contracts related to the transportation, storage and wholesale marketing of crude or refined petroleum products. If the identified performance obligations are distinct or combined, an adequate explanation needs to be disclosed. Likewise, if it’s determined that all contracts have a single performance obligation, consideration of ASC 606 must be made. For a related upstream example, producers operating under product sales contracts should disclose that the unit of measure, such as barrel of oil or MMBTU of natural gas, is separately identifiable and represents a distinct performance obligation. The comment trend has shown that registrants need a detailed analysis of whether goods or services are distinct or should be combined. Another key comment letter trend involves transfer of control. SEC staff has asked for more transparency as to whether control transfers at a point in time versus over time. The upstream and midstream impact related to the sector’s intricate gas processing arrangements must be assessed as to when the control of wet gas is transferred. Along with the crucial “principal versus agent” determination, the wet gas transfer generally takes place at either the wellhead or the tailgate of the plant. Depending on where and when that control transfers, the revenue is either presented as net or gross of the amounts remitted to the third party. The SEC has remitted comments urging companies to provide robust disclosures for control conclusions relating to processing arrangements. Disaggregated revenue disclosures, and the manner in which disaggregation categories are determined, was also identified as a comment trend and raises an issue applicable to all sectors. An example of an upstream instance would involve a producer with material drilling operations in multiple basins. The company must evaluate whether production revenues should be further disaggregated by geographical basin in the footnotes to the financial statements based on revenue/volume disaggregation in earnings releases, investor presentations and key internal reports. Although the most common categories presented in tabular disclosure are product line and geographical region, these must be assessed in accordance with ASC 606. The SEC staff comment trends have primarily related to aspects of the new standard that require judgment. It’s important to keep in mind that the goal of the revenue standard is to increase transparency to investors regarding a company’s revenue contracts and accounting policies. The energy sector is complex and the effects of ASC 606 are pervasive. Because of that, revenue recognition footnote disclosures for your next reporting period should be examined by your finance department and your assurance firm in the areas noted above. ### ASC 842 Expected to Impact Natural Resource Sector Accounting Standard Codification (ASC) Topic 842 - Leases, the new FASB lease accounting standard aimed at closing a major concern of stakeholders in lease accounting in accordance with ASC 840, went live for public companies this past January 1 and will be effective for nonpublic companies beginning January 1, 2020. Although the new standard scopes out leases for the exploration of minerals, oil, natural gas and other non-regenerative resources subject to the guidance of FASB ASC 930, Extractive Activities - Mining and ASC 932, Extractive Activities - Oil and Gas, companies in the natural resource sector are paying particular attention to the implementation rules. Under ASC 842, more arrangements are expected to meet the definition of a lease compared with previous accounting standards. In accordance with the new guidance, a contract is or contains a lease if it conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. That means agreements for processing and pipelines, gathering and transportation, and drill rig contracts may meet the definition of a lease under ASC 842. Additionally, many lease arrangements include both lease and non-lease components as part of the consideration a company pays throughout a contract. In accordance with ASC 842, unless a company adopts a practical expedient to combine them, companies are now required to allocate a portion of the consideration paid to the different components based on standalone selling prices. Drill rig contracts deemed to be within the scope of ASC 842 could require such a review of the various components. The new lease accounting standard is a significant change from the prior accounting rule. Assessing the impact will be important for companies as they communicate the changes to stakeholders. ### Asset Transactions vs. Stock Transactions Asset transactions and stock transactions are the two most common types of transaction structures when purchasing or selling a business. Asset transactions occur when buyers assume specific liabilities and purchase specific assets from a business, while stock transactions occur when buyers purchase shares of stock from the company that they wish to acquire.By specifically identifying assets and liabilities to be purchased and assumed in an asset transaction, buyers are able to avoid undesirable assets and liabilities. Additionally, in an asset transaction, the cash and long-term debt obligations of an entity are usually not acquired by the buyer. The purchased assets and liabilities would either be used in the formation of a new entity or would be rolled into the buyer's existing company. The seller would remain as the legal owner of the target entity with any remaining assets and liabilities.Stock transactions are much simpler in concept, which is one of the main reasons that they are more commonly used. Unlike an asset transaction, stock transactions are less complex and are easier to execute because the buyer does not have to deal with costly revaluations of assets and liabilities due to the fact that they are all assumed at the time of purchase. However, a major tax advantage of an asset transaction is that the buyer will receive a step-up in basis in the purchased assets equal to the purchase price. The step-up in basis allows for additional future depreciation and/or amortization expense, which in turn, will reduce future taxable income and income tax expense. In a stock transaction, the buyer does not receive a step-up in basis, and all assets and liabilities transfer at their existing tax basis.Furthermore, the goodwill acquired by the buyer in an asset transaction can be amortized on a straight-line basis over 15 years under IRC Section 197. Goodwill is not tax-deductible in a stock transaction until the stock is later sold.The seller, however, can be at a tax disadvantage with an asset transaction because the gains on certain assets would be treated as ordinary gains and taxed at higher rates. The tax advantage for the seller lies in a stock transaction because the sale of equity interests would be taxed at capital gains rates, which can be significantly lower than ordinary income rates.  For this reason, the seller may insist on a higher purchase price if the transaction is structured as an asset transaction.There are many factors to consider when choosing the appropriate form of transaction structure. Each option will have significant tax consequences for both parties. Therefore, it is important for both the buyer and seller to consider the benefits and consequences of each type of transaction to determine which structure best suits their needs. ### Schneider Downs' Annual Manufacturers' Economic Survey Schneider Downs’ annual Manufacturers’ Economic Survey gathers valuable insight from industry leaders throughout the region, highlighting the major challenges companies are facing, as well as how they’re reacting to and preparing for significant economic changes. The results of the 2018 survey, released this week, indicate that many manufacturers are most concerned about the workforce shortage, rising labor costs, government regulation, changing technology, succession planning and IT security. The review also provides a snapshot of how manufacturing companies are reacting to important changes recently enacted or on the horizon, including: The Tax Cuts and Jobs Act Trade Tariffs The United States-Mexico-Canada Agreement The analysis also focuses on rising concerns surrounding information security, in light of the ever-increasing number of breaches. Impact is considered on both a national and international scale, with the issuance of the General Data Projection Regulation in 2018, impacting those with operations in the European Union. These results, along with insightful articles from the professionals at Schneider Downs, can be reviewed in a free, downloadable PDF on the Firm’s website. Once you’ve read the report, we hope you’ll take the time to share your feedback with us. ### Part Two in a Series: Managing Risks of Technologies Emerging as Business Opportunities - Artificial Intelligence As we enter the fourth industrial revolution, technology continues to advance at a rate never before seen. Every day, driverless Ubers cruise the streets of Pittsburgh, Alexas chatter in the kitchen, and Roombas clean our carpets. This new emerging artificial intelligence (AI) technology is not only a convenience in our lives, it’s also creating opportunities within various industries and reshaping the way companies operate. AI, in its basic definition, represents the capacity for machines to perform tasks that have typically required human intelligence, like problem solving, learning, perceiving and reasoning. The idea behind AI is that it will learn similar to how a human learns – from experience. The benefit to having machines be able to teach themselves is that they won’t need to be continually programmed and will be able to readily adapt to future trends. Companies can use machine-learning tools for a wide variety of tasks, including classification, clustering and regression. Classification involves training a machine to recognize patterns in data, which can be used for detecting reconciling items and recommending actions to take for that item. Clustering consists of training a machine to detect individual data instances that have similar characteristics, a task that can improve fraud detection. By training a machine on regression, predicting the next value in a sequence, forecasts can be more accurate. In short, the use of AI will vastly improve the quality of data analytics. How does this affect the auditing profession? Although AI may help optimize a company’s processes, there are many risks to consider, including: Roles and responsibilities for data ownership for AI implementations are ambiguous Data privacy and security over the use AI is insufficient Lack of oversight and accountability over the governance structure of AI activities; governance structure lacks alignment with company values AI roles and responsibilities relative to the AI strategy and key performance measures are unclear Lack of policies and procedures for oversight and continued monitoring for risk management, ethics, compliance, information privacy and security related to AI While AI is still in the early phases, it will have many uses in the near future, and it’s imperative that auditors and their clients are aware of the risks associated with the technology. ### Qualified Opportunity Zones in Layman's Terms There has been a lot of buzz lately regarding Qualified Opportunity Zones (QOZ). This is a new tax incentive contained in and created by the Tax Cuts and Jobs Act, which was passed in December 2017. As an auditor listening to our tax experts talk about this topic, a lot of this discussion was foreign to me, so I thought that it made sense to cover some of the basics and provide links to some helpful resources. The following are some of the basics: An Opportunity Zone is a low-income/economically distressed community nominated by the state and certified by the Treasury Department. The QOZ program is designed to spur long-term private sector investments in these communities. The investments may receive preferential tax treatment for the investors if certain conditions are met. Investors can defer tax on any prior capital gains invested in a Qualified Opportunity Fund (partnership or corporation set up for investing in QOZs) until the earlier date on which the investment is sold or exchanged, or December 31, 2026. If the QOZ is held on for longer than five years there is a 10% exclusion on the gain and 15% for investments held longer than seven years. If the investor holds on to the QOZ investment for 10 years or longer, the investor is eligible for an increase in basis of the investment equal to its fair market value on the date that the investment is sold or exchanged. To defer a gain, a taxpayer has 180 days from the date of the sale or exchange of appreciated property to invest the capital gain into a QOZ fund. This program does not have a requirement to invest in like-kind property. Therefore, realized gains on the sale of stock can be invested into a QOZ fund. An example of how this may look: January 1, 2019, an individual taxpayer sells stock that generates a capital gain of $500,000. March 31, 2019 (within 180 days), the taxpayer contributes the $500,000 capital gain into a Qualified Opportunity Fund (QOF), which invests the money into a QOZ property. At this point the investor has zero basis in her/his QOF investment. March 31, 2024 (five years later), the investor’s basis in the QOF increases to $50,000 (10%). March 31, 2026 (seven years later), the investor’s basis in the QOF increases to $75,000 (15%) December 31, 2027. the investor pays tax on the $425,000 of deferred gains and the basis in the QOF increases to $500,000. March 31, 2029 (10 years later), the investor sells investment for $750,000. There is not a taxable gain, as the basis is deemed to be fair market value (the sales price). The above is a high level and general overview of the QOZ program. If you are considering an investment in a QOF, consult your tax advisor prior to doing so. The following links are helpful resources if you are considering an investment in a QOF: IRS Frequently Asked questions on Opportunity Zones: https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions Previous Schneider Downs Our Thoughts On Articles on QOZs /our-thoughts-on/real-estate/tax/investment-opportunity-zones-yield-significant-tax-benefits-part1 /our-thoughts-on/irs/tax/tax-savings-avail-qualified-opp-zones-proposed-regs-issued ### Hello from the 2019 Auto Summit at the NADA Convention San Francisco was the happening place this past weekend for the National Automotive Dealership Association Convention.  The West Coast had a feel of home to it as I saw familiar faces aboard the outgoing flight and bumped into some Western PA dealers at other events. I attended one of the most anticipated events, which was the Auto Summit sponsored by J.D. Power.  The topics ranged from the annual franchise assessment to the digital update to the future of electrification. This was my second trip to the Auto Summit, and like my last summit, I did not leave disappointed. The franchise assessment session enabled dealers to compare how their franchise stands against their competition.  The group discussed loyalty, conquest, quality, appeal, service, image, residual value, retail share change and sales per model.  Each category was rated excellent, good, fair or poor.  I have some thoughts regarding more than 30 franchises that were discussed which ranged from high volume, mid/low volume to luxury.  Let me know if you want to discuss your franchise(s).Ford’s President of Global Ford Customer Service Division, Frederiek Toney, and Cadillac’s Chief Marketing Officer, Deborah Wahl, were the two keynote speakers who discussed a common theme, which was future and innovation.  Mr. Toney discussed electric vehicles and the service impact.  Where does one of the most profitable departments go from here?  Ms. Wahl discussed when electric will be the primary engine and automatous driving is all we know. Lastly, digital considerations and dealership reputation cannot be overlooked any longer.  The summit presenters noted that dealerships get their customers to look at vehicles digitally, but they still visited the dealership to complete the sale.  We need to make sure the process is seamless from beginning digitally and ending at the dealerships.  This includes the model, color, credit application and price.  Also, everywhere we go on the internet, we are being rated.  The question is how is your dealership responding to these ratings, positive or negative?Overall, the trip was worth it.  The automotive industry is still strong.  We need to be nimble as we move into a future with many alternatives.  I look forward to next year’s events in Las Vegas for Valentine’s Day weekend.  If you want to discuss any of these topics, please reach out to Steve Barber. ### EU Efforts to Stem Abusive Tax Structures It is of little surprise that the individual EU countries and European Commission for Competition have narrowed their focus on multinational companies with cross border operations. There have been a number of high profile cases – Astra Zenteca, Apple, and Mastercard to name a few who have had to pay the piper. And the release of the Panama Papers only served to stir the pot even more. As a result, companies doing business within the EU should be aware of the Commission’s ambitious agenda ”for fairer, simpler and more effective corporate taxation in the EU”.  To that end, nearly 3 years ago, the European Commission rolled out the Anti-Tax Avoidance Directive aimed at establishing common transparency rules against practices deemed to be for the purposes of tax avoidance. These measures come into effect as of January 1, 2019 and will serve to help eliminate inconsistency among member countries, provide a more level playing field and uniform taxation as well as country-by-country reporting and sharing of information. The Anti-Tax Avoidance Directive portion provides rules in the following areas:Controlled Foreign Company (CFC) – to deter profit shifting to a low/no tax country.Switchover rule – to prevent double non-taxation of certain income.Exit Taxation – to prevent companies from avoiding tax when relocating assets/operations.Interest limitation - to discourage artificial debt arrangements designed to minimize taxes.General Anti-abuse Rules (GAAR) – to counteract aggressive tax planning when other rules don’t apply.And the plot thickens – adding to that, the changes set forth when the U.S. passed the Tax Cuts & Jobs Act in 2017.  These include many changes to the international side of U.S. taxation. Specifically these new provisions take aim at:CFC rules – expanded in scope.Dividend s Received Deduction – indirect foreign tax credit replaces ownership threshold limits.G.I.LT.I. now impose U.S. tax on most of the CFC’s operating income.Outbound transfers now fully taxable in most cases.Corporate Tax Rate – reduced to 21%Companies doing business in the EU (and throughout the world) should be aware of these new measures and take this opportunity to assess their operations,  the use of holding companies, review internal documents and agreements to ensure compliance with these rules and make changes where needed. Penalties for non-compliance and the cost of defending arrangements can be high.  Do planning opportunities still abound? Is your structure tax efficient? Is it time to repatriate income to the states? ### Part One in a Series: Managing Risks of Technologies Emerging as Business Opportunities - Websites and Mobile Applications Websites and mobile applications are an important medium for businesses to interact with customers, obtain information, and conduct business transactions. According to a 2018 survey of 351 small businesses performed by Clutch.co, 42% of small businesses currently have a mobile app and 30% plan to build one in the future (Panko). Internal Audit as a profession must identify and mitigate the emerging risks associated with these websites and mobile applications. The use of websites and mobile applications, particularly by small businesses, opens up an array of potential security issues. According to the Verizon Data Breach Investigation Report, 21% of data breaches in 2017 were through web applications. This is a higher percentage than any other type of breach, with the next closest type of breach being miscellaneous errors at 16% of breaches reported. Like most risks, the risks associated with websites and mobile applications can be mitigated. Let’s first identify what they are. Websites and mobile applications can be vulnerable due to: A lack of technical security assessments being performed Noncompliance with legal and regulatory requirements (e.g., data privacy) Inappropriate system configurations Unencrypted data stored in static areas of the application or website Security procedures are nonexistent for end users using mobile applications and websites The possible issues that can result from a successful attack on a website or mobile application are numerous and severe. With websites and mobile applications being a key medium for a company to generate sales, the lost revenue due to a successful attack can be very detrimental. Another issue that may be even more troublesome is the loss of sensitive data. With online sales being so critical, the possibility of losing customer information is a risk that must be addressed. With the General Data Protection Regulation (GDPR) - see our most recent article on the subject here - lost customer information can be extremely costly to your company. So how does this impact Internal Audit? This series is focused on identifying the risks related to the next generation of Internal Audit. We as professionals already know that websites and mobile applications are an integral and essential part of our everyday lives. As internal auditors look at risk in its entirety and not just financial statement risk, we must consider the possibility that security flaws can exist in websites and mobile applications. Considering these possibilities when performing risk assessments and helping the client identify potential weaknesses or vulnerabilities are two crucial ways that Internal Audit can bring value to the client. If you have additional questions or concerns about the risks and possible mitigation techniques related to websites and mobile applications, we welcome the opportunity to discuss your concerns and become a trusted advisor. Please visit our Risk Advisory Services page. ### What is the SEC Looking For in Your Internal Control Environment? This Article was co-written by Nicole Saldamarco At the recent AICPA year-end conference, SEC staff members indicated that they will be looking more closely at internal controls for this year end including control considerations for new accounting pronouncements, the evaluation of deficiencies, the overall impact of a deficiency and cyber security. With the much talked about revenue recognition standard (ASC 606) becoming effective for December 31, 2018 fiscal year-end companies and the new lease standard (ASC 842) going into effect in the following year,the SEC will consider transition controls, as well as the addition of daily controls designed to ensure revenue and leases are appropriately accounted for on an on-going basis.  In addition to the new accounting pronouncements, the SEC staff indicated that management should really consider the severity of control deficiencies and the severity should be considered through the eyes of a “prudent official.”   While management is evaluating a deficiency, they should also consider the impact of the deficiency on not only the specific area to which the control pertains, but also consider if any other financial statement areas could be impacted.  Finally, how can we talk about accounting or internal controls without considering “cyber.” The SEC staff noted that nearly all companies are impacted by potential cyber attacks and this risk should be included in management’s risk assessment. The SEC wants to ensure that public companies consider the risk of a material weakness to their financial statements and, as such, consider the controls implemented to mitigate this risk. ### Transfer Pricing: A Reporting Requirement for Multinational Corporations It should come as no surprise that large companies often create affiliate and/or subsidiary companies to carry out various parts of their operations across the globe. These parent-affiliate/subsidiary corporations are considered related parties, and when they engage in transactions between one another, transfer pricing becomes a very important reporting requirement to consider.The transfer price, by definition, is the price that one related party charges another related party in a particular transaction. For example, foreign Parent Company (“P”) purchases widgets from U.S. Subsidiary Company (“S”) at a standard price determined by P. The price that P pays to S for the widgets is the transfer price.Intercompany transactions are common in the marketplace today. The purchase price of the widgets is not negotiated by the two related parties in the same way it would be between two unrelated parties. Thus, there exists a risk that the cost that P pays S for widgets will vary substantially from the cost of widgets had P purchased them from an unrelated company.The IRS is concerned with ensuring that related parties are not using intercompany pricing as a mechanism to shift profits from one company located in a high tax rate jurisdiction to another related company in a lower rate jurisdiction. To accomplish this, the IRS has been granted the authority to require companies to report related-party transactions and show that transaction costs are within an acceptable range of comparable transactions in the market.Let’s look at our widget example above. The IRS requires P to report transactions between P and S, and show that comparable companies (same size, industry, etc.) would sell widgets to P for roughly the same cost. If the IRS finds that P is significantly underpaying or overpaying for widgets from S, it has the power to adjust transactions to better reflect the income of the related companies.The Internal Revenue Code and Treasury Regulations have rigid requirements surrounding the annual reporting of transfer pricing. Regulations provide detailed instructions on how to choose comparable parties and how to calculate the appropriate, acceptable price ranges for comparison. Due to the nature of the analysis, every transfer pricing report is unique and must be tailored to the individual reporting party. There are consequences for failing to report or improperly reporting transfer pricing, so it’s important for corporate taxpayers to keep reports current. Most countries have similar rules; recently implemented Country by Country OECD reporting requirements have elevated the importance of contemporaneous documents.If you have any concerns regarding related-party transactions or transfer pricing, it’s always best to consult your accountant or one of our tax professionals. ### SOC 2 Reports: Common Control Exceptions and How to Avoid Them In performing SOC 2 examinations, we often come across the same types of control exceptions. To assist organizations with avoiding these exceptions, we’ve compiled a list, in no particular order, of the most common ones we typically identify. All employees did not complete security awareness training. Service organizations typically utilize an online training platform that enables employees to complete security awareness training at their convenience. The training platform makes it easy to track those employees who have not completed the training and will send automated emails reminding them of their requirements. The risk assessment is incomplete and did not include all relevant threat events. Service organizations should follow NIST’s guidance by referencing NIST SP800-30 rev1. Risk assessments need to list all relevant threat events, the likelihood of the threat event occurring, the impact to the organization if the threat event were to occur and the overall risk of the threat event. Organizations should create a template based on NIST’s guidance and executive leadership needs to review results of the risk assessment, which should be updated annually. Independent assessments of internal controls were not performed. Service organizations should engage independent third parties to perform penetration tests, including web application penetration tests for any cloud-based products that are included in the scope of the SOC 2 report. In addition, service organizations need to run vulnerability scans on a quarterly basis to identify misconfigurations and missing patches. Multifactor authentication is not used for remote access. Service organizations should require employees to enter a second factor of authentication in addition to passwords when accessing the network remotely. Typical second factors of authentication are soft tokens, sent via SMS or mobile applications, or hardware tokens that must be plugged into employee’s machine. Super user access is not restricted to appropriate personnel. Service organizations need to follow the “principle of least privilege” when determining which users require super user access to the network and critical applications. For those who do not require such access, specific roles should be created that limit access to only the functions necessary to perform one’s job responsibilities. Terminated user access was not removed in a timely manner. Service organizations should mandate that a notice of termination needs to be communicated to HR and IT prior to the departing employee’s last day. Upon receiving such notice, IT should remove access immediately or set the employee’s account to expire on his or her last day. Developers have access to make changes to production systems. Service organizations like software-as-a-service (SaaS) providers that develop custom cloud-based applications should restrict developers from having access to make changes to production code files. In the event that’s not feasible, the service organization should implement a monitoring control, such as file integrity monitoring software that automatically alerts management when production code files are changed. If an unexpected change is detected, management can investigate to determine if the change was unauthorized or malicious. For more information on SOC Reports and how Schneider Downs can help with meeting your customers’ SOC reporting requirements, please contact our SOC experts. ### GDPR Revisited Many have heard about the French data regulator CNIL imposing a $57 million (€50 million) fine on Google for violating the General Data Protection Regulation (GDPR), specifically for failing to make its data collection policies easily accessible while also failing to obtain sufficient and specific consent for ad personalization across its services. This comes as the first major GDPR violation since its inception in May of 2018. CNIL indicates that Google’s approach to gathering personal data makes it hard for users to understand what data is being collected and sold, while not being transparent in the ability to opt out. Although this is not the first fine imposed for violating GDPR, it is by far the largest. In December, a Portuguese hospital was fined €400,000 after its staff permitted unauthorized access to patient records, while a German social media and chat service was fined €20,000 in November for storing passwords in plain text. Lessons Learned? Will there be a change to the privacy policies and settings from providers such as Google, or will it change the user experience of such services? According to CNIL, these violations are yet to be remediated, and after all, the fine represents less than three hours of Google’s revenue. Will organizations continue to assess and mitigate risks related to the consent, privacy and protection of EU personal data, or will they be willing to accept the risk of being breached and/or face the fines for noncompliance with GDPR? What’s Next GDPR is not going away, and it is only a matter of time before additional privacy regulations are adopted domestically and internationally. If you have any questions related to the GDPR or the privacy and protection of data, please visit our GDPR Compliance page. ### SAP S/4HANA Security and Project Challenges Organizations need to be aware of the SAP S/4HANA security challenges as they prepare for the year 2025 SAP deadline for converting SAP ECC and other older SAP systems to SAP S/4HANA.  The 2025 deadline is to implement the SAP S/4HANA (application) and not just to implement the SAP HANA in-memory database.   Of course, the standard system development lifecycle processes should be followed, as well.  Below is a listing to assist in a successful migration to SAP S/4HANA: Do not treat SAP S/4HANA as just an update.  Treat it as a “Major Project.”  Organizations are devoting multiple months and even multiple years to the change.  Custom code and security will need to be updated.  Dedicate a budget of skilled IT and business resources and adequate time to set the foundation for project success. Involve the organization’s SAP Security group at the beginning.  Even when an outside implementer is assisting in the project, the internal SAP Security group should be driving policies, standards and controls to ensure a successful project.  Transaction changes are found throughout the SAP S/4HANA Business Processes.  But, many of the transactions remain the same.  Existing roles should be leveraged as much as possible as a starting point. Internal Audit and External Audit should be involved early in the project.  Auditors will work with the project team by advising on security and control requirements.  Do not hesitate to request the auditors to review security and controls prior to- and after go-live. Spend time reviewing the “Simplification List for SAP S/4HANA” whitepaper written by SAP.  SAP S/4HANA is simplifying the SAP environment and preparing for future innovations.  These changes are documented within this 900 plus page reference document. Ensure the added and removed transactions and SAP tables are properly updated and tested in the SAP security roles. Custom SAP reports need to be thoroughly identified, evaluated, updated and tested.  Organizations need to be aware of their custom code but need to evaluate the future usage.  Valuable time and resources should not be wasted if the custom reports will no longer be used in SAP S/4HANA.  Custom reports that will be used need to be updated and tested. If possible, try to avoid implementing SAP S/4HANA close to the end of the fiscal year.  Surprises will likely come up, causing possible delays in the project or increased cleanup after go-live.  This would be a good rule to live by for any major project, though, especially for organizations that must comply with the Sarbanes-Oxley Act. Plan to be compliant with production controls on “Day One.”  For example, the formal production transport change management process with the production restricted client settings should be in place at go-live.  Client settings should be set to enforce logging as well.  Security settings and processes should also be restricted and established, including configuring password settings according to company policy, enforcing the production security provisioning processes (adding and removing access), appropriately restricting the SAP_ALL profile and other privileged access, evaluating if Service accounts can be changed to System accounts, and performing a formal users and roles approved security baseline prior to go-live. Developer Keys are no longer used in SAP S/4HANA.  Organizations need to re-evaluate their segregation-of-duties of transports.  Developer keys in the past may have mitigated a transport risk (for example, the Basis Team having developer access in the development environment and the ability to push transports to the production environment but did not have a developer key). However, for SAP S/4HANA, organizations may need to implement a mitigating control to validate that the same user is not creating and moving the same transport to the production environment. SAP GRC controls need to be updated.  The segregation-of-duties (SOD) rule set needs to be updated with the transactions being added and removed.  SOD conflicts should also be evaluated for conflicts within SAP S/4HANA.  Extra attention should be devoted to the vendor maintenance authorizations.  SAP consolidated vendor management maintenance within the “BP” transaction.  Mitigating controls should be considered to address SOD conflicts that access cannot be separated.  The firecall process should also be reviewed to ensure only appropriate users can request firecall accounts that provide reasonable elevated access. ### PCAOB Amends Standards for the Use of Specialists This article was co-written by Jonathan Grim.In response to more estimates used in financial reporting and the increased use of specialists who determine these estimates, the PCAOB published Release No. 2018-006, Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists on December 20, 2018. These amendments are intended to enhance investor protection by strengthening the requirements of the auditor when evaluating the work of a specialist, whether that specialist is employed by the company, employed by the auditor, or engaged by the auditor. If the specialist’s work is not properly evaluated by the auditor, the risk that the auditor will not be able to detect a material misstatement may increase.The amendment revises the standards AS 1105, Audit Evidence (for use of the company’s specialist) and AS 1201, Supervision of the Audit Engagement (for use of auditor-employed specialist). The Amendment also replaces AS 1210, Using the Work of a Specialist, and retitles the standard as Using the Work of an Auditor-Engaged Specialist (for use of auditor-engaged specialist). As AS 1210 currently exists, it does not differentiate the auditor requirements between the roles of the company’s specialist and an auditor-engaged specialist, even though both have different roles in the reporting process.The amendments to the auditing standards are as follows:AS 1105 Auditor Requirements for Using the Work of a Company’s Specialist: Obtain an understanding of: [1] the work and reports of the specialist and related company processes and controls; [2] the knowledge, skill, and ability of a company specialist; and [3] the relationship between the company of the specialist and the outside entity that employs the specialist (if applicable). Perform procedures to evaluate the data, significant assumptions, and methods, including models, used by the specialist, and the reliability of the work in regards to the relevant assertion. AS 1201 Auditor Supervisory Requirements over Auditor-Employed Specialists: Verify that the specialist is aware of the work needed to be performed and coordinate their work with that of the other engagement team members. Evaluate the appropriateness of the audit evidence gathered from the specialist and its consistency with other relevant information. AS 1210 Auditor Requirements for Using Auditor-Engaged Specialists Supervisory requirements parallel those of the revised AS 1201. Reviewing the specialist’s work is dependent on the risk of material misstatement, significance of the work, and their knowledge, skill and ability. In the event that the auditor employs a specialist with impaired objectivity, additional procedures should be performed to evaluate the data, significant assumptions and methods used by the specialist. In some cases, it may become necessary to employ additional specialists. While the new standards may seem to increase the work and cost of the auditor, the revisions clarify that the auditor’s evaluation does not require reperforming the specialist’s work. Instead, the responsibility is to evaluate whether the specialist’s work provides sufficient evidence to support the conclusion regarding conformity to the applicable financial reporting framework. Upon approval of the SEC, the standards would become effective for audits of financial statements for fiscal years ending on or after December 15, 2020. ### The End of an Era – LIBOR Interest Rate The London interbank offered rate (LIBOR) is arguably one of the most important numbers in the finance world.  You can find it within most variable-rate debt agreements, adjustable mortgages and private student loans.  This rate is the standard for approximately $260 trillion of loan and derivative contracts today.  But LIBOR’s days are numbered due to being scheduled to be phased out by 2021.  LIBOR is a daily rate produced by a large group of banks; it is the rate that banks would charge other banks to borrow money.  It is calculated by averaging the rates by the group of banks after excluding the highest and lowest rates submitted.  The rate became notorious during the 2012 financial crisis due to it being incredibly easy to manipulate.  This has made many banks involved in the rate-setting process to become nervous.  Additionally, the rate has become less important due to new rules encouraging banks to use other forms of borrowing rates such as the Secured Overnight Financing Rate (SOFR), which is sponsored by the Federal Reserve.  Many ask: why would banks still respond to the LIBOR survey?  This is due to British regulators encouraging them to do so in fear of the results of an abrupt stoppage in the rate and the impact on the outstanding debt agreements and derivative contracts.  The phaseout implemented is providing time for the industry to prepare itself for life after LIBOR.Preparing for life after LIBOR is making many in the finance world nervous.  Many variable-rate debt agreements will need to be amended, causing contracts to be rewritten, computer systems to be updated and a lot of non-revenue generating administrative work by banks.  Additionally, derivative contracts do not provide a workable option to replace LIBOR.  This will cause approximately $190 trillion of LIBOR-linked derivative contracts to be renegotiated establishing new derivative contracts.  These renegotiations will be significant and costly for banks. The outcome of the change is still uncertain, and there are still many questions that will need to be answered throughout the course of the phaseout.  ### PCAOB Adopts New Standard on Auditing Accounting Estimates The Public Company Accounting Oversight Board (PCAOB) adopted a new standard on auditing accounting estimates.  The standard is in response to the increasing use and significance of accounting estimates in the preparation of financial statements.  The new changes enhance existing audit approaches and are intended to promote consistency in practice in areas that have created challenges to auditors. The new standard on auditing estimates replaces three existing standards: Auditing Standard (AS) 2501, Auditing Accounting Estimates AS 2502, Auditing Fair Value Measurements and Disclosures AS 2503, Auditing Derivative Instruments, Hedging Activities and Investments in Securities The standard refines the definition of an accounting estimate to include a decision not to recognize a transaction or event based on a calculation or other analysis.  It also emphasizes the need for professional skepticism when auditing accounting estimates due to the subjective nature of assumptions used and measurement uncertainty that make estimates susceptible to management bias.  The new standard is intended to promote a risk-based audit approach.  The consolidation and changes of previous standards are anticipated to clarify and enhance existing auditing standards to improve overall audit quality.  Additionally, more work is expected to be required in evaluating information provided related to certain estimates. Key Changes The new standard creates/changes the requirements to gather audit evidence and evaluate estimates as follows: Testing a company’s process for developing the estimate; Developing an independent expectation of the estimate for comparison to the company’s estimate; Evaluating events or transactions that occur after the measurement date, Requiring the auditor to obtain an understanding of management’s analysis of critical accounting estimates and take that understanding into account when evaluating the reasonableness of significant assumptions and management bias; Explicitly requiring the auditor to assess certain factors to identify significant assumptions that are susceptible to bias or depend on the company’s intent and ability to carry out specific courses of action; Strengthening requirements for testing whether data produced by the company is complete and accurate and evaluating whether data is appropriately used by a company, including a new requirement to evaluate whether a company’s change in the source of data is appropriate; Requiring an integration for evaluating estimates with the risk assessment standards to focus auditors’ attention on estimates with greater risk of material misstatement which includes enhancing requirements for obtaining an understanding of the company’s process for determining accounting estimates; and Establishing requirements for the auditor to determine whether pricing information obtained from third parties provides sufficient, appropriate audit evidence. The new standard applies to all audits conducted under PCAOB Standards, and the changes are subject to approval by the Securities and Exchange Commission (SEC).  The standard would be effective for audits of periods ending on or after December 15, 2020. ### Transportation and Logistics to Continue Strong, if Slower, Growth in 2019 The bustling U.S. economy – led by robust consumer spending and energetic demand on durable industries like construction, manufacturing and mining – all contributed to making 2018 a record-setting year for the trucking industry. According to the American Trucking Association (ATA), total freight hauled by for-hire drivers through November 2018 was 7.2% more than the first 11 months of 2017. Supporting a GDP that grew 3.4% in the third quarter alone, many industry experts hailed 2018 as the industry’s best year in decades. But what lies ahead for 2019? Indications are the stellar industry growth experienced over the last 20 months will cool sometime later this year. In December, FTR Transportation Intelligence projected freight shipping, for instance, will start the year at around a 3.0% growth rate but dip to around 2% the latter half of 2019. The degree of freight growth will certainly rely largely on the economy, but overall industry performance will also depend on what happens with the ongoing trade dispute between the U.S. and China, the globe’s leading economies. Delegates from U.S. and China have continued trade talks amidst the Trump Administration momentarily pausing the January 1 additional tariffs of up to 25% on Chinese-imported goods. The parties are continuing negotiations, surrounded by a smoothed trade deficit and access for American companies to Chinese markets, will have a potentially large impact on industry numbers in 2019. A big concern for most trucking companies this year will be the enduring shortage of qualified available people to sit behind the wheel. The ATA estimates the U.S. trucking industry is shy approximately 50,000 needed drivers, a number easily amplified when considering that many fleets are also facing an increased roster of aging operators. The Bureau of Labor Statistics sets the average age of U.S. commercial truck drivers at 55. Compounding the driving shortage concern are issues that have resulted from the electronic logging device (ELD) directive mandated by the Federal Motor Carrier Safety Administration in December 2017. The Hours of Service regulation was primarily instituted to allow companies to more closely adhere to the existing limits on driver hours, replacing the easily falsified paper logs with automated devices. Due to the regulation, however, overall miles logged per driver has actually been reduced, since the ELD records the waiting time surrounding loading or unloading a truck as driving hours. After one year of the directive, and working within the context of the industry-wide labor shortage, companies have begun to incentivize the drivers with escalated pay and enhanced bonuses, which has had a ripple effect and increased freight rates. Throughout 2019, trucking companies and carriers will be monitoring the continued driver shortage and its correlation to driver expense and freight rates. Meanwhile, on the fuel front, the U.S. Energy Information Administration reported on January 7 that the average retail price of diesel in the U.S. had dropped 3.5 cents from the prior week to $3.013 a gallon, marking a 12-week steady decline. Price volatility, as always, is spurred by market demand, foreign exchange movements, foreign policy and political instability in the Middle East. Lower diesel prices, though, create lower fuel surcharges, which could offset potential future freight rate increases. ATA chief economist Bob Costello says growth rates will also decelerate because of tougher year-over-year comparisons, but whether or not experts are correct in their analysis, a well-devised plan is critical. If your organization would like assistance in navigating through current transportation and logistics business conditions, we invite you to contact us and visit the Schneider Downs Transportation & Logistics Industry Group. For additional information, visit the Our Thoughts On blogsite. ### IRS Provides Safe Harbors For Business Charitable Contributions The Tax Cuts and Jobs Act passed in December 2017 created Internal Revenue Code (“IRC”) §164(b)(6), which limits the annual deduction for state and local taxes to $10,000. This prompted several states with higher individual income tax rates to introduce ways for constituents to counterbalance the impact of the limitation, including one alternative that taps into government-sponsored programs that generate state tax credits to offset an individual’s state and local liability.The Department of the Treasury and the IRS have issued additional guidance on this matter in the past year, including proposed regulations to clarify whether state programs generating state tax credits correctly apply the IRC and Treasury Regulations as intended. After publication of the proposed regulations, on August 27, the agencies received a number of inquiries from taxpayers and other stakeholders regarding the application of the proposed regulations to business entities that make payments to charitable organizations described in IRC §170(c).To address the matter, the IRS has since issued Revenue Procedure 2019-12, which clarifies that certain businesses (C corporations and pass-through entities) that contribute to charitable funds or certain government organizations in exchange for the receipt of state credits, can claim such contributions from federal taxable income as a business deduction without a corresponding reduction in the amount of the expense if certain safe harbor provisions are met.Safe Harbor for C corporations – if a C corporation engaged in a trade or business makes a payment to an organization described in IRC §170(c), and receives or expects to receive a tax credit that reduces a state or local tax imposed on the C corporation, such payment is treated as meeting the requirements of an ordinary and necessary business expense for purposes of IRC §162(a) to the extent of the credit received or expected to received.Safe Harbor for Pass-Through Entities – the safe harbor applies to all pass-through entities except single-member limited liability companies disregarded for federal income tax purposes. If the entity is subject to state and local tax, other than state or local income tax, while carrying on its trade or business, the pass-through entity may treat such payment as meeting the requirements of IRC §162(a) to the extent of the credit received or expected to be received. Otherwise, the deductibility of the payment must be determined at the level of the individual owners and subject to the $10,000 limitation of IRC §164(b)(6).The safe harbor tests are effective January 1, 2018. ### Proposed Economic Presence Standards for Philadelphia’s Business Income and Receipts Tax The City of Philadelphia has drafted proposed economic nexus standards for Business Income and Receipts Tax (“BIRT”) based upon the recent United States Supreme Court ruling in South Dakota v. Wayfair.The proposed economic presence standards are effective for tax years beginning January 1, 2019 and thereafter.  According to the proposed regulation, having an economic presence in the city is sufficient to constitute doing business in the city.Economic Presence means substantial business presence evidenced by the purposeful direction of business toward the City of Philadelphia examined in light of frequency, quantity, and systematic nature of a business organization’s economic contacts with Philadelphia.  Economic Presence may occur even if a business does not have a physical presence in Philadelphia.  Substantial business presence includes, but not limited to, a group of activities performed by a business organization for the purpose of earning income or profit from such activities and includes every operation which forms a part of, or step in, the process of earning income or profit from such group activities.  Economic presence in Philadelphia may exist when a business sells tangible personal property, specified digital products, or services to be delivered electronically or physically to a location within Philadelphia, even if the business has no physical presence in Philadelphia.  Economic presence is a lower standard than active presence.Under the Economic Presence standard, a business with no physical presence in Philadelphia is considered to have nexus in Philadelphia and is subject to BRIT if it: Has Economic Presence, as stated above, in Philadelphia; and Has generated at least $100,000 in Philadelphia gross receipts during any 12-month period ending in the current tax year.  The draft goes on to say that nexus created under the Economic Presence standard depends upon the facts and circumstances of the taxpayer’s activities in the City of Philadelphia.  Performing one or more of the following activities without conducting any other activities will not necessarily create nexus: Meeting with supplier of goods and services in Philadelphia; Meeting in Philadelphia with government representative in the official capacity; Attending occasional meetings in Philadelphia (such as Board meetings, general internal corporate policy meetings and training, retreats, seminars and conferences sponsored by other, etc.); Holding recruiting or hiring events in Philadelphia; or Attending and/or participating at a trade show in Philadelphia at which orders for goods are taken and no sales are made. Public Law 86-272 protection applies to sellers whose activities are strictly limited to solicitation and activities ancillary to solicitation whose orders for tangible personal property are approved and fulfilled by shipment or delivery outside Philadelphia.  These sellers will not be subject to the Net Income portion of the BRIT.If you have any questions regarding the proposed Economic Presence standards for the BRIT, please contact your state and local tax professional.  ### Understanding Cyberthreats in our Energy Infrastructure Cybercrime MotiveMost cyberattacks are simply motivated by money – revenue from cybercrime has reached nearly $1.5 trillion per year. The majority of the cyber threat actors out there today are just your average criminals, having adapted to the current digital landscape. Low-end earners in the cybercrime world can still pull in close to $3,500 per month, with top earners clearing over $160,000. Clearly, profit is the reason money tops the list of cybercrime motives year after year.Now, remove money from the equation. What becomes the endgame when the attacker measures success in terms of something other than profit? If money is not the goal, does the profile of the target change? Who would be motivated to carry out cyberattacks of this nature?Hacktivists, but mainly nation-states (including terror groups to a lesser extent) fit the profile. Political motivation is currently one of the driving forces behind attacks perpetrated by these types of cyber threats. Influencing public opinion (2016 Democratic National Committee leak), disrupting the production capabilities of a foreign adversary (2010 Stuxnet virus) and advancing military operations (2007 use of Suter in Operation Outside the Box) all exemplify politically charged cyberattacks.Taking a Closer Look at Energy and Natural ResourcesFirms in the energy and natural resource sector face threats founded in both financial and political motives. Financial because these companies are first and foremost a business, but also political because – as part of our society’s infrastructure – they play a role in the lives of people and operations of public and private sector firms in entire regions.The U.S. government has taken note. In July 2018, the Senate Energy & Natural Resources Committee held a session with time allocated to discussing policy revolving around the securing of power grids and gas/electricity delivery infrastructure from cyber and physical attack vectors.Several factors come into play when examining the current landscape. Many infrastructure-related systems in place today were designed before security became a topic of major concern. As such, outfitting these systems with modern security technology to detect and alert on intrusion attempts can prove difficult. Simultaneously, evolving technology is being introduced into that legacy environment. Think about IoT (internet of things) devices like smart sensors, smart meters and products that integrate into cloud solutions, often with security as an afterthought.The risk posed by compromise of this infrastructure is unmistakable. Fortunately, most risk has been uncovered by researchers or white hats attempting to strengthen security. But there are a few instances of malicious cyber activity targeting energy infrastructure.Ukrainian Power Grid AttackThe most commonly recognized (and first well-documented) cyberattack on energy/power infrastructure was the attack on the Ukrainian power grid that occurred in December 2015. The immediate impact of the incident: a blackout affecting over 230,000 residents, most of them customers of a company called Prykarpattyaoblenergo. The perpetrators didn’t just decide to flip the breakers either; they strung multiple facets of the attack together, across three energy distribution companies, in an attempt to leave residents uninformed and delay operators from getting the grid back online.How was Prykarpattyaoblenergo initially compromised? Multiple employees opened phishing emails containing a macro within a Microsoft Word document that, when executed, unleashed a form malware called BlackEnergy. The actors then used access to the corporate Windows network to harvest user account credentials and slowly gather information to formulate the specifics of their next attack. Eventually, they moved laterally to the SCADA network, bypassing the firewall that segmented the two networks, using compromised accounts that had VPN access without two-factor authentication. It’s from this network that they were able to interact with equipment affecting power supply.Before initiating the outage, the attackers took two additional steps: 1) they disabled the backup power supply of multiple control centers to keep the operators responsible for dealing with outages in the dark, literally, and 2) they overwrote the firmware of serial-to-Ethernet converters at electrical substations to prevent operators from being able to close the breakers without physical access. Then, as the attackers began to open breakers to start the outage, a telephone denial-of-service attack (similar to a DDoS attack) hit customer call centers. The torrent of fake phone calls was designed to prevent legitimate customer calls from getting through, thus slowing the exchange of information between them and operators.TakeawaysThe Ukrainian example can be somewhat astounding, but lessons can be learned from those control failures. Surface-level items, such as the importance of two-factor implementations and anti-phishing measures come to mind. But what about hardening the inside of your network? Consider assuming that an outsider already has credentialed access to your network (through phishing, for example). There are steps you can take to limit the scope of potential compromise, to prevent that outsider from harvesting other credentials and pivoting throughout your systems.Fortunately, the United States has put forth good, established control frameworks to guide critical infrastructure in combatting these sorts of threats. An example of one specific to the energy industry is the Cybersecurity Capability Maturity Model (C2M2) Program.Outside of introducing control frameworks, you can submit controls to simulated real-life threats in the form of penetration testing. Assessments in this form can help simulate an attacker with network access - testing network segmentation, lateral movement techniques and endpoint hardening, among others. ### Pennsylvania’s Economic Nexus Provision for Sales and Use Tax On January 8, 2019, the Pennsylvania Department of Revenue issued Sales and Use Tax Bulletin 2019-01, clarifying how the Department will apply economic nexus standards for sales and use tax based on the United States Supreme Court’s opinion in South Dakota v. Wayfair issued last June.  The new provisions are effective July 1, 2019.The Department has indicated that it will use an economic nexus threshold of $100,000 in sales to Pennsylvania residents during the previous 12 months.  The legal basis cited for this by the Department is 72 P.S. §§ 7202, 7208.The Code defines “maintaining a place of business in this Commonwealth to include having any contact with this Commonwealth which would allow the Commonwealth to require a person to collect and remit tax under the Constitution of the United States.The bulletin discusses how Pennsylvania law complies with the simplification features identified in the Wayfair opinion.  The Department also indicated that it will certify service providers that will offer software and perform services that, when relied upon by a vendor to determine whether or not the sale of a particular product or provision of a particular service is subject to sales tax, will relieve the vendor of liability upon audit. The new economic nexus rules do not replace or provide an alternative to the provisions of Act 43 regarding remote vendor use tax reporting or registration requirements.  Remote sellers who chose the use tax reporting option under Act 43 must register with the Department and begin collecting tax once they meet one of the two referenced thresholds during the previous 12- month period.Any questions regarding Pennsylvania’s new economic thresholds and sales tax registration should be directed to your state and local tax professional. ### Making Your Benefit Plan Audit Easier Generally, any plan with 100 or more participants requires a plan audit. Whether your plan has already reached this threshold or you anticipate the plan reaching it in the future, here are some tips to help make your plan audit go more smoothly.DocumentationYour auditors will want to see support for any items selected for testing. Be sure to only process a contribution, benefit payment, investment allocation change, etc. once you have obtained appropriate documentation from your participant. Keeping in mind, also, when your plan audit will take place. These audits can take place up to nine months after year-end. Many companies move files to storage areas after the fiscal year is closed. However, you will need to keep all of your payroll and benefit plan files on hand until the audit has been completed.Many plan record-keepers provide interactive websites where employees can initiate transactions. In many cases, you can work with your plan recordkeeper to set up certain parameters in the software so that participants can only make elections that follow the plan document. By implementing a method like this, you avoid having to retain as much paper documentation and decrease the risk of human error.Streamline Processes When PossibleTo prevent errors or misstatement, find ways to automate or at least simplify your process. Auto-enrollment is a great way to ensure that all eligible employees participate. When new hires begin employment at your company, inform them of your benefit plan’s auto-enrollment provision and provide them the option to decline enrollment. For any eligible employee who does not wish to participate, be sure to retain forms that show they declined enrollment. If they do not decline, they will be enrolled into the plan. Some payroll software can even communicate to certain benefit plan software, which allows for the data to be automatically uploaded. This means that you will not be chasing down enrollment forms, and you will not risk denying eligible employees access to the plan.You can also simplify the calculation of employer contributions to prevent errors. Ideally, you would set up codes in your payroll system that would automatically calculate what each participant’s employer contribution should be. If this is not possible, set up a spreadsheet to do most of the calculating for you. Download the necessary payroll and contribution data and test the accuracy of the data. Then set up all of the necessary formulas so that the spreadsheet will do the rest of the work for you. This can help ensure the accuracy of the calculation and will provide you appropriate documentation.Follow Your Plan DocumentPlan documents are certainly not always easy to read and interpret. At some point along the way, a provision can be misinterpreted. Or a new plan amendment could be made, but the old provisions are still being followed. It is important that the plan document and its amendments be reviewed periodically to ensure that the plan is operating in accordance with its provisions. If there are deviations from plan provisions, this will result in additional time spent providing your auditors with supporting documentation for additional samples and correcting the errors.These are some suggestions to help you prevent errors and be better prepared for your benefit plan’s audit. ### Long-Awaited Employee Benefit Plan Audit Standard Final Balloted In April 2017, the Audit Standards Board (ASB) issued an exposure draft of the Proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.  The proposed SAS was issued in response to the May 2015 report from the Department of Labor (DOL) that found nearly 40% of all employee benefit plan audits contained one or more major deficiencies.  The new auditing standard was designed to enhance the quality of employee benefit plan audits and to strengthen the auditor’s report.Once issued final, the new auditing standard is expected to be effective no earlier than for audits of financial statements for periods ending on or after December 15, 2020.  Early adoption is not permitted.  The new auditing standard does include transitional implementation guidance in year of adoption.  Based on the ASB’s final issuance of its proposed SAS, Auditor Reporting, certain confirming amendments to the auditor’s report may be required.  The audit reporting standard is expected to be finalized during the first half of 2019.The new standard includes requirements for all phases of an employee benefit plan audit, including engagement acceptance, risk assessment and response, communication with those charged with governance, audit procedures and reporting.Some of the more significant changes and/or provisions included in the new auditing standard are: Changes to the form and content of the auditor’s report on the financial statements and the ERISA required supplemental schedules are among the most significant changes resulting from the new standard.  As noted above, additional changes may be required to the auditor’s report in order to conform to the reporting requirements included in the final SAS, Auditor Reporting. Gone, in name only, is the limited-scope audit.  It has been replaced with the ERISA section 103(a)(3)(C) audit.  Along with the name change, there are additional procedures required to be performed by plan management as well as the plan auditor.  If plan management elects to have an ERISA section 103(a)(3)(C) audit performed, management will need to assess whether the entity issuing the certification is a qualified institution under DOL rules and regulations.  Likewise, the auditor will need to perform additional procedures.  The auditor is required to 1) evaluate management’s process for determining if the certification is from a qualified institution, 2) obtain from management and read the certification as it relates to investment information prepared and certified by a qualified institution, 3) compare the certified investment information with the related information presented and disclosed in the ERISA plan financial statements and ERISA-required supplemental schedules and 4) read the disclosures relating to the certified investment information to assess whether they are in accordance with the requirements of the applicable financial reporting framework. ERISA section 103(a)(3)(C) auditor report will change so that modified opinions resulting from information certified by a qualified institution will no longer be issued.  Rather, auditor’s report will provide a two-prong opinion - one opinion on whether the information covered by certification agrees to the certification; and the second opinion on whether information not covered by the certification is fairly presented. Auditors are required to perform procedures sufficient to ensure that amounts received and disbursed as reported by the trustee or custodian were determined in accordance plan provisions.  The auditor should consider the risk of material misstatement in determining which plan provisions are to be tested.  Initially, the proposed audit standard would have required auditors to perform certain procedures regardless of risk of material misstatement. Auditors are required to read the draft Form 5500 and identify material inconsistencies, if any, with the audited financial statements prior to dating the auditor’s report. ### Addressing Technology Risks within the Financial Services Industry As rapidly as technology evolves, so does the inherent risk surrounding that technology. It has now become ever so critical to ensure appropriate mitigation strategies are constantly evaluated and overall governance is maintained at the executive and board levels. Financial institutions continuously face risk due to misalignment between business and IT strategies, management decisions and the lack of experience to support ever-changing technologies that are critical to the ongoing success of the institution. Oftentimes, financial organizations are reliant on legacy systems that may become obsolete, uncompetitive or disruptive, thus jeopardizing the security, availability and integrity of the data. Depending on the size of the institution, mergers and acquisitions – all too common in the financial services industry – can often burden an organization’s IT environment by increasing the number of systems, applications and interdependencies (including vendors), which are frequently overlooked and under-budgeted, further increasing risk. For more on the effects of M&A, please see our OTO article, Don’t Acquire the Data Breach – The Importance of Cybersecurity and Information Technology Due Diligence. In general, financial services executive management and boards of directors must be acutely aware when addressing risk areas, which often include: IT strategy Cybersecurity and incident response Resiliency and continuity Third-party vendor risk management Data security and management Expertise and experience of IT professionals Ongoing risk management At the end of the day, technology risks have financial, regulatory, operational, strategic and reputational implications if not addressed in a collaborative manner with board-level oversight. Members don’t have to be IT experts, necessarily, but they do need to understand how technology supports strategic initiatives so they can provide oversight and challenge management if/when required. If you have questions on how technology risks impact your financial institution, or would like to learn more how Schneider Downs can help your organization with any of the specific risks above, we’re happy to discuss. ### Mortality Scale 2018 Update In October 2018, the Society of Actuaries released its annually updated mortality improvement scale for pension plans, MP-2018, based on the same methodology and assumptions used to develop the previous scale (MP-2017) and revised to reflect historical U.S. mortality experience through 2016. The Society anticipates that pension plans implementing MP-2018 could see a decrease in plan obligations from 0.2 percent to 0.6 percent.Under U.S. GAAP, pension plan sponsors are required to use mortality assumptions that return the best estimate of the plan’s future experience when assessing obligation. This should be reflected through the date of issuance and take into consideration the financial statements of both the benefit plan and the plan sponsor. Plan administrators should also calculate the impact of the updated mortality scale on any financial statements that have yet to be issued.Bottom line? With the release of MP-2018, plan sponsors throughout business should review implications with their plan actuaries and auditors. Contact Schneider Downs if you’d like to discuss. ### “Step-Up” Your Estate Tax Strategies Please note that the following article was co-authored by Greg Allison.One of the most common strategies employed by affluent taxpayers in a comprehensive estate plan is to gift assets into trusts. This is largely done with an eye toward removing assets from the taxpayer’s gross estate for federal estate tax purposes. While this is generally a good strategy from an estate tax perspective, it has the potential to cause income tax issues for the beneficiaries.Under Internal Revenue Code (“IRC”) Section 1014(a), the basis of property a beneficiary inherits will be the fair market value of such property on the decedent’s death (as opposed to the decedent’s basis). For example, if the decedent bought a diamond ring in 1990 for $5,000 and at the time of his or her death in 2019 the ring is worth $10,000, the individual who inherits the ring will have a basis of $10,000. The "step-up" in basis is advantageous because if the beneficiary later sells the ring for $12,000, he or she will only have to recognize the gain of $2,000 instead of $7,000 (as the descendant would have).Generally, assets gifted to trusts are not eligible for this basis step-up when the taxpayer passes away. So how does a taxpayer employ both estate tax planning (remove assets from estate) and income tax planning (obtain a basis step-up upon death) together? Consider the following example:Joe Smith transferred Property 1 with a basis of $100,000 to a trust in 1990 with a current fair market value of $1 million. Joe Smith personally has a property (Property 2) that he purchased for $900,000 with a current fair market value of $1 million. Joe’s estate plan leaves everything to his daughter, Mary, upon his death. When Joe passes away, Mary will have Property 1 with a $100,000 basis and Property 2 with a $1 million basis. If Mary sells both properties for $2 million, she will recognize $900,000 in taxable gain.What if Joe exchanges, or swaps, Property 1 with Property 2, and then passes away? The basis in Property 1 would be stepped-up to $1 million (since Property 1 would be includable in his gross estate). The basis in Property 2 would be $900,000 (not eligible for a basis step-up, since Property 2 is in the trust). If Mary sells both properties for $2 million, she will only recognize $100,000 in taxable gain.These examples illustrate the need to review your estate planning strategies not just from an estate and gift tax perspective, but also from an income tax perspective to maximize the highly beneficial basis step-up rules upon death. Your Schneider Downs advisor would welcome the opportunity to review your estate plan in this light. ### Making the Most of Your Charitable Contributions One of the most significant changes introduced in new tax law is that the standard deduction has increased significantly for every type of taxpayer. For single filers, the standard deduction increased from $6,350 to $12,000, and for married filing jointly taxpayers, the standard deduction has jumped from $12,700 to $24,000. A higher standard deduction, along with capping the state and local deductions at $10,000 will enable fewer taxpayers to itemize their deductions. In fact, the nonpartisan Tax Policy Center projected that approximately 90% of taxpayers will take the standard deduction, as compared to the near 70% who do currently. Since fewer taxpayers will be able to itemize their deductions, fewer people will receive a charitable contribution tax benefits. So if you are a taxpayer inclined to give charitably, what can you do to maximize your tax benefits?The most common method is “bunching” charitable contributions. The concept is simple: if you were originally planning to give $10,000 in charitable contributions each year over the next three years, instead, you should give all $30,000 in the first year, and nothing in the following two years. The tax advantages of giving, in this case, will come into play in the year you give $30,000. Donating $30,000 in one year will far surpass the threshold for itemizing, allowing for a tax benefit on your entire charitable contribution. If you weren’t to bunch your contributions, it’s likely you wouldn’t pass the threshold ($12,000/$24,000) to itemize in any of the three years by opting for the standard deduction.This strategy might not be useful for all charitably inclined taxpayers, though. For example, it may be difficult for some to double or triple their usual contribution in one year, even though it would end up equaling the same amount contributed. In this case, the intermediate years off from giving can be used to save up for the larger contribution.Donor-advised funds can be a very effective vehicle for giving charitably. A donor advised fund works very similarly to a mutual fund that holds future charitable contribution proceeds.  Once the funds are deposited into the donor advised fund, the taxpayer receives the tax deduction.  These funds can then either be directed to the charitable organizations at that time or at a later date based on pledge commitments.  While the funds are held in the donor-advised account, they can grow tax-free, and the earnings can then also be contributed to charitable organizations at a later point in time.  Thinking prudently about your future contributions and the timing of them can pay off, and bunching techniques are great tools to consider for those who are charitably inclined. Please consult your Schneider Downs tax advisor to determine how these and other tax planning strategies can impact your personal tax situation. ### Effective Dividends to Receive a 100% Deduction under New Proposed Treasury Regulations It should come as no surprise that taxpayers seek to minimize tax liability and maximize tax benefit. One way to achieve that result is for taxpayers to defer income recognition, and thus defer tax liability into the future. Prior to 1962, one popular mechanism of deferral employed by controlled foreign corporations (“CFC”) was to invest earnings in U.S. property, such as corporate stock or real property, instead of distributing a dividend to its U.S. shareholders. This deferral mechanism was highly effective because earnings of CFCs are taxable when repatriated to the United States, which, until 1962, was only done through the distribution of a dividend. The overseas cash was brought back to the U.S. without a tax cost. However, in 1962, with the purpose of eliminating the above deferral mechanism, Congress added § 956 to the Internal Revenue Code. Section 956 classifies the investment of CFC earnings in certain U.S. property as “substantially equivalent to a dividend.” Congress determined that the investment in U.S. property, in substance, achieves the same result to the U.S. shareholder as a dividend distribution, and should have the same effect on deferral as a dividend distribution. Thus, effective dividend distribution treatment ended this deferral technique. Fast-forward to the passage of the Tax Cut and Jobs Act (“TCJA”) and the addition of the dividend received deduction for the foreign portion of an actual dividend received (see previous article ). While the TCJA added a significant benefit to corporate shareholders receiving actual dividend distribution in § 245A, the Act did not add an equivalent deduction to the Code for the foreign source component of § 956 payments. The failure to update § 956 created a new disparity, in direct opposition to the purpose of § 956, which was to create symmetry between the treatment of actual dividends and payments that are “essentially equivalent to a dividend.” Due to this newly created imbalance, on October 31, 2018, the Internal Revenue Service issued a Treasury Regulation to restore symmetry in the treatment of actual and effective dividends received from CFCs. The proposed regulation allows a U.S. corporate shareholder to take a deduction for the foreign source portion of the § 956 payment that would otherwise be treated as “essentially equivalent to a dividend.” Which, to the satisfaction of the corporate shareholder-taxpayer, means essentially tax-free repatriation of earnings, regardless of which mechanism is used to repatriate those earnings! Additionally, as noted in my previous article, we may see similar guidance issued with regard to all or some categories of Subpart F soon. ### Income Tax Due Diligence – A Critical Piece of Acquisition Due Diligence In addition to a comprehensive sales and use tax review, a thorough income tax review is critical in the overall tax diligence process that a buyer must undertake in considering an acquisition. This is particularly true with equity transactions, due to the complexity of tax law at both the federal and state level and the hidden risks that may be inherited.We previously covered the importance of the sales and use tax review as part of the overall tax due diligence process (see Our Thoughts On /our-thoughts-on/salt/sales-tax-due-diligence-deep-dive and /our-thoughts-on/salt/what-you-should-know-about-sales-tax-due-diligence). Now we consider the income tax review.Income Tax Due Diligence The structure of the acquisition will often govern the level of income tax diligence that is necessary.  Under an asset purchase, the buyer will generally not inherit any historical income tax risk of the seller (note that the same cannot be said for certain other taxes, including sales and use tax).  However, it is still prudent to perform some level of income tax diligence so that the buyer understands any tax complexities that are associated with the business being acquired (such as multiple state filing requirements or the existence of a foreign permanent establishment).  Additionally, a review of payroll tax filings and tax remittances should be performed in an asset purchase, because successor liability could attach.The potential acquisition of equity (stock, LLC interests, etc.) gives rise to the need for a more thorough diligence review.  The acquisition of equity comes with it all known and unknown historical tax risk, so it is important to have a tax diligence team that is knowledgeable in the areas of federal, state and international taxation.  Since the buyer will inherit the tax history of the target company in a stock purchase, it is important to understand, among other things: Tax elections made Accounting methods used Historical tax reporting State income tax nexus and required filings Foreign activity Carryforward of net operating losses and tax credits This said, the level of diligence may also vary depending upon the type of entity being acquired, i.e., a C corporation or a pass-through entity (S corporation or partnership).  In an acquisition of a C corporation, any increase in income taxes resulting from tax examination adjustments will be borne by the buyer.  In contrast, since pass-through entities are generally not tax-paying entities (income reported by, and tax paid by, the owners), any adjustments to historical taxable income will be reported by the owners, and the entity itself should not bear a significant burden (note that this could change somewhat given recently finalized partnership tax examination rules). This is not to suggest that there is not risk in acquiring an S corporation.  A very common tax structure involving the acquisition of S corporation stock involves the Internal Revenue Code (IRC) Section 338(h)(10) election, which treats a stock acquisition as an asset purchase for income tax purposes, affording the buyer a step-up in basis.  An IRC Section 338(h)(10) election is limited in its application primarily to acquisitions of S corporations or C corporation subsidiaries of a consolidated group by a corporate entity. A buyer’s diligence team must ensure the validity of the S corporation being acquired to protect the buyer from a couple adverse consequences.  First, the S corporation that the buyer thought they acquired might be considered a C corporation, and, for all open tax years under statute, tax, penalty and interest could be assessed, all to be borne by the buyer.  Second, the Section 338(h)(10) election filed would be invalid, and the basis step-up that the buyer thought they achieved would be void. A good tax diligence team may also provide the buyer with analysis of whether the outcome of the transaction will meet the desired effect, or whether there are hurdles to be cleared before consummation of the acquisition.  Additionally, a well-informed diligence team may identify opportunities to treat certain stock acquisitions as asset acquisitions for income tax purposes.  With this typically comes an analysis of the estimated tax consequences to the seller under both scenarios to provide the buyer with the requisite information to successfully negotiate a potential change in deal structure. As you can see, tax due diligence is not to be taken lightly and should be an essential component of the acquisition process so that the buyer is educated and informed about the risks they are acquiring. If you have questions related to M&A tax diligence, whether buy-side or sell-side, we welcome the opportunity to assist and help protect your investment.  ### Impact Fee Imposed by Pennsylvania Supreme Court The Supreme Court of Pennsylvania issued its decision in Snyder Brothers, Inc. v. Pennsylvania Public Utility Commission, ruling that impact fees applied to vertical gas wells that produced an average of 90,000 cubic feet of gas per day for a single month in a given year.  The decision reverses the order issued by the Commonwealth Court which sided with Snyder Brothers, Inc. (“SBI”).The case centered on the use of the word “any” in the Oil and Gas Act (“Act 13”).  Act 13 imposed an impact fee on a “vertical gas well” that produces more natural gas than a stripper well.  A stripper well is “an unconventional well incapable of producing more than 90,000 cubic feet of gas per day during any calendar month.”  Act 13 allows the suspension of impact fees if the operator produces less natural gas than the limit to be classified as a stripper well.   SBI was assessed impact fees, penalty and interest for wells it operated in 2011 and 2012 that it did not classify as vertical gas wells.   SBI responded that the wells were stripper wells not subject to the impact fees.  SBI argued that the statute was unambiguous and that since its unconventional wells produced less than 90,000 cubic feet of gas per day in a single month during the year, the wells were stripper wells.The Pennsylvania Public Utility Commission (“PUC”) argued that the word “any” was ambiguous and therefore it was necessary to interpret the statute.  The dispute was presented to an Administrative Law Judge (“ALJ”) and the PUC, both of which concluded that the word “any” had two meanings.  The phrase “any calendar month” was interpreted to mean “every calendar month” by the ALJ and the PUC, whereas SBI had argued it should be interpreted as “one calendar month.”SBI appealed the ruling to the Commonwealth Court, which reversed the decision of the ALJ and the PUC.  The Court found that the word “any” was unambiguous in the context of the statute and meant “only one or a singular month”.  The Court went as far as to cite grammar rules in its decision on the basis that “any” modified a singular noun.  The Court ruled that if a well is unable to produce “90,000 cubic feet per day in any one month of a calendar year, it must be classified as a stripper well for that year.”The Pennsylvania Supreme Court found that the word “any” was ambiguous in that it had two reasonable and plausible interpretations.  Due to the ambiguity, the Court resorted to “statutory construction factors” to draw conclusions on the purpose, intent and history of the statute.The Court gave significant weight to the intent of the statute to provide counties and municipalities with funds to address the effects of drilling (air and water pollution and heavy vehicle traffic) in their communities.Further, the Court cited the impact of gas well production on communities and sided with the PUC’s assertion that the impact on the community does “not vary with the fluctuations in well production.”The Court concluded that the interpretation of “any” which is most closely aligned with the statute’s intent is “each and every” calendar month during a calendar year.  The Court also considered other provisions within Act 13 under the premise that the statute must be read as a whole and not just its individual parts.  Act 13 includes a section on nonproducing wells that states that the impact fee is applicable if the well produces 90,000 cubic feet per day “at some point during a calendar year.”Lastly, the Court sided with the PUC’s interpretations of Act 13 that it issued as Orders, beginning in 2012.  The PUC Orders all concluded that if a well qualifies as a vertical well in any calendar month, then the well is subject to the impact fee. ### What's New Under TCJA for Education Expenses? By now you know that the Tax Cuts and Jobs Act (TCJA) signed into legislation last December will have a major impact on your tax filings for the years 2018 through 2025. We at Schneider Downs are still working through each aspect as year-end tax projections are being completed for our clients. An area of attention for those of us with student dependents is what has changed under TCJA related to education expenses. In October 2018, the IRS issued Publication 5307 to provide an overview of TCJA as it relates to individuals. This article focuses specifically on education expenses. Tuition Assistance Programs, commonly referred to as Qualified Tuition Plans (QTP) or 529 Plans, are a savings vehicle many of us use for our childrens' higher education expenses. These plans were first developed in 1996 to allow taxpayers a tax-advantaged way to save for qualified higher education expenses for designated beneficiaries. The TCJA legislation has expanded QTPs in two major ways: Distributions from a QTP made after December 22, 2017, and through December 31, 2025, will not be subject to income tax if the distribution is transferred to an ABLE account of the designated beneficiary or a member of the family of the designated beneficiary. ABLE accounts were also created under Internal Revenue Code Section 529 and are meant to be used as a savings vehicle for individuals with disabilities. These savings accounts do not interfere with governmental aid available to those individuals and are meant to be used for qualified costs like basic living expenses, assistive technology and transportation, etc. QTP rollovers to an ABLE account are limited to the annual ABLE contribution limit, which is tied to the annual gift tax exclusion amount ($15,000 for tax year 2018). The second way QTPs were expanded is that they are now able to be used for tuition expenses related to the beneficiary's enrollment in kindergarten through 12th grade at private or parochial schools. An annual limit of distributions for pre-college tuition is set at $10,000 per the TCJA. Previously, only higher education (post-secondary) costs were available to be funded with these tax-advantaged savings plans. Education Credits and Deductions, specifically, the student loan interest deduction and Lifetime Learning Credit, have both been retained by the TCJA. Additionally, the American Opportunity Credit is still in place. Only the Tuition and Fees deduction has been allowed to expire as of the end of 2017. That was an "above the line" (before adjusted gross income) deduction related to tuition, fees and books/supplies. Over the last few years, it’s been resurrected with an extenders package, so this may happen again for 2018. You may wish to review an article written last year that describes the types of expenses eligible for each of the tax benefit programs. The main update to that specific article is that, as of this writing, the Tuition and Fees Deduction is not available for 2018. Education costs for our children is a maze, but, we are available to help you through it! With the changes enacted by the Tax Cuts and Jobs Act, you may wish to discuss your questions related to this topic or any others with your Schneider Downs & Co. team. Please feel free to reach out with all questions as we are available to assist you. ### Where are your trucks at December 31, 2018? For many nonpublic transportation companies, the question of where your trucks are at December 31, 2018 is an important question to prepare yourself for the upcoming revenue recognition changes.  Beginning January 1, 2019, nonpublic companies are required to adopt the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which changes the core principles of revenue recognition.  Companies have the option to elect the full retrospective or modified retrospective transition method while transitioning to the new standard.  Under the full retrospective transition method, companies will present the provisions of ASU No. 2014-09 to the year-end December 31, 2018 and any other prior periods presented.  Under the modified retrospective transition method, companies will present the provisions of ASU No. 2014-09 retrospectively, with the cumulative effect of initially applying the adoption recognized at the date of initial application, January 1, 2019.Since companies need to understand the impacts of implementation, it is important to consider revenue recognition principles at December 31, 2018, particularly as they relate to open contracts at that date.  Currently, many transportation companies recognize revenue when freight is delivered.  Under the new revenue recognition standard, transportation companies will have to assess whether to recognize revenue over time or at a point in time.  As stated in the ASU No. 2014-09, “Revenue is recognized over time only when an entity transfers control of a good or service. The performance obligation is considered satisfied over time if one of the following criteria is met to indicate transfer of control: The customer receives and consumes the benefits provided by the entity’s performance as the entity performs, The entity’s performance creates or enhances an asset (for example, building an addition to an existing home) that the customer controls as the asset is created or enhanced, or The entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.” Many transportation companies will meet the revenue recognition over time based on the fact that the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.  Customers receive benefit from a carrier transporting the goods halfway, as another company could pick up the goods and complete the delivery without having to reperform the services provided to date.  For many companies that have historically recognized revenue at a point in time, they will need to consider the criteria creating “over time” revenue recognition.  Companies should evaluate how to measure the performance obligations by distance shipped, days traveled or cost incurred to transport. In conclusion, transportation companies may have deliveries in transit at year-end and knowing the shipment status at December 31, 2018 will help nonpublic companies implement the new revenue recognition standard.  ### The Future of Construction In thinking about the future of construction, my Google search turned up a lot of ideas.  Some of the main aspirations of construction companies for the future are zero defects and accidents, efficiency and sustainability…as well as completing projects on time and on budget.  These are great concepts, but I question…aren’t these already goals of today’s construction industry?  One thing is certain: change is always constant.  To achieve these outcomes, you need innovation. The desired future outcomes of construction companies are easy to identify.  The difficulty comes with finding actions steps to achieve those outcomes.  So, I think construction companies need to think more about innovation for the future.  Innovation requires a willingness to challenge the assumptions that have made a construction company successful.  It’s important to remember that innovation can be most any type of new idea: New equipment, automated scheduling systems or simply a new approach to communicating with clients. The challenge – for any company in any industry – is to recognize that innovation offers the promise of constant improvement, rather than standing still. If an organization has management that is content in its ways, it will eventually fall behind.  The mindset of constant improvement needs to be engrained into your culture.  Solutions to problems will become part of your thinking… and those solutions will eventually grow into larger ideas that create value.  This value will create a competitive advantage for construction companies that look to the future. At the heart of this mindset is a commitment to innovation. ### Relief from addition to tax for underpayment of estimated income tax for tax-exempt organizations that provide Qualified Transportation Fringe Benefits As a result of the changes made to Internal Revenue Code (IRC) sections 274 and 512 by the Tax Cuts and Jobs Act of 2017, tax-exempt organizations must increase unrelated business income by any amount that is paid or incurred for any qualified transportation fringe benefit (as defined in IRC section 132(f)) provided to its employees.  This change is effective for amounts incurred or paid after December 31, 2017.  Tax-exempt organizations should have made estimated tax payments to cover any tax liability resulting from the new rule.  Some tax-exempt organizations would owe unrelated business income tax for the first time.      The IRS published Notice 2018-100 on December 10, 2018 which provides relief of the addition to tax under IRC section 6655 for underpayment of estimated income tax payments required to be made on or before December 17, 2018.  This relief applies to tax-exempt organizations subject to the tax for which estimated income tax payments would otherwise be required to be made on or before December 17, 2018.  The relief only applies if a tax-exempt organization was not required to file Form 990-T, Exempt Organization Business Income Tax Return, for the taxable year preceding the organization’s first taxable year ending after December 31, 2017. To qualify, the tax-exempt organization must timely file Form 990-T and timely pay tax.In order to claim the waiver under this Notice, the tax-exempt organization must write “Notice 2018-100” on the top of its Form 990-T. ### IRS Guidance on Parking Expenses for Qualified Transportation Fringes Provides Opportunities for Exempt Organizations The IRS has released Notice 2018-99, which provides interim guidance to tax-exempt organizations as to how unrelated business taxable income (UBTI) is increased by disallowed parking expenses.  Guidance provided within the Notice may be relied upon until the IRS issues proposed regulations on the issue.BackgroundPrior to the passage of the Tax Cuts and Jobs Act (TCJA), certain qualified transportation fringe benefits provided by an employer to an employee could be excluded from the employee’s gross income and still be deducted by the employer.  Such benefits include qualified parking, which is defined as parking provided to an employee on or near the business premises of the employer, or on or near a location from which the employee commutes to work.The TCJA added IRC § 274(a)(4), which precludes employers from deducting expenses incurred in connection with certain qualified transportation fringe benefits, including parking.  Specifically, effective for expenses paid or incurred after December 31, 2017, qualified parking expenses are not deductible unless the benefit is treated as taxable wages to the employee.Increase to UBTIThe TCJA also added IRC Section 512(a)(7), which requires an exempt organization to increase its UBTI by any amount for which a deduction for qualified parking is not allowed under IRC Section 274. Notice 2018-99IRS Notice 2018-99 indicates that the method for calculating nondeductible parking expense depends on whether the employer pays a third party to provide parking for its employees or whether the employer owns or leases a parking facility where its employees park. For example, if an employer pays a third party to allow its employees to park at the third party’s parking garage or lot, the disallowed amount is generally the employer’s total annual expense for the employee parking less any amounts treated as compensation to the employee. On the other hand, if the employer owns or leases all or a portion of a parking facility where employees park, the disallowance may be calculated using any reasonable method.   However, the IRS does provide within the Notice a four-step method that may be used for calculating the disallowed parking, which the IRS will treat as a reasonable method. Tax Planning OpportunitiesAlthough the interim guidance issued by the IRS is welcome, there are still unanswered questions.  However, IRS Notice 2018-99 does provide sufficient guidance to allow most exempt organizations to do tax planning with regard to UBTI from disallowed parking expense.For example, if the employer pays a third party to allow employees to park in the third party’s parking lot, and the employees pay for the parking using a pre-tax wage reduction option, the employer’s UBTI is based upon the amount of employees’ income exclusion.   If the employer were to eliminate the pre-tax wage reduction program, the employer would also eliminate the parking expense disallowance and related UBTI.Another opportunity is the special rule enabling many employers who own or lease the parking facility to retroactively reduce the amount of disallowed parking expenses.  Specifically, under this rule, employers have until March 31, 2019 to change their parking arrangements to reduce or eliminate the number of employee reserved spots, which in turn, may reduce the disallowed parking expense (and UBTI).Perhaps the biggest opportunity involves the “primary use test”.   That is, after accounting for reserved employee spots, if more than 50% of the parking is used by the general public, then the total remaining expense associated with parking does not increase UBTI. Please contact your Schneider Downs representative with any questions or if you would like to discuss opportunities to minimize the increase to UBTI from this change. ### Employee Benefits Due Diligence in Mergers and Acquisitions When conducting due diligence in connection with a potential merger or acquisition, companies too frequently treat employee benefits as an afterthought. In reality, employee benefit plans are a common source of substantial hidden liabilities. Employee benefit specialists should be engaged early in the due diligence process to flag potential liabilities and craft appropriate workarounds.      Proper employee benefit due diligence can catch issues such as the following: Qualified plan defects. Any retirement plan that fails to meet the tax code’s convoluted qualified plan rules is a ticking time bomb of potential liability.  Careful due diligence can flag known qualification defects and advise appropriate steps to avoid inheriting any associated liability. IRS reporting failures. Many employee benefit plan sponsors fail to properly file required reports with the IRS, such as Form 5500 (annual return of an employee benefit plan) or Forms 1094-C and 1095-C (reporting offers of health coverage). Late filing penalties, which accrue each day, can become substantial over time, and unless proper steps are taken, this liability may pass on to the successor employer. Employer “pay or play” penalties. Companies that employ 50 or more full-time employees are subject to the Affordable Care Act’s “pay or play” provisions, which impose substantial tax penalties if the employer fails to offer adequate health coverage to its full-time employees. Employee benefit specialists can help assess the risk of penalties and advise on appropriate representations and warranties to protect the successor employer. Fortunately, most employee benefit-related liabilities can be avoided if caught early enough in the due diligence process. Once areas of potential liability are flagged, employee benefit specialists can advise on appropriate protective measures. Failure to engage employee benefit specialists early enough can result in inheritance of plan-related liabilities that in some cases may go on to infect the acquiring entity’s own plans. ### Does Santa Pay the Gift Tax? Does Santa Receive Wages of Cookies and Milk? ‘Twas the night before Christmas and all through the house, not a creature was stirring… except for St. Nick’s elf-accountants, who couldn’t wait to calculate his potential gift tax.CNBC reports that this year, U.S. holiday retail sales from November 2018 through January are expected to rise to about $1.10 trillion, up from $1.05 trillion in 2017.Are those elves being paid for overtime?Today, 323.13 million people live in the U.S. Let’s assume Santa is visiting every U.S. household this year, and each individual will receive gifts of equal value – no coal. This means that, if Santa’s sleigh can hold $1.10 trillion in gifts, he will distribute $3,404.20 of gifts to each U.S. resident.Many of us enjoy exchanging gifts throughout the year, but we seem to take for granted that these exchanges are not taxable. Gifts are ordinarily taxable to the gift-giver. This allows the beneficiary to enjoy the benefit of the gift, tax-free. However, as several of my colleagues have sagaciously written in recent weeks, there is a gift tax exclusion under which gifts are not taxable to anyone, up to a certain amount per beneficiary.How many gifts may a gift-giver give before a gift tax must be paid? Under the current gift tax exclusion, up to $15,000 per beneficiary.This means that Santa, giving only $3,404.20 per person, per year, falls under the gift tax exclusion and pays no gift tax.Well, that’s it! Merry Christmas to all, and to all a good….Wait a minute…. What does the IRS make of all the cookies and milk provided by those who anxiously await Santa’s arrival?The iconic Commissioner v. Duberstein explains that a “gift” is something given without the expectation of or in response to receiving something in return. If Santa tumbles down our chimneys only because he expects to receive his wages of cookies and milk, then the presents he delivers are not gifts. Instead, this Christmastime exchange would be Santa’s business transaction, and taxpayers would then report $3,404.20 of taxable income for the presents they receive!Fortunately, even if Santa does look forward to receiving cookies and milk while delivering toys to tots, the IRS likely does not classify this exchange as taxable.O’Hare v. Commissioner states that in our society, when a donor “performs a kindness” without any expectation of compensation, sometimes the beneficiary may wish to express his thanks in a tangible manner. When the value of the benefit given so outweighs the token of thanks, such that the parties understand the transaction is not payment in exchange for services, the IRS does not recognize the token.So what does this mean for us?Every Christmas Eve, some households set out cookies for Santa, knowing that he will soon bring them $3,404.20 in presents. The average cost to make a dozen cookies is between $2-3. A gallon of milk, around $3. So, in exchange for over $3,000 of gifts, Santa receives from some households less than $6 of cookies and milk. Whether spurred by the holiday spirit or simply hoping that Santa will visit them, too, the IRS disregards the $6 of milk and cookies we set out for Old St. Nick. Milk and cookies are merely our token of thanks, rather than payment, for packages delivered by Santa Claus.So long as Santa’s presents are truly donative in nature, and milk and cookies are a mere token of our gratitude, this remains a gift exchange that qualifies for the annual exclusion and raises no income tax consequences. Ho, ho, ho!Stay tuned for more details in “Does Santa Pay the Gift Tax? Does Santa Receive Wages of Cookies and Milk?” Part II: Year-End Gift-Giving Strategies ### Year-End Giving from IRAs: Traps to Avoid The holiday season is a time of giving and reflection. Charitable contributions are a time-honored way of achieving one’s philanthropic goals while enjoying certain tax benefits along the way. For IRA owners over age 70½, one of the most efficient ways to give is known as the qualified charitable contribution (“QCD”). But look out. IRA owners who have control over the checkbook need to be aware that the QCD rules come with a trap for the unwary. Here’s how a QCD works. Taxpayers over age 70½ are obligated to take required minimum distributions (“RMDs”) from their IRA accounts each year. Normally, these amounts are included in the owner’s income, and the owner is entitled to a charitable deduction if he or she donates the RMD to charity. But since an owner’s charitable contribution deduction is limited by certain provisions in the tax code, the deduction does not fully offset the reported income.   By contrast, with a QCD, the custodian of an IRA transfers money directly to a charity chosen by the owner. The amount transferred, up to $100,000 per year, is not included in the IRA owner’s income, and counts toward his or her RMD for the year. This is a win-win result for the owner and the charity.         Taxpayers with control of their IRA checkbooks need to be careful when writing checks to charities this time of year. This is because the rules are written such that only the IRA custodian, and not the IRA owner, can make a QCD. This is contrary to the rules for other types of charitable gifts and can lead to unintended tax consequences. For example, assume that an IRA owner mails a check to a charity on December 23 with the intention that the donation qualify as a QCD and count toward the RMD for the year. The charity deposits the check in its bank account on January 2, and the IRA custodian transfers the funds from the IRA account to the charity’s bank account on January 3. Under ordinary charitable deduction rules, the gift would be deemed complete when the owner mailed the check on December 23. But under the QCD rules, since no action was taken by the custodian until January 3, the QCD will not be treated as made until the second year. The owner thus failed to take the required RMD for the first year and will be subject to penalties for failure to do so. So what can an IRA owner with control of the checkbook do to avoid this result? First, since charities receive a high volume of donations during the holiday season, it is wise to avoid last-minute gifting to allow for sufficient processing time. It may also be a good idea to call the charity to obtain its assurances that the check was received and will be deposited before year-end. In addition, IRA owners with control of the checkbook may nonetheless wish to consider having the custodian mail the check directly to the charity. Doing so would cause the QCD to be complete as of the date of the mailing. Taking these precautions can ensure that year-end gifting is accomplished without any unwelcome holiday surprises.    ### Don't Acquire the Data Breach - The Importance of Cybersecurity and Information Technology Due Diligence Co-Authored by: Eric FairAs businesses evolve through mergers and acquisitions (M&A), the ever-changing technology landscape continues to provide a challenge to companies and their acquirers. This highlights the ongoing need to perform cybersecurity (cyber) and information technology (IT) due diligence, since it’s critical to understand the nature and significance of the targeted business’s vulnerabilities, the impact of these vulnerabilities and the existing cyber program in place to mitigate potential threats.Know Before You AcquireAcquirers must take a risk-based approach to IT due diligence and have a process in place to evaluate the current threat landscape to identify any underlying threats to the business being acquired. The landscape may vary by industry or region, and higher risk transactions require a greater level of scrutiny, but the process can be applied to other businesses in the portfolio and used when assessing new M&A opportunities.For highly active private equity firms, it’s critical to continuously inject IT due diligence into the transaction lifecycle. This allows such firms to engage cybersecurity or other experts at critical points to more effectively identify and mitigate risk to their potential and existing businesses.When and What to AssessKnowing when to inject the right experts is a critical component to any well-run M&A due diligence strategy. Here are a few key indicators to consider when making the decision to inject cyber or other IT experts: Technology is Core to the Business – If the target organization is a technology software or solution provider, IT due diligence is a must. Engage IT experts who understand software development best practices and application security to ensure the systems were built using sound practices and are free from vulnerabilities. Ensure you consider the target organization’s usage of open-source software and code within their solution.   Secret Recipes Need to Stay Secret – Chances are the target organization may have a unique method, process or technology that’s helped it gain its competitive edge over the years. In that case, potential acquirers may want to know if the target organization has been hacked previously or, theoretically, how easy it would be to hack into their organization. Engage cyber-experts who can review company IT systems and logs to look for indicators of previous breaches or compromise. Also, consider engaging cyber-experts to perform a corporate network penetration test to see how they hold up to common hacker methods.   Big Brother is Watching – If the target organization is subject to regulatory oversight, there are various risks the organization may be subject to, including legal, financial and operational. For example, in the healthcare industry, noncompliance with Health Insurance Portability and Accountability Act rules can open an organization to major fines as well as additional regulatory oversight and scrutiny.   Usage of Consumer Data - The impact of emerging regulatory frameworks, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), may have a substantial unrealized future impact on the target organization. Current business practices may be unlawful or impermissible in the future, as the privacy and legal landscape evolves. Other Areas to AssessIn the ongoing effort to mitigate IT risks in M&A, other areas that acquirers may consider assessing include: Cybersecurity program/framework adoption (NIST, ISO, CIS Top 20, etc.) Third-party risk management and supply chain risks Security controls for protection and detection of threats Security and privacy controls in products and services offered Sensitive data security controls Data privacy programs Prior risk assessments History of data breaches Potential ImpactsThe failure to assess IT risks during M&A transactions can cripple a business’ reputation and future growth before it even starts, through unforeseen and costly technology integrations, unexpected liabilities, inherent data exposure/breach and overall increased enterprise risks. An effective IT due diligence program, then, could have a major impact on the value the acquirer places on the target company and the overall structure of the transaction.If you have questions related to M&A or IT due diligence for an upcoming transaction, we welcome the opportunity to discuss your specific situation. ### California Sales and Use Tax Collection Requirements California is the latest state to require out-of-state sellers to collect sales (use) tax if the seller reaches certain sales thresholds. California’s thresholds of $100,000 in sales or 200 separate transactions are consistent with those established in the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. last summer. The thresholds are based on activity in the current or preceding calendar year.  California’s collection requirements on out-of-state sellers are effective on April 1, 2019. California is also applying the thresholds to a seller’s obligation to collect district sales/use tax. Historically, sellers were only required to collect the district tax if they were “doing business” in the district by way of an office, employee or other nexus creating activity. Effective April 1, 2019, sellers that have $100,000 in sales or 200 separate transactions in a district are required to collect the local sales/use tax. This change will impact in-state and out-of-state sellers alike and may require an update to the seller’s tax collection software or reporting procedures. More information on California’s sales/use tax requirements can be found on the California Department of Tax and Fee Administration (CDTFA) website at - http://www.cdtfa.ca.gov/industry/wayfair.htm Please contact our State and Local Tax team if you have any questions concerning your sales and use tax collection obligations. ### IRS Clarifies Uncertainty Surrounding Lifetime Gifting and Increased Basic Exclusion Amount Under TCJA Over the past year, Schneider Downs has been busy tracking the drafting, passage and, as of late, the Internal Revenue Service's implementation of the Tax Cuts and Jobs Act ("TCJA"). From an Estate and Trust perspective, few changes under the TCJA have generated as much buzz as the doubling of the estate and gift tax basic exclusion amount. Thanks to the TCJA, taxpayers are now able to gift their designated beneficiaries up to $10 million, which when adjusted for inflation equals $11.18 million in 2018. But despite the ability to now shelter twice as much money from the estate and gift tax as taxpayers could under prior law, estate planners have been cautious to recommend taking advantage of these increased limits due to a key expiration provision included in the post-TCJA code. Under the estate and gift tax regime, there are, practically speaking, two ways a person can take advantage of the basic exclusion amount. A taxpayer can either (1) die and take the full amount of the exclusion against their taxable estate, or (2) make various gifts throughout their lifetime, and to the extent that any gift exceeds the annual gift tax exclusion amount, the taxpayer then utilizes their basic exclusion amount during life. The problem for tax planners, until recently, has been that the increased exclusion expires on December 31, 2025. The issue then, is that if the taxpayer utilizes the increased exclusion during his or her lifetime, but then dies after December 31, 2025 (when the basic exclusion reverts back to $5 million as adjusted for inflation), the taxpayer could be forced to pay estate tax on the additional amounts gifted. The practical effect of the expiration provision meant that, in order to take advantage of the exclusion a person had to die after December 31, 2017 but before January 1, 2026. On November 23, however, the IRS released proposed regulations which, if made permanent, would permit a taxpayer to gift the entire increased basic exclusion amount without being penalized if the taxpayer passes away after the basic exclusion has reverted back to $5 million as adjusted for inflation. In basic terms, what the IRS has said is that if a taxpayer passes away after the basic exemption has reverted back to pre-TCJA levels, and the taxpayer owes estate tax because of gifts made in reliance on the increased basic exclusion amount, a credit will be applied to offset the tax liability incurred by the additional gifts. The result: estate planners can now advise clients to gift up to the increased basic exclusion amount without the uncertainty of the taxpayer surviving the expiration of the TCJA provision. It is important to remember that proposed regulations can change before being finalized and should not be relied upon.  However, these new regulations come as welcome insight into the IRS thought process and how it intends to provide certainty to long-range estate plans in a tax environment with few long-term laws. ### SOC 2 Examinations - What Are the Trust Services Criteria and Categories? The 2017 Trust Services Criteria (TSC), which superseded the 2016 Trust Services Principles and Criteria (TSPC), serves as the control criteria for attestation engagements to assess and report on controls for information and systems like System and Organization Control (SOC) 2 and SOC for Cybersecurity examinations. On December 15, the principles were officially renamed to categories. Along with the name alteration, another critical change was the control criteria’s integration with the 2013 COSO Framework, which stands for the Committee of Sponsoring Organizations of the Treadway Commission. Integrating this framework into SOC 2 reporting was done with the intent of expanding the assessment environment. The 2013 COSO, which has five components and 17 principles, is used to assess the design, implementation and maintenance of internal controls and evaluate their effectiveness.Similar to the prior version of the TSPC, the new TSC still consists of 5 categories: security, availability, confidentiality, processing integrity and privacy. In addition, there is a set of criteria aligned to all five categories known as the Common Criteria.Each category has a specific set of criteria to meet with corresponding points of focus. The American Institute of Certified Public Accountants (AICPA) defines them as the following: Security - Information and systems are protected against unauthorized access, unauthorized disclosure of information, and damage to systems that could compromise the availability, integrity, confidentiality, and privacy of information or systems and affect the entity’s ability to meet its objectives.   Availability - Information and systems are available for operation and use to meet the entity’s objectives.   Processing integrity - System processing is complete, valid, accurate, timely, and authorized to meet the entity’s objectives.   Confidentiality - Information designated as confidential is protected to meet the entity’s objectives.   Privacy - Personal information is collected, used, retained, disclosed, and disposed of to meet the entity’s objectives. The Common Criteria are mandatory for a SOC 2 engagement and, since the Common Criteria is based off of the security category, every organization undergoing a SOC 2 engagement should include security at a minimum. For the additional categories, the criteria are made up of the Common Criteria plus the additional criteria specific to the said category.The additional four categories should be considered based on the industry the organization operates in, the types of services the organization provides and contractual requirements from customers, as well as the information and assurance needs of key stakeholders. The 2017 TSC can also be used as the framework for a SOC for Cybersecurity examination. For more information on these reports, please refer to our recent article, SOC for Cybersecurity Reports: Overview and Comparison to SOC 2 Reports.In addition to contractual requirements from customers, organizations can choose whether or not to include the additional four categories into the scope of their SOC 2 examination. If so, they may choose any combination of the four categories they deem appropriate, based on the factors described above.At a high level, there are some industry-specific and data-specific factors that should be considered when deciding which categories to include. For instance, software-as-a-service (SaaS) and cloud computing organizations should consider the availability category. Organizations that process transactions on behalf of their customers may consider including financial controls within the processing integrity category. Organizations that maintain, store and/or process highly sensitive customer data that does not fall under the purview of privacy regulations – such as HIPAA or GDPR – should consider including the confidentiality category. Organizations that maintain, store and/or process personally identifiable information and/or protected health information should consider including the privacy category.In short, management and key stakeholders of an organization considering undergoing a SOC 2 examination should understand and determine which categories are most relevant to the services they provide and the data they process and store. The organization can consult with auditors to determine which criteria would be most relevant for inclusion in the SOC 2 report. For additional information on SOC 2 examinations, visit Schneider Downs’ Frequently Asked Questions about SOC Reports.In addition, please contact us if you’re interested in learning about our SOC 2 and SOC for Cybersecurity examinations and how we can help you meet your customers’ and key stakeholders’ requirements. ### Postcard from the AICPA Global Manufacturers Conference The Schneider Downs Manufacturing Industry Focus Group sent members to the AICPA Global Manufacturers Conference in mid-November.  The three-day conference covered a variety of topics including an economic outlook, tax reform update, the Blockchain impact, accounting and regulatory matters, among several others.  One of the more interesting sessions covered the manufacturing workforce and the challenges in finding skilled labor. Spoiler alert – this session did not reveal the key to finding talent to a group of accountants.  Nor did it suggest that the skilled labor shortage is no longer an issue and that there is now a strong pipeline of talent entering the workforce.  Quite the opposite, in fact.  However, Noel Ginsburg, the CEO of InterTech Plastics, based in Denver, Colorado, shared the relatively recent success of CareerWise Colorado (“CareerWise”), which established the first statewide youth apprenticeship program in the United States.The CareerWise system was modeled after the apprenticeship system used in Switzerland.  Switzerland’s academic curriculum for grades K-10 is similar in nature to the U.S. education system.  However, the student’s work experience starts around age 15 and lasts two to four years as a hybrid structure of classroom education and vocational training.    The CareerWise website notes that in Switzerland, there are over 230 apprenticeship occupations, with 40% of companies participating in the program.  An astounding 70% of Swiss students choose apprenticeships, with 30%  eventually working for the company they trained with. To address the skilled labor shortage in the United States (specifically Colorado), Mr. Ginsburg teamed with politicians, business leaders and educators in Colorado who traveled to Switzerland to study the apprenticeship model and brought their learnings back to Colorado and began CareerWise.  The CareerWise apprenticeship is a three-year program that provides students with the skills to enter the workforce upon completion if they choose not to pursue a higher education.  Apprenticeships are offered in five areas, one of them being advanced manufacturing. CareerWise offers students a paid apprenticeship and the opportunity to earn debt-free college credits.  The CareerWise website lists approximately 75 companies that participate in the program, including recognizable names like Home Advisor, Otter Products and Janus Henderson.  The CareerWise program is not intended to divert students away from pursuing a higher education.  Rather, it is designed to provide students with opportunities to have a successful careers without a four-year degree while providing employers with a pipeline of talent. Mr. Ginsburg mentioned that leaders from approximately 20 states have visited Colorado to learn about CareerWise in an effort to help employers fill the skills gap in their respective states.  It will obviously take time to implement these programs across the country, but the success CareerWise is having appears to be a good first step. ### Amazon Money Laundering Scam An apparent fraud scheme has been uncovered that involves scammers’ use of CreateSpace, Amazon’s self-publishing service, to sell fake books under stolen identities. The scammer allegedly then buys the books with stolen credit cards and keeps 60% of the purchase price, which is what Amazon traditionally gives its authors.The pages of the books have no real text, but instead are filled with computer-generated nonsense, and priced at hundreds of dollars each. This is likely intentional to help prevent average customers from finding the books using title searches and/or purchasing by accident. The scheme can be attractive to thieves because it’s a relatively efficient way to launder money directly into a bank account linked to CreateSpace instead of using cryptocurrencies.After receiving a Form 1099 indicating that he made over $20,000 selling books through a CreateSpace account, legitimate author Patrick Reames spoke with KrebsOnSecurity regarding his experience with the fraudulent activity. The thief had apparently used Mr. Reames’s Social Security number to set up the CreateSpace account and convinced Amazon they were him. Mr. Reames has since tried to get Amazon to issue an adjusted 1099 (the process is still ongoing as we go to press), but it’s been difficult for the retail giant to prove whether Mr. Reames did or did not receive the money as recorded.Amazon has stated that it is committed to protecting the security of its users, and urges anyone receiving an incorrect 1099 to contact 1099@amazon.com to begin an investigation.If you have any questions regarding fraud, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com. ### Department of Education "Raises a Warning Flag" on Student Debt In a recent speech at the Federal Student Aid Training Conference in Atlanta, U.S. Secretary of Education Betsy DeVos warned that the growth of student loan debt held by the federal government is growing in an unsustainable manner. During her speech, Ms. DeVos noted that, “It took 42 years—1965 until 2007—for the student loan balance to grow to 500 billion dollars. It took only six years for the loan balance to double—to one trillion dollars—in 2013. One-seventh the amount of time it took to get to 500 billion.” What does this mean to institutions of higher education? The Trump administration has signaled several times that it is seeking reform by making changes to the Higher Education Act of 1965 though pending legislation called Promoting Real Opportunity, Success, and Prosperity through Education Reform, or PROSPER. The bill, which has been stalled in committee for much of 2017 and 2018, is intended to address some of the concerns raised by Ms. DeVos. What this means for students and institutions are potential changes to the types of programs and the benefits under them, such as reducing the overall package to one loan, one grant and one work-study program, which would assist in streamlining the process of granting and managing the programs. In her comments, Ms. DeVos signaled that the federal government would seek to change its practices and become “a more responsible lender.” She also challenged institutions of higher education to “become honest about their individual roles in the cost-value proposition,” adding that, “Every school should focus on helping each student find the right pathway, and they should help students graduate with high-quality career prospects and with low debt.” Institutions know this challenge is not new, but in the current climate, cost management is not easy when attempting to attract faculty, manage fund-deferred maintenance and invest in future programs and technologies. Benchmarking through use of the Composite Financial Index or following other metrics can assist the process, but ultimately it requires that institutions continue to think differently about how they can expand their revenue prospects by responding to today’s needs and market. Institutions, then, should be focused on not only their mission, but also on their brand and how that brand is received in the market. The brand will not only deliver today’s students, but is also key to lifelong engagement of alums, benefactors and employers so the mission can be passed along to the next generation. ### Reminder: Increased Limit for Charitable Deductions With the holiday season upon us, it is time to look back at our year and to look forward to achieving our goals for 2018.  For many, that means reaching into our pockets and giving back to our communities through charitable contributions.  The holiday spirit is a spirit of giving. How can we think strategically about the amount we give at year-end to ensure that we also enjoy the tax benefits from charitable giving?Prior to 2018, charitable contributions of up to 50% of an individual’s AGI (adjusted gross income) could be deducted if the taxpayer is eligible for itemized deductions.  Now, according to the Tax Cuts and Jobs Act, the charitable deduction limit is 60% of a donor’s AGI for cash contributions to public charities (as well as to private operating foundations and certain governmental units).The new 60% contribution limit applies to cash contributions made in taxable years 2018 through 2025. If the holiday season inspires you to give more to the organizations you care about, remember that now, you can deduct contributions up to another 10% of your AGI.  If by chance you exceed the 60% limitation, the excess can be carried over to each of the five succeeding tax years. Remember that the substantiation requirement for donations in excess of $250 is still in place.  Be sure that you receive a contemporaneous written acknowledgement from the charitable organizations you support. ### When is a Disaster a Tax Deduction? It’s not your imagination--we are experiencing more weather and climate disasters than ever before. According to the website www.climate.gov, in 2017, “the U.S. experienced a historic year of weather and climate disasters. In total, the U.S. was impacted by 16 separate billion-dollar disaster events.” These included tornadoes, floods, wildfires, hurricanes, etc.With all of the related casualty losses caused by these natural disasters, you probably wonder when losses caused by catastrophic events are deductible on your personal income tax return. As with most deductions beginning in 2018, there are changes to what had been long-standing rules.As a refresher, before the Tax Cuts and Jobs Act (TCJA) passed in December, 2017, a deductible casualty loss was damage to, destruction of or loss of property resulting from an identifiable event that was sudden, unexpected or unusual. Often times, these losses were weather-related, but they could also have been from accidents, fires, theft, etc.In tax years prior to 2018, taxpayers were able to deduct uncompensated personal casualty losses of the lesser of:a. adjusted basis in the property right before the loss event, or b. decrease in fair market value (FMV) of the property as a result of the loss eventThe casualty loss amount was always net of any insurance reimbursement that was received or expected to be received.A further limitation was applied to the overall loss amount so that the final deduction amount, as shown above, was reduced bya. $100 per casualty or theft event, and b. 10% of Adjusted Gross Income (AGI)These losses were reported on Form 4684, which would be attached to a taxpayer’s individual income tax return. The process, as described, was rather cumbersome and the limitations often proved to be too great (especially the 10% of AGI floor) for much in the way of allowable deductions.To ease this burden placed on taxpayers, the IRS issued two Revenue Procedures (Rev. Proc. 2018-8 and 2018-9) in early 2018 that offered some relief from the long-established process of reporting casualty losses. Rev. Proc. 2018-8 put in place safe harbors along with de minimis methods to compute casualty damage amounts to personal-use residences. Rev. Proc. 2018-9 dealt only with areas in southern states that had damage resulting from one of the three 2017 hurricanes (Harvey, Irma, and Maria). Prior to the end of 2017, the 10% of AGI limitation had been lifted for losses from those three hurricanes to further ease the burden those weather-related events had placed on U.S. taxpayers.Fast forward to December 22, 2017, when President Trump signed the Tax Cuts and Jobs Act into law, which significantly curtailed personal casualty losses for the tax years 2018 through 2025. The definition of a loss hasn’t changed; however, the TCJA includes language clarifying that personal casualty losses are deductible only when they are attributable to a federally declared disaster. FEMA provides a website (https://www.fema.gov/disasters) which lists 92 federally declared disasters for 2018, through the date of this article.Thus, a casualty loss resulting from the torrential rains/floods/landslides that were experienced in Southwestern Pennsylvania in the months of July through September are not eligible to be deducted, since these events were not labeled/declared a federal disaster. Recently, a client contacted Schneider Downs regarding extensive losses sustained in their family home as a result of flooding. Those losses were, sadly, not covered by their homeowner’s policy. We had the unfortunate task of explaining the new casualty loss regime, which provides no relief to those particular taxpayers.In conclusion, you might want to review your home and auto insurance policies, because the final safety net of a tax deduction will most likely not be available to most taxpayers.With all the changes enacted by the Tax Cuts and Jobs Act, you may wish to discuss matters related to this topic – or any others – with your Schneider Downs & Co. team. Please feel free to reach out with any questions. We are available to assist you. ### FDIC Information Technology Risk Examination (InTREx) Program Overview The FDIC’s Information Technology Risk Examination (InTREx) Program is its current information technology and IT operations examination procedures.  Originally introduced in 2016, InTREx takes a risk-based approach to performing examinations of IT.  By focusing examiner procedures on areas of elevated risk based on the institution’s IT Profile, the program should lead to a more efficient engagement for the institution and examiners. At the end of the InTREx examination, a composite rating based on the  Uniform Rating System for Information Technology (URSIT) of the Federal Financial Institutions Examination Council (FFIEC), is produced to quantify the effectiveness of the institution’s IT risk management practices and condition. Let us delve deeper into the different components of the InTREx Program The Information Technology Profile (ITP) questionnaire, used to scope the examination, will be provided to the institution approximately 90 days before a scheduled examination.  The ITP contains 29 questions which will assist the examiner with scoping the examination procedures. Approximately 45 days prior to the examination, an IT request letter will be provided listing the items the examiners will need to review. This listing will be scoped based on the ITP responses. The InTREx examination core modules, defined by the FFIEC’s URSIT methodology, cover the four following IT functions: Audit, Management, Development & Acquisition, and Operations & Maintenance. A URSIT component rating is assigned to each of these modules as part of the InTREx examination, and these component ratings are then used to develop an overall composite rating. URSIT ratings are on a scale of 1-5 with 1 being the highest rating and degree of least concern; and 5 being the lowest rating and degree of most concern.  The examination procedures for each of the core modules are based on the FFIEC’s IT Work programs associated with the functions listed. Additionally, workpapers covering Cybersecurity Preparedness and Information Security Standards are also included in the program.  The workpaper results are not assigned a URSIT rating but comments on adherence to Information Security Standards and Cybersecurity Preparedness are included in the final report.  The URSIT ratings, comments and management action plans are used by the FDIC determine the degree of ongoing supervisory oversight for IT functions. To prepare for a FDIC InTREx examination, institutions should perform the following steps. Review the FFIEC IT Examination Procedures for the InTREx core modules Complete the FFIEC Cybersecurity Assessment Tool and identify a target maturity level. As a general practice management, auditors, and compliance officers at financial institutions, should be familiar with the FFIEC IT Examination Procedures and Cybersecurity Assessment Tool as they form the core of many IT related examinations at financial institutions (such as the InTREx Program).  Incorporating FFIEC guidance into internal audit programs can help prevent surprises from popping up at examination time. Ask Schneider Downs Cybersecurity Advisors or your Schneider Downs representative about how to prepare for IT related examinations (including InTREx) that might impact your institution or organization. ### New Jersey and New Mexico Offer Tax Amnesty Programs New Jersey – Beginning November 15, 2018 and running through January 15, 2019, the New Jersey Division of Taxation is offering tax amnesty for eligible taxpayers to resolve any outstanding tax liabilities administered by the New Jersey Division of Taxation during the period of February 1, 2009 through September 1, 2017.  Taxes not administered by the New Jersey Division of Taxation are not eligible for the amnesty program.  In accordance with the terms of the program, taxpayers must remit the full amount of the tax due, one-half of the related interest, and file any required returns by the January 15, 2019 deadline.  The program is not available to taxpayers under criminal investigation, or those who have been charged by a county prosecutor or the Attorney General for a New Jersey tax matter.  Taxpayers who have filed an administrative or judicial appeal related to a tax assessment may participate in amnesty if they withdraw the appeal, waive all rights to related future appeals and receive written approval from the Director of the Division.  The programs imposes a 5% penalty to eligible taxpayers not participating in the amnesty program. New Mexico – The New Mexico Taxation and Revenue Department has instituted a fresh start program for small businesses and individuals with unreported or underreported taxes.  Those who qualify and finalize enrollment in the program by the December 31, 2018 deadline may get all penalties and related interest forgiven, provided that they pay the required taxes within 180 days. The Department is determining eligibility using the following criteria: The taxpayer demonstrates a willingness and ability to comply with New Mexico’s tax laws. The taxpayer demonstrates a system of internal controls and business records that are acceptable to the Department (for most taxpayers, this may become income identified on the federal return). The taxpayer’s records are available to conduct the income disclosure. The taxpayer has not been the subject of a criminal tax investigation. The taxpayer is not in a legal dispute with the Department over the taxability of the transactions that would be included in the program. The taxpayer is not including periods that are not currently under audit or already assessed. Additional questions about the program of eligibility can be directed to the Department at (505) 841-6216, or contact your state and local tax professional for more information.  ### Is My Home Mortgage Interest Still Deductible? You’ve probably heard that significant changes have come to the tried-and-true Schedule A itemized deductions methodology we’re all familiar with. One such modification is in the area of deductibility of mortgage, home equity loan and home equity line-of-credit (HELOC) interest. Beginning with tax year 2018 and continuing through 2025, the standard will be quite different than in the past. To understand the changes, it makes sense to summarize the prior rules. Mortgage interest then For loans entered into after October 13, 1987, through December 15, 2017, homeowners were allowed to deduct interest charged on mortgages valued up to $1 million1 on their principal or second home, as long as the debt was secured by the home(s). This was defined as “qualified residence” debt. The main restrictions on this deduction were the overall indebtedness limit and that this deduction didn’t apply to investment property, only a qualified residence. Additionally, interest of up to $100,000 on home equity debt was eligible for a deduction, provided the fair market value of the home was more than the total of mortgage debt and home equity debt. What’s more, the home equity interest didn’t need to be tied to specific home improvements. This means, interest stemming from a home equity loan used to purchase an auto, pay college tuition or pay off credit card balances was deductible on Schedule A as long as the requirements related to debt security and fair market value were met. Mortgage interest now Beginning with tax year 2018, interest on loans entered into after December 15, 2017, can only be fully deductible for those mortgages with total principal of $750,000 or less. For greater amounts, interest will be deductible on a pro-rata basis.  For example, if a 2018 loan is entered into for a $1 million balance, only 75% of the interest will be deductible ($750,000 / $1,000,000). The requirement that the mortgage interest be tied to a principal residence or second home, and that the debt is secured by the home(s), is still in place. Home equity or HELOC interest has been suspended as of that same date when total indebtedness is more than $750,000 and/or when the equity loan or line of credit isn’t used to buy, build or substantially improve the taxpayer’s home that secures the loan. No longer, then, can a taxpayer enter into a home equity loan to pay a child’s college tuition and deduct that interest. Mortgage interest existing as of December 15, 2017 (“grandfathered” debt) Breathe a sigh of relief, as the new $750,000 limitation does not apply if your mortgage loan was in place prior to the changeover date. You may still deduct mortgage interest on debt up to the $1 million ceiling. Another important point on the “grandfathered debt” is that if you refinance, you will still qualify for the old $1 million limit. Home equity or HELOC interest for loans in place as of December 15, 2017, however, must be examined to ensure that those proceeds were used to buy, build or substantially improve your home. If they were used to pay personal debt, they’re no longer deductible for tax years 2018 through 2025, so it’s important to let your tax preparation team know how the proceeds from home equity debt were used. While Form 1098 may call it a home equity loan, it may actually be a “qualified residence loan” under the IRS definition. With all the changes enacted by the Tax Cuts and Jobs Act, you may wish to discuss matters related to this topic – or any others – with your Schneider Downs & Co. team. Please feel free to reach out with any questions, as we are available to assist you. 1 Dollar amounts quoted in this article relate to all taxpayer filing statuses, except for “Married Filing Separately,” which are 50% of the loan amounts reflected above. ### Sales Tax Due Diligence (A Deeper Dive) As noted in our previous Our Thoughts On article, sales tax can be complicated in the context of a buying or selling an entity, and proper diligence is necessary to ensure that the buyer is made aware of known liabilities and potentially unknown liabilities.  A sales tax due diligence process typically begins with a review of the target company’s sales tax returns to determine where the company is currently filing and the tax treatment of its sales. A review of the target’s sales by state is conducted for a period of years to determine where its customers are located and, potentially, where it operates.  It is also important to review other available resources including the company’s tax policies and procedures and the company’s website to gain an understanding of the products or services that the target sells to its customers.  A thorough understanding of what the target sells is necessary to determine whether the products or services are taxable in the jurisdictions where it operates. An interview of the target’s personnel or representatives should be conducted to obtain more knowledge of the business and its existing tax processes and procedures.  An in-depth understanding of the target’s activities across the country is necessary to conclude on where the target has sales tax nexus. Often, unbeknownst to many companies, sales tax nexus is created simply through: sales solicitation within a state, product delivery in company-owned vehicles, performance of services by employees, or storage of inventory. The interview with the target company’s personnel typically includes questions about the company’s procedures, including the company’s use tax accrual process and which personnel are making taxability determinations.  Current and prior sales tax audits should be reviewed to understand the issues raised, tax assessed, and the target’s process in place to comply going forward. Once the analysis is complete, a sales tax due diligence report is generally prepared summarizing any potential issues and estimating the tax exposure.  The report includes conclusions as to any weakness in the company’s tax processes and procedures, and might include a list of additional states where filing obligations exist. With the Supreme Court’s recent decision in South Dakota v. Wayfair, which authorized the states to impose economic nexus on businesses that have $100,000 in sales or 200 separate transactions in a state, nexus issues and tax liabilities will continue to expand for many businesses. Schneider Downs’ due diligence tax advisors assist buyers in assessing the sales tax posture of target companies and the associated risk of potential tax liabilities.  Our advisors recommend corrective action to resolve any issues or liabilities—from obtaining missing exemption certificates to applying for a voluntary disclosure with a state or states. A voluntary disclosure agreement involves a taxpayer coming forward with notification to a state (typically on an anonymous basis through a third party) that it has a tax liability.  In return for the taxpayer’s good faith effort to resolve its liability, the state will typically agree to a limited look-back period and in most cases will waive any penalties. Additionally, many states require that a purchaser (or seller) obtain a tax clearance certificate for an asset sale.  If the sale warrants a tax clearance certificate from the state, our advisors can provide an explanation of the process required to obtain the tax clearance certificate from the respective state(s). Sales tax due diligence can be a matter of “known knowns” or “known unknowns.”  If conducted properly, the diligence process will affirm the knowns and identify and quantify the unknowns.  A buyer that knows where its potential sales and use tax exposure lies is in a better position to act. Contact our experienced due diligence team to get ahead of sales tax issues that might affect your transactions. ### Higher Education and Construction; Does Building Green Still Matter? At a recent symposium held by the Master Builders’ Association of Western Pennsylvania (MBA), a panel of speakers tackled the question of whether green building and sustainability is still relevant. Key concepts and practices developed around the concept have existed now for almost 25 years, since the creation of the U.S. Green Building Council, with the Leadership in Energy and Environmental Design (LEED) rating system turning 18 this year and the Living Building Challenge building performance standards in existence for a dozen.So what roles do major project owners, such as colleges and universities, have in building green and developing long-range sustainability plans? It was not surprising to learn that one local institution of higher learning, the University of Pittsburgh (Pitt), believes it has the answer to that question and the plan, and the data to back it up.Dr. Aurora Sharrard, former executive director of the Green Building Alliance, is now Pitt’s Director of Sustainability. During the MBA discussion, she provided detail on Pitt’s sustainability plan, which focuses on stewardship, exploration, community and culture in 15 impact areas, and addresses everything from energy and emissions, landscape and ecology, and materials and waste, to water systems, health and well-being, global outreach and innovation. The University’s geographic massive footprint affords substantial opportunity to influence its areas of impact, as the main campus and four regional campuses account for 131 buildings, comprising 13.8 million square feet on 146 acres of property.Key goals within the Pitt plan include: Produce or procure 50% of the University’s electricity from renewables; Reduce landfill waste by 25%; Reduce greenhouse gas emissions by 50%; and Increase tree canopy by 50%, all by 2030. Additional goals include increasing sustainability-related service learning opportunities for students, serving meals in reusable containers, and the incorporation of sustainability into all student programming. The University currently has 12 LEED-certified buildings and is pursuing certification for nine current or recently completed construction and renovation projects.Dr. Sharrard also believes the financial data and that Pitt’s students and faculty, which number over 41,000, support its commitment to green building and sustainability. The University’s focus with any concept or practice within its plan is “triple bottom line,” a three-part framework comprised of social, environmental and financial components to evaluate overall performance and impact. Execution of the framework within the sustainability plan has so far resulted in a 12% reduction in energy use and a 14.5% reduction in water use, with overall financial savings estimated at approximately $27 million. Additionally, sourcing a 2018 National Union of Students survey of higher education students, Dr. Sharrard noted the following: 61% of students would accept a salary 15% lower than average to work in a job that contributes to positive social and environmental change 92% are concerned about the effects of climate change 85% would vote for a government that increased action to tackle climate change 76% responded that climate change will negatively affect them These responses clearly identify students with a strong support of climate change action, and the interest to work for companies with positive social and environmental records and change initiatives.The University’s focus on green building and sustainability not only directly correlates with its triple bottom line framework – so important to key stakeholders – but is also highly appealing to its primary consumer, its students. Pitt’s best-in-class sustainability plan and results clearly illustrate the importance of green building, and our region is fortunate to have a university committed to long-range sustainability. ### An Inflow of Opportunity: Tax-Free Repatriation of Foreign Source Income from a Controlled Foreign Corporation For more than fifty years, and subject to many exceptions, U.S. shareholders have been utilizing the controlled foreign corporation (“CFC”) as a vehicle to defer U.S. tax liability on income earned abroad. Internal Revenue Code (“IRC”) § 957 defines a CFC as a corporation in which certain U.S. shareholders own more than 50% of said corporation. Generally speaking, by investing in a CFC, corporate shareholders are capable of deferring recognition of U.S. tax liability virtually indefinitely (subject to some exceptions, such as Subpart F Income recognition).This virtually indefinite deferral of U.S. tax liability is possible because income earned by a CFC is taxable to its U.S. shareholders only at the time when the money is repatriated, or brought back to the United States, and not necessarily at the time the money is earned by the corporation.Repatriation of income is accomplished in two ways: either through dividend distribution or effective dividend distribution (e.g., a transaction where the CFC makes a certain type of investment in U.S. property, such as corporate stock or real property). These distributions result in income, and subsequently, potential tax liability to the U.S. shareholder.Prior to the enactment of the Tax Cut and Jobs Act (“TCJA”), IRC § 245, acting alone, allowed that a U.S. domestic shareholder in a CFC was entitled to a deduction only for the portion of a dividend distribution, or effective dividend distribution, which was attributable to U.S. source income. The U.S. corporate shareholder was required to pay tax on the portion of the dividend distribution that was attributable to foreign source income.However, the TCJA added IRC § 245A, or the participation exemption system, as additional incentive for CFCs to repatriate foreign earnings. The exemption allows U.S. corporate shareholders of certain CFCs to deduct the foreign source portion of a dividend received from the shareholder’s gross income. This deduction is in addition to the I.R.C. § 245 dividends received deduction for the U.S. source portion of the dividend.Thus, U.S. corporate shareholders effectively receive a one-hundred percent dividends received deduction for dividends from CFCs. This new system ultimately creates an opportunity for corporate shareholders to repatriate significant amounts of income, in the form of dividends or effective dividends, without paying any U.S. tax on it at all! Keep in mind that local countries may charge a withholding tax on payment of dividends.  Because there is no taxation in the U.S., this withholding will be an out-of-pocket cost.  In prior years, typically withholding could be claimed as a foreign tax credit. Note also that the IRS recently issued guidance regarding Section 956 and the participation exemption, treating deemed dividends under the IRC similar to actual repatriation and, to the extent the requirements are met, eligible for the participation exemption. We may see similar guidance issued with regard to all or some categories of Subpart F soon. ### How Does the Revenue Recognition Standard Affect Private Equity Firms? The creation and adoption of the Financial Accounting Standards Board’s (FASB) Codification Section 606, Revenue from Contracts with Customers, (ASC 606) is one of the most significant changes to the Codification that has occurred over the past several years. Private equity firms are in a unique situation because the adoption of ASC 606 will not only have an effect on the portfolio companies within the fund, but also the fund itself.Each portfolio company will need to evaluate the five-step model. Depending on the facts and circumstances of the portfolio company, the timing of revenue may significantly change. Portfolio companies that have historically recognized revenue at a point in time may start to recognize revenue over time and vice versa. A change in timing of revenue could have multiple effects, including but not limited to effects on debt covenants, attraction to potential purchasers, anticipated Earnings Before Income, Taxes, Depreciation, and Amortization (EBITDA), and more. Most portfolio companies measure their financial results using EBITDA; therefore, if there is a sudden fluctuation in EBITDA between periods, especially in the period of acquisition, conversations should occur with potential users of the financial statements.One may ask, how will ASC 606 affect the valuation of the fund? Depending on how the fund values its portfolio companies, a change in revenue recognition could have a significant effect on the valuation of the fund. For example, if an EBITDA multiple is used, or a discounted cash flow model, or a comparable company analysis, any fluctuation in revenue could have a direct effect on the valuation of the fund.Depending on how the partnership agreement is written, there could be additional effects including the allocation of profits and losses. The timing of revenue recognition has a direct effect on the amount of profits available for allocation, which in turn can have an effect on the carried interest calculation and therefore any clawback provisions.In addition, the allocation of management fees should be reviewed. If management fees are waived or offset and carried forward to a future period, ASC 606 will be applicable.As private equity funds are looking for potential acquisitions or soliciting potential acquirers, ASC 606 will have an impact. If potential acquisitions or sales occur during the transition period, fund managers should be alert when reviewing comparative financial information.In addition, contingent consideration is a topic that occurs in most acquisitions with private equity firms. Fund partners, deal teams, and management of portfolio companies should remain alert as to how contingent considerations could fluctuate with the adoption of ASC 606.For example, contingent consideration is usually based on a revenue or EBITDA target. These targets were more than likely based on guidance in place prior to the implementation of ASC 606. Depending on how significant of a transition ASC 606 has on the portfolio company, the targets may be met more quickly. This should be considered when budgeting cash flows.ASC 606 will have an effect on all industries; however, private equity funds and portfolio companies have unique effects that should be considered.For more information, please contact the Schneider Downs audit department. ### IRS Raises the Estate and Gift Tax Exemption for 2019 Property included in an individual’s estate at the time of death is subject to a tax by the federal government. There is, however, an exemption available to offset the tax, which is typically adjusted for inflation each year.Under the Tax Cuts and Jobs Act signed into law on December 2, 2017, the federal estate tax exemption amount was doubled from $5.49 million per person for 2017 to $11.18 million per person for 2018. This lifetime exclusion is yet again on the rise.In Rev. Proc. 2018-57, issued on November 15, the Internal Revenue Service announced a new limit for 2019. Now, an individual can pass $11.4 million to beneficiaries, tax free, whether at the end of his or her life or by gifts throughout. The number doubles to $22.8 million for married couples, though in order for the surviving spouse to claim the unused portion of their spouse, they must file an estate tax return and elect for portability.In addition to this exemption, there’s also an annual gift exclusion component that currently stands at $15,000 per person ($30,000 per married couple). This means that an individual is able to gift up to $15,000 per donee without using any of the lifetime exclusion amount. For example, if an individual gifts each of their three children $15,000, they will have gifted $45,000 without using any of their $11.4 million exclusion. This amount will remain at $15,000 for 2019; it should be kept in mind when gifting throughout the year in order to maximize tax benefits. ### IRS Releases Official Inflation-Adjusted Tax Figures for 2019 On November 15, 2018, the IRS issued Revenue Procedure 2018-57, which details the official inflation-adjusted tax rate schedules and other tax figures for the 2019 tax year. The highlights are as follows:Tax Rate Schedules: The tax rates remain the same as 2018, though the taxable income thresholds increased slightly.Married Filing JointlyIf taxable income is:                                                                        The tax amount is:Not over $19,400                                                                              10% of taxable incomeOver $19,400 but not over $78,950                                           $1,940 plus 12% of the excess over $19,400Over $78,950 but not over $168,400                                        $9,086 plus 22% of the excess over $78,950Over $168,400 but not over $321,450                                      $28,765 plus 24% of the excess over $168,400Over $321,450 but not over $408,200                                      $65,497 plus 32% of the excess over $321,450Over $408,200 but not over $612,350                                      $93,257 plus 35% of the excess over $408,200Over $612,350                                                                                    $164,710 plus 37% of the excess over $612,350SingleIf taxable income is:                                                                        The tax amount is:Not over $9,700                                                                                10% of taxable incomeOver $9,700 but not over $39,475                                             $970 plus 12% of the excess over $9,700Over $39,475 but not over $84,200                                           $4,543 plus 22% of the excess over $39,475Over $84,200 but not over $160,725                                        $14,383 plus 24% of the excess over $84,200Over $160,725 but not over $204,100                                      $32,749 plus 32% of the excess over $160,725Over $204,100 but not over $510,300                                      $46,629 plus 35% of the excess over $204,100Over $510,300                                                                                    $153,799 plus 37% of the excess over $510,300Head of HouseholdIf taxable income is:                                                                        The tax amount is:Not over $13,850                                                                              10% of taxable incomeOver $13,850 but not over $52,850                                           $1,385 plus 12% of the excess over $13,850Over $52,850 but not over $84,200                                           $6,065 plus 22% of the excess over $52,850Over $84,200 but not over $160,700                                        $12,962 plus 24% of the excess over $84,200Over $160,700 but not over $204,100                                      $31,322 plus 32% of the excess over $160,700Over $204,100 but not over $510,300                                      $45,210 plus 35% of the excess over $204,100Over $510,300                                                                                    $152,380 plus 37% of the excess over $510,300Married Filing SeparateIf taxable income is:                                                                        The tax amount is:Not over $9,700                                                                                10% of taxable incomeOver $9,700 but not over $39,475                                             $970 plus 12% of the excess over $9,700Over $39,475 but not over $84,200                                           $4,543 plus 22% of the excess over $39,475Over $84,200 but not over $160,725                                        $14,383 plus 24% of the excess over $84,200Over $160,725 but not over $204,100                                      $32,749 plus 32% of the excess over $160,725Over $204,100 but not over $306,175                                      $46,629 plus 35% of the excess over $204,100Over $306,175                                                                                    $82,355 plus 37% of the excess over $306,175Standard Deductions: The 2019 standard deductions also increased slightly to $24,400 (married filing jointly), $12,200 (single), $18,350 (head of household) and $12,200 (married filing separate).  For an individual who can be claimed as a dependent on another’s return, the standard deduction will be $1,100, or $350 plus the individual’s earned income, whichever is greater.  The additional deduction for married taxpayers 65 or over or blind remained the same at $1,300.  For a single or head of household taxpayer who is 65 or over or blind, the deduction increased to $1,650.Capital Gains: The 0% capital gains rate will now apply to adjusted net capital gain up to $78,750 (married filing jointly), $39,375 (single), $52,750 (head of household) and $39,375 (married filing separate). The 15% capital gains rate will apply to adjusted net capital gain over the 0% maximum threshold and up to $488,850 (married filing jointly), $434,550 (single), $461,700 (head of household) and $244,425 (married filing separate). The 20% capital gains rate will apply to adjusted capital gain over the 15% maximum threshholds.Kiddie Tax: The exemption from kiddie tax for 2019 will be $2,200. A parent will be able to elect to include a child’s income on their return if the child’s income is more than $1,100 and less than $11,000.Alternative Minimum Tax: For 2019, the AMT exemption amounts will be $111,700 (married filing jointly), $71,700 (single and head of household) and $55,850 (married filing separate). The excess taxable income above which the 28% AMT tax rate applies will be $194,800 for joint returns and $97,400 for unmarried individuals and married persons filing separately.  The exemption phaseout amounts will be $1,020,600 for joint returns and $510,300 for unmarried individuals and married persons filing separately.Qualified Business Income Deduction Limitations:  For 2019, taxpayers with taxable income above $321,400 for joint filers, $160,700 for single and heald of household filers, and $160,725 for married filing separate filers are subject to limitations on their QBI (Section 199A) deduction.Excess Business Loss Disallowance Rules: An excess business loss is the excess of aggregate deductions of the taxpayer attributable to the taxpayer's trades and businesses, over the sum of aggregate gross income or gain of the taxpayer plus a threshold amount. For 2019, the threshold amount is $510,000 for married individuals filing jointly and $255,000 for all other individuals.For information on other 2019 tax changes, see IRS Rev. Proc. 2018-57.For questions on how these changes may affect you, please consult your tax advisor. ### Horsing Around - How A Champion Quarter-Horse Breeder Stole Millions Rita Crundwell, Comptroller of the City of Dixon, Illinois and successful quarter-horse breeder, had no idea that her $53.7 million fraud would soon be coming to an end while she was away at an equine competition in October 2011.While Crundwell was out of the office, Kathe Swanson, city clerk of Dixon, Illinois, was tasked with preparing Dixon’s fiscal report.  Since Crundwell never enabled the option to view statements online, typically she would have Swanson request statements only for specific account numbers. This time, when Swanson called the bank, she requested copies of all the statements for the City of Dixon.  When she received the statements, she identified an unknown reserve fund account with large recurring deposits.  Swanson brought this suspicious account to the attention of Dixon Mayor, Jim Burke, which prompted an FBI investigation.During the investigation, Swanson uncovered the details of how Crundwell was stealing money from the city. The funds would initially be deposited into the Illinois Treasurer’s Investment Pool state account, and Crundwell would receive a fax notifying her that the money was in the account. Crundwell would then transfer the money to Dixon’s capital development account, a legitimate account, before writing a check payable to ‘treasurer’ and depositing it into the fraudulent reserve account. Using the fraudulent reserve account that she opened in December 1990, Crundwell was able to steal $53.7 million from the City of Dixon.Using the stolen funds, Crundwell purchased hundreds of quarter horses, multiple properties, homes, vehicles, jewelry and a boat. During this time, she became a nationally recognized quarter-horse breeder through her business, RC Quarter Horses, LLC. Crundwell was able to live out her dreams and extravagant lifestyle while the City of Dixon struggled financially.After a six-month FBI investigation, Crundwell was indicted and plead guilty to wire fraud. She was sentenced to over 19 years in prison.  In 2018, Swanson was awarded the ACFE’s 2018 Sentinel Award for her courageous actions in uncovering a fraud that truly impacted an entire city.If you think your organization might be a victim of fraud, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com. For similar articles, visit the Our Thoughts On blog. ### Danske Bank Money Laundering Scandal Fallout On September 19, 2018, Thomas Borgen, CEO of the Estonian Branch of Danske Bank since 2013, resigned amidst potentially the largest money laundering scandal in European history.  Danske Bank’s Chairman, Ole Anderson followed suit and stepped down from his position on November 6, 2018.  This comes after an agreement between Danske and several of its major shareholders that “extraordinary and extensive changes” are required at the bank.In 2007, Danske Bank purchased the As Sampo Bank and, as a result, entered the Baltic market for the first time. Consequently, Danske Bank inherited As Sampo Bank’s customers. From 2007-2015, there were over 9.5 million payment transactions, totaling upwards of $236 billion, many of which appeared to be suspicious in nature. After examination, investigators deemed 6,200 of the total 15,000 foreign customer accounts of the Estonian bank branch to be suspicious – including accounts linked to the Russian Laundromat and Azerbaijani Laundromat scandals.  Further, there were 42 employees and agents of the bank who seemed to be involved in the suspicious activity.Following Danske’s entrance into the Baltic market in 2007, Estonian financial regulators issued a critical inspection report of the bank. The Russian Central Bank provided information pointing to possible tax and customs evasion as well as money laundering to Danish financial regulators, who then reiterated this to key members of the Danske Bank. However, no action was taken as a result of the report. Further, in 2008 Danske Bank Group elected against migrating Baltic banking activities onto the primary IT platform due to the related costs and resources. Therefore, the bank did not benefit from anti-money laundering procedures that likely contributed to the inability to detect the schemes that took place during the nine-year period.  In addition, in 2014, before a business review could be completed, a whistleblower within the Estonian branch, as well as the results of an internal audit, highlighted anti-money laundering control deficiencies. Again, while action was prompted, these allegations and findings were not investigated.Danske Bank’s stock has fallen by 30% in 2018 and nearly 50% from an all-time high in May of 2017. Penalties and potential criminal charges remain likely. The United Kingdom has announced an investigation into U.K.-registered companies involved in the laundering, and the United States could open up an investigation regarding the violation of U.S. sanctions. The effects of this scandal will not be reflected in just monetary value from penalties imposed or loss of market value, but will also be reflected in the loss of customers going forward.If you need assistance with assessing or responding to fraud within your organization please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Kevin Begley at 412.697.5165 or kbegley@schneiderdowns.com. For similar articles, visit the Our Thoughts On blog. ### 2019 Filing Season Risks Facing Delayed Start The new Tax Cuts and Jobs Act (the “Act”) brought significant tax code changes to both individuals and businesses and to tax-exempt organizations. In an effort to evaluate how the IRS’ information technology organization has been dealing with the various changes, an audit was initiated by the Treasury Inspector General for Tax Administration (TIGTA). The findings? There is increased risk of a delayed start to the 2019 tax-filing season. Reasons point to the obvious: significant changes in the tax code, shortened delivery cycles and many missed deadlines.In implementing the new Act, President Trump signed the Consolidated Appropriations Act, granting the IRS $320 million, $291 million of which was earmarked for information technology and ancillary operations support work. The TIGTA audit also estimated that it would take more than 1.1 million labor hours (or 542 full-time equivalents) to implement the new tax provisions, but as of June 2018, the IRS had only 117 current and new employees on hand to meet the changes. The IRS IT organization had planned to identify any potential negative impact on existing programs and projects brought about by the implementation of the Act, but as of July 16, no documentation had been provided.The standard deadline for IT products and services for the next filing season is January 31. With implementation of the Act, several short-term deadlines were effected to simplify execution of the Act’s tax provisions. Unfortunately, those deadlines were missed, necessitating a new deadline of June 1 for submitting final work request notifications, set by the IT organization. This deadline change effectively shortened the timeframe for making system changes for the 2019 filing season by four months, but as the TIGTA audit notes, that deadline was also missed.In response to the TIGTA report, IRS CIO S. Gina Garza had the following response:“The IRS has created new forms and governance structures to increase communication, collaboration and alignment across critical IT stakeholders and implement tax reform changes, including an Executive Oversight Team comprised of IT leaders. The IRS has also secured adequate funding and hiring flexibility for tax reform implementation, and proactively addresses outstanding resource gaps.”It’s been more than 30 years since the last major tax reform act and it’s estimated that implementation of the new Act will require creating or revising more than 450 forms, publications and instructions, and modifying over 140 IT systems. With all the tax law changes and the missed guidance deadlines, a delayed start to the 2019 filing season is all but guaranteed. Strap on your helmet; this filing season is going to be a bumpy ride. ### Fraud in the Music Streaming Industry Over the past several years, as the music streaming industry has experienced rapid growth, fraud has entered into the industry. Though the total impact of this type of fraud is indeterminable at the moment, this could be a legitimate concern in the future.A method actively being used to commit streaming fraud is artists producing content and either buying or manipulating streams. Streamify is one of the companies that will accept money in return for streams. Streamify ensures that all of its streams are real by hiring actual people to listen to the songs, thus making them for royalties to the artists. Further, there are also playlist promotion companies like Spotlister that will be paid by artists to place one of their songs in popular playlists. The concept of companies like Streamify and Spotlister would be very appealing to young emerging artists, who are looking to kickstart their careers by producing streams on Spotify. However, these types of companies present an opportunity for fraud, as individuals are paying these companies to manipulate streams on music they produce in order to turn around a quick profit. An interesting incident in the music streaming industry occured in 2017. The artist Post Malone’s label, Republic Records, posted the chorus to their hit song “Rockstar” on loop for three minutes and 28 seconds on YouTube. Because the YouTube video had the appropriate length of the song, it appeared to be legitimate and exceeded more than 40 million views. This type of streaming isn’t technically illegal because it is just considered to be a remix posted by the artist’s record company. But would this be considered fraud? There appears to be an intent to deceive, and financial gain resulted from each time that video was watched, so an argument can be made that this constitutes a fraud.The bottom line is there are unique challenges that streaming sites face in their efforts to ensure that legitimate artists are being paid for their work and streams. There are a couple solutions that could mitigate the effects of fraud in the music industry. First, there are startup businesses that are building solutions to detect irregular streaming activity. If effective, they would eliminate bots giving artists fake streams. Another solution is to pay artists with subscription fee money rather than by the volume of streams a song has. That way, if a bot was producing fake streams, the artist would only earn a percentage of the subscription fees for one user. At the moment, streaming companies are aware that the problem exists, and are actively working toward a solution. However, for the time being, they have acknowledged that the current system is the best option they have.If you need assistance with assessing or responding to fraud within your organization please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Kevin Begley at 412.697.5165 or kbegley@schneiderdowns.com. For similar articles, visit the Our Thoughts On blog. ### 2018 International Fraud Awareness Week The Association of Certified Fraud Examiners (ACFE) in its Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse estimates that, worldwide, fraud costs companies 5% of their annual revenue each year.  Median losses are estimated to be $130,000, while over one-fifth of all cases are estimated to have losses over $1 million.  In an effort to bring awareness to the risk of fraud, and ways that business owners and investigators may be able mitigate and respond to fraud, the ACFE will once again host International Fraud Awareness Week from November 11-17, 2018. The 2018 report included information obtained from 125 countries and 2,690 cases of occupational fraud.  The ACFE has created a number of resources based on the information obtained from the Report to the Nations to promote the discussion of fraud topics throughout the week, including: Infographics on the costs of fraud and red flags of fraud to share or display in your business. The ACFE Fraud Prevention Checkup, which scores your company’s fraud health based on seven questions related to policies and controls in place within your organization. A worksheet to help you design an effective anti-fraud training program for your organization. Several videos, podcasts, reports and guides. Links to these resources from the ACFE can be found at: http://www.fraudweek.com/resources.aspxAt Schneider Downs, we are happy to participate in International Fraud Awareness Week by sharing the information created by the ACFE with our clients.  However, as experts within the Business Advisory Services Group, we focus on fraud year-round by keeping up to date on the latest tools, technology and schemes that perpetrators may use to harm our clients. If you require further information regarding how to mitigate or respond to fraud, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Bernard Rafferty at 412.697.5477 or brafferty@schneiderdowns.com. For similar articles, visit the Our Thoughts On blog. ### Lessons Every Company Can Learn From the Decline of Sears On October 15, Sears Holdings, owner of the once-beloved Sears department stores, filed for bankruptcy protection. While the company’s decline has been largely publicized, it is still hard to believe that a longstanding staple in the American shopping experience is on the brink of liquidation. Today, Sears is associated with monstrous, empty department stores, 142 of which will be closing by year-end, but it wasn’t always that way. For a long time, Sears was synonymous with success.  It was innovative— the largest retailer in the world and its name sake adorned the tallest building in the world. In its infancy, Sears was ahead of its time, as it was one of the first companies to implement a sales catalog strategy, which allowed consumers to order products from the comfort of their own home. The company then grew into large shopping malls, where it carried almost any item, from clothing to large appliances that the American family could need. So how did the company fall from grace? Below are a few takeaways every company can learn from the decline of Sears: 1. React and adapt to an evolving business landscape Sears was once a pioneer for the home shopping experience; however, once it made its move to retail department stores, it was slow to react to market demands. Walmart and Amazon have methodically captured market share by building robust e-commerce shopping portals.  This not only captured the preferred home shopping method, but also shed cost, allowing both retailers to beat Sears on price. Sears was slow to react to the reversion back to the home shopping experience and held steadfast in its belief that consumers preferred an in-store shopping experience. Business owners need to stay on top of industry trends and evolutions. Management cannot get fixated on a “this is how it’s always been done” mentality. Instead, understand how your business landscape is evolving and adapt accordingly. Recognizing market demands and reacting quickly will allow a company to sustain long-term success. 2. Protect your brand At one point, Sears was an iconic brand that represented quality.Now, it’s known for dilapidated stores that have half-filled shelves. Instead of injecting money into the in-store shopping experience, management decided to cut costs, which included the maintenance and renovations required to attract customers. Advertising was another area management decided to abandon in order to reduce expenses. While Sears lagged its competitors, it ignored its greatest assets: its brand and customer base. Through lack of investment, the Company failed to provide customers with a superior shopping experience, which resulted in a dramatic decline of sales. Even in tough times, companies should not neglect quality for an improved bottom line. While the result may include short-term financial gains, those gains will almost certainly come at the expense of the brand and future profits. 3. Create and implement a clear strategic plan In 2005, Kmart and Sears merged to form Sears Holdings in an effort to create a larger, stronger more productive company.The thought process was to expand locations while also creating synergies that would produce a more efficient and profitable entity. At the same time, Sears also immediately began using its excess liquidity to buy back stock.These strategies were in direct conflict with each other: the company was doubling down on the brick-and-mortar retail space and, at the same time, notifying the market that investing in its stores would not provide adequate returns. Companies need to create a strategic plan that provides a framework to achieve clearly articulated goals.The plan needs to be harmonious to where each step builds off of the previous one. Otherwise, you might as well be throwing stuff against a wall and hoping something sticks. Sears was an American icon for over 100 years and now is on the verge of going the way of the dinosaurs. While there are many reasons for its decline, business owners should examine how they can prevent such a catastrophe by focusing on these three areas. If you think your business might be falling victim to similar issues as Sears or just curious to learn more, please contact Will Frederick of Schneider Downs Meridian. ### Is Your Construction Company Eligible for a Credit for Wages Paid under FMLA? The Tax Cuts and Jobs Act enacted late last year created an employer credit for paid leave provided under the Family and Medical Leave Act (FMLA). The credit is equal to 12.5% of wages paid to a qualifying employee during any period in which he or she is on leave under FMLA, provided the employee’s pay during this period is 50% of the wages normally paid to him or her. The credit increases by 0.25% – up to a maximum of 25% – for each percentage point by which the employee’s rate of payment exceeds 50%.Here are some high-level facts about the Employer Credit for Paid Family Leave, and how it benefits employers: To claim the credit, employers must have a written policy that meets certain requirements: Employers must provide at least two weeks of paid family and medical leave annually to all qualifying employees who work full-time. This can be prorated for employees who work part-time. The paid leave must be not less than 50% of the wages normally paid to the employee.   A qualifying employee is any employee who: Has been employed for one year or more. For the preceding year, had compensation that did not exceed 60% of the amount considered “highly compensated” under Internal Revenue Code Section 45S(d). For 2018, the employee must not have earned more than $72,000 (60% x $120,000) in 2017.   For purposes of this credit, “family and medical leave” is leave for one or more of the following reasons: Birth of an employee’s child and to care for the newborn. Placement of a child with an employee for adoption or foster care. Care for an employee’s spouse, child or parent who has a serious health condition. A serious health condition that makes an employee unable to perform the functions of his or her position. Any qualifying event due to an employee’s spouse, child or parent being on covered active duty – or being called to duty – in the Armed Forces. Care for a service member who is an employee’s spouse, child, parent or next of kin.   The maximum amount of leave subject to the credit for any employee may not exceed 12 weeks for any tax year.   An employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Any wages taken into account in determining any other general business credit may not be used toward this credit.   The credit is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017 and the credit is not available for wages paid in taxable years beginning after December 31, 2019. The FMLA credit falls under the general business credit and is allowed as a credit against the alternative minimum tax. If you have any questions regarding the FMLA credit and the application to your construction company, do not hesitate to contact Mark Di Pietrantonio or another member of the Schneider Downs Construction Industry Focus Group. ### What You Need to Know About the Ohio Data Protection Act What Is the Ohio Data Protection Act?On August 3, 2018, Ohio Governor John Kasich signed the Ohio Data Protection Act (“the Act”) into law. The Act, which went into effect on November 2, 2018, provides affirmative litigation defense to Ohio  companies that have suffered a security incident or data breach involving personal information or restricted information. In short, the Act is intended to be an incentive to encourage Ohio companies to voluntarily implement a robust cybersecurity program. Call to Action - How Companies Can Become Eligible For Legal DefenseCompanies are entitled to affirmative defense under the Act if several conditions are met. First, a company must implement a written cybersecurity program that “reasonably conforms to an industry-recognized cybersecurity framework.” The cybersecurity program must outline measures that (1) protect the security and confidentiality of personal information; (2) protect against any anticipated threats or hazards to the security or integrity of the personal information; and (3) protect against unauthorized access to and acquisition of information that is likely to result in a material risk of identity theft or other fraud.The Act recognizes the following as industry-accepted cybersecurity frameworks: •    National Institute of Standards and Technology (NIST);•    Federal Risk and Authorization Management Program (FedRAMP);•    The Center for Internet Security Critical Security controls for effective cyber defense;•    The security requirements of HIPAA and HITECH;•    Title V of the Gramm-Leach-Bliley Act of 1999; and•    The payment card industry (PCI) data security standard. Secondly, the size and scope of the cybersecurity program must be appropriate for the organization based upon five factors: (1) the size and complexity of the organization; (2) the nature and scope of the activities of the covered entity; (3) the sensitivity of the information to be protected; (4) the cost and availability of tools to improve information security and reduce vulnerabilities; and (5) the resources availability to the organization.Data Protection LimitationsAs of today, the United States does not have any centralized, formal legislation at the federal level regarding data protection and privacy. While Ohio is the first state in the country to implement a law that provides a data breach safe harbor for companies, there are limitations to the coverage this Data Protection Act’s “legal safe harbor” provides.  For example, the Act does not provide companies with blanket immunity from a data breach lawsuit.  The entity would still have the burden of validating that its cybersecurity program complied with the law’s requirements. Furthermore, the safe harbor does not establish a minimum cybersecurity standard nor does it impose liability upon companies that do not comply with the Act.Looking ForwardNo matter how robust a company’s security program may be, data breaches and other types of cyberattacks are an inevitable part of doing business. Adoption of the guidance outlined in the Data Protection Act could set companies ahead of the curve and provide for a valuable defense in subsequent litigations.Questions?  Contact cybersecurityteam@schneiderdowns.com ### Professional Service Firms - Are You Ready for the Implementation of the New Lease Standard? What Are the Five Key Questions to Ask? Professional service firms will be required to adopt Accounting Standards Update (ASU) 2016-02 Topic 842 - Leases (ASU 2016-02) in the upcoming years.  ASU 2016-02 is effective for periods beginning after December 15, 2019 for nonpublic entities and after December 15, 2018 for public entities and nonprofit entities that are conduit bond obligors in over-the-counter markets. Ask yourself the following five questions in order to prepare for the implementation of ASU 2016-02: Does the company have a complete population of the leases that the company has entered into? Does the company have the system or tracking capabilities to capture the various components of each lease? Has the company begun to have conversations with outside third-parties and users of the financial statements? Has the company considered the effect on debt covenants once the standard has been implemented? Has the company begun to evaluate the practical expedients available during implementation? ASU 2016-02 may have a significant impact on professional service firms.  Companies should consider the impact by starting to address the five questions above to determine the impact on their financial statements. After the questions have been asked and answered you might want to take a look at simpLEASE Accounting, a tool developed by Schneider Downs that has been specifically designed to help companies manage leases under ASU 2016-02. For more information, please contact the Schneider Downs audit department and download a copy of the Schneider Downs lease accounting whitepaper. ### Transportation Industry Adjusts to New Tax Laws Surrounding Per Diems Effective in 2018, new tax laws were put in place regarding the treatment of per diems for company drivers and owner-operators within the transportation industry. A per diem payment is a reimbursement, as defined in Internal Revenue Code and Regulations, designed to cover meals and incidental expenses of drivers when they’re away from home. The new laws will have the greatest impact on company drivers.Previously, drivers and owner-operators were able to exclude from taxable income any per diem received as reimbursement. The transportation company took a deduction for the per diem paid and the only record keeping consisted of logging days away from home.When companies didn’t pay the per diem as reimbursement, drivers were able to deduct $63 per day as an “unreimbursed employee business expense” on Schedule A of their individual tax returns. Owner-operators could deduct the $63 per day as a business expense on either Schedule C of their individual returns or on their business entity income tax returns.With the change in the law, owner-operators will still be able to deduct per diems as before, but with the elimination of all employee business expense deductions, company drivers lost the ability to claim per diems on their individual tax returns. The new standard deduction ($12,000 for individuals, $24,000 for married filing jointly) should help to offset some of that forfeiture.A better answer for many companies and their employee drivers may be to establish the per diem as a reimbursement plan, which could exclude the payments from drivers’ taxable income yet still give the company a deduction. In this tight driver labor market, having per diems treated as nontaxable income could be a great recruiting and retention tool. ### The Estate and Gift Tax Exemption Planning Puzzle As every good tax advisor knows, planning is key. So what happens when you have to plan for the unknown? This is the situation that estate and gift tax planners are currently facing in response to the Tax Cut and Jobs Act (“TCJA”) signed into law on December 22, 2017.The federal government imposes an estate tax on the transfer of property included in the estate of the deceased.  An exemption to the estate tax is available, which allows a certain amount of the decedent’s estate to pass without incurring any taxes. Some, or all, of this exemption can also be used during an individual's lifetime in the form of gifts.Under the TCJA, the estate tax exemption amount has been doubled from $5.49 million (in 2017) per person to $11.18 million between January 1, 2018 and December 31, 2025. This means that through December 31, 2025, an individual can distribute up to $11.18 million in assets entirely free of estate or gift tax. For a married couple, the amount doubles to $22.36 million, as they may aggregate their exemption. However, on January 1, 2026, the exemption will be subject to a “sunset” provision, causing the amount to revert to the $5.49 million dollar exemption of 2017, plus any increase for inflation.This raises the question - what happens if a taxpayer utilizes her entire exemption by way of lifetime gifts at the end of 2025 and passes away after January 1, 2026 when the exemption amount has reverted back? This creates concerns as to whether the estate could possibly owe tax even if the decedent had no taxable assets due to prior gifting. The TCJA did not address this issue. Under the Internal Revenue Code (“IRC”) Section 2001 (g)(2), the U.S. Department of Treasury has stated that it will release instructions to address this potential issue as necessary. Schneider Downs is committed to keeping you informed as any instructions come to light. ### 2019 Retirement Plan Limitations N ### How to Decide if a Type 1 or Type 2 SOC Report is Right for Your Organization In a previous article, we described the differences between SOC 1 reports and SOC 2 reports.  Once an organization decides to pursue a SOC 1 or SOC 2 report, the next decision it will need to make is whether it will complete a Type 1 examination or a Type 2 examination. We can start by defining the scope of each type of examination:A Type 1 examination is an evaluation of the design of controls and the fairness of the presentation of the organization’s system description. A Type 1 report provides assurance about whether controls are in place as of a point in time.A Type 2 examination is an evaluation of the design of controls, the fairness of the presentation of the organization’s system description and an evaluation of the operating effectiveness of the controls over a period of time. A Type 2 report provides assurance about whether controls were working as designed during the report period, typically 6-12 months. Since a Type 2 report includes control testing over a period of time, it provides users of the report a greater degree of assurance whether an organization has an adequate control environment. For this reason, the Type 2 report is what most users request, and expect to receive. That’s not to say a Type 1 report isn’t useful. The main reason that an organization would choose to obtain a Type 1 report is because there is a desire to get a report issued quickly, often due to contractual requirements. Since the auditor’s procedures represent a single point-in-time, the report can be issued within a few months, whereas a Type 2 report requires testing the controls for the in-scope period in order for the service auditor to conclude whether the controls were operating effectively during the period. A second, although much less common reason, is the organization’s users find that the content of a Type 1 report is acceptable for their needs. Some organizations may perform a Type 1 examination for their first SOC report in order to get a report in their users’ hands more quickly, and then transition to a Type 2 report for subsequent reporting periods. When producing a Type 1 report, organizations should be prepared to answer questions about whether they are planning to produce a Type 2 report and when they expect that to occur.  ### Private Companies Rejoice - VIE Rules are Changing for the Better The Financial Accounting Standards Board (FASB) recently released one of the most anticipated changes to accounting guidance for variable interest entities (VIE). The change is intended to provide relief to private companies from challenges that have arisen from going through the evaluation and the potential consolidation of these entities, as well as to eliminate diversity in practice in the accounting for and disclosure of involvement with VIEs. This new accounting guidance does not change the existing voting interest model and will continue to require consolidation of an entity that another entity controls. This guidance permits private entities to make an accounting policy election to forgo consolidation of entities that had complex common control arrangements, which usually resulted in them being a VIE of an entity, despite lack of control in that entity. The expectation is that if an entity makes the policy election, there will be significantly fewer VIEs consolidated by private companies.   These changes will require significant disclosure about the involvement with VIEs under common control, but are similar to existing related party disclosures and would include elements such as risks, assets and liabilities associated with the involvement in the VIE, guarantees and other significant contractual items. Private companies have the ability to early-adopt these changes immediately or wait until the fiscal years beginning after December 15, 2019. When implementing the change, private companies will need to apply this change retrospectively and employ a cumulative adjustment to retained earnings in the earliest period presented. Private companies, therefore, should start evaluating their VIEs now and decide if they meet the definition of being under common control to determine if they can be deconsolidated or if further analysis is required. Also remember to evaluate the impact of deconsolidating any VIE on the entity’s debt, lease or other significant contractual agreements. Proactive discussions with the users of the entity’s financial statements will help in understanding the reason for the accounting policy change. While the effort will be quite a bit work in year one, it could greatly simplify an entity’s financial statements on a go-forward basis. ### 2019 Retirement Plan Limitations On November 1, 2018, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect January 1, 2019 (IRS Notice 2018-83). These COLAs affect various contribution and deduction limits for qualified retirement plans, as well as the deductible contribution limits for traditional Individual Retirement Arrangements (IRAs).Internal Revenue Code Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. These adjustment procedures are similar to those used to adjust benefit amounts under IRC Section 215(i)(2)(A) or the Social Security Act.Some limitations increased, while others remain unchanged from the 2018 limits.  The more common limitations are summarized below, along with the applicable Code Section and/or Treasury Regulations Section (Regs).Increased Limits The annual deferral limit for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increases from $18,500 to $19,000 (Code Sections 402(g)(1),402(g)(3)).   The annual contribution limitation for defined contribution plans increases from $55,000 to $56,000 (Code Section (415(c)(1)(A)).   The annual maximum considered compensation limit increases from $275,000 to $280,000 (Code Sections 401(a)(17), 404(l),408(k)(3)(C) and 408(k)(6)(D)(ii)).   The annual deferral limit for deferred compensation plans of state and local governments, and tax-exempt organizations increases from $18,000 to $18,500 (Code Section 457(e)(15)).   The limitation on the annual benefit under a defined benefit plan increases from $220,000 to $225,000. (Code Section 415(b)(1)(A)).   The dollar limitation for determining the maximum account balance in an Employee Stock Ownership Plan (ESOP), subject to a five-year distribution period, increases from $1,105,000 to $1,130,000; and the dollar amount used to determine the lengthening of the five-year distribution period increases from $220,000 to $225,000 (Code Section 409(o)(1)(C)(ii)).   The annual “look-back” compensation income limit for purposes of the definition of “Highly Compensated Employee” increases from $120,000 to $125,000 (Code Section 414(q)(1)(B)).   The annual compensation threshold for purposes of the definition of “Key Employee” increases from $175,000 to $180,000 (Code Section 416(i)(1)(A)(i)).   The annual deferral limitation for SIMPLE retirement accounts increases from $12,500 to $13,000 (Code Section 408(p)(2)(E)).   The maximum amount that can be contributed to an IRA increases from $5,500 to $6,000 (Code Section 219(b)(5)(A)).   The Social Security Taxable Wage Base increases from $128,400 to $132,900. Unchanged Limits The maximum amount of catch-up contributions that individuals age 50 or over may make to 401(k) plans, 403(b) plans, SEPs and governmental 457(b) plans remains at $6,000 (Code Section 414(v)(2)(B)(i)).   The IRA catch-up contribution limit for IRAs remains unchanged at $1,000 (Code Section 219(b)(5)(A)).   The dollar limitation on premiums paid with respect to a Qualifying Longevity Annuity Contract (QLAC) remains at $130,000. (Code Section 1.401(a)(9)-6 and Regs. Section A-17(b)(2)(ii)).   The limitation concerning the qualified gratuitous transfer of qualified employer securities to an ESOP remains at $50,000 (Code Section 664(g)(7)).   The maximum amount of catch-up contributions that individuals age 50 or over may make to SIMPLE 401(k) plans or SIMPLE retirement accounts remains at $3,000 (Code Section 414(v)(2)(B)(ii)).   The compensation threshold for simplified employee pensions (SEPs) remains at $600 (Code Section 408(k)(2)(C)). Quick reference guide to key limitations for 2018 and 2019:                        Item                                         2018 Limit                               2019 Limit             401(k)/403(b)/457                                   $18,500                                     $19,000            Elective Deferral Limit            ____________________________________________________________________            Defined Contribution Plan                      $55,000                                     $56,000            Annual Limit            ____________________________________________________________________            Defined Benefit Plan                              $220,000                                   $225,000            Annual Limit            _____________________________________________________________________                 Annual Compensation Limit                   $275,000                                   $280,000            _____________________________________________________________________            Catch-Up Contribution Limit                   $    6,000                                   $    6,000            401(k)/403(b)/457(b)/SEP            _____________________________________________________________________            Highly Compensated Employee             $120,000                                   $125,000            Compensation Threshold            _____________________________________________________________________            Key Employee                                       $175,000                                   $180,000            Compensation Threshold            ______________________________________________________________________            Social Security Taxable                          $128,400                                   $132,900            Wage Base ### Are You Ready for ASC 606 to go into Effect? For fiscal periods beginning after December 15, 2017, ASC 606 will change the way companies recognize revenue. In general, ASC 606 will affect revenue recognition from contracts with their customers. How will this ASC affect retailers? Retailers will see a change in the way revenue is recorded related to gift cards. ASC 606 will change how retailers recognize gift card breakage revenue. Breakage rate is an estimate rate at which a company expects its gift cards to not be redeemed. There are multiple ways in which breakage revenue is calculated. With the new ASC, companies will be expected to use the redemption pattern method for calculating breakage revenue.  Since most gift cards are redeemed within the year of issuance, companies that use the released obligation method or the remote method on gift cards will likely to have a significant impact. Due to most gift cards being redeemed within a year of issuance, the change in methods will likely accelerate breakage revenue for companies. Although companies are able to use the remote method with the new ASC, this method should be utilized only when the company expects there to be no breakage at all. If there is a history of breakage, the use of redemption method should be used to properly record a liability related to gift cards. ### Schneider Downs Sponsors the 2018 Pennsylvania Automotive Association Fall Conference Last month, Steve Barber and Henry Szymanski from our Auto Dealer Advisory Group attended the 2018 Pennsylvania Automotive Association (“PAA”) Fall Conference held at the Fairmont Southampton in Bermuda.As a Bronze sponsor of the event, Schneider Downs was invited to present at one of this year’s business sessions.  Henry represented the firm as a panel member discussing the topic Cost Containment within the Dealership Environment.Other informative presentations included: Strategies to Dominate the Market – Cory Mosley, Mosley Automotive Using Data to Better Understand and Reach your Target Customer – Travis Flood, Comcast Is the Sky Falling? Dealership Values and the Buy-Sell Market in a Shifting Auto Retail Climate – Erin Kerrigan, Kerrigan Advisors In closing the business sessions, the PAA’s John Devlin, Mark Stine and Chad Marsar provided updates and insights on current Pennsylvania legal and political matters.The final event of the conference was the Chairman’s Dinner, an elegant evening of socializing and networking with many members of the automotive community from throughout the Commonwealth.As a recurring Fall Conference sponsor, Schneider Downs recognizes the importance of the PAA’s on-going regulatory influence, its role in educating dealers, and the value of its membership events.  Of course, coconut palms and sunshine will always enhance the experience and outlook for us Pennsylvania natives! ### Revenue Procedure 2018-52 Released by IRS: VCP Modifications On September 28, 2018, the IRS released Revenue Procedure 2018-52, which will be effective as of January 1, 2019 and supersedes Revenue Procedure 2016-51. The most impactful change comes to the submission of corrections process to the IRS’s Voluntary Correction Program (“VCP”). The VCP is one of three correction programs plan sponsors can use to correct errors under the Employee Plans Compliance Resolution System (“EPCRS”), and is in place for plan sponsors to correct mistakes with either the plan document’s language or how the plan has been run. Currently, the VCP operates via “snail mail,” with all requested changes and corresponding user fees being mailed to the IRS directly. Revenue Procedure 2018-52 converts this to an electronic process, where change submission requests and user fee payments will be made through the website www.pay.gov.  Between January 1, 2019 and March 31, 2019, users can still submit hard copies directly to the IRS, or can utilize the new online submission. However, beginning April 1, 2019, the IRS will accept only online submissions, while any paper correspondence pertaining to the VCP will not be processed or returned.  In addition, through pay.gov, plan sponsors will be able to authorize a legal representative to sign and submit any VCP submissions, given the proper authorization forms are submitted. Other changes as a result of Revenue Procedure 2018-52 are as follows: All 457(b) plan submission requests must be through pay.gov, following the same timeline outlined above; Minor language revisions related to user fees; and Clarification of payment options for Audit CAP sanction payments. The IRS is welcoming feedback to all changes outlined in Revenue Procedure 2018-52, so familiarizing yourself with the pay.gov website before full implementation may be beneficial to ensuring a smooth transition for your plan. ### Retail Sales Register Solid Third Quarter Results Going into the Holiday Season Based on calculations released by the National Retail Federation (NRF) and data from the U.S. Census Bureau, retail sales in September increased three percent and the three-month moving average increased 4.5 percent over the prior year. This excludes automobiles, gas stations and restaurants and comes as retail continues a long-term pattern of improved sales. Today’s numbers confirm an underlying strength in the industry and a solid trajectory going into the fourth quarter of 2018. It is expected based on this information that consumers will spend 4.1 percent more than last year during the winter holidays. According to NRF President and CEO Matthew Shay, “The holidays are just around the corner and consumers are ready to shop. Confidence is near an all-time high, unemployment is the lowest we’ve seen in decades and take-home wages are up. Retailers expect strong demand this year, and are prepared with a wide array of merchandise while offering strong deals and promotions during the busiest and most competitive shopping season of the year.” This leads the NRF to assume the upcoming holiday season will continue to reflect the growth seen over the past year. The NRF expects retail sales in November and December 2018 to increase between 4.3 and 4.8 percent, which runs consistent with NRF’s forecast that annual retail sales for 2018 will increase at least 4.5 percent over the prior year. The holiday forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. ### Is Your Organization Failing Password Security Management? Security management may be implementing high-cost sophisticated measures in your organization, but it’s often the first factor of enterprise authentication that isn’t getting the attention it deserves. According to the LastPass 2018 Global Password Security Report, nearly half the organizations participating in the study failed at password security management.The larger the organization, of course, the harder it is to hold employees to security standards. Password sharing, weak passwords, and mixing security habits – like using the same passwords for personal and work accounts – are all factors that can contribute to bad password protection.There are actions you can take. First, assess the current state of your organization’s password management by evaluating the required strength (password length, complexity, reuse policy) and security (duplicate passwords, weak passwords, shared passwords, multifactor authentication) of all passwords used on your network and applications.Evaluate your organizations password standards against best practice and determine is your organization maintaining those standards. Do not simply rely on default standards that come with your software to be at or above your organizations standards. For example the password “Fall2018” meets the Windows complexity requirements, but is actually a weak password that can easily be guessed. These passwords should not be permitted to be used by anyone. Blacklisting passwords is very effective method of restricting the use of common and weak passwords and in turn strengthening your security.  Various software solutions can be implemented to systematically blacklist any passwords and restrict it from being used.Next, go back to the basics so you don’t feel you have to rely on expensive sophisticated measures. Strong password security starts with requiring an appropriate length; the standard should be a minimum of 12-16 characters and incorporate multiple levels of complexity (upper and lower case, numeric, special characters). Multifactor authentication is a must. The process is easier than ever to implement and the security it provides is well worth the cost.Good password security requires strong password settings for all the password attributes available. For example if an online account you have set up stores your password in an encrypted manner you may think your passwords are safe. But when passwords are stolen from a breached organization, the cyber-criminals will take the encrypted passwords and attempt to "crack" the encryption algorithms with powerful computers in an attempt to retrieve your actual clear-text password so they can use it. The longer and more complex your password is, the harder it is to reverse-engineer it from the encrypted, protected state. So the effectiveness of storing passwords in an encrypted state heavily relies on the strength of the password.Here are a few tips for creating a long and complex password that you can remember and will be more secure. First: forget the password concept of using a single word appended with a couple numbers or symbols and shift to a passphrase! A passphrase is where you combine multiple words (add in some numbers and symbols too) to create a long password. Do not use famous quotes from songs, books, etc. Use words that may only make sense to you and mix in some symbols and numbers. For example, "FordMustang" may not be a dictionary word, but it's a proper noun that's easily guessed. Instead, you might try "My2016Must@ngIsR3D." This passphrase is much more difficult to crack than the password “FordMustang” using today's hacker tools.At Schneider Downs, we practice strong password security management and require all our employees to follow standards. Please reach out to us if you have any questions about your password security management. We offer assessments of your current practices or can conduct a password security audit to evaluate the effectiveness of your controls. ### Mitigating the Risk of Cyber Attacks to Your Employee Benefit Plan From Target to Equifax to the federal government, it seems that a new cybersecurity breach makes headlines on an almost daily basis.  With all these breeches, an attack on your employee benefit plan seems inevitable.Cybersecurity risks, such as phishing techniques, malware and ransomware attacks, facing employee benefit plans are no different than those facing corporations, and in fact, may be even more significant.  Why is this you may ask?  Well the answer is two-fold. First, in addition to the plan assets being susceptible to theft, there are two potentially far more valuable pieces of data that hackers may be after; personally identifiable information (PII) and electronic protected health information (EPHI). With PII and EPHI, hackers may be able to, among other things, open accounts, falsify insurance claims, file fraudulent tax returns and even create new identifies.  Unlike credit cards, this information may be used over longer periods of time and can even be sold to other criminals. Secondly, the nature of how employee benefit plans operate, that is, in an almost completely electronic environment, make them more susceptible to cyberattacks.  The electronic environment,  along with significant use of outside third-party service providers, who may have varying degrees of controls in place to address cyber risks, and the fact that often employee benefit plans fall outside of the corporation’s cybersecurity plan can be a recipe for disaster.As a plan sponsor and those charged with governance, you have a responsibility with respect to management and oversight of the plan, including understanding risks to the plan, even risks of cyberattacks.Thinking that all is lost?  Fear not, the Department of Labor in its Advisory Council Cybersecurity Report identified four areas of effective practices. Data management – protect and control data; and ensure that your employee benefit plans fall under the organization’s cybersecurity policies Technology management – maintain up-to-date technology and perform routine scans for potential vulnerabilities Service provider management – understand the data security controls at your third-party service providers as well as their procedures in the event of a breach People management – properly train and manage your employees Think you don’t have the time to address these risks or that the cost is too much or that it couldn’t happen to your plan?  Consider the consequences of a cyberattack: significant costs to detect, investigate and remediate; theft of PII and/or online access resulting in monetary losses to participants, beneficiaries and the plan sponsor; loss of reputation and trust of employees; and potential fines and penalties resulting from HIPAA violations.  According to a study performed by the Poneman Institute, the average cost of a malware attack is $2.4 million.If you have concerns about cybersecurity for your employee benefit plan, remember that our firm houses the premier employee benefit plan audit practice in the region as well as one of the largest cybersecurity practices in Pittsburgh. Schneider Downs is well positioned to answer your questions and meet your organization’s needs. ### Gramm-Leach-Bliley Act - Are you protecting your students' financial data? The Gramm-Leach-Bliley Act (GLBA) is a federal law that applies to entities that collect consumer financial data, including institutions of higher education. This law, specifically the Safeguards Rule, applies to how higher education institutions collect, store, and use student financial records containing personally identifiable information (PII).  Some examples of student data that need to be protected under the GLBA include information provided on the Free Application for Federal Student Aid (FAFSA), student application information, and student information shared with loan servicers.   Higher education institutions have been required to comply with the provisions of the GLBA since 2003; however, there has not been much enforcement by the Department of Education (DOE) related to the GLBA. This is about to change.The U.S. Office of Management and Budget announced that it plans to add new Special Tests and Provisions to its 2019 Compliance Supplement, with the DOE including the testing requirements in the Audit Guide shortly thereafter. As a result, higher education institutions’ compliance with the GLBA will most likely be tested as part of your institution’s Single Audit starting in 2019.  The DOE has cautioned higher education institutions that data security and student privacy are becoming critical issues. Failure to comply with GLBA provisions may bring penalties that range from monetary fines to the restriction or loss of eligibility for certain federal funding.So, what does your institution need to do in order to ensure compliance with the GLBA and prepare for upcoming Single Audits?  The Safeguards Rule requires institutions to develop, implement, and maintain a written information security program that includes the following components: Designate an information security officer for coordinating the information security program. Assess the risks to confidential information, assess the level of controls in place, and identify action plans to address the risks. Implement an information security program, including various technical and physical underlying controls. Oversee vendor relationships to ensure confidential data is secured at their locations when applicable and access is controlled when vendors utilize PII from   the institution. Perform an ongoing evaluation of the program to keep content current with the changing security environment. In addition to developing a program, institutions must properly train employees, managers, staff, and their vendors on their data security protocols and ensure there is ongoing training and monitoring. The employees responsible for implementation and management of the program must understand it, recognize its importance, and be incentivized to follow and adhere to it. Management must ensure that violations of the program are addressed appropriately. Vendors that aren’t able to comply with the necessary safeguards must be replaced.How will this change impact your audit?  External auditors will be required to conduct expanded audit testing and report significant noncompliance findings if the institution has complied with these requirements.  This will add another layer of complexity and effort to the audit process. The DOE suggested the following audit procedures be tested as part of the auditors’ compliance audit:   Verify that an institution has designated an individual to coordinate the information security program. Obtain the institution’s risk assessment and verify that it addresses the required standards for safeguarding customer information. Obtain documentation of the institution’s safeguard that aligns with each risk identified from the risk assessment and verify that the institution has identified a safeguard for each risk. These rules will be finalized as part of the vet copy of the Compliance Supplement, which will be released in the spring of 2019.For additional information, please refer to the following resources:https://www.ftc.gov/tips-advice/business-center/guidance/financial-institutions-customer-information-complyinghttps://www.gao.gov/products/GAO-18-121 ### The Changing Landscape of Qualified Retirement Plans Plan Sponsors continue to be faced with the pressure of overseeing a “successful” retirement plan for participants and beneficiaries. How “successful” is defined continues to be an ever-evolving and expanding measurement. In this day and age of fee consciousness, a heavy focus in our industry has been put on plan costs and having procedures put in place to benchmark fees. Quite frankly, this effort was long overdue and, according to recent research from the Callen Institute, 83% of plan sponsors calculated fees in the last year. Other areas of high importance are reviewing plan investments against appropriate benchmarks and how often this is done; having a formal investment policy in place and documenting the plan’s goals and objectives. Another few items to address on the plan sponsor “checklist” include reviewing how current match, participation and contribution rates compare to industry averages, and how to measure the effectiveness of current education programs in place. A new trend quickly becoming mainstream is Financial Wellness programs being offered on retirement plan platforms. These programs focus not just on retirement projections, but also offer a broad range of solutions such as emergency savings, debt management, college savings, insurance needs, etc. Such goal-based planning helps to assist participants with both short-term and long-term financial planning needs and to assist them in leading healthier financial lives. As Plan Sponsors continue to review ways to measure a “successful” retirement plan, the checklist keeps getting longer. As fiduciaries to the plan, be sure that there are processes and procedures in place which are documented; and check with your financial professional on latest industry best practice areas that should be addressed. Schneider Downs houses one of the largest Employee Benefit Plan Advisory Practices in the region. Our advisors can answer your questions on best practices and maintaining a successful retirement plan for your employees. Contact us for advice. ### What You Should Know About Sales Tax Due Diligence Sales tax is rarely a top priority for either buyers or sellers, but should not be overlooked when evaluating a deal.  A sales tax due diligence review can undercover improperly filed returns, nexus issues, and improper taxability categorization.  Any of these can result in a tax liability or tax assessment in the event of audit.  It is very common to see companies with employees or representatives physically present in multiple states, but only registered for sales tax in their home state. State tax laws generally provide that the purchaser of a business, or substantially all of its assets, is responsible for unpaid tax liabilities of the seller (to the extent of the purchase price). Sales tax issues can impact negotiations, delay closing and even result in abandonment of the purchase. The transactional nature of sales tax causes exposure to grow exponentially, because errors have the potential to increase tax liability with every sale and each passing year. It is important for buyers to understand the seller’s business from a sales tax perspective in order to assess tax risk.  A proper due diligence review should help the buyer (buy-side diligence) or seller (sell-side diligence) understand: Where the target company should be registered for sales tax based on its sales tax nexus Whether the target is properly filing its returns and administrating its sales tax responsibilities If the target obtains and maintains proper documentation from its’ customers related to exempt sales The target’s sales and use tax procedures in place The estimated sales and use tax exposure of the target A thorough understanding of the items above could 1) impact the transaction price, 2) result in a portion of the purchase price being held in escrow pending resolution of the tax issues, or 3) require an indemnification provision within the purchase agreement.  The buyer’s understanding of these items will also provide direction in prioritizing and addressing potential sales and tax issues subsequent to closing. Contact our experienced due diligence team to get ahead of sales tax issues that might affect your transactions. ### SOC Report Refresher: What Are the Different Types of SOC Reports? The rise of cloud computing has played a key role with businesses that outsource certain functions to service organizations. Since such organizations are now being held accountable for computing, processing, storage and the protection of customer data, entities are requiring them to complete a System and Organization Control (SOC) report prior to engagement.Additionally, the constant threat of cybersecurity breaches has resulted in assurance needs for management of all organizations, so the AICPA has introduced a new type of SOC report that any organization can engage a CPA to perform to evaluate its cybersecurity risk management program.Below is a refresher on all the current types of SOC reports and the differences between them.Overview of Different SOC Examinations SOC 1 engagements are examinations of the internal control over financial reporting at a service organization. These engagements are performed under SSAE 18 (Statement on Standards for Attestation Engagements No. 18). The SOC 1 guide provides guidance to practitioners in examining and reporting on a service organization’s controls over the services it provides to user entities when those controls are likely to be relevant to user entities’ internal control over financial reporting. SOC 1 examinations are warranted if a service organization processes financial transactions on behalf of its customers that affect its client’s financial reporting. Examples of SOC 1 clients would be payroll providers, claims processor and third-party benefit administrator organizations. SOC 2 examinations are mainly used for service organizations that host or process other types of data for clients that do not impact financial reporting. Service organization clients require assurance over how vendors handle their data securely and want to ensure that their data is available when needed. SOC 2 examinations include reporting on a combination of one or more of the following Trust Service Categories: security, availability, confidentiality, processing integrity and privacy. Service organizations like datacenters and Software-as-a-service (SaaS) organizations are prime candidates for SOC 2 examinations. SOC 3 examinations result in general-use reports that can be distributed to any party and made available publicly on a service organization’s website. SOC 3 reports do not include a description of the service auditor’s tests of controls and the results thereof. The procedures performed in a SOC 3 are substantially the same as the procedures performed in a SOC 2; therefore, service organizations may choose to have the service auditor issue two reports as a result of a SOC 2 examination – a SOC 2 and a SOC 3. SOC for Cybersecurity engagements can be performed for any organization. This type of SOC report involves practitioners examining and reporting on an entity's cybersecurity risk management program. In the examination, the subject matter is (a) the description of the entity's cybersecurity risk management program in accordance with the description criteria and (b) the effectiveness of controls within that program to achieve the entity's cybersecurity objectives based on the control criteria. The AICPA’s guide “Reporting on an Entity’s Cybersecurity Risk Management Program and Controls” presents description criteria that may be used when preparing and evaluating the description of the entity's cybersecurity risk management program and applicable trust services criteria (which can be used as control criteria). For additional information on SOC examinations, visit Schneider Downs’ “Frequently Asked Questions about SOC Reports” here: /soc-report-faq.Please contact us if you are interested in learning about our experience performing SOC examinations and how we can help you with your SOC reporting needs. ### Calling all U.S. Citizens Did you properly report your foreign income and assets? U.S. citizens are required to report income on their tax returns, irrespective of where the income is earned or where they live. This means that a U.S. citizen abroad could be required to file tax returns in more than one country. Generally, the tax rules provide an offset to U.S. tax for foreign tax paid.For several years, the IRS has focused on increasing compliance in reporting both foreign-based assets and income for U.S. citizens. Penalties for noncompliance have been raised and enforced (to the extent that the IRS contacts the taxpayer). In order to encourage compliance the IRS created the Offshore Voluntary Disclosure Program and several other disclosure options with low or no penalties.Although the IRS closed the Offshore Voluntary Disclosure Program in late September, the Streamlined Compliance and Delinquent Information Returns options remain in place. For U.S. citizens living abroad, it is possible to become compliant through these processes, pay any tax an interest due, without incurring any penalties. U.S. residents would be subject to a small 5% penalty on undisclosed assets, but this is much lower than the normal penalties which can actually exceed the value of the unreported assets.There are specific eligibility requirements for these programs and it is unclear how long the IRS will maintain these programs. In today’s digital age, it is likely that the IRS will begin searching for taxpayers who haven’t properly reported.  Don’t wait to be contacted by the IRS; Schneider Downs can assist you with your compliance efforts. ### It's time to talk about your CYBER audit policy Imagine for a moment that your organization is hit with a malicious Trojan that your office’s Information Technology (IT) staff hasn’t noticed for months, and it maintained persistence on one of your file servers where your team maintains sensitive documentation. Obviously, your first goal is execution of your well-documented incident response plan. (You do have one of those prepared, don’t you?) So, you work on containment and eradication of the malware, and then comes the second question that should logically follow an intrusion of this types. Did they take any of the sensitive data stored on this server?Your ability to respond to an incident and answer questions like the one mentioned previously will rely on your skill to have the right personnel trained in incident response or calling in a team that can help answer those questions and having sound group audit policies in place for the servers affected. There have been many incidents I have personally responded to where we could have answered more questions about the details surrounding the intrusion, but lack of audit policy and proper backups of the logs prevents a detailed picture of what happened. Forensic examinations of the hard drives are all that is left in those cases, and that unfortunately, can cost precious time to get that peace of mind you would like to have.If you’re currently asking yourself what you should do to get up to speed on this, the answers for a sound audit policy start with matching standards developed by organizations who have already studied what audit policies are necessary. Center for Internet Security (CIS) benchmarks are the place to start, but you should consider additional items to audit if it is a very sensitive system. Strong audit policies are also a great place to help discover malware beyond just the initial infection. Consider the installation of a Security Information and Event Management (SIEM) tool if possible. SIEM software is going to assist in efforts to discover the lateral movement of malware and command and control (C2) connections or exfiltration. You can also perform advanced data analytics and stop threats before they become a much larger problem.In today’s ever-increasing threat landscape, your cybersecurity practices need to be at the top of their game. Don’t just rely on the anti-virus software installed on systems. With the advent of the cloud integration, anti-virus companies are getting better at detecting and handling threats, but they still miss a lot of threats, and it shouldn’t be something to rely on totally for your overall security posture. A lot of firewalls these days also come with built-in Intrusion Detection Systems (IDS) or Intrusion Prevention Systems (IPS). Ensure you have a team taking the time to look through events generated by these devices because these will only alert you and maybe block the communication, but these devices don’t perform remediation of the affected systems.Cybersecurity development of any organization should be as important as locking your doors at night. Set your security and audit controls up and test them frequently, so you are prepared to handle to the worst of scenarios. Your organization should consider IT audits and penetration tests or purple team exercises as part of your continued effort to secure the network. We also recommend that you keep backups prepared in case of a catastrophic event. ### Congress Reaches Out to President to Help ESOPs More than 20 members of Congress signed a letter addressed to President Trump earlier this month requesting assistance in protecting employee-owned companies from the Department of Labor (“DOL”).  The letter argues that the DOL has issued very little guidance on important issues governing Employee Stock Ownership Plans (“ESOPs”), including the valuation of shares owned by the ESOP. This has led to inconsistent positions by the DOL on legal issues and aggressive enforcement policies.  In some instances, the DOL has threatened to sue companies over their ESOP valuation unless they terminate the ESOP.  DOL investigations can place a significant burden on small ESOP companies, sometimes hindering their ability to obtain financing, or causing them to terminate their ESOP.  At the very least, there is concern that the DOL’s enforcement policies could make it difficult for ESOP companies to make business decisions and/or to find someone willing to be their plan fiduciary. The writers of the letter assert that ESOPs are a great mechanism to help private companies succeed, citing studies showing that ESOP companies have higher survival rates, lower layoffs and better performance compared to non-ESOP companies.  Therefore, in order to support the growth of small businesses, the letter requests that President Trump work to persuade the DOL to clarify the rules governing ESOPs (related to valuation and other relevant issues), and to improve the DOL’s enforcement practices in order to reduce the burden placed on small businesses. Schneider Downs has significant experience assisting clients with various ESOP-related needs, including audit, tax, plan design and administration. For more information, please contact Jason Lumpkin (412.697.5472; jlumpkin@sdcpa.com) of our Employee Benefits Group.  Schneider Downs also has significant experience providing business valuation services.  For more information, please contact Joel Rosenthal (412.697.5387; jrosenthal@sdcpa.com) or Steve Thimons (412.697.5281; sthimons@sdcpa.com) of our Business Advisory Group. ### Significant Tax Savings Available Using Qualified Opportunity Zones: Proposed Regulations Issued The Internal Revenue Service (IRS) finally issued much needed guidance, in the form of proposed regulations, on Qualified Opportunity Zones (QOZs).  The guidance provides investors/taxpayers with an initial set of rules on how to qualify for the special tax break for investments made into Qualified Opportunity Funds (QOFs).  As noted in our article of July 11, 2018, investment in QOZs can provide three substantial federal taxpayer benefits to electing taxpayers: Immediate deferral of the gain from taxable income through December 2026; Permanent non-recognition of that gain up to 15% of the gain (meeting holding period requirements); and Permanent exclusion from income of future appreciation earned on the qualified investment (also meeting additional holding period requirements). Utilization of the above provisions can substantially, and permanently, reduce the amount of overall federal taxes paid.  For example, the effective individual capital gains rate on the sale of capital gains assets be reduced from 20% to as low as 8.5%.  On total appreciation of $10,000,000 ($5m deferred gain and $5 additional appreciation), the cash tax savings could be $1,150,000. The Tax Cuts and Jobs Act created QOZs effective as of January 1, 2018.  Members of Congress believe that the use of these zones will spur business investment, economic development, and job growth in economically disadvantaged areas throughout the United States (there are over 8,700 approved zones).  However, many taxpayers have been hesitant to begin taking advantage of the tax savings “opportunity” until the IRS provided additional operating rules.  As of Friday, October 19, the IRS provided the initial set of generally taxpayer-favorable rules. Key provisions in the proposed regulations include: Clarification that QOZ incentives apply to electing “C” corporations, flow-through entities, and individuals who recognize any type of capital gain (short-term or long-term), triggered from the sale of property to an unrelated party, and within 180 days (as defined) invests the gain in a QOF; That deferred capital gains retain their character throughout the deferral period until ultimately recognized; That QOZ benefits are only available to reinvestments of recognized capital gains; A more strict definition of “related party” applies to QOZs than used elsewhere in the Internal Revenue Code; Operational rules for the 180-day reinvestment requirement; Reinvestment opportunities exist for an owner of a flow-through entity that itself fails to make the election to defer the gain; QOF qualification and operating rules; That additional QOF investments, over and above the investment of recognized gains, do not qualify for any of the QOZ benefits (though additional investment will not disqualify the QOF); A QOF can be a newly formed or pre-existing partnership or corporation and that it self-certifies its eligibility; How owners track their tax basis in a QOF. Taxpayers who want to take advantage of the tax benefits derived through investment in QOZs have a couple of options they can pursue.  They can choose to reinvest realized gains in QOFs established by third-party developers and investment advisors or they can choose to form and operate their own QOF.  QOFs need to be identified or formed well in advance of the expiration of the 180-day period to allow sufficient time to meet the gain reinvestment requirements. Further, the QOF also has its own requirements to invest the funds it receives into qualified opportunity zone businesses and properties in a timely manner.  Generally, the fund must invest at least 90% of its assets in qualified opportunity zone property. The rules are new and are being analyzed in more detail.  However, this congressionally permitted form of tax-saving strategy is worthy of consideration.  Please contact Schneider Downs & Co., Inc. as soon as possible for assistance with the QOZ planning and compliance process. ### 2018 Construction Spending Update Recently, the U.S Census Bureau released its report detailing a monthly estimate of the total dollar value of construction work done in the U.S. The spending estimate included work done on new and existing structures for both the private and public sectors. The breadth of the spending estimate included the following: labor costs, materials costs, overhead costs, interest, taxes paid during construction, and contractor profits. According to the recent U.S. Census Bureau’s August Construction Spending release, August 2018 construction spending was 6.5% higher than the same month in 2017. Along similar lines, construction spending for the first eight months of 2018 was recorded at $862.0 billion, while the first eight months of the previous year posted spending of $818.7 billion, which is a 5.3% increase.  Comparing the first eight months of 2018 to 2017, public construction and private construction have increased 7% and 4.8%, respectively. More specifically, within the private construction sector, residential projects and nonresidential projects expanded 6.5% and 2.7%, respectively.Measured by the gross domestic product (GDP), the overall economy grew at a strong 4.2% annual rate in the April-June quarter. As recently published by the National Association for Business Economics, the 2018 GDP is forecasted to come in at a solid 2.9% rate. As for 2018, the construction industry is reaping the benefits of the surging economy. There is not total certainty as to whether, or how long, the upswing will continue. As each construction firm handles the skilled labor shortages and rising costs for land, lumber, and labor, it is pivotal to implement a strategic plan, rather than to simply rely on a soaring economy. If your company would like assistance in maneuvering the construction climate, we invite you to contact us and visit the Schneider Downs Construction Industry Group. For additional information, visit the Our Thoughts On blogsite. ### Cyber Monday Growth Brings Evolving Risks for Retailers The trees outside are turning vibrant shades of red, orange and yellow, which has retailers seeing green.  As Black Friday and Cyber Monday quickly approach, it is predicted that spending on these days will be at an all-time high.  Adobe estimates that 2018 Cyber Monday spending will reach $7.25 billion (up 10% from 2017 and 110% from 2016).  Of this, $2.50 billion is estimated to be mobile-only spending (purchases via phones or tablets). The swing towards the direct-to-consumer model in the retail industry has created many new risks which retailers must consider.  Here are a few: Real-time ordering creates the need for real-time inventory.  For a company to be most successful during what’s expected to be a record-setting day of online sales, their processes and system for recording transactions and changes in inventory must be quick and accurate.  Shoppers placing orders to find out that they can’t be fulfilled may result in negative brand reputation for retailers. With digital sales comes private customer data – and the need to manage and protect that data.  We also can’t ignore the sensitive customer information that is maintained through loyalty and rewards programs.  Consumers expect that their data will be protected.  Data breaches have been in the news over and over again - a mistake here could easily tarnish your brand.  With customer data comes valuable insights. There’s also a risk that retailers aren’t using their access to data for a positive impact on sales and strategy.  It’s important that companies don’t lose sight of understanding and analyzing available data to help drive innovation and business decisions. Sales have become digital, and mobile applications and websites are being used more than ever for purchasing.  Companies need to ensure that their mobile applications and websites are secure and available, all while ensuring a positive customer experience.  Consumers want it all!  Let’s face it, we want to receive our order as quickly as possible and, if we can make it happen, we don’t want to pay for shipping. Many retailers offer promotions in which you spend a certain amount and get shipping for free. On Cyber Monday, they may even offer free shipping on all online sales. Consider how to maintain effective margins when offering free shipping. One solution that companies are implementing is an algorithm that analyzes the geographical location of the customer’s shipping address versus the item availability at the retailer’s distribution center and stores.  Based on the algorithm, the shipment will be sourced from the most appropriate and cost-effective location. If retailers can manage the risks that come along with direct-to-consumer sales, they will see the rewards in the form of strong brand recognition.  That, paired with the ability to remain nimble and grow with the constantly adapting industry, will result in successful sales for retailers, not only through the holiday season, but throughout the entire year. For more information on how Schneider Downs can assist with your risk and control strategies, visit our Risk Advisory Services page at /risk-advisory-services.  ### IRS provides guidance on Exclusion from Income of Qualified Moving Expense Reimbursements On September 21, the Internal Revenue Service issued Notice 2018-75, providing guidance on excluding from income an employee’s reimbursed qualified moving expenses incurred in 2017 but paid after January 1, 2018. The recently enacted Tax Cuts and Jobs Act (TCJA), effective for any taxable year beginning after December 31, 2017 and before January 1, 2026, suspended the exclusion of reimbursed qualified moving expenses from an employee’s gross taxable income except in the case of an individual who is a member of the Armed Forces on active duty and moves pursuant to a military order as part of a permanent change of station. Notice 2018-75 excludes from an employee’s wages the amount of moving expenses incurred in 2017 but paid in 2018 that would otherwise have been taxable under the TCJA, based on a strict reading of the law.A qualified moving expense reimbursement can be paid directly to the employee or to the provider of the moving services on the employee’s behalf during 2018, provided the expense had been incurred and would have been deductible as moving expenses prior to January 1, 2018. However, if the employee had previously deducted the moving expenses being reimbursed in a prior year, the reimbursement is taxable and does not qualify as a qualified moving expense reimbursement.So what should an employer do if it’s already reimbursed an employee’s moving expenses in 2018 for a move that occurred in 2017, and included that amount as part of the individuals’ wages or other compensation? Those employers who have already withheld and paid federal employment taxes on the amount reimbursed to the relocating employee may be able to make an adjustment to reduce future payments to account for the potential overpayment or request a refund of the federal employment taxes.For additional information regarding the overpayment process, see IRS Publication 15 (Circular E), or please contact us to discuss. ### What is Ransomware? Ever since the mid-2000s, industries around the world constantly have one fear in the back of their mind in regards to information security: ransomware.What Is Ransomware?Ransomware is a type of malicious software that either prevents access to existing files or to the computer entirely until a ransom is paid. It is so widespread that individuals are hit with ransomware every 10 seconds and businesses are infected every 40 seconds.Ransom can vary depending on who is infected. A single user’s computer that is infected may have a ransom of $1,000 ransom, while an enterprise may be asked for a ransom of upwards of $15,000. These ransoms are almost always requested in the form of cryptocurrency to prevent the hacker from being identified.Because of the fear of downtime in their computer systems, 70 percent of businesses paid the ransom to their attackers in 2016. Overall, businesses reportedly paid more than $301 million in ransom during that year. For many who are infected, it may seem like an easy fix to prevent downtime, but the reality is the infected computers are only restored 19% of the time after the ransom is paid.Who Is Targeted?Ransomware attacks have been such a threat in the security world because everyone is at risk for infection if poor security practices are being used. No matter how small or big a business may be, they can be infected with ransomware.Security researchers have seen trends in the industries targeted. In 2017, businesses and professional services were the most targeted field for ransomware, followed by government agencies and healthcare. These fields are most commonly targeted because hackers recognize the severity of downtime allowing for a quick payment of the ransom. When infected with ransomware, 72% of businesses lost access to their data for two or more days.How Ransomware Is SpreadMuch like other malware, ransomware is commonly spread through social engineering techniques such as phishing. Victims of ransomware are usually tricked into download malicious email attachments, or by visiting a link that attempts to download a file containing ransomware. Hackers typically take one of two approaches when phishing; they either pretend to be someone the victim knows by using an email with a nearly-similar domain name or by using scare tactics against the victim. They may claim that they have access to the user’s private information and to prevent the release of this information, they must run the malicious file.Depending on the type of ransomware and the time the computers were last patched for security updates, ransomware may be able to spread across your networks with no additional help from the victim. In 2017, WannaCry began infecting systems using a newly released exploit called EternalBlue. Using EternalBlue, WannaCry was able to spread through a company’s network infecting every vulnerable machine with the ransomware. The EternalBlue vulnerability is still often found during network security assessments. To ensure there are no vulnerable computers in your network, it is recommended to conduct routine network security assessments.What Are The Steps Of A Ransomware Infection?Stage 1 – InfectionThis is when the ransomware software is opened and executed through an email attachment or downloaded from a malicious website.Stage 2 – IncubationNext, depending on the ransomware, it may stay hidden from the user for a set amount of time. During this time, it may attempt to further hide itself and replicate to other computers on the network.Stage 3 – ExecutionNow the ransomware will begin to perform its main task. It will first delete existing shadow copies from the device to prevent recovery of files, then begin to encrypt as many files as possible.Stage 4 – Calling Back HomeNow the ransomware software will send the private encryption key back to the command-and-control server. This will allow the hacker to decrypt the files if payment is received and the hacker chooses to do so.Stage 5 – Scare TacticsThe last step is notifying the victim of steps they need to now take. The ransom screen will now appear and give detailed instructions on where the ransom needs to be sent. The ransom screen will often have a time limit between 24 and 72 hours.Types of RansomwareLocker Ransomware – When infected with locker ransomware, access to the user interface is locked. The hacker may also prevent the use of the mouse and limit the use of certain keys on the keyboard, only allowing access for payment of the ransom.Crypto Ransomware – When infected with crypto ransomware, the files on the device are encrypted. This means the user interface can be accessed but not any of the existing files.Mobile Ransomware – Mobile devices are also vulnerable to ransomware attacks. These attacks have been seen affecting Android devices through fake and malicious apps.What to Do If You Get Infected:If you are infected by ransomware, the first and most important step is to remove the infected device from the network. This may prevent the spread of the ransomware across your network.After removing the device from the network, the next step is report the incident to the proper individuals. Afraid of getting in trouble, employees will often hide the ransomware and try to pay the fee on their own. This may be a temporary fix, but malware may still be hiding on the computer, or spreading through the network.The last action that should be taken is contacting a network security team such as Schneider Downs. Depending on the type of ransomware, the team may be able to unlock the files, ensure your networks are free of the ransomware, and provide phishing simulations to help prevent another infection of malware. References:Forbes: https://www.forbes.com/sites/leemathews/2018/03/09/why-you-should-never-pay-a-ransomware-ransom/#3549dd091753Comparitech: https://www.comparitech.com/antivirus/ransomware-statistics/Schneier on Security: https://www.schneier.com/blog/archives/2017/05/the_future_of_r.html ### Turnaround Plan Required - Political Conversations in Business The current political environment has become a daily part of many conversations. With the polarized political environment in the U.S., and individuals holding dramatically differing political viewpoints, politics is now inherently embedded in my business day. This makes for a very tricky situation that one must carefully navigate, since a poorly worded email or an “off the cuff” comment can immediately evoke emotional reaction and might negatively affect a deal. Business and politics do not mix. What happens when they do? Historically, at least as I have experienced it, there was a general rule that business and politics do not mix. But today, I find that it is on the forefront of many conversations, jokes and minds. It’s hard to escape. So, what communication strategies can navigate around politically sensitive topics while remaining focused on the business task? As a certified turnaround professional my work involves assisting organizations through corporate renewal. I generally find that the support will be either a distressed situation or an interaction to enable further growth and profitability. From that perspective, I know that simple plans can serve you well in politically charged situations. These simple tips can help you avoid pitfalls in most business interactions. How to avoid a deal-stopping political discussion. First, the silent plan. The goal of which is to remain as quiet and silent as possible regarding your political leanings. When creating profiles and communications on professional networking websites such as LinkedIn or personal social media platforms like Facebook, keeping political perspectives out of all types of communication is a helpful step to keeping politics separate from business.  It will increase your odds of not alienating customers. Your odds of guessing someone’s political views is about 50/50. Professional gamblers prefer odds significantly greater than 50/50. It’s probably best not to risk losing a customer or damaging your organization’s brand on a non-essential gamble that doesn’t add value to the business at hand. Walk into any meeting with a neutral topic that might interest others in your back pocket to share. Second, the Teflon move. Allegedly nothing sticks to Teflon. So, although my wife will disagree based on my cooking abilities, I try not to rely on “being the Teflon don.” Stickiness aside, the goal is to divert any conversations to other topics, with efforts to focus the conversation on the desired business message. Try to slip and slide away from risky conversation. All communication paths should lead back to the business task, void of any “left” or “right” perspectives. Third, the listening path to neutral. You should know yourself and know your company. It’s important to understand any gaps between you personally and the organization you represent in business. Embrace your organization’s value statement, since it will serve as the basis for neutrality. Most organizations will have a value statement that includes words like: respect, ethical, integrity, and balance. The value statement may include sayings like: "do the right thing", "always respect everyone", "work and family communities are important", "accept people for who they are" and similar calls for respect of others. Listen well and leverage the positivity. In sensitive situations, listen well and reiterate your organization’s values and your clients’ organizations’ values—since most tend to project positive behaviors: leverage the positivity accordingly. Overall, be prepared, as one never knows what the situation may call for. While there is no one clear path to ensure success, there are often little paths, including preparation, which can help minimize any potential downside. Recognize there may be a time and place when a stand must be made, but at the simplest level, the message of being respectful of people in all aspects with an empathic ear will serve you well. By having thought about the challenge of business and politics, and by at least having a plan or mindset ready to go – even if is as simple as the three concepts above – you can help advance business objectives. As a turnaround consultant, I have to extract value out of volatile situations. Turnaround consulting is unique, as one meets people under intense circumstances that many have never encountered before. It requires the ability to know when to stop and when to start a fire to achieve a business end. But more importantly, it requires that you recognize when you can bring value. But with politics evoking emotion, any statement can be a potential fire-starter that can quickly escalate out of control. So have a plan to prevent political sparks from becoming a barrier to business. Since no matter if your interaction is turnaround situation or just a regular business interaction you need to improve your odds of making a positive connection to better than 50/50. ### Labor Shortage, Tall Task The labor shortage facing contractors has been a key industry risk in recent years. On August 29, 2018, Autodesk and the Associated General Contractors of America (AGC) released their findings of a survey taken by over 2,500 constructions firms nationwide. The survey asked 18 different questions relating to various matters, including employment and labor shortage issues. A few key takeaways: 80% of respondents noted difficulties in hiring craft labor (83% of PA respondents). Of 20 different craft labor types listed, both national and PA respondents noted 19 of 20 positions were more difficult to hire than one year prior. Craft laborers within respondents’ local pipelines rated 85% of individuals at poorly or fairly trained (65% by PA). Contractors have taken differing approaches to remedy labor shortages, with 62% of survey respondents increasing base pay rates for skilled laborers. These additional costs resulted in 47% of survey respondents having to put higher-priced bids out, directly attributable to increased labor costs. Some firms are providing in-house training to increase job site efficiencies with their existing workforce, while other firms are investing in labor-saving equipment and technology to reduce the need for laborers in the future.Brian Turmail, Senior Executive Director of Public Affairs at AGC, responded to this survey, saying, “We think the project site 10 years from now will look very different than it does today.” What steps has your firm taken to combat skilled labor shortages? ### Business Meals Remain Deductible On Wednesday, October 3, 2018, the Internal Revenue Service (IRS) issued Tax Notice 2018-76 confirming our conclusion reached in March 2018 that certain business meals will remain 50% deductible. The results are more favorable than we had originally hoped for as food and beverages purchased separately at an entertainment event can still be deducted and are not to be considered non-deductible entertainment expenses. The Tax Cuts and Jobs Act (the Act) amended §274 of the Internal Revenue Code disallowing a deduction for expenses with respect to entertainment, amusement, or recreation. In the haste that the Act was drafted and passed, it was not clear whether the statutory language relating to the new non-deductible entertainment provisions would also negatively impact the deductibility of expenses for business meals. There were conflicting conclusions among tax professionals as to whether business meals were included in the new law, or whether the old law remained. Our analysis led us to the conclusion that the Act did not change the law related to business meals that existed prior to its enactment. Now, there is specific support from the IRS that those meals remain deductible assuming other requirements are met.         The notice provides that the Treasury Department and the IRS intend to publish proposed regulations under §274 clarifying when business meal expenses are nondeductible entertainment expenses and when they are 50 percent deductible expenses. Until the proposed regulations are effective however, taxpayers may rely on the guidance in the notice for the treatment for certain business meals.In accordance with the notice, taxpayers may deduct 50 percent of an otherwise allowable business meal expense if:1. The expense is an ordinary and necessary expense under § 162(a) paid or incurred during the taxable year in carrying on any trade or business; 2. The expense is not lavish or extravagant under the circumstances; 3. The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages; 4. The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and 5. In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.The notice does indicate that the Treasury Department and the IRS intend to issue separate guidance addressing the treatment of expenses for food and beverages furnished primarily to employees on the employer’s business premises. At this time, we believe these expenses remain 50% deductible.We will continue to monitor the tax changes and provide our insight into their application to help you optimize your own unique tax situation. Please contact your Schneider Downs tax representative for additional information regarding the above and/or for any other tax issues you may be facing. ### IRS Releases 2018 Draft of Excise Tax Form 4720; Includes Schedules for Exempt Organizations Two new excise taxes added by the recently enacted Tax Cuts and Jobs Act may apply to exempt organizations, for tax years beginning after December 31, 2017: A 21% excise tax on executive compensation, applicable to the top five "covered" employees who are paid more than $1 million. The excess amount greater than $1 million is the taxable portion. A covered employee is a current or former employee who is or was one of the five highest-compensated in a tax-exempt organization for the taxable year, or was a covered employee of the organization (or its predecessor) for any preceding taxable year beginning after December 31, 2016. The tax does not include compensation paid to licensed medical professionals (doctors and nurses) and veterinarians.   A 1.4% excise tax on the net investment income of private colleges and universities that meet all the following criteria: The institution had at least 500 students in the preceding taxable year; More than 50% of the students are located in the United States; The institution is not a state college or university; and The aggregate fair market value of the assets at the end of the preceding taxable year (other than those used in carrying out the institution's exempt purpose) is at least $500,000 per student. Form 4720 will be used to report both excise taxes; Schedule N for the tax on executive compensation, Schedule O for the tax on net investment income.Note that Form 4720 is a separate return from the Form 990, but carries the same due date. A separate extension would need to be completed for Form 4720, however; use Form 8868, Application for Automatic Extension of Time to File an Exempt Organization Return, and enter code 09, Form 4720 (other than individual).The IRS released the 2018 draft of Form 4720 on July 18. To stay current with the latest draft forms or the release of final forms, visit the IRS website. ### Key Oil and Gas Provisions Remain Through Tax Reform While there have been sweeping changes due to the Tax Cuts and Jobs Act of 2017, a few key components that taxpayers in the oil and gas industry have routinely benefitted from will remain intact. One of the more important provisions to remain under the new law is the option to fully expense intangible drilling costs incurred in the startup of the business. The option to immediately expense intangible drilling costs can greatly help oil and gas taxpayers in the earliest, most capital-intensive years of the business.As an added boost, the percentage depletion deduction has also survived the tax reform and will remain effective under the new law. Under percentage depletion, a taxpayer can deduct 15% of the gross income on a well-by-well basis, subject to certain limitations. Percentage depletion can often provide a more advantageous alternative to cost depletion for profitable wells, and will continue to benefit many oil and gas taxpayers, as it remains a viable deduction into the future.The two aforementioned provisions remaining intact will certainly benefit taxpayers in the oil and gas industry into the foreseeable future. These key measures will certainly help to stabilize the industry from a tax perspective. ### Phishing, Don't Take the Bait! We’ve all heard about phishing by now. It’s the attack vector of choice for many hackers – in which the weapon used is a simple email. Hackers love phishing because it’s usually easier to trick a single employee into clicking a toxic link in a phishing email than it is to craft a technical exploit for a company system. If we all know about phishing, why do we take the bait? Many people associate phishing with common spam and/or obviously phony emails that often end up in our personal inboxes. Such obvious phishing emails might contain blatant spelling mistakes or request financial information for banks we don’t have accounts with. But the real threat of phishing comes from a higher caliber attack. Many adversaries are actually quite adept at crafting believable messages. They use proper grammar and accurate logos. Their emails seem to be appropriate – in a context that doesn’t readily indicate a phishing attempt. These advanced phishing techniques, as well as common spam attempts, are why phishing continues to be a leading cause of data breaches. Phishing and pretexting account for 93% of social breaches in 2018 Verizon study. According to Verizon’s 2018 Data Breach Investigations Report (DBIR), phishing and pretexting account for 93% of social breaches in the study. (Pretexting is influencing a person, in order to affect their behavior or gain information by creating a false sense of security. Pretexting occurs in a variety of ways, including through email.) Well publicized breaches such as the Democratic National Committee, Target, and Anthem Health Insurance reportedly all began with compromise via phishing email. Common phishing techniques and how you can spot them. Schneider Downs calls the two overarching categories of phishing: Phishing for Credentials and Phishing for Compromise. Other documented techniques, such as Spear-Phishing, may utilize either technique depending on the situation. Phishing for Credentials As you might have guessed, Phishing for Credentials is about trying to compromise a valid username and password combination for a specific application. The targeted application would likely be a high-value target; it could be a VPN, Office365, Outlook Web App, or a custom portal used to store sensitive information.  The email could be a request from an adversary impersonating someone you know and might include a link to a fake login portal. For example, if your company uses Dropbox to share documents, valid Dropbox credentials could prove useful to an attacker.  A phish for credentials specifically targeting Dropbox could look like this: The body of the email looks legitimate, as if it’s a real notification from Dropbox. If you click the link to view the documents, you’re brought here to a (fake) login screen: Again, this looks very real. It’s almost an exact clone of the real Dropbox login page. Setting up these kinds of fake pages is trivial for attackers. Any usernames and passwords entered on this page are sent back in cleartext to the attacker, who then might redirect you to the real Dropbox login to avoid causing suspicion. What to Look for: Always watch out for the domain name. Something will generally be slightly off in the from address field or in the URL. You would expect this email to be from dropbox.com. In the example, we’ve blurred the domain since we actively use it in our ethical hacking engagements, but, it’s coming from a domain that is not similar to dropbox.com. In a more careful attack, the domain could easily be something as close to the real name as mydrobox.com or dropdox.com. Before even clicking the View Documents button in the email, you can hover the mouse over it to see where the hyperlink goes. If it doesn’t go where you expect, don’t click. Many of these types of phishes have generic greetings instead of your name. Attackers won’t always take the time to get your personal details or place them in the email. Introductions similar to “Dear Customer” are signs that the email might by a phish. Also, in the browser screenshot you might have noticed that the site uses HTTPS and that Chrome identified the website as secure using the green lock symbol. Many people are aware that you shouldn’t enter credentials over HTTP, where the browser does not show the secure symbol. That is true, however, it does not mean that any site using encryption is safe to enter your credentials in. Setting up the certificates for encryption takes a few minutes, but it’s a step many adversaries will take in order to help gain your trust. Phishing for Compromise Phishing for Compromise is different from Phishing for Credentials in that it likely includes a file. The file could be attached directly to the email or could be downloaded from a link in the email. It could be formatted as a Microsoft Office document, a PDF, an executable, or almost anything except a text document. If the file is run it will attempt to introduce some form of malware to your system. This could be something like ransomware, as we saw with many attacks in 2017, or an outbound connection, known as a reverse shell, giving the attacker remote control of your system. The example below is a sneaky trick – it’s a phishing email claiming to contain the results of an internal phishing campaign conducted by the recipient’s own company. Who doesn’t want to know if your work neighbor clicked the bad links during training exercises, right? In a ploy to gain your trust, the email contains some general info about phishing and even some tips on how to avoid getting phished. Clicking the Review Report link downloads a file hosted on the internet, in this case called Results.xls. The file contains some phony phishing statistics, listed by department, with some pretty formatting to make it look legitimate. This excel file contains a macro, which in this case, is actually a malicious payload – you’ll see the yellow SECURITY WARNING bar asking if you wish to enable macros. If the Enable Content button is clicked, the macro automatically runs, attempting to run a command on the victim’s computer that allows the sender to remotely access the computer. If successful, the attacker could run shell commands, browse/edit/delete files, and much more. What to Look for: Phishing emails that contain payloads want you to open the file – oftentimes playing off human emotion by using wording to make the situation seem urgent or, in this case, make you curious about what the file contains. Older versions of Microsoft Office Documents like .xls and .doc allow macros to be saved in the document. Newer versions of Office documents (.xlsx and .docx) don’t, instead requiring a special extension (.xlsm and .docm) most people aren’t used to seeing. If you don’t normally see older versions of these file types, this should be a red flag. Security warnings caused by the presence of macros. Be extremely careful clicking through security warnings! Do so only if you know the sender and the purpose of the macro or program. This is not specific to Office documents. Other file formats might require or even prompt you for administrative privileges. Countermeasures The two umbrellas that phishing defenses fall under are user training and technical controls. Schneider Downs believes the most effective defense is a healthy combination of both. User training can be in a variety of formats: seminars, computer trainings or phishing simulations, to name a few. Phishing simulations are legitimate attempts by your company or a third party to phish your employees. This can be done to establish a baseline, track progress, or directly alert users to missteps by redirecting users who click to a training page. The goal of simulations, and all user trainings, is to raise awareness and foster a healthy relationship between your employees and your security personnel. The end user is often the first line of defense. It’s important that employees know that they should report (and are comfortable doing so) any suspicious emails to security, whether it’s a real phish, a simulation, or a legitimate email. Technical controls are software put in place that help prevent phishing emails from ever reaching the end user. This can be through inspection of the domain it’s coming from, examination of where links take you, and sandboxing attached files. If something gets flagged, the email isn’t delivered to users, or at least prompts the user to release the email to their inbox. Technical tools such as Mimecast have capabilities to help with incident response if phishing emails get through. Post-delivery options include abilities such as viewing other recipients of an email (for password resets, etc.) and killing hyperlinks in an email. These options are great – since you can get a bigger picture and take action quickly if just one user reports suspicious activity to you. If you have any questions, please contact Schneider Downs’ cybersecurity advisory team. Click here to view Verizon’s 2018 Data Breach Investigations Report. ### United States-Mexico-Canada Agreement (USMCA) Finalized On August 27, the existing North American Free Trade Agreement (NAFTA) was replaced with a new tentative accord between the United States and Mexico. The original NAFTA had been instituted to remove trade barriers and most tariffs between the United States, Mexico and Canada, but it was not until September 30 that all three nations came to an agreement that pulled Canada into the mix.Now known as the United States-Mexico-Canada Agreement (USMCA), the pact looks to yield positive results in manufacturing sectors within each of the respective countries. Starting in 2020, it will require that 75% of a car’s parts will have to come from one of these three countries to qualify for duty-free treatment, an increase from the previous 62.5% requirement. Also starting in 2020, it will be required that at least 30% of vehicle manufacturing work be completed by workers earning at least $16 per hour. That figure will gradually move to 40%, for cars, by 2023. The consensus is that these provisions will help bring manufacturing jobs back to the U.S.Outside of manufacturing, the agreement also brings about changes for the U.S. dairy sector. Historically, the Canadian government has sought to restrict the amount of dairy produced within the country. With the USMCA, U.S. dairy farmers will be able to increase the amount of product sent to north of the border.The three countries are expected to sign the agreement by December 1. USMCA will last for 16 years and will be subject to revision every six. ### How the size of an organization can affect its risk of fraud According to the Association of Certified Fraud Examiners’ (“ACFE”) 2018 Report to the Nations, organizations with less than 100 employees represented the largest number of cases that they studied and were also the victims of the largest median loss due to fraud, when compared to the other organizations studied.The ACFE’s findings are based on a study of 2,690 cases of occupational fraud that were investigated between January 2016 and October 2017.  The study found that the number of employees an organization has directly relates to the organization’s risk for fraud and its ability to implement anti-fraud controls. Smaller organizations tend to have fewer resources and more difficulty implementing separation of duties and other key fraud controls in order to help mitigate the organization’s risk.  In 42% of the cases studied involving organizations with less than 100 employees, the fraud was determined to have been caused by a lack of internal controls. In organizations with 100 or more employees, a lack of internal controls was identified in 25% of the cases.Small organizations, or those with less than 100 employees, represented 28% of the cases investigated. These cases had a reported median loss of $200,000, which is almost twice as much as the median loss reported by organizations with 100 to 9,999 employees. The largest organizations studied had 10,000 or more employees and accounted for 24% of the cases. These organizations had a median loss of $132,000, which falls between the small and medium-sized companies’ range.Another important difference to recognize when evaluating the fraud risks for organizations of different sizes is that larger organizations often battle different risks than smaller organizations. According to the study, the following percentages of cases related to organizations with 100 or more employees: corruption (43%); non-cash fraud (22%); billing (18%); and cash on hand (14%). In contrast, the following percentages of cases related to organizations with fewer than 100 employees: corruption (32%); billing (29%); check and payment tampering (22%); and expense reimbursements (21%) (read more about expense reimbursement schemes here). These statistics highlight the importance of understanding the specific needs and risks of an organization when designing or evaluating internal controls. Should you identify fraud, or have concerns of fraud occurring in your organization, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com to see how we can help you address those risks. ### If You're Waiting For A Sign, This Might Be It - Six Behavioral Red Flags Of Fraud According to the Association of Certified Fraud Examiners’ (“ACFE”) 2018 Report to the Nations, in 85% of the cases studied, fraudsters displayed at least one behavioral red flag. In 50% of the cases, multiple red flags were evident.Would you be able to recognize the six behavioral red flags of fraud if presented within your own organization?The ACFE’s findings are based on a study of 2,690 cases of occupational fraud that were investigated between January 2016 and October 2017.By far, the most common behavior exhibited by perpetrators was living beyond their means. This red flag was identified in 41% of the cases. The most common red flags identified and their percentage of occurrence were as follows: Living beyond one’s means (41%) – a person’s lifestyle seems to exceed their income or available funds; Financial difficulties (29%); Unusually close association with a vendor or customer (20%); Excessive control issues or unwillingness to share duties (15%); Recent divorce or family problems (14%); and A general “wheeler-dealer” attitude (13%). Some of the other red flags occurring less often, but still reported as being present, included: irritability, suspiciousness, or defensiveness; addiction problems; complained about inadequate pay; excessive pressure from within the organization; social isolation; past legal problems; and refusal to take vacations. The study also showed that no behavioral red flags were displayed in 15% of the cases.The study pointed out that 45% of fraudsters committed some type of non-fraud workplace violation.That finding indicates a possible link between occupational fraud and other forms of misconduct in the workplace.The top five examples of non-fraud-related misconduct and their percentage of occurrence in the cases studied were as follows: Bullying or intimidation (21%); Excessive absenteeism (14%); Excessive tardiness (10%); Excessive internet browsing (7%); and Sexual harassment (4%). Another category of red flags identified in the study is human resources-related red flags. Human resources-related red flags sometimes occur as a result of events such as poor performance evaluations or loss of pay or benefits which can ultimately cause financial stress or resentment towards the organization. The study showed that human resource-related flags were present in 39% of the cases, with negative performance evaluations and fear of job loss being the top two indicators.If you think your organization might be a victim of fraud contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com. For similar articles, visit the Our Thoughts On blog. ### Putting a Face to the Fraud What do fraudsters look like? Do they dress, act, or talk a certain way? In the Association of Certified Fraud Examiners’ (“ACFE”) 2018 Report to the Nations, the ACFE explores common characteristics and risk profiles for those who commit occupational fraud.The ACFE’s findings are based on a study of 2,690 cases of occupational fraud that were investigated between January 2016 and October 2017. The following is a summary of some of the key characteristic findings reported on by the ACFE.Position in an organization – Owners and executives committed only 19% of the frauds studied; however, the median loss by these individuals was $850,000.Fraud loss caused by owners and executives is almost six times larger than the median loss by managers. Managers committed 34% of the frauds and caused a median loss of $150,000. Lower-level employees accounted for 44% of the frauds and a median loss of $50,000.This data shows how strong a factor the perpetrator’s position level is in their ability to commit sizeable frauds. The ACFE reported that a significant correlation between authority and fraud loss has been acknowledged in every report going back to 1996.Tenure – Losses from fraud typically increase with the length of the perpetrator’s tenure at the organization. Fraudsters with less than one year at their organization were responsible for a median loss of $40,000, while fraudsters with over ten years caused a median loss of $241,000.Gender – 69% of fraud perpetrators were male. The median loss attributed to men was $156,000 and $89,000 to women. Historical studies have all shown that fraudsters tend to be male and that men are responsible for larger fraud losses.Age – Median fraud losses of $480,000 were the largest and seen in the study’s second oldest age range of 56 to 60. The next largest median loss was $355,000 which was caused by those older than 60. Median loss related to those 25 years of age and younger was $23,000.Education – The data indicates that more-educated perpetrators may be more effective at committing fraud.  Education is also correlated with authority, which has already been shown to increase the extent of losses due to fraud. Fraudsters with a postgraduate degree were responsible for 14% of frauds with a median loss of $230,000, while those with a high school diploma or less were responsible for 24% of frauds and a median loss of $75,000. Those with a university degree committed 47% of the frauds and caused a median loss of $160,000.Collusion – About 50% of cases investigated involved collusion among multiple fraudsters. Fraud losses increased with the number of perpetrators involved. For example, 52% of the cases involved one perpetrator causing a median loss of $74,000 and 30% of the cases involved three or more perpetrators causing a median loss of $339,000.Behavioral traits can also present themselves as warning signs. The six most frequently identified behaviors displayed by fraudsters were: living beyond means; financial difficulties; unusually close association with a vendor or customer; excessive control issues or unwillingness to share duties; recent divorce or family problems; and a general “wheeler-dealer” attitude. Read more about the warning signs of fraud in “If You’re Waiting for a Sign, This Might Be It – Six Behavioral Red Flags of Fraud."Should you identify fraud, or have concerns of fraud occurring in your organization, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com to see how we can help you address those risks. ### Occupational Fraud - An Attack From Within In the Association of Certified Fraud Examiners’ (“ACFE”) 2018 Report to the Nations, the ACFE presents its findings related their study of 2,690 cases of occupational fraud that were investigated between January 2016 and October 2017.As defined in this report, occupational fraud is fraud committed against an organization by its own officers, directors or employees. In short, it is an attack from within.The three major types of occupational fraud are asset misappropriation, corruption and financial statement fraud. Asset misappropriation is the most common form of occupational fraud, in terms of frequency, representing 89% of cases in the ACFE’s study. However, the median loss related to asset misappropriation cases was only $114,000, which is significantly less than the other two types.Corruption schemes fell in the middle, representing 38% of cases and a median loss of $250,000.Financial statement fraud was seen in only 10% of the cases investigated; however, it was certainly the most expensive type of fraud with a reported median loss of $800,000.Based on the 2,690 cases studied, the ACFE reported over $7.1 billion in total losses, with a median loss of $130,000 per case.  It is important to note that fraud schemes often consist of more than one form of fraud. Almost one-third of the cases in the ACFE’s study involved multiple forms of occupational fraud. This is a very important fact to take into consideration when designing or evaluating an organization’s control environment.The study also showed that each of the 18 entity-level anti-fraud controls assessed in the study were associated with both reduced fraud losses and quicker fraud detection.For example, the study showed that surprise audits and the use of proactive data monitoring and analysis cut fraud losses in half. However, smaller organizations tend to have fewer, if any, anti-fraud controls, leaving these organizations often more susceptible to fraud.Should you identify fraud, or have concerns of fraud occurring in your organization, contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Alyssa Brunatti at 412.697.5371 or abrunatti@sdcpa.com to see how we can help you address those risks. ### Minimum Wages Are On the Rise Effective October 1, 2018, Delaware will enact a 50-cent increase in its minimum wage, bringing it to a new high of $8.75 per hour. Shortly thereafter and throughout 2019, adjustments will be made to minimum wage levels in 22 states and districts, including Alaska, Arizona, California, Colorado, Delaware (additional adjustment in 2019), the District of Columbia, Florida, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, South Dakota, Vermont and Washington.In an effort to increase the minimum wage, some states have passed legislation to enact adjustments on an annual basis based on the consumer price index or similar metric. Other states have passed fixed increases to attain a specific wage over time. Most notably, California, D.C., Massachusetts, and New York will reach a $15 minimum wage by 2023.There has been a lot of debate surrounding the federal minimum wage law in recent years as the issue has taken a spot at the center of the nation’s political discussion. Regardless of whether the nation believes that the market should determine wages or that the national minimum should be raised, the reality of current state legislation is that the minimum wage will continue to increase across the country. As such, retailers can expect to see increases in one of their most significant expenses over the next five years.For more on how these legislative actions can affect your business, contact us at contactSD@schneiderdowns.com.  ### New Submission Requirements for Forms 1099-MISC The Protecting Americans from Tax Hikes (PATH) Act of 2015 updated the due date filing requirements for Forms 1099-MISC as follows: January 31 - Reporting non-employee compensation (Box 7), whether filed on paper or electronically February 28 – Not reporting non-employee compensation (all boxes except Box 7) and filed on paper March 31 - Not reporting non-employee compensation (all boxes except Box 7) and filed electronically Effective for tax year 2018, it is required that all Form 1099-MISC submissions after January 31, 2019 reporting non-employee compensation in Box 7 be filed separately from other Forms 1099-MISC with reporting in other boxes.  Therefore, if filing on paper, separate submissions are required, each with its own Form 1096.  If filing electronically, separate submissions are required, each with its own Payer “A” Record.It is important that Forms 1099-MISC be submitted in accordance with IRS transmission rules above. Organizations that submit mixed submissions (those with both Box 7 and other boxes completed) may receive a Notice 972CG, treating all Forms 1099-MISC subject to the Section 6721 penalty for failure to file by January 31.Penalties for late filing vary based on the gross receipts of an organization and the number of days the filing is late but can be significant.  Organizations may provide recipients with a single payee statement reporting all Form-MISC payment types even if they report two separate forms with the IRS.  The due date for providing payees Forms 1099-MISC is January 31.If you have any questions or would like to discuss these regulations in further detail, please contact your Schneider Downs representative. ### Calculation of Value Accepted in Divorce Case In a recent Alabama divorce case (Rohling v. Rohling, 2018 Ala. Civ. App. LEXIS 94), the appeals court affirmed the trial court’s acceptance of a calculation of value of the husband’s dental laboratory business.The husband acted as his own expert in determining the value of his business based on his knowledge, skill and experience in managing the dental lab and its financial matters. The wife hired a CPA, CVA, MAFF to perform a calculation engagement to value the business. The husband’s attorney argued, among other things, that a calculation engagement is not relevant and that a more thorough and accurate valuation engagement should have been performed. However, the husband did not obtain either a calculation of value or full valuation of the business.  The court found that the calculated value of the business performed by the wife’s expert was a “reliable basis for determining the value of the dental lab.” The main difference between a valuation engagement and a calculation engagement is that a valuation results in a “conclusion of value” and relies on the valuation analyst’s judgement to apply all valuation approaches and methodologies deemed appropriate to determine the value of a business, resulting in the analyst providing his or her opinion on the value of the business.  A calculation, on the other hand, involves the client instructing the analyst to apply certain valuation procedures to the subject business, and the analyst provides a “calculation of value” in compliance with the client instructions.  Therefore, a calculation engagement does not provide an analyst’s opinion of value, since only client-directed, and often limited, valuation procedures are performed.There is no definitive guidance on when a calculation or valuation should be performed and, generally, most valuation analysts do not believe a calculation engagement is appropriate for litigation.  It is difficult to determine why the courts accepted the calculation of value in this case, even though it did not include the more in-depth procedures necessary to rise to the level of a valuation engagement.  Apparently, the court at least believed the wife’s expert was properly qualified as an expert witness in the case and that he properly followed the standards for preparing a calculation engagement as outlined in the Statements on Standards for Valuation Services issued by the AICPA.A calculation of value can be a time-saving and less-expensive alternative to a full valuation; however, deciding which option is appropriate depends on the individual situation and must be discussed with your attorney and/or valuation analyst before a decision is made.  Despite the above ruling, one must tread lightly with the idea of using a calculation in a dispute setting.  Schneider Downs has significant experience preparing valuation and calculation engagements and routinely assists clients in determining which type of engagement is appropriate.  For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com. ### New Employee Benefit Plan Auditing Standard Now Final After years of debate, deliberation and revision, it appears the Auditing Standards Board (ASB) is finally set to issue Statement on Auditing Standards (SAS) Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA as a final standard. The ASB has not yet announced when the final standard will be available nor has it determined the effective date.The following are a few of the significant provisions that are included in the final standard: An audit performed in accordance with ERISA section 103(a)(3)(C) will no longer be referred to as a "limited scope audit." Instead, a limited scope audit will be referred to an “ERISA section 103(a)(3)(C) audit.” The ASB believes this provides for better distinction from an audit where a scope limitation is imposed. Auditors will now be required to make inquiries of management on how they determined that the institution issuing the investment certification is qualified to do so. The auditor’s reports under an ERISA section 103(a)(3)(C) will provide a two-pronged opinion based on the audit and on the procedures performed relating to the certification. The report will provide an opinion on whether information not covered by the certification is presented fairly, and an opinion on whether the certified investment information in the financial statements agrees to or is derived from the certification. Additionally, the proposed auditing standard would have required auditors to perform procedures on specific plan provisions regardless of their assessment of risk as well as include the findings in their auditor’s report. Neither provision was included in the final standard.As audit requirements become more and more stringent, it is more important than ever that plan sponsors hire a quality audit firm to perform their employee benefit plan audit. Not only does an audit help the plan sponsor carry out its fiduciary responsibility with filing a complete and accurate Form 5500, but an audit may also be useful in identifying operational errors or internal control weaknesses. What are the consequences of not having a quality audit performed? - possible rejection of plan filings by the Department of Labor and fines up to $1,100 per day on deficient filings. Is that a risk worth taking? ### Understanding and Calculating Economic Nexus Thresholds for Sales and Use Tax While a few states such as Hawaii and Vermont already have active economic nexus provisions in place for sales and use tax, remote sellers are anxiously working to comply with a number of states whose economic nexus provisions go into effect on October 1, 2018.The states of Alabama, Illinois, Indiana, Kentucky, Michigan, Minnesota, New Jersey and Wisconsin all have laws that go into effect on October 1 for remote vendors meeting certain economic thresholds. As such, it is critically important for remote sellers to understand and calculate the thresholds correctly to ensure they are properly registered and filing sales tax returns in the required jurisdictions. All of the above states, with the exception of Alabama and Minnesota, use thresholds of $100,000 in sales or 200 individual transactions.  However, not all states calculate their thresholds in the same way.  For instance, most of the states use an annual figure, such as the previous or current calendar year’s sales. If you are a remote vendor who exceeded either of $100,000 in sales or 200 individual transactions in 2017 or 2018, you will need to register and begin collecting sales tax in the following states by October 1, 2018: Indiana, Kentucky, Michigan, New Jersey and Wisconsin.  Illinois and Minnesota calculate their thresholds a little differently, they use the 12- consecutive-month rule. In Illinois, remote sellers at the end of September will need to calculate their thresholds for the past 12 months to see if they exceed the $100,000 in sales or 200 individual transactions thresholds. When calculating the thresholds for Illinois, remote vendors are not to include sales for resale, sales from out of state that require registration with an Illinois agency (motor vehicles, trailers, aircraft, watercraft, etc.) or occasional sales.  If remote sellers have met the threshold for the past 12 months in the period ending September 30, 2018, they must register and begin collecting sales tax on October 1, 2018. For remote vendors not meeting either threshold, they must perform the same calculation at the end of the next quarter to see if they exceed either of the thresholds for the 12- month period ending December 31, 2018. Remote sellers meeting either threshold must begin collecting sales tax on the first of the following month (January 1, 2019); those who do not meet either threshold must repeat the process at the end of the following quarter (March 31, 2019). Once the threshold has been met, vendors must register and begin filing returns for at least one year before they can perform the threshold calculations again to see if they still have an economic presence and nexus with Illinois.Minnesota uses a straight 12-month period for its threshold calculation. As such, remote vendors not meeting the thresholds will have to calculate each month to make sure that they are not approaching the state’s 10 or more transactions totaling $100,000 or 100 or more individual transactions. Remote sellers should not assume that all states using the same or similar economic thresholds calculate their thresholds the same way. Remote vendors should check the respective state’s rules to make sure they understand what the economic nexus standard is and how the thresholds are calculated. If you have any questions regarding the proper calculation of a particular nexus threshold, you should consult with your state and local tax professional. ### Administrative Expenses for Trusts and Estates Will Remain Deductible The Internal Revenue Service (the “IRS”) has announced in Notice 2018-61 (the “Notice”) that it plans to issue regulations clarifying that non-grantor trusts and estates can still take deductions for certain costs paid or incurred in the administration of the estate or trust.The Tax Cuts and Jobs Act (the “Act”), signed into law late last year, added new Section 67(g) to the Internal Revenue Code (the “Code”). Code Section 67(g) provides that miscellaneous itemized deductions will not be permitted for tax years 2018 through 2025. Notwithstanding that provision, existing Code Section 67(e)(1) permits an estate or nongrantor trust, in computing its adjusted gross income (“AGI”), to deduct the costs that are paid or incurred in connection with the administration of the estate or trust that are unique to the administration.Practitioners expressed concern that Code Section 67(g) could be read to eliminate the Code Section 67(e) deduction for administrative expenses. Many reasoned that, since Section 67(e) was not specifically removed from the Code when Section 67(g) was added, Congress did not intend to disallow deductions for administrative expenses. But since the IRS had not taken a formal position on the matter, the waters were muddied.The Notice explains that administrative expenses deductible under Code Section 67(e) are above-the-line deductions allowable in computing AGI.  These expenses are therefore not included within the definition of itemized deductions. Accordingly, the suspension of the deductibility of miscellaneous itemized deductions does not affect the ability of a fiduciary to continue to deduct the costs paid or incurred in the administration of an estate or trust.Estates and trusts reach their highest marginal tax brackets much quicker than individuals. Executors and trustees typically rely on deductions for administrative expenses to offset income that may otherwise be taxed at a high rate. Although the specific content of the forthcoming regulations remains to be seen, fiduciaries should rest assured that the deduction for administrative expenses will remain intact.The Treasury Department and the IRS intend to issue regulations clarifying that estates and non-grantor trusts may continue to deduct administrative expenses. Although there is no set release date for these regulations, taxpayers may rely on the Notice for tax years beginning after December 31, 2017.      ### New Procurement Standards Impacting Research and Development Activities The Research and Development (R&D) Cluster encompasses a variety of programs in which the federal government sponsors research and development activities through a number of awards, such as contracts, grants, cooperative agreements, etc. The purpose and objectives of each project vary widely from award to award, and as such, the specific requirements, involved organizations, and amounts awarded are unique to each award. From a compliance perspective, the wide variety of requirements and terms within individual awards calls for those involved with compliance within the organization to perform a detailed assessment of which compliance requirements per 2 CFR 200 are applicable to the specific award. In this assessment, organizations must determine which of the 12 types of compliance requirements are likely to have a direct and material effect on the R&D cluster.Within the 12 compliance requirements, procurement standards have seen significant change. Because a large portion of R&D awards typically call for the non-federal entity to purchase equipment, supplies, contracted services, etc. to assist in the outlined research and development activities, these changes will likely have a significant effect on the organization’s procurement procedures and processes. The changes to procurement were issued as part of the Office of Management and Budget’s (OMB’s) grant reform, titled “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.” Although overall changes to federal awards were implemented in 2014, the OMB issued a grace period of three full fiscal years for implementation of the procurement standards in 2 CF 200.317 through 200.326. The standards are now in effect, impacting fiscal years beginning on or after December 23, 2017, or for organizations with June 30 year-ends, the new standards were effective July 1, 2018.Changes to the procurement standards revolve heavily around an increase in documentation for contractor selection and oversight, written employee conduct policies, conflict-of-interest policies in place, and procurement documentation retention. To promote open competition, organizations must focus on the most economical solution or bid during the selection process and should avoid using federal funds for unnecessary items. In addition, organizations cannot specify only “brand name” products, instead of allowing “an equal” product to be offered, and cannot place unnecessary requirements for potential firms or unnecessary experience requirements from those firms.Although the level of documentation required and solicitation to multiple vendors depends upon the size of the purchase, from an R&D award perspective, these changes can have significant impacts on equipment and supplies purchased to be used for research and development activities, as well as any outsourced activities to assist in development activities. Organizations must more diligently determine which vendor provides the best product in line with program needs, for the most economic price. Organizations that have traditionally partnered with vendors due to long-term relationships and experience will need to reevaluate their basis of selection of those vendors, and may ultimately be required to take on more economical selections to fall within the new requirements and promote more open competition.For R&D activities, organizations must find the balance between appropriate pricing, while keeping the quality of equipment and services necessary for the activities to be performed. From an administrative standpoint, these changes to the procurement standards may initially create an extra burden for organizations, since more ground work needs to be done in the final selection of vendors, and documentation surrounding the process and selection is required to be much more robust.Because these standards are now fully in effect, organizations need to be reassessing and revising procurement and purchasing policies to ensure they are in line with all requirements of the revised federal standards. This also encompasses a shift in the documentation that organizations need to be retaining for all steps of the procurement process. Organizations need to have to support regarding why selections were made, and the evaluation process of how those selections were decided upon. Although initially this may prove to be an administrative burden in the first year of implementation, over time organizations should see an economic benefit to the robust procurement evaluations.For additional information regarding the procurement standards, refer to the full requirements in accordance with the Code of Federal Regulations. ### Will Cloud Service Providers' SOC 2 Reports Satisfy SaaS Companies' Customer Assurance Needs? Software-as-a-Service (SaaS) companies tend to provide services that require their customers to entrust them with their sensitive data.  Therefore, customers of SaaS companies need to obtain assurance over the controls in place at SaaS companies to be certain their data is appropriately protected.  In order to obtain the appropriate level of assurance, customers require their SaaS companies to provide them with System and Organization Control (SOC) 2 reports.  SOC 2 reports focus on a company’s internal controls as they relate to security, availability, processing integrity, confidentiality, and/or privacy of a system. Companies are not required to address all of the categories; the examinations should be limited only to the categories relevant to the services being provided. As part of its SOC 2 examination, a CPA firm will test relevant controls over a specified period of time (SOC 2 Type 2) or as of a point in time (SOC 2 Type 1) and document the results in a SOC 2 report, which can then be provided to customers.A common misconception among SaaS companies is the belief that providing customers with their third-party cloud service provider’s (e.g., Amazon Web Services) SOC 2 report will sufficiently address their customers’ desired level of assurance. Unfortunately, this is not the case. While the cloud service provider’s SOC 2 report gives customers assurance that their data is physically secured, it will not address the SaaS company’s key controls relating to logical security, security monitoring and change management over source code.SOC 2 reports address multiple key areas, including but not limited to: logical access, security event monitoring and change management. SaaS customers want to understand who can access their data, how their data is protected from inappropriate access, both internally and externally (i.e., encryption, network security, etc.), and how their data will remain safe when application changes are made by the SaaS company.In conclusion, SaaS companies need their own SOC 2 reports, even when the services being provided are hosted in a third-party cloud environment. SaaS companies must provide their customers with their own SOC 2 reports, in conjunction with their third party’s SOC 2 report, to provide comprehensive assurance to customers that their data is appropriately secured, both logically and physically.For additional information on SOC 2 examinations, visit Schneider Downs’ “Frequently Asked Questions about SOC Reports” here: /soc-report-faq.Please contact us if you are interested in learning about our SOC 2 examinations and how Schneider Downs can help you meet your customers’ requirements. ### State of Higher Education Looking Up, But Still Facing Challenges The general outlook for the higher education sector has been negative for a number of years, according to Moody’s industry reports for the past several years. Nonetheless, for selected revenue streams, the first half of 2018 experienced better growth than was expected. For the industry as a whole, this optimistic news is due in part, at least, to the following factors: The Fiscal Year 2018 Consolidated Appropriations Act, March’s omnibus spending bill, increased funding for the Federal Work-Study program, as well as for both Pell Grants and Supplemental Educational Opportunity Grants. The bill also increased funding to grant-making agencies like the National Science Foundation and the National Institutes of Health. Many investment portfolios for institutions had stronger returns, due to the favorable market conditions. With fiscal environments improving for many states, public university funding for FY2019 has surpassed predicted growth rates by 2.0% to 2.5%. Although the above is good news for higher education, a comprehensive challenging business environment lies ahead for the industry sector at large. Some key realities of higher education, from a revenue perspective, are as follows: According to a study by Moody’s, private four-year college and university operating revenue is predicted to grow between 3.0% and 3.5% through FY2019, though smaller and medium-sized private institutions are forecasted to realize lower net tuition revenue growth than large private institutions. Expenses, meanwhile, are expected to grow at around 4.0%, which would surpass the anticipated operating revenue growth. Increases in labor, technology and other costs to competitively strengthen programs and facilities are the primary drivers. Nationwide, full-time equivalents (FTEs) are predicted to grow around 1.0% throughout the 2019 fiscal year, with the country’s West and South regions accounting for much of that increase. According to the Western Interstate Commission for Higher Education (WICHE), the Northeast and Midwest will continue to experience the brunt of the decreases in number of high school graduates seeking a four-year degree. In WICHE demographic research, the number of high school graduates will continue to decrease until 2025 when it will be more than 5.0% lower than 2009 levels for both regions, which leaves institutions in these areas in an especially unfavorable position. The market’s performance was of significant growth in fiscal years 2017 and 2018, though it’s not expected that market conditions will continue at the same level of favorability. After such a market surge, a market correction is always a possibility. Any market downturn would impact endowment income, representing a funding source on which most institutions consistently rely. In this harsh higher education environment, it’s imperative institutions do their best to diversify revenue streams and develop metrics and other tools to measure and implement proactive strategies for today’s modernization. There’s a reason why the 2017 Inside Higher Education Survey of College and University Business Officers showed that 71 percent of chief business officers believe higher education is in the midst of a financial crisis. Maneuvering these challenging times requires careful planning, review of the existing model, and developing or modifying strategic plans to respond to an evolving market.If your institution would like assistance in navigating your industry sector’s business conditions, we invite you to contact us and visit the Schneider Downs Educational Services Industry Group. For additional information, visit the Our Thoughts On blogsite.  ### Don't Be Lulled Into a False Sense of Security In my journey as a cybersecurity professional, I provide a wide variety of services to an even wider variety of clients. Within those services, there is one underlying value that I have come to appreciate above the rest: removing a false sense of security, which can be one of the most dangerous and common challenges of modern information security. In a world of ever-changing information technology, getting comfortable isn’t always a good thing. A false sense of security can prevent the kind of questioning, testing and general concern that leads to continued improvement of an organization’s security. Most importantly, a false sense of security obscures the true risk and impact of cybersecurity vulnerabilities, leaving management to make critical decisions regarding resource allocation and long-term roadmaps with inaccurate and incomplete information. The unknown has always been and always will be one of the greatest challenges to security. It’s incredibly difficult for someone to effectively defend against an unknown method of attack. That’s why it’s so important for us, as security professionals, to constantly be identifying the unknown. We attempt to identify the unknown by questioning our security controls, researching the latest techniques, verifying our detection capabilities, and reviewing our high-level and technical strategies for potential improvements. But at the end of the day, no matter how much progress we make, we are all still limited by the fact that people don’t know what they don’t know. Despite our best efforts, there will always be a new technique or an obscure vulnerability of which we are (so far) unaware. This fundamental limitation is what enables penetration testing to be so valuable. A properly scoped and performed penetration test will identify the unknowns of an organization’s security and remove a false sense of security by demonstrating techniques that bypass those securities. That’s why so many organizations depend on penetration testing services to shine light on the unknown and help guide their security strategies. It’s important to note, however, that not all penetration tests are created equal. One of the goals of this article is to educate consumers on the differences between a commodity penetration test and a high-quality penetration test. Commodity Penetration Testing A commodity penetration test will often use a standard, nonflexible approach, with a minimal scope. Its focus is on technical vulnerabilities because it is reliant on automated scanners. If the scans don’t identify any vulnerabilities, the test is over. This is an automated and binary approach, whereby the scanner only checks for missing patches. Any vulnerabilities identified by the scans will be presented via automated reporting with limited or no recommendations. Communication during the testing is minimal, and once the report is delivered the engagement is done. High-Quality Penetration Testing A high-quality penetration test will use a tailored methodology and flexible approach. The scoping processes should be collaborative and include as few restrictions as possible to best simulate a realistic threat actor. It should leverage all forms of vulnerabilities and exploits, including using social engineering, web application exploits and other realistic intrusion techniques. The reporting process should be very customized and impact-focused. Every finding should come with a detailed recommendation for potential remediation. Most importantly, the communication before, during and after the testing should be extensive and lead to a continued partnership. The issues caused by these differences are not specific to small organizations. I have come to learn that nothing can be assumed about the effectiveness of an organization’s cybersecurity based on size, industry, resources or culture. Many of our clients have had high-budget annual penetration testing performed for years—with limited findings. We would prefer to state that the limited findings are commonly a result of the client’s exceptional security posture, however, we typically identify limitations to the scope and approach of the previously executed penetration tests that likely caused the limited findings. Through collaboration with our clients and countless hours of vigilant research and training, we have implemented a more comprehensive and collaborative testing approach, and the results have been noteworthy. Take, for instance, a recent example where we were able to gain remote access to a client network and eventually obtain domain admin rights to their entire environment by executing a series of crafted intrusion techniques. We then took the time that same day to walk our client through the circumstances that led to our successful compromise. Our client was shocked that none of their previous penetration testers had tried most of the techniques we used. Thankfully, we were able to remove their false sense of security and point to the specific areas of concern, in which they can continue to improve their security. The lesson here is that penetration testing techniques should be constantly evolving, much in the same way new cyber threats continue to emerge. Even after a successful penetration testing experience, it’s wise to avoid becoming overconfident. There are certain basic steps that all organizations should keep in mind when considering a penetration test. It’s our hope that consumers become more selective with their penetration testers and more involved in the scoping and testing processes. Ask your penetration testers what techniques they’re using and encourage them to find the unknown vulnerabilities, so they can be remediated. If a penetration test comes back with no significant findings, be skeptical. Lastly, penetration testing is not the only way to combat a false sense of security. Constant internal verification, audits, reviews, research and trainings can go a long way towards identifying the unknown in between penetration testing exercises. Questions are good; the right questions are invaluable. Please feel free to contact us for more info about what constitutes a meaningful penetration test or any other cybersecurity-related matter. ### Student Loan Repayment Program - A Retirement Plan Twist A recent IRS decision allowing an employer to offer a student loan repayment (SLR) benefit as an element of its retirement plan could open the door to other employers interested in offering similar benefits. On August 17, 2018, the IRS issued Private Letter Ruling 201833012 (the PLR). The PLR addressed an individual plan sponsor’s desire to amend its retirement plan to include a program for employees who were making student loan repayments. The form of this benefit would be an employer nonelective contribution (an SLR contribution). Importantly, a PLR is directed to a specific taxpayer requesting the ruling, and applicable only to the specific set of facts and circumstances included in the request. That means other taxpayers cannot rely on the PLR as precedent. It is not a regulation or even formal guidance. However, it does provide insight into how the IRS would treat similar arrangements.Under the specific program described in the PLR, the employer would make a 401(k) plan nonelective contribution on a worker's behalf if the worker was making a student loan payment of at least 2% of his/her salary for a given pay period. The current plan design in the PLR allows for a matching contribution equal to 5% of compensation for 2% of compensation deferred. As such, under the IRS approved plan, the employer would simply change the matching contribution to a nonelective contribution. The employees could receive 5% of compensation as an SLR contribution provided the amount of student loan payments they made during the year totaled at least 2%. The SLR contribution would be calculated at year-end. Importantly, the PLR states that the proposed program would allow participants to both defer into the retirement plan and make a student loan repayment at the same time, but they would only receive either the match or the SLR contribution and not both for the same pay period. Participants in the plan would not be required to defer into the 401(k) plan in order to receive the SLR contribution.Finally, it is important to note that any contribution to the plan as an SLR contribution would be subject to the nondiscrimination testing provisions under the Internal Revenue Code. The student loan benefit would replace the company match for those participants who enroll and make the requisite loan payments. As such, the SLR contribution would effectively reduce or eliminate the matching contributions made for non-highly compensated employees, and potentially cause the plan to fail testing.If you are considering adding a student loan repayment program to your benefits package and/or wish to explore the potential for a qualified plan integrated program, please contact your plan advisor. ### PA DEP Issues 2017 Annual Oil and Gas Report On August 31, the Pennsylvania Department of Environmental Protection (DEP) released its 2017 annual oil and gas report. The DEP, with a mission of “protecting Pennsylvania’s air, land and water from pollution and providing for the health and safety of its citizens through a cleaner environment,” is responsible for granting and reviewing permits for the construction and drilling of wells, and inspection of oil and gas well sites to ensure that they are constructed and operated in accordance with those permits. The 2017 annual report outlines the department’s progress on new and continuing initiatives, as well as results of department activities such as permit issuance, compliance inspections, plugging of orphan or abandoned wells, etc. In addition, an outlook of current 2018 initiatives and their progress is highlighted. The largest continuing initiatives highlighted by the DEP are the movements toward a mobile platform for inspections and development of a new e-permitting application to replace the current paper system. Although the e-permitting system is still in development and expected to be released in late 2018, the DEP saw a large increase in new well drilling permits issued. 2,028 unconventional permits and 203 conventional well drilling permits were issued in 2017, showing a 58% and 28% increase from 2016. 515 of these unconventional permits were issued in Washington County, and 74 of the conventional permits were issued in both Warren and McKean County. Permits have declined slowly since 2010, but have seen a slight increase in recent years, due in part to a more streamlined, efficient process. The DEP has also updated its process for inspections, launching a mobile app to allow inspections to be conducted at oil and gas sites through tablet computers. This not only allows for greater accuracy, but allows the DEP to provide information to the public in a much more efficient manner, within hours or days of inspections taking place. With this updated process, the DEP has been able to place increased emphasis on inspecting orphan and abandoned wells. In 2017 the DEP conducted approximately 36,000 compliance inspections, which is more than double the inspections performed in 2010. One of the biggest issues the DEP faces, and will continue to face, is the large number of orphan and abandoned wells within the state. The DEP estimates there to be approximately 100,000 – 560,000 abandoned oil and gas wells unaccounted for in Pennsylvania and estimates the costs to plug these wells, once accounted for, to be approximately $150M to $3.7B. To assist with the rising costs and search for these abandoned wells, the DEP has developed the “Good Samaritans” initiative to encourage partners within the oil and gas industry to plug dangerous abandoned wells, and be protected from liability for their role in reducing environmental hazards. Through cost savings from projects like the “Good Samaritan” initiative and in-kind contributions, the DEP has estimated to have saved approximately $6M to be used towards plugging of these legacy wells. As the DEP focused on improving the permit and inspection process in 2017, it continues to improve upon those processes in 2018. Most notably, the Erosion & Sediment Control General Permit for Oil and Gas Operations will expire in late December 2018. Currently, the DEP is in the process of developing an electronic, streamlined permit process with the hopes to further improve the efficiency of the permit review process. One of the largest changes affecting operators in the state is the Unconventional Well Permit Fee Application increase. The DEP has proposed increasing the current permit application fees of $5,000 for non-vertical unconventional wells and $4,200 for vertical unconventional wells, to $12,500 for unconventional well permit applications. The comment period for the proposition has ended, with comments both in favor and in opposition arising, but the regulation has not yet been approved as of the end of August 2018. ### Free Speech/Privacy Advocates Score Significant Victory with Changes to Form 990 Schedule B Disclosure Requirements Advocates of free speech and personal privacy scored a significant victory with the Service's recent release of Revenue Procedure 2018-38. Effective for tax years ending December 31, 2018, the new procedure exempts all tax-exempt organizations, other than public charities and private foundations  exempt from federal income tax under IRC Section 501(c)(3), and political organizations  described in IRC Section 527, from having to file a Schedule B with their annual Form 990 disclosure. Beginning in 1998, Schedule B generally required that a tax-exempt organization provide to the Service a list of donors who contributed at least $5,000 to the exempt organization, as well as the donor's addresses and aggregate contribution amount.  However, while the Form 990 is a public document, the names and addresses of donors on Schedule B donors were both confidential by law and exempt from public disclosure.  But what happens in theory is not always what happens in practice, and since 1998, the IRS has, in some instances, inadvertently disclosed private Schedule B information.  In addition, state attorneys general have sought to force disclosure under a variety of circumstances, eroding anonymity protections.  Concerned with the disclosures, and the chilling effect that a lack of anonymity might bring to exempt organization contributions, Congress asked the IRS to reconsider its Schedule B disclosure requirements. In essence, Rev. Proc. 2018-38 says that certain exempt organizations, such as associations, labor unions, and social welfare organizations, no longer need to file Schedule B.  These organizations will still be required to maintain donor records, and the IRS may still request this information for tax administration and compliance matters, but these organizations no longer will be required to submit this information to the Service.  IRC 501(c)(3) organizations, because of the tax-deductible nature of their contributions, and IRC 527 organizations, because of their political nature, will still be governed by the same rules for Schedule B disclosure that existed prior to the Rev. Proc.However, not all members of Congress have been thrilled with the Service's recent decision to eliminate Schedule B disclosures.  Various senators, including Sen. Ron Wyden, the Senate Finance Committee's ranking member, have expressed concern that eliminating Schedule B requirements for 501(c)(4) organizations that are permitted to engage in political activity would lead to an additional influx of "dark money" into politics.  Sen. Wyden has even gone so far as to suggest that he would oppose Charles Rettig's nomination as the next IRS Commissioner unless the new procedure was repealed.If your exempt organization needs help in determining whether you still have a filing requirement following the new Rev. Proc., or if you would like to better understand the new Schedule B requirements, feel free to contact the Not-for-Profit Team at Schneider Downs.  We are always here to assist! ### Aretha Franklin Left no Will - What Happens Next? On August 16, 2018, a saddened world mourned the passing of legendary vocalist and songwriter Aretha Franklin. Known affectionately to her fans as the “Queen of Soul,” Franklin will long be remembered for her musical accomplishments and also for her contributions to the civil rights movement. It is estimated that she left behind an estate worth around $80 million, but she left no will to direct who will receive these assets.Franklin is not the first celebrity to die without an estate plan. The musician Prince, who passed unexpectedly two years ago, also left no will. Shortly thereafter, nearly 30 individuals who claimed to be Prince’s relatives filed court documents in hopes of receiving a slice of the $200 million pie. As of this writing, the estate has still not settled, and the six individuals who the court determined are entitled to share in the estate have not received a dime. When all is said and done, the attorney fees and court costs will have significantly reduced the amount distributable to Prince’s heirs. It is too early to determine whether Franklin’s lack of estate planning will cause her estate to endure its own legal battles.   Even if you have never written a hit song, and don’t have $80 million to distribute to your loved ones, you should still have a will in place. This is because, if you die without a will, your state’s intestacy laws will determine who receives your assets. The recipients may very well be individuals who you would prefer not to receive your property. In addition, your personal representative will be chosen by the court, and not by you. Furthermore, if you have minor children who do not have a surviving parent, the court will determine a suitable guardian. The chosen guardian may be someone who you do not wish to raise your children.     Despite the consequences of dying without a will, a recent survey by the American Association of Retired Persons (“AARP”) revealed that only 4 in 10 American adults have prepared their estate planning documents. If you are among the remaining majority who has not yet gotten around to estate planning, we strongly recommend that you consult an estate planning professional as soon as possible. Doing so will give you the peace of mind in knowing that you have helped your loved ones avoid unnecessary hassles and that your hard-earned assets will pass to the recipients of your choosing. ### IRS Provides Guidance on What Constitutes a Covered Employee under Code Sec. 162(m) On August 22, the IRS issued Notice 2018-68, providing guidance on the application of section 162(m), which generally limits the amount of a deduction that publicly held corporations can claim for compensation paid to certain employees earning in excess of $1 million. The Tax Cuts and Jobs Act (TCJA), effective for tax years beginning after December 31, 2017, significantly altered the regulations under Section 162(m) by modifying the definitions of “covered employee,” “compensation” and “publicly held corporation.” Notice 2018-68 will serve to assist taxpayers by providing a definition of a covered employee for purposes of Code Sec. 162(m)(3), defining what constitutes a binding contract under the Grandfather Rule, and defining what constitutes a material modification of a binding contract.As per the TCJA,covered employee is any employee of the corporation who: is the principal executive officer or an individual acting in such capacity at any time during the tax year; is the principal financial officer or an individual acting in such capacity at any time during the tax year; is among the three highest compensated officers for the tax year (besides the principal executive or financial officer); or was a covered employee of the corporation (or any predecessor) for any prior tax year beginning on or after January 1, 2017. Applicable employee compensation (remuneration) includes any cash and noncash benefits paid for services, including commissions and performance-based compensation. It does not include: income from specified employee trusts, annuity plans, pensions, or any benefit that is reasonably anticipated to be tax free; income payable under a written binding contract which was in effect on February 17, 1993; and compensation paid before a corporation became publicly held. Amendments to Section 162(m) made by the TCJA do not apply to remuneration payable under a written binding contract that was in effect on November 2, 2017, and which is not modified in any material respect on or after such date. The transition rule (Grandfather Rule) applies to a written binding contract that was renewed after November 2, 2017.  A written binding contract that is terminable or cancelable by the corporation without the employee’s consent after November 2, 2017, is treated as renewed as of the date that any such termination or cancellation, if made, would be effective.TCJA amendments to Section 162(m) will apply to any written binding contract that is materially modified after November 2, 2017. A material modification occurs when the contract is amended to increase the amount of compensation payable to the employee. A modification of the contract that accelerates the payment of compensation is a material modification unless the amount of compensation paid is discounted to reasonably reflect the time value of money. If a written binding contract is materially modified, it is treated as a new contract entered into as of the date of the modification.As described above, the TCJA amendments to Section 162(m) apply to taxable years beginning on or after January 1, 2018. It is generally anticipated that the guidance in Notice 2018-68 will be incorporated in future regulations that, with respect to the issues addressed in this notice, will apply to any taxable year ending on or after September 10, 2018.The Treasury Department and the IRS anticipate issuing further guidance on other aspects of Section 162(m), including the effects of the Act’s amendments. Accordingly, the agency is requesting comments on additional issues that future guidance should address.Schneider Downs will continue to monitor guidance issued by the Treasury and IRS regarding the Tax Cuts and Jobs Act and will provide you these insights in a timely manner. As always, if you have any questions about statutory or administrative changes and how they impact you, please don’t hesitate to contact us. ### The interplay of the new charitable deduction regulations and state and local tax credits There is a lot of concern, and possibly even misconceptions, regarding the (practical) impact of the proposed charitable contribution regulations that were issued last week.  In particular, there is much angst over the impact those regulations may have on gifts made to organizations, particularly for programs supporting education, that generate state tax credits.  The proposed regulations were issued in response to the efforts by a number of states to reduce the impact of the $10,000 ceiling on the deductibility of state and local taxes.  These states are attempting to accomplish this by creating charitable organizations, administered by the state that would accept “donations” in exchange for granting credits that could be used against state income tax liabilities.  As an example, rather than pay $50,000 to the state as state taxes and be limited to a deduction of $10,000, some states are advocating that individuals donate the same $50,000 to a state-established charitable organization.  This donation would entitle the donor to a $50,000 tax credit against his or her state tax liabilities (thereby not requiring a direct tax payment to the state).  This would convert $40,000 of otherwise non-deductible state tax payments to a deductible charitable contribution.  Prior to the recent tax changes, there were already rules in place disallowing a charitable deduction when there is an expectation of a benefit in return.  The question is whether the receipt of state tax credits in exchange for donations is a significant benefit that should limit the charitable deductibility of the payment. Whether the IRS decided in the past to pursue or not pursue the issue is another matter.  Prior to 2018 though, the IRS was aware of the issue and appeared to have chosen not to address it by not issuing previous guidance.  However, the Tax Cuts and Jobs Act and the subsequent state workarounds changed the IRS’s approach.   With the issuance of the proposed regulations, the IRS position is now clear that taxpayers should not expect to obtain both a state tax credit and a federal charitable deduction (except in very limited circumstances where the credit or benefit received is no more than 15% of the donation) for payments made after August 27.  This new approach could impact existing education programs.  The IRS’s broad position appears to be rooted in the belief it is unable to allow one type of payment generating a state tax credit to be treated as a charitable deduction (such as a contribution to a qualifying educational institution) while denying a deduction for other “charitable” programs established by states to work around the SALT itemized deduction limitation.  However, the underlying law has not changed; what has changed is that now there is written guidance in the form of the proposed regulations.  So what is the practical implication for people who want to donate to organizations that provide tax credits in exchange for the contribution?  Interestingly, it is not always as significant as one might think, as there is still a state tax credit available, and there is still a charitable deduction available for the piece of the donation not generating a credit.  Although taxpayers may not use these programs to circumvent the state tax limitation, a contribution through such a program may still remain a very viable option to paying the taxes directly.  Taxpayers should evaluate their current tax situation to determine the benefits. At Schneider Downs, we help you with the practical implications of the tax law and work to optimize your tax situation while helping you achieve your personal financial goals and objectives.  Please do not hesitate to call one of our tax professionals to discuss these and other options with you.  ### The U.S. - Mexico Trade Agreement Impact on U.S. Manufacturing The North American Free Trade Agreement (NAFTA) has been in the news recently, which is not surprising since President Trump signed an executive order to renegotiate the existing agreement back in January 2017. The original NAFTA agreement instituted a trade agreement between the United States, Canada and Mexico that removed trade barriers, eliminated most tariffs, and increased investment opportunities between the aforementioned nations.On August 27, 2018, the existing NAFTA agreement was replaced with a tentative agreement between the United States and Mexico. This agreement, the U.S. – Mexico Trade Agreement, includes updates to provisions surrounding the digital economy, automobiles, agriculture and labor unions. Currently, Canada is on the outside looking in, and it remains to be seen whether the U.S. – Mexico Trade Agreement will become a trilateral pact between the three nations, or if talks of an agreement will go a different route.As the U.S. – Mexico Trade Agreement currently stands, there appears to be benefits for the U.S. manufacturing industry. The new agreement encourages U.S. manufacturing and economic growth by requiring that 75% of auto content be made in these two countries and that 40% to 45% be made by workers earning at least $16 per hour. With the stipulation of higher wages, some of the work could theoretically shift from Mexico to the U.S.  It remains to be seen what the overall impact of the new agreement will be and how talks with Canada will go, but early indications include potential increases in manufacturing in the U.S., particularly in the automotive industry. ### SECURITY NOTICE: MAJOR ONLINE BANKING PLATFORM VULNERABILITY - FISERV Businesses that utilize Fiserv eBanking platforms should take note of an online banking information disclosure vulnerability that was made public.Fiserv is a top provider for internet banking solutions for banks of various sizes. In a recent Brian Krebs article, it was verified that an information disclosure vulnerability was discovered by security researcher Kristian Erik Hermansen that allowed one e-banking customer to view certain details of other customers, effectively bypassing authentication. Here are some more details: The eBanking platform allows a customer to set up email based alerts when new transactions are applied to their account and certain other conditions that are customizable (e.g., dollar thresholds). This alerting process assigns the alert a specific event ID number within the web address. According to the analysis performed, these event numbers appeared to be sequential. If a customer has an alert generated, the customer can modify the event ID within the sites’ code and obtain access to alert setup pages for other customers. After gaining access to another customers’ alerts, you can view and edit the alerts, see the customers’ email address, phone number and full bank account number. The above situation refers to a common type of secure coding issue known as Exposed Session Variables. This issue involves an attacker modifying session tokens to impersonate another individual to gain access to the details and gain the permissions of that individual. There are many times where it may seem that the session variables used in an application are random, but attackers are able to use special tools to try to guess the next variable and gain unauthorized access. The issue is associated with the OWASP Top 10 security issues (A3 – Broken Authentication and Session Management). Testing for these types of errors should be common practice for development shops, and it should also be a routine manual check in a web application penetration test. Checking for this type of vulnerability is part of Schneider Downs’ comprehensive web application penetration test.Fiserv has researched the issue to determine that it stems from a messaging solution available to a subset of online banking clients.  Additionally, since then, the company has applied a hot fix to all Fiserv hosted platforms which modifies the alert to use randomly generated event ID strings as opposed to a sequential event ID.  Per Fiserv, the hotfix will be made available shortly to users who have local installations of the Fiserv eBanking platform.IMMEDIATE ACTION:  We recommend that you verify that the hotfix has been applied to your environment by performing a test against an alert if possible. We can assist you with the next steps to take.NEXT STEPS: Independent penetration testing of your online banking environments should be performed to check for potential misconfigurations. This testing should occur at both the network and web-application level. If the application is vendor-hosted, ensure that the vendor is hiring an independent party to perform penetration testing against their products and systems. Ensure that your contracts with your software hosting vendors allow you the ability to review the results of these types of tests with your vendors in more detail. Our cybersecurity experts can guide you through this process. Ensure that your vendors maintain secure coding practices; and ensure that they validate that the releases do not contain vulnerabilities. Similarly, our cybersecurity experts and IT auditors can help assess your vendor’s coding practices. Contact Schneider Downs’ cybersecurity advisory team for assistance or clarification on how to achieve these security steps.For more information, please refer to the following sources: The story posted by Brian Krebs on Krebs on Security: https://krebsonsecurity.com/2018/08/fiserv-flaw-exposed-customer-data-at-hundreds-of-banks/ The OWASP Top 10 Common Vulnerabilities – A3: Broken Session Authentication: https://www.owasp.org/index.php/Top_10_2010-A3-Broken_Authentication_and_Session_Management The OWASP Top 10 Common Vulnerabilities – Testing for Exposed Session Variables: https://www.owasp.org/index.php/Testing_for_Exposed_Session_Variables_(OTG-SESS-004) ### IRS Issues Interim Guidance to Organizations with Multiple Unrelated Businesses On August 21, the Internal Revenue Service released IRS Notice 2018-67, which provides long-awaited interim guidance on the new rules under Section 512(a)(6) of the Internal Revenue Code. This IRC section, added by the Tax Cuts and Jobs Act, requires an exempt organization with more than one unrelated trade or business to separately calculate unrelated business taxable income (UBTI) with respect to each trade or business.Until proposed regulations are released later this year, exempt organizations can rely on this interim guidance. Following are some observations on what’s provided in the IRS Notice.Multiple Unrelated Trade or Business ActivitiesThere is no statutory or regulatory definition as to what constitutes a trade or business for UBTI purposes. Pending issuance of proposed regulations, exempt organizations may rely on reasonable, good-faith interpretations of the IRC, including all facts and circumstances, when determining whether it has more than one trade or business. Use of the NAICS 6-digit codes will be considered a practical interpretation until proposed regulations are published.Investments in Partnerships with UBTIExempt organizations other than social clubs (IRC Section501(c)(7)) may aggregate UBTI from an interest in a single partnership with multiple trades or businesses conducted by lower-tier partnerships, as long as the directly held interest in the partnerships meets the requirements of either the de minimis test or the control test. Additionally, under the interim rule, an exempt organization may aggregate all qualifying partnerships interests and treat the group of qualifying partnership interests as comprising a single trade or business for purposes of IRC 512(a)(6)(A). The income from qualifying partnership interests that may be aggregated includes debt-financed income.In general, the de minimis test is met if the exempt organization directly holds no more than 2% of the profits interest and no more than 2% of the capital interest. Generally the control test is met if the organization’s partnership interest is no more than 20% of the capital interest and the organization does not have control or influence over the partnership. Special rules apply for both tests that require combining related interests in certain circumstances. When determining the percentage interests, an exempt organization may rely on the Schedule K-1 from the partnership.A transition rule may be applied for a partnership interest acquired before August 21, 2018 if the partnership interest cannot satisfy either the de minimis test or control test. That is, the exempt organization may treat each partnership interest as a single trade or business regardless of whether or not there is more than one trade or business directly conducted by the partnership or lower-tier partnerships.Other Guidance Other interim guidance in Notice 2018-67 includes the following: The Notice provides IRS commentary regarding the application of IRC 512(a)(6) to net operating losses, both pre-2018 and post-2017, and requests comments regarding how the NOL should be taken by organizations with multiple trades or businesses, as well as comments on the ordering of NOLs. Any amount included in UBTI under the newly added IRC Section 512(a)(7) related to certain transportation fringe benefits is not subject to the separate UBTI computation under IRC Section 512(a)(6) because IRC Section 512(a)(7) does not treat these amounts as gross income derived from an unrelated trade or business. Global intangible low-taxed income (GILTI) should be calculated in the same manner as Subpart F income. That is, the GILTI income is treated as a dividend and subject to the UBTI rules that address dividends. The IRS and Treasury Department found no clear distinction between income from an unrelated trade or business and that from debt-financed income under IRC 512(b)(4), certain income from controlled entities under IRC 512(b)(13), or certain insurance income under IRC 512(b)(17). Hence, debt-financed income, income from controlled entities and/or certain insurance income may be aggregated when applying IRC Section 512(a)(6) in certain circumstances. The IRS is soliciting comments on the proposed regulations. Submissions should be offered on or before December 3, 2018.Although the proposed guidance is welcome, questions still remain. If you have any questions or would like to discuss these regulations in further detail, please contact your Schneider Downs representative. ### How the Tax Cuts and Job Act Impacted Valuations How has the Tax Cuts and Jobs Act (“TCJA”) affected business valuations? The impact of the TCJA is dependent upon the company being valued as well as the specific approach chosen for a valuation.  Listed below are a few key items that should be considered when using an Income Approach to valuation and when valuing the entity as a C corporation. Change in After-Tax Earnings – Under the TCJA, the federal tax rate for a C corporation was permanently reduced from 35% to 21%. That should reduce taxes and increase after-tax cash flow, all else being equal, so if using historical earnings to value a company, make sure to account for this rate reduction. Also, update taxes to the new tax rate in any forecasts used in the discounted cash flow approach.   Discount Rate – The reduction to the tax rate will also affect the weighted average of cost of capital (“WACC”), wherein the cost of debt is reduced by the tax savings benefit of interest expense. Therefore, the lower tax rate will increase the discount rate due to less tax savings from interest expense. Also, be aware of the limitation on interest expense deductibility of 30% of adjusted taxable income, as defined by the TCJA.   Depreciation Expense – New allowances for depreciation need to be taken into account in any forecast of future income. In general, all qualified property purchased in 2018 through 2022 is 100% deductible in the year purchased. From 2023 to 2027, that percentage is reduced by 20% each year.  So if using the discounted cash flow method, sufficient years of cash flows to account for this tax savings will need to be included in the forecasts or the tax benefit of the depreciation will need to be accounted for separately and added to the valuation. Remember, valuation is not an exact science and requires astute judgment in determining the correct approach and assumptions. If you need help in determining the value of your company, please contact Christy Samek at 412-697-5415. ### Pass-Through Entity vs. C Corporation There has been much recent debate about whether the difference between the amount of taxes paid by a C corporation, as compared to those paid by a pass-through entity (“PTE”, e.g., an S corporation, partnership or a limited liability company), would result in different values for each entity, with all else being equal.  Since the value of a company is driven by the present value of its expected future cash flows, it stands to reason that if a C corporation pays more in taxes than does an S corporation, it is possible that the C corporation would be worth less.To understand how this may apply to your company (C corporation or PTE), it is important to first understand the differences in how each entity type is taxed. (This is meant to be an illustrative example; for tax consequences specific to your organization, please consult your tax advisor).A C corporation generally pays taxes on its earnings while its shareholders pay taxes on any dividends and are also subject to capital gains taxes when they sell their C corp shares. PTE owners, on the other hand, generally only pay personal income taxes on earnings of the PTE regardless of distributions received. The simple example below illustrates these differences at the federal tax level (state and local taxes are not considered here).Assumptions:Federal corporate tax rate – 21%Federal dividend and capital gains tax rates – 20%Individual (pass-through) tax rate – 35%Earnings before taxes – $100Earnings distributed to owners – 50%   C Corporation PTE Earnings Before Taxes $            100.0 $            100.0 Corporate Income Tax 21.0 - Net Income Availbale to Shareholders 79.0 100.0 Earnings Retained in Company 39.5 50.0 Dividends  39.5 50.0 Dividend Tax/Personal Income Tax 7.9 35.0 Net Distribution Cash Flow to Shareholders $              31.6 $              15.0 If the hypothetical entity were then sold immediately after the first year of activity, the C corporation would be subject to capital gains taxes on the earnings retained by the entity, while the PTE owners would not, as indicated below:   C Corporation PTE Capital Gain $39.5 $50.0 Less Capital Gains Tax/No Tax 7.9 - Net Cash Flow $     31.6 $     50.0 In this example, the owner of a PTE receives $65 while the owner of the C corporation receives only $63.2, indicating the value of the PTE is higher.But it should be noted that this an overly simplified example and  does not take into account specific factors like the time value of money, nor does it cover every potential difference between a C corporation and PTE.Given the significant complexities of valuing C corporations and PTEs, it is important to consult with advisors to make sure all appropriate factors are considered.  Schneider Downs has significant experience preparing business valuations for both PTEs and C corporations for a wide range of purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Joel Rosenthal (412-697-5387; jrosenthal@sdcpa.com) if you need any business valuation services. ### Proposed Changes to Gainful Employment Regulations On August 10, the Department of Education (DOE) announced a proposal to rescind gainful employment regulations. This is part of the on-going initiative by the Trump administration to review existing federal requirements with the goal of reducing regulation across all types of industries. As outlined in 34 CFR part 668, subpart Q, regulations require that educational programs lead to a degree at a nonprofit or public institution, or prepare students for gainful employment in a recognized occupation, in order to be eligible for Title IV funds. As such, all programs offered by for-profit institutions must prepare students for gainful employment, supported by records of the ratio of loan debt-to-earnings of alumni, in order for enrolled students to be eligible to receive Title IV funds. These rules were enacted under the Obama administration in response to concerns that students were not attaining meaningful employment upon graduation. Nonprofit and public institutions don’t have to overcome this hurdle, which has provided a competitive advantage. If gainful employment regulations are rescinded, Title IV funds would become more readily available to prospective students of for-profit programs, thus removing the existing advantage for not for-profit and public institutions.  The change may also spark increased competition for students amongst all institutions of higher learning. The DOE believes that “data such as debt levels, expected earnings after graduation, completion rates, program costs, accreditation and consistency with licensure requirements is important to consumers, but not just those students who are considering enrolling in a gainful employment program.” As such, the DOE is considering implementing regulation that requires each program, regardless of tax status, to disclose this information on it’s website to allow prospective students to evaluate all programs on a level playing field. ### GDPR's Effects on Higher Education Co-Authored by: Jaye WilsonIt has been nearly three months since the General Data Protection Regulation (GDPR) has gone into effect, its impact has been varied among corporations, small businesses, higher education and other organizations.  Larger organizations have spent a significant amount of resources, effort and money in order to comply with the regulations  prior to the enforcement date, while others have taken the approach that they are too small and are not worried about their organization being targeted or the regulation being enforced against them.  One sector that GDPR could affect across the entire United States is higher education. How Will GDPR Affect Higher Education?GDPR defines three basic roles in data transactions: the data subject (person the data is related to); the data controller (dictates what is done with the data); and the data processor.  A higher education institution (institution) in all likelihood are controllers as it relates to its human resources and student data.  It also could be a data processor, for instance, if it has a partnership through its study-abroad program.  GDPR also places an emphasis on understanding and documenting what third-party data vendors have access to and what they are doing with it.GDPR also explains rights for data subjects, including the right of access to data, the right to erasure (right to be forgotten), and rights to restrictions on data processing.  For instance, data subjects have a right not to be subject to a decision based solely on automated processing.Institutions typically have three different categories of data most likely to be impacted by GDPR.  The first bucket consists of students who are EU citizens coming to an institution in the United States or attending the institution's locations abroad.  Any data you collect on those students, from name to disability status or grades, will be considered personal data.Another bucket is human resources data. People who work at U.S. universities may be EU citizens, or if an institution has operations abroad, it is likely to have a number of EU employees.The third major bucket involves admissions and recruiting.  Under GDPR, if a student doesn't apply to your institution but has some interaction with your website, or has admissions interaction with you, then that data will also be impacted.  It won't be as robust or sensitive as the data you have on your actual students, but a potential student is going to provide you some personal data that is going to have to be protected. GDPR is about making sure institutions are doing what is needed to protect the privacy of data and validating that the controls they have implemented are effective through documentation and governance.The new rules require institutions to take extra steps to protect the personal information of people in the EU, regardless of whether they are EU citizens or permanent residents. So the requirements would also apply to American students or faculty members who communicate with campuses while they are in the EU.Institutions that have campuses abroad or have faculty traveling abroad and using their work email will now be subject to the GDPR regulations.  Institutions that are online-only will now need to start protecting their personal data specific to EU citizens, since anyone is able to enroll at these online schools.  Enrollment management will now be required to collect only the information it needs to enroll students at its institutions and only retain the data it as necessary.  It is going to be difficult for higher education institutions to determine when they should start purging data and how they will conform to the “right to be forgotten” for alumni, students, faculty or possibly recruits who want their information to be purged from the institution’s systems.   GDPR is going to make business as usual for higher education a little bit more complex. What Are the First Steps to Take?  Now that higher education needs to start thinking about becoming compliant with GDPR, what are the first steps to be taken to help reach that goal? Data Audit: Complete an audit of all of the institution’s current data to determine what is currently stored on alumni, students, faculty, staff, applicants and applicants’ families.  The institution needs to know what kind of personal data it holds as well as where this personal data is being stored (locally, servers, cloud, etc).  This would include reviewing who has access to the data, ensure that proper permissions are configured for each department to access only what is required of their responsibilities and what specific personal data is being collected and stored (name, address, phone number, emails, financials, guardian’s personal data, etc). Data Justification: Determine the justification to store and retain the current data.  The institution will need to go through the current data it has and determine what the justification is to store this data and try and determine what is required and what can be purged. Consent: Active consent is now required and must be documented for the institution, prior to collecting and processing personal data from data subjects.  Active consent must be collected prior to collecting and processing any new enrollment data from data subjects.  Active consent is also required to continue sending newsletters, marketing, nonbusiness-related communications to any data subject that is associated with the institution.  Data subjects must have a way to revoke their active consent from the institution. Data Access, Integrity and Deletion Process:  The biggest challenge for intuitions to incorporate is the ability to give their alumni, students, faculty, staff and applicants the proper access to their own personal data.  EU citizens must be able to request their data in a readable format from the institution, and this must be completed within 30 days.  Some organizations have implemented electronic ways to comply with this, while others need to manually collect and provide the personal data.  EU citizens must have the ability to update data or request that data be updated and have the ability to limit what their data is used for.  The biggest hurdle at this time is the ability to allow EU citizens to have “the right to be forgotten” and how an institution will be able to fulfill this request for data to be purged in all of its systems within 30 days. Unfortunately, these are not the only things that need to be completed to become compliant, but completing these would be a great start for any higher education institution or any organization to become compliant with GDPR. If you have any questions related to your organization’s compliance with GDPR, please contact Eric Wright at 412-697-5328 or ewright@schneiderdowns.com. ### Trends in Purchase Price Allocations In the world of mergers and acquisitions, it is useful to study past transactions to provide benchmarks and to understand trends in an industry. One source that can be used for this purpose is the Houlihan Lokey 2016 Purchase Price Allocation Study, which was published in September 2017.  The study provides trends in purchase price allocations by examining public filings from approximately 1,300 transactions in 2016 and limiting transactions to those that meet the study’s screening criteria—a total of 455 transactions. A majority of the transactions (roughly 62%) reported purchase consideration below $250 million. Purchase consideration is defined as the total of the purchase price paid and the liabilities assumed. Highlights of the study include: In 2016, the median enterprise value to EBITDA multiple was 12.2x—down slightly from the median multiple of 12.5x in the prior year’s study.    The study indicates that, consistent with trends in recent years, a large percentage of purchase consideration was allocated to intangible assets and goodwill. In 2016, an average of 35% and 36% of the purchase consideration was allocated to intangible assets and goodwill, respectively.    The most commonly identified intangible assets were developed technology, trademarks and trade names, IPR&D and customer-related assets (including backlog, customer contracts and customer relationships).    Transactions in the healthcare industry reported the highest median percentage of intangible assets to purchase consideration of 50%.   Transactions in the technology industry reported the highest median percentage of goodwill to purchase consideration of 50%.    Indefinite-lived intangible assets accounted for roughly 13% of the total intangible asset value. The most common indefinite-lived intangible assets were trademarks and trade names.   In the current year report, developed technology and IPR&D increased in frequency of identification, but decreased in the amount of purchase consideration allocated to each of these asset types.   Approximately 97% of transactions allocated purchase consideration to goodwill. (Transactions with negative goodwill are eliminated from the study based on the search criteria, which in this case excluded 14 transactions with bargain purchases.) These trends provide some insight into a “typical” transaction. However, each transaction will certainly have its own set of particular facts and circumstances. Schneider Downs has significant experience in performing purchase price allocations in order to comply with ASC 805. If you would like more information about Schneider Downs’ purchase price allocation services or other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Jennifer Doering at 412.697.5275 or jdoering@schneiderdowns.com. ### How Tax Reform Will Make Divorce More Expensive Divorcing couples are not likely to be found on the list of taxpayers who are happy with the sweeping changes effected by The Tax Cuts and Jobs Act (the “Act”). For certain couples who part ways by means of a divorce decree or separation agreement made final in 2019 or thereafter, divorce will become a lot more expensive. This is because, beginning next year, the Act eliminates the income tax deduction for alimony payments that has been a part of the Internal Revenue Code for nearly 80 years.Alimony, also known as “spousal support,” is an obligation imposed by the court upon one spouse to continue to provide financial support to the other spouse following a divorce or legal separation. Typically, the higher-earning spouse is ordered to make payments to the lower-earning spouse for a prescribed period of time or until the spouse remarries.Under current law, a spouse who pays alimony (the “payor spouse”) may take an above-the-line deduction equal to the amount of alimony paid, and the spouse who receives the alimony (the “payee spouse”) includes the alimony in his or her income for the year of receipt. Because of the income disparity between the spouses, this rule often has the effect of shifting taxable income from a higher tax bracket to a lower tax bracket. The net result is more money available to the divorcing spouses and less money to the Internal Revenue Service.Beginning next year, the playing field will change. For divorces and legal separations effected after 2018, the payor spouse will no longer be entitled to a deduction for alimony paid, and the payee spouse will no longer include the alimony payments in income. The consequence is that income that would otherwise be taxed at the payee spouse’s lower rate will now be taxed at the payor spouse’s higher rate, thus diminishing the cash flow of the payor spouse. Although the payee spouse will receive more favorable treatment under the new law, the spouses considered together are usually better off under current rules.Divorce can be complicated from a legal perspective and also from a tax perspective. Taxpayers contemplating a divorce are well-advised to consult with a tax professional as well as a divorce attorney to ensure the best possible outcome. ### Proposed Changes to Data Collection Forms Could Add Significant Hours to Compliance Reporting On April 3, the U.S Department of Commerce Federal Audit Clearinghouse (FAC) proposed revisions to the Data Collection Form (DCF) that is submitted by all entities subject to Single Audit Act Amendments of 1996. As it currently stands, all nonfederal entities (states, local governments, institutions of higher education, not for profit organizations and others) that expend at least $750,000 a year in federal funds are required to have audits completed in accordance with 2 CFR part 200 (Uniform Guidance). The audits are designed to reduce risk of noncompliance and provide federal oversight. When the audits are completed, the single audit reports and data collection forms are submitted to the FAC.The proposed changes are designed to make the reports easier to use by federal agencies, pass-through entities and the public. The FAC is proposing to include the following four elements on the form: Text of the federal award audit findings Text of the corrective action plan Notes to the Schedule of Federal Awards (SEFA) Communication from auditor to auditee in writing of any issues that did not constitute an audit finding, but warranted the attention of those charged with governance Currently the first three of these elements are required to be included in the audit reports for these entities, but the FAC would like to streamline this process further to improve processing of any findings by the oversight agencies.The proposed changes are intended to provide transparency to all users of the audit findings. Although the modifications do not appear overly difficult, the Census Bureau estimates that organizations could incur many more hours in education, data collection and data formatting to properly complete the form. Of the approximate 80,000 respondents, it’s been projected that it would take each of the 400 largest respondents 70 hours in total; for the remaining 79,600, the estimate is 21 hours. That makes 1,699,600 total annual hours if the proposed changes are accepted, a large additional burden placed on both auditors and auditees, and a major point of debate among all involved.This proposal will have no effect on 2018 single audits, as the final form revision would not be effective until fiscal periods ending in 2019, 2020 or 2021.The comment period on these changes recently expired and the FAC is currently reviewing those comments and other proposals and have no additional comment at this time. You can read the draft of the proposed form here. ### U.S. retail sales in June increase 6.6% year-over-year, leading to the continued rise in interest rates by the Federal Reserve for 2018 Boosted by increased purchases primarily of automobiles, retail sales during June in the United States rose steadily, affirming expectations for strong economic growth in the second quarter. The Commerce Department noted that retail sales increased 0.5% from May to June, which exceeded economist forecasts for the month. The 0.5% increase related mainly to retail sales of automobiles, gasoline, building materials and food services. Excluding the four previously mentioned environments, retail sales growth remained at a consistent 0.8%, as seen in the prior month.These retail sales correspond closely with the consumer spending component of GDP, which accounts for two-thirds of the United States’ economic activity. Consumer spending has increased due to a variety of reasons; however, it seems that one of the main reasons behind the increased spending is the recent tax cuts seen in the United States.The Federal Reserve has already raised interest rates twice in the current year, and due to the economy’s strong performance coupled with tightening labor markets (the unemployment rate was 4% in June) and firming inflation, the Fed is likely to continue to increase interest rates. The Federal Reserve has indicated that two more interest rate hikes are likely by the end of 2018. ### Final Regulations on Recordkeeping and Substantiating Charitable Contributions The American Jobs Creation Act of 2004 and the Pension Protection Act of 2006 made changes to the charitable contribution deduction recordkeeping and substantiation requirements.  In 2008, the IRS issued proposed treasury regulations to address these changes.  On July 30, 2018, the IRS issued final treasury regulations that generally adopt the proposed regulations that were issued in 2008 with a few modifications.Cash ContributionsThe final regulations clarify the recordkeeping requirements for all cash contributions, regardless of the amount of the contribution.  In order to deduct any contribution of cash, check or other monetary gift for federal income tax purposes, a donor must maintain, as a record of the gift, a bank record or written communication from the charitable organization that shows the name of the organization, date of contribution and amount of the donation.   The final regulations provide that these record keeping requirements are in addition to the substantiation rules which require a contemporaneous written acknowledgement of contributions of $250 or more. The final regulations also address the use of a blank pledge card given to a donor who makes a contribution of cash, check or other monetary gift to an organization that collects contributions that are subsequently distributed to other organizations, such as a combined federal campaign.   Under the final regulations, a blank pledge card provided by a donee organization and subsequently filled out by the donor does not satisfy the required recordkeeping requirements.Noncash Contributions           The final regulations also detail the recordkeeping and substantiation requirements for different thresholds of noncash contributions (other than publicly traded stock): To claim a deduction for a noncash contribution for property of less than $250, the donor must obtain a receipt from the donee organization or keep reliable records.    To claim a deduction for a noncash contribution of at least $250 but not more than $500, the donor is required to obtain a contemporaneous written acknowledgement.    To claim a noncash contribution of more than $500 but not more than $5,000, the donor must obtain a contemporaneous written acknowledge from the donee organization and file a completed IRS Form 8283, Noncash Charitable Contributions, (Section A) with the donor’s tax return.      To claim a noncash contribution deduction of $5,000 or more, the donor must obtain, in addition to a contemporaneous written acknowledgement, a qualified appraisal, and complete and file an IRS Form 8283 with the donor’s tax return.  If the claimed deduction is more than $500,000, the donor must also attach a copy of the qualified appraisal to the donor’s tax return for the year of the contribution and any subsequent years where there is a contribution carryover.  The final regulations also define the terms “qualified appraisal” and “qualified appraiser.”  The final regulations are generally effective as of July 30, 2018 but there is a transition rule that applies to the appraisal requirements which provides an effective date for contributions made on or after January 1, 2019.The takeaway for donors is that compliance with these recordkeeping and substantiation rules is critical as there has been recent activity where taxpayers have been denied a charitable deduction for not following the recordkeeping and substantiation rules. The takeaway for charities is understanding the importance of insuring their contribution acknowledgements are in compliance with these rules so as to assist their donors in achieving a tax deduction. ### Updated: Do Printers/Printing Companies Require a SOC (System and Organization Control) Report? The answer to this question is clearly based upon the level of risk that the printing company represents to its clients.  To answer this question, one must first gain an understanding of the services provided by printing vendors, sensitivity of the data shared with the printing company, the risk to the user organization should the printer experience a data loss and the expected level of security that is required to minimize the identified risk.ServicesThe primary service provided by printing companies is commercial printing (i.e., financial statements, event tickets, direct mailers, coupons, posters, labels, schedules, tourist guides, maps, rack literature, postcards) and digital printing of electronic marketing materials.  Printing companies also provide sophisticated data management to personalize content and develop target demographics to better focus marketing campaigns on the right audiences.  Many printing companies also provide order fulfillment services.Data and RiskDepending on the type of service provided by the printing vendor, the data being handled can span from names and addresses in mailing lists to social security numbers, bank account numbers, financial data, health information or payroll information.  Some of this data is highly sensitive and could be used to commit identity theft, resulting in material impact to individuals, which could be considered a required reportable event under most state information breach laws and result in substantial cost to the user organization.  Printing vendors are almost always provided mailing lists from user organizations.  At first glance, this may not seem to be sensitive, but if you consider that a mailing list is a record of an organization’s customers, most organizations would view this information as a valuable asset that needs to be protected against leakage or unauthorized disclosure to competitors.  In addition, the mailing lists could be focused on a group’s specific characteristics, such as high-net-worth individuals, that if disclosed, would result in a high level of dissatisfaction of the user organization’s clients.  Clearly, substantial risk could exist on behalf of the user organization should the printing vendor experience a data breach or mishandle its customer data.   In addition to the data risk that exists, printing companies that provide fulfillment services also have risk from shrinkage due to theft of merchandise or duplication of event tickets.Industry RequirementsA significant increase in third-party management and regulatory requirements has occurred for a number of industries.  In particular, regulators are placing increased pressure on financial institutions to assess the security and controls of third-party vendors, evaluate data protection practices and understand the risk of their business partners. Healthcare organizations have adopted policies that require all third parties to demonstrate HITRUST compliance. Organizations migrating to a cloud environment have also raised the awareness of the need to evaluate data-protection capabilities of all business partners with which they share information.Should a printing company have a SOC report?  Clearly, there is considerable risk associated with many of the data-fueled services provided by printing companies that would warrant a SOC report.  While a SOC report is not a requirement of the industry, the report would demonstrate to the user organizations that the level of security providing protection of data and merchandise is a major objective and is taken seriously by senior management of the organization.  A SOC report would also provide a distinct competitive and marketing advantage to the printing company, providing an authoritative and respected method to communicate and demonstrate to the marketplace that protection of client information is as valuable as the quality of the service that it provides.Do you think your organization could benefit from a SOC Report?  Visit our Service Organization Control page or contact one of our professionals to discuss your need. ### Apple Tops $1 Trillion Market Capitalization Threshold Earlier this month, Apple became the first publicly traded U.S. company to surpass $1 trillion in market capitalization. It tops a list that, as of August 3, claims five technology-centric entities as the largest in the world, ranked by market cap: $1.0 trillion – Apple $888 billion – Amazon $862 billion – Alphabet (Google’s parent) $829 billion – Microsoft $514 billion – Facebook Berkshire Hathaway was the top non-tech organization on the list at #6, with just over $500 billion in market cap. The only non-U.S. company in the top 10 was Chinese conglomerate Tencent Holdings Limited at #7, with market cap of $423 billion. The U.S. dominated the top 100 with 57 companies making the list; China was a distant runner-up with 10. Just how significant is Apple’s surpassing $1 trillion in market cap? Has anyone else done it before? According to an article published by Time[1], two giant trade monopolies from centuries ago, the Dutch East India Company and the South Sea Company, were each valued at more than $4 trillion (in today’s equivalent dollars) during their peaks in the 1600s and 1700s, respectively. The Dutch East India Company, in fact, is regarded as the most valuable corporation of all time, reaching at one point a worth of more than $8 trillion. But what about the modern era, where business competition in virtually every industry has become increasingly fierce, making it more difficult for companies to grow to such a massive size. Two oil syndicates have done it recently. Before the 2008 economic recession, PetroChina, that nation’s largest oil concern, reached $1.7 trillion (adjusted for today’s dollars) in market cap. Today, state-owned Saudi Aramco is currently valued at $1.5 trillion. Considering that all the other companies to pass the $1 trillion hurdle were either owned or substantially supported by their governments, it makes Apple’s accomplishment, in a country with relatively strict antitrust laws, even more impressive. Although trillion dollar companies are a bit larger than our typical clients, Schneider Downs has significant experience preparing business valuations for small- and middle-market companies for a wide range of purposes. Please contact Steve Thimons (412-697-5281; sthimons@sdcpa.com) or Joel Rosenthal (412-697-5387; jrosenthal@sdcpa.com) if you need any business valuation services. ### Strategies for Service Organizations to Prepare for the New SOC 2 Reporting Requirements Service Organizations that undergo a SOC 2 examination or are currently preparing to have one performed, should be aware of the recently updated requirements and how their pending SOC 2 examinations will be impacted. The specific changes pertain to the updated 2017 Trust Services Criteria (TSC) and the 2018 SOC 2 Description Criteria (DC). For more information on the specifics of these changes, refer to our recent SOC 2 update article. When the SOC 2 as-of date for a Type 1 report or the period-end date for a Type 2 report is on or after December 16, 2018, the 2017 TSC and the 2018 DC must be used. If the as-of date or the period-end date is on or before December 15, 2018, then either version of the TSC (2016 or 2017) and DC (2015 or 2018) may be used. Keep in mind, that the 2018 DC were intended to be used with the 2017 TSC. Therefore, if a service organization uses the 2018 DC, then it must use the 2017 TSC. With the effective date right around the corner, service organizations might be wondering how to best prepare. Below, we will walk through the steps service organizations should perform in order to prepare for these updates, based on different scenarios. Scenario 1 - A service organization issued a SOC 2 report under the 2016 TSC and 2015 DC and the SOC 2 examination period-end date is on or before 12/15/18: Perform next examination under 2016 TSC and 2015 DC. Perform a readiness assessment under the 2017 TSC and 2018 DC to identify new controls that will need to be implemented to meet the 2017 TSC and 2018 DC requirements for the following year’s SOC 2 examination Scenario 2 – A service organization issued a SOC 2 report, or completed a readiness assessment, under the 2016 TSC and 2015 DC and the SOC 2 examination period-end date is on or after 12/16/18: Map current controls to the 2017 TSC, identify control gaps and implement controls, as necessary. Determine if controls and system description meet the 2017 TSC and 2018 DC. If yes, leave report period-end date as is and perform examination under the 2017 TSC and 2018 DC. If no, determine if moving up the report period-end date to on or before 12/15/18 is an option. Base this decision off of customer requirements. If end date cannot be moved up, the service organization will have to perform the examination under the 2017 TSC and 2018 DC The service organization risks having pervasive exceptions, thus causing the SOC 2 report to be qualified. If end date can be moved up, the service organization should move the report period-end date up. In addition, the service organization should perform a readiness assessment under the 2017 TSC and 2018 DC to identify new controls that will need to be implemented to meet the 2017 TSC and 2018 DC requirements for the following year’s SOC 2 examination Scenario 3 – A service organization is in the process of evaluating CPA firms to perform a SOC 2 examination; Evaluate CPA firms and ask if they have issued any reports under the 2017 TSC and 2018 DC. Engage a CPA firm to perform a readiness assessment using the 2017 TSC and 2018 DC. Schneider Downs has converted several of its clients over to the new SOC 2 requirements. In addition, we have early-adopted the updated SOC 2 requirements and have issued SOC 2 reports for new clients using the updated SOC 2 requirements. For more information on how to prepare for the impending SOC 2 changes, please visit our SOC FAQs page or feel free to contact a member of our SOC Reporting team. ### The Benefits of Sell Side Due Diligence There has been an uptick in the number of companies doing sell side due diligence over the past few years, for many good reasons. Sell side diligence helps the company determine its true value by identifying its sustainable cash flows, the quality of earnings that will be most important to potential buyers. It also provides comfort to intermediaries, provides confidence in the numbers, and provides a forum to explain the company’s history. In addition, it speeds the process of a potential transaction. In today’s world, there is value to cutting time between the letter of intent and closing.  The most common areas that Sell Side Due Diligence should cover: Determination and documentation of owner expense addbacks Identification of one-time financial events Evaluation of capital investments on future earnings Potential off-balance-sheet liabilities Impact of employee benefits Evaluation of staffing levels Customer trends, contracts and sustainability Impact of recent marketing and sales programs on future revenues Vendor relationships, contracts and commitments IT investments and risks Federal, state and local taxes including sales and use taxes The above are only a few items to consider. Careful planning of the engagement should include meetings with the company’s management to determine other company-specific areas that would need to be addressed as part of the diligence plan.One other benefit of sell side diligence is that it gives the company the opportunity to develop a full and complete data bank to support the quality of earnings and other findings. This will help reduce the burden of producing a huge amount of data in a condensed period of time when the company gets the right offer.Schneider Downs provides a complete suite of both Sell Side and Buy Side Due Diligence. Please contact Joel Rosenthal at 412-697-5387 or jrosenthal@schneiderdowns.com if you would like to discuss our services. ### Tax Reform Impact on Donor Acknowledgement Letters Each year, charitable organizations gather their contribution data over the past calendar year in order to prepare their donor acknowledgement letters.  With the passing of the Tax Cuts and Jobs Act of 2017 (TCJA) in late December of 2017, charitable organizations need to be aware of the changes in deductibility of meals and entertainment expenses for businesses to ensure appropriate information is included in an acknowledgement for a quid pro quo contribution.Before TCJA, 50% of entertainment expenses for businesses were permitted to be deducted, and meals had a potential of being 100% deductible if certain criteria were met.  As of January 1, 2018, businesses cannot deduct entertainment expenses and can only deduct 50% of business-related meals.  How does this affect exempt organizations?  If an exempt organization receives a quid pro quo payment for the attendance of an event or fundraiser from a business, the exempt organization should be disclosing the entertainment and meal expenses separately. If an acknowledgement is provided for a qualified sponsorship payment and there is not a "substantial return benefit," the exempt organization should not value the goods/services on the acknowledgement or reduce the contribution amount in the acknowledgement.  If the goods or services constitute a substantial benefit, the amount above the fair market value of the benefit would be classified as a charitable contribution.  For example, if a charity hosted a golf outing, the difference between the amount paid and the value of the benefit (i.e., golf, meals, entertainment) should be disclosed as a charitable contribution.  After TCJA, it is important that charitable organizations provide their sponsors information on the types and amount of financial benefit.  The golf and other entertainment portion of the benefit should be separately stated from the meals.With the passing of TCJA, tax professionals are speculating that this area of tax reform could potentially be under scrutiny.  Charities always appreciate their event sponsors.  As a charity, you should ensure that you provide your sponsors with the appropriate amount of information for their tax reporting requirements. ### Living The Dream I had just turned 17 when I walked into my first college accounting class. I had no idea what I was getting myself into, but was excited for a new opportunity because I had just about exhausted my list of possible majors and had not yet found something that I loved. On the other hand, I had not considered the idea of a career in business, either. Although I had no idea what I was getting myself into at the time, it turned out to be the best decision I ever made. Not only did the material come easy to me, but I was also very interested in what I was learning.What sealed the deal for me was the professor from my first accounting class. He had such a strong impact on me because of the stories that he shared about his experiences in public accounting; I had never heard anyone speak about a career with such passion. Never before did I have a professor who enjoyed reminiscing on past careers the way that he did. Everything clicked for me during my time in his class. I knew that I had found a major, and shortly thereafter, a career that I would be passionate about and would continue to excite me.Once I declared a major in accounting, it was shortly after that I realized I wanted to end up in public accounting. I did not want to be closed-minded though, so I explored my options throughout college with a variety of internships. First, I worked as a teller; then I went onto accounts payable, general accounting, and finally cost accounting. All of these jobs were interesting, but they did not meet the expectations that I had for my future, so I searched for an auditing internship.This is where I found Schneider Downs. Throughout my time here at Schneider Downs, I got the opportunity to work with a variety of clients and engagements. Every day I learned something new, which made me excited to wake up and go to work every day.  Schneider Downs focuses on the personal connections its professionals make with every one of their clients, and I can say that the firm definitely made a personal connection with me, as well. The work at Schneider Downs intrigued me, and the culture of the company was positive, caring and engaging, which made for a perfect internship.I am glad that I can now say with the utmost confidence that I am starting grad school knowing what I want to do for the rest of my life, and I owe this assurance to Schneider Downs and the internship experience that I had. ### IRS Clarifies Freight Brokerage Will Qualify for 20% Qualified Business Income Deduction The Internal Revenue Service issued proposed regulations on August 8, 2018 related to the new Section 199A Deduction, also known as the Qualified Business Income Deduction (QBI). Available for the first time in 2018, the 20% deduction would be available to certain flow-through business owners and self-employed individuals to apply against their qualified business income.When the Tax Cuts and Jobs Act was signed in December 2017, brokerage services were included as “Specified Services”,  which were ineligible for the 20% QBI deduction. Although brokerage services were not defined at that time, it was unclear whether they included insurance brokers, real estate brokers or freight brokers, among others. The proposed regulations clarify that only security brokers are “Specified Services” and excluded from the QBI deduction.  The introduction to the proposed regulation states:Proposed §1.199A-5(b)(2)(x) uses the ordinary meaning of “brokerage services” and provides that the field of brokerage services includes services in which a person arranges transactions between a buyer and a seller with respect to securities (as defined in section 475(c)(2)) for a commission or fee. This includes services provided by stock brokers and other similar professionals, but does not include services provided by real estate agents and brokers, or insurance agents and brokers.We will continue to analyze the proposed regulations and provide more guidance. If you have any questions, please contact a Schneider Downs Tax Advisor. ### IRS Releases Draft of 2018 Form 990 On July 18, 2018, the Internal Revenue Service (IRS) released a draft of the 2018 Form 990.  With the passing of The Tax Cuts and Jobs Act (The Act), two questions have been added to the draft 2018 Form 990 in regards to the newly imposed excise tax on compensation greater than one million dollars and excise tax on educational institution's net investment income:Part V, Question 15:  Is the organization subject to the Section 4960 tax on payment(s) of more than $1,000,000 in remuneration or excess parachute payment(s) during the year ?                          If "Yes," see instructions and file Form 4720, Schedule N.Part V, Question 16:  Is the organization an educational institution subject to the Section 4968 excise tax on net investment income?                                                                                                                             If "Yes," complete Form 4720, Schedule O.If an exempt organization or related person or governmental entity pays more than one million dollars to any covered employee, the organization is required to pay a flat 21% tax on the excess amount above one million dollars for the top five highest paid employees.  Excluded from this excise tax are payments to medical professionals to the extent the payment is for performance of medical or veterinary services.  Medical professionals include doctors, nurses and veterinarians.The Act also imposes a 1.4% excise tax on the net investment income of education institutions that meet the following requirements: The institution had at least 500 students in the preceding year; More than 50% of the students are located in the United States; The institution is not a state college or university; and The aggregate fair market value of the assets at the end of the preceding taxable year (other than those used in carrying out the institution's exempt purpose) is at least $500,000 per student. When determining if an institution meets the asset-per-student standard, assets and net investment income of related organizations are included.  An organization is treated as related to the institution for this purpose if the organization: (1) controls, or is controlled by, the institution; (2) is controlled by one or more persons who control the institution; or (3) is a supported organization or a supporting organization during the taxable year with respect to the institution.If an exempt organization answers yes to either Question 15 or 16 in Part V, it must complete Schedule N or O that will be included in From 4720.  If the above excise tax applies to your organization, the IRS has not released a draft version of Form 4720.  The draft 2018 Form 990-T has not been released at this time.  The Form 990-T will include both excise taxes above. Visit the IRS website to stay current on the 2018 draft forms released by the service. ### If Only Those Employees... One of the most common sentiments that I come across as an information security professional is that employees are the ones making the organization less secure:. If only everyone was as smart as IT, or a security professional or of high intelligence, no one would click on those phishing emails or get malware from social media sites. The logic in that type of thinking is flawed and can actually be detrimental to the security of an organization. Let’s talk about why that is and what to do about it. The goal should be to protect our employees as much as possible from cyberattacks, not to waste time blaming the victims. First, let’s get rid of the notion that IT, security and “smart people” in general are immune to phishing and other social engineering attacks. EVERYONE is vulnerable. It isn’t just employees in marketing and sales that get phished. As a penetration tester I can tell you this with certainty. We frequently are able to get IT and sometimes even security staff to click on phishing emails and open malware hidden in support tickets. A good phish can trick about anyone, and attackers are much better at phishing than they used to be. Now, that isn’t to say that we need to stop educating our employees about safe computing practices. Employees need to know to lock their computer when they walk away, use strong but easy-to-remember passwords, watch out for suspicious emails, and etc. Let’s be honest though. An accountant’s job is accounting, an HR associate’s job is HR. We can’t expect everyone to be an expert outside of their field. For instance, I am great at security consulting, but you wouldn’t want to hire me to do your company’s taxes.  We can’t rely on our employees to be experts at defending themselves from cyberattack, but we can help them out. It is true that currently employees are one of the softest targets, but that is often due to an organization’s security and IT controls. Most frequently on our penetration tests, we gain access to a client’s network by guessing weak passwords that meet complexity requirements (and that is possible to prevent) or phishing employees, which may require evading antivirus products and other security controls. Once we are on a network, it is often those weak passwords, password reuse, and overly permissive user accounts that allow us to move from victim zero to full control of a network. Employees take the blame, but most often, what it comes down to is corporate culture. Often, organizations want to make things easy for employees and for the IT team, so they avoid technical controls that make attackers lives’ much more difficult. However, there are many technical controls that are mature and, while they may take time to implement, they don’t add much complexity for an employee and provide a great deal of added security. Everyone has a firewall and traditional antivirus and you need those things, but they do little to stop many attackers. To more effectively stop and limit an attacker’s impact we need to do things like: ensure that two-factor authentication is used on all possible externally accessible resources, limit administrative credential assignment on a least privilege model, have separate administrative accounts from those accounts that are used for day-to-day work, segregate network traffic (Tom’s workstation doesn’t need to talk to Janice’s workstation or the backend database server), block bad passwords (even those that meet complexity requirements) and have a better understanding of who/what is on our networks and what they are doing. I have yet to see any organization doing all of what I just listed. The security controls I presented are not million-dollar appliances that take a team of three or more people to operate. Some are difficult to implement, but many are not. We all want the easy button, and spending money is often easier, but the best things in life don’t come without effort. If we put in a little elbow grease with our IT and security practices, we can stop putting so much of the blame on our employees. With that I pose a challenge: Instead of blaming victims, try to do more to protect them. ### How Tax Reform Made Your Estate Plan Obsolete If you are among the many taxpayers who had wills and other estate planning documents prepared prior to this year, don’t be too eager to delete your estate planning advisor from your rolodex. Thanks to changes to the federal estate, gift and generation-skipping tax exemptions made by the recent Tax Cuts and Jobs Act (“TCJA”), these documents may now be obsolete.         Before the TCJA, the first $5 million, or $10 million per married couple (as adjusted for inflation), of transferred property was exempt from federal wealth transfer taxes. For decedents dying and for gifts made from 2018 through 2025, the TCJA doubles the amount that can be excluded from these taxes. Indexing for post-2011 inflation, this means that individuals can transfer up to $11.2 million, and married couples up to $22.4 million, on a tax-free basis.      This increased exemption amount may trigger the need for you to re-draft some important documents, including wills and trust agreements. Many estate plans that were prepared under prior law provided for the automatic creation of a “credit shelter” trust in order to fully utilize the exemption amount of the first spouse to die. The changes to the law made by the TCJA may cause the credit shelter trust to be unnecessary in many cases. Furthermore, an unnecessary credit shelter trust may also forfeit the benefit of the basis step-up at the death of the second spouse.  You should contact your estate planning advisor as soon as possible to discuss the impact that the TCJA may have on your current estate plan. ### Domain Names Acquired in a Business Combination This article provides a brief discussion of some common valuation methods used to determine the fair value of one particular type of intangible asset: domain names.Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 requires that an acquirer of a business record, separately from goodwill, the identifiable assets (tangible and intangible) and liabilities assumed of the acquired entity at their acquisition date fair values.  Domain names meet the FASB’s definition of an intangible asset separately identifiable from goodwill.The Relief-from-Royalty Method, a form of the Income Approach to valuation, calculates the value of an intellectual property (“IP”) asset as the amount that a company saves by owning the IP instead of licensing the use of the IP from a third party.  An applicable royalty rate is multiplied by the future sales expected to be generated using the IP asset, and these future cash flows are discounted to the present day to determine the value of the IP.  The applicable royalty rate can be derived based on analyzing third-party licensing agreements for similar property (i.e., other domain names).  Because the Relief-from-Royalty Method utilizes royalty rates obtained from licensing transactions within the market, it is considered to be a hybrid of the Income and Market Approaches to valuation.The Cost Approach establishes value based on the current costs needed to reproduce or replace the domain name. The acquired entity’s management may have historical cost records supporting the acquisition of the domain name. These records may provide at least a general idea of what it would cost to recreate the website in the current year. However, the Cost Approach may not always be a relevant indication of fair value for the domain name asset. For example, if the related website has grown in popularity and is used to drive sales for the acquired entity, the domain name’s current value may not be appropriately captured in historical cost records.The Market Approach to valuation estimates the fair value of domain names using sale prices of similar intangible property. Various websites, including domainindex.com and namebio.com may provide historical sale prices of domain names similar to the target domain. However, it is important to note that a similar domain name may have completely different user traffic than the target domain, which would impact value.  In addition, a domain that is also a generic term (e.g., food.com) or a short abbreviation (e.g., NHL.com) would typically have more value than a more specific or long brand/company domain name representing similar content.  Therefore, it is important to consider the Market Approach, but other factors specific to the target domain name should be taken into account.Schneider Downs has significant experience in determining the fair value of intangible assets acquired through business combinations in order to comply with ASC 805.  For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@schneiderdowns.com or Steve Thimons at 412.697.5281 or sthimons@schneiderdowns.com. ### IRS Releases Proposed Regulations on the 20% Qualified Business Income Deduction for Flow-through Businesses On August 8, the Treasury Department and Internal Revenue Service released long-awaited regulations on the 20% deduction for pass-through businesses whose income flows through to individuals or certain trusts and estates.  The release totaled over 180 pages of explanations and technical guidance.  At the same time, the IRS released Notice 2018-64, which provides guidance on calculating eligible wages used in the overall calculation. As a refresher, the Tax Cuts and Jobs Act created the deduction when the Act was signed into law in December 2017 and the deduction is first available to reduce income on 2018 tax returns.  The deduction is available to all taxpayers making less than $157,500 as individuals or $315,000 as joint filers.  For those taxpayers above the limits, specified service trade or businesses are not eligible for the deduction.  These businesses include law, accounting, consulting, performing arts, athletics, financial services, health, and brokerage services, as well as “any trade or business where the principal asset” is the “reputation or skill” of at least one employee.  The proposed regulations provide additional clarity into the definitions of these specified services.  Note that architects and engineers continue to be specifically excluded from the list of service businesses ineligible for the deduction.   For those businesses that qualify for the deduction, an initial impression is that the IRS appears to have provided favorable interpretations of the rules.  Banks, insurance businesses, and real estate brokers received favorable news while others, such as veterinarians, were not as fortunate.  Initial takeaways include: The proposed regulations include several anti-abuse measures including rules aimed at preventing non-eligible businesses from splitting potentially eligible businesses from ineligible businesses and employees from being labeled as independent contractors. The proposed regulations contain favorable rules for businesses with minor amounts of potentially unfavorable service revenue. Favorable aggregation rules are proposed, permitting taxpayers to combine business entities to help them satisfy wage limitations in the tax law.  Over the next few weeks, the proposed rules will be analyzed more thoroughly, and additional planning ideas and compliance guidance will be provided.  In the meantime, if you have questions, please contact your Schneider Downs tax consultant.  ### How are Automobile Dealerships Valued? Typically, when valuing a business, three approaches to valuation are considered: the income approach, the market approach and the asset-based approach. These three approaches are relevant to valuing automobile dealerships; however, for automobile dealerships, transaction data is available specific to goodwill. Thus, the asset-based approach can become a “hybrid” asset-based/market approach. The hybrid asset-based/market approach is relevant due to the fact that automobile dealerships are typically sold for the value of the tangible assets plus goodwill.For an automobile dealership, goodwill is known as “blue sky”. Transaction data is available based on a multiple of pre-tax earnings used to determine blue sky for a particular brand of vehicle. For example, Honda might range from a pre-tax multiple of 5.0 - 6.5. However, a specific dealership can have a blue sky multiple below or above this range, depending on company-specific factors. Below are some factors that need to be considered when determining blue sky value: The growth potential of a specific dealership is considered in determining the multiple. In general, when a dealership is expected to experience high growth, the multiple could be higher. However, this factor can also depend upon current economic conditions.   Location is another factor. A dealership that is on a back road or is land-locked could have a reduced multiple.   Manufacturer requirements can also reduce the multiple. If there are significant improvements that need to be made in order to be image-compliant, a buyer will want a reduction to the multiple, since the buyer will need to make additional investments.   Rent expense is also considered. A building with high rent expense for the market could reduce the multiple, and low rent for the market could increase the multiple.   Demand for a specific brand in a given location is also considered. If a Lexus dealership is located in a low-income neighborhood, then the multiple for that dealership might be well below the typical range, since there is likely no market for that luxury brand in its current location.   Another factor that impacts the blue sky multiple is the amount of competition in that location.   Existing workforce is another factor. If a dealership lacks sufficient service technicians, the blue sky multiple could be impacted. There are multiple considerations for each factor and other factors that might need to be addressed depending on the specific dealership. Also, certain factors may cancel each other out; for example, if rent is high but demand for that brand in that location is high, then the multiple could be average, since those factors might cancel each other out. The valuation process requires judgement in determining the proper multiple to apply to a specific dealership.Christy Samek specializes in valuing automobile dealerships for estate and gift tax planning purposes. Valuing a business requires significant judgement in determining the correct approach and assumptions. For assistance in determining the value of your dealership, please contact Christy Samek at 412-697-5415. ### Ready for a Fast-Moving Wayfair World Since the U.S. Supreme Court’s decision in South Dakota v. Wayfair eliminated the physical presence standard for substantial sales and use tax nexus, states are now free to impose economic nexus standards as long as those standards do not discriminate against, or impose an undue burden on interstate commerce. While the Wayfair case is on remand to the South Dakota Supreme Court, it is expected that the South Dakota law will survive any additional constitutional challenges.Justice Kennedy, in the Supreme Court’s opinion, identified the following safeguards in the South Dakota law that prevent discrimination and undue burdens on interstate commerce: A safe harbor or small seller exception.  A remote seller must have $100,000 in sales directed into the state or 200 individual transactions in an annual period before substantial nexus is established. No retroactive application of the law. Single state-level administration of the tax. Uniform definition of products and services. Simplified tax rate structure. Free sales tax administration software provided by the state. Immunity from liability if those errors resulted from relying upon state’s software. Safeguard numbers three through seven are consistent with the standards found within the Streamlined Sales Tax Agreement, of which South Dakota is a full member.  There are also 22 other states that are members of the Streamlined Sales Tax Agreement. Currently, there are 13 full member states that have a similar economic nexus threshold of $100,000 in sales and 200 individual transactions on an annual or 12-month basis with no retroactive collection activity. As such, these states are most likely compliant with the safeguards as described in the Wayfair decision and have a good chance of surviving constitutional challenges.  Those states are: Georgia – Collection for remote sellers meeting the thresholds is to begin by January 1, 2019. Indiana – Collection for remote sellers meeting the thresholds is to begin by October 1, 2018, provided that the Wayfair case is concluded by that date. Iowa – Collection for remote sellers meeting the thresholds is to begin by January 1, 2019. Kentucky – Collection for remote sellers meeting the thresholds went into effect on July 1, 2018, but the Department will extend time for remote sellers to register until October 1,, 2018. Minnesota – Collection for remote sellers meeting the thresholds is to begin by October 1, 2018. Nebraska – Collection by remote sellers meeting the thresholds is to begin by January 1, 2019. Nevada – Issued a proposed regulation regarding the above-referenced thresholds but did not indicate an effective start date. North Carolina – Collection by remote sellers meeting the thresholds is to begin within 60 days of meeting the thresholds or by November 1, 2018, whichever occurs later. North Dakota – Collection by remote sellers meeting the threshold is to begin by October 1, 2018. Rhode Island – Remote sellers meeting the thresholds have the option to comply with use tax reporting requirement or registering and collecting the tax.  Law went into effect August 2017. South Dakota – Guidance for remote sellers meeting the thresholds is expected soon after the conclusion of the Wayfair case.  Governor called emergency legislative session for September 12, 2018 regarding Wayfair; appears to be targeting a start date of October 1, 2018. Utah – Collection for remote sellers meeting the thresholds is to begin by January 1, 2019. Vermont – Collection for remote sellers meeting the thresholds began on July 1, 2018. Wisconsin – Collection for remote sellers meeting the thresholds is to begin by October 1, 2018. Washington – Collection for remote sellers meeting the threshold is to begin by October 1, 2018. Wyoming – Guidance for remote sellers meeting the thresholds is expected soon after the conclusion of the Wayfair case. There are additional states that are full members of the Streamline Sales Tax Agreement that meet a number of the referenced safeguards but have not established economic thresholds of $100,000 or 200 individual transaction, neither have they yet passed legislation barring retroactive collection of the tax.  Such states include: Arkansas, Kansas, Michigan, New Jersey, Ohio, Oklahoma, Washington and West Virginia.  New Jersey is reported to have passed the required thresholds and no retroactivity collection legislation, but it is still waiting for the Governor’s signature. There are a number of other states that have enacted economic nexus standards for sales tax purposes but do not have the protections referenced in South Dakota law, including: Alabama – Collection for remote sellers who exceed the state’s $250,000 threshold in annual sales to begin by October 1, 2018. Connecticut – Collection for remote sellers who exceed the state’s thresholds of $250,000 in sales or 200 individual transactions in a 12-month period to begin by December 1, 2018. Hawaii – Collection for remote sellers who exceed the $100,000 or 200 individual transaction thresholds in the current or preceding calendar year began on July 1, 2018. Illinois – Collection for remote sellers who exceed the state’s thresholds of $100,000 in sales or 200 individual transactions in a 12-month period is to begin by October 1, 2018. Louisiana – Has thresholds of $100,000 or 200 individual transactions in the state during the previous or current calendar year.  Collection requirements will begin once the Wayfair case becomes final. Maine – Has thresholds of $100,000 and 200 individual transactions in the previous or current calendar year.  The state appears to be waiting on the conclusion of the Wayfair case. Massachusetts – Uses thresholds of $500,000 in sales and 100 or more transactions in the preceding calendar year, litigation pending, no stay.  Began October 1, 2017. Mississippi – Uses a threshold of $250,000 in sales.  Remote seller meeting this threshold should be registered by August 31, 2018 and begin collecting on September 1, 2018. Tennessee – Uses a threshold of $500,000 in Tennessee sales during the previous 12 months.  Enforcement is stayed pending litigation. States such as Colorado, Oklahoma, Pennsylvania and Washington have passed use tax reporting laws.  Use tax reporting laws apply to remote sellers exceeding a certain threshold of sales in the state in an annual or 12-month period.  The sellers have the option of registering and collecting the state’s sales tax or complying with the state’s various use tax reporting requirements.  Use tax reporting requirements are generally obligations imposed on remote sellers to inform their customers of use tax obligations with their purchases and the filing of reports with both their customers and the respective Departments of Revenue or Taxation regarding their sales into the state.  The threshold in Colorado for use tax reporting requirements is $100,000 of Colorado sales.  The threshold in Oklahoma, Pennsylvania and Washington is $10,000 of sales into the state.  Use tax reporting requirements such as the one in Colorado were declared constitutional by the U.S. Court of Appeals for the 10th Circuit.  The U.S. Supreme Court refused to hear the case, so the 10th Circuit’s opinion stands. States with complex sales and use tax laws such as California, New York and Texas would have difficulty complying with the requirements of the Streamlined Sales Tax Agreement but may be able to get around the constitutional requirements as established in Wayfair by enacting onerous use tax reporting requirements like Colorado and Pennsylvania.  Many remote sellers may choose to voluntarily register and collect sales tax instead of taking the risk of antagonizing customers by complying with the reporting requirements.Remote sellers should begin focusing their attention on states with use tax reporting requirements and those states with remote seller’s nexus laws that closely resemble the South Dakota law.  Barring any unforeseen circumstances, it appears as though South Dakota’s law may be considered constitutional on remand to the South Dakota Supreme Court.  Therefore, many of the Streamlined Sales Tax Agreement full member states that have imposed similar economic nexus thresholds may also be considered to be within the constitutional standards as established in the Wayfair case. Other states that have similar thresholds but do not have safeguards similar to the Streamlined Sales Tax Agreement are more likely to face constitutional challenges.   While the U.S. Supreme Court said that physical presence is no longer required for a substantial nexus, it did not define the bare minimum for substantial nexus.  Nor did the Court say it was essential for a nexus law to have all seven standards identified in the Wayfair case as protections against discrimination or undue burdens on interstate commerce.While the full member Streamlined Sales Tax Agreement states with thresholds and no retroactivity laws similar to South Dakota appear to be constitutional, the economic nexus laws imposed by other states will have to be reviewed on a case-by- case basis.Remote sellers will have to be aware of rapidly changing nexus standards in all taxing jurisdictions.  Remote sellers should consult with their state and local tax professionals to ensure they are registered in all applicable locations. ### Is a Capital Gains Tax Cut on the Horizon? President Donald Trump is reportedly pushing for another change in tax policy by indexing capital gains for inflation. Implementing the change is projected to both (i) boost economic growth and (ii) result in a tax cut of $102 billion over the next decade (according to the Penn-Wharton Budget). The capital gains tax is imposed whenever a capital asset is sold, such as an investment in stock or a mutual fund. Under the current tax law, the investor is taxed at the capital gains rate on the difference between the original price of the investment and the selling price. For example, if stock were purchased for $1 million and sold for $3 million, the investor would be taxed on the $2 million gain. Under the proposed plan, investors would be allowed to adjust the original value of the investment upwards to account for inflation. In the same example, assume the inflation calculation yields an adjustment of $800,000 between the time the investment was acquired and subsequently disposed. As a result, the original purchase price of the investment would be adjusted to $1,800,000, reducing the taxable gain to $1,200,000. The inflation adjustment could save the investor $160,000 of capital gain tax, using a 20% capital gain tax rate. The idea has been around for some time but never persevered due to legal challenges. In order for the plan to progress, the Treasury Department would have to redefine the word “cost” under the Revenue Act of 1918. The same plan was considered back in 1992 under President George H.W. Bush, but the Treasury Department determined that there were no legal grounds to support the change. ### It's Never Too Early to Plan for Your Successor In the past year, we have worked with clients in a variety of industries to address succession matters. Some industries seem to have a more natural succession track than others. Recently, we have been working with a number of professional service companies. Often, the owners of these businesses are so focused on attracting and retaining new clients as their business grows that they haven’t taken time to stop and think about their overall succession plan and the role that key employees or external strategic partners will play in that plan.There are a variety of tools and models that business owners can use to provide an incentive for the next generation of key employees to buy ownership in the business while over time buying out the founding owner or owners. We often assist clients with deferred compensation models that are structured to achieve the goals of the business owner, ensuring that there will be sufficient cash flow to fund the deferred compensation plans and provide an incentive for others in the business to think like owners. Such compensation models work as a retention tool for those key employees while at the same time delivering retirement funding for the existing owners.The vesting requirements of these plans can be structured in a way to require key employees to stay for a number of years before any benefit vests to the employee.  In addition, we can structure the stock of the company to retain control through voting and non-voting shares or units in the corporation or partnership to meet the goals of the founder of the business. These plans take a significant amount of thought and planning to ensure that they are structured in a manner that will accomplish the goals of everyone involved.There are also unique planning structures that can be implemented relative to the sale and purchase of shares or units to ensure the most tax-efficient structure for both buyer and seller while also addressing cash flow considerations of both parties. These discussions can be challenging, but delaying the discussion and related planning will not make the process any easier and often can magnify issues and timing constraints that may exist. Please contact us if succession matters are a thought that has been keeping you awake at night. We’ll help you determine what options exist to effectively plan for the transition of your business to the next generation of leaders. ### PA DEP Calls for Plugging of Almost 1,100 Wells The Pennsylvania Department of Environmental Protection (DEP) estimates that there are between 100,000 and 500,000 abandoned, unplugged wells in the commonwealth, and now it is trying to stop almost 1,100 more from adding to that count. In late July, the DEP issued administrative orders to three oil and gas companies, Alliance Petroleum Corporation (a subsidiary of Diversified Gas & Oil), CNX Resources and XTO Energy, to plug abandoned wells throughout Pennsylvania.“It is critical that all operators adhere to state laws to mitigate the environmental and public health and safety hazards and not add to the costly orphaned and abandoned well inventory that would otherwise fall on the shoulders of Pennsylvania citizens,” DEP Secretary Patrick McDonnell said in a written statement.According to Pennsylvania’s 2012 Oil and Gas Act, a well is considered abandoned if it does not “produce, extract or inject any gas, petroleum or other liquid” for a 12-month span. The law also requires owners and operators to submit a schedule of plugging activity for their abandoned wells. Wells are idled for various reasons, such as when it does not turn a profit. An inactive well can be turned back on within a year to avoid being considered abandoned, and if not, as in the case of these 1,058 wells, the commonwealth can order the well be shut off for good.Of the combined 1,058 abandoned wells, Alliance is responsible for 638, CNX for 327 and XTO for 93. Many of these wells were discovered through an investigation triggered by a wave of well transfer forms initiated by the three companies that included wells idle for all of 2017. With an estimated price tag of anywhere between $10,000 and $100,000 to plug each well, Alliance, CNX and XTO are looking at significant commitments for plugging, money that could be put towards future drilling activities.The administrative orders allow 60 days for each company to respond with a plan for plugging the wells; however, there is an option to appeal to the Environmental Hearing Board. As the order currently stands, Alliance and CNX must each plug at least 30 wells per quarter beginning October 1. XTO must plug 15 wells per quarter. CNX and XTO are required to complete plugging activity by 2020, while Alliance has until 2023. ### Advisers Longing Clarity on Qualified Business Income Deduction When the Tax Cuts and Jobs Act (The Act) was signed into law at the end of 2017, questions arose immediately regarding the applicability of the 20% deduction for Qualified Business Income (QBI). It was immediately clear that the deduction would not provide the same tax relief for the professional service industry as it does for many other industry groups. Seven months later, upcoming guidance is desperately necessary to provide professional service taxpayers with the information to deploy proper planning and organization strategies prior to the end of the year.How the deduction works?The deduction, at first glance, appears simple: a 20% deduction of Qualified Business Income (QBI) earned in a “qualified trade or business” is available for business owners organized as sole proprietorships or pass-through entities. However, the deduction must pass through two additional limitations if the taxpayer’s taxable income is greater than $157,500 for the year ($315,000 for married filing jointly). First, the deduction is limited to the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of the unadjusted basis cost of tangible property immediately after acquisition of qualified property. Finally, the resulting deduction is limited to 20% of the excess of taxable income over the sum of capital gains plus qualified cooperative dividends.The purpose of the deduction is to keep entities subject to a single layer of tax competitive with their double-taxed C-Corporation counterparts that received a tax cut to a 21% flat tax. Taxpayers who are eligible to receive the maximum 20% deduction will be taxed at a maximum of 29.6% on QBI. Specified ServicesFor those in the professional service industry, their trade or business may not qualify for the QBI deduction. The Act refers to specified service trade or businesses as those involved in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business if such trade or business is based on the reputation or skill of one or more of its employees or owners.It is important to note that the same exception for taxable income applies to the specified service rule. Therefore, if the business owner’s taxable income is less than $157,500 for the year ($315,000 for married filing jointly), he/she may still claim the QBI deduction assuming he/she meets other qualifying factors. The hope is that the anticipated regulations will provide answers for single businesses with multiple separate trades or businesses. If an entity combines specified service businesses with a qualified trade or business, it is unclear whether a deduction is available for the qualified portion of the entity. If the deduction denied, it is likely advantageous to separate the businesses into separate entities. In addition, more clarity is required regarding service-related businesses that may fall outside the specified service definition, which is currently very vague and broad. Guaranteed PaymentsGuaranteed payments to partners are common in professional services companies organized as a partnership. These payments are made to a partner for services rendered with respect to a trade or business.  These payments are explicitly excluded from QBI. To this point, a consideration is to review partnership agreements for possible revisions to distribute income in a different fashion. In addition, guaranteed payments are not included as wages for the 50% or 25% wage limit test. Therefore, additional consideration should be given to entity structure.When will we have answers?As covered in prior Our Thoughts On articles, the American Institute of Certified Public Accountants (AICPA) requested additional guidance in the form of a letter to the Internal Revenue Service (IRS) at the end of February. The AICPA subsequently listed the request on its “Recommendations for 2018-2019 Guidance Priority List” letter dated June 14, 2018. It is not clear when the guidance will be available, but it is clearly one of the most anticipated regulation sections for tax advisers as 2018 progresses. ### ASU 2016-02: How the Lease Standard Will Impact Drilling Companies On February 25, 2016, the Financial Accounting Standards board (“FASB”) issued ASU 2016-02 on leases, which is effective for calendar periods beginning January 1, 2019 for public business entities and January 1, 2020 for all other entities and represents a significant change to lease accounting. As a result, oil and gas companies will face significant implementation challenges during the transition period. The scope of the standard is limited to leases of property, plant and equipment (“PP&E”) and excludes leases of intangible assets; leases to explore for or use minerals, oil, natural gas and similar nonregenerative resources; leases of biological assets; leases of inventory; and leases of assets under construction. The new standard defines a lease as “a contract, or part of a contract, that conveys the right to control the use of identified PP&E (an identified asset) for a period of time in exchange for consideration.” Control is considered to exist if the customer has both of the following characteristics: 1) the “right to obtain substantially all of the economic benefits from the use of an asset,” and 2) the “right to direct the use of the asset.” ASU 2016-02 is consistent with existing accounting pronouncements in that the leased asset must be identifiable either explicitly or implicitly. The evaluation of whether there is an identified asset, however, depends on whether a supplier has a substantive substitution right through the period of use that differs from current guidance. Substitution rights are considered substantive if the supplier has the ability to substitute alternative assets through the period of use and the supplier would benefit economically from the substitution. The leasing entity should consider facts and circumstances at the inception of the contract, which will require significant judgment when determining whether a substitution right is substantive. The new standard represents a significant change from current lease guidance with regard to a customer’s right to control the use of the identified asset. Under current U.S. GAAP, an entity’s taking of substantially all outputs of an identified asset was considered indicative of the customer’s right to control the use of the asset if the pricing per unit in the arrangement was neither fixed nor market at the time of delivery. The new standard aligns the assessment of whether a contract gives the customer the right to control the use of the specified asset with the concept of control developed as part of the FASB’s new revenue recognition standard. Therefore, a contract evaluated under the new standard is deemed to convey the right to control the use of an identified asset if the customer has both the right to direct and obtain substantially all economic benefits from the use of the asset. The right to direct the use of the specified asset will take into account whether the customer has the right to determine (or predetermine through a contract) how and for what purpose the asset is used. Economic benefits from the use of the specified assets would include those the customer can realize in a transaction with a third party. Oil and gas entities need to increase scrutiny of their contracts to determine whether such contracts are leases under the new standard. The terms of drilling contracts are often complex and differ from contract to contract, which can cause challenges to determine the appropriate accounting under the new guidance. The determination of whether a well operator controls an identified rig in a drilling contract will dictate whether the arrangement is accounted for as a lease on the balance sheet or is treated as an off-balance sheet service arrangement. Fulfillment of the contract depends on the use of an identified asset. Due to the nature of the projects and the complexities involved, specific rigs are often explicitly or implicitly identified in the terms of a drilling contract, which may also involve capital upgrade requirements that make it necessary for an independent contractor to custom-fit a rig to meet the operator’s needs. The fulfillment of a drilling contract will often depend on the use of a specified drilling rig that would meet the definition of an identified asset under the new standard. A well operator has the right to direct the use of a specified drilling rig if it can determine how and for what purpose the asset is used. Additionally, the extent to which an operator determines how and for what purpose the specific rig is used will depend on whether the drilling contract grants the operator decision-making rights over the asset. An operator should identify the rights that most impact how and for what purpose the rig is used throughout the period of use and determine who controls those rights. If the decisions related to how and for what purpose the rig is used are predetermined, the assessment should focus on whether the operator controls the drilling program or designed the aspects of the rig that are most relevant to how and for what purpose it is used. Meeting either of the above criteria would be deemed to convey the right to direct the use of the identified asset to the operator. The decision-making rights that most affect the economic benefits to be derived from a drilling rig are likely to differ depending on the type of drilling contract (turnkey, footage, day rate). In all scenarios, oil and gas entities will need to evaluate on the basis of the specific facts and circumstances whether they have the right to determine how and for what purpose a specified drilling rig is used and, thus, the right to direct the use of the asset. Oil and gas entities will need to use judgment when performing the evaluations. Schneider Downs professionals have the resources and tools to assist in developing and executing an action plan for implementing the new standard. Our services include help with accounting interpretations, process revisions, software implementations and tax analysis. If you have any questions, reach out to Logan Kowcheck at lkowcheck@schneiderdowns.com. ### Accounting Firm Trade Names What is the value of the Schneider Downs trade name? The number is too large to fit on this page! I am joking, but in all seriousness, a company’s trade name might have considerable value, and it is often necessary to determine the value of a professional service firm’s trade name (this article focuses on accounting firms in particular) for financial reporting purposes.When an acquirer purchases a company, any intangible assets owned by the target company (including its valuable trade name, if any) must be recorded on the acquirer’s balance sheet.The trade name is often not as important as some of the other intangible assets commonly owned by accounting firms; namely customer relationships. Since much of an accounting firm’s work is recurring, which is common with audit and tax services, the value of the firm’s ongoing customer relationships (often enriched through numerous years of repeat service) are typically more valuable than the firm’s trade name.The low value placed on accounting firm trade names is also evident when looking at post-acquisition branding strategies within the public accounting industry. Typically, the target accounting firm’s name is dropped and replaced with the name of the acquiring firm, or the two firms’ names will be combined into a new name. For example, in the 1989 merger of Deloitte Haskins & Sells with Touche Ross, Deloitte & Touche was the emerging firm name at the time.In contrast, an important brand name is normally left unchanged when the owner of the name is acquired. This is common with brands representing products (as opposed to services) such as food, drink and car brands. For example, the Jeep brand has exchanged hands many times since the company began in 1941, but the Jeep name remains unchanged. The fact that accounting firm names are often replaced or modified post-acquisition supports the conclusion that the trade name is not a significant value driver in the transaction.Schneider Downs has significant experience in determining the value of trade names and other intellectual property for clients to use in transfer pricing and financial reporting applications.  Please contact Stephen D. Thimons (412-697-5281; sthimons@sdcpa.com) or Joel M. Rosenthal (412-697-5387; jrosenthal@sdcpa.com) of our office if you need assistance determining the value of your firm’s intellectual property. ### SOC 2 Reporting Standards Updated: Effective 12/15/2018 The AICPA recently updated the SOC 2 reporting standards to align with the COSO 2013 Internal Control Framework. The specific updates pertain to the updated 2017 Trust Services Criteria (TSC) and the 2018 SOC 2 Description Criteria (DC). Service organizations must use the 2017 TSC and 2018 DC for SOC 2 reporting periods ending on or after December 16, 2018, regardless of the SOC 2 report issue date.  The 2018 DC were intended to be used with the 2017 TSC; therefore, if a service organization uses the 2018 DC, then they must use the 2017 TSC.  When using the 2015 DC, service organization may choose to use the 2016 TSC or 2017 TSC.The following list summarizes the most significant changes that have taken place as a result of the update to the 2017 TSC: Renames the Trust Services Principles and Criteria.  The COSO 2013 framework uses the term principles to refer to the elements of internal control.  To avoid confusion, the Trust Services Principles and Criteria will be renamed as the Trust Services Criteria (the term Principles has been removed).  In addition, the five principles (Security, Availability, Processing Integrity, Confidentiality and Privacy) will now be referred to as the Trust Services Categories.    Restructures and aligns the TSC with the COSO 2013 framework.  This is a significant change that will most likely require service organizations to restructure their controls.  Service organizations will have to ensure that their controls meet the 17 principles in the COSO 2013 framework and the additional supplemental criteria noted below.   Restructures and adds supplemental criteria to better address cybersecurity risks in engagements using the TSC.  In addition to the 17 principles in the COSO 2013 framework, new supplemental criteria were developed and organized into the following categories:   Logical and physical access controls. The TSC relevant to how an entity restricts logical and physical access, provides and removes that acces, and prevents unauthorized access. System operations. The TSC relevant to how an entity manages the operation of system(s) and detects and mitigates processing deviations, including logical and physical security deviations. Change management. The TSC relevant to how an entity identifies the need for changes, makes the changes using a controlled change management process, and prevents unauthorized changes from being made. Risk mitigation. The TSC relevant to how an entity identifies, selects and develops risk mitigation activities and how the entity assesses and manages risks associated with vendors and business partners.    Adds points of focus to all TSC.  The points of focus may assist management and the practitioner in evaluating whether the controls are suitably designed and operating effectively; however, use of the TSC does not require management or the practitioner to separately assess whether points of focus are addressed. The following list summarizes the most significant changes that have taken place as a result of the update to the 2018 DC: Principal Service Commitments. The service commitments a service organization makes to user entities and others are based on the needs of those entities. In identifying the service commitments to be disclosed, service organization management may begin by reviewing the commitments it made to user entities. Service commitments may be communicated to user entities in many ways, such as through contracts, service-level agreements, and published policies (for example, a privacy policy). No specific form of communication is required.   Principal System Requirements. System requirements may result from the service organization’s commitments relating to one or more of the trust services categories (for example, a commitment to programmatically enforce segregation of duties between data entry and data approval creates system requirements regarding user access administration).   Identified Security Incidents. For identified security incidents as of the date of the description (for a Type 1) or during the period of time covered by the description (for a Type 2), as applicable, the following information might need to be disclosed, depending on the type of security incident that occurred: Nature of each incident; Timing surrounding the incident; and Extent (or effect) of the incident and its disposition. For more information on SOC Reports and the impending changes, please visit our SOC FAQ page or feel free to contact a member of our SOC Reporting team.  Stay tuned for our future post on the best strategies to prepare for the impending SOC 2 requirement changes. ### Checking in on the PCAOB in a Time of Transition The Public Company Accounting Oversight Board (PCOAB) has experienced a transformation in recent months, including the appointment of a new chairman and an entirely new board as well as the departure of several long-serving staff.  The Chairman, William Duhnke, has also indicated that the Board will drastically alter the way it develops its upcoming strategic plan to ensure the Board is positioned to address the challenges of an ever-changing environment.  This could mean significant changes in the way the PCAOB oversees the accounting profession.  With all the changes at the PCAOB, it’s a good time to monitor the Board’s Standard Setting Agenda. The Board’s quarterly agenda as of June 30, 2018 has been released, and the items on the agenda are familiar projects – Auditing Accounting Estimates, Including Fair Value Measurements The Auditor’s Use of the Work of Specialists Supervision of Audits Involving Other Auditors Going Concern Each of the projects listed above has been on the radar for several years.  However, two of the projects, Auditing Accounting Estimates, Including Fair Value Measurements and The Auditor’s Use of the Work of Specialists, may be reaching a conclusion sooner rather than later.  The Board issued proposals on these companion projects in June of 2017, and it now appears that a recommendation for the Board’s consideration will be developed for the fourth quarter of 2018. In addition to the projects above, the PCAOB has a research agenda, which includes the following projects – Quality Control Standards, Including Assignment and Documentation of Firm Supervisory Responsibilities Changes in the Use of Data and Technology in the Conduct of Audits Auditor’s Role Regarding Other Information and Company Performance Measures, Including Non-GAAP Measures Auditor’s Consideration of Noncompliance with Laws and Regulations Auditor Communications with Audit Committees Concerning Independence Stay tuned and please contact us with any PCAOB-related questions . ### Optimizing your two-factor authentication security Often when discussing cybersecurity threats like phishing and initial points of compromise with clients, we’ll hear something along the lines of, “That looks great, but we have two-factor authentication enabled on that login.” But while enabling two-factor authentication (2FA) is a step in the right direction – Schneider Downs recommends it everywhere – it isn’t foolproof. Traditional two-factor does add an extra layer of protection on top of your accounts, deterring lazy malicious actors, but will not stop attackers dedicated to breaching your organization. What traditional forms of 2FA (SMS, push code) really do is limit attackers to a single login session per compromised account. How? Because traditional 2FA requires you to type in a code, it can be phished just like usernames and passwords. If an attacker tricks a user into entering credentials on a fake login site they can programmatically submit those credentials to the real site (www.schneiderdowns.com), triggering the SMS token or notification, which the user may also then enter on the fake site. These 2FA methods still rely on users to notice red flags like a slightly different domain, URL or sender, which phishing has proven users are susceptible to overlooking. Enter Universal 2nd Factor (U2F), created by the FIDO alliance, a form of two-factor using public key encryption and involving a small USB device on which the private key is stored. It gets plugged into an open USB port and is able to communicate directly with your web browser, meaning no additional drivers or software needs to be locally installed. When you login to a site with U2F enabled, the site sends your device an encrypted challenge, which includes the URL of the website asking for the information. If the user has the USB plugged in and approves authentication, the challenge is signed and sent back. Since the exchange included the URL of the inquiring site, the authentication token is only good for that site. This means that an attacker who tricks a user into entering and approving authentication for www.schn3iderdowns.com cannot successfully relay that authentication to www.schneiderdowns.com. Methods to attack U2F security will likely become a hot topic in the future, but right now, enabling it on a supported service drastically reduces the success rate of attacks that rely on phishing techniques or keyloggers as a means of breaching that service. U2F authentication deployment is still in early stages, but may be quite common soon. Chrome, Firefox and Opera are the only browsers that currently support it, but some large services like Google, Dropbox, Facebook, Twitter and GitHub have already adopted U2F support. ### Tax Reform 2.0 Framework The House Ways and Means Committee (the “Committee”) released a brief outline of its tax reform plan titled House GOP Listening Session Framework: Tax Reform 2.0 (the “framework”) on July 24, 2018.  House Republicans hope this long-awaited tax reform 2.0 framework, if implemented, would solidify the Tax Cuts and Jobs Act (the “TCJA”) reform by helping to create jobs in the United States, raise wages, and expand the economy. The framework would make permanent the TCJA tax changes and institute other reforms to benefit individuals and small businesses. The Committee notes that the framework is designed to build on the growing successes of the TCJA in three main ways:Provide certainty for Americans by making permanent the individual income tax rate and deduction changes scheduled to expire in 2025: Both the Committee and the Tax Foundation, an independent, nonpartisan think tank specializing in tax policy, estimate that this would create 1.5 million new jobs, increase wages by 9%, and increase GDP by 2.2%.  The Tax Foundation also notes that annual federal revenues would decline by $112 billion dynamically. Promote family-friendly savings plans: Various sources estimate that  50% of working-age adults say they do not expect to have enough savings to live comfortably in retirement. Additionally, more than one in three workers do not have access to a retirement plan through their employer. Tax Reform 2.0 contains a range of proposals to help families start saving earlier and save more throughout their lives. The framework suggests that the retirement objectives can be achieved through USA (Universal Savings Accounts, which offer a flexible savings tool for families), expanded Section 529 Plans (could be used to pay for apprenticeship fees to learn a trade, pay off student debt, or cover the cost of home schooling), and through New Baby savings accounts (paradoxically), which would allow families access to retirement accounts penalty-free when having a new child, though allowing for future replenishment. These instruments are not described in much detail, but are part of the very high-level outline.Improve start-up business innovation: While it’s unclear what provisions the House may consider, House leaders have promised to remove the tax code’s barriers to entrepreneurship, while also helping businesses to write off more of their initial start-up costs. ### Impairment Testing for Intangible Assets with Indefinite Lives Accounting Standards Codification (“ASC”) 350 Intangibles – Goodwill and Other states that “an intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized […] but should be tested for impairment at least annually.” Since I begin this article by quoting accounting standards, I imagine everyone is now appropriately on the edge of their seats...Under the guidance, the term “indefinite useful life” means that “that life extends beyond the foreseeable horizon – that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the reporting entity.” The term “indefinite” should not be confused with “infinite.”Company trademarks are one type of intangible asset that will sometimes be attributed an indefinite life. For example, it would be very difficult to determine that the life of the NIKE trademark would be anything but indefinite when considering the long history and positive recognition that the trademark has enjoyed within the athletic apparel industry. On the other hand, a trademark representing an obscure technology might not have an indefinite life, because technology often becomes obsolete over time. For example, if it is well known that a certain type of technology has an average lifecycle of 5-10 years before being replaced by a newer technology, the argument could be made that the life of a trademark representing that technology (and no other products/services) would not extend beyond 10 years.The indefinite-lived intangible asset will remain on the balance sheet at its acquired value (unless value is determined to be impaired at some point in the future; further discussion of impairment is beyond the scope of this article). The finite-lived intangible asset’s value will be reduced each year by amortization expense until the end of its life. The useful lives attributed to a company’s intangible assets will affect the financial statements for the company and should be thoroughly understood by management.Schneider Downs has significant experience valuing intangible assets for financial reporting purposes, and we work with clients’ management teams to help them determine the useful lives of these assets. For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com. ### How "Taxing" is the Suspension of Miscellaneous Itemized Deductions for Trusts and Estates In Notice 2018-61 issued July 13, 2018 by the Internal Revenue Service ("IRS"), the IRS has provided insight to the recently enacted Internal Revenue Code ("IRC") Section 67(g). Under this section, no miscellaneous itemized deductions can be taken beginning after December 31, 2017 and before January 1, 2026, effectively creating an eight (8) year suspension.  IRC Section 67(e) provides that this applies the same for individuals, trusts and estates alike. So what, exactly, does this new provision entail?The Notice reiterates that the term "miscellaneous itemized deductions" does not include deductions for interest expenses, state and local taxes, losses (such as theft), charitable contributions and other specifically named deductions under IRC 67(b); thus, these types of deductions can still be taken at leisure.  Unfortunately, it more or less does suspend any deductions not specifically named by the IRS under this code section.On the plus side, the Notice further highlights that deductions specific to trust and estate administration may still be taken. This includes some legal fees and the standard deductions for estates and trusts outlined in IRC Section 642(b). It also keeps intact the deduction for trusts distributing current income.All in all, the Notice seems to express a favorable result towards estate and trust administration. However, as the IRS and Treasury Department are currently welcoming comments and concerns on certain aspects relating to the effect of the Section 67(g) provision, it will remain to be seen what changes will stick. ### Procurement Standards - Is Your NFP in Compliance? In May 2017, the Office of Management and Budget (OMB) issued an additional one-year grace period for implementation of the procurement standards in 2 CFR 200.317 through 200.326.  As a result, the implementation date for the new procurement standards impacts fiscal years beginning on or after December 26, 2017.  For NFPs with June 30 year-ends that elected to defer implementation, this means the new standards went into effect on July 1, 2018.  These standards are in effect now, and if your organization hasn’t already updated the applicable standards and procedures, you need to take action immediately to be compliant. The new procurement standards were issued as part of the OMB’s comprehensive grant reform rules titled the “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards” (Uniform Guidance).  Part of these reforms affected the procurement process and require non-federal recipients of federal funds to maintain formal documentation over their procurement procedures.Required documentation includes the process for contractor selection and oversight, written employee conduct policies, conflict-of-interest policy, and a policy over procurement documentation retention. The contractor selection process must be in line with set acquisition thresholds and demonstrate full and open competition.  The new standards classify procurement under five different methods: Micro-purchases (purchases of $3,500 or less):  No competitive quotes are required. The purchase is deemed acceptable if management deems the price reasonable. Small purchases (purchases up to the Simplified Acquisition threshold, currently set at $150,000): Under this method, an informal process is acceptable; however, competitive bids must be obtained. Sealed bids (purchases over the Simplified Acquisition threshold): Under this method, bids are publically solicited and the contract is awarded to the bidder that conformed to all of the material terms at the lowest price. Competitive proposals (purchases over the Simplified Acquisition threshold): Under this method, formal solicitations are required; however, sealed bids are not appropriate, as price represents just one of the factors in selecting the most advantageous contractor. Noncompetitive proposals: This process is only appropriate when specific criteria are met - such as an acquisition only being available from one source, during an emergency, or the competition is deemed inadequate. The above thresholds are subject to change. For additional information regarding the procurement standards, refer to the full requirements per the Code of Federal Regulations:https://www.gpo.gov/fdsys/pkg/CFR-2018-title2-vol1/pdf/CFR-2018-title2-vol1-part200-subpartD.pdfhttps://www.gpo.gov/fdsys/browse/collectionCfr.action?selectedYearFrom=2018&go=GoIf you have any questions on the above material, please contact us, or reach out to your Schneider Downs team member, and we will be happy to assist your organization in meeting these new requirements. ### Traditional Retailers on the Mend? Scott Galloway, a professor of marketing at New York University’s Stern School of Business once said about Amazon that the company does not want to own a piece of retail, they want to own all of it. With Amazon currently owning around 40% of the retail market with a projected increase to 50% by 2021, along with all online retail sales projected to surpass $1 trillion in the next decade, it certainly seems to be trending in that direction.  However, there are several factors indicating that traditional retailers will not go down without a fight.First, shares of retailers are experiencing their biggest turnarounds in years.  The SPDR S&P Retail ETF is up by 11% in 2018, strongly outperforming the S&P 500’s modest 3.5% gain.  In addition, shares of stores such as Macy’s and Dillard’s have grown over 55% this year.  Not only have these department stores shown market growth, but several companies such as Macy’s, Home Depot, Walmart, Dick’s Sporting Goods and American Eagle are beating expectations.While some may attribute this growth to President Trump’s tax cuts that went into effect this year, there are two key factors that may lead to a continuation of this trend.  First, total spending on logistics such as shipping and warehousing costs hit a record $1.5 trillion in 2017, a 6.2% increase from 2016.  The Supreme Court also very recently ruled that retailers must collect sales tax on online sales, regardless of a physical presence in a particular state.  When combined, these could lead to increasing costs of online shopping and drive consumers back to the brick and mortar stores. ### SEC Expands the Scope of Smaller Public Companies That Qualify for Scaled Disclosures On June 28, 2018, the Securities and Exchange Commission (SEC) adopted an amendment that expands the scope of the definition of Smaller Reporting Companies (SRC) that qualify for scaled disclosures. The amendments are intended to encourage capital formation and reduce the high cost of compliance that can be burdensome smaller companies. Although amendments are being made, the SEC still has one goal in mind: to protect the investor.Companies that have a public float of less than $250 million are now considered to fall under the definition of an SRC. A company with no public float, or public float less than $700 million, and annual revenues less than $100 million in the most recently completed fiscal year will also now qualify under the definition of an SRC. Prior to the revision of the SRC definition, a company that had a public float of less than $75 million or a company with no public float and revenues less than $50 million qualified as an SRC.If a company has determined that it does not meet the revised qualifications of an SRC, the company will remain unqualified until it meets a lower qualification threshold that is set at 80% of the figures outlined above. For example, if a company previously had $250 million or more of public float, it would have to reach a public float of less than $200 million in order to qualify as an SRC.The amendment will be effective 60 days after publication in the Federal Register.It is important to note that these amendments do not modify the definitions and thresholds of an “accelerated filer” and “large accelerated filer.” In other words, if a Company has more than a $75 million of public float, the company may still qualify as an SRC, but will remain subject to requirements that apply to accelerated filers, such as report filing requirements. Although the definitions of an accelerated filer and large accelerated filer currently remain unchanged, the SEC Chairman, Jay Clayton, has instructed his staff to propose recommendations that could result in additional changes to these definitions. With these potential changes on the horizon, one would think that it would further reduce the number of companies that qualify as accelerated filers. This is consistent with the SEC’s recent actions and goal to encourage capital formation and limit the cost burden on smaller companies, all while maintaining protection of the investor. ### Ohio Sales and Use Tax Exemptions for the Oil and Gas Industry Ohio House Bill (“H.B.”) 430 clarifies the Ohio sales and use tax exemption language for the oil and gas industry.  The law becomes effective on September 13, 2018, but is intended to clarify existing Ohio law and “applies to all cases pending on a petition for reassessment or further appeal, or transaction subject to an audit by the Department of Taxation, on or after, May 18, 2018.”Prior law required that goods and services were used “directly in the production of crude oil or natural gas” in order to be exempt from Ohio sales and use tax.  This statutory language was narrowly applied by the Department of Taxation, and the sales and use tax exemption was permitted only for goods and services that were directly related to actual drilling activitiesH.B. 430 continues the requirement that goods and services are used “directly in the production of crude oil or natural gas,” but also clarifies the definition of what is considered “production.”  Specifically, “production means operations and tangible personal property directly used to expose and evaluate an underground reservoir that may contain hydrocarbon resources, prepare the wellbore for production, and lift and control all substances yielded by the reservoir to the surface of the earth.”  Additionally, H.B. 430 includes a detailed list of items that are exempt and are not exempt under the clarified Ohio sales and use tax exemption. As the oil and gas business has continued to grow in recent years, this clarification in Ohio law will likely impact many Ohio businesses. For more information on this topic or other State and Local Tax matteres, please email contactsd@schneiderdowns.com. We welcome all questions, comments and concerns and will be sure to forward your message along to the approporiate individual and get you a response promptly. The Schneider Downs State and Local Tax group consists of six professionals located in both Pittsburgh, PA and Columbus, OH. ### Ohio Bright-Line Residency Test Ohio House Bill (“HB”) 292 creates an updated bright-line residency test which may be used by individuals to create a presumption that the individual is not domiciled in Ohio (i.e., that they are an Ohio nonresident).  The law is effective for taxable years beginning on, or after, January 1, 2018.  For an individual to qualify for the presumption of non-residency, an individual must: Spend less than 213 contact periods in Ohio during the taxable year. File an Ohio Form IT-DA with the Ohio Tax Commissioner by the 15th day of the tenth month (i.e., October 15th) following the end of the taxable year.  As part of the Ohio Form IT-DA, the individual must certify that the individual had less than 213 contact periods in Ohio during the taxable year.  Have at least one abode outside of Ohio for the entire year in which the individual does not claim a depreciation deduction under Internal Revenue Code Sec. 167.  Not hold a valid Ohio driver’s license or identification card at any time during the taxable year. Not receive an Ohio homestead benefit of real estate tax purposes for the taxable year. Not claim in-state residency tuition for state institutions of higher education for the taxable year using an abode located in Ohio.  Individuals who are considering changing their Ohio residency for 2018, or for future taxable years, should review the bright-line requirements and take any required steps to meet the requirements.  For example, individuals may want to consider canceling their Ohio driver’s license (and obtaining a new driver’s license in their state of residency) during 2018 if they want to take advantage of the presumption of non-residency in 2019. In the event that an individual does not meet all of these requirements, it is still possible that the individual could be considered an Ohio nonresident.  However, because the presumption of non-residency is not met, the individual may be required to provide evidence and detailed documentation to the Ohio Tax Commissioner supporting the conclusion that he or she was an Ohio nonresident for the taxable year. For more information on this topic or other State and Local Tax matters, please email contactsd@schneiderdowns.com. We welcome all questions, comments or concerns and will be sure to forward your message along to the appropriate individual and get you a response promptly. The Schneider Downs State and Local Tax group consist of six professionals located in both Pittsburgh, PA and Columbus, OH. ### What Are Complementary Subservice Organization Controls And How Do They Impact SOC Reports? Service organizations typically outsource functions such as data center hosting or transaction processing, to outside vendors, referred to as subservice organizations. Depending on the nature of the function outsourced, user entities may require information about the controls that are in place to mitigate the risk presented by the service they’re providing to the service organization.  When the carve-out method is used for presenting a subservice organization, and controls at the subservice organization, in combination with controls at the service organization, are necessary in order to achieve a control objective (SOC 1) or a trust services criteria (SOC 2), the controls performed by the subservice organization are referred to as complementary subservice organization controls (CSOCs).When an instance like this occurs, service organizations must incorporate CSOCs into their SOC reports. The CSOCs need to be specific to the services provided by the service organization’s system. The description of the service organization’s system needs to describe the subservice organization’s responsibility for implementing CSOCs and indicate that the service organization can only achieve the specific control objectives or applicable trust services criteria if the CSOCs are suitably designed and, in a type 2 examination, operating effectively throughout the period.Service organization management may request the service auditor’s assistance when determining how to present the CSOCs in the description. For example, the service auditor may be able to provide examples of CSOC disclosures made by others and can make recommendations to improve the presentation of the CSOCs in the description.Examples of the types of CSOCs a subservice organization is assumed to have implemented include the following: Controls relevant to the completeness and accuracy of transaction processing on behalf of the service organization. Controls relevant to the completeness and accuracy of specified reports provided to and used by the service organization. General IT controls relevant to the processing performed for the service organization For more on subservice organization controls, contact a professional at Schneider Downs. ### Are You Green? A multipurpose indoor arena that serves as an entertainment venue that hosts concerts, family events, and most importantly, the home of the Pittsburgh Penguins, the PPG Paints Arena is a top attraction not just for tourists, but for the residents of Pittsburgh. However, it’s not as well-known for being the first LEED Gold certified major sports venue in the United States. The LEED (Leadership in Energy and Environmental Design) certification was created by the U.S. Green Building Council (USGBC) to promote and provide a framework for green, or sustainable, buildings and communities to improve the quality of life. The LEED certification is the most renowned program to be used in more than 167 countries. Besides bringing recognition, green buildings also reduce energy and water consumption, promoting the idea of green buildings and green living. PPG Paints Arena, for instance, consumes 31% less energy and 40% less water than conventional buildings of similar size. LEED buildings generally report 20% lower maintenance costs. It’s not surprising the construction of green buildings has been growing. In fact, according to the Dodge Data & Analytics SmartMarket Report, the global green building sector continues to double every three years. The benefits of green building go beyond the reduction of maintenance costs. It also provides tax incentives to businesses. The Energy Investment Tax Credit (ITC) allows businesses a tax credit equal to 30% of the cost of installing a major energy system, such as solar panels, as a reduction to federal income taxes. While the ITC is subject to annual limitations, there is no cap on the amount of credit and can be carried forward to a future tax filing year. Additionally, the credit is available to individuals. Please refer to Internal Revenue Code §48 for requirements and eligibility. Another energy-related tax incentive is the 179D deduction, a deduction that is already utilized by many construction companies. This deduction was extended for the 2017 tax year in the Bipartisan Budget Act of 2018. It remains to be seen if it will be extended for 2018. Please contact a member of our Construction Tax group for more information on the energy tax incentives and how they can benefit your business. ### New Jersey Enacts Numerous Corporate and Individual Income Tax Changes New Jersey Governor Phil Murphy recently signed legislation that enacted numerous, and significant, income tax changes for both corporate and individual taxpayers.  Following are some key takeaways: Corporation Business Tax Combined reporting - For tax years beginning on or after January 1, 2019, taxpayers under common ownership that are engaged in a unitary business will be subject to mandatory combined reporting. Sourcing for sales of services - For tax years beginning on or after January 1, 2019, service providers will be required to source income to New Jersey under the market-based sourcing approach. Surtax - Taxpayers with allocated net income greater than $1 million will be subject to a surtax of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021.  The surtax is in addition to the 9% corporate income tax rate. Dividend received deduction - For tax years beginning after December 31, 2016, the dividend received deduction for dividends from 80% or more subsidiaries will be decreased from 100% to 95%. Individual Income Tax New tax bracket - For tax years beginning on or after January 1, 2018, taxable income in excess of $5 million will be taxed at 10.75%.  Previously, the top individual income tax rate was 8.97% and was imposed on taxable income in excess of $500,000. In addition, the legislation also calls for the Division of Taxation to offer an amnesty program for unpaid taxes originally due on or before February 1, 2009 through September 1, 2017.  The Division will provide participants with 50% relief on interest and 100% relief on penalties, collection costs and recovery fees.  The actual dates are to be determined, but the program will run for 90 days, and end on or before January 15, 2019. If your business operates in New Jersey, or you otherwise derive income from New Jersey sources, and have questions about how the new laws may affect your New Jersey income tax liability, please contact a member of our State and Local Tax group. ### Like-Kind Exchanges Are No More For Vehicles. Don't Panic - Bonus Depreciation and Luxury Auto Limits Have Increased The 2017 Tax Cuts and Jobs Act (TCJA) made significant changes to the property eligible for tax-free treatment in like-kind exchange transactions under IRC Sec. 1031. Under previous law, non recognition of gain applied to like-kind exchanges of (1) depreciable tangible personal property; (2) intangible or non depreciable personal property; and (3) real property.  After December 31, 2017, like-kind exchanges, and thus deferred gain treatment, will only be allowed for exchanges of real property not primarily held for sale. Exchanges of personal property, most notably automobiles, will no longer qualify for like-kind exchange treatment; those exchanges now result in taxable gain or loss in the year of exchange. This new TCJA like-kind exchange restriction has many companies worried about purchasing new vehicles, as the tax-free benefit on the gain of the trade in is now lost. We are here to tell you – don’t panic! There are depreciation provisions in the TCJA that will help counter the loss of like-kind exchange benefits, some of which are very specific to automobiles. Often, these new provisions will actually result in a greater year-one tax savings on automobiles than previously received with like-kind exchange treatment.The TCJA increased the bonus depreciation percentage from 50% to 100% for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. The new law also expanded the definition of what property qualifies for 100% bonus depreciation. Prior to the TCJA, used property was not eligible for bonus depreciation. However, after Sept. 27, 2017, property acquired in used condition but of first use to the taxpayer will generally qualify for 100% bonus depreciation (i.e., full expensing).The new law also increased depreciation limits for passenger automobiles placed in service after Dec. 31, 2017. For the purpose of the depreciation caps, a passenger automobile includes any four-wheeled vehicle manufactured primarily for use on public streets, roads and highways that has an unloaded gross vehicle rating (GVWR) of 6,000 pounds or less (IRC Sec. 280F (d)(5)(A)). The table below shows the increase in depreciation allowed on passenger automobiles under the TCJA.   First Yr. Depreciation Later Yrs. Depreciation Date Placed in Service No Bonus   Bonus Yr. 2 Yr. 3 Yr. 4 to End 2018 - Cars, Light SUVs, Trucks & Vans (New Law)  $     10,000  $     18,000  $     16,000  $       9,600  $       5,760             2017 - Cars (Prior Law)  $       3,160  $     11,160  $       5,100  $       3,050  $       1,875 2017 - Light SUVs, Trucks & Vans (Prior Law)  $       3,560  $     11,560  $       5,700  $       3,350  $       2,075 Vehicles with a GVWR greater than 6,000 pounds are not subject to these depreciation limits mentioned. Therefore, in many cases the switch from 50% to 100% bonus depreciation on these heavy vehicles will allow for a full tax write-off at the time of purchase.To demonstrate how the TCJA like-kind exchange and depreciation provisions will impact your business and leave you with no reason to panic, please consult your Schneider Downs advisor. ### Opportunities Created in the Trucking Industry with Electronic Logging Device Mandate Seth Clevenger and Eric Miller from Transport Topics, a freight transportation publication, hosted a web broadcast last month to discuss the effect of the electronic logging device (ELD) mandate on the trucking industry.  The biggest takeaway from the broadcast was the opportunities companies and drivers currently have from the advancements in technology. To start the program, Tom McLeod, president of McLeod Software, discussed current forces in the industry and the continuous improvements companies need to incorporate into their core competencies.  Seth started the discussion by highlighting the strong economy and the tight freight capacity market. Tom spoke of the forces that are creating strains on capacity.  He mentioned the strong economy and driver shortages’ impact on the industry.  He maintained that driver shortages were due to driver pay not keeping up with other industries and a shortage of nine million people from the ages of 35-50.  Tom stated that in the past when the economy was strong, there were driver shortages, but now the situation is compounded by ELD.  He added that this disruption could create opportunities for companies connecting with their shippers. Seth and Tom further discussed how fleets could succeed in this new environment with ELD available. They noted that by providing more support to drivers in planning the freight, the operational departments of companies would help keep the productivity where it needs to be, while increasing driver income, preserving freight revenue for companies and maintaining service levels to customers.  They also said that companies and drivers need to look at hours-of-service compliance to ensure they make the pickup and delivery on time.           Kerri Wirachowsky, director of Roadside Inspection Program at the Commercial Vehicle Safety Alliance, discussed how drivers could now be saving time with implementation of ELD.  She noted that with enforcement being in effect since April 1, violations with the hours of service limits have decreased.  Drivers are operating in real time and are not behind in recording their hours, which can lead to saved time and efficiencies.  Kerri stated that if drivers were in compliance with logging hours of services before, they could be making more money with efficiencies gained with ELD tracking of hours of service.Edin Selimagic, safety manager for Midwest Freight Systems of Warren, Michigan, was the last of the panelist and spoke about drivers’ feedback with ELD compliance.  He noted that, thus far, most drivers have provided positive feedback such as improved rest and have even been requesting additional ELD training.  He also noted that, while subject to roadside inspections, drivers feel confident because they have the logs to support their hours of service.In conclusion, the more companies and drivers take advantages of the opportunities the ELD provide, the more they will gain from the disruption of the mandatory ELD compliance.To watch the program, go to: www.ttnews.com/videos/how-have-elds-changed-trucking. ### How to Beat the Exam Nicknamed Can't Pass Again: Tips to Passing the CPA Exam The passing rate of each of the four parts of the CPA exam is about 50%. And although we tend to sometimes focus on the half who fail, remember: 50% of the people who take the test do pass. Some of my colleagues and I were able to pass all four parts the first time we took the exam. Check out some of our tips on how beat this challenging test:The Best Time to Take the ExamMost public accounting firms have new staff start in the fall. This means that when a college senior graduates in April or May, he or she has five to six months before starting work full time. This is hands down the best time for you to start studying and taking the test. You’ve just finished four-to-five years of college, so you’re still in that academic mindset, and you may have free time like you’ll never have again. Take advantage of those summer months, because when you start working you might be too busy or tired to study seriously.Develop a Plan and Stick to ItBefore your buy your study materials or notices to schedule (NTS), develop a study and exam plan. Know when the blackout months are and decide on which months you plan on taking each test. It is possible to complete the test in just six months; you can plan to study for a month, then sit for a test. If this isn’t realistic due to other commitments, develop a reasonable schedule that fits your life. Plan how many hours you will study each week and keep track of those hours as you start. This is not a test you can beat without putting in time studying.Buy Your Materials and NTSMost public accounting firms offer staff free or discounted study materials through nationally recognized companies. Do your research and decide which programs fit you and your needs, then make sure you do everything the program tells you to do. These companies have done their research and know what it takes to get people to pass. Some materials, like Becker, even offer pass guarantees. If you follow Becker’s program and don’t pass, you get to repeat the course at no additional cost.Additionally, buying your NTS ahead of time will hold you accountable to taking the tests. NTS are only valid for a period of time, so you’ll have to schedule your tests within that timeframe.Along with buying materials, you should also make some of your own. Creating flashcards or drafting outlines will help you learn and remember the information. Some companies sell flashcards, but it’s definitely worthwhile to make your own. Not only will you learn from taking the time to write out the information, but you can use those items to study.Study Like It’s Your JobIf you’re fortunate enough to live at home the summer between graduation and your start date, and have some money saved, avoid picking up a summer job. Treat studying and taking the CPA exam as your full-time occupation. Study 40-50 hours a week and you’ll be able to knock out your test before you start. All your energy will be focused on the test and you won’t have to worry about being too tired after work to study. Just as you will when you work a paying job, you can still have fun on the weekends and can even go on vacation. Just make sure you factor that downtime into your study schedule. If you don’t take the time to relax and enjoy some free time, you’ll burn out before you’ve finished the test.Don’t Get DiscouragedIf you sit for a part of the exam and feel like you don’t understand any of the questions, don’t panic. Just do your best on those tricky questions and move on. Trust that you did everything you could to prepare. If you do happen to fail a part of the exam, don’t feel discouraged. This test has stumped some of the best accountants. Just realize that this exam is set up to be extremely difficult. Pick yourself back up and start studying for that part again. I have many friends who’ve failed at least one part and have retaken those parts and passed.Remember, these tips don’t in any way guarantee success, but I hope they can get you on the path to success. ### Investment in Opportunity Zones Can Yield Significant Tax Benefits (Part 1 - Introduction) The Tax Cuts and Jobs Act (the “Act”) signed into law back in December contains a number of tax beneficial provisions. One that should catch the eye of investors with significant capital gains includes an economic development program that encourages investment in designated low-income communities. Generally the program allows individual and corporate taxpayers to defer paying taxes on gains recognized from the sale of stock, business assets or any other type of property – regardless of where the property sold is located – for as long as until December 31, 2026.  To qualify, the investor reinvests the disposition proceeds into a new type of investment vehicle called a “Qualified Opportunity Fund” (or “QOF”). Even better, in addition to deferring current taxes, partial exclusion on the deferred gain plus partial to full exclusion from income of future appreciation on the new assets is possible. These benefits become available when the QOF uses the funds it receives to invest in businesses operating in certain low-income locations described under the statute as a Qualified Opportunity Zone (“QOZ”).In Notice 2018-48 (published June 20, 2018), the IRS, working in conjunction with officials from each of the 50 states, the District of Columbia and U.S. territories, provides an official list of qualifying QOZs. With this information, investors can now investigate in depth whether they are interested in potentially enhancing future after-tax investment returns by investing in assets and/or businesses located in these areas. The executive summary of the program is that an investor realizing capital gain from the sale of property to an unrelated party must, within 180 days from the disposition of the gain generating asset disposition, invest the gain proceeds in a QOF to gain access to the benefits the provision offers. The QOF, which can be a partnership or corporation formed by the taxpayer/investor, then must invest in a qualified opportunity zone business (excluding certain businesses including golf courses, racetracks or massage parlors) or business property. Assuming necessary operating conditions and requirements are met, a taxpayer electing to take advantage of this new statutory tax incentive could: defer until December 31, 2026 paying tax on capital gain resulting from the original sale of assets; permanently exclude up to 15% of his or her gain from the original sale of assets; and permanently exclude appreciation earned on the investment in the opportunity fund. As with many aspects of the Act, there are interpretive issues that still need to be addressed by the IRS. Further, specific compliance and operating requirements must also be met, which will be discussed in a future article. The opportunity is worth exploring, however, when taking into consideration your overall tax planning and investing goals.If you are interested in learning more about this tax opportunity, please do not hesitate to contact us. ### Funding for Start-Up Companies “I have developed the next groundbreaking software tool, but how can I obtain funding in order to grow this innovation?” This is an all-too-familiar thought of every entrepreneur. Obtaining funding for a start-up organization can be one of the most painstakingly hard processes that an entrepreneur can face. In some instances, obtaining financing to continue on the journey can be more difficult than cultivating the idea you are trying to commercialize.Most entrepreneurs are focused on their big idea and are not typically focused on the intricacies of the various levels of funding to grow their company. Below is a synopsis of the five major levels of funding:1. Seed Funding: Seed funding can take various forms. The most common is crowdfunding. Crowdfunding can come from family, personal friends, or strangers. Crowdfunding sites such as Kickstarter and gofundme have become extremely popular over the past several years. Seed funding provides a cash benefit for the entrepreneur in exchange for equity or convertible debt. Convertible debt allows a debt instrument to be converted into a specified number of shares of common stock. In accordance with Accounting Standards Codification (ASC) Section 480, Distinguishing Liabilities from Equity, the characteristics of the convertible debt are analyzed to determine if the debt should be bifurcated with a portion of the financing allocated to the debt instrument and the remaining portion allocated to the conversion feature.2. Angel Funding: Angel funding has similar characteristics to seed funding; however, angel investors are private, accredited, high-net-worth individuals. Angel investors often provide business advice and consulting but do not always require an equity interest in the company.3. Venture Capital Funding: Venture capital funding is a form of financing that requires an equity interest in the company. The first round of venture capital funding is the Series A round. Series A typically takes the form of preferred stock. The most common characteristics of Series A preferred stock include conversion options into common stock and liquidation preferences. Common conversion features may be at the option of the preferred stockholder or mandatory with the approval of the majority of the stockholders. In addition, preferred stock agreements usually include a provision that will mandate conversion if the company consummates an initial public offering at a designated price with specified proceeds. Voting rights for preferred stockholders may be equal to common stockholders or may be preferential to common stockholders. Additional funding, including Series B and Series C rounds, usually occurs at the venture capital level.Two additional features that are commonly issued in conjunction with Series A are the creation of a stock option pool and issuance of warrants. These can be issued at the seed levels also; however, they are more commonly issued once a company has obtained venture capital funding.  The stock option pool will be established to offer both qualified and nonqualified stock options to purchase common stock. Qualified options can be issued only to employees; whereas, nonqualified stock options can be issued to employees, vendors, board members, consultants, etc.  Upon issuance, the stock options are valued at fair value in accordance with ASC 718, Stock Compensation. The most common technique for valuing stock options is the Black Scholes model.  Warrants can be issued in the form of detachable or nondetachable warrants. Warrants provide the right to purchase the underlying stock at a discounted amount.4. Mezzanine and Bridge Loans: Mezzanine and bridge loans are usually entered into prior to an initial public offering. The goal is to provide help in order to meet the next level of funding. Bridge loans can also be used in between various series of funding at the venture capital level.5. Initial Public Offering: An initial public offering (IPO) is the ultimate exit that entrepreneurs strive towards. There are both advantages and disadvantages to this type of an exit, including raising money, having the company’s shares listed on a stock exchange, incurring expensive costs, and adhering to more regulations.By understanding the various levels of funding, entrepreneurs will have the information to be able to face the challenge of how to obtain funding.  Please contact the Schneider Downs Audit and Assurance Department for additional information regarding funding for start-up companies or visit the Our Thoughts On blog for similar articles.  ### SEC Approves Final and Proposed Rules in Latest Open Meeting Staying busy this summer, the SEC on June 28, 2018 they voted to approve five final rules and proposals that represent significant progress on many of its priorities.First, the SEC adopted amendments to modernize the definition of “smaller reporting company (SRC).”  Some of the key changes are that companies with a public float of less than $250 million will qualify as SRCs (previously, the public float had to be less than $75 million), while a company with no public float or with a public float of less than $700 million will qualify as a SRC if it had annual revenues of less than $100 million during its most recently completed fiscal year (previously, annual revenues had to be less than $50 million).Second, the SEC adopted amendments to require the use of Inline XBRL format in certain filings, which have been under study for many years.  This amendment is intended to improve the data’s usefulness, timeliness and quality to benefit investors, other market participants and other data users.  Operating companies currently required to submit information in XBRL will be required, on a phased in basis, to transition to XBRL.  The deadlines for adoption are: large accelerated filers with fiscal periods ending on or after June 15, 2019, accelerated filers with fiscal periods ending on or after June 15, 2020 and other filers with fiscal periods ending on or after June 15, 2021.Third, the SEC proposed permitting certain exchange-traded funds (ETF) to operate without first obtaining a fund-specific exemptive order from the Commission.  This proposal would modernize the regulatory framework for ETFs and come directly to market without the cost and delay of obtaining an exemptive order.  The Committee believes this will facilitate greater competition and innovation in the ETF marketplace by lowering barriers to entry.  This proposal would also replace hundreds of individualized exemptive orders with a single rule.Fourth, the SEC adopted amendments related to disclosures of liquidity risk management for open-ended funds.  These amendments are intended to improve the liquidity disclosures and enhance the N-PORT (the form that funds will file each month with portfolio holdings information) classification reporting.Lastly, the SEC proposed an amendment to the rules that govern its whistleblower program.  The proposal would allow for additional tools in award determination, provide a uniform definition of the term whistleblower, increase the efficiency in the claims review process and clarify and enhance certain policies and procedures. Schneider Downs will continue to monitor current developments concerning new proposals and amendments released by the SEC.  Please contact your Schneider Downs representative with any questions. ### Not-for-Profit Entities Receive Guidance on Contributions! Be aware! If your organization receives contributions from third parties, or contracts with government agencies, there are changes to the method and timing of recording revenue. These changes could be effective as early as July 1, 2018 for not-for-profit public business entities.On June 21, 2018, the Financial Accounting Standards Board (FASB) finalized the Accounting Standards Update (ASU) 2018-08, Clarifying the Scope of the Accounting Guidance for Contributions Received and Contributions Made.This new update assists entities in determining whether transactions should be accounted for as contributions (nonreciprocal transactions) or as exchange transactions (reciprocal transaction). A key concept in this update is whether the resource provider is receiving commensurate value in return for the resources transferred. This determination is what decides which guidance should be applied, resulting in potential different accounting and recognition timing.A more robust framework for determining whether a contribution is conditional or unconditional is also provided in the ASU. The process includes distinguishing between a donor-imposed condition and a donor-imposed restriction.  This determination is critical, because it affects the timing of contribution revenue. For a donor-imposed condition to exist, there must be a barrier to overcome and a right of return of assets transferred or release of the promisor’s obligation to transfer assets.One of the largest areas that will be affected relates to government grants and contracts. Most entities will now account for these as restricted conditional contributions. Previously, many organizations treated these as exchange transactions. This was largely because many organizations did not believe that the government gives “contributions,” because the general public is receiving commensurate value. This update makes a clear differentiation between the benefit received by the general public and the resource provider receiving that benefit. Therefore, under the new guidance, these transactions will often be considered nonreciprocal (i.e., contributions).Effective dates of this ASU fall in line with ASU 2014-09:Resource Recipients (i.e., grant recipients): Public Business Entities* - annual periods beginning after June 15, 2018 All Other Entities - annual periods beginning after December 15, 2018 Resource Providers (i.e., grant makers): Public Business Entities* - annual periods beginning after December 15, 2018 All Other Entities - annual periods beginning after December 15, 2019 *Includes those entities that have issued conduit debtEarly adoption is permitted. A modified prospective transition approach is required, which means that in the year of adoption, the changes will apply to all new agreements and to the remaining portions of any agreements from prior years that have not been completed as of the effective date.For those entities that are resource recipients and are considered a pubic business entity, this means that this standard is in effect required immediately upon issuance of the ASU! It is also worth noting that many organizations are both grant recipients and grant makers. As shown above, there are different effective dates depending on this classification, which means that these entities will need to determine if they should stagger implementation dates, or accelerate the implementation of the ASU to not mislead net financial results.Schneider Downs’ not-for-profit advisory professionals are well educated on these updates and are here to help you navigate these times of significant changes. Please contact us to get more information and assistance on implementing this new ASU. ### Accounting for Cloud Computing Earlier this month, the Financial Accounting Standards Board’s (FASB) Emerging Issue Task Force (EITF) reached a consensus to permit the capitalization of cloud computing implementation costs under hosting agreements that are service contracts. On June 27, 2018 the FASB ratified the EITF’s consensus in a 4-2 vote. The FASB designed this guidance to treat cloud applications in the same manner as on-site software applications.Through this process, the EITF determined that customers in cloud computing services contracts should use the existing guidance on Internal Use Software (Codification Subtopic 350-40) to determine which implementation costs should be recognized as assets. These assets should then be expensed over the term of the hosting agreement. The length of time should include any renewal options determined to be likely.  The assets recognized are then subject to impairment considerations under the Internal Use Software guidance.  Costs permitted to be capitalized primarily consist of employee training, system reconfiguration, and coding expenses.The EITF also determined that the expenses relating to the implementation costs are required to be recognized on the same line of the income statement as the expenses incurred for the hosting agreement. Similarly, the capitalized implementation costs must be presented on the same line of the balance sheet, as any prepaid hosting fees and presented on the cash flow statement in the same manner as the fees associated with the hosting agreement.Entities are also required to disclose the implementation costs of a hosting agreement according to paragraph 35-40-50-1 of the Internal Use Software section of the Codification. This disclosure should include a description of the nature of the entity’s hosting agreement.The FASB plans to publish a final update by the fall of 2018. The FASB has provided entities with the option to apply this guidance retrospectively or prospectively to implementation costs incurred after the adoption date. The guidance is required for public entities with annual periods, including interim periods, beginning after December 15, 2019 and for nonpublic entities with annual periods beginning after December 15, 2020.  Please contact the Schneider Downs Audit and Assurance Department for additional information regarding the EITF’s consensus or visit the Our Thoughts On blog for similar articles. ### Misconceptions v. Reality: My Internship Experience For many, the word “internship” brings to mind images of young college students grabbing coffee, sitting around bored, and doing busy work because the full-time employees either do not have the time, or the inclination, to deal with the kids who barely know their way around the office yet.  While I am sure that internships like this exist, this could not be further from the truth at Schneider Downs.  From day one, it became evident that my internship experience was going to be full of exciting work that was going to give me a glimpse into what the real world of accounting was like, while at the same time enabling me to help the firm serve clients.  At Schneider Downs, interns are not only given projects that are important and crucial for the firm, but are provided with learning experiences in their first professional jobs.Although we were given important tasks, we were not left alone.  We had amazing support from everyone from the first-year associates who were our mentors, to support staff who made sure we knew how to get around the office and use our computers, and to partners who wanted us to feel welcome and were there to offer advice and a kind word.  This amazing group of people made Schneider Downs both a great collaborative experience for the work the firm does for clients, as well as a learning environment for us college interns.  My internship with Schneider Downs was everything that an internship should be: challenging, rewarding, fun, and a learning experience, and far from the stereotypical internship full of coffee runs that students hear horror stories about. ### Post Card 1040 On Friday June 29, 2018, the IRS released the much anticipated draft "postcard-sized" Form 1040 that was promised by the GOP during the lead-up to tax reform.  The new "postcard" Form 1040 will replace and consolidate the Forms 1040, 1040A and 1040EZ.  This new draft Form 1040 has changed the presentation 1) to remove many of the items of income and deductions from the face of the Form 1040 and 2) to include many additional schedules beyond what a taxpayer is used to filing.  The IRS has stated that since (to date) more than 80% of taxpayers filed their 2017 income tax returns electronically, by either using a tax professional or a self-preparation software, the change will have minimal impact on the way taxpayers file their returns. Some opponents to tax reform have stated that this new filing will do nothing but increase the cost to those individuals using preparers who base their fee on the number of forms and schedules that a taxpayer's return includes.The IRS has stated that it has released this draft to "invite stakeholder input", but Treasury Secretary Steve Mnuchin has stated that the draft is also mostly finalized.  So it appears that come January 2019, all taxpayers will be filing their income tax returns using the new "postcard" Form 1040.Schneider Downs will continue to monitor the draft Form 1040 as it works its way through the Treasury Department and will provide updates as to the status until the final version is released. ### Pennsylvania Impact Fee Distributions Top $209 Million in 2017 The Pennsylvania Public Utility Commission (PUC) recently published detailed information regarding the 2017 distribution of Act 13 impact fees levied on unconventional natural gas wells.Act 13 was signed into law by former Pennsylvania Governor Tom Corbett in 2012. The act imposes an impact fee on unconventional natural gas wells in the Commonwealth. Unconventional gas wells are those drilled in the production of natural gas from a geological shale formation (such as Marcellus Shale). Impact fees are determined considering the age of the well and the average price of natural gas (as determined by the PA PUC each January). Unconventional wells are subject to an impact fee for at least 15 years. Act 13 restricts the use of impact fees to certain approved uses. Most funds collected are distributed to counties and municipalities where shale gas development is occurring, while some funds are available to be distributed to local governments across the Commonwealth and to address statewide issues.The PUC distributed over $209 million in impact fees during 2017, the third-highest amount since the impact fee has existed. Higher natural gas prices and an increase in producing wells generated impact fee distributions that were $36 million higher in 2017 than in 2016. Local governments primarily used 2017 impact fee funds for public infrastructure projects, emergency preparedness/public safety expenditures, and to replenish their capital reserve funds. Statewide conservation programs and the Pennsylvania Department of Environmental Protection also received significant impact fee distributions.In addition to the impact fee, Pennsylvania lawmakers have debated for years about levying a severance tax on natural gas producers. While the impact fee is imposed on each unconventional natural gas well drilled, a severance tax would assess natural gas producers on the resources they extract. The Pennsylvania state budget for fiscal year 2019 was passed on June 22, 2018 without the severance tax, but the debate will likely continue. ### My Summer 2018 Internship Experience Starting a new job is an experience unlike any other. It makes a person feel simultaneously nervous, excited, hopeful, and anxious, whether it be a cashier at a supermarket or a server at a diner.  Starting a new career makes these feelings even stronger. All of us here started from humble beginnings from working in gas station restaurants to basic data entry at a tiny accounting firm from home. This new experience at Schneider Downs was nothing short of a perfect transitional position into a real, professional work environment. We went from handling transactions of under $20 at our old jobs to working on full-scope audits of multi-million dollar companies we encounter daily. Every day has been a new experience that has helped myself and the other interns develop on a professional and educational level, helping us learn critical thinking from a new perspective.Schneider Downs is an environment unlike any of us have seen before, and it is created by the people of the company. When the interns, including myself, started here, with all of the nervous and excited feelings, we quickly discovered that the employees here were just as eager to help us as we were to learn the materials and environment this firm has to offer. There is a perfect balance of high work ethic and a close community without any aspect being too overbearing or underwhelming. To start our professional careers in this environment does nothing short of setting us up for a successful career, whether we start at Schneider Downs or go back to our local small accounting firm from back home. I can speak for the other interns when I say we were proud and grateful to share this experience together and to grow as professionals on both an individual and team level. ### Pennsylvania Bonus Depreciation Update On Thursday June 28, 2018, Pennsylvania Governor Tom Wolf signed into law Act 72 of 2018 (“Act 72”).  Act 72 updates the Commonwealth’s corporate net income tax law relative to changes in depreciation expense under federal law as a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”).  We addressed the federal tax changes and the Pennsylvania Department of Revenue's initial position with regard to those changes in a previous OurThoughtsOn article. Act 72 provides clarification on calculating taxable income for Pennsylvania corporate net income tax purposes when 100% federal bonus depreciation was taken on assets placed in service after September 27, 2018.  Taxpayers simply add-back the 100% federal bonus depreciation, and deduct depreciation expense calculated under Internal Revenue Code Sections 167 and 168 without regard to Section 168(k).  In other words, depreciation is recalculated for Pennsylvania corporate net income tax purposes as though federal 100% bonus depreciation did not exist. The changes take effect immediately and are applicable for tax years beginning on or after January 1, 2017.  Therefore, taxpayers that filed their 2017 corporate net income tax returns prior to the enactment of Act 72 may want to consider filing amended returns in order to capture the previously thought to be disallowed depreciation expense. Please contact a member of our State and Local Tax group if you have any additional questions on how your company may be affected by the enactment of Act 72. ### Pennsylvania Launches 1099-MISC Website In 2017, Pennsylvania enacted Act 43 of 2017 which imposed a withholding requirement on payors of Pennsylvania-source income to certain nonresidents.  The law and lack of initial guidance resulted in confusion and many questions for businesses attempting to implement the required withholding.  The Pennsylvania Department of Revenue has been addressing taxpayer concerns individually, and with lobbyists and has now launched a new website with information on the nonresident withholding requirements. The website includes an explanation of the law and its requirements on payors and includes: The definition of Pennsylvania-source income and recommendations for determining the source income amount when income is attributable to activity inside and outside Pennsylvania; Commonly used terms in the non-resident withholding law; Frequently asked questions; and A link to the 1099-MISC withholding exemption certificate. The Pennsylvania Nonresident Withholding webpage may be found at here. Please contact our State and Local Tax team if you have any questions concerning your nonresident withholding responsibilities. ### The IT Security Superhero's Guide to Good Cyber Hygiene “Move along folks, nothing to see here!” is what I imagine stressed-out IT security crusaders worldwide murmur every night in their sleep. Especially after spending yet another day protecting their organizations from the hundreds of thousands of cyber criminals and villains who use their arsenals of malware and attack techniques to wreak havoc on core systems and hold hostage sensitive information like intellectual property, personally identifiable information, protected health information, financial data and trade secrets.Mix in some job fatigue and it would be difficult to blame these hardworking superheroes for becoming distracted from maintaining good cyber hygiene, in other words, fundamental principles and practices that provide a solid foundation of security for any organization. While it alone does not guarantee any organization Luke Cage-like bulletproof protection, cyber hygiene remains effective at warding off risks from even some of the most common and sophisticated internal and external adversaries.Schneider Downs believes basic cyber hygiene is so critical that its absence could undermine existing security programs and even sophisticated cyber defense technologies. While there is no magic spell available to banish cyber threats into a dark dimension forever, the following Schneider Downs “Security Superhero” checklist features kryptonite-like quality tips for weakening cyber criminals’ attack strategies and keeping your organization safe in the ongoing cyberspace battle between good and evil:#1: Deploy robust endpoint security like antivirus software, encryption, data loss prevention tools, application whitelisting and other security safeguards on all computer systems.#2: Conduct cybersecurity education and awareness activities (e.g., phishing simulations) that promote proper employee behavior.#3: Limit the number of users with administrative privileges, and maintain appropriate system access that’s commensurate with job duties.#4: Enforce use of multifactor authentication, complex passwords and/or passphrases, especially on corporate email and key systems.#5: Maintain a regular patching schedule for applications and infrastructure assets, such as servers and databases, to maintain functionality and safeguard against malware attacks.#6: Implement and test procedures that regularly backup and routinely recover data.#7: Test periodically for exploitable vulnerabilities and unauthorized software installed on your network.#8: Identify and manage risks associated with third-party suppliers and external dependencies.#9: Build and maintain an inventory of key assets like hardware and software.#10: Establish an incident response plan to detect and react to security incidents such that damage to the organization and time to recover business operations is limited.#11: Secure personal mobile devices by enabling a passcode or fingerprint lock, engaging encryption, and/or keeping operating system and mobile app versions current. ### Pennsylvania State Budget Approved for $32.7 Billion, No Severance Tax Included On June 22, Pennsylvania Governor Tom Wolf signed into law a $32.7 billion state budget for fiscal year 2019. Noted as “bipartisan,” this is the first time in the Governor’s tenure that a budget has been signed before the June 30 deadline. The newly approved budget includes a 2% increase from FY2018, representing an additional $700 million in available spending.One noteworthy omission from the approved budget is that it includes no severance tax on unconventional gas production. Governor Wolf was a proponent of imposing the tax, but abandoned efforts at the last minute as negotiations pushed, concessions were made and the budget deadline loomed. The proposed tax would have charged natural gas drillers a fee based on the volume of gas developed, which could have potentially brought the state more than $200 million in revenue annually. Pennsylvania is the only major gas developing state that does not currently levy a severance tax.On the other hand, Pennsylvania drillers already pay impact fees on natural gas, which effectively taxes them for each well drilled. The fees were enacted into law in 2012 by then-Governor Tom Corbett and, since their origin, have allowed the state to collect nearly $1.5 billion in revenue from natural gas companies. In 2017 alone, $209.6 million in impact fees was collected. Many within the energy industry see the proposed severance tax as a “double tax,” which could ultimately prove harmful to small businesses and local job growth.Even though the levy was not included in latest budget, Governor Wolf is still adamant about imposing severance tax legislation at some point in the future, as this has been a major point of debate for the past four years. Schneider Downs will continue to monitor developments concerning the matter and its possible effect on Pennsylvania energy companies.  ### Pennsylvania Issues Guidance on Filing of Forms W-2 and 1099 To assist employers in complying with its new W-2/1099 filing requirements, the Pennsylvania Department of Revenue released the 2018 W-2 and 1099 Employer Withholding Reporting Instructions and Specifications Handbook.The Handbook addresses topics such as filing requirements, due dates, electronic filing options and file specifications. The Handbook also includes lists of frequently asked questions and tips to avoid common errors. Please be advised that from December 17, 2018 through January 2, 2019, the Department will institute a blackout period during which W-2/1099 information cannot be uploaded in e-TIDES. When the system becomes available on January 3, 2019, employer files will not be accepted under the old format.  Please contact our State and Local Tax team if you have any questions concerning your W-2/1099 filing responsibilities. ### Will Federal Reserve Increases Impact Residential Construction? In recent years, the residential construction industry has shown great strength not only due to the demand for housing, but also because of consistently low interest rates.  With the Federal Reserve raising interest rates and potential further increases to come, what does that mean for the housing market and, in turn, residential construction?Contrary to popular belief, rising interest rates actually may not signal a downturn in the housing market and residential construction.  According to some experts in the industry, housing demand still remains high due to the low levels of inventory and production that were borne of the recession in the late 2000s.  In addition, increasing wages and low unemployment levels over the past few years have offset the impact of increasing interest rates and higher construction costs. According to the federal government, new home sales in May were better than anticipated, and corresponding gains were noted at construction and home-improvement stores like Home Depot and Lowe’s.  For those who were concerned about facing construction issues due to a forthcoming downturn in the housing industry, recent results point to a healthy and stable market. ### Bill Introduced to Repeal Unrelated Business Income Tax Rules for Exempt Organizations On June 7, Rep. K. Michael Conaway, R-Texas, introduced H.R. 6037, the Nonprofits Support Act that seeks to repeal two unrelated business income provisions enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA). The bill consists of two sections: the first would repeal the requirement that unrelated business income must be calculated separately for each trade or business activity, while the second would repeal the increase of unrelated business income by certain disallowed fringe benefits. The bill has been referred to the House Committee on Ways and Means. Separate Computation of Income The U.S. tax reform of 2017 resulted in changes for tax-exempt organizations that affect how much an organization engaged in unrelated business activities must pay in taxes, and possibly how the organization will be required to keep track of those activities. Under the TCJA, a new section was added to the Internal Revenue Code that requires exempt organizations that have unrelated business income to report each activity separately. This means the organization will no longer be permitted to offset income from one activity with expenses of another, a change that will result in many organizations now having a tax liability for those activities generating net income. The IRS has not yet provided guidance as to how to identify a separate trade or business; the Nonprofits Support Act would repeal the requirement to separately compute income for each trade or business. Inclusion of Disallowed Fringe Benefits The TCJA also added a provision that requires exempt organizations to treat certain fringe benefits like employer-provided parking and transit passes as unrelated business taxable income unless the organization treats the benefit as taxable compensation to the employee. The Nonprofits Support Act would also repeal this requirement. Schneider Downs continues to monitor current developments concerning tax issues affecting exempt organizations. Please contact your Schneider Downs representative with any questions. ### It's a New Era: Sales Tax Compliance after South Dakota v. Wayfair The United States Supreme Court overturned the physical presence standard for sales and use tax nexus for remote sellers in its opinion on the case of South Dakota v. Wayfair. The Court ruled the physical presence standard established by Quill is “unsound and incorrect.”The Court’s ruling effectively ushers in an “economic nexus” era for states and remote sellers alike.Economic nexus is the concept of a presence based solely on economic activity in a state.  The economic activity is typically measured by gross receipts derived from and/or the number of transactions sourced to the applicable state.South Dakota’s neighbor, North Dakota, immediately updated its website with information for remote sellers and the requirement to collect sales tax. North and South Dakota’s sales tax laws relative to remote sellers are very similar. In both states, remote sellers that have gross sales exceeding $100,000 or 200 separate transactions are required by law to collect and remit sales tax.  It is expected that many states will follow the lead provided by South Dakota v. Wayfair in the coming weeks and months.If your business exceeds $100,000 in gross sales or 200 separate transactions in any state, you may be subject to sales tax collection in the near future.Now is the time to review your organization’s activities outside your home state to determine the impact of Wayfair on your sales tax compliance obligations. Multistate sales tax collection is complicated and adds to the administrative responsibilities of the business.Businesses that are now subject to sales tax collection will have additional administrative and compliance responsibilities including: Registration with the state(s) Tax rate determinations and maintenance Taxability determinations for products or services sold Obtaining exemption certificates, when applicable The administration and compliance of sales tax can overwhelm an organization when the tax rules change. Constant compliance with changes and nuances in states’ regulations can be especially burdensome when a business is uninitiated, understaffed, or focused on a pressing business initiative.Schneider Downs’ State and Local Tax (SALT) team can assist with your tax needs. Our dedicated professionals are poised to address the changes brought about by the Wayfair ruling.Schneider Downs’ SALT team addresses the entire spectrum of multistate sales and use tax issues and opportunities of our clients. If you have questions, please contact a member of our SALT group. ### Postcard from the 2018 AICPA SOC for Cybersecurity Conference I recently attended the AICPA’s SOC for Cybersecurity conference at the AICPA’s headquarters in Durham, North Carolina.  The conference covered the following areas: The AICPA's Cybersecurity Risk Management reporting framework and how it may be used by organizations and practitioners to evaluate controls and communicate certain cybersecurity information to interested parties; The components of an organization's cybersecurity risk management program; The performance and reporting requirements of a SOC for Cybersecurity examination; The description criteria that must be used by an organization when writing its description of its cybersecurity risk management program; Key considerations prior to accepting a cybersecurity examination engagement and  planning considerations; Key steps involved in performing the cybersecurity risk management examination; and Key factors to consider while forming the opinion and preparing the practitioner's report. Those in attendance at the conference received the SOC for Cybersecurity Certificate, which demonstrates the ability to apply the AICPA’s cybersecurity risk management reporting framework, analyze and examine an organization’s cybersecurity risk management program and report on an organization’s cybersecurity risk management program.Overall, the conference was very insightful.  The audience was diverse and included representatives from public accounting firms and other organizations vested in SOC reporting (third-party service providers, users of the reports, consultants, etc.) from throughout the United States.Schneider Downs’ participation at the SOC for Cybersecurity conference and other SOC professional forums demonstrates our firm’s commitment to remaining on the leading edge of SOC practices and ensuring that our team applies techniques that adhere to AICPA standards.  This commitment ensures that our clients’ examinations are conducted effectively and in accordance with current authoritative guidance aligned with leading practices.For more information on the new SOC for Cybersecurity reporting framework, please contact Schneider Downs. ### Cryptojacking on the Rise Since 2013, companies have had one main thing on their minds when it came to IT security – ransomware – an exploitative attack that’s cost thousands of users countless hours and billions of dollars from which to recover.In 2017, when the world was first hit by the famous WannaCry ransomware, users were required to send bitcoin to their attackers in order to unlock files. But after 200,000 computers were infected and only about $50,000 dollars was transferred, attackers have begun to rely on “cryptojacking” to cut the human element out of the process and have computers generate the money, all without us knowing.What Is Cryptojacking?Cryptojacking occurs when a computer is unknowingly manipulated to mine cryptocurrency that is then sent to the attacker. Using a complex algorithm, miners can be anyone who wants to use their own computer to process the algorithm. For their trouble, they’re given a percentage of the transaction.Mining, though, can be expensive because of the electricity and equipment involved. This is where cryptojacking comes in. It can infect computers by either downloading malicious files that install malware, or by browsing to an attacker’s website where coins are mined through JavaScript, after which the attacker sends the currency to themselves. Depending on the type of cryptocurrency the attacker chooses to mine, this process can be completely untraceable.Because of the nature of cryptojacking, most users may not even realize they’re infected with the malware, though two easy ways to tell are quick battery drainage and slower than usual performance. Even if the cryptojacking malware is discovered, however, it’s usually just removed and forgotten since no files were locked or money taken, as would be the case with ransomware. This is why there’s a much smaller chance of cryptojacking criminals being tracked down.A computers CPU utilization after visiting a malicious cryptojacking website.How Widespread Is Cryptojacking?Cryptojacking is relatively new, but the attackers profiting from the malware are not. Most were previously ransomware bandits but switched because of the higher profit potential and diminished risk. According to Symantec, incidents of cryptojacking rose 8,500 percent in the fourth quarter of 2017 and 34,000 overall for the year. A majority of the infected websites were breached and had the malicious code inserted to the homepage. Frighteningly enough, there’s a good chance you’ve mined cryptocurrency for an attacker at one point or another.Our RecommendationsInstall add-blockers and anti-cryptomining extensions to your web browsersThese free extensions will alert you and stop the utilization of your computer to mine cryptocurrencies.Scan with antivirus programs regularlyMost antivirus programs are now able to detect if your computer contains malware that is cryptojacking.Keep an eye on the performance of your computerIf you notice a sudden drop of battery life or performance, close your browser tabs. If that resolves the issue, you may have inadvertently visited a cryptojacking website. If the issue is not resolved, you may have malware installed on your computer.Visit https://cryptojackingtest.com/Created by the browser Opera, this website will analyze your browser’s performance and let you know if it’s being affected by cryptojacking. ### United States Supreme Court Issues Opinion in Wayfair Case Earlier today, the United States Supreme Court, in a 5-to-4 decision, issued its much anticipated opinion in South Dakota v. Wayfair, overturning the physical presence requirement that has been the basis of sales and use tax nexus for the past 51 years.  The Court in its ruling declared the standard “unsound and incorrect.”  Due to the large number of state and local taxing jurisdictions in the United States with various rates, rules and regulations, the Court first established the physical presence test in National Bellas Hess v. Illinois, 1967 and upheld this standard 25 years later in Quill Corp. v. North Dakota, 1992. Due to a rapidly growing retail market on the internet and declining sales tax revenue, many states, in defiance of the physical presence standard established in Quill, passed economic nexus standards based upon a specific dollar amount of sales or number of transactions in a year to state residents. In 2016, South Dakota passed an economic nexus standard based upon $100,000 in sales or 200 transactions.  Soon, a handful of other states passed similar economic nexus standards in defiance of Quill.  While the South Dakota Supreme Court declared the law unconstitutional on the basis of the Quill decision, the U.S. Supreme Court granted certiorari on appeal and agreed to hear the case.In the opinion drafted by Justice Kennedy, it appeared that the South Dakota law’s safeguards against discrimination and undue burdens on interstate commerce were persuasive.  The respective safeguards include: A safe harbor for small sellers who do not meet that annual economic threshold of $100,000 in sales or 200 transactions; No application of the law retroactively; and Sales tax simplification features that come with membership in the streamlined sales tax agreement, such as a single state-level tax administration, uniform definition of products and services, simplified tax rate structures and other uniform rules.  The state also provides sellers access to sales tax administration software paid by the state.  Sellers using this software are immune from audit liability. The Court’s opinion will have a significant impact on remote sellers throughout the United States.  States looking to take advantage of today’s ruling and establish economic nexus standards should consider using the South Dakota law as a model.While the Court did address the issue of the physical presence standard, it will take time to see the impact of today’s decision on remote sellers and service providers.  There will most likely be more litigation on economic nexus standards that are different from the South Dakota model.  Then again, there will always be the question on whether Congress will act, especially when a new Congress on comes in next January.     ### The Wayfair Case, Quill, and Sales and Use Tax Nexus History On April 17, 2018 the United States Supreme Court heard arguments in the case of South Dakota v. Wayfair Inc., challenging the long-standing law regarding when a state may impose its sales and use tax collection requirements on remote sellers.  The Court is expected to issue its opinion within the next few weeks.At issue is the long-standing physical presence nexus requirement that is the result of a previous U.S. Supreme Court case, National Bellas Hess v. Illinois, in 1967.  The United States Supreme Court said that state laws requiring remote sellers to collect sales or use tax must meet both the Due Process Clause and the Commerce Clause requirements of the U.S. Constitution.  In National, the Court said that a remote seller must have a physical presence in the state that is more than the slight physical presence of doing business via common carrier and the U.S. Postal Service to meet both of these requirements.In 1992, the state of North Dakota decided to challenge the law, which resulted in another U.S. Supreme Court case, Quill v. North Dakota.  In Quill, the Court ruled that a physical presence was no longer a necessity for the Due Process Clause.  However, for Commerce Clause purposes, a physical presence was still required.  The Court still had concerns about the effects of collection requirements on interstate commerce that it expressed in the National opinion:“And if the power of Illinois to impose use tax burdens upon National were upheld, the resulting impediments upon the free conduct of its interstate business would be neither imaginary or remote.  For if Illinois can impose such burdens, so can every other State, and so, indeed can every municipality, every school district, and every other political subdivision throughout the Nation with power to impose sales and use taxes.  The many variations in rates of tax, in allowable exemptions, and in administrative and record- keeping requirements could entangle National’s inter-state business in a virtual welter of complicated obligations to local jurisdictions with no legitimate claim to impose a fair share of the cost of the local government.”In 1992, there were an estimated 6,000 state and local taxing jurisdictions.  Today, estimates have grown to between 10,000 and 16,000.  Many of these jurisdictions have their own rules and regulations, along with their own remittance and filing requirements.In addition to upholding its previous ruling regarding the Commerce Clause, the Court in Quill said something else that was very important in shaping the future resolution of the issue.  The Court said that Congress was free to disagree with the Court’s opinion and enact legislation mandating remote sellers to collect another state’s sales and use tax and that Congress may be better equipped to resolve the matter.Ever since the Supreme Court’s ruling in 1992, states have been searching for a way to have Congress pass legislation requiring remote sellers to collect the tax.  Since the 1970s, every session of Congress has introduced a bill to address this issue.  In 2013, the Marketplace Fairness Act passed in the U.S. Senate but stalled in the U.S. House of Representatives, because certain House members were concerned about allowing states to impact activities beyond their borders.  House members at the time cited the Congressional concept of “no regulation without representation,” believing that a taxing state should not be able to impose requirements of conduct upon a remote seller that lacks physical presence and rights to legislative representation in the taxing state.States have also taken action on their own regarding Quill.  Such action includes establishing the Streamlined Sales Tax Agreement, enacting click-through nexus laws and non-nexus use tax reporting requirements.In 2010, the state of Colorado passed a law requiring remote sellers that do not have a physical presence in Colorado to comply with various reporting requirements regarding sales to Colorado residents.  Many remote sellers found the reporting requirements so onerous that a number of vendors chose to register and collect the state’s tax rather than try to comply with all of the components of the reporting law.  After years of legal challenges, in February 2016, the U.S. Court of Appeals for the 10th Circuit ruled that Colorado’s reporting requirements were constitutional.  The U.S. Supreme Court turned down a request to hear the case.  As such, the Court of Appeals’ opinion holds, and the Colorado reporting requirement is law, providing states with perhaps their best tool with which to compel remote sellers to register and collect sales or use tax.  States such as Pennsylvania and Washington have enacted similar reporting requirements in the past year.Partly based upon opinions issued in the various Colorado reporting court cases, states became aggressive in passing laws and issuing regulations challenging Quill’s physical presence requirement.  One of the first states was South Dakota.  The South Dakota law used an economic standard for nexus instead of physical presence.  Under the new South Dakota law, a remote seller has nexus with the state if it has an annual sales threshold of $100,000 or 200 or more separate transactions in South Dakota.  South Dakota then proceeded to file lawsuits against a number of remote sellers, including Wayfair, to register and collect the state’s use tax.  Enforcement of South Dakota’s law has been put on hold, pending the outcome of the Wayfair case.  The South Dakota courts struck down the law, since it violated Quill’s physical presence standard.  South Dakota then requested that the U.S. Supreme Court hear the case, which it did on January 12, 2018.Proponents of the South Dakota law claim that their new nexus standards are more appropriate in a 21st century economy, and that Quill improperly provides a tax haven and unfair competitive advantage for remote sellers over in-state brick-and-mortar stores.  States claim that Quill deprives state and local jurisdictions of much-needed tax revenue.Defenders of Quill claim the law still works.  Supporters point out that many of the largest remote sellers (such as Amazon) are already registered in most states, since those remote sellers shifted their business model to focus on customer service, requiring a greater physical presence in multiple states.  This physical presence requires complying with sales and use tax registration and collection requirements.  Quill defenders also agree with the Court’s previous ruling, stating that Congress is the best institution to settle the dispute.  Quill proponents also question the logic of overturning a law to shift an unfair burden from one group to another, claiming that even small remote sellers with no physical presence would have collection responsibilities in every sales and use tax jurisdiction in the United States.  In-state brick-and-mortar retailers would only have to charge one tax rate and familiarize themselves with one state’s set of rules and procedures, while remote sellers would have to be concerned with potentially 10,000 to 16,000 jurisdictions.  The dynamics of the case are interesting:  Justices Anthony Kennedy and Clarence Thomas were on the court when Quill was decided 26 years ago and have made comments that appear to convey that they believe Quill should be overturned; however, both justices were relatively quiet during oral arguments in April.  Conversely, Justices Elena Kagan, Sonia Sotomayor and Stephen Breyer asked many questions to both sides. Justices Kagan and Sotomayor seemed concerned about the ensuing chaos that could occur if the Court were to simply overturn Quill. Prior to oral arguments, the conventional wisdom among the experts stated that the Court would not have taken the case unless a number of the justices intended to overturn Quill, since the Court has turned down numerous opportunities to take up the case in the past.  However, after oral arguments, the experts seemed to tone down their predictions of Quill’s demise.What the Court will decide is anyone’s guess. Regardless, we will know their decision shortly. ### Late Participant Contributions to Your Employee Benefit Plan? EBSA is Coming for You! Contributions to employee benefit plans that are withheld from employee pay must be remitted to the plan as soon as administratively feasible.  Generally, the U.S. Department of Labor (DOL) believes that “contributions (other than union dues) withheld from an employee’s wages or paid to the employer by a participant must be sent to the plan on the earliest date these contributions can reasonably be separated from the employer’s general assets…In no event may these contributions be forwarded later than the 15th business day following the month of the withholding.”  However, the DOL expects that most employers can forward the contributions long before the maximum time period, and will look at past contribution history and employer practices to determine the appropriate period of time for contribution remittance.The Voluntary Fiduciary Correction Program (VFCP) was created by the DOL to allow for plan officials to correct certain employee benefit plan fiduciary violations, including delinquent participant contributions.  If a plan sponsor follows the applicable steps as required by the VFCP, no self-reported transactions will result in further enforcement action by the DOL.Even after following the steps as required by the VFCP, plan sponsors must report the delinquent contributions on Schedule H of the applicable plan year Form 5500 filing.  With the Form 5500 filing, the plan sponsor must indicate whether the delinquent contributions were: Not corrected Corrected outside of the VFCP Pending correction in the VFCP Fully corrected under the VFCP and Prohibited Transaction Exemption 2002-51 As a best practice, we have always advised clients with identified delinquent contributions to make the appropriate corrective action, following all required steps under the VFCP.  However, this practice is proving to be even more prudent as it appears that beginning in 2018 the Employee Benefit Security Administration (EBSA) of the DOL began sending form letters to plan sponsors who indicated on their 5500 filings that late contributions were corrected outside of the VFCP.  The letters threatened “possible alternative enforcement measures” if the plan sponsor did not complete a VFCP application within 60 days of receiving the letter.   While organizations such as the American Retirement Association have filed formal comments opposing the EBSA’s recent actions, it is still advisable to make all appropriate corrections through the VFCP to avoid additional potential fines and penalties. If you think you’ve made delinquent contributions to your benefit plan, or have any plan compliance issues or concerns, please feel free to reach out to our benefit plan experts at Schneider Downs.  ### IRS Releases Guidance Regarding TCJA Higher Education Excise Tax on Net Investment Income On June 8, 2018, the IRS released Notice 2018-55 (“Notice”) regarding the Tax Cuts and Jobs Act's 1.4% excise tax on the net investment income of “applicable education institutions.” In short, the Notice provides that, in determining net investment income, taxpayers should calculate gains on the sale of property using a stepped-up basis, namely, basis of the fair market value of the property at December 31, 2017. Calculation of losses will continue to follow normal rules.The 1.4% excise tax on net investment income only applies to "applicable educational institutions" defined as follows: Colleges and universities with at least 500 students during the preceding tax year, of which more than 50 percent are located in the United States; Private educational institutions and not state colleges and universities described in Code Sec. 511(a)(2)(B); and Institutions having assets with an aggregate fair market value of at least $500,000 per student (not including assets used directly to carry out the institution’s exempt purpose) as measured at the end of the preceding tax year. It’s estimated that 40 or fewer colleges and universities will be impacted by this new tax. Affected institutions will need to create “new” basis records for all investment assets on the balance sheet as of December 31, 2017. The effect of this provision will be to tax appreciation earned and realized after December 31, 2017. Normal basis rules shall continue to apply to capital losses.The IRS intends to propose regulations under which losses may offset gains to the extent of gains, and where no capital loss carryovers or carrybacks will be allowed. Proposed regulations may allow losses from property sales by related organizations to offset gains realized by other related organizations.The IRS also intends to issue further guidance regarding the excise tax, until such time taxpayers may rely on the Notice. The tax will be reported on Form 4720, Return of Certain Excise Taxes, under chapters 41 and 42 of the Internal Revenue Code.If you have any questions about this matter, please reach out to us at Schneider Downs. ### Inclusive or Carve-Out: How Subservice Organizations Are Presented in SOC Reports Service organizations typically use subservice organizations (i.e.  third parties) to perform key controls that are necessary, in combination with the controls at the service organization, to meet the applicable control objectives (SOC 1) or Trust Services Criteria (SOC 2).  Services provided by subservice organizations often relate to infrastructure hosting, application development, security monitoring, offsite storage of backups and disaster recovery services.  When these services are included in the SOC report, the service organization has two options for presenting the subservice organization within it’s SOC report: the carve-out method or the inclusive method.The carve-out method addresses the services provided by the subservice organization by “carving out” (i.e.  excluding) such services from the description of the service organization’s system and from the scope of the examination.  When using this method, the description of the service organization’s system must include the services performed by the subservice organization, the types of controls expected to be in place at the subservice organization (complementary subservice organization controls) and the controls the service organization has in place for monitoring the effectiveness of the subservice organization’s controls.  When using the carve-out method, the service auditor is responsible for determining if the service organization’s monitoring controls are appropriate.The inclusive method addresses the services provided by the subservice organization by “including” it’s services and related controls in the description of the service organization’s system.  The scope of the report would include the service auditor assessing the design and operating effectiveness of the subservice organization’s controls.  The results of the service auditor’s tests of operating effectiveness of the subservice organization’s controls would be included in section four of the SOC report. Management of the subservice organization would also sign management assertion and management representation letters and the assertion letter would be included in section two of the SOC report after the service organization’s assertion.     The carve-out method may be appropriate in the following situations:• If the subservice organization has a Type I or Type II SOC report that covers the applicable services available for management to review.• If the subservice organization will not provide contractual or other commitments regarding its willingness to be included in the SOC examination.• If the subservice organization has implemented controls to govern the third party’s services.The inclusive method may be appropriate in the following situations:• If a SOC report or other assurance regarding the subservice organization’s applicable services and controls is not available.• If the subservice organization agrees to be subjected to the examination procedures and is willing to provide the service auditor with a written assertion and representation letter.• If the subservice organization’s services are extensive, then the usefulness of the SOC report for users of the system may be diminished by excluding the subservice organization’s controls from the examination.Prior to beginning the reporting period, management should determine what method it should use to present subservice organizations within the report.  If multiple subservice organizations are to be included in the scope of the report, management may decide to use the carve-out method for some subservice organizations and the inclusive method for other subservice organizations.  Generally, the inclusive method requires more involvement by the subservice organization, and management of the service organization should consider the risks associated with the subservice organization’s refusal to cooperate with the examination when determining which method to use. ### The Path You Choose Will Lead to Your Success Welcomed.As soon as I walked off the elevator and onto the 17th floor for training, that was the feeling I received. From day one, the firm treated me just like an actual, full-time auditor. Earlier, I had the opportunity to meet some of the other interns and many employees at the company holiday party, which really helped ease me into the organization.When searching for an internship, every company describes its culture. But Schneider Downs really excels. They didn’t hesitate to bring me into the field, and started teaching me immediately. Here, there is a genuine and professional environment that other companies cannot seem to master as well.In the office and out in the field, the employees do not hesitate to stop what they’re doing in order to give you a task and explain something. The explanation you receive will include everything from how to correctly perform the task to the reasoning behind it. As an intern, it’s easy to simply perform the work. But when you actually understand the reasoning behind the task, everything clicks.Not only do the employees care that you’re learning the tasks at hand, they also genuinely want to get to know you better. Going out to lunch and socializing at company events has really shown me how friendly everyone is at Schneider Downs. The work environment is, without a doubt, way different than the classroom. I know for a fact that I will leave this internship with much more knowledge compared to when I first started, and I couldn’t be happier to be interning for such an impressive firm.I will always be thankful for the opportunity Schneider Downs has given me and I cannot wait to see what my future career has in store. ### Revenue Recognition- Member Owned Private Organization In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), providing a robust framework for addressing revenue recognition issues and, upon its effective date, replacing almost all pre-existing revenue recognition guidance. Implementation of the framework provided in the ASU should result in improved comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The new guidance applies specifically to contracts with customers and will impact how member-owned private organizations account for revenue. Since such organizations typically have multiple revenue streams, each one will need to be evaluated during the adoption period. ASU 2014-09 defines a customer as “a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration” (ASC 606-10-15-3). This raises a question for member-owned private organizations as to whether a selected transaction involves a member acting as a customer (e.g., purchasing food from a clubhouse) or as an owner, when contributing to a capital assessment, for example. Since organizations typically have more than one form of membership, each offering different rights and benefits, they are now required to individually evaluate their categories and decide whether each obtains an ownership interest or only a privilege. When evaluating those revenue streams, the majority of transactions are expected to meet the definition of “revenue from a customer” and should not significantly change the way revenue is currently recognized. There are, however, significant transactions that will need to be reviewed to determine the manner revenue is recognized, including those from initiation fees and capital assessments, two examples of how revenue recognition can differ based on its classification as a revenue transaction with a customer, an ownership transaction, or a combination of the two. If the organization determines the initiation fee and any capital assessment is being received from a member in his or her capacity as an owner, such amounts should be recorded as a contribution of capital and would not be in the scope of the ASU. But if it is deemed to be a revenue transaction, it would fall under the scope of the ASU and the organization should apply the five-step recognition model. Implementation of ASU 2014-09 must occur no later than the annual reporting period beginning after December 15, 2017. With the deadline looming, all organizations should be well on their way to assessing how the new ASU will impact accounting for revenue transactions and disclosures, and begin developing a corresponding implementation plan. Should you have any questions regarding the impact of this standard on your organization’s membership revenue, please reach out to Logan Kowcheck, CPA ### Does your organization have plans for construction this summer? Higher education institutions and not-for-profit organizations now need to consider the Uniform Guidance procurement requirements for fiscal year beginning July 1, 2018 when entering into construction contracts that have an element of federal funding.    We have been tracking the key challenges faced by the Office of Management and Budget (OMB)’s release of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, referred to as “Uniform Guidance,” since it became effective in December 2014.  After a three-year deferral period, the time is finally here for non-Federal entities with a June 30 year-end for fiscal year July 1, 2018 through June 30, 2019 to comply. All non-federal entities should update and enhance their written policies, if you have not already done so, in order to comply with the modified procurement requirements.  Policies should address the various types of procurement methods concerning tiers, depending on the amount and awarding requirements.  The types of procurement methods vary from mico purchases of $3,000 or less, small purchases of $150,000 or less to sealed bids greater than $150,000.     For non-federal entities entering into construction contracts, the small purchases and sealed bids will be most applicable procurement methods used.  When making small purchases ranging from $3,000 to $150,000, quotes must be obtained from an adequate number of qualified sources.  OMB Guidance states that “during the sealed bid process, public solicitation and a firm fixed price contract is awarded to the responsible bidder whose bid, confirming with all the material terms and conditions of the invitation for bids, is the lowest in price.”  According to the procurement sections of the Uniform Guidance, located at 2 CFR 200.320, “the preferred method of procuring construction is the sealed bid method.”  During the bidding process, non-federal entities should consider a complete and adequate specification of the services requested, ensure two or more bidders are willing to complete for the business, and the selection of the successful bidder can be made principally based on price.  Before contracting with the successful bidder, also remember to check that the Company is not on the suspended or debarred vendor lists. Solicitation is normally based on competitive proposals through a request for proposal process or noncompetitive negotiations from a single source when the services are unique. With many of the non-federal entities electing the defer implementation of the Uniform Guidance requirements over the past handful of years, make sure your procurements policies and contracts are updated this summer to ensure that you comply and do not run into issues with purchasing. ### Insight - Fed Funds Increase On June 13, members of the Federal Reserve’s Federal Open Market Committee voted to increase the target range for the federal funds rate by 25 basis points from the previous range of 1.50% - 1.75% to a range of 1.75% - 2.00%. The rate is applied by large banks when making overnight loans to each other from their reserves funds held with the Fed and becomes the basis for loan rates across the economy from auto loans to credit card and mortgage rates. The Fed uses its Federal Open Market Committee and open market operations to influence the supply of money in the broader economy. This decision to increase the federal funds rate was the result of current rates trending around 1.70% (towards the upper threshold of their current range) and strong economic indicators. The May jobs report showed the U.S. economy added 223,000 jobs, up from the 188,000 jobs expected, while unemployment numbers fell slightly. Following this news, the Fed believes unemployment will fall to 3.6% by the end of the year. The Fed also revised its projected economic growth for the U.S. economy to 2.8% for this year and forecast that inflation will reach its 2% target for 2018. Last week’s news does not mean that rates will immediately increase on commercial and personal loans, as the rise was expected and largely already factored into recent loans. The larger news is that the Fed has already signaled two additional rate hikes this year and three in 2019. The increase will result in higher consumer rates over time as the monetary supply declines. The Fed is under a mandate to maximize employment, stabilize prices and moderate long-term interest rates. With the low unemployment rate and inflation around its target, the Fed believes these rate increases are necessary for the long-term growth of the economy. ### Expense Reimbursement Schemes in the Professional Services Industry According to the 2018 ACFE Report to the Nations on Occupational Fraud and Abuse, the median loss from occupational fraud costs the professional services industry $258,000. The most common scheme surrounds expense reimbursements.An expense reimbursement scheme occurs when an employee files a claim for reimbursement of fictitious and/or inflated business expenses, based on false documents. Employees can either mischaracterize expenses, overstate expense reports, seek reimbursement for fictitious expenses or submit multiple reimbursement requests. Fraud perpetrators accomplish this in a variety of ways: Alter actual receipts Overpurchase business expenses Overstate another employee’s expenses Produce fictitious receipts Obtain blank receipts from vendors Claim the expenses of others What can you do to detect and prevent expense reimbursement schemes? Review and analyze expense accounts by comparing current expenses to historical or budgeted expenses. Perform a detailed review of employee expense reimbursements, which may include a review of employees’ schedules. Require employees to submit detailed receipts or other supporting documentation and provide an explanation of expenses before payment is reimbursed. Periodically review employee expense reimbursements. Understand the travel and entertainment policy of the company. If you have any questions regarding expense reimbursement schemes, feel free to contact us at contactSD@schneiderdowns.com ### Use Tax - To Report or To Collect and Remit: That is the Question If the United States Supreme Court upholds the physical presence standard in its South Dakota v. Wayfair opinion, many remote sellers lacking the physical presence nexus in various states might still find themselves deciding to collect and remit the state’s use tax. The United States Supreme Court let stand a U. S. Circuit Court’s opinion in DMA v. Brohl II, confirming the constitutionality of use tax reporting laws.  Since then states have been passing laws requiring remote sellers who lack the physical presence nexus, but meet certain economic thresholds in the state during a year (usually $100,000 in sales or 200 transactions; these amounts can vary by state), to comply with various use tax reporting requirements or to register and collect the tax from their customers.  In some instances, complying with the use tax reporting requirements might be more difficult than collecting and remitting the tax.     While use tax reporting requirements do not require the collection of the state’s use tax, they generally require remote sellers to do one, some or all of the following: Post of notice on the website or sale forum indicating that the state’s sales or use tax might be due on a purchase.  Inform buyers that they might be required to file a use tax return with that state’s Department of Revenue or Taxation in connection with the purchase and delivery of the item they are obtaining. Printing a notice on all sales documents (i.e., invoices, receipts etc.,) stating that the state’s sales or use tax was not collected on the sale and that the buyer might have to directly remit the tax to the state. Provide an annual report to the customer, by a certain date (usually by January 31st of the following year) with a listing of that customer’s purchases stating that sales or use tax was not collected on purchases and that the customer might have to file a use tax return with the state. Provide an annual report to the Department of Revenue or Taxation, by a specific date (usually by January 31st or some other date proscribed by the state in the following year).  The report should contain: the customer’s name, billing address, delivery address, and a notation of whether the delivery address is different than the purchaser’s last known mailing address, and total dollar amount of purchases. Failure to comply with each of the requirements usually carry some type on monetary penalty for each offense, which can add up very quickly.  The requirements vary by state.  States such as Oklahoma have limited requirements, whereas states like Colorado, Pennsylvania, and Washington have numerous and complex requirements.Since many of these reporting requirements can be quite labor intensive, with significant consequences for non-compliance, not to mention concerns about antagonizing customers by issuing the required reports and notices, we expect that many remote sellers will choose registration and collection of the tax instead of complying with the state’s use tax reporting requirements.Currently, the following jurisdictions have some type of remote seller use tax reporting requirement: Alabama, Colorado, Georgia, Louisiana, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, and Washington.If the physical presence nexus standard survives the challenge in South Dakota v. Wayfair, you can expect most, if not all, states that impose a sales and use tax to pass some type of complex use tax reporting requirements, forcing remote sellers to answer the dreaded question: to report, or to collect and remit.Please consult with your state and local tax advisor if you have any questions regarding state-specific reporting requirements. ### Tax Exempt Advisory Committee Weighs In on Current Issues The Advisory Committee on Tax Exempt and Government Entities (ACT) fosters public discussion of issues relevant to tax-exempt and government entities, and presents in an organized and constructive fashion the interested public’s observations surrounding current or proposed entity programs, while also suggesting improvements. The following are propositions made by the ACT as part of its 2018 Report of Recommendations, released June 7.In July 2015, the IRS announced the end of the staggered five-year remedial amendment cycle system for determination letters issued to individually designed employee plans. As of January 31, 2017, this cycle system came to an end, but determination letters are still granted upon initial qualification or termination of a plan. The ACT recommends reinstitution of this amendment cycle on a limited basis and enumerates 12 circumstances wherein the IRS should consider allowing applications for determination letters. See Publication 4344 (Rev. 6-2018) for more information.The Employee Plans Subgroup of the ACT also examined compliance concerns for tax-qualified retirement plans with respect to participants and beneficiaries who are missing or are otherwise not responsive (considered “missing participants”). In order to deal with the complex issues facing plan sponsors who seek to make distributions from employee plans, the ACT recommends several changes that would modify existing guidance and provide new guidance on certain IRS Forms and their accompanying instructions, while issuing new Field Directives. See Publication 4344 (Rev. 6-2018) for more information.The ACT also provides recommendations with respect to incentivizing the universal e-filing of Form 990. For fiscal year 2017, roughly 57 percent of all Forms 990 and 990-EZ were filed electronically. Currently, only the smallest exempt organizations filing Form 990-N and the largest organizations filing at least 250 returns in a calendar year and/or with assets exceeding $10 million are required to e-file Forms 990 and 990-EZ. The ACT recommends a mandatory electronic filing law for all exempt organization returns, noting that there appears to be overwhelming support for the action and that prioritizing the development of online accounts for exempt organizations would help expedite the process.Finally, the ACT also provides recommendations encouraging self-compliance by issuers of tax-advantaged obligations/tax exempt bonds, and recommendations regarding sharing of taxpayer information with tribal government tax programs. Please see Publication 4344 (Rev. 6-2018) or contact a member of the Schneider Downs tax department if you have further questions. ### Hands-On Learning Experience In high school, where I first decided I wanted to go into accounting, I was not really aware of what a public accounting firm did. While studying at Pitt, the idea of working in audit for a public accounting firm really interested me. When I received my offer from Schneider Downs as an Audit Intern, I was beyond excited. I was thrilled about the opportunity to intern at such a great, well-respected company, and in the exact area that I wanted. I thought I would enjoy audit because I liked the idea of working at the client site and learning about various businesses. I couldn’t wait to start and get my first experience of auditing and the culture at Schneider Downs.Before I started, I was curious about how much client site involvement I would actually have. I quickly learned that Schneider Downs does a fantastic job at getting the interns involved with clients. I was on many different engagements, and I really felt like I learned a lot while I was at the client. What I learned gave me great insight into the audit service line. Everyone I worked with was very kind, knowledgeable, and helpful. They took time to explain to me what I was doing, and the importance of it. People often say that the employees are what makes a firm unique, but this is especially true for Schneider Downs.By getting hands-on experience, my internship at Schneider Downs has given me a great introduction into auditing, public accounting, and what it is like to work at one of the top accounting firms in the country. ### Real World Application College does not prepare you for the real world in the way you would expect. The unlimited number of homework problems you have due and vocab words you have to memorize make you question how much of this is actually going to apply when you get a real job. Weeks go by and you forget half of the things you discussed in class until it’s time to take the final and you have to learn it all over again. I will say, the things that stick with you are the important things. For example, how in your freshman year you begin to attend all of these Student Accounting Association meetings and career fairs and you’re thinking: “How does any of this even apply to me?”Then you learn about all of these real world jobs, what it takes to get there, and how you shouldn’t limit yourself just because of where you’re from or what school you go to. You’ll begin to realize that all of these firms are out there looking for you. You just need to find one that is the best fit for you, and that’s why I chose Schneider Downs.It is not until you get out into a real job that those words you learn in college start making sense. You get thrown into scenarios where it is actually important to understand the concept of materiality and the financial statement assertions. All of this started making sense to me when I started my internship, and I had to drive out to my first client location in the week that I first started. The opportunities I have been given, and continue to be given, reassure me that I made the right choice on where to spend my summer. Everyone that I work with is understanding of where I am at in this point of my life, and encouraging to me in all the work that I do and about what I can achieve.This internship has given me the opportunity to move from my small town to the city for the first time in my life. It still feels great to be walking around downtown Pittsburgh and to look up at the One PPG building and think, “Wow, I actually work there.” Because of my internship experience, I am proud of what I have accomplished so far in college. But, after working in a real firm, I realized there is a lot more in my professional career I have yet to accomplish. Working as an intern at Schneider Downs has given me a more clear understanding of this, and has shown me what I have to look forward to following graduation. ### Internet of Things: Keeping Security in Focus At Schneider Downs, we understand that the continuous advancement of technology fuels a corresponding expansion in the variety of internet-connected systems and devices used by our clients. These devices have the potential to enable process efficiency, analytics, and even security. Common examples we see in organizations each day are camera systems and door lock systems. Often, these types of devices are designed to be easy to use, but may overlook various aspects of security.It’s easy to underestimate the threats these devices can pose to your organization. While providing penetration testing services to clients, our security analysists have leveraged poorly configured systems like door locks to gain access to restricted areas and sensitive data. Device functionality will always be the primary selection criteria, but each device should also be looked at from a security perspective. Here are some security-focused areas that should be considered in the selection process:Vendor Reputation – What’s the reputation of the manufacturer of the device you’re considering, and how long have they been around? If the manufacturer goes out of business or drops product support for your device, updates will stop, vulnerability management will become much harder and you may even need to retire the devices early. Considering product support plans and how long manufacturers have been in business can help ensure that your chosen device has longevity.Credential Management – Many devices come with a default username and password to log in with, often as simple as admin:password. Ensuring devices can change the password, at a minimum, is essential to the security of data it may collect. Measures then need to be put into place to ensure those credentials are actually changed from their defaults. If not, your device will be vulnerable to anyone with a connection that’s smart enough to Google for those default credentials.Encryption – Chances are if you’re exploring IoT devices for your organization, you’re interested in the data those devices can collect. Choosing devices that support encryption of data at rest and in transit will help that data stay confidential. Choices may be limited since many devices lack the computing required for secure encryption; your organization will need to determine whether or not the device’s connectivity and purpose warrant encryption. Devices with weak encryption or without encryption at rest can have risks mitigated through isolation on separate networks and the use of transport encryption through TLS.Patching– Unpatched devices are one of the biggest risks to any organization. For IoT devices, patch-ability is twofold. First, make sure the device’s hardware is capable of being patched. If a vulnerability is exposed and your device can’t receive a patch, your best option to secure it will be to replace it. Secondly you must ensure that newly released patches are applied via automatic updates or a manual schedule. Further, some products may requiring manual updates may need physical access to the device for each update.Final ThoughtsWhile the aspects discussed in this article are angled towards selecting IoT products, security considerations should be examined as part of any organization’s technology selection process. If we as consumers can consistently make decisions and ask questions based on security, there’s a chance more vendors will design products with these elements in mind.  ### Greetings from the American Trucking Association's National Accounting and Finance Council Annual Conference In support of Schneider Downs’ many clients in the transportation and logistics industry, we sent a delegation to attend the American Trucking Association’s (ATA) National Accounting and Finance Council (NAFC) Annual Conference in Raleigh, North Carolina from June 5 through 7, 2018. This was the first stand-alone conference in many years for the NAFC after being included in ATA’s Annual MCE Conference in the past. It was a rousing success with a wide variety of educational and informative topics related to the industry. The conference included sessions on the following topics: Adapting to Changes in Tax Policy Mergers and Acquisitions in Transportation Productive Solutions to Cyber Risk and Threat Vulnerabilities The Future of Supply Chains and Why We Should All Embrace Blockchain Technology Reducing Risk and Improving Insurance Loss Cost Economic Trends in Trucking Amidst Policy Changes Our delegation was thoroughly impressed by the quality of all presentations.  Each session provided timely, relevant content presented by professional, knowledgeable industry experts, without exception.  One session we found to be particularly insightful was that pertaining to blockchain technology.  Tyler Jenks, SVP of Solutions Architecture from Very, LLC, presented the first half of the blockchain session.  Mr. Jenks provided perhaps the most understandable explanation we’ve witnessed of how blockchain technology works, replete with witty commentary and relatable examples of this technology in practice.  Dale Chrystie, VP for Strategic Planning & Support at FedEx Freight, took this a step further in the second half of the presentation, providing real-world examples of how his organization has implemented this technology in its current operations and where he sees it adding additional benefits in the future. But the highlight of the conference for us was the keynote address by Chris Spear, the President and CEO of the ATA. For over an hour, Mr. Spear shared his insights on the current industry landscape and the organization’s legislative initiatives. His vision of the industry’s future is at once optimistic, yet grounded strongly in reality.  One interesting thought he shared was how he believes autonomous vehicle technology will lead to a “Driver Assist” model, not a driver replacement. He compared this to commercial airlines, which continue to employ pilots even though they have for some time utilized autopilot technology to perform much of the flying. The NAFC Board of Directors has plans to expand group membership and provide several educational sessions and webinars over the coming year. These could provide great opportunities for the accounting and finance team at your transportation and logistics company to obtain industry specific training. The Schneider Downs Transportation and Logistics team will continue to be involved with the NAFC and will keep you up to date on these future activities. If you would like to learn more about the organization, you can visit its website at www.trucking.org/National_Accounting_Council.aspx. ### SOC Reporting: Vendor or Subservice Organization? Many service organizations outsource functions of their business to third-party organizations (vendors).  The functions performed by vendors may impact the service organization’s delivery of services to user entities.  When completing a SOC 1 or SOC 2 examination, the service organization must determine if any of it’s vendors are considered subservice organizations and therefore in-scope for the SOC examination. The difference between a vendor and a subservice organization is that a vendor’s controls are not necessary for the service organization to meet the SOC 1 objectives or SOC 2 criteria, while a subservice organization’s controls are likely to be necessary to meet the objectives or criteria.  A vendor is likely to be considered a subservice organization if the following points apply: If user entities’ understanding of the service organization’s system requires the services provided by the vendor to be included in the service organization’s system description; and If controls at the vendor are necessary, in combination with the service organization’s controls, to provide assurance that the SOC 1 objectives or SOC 2 criteria are met; or A service organization’s contract with the vendor stipulates that the vendor perform certain controls  to address risks related to the vendor’s service. As an example, consider a vendor that monitors a service organization’s IT logs for events that could indicate unauthorized activities.  If the vendor is responsible for analyzing the logs for notable activities and alerting the service organization to suspicious activities, then controls at the vendor would be relevant to meeting the service organization’s security commitments, and the vendor would be a subservice organization because the vendor is performing the control to monitor the logs.  The same vendor would not be considered a subservice organization if the service organization was reviewing summary reports of logged events generated by the vendor, since the service organization would be responsible for monitoring the reports and would not be relying on the vendor for identifying suspicious activity.  The service auditor is allowed to assist with determining if a third party should be classified as a vendor or subservice organization, but the determination is ultimately the responsibility of the service organization’s management.Once the necessary subservice organizations are identified, the service organization will need to determine if the inclusive or carve-out method will be used to present the subservice organizations in it’s SOC report.  Look for our upcoming article titled “Inclusive or Carve-Out:  How Subservice Organizations Are Presented in SOC Reports” for guidance on choosing the appropriate method. ### Pennsylvania Issues Exemption Form for 1099-MISC Withholding Act 43 of 2017 imposed a withholding requirement on payors of Pennsylvania-source income to non-resident individuals and single member LLCs.  The requirement has proven difficult for businesses to implement and led to many questions for payors.  In response, the Pennsylvania Department of Revenue has issued REV-1832, 1099-MISC Withholding Exemption Certificate.  The form is intended for use in determining a payee’s residency status or entity type.  The form is required, by the department, when the payor is not required to withhold from the payee. Payees may claim an exemption from withholding based on a valid exemption basis, including: Individual is a Pennsylvania resident Trust or Estate is established by or includes a Pennsylvania resident Payee is not subject to Pennsylvania personal income tax, i.e., corporation, partnership, multi-member LLC or income is not PA-source income A payor that receives a properly completed REV-1832, in good faith, is not required to withhold from the payee.  The form must include the reason for exemption and signature to be valid.  If the payor receives an invalid form, it is required to withhold until a properly completed certificate is received. ### Life begins at the end of your comfort zone During the past year, everything that I knew to be normal was completely changed. Not only did I find myself at a new Penn State campus with over 40,000 students, but only 9 months later, I moved to Pittsburgh all alone without knowing anyone to intern at Schneider Downs. I remember starting my junior year and being extremely overwhelmed because I knew I needed an internship at an accounting firm for the upcoming summer, but I did not know how I was going to stand out among so many other students at Penn State. I was beyond nervous and did not know what to expect when interviewing to intern at Schneider Downs, but immediately I could tell how welcoming and friendly everyone was, and I left the interview knowing I really wanted to work at Schneider Downs.The first time I visited One PPG Place, I was overwhelmed and nervous, but the welcoming atmosphere of the Schneider Downs office really made me feel at home and like I belonged. I have spent my entire life living in a small, rural town of about 2,500 people, 2 ½ hours from Pittsburgh, so I was beyond excited for the opportunity to spend the summer working in the heart of the city. I grew up in a family of Pirates fans so I have been to PNC Park numerous times to watch games, and each time I remember being in shock at how beautiful the city skyline is, hoping someday I would be able to live and work there. I remember leaving the office the day of my second interview beyond excited to call my family and tell them everything about my experience and to just talk about how much I wanted to work at Schneider Downs!Fast forward to May, and the time came to leave home and move to the city where I didn’t know anyone and start a professional accounting internship in one of the biggest buildings in downtown Pittsburgh. The very first day I moved into my apartment and was alone for the first time, I was nervous and very far out of my comfort zone. I would be lying if I said I didn’t want to just turn around and go right back home, but the moment I stepped into Schneider Downs on my first day, this feeling completely went away. I was surrounded by other interns in the same exact boat I was in, and because of that, I made unexpected connections and friendships I am very grateful for.From the beginning, everyone at Schneider Downs made sure I felt welcomed, comfortable, and like I belonged. This internship experience offered me more than I ever expected it to. I knew from day one that I did not want a stereotypical internship experience where I would be making copies and getting coffee, and Schneider Downs was nothing like that at all. Schneider Downs did not hesitate to throw me right into field work at different client locations, and really gave me insight on what it would be like to start my professional career here. From day one of training to the end of my internship, I learned something new every day, whether it be something about accounting, a client, a co-worker, the firm, or even myself. Schneider Downs taught me to push myself further and gave me the confidence to not be afraid to jump right into something new and ask questions. I’m grateful for receiving the opportunity to intern at Schneider Downs and will hold onto the memories, experiences, and knowledge I gained for many years to come! ### IRS releases guidance to taxpayers for changing accounting methods to conform to financial accounting revenue recognition standards On May 10, 2018, the IRS released Revenue Procedure 2018-29 (hereinafter Rev. Proc. 2018-29) to provide new, automatic procedures for taxpayers changing their method of accounting for the recognition of income for federal income tax purposes to a method for recognizing revenues described in the new Financial Accounting Standard Board (FASB) standard for revenue recognition. Under the new FASB standard (titled Revenue from Contracts with Customers), an entity must recognize revenue for financial statement purposes for goods and services promised to customers in an amount that reflects what the entity expects to receive in exchange for those goods and services.  Rev. Proc. 2018-29 creates new, automatic accounting method change procedures by adding new Section 16.11 to the list of automatic procedures. It provides procedures for obtaining automatic consent of the IRS Commissioner for a taxpayer that wants to change its method of accounting for recognition of income for federal income tax purposes to a method that uses the new financial accounting standards for the following: Identifying performance obligations;  Allocating transaction price to performance obligations; and/or Considering preformation obligations satisfied.  A taxpayer may request a change under these automatic provisions only if the taxpayer’s new method of accounting is otherwise permissible for federal income tax purposes and the change in method of accounting is made for the taxable year in which the taxpayer adopts the new standard for financial accounting purposes. Rev. Proc. 2018-29 further provides that a change under Section 16.11 may only be made in the taxpayer’s first, second or third taxable year ending on or after May 10, 2018. A taxpayer making a change under Section 16.11 may implement the change with either an IRC Section 481(a) adjustment or on a cut-off basis. A taxpayer making a change under Section 16.11 is eligible for reduced filing requirements, thereby limiting the portions of the Form 3115, Application for Change in Accounting Method, required to be completed.Rev. Proc. 2018-29 is not intended to provide guidance for taxpayers changing their method of accounting to comply with amended IRC Section 451 of the new tax law, but rather only provides guidance for taxpayers changing a method of accounting to an otherwise permissible method of accounting that recognizes revenue in income in a manner described in the new FASB standard. The Treasury Department and IRS are expected to provide future guidance to address the changes made to IRC Section 451 as a result of the new tax law. ### Congressional Research Service Releases Tax Policy Options on College Endowments Educational institution endowments have come under attack from all sides lately. Whether it is the new excise tax on net investment income, a Congressman intent on forced spending to reduce the cost of higher education, or dedicated Congressional hearings, colleges and universities have had to remain on constant pivot to fend off attackers. Now, the Congressional Research Service ("CRS"), a nonpartisan public policy research service of the U.S. Congress, has added to the salvo. On May 4, the CRS released "College and University Endowments: Overview and Tax Policy Options," a report based on data from a variety of sources that notes: In 2017, college and university endowment assets totaled $566.8 billion; 75% of endowment assets (roughly $425 billion) are held by just 12% of all institutions, with four universities holding over 16% of all endowment assets; Over the past 20 years, the average endowment spending rate was 4.4%; and In 2017 endowments assets earned an average rate of return of 12.2%. While the CRS report makes no specific recommendations on which policies Congress should enact, it does discuss a number of policy changes that could be accomplished by additional endowment legislation. Depending on legislative and policy objectives, the CRS submits that: The new 1.4% excise tax on net investment income could be reduced or eliminated in exchange for policy objectives like increased spending on financial aid to low- or middle-income students, or increased use of minority- and women-owned asset management firms. Endowments could be a revenue generator for the federal government, something long discussed but rarely reduced to writing by a government agency. Charitable donations not immediately used for charitable purposes may not be fully deductible to individuals on a dollar-for-dollar basis (e.g. only a percentage of a restricted gift to a college or university endowment would deductible on an individual's personal income tax return). Endowments could be required to make a minimum annual payout. Private non-operating foundations are currently required to distribute a minimum of 5% of their assets annually and many in Congress view endowments and private foundations as functional equivalents. Current laws incentivize the use of offshore debt-financed investments and hedge funds. The CRS suggests Congress could disallow blocker corporations or create "look through" rules in an effort to bring parity between domestic and offshore investments. Increased data reporting, either via a new filing requirement or via the current Form 990 could be utilized to bring greater transparency to college and university endowments. Fair or unfair, the numbers and ideas floated by the CRS are bound to draw attention. With higher education costs rising and some legislators accusing colleges and universities of "sitting" on what has now been quantified as over a half a trillion dollars' worth of assets, calls for endowment reform are only likely to increase. Additionally, endowment reformers are likely to point to the 4.4% expenditure rate as evidence that colleges and universities are not doing enough with their money. Finally, while most policy change suggestions from the CRS are not particularly new, with both Representative Reed and former Representative David Camp mentioned in the report, the CRS brings many of these ideas back to the forefront of legislator's minds. The fight over endowments is far from over, but colleges and universities would be well served to get out in front of this report and ensure their legislators understand the impact of endowment reform. ### 12 Simple Words This fall, I will be entering my fifth year at Penn State to finish my bachelor’s and master’s degrees in accounting and, in a few short weeks, I will complete my second summer internship at Schneider Downs. It’s now been almost two years since I began the interview process.Like most students before a career fair, I “Google-searched” all the accounting firms I planned to speak with in advance. At the Penn State career fair, I spent a few hours learning what each firm had to offer, the industries they worked with and their values/mission statements. Most had a long set of core values and a mission statement that ran a couple sentences long, but I’ll never forget coming across Schneider Downs’ mission statement. It’s 12 words long: “Working together every day to make our firm, clients and communities better.” It’s simple, memorable and, in my opinion, says it all.After two internships, I’ve now seen firsthand how Schneider Downs strives to fulfill its mission. Thanks to the firm, I’ve been given a number of opportunities to contribute and add value to the audits to which I’ve been assigned. I am consistently challenged, but always have support when I need it. Many students I go to school with have internships that are just “check-boxes” for their resumes, but my internships at Schneider Downs have definitely helped prepare me for my career after graduation.The teams I worked with here were professional and determined to do the best job for the client. Everyone works hard with a willingness to do whatever it takes to get the job done right, but they’re also friendly and welcoming.As a bonus, I was also able to participate in some community service projects as part of my internships. This year, the interns helped with the Arthritis Walk. I wasn’t too excited when my alarm went off at 5:30 a.m. that Saturday, but I was really glad we were able to help, and love that Schneider Downs is so active in the community.So, that’s it. Schneider Downs’ mission statement was one of the first things that stood out to me about the firm. Now, after (almost) two internships, I’m happy to report that statement is not just words on the website, but “working together every day to make our firm, clients and communities better” is really how Schneider Downs lives and breathes. ### Lifestages: The Final Frontier You have a lovely retirement mapped.  But after the travel, second careers and volunteerism, when you are feeling your age, what then? What does that phase of your life look like? The final years are a challenging phase for planning.  Our Greatest Generation are in this stage.  This generation came through the Great Depression, World War II and the boom in the 1950s.  Their possessions have been hard earned and their assets represent a lifetime of accomplishment. They want to stay in their homes. Reality is dramatically different.  Our loved ones may not mention that the stress of maintaining that house is starting to take a toll on their health.  They hide their mistakes, afraid people will say they have dementia.  As judgment becomes more clouded, they may fall prey to scams. But the thought of moving is overwhelming.  Sorting and disposing of memories can seem insurmountable. Often a fall or sudden illness will start a downhill spiral that leads to a need for skilled nursing.  At this point the elder person and caregivers are in panic mode.  Beds in good nursing facilities can be scarce.  Medicare has an online guide with a star rating that can help you choose, keep in mind the perfect choice may have a waiting list. When it comes to your own planning, consider this your call to action: Grant a Power of Attorney.  A loved one, friend or even trusted advisor who is empowered to act for you.  Try not to choose your spouse or sibling, as they may reach this stage before you do. Consider their stress in dealing with your legal and financial matters. Talk with your legal advisor for guidance. Evaluate your assets.  Are you able to pay out of pocket or do you need long term care insurance?  Eldercare costs are inflating between 4% and 5% per year.  A personal care home today can cost $4,000 per month, skilled nursing $8,000.  Work with your financial advisor to run some projections. Consider a Continuing Care Retirement Community (CCRC).  Visit a few of these communities.  They offer independent living that transitions to personal care, memory care and finally skilled nursing if needed.  A CCRC offers activities, transportation and a sense of community.  There is typically a buy-in, which may be refundable.  Some communities maintain your admission even if you outlive your assets. Would you prefer to stay in your home as you age? Realize that you may have to pay full-time staff. Hire only from insured, bonded agencies that specialize in elder care.  Considering that most of your hours may be spent with the staff, be sure you like and trust them. These are tough decisions. Face them head-on and you will feel better for it.  As a gentlemen friend of ours put it when he moved into a CCRC.  “It’s the best gift I could give my kids.” Additional Resources: Medicare Nursing Home Ratings Guide: https://www.medicare.gov/nursinghomecompare/search.html Just the facts ma’am.  Sobering look at the landscape of long term care: http://www.morningstar.com/articles/823957/75-mustknow-statistics-about-longterm-care.html     ### Consider Stock Transactions When Performing Business Valuations Business valuations performed for gift or estate tax purposes utilize the fair market value (“FMV”) standard of value.  That is, the value of the business that “would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or to sell and each having reasonable knowledge of all relevant facts” must be determined.  A pending or recent transaction of the stock of a business would normally provide a relevant indication of the FMV relative to an estate/gift tax valuation of the business. However, it is important to be careful when considering these transactions in a fair market value analysis.  For example, the transaction could be between related parties at a steep discount or premium (for numerous reasons), the transaction may exclude subsidiaries that are subject to the valuation (or include subsidiaries that are not subject to the valuation), or it could be unlikely that a pending transaction will eventually close.  It is important to discuss the terms of any potential or recent transactions with the company’s owners.  Letters of intent, purchase agreements and/or buy-sell agreements for the company should be reviewed.  If multiple similar purchase offers were received, it is more likely that the purchase price could indicate FMV.  On the other hand, if only one buyer/offer was entertained without any additional interest from the market, it is possible that FMV could vary from the transaction price. It is always important to inquire with management about any pending or recent transactions in the company’s ownership when performing a valuation.  Depending on various factors, these transactions can often provide a very important data point in determining the FMV of a company for gift and estate tax valuations.Schneider Downs has extensive experience performing business valuation engagements for a wide range of purposes.  For more information about Schneider Downs’ business valuation and other business advisory services, please contact Joel Rosenthal at 412.697.5387 or jrosenthal@sdcpa.com or Steve Thimons at 412.697.5281 or sthimons@sdcpa.com. ### Landmark Regulatory Reform Bill Alleviating Burden on Banks Signed into Law On May 24th, President Trump signed into law S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act. The law intends to right size the provisions placed on financial services organizations as part of Dodd-Frank Act by reducing administrative and compliance-related costs. Three key areas addressed in the Act are mortgage lending rules, regulatory relief to financial institutions and consumer protections related to credit reporting. The Act aims to foster economic growth and eliminate many of the administrative hardships placed on institutions, which is expected to enable them to offer more loans to qualified customers and be positioned to best serve their communities.Key features from the Act include: Providing Qualified Mortgage Designation for most mortgages held by banks with less than $10 Billion in Assets: The Act expands the designation of “qualified mortgages” for insured depository institutions and insured credit unions with less than $10 billion in assets, and amends the Truth in Lending Act (TILA) requirements for these institutions to waive the ability-to-repay requirements. This gives a greater number of borrowers access to qualified mortgages (based on the rules defined by the Consumer Financial Protection Bureau), which lowers their borrowing costs compared to a nonqualified loan. This is important for borrowers with sufficient assets and other sources of funds that may not have consistent year-to-year income to meet the qualified mortgage requirements, thus forcing them to acquire a higher-cost qualified mortgage. A loan that satisfies the revised qualified mortgage requirements would also comply with the ability-to-repay requirements of the Truth in Lending Act (TILA). To qualify, the loan cannot have an interest-only or negative amortization feature and must comply with prepayment penalty limitations under the TILA ability-to-repay requirements. Raising the Threshold for Systematically Important Financial Institutions: The Act raises the threshold for designating an institution as “systemically important” from $50 billion in total assets to $250 billion in total assets, thereby reducing the number of institutions subject to the enhanced standards for capital planning, liquidity and regulatory reporting requirements. The Act also decreases, from three to two, the number of scenarios that must be included in the Federal Reserve-conducted and company-conducted stress tests. Ending Mandated Stress Tests for Financial Institutions Under $100 billion in Assets: The Act ends stress testing requirements for all financial institutions under $100 billion in assets (previously $50 billion), internal stress tests for financial institutions under $250 billion in assets, and allows federal regulators to design tailored supervisory stress tests for financial institutions between $100 billion and $250 billion rather than a one-size fits all approach. These changes will result in significant compliance cost reductions for many large financial institutions; Simplifying Capital Requirements for Qualifying Community Banks: The Act simplifies the treatment of assets subject to Basel III capital framework requirements. Financial institutions that meet the definition of a Qualified Community Bank, which is any insured depository institution or depository institution holding company with total consolidated assets of less than $10 billion, would be exempt from existing risk-based capital ratio and leverage ratio requirements. Instead, these banks would be required to establish a Community Bank Leverage Ratio (the tangible equity capital as a percentage of the average total consolidated assets) of not less than 8% and not more than 10%. A Qualifying Community Bank that meets the new Community Bank Leverage Ratio would also be considered to have met generally applicable leverage capital requirements, thereby exempting it from having to comply with the complexities of the Basel III capital framework requirements; Appraisal Exemptions for Loans in Rural Areas: The Act provides relief from appraisal requirements for mortgages of properties in rural areas under $400,000 in estimated value where appraisers are scarce, allowing for a timely and cost-effective loan approval process. The loan must remain in the mortgage originator’s loan portfolio. In addition, not later than three days after the Closing Disclosure is given to the consumer, the mortgage originator or its agent must have contacted at least three state-certified appraisers and documented that no such appraiser was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments. Instituting Longer Examination Cycles: The Act raises the threshold for small institutions eligible for 18-month examinations from $1 billion to $3 billion of total consolidated assets, thereby providing smaller institutions more time and resources to support economic growth within their communities rather than constant focus on supporting regulator review requests. Previously, these institutions were on a 12-month onsite examination cycle. HMDA Reporting Exemptions: The Act exempts financial institutions from the expanded set of Home Mortgage Disclosure Act (HMDA) data reporting requirements for those institutions that originated 500 or fewer mortgages or Home Equity Lines of Credit combined in the preceding two calendar years and have not received a rating of “needs to improve record of meeting community credit needs” in each of its two most recent Community Reinvestment Act (CRA) examinations nor “substantial noncompliance in meeting community credit needs” on its most recent CRA examination. This exemption should greatly reduce the time and effort required by qualifying institutions to capture and report HMDA data. Community Bank Relief on Volcker Rule Requirements: The Act amends the Bank Holding Company Act of 1956 to exempt banks with assets valued at less than $10 billion from the “Volcker Rule,” which prohibits banking agencies from engaging in proprietary trading or entering into certain relationships with hedge funds and private equity funds. These banks are also exempted from specified federal banking agencies’ capital and leverage ratio requirements. A bank will be exempt as long as the trading assets and trading liabilities of the bank and any company that controls the bank are less than 5% of total consolidated assets. Charters for Federal Thrifts: The Act provides charter flexibility for federal thrifts with less than $20 billion in assets to operate with the same powers and duties as national banks without being required to convert charters, thereby allowing them to offer commercial loans to qualified customers that they otherwise would be restricted from making based on existing rules restrictions. Credit Reporting Freeze Alerts: The Act amends the Fair Credit Reporting Act (FCRA) to require credit reporting agencies (e.g., Equifax, Experian and TransUnion) to increase consumer protections and improve the accuracy of credit reporting. Credit reporting agencies will be required to provide fraud alerts for consumer files for at least one year, provide consumers with one free credit-freeze alert and one free unfreeze alert per year, and permit a consumer to place or remove a freeze on the consumer’s credit report at no cost. This law, in summary, is intended to redefine systemically important financial institutions, reduce compliance requirements and associated costs on financial institutions and enable them to better serve their customers and communities without impairment to safety and soundness.Schneider Downs Risk Advisory Services team provides thought leadership and risk mitigating strategies to Financial Services organizations through regulatory compliance, governance, risk and control solutions. To learn more about how we can help your organization, please contact Steven Bank at sbank@schneiderdowns.com (614) 586-7256 or Donald Owens dowens@schneiderdowns.com (614) 586-7257. ### How Accounting Found Me From an early age in life – around age five or six – kids start being asked what they want to do when they grow up.  It’s an innocent question that slowly gains more and more weight to it, the older you get. A young child can dream of the most incredible career choices without a single regard for what it might take to reach that dream. As reality sets in, this simple question becomes increasingly harder to answer. It is not too often that you hear a young child say they would like to be an accountant when they grow up, and to this day, I am still asked about how I choose the path I did.Being a first-generation college student in my family, I surprised everyone in my family when I choose accounting to be my major.  Each person’s surprise was then followed by: “Are you sure this is what you want to do for the rest of your life,” and the ever-so-daunting question of “Why?”  I can honestly say I ended up in the accounting world by chance.I attended a high school that has a graduating class of around 800 to 900 kids. Due to so many kids and the huge emphasis placed on sports at North Allegheny High School, your sport ends up being your claim to fame. Your sports allows you to connect and compete with kids in the multiple different elementary and middle schools within NA, before you all get thrown together for high school.  Since you transition schools three different times during your time at NA, the friendships you gain from your sport give you a place to belong. Slowly and surely, your sport consumes you. While I never regretted the fact that my life revolved solely around basketball, it left little time to contemplate what my future would be.Regarding college, I never really thought about where I would attend; I was just hoping to get lucky enough to get an offer from anywhere to continue my basketball career. I cared little about where that would be, as long as I could keep that constant in my life. As things turned out, my basketball career ended in 10th grade due to an injury to my hip. After this, I walked blindly around school wondering what my next move was. Losing something that consumes your life for as long as you can remember is a huge adjustment. Junior year of high school was approaching, and it was time to pick our elective classes. Well, I had one class left to pick, and no idea what to take. A random choice was made then that lead me onto my new life path.When I randomly selected accounting as a class in high school, I never would have guessed that I would actually kind of enjoy it. Accounting came somewhat naturally to me and I ended up doing pretty well in the class. One thing led to another, Washington & Jefferson College emailed me with a free application to apply, and that was that. I toured the school and accepted without even knowing that their accounting program was set up to allow me to graduate in four years with enough credits to sit for the CPA exam!One random choice and one lucky break later and W&J become my home, where I am fortunate enough to study accounting. Thanks to the incredible work our career services department at W&J does, they were able to help me get the opportunity to apply for an internship at Schneider Downs. I will never be able to thank them enough for leading me to a wonderful firm that has provided me with a great opportunity to further my education in accounting. ### CFPB Auto Dealer Regulation Overturned On May 21, 2018, President Donald Trump signed a resolution of disapproval effectively reining in the ability of the Consumer Finance Protection Bureau (CFPB) to punish auto dealers for what the CFPB perceived as discriminatory lending practices.  The resolution of disapproval, written by Senators Pat Toomey, R-Pennsylvania, and Jerry Moran, R-Kansas, used the Congressional Review Act to reverse guidance set by the CFPB in 2013.  The guidance was seen by detractors, including the National Auto Dealers Association (NADA), as an attempt to eliminate auto dealers’ ability to discount financing for consumers.NADA had vehemently opposed the guidance from the outset.  It argued that, among other things, (1) the research suggesting that auto dealers’ lending practices are discriminatory was flawed, and (2) the ability of dealers to offer discounted financing actually benefits consumers.  First, NADA pointed out that there is no way to determine if dealers’ lending practices are discriminatory, because auto dealers are prohibited by law from asking applicants questions about race or ethnicity.  In its review of loan applications, the CFPB was forced to guess about applicants’ race or ethnicity based on addresses and surnames.Another point that NADA made was that the CFPB was seeking to eliminate the dealer mark-up that dealers earn when providing consumer financing.  Dealers are typically able to negotiate a finance charge with lending institutions, and then charge a stepped-up interest rate when providing financing to their customers.  The difference represents profit to the dealerships.  The CFPB’s solution is to require dealers to charge a flat fee.  NADA argued that the CFPB solution would eliminate dealers’ incentive to use the institution that charged the most competitive rate, which would serve to drive up rates paid by consumers.While this is good news for the auto industry, consumer advocates worry that this change will lead to unfair lending practices among dealers.  Consumer advocates point to several studies, including one conducted by the CFPB, which found that minority customers often paid higher interest rates on their auto loans.  As an example, advocates point to a joint study between the CFPB and the U.S. Department of Justice, in which Ally Financial was ordered to repay $80 million to borrowers.Please contact Robert E. Bandi rbandi@schneiderdowns.com of our office if you would like to discuss further. ### Time to Revisit that Roth Conversion? Thanks to the recently enacted Tax Cuts and Jobs Act, now could be the best time to convert your traditional IRA into a Roth IRA.Roths have been in the public eye since 1997 when Congress passed the Taxpayers Relief Act. Due to income limitations and high tax brackets, however, many individuals have been unable to take advantage of the Roth, either through annual contributions or conversion of a traditional IRA.What makes the Roth so special? Both types of IRAs allow assets to grow on a tax deferred basis, but there are three key differences. The first has to do with the deductibility of the annual contribution. Some individuals can fund a traditional IRA with pretax dollars – that is, a tax deduction is received when the contribution is made – but Roth IRAs are funded with after-tax dollars, so the annual contribution is not deductible.The second difference, and the great appeal of the Roth IRA, is how the assets are taxed in the future. Contributions to an IRA will grow tax-free until you start to withdraw from it, then you will pay ordinary income taxes on each withdrawal. With a Roth IRA, you never have to pay taxes on it again, meaning the growth is completely tax-free upon distribution (though at that point you must have had the account opened for at least five years and be over the age of 59½).The third, and what we believe to be the most important difference to retired individuals over age 70, is that required minimum distributions (RMDs) do not apply to the Roth IRA. As a reminder, when one reaches age 70½, the IRS requires annual distributions based on the age and account balance of the traditional IRA owner. High-income earners tend to retire with large IRA balances, and they often do not need to withdraw. Being able to avoid taking RMDs is a huge financial benefit, one that should greatly increase the value of your assets over time, if not for you, then for your heirs.Here are a few scenarios in which a Roth conversion may be the best choice for you. If your effective tax rate this year will be less than what it was last year under the 2017 tax brackets, you might want to capitalize on the decrease in rates before they revert back to 2017 levels in 2026 (the new tax law sunsets at the end of 2025). Your tax bracket may be higher during your retirement years. In practice, we have seen this happen when clients turn 70½ and have to start taking required minimum distributions. You are just starting your career and have many more working years to go. Because you haven’t hit your highest income earning years, you should take advantage of the lower tax rates you are subject to. Each year your income rises, your taxes will as well. Some people are fortunate enough to not need their IRA funds in retirement, and they want to leave that money to their heirs. Converting your traditional IRA to a Roth IRA will allow you to avoid taking RMDs when you turn 70½, which over time can maximize the benefit for your heirs. Along with the new tax changes come opportunities – ones that may benefit you. Converting to a Roth IRA could be a great strategy, but understanding if and when you should move your traditional IRA to a Roth can be difficult. Please consult with your Schneider Downs Wealth Management Advisor to see if this form of financial planning will work for you.  ### Pennsylvania Provides Clarification on Application of Nextel Decision The Pennsylvania Department of Revenue recently released Corporation Tax Bulletin 2018-02 to clarify its position on the application of the decision issued on October 18, 2017 in the case of Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth of Pennsylvania. Prior to Nextel, Pennsylvania corporate taxpayers were able to use the greater of a flat dollar cap or a percentage cap when calculating the amount of net operating loss (NOL) carried forward from prior tax years that could offset current year income. In summary, the Nextel decision found that the flat dollar cap on the NOL violated the Uniformity Clause of the Pennsylvania Constitution and the percentage cap was left in place. In response, the Department issued Corporation Tax Bulletin 2017-01 which explained that the flat dollar cap would not be available for taxable years beginning in 2017 and thereafter. The Bulletin was silent, however, as to potential retroactive application of the decision to tax years that remained open for reassessment. Corporation Tax Bulletin 2018-02 addressed this issue and clarified that the Department would not apply the Nextel decision to taxable years beginning prior to January 1, 2017. If you have any questions as to how the Nextel decision may impact your company's Pennsylvania corporate net income tax liability, please contact a member of our SALT team. ### Is your home router hacked? At Schneider Downs, we understand that cybersecurity threats to our clients will sometimes extend to devices and systems outside their IT purview. As the acceptance and utilization of remote employees increases, so does the risk associated with remote offices. This article outlines the dangers posed by the presence of VPNFilter, the most recent and widespread threat to these environments and our recommendations on how to defend against it. What is VPNFilter? VPNFilter is an advanced, persistent, modular malware system that has infected over 500,000 networking devices in more than 50 countries around the world. Cisco’s TALOS Intelligence Group had been researching the malware for months with the assistance of public- and private-sector threat intelligence partners and law enforcement, but after observing a dramatic spike of infection rates, they decided to publish their unfinished work so that affected parties and the cybersecurity community can better defend themselves. What Devices Are Being Targeted? Unpatched personal networking devices like small office/home office (SOHO) routers are rarely updated and, hence, often susceptible to well-known, public vulnerabilities. If we think of these devices as one large network of internet-facing systems with minimal security, it’s easy to see how an advanced malware like VPNFilter can leverage pre-existing vulnerabilities and propagation capabilities to gain a large footprint. So far, the following devices are known to be affected, but other personal networking devices are likely affected as well: LINKSYS DEVICES: MIKROTIK ROUTEROS VERSIONS FOR CLOUD CORE ROUTERS: NETGEAR DEVICES: QNAP DEVICES: E1200 1016 DGN2200 TS251 E2500 1036 R6400/R7000/R8000 TS439 Pro WRVS4400N 1072 WNR1000 - - - WNR2000 -   What Is The Impact? Data Collection – Networking devices provide a natural capability to collect data. Components of the VPNFilter malware allow for theft of website credentials and general monitoring of network traffic. Cyber Obfuscation – Threat actors can leverage infected devices to cover their digital footprint and true point of origin. Devices infected with VPNFilter could easily be used as hop points before connecting to the intended victim device. Botnet – Large-scale threat actors can leverage infected devices to remotely serve multiple operational needs, including distributed denial of service (DDoS) attacks. Devices infected with VPNFilter have been observed conducting TCP scans on ports 23, 80, 2000 and 8080, which were likely to identify additional devices to infect. These scans targeted devices in over 100 countries. Self-Destruction – VPNFilter has a destructive capability that can render an infected device unusable. This can be triggered on individual victim machines or multiple infected machines at once, which has the potential of cutting off internet access for hundreds of thousands of victims worldwide. Our Recommendations: Owners of personal networking devices should reset them to factory defaults to remove the persistence module of the malware, then reboot the device to flush out any non-persistent modules and lastly, ensure your device is up to date with the latest patch versions, as VPNFilter initially exploits devices by utilizing well-known vulnerabilities that have available patches. Due to the relatively low cost of personal networking devices and the direct relationship between the age of a device and its known vulnerabilities, it’s likely that upgrading to a newer networking device with additional security features could be the best course of action. This could also be the preferred solution for users unable to reset their devices to factory defaults. Organizations utilizing remote employees should ensure that all confidential resources can only be accessed through a secured virtual private network (VPN). Schneider Downs also highly recommends that two-factor authentication be enforced on all VPNs. In our experience providing penetration testing services, we frequently identify single-factor authentication and are able to bypass it through Password Spraying, Phishing and other techniques. References: Cisco’s TALOS Intelligence Group: https://blog.talosintelligence.com/2018/05/VPNFilter.html ### IRS Announces 2017 Marginal Well Credit for Marginally Producing Natural Gas Properties Natural gas well owners holding an operating interest in a qualified marginal well during 2017 are eligible to claim a $0.51 credit per qualified MCF, since the IRS finalized and released the reference price used to compute the credit for the 2017 tax year in the issuance of Bulletin No. 2018-22, dated May 29, 2018.This is a significant opportunity for gas producers that own interests in qualified stripper wells, because the credit could provide as much as $3,350.70 in tax savings per qualified well (there is no limit on the amount of qualified wells a taxpayer can use to determine their credit).As previously indicated in prior posts, the marginal well credit is a production based tax credit for marginal domestic wells that have marginal production under percentage depletion rules, which is 15 barrels of oil equivalent per day (i.e., 90 mcf or less per day).The marginal well credit is part of the general business credit and cannot offset tax liabilities generated from the alternative minimum tax, and any unused credit can be carried back five years and carried forward 20 years. ### New Revenue Procedure for Contributors Making Donation to Tax-Exempt Organizations New Revenue Procedure 2018-32 modifies, consolidates and supersedes Rev. Proc. 81-6, Rev Proc. 81-7, Rev. Proc. 89-23 and Rev. Proc. 2011-33 in providing more accessible guidance to grantors and contributors who make donations to tax-exempt organizations. Originally, these four Revenue Procedures offered the following guidance: Rev. Proc. 81-6 provided a safe harbor to grantors and contributors to determine if they could rely on an organization’s classification as a public charity, and would be considered not to have knowledge of, be responsible for, or be aware of an organization’s change in public charity status or revocation of a determination letter or a ruling classifying an organization as a public charity. Rev. Proc. 81-7 provided guidance for classifying a contribution as an “unusual grant.” In these instances, a recipient organization would not include the unusual grant into the calculation of its public support test; therefore, its public charity status would not be affected. A grantor or contributor who makes an unusual grant would not be responsible for an act that results in a revocation of public charity status and is entitled to rely on the organization’s classification as a publicly supported organization. Rev. Proc. 89-23 provided an additional safe harbor to private foundation contributors to determine if they were entitled to rely on the classification of an organization as a public charity, and would be considered not to have knowledge of, be responsible for, or be aware of an organization’s change in public charity status or revocation of a determination letter or a ruling classifying an organization as a public charity. Private foundations rely on an organization’s status to avoid a liability for excise tax. Rev. Proc. 2011-33 set forth procedures for grantors and contributors to rely on the listing of organizations in Publication 78, Cumulative List of Organizations described in §170(c) for purposes of deducting contributions under §170(c) and making grants under §§4942,4945, and 4966. The IRS maintains and updates two publicly available compilations of information on organizations eligible to receive tax-deductible contributions under §170. The first lists organizations that are eligible to receive tax-deductible charitable contributions, while the second is an extract of certain information concerning tax-exempt organizations from the IRS electronic Business Master File (EO BMF).Historically, the IRS has maintained an electronic database (Publication 78) of eligible organizations as a part of Exempt Organizations Select Check (“Select Check”) on their website. Select Check had two more databases included; one was a list of organizations whose tax exempt status was revoked, while the other provided a list of organizations that have filed Form 990-N.Recently, the IRS renamed Select Check to Tax Exempt Organization Search (“TEOS”) and added two more databases. The first additional database has images of the Form 990 series annual returns filed by tax-exempt organizations on or after January 1, 2018. The second includes favorable determination letters issued on or after January 1, 2014. The new tool allows users to search within all five databases.If an organization listed in TEOS or EO BMF ceases to qualify as an organization to which contributions are deductible under §170(c) and its determination letter is revoked, grantors and contributors may generally rely on the information provided by TEOS and EO BMF until the date of a public announcement stating that the organization ceases to qualify as an organization to which contributions are deductible under §170(c).To simplify compliance for grantors and contributors, this revenue procedure combines the safe harbors of Rev. Proc. 81-6, Rev. Proc. 81-7 and Rev. Proc. 81-23, and the reliance revenue procedure of Rev. Proc. 2011-33, replacing them with one revenue procedure on deductibility and reliance issues for grantors and contributors. The revenue procedure updates the language of safe harbor and unusual grants guidance to reflect the updated searchable database modified by the IRS.This revenue procedure is effective May 16, 2018 ### Climbing AFRs Put Dormant Estate Planning Techniques Back on the Table When considering federal estate tax planning, one of the most common objectives of the planner is removing assets from the taxpayer’s taxable estate.  Many of these techniques are predicated upon a taxpayer’s assets appreciating at a rate that exceeds the Applicable Federal Rates (AFRs). Generally, lower AFRs make many estate planning techniques more appealing.The AFRs, which are published every month by the Internal Revenue Service (IRS) via a Revenue Ruling, provide a benchmark for the minimum amount of interest that must be charged on any covered transaction (i.e., most intra-family asset sales and loan transactions).  Generally, a failure to charge a rate of interest at least equal to the AFR at the time of the transaction will jeopardize the integrity of the transaction.AFRs also play a critical role in determining which estate planning techniques to choose.  For example, in 2007, the AFRs for all three term loan classifications (short-term, mid-term, and long-term) were hovering around 5%.  Over the next six to seven years, AFRs plummeted to historic lows, with short- and mid-term rates falling under 1% and long-term rates falling under 2%.  During this period, strategies that thrive on low AFRs such as Grantor Retain Annuity Trusts (GRATs), Charitable Lead Annuity Trusts (CLATs), and Intentionally Defective Grantor Trusts (IDGTs) were favored because they allowed the taxpayer to move significant assets out of his or her estate while only taking back into his or her estate an annuity/note payment calculated using these historically low AFRs.However, since 2016 Q4, AFRs have been trending upward precipitously.  As of May 2018, long-term rates were at their three-year high, mid-term rates were at their seven-year high, and short-term rates were at their ten-year high.  Rising AFRs now mean that certain estate planning strategies that are more suitable for this environment are once again being considered and discussed. Mostly notably, consideration is now being given to implementing Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Grantor Retained Income Trusts (GRITs).  If you have not taken a look at your estate plan in a number of years, now may be the time to sit down and talk with a professional about how rising AFRs, not to mention new opportunities available pursuant to tax reform passed in December, 2017, can work in your advantage. ### U.S. Retail Sales on the Rise U.S. retail sales were on the rise at the beginning of the second quarter. Commerce Department figures showed that there was a 0.8% increase in the value of sales in March and a 0.3% increase in April, which matched the median forecast. February retail sales data was previously estimated as a 0.1% decrease but was adjusted to unchanged. Retail sales, when excluding automobile and gasoline sales, rose 0.4% in March and 0.3% in April. Automobile sales only increased by 0.1% in April after having a 2.1% rise in March. Gasoline prices are at an all-time high since late 2014, which has led to a 0.8% increase in earnings. Additionally, retail-control group sales increased by 0.4%. These sales are used to calculate gross domestic product and exclude auto dealers, food services, building materials stores, and fueling stations. While nine of thirteen major retail categories showed advancement in April, increased earnings were especially apparent in furniture merchants, building material outlets, Internet retailers, and department stores. Apparel stores showed the largest increase in sales since March of 2017. Furniture stores and clothing stores had increases in sales of 0.8% and 1.4% respectively, while department store sales increased by 0.2% and sales at general merchandise outlets rose 0.3%. Because of the second quarter sales results, consumer spending, the largest part of the economy, is expected to increase after having a weak first quarter. The overall growth in sales can be partially attributed to larger after-tax paychecks, which arose from President Donald Trump's tax cuts that were signed into law at the end of 2017. These tax cuts allow for more spending, which help to stimulate growth in the economy. The strong job market and larger paychecks have helped to alleviate the affects from rising fuel costs. James Knightley, chief international economist at ING Bank, commented that “Households are in good spirits and are spending in the new season. Employment is rising, wages are growing and tax cuts means there is more cash in people’s pockets.” ### The Rise of Business Email Compromise Scams The Rise of Business Email Compromise Scams Business Email Compromise – or BEC – is an increasingly common scam targeting U.S. and European companies that is often carried out by criminal organizations. In most cases, attackers from these organizations target employees who have access to company finances or W-2 information with the intention of tricking them into transferring money or sending data records. The deceptive techniques used to target and exploit victims vary from spear phishing and social engineering to email spoofing and computer intrusion techniques (malware). Statistics The FBI 2017 Internet Crime report highlights growing trends in cybercrime that were seen last year. BEC – or “CEO Fraud” – led the pack in 2018, topping $676 million in victim losses. Since 2015, there’s been a staggering 1,300% growth in losses as a result in the spike in these frauds, now totaling over $3.0 billion in the past three years alone. BEC is a serious threat on a global scale that’s expected to continue to rise with the increased reliance on business email. Anatomy of the Scam A BEC scam can take on various forms. One common scheme, called CEO impersonation, attempts to persuade a target into wiring money for apparent business purposes. This scheme usually begins with the attacker compromising the CEO of the target company’s email account through a phishing or malware attack. After spending some time monitoring email communications to carefully understand the company’s vendor relationships as well as the CEO’s interests, email communication style and travel plans, the target is then chosen. Employees from Finance or Accounts Payable – or even the Controller – are often primary scam targets. At the appropriate time, the attacker sends a phony email to the selected target from either the CEO’s inbox or a lookalike domain name (which is usually one or two letters off from the company’s true domain name). The email typically requests an immediate wire transfer to the attacker’s account, whose account number has been modified and disguised as that of a trusted vendor. Unless the scheme is detected in a timely manner, any transferred money is often difficult to recover. Don’t Fall Victim Schneider Downs recommends any number of the following procedures to help your organization develop its own effective defensive strategy against BEC and other email cyberattacks: Establish and enforce proper procedures and policies. Trust But Verify Scrutinize emails containing requests for wire transfers and W-2 information. Create email rules to flag emails where "reply" and "from" email addresses do not match. Promote user awareness regularly beginning at employee onboarding. Incorporate checks and balances as compensating controls Call previously known phone numbers to confirm transfer requests. Be a change agent (see something, say something!). Conduct simulated email cyberattacks among company employees. ### IRS Intends to Issue Proposed Regulations Regarding the Limit for the Deduction of Business Interest On April 2, 2018, the Internal Revenue Service ("IRS') issued Notice 2018-28 announcing its intent to issue proposed regulations addressing the amendments to Section 163(j) regarding the deductibility of business interest expense.  For purposes of Section 163(j), business interest expense is interest that is paid or accrued on indebtedness that is properly allocable to a trade or business (including rental activities).Originally, Section 163(j) placed limits on the deductibility on certain disqualified interest paid or accrued by a corporation in a taxable year if the payer's debt-to-equity ratio exceeded 1.5  to 1.0 and the payer’s net interest expense exceeded 50% of its adjusted taxable income.  The so-called “interest stripping” rules generally applied to corporations paying interest to related parties exempt from U.S. taxation.The Tax Cuts and Jobs Act amended Section 163(j) to replace the old rules with a new and different set of limitations on the deduction of business interest for tax years after December 31, 2017.  The limitation now applies to all taxpayers, except for certain small businesses and farm businesses. Specifically, Section 163(j)(1) limits the amount of business interest expense that may be deducted in a tax year to the sum of (1) the taxpayer's business interest income, (2) 30% of the taxpayer's adjusted taxable income, and (3) the taxpayer's floor plan financing interest (indebtedness used to finance inventory acquisition of motor vehicles held for sale or lease). The notice indicates that the IRS intends to issue proposed regulations in five specified areas and also provides that until those regulations are released, the notice serves as interim guidance that taxpayers can rely upon.  The five areas include: Treatment of interest disallowed and carried over under prior Section 163(j)(1)(A) Defines corporate business interest expense and business interest income to be all interest expense and income (no classification as investment interest expense allowed for example) Application to Consolidated Groups Impact on Earnings and Profits Calculations of “C” Corporations Business Interest Incomeand Floor Plan Interest of Partnerships and “S” Corporations Of particular interest to many taxpayers is the impact the rules have on partnerships, “S” corporations, and their owners.  The new rules require that the annual limitation on the deduction for business interest expense be applied at the partnership level and that any deduction for business interest be taken into account in determining the non-separately stated taxable income or loss of the partnership.  In certain circumstances, the limitation may also be applied at the individual partner's level.  The notice indicates that the proposed regulations will provide that, for purposes of calculating a partner’s annual deduction for business interest, a partner, with exceptions, generally will not include the partner’s share of the partnership’s business interest income for the taxable year.  Additionally, it’s intended that the proposed regulations will provide that a partner cannot include his or her share of the partnership’s floor plan financing interest in determining the partner’s annual business interest expense deduction limitation.  The intent of the regulations is to prevent the double counting of business interest income and floor plan financing interest.  The IRS intends to create similar rules for “S” corporations and their shareholders.What goes unstated in the notice is that there are still a number of other issues and questions surrounding the deductibility of interest.  For example, the notice is silent as to how interest of a partnership with a corporate partner will be treated, how interest of a partnership in the business of trading securities or other investment assets will be treated, and how the interaction of the interest rules with the application of global intangible low-taxed income provisions might apply. However, if and when that guidance is ultimately provided or not, the Schneider Downs’ tax professionals will be there to guide you. ### IRS-Issued Guidance on Blended Corporate Tax Rates With the new tax law in effect on January 1, 2018, and many corporations having fiscal year-ends that differ from a calendar (December 31) year-end, the Internal Revenue Service (IRS) recently issued guidance on how to calculate income taxes under the different tax rate schedules for corporate taxpayers with a tax year that includes both December 31, 2017 and January 1, 2018. Notice 2018-38 provides this guidance when calculating the income tax under both the regular and alternative minimum tax (AMT) systems.The taxation of corporation income is governed by IRC Section 11(a). Prior to the recent tax reform legislation, Section 11(b) provided graduated corporate tax rates, starting at 15% and increasing to 35% (with higher effective rates eliminating the benefit of lower brackets). “C” corporations were also subject to their own AMT regime.With tax reform came permanent changes to corporate income tax rates. The Tax Cuts and Jobs Act (the Act) established a flat corporate tax rate of 21% effective for taxable years beginning after December 31, 2017. The Act also limited the application of AMT to taxpayers other than corporations (thus eliminating corporate AMT).For calendar year-end corporations, the transition was easy, since their 2017 year ended under the previous tax rate schedule and their 2018 year started with the new one. But how should fiscal year-end corporations handle their tax calculations? The IRS Notice provides the answer.The notice explains that the existing Internal Revenue Code provides “that if any rate of tax imposed by Chapter 1 of the Code changes, and if the taxable year includes the effective date of the change (unless that date is the first day of the taxable year), then –(1) tentative taxes shall be computed by applying the rate for the period before the effective date of the change, and the rate for the period on and after such date, to the taxable income for the entire taxable year; and(2) the tax for such taxable year shall be the sum of that proportion of each tentative tax which the number of days in each period bears to the number of days in the entire taxable year.The notice provides a detailed example for a corporation with a June 30 year-end: the corporation would have 184 days taxed under the old tax rates from July 1, 2017 through December 31, 2017; and then 181 days from January 1, 2018 to the corporation’s June 30, 2018 year-end taxed under the new rates.  The example uses a corporation with a 34% effective tax rate under the old rules and the 21% rate under the new rules and determined it would pay a total tax of $275,534 for the fiscal year (for an overall effective rate of 27.6%).  The example indicated that the corporation was not in an AMT position for the period through December 31, 2017.  ### What Did Auto Dealers Give Up for 100% Floorplan Interest Deductibility? There has been a lot of praise for the National Automotive Dealer Association (“NADA”) for lobbying for the 100% deductibility of floorplan interest expense and rightfully so.  There was much panic when we saw that “floor plan interest expense is not deductible” in a version of the tax reform.  The NADA took charge and fought for the dealers nationwide.  However, there has not been much talk regarding the item the dealers might be giving up. We need to first talk about the mechanics of the interest expense deduction limitation.  The business interest expense deduction shall not exceed the sum of business interest income, 30% of the adjusted taxable income, and the floor plan financing interest.  More detail regarding the mechanics of this limitation can be found on our Tax Reform Blog at Business Interest Deduction. Per the above limitation, if the floor plan financing interest was taken into account, the taxpayer will not be eligible for 100% bonus depreciation on capital expenditures for the year.  This statement does not go into any further detail.  Most interpret this as if you deduct one dollar of floorplan interest, the taxpayer cannot utilize bonus depreciation.  We are waiting for the IRS to issue more guidance. The most asked question from dealers is “can we offset the interest expense with the floorplan credits?”  Please know that this is not allowed.  The credits are known as a discount from the manufacturer and not a reimbursement.  The gross floorplan interest expense will be considered for the limitation.  Dealers should consider separating floorplan interest expense, floor plan interest credits and other business interest into three different general ledger accounts.  This will help at year-end to determine the new tax law impact regarding potential business interest deductibility and the eligibility of bonus depreciation. Auto dealers have relied on this accelerated depreciation over the past decade and half which may be potentially coming to an end for some.  Please keep in mind that this depreciation deduction is not lost but just deferred. We need to plan accordingly regarding the effect of this potential limitation on bonus depreciation.  Before we panic, please note that there are other tax advantages that may offset this limitation such as the 20% qualified business deduction, increase in section 179 expense, lower tax rates for individuals and corporations.  Please stay tuned as more information and guidance are provided. Please contact Steve Barber of our office if you have any questions. ### Sonic Thump: The History and Future of Commercial Supersonic Aviation Recent news reports have given attention to NASA’s low-boom flight demonstration (LBFD) project. Per the NASA website, the mission “has two goals: 1) design and build a piloted, large-scale supersonic X-plane with technology that reduces the loudness of a sonic boom to that of a gentle thump; and 2) fly the X-plane over select U.S. communities to gather data on human responses to the low-boom flights and deliver that dataset to U.S. and international regulators. Using this data, new sound-based rules regarding supersonic flight over land can be written and adopted, which would open the doors to new commercial cargo and passenger markets to provide faster-than-sound air travel.” If successful, the project could make possible three-hour flights from New York to Los Angeles, a flight path that currently takes six hours. Presently, all supersonic aircraft suffer from the same annoying problem; they cause loud “sonic booms” as they accelerate past the speed of sound (approximately 343 meters per second). Sonic booms are so loud that they’ve been known to shatter windows on the ground in areas near supersonic flight paths, and are generally considered to be a nuisance. For this reason, supersonic flight over land has been banned in the U.S. since 1973. Over the past 15 years, there’s been a complete absence of supersonic options in the commercial aviation industry. The last (and only) plane to offer such service was the fabled Concorde, operated primarily by British Airways and Air France from 1976 to 2003. In its day, the Concorde was the Rolls Royce of commercial aircraft, with roundtrip ticket prices averaging $12,000. Despite its cramped cabin, wealthy flyers could indulge by drinking champagne and eating French pastries off bone china, all while viewing the curvature of the earth outside their windows on the three-and-a-half hour flight from New York to Paris. Unfortunately, the Concorde was abruptly retired in 2003, owing to high operating costs, low flight demand following the 9/11 terror attacks, and public concern regarding the aircraft’s safety after a lethal crash in 2000 claimed the lives of all 100 passengers and nine flight crew on board. Should NASA be successful in its testing of the LBFD, and if engineers can figure out how to make this technology financially attainable to the general populace, it could mark a return to (and, simultaneously, expansion of) commercial supersonic aviation. Aerospace giant Lockheed Martin has been awarded the nearly $250 million contract to build a prototype, and the two organizations hope to begin testing in 2021. Just hope they plan on serving champagne! ### IRS Releases FAQs on Family Medical Leave Act Credit The IRS recently posted to its website FAQs regarding the new Internal Revenue Code Section 45S, "Employer Credit for Paid Family and Medical Leave" ("FML credit"), added by the Tax Cuts and Jobs Act of 2017. Much of the FAQs act as a recapitulation of information already known about the FML credit (see our initial coverage on this topic here), but also serve to refine the previous understanding and provide a concise overview of the new tax credit. The FML credit is a general business credit available to employers. Effective for wages paid in tax years beginning in 2018 and 2019, the credit is based on wages paid to qualifying employees while they are on family and medical leave. To claim the FML credit, employers must have a written policy in place that includes (1) at least two weeks of paid family and medical leave (annually) to all qualifying employees who work full time (prorated for employees who work part-time); and (2) the paid leave must not be less than 50 percent of the wages normally paid to the employee. The FML credit only applies to qualifying employees, namely, (1) any employee under the Fair Labor Standards Act who has been employed by the employer for at least one year; and, assuming the employer is claiming a FML credit for the 2018 tax year, (2) the employee did not earn more than $72,000 in 2017. For purposes of the FML credit, "family and medical leave" has a special definition, i.e., family and medical leave occurs for the following reasons: Birth of an employee's child and to provide care for the child. Placement of a child with an employee for adoption of foster case. Care for an employee's spouse, child or parent who has a serious health condition. A serious health condition that causes the employee to be unable to perform the functions of his or her position. Any qualifying exigency due to an employee's spouse, child or parent being on covered active duty in the Armed Forces. Care for a service member who is the employee's spouse, child, parent or next of kin. Only employee leave taken under one of these conditions qualifies for family medical leave. Thus, employer-paid vacation leave, personal leave or medical leave for a purpose not meeting one of the above criteria does not qualify as family and medical leave for purposes of the FML credit and employers cannot take the FML credit. The FAQs provides a framework for calculation of the FML credit, which is a percentage of qualifying employee wages paid when such an employee is on family and medical leave, up to 12 weeks per year. The percentage begins at 12.5% and is increased by 0.25% for each percentage exceeding 50% of the employee's wages, up to a maximum of 25%. The FML credit has other tax implications; employers must reduce their salaries and wages expense by the FML credit amount. Also, any wages used in determining another general business credit cannot again be used in calculation of the FML credit. The IRS expects to release additional guidance on the FML credit in the future. Schneider Downs will continue to monitor such guidance and provide timely updates on this matter. If you have any questions about this topic, please reach out to us for more information. ### IRS Clarifies Treatment of Transportation Fringe Benefits for Tax-Exempt Employers The IRS recently released subsequent guidance on an issue we discussed in a previous Our Thoughts On article (see here). In late March, the agency updated Publication 15-B, "Employer's Tax Guide to Fringe Benefits," which clarified its interpretation of changes made to the taxation of certain fringe benefits under the Tax Cuts and Jobs Act ("TCJA"). Specifically, the IRS confirmed its position that tax-exempt employers cannot use a qualified pretax compensation reduction agreement ("CRA") to avoid the imposition of tax under the unrelated business income rules on certain qualified transportation fringe ("QTF") benefits. Under the TCJA, the newly added IRC Section 512(a)(7) provides that, among other things, QTF benefits "paid or incurred" by tax-exempt employers are includable in the organization’s UBTI. The TCJA treats certain qualified transportation fringe benefit expenses as taxable income for tax-exempt employers. QTF includes three categories of benefits: (1) transportation in a commuter highway vehicle (e.g., commuter buses or vanpools); (2) transit passes; and (3) qualified parking. Prior to the release of the recent guidance, some tax experts theorized that CRAs might act a mechanism to avoid inclusion of QTF in an organization’s UBTI. This argument asserted that CRAs represent pretax contribution accounts funded through employee wage reduction, not expenses "paid or incurred" by tax-exempt employers. But the IRS disagrees with this argument, and has updated Publication 15-B to clarify that QTF CRAs, despite their form, represent expenses includable in UBTI for purposes of the TCJA. At the employee level, nothing has changed. Employees may still treat QTF as pretax salary reductions under IRC Section 132(f), but a tax-exempt employer offering a QTF should be cognizant of the release of this guidance. If you have any questions about this matter, please reach out to your Schneider Downs tax contact. ### 401(k) Plan Sponsors and Participants: Be Aware of Unethical Requests In our ongoing effort to keep you apprised of important industry developments, we thought you should be aware that Wells Fargo recordkeeping is presently under investigation by the United States Department of Labor (DOL) for alleged actions surrounding its asset retention practices. While it’s not uncommon for recordkeepers to attempt to retain as many assets as possible as they exit their clients’ retirement plans, in some instances they’ve taken the misstep of soliciting rollovers to more expensive proprietary IRAs prior to a participant experiencing a separation from service through in-service withdrawal at age 59½.You might recall that a few years ago, Principal came under similar focus for allegedly recommending rollovers to its own IRAs that were said to be more expensive than what participants were paid within their former plans. As a reminder, no service provider should be soliciting rollovers, so this instance involving Wells Fargo bears watching. Unfortunately, because this a regulatory investigation rather than a lawsuit, we don’t yet have a complete picture of the facts and circumstances.That said, Wells Fargo’s actions are under scrutiny but, as mentioned, these practices are not necessarily unique. Recent articles in the mainstream press named Morgan Stanley as allegedly having similar goals for retaining exiting assets, while Bank of America’s Merrill Lynch was accused of implementing something similar until they changed last year in anticipation of the new DOL Fiduciary Rule, which is now likely disappearing. ### Transportation Industry Shifting Gears with Blockchain How the logistics and transportation industry is evolving with the help of shared distributed-ledger technology Blockchain, and the potential roadblocks ahead. Poised for a Transformation Peter Drucker once said, "Efficiency is doing better what is already being done," but as technology continues to develop, that makes the practice of efficiency a moving target. The business of moving freight is littered with inefficiencies from purchase order to delivery. The industry is ready for a transformation, and there's a lot on the table. According to the American Trucking Association, nearly 71% of the nation's freight is moved by trucks. The industry generates $738.9 billion in gross revenues and ships over 10.55 billion tons of domestic freight. Blockchain may be just the shipment the industry has been waiting for. The Road Ahead Blockchain technology uses timestamped digital records, or "blocks," to make changes to its digital ledger. Those so-called "blocks" are immutable, secure, trackable and incorruptible. This means that when a transaction updates within the Blockchain, there's no question about who, what, where or when that change occurred. This is why the technology is often referred to with profound regard. The Blockchain solution thrives when transparency of data is a key requirement. In transportation, many distinct parties have vested interests in following certain transactions, so data transparency is a key part of the process. The more parties involved in a transaction, the more Blockchain can flourish. Thus, the benefits of the technology are well-founded. Education around Blockchain has become somewhat mainstream of late. As a result, acceptance is far more common today than just a few years ago, and the industry has taken notice. A consortium of stakeholders known as BiTA (Blockchain in Transport Alliance) is now in place. Their stated mission is to develop and establish industry Blockchain standards and collaboratively identify efficiencies. There are already over 1,000 applicants, with members including such industry luminaries as UPS, FedEx, Salesforce, SAP, Uber, GE, Penske, JD Logistics and Polaris. Fueling Changes Given the conventional nature of current business activity, Blockchain’s potential impact is exponential, with processes able to occur in a far more fluid manner. Consider these benefits: Transparency – all stakeholders maintain access and knowledge to transactions in real time Instantaneous Payments and Digital Contracts Immutable Information and Record Maintenance – assurance that data is complete and accurate for organizations, auditors and regulators Traceability – distributors could trace shipments to its source in real-time Increased Monitoring Efficiency – through use of IoT (Internet of Things) Delivery Efficiency – a digital roadmap of routes and contracts embedded within the Blockchain that can trigger payments instantly upon delivery Historical Performance Tracking – better tracking of cargo and vehicle services Reduced Administrative and Processing errors Potential Roadblocks There are but a few keystones that still need to be in place before we can put the pedal to the metal. Suppliers, shippers and brokers alike will need to accept and embrace the technology for its capabilities. That includes maintaining the security of the Blockchain, which must be cultivated from its inception and closely monitored. BiTA plans to vet data sources, payments, contracts and insurance, but that will not be enough. There needs to be a large ecosystem of interconnected partners to allow the technology to reach its full potential. Data elements will need to be consistent for ease of understanding. Failure to put in place a comprehensive set of standards may lead to inconsistent interpretation. Fortunately, BiTA is on top of things; they plan to release their first iteration of standards this summer. Summarizing, Kenneth Craig, vice president of McLeod Software and BiTA charter member notes, "The concept of deploying Blockchain in trucking systems is only in its infancy. When fully adopted, Blockchain has the potential to revolutionize the shipment and transaction process." ### How to Address a Modified Opinion in your SOC Report In the event that a user obtains a System and Organization Controls (SOC) Report and sees that the service auditor has modified their opinion in some way, questions should surface for that user that they hope to have answered by continuing to read the report.Since the service auditor is providing an opinion on whether (a) the description of the service organization’s system is presented in accordance with the description criteria, (b) the controls stated in the description were suitably designed to provide reasonable assurance that the service organization’s service commitments and system requirements were achieved based on the applicable trust services criteria (SOC 2) or control objectives (SOC 1), and (c) that those controls were operating effectively to provide reasonable assurance that the service organization’s service commitments and system requirements were achieved based on the applicable trust services criteria (SOC 2) or control objectives (SOC 1), the user will want to know exactly which aspect of the opinion is modified.A SOC report user will need to be presented with as much information as possible, regardless of what caused the modified opinion, so as to avoid needing to request additional information to understand its basis. For example, the report opinion might be modified because the pervasiveness of testing exceptions led to controls not operating effectively throughout the period. In this case, it is helpful for the report user to be able to understand the causative factors of the testing exceptions, the controls in place that mitigate the effect of the exceptions, what corrective actions management has taken, and any other information relevant to the exceptions that would help a user to understand how it has been addressed by management.With this information at hand, the user can make an informed decision as to whether the report is sufficient for their specified purposes or if further third party risk management activities are necessary. ### GDPR or Naught Over the past few weeks, there have been multiple major news stories regarding data security, but one that affects over 85 million individuals is Facebook and the massive data scandal with Cambridge Analytica.  Data that was leaked originated from Facebook, but this data was used improperly by third-party external developers.  However, with proper data privacy and data protection regulations/policies, this could have been avoided. Is GDPR Compliance Right for You?GDPR (General Data Protection Regulation), which goes into effect on May 25th, is a landmark piece of legislation that is changing the privacy compliance landscape and causing organizations to rethink how they operationalize privacy.  This new regulation mandates that any organization that processes, store or collects EU citizen data must follow strict guidelines not only to protect this data, but to ensure that the data is used in ways that the data subject has explicitly agreed to.  Not all organizations must comply with GDPR, but that doesn’t mean they should ignore data privacy, protection and retention around the data that they collect and store. Organizations from North America are wondering if they need to be compliant with GDPR and what the requirements and risks will be.  While any organization that collects and stores one record of an EU data subject is technically in the GDPR crosshairs, there isn’t a “one-size fits all” approach to compliance. Compliance efforts should be based on the level of risk exposure that your organization is willing to accept. In addition, there are certain baseline practices that the GDPR recommends that can be implemented anywhere. There are different levels of risk exposure that can depend on a myriad of factors such as the complexity of your operations, number of EU data subject records, where your customer base resides, etc.  Based on those facts, there may be different compliance priorities and options depending on the level of risk.The chart below hypothesizes levels of risk and associated attitudes related to GDPR, possible compliance approaches to take and resulting business implications.  If your organization believes the risk is low, this does not mean you can ignore your current data privacy, protection and retention practices; instead, you should reassess your current business practices around risk posture.  Once you have completed this reassessment, you can appropriately invest around these areas to help reduce the risk of potential data breaches and data loss.  Implementing Best Practices and Reducing RiskJust because you feel GDPR is not appropriate for your organization, you should still implement best practices around data protection and reduce the risk of data breaches and data loss.  There are a few common ways that data is lost among organizations, but implementing best practices around data privacy, protection and retention can help reduce the risk of losing your data.Based upon data from Privacy Rights Clearinghouse, the top causes of data loss include: (1) hacking, malware, or malicious code (57%); (2) unintended disclosure (22%); and (3) portal devices and physical loss (17%).  Companies should prioritize and manage such risk to help limit exposure to data loss.Understanding your current and expected data security posture, your desired risk appetite and the available investment in resources and technologies will help you prioritize and build a reasonable and effective data privacy plan. ### One Month Away: Should You Be Preparing for GDPR? We’re now less than a month away from the beginning of the European Union’s enforcement of the General Data Protection Regulation (GDPR), effective May 25, 2018. This is widely considered to be the most comprehensive data privacy regulation in the world, and it will impact all organizations that store and process personal data belonging to residents of the EU. Sanctions for violations of this standard can reach as high as €20 million or up to 4% of an organization’s annual revenue. Simply put, GDPR standardizes data privacy regulations throughout the EU to enforce the protection of personal data. So why should organizations in North America be concerned with GDPR compliance? The short answer is that the regulation applies if an organization collects data from EU residents or processes such data on behalf of another party. In today’s global economy, there are certainly many companies with clients, customers and employees located in the EU. Should your company be preparing for GDPR compliance?  Visit our blog to learn more about what you should know. ### SEC’s Proposal at a Glance With the fate of the Department of Labor’s Fiduciary Regulation hanging in the balance following a recent ruling by the United States Court of Appeals for the Fifth Circuit, the Securities and Exchange Commission recently proposed its own version of a fiduciary rule. Originally drafted at over 1,000 pages, the primary goal of the proposal is to, “enhance the quality and transparency of investors’ relationship with investment advisers and broker dealers while preserving access to a variety of types of advice relationships and investment products.”The SEC’s effort to regulate the best interest of a client is broken down into three key parts for a broker-dealer to abide by.  Each of the three defined obligations must be practiced by any broker-dealer, in order to appropriately put the client’s financial best interest ahead of any other interest: Disclosure Obligation: all information regarding investment is disclosed to client. Care Obligation: investment professional makes careful effort to act in client’s best interest. Conflict of Interest Obligation: to eliminate any conflicts of interest from financial incentives, and if conflicts cannot be mitigated, clear disclosure must be made. Along with regulating the best interest of the client, the SEC proposal clarifies the, “Advisers Act.”  In this proposal the SEC spells out the fiduciary responsibilities that must be carried out by investment advisers, when servicing their clients.The SEC will leave the new proposal open for public comments for a 90-day period. During this time, the financial industry can offer their opinions and interpretations. Schneider Downs Wealth Management Advisors and Schneider Downs Retirement Solutions will be reviewing the proposal closely in order to provide additional insight and information over the next few weeks.Source: https://www.sec.gov/news/press-release/2018-68 ### What do user entities expect to be in your SOC Report? When a service organization engages a service auditor to perform a System and Organization Controls (SOC) report examination, it is important to note that there are required sections that every report must contain. But there are also many other facets that users of the report expect to be included in order for the users to get a clearer, broader picture of the system and its controls on which the report is based.Primarily, users are interested in whether the service auditor’s opinion is unqualified or modified. Read the Our Thoughts On article for how a service organization should address a modified opinion in its SOC report here.Beyond the opinion, a user of a report expects to see a clearly defined scope, so that they can determine whether the report includes the services that the service organization is providing to them, and a report period that is sufficient to meet their needs. The scope paragraph should list not only what is included in the scope of the report, but also what is excluded from the scope of the report. For example, if only certain locations of a service organization’s business are within the scope of the report, the report should clearly state the locations included and the locations excluded. Reports should be issued on a regular basis and should cover 6-12 months so that the users of the report can effectively rely on the controls for their intended use, whether it’s a financial statement audit or third party risk management activities.Once the user has determined that the scope of the report is appropriate for the service they are receiving from the service organization, the user should also expect to see control objectives (in a SOC 1) or trust services criteria (in a SOC 2) that are appropriate for the service they are receiving. For example, if the service organization is a data center that is physically hosting a user entity’s IT infrastructure, the user should expect to see controls related to availability of the systems and physical and environmental security of the facilities.Further, a user of a report expects the description of the system to be written in such a way that it is understandable to someone who either uses the system or represents a user of the system (e.g., a user entity’s auditor). Service organizations should avoid using highly technical jargon or acronyms that such users might not understand fully.The description of the system should include any subservice organizations to whom the service organization has outsourced any part of its system as well as the complementary subservice organization controls that the service organization expected to be in place when designing and implementing their controls. Since a service organization can choose the inclusive method or the carve-out method of presenting a subservice organization, the report should communicate to the users whether the service auditor’s examination extended to the controls in place at the subservice organization.Complementary user entity controls are another important facet of the description of the system because they communicate to the user entities what controls they must have in place and operating effectively in order for the service organization’s controls to operate effectively as well.When a SOC report contains this type of information and appropriate level of detail, users can better understand the full picture of the service organization’s system for providing the in-scope service and can utilize the SOC report for their specified purposes. ### Weathering Volatile Markets Over the past few months, investors have had to deal with increased market volatility, a trend that could well persist for some time to come. As concerns continue to rise, the financial media will point to a number of possible contributing factors, including expected increases in inflation, the possibility of a trade war or that much-predicted market correction. Regardless of what’s causing the volatility, investors need to be aware of their options and the implications of their actions during these turbulent market conditions.But what is volatility, really? By financial definition, it’s an arithmetic measure of the likelihood that a market security will increase or decrease in value within a short time period, which is a measure of standard deviation. Volatile markets, like the ones we’ve experienced recently, see a large amount of rapid price fluctuations along with a high volume of trading. The efficient market hypothesis tells us that fair market prices will adjust and correct in response to the release of new data and information, and that volatility is caused by changing investor opinion of the present value of securities in the market.So how should an investor react under these conditions? While there’s no definitive answer suitable for all investors, there are a number of general guidelines, some of which are as follows: Become an Impassive Investor – In other words, don’t allow emotions and short-term fears dictate investment decisions. Volatility in the markets can create fear or panic, which leads to irrational thought processes and poor decision-making. Contact your financial professional when there is fear or you have questions; he or she will provide the necessary insight to understand how the current activity is affecting your portfolio. Become Aware of Risk Tolerance – A successful investor understands that risk cannot be eliminated. The key is to determine the amount of risk that can be tolerated before fear or panic begins to affect the decision-making process. Once you understand the amount of risk you can handle, you and your advisor can develop a long-term investment strategy that defends against risk factors and market volatility. Your financial professional should develop a strategy that is best suited for your specific risk tolerance and established goals. Diversification – The best defense against market volatility is diversification, which represents the mix of investments held within an investor’s portfolio. No financial professional can truly predict which asset class will perform best during a specific period of time, but strategically scattering your investments among different asset classes will generally provide effective risk management. Stay the Course – As cliché as it sounds, long-term investing is a marathon, not a sprint. Historically, investors who “stay the course” and don’t overreact to market volatility are often rewarded by the performance of their portfolio over the long haul.  Ultimately, the long-term success of your investment strategy will not be determined by the impact of short-term market fluctuation. Select a Trusted Financial Professional – Investors should undertake careful due diligence in selecting a financial professional who is both knowledgeable and trustworthy. An effective financial advisor will provide you with essential insight and understanding of all market conditions, with proper consideration of your specific goals, objectives and risk tolerance. A trusted financial professional can also help eliminate impulsive and irrational investment decisions derived from short-term fear.   Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal and with any investment vehicle, past performance is not a guarantee of future results. The information discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Individual situations can vary, and the information should be relied upon when coordinated with individual professional advice. ### Texas and Alabama offer Tax Amnesty Texas – Beginning May 1 and running through June 29, Texas will offer tax amnesty for liabilities that have not been previously reported to the Comptroller.  The amnesty applies to periods prior to January 1, 2018.  Taxpayers who come forth and settle their eligible delinquencies can do so without interest or penalties. Ideal candidates are generally taxpayers who do not have a Texas Sales and Use Tax Permit, are not registered for a tax or fee administered by the Comptroller’s office or are taxpayers who have a permit, but have underreported and owe additional taxes or fees.  The program does not apply to periods under audit, IFTA taxes, PUC Gross Receipts assessments, Local Vehicle Tax and Unclaimed Property payments.  Further details are expected to be forthcoming as we reach the beginning of the amnesty period.Alabama – Beginning July 1 and running through September 30, Alabama will offer tax amnesty to taxpayers with liabilities that were due prior to January 1, 2017 or periods that began prior to January 1, 2017.  The program provides for a three-year or 36-month look-back period, except for instances where the taxpayer collects the tax, in which the look-back period would extend back to when the taxpayer started collecting the tax if it exceeds 36 months. Taxpayers who come forth and settle their eligible liabilities can do so without penalties and interest.  However, penalties could be imposed at a later date if it is discovered that the taxpayer did not comply with the amnesty provisions and/or provided false or fraudulent information.Taxpayers must comply with the following requirements: All applicable returns, supporting documentation and full payment of the tax must be submitted on or before November 15, 2018.  A payment and return that is submitted via the U. S. Postal Service in a properly addressed envelope is considered timely if postmarked on or before November 15, 2018.  Payments and returns delivered via courier are considered paid the date they delivered to the Department of Revenue’s headquarters or regional office.  The current-year return is to be included with the amnesty returns for the eligible tax type.  Penalties for failure to timely file and pay will be waived; however, waiver of interest will not apply to the current-year return. Amnesty will not apply to taxpayers under any of the following circumstances: Taxpayers who are party to a criminal investigation or criminal litigation that is still pending as of March 6, 2018 for the non-payment, delinquency or fraud in relation to any state tax imposed by the state and administered by the Department of Revenue. The taxpayer has delivered or disclosed a false or fraudulent application, document, return or other statement to the Department of Revenue in connection with an amnesty application. The taxpayer has been issued a final assessment in which the appeal period has ended. The taxpayer has entered into a voluntary disclosure agreement with the Department of Revenue before December 31, 2017. The taxpayer has been granted amnesty for the tax type as part of the Alabama Tax Delinquency Amnesty Act of 2016. ### Service Providers: Are You Ready for a Post-Quill Sales Tax World? On April 17, 2018 the United States Supreme Court will hear oral arguments in the case of South Dakota v. Wayfair, Inc.  The issue is whether the Supreme Court should overrule its previous opinion in Quill Corp. v. North Dakota (“Quill”) that upheld the physical presence nexus requirement for sales and use tax. The general consensus among sales tax experts is that the Court accepted the case for the purpose of overturning the physical presence standard.  Assuming that the conventional wisdom is correct and the Court overturns the physical presence requirement - what will a post-Quill world look like?  Will the Court merely do away with the physical presence standard?  Will they replace it with an economic standard?  Will they remove the physical presence standard only for those states that have met the simplification standards of the Streamlined Sales Tax Agreement, like South Dakota?  Maybe a combination of different standards or could it be something else entirely? The expulsion of the physical presence standard should not have a significant impact on large remote retailers, since many of them are already registered and collecting in most states.   Smaller remote retailers will feel a much bigger impact, but, even small retailers have some experience with the collection and remittance of sales tax and, in time, should be able to adjust to a post-Quill world.Service providers may have a much more difficult time.  Since most states tax only a limited number of services, many service providers have limited or no experience with collecting and remitting sales tax.  Although the majority of states tax only a limited number of services, the number and type of services that are subject to tax can vary significantly by state.  Furthermore, states are continuously broadening their tax base by taxing additional services through legislation.  Some states such as South Dakota, Hawaii, New Mexico and West Virginia tax most services.  Service providers should also understand that some states tax certain services on the basis of where the benefit of their service is received, not where the service is performed.  That can make it difficult to determine which state’s tax is applicable. If physical presence is no longer required for sales tax nexus, a service provider may find themselves responsible for sales tax in a number of states even though their home state might not tax the service they provide.  Furthermore, a service provider might be performing services that are taxable in a specific state and not realize it because the taxable service is essentially imbedded into another service.  For example, an advertising agency with clients in various states might be gathering and manipulating data they receive from clients or processing other types of information which they use to target potential customers for their clients.  Depending upon the jurisdictional statutes at issue, the advertising agency might be performing taxable data processing and information services in addition to advertising services, which may or may not be taxable.  As a result, service providers should not assume their services are exempt if they are not specifically identified as taxable.  Providers must be aware of the various service components that make up their primary service and whether or not those component services such as those referenced in the example above, are subject to tax in a particular state.   In addition, service providers who provide a mix of taxable and non-taxable services must understand that the manner in which they invoice their clients can impact how the sales tax is to be charged.  As a general rule, when a service provider is providing both taxable and non-taxable services, those services should be listed separately on the invoice.  If they are bundled together for a single fee, the entire fee, including the non-taxable portion might be subject to sales tax. Service providers in a post-Quill world will have to learn quickly how their business may be impacted by the United States Supreme Court’s opinion in South Dakota v. Wayfair.  Much will depend upon the details in the opinion and what type of nexus standard, if any that the Court establishes.  Regardless of what those details and standards are, service providers should consult with their state tax professional to better understand the impact on their business.     ### Museums to Receive Clarity on Accounting for Collections The Financial Accounting Standards Board (FASB) will soon release for public comment a proposal revising its guidance on accounting for historical collections. The proposal attempts to align the FASB guidance with the requirements from the AAM, formerly known as the American Alliance of Museums. FASB’s proposed revision would broaden U.S. GAAP’s definition of a “collection,” and therefore eliminate the diversity in practice regarding accounting for collections. Currently, the FASB definition of a “collection” is narrowly defined to only include pieces that meet the following conditions: held for public exhibition, education, or research for continuance of public service rather than financial gain; protected, unencumbered, cared for, and preserved. In addition, “collection” items, according to current FASB guidance, are subject to a policy that requires the proceeds from the sale of a collection to be used to acquire new collections. However, the definition espoused in the code of ethics of the AAM, which is the accrediting organization for U.S. museums, differs on that point. The AAM allows for the proceeds of the sale of collections to not only purchase new collections, but also for the proceeds to be used in direct care of collection pieces. This allows for museum curators to utilize these proceeds to better care for their continuously aging existing collections, such as centuries-old art or prehistoric fossils, all while keeping an eye open for their next line of exhibits. Without the aforementioned changes, external auditors may question accounting of collections even when organizations are following the code of ethics of the AAM. The proposal is expected to be released for comment within the upcoming months. Stay tuned. For more information on the FASB’s meeting and discussion visit the Meeting Minutes page at www.FASB.org. ### Blockchain Technology and Its Impact on Employee Benefit Plans Blockchain technology appears to be the latest up and coming change affecting the way many industries will process transactions.  What is blockchain technology?  It is a digital ledger created to capture transactions among various parties in a network.  Blockchain technology has the potential to impact all recordkeeping processes, including the way transactions are initiated, processed, authorized, recorded and reported.  Many blockchain advocates are hopeful that these new transaction applications will help establish trust, accountability and transparency among their organization and partners.  As it relates to employee benefit plans, many experts feel there are several ways in which blockchain technology will benefit the industry.  It will have the capability to transform the overall administration and recordkeeping, link payroll with participant accounts and investment elections and allow participants to more easily transfer money from one fund to another.  One specific opportunity is the use of smart contracts for pension plans.  Smart contracts are computer code stored on the blockchain that executes actions under specific circumstances.  A pension plan is a contract with required payments at a required time.  A smart contract would be more efficient and would eliminate errors in plans where a manual process is still being utilized.  Another common proposed usage for blockchain in the retirement arena is in the exchange of documents.  Many benefit plan documents require approval and verification by several parties.  Blockchain would make it easier for all parties to review and approve documents.  Blockchain would also offer advantages related to document and data management, since it is considered to be tamper-proof, provides time-stamping and is much cheaper because it is decentralized.  The decentralization also could provide more information transparency, which could eliminate the problem of hidden fees.  While there are still many unknowns related to blockchain technology, it is one of the hottest topics and something to be monitored within your organization. ### The Second Line of Defense: An Overview Risk management in any organization can be complex and difficult. Many companies address the complexity by adding layers of audit and governance, and when an organization grows large enough or risks are deeply intertwined in different segments of the business, the layers become separate internal entities. This layered structure for managing business risks is known as the Three Lines of Defense risk management model.Within the model, the Second Line of Defense (2LOD) is an independent group tasked with identifying, measuring, monitoring and reporting on risk across the enterprise. By creating and maintaining the appropriate policies, frameworks, methodologies and tools, the 2LOD team develops the companywide aggregate risk appetite profile and control standards.Implementing a second line of defense is key to creating a sustainable risk management program. When organizations move to the Three Lines of Defense model, they shift from treating risk as a secondary task for management and business teams to a centralized, ongoing program. Establishing the 2LOD enables cohesive risk management strategies, trend identification across the enterprise and coordinated operational risk mitigation efficiencies. The second line team also serves as a check against the operational teams that execute the risk governance plan. The challenge process employed by the second line promotes discussion on the results and conclusions drawn by the operational teams during their implementation of the risk framework.The need for a 2LOD emerges when there are pervasive risks across a number of separate business segments and supporting operational groups. Greater numbers of stakeholders and the need for transparent risk management are key factors in any decision to move to a second line of defense. Oftentimes, the three-tier model is used in large corporations since it allows executive leadership better visibility and understanding into the risks faced throughout their organization. The model is also used in companies where there is a strong focus on managing financial and business risk.The fact is, any business can benefit from having a 2LOD and implementation does not have to be daunting. Large enterprises may need a team of risk professionals to oversee all policies and activates, but smaller organizations can make their second line a single risk officer who sets policy and tracks risks in disparate parts of the company. They can establish a cohesive risk program to help leaders better understand and holistically manage risk across the organization. ### Is your PA business ready? Starting in 2018, Pennsylvania is requiring businesses to withhold state income tax of 3.07% from all non-resident Form 1099 recipients paid over $5,000 per year. As a business, you will want to assess how much of an impact this will have on your organization and develop a process to manage the withholding moving forward. Looking over your prior years’ Forms 1099 can provide insight as to the volume of out of state vendors paid by your organization. Even if you have few or none, there may come a time where a vendor fits into this category, and you will want to prepare for it. Below are some considerations to take into account. The amounts withheld for PA income tax are to be paid and reported on the same tools used for payroll tax reporting, e-TIDES and REV-1667. You can use the same Tax ID, but we recommend you avoid combining accounts payable data with payroll data. This is particularly important if you are using a third-party payroll processor to submit tax forms on your behalf. To avoid issues, you can create a specific 1099-MISC withholding account with the State. Fill out Form PA-100 found at www.pa100.state.pa.us to create the new account. The Tax ID assigned will be required to show in Box 17 on the Forms 1099. Additionally, you will want to review your process to collect the tax withholding and also to report the amounts properly at year-end. The amount paid to the individual or business, including the amounts withheld for state income tax, will need to show in the appropriate boxes. The most common of these being targeted are: Box 1 – Rents and Box 7 – Nonemployee compensation. The income amount of the recipient will also need to show on Box 18 – State income. In addition, the amount withheld for PA State Tax is required to show in Box 16. More sophisticated accounting systems should be able to handle the reporting issues, but may require customizations. Others systems may need manual inputs and overrides throughout the year and at year-end to correctly report the amounts on the form. Questions pertaining to your specific accounting software should be directed to a software consultant familiar with your application. Understanding the process prior to entering invoices or checks for these vendors will save pain at year-end. If you have yet to start withholding, there is no need to worry. The PA Department of Revenue has stated that they will not apply assessments for payments made prior to July 1, 2018. ### A Tax Cut and Jobs Act Call for Guidance on Implementing the 20% Qualified Business Income Deduction The Tax Cuts and Jobs Act (the Act), enacted December 22, 2017, provided many taxpayer-friendly benefits, including a 20% deduction against flow-through income from certain qualifying businesses.  Much has been discussed and written about the need for additional guidance necessary to allow taxpayers (and their advisors) to interpret and apply the new rules.  At the same time, the guidance needs to facilitate Internal Revenue Service (IRS) administration of the law effectively and efficiently. The rules surrounding the new deduction are complex, do not affect all types of business equally, and leave undefined terms and concepts necessary to calculate the deduction.  However, it has been three months since the Act’s signing, and there has been very little substantive guidance issued, leaving taxpayers frustrated.  The IRS has communicated that guidance would be available by the end of June.  Given the task ahead of them, though, query whether that goal is realistic. The American Institute of Certified Public Accountants, in a letter addressed to the Assistant Secretary for Tax Policy at the Department of the Treasury (Treasury) and Principal Deputy Chief Counsel at the IRS and dated February 21, 2018, called for specific detailed guidance on: The definition of Qualified Business Income (QBI); How businesses may be aggregated in the calculation of QBI; The impact of losses from flow-through business on QBI; Whether wages paid by related-party employee leasing companies are utilized in the determination of QBI; The application of the rules to pass-through entities with fiscal years ending in 2018; and The availability of deductions for Electing Small Business Trusts. On March 19, a coalition called “Parity for Main Street Employers” (the coalition) delivered a letter to the Treasury and IRS calling for similar guidance in certain areas.  The coalition is a group representing a wide range of Trade Groups including the National Automobile Association, the U.S. Chamber of Commerce, and the S Corporation Association.  They requested that Treasury and IRS use their regulatory authority to adopt reasonable methods for calculating the new 20% pass-through deduction, so businesses are not penalized in how they choose to organize their business operations.  More specifically, the group is requesting guidance for (1) allowing taxpayers to group activities conducted through S corporations and partnerships, and (2) permitting businesses with existing groups under the Passive Activity rules of the Internal Revenue Code to reorganize those groups to reflect the new law. Guidance needs to be issued as soon as possible so that taxpayers can plan to utilize, and benefit from, the law as Congress intended.  Until that time, the tax professional community cannot be certain whether the IRS will interpret ambiguous provisions in the law broadly or narrowly and whether those interpretations will be favorable or unfavorable to taxpayers.  However, whether that guidance is ultimately forthcoming or not, the Schneider Downs’ tax professionals will be there to guide you. ### Do You Have a DPO? You May Need One Soon May 25, 2018, is a date with significant meaning if you’re a company that operates within the European Union or processes data that identifies EU citizens. That’s when the new General Data Protection Regulation (GDPR) goes into full effect.So who at your company will be responsible for ongoing data protection efforts under this forthcoming regulation? Answer: the Data Protection Officer (DPO).What, exactly, is a DPO? Under the GDPR, all businesses that collect components of “data subject’s” personal private data of EU citizens the appointment of a DPO is highly recommended when a business’ core activities consist of processing data on a large scale or if the data is within a special classification of personal identifiable information (e.g., racial or ethnic origin, political opinions, religious or philosophical beliefs, etc.). Core activities are defined as the key operations required to fulfill an organizations overall goal. Depending on the size of the organization, the DPO role may be filled by one individual, a combination of staff or even outsourced as a for-hire solution to qualified third parties.What is the role of a DPO?The DPO should stay well-informed on laws, regulations and practices surrounding the matter of data protection and communicate that knowledge to personnel performing data processing duties. They will monitor the organization’s ongoing compliance with GDPR, as well as internal data protection policies and procedures.Other major responsibilities include awareness-raising and staff training, along with serving as point of contact to supervisory authorities, fielding requests from data subjects and functioning as adviser when the company conducts a Data Protection Impact Assessment, a process that identifies organizational risk and aids in its mitigation. He or she would report to senior management or the board of directors, and could not be penalized or terminated for performing tasks related to GDPR compliance.Qualifications of a potential DPOWhile the degree of experience and recommended credentials for a DPO are not precisely outlined by GDPR, organizations should demand a certain level of privacy and data protection expertise. Additionally, though not required to be a legal entity, the DPO needs to ensure that data protection rules are followed, which means the candidate should have a great understanding of GDPR and privacy laws within the EU. A strong technology background is also desired, as the DPO would work in conjunction with IT personnel to implement proper data classification, security, retention and disposal procedures.In summary, a DPO will help your organization prepare for compliance with GDPR before and after the May 25 implementation date. Strong management and communication skills are a must, since they will be interfacing with internal and external personnel at varying levels, as well as comprehensive knowledge on information technologies and data protection standards.For more information regarding GDPR, please visit the Schneider Downs website, as well as the ongoing Our Thoughts On articles being published by our Risk Advisory professionals. If you have any questions related to your organization’s assignment of a DPO, their responsibilities, or compliance with GDPR, please contact us. ### Cybersecurity for Car Dealers: Indifference Is Not a Strategy With cyber-attacks on the rise, it is hard to go a day without hearing or reading about a massive breach or incident. What the news outlets don’t show you is the impact these cyber-attackers are having on the small to medium-sized businesses right here in our own community. Car dealerships are certainly not immune from these cyber-attacks. Because they typically have all the same sensitive data that you would expect to find at a bank, but typically with far less scrutiny and weaker security controls, car dealerships are excellent targets for attackers.Banks and other financial institutions have long been regulated and are required to have regular IT audits, network security penetration tests and more. Car dealers on the other hand are not as closely regulated when it comes to information security matters. Car dealers, however, are required to comply with consumer information safeguards, such as the Gramm-Leach-Bliley Act (GLBA). This requires companies defined under the law as “financial institutions” to ensure the security, privacy and confidentiality of this type of information. Don’t think you are a “financial institution”? Consider this definition from the GLBA, “The Rule applies to all businesses, regardless of size, that are ‘significantly engaged’ in providing financial products or services.” Not complying with these rules can lead to major sanctions and fines.It is incumbent upon car dealerships to have, among other practices, a written information security plan that describes their information security program to protect customer information. As part of this plan, car dealers also must: designate one or more employees to coordinate an information security program; identify and assess the risks to customer information in each relevant area of the company’s operation, and evaluate the effectiveness of the current safeguards for controlling these risks; design and implement a safeguards program, and regularly monitor and test it; select service providers that can maintain appropriate safeguards, make sure your contract requires them to maintain safeguards, and oversee their handling of customer information; and evaluate and adjust the program in light of relevant circumstances, including changes in the firm’s business or operations, or the results of security testing and monitoring. Schneider Downs has worked with many car dealerships in assessing their information security posture through network security consulting and penetration tests. We often find common issues that allow us to use our ethical hacking methods to breach their protections. Here are a few of these common issues that we would suggest paying attention to at your organization: Inadequate passwords and password management. – We know, passwords are a pain. But the reality is, when it comes to security, passwords are often the only thing standing between your organization and a breach. We have had great success guessing and cracking passwords as part of our ethical hacking engagements that have led to compromises of the most sensitive systems (F&I, CRM, ERP, etc.). Using email to store and transmit sensitive documents. – We’ve come to learn that people are pack rats, and email allows them to become digital pack rats. Combine that truth with the common practice of sales and finance personnel who ask for customers to send them their social security card, W2, driver’s license, credit card, bank statements and more, all via email. At this point, the hacker doesn’t even need to hack into your network, all they need to do is breach an employee’s email. Highly susceptible to phishing. – Most organizations we’ve worked with have also been highly susceptible to various types of phishing attacks. Personnel training and technical controls to combat phishing emails have been inadequate in most cases. Usually, all it takes is one person to fall for a phishing attack, and then that point of access is used as a pivot point to launch a much wider breach. Lacking patch management discipline. – After an initial successful phishing attack occurs, attackers typically leverage stolen credentials and exploit vulnerabilities in systems due to missing patches. Patching systems takes regular discipline to stay on top of the latest news and updates from vendor sources, discipline that we’ve found to be lacking quite broadly at many dealerships. ### Tax Provisions Included in Federal Spending Bill On Friday March 23, Congress passed the Consolidated Appropriations Act, 2018, H.R. 1625 (the Act), a $1.3 trillion spending bill designed to keep the government open for business for the remainder of the budget year ending September 30.  In addition to providing support for various programs and operations, the 2,232-page bill contains a number of tax-related provisions, including funding for the IRS and technical corrections to a number of pieces of tax legislation.The bill appropriates slightly more than $11 billion to the IRS for taxpayer services, enforcement activities, and operations.  Included is an allocation of $320 million that will enable the agency to carry out changes made necessary by the Tax Cuts and Jobs Act (TCJA), although a spending plan must be submitted to the House and Senate appropriations committees before those funds can be used.The Act amends the low-income housing credit by adding an average income test to IRC Section 42(g), while providing a 12.5% increase in annual allocations to the State Housing Credit Ceiling for four years beginning in 2018.  It also modifies a provision in the TCJA favoring farmer-owned cooperatives over traditional agriculture corporations by providing a larger benefit to cooperatives under the Section 199A 20% deduction provision.  Some lawmakers argued that without a fix this provision could disrupt the farm economy. The Act retroactively revises previous law by providing a 9% deduction of qualifying income for specified agricultural cooperatives and eliminating the 20% deduction for cooperative dividends.This was the only provision that corrected TCJA drafting errors, thereby leaving untouched the need to address the failure to provide for a 15-year recovery period for qualified improvement property placed in service after December 31, 2017.  At this time, it appears technical corrections related to the TCJA will be in limbo until after the 2018 elections.The Act does contain technical tax corrections to earlier actions like the PATH Act of 2015, the Bipartisan Budget Act of 2015 and other legislation dating back as far as the American Jobs Creation Act of 2004.  The new provisions may be cited as the Tax Technical Corrections Act of 2018, and include changes to the new centralized partnership audit regime introduced in 2015 that became generally effective this year.  New rules include: A new definition for a partnership audit adjustment; Additional rules for determining imputed underpayments; Alternative procedures for filing amended returns for purposes of modifying imputed underpayments; Additional rules for the treatment of pass-through partners in tiered structures; Rules relating to the failure of a partnership to pay the imputed underpayment; and A requirement that pass-through partners in tiered structures file a partnership adjustment tracking report with the IRS if they receive a statement from the IRS under Internal Revenue Code Section 6226(a)(2) as part of a partnership audit. If you have questions about the Act, the TCJA or other tax related issues, please contact Schneider Downs.  To view similar articles, visit the Our Thoughts On blog. ### Increased Penalties for Failure to File an FBAR to Report Foreign Financial Assets The Financial Crimes Enforcement Network (FinCEN) recently announced inflation-adjusted penalties for failure by U.S. persons to file a Report of Foreign Bank and Financial Accounts (FBAR) reporting an interest in foreign financial accounts.  The civil penalty for non-willful failure to report increased to $12,921 (from $12,663), and the penalty for willful failure to report increased to $129,210 (from $126,626) for penalties assessed in 2018.  Note that criminal penalties can be significantly greater. U.S. persons with a financial interest in, or signature authority over, foreign financial assets exceeding $10,000 in the aggregate at any point during the year are required to file the FBAR.  FinCEN Form 114 is the form used to report this compliance obligation.  The FBAR report is not itself an income tax return; it is filed separately from an individual's income tax return, and must be filed electronically. The due date for the FBAR now tracks the filing deadline for individual taxpayers filing their individual tax returns (this year, April 17, 2018).  While Congress has directed the Internal Revenue Service (IRS) to provide extensions of time to file the FBAR, there are no current regulations providing for filing extensions at this time.  Note, however, that in an informational release dated February 22, 2018, the IRS clarified that filers who fail to file their 2017 calendar year FBARs by April 17, 2018 have an automatic extension up to October 15, 2018 to file it. A U.S. person is broadly defined to include individuals (children included), corporations, partnerships, LLCs, and trusts. Financial assets include, but are not limited to, bank accounts, securities accounts, mutual funds, and insurance policies or annuities with a cash value.  Further, the IRS and courts may broadly interpret the definition of foreign financial assets.  For example, query whether virtual currency accounts and online gambling accounts qualify as financial asset accounts subject to reporting. A "foreign financial account" is a financial account located outside the U.S.  An account maintained with a branch of a U.S. bank that is physically located outside of the U.S. is a foreign financial account.  An account maintained with a branch of a foreign bank that is physically located in the U.S. is not a foreign financial account. Please do not hesitate to contact us with questions about the foreign financial asset reporting requirements and visit our SD Global Services page to learn more about the services that we offer our clients. ### How Do You Measure the Success of Your Retirement Plan? This article was co-written by Miles Gibson.There can never be enough questions for your Investment Committee to ask as it reviews your organization’s retirement plan. Understanding the underlying strategy of your plan’s investment options – and being able to communicate them – is critical. To better gauge the performance of your Committee, here are a few questions to ask at the next meeting.What is the basis for the funds available on the menu?“Wow, there are a lot of funds to choose from here; how do I make the best decision for me?” is a common question participants ask themselves when deciding from among investment funds presented. To smooth that process, the Investment Committee needs to add and remove funds, as appropriate, basing their actions and decisions on a procedure that’s well communicated in an Investment Policy statement.Am I paying too much for these funds?Maybe the first question that comes to every participant’s mind. With thousands of funds available, your Committee needs to explain why one fund costs more than the next. There are times when a more expensive share class is warranted, but the reasoning has to fit within the plan’s Investment Policy.What, exactly, are we buying and how much does it cost for each participant?It’s the fiduciary’s responsibility to determine that fees paid for services are reasonable and warranted, but it’s the participant’s responsibility to hold the fiduciary accountable. By asking the right questions, the participant can better understand the services being provided, and whether or not the fiduciary is acting in the participant’s best interest.What will you do to keep the fiduciaries and the participants of the plan more informed? It’s important for participants to be aware of what’s going on in the marketplace. Ask the Investment Committee how they will keep plan participants up to date with current economic market conditions, potential opportunities, periodic performance updates and everything in between.If you have questions, or would like to discuss the process and procedures Schneider Downs Wealth Management Advisors follows to ensure our clients are meeting their investment fiduciary responsibilities, please contact Schneider Downs. ### Healthcare Trends and Industry Outlook Healthcare is a constantly evolving industry, and yet how much change there is to come. The trend towards value-based payment as opposed to volume-based payment continues, mergers across all types of healthcare organizations are becoming more and more frequent, and the competition for talent is fierce. Cost containment and cost consolidation are keys to success, to allow for investments in technology. The industry is being continuously reinvented by technology, whether it is via tech companies like Amazon, Google or Apple or via the industry itself changing its service delivery methods to meet consumers’ expectations. These challenges exist in addition to any consideration of legislative changes, which are lengthy and complex for providers, payors and individuals to navigate.One very interesting thing to consider regarding the outlook of the industry is the impact of millennials as consumers. Millennials are often discussed relative to the workplace and with respect to consumer trends. Millennials are known in the workplace for wanting paid time off, flexibility, opportunities to make an impact, to work in an organization where your voice is heard and acted upon, and self-directed growth opportunities. In healthcare, millennials will rule the way healthcare is delivered because not only are they seeking their own care, but they are directing the care of their children and now or in the near future, the care of their parents. Millennials will want to receive healthcare on their own schedules, evening and weekends. They will demand to receive services on time without a long wait and with the opportunity to make informed decisions about the services and cost of services they receive. They will want the opportunity to have easy and convenient access to healthcare innovation, and technology will be critical to meeting the needs of consumer expectations in coming years to capture this important “buyer.”In this challenging yet exciting industry, investments in technology and forward-thinking opportunities will prove to be keys to success.For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### Tax Reform Impacts Federal Estate, Gift and Generation-Skipping Taxes Within the recently enacted Tax Cuts and Jobs Act (the “Act”), lawmakers failed to satisfy longstanding promises of a full repeal of the federal estate tax.  The Act does, however, significantly increase the amount of wealth that taxpayers can transfer on a tax-free basis during their lifetimes and at death. For now, anyway.For decedents who pass away after 2017 but before 2026, and for lifetime gifts made during this timeframe, the federal estate and gift tax exemption amount has been increased from $5 million to $10 million, indexed annually for inflation from 2011. The adjusted exemption for individuals in 2018 has been set at $11.18 million and at $22.36 million for married couples. The generation-skipping transfer tax (“GST”), which is levied on transfers made to recipients who are two or more generations younger than the donor, has also been increased from $5 million to $10 million per person ($20 million per married couple), again adjusted for inflation as above. Maximum tax rates for estate, gift and GST taxes remain at 40%.The Act also leaves untouched several important estate planning tools frequently utilized by taxpayers. Portability, which permits a surviving spouse to claim the unused portion of a deceased spouse’s estate tax exemption, remains available for the indefinite future. In addition, the gift tax annual exclusion, which allows taxpayers to make certain lifetime gifts without incurring gift tax or reducing the gift tax exclusion, is unaffected by the legislation, and has been increased to $15,000 per person per donee in 2018. Assets inherited from a decedent will continue to receive a step-up in basis to the value on the date of death.Unless Congress takes further action, the increased estate, gift and GST exemption amounts will sunset at the end of 2025. This means that for decedents who die in 2026 or later, or for lifetime transfers made after the end of 2025, the exemptions will revert back to pre-2018 levels, adjusted for inflation.Any change in the law of this magnitude presents opportunities and pitfalls. Taxpayers are strongly encouraged to consult with their estate planning advisors to determine the impact the legislation will have on their existing estate plans.For more information, contact Schneider Downs or visit the Our Thoughts On blog.  ### Report Cards Are Out: American Infrastructure Gets D+ The American Society of Civil Engineers (ASCE) recently released their 2017 Infrastructure Report Card.  Every four years, the ASCE grades the nation’s infrastructure within sixteen major categories on an A - F scale.  Many factors determine the grade a particular category of infrastructure receives, including Capacity, Condition, Funding, Future Need, Operation and Maintenance, Public Safety, Resilience, and Innovation.Overall, America’s cumulative infrastructure grade in 2017 was D+.  Low-scoring areas include Aviation (D), Roads (D), and Public Transit (D-), among many others.  Explore other categories. The report notes that Aviation is hampered by airport and control system infrastructure, which is causing congestion to grow.  It notes that this area faces a $42 billion funding gap over the next ten years and that “24 of the top 30 major airports may soon experience ‘Thanksgiving-peak traffic volume’ at least one day every week.”  Roads are noted to be overcrowded, underfunded, and often in poor condition.  With a growing backlog of repair work, “traffic delays cost the country $160 billion in wasted time and fuel in 2014.” Public Transit faces increasing demand despite a $90 billion rehabilitation backlog.  The report notes that many Americans have inadequate access to public transit.  As we reported last July, there is currently research and development underway to address America’s future travel needs.  While these large scale projects are important to develop long-term solutions, it is important that small scale solutions also be implemented to assist with today’s immediate needs. At the local level, one such smaller-scale project is the bus rapid transit project between Downtown and Oakland to streamline travel between these two neighborhoods.  The Pittsburgh Post-Gazette  reported in February that while it is not certain that federal funding will be secured, “it is a high priority project and it will proceed.”  If funding can be secured for such projects, it will present opportunities to local construction firms specializing in a range of industries, and improving our nation’s infrastructure grades certainly is a long road ahead.If you have questions about this article, please contact us.   ### Regulatory Reform Bill Alleviating Burden on Banks and Credit Unions Progresses Through Congress The United States Senate passed bill S. 2155 – Economic Growth, Regulatory Relief and Consumer Protection Act – a bipartisan reform bill that removes a long list of regulatory requirements on financial services organizations. It now goes to the House where it is expected to pass and ultimately be signed into law by President Trump.The bill is considered by proponents to be a needed retraction of many of the regulatory requirements that resulted from the financial crisis of 2007-2009. During this period, concerns resulting from liquidity and capital concerns in the financial system were prevalent and many pundits in the business and government sectors believed that regulatory leniency significantly contributed to the instability. In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). It is estimated that the Dodd-Frank Act resulted in nearly 12,000 pages of new or expanded regulations.  In addition, regulators expanded the scope of existing laws and regulations, such as implementing new regulations with respect to the Basel III Accord. Following this broad expansion of regulations, financial institutions argued that the changes were an over-correction and certain regulations were unduly burdensome, especially for smaller banks and credit unions that lacked sufficient resources to comply with new requirements.Acknowledging these concerns, bill S. 2155 is intended to provide regulatory relief from many of the Dodd-Frank requirements placed on banks and credit unions, especially those with assets under $10 billion thereby reducing administrative and compliance costs. Three key areas addressed in the bill are mortgage lending rules, regulatory relief to financial institutions and consumer protections related to credit reporting. The bill aims to foster economic growth and eliminate many of the administrative hardships placed on institutions, which is expected to enable them to offer more loans to qualified customers and be positioned to best serve their communities.Key features from the bill include: Changing Qualified Mortgages Requirements: The bill, if it becomes law, will expand the designation of “qualified mortgages” for insured depository institutions and insured credit unions with less than $10 billion in assets and amends the Truth in Lending Act (TILA) requirements for these institutions to waive the ability-to-repay requirements. This gives a greater number of borrowers access to qualified mortgages (based on the rules defined by the Consumer Financial Protection Bureau), which lowers their borrowing costs compared to a non-qualified loan. This is important for borrowers with sufficient assets and other sources of funds that may not have consistent year-to-year income to meet the qualified mortgage requirements, thus forcing them to acquire a higher-cost qualified mortgage. A loan that satisfies the revised qualified mortgage requirements would also comply with the ability-to-repay requirements of the Truth in Lending Act (TILA). To qualify, the loan cannot have an interest-only or negative amortization feature and must comply with prepayment penalty limitations under the TILA ability-to-repay requirements. Raising the Threshold for Systematically Important Financial Institutions: The bill raises the threshold for designating an institution as “systemically important” from $50 billion in total assets to $250 billion in total assets, thereby reducing the number of institutions subject to the enhanced standards for capital planning, liquidity and regulatory reporting requirements. The bill also decreases, from three to two, the number of scenarios that must be included in the Federal Reserve-conducted and company-conducted stress tests; Raising Limits on Financial Institutions Required to Perform Stress Testing:  The bill ends stress testing requirements for all financial institutions under $100 billion in assets (previously $50 billion), internal stress tests for financial institutions under $250 billion in assets, and allows federal regulators to design tailored supervisory stress tests for financial institutions between $100 billion and $250 billion rather than a one size fits all approach. These changes will result in significant compliance cost reductions for many large financial institutions; Capital Simplifications for Qualifying Community Banks: The bill simplifies the treatment of assets subject to Basel III capital framework requirements. Financial institutions that meet the definition of a Qualified Community Bank, which is any insured depository institution or depository institution holding company with total consolidated assets of less than $10 billion, would be exempt from existing risk-based capital ratio and leverage ratio requirements. Instead, these banks would be required to establish a Community Bank Leverage Ratio (the tangible equity capital as a percentage of the average total consolidated assets) of not less than 8 % and not more than 10 %. A Qualifying Community Bank that meets the new Community Bank Leverage Ratio would also be considered to have met generally applicable leverage capital requirements, thereby exempting it from having to comply with the complexities of the Basel III capital framework requirements; Appraisal Exemptions for Loans in Rural Areas: The bill provides relief from appraisal requirements for mortgages of properties in rural areas under $400,000 in estimated value where appraisers are scarce, allowing for a timely and cost-effective loan approval process. The loan must remain in the mortgage originator’s loan portfolio. In addition, not later than three days after the Closing Disclosure is given to the consumer, the mortgage originator or its agent must have contacted at least three state-certified appraisers and documented that no such appraiser was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments. Extend Examination Cycles: The bill raises the threshold for small institutions eligible for 18-month examinations from $1 billion to $3 billion of total consolidated assets, thereby providing smaller institutions more time and resources to support economic growth within their communities rather than constant focus on supporting regulator review requests. Previously, these institutions were on a 12-month on-site examination cycle; HMDA Reporting Exemptions: The bill exempts financial institutions from the expanded set of Home Mortgage Disclosure Act (HMDA) data reporting requirements for those institutions that originate 500 or fewer mortgages or Home Equity Lines of Credit combined in the preceding two calendar years and have not received a rating of “needs to improve record of meeting community credit needs” in each of its two most recent Community Reinvestment Act (CRA) examinations nor “substantial non-compliance in meeting community credit needs” on its most recent CRA examination. This exemption should greatly reduce the time and effort required by qualifying institutions to capture and report HMDA data; Community Bank Relief on Volcker Rule Requirements: The bill amends the Bank Holding Company Act of 1956 to exempt banks with assets valued at less than $10 billion from the “Volcker Rule,” which prohibits banking agencies from engaging in proprietary trading or entering into certain relationships with hedge funds and private equity funds. These banks are also exempted from specified federal banking agencies’ capital and leverage ratio requirements. A bank will be exempt as long as the trading assets and trading liabilities of the bank and any company that controls the bank are less than 5 % of total consolidated assets; Charters for Federal Thrifts: The bill provides charter flexibility for federal thrifts with less than $20 billion in assets to operate with the same powers and duties as national banks without being required to convert charters, thereby allowing them to offer commercial loans to qualified customers that they otherwise would be restricted from making based on existing rules restrictions; Credit Reporting Freeze Alerts: The bill amends the Fair Credit Reporting Act (FCRA) to require credit reporting agencies (e.g., Equifax, Experian and TransUnion) to increase consumer protections and improve the accuracy of credit reporting. Credit reporting agencies will be required to provide fraud alerts for consumer files for at least one year, provide consumers with one free credit-freeze alert and one free unfreeze alert per year, and permit a consumer to place or remove a freeze on the consumer’s credit report at no cost. This bill, in summary, is intended to redefine systemically important financial institutions, reduce compliance requirements and associated costs on financial institutions and enable them to better serve their customers and communities without impairment to safety and soundness.  Schneider Downs will continue to monitor progress on this bill and other bills impacting regulatory requirements on financial services organizations. To learn more about how we can help your organization with its regulatory compliance, governance, risk and control solutions, please contact Schneider Downs. ### Pennsylvania Department of Environmental Protection Proposes 250% Permit Fee Increase for Unconventional Gas Wells The Pennsylvania Department of Environmental Protection (DEP) has proposed a 250% permit fee increase for all unconventional gas wells. This would increase the current fee of $5,000 to $12,500. This will be the first increase in permit fees since 2014. In 2014, the fee structure was updated from a structure based on bore length (an average fee of $3,200 per well) to a flat fee of $5,000. The most recent increase comes as an attempt to alleviate the backlog of permit requests that are on file with the DEP. The total number of backlogged permits totals more than 10,000 as of December 2017, according to the DEP’s annual report. This backlog is due to an increased workload for the agency, even though drilling and permit numbers have declined since the last fee change in 2014. The DEP states that the drilling of a well creates several other activities that all must be completed in connection with the inspection of the well itself. These other activities include inspections of access roads and water impoundments. The initial permit fee does not generate any other revenue for the DEP for the additional inspections that are conducted in future years. Therefore, the fee increase is an attempt to generate additional revenue for the agency, since the additional supporting workload increases for each well permit received. The DEP receives state general fund appropriations, although these have decreased significantly over the past several years. Appropriations have steadily decreased from a peak of $245 million in 2002-2003, to $148 million in the 2018-2019 Pennsylvania state budget. However, Gov. Tom Wolf has stated that the 2018-2019 Pennsylvania state budget will provide an additional $2.5 million to the DEP. These funds will be used to hire 35 individuals to fulfill positions throughout the agency, to assist with the timely processing of permit requests and other DEP functions. In addition to Gov. Wolf increasing the DEP’s general fund appropriation, Gov. Wolf has also stated that he will expand electronic permitting, so as to expedite the permit process by the end of the year. Currently the only state permits that are able to be applied for online are underground mining and storage tank renewal. This initiative would significantly reduce the amount of paperwork required for each permit, and expedite the entire permit process. Gov. Wolf’s administration has also stated that they plan to support legislation that would allow for the permitting of multiple wells on one pad site with only one application. This would decrease the number of permits received by the DEP on an annual basis, since currently each well requires its own permit. This will also allow the agency to complete permit applications in a more timely manner, based on the decrease in permits.In summary, the permit fee increase will generate additional revenue for the DEP. In addition to the fee increase, Gov. Tom Wolf has allocated an additional $2.5 million from the Pennsylvania state budget to the agency. This will be largely utilized to hire 35 individuals to assist with the processing of permits. Gov. Wolf has also stated that he will support legislation to expand electronic permitting for wells, and to allow the permitting of multiple wells, on one pad site, with only one application. All of these factors will increase the effectiveness and efficiency of the DEP’s processing of gas well permit applications, and in return create a more streamlined process for all permit filers in the Pennsylvania Oil and Gas industry.For more information please contact us and for additional articles, please visit the Our Thoughts On...blog.   ### NIST Releases Final Draft Publication to Assist in Assessing Compliance with NIST SP 800-171 Background As of December 31, 2017, all Department of Defense (DoD) contractors that process, store or transmit Controlled Unclassified Information (CUI) must meet the Defense Federal Acquisition Regulations Supplement (DFARS) minimum security standards. DFARS 253.207-7012 requires organizations with CUI to implement the security requirements in NIST SP 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations.” If government contractors fail to comply with the NIST security requirements, they risk losing their defense contracts. Overview of NIST Special Publication (SP) 800-171 NIST SP 800-171 provides a standardized set of requirements for all CUI security needs. There are a total of 110 security requirements organized by 14 families of controls. The requirements apply to all components of nonfederal systems and organizations that process, store or transmit CUI, or that provide security over these components. These requirements are tailored for non-federal systems and allow government contractors to implement consistent safeguards in their environments to protect CUI. CUI can be any information that supports federal missions and business functions that affect the economic and national security interests of the United States. Non-federal organizations (colleges, state/local governments, federal contractors, etc.) often process, store or transmit CUI. Some common examples of CUI a defense contractor may have are technical information, engineering drawings, project specifications, standards, manuals, technical reports, data sets, and studies and analysis. SP 800-171 helps organizations to address potential deficiencies in managing and protecting CUI. Protecting systems with CUI is very important to federal agencies, and safeguards should be in place to defend against potential threats to the confidentiality, integrity and availability of CUI. Complying with the SP 800-171 security requirements should help to reduce the risk to CUI from cyber threats. Most of the SP 800-171 security controls are only a sentence or two long, and the requirements are somewhat vague and leave much up to interpretation. There are a variety of ways organizations could respond to these requirements. Many organizations are looking for clarification and guidance on the SP 800-171 security requirements, and that is where NIST SP 800-171A comes in. What Is NIST SP 800-171A? The final draft of NIST SP 800-171A, “Assessing Security Requirements for Controlled Unclassified Information,” was released late February. NIST developed this publication as a companion guide for SP 800-171 to help assessments of the CUI security requirements. SP 800-171A provides a tool for government contractors, subcontractors, third parties and reviewers to improve their understanding of security objectives from SP 800-171. It provides a consistent process for assessment and additional explanation of the requirements. SP 800-171A provides much more detail for the 110 security requirements listed in SP 800-171. The publication provides customizable procedures that organizations can use to conduct assessments of the security controls. For each CUI security requirement, NIST has provided “Assessment Objectives,” “Potential Assessment Methods and Objects,” and reference to further discussion on the requirement. The “Assessment Objectives” break down the security controls into separate elements. These elements should be addressed in order to satisfy the requirements. The “Potential Assessment Methods and Objects” section provides recommendations for how the organization/assessor could examine, or test each particular control and also provides suggestions related to who to speak with or interview within a typical organization. The “Discussion” material contains further useful explanations and interpretations of the CUI security requirements. It is intended to facilitate implementing and assessing the controls. SP 800-171A is a very useful tool for companies looking to achieve or validate NIST 800-171 compliance. The procedures outlined in this draft publication can be used by organizations as a starting point to develop assessment plans and approaches that can produce evidence needed to determine compliance for the CUI security requirements. SP 800-171A can help enterprises to organize, inform, measure and document their assessment of present security and to prepare plans of action for security improvement. Federal agencies can also make use of this publication for the evaluation of contractor compliance. While SP 800-171A does provide clarification for the SP 800-171 CUI security requirements, it also has a lot of information to digest. It is important to note that SP 800-171A is designed be used as guidance and does not create new security requirements for companies to meet. NIST 800-171 compliance may be a daunting and time-consuming project, but there are many benefits to protecting CUI, including continuing to do business with federal agencies. If you have any questions related to NIST SP 800-171A or your organization’s compliance with NIST 800-171, please do not hesitate to contact us. For more information regarding NIST, please visit the Schneider Downs website, as well as the ongoing Our Thoughts On articles being published by our Risk Advisory professionals. If you have any questions related to your organization’s compliance with NIST standards, please contact us. ### My Client/Prospective Client Just Asked for a SOC Report. Now What Do I Do? Does anxiety and panic set in when a client or prospect asks if you have a Systems and Organization Controls (SOC) report? Could you be in jeopardy of losing a current client or missing out on a new opportunity or prospective client? Have you even thought about whether it is practical for your organization to have a SOC examination conducted? SOC report requests have become a common practice, and even a requirement in some cases, in today’s world, due in part to corporate compliance mandates, client auditor requests, and the need to provide assurance to the entities you do business with that your internal controls are sufficient and reliable. If your organization processes transactions on behalf of your client, provides a service that affects your client’s financial statements, provides a service that affects the compliance and operational controls of your clients, or is responsible for ensuring the security of client’s sensitive data, then your organization would benefit from engaging a CPA firm to perform a SOC examination.When a client or prospective client asks your organization to provide a SOC report and you have determined your organization would benefit from having a SOC report, you should consider the following items in order to choose the most appropriate SOC report for your organization: Determine the services that should be included in your SOC report. A SOC report can be intended for your clients in general and include the overall services you are providing or be tailored for a specific requestor and specific services you provide. Determine the type of SOC report. A SOC 1 examination is intended to provide a report on the controls of a service organization that are relevant to the user entities’ financial reporting. The user entities are concerned about accuracy of their financial data and information technology general controls.  Typical user entities include financial statement auditors, compliance personnel, and financial management personnel. A SOC 1 report is a restricted use report. A SOC 2 examination is intended to provide a report on the effectiveness of the controls at a service organization related to selected trust services categories (security, availability, processing integrity, confidentiality and privacy). The user entities are concerned with the governance, and operational and information technology general controls that pertain to one or more of the trust service categories. Typical users of the report include IT executives, compliance officers, regulators, security officers and appropriate business partners. A SOC 2 is a restricted use report. A SOC 2+ examination is the same as a SOC 2 but with additional suitable criteria such as HITRUST and HIPAA added into as part of the examination. A SOC 3 examination is intended to provide the same report as a SOC 2, but with fewer details of the service organization processes and controls in the actual report. A SOC 3 report is a general use report and can be posted on your website for distribution to prospective clients. A SOC for Cybersecurity examination is intended to provide a report on an organization’s enterprise-wide cybersecurity risk management program, including effective processes and controls in place to detect, respond to, mitigate and recover from breaches and other security events. The SOC for Cybersecurity is not limited to service organizations alone. Typical users of the report include board of directors, senior management, investors and business partners.  A SOC for Cybersecurity report is a general use report, but can be restricted to specific users, if necessary. Determine if the SOC report should be at a point in time or cover a period of time. A Type I report is as of a point in time and is intended to determine if the controls stated in the description are suitably designed. A Type II report covers a period in time and is intended to determine if the controls stated in the description are suitably designed and operating effectively. Note: SOC 1, SOC 2, and SOC 3 can be either a Type I or Type II report. Determine when your customers are requiring the SOC report to be provided to them. Timing of the CPAs’ field work is important in order to have the SOC report available to the customer when requested. Whether you are having a Type I report, which  requires less lead in time and field work, or a Type II report, which requires more lead in time and field work, it is critical to have an established plan in order to meet customer requested delivery dates.  Let our experienced professionals lead the appropriate discussions with your organization and with the requesting parties to gain insight on the reason the SOC report is being requested, the value of SOC reports, and the type of SOC report that benefits all parties.For more information regarding SOC reports, please visit Schneider Downs' website, review our Frequently Asked Questions about SOC Reports and read our Our Thoughts On articles that are published by our Risk Advisory professionals.      ### One-Time Fuel Credit Claims Begin April 2 for 180 Days The IRS recently released Notice 2018-21 that provides, among other things, guidance to taxpayers regarding the Biodiesel Mixture Credit, the Alternative Fuel Credit and the Alternative Fuel Mixture Credit, all of which expired at the end of 2016. The Bipartisan Budget Act, passed February 8, retroactively reinstates those credits from January 1 through December 31, 2017.The notice specifies that taxpayers must use the one-time claim process for the Biodiesel Mixture Credit or the Alternative Fuel Credit by filing Form 8849 (Claim for Refund of Excise Taxes) and include Schedule 3 (Certain Fuel Mixtures and the Alternative Fuel Credit). Importantly, all claims must be made on a single Form 8849.Similarly, taxpayers claiming the Alternative Fuel Mixture Credit for 2017 should complete a Form 720X (Amended Quarterly Federal Excise Tax Return). Outside of these instances, all filers should continue to use the traditional forms (e.g., the Form 4136, et al) associated with other tax credits.The claim period for all credits begins on April 2, 2018, with claims for the Biodiesel Mixture Credit and Alternative Fuel Credit required by September 29. Claims for the Alternative Fuel Mixture Credit must generally be made from the later of (a) three years from the time the return was filed, or (b) two years from the time the tax was paid.If you have questions about these credits or any other fuel credit issues, please contact a Schneider Downs. To view similar articles, visit the Our Thoughts On blog. ### New Tariffs Proposed on Steel and Aluminum On March 8, President Trump announced that the United States would begin imposing tariffs on imported steel and aluminum.  While on the campaign trail in 2016, Mr. Trump clearly stated his intent to strengthen our global position, renegotiate trade agreements, and bring back manufacturing to the United States. The tariffs announced today include a 25% tariff on imported steel and a 10% tariff on imported aluminum.  However, it appears that there may be a temporary exclusion for our North American trading partners (Canada and Mexico), providing that the NAFTA agreement is renegotiated in the near-term (currently, policymakers are on their seventh round of discussions).    Many politicians (including prominent Republicans) are concerned about the retaliation from trade partners around the world.  China has insinuated that a trade war may be looming.  And the European Union announced a potential retaliation of its own, with a proposed 25% tariff on American-produced goods, including motorcycles and spirits.The news closer to home, however, appears to be more optimistic.  Earlier this week, U.S. Steel announced that it would be restarting an idle blast furnace and would begin steel production at a plant in Illinois as a result of the planned tariffs on steel imports.  The steelmaking facility was shut down over two years ago, largely due to the low cost of imported steel and the inability to produce in a competitive environment.  U.S. Steel’s CEO, David Burritt, announced that the company plans to bring back 500 jobs.  Additionally, an aluminum manufacturer in Kentucky announced plans to hire 300 people. Of course, as is often the case, with the good news may come bad news.  There is mass speculation that these tariffs will be detrimental to the United States, and will cause the loss of thousands of U.S. jobs as manufacturers pay more for their raw materials.It likely won’t take long for global leaders to voice their discontent with the proposed tariffs. For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### IRS Reacts To Perceived Loopholes Under The Tax Cuts and Jobs Act Taxpayers attempting to take advantage of perceived loopholes in the Tax Cuts and Jobs Act ("TCJA"),beware: the IRS has been quick to respond to positions with which it disagrees. In the most recent example, the IRS released guidance that closed a potential carried interest loophole. In the past few months, similarly, the IRS blocked other TCJA positions regarding the prepayment of taxes and repatriation of foreign earnings. The IRS recently released guidance closing a potential carried interest loophole. Carried interest represents the portion of an investment fund's return paid to managers of the fund. This return is taxed at a preferential capital gains rate to the managers. The TCJA modified the carried interest rules such that, in order to receive the preferential tax rate, managers must hold the investments for three years. The TCJA, as written, does not apply the three-year holding period to investments held through a corporation. The TCJA does not define the type of corporation--namely a C corporation or an S Corporation -- to which this exemption applies. Thus, taxpayers seeking to avoid the three-year holding requirement have directed their carried interests to single-member LLCs taxed as S corporations. The IRS has recognized, and disagreed with, this tactic. In a recent notice, the IRS specified that carried interest routed through S corporations will be subject to the same three-year holding requirement as partnerships and non-S Corporation LLCs. This does not represent the first instance of the IRS disagreeing with potential loopholes in the TCJA. For example, taxpayers anticipating the TCJA’s $10,000 limitation on state and local property taxes attempted to prepay property taxes before the close of 2017. The IRS acted swiftly to limit this deduction by clarifying that such prepayments are deductible only to the extent they have been assessed and there is an existing obligation upon which the taxpayer made payment. Similarly, taxpayers attempting to delay the deemed repatriation tax under the TCJA by electing a shorter tax year met resistance from the IRS. That is, the IRS issued guidance clarifying the circumstances and procedures under which a change in tax year will be approved. If you have any questions about these or other areas of the TCJA, please reach out to us at Schneider Downs. ### GDPR: Common Myths and Truths Revealed The General Data Protection Regulation (GDPR) has been a hot topic of conversation since being adopted in April 2016. The new regulation changes how companies need to manage the data of data subjects in the European Union (EU) and will become fully enforceable starting May 25, 2018. With that date quickly approaching, we’d like to clear up some myths that we have been hearing. Myth #1: Since my enterprise is not located in the EU, we don’t have to comply with GDPR. Truth: Any enterprise that 1) offers goods or services to individuals in the EU, 2) processes or holds the personal data of EU residents or 3) monitors the behavior of individuals in the EU will be subject to GDPR. This includes visitors to the EU as well. GDPR would apply, for example, if an American citizen visits a U.S.-based website while vacationing in Germany and that website monitors that citizen’s behavior while in Germany. Myth #2: Once my company becomes GDPR compliant, we will be compliant as long as GDPR is enforced. Truth: GDPR is not a regulation that you can “set and forget.” It’s an ongoing initiative that will need to be followed by all personnel starting May 25, 2018, ad infinitum. Because of that, companies will need to continually educate personnel on maintaining awareness surrounding the integrity of personal data and GDPR. Myth #3: Every data breach around personal data will need to be reported. Truth: Not all breaches must be conveyed to the Information Commissioner’s Office. Those that result in risk to data subjects’ rights and freedoms, for instance, must be reported no later than 72 hours after discovery. If there is no risk, there’s no reason to report, but the matter should be documented. Myth #4: Full monetary fines (€20 million, or 4% of worldwide annual of the prior financial year’s revenue, whichever is higher) will be assessed if your data is breached and data subjects’ rights and freedoms are exposed. Truth: Fines will be administered by individual member state supervisory authorities utilizing the following criteria: nature of infringement, intention, mitigation, preventative measures, history, cooperation, data type, notification and certification, as well as a few other mitigating factors. Not all companies will be fined the full amount, as long as they are open, honest and report without delay.  Exercising ongoing compliance efforts and the more mature an organization is with regard to GDPR, the more likely the fines will be lessened. Myth #5: My data is currently hosted with a cloud provider; it is their responsibility to be GDPR compliant, not mine. Truth: Even if all your data is hosted in a third-party cloud provider’s environment (processor), it’s the responsibility of both the controllers and processors to be compliant with GDPR. As the data controller or processor, it is still your responsibility to protect and manage the personal data of your data subjects. There is no forgiveness for ignorance. For more information regarding GDPR, please visit the Schneider Downs website, as well as the ongoing Our Thoughts On articles being published by our Risk Advisory professionals. If you have any questions related to your organization’s compliance with GDPR, please contact us. ### Taxpayers can continue to deduct interest paid on home equity loans under the recently enacted Tax Cuts and Jobs Act For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the original language of the Tax Cuts and Jobs Act (the Act) indicated that “home equity debt” is no longer deductible.  The elimination of the deduction for interest on home equity debt applied regardless of when the home equity debt was incurred.  However, in a recent release, the IRS stated that despite the newly enacted restrictions on home mortgages under the Act, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled. In Information Release 2018-32 dated 2/22/2018, the IRS clarified that the Act “suspends the deduction for interest paid on home equity loans and lines of credit, unless the proceeds are used to buy, build or substantially improve the taxpayer's home that secures the loan.” This statement is important, as the illustration noted below demonstrates. For example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not.  Under the Act, interest remains deductible on Schedule A as mortgage interest, if the loan is secured by the taxpayer's main home or second home (known as a qualified residence), and does not exceed the cost of the home, and meets other requirements. As discussed in our report on the Tax Cuts and Jobs Act , the combined limit on acquisition debt generally incurred after December 15, 2017 used to acquire a principal residence and/or second home is $750,000 ($375,000 married filing separately).  However, taxpayers need to exercise care in how the loan proceeds are used and documented.  As noted in the second illustration provided in the release (and shown below), the incorrect form of the transaction could render interest on a loan non-deductible. Illustration 2: In January 2018, Mary takes out a $500,000 mortgage to purchase a main home.  The loan is secured by the main home.  In February 2018, she takes out a $250,000 loan to purchase a vacation home.  The loan is secured by the vacation home.  Because the total amount of both mortgages does not exceed $750,000, all of the interest paid on both mortgages is deductible. However, if Mary took out a $250,000 home equity loan on the main home to purchase the vacation home, then the interest on the home equity loan would not be deductible. The second example in the illustration is contrary with the language in the release that states that proceeds be “used to buy, build, or substantially improve the taxpayer's home that secures the loan.” Therefore the deduction is disallowed. Because of the variety of limits imposed on interest deductions, the IRS provides special rules for allocating interest expense among the categories.  These “tracing rules,” as they are called, are generally based on the use of the loan proceeds.  Under the tracing rules, interest expense is allocated in the same way as the debt on which the interest is paid.  The debt, in turn, is allocated by tracing the use of the debt proceeds to specific expenditures. Although the release does not address these rules, there still may be an opportunity to deduct the interest if incurred on a HELOC or other mortgage loan and used for investment purposes such as for rental real estate or investment in S corporation stock via the tracing rules.  Please contact Schneider Downs to discuss these rules further and determine the best option for you. ### SEC Issues Guidance on Disclosure of Cybersecurity Risks and Incidents The Securities and Exchange Commission (SEC) issued interpretive Release No. 33-10459 Commission Statement and Guidance on Public Company Cybersecurity Disclosures to assist public companies in preparing disclosures about cybersecurity risks and incidents.  The interpretive release builds upon guidance issued in 2011 by the SEC’s Division of Corporation Finance (CF Disclosure Guidance: Topic No. 2) by addressing two topics not developed in the staff’s 2011 guidance, including the importance of cybersecurity policies and procedures and the application of insider trading prohibitions in the cybersecurity context.The SEC acknowledges that many companies have provided cybersecurity disclosures under CF Disclosure Guidance; although primarily as part of the discussion on risk factors; however, the SEC believes that due to the increasing cost, significance, and frequency of cybersecurity incidents, further guidance was necessary.Following are the main points in the SEC’s interpretive release:General Disclosure GuidanceMaterialityCompanies should consider the materiality of cybersecurity risks and incidents when preparing the disclosures.  The materiality of cybersecurity risks or incidents depends on their nature, extent, and potential magnitude.  Materiality of cybersecurity risks and incidents also depends on the range of harm that incidents may cause, including harm to a company’s reputation, financial performance, and customer and vendor relationships. Timing of DisclosureWhere a company has become aware of a cybersecurity incident or risk that would be material to its investors, the SEC would expect the company to make appropriate disclosure timely and sufficiently prior to the offer and sale of securities and to take steps to prevent directors and officers (and other corporate insiders who were aware of these matters) from trading its securities until investors have been appropriately informed about the incident or risk.  The SEC also notes that an ongoing internal or external investigation - which can often be lengthy - would not on its own provide a basis for avoiding disclosures of a material cybersecurity incident.Specific Disclosure GuidanceRisk FactorsIn evaluating cybersecurity risk factor disclosures, the SEC advises companies to consider the following issues: The occurrence of prior cybersecurity incidents, including their severity and frequency. The probability of the occurrence, and potential magnitude, of cybersecurity incidents. The adequacy of preventative actions taken to reduce cybersecurity risks and the associated costs, including, if appropriate, the limits of the company’s ability to prevent or mitigate certain cybersecurity risks. The aspects of the company’s business and operations that give rise to material cybersecurity risks, and the potential costs and consequences of such risks, including industry-specific risks and third-party supplier and service-provider risks. The costs associated with maintaining cybersecurity protections, including, if applicable, insurance coverage relating to cybersecurity incidents or payments to service providers. The potential for reputational harm. Existing or pending laws and regulations that may affect the requirements to which the company is subject relating to cybersecurity and the associated costs to companies. Litigation, regulatory investigation, and remediation costs associated with cybersecurity incidents. The SEC also advises that in meeting these SEC disclosure obligations, companies may need to disclose previous or ongoing cybersecurity incidents or other past events in order to place discussions of these risks in the appropriate context.The SEC also provided guidance on specific cybersecurity disclosures related to the following: MD&A - Item 303 of Regulation S-K and Item 5 of Form 20-F Description of Business - Item 101 of Regulation S-K and Item 4.B of Form 20-F Legal Proceedings - Item 103 of Regulation S-K Financial Statement Disclosures Board Risk Oversight - Item 407(h) of Regulation S-K and Item 7 of Schedule 14A Disclosure Controls and ProceduresThe SEC notes that cybersecurity risk management policies and procedures are key elements of enterprise-wide risk management, including as it relates to compliance with the federal securities laws.  In its interpretive release, the SEC encourages companies to adopt comprehensive policies and procedures relating to cybersecurity and to assess their compliance regularly. Insider TradingCompanies are encouraged to consider how their codes of ethics and insider trading policies take into account and prevent trading on the basis of material non-public information relating to cybersecurity risks and incidents.  In addition, while companies are investigating and assessing significant cybersecurity incidents, and determining the underlying facts, ramifications and materiality of these incidents, they should consider whether and when it may be appropriate to implement restrictions on insider trading in their securities.We encourage companies to take a fresh look at their cybersecurity disclosures in consideration of this guidance released by the SEC. For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### Pennsylvania Public Utilities Commission Increases Impact Fees for 2017 For 2017, Pennsylvania’s Independent Fiscal Office (IFO) is projecting the impact fee to be approximately $219.4 million, the third highest in the history of the fee, and an increase of $46.1 million from the prior year. This is due to the Pennsylvania Public Utility Commission (PUC) increasing the unconventional well impact fee by $5,400 for first-year horizontal wells and $1,000 for newly drilled vertical wells. Act 13 of 2012, enacted to strengthen environmental standards, directs the PUC to adjust the fee annually based on the average NYMEX Henry Hub price for the year and the Consumer Price Index (CPI) for the region when unconventional wells spud increases from the prior year. Over the past seven years, the fee has generated more than $1.4 billion, which is distributed to local governments to assist with infrastructure, emergency services, environmental initiatives and other programs. The fee was the highest in 2013, when it reached $225.7 million.There are two primary sources for the increase. First, the average annual NYMEX price of natural gas exceeded $3.00 in 2017, causing the PUC to adjust the statutory fee schedule upward, resulting in a $43.4 million estimated increase. The other reason is that the revenue from 812 new wells spud in 2017 offset reduced collections from older wells and wells that moved into the exempt stripper category. The effect of the offset from new wells on the fee is an increase of approximately $2.7 million. Just about 8,600 wells are subject to this fee, while 2,300 are exempt due to being plugged or low production of gas.The IFO has also calculated the effective rate of the impact fee at an estimated 2.9 percent for 2017, a decrease from 4.5 percent in 2016. The effective rate, calculated by taking the annual impact fee revenues and dividing them by the total market value of unconventional natural gas production, has ranged from a high of 6.9 percent in 2015 to a low rate of 2.4 percent in 2014, with the biggest changes in rates due to changes in the price of natural gas.For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### Passphrases and Other Password Protection Strategies Building a reputation for sound data privacy and robust security is challenging for many organizations in this digital age, especially those in the financial services industry.  Below are a few statistics to help illustrate the reasons why this challenge exists for so many financial services organizations:    In 2017, the financial services industry was the most-attacked industry.  In particular, 24% of the total breaches that occurred last year affected financial organizations.  The second-highest percentage (15%) of breaches involved healthcare organizations. (Source: 2017 Verizon Data Breach Investigations Report (DBIR))   81% of the hacking-related breaches of 2017 leveraged either stolen or weak passwords (Source: 2017 Data breach Investigations report) Enabled by the alarming use of weak or insecure passwords, not only are employees an organization’s first line of defense against cyberattacks, employees are also potential threats to these attacks.  The defensive strategy against these attacks is simple—improve protection of vulnerable passwords by creating and using passwords that are easy to remember, but difficult to be compromised.  With our comprehensive expertise and experience helping clients improve their cybersecurity strategies, Schneider Downs recommends any number of the following procedures to help your organization effectively develop its own defensive strategy to prevent falling victim to a crippling data breach or other attack: Encourage use of unique passphrases (minimum length of 8 up to 64 characters) and not passwords[1]. Enable multi-factor authentication (MFA), where possible. Implement and adopt security policies and procedures, and enforce them through security awareness training and education. Implement periodic auditing to detect password policy violations and maintain compliance with policy and/or regulatory requirements. Leverage use of free, popular password managers to reduce the risk of losing or forgetting passwords or passphrases. While no security measure is full proof, proper password management is an essential security measure in safeguarding organizations from cyber threats.  At Schneider Downs, we assist companies in assessing their risk exposures to cyberattacks. For more information on Schneider Downs' cybersecurity offerings, check out the Cybersecurity Services page. If you find that your question has not been addressed, please do not hesitate to contact us.   [1] Passphrases are commonly described as a sequence of words or other text used to authenticate one’s identity.  In June of 2017, the National Institute of Science and Technology (NIST) released new password security guidelines.  In short, these new guidelines recommended using long passphrases instead of complex passwords that were created from the use of special characters, numerals and capitalization.   ### Employer Tax Credit for Paid Family and Medical Leave The Tax Cuts and Jobs Act ("TJCA") provides a general business credit to qualifying employers that provide paid leave pursuant to the Family Medical and Leave Act ("FMLA"). Currently, the FMLA does not require employers to compensate employees while they take FMLA leave. The TCJA, however, offers a new incentive for paid family and medical leave.The TJCA provides a general business credit in an amount equal to the applicable percentage of the wages paid to a qualifying employee during any period in which the employee is on family and medical leave. The applicable percentage starts at 12.5% of wages paid to a qualifying employee during the period in which the employee is on family and medical leave, provided that wages paid under the program are at least 50% of the wages normally paid to the employee. The 12.5% applicable percentage increases by .25% for each percentage point by which the rate of wages paid to the employee on leave exceeds 50% of the employee’s normal wages. The applicable percentage is capped at 25%. The credit can be calculated based on up to 12 weeks of FMLA leave.To qualify for the credit, certain criteria must be satisfied. Generally, all of the following requirements must be met: The employer must have a written policy in place for paid leave under FMLA for qualified employees. In addition, the policy must offer at least 2 weeks of paid FMLA leave (pro-rated for qualifying part-time employees) with compensation rates of at least 50%. The employee must meet all the requirements under the FMLA. For example, the employee must have been employed by the employer for the preceding year. In addition, for the prior year, the employee must have received no more than 60% of the amount of wages paid to a highly compensated employee. Thus, for 2018, the employee cannot receive wages more than 60% of $120,000, namely $72,000. Wages paid under the FMLA program can only be treated as a family and medical leave payment for purposes of the tax credit.  This means that any payment made pursuant to a vacation or paid time off, non-FMLA leave plan does not qualify for the tax credit. Likewise, paid leave required by state or local law does not qualify. If you have any questions about this tax credit, please contact Schneider Downs. For similar articles visit the Our Thoughts On blog. ### Late To Comply with GDPR? Here Are Three Steps to Take Right Now. Background The European Union’s (EU) General Data Protection Regulation (GDPR) goes into effect on May 25, 2018. The regulation is specific to the protection of natural persons with regard to the processing of personal data and on the free movement of such data. The regulation applies to any organization doing business in the EU or that processes personal data originating in the EU, be it data of residents or visitors. The GDPR has made profound changes to the understanding of privacy, data protection and personal data in the EU and has wide-ranging effects on anyone processing personal data of data subjects of the EU. A data subject is defined as a person whose personal data is being captured and processed. If your organization captures just one record of an EU data subject, this regulation applies to you. Penalties for failing to comply with the articles of GDPR may subject the organization to fines up to €20m or 4% of the organization's total global revenue, whichever is greater. If your organization hasn’t begun the process to ensure compliance, there are certain highly effective steps that you can take immediately to bring your compliance program to life. Below are some of those steps and some advice to get started. Raise Awareness If your organization is late to the GDPR party, chances are there is an awareness issue. Complying with GDPR means taking meaningful actions to change the way your employees use personal data within your business, including being able to respond to incidents and breaches that affect that personal data. The awareness process supports all other processes by explaining, communicating and reinforcing both GDPR requirements and good practice. Therefore, raising awareness of the GDPR at all levels of the organization is imperative. Classify and Identify Personal Data Understanding the data that you hold is one of the key steps in understanding how to design a program for GDPR compliance. Your organization should take a multi-disciplinary approach to this process and work with various stakeholders such as business lines, operations, technology, data and analytics departments, human resources and potentially others, based on your business. You should work to examine and map out your organization’s processes and data flows to identify any data inputs that may be linked to an identified (or indirectly identifiable) person. Where this is the case, the process or procedure handling the data must be identified and inventoried. It is also important to understand that this also applies to paper-based processing of data, for instance, filled-in forms sent in by mail or other paper-based forms. The output of this phase should include business process documentation, data flow diagrams, a personal data register and a data processing register. Perform a Data Protection Impact Assessment Taking the output from the previous step into account, performing a Data Protection Impact Assessment (DPIA) should be your next step. GDPR requires that a DPIA be performed in certain cases (e.g., processing of special categories of data, large scale data processing, etc.). A DPIA should be designed in order to describe the data processing, assess the necessity and proportionality of processing of that data and determine compliance with the GDPR requirements. The assessment should also ensure that the risks to personal data are properly mitigated and the safeguards and security measures in place to protect personal data are appropriate in relation to the risk. Any risks to personal data that are not appropriately mitigated should have a risk treatment plan assigned to them and be tracked through remediation. If you have any questions related to your organization’s compliance with GDPR, please contact Dan Desko at 412-697-5285 or ddesko@schneiderdowns.com. ### Internal Revenue Service Seeking Comments on Proposed Changes to Donor Advised Funds On December 4, 2017, the Internal Revenue Service (IRS) issued Notice 2017-73, wherein the agency describes the approaches it’s considering in addressing certain issues regarding donor advised funds (DAFs). The notice discusses three specific situations:               Certain distributions from a DAF that pay for the purchase of tickets that enable a donor, donor advisor or a related person to attend or participate in a charity-sponsored event. Certain distributions from a DAF that the distributee charity treats as fulfilling a pledge made by a donor, donor advisor or related person. The development of regulations to change the public support computation to prevent DAFs from circumventing the private foundation rules. Section 3 of the notice deals with the purchase of event tickets by the DAF in which the donor, donor advisor or a related person attends. The IRS prohibits these transactions if more than an incidental benefit is received.  In the notice, the agency indicates that several commentators have suggested the opportunity for payment to an event be split between the cost of the event and the charitable piece. In this quid pro quo situation, the event piece could be paid or reimbursed by the donor/advisor while the DAF would pay the charitable piece. The commentators suggest that this would not be considered a prohibited transaction. The IRS has not indicated that it would agree with the analysis.Section 4 of the notice deals with the use of a DAF to fulfill a charitable pledge by a donor. The IRS has traditionally taken the view that a legally enforceable pledge by an individual to a charity organization could not be fulfilled by the individual’s DAF. As per the notice, the IRS indicates that in certain circumstances they will allow a DAF to fulfill a donor/advisor’s pledge.Section 5 deals with the IRS’ concern that DAFs are being used to avoid tipping a public charity into private foundation status. If less than 33 1/3 percent of an organization’s contributions come from the general public, an organization could be considered a private foundation. The IRS is concerned that DAFs are being used to circumvent these rules. In the notice, the agency indicates that they are considering adopting a complex set of rules to trace where the original donation came from when applying the public charity test.If you have any questions on this notice or how it might impact the operation of your DAF, please reach out to one of our tax exempt experts at Schneider Downs & Co. ### 401(k) Hardship Withdrawals - Made Easier by the 2018 Budget Act Hardship withdrawals from 401(k) and 403(b) plans will be soon become less restrictive under the provisions of the recently-passed Bipartisan Budget Act of 2018“ (the “Budget Act”).Under current rules, 401(k) plan participants who experience a “qualifying event" may elect to receive a hardship distribution from their retirement account.  A qualifying event includes (1) eviction or foreclose prevention from a principal residence, (2) the purchase of a primary residence, (3) medical expenses, (4) educational expenses, (5) funeral and burial expenses and (6) certain home repairs due to damages in a declared disaster area.  Additionally, a participant must exhaust all other options for withdrawal within the plan (i.e. loans) prior to being eligible for a hardship withdrawal and can only receive amounts he or she previously contributed to the plan.  Finally, future 401(k) or similar contributions will be suspended for a period of 6 months following the date of the hardship withdrawal. Effective for hardship distributions that occur after January 1, 2019, employees will no longer be subject to the 6-month suspension period for contributions.  Also, amounts eligible for withdrawal will be expanded to include earnings, as well as other employer contributions previously made to the plan. Lastly, the legislation would remove the requirement to take a loan before qualifying for a hardship withdrawal.While the 2018 Budget Act makes hardship withdrawal rules less restrictive and easier for plan sponsors to administer, plans will need to be amended to incorporate the new rules for plan years beginning after December 31, 2018.For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### Siloing of Unrelated Business Income Is Creating Many Questions for Tax-Exempt Organizations “Siloing” is the term being used to describe the 2017 tax reform change that requires exempt organizations to separate each of their unrelated business activities and only tax those with income.  I am not sure it is a real word.  It is fun to say and visualize, but beyond that, it is quite the challenge for exempt organizations.Unrelated business taxable income (UBIT) is income from a trade or business regularly carried on by an exempt organization that is not substantially related to the organization’s charitable mission.  It can also include investment earnings, royalties, rents and gains on sales if debt was used to finance the activity.  Traditionally, exempt organizations were allowed to combine all their UBIT items on Form 990-T.  Loss activities would be used to offset gains from profitable activities to arrive at a net UBIT.Under the 2017 Tax Cuts and Jobs Act, IRC Section 512(a)(6) was added to require exempt organizations to separately report each unrelated activity (siloing).  Only the activities that generated income would be taxed.  The Joint Committee on Taxation estimates that this change will result in $3.2 billion in increased revenue over the next 10 years.  The new rule is effective for tax years beginning after December 31, 2017.Exempt organizations are struggling to determine how to identify a separate activity and how to allocate expenses on an-activity-by activity basis.  For example, if an organization has summer camp rentals, conference space rentals, and rental of its parking lots for outside events, can all of this be combined into one rental activity?  Or, does the organization need to track and report each rental activity separately?  The treatment of income from partnership investments is also unknown.  Can an organization combine and treat all UBIT from flow-through investments as one partnership activity?  Or, is the organization required to look through every partnership investment and separate each activity in a separate UBIT silo?The Treasury Department has indicated it will issue more guidance “sooner rather than later” to help exempt organizations understand these new rules.  Elinor Ramey, an attorney-advisor in the Treasury’s Office of Tax Policy, said recently: “This is definitely something we need to issue guidance on; we would love comments on how people think it can be done, and done well, to match the intent of the law and administration both for taxpayers and for the IRS.”Meanwhile, exempt organizations and practitioners are forced to make assumptions and best guesses on how to interpret and apply the new siloing rules.  This will be particularly challenging for calculating estimated tax payments before additional guidance is provided by the IRS.If you have any questions on the changes to UBIT or the impact of the new law on exempt organizations, please feel free to contact us. ### Revenue Recognition Considerations for Software Companies In August 2017, the FASB issued guidance for software companies in connection with the implementation of ASU 2014-09 and the five-step model.Step One requires companies to determine whether or not there are multiple contracts. An important consideration specific to software companies is to ensure that all contracts are present, and to determine whether or not there are multiple contracts or if the contracts are interrelated. It is common for software companies to have multiple arrangements that constitute a promise to transfer a good, license, or service in exchange for consideration. A company will need to obtain and consider relationships between Master Service Agreements, purchase orders, side arrangements and more.Step Two requires companies to identify performance obligations. Most software developers offer post contractual support and maintenance when a license is granted or when a subscription is purchased. Companies will need to identify whether or not the subscription or license, post contractual support and maintenance are bundled together as one performance obligation or whether they are three distinct performance obligations. In addition, when a software license is granted and the Company is hosting the software, a Company must determine whether or not the license is separate and distinct based on criteria including, but not limited to, the right and ability to run the software on their own hardware without significant penalty. SaaS (Software as a Service) arrangements do not include the promise of a license.Step Three requires companies to identify the transaction price. Oftentimes with software transactions, there are price concessions that include discounts, refunds, credits and more. Arrangements with extended payment terms are analyzed to determine whether or not the terms meets the definition of a significant financing transaction, and to determine, based on historical collections, whether or not payments would be considered variable consideration or a reduction in the transaction price.Step Four requires companies to allocate the transaction price to the performance obligations. Transaction price is allocated based on the relative standalone selling price for each of the performance obligations. ASC 606 allows for the use of the residual method when the standalone selling price is highly variable or uncertain. If an entity has previously established vendor-specific objective evidence of fair value under ASC 985 for licenses, an observable standalone selling price exists and the residual method should not be applied. The residual method is an allocation method and differs from the residual approach under ASC 985, which is an estimation method.Step Five is the recognition of revenue. Technical support and software updates will need to be reviewed for overtime or point-in-time recognition. As noted within ASC 606, an entity is not permitted to default directly to a straight-line measure of progress, but a straight-line measure of progress will be reasonable in multiple cases when it applies to technical support and updates.Please contact the Schneider Downs Audit and Assurance Department for additional information regarding ASU 2014-09 or visit the Our Thoughts On blog for similar articles.  ### Revenue Recognition Considerations for Engineering Firms In August 2017, the FASB issued guidance for engineering firms in connection with the implementation of ASU 2014-09 and the five-step model.Step One requires firms to determine whether or not there are multiple contracts. An important consideration specific to engineering firms is to evaluate change orders and determine if the change order is a new and separate contract or if it is a modification of an existing contract.Step Two requires firms to identify performance obligations. Engineering firms may provide multiple activities on behalf of a customer, including but not limited to design, implementation and service activities. The various activities need to be reviewed to determine if there is significant integration. Firms will also need to determine the contract term and termination provisions within the contract. If a termination clause is included in the contract and there is no consideration exchanged to exercise the provision, the term of the contract will end after the good or service has been provided to the customer.Step Three requires firms to identify the transaction price. In conjunction with this step, variable consideration needs to be reviewed. Contract incentives, including bonus payments and penalties for a delay in the completion of a project, are examples of variable consideration specific to engineering firms. These entities are required to estimate variable consideration using one of two approaches, the expected value method and the most likely amount method. The expected value method takes into consideration a weighting of probable amounts, while the most likely amount method identifies one amount that has the largest potential outcome. Prior experience can be used to assist in estimating the potential outcomes for variable consideration. If firms and their customers have not agreed to a price for a change order, the transaction price for the change order would be considered variable consideration.Step Four requires firms to allocate the transaction price to the performance obligations. Transaction price is allocated based on the relative standalone selling price for each of the performance obligations. If this price is not directly observable, an estimate will be made using approaches like cost plus margin. Discounts would also need to be reviewed to determine whether the discount should be attributed to a specific performance obligation or the overall contract.Step Five is the recognition of revenue. In most cases, firms will use an overtime methodology for revenue recognition. The most common method will be an input method based on resources used or hours expended. If there is no reasonable methodology to determine the amount of progress that has been expended, revenue recognition will be deferred until progress can be quantified. This concept is similar in nature to the percentage-of-completion method defined in ASC 605 under the existing guidance.Please contact the Schneider Downs Audit and Assurance Department for additional information regarding ASU 2014-09 or visit the Our Thoughts On blog for similar articles.  ### You Get a Tax Cut! And They Get a Tax Cut! Should I Stay an S Corp? The Tax Cuts and Jobs Act represents the largest overhaul in federal tax law since 1986. The changes are sweeping and affect almost every form of income tax on the books. Under the new law, most individuals and corporations will see a decrease their tax rates, which likely could mean a decrease in their overall tax liability. Changes to Individual Income Tax Rates The Act includes a number of major changes to the rules on individual income taxes, including a new pass-through business income deduction, a repeal of the personal exemption, and an increase to the standard deduction. However, one of the most important of these changes is the revised tax rates for the seven marginal tax brackets. We’ve provided a comparison of the rates expected for 2018 under the old law compared with the Act’s new tax rates for married filing jointly and single filing status:    Under the new law, taxpayers in six of the seven brackets are now subject to lower tax rates. Most notably, taxpayers in the highest bracket now benefit from a 2.6% decrease in their marginal income tax liability. Changes to Corporate Tax Rates Under the Act, the new corporate tax rate is a flat 21%. Under prior law, corporations and their shareholders paying income tax in the United States were potentially subject to a combined income tax rate of 50.47%. This percentage is comprised of two taxes: 1) a 35% entity-level corporate tax rate, and 2) a 23.8% shareholder-level tax rate on the remaining 65% of corporate income distributed as a dividend (35% + [65% x 23.8%] = 50.47%). With this new rate of 21 %, these taxpayers now enjoy a lower combined tax rate of 39.8% (21% corporate tax plus 23.8% tax on remaining 79% of corporate income distributed as a dividend). Should you review your choice of entity – C versus S corporation? It is important to note that despite the change in the entity-level corporate tax rate, the difference in tax rates between C-corporations (subject to the entity-level tax and a tax on dividends distributed) and S-corporations (a pass-through entity) remains about 10%. This maintained rate difference is due to the Act’s changes to the individual income tax rules including the inclusion of a new 20% qualified business income deduction. Under prior law, S-corporations were subject to a top combined tax rate of 40.8%. This rate was comprised of a top marginal individual tax rate of 39.6% plus a 1.2% itemized deduction limitation. With the passage of the Act, the top individual marginal tax rate is now lowered from 39.6% to 37%. On top of that benefit, the Act also grants S-corporation shareholders a new 20% qualified business income deduction towards their individual income liability. With these changes, S-corporations now enjoy a significantly lower combined tax rate of 29.6% (the product of the 37% top marginal individual tax rate reduced by the 20% pass-through income deduction). The new 20% deduction is subject to several limitations and restrictions and may not apply to all situations. Applying pre-Act law, the C-corporation combined rate of 50.47% was approximately 10% higher than the S-corporation rate of 40.8%. With the Act now in effect, the C-corporation combined rate of 39.8% is still approximately 10% higher than the S-corporation rate of 29.6%. Every situation can be different, so the best course of action would be to discuss any changes with your tax advisor and run the numbers. If you have questions about this article, please contact us.  For similar articles, please visit the Out Thoughts On...Transportation and Logistics blog.  ### Manufacturers Looking for Ways to Reduce Expenses Manufacturers across the world are constantly looking for ways to reduce expenses and ultimately increase the bottom line. Some companies have eliminated unnecessary positions within the organization while others have employed conscientious cost-cutting.A strategy some larger corporations have revisited in recent years when trying to decrease costs is the zero-based mindset. While companies typically look to historical data and past events in establishing budgets for the upcoming year, zero-based mindset forces management to start at zero and justify all expenses flowing through the organization to prevent budget items from being pushed blindly through the process.Zero-based mindset allows companies to increase internal accountability by examining cost elements of the organization on a granular level. This, in turn, could help companies lower variable costs within their supply chain process and effectively achieve the cost-cutting approach so many seek.There may be no failsafe solution when looking to reduce costs for your organization, but adopting a zero-based approach for examining budgets and supply chain processes could be a step in the right direction. For more information on how to reduce expenses for your manufacturing company, contact us.  ### How Tax Reform has Affected the Manufacturing Industry On December 22, 2017, the highly anticipated tax reform was signed into law. One goal of tax reform was to help attract manufacturers to return to the U.S. and create additional jobs for Americans, to continue to drive down the unemployment rate.How has this tax reform helped companies in the manufacturing industry? For starters, it lowers the corporate tax rate to 21% which hopefully, will draw businesses back from foreign countries, since the U.S. previously had one of the highest federal corporate tax rates, at 35%, before this tax reform.Another piece of good news for manufacturers is that they now are able to immediately expense qualified property obtained before 2023 and immediately expense up to $1 million of the cost of certain depreciable assets acquired and placed in service in the tax year. However, the law does repeal the deduction for domestic production activities.In addition to lowering the corporate tax rate down to 21% from 35%, the reform also eliminates AMT, while still allowing companies who hold AMT credits to use them to reduce or eliminate their future regular tax liabilities.In the past, many manufacturers have been required to keep inventories on the accrual basis of accounting, allowing only small manufacturers, with less than a $1 million in gross receipts, calculated on a three-year average, to be on the cash basis. The new reform increases that threshold up to a $25 million three-year average and permits any company which passes this test to now report on the cash basis of accounting.The impact of tax reform will vary from business to business; however, the market is starting to see movement in the right direction for the manufacturing industry.  Companies are beginning to hire more employees and pay larger bonuses and salaries due to the reform. It should be quite interesting to see the continued growth over the course of the next few years. If you have questions about how the new tax reform will affect your manufacturing organization, contact us.  ### Welcoming the New Year -- Recap of Federal Gas Tax Proposals, 2018 Pennsylvania Toll Increases and Pennsylvania Gas Tax Reductions The Commonwealth of Pennsylvania decreased both the wholesale motor fuels tax and the diesel fuels tax on gasoline by .006 cents on January 1, 2018.  Despite the slight reduction in rates, Pennsylvania still wins the first place trophy for the highest gas tax in the United States.  The taxes on motor fuels and diesel fuels decreased to 57.6 cents per gallon and 74.1 cents per gallon, respectively. In related news, the tolls for using the Pennsylvania Turnpike have increased for the ninth consecutive year.  A 6% increase in tolls went into effect January 7, 2018, mirroring the 6% increase that was enacted in 2017.  The revenue generated from the toll increase will be invested to pay for a ten-year spending plan that will invest approximately $5.77 billion in infrastructure in the coming years, consisting of ongoing reconstruction and widening projects.The Pennsylvania Turnpike is expecting to increase toll prices through 2044 based on their latest projections.  So how will Pennsylvania drivers and trucking companies react to these continual toll increases?  The turnpike faces competition from free interstate highways, including I-80, and roads such as I-78 and I-81.  These free roads have attracted a variety of warehouse districts recently, which move freight to mid-Atlantic customers without having to pay turnpike tolls.There may be a federal gas tax increase on the horizon also. The U.S. Chamber of Commerce has proposed a 25 cent increase to the federal gas tax that has remained at 18.4 cents since 1994. The Chamber proposal is a 5 cent per year increase for 5 years. The funds would be used to help fund much-needed infrastructure projects on roads and bridges. The group also supports a more efficient permitting process and more private partnerships to fund infrastructure projects.On a positive note, the United States economy is expected to remain strong for 2018, meaning higher gas taxes and toll prices may not necessarily inhibit driver and trucker behavior.  Only time will tell…For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### TAX REFORM: A NEW DEDUCTION FOR INDIVIDUALS - 20% QUALIFIED BUSINESS INCOME DEDUCTION The Tax Cuts and Jobs Act provided non-corporate taxpayers (e.g., S-corporations, partnerships, limited liability companies, and sole proprietorships) a new deduction that is claimed on individual income tax returns. Calculation of this deduction is complex. In short, the Act provides a 20% deduction for qualified business income (QBI). This 20% deduction is limited by particular thresholds. However, these limitations come into effect only when a certain amount of taxable income is reached on the individual tax return. Moreover, special rules apply to specified service businesses.Specifically, the Act allows individuals and certain trusts to potentially deduct 20% of QBI as a deduction from taxable income (the deduction will be presented after a taxpayer’s adjusted gross income so as not to affect other items that are directly tied to a taxpayer’s adjusted gross income). QBI has a broad definition and is effectively connected to a non-corporate entity’s business activities within the United States. However, QBI does not include investment items such as dividends, interest or capital gains/losses.If the individual's taxable income exceeds $157,500 (or $315,000 for a joint return), the 20% deductible amount could be further limited. The Act generally limits the deduction to the lesser of:1. 20% of the taxpayer’s qualified business income for the trade or business; or2. the greater of: (a) 50% of W-2 wages from the business; or (b) 25% of W-2 wages from the business plus 2.5% of the unadjusted basis of all qualified business property.As mentioned above, the deduction excludes income earned through “specified service activities.” A “specified service activity” is any venture where the principal asset sold is based on an employee or owner’s reputation or skill (e.g., health, law, accounting). The Act allows taxpayers that earn income from a specified service activity to still claim this deduction if their taxable income falls below $207,500 for a single taxpayer ($415,000 for a married filing jointly taxpayer).While the computation is complex and further limitations and rules not outlined above may apply, the deduction could provide a large reduction in taxes to taxpayers that qualify.For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### One-Year Extension of the Alternative Fuel Excise Tax Credit for 2017 This article was in collaboration with Keith Donnelly. The Alternative Fuel Credit is a refund of federal excise taxes that many companies in the transportation and manufacturing industries utilized in the past.  To qualify, the taxpayer sold or used the fuels listed below to operate a motor vehicle, motor boat or aviation equipment. The taxpayer was also required to be registered with the IRS as an Alternative Fueler. Specifically, the credit provided for a $0.50 per gallon credit for the following fuels: Liquefied petroleum gas “P-Series” fuel Compressed natural gas Liquefied hydrogen Fischer-Tropsch process liquid fuel from coal Liquid fuel derived from biomass Liquefied natural gas Liquefied gas derived from biomass Compressed gas derived from biomass The credit expired on December 31, 2016; and the Tax Cuts and Jobs Act failed to provide an extension of the credit.  However, on February 9, 2018, Congress passed the federal spending bill (The Bipartisan Budget Act of 2018), which contained many provisions generally referred to as “Extenders” including several energy related tax incentives.  The bill extends a few items impacting the transportation industry, including both the Alternative Fuel Credit and tax credits related to biodiesel and renewable diesel fuels, until December 31, 2017. We will continue to monitor the status of all of these credits and the potential of them being extended for the 2018 tax year. The IRS will have to act quickly on this matter and update related forms, procedures, etc…  For example, the IRS issued the 2017 Form 4136 without the lines required to claim these credits based on the current law at the time of their publishing.  Please contact any member of Schneider Downs Tax Department for additional information regarding these specific tax law extenders and any other changes that were included in the earlier Tax Cuts and Jobs Act. ### New Pennsylvania Withholding Requirement on 1099-MISC Filers for Non-Residents *Alert* - The Pennsylvania Department of Revenue delayed the penalty for failure to withhold until July 1, 2018. See Our Thoughts On dated 2/9/2018.  Under Act 43 of 2017, anyone that pays Pennsylvania-source non-employee compensation or business income to a non-resident individual or disregarded entity that has a non-resident member and is required to file a Federal Form 1099-MISC must also file the form with the Pennsylvania Department of Revenue (Department) and is now required to withhold Pennsylvania tax from such payments. These payments include non-employee compensation, rents and royalties. The withholding amount is equal to the rate specified at 72 P.S. § 7302 (currently, 3.07%). The withholding is optional for payments to a payee of less than $5,000 annually. Government payors are exempt from the withholding requirement; however, state-owned and state-affiliated universities are not excluded. Companies within the transportation industry should exercise caution before remitting state withholding on certain Independent contractors. Independent contractors that are merely transporting freight through Pennsylvania are generally not subject to withholding requirements and appear to be exempt from the Act’s withholding provisions. This is due to such payments being exempted from Federal Form 1099-MISC filing under the Federal Regulations. This exception applies to payments for transportation services including truck, rail, ship and air freight services. Payors that are required to withhold must do the following: Apply for a 1099-MISC withholding account by completing a PA-100 Pennsylvania Enterprise Registration Form electronically Electronically file quarterly withholding returns and annual reconciliations with the Department via e-TIDES; Electronically remit the withheld monies via e-TIDES; Payors are required to withhold and remit taxes on income according to the following schedule: Quarterly – If total withholding is under $300 per quarter, the taxes are due the last day of April, July, October and January. Monthly – If total withholding is $300 to $999 per quarter, the taxes are due the 15th day of the following month. Semi-Monthly – If total withholding is $1,000 to $4,999.99 per quarter, the taxes are due within three banking days of the close of the semi-monthly period. Semi-Weekly – If total withholding is $5,000 or greater per quarter ($20,000 per year). Additionally, payers must file reconciliation returns for each quarter and the annual withholding reconciliation statement (REV-1667 R) with the 1099-MISC statements for each payee. Payors will be liable for taxes not withheld in the same manner as employers withholding employee compensation. Payees having tax withheld must also file a copy of the 1099-MISC with their Pennsylvania tax return. Please visit the Our Thoughts On...Transportation and Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### New Limitation on Business Losses of Pass-through Entities The Tax Cuts and Jobs Act expands certain limitations on losses for non-corporate taxpayers. The new provisions limit the aggregate amount of deduction related to business income generated during the year to $500,000 (filing joint) or $250,000 (filing single), for tax years beginning after December 31, 2017 and before January 1, 2026. Any remaining excess business losses of the taxpayer are treated as part of the taxpayer’s net operating loss (NOL), which is carried forward to subsequent tax years. These NOL carryforwards are allowed to offset 80% of the taxpayer’s income in the following years. Excess business loss is the excess, if any, of: the taxpayer’s aggregate deductions for the tax year from the taxpayer’s trades or businesses, determined without regard to whether or not such deductions are disallowed for such tax year under the excess business loss limitation; over the sum of: the taxpayer’s aggregate gross income or gain for the tax year from such trades or businesses, plus $250,000, adjusted annually for inflation after tax years beginning after December 31, 2018 (200% of the $250,000 amount in the case of a joint return). The above changes are effective for tax years beginning after December 31, 2017, but expire after December 31, 2025. The above changes will present challenges to companies in the transportation industry. If the company decides to take advantage of the 100% bonus depreciation, would that create a loss for the current year? How will that loss impact the following year when the carryover of the NOL can offset only 80% of the company’s taxable income? Also, the cyclical nature of the transportation industry could cause companies with losses in one year to be limited in using those losses in the following years. Company management will need to make assumptions and prepare an analysis to chart the best course of action as these situations arise. Please visit the Our Thoughts On...Transportation and Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Like-Kind Exchanges No Longer Available for Personal Property Effective after December 31, 2017, the Tax Cuts and Jobs Act (“the Act”) repeals the favorable deferral of gain generated by like-kind exchanges of tangible personal property. This means that businesses in the transportation industry can no longer defer gains on the exchange of tractors, trailers, straight trucks, vehicles, equipment, and other personal property. However, the Act still allows a tax-free exchange for real property that is held for use in a trade or business or held as an investment. Like-kind exchanges were useful to many trucking companies to defer gains associated with the disposal of low tax-basis equipment. The ability to use the new 100% bonus depreciation should help to mitigate the impact of the loss of the like-kind exchange for equipment over the next several years. It should be noted that a transition rule may apply to qualified personal property that is relinquished before or on December 31, 2017 and the replacement property is later acquired in accordance with the 45-day identification deadline and 180-day exchange deadline. As companies and investors navigate through the complexities and the repeal of favorable items caused by tax reform, planning opportunities such as tax deferral of qualified real property, such as terminals and warehouses, should be considered. Please visit the Our Thoughts On...Transportation and Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Changes to the Entertainment Expense The Tax Cuts and Jobs Act permanently repealed most business deductions related to entertainment, amusement or recreation activities or a facility used in connection with any of the aforementioned activities. Membership and club dues remain non-deductible.The above changes apply to amounts paid or incurred after December 31, 2017.While the Act provided substantial changes to entertainment and employer transportation benefits, the deduction for 50% of food and beverage expenses associated with operating a trade or business is retained (meals consumed by employee while traveling for work). Additionally, the Act reduces the limit to 50% ( down from 100%) for the employer expenses associated with providing food and beverages to employees through an eating facility, which meets de minimis fringe requirements. Meals provided on-premises to employees for the convenience of the employer to employees, spouses and dependents remain 50% deductible until December 31, 2025, after which they become nondeductible.Taxpayers subject to the Department of Transportation hours of service limits, such as interstate truck operators and bus drivers, are still allowed to deduct 80% of business meals consumed, or related to, any period of duty for which those limits are in effect. Please visit the Our Thoughts On...Transportation and Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Business Interest Deduction The Tax Cuts and Jobs Act (“the Act”) provides for new limits on the business interest deduction that may impact the transportation industry. Effective for any tax year beginning after December 31, 2017, the Act places a limit on the deductibility of the business interest expense incurred. That limit is the sum of business interest income, 30% of the business’s “adjusted taxable income” and “floor plan financing interest.”“Adjusted taxable income” has a similar definition to EBITDA and includes a taxpayer’s regular taxable income computed without regard to: any item of income, gain, deduction or loss that is not allocable to the trade or business; any business interest or business interest income; any net operating loss deduction; the newly provided 20% deduction for qualified business income of a pass-through entity; and allowable deductions for depreciation, amortization, and/or depletion (for years prior to 1/1/2022).   “Floor plan financing interest” means interest paid or accrued on floor plan financing indebtedness. Floor plan financing indebtedness means indebtedness used to finance the acquisition of a motor vehicle held for sale or lease to retail customers and secured by the inventory so acquired. A motor vehicle includes an automobile, truck, recreational vehicle, motorcycle, boat, and farm machinery and equipment.The business interest limitation does not apply to small businesses with average annual gross receipts (for the three prior years) less than $25 million. Further, any disallowed interest expense exceeding the limitation may be carried forward indefinitely. However, excess business interest of a partnership does not remain at the entity level. Instead, it is passed through to each partner. This treatment will complicate calculations of deductible interest in future years at the partner level by requiring separate excess taxable business income calculations. Interestingly, the excess interest disallowed in the current year remains at the corporate level for both C and S corporations and will be carried forward to subsequent years.Transportation businesses that have traditionally relied on the business interest deduction—or that are contemplating taking on new debt—should consider the limitation. Careful tax planning in light of other provisions in the Act (e.g., new, more generous depreciation provisions) may help offset the limitation imposed on the business interest deduction. However, this determination is best made by a qualified tax professional.  Contact a Schneider Downs tax advisor to determine if this deduction could benefit you. ### The U.S. Is Becoming More Attractive for Manufacturing Firms Conditions are improving in the U.S. manufacturing industry, which may lead firms to consider constructing new facilities or relocating their operations back to America.Tax relief, in the form the Tax Cuts and Jobs Act, was signed into law by President Trump in late 2017. The bill lowered the U.S. corporate tax rate from 35% to 21%. In addition, favorable interest rates and a robust credit environment are also contributing to manufacturing growth. These factors allow U.S. firms to increase capital spending on technology and machinery. Advances in automation, as well as machine learning and simulation, are also contributing to productivity growth and increased efficiency, which should make the U.S. more attractive to manufacturers.President Trump has also called for the U.S. to renegotiate its trade agreements to be more equitable. Most business leaders generally praise the idea of revisiting our trade deals, but some warn of the potential negative effects. Under NAFTA, for example, many large U.S. manufacturing operations have come to rely on complex supply chains with suppliers in Canada and Mexico. If negotiations were to interrupt the free flow of goods over U.S. borders, it could cause interruptions in the supply chain. At the same time the White House is pushing back on international trade agreements, the EU is signing new agreements with Canada, Japan and Mexico; and the Trans-Pacific Partnership is proceeding without U.S. involvement.Generally, the U.S. manufacturing industry is improving. However, for firms to commit to long-term investments in American manufacturing, the U.S. will have to overcome significant hurdles. Labor costs continue to be significantly higher in the U.S. than in other parts of the world, and decades of uncertainty about the long-term viability of American manufacturing stand in the way. In order to succeed, the U.S. must advance the specific types of manufacturing where America has unique and long-lasting advantages over other countries. For more information on how the new tax laws are affecting the manufacturing industry, contact us.  ### Federal Government's Appetite for Revenue Nibbles Away at Tax Deductible Meals With apologies to William Shakespeare, a big tax question vexing many business owners these days is not, “To be or not to be?” but, rather, “Meals – deductible or not deductible?” Like many initial responses that come from tax advisors from whom guidance is sought, the answer is, “Well … it depends.” Fortunately, many meals paid for by businesses continue to remain deductible, so all is not lost. Businesses should not despair, as tax results should not be as painful as Hamlet’s tragic outcome. The Tax Cuts and Jobs Act (the “Act”) made a number of significant changes to federal tax law (click here to see our thoughts on the Act). And while many businesses should see a reduction in taxes due to the corporate rate reductions and the qualified business income tax deduction, other provisions established by the Act reduced some of those tax savings benefits. One causing much consternation is the proviso that repealed the prior law’s “exception to the deduction disallowance for entertainment, amusement or recreation” (as described in the Conference Report to Accompany the Tax Cuts and Jobs Act) and the impact it may have on deducting food and beverage expenses as business meals. While most entertainment-related expenses are now nondeductible, the good news is that the same Conference Committee said taxpayers, “May still generally deduct 50 percent of the food and beverage expenses associated with operating their trade or business.” Further, many of the specific provisions within the Internal Revenue Code dealing with food, beverages and meals were not affected by the Act and remain unchanged. Some examples of expenses still partially or fully deductible (ranging from 100% deductible to 50% deductible) include: Food and beverages furnished on business premises primarily for employees; Food and beverages furnished at annual employee picnics or holiday parties; Business meals provided at employee, stockholder or business meetings; Business meals for attendance at meetings or conventions of organizations such as business leagues and chambers of commerce; Meals consumed by employees while traveling; Meals required by federal law to be provided to crew members of certain commercial vessels; Meals provided to over the road truck drivers; and Meals that are de minimis fringe benefits. The above is not a comprehensive list. Taxpayers should address what types of food and beverage expenses – and possibly some entertainment expenses – still qualify for a deduction, and how they’re going to track those expenses in accounting systems. We will continue to monitor the tax changes and provide our insight into their application to help you optimize your own unique tax situation. Please contact your Schneider Downs tax representative for additional information regarding the above and/or for any other tax issues you may be facing. For questions on the new tax laws and entertainment-related expenses, contact us. ### Easing the Burden on Exempt Organizations' Application for Exemption The Internal Revenue Service (“IRS”) recently issued Revenue Procedure 2018-15, stating that it will no longer require a new exemption application from a domestic 501(c) organization that changes its corporate formation or place of organization, an action that historically required the filing of a new and properly executed Form 1023. The IRS determined that requiring a new application was often unnecessary and duplicative.The new guidance reduces the compliance burden on certain exempt organizations. Under the revenue procedure, surviving organizations of corporate restructurings are not required to file a new exemption application if such surviving organization is: A domestic business entity; Classified as a corporation (as defined); and Carrying out the same purposes as the exempt organization that engaged in the corporate restructuring. The restructuring organization must also be in good standing with the state where it’s incorporated (or formed, in the case of unincorporated associations). Additionally, for 501(c)(3) concerns, the articles of organization of the surviving entity must continue to meet the test regarding dedication of assets to exempt purposes. Finally, the surviving corporation will have reporting obligations that require the submission of information regarding the restructuring that will need to be filed with its Form 990.For transactions that don’t qualify as corporate reorganization, tax-exempt organizations will need to follow other procedures to apply for a determination letter if they want to continue to be recognized as tax-exempt.Please contact Schneider Downs’ tax professionals if you have any questions on how this new guidance affects your exempt organization. ### Changes in Ohio Financial Institutions Tax All large corporations begin small, with a vision and strategy. The Small Business Investment Company (SBIC) program provides loans to private equity funds licensed by the U.S. Small Business Administration (SBA) to help finance promising young companies across the country. Funds are able to borrow up to $150 million in low interest loans from the government to invest in the market. Once small businesses like Apple Computer, Buffalo Wild Wings and Costco have all benefitted from SBIC financing over the years.In Ohio, the program has been especially impactful. According to the Small Business Investor Alliance (SBIA), SBIC-leveraged funds have invested approximately $500 million in over 100 Ohio companies during the past eight years alone. These small businesses operate in critical industries like manufacturing, technology and healthcare. Despite the potential benefit of SBIC financing, however, Ohio has not historically been an ideal tax climate for SBIC-leveraged funds because of the Financial Institutions Tax, or FIT.The FIT is a tax levied on the apportioned equity capital or net worth of banks, bank holding companies, trust companies, nonbank small dollar lenders, certain savings and loans companies, and other similar institutions previously subject to the Ohio Corporate Franchise Tax. Insurance companies, credit unions and dealers in intangibles are financial services providers generally exempt from the FIT, which became effective January 1, 2014, upon the passage of HB 510.The rate used to calculate FIT liability varies with the size of the taxpayer. A rate of 0.8% is applied to the first $200 million in taxable capital, 0.4% for capital in excess of $200 million but less than $1.3 billion, and 0.25% for capital in excess of $1.3 billion. For SBIC-leveraged funds, the FIT represents a potentially significant cash outflow and expense.Interestingly, the applicability of the FIT to SBIC-leveraged funds appears to have been an oversight lost amidst the significant revisions to Ohio’s tax code included in HB 510, especially the introduction of the Ohio Commercial Activity Tax. Once the Ohio General Assembly recognized the issue, a proposed change to the definition of “financial institution,” excluding SBIC-leveraged funds, was introduced by state Rep. Derek Merrin in HB 592. Language in that bill was incorporated into another piece of legislation in late 2016 and ultimately passed, becoming effective retroactively in 2017. Any SBIC Fund adversely impacted by the issue could seek a refund from the state. The SBIA and other industry proponents heralded the legislative change.The recently passed Tax Cuts and Jobs Act has overshadowed other new laws and regulatory changes at the federal and state level, but at Schneider Downs we continue to monitor the entire tax landscape to provide you with insight on lesser-known yet important issues like the FIT. As always, if you have any questions about statutory or administrative changes and how they impact you, please don’t hesitate to reach out to your tax professional at Schneider Downs. ### AICPA Requests Guidance on TCJA On January 29, 2018, the American Institute of Certified Public Accountants (AICPA) sent a letter to the Internal Revenue Service (IRS) requesting clarification and guidance on a variety of provisions included in the Tax Cuts and Jobs Act (TCJA). In it, the AICPA identified three key areas that require immediate focus and attention: the deduction for qualified business income established under section 199A; procedures for making accounting method changes under section 481; and taxpayer relief from penalties resulting from the underpayment of tax.The deduction for qualified business income has been one of the most discussed components of the TCJA. Allowing a taxpayer to exclude from gross income 20% of amounts deemed to be “qualified business income,” the deduction is limited to the greater of 50% of W-2 wages paid by the business or the sum of 25% of W-2 wages paid by the business plus 2.5% of the “unadjusted basis immediately after acquisition of all qualified property” of the business. While this is a simple calculation on the surface, the AICPA noted in its letter that the language fails to account for a number of complex business ownership structures and situations. For example, there is a lack of clarity as to whether or not taxpayers can group together active trades or businesses to increase W-2 and basis limitations. The statute also does not address whether business incomes and losses from separate activities should be netted to calculate the deduction. Given that new section 199A deduction is a high-profile provision of the TCJA, the AICPA hopes the IRS will work quickly to provide guidance on its application.The AICPA has recommended to the IRS that it simplify the process to change accounting methods pursuant to the new law. A pertinent example is an overall method of accounting change (accrual to cash) made possible by the increase in the gross receipts test from $5 million to $25 million. The AICPA has recommended that the switch be an automatic change and that certain small taxpayers be exempt from filing Form 3115, “Application for Change in Accounting Method” altogether to streamline the process and ease the burden on both the IRS and taxpayers.The AICPA has also requested penalty relief for taxpayers adversely affected by the new rules. While the majority of the TCJA’s provisions are not effective until tax years beginning on or after January 1, 2018, there are provisions that may increase a taxpayer’s liability for the 2017 tax year. Most notably, the AICPA highlighted that the section 956 deemed foreign income inclusion known as the “toll-charge” could create underpayments of estimated tax because calendar year corporate taxpayers made fourth quarter estimated payment for 2017 by December 15, 2017.At Schneider Downs, we continue to monitor the situation and will keep you abreast of the ongoing dialogue between the IRS and AICPA on this issue. As always, if you have any questions about the new tax reform bill and how it may affect you or your business, please do not hesitate to reach out to your tax professional at Schneider Downs. ### Pennsylvania 1099-MISC Update from the Department Businesses and organizations have been struggling to implement the withholding and reporting obligations passed under Act 43 of 2017.  Act 43 requires withholding on payments to non-resident individuals of Pennsylvania-source income, including lessors.  The withholding and reporting law was passed in October 2017, but the issues surrounding it may not have been fully appreciated by taxpayers until December, when the Pennsylvania Department of Revenue issued an Informational Notice on the subject.Since the release of that Informational Notice by the Department, taxpayers have asked many questions, not least of which is, how to timely implement the withholding and reporting requirements on such short notice.  The Pennsylvania Institute of Certified Public Accountants (PICPA) took up the cause on behalf of clients and taxpayers, and, in late January, sent a letter to the Department requesting a one-year delay in the implementation of the new 1099-MISC reporting, citing the challenges and burdens of implementing the new reporting requirements.The Department stated, in its response to the PICPA’s request, that no assessments will be made for failing to withhold 1099-MISC income for periods prior to July 1, 2018.  The Department does expect taxpayers to file 1099-MISC with the Department by January 2019.  The Department also indicated that it will be providing updated guidance in the coming weeks and months that will be available on the website www.revenue.pa.gov.  Currently, the website includes a revised Information Notice and Fact Sheet (see links below) on the withholding requirements.  More developments related to the 1099-MISC withholding requirement are expected, so check our website for updates.http://www.revenue.pa.gov/GeneralTaxInformation/TaxLawPoliciesBulletinsNotices/Documents/Informational%20Notices/info_notice_pit_2017-01.pdfhttp://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/EmployerWithholding/Documents/1099-MISC_Fact_Sheet.pdf ### Impact of Tax Reform on Professional Service Organizations The Tax Cuts and Jobs Act (The Act) was signed into law on December 22nd and brings with it the most sweeping changes to the Tax Code in more than 30 years.  In some cases professional service organizations may be one of the few industries that is a loser in the context of overall tax reform.  While the top marginal rates are lower and C corporations are now eligible for the reduced flat rate of 21%, pass-through entities or sole proprietorships that have income above a certain threshold will not be eligible for the pass-through deduction.  The summary below illustrates this and a few other key changes that will impact taxpayers in this industry. Reduced corporate tax rate of 21% applies to all C corporations.  The flat 35% tax rate that previously applied to Professional Service Corporations (PSC’s) has been removed. The 20 % deduction for pass-through entities does not apply to specified service businesses in the areas such as health, law, accounting, actuarial science, performing arts, athletics, financial services, brokerage services, consulting or any business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.  The law specifically excludes architecture and engineering from the specified service definition.  If your business falls within one of these specified service areas you are eligible for this deduction for income up to $315,000 Joint filers ($157,500 individuals) and it is completely phased out at $415,000.  We expect further guidance regarding the definitions of what activities fall within the above specified service categories.  Stay tuned. The Act provides a limitation on the deductibility of business interest expense.  This limitation is based on 30% of taxable Earnings Before Interest, Depreciation, Taxes and Amortization (EBITDA) for tax years 2018 to 2021.  The limitation is then based on 30% of Earnings Before Interest and Taxes (EBIT) for tax years beginning after 2021.  Businesses with average annual gross receipts of less than $25 million are not subject to this limitation.  The limitation is determined at the entity level. Entertainment expenses under the Act are now 100% non-deductible.  This will have a significant impact on cost of client entertainment.  Previously these expenses were subject to a 50% limitation.  Food and beverages are still subject to a 50% deduction limitation assuming they are directly connected to a trade or business.  The Act also eliminates the deduction for meals provided for the convenience of the employer that is currently 100% deductible, but applies to amounts paid or incurred after December 31, 2025. The Act disallows excess business losses for taxpayers other than C corporations beginning with the 2018 tax year and ending with the 2025 tax year.  An excess business loss is determined at the individual taxpayer level and aggregates pass-through and sole proprietorship losses that exceed $500,000 for joint filers ($250,000 for all other taxpayers) in any tax year.  The amount of losses in excess of $500,000 will carry forward to future tax years as a Net Operating Loss (NOL). Certain fringe benefits are now no longer deductible unless they are included in the respective employee’s compensation. Please contact any member of Schneider Downs Tax Department for additional information regarding these specific tax law changes and any other changes that were included in the Tax Cuts and Jobs Act. ### Tax Reform Bill Includes Extension of Time to Repay Retirement Plan Loans With sweeping tax reform going into full effect last month, many 401(k) participants are wondering how and if their plans will be affected. The answer to that question is: not much. The biggest news for 401(k) owners with regard to the new tax laws is the extension of payback dates on outstanding loans.Prior to the tax reform bill, participants who’d left employment with an outstanding loan were expected to pay off the balance within 60 days of separation or face a 10% withdrawal penalty and have the distribution be considered taxable income. The new bill provides a greater window, as individuals now have until the filing deadline of their individual tax return to avoid the tax consequences of a “deemed distribution.” For example, if an employee is terminated today with an outstanding loan, he or she would have until April 15, 2019, to pay it back, or October 15, 2019, if an extension is requested.The new law benefits both employees and employers. Extending the loan repayment deadline gives participants more time to pay off outstanding loans and, more importantly, incentivizes an employee to take out a loan rather than process a hardship withdrawal, which incurs both a withdrawal expense and a taxable distribution subject to penalty. The tax reform is also good news for employers since it ultimately reduces the leakage of funds in 401(k) plans.For more information on the payment extension of retirement plan loans, please contact us.  Visit the Our Thoughts On...blog to read similar articles.   ### Proposed Pa. House Bill Would Repeal Department of Revenue Disallowance of 100% Bonus The recently enacted Tax Cuts and Jobs Act (“Act”) signed into law December 22, 2017 has brought significant changes to the federal tax system.  There are numerous unanswered questions involving the Act that are still being researched by tax professionals; technical corrects to the law are needed by Congress on some items, and the IRS needs to issue guidance in many others.  The Act’s implementation uncertainties are not just limited to federal tax issues, however; it is also causing anxiety and concern with many states. Please click here to see Schneider Downs’ tax reform guide for a more comprehensive analysis of the new law. Under the Act, bonus depreciation, Internal Revenue Code (“IRC”) Section 168(k), doubles from 50% to 100% for property purchased between September 27, 2017 and January 1, 2023, effectively allowing an immediate federal tax write-off for qualifying property for both new and used property.  Many states however, including Pennsylvania, do not allow bonus depreciation and will not be allowing the immediate 100% bonus write-off under their own income tax rules; they “decouple” their state tax depreciation rules from federal tax depreciation rules. In response to the federal changes in depreciation produced by the Act, Pennsylvania Department of Revenue (“PADOR”) issued Corporation Tax Bulletin 2017-02 (“the bulletin”) on December 22, 2017 (see SD article dated January 4, 2018).  Unfortunately, the initial guidance from PADOR with respect to the new 100% bonus depreciation rules is particularly harsh for corporate taxpayers (i.e., not applicable to “S” corporations, partnerships, trusts and individuals). The bulletin provided that “any deduction for depreciation of qualified property under Section 168(k) of the Internal Revenue Code (i.e., bonus depreciation) must be added back to Pennsylvania taxable income for corporate net income tax purposes.”  It further indicated that there are no additional mechanisms for cost recovery with respect to the qualified property, effectively denying any current depreciation-related deduction with respect to property using 100% bonus depreciation for federal tax purposes.  PADOR did concede, however, that a taxpayer could take an additional deduction when the qualified property is sold or otherwise disposed of in a later taxable year. This could substantially increase the cost of investment in Pennsylvania for corporate businesses. Recently, on January 9, 2018, a Memorandum (the memo) was sent to all Pennsylvania House members by Representative Francis X. Ryan introducing a call for House Bill HB2017, which is designed to reverse the “draconian pronouncement” of Bulletin 2017-12 and restore depreciation deductions for machinery and equipment to match the federal statutory scheme. In the memo, Mr. Ryan notes he plans to introduce legislation in the near future and is requesting cosponsors to join him. However, at this time, legislation has not been introduced to reverse the provisions of Bulletin 2017-02. As a side note, however, while bonus depreciation is not allowed for “S” corporations, partnerships, trusts or individuals, either, those taxpayer can at least claim depreciation on assets where 100% bonus depreciation is claimed for federal purposes.  In those instances, depreciation can be claimed using other depreciation methods allowed for Pennsylvania purposes. You may want to contact your state representative to convey your position about the need for this proposed bill.  We will keep you updated on the potential legislation, so please continue to visit the Our Thoughts On blog or contact your Schneider Downs representative.   ### Hardship Availability Due to Modification of Deduction for Personal Casualty Losses Under the Tax Cuts and Jobs Act In general, the Internal Revenue Service’s hardship distribution regulations provide that a hardship distribution may only be made on account of a participant’s immediate and heavy financial need. This “immediate and heavy financial need” for hardship withdrawals has certain requirements that include medical, education, funeral, home purchase, foreclosure prevention and casualty loss.   Previously, casualty loss allowed for “Expenses for the repair of damage to the employee’s principal residence that would qualify for the casualty deduction under section 165” (this generally included property losses that were not covered by insurance for storms, fires and other like casualties).  The recently enacted tax reform legislation, commonly referred to as the Tax Cut and Jobs Act, made a change to the types of personal casualty losses that qualify for a casualty deduction under Section 165 of the Internal Revenue Code. This temporary change, applicable to tax years 2018-2025, affects plans that permit hardship distributions to their participants as they are no longer allowed hardship withdrawals unless the casualty loss is credited to a disaster area declared by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.  It is still unclear as to whether or not that this provision was meant to affect hardship withdrawals from 401(k) plans or if it was a consequence not intended.  However, the existing regulations and statute language indicate that the previous qualification for principal residence casualty damage has been excluded unless in a disaster area declared by the federal government.  Plan Sponsors need to look for future guidance and developments regarding this type of withdrawal provision. For more information, contact Schneider Downs or visit the Our Thoughts On blog. ### Pennsylvania Nonprofit Alert: State Raises Audit Requirement Threshold On December 22, 2017, Governor Tom Wolf signed two legislative measures that amend the Pennsylvania Solicitation of Funds for Charitable Purposes Act. Act 71 of 2017, intended to align state audit requirements for financial reports with those under federal law, raises the threshold on the amount of annual contributions nonprofits are permitted to receive before being subject to an audit, review or compilation. Under the new law, financial statement requirements are as follows: Audit - $750,000 or more in gross annual contributions Review - $250,000 to less than $750,000 in gross annual contributions Compilation - $100,000 to less than $250,000 in gross annual contributions Optional for those that receive less than $100,000 in gross annual contributions Pennsylvania Code defines annual gross contributions as total national contributions, not simply those received from within the state. To determine annual gross contributions, include: federated campaign contributions; the contribution portion of membership dues; all income from fundraising and gaming events; contributions from related organizations; and general contributions. The second bill, Act 72 of 2017, provides that a nonprofit annual registration statement will be considered filed as timely if it is postmarked on or before the renewal date. Previously, the registration statement was only considered filed as timely if it was received by the Bureau of Charitable Organizations by the renewal date. The goal of the bill is to align the due date standard with nearly all other state filings and to eliminate unnecessary fines and penalties on nonprofit organizations. Acts 71 and 72 are both effective February 20, 2018. For purposes of determining financial statement requirements, they will become effective for organizations with a year-end of March 31, 2017 or later. The annual registration statement postmark date standard becomes effective for filings due after February 20, 2018. For more information on the audit requirement thresholds, contact us.  ### ASU 2018-01 Lessens the Blow of Accounting for Land Easements Under New Lease Requirements Back in February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. After this issuance, however, numerous questions surfaced concerning the application of the lease requirements on land easements. Easements represent the right to use, access or cross another entity’s land for a specified purpose. An example is when a company is given the right to pass a pipeline through a field or run an electric cable over a farm while the landowner continues to use the property as before. Currently, entities are varied in their approach to accounting for land easements; some choose to represent them under lease guidance, while others do so under intangible or property, plant and equipment guidance. Because of this difference, many entities that don’t currently account for land easements under lease guidance have indicated that the process of evaluating all existing or expired easements to determine if they meet the definition of a lease under the new requirements is both costly and complex. These same entities note that most of their existing easements would not meet the definition of a lease or, if they did meet the definition, many are prepaid and already recognized on the balance sheet. In response, the FASB has issued ASU 2018-01, which clarifies the new lease accounting standard (2016-02) with regard to land easements. The new ASU includes an optional transition practical expedient that, if elected, would not require an organization to reconsider its accounting for existing or expired land easements not currently accounted for under the old lease accounting standard. All new or modified land easements would have to be evaluated for recognition as a lease once a company adopts ASU 2016-02. If a company does not elect this practical expedient, all existing or expired land easements will have to be evaluated with respect to ASU 2016-02. This update provides relief to utility and oil and gas companies with existing property rights of way for gas pipelines and electric power lines when they make the transition to the new lease accounting standard. The ASU will have the same effective date as the new lease standard. For public companies, this means effective for annual reporting periods beginning after December 15, 2018. All other entities would have an additional year. For more information on this ASU or others, contact us.  ### Reminder: Foreign-owned U.S. Disregarded Entities Face New Reporting Requirements Until recently, disregarded entities (DREs) were typically not required to obtain an employer identification number (EIN) and generally did not have federal tax filing requirements. As long as the DRE or its foreign owner did not receive U.S.-source income, federal income tax returns were not necessary, unlike the situation for corporations, partnerships and foreign corporations engaged in U.S. trade or business, which must file annual tax returns and, in certain cases, Form 5472.Final Regulations (TD 9796), applicable to tax years beginning on or after January 1, 2017, changes all that and imposes new filing requirements on DREs. Under TD 9796, domestic disregarded entities wholly owned, directly or indirectly, by foreign persons are now treated as domestic corporations solely for purposes of making them subject to the reporting requirements that apply to 25% foreign-owned domestic corporations 1. Essentially, DREs are now treated as separate from their owners for purposes of reporting, record maintenance and associated compliance. A foreign person is deemed to wholly own a domestic disregarded entity if that person has direct or indirect sole ownership of the entity.For taxable years beginning in 2017, then, foreign-owned domestic disregarded entities must maintain a set of adequate financial records, obtain from the Internal Revenue Service (IRS) an EIN, and file both a U.S. corporate income tax return and Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation). Further, the new regulations expand the scope of reportable transactions that give rise to a Form 5472 filing requirement which include sale, assignment, lease, license, loan, advance, contribution or other transfer of any interest.Final Regulations are designed to improve financial transparency and enhance sharing of information with partner authorities. The new rules could potentially lead to a time consuming and burdensome tax preparation process for foreign-owned DREs, and result in penalties for failure to file 5472 and/or maintain adequate records.On the other hand, there are some planning opportunities. A single member LLC (which is, by default, treated as a DRE), may consider an election to be treated as a corporation for U.S. income tax purposes to take advantage of the newly established corporate income tax rate (21%). Note that this would not eliminate the tax return filing requirement or, in some instances, the requirement to file Form 5472.Alternatively, the LLC may be liquidated and avoid a U.S. corporate tax return filing requirement going forward until the property is sold. But this option may have broader tax implications, including foreign tax consequences, depending on the entity’s ownership of other assets and entity’s U.S. activities in general.Contact your SD service team for assistance with your filing requirements.1 Internal Revenue Code Section 6038A ### Pa. Legislators Hope to Cut Permit Red Tape, Smooth Path for Drillers The Pennsylvania Department of Environmental Protection (DEP) claims it will render a decision on a drilling permit for new well within 45 days of application. The timing on that determination, however, actually averages closer to 100 days. Similarly, the state is supposed to make decisions on earthmoving permit applications within 14 days, but it customarily takes quite a bit longer, sometimes over 200 days in certain parts of the commonwealth. Whether seeking to drill a conventional or unconventional well, these time variances and delays increase the possibility of gas companies moving their drilling operations outside Pennsylvania’s borders. Noting the state’s lengthy and cumbersome bureaucratic regulations can yield unfavorable economic consequences, Republican state legislators have begun reassessing existing guidelines and are heading a handful of bills that seek to cut red tape and repeal outdated protocols. Rep. Kristin Phillips-Hill, R-York County, is backing a standard that would eliminate two regulations for every one created, citing that extensive dealings with government regulations can place a large burden on small companies, and  having employees – usually owners – need to shift focus from growing the business to mere compliance often leads to adverse side effects. Supporters say the efforts to deregulate certain legislation stand to decidedly reduce the amount of time it takes the DEP to hand down decisions on new drilling and earthmoving permits. On a related note, another proposal would require state agencies to provide greater transparency to business owners regarding the overall permit application process, a move that could effectively lead to more accurate and timely planning by oil and gas companies. These reports are positive news for operators looking to move Pennsylvania’s natural resources to market. Time will tell if the actions of the state lawmakers will make a difference. If your company would like help navigating the industry’s regulatory climate, we invite you to contact the Schneider Downs Energy and Natural Resources Group. For additional information, visit the Our Thoughts On blogsite. ### State and Local Property Tax Deduction Update New bipartisan legislation introduced in the House, titled “The Cutting Local Taxes by Reinstating SALT Bill (HR 4789)” (the “Bill”) would now allow a deduction for prepaid 2018 property taxes paid in 2017.  This new proposal would provide certain taxpayers with an opportunity to claim a deduction for prepaid property taxes paid in 2017 defeating a $10,000 ceiling on the deductibility of state and local taxes recently enacted by The Tax Cuts and Jobs (the “Act”). Under the Act, beginning on January 1, 2018, a taxpayer can only claim an itemized deduction for state and local taxes of up to $10,000 for the aggregate of: state and local property taxes not paid or accrued in carrying on a trade or business, or other specified activity, and  state and local income tax paid or accrued in the taxable year. This provision of the Act triggered many taxpayers, often on the advice of tax professionals, to prepay 2018 real estate tax obligations in the hope of claiming a deduction in 2017 for an expense that would otherwise be nondeductible if paid in 2018.  As detailed in a previous Our Thoughts On post, “Tax Reform and Payment of Taxes Prior to December 31, 2017,” the prepayment was likely to be disallowed.  The IRS eventually released an advisory notice on December 27 stating, “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.”  In states such as Pennsylvania, which make most assessments after December 31, the prepayments would likely have been treated as nondeductible deposit against a tax and essentially would have amounted to an interest-free loan by the taxpayer to the municipality taxing the real estate. The Bill’s sponsors, two representatives from New Jersey, explain that the Bill would allow a deduction of 2018 property taxes, paid by December 31, 2107, regardless of whether the tax was actually assessed before 2018.  Rep. Leonard Lance, R-N.J. stated, “Taxpayers rightfully believe that the Tax Cuts and Jobs Act signed into law last month would allow 2018 property tax prepayments to be fully deductible on their 2017 tax returns.  It took the IRS five days after the bill passed and four days before the end of 2017 to issue guidance that would limit the deductibility based on the date of the property tax assessment.  Rep. Josh Gottheimer, D-N.J., added, “The IRS rushed a baseless decision to limit taxpayers' ability to deduct these payments on their 2017 returns.  This bill would reflect the will of Congress that these prepayments are and should remain fully deductible.” Whether the proposal is only political posturing or has an actual chance of passing at this time is unknown.  Schneider Downs’ Tax Advisors will continue to monitor additional proposals, changes and technical corrections to the Act.  If you have questions, please contact us. ### TPP Likely To Pass Without U.S. This month the 11 remaining countries in negotiations under the Trans-Pacific Partnership (TPP) signaled that the agreement will move forward under a new version called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with an expected signing to take place on March 8 in Chile. The remaining nations of Australia, New Zealand, Japan, Malaysia, Vietnam, Singapore, Peru, Chile, Canada, Mexico and Brunei represents close to 15% of the global economy.The deal plans to stimulate economic growth among the 11 countries by eliminating 98% of tariffs and standardize rules and regulations between participants. The deal has been modified from the original proposal with some changes to the tariffs selected and a suspension of some provisions pushed by the U.S. concerning government procurement and intellectual property rights. While the agreement is expected to be signed in two months, implementation could take up to a decade as countries phase out existing tariffs.Malcolm Turnbull, the Australian prime minister, has publicly stated that the deal will include a path for U.S. participation if it desires to join in the future. If the U.S. were to join, this deal would cover 40% of the global economy and a quarter of world trade. The U.S. is currently engaged in renegotiations on the North American Free Trade Agreement (NAFTA) with Canada and Mexico and a trade deal with South Korea.If CPTPP were to pass, a second wave of participants have expressed interest in joining, including the United Kingdom, Sri Lanka, Indonesia, Taiwan, Thailand, the Philippines and Colombia. For more information on the Trans-Pacific Partnership, contact us.  ### SEC Effects of Tax Reform On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118) in response to the passage of the Tax Cuts and Jobs Act (Act), which describes three scenarios associated with a company’s status of accounting for income tax reform: (1) a company is complete with its accounting in regards to the effects of tax reform, (2) a company is able to reasonably estimate the effects of tax reform, which is recorded as a provisional amount, or (3) a company is not able to reasonably estimate the effect of tax reform and continues to apply the provisions of tax laws that were effective immediately prior to tax reform being enacted.  In some instances, an entity may not necessarily have the information available, prepared or analyzed for income tax effects in order to determine the reasonable estimate related to provisional amounts.  For these instances, there are no expectations related to including these provisional amounts in the company’s financial statements, since a reasonable estimate cannot be determined.  These financial statements would instead reflect the income tax effects of the Act in which the accounting under ASC 740 is complete.  The company would report any provisional amounts for the specific income tax effect that is incomplete but a reasonable estimate could be determined.  Once a reasonable estimate is able to be determined, it should be included in the financial statements in the first reporting period in which the company was able to determine the reasonable estimate. A company’s measurement period begins in the reporting period that includes the Act’s enactment date and ends once the company has obtained, prepared and analyzed all the information needed to complete the requirements under ASC 740.  For reporting purposes, any provisional amounts or adjustments to provisional amounts should be included in income from continuing operations as an adjustment to tax expense/benefit in the reporting period the amounts are determined. Entities should include the following financial statement disclosures to provide information about the material financial reporting impact of the Act if the accounting under ASC 740 is incomplete, whether or not a reasonable estimate can be made: Qualitative disclosures of the areas for which the accounting is complete; Items recorded as provisional amounts; Current or deferred tax amounts for which the income tax effects have not been completed; Reasons for the incomplete accounting; Additional information or analysis that still needs to occur as well as other information that would be relevant why the issuer was not able to complete the accounting; Nature and amount of adjustments on the effective tax rate; and When the accounting for the income tax effects is completed. In summary, the SEC staff, having recognized in advance the complexity of the new law and the effort that would be necessary to compute the impact on financial statements, has provided a year from inception to fully complete the analysis. If you have questions about the SEC and tax reform, contact us.  ### 2017 TAX CUTS AND JOBS ACT: EFFECT OF TRANSPORTATION FRINGE BENEFITS ON UNRELATED BUSINESS TAXABLE INCOME (UBTI) Under the 2017 Tax Cuts and Jobs Act, Section 274(a) of the Internal Revenue Code includes a new provision that expressly disallows deductions for “the expense of any qualified transportation fringe (as defined in section 132(f)) provided to the employee of the taxpayer.” A “qualified transportation fringe benefit” includes anything provided by the employer to an employee for commuter transportation including buses, vanpools, transit passes, parking passes or reimbursements, and bicycle commuting reimbursements. The new provision requires tax-exempt organizations that provide such benefits to their employees to report as Unrelated Business Taxable Income (“UBTI”) the value of those benefits.  This new rule is effective for amounts incurred after December 31, 2017. In addition, the newly-added Section 274(l) of the Code generally disallows deductions for any expense incurred for the purpose of providing transportation, payment or reimbursement to an employee related to travel between the employee’s residence and his or workplace.  The stated purpose of the rule is to put tax-exempt organizations on par with taxable organizations, since under the new tax law, for-profit entities are no longer allowed to deduct the fringe benefits listed above that are provided tax-free to their employees. Section 132(f) of the Internal Revenue Code, which governs qualified transportation fringe benefits remains relatively unaffected by the Tax Cuts and Jobs Act; but the bill does suspend qualified bicycle commuting reimbursement from the definition of qualified transportation fringe benefits until January 1, 2026.  Under the old rules, not-for-profit employers were able to provide these benefits to employees as tax-free items.  Starting in 2018, however, if a tax-exempt organization wants to continue providing these benefits tax-free, the organization is required to include the value of the benefits in UBTI and pay tax on them.  These transportation benefits will continue to be non-taxable fringe benefits to employees under the new Act. If the tax-exempt organization wants to avoid the new tax, either (i) it can provide the benefits as taxable items to the employees (and include the cost of the benefits in the employees’ Forms W-2) or (ii) it can stop providing these benefits.  If the organization chooses to treat these benefits as taxable wages, it will be subject to higher FICA and Medicare payroll taxes and the employees will have increased personal income taxes. Two small exceptions to Section 274(l) exist for employers that lets them avoid the UBTI: (i) expenses that are “necessary for ensuring the safety of the employee” between the employee’s residence and workplace will continue to be deductible (although the bill does not state what expenses qualify as necessary to ensure an employee’s safety); and (ii) between December 31, 2017, and before January 1, 2026, employers will be able to deduct qualified bicycle payments or reimbursements to employees only if this method of transportation is regularly used for travel between the employee’s residence and place of employment.” (This benefit, however, will no longer be a tax-free benefit to the employee.) Employers may need to amend their Section 125 Cafeteria Plan and / or Section 132(f) Qualified Transportation Plan documents as well as any other informative documents to reflect changes in benefit offerings.   These changes can only be effectuated prospectively. ### Employers Take Note: IRS Issues 2018 Income Tax Withholding Tables With passage of the Tax Cuts and Jobs Act, the IRS has now assumed the important task of implementing tax reform. On January 11, the agency began this process by releasing the new 2018 federal income tax withholding tables. Though taxpayers must begin using the new tables no later than February 15, 2018, the IRS strongly encourages employers to update their withholding compliance procedures as soon as possible. In an effort to lessen the burden of compliance, the IRS formulated the 2018 withholding tables to correspond with the current version of Form W-4; though a revision to the Form is expected at a later date. Additionally, the IRS ensures employers and employees that they may continue to use withholding allowances already claimed on previously filed Form W-4s. The 2018 withholding tables incorporate the most significant individual income tax changes under the Tax Cuts and Jobs Act, including the repeal of the personal exemption, the increase to the standard deduction, the new marginal tax rates and changes in tax brackets. The IRS notes that individuals may find their withholding thresholds have decreased as a result of these changes, thereby increasing their after-tax income. Treasury Secretary Steve Mnuchin, speaking to the White House press pool, estimated that 90% of employees will see their take home pay increase under the new withholding guidelines. In order to better illustrate the real world impact of the new withholding tables, the IRS intends to revamp the withholding tax calculator already available on their website. The new calculator will also allow taxpayers to see how their after tax income will be affected by other tax reform changes such as the revisions to itemized deductions, the increase in the child tax credit, and the new dependent credit. The agency hopes to have the updated calculator ready by the end of February. The new 2018 individual income tax withholding tables are just the first step on the road to fulfilling the objectives of tax reform. Schneider Downs is committed to keeping our clients and the general public up-to-date on new developments in the reform process. For more information on the 2018 withholding tables, please click here. We also invite you to visit our Tax Reform Blog, or contact our offices personally if you have any questions. ### Rewind: Schneider Downs Energy and Natural Resources Industry Group 2017 Recap Schneider Downs’ Energy and Natural Resources Industry Group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products, and alternative fuel and energy industries. Our Energy and Natural Resources Group is specifically focused on your industry, and our advisors are experienced in your operating environment. Throughout the year, members within the industry group attended events and seminars related to the industries to keep current on technical knowledge and trends and to provide clients with the most up-to-date insights. In 2017, our professionals attended local and national conferences and seminars sponsored by organizations including: American Institute of Certified Public Accountants Professional Development Institute Marcellus Shale Coalition Pennsylvania Independent Oil and Gas Association Ohio Oil and Gas Association Council of Petroleum Accountants Societies In addition to attending local, regional and national seminars, our professionals spoke at seminars and various events throughout the region.  Our professionals use the knowledge obtained from conferences, seminars and publications within the industries to write commentaries on topics ranging from legislation changes to operational challenges that will impact companies within the industries. During 2017, we wrote 26 energy-specific articles published through the Schneider Downs Our Thoughts On blog to provide insight on current matters and help companies navigate issues. In December, Schneider Downs held an internal Energy and Natural Resources Industry Update, a day-long event that covered topics including the general state of the industries, issues surrounding depreciation, depletion and amortization (DD&A) and property, impairment, asset retirement obligation and asset abandonment. The event was capped by a discussion from featured speaker David J. Spigelmyer, President of the Marcellus Shale Coalition. This investment in our employees’ knowledge ensures that they are up-to-date on current trends and topics within the industries and can fully assist clients when they are working on engagements. With offices in Pittsburgh and Columbus, the Schneider Downs Energy and Natural Resources Energy Group is available to discuss industry issues at your convenience. ### What the Government Shutdown Means for the IRS The Internal Revenue Service ("IRS") has updated their Fiscal Year 2018 Lapsed Appropriations Contingency Plan ("the plan") which outlines how they plan to deal with the first five business days of a government shutdown, also known as a lapse in appropriations, during the 2018 filing season. The filing season is still scheduled to begin on January 29, 2018, only one week from today, with the government currently shut down. If the shutdown lasts for longer than five business days the plan will be reassessed to identify any necessary adjustments to positions and personnel.According to the plan if a lapse in funding occurs the IRS will "continue return processing activities to the extent necessary to protect government property, which includes tax revenue, and maintaining the integrity of the federal tax collection process." In the plan, the IRS categorizes activity based on its impact on the Treasury Department's vital functions. One part of the plan includes those activities that are "necessary for the safety of human life or protection of government property." These are functions that they require the employees to continue performing including but not limited to "electronic returns that are processed systemically, processing of paper returns through batching, continuing use of computer operations to prevent the loss of data, and maintaining criminal law enforcement and undercover operations."The Senate reached a compromise today that will provide government funding through February 8th. The House of Representatives still must vote to pass this temporary funding bill, but this does not provide certainty regarding the passage of a longer term government budget. Please stay turned for additional updates and contact us with questions.  ### Worker Shortage an Ongoing Challenge for Construction Firms in 2018 In a recent survey of more than 1,600 construction firms conducted by Associated General Contractors of America, respondents reported that their companies will struggle to find and retain workers for the upcoming 2018 summer construction season.The survey showed that the labor shortage spans all regions of the country and impacts both union and nonunion firms of all sizes, including various specialty markets.  Specialties needed include carpenters, electricians, bricklayers, concrete workers and plumbers.  Most firms surveyed believe these labor challenges will continue or even become a greater challenge over the next 12 months.According to the survey, firms are hiring roughly the same number of workers as in past years; however, the quantity of job openings has increased significantly.  The result is that contractors are taking more time on average to fill open positions, and therefore, must pay more overtime to existing workers and spend more on training lesser-experienced hires.In order to attract new workers, firms are engaging directly with career services organizations at high schools, colleges, and vocational programs in order to make connections with workers early in their careers and aid in recruitment.Firms are responding to the labor shortage by increasing base pay rates and offering new benefits and bonuses to retain workers.  Firms are also increasing their usage of subcontractors to complete work as well as staffing firms to find workers.  Additionally, firms are investing in new equipment, tools and machinery designed to use man hours more efficiently.  To a lesser extent, firms are increasing their utilization of offsite prefabrication and virtual construction methods to make more efficient use of man hours.As firms improve pay and benefits, they continue to make strides to improve their own margins on employee labor.  According to a Construction Financial Management Association annual benchmarking poll of construction companies, average revenue per full-time equivalent employee (FTE) increased from approximately $338,000 to $352,000 in 2016 and 2017, respectively.  This translated to an increase in gross profit per FTE from approximately $46,000 to $51,000 in 2016 and 2017, respectively.While the labor shortage is not a new challenge for the construction industry, it will continue to require the attention and careful management by firms in 2018. If you have any questions about the worker shortage challenge, contact us.  ### Real Estate Industry: Opportunities in the Tax Reform Act On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (The Act) into law. The Act provides opportunities for all facets of the real estate industry, including many real estate investment and developer-friendly provisions, with few industry offsets.  The following are highlights of the recently signed legislation’s impact on the real estate industry: Internal Revenue Code (IRC) Section 1031 like-kind exchanges retained for real property Ability to elect out of the 30% of adjusted business income interest expense limitation and fully deduct interest expense in exchange for a nominal increase in asset life on building property lives (Non-residential:  39 yr. to 40 yr.;  Residential:  27.5 yr. to 40 yr.) Bonus depreciation increased to 100% from 50% for qualifying assets place in service after September 27, 2017 and before January 1, 2023.  (Yes, this applies to 2017 tax year!) Bonus depreciation rules expanded definition to “used” property (as long as property is first used by the taxpayer) IRC Section 179 expensing increased to $1 million; Phase-out begins at $2.5 million Roofs, heating, ventilation and air conditioning, fire protection, alarm systems and security systems in non-residential property are now eligible for IRC Section 179 expensing Historic Rehabilitation Tax Credit retained at 20% of qualified rehabilitation expenditures; however, the credit will be required to be claimed ratably over a five-year period in the year the structure is placed into service Low-Income Housing Tax Credit retained (name changed to Affordable Housing Credit) Pass-through and Rental Real Estate income eligible for 20% deduction – limited to greater of 50% of qualified W-2 wages allocated from trade or business, OR 2.5% of unadjusted property basis plus 25% of qualified W-2 wages Carried interest provision retained for capital gains tax treatment; however, three-year holding period will apply to partnership interest and/or business assets Aggregate pass-through business losses are limited to $500,000 for married filing joint filers; unallowed pass-through business losses carry forward as a net operating loss and can be utilized in future years (subject to 80% taxable income limitation) Technical termination of partnerships is eliminated.  Formerly applied when more than a 50% ownership change occurs.  This will eliminate short-period returns or restarting depreciable lives for ownership changes/transfers. Top individual rates reduced to 37% (phasing in at $600,000) from 39.6% (phased in at $466,000) Estate tax exemption limit increased from $5.5 million to $11 million for each taxpayer and spouse ($22.4 million for married couples for 2018).  Basis step-up retained and 40% tax rate remains unchanged. The combination of the above provisions and lower tax rates should favorably impact the real estate industry.  Taxpayers should begin to analyze how these new provisions will impact their future tax liabilities.  For more information on how the new provisions can present both opportunities and challenges, please contact any of our Real Estate Industry Group members. ### Payroll Personnel, Beware of W-2 Scam The IRS has urged employers to notify their payroll department of a W-2 phishing scam that affected hundreds of organizations—and hundreds of thousands of their employees—last year. Targets of the scam include small and large businesses, public schools, universities and charities. The IRS hopes to prevent the scam by educating employers and, for those affected by the scam, by providing measures to mitigate its success.In the scam, cybercriminals research the organization and identify persons of authority (e.g., the Chief Operating Officer in a business). They then use a technique known as business email spoofing to impersonate that individual in email correspondence. In many cases, the perpetrator will begin with a seemingly innocent email, asking if the employee is working today. Thereafter, they will request Form W-2 information for all employees and, if that is received, ask for a wire transfer. The cybercriminal will use the W-2 information to file fraudulent tax returns or place it for sale on the Dark Net.In addition to educating employers to prevent the scam, the IRS urges businesses to have effective controls in place around the release of private information. For example, businesses should limit the number of employees who can respond to W-2 requests and, when such a request is made, require additional verification from the requestor (such as a telephone call) before sending the W-2.Unfortunately, many employers do not realize they are victims of the scam until days, weeks or months after it is effectuated. By this time, damage may have occurred. For this reason, employers should timely notify the IRS upon learning they are victims of the scam. Specifically, employers should: Email “dataloss@irs.gov”; In the subject line, type “W2 Data Loss”; and Include in the email: (a) the business name and employer identification number; (b) a contact name and phone number; and (c) a summary of how the data loss occurred and the number of affected employees. Likewise, victims, or attempted victims, of the scam should send the full email header to “phishing@irs.gov” with “W2 Scam” in the subject line.  This is merely one of the many cybersecurity threats employers face. The nature and complexity of these attacks continues to evolve, becoming increasingly more difficult to detect. If you have questions about effective cybersecurity, do not hesitate to contact our office.  ### Slowdown in International Enrollments Affecting U.S. Colleges and Universities Many higher education institutions have their financial challenges these days, thanks in part to a saturated market, an increase in online education programs and an overall decline in the number of high school graduates pursuing college and university studies. Larger and more selective institutions are having less concern with enrollment than their smaller, often private counterparts, which typically are forced to manage with smaller endowments and subsequently struggle to make ends meet.For many, tapping into and attracting an international student population has played a major role in balancing increasingly tight budgets, but that inflow has slowed in recent years. A snapshot survey of 500 institutions conducted by the Institute of International Education  reported a 7% decline in the enrollment of new international students in the fall of 2017 compared to the prior year. Possible explanations for the decline include delays and denials related to the visa application process, the social and political environment in the U.S., and competition from colleges and universities in other countries.Similarly, the recent release of Open Doors,  a comprehensive annual survey of more than 2,000 colleges and universities funded by the U.S. State Department, noted that six years of steady growth in new international enrollments had curbed considerably. In the fall of 2016, U.S. international enrollments rose a modest 3.4% from the previous year, which had in turn seen a 6.7% increase from 2014. Accounting for much of the 2016 increase was a 19.1% bump in the number of participants registered in Optional Practical Training, a program comprised of individuals who are “sponsored” by an institution and considered “students” for visa purposes only. Basically, these are persons who have already been granted a degree and are now pursuing employment. Open Doors confirmed the assertion that new international enrollments are flattening.In the hypercompetitive higher education market, any analytics related to the 1.1 million currently enrolled international students are a cause for concern, and may call for corresponding strategic planning on the part of institutions across the U.S. For many institutions, this may require to revision their longer term enrollment projections to adjust to the reality of this declining student population, which can no longer be counted on providing relief to a stagnating or declining domestic student population. Revenue diversification beyond tuition and cost containment remains key in order to ensure long-term sustainability of institutions of all sizes.    Contact Schneider Downs if you have questions and want to learn about the potential impact to your particular institution. ### The Impact of the Tax Cuts and Jobs Act on Your Construction Company Beyond 2017 If you (or your trust or estate) own an interest in a pass-through construction company, you’ll want to take note of two of the more significant changes regarding deductions made by the recently enacted Tax Cuts and Jobs Act (“the Act”).First, the Act repeals the Domestic Production Activities Deduction (DPAD) for tax years beginning after 2017. As you may recall, the DPAD generally provided taxpayers (including individuals, estates and trusts) with a deduction equal to 9% of the lesser of qualified production activities income or taxable income, subject to a limitation of 50% of wages paid (IRC Code Section 199).The Act also institutes the Qualified Business Income Deduction, or QBID (IRC Code Section 199A), which allows an individual, estate or trust to deduct up to 20% of domestic qualified business income from a partnership, S corporation or sole proprietorship for tax years 2018 through 2025. The QBID is generally limited to the greater of (1) 50% of W-2 wages paid by the business, or (2) the sum of 25% of the W-2 wages paid plus 2.5% of the unadjusted basis of certain property the business uses to produce qualified business income.Example: A taxpayer operates a construction company as a sole proprietorship. The company buys a machine for $100,000 and places it in service in 2020. In that year, the business has no employees and $20,000 of taxable income (before the QBID). The W-2 wages/qualified property limit on the business’ deductible amount for 2020 is $2,500, which is the greater of (1) 50% of W-2 wages ($0 × 50% = $0), or (2) the sum of 25% of W-2 wages ($0) plus 2.5% of the unadjusted basis of the machine immediately after its acquisition ($100,000 × 0.025 = $2,500).Assuming joint taxable income is greater than $315,000, the QBID for 2020 is $2,500, which is the lesser of (1) the wage limitation calculated above, or (2) 20% of the Qualified Business Income ($20,000 × 20% = $4,000).Modifications to W-2 wages/qualified property limit. The W-2 wages/qualified property limit described above does not apply if taxable income without regard to the QBID for the tax year is equal to or less than a $157,500 threshold ($315,000 for taxpayers filing a joint return; adjusted for inflation; Code Sec. 199A(b)(3)(A)).Qualified trade or business. A taxpayer can claim the QBID for income from many types of trades or businesses, but not for certain “specified service trades or businesses,” described below. Also, performing services as an employee is not a qualified trade or business, according to Code Sec. 199A(d)(1).A specified service trade or business is any trade or business that: Involves the performance of services in the fields of accounting, actuarial science, athletics, brokerage services, consulting, financial services, health, law or the performing arts; or Involves the performance of services consisting of investing and investment management, trading or dealing in securities, partnership interests or commodities; or whose principal asset is the reputation or skill of one or more of its employees or owners (Code Sec. 199A(d)(2). Note that architecture and engineering are not specified service trades or businesses and, therefore, can be qualified trades or businesses for Code Sec. 199A purposes if they otherwise qualify.Determining how these changes will impact your construction company is not as straightforward as it may seem. There are a significant number of rules, exceptions and phase-out provisions related to the new the 20% QBID that are far beyond the scope of this article. We also have not addressed what impact these deductions may have when computing taxable income in any state that your construction company operates.If you have any questions about the QBID and the potential benefits to your construction company, do not hesitate to contact Mark Di Pietrantonio or another member of the Schneider Downs Construction Focus Group. ### Standard Mileage Rate for 2018 Announced For 2018, the standard mileage rate for the use of a car, van, pickup, or panel truck will increase to 54.5 cents per mile for business miles driven (53.5 cents in 2017). The standard mileage rate represents all costs associated with vehicles. Taxpayers electing this method may not deduct actual expenses, including depreciation, lease payments, maintenance, repairs, gas, oil, insurance, and vehicle registration costs.Among other instances, the standard mileage rate applies to miles driven for traveling from one work location to another within the taxpayer’s home area (generally, the city or general area of the taxpayer’s main place of business), visiting customers, and attending business meetings away from the regular workplace.Contact a Schneider Downs tax advisor if you have any questions. ### Recently Issued Accounting Standards Potentially Impacting Construction Company Financial Reporting in the Upcoming Year With the start of the new year, many contractors are gearing up for their annual year-end audits to begin. I wanted to provide a quick refresher on some of the newly issued accounting standards updates (ASUs) that contractors may need to consider from a financial reporting perspective. We focuses on the ASUs that will be effective for non-public entities for fiscal years beginning on December 15 2017 (calendar years ending December 31, 2018) or earlier. Below is a summary of those standards, along with the effective date: ASU 2015-02 Consolidation (Topic 810) Amendments to the Consolidation Analysis. The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: 1. Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; 2. Eliminate the presumption that a general partner should consolidate a limited partnership; 3. Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related-party relationships; and 4. Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016 (calendar year ending December 31, 2017). ASU 2015-11 Inventory (Topic 330) Simplifying the Measurement of Inventory When this standard is adopted, an entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016 (calendar year ending December 31, 2017), and interim periods within fiscal years beginning after December 15, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. ASU 2015-17 Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes To simplify the presentation of deferred income taxes, the amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2017 (calendar year ending December 31, 2018), and interim periods within annual periods beginning after December 15, 2018. ASU 2016-06 Investments – Equity Method and Joint Ventures (Topic 323) Simplifying the Transition to the Equity Method Accounting The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this Update require that an entity that has an available-for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (calendar year ending December 31, 2017). The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. No additional disclosures are required at transition. ASU 2016 -17 Consolidation (Topic 810) Interests Held Through Related Parties That Are Under Common Control The amendments in this Update do not change the characteristics of a primary beneficiary in current generally accepted accounting principles (GAAP). Therefore, a primary beneficiary of a VIE has both of the following characteristics: (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a VIE), the amendments in this Update require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. That is, under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. If, after performing that assessment, a reporting entity that is the single decision maker of a VIE concludes that it does not have the characteristics of a primary beneficiary, the amendments continue to require that reporting entity to evaluate whether it and one or more of its related parties under common control, as a group, have the characteristics of a primary beneficiary. If the single decision maker and its related parties that are under common control, as a group, have the characteristics of a primary beneficiary, then the party within the related-party group that is most closely associated with the VIE is the primary beneficiary. The amendments in this Update improve GAAP because, in situations involving common control, a single decision maker focuses on the economics to which it is exposed when determining whether it is the primary beneficiary of a VIE before potentially evaluating which party is most closely associated with the VIE. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016 (calendar year ending December 31, 2017), and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. If an entity early-adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. In addition to the above ASUs, the new revenue recognition guidance under topic 606 and the lease accounting guidance under ASU 2016-02 may have significant financial reporting requirements to companies in the construction industry. The new revenue recognition guidance will be effective for non-public entities for fiscal year beginning on December 15, 2018 (calendar year-end December 31, 2019). The new lease accounting guidance will be effective for non-public entities for fiscal years beginning on December 15, 2019 (calendar year ending December 31, 2020). If you have any questions on the above ASUs and the potential impact to your company, please feel free to reach out to me. ### Tax Reform: A New Deduction for Individuals - 20% Qualified Business Income Deduction The Tax Cuts and Jobs Act provided non-corporate taxpayers (e.g., S-corporations, partnerships, limited liability companies, and sole proprietorships) a new deduction that is claimed on individual income tax returns. Calculation of this deduction is complex. In short, the Act provides a 20% deduction for qualified business income (QBI). This 20% deduction is limited by particular thresholds. However, these limitations come into effect only when a certain amount of taxable income is reached on the individual tax return. Moreover, special rules apply to specified service businesses.Specifically, the Act allows individuals and certain trusts to potentially deduct 20% of QBI as a deduction from taxable income (the deduction will be presented after a taxpayer’s adjusted gross income so as not to affect other items that are directly tied to a taxpayer’s adjusted gross income). QBI has a broad definition and is effectively connected to a non-corporate entity’s business activities within the United States. However, QBI does not include investment items such as dividends, interest or capital gains/losses.If the individual's taxable income exceeds $157,500 (or $315,000 for a joint return), the 20% deductible amount could be further limited. The Act generally limits the deduction to the lesser of:1. 20% of the taxpayer’s qualified business income for the trade or business; or2. the greater of: (a) 50% of W-2 wages from the business; or (b) 25% of W-2 wages from the business plus 2.5% of the unadjusted basis of all qualified business property.As mentioned above, the deduction excludes income earned through “specified service activities.” A “specified service activity” is any venture where the principal asset sold is based on an employee or owner’s reputation or skill (e.g., health, law, accounting). The Act allows taxpayers that earn income from a specified service activity to still claim this deduction if their taxable income falls below $207,500 for a single taxpayer ($415,000 for a married filing jointly taxpayer).While the computation is complex and further limitations and rules not outlined above may apply, the deduction could provide a large reduction in taxes to taxpayers that qualify.Contact a Schneider Downs tax advisor to determine if this deduction could benefit you. ### Geological and Geophysical Costs Now Amortizable Over 24 Months for Certain Non-E&P Companies Generally, any geological and geophysical (G&G) expenses paid or incurred in connection with the exploration for, or development of, oil or gas within the United States, shall be allowed as a deduction over a 24-month period beginning with the mid-point of the taxable year in which such expenditures were paid or incurred. If any property with respect to which G&G expenses are paid or incurred is retired or abandoned during the 24-month period described above, no deduction shall be allowed on account of such retirement or abandonment, but the amortization deduction can still be taken. These costs include geologist cost, seismic surveys, gravity meter and magnetic surveys, and the drilling of core holes. Previously, these costs were only considered to be amortized by exploration and production companies or taxpayers with a mineral interest. However, in a recent tax court case, CGG Americas v. Commissioner, 147 T.C. 78, the court extended the amortization deduction to third-party service providers, even if they are not considered exploration and production companies or have no mineral interests. For certain companies that support exploration and production activities, this may provide an accelerated method to deduct the associated G&G costs incurred and to reduce taxes in the current year. For additional information on whether your business may benefit, contact a member of the Oil and Gas Group at Schneider Downs.  ### 2018 Brings Additional Withhholding Requirements for Payors of Pennsylvania-Source Income In October of 2017, Pennsylvania Governor Tom Wolf signed into law Act 43 (“the Act”). Among the other provisions of this Act, companies are now required to withhold state tax on out-of-state independent contractors that perform services within Pennsylvania, as well as companies that make rent payments to non-resident individual lessors. This requirement adds a layer of reporting for many companies, and has led to some confusion within companies that have a long roster of independent contractors - particularly in the transportation industry. The Act also adds an exclusion to reduce some of the administrative burden of this provision. Withholding state tax is optional when the annual payments are less than $5,000 annually. In circumstances where the payor is unsure of the total amount of annual payments, it is recommended to withhold and remit incomes tax on all payments to the payee. Companies are also required to electronically submit copies of Federal Form 1099-MISC to Pennsylvania for all individuals subject to state tax withholding. Companies within the transportation industry should exercise caution before remitting state withholding on their independent contractors. Independent contractors that are merely transporting freight through Pennsylvania are generally not subject to withholding requirements and would be exempt from the Act’s withholding provisions. This is due to such payments being exempted from Federal Form 1099-MISC filing under federal regulations. Additional exceptions may also apply for companies in other industries. Contact Schneider Downs to receive a consultation on the potential impact of this Act’s new compliance requirements on your company. ### Significant Tax Savings Now Available for Purchased Equipment and Other Tangible Property The Tax Cuts and Jobs Act provides an enormous tax benefit to taxpayers investing in capital asset additions: the Act increases the bonus depreciation deduction to 100% of cost for a limited time and additionally, increases the amount eligible to expense under Internal Revenue Code Section 179. The Act increases the Section 179 immediate expensing limit from $500,000 to $1 million effective after December 31, 2017. Similarly, the Act increases the Section 179 phase-out from $2 million to $2.5 million. Both of these amounts are indexed for inflation beginning after 2018. Further, the Act expands the definition of Section 179 qualified real property to include qualified improvement property and improvements made to nonresidential real property (including roofs, heating, ventilation, air conditioning property, fire protection and alarm systems, and security systems). The Act modifies the amount of qualified property eligible for bonus depreciation. Specifically, the Act modifies the existing bonus depreciation rules by increasing the first-year depreciation deduction to be equal to 100% of the basis of qualified property placed in service between September 27, 2017 and December 31, 2022. Thereafter, the amount of bonus depreciation is reduced by 20% annually, and will be phased-out by 2027. For assets placed in service in 2017, taxpayers can alternatively elect to use 50% bonus depreciation (rather than 100% bonus depreciation) during the period September 28, 2017 through December 31, 2017. Additionally, both new and used property are now eligible for bonus depreciation (as long as it is the first-time use of the taxpayer). Since the 100% expensing rules are available for a limited time, taxpayers should carefully plan the timing of capital asset purchases in order to maximize the deduction allowed. Please visit the Our Thoughts On Transportation & Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### New PA Withholding Requirement on Royalties, Bonus Payments, Rents and other Business Income Under Act 43 of 2017, anyone that pays Pennsylvania-source non-employee compensation or business income to a non-resident individual or disregarded entity that has a non-resident member and is required to file a Federal Form 1099-MISC with the Pennsylvania Department of Revenue (Department) is now required to withhold amounts from such payments. These payments include lease payments, such as rents, royalties, bonus payments, damage rents and other payments related to a lease. The withholding amount is equal to the rate specified at 72 P.S. § 7302 (currently, 3.07%). The withholding is optional for payments to a payee of less than $5,000 annually. Government payors are exempt from the withholding requirement; however, state-owned and state-affiliated universities are not excluded. When considering the reporting of working interest in oil and gas wells, the question arises of whether Pennsylvania withholding is required on the gross income from the well, as reported on the Form 1099, or the net amount paid to the individual after property taxes, gathering expenses, and other operating expenses are deducted. The law enacted by Act 43 and Informational Notice Personal Income Tax 2017-01 provide no guidance on the issue. To gain further clarification, Schneider Downs has reached out to Pennsylvania Chief Counsel and will provide an update once received. For additional information on withholding and filing, see below.  Payors that are required to withhold must do the following: 1. Apply for a 1099-MISC withholding account by completing a PA-100 Pennsylvania Enterprise Registration Form Electronically at: www.pa100.state.pa.us; 2. Electronically file quarterly withholding returns and annual reconciliations with the Department via e-TIDES; 3. Electronically remit the withheld monies via e-TIDES; Payors are required to withhold and remit taxes on income according to the following schedule: Quarterly – If total withholding is under $300 per quarter, the taxes are due the last day of April, July, October, and January. Monthly – If total withholding is $300 to $999 per quarter, the taxes are due the 15th day of the following month. Semi-Monthly – If total withholding is $1,000 to $4,999.99 per quarter, the taxes are due within three banking days of the close of the semi-monthly period. Semi-Weekly – If total withholding is $5,000 or greater per quarter ($20,000 per year). Additionally, payers must file reconciliation returns for each quarter and the annual withholding reconciliation statement (REV-1667 R) with the 1099-MISC statements for each payee. Payors will be liable for taxes not withheld in the same manner as employers withholding employee compensation.   Payees having tax withheld must also file a copy of the 1099-MISC with their Pennsylvania tax return. Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Marginal Well Credit Creates Major Opportunity to Reduce Taxes The marginal well credit (MWC), generally unavailable since its enactment in the early 2000s due to price limitations, is now available for natural gas producers with operating interests in tax year 2016 and is projected to be available for tax year 2017. The MWC is a production based tax credit that provides a maximum credit of $0.50 (adjusted for inflation) per 1,000 cubic feet of qualified production of natural gas.For purposes of the MWC, a marginal well is a domestic well that has marginal production under percentage depletion rules, which is 15 barrels of oil equivalent per day (i.e., 90 mcf or less per day).The MWC is subject to certain limitations. First, taxpayers must have an operating interest in a marginal well. Second, the credit amount is determined based on the average wellhead price of domestic natural gas for the prior year, namely the reference price. Third, the credit can only be claimed for qualified production on the first 1,095 barrels of oil equivalents (6,570 mcf) for the tax year. Certain limitations exist for production in a short year.For tax year 2016, the credit available for natural gas production after limitations are applied is $0.14 per mcf. Utilizing the same methodology used to calculate the 2016 credit that the IRS outlined in Notice 2017-51, it is anticipated that a credit for qualified natural gas wells will be available for 2017; however, the IRS will issue its final calculation in 2018.It should be noted that crude oil production also qualifies for this credit and is subject to other limitations not described within this article; however, since oil prices have regularly exceeded the price limitation outlined in the Internal Revenue Code, this credit related to oil production often remains unavailable.The MWC is part of the general business credit and cannot offset tax liabilities generated from the alternative minimum tax, and any unused credit can be carried back five years and carried forward 20 years.If you think you could benefit from the credit or would like to discuss 2017 production and projections available for the credit, please contact a Schneider Downs tax advisor.  ### New Limitation on Business Losses of Non-Corporate Taxpayers The Tax Cuts and Jobs Act expanded certain pass-through limitations on losses for non-corporate taxpayers. The new provisions limit the aggregate amount of deduction related to business income generated during the year to $500,000 (filing joint) or $250,000 (filing single), for tax years beginning after December 31, 2017 and before January 1, 2026. Any remaining excess business losses of the taxpayer are treated as part of the taxpayer’s net operating loss (NOL), which is carried forward to subsequent tax years. These NOL carryforwards are allowed to offset 80% of the taxpayer’s income in the following years. Excess business loss is the excess, if any, of: the taxpayer’s aggregate deductions for the tax year from the taxpayer’s trades or businesses, determined without regard to whether or not such deductions are disallowed for such tax year under the excess business loss limitation; over the sum of: the taxpayer’s aggregate gross income or gain for the tax year from such trades or businesses, plus $250,000, adjusted annually for inflation after tax years beginning after December 31, 2018 (200% of the $250,000 amount in the case of a joint return) The above changes can be of particular concern for those that may have intangible drilling costs passed through from an oil and gas investment activity and the inability to utilize the full deduction in the current year. It remains largely unknown and regulations will need to be provided to offer clarity on the interplay between the excess loss deduction limitation and the potential addback for excess intangible drilling costs for the individual alternative minimum tax. Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Like-Kind Exchange Repealed for Equipment - Opportunity Still Exists for Mineral Rights Effective after December 31, 2017, the Tax Cuts and Jobs Act repealed the favorable tax deferral treatment to company cars, drilling rigs, mining equipment and other personal property. However, the Act still allows a tax free exchange to real property that is held for use in a trade or business or held as an investment.Even though the Act substantially limits the property that qualifies, an opportunity may still exist for the exchange of mineral and surface rights. Limited authority exists regarding the exchange of properties, however, it is generally held that exchanges of mineral rights for mineral rights, mineral rights for surface rights, and long-term lease for real estate could potentially qualify as an exchange of like-kind property.It should be noted that a transition rule may apply to qualified personal property that is relinquished before or on December 31, 2017 and the replacement property is later acquired in accordance to the 45-day identification deadline and 180-day exchange deadline.As companies and investors navigate through the complexities and the repeal of favorable items caused by tax reform, planning opportunities such as tax deferral of qualified property should be considered.Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### Financial Statements: Impact of Tax Reform on Deferred Taxes The Tax Cuts and Jobs Act of 2017 (the Act) was signed into law on December 22, 2017 by President Trump. While everyone has been concerned with tax planning opportunities, don’t forget the financial statement impact. The most anticipated change has been the establishment of a flat corporate tax rate of 21% replacing previous tax rates that ranged from 15%-35%. The new tax rate is in effect as of January 1, 2018; therefore, current taxes payable for calendar year-end companies will be calculated using the previous rates. However, deferred taxes will have to be remeasured. Accounting Standards Codification (ASC) 740, Income Taxes, requires companies to recognize the effect of tax reform on deferred income taxes in the enactment period’s financial statements. The impact of these changes should be recognized in income from continuing operations for the year ended December 31, 2017. Changes in the tax laws or rates may also require a revaluation of a valuation allowance for deferred tax assets. For example, companies that have federal deferred tax liabilities will recognize a reduction in the liability and additional tax income as a direct result of lowering their tax rate to 21%. There are also certain deferred tax balances that were recorded as direct adjustments to shareholders’ equity or other comprehensive income (OCI) for which the offsetting tax adjustment was also recorded as an equity or OCI adjustment, respectively. The effect of tax law changes for deferred tax amounts initially recorded to equity or OCI is recorded as a component of tax expense from continuing operations in the period the tax law is enacted. This treatment is consistent with ASC 740-20-45, which prohibits backward tracing, or considering where the previous tax effects were recorded in the financial statements. Other key changes to the tax law are as follows: Elimination of the corporate alternative minimum tax (AMT) for years beginning after December 31, 2017. However, AMT credits will be refundable and can offset regular tax liability in an amount equal to 50% (100% for tax years beginning in 2021). Reduction of the maximum deduction for net operating loss (NOL) carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable income. NOLs generated in tax years after 2017 can be carried forward indefinitely although generally, the new law does not permit carrybacks. Limitation of the deduction for interest expense incurred by U.S. corporations Repeal of the Domestic Production Activity Deduction (DPAD) Subjects foreign earnings on which U.S. income tax is currently deferred to a one-time tax Creation of a territorial tax system rather than a worldwide tax system Creation of a new base erosion anti-abuse tax (BEAT) and new minimum tax on certain intangible foreign earnings ASC 740 requires companies to disclose the effect of adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates. Companies will also need to consider other aspects of the Act and the disclosure requirements for each, such as the one-time transition tax on deemed repatriation. As companies continue to assess the impact of tax reform on their future tax position, companies should involve their auditors and financial statement preparers to ensure that the impact is reflected within the measurement of deferred taxes and that the change in accounting is completely and accurately disclosed within their financial statements. Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a member of the Schneider Downs Energy & Resources Industry Group if you have any questions. ### Disallowance of the Entertainment Expense The Tax Cuts and Jobs Act permanently repealed most business deductions related to entertainment, amusement, or recreation activities or a facility used in connection with any of the aforementioned activities. Membership and club dues remain non-deductible.In addition, the Act disallows deductions for employer qualified transportation fringe benefits, such as qualified parking, transit passes, van pools, and bicycle commuting, unless the benefit is for the sole exception of ensuring employee safety. It should be noted that these pre-tax benefits offered to employees are still not included in their taxable wages, with the exception of the qualified bicycle commuting benefit.The above changes apply to amounts paid or incurred after December 31, 2017.While the Act provided substantial changes to entertainment and employer transportation benefits, the deduction for 50% of food and beverage expenses associated with operating a trade or business is retained (meals consumed by employee while traveling for work). Additionally, the Act expands the 50% limit to include employer expenses associated with providing food and beverages to employees through an eating facility, which meets de minimis fringe requirements, as well as meals provided on-premises to employees for the convenience of the employer to employees, spouses and dependents through December 31, 2025.Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a Schneider Downs tax advisor if you have any questions. ### IRS Implements Stricter Identity Proofing Process for E-Service Users As data protection grabs center stage in our increasingly digital world, the IRS has taken steps to enhance its own digital regulation policies. One such measure is the implementation of the Secure Access Program, a new “identity proofing system” for the agency’s e-Service users.Prior to the new Secure Access system, e-Service authentication was relatively simple. At initial registration, users were asked to input basic tax account profile information (name, address, Social Security number, date of birth, adjusted gross income, filing status, etc.). But based on the increase in cyberattacks aimed at stealing taxpayer information, the agency grew concerned that its current identity verification processes didn’t do enough to protect sensitive data.As of December 10, 2017, the IRS now requires any taxpayer or practitioner using its e-Service platform to establish an account on Secure Access through the agency’s online “Get Transcripts,” IP PIN tool, or View Balance functions.Secure Access aims to fortify the e-Service identification process and ensure that anyone using the platform “is who they say they are.” The program uses a two-step verification process; first it requires users to login with a user name and password, then asks the user to input a unique security code sent directly to their registered mobile phone number or through their IRS2Go App.The IRS has made it abundantly clear that participation in the Secure Access Program is mandatory. For more information on the components of the Secure Access Program and how you may register, please visit: https://www.irs.gov/individuals/secure-access-how-to-register-for-certain-online-self-help-tools. We also invite you to contact our offices personally if you have any questions.  ### IRS PUTS SMALL BUSINESSES ON ALERT The Internal Revenue Service (IRS) recently issued a News Release (IR 2017-198) to heighten awareness of identity theft toward small businesses.  In the past year, the IRS has noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.  Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to help file fraudulent returns. Stolen Employer Identification Numbers (EINs) are being used to file such returns, open lines of credit and obtain credit cards. Businesses should be alert for potential identity theft and contact the IRS if they experience any of the following: Extension to file requests are rejected because a return with the EIN or Social Security number (SSN) is already on file; An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS; An unexpected receipt of a tax transcript or IRS notice that doesn't correspond to anything submitted by the filer; or Failure to receive expected correspondence from the IRS because the company address has been changed. To help verify the legitimacy of tax return filings, the IRS will be asking for additional information from businesses and tax return preparers in 2018.  The following questions will be added for tax return filings in 2018: The name and SSN of the company executive authorized to sign the corporate tax return. Is this person authorized to sign the return? Payment history - Were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid? Parent company information - Is there a parent company? If yes, identify it. Additional information based on deductions claimed Filing history - Has the business filed Form(s) 940, 941 or other business-related tax forms? As another tax filing season kicks off in a month or so, small businesses should be aware  of identity theft signs and be vigilant in protecting company EINs and other sensitive company data. For more information, please contact Schneider Downs.   ### Requirements of the SEC's Mandated Pay Ratio The Securities and Exchange Commission’s (SEC) pay ratio rule that was mandated by the Dodd-Frank Act requires pay ratio disclosures for a company's first full fiscal year beginning on or after January 1, 2017. For a calendar year company, this means that the initial pay ratio disclosure would relate to calendar year 2017 compensation and would be disclosed in the company's 2018 proxy.  The rule requires public companies to disclose the median of total annual compensation of all employees except the CEO, the total annual compensation of the CEO, and the ratio between the two.  The pay ratio requirement permits registrants to use reasonable estimates to identify the median employee and in determining total compensation of all employees.  Specifically, registrants are permitted to use their entire employee population or statistical sampling and/or other reasonable methods in determining the median employee.  The reason for granting this flexibility was to minimize the overall burden to registrants with their efforts to comply.  In addition, the rule states that both U.S. employees and non-U.S. employees be included in the scope of identifying the median employee. However, with certain limitations, issuers may exempt non-U.S. employees when they account for 5% or less of total U.S. and foreign employees. Per the SEC, a registrant may use “appropriate existing internal records, such as payroll records, in determining whether the 5% de minimis exemption is available.”The SEC approved additional guidance issued by the Division of Corporation Finance in September 2017 in order to assist companies in their efforts to comply with the pay ratio rule.  The guidance offers hypothetical examples of the use of sampling techniques and other reasonable methodologies and clarification of language in the instructions.   Registrants must derive the data used in the pay ratio from their own records and not rely on industry data or estimates. For more information, visit https://www.sec.gov/corpfin/announcement/guidance-calculation-pay-ratio-disclosure. For more information on the disclosure’s practical considerations, contact us. ### On Your Marks, Get Set, Go! Tax Season Begins It’s that time of year again – the IRS issued a statement on January 4 announcing the official beginning of tax season on Monday, January 29, 2018.  Starting on this date, the IRS will begin accepting 2017 income tax returns.  This year’s filing deadline for individual income tax returns is Tuesday, April 17, 2018, since the traditional April 15 falls on a Sunday, and the following Monday is a government holiday.  The IRS wanted to remind taxpayers that filing electronically is the fastest and most efficient way to file your tax return and get your refund.  It also wanted to inform taxpayers that refunds from the Earned Income Tax Credit and the Additional Child Tax Credit would not be issued before February 27, 2018.  Below is a chart to summarize tax return deadlines for businesses and other entities.   Entity 2018 Due Date (for Tax Year 2017)   C corporation   15th day of the fourth month following the close of the tax year (April 18, 2018 if calendar year)     S corporation   15th day of the third month following the close of the tax year (March 15, 2018 if calendar year)     Partnership   15th day of the third month following the close of the tax year (March 15, 2018 if calendar year)     Estates/Trusts   15th day  of the fourth month following the close of the tax year (April 18, 2018 if calendar year)     Tax Exempt Organization (Forms 990, 990-EZ, 990-PF, 990-BL)   15th day of the fifth month following the close of the tax year (May 15, 2018 if calendar year)     As always, feel free to contact us with any questions you may have regarding your tax compliance responsibilities.  ### Tax Act Rules That Will Impact 2017 Tax Returns President Trump recently signed into law the Tax Cuts and Jobs Act (“the Act”), most of which becomes effective for the 2018 tax year. Certain provisions of the Act, though, become effective before that time and should be taken into consideration during 2017 tax preparation. While much attention was focused late in December on prepaying individual income and real estate taxes, for instance (see our article here), the Act does affect other significant 2017 deductions. One key retroactive provision concerns bonus depreciation. Former law permitted businesses to take an immediate 50% bonus depreciation deduction for the cost of qualified property (defined, among other criteria as new property). The Act changes this by allowing taxpayers to take a 100% bonus depreciation for eligible assets placed in service between September 28 and December 31, 2017. Note that taxpayers are still permitted to elect 50% bonus depreciation for assets placed in service during this period, and qualified property is now defined to include both new and used property. Accordingly, businesses should determine if any assets placed into service during this 2017 period qualify for additional bonus depreciation. Another provision of the Act may allow individuals with severe medical issues to improve their tax position stance by reducing the floor from 10% to 7.5% of AGI for medical expenses incurred after December 31, 2016 and before January 1, 2019. While the Act provides for more liberal depreciation and medical deductions, it does limit other deductions that could affect 2017 tax returns. First, similar to former law, the Act denies deductions related to payments made to, or at the direction of, a government or government entity in relation to the violation (or investigation of a violation) of any law. As a narrow exception, the Act permits such items to be deducted when they constitute, or are identified as, restitution in a court order or settlement. (Note: restitution for failure to pay tax under the Internal Revenue Code is only deductible if it would have been allowed as a deduction for tax if it were timely paid.) The Act also eliminates the deduction for lobbying legislation before local government bodies, and prohibits any deductions for settlements, payments or attorney fees paid or incurred in sexual harassment or sexual abuse cases subject to a nondisclosure agreement. These three provisions are effective December 22, 2017. There are many items adjusted by the Act to consider. This brief article covers the more common deductions affecting 2017 tax returns as adjusted by the Act. Other items, such as certain contributions to capital of a corporation under Section 118, also have a date of enactment prior to January 1, 2018. If you have questions about tax reform and its potential impact to you or your business, please contact a member of Schneider Downs Tax Advisory Services. ### Annual Oil and Gas Update Sheds Light on Current State of the Industry The oil and gas industry in the United States has been somewhat depressed of late, with a decline in the number of active rigs from the record highs of previous years, and numerous calls for increases in taxes and regulations, which have led to instability in the market. Since last year, for instance, over 100 U.S. oil and gas companies have declared bankruptcy. That said, nationwide production has remained steady, despite the presence of relatively low gas prices. Locally, Pennsylvania’s natural gas production continues to rise since the discovery of the Marcellus Shale district, primarily in the southwestern portion of the state. With 6,888 unconventional wells currently producing 4.5 trillion cubic feet per year of natural gas in Pennsylvania alone – or about 20% of total U. S. production – the effort has so far been a boon for regional consumers, who’ve seen steady decreases in household electric costs.It was against this backdrop that Schneider Downs recently held its annual Oil and Gas Update, a daylong event that covered a wide range of topics including the general state of industry, issues surrounding depreciation, depletion and amortization (DD&A) and property, plant and equipment (PPE) as well as impairment, and capped by a talk from featured speaker David J. Spigelmyer, President of the Marcellus Shale Coalition.Participants discussed, in detail, industry matters as changes in prices, drilling costs exceeding expectations, significant increases in DD&A rates, production difficulties and lease expiration in the near future, as well as derivative and hedge accounting, taxes and revenue recognition. Conversations regarding PPE, DD&A and impairment proved particularly beneficial in understanding reporting issues relevant to those areas, including understanding how to determine which depreciation method oil and gas clients should be using and determining which triggering events may cause impairment of clients’ assets.Guest speaker Spigelmyer wrapped up the day, touching on many aspects of the oil and gas industry as a whole and Pennsylvania operations, in particular. After explaining the key difference between conventional and unconventional drilling – conventional involves drilling straight down into a reserve while unconventional drills horizontally through the shale – Spigelmyer described how Pennsylvania is helping to streamline delivery of the retrieved natural gases through the construction of several pipelines that will run from the gas-rich markets to other markets throughout the state and country. With trucking expensive, these pipelines can go a long way in significantly reducing costs.Spigelmyer concluded his message by addressing a common misconception, namely that oil and gas companies “don’t pay taxes,” by explaining how those companies are hit with massive fees instead. As an example, the licensing fee to start a well – once only $100 – is today over $3,000. In addition, oil and gas companies pay an “impact fee” for unconventional wells.Despite the oil and gas industry’s ongoing challenges, Spigelmyer expressed optimism about its future as a whole, not only for Pennsylvania, but for the world. For more information on the current state of the oil and gas industry, contact us.       ### IRS Issues Notice for Computing "Transition Tax" On December 29, the Internal Revenue Service (IRS) and Treasury Department published Notice 2018-07 (Notice), providing guidance for computing the “transition tax” under the new Tax Cuts and Jobs Act enacted one week earlier. Under the new law, a transition tax will now be imposed on net foreign earnings of nondomestic subsidiaries of U.S. companies by designating those earnings as repatriated. A result of efforts to transition the country to a territorial tax system, the levy is expected to generate billions of dollars in revenue over next eight years. Foreign earnings held in the form of cash and cash equivalents will be taxed at a 15.5% rate, with remaining earnings taxed at an 8% rate. The transition tax can be paid in installments over an eight-year period. The guidance is 22 pages long and discusses how the IRS will determine the two types of income – those related to cash and cash equivalents, and remaining earnings – with the overall goal to eliminate double counting and double non-counting in determining cash position and earnings. The Notice elaborates on loans among related entities: for purposes of the cash position of a specified foreign corporation, for instance, loans between related companies are not treated as cash. The Notice also addresses the circumstance when a U.S.-based shareholder and a foreign corporation have different taxable years and the aggregate cash position needs to be determined. Finally, the Notice indicated that the IRS intends to issue further regulations clarifying how foreign earnings are to be computed and rules that will assist taxpayers by providing certain additional information needed for computing their transition tax. For more information on computing the transition tax, contact us.  ### IF YOU SEE A SPECTRE, DON'T HAVE A MELTDOWN! Dan Desko contributed to this article. At Schneider Downs, many of our clients have been reaching out and asking for advice on how to deal with the recently reported global security vulnerabilities Meltdown and Spectre. This article discusses the weaknesses at a high level and provides our current recommendations. The media has been covering these issues ad nauseam, and while they are serious vulnerabilities, we urge everyone to stay calm and do their research on how it may affect their systems. These are not the first significant security issues that have been released, and they certainly will not be the last. What is the problem? What you need to know about Meltdown and Spectre is that they are both related to issues within the CPU, the processor that powers most modern computing hardware like desktops, laptops, servers and mobile devices. This impacts physical computing systems, virtual systems and containers (e.g., Docker). In addition, those who use public cloud computing resources should be wary as it may be possible to use these vulnerabilities to view sensitive data belonging to other entities in a shared computing environment. Through the discovered flaws it may be possible for malicious software to listen in on other legitimate and sensitive programs running on a computer, or even between virtual machines and containers running on the same hardware. What can you do? Keep following the security best practices and cyber hygiene you already work hard to maintain. Attackers cannot utilize these vulnerabilities if they can’t access your systems in the first place, therefore this enforces the need for strong layered defenses: Ensure your firewall rules have been reviewed recently; Monitor and review external traffic on a regular basis; Protect your users against phishing attacks through training and phishing mitigation software; Monitor unusual activity on the internal network; Keep antivirus software up to date; Ensure host based protections are optimized, and so on … Cloud Considerations Side-channel attacks against these vulnerabilities may allow others in a multitenant environment to view your data in an unauthorized manner. If you’re utilizing a shared environment, such as a public cloud infrastructure, you’ll want to follow up with your provider to see what measures they’re taking to address these issues within their infrastructure. We’ve seen reports that major cloud platforms are taking the threat seriously, and are actively managing their environments in efforts to remediate the threats. Amazon Web Services, Google Cloud, and Microsoft Azure have all deployed patches against the Meltdown attack, and there’s no indication that the available exploits could work against any of those platforms. Patching What You Control These flaws were properly disclosed to the affected parties in advance, which means that hardware and software vendors like Intel, AMD, Microsoft, Amazon and others have been working to create patches to update your devices, some of which are available now. Meltdown has been reported to be an easier issue to correct and patches are currently available for Windows, Linux and OSX that help remediate the vulnerability. Spectre is reportedly harder to remediate because it may not be feasible to fix the vulnerabilities in software and may ultimately require the replacement of the CPU hardware. However, we have seen reports noting that Intel plans to have software and firmware updates available by January 12 to address the Spectre and Meltdown vulnerabilities in 90 percent of the affected processors sold since 2013. We recommend you follow your standard update policy for critical patches to test and implement the patches available. Ensure that you consider the impact of the patch before installing it by testing. We’ve seen reports regarding potential performance impacts. A more detailed account of these vulnerabilities and a listing of links to vendors affected by these vulnerabilities and their updates to these matters can be found at the US CERT: https://www.kb.cert.org/vuls/id/584653 In addition, more detailed information and a number of informational FAQs can be found here: https://meltdownattack.com/ We’ll provide additional updates in subsequent articles as this situation evolves.  If you have questions in the meantime, please do not hestitate to contact us. References: Spectre Attacks: Exploiting Speculative Execution - Paul Kocher, Daniel Genkin, Daniel Gruss, Werner Haas , Mike Hamburg , Moritz Lipp , Stefan Mangard , Thomas Prescher , Michael Schwarz , Yuval Yarom Meltdown - Moritz Lipp, Michael Schwarz, Daniel Gruss, Thomas Prescher, Werner Haas, Stefan Mangard, Paul Kocher, Daniel Genkin, Yuval Yarom, Mike Hamburg https://www.nytimes.com/2018/01/03/business/computer-flaws.html ### Employee Withholding Changes in the New Year Shortly after the tax bill was signed by President Trump, the Internal Revenue Service (“IRS”) issued a statement on December 26, 2017 indicating that they are currently working to develop withholding guidance for 2018. The Tax Cuts and Jobs Act (the Act) substantially changed individual income tax brackets and rates effective January 1, 2018 - it is important to note they are slated to expire in 2025. The Act has seven progressive tax rates of 10, 12, 22, 24, 32, 35, and 37 percent with new accompanying income ranges for each bracket.The IRS anticipates that the new 2018 withholding guidelines will come out sometime in January 2018. In its statement, the IRS noted that after the guidance is released “employers and payroll service providers will be encouraged to implement the new withholding tables in February.”.Most likely, a new version of the W-4 form, plus new instructions, will be released by the IRS around the same time. The IRS stated that the new guidance “will be designed to work with the existing Forms W-4 that employees have already filed.” However, since the new law repeals deductions for personal exemptions, and increases the standard deduction, the methodology, terminology, and instructions in the existing Form W-4 seem dated. Further, the child tax credit, set to increase from $1,000 to $2,000, and a new additional $500 family credit for non-child dependents would affect an employee’s tax liability upon which withholding is supposed to offset.In their statement, the IRS emphasized that no further action by taxpayers is needed at this time.  Employers are generally required to withhold taxes from employees based upon the forms provided by employees, therefore employees should expect to adjust their income tax withholding and prepare a new Form W-4 for their employers after the guidance is released.   Individual taxpayers will likely begin to see the benefits of those withholding changes as early as February. If you have questions about the new income tax brackets or withholding, contact us.  ### Three May Be Better Than Four With many potential college students and their families questioning the necessity and benefit of committing four years of time and money to earn an undergraduate degree, tapping and successfully reaching that market has become increasingly challenging for higher education institutions across the country. In response to those concerns, colleges and universities need to be attentive to both the affordability factor and to time requirements when they promote the virtue and value associated with obtaining a baccalaureate degree. As a result, market savvy higher education institutions are increasingly communicating information about their three-year degree programs, complete with detailed course offerings and campus resources that will support efficient completion. Concurrently, those entities are also addressing the potential effect of the shortened programs on their annual and multiyear operating and capital budgets, looking to accommodate the looming impact in their plans for sustainable positive financial results while still providing quality services and a welcoming and safe environment to fully support best practice student learning. By offering a three-year program, higher ed institutions give families a practical, cost-saving option. For one, obtaining a degree in three years helps avoid a fourth year of undergraduate tuition, room and board, and commits less of the student/family’s financial resources and financial capacity. Plus, a student completing his or her degree in three years will be able to hit the job market or begin a graduate degree program a year earlier. For its part in selling the idea, the institution should probably provide a worksheet of sorts on its website and in its marketing materials that spells out a total cost comparison. They can also promote the fact that annual tuition prices for full-time enrollment permit students to sign up, at no additional cost, for more credit hours than the standard 15 per semester. If the student earns 18 credits each semester, for instance, he or she would accumulate 108 credit hours in just three conventional (fall/spring) semesters and could pick up the remaining 12 credits by attending summer classes, when cost per credit hour and room and board is often lower than the tuition and living expenses charged during the regular academic year. Students who’ve taken college accredited classes in high school could get an additional bonus by having those credits applied to their curriculum requirements. But the programs are not for everyone. Institutions need to be clear in explaining that acceptance of a prospective student into an accelerated program is limited to those who have earned a high quality academic ranking at their high school, and are motivated and committed to a specific three-year program and degree major. In addition, some academic programs and majors – by their nature – require more than three years of study, so if the prospective student is unsure about pursuing a specific major, or would personally benefit from a fourth year of college life, a three-year degree program may not be the right choice. Market-smart colleges and universities continually evaluate and implement initiatives to better address needs of students and to achieve enrollment and budget goals. Three-year degree programs are just one example, but in this case, it may be true that less is more. For more information on three-year vs. four-year programs, contact us.  Prior to joining Schneider Downs Meridian, Lou Marcoccia served as Executive Vice President and Chief Financial Officer of Syracuse University. ### Pennsylvania Decouples from Federal Bonus Depreciation In response to the recently enacted federal Tax Cuts and Jobs Act of 2017 (“The Act”), the Pennsylvania Department of Revenue (“Department”) issued Corporation Tax Bulletin 2017-02 to assist taxpayers with understanding The Act’s impact on depreciation expense for Pennsylvania corporate net income tax purposes. Under The Act, corporate taxpayers are permitted to currently expense 100% of the costs of qualified property placed in service after September 27, 2017.  When the federal expense was increased to 100% in 2011, the Department followed suit and permitted the deduction.  However, taxpayers are not being afforded such latitude this time around and will be required to add back the amount deducted under the 100% expensing for federal tax purposes when calculating their Pennsylvania taxable income.  Furthermore, Pennsylvania provides taxpayers with no mechanism for recovering the cost of the underlying property unless the property is disposed of.  For example: If a taxpayer places in service $1million of qualified property, the taxpayer will receive a deduction of $1 million for federal income tax purposes.  This $1 million must be added back when calculating the taxpayer’s Pennsylvania taxable income, and the taxpayer is not permitted a deduction for depreciation of the property while it is being used in the ordinary course of business.  Rather, the taxpayer will adjust its income in the year the property is disposed of for any difference in depreciation expense taken for federal and Pennsylvania purposes (i.e., the $1 million). This could create a significant unanticipated tax liability for Pennsylvania corporate net income taxpayers given Pennsylvania’s onerous 9.99% tax rate (which is surpassed only by Iowa’s top rate of 12%). If you have any questions about how the Department’s policy could impact your business, please contact a member of our State and Local Tax (SALT) team. ### New Tax Law Offers Many Opportunities for Transportation Companies The new tax law commonly referred to as the Tax Cuts and Jobs Act of 2017 (“The Act”) will provide many opportunities – and a few challenges – for companies in the transportation industry. This article highlights some of the important provisions, most of which are effective January 1, 2018, unless stated otherwise below. If your transportation company is a C corporation, it will now be subject to a 21% tax rate. Shareholders will be taxed at capital gains rates on any qualified dividends received. This provision is permanent. If your transportation company is a sole proprietorship, S corporation or partnership, you could receive a 20% deduction against qualified business income, subject to certain limitations. This provision is temporary and will expire on 12/31/2025. Individual tax rates have been reduced, with a maximum rate of 37%. This provision is temporary and will expire on 12/31/2025. Like-kind exchanges are now limited to real property transactions, so companies will no longer be able to defer gain on the sale of tractors and trailers. This provision is permanent. Business interest deductions will generally be capped at 30% of adjusted taxable income, but excess would be carried forward indefinitely. This provision is permanent. Entertainment expenses like sports tickets are no longer deductible. This provision is permanent. There was no change made to the 80% meals deduction for employees, subject to the Department of Transportation’s hours of service rules. Two of the biggest opportunities for transportation companies and any entity that is capital intensive are the 100% bonus depreciation provisions and increased first-year expensing (Section 179) that were included in the bill. Bonus Depreciation The Act modifies existing bonus depreciation rules by increasing the first-year depreciation deduction to 100% of the basis of qualified property placed in service between September 27, 2017, and December 31, 2022. Thereafter, the amount of bonus depreciation is reduced by 20% annually, and will be phased out by 2027. Taxpayers can alternatively elect to use 50% bonus depreciation (rather than 100% bonus depreciation) during the period September 28, 2017, through December 31, 2017. Additionally, the provision requiring that the original use of the property commence with the taxpayer has been removed. Accordingly, both new and used property are now eligible for bonus depreciation. Section 179 Expensing The Act increases the Section 179 expensing limit to $1.0 million, up from the current $500,000. Similarly, the bill increases the Section 179 phase-out to $2.5 million, from the current $2.0 million. Both amounts are indexed for inflation beginning after 2018. This provision is permanent. So what will that mean? If a trucking company purchases a new or used tractor for $130,000 between now and December 31, 2022, they can expense the entire amount in the year the equipment is placed in service. Under prior law, if the tractor was used there was no bonus depreciation available and it was depreciated over three years. The first-year depreciation deduction would have been $43,329. If the tractor was new, there was the opportunity for 50% bonus depreciation, which would have generated $86,665 of first-year depreciation expense. The new tax provisions will give companies added incentive to update their fleets and receive an immediate tax deduction. Companies will have an opportunity to impact their taxable income and the corresponding amount of tax they pay by purchasing equipment. The combination of these provisions and the lower tax rates should provide transportation companies with increased cash flow to meet increasing demands. For more information about how the new tax provisions can create both opportunities and challenges for the transportation industry, contact us.  ### Tax Reform Changes to Charitable Deduction As promised, the House-Senate Conference Committee on the Tax Cuts and Jobs Act has preserved the deduction for charitable contributions.  The new law actually increases the adjusted gross income (AGI) limitation for deducting cash contributions— from 50% to 60% of AGI —effective for contributions made in tax years beginning after 2017.As anticipated, the law repeals the current 80% deduction for contributions made for university athletic seating rights, effective for contributions made in tax years beginning after 2017.The original House bill had proposed increasing the standard mileage rate for charitable use of an automobile.  The increase would have taken into account the variable cost of operating an automobile rather than the current 14 cents per mile.  This provision did not make the final bill.Other provisions of the law could have significant effects on the amount of charitable giving.  Increasing the standard deduction coupled with the elimination of many itemized deductions is expected to significantly reduce the number of taxpayers who itemize deductions.  Currently about 33% of individual taxpayers itemize.  Under the new provisions, it is estimated that less than 10% will itemize.  Tax-exempt organizations are concerned that these changes might influence the level of charitable contribution by individuals.The reduction of the corporate tax rate could also reduce the contributions received by charitable organizations by reducing the tax benefit of the donation.  The new law did not change the limitation on deductibility; Corporations are still limited to deducting charitable deductions up to 10% of taxable income. Additionally, there is concern that the increase to the estate tax exemption to over $11.2 million will also be a drag on charitable giving.  A lower estate tax burden may erode the incentive to leave bequests to charity.If you have any questions on the changes to charitable deductions or the impact of the new law on non-profit organizations and charitable giving, please feel free to contact us for help. ### Ohio's Unified Filing Systems for Businesses As efforts are made across the country to simplify tax laws, the state of Ohio has taken the first major step to streamline local tax filings. Between arduous municipal tax codes and the administrative burden that comes with doing business in multiple jurisdictions, Ohio tax filings have long been a source of frustration for taxpayers and preparers. A key component of the state’s recent municipal tax reform is the creation of a new centralized reporting system that will allow taxpayers to register and file one return for all applicable Ohio municipalities.The centralized system, effective with tax year 2018, will allow businesses to make all municipal income tax payments through the Ohio Business Gateway. The state Department of Taxation will then distribute payments to the appropriate municipalities, as well as handle administrative matters like billing, assessment, audits, collections and appeals. Administration of tax and related issues for any period before the registration period will continue to be handled by individual municipalities.Opting in to the state-administered filing system will be an all-or-nothing decision made by each filer for all operations in which the entity is subject to net profit tax, and will be automatically renewed unless the taxpayer takes appropriate action to terminate its election. The opt-in process is open now, with registrants needing to be signed up by the third month of their taxable year, i.e. calendar year taxpayers must opt-in by March 1 for their 2018 returns. Sole proprietors and disregarded entities are not eligible to opt-in to the new system.There are two registration options. Both are free and require the taxpayer to complete a Schedule A and Schedule B in addition to the basic information. Schedule A is a listing of the municipalities and Schedule B (if applicable) is a listing of members in a consolidated group.The first registration method is an interactive Excel document that can be found here. Upon completing the schedules in the file, the taxpayer should save and email it to the Ohio Department of Tax. There’s also a way to transmit it through the department’s secure messaging center within the interactive sheet. This electronic option allows you to register multiple taxpayers at one time.The other option is to complete a Form MNP-R, which contains the same information as above but in paper form, that can be mailed to the Ohio Department of Taxation or submitted using the department’s secure messaging center. Taxpayers who register using either method prior to February 5 will receive a municipal net profit tax account number and registration confirmation letter that month.Both registration methods require taxpayers to notify all municipalities in which they’re required to file in the year leading up to their opting in to the system. Taxpayers filing municipal returns for the first time do not need to notify municipalities.Once registered, taxpayers will be required to file each annual tax return and declaration of estimated taxes through the Ohio Business Gateway. Returns will be due the 15th day of the fourth month after the close of the taxable year, but they can be extended if a request is received by the commissioner on or before the due date, or if the taxpayer has requested an extension for filing its federal return. As with most things related to filing, the extension is for the time to file the return, not an extension of time to pay the tax liability.Something to keep in mind is that once a business opts in to this method they are now working directly with the Ohio Tax Commissioner instead of each individual municipality. An example where this may come into play is when a special filing agreement is in place with a particular municipality. If you have an alternative apportionment agreement, for instance, it is not binding with the Ohio Tax Commissioner. You must request alternative apportionment with the new filing of your tax return. The commissioner will then consider each request on a case-by-case basis. If a municipal corporation has agreed to allow the alternative apportionment, that will be a significant factor in evaluating the request and documentation of such prior agreements should be provided.Taxpayers will be able to file estimates through the Ohio Business Gateway starting in February; tax return filing capabilities begin in 2019. Estimates will be due (for calendar year taxpayers) on the 15th day of the fourth, sixth, ninth and 12th month of their taxable year, and can be made through ACH debit on the Ohio Business Gateway or by EFT through the Ohio Treasurer of State (tos.ohio.gov). Taxpayers with an estimated combined liability of less than $200 are not required to make estimated payments. Additional forms – including extension requests, NOL credit schedules and cancellation information – will be located at tax.ohio.gov/forms as they become available.Despite estimates from the Department of Taxation that say the new approach could save Ohio businesses $800 million in compliance costs, not all parties are in favor of the reform. In November, a lawsuit was filed by several cities – Cincinnati, Cleveland and Columbus among them – seeking a preliminary injunction to halt the state’s operations related to the reform, including the centralized filing system. At this time, we don’t yet know what impact the lawsuit may have.Our final thoughts are that this would be a beneficial program for a business filing in several cities. More information is sure to come following the aforementioned lawsuit and Schneider Downs will be monitoring these developments to provide further guidance. In the meantime, feel free to reach out to us with any questions. ## Remote Learning ### From Chaos to Confidence: How HITRUST Actually Gets Done In this panel discussion, you’ll hear from organizations that earned HITRUST certifications, including SOC 2 + HITRUST. Learn firsthand what strategies proved effective, which approaches fell short, and valuable lessons for future initiatives. This discussion will also address key topics, such as optimizing assurance levels (e1/i1/r2) to align with business needs, mitigating scope expansion, expediting sales cycles, and implementing practical compliance methodologies for sustained success. You’ll receive a starter roadmap and resources you can repurpose regarding how to: Right-size the assurance (e1/i1/r2) and scope to business reality Build an “evidence engine,” not a one-off project Operate practically post-cert with cadence Presenters: Moderator: Bill Deller, Schneider Downs, IT Risk Advisory Shareholder Panelists: Mark Conklin, Free Market Health, President & CTO Christopher Keslin, CareEnroll, Chief Operating Officer Hannah Moore, WellRithms, Corporate Compliance Officer Ryan Patrick, HITRUST, EVP, TPRM Customer Solutions If you have any issues with registration, please contact Lindsay Sherrill. Please note that CPE is not being offered for this event. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Learn more on our dedicated IT Risk Advisory page or contact the team directly at contactsd@schneiderdowns.com. ### AP Automation and Other AI/ML Enablers for Finance Scale Join our session on exploring how AI and automation are reshaping the role of modern finance. While finance teams have long been responsible for ensuring stability and control, today they’re also expected to drive agility and strategic insight across the business. Yet many leaders lack the tools, time, and collaboration needed to help stakeholders anticipate what’s ahead. Our team will break down how forward-thinking teams are using intelligent technologies to scale operations, unlock deeper visibility, and deliver bottom-line impact. Speakers: John Huckle - Chief Digital Innovator, SD Digital What You'll Learn: Demystifying Automation and AI/ML in Finance teams: what it means and how it impacts Prioritizing where to start and how to make pragmatic progress Advancing Automation and AI/ML safety and securely Next steps: 3 things that you can do right now CPE Information: Delivery Method: Group- Internet Based Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Information Technology (1 CPE Credit) Contact (Registering/Technical Issues): Alyssa Sansavera About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### Topics Impacting Real Estate – Insurance, Capital, Markets and Taxes As we approach the end of 2025, it’s clear this year has brought significant changes to the real estate industry. Watch a timely and insightful virtual panel discussion where experts from JLL, Schneider Downs and USI will break down three major shifts that could impact your current and future Net Operating Income (NOI): What You’ll Learn: How rising insurance costs and coverage changes are reshaping risk strategies. What capital market trends mean for financing and valuations heading into 2026. Key tax developments and how to evaluate their impact on your portfolio. Whether you’re an investor, operator, or advisor, this session will help you assess the implications of these changes and prepare for what’s ahead. Speakers: Patrick Kerns, Shareholder, Schneider Downs David Mitros, Shareholder, Schneider Downs Nicholas Unkovic, Senior Managing Director, JLL Joseph Sutton, Maryland President, USI Delivery Method: Group- Internet Based Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Specialized Knowledge (1.5 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development. To learn more, visit our Real Estate Industry Group page. Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### R&D Tax Credits for Construction: Turning Legislative Change Into Opportunity In this learning, the Schneider Downs R&D Tax Credit Team discusses how recent changes from the One Big Beautiful Bill are reshaping opportunities in the construction industry. Many companies may not realize they qualify or may be missing out on valuable credits. Our team will explain the latest updates, outline how to determine eligibility, walk through the credit process, and share practical strategies to help construction professionals maximize credits and strengthen their bottom line. There is no fee for this program. For more information regarding complaint and program cancellation policies, please contact Lindsay Sherrill. Attendees will: Understand recent changes from the One Big Beautiful Bill and how they impact R&D tax credit opportunities in the construction industry. Learn how to assess eligibility and navigate the steps involved in claiming R&D tax credits. Gain practical strategies to maximize credits and strengthen financial outcomes for construction businesses. Speakers: Ross Alessandro, Shareholder, Tax Advisors, Research & Development Erin Haase, Director, Credits and Incentives, Research & Development Ted Pettko, Shareholder, Accounting, Assurance & Advisory Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Tax (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions. About Schneider Downs R&D Tax Services Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at contactsd@schneiderdowns.com. Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.  ### Maximizing Your Philanthropy According to industry data, most high-net-worth individuals and families are engaging in various forms of charitable giving driven by their personal values, legacy planning and tax incentives. Our Schneider Downs Wealth Management team will discuss and illustrate how they work with our clients to maximize their philanthropic intentions. Presenters: David Brinkman, CPA, CFA, CFP®, Partner & Senior Wealth Manager, Schneider Downs Wealth Management Advisors Maggie Gompers-Havelka, JD, MBA, Shareholder, Estate and Trust Advisory Services, Schneider Downs James Moyer, CFP®, MBA, Senior Wealth Manager, Schneider Downs Wealth Management Advisors Please note that CPE is not be offered for this presentation.  About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### From Complexity to Clarity: Understanding the One Big Beautiful Bill (OBBB) This session will help you understand how the newly enacted One Big Beautiful Bill (OB3) may impact your financial planning, tax strategy, and compliance obligations. We’ll highlight the most relevant provisions, including updates to deductions, credits, depreciation rules, and estate planning thresholds. You’ll also learn what actions to consider before year-end and how to position yourself or your business for success under the new law. Whether you’re a business owner, investor, or advisor, this webinar will provide clear, actionable insights to help you navigate the new tax landscape with confidence. Watch Webinar | Download Slides Presenters: Brett Cubellis, CPA, Shareholder, Tax Advisory, Schneider Downs Charlotte Garraway, PMP, EA, Senior Manager, Tax Credits & Incentives, Schneider Downs Maggie Gompers Havelka, JD, MBA, Shareholder, Estate & Trust Advisory Services, Schneider Downs Janelle Merlo, CPA, CFP®, Shareholder, Tax, Schneider Downs Megan Whitlock, CPA, Shareholder, Tax, Schneider Downs What You’ll Learn: Understand the most important changes introduced by the OBBB and how they affect individuals and businesses. Gain clarity on the timing, implementation, and expected IRS guidance related to the new legislation. Learn strategic planning tips to optimize tax outcomes and ensure compliance under the new rules.   CPE Information Method: Virtual (ON24) CPE: 1.5 Hours (Tax) Learning Level: Overview Prerequisites: None Advanced Preparation: None Registration Assistance: Lindsay Sherrill About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Key Updates and Insights in the Not-For-Profit Sector Join an exclusive session hosted by Schneider Downs' Not-for-Profit Industry Group leaders and subject matter experts. This event will provide the latest insights and developments in the not-for-profit sector, including industry trends and regulatory changes. Our experts will offer valuable insights and practical advice to help you navigate these updates effectively. Presenters: Brittany Becker – Manager, Audit Jenn Closser – Senior Manager, Audit & Assurance Elena Faurie – Senior Manager, Tax Shane Gastecki – Director, Audit Danielle Miceli – Senior Manager, Audit Daniel Struth – Senior Manager, Audit Erin Wood – Director, Tax Advisory Services What You’ll Learn: Conference Update: Key takeaways from the annual AICPA & CIMA Not-for-Profit Industry Conference. Current Accounting Update: Latest updates from the Financial Accounting Standards Board (FASB). Uniform Guidance Revisions: Important changes and their implications. Tax Developments: Recent tax updates affecting not-for-profit organizations.   CPE Information Method: Virtual (ON24) CPE: 1.5 Hours (Governmental Accounting) Learning Level: Overview Prerequisites: None Advanced Preparation: None Registration Assistance: Lindsay Sherrill About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### Optimizing High Net Worth Tax Planning Effective high-net-worth tax planning begins with a comprehensive understanding of current tax structures and key drivers. By anticipating future tax implications—such as Social Security benefits, required minimum distributions, Roth conversions and increased itemized deductions—individuals can identify long-term planning opportunities that optimize their financial strategy. Observe an insightful discussion that our team of experts illustrate on how they collaborate with clients to enhance their tax planning and maximize financial outcomes. Presenters: Dave Brinkman, Partner & Senior Wealth Manager, Schneider Downs Wealth Management Advisors Matt Biggs, Wealth Manager, Schneider Downs Wealth Management Advisors Kelly Murphy, Wealth Manager, Schneider Downs Wealth Management Advisors Please note that CPE will not be offered for this presentation.  About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### An Agile Approach to Data Analytics If you are at the beginning of your journey to becoming an insights-driven organization but aren't sure how to balance a thoughtful strategy with making progress, or if you're deep into using data to drive proactive decisions but frustrated by the pace of change, then we need to talk. Agile, a long embraced in software development, offers a way forward. It focuses on incremental improvements over time. This "progress over perfection" mindset builds flexibility, accelerates delivery, and encourages user-driven design that leads to greater adoption and impact. Join the SD Digital team to explore how Agile principles can transform your data analytics efforts. You’ll learn practical ways to apply Agile methodologies to your workflows, generate faster insights, and adapt to changing business needs while fostering stronger collaboration across teams. What You’ll Learn: Apply Agile techniques to deliver faster, more actionable insights Use sprints, backlogs, and feedback cycles to improve collaboration Prioritize high-impact work that evolves with your business Presenters: John Huckle – Chief Digital Innovator, SD Digital Tina Kirsch – Senior Manager, SD Digital Michael E. Mielke – Manager, SD Digital Please note that CPE is not being offered for this event.  About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services Explore how Solver Cloud and Power BI can simplify financial reporting, improve operations, and give you clearer insights into your data. Join SD Digital’s Chief Digital Innovator, John Huckle, to discover how finance teams and executives can harness the power of AI and ML to: Use Solver Cloud to bring together financial data from disparate systems and provide your team with one version of the truth Speed up your reporting process and free up time for more valuable work Improve the end-user experience with Power BI dashboards that deliver real-time, actionable insights Presenters: Robert Morgan - Manager, SD Digital Jan Kubiska- Senior Director of I.T. & Security, Pressley Ridge Please note that CPE is not being offered for this event.  About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Navigating Times of Uncertainty for NFPs and Higher Ed 1 CPE Credit (Finance) Kimberly L. James, Patrick F. Kerns, and Sarah Piot, Shareholders of Schneider Downs, discuss different strategies your organization should be considering during these uncertain times for the not-for-profit and higher education sectors. This event concentrated on six areas that all organizations should be focused on to ensure that you are prepared to navigate these changing times. What You'll Learn: Gain an understanding of potential tax policy changes and how they could affect not-for-profit organizations. Understand why it is important to focus on budgets and scenario planning and key considerations to evaluate when developing them. Evaluate different cost containment strategies that focus on organizational mission and health. Understand why cash flow planning has a heightened level of importance. Learn about why it is still important to focus on strategic investments and partnerships in times of uncertainty. Gain a deeper understanding of why it is important to start developing your communication strategy now. CPE Information: Method: Virtual (ON24) CPE: 1 Hour (Finance) Learning Level: Overview Prerequisites: None Advanced Preparation: None About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### The Impact of AI on the Office of the CFO Explore real-world use cases and learn proven strategies to de-risk and accelerate adoption in a safe, effective way that delivers measurable business results and meaningful bottom-line impact. Join SD Digital’s Chief Digital Innovator, John Huckle, to discover how finance teams and executives can harness the power of AI and ML to: Drive new and diverse revenue streams Optimize operational and financial costs Anticipate future trends with predictive insights Presenter: John Huckle - Chief Digital Innovator, SD Digital Please note that CPE is not being offered for this event.  About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Top 5 Factors When Evaluating Business Central in 2025 When: Tuesday, April 22, 2025 • 2:00 pm – 3:00 pm With AI and machine learning transforming finance and operations, choosing the right ERP solution is more critical than ever. Business Central offers powerful tools to drive efficiency, but how do you ensure a successful implementation—and get the best value for your investment? Join the SD Digital team for our upcoming webinar, where we’ll break down the top five factors to consider when evaluating Business Central. From maximizing business value to leveraging AI-driven capabilities and selecting the right implementation partner, this session will equip you with the insights needed for a successful adoption. Presenters: Mike Scalamogna- Manager, SD Digital What You’ll Learn: Maximizing Business Value – How Business Central impacts working capital, operational efficiencies and the employee experience. The Power of AI & ML – What’s available today, Microsoft’s roadmap, and why AI is a game-changer for finance teams. Choosing the Right Partner & Planning for Success – The 3 C’s of partner selection and key considerations for a smooth implementation.  Please note that CPE is not offered for this event.  ### 2025 Employee Benefits Forum Join us for an insightful Employee Benefits Forum where we'll cover key topics such as maintaining plan compliance, navigating regulatory updates and exploring industry trends. Our experts will also discuss fiduciary responsibilities under ERISA, providing best practices and recent legal developments to help you manage your duties effectively. What You'll Learn: Retirement plan best practices to mitigate risk and ensure efficient and compliant plan operations Emerging trends in retirement plan design, investment offerings and participant engagement strategies Practical implications and key takeaways from recent regulatory developments and published guidance Presenters: Patricia Giudici - Shareholder, Accounting, Assurance and Advisory Services Frances Kusnierz - Senior Manager, Accounting, Assurance and Advisory Services Alexander Papson - Senior Manager of Fiduciary Solutions, Schneider Downs Wealth Management Advisors, LP Don't miss this opportunity to enhance your knowledge and improve your plan's outcomes! CPE Information: Host: Schneider Downs Delivery Method: Virtual Program Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge (1.5 CPE Credits) For more information on this event or if you have any trouble, please contact Lindsay Sherrill. ### Data Rich, Information Poor - Closing the Data Analytics Gap Gain actionable insights, overcome data challenges, and drive real business results. Data is everywhere, and the sheer volume created by today’s digital tools can feel impossible to manage. For many organizations, turning all that data into meaningful, actionable insights feels like an uphill battle. Whether it’s a lack of expertise, people, or processes, the challenges are real—but so are the opportunities. Join SD Digital Shareholder and Chief Digital Innovator John Huckle as he breaks down how to tackle these challenges and turn your data into real business results. Presenter: John Huckle - Chief Innovation Officer, SD Digital About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com ### Navigating Early-Year Tax Obligations for NFP Organizations 1 CPE Credit (Tax) During this webinar, we will provide guidance on filing various required IRS forms, including Forms 1099, 1042-S, and 1098-T. We will delve into the specific requirements and deadlines and provide valuable tips. We will also address donor acknowledgment rules and best practices to ensure donors have all the information for the 2025 filing season. The webinar will also cover additional considerations for not-for-profit organizations to address early in the year. Learning Objection: Understand filing requirements related to Forms 1099, 1042-S and 1098-T. Understand the donor acknowledgment rules and record-keeping practices as they relate to contributions. Speakers: Erin Wood, Director, Schneider Downs, NFP Tax Services Tina Kirsch, Sr. Manager, Schneider Downs, SD Digital Elena Faurie, Sr. Manager, Schneider Downs, NFP Tax Services Don’t miss this opportunity to gain essential knowledge on IRS filing requirements and donor acknowledgment rules. Register now to secure your place and get ready to ensure compliance and streamline your not-for-profit organization’s filing process for the 2025 season. Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Tax (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill ### Navigating the Path to Compromise: Common Findings from Penetration Testing 1 CPE Credit (Information Technology) Start 2025 with the Schneider Downs Cybersecurity team as they open their files to share critical insights, top vulnerabilities, and user behavior patterns identified through their real-life penetration testing experiences from the frontline. The team will also share practical strategies for enhancing your organization's security posture, including multi-factor authentication and purple team assessments. Don’t miss this opportunity to gain valuable knowledge and actionable advice to boost your security posture in the new year. Panelists David Murphy – Senior Manager, Schneider Downs Cybersecurity Consulting Stephen Bish – Manager, Schneider Downs Cybersecurity Consulting Rogers Spears – Manager, Schneider Downs Cybersecurity Consulting Learning Objective: Upon completing this webinar, participants will have enhanced knowledge of Cybersecurity and be able to identify, prevent, and mitigate common cybersecurity threats. Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Information Technology (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill   About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page. ### Blueprint for Success: How to De-Risk Your ERP Investment Presenters: John Huckle - Chief Innovation Officer and Mike Scalamogna – Manager, SD Digital Description: Are you considering or planning to transition from Dynamics GP to Dynamics 365 Business Central? If you are looking to transform your business, unlock new capabilities and drive lasting, impactful organizational change this webinar is for you. Join SD Digital Manager Mike Scalamogna for a deep dive into essential but often-overlooked areas that can significantly influence your long-term success and discover best practices to ensure your investment in Business Central meets your goals. About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated Schneider Downs Digital page or contact the team directly at contactsd@schneiderdowns.com. ### 2024 CPE Month Webinar Series: Wealth Management and Retirement Planning Matters 3 CPE Credits (Specialized Knowledge) Prudent Processes and Initiatives to Create Thriving Qualified Retirement Plans (50 mins – 1 CPE) Speakers:Tyler Brose and Miles Gibson Description: In today's rapidly evolving employment and regulatory landscapes, thoughtful decision-making, transparency, and consistency are just a few important factors that make for a thriving (and well-appreciated) qualified retirement plan program. This session will focus on what employers can do to ensure that their qualified retirement plan is compliant and competitive. Learning Objectives: Identify the things that employers can (and must) do to ensure that their qualified retirement plan is compliant and competitive. Year-End Wealth Management Stocking Stuffers (50 mins – 1 CPE) Speaker: Dave Brinkman Description: Various financial planning ideas for year-end consideration from our wealth management team Capital Markets Update (50 mins – 1 CPE) Speaker: Jason Staley Description: We’ll be covering a recap of capital markets performance and the current state of private markets. Learning Objectives: Identify whether a regime change has begun to take shape in the markets   Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill ### 2024 CPE Month Webinar Series: Audit Update 3 CPE Credits (Accounting) General Business Environment Update (25 mins - .5 CPE) Speaker: Doug Morally Description: This session will provide an update on the current global economy. As we navigate through a period marked by geopolitical tensions, inflation, labor shortages, and shifting trade dynamics, it is crucial for businesses to understand the key economic indicators and trends that shape our environment. Learning Objective: Understand the current global economic landscape and identify key economic indicators and trends. Accounting Matters to Consider in a Declining Rate Environment (25 mins - .5 CPE) Speaker: Patricia Giudici Description: How does a market with declining interest rates have an effect on the financial statements and what are some key areas we should be thinking about? Learning Objectives: Explore several financial statement components including but not limited to interest rate swaps, pension obligations, potential impairment, and considerations on acquisitions. IFRS Advantages for Global Organizations (25 mins - .5 CPE) Speaker: Michael Maloney Description: In today's rapidly evolving global market, financial transparency and consistency are paramount for companies operating across multiple jurisdictions. The International Financial Reporting Standards (IFRS) provide a universally accepted framework that enhances the comparability and reliability of financial statements. This session will cover the benefits of adopting IFRS as well as the adoption challenges that we’ve worked with clients to overcome. The session will also cover recent accounting changes under the international standards. Learning Objective: Identify the opportunities and obstacles of adopting global accounting policies for your organization. Accounting Panel Discussion: Navigating Hot Topics, Recent Standards, and Common Pitfalls (75 mins- 1.5 CPE) Moderator: Lauren Weddell Speakers: Nicholas Lombardo, Ryan Deatrick, Trevor Warren, Jessica Wingertsahn Description: Join us for an enlightening panel discussion where industry experts come together to explore the most pressing issues in the field of accounting today. This session will delve into several critical areas including: hot topics, recent accounting standards, and common pitfalls that accountants and financial professionals need to be aware of. Our panelists will highlight the latest trends and challenges facing the accounting industry, break down the most significant updates from governing bodies such as the Financial Accounting Standards Board (FASB), and share real-life examples and practical advice on how to avoid common mistakes in areas such as revenue recognition, expense management, and internal controls. Learning Objective: Identify and articulate the latest hot topics and trends in the accounting industry, including technological advancements and regulatory changes, understand and apply recent updates to accounting standards from governing bodies, and recognize common accounting pitfalls and implement strategies to mitigate these risks in their professional practice. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Accounting Contact (Registering/Technical Issues): Lindsay Sherrill ### 2024 CPE Month Webinar Series: Tax Update 3 CPE Credits (Tax) Federal Tax Update (25 mins- .5 CPE) Speaker: Dan Phillips Description: Review of the current state of the federal legislature and potential tax reform objectives.  Reflect on pending changes relative to phaseouts of prior legislation and potential future tax impacts. Learning objective:  Obtain a general understanding of current make up of congress and potential tax proposals that may be forthcoming.  We will explore the potential impact and also timing of certain possibilities. Partnership Taxation Update (50 minutes – 1 CPE) Speaker: Megan J. Whitlock Description: This session will provide updates on changes to partnership tax forms and reporting for the 2024 filing season.  We will also cover current tax court cases and proposed regulations issued in 2024 along with discussion around the IRS newly created Passthroughs, Trusts and Estates office that will focus exclusively on partnerships, S corporations, trusts and estates and what this means for taxpayers. Learning Objective: Understand new reporting obligations partners have for property distributions from partnerships with respect to Form 7217 along with other areas of IRS focus including basis shifting transactions and self-employment tax.    State and Local Tax Planning and Update (25 mins - .5 CPE) Speaker: Stephen Worth Description: This session will provide an update on recent changes to state tax legislation, including a focus on Pennsylvania and Ohio.  The session will also include a discussion of common state tax pitfalls and opportunities for state tax savings. Learning Objectives: Identify state tax legislative updates, as well as identify state tax exposure risk and opportunities.  Estate and Trust Federal Taxation Review (25 mins - .5 CPE) Speaker: Greg Allison Description:This session will provide an update on recent changes in the estate planning area, visit some of the most popular estate planning strategies of 2024, and talk about strategies to consider in the coming year. Learning Objective:Identify recent legislative changes and case law impacting the estate planning area and understand relevant strategies to deploy. Federal R&D Tax Credit Update (25 minutes – .5 CPE) Speakers: Ross Alessandro, Erin Haase, Charlotte Garraway Description: This session will provide an update on recent developments related to the Federal Research and Development Tax Credit, including information on the IRC Section 174 Capitalization requirements.  We will also discuss the IRS’s updates to Form 6765 which will increase the need for taxpayers to create documentation to support their qualified research activities. Learning Objective: Understand current and future reporting requirements related to the Federal Research and Development Tax Credit. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Tax Contact (Registering/Technical Issues): Lindsay Sherrill ### 2024 CPE Month Webinar Series: Consulting Technology and Advisory 3 CPE Credits (Specialized Knowledge) Agility: The Cornerstone of Effective Fraud Risk Management (50 minutes- 1 CPE) Speaker: James Rumph, Director Description: In today’s rapidly evolving landscape, the ability to swiftly adapt to new threats is crucial for effective fraud risk management. This session will explore how agility can enhance fraud risk prevention, detection, and response strategies. Attendees will gain insights that can help organizations keep up with ever evolving fraud. Learning Objectives: Understand the Importance of Agility: Learn why agility is essential to all phases of fraud risk Identify Agility Contributing Strategies: Become acquainted with strategies that support agile fraud risk management practices. Update on the Current M&A and Capital Markets Landscape (50 minutes- 1 CPE) Speakers: Peter Lieberman & Tom Springer, Managing Partners, Schneider Downs Capital Description: Closing out another eventful year in the M&A and Capital Markets, this session will the current climate for dealmaking, the impact of macro-economic drivers such as interest rates and trends in volume and pricing. We will also explore emerging trends in deal execution and diligence for both buyers and sellers, focusing on key pitfalls for dealmakers. Learning Objectives: Update on Marketing Conditions: Learn how debt and equity providers in the capital markets are viewing transactions and current economic conditions. Identify Strategies to Better Execute Transactions: Identify areas in negotiations and due diligence that are likely to present challenges and opportunities during the process of identifying, structuring and closing transactions. Safely and Meaningfully Accelerating Your AI Journey: Demystifying the Risks and Understanding What’s Possible (50 mins- 1 CPE) Speaker: John Huckle and Karl Bixler Description: With AI adoption gaining momentum at scale, mainly driven through our systems of record and engagement rolling AI capabilities into core features, acceleration of these tools is happening without clarity in how these solutions work – creating vulnerabilities to data privacy and leaving value that AI can generate on the table. Starting with the frameworks of Generative versus Predictive Ai, we will dive into how each of these classes of Ai work, common architectures, the importance of data structures, how they ingest and process data, and how Machine Learning works to enhance both use cases over time. We will also talk about how get your organization ready to think about, evaluate, and act upon Ai opportunities now and over time. Finally, we will share our progress on utilizing Microsoft’s different Copilot models (for Dynamics, for the Web, and for Office 365) for internal use cases, as well as specific use cases from leveraging Ai in Intelligent Automation client use cases. Learning Objectives: Understand enough about the inner workings of Generative and Predictive AI to better uncover use cases in your organization for AI Understand and be able to think through data privacy concerns with AI public and private clouds Understand what methods and practices you can use to identify, evaluate, prioritize, and safely action on AI opportunities in your teams Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill ### What’s New With Business Central? Presenter: Bob Whalen – Senior Manager, SD Digital Join SD Digital for an in-depth exploration of the latest upgrades and new features in Microsoft Business Central 365! In this webinar, SD Digital Senior Manager Bob Whalen will guide you through the newest enhancements and features, offering insights on how to maximize your digital investment. Discover what's on the horizon for the upcoming year and stay informed about the latest developments. Register About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. ### Lease Accounting for 2024 and Beyond Join the Schneider Downs Lease Accounting team for an in-depth exploration of the latest updates and best practices for effective ASC 842 lease accounting. This webinar will provide valuable insights to help you streamline your lease accounting processes and choose the best solution tailored to your organization's needs and industry. Key discussion points include: Streamlining Post-Adoption: Strategies to simplify and enhance the efficiency of lease accounting after ASC 842 adoption. Industry Considerations: An overview of lease accounting best practices specific to construction, manufacturing, and accounting professionals. Evaluating Lease Accounting Options: Guidance on assessing the most suitable path forward. Software vs. Outsourcing: A comparison of in-house software solutions versus outsourced services to help you make an informed decision. Don't miss this opportunity to stay ahead of the curve and ensure your lease accounting practices are optimized for 2024 and beyond. Register About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market, and the user experience. Learn more on our dedicated Schneider Downs Digital page or contact the team directly at contactsd@schneiderdowns.com. ### 5 Key Things You Missed at Community Summit Presenter: John Huckle – Chief Digital Innovator and Shareholder, SD Digital Presenter: Bob Whalen – Senior Manager, SD Digital Presenter: Jesse Anderson – Manager, SD Digital Presenter: Mike Scalamogna – Manager, SD Digital So much content, not enough time. We know how much insights the North America Community Summit delivers and know firsthand you simply can’t make every session you want. No worries—SD Digital has you covered! Join John Huckle, SD Digital's Chief Digital Innovator, and the SD Digital team, for an insightful panel discussion on the latest trends, news, and key sessions from the largest independent event dedicated to innovation, education and training in Microsoft business applications. Register About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. ## Videos ### simpLEASE Accounting Software Overview ### Schneider Downs Digital Transformation Overview ### Risk Advisory Solutions ### Cybersecurity Services ### Retirement Solutions ### Automation and Data Analytic Process Team (ADAPT) ### Wealth Management Advisors, LP ### simpLEASE Accounting Software ### Accounting Advisory Services ### SOC Report Solutions ### State and Local Tax (SALT) Practice ### Top Lease Accounting Mistakes - Poor Decision Making ### Top Lease Accounting Mistakes - Underestimating the Adoption Process ### Top Lease Accounting Mistakes - Waiting Until the Last Minute ### Top Lease Accounting Mistakes - Putting Too Much Pressure on Staff and Vendors ### Top Lease Accounting Mistakes - Viewing Contractors as Adoption Panacea ### Top Lease Accounting Mistakes - Rushing the Adoption Process ### Take 10 with Tom: The Importance of Wealth Management in the Transaction ### Take 10 with Tom: Compensation and Incentive Strategies for Middle-Market Companies ### Take 10 with Tom: Common Tripwires to a Successful Transition ### Take 10 with Tom: Key Tax Considerations and Best Practices for Transactions ### Take 10 with Tom: Understanding Purchase Price Adjustments ### Two Truths and a Lie about Purple Teaming ### Two Truths and a Lie about Cybersecurity Insurance ### Two Truths and a Lie about Cybersecurity Governance ### Which cyber maturity framework is right for us? ### Big Thinking Personal Focus ### Digital Transformation Solutions ### What is business email compromise and why is it so lucrative for threat actors? ### Schneider Downs Wealth Management Advisors Careers ### Estate Planning ### Tax Credits & Incentives ### What exactly is a Purple Team Assessment and how does it work? ### Pre-tax vs Roth Contributions ### Working at Schneider Downs - Experienced Professionals ### What is “callback phishing” and why is it growing so fast? ### Options for Retirement Accounts When Moving Jobs ### Why Are Cyber Insurance Premiums on The Rise? ### Can we really do anything about supply chain and third-party risk? ### Target Date Funds ### My User Opened a Malicious Attachment and Shut Their Machine Down, What Now? ### Digital Transformation ### Private Family ### Mergers & Acquisitions ### Data Analytics ### Governance For Retirement Plan Sponsors ### Revenue Sharing Arrangements ### Cash Flow in Retirement ### simpLEASE Accounting Software Overview ### simpLEASE Accounting ### What TTPs Can We Expect Threat Actors to Utilize Over the Next Few Months? ### SOC Reports ### Increasing Retirement Plan Contribution Rates ### Business Consulting ### Professional Development – 2022 P.O.W.E.R. Up Summit ### The Importance of a Financial Plan ### ERISA Bonding Requirements ### Accounting Advisory ### Employer Sponsored Retirement Plans ### What is a tabletop exercise (TTX) and who should be involved? ### How can organizations protect themselves from attacks that bypass MFA? ### Business Continuity, Disaster Recovery and Incident Response Plans ### How often should we rotate pentest vendors? ### Technology Advisors ### Is Your Estate in Order? ### The Voyage Program ### Focus on Women’s Leadership ### State & Local Tax ### Real Estate ### Qualified Default Investment Alternative ### Cybersecurity ### Best Practices to Keep Your Home Network Safe ### Are There Any MFA Methods More/Less Secure Than Others? ### Introducing SDWMA ### How To Develop Strong Password Policies? ### Active Versus Passive Investing ### Risk Advisory ### A Disciplined Approach to Investments ### Alternative Profit Sharing Contribution Allocations ### Asset Allocation ### Retirement Solutions ### Wealth Management ### What is the difference between EDR and XDR? ### Top Cybersecurity Questions of 2022 - What Are The Similarities and Differences Between EDR and XDR? ### Top Cybersecurity Questions of 2022 - What is Business Email Compromise? ### Top Cybersecurity Questions of 2022 - How Can We Prevent Cyber Attacks Designed to Bypass MFA? ### Top Cybersecurity Questions of 2022 - How Often Should I Rotate Penetration Testing Vendors? ### Top Cybersecurity Questions of 2022 - What Are Tabletop Exercises and How Do They Work? ### Top Cybersecurity Questions of 2022 - What Exactly is a Purple Team Assessment? ### Top Cybersecurity Questions of 2022 - What Cybersecurity Framework is Right for Our Organization? ### Top Cybersecurity Questions of 2022 - How Can We Reduce Supply Chain and Third-party Risk? ## Case Studies ### Emerging Technology Client Unaware Of Sales Tax Requirements Upon Exit Shareholder TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review and compilation engagements, and he services a diversified number of industries, from automotive to nonprofit. He also leads the firm’s Emerging Technology Services Group. When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products across multiple taxing jurisdictions, Trevor and his team understood that this missing piece would pose issues during due diligence and could negatively impact the client’s sale. To help ensure that the sale went smoothly, Trevor and his team suggested that the Schneider Downs state and local tax group perform a sales tax nexus study on the company. The group performed an analysis on both the client’s material revenue streams and the sales tax reporting requirements in the jurisdictions where they had customers. Then, Trevor and his team used that information to estimate the client’s total tax exposure, pinpoint the jurisdictions with significant exposure and help draft Voluntary Disclosure Agreements in those the jurisdictions. “We know that these requirements can be hard on early-stage companies when they have limited staff and revenue generation is a primary focus,” said Trevor. “By doing this analysis and going through the voluntary disclosure agreement process, we were able to get the company compliant with their sales tax filing requirements at a significantly reduced cost.” In addition, this process eliminated tax issues and exposure for the company upon exit. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. Excerpt: When one of the firm’s emerging technology clients was making plans to sell their business, Trevor and his team noticed that they were unaware of sales tax filing requirements. Knowing from experience how complex such requirements can be for emerging technology companies who sell products ### Pandemic-fueled Tax Liabilities For Dealerships Shareholder STEVE BARBER has been with Schneider Downs since 2003 and has over 20 years of experience in all areas of tax advisory services including tax planning, research and compliance, accounting, acquiring, selling and operational and financial reporting matters for closely held businesses. Steve serves clients in several diversified industries, including automobile, construction, real estate and manufacturing. As leader of the Automotive Services Group, Steve learned from most, if not all clients that they were struggling with COVID-19’s impact on their ability to maintain an inventory of new vehicles. For dealers using the last-in, first-out (LIFO) method of inventory accounting, when inventories dip, normally the LIFO reserve is recaptured, and more federal income taxes are due. Therefore, because of the pandemic-fueled shortage, many of Steve’s clients were faced with potential significant tax liabilities. Steve and his team took a two-pronged approach to helping their clients avoid the LIFO reserve recapture. “We suggested a different accounting method to calculate LIFO reserve to avoid the recognition of income prematurely,” he said. In addition, the group devised a way to bolster their clients’ inventory calculations. “We combine the dealer’s used vehicles and parts with their new vehicles to create a larger pool of inventory and to capitalize on the very large used vehicle inflation,” said Steve. This made the LIFO reserve recapture not as drastic and, in some cases, increased the reserve. Working with Steve, one client experienced a 25% increase to their LIFO reserve, rather than what would have been a 60% drop caused by the pandemic. Implementing Steve’s team’s suggestions, the dealer changed their income by approximately $2 million and achieved over $600,000 in deferred tax savings. Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Organization Severely Impacted By Covid-19. With over 14 years of experience, MATTHEW WERNER is a tax shareholder with expertise in serving public, private, and emerging global organizations. He has worked with domestic and global clients in numerous industries including transportation, manufacturing, technology, and healthcare. During frequent communication throughout the pandemic, Matthew realized one of his clients was struggling with a significant drop in gross receipts. Matthew and his team continually monitor legislative tax changes and noticed previously excluded organizations that received PPP loans and were now also eligible for employee retention credits. “Once we noticed an area of opportunity related to the Employee Retention Credit, we were able to calculate the credit available while navigating PPP forgiveness to ensure maximizing both programs,” said Matthew. “In the end, we identified and claimed over $1 million in refundable credits and the clients were thrilled.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Company Impacted By Ransomware. TREVOR WARREN joined Schneider Downs in 2001 and has more than 20 years of experience in public accounting. He mainly focuses on audit, review, and compilation engagements, and services a diversified number of industries from automotive to nonprofit. One of Trevor’s clients fell victim to ransomware. Their system was locked down and the ransom was in the mid six-figures. The company had cyber insurance and was referred to a few firms that were more focused on negotiating the ransom instead of assisting in restoring the system. That’s when Trevor received a call from the company’s CFO. “I was able to immediately get the CFO in touch with our cyber team, who were on-site and working with their Director of Information Technology quickly,” said Trevor. “We were able to successfully restore the client’s system and remove any threat of ransomware. Plus, the client did not have to pay any of the ransom and most of our fees were covered through their cyber insurance.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Accurately Gauging Employee Credit Card Usage. KIM GRIFFITH has more than 30 years of accounting experience and specializes in providing audit, tax and business consulting services to not-for-profit and governmental clients. She joined Schneider Downs in 2016 and provides clients with a range of services including budgeting, account systems, reviews of policies and procedures and strategic planning. One of Kim’s clients operates multiple community-living homes and was struggling to determine if employees were using their company credit cards appropriately. Through audit procedures, they were able to uncover questionable transitions and change the credit card usage policies. “We were able to identify a new purchasing card provider for our client and assess the data that they could utilize under this new system,” said Kim. “That way, they can more effectively monitor the transactions through automated reporting which safeguards the client’s funds.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Inefficient Tax Credit Realization. Joining Schneider Downs in 2004, DOUG MORALLY has more than 14 years of public accounting experience. He serves a variety of clients from not-for-profit, construction, retail, transportation, manufacturing industries and professional services. One of Doug’s clients, a professional services company, was looking to transition their Research and Development (R&D) study to Schneider Downs to save money and maximize the R&D tax credit. Doug’s team was able to use their expertise to expand the sample of projects reviewed in 2019 and increase the net R&D credit. “This expansion helped identify an R&D tax credit of almost $900,000—almost double what have been identified in previous years,” said Doug. “We were able to help our client save significant money and maximize their R&D tax credit.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Time Consuming Billing Process. Shareholder PATRICK ARMKNECHT has been with Schneider Downs for over 21 years. His expertise lies mainly in corporate accounting, project management and software implementation. One of Patrick’s clients was looking for more efficient back-office operations. Patrick’s team recommended the Robotic Process Automation (RPA) technology to help address their billing problem. After implementing RPA technology, manual time spent completing the monthly billing process was reduced by 75%. “Although the immediate need was focused on the monthly billing process, we recognized that investment in RPA would also enable the client to automate a number of processes throughout their organization,” Patrick said. “They have already implemented five other automation projects in different parts of the organization and have a list of more than 20 other processes they intend to automate in the near future.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Large Tax Burden In The Succession Plans Of A Family Business. GREG ALLISON is responsible for estate and succession planning for business owners, executives and high-net-worth individuals. He also prepares annual income tax returns for estates and trusts in addition to gift tax returns, federal estate tax returns and state inheritance tax returns. One of Greg’s clients was a father wanting to retire and give his son 100% ownership of their company. Giving his 80% share in the company would result in a $1.5 million tax due on redemption. Greg’s team was able to avoid the $1.5 million tax and introduce asset protection by having the father creator a grantor trust instead. “By creating a grantor trust, the father was able to sell his shares under the same terms as redemption but save money since no gain is recognized on the sale,” said Greg. “We were also able to integrate asset protection into the structure and procure the recurring tax and attest services.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Incorrect Accounting Methods Shareholder GENNARO DIBELLO has widespread experience in all areas of tax and business planning associated with closely held companies, and he's been with Schneider Downs since 1987. During a routine review of one of our client's operations, Gennaro's team identified something that wasn't very routine at all. They discovered that the client was using multiple incorrect methods and calculations for computing tax depreciation for their fixed assets. Gennaro met the client to discuss the issue, presented a solution to correct the problem, quantified the results, and implemented the changes resulting in a favorable adjustment of nearly $4.5 million. Gennaro's expertise and eye for detail was critical in helping this client fix a problem they didn't even realize that they had. "We're good at identifying opportunities or exposures that aren't on our clients' radars," Gennaro said. "It's not necessarily what we were originally retained to do, but while we're executing our engagements, we're always looking for new ways to help our clients and minimize their tax burden." Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Cybersecurity Defenses Compromised By Employees' Passwords Shareholder ERIC WRIGHT has been involved with Information Technology with Schneider Downs since 1983 and oversees the firm’s thriving Technology Consulting and IT Audit & Compliance practices. Through this role, Eric brings extensive experience in assessing IT infrastructure and identifying cybersecurity risk and exposure. One of our clients felt fairly good about their existing cybersecurity defenses. But they were still afraid of the unknown and newer cyber attack techniques. Through our regular audit procedures, we inquired about their current cyber controls and their confidence in withstanding an attack. We then performed a network penetration test which simulates an external adversary hacking their network. This procedure identified the client's unknown weaknesses in their defenses through a live test. “Within 48 hours, we were able to guess the passwords of close to 10% of their employees, effectively giving us VPN access to their corporate network and certain employee utilities, like email.” Eric said. "We also found that their corporate intranet site was visible over the internet and susceptible to login via the bad passwords. After identifying these issues, we worked with the client to make significant changes to their environment to make it harder for an attacker to break in." Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### A Complex Business Evaluation Case. With Schneider Downs since 2014, shareholder TOM PRATT has more than 30 years of experience in public accounting, forensic accounting, litigation support, business valuation and financial reorganization. Tom’s team was involved in a complex and contentious business evaluation dispute between our client, who was the controlling shareholder, and a non-controlling shareholder. The dispute included allegations of fraud, self-dealing and mismanagement of entities against our client. We worked with our client’s outside legal counsel to help them respond to both the valuation issues and, importantly, refute the allegations being made against him. Our diligent and objective work assisted in the settlement of the dispute, and our client purchased the interests of the non-controlling shareholder prior to going to trial. “We’ve seen just about everything you can see when it comes to disputes between business partners,” Pratt said. “So we know what to look for and what analysis and evidence will help our clients.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### A Not-for-profit Client Out Of 401(k) Compliance. Shareholder JASON LUMPKIN serves as a Practice Unit Leader for SDAdvantage Retirement Solutions. He has more than 17 years of qualified retirement plan experience, primarily serving middle market, closely held businesses. His background includes plan design, documentation reporting, participant education, and ongoing administration for defined contribution plans, including employee stock ownership plans. While working with one of our non profit clients, Jason’s team discovered that the organization was failing non-discrimination testing due to poor 401(k) participation among its employees. To address the issue, we recommended the implementation of a second retirement plan, a 403(b) plan, that would cover only the highly paid employees, allowing them to contribute the maximum amounts without concern for the limits imposed by the 401(k) plan’s non-discrimination testing. “These top employees were no longer constrained by the limits of the 401(k) plan testing results,” Jason said. “Plus, the organization no longer had to be concerned about the non-discrimination test. We also avoided implementing a “safe harbor” design in the 401(k) plan, which can result in costly employer contributions and vesting provisions that favor short-term employees.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Liquidity Issues For A Local Company. Shareholder STACI BROGAN has more than 20 years of public accounting experience. Her areas of expertise include helping not-for-profit clients, publicly traded registrants, and clients with complex governance structures. One of Staci’s clients was struggling with cash flow issues and wasn’t sure how to better manage their liquidity. But Staci’s team had an in-depth knowledge of the company and a clear understanding of their operations. Through detailed benchmarking of the company’s financial results as compared to their peers, a template was created to better project cash flows and positively impact key ratios. “In addition to benchmarking performance, we were able to provide the client with an analysis to evaluate a key contract,” Brogan said. “This allowed them to negotiate better terms for the organization which also helped with their liquidity.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### The Tax Implications Of Overseas Valuations. Shareholder MARY RICHTER has more than 20 years of public accounting experience since joining Schneider Downs in 2002. She has expertise with domestic and international tax planning, state tax nexus, tax credits, accounting for income taxes, and specific transaction planning and implementation. One of Mary’s clients was reorganizing their overseas operating structure and wanted to move certain assets to different jurisdictions. The client had been purchased by a Private Equity group and called us about updating a valuation we had previously done for the business. In addition to working through the valuation questions, we were able to identify an opportunity to revise their restructuring plan to avoid taxation of a significant portion of the transactions. “By asking questions, having a strong understanding of their needs, and collaborating with the client, we were able to save them roughly $1 million in taxes,” Mary said. “Plus, our plan enabled them to generate future tax deductions overseas to offset the current cost of restructuring. We also saved them substantially on fees.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### New Accounting Methods For Significant Refunds. A part of Schneider Downs since 1988, JAY MEGLICH provides auditing and consulting services to a variety of businesses and tax-exempt organizations. While speaking with a client, the conversation turned to tax reporting for retainages held under contract. Jay suggested the client have a follow up meeting with the tax team to look into this issue in more detail and review the overall method of reporting that was being used for income tax reporting purposes. After changing their accounting methods, we filed amended returns for open tax years and were able to get the client a significant refund on prior year’s returns. Plus, this new favorable reporting method was implemented going forward. “It’s always satisfying to help clients find new and unexpected savings,” Meglich said. “This client was then able to leverage the cash flow into financing that assisted them in expanding their operations and eventually to the purchase of a larger facility to continue their growth.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### Inefficiency In Data Extraction And File Conversion. Shareholder TED PETTKO has extensive experience with public and privately owned companies from a diverse group of industries, and he’s been with Schneider Downs since 1997. Ted's team implemented a solution for a client who had an ongoing need to extract data from one platform and enter it into another. The manual process they had in place was not only cumbersome and time consuming, but it also resulted in an unclean format. Using proprietary data analysis software, IDEA, the team helped the client extract an entire year of information into a clean format in a matter of hours. Previously, it had taken the client several days to perform the extraction. "Our efforts on behalf of our client enhanced their timeliness and efficiency," Pettko said. "Using data analysis software in the audit profession gives us the ability to extract information in a fraction of the time, summarize the data and produce high-level analytics to support our audit opinion. Ultimately it's a win-win." Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### A Family-owned Business Needing Tax Advice. Shareholder MARK DIPIETRANTONIO has been with the firm since 1995 and brings extensive experience in all areas of tax planning, research and compliance. When Mark was introduced to a new client, he learned through the course of the conversations about the nature of the business, their clients, and most interestingly, that they were not utilizing all of the tax deductions available in this specific industry. After some research, we determined that they were eligible for large deductions in excess of $1.4 million dollars, which had a huge impact on this family-owned business. “It felt great to be able to deliver such positive and unexpected news to this small business owner,” DiPietrantonio said. “By immediately amending the tax returns for the prior years in which the statute of limitations had not closed, we were able to secure a significant refund for them.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### A Limited Employee Benefit Plan. Shareholder JOE BRUCE has more than 21 years of public accounting experience since joining Schneider Downs in 1996. He has expertise with a variety of clients including construction, manufacturing, retail, oil and gas industries, and employee benefit plans. One of Joe’s clients had a successful business and was interested in contributing more to their retirement accounts. However, the client was limited by the existing employee benefit plan structure and IRS contribution limitations on their existing structure. Joe’s team was familiar with the structure of their existing plan and offered to do an analysis of their options. “The Schneider Downs Retirement Plan Solutions Group suggested a cash balance plan and provided an analysis to the business owners which quantified the impact and provided options to allow the client to evaluate the direction they were most comfortable moving forward with.” Bruce said. “The client elected to adopt the cash balance plan and was able to significantly increase contributions into the owners’ retirement accounts. This also enhanced the quality of the retirement benefits for their employees, which in turn helped improve employee retention.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### New Rules For Business Deductions. Shareholder EVAN OGRODNIK has been with Schneider Downs since 2005 and is one of our experts in tax compliance and planning, accounting, and financial reporting matters. Evan’s team always worked closely with our clients’ accounting group and Schneider Downs‘ audit team. When the IRS changed the rules on the deductibility of repairs and maintenance versus capitalization of assets, a group of Schneider Downs’ tax specialists performed a deep-dive on the technical rules of this change to develop tax planning strategies for their clients.  In one particular instance, through extensive analysis of the client’s fixed asset ledgers as well as those of related-party commercial rental properties, we were able to find tax savings of approximately $300,000. “Communication with our clients is always critical,” Ogrodnik said. “Our understanding of new, complex regulations, knowledge of our client’s business and internal workings, and the trust the client had in our experts, allowed us to take advantage of tax rules and garner significant deductions.” Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### A Global Company Needing Better Internal Controls. Shareholder JIM YARD is Schneider Downs’ practice leader for our Risk Advisory Services Department. Jim specializes in providing risk management, internal audit, and internal control consulting services.  One of our clients was a large consumer markets company with a global footprint. We learned that the company wanted to improve overall corporate governance and internal controls. Jim’s team was called upon to help with an evaluation since leadership at the company realized the need for a firm with international experience in multiple countries and languages. With the assistance of country-specific resources through Prime Global - one of the largest associations of independent public accounting firms in the world - and a consistent core team based in Pittsburgh, we have been able to provide the expertise necessary to develop and assist the company in building and establishing a global internal audit function, and bringing best practices across their global operations and core processes. “By accessing industry expertise, assessing risk and pulling in subject matter and international specialists, we were able to direct the company’s plans to implement best practices, mitigate risks, standardize their processes and create efficiencies throughout its operations and business units,” Jim said. “The client has recognized the success of this partnership and has gone on to award us other projects including on-going international location reviews, various operational and process reviews, systems implementation/migration, and fraud investigations.” Schneider Downs provides Big Thinking and Personal focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ### High Tax Burden For Family-owned Franchisor. A tax shareholder with more than 25 years of private and public accounting experience, CHRIS MCELROY joined Schneider Downs in 2017 and advises clients in diverse sectors, including consumer products and retail, healthcare, and manufacturing and distribution. Chris' team went to the aid of a family-owned retailer/franchisor that needed to reduce its tax burden to better align with the long-term vision for the business. Schneider Downs' shareholder-led service model positioned the team to have a sophisticated understanding of the client's objectives and leverage opportunities afforded by the Tax Cuts and Jobs Act. "We helped the client implement a structure to get requisite cash flows to the owners while taking advantage of favorable corporate tax rates, non-U.S. tax planning, and other tax provisions such as QBI and FDII,” said McElroy. “We were able to reduce their overall annual global tax burden by nearly 15% as a result." Schneider Downs provides Big Thinking and Personal Focus in delivering a variety of services for large and small businesses, both publicly and privately held, as well as nonprofit organizations, government entities and more. Through our commitment to thought leadership and knowledge management, we deliver the solutions our clients need with a personal commitment to service. ## Staff ### MELODY VAN DUSEN, CPA ### JANELLE A. MERLO, CPA, CFP® ### Maggie Gompers-Havelka, JD, MBA ### Patrick J. Hickmann, CPA ### Logan W. Kowcheck, CPA ### Michael M. Marasco, MBA ### Gregg W. Daily, AIF® ### MICHAEL J. VOINOVICH CPA ### Chris J. King ### JOSEPH J. VANDERMARK, CISA, CIPP ### Thomas M. Merante ### Stuart Lawson, CPA, CEPA, CM&AA ### Rebecka Talley, CEPA, CMAA ### Christine Marshall ### Walter H. Gilligan, MBA ### Wayne Pigott, CMAA ### Erika Keough, MBA, SHRM-SCP ### Victor R. Nichols ### Matthew Kotkiewicz ### Cynthia J. Hoffman, CPA, JD ### Tyler M. Reeder ### Michael P Hart ### Julie Ann M. Boles ### Imran Mohiuddin ### Alyssa M. Fudala ### JEFFREY A. WLAHOFSKY ### PAUL M. MATVEY ### RAYMOND W. BUEHLER JR. ### JASON R. STALEY CFA, CAIA® ### DEREK J. EICHELBERGER CFA, CFP® ### MICHAEL J. BUCCI CIMA® ### DAVID C. BRINKMAN CFA, CPA, CFP® ### RON S. WOLLETT JD ### BRETT T. CUBELLIS CPA ### MEGAN J. WHITLOCK CPA ### LAUREN E. WEDDELL CPA ### STEVEN D. THOMPSON CPA ### JAMES A. SAYRE CPA ### BRIAN W. MATTHEWS CPA, CM&AA ### JOHN J. HUCKLE ### PATRICIA R. GIUDICI CPA ### WILLIAM M. DELLER JR., CISA, CTPRP, CTPRA, CCSFP ### EUGENE M. DEFRANK CPA ### RYAN R. DEATRICK CPA, CCIFP ### JEANNE M. BARRETT CPA ### DANIEL P. PHILLIPS CPA ### EDWARD R. FRIEL CPA ### KIMBERLY L. JAMES CPA ### PATRICK F. KERNS CPA ### JOSEPH A. BRUCE CPA ### MARK A. DIPIETRANTONIO CPA, CCIFP ### THEODORE M. PETTKO CPA ### CARL D. SCHARF CPA ### PHYLLIS M. TEDESCO, CPA ### MICHAEL W. DARPINO, JD, LL.M., MBA ### KARI T. OWENS, JD ### DEL E. WILMOT JR., EA ### VICKI MAYOWSKI, CPA ### MAGGIE GOMPERS-HAVELKA, JD, MBA ### CATHERINE A. MARTZ, CPA, MST ### ASHLEY N. BUCEK, EA, MST, MBA ### MELANIE M. LASOTA, CPA, JD ### CAROL G. MURRAY, CPA, JD ### SARAH R. PIOT CPA ### DARIN G. SCHINDLER CPA ### GREGORY L. ALLISON JD, CPA/PFS, CFP® ### JAMES B. YARD CPA CIA ### CARLEY R TASLOV CPA ### NICHOLAS D. LOMBARDO CPA ### CARL N. KRIEBEL CISSP ### ERIC M. FAIR CISA, CDPSE, CBCLA ### TOM SPRINGER ### PETER J. LIEBERMAN ### PATRICK B. ARMKNECHT CPA, CITP ### ADAM J. GOODE CPA ### EVAN C. OGRODNIK CPA ### DAVID J. MITROS CPA ### ROSS S. ALESSANDRO III CPA ### MATTHEW S. LEGG CPA ### MARY D. RICHTER CPA ### STEPHEN R. WORTH CPA, JD ### MATTHEW C. WERNER CPA ### JUSTIN C. STEELE ESQ ### STEVEN A. BARBER CPA, MST ### CHRISTOPHER S. MCELROY CPA ### STACI L. BROGAN CPA ### ERIC M. WRIGHT CPA, CITP ### DOUGLAS J. MORALLY CPA ### TREVOR P. WARREN CPA ### TONY P. IELASE CISA ## Testimonials ### Bridget Mancosh - Point Park University Variety of services, expertise and customer service. ### Aaron Baker - Glendorn Energy They collaboratively work with us. ### Aaron Oliver - FNB Corporation Good continuity throughout the engagement teams showing complete understanding from Shareholder all the way down to the senior and staff level. ### Donna Brown - Rohrich Auto Holdings the ease of having questions answered- the knowledge of our day-to-day business needs and issues. ### Bob Mermelstein - Pittsburgh Botanic Garden We have been overwhelmingly happy with the people and services that we receive from Schneider Downs. Not everyone understands the nuances of nonprofit finance, but SD does. While we are required to have an audit and to file with the IRS and Commonwealth, we view our relationship with Schneider Downs as more of a partnership. We are constantly bounces our thoughts off of our SD team for agreement and/or guidance so that there are no surprises on either side. The SD team has been great to work with. They are respectful and knowedgeable about our industry/business and we appreciate our relationship. ### Laura Poynar - PNC The best thing is the partnership. Patrick and team are always responsive and great to work with. I love the open dialogue and professionalism. The team at SD is very knowledgeable and I feel they take the step further to exceed rather than just meet our expectations. ### Rick Gant - United Bank The people. They are very knowledgeable and quick to respond when issues arise. Jim Yard and the staff out of Pittsburg have been very helpful in the areas of IT Auditing, Mortgage Company Operations, and Wealth Management. They are very prompt in returning our calls and providing support when needed. ### Tracy Rosetti Delvaux - Hanna Holdings, Inc. and Subsidiaries ...They are truly a full-service firm - we utilize the tax, audit, transaction, cybersecurity, 401k, and family office teams. ### Michael Falcone - Michael Falcone Honesty, Integrity, Professional Down to earth. ### Tamara Grecco - Microbac The people! ### Beth Ginnever - Baumann Auto Group Brett Cubellis is the best! He always follows up and is prompt in his response. ### Jeff Mattiuz - Oberg Industries, Inc. Good people, firm culture and reasonably priced. It's also nice to support a locally HQ'd firm. ### Russ Grunebach - Duquesne University Friendly knowledgeable staff ### Jean Halle - American Public Education Inc. Competency is broad and efficiently applied. SD is a great thought partner and goes beyond keeping score to enable us with meaningful insights. ### Todd Simko - Main Street Bank Jim Yard, Jessica Miller and team are first class in everything they do. They are a wealth of experience and knowledge and share that expertise with our Management team and Board. I have worked with numerous firms in my 25+ career and Schneider Downs is the best when it comes to communication, transparency and high-quality work product. We could not be happier with our relationship, and they are a source of strength in our overall risk management framework. ### Greg Wilson - Centimark Professionalism and pragmatic ### Don Hall - Zippo Manufacturing Company Every thing from keeping us up on all of the changes to consistent timely assistance when we need! ### Paul Castelnovo - Vogel Holding, Inc. I love the diversity of the personnel, each one has a unique skill set, and they all care about what's important..."The Client!! ### Zach Doran - Ohio Automobile Dealers Association The people are knowledgeable and care about positively impacting our business. ### John Heisey - CentiMark Corporation The past year has been the perfect example of what I like best about Schneider Downs. In addition to our recurring annual corporate audit, tax compliance, and employee benefit plan audit / TPA services, SD&Co has provided us with cyber security consulting, breach response, lease accounting software and implementation, and estate valuation services. It is great to know that with a call to one of our primary relationship contacts, we can quickly and confidently be placed in the hands of an expert in any number of financial-related services. Communication and consistency within all SD&Co. service offerings is fantastic!!! ### Justin Young - Ease Logistics Working with Schneider Downs has been an absolute game-changer for our business. Their Tax and Audit teams, especially Carl Scharf, Sarah Hoagland, and Brandon Embreus, are unmatched in expertise and dedication. From day one, they took the time to understand the unique aspects of our company and developed strategies tailored to our needs. What I appreciate the most is their proactive approach; they always keep me informed of tax-saving opportunities, regulatory changes, and potential risks, so there are never any surprises. Every member of the team is approachable, patient, and incredibly knowledgeable — they make our complex world of accounting feel simple and manageable. In a world where customer service often falls short, Schneider Downs stands out with their unwavering commitment to their clients. They’re not just our accountants; they’re trusted partners who genuinely care about our success. ### Steve Harrell - Expedient Great relationship with our primary POC - Jim Sayer. Excellent knowledge base and highly responsive to our business needs. SD has added real value to our taxation reporting and strategy. ## Events ### Kick Off Compliance: January Filing Deadlines & Payroll Changes Under OBBB January 6th, 2025 @ 10:00 AM EST Join us for a practical session designed to help you start the year on the right foot. We’ll cover critical beginning of the year filing requirements, including Forms 1099 and 1042, and walk through recent payroll updates resulting from OBBB changes. What You'll Learn: Identify tax deductions available for employees earning overtime and tips. Explain the payroll department’s responsibility to report earnings and deductions to employees. Recognize common “gotcha” items that employees and employers may overlook in payroll and tax reporting. Review the 2026 annual limit changes affecting payroll and benefits. Analyze the final adjustments related to the implementation of the Secure 2.0 Act. Understand deadlines and compliance obligations for Forms 1099 and 1042. Apply strategies to avoid errors in payroll and tax reporting. Ensure timely submissions of required forms to maintain compliance. Speakers: Tina Kirsch - Senior Manager, SD Digital Hailey Adams-Brown - Tax Manager, Schneider Downs Elena Faurie - Senior Tax Manager, Schneider Downs Delivery Method: Group- Internet Based Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: ITAX (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill   Register Now   About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### 2025 CPE Month Webinar Series: Consulting, Technology and Advisory We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 4, 2025 (3 CPE Hours) 9:00 am – 9:05 am - Opening Video Welcome/Housekeeping items 9:05 am - 9:55 am - Office of the CFO Discussion 9:55 am - 10:00 am - Short Break (swap out panel) 10:00 am - 10:50 am - Risk Discussion 10:50 am – 10:55 am - Short Break (swap out panel) 10:55 am – 11:45 am - M&A Discussion 11:45 am – Noon - Catch up time/Thank you comments Register for this or all webinars Office of the CFO Panel Discussion: What CFOs Should be Thinking About Headed into 2026 Speakers: Adam Goode (Moderator), Nick Lombardo, John Huckle and Phil Farabaugh Description: A panel discussion involving leaders from our Advisory and Digital practices who will be discussing timely and relevant topics as we head into year-end. We will cover a variety of topics that we know are on the minds of CFOs including AI, automation, outsourcing trends, tariffs, interest rates, and a host of other important topics. Learning objective:  Participants will learn about current issues most CFOs are facing, including practical solutions to problems.  Participants will also learn about how companies can get value out of AI and automation.   Risk Panel Discussion: Emerging Risk Trends and How to Build Resiliency Speakers: Carley Taslov (Moderator), Joe Vandermark, Carl Kriebel and James Rumph Description: A panel discussion involving leaders from our Risk and Cybersecurity practices who will be discussing a host of emerging risk trends we are seeing.  Topics will include thoughts on cyber risk, operational risk, enterprise risk management, IT risk, fraud risk, vendor risk and others. Learning Objective: Participants will learn about emerging risk trends and how to strengthen their risk resiliency within their organizations. M&A Panel Discussion: The State of M&A Headed into 2026 Speakers: Pete Lieberman (Moderator), Brian Matthews, Walt Gilligan, Alyssa Fudala Description: A panel discussion involving leaders from our Transaction Advisory and SD Capital practices who will cover the state of M&A headed into 2026 and how buyers and sellers should be thinking about deal flow in this environment. Learning Objectives: Participants will learn about how buyers and sellers are thinking about deals and what each side needs to know.  Participants will also get an update on the current M&A market.  Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### 2025 CPE Month Webinar Series: Audit Update We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 11, 2025 (3 CPE Hours) 9:00 am – 9:05 am - Intro and Housekeeping and tribute to JRN 9:05 am – 9:30 am - General Business Environment Update 9:30 am – 9:55 am - From Audit to Action: What I learned moving from Auditor to CFO 9:55 am – 10: 20 am - Navigating Unique Equity Transactions and Awards: Accounting and Disclosure Essentials 10: 20 am – 10:30 am - BREAK 10: 30 am – 10:55 am - IFRS Advantages for Global Organizations 10:55 am – 11:20 am - AI For Finance Teams – How to accelerate your day 11:20 am - 11:45 am - Forecasting, Budgeting and Evaluating Going Concern: Ensuring Financial Sustainability and Compliance 11:45 am – Noon - Q&A/Wrap Up/Catch Up Time Register for this or all webinars General Business Environment Update Speaker: Doug Morally Description: This session will provide an update and perspective on today’s global economy amid geopolitical tensions, evolving trade policies, and persistent labor challenges. This session highlights key indicators and emerging trends that influence business strategy in an uncertain environment. Learning objective: Understand the most significant economic forces shaping global markets today and identify insights to help businesses adapt to shifting trade, labor, and policy dynamics. From Audit to Action: What I Learned Moving From Auditor to CFO Speaker: Mike Voinovich Description: The session will offer a unique perspective from a 29-year accounting professional who has served as both a lead audit partner and a CFO. We’ll explore how moving from public practice to an executive finance role changes the way you think about risk, decision-making, and collaboration. Learning Objective: Discover how the CFO role differs from the auditor’s lens and why that matters and understand how auditors and finance leaders can work together more effectively to achieve shared goals. Navigating Unique Equity Transactions and Awards: Accounting and Disclosure Speakers: Jenna Zelenski and Jennifer Closser Description: This session explores the complexities and nuances of accounting for unique equity transactions and equity-based compensation awards. This session will provide insights into the applicable U.S. GAAP guidance and address disclosure requirements. Learning Objectives: Identify key types of equity transactions and awards commonly encountered in financial reporting. Apply relevant accounting standards to recognize, measure, and disclose equity-based compensation in accordance with U.S. GAAP. IFRS Advantages for Global Organizations Speaker: Michael Maloney Description: In today's rapidly evolving global market, financial transparency and consistency are paramount for companies operating across multiple jurisdictions. The International Financial Reporting Standards (IFRS) provide a universally accepted framework that enhances the comparability and reliability of financial statements. This session will cover the benefits of adopting IFRS as well as the adoption challenges that we’ve worked with clients to overcome. The session will also cover recent accounting changes under the international standards and items to consider before the end of the year. Learning Objectives: Identify the opportunities and obstacles of adopting global accounting policies AI for Finance Teams – How to Accelerate Your Day Speaker: Patrick Kerns Description: During this session we will explore using Microsoft Copilot some basic functions that all finance teams should be aware of and using to help improve your leverage. Learning Objectives: Understanding the different AI tools and privacy considerations, creating basic agents to help you be more effective, using Copilot to help tame your inbox and review priorities, using CoPilot to quickly turn large excel documents in easier to understand presentations and quickly create presentations summarizing financial results. Forecasting, Budgeting and Evaluating Going Concern: Ensuring Financial Sustainability and Compliance Speaker: Logan Kowcheck Description: This presentation provides a comprehensive overview of key financial planning and reporting practices under US GAAP, focusing on forecasting, budgeting, and evaluating going concern. Designed for finance professionals, shareholders, and auditors, it outlines the principles and procedures that ensure financial sustainability and regulatory compliance. Attendees will gain insights into how to develop realistic financial forecasts, implement effective budgeting strategies, and assess an entity’s ability to continue operations for the foreseeable future. Learning Objectives: Understand the role of forecasting and budgeting in financial planning and how they align with US GAAP standards, apply the principles of ASC 205-40 to evaluate an entity’s going concern status, identify conditions and events that may raise substantial doubt about going concern, assess mitigating factors and management plans that influence going concern evaluations, recognize required disclosures related to going concern and their impact on financial statements, implement best practices to enhance the accuracy and reliability of financial forecasts and budgets, and avoid common pitfalls in forecasting, budgeting, and going concern assessments. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Accounting Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### 2025 CPE Month Webinar Series: Tax Update We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 9, 2025 (3 CPE Hours) 1:00 pm – 1:05 pm - Intro and Housekeeping 1:05 pm – 1:30 pm - Federal Tax Update 1:30 pm – 2:15 pm - Tax Planning Ideas for the High Net Worth Individual 2: 15 pm – 2:40 pm - Estate Planning Update 2: 40 pm – 2: 45 pm - BREAK 2:45 pm – 3:10 pm - State and Local Tax Planning and Update 3:10 pm – 3:55 pm - Federal R&D Tax Credit Update 3:55 pm – 4:00 pm - Q&A/Wrap Up/Catch Up Time Register for this or all webinars Federal Tax Update Speaker: Dan Phillips Description: Review of the current state of the federal legislature and potential tax reform objectives. Reflect on tax impacts of the OBBB across a variety of taxpayers and situations. Learning objective: Obtain a general understanding of current status of the Capital and potential tax legislation.  Be familiar with high level impacts of the OBBB for 2025 and into the future. Tax Planning Ideas for the High Net Worth Individual Speakers: Darin Schindler and Vicki Mayowski Description: : Individual income tax planning strategies and other strategies designed for high net worth individuals. Learning Objective: Obtain knowledge of the tax planning strategies that high net worth individuals can benefit from with respect to their federal and state income taxes. Estate Planning Update Speaker: Greg Allison Description: This session will provide an update on recent changes in the estate planning area (notably the impact of the One Big Beautiful Bill), and visit some of the most popular estate planning strategies of 2025 focusing on the top strategies for individuals under the new $15 million exemption. Learning Objectives: Identify recent legislative changes and case law impacting the estate planning area and understand relevant strategies to deploy. State and Local Tax Planning and Update Speaker: Stephen Worth Description: This session will provide an update on recent changes to state tax legislation, including the state implications of the OBBB and a focus on changes in Pennsylvania and Ohio. The session will also include a discussion of common state tax pitfalls and opportunities for state tax savings. Learning Objectives: Identify state tax legislative updates, as well as identify state tax exposure risk and opportunities. Federal R&D Tax Credit Update Speakers: Ross Alessandro, Erin Haase, Charlotte Garraway Description: This session will provide a comprehensive overview of the latest developments in the Federal Research & Development (R&D) Tax Credit, including key changes introduced by the One Big Beautiful Bill Act (OBBBA) and recent IRS guidance. Attendees will gain insights into the reinstatement of immediate expensing for domestic R&D under Section 174A, enhanced documentation requirements for Form 6765, and strategic planning opportunities for both large and small businesses. Learning Objectives: Understand the latest legislative and regulatory changes related to the Federal Research and Development Tax Credit. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Tax Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### 2025 CPE Month Webinar Series: Wealth Management and Retirement Planning Matters We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 16, 2025 (3 CPE Hours) 1:00 pm – 1:05 pm - Intro and Housekeeping 1:05 pm – 2:20 pm - 2025 Capital Markets: Miami Vice (Peak 80's) Meets Sand Hill Road (Peak 90s) 2: 20 pm – 2:30 pm - BREAK 2: 30 pm – 3: 45 pm - 2025 Top Client Conversations and Advice 3:45 pm – 4:00 pm - Q&A/Wrap Up/Catch Up Time Register for this or all webinars 2025 Capital Markets: Miami Vice (Peak 80's) Meets Sand Hill Road (Peak 90s) Speaker: Jason Staley Description: This three-part market commentary explores current global investment trends through November 30, compares the AI boom to the late 1990s internet surge, and outlines key investment themes and expectations for 2026, including infrastructure, international performance and small-cap leadership. Learning objective: Obtain a general understanding of current status of the Capital and potential tax legislation.  Be familiar with high level impacts of the OBBB for 2025 and into the future. 2025 Top Client Conversations and Advice Speaker: Dave Brinkman Description: Schneider Downs Wealth Management will discuss the top 5 client conversation themes from 2025 ranging from investment management, taxes, and estate planning. Providing the context to these conversations and our subsequent advice to our clients on the topic. Learning Objective: Illustrating the value of comprehensive investment management, tax, and estate planning guidance. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### From Chaos to Confidence: How HITRUST Actually Gets Done Register Here | December 3, 2025 12:00 PM EST In this panel discussion, you’ll hear from organizations that earned HITRUST certifications, including SOC 2 + HITRUST. Learn firsthand what strategies proved effective, which approaches fell short, and valuable lessons for future initiatives. This discussion will also address key topics, such as optimizing assurance levels (e1/i1/r2) to align with business needs, mitigating scope expansion, expediting sales cycles, and implementing practical compliance methodologies for sustained success. You’ll receive a starter roadmap and resources you can repurpose regarding how to: Right-size the assurance (e1/i1/r2) and scope to business reality Build an “evidence engine,” not a one-off project Operate practically post-cert with cadence Presenters: Moderator: Bill Deller, Schneider Downs, IT Risk Advisory Shareholder Panelists: Mark Conklin, Free Market Health, President & CTO Christopher Keslin, CareEnroll, Chief Operating Officer Hannah Moore, WellRithms, Corporate Compliance Officer Ryan Patrick, HITRUST, EVP, TPRM Customer Solutions   Register Here If you have any issues with registration, please contact Lindsay Sherrill. Please note that CPE is not being offered for this event. About Schneider Downs IT Risk Advisory Schneider Downs’ team of experienced risk advisory professionals focuses on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business. Learn more on our dedicated IT Risk Advisory page or contact the team directly at contactsd@schneiderdowns.com. ### AP Automation and Other AI/ML Enablers for Finance Scale November 19, 2025 @ 2:00 PM EST Join us for a webinar exploring how AI and automation are reshaping the role of modern finance. While finance teams have long been responsible for ensuring stability and control, today they’re also expected to drive agility and strategic insight across the business. Yet many leaders lack the tools, time, and collaboration needed to help stakeholders anticipate what’s ahead. In this session, we’ll break down how forward-thinking teams are using intelligent technologies to scale operations, unlock deeper visibility, and deliver bottom-line impact. What You'll Learn: Demystifying Automation and AI/ML in Finance teams: what it means and how it impacts Prioritizing where to start and how to make pragmatic progress Advancing Automation and AI/ML safety and securely Next steps: 3 things that you can do right now Speakers: John Huckle - Chief Digital Innovator, SD Digital Delivery Method: Group- Internet Based Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Information Technology (1 CPE Credit) Contact (Registering/Technical Issues): Alyssa Sansavera Register Now About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### The Future of the Finance Function: Powered by Generative AI Free Webinar | Register Here November 17, 2025 @ 1:00 PM EST Join SD Digital and Solver for an inside look at how generative AI is transforming the finance function. In this session, you’ll see how Solver and the SD Digital work together with connected data warehouses to empower financial leaders and executives with real-time collaboration and smarter decision-making. With trusted data as the foundation, finance leaders can simplify ad hoc reporting, unlock insights in seconds, and gain the clarity and confidence needed to drive strategy and innovation. Presenters: Patrick Armknecht - Shareholder, SD Digital Drew Reo - Manager, SD Digital Mark Bennett - Senior Partner Development Lead, Solver If you have any issues with registration, please contact Lindsay Sherrill Please note that CPE is not being offered for this event.  Register Now About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Topics Impacting Real Estate - Insurance, Capital, Markets and Taxes October 21, 2025 @ 9:00 AM EST As we approach the end of 2025, it's clear this year has brought significant changes to the real estate industry. Join us for a timely and insightful virtual panel discussion where experts from JLL, Schneider Downs and USI will break down three major shifts that could impact your current and future Net Operating Income (NOI): What You’ll Learn: How rising insurance costs and coverage changes are reshaping risk strategies. What capital market trends mean for financing and valuations heading into 2026. Key tax developments and how to evaluate their impact on your portfolio. Whether you're an investor, operator, or advisor, this session will help you assess the implications of these changes and prepare for what’s ahead. Register Now Speakers: Patrick Kerns, Shareholder, Schneider Downs David Mitros, Shareholder, Schneider Downs Nicholas Unkovic, Senior Managing Director, JLL Joseph Sutton, Maryland President, USI Delivery Method: Group- Internet Based Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Specialized Knowledge (1.5 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill About Schneider Downs Real Estate Services The Schneider Downs Real Estate industry group provides accounting, tax and consulting services to clients nationally and internationally. Our real estate group meets our clients’ needs by providing value-added solutions in all areas of real estate ownership, including commercial, industrial, residential, multi-family, student housing, hotel and land development. To learn more, visit our Real Estate Industry Group page. Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. ### Before the Breach – A Strategic Guide to Cyber Breach Preparation When: Tuesday, January 13, 2026, 1:00 PM ET In the aftermath of a cybersecurity breach, organizations consistently identify gaps that could have dramatically reduced their impact, recovery time, and overall costs. Join our team of frontline incident responders and ethical hackers as they share insights highlighting the top preparations companies wish they’d implemented before the breach. These aren't exotic technologies; they're proven practices that transform organizations from reactive to proactive security postures. These preparations represent the difference between a manageable incident and a business-threatening catastrophe. Presenters: Taylor Anderson, MCFE - Cybersecurity Consulting Senior Analyst, Schneider Downs Stephen Bish, CEH - Cybersecurity Consulting Manager, Schneider Downs Roger Spears, CEH - Cybersecurity Consulting Manager, Schneider Downs  REGISTER HERE  Please note that CPE is not being offered for this event. For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### R&D Tax Credits for Construction: Turning Legislative Change Into Opportunity When: October 22, 2025 @ 11:00 AM EST | Register Now Join the Schneider Downs R&D Tax Credit Team for a webinar on how recent changes from the One Big Beautiful Bill are reshaping opportunities in the construction industry. Many companies may not realize they qualify or may be missing out on valuable credits. Our team will explain the latest updates, outline how to determine eligibility, walk through the credit process, and share practical strategies to help construction professionals maximize credits and strengthen their bottom line. There is no fee for this program. For more information regarding complaint and program cancellation policies, please contact Lindsay Sherrill. Attendees will: Understand recent changes from the One Big Beautiful Bill and how they impact R&D tax credit opportunities in the construction industry. Learn how to assess eligibility and navigate the steps involved in claiming R&D tax credits. Gain practical strategies to maximize credits and strengthen financial outcomes for construction businesses. Speakers: Ross Alessandro, Shareholder, Tax Advisors, Research & Development Erin Haase, Director, Credits and Incentives, Research & Development Ted Pettko, Shareholder, Accounting, Assurance & Advisory Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Tax (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill In order to be awarded CPE credit(s), you must be present for a minimum of 50 minutes after the start of the event and respond to at least 3 polling questions. Register Now About Schneider Downs R&D Tax Services Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at contactsd@schneiderdowns.com. Schneider Downs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.  ### Stirring Growth: Columbus Manufacturing, Cocktails and Conversations Join us for an exclusive Manufacturing Event that promises to be both informative and entertaining! The manufacturing industry is a cornerstone of the Columbus, Ohio, economy, driving growth and innovation across the region. This sector not only provides a significant number of jobs but also contributes to the economic stability and development of our community. With a robust pipeline of industrial projects, Columbus is poised to continue its legacy of excellence in manufacturing. This event is a show of appreciation for your continued efforts to keep our region at the forefront of manufacturing.   Additionally, we are honored to have the Interim President of One Columbus, Matt McCollister, who will be speaking about the following key topics: The presence of industrial projects in our project pipeline The impact the industrial sector has had on our regional economy Key items we are monitoring that could positively or negatively impact future industrial growth This event will also feature a special session where you’ll learn how to manufacture the perfect cocktail or mocktail. Our professional mixologist will guide you through the art of crafting delicious and visually stunning drinks. Whether you’re a cocktail enthusiast or prefer non-alcoholic options, this session has something for everyone. Click Here To Register: Stirring Growth Columbus Manufacturing - Schneider Downs   ### Pittsburgh Anti-Fraud Leader Roundtable Event Please register for our Anti-Fraud Leader Roundtable below! When: September 24th, 2025, 3:30-5:30pm ET Location: Rivers Club, 301 Grant St Ste 411, Pittsburgh, PA 15219 Course Summary: Join us as we provide a local forum for collaboration in the fight against fraud, where leaders can discuss trends and fraud risk management best practices – all while networking with peers across several industries. Host: Nick Leone Delivery Method: Group-Live Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Specialized Knowledge (1.5 CPE Credits) Contact (Registering/Technical Issues): Alyssa Sansavera Agenda: Panel discussion 3:30pm to 4:45pm led by Nick Leone with attending participants and happy hour 4:45pm to 5:30pm. Topics to Be Discussed: Pre-submitted topics Walk on topics Pittsburgh Anti-Fraud Leader Round Table Event Name(Required) First Last Company/Organization(Required)Job Title(Required)Email(Required) Please list any topics you would like to include in the discussion here:Would you be interested in staying until 5:30 for a brief happy hour after our event? * Yes No CAPTCHA Submit   ### Columbus Anti-Fraud Leader Roundtable Event Please register for our Anti-Fraud Leader Roundtable below! When: September 23rd, 2025, 3:30-4:45pm ET Location: Hofbräuhaus, 800 Goodale Blvd. Columbus, OH 43212 Course Summary: Join us as we provide a local forum for collaboration in the fight against fraud, where leaders can discuss trends and fraud risk management best practices – all while networking with peers across several industries. Host: James Rumph Delivery Method: Group-Live Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Specialized Knowledge (1.5 CPE Credits) Contact (Registering/Technical Issues): Alyssa Sansavera Agenda: Panel discussion 3:30pm to 4:45pm led by James Rumph with attending participants and happy hour 4:45pm to 5:30pm. Topics to Be Discussed: Pre-submitted topics Walk on topics Columbus Anti-Fraud Leader Round Table Event Name(Required) First Last Company/Organization(Required)Job Title(Required)Email(Required) Please list any topics you would like to include in the discussion here:Would you be interested in staying until 5:30 for a brief happy hour after our event? * Yes No CAPTCHA Submit   ### From Complexity to Clarity: Understanding the One Big Beautiful Bill (OBBB) When: Wednesday, August 20, 2025, 09:00 AM ET Join us for an informative and engaging webinar where we’ll break down the key elements of the newly enacted One Big Beautiful Bill (OB3)—a sweeping federal tax reform package that introduces over 100 changes affecting individuals, businesses, and estates. This session will help you understand how the new legislation may impact your financial planning, tax strategy, and compliance obligations. We’ll highlight the most relevant provisions, including updates to deductions, credits, depreciation rules, and estate planning thresholds. You’ll also learn what actions to consider before year-end and how to position yourself or your business for success under the new law. Whether you’re a business owner, investor, or advisor, this webinar will provide clear, actionable insights to help you navigate the new tax landscape with confidence. Presenters: Brett Cubellis, CPA, Shareholder, Tax Advisory, Schneider Downs Charlotte Garraway, PMP, EA, Senior Manager, Tax Credits & Incentives, Schneider Downs Maggie Gompers Havelka, JD, MBA, Shareholder, Estate & Trust Advisory Services, Schneider Downs Janelle Merlo, CPA, CFP®, Shareholder, Tax, Schneider Downs Megan Whitlock, CPA, Shareholder, Tax, Schneider Downs What You’ll Learn: Understand the most important changes introduced by the OBBB and how they affect individuals and businesses. Gain clarity on the timing, implementation, and expected IRS guidance related to the new legislation. Learn strategic planning tips to optimize tax outcomes and ensure compliance under the new rules. CPE Information Method: Virtual (ON24) CPE: 1.5 Hours (Tax) Learning Level: Overview Prerequisites: None Advanced Preparation: None  REGISTER HERE  For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. About Schneider Downs Tax Services Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives. To learn more, visit our dedicated Tax Services page. ### Navigating Government Fraud and Corruption Investigations: Corporate Counsel Best Practices Please register below! When: September 11, 2025, 2:30-5:30pm ET Location: Rivers Club: 301 Grant St., Suite 411, Pittsburgh, PA 15219 Maximum CLE Hours: 2.00 = 2.00S (preapproved by Pennsylvania CLE Board) Agenda: Panel discussion 2:30pm to 4:30pm and happy hour 4:30pm to 5:30pm Description: In this panel discussion, leading local white collar investigation attorneys will share their expertise on how corporations can effectively navigate government fraud and corruption investigations. Attendees will gain practical advice on: Responding to Investigations: Best practices for managing government inquiries, including how to handle subpoenas and cooperate with investigators. Internal Investigations: Conducting thorough and effective internal investigations to identify and address potential issues before they escalate. Mitigating Risks: Strategies for minimizing legal and reputational risks during and after an investigation. Join us to learn from seasoned professionals and ensure your organization is prepared to handle the complexities of government fraud and corruption investigations. Panelists Thomas C. Ryan • Managing Partner • K&L Gates Efrem M. Grail • Partner • The Grail Law Firm Colin Callahan • Partner-in-Charge | Pittsburgh • Flannery Georgalis                        Moderator James Rumph - Director, Business Advisory/Forensics & Litigation Services - Schneider Downs   Navigating Government Fraud and Corruption Investigations: Corporate Counsel Best Practices Name(Required) First Last Company/Organization(Required)Job Title(Required)Email(Required) Will you be staying for our hosted happy hour? Yes No CAPTCHA Submit   ### Maximizing Your Philanthropy When: Wednesday, August 27, 2025, 11:00 AM ET According to industry data, most high-net-worth individuals and families are engaging in various forms of charitable giving driven by their personal values, legacy planning and tax incentives. In our next wealth management webinar, Schneider Downs Wealth Management will discuss and illustrate how we work with our clients to maximize their philanthropic intentions. Presenters: David Brinkman, CPA, CFA, CFP®, Partner & Senior Wealth Manager, Schneider Downs Wealth Management Advisors Maggie Gompers-Havelka, JD, MBA, Shareholder, Estate and Trust Advisory Services, Schneider Downs James Moyer, CFP®, MBA, Senior Wealth Manager, Schneider Downs Wealth Management Advisors  REGISTER HERE  Please note that CPE is not being offered for this event. For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, our commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### Key Updates and Insights in the Not-for-Profit Sector When: Tuesday, August 19, 2025,  1:30 PM ET Key Updates and Insights and Insights in the Not-for-Profit Sector We invite you to an exclusive session hosted by Schneider Downs' Not-for-Profit Industry Group leaders and subject matter experts. This event will provide the latest insights and developments in the not-for-profit sector, including industry trends and regulatory changes. Our experts will offer valuable insights and practical advice to help you navigate these updates effectively.  REGISTER HERE  Presenters: Brittany Becker – Manager, Audit Jenn Closser – Senior Manager, Audit & Assurance Elena Faurie – Senior Manager, Tax Shane Gastecki – Director, Audit Danielle Miceli – Senior Manager, Audit Daniel Struth – Senior Manager, Audit Erin Wood – Director, Tax Advisory Services What You’ll Learn: Conference Update: Key takeaways from the annual AICPA & CIMA Not-for-Profit Industry Conference. Current Accounting Update: Latest updates from the Financial Accounting Standards Board (FASB). Uniform Guidance Revisions: Important changes and their implications. Tax Developments: Recent tax updates affecting not-for-profit organizations. CPE Information Method: Virtual (ON24) CPE: 1.5 Hours (Governmental Accounting) Learning Level: Overview Prerequisites: None Advanced Preparation: None Registration Assistance: Lindsay Sherrill About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. ### Optimizing High Net Worth Tax Planning When: Thursday, June 26, 2025,  11:00 AM ET Effective high-net-worth tax planning begins with a comprehensive understanding of current tax structures and key drivers. By anticipating future tax implications—such as Social Security benefits, required minimum distributions, Roth conversions and increased itemized deductions—individuals can identify long-term planning opportunities that optimize their financial strategy. Join us for an insightful discussion as our team of experts illustrates how we collaborate with clients to enhance their tax planning and maximize financial outcomes. Presenters: Dave Brinkman, Partner & Senior Wealth Manager, Schneider Downs Wealth Management Advisors Matt Biggs, Wealth Manager, Schneider Downs Wealth Management Advisors Kelly Murphy, Wealth Manager, Schneider Downs Wealth Management Advisors  REGISTER HERE  Please note that CPE is not being offered for this event. For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. About Schneider Downs Wealth Management Schneider Downs Wealth Management has been providing investment and retirement services since 2000. Although our service platforms continue to evolve, our commitment to our clients remains our first priority. Our service is tailored to your individualized goals but built on the fundamental principles of our practice: fiduciary guidance, fee transparency and goal-based decision making. To learn more, visit our dedicated Wealth Management page. Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. ### From Data to Decisions: Analytics for Transportation Leaders SD Digital Leaders to Discuss Data Analytics for Transportation Leaders Wednesday, June 18th 10:00 AM – 11:00 AM John Huckle and Robert Morgan to explore how analytics can drive efficiency in transportation with the Ohio Trucking Association. Robert Morgan and John Huckle from Schneider Downs Digital will be featured in the Ohio Trucking Association’s Level Up webinar series, where they will lead a discussion on how data analytics can drive efficiency in the transportation industry. This webinar will introduce key analytics concepts specifically for finance leaders in transportation and logistics. Attendees will explore real-world use cases such as fuel optimization and lane margin maximization, supported by anonymized wireframes that show these strategies in action. The session will also highlight essential tools and best practices to help teams make smarter, data-driven decisions that lead to measurable performance improvements.  REGISTER HERE  Please note, this is a partner webinar and not hosted by Schneider Downs. CPE is not being offered for this event. ### An Agile Approach to Data Analytics When: Tuesday, June 24, 2025,  11:00 AM ET If you are at the beginning of your journey to becoming an insights-driven organization but aren't sure how to balance a thoughtful strategy with making progress, or if you're deep into using data to drive proactive decisions but frustrated by the pace of change, then we need to talk. Agile, long embraced in software development, offers a way forward. It focuses on incremental improvements over time. This "progress over perfection" mindset builds flexibility, accelerates delivery, and encourages user-driven design that leads to greater adoption and impact. Join the SD Digital team to explore how Agile principles can transform your data analytics efforts. You’ll learn practical ways to apply Agile methodologies to your workflows, generate faster insights, and adapt to changing business needs while fostering stronger collaboration across teams. What You’ll Learn: Apply Agile techniques to deliver faster, more actionable insights Use sprints, backlogs, and feedback cycles to improve collaboration Prioritize high-impact work that evolves with your business Presenters: John Huckle – Chief Digital Innovator, SD Digital Tina Kirsch – Senior Manager, SD Digital Michael E. Mielke – Manager, SD Digital  REGISTER HERE  Please note that CPE is not being offered for this event. For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com ### Solver Cloud and Power BI in Action: Transforming Reporting in Health and Human Services When: May 20, 2025 • 2:00 pm – 3:00 pm Join SD Digital and Pressley Ridge for a practical look at how Solver Cloud and Power BI can simplify financial reporting, improve operations, and give you clearer insights into your data. You’ll hear directly from the Senior Director of IT and Security at Pressley Ridge, a health and human services client who is actively using these tools to enhance their financial reporting process, improve operational efficiency, and measure patient outcomes. They'll share real-life applications and lessons learned so you can see what this looks like in action. Attendees will learn how to: What You'll Learn: Use Solver Cloud to bring together financial data from disparate systems and provide your team with one version of the truth Speed up your reporting process and free up time for more valuable work Improve the end-user experience with Power BI dashboards that deliver real-time, actionable insights  REGISTER HERE  Presenters: Robert Morgan – SD Digital, Manager Jan Kubiska – Pressley Ridge, Senior Director of I.T. & Security Please note that CPE is not being offered for this event.  About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Navigating Times of Uncertainty for NFPs and Higher Ed When: May 21, 2025 • 9:00 am – 10:00 am 1 CPE Credit (Finance) Join Kimberly L. James, Patrick F. Kerns, and Sarah Piot, Shareholders of Schneider Downs, to learn about different strategies your organization should be considering during these uncertain times for the not-for-profit and higher education sectors. This event will focus on six areas that all organizations should be focused on to ensure that you are prepared to navigate these changing times. What You'll Learn: Gain an understanding of potential tax policy changes and how they could affect not-for-profit organizations. Understand why it is important to focus on budgets and scenario planning and key considerations to evaluate when developing them. Evaluate different cost containment strategies that focus on organizational mission and health. Understand why cash flow planning has a heightened level of importance. Learn about why it is still important to focus on strategic investments and partnerships in times of uncertainty. Gain a deeper understanding of why it is important to start developing your communication strategy now.  REGISTER HERE  CPE Information: Method: Virtual (ON24) CPE: 1 Hour (Finance) Learning Level: Overview Prerequisites: None Advanced Preparation: None Registration Assistance: Lindsay Sherrill About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### The Impact of AI on the Office of the CFO Explore real-world use cases and learn proven strategies to de-risk and accelerate adoption in a safe, effective way that delivers measurable business results and meaningful bottom-line impact. Join SD Digital’s Chief Digital Innovator, John Huckle, to discover how finance teams and executives can harness the power of AI and ML to: Drive new and diverse revenue streams Optimize operational and financial costs Anticipate future trends with predictive insights Presenter: John Huckle - Chief Digital Innovator, SD Digital If you have any issues with registration, please contact Lindsay Sherrill Register  Please note that CPE is not being offered for this event.  About SD Digital SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com. ### Top 5 Factors When Evaluating Business Central in 2025 When: Tuesday, April 22, 2025 • 2:00 pm – 3:00 pm With AI and machine learning transforming finance and operations, choosing the right ERP solution is more critical than ever. Business Central offers powerful tools to drive efficiency, but how do you ensure a successful implementation—and get the best value for your investment? Join the SD Digital team for our upcoming webinar, where we’ll break down the top five factors to consider when evaluating Business Central. From maximizing business value to leveraging AI-driven capabilities and selecting the right implementation partner, this session will equip you with the insights needed for a successful adoption. Presenters: Mike Scalamogna- Manager, SD Digital What You’ll Learn: Maximizing Business Value – How Business Central impacts working capital, operational efficiencies and the employee experience. The Power of AI & ML – What’s available today, Microsoft’s roadmap, and why AI is a game-changer for finance teams. Choosing the Right Partner & Planning for Success – The 3 C’s of partner selection and key considerations for a smooth implementation. Register If you have any issues with registration, please contact Lindsay Sherill.  Please note that CPE is not being offered for this event.  ### 2025 Employee Benefits Forum When: April 1, 2025 • 9:00 am – 10:30 am Join us for an insightful Employee Benefits Forum where we'll cover key topics such as maintaining plan compliance, navigating regulatory updates and exploring industry trends. Our experts will also discuss fiduciary responsibilities under ERISA, providing best practices and recent legal developments to help you manage your duties effectively. What You'll Learn: Retirement plan best practices to mitigate risk and ensure efficient and compliant plan operations Emerging trends in retirement plan design, investment offerings and participant engagement strategies Practical implications and key takeaways from recent regulatory developments and published guidance Presenters: Patricia Giudici - Shareholder, Accounting, Assurance and Advisory Services Frances Kusnierz - Senior Manager, Accounting, Assurance and Advisory Services Alexander Papson - Senior Manager of Fiduciary Solutions, Schneider Downs Wealth Management Advisors, LP  REGISTER HERE  Don't miss this opportunity to enhance your knowledge and improve your plan's outcomes! CPE Information: Host: Schneider Downs Delivery Method: Virtual Program Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge (1.5 CPE Credits) For more information on this event or if you have trouble with registration, contact Lindsay Sherrill. ### Data Rich, Information Poor – Closing the Data Analytics Gap Gain actionable insights, overcome data challenges, and drive real business results. When: Tuesday, March 11, 2025,  2:00 PM ET Data is everywhere, and the sheer volume created by today’s digital tools can feel impossible to manage. For many organizations, turning all that data into meaningful, actionable insights feels like an uphill battle. Whether it’s a lack of expertise, people, or processes, the challenges are real—but so are the opportunities. Join SD Digital Shareholder and Chief Digital Innovator John Huckle as he breaks down how to tackle these challenges and turn your data into real business results. Presenter: John Huckle - Chief Innovation Officer, SD Digital Register About SD Digital  SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. With a forward-thinking cap and digital lens, we empower organizations to realize the art of the possible with the power of digital through business-focused and technology-enabled solutions, built on an unwavering commitment to practicality, speed to market and the user experience. Learn more on our dedicated SD Digital page or contact the team directly at contactsd@schneiderdowns.com ### Navigating Early-Year Tax Obligations for NFP Organizations During this webinar, we will provide guidance on filing various required IRS forms, including Forms 1099, 1042-S, and 1098-T. We will delve into the specific requirements and deadlines and provide valuable tips. Additionally, we will address donor acknowledgment rules and best practices to ensure donors have all necessary information for the 2025 filing season. The webinar will also cover additional considerations for not-for-profit organizations to address early in the year. When: Thursday, January 23, 2025 Time: 10 AM EST What You'll Learn: Understand filing requirements related to Forms 1099, 1042-S and 1098-T. Understand the donor acknowledgement rules and record keeping practices as it relates to contributions. Speakers: Erin Wood, Director, Schneider Downs, NFP Tax Services Tina Kirsch, Sr. Manager, Schneider Downs, SD Digital Elena Faurie, Sr. Manager, Schneider Downs, NFP Tax Services Don’t miss out on this opportunity to gain essential knowledge on IRS filing requirements and donor acknowledgment rules. Register now to secure your place and get ready to ensure compliance and streamline your not-for-profit organization’s filing process for the 2025 season. Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Tax (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill Register for this event About Schneider Downs Not-for-Profit Services Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### 2024 CPE Month Webinar Series: Audit Update We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization Agenda: When: December 12, 2024 9:00 – 9:05 am – Intro and Housekeeping 9:05 – 9:30 am  – General Economic Overview (25 minutes) 9:30 – 9:55 am – Accounting Matters to Consider in a Declining Rate Environment (25 minutes) 9:55 – 10: 20 am – IFRS (25 minutes) 10: 20 – 10:30 am – BREAK 10: 30 – 11: 45 am – Panel Discussion on A&A Matters (75 minutes) 11:45 – Noon – Q&A General Business Environment Update (25 mins - .5 CPE) Speaker: Doug Morally Description: This session will provide an update on the current global economy. As we navigate through a period marked by geopolitical tensions, inflation, labor shortages, and shifting trade dynamics, it is crucial for businesses to understand the key economic indicators and trends that shape our environment. Learning Objective: Understand the current global economic landscape and identify key economic indicators and trends. Accounting Matters to Consider in a Declining Rate Environment (25 mins - .5 CPE) Speaker: Patricia Giudici Description: How does a market with declining interest rates have an effect on the financial statements and what are some key areas we should be thinking about? Learning Objectives: Explore several financial statement components including but not limited to interest rate swaps, pension obligations, potential impairment, and considerations on acquisitions. IFRS Advantages for Global Organizations (25 mins - .5 CPE) Speaker: Michael Maloney Description: In today's rapidly evolving global market, financial transparency and consistency are paramount for companies operating across multiple jurisdictions. The International Financial Reporting Standards (IFRS) provide a universally accepted framework that enhances the comparability and reliability of financial statements. This session will cover the benefits of adopting IFRS as well as the adoption challenges that we’ve worked with clients to overcome. The session will also cover recent accounting changes under the international standards. Learning Objective: Identify the opportunities and obstacles of adopting global accounting policies for your organization. Accounting Panel Discussion: Navigating Hot Topics, Recent Standards, and Common Pitfalls (75 mins- 1.5 CPE) Moderator: Lauren Weddell Speakers: Nicholas Lombardo, Ryan Deatrick, Trevor Warren, Jessica Wingertsahn Description: Join us for an enlightening panel discussion where industry experts come together to explore the most pressing issues in the field of accounting today. This session will delve into several critical areas including: hot topics, recent accounting standards, and common pitfalls that accountants and financial professionals need to be aware of. Our panelists will highlight the latest trends and challenges facing the accounting industry, break down the most significant updates from governing bodies such as the Financial Accounting Standards Board (FASB), and share real-life examples and practical advice on how to avoid common mistakes in areas such as revenue recognition, expense management, and internal controls. Learning Objective: Identify and articulate the latest hot topics and trends in the accounting industry, including technological advancements and regulatory changes, understand and apply recent updates to accounting standards from governing bodies, and recognize common accounting pitfalls and implement strategies to mitigate these risks in their professional practice. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Accounting Contact (Registering/Technical Issues): Lindsay Sherrill Register for this or all webinars. ### 2024 CPE Month Webinar Series: Wealth Management and Retirement Planning Matters We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization Agenda: When: December 17, 2024 1:00 – 1:05 pm – Intro and Housekeeping 1:05 – 1:55 pm – Qualified Retirement Plans (50 mins) 1:55 – 2:45 pm – Year-End WM Updates (50 mins) 2: 45 – 2:55 pm – BREAK 2: 55 – 3: 45 pm – Capital Markets Update (50 mins) 3:45 – 4:00 pm – Q&A Prudent Processes and Initiatives to Create Thriving Qualified Retirement Plans (50 mins – 1 CPE) Speakers:Tyler Brose and Miles Gibson Description: In today's rapidly evolving employment and regulatory landscapes, thoughtful decision-making, transparency, and consistency are just a few important factors that make for a thriving (and well-appreciated) qualified retirement plan program. This session will focus on what employers can do to ensure that their qualified retirement plan is compliant and competitive. Learning Objectives: Identify the things that employers can (and must) do to ensure that their qualified retirement plan is compliant and competitive. Year-End Wealth Management Stocking Stuffers (50 mins – 1 CPE) Speaker: Dave Brinkman Description: Various financial planning ideas for year-end consideration from our wealth management team Capital Markets Update (50 mins – 1 CPE) Speaker: Jason Staley Description: We’ll be covering a recap of capital markets performance and the current state of private markets. Learning Objectives: Identify whether a regime change has begun to take shape in the markets   Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill Register for this or all webinars. ### 2024 CPE Month Webinar Series: Tax Update We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 10, 2024 1:00 – 1:05 pm – Intro and Housekeeping 1:05 – 1:30 pm – Federal Tax Update (25 mins) 1:30 – 2:20 pm  – Partnership Taxation Update (50 mins) 2:20 – 2:30 pm – BREAK 2:30 – 2:55 pm –  State and Local Tax Planning and Update (25 mins) 2:55 – 3:20 pm –  Estate and Trust Federal Taxation Review (25 mins) 3:20 – 3:45 pm – Federal R&D Tax Credit Update (25 mins) 3:45 – 4:00 pm – Q&A/Wrap Up/Catch Up Time Federal Tax Update (25 mins- .5 CPE) Speaker: Dan Phillips Description: Review of the current state of the federal legislature and potential tax reform objectives.  Reflect on pending changes relative to phaseouts of prior legislation and potential future tax impacts. Learning objective:  Obtain a general understanding of current make up of congress and potential tax proposals that may be forthcoming.  We will explore the potential impact and also timing of certain possibilities. Partnership Taxation Update (50 minutes – 1 CPE) Speaker: Megan J. Whitlock Description: This session will provide updates on changes to partnership tax forms and reporting for the 2024 filing season.  We will also cover current tax court cases and proposed regulations issued in 2024 along with discussion around the IRS newly created Passthroughs, Trusts and Estates office that will focus exclusively on partnerships, S corporations, trusts and estates and what this means for taxpayers. Learning Objective: Understand new reporting obligations partners have for property distributions from partnerships with respect to Form 7217 along with other areas of IRS focus including basis shifting transactions and self-employment tax.    State and Local Tax Planning and Update (25 mins - .5 CPE) Speaker: Stephen Worth Description: This session will provide an update on recent changes to state tax legislation, including a focus on Pennsylvania and Ohio.  The session will also include a discussion of common state tax pitfalls and opportunities for state tax savings. Learning Objectives: Identify state tax legislative updates, as well as identify state tax exposure risk and opportunities.  Estate and Trust Federal Taxation Review (25 mins - .5 CPE) Speaker: Greg Allison Description:This session will provide an update on recent changes in the estate planning area, visit some of the most popular estate planning strategies of 2024, and talk about strategies to consider in the coming year. Learning Objective:Identify recent legislative changes and case law impacting the estate planning area and understand relevant strategies to deploy. Federal R&D Tax Credit Update (25 minutes – .5 CPE) Speakers: Ross Alessandro, Erin Haase, Charlotte Garraway Description: This session will provide an update on recent developments related to the Federal Research and Development Tax Credit, including information on the IRC Section 174 Capitalization requirements.  We will also discuss the IRS’s updates to Form 6765 which will increase the need for taxpayers to create documentation to support their qualified research activities. Learning Objective: Understand current and future reporting requirements related to the Federal Research and Development Tax Credit. Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Tax Contact (Registering/Technical Issues): Lindsay Sherrill Register for this or all webinars ### 2024 CPE Month Webinar Series: Consulting Technology and Advisory We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Agenda When: December 5, 2024 9:00 – 9:05 am – Intro and Housekeeping 9:05 – 9:55 am – Fraud Risk Management (50 mins) 9:55 – 10:45 am – M&A and Capital Markets (50 mins) 10:45 – 10:55 am – BREAK 10:55 – 11:45 am – Artificial Intelligence (50 mins) 11:45 – Noon – Q&A/Wrap Up/Catch Up Time Agility: The Cornerstone of Effective Fraud Risk Management (50 minutes- 1 CPE) Speaker: James Rumph, Director Description: In today’s rapidly evolving landscape, the ability to swiftly adapt to new threats is crucial for effective fraud risk management. This session will explore how agility can enhance fraud risk prevention, detection, and response strategies. Attendees will gain insights that can help organizations keep up with ever evolving fraud. Learning Objectives: Understand the Importance of Agility: Learn why agility is essential to all phases of fraud risk Identify Agility Contributing Strategies: Become acquainted with strategies that support agile fraud risk management practices. Update on the Current M&A and Capital Markets Landscape (50 minutes- 1 CPE) Speakers: Peter Lieberman & Tom Springer, Managing Partners, Schneider Downs Capital Description: Closing out another eventful year in the M&A and Capital Markets, this session will the current climate for dealmaking, the impact of macro-economic drivers such as interest rates and trends in volume and pricing. We will also explore emerging trends in deal execution and diligence for both buyers and sellers, focusing on key pitfalls for dealmakers. Learning Objectives: Update on Marketing Conditions: Learn how debt and equity providers in the capital markets are viewing transactions and current economic conditions. Identify Strategies to Better Execute Transactions: Identify areas in negotiations and due diligence that are likely to present challenges and opportunities during the process of identifying, structuring and closing transactions. Safely and Meaningfully Accelerating Your AI Journey: Demystifying the Risks and Understanding What’s Possible (50 mins- 1 CPE) Speaker: John Huckle and Karl Bixler Description: With AI adoption gaining momentum at scale, mainly driven through our systems of record and engagement rolling AI capabilities into core features, acceleration of these tools is happening without clarity in how these solutions work – creating vulnerabilities to data privacy and leaving value that AI can generate on the table. Starting with the frameworks of Generative versus Predictive Ai, we will dive into how each of these classes of Ai work, common architectures, the importance of data structures, how they ingest and process data, and how Machine Learning works to enhance both use cases over time. We will also talk about how get your organization ready to think about, evaluate, and act upon Ai opportunities now and over time. Finally, we will share our progress on utilizing Microsoft’s different Copilot models (for Dynamics, for the Web, and for Office 365) for internal use cases, as well as specific use cases from leveraging Ai in Intelligent Automation client use cases. Learning Objectives: Understand enough about the inner workings of Generative and Predictive AI to better uncover use cases in your organization for AI Understand and be able to think through data privacy concerns with AI public and private clouds Understand what methods and practices you can use to identify, evaluate, prioritize, and safely action on AI opportunities in your teams Delivery Method: Group Internet (Live) or Self Study (On-demand) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Specialized Knowledge Contact (Registering/Technical Issues): Lindsay Sherrill Register for this or all webinars ### Emerging Issues Impacting the Energy Sector Please join Schneider Downs and COPAS for a seminar on emerging issues impacting the energy industry. We hope you will also stay for a networking happy hour following the event. When: October 23, 2024, 1-5 pm ET Where: The Loft Conference Center at Southpointe, 1000 Noble Energy Dr., Suite 100, Canonsburg, PA 15317 Topics include: Federal Methane Fee Regulations and ESG – Dan Romito- Pickering Energy Partners Tax Update - Woodrow Morris & Mark Balistrieri- Schneider Downs Cybersecurity - Stephen Bish- Scheider Downs Legal Update - Jason Antin- Steptoe & Johnson Registration is from 12:30-1PM. The event will conclude with a networking happy hour. Learning Objective: By the end of this session, participants will be have an understanding of the impact of recent legislative changes in the energy sector. Participants will learn about the change in PA state depletion calculations, tax regulations, cybersecurity challenges, and legal implications within the oil and gas industry in the tri-state area. Delivery Method: Group-Live Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Specialized Knowledge Contact (Registering/Technical Issues): Sophia Bodo For more information and to register for this event, click the button below: Register  ### Navigating the Path to Compromise: Common Findings from Penetration Testing Start 2025 with the Schneider Downs Cybersecurity team as they open their files to share critical insights, top vulnerabilities, and user behavior patterns identified through their real-life penetration testing experiences from the frontline. The team will also share practical strategies for enhancing your organization's security posture, including multi-factor authentication and purple team assessments. Don’t miss this opportunity to gain valuable knowledge and actionable advice to boost your security posture in the new year. When: January 23, 2025 1:00 – 2:00 PM ET Presenters: David Murphy – Senior Manager, Schneider Downs Cybersecurity Consulting Stephen Bish – Manager, Schneider Downs Cybersecurity Consulting Rogers Spears – Manager, Schneider Downs Cybersecurity Consulting Learning Objective: Upon completing this webinar, participants will have enhanced knowledge of Cybersecurity and be able to identify, prevent, and mitigate common cybersecurity threats. Delivery Method: Group- Internet Learning Level: Overview Prerequisites: None Advanced Preparation: None Field of Study: Information Technology (1 CPE Credit) Contact (Registering/Technical Issues): Lindsay Sherrill Register About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. To learn more, visit our dedicated Cybersecurity page.http://www.schneiderdowns.com/subscribehttp:/www.schneiderdowns.com/subscribe ### Blueprint for Success: How To De-risk Your ERP Investment When: January 16, 2025 2:00 – 3:00 PM ET Presenters: John Huckle – Shareholder, SD Digital Mike Scalamogna – Manager, SD Digital Are you considering or planning to transition from Dynamics GP to Dynamics 365 Business Central? If you are looking to transform your business, unlock new capabilities and drive lasting, impactful organizational change this webinar is for you. Join SD Digital's Shareholder John Huckel and Manager Mike Scalamogna for a deep dive into essential but often-overlooked areas that can significantly influence your long-term success and discover best practices to ensure your investment in Business Central meets your goals. Register About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. ### What’s New With Business Central? When: November 14, 2024 2:00 – 3:00 PM ET Presenter: Bob Whalen – Senior Manager, SD Digital Join SD Digital for an in-depth exploration of the latest upgrades and new features in Microsoft Business Central 365! In this webinar, SD Digital Senior Manager Bob Whalen will guide you through the newest enhancements and features, offering insights on how to maximize your digital investment. Discover what's on the horizon for the upcoming year and stay informed about the latest developments. Register About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. ### 2024 Not-for-Profit Symposium: Day 1 Day 1 - September 25, 2024 • 1PM – 4PM ET Join us at this year’s Not-for-Profit Symposium, where we’ll delve into a range of industry topics. Against the backdrop of a dynamic climate for change, we aim to provide an overview of recent developments and offer practical solutions to enhance your organization’s understanding and resilience. Topics will include: State of the Not-for-Profit Industry Accounting Standards Update and Higher Education Reporting Changes Tax and Regulatory Update Current State of Cybersecurity Agenda: State of the Not-for-Profit Industry (25 Minutes - .5 CPE Credit) – 1:00 – 1:25 PM Speakers: Sarah Piot, Shareholder & Kim James, Shareholder Description: This session will explore current economic and industry updates, recent legislative and regulatory changes, and provide an overarching perspective on the NFP sector. Learning Objective: Identify industry, regulatory, and economic developments affecting not-for-profit organizations. Accounting Standards Update and Higher Education Reporting Changes (50 minutes – 1 CPE Credit) - 1:25 – 2:15 PM Speakers: Shane Gastecki, Director & Michael Withrow, Senior Manager Description: This session will provide an update on recent changes in U.S. GAAP, including a focus on CECL, crypto assets, and other recent accounting standards updates, as well as a description of other projects currently on the Financial Accounting Standards Board’s pipeline. We will also discuss recent reporting changes related to the Higher Education sector. Learning Objective: Identify recent NFP accounting standard changes and their impact to the NFP industry. We will also identify reporting changes required by the Department of Education. BREAK – 2:15 – 2:25 PM (10 Minutes) Tax and Regulatory Update (50 minutes – 1 CPE Credit) – 2:25 – 3:15 PM Speakers: Sarah Piot, Shareholder & Elena Faurie, Sr Manager Description: This session will offer a comprehensive tax and regulatory update, including insights into potential tax reforms relevant to tax-exempt organizations. Learning Objective: Identify tax developments and recognize potential tax reform implications for not-for-profit organizations. Current State of Cybersecurity (25 minutes – .5 CPE Credit) – 3:15 – 3:40 PM Speaker: Stephen Bish, Manager – Cybersecurity Consulting Description: Join Stephen Bish – Manager of Cybersecurity Consulting at Schneider Downs, as he provides an update on the current state of cybersecurity by sharing stories from the front lines of consulting, including major ransomware incidents. Learning Objective: This presentation will discuss the tactics threat actors leverage and share insights from countless strategic discussions with business and technology leaders attempting to navigate the various challenges of modern cybersecurity. Closing / Additional Questions – 3:40 – 3:45 PM (5 Minutes) Delivery Method: Virtual (ON24) – Broken Between Two Days (3 CPE Credits each Day – 6 total) Learning Level: Overview Prerequisites: None Advanced Preparation: None Fields of Study: Accounting Contact (Registering/Technical Issues): Lindsay Sherrill Register for this or both webinars. Click here to view the Day 2 Agenda. ### X Marks the Spot: Dig Deeper into your xFP&A Investment When: September 24, 2024 2:00-3:00PM ET Presenters: Patrick B. Armknecht CPA, CITP - Shareholder, SD Digital & Robert L. Morgan - Senior Manager, SD Digital Discover how Solver xFP&A can transform your organization by providing actionable insights and accelerating decision-making. We'll dive into the meaning and impact of xFP&A, showcase real-life use cases and demonstrate xFP&A's capabilities with a live demo. Don't miss this opportunity to learn how Solver Cloud's Planning, Reporting, Consolidation and Analysis capabilities can be leveraged beyond the walls of finance and accounting. Topics Include: What xFP&A means for finance and beyond use case for xFP&A outside of traditional Finance functions Best practices and red flags for non-accounting data warehouse configuration Register now to secure your spot. About SD Digital SD Digital delivers modern solutions for modern problems through the power of digital. Whether your organization is aspiring to scale during a period of growth, streamline operations to free up cash and human capital, become nimbler to better serve customers, or better utilize your data to make proactive decisions, the SD Digital team has the forward-thinking mindset, business acumen and technical expertise to accelerate and progress your digital journey. To learn more, visit our dedicated SD Digital page. ### Leveraging Intelligent Automation to Increase Capacity in your Finance Function When: July 23, 2024 2:00 – 3:00 PM ET In this webinar, Schneider Downs Digital and Automation Anywhere are teaming up to discuss tools and strategies for implementing intelligent automation within the finance function of your organization. Discover how intelligent automation can drive business efficiency, cost reduction, risk mitigation, and capacity creation. Explore its applications in Accounts Payable, Accounts Receivable, FP&A, Account Reconciliation, and Compliance processes and learn from real-world examples, including case studies and practical demonstrations. Register now to secure your spot. ### Streamlining Audits Year-Round: Transitioning from Ad-Hoc to Proactive Processes When: July 16, 2024 2:00 – 3:00 PM ET Please join Schneider Downs and Hyperproof for a webinar on how to streamline audits year-round. We invite you to our upcoming webinar, Streamlining Audits Year-Round, hosted by Hyperproof and featuring Schneider Downs IT Risk Advisory Shareholder, Bill Deller, along with other third-party risk management professionals. This webcast will provide practical insights into optimizing your audit process. You'll learn the essential steps to get started with streamlining audits year-round. Our panel of experts will also address the ethical considerations and potential risks associated with this transition, offering valuable strategies to tackle them effectively. Additionally, we will explore how organizations can plan for the future by transitioning from ad-hoc audit processes to a proactive audit approach. Register now to secure your spot. ### 12th Annual Fraud and Corruption Awareness Seminar When: May 20, 2024 8:00AM - May 20, 2024 5:00PM Please join Schneider Downs, The IIA and ACFE for the 12th Annual Fraud and Corruption Awareness Seminar. This year’s topics and speakers will include: What Started in Vegas Didn’t Stay in Vegas: What Happens When Love, Loyalty, Family and Money Collide  Bill Livolsi, Owner, wc2llc.com They Didn’t Teach This in Law School: Adventures in Compliance & Cross-Border Investigations  William Semins, Partner, K&L Gates; and Thomas Ryan, Partner, K&L Gates Understanding the Mindset of the Fraudster  John Warren, Chief Executive Officer, Association of Certified Fraud Examiners Human Trafficking Myths and Truths  Fina Spory, Special Agent, Homeland Security Investigations Greenwashing and Legal Risks in ESG Reporting  Matt Hartman, Risk Advisory Services Senior Manager, Schneider Downs Rivers Casino 777 Casino Dr, Pittsburgh, PA 15212 Registration is between 7:00 am - 8:00 am 8 CPE hours (including 2 hours of Ethics) View the PDF for more details and speaker bios ### 2024 Employee Benefits Forum When: May 2, 2024 9:30AM - May 2, 2024 11:30AM Topics to include: Current Landscape of Employee Benefit Plan Audits and Best Practices Regulatory Updates In addition to recent regulatory updates pertaining to retirement plans, Schneider Downs will highlight guidance that has been published regarding the SECURE 2.0 Act and provide an overview of which provisions are effective in 2024 or will become effective in 2025 Common Errors & Unintended Consequences of Compliance Failures: How to Correct and Avoid Schneider Downs will review common errors and how to correct and avoid them (e.g., late remittances, failure to provide an opportunity to enroll, failure to provide required disclosures/notices, failure to apply plan document definition of compensation, etc.). Further, we will highlight ways to address failed annual nondiscrimination tests through Class Exclusions, Automatic Enrollment, Safe Harbor Plan Design, etc. Retirement Plan Litigation and Liability Landscape We will provide an overview of fiduciary responsibilities and standards of care imposed under ERISA and highlight industry best practice standards to mitigate associated liability within the context of industry litigation trends If you have any questions about the webinar or have issues registering, please contact Lindsay Sherrill at lsherrill@schneiderdowns.com. ### SOC 2 Compliance: Key Steps to Success in 2024 The new year is here and so is the need for many organizations to start planning their annual SOC 2 report. Whether your organization is performing its first SOC 2 report or its twentieth, chances are you will face new obstacles and challenges on the path to compliance. Join compliance professionals from Schneider Downs, New England Safety Partners and SOC 2 auditees for an in-depth webinar exploring best practices, common pitfalls and key considerations organizations need to know when preparing for a SOC 2 report. This webinar will cover topics such as: Common SOC 2 reporting failures and how to avoid them Managing implementation tasks, budgets and report tools Evaluating reporting tools including automation and compliance calendars How to achieve SOC 2 success and avoid compliance fatigue Presenters: Timothy Wolfgang CISA, CISSP, CCSFP, Senior Manager – Schneider Downs Edward Gardner, Principal – New England Safety Partners Bob Antia CRISC, CISM, CISSP, CDPP, CISO – LiveAction Jacob Katz CISA, CTPRA, Manager – Schneider Downs   Attendees qualify for 1 CPE credit, and a webinar replay will be made available to all registrants. ### 2023 CPE Month Webinar Series We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with Lindsay Sherrill at lsherrill@schneiderdowns.com. CPE Eligible 2023 CPE Month Webinar Series: Tax Update Tuesday, December 05, 2023 9:00 AM Eastern Standard Time Duration: 3 hours Topics Covered to Include*: Federal Tax and IRS Update Partnership Insights R&D and Tax Credits Update State and Local Tax Insights Estate Planning Update International Tax Update *Topics subject to change Download the on-demand recording Consulting, Technology and Advisory Thursday, December 07, 2023 1:00 PM Eastern Standard Time Duration: 3 hours Topics Covered to Include*: Tripwires to a Successful Transaction M&A and Capital Markets Cybersecurity ESG Digital Transformation *Topics subject to change Download the on-demand recording  Audit Update Tuesday, December 12, 2023 9:00 AM Eastern Standard Time Duration: 2 hours, 30 minutes Topics Covered to Include*: Current Expected Credit Loss (CECL) Leases: Common Questions and Best Practices A&A General Update General Business Environment Overview Private Equity Considerations *Topics subject to change Download the on-demand recording Wealth Management and Retirement Planning Matters Thursday, December 14, 2023 Time: 1:00 PM Eastern Standard Time Duration: 3 hours Topics Covered to Include*: Financial Planning Areas of Focus Heading Into Year End SECURE 2.0 Act Update Plan Design Strategies that Align with Company Goals and Objectives Conversations about Capital Markets *Topics subject to change Download the on-demand recording ### Securing Success: Cybersecurity Strategies and IT Risk Compliance for Retailers Amidst Changing Rules In today's rapidly evolving digital landscape, safeguarding sensitive customer data and ensuring operational resilience are paramount. Join us as industry experts delve into the intricacies of Cybersecurity and IT Risk Compliance, providing invaluable insights and actionable strategies to fortify your retail enterprise against ever-emerging threats and ever-changing rules. This webinar will cover topics such as: Key changes for PCI compliance coming with v4.0 of the framework in 2024 Trends we see in penetration tests with retailers Implications of the new SEC cyber rule Overview of the FTC Safeguards Rule Don't miss out on this opportunity to equip your organization with the knowledge and tools needed to navigate the complexities of cybersecurity and compliance in the retail sector. Download the on-demand recording 1 CPE (Specialized Knowledge) About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. To learn more, visit our dedicated Cybersecurity page. ### Tee Off Against Cancer - 2023 Men Wear Pink Fundraiser Come to Topgolf to support Tax Manager Kevin Frischkorn's 2023 Men Wear Pink Campaign! ### Guest Bartending - 2023 Men Wear Pink Fundraiser Come to Velum Fermentation, a craft brewery in the Southside of Pittsburgh, to support Tax Manager Kevin Frischkorn's 2023 Men Wear Pink Campaign! Purchase your tickets here. The price of one ticket includes complimentary food and two beverages. On top of eating and drinking, there will be a number of games (cornhole, bocce, etc.) and prizes. We hope to see you there! ### ESG Data and Greenwashing: Key Considerations for Retailers Data is a critical component of the success of any public or private retailer’s ESG program. It is instrumental in baselining a company’s ESG impacts, setting targets to achieve stated goals and reporting progress to key stakeholders. There are a plethora of standards to consider when evaluating alignment to industry best practices for thematic ESG data points. Join Schneider Downs' Senior ESG & Sustainability Manager Matt Hartman as he discusses pragmatic solutions for gathering ESG data, challenges to be mindful of, and greenwashing concerns in the retail space. Download the on-demand recording CPE credit available About Schneider Downs ESG Consulting With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization develop an ESG program, comply with ESG regulatory requirements and evaluate ESG risks and opportunities within the context of your ESG strategy. For more information, please visit our ESG Consulting page or contact us at contactsd@schneiderdown.com. ### Inside a Ransomware Attack: Chronicles of a Rapid Responder Ransomware is one of the most devastating cyber-attack methods today, and these attacks are seemingly getting more challenging to prevent and recover from. Join the Schneider Downs Cybersecurity team as we share a real-world experience of a large-scale ransomware attack that threatened global business operations. We will walk you through the realities of this well-coordinated and crafted ransomware attack by: Analyzing the tactics, techniques and procedures (TTPs) used by the threat actors Discussing controls that could have prevented or detected the malicious actions Providing accounts of lessons learned by those experiencing the incident Download the on-demand recording Attendees qualify for 1 CPE credit, and a webinar replay will be made available to all registrants. Learn more on our dedicated Cybersecurity page or contact us at contactsd@schneiderdowns.com for more information. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity, at www.schneiderdowns.com/subscribe. ### 2023 Not-for-Profit Symposium Schneider Downs’ Not-for-Profit Symposium is back in a new hybrid format. This year’s event will take place on Thursday, August 17, 2023, at the Rivers Club in Downtown Pittsburgh. We’re excited to offer our guests the opportunity to attend the Symposium live in Pittsburgh or virtually using our new hybrid presentation format. Both options will provide the same presentation content and continuing professional education (CPE) credits. Either way, we hope you’ll mark your calendars to join us. Virtual Attendance: The regular programming will begin at 1:00 p.m. and provide 4 hours of CPE credits for those attending online. Download the on-demand recording Topics to include: State of the Not-for-Profit Industry Ethics Tax Update Budgeting Considerations- Life After Federal Assistance Programs Accounting Standards Update and Lease Adoption Considerations Cybersecurity Digital Transformation About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### Tools and Strategies for Financially Distressed Institutions of Higher Education In this webcast, Steptoe & Johnson's team of experienced Higher Education attorneys has partnered with industry-leading accounting firm Schneider Downs to discuss tools and strategies for financially distressed institutions of higher education. What are the current and future economic challenges facing institutions of higher education? What legal challenges are likely to arise? Join us to learn business and legal strategies that can be employed to overcome those challenges, as well as tools that can be utilized to change traditional ways of doing business. CPE and CLE credit will be available About Schneider Downs Higher Education Services  The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. To learn more, visit our Higher Education Industry Group page. ### Third Party Servicers and Higher Education Institutions - How to Navigate the New DOE Guidance The recently released Department of Education (DOE) guidance surrounding Third-Party Servicers (TPSs) for Higher Education Institutions (HEIs) proposes large-scale changes in how TPSs are defined. Massive speculation remains on the feasibility of HEIs to adjust and prepare by the current effective date of September 1, 2023. Join the Schneider Downs team as we break down the DOE’s recent guidance and discuss ways to navigate the changing landscape of HEI expectations. Key takeaways will include: An understanding of the recently issued DOE Dear Colleague Letter The potential impacts on HEIs and TPSs Action plans for engaging with TPSs Your Schneider Downs presenters for this webinar will be: Bill Deller – IT Risk Advisory Senior Manager Melissa Gallo – IT Risk Advisory Consultant Attendees qualify for 1 CPE credit, and a webinar replay will be made available to all registrants. Please feel free to share this with colleagues and others you feel may benefit from learning about these important topics. About Schneider Downs Third-Party Risk Management Schneider Downs is a registered assessment firm with the Shared Assessments Group, the clear leader in third-party risk management guidance. Our personnel are experienced in all facets of vendor risk management and have the credentials necessary (CTPRP, CISA, CISSP, etc.) to achieve meaningful results to help your organization effectively achieve new vendor risk management heights. To learn more, visit our Third-Party Risk Management page or contact us at contactsd@schneiderdowns.com. ### Timely Tax Topics for Retail and Restaurant Businesses For most companies and organizations, state and local taxes represent the majority of the overall tax burden. Join us for a webinar where we will discuss tax legislative updates and state and local tax matters impacting the retail and restaurant industries as tax remains an area of heightened focus due to the ever-increasing complexity for retailers of all shapes and sizes. Topics to include: Federal Legislative Updates New Federal Tax Legislation Expiring Federal Tax Legislation State and Local Tax Matters State Tax Legislation Updates State Nexus (Including the impact of remote employees) Pass-Through Entity Tax Marketplace Facilitators Please feel free to share this invitation with colleagues and others that you feel may benefit from learning about these important topics. Presenters: Stephen Worth, State & Local Tax Shareholder Kristyn Stang, Senior Tax Manager Justin Premich, Senior Tax Analyst ### 2023 Employee Benefits Forum, Webinar, SECURE 2.0 Act Topics to include: Audit Landscape: We will explore the current benefit plan landscape and the landscape of the Schneider Downs benefit plan practice. Regulatory Update: The SECURE 2.0 Act of 2022 (“SECURE 2.0”) was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill. This massive piece of legislation builds on the foundation that was laid by the SECURE Act of 2019 (“SECURE 1.0”) to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement. While many of the provisions from SECURE 2.0 do not take effect until 2024 and beyond, plenty of the 90+ provisions are effective retroactively or starting in 2023. In this program, Schneider Downs Retirement Solutions (SDRS) will unpack the major provisions from SECURE 2.0 and their impact on retirement plan sponsors and participants, including their respective effective dates as well as which provisions are mandatory versus those that are subject to employer adoption on a discretionary basis. CPE Credit Available HRCI and SHRM Credit Available The webinar will also be available after the live session for viewing and credit.  ### The Intel Effect: How Landing the Tech Giant is Shaping the Landscape of Columbus and its Economy Intel was just the beginning. Over the last several years, Columbus has announced the addition of many big-named corporations to the region that will alter not only the economy as we know it but also the landscape of Columbus and its surrounding areas. The amount of logistics that go into planning for such large employers is likely something that most people haven’t fully wrapped their heads around. Schneider Downs is proud to host a group of professionals that were instrumental in bringing Intel to the region and continue to work in various sectors making sure we are fully prepared for what’s ahead. Matt McQuade, Managing Director of Business Development of One Columbus, will kick us off by explaining why Central Ohio is such a hot spot for new companies and how we got where we are today. Then, we’ll move to a panel discussion, moderated by Schneider Downs Wealth Management Partner Dave Brinkman, to bring together multiple perspectives on such topics as: What needs to happen with housing, highways, airport expansion, public transportation, etc. to accommodate the influx of new business? With nationwide labor shortages, how are we filling all of the new jobs? What could be the economic impact on the existing industries and companies in the region, as well as what opportunities could it present? PANELISTS Matt McQuade - Managing Director, Business Development, One Columbus Thea Ewing - Chief Regional Development Officer and Senior Director of Programming, Mid-Ohio Regional Planning Commission (MORPC) Rea Hederman - Executive Director, Economic Research Center at The Buckeye Institute Rick Platt - President and CEO, Heath-Newark-Licking Co. Port Authority AGENDA Registration 2:30 - 3:00 p.m. Program 3:00 - 5:00 p.m. Networking Reception 5:00 - 6:30 p.m. Le Méridien Columbus, The Joseph 620 N High St, Columbus, OH 43215 2 CPE Credits are Available Sorry for the inconvenience, capacity limits have been met.  ### Doing Better by Doing Good Ethics CPE Event Leveraging Corporate Sustainability to Drive Business and Social Value We are very excited to return to a live CPE event this December. Please join us for a provocative discussion followed by the opportunity to reconnect in person. Please join us after the event for a social networking reception *There is a capacity limit for this event, so please register early.  About the Event The need for sustainability is an increasingly relevant topic within the business world in which we operate. Organizations worldwide are under significant scrutiny from governments, customers, employees and communities to conduct operations with more transparency and clarity, especially when it comes to their sustainability practices. The emerging focus of Environmental, Social and Governance (ESG) reporting further places the implementation of sustainable practices at the forefront of corporate planning for companies of all sizes and industries. While legislations and requirements are not yet widely in effect, this is an appropriate time to evaluate both the operational and the ethical considerations that drive corporate sustainability. Join Schneider Downs for a discussion and CPE event, “Doing Better at Doing Good,” presented by CB Bhattacharya, HJ Zoffer Chair of Sustainability and Ethics at the Katz Graduate School of Business at the University of Pittsburgh. In this session, we will examine the value of corporate social performance, both as a contributor to society and to the bottom line. Can “doing the right thing” also be “good for business,” and how can this concept best be evaluated? Location: Westin Convention Center Hotel, Pittsburgh This presentation will provide 2 hours of Ethics CPE. Takeaways from this presentation will include: Why sustainability is at the forefront of corporate responsibility today Examples of how companies worldwide are successfully making sustainability work for business The definition of ESG, and discussion of its increasing importance in the corporate world Identifying the challenges of measuring sustainable practices Distinguishing between compliance and “doing the right thing” Defining success when implementing sustainable practices ### CPE Month Webinar Series: Personal Finance and Retirement Planning Matters We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with me at lsherrill@schneiderdowns.com. Personal Finance and Retirement Planning Matters 3 CPE Hours Topics Covered to Include*: Market Update and Key Issues for Investors to Consider Designing Retirement Programs to Navigate the Great Resignation What is a Private Family Office? *Topics subject to change.  About Schneider Downs Retirement Solutions Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. To learn more, visit our dedicated Retirement Solutions Services page. ### CPE Month Webinar Series: Consulting, Technology and Advisory We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with me at lsherrill@schneiderdowns.com. Consulting, Technology and Advisory 3 CPE Hours Topics Covered to Include*: Mergers & Acquisitions and Capital Markets Digital Transformation Cyber Maturity Assessment *Topics subject to change.  About Schneider Downs Business Consulting  Schneider Downs Business Consulting delivers sophisticated consulting services to meet the complex needs of today’s business environment. Our team features experienced professionals across a diverse array of specialties that allows us to help our clients make more informed business decisions across every facet of their operations. To learn more, visit our dedicated Business Consulting page. ### CPE Month Webinar Series: Audit We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with me at lsherrill@schneiderdowns.com. Audit Update 3 CPE Hours Topics Covered to Include*: Leases: Initial Adoption and Year 2 Accounting Other Accounting Standards Business Combination Matters Economic Environment Update *Topics subject to change.  Audit and Assurance  About Schneider Downs Audit and Assurance Services Schneider Downs’ engagement teams are hand-selected by our shareholders based on skill sets and experience and are available around the clock for consultation. Each attestation engagement is subject to our comprehensive quality control and risk management system, providing an independent review of audit opinions, related financial statements and significant underlying working papers, to ensure that the highest levels of professional standards are met. To learn more, visit our dedicated Audit and Assurance page. ### CPE Month Webinar Series: Tax We are pleased to invite you to participate in our free Continuing Professional Education (CPE) events held throughout the month of December. Our goal is to provide compelling and relevant content that is specific to the business matters most important to you and your organization. Feel free to sign up for one or all of the sessions via the link below. Once registered, you will receive an individual login link for each session. If you do not receive the confirmation emails, please get in touch with me at lsherrill@schneiderdowns.com.  Tax Update 3 CPE Hours Topics Covered to Include*: Federal Tax Update/IRS Status Credits and Incentives State Tax Update and Opportunities Estate Tax/Exit Planning   *Topics subject to change.  About Schneider Downs Tax Advisors With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Visit our Tax Services page to learn more. ### Women Reshaping the Future of Columbus Schneider Downs is pleased to host a gathering of professionals who are collectively working to advance our community. Please join us for an evening of insightful dialogue, new ideas and a special moderated panel discussion featuring four innovative female leaders in our region. Kelly Griesmer, President and CEO of The Women's Fund, will discuss how COVID has impacted women specifically and Columbus' social response to those impacts. We will then shift to a panel discussion of women leaders to share how COVID has impacted their female workforce, both personally and professionally, how their businesses have shifted over the last several years and the opportunities it presents. We encourage all attendees to bring a mentee that would be interested in hearing the message and would benefit from this networking opportunity with other community leaders. Panelists: MODERATOR: Kelley Griesmer, President and CEO, The Women's Fund of Central Ohio Sandy Doyle-Ahern, President, EMH&T Leigh Burnside, SVP of Finance and Chief Financial Officer, The Wendy’s Company Stephanie Hightower, President and CEO, Columbus Urban League Ola Snow, Chief Human Resources Officer, Cardinal Health AGENDA Registration and Networking with Cocktails & Appetizers 5:00 - 6:00 pm Program 6:00 - 7:30 pm Open Networking 7:30 - 8:00 pm The Fives 550 Reach Boulevard Columbus, Ohio 43215 ### Webinar: Mindful Money Forum: Connecting Our Finances to Our Psyche Join us for our second annual Mindful Money Forum where we will sit down with our team of advisors to discuss some of the hot topics on everyone’s minds. Our webinar will feature segments you may recognize but with content exclusive to this event, featuring a Coffee with Alissa interview with special guest star, Mike Savage, CFA, from Charles Schwab as well as a Market Update with Dave & Jason. About Schneider Downs Wealth Management  Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training. To learn more, visit our Wealth Management page. ### Top 842 Lease Issues Facing Retailers - How to Avoid Them This webinar will cover the top issues and lessons learned by retailers and business-to-consumer organizations with implementing the new leasing standard under ASC 842, which is effective this year. We will provide a brief overview of the new standard, the impact on financial statements and financial covenants, and tools to assist with the lease adoption. The webinar will also discuss time-saving practical expedients organizations should consider. About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.   To learn more, visit our Not-for-Profit Industry Group page. ### How to Recover from a Cyberattack, presented by the Chronicle of Higher Education Manager of Cybersecurity, David Murphy, will share his insight on how to build reliable cybersecurity as part of an institution’s strategic planning in the upcoming How to Recover From a Cyberattack virtual panel discussion presented by the Chronicle of Higher Education. About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. Want to be in the know? Subscribe to our bi-weekly newsletter, Focus on Cybersecurity. ### Webinar: How to Recover from a Cyberattack, presented by the Chronicle of Higher Education ### 2022 Not-For-Profit Symposium: Schneider Downs' Not-for-Profit Services Group has presented an annual event for the area's nonprofits to gain knowledge on various topics of interest for the last 18 years. We've decided to remain virtual this year in order to include our clients and friends from all over the region and present topics in a 2-part webinar. In the morning session, we'll give a not-for-profit tax update, review all the relevant accounting and reporting requirements impacting the industry and wrap up with a presentation about the current capital market environment. Then, meet us back for the technology-focused afternoon session, where we'll discuss cybersecurity challenges impacting most organizations, as well as how to leverage technology to improve your company's competitive advantage. About Schneider Downs Not-for-Profit Services  Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software. To learn more, visit our Not-for-Profit Industry Group page. ### Cyber Insurance: 2022 and Beyond Cyber insurance continues to be one of the most discussed, yet misunderstood coverages in the business world. Join the Schneider Downs cybersecurity team as they discuss the changing landscape of cyber insurance, critical requirements to qualify for coverage and the current state of cybersecurity. Key topics include: Understanding cyber insurance coverage and limitations Key requirements to qualify for underwriting The impact of ransomware Industry trends and predictions Panelists Carl N. Kriebel CISSP – Shareholder, Cybersecurity David Murphy – Cybersecurity Manager Stephen Bish – Lead Cybersecurity Strategist About Schneider Downs Cybersecurity The Schneider Downs cybersecurity practice consists of experts offering a comprehensive set of information technology security services, including penetration testing, intrusion prevention/detection review, ransomware security, vulnerability assessments and a robust digital forensics and incident response team. For more information, visit www.schneiderdowns.com/cybersecurity or contact the team at cybersecurity@schneiderdowns.com. In addition, our Digital Forensics and Incident Response teams are available 24x7x365 at 1-800-993-8937 if you suspect or are experiencing a network incident of any kind. ### Lease Accounting: Your Time is Up; The Time is Now. The new lease accounting standard ASC 842 deadline is here, and many organizations are running out of time. Join the Schneider Downs simpLEASE team to learn about the most common issues that arise as a company adopts the changes to lease accounting. The webinar will help attendees: Understand how ASC 842 impacts your financials moving forward Gain a better understanding of the decisions required for lease accounting Learn what to expect for ongoing lease tracking, maintenance and reporting requirements under ASC 842 Discover how simpLEASE can make lease accounting simple Attendees will qualify for 1 CPE and a replay will be made available to all registrants. About simpLEASE simpLEASE is a software program that provides easy-to-understand guidance to analyze each individual lease. The program was developed in conjunction with the accountants at Schneider Downs, one of the nation’s 60 largest public accounting firms. Schneider Downs has been tracking and anticipating the changes to lease accounting standards for years, and has worked extensively to understand the specifics and intricacies of the standards. Thus, simpLEASE is not only easy to use, but also serves as an extremely insightful and intuitive tool to provide accurate analysis for all lease computations. Learn more at www.simpleaseaccounting.com or contact us at contactsd@schneiderdowns.com for more information. ### Private Foundations Webinar Series: Management Responsibilities and Key Tax Matters Join tax-exempt experts from the Schneider Downs, Dentons Cohen & Grigsby and Goldman Sachs teams for a three-part webinar series focused on private foundations. In this series, we will review various aspects of private foundation governance, board and management responsibilities as well as key tax-related matters. We will also discuss investing including best practices and business partner roles. Webinar 3 will include discussions on private foundation management responsibilities including those surrounding financial reporting and internal controls as well as key tax matters on required federal and state compliance, distribution requirements and due diligence. ### Private Foundations Webinar Series: Investments - Best Practices and Various Business Partner Roles Join tax-exempt experts from the Schneider Downs, Dentons Cohen & Grigsby and Goldman Sachs teams for a three-part webinar series focused on private foundations. In this series, we will review various aspects of private foundation governance, board and management responsibilities as well as key tax-related matters. We will also discuss investing including best practices and business partner roles. Webinar 2 will identify and understand the important issues and decisions that private foundation boards or investment committees should consider and how different business partner relationships can assist in making these decisions. ### Private Foundations Webinar Series: Private Foundations Governance Join tax-exempt experts from the Schneider Downs, Dentons Cohen & Grigsby and Goldman Sachs teams for a three-part webinar series focused on private foundations. In this series, we will review various aspects of private foundation governance, board and management responsibilities as well as key tax-related matters. We will also discuss investing including best practices and business partner roles. The first webinar will explore various aspects of private foundation governance including the key roles and responsibilities of board members, the importance and purpose of key policies and suggestions for ensuring the provisions in your organizing documents are adhered to.   ### 2022 Employee Benefits Forum Topics to include: Plan Landscape We will explore the current benefit plan landscape and the landscape of the Schneider Downs benefit plan practice. SAS 136 We will discuss the new auditing standard, SAS 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans. Discussion topics will include additional plan management responsibilities, added auditor requirements, as well as significant changes to the opinion. Regulatory Updates Learn about the significant provisions of recent legislation and their impact on qualified retirement plans. Common Retirement Plan Pitfalls Managing all that is required to run an effective and compliant qualified retirement plan demands a thorough understanding of governing rules and regulations and a commitment to established processes and procedures. This session will explore some of the common pitfalls that can be found in retirement plans and how to avoid them. Elements of a Strong Investment Policy Statement Learn how a strong Investment Policy Statement can help plan fiduciaries mitigate risk by establishing a definable, measurable and repeatable investment oversight process that meets industry best practice standards. The Importance of Participant Engagement This session will provide an understanding of strategies to improve plan participant engagement and their respective benefits for both employees and employers. Executive Compensation Plan Design This section will provide an overview of nonqualified deferred compensation plans, a popular compensation tool for retaining and incentivizing key executives. Different types of nonqualified plans will be discussed, including SERPs, excess plans and phantom equity arrangements. CPE Credit Available HRCI and SHRM Credit Available The webinar will also be available after the live session for viewing and credit. ### 2021 CPE Days Join Schneider Downs experts on Wednesday, December 15th, and Thursday, December 16th for our annual CPE event. Our virtual event will provide 6 hours of complimentary CPE credit. For those that will not be able to join us live, there will be the option to watch the sessions later for continuing education credits as well. Day one's topics will include two hours of tax information, followed by a presentation on the psychology of money. Day two will focus on audit-related topics, as well as digital transformation. ### The Benefits of a Purple Team Assessment Join the Schneider Downs cybersecurity team to learn about one of the fastest growing cybersecurity solutions across all industries, Purple Team assessments. Purple Team assessments are growing in popularity as organizations are increasingly interested in understanding how their current cybersecurity defenses hold up against the evolving threats of today and tomorrow in real-time. The webinar will focus on several aspects of a Purple Team assessment including: How a Purple Team assessment works from start to finish The benefits of a Purple Team assessment and impact on cybersecurity posture Best practices and our team’s experiences from past engagements Attendees will qualify for 1 CPE and a replay will be available to all registrants following the live event. Schneider Downs Panelists: Stephen Bish – Lead Cybersecurity Strategist David Murphy – Blue Team Manager Brandon Gale – Senior Cybersecurity Analyst   About Schneider Downs Purple Team Assessments A Schneider Downs Purple Team exercise brings together our red teamers and blue teamers, onsite, to work alongside your team to learn how to prevent and detect specific offensive techniques from the MITRE ATTACK framework and other hacker tools, techniques and procedures. As part of a Purple Team exercise, our goal is to provide the hacker toolsets and mentality of our red team experts along with the incident responder and defensive thinking of our blue team experts in a way that encourages, engages and sparks knowledge transfer. Learn more at www.schneiderdowns.com/cybersecurity/services/purple-team-assessment or contact the team at cybersecurity@schneiderdowns.com. View our full suite of cybersecurity solutions and resources at www.schneiderdowns.com/cybersecurity. ### Security and Tax Considerations for Professional Service Organizations Please join the Schneider Downs Professional Services Industry Group for our webinar covering topics for professional service companies in the current business environment. As many professional firms continue to navigate balancing remote and in-person work, it has become increasingly important and challenging to maintain a service organization’s control environment, stay abreast of state and local income and sales & use tax compliance matters and ensure the protection of sensitive data. This presentation will cover state and local tax issues, cyber security including addressing incident response mitigation and the importance of Service Organization Controls (SOC) reports for service providers. The Schneider Downs SOC team will cover the types of SOC examinations, why your organization might need one and how to evaluate third parties that provide services to your organizations through review of their SOC reports Lyle Washowich, the COO of the Western Pennsylvania Region of Burns White will present regarding current Cybersecurity threats and what can be done to mitigate cyber risks Stephen Worth, Schneider Downs State & Local Tax Shareholder, will discuss the income tax implications of conducting business in multiple states, remote employee considerations as well as state & local sales & use tax considerations for remote content delivery/sales ### Lease Accounting: The Final Countdown to ASC 842 The new lease accounting standard ASC 842 deadline is quickly approaching and many organizations are still navigating the associated challenges. Join the Schneider Downs simpLEASE team to learn about the most common issues that arise as a company adopts the changes to lease accounting, and best practices organizations need to take to successfully meet the ASC 842 deadline. The webinar will help attendees: Understand how ASC 842 impacts your financials moving forward Gain a better understanding of the required decisions that will need to be made as you adopt (adapt?) Learn more about what to expect around reporting requirements and ongoing lease maintenance under ASC 842 Discover how simpLEASE can make lease accounting simple Presenters Jason Reljac – Manager, simpLEASE Accounting Development Tina Kirsch – Manager, simpLEASE Accounting Implementations Attendees will qualify for 1 CPE and a replay will be made available to all registrants. Learn more at www.simpleaseaccounting.com or contact us at contactsd@schneiderdowns.com for more information. ### Helping Contractors Navigate the Employee Retention Credit One of the important components of the various COVID relief programs enacted by Congress is the Employee Retention Credit (ERC) which was designed to help businesses who kept employees on the payroll when COVID-19 forced business suspensions or closures.  Ross Alessandro and Matt Werner will host this webinar to discuss how ERC can apply to the construction industry and highlight several of the key criteria that construction companies should consider when applying for this credit. ### Day 3: 2021 Not-for-Profit Symposium Day 3 Agenda: HR Panel Discussion Join Kelly Horn, CHRO of Schneider Downs as she leads a panel of individuals to discuss the issues facing many non-profit organizations in a post-COVID environment.   Our topics will include recruiting and retention, employee benefit trends, hybrid working environments and many others.  We are delighted to have Charles “Chaz” Billington, III (Partner, Vorys, Sater, Seymour and Pease LLP), Melissa Painter (Vice President of Human Resources, The Watson Institute), Kerstin Sjoberg (Executive Director, Disability Rights Ohio) and Robert Stape (Chief Operating Officer, Goodwill of Southwestern Pennsylvania) join as panelists and share their organization practices and thoughts from a legal perspective. Nonprofit Tax Update Join us for a tax update for not-for-profit organizations. We will have a discussion on the Paycheck Protection Program and the Employee Retention Credit that will include recent guidance and suggestions on how to maximize the two programs.  We will also be discussing the complexities surrounding state solicitation including registration, annual filings and required acknowledgment disclosures.   Finally, we will provide an update on what’s new with the Internal Revenue Service and their recent focus and priority guidance plan. This session will be presented by Shareholders Gene Logan and Sarah Piot, and Senior Managers Brian Matthews and Melanie Pantalone. ### Day 2: 2021 Not-for-Profit Symposium Day 2 Agenda:  Robotic Process Automation for Not-for-Profits An introduction to Robotic Process Automation Technology and examples of how not-for-profit organizations are leveraging the technology to gain efficiencies. Managing Your Organization with Data Analytics and Business Intelligence This session will demonstrate how organizations are using data analytics and business intelligence tools to manage each part of their business.  Data analytics experts from our Automation & Data Analytics Process Team (“ADAPT”) will showcase real-life examples that prove how obtainable data analytics and business intelligence are for your organization.  A well-executed data strategy will translate to less time spent compiling analysis and more time strategically planning your organization’s response, by using data to make decisions with confidence and clarity. Current State of Cybersecurity Join one of our cybersecurity experts as he provides an update on the current cybersecurity landscape through frontline stories and their lessons learned. ### Day 1: 2021 Not-for-Profit Symposium Day 1 Agenda: State of the NFP Industry  The last 17 months have presented not-for-profits with significant challenges ranging from the operational impacts of the pandemic to decreased funding sources and labor challenges.   As leaders at your organizations and in the community, you have led your organizations through the storm of disruption.   Our experts will discuss some of the top issues impacting your organizations as we look ahead to a brighter future. KEYNOTE SPEAKERS Join our Keynote speakers, Lisa M. Schroeder, President and CEO of The Pittsburgh Foundation and Dan A. Sharpe, Vice President – Community Research and Grants Management of The Columbus Foundation for what is sure to be a dynamic session to kick off our Symposium.   The session will include various thoughts from each speaker including views on current and future gifting strategies, evolving strategies resulting from COVID and post-COVID challenges, community stress points and collaborative initiatives to address service gaps, diversity, inclusion and education initiatives to build a stronger community and many more! Complex Gift Accounting In this session, we will cover issues surrounding complicated funding arrangements and the GAAP standards that apply when determining proper accounting treatment. Not-for-Profit Accounting and Auditing Update Schneider Downs experts will cover the latest accounting and auditing developments impacting not-for-profit organizations, including new Financial Accounting Standards Board requirements along with recent developments from the AICPA, OMB and Yellow Book. ### Schneider Downs Exit & Succession Planning Masterclass Series: Session 4 Join the Schneider Downs Exit and Succession Planning team for a four-part webinar series to help business owners navigate their way to the next step.In this series, we will review the Exit Planning Process, considerations and potential roadblocks. We will also provide tools that you can use to start to develop a plan to successfully achieve company, financial and personal goals. Attendees qualify for 1 CPE per session and replays will be available to registrants following the live event. Registrants only need to register once to be enrolled in all four sessions. All sessions are scheduled from 9am – 10am EDTAs a part of the webinar series, we are offering a complimentary Exit Map Assessment and Debrief to help you determine your preparedness for succession or exit. Click here to take our online survey and we will provide a report and be available to discuss the results with you. Individuals who complete the assessment will qualify for a copy of “Navigating the Boomer Bust” by John Dini.Masterclass ScheduleMay 5, 2021 – Process Overview and Goal SettingIn the first of our four part exit and succession planning webinar series, Mary Richter and Dave Brinkman discuss the exit and succession planning process, including the role of advisors who are focused on key planning considerations for the business owner(s), the owner’s unique personal and professional goals, internal succession or external transaction options, and overall key decision points and milestones found throughout the exit and succession process.Panelists: David Brinkman, Mary RichterMay 19, 2021 – Analyze and Develop a PlanAttendees will learn the importance of developing an exit and succession plan and the interrelation between personal, financial and business goals and objectives.  Attendees will also hear from a valuation expert on key value drivers that will impact your valuation, and learn why and how estate planning and wealth management play a role in your master planPanelists: Greg Allison, David Brinkman, Joseph Bruce, Stephen ThimonsJune 2, 2021 – Setting and Executing StrategyOur series continues by reviewing the value drivers of a business, focusing on developing your succession plan and advice from dealmakers. We will cover legal aspects of a transaction and explain to expect from the sale process, including real-life stories and experiences from our speakers.Panelists: Imran Mohiuddin, Aaron Weir, EsquireJune 16, 2021 – Closing the Deal and Beyond: Lessons Learned from Successful TransactionsOur series concludes with a review of the previous sessions, learning what happens after the deal is completed and how to measure success.  Join us as Scott Snider, Vice President of the Exit Planning Institute shares experiences from the field.Panelists: George Adams, Zachary Davis, Scott SniderAbout Schneider Downs’ Exit Planning and Succession AdvisorySchneider Downs’ Exit Planning and Succession Advisory Services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Learn more at www.schneiderdowns.com/exit-planning-succession-advisory or contact the team at contactsd@schneiderdowns.com. ### Schneider Downs Exit & Succession Planning Masterclass Series: Session 3 Join the Schneider Downs Exit and Succession Planning team for a four-part webinar series to help business owners navigate their way to the next step.In this series, we will review the Exit Planning Process, considerations and potential roadblocks. We will also provide tools that you can use to start to develop a plan to successfully achieve company, financial and personal goals. Attendees qualify for 1 CPE per session and replays will be available to registrants following the live event. Registrants only need to register once to be enrolled in all four sessions. All sessions are scheduled from 9am – 10am EDTAs a part of the webinar series, we are offering a complimentary Exit Map Assessment and Debrief to help you determine your preparedness for succession or exit. Click here to take our online survey and we will provide a report and be available to discuss the results with you. Individuals who complete the assessment will qualify for a copy of “Navigating the Boomer Bust” by John Dini.Masterclass ScheduleMay 5, 2021 – Process Overview and Goal SettingIn the first of our four-part exit and succession planning webinar series, Mary Richter and Dave Brinkman discuss the exit and succession planning process, including the role of advisors who are focused on key planning considerations for the business owner(s), the owner’s unique personal and professional goals, internal succession or external transaction options, and overall key decision points and milestones found throughout the exit and succession process.Panelists: David Brinkman, Mary RichterMay 19, 2021 – Analyze and Develop a PlanAttendees will learn the importance of developing an exit and succession plan and the interrelation between personal, financial and business goals and objectives.  Attendees will also hear from a valuation expert on key value drivers that will impact your valuation, and learn why and how estate planning and wealth management play a role in your master planPanelists: Greg Allison, David Brinkman, Joseph Bruce, Stephen ThimonsJune 2, 2021 – Setting and Executing StrategyOur series continues by reviewing the value drivers of a business, focusing on developing your succession plan and advice from dealmakers. We will cover legal aspects of a transaction and explain to expect from the sale process, including real-life stories and experiences from our speakers.Panelists: Imran Mohiuddin, Aaron Weir, EsquireJune 16, 2021 – Closing the Deal and Beyond: Lessons Learned from Successful TransactionsOur series concludes with a review of the previous sessions, learning what happens after the deal is completed and how to measure success.  Join us as Scott Snider, Vice President of the Exit Planning Institute shares experiences from the field.Panelists: George Adams, Zachary Davis, Scott SniderAbout Schneider Downs’ Exit Planning and Succession AdvisorySchneider Downs’ Exit Planning and Succession Advisory Services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Learn more at www.schneiderdowns.com/exit-planning-succession-advisory or contact the team at contactsd@schneiderdowns.com. ### Schneider Downs Exit & Succession Planning Masterclass Series: Session 2 Join the Schneider Downs Exit and Succession Planning team for a four-part webinar series to help business owners navigate their way to the next step. In this series, we will review the Exit Planning Process, considerations and potential roadblocks. We will also provide tools that you can use to start to develop a plan to successfully achieve company, financial and personal goals. Attendees qualify for 1 CPE per session and replays will be available to registrants following the live event. Registrants only need to register once to be enrolled in all four sessions. All sessions are scheduled from 9am – 10am EDT As a part of the webinar series, we are offering a complimentary Exit Map Assessment and Debrief to help you determine your preparedness for succession or exit. Click here to take our online survey and we will provide a report and be available to discuss the results with you. Individuals who complete the assessment will qualify for a copy of “Navigating the Boomer Bust” by John Dini. Masterclass Schedule May 5, 2021 – Process Overview and Goal Setting In the first of our four part exit and succession planning webinar series, Mary Richter and Dave Brinkman discuss the exit and succession planning process, including the role of advisors who are focused on key planning considerations for the business owner(s), the owner’s unique personal and professional goals, internal succession or external transaction options, and overall key decision points and milestones found throughout the exit and succession process. Panelists: David Brinkman, Mary Richter May 19, 2021 – Analyze and Develop a Plan Attendees will learn the importance of developing an exit and succession plan and the interrelation between personal, financial and business goals and objectives.  Attendees will also hear from a valuation expert on key value drivers that will impact your valuation, and learn why and how estate planning and wealth management play a role in your master plan Panelists: Greg Allison, David Brinkman, Joseph Bruce, Stephen Thimons June 2, 2021 – Setting and Executing Strategy Our series continues by reviewing the value drivers of a business, focusing on developing your succession plan and advice from dealmakers. We will cover legal aspects of a transaction and explain to expect from the sale process, including real-life stories and experiences from our speakers. Panelists: Imran Mohiuddin, Aaron Weir, Esquire June 16, 2021 – Closing the Deal and Beyond: Lessons Learned from Successful Transactions Our series concludes with a review of the previous sessions, learning what happens after the deal is completed and how to measure success.  Join us as Scott Snider, Vice President of the Exit Planning Institute shares experiences from the field. Panelists: George Adams, Zachary Davis, Scott Snider About Schneider Downs’ Exit Planning and Succession Advisory Schneider Downs’ Exit Planning and Succession Advisory Services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Learn more at www.schneiderdowns.com/exit-planning-succession-advisory or contact the team at contactsd@schneiderdowns.com.   ### 2021 Higher Education Symposium Join the experts of Schneider Downs on May 18, 19 and 20 when we present our annual higher education symposium. This year’s event will be virtual and will provide 8 hours of continuing education credit, including one hour of ethics.  This year’s topics will be focused on assisting your institution to navigate the evolving regulatory, compliance and risk environment. Registrants only need to register once to be enrolled in all three sessions, if you choose. Once in the registration area, just click on the sessions you are interested in and include your information. You'll receive a separate confirmation email for each session. Tuesday, May 18th from 9:00am - Noon Day 1 Agenda: Legislative Update A Bond Refinancing Story Cybersecurity and Third-Party Risk Panelists: Patrick Kerns, Sarah Piot, Jennifer Lundy, Lorenzo Mendez, Bill Deller Wednesday, May 19th from 1:00pm - 3:00pm Day 2 Agenda: Lease Accounting Executive Compensation Employee Benefit Strategies Panelists: Russel Grunebach, Kathy Karner, Shane Gastecki, Shad Fagerland, Melanie Pantalone, Amanda Wright Thursday, May 20th from 9am - Noon Day 3 Agenda:  Understanding Your Data Today, Tomorrow and in the Future Investment Strategies Ethics Panelists: Andy Hannah, Gina Montana, Chris Blume, Steve Thimons   ### Schneider Downs Exit & Succession Planning Masterclass Series: Session 1 Join the Schneider Downs Exit and Succession Planning team for a four-part webinar series to help business owners navigate their way to the next step. In this series, we will review the Exit Planning Process, considerations and potential roadblocks. We will also provide tools that you can use to start to develop a plan to successfully achieve company, financial and personal goals. Attendees qualify for 1 CPE per session and replays will be available to registrants following the live event. Registrants only need to register once to be enrolled in all four sessions. All sessions are scheduled from 9am – 10am EDT As a part of the webinar series, we are offering a complimentary Exit Map Assessment and Debrief to help you determine your preparedness for succession or exit. Click here to take our online survey and we will provide a report and be available to discuss the results with you. Individuals who complete the assessment will qualify for a copy of “Navigating the Boomer Bust” by John Dini. Masterclass Schedule May 5, 2021 – Process Overview and Goal Setting In the first of our four part exit and succession planning webinar series, Mary Richter and Dave Brinkman discuss the exit and succession planning process, including the role of advisors who are focused on key planning considerations for the business owner(s), the owner’s unique personal and professional goals, internal succession or external transaction options, and overall key decision points and milestones found throughout the exit and succession process. Panelists: David Brinkman, Mary Richter May 19, 2021 – Analyze and Develop a Plan Attendees will learn the importance of developing an exit and succession plan and the interrelation between personal, financial and business goals and objectives.  Attendees will also hear from a valuation expert on key value drivers that will impact your valuation, and learn why and how estate planning and wealth management play a role in your master plan Panelists: Greg Allison, David Brinkman, Joseph Bruce, Stephen Thimons June 2, 2021 – Setting and Executing Strategy Our series continues by reviewing the value drivers of a business, focusing on developing your succession plan and advice from dealmakers. We will cover legal aspects of a transaction and explain to expect from the sale process, including real-life stories and experiences from our speakers. Panelists: Imran Mohiuddin, Aaron Weir, Esquire June 16, 2021 – Closing the Deal and Beyond: Lessons Learned from Successful Transactions Our series concludes with a review of the previous sessions, learning what happens after the deal is completed and how to measure success.  Join us as Scott Snider, Vice President of the Exit Planning Institute shares experiences from the field. Panelists: George Adams, Zachary Davis, Scott Snider About Schneider Downs’ Exit Planning and Succession Advisory Schneider Downs’ Exit Planning and Succession Advisory Services are multi-disciplined, fully integrated and holistic exit planning and succession solutions that are customized and designed for business owners by business owners. Learn more at www.schneiderdowns.com/exit-planning-succession-advisory or contact the team at contactsd@schneiderdowns.com. ### Schneider Downs Financial Services Webinar Join Schneider Downs on Wednesday, April 28th for a webinar for the Financial Services sector as we cover topics like Fraud Risk Assessments, Implementing Secure Systems in the Cloud, and Cybersecurity. Topics will include: What is a Fraud Risk Assessment & Why Does My Institution Need One? Fraud, the dreaded word that most institutions don't want to think could affect their institution.  Everyone knows that fraud risks are out there, but not everyone is equipped to recognize and reduce the impact of fraud. It is essential to properly plan and perform a Fraud Risk Assessment to ensure your institution is properly mitigating fraud risks.  Join the Schneider Downs Risk Advisory professionals as we discuss the importance of a Fraud Risk Assessment utilizing the FDIC Bank Fraud and Abuse framework and highlight the items that your institution should be considered when planning and executing a Fraud Risk Assessment. Introduction to Cloud Security During this session, Tim Wolfgang and Christian Johnson will cover the best practices financial institutions should follow for implementing secure systems in the cloud.  During this session, we will review the benefits of different cloud implementation models and the shared responsibility concept before diving into IT security topics and best practices relevant to cloud systems. The SolarWinds Breach and Its Lasting Implications Session Description: The SolarWinds breach and its effects have been unwinding, with new developments on almost a daily basis. This attack and the methods used have caused many to question how we approach cybersecurity defenses in modern enterprise environments. This event certainly will have major implications across IT operations, cybersecurity, IT audit, and enterprise risk for some time to come. As leaders in risk management, we need to be prepared to pivot our approach to assessing cyber risk in this dynamic environment. ### 2021 Employee Benefits Forum Topics to include: ERISA Audit Landscape Regulatory Update CARES Act Update Behavioral Finance Applied to Qualified Plan Menu Design Retirement Plan Best Practice Standards ### Legislative Update for Higher Education Join Patrick Kerns and Sarah Piot on March 17th at 9:00 am for a webinar focused on the legislative impacts to higher education that have resulted from the Consolidated Appropriation Act of 2021 (CAA) and the associated Coronavirus Response and Relief Supplement Appropriations Act (CRRSAA). We will review some of the changes that your institution should be carefully monitoring in the coming months. The webinar will focus on topics including Higher Education Emergency Relief Fund II, Employee Retention Tax Credit, and other pending legislative changes. We encourage you to submit questions in advance. ### Risk Management as a Competitive Advantage Risk landscapes are changing more rapidly and with a greater impact than ever before. The pandemic has magnified risk management as a competitive advantage. Effective Enterprise Risk Management (ERM) is a critical enabler for strategy execution. It creates greater confidence in decision making and achieving operational and strategic objectives while effectively enabling risks and opportunities to be actively managed.  The value is in the discipline surrounding key events to realize opportunities, minimize disruptions, manage adverse events and limit financial ramifications. In this presentation, you’ll learn about a comprehensive framework for ERM and a practical approach to standing up an ERM process, as well as specific risks to consider as a result of COVID-19. Attendance is FREE and qualifies for 1 CPE hour. ### Inside Web Application Penetration Testing Web application penetration testing continues to be one of the most critical components of any information security program. Join members of the Schneider Downs cybersecurity team on February 11, 2021 for a deep-dive into the world of web application penetration testing. Topics include differentiating web application penetration testing from other assessment services, our approach to web application penetration testing engagements, the most common web application vulnerabilities and understanding web application penetration testing final reports. ### 2020 Exempt Organization Tax Update 2020 has certainly been a year like no other. Join Sarah Piot, Tax Director, and Melanie Pantalone, Tax Manager, for their annual year-end tax webinar for tax exempt organizations. Topics include: CARES Act Update Recent Developments Year-End Primer 1 CPE Credit ### Schneider Downs Annual CPE Day: Day 2 - Audit Focused You are cordially invited to participate in Schneider Downs’ virtual CPE event, Forging a Great Future from the Lessons of 2020. In light of the challenges presented by the COVID-19 pandemic, this year’s presentations will be conducted via webinar across two dates, December 9 and 10, 2020. This year’s presentations will include reflections of the challenges presented by the COVID-19 pandemic in 2020, while also casting an eye toward opportunities that exist in 2021 and beyond. We invite you to attend one or both of these sessions. DAY TWO AGENDA: Accounting Standards Update – Exploring Pending Legislative Changes Brought on by 2020 Presented by: Adam Goode, Sr. Manager, Schneider Downs and Nick Lombardo, Sr. Manager, Schneider Downs Cybersecurity – Update on Remote Operations Security Presented by: Dan Desko, Shareholder, Schneider Downs Robotic Process Automation- Reducing the Burden on Resource Strapped Organizations Presented by: Patrick Armknecht, Shareholder, Schneider Downs ### Schneider Downs Annual CPE Day: Day 1 - Tax Focused You are cordially invited to participate in Schneider Downs’ virtual CPE event, Forging a Great Future from the Lessons of 2020. In light of the challenges presented by the COVID-19 pandemic, this year’s presentations will be conducted via webinar across two dates, December 9 and 10, 2020. This year’s presentations will include reflections of the challenges presented by the COVID-19 pandemic in 2020, while also casting an eye toward opportunities that exist in 2021 and beyond. We invite you to attend one or both of these sessions. DAY ONE AGENDA: Tax Policy Outlook – what you can expect in 2021 and beyond Presented by: Chris McElroy, Co-CEO, Schneider Downs and Daniel Phillips, Shareholder, Schneider Downs Planning Strategies to Consider in Light of the 2020 Election Results Presented by: Mary Richter, Shareholder, Schneider Downs, Carl Scharf, Shareholder, Schneider Downs and Gregory Allison, Shareholder, Schneider Downs Managing Your Tax Function through the Pandemic – Opportunities and Risks Presented by: Justin Steele, Shareholder, Schneider Downs and Adam Costa,  Manager, Schneider Downs ### Higher Education CFO Roundtable Join the Schneider Downs Higher Education industry group as we have an open discussion on the current state of higher education as this is a year like no other due to COVID-19 and how the sector is rising the meet this challenge and others. Registration for this event has closed. Please contact Leigha Pindroh with any questions. Thank you! ### Dentons Cohen & Grigsby and Schneider Downs present External Disruption and the Nonprofit Sector: Opportunities and Challenges Dentons Cohen & Grigsby and Schneider Downs present a panel discussion on the impact that the current external disruption has had on the nonprofit sector overall and how it has resulted in opportunities, challenges, and new insights for organizations. Our panelists are prominent and seasoned leaders drawn from higher education, human services, and arts and cultural organizations. Join the discussion as we study the unique and shared pressures within the nonprofit sector and prepare for the road ahead. Panelists: Dr. Chris Howard, President, Robert Morris University B.J. Leber, President & CEO, Adagio Health Janis Burley Wilson, President and CEO, August Wilson Center Moderated by: Staci Brogan, Shareholder, Schneider Downs Kate Dewey, Senior Advisor, Dentons Cohen & Grigsby ### Webinar for Professional Services Firms Join Schneider Downs' Professional Services Industry Group on Thursday, November 5th, as they host a webinar on significant developments impacting professional services firms. Topics Covered: Cybersecurity - Impact on the Professional Service Industry - How to prepare to avoid being the next target Business Succession Planning – Start planning now for future succession Corporate Finance – M&A Process Overview and Current State of the Market 1.5 CPE Credits will be offered.   ### SOC Reporting in a Remote World With remote work becoming the “new normal” for many businesses, SOC reports are changing to adapt to this environment. Join Troy Fine and Sara Hudak from Schneider Downs' IT Risk Advisory Department as they discuss how SOC reporting has been impacted by remote working environments, including: What service organizations should be considering as they start planning for their next SOC examination; What user entities should be focusing on when using SOC reports as part of their third party risk management program; and How service auditors are using technology to alter their testing procedures and streamline the audit process. ### Construction Industry Update Please join Schneider Downs' Construction Industry Group on Tuesday, October 27th, as we host a webinar on significant developments impacting the construction industry in 2020. Construction Topics Covered Industry Update provided by Jeff Burd, Owner and Founder of Tall Timber Group The Paycheck Protection Program – What Now? Income Tax – Year-end Planning in 2020 Developments in Data Analytics for the Construction Industry – Are you getting the most out of your data? If you have questions in advance, you will be able to submit them during the registration process, as well as during the webinar. ### Schneider Downs Manufacturing Group: RPAs and Data Analytics More than ever, businesses must quickly adapt to a rapidly changing environment to remain competitive. Join a panel of Schneider Downs expert for a comprehensive webinar on how Robotic Process Automation and Data Analytics technology can help manufacturers reduce risk and improve productivity and profitability. ### Columbus NFP Symposium Week: Tax Update and PPP Loan Discussion For the last 16 years, Schneider Downs' Columbus Not-for-Profit Services Group has presented an annual in-person event for the area's nonprofits to gain knowledge on various topics of interest. Due to the ongoing pandemic, we've decided to go virtual this year and present four topics in four days via webinar. Join us for a tax update for not-for-profit organizations. Following this update, we will have a discussion on factors to maximize your organization's loan forgiveness, including an update on how the Paycheck Protection Program Flexibility Act has provided new opportunities to maximize the forgiveness portion. There will also be insights on the revised forgiveness application, the new EZ application and a Q&A session. This webinar will qualify for 1.5 CPE credits (Tax). ### Columbus NFP Symposium Week: Panel Discussion - Operating in the Current Environment For the last 16 years, Schneider Downs' Columbus Not-for-Profit Services Group has presented an annual in-person event for the area's nonprofits to gain knowledge on various topics of interest. Due to the ongoing pandemic, we've decided to go virtual this year and present four topics in four days via webinar. Schneider Downs has invited a panel of local nonprofit business leaders, including Stephanie Hightower from the Columbus Urban League, Duane Casares from Directions for Youth & Families and Elfi DiBella from CAPA, to discuss how their organizations have evolved due to COVID-19. Topics to be discussed include emergency funding, funder engagement, program delivery, remote workforce and evolving community needs. This webinar will qualify for 1.5 CPE credits (Management Services). ### Columbus NFP Symposium Week: Internal Controls and Fraud For the last 16 years, Schneider Downs' Columbus Not-for-Profit Services Group has presented an annual in-person event for the area's nonprofits to gain knowledge on various topics of interest. Due to the ongoing pandemic, we've decided to go virtual this year and present four topics in four days via webinar. The COVID-19 pandemic has resulted in many disruptions. The unexpected shift for employees to work from remote locations has introduced some unique risk management challenges. Representatives from Schneider Downs’ Risk Advisory Services practice will discuss how to identify both external and internal fraud risks, as well as share leading best practices to guard against Cybersecurity attacks and internal fraud schemes and scenarios.This webinar will qualify for 1.5 CPE credits (Audit & Information Technology). ### Columbus NFP Symposium Week: Accounting & Auditing For the last 16 years, Schneider Downs' Columbus Not-for-Profit Services Group has presented an annual in-person event for the area's nonprofits to gain knowledge on various topics of interest. Due to the ongoing pandemic, we've decided to go virtual this year and present four topics in four days via webinar. This session will provide a high-level overview of the latest accounting and auditing updates that will affect not-for-profit organizations in the near future. This webinar will qualify for 1 CPE credit (Accounting). ### Higher Education Webinar Series: Managing Your Data Join Robert Morgan, Senor Manager of our Schneider Downs' Technology Advisors and Automation & Data Analytics Process Team (ADAPT) for a complimentary webinar on managing your data. The webinar will discuss the power of a data warehouse, supported by other tools and best practices, that can help unleash the data in your organization. Takeaways from this webinar: -Develop a high-level understanding of the purpose of a data warehouse -Learn about the tools available to use and visualize the data -Develop a methodology to support the implementation of data-related projects Attendees will qualify for 1 CPE credit, and a replay of the webinar will be made available to registrants following the live event. ### PPP Loan Update for Tax Exempt Organizations As we enter the time of forgiveness calculations please join Gene Logan and Brian Webster on Tuesday, June 23rd at 10 am, as they answer your questions regarding PPP loans.  Topics will include the newly passed PPP Flexibility Act, the Full-Time Equivalent test, documentation required for forgiveness, the needs assessment, and many others. 1 CPE Credit. ### Higher Education Webinar Series: Using Data to Prepare for Life After COVID-19 During this webinar, we will provide a brief overview of Schneider Downs’ Automation and Data Analytics Process Team (“ADAPT”) and how we can help higher education organizations prepare for changes to your business from the COVID-19 pandemic. Measuring the financial impact of instructor utilization, enrollment trends, and course enrollment capacity will certainly look different in the upcoming semesters. See how data can help! 1 CPE Credit. ### Fiduciary Responsibility During COVID-19 Join a panel comprised of professionals from Dentons Cohen & Grigsby and Schneider Downs as they discuss fiduciary responsibility during the COVID-19 Pandemic for both management and board members. Panelists: Staci Brogan, Audit Shareholder, Schneider Downs Kate Dewey, Senior Advisor, Dentons Cohen & Grigsby Christie Tillapaugh, Shareholder, Dentons Cohen & Grigsby Lauren Weddell, Audit Shareholder, Schneider Downs Moderated by: Joel Rosenthal, Shareholder, Schneider Downs Business Advisors Discussion topics will include: Operational and Financial Fiduciary Responsibilities Fiduciary Responsibility Considerations of Board Members Monitoring Operational Results If you have questions in advance, you will be able to submit them during the registration process. ### Critical Considerations for Small Businesses: From PPP to Main Street – What You Need to Know Now Join a panel of Schneider Downs experts for a comprehensive overview of the latest updates to the CARES Act. The webinar will cover a wide range of critical topics and important program updates including significant provisions, retirement plan considerations for loan forgiveness purposes, potential tax considerations and the Main Street Lending program. Moderator •    Joel M. Rosenthal CPA, CVA, CM&AA – Shareholder, Schneider Downs Business Advisory Panelists •    Brian W. Matthews – Senior Manager, Schneider Downs Audit & Assurance Services •    Brian Webster CPA/ABV/CFF, CVA, CFE, CMA – Senior Manager, Schneider Downs Business Advisory Group •    Daniel P. Phillips CPA – Shareholder, Schneider Downs Tax Advisory •    Kirk Mitchell CPA, MST – Senior Manager, Schneider Downs Tax Advisory •    Shad C. Fagerland – Senior Manager, SDAdvantage Retirement Solutions Attendees will qualify for 1.5 CPE credits and a copy of the webinar will be made available to registrants following the live event. ### Four Topics All Not-for-Profits Need to Consider in Light of COVID-19 Join Adam Goode and Patrick Kerns of Schneider Downs to hear about four key topics that all not-for-profits need to focus during this time of uncertainty as you prepare for a year-end like none other. The update will focus on evolving regulations, the role of your organization, liquidity, and year-end readiness. They will discuss the evolving regulatory environment and its impact on your year-end, including changes in deadlines, the release of the 2020 compliance supplement by the OMB and others. They will discuss why you should evaluate the role of your organization in these challenging times to ensure you can continue to fulfill your mission. Liquidity has become such a focus for so many and they will discuss what some sources of liquidity you need to evaluate as your organization weathers this storm. And lastly, they will talk about how to evaluate the impact of COVID-19 and other accounting standards as you close your books for 2020. If you have questions in advance, you will be able to submit them during the registration process. 1 CPE Credit. ### Estate Planning Opportunities Created by the COVID-19 Pandemic Presenters (click link for contact information): Gregory L. Allison, JD, CPA/PFS, CFP® - Tax, Estate and Succession Planning Services Derek J. Eichelberger, CFA, CFP®, AIFA® - Schneider Downs Wealth Management Advisors, LP Darin G. Schindler, CPA - Schneider Downs Private Family Office Services   Download a copy of the PPT here. Watch a replay of the webinar here.    ### Understanding the CARES Act & SECURE Act In light of the Coronavirus, Aid, Relief, and Economic Security (CARES) Act being passed recently, we have shifted the focus of our webinar to cover the CARES Act’s provisions pertaining to qualified retirement plans and individual retirement accounts (IRAs). These provisions ease retirement plan hardship and loan rules to free up funds for individuals impacted by the pandemic and to provide relief from the required minimum distribution (RMD) rules. We will also cover some of the important provisions of the SECURE Act. 1.5 CPE Credit 1.5 HRCI and SHRM Credit *Pending Approval   ### COVID-19: NON-PROFIT TAX IMPLICATIONS Join Schneider Downs experts to explore the impact of the following three Acts born out of the COVID-19 pandemic as we work through the ramifications to non-profit organizations and their employees. Coronavirus Preparedness and Response Supplemental Appropriations Act SBA Economic Injury Disaster Loans Families First Coronavirus Response Act  Sick Pay Provisions  Family Medical Leave Provisions Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Small Business Loan Program Employee Retention Credit Program Changes to Charitable Contribution Limitations Payroll Tax Deferral Program Speakers: Eugene J. Logan - Shareholder, Schneider Downs Tax Advisory Sarah R. Piot, Director, Tax Advisory Services Melanie C. Pantalone, Manager, Tax Advisory Services COVID-19 Nonprofit Tax Implications Webinar Recording ### Business Operations During COVID-19 Webinar Thanks for your interest in our webinar that took place on Wednesday, March 25, 2020. Click here to watch a replay of the webinar.  Click here to download a PDF of the webinar slides.  Speakers: Joel M. Rosenthal CPA, CVA, CM&AA - Shareholder, Schneider Downs Business Advisory Thomas D. Pratt CPA, ABV, CFF, CVA - Shareholder, Schneider Downs Business Advisory Michael T. Von Lehman CTP - Director, Schneider Down Meridian Peter J. Lieberman - CEO, Schneider Downs Corporate Finance In addition to the webinar replay, we invite you to visit the Our Thoughts On articles for the latest updates and analysis of legislative changes and market conditions brought on by the COVID-19 pandemic at www.schneiderdowns.com/our-thoughts-on/category/Coronavirus. Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC. ### Webinar-simpLEASE The new accounting standard for leases represents a major change for nearly all organizations, but it doesn’t need to be disruptive. Nearly every organization utilizes lease contracts as part of its day-to-day operations. Recent changes by the FASB will dramatically alter how these organizations identify those leases on their annual financial statements. For some organizations, this will mean analyzing hundreds – even thousands – of individual lease contacts – a time-consuming and laborious process. Brian Matthews, Senior Manager and Jason Reljac, Manager of Schneider Downs Technology Advisors, will provide a brief overview of the changes in lease accounting and information on a software solution that can simplify your transition to the new standard. simpLEASE - Simplifying Your Transition to the New Standard Webinar Recording ### An Introduction to Robotic Process Automation Download a copy of the presentation here Watch the recorded webinar here   ## Tax Reform ### Tax Reform 2021 - Build Back Better: President Biden`s Updated Framework as of October 28, 2021 As we noted in our recent letter on October 25, The Tax Evolution Continues article, President Biden and democratic leaders in both the House and Senate have been intensely, and often passionately, working on developing a new framework that would be acceptable by both moderate and progressive wings of their party. On Thursday, October 28, the White House released a refurbished framework hoping to build unity within the Democratic party concerning spending priorities and the revenue-raising needed to support additional programs. Almost simultaneously with the release of the framework, a draft copy of the updated legislation, H.R. 5376 Build Back Better Act, was released by the House Rules Committee. At a cost of about $1.75 trillion, the newly released framework is approximately 60% of the size of the former $3.1 trillion proposal. While details still need to be reviewed, it appears that the revenue raised by new provisions will be about $2 trillion. The White House is reporting that the “plan is more than fully paid for by asking the wealthiest Americans and most profitable corporations to pay their fair share. It does not raise taxes on small business and anyone making less than $400,000 per year. It will also generate economic growth that will increase tax revenue and contribute to deficit reduction.” A White House press release notes that “The Build Back Better framework includes a new surtax on the income of multi-millionaires and billionaires – the top 0.02 percent of Americans. It would apply a 5 percent rate above income of $10 million, and an additional 3 percent above income of $25 million. The Build Back Better framework will also close the loopholes that allows some wealthy taxpayers to avoid paying the 3.8 Medicare tax on their earnings.” The new proposal substantially re-writes the tax-related provisions in the previous incarnation of the Build Back Better Act. A White House Fact Sheet provides the following information on some of the tax-related provisions: 15% Corporate Minimum Tax on Large Corporations 1% Surcharge on Corporate Stock Buybacks Global Minimum Tax: Consistent with OECD and with appropriate effective date for 15%, Country-by-Country Penalty Rate for Foreign Corporations Based in Non-Compliant Countries (i.e., Base Erosion and Anti-Abuse Tax) New Surtax on Multi-Millionaires and Billionaires Close Medicare Self-Employment Tax Loophole by Strengthening the Net Investment Income Tax for Those Making Over $400,000 Continue Limitation on Excess Business Losses   The new legislation removes the increases in corporate and individual tax rates, including the proposed increase in individual capital gain tax rates, proposed under the previous version of the Build Back Better legislation. Other provisions that have been removed include provisions related to: Taxation of carried interests, Changes in the limitation of the 20% Section 199A qualified business income deduction for pass-through income, Changes to the estate tax, and Changes to individual retirement savings accounts. We are analyzing the newly released proposed legislation in more detail. We will continue to provide ongoing insight into the impact, challenges and opportunities presented by the newly proposed rules. Is this the last word on proposed legislation? Using recent history as a guide, the answer may be “no”. Based upon a review of the legislative activity over the past 8 months coupled with insight gained from observing the Republican Party’s experience with negotiating and writing the final version of the Tax Cuts and Jobs Act leading to its signing on December 22, 2017, we could again observe changes that reintroduce both spending and tax provisions that were included in the original proposal. We close as we did with our first letter. As we’ve seen since April, and as Yogi Berra once so astutely stated, “it ain’t over until it’s over.” As with all proposed tax legislative changes, taxpayers and advisors will need to monitor progress closely. We will continue to monitor developments as these proposed changes move through the legislative process. Additional articles and analyses will be provided in the coming weeks. In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant, or contact us at contactsd@schneiderdowns.com.   ### Tax Reform 2021 - Build Back Better: The Tax Evolution Continues, October 25, 2021 Update As we enter the last week of October, the movement on proposed tax legislation appears to be shifting faster than hillsides in rain-soaked California. The White House along with Democratic leaders in the House and Senate are working hard to agree on the size and scope of the proposed Build Back Better legislation that has stalled in the House since the end of September. Over the weekend, Senator Joe Manchin (D-W.Va.) met with President Biden and Senate Majority Leader Chuck Schumer (D-N.Y.) in what is being described by the White House as a productive discussion about the President’s economic agenda. House Speaker Nancy Pelosi (D-Calif.) went as far as to say on Sunday that a deal appears to be close. Senator Manchin said a deal on the framework may be near. He noted that “a framework” should be agreed to this week, though “having it finished with all the ‘t’s’ and ‘i’s’ and everything crossed and dotted will be difficult from the Senate side because we have an awful lot of text to go through.” A compromise by Democrats on the overall size of the newly proposed spending as well as the programs being developed may well be in the offing. Agreements on the size and length of spending bills will impact the tax provisions that will need to be included as revenue-raisers in any final legislation. Some of the previous focus on tax hikes resulting from increases in both corporate and individuals appear to have shifted somewhat. Revenue-replacement options may include new taxes on the unrealized capital gains of “billionaires.” For his part, President Biden is extremely hopeful that the framework will be completed by the time he leaves for a United Nations conference on climate change in Glasgow this coming Thursday. Senator Schumer said on Monday that he wants the climate provisions to be completed before the President leaves, but there are “three to four outstanding issues” on the larger tax and spending package that remain to be settled on the larger plan. Without new legislative text to review, however, it’s impossible to know what provisions will be added, what provisions will be removed, and what will remain from H.R. 5376 Build Back Better currently unacted upon since being introduced in the House on September 27. As we’ve seen since April though, and as Yogi Berra once so astutely stated, “it ain’t over until it’s over.” As with all proposed tax legislative changes, taxpayers and advisors will need to monitor progress closely. We will continue to monitor developments as these proposed changes move through the legislative process. Additional articles and analyses will be provided in the coming weeks. In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant, or contact us at contactsd@schneiderdowns.com. ### Introduction to Tax Reform 2021 – The Proposed “Build Back Betterâ€_x009d_ Legislation For the better part of two years, U.S. taxpayers have been hearing about more changes to federal tax law (over and above the numerous tax law changes resulting from responses to COVID-19).Beginning with the 2019 primary elections, through the 2020 presidential campaign and into the early part of this spring with the release of President Biden’s Made in America and American Families Plan proposals, we’ve been learning about and tracking various income and wealth tax proposals. Currently, there’s a comprehensive bill exceeding 2,500 pages (subject to change at any time) on the table that was released by the House Budget Committee on September 27, 2021 that is currently awaiting further action in the House of Representatives. With actual proposed statutory language to evaluate, Schneider Downs is pleased to introduce its dedicated webpage to Tax Reform 2021 – Build Back Better. Our goal for this site is to keep you updated on the proposed legislation being discussed in both the House and Senate. We want to provide details of the legislation and a balanced analysis of the potential impact on businesses and individuals. You’ll be able to access articles on various components of the proposals, along with documents and links to government sites that will provide easy access to the original source documents. The 2022 budget resolution (S. Con. Res. 14) laid the groundwork for the Build Back Better Act (BBB) by providing the option of using the budget reconciliation process to pass the legislation. Goals of the BBB as noted by the House Committee Cut taxes for the middle class; Create jobs; Lower costs for working families; Tackle the climate crisis and strengthen resilience; Ensure fiscal responsibility; and  Stimulate future economic growth.  As we and other advisors have noted, the current proposal in the House will likely not be the same as the one that could ultimately be passed. The Senate still needs to develop its version of the bill. As the country has observed since the middle of September when the House Budget Committee approved a marked-up bill for the full House to approve, divisions in the Democratic Party need to be bridged. As we enter the last week of October, President Biden is partnering with both House and Senate Democratic leaders, who are still looking for an agreement on the size and scope of the BBB that would also pave the way for the separate bipartisan infrastructure bill to pass the House. The negotiations impact the tax provisions contained in the overall legislation. Corporate, business and individual tax provisions are being revisited. For example, proposals to lower the proposed increase in the corporate tax rate, provide a larger state and local tax deduction, tax unrealized appreciation of investment assets, and introduce a new financial transactions tax on trading have been proposed. Negotiations are ongoing, as it is necessary for all 50 Democratic senators to pass the tax-and-spend legislation using the budget reconciliation process. We’ll let you know “Our Thoughts On” Build Back Better; let us know yours, so we can help you plan for your future. ## Quick References ### Dealership Risk Advisory Services ### LumenFi Overview ### Managing the Challenges of M&A During and After the Federal Government Shutdown ### Dealership Solutions Brochure ### Why Businesses Are Turning To Managed Accounting ### Oil and Gas Overview ### Mining and Aggregate Overview ### 10 Things Companies Wish They Did Before a Breach ### The HITRUST Journey: 7 Steps to Expect Before You Certify ### Managed Accounting Services Overview ### R&D Tax Credit Qualified Research – Four Part Test Overview ### Demystifying HITRUST: A Path to Clarity and Certification ### SOC Services Overview ### The Impact of Digital at Dealerships ### Penetration Testing and AI in 2025: Exploring Capabilities, Limitations, and Best Practices ### 5 Common Lease Accounting Implementation Mistakes and How to Avoid Them ### Digital Modernization Service Overview ### Real Estate Services Overview ### Strategic Capital: Making the Most of Minority Investment ### Top 3 Digital Tools Reshaping the Construction Industry ### Service Overview - Emerging Technology ### Litigation Support Services ### Business Interruption Services ### Forensics & Investigative Accounting Services ### 5 Essential Software Considerations for Start-ups ### 5 Actions CFOs Should Take Amid 2025 Tariff Uncertainty ### Fraud Risk Assessments ### Service Overview – Power BI Enterprise Solutions ### Service Overview – Data Analytics and Power BI ### Accounting Optimization Assessments ### Guide - Cybersecurity Maturity Model Certification (CMMC) ### State of the Industry: 2025 Tax and Legislative Outlook and How it Might Impact the Trucking Industry ### State of the Industry: Tax Planning Ideas for the New Year- Part Two ### State of the Industry: Tax Planning Ideas for the New Year – Part One ### 5 Key Considerations for SRCs and SOX in 2025 ### 5 Things You May Not Know About the R&D Tax Credit ### Top 5 Digital Priorities for CFOs in 2025 ### R&D Tax Credit for Transportation & Logistics ### Data Analytics Success Story - Waste Collection Data and Reporting Tool ### Data Analytics Success Story - Manufacturing Data Warehouse, Budgeting and Reporting Tool ### Data Analytics Success Story - Primary Care Physician Reporting ### Data Analytics Success Story - Pricing Damage Model ### Data Analytics Success Story - Whole Sale Distributor Litigation Support ### Intelligent Automation Success Story - Bill Rates Adjustments ### Intelligent Automation Success Story - Cash Conversion ### Intelligent Automation Success Story - Fee Processing ### Intelligent Automation Success Story - Internal Audit ### Intelligent Automation Success Story - Legal Compliance ### Intelligent Automation Success Story - Sales & Use Tax ### Intelligent Automation Success Story - Road Toll Reconciliation ### What is the Future of Dynamics GP? 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Excerpt: David Murphy shares his insights with CSO Online on some of the most problematic insider threats and minimizing their risk. ### Guide – Understanding the Security and Privacy Concerns of TikTok Excerpt: Learn what data TikTok users share, with whom that information is being shared and why the platform is considered by many as a security risk. ### Case Study: Company Impacted by Six-Figure Ransomware Attack ### Article - How Third Party Risk Management Caters to Your Organization Excerpt: Learn more about what your third-party risk management team does every day to keep your organization safe. ### InfoSec Policy Templates ### Chronicles of a Penetration Tester Excerpt: Lead Cybersecurity Strategist Stephen Bish shares his adventures as a penetration tester. ### Webinar: 10 Vulnerabilities Hackers Love to Exploit ### 10 Most Common Physical Cybersecurity Threats Excerpt: Learn about some of the top physical cybersecurity threats facing organizations and best practices for mitigating physical security risks. ### Infographic – 10 Steps Contractors Can Take to Reduce Cyber Attacks Excerpt: Learn ten key steps contractors can take to strengthen their cybersecurity defenses. ### Fortifying Retail Security: Essential Cybersecurity Tools and Software Excerpt: Explore essential cybersecurity tools and software that are indispensable for securing the retail industry ### Guide – Compliance and Third Party Risk Management ### Article - Pittsburgh Post Gazette - Ask Me About... 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Here's How They Can Do That Excerpt: Schneider Downs' David Murphy discusses cyber insurance and potential Russian cyberattacks. ### Defend Your Dollars and Data: How to Avoid IRS Impersonation Scams Excerpt: Learn more about how to identify and avoid IRS impersonation scams this tax season. ### Guide - Automotive Dealerships and the FTC Safeguards Rule Excerpt: Learn about the new compliance requirements outlined by the updated Federal Trade Commission Safeguards Rule for automotive dealerships. ### Webinar: Inside Web Application Penetration Testing ### Employees’ Passwords Compromise Cybersecurity Defenses ### Why IT compliance strengthens and protects your business Excerpt: Manager of Risk Advisory Services, Timothy Wolfgang, joins the PGH Networks to discuss why IT compliance strengthens and protects your business. ### Article – Schneider Downs Named PTC Tech 50 Cybersecurity Innovator of the Year ### Article - The Top Ten Most Common SOC 2 Exceptions Excerpt: Learn about the most common SOC 2 exceptions the Schneider Downs team have encountered. ### Benefits of a Purple Team Assessment Excerpt: Learn more about the benefits of extending your basic penetration testing using Purple Team assessments to help you improve the organization’s alerting and detection posture. ### Article – HowStuffWorks – Have You Been Zoom Bombed? ### 10 Cybersecurity New Year's Resolutions for 2024 Excerpt: Strengthen your cybersecurity defenses in 2024 with these ten tips from the Schneider Downs cybersecurity team. ### Top Cybersecurity Questions of 2022 Excerpt: The Schneider Downs Cybersecurity team shares some of the top questions they have faced from clients in 2022. ### Article – WAND – Ransomware, Pandemic Brought Down Lincoln College Excerpt: Sean Thomas discusses the role a ransomware attack played in the permanent closure of Lincoln College. ### Article – VentureBeat – Why the U.S. Can Engage Russia on Cyber Over Ukraine Excerpt: Schneider Downs' David Murphy provides insight on how the issues in Ukraine create implications in US/Russian relations. ### Article - Proposed Interagency Guidance on Third-Party Risk Management Excerpt: Learn about the new jointly proposed guidance on Third Party Risk Management from the OCC, FDIC and Board of Governors of the Federal Reserve System. ### Article – Pittsburgh Business Times – Carl Kriebel Joins Schneider Downs Excerpt: Carl Kriebel joined Schneider Downs & Co. Inc. as a shareholder and is based at its downtown headquarters. ### Squish the Quish – Stop and Think Before You Access a QR Code Excerpt: Learn more about QR code phishing attacks and how to protect yourself from this rising threat. ### Maximizing the Value of Penetration Testing Excerpt: Learn about penetration testing including our methodologies, and best practices to help your organization maximize the value of this assessment tool. ### Article – S&P Global – Small Banks Could Face Challenges With 36-Hour Cyber Reporting Rule Excerpt: David Murphy discusses why smaller banks may struggle with the FDIC 26-hour cyber reporting rule. ### Digital Forensics & Incident Response Overview ### Article - Government Technology - Cyber Analyst Q&A: Security Lessons from Lincoln College Excerpt: David Murphy discusses cyber attack vulnerabilities and what colleges can do to mitigate them. ### State of the Industry: ESG ### State of the Industry: Current Economic Conditions ### State of the Industry: Exit & Succession Planning ### State of the Industry: Cybersecurity ### State of the Industry: Rough Road Ahead ### Ensuring Network Security in the Retail Industry: A Crucial Imperative Excerpt: Learn more about the need for robust network security in the retail industry and discover effective strategies for enhancing it. ### Article - Shared Assessment SIG Questionnaire – What’s New for 2023? Excerpt: Learn about some of the key changes to the Shared Assessments 2023 Standardized Information Gathering (SIG) Questionnaire. ### Article – Search Security – Cyber Insurance Premiums Skyrocket Excerpt: Schneider Downs' Stephen Bish discusses Cyber insurance premiums with TechTarget, as costs skyrocket due to attacks surge. ### 10 Vulnerabilities Hackers Love to Exploit Excerpt: Get inside the mind of a hacker to learn about underlying circumstances leading to breaches and best practices to mitigate these risks. ### Comcast Xfinity Breach Impacts Nearly 36 Million Customers Excerpt: Learn more about the Comcast Xfinity breach that exposed login credentials of 35.8 million customers. ### Article - WTAE-TV ABC 4 - How to protect yourself from online shopping scams Excerpt: Cybersecurity Shareholder Carl Kriebel sits down with WTAE-ABC Pittsburgh to discuss some of the most popular scams targeting holiday shoppers and how to avoid them. ### Webinar: Benefits of a Purple Team Assessment ## Transactions ### Advised BPI, Inc. Advised BPI, Inc. on their strategic partnership with RHI Magnesita SD Capital served as financial advisor. ### Advised John T. Boyd Company Advised John T. Boyd Company on its sale to Management SD Capital served as financial advisor. ### Advised Standard Air & Lite Corporation Advised Standard Air & Lite Corporation on its sale to Koch HVAC Distribution, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Allegheny Card Solutions Advised Allegheny Card Solutions, a subsidiary of Allegheny Plastics, Inc. on its sale to NewGuard Plastic Cards, a portfolio company of Daboosh Investments, LLC Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### VES Provided value enhancement and sell side advisory services on its sale to Waseyabek Development Company Springer Lawson & Associates, a predecessor firm to SD Capital led by Tom Springer and Stuart Lawson, served as financial advisor. ### AINS Provided value enhancement and sell side advisory services on its sale to Gemspring Capital. Springer Lawson & Associates, a predecessor firm to SD Capital led by Tom Springer and Stuart Lawson, served as financial advisor. ### Advised Donegal Construction Corp Advised Donegal Construction Corp. and Delta Contracting, Inc. on their sale to SurfaceCycle, a portfolio company of Warren Equity Partners Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Armstrong Nutrition Management, LLC Advised Armstrong Nutrition Management, LLC on its sale to DiningRD, a portfolio company of Evolution Capital Partners Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised CWM Environmental, LLC Advised CWM Environmental, LLC (CWM) on its sale to Metiri Group, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Producers Supply Company, Inc. Advised Producers Supply Company, Inc. on its sale to BPS Supply Group, a portfolio company of Trive Capital Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Sam Levin, Inc. Advised Sam Levin, Inc. on its sale to Art Van Furniture, an affiliate of Thomas H. Lee Partners, L.P. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### UV Technologies UV Technologies, a division of Calgon Carbon Corporation, has been acquired by De Nora Holdings US, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Kanata Blanket Company and Neet Feet The assets of Kanata Blanket Company and Neet Feet have been acquired by an undisclosed buyer Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Westmoreland Advanced Materials, Inc. Advised Westmoreland Advanced Materials, Inc. on its sale of certain assets to Allied Mineral Products, LLC Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Klein's Restoration Services Advised Klein's Restoration Services on its sale to Yak Access, LLC, an affiliate of Platinum Equity Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Keystone Consultants, Inc. Advised Keystone Consultants, Inc. on its sale to Contract Land Staff, LLC, an affiliate of Oaktree Capital Management, L.P. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### James Austin Company Advised James Austin Company on its sale to KIK Custom Products, an affiliate of Centerbridge Partners, L.P. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Choice Respiratory Care, Inc. Advised Choice Respiratory Care, Inc. on its sale to a national respiratory care provider Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Well Service Group, Inc. Advised Well Service Group, Inc. and Utility Access Solutions, Inc. on their sales to Newpark Resources Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Weavertown Transport Leasing, Inc. Advised Weavertown Transport Leasing, Inc. and Weaver Town Oil Services, Inc., operating as Weavertown Environmental Group, on their sale to Univar USA Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Conveyor Services Corporation Advised Conveyor Services Corporation, Classic Conveyor Components Corporation and Affiliates on its sale to Fenner, PLC Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Troy D. Dolan Advised Troy D. Dolan on his equity investment in Diamond Technical Services, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### L.R. Kimball & Associates, Inc. Advised L.R. Kimball & Associates, Inc. on its sale to CDI Corp. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### DMLogic, LLC Advised DMLogic, LLC on its sale of a majority ownership interest to Körber AG Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### NILCO Corporation Advised NILCO Corporation on its acquisition by Platinum Equity Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### TIGG Corporation Advised TIGG Corporation on its sale to The Spencer Turbine Company, a portfolio company of Alliance Holdings, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Powerohm Resistors, Inc. Advised Powerohm Resistors, Inc. on its sale to Hubbell Industrial Controls, Inc., a business unit of Hubbell Incorporated Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Snap-tite, Inc. Advised Snap-tite, Inc. on its sale to Parker Hannifin Corporation Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Union Spring & Manufacturing Corp. Advised Union Spring & Manufacturing Corp. on the sale of its Pontotoc Spring division to MW Industries, Inc., a portfolio company of Genstar Capital Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Print Tech of Western Pennsylvania Advised Print Tech of Western Pennsylvania on its sale of assets to Center Capital, LLC Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Heartland Petroleum, LLC Advised Heartland Petroleum, LLC on its recapitalization by Warren Distribution Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### S/D Engineers, Inc. Advised S/D Engineers, Inc. on its sale to Siemens Power Generation, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Snap-tite Hose, Inc. Advised Snap-tite Hose, Inc., a business unit of Snap-tite, Inc., on its sale to All-American Hose, LLC Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Marion Steel Advised Marion Steel on its sale to Nucor Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Eat’n Park Hospitality Group Advised Eat’n Park Hospitality Group on the sale of its Cura Hospitality division to TrustHouse Services Group Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### ABARTA, Inc. Advised ABARTA, Inc. on its acquisition of Kahiki Foods, Inc. Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### AAA Allied Group Advised AAA Allied Group on its acquisition of Bob Sumerel Tire Co. Inc.’s retail business Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### West Mifflin Imaging Associates, LP Advised West Mifflin Imaging Associates, LP on its sale to Jefferson Regional Medical Center Schneider Downs Corporate Finance, LP, an affiliate of SD Capital, served as financial advisor. ### Advised Millspring Property Fund LP Advised Millspring Property Fund LP on its acquisition of Millspring Commons, a 159-unit multifamily property in Richmond, Virginia ### Advised Daytona Properties II, LLLP Advised Daytona Properties II, LLLP, an affiliate of RISE Properties, LLC, on its issuance of limited partnership units to finance the construction of a 96-unit student housing property in Daytona, Florida ### Advised Rochester Apartments, LLLP Advised Rochester Apartments, LLLP, an affiliate of Schafer Richardson, Inc., on its issuance of limited partnership units to finance the construction of a 209-unit multifamily development in Rochester, Minnesota ### Advised Daytona Properties I, LLLP Advised Daytona Properties I, LLLP, an affiliate of RISE Properties, LLC, on its issuance of limited partnership units to finance the construction of a 144-unit student housing property in Daytona, Florida ### Advised Waypoint Jacksonville Investors, LP Advised Waypoint Jacksonville Investors, LP, an affiliate of Waypoint Residential, LLC, on its issuance of limited partnership interests to finance the construction of a 380-unit multifamily development in Jacksonville, Florida ### Advised Baton Rouge Properties I, LLLP Advised Baton Rouge Properties I, LLLP, an affiliate of RISE Properties, LLC, on its issuance of limited partnership units to finance the acquisition and repositioning of a 240-unit student housing property in Baton Rouge, Louisiana ### Advised Waypoint Austin Falcon Investors, LP Advised Waypoint Austin Falcon Investors, LP, an affiliate of Waypoint Residential, LLC, on its issuance of limited partnership interests to finance the construction of a 324-unit multifamily development in Austin, Texas ### Advised Oakland Fifth Avenue Hotel Associates, LP Advised Oakland Fifth Avenue Hotel Associates, LP on its issuance of limited partnership interests to finance the construction of The Oaklander, an Autograph Collection Marriott hotel in Pittsburgh, Pennsylvania ### Advised Athens Ohio Properties I, LLLP Advised Athens Ohio Properties I, LLLP, an affiliate of RISE Properties, LLC on its issuance of limited partnership units to finance the acquisition and repositioning of a 182-unit student housing property in Athens, Ohio ### Advised RHHotel, LP Advised RHHotel, LP, an affiliate of Creative Real Estate Development Company, on its issuance of limited partnership interests to finance construction of a Hampton Inn & Suites hotel in Cranberry, Pennsylvania ### Advised Oxford West Properties I LLLP Advised Oxford West Properties I LLLP, an affiliate of RISE Properties, LLC on its issuance of limited partnership units to finance the acquisition and repositioning of a 303-unit student housing property in Oxford, Ohio ### Advised Waypoint Tampa Starkey Investors, LP Advised Waypoint Tampa Starkey Investors, LP, an affiliate of Waypoint Residential, LLC, on its issuance of limited partnership interests to finance the construction of a 384-unit multifamily development in Tampa, Florida ### Advised Yorkshire Property Fund, LP Advised Yorkshire Property Fund, LP, an affiliate of Republic Properties Corp., on its issuance of limited partnership interests to finance the acquisition of a 202-unit multifamily property in Yorktown, Virginia ### Advised Waypoint Hackensack Urban- NJ Investors, LP Advised Waypoint Hackensack Urban- NJ Investors, LP, an affiliate of Waypoint Residential, LLC, on its issuance of limited partnership interests to finance the construction of a 235-unit multifamily development in Hackensack, New Jersey ### Advised Waypoint West Kernan-FL Investors, LP Advised Waypoint West Kernan-FL Investors, LP, an affiliate of Waypoint Residential LLC, on its issuance of limited partnership interests to finance the construction of a 301-unit multifamily development in Jacksonville, Florida ### Advised Waypoint Maple Street-Ind. Investors, LP Advised Waypoint Maple Street-Ind. Investors, LP, an affiliate of Waypoint Residential LLC, on its issuance of limited partnership interests to finance the construction of a 214-unit multifamily development in Jeffersonville, Indiana ### Advised Six Forks Property Fund LP Advised Six Forks Property Fund LP, an affiliate of Republic Properties Corp., on its issuance of limited partnership interests to finance the acquisition of a 174-unit multifamily property in Raleigh, North Carolina ### Advised Grand Canyon Ranches LLC Advised Grand Canyon Ranches LLC, an affiliate of HLC Equity, on its issuance of limited partnership interests to finance the repositioning of a 336-unit multifamily property in Fort Worth, Texas ### Advised Baltimore Properties II, LLC Advised Baltimore Properties II, LLC, an affiliate of RISE Properties, LLC on its issuance of membership interests to finance the construction of a 181-unit student housing property in Baltimore, Maryland ### Advised FP Glenwood Holdings, LLC Advised FP Glenwood Holdings, LLC, an affiliate of Faros Properties, on its issuance of membership interests to finance the acquisition of a 304-unit multifamily property in the Atlanta suburb of Decatur, Georgia. ### Advised FP Riverdale Holdings, LLC Advised FP Riverdale Holdings, LLC, an affiliate of Faros Properties, on its issuance of membership interests to finance the acquisition of a 316-unit multifamily property in the Atlanta suburb of Riverdale, Georgia. ### Advised Rya Apartments, LLC Advised Rya Apartments, LLC, an affiliate of Schafer Richardson, Inc., on its issuance of membership interests to finance the construction of a 237-unit multifamily development in the Minneapolis suburb of Richfield, Minnesota. ### Advised Chapel Hill Property Fund LP Advised Chapel Hill Property Fund LP, an affiliate of Republic Properties Corp., on its issuance of limited partnership interests to finance the acquisition of a 144-unit multifamily property in the Chapel Hill suburb of Carrboro, North Carolina. ### Advised Waypoint Acquisition Portfolio 2020-B, LP Advised Waypoint Acquisition Portfolio 2020-B, LP, an affiliate of Waypoint Residential, LLC, on its issuance of limited partnership interests to finance the acquisition of a 698-unit portfolio comprised of two multifamily properties in Dallas, Texas and Daytona Beach, FL. ### Advised FP Baldwin Park Holdings LLC Advised FP Baldwin Park Holdings LLC, an affiliate of Faros Properties, on its issuance of membership interests to finance the acquisition of a 184-unit multifamily property in Orlando, FL. ### Advised HLC Layers Fund LP Advised HLC Layers Fund LP, an affiliate of HLC Equity, on its issuance of limited partnership interests to finance the acquisition of a 330-unit multifamily property in the Dallas suburb of Farmers Branch, TX. ### Advised FP Peachtree Industrial Holdings LLC Advised FP Peachtree Industrial Holdings LLC, an affiliate of Faros Properties, on its issuance of membership interests to finance the acquisition of a 256-unit multifamily property in the Atlanta suburb of Duluth, GA. ### Advised Brevard Properties I JV, LLC Advised Brevard Properties I JV, LLC, an affiliate of RISE Properties, LLC, on its issuance of membership interests to finance the construction of a 166-unit active adult multifamily property in Viera, a master-planned community adjacent to Melbourne, Florida. ### Advised Lionstone Drive Investors II, LLC Advised Lionstone Drive Investors II, LLC, an affiliate of Benedict Canyon Equities, Inc. on its issuance of membership interests to finance the acquisition of a 288-unit multifamily property in Colorado Springs, Colorado. ### Advised 6701 Del Rey Investors II, LLC Advised 6701 Del Rey Investors II, LLC, an affiliate of Benedict Canyon Equities, Inc. on its issuance of membership interests to finance the acquisition of a 192-unit multifamily property in Las Vegas, Nevada. ### Advised 4275 Sanders View Investors I, LLC Advised 4275 Sanders View Investors I, LLC, an affiliate of Benedict Canyon Equities, Inc. on its issuance of membership interests to finance the acquisition of a 300-unit multifamily property in Colorado Springs, Colorado. ## Ad Landing Pages ### CMMC - Cybersecurity Maturity Model Certification Services Cybersecurity Maturity Model Certification (CMMC) Compliance Services As an authorized C3PAO, Schneider Downs is qualified to assess and certify organizations subject to the DOD’s DFARS 7021 clause.The CMMC requirements were finalized on December 16, 2024, for organizations within the defense industrial base (DIB).Per DFARS 7021/CMMC, all organizations must be certified to be awarded DOD contracts that contain the DFARS clause. Conquer CMMC Compliance – Contact Us Today! CMMC Third-Party Assessment Organization (C3PAO) Schneider Downs is one of the first 55 nationwide C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) program. Competitive Advantage Our deep understanding of CMMC assessments, combined with our designation as a C3PAO, uniquely positions us to provide guidance that will be invaluable as you prepare for your assessment. Industry Expertise If you choose to consult with us, we will leverage our expertise across several industries to address your specific CMMC challenges. Schneider Downs has over 25 years of experience auditing a variety of organizations' security frameworks. CMMC CertificationSchneider Downs is one of the first 55 nationwide CMMC C3PAOs authorized to conduct CMMC certification assessments for the Department of Defense’s (DoD) CMMC program. This puts us in a unique position to either:Help an organization prepare for CMMC certification through consultative efforts such as performing a gap analysis/mock audit orPrepare the organization for CMMC certification.The CMMC independence requirements prevent us from serving in both capacities.Starting in 2025, companies subject to DFARS 7021 that conduct business with the DoD and suppliers across the DIB will need to achieve one of three levels of Cybersecurity Maturity Model Certification (CMMC). CMMC is projected to impact 450,000 organizations, including U.S. organizations and their international partners. For contracts that require CMMC, you may be disqualified from participating if your organization is not certified. CMMC Readiness Assessment ConsultingNot ready for the CMMC Certification yet? Have you aligned your System Security Plan (SSP) with your Shared Responsibility Matix (SRM) and Asset Inventory with the appropriate CMMC classifications? These are areas (among others) where we can help. Our demonstrated understanding of compliance frameworks, combined with our designation as a C3PAO, uniquely positions us to consult with your organization and provide guidance that will be invaluable to you as you prepare for your assessment. Our consulting services could take many forms including:Develop and align critical documentation with one anotherConduct a readiness assessment detailing the controls that would pass an assessment and provide recommendations for those controls that failedConsult with management regarding an overall CMMC implementation strategyConduct mock auditsAssist management with their required annual self-assessmentAssist management with the interpretation of CMMC requirementsWork with management to address failed controls included within your Plan of Action & Milestones (POA&Ms)CMMC Readiness Assessment PhasesOur comprehensive CMMC readiness assessment encompasses four distinct phases.Phase 1 focuses on meticulous planning and preparation, including establishing roles, gathering necessary documentation, and verifying readiness.Phase 2 involves the core assessment activities, where Schneider Downs evaluates the client’s CMMC practice implementation through evidence review, interviews, and observations.Phase 3 delivers the recommended assessment results in a formal report, outlining areas of conformance and non-conformance with specific remediation recommendations.Phase 4 centers on the closure of the identified POA&Ms and a final validation to ensure all necessary actions have been taken.About Schneider DownsAs a certified C3PAO, Schneider Downs provides comprehensive CMMC readiness consulting to guide organizations seeking CMMC certification, helping them prepare for their official C3PAO assessment process.Our team includes several CMMC Certified Professionals (CCPs) and CMMC Certified Assessors (CCAs). CCPs and CCAs have undergone extensive training on the CMMC model and CMMC Assessment Process (CAP) and can simulate a real assessment to effectively identify gaps that can be remediated prior to the official C3PAO assessment. CMMC: Cybersecurity Maturity Model Certification GuideDownload our comprehensive CMMC Guide for a detailed overview of CMMC, including a deep dive into the certificate framework, certification process, potential costs and best practices for preparing your organization. View our comprehensive CMMC Guide here CMMC FAQsTo help you navigate these requirements and prepare your organization for compliance, we have compiled answers to the most frequently asked questions about the CMMC framework, its impact on your business, and how Schneider Downs, as an authorized C3PAO, can guide your path to certification. For the full list of frequently asked questions, download our CMMC FAQ Guide.  What are the latest updates on CMMC 2.0? As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC. What is Considered “In Scope” for CMMC? Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP). What if I do not want to comply or am unable to comply with CMMC, what are the consequences? For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause. How will I know what CMMC level is required for each DoD contract? Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required. What is the difference between CMMC and NIST 800-171? The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172. Who can help me become CMMC compliant? Schneider Downs is currently one of the first 55 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. As of January 31, 2025, the Department of Defense (DoD) has finalized the implementation framework for the Cybersecurity Maturity Model Certification (CMMC) 2.0 program. The final rule was published on October 15, 2024, and took effect on December 16, 2024. Contracts will start to include the DFARS clause requirement, meaning all DoD contractors will be required to comply with CMMC.Any system, network, or infrastructure that stores, processes, or transmits FCI or CUI is considered in scope for CMMC 2.0. This includes:Internal IT networks that handle CUI.Cloud environments where CUI is stored or processed (e.g., Microsoft GCC High, AWS GovCloud).End-user devices (laptops, desktops, mobile devices) that access CUI.Email and collaboration tools (if used for CUI communication).Subcontractors handling CUI must also meet the appropriate CMMC level.Organizations need to define and document the boundary of their CMMC in-scope environment to ensure compliance within their System Security Plan (SSP).For defense contractors, the consequences could be severe. If you decide to not comply or are unable to comply with the CMMC requirements, you will no longer be able to bid on any DoD contracts that include the DFARS clause.Each DoD Request for Proposal (RFP), Request for Quote (RFQ), or Request for Information (RFI) will specify the required CMMC level for that contract. Contracts that require CMMC compliance will reference specific Defense Federal Acquisition Regulation Supplement (DFARS) clauses, such as:DFARS 252.204-7012 (Cybersecurity Requirements)DFARS 252.204-7019 (SPR System Submission)DFARS 252.204-7020 (DIBCAC Assessment for Medium & High Risk)DFARS 252.204-7021 (CMMC Certification Requirements)If DFARS 252.204-7021 is included, the contract will specify the required CMMC level.There is also the way to determine by the type of information that you will be handling with this contract:If your company only handles Federal Contract Information (FCI) → CMMC Level 1 is required.If your company handles Controlled Unclassified Information (CUI) → CMMC Level 2 or Level 3 may be required.If your company works with high-value CUI for critical national security → CMMC Level 3 is required.The CMMC framework is closely aligned with NIST standards, as compliance with CMMC requirements necessitates adherence to NIST guidelines. DoD contractors must either perform a self-assessment or undergo a third-party evaluation to verify compliance with the relevant NIST standards outlined in DFARS clause 252.204-7012. Under CMMC 2.0, Level 2 assessments are based on the security controls in NIST SP 800-171, while Level 3 assessments incorporate both NIST SP 800-171 and a subset of advanced protections from NIST SP 800-172.Schneider Downs is currently one of the first 55 Authorized C3PAOs in the nation. Schneider Downs can help with readiness and consulting services to help you prepare for your CMMC assessment. Once you are ready for your assessment, Schneider Downs can provide partner C3PAOs to conduct the assessment. Cybersecurity Maturity ModelCertification (CMMC) Schneider Downs is one of the first 55 Authorized C3PAOs and can handle your CMMC Certificaton. Demand is expected to significantly increase. Contact Us Today to ensure compliance is met. ### Outsourced Accounting Services Outsourced Accounting Services 75% of CPAs plan to retire within 15 years The accounting profession faces a looming wave of retirements that will significantly reduce the workforce. 84% of CFOs report an accounting talent shortage Finance leaders are struggling to fill key roles and maintain operational capacity amid increasing demand. 80% of companies face finance talent gaps Industry studies estimate a 3.5 million–person shortfall in accounting professionals. The Accounting Workforce Is Changing.So Should Your Strategy.​Accounting and finance teams are facing a historic talent shortage and ongoing industry change. That is why so many organizations choose to outsource their accounting needs to Schneider Downs.For more than 30 years, business leaders have shared the same concern: finding and keeping skilled accounting talent is difficult, and limited internal capacity makes it hard to stay ahead. Even with an in-house hire, turnover, rising labor costs and staffing gaps often leave teams focused on day-to-day tasks instead of strategy.Schneider Downs provides scalable outsourced accounting solutions that are cost effective, sustainable and backed by deep expertise. Whether you need executive financial leadership, outsourced controller support or a customized accounting function, we deliver real-time financial clarity that helps you operate more efficiently and make smarter decisions with confidence. Outsourced Accounting FAQs Have questions about outsourced accounting? Here are some of the most common topics we discuss with clients. Why Should I Outsource My Accounting Function? Outsourcing accounting offers numerous advantages, including reduced overhead costs, access to specialized expertise, streamlined processes, improved accuracy, and the ability to focus on core business competencies. What Kinds of Accounting Responsibilities and Tasks Can Be Outsourced? Any accounting task can be outsourced with our model. Typically, the accounting tasks that have been outsourced are recording daily transactions, cash application to outstanding accounts receivable, paying suppliers and vendors, processing payroll and monthly financial reporting detailing company operating results. How Do I Choose the Right Outsourced Accounting Provider for Me? When selecting an outsourced accounting provider, prioritize experience in your industry, a comprehensive service offering, advanced technology utilization, frequent and transparent communication, and robust security measures to safeguard your financial data. How Do I Ensure a Smooth Transition with an Outsourced Accounting Partner? For a smooth transition to outsourced accounting, start by sharing your goals with the provider and making sure you are on the same page. Bring your staff into the selection process since they will be working with the provider every day. During onboarding, provide the financial information they need to get a clear picture of your business. Create an onboarding plan together and keep the conversation going to track progress and confirm the services are meeting your needs. Outsourcing accounting offers numerous advantages, including reduced overhead costs, access to specialized expertise, streamlined processes, improved accuracy, and the ability to focus on core business competencies.Any accounting task can be outsourced with our model. Typically, the accounting tasks that have been outsourced are recording daily transactions, cash application to outstanding accounts receivable, paying suppliers and vendors, processing payroll and monthly financial reporting detailing company operating results.When selecting an outsourced accounting provider, prioritize experience in your industry, a comprehensive service offering, advanced technology utilization, frequent and transparent communication, and robust security measures to safeguard your financial data.For a smooth transition to outsourced accounting, start by sharing your goals with the provider and making sure you are on the same page. Bring your staff into the selection process since they will be working with the provider every day. During onboarding, provide the financial information they need to get a clear picture of your business. Create an onboarding plan together and keep the conversation going to track progress and confirm the services are meeting your needs.Contact Us TodayDiscover how we can support your accounting goals. Outsourced Accounting Solutions Every organization has different needs. The outline below will help you see which level of managed accounting services may be most appropriate for your business. And if your needs do not fit neatly into a single level, we also provide customized solutions tailored to your goals. CFO Services Controller Services Full Accounting Solution Schneider Downs CFO Services provide scalable, outsourced financial leadership from a team of CFOs, CPAs and experienced accounting professionals, delivering strategic expertise at a cost that fits your budget whether you need ongoing support a full-time CFO. Schneider Downs Controller Services provide the timely, accurate reporting and financial insight your leadership team needs to make confident business decisions, offering scalable support when your accounting function needs additional expertise. Schneider Downs Full Accounting Solution delivers timely transaction recording, efficient month-end execution and accurate financial reporting, whether you need a complete outsourced function or supplemental support for your existing team. Schneider Downs CFO Services provide scalable, outsourced financial leadership from a team of CFOs, CPAs and experienced accounting professionals, delivering strategic expertise at a cost that fits your budget whether you need ongoing support a full-time CFO.Schneider Downs Controller Services provide the timely, accurate reporting and financial insight your leadership team needs to make confident business decisions, offering scalable support when your accounting function needs additional expertise.Schneider Downs Full Accounting Solution delivers timely transaction recording, efficient month-end execution and accurate financial reporting, whether you need a complete outsourced function or supplemental support for your existing team. View our outsourced accounting service tiers Experience your finances in action. Contact us today to receive your complimentary consultation. Whether you need to implement a full accounting solution or are searching for supplemental support to your existing team, Schneider Downs Outsourced Accounting Services can help you achieve your goals. Common Accounting Problems We Solve Here are common pain points we help clients turn into strengths. If any of these feel familiar, contact us to discuss your organization and goals. Struggling to Manage Cash Flow While Staying Financially Healthy Our experienced professionals provide strategic financial leadership and customized solutions to help manage working capital, optimize cash flow, and improve overall financial performance. Facing Turnover and Losing Consistent Financial Leadership Our Managed Accounting team delivers scalable support, continuity, and real-time visibility so leadership can make confident decisions and achieve long-term success. Keeping Up With Changing Tax Laws Schneider Downs Tax Advisors help you navigate complexity, maximize tax advantages, and stay compliant with ongoing obligations. Spending Too Much Time on Manual Accounting Tasks We customize solutions to support existing staff or provide a fully outsourced structure, enabling your team to focus on growth and strategy. Lacking Bandwidth to Manage Complex Accounting With access to more than 500 professionals, we handle intricate challenges and deliver senior-level expertise across industries and corporate structures. Difficulty Scaling Infrastructure Without Adding Staff Immediately Schneider Downs Managed Accounting Services provides a flexible model with proven processes and leading technology to scale infrastructure quickly alongside your growth. Our experienced professionals provide strategic financial leadership and customized solutions to help manage working capital, optimize cash flow, and improve overall financial performance.Our Managed Accounting team delivers scalable support, continuity, and real-time visibility so leadership can make confident decisions and achieve long-term success.Schneider Downs Tax Advisors help you navigate complexity, maximize tax advantages, and stay compliant with ongoing obligations.We customize solutions to support existing staff or provide a fully outsourced structure, enabling your team to focus on growth and strategy.With access to more than 500 professionals, we handle intricate challenges and deliver senior-level expertise across industries and corporate structures.Schneider Downs Managed Accounting Services provides a flexible model with proven processes and leading technology to scale infrastructure quickly alongside your growth. Get Real-Time Financial Clarity. Contact Us Today Our Certifications ### Excellence in Columbus 35 Years of Excellence in Columbus. Schneider Downs is a trusted partner to businesses throughout Central Ohio, providing personalized tax, audit and advisory solutions. Our long-standing client relationships are a testament to our dedication to exceptional service and tailored expertise. Explore their stories and successes in the testimonial videos below. Client Reflections in Columbus, OH https://youtu.be/pRJedBOrjU8https://www.youtube.com/watch?v=gM2vO8RHbO8https://youtu.be/4oMVrGVeI7YDelivering the Difference for ODW LogisticsProviding Operations Expertise for GermainBecoming a Strategic Partner for Sbarrohttps://youtu.be/j9eo84Z7Eg8https://youtu.be/HUYzZb-VwX8https://youtu.be/QQriup01B3AProviding Technical Expertise for Crawford HoyingDiscovering Opportunities for Eco PlumbersContinuing a Family Legacy with Ricart Community Partnerships Schedule an Intro Call With Andrea Broad capabilities, unmatched expertise Audit and Assurance Services Audit and Assurance Services Schneider Downs provides a variety of specialized services… Consulting Services Schneider Downs Consulting Services Carefully curated range of services and solutions for… Private Client Services Big Thinking. Personal Focus. Why Schneider Downs Private Client Services? Tax and… Retirement Solutions Retirement Solutions Schneider Downs Capital Value Advisors for the Middle Market A premier, full-service, value growth and… Tax Services Tax Services Schneider Downs provides a variety of specialized services to assist… Wealth Management Wealth Management An Industry Leader